అకౌంట్స్ గమనికలుSML Mahindra Ltd.

Mar 31, 2025

(f) Provisions (other than for employee benefits)

A provision is recognised if, as a result of a past event, the Company has a present legal or constructive
obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be
required to settle the obligation. Provisions are recognised at the best estimate of the expenditure
required to settle the present obligation at the balance sheet date. Provisions are determined by
discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of
the time value of money and the risks specific to the liability. The unwinding of the discount is recognised
as finance cost.

Expected future operating losses are not provided for.

(i) Warranties

Provision for warranties is recognised when the underlying products or services are sold. The provision is
based on technical evaluation, historical warranty data and a weighing of all possible outcomes by their
associated probabilities. The timing of outflows will vary as and when warranty claim will arise.

(ii) Onerous contracts

A contract is considered to be onerous when the expected economic benefits to be derived by the
Company from the contract are lower than the unavoidable cost of meeting its obligations under the
contract. The provision for an onerous contract is measured at the present value of the lower of the
expected cost of terminating the contract and the expected net cost of continuing with the contract.

(g) Contingent liabilities

A contingent liability exists when there is a possible but not probable obligation, or a present obligation
that may, but probably will not, require an outflow of resources, or a present obligation whose amount
cannot be estimated reliably. Contingent liabilities do not warrant provisions, but are disclosed unless the
possibility of outflow of resources is remote.

Contingent assets usually arise from unplanned or other unexpected events that give rise to the possibility of
an inflow of economic benefits to the entity. Contingent assets are recognized when the realisation of income
is virtually certain, then the related asset is not a contingent asset and its recognition is appropriate.

A contingent asset is disclosed where an inflow of economic benefits is probable.

(h) Commitments

Commitments include the amount of purchase order / contracts (net of advances) issued to parties for
completion of assets. Provisions, contingent liabilities, contingent assets and commitments are reviewed at
each reporting date.

(i) Revenue

(a) Revenue from contract with customers
Sale of goods and rendering of services

Under Ind AS 115, the Company recognizes revenue when or as a performance obligation is satisfied by
transferring a promised good or service to a customer.

Further, revenue is recognized based on a 5-Step Methodology which is as follows:

Step 1: Identify the contract(s) with a customer
Step 2: Identify the performance obligation in contract
Step 3: Determine the transaction price

Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognise revenue when or as the entity satisfies a performance obligation
The Company disaggregates revenue from contracts with customers by geography.

Use of significant judgements in revenue recognition:

i. The Company’s contracts with customers could include promises to transfer multiple products and
services to a customer. The Company assesses the products / services promised in a contract and
identifies distinct performance obligations in the contract. Identification of distinct performance obligation
involves judgement to determine the deliverables and the ability of the customer to benefit independently
from such deliverables.

ii. Judgement is also required to determine the transaction price for the contract. The transaction price
could be either a fixed amount of customer consideration or variable consideration with elements such as
volume discounts, service level credits, performance bonuses, price concessions and incentives. The
transaction price is also adjusted for the effects of the time value of money if the contract includes a
significant financing component. 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 allocates the elements of variable considerations to all
the performance obligations of the contract unless there is observable evidence that they pertain to one
or more distinct performance obligations.

iii. The Company uses judgement to determine an appropriate standalone selling price for a performance
obligation. The Company allocates the transaction price to each performance obligation on the basis of
the relative standalone selling price of each distinct product or service promised in the contract.

iv. 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, etc.

Sale of products

Revenue from sale of products is recognized at the point in time when control of the asset is transferred to the
customer, generally on delivery of the products at an amount that reflect the consideration to which the
Company expects to be entitled in exchange for those goods or services. The Company has generally
concluded that it is the principal in its revenue arrangements, because it typically controls the goods or
services before transferring them to the customer.

Rendering of services

Consideration received for services not yet rendered and for which Company has an obligation to perform is
recognised as revenue received in advance and subsequently recognised as revenue in the Statement of
Profit and Loss over the period of the contract.

Revenue from royalty is recognized on accrual basis as per the terms of agreement entered into with the
respective parties.

Revenue from dealer support services is recognized on accrual basis as per the terms of agreement entered
into with the Dealers.

Contract Liabilities

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

(b) Other operating revenue - Export incentives

Export incentives are accounted for on an accrual basis.

(j) Recognition of interest income or expense

Interest income or expense is recognised using the effective interest method.

The ‘effective interest rate’ is the rate that exactly discounts the estimated future cash payments or receipts
through the expected life of the financial instrument to:

- The gross carrying amount of the financial asset; or

- The amortised cost of the financial liability.

In calculating interest income and expense, the effective interest rate is applied to the gross carrying amount
of the asset (when the asset is not credit-impaired) or to the amortised cost of the liability. However, for
financial assets that have become credit-impaired subsequent to initial recognition, interest income is
calculated by applying the effective interest rate to the amortised cost of the financial asset. If the asset is no
longer credit-impaired, then the calculation of interest income reverts to the gross basis.

(k) Borrowing costs

Borrowing costs includes interest and other costs (including exchange differences arising from foreign
currency borrowings to the extent they are regarded as an adjustment to the interest cost) incurred in
connection with the borrowing of funds. Borrowing costs directly attributable to acquisition or construction of
an asset which necessarily take a substantial period of time to get ready for their intended use are capitalised
as part of the cost of that asset. Other borrowing costs are recognised as an expense in the period in which
they are incurred.

(l) Income-tax

Income tax comprises current and deferred tax. It is recognised in Statement of Profit and Loss except to the
extent that it relates to an item recognised directly in equity or in other comprehensive income.

Current tax

Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and
any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax
reflects the best estimate of the tax amount expected to be paid or received after considering the uncertainty,
if any, related to income taxes. It is measured using tax rates (and tax laws) enacted or substantively enacted
by the reporting date.

Current tax assets and current tax liabilities are offset only if there is a legally enforceable right to set off the
recognised amounts, and it is intended to realise the asset and settle the liability on a net basis or
simultaneously.

Deferred tax

Deferred tax is recognised in respect of temporary differences between the carrying amounts of the assets
and liabilities for financial reporting purposes and the corresponding amounts used for taxation purposes.
Deferred tax asset is recognised for the carryforward of unused tax losses and unused tax credits to the
extent that it is probable that future taxable profit will be available against which the unused tax losses and
unused tax credits can be utilised. Therefore, the Company recognises a deferred tax asset only to the extent
that it has sufficient taxable temporary differences or there is convincing other evidence that sufficient taxable
profit will be available against which such deferred tax asset can be realized.

Deferred tax assets - unrecognised or recognised, are reviewed at each reporting date and are recognised /
reduced to the extent that it is probable / no longer probable respectively that the related tax benefits will be
realized.

Deferred tax is measured at the tax rates that are expected to apply to the period when the asset is realized
or the liability is settled, based on the laws that have been enacted or substantively enacted by the
reporting date.

The measurement of deferred tax reflects the tax consequences that would follow from the manner in which
the Company expects, at the reporting date, to recover or settle the carrying amount of its assets
and liabilities.

Deferred tax assets and deferred tax liabilities are offset only if there is a legally enforceable right to offset
current tax liabilities and assets, and they relate to income taxes levied by the same tax authorities.

(m) Leases

The Company''s lease asset classes primarily consist of leases for Buildings and Plant and equipment. The
Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains,
a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange
for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the
Company assesses whether: (i) the contract involves the use of an identified asset (ii) the Company has
substantially all of the economic benefits from use of the asset through the period of the lease and (iii) the
Company has the right to direct the use of the asset.

At the date of commencement of the lease, the Company recognizes a right-of-use (ROU) asset and a
corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of
12 months or less (short-term leases) and low value leases. For these short-term and low-value leases, the
Company recognizes the lease payments as an operating expense on a straight-line basis over the term of
the lease.

Certain lease arrangements includes the options to extend or terminate the lease before the end of the lease
term. ROU assets and lease liabilities includes these options when it is reasonably certain that they will be
exercised.

The ROU assets are initially recognized at cost, which comprises the initial amount of the lease liability
adjusted for any lease payments made at or prior to the commencement date. These are subsequently
measured at cost less accumulated depreciation and impairment losses. ROU assets are depreciated from
the commencement date on a straight-line basis over the shorter of the lease term and useful life of the
underlying asset.

The lease liability is initially measured at amortized cost at the present value of the future lease payments.
The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable,
using the incremental borrowing rates of the Company. Lease liabilities are remeasured with a corresponding
adjustment to the related ROU asset if the Company changes its assessment of whether it will exercise an
extension or a termination option.

Lease liability and ROU assets have been separately presented in the Balance Sheet and lease payments
have been classified as financing cash flows.

Judgements and estimates:-

Ind AS 116 requires lessees to determine the lease term as the non-cancellable period of a lease adjusted
with any option to extend or terminate the lease, if the use of such option is reasonably certain. The Company
makes an assessment on the expected lease term on a lease-by-lease basis and thereby assesses whether
it is reasonably certain that any options to extend or terminate the contract will be exercised. In assessing
whether the Company is reasonably certain to exercise an option to extend a lease, or not to exercise an
option to terminate a lease, it considers all relevant facts and circumstances that create an economic
incentive for the Company to exercise the option to extend the lease, or not to exercise the option to terminate
the lease. The Company revises the lease term if there is a change in the non-cancellable period of a lease.

(n) Financial Instruments

i) Recognition and initial measurement

Trade receivables are initially recognised at their transaction price. All other financial assets and financial
liabilities are initially recognised when the Company becomes a party to the contractual provisions of the
instrument.

A financial asset or financial liability is initially measured at fair value plus, for an item not at fair value
through profit and loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue.

ii) Classification and subsequent measurement
Financial assets

On initial recognition, a financial asset is classified as measured at:

a. Amortised cost; or

b. Fair value through profit and loss (‘FVTPL’)

Financial assets are not reclassified subsequent to their initial recognition, except if the Company
changes its business model for managing financial assets.

A financial asset is measured at amortised cost if it meets both of the following conditions and is not
designated as at FVTPL:

- the asset is held within a business model whose objective is to hold assets 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.

All financial assets which are not classified as measured at amortised cost or FVOCI as described above
are measured at FVTPL. This includes all derivative financial assets, unless they are designated as
hedging instruments, for which hedge accounting is applied. On initial recognition, the Company may
irrevocably designate a financial asset that otherwise meets the requirements to be measured at
amortised cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting
mismatch that would otherwise arise.

Financial assets: Assessment whether contractual cash flows are solely payments of principal and
interest

For the purposes of this assessment, ‘principal’ is defined as the fair value of the financial asset on initial
recognition. ‘Interest’ is defined as consideration for the time value of money and for the credit risk
associated with the principal amount outstanding during a particular period of time and for other basic
lending risks and costs (e.g. liquidity risk and administrative costs), as well as a profit margin.

In assessing whether the contractual cash flows are solely payments of principal and interest, the
Company considers the contractual terms of the instrument. This includes assessing whether the
financial asset contains a contractual term that could change the timing or amount of contractual cash
flows such that it would not meet this condition. In making this assessment, the Company considers:

- contingent events that would change the amount or timing of cash flows;

- terms that may adjust the contractual coupon rate, including variable interest rate features;

- prepayment and extension features; and

- terms that limit the Company’s claim to cash flows from specified assets (e.g. non-recourse features).
Financial assets: Subsequent measurement and gains and losses

Financial liabilities: Classification, subsequent measurement and gains and losses
Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified
as at FVTPL, if it is classified as held for trading, or it is a derivative or it is designated as such on initial
recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including
any interest expense, are recognised in profit or loss. Other financial liabilities are subsequently
measured at amortised cost using the effective interest method. Interest expense and foreign exchange
gains and losses are recognised in profit or loss. Any gain or loss on de-recognition is also recognised
in profit or loss.

iii) De-recognition
Financial assets

The Company derecognises a financial asset when the contractual rights to the cash flows from the
financial asset expire, or if it transfers the rights to receive the contractual cash flows in a transaction in
which substantially all of the risks and rewards of ownership of the financial asset are transferred or in
which the Company neither transfers nor retains substantially all of the risks and rewards of ownership
and does not retain control of the financial asset.

If the Company enters into transactions whereby it transfers assets recognised on its balance sheet, but
retains either all or substantially all of the risks and rewards of the transferred assets, the transferred
assets are not derecognised.

Financial liabilities

The Company derecognises a financial liability when its contractual obligations are discharged or
cancelled, or expire.

The Company also derecognises a financial liability when its terms are modified and the cash flows under
the modified terms are substantially different. In this case, a new financial liability based on the modified
terms is recognised at fair value. The difference between the carrying amount of the financial liability
extinguished and the new financial liability with modified terms is recognised in profit or loss.

iv) Offsetting

Financial assets and financial liabilities are offset and the net amount is presented in the balance sheet
when, and only when, the Company currently has a legally enforceable right to set off the amounts and it
intends either to settle them on a net basis or to realize the asset and settle the liability simultaneously.

(o) Impairment

i) Impairment of financial assets

The Company recognises loss allowances for expected credit loss on financial assets measured at amortised
cost. At each reporting date, the Company assesses whether financial assets carried at amortised cost is
credit-impaired. A financial asset is ‘credit-impaired'' when one or more events that have detrimental impact on
the estimated future cash flows of the financial assets have occurred.

The Company measures loss allowances at an amount equal to lifetime expected credit losses for a financial
instrument if the credit risk on that financial instrument has increased significantly since initial recognition. If,
on the other hand, the credit risk on the financial instrument has not increased significantly since initial
recognition, the Group measures the loss allowance for that financial instrument at an amount equal to
12 month ECL.

With respect to trade receivables, the loss allowances are always measured at an amount equal to lifetime
expected credit losses. Lifetime expected credit losses are the expected credit losses that result from all
possible default events over the expected life of a financial instrument. The Company follows ‘simplified
approach'' for recognition of impairment loss allowance for 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 expected credit loss at each reporting date, right from its initial recognition.

12-month expected credit losses are the portion of expected credit losses that result from default events that
are possible within 12 months after the reporting date (or a shorter period if the expected life of the instrument is
less than 12 months).

In all cases, the maximum period considered when estimating expected credit losses is the maximum
contractual period over which the Company is exposed to credit risk.

To assess whether there is a significant increase in credit risk, the Company compares the risk of a default
occurring on the asset as at the reporting date with the risk of default as the date of initial recognition.

The Company considers reasonable and supportable information that is relevant and available without undue
cost or effort. This includes both quantitative and qualitative information and analysis, based on the
Company''s historical experience and informed credit assessment and including forward looking information.
Measurement of expected credit losses

Expected credit losses are a probability- weighted estimate of credit losses. Credit losses are measured as the
present value of all cash shortfalls (i.e. difference between the cash flow due to the Company in accordance
with the contract and the cash flow that the Company expects to receive).

Presentation of allowance for expected credit losses in the balance sheet

Loss allowance for financial assets measured at amortised cost is deducted from the gross carrying amount
of the assets.

Write-off

The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is
no realistic prospect of recovery. This is generally the case when the Company determines that the debtors do
not have assets or sources of income that could generate sufficient cash flows to repay the amount subject to
the write-off. However, financial assets that are written off could still be subject to enforcement activities in
order to comply with the Company''s procedure for recovery of amounts due.
ii) Impairment of non-financial assets

The Company''s non-financial assets, other than inventories and deferred tax assets, are reviewed at each
reporting date to determine whether there is any indication of impairment. If any such indication exists, then
the asset''s recoverable amount is estimated.

For impairment testing, assets that do not generate independent cash inflows are grouped together into cash¬
generating units (CGUs). Each CGU represents the smallest group of assets that generates cash inflows that
are largely independent of the cash inflows of other assets or CGUs.

The recoverable amount of a CGU (or an individual asset) is the higher of its value in use and its fair value less
costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a
pre-tax discount rate that reflects current market assessments of the time value of money and the risks
specific to the CGU (or the asset).

An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its estimated recoverable
amount. Impairment losses are recognised in profit or loss. Impairment loss recognised in respect of a CGU is
allocated to reduce the carrying amounts of the assets of the CGU (or group of CGUs) on a pro rata basis.

An impairment loss in respect of assets for which impairment loss has been recognised in prior periods, the
Company reviews at each reporting date whether there is any indication that the loss has decreased or no
longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the
recoverable amount. Such a reversal is made only to the extent that the asset''s carrying amount does not
exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no
impairment loss had been recognised.

(p) Operating segments

An operating segment is a component of the Company that engages in business activities from which it may earn
revenues and incur expenses, including revenues and expenses that relate to transactions with any of the
Company''s other components, and for which discrete financial information is available. All operating segments''
operating results are reviewed regularly by the Company''s Chief Operating Decision Maker (CODM) to make
decisions about resources to be allocated to the segments and assess their performance.

(q) Cash and cash equivalents

For the purpose of presentation in the statement of cash flows, cash and cash equivalents include cash in hand,
demand deposits held with banks, other short-term highly liquid investments with original maturities of three
months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of
changes in value.

(r) Statement of Cash flows

Cash flows are reported using the indirect method, whereby profit / (loss) for the period is adjusted for the effects of
transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments
and item of income or expenses associated with investing or financing cash flows. The cash flows from operating,
investing and financing activities of the Company are segregated based on the available information.

(s) Earnings per share

Basic earnings per share are calculated by dividing the net profit / (loss) for the year attributable to equity
shareholders by the weighted average number of equity shares outstanding during the year. Diluted earnings per
share is computed using the weighted average number of equity and dilutive equity equivalent shares outstanding
during the year end, except where the results would be anti-dilutive.

(t) Research and development

Expenditure on research is recognised in the Statement of Profit and Loss under the respective heads of account in
the period in which it is incurred.

Expenditure on development activities, whereby research findings are applied to a plan or design for the production
of new or substantially improved products and processes, is capitalised, if the cost can be reliably measured, the
product or process is technically and commercially feasible and the Company has sufficient resources to complete
the development and right to use the asset. The expenditure capitalised includes the cost of materials, direct labour
and an appropriate proportion of overheads that are directly attributable to preparing the asset for its intended use.
Other development expenditure is recognised in the Statement of Profit and Loss as an expense as incurred.
Capitalised development expenditure is stated at cost less accumulated amortisation and impairment losses.
Property, plant and equipment used for research and development are depreciated in accordance with the
Company''s policy as stated above.

(u) Recent accounting pronouncement

Ministry of Corporate Affairs ("MCA") notifies new standard or amendments to the existing standards under
Companies (Indian Accounting Standards) Rules as issued from time to time. On 7 May 2025, MCA amended the
Companies (Indian Accounting Standards) Rules, 2015 by issuing the Companies (Indian Accounting Standards)
Amendment Rules, 2025, applicable from 1 April 2025, as below:

Ind AS 21 - The Effects of Changes in Foreign Exchange Rates - This amendment requires entities to assess
currency exchangeability, estimate exchange rates when currencies are not readily exchangeable, and provide
additional disclosures in such cases. The effective date for adoption of this amendment is annual periods beginning
on or after 1 April 2025. The Company has evaluated the amendment and does not expect this amendment to have
any significant impact in its financial statements.

