Rights, Preferences and restrictions

The Company has only one class of equity shares having a par value of Rs.10/- per share. Each member is entitled to one vote by e voting (remote e - voting/ e - voting at the meeting), every shareholder is entitled to vote in proportion to their holdings.

Provision for Warranty claims:

Provision for warranty related costs is an estimate made by the management based on possible future outflow on servicing the customer for any corrective action when the product is sold to the customer. Initial Recognition is based on historical experience. The estimate of warranty related costs is reviewed annually.

27 TERMS OF REPAYMENT OF TERM LOANS AND OTHER LOANS

The term loans and other loans are repayable over a period of 1 to 5 years as per the terms of agreement entered into with the Banks / others.

28 Sale of Services

The Company's sale of services include certain composite services, wherein the purchase and its corresponding sale of materials/components amounting to Rs. 269.01 crores are netted off and reflected in the Statement of Profit and Loss. (previous year 'Nil').

a) Provident Fund

In respect of the Employees Provident Fund Scheme, the Company has contributed Rs. 6.97 crores for the year ended 31st March 2023 (previous year Rs. 6.55 crores) to Provident fund Authorities.

b) Superannuation :

The Company has contributed Rs. 0.71 crores for the period 2022-23 (previous year Rs. 0.66 Crores) to the Superannuation trust and the same is recognised in Statement of Profit and Loss under the head employee benefit expenses.

Defined Benefit Plan

c) In respect of employees Provident Fund managed through Trust, the Company has contributed Rs. 4.25 crores for the year ended 31st March,2023 (previous year Rs. 3.73 crores) to the Provident Fund Trust. The interest payable by trust to the beneficiaries of trust as per the rate notified by the Government is met by the trust with contribution from company for the previous year ended 31st March 2023 of Rs. 2.52 crores. (previous year - Rs. 2.19 Crores).

Fair value hierarchy

The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable and consists of the following three levels:

Level 1 hierarchy - Includes Financial Instruments measured using quoted prices in the active market.

Level 2 hierarchy - The Fair value of Financial Instruments that are not traded in an active market, is determined using valuation techniques which maximise the use of observable market data.

i) The Fair value of an Equity Instruments classified as at Fair value through profit or loss included under Level 3 Investments is determined using Cost approach.

ii) The Fair value of an equity Instrument classified as at Fair value through Other Comprehensive Income included under Level 3 Investments was valued by Registered valuer taking a combination of comparable companies multiple method and Discounted cash flow method in the previous year.

iii) There are no transfers between Level 2 and Level 3 during the year.

iv) Trade Receivables, Trade Payables, Cash and Cash equivalents and Other Financial Assets and Liabilities are stated at amortized cost which approximates their fair value.

C. Financial risk management

The Company's business activities are exposed to a variety of financial risks, namely liquidity risk, market risk and credit risk. The Risk management policies have been established to identify and analyse the risks faced by the Company, to set and monitor appropriate risk limits and controls, periodically review and reflect the changes in the policy accordingly.

a) Management of liquidity risk

Liquidity risk is the risk that the Company will face in meeting its obligations associated with its financial liabilities. The Company's approach in managing liquidity is to ensure that it will have sufficient funds to meet its liabilities . In doing this, management considers both normal and stressed conditions.

The Company regularly monitors the rolling forecasts and the actual cash flows to service the financial liabilities on a day-to-day basis through cash generation from business and by having adequate banking facilities.

The following table shows the maturity analysis of the Company's financial liabilities based on contractually agreed undiscounted cash flows along with its carrying value as at the Balance sheet date.

b) Management of Market risk:

The Company is exposed to the following market risks which affects the value of the Financial instruments:

1. Currency risk;

2. Interest rate risk

i) Foreign currency risk

Foreign currency risk is the risk that the fair value of or future cash flows of an exposure will fluctuate because of the changes in foreign exchange rates. As at 31st March, 2023, the net un-hedged exposure to the Company on holding such financial assets and liabilities amounts to Rs. 180.76 Crores.

