అకౌంట్స్ గమనికలుGala Precision Engineering Ltd.

Mar 31, 2026

Provisions, contingent liabilities and contingent assets

Provisions are recognized when there is a present legal or constructive obligation as a result of a past event and it is
probable (i.e. more likely than not) that an outflow of resources embodying economic benefits will be required to settle

the obligation and a reliable estimate can be made of the amount of the obligation.

Provision for separate sales related obligations is made for probable future claims on sales effected and are estimated
based on previous claim experience on a scientific basis. This provision is revised annually.

Contingent liabilities are disclosed on the basis ofjudgment of management / independent experts. These are reviewed
at each balance sheet date and are adjusted to reflect the current management estimate.

Revenue recognition and other income

The Company derives revenues primarily from sale of goods comprising springs, parts, fasteners, and assemblies.
Revenue from contract with customers is recognised upon transfer of control of promised products or services to
customers in an amount that reflects the consideration the Company expects to receive in exchange for those products

or services.

Revenue from the sale of goods is recognised at the point in time when control is transferred to the customer.

Revenue towards satisfaction of a performance obligation is measured at the amount of transaction price allocated to
that performance obligation. The transaction price of goods sold and services rendered is net of variable consideration
on account of prompt payment discounts and schemes offered by the company as part of the contract with the
customers. The Company recognises changes in the estimated amounts of obligations for discounts in the period in
which the change occurs. Revenue also excludes taxes collected from customers.

Revenue in excess of invoicing is classified as contract assets while invoicing in excess of revenues are classified as

contract liabilities.

Use of significant judgements in Revenue Recognition :

• Judgement is required to determine the transaction price for the contract. The transaction price could be either
a fixed amount of consideration or variable consideration with elements such as prompt payment discounts. Any
consideration payable to the customer is adjusted to the transaction price, unless it is a payment for a distinct
product or service from the customer. The estimated amount of variable consideration is adjusted in the transaction
price only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue
recognised will not occur and is reassessed at the end of each reporting period.

• The Company exercises judgement in determining whether the performance obligation is satisfied at a point in
time or over a period of time. The Company considers indicators such as how customer consumes benefits as

services are rendered or who controls the asset as it is being created or existence of enforceable right to payment
for performance to date and alternate use of such product or service, transfer of significant risks and rewards to

the customer, acceptance of delivery by the customer.

Employee Benefits
Short-term Employees Benefits

All employee benefits payable wholly within twelve months of rendering services are classified as short term employee
benefits. Benefits such as salaries, wages, performance incentives etc., are recognized during the period in which the

employee renders related services and are measured at undiscounted amount expected to be paid when the liabilities
are settled.

Post-employment benefits

The Company provides the following post-employment benefits:

;; ; ; ; i) Defined benefit plans such as gratuity and ;;;;;;;;;

!!!!; ii) Defined Contribution plans such as provident fund T T .

Defined benefits plans

The cost of providing benefits on account of gratuity are determined using the projected unit credit method on the

basis of actuarial valuation made at the end of each balance sheet date

Re-measurements comprising of actuarial gains and losses arising from experience adjustments and change in
actuarial assumptions, the effect of change in assets ceiling (if applicable) and the return on plan asset (excluding net
interest) are recognised in other comprehensive income (OCI) except those included in cost of assets as permitted
in the period in which they occur. Re-measurements are not reclassified to the Statement of Profit and Loss in

subsequent periods.

Defined contribution plans

Payments to defined contribution retirement benefit plans, viz., Provident Fund for eligible employees are recognized

as an expense when employees have rendered the service entitling them to the contribution.

Income taxes

Income tax expense represents the sum of tax currently payable and deferred tax. Tax is recognised in the profit or
loss section of the Statement of Profit and Loss, except to the extent that it relates to items recognised directly in

equity or in other comprehensive income.

Current tax

Current tax is the expected tax payable/ receivable on the taxable income/ loss for the year using applicable tax rates
for the relevant period, and any adjustment to taxes in respect of previous years. Interest expenses and penalties, if
any, related to income tax are included in finance cost and other expenses respectively. Interest Income, if any, related
to Income tax is included in Other Income

Deferred Tax

Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the
balance sheet and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are
recognised for all taxable temporary differences. Deferred tax assets are recognised for all deductible temporary
differences, unabsorbed losses and unabsorbed depreciation to the extent that it is probable that future taxable
profits will be available against which those deductible temporary differences, unabsorbed losses and unabsorbed
depreciation can be utilised.

Financial Instruments

a) Financial assets

Investments in subsidiaries

Investments in subsidiaries are carried at cost
Financial assets other than investment in subsidiaries

Financial assets of the Company comprise trade receivable, cash and cash equivalents, Bank balances,advances
to employees, security deposit, claims recoverable etc.

Initial recognition and measurement

All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value
through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. However, Trade
receivables that do not contain a significant financing component are measured at Transaction Price. Transaction
costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.

Subsequent measurement

For purposes of subsequent measurement financial assets are classified in three categories:

- Financial assets measured at amortized cost

- Financial assets at fair value through OCI

;;;;;;- Financial assets at fair value through profit or loss ;;;;;;;;;;

Security Deposits, Rent deposits and Export benefits receivable are measured at amortised cost. Financial assets
are measured at amortized cost if the financials asset is held within a business model whose objective is to hold
financial assets in order to collect contractual cash flows and the contractual terms of the financial asset give
rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount
outstanding. These financials assets are amortized using the effective interest rate (EIR) method, less impairment.
Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that
are an integral part of the EIR. The EIR amortization is included in finance income in the statement of profit and
loss.

Financial assets at fair value through profit or loss (‘FVTPL’)

Any financial asset that does not meet the criteria for classification as at amortized cost or as financial assets at
fair value through other comprehensive income, is classified as financial assets at fair value through profit or loss

Derecognition

The Company derecognises a financial asset only when the contractual rights to the cash flows from the asset
expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset

to another entity.

Impairment of financial assets

The Company assesses impairment based on expected credit loss (''ECL'') model on the following:

- Financial assets that are measured at amortised cost; and
ECL is measured through a loss allowance on a following basis:¬
- The 12 month expected credit losses (expected credit losses that result from those default events on the

financial instruments that are possible within 12 months after the reporting date)

- Full life time expected credit losses (expected credit losses that result from all possible default events over the
life of financial instruments)

The Company follows ‘simplified approach'' for recognition of impairment on trade receivables or contract assets
resulting from normal business transactions. The application of simplified approach does not require the Company

to track changes in credit risk. However, it recognises impairment loss allowance based on lifetime ECLs at each
reporting date, from the date of initial recognition.

