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అకౌంట్స్ గమనికలుMV Electrosystems Ltd.
o. Provisions
A provision is recognised when an enterprise has a present
obligation as a result of past event and it is probable
that an outflow of resources will be required to settle the
obligation, in respect of which a reliable estimate can be
made. If the effect of time value of money is material,
provisions are discounted using a pre-tax rate that reflects
when appropriate, the risks specific to the liability.
p. Retirement and other employee benefits
(i) Retirement benefit in the form of provident fund is a
defined contribution scheme. The Company has no
obligation, other than the contribution payable to the
provident fund. The Company recognizes contribution
payable to the provident fund scheme as an expense,
when an employee renders the related service. If
the contribution payable to the scheme for service
received before the balance sheet date exceeds the
contribution already paid, the deficit payable to the
scheme is recognized as a liability after deducting the
contribution already paid. If the contribution already
paid exceeds the contribution due for services
received before the balance sheet date, then excess
is recognized as an asset to the extent that the pre¬
payment will lead to, for example, a reduction in future
payment or a cash refund.
(ii) Gratuityis a defined benefit plan and provision is
being made on the basis of actuarial valuation carried
out by an independent actuary at the year-end using
projected unit credit method.
Remeasurements, comprising of actuarial gains
and losses, the effect of the asset ceiling, excluding
amounts included in net interest on the net defined
benefit liability and the return on plan assets
(excluding amounts included in net interest on the net
defined benefit liability), are recognised immediately
in the balance sheet with a corresponding debit
or credit to retained earnings through OCI in the
period in which they occur. Remeasurements are not
reclassified to profit or loss in subsequent periods.
Past service costs are recognised in profit or loss on
the earlier of:
⢠The date of the plan amendment or
curtailment, and
⢠The date that the Group recognises related
restructuring costs
⢠Net interest is calculated by applying the
discount rate to the net defined benefit liability
or asset. The Group recognises the following
changes in the net defined benefit obligation
as an expense in the consolidated statement of
profit and loss:
⢠Service costs comprising current service
costs, past-service costs, gains and losses on
curtailments and non-routine settlements; and
⢠Net interest expense or income
Compensated Absences
Accumulated leave which is expected to be utilized within
the next 12 months, is treated as short-term employee
benefit. The Company measures the expected cost of such
absences as the additional amount that it expects to pay
as a result of the unused entitlement that has accumulated
at the reporting date.
The Company treats accumulated leave expected to be
carried forward beyond twelve months, as long-term
employee benefit for measurement purposes. Such long¬
term compensated absences are provided for based on the
actuarial valuation using the projected unit credit method
at the year-end. Actuarial gains/losses are immediately
taken to statement of Profit and Loss in the period in
which they occur.
A financial instrument is any contract that gives rise to
a financial asset of one entity and a financial liability or
equity instrument of another entity.
Financial assets
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. Purchases or sales
of financial assets that require delivery of assets within
a time frame established by regulation or convention in
the market place (regular way trades) are recognised on
the trade date, i.e. the date that the Company commits to
purchase or sell the asset.
Subsequent measurement
For purposes of subsequent measurement, financial
assets are classified in four categories:
⢠Debt instruments at amortised cost
⢠Debt instruments at fair value through other
comprehensive income (FVTOCI)
⢠Debt instruments, derivatives and equity instruments
at fair value through profit or loss (FVTPL)
⢠Equity instruments measured at fair value through
other comprehensive income (FVTOCI)
Debt instruments at amortised cost
A ''debt instrumentâ is measured at the amortised cost if
both the following conditions are met:
a) The asset is held within a business model whose
objective is to hold assets for collecting contractual
cash flows, and
b) Contractual terms of the asset give rise on specified
dates to cash flows that are solely payments
of principal and interest (SPPI) on the principal
amount outstanding.
After initial measurement, such financial assets are
subsequently measured at amortised cost using the
effective interest rate (EIR) method. Amortised 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 amortisation is included in finance income
in the profit or loss. The losses arising from impairment are
recognised in the profit or loss.
Debt instrument at FVTPL
FVTPL is a residual category for debt instruments. Any
debt instrument, which does not meet the criteria for
categorization as at amortized cost or as FVTOCI, is
classified as at FVTPL.
