1. Reporting entity

Sanghvi Movers Limited (“SML” or “the Company”) is a public company domiciled in India and was incorporated in 1989. SML is engaged in the business of providing hydraulic and crawler cranes to various industries in the infrastructure sector and has a fleet of mediumldto largedsize hydraulic truck mounted telescopic and lattice boom cranes and crawler cranes with lifting capacity ranging from 20 tons to 800 tons. The Company has its registered office in Pune. The equity shares of the Company are listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).

2. Basis of preparation

2.1 Statement of compliance

These financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) as per the Companies (Indian Accounting Standards) Rules, 2015 notified under Section 133 of Companies Act, 2013, (the ‘Act’) and other relevant provisions of the Act.

The financial statements were authorized for issue by the Company’s Board of Directors on 25 May 2018. Details of the Company’s significant accounting policies are included in Note 3.

2.2 Functional and presentation currency

These financial statements are presented in Indian Rupees (INR), which is also the Company’s functional currency. All amounts have been rounded-off to the nearest lakh to two decimal points, unless otherwise indicated.

2.3 Basis of measurement

The financial statements have been prepared on the historical cost basis except for the following items:

2.4 Use of estimates

In preparing these financial statements, management has madejudgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised prospectively.

Assumptions and estimation uncertainties

- Note 19 - measurement of defined benefit obligations: key actuarial assumptions;

- Note 19 and 25 - the Company has received some orders and notices from tax authorities in respect of direct and indirect taxes. The outcome of these matters may have a material effect on the financial position, results of operations or cash flows. Management regularly analyses current information about these matters and makes provisions for probable contingent losses expected to be incurred to resolve these matters. In making the decision regarding the need for loss provisions, management considers the degree of probability of an unfavourable outcome and the ability to make a sufficiently reliable estimate of the amount of loss. The filing of a suit or formal assertion of a claim against the Company or the disclosure or the disclosure of any such suit or assertions, does not automatically indicate that a provision of a loss may be appropriate; and

- Note 10 - Property, plant and equipment represent a significant proportion of the asset base of the Company. The charge in respect of periodic depreciation is derived after determining an estimate of an asset’s expected useful life and the expected residual value at the end of its life. The useful lives and residual values of company’s assets are determined by management at the time the asset is acquired and reviewed periodically, including at each financial year end. The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact their life.

2.5 Measurement of fair values

A number of the accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities.

The Company has an established control framework with respect to the measurement of fair values which is overseen by the Chief Financial Officer (CFO).

Significant valuation issues are reported to the Company’s audit committee.

Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.

- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

- Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs)

When measuring the fair value of an asset or a liability, the Company uses observable market data as far as possible. If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as a lowest level input that is significant to the entire measurement.

The Company recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

2.6 Current versus non-current classification

The Company presents assets and liabilities in the Balance Sheet based on current/ non-current classification.

Assets

An asset is classified as current when it satisfies any of the following criteria:

a) it is expected to be realized in, or is intended for sale or consumption in, the Company’s normal operating cycle

b) it is held primarily for the purpose of being traded;

c) it is expected to be realized within 12 months after the reporting date; or

d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting date.

Current assets include current portion of non-current financial assets. All other assets are classified as non-current.

Liabilities

A liability is classified as current when it satisfies any of the following criteria:

a) it is expected to be settled in the Company’s normal operating cycle;

b) it is held primarily for the purpose of being traded;

c) it is expected to be settled within 12 months after the reporting date; or

d) the Company does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

Current liabilities include current portion of non-current financial liabilities. All other liabilities are classified as non-current.

Deferred tax assets and liabilities are classified as non-current assets and liabilities.

Operating cycle

Operating cycle is the time between the acquisition of assets for processing and their realisation in cash or cash equivalents. The operating cycle of the Company is less than 12 months.

A. Measurement of fair values Fair value hierarchy

The fair value of investment property has been determined by external, independent valuer, having appropriate recognised professional qualifications and recent experience in the location and category of the property being valued.