For recognition of impairment loss on other financial assets, the Company determines whether there has been
a significant increase in the credit risk since initial recognition. If credit risk has increased significantly, lifetime

ECL is provided. For assessing increase in credit risk and impairment loss, the Company assesses the credit risk
characteristics on instrument-by-instrument basis.

Impairment loss allowance (or reversal) recognised during the period is recognised as expense/income in profit

and loss.

b) Financial Liabilities

The Company''s financial liabilities includes borrowings, trade payable, lease liabilities, accrued expenses and

other payables.

Initial recognition and measurement

All financial liabilities at initial recognition are classified as financial liabilities at amortized cost or financial liabilities
at fair value through profit or loss, 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. T !!!!!!.

All Financial Liabilities other than derivatives are measured at amortised cost. Interest expense that is not
capitalised as part of costs of assets is included as Finance costs in Profit or Loss.

Derecognition

A financial liability is derecognised when the obligation under the liability is discharged / cancelled / expired. 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 de
recognition of the original liability and the recognition of a new liability. The difference in the respective carrying
amounts is recognised in profit or loss.

Derivatives

Derivative instruments are initially recognised at fair value on the date a derivative contract is entered into and
are subsequently re-measured to their fair value at the end of each reporting period. The resulting gain or loss is
recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument
and is recognised in Other Comprehensive Income (OCI).

Borrowing costs

Borrowing cost includes interest, commitment charges, brokerage, underwriting costs, discounts / premiums,
financing charges, exchange difference to the extent they are regarded as interest costs and all ancillary / incidental

costs incurred in connection with the arrangement of borrowing.

Borrowing costs which are directly attributable to acquisition / construction of qualifying assets that necessarily
takes a substantial period of time to get ready for its intended use are capitalized as a part of cost pertaining to

those assets. All other borrowing costs are recognised as expense in the period in which they are incurred.

The Company identifies the borrowings into specific borrowings and general borrowings. Specific borrowings are
borrowings that are specifically taken for the purpose of obtaining an asset. Borrowing cost incurred on specific

borrowings are capitalised to the cost of the qualifying asset. For general borrowings, the Company determines
the amount of borrowing costs eligible for capitalisation by applying a capitalisation rate to the expenditures on
the qualifying asset based on the weighted average of the borrowing costs applicable to general borrowings.
The capitalisation on borrowing costs commences when the company incurs expenditure for the asset, incurs
borrowing cost and undertakes activities that are necessary to prepare the asset for its intended use or sale. The
capitalisation of borrowing costs is suspended during extended periods in which active development of a qualifying
asset is suspended. The capitalisation of borrowing costs ceases when substantially all the activities necessary to
prepare the qualifying asset for its intended use or sale are complete.

Share based Payments

Equity-settled transactions

The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using
an appropriate valuation model. That cost is recognised, together with a corresponding increase in share-based
payment (SBP) reserves in equity, over the period in which the performance and/or service conditions are fulfilled in
employee benefits expense. The cumulative expense recognised for equity-settled transactions at each reporting
date until the vesting date reflects the extent to which the vesting period has expired and the Company''s best
estimate of the number of equity instruments that will ultimately vest. The statement of profit and loss expense or
credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that
period and is recognised in employee benefits expense

Service and non-market performance conditions are not taken into account when determining the grant date fair
value of awards, but the likelihood of the conditions being met is assessed as part of the Company''s best estimate
of the number of equity instruments that will ultimately vest. Market performance conditions are reflected within the
grant date fair value. Any other conditions attached to an award, but without an associated service requirement,
are considered to be non-vesting conditions. Non-vesting conditions are reflected in the fair value of an award and
lead to an immediate expensing of an award unless there are also service and/or performance conditions

No expense is recognised for awards that do not ultimately vest because non-market performance and/or service
conditions have not been met. Where awards include a market or non-vesting condition, the transactions are
treated as vested irrespective of whether the market or non-vesting condition is satisfied, provided that all other
performance and/or service conditions are satisfied

The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted

earnings per share

Segment reporting

Operating segments are reported in a manner consistent with the internal reporting done to the chief operating
decision maker. The Company operates in a single operating segment

D) Recent pronouncements

The Ministry of corporate Affairs ("MCA") notified amendments on 7 May 2025 and 13 August 2025 under the Companies

(Indian Accounting Standards) Amendment Rules, 2025 and the Companies (Indian Accounting Standards) Second
Amendment Rules, 2025, respectively, which is effective from annual reporting periods beginning on or after 1 April

2025.

(a) Amendment to Ind AS 7 and Ind AS 107 - Supplier Finance Arrangement:

The amendments to Ind AS 7 ''Statement of Cash Flows'' and Ind AS 107 ''Financial Instruments: Disclosures'' clarify
the characteristics of supplier finance arrangements and require additional disclosures for such arrangements. The
disclosure requirements in the amendments are intended to assist users of financial statements in understanding
the effects of supplier finance arrangements on an entity''s liabilities, cash flows and exposure to liquidity risk.

The Company does not have any supplier finance arrangements during the financial year.

(b) Amendment to Ind AS 1 - Classification of liabilities as current or non-current and non-current liabilities
with covenants:

The amendment specifies the requirements for classifying liabilities as current or non-current in the balance sheet,
and clarifies the following:

a) An entity''s right to defer settlement of a liability for at least twelve months after the reporting period must have
substance and must exist at the end of the reporting period. The classification of a liability as current or non¬
current is unaffected by the likelihood that the entity will exercise its right to defer settlement.

b) If an entity''s right to defer settlement of a liability is subject to covenants, such covenants affect whether that

right exists at the end of the reporting period only if the entity is required to comply with the covenant on or
before the end of the reporting period.

c) In case of a liability that can be settled, at the option of the counterparty, by the transfer of the entity''s own
equity instruments, such settlement terms do not affect the classification of the liability as current or non¬
current only if the option is classified as an equity instrument.

These amendments have no effect on the measurement of any items in the financial statements of the Company.

The Company do not make retrospective adjustments as a result of adopting the amendments to Ind AS 1.

c) Amendment to Ind AS 12 - Pillar-Two Tax Reforms

The Company is not within the scope of the OECD Pillar Two Model Rules,

d) Amendment to Ind AS 21-Lack of exchangeability

The Amendments introduces requirement to assess when a currency is exchangeable into another currency and
when it is not. The amendment requires an entity to estimate the spot exchange rate when it concludes that a
currency is not exchangeable into another currency. These amendments had no effect on the financial statements
of the Company.

