1. Corporate Information :

Hindustan Motors Limited ("the Company") is a company limited by shares, incorporated and domiciled in India having its Registered Office at Kolkata. The Shares of the Company are publicly traded on the National Stock exchange of India and BSE Limited. The company is primarily engaged in manufacture and sale of Vehicles, Spare Parts of Vehicles, Steel Products and Components. The Company is also engaged in Trading of Spare Parts of Vehicles.

ii. Rights and preferences attached to equity shares :

The Company has only one class of equity shares issued and subscribed of face value of INR 5 per share. Each holder of equity share is entitled to one vote per share.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive assets of the Company remaining after settlement of all liabilities. The distribution will be in proportion to the number of equity shares held by the shareholders. In the event of declaration of dividend by the Company, approval of shareholders will be required in its Annual General Meeting.

Nature and purpose of Reserves

(i) Securities premium reserve

Securities premium reserve represents amount received in excess of per value of issue of shares. The reserve is utilised in accordance with the provisions of the Companies Act.

(ii) Revaluation Reserve

Revaluation Reserve was created under previous GAAP on upward revaluation of land and building.

a) Security

These Debentures were secured by a charge on the assets of Uttarpara Plant which were released during the year.

b) Terms of repayment and Interest rate :

10.25% Debentures of INR 2053Lakhs were redeemable in three equal installments of INR 684.33 Lakhs each alongwith interest on September 29,2015, September 29,2016 and September 29,2017.

Note : Cash credit facilities together with interest and other charges thereon, were secured by mortgage on a part of the Company's land together with other immovable assets thereon,both present and future, and by way of a hypothecation charge over all the movable assets including book debts of the company. Cash credit was repayable on demand and carries interest@10.397% to 16.20% p.a. on monthly rest.

(a) Fair value

The fair value of the financial assets and liabilities approximates their carrying amounts as the Balance Sheet date

(b) Fair valuation Techniques

The fair value of the financial assets and liabilities are included at the amount that would be received to sell anasset or paid to transfer a liability in an orderly transactions between market participants at the measurement date.

The following method of assumption were used to estimate the fair values :

(i) The fair value of cash and cash equivalents, trade receivables, trade payables, current financial liabilities / financial assets approximate their carrying amount largely due to theshort term nature of these instruments. The management considers that the carrying amounts of financial assets and financial liabilities recognised at nominal cost /amortised cost in the financial statements approximate their fair value.

(ii) A substaintial portion of the company's long-term debts has been contracted at fixed rate of interest. Fair value of variable interest borrowings approximates their carrying value subject to adjustments made for transaction cost.

2 FINANCIAL RISK MANAGEMENT

The company's risk management is carried out by a treasury department under policies approved by the Board of Directors, Company Treasury identifies, evaluates and hedges financial risks in close co-operation with the company's operating units. The board provides principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, liquidity risk and investment of excess liquidity.

(A) Market Risk

(i) Foreign currency risk

The Company does not operates internationally. The company does not have significant foreign currency exposure.

(ii) Interest rate risk

The company does not have borrowing as at 31st March 2018. As such there is no interest rate risk

(iii) Price risk

The company does not have a practice of investing in market equity securities with a view to earn fair value changes gain. At the reporting date company does not hold quoted securities. Accordingly, company is not exposed to significant market price risk.

(B) Credit Risk

The Company is exposed to credit risk from its activities and from its financing activities including deposits with banks.

(C) Liquidity Risk

Liquidity risk is the risk that the Company may not be able to meet its present and future cash and collatoral obligations without incurring unexpectable loses.

3 CAPITAL MANAGEMENT - RISK MANAGEMENT

The company's objectives when managing capital are to safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders. In order to maintain or adjust the capital structure, the company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

The Management believes that the outcome of the above will not have any material adverse effect on the financial position of the company. Against the above claims/demands, payments have been made under protest and/or debts have been withheld by the respective parties, to the extent of Rs. 78.38 lakhs (Rs.377.09 lakhs).

Included in the above are contingent liabilities to the extent of Rs 886.41 (2017-INR 1187.20 Lakhs; 2016-INR 1187.20 Lakhs) relating to the pre transfer period of the earstwhile Power Unit Plant and Power Product Division of the Company, which were transferred to AVTEC Limited in June 2005, Rs 502.21 (2017 - INR 502.21 Lakhs; 2016-INR 502.21 Lakhs) relating to the pre-transfer period of the earstwhile Earthmoving Equipment division of the Company,which was transferred to Caterpillar India Private Limited in February 2001 and Rs 701.11 (2017-INR 1393.89 Lakhs; 2016 - INR 1814.41 Lakhs) relating to the pre transfer period of the earstwhile Chennai Car Plant of the Company, which has been tranferred to Hindustan Motor Finance Corporation Limited in March 2014. However, demands to the extent of Rs 667.29 (2017 - INR 667.29 Lakhs; 2016 - INR 667.29 Lakhs) in case of earstwhile Power unit Plant are covered by counter guarantees by the customers.

b) Bonus for the years 1963-64 to 1967 - 68 at Uttarpara unit is under adjudication (amount indeterminate). The Company contends that no liability exists in this regard under the Payment of Bonus Act, 1965.

