(a) The Company has subscribed to the Dynamatic Manufacturing Limited's equity share on 25 March 2024 under Rights issue towards 3,50,00,000 equity shares at face value of INR 10 each.

(b) The Company's investments in its German operations are held in Eisenwerk Erla GmbH, Germany (EEG), an indirect step down wholly owned subsidiary of the Company. EEG, is wholly owned by JKM Erla Holdings GmbH, Germany (JKM Erla), which is a wholly owned subsidiary of JKM Erla Automotive Limited, India (JEAL), another wholly owned subsidiary of the Company.

EEG, is currently undergoing a transformation from automotive and foundry businesses to the aerospace business. Considering the various challenges involved, viz., the supply chain crisis at OEMs, current inflation in Europe, and the steep and unpredictable increase in the cost of gas and electricity being faced by corporations across Europe, EEG undertook corporate restructuring measures through the "Protective Shield Process by Self-Administration" under the applicable German Laws, and in this regard, a financial resolution plan was filed before the local court at Chemnitz, which got approved by creditors in favour of EEG. Consequent to this, the local court at Chemnitz passed its final order and ended the protective shield through self-administration proceedings effective 1 August 2023.

Owing to the aforesaid intra-group corporate restructuring measures, JKM Erla, engaged in the business of setting up automotive component processing/manufacturing units was decided to be dismantled with the aim of streamlining the group's holding structure for German operations, and accordingly an application has been made before appropriate authorities and is awaiting necessary order. In the interim, the 100% shareholdings held by JKM Erla in EEG was assigned to JEAL.

The restructuring carried out by EEG also envisaged refinancing of certain borrowings of EEG by way intra-group loans. To fund these intra-group loans, during the year, the Company borrowed a term loan from a bank, the proceeds of which were permitted to be utilized in investment in overseas subsidiaries.

As part of the annual impairment assessment of the Company's investments in Germany, the Company has recognized an impairment loss of Rs. 671 Lakhs in the year ended 31 March 2024 in respect of its investment in JEAL.

*The Board of Directors subsequent to members approval dated 9 March 2023, allotted 4,50,000 equity shares to nonpromoter persons on preferential basis for an amount of INR. 112,90,50,000 (Rupees one hundred twelve crore ninety lacs and fifty thousand only), in accordance with Chapter V of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 ("SEBI (ICDR) Regulations"), as amended from time to time. As on the Board meeting date 29 May 2023, the proceeds of the preferential allotment has been utilized towards prepayment of debt and for general corporate purposes.

ii. Rights, preferences and restrictions attached to equity shares:

The Company has a single class of equity shares. Accordingly, all equity shares rank equally with regard to dividends and share in the Company's residual assets. The equity shares are entitled to receive dividend as declared from time to time. The voting rights of an equity shareholder on a poll (not on show of hands) are in proportion to its share of the paid-up equity capital of the Company.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining asset of the Company after distribution of all preferential amounts, if any. The distribution will be in proportion to the number of equity shares held by the shareholders.

The Company has not allotted any fully paid equity shares by way of bonus shares nor has bought back any class of equity shares during the period of five years immediately preceding the balance sheet date nor has issued shares for consideration other than cash.

(i) Capital reserve:

Capital reserve was created on account of subsidy received during the year ended 31 March 2005 and is not freely available for dividend distribution.

(ii) Capital redemption reserve:

During the year ended 31 March 2005, an amount of INR 240 lakhs was transferred to Capital redemption reserve upon redemption of preference share, in accordance with Section 69 of the Companies Act, 1956. It is not freely available for dividend distribution.

(iii) Reserve on amalgamation:

Reserve on amalgamation was created pursuant to the scheme of amalgamation of JKM Daerim Automotive Limited (JDAL) during the year ended 31 March 2008. It is not freely available for dividend distribution.

(iv) General reserve:

General reserve is used from time to time to transfer profits from retained earnings for appropriation purpose.

(v) Securities premium:

Securities premium reserve is used to record the premium received on issue of shares by the Company. The reserve can be utilised in accordance with the provision of the Act.

(vi) Retained earnings:

The cumulative gain or loss arising from the operations which is retained by the Company is recognised and accumulated under the heading of retained earnings. At the end of the year, the profit after tax is transferred from the statement of profit and loss to the retained earnings.