The below amendments are notified but not yet effective

Amendment to Ind AS 1 ‘Presentation of Financial Statements’- Classification of Liabilities as current or non¬
current and non-current liabilities with covenants:

The amendment includes specific provisions that will take effect for reporting periods beginning on or after 1 April

2026, retrospectively, as outlined below:

a) Breach of material covenant for long-term loan arrangement on or before end of reporting period with effect
that liability becomes payable on demand as on reporting date, then it shall be classified as current liability, if
lender agreed after reporting period and before approval of financial statements to not demand payment as a

consequence of breach.

b) Classify as non-current liability, if lender agreed by end of reporting period to provide grace period ending at least
12 months after reporting period within which entity can rectify the breach provided lender does not demand
immediate repayment.

c) Disclose information about the timing of settlement to understand the impact of the liability on the financial

statements.

The Company does not expect this amendment to have an impact on its operations or financial statements.

Rights, preferences and restrictions attaching to each class of shares including restrictions on the distribution of
dividends and the repayment of capital

The company has equity shares having a par value of Rs.10 per share. Each shareholder is eligible for one vote per share
held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual
General Meeting, except in case of interim dividend. 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.

As per the scheme, the number of shares that will vest is conditional upon length of service, grades, salary cost of the
employee to the Company, performance appraisals and / or any other factors as determined by Committee. The vesting
period shall be 5 years from the grant date i.e. 14th January 2022. The options granted under this scheme is exercisable
by employees till five years from date of its vesting. The Company has granted options at an exercise price of Rs. 350. At
grant date, the estimated fair value of stock options granted under Gala ESOP 2021 is Rs. 350. The fair valuation of stock
options have been done by an independent valuer using Income Approach Method. The details of stock options granted
and key assumptions taken into account for fair valuation are as under:

The Shareholders of the Company had approved on 06th August, 2024 an Employee Stock Option Scheme ("Gala ESOP
2024"), formulated by the Company, under which the Company issued upto 300,000 options to its Wholetime Directors of
the Company. The Gala ESOP 2024 is administered by the Board of Directors / Nomination and remuneration committee
of the Company

As per the scheme, the number of shares that will vest is conditional upon length of service, grades, salary cost of the
employee to the Company, performance appraisals and / or any other factors as determined by Committee. The vesting
period shall be 6 years from the grant date i.e. 06th August 2024. The options granted under this scheme is exercisable
by employees till five years from date of its vesting. The Company has granted options at an exercise price of Rs. 530. At
grant date, the estimated fair value of stock options granted under Gala ESOP 2024 is Rs. 530. The fair valuation of stock
options have been done by an independent valuer using Income Approach Method. The details of stock options granted
and key assumptions taken into account for fair valuation are as under:

Note 28

A. Capital Management

For the purpose of Company''s capital management, capital includes Issued Equity capital, Securities premium, and
all other equity reserves attributable to the Equity Holders of the Company. The primary objective of the Company''s
capital management is to maximise the shareholder''s value.

The Company manages its capital structure and makes adjustments in the light of changes in economic conditions
and requirements of the financial covenants and to continue as a going concern. The Company monitors using a

I gearing ratio which is net debts divided by total capital plus net debt. The company includes within net debt, interest
bearing loans and borrowings, less cash and short term deposit.

B. Financial Risk Management

The Company''s principal financial liabilities comprise loans and borrowings, trade and other payables. The main
purpose of these financial liabilities is to finance the operations of the Company. The principal financial assets include

trade and other receivables and cash and short term deposits.

The Company has assessed market risk, credit risk and liquidity risk to its financial liabilities.

i) Market Risk

Market Risk is the risk of loss of future earnings, fair values or cash flows that may result from a change in
the price of a financial instrument, as a result of interest rates, foreign exchange rates and other price risks.
Financial instruments affected by market risks, primarily include loans And borrowings and foreign currency

receivables and payables

Interest Rate Risks

The Company borrows funds in Indian Rupees to meet both the long term and short term funding requirements.
Interest rate is fixed for the tenor of the Long term loans availed by the Company. Interest on Short term
borrowings is subject to floating interest rate and are repriced regularly. The sensitivity analysis detailed below

have been determined based on the exposure to variable interest rates on the average outstanding amounts
due to bankers over a year

Exposure to interest rate risk

The interest rate profile of the Company''s interest-bearing financial instruments as reported to the management

is as follows:

Fair value sensitivity analysis for fixed rate instruments

The Company measures its fixed rate financial liabilities at amortized cost and does not designate these liabilities
at fair value through profit or loss (FVTPL). Consequently, any changes in market interest rates at the reporting
date would not directly affect the Company''s profit or loss, as the interest expense is based on the fixed effective

interest rate.

Cash flow sensitivity analysis for variable-rate instruments T C

A reasonably possible change of 100 basis points in interest rate would have resulted 035 022

in variation in the interest expense for the Company by CM!!!!

Foreign currency risks

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate due to changes
in foreign exchange rates. The Company enters into forward exchange contracts to hedge its foreign currency
exposures. Foreign currency risks from financial instruments at the end of the reporting period expressed in INR:

Price Risks

More than One-third of the Company''s revenues are generated from exports and the raw materials are procured
through import and local purchases where local purchases track import parity price. The Company is affected by
the price stability of certain commodities. Due to the significantly increased volatility of certain commodities, the

Company enters into contract with the customers that has provision to pass on the change in the raw material
prices and also the volatility in the exchange rate. The Company has a risk management framework aimed
at prudently managing the risk arising from the volatility in commodity prices and freight costs. The Company
hedges 65-70% of its export collections through plain vanilla forward covers. .....;;;;;;

ii) Credit Risk

Credit Risk is the risk that a counterparty will default on its contractual obligations resulting in a financial loss to

the Company. It arises from credit exposure to customers and Balances with Banks.

The Company holds cash and cash equivalents with banks which are having highest safety rankings and hence
has a low credit risk.

The Company''s exposure to credit risk is influenced mainly by the individual characteristics of each customer.

The demographics of the customer, including the default risk of the industry and country in which the customer
operates, also has an influence on credit risk assessment. Credit risk is managed through credit approvals,

establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company
grants credit terms in the normal course of business. The Company has taken insurance cover for overseas
debtors through ECGC but has not taken any insurance cover for local debtors. The company uses Expected
Credit Loss (ECL) Model to assess the impairment loss or gain. The outstanding trade receivables due for a
period exceeding 180 days as at the year ended 31 March 2026 is as follows

iii) Liquidity Risk

The Company manages liquidity risk by maintaining adequate surplus, banking facilities and reserve borrowings
facilities by continuously monitoring forecasts and actual cash flows.

The Company has obtained fund and non-fund based working capital lines from various banks. The Company
monitors funding options available in the debt and capital markets with a view to maintaining financial flexibility

All payments are made along due dates and requests for early payments are entertained after due approval and
availing early payment discounts.

The Company has a system of forecasting rolling one month cash inflow and outflow and all liquidity requirements

are planned.