In addition, the Company may elect to designate a debt
instrument, which otherwise meets amortized cost or
FVTOCI criteria, as at FVTPL. However, such election
is allowed only if doing so reduces or eliminates a
measurement or recognition inconsistency (referred to as
''accounting mismatchâ). The Company has not designated
any debt instrument as at FVTPL.
Debt instruments included within the FVTPL
category are measured at fair value with all changes
recognized in the P&L.
Equity investments
All equity investments in scope of Ind AS 109 are measured
at fair value. Equity instruments which are held for trading
and contingent consideration recognised by an acquirer in
a business combination to which Ind AS103 applies are
classified as at FVTPL. For all other equity instruments,
the Company may make an irrevocable election to present
in other comprehensive income subsequent changes in
the fair value. The Company makes such election on an
instrument-by-instrument basis. The classification is made
on initial recognition and is irrevocable.
If the Company decides to classify an equity instrument as
at FVTOCI, then all fair value changes on the instrument,
excluding dividends, are recognized in the OCI. There is no
recycling of the amounts from OCI to P&L, even on sale
of investment. However, the Company may transfer the
cumulative gain or loss within equity.
Equity instruments included within the FVTPL
category are measured at fair value with all changes
recognized in the P&L.
Derecognition
A financial asset (or, where applicable, a part of a financial
asset or part of a Company of similar financial assets) is
primarily derecognised (i.e. removed from the Companyâs
balance sheet) when:
⢠Rights to receive cash flows from the asset
have expired, or
⢠The Company has transferred its rights to receive
cash flows from the asset or has assumed an
obligation to pay the received cash flows in full
without material delay to a third party under a ''pass¬
throughâ arrangement; and either (a) the Company has
transferred substantially all the risks and rewards of
the asset, or (b) the Company has neither transferred
nor retained substantially all the risks and rewards of
the asset, but has transferred control of the asset.
When the Company has transferred its rights to receive
cash flows from an asset or has entered into a pass¬
through arrangement, it evaluates if and to what extent it
has retained the risks and rewards of ownership. When
it has neither transferred nor retained substantially all of
the risks and rewards of the asset, nor transferred control
of the asset, the Company continues to recognise the
transferred asset to the extent of the Companyâs continuing
involvement. In that case, the Company also recognises
an associated liability. The transferred asset and the
associated liability are measured on a basis that reflects
the rights and obligations that the Company has retained.
Continuing involvement that takes the form of a guarantee
over the transferred asset is measured at the lower of the
original carrying amount of the asset and the maximum
amount of consideration that the Company could be
required to repay.
Impairment of financial assets
In accordance with Ind AS 109, the Company applies
expected credit loss (ECL) model for measurement and
recognition of impairment loss on the financial assets. The
Company follows ''simplified approachâ for recognition of
impairment loss allowance on Trade receivables.
The application of simplified approach does not require
the Company to track changes in credit risk. Rather, it
recognises impairment loss allowance based on lifetime
ECLs at each reporting date, right from its initial recognition.
For recognition of impairment loss on other financial
assets and risk exposure, the Company determines that
whether there has been a significant increase in the
credit risk since initial recognition. If credit risk has not
increased significantly, 12-month ECL is used to provide
for impairment loss. However, if credit risk has increased
significantly, lifetime ECL is used. If, in a subsequent
period, credit quality of the instrument improves such that
there is no longer a significant increase in credit risk since
initial recognition, then the entity reverts to recognising
impairment loss allowance based on 12-month ECL.
Lifetime ECL are the expected credit losses resulting
from all possible default events over the expected life of
a financial instrument. The 12-month ECL is a portion of
the lifetime ECL which results from default events that are
possible within 12 months after the reporting date.
ECL is the difference between all contractual cash flows
that are due to the Company in accordance with the contract
and all the cash flows that the entity expects to receive (i.e.,
all cash shortfalls), discounted at the original EIR. When
estimating the cash flows, an entity is required to consider:
⢠All contractual terms of the financial instrument
(including prepayment, extension, call and similar
options) over the expected life of the financial
instrument. However, in rare cases when the expected
life of the financial instrument cannot be estimated
reliably, then the entity is required to use the remaining
contractual term of the financial instrument
⢠Cash flows from the sale of collateral held or
other credit enhancements that are integral to the
contractual terms
ECL impairment loss allowance (or reversal) recognized
during the period is recognized as income/ expense in the
statement of profit and loss (P&L). This amount is reflected
under the head ''other expensesâ in the P&L.
Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as
financial liabilities at fair value through profit or loss, loans
and borrowings, trade and other payables.
All financial liabilities are recognised initially at fair value
and, in the case of loans and borrowings and payables, net
of directly attributable transaction costs.
The Companyâs financial liabilities include trade and other
payables, loans and borrowings including cash credit and
financial guarantee contracts.
Subsequent measurement
The measurement of financial liabilities depends on their
classification, as described below:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include
financial liabilities held for trading and financial liabilities
designated upon initial recognition as at fair value through
profit or loss. Financial liabilities are classified as held for
trading if they are incurred for the purpose of repurchasing
in the near term. This category also includes derivative
financial instruments entered into by the Company that
are not designated as hedging instruments in hedge
relationships as defined by Ind AS 109. Separated embedded
derivatives are also classified as held for trading unless they
are designated as effective hedging instruments.
Gains or losses on liabilities held for trading are recognised
in the statement of profit and loss.
Financial liabilities designated upon initial recognition at
fair value through profit or loss are designated as such at
the initial date of recognition, and only if the criteria in Ind
AS 109 are satisfied. For liabilities designated as FVTPL,
fair value gains/ losses attributable to changes in own
credit risks are recognized in OCI. These gains/ loss are not
subsequently transferred to P&L. However, the Company
may transfer the cumulative gain or loss within equity. All
other changes in fair value of such liability are recognised
in the statement of profit or loss. The Company has not
designated any financial liability as at fair value through
Statement of profit and loss.
Derecognition
A financial liability is derecognised when the obligation
under the liability is discharged or cancelled or expires.
When an existing financial liability is replaced by another
from the same lender on substantially different terms, or
the terms of an existing liability are substantially modified,
such an exchange or modification is treated as the
derecognition of the original liability and the recognition
of a new liability. The difference in the respective carrying
amounts is recognised in the statement of profit or loss.
r. Derivative financial instruments
The Company does not use derivative financial instruments,
such as forward currency contracts to hedge its foreign
currency risks respectively. Any gains or losses arising
from changes in the foreign currency rates are taken
directly to profit or loss in the year of realization /payment
The Company measures financial instruments, such as,
investment at fair value at each balance sheet date.
Fair value is the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date.
The fair value measurement is based on the presumption
that the transaction to sell the asset or transfer the liability
takes place either:
⢠In the principal market for the asset or liability, or
⢠In the absence of a principal market, in the most
advantageous market for the asset or liability
The principal or the most advantageous market must be
accessible by the Company.
The fair value of an asset or a liability is measured using
the assumptions that market participants would use
when pricing the asset or liability, assuming that market
participants act in their economic best interest.
A fair value measurement of a non-financial asset takes
into account a market participant''s ability to generate
economic benefits by using the asset in its highest and
best use or by selling it to another market participant that
would use the asset in its highest and best use.
The Company uses valuation techniques that are
appropriate in the circumstances and for which sufficient
data are available to measure fair value, maximising the
use of relevant observable inputs and minimising the use
of unobservable inputs.
All assets and liabilities for which fair value is measured
or disclosed in the financial statements are categorised
within the fair value hierarchy, described as follows, based
on the lowest level input that is significant to the fair value
measurement as a whole:
⢠Level 1 â Quoted (unadjusted) market prices in active
markets for identical assets or liabilities
⢠Level 2 â Valuation techniques for which the
lowest level input that is significant to the fair value
measurement is directly or indirectly observable
⢠Level 3 â Valuation techniques for which the
lowest level input that is significant to the fair value
measurement is unobservable
For assets and liabilities that are recognised in the
financial statements on a recurring basis, the Company
determines whether transfers have occurred between
levels in the hierarchy by re-assessing categorisation
(based on the lowest level input that is significant to the
fair value measurement as a whole) at the end of each
reporting period.
The Company''s management determines the policies and
procedures for recurring fair value measurement, such
as derivative instruments and unquoted financial assets
measured at fair value.
At each reporting date, the management analyses the
movements in the values of assets and liabilities which
are required to be remeasured or re-assessed as per the
Company''s accounting policies. The management also
compares the change in the fair value of each asset and
liability with relevant external sources to determine whether
the change is reasonable.