(v) Cash flow hedge reserve:

The cumulative effective portion of gains or losses arising from changes in fair value of hedging instruments designated as cash flow hedges are recognised in cash flow hedge reserve. Such changes recognised are reclassified to the statement of profit and loss when the hedged item affects the profit or loss or are included as an adjustment to the cost of the related non-financial hedged item. The Company has designated certain foreign currency swaps as cash flow hedges in respect of foreign currency trade receivables and highly probable future forecasted transactions.

* Cash credit and working capital demand loans from banks carry interest ranging between 9.35% - 11.15% per annum (31 March 2023: 10.65% - 12.65% per annum), computed on a monthly basis on the actual amount utilized, and are repayable on demand. Packing Credit & Working Capital Demand loans in Foreign Currency from banks carry interest ranging between 6m SOFR 3.00% and Sterling Over Night Index Average ('SONIA') 4.00% per annum (31 March 2023: 6m SOFR 3.00% and SONIA 4.00% per annum). These are secured by pari passu charge by way of hypothecation of stock and book debts of the Company and second pari passu charge on the movable and immovable fixed assets of the Company.

Information about the Company's exposure to interest rate, currency and liquidity risk are disclosed in note 46.

42 Segment reporting

The Chief Executive Officer and Managing Director of the Company has been identified as the Chief Operating Decision Maker ('CODM') as defined by Ind AS 108, Operating Segments. The CODM evaluates the Company's performance and allocates resources based on an analysis of various performance indicators by the products portfolio and segment information has been presented accordingly.

Operating segment

The Company's business is concentrated in manufacturing of hydraulic products, and aerospace related items and others. And accordingly, primary segment information is presented based on the followings:

Segment information is prepared in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole. The Company has a corporate centre, which provides various accounting and administrative support functions. Segment information for this activity has been aggregated under 'Unallocated'. Revenue identifiable to business segments have been disclosed under the respective business segment. Segment costs include employee benefit expenses, cost of material consumed, depreciation and other operating expenses that can be allocated on a reasonable basis to respective segments. Assets and liabilities in relation to segments are categorized based on items that are individually identifiable to that segment. Certain expenses, assets and liabilities are not specifically allocable to individual segments as these are used interchangeably. The Company therefore believes that it is not practicable to provide segment disclosures relating to such assets and liabilities and accordingly, these are separately disclosed as 'unallocated'.

The Company operates the following post-employment defined benefit plan.

Defined benefit plan

The Company operates post-employment defined benefit plan that provide gratuity, governed by the Payment of Gratuity Act,1972. Employee's who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/termination is the employees last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number of years of service or part thereof in excess of six months. The gratuity plan is a funded plan. The Company does not fully fund the liability and maintains a target level of funding to be maintained over a period of time based on estimations of expected gratuity payments.

These defined benefit plans expose the Company to actuarial risks, such as longevity risk, currency risk, interest rate risk and market (investment) risk.

A Funding

The Company expects to pay INR 120 in contributions to its defined benefit plans in financial year 2024-2025.

B Reconciliation of net defined benefit liability

The following table shows a reconciliation from the opening balances to the closing balances for the net defined benefit liability/ assets and its components:

(i) The discount rate is based on the prevailing market yield on Government Securities as at the balance sheet date for the estimated term of obligations.

(ii) The expected return on plan assets is determined considering several applicable factors mainly the composition of the plan assets held, assessed risks of asset management, historical results of the return on plan assets and the Company's policy for plan asset management.

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

2 2 2 DYNAMATIC TECHNOLOGIES LIMITED - STANDALONE FINANCIAL STATEMENTS - ANNUAL REPORT 2023-2024

Defined contribution plan

The Company's contribution to Provident Fund aggregating to INR 466 (31 March 2023: INR 528) has been recognised in the Statement of Profit and Loss under the head employee benefit expense.

45 Financial instruments - fair value and risk management Accounting classification and fair value

The following table shows the carrying amount and fair value of financial assets and financial liabilities including their levels in fair value hierarchy:

The section explains the judgement and estimates made in determining the fair values of the financial instruments that are:

a) recognised and measured at fair value

b) measured at amortised cost and for which fair values are disclosed in the financial statements.

To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the Indian Accounting Standard.