The fair value measurement for all of the investment property has been categorised as a Level 3 fair value based on the inputs to the valuation techniques used.

3 (a) (i) Rights preferences and restrictions attached to equity shares

The Company has only one class of equity shares having par value of Rs. 2 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

Nature and purpose of other reserves

Securities premium reserve

Securities premium reserve is used to record the premium on issue of shares. The reserve is to be utilised in accordance with the provisions of the Act.

Remeasurement of defined benefit liability (asset)

Remeasurement of defined benefit liability (asset) comprises actuarial gains and losses.

Cash flow hedging reserve

The Company uses hedging instruments as part of its management of foreign currency risk associated with foreign currency borrowings and interest rate risk associated with variable interest rate borrowings as described within note 22. For hedging foreign currency risk, the Company uses principal swap which is designated as cash flow hedges. For hedging interest rate risk, the Company uses interest rate swaps which is also designated as cash flow hedges. To the extent these hedges are effective; the change in fair value of the hedging instrument is recognised in the cash flow hedging reserve. Amounts recognised in the cash flow hedging reserve is reclassified to profit or loss when the hedged item affects profit or loss (e.g. interest payments).

i) Term loans from banks in Indian rupees carry interest rate ranging from 9.20% to 9.75% p.a. repayable in 1 to 48 monthly and 1 to 12 quarterly installments.

ii) Loans from related parties are repayable on demand with a notice of 13 months and carry interest rate ranging from 4.25 % - 9.12% p.a.

iii) USD term loan from bank equivalent to Rs. 2,170.02 Lakhs (31 March 2017: Rs. 2,138.96 Lakhs) carries interest rate of one year 6 months LIBOR 0.50% which is repayable on 14 November 2018.

iv) Another USD term loan from bank equivalent to Rs. 2,620.95 Lakhs (31 March 2017: Rs. 2,596.58 Lakhs) carries interest rate of one year 6 months LIBOR 0.61% which is repayable on 17 September 2018.

v) EURO term loan from bank equivalent to Rs. Nil (31 March 2017: Rs. 5,045.21) carries interest rate of one year EURIBOR 0.68% which was repayable on 27 March 2018.

Secured borrowings and assets pledged as security

a) Term loans amounting to Rs. 35,966.38 Lakhs (31 March 2017 : Rs. 29,517.64 Lakhs) are secured against cranes/ trailers.

b) Term loans amounting to Rs. 12,982.78 lakhs (31 March 2017: Rs. 9,979.07 Lakhs) are secured against cranes/ trailers and registered mortgage on land and buildings at Tathawade.

c) Term loans amounting to Rs. 1,108.37 lakhs (31 March 2017 : Rs. 3,797.21 Lakhs) are secured against cranes and land at Vadagaon Pune.

d) Term loans amounting to Rs. 684.64 Lakhs (31 March 2017: Rs. 5,338.96 Lakhs) are secured against cranes and office building at Sate, Pune.

e) Term loans amounting to Rs. 239.34 Lakhs (31 March 2017: Rs. Nil) are secured against Car.

f) Working capital loans from banks representing cash credit facilities as at 31 March 2018 and 31 March 2017 are secured against receivables and stock of spares & continuation of charge on cranes hypothecated with bank for term loan. The cash credit facilities are repayable on demand and carry interest rate ranging between 8.75-8.8% p.a.

The carrying amounts of financial and non-financial assets pledged as security for current and non-current borrowings are disclosed in note 26.

Information about the Company’s exposure to interest rate, foreign currency and liquidity risks is included in note 22.

(i) Compensated absences

The compensated absences cover the Company’s liability for earned leave.

The amount of the provision of Rs. 14.92 Lakhs (31 March 2017 - Rs. 31.50 Lakhs) of its employees is presented as current since the same is expected to be funded within 12 months from the reporting date.