(ii) outstanding term loan - 2 of Rs. 45.70 lakhs (previous year Rs. 594.06 lakhs), carrying variable interest rate of 1 month MCLR 0.15% /
3 months MCLR 0.25%, repayable in monthly instalments commencing from 5 August 2022 and ending on 5 April 2025. The lender has
exclusive charge on movable fixed assets (Plant and Machinery) of the project.

(iii) outstanding term loan - 3 of Rs. 3,531 lakhs (previous year Rs. 4,781 lakhs), carrying variable interest rate of 3 months T bill rate 1.72% for
disbursements upto 30 April 2023 and 3 months T bill rate 1.97% for disbursements from 1 May 2023 onwards, repayable in quarterly
instalments commencing from 1 April 2024 and ending on 1 January 2028. The lender has first charge on movable fixed assets of
the Company, giving a minimum cover of 1.25 times of the loan amount (excluding those movable fixed assets which are exclusively charged
to other lenders).

(iv) outstanding term loan - 4 of Rs. 1,334 lakhs (previous year Nil), carrying variable interest rate of 1 year MCLR 0.10%, repayable in quarterly
instalments commencing from 31 March 2025 and ending on 31 March 2027. The lender has exclusive charge on the fixed assets of the
Company which are created through this term loan specifically. The lender also has negative lien on fixed assets of the Company (excluding
fixed assets exclusively charged for our loan).

(v) outstanding term loan - 5 of Rs. 3,200 lakhs (previous year Nil), carrying variable interest rate of based on Repo rate (presently 8.25%
to 8.50%), repayable in quarterly instalments commencing from 30 September 2025 and ending on 30 June 2028. The lender has first
exclusive charge on the fixed assets of the Company being funded from the term loan of Axis bank.The lender also has negative lien on
fixed assets of the Company (excluding fixed assets exclusively charged for this loan).

(vi) outstanding working capital term loan of Rs. 1,000 lakhs (previous year Nil), carrying variable interest rate of 1 month MCLR without spread
presently 8.35%, repayable in ten quarterly instalments commencing from 20 August 2025 and ending on 20 November 2027. The lender has
equitable mortgage (first and exclusive) of Industrial Unit (Land and Building) located at village Asron, Shahid Bhagat Singh Nagar, Punjab.

(vii) outstanding term loans for vehicles Rs. 158.54 lakhs (previous year Rs. 195.47 lakhs), carrying fixed interest rate ranging from 8.75%
to 9.50% per annum (previous year 8.75% to 9.50% per annum), repayable in monthly instalments commencing from 10 April 2023 and
ending on 5 March 2029. The lender has exclusive charge on vehicle financed by such loan.

(viii) outstanding term loans for vehicles Rs. 104.31 lakhs (previous year Nil), carrying floating interest rate (Repo rate Spread) presently ranging
from 8.80% to 8.85%, repayable in monthly instalments commencing from 15 August 2024 and ending on 15 March 2030. The lender has
exclusive charge on vehicle financed by such loan.

# includes outstanding term loan amounting to Nil (previous year Rs. 193.74 lakhs), carrying variable interest rate of 1 year MCLR 0.15%
repayable in quarterly instalments commencing from 5 October 2021 and ending on 31 March 2025. The lender has a negative lien on fixed
assets of the Company.

35 The Company has established a comprehensive system for maintenance of information and documents as
required by the transfer pricing regulation under sections 92-92F of the Income-Tax Act, 1961. Since the law
requires existence of such information and documentation to be contemporaneous in nature, the Company
continuously updates its documentation for the international transactions entered into with the associated
enterprises during the financial year and expects such records to be in existence latest by the due date as required
under law. The management is of the opinion that its international transactions are at arm’s length so that the
aforesaid legislation will not have any impact on the financial statements, particularly on the amount of income tax
expense and that of provision for taxation.

36 Related parties

A. Related party and nature of related party relationship where control exists:

Controlling Enterprise: Sumitomo Corporation, Japan

B. Other related parties with whom transaction have taken place during the year:

Key management personnel

Mr. Junya Yamanishi - Managing Director & CEO (upto 16 April 2025)

Mr. Yasushi Nishikawa - Managing Director & CEO (w.e.f. 17 April 2025)

Mr. Rakesh Bhalla - Chief Financial Officer
Mr. Parvesh Madan - Company Secretary

Mr. S.K. Tuteja - Chairman, Non Executive and Independent Director (upto 21 September 2024)

Mr. Chandra Shekhar Verma - Chairman, Non Executive and Independent Director *

Mr. Sudhir Nayar - Non Executive and Independent Director (upto 21 September 2024)

Mr. Sanjeev Mehan - Non Executive and Independent Director (w.e.f. 22 September 2024)

Mrs. Atima Khanna - Non Executive and Independent Director

* appointed as Chairman of the Board of Directors w.e.f. 22 September 2024.

Shareholders holding 10% or more share in the Company *

- Isuzu Motors Limited, Japan

- Navodya Enterprises (Acquirer) along with Person Acting in Concert (PAC) - SPV T raders, Anandam Enterprises,
Sapna Gupta and Sachin Bansal.

* As per amended regulation 2(1)(zb) of Securities and Exchange Board of India (Listing Obligations and Disclosure
Requirements) Regulations, 2015, vide notification dated 9 November 2021, applicable from 1 April 2023, related
party includes any person or any entity, holding equity shares of ten per cent or more in the listed entity, either
directly or on a beneficial interest basis as provided under section 89 of the Companies Act, 2013, at any time during
the immediately preceding financial year.

(ii) Defined benefit plan - Gratuity

The Company operates a gratuity plan wherein every employee is entitled to the benefit equivalent to 15 days
salary (includes dearness allowance) last drawn for each completed year of service. The same is payable on
termination of service, or retirement, or death whichever is earlier. The benefits vest after five years of
continuous service. Gratuity benefits valued are in accordance with the payment of Gratuity Act, 1972.

The above defined benefit plan exposes the Company to following risks:

Interest rate risk:

The defined benefit obligation calculated uses a discount rate based on government bonds. If bond yields fall,
the defined benefit obligation will tend to increase.

Salary inflation risk:

Higher than expected increases in salary will increase the defined benefit obligation.

Demographic risk:

This is the risk of variability of results due to unsystematic nature of decrements that include mortality,
withdrawal, disability and retirement. The effect of these decrements on the defined benefit obligation is not
straight forward and depends upon the combination of salary increase, discount rate and vesting criteria. It is
important not to overstate withdrawals because in the financial analysis the retirement benefit of a short
career employee typically costs less per year as compared to a long service employee.

The Company actively monitors how the duration and the expected yield of the investments are matching the
expected cash outflows arising from the employee benefit obligations. The Company has not changed the
processes used to manage its risks from previous periods. The funds are managed by specialised team of
Life Insurance Corporation of India.

a) Funding

This is a funded benefit plan for qualifying employees. The Company makes contributions to Life Insurance
Corporation of India ("LIC of India"). The assets managed by the fund manager are highly liquid in nature and
the Company does not expect any significant liquidity risks.

The Company expects to pay Nil (previous year Rs. 100 lakhs) in contribution to its defined benefit plans in
2025-26.

38 Financial Instruments - Risk Management and Fair Values
(A) Financial risk management

During the course of its business, the Company is exposed to certain financial risks that could have significant
influence on the Company’s business and operational / financial performance. These include market risk
(including foreign currency risk, interest rate risk), credit risk and liquidity risk.

The Board of Directors reviews and approves risk management framework and policies for managing these
risks and has constituted Risk Management Committee to monitor mitigating actions taken by Management,
minimize potential adverse effects and achieve greater predictability to earnings.

The Company uses derivative financial instruments to hedge risk exposures in accordance with the
Company’s policies as approved by the Board of Directors.

The Company has exposure to the following risk arising from financial instruments:

- Market risk (refer (I))

- Credit risk (refer (II)) and

- Liquidity risk (refer (III))

(I) Market risk

Market risk is the risk of any loss in future earnings, realisable fair values or future cash flows that may result
from fluctuations in the pricing of a financial instrument. The Company’s activities expose it primarily to the
financial risks of changes in foreign currency exchange rates and interest rates as future market changes
cannot be normally predicted with reasonable accuracy.
i. Foreign currency risk management:

The Company is exposed to foreign currency risk to the extent that there is a mismatch between the
currencies in which sales and purchases are denominated and functional currency of the Company, i.e.
Indian Rupee (Rs.). The currencies in which these transactions are primarily denominated are US Dollar,
Euro, Pound (GBP) and Japanese Yen (Yen). The Company uses currency swap contracts to hedge its
currency risk as per the approved policy of the Company. The Company''s policy is to ensure that its net
exposure is kept to an acceptable level which will not have material effect on the profits of the Company if
there is any fluctuation in the currency rates.

The carrying amounts of the Company’s foreign currency denominated monetary assets and monetary
liabilities at the end of the reporting period, as reported to management, are as follows:

ii. Interest rate risk management :

The Company is exposed to interest rate risk pertaining to funds borrowed at both fixed and floating interest rates.
The risk is managed by the Company by maintaining an appropriate mix between fixed and floating rate
borrowings. Hedging activities are evaluated regularly to align with interest rate views and defined risk appetite,
ensuring the most cost-effective hedging strategies.

As at year end, financial liabilities (borrowings) of Rs. 32,019.43 lakhs (previous year Rs. 41,370.08 lakhs) were
subject to variable interest rates.

- Sensitivity analysis:

The sensitivity analysis below has been determined based on the exposure to interest rates at the end of the
reporting period. A 100 basis point increase or decrease is used when reporting interest rate risk internally to key
management personnel and represents management’s assessment of the reasonably possible change in interest
rates.

A reasonably possible change of 1 % in interest rates at the reporting date would have increased / decreased the
profit before tax and equity by the amounts shown below. This analysis assumes that all other variables remain
constant.

The Company''s certain long term loans taken from bank carries variable rate of interest, hence, it is subject to
interest rate risk since carrying amount or the future cash flows will fluctuate because of a change in market interest
rates.

(II) Credit risk :

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to
the Company. Credit risk encompasses both the direct risk of default and the risk of deterioration of creditworthiness
as well as concentration risks. None of the financial instruments of the Company result in material concentrations of
credit risks.

The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets as at
31 March 2025 and 31 March 2024.

The credit risk on liquid funds is limited because the counterparties are banks with high credit ratings.

Other financial assets measured at amortised cost: Other financial assets measured at amortized cost includes
security deposits and others. Credit risk related to these other financial assets is managed by monitoring the
recoverability of such amounts continuously and there were no indications that defaults in payment obligations
would occur.

(MI) Liquidity risk :

Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk
management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The
Company has obtained working capital borrowing limits of Rs. 80,783.56 lakhs from various banks to meet it''s
liquidity needs, out of which Rs. 22,504.43 lakhs has been utilised as at 31 March 2025.

The table below summarises the maturity profile remaining contractual maturity period at the balance sheet date for
its non derivative financial liabilities based on the undiscounted cash flows.

The Company determines the fair value of its financial instruments on the basis of the following hierarchy:
Level 1: The fair value of financial instruments that are quoted in active markets are determined on the basis of quoted
price for identical assets or liabilities.

Level 2: The fair value of financial instruments that are not traded in an active market are determined using valuation
techniques based on observable market data.

Level 3: The fair value of financial instruments that are measured on the basis of entity specific valuations using inputs
that are not based on observable market data (unobservable inputs).

There are no transfers between Level 1, Level 2 and Level 3 during the year ended 31 March 2025 and 31 March 2024.

40. The Ministry of Corporate Affairs (MCA) has prescribed a requirement for companies under the proviso to Rule 3(1)
of the Companies (Accounts) Rules, 2014 inserted by the Companies (Accounts) Amendment Rules 2021 requiring
companies which uses accounting software for maintaining its books of account, shall 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 the books of account along with the date when such changes were made and ensuring that the
audit trail cannot be disabled.

The Company uses certain accounting software for maintaining accounting records, employee reimbursement
records and dealer expenses/ claims records which have a feature of recording audit trail (edit log) facility and the
same have been operated throughout the year for all relevant transactions recorded in the software. Furthermore,
the audit trail has been preserved by the Company as per the statutory requirements for record retention from the
date the audit trail was enabled for the accounting software.

41 (a) Capital management

The Company manages its capital to ensure that the Company will be able to continue as a going concern, while
maximising the return to stakeholders through efficient allocation of capital towards expansion of business,
optimisation of working capital requirements and deployment of surplus funds. The Company uses the operational
cash flows and equity to meet its working capital requirements. The funding requirements are met through equity,
internal accruals and a combination of both long-term and short-term borrowings. The Company is not subject to
any externally imposed capital requirements.

Management of the Company reviews the capital structure of the Company on a regular basis and uses debt equity
ratio to monitor the same. As part of this review, management of the Company considers risks associated with the
movement in the working capital and capex needs.

The following table summarises the capital structure of the Company:

The Company is required to comply with certain covenants under the agreement executed for some of its long term
borrowings. During the financial year ended 31 March 2024, for borrowings aggregating to Rs. 594.06 lakhs, one of
the financial covenants was not met by the Company and the lenders had the option to recall the said borrowings.
The lender waived off the requirement of meeting the financial covenants for the year ended 31 March 2024 on
borrowing amounting to Rs. 594.06 lakhs, hence, maturities of said loan due after 12 months of the reporting date
had been classified as non-current liability as at 31 March 2024.

43 Final Dividend

The Board of Directors at their meeting held on 30 May 2025, has considered and recommended a final dividend of
180% (Rs.18 per equity share of Rs. 10 each fully paid up) amounting to Rs. 2,604.90 lakhs for the year ended 31
March 2025, subject to approval by the shareholders at the ensuing Annual General Meeting, and it has not been
recognised as liability in these financial statements.

During the year ended 31 March 2025, the Company has paid a final dividend of 160% (Rs. 16 per equity share of
Rs. 10 each fully paid up) amounting to Rs. 2,315.46 lakhs in respect of previous year ended 31 March 2024, which
was considered and recommended by the Board of Directors at their meeting held on 23 May 2024 and was
subsequently approved by the shareholders at the Annual General Meeting, held on 20 September 2024.

44 Subsequent to the year ended 31 March 2025, Sumitomo Corporation, Japan (Promoter shareholder) and Isuzu
Motors Limited, Japan (Public shareholder) have entered into Share Purchase Agreements with Mahindra &
Mahindra Limited ("Acquirer") on 26 April 2025, whereby they have agreed to sell 63,62,306 equity shares
(representing 43.96% of the equity share capital of the Company) and 21,70,747 equity shares (representing
15.00% of the equity share capital of the Company) respectively, of face value of Rs.10/- each, at a price of Rs. 650/-
pershare.

Further, on 5 May 2025, the Acquirer has published a Detailed Public Statement to the public shareholders
announcing the ''Open Offer'' for acquisition of upto 37,62,628 fully paid equity shares of face value of Rs.10/- each,
representing 26% of the equity share capital of the Company, at a price of Rs. 1,554.60/- per share.

The aforesaid acquisition and the ''Open Offer'' are subject to satisfaction of customary conditions precedent
including, but not limited to, receipt of approval from the Competition Commission of India (“CCI”).

45 The Company has received anonymous complaint alleging that some employees may have financial dealings with
specific dealers. To investigate the matter, the Company, on the directions of Audit Committee, has appointed an
external expert who has submitted their report to the Audit Committee and the Audit Committee has appointed a
sub-committee of two independent directors to look into all aspects and conclude the matter. Based on expert’s
findings, there is no evidence of financial impropriety or fraud against the Company. Management is confident that
this matter is not expected to have any material impact on the accompanying financial statements and
consequently, no adjustment is required to be made to the financial statements for the quarter and year ended 31
March 2025.

48 (a) 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 persons or entities, including foreign entities (Intermediaries) with
the understanding (whether recorded in writing or otherwise) that the Intermediary shall (i) directly or
indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the
company (Ultimate Beneficiaries) or (ii) provide any guarantee, security or the like to or on behalf of the
Ultimate Beneficiaries.

(b) The Company has not received any funds from any persons or entities, including foreign entities (Funding
Party) with the understanding (whether recorded in writing or otherwise) that the company shall (i) directly or
indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the
Funding Party (Ultimate Beneficiaries) or (ii) provide any guarantee, security or the like on behalf of the
Ultimate Beneficiaries.

(c) 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.

(d) The Company has not traded or invested in crypto currency or virtual currency during the current or previous
year.

(e) The creditors covered by Micro, Small and Medium Enterprises Development Act, 2006 ("the MSMED
Act, 2006") have been identified on the basis of information available with the Company.

(f) The Company has no such layers as prescribed under clause (87) of section 2 of the Act read with Companies
(Restriction on number of Layers) Rules, 2017. Hence, the said clause is not applicable to the Company.

(g) The Company has not been declared wilful defaulter by any bank or financial Institution or other lender.

(h) The Company did not have any transactions with companies struck off under Section 248 of the Companies
Act, 2013 or Section 560 of Companies Act, 1956 during the year.

(i) No charges or satisfaction are yet to be registered with ROC beyond the statutory period.

(j) No proceeding have been initiated on or is pending against the Company for holding benami property under
the Benami Transactions Prohibition) Act, 1988 (45 of 1988) and Rules made thereunder.

As per our report of even date attached For and on behalf of the Board of Directors of SML Isuzu Limited

For Walker Chandiok & Co LLP

Chartered Accountants ^{Rakesh Bhalla Chandra Shekhar Verma}

ICAI Firm registration number: 001076N/N500013 ^{Chlef Financial Offi}ce^{r Ch}aii-man

FCMA: 09442 DIN: 00121756

Sandeep Mehta Parvesh Madan Yasushi Nishikawa

Partner Company Secretary Managing Director & CEO

Membership Number: 099410 ACS: 31266 DIN: 11027072

Place: Chandigarh Place: New Delhi

Date: 30 May 2025 Date: 30 May 2025

---

Mar 31, 2024

(f) Provisions (other than for employee benefits)

A provision is recognised if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are recognised at the best estimate of the expenditure required to settle the present obligation at the balance sheet date. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost.

Expected future operating losses are not provided for.

(i) Warranties

Provision for warranties is recognised when the underlying products or services are sold. The provision is based on technical evaluation, historical warranty data and a weighing of all possible outcomes by their associated probabilities. The timing of outflows will vary as and when warranty claim will arise.

(ii) Onerous contracts

A contract is considered to be onerous when the expected economic benefits to be derived by the Company from the contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision for an onerous contract is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract.

(g) Contingent liabilities

A contingent liability exists when there is a possible but not probable obligation, or a present obligation that may, but probably will not, require an outflow of resources, or a present obligation whose amount cannot be estimated reliably. Contingent liabilities do not warrant provisions, but are disclosed unless the possibility of outflow of resources is remote.

Contingent assets usually arise from unplanned or other unexpected events that give rise to the possibility of an inflow of economic benefits to the entity. Contingent assets are recognized when the realisation of income is virtually certain, then the related asset is not a contingent asset and its recognition is appropriate.

A contingent asset is disclosed where an inflow of economic benefits is probable.