Exposure to liquidity risk:

The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts

are gross and undiscounted, and include estimated interest payments

Note 29

Fair values and hierarchy

This section explains the judgements and estimates made in determining the fair values of the financial instruments that

are

a) recognised and measured at fair value and

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

The management assessed that fair value of trade receivables, cash and cash equivalents, recoverable from customers,
other short-term financial assets, shortterm borrowings, trade payables and other short-term financial liabilities approximate

their carrying amounts largely due to the short-term maturities of these instruments

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

a. Term deposits- The fair value of term deposits is equal to carrying value since they are carrying market interest rates
as per the banks.

b. Foreign exchange forward contracts- Foreign exchange forward contracts are valued using valuation techniques,
which employs the use of market observable inputs. The most frequently applied valuation techniques include forward
pricing

c. Non-current borrowings - The fair value of non-current borrowings is estimated by discounting future cash flows using

rates currently available for debt on similar terms, credit risk and remaining maturities. The carrying value and fair
value of the borrowings has been considered the same since the existing interest rate approximates its fair value.

d. Others- For other financial assets and liabilities that are measured at fair value, the carrying amounts are equal to the

fair values

* Remuneration does not include provisions made for Gratuity of INR 0.38 crores as it is determined on an actuarial
basis for the Company as a whole.

d) Terms and conditions of transactions with related parties;

The transactions with related parties are made on terms equivalent to those that prevail in arm''s length
transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs
in cash. There have been no guarantees provided or received for any related party receivables or payables.
For the year ended 31 March, 2026, and 31 March 2025, the Company has not recorded any impairment of
receivables relating to amounts owed by related parties. This assessment is undertaken each financial year
through examining the financial position of the related party and the market in which the related party operates.

*A patent infringement suit was filed by Nord-Lock AB & Nord-Lock (India) Pvt. Ltd. against Erstwhile Gala Precision

Engineering Pvt. Ltd. & Gala Fasteners Pvt. Ltd. Infringement of patents related to Wedge-Lock technology washers
and involves the manufacture, sale, and advertisement of ''Gallock Washers'' by Gala Precision Engineering. The
Plaintiffs'' have reserved their rights to enhance their claim amount at a later stage taking into account the Defendants''
total sales revenue for all the infringing products sold during the entire period of infringement, which will be assessed
after the trial takes place.As the matter is currently under litigation, it is not possible to estimate the financial outcome
at this stage. Consequently, no provision has been made in the financial statements in relation to this lawsuit.

k) Notes on IPO Proceeds

The equity shares of the Company had been listed on National Stock Exchange ("NSE") and on BSE Limited ("BSE")
on September 09, 2024 by completing Initial Public Offer (“the IPO”) of 31,74,416 equity shares of face value of Rs.
10 each at an issue price of Rs. 529 per equity share (including share premium of Rs. 519 per equity share) consisting
of a fresh issue of 25,58,416 equity shares and an offer for sale of 6,16,000 equity shares.

The Company has incurred Rs. 17.50 crore as IPO related expenses and allocated such expenses between the
Company (Rs. 14.10 crore has been adjusted of the securities premium account) and selling shareholders (Rs. 3.40
crore) in proportion to the equity shares allotted to the public as fresh issue by the Company and under the offer for
sale by selling sharcholders respectively. The Company has an amount of Rs. 121.24 crore (net of IPO expenses
of Rs. 14.11 crore) from proceeds out of fresh issue of equity shares. The utilisation of the net IPO proceeds is
summarised below.

* Net IPO proceeds which were un-utilised as at March 31, 2026 amounting to Rs. 35.98 crores has been temporarily
invested in fixed deposits

I) Disclosure required by section 186(4) of the Companies Act,2013 :

1. Details of Investments made are given in Note 3

2. Amount of Loans and advances in the nature of loans outstanding from /to subsidiaries Rs Nil (Previous year
Rs Nil)

3. Loans to employees have been considered to be outside the purview of disclosure requirements.

4. Investment by Loanee in the shares of the Parent company- Nil ( Previous year Nil) .LL

m) Additional regulatory information required by Schedule III

i No proceedings have been initiated or pending against the Company under the Benami Transactions (Prohibition)
Act, 1988 (45 of 1988) and the rules made thereunder.

ii The Company is not declared wilful defaulter by any bank or financial Institution or government or any government

authority

iii The Company has no transactions with companies struck off under section 248 of the Companies Act, 2013 or

section 560 of Companies Act, 1956.

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

v The Company has not entered into any scheme of arrangement which has an accounting impact on current or
previous financial year.

vi 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:

(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.

vii 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

viii There is no income surrendered or disclosed as income during the current or previous year in the tax assessments
under the Income Tax Act, 1961, that has not been recorded in the books of account.

ix The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.

x The Company has not revalued its Property, Plant and Equipment (including Right-of-Use Assets) or intangible
assets or both during the current or previous year.

xi The title deeds of all the immovable property (other than properties where the Company is the lessee and the
lease agreements are duly executed in favour of the lessee) are held in the name of the Company.

xii There are no charges or satisfaction which are yet to be registered with ROC beyond the statutory period.

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Mar 31, 2025

Rights, preferences and restrictions attaching to each class of shares including restrictions on the distribution of dividends and the repayment of capital

The company has equity shares having a par value of Rs.10 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. 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.

Note on bonus of shares

The Board of Directors of the Company, at its meeting held on 17th August, 2023 had approved reclassification of authorized share capital of ?18,00,00,000/- divided into ?11,00,00,000/- comprising of 1,10,00,000 Equity shares of ?10/- each and ?7,00,00,000/- comprising of 70,00,000 Preference shares of Rs.10/- each to ^18,00,00,000/- divided into 1,80,00,000 Equity Shares of ?10/-, which was approved by the shareholders by means of a special resolution dated September 5, 2023.

Post reclassification of the existing authorised share capital of the company, the Board of Directors at its meeting held on 17th August, 2023 had approved the bonus issue of three new equity share for every one share held on record date, which was approved by the shareholders by means of an Special resolution dated 5th September, 2023. The record date for the bonus issue is 27th September, 2023. The sum of ? 75.37 Million by capitalisation of profits transferred from security premium amounting to ? 60.73 Million and capital reserve amounting to ? 15 Million. The company had allotted 75,83,688 equity shares of ? 10 each by way of bonus issue to its shareholders in ratio of 3:1 effective 27th September, 2023.

The Shareholders of the Company had approved on 14th January, 2022 an Employee Stock Option Scheme (“Gala ESOP 2021”), formulated by the Company, under which the Company issued upto 50,000 options to its permanent employees, including Wholetime Directors of the Company. The Gala ESOP 2021 is administered by the Board of Directors of the Company.