(ii) Defined contribution plans

The Company has certain defined contribution plans. Contributions are made to provident fund, superannuation fund and national pension scheme in India for employees at the prescribed rate of basic salary. These contributions are made to registered provident fund administered by the government. The Company also contributes to superannuation fund to Life Insurance Corporation of India for its employees. The obligation of the Company is limited to the amount contributed and it has no further contractual nor any constructive obligation. The expense recognised during the period towards defined contribution plan are as follows:

(Hi) Defined benefit obligation

The Company has a defined benefit gratuity plan governed by the Payment of Gratuity Act, 1972. It entitles an employee who has rendered at least five years of continuous service to gratuity at the rate of fifteen days salary for every completed year of service or part thereof in excess of six months based on the rate of salary last drawn by the concerned employee.

A. Funding

The gratuity liability is funded through a Group Gratuity Scheme with Life Insurance Corporation of India. The funding requirements is determined at each Balance sheet date based on an actuarial valuation carried out by an independent actuary using the projected unit credit method.

* Financial assets and liabilities such as trade receivables, loans, cash and cash equivalents, bank balance other than cash and cash equivalents, security deposits, interest accrued on fixed deposits, trade payables, interest accrued but not due on borrowings, accrued employee liabilities, capital creditors are largely short-term in nature. The fair value of these financial assets and liabilities approximate their carrying amount due to the short-term nature of such assets and liabilities.

4. Financial risk management

“The Company’s board of directors has overall responsibility for the establishment and oversight of the Company’s risk management framework. The board of directors has established the risk management committee, which is responsible for developing and monitoring the Company’s risk management policies. The committee reports to the board of directors on its activities.

The Company’s risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate credit limits and controls and to monitor risks and adherence to credit limits. The Company, through its training and established procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.

The Company’s activities expose it to market risk, liquidity risk and credit risk. In order to minimize any adverse effects on the financial performance of the Company, derivative financial instruments, such as foreign exchange forward contracts, principal swaps are entered to hedge certain foreign currency risk exposures and interest rate swaps to hedge variable interest rate exposures. Derivatives are used exclusively for hedging purposes and not as trading or speculative instruments.

This note explains the sources of risk to which the Company is exposed to and how the entity manages the risk and the impact of hedge accounting in the financial statements:”

(A) Credit risk

Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss. The maximum exposure to the credit risk at the reporting date is primarily from trade receivables amounting to Rs. 13,451.77 lakhs and Rs. 16,581.50 lakhs as of 31 March 2018 and 31 March 2017, respectively. Trade receivables are typically unsecured and are derived from revenue earned from customers located in India. Credit risk has always been managed by the Company through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. On account of adoption of Ind AS 109, the Company uses expected credit loss model to assess the impairment loss. The Company computes the expected credit loss allowance for trade receivables based on available external and internal credit risk factors such as the ageing of its dues, market information about the customer, industry information and the Company’s historical experience for customers.

The following table gives details in respect of percentage of revenue generated from top three customers of the Company wherein revenue for each of them exceeds 10 percent of Company’s revenue from operations:

Credit risk exposure

The allowance for lifetime expected credit loss on customer balances as at 31 March 2018 was Rs. 2,945.18 Lakhs (2017 - Rs. 833.45 lakhs). The impairment loss recognised for lifetime expected credit loss on customer balances for the year ended 31 March 2018 was Rs. 2,111.73 lakhs (2017 - Rs. 206.86 lakhs).

Credit risk on cash and cash equivalents is limited as the Company generally invests in deposits with banks and financial institutions with high credit ratings assigned by domestic credit rating agencies. Investments primarily include investment in liquid mutual fund units and fixed deposits which are funds deposited at a bank for a specified time period.

(B) Liquidity risk

The Company’s principal sources of liquidity are cash and cash equivalents and the cash flow that is generated from operations. The Company believes that the working capital is sufficient to meet its current requirements. Accordingly, no liquidity risk is perceived.