(h) Commitments

Commitments include the amount of purchase order / contracts (net of advances) issued to parties for completion of assets. Provisions, contingent liabilities, contingent assets and commitments are reviewed at each reporting date.

(i) Revenue

(a) Revenue from contract with customers Sale of goods and rendering of services

Under Ind AS 115, the Company recognizes revenue when or as a performance obligation is satisfied by transferring a promised good or service to a customer.

Further, revenue is recognized based on a 5-Step Methodology which is as follows:

Step 1: Identify the contract(s) with a customer Step 2: Identify the performance obligation in contract Step 3: Determine the transaction price

Step 4: Allocate the transaction price to the performance obligations in the contract Step 5: Recognise revenue when or as the entity satisfies a performance obligation The Company disaggregates revenue from contracts with customers by geography.

Use of significant judgements in revenue recognition:

i. The Company’s contracts with customers could include promises to transfer multiple products and services to a customer. The Company assesses the products / services promised in a contract and identifies distinct performance obligations in the contract. Identification of distinct performance obligation involves judgement to determine the deliverables and the ability of the customer to benefit independently from such deliverables.

ii. Judgement is also required to determine the transaction price for the contract. The transaction price could be either a fixed amount of customer consideration or variable consideration with elements such as volume discounts, service level credits, performance bonuses, price concessions and incentives. The transaction price is also adjusted for the effects of the time value of money if the contract includes a significant financing component. 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 allocates the elements of variable considerations to all the performance obligations of the contract unless there is observable evidence that they pertain to one or more distinct performance obligations.

iii. The Company uses judgement to determine an appropriate standalone selling price for a performance obligation. The Company allocates the transaction price to each performance obligation on the basis of the relative standalone selling price of each distinct product or service promised in the contract.

iv. 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, etc.

Sale of products

Revenue from sale of products is recognized at the point in time when control of the asset is transferred to the customer, generally on delivery of the products at an amount that reflect the consideration to which the Company expects to be entitled in exchange for those goods or services. The Company has generally concluded that it is the principal in its revenue arrangements, because it typically controls the goods or services before transferring them to the customer.

Rendering of services

Consideration received for services not yet rendered and for which Company has an obligation to perform is recognised as revenue received in advance and subsequently recognised as revenue in the Statement of Profit and Loss over the period of the contract.

Revenue from royalty is recognized on accrual basis as per the terms of agreement entered into with the respective parties.

Revenue from dealer support services is recognized on accrual basis as per the terms of agreement entered into with the Dealers.

Contract Liabilities

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

(b) Other operating revenue - Export incentives

Export incentives are accounted for on an accrual basis.

(j) Recognition of interest income or expense

Interest income or expense is recognised using the effective interest method.

The ‘effective interest rate’ is the rate that exactly discounts the estimated future cash payments or receipts through the expected life of the financial instrument to:

- The gross carrying amount of the financial asset; or

- The amortised cost of the financial liability.

In calculating interest income and expense, the effective interest rate is applied to the gross carrying amount of the asset (when the asset is not credit-impaired) or to the amortised cost of the liability. However, for financial assets that have become credit-impaired subsequent to initial recognition, interest income is calculated by applying the effective interest rate to the amortised cost of the financial asset. If the asset is no longer credit-impaired, then the calculation of interest income reverts to the gross basis.

(k) Borrowing costs

Borrowing costs includes interest and other costs (including exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost) incurred in connection with the borrowing of funds. Borrowing costs directly attributable to acquisition or construction of an asset which necessarily take a substantial period of time to get ready for their intended use are capitalised as part of the cost of that asset. Other borrowing costs are recognised as an expense in the period in which they are incurred.

(l) Income-tax

Income tax comprises current and deferred tax. It is recognised in Statement of Profit and Loss except to the extent that it relates to an item recognised directly in equity or in other comprehensive income.

Current tax

Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax reflects the best estimate of the tax amount expected to be paid or received after considering the uncertainty, if any, related to income taxes. It is measured using tax rates (and tax laws) enacted or substantively enacted by the reporting date.

Current tax assets and current tax liabilities are offset only if there is a legally enforceable right to set off the recognised amounts, and it is intended to realise the asset and settle the liability on a net basis or simultaneously.

Deferred tax

Deferred tax is recognised in respect of temporary differences between the carrying amounts of the assets and liabilities for financial reporting purposes and the corresponding amounts used for taxation purposes. Deferred tax asset is recognised for the carryforward of unused tax losses and unused tax credits to the extent that it is probable that future taxable profit will be available against which the unused tax losses and unused tax credits can be utilised. Therefore, the Company recognises a deferred tax asset only to the extent that it has sufficient taxable temporary differences or there is convincing other evidence that sufficient taxable profit will be available against which such deferred tax asset can be realized.

Deferred tax assets - unrecognised or recognised, are reviewed at each reporting date and are recognised / reduced to the extent that it is probable / no longer probable respectively that the related tax benefits will be realized.

Deferred tax is measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on the laws that have been enacted or substantively enacted by the reporting date.

The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and deferred tax liabilities are offset only if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authorities.

(m) Leases

The Company''s lease asset classes primarily consist of leases for Buildings and Plant and equipment. The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether: (i) the contract involves the use of an identified asset (ii) the Company has substantially all of the economic benefits from use of the asset through the period of the lease and (iii) the Company has the right to direct the use of the asset.

At the date of commencement of the lease, the Company recognizes a right-of-use (ROU) asset and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of 12 months or less (short-term leases) and low value leases. For these short-term and low-value leases, the Company recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease.

Certain lease arrangements includes the options to extend or terminate the lease before the end of the lease term. ROU assets and lease liabilities includes these options when it is reasonably certain that they will be exercised.

The ROU assets are initially recognized at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date. These are subsequently measured at cost less accumulated depreciation and impairment losses. ROU assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset.

The lease liability is initially measured at amortized cost at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates of the Company. Lease liabilities are remeasured with a corresponding adjustment to the related ROU asset if the Company changes its assessment of whether it will exercise an extension or a termination option.

Lease liability and ROU assets have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows.

Judgements and estimates:-

Ind AS 116 requires lessees to determine the lease term as the non-cancellable period of a lease adjusted with any option to extend or terminate the lease, if the use of such option is reasonably certain. The Company makes an assessment on the expected lease term on a lease-by-lease basis and thereby assesses whether it is reasonably certain that any options to extend or terminate the contract will be exercised. In assessing whether the Company is reasonably certain to exercise an option to extend a lease, or not to exercise an option to terminate a lease, it considers all relevant facts and circumstances that create an economic incentive for the Company to exercise the option to extend the lease, or not to exercise the option to terminate the lease. The Company revises the lease term if there is a change in the non-cancellable period of a lease.

(n) Financial Instruments

i) Recognition and initial measurement

Trade receivables are initially recognised at their transaction price. All other financial assets and financial iabilities are initially recognised when the Company becomes a party to the contractual provisions of the instrument.

A financial asset or financial liability is initially measured at fair value plus, for an item not at fair value through profit and loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue.

ii) Classification and subsequent measurement Financial assets

On initial recognition, a financial asset is classified as measured at:

a. Amortised cost; or

b. Fair value through profit and loss (‘FVTPL’)

Financial assets are not reclassified subsequent to their initial recognition, except if the Company changes its business model for managing financial assets.

A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:

- the asset is held within a business model whose objective is to hold assets 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.

All financial assets which are not classified as measured at amortised cost or FVOCI as described above are measured at FVTPL. This includes all derivative financial assets, unless they are designated as hedging instruments, for which hedge accounting is applied. On initial recognition, the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

Financial assets: Assessment whether contractual cash flows are solely payments of principal and interest

For the purposes of this assessment, ‘principal’ is defined as the fair value of the financial asset on initial recognition. ‘Interest’ is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as a profit margin.

In assessing whether the contractual cash flows are solely payments of principal and interest, the Company considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making this assessment, the Company considers:

- contingent events that would change the amount or timing of cash flows;

- terms that may adjust the contractual coupon rate, including variable interest rate features;

- prepayment and extension features; and

- terms that limit the Company’s claim to cash flows from specified assets (e.g. non-recourse features). Financial assets: Subsequent measurement and gains and losses

Financial liabilities: Classification, subsequent measurement and gains and losses

Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as at FVTPL, if it is classified as held for trading, or it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognised in profit or loss. Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in profit or loss. Any gain or loss on de-recognition is also recognised in profit or loss.

iii) De-recognition Financial assets

The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or if it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control of the financial asset.

If the Company enters into transactions whereby it transfers assets recognised on its balance sheet, but retains either all or substantially all of the risks and rewards of the transferred assets, the transferred assets are not derecognised.

Financial liabilities

The Company derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire.

The Company also derecognises a financial liability when its terms are modified and the cash flows under the modified terms are substantially different. In this case, a new financial liability based on the modified terms is recognised at fair value. The difference between the carrying amount of the financial liability extinguished and the new financial liability with modified terms is recognised in profit or loss.

iv) Offsetting

Financial assets and financial liabilities are offset and the net amount is presented in the balance sheet when, and only when, the Company currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realize the asset and settle the liability simultaneously.

(o) Impairment

i) Impairment of financial assets

The Company recognises loss allowances for expected credit loss on financial assets measured at amortised cost. At each reporting date, the Company assesses whether financial assets carried at amortised cost is credit-impaired. A financial asset is ‘credit-impaired'' when one or more events that have detrimental impact on the estimated future cash flows of the financial assets have occurred.

The Company measures loss allowances at an amount equal to lifetime expected credit losses, except for the following, which are measured as 12 month expected credit losses:

- Bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition.

Loss allowances for trade receivables are always measured at an amount equal to lifetime expected credit losses. Lifetime expected credit losses are the expected credit losses that result from all possible default events over the expected life of a financial instrument. The Company follows ‘simplified approach'' for recognition of impairment loss allowance for 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 expected credit loss at each reporting date, right from its initial recognition.

12-month expected credit losses are the portion of expected credit losses that result from default events that are possible within 12 months after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months).

In all cases, the maximum period considered when estimating expected credit losses is the maximum contractual period over which the Company is exposed to credit risk.

To assess whether there is a significant increase in credit risk, the Company compares the risk of a default occurring on the asset as at the reporting date with the risk of default as the date of initial recognition. It considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Company''s historical experience and informed credit assessment and including forward looking information.

Measurement of expected credit losses

Expected credit losses are a probability- weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. difference between the cash flow due to the Company in accordance with the contract and the cash flow that the Company expects to receive).

Presentation of allowance for expected credit losses in the balance sheet

Loss allowance for financial assets measured at amortised cost is deducted from the gross carrying amount of the assets.

Write-off

The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. This is generally the case when the Company determines that the debtors do not have assets or sources of income that could generate sufficient cash flows to repay the amount subject to the write-off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Company''s procedure for recovery of amounts due.

ii) Impairment of non-financial assets

The Company''s non-financial assets, other than inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset''s recoverable amount is estimated.

For impairment testing, assets that do not generate independent cash inflows are grouped together into cash generating units (CGUs). Each CGU represents the smallest group of assets that generates cash inflows that are largely independent of the cash inflows of other assets or CGUs.

The recoverable amount of a CGU (or an individual asset) is the higher of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the CGU (or the asset).

An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its estimated recoverable amount. Impairment losses are recognised in profit or loss. Impairment loss recognised in respect of a CGU is allocated to reduce the carrying amounts of the assets of the CGU (or group of CGUs) on a pro rata basis.

An impairment loss in respect of assets for which impairment loss has been recognised in prior periods, the Company reviews at each reporting date whether there is any indication that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. Such a reversal is made only to the extent that the asset''s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

(p) Operating segments

An operating segment is a component of the Company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Company''s other components, and for which discrete financial information is available. All operating segments'' operating results are reviewed regularly by the Company''s Chief Operating Decision Maker (CODM) to make decisions about resources to be allocated to the segments and assess their performance.

(q) Cash and cash equivalents

For the purpose of presentation in the statement of cash flows, cash and cash equivalents include cash in hand, demand deposits held with banks, other short-term highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

(r) Statement of Cash flows

Cash flows are reported using the indirect method, whereby profit / (loss) for the period is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

(s) Earnings per share

Basic earnings per share are calculated by dividing the net profit / (loss) for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed using the weighted average number of equity and dilutive equity equivalent shares outstanding during the year end, except where the results would be anti-dilutive.

(t) Research and development

Expenditure on research is recognised in the Statement of Profit and Loss under the respective heads of account in the period in which it is incurred.

Expenditure on development activities, whereby research findings are applied to a plan or design for the production of new or substantially improved products and processes, is capitalised, if the cost can be reliably measured, the product or process is technically and commercially feasible and the Company has sufficient resources to complete the development and right to use the asset. The expenditure capitalised includes the cost of materials, direct labour and an appropriate proportion of overheads that are directly attributable to preparing the asset for its intended use. Other development expenditure is recognised in the Statement of Profit and Loss as an expense as incurred.

Capitalised development expenditure is stated at cost less accumulated amortisation and impairment losses. Property, plant and equipment used for research and development are depreciated in accordance with the Company''s policy as stated above.

(u) Recent accounting pronouncement

Ministry of Corporate Affairs ("MCA") notifies new standard or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. There is no such notification which would have been applicable from 1 April 2024.

(ii) Defined benefit plan - Gratuity

The Company operates a gratuity plan wherein every employee is entitled to the benefit equivalent to 15 days salary (includes dearness allowance) last drawn for each completed year of service. The same is payable on termination of service, or retirement, or death whichever is earlier. The benefits vest after five years of continuous service. Gratuity benefits valued are in accordance with the payment of Gratuity Act, 1972.

The above defined benefit plan exposes the Company to following risks:

Interest rate risk:

The defined benefit obligation calculated uses a discount rate based on government bonds. If bond yields fall, the defined benefit obligation will tend to increase.

Salary inflation risk:

Higher than expected increases in salary will increase the defined benefit obligation..

Demographic risk:

This is the risk of variability of results due to unsystematic nature of decrements that include mortality, withdrawal, disability and retirement. The effect of these decrements on the defined benefit obligation is not straight forward and depends upon the combination of salary increase, discount rate and vesting criteria. It is important not to overstate withdrawals because in the financial analysis the retirement benefit of a short career employee typically costs less per year as compared to a long service employee.

The Company actively monitors how the duration and the expected yield of the investments are matching the expected cash outflows arising from the employee benefit obligations. The Company has not changed the processes used to manage its risks from previous periods. The funds are managed by specialised team of Life Insurance Corporation of India.

a) Funding

This is a funded benefit plan for qualifying employees. The Company makes contributions to Life Insurance Corporation of India ("LIC of India"). The assets managed by the fund manager are highly liquid in nature and the Company does not expect any significant liquidity risks.

The Company expects to pay Rs. 100 lakhs (previous year Rs. 100 lakhs) in contribution to its defined benefit plans in 2024-25.

38 Financial Instruments - Risk Management and Fair Values (A) Financial risk management

During the course of its business, the Company is exposed to certain financial risks that could have significant influence on the Company’s business and operational / financial performance. These include market risk (including foreign currency risk, interest rate risk ), credit risk and liquidity risk.

The Board of Directors reviews and approves risk management framework and policies for managing these risks and has constituted Risk Management Committee to monitor mitigating actions taken by Management, minimize potential adverse effects and achieve greater predictability to earnings.

The Company uses derivative financial instruments to hedge risk exposures in accordance with the Company’s policies as approved by the Board of Directors.

The Company has exposure to the following risk arising from financial instruments:

- Market risk (refer (I))

- Credit risk (refer (II)) and

- Liquidity risk (refer (III))

Market risk is the risk of any loss in future earnings, realisable fair values or future cash flows that may result from fluctuations in the pricing of a financial instrument. The Company’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates as future market changes cannot be normally predicted with reasonable accuracy. i. Foreign currency risk management:

The Company is exposed to foreign currency risk to the extent that there is a mismatch between the currencies in which sales, purchases and borrowings are denominated and functional currency of the Company, i.e. Indian Rupee (Rs.). The currencies in which these transactions are primarily denominated are US Dollar, Euro, Pound (GBP) and Japanese Yen (Yen). The Company uses currency swap contracts to hedge its currency risk as per the approved policy of the Company. The Company''s policy is to ensure that its net exposure is kept to an acceptable level which will not have material effect on the profits of the Company if there is any fluctuation in the currency rates. However, the Company has designated cross currency interest rate swaps derivatives as hedge relationship.

The carrying amounts of the Company’s foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period, as reported to management, are as follows:

ii. Interest rate risk management :

The Company is exposed to interest rate risk pertaining to funds borrowed at both fixed and floating interest rates. The risk is managed by the Company by maintaining an appropriate mix between fixed and floating rate borrowings by the use of cross currency interest rate swap contracts. Hedging activities are evaluated regularly to align with interest rate views and defined risk appetite, ensuring the most cost-effective hedging strategies.

As at year end, financial liabilities of Rs. 41,370.08 lakhs (previous year Rs. 25,793.71 lakhs) were subject to variable interest rates.

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. Credit risk encompasses both the direct risk of default and the risk of deterioration of creditworthiness as well as concentration risks. None of the financial instruments of the Company result in material concentrations of credit risks.

The Company primarily has exposure from following types of customers:

- Dealers

- Government institutions

To manage trade receivables, the Company periodically assesses the financial reliability of customers, taking into account the financial conditions, economic trends, analysis of historical bad debts, aging of such receivables and the country in which customers operate.

The Company''s exposure to credit risk for trade receivables by the type of customers is as follows:

Note:

(1) The Company has unrecognized deferred tax assets of Rs. 3,052.49 lakhs on unabsorbed depreciation and unused tax losses of Rs. 12,128.45 lakhs as on 31 March 2023. During the current year, the Company has recognized entire amount of unrecognized deferred tax asset considering current year profits and sufficient future taxable profits based on projections.

(2) During the year ended 31 March 2023, the Company had opted for a lower tax rate under section 115BAA of the Income Tax Act, 1961 inserted vide Taxation Laws (Amendment) Act, 2019 (''new tax regime''). As per the new tax regime, the Company had an irrevocable option of shifting to a lower tax rate with consequent reduction in certain tax incentives. Consequently, deferred tax asset was derecognized amounting to Rs. 768.20 lakhs on account of Minimum alternate tax (MAT) which is not available in new tax regime and net deferred tax assets amounting to Rs. 206.29 lakhs were reversed on account of change in tax rate on deferred tax asset (net) as on 31 March 2022. During the year ended 31 March 2023, the Company recognised deferred tax on new tax rate. Additionally, Rs. 5,087.46 lakhs of unused tax losses comprising Rs. 3,801.78 lakhs additional depreciation and Rs.1,285.68 lakhs additional deduction under section 35(2AB) were surrendered.

40. The Ministry of Corporate Affairs (MCA) has prescribed a new requirement for companies under the proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 inserted by the Companies (Accounts) Amendment Rules 2021 requiring companies which uses accounting software for maintaining its books of account, shall 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 the books of account along with the date when such changes were made and ensuring that the audit trail cannot be disabled.