Investment in equity shares of subsidiaries are not appearing as financial asset in the table above being investment in subsidiaries accounted under Ind AS 27, Separate Financial Statements which is scoped out under Ind AS 109.

Fair value hierarchy

Level 1: It includes financial instruments measured using quoted prices. This includes investment in equity, preference securities, mutual funds and debentures that have quoted price.

Level 2: The fair value of financial instruments that are not traded in an active market (for example, traded bonds, over-the-counter derivatives) 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: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unquoted equity securities.

Fair Valuation Method

The fair value of the financial assets and liabilities is 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:

A Financial Assets:

Fair value of all the above financial assets except investments are measured at balance sheet date value, as most of them are settled within a short period and so their fair value are assumed to be almost equal to the balance sheet date value.

B Financial Liabilities:

(i) Borrowings: It includes loans taken from banks and financial institution, cash credit and bill discounting facilities. Borrowings are classified and subsequently measured in the financial statements at amortized cost. Considering that the interest rate on loans is reset on yearly basis, the carrying amount of the loan would be a reasonable approximation of its fair value.

(ii) Trade payables and other financial liabilities: Fair values of trade payables and other financial liabilities are measured at balance sheet date value, as most of them are settled within a short period and so their fair values are assumed almost equal to the balance sheet date values.

(iii) Derivative financial instruments: Derivative instruments used by the Company include forward exchange contracts, interest rate swaps, currency swaps, options and interest rate caps and collars. These financial instruments are utilised to hedge future transactions and cash flows and are subject to hedge accounting under Ind AS 109 "Financial Instruments" wherever possible. The Company does not hold or issue derivative financial instruments for trading purposes. All transactions in derivative financial instruments are undertaken to manage risks arising from underlying business activities.

The Company's activities expose to financial risks: credit risk, liquidity risk and market risk.

Risk management framework

The Company's Board of Directors has overall responsibility for the establishment and oversight of the Company's risk management framework. The Company's risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company's activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.

The Company's Audit Committee oversees how management monitors compliance with the Company's risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The Audit Committee is assisted in its oversight role by internal auditor. Internal Audit function includes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee.

i) Credit risk

Credit risk is the risk of financial loss to the Company, if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company's receivables from customers and loans given. Credit risk arises from cash held with banks and financial institutions, as well as credit exposure to clients, including outstanding accounts receivables. The maximum exposure to credit risk is equal to the carrying value of the financial assets. The objective of managing counterparty credit risk is to prevent losses in financial assets. The Company assesses the credit quality of the counterparties, taking into account their financial position, past experience and other factors. The carrying amount of financial asset represent the maximum credit exposure.

Trade and other receivables

The maximum exposure to credit risk at the reporting date is primarily from trade receivables. However, the management also considers the factors that may influence the credit risk of its customer base. Customers of the Company are spread across diverse industries and geographical areas. The Company limits its exposure to credit risk from trade receivables by establishing a maximum credit period and takes appropriate measures to mitigate the risk of financial loss from defaults. Recurring credit evaluation of credit worthiness is performed based on the financial condition of respective customers.

Expected credit loss assessment for Trade Receivables as at 31 March 2024 and 31 March 2023 are as follows:

The Company establishes an allowance for credit loss that represents its estimate of expected losses in respect of trade and other receivables based on past and the recent collection trend. The maximum exposure to credit risk as at reporting date is primarily from trade receivables as at 31 March 2024 amounting to INR 20,688 (31 March 2023: INR 16,263). The movement in allowance for credit loss in respect of trade and other receivables during the year was as follows:

ii) Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligation as the become due. The Company's approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company's reputation.

Management monitors rolling forecast of the Company's liquidity position and cash and bank balances on the basis of expected cash flows. This is generally carried out by the Management of the Company in accordance with practice and limits set by the Company. In addition, the Company's liquidity management policy involves projecting cash flows and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans.

i) Financing arrangement

The Company maintains the following line of credit:

(i) Term loan from bank aggregating to INR 9,000 (31 March 2023: INR Nil ) repayable in 28 quarterly instalments. First instalment starting from 1 June 2024 with interest rate at 9.60% per annum.

First pari passu charge on the entire movable and immovable fixed assets of the Company, present and future. Second pari passu charge on the entire current assets of the Company. First charge over Debt Service Reserve Account (DSRA).

