Note 5A - Right of use assets

The Company has lease contract for premises/building used for its operations with lease terms of 2-10 years, and for lease hold land with lease term of 95-99 years The Company's obligations under its leases are secured by the lessor's title to the leased assets. The Company is restricted from assigning and subleasing the leased assets. The Company applies the short-term lease recognition exemption to its short-term leases of machinery and equipment (mainly Laptops) (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option).

Credit period

Trade receivables are non-interest bearing and are generally on payment terms of 30 to 120 days.

No trade or other receivable are due from directors or other officers of the Company either severally or jointly with any other person. Nor any trade or other receivable are due from firms or private companies respectively in which any director is a partner, a director or a member, except as disclosed in note 47

During the previous year, the Company along with VCHBV entered into a Securities Purchase Agreement (‘SPA') dated April 28, 2022 as amended dated July 01, 2022, October 05, 2022 and May 12, 2023 with Compagnie Plastic Omnium SE, France to divest the Sellers 4-Wheeler lighting business in the Americas and Europe ("VLS Business"). The deal also includes transfer of India R&D centre for four-wheeler lighting busines which has assets of 36.37 Million as on March 31,2022.

On October 6, 2022 out of H 36.37 millions asset sold to VL Lighting Solution Pvt.Ltd. step down subsidiary Compagnie Plastic Omnium SE, France of H 6.51 million and balance assets of H 29.86 millions which were not transferred as a part of sale transaction have been reclassified to Property Plant & Equipments.

(b) Rights, preferences and restrictions attached to equity shares

Equity shares: The Company has equity shares having a par value of Re. 1 per share (previous year Re.1 per share). In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend.

Nature and purpose of reserves General reserve

General reserve is the retained earning of the Company which is kept aside out of the Company's profits to meet future (known or unknown) obligations.

Capital reserve

Capital reserve is not available for distribution as dividend.

Securities premium

Securities premium is used to record the premium on issue of shares. It is utilised in accordance with the provisions of the Companies Act, 2013.

1) Rupee Term Loans from Banks are secured by:

(a) Kotak Mahindra Bank Limited, Rupee Term Loan 2 outstanding Balance of H 350 million Secured by Exclusive First Charge By Way Of Hypothecation On Movable Fixed Assets of the Following Plants of Company:

(1) Varroc Engineering Limited, Plant VIII PLOT NO M-191/3, MIDC INDUSTRIAL AREA, WALUJ, AURANGABAD 431136, Maharashtra

(2) Varroc Engineering Limited, Exhaust Plant - PLOT NO. B-14, MIDC INDUSTRIAL AREA, CHAKAN, TAL. KHED, DIST. PUNE 410501 Maharashtra

(b) HSBC BANK Term Loan 1 outstanding balance of H 187.50 million secured by Exclusive Charge by way of Hypothecation on identified movable Fixed Assets of the Following Plants :

(1) Varroc Engineering Limited, Plant IV PLOT NO M 140,141, MIDC,WALUJ,AURANGABAD 431136, Maharashtra.

(2) Varroc Engineering Limited, Corporate Office , L 4, MIDC INDUSTRIAL AREA, WALUJ, DISTRICT AURANGABAD 431136 Maharashtra.

(3) Varroc Engineering Limited, Pantnagar, Plot No 20 SECTOR 9, INTEGRATED INDUSTRIAL AREA, PANTNAGAR, DISTRICT UDHAMSINGH NAGAR,UTTRAKHAND

(c ) HSBC BANK Term Loan 2 outstanding balance of H 375 million secured by Exclusive Charge by way of Hypothecation on identified movable Fixed Assets of the Following Plants :

(1) Varroc Engineering Limited, Plant V - Plot No. L-6/2, MIDC, WALUJ, AURANGABAD 431136 Maharashtra.

(2) Varroc Engineering Limited, PLant V - R&D, PLOT NO L-6/2, MIDC,WALUJ,AURANGABAD 431 136 Maharashtra.