The Company uses certain accounting software for maintaining accounting records, employee reimbursement records and dealer expenses/ claims records. During the year ended March 31, 2024, the audit trail (edit logs) feature has been implemented w.r.t to such accounting software used by the Company for maintaining its books of account and have been operated for all the relevant transactions recorded in such software except that for one accounting software audit trail feature for one User Id was not enabled at the database level to log any direct data changes, used for internal communications between application server and database server. As per management assessment, it was not required, since, there were no manual transaction involved and backup logs were already created for each transaction. However Management has enabled the audit trail for said User Id subsequent to the yearend.

41 (a) Capital management

The Company manages its capital to ensure that the Company will be able to continue as a going concern, while maximising the return to stakeholders through efficient allocation of capital towards expansion of business, optimisation of working capital requirements and deployment of surplus funds. The Company uses the operational cash flows and equity to meet its working capital requirements. The funding requirements are met through equity, internal accruals and a combination of both long-term and short-term borrowings. The Company is not subject to any externally imposed capital requirements.

Management of the Company reviews the capital structure of the Company on a regular basis and uses debt equity ratio to monitor the same. As part of this review, management of the Company considers risks associated with the movement in the working capital and capex needs.

The following table summarises the capital structure of the Company:

46 (a) 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 persons or entities, including foreign entities (Intermediaries) with the understanding (whether recorded in writing or otherwise) that the Intermediary shall (i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or (ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

(b) The Company has not received any funds from any persons or entities, including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the company shall (i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or (ii) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(c) 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.

(d) The Company has not traded or invested in crypto currency or virtual currency during the current or previous year.

(e) The creditors covered by Micro, Small and Medium Enterprises Development Act, 2006 ("the MSMED Act, 2006") have been identified on the basis of information available with the Company.

(f) The Company has no such layers as prescribed under clause (87) of section 2 of the Act read with Companies (Restriction on number of Layers) Rules, 2017. Hence, the said clause is not applicable to the Company.

(g) The Company has not been declared wilful defaulter by any bank or financial Institution or other lender.

(h) The Company did not have any transactions with companies struck off under Section 248 of the Companies Act, 2013 or Section 560 of Companies Act, 1956 during the year.

(i) No charges or satisfaction are yet to be registered with ROC beyond the statutory period.

(j) No proceeding have been initiated on or is pending against the Company for holding benami property under the Benami Transactions Prohibition) Act, 1988 (45 of 1988) and Rules made thereunder.

As per our report of even date attached For and on behalf of the Board of Directors of SML Isuzu Limited

For Walker Chandiok & Co LLP Rakesh Bhalla S.K. Tuteja

Chartered Accountants Chief Financial Officer Chairman

ICAI Firm registration number: 001076N/N500013 FCMA: 09442 DIN: 00594076

Sandeep Mehta Parvesh Madan Junya Yamanishi

Partner Company Secretary Managing Director & CEO

Membership Number: 099410 ACS: 31266 DIN: 09174162

Place: New Delhi Place: New Delhi

Date: 23 May 2024 Date: 23 May 2024

---

Mar 31, 2023

Rights, preferences and restrictions attached to the equity shares :-

The Company has a single class of equity shares. Accordingly, all equity shares rank equally with regard to dividends and share in the Company’s residual assets. The equity shares are entitled to receive dividend as declared from time to time. The voting rights of an equity shareholder on a poll (not on show of hands) are in proportion to its share of the paid-up equity capital of the Company. Voting rights cannot be exercised in respect of shares on which any call or other sums presently payable have not been paid. Failure to pay any amount called up on shares may lead to forfeiture of the shares. On winding up of the Company, the holders of equity shares will be entitled to receive the residual assets of the Company, remaining after distribution of all preferential amounts, if any, in proportion to the number of equity shares held.

Note: As per the declaration submitted by Navodya Enterprises under SEBI (SAST) Regulations, 2011 :

i) As on 31st March 2023 - Total shareholding 21,53,100 shares (14.8781%) : Navodya Enterprises (Acquirer) along with Person Acting in Concert (PAC) - SPV Traders, Anandam Enterprises, Sapna Gupta & Sachin Bansal.

ii) As on 31st March 2022 - Total shareholding 17,58,100 shares (12.1486%) : Navodya Enterprises (Acquirer) along with Person Acting in Concert (PAC) - SPV Traders, Anandam Enterprises, Sapna Gupta & Sachin Bansal.

6. There are no shares reserved for issue under options and contracts/commitments. Further, there are no shares that have been allotted during last 5 years pursuant to a contract without payment being received in cash, or by way of bonus shares or shares bought back.

* The Company''s exposure to liquidity and market risks related to financial liabilities are disclosed in note 38.

** includes (i) outstanding term loan Rs. 1,300.00 lakhs from Axis Bank which carries variable interest rate of 1 year MCLR 0.10% repayable in quarterly instalments

commencing from 31 December 2022 and ending on 31 December 2025. The lender has exclusive charge on the fixed assets of the Company which are created through this term loan. The lender also has negative lien on fixed assets of the Company (excluding fixed assets exclusively charged for this loan). (ii) outstanding term loan Rs. 1,142.43 lakhs from HDFC Bank which carries variable interest rate of 1 month MCLR 0.15% repayable in monthly instalments commencing from 5 August 2022 and ending on 5 April 2025. The lender has exclusive charge on movable fixed assets of the project. (iii) outstanding term loan Rs. 50 lakhs from Exim Bank which carries variable interest rate of 3 months T bill rate 1.72% for disbursements upto 30 April 2023 and 3 months T bill rate 1.97% for disbursements 1 May 2023 onwards, repayable in quarterly instalments commencing from 1 April 2024 and ending on 1 January 2028. The lender has first charge on movable fixed assets of the Company, giving a minimum cover of 1.25 times of the loan amount (excluding those movable fixed assets which are exclusively charged to other lenders). (iv) outstanding term loan for vehicles 17.30 lakhs from Axis Bank which carries fixed interest rate of 8.95% repayable in monthly instalments commencing from 10 April 2023 and ending on 10 March 2028. The lender has exclusive charge on vehicle financed by such loan.

# includes (i) term loan in the form of External Commercial Borrowing ("ECB"), denominated in USD, taken from MUFG Bank Ltd., Japan. The loan carries floating rate of interest of USD 1 month LIBOR 0.70% hedged by cross currency interest rate swaps carrying fixed rates of interest and is repayable in 18 quarterly instalments, commencing from 2 July 2018 and ending on 3 October 2022. The Company has an outstanding balance of Nil (USD Nil) as at 31 March 2023 [previous year Rs. 3,201.76 lakhs (USD 42.24 lakhs)]. (ii) outstanding term loan amounting to Rs. 400 lakhs (previous year Rs. 1,600 lakhs) from HDFC Bank which carries floating interest rate of 3 months MCLR, repayable in monthly instalments commencing from 1 April 2020 and ending on 1 July 2023. The lender has a negative lien on fixed assets of the Company. (iii) outstanding term loan amounting to Rs. 503.22 lakhs (previous year Rs. 812.70 lakhs) from Axis Bank which carries variable interest rate of MCLR 0.15%,, repayable in quarterly instalments commencing from 5 October 2021 and ending on 31 March 2025. The lender has a negative lien on fixed assets of the Company.

(i) The cash credit limits sanctioned by the bankers are secured by a parri passu charge on the Company''s current assets.These carry floating interest rate ranging from 6.50% to 8.70% during 2022-23 (previous year 6.50% per annum).

(ii) Other loans from banks - secured represents working capital demand loan taken from Axis Bank and HDFC bank, secured by parri passu charge on current assets of the Company. These carry an interest rate ranging from 5.51% to 8.50% per annum (previous year 5.44% to 6.00% per annum).

(iii) Other loans from banks - unsecured represents working capital demand loan / working capital loan taken from MUFG Bank, Axis Bank and HDFC Bank. These carry an interest rate ranging from 5.25% to 8.50% per annum (previous year 5.44% to 6.00% per annum).

* The Company has borrowings from banks on the basis of security of current assets and quarterly returns or statements of current assets filed by the Company with banks are in agreement with the books of accounts.

# net of reversal of unutilised provisions during the year for warranty Nil (previous year Rs. 50 lakhs), liquidated damages Rs. 34.43 lakhs (previous year Rs. 5.52 lakhs) and contingencies Nil (previous year Rs. 12.63 lakhs).

* The Company is liable towards warranty claims made by end users of its products. The year-end provision is based on i ts estimate of past experience regarding failure trends of products and costs of repair or replacement. It is estimated that the provision would be fully utilised over the warranty period, which range from two to five years.

** Represents provision for liquidated damages as per the contracts entered with the customers and expected to be utilised within one year from the reporting date.

*** Represents provision for contingencies pertaining to estimated outflow in respect of litigations and disputes. While the timing and amount of cash outflows is determinable only on occurrence of future uncertain events, the Company expects outflow within one year from the reporting date.

* The Company''s exposure to liquidity and market risks related to financial liabilities are disclosed in note 38.

** includes Rs. 371.89 lakhs (previous year Rs. 7.53 lakhs) payable to controlling enterprise (refer note 36)

# The Ministry of Micro, Small and Medium Enterprises has issued an Office Memorandum dated 26 August 2008 which recommends that the Micro and Small Enterprises should mention in their correspondences with its customers the Entrepreneurs Memorandum Number as allocated after filing of the Memorandum. Accordingly, the disclosure in respect of amounts payable to such enterprises as at the year end has been made in the financial statements based on information available with the Company as under :

In respect of the matters above pending at various authorities, the amount represents the demands received under the respective demand / show cause notices / legal claims, wherever applicable.

(b) The Company is subject to legal proceedings and claims, which have arisen in the ordinary course of business. The Company''s management does not reasonably expect that these legal actions, when ultimately concluded and determined, will have a material and adverse effect on the Company''s results of operations or financial condition.

32 Leases

The Company (lessee) leases a number of buildings, plant and equipment used in its operations. Leases of buildings and plant and equipment generally have lease terms between 2 to 7 years.The Company assesses at lease commencement whether it is reasonably certain to exercise the extension or termination option as per respective lease agreements.

34 Segment information

The Company is primarily engaged in the business of manufacturing of commercial vehicles and related components which constitutes a single business segment and accordingly, the disclosures of Ind AS 108, “Operating Segments" are not required to be given. As defined in Ind AS 108, the Chief Operating Decision Maker (CODM), i.e. the Board of directors, evaluates the performance of the Company and allocates resources based on the analysis of the various performance indicators of the Company as a single unit.

a. Overseas segment includes sales and services rendered to customers located outside India.

b. Domestic segment includes sales and services rendered to customers located in India.

c. The Company has its business operations primarily in India. There are no other non-current assets outside India.

Major customer

No customer individually accounted for more than 10% of the revenue of the Company for financial year 2022-23 and 2021-22.

35 The Company has established a comprehensive system for maintenance of information and documents as required by the transfer pricing regulation under sections 92-92F of the Income-Tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company continuously updates its documentation for the international transactions entered into with the associated enterprises during the financial year and expects such records to be in existence latest by the due date as required under law. The management is of the opinion that its international transactions are at arm’s length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of income tax expense and that of provision for taxation.

36 Related parties

A. Related party and nature of related party relationship where control exists:

Controlling Enterprise: Sumitomo Corporation, Japan

B. Other related parties with whom transaction have taken place during the year:

Key management personnel

Mr. Yugo Hashimoto - Managing Director & CEO (upto 19 May 2021)

Mr. Junya Yamanishi - Managing Director & CEO (w.e.f. 20 May 2021)

Mr. Tadanao Yamamoto - Whole-time Director - Quality Assurance (upto 29 November 2021)

Mr. Rakesh Bhalla - Chief Financial Officer Mr. Parvesh Madan - Company Secretary

Mr. S.K. Tuteja - Chairman, Non Executive and Independent Director

Dr. (Mrs.) Vasantha S Bharucha - Non Executive and Independent Director (upto 21 September 2022)

Mr. Sudhir Nayar - Non Executive and Independent Director

Mr. Chandra Shekhar Verma - Non Executive and Independent Director

Mrs. Atima Khanna - Non Executive and Independent Director (w.e.f. 22 September 2022)

C. Transactions with related parties and outstanding balances as at year-end:

(ii) Defined benefit plan - Gratuity

The Company operates a gratuity plan wherein every employee is entitled to the benefit equivalent to 15 days salary (includes dearness allowance) last drawn for each completed year of service. The same is payable on termination of service, or retirement, or death whichever is earlier. The benefits vest after five years of continuous service. Gratuity benefits valued are in accordance with the payment of Gratuity Act, 1972.

The above defined benefit plan exposes the Company to following risks:

Interest rate risk:

The defined benefit obligation calculated uses a discount rate based on government bonds. If bond yields fall, the defined benefit obligation will tend to increase.

Salary inflation risk:

Higher than expected increases in salary will increase the defined benefit obligation.

Demographic risk:

This is the risk of variability of results due to unsystematic nature of decrements that include mortality, withdrawal, disability and retirement. The effect of these decrements on the defined benefit obligation is not straight forward and depends upon the combination of salary increase, discount rate and vesting criteria. It is important not to overstate withdrawals because in the financial analysis the retirement benefit of a short career employee typically costs less per year as compared to a long service employee.

The Company actively monitors how the duration and the expected yield of the investments are matching the expected cash outflows arising from the employee benefit obligations. The Company has not changed the processes used to manage its risks from previous periods. The funds are managed by specialised team of Life Insurance Corporation of India.

a) Funding

This is a funded benefit plan for qualifying employees. The Company makes contributions to Life Insurance Corporation of India ("LIC of India"). The assets managed by the fund manager are highly liquid in nature and the Company does not expect any significant liquidity risks.

The Company expects to pay Rs. 100 lakhs (previous year Rs. 100 lakhs lakhs) in contribution to its defined benefit plans in 2023-24.

f) Plan assets

The plan assets are maintained with Life Insurance Corporation of India Gratuity Scheme. The details of investments maintained by Life Insurance Corporation of India and asset-liability matching strategies are not available with the Company and have not been disclosed.

The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same methods (present value of defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognised in the balance sheet.

The methods and assumptions used in preparing the sensitivity analysis did not change as compared to the previous year.

(iii) Defined contribution plans

The Company makes contribution towards employees'' provident fund, superannuation fund and employees'' state insurance plan scheme. Under the schemes, the Company is required to contribute a specified percentage of payroll cost, as specified in the rules of the scheme, to these defined contribution schemes.

38 Financial Instruments - Risk Management and Fair Values (A) Financial risk management

During the course of its business, the Company is exposed to certain financial risks that could have significant influence on the Company’s business and operational / financial performance. These include market risk (including foreign currency risk, interest rate risk ), credit risk and liquidity risk.

The Board of Directors reviews and approves risk management framework and policies for managing these risks and has constituted Risk Management Committee to monitor mitigating actions taken by Management, minimize potential adverse effects and achieve greater predictability to earnings.

The Company uses derivative financial instruments to hedge risk exposures in accordance with the Company’s policies as approved by the Board of Directors.

The Company has exposure to the following risk arising from financial instruments:

- Market risk (refer (I))

- Credit risk (refer (II)) and

- Liquidity risk (refer (III))

(I) Market risk

Market risk is the risk of any loss in future earnings, realisable fair values or future cash flows that may result from fluctuations in the pricing of a financial instrument. The Company’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates as future market changes cannot be normally predicted with reasonable accuracy.

i. Foreign currency risk management:

The Company is exposed to foreign currency risk to the extent that there is a mismatch between the currencies in which sales, purchases and borrowings are denominated and functional currency of the Company, i.e. Indian Rupee (Rs.). The currencies in which these transactions are primarily denominated are US Dollar, Euro and Japanese Yen (Yen). The Company uses currency swap contracts to hedge its currency risk as per the approved policy of the Company. The Company''s policy is to ensure that its net exposure is kept to an acceptable level which will not have material effect on the profits of the Company if there is any fluctuation in the currency rates. However, the Company has designated cross currency interest rate swaps derivatives as hedge relationship.

The carrying amounts of the Company’s foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period, as reported to Management, are as follows:

A reasonably possible strengthening (weakening) of the Indian Rupee by 1% against below currencies at 31 March 2023 and 31 March 2022 would have impacted the exposure in relation to financial instruments denominated in foreign currency and increased / decreased profit or loss by the amounts shown below. This analysis is performed on foreign currency denominated monetary financial assets and financial liabilities outstanding as at the year end. This analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecast sales and purchases.

ii. Interest rate risk management :

The Company is exposed to interest rate risk pertaining to funds borrowed at both fixed and floating interest rates. The risk is managed by the Company by maintaining an appropriate mix between fixed and floating rate borrowings by the use of cross currency interest rate swap contracts. Hedging activities are evaluated regularly to align with interest rate views and defined risk appetite, ensuring the most cost-effective hedging strategies.

As at year end, financial liabilities of Rs. 25,793.71 lakhs (previous year Rs. 29,056.88 lakhs) were subject to variable interest rates, out of which, financial liabilities of Nil (previous year Rs. 3,201.76 lakhs) were hedged using cross currency interest rate swaps.

The sensitivity analysis below has been determined based on the exposure to interest rates at the end of the reporting period. A 100 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents Management’s assessment of the reasonably possible change in interest rates.

A reasonably possible change of 1 % in interest rates at the reporting date would have increased / decreased the profit or loss by the amounts shown below. This analysis assumes that all other variables remain constant.

The Company''s certain long term loans taken from bank carries variable rate of interest, hence, it is subject to interest rate risk since carrying amount or the future cash flows will fluctuate because of a change in market interest rates.

(II) Credit risk :

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. Credit risk encompasses both the direct risk of default and the risk of deterioration of creditworthiness as well as concentration risks. None of the financial instruments of the Company result in material concentrations of credit risks.

The Company primarily has exposure from following types of customers:

- Dealers

- Government institutions

To manage trade receivables, the Company periodically assesses the financial reliability of customers, taking into account the financial conditions, economic trends, analysis of historical bad debts, aging of such receivables and the country in which customers operate.

The Company makes an allowance for doubtful trade receivables using the simplified approach for expected credit loss and by continuously monitoring the recoverability of receivable balances.

The credit risk on liquid funds is limited because the counterparties are banks with high credit ratings.

Derivative financial instruments: Credit risk related to derivative financial instruments is managed by only entering into such arrangement with highly rated banks as ''counterparties.

Other financial assets measured at amortised cost: Other financial assets measured at amortized cost includes security deposits and others. Credit risk related to these other financial assets is managed by monitoring the recoverability of such amounts continuously and there were no indications that defaults in payment obligations would occur.

(MI) Liquidity risk :

Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company has obtained short term borrowing limits of Rs. 50,551.19 lakhs from various banks to meet it''s liquidity needs, out of which Rs. 22,398.07 lakhs has been utilised as at 31 March 2023.

The table below summarises the maturity profile remaining contractual maturity period at the balance sheet date for its non derivative financial liabilities based on the undiscounted cash flows.

(i) Fair valuation of financial assets and liabilities with short term maturities is considered as approximate to respective carrying amount due to the short term maturities of these instruments.

(ii) Fair value of non-current financial assets has not been disclosed as there is no significant differences between carrying value and fair value.