4 LEASES

Disclosure regarding leases as per IND AS -17 "Leases"

Finance Lease As a lessee

In case of leasehold land, tenure of the lease is 99 years with effect from 23th May, 1989. The lease will be renewed on mutually agreed terms on the expiry of current lease period.

5 DESCRIPTION OF PLANS

i) Description of Plans

A. Defined benefit plans

a) Provident Fund

The company also has certain defined contribution plans. Contributions are made to provident fund in India for employees at the rate of 12% of basic salary as per regulations. The contributions are made to registered provident fund administered by the government. The obligation of the company is limited to the amount contributed and it has no further contractual nor any constructive obligation.

b) Gratuity

The company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972.

B. Other Employee Benefits Leave Encashment

The amount of the provision of Rs. (April 1, 2016 - Rs 7.31 Lakhs and March31, 2017 Rs 8.79 Lakhs and March 31, 2018 Rs. 11.47 Lakhs) is considered as current and the accumulated leave expected to be carried forward beyond twelve months as long term employee benefit for measurement purpose.

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 method i.e. projected unit credit method has been applied as that used for calculating the defined benefit liability recognised in the balance sheet.

vi) Risk exposure

Through its defined benefit plans, the Company is exposed to a number of risks, the most significant of which are detailed below :

Description of Risk Exposers : Valuations are based on certain assumption which are dynamic in nature and vary overtime. As such Company is exposed to various risk as follows:

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. Withdrawls : Actuals withdrawls providing higher or lower than assumed withdrawls can impact plan's liability. Discount Rate : Reduction in discount rate in subsequent valuations can increase the plans liability.

vii) Defined benefit liability and employer contributions

Expected contribution to post employment benefit plan for the year ending March 31, 2018 is INR The weighted average duration of the defined benefit obligation is 10 years in case of Gratuity and 10 years in case of Leave encashment in all the three years. The expected maturity analysis of undiscounted gratuity and leave encashment is as follows :

6 SEGMENT REPORTING

As the Company's business activity falls within a single primary business segment viz "Automobiles" and there is no reportable secondary segment i.e. geographical segment, the disclosure requirement of IND AS 108 - "OperaingSegments " is not applicable.

7 FIRST-TIME ADOPTION OF IND AS (Transition from Indian GAAP to Ind As)

These financial statements, for the year ended March 31, 2018, are the Company's first financial statements prepared in accordance with Ind AS.

The accounting policies set out in note 1 have been applied in preparing the financial statements for the year ended March 31, 2018, the comparative information presented in these financial statements for the year ended March 31, 2017 and in the preparation of an opening Ind AS balance sheet at April 1, 2016 (date of transition to Ind AS). In preparing itsopening Ind AS balance sheet, the company has adjusted the amounts reported previously in financial statements prepared in accordance with the accounting standards notified under Companies (Accounting Standards) Rules, 2006 (as amended) and other relevant provisions of the Act. An explanation of how the transition from previous GAAP to IND AS has affected the Company's financial position, financial performance and cash flow is set out in the following tables and notes.

A) Exemptions and exceptions availed

Set out below are the applicable Ind AS 101 optional exemptions and mandatory exceptions applied in the transition from previous GAAP to Ind AS.

A.1 Ind AS optional exemptions

(a) Deemed cost

Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognised in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition. This exemption is also used for intangible assets covered by Ind AS 38 Intangible Assets.

Accordingly, the Company has elected to measure all of its property, plant and equipment and intangible assets at their previous GAAP carrying value, which has been considered as deemed cost.

(b) Investments in subsidiaries

Ind AS 101 permits a first-time adopter to measure its investments in subsidiaries, joint ventures and associates at deemed cost, which should be either:

(i) fair value at the entity's date of transition to Ind ASs in its separate financial statements; or

(ii) previous GAAP carrying amount at that date

The company has elected to measure in its separate financial statements all of its investments in subsidiaries at their previous GAAP carrying amount on the date of transition.