(d) HSBC BANK Working Capital Term Loan (WCTL) of H 400 Million and INR 435 Million outstanding balance of H 300.00 Million and H 435.00 Million

respectively, by way of Guaranteed Emergency Credit Line (GECL) under ECLGS scheme of National Credit Guarantee Trustee Company Ltd. (NCGTC) are secured by way of second pari-passu charge on current assets of the Company along with other banks. Further secured by second charge on movable fixed assets of the Company situated at

(1) Varroc Engineering Limited, Plant IV - Plot No. M-140-141, MIDC Industrial Area, Waluj, Aurangabad 431 136, Maharashtra

(2) Varroc Engineering Limited, Corporate Office, Plot No. L-4, MIDC Industrial Area, Waluj, Aurangabad 431 136, Maharashtra

(3) Varroc Engineering Limited, Pantnagar - Plot No.20 Sector 9, Integrated Industrial Area, Pant Nagar, Dist. Udhamsingh Nagar, Uttrakhand

(4) Varroc Engineering Limited, Plant V - Plot No. L-6/2, MIDC Industrial Area, Waluj Aurangabad - 431136

(5) Varroc Engineering Limited,Plant V - R&D, Plot No. L-6/2, MIDC Industrial Area, Waluj Aurangabad - 431136

(e) (i) ICICI BANK Rupee Term loan of H 1000 Million is secured by way of mortgage of immovable properties situated at:

(1) Gut No. 390, Takve Bk, Tal. Maval, Dist. Pune, Maharashtra

(2) Plot No. B-14, MIDC, Chakan, Tal. Khed, Dist. Pune, Maharahtra

(3) Plot Nos. K-101-102, M-140-141 and M-191/3, MIDC Industrial Area, Waluj, Aurangabad, Maharashtra

(4) B-3010, 3rd Floor, Marvel Edge, Village Vadagaonsheri Taluka Haveli Dist Pune, Maharashtra

(5) A-7010 & 7020, B-7010, 7020, 7030 & 7040 at 7th Floor, Marvel Edge, Village Vadagaonsheri Taluka Haveli Dist Pune, Maharashtra

(ii) ICICI BANK Rupee Term Loan of of H 1250 Milion availed on March 31 2023 , security creation is in process.

(f) IDBI BANK Rupee Term loan of H 750 Million (partially availed of H 292.60 million) is secured by way of hypothecation of specific movable properties of the Borrower including its movable plant and machinery, machinery spares, tools and accessories and movables, both present and future

2) Rupee Term Loans from Financial Institution are secured by:

(a) Rupee Term loan of H 1000 Million availed from Bajaj Finance Limited outstanding balance as on March 31, 2023 H720.66 million is secured by way of mortgage on specific immovable properties on exclusive charge basis located at Plot Nos. E-4, L-6/2 and L-4, MIDC, Waluj, Aurangabad - 431136, Maharashtra State.

(b) Rupee Term loan of H 650 Million outstanding balance as on March 31, 2023 H259.52 million availed from Bajaj Finance Limited is secured by way of mortgage on specific immovable properties on exclusive charge basis located at Plot No. B-24/25, MIDC, Chakan, Pune - 410501, Maharashtra State and extension of charge on specific immovable properties located at E-4, L-6/2 and L-4, MIDC, Waluj, Aurangabad - 431136, Maharashtra State.

(c) Rupee Term loan of H 600 Million availed from Tata Capital and Financial Services Limited outstanding balance as on March 31, 2023 H 600.00 million is secured by way of mortgage on immovable properties on exclusive charge basis located at Plot No. 20, Sector 9, SIDCUL Industrial area, Pantnagar, Rudrapur, Uttarakhand 263153

3) Non Convertible Debentures are Secured by:

Non Convertible Debentures Secured by Exclusive charge by way of Hypothecation on the specific identified movable properties of the Company situated at:

(1) Varroc Engineering Limited -VEL-III - Plot No. B-24 & 25, MIDC, Chakan, Pune - 410501, Maharashtra

(2) Varroc Engineering Limited -VEL-III (R&D) - Plot No. B-24 & 25, MIDC, Chakan, Pune - 410501, Maharashtra

(3) Varroc Engineering Limited -VEL VII (Valves) -Plot No. L-4, MIDC, Waluj, Aurangabad - 431136, Maharashtra.