(iii) The fair value of borrowings is based upon a discounted cash flow analysis that used the aggregate cash flows from principal and finance costs over the life of the debt and current market interest rates.

The Company determines the fair value of its financial instruments on the basis of the following hierarchy:

Level 1: The fair value of financial instruments that are quoted in active markets are determined on the basis of quoted price for identical assets or liabilities.

Level 2: The fair value of financial instruments that are not traded in an active market are determined using valuation techniques based on observable market data.

Level 3: The fair value of financial instruments that are measured on the basis of entity specific valuations using inputs that are not based on observable market data (unobservable inputs).

There are no transfers between Level 1, Level 2 and Level 3 during the year ended 31 March 2023 and 31 March 2022.

Measurement of fair values Fair value hierarchy

Fair value measurement for the cross currency interest rate swap has been categorised as level 2 fair value based on the inputs to the valuation technique used.

Valuation technique

Cross currency interest rate swaps: The fair value is calculated as the present value of the estimated future cash flows. Estimates of future floating-rate cash flows are based on quoted swap rates, futures prices and interbank borrowing rates. Estimated cash flows are discounted using a yield curve constructed from similar sources and which reflects the relevant benchmark interbank rate used by market participants for this purpose when pricing interest rate swaps.

(1) Out of above, unabsorbed carried forward losses of Rs. 1,373.90 lakhs will expire in assessment year 2029-30 and Rs. 6,014.92 lakhs will expire in assessment year 2030-31. Unabsorbed depreciation of Rs. 4,739.63 lakhs do not have expiry.

(2) The Company has unrecognized deferred tax assets of Rs. 8,196.43 lakhs on unabsorbed depreciation and unused tax losses of Rs. 23,455.91 lakhs as on 31 March 2022. During the current year, the Company has earned profit before tax of Rs. 1,727.56 lakhs and is also expecting taxable profits in future based on future projections. The management has recognized deferred tax asset of Rs. 1,570.48 lakhs during the quarter and year ended 31 March 2023 on carry forward of unused tax losses based on the probability of sufficient taxable profits in near future.

(3) During the year ended 31 March 2023, the Company has opted for lower tax rate under section 115BAA of the Income Tax Act, 1961 inserted vide Taxation Laws (Amendment) Act, 2019 (''new tax regime''). Per new tax regime, the Company has an irrevocable option of shifting to lower rate with consequent reduction in certain tax incentives. Consequently, deferred tax asset has been derecognized amounting to Rs. 768.20 lakhs on account of Minimum alternate tax (MAT) which is not available in new tax regime and net deferred tax asset amounting to Rs. 206.29 lakhs has been reversed on account of change in tax rate on deferred tax asset (net) as on 31 March 2022. For the current year, the Company has recognised deferred tax on new tax rate. Also, Rs. 5.087.46 lakhs of unused tax losses comprising Rs. 3,801.78 lakhs additional depreciation and Rs. 1,285.68 lakhs additional deduction under section 35(2AB) has been surrendered.

40. The Company considers its property, plant and equipment and intangible assets as a single cash generating unit or CGU. The total carrying value of its CGU as at 31 March 2023 is Rs. 34,996.45 lakhs (refer note 3). Based on its assessment of the various factors that indicate impairment, the Company decided to test its CGU for impairment as per the requirements of Ind AS 36 on ‘Impairment of Assets’. In accordance with the requirements of Ind AS 36, the Company was required to determine a recoverable amount of its CGU. The Company has considered fair value less costs to sell (‘the fair value’) of the CGU as its recoverable amount and engaged an independent third party valuer (‘the Valuer’) to arrive at this fair value.

The Valuer has adopted the sales comparison method under market approach for valuing land and has adopted the depreciated replacement cost method under cost approach to value key assets such as building and plant and machinery. Further, in respect of technical knowhow and software which have a definite life, the Valuer has considered their book value as being representative of their fair value.

Some of the key assumptions used by the Valuer for determining the fair value for significant assets are as follows:

i. Land - smaller land parcels, parcels located in proximity to arterial roads, land parcels accessible via highways and industrial zoned land parcels with all approvals command a higher premium

ii. Building - a life of 60 years and 30 years has been considered for RCC structures and shed structures respectively. Key building parameters such as physical and functional obsolescence, environmental factors etc. have also been considered for valuation.

iii. Plant and Equipment - total economic life for machineries under various categories have been considered on the basis of regulations prescribed under Schedule II of Indian Companies Act, 2013. Further, a salvage value of 2-5% on the replacement cost, as of date of assessment, of plant and machinery and other equipment has been considered. Additionally, the nature of machineries, current trend in the relevant industry, age and future physical life (low residual life), etc. have also been considered.

In addition to the above, approx. 5% towards cost to sell or brokerage charges as well as other cost related to the transaction activities have been considered on plant and machinery and other assets to arrive at the net realizable value.

Based on all the above factors, as per the final report issued by the Valuer, the fair value of the CGU is higher than its carrying value and hence the Company has concluded that no impairment provision needs to be recorded in the financial statements.

41 Capital management

The Company manages its capital to ensure that the Company will be able to continue as a going concern, while maximising the return to stakeholders through efficient allocation of capital towards expansion of business, optimisation of working capital requirements and deployment of surplus funds. The Company uses the operational cash flows and equity to meet its working capital requirements. The funding requirements are met through equity, internal accruals and a combination of both long-term and short-term borrowings. The Company is not subject to any externally imposed capital requirements.

Management of the Company reviews the capital structure of the Company on a regular basis and uses debt equity ratio to monitor the same. As part of this review, management of the Company considers risks associated with the movement in the working capital and capex needs.

* The Company is required to comply with certain covenants under the agreement executed for some of its long term borrowings. During the financial year ended 31 March 2023, for borrowings aggregating to Rs. 1,542.43 lakhs, some of the financial covenants have not been met by the Company due to gradual recovery after Covid-19 impact and the lenders have the option to recall the said borrowings. The lender has waived off the requirement of meeting the financial covenants for the year ended 31 March 2023 on borrowing amounting to Rs. 1,542.43 lakhs, hence, maturities of said loan due after 12 months of the reporting date has been classified as non-current liability as at 31 March 2023.

43 Going concern and Covid-19 assessment

The Covid-19 pandemic had a significant impact on the Company''s operations for financial years 2020-21 and 2021-22, resulting in slowdown of business activities and significant losses. The Company gradually returned to normalcy in the current year. Management believes there is no further impact of COVID-19 given increase in revenues, improvement in overall financial statements of the Company and no disruption in business operations. Company''s current liabilities exceeds current assets by Rs. 14,679.75 lakhs as at 31 March 2023. However, in view of improved results, strong net worth, established technical excellence, continued support from various stakeholders i ncluding its promotor group and through availability of financing from lenders, the Company will continue as a going concern and will be able to meet its financial obligations in the foreseeable future. The financial statements are accordingly prepared on a going concern basis of accounting.

46 (a) 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 persons or entities, including foreign entities (Intermediaries) with the understanding (whether recorded in writing or otherwise) that the Intermediary shall (i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or (ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

(b) The Company has not received any funds from any persons or entities, including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the company shall (i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or (ii) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(c) 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.

(d) The Company has not traded or invested in crypto currency or virtual currency during the current or previous year.

(e) The creditors covered by Micro, Small and Medium Enterprises Development Act, 2006 ("the MSMED Act, 2006") have been identified on the basis of information available with the Company.

(f) The Company has no such layers as prescribed under clause (87) of section 2 of the Act read with Companies (Restriction on number of Layers) Rules, 2017. Hence, the said clause is not applicable to the Company.

(g) The Company has not been declared wilful defaulter by any bank or financial Institution or other lender.

(h) No transactions are carried out with companies struck off under section 248 of the Act or section 560 of Companies Act, 1956.

(I) No charges or satisfaction are yet to be registered with ROC beyond the statutory period.

(j) No proceeding have been initiated on or is pending against the Company for holding benami property under

the Benami Transactions Prohibition) Act, 1988 (45 of 1988) and Rules made thereunder.

47 The figures for previous year have been re-classified/ re-grouped wherever necessary. The impact of such

reclassification/regrouping is not material to the financial statements.

---

Mar 31, 2018

Notes:

* Additions include Rs. 650.43 lakhs (previous year Rs.150.31 lakhs) towards assets located at the research and development facilities.

** refer note 15 for information on PPE pledged as security by the Company.

# refer note 31 for reconciliation of deemed cost as adopted by Company in accordance with Ind AS 101.

@ The related finance lease obligations in respect to plant and equipment acquired under finance lease arrangements have been disclosed in note nos. 15 A & 16.

^A Disposals / adjustments included in Capital work in progress / Intangible assets under development represents assets capitalised during the year.

Additions during the year in PPE and other intangible assets includes borrowing costs capitalised amounting to Rs. 403.97 lakhs (previous year Rs. 10.62 lakhs).

Refer note 32 for disclosure of contractual commitments for the acquisition of PPE.

The gross and net carrying amount of plant and equipment acquired under finance leases are separately shown in the reconciliation of carrying amount in note no. 3 above.

1. Rights, preferences and restrictions attached to the equity shares :-

The Company has a single class of equity shares. Accordingly, all equity shares rank equally with regard to dividends and share in the Company’s residual assets. The equity shares are entitled to receive dividend as declared from time to time. The voting rights of an equity shareholder on a poll (not on show of hands) are in proportion to its share of the paid-up equity capital of the Company. Voting rights cannot be exercised in respect of shares on which any call or other sums presently payable have not been paid. Failure to pay any amount called up on shares may lead to forfeiture of the shares. On winding up of the Company, the holders of equity shares will be entitled to receive the residual assets of the Company, remaining after distribution of all preferential amounts in proportion to the number of equity shares held.

2. There are no shares reserved for issue under options and contracts/commitments. Further, there are no shares that have been allotted during last 5 years pursuant to a contract without payment being received in cash, or by way of bonus shares or shares bought back.

# Refer to note 33(c) for future minimum lease payments in respect of finance lease obligations.

* The Company''s exposure to liquidity and market risks related to financial liabilities are disclosed in note 39.

** Represents term loan in the form of external commercial borrowing ("ECB"), denominated in USD, taken from Bank of Tokyo Mitsubishi UFJ Ltd., Japan. The loan carries floating rate of interest of USD 1M LIBOR 70 bps and is repayable in 18 quarterly instalments, commencing from 02 July, 2018 and ending on 03 October, 2022. Accordingly, the Company has an outstanding of Rs. 14,016.50 lakhs (USD 215.06 lakhs) as at 31 March 2018 [31 March 2017 Rs. 3,352.58 lakhs (USD 51.70 lakhs), 1 April 2016 Nil].

(i) The cash credit limits sanctioned by the bankers are secured by a first charge by way of hypothecation of the Company’s current assets i.e. stocks of raw materials, semi-finished goods, finished goods, stores and spares, bills receivables including receivables from hire-purchase/ leasing, book debts and other movables of the Company (both present and future) and also by way of a collateral pari passu second charge on the Company’s Property, plant and equipment. These carry an interest rate ranging from 10.00% to 11.00% per annum. The Company has not defaulted on repayment of loan and interest during the year.

(ii) Other loans from banks - unsecured represents working capital demand loan taken from Mizuho Bank Limited. These carry an interest rate ranging from 7.00% to 8.00% per annum. The Company has not defaulted on repayment of loan and interest during the year.

# This represents fair value of the derivative contracts undertaken to hedge against the foreign exchange exposure arising from repayment of loans and payment of interest. The Company has designated these derivatives as hedge relationships. Any change in the fair value of the derivative contract is recognised in the other comprehensive income.

* The Company''s exposure to liquidity and market risks related to financial liabilities are disclosed in note 39.

# net of write back of liability in respect of provision for warranty Rs. 44.15 lakhs (2016-17 Rs. 113.14 lakhs, 2015-16 Rs. 230.93 lakhs)

* The Company is liable towards warranty claims made by end users of its products. The year end provision is based on its estimate of the past experience regarding failure trends of products and costs of rectification or replacement. It is estimated that the provision would be fully utilized over the warranty period i.e. within 3 years.

3. Explanation of transition to Ind AS

As stated in note 2 (a) (i), these are the Company''s first financial statements prepared in accordance with Ind AS. For the year ended 31 March 2017, the Company had prepared its financial statements in accordance with Companies (Accounting Standards) Rules, 2006 notified under section 133 of the Act and other relevant provisions of the Act (''previous GAAP'').

The accounting policies set out in note 2 have been applied in preparing these financial statements for the year ended 31 March 2018 including the comparative information for the year ended 31 March 2017 and the opening Ind AS balance sheet on the date of transition i.e. 1 April 2016.

In preparing its Ind AS balance sheet as at 1 April 2016 and in presenting the comparative information for the year ended 31 March 2017, the Company has adjusted amounts reported previously in financial statements prepared in accordance with previous GAAP. This note explains the principal adjustments made by the Company in restating its financial statements prepared in accordance with previous GAAP, and how the transition from previous GAAP to Ind AS has affected the Company''s financial position, financial performance and cash flows.

A. Optional exemptions availed

(i) Property, plant and equipment and intangible assets

As permitted by Ind AS 101 "First time adoption", the Company has elected to continue with its carrying values under previous GAAP for all items of property, plant and equipment. The same selection has been made in respect of intangible assets.

(ii) Determining whether an arrangement contains a lease

Ind AS 101 includes an optional exemption that permits an entity to apply the relevant requirements in Appendix C of Ind AS 17 for determining whether an arrangement existing at the date of transition contains a lease by considering the facts and circumstances existing at the date of transition (rather than at the inception of the arrangement). The Company has elected to avail of the above exemption.

B. Mandatory exceptions

(i) Estimates

As per Ind AS 101, an entity''s estimates in accordance with Ind AS at the date of transition or as at the end of the comparative information period presented in the entity''s first Ind AS financial statements, shall be consistent with estimates made for the same date in accordance with previous GAAP unless there is objective evidence that those estimates were in error. However, the estimates should be adjusted to reflect any difference in accounting policies.

As per Ind AS 101, where application of Ind AS requires an entity to make certain estimates that were not required under previous GAAP, those estimates should be made to reflect conditions that exist at the transition date or at the end of the comparative period, as the case may be.

The Company’s estimates under Ind AS are consistent with the above requirement. Key estimates considered in preparation of the financial statements that were not required under the previous GAAP are as follows:

- Determination of discounted value for financial instruments carried at amortised cost.

- Determination of fair value changes of cash flow hedges through other comprehensive income.

- Impairment of financial assets based on expected credit loss model."

(ii) Classification and measurement of financial assets

Ind AS 101 requires an entity to assess classification of financial assets on the basis of facts and circumstances existing as on the date of transition. Accordingly, the Company has determined the classification of financial assets based on facts and circumstances that exist on the date of transition. Measurement of financial assets accounted at amortised cost has been done retrospectively.

(iii) De-recognition of financial assets and liabilities

"Ind AS 101 requires a first-time adopter to apply the de-recognition provisions of Ind AS 109 prospectively for transactions occurring on or after the date of transaction to Ind AS. However, Ind AS 101 allows a first time adopter to apply the de-recognition requirements in Ind AS 109 retrospectively from the date of the entity’s choosing, provided that the information needed to apply Ind AS 109 to financials assets and liabilities derecognised as a result of past transaction was obtained at the time of initially accounting for those transactions. As permitted by Ind AS 101, the Company has adopted to apply the de-recognition provisions of Ind AS 109 prospectively from the date of transition to Ind AS.

(a) Finance lease arrangements

Under Ind AS, any arrangement (even if not legally structured as lease) which conveys a right to use an asset in return for a payment or series of payments are identified as leases provided certain conditions are met. In case such arrangements are determined to be in nature of leases, such arrangements are required to be classified into finance or operating leases as per the requirement of Ind AS 17 "Leases".

As per Ind AS 17, "Leases", the Company has assessed certain long term arrangements, fulfillment of which is dependent on use of specified assets and where the Company has the right to control the use of such assets for being in the nature of lease. This resulted in certain arrangements being treated as a lease and classified as a finance lease.

(b) Non current provision of warranty expense

Under Indian GAAP, the Company has accounted for provisions, including long term provisions, at the undiscounted amount. In contrast, Ind AS 37 "Provisions, Contingent liabilities and Contingent assets" requires that where the effect of time value of money is material, the amount of provision should be the present value of the expenditures required to settle the obligations. Hence, provision for warranty has been valued at present value by discounting it at risk adjusted discount rate. Ind AS 37 also provides that where the discounting is used, the carrying amount of provision increases in each period to reflect the passage of time. This increase is recognised as borrowing cost.

(c) Service charges

Under previous GAAP, service charge utilisation during the period was adjusted from service charge provision. However, under Ind AS, the same has been added to revenue from sale of goods and correspondingly service charge expense for the year has also been increased by the same amount. This has resulted in an increase in the revenue from operations and service charge expenses for the year ended 31 March 2017. Further, the amount of Rs. 185.12 lakhs recognised during the year in service charge expense has been reversed. The total comprehensive income for the year ended and equity as at 31 March 2017 has remain unchanged.

(d) Discounts , commissions and liquidated damages

Under previous GAAP discounts , commission paid and liquidated damages amounting to Rs. 1,598.03 lakhs were recorded under other expenses. However, under Ind AS they are reclassified from other expenses and netted off from revenue. Hence the revenue has been reduced by Rs.1,598.03 lakhs and correspondingly other expenses has been decreased. The total comprehensive income for the year ended and equity as at 31 March 2017 has remain unchanged.

(e) Excise duty

Under previous GAAP, revenue from sale of goods was presented net of excise duty on sales. Under Ind AS, revenue from sale of goods is presented inclusive of excise duty. Excise duty is presented as an expense in profit or loss. This has resulted in an increase in the revenue from operations and expenses for the year ended 31 March 2017. The total comprehensive income for the year ended and equity as at 31 March 2017 has remain unchanged.

(f) Actuarial gains and losses

Under Ind AS, all actuarial gains and losses are recognised in other comprehensive income. Under previous GAAP, the Company recognised actuarial gains and losses in profit or loss. Hence actuarial gain amounting to Rs. 81.62 lakhs (gross of tax impact of Rs. 28.25 lakhs) has been recognised in other comprehensive income instead of profit or loss. However, this has no impact on the total comprehensive income and total equity for the year ended 31 March 2017.

(g) Net interest on net defined liability

Under Ind AS, net interest on net defined benefit liability amounting to Rs.169.57 lakhs has been reclassified from employee benefit expense to finance cost. However, this has no impact on the total comprehensive income and total equity for the year ended 31 March 2017.

(h) Deferred taxes

Under Ind AS, deferred taxes are recognised relating to Ind AS adjustments including deferred taxes measured using balance sheet approach. The effect of these are reflected in total equity and total comprehensive income.

(i) Derivatives (cross currency interest rate swaps)

Under the previous GAAP, the Company had adopted the hedge accounting principles as provided in Guidance note on Accounting for Derivative Contracts issued by the Institute of Chartered Accountants of India, and accordingly, the net effective portion of hedging instruments was recognised directly in the cash flow hedge reserve. Under Ind AS 109 "Financial instruments", net effective portion of hedging instruments are accounted as a part of the other comprehensive income to the extent considered as effective and are aligned to the hedging strategy. Accordingly total comprehensive income has been increased and this has no impact on the total equity as at 31 March 2017.