For the purpose of fair value disclosures, the Company has
determined classes of assets and liabilities on the basis of
the nature, characteristics and risks of the asset or liability
and the level of the fair value hierarchy as explained above.
As of March 31, 2025 and March 31, 2026 the fair value of
cash and bank balances, trade receivables, other current
financial assets, trade payables and other current financial
liabilities approximate their carrying amount largely due to
the short-term nature of these instruments.
For other financial assets that are measured at amortised
cost, the carrying amounts approximate the fair value.
A contingent liability is a possible obligation that arises
from past events whose existence will be confirmed by the
occurrence or non-occurrence of one or more uncertain
future events beyond the control of the Company or a
present obligation that is not recognised because it is not
probable that an outflow of resources will be required to
settle the obligation. A contingent liability also arises in
extremely rare cases, where there is a liability that cannot
be recognised because it cannot be measured reliably.
The Company does not recognise a contingent liability but
discloses its existence in the financial statements unless
the probability of outflow of resources is remote.
Provisions and contingent liabilities are reviewed at each
balance sheet date.
Cash and cash equivalent in the balance sheet comprise
cash at banks and on hand and short-term deposits with an
original maturity of three months or less, which are subject
to an insignificant risk of changes in value.
For the purpose of the statement of cash flows, cash and
cash equivalents consist of cash and short-term deposits,
as defined above as they are considered an integral part of
the Companyâs cash management.
Basic earnings per share are calculated by dividing the net
profit or loss (after tax) for the year attributable to equity
shareholders by the weighted average number of equity
shares outstanding during the year.
Diluted earnings per share when applicable are calculated
by dividing the net profit or loss (after tax) for the year
attributable to equity shareholders by the weighted
average number of equity shares which would be issued
on the conversion of all the dilutive potential equity shares
into equity shares. Dilutive potential equity shares when
applicable are deemed converted as of the beginning of
the period, unless they have been issued at a later date.
3. Significant accounting judgements, estimates
and assumptions:-
The preparation of the Companyâs financial statements
requires management to make judgements, estimates and
assumptions that affect the reported amounts of revenues,
expenses, assets and liabilities, and the accompanying
disclosures, and the disclosure of contingent liabilities.
Uncertainty about these assumptions and estimates could
result in outcomes that require a material adjustment to
the carrying amount of assets or liabilities affected in
future periods.
Judgements :- In the process of applying the companyâs
accounting policies, management has made the following
judgements, which have the most significant effect on the
amounts recognised in the financial statements
Determining the lease term of contracts with renewal and
termination options - Company as lessee The Company
determines the lease term as the non-cancellable term of
the lease, together with any periods covered by an option to
extend the lease if it is reasonably certain to be exercised,
or any periods covered by an option to terminate the lease,
if it is reasonably certain not to be exercised.
The Company has a lease contracts that include extension
and termination options. The Company applies judgement
in evaluating whether it is reasonably certain whether or
not to exercise the option to renew or terminate the lease.
That is, it considers all relevant factors that create an
economic incentive for it to exercise either the renewal or
termination. After the commencement date, the Company
reassesses the lease term if there is a significant event
or change in circumstances that is within its control and
affects its ability to exercise or not to exercise the option to
renew or to terminate.
Estimates and assumptions: - The key assumptions
concerning the future and other key sources of estimation
uncertainty at the reporting date, that have a significant risk
of causing a material adjustment to the carrying amounts
of assets and liabilities within the next financial year, are
described below. The Company based its assumptions
and estimates on parameters available when the financial
statements were prepared. Existing circumstances and
assumptions about future developments, however, may
change due to market changes or circumstances arising
that are beyond the control of the Company. Such changes
are reflected in the assumptions when they occur.
The cost of the defined benefit plans and other employment
benefits and the present value of the obligation are
determined using actuarial valuation. An actuarial
valuation involves making various assumptions that may
differ from actual developments in the future. These
include the determination of the discount rate, future salary
increases and mortality rates. Due to the complexities
involved in the valuation and its long-term nature, a defined
benefit obligation is highly sensitive to changes in these
assumptions. All assumptions are reviewed at each
reporting date. The parameter most subject to change is the
discount rate. In determining the appropriate discount rate,
management considers the interest rates of government
bonds in currencies consistent with the currencies of the
post-employment benefit obligation. The underlying bonds
are further reviewed for quality. Those having excessive
credit spreads are excluded from the analysis of bonds on
which the discount rate is based, on the basis that they do
not represent high quality corporate bonds.