(4) Varroc Engineering Limited - VEL VII (Forging) -Plot No. L-4, MIDC, Waluj, Aurangabad - 431136, Maharashtra.

(5) Varroc Engineering Limited - VEL Chennai - Survey No. 128-1B & 129/1B, Ezhichur Village, Taluka Sriperumbudur, Dist. Kancheepuram, Chennai -603204, Tamilnadu.

(6) Varroc Engineering Limited- VEL Windmill Satara -Wind Mills 2.10 MW Wind Mills installed at village Vankusawade & Kusawade, District: Satara, Maharashtra

(7) Varroc Engineering Limited - VEL Windmill Supa- 4 MW Wind Mills installed at Village Shahajapur, Pimpalgaon & Jamner (Supa), District Ahmednagar, Maharashtra.

(8) Varroc Engineering Limited- VEL Windmill Jaisalmer- 2.25 MW Wind Mills installed at Village Badabaugh, Site: Baramsar, Dist Jaisalmer, in Rajasthan State.

(9) Varroc Engineering Limited- Lighting Plant Plot No. B-14, MIDC, Chakan, Pune - 410501, Maharashtra

(10) Varroc Engineering Limited- VEL-I - Plot No. E-4, MIDC, Waluj, Aurangabad - 431136, Maharashtra

(11) Varroc Engineering Limited -VEL-II - Plot No. K-101-102, MIDC, Waluj, Aurangabad - 431136, Maharashtra

(12) Varroc Engineering Limited - VEL - Halol - Plot No. 103/4, Maswad, GIDC Expansion Estate, Halol-II, Dist. Panchmahal, Gujarat - 389 350

4) Covenant non-compliance

Bank loans contain certain debt covenants relating to limitation on indebtedness, debt-equity ratio, net borrowings to EBITDA ratio and debt service coverage ratio. Some of the debt covenants in respect of non-current borrowings of H 3,033.14 million were not complied as at March 31, 2023. The Company has received waiver letter subsequent

to year-end from one lender agreeing not to demand repayment as a consequence of such breaches. For rest of the facilities, non-current loans of H 2,381.23 million have been reclassified as current. The asset cover in respect of the Non-Convertible Debentures of the Company as on March 31 , 2023 is 1.21 times of the total due amount which is greater than the requirement of 1.1 times of the said Secured Non-Convertible Debentures.

The management does not expect any material impact on the financial statements/cash flows due to the above.

Cash credit facilities availed from Standard Chartered Bank, HDFC Bank Limited, CITI Bank N.A, ICICI Bank Limited, IDBI Bank Limited, Axis Bank Limited, Kotak Mahindra Bank Limited and IDFC First Bank Ltd. are secured by first paripassu charge by way of hypothecation of stocks of raw materials, work in progress, finished goods, consumable, stores and spares, packing materials and receivables of the Company both present and future.

* The Company has obtained unsecured Buyer's credit of Euro 3,033,187.65 on 13.07.2021 from IDFC First Bank Ltd. for a period of 1 year which is further rolled over for another 1 year against capex import LC payment. The Buyer's credit is due for payment on 03.07.2023 and carries the interest rate of 1.75% pa.

The Company has borrowings from banks or financial institutions on the basis of security of current assets, and quarterly returns or statements of current assets filed by the Company during the current and previous year with banks or financial institutions are in agreement with the books of accounts except as mentioned in Note 22(a) & 22(b).

Note 2 Includes Post closure entries posted at the time of finalisation of quarterly financial statement.

Note 3 Primarily includes intercompany debtors, provision for customer rate increase/decrease and debtors of ageing more than 90 days. Further, factoring balance has been disclosed separately in the statement which is netted off in the financial statements

Note 4 The net difference is on account of incorrect adjustments.

Note 5 Mainly includes inter company creditors and provision for expenses.

Note 6 Trade payable shown in stock statement is net of vendor advances outstanding as of that date.