As per the scheme, the number of shares that will vest is conditional upon length of service, grades, salary cost of the employee to the Company, performance appraisals and / or any other factors as determined by Committee. The vesting period shall be 5 years from the grant date i.e. 14th January 2022. The options granted under this scheme is exercisable by employees till five years from date of its vesting. The Company has granted options at an exercise price of Rs. 350. At grant date, the estimated fair value of stock options granted under Gala ESOP 2021 is Rs. 350. The fair valuation of stock options have been done by an independent valuer using Income Approach Method. The details of stock options granted and key assumptions taken into account for fair valuation are as under:

* As per the scheme, in case of issue of bonus shares by the company, number of options granted shall be adjusted in the same proportion as the bonus being declared. Accordingly, number of options granted have been proportionately increased in ratio of bonus issue i.e. 3:1

The Shareholders of the Company had approved on 06th August, 2024 an Employee Stock Option Scheme (“Gala ESOP 2024”), formulated by the Company, under which the Company issued upto 300,000 options to its Wholetime Directors of the Company. The Gala ESOP 2024 is administered by the Board of Directors / Nomination and remuneration committee of the Company

As per the scheme, the number of shares that will vest is conditional upon length of service, grades, salary cost of the employee to the Company, performance appraisals and / or any other factors as determined by Committee. The vesting period shall be 6 years from the grant date i.e. 06th August 2024. The options granted under this scheme is exercisable by employees till five years from date of its vesting. The Company has granted options at an exercise price of Rs. 530. At grant date, the estimated fair value of stock options granted under Gala ESOP 2024 is Rs. 530. The fair valuation of stock options have been done by an independent valuer using Income Approach Method. The details of stock options granted

A. Capital Management

For the purpose of Company''s capital management, capital includes Issued Equity capital, Securities premium, and all other equity reserves attributable to the Equity Holders of the Company. The primary objective of the Company''s capital management is to maximise the shareholder''s value.

The Company manages its capital structure and makes adjustments in the light of changes in economic conditions and requirements of the financial covenants and to continue as a going concern. The Company monitors using a gearing ratio which is net debts divided by total capital plus net debt. The company includes within net debt, interest bearing loans and borrowings, less cash and short term deposit.

B. Financial Risk Management

The Company''s principal financial liabilities comprise loans and borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the operations of the Company. The principal financial assets include trade and other receivables and cash and short term deposits.

The Company has assessed market risk, credit risk and liquidity risk to its financial liabilities.

i) Market Risk

Market Risk is the risk of loss of future earnings, fair values or cash flows that may result from a change in the price of a financial instrument, as a result of interest rates, foreign exchange rates and other price risks. Financial instruments affected by market risks, primarily include loans And borrowings and foreign currency receivables and payables

Interest Rate Risks

The Company borrows funds in Indian Rupees to meet both the long term and short term funding requirements. Interest rate is fixed for the tenor of the Long term loans availed by the Company. Interest on Short term borrowings is subject to floating interest rate and are repriced regularly. The sensitivity analysis detailed below have been determined based on the exposure to variable interest rates on the average outstanding amounts due to bankers over a year

Fair value sensitivity analysis for fixed rate instruments

The Company measures its fixed rate financial liabilities at amortized cost and does not designate these liabilities at fair value through profit or loss (FVTPL). Consequently, any changes in market interest rates at the reporting date would not directly affect the Company''s profit or loss, as the interest expense is based on the fixed effective interest rate.

Cash flow sensitivity analysis for variable-rate instruments

A reasonably possible change of 100 basis points in interest rate would have resulted in variation in the interest expense for the Company by

Cash flow sensitivity analysis for variable-rate instruments

A reasonably possible change of 100 basis points in interest rate would have resulted 217 404

in variation in the interest expense for the Company by

Foreign currency risks

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate due to changes in foreign exchange rates. The Company enters into forward exchange contracts to hedge its foreign currency exposures. Foreign currency risks from financial instruments at the end of the reporting period expressed in INR :

Price Risks

More than One-third of the Company''s revenues are generated from exports and the raw materials are procured through import and local purchases where local purchases track import parity price. The Company is affected by the price stability of certain commodities. Due to the significantly increased volatility of certain commodities, the Company enters into contract with the customers that has provision to pass on the change in the raw material prices and also the volatility in the exchange rate. The Company has a risk management framework aimed at prudently managing the risk arising from the volatility in commodity prices and freight costs. The Company hedges 65-70% of its export collections through plain vanilla forward covers.

ii) Credit Risk

Credit Risk is the risk that a counter party will default on its contractual obligations resulting in a financial loss to the Company. It arises from credit exposure to customers and Balances with Banks.

The Company holds cash and cash equivalents with banks which are having highest safety rankings and hence has a low credit risk.

The Company''s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the customer, including the default risk of the industry and country in which the customer operates, also has an influence on credit risk assessment. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. The Company has taken insurance cover for overseas debtors through ECGC but has not taken any insurance cover for local debtors. The company uses Expected Credit Loss (ECL) Model to assess the impairment loss or gain. The outstanding trade receivables due for a period exceeding 180 days as at the year ended 31 March 2025 is as follows.

iii) Liquidity Risk

The Company manages liquidity risk by maintaining adequate surplus, banking facilities and reserve borrowings facilities by continuously monitoring forecasts and actual cash flows.

The Company has obtained fund and non-fund based working capital lines from various banks. The Company monitors funding options available in the debt and capital markets with a view to maintaining financial flexibility

All payments are made along due dates and requests for early payments are entertained after due approval and availing early payment discounts.

The Company has a system of forecasting rolling one month cash inflow and outflow and all liquidity requirements are planned.

Exposure to liquidity risk:

The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted, and include estimated interest payments.

Note 29

Fair values and hierarchy

This section explains the judgements and estimates made in determining the fair values of the financial instruments that are

a) recognised and measured at fair value and

b) measured at amortised cost and for which fair values are disclosed in the standalone 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 in the Indian Accounting Standard.

The management assessed that fair value of trade receivables, cash and cash equivalents, recoverable from customers,

other short-term financial assets, short term borrowings, trade payables and other short-term financial liabilities approximate

their carrying amounts largely due to the short-term maturities of these instruments.

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

a. Term deposits- The fair value of term deposits is equal to carrying value since they are carrying market interest rates as per the banks.

b. Foreign exchange forward contracts- Foreign exchange forward contracts are valued using valuation techniques, which employs the use of market observable inputs. The most frequently applied valuation techniques include forward pricing

c. Non-current borrowings - The fair value of non-current borrowings is estimated by discounting future cash flows using rates currently available for debt on similar terms, credit risk and remaining maturities. The carrying value and fair value of the borrowings has been considered the same since the existing interest rate approximates its fair value.

d. Others- For other financial assets and liabilities that are measured at fair value, the carrying amounts are equal to the fair values.

d) Terms and conditions of transactions with related parties;

The transactions with related parties are made on terms equivalent to those that prevail in arm''s length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. For the year ended 31 March, 2025, and 31 March 2024, the Company has not recorded any impairment of receivables relating to amounts owed by related parties. This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.

