3.4 f Provision for Income tax and deferred taxes
The company uses judgements based on the relevent
rulings in the areas of allocation of revenue, costs,
allowances and disallowances which is exercised while
determining provision for income tax. A deferred tax
asset is recognised to the extent that it is probable that
its future taxable profits will be available against which
the deductable temporary differences and tax losses
can be utilised accordingly the company exercises its
judgement to re assess carrying amount of deferred tax
asset at the end of each reporting period.
3.4 g Provision and contingencies
The company estimates the provisions that have
present obligation as a result of past events and it is
probable that out flow of resources will be required to
settle the obligations. These provisions are reviewed
at the end of each reporting period and or adjusted to
reflect the current best estimates.
The company uses significant judgements to assess
contingent liabilities. Contingent liabilities are
disclosed when there is possible obligation arising
from past events, the existance of which will be
confirmed by the occurence or non occurence of one
or more uncertain future events not wholly within the
control of the company or a present obligation that
arises from past events where it is either not probable
that an out flow of resoures will be required to settle
the obligation or realiable estimate of the amount
cannot be made. Contingent assets are disclosed in
the financial statements but not recognised.
4 Recent accounting pronouncements :
The Ministry of Corporate Affairs ("MCA") vide notifications
dated May 7, 2025, and August 13, 2025, notified amendments
to certain Indian Accounting Standards ("Ind AS"), which are
applicable for annual reporting periods beginning on or after
April 1,20.
The amendments mainly relate to Ind AS 1 - Presentation of
Financial Statements in respect of classification of liabilities
as current or non-current and liabilities with covenants, Ind
AS 7 - Statement of Cash Flows and Ind AS 107 - Financial
Instruments: Disclosures in respect of supplier finance
arrangements, Ind AS 12 - Income Taxes in respect of
International Tax Reform - Pillar Two Model Rules, and Ind
AS 21 - The Effects of Changes in Foreign Exchange Rates in
respect of lack of exchangeability.
The Company has evaluated the above amendments and
based on its assessment; these amendments do not have
any material impact on the financial statements of the
Company. The Company has also considered the disclosure
requirements relating to supplier finance arrangements
under Ind AS 7 and Ind AS 107.
Certain requirements relating to classification of liabilities
as current or non-current under Ind AS 1 are applicable for
annual reporting periods beginning on or after April 1,2026.
The Company does not expect these requirements to have
any material impact on its financial statements.
Note: 5 Property, Plant and Equipment as on March 31, 2026
Accounting policy:
Property, Plant and Equipment (PPE) are measured at cost less accumulated depreciation and impairment loss if any. The cost of PPE
includes those incurred directly for the construction or acquisition of the asset and directly attributable to bringing it to the location
and condition necessary for it to be capable of operating in the manner intended by the management and includes present value of
expected costs for dismantling/restoration where ever applicable.
The cost of major spares is recognized in the carrying amount of the item of PPE in accordance with the recognition criteria set out in
the standard. The carrying amount of the replaced part is derecognized at the time of actual replacement. The costs of the day-to-day
servicing of the item are recognized in statement of profit or loss as incurred. Each component / part of an item of PPE with a cost that
is significant in relation to the total cost of the item is depreciated separately only when it has a different useful life. The gain or loss
arising from de-recognition of an item of PPE is included in statement of profit or loss when the item is derecognized.
Depreciation on PPE including those on leasehold premises is provided for under straight line method over the useful life of assets specified
in Part C of Schedule II to the Companies Act, 2013 and in the manner specified therein, except in respect of dies, moulds and testing
equipment as elaborated in note 5.1 below. Assets costing less than H5,000/- are fully depreciated in the year of purchase. Depreciation
methods, useful lives and residual values are reviewed at each reporting date and accounted for as change in accounting estimate.
PPE with finite life are evaluated for recoverability when ever there is an indication that their carrying amounts may not be recoverable.
If such indication exists, the recoverable amount (higher of fair value less cost to sell and value in use) is determined on an individual
asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the
recoverable amount is determined for cash generating unit (CGU) to which the asset belongs. If the recoverable amount of an asset (or
CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount.
An impairment loss is recognised in the statement of profit and loss account.
5.1 In respect of dies,moulds and testing equipment included in plant & machinery group, the management had, in the past, technically
estimated their useful lives at 5 years and 10 years respectively on straight line method and the company had continued to charge
such higher depreciation (as compared to Schedule II) on the same basis.
5.2 Disclosure in respect of title deeds of immovable properties:
1 Freehold land:
a) The Gross block of freehold land comprises of actual acquisition cost of H35.91 crores and land development charges
capitalized amounting to H4.46 crores.