Note 7 The balance difference is on account of incorrect adjustments which majorly pertains to:

i) The creditor balance outstanding for more than 90 days has not been considered for the plants in lighting division for the purpose of reporting in stock statement.

ii) For reporting in quarterly statement to banks, incorrect capital creditors amounts were considered for exclusion from total creditors balance.

Note 2 Includes Post closure entries posted at the time of finalisation of quarterly financial statement.

Note 3 Primarily includes intercompany debtors, provision for customer rate increase/decrease and debtors of ageing more than 90 days. Further, factoring balance has been disclosed separately in the statement which is netted off in the financial statements

Note 4 The net difference is on account of incorrect adjustments.

Note 5 Mainly includes inter company creditors and provision for expenses.

Note 6 Trade payable shown in stock statement is net of vendor advances outstanding as of that date.

Note 7 The balance difference is on account of incorrect adjustments which majorly pertains to:

i) The creditor balance outstanding for more than 90 days has not been considered for the plants in lighting division for the purpose of reporting in stock statement.

ii) For reporting in quarterly statement to banks, incorrect capital creditors amounts were considered for exclusion from total creditors balance.

D Performance obligation

Revenue from contracts with customers include revenue from finished goods, tooling, engineering services and Job work.

Finished goods / tooling / engineering services

For the sale of finished goods the performance obligation is generally satisfied upon its delivery or as per the terms of the customer contract and payment is generally due within 30 to 120 days from delivery.

For sale of toolings, the performance obligation is considered satisfied on billing after approval of the part(s) by the customer. The Company generally receives advance for toolings contracts ranging from 30 % to 50% of the contracted price. The revenue is recognised at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.

Product development/engineering services are considered as related to sale of parts rather than a separate performance obligation. As a result, revenue from engineering services is recognised over the period of production from the date of start of production. Costs incurred in respect of providing engineering services are recognised as intangible assets and amortised over the period of production from the date of start of production. Payments received from customers in respect of product development/engineering services are presented as contract liabilities.

For supply of engineering services to group companies, performance obligation is generally satisfied on the basis of time/work completed as per the contract with the group companies and payment is generally due within 30-60 days.

The Company provides normal warranty provisions on some of its products sold, in line with the industry practice. The Company considers that the contractual promise made to the customer in the form of warranties for the parts supplied does not meet the definition of separate performance obligation as it does not give rise to additional service

Job work revenue is recognised when the work is completed and billed to customer.

B Defined benefit plan (Gratuity)

The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/ termination is the employees last drawn basic salary plus dearness allowance per month computed proportionately for 15 days salary multiplied for the number of years of service. The gratuity plan is a funded plan and the Company makes contributions to recognised funds in India. The Company does not fully fund the liability and maintains a target level of funding to be maintained over a period of time based on estimations of expected gratuity payments.

Sensitivity for significant actuarial assumptions is computed by varying one actuarial assumption used for the valuation of the defined benefit obligation by 1%, keeping all other actuarial assumptions constant. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of defined benefit obligation calculated with the projected unit credit method at the end of reporting period) has been applied while 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.

RISK EXPOSURE AND ASSET LIABILITY MATCHING

Provision of a defined benefit scheme poses certain risks, some of which are detailed here under as companies take on uncertain long-term obligations to make future benefit payments.

1) Liability Risks Asset-Liability mismatch risk-

Risk which arises if there is a mismatch in the duration of the assets relative to the liabilities. By matching duration with the defined benefit liabilities, the Company is successfully able to neutralize valuation swings caused by interest rate movements. Hence, companies are encouraged to adopt asset-liability management.

Discount rate risk-

Variations in the discount rate used to compute the present value of the liabilities may seem small, but in practice can have a significant impact on the defined benefit liabilities.

Future salary escalation and inflation risk -

Since price inflation and salary growth are linked economically, they are combined for disclosure purposes. Rising salaries will often result in higher future defined benefit payments resulting in a higher present value of liabilities especially unexpected salary increases provided at management's discretion may lead to uncertainties in estimating this increasing risk.