*A patent infringement suit was filed by Nord-Lock AB & Nord-Lock (India) Pvt. Ltd. against Erstwhile Gala Precision Engineering Pvt. Ltd. & Gala Fasteners Pvt. Ltd. Infringement of patents related to Wedge-Lock technology washers and involves the manufacture, sale, and advertisement of ‘Gallock Washers'' by Gala Precision Engineering. The Plaintiffs'' have reserved their rights to enhance their claim amount at a later stage taking into account the Defendants'' total sales revenue for all the infringing products sold during the entire period of infringement, which will be assessed after the trial takes place.As the matter is currently under litigation, it is not possible to estimate the financial outcome at this stage. Consequently, no provision has been made in the financial statements in relation to this lawsuit.

k) The Company had undergone a strategic transfer of its investments in subsidiary Gala Precision Components (Shanghai) Private Limited (Gala China) to its group company Gala Springs LLP at a nominal value of Rs. 1 Million. Consequently, the remaining investment amount of Rs. 73.57 Million was written off in the books. Simultaneously, the Company had taken proactive steps to transfer its China business to its distributor. Going forward, the Company intended to sell products to the local distributor, who would then sell to Chinese customers. However, as of March 2024, the Company has initiated winding-up proceedings for Gala China. Given the ongoing winding-up process and the shift in business strategy to a distributor model, the Company has decided to write off the outstanding receivables amounting to Rs. 41.28 Million due from Gala China.

l) Discontinued Operations:

On 22nd June, 2022, the Board of Directors ratified the decision of the management to dispose of Company''s Surface Engineering Solutions division, which was also a separate segment as per Ind AS 108 Segment Reporting. The disposal is consistent with the Company''s long-term strategy to focus its activities in the areas of Springs, Parts, Fasteners and Assemblies, and to divest unrelated activities.

The Company sold the Intangible assets of SES business relating to Deburring & Polishing Systems & related Media Chemicals and remaining Property, Plant & Equipment has been put to use for other business units during the year ended 31st Mar, 2024. The amounts of other assets comprising of “Assets and Liabilities” are regular business transactions which in view of the management are likely to be settled or disposed in due course of time. On 31st May,

2022, the Company signed a contract to sell the SES Division to S M Systems Pvt Ltd for Rs. 30 Million.In October

2023, the Company signed a contract with Gala Finishing Solutions Pvt. Ltd. for Rs. 3.50 Million.

As per Management, only those income & expenses directly attributable to the discontinued/(P.Y. - discontinuing) operations are considered for disclosure

m) Notes on IPO Proceeds

The equity shares of the Company had been listed on National Stock Exchange (“NSE”) and on BSE Limited (“BSE”) on September 09, 2024 by completing Initial Public Offer (“the IPO”) of 31,74,416 equity shares of face value of Rs. 10 each at an issue price of Rs. 529 per equity share (including share premium of Rs. 519 per equity share) consisting of a fresh issue of 25,58,416 equity shares and an offer for sale of 6,16,000 equity shares.

The Company has incurred Rs. 175.01 million as IPO related expenses and allocated such expenses between the Company (Rs. 141.05 million has been adjusted of the securities premium account) and selling shareholders (Rs. 33.96 million) in proportion to the equity shares allotted to the public as fresh issue by the Company and under the offer for sale by selling sharcholders respectively. The Company has an amount of Rs. 1212.35 million (net of IPO expenses of Rs. 141.05 million) from proceeds out of fresh issue of equity shares. The utilisation of the net IPO proceeds is summarised below.

n) Disclosure required by section 186(4) of the Companies Act,2013 :

1. Details of Investments made are given in Note 3

2. Amount of Loans and advances in the nature of loans outstanding from /to subsidiaries Rs Nil (Previous year Rs Nil)

3. Loans to employees have been considered to be outside the purview of disclosure requirements.

4. Investment by Loanee in the shares of the Parent company- Nil ( Previous year Nil)

o) Additional regulatory information required by Schedule III

i No proceedings have been initiated or pending against the Company under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and the rules made thereunder

ii The Company is not declared wilful defaulter by any bank or financial Institution or government or any government authority

iii The Company has no transactions with companies struck off under section 248 of the Companies Act, 2013 or section 560 of Companies Act, 1956.

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

v The Company has not entered into any scheme of arrangement which has an accounting impact on current or previous financial year.

vi 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:

(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

vii 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

viii There is no income surrendered or disclosed as income during the current or previous year in the tax assessments under the Income Tax Act, 1961, that has not been recorded in the books of account.

ix The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year

x The Company has not revalued its Property, Plant and Equipment (including Right-of-Use Assets) or intangible assets or both during the current or previous year.

xi The title deeds of all the immovable property (other than properties where the Company is the lessee and the lease agreements are duly executed in favour of the lessee) are held in the name of the “Gala Precision Engineering Pvt Ltd”. The Company has been converted from Private Limited Company to a Public Limited Company on October 3, 2023. The Company is in the process of getting the title deeds endorsed in the name of “Gala Precision Engineering Limited” from “Gala Precision Engineering Pvt Limited” for all the land and building

xii There are no charges or satisfaction which are yet to be registered with ROC beyond the statutory period.

---

Mar 31, 2024

Rights, preferences and restrictions attaching to each class of shares including restrictions on the distribution of dividends and the repayment of capital

The company has equity shares having a par value of Rs.10 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. 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.

Note on bonus of Shares

The Board of Directors of the Company, at its meeting held on 17th August, 2023 had approved reclassification of authorized share capital of ?18,00,00,000/- divided into ^11,00,00,000/- comprising of 1,10,00,000 Equity shares of ?10/- each and ?7,00,00,000/- comprising of 70,00,000 Preference shares of Rs.10/- each to ?18,00,00,000/- divided into 1,80,00,000 Equity Shares of ?10/-, which was approved by the shareholders by means of a special resolution dated September 5, 2023.