(j) Proposed dividend

Under previous GAAP, dividends proposed by the board of directors after the reporting date but before the approval of financial statements were considered to be adjusting event and accordingly recognised (along with related dividend distribution tax) as liabilities at the reporting date. Under Ind AS, dividends so proposed by the board are considered to be non-adjusting event. Accordingly, provision for proposed dividend and dividend distribution tax recognised under previous GAAP has been reversed.

(l) Under previous GAAP, Company had received the grant amounting to Rs. 15 lakhs from the Government for the set up of manufacturing facility and same has been treated as capital reserve. But as per Ind AS grant can be of two types i.e. income related and asset related grant. If the grant is related to asset, then the grant will be set up as deferred income and credited to statement of profit and loss on a systematic basis and rational basis over the useful life of asset. If the grant is related to income, then the grant is recognised in the statement of profit and loss over a period in which the company recognised the expenses for which the grant has been received. Accordingly, on the date of transition amount of Rs.15 lakhs has been transferred from capital reserve to general reserve. This has no impact on total equity as at 1 April 2016 and 31 March 2017.

In respect of the matters above, the amount represents the demands received under the respective demand/ show cause notices/ legal claims, wherever applicable.

(b) In addition, the Company is subject to legal proceedings and claims, which have arisen in the ordinary course of business. The Company''s management does not reasonably expect that these legal actions, when ultimately concluded and determined, will have a material and adverse effect on the Company''s results of operations or financial condition.

4. Segment information

The Company is primarily engaged in the business of manufacturing of commercial vehicles and related components which constitutes a single business segment, accordingly, disclosure requirement of Ind AS 108, “Operating Segments” are not required to be given. As defined in Ind AS 108, the Chief Operating Decision Maker (CODM) i.e. the Board of directors evaluates the performance of the Company, allocate resources based on the analysis of the various performance indicator of the Company as a single unit.

Notes:

a. Overseas segment includes sales and services rendered to customers located outside India

b. Domestic segment includes sales and services rendered to customers located in India

c. Non-current segment assets includes property, plant and equipment, capital work in progress, intangible assets, intangible assets under development and capital advances.

Major customer

No customer individually accounted for more than 10% of the revenue.

5. The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing regulation under sections 92-92F of the Income-Tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company continuously updates its documentation for the international transactions entered into with the associated enterprises during the financial year and expects such records to be in existence latest by the due date as required under law. The management is of the opinion that its international transactions are at arm’s length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of income tax expense and that of provision for taxation.

* Excludes contribution to the gratuity fund and provision for compensated absences determined on an actuarial basis, as these are determined for the Company as a whole.

** Approval from the Shareholders by way of a special resolution is being sought at the ensuing Annual General Meeting for payment of managerial remuneration as Minimum Remuneration to Managing Director & CEO and Whole-time Director & CFO in view of inadequacy of profits and ratification of payment of excess remuneration aggregating to Rs. 44.18 lakhs paid during the financial year ended 31 March 2018. In terms of the provisions of the Companies Act 2013, the amount will be refunded to the Company by the concerned directors in case it is not approved by the shareholders. Additionally, commission of 1% of the net profits computed in accordance with Section 198 of the Companies Act, 2013, will be paid to the Managing Director & CEO and to the Whole-time Director & CFO upon receipt of the aforesaid shareholder(s) approval.

(ii) Defined benefit plan - Gratuity

The Company operates gratuity plan wherein every employee is entitled to the benefit equivalent to 15 days salary (includes dearness allowance) last drawn for each completed year of service. The same is payable on termination of service, or retirement, or death whichever is earlier. The benefits vest after five years of continuous service. Gratuity benefits valued are in accordance with the payment of Gratuity Act, 1972.

The above defined benefit plan exposes the Company to following risks:

Interest rate risk:

The defined benefit obligation calculated uses a discount rate based on government bonds. If bond yields fall, the defined benefit obligation will tend to increase.

Salary inflation risk:

Higher than expected increases in salary will increase the defined benefit obligation.

Demographic risk:

This is the risk of variability of results due to unsystematic nature of decrements that include mortality, withdrawal, disability and retirement. The effect of these decrements on the defined benefit obligation is not straight forward and depends upon the combination of salary increase, discount rate and vesting criteria. It is important not to overstate withdrawals because in the financial analysis the retirement benefit of a short career employee typically costs less per year as compared to a long service employee.

The Company actively monitors how the duration and the expected yield of the investments are matching the expected cash outflows arising from the employee benefit obligations. The Company has not changed the processes used to manage its risks from previous periods. The funds are managed by specialised team of Life Insurance Corporation of India.

a) Funding

This is a funded benefit plan for qualifying employees. The Company makes contributions to Life Insurance Corporation of India ("LIC of India"). The assets managed by the fund manager are highly liquid in nature and the Company does not expect any significant liquidity risks.

The Company expects to pay Rs. 475 lakhs in contribution to its defined benefit plans in 2018-19.

f) Plan assets

The plan assets are maintained with Life Insurance Corporation of India Gratuity Scheme. The details of investments maintained by Life Insurance Corporation are not available with the Company and have not been disclosed.

"The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same methods (present value of defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognised in the balance sheet.

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.

6. Financial Instruments - Risk Management and Fair Values

(A) Financial risk management

In course of its business, the Company is exposed to certain financial risks that could have significant influence on the Company’s business and operational / financial performance. These include market risk (including currency risk, interest rate risk ), credit risk and liquidity risk.

The Board of Directors reviews and approves risk management framework and policies for managing these risks and has constituted Risk management committee of the Board to monitor suitable mitigating actions taken by the management to minimize potential adverse effects and achieve greater predictability to earnings.

The Company uses derivative financial instruments to hedge risk exposures in accordance with the Company’s policies as approved by the board of directors.

The Company has exposure to the following risk arising from financial instruments:

- Market risk (refer (I))

- Credit risk (refer (II)) and

- Liquidity risk (refer (III))

(I) Market risk

Market risk is the risk of any loss in future earnings, in realisable fair values or in future cash flows that may result from fluctuations in the pricing of a financial instrument. The Company’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates as future specific market changes cannot be normally predicted with reasonable accuracy.

i. Foreign currency risk management:

The company is exposed to foreign currency risk to the extent that there is a mismatch between the currencies in which sales, purchases and borrowings are denominated and functional currency of the Company, i.e. INR (Rs.). The currencies in which these transactions are primarily denominated are US dollar, Euro and Yen. The Company uses currency swap contracts to hedge its currency risk as per the approved policy of the Company. The Company''s policy is to ensure that its net exposure is kept to an acceptable level which will not have material effect on the profits of the company if there is any fluctuation in the currency rates. However, the Company has designated cross currency interest rate swaps derivatives as hedge relationship.

ii. Interest rate risk management:

The Company is exposed to interest rate risk pertaining to funds borrowed at both fixed and floating interest rates. The risk is managed by the Company by maintaining an appropriate mix between fixed and floating rate borrowings by the use of interest rate swap contracts. Hedging activities are evaluated regularly to align with interest rate views and defined risk appetite, ensuring the most cost-effective hedging strategies.

- Sensitivity analysis:

The sensitivity analysis below has been determined based on the exposure to interest rates at the end of the reporting period. A 100 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents Management’s assessment of the reasonably possible change in interest rates.

A reasonably possible change of 1 % in interest rates at the reporting date would have increased / decreased the profit or loss by the amounts shown below. This analysis assumes that all other variables remain constant.

The Company''s long term external commercial borrowings carries floating rate of interest and same is hedged by the company using cross currency interest rate swaps. They are, therefore, not subject to interest rate risk since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.

(II) Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company.

The Company primarily has the exposure from following type of customers :

- Dealers

- Government institutions

To manage trade receivable, the Company periodically assesses the financial reliability of customers, taking into account the financial conditions, economic trends, analysis of historical bad debts, aging of such receivables and country in which customers operate.

(III) Liquidity risk

Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company has obtained sufficient working capital limits from various banks to take care of liquidity risks. Furthermore, the Company has access to funds through commercial papers.

Note:

(i) Fair valuation of financial assets and liabilities with short term maturities is considered as approximate to respective carrying amount due to the short term maturities of these instruments.

(ii) Fair value of non-current financial assets has not been disclosed as there is no significant differences between carrying value and fair value.

(iii) The fair value of borrowings is based upon a discounted cash flow analysis that used the aggregate cash flows from principal and finance costs over the life of the debt and current market interest rates

(iv) Trade receivables, cash and cash equivalents, bank balances other than cash and cash equivalents, other financial assets, trade payables and other financial liabilities have fair values that approximate to their carrying amounts due to their short-term nature.

The Company determines the fair value of its financial instruments on the basis of the following hierarchy:

Level 1: The fair value of financial instruments that are quoted in active markets are determined on the basis of quoted price for identical assets or liabilities.

Level 2: The fair value of financial instruments that are not traded in an active market are determined using valuation techniques based on observable market data.

Level 3: The fair value of financial instruments that are measured on the basis of entity specific valuations using inputs that are not based on observable market data (unobservable inputs).

There are no transfers between Level 1, Level 2 and Level 3 during the year ended 31 March 2018 and 31 March 2017.

Measurement of fair values

Fair value hierarchy

Fair value measurement for the cross currency interest rate swap has been categorised as level 2 fair value based on the inputs to the valuation technique used.

Valuation technique

Cross currency interest rate swaps: The fair value is calculated as the present value of the estimated future cash flows. Estimates of future floating-rate cash flows are based on quoted swap rates, futures prices and interbank borrowing rates. Estimated cash flows are discounted using a yield curve constructed from similar sources and which reflects the relevant benchmark interbank rate used by market participants for this purpose when pricing interest rate swaps. The fair value estimate is subject to a credit risk adjustment that reflects the credit risk of the Company and of the counterparty; this is calculated based on credit spreads derived from current credit default swap or bond prices.

7. Dividends

a. Proposed Dividend

The board has proposed a dividend of Rs. 1.50 per equity share of Rs. 10 each fully paid up amounting to Rs. 261.70 lakhs (including dividend distribution tax), subject to approval by the shareholders at the ensuing Annual General Meeting.

8. CAPITAL MANAGEMENT

The Company manages its capital to ensure that the Company will be able to continue as a going concern, while maximising the return to stakeholders through efficient allocation of capital towards expansion of business, optimisation of working capital requirements and deployment of surplus funds into various investment options. The Company uses the operational cash flows and equity to meet its capital requirements. The funding requirements are met through equity, internal accruals and a combination of both long term and short term borrowings. The Company is not subject to any externally imposed capital requirements.

The management of the Company reviews the capital structure of the Company on regular basis and uses debt equity ratio to monitor the same. As part of this review, the management of the Company considers risks associated with the movement in the working capital and capex needs.

9. The specified bank notes (SBN) as defined under the notification issued by the Ministry of Finance, Department of Economic dated 08 November, 2016 are no longer in existence. Hence the Company has not provided the corresponding disclosures as prescribed in Schedule III to the Companies Act, 2013. The disclosure of SBN made in the financial statements for 31 March 2017 is as follows:

* For the purpose of this disclosure, the term ''Specified Bank Notes'' shall have the same meaning provided in the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O. 3407 (E) dated 8 November 2016

10. The Supreme Court of India had on 29 March 2017 passed an order which restricted sale and registration of BS-III emission norms compliant (‘BS-III’) vehicles in India effective 01 April 2017. The Company had taken necessary steps to be in compliance with the aforesaid order. The Company had also decided to take back BS-III vehicles lying with the dealers at the year end and had accounted for such sales returns amounting to Rs. 2,220.02 lakhs in its books of accounts. Further, certain BS-III components lying with the Company (including those forming part of impacted BS-III vehicles) and other related costs needed to be written off as no future benefit is envisaged. Consequently, the total amount of BS-III stock written off (including margin loss on sales returns) during the year ended 31 March 2017 amounted to Rs. 1,009.97 lakhs. The Company took necessary steps to convert the BS-III vehicles in stock to ensure compliance with BS-IV emission norms. Related costs for such conversion, accordingly, has been accounted for as and when incurred. The Company has during the current year additionally, identified certain components aggregating to Rs. 66.04 lakhs which are no longer usable and accordingly value has been written down in the Statement of profit and loss.

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Mar 31, 2017

1. Company overview

SML Isuzu Limited is a public company, incorporated under the Companies Act, 1956 and its shares are listed on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) in India. The Company is primarily engaged in the business of manufacture and sale of Commercial Vehicles and its parts. The Company has its operations primarily in India.

2. The financial statements for the year ended 31 March 2017 have been prepared as per the requirements of Schedule 111 of the Companies Act, 2013.

a. Rights, preferences and restrictions attached to the equity shares :-

The Company has a single class of equity shares. Accordingly, all equity shares rank equally with regard to dividends and share in the Company’s residual assets. The equity shares are entitled to receive dividend as declared from time to time. The voting rights of an equity shareholder on a poll (not on show of hands) are in proportion to its share of the paid-up equity capital of the Company. Voting rights cannot be exercised in respect of shares on which any call or other sums presently payable have not been paid. Failure to pay any amount called up on shares may lead to forfeiture of the shares. On winding up of the Company, the holders of equity shares will be entitled to receive the residual assets of the Company, remaining after distribution of all preferential amounts in proportion to the number of equity shares held.

In respect of the matters above, the amount represents the demands received under the respective demand/ show cause notices/ legal claims, wherever applicable.

b) In addition, the Company is subject to legal proceedings and claims, which have arisen in the ordinary course of business. The Company’s management does not reasonably expect that these legal actions, when ultimately concluded and determined, will have a material and adverse effect on the Company’s results of operations or financial condition.

c) Commitments

- Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs. 6,139.59 lakhs (previous year Rs. 3,948.77 lakhs).

- Non- cancellable lease commitments of Rs. 265.87 lakhs (previous year Rs. 74.12 lakhs)

3. The Supreme Court of India has on 29 March 2017 passed an order which restricts sale and registration of BS-III emission norms compliant (‘BS-III’) vehicles in India effective 01 April 2017. The Company has taken necessary steps to be in compliance with the aforesaid order. The Company has also decided to take back BS III vehicles lying with the dealers at the year end and has accounted for such sales returns amounting to Rs. 2,220.02 lakhs in its books of accounts. Further, certain BS-III components lying with the Company (including those forming part of impacted BS-III vehicles) and other related costs need to be written off as no future benefit is envisaged. Consequently, the total amount of BS III stock written off (including margin loss on sales returns) during the quarter / year ended 31 March 2017 amounts to Rs. 1,009.97 lakhs. The Company is taking necessary steps to convert the BS III vehicles in stock to ensure compliance with BS-IV emission norms. Related costs for such conversion will, accordingly, be accounted for as and when incurred.

# net of write back of liability in respect of provision for warranty Rs.113.14 lakhs (previous year Rs. 230.93 lakhs) and in respect of provision for service charges Rs. 510.00 lakhs (previous year Rs. 622.11 lakhs)

* The Company is liable towards warranty claims made by end users of its products. The year end provision is based on its estimate of the past experience regarding failure trends of products and costs of rectification or replacement. It is estimated that the provision would be fully utilized over the warranty period i.e. within 3 years.

** The Company has provided free service coupons to end users of its products and estimated a provision based on its historical trends of utilization and expected future utilization of service coupons within a period of 3 years.

4. Segment Information

The Company is engaged in the business of manufacture of Commercial vehicles and spares which is a primary segment for the Company which constitutes a single business segment and accordingly disclosure requirements of Accounting Standard 17, “Segment Reporting”, specified under Section 133 of the Companies Act, 2013 read with Rule 7 of Companies (Accounts) Rules, 2014 in relation to primary segment are not required to be given. All the business activities of the Company are primarily conducted from locations in the Indian subcontinent i.e. India and its neighbouring countries having similar economic environments. Accordingly, no additional disclosure for secondary segment reporting on the basis of geographical operations has been made in these financial statements.

5. Related party disclosures

A. Names of related parties

i. Related parties where control exists Sumitomo Corporation, Japan - Controlling Enterprise

ii. Key management personnel Mr. Eiichi Seto - Managing Director & CEO

Mr. Gopal Bansal - Whole-time Director & CFO Mr. Kei Katayama - Whole-time Director - R&D

6. The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing regulation under sections 92-92F of the Income Tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company continuously updates its documentation for the international transactions entered into with the associated enterprises during the financial year and expects such records to be in existence latest by the due date as required under law. The management is of the opinion that its international transactions are at arm’s length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of income tax expense and that of provision for taxation.

7. The Company has taken certain premises under operating lease arrangements. The total lease rental recognized as expense aggregate to Rs.391.07 lakhs (previous year Rs. 369.89 lakhs).

Future minimum lease payments under non-cancellable operating leases:

I Defined Benefit Plan (Gratuity):

General description of defined benefit plan/other long term benefit plan:

The Company operates gratuity plan wherein every employee is entitled to the benefit equivalent to 15 days salary (includes dearness allowance) last drawn for each completed year of service. The same is payable on termination of service, or retirement, or death whichever is earlier. The benefits vest after five years of continuous service. Gratuity benefits valued are in accordance with the payment of Gratuity Act, 1972.

II Short term employment benefits:

The undiscounted amount of short term employee benefits expected to be paid in exchange for services rendered by employees is recognized during the period when the employee renders the services. These benefits include compensated absences and performance incentives.

8. Accounting for Derivative Contracts

The Company uses Currency/Interest rate swaps to hedge its exposure to movements in foreign exchange rates relating to certain firm commitments. The Company designates such contracts in a cash flow hedge relationship by applying the principles set out in “Guidance Note on Accounting for Derivative Contracts”. The use of hedging instruments is governed by the Company’s policies approved by the Board of Directors, consistent with the Company’s risk management strategy. The information on derivative instruments is as follows:

9. a) The cash credit limits sanctioned by the bankers are secured by a first charge by way of hypothecation of the Company’s current assets i.e. stocks of raw materials, semi-finished goods, finished goods, stores and spares, bills receivables including receivables from hire purchase/ leasing, book debts and other movables of the Company (both present and future) and also by way of a collateral pari passu second charge on the Company’s fixed assets. These carry an interest rate ranging from 10.00% to 12.00% per annum. The Company has not defaulted on repayment of loan and interest during the year.

Other loans from banks - unsecured represents working capital demand loan taken from Mizuho Bank Limited. The Company has not defaulted on repayment of loan and interest during the year. These loans have been fully repaid as at the end of current year.

b) The Company had in an earlier year taken loans from Financial Institutions against first charge on its movable and immovable property. The said loans have since been repaid. However, the charges in respect of these loans are in the process of being vacated.

10. Contribution towards Corporate social responsibility :

a) Gross amount required to be spent by the Company during the year 2016-17 - Rs. 102.45 lakhs (2015-16: Rs. 86.60 lakhs)

b) Amount spent during the year:

c) Related party transactions in relation to corporate social responsibility: NIL

d) The Company does not carry any provisions for Corporate social responsibility expenses for current year and previous year.