As of 31 March 2018, the Company had a working capital of Rs. 3,600.86 lakhs and that as at 31 March 2017 had a working capital of Rs. 3,800.50 lakhs. The working capital of the Company for this purpose has been derived as follows:

The working capital as at 31 March 2018 calculated above includes cash and cash equivalents of Rs. 251.30 lakhs. Also, the working capital as at 31 March 2017 calculated above includes cash and cash equivalents of Rs. 238.92 lakhs and current investments of Rs. 1,500.43 lakhs.

The table below provides details regarding the contractual maturities of significant financial liabilities as of 31 March 2018:

(C) Market risk

Though the Company operates only in India, the Company is exposed to foreign exchange risk through purchases from overseas suppliers in various foreign currencies. The Company holds derivative financial instruments such as foreign exchange forward and cross currency interest rate swap (CCIRS) to mitigate the risk of changes in exchange rates on foreign currency exposures. The exchange rate between the Indian 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 as the Indian rupee appreciates/ depreciates against these currencies.

Sensitivity Analysis:

A change in 1% in the rates of foreign currency payables will affect the outstanding as at 31 March 2018 by Rs.47.86 lakhs (31 March 2017 - Rs. 97.81 lakhs). As the rate of exchange of the foreign currency increases, the outstanding dues would increase and vice versa. However the foreign currency payables are fully hedged by forward contracts.

Derivative financial instruments

The Company holds derivative financial instruments such as foreign currency forward contracts to mitigate the risk of changes in exchange rates on foreign currency exposures. The counterparty for these contracts is generally a bank or a financial institution. These derivative financial instruments are valued based on quoted prices for similar assets and liabilities in active markets or inputs that are directly or indirectly observable in the marketplace.

Some of the foreign exchange forward contracts mature within twelve months. The table below analyzes the derivative financial instruments into relevant maturity groupings based on the remaining period as of the balance sheet date:

The Company has designated foreign exchange forward contracts as cash flow hedges to mitigate the risk of foreign exchange exposure on highly probable forecast cash transactions. The related hedge transactions for balance in cash flow hedging reserve are expected to occur and reclassified to the statement of profit or loss within a period of 12 months to 18 months from 31 March 2018.

Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness assessments to ensure that an economic relationship exists between the hedged item and hedging instrument, including whether the hedging instrument is expected to offset changes in cash flows of hedged items.

If the hedge ratio for risk management purposes is no longer optimal but the risk management objective remains unchanged and the hedge continues to qualify for hedge accounting, the hedge relationship will be rebalanced by adjusting either the volume of the hedging instrument or the volume of the hedged item so that the hedge ratio aligns with the ratio used for risk management purposes. Any hedge ineffectiveness is calculated and accounted for in profit or loss at the time of the hedge relationship rebalancing.

The following table provides a reconciliation by risk category of components of equity and analysis of OCI items, net of tax, resulting from cash flow hedge accounting:

5 Related party disclosures

a) Individuals exercising significant influence over the Company

1 Chandrakant Sanghvi

b) Key management personnel

1 Chandrakant Sanghvi - Chairman and Managing Director

2 Sham Kajale - Joint Managing Director and Chief Financial Officer

3 Rajesh Likhite - Company Secretary and Chief Compliance Officer

4 Vijay Mainkar - Non Executive Independent Director *

5 Dara Damania - Non Executive Independent Director *

6 S. Padmanabhan - Non Executive Independent Director *

7 Pradeep Rathi - Non Executive Independent Director *

8 Dinesh Munot - Non Executive Independent Director *

9 Madhukar Kotwal - Non Executive Independent Director *

10 Mina Sanghvi - Non Executive Non Independent Director *

c) Relatives of Individuals exercising significant influence over the Company

1 Mina Sanghvi - Spouse of Chandrakant Sanghvi

2 Rishi Sanghvi - Son of Chandrakant Sanghvi

3 Niyoshi Sanghvi - Daughter of Chandrakant Sanghvi

4 Ruchi Sanghvi - Daughter of Chandrakant Sanghvi

5 Anilkumar Sanghvi - Brother of Chandrakant Sanghvi

d) Enterprises over which key management personnel exercise significant influence

1 Jethi Builders and Traders Private Limited

2 Maharashtra Erectors Private Limited

3 Sanghvi Erectors Private Limited

* The Company has paid sitting fees amounting to Rs. 21.90 Lakhs (2017: Rs. 20.50 Lakhs) to non executive independent directors.