The mortality rate is based on publicly available mortality
tables. Those mortality tables tend to change only at
intervals in response to demographic changes. Future
salary increases are based on expected future inflation
rates for the country
Further details about defined benefit obligations are
provided in Note 37.
Taxes: - Deferred tax assets are recognised to the extent
that it is probable that taxable profit will be available against
which the losses can be utilised. Significant management
judgement is required to determine the amount of deferred
tax assets that can be recognised, based upon the likely
timing and the level of future taxable profits together with
future tax planning strategies.
4. Recent Accounting Pronouncements:
The Ministry of Corporate Affairs ("MCAâ) notifies new
standards or amendments to the existing standards
under Companies (Indian Accounting Standards) Rules
as issued from time to time. For the year ended March 31,
2026, MCA has amendments primarily focused on liability
classification (Ind AS 1), new disclosure norms for supplier
financing (Ind AS 7/107), and global tax rules (Ind AS 12).
These amendments to the existing standards are not
expected to have a material impact on the company during
the current financial year.
4.1 Inventories are valued at cost or net realisable value whichever is lower except for Raw Materials which are carried at cost where
the finished goods in which they will be incorporated are expected to be sold at or above cost.
Raw Materials, Ancillary Raw Materials and Stores & Spares
Cost comprises the cost of purchase including duties and taxes (other than those subsequently recoverable from the taxing
authorities), freight inward and other costs directly attributable to bringing the inventories to their present location and condition.
The cost of Ancillary Raw Materials and Stores & Spares is determined using the First-In First-Out (FIFO) method.
Work-in-Progress
Cost of Work-in-Progress comprises the cost of raw materials consumed, direct labour and an appropriate allocation of variable
and fixed production overheads incurred in bringing the inventories to their present stage of completion.
Finished Goods
Cost of Finished Goods comprises the cost of raw materials, direct labour and an appropriate allocation of variable and fixed
production overheads incurred in bringing the inventories to their present location and condition. Finished Goods are valued at
the lower of cost and net realisable value.
Terms / Rights attached to equity shares
a) The Company has a single class of Equity Shares having a par value of INR 5 per share (Previous Year INR 10 per share). Each
holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The
dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting
b) The Company has not declared any dividend during the period.
c) In the event of liquidation of the company, the holders of equity share will be eligible to receive remaining assets of the company,
after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by
the shareholders.
d) All the equity shares issued by the Company are fully paid-up and rank pari passu in all respects.
e) The company has not resereved any shares for issue under options and contracts/commitments for the sale of
shares/disinvestmemts
f) For the period of five years immediately precedings the date as at which the Balance Sheet is prepared
i) The company has not allotted any fully paid up shares pursuant to the contract(s) without payment being received in cash.
ii) The company has alloted fully paid up shares in the ratio of 31 shares for every share held by the shareholder in the
Company by way of bonus shares during the FY 2023-24.
iii) The company has not bought back any class of shares
g) During the year, the Company issued 456,100 equity shares on 25th August 2025 at an issue price of ?547 per share aggregating
to ?24,94,86,700/- and 633,500 equity shares on 01st October 2025 at an issue price of ?547 per share aggregating to
?34,65,24,500/-. The aggregate consideration received on issue of the above shares amounted to ?59,60,11,200/-. The excess
of issue price over face value i.e. ?537 per share amounting to ?58,51,15,200 has been credited to Securities Premium.
Subsequently, the Company subdivided its equity shares from face value of ?10 each to ?5 each on 05th November 2025.
Accordingly, the number of equity shares increased from 1,02,29,600 to 2,04,59,200. There is no change in the total paid-up
share capital of the Company.
Securities premium
Where a company issues shares at a premium, whether for cash or otherwise, a sum equal to the aggregate amount of the
premium received on those shares is transferred to "Securities Premium Accountâ and the utilisation thereof is in accordance
with the provisions of Section 52 of the Companies Act, 2013.
Retained Earnings
Retained Earnings (RE) are the accumulated portion of a business''s profits that are not distributed as dividends to shareholders
but instead are reserved for reinvestment back into the business. Normally, these funds are used for working capital and fixed
asset purchases (capital expenditures) or allotted for paying off debt obligations.