Post reclassification of the existing authorised share capital of the company, the Board of Directors at its meeting held on 17th August, 2023 had approved the bonus issue of three new equity share for every one share held on record date, which was approved by the shareholders by means of an Special resolution dated 5th September, 2023. The record date for the bonus issue is 27th September, 2023. The sum of ? 75.37 Million by capitalisation of profits transferred from security premium amounting to ? 60.73 Million and capital reserve amounting to ? 15 Million. The company had allotted 75,83,688 weighted average number of equity shares of ? 10 each by way of bonus issue to its shareholders in ratio of 3:1 effective 27th September, 2023

The Shareholders of the Company had approved on 14th January, 2022 an Employee Stock Option Scheme ("Gala ESOP 2021"), formulated by the Company, under which the Company issued upto 50,000 options to its permanent employees, including Wholetime Directors of the Company. The Gala ESOP 2021 is administered by the Board of Directors of the Company

As per the scheme, the number of shares that will vest is conditional upon length of service, grades, salary cost of the employee to the Company, performance appraisals and / or any other factors as determined by Committee. The vesting period shall be 5 years from the grant date i.e. 14th January 2022. The options granted under this scheme is exercisable by employees till five years from date of its vesting. The Company has granted options at an exercise price of Rs. 350. At grant date, the estimated fair value of stock options granted under Gala ESOP 2021 is Rs. 350. The fair valuation of stock options have been done by an independent valuer using Income Approach Method. The details of stock options granted and key assumptions taken into account for fair valuation are as under:

Note 28 (a)- Transition to Ind AS - Reconciliations

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

i. Reconciliation of balance sheet as at 31 March 2023 and 31 March 2022

ii. Reconciliation of Total Comprehensive Income for the year ended March 31, 2023

iii. Adjustment to Statement of Cash Flows

On account of transition to Ind AS, there is no material adjustment to the Statement of Cash Flows

The presentation requirments under previous GAAP differs from Ind AS and hence previous GAAP infromation has been regrouped for ease of reconciliation with Ind AS.The regrouped previous GAAP information is derived from the Financial Statements of the Company prepared in accordance with Previous GAAP

i Revenue Recognition - Ind AS 115

Under Indian GAAP, variable consideration i.e. discounts on Sales was recorded under Other Expenses. Under Ind-AS, revenue from oeprations is to be recognised net of variable considerations.

ii Non Current Liabilities

The Company has elected to measure certain deposits at fair Value at the date of transition to IND AS. Accordingly, as at 31st March, 2023 a decrease of Rs.0.07 Million for the period ended 31st March 2023 has been recognised as an income on amortisation of fair value of the financial liability

iii Defined Benefit Obligation:

Both under previous GAAP and Ind-AS, the Group recognised costs related to its post-employment defined benefit plan on an actuarial basis. Under Indian GAAP, the entire cost, including actuarial gains and losses, are charged to statement of profit and loss. Under Ind-AS, re-measurements comprising of actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions, the effect of change in asset ceiling (if applicable) and the return on plan assets (excluding net interest) are recognised immediately in the balance sheet with a corresponding debit or credit to retained earnings through Other Comprehensive Income (OCI). Thus, the employee benefit cost is reduced by Rs. 2.88 Million and deferred tax thereon of Rs. 0.72 Million for 2022-23 and re-measurement losses on defined benefit plans has been recognised in the Other Comprehensive Incomes (net of tax)

Note 28 (d) - Reconciliation of Total Comprehensive Income for the year ended 31 March 2023

iv Ind AS 116

The company has recognised lease liability and ROU assets. Lease payments are allocated between principal and finance cost. The finance cost of Rs. 6.10 Lacs is charged to Statement of Profit and Loss over the lease period. ROU assets are depreciated on a straight-line basis over the asset''s useful life. Deferred Tax thereon has been recognised. Actual rent expenses debited to P&L is reversed.

v Prior period Adjustments

In accordance with Ind AS, prior-period expenses/income are recognised in a year in which it related. Accordingly, deferred tax reversal has been recognised in the year ended 31.3.2022 instead of year ended 31.03.2023

Note 29

A. Capital Management

For the purpose of Company''s Capital Management, capital includes Issued Equity Capital, Securities Premium, and all other Equity Reserves attributable to the Equity Holders of the Company. The primary objective of the Company''s Capital Management is to maximise the Share Holder Value.

The Company manages its capital structure and makes adjustments in the light of changes in economic conditions and requirements of the financial covenants and to continue as a going concern. The Company monitors using a gearing ratio which is net debts divided by total capital plus net debt. The company includes within net debt, interest bearing loans and borrowings, less cash and short term deposit.

B. Financial Risk Management

The Company''s principal financial liabilities comprise loans and borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the operations of the Company. The principal financial assets include trade and other receivables and cash and short term deposits.

The Company has assessed market risk, credit risk and liquidity risk to its financial liabilities.

i) Market Risk

Market Risk is the risk of loss of future earnings, fair values or cash flows that may result from a change in the price of a financial instrument, as a result of interest rates, foreign exchange rates and other price risks. Financial instruments affected by market risks, primarily include loans And borrowings and foreign currency receivables and payables

Interest Rate Risks

The Company borrows funds in Indian Rupees to meet both the long term and short term funding requirements. Interest rate is fixed for the tenor of the Long term loans availed by the Company. Interest on Short term borrowings is subject to floating interest rate and are repriced regularly. The sensitivity analysis detailed below have been determined based on the exposure to variable interest rates on the average outstanding amounts due to bankers over a year

Fair value sensitivity analysis for fixed rate instruments

The Company measures its fixed rate financial liabilities at amortized cost and does not designate these liabilities at fair value through profit or loss (FVTPL). Consequently, any changes in market interest rates at the reporting date would not directly affect the Company''s profit or loss, as the interest expense is based on the fixed effective interest rate.

Cash flow sensitivity analysis for variable-rate instruments

A reasonably possible change of 100 basis points in interest rate would have resulted in variation in the interest expense for the Company by 5.39 5.79 5.61

Foreign Currency Risks

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate due to changes in foreign exchange rates. The Company enters into forward exchange contracts to hedge its foreign currency exposures. Foreign currency risks from financial instruments at the end of the reporting period expressed in INR :

Price Risks

More than One-third of the Company''s revenues are generated from exports and the raw materials are procured through import and local purchases where local purchases track import parity price. The Company is affected by the price stability of certain commodities. Due to the significantly increased volatility of certain commodities, the Company enters into contract with the customers that has provision to pass on the change in the raw material prices and also the volatility in the exchange rate. The Company has a risk management framework aimed at prudently managing the risk arising from the volatility in commodity prices and freight costs. The Company hedges 65-70% of its export collections through plain vanilla forward covers.

ii) Credit Risk

Credit Risk is the risk that a counterparty will default on its contractual obligations resulting in a financial loss to the Company. It arises from credit exposure to customers and Balances with Banks.

The Company holds cash and cash equivalents with banks which are having highest safety rankings and hence has a low credit risk.

The Company''s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the customer, including the default risk of the industry and country in which the customer operates, also has an influence on credit risk assessment. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. The Company has taken insurance cover for overseas debtors through ECGC but has not taken any insurance cover for local debtors. The company uses Expected Credit Loss (ECL) Model to assess the impairment loss or gain. The outstanding trade receivables due for a period exceeding 180 days as at the year ended 31 March 2024 is as follows

iii) Liquidity Risk

The Company manages liquidity risk by maintaining adequate surplus, banking facilities and reserve borrowings facilities by continuously monitoring forecasts and actual cash flows.