2 Non - factory buildings:
a) The gross block of non-factory buildings of H17.50 crores, comprise of actual cost of building constructed on factory lands
of value of H8.28 crores, and cost of acquisition of buildings, (situated on other than factory lands) purchased from the third
parties, is H9.22 crores.
Note: 6 Capital work in progress
Accounting policy:
Expenditure attributable /relating to PPE under construction / erection is accounted for as below:
A) To the extent directly identifiable to any specific plant / unit, trial run expenditure net of revenue is included in the cost of PPE.
B) To the extent not directly identifiable to any specific plant / unit, is kept under 'expenditure during construction' for allocation to
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.
i) Assets taken under lease
a) The Company recognises Right-of-Use (ROU) asset representing its right to use the underlying asset for the lease term at the lease
commencement date. The cost of the ROU asset is measured in accordance with the measurement criteria as per Ind AS 116. The
ROU asset is depreciated using the straight-line method from the commencement date over the shorter of lease term or useful life
of ROU asset. The estimated useful lives of ROU assets are determined on the same basis as those of PPE. ROU assets are tested
for impairment whenever there is any indication that their carrying amounts may not be recoverable. Impairment loss, if any, is
recognised in the statement of profit and loss.
b) The Company measures the lease liability at the present value of the lease payments that are not paid at the commencement date of
the lease. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that
rate cannot be readily determined, the Company uses incremental borrowing rate. The lease liability is subsequently remeasured
by increasing the carrying amount to reflect interest on the lease liability, reducing the carrying amount to reflect the lease
payments made and remeasuring the carrying amount to reflect any reassessment or lease modifications or to reflect revised in¬
substance fixed lease payments. The company recognises the amount of the re-measurement of lease liability in accordance with
the requirements under Ind AS 116.
c) The Company has elected not to apply the requirements of Ind AS 116 leases to short-term leases of all assets that have a lease
term of 12 months or less and leases for which the underlying asset is of low value. The lease payments associated with these leases
are recognized as an expense.
ii) Assets given on lease
At the inception of the lease the Company classifies each of its leases as either an operating lease or a finance lease. The Company
recognises lease payments received under operating leases as income. In case of a finance lease, finance income is recognised
over the lease term based on a pattern reflecting a constant periodic rate of return on the lessor's net investment in the lease.
(c) The company incurred H4.72 crores for the year ended March 31,2026 (Previous year H1.93 crores) towards expenses relating to
short-term leases and leases of low-value assets. The total cash outflow for leases is H10.10 crores for the year ended March 31,
2026 (Previous year H4.92 crores), including cash outflow for short term and low value leases.
(d) Lease contracts for land & building entered by the company are primarily to conduct its business in the ordinary course.
i) Investments in subsidiaries, associate and joint ventures are measured at cost. Impairment / diminution in value, other than
temporary, is provided for.
ii) Investments classified as 'current investments' are carried at cost and diminution / impairment with reference to market value is
recognized.
iii) Investments in mutual funds & Alternate Investment fund (AIF) are classified as "At fair value through Profit & Loss Account (FVTPL)"
and gains/losses are routed through Profit & Loss at each reporting period.
10.3 HBL Tonbo Private Limited (HTPL)
HBL Tonbo Private Limited (HTPL) was incorporated by HBL Engineering Limited and Tonbo Imaging India Private Limited
incorporated on September 12, 2022 with a sharing ratio of 51:49. There were no commercial operations since inception of HTPL.
An application under Section 248 (2) of the Companies Act, 2013 was made during FY 22-23 for striking off the name of the Company
and is under process with Ministry of Corporate Affairs.In view of the same, a provision for diminution of 100% value of investment
in equity shares of HTPL of H51,000 has been made during the previous reporting periods.
Torquedrive Technologies Private Limited (TTL) :
In view of the permanent diminution of the investments in TTL, during the FY 23-24, an amount of H3 crores had been provided
for diminution in value of investments.
TTL Electric Fuel Private Limited (TTL EFL) :
Electric Fuel Limited (EFL) is treated as subsidiary due to control arising on account of shareholding.
During the year HBL has invested an additional amount of H0.18 crores in the equity of TTL EFL. Provision for dimunition to the
tune of H0.09 crores, is made in the books as the fair value of equity share isH5/- against face value of H10/-.
Tonbo Imaging India Limited (Tonbo):
During the financial year, Tonbo Imaging India Limited (Tonbo) allotted bonus shares in the ratio of 19 equity shares of H10 each for
one equity share held in the Company. As a result of which 15,50,970 equity shares of H10 each were allotted as bonus, aggregating
to 16,32,600 equity shares of H10 each. Subsequently, the face value of H10 per equity share was sub-divided into face value of H2
per equity share, consequently as on March 31,2026, HBL holds 81,63,000 equity shares of H2 each in Tonbo. HBL holds 14.25% in
the equity capital of Tonbo against overall original cost of investment of H86.67 Crores.