2) Asset risks

All plan assets are maintained in a trust fund managed by a public sector insurer viz. LIC of India. LIC has a sovereign guarantee and has been providing consistent and competitive returns over the years.

The Company has opted for a traditional fund wherein all assets are invested primarily in risk averse markets. The Company has no control over the management of funds but this option provides a high level of safety for the total corpus. A single account is maintained for both the investment and claim settlement and hence 100% liquidity is ensured. Also, interest rate and inflation risk are taken care of

(ii) Valuation technique used to determine fair value

The following methods and assumptions were used to estimate the fair value of the financial instruments included in the above tables:

- The Company enters into derivative financial instruments with financial institutions with investment grade credit ratings. Foreign exchange forward contracts, interest rate swaps are valued using valuation techniques, which employs the use of market observable inputs. The most frequently applied valuation techniques include forward pricing model, using present value calculations. The models incorporate various inputs including the credit quality counterparties, foreign exchange spot and forward rates, yield curves of the respective currencies, currency basis spread between the respective currencies, interest rate curves etc. The changes in counterparty credit risk had no material effect on financial instruments recognised at fair value through profit and loss.

Commentary

The carrying amounts of trade receivables, loans, other financial assets, cash and bank balances, trade payables/ acceptances and other financial liabilities are considered to be the same as their fair values due to their short-term nature. The fair values of non-current financial assets and non-current financial liabilities also approximate their carrying values. The borrowings which are at floating rate of interest, fair values as at March 31,2023 approximate their carrying values.

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

Other Assets for which Fair Value is disclosed

The fair value of investment property is based on valuation performed by independent valuer as per significant observable inputs (Level 2).

Fair value of the investment property as on March 31,2023 H138.70 million.(March 31,2022 H 138.70 million) - Refer Note 4

Note 44 : Financial risk management

The Company's principal financial liabilities, other than derivatives, comprise loans and borrowings, trade and other payables, and financial guarantee contracts. The main purpose of these financial liabilities is to finance the Company's operations and to provide guarantees to support its operations. The Company's principal financial assets include loans, trade and other receivables, and cash and cash equivalents that derive directly from its operations. The Company also enters into derivative transactions.

The Company is exposed to market risk, credit risk and liquidity risk. The Company's senior management oversees the management of these risks. All derivative activities for risk management purposes are carried out by specialist teams that have the appropriate skills, experience and supervision. It is the Company's policy that no trading in derivatives for speculative purposes may be undertaken. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below:

Market Risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: currency risk, interest rate risk and other price risk such as equity

price risk and commodity price risk. Financial instruments affected by market risk include loans and borrowings, receivables, payables, deposits, investments and derivative financial instruments.

a) Foreign currency risk

The Company operates internationally and the business is transacted in several currencies. Consequently, the Company is exposed to foreign exchange risk through its sale and purchase of goods and services, mainly in the North America and Europe . The exchange rate between the rupee and foreign currencies has changed substantially in recent years and may fluctuate substantially in the future. Consequently, the results of the Company's operations are affected positively/adversely as the rupee appreciates /depreciates against these currencies. The Company evaluates exchange rate exposure arising from these transactions and enters into foreign exchange forward contracts, interest and principal swaps and options to mitigate the risk of changes in exchange rates on foreign currency exposures. The Company follows established risk management policies, to hedge forecasted cash flows denominated in foreign currency. The Company has designated certain derivative instruments as cash flow hedges to mitigate the foreign exchange exposure.

iii) Sensitivity

For the year ended March 31, 2023 and March 31, 2022, every 5% percentage point appreciation/depreciation in the exchange rate between the Indian rupee and U.S. Dollar, would have affected the Company's incremental operating margins by approximately H 12.82 million and H 3.56 million respectively. And for Euro, every 5% percentage point appreciation/depreciation in the exchange rate would have affected the Company's incremental operating margin by approximately H 691.11 million, previous year H 13.81 million The sensitivity for net exposure in JPY and in other currencies does not have material impact to Statement of Profit and Loss. Sensitivity analysis is computed based on the changes in the receivables and payables in foreign currency upon conversion into functional currency, due to exchange rate fluctuations between the previous reporting period and the current reporting period.

b) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of change in market interest rates. The Company's exposure to the risk of changes in market interest rates relates primarily to the Company's long term debt obligations with floating interest rates.