(c) Classification and measurement of Lease land

In accordance with Ind AS 101, when a lease includes both land and building elements, a first time adopter may assess the classification of each element as finance or an operating lease at the date of transition to Ind AS on the basis of the facts and circumstances existing as at the date of transition. Accordingly, applying the same exemption, the Company has classified its Pithampur land leases into finance lease on the basis of the facts and circumstances existing as at the date of transition.

A.2 Ind AS Mandatory Exceptions

(a) Estimates

Estimates made under Ind AS as at April 1, 2016 are consistent with the estimates as under previous GAAP.

(b) Classification and measurement of financial assets

Ind AS 101 requires that an entity should assess the classification of its financial assets on the basis of facts and circumstances exist on the date of transition. Accordingly, in its Opening Ind AS Balance Sheet, the company has classified all the financial assets on basis of facts and circumstances that existed on the date of transition, i.e., April 1, 2016.

1 Fair valuation of security deposits paid

Under the previous GAAP, interest free lease security deposits assets (that are refundable in cash on completion of the contract term) are recorded at their transaction value. Under Ind AS, all financial assets are required to be recognised at fair value at initial recognition and subsequently at amortised cost. Accordingly, the company has fair valued these security deposits under Ind AS. Difference between the fair value and transaction value of the security deposit has been recognised as prepaid rent.

2 Tax effects of adjustments

Additional deferred tax asset/(liability) has been recognised corresponding to the adjustments to retained earnings/profit or loss as a result of Ind AS Implementation.

3 Remeasurement of Post-employment benefit obligations (Net of Tax)

Under Ind AS, all items of income and expense recognised in a period should be included in profit or loss for the period, unless a standard requires or permits otherwise. Items of income and expense that are not recognised in profit or loss but are shown in the statement of profit and loss as 'other comprehensive income' includes remeasurements of defined benefit plans. The concept of other comprehensive income did not exist under previous GAAP. Accordingly, loss on remeasurements of post-employment benefit obligation has been reclassified to the Other Comprehensive Income for the period.

4 Cash and Cash Equivalents

Under IndAs,unpaid dividend account should be included in Other Bank Balances, whereas in previous IGAAP the same was included in cash and cash equivalents.

8 The operating results have been adversely affected due to adverse market conditions and the accumulated losses of the Company as at 31st March, 2018 stand at Rs. 19623.81 lacs as against the share capital of Rs. 10441.44 lacs. Also current liabilities as at 31st March, 2018 exceed current assets by Rs.7864.26 lacs. The Company had also declared "Suspension of work" at its Uttarpara plant w.e.f. 24th May, 2014 & layoff at its Pithampur plant w.e.f. 4th December, 2014. These conditions indicate the existence of material uncertainty about the Company's ability to continue as a going concern, which is dependent on the Company establishing profitable operations and sustainable cash flows. The Management is in the process of further rationalizing the expenses as well as considering the measures to generate additional revenue apart from revenue generated during the year. Accordingly, the Company continues to prepare its accounts on a "Going Concern" basis. The Auditors in their audit report for the year ended 31st March, 2018 had also given Emphasis of Matter on above.

9 Due to low productivity, growing indiscipline, shortage of funds and lack of demand of products, the management declared "Suspension of work" at Company's Uttarpara Plant with effect from 24th May, 2014. The Company also declared layoff at its Pithampur plant with effect from 4th December, 2014 due to lack of orders. Based on legal opinion obtained, the employees and workmen, falling under the purview of "Suspension of work" at Uttarpara plant, are not entitled to any salary & wages during that period and accordingly the Company has not provided for such salary & wages.

10 The financial statements of the Company for the financial year 2017-18 have been signed by two Non-Executive Directors, the Chief Financial Officer and the Company Secretary as there is no Chairperson, Managing Director or Chief Executive Officer on the basis of expert opinion obtained by the Company in the earlier year.

11 The wholly owned immaterial foreign subsidiary of the Company namely Hindustan Motors Limited, USA was already dissolved on 16th February, 2017 as per the laws appliacble in USA as such not in existence since after dissolution. Further, the application made by the Company to Reserve Bank of India seeking permission for writing off its entire investment in Hindustan Motors Limited, USA (Capital, Loan and other receivables/payables) for which necessary provision has been made in the accounts of the Company, is under consideration.

12 The Company has executed an agreement with Peuget S.A. on 10th February, 2017 for the sale of the Ambassador brand and certain related rights (Ambassador Brand) for a consideration foreign currency equivilent to INR 8000 lakhs, received during the year INR 7897 lakhs, net of exchange loss of Rs 103 lakhs upon fulfilment of the terms and conditions as prescribed in the said above mentioned agreement.

13 Previous year's figures have been regrouped / rearranged wherewere necessary.