Tonbo is continued to be classified as "Associate" based upon the Board representation and voting rights on affirmative matters
affecting the operating and financials decisions of the investee company.
Naval Systems and Technologies Private Limited:
NSTL is also classified as "Associate" due to significant influence arising on voting power in the Board and share holding of 41%.
Investment in AIF:
Since the audited NAV for India SME investments (AIF) will be available within 180 days from the end of financial year, fair value
changes during the period have been made considering the provisional NAV and are recognized in the Profit & Loss for the period
ended 31st March 2026. The annual adjustments to the gains/ losses will be accounted for based on audited NAV.
Note: 11 Financial instruments (financial assets and financial liabilities):
Accounting policy:
i) All financial instruments are recognized initially at fair value. The classification of financial Instruments depends on the objective
of the business model for which it is held and the contractual cash flows that are solely payments of principal and interest on the
principal amount outstanding. For the purpose of subsequent measurement, financial instruments of the Company are classified
into (a) Non-derivative financial instruments and (b) Derivative financial instruments.
ii) Non-derivative financial instruments
a) Security Deposits, cash and cash equivalents, employee and other advances, trade receivables and eligible current and non¬
current financial assets are classified as financial assets under this clause.
b) Loans and borrowings, trade and other payables including deposits collected from various parties and eligible current and
non-current financial liabilities are classified as financial liabilities under this clause.
c) Financial instruments are subsequently carried at amortized cost wherever applicable using Effective Interest Rate (EIR)
method less impairment loss.
d) Transaction costs that are attributable to the financial instruments recognized at amortized cost are included in the fair value
of such instruments.
iii) Derivative financial instruments
a) Derivative financial assets and liabilities are initially recognized at fair value on the date a derivative contract is entered into
and are subsequently re-measured to their fair value at each reporting date
b) Changes in the fair value of any derivative asset or liability are recognized immediately in the income statement and are
included in other income or expense.
c) Cash flow hedge: Changes in the fair value of the derivative hedging instrument designated as a cash flow hedge are
recognized in other comprehensive income and presented within equity in the cash flow hedging reserve to the extent that
the hedge is effective. To the extent that the hedge is ineffective, changes in fair value are recognized in the statement of
profit and loss. If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated
or exercised, then hedge accounting is discontinued prospectively. The cumulative gain or loss previously recognized in the
cash flow hedging reserve is transferred to the statement of profit and loss upon the occurence of the related forecasted
transaction.
(iv) Impairment
i) Financial assets
a) The Company applies Expected Credit Loss (ECL) model for measurement and recognition of impairment loss on the
following financial assets and credit risk exposure:
Financial assets that are debt instruments, and are measured at amortized cost wherever applicable for e.g., loans, debt
securities, deposits, and bank balance.
b) Trade receivables
The Company follows 'simplified approach' for recognition of impairment loss allowance on trade receivables which do
not contain a significant financing component. The application of simplified approach does not require the company
to track changes in credit risk. Rather, it recognizes impairment loss allowance based on lifetime ECL's at each reporting
date, right from its initial recognition.
ii) Non - financial assets
The company assesses at each reporting date whether there is any objective evidence that a non-financial asset or a group
of non-financial assets is impaired. If any such indication exists, the Company estimates the amount of impairment loss.
Disclosure in accordance with Ind-AS 107 and 113 - Financial Instruments
A) Capital management
The Company manages its capital structure and makes adjustment to it, in light of changes in economic condition. To mainintain
or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholder, or
issue new shares. No changes were made in the objectives, policies and procedures in the past three years.
The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Company includes
within net debt, borrowings, trade and other payables, other liabilities, less cash and cash equivalents. Capital includes Issued
equity capital, securities premium and all other equity reserves attributable to the equity holders.
Level 1 - Quoted prices (unadjusted) in the active markets for identical assets or liabilities.
Level 2 - Inputs other than quoted prices included within level 1 that are observable for assets or liabilities, either directly (i.e., as
prices) or indirectly (i.e., derived from prices).
Level 3 - Inputs for assets or liabilities that are not based on observable market data (unobservable inputs).
D) Financial risk management
Financial risk factors
The Company is exposed to financial risks arising from its operations and the use of financial instruments. The key financial risks
include market risk, credit risk and liquidity risk. The management reviews and designs policies and procedures to minimise
potential adverse effects on its financial performance. The primary market risk to the company is foreign exchange risk. The
companies exposure to credit risk is influenced mainly by the customers repayments. The companies exposure to liquidity risks
are on account of interest rate risk on borrowings. The following sections provide details regarding the companies exposure to
the above mentioned financial risks and the management thereof.