The Company has obtained fund and non-fund based working capital lines from various banks. The Company monitors funding options available in the debt and capital markets with a view to maintaining financial flexibility

All payments are made along due dates and requests for early payments are entertained after due approval and availing early payment discounts.

The Company has a system of forecasting rolling one month cash inflow and outflow and all liquidity requirements are planned.

Exposure to liquidity risk:

The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted, and include estimated interest payments

Note 30

Fair Values and Hierarchy

This section explains the judgements and estimates made in determining the fair values of the financial instruments that are a) recognised and measured at fair value and b) measured at amortised cost and for which fair values are disclosed in the Standalone 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 in the Indian Accounting Standard.

The management assessed that fair value of trade receivables, cash and cash equivalents, security deposits, recoverable from customers, other short-term financial assets, shortCterm borrowings, trade payables and other short-term financial liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments

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

a. Term deposits- The fair value of term deposits is equal to carrying value since they are carrying market interest rates as per the banks.

b. Foreign exchange forward contracts- Foreign exchange forward contracts are valued using valuation techniques, which employs the use of market observable inputs. The most frequently applied valuation techniques include forward pricing

c. Non-current borrowings - The fair value of non-current borrowings is estimated by discounting future cash flows using rates currently available for debt on similar terms, credit risk and remaining maturities. The carrying value and fair value of the borrowings has been considered the same since the existing interest rate approximates its fair value

d. Others- For other financial assets and liabilities that are measured at fair value, the carrying amounts are equal to the fair values

Business Segments: For management purposes, the company is organised on a worldwide basis into two major operating divisions - Springs, Parts and Assemblies and Surface Engineering Solutions. The divisions are the basis on which the company reports its primary segment information. The Springs, Parts and Assemblies segment produces a broad range of disc springs for wind mill, transformers, turbines, railways, automotives and off high way vehicles. The Surface Engineering Solutions segment manufactures centrifugal finishing machines, washing systems and media chemicals.During the year, the company has sold the Intangible assets of Surface Engineering Solutions business relating to Deburring & Polishing Systems & related Media Chemicals and remaining Property, Plant & Equipment has been put to use for other business units during the year ended 31st Mar, 2023 and hence the said division is discontinued

Geographical segments: The company''s operating divisions are managed from India . In India, its home country, the company produces and sells a broad range of disc springs, coil springs, fastening solutions, washers, media chemical and machines and washing systems.

The company has disclosed Geographical Segment as the secondary segment.

Sales by market: The following table shows the distribution of the company''s sales and service income by geographical market.

* A patent infringement suit was filed by Nord-Lock AB & Nord-Lock (India) Pvt. Ltd. against Gala Precision Engineering Pvt. Ltd. & Gala Fasteners Pvt. Ltd. Infringement of patents related to Wedge-Lock technology washers and involves the manufacture, sale, and advertisement of ''Gallock Washers'' by Gala Precision Engineering. The Plaintiffs'' have reserved their rights to enhance their claim amount at a later stage taking into account the Defendants'' total sales revenue for all the infringing products sold during the entire period of infringement, which will be assessed after the trial takes place.As the matter is currently under litigation, it is not possible to estimate the financial outcome at this stage. Consequently, no provision has been made in the financial statements in relation to this lawsuit.

k) During the year ended 31st March, 2023, the Company has completed the sale of the land and building located at Thane. The decision to sell the property was based on Company''s strategic objectives, including optimizing its asset portfolio and reallocating resources to support its core business activities. Considering the significance of this transaction, the gain from the sale has been classified as an exceptional item and separately disclosed.

l) Discontinuing Operations:

On 22nd June, 2022, the Board of Directors ratified the decision of the management to dispose of Company''s Surface Engineering Solutions division, which is also a separate segment as per AS 17, Segment Reporting. The disposal is consistent with the Company''s long-term strategy to focus its activities in the areas of Springs, Parts, Fasteners and Assemblies, and to divest unrelated activities.

The Company sold the Intangible assets of SES business relating to Deburring & Polishing Systems & related Media Chemicals and remaining Property, Plant & Equipment has been put to use for other business units during the year ended 31st Mar, 2024. The amounts of other assets comprising of "Assets and Liabilities" are regular business transactions which in view of the management are likely to be settled or disposed in due course of time. On 31st May, 2022, the Company signed a contract to sell the SES Division to S M Systems Pvt Ltd for Rs. 30 Million.In October 2023, the Company signed a contract with Gala Finishing Solutions Pvt. Ltd. for Rs. 3.50 Million

m) The Company has undergone a strategic transfer of its investments in subsidiary Gala Precision Components (Shanghai) Private Limited (Gala China) to its group company Gala Springs LLP at a nominal value of Rs. 1 Million. Consequently, the remaining investment amount of Rs. 73.57 Million was written off in the books. Simultaneously, the Company had taken proactive steps to transfer its China business to its distributor. Going forward, the Company intended to sell products to the local distributor, who would then sell to Chinese customers. However, as of March 2024, the Company has initiated winding-up proceedings for Gala China. Given the ongoing winding-up process and the shift in business strategy to a distributor model, the Company has decided to write off the outstanding receivables amounting to Rs. 41.28 Million due from Gala China.

n) Disclosure required by section 186(4) of the Companies Act,2013 :

1. Details of Investments made are given in Note 3

2. Amount of Loans and advances in the nature of loans outstanding from /to subsidiaries Rs Nil (Previous year Rs Nil)

3. Loans to employees have been considered to be outside the purview of disclosure requirements.

4. Investment by Loanee in the shares of the Parent company- Nil ( Previous year Nil)

o) Additional regulatory information required by Schedule III

i No proceedings have been initiated or pending against the Company under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and the rules made thereunder

ii The Company is not declared wilful defaulter by any bank or financial Institution or government or any government authority

iii The Company has no transactions with companies struck off under section 248 of the Companies Act, 2013 or section 560 of Companies Act, 1956.

iv The Company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with the Companies (Restriction on number of layers)

Rules 2017

v The Company has not entered into any scheme of arrangement which has an accounting impact on current or previous financial year.

vi 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:

(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

vii 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

viii There is no income surrendered or disclosed as income during the current or previous year in the tax assessments under the Income Tax Act, 1961, that has not been recorded in the books of account.

ix The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year

x The Company has not revalued its Property, Plant and Equipment (including Right-of-Use Assets) or intangible assets or both during the current or previous year.

xi The title deeds of all the immovable property (other than properties where the Company is the lessee and the lease agreements are duly executed in favour of the lessee) are held in the name of the Company.

xii There are no charges or satisfaction which are yet to be registered with ROC beyond the statutory period.