** As gratuity and compensated absences are computed for all the employees in aggregate, the amounts relating to the Key Managerial Personnel cannot be individually identified. However, contribution toward superannuation fund is included as part of managerial remuneration.

a) Claims against the Company not acknowledged as debts comprises of claims raised on Company by it’s customers amounting to Rs. 127.92 Lakhs (2017 : Rs. 127.92 Lakhs) for breach of contracts and by certain government authorities amounting to Rs. 235.64 Lakhs (2017 : Rs. 174.06 Lakhs) on account of road taxes and charges for conversion fees for land. The Company has been advised by its legal counsel that it is possible, but not probable, that action will succeed in respect of claims against the Company. These claims are being contested in the courts by the Company. The Management does not expect these claims to succeed. Accordingly, no provision for the contingent liability has been recognised in the financial statements.

b) Sales tax matters include demand notice received from various authorities regarding transfer of right to use the goods as mentioned below:

The Company has received Notice of Demand in respect of Order of Assessment for FY 2007-08 , FY2008-09 , FY 2009-10 and FY 2010-11 towards VAT and CST liability regarding transfer of right to use the goods .

Based on various favourable judgments and considering the nature of its business, the management believes that rendering Crane Services on rental basis does not involve “transfer of right to use goods” so as to fall under the purview of VAT or Sales tax. As the Company never passes effective control and possession of its cranes to its customers, the question of levying VAT or CST does not arise.

c) Income tax matters comprise demand from the tax authorities for the payment of additional tax of Rs. 3.03 Lakhs (2017: Rs. 6.24 Lakhs) upon completion of their tax reviews for the various financial years. The tax demands are mainly on account of TDS liability under the Income Tax Act. The matter is pending before the Assessing Officer of Income Tax.

d) Service tax matters comprise of demand raised by tax authorities for the payment of service tax of Rs. 237.48 Lakhs (2017: 237.48 Lakhs) on account of services provided to SEZ developer/unit where exemption has been claimed by the Company. The matter is pending before the Customs, Excise and Service Tax Appellate Tribunal.

The Company is contesting the above demands of Sales tax, Income tax and Service tax and the management, including its tax advisors, believe that its position will likely be upheld in the appellate process. No tax expense has been accrued in the financial statements for the tax demand 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 operations.

6 Operating leases

Leases as lessor

The Company leases out its investment property on operating lease basis (see Note 11)

Amounts recognised in profit or loss

During the year ended 31 March 2018, property rentals of Rs. 123.87 lakhs (31 March 2017: Rs. 27.53 lakhs) pertaining to investment property have been included in other income (see note 5). Expenses recognised in profit or loss, are as follows:

7 Compliance with Micro, Small and Medium Enterprises Development Act, 2006

The Company has amounts due to suppliers under the Micro, Small and Medium Enterprises Development Act, 2006 (‘MSMED Act’) as at 31 March

8 Disclosure on Specified Bank Notes

During the last year, the Company had Specified Bank Notes (SBNs) or other denomination notes as defined in the MCA notification, G.S.R. 308(E ), dated March 30, 2017. The details of SBNs held and transacted during the period from November 08, 2016 to December 30, 2016, the denomination-wise SBNs and other notes as per the notification were as follows for years ended 2017. However, this notification will not be applicable for current financial year ended 2018:

* For the purposes of this clause, 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 Economics Affairs number S.O. 3407(E ), dated November 8, 2016.

^A Permitted receipts include Rs. 20.48 lakhs representing withdrawal from banks.