C) Other price risk

The Company does not have material investments in equity securities other than investments in its subsidiaries. Hence, equity price risk is considered to be low. Further, the Company's operating activities require the ongoing purchase of various commodities for manufacture of automotive parts. However, the movement is commodity prices are substantially adjusted through price differences as per customer contracts and hence commodity price risk for the Company is also considered to be low.

Credit risk management

Credit risk arises when a customer or counterparty does not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its investing activities, including deposits with banks and financial institutions,

foreign exchange transactions and other financial instruments. The Company only deals with parties which have good credit rating/worthiness given by external rating agencies or based on the Company's internal assessment.

Trade receivables

Customer credit risk is managed by the Company's established policy, procedures and control relating to customer credit risk management. Further, Company's customers includes marquee OEMs and Tier I companies, having long standing relationship with the Company. Outstanding customer receivables are regularly monitored and reconciled. At March 31, 2023, receivable from Company's top 5 customers accounted for approximately 42.61 % (March 31, 2022: 43.99%) of all the receivables outstanding. An impairment analysis is performed at each reporting date on an individual basis based on historical data. The maximum exposure to credit risk at the reporting date is the carrying value of trade receivables disclosed in Note 12. The Company does not hold collateral as security.

Financial instruments and cash deposits

Credit risk from balances with banks and financial institutions is managed by the Company's corporate treasury department in accordance with the Company's policy. Investments of surplus funds are made only with approved counterparties. Credit limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterparty's potential failure to make payments.

The Company's maximum exposure to credit risk for the components of the balance sheet at March 31, 2023 and March 31, 2022 is the carrying amounts as disclosed in note 13 except for financial guarantees. The Company's maximum exposure relating to financial guarantees is disclosed in note 51 (B).

d) Liquidity risk

Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at a reasonable price. The Company's corporate treasury department is responsible for liquidity and funding as well as settlement management. In addition, processes and policies related to such risks are overseen by senior management. Management monitors the Company's net liquidity position through rolling forecasts on the basis of expected cash flows. As at March 31,2023, cash and cash equivalents are held with major banks.

The amounts disclosed in the above table are the contractual undiscounted cash flows

For financial guarantee contracts, refer note 51 (B).

Note 45 - Capital management

(a) Risk management

T he Company's capital comprises equity share capital, securities premium, retained earnings and other equity attributable to shareholders.

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 for other stakeholders, and

- Maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders or issue new shares.

No changes were made in the objectives, policies or processes for managing capital of the Company during the year.

Loan covenants

The Company's capital management aims to ensure that it meets financial covenants attached to the interestbearing loans and borrowings that define capital structure requirements. Some of the financial covenants were not complied as at March 31,2023. Refer note 21 for details.

(b) Dividends not recognised at the end of the reporting period

The Board of Directors have not recommended any dividend during the current year.

(i) The Company is contesting excise, service tax and goods and service tax demand/notices and the management, including its tax advisors, believe that it's position will likely be upheld in the appellate process. No expense has been accrued in the financial statements for the tax demands/notices raised. The management believes that the ultimate outcome of this proceeding will not have a material adverse effect on the Company's financial position and results of the operations. The Company has deposited H 38.08 million (previous year H 38.08 million) with the tax authorities against the above matters to comply with the order of the tax authorities.

(ii) There are numerous interpretative issues relating to the Supreme Court (SC) judgement on PF dated February 28, 2019. As a matter of caution, the company has made a provision on a prospective basis from the date of the SC order. The company will update its provision, on receiving further clarity on the subject.

(C) - Code on Social Security, 2020

The Code on Social Security, 2020 (‘Code') relating to employee benefits during employment and post-employment benefits received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified and the final rules/interpretation have not yet been issued. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period the Code becomes effective.