The Company manages currency exposures by continuously monitoring the Foreign currency rates with the transaction rate and takes steps to mitigate the risk using Forward/ Derivative contracts.

Sensitivity to risk

A 5% strengthening of the INR against foreign currencies to which the Company is exposed (net of hedge) would have led to approximately an additional Gain of Rs. 9.04 Crores in the Statement of Profit and Loss. A 5% weakening of the INR against these currencies would have led to an equal impact but with opposite effect.

ii) Interest rate Risk

Interest rate is the risk that the Fair value of future cash flows of a financial instruments will fluctuate because of changes in market interest rates. The Company has Rs. 100.88 Crores Borrowings at Floating rate of Interest as at 31st March, 2023 (previous year Rs. 181.40 Crores).

Sensitivity to risk

An increase in interest rate of 1% will likely to affect the profit negatively by Rs. 1.01 crores and a decrease of 1% would have led to an equal impact but with opposite effect.

c) Management of credit risk

Credit risk is the risk of financial loss to the Company if the other party to the financial assets fails to meet its contractual obligations.

i) Trade Receivables:

Concentration of credit risk with respect to trade receivables are limited as the customers are predominantly original equipment manufacturers (OEs). All trade receivables are reviewed and assessed for default on a quarterly basis. Our historical experience of collecting receivables is that credit risk is low. Refer Note (f) for accounting policy on Financial Instruments.

ii) Other Financial Assets:

The Company has exposure in Cash and cash equivalents and term deposits with banks. The Company's maximum exposure to credit risk as at 31st March, 2023 is the carrying value of each class of financial assets as on that date.

Return on Equity and Net profit ratio : The net profit for the year has declined due to additional inspection and rectification work at an overseas customer location and higher interest cost. Decline in the net profit compared to the earlier year is the reason for decline in this ratio.

Debt service coverage ratio : It is adversely impacted by increase in Interest cost in furtherance of increase in repo rate.

Return on Investments : As a result of Dividend receipt from it's investments (previous year Nil).

50 Other Regulatory Disclosures as required under Schedule III Of Companies Act, 2013

a) The Company does not have any Benami property held in its name. No proceeding has been initiated or pending against the company for holding any benami property under the benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder

b) During the year, the Company has borrowings from banks on the basis of security of current assets. Returns/Statements filed with the banks on a periodical basis are in agreement with the books of accounts.

c) As per the information available with the company, the company has not transacted with any companies struck off under section 248 of the Companies Act, 2013 or under Section 560 of the Companies Act, 1956

d) There has been no charges or satisfaction yet to be registered with the Registrar of Companies (ROC) beyond the statutory period

e) The Company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with Companies (Restriction on number of Layers) Rules, 2017.

f) The Company has not advanced or loaned or invested funds (either borrowed funds or share premium or any other sources or kind of funds) to any other person(s) or entity (ies), including foreign entities (intermediaries) with the understanding (whether recorded in writing or otherwise) 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 on behalf of the ultimate beneficiaries.

g) 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 Company (ultimate beneficiaries) or

(ii) provide any guarantee, security or the like on behalf of the ultimate beneficiaries.

h) Company has not traded or invested in Crypto currency or virtual currency during the financial year ended March 31, 2023.

i) The Company has not given any loans or advances in the nature of loans to Promoters, Directors, Key Managerial Personnel and related parties, that are repayable on demand or without specifying any terms or period of repayment.

51 Other notes :

a) The Board of Directors of the Company at their meeting held on December 07, 2021, approved the scheme of amalgamation of Sundaram Hydraulics Limited with the Company and their respective shareholders, effective 1st Oct 2021. The Company is awaiting the final hearing and necessary directions in this regard from National Company Law Tribunal ( NCLT).

b) Product inspection and rectification expenses include Rs 27.23 crores, net of insurance claim received, towards cost of certain pre-delivery / increased inspection and rectification work at an overseas customer location.

c) Previous year's figures have been regrouped wherever necessary to conform to this year's classification.