(ii) Term loan from bank aggregating to INR 129 (31 March 2023: INR Nil ) repayable in 60 monthly instalments. First instalment starting from 31 October 2023 with interest rate at 8.90% per annum. This loan is secured by hypothecation of assets (cars).

(iii) Term Loan from financial institutions aggregating to INR 3,080 (31 March 2023: INR 3,657) repayable in 20 quarterly instalments first instalment starting from 30 June 2023 with interest rate of 10.75% per annum.

First pari passu charge on movable and immovable fixed assets of the Company, present and future. Second pari passu charge on all current assets of the Company. First charge over Debt Service Reserve Account (DSRA). Personal guarantee issued by the promoter.

(iv) Term Loan from financial institutions aggregating to INR 7,000 (31 March 2023: INR Nil) repayable in 20 quarterly instalments first instalment starting from 30 September 2024 with interest rate of 10.25% per annum.

First pari passu charge on movable and immovable fixed assets of the Company, present and future. Second pari passu charge on all current assets of the Company.

(v) Term Loan from financial institutions aggregating to INR 282 (31 March 2023: INR Nil) repayable in 60 monthly instalments with interest rate of 10.25% per annum. This is secured by hypothecation of assets (cars).

(vi) Cash credit and working capital demand loans from banks carry interest ranging between 9.35% - 11.15% per annum, computed on a monthly basis on the actual amount utilized, and are repayable on demand. Packing Credit & Working Capital Demand loans in Foreign Currency from banks carry interest ranging between 6m SOFR 3.00% and SOFR 3.50% per annum. These are secured by pari passu charge by way of hypothecation of stock and book debts of the Company and second pari passu charge on the movable and immovable fixed assets of the Company.

The table below provides details regarding the contractual maturities of significant financial liabilities as at 31 March 2024 and 31 March 2023. The amounts are gross and undiscounted contractual cash flow and includes contractual interest payment and exclude netting arrangements:

As disclosed in note 18 and 22, the Company has secured bank loan that contains loan covenants. A future breach of covenant may require the Company to repay the loan earlier than indicated in the above table. Except for these financial liabilities, it is not expected that cash flows included in maturity analysis could occur significantly earlier.

III Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Company's income or the value of its holdings of financial instruments. Market risk is attributable to all market risk sensitive financial instruments including foreign currency receivables and payables and long term debt. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

a) Currency risk

The Company is exposed to currency risk to the extent that there is a mismatch between the currencies in which sales, purchases, loan and borrowings are denominated and the respective functional currency of the Company. The functional currency of the Company is INR. The currencies in which these transactions are primarily denominated are USD, EURO, GBP, SGD and CAD etc.Management monitors the movement in foreign currency and the Company's exposure in each of the foreign currency. Based on the analysis and study of movement in foreign currency, the Company decides to exchange its foreign currency.

The Company's policy is to maintain a stable and strong capital base structure with a focus on total equity so as to maintain investor, creditor and market confidence and to sustain future development and growth of the business. The Company monitors the return on capital as well as the level of dividends on its equity shares. The Company's objective when managing capital is to maintain an optimal structure so as to maximize shareholder value and safeguard its ability to continue as a going concern.

The Company monitors capital using a ratio of 'adjusted net debt' to 'equity'. For the purpose of Company's capital management, adjusted net debt is defined as aggregate on non-current borrowing, current borrowing and current maturities of long-term borrowings less cash and cash equivalents and total equity includes issued capital and all other equity reserves.

52 Revenue from contracts with customers

A. Disaggregate revenue information

The table below presents disaggregated revenues from contracts with customers for the year ended 31 March 2024 and 31 March 2023 by market or type of customers, timing of revenue recognition, contract-type and geography.

The Company believes that this disaggregation best depicts how the nature, amount, timing and uncertainty of our revenues and cash flows are affected by industry, market and other economic factors.

B. Contract balances

The Company does not have any contract balances.

C. Remaining performance obligations

The remaining performance obligation disclosure provides the aggregate amount of the transaction price yet to be recognised as the end of the reporting period and an explanation as to when the Company expects to recognise these amount in revenue. Unsatisfied or partially satisfied performance obligations are subject to variability due to several factors such as termination changes in contract scope, re-validation of estimates and economic factors.