Other Comprehensive Income
This reserve represent the cumulative gain/losses arising from measurement of the defined benefit obligations relating to
gratuity, as per the requirement of IND AS-19 Employee Benefits
2) The Company has availed a Cash Credit facility of H 167.00 Mln, BG of H 31.00 Mln., BG( Sub Limit) of H 10.00 Mln Working
Capital term Loans of H 50.00 Mln. And Working Term Loan GECL Ext. of H 17.11 Mln from HDFC Bank Limited is primarily
secured by hypothecation of Industrial Property situated at Nangla Bhiku, Palwal, Haryana-121102
3) The Company has availed various Car loans from Union Bank of India, HDFC Bank, IOB and Daimler Financial Services
during previous financial years which are primarily secured by the cars purchasesd from such loans.
4) The Company has acquired a new Plot at Village Nangla Bhiku Dist. Palwal, Haryana against which the company has
availed a construction loan of H 42.50 Mln from Indian Overseas Bank but the same was taken over by HDFC Bank by
sanctioning a working capital term loan of H 50.00 Million.
5) The Company has availed a new machinery term loan during the FY 2025-26 from Baja] Finanace Limited amounting to H 70.00
Million for 66 Months including 6 months moratoriumfromdate of first disbursement at 9.50%p. a. floating rate of interest linkedto
BFL FRR i.e.8.50% spreadof 1.0% andthe same is secured by Exclusive charge over MFA of the company with minimum FACR of
1.33x procured using BFL funds
This section explains the judgements and estimates made in determining 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 financial statements.
To provide an indication about the reliability of the inputs used in determining fair value, the company has classified
financial instruments into three levels prescribed under the accounting standard. An explanation of each level follows
underneath the table.
30 Fair value measurements (Contd..)
Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices.
Level 2: The fair value of financial instruments that are not traded in an active market ( for example traded bonds) is
determined using valuation techniques which maximise 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.
(iii) Fair value of financial assets and liabilities measured at amortized cost
As of March 31, 2025 and March 31, 2026 the fair value of cash and bank balances, trade receivables, other current financial
assets, trade payables and other current financial liabilities approximate their carrying amount largely due to the short term
nature of these instruments.
For other financial assets that are measured at amortised cost, the carrying amounts approximate the fair value.
The Companyâs activities expose it to market risk, liquidity risk and credit risk. The Companyâs board of directors has overall
responsibility for the establishment and oversight of the Company''s risk management framework.
Credit risk is the risk that counterparty fails to discharge its obligation to our Company. Our exposure to credit risk is influenced
mainly by cash and cash equivalents and trade receivables. We continuously monitor defaults of customers and other
counterparties and incorporate this information into its credit risk controls. However, majority of our total sales comprises of
sales to Indian Railways ,details of which are as under:
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market
prices. Market risk comprises three types of risks: Currency risk, Interest rate risk and other price risk. Financial instruments
affected by market risk include loans, borrowings, term deposits, and investments.
(i) Foreign Currency Risk
The payments made by the Company towards consideration for import of raw material, inventory and fixed assets are
denominated in foreign currency, mostly the USD. Accordingly, We have currency exposures relating to forex payments,
other than in Indian Rupees, particularly the USD. For the year ended March 2026 and March 2025 our net imports amounted
to ? 117.40 millions and ? 20.87 millions respectively. Further, the significant portion of the components for manufacture
of Rolling Stock Electrics and Propulsion Systems will be imported including hardware and electronic components, namely,
IGBTs, semi conductors, micro processors, capacitors, etc and the exposure to foreign currency risk may increase in future.
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in market interest rates. We are exposed to interest rate risk because funds are borrowed at floating interest
rates. Interest rate risk is measured by using the cash flow sensitivity for changes in variable interest rate, projected debt
servicing capability and view on future interest rate. Our borrowings are denominated in Indian Rupees with a mix of fixed
and floating rates of interest.
(iii) Commodity Price Risk
We are exposed to risks in respect of price and availability of raw material used for our manufacturing operations. Since the
majority of our business is with Indian Railways, most of the orders being executed by us contains price variation clause
which may allow us to pass on changes in the cost of our primary raw materials to our customers. However, we may not
be able to do so immediately or fully, and so strong and rapid fluctuations in the prices of these raw materials could affect
our operating results.