Note 52- Loss on equity investments and loans given to VLS

The Company and VarrocCorp Holding BV, Netherlands ("VCHBV", wholly owned subsidiary of the Company) (together referred to as "Sellers") entered into a Securities Purchase Agreement dated April 29, 2022 as amended dated October 05, 2022 and May 12, 2023 (collectively referred to as "SPA") with Compagnie Plastic Omnium SE, France (referred to as "Buyer"), to divest the Sellers 4-Wheeler lighting business in the Americas and Europe ("VLS Business"). The equity value agreed under the SPA was Eur 69.5 million (subject to closing adjustments as provided under the SPA) and accordingly the loss on equity investments and loans given to VLS business of Rs 13,321.90 million was recognised during the year ended March 31,2023 as exceptional item. Summary of loss on equity and loans given to VLS business is as follows :

As per the terms of the SPA, a specific ‘Adjustment Escrow' has been provided for the Final Closing Statement and the Final Closing Adjustment Statement to be prepared as of Closure Date i.e. Oct 6, 2022. The Buyer had a period of 90 working days from the closing date to come up with the same duly supported by requisite information/documentation.

The Buyer submitted the final adjustments in the month of February 2023 but failed to provide the necessary supporting details to enable the Sellers to understand these adjustments. Hence, Sellers sent a Dispute Notice in accordance with the SPA disputing the proposed adjustments. Pursuant to the amendment to SPA dated May 12, 2023, both parties have mutually agreed to attempt the resolution of their disagreements in accordance with the provisions of the SPA. Considering the disagreement between the parties and the negotiations with the Buyer are under progress, the effect of the proposed adjustments cannot be ascertained for recognition in the standalone financial statements as of March 31, 2023, and accordingly the loss recognised for the year ended March 31,2023 is based on the initial agreed equity value of Eur 69.5 million as explained above.

Formulae for calculation of ratios are as follows:

(i) Current ratio = [ Current Assets / Current Liabilities ]

(ii) Debt-Equity Ratio = [ Total Debt / Total Equity ]

(iii) Debt service coverage ratio = [ (Earning before Interest Tax & Depreciation & amortization and exceptional items)/ (Interest Expense Principal repayments of long term loan made during the period) ]

(iv) Return on Equity ratio = [(Net Profits after taxes - Preference Dividend/(Average Shareholder's Equity)]

(v) Inventory Turnover ratio= [(cost of goods sold)/(Average Inventory)]

(vi) Trade Receivable Turnover Ratio = [(Revenue from Operation)/(Average Trade receivable)]

(vii) Trade Payable Turnover Ratio = [ (Purchases)/(Average Trade payable)]

(viii) Net Capital Turnover Ratio = [( Net Annual Sales )/( Average Working Capital)]

(ix) Net Profit ratio = [ (Net Profit after taxes)/ (Revenue from Operation)]

(x) Return on Capital Employed = [( Earning Before Interest and taxes (EBIT))/( Capital employed)]

(xi) Return on Investment = [(Income generated from invested funds in bank FDs and mutual funds)/ (Average invested funds in bank FDs and mutual funds)]

(xii) Capital Employed = Tangible Net worth Total Debt Deferred Tax Liability

(xiii) Working capital = (Current assets - Current liabilities)

Commentary

A) Decrease in Current ratio is due to impairment of loan receivable & gurantee commission receivable from Related Party.

B) Increase in Debt equity ratio is due to increase in borrowings raised during the year and and decrease in equity due to losses.

C) Decrease in the ratio is due to losses in the current year as compared to profit in the previous year.

D) Decrease in the ratio is mainly due to impairment provision of loan, interest & guarantee to related party and impairment of investment in subsidiaries.

E) Decrease in the return on capital employed primarily due to impairment provision on investment/loan to subsidiary during the year.

F) Increase in ratio mainly due increase in revenue as compared to previous year.

G) Decrease in Net capital turnover ratio is mainly on account of increase in current borrowings and Inter corporate deposits

Note 55 : Other Statutory Information

(i) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.

(ii) The Company does not have any transactions with companies struck off.

(iii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period,

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

(v) The Company does not have any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961.