Applying the practical expedient as given in Ind AS 115, the Company has not disclosed the remaining performance obligation related disclosures for contracts where the revenue recognised corresponds directly with the value to the customer of the Company's performance completed to date, typically those contracts where invoicing is on time and material, unit price basis.

53 Discontinued operations and assets held for sale

On 6 January 2024, the Company has completed the sale of wind farm lands admeasuring 357.867 acres including building, situated at Varapatti Village, Sulur Taluk, Coimbatore, in favour of Tamil Nadu Industrial Development Corporation Limited (TIDCO), for the setting up of the Southern Defence Industrial Corridor for a compensation amount of Rs. 10,710.81 Lakhs.

The Company has retained land measuring approximately 87 acres having greater strategic value for future development and accordingly the cost of such landamounting to INR 1,089 Lakhs been re-classified from assets held for sale to property, plant and equipment.

As per Section 135 of the Companies Act, 2013, a company, meeting the applicability threshold, needs to spend at least 2% of its average net profit for the immediately preceding three financial years on corporate social responsibility (CSR) activities. A CSR committee has been formed by the company as per the Act. The amount required to be spent and actual amount spent on the areas for CSR activities which are specified in Schedule VII of the Companies Act, 2013 is as follows:

Dynamatic Manufacturing Limited (Formerly known as JKM Ferrotech Limited) ('DML'), a wholly owned subsidiary of the Company, had entered into an Assets Purchase agreement ('APA') with the Company dated 01 September 2022. Based on this agreement, the Company has transferred the Plant and Machinery alongside identified employees to DML and concluded, below is the summary of transaction carried out:

In March 2017, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) (Amendments) Rules, 2017, notifying amendments to Ind AS 7, 'Statement of Cash Flows'. These amendments are in accordance with the amendments made by International Accounting Standards Board (IASB) to IAS 7, 'Statement of Cash Flows'. The below disclosure is in line with such amendments suggested:

58 Additional regulatory information not disclosed elsewhere in the financial statements

(i) As per section 248 of the Companies Act, 2013, there are no balances outstanding or transactions with struck off companies.

(ii) The Company has not traded / invested in Crypto currency or virtual currency.

(iii) Refer Note 4 regarding the corporate restructuring measures carried out by Eisenwerk Erla GmbH, Germany (EEG), an indirect step-down wholly owned subsidiary of the Company, which also envisaged refinancing of certain borrowings of EEG by way intra-group loans. To fund these intra-group loans, during the year, the Company borrowed a term loan from a bank, under terms that permitted utilization of the proceeds for investment in overseas subsidiaries. During the year, as part of the aforesaid restructuring measures, the Company has given a loan to JKM Global Pte Ltd (a wholly owned direct subsidiary), with the objective of funding EEG. Other than the above, the Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall :

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

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

(iv) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party)

with the understanding (whether recorded in writing or otherwise) that the Company shall

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

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

(v) The Company has no such transaction which is not recorded in the books of accounts that has been surrendered

or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).

(vi) The Company has not granted any loans or advances in the nature of loans to promoters, directors, KMPs and the related parties (as defined under Companies Act, 2013), either severally or jointly with any other person, except as disclosed in the financial statements.

(vii) The Company is not a declared wilful defaulter by any bank or financial institution or other lender.

(viii) The Company does not have any Capital-work-in progress whose completion is overdue or has exceeded its cost

compared to its original plan.

59 On 13 February 2024, the Board of Directors of the Company had declared an interim dividend of Rs.5 per equity share (50%) for the financial year 2023-24 and paid to the shareholders during the current quarter ended 31 March 2024. The Board of Directors of the Company vide meeting dated 28 May 2024, have subject to approval of shareholders declared final dividend of INR 5 per equity shares (50%) for the financial year 2023-24 and the same will be disbursed to the shareholders after ensuing Annual General Meeting.

60 The Code on Wages, 2019 and Code on Social Security, 2020 ("the Codes") relating to employee compensation and postemployment benefits that received Presidential assent have not been notified. Further, the related rules for quantifying the financial impact have not been notified. The Company will assess the impact of the Codes when the rules are notified and will record any related impact in the period the Codes become effective.

61 The Company's accounting software for maintaining its books of account has 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 was enabled to log any direct data changes with effect from February 20, 2024.

62 The standalone financial statements were approved for issue by the board of directors on 28 May 2024.