Liquidity risk is the risk that our Group will encounter difficulty in meeting the obligations associated with its financial liabilities
that are settled by delivering cash. Our 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. Our management monitors rolling forecasts of our liquidity position and cash
and cash equivalents on the basis of expected cash flows and the due dates for repayment of term loans. We are confident of
managing our financial obligation through available cash and bank balances, short term borrowings and liquidity management.
The Companyâs objective with respect to capital management is to ensure continuity of business while at the same time provide
reasonable returns to its various stakeholders. In order to achieve this, requirement of capital is reviewed periodically with reference
to operating and business plans that take into account capital expenditure and strategic investments. Sourcing of capital is done
through judicious combination of equity/internal accruals and borrowings, both short term and long term. Net debt (total borrowings
less investments and cash and cash equivalents) to equity ratio is used to monitor capital.
The Company had not declared or paid any dividend during the period.
37 Employee benefits(i) Defined Contibution plan
a) Gratuity
The Company provides gratuity benefits to eligible employees in accordance with the applicable provisions of the Payment
of Gratuity Act, 1972 and other relevant regulations.. In case of death while in service, the gratuity is payable irrespective
of vesting. The amount of gratuity payable on retirement/termination is the employees last drawn basic salary per month
computed proportionately for 15 days salary multiplied by the number of years of service. The gratuity plan is not a funded
plan and the Company makes provision on the basis of acturial valuation and the same is paid by the company only when
it becomes due.
Risk exposure:
Valuations are based on certain assumptions, which are dynamic in nature and vary over time. As such company is exposed
to various risks as follow -
A) Salary Increases- Actual salary increases will increase the Planâs liability. Increase in salary increase rate assumption
in future valuations will also increase the liability.
B) Investment Risk - If Plan is funded then assets liabilities mismatch & actual investment return on assets lower than
the discount rate assumed at the last valuation date can impact the liability.
C) Discount Rate : Reduction in discount rate in subsequent valuations can increase the planâs liability.
D) Mortality & disability - Actual deaths & disability cases proving lower or higher than assumed in the valuation can
impact the liabilities.
E) Withdrawals - Actual withdrawals proving higher or lower than assumed withdrawals and change of withdrawal rates
at subsequent valuations can impact Planâs liability.
Company attention was drawn to provisions of accounting standard that actuarial assumptions are an entityâs best
estimates of variables that will determine the ultimate cost of providing post employment benefits and shall be unbiased
& mutually compatible.
a) Economic Assupmtions
The principal assumptions are the discount rate & salary growth rate. The discount rate is generally based upon the
market yields available on Government bonds at the accounting date relevant to currency of benefit payments for a
term that matches the liabilities. Salary growth rate is companyâs long term best estimate as to salary increases &
takes account of inflation, seniority, promotion, business plan, HR policy and other relevant factors on long term basis
as provided in relevant accounting standard. These valuation assumptions are as follows:
b) Compensated Leave Absences
The Company has provided for Acturial Liability for Earned Leave Liability of the Employees.
Risk exposure:
Valuations are based on certain assumptions, which are dynamic in nature and vary over time. As such company is exposed
to various risks as follow -
A) Salary Increases- Actual salary increases will increase the Planâs liability. Increase in salary increase rate assumption
in future valuations will also increase the liability.
B) Investment Risk - If Plan is funded then assets liabilities mismatch & actual investment return on assets lower than
the discount rate assumed at the last valuation date can impact the liability.
C) Discount Rate : Reduction in discount rate in subsequent valuations can increase the planâs liability.
D) Mortality & disability - Actual deaths & disability cases proving lower or higher than assumed in the valuation can
impact the liabilities.
E) Withdrawals - Actual withdrawals proving higher or lower than assumed withdrawals and change of withdrawal rates
at subsequent valuations can impact Planâs liability.