11. During the previous year ended 31 March 2016, the Company had adjusted provision for tax by Rs. 287.76 lakhs (disclosed as current tax adjustment related to prior years). This had been done to align the amounts as per the books of accounts with the relevant Income-tax records.

12. Previous year figures have been regrouped / reclassified, wherever necessary, in order to conform to current year’s classifications.

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Mar 31, 2016

1. Rates and taxes include amount of Rs. 4.99 lakhs (previous year Rs 38.39 lakhs) provided towards expected sales tax liability in respect of certain sales returns which took place in earlier years. Accordingly, these have been provided for in the books of accounts.

2. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs. 3,948.77 lakhs (previous year Rs. 2,496.77 lakhs).

3. The Company has adopted Accounting Standard 29 ''Provisions, Contingent Liabilities & Contingent Assets'' as notified by the Companies (Accounting Standards) Rules, 2006. Accordingly the following disclosure has been made:

# net of write back of liability in respect of provision for warranty Rs. 230.93 lakhs (previous year Rs. 100.79 lakhs) and in respect of provision for service charges Rs. 622.11 lakhs (previous year Rs. 94.54 lakhs)

* The Company is liable towards warranty claims made by end users of its products. The yearend provision is based on its estimate of the past experience regarding failure trends of products and costs of rectification or replacement. It is estimated that the provision would be fully utilized over the warranty period.

** The Company has provided free service coupons to end users of its products and estimated a provision based on its historical trends of utilization of service coupons.

4. The Company is engaged in the business of manufacture of Commercial vehicles and spares which is a primary segment for the Company which constitutes a single business segment and accordingly disclosure requirements of Accounting Standard 17, "Segment Reporting", specified under section 133 of the Companies Act, 2013 read with Rule 7 of Companies (Accounts) Rules, 2014 in relation to primary segment are not required to be given. All the business activities of the Company are primarily conducted from locations in India. Therefore, all the revenue and net assets are attributed to Indian operations. Accordingly, no additional disclosure for secondary segment reporting on the basis of geographical operations has been made in the financial results.

5. In accordance with Accounting Standard on "Related Party Disclosures" (AS 18), the disclosure in respect of transactions with the company''s related parties are as follows:

i. Entities where control exists Sumitomo Corporation, Japan - Controlling Enterprise

ii. Key management personnel Mr. E. Seto - Managing Director & CEO

Mr. Gopal Bansal - Whole-time Director & CFO

Mr. Y Kosaka - Whole-time Director - R&D (upto 18 June 2014)

Mr. Kei Katayama - Whole-time Director - R&D (w.e.f. 8 August 2014)

6. Based on the information and records presently available with the management, there are no dues outstanding to micro and small enterprises covered under the Micro, Small and Medium Enterprises Development Act, 2006 and no interest has been paid / is payable in respect of transactions with such parties during the financial year 2015-16.

7. The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing regulation under Sections 92-92F of the Income-Tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company continuously updates its documentation for the international transactions entered into with the associated enterprises during the financial year and expects such records to be in existence latest by the due date as required under law. The management is of the opinion that its international transactions are at arm’s length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of income tax expense and that of provision for taxation.

8. The Company has taken certain premises under operating lease arrangements. The total lease rental recognized as expense aggregate to Rs. 369.89 lakhs (previous year Rs. 329.54 lakhs).

Future minimum lease payments under non-cancellable operating leases:

II Defined Benefit Plan (Gratuity):

General description of defined benefit plan/other long term benefit plan:

The Company operates gratuity plan wherein every employee is entitled to the benefit equivalent to 15 days salary (includes dearness allowance) last drawn for each completed year of service. The same is payable on termination of service, or retirement, or death whichever is earlier. The benefits vest after five years of continuous service. Gratuity benefits valued are in accordance with the payment of Gratuity Act, 1972.

Note: The estimates of future salary increase considered in actuarial variation take account of inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.

The Company expects to contribute approximately Rs. 300.00 lakhs (previous year Rs. 300.00 lakhs) to the Gratuity Fund during financial year 2016-17.

Short-term employment benefits

The undiscounted amount of short-term employee benefits expected to be paid in exchange for services rendered by employees is recognized during the period when the employee renders the services. These benefits include compensated absences and performance incentives.

9. Details in respect of dividend remitted during the year in foreign currency :

a) Number of Non-resident shareholders *: 1 (Previous year 1 )

b) Number of shares held as on record date *: 2,170,747 (Previous year 2,170,747)

c) Amount remitted during the year *: Rs. 13,024,482 (Previous year Rs. 6,512,241)

d) Financial Year to which dividend pertains : 2014-15 (Previous year 2013-14) *excludes non-resident shareholders to whom dividend is paid in Indian Rupees

10. a) The cash credit limits sanctioned by the bankers are secured by a first charge by way of hypothecation of the Company''s current assets i.e. stocks of raw materials, semi-finished goods, finished goods, stores and spares, bills receivables including receivables from hire purchase/ leasing, book debts and other movables of the Company (both present and future) and also by way of a collateral pari passu second charge on the Company''s fixed assets.

b) The Company had in an earlier year taken loans from Financial Institutions against first charge on its movable and immovable property. The said loans have since been repaid. However, the charges in respect of these loans are in the process of being vacated.

11. During the previous year ended 31 March, 2015, the Company had revised useful lives of certain fixed assets based on internal technical evaluation with effect from 1 April, 2014. Accordingly, the useful lives of certain assets required a change from the previous estimated useful life.

As a result of this change, the depreciation charge for the year ended 31 March, 2015 was higher by Rs. 580.39 lakhs which has been charged to Statement of Profit and Loss.

12. During the previous year ended 31 March, 2015, the Company had adjusted Provision for tax amounting to Rs. 6,836.69 lakhs with outstanding advance tax/ tax deducted at source for the respective years for which Income-tax assessments have been completed/ closed. Further, during the current year, the Company has adjusted provision for tax by Rs. 287.76 lakhs (disclosed as current tax adjustment related to prior years). This had been done to align the amounts as per the books of accounts with the relevant Income-tax records.

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Mar 31, 2015

1. Company overview

SML Isuzu Limited (Formerly Swaraj Mazda Limited) is a public company, incorporated under the Companies Act, 1956 and its shares are listed on the National Stock Exchange of India Limited (NSE) and BSE Limited (BSE) in India. The Company is primarily engaged in the business of manufacture and sale of Commercial Vehicles and its parts. The Company has its operations primarily in India.

2. The financial statements for the year ended 31 March 2015 have been prepared as per the requirements of Schedule III of the Companies Act, 2013.

3. Rights, preferences and restrictions attached to the equity shares

The Company has a single class of equity shares. Accordingly, all equity shares rank equally with regard to dividends and share in the Company's residual assets. The equity shares are entitled to receive dividend as declared from time to time. The voting rights of an equity shareholder on a poll (not on show of hands) are in proportion to its share of the paid-up equity capital of the Company. Voting rights cannot be exercised in respect of shares on which any call or other sums presently payable have not been paid.

Failure to pay any amount called up on shares may lead to forfeiture of the shares.

On winding up of the Company, the holders of equity shares will be entitled to receive the residual assets of the Company, remaining after distribution of all preferential amounts in proportion to the number of equity shares held.

In addition, the Company is subject to legal proceedings and claims, which have arisen in the ordinary course of business. The Company's management does not reasonably expect that these legal actions, when ultimately concluded and determined, will have a material and adverse effect on the Company's results of operations or financial condition.

2. a) Rates and taxes include certain VAT input credits, availed in earlier years, amounting to Rs. Nil (previous year Rs. 147.83 lakhs), which are not likely to be utilized and an amount of Rs. 38.39 lakhs (previous year Rs 134.36 lakhs) provided towards expected sales tax liability in respect of certain sales returns which took place in earlier years. Accordingly, these have been provided for in the books of accounts.

b) Purchases for the year include an amount of Rs. Nil (previous year Rs. 35.21 lakhs) towards purchase tax paid pertaining to earlier years.

3. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs. 2,496.77 lakhs (previous year Rs. 1,879.26 lakhs).

4. The Company is engaged in the business of manufacture of Commercial vehicles and spares which is a primary segment for the Company which constitutes a single business segment and accordingly disclosure requirements of Accounting Standard 17, "Segment Reporting", prescribed by the Companies (Accounting Standard) Rules 2006 in relation to primary segment are not required to be given. Business activities of the Company are primarily conducted from locations in India. Therefore, revenues and net assets are attributed to Indian operations. Accordingly, no additional disclosure for secondary segment reporting on the basis of geographical operations has been made in the financial statements.

5. In accordance with Accounting Standard on "Related Party Disclosures" (AS 18), the disclosure in respect of transactions with the company's related parties are as follows:

i. Entities where control exists

Sumitomo Corporation, Japan -Controlling Enterprise

ii. Key management personnel

Mr. E. Seto - Managing Director & CEO (w.e.f. 26 December 2013) Mr. Gopal Bansal - Whole-time Director & CFO (w.e.f. 11 February 2014) Mr. Y. Kosaka - Whole-time Director - R&D (upto 18 June 2014) Mr. Kei Katayama - Whole-time Director - R&D (w.e.f. 8 August 2014) Mr. Y. Watanabe - Managing Director & CEO (upto 25 December 2013) Mr. R.P Sehgal - Whole-time Director - Works (up to 31 May 2013)

6. Based on the information and records presently available with the management, there are no dues outstanding to micro and small enterprises covered under the Micro, Small and Medium Enterprises Development Act, 2006.

7. The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing regulation under sections 92-92F of the Income-Tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company continuously updates its documentation for the international transactions entered into with the associated enterprises during the financial year and expects such records to be in existence latest by the due date as required under law. The management is of the opinion that its international transactions are at arms length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of income tax expense and that of provision for taxation.

8. The Company has taken certain premises under operating lease arrangements. The total lease rental recognized as expense aggregate to Rs. 329.54 lakhs (previous year Rs. 254.09 lakhs).

II Defined Benefit Plan (Gratuity):

General description of defined benefit plan/other long term benefit plan:

The Company operates gratuity plan wherein every employee is entitled to the benefit equivalent to 15 days salary (includes dearness allowance) last drawn for each completed year of service. The same is payable on termination of service, or retirement, or death whichever is earlier. The benefits vest after five years of continuous service. Gratuity benefits valued were in accordance with the payment of Gratuity Act, 1972.

9. a) The cash credit limits sanctioned by the bankers are secured by a first charge by way of hypothecation of the Company's current assets i.e. stocks of raw materials, semi-finished goods, finished goods, stores and spares, bills receivables including receivables from hire purchase/ leasing, book debts and other movables of the Company (both present and future) and also by way of a collateral pari passu second charge on the Company's fixed assets.

b) The Company had in an earlier year taken loans from Financial Institutions against first charge on its movable and immovable property. The said loans have since been repaid. However, the charges in respect of these loans are in the process of being vacated.

10. As per Section 135 of the Companies Act, 2013, a CSR committee has been formed by the Company. The areas for CSR activities are promoting health care, sanitation, safe drinking water, supporting education (including infrastructure) of underprivileged children / girl child. Expenditure was incurred on such activities throughout the year, as specified in Schedule VII of the Companies Act, 2013.

11. During the year ended 31 March 2015, the Company has revised useful lives of certain fixed assets based on internal technical evaluation with effect from 1 April 2014. Accordingly, the useful lives of certain assets required a change from the previous estimated useful life.

12. During the current year, the Company has adjusted Provision for tax amounting to Rs. 6,836.69 lakhs (previous year Rs. Nil) with outstanding advance tax/ tax deducted at source for the respective years for which Income-tax assessments have been completed/ closed. This has been done to align the amounts as per the books of accounts with the relevant Income-tax records.

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Mar 31, 2014

1. There are contingent liabilities in respect of claims against the Company not acknowledged as debts:

Particulars 2013-14 2012-13 (Rs. in lakhs) (Rs. in lakhs)

Sales tax matters 554.40 554.40

Excise and service tax matters 379.49 531.13

Income tax matters 1,094.72 1,243.14

Civil matters 207.04 207.65

Total 2,235.65 2,536.32

2. a) Rates & taxes include certain VAT input credits, availed in earlier years, amounting to Rs. 147.83 lacs, which are not likely to be utilized and an amount of Rs. 134.36 lacs provided towards expected sales tax liability in respect of certain sales returns which took place in earlier years and the issue is likely to be litigated / disputed by the Department. Accordingly, these have been provided for in the books of accounts.

b) Purchases for the year include an amount of Rs. 35.21 lacs towards purchase tax paid pertaining to earlier years.

3. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs. 1,879.26 lakhs (previous year Rs. 228.87 lakhs).

4. The Company has adopted Accounting Standard 29 ''Provisions, Contingent Liabilities & Contingent Assets'' as notified by the Companies (Accounting Standards) Rules, 2006. Accordingly the following disclosure has been made:

* The Company is liable towards warranty claims made by end users of its products. The year end provision is based on its estimate of the average warranty cost per unit of goods sold and on the basis of historical data. It is estimated that the provision would be fully utilized over the warranty period.

** The Company has provided free service coupons to end users of its products and estimated a provision based on its historical trends of utilization of service coupons.

5. As the Company''s business activities fall within a single primary business segment, viz., "Commercial Vehicles and Spares", the disclosure requirement of Accounting Standard (AS) - 17 "Segment Reporting" is not applicable.

6. In accordance with Accounting Standard on "Related Party Disclosures" (AS 18), the disclosure in respect of transactions with the company''s related parties are as follows:

i. Entities where control exists: Sumitomo Corporation, Japan Holding Company (up to 12 April 2012) Controlling Enterprise (w.e.f. 13 April 2012)

ii. Key management personnel: Mr. Y. Watanabe - Managing Director & CEO (upto 25 December 2013) Mr. E. Seto - Managing Director & CEO (w.e.f. 26 December 2013) Mr. R.P Sehgal - Whole-time Director - Works (up to 31 May 2013) Mr. Y. Kosaka- Whole-time Director - R&D (w.e.f. 08 November 2012) Mr. Gopal Bansal- Whole-time Director & CFO (w.e.f. 11 February 2014)

* Excludes contribution to the gratuity fund and provision for compensated absences determined on an actuarial basis, as these are determined for the Company as a whole.

7. Based on the information and records presently available with the management, there are no dues outstanding to micro and small enterprises covered under the Micro, Small and Medium Enterprises Development Act, 2006.

8. The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing regulation under sections 92-92F of the Income-Tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company continuously updates its documentation for the international transactions entered into with the associated enterprises during the financial year and expects such records to be in existence latest by the due date as required under law. The management is of the opinion that its international transactions are at arms length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of income tax expense and that of provision for taxation.

9. The Company has taken certain premises under operating lease arrangements. The total lease rental recognized as expense aggregate to Rs. 254.09 lakhs (previous year Rs. 224.00 lakhs).

Note: The estimates of future salary increase considered in actuarial variation take account of inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.

The Company expects to contribute approximately Rs. 133.45 lakhs to the Gratuity Fund during financial year 2014-15.

Short term employment benefits

The undiscounted amount of short term employee benefits expected to be paid in exchange for services rendered by employees is recognized during the period when the employee renders the services. These benefits include compensated absences and performance incentives.

10. Details in respect of dividend remitted during the year in foreign currency :

a) Number of Non-resident shareholders: 1 (Previous year 1 )

b) Number of shares held as on record date: 2,170,747 (Previous year 2,170,747)

c) Amount remitted during the year: Rs. 17,365,976 (Previous year Rs. 17,365,976)

d) Financial Year to which dividend pertains : 2012-13 (Previous year 2011-12)

11. The cash credit limits sanctioned by the bankers are secured by a first charge by way of hypothecation of the Company''s current assets i.e. stocks of raw materials, semi-finished goods, finished goods, stores and spares, bills receivables including receivables from hire purchase/ leasing, book debts and other movables of the Company (both present and future) and also by way of a collateral pari passu second charge on the Company''s fixed assets.

The Company had in an earlier year taken loans from Financial Institutions against first charge on its movable and immovable property. The said loans have since been repaid. However, the charges in respect of these loans are in the process of being vacated.

12. Previous year figures have been regrouped / reclassified, wherever necessary, in order to conform to current year''s classifications.

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Mar 31, 2013

1. Company overview

SML Isuzu Limited (Formerly Swaraj Mazda Limited) is a public company, incorporated under the Companies Act, 1956 and its shares are listed on the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) in India. The Company is primarily engaged in the business of Commercial Vehicles and its parts. The Company has its operations primarily in India.

2. The financial statements for the year ended 31 March 2013 have been prepared as per the Revised Schedule VI to the Companies Act, 1956

3. Through issue of excise notification no 11/95 dated March 16, 1995 Government had sought to lapse Modvat Credit Receivable aggregating Rs. 488 lakhs out of available credit balance appearing under the head "Short term Loans & Advances". Petition filed by the Company and other affected manufacturers with the Delhi High Court challenging the said notification on grounds of law and equity was allowed by the Supreme Court vide Order dated January 28, 1999. Subsequently, the Finance Act, 1999 brought in a retrospective amendment w.e.f. March 16, 1995 in the Central Excise Act, empowering the Central Government to lapse such Modvat. Based on the legal advice obtained by the Company to seek redressal against the action of the Government, the Company had filed a writ petition and was admitted by the Delhi High Court on the ground that the Government action has violated the doctrine of promissory estoppels / expectation principle besides other grounds.

In the previous years, though adjusted in excise records, no provision was made in the books of accounts in respect of such Modvat credit. On a review, the Company had provided the entire amount of Rs 488 lakhs during the previous year ended 31 March 2012. In view of the significance of the amount involved, the same was shown as an exceptional item and disclosed as a prior period adjustment during the previous year ended 31 March 2012.

4. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs. 228.87 lakhs (previous year Rs. 586.64 lakhs).

5. The Company has adopted Accounting Standard 29 ''Provisions, Contingent Liabilities & Contingent Assets'' as notified by the Companies (Accounting Standards) Rules, 2006.

6. As the Company''s business activities fall within a single primary business segment, viz., "Commercial Vehicles and Spares", the disclosure requirement of Accounting Standard (AS) - 17 "Segment Reporting" is not applicable.

7. In accordance with Accounting Standard on "Related Party Disclosures" (AS 18), the disclosure in respect of transactions with the company''s related parties are as follows:

i. Entities where control exists Sumitomo Corporation, Japan

Holding Company (up to 12 April 2012) Controlling Enterprise (w.e.f. 13 April 2012)

ii. Key management personnel Mr. Y. Watanabe – Managing Director & CEO (w.e.f. 01 June 2011)

Mr. Y. Watanabe – Whole-time Director (up to 31 May 2011) Mr. R.P Sehgal – Whole-time Director Mr. Y. Kosaka – Whole-time Director (w.e.f. 08 Nov 2012) Mr. Yash Mahajan – Managing Director (up to 31 May 2011)

8. Based on the information and records presently available with the management, there are no dues outstanding to micro and small enterprises covered under the Micro, Small and Medium Enterprises Development Act, 2006.

9. The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing regulation under sections 92-92F of the Income-Tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company continuously updates its documentation for the international transactions entered into with the associated enterprises during the financial year and expects such records to be in existence latest by the due date as required under law. The management is of the opinion that its international transactions are at arms length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of income tax expense and that of provision for taxation.