Company attention was drawn to provisions of accounting standard that actuarial assumptions are an entityâs best
estimates of variables that will determine the ultimate cost of providing post employment benefits and shall be unbiased
& mutually compatible.
a) Economic Assupmtions
The principal assumptions are the discount rate & salary growth rate. The discount rate is generally based upon the
market yields available on Government bonds at the accounting date relevant to currency of benefit payments for a
term that matches the liabilities. Salary growth rate is companyâs long term best estimate as to salary increases &
takes account of inflation, seniority, promotion, business plan, HR policy and other relevant factors on long term basis
as provided in relevant accounting standard. These valuation assumptions are as follows:
38 LEASESWhere the Company is lessee
The Company has taken various assets on lease such as, generator, buildings and office premises Generally, leases are renewed only
on mutual consent and at a prevalent market price and sub-lease is restricted.
The Company has Adopted Ind AS 116 using the full retrospective method of adoption.
The Company also applied the available practical expedients wherein it:
a) Used a Single Discount rate to a portfolio of leases with reasonably similar characteristics
b) Relied on its assessment of whether leases are onerous immediately before the date of initial application
c) Applied the short term lease exemptions to leases with lease term that ends within 12 months of the date of initial application.
d) Used hindsight in determining the lease term where the contract contained option to extend or terminate the lease.
42 Additonal Regulatory Information (Contd..)
42.3 The Company has not revalued its Property,Plant and Equipment during the year.
42.4 The Company has not revalued its intangible assets during the year. The Company has written off its suspended Intangible
Assets under development during the FY 2024-25.
42.5 The Company had not granted any Loans or advances to promoters, directors, KMPs and the related parties (as defined
underCompanies Act, 2013,) either severally or jointly with any other person
42.6 No procedings have been initiated or pending against Company for holding any Benami Property under Prohibitions of Benami
Transactions Act,1988 (Earliers titled as Benami transactions (Prohibitions) Act,1988
42.7 The monthly returns/statement of current assets filed by Company with Banks for Borrowings are in agreement with the books
of accounts except the Inventory of Packing material lied with the Company as the same was not considered while providing
statement of Current Assets.
42.8 The Company is not declared a wilfull defaulter by any Bank or Financial Institution or any other lender
42.9 The Company has no transaction with Companies which are stuck off under section 248 of the Companies Act,2013 or under
section 530 of Companies Act,1956
42.10 There are no charges or modifications thereof pending for satisfaction with the Registrar of Companies (ROC) under the
provisions of the Companies Act, 2013.
42.11 Corporate Social Responsibility (CSR)
As per the provisions of Section 135 of the Companies Act, 2013, the Company is required to spend a certain percentage of
its average net profits of the last three financial years on Corporate Social Responsibility (CSR) activities. However, CSR is not
applicable to the Company for the following reason:
a) The Company''s net worth is less than 500 crore and Turnover is less than 1000 crore and Net profit is also less than 5
crore.
Therefore, the Company has not spent any amount on CSR activities during the financial year.
42.12 With effect from April 01, 2023 the Ministry of Corporate Affairs (MCA) has made it mandatory for every company which
uses accounting software for maintaining its books of accounts to use only such accounting software which has a feature of
recording audit trail of each and every transaction, creating an edit log of each change made in books of accounts along with the
date of such changes were made and ensuring that the audit trail cannot be disabled.
The Company is using Accounting software for maintaining books of accounts for the FY 2023-24 and onwards which has a
feature of recording audit trail (edit log) facility.
42.13 The Company have identified all the micro and small enterprises as per MSMED Act, 2006 and have made payments to them
generally within the time limit specified in Section 15 of the MSMED Act, 2006 except few cases. Out of the total Trade Payables
of H 219.23 Millions only H 49.34 Millions is payable to Micro and small enterprises.
The Company has not provided for interest on delayed payments to Micro and Small Enterprises under the MSMED Act, 2006,
as the same was not claimed by the suppliers.. Consequently, said amount is not disclosed in notes to accounts as required by
the section 22 of MSMED Act, 2006. However there is no impact on taxable income as the Interest u/s 16 of MSMED Act, 2006
is not allowed as deduction under Income Tax Act, 1961.
42 Additonal Regulatory Information (Contd..)
42.14 During the year ended 31 March 2026, the Company incurred a cash loss of ? 136.83 Million (Previous year: ? NIL). Management
has evaluated the Companyâs operational and financial position and believes that the Company will be able to realize its assets
and discharge its liabilities in the normal course of business. Accordingly, the financial statements have been prepared on a
going concern basis.
44 Details of Crypto Currency or Virtual Currency
The Company has not traded or invested in Crypto Currency or Virtual Currency during the financial year
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