10. The Company has taken certain premises under operating lease arrangements. The total lease rental recognized as expense aggregate to Rs. 224.00 lakhs (previous year Rs. 203.49 lakhs).

11. The Company had issued 3,984,946 equity shares of Rs. 10 each at a premium of Rs. 190 per share on rights basis on 26 March 2010. The net proceeds (Net of issue expenses Rs. 118.52 lakhs) of the rights issue were utilized for repayment of Allahabad Bank Term Loan Rs. 5,000.00 lakhs and for general corporate purposes Rs. 1,051.37 lakhs by 31 March 2010. Out of balance proceeds of Rs. 1,800 lakhs earmarked for financing the expansion project, Rs. 1,299.97 lakhs have been utilized till 31 March 2013 as per terms of the Letter of Offer and subsequent shareholder''s approval. As regards balance amount of Rs. 500.03 lakhs shareholders have given their consent at Extraordinary General Meeting held on 28 March 2013 for its utilization towards general corporate purposes including but not restricted to meeting working capital requirements.

12. In respect of change of company name from SWARAJ MAZDA LIMITED to SML ISUZU LIMITED, the Registrar of Companies, Chandigarh has issued a fresh certificate of incorporation dated 03 January 2011.

13. The cash credit limits sanctioned by the bankers are secured by a first charge by way of hypothecation of the company''s current assets i.e. stocks of raw materials, semi-finished goods, finished goods, stores and spares, bills receivables including receivables from hire purchase/ leasing, book debts and other movables of the Company (both present and future) and also by way of a collateral a pari passu second charge on the Company''s fixed assets.

The Company had in an earlier year taken loans from Financial Institutions against first charge on its movable and immovable property. The said loans have since been repaid. However, the charges in respect of these loans are in the process of being vacated.

14. Previous year figures have been regrouped / reclassified, wherever necessary, in order to conform to current year''s classifications.

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Mar 31, 2012

1. Basis of preparation

The financial statements are prepared under the historical cost convention on the accrual basis of accounting, in accordance with the Indian Generally Accepted Accounting Principles (GAAP) and comply with the accounting standards, as prescribed by the Companies (Accounting Standards) Rules, 2006, and the provisions of the Companies Act, 1956, to the extent applicable, as adopted consistently by the Company. The financial statements have been prepared in Indian rupees.

2. The financial statements for the year ended March 31, 2011 had been prepared as per the then applicable, pre-revised Schedule VI to the Companies Act, 1956. Consequent to the notification of Revised Schedule VI under the Companies Act, 1956, the financial statements for the year ended 31 March, 2012 are prepared as per Revised Schedule VI. Accordingly, the previous year figures have also been reclassified to conform to this year's classification. Such reclassification of previous year figures does not impact recognition and measurement principles followed for preparation of financial statements.

3. Through issue of excise notification no 11/95 dated March 16, 1995 Government sought to lapse Modvat Credit Receivable aggregating Rs. 488 lakhs out of available credit balance appearing under the head Short term Loans & Advances. Petition filed by the Company and other affected manufacturers with the Delhi High Court challenging the said notification on grounds of law and equity was allowed by the Supreme Court vide Order dated January 28, 1999. Subsequently, the Finance Act, 1999 brought in a retrospective amendment w.e.f. March 16, 1995 in the Central Excise Act, empowering the Central Government to lapse such Modvat. Based on the legal advice obtained by the Company to seek redressal against the action of the Government, the Company had filed a writ petition and was admitted by the Delhi High Court on the ground that the Government action has violated the doctrine of promissory estoppels / expectation principle besides other grounds.

In the previous years, though adjusted in excise records, no provision was made in the books of accounts in respect of such Modvat credit. On a review, the Company has decided to provide the entire amount of Rs 488 lakhs during the year. In view of the significance of the amount involved, the same has been shown as an exceptional item and disclosed as a prior period adjustment.

4. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs. 586.64 lakhs (previous year Rs. 417.22 lakhs).

Figures of previous year are given in brackets

* The Company is liable towards warranty claims made by end users of its products. The year end provision is based on its estimate of the average warranty cost per unit of goods sold and on the basis of historical data it is estimated that the provision would be fully utilized over the warranty period.

5. As the Company's business activities fall within a single primary business segment, viz., "Commercial Vehicles and Spares", the disclosure requirement of Accounting Standard (AS) - 17 "Segment Reporting" is not applicable.

6. Based on the information and records presently available with the management, there are no dues outstanding to micro and small enterprises covered under the Micro, Small and Medium Enterprises Development Act, 2006.

7. The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing regulation under sections 92-92F of the Income-Tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company continuously updates its documentation for the international transactions entered into with the associated enterprises during the financial year and expects such records to be in existence latest by the due date as required under law. The management is of the opinion that its international transactions are at arms length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of income tax expense and that of provision for taxation.

8. The Company has taken certain premises under operating lease arrangements. The total lease rental recognized as expense aggregate to Rs. 203.49 lakhs (previous year Rs.162.35 lakhs).

Note: The estimates of future salary increase, considered in actuarial variation, take account of inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.

The Company expects to contribute approximately Rs. 97.48 lakhs to the Gratuity Fund during Financial Year 2012-13.

Short term employment benefits

The undiscounted amount of short term employee benefits expected to be paid in exchange for services rendered by employees is recognized during the period when the employee renders the services. These benefits include leave encashment and performance incentives.

9. Details in respect of dividend remitted during the year in foreign currency :

a) Number of Non-resident shareholders: 1 (Previous year 1 )

b) Number of shares held as on record date: 5,78,866 (Previous year 5,78,866)

c) Amount remitted during the year: Rs. 46,30,928 (Previous year Rs. 23,15,464)

d) Financial Year to which dividend pertains : 2010-11 (Previous year 2009-10)

10. The Company had issued 3,984,946 equity shares of Rs. 10 each at a premium of Rs. 190 per share on rights basis on 26 March 2010. The net proceeds (Net of issue expenses Rs. 118.52 lakhs) of the rights issue were utilized for repayment of Allahabad Bank Term Loan Rs. 5,000.00 lakhs and for general corporate purposes Rs. 1,051.37 lakhs by 31 March 2010. Out of balance proceeds of Rs. 1,800 lakhs earmarked for financing the expansion project, Rs. 838.79 lakhs have been utilized till 31 March 2012 as per terms of the Letter of Offer and subsequent shareholder's approval. The balance amount of Rs. 961.21 lakhs has been placed with a commercial bank as per terms of the Letter of Offer (included in "Cash and Bank balances" under Note 16).

11. In respect of change of company name from SWARAJ MAZDA LIMITED to SML ISUZU LIMITED, the Registrar of Companies, Chandigarh has issued a fresh certificate of incorporation dated 03 January 2011.

12. The cash credit limits sanctioned by the bankers are secured by a first charge by way of hypothecation of the company's current assets i.e. stocks of raw materials, semi-finished goods, finished goods, stores and spares, bills receivables including receivables from hire purchase/ leasing, book debts and other movables of the Company and also by way of a collateral a pari passu second charge on the Company's fixed assets.

The Company had in an earlier year taken loans from Financial Institutions against first charge on its movable and immovable property. The said loans have since been repaid. However, the charges in respect of these loans are in the process of being vacated.

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Mar 31, 2011

1. There are Contingent Liabilities in respect of:

a) Claims against the Company not acknowledged as debts:

Particulars 2010-11 2009-10

(Rs. in lacs) (Rs. in lacs)

Sales Tax Cases 261.71 278.95

Excise and Service Tax Cases 116.40 56.54

Income Tax Cases 402.98 265.88

Civil Cases 212.47 31.82

Total 993.56 633.19

b) Bank Guarantees given by the Company and outstanding as on 31.03.2011 amounting to Rs. 1,354.95 lacs (Previous YearRs. 1,814.29 lacs).

c) Letters of Credit issued on behalf of the Company by its bankers and outstanding as on 31.03.2011 amounting to Rs. 2,554.67 lacs (Previous Year Rs. 1,884.82 lacs).

2. Through issue of excise notification no 11/95 dated March 16, 1995 Government sought to lapse Rs. 488 lacs out of Modvat Credit Receivable balance as on March 16,1995. Petition by the Company and others with the Delhi High Court challenging the said notification on grounds of law and equity was allowed by the Supreme Court vide order dated January 28,1999. The Finance Act, 1999 has, however, brought in retrospective amendment w.e.f. March 16,1995 in the Central Excise Act, empowering the Central Government to lapse such modvat. On legal advice obtained by the Company to seek redressal against the action of the Government, the Company has filed writ petition before the Delhi High Court on the ground that the Government action violates the doctrine of promissory estoppel/expectation principle beside other grounds. The Court has already admitted the petition. Accordingly, pending Company's petition and decision thereupon, the amount of Rs. 488 lacs though adjusted in excise records has not been provided in the books of account.

3. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs. 417.22 lacs (Previous Year Rs. 455.73 lacs).

4. (a) Market promotion expenses (Schedule K) includes Commission on Sales amounting to Rs. 53.40 lacs (Previous Year Rs. 159.16 lacs) & Liquidated damages on execution of sales orders amounting to Rs. 103.64 lacs (PreviousYearRs. Nil).

5. As the Company's business activities fall within a single primary business segment, viz., "Commercial Vehicles and Spares", the disclosure requirement of Accounting Standard (AS) -17 "Segment Reporting" is not applicable.

6. Raw Materials & Components Consumed:

i) In view of varied nature of large number of items, it is not possible to furnish quantitative information on components.

ii) The figure of others is a balancing figure based on total consumption shown in Schedule J and includes adjustments for excess/shortage found on physical verification.

iii) Quantities and values of all items represent issues from stores made during the year.

7. There are no Micro and Small Enterprises, to whom the Company owes dues, which are outstanding for more than 45 days as at 31st March, 2011. This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined on the basis of information available with the Company.

8. The Company has a system for maintenance of information and documents as required by the transfer pricing regulation under Sections 92-92F of the Income Tax Act, 1961, as applicable. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company also updates its information and documentation for international transactions entered into with the associated enterprises during the financial year. The management is of the opinion that its international transactions are at arms length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.

9. The Company has taken certain premises under operating lease arrangements. The lease period varies from 1 to 15 years with the option to extend the same with mutual consent. The total lease rental recognized as expense aggregate to Rs. 162.35 lacs (Previous Year Rs.151.73 lacs).

*Notes:

i. Contribution to Provident and other funds does not include contribution towards gratuity & leave encashment, as these are actuarially valued for the Company as a whole.

ii. Other Perquisites does not include premium in respect of personal accident insurance, as the separate figures for the directors are not available.

Note: The estimates of future salary increase, considered in actuarial variation, take account of inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.

Short term employment benefits

The undiscounted amount of short term employee benefits expected to be paid in exchange for services rendered by employees is recognized during the period when the employee renders the services. These benefits include compensated absences and performance incentives.

The Company expects to contribute approximately Rs. 86.94 lacs to the Gratuity Fund during financial year 2011 -12.

10. Current tax expense comprise of Rs. Nil (Previous year Rs. 537.18 lacs), charge for Minimum Alternate Tax under section 115JBof the Income Tax Act, 1961. The Company has recognized MAT Credit Entitlement of Rs. Nil (Previous year Rs. 537.18 lacs) grouped under Loans and Advances (Schedule G), in accordance with Guidance Note issued by the Institute of Chartered Accountants of India. During the year, the Company has utilized Rs. 192.00 lacs by way of setting it off against the tax liability arising under the normal provisions of Income Tax. Consequently, the amount of Rs. 192.00 lacs has been transferred from MAT Credit Entitlement to Advance taxes under head Loans & Advances.

11. Detail in respect of dividend remitted during the year in foreign currency:

a) Number of Non-resident Shareholders: 1 (Previous Year 1 )

b) Number of Shares held as on record date: 578,866 (Previous Year 209,000)

c) Amount remitted during the year: Rs. 2,315,464 (Previous Year Rs. 313,500)

d) Financial Year to which dividend pertains : 2009-10 ( Previous year 2008-09)

12. Miscellaneous expenses include assets written off during the year Rs. 0.30 lacs (Previous year Rs. 2.39 lacs).

13. The Company had issued 3,984,946 Equity shares of Rs. 10 each at a premium of Rs. 190 per share on Rights basis on 26th March, 2010. The net proceeds (Net of issue expenses Rs. 118.52 lacs) of the Rights issue were utilized for repayment of Allahabad Bank Term Loan Rs. 5,000.00 lacs and for general corporate purposes Rs. 1,051.37 lacs by March 31st, 2010. Out of balance proceeds of Rs. 1,800.00 lacs earmarked for financing the expansion project, Rs. 163.96 lacs have been utilized for ongoing Phase I of expansion project during the current year and the balance Rs. 1,636.04 lacs are placed with a scheduled commercial bank as fixed deposits as per terms of Letter of Offer (which is included in Fixed Deposit Balances under Cash and Bank Balances - Schedule G).

14. In respect of change of Company name from SWARAJ MAZDA LIMITED TO SML ISUZU LIMITED, the Registrar of Companies, Chandigarh has issued a fresh certificate of incorporation dated 3rd January, 2011.

15. Previous year figures have been regrouped / reclassified wherever considered necessary to conform to current year's classification.

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Mar 31, 2010

1. There are Contingent Liabilities in respect of:

a) Claims against the Company not acknowledged as debts:

Particulars 2009-10 2008-09

(Rs. in lacs) (Rs. in lacs)

Sales Tax Cases 278.95 252.89

Excise Cases 56.54 178.18

Income Tax Cases 265.88 192.25

Civil Cases 31.82 31.52

Total 633.19 654.84

b) Bank Guarantees given by the Company and outstanding as on 31.03.2010 amounting to Rs. 1,814.29 lacs (Previous Year Rs. 1,006.38 lacs).

c) Letters of Credit issued on behalf of the Company by its bankers and outstanding as on 31.03.2010 amounting to Rs. 1,884.82 lacs (Previous Year Rs. 1,358.31 lacs).

2. Through issue of excise notification no 11/95 dated March 16, 1995 Government sought to lapse Rs. 488 lacs out of Modvat Credit Receivable balance as on March 16, 1995. Petition by the Company and others with the Delhi High Court challenging the said notification on grounds of law and equity was allowed by the Supreme Court vide order dated January 28, 1999. The Finance Act, 1999 has, however, brought in retrospective amendment w.e.f. March 16, 1995 in the Central Excise Act, empowering the Central Government to lapse such modvat. On legal advice obtained by the Company to seek redressal against the action of the Government, the Company has filed writ petition before the Delhi High Court on the ground that the Government action violates the doctrine of promissory estoppel/expectation principle beside other grounds. The Court has already admitted the petition. Accordingly, pending Companys petition and decision thereupon, the amount of Rs. 488 lacs though adjusted in excise records has not been provided in the books of account.

3. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs. 2,144.20 lacs (Previous Year Rs. 443.71 lacs).

4. As the Companys business activities fall within a single primary business segment, viz., "Commercial Vehicles and Spares", the disclosure requirement of Accounting Standard (AS) – 17 "Segment Reporting" is not applicable.

5. In accordance with Accounting Standard on "Related Party Disclosures" (AS 18), the disclosure in respect of transactions with the companys related parties are as follows:

i. Holding / Associate Company Sumitomo Corporation, Japan (Holding w.e.f January 06, 2009) *

ii. Key Management Personnel * Mr. Yash Mahajan - Managing Director

Mr. Y. Watanabe - Whole-time Director (w.e.f 1st July, 2009)

Mr. K. Nkajima - Whole-time Director (up to 30th June, 2009)

The Deferred Tax expense (net) for the current year aggregating to Rs. 897 lacs debited to Profit & Loss Account (Previous year Rs. 115 lacs has been credited to the Profit & Loss Account).

Note: Figures shown in parenthesis [ ] relate to previous year.

i) In view of varied nature of large number of items, it is not possible to furnish quantitative information on components.

ii) The figure of others is a balancing figure based on total consumption shown in Schedule J and includes adjustments for excess/shortage found on physical verification.

iii) Quantities and values of all items represent issues from stores made during the year.

6. There are no Micro and Small Enterprises, to whom the Company owes dues, which are outstanding for more than 45 days as at 31st March, 2010. This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined on the basis of information available with the Company.

7. The Company has a system for maintenance of information and documents as required by the transfer pricing regulation under Sections 92-92F of the Income Tax Act, 1961, as applicable. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company also updates its information and documentation for international transactions entered into with the associated enterprises during the financial year. The management is of the opinion that its international transactions are at arms length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.

8. The Company has taken certain premises under operating lease arrangements. The lease period varies from 1 to 15 years with the option to extend the same with mutual consent. The total lease rental recognized as expense aggregate to Rs.151.73 lacs (Previous Year Rs.156.38 lacs).

*Notes:

i. Contribution to Provident and other funds does not include contribution towards gratuity & leave encashment, as these are actuarially valued for the Company as a whole.

ii. Other Perquisites does not include premium in respect of personal accident insurance, as the separate figures for the directors are not available. 20. Disclosures as per AS - 15 (Revised) ‘Employee Benefits for year ended March 31, 2010:

Note: The estimates of future salary increase, considered in actuarial variation, take account of inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market.

Short term employment benefits

The undiscounted amount of short term employee benefits expected to be paid in exchange for services rendered by employees is recognized during the period when the employee renders the services. These benefits include compensated absences and performance incentives.

The Company expects to contribute approximately Rs. 70.92 lacs to the Gratuity Fund during financial year 2010-11.

9. Current tax expense comprise of Rs. 537.18 lacs (Previous year Rs. 41.22 lacs), being charge for Minimum Alternate Tax under section 115JB of the Income Tax Act, 1961. The Company has recognized MAT Credit Entitlement of Rs. 537.18 lacs (Previous year Rs. 41.22 lacs) grouped under Loans and Advances (Schedule G), in accordance with Guidance Note issued by the Institute of Chartered Accountants of India.

10. Detail in respect of dividend remitted during the year in foreign currency :

a) Number of Non-resident Shareholders: 1 (Previous Year 1 )

b) Number of Shares held as on record date: 209,000 (Previous Year 209,000)

c) Amount remitted during the year: Rs. 313,500 (Previous Year Rs. 1,149,500)

11. Miscellaneous expenses include assets written off during the year Rs. 2.39 lacs (Previous year Rs. Nil ).

12. During the year the Company has raised Rs. 7,969.89 lacs through issue of 3,984,946 Equity shares on Rights basis. The equity shares of Rs. 10 each were issued at a premium of Rs. 190 per share.

The net proceeds (Net of expenses Rs. 118.52 lacs) of the Rights issue have been utilized as follows:

1. Repayment of Allahabad Bank Term Loan amounting to Rs. 5,000.00 lacs.

2. For general corporate purposes Rs. 1,051.37 lacs.

3. Pending utilization, the balance proceeds of Rs. 1,800.00 lacs, earmarked for the expansion project, have been kept in separate current account (which is included in Current Accounts Balances under Cash and Bank Balances- Schedule G).

13. Previous year figures have been regrouped / reclassified wherever considered necessary to conform to current years classification.