Market risk
The Company operates internationally and a portion of the business is transacted in several currencies and consequently the
Company is exposed to foreign exchange risk through its sales and services in those countires. 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 as the rupee appreciates/ depreciates against these currencies. The company
leaves exchange rate risk with regard to foreign exposures unhedged when the local currency is depreciating against the foreign
currency and hedges this risk when the local currency is appreciating against the foreign currency. Currently the foreign exchange
risk of the company is covered through natural hedge and the Company uses the foreign currency denominated accounts to
mitigate the exchange rate variation.
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 H656.56 crores and H386.03 crores as of
March 31,2026 and March 31,2025, respectively. Trade receivables are typically unsecured and are derived from revenue earned
from customers primarily located in India and overseas. 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 or gain. The company uses a provision matrix to compute the expected credit loss
allowance for trade receivables. The provision matrix takes into account available external and internal credit risk factors and the
companie's historical experience for customers.
Credit risk on cash and cash equivalents is limited as the company generally invest in deposits with banks and financial institutions
with high credit ratings assigned by international and domestic credit rating agencies with no history of default.
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 also has long term and short term borrowings from banks and financial institutions. Term loans are project specific
and for refinancing of capital expenditures. Short term loans repayable on demand from banks are obtained for the working capital
requirements of the company.
As of March 31,2026, the Company had a working capital of H1,424.98 crores including cash and cash equivalents of H515.12 crores.
As of March 31,2025, the Company had a working capital of H794.69 crores including cash and cash equivalents of H112.96 crores.
As of March 31,2026 and March 31,2025, the outstanding gratuity and compensated absences were H6.10 crores and H4.50 crores,
respectively, which have been substantially funded. Accordingly, no liquidity risk is perceived.
Interest rate risk
The interest rate risk is the risk that the fair value or the future cash flows of the companies financial instruments will fluctuate
because of the change in market interest rates. The company's exposure to interest rate risk on account of loans from banks and
financial institutions is insignificant. Further, these fluctuations are managed through negotiated and prefixed interest rates on
term loans enabling the management to plan its future financial commitments and exposures. Short term and Working capital
loans repayable on demand are a subject to prevailing market rate fluctuations and sanctioned facilities are availed on a need to
borrow basis to ensure minimun exposure to interest rate fluctuations. The interest rate fluctuations on commercial paper's are
managed through negotiated and prefixed terms with highly rated financial institutions.
Other price risk
Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in
market prices, other than those arising from interest rate risk or foreign currency risk. The Company's exposure to other price risk
primarily arises from its investments in Alternative Investment Funds (AIFs) and mutual funds, which are measured at fair value
through profit or loss.
The fair value of these investments is linked to the net asset value/fair value of the underlying schemes and is affected by changes
in the value of the underlying investments held by such funds, including changes in equity prices, debt market conditions, sectoral
exposures, liquidity conditions and other market-related factors. In the case of AIFs, the valuation may also be affected by the
nature of the underlying investments, including investments in unlisted or less liquid securities, where fair value movements may
not always be immediately observable in active markets.
The Company manages this risk through an approved investment framework, which includes evaluation of the nature of the fund,
investment objective, portfolio composition, credit profile, liquidity, regulatory status of the fund and reputation/track record of the
fund manager. The Company periodically reviews the carrying value, NAV statements, fund performance reports, and any material
developments reported by the fund managers. Management also monitors whether the investment exposure remains consistent
with the Company's treasury and risk management objectives.
Note: 13 Other financial assets
Accounting policy:
Cash and cash equivalents
The company considers all high liquid investment which are readily convertible into amount of cash that are subject to insignificant
risk of change in value to be cash equivalents. Cash and cash equivalents consists of balances with banks which are un restricted for
18.2 During the year 2011-12, certain assets of the Company were damaged due to heavy rainfall. The company had incurred H0.95 crores
towards repairing the damages caused and was accounted for as claim recoverable. The cost of new assets acquired is capitalised.
However, the claim is made for total cost of repairs and acquisition of assets, as the loss is covered under re-instatement Policy
which was in force. The total claim was repudiated by the Insurer against which the company filed a suit. The said claim has been
written off during the year owing to prolonged litigation and uncertainity of recovery. The matter is still sub-judice.
21.2 Terms/rights attached to equity shares
The company has only one class of equity shares having a par value of HI 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.
23.4 Current maturities of long term debt
Represents instalments due within 12 months from the date of balance sheet.
23.5 Term loans :
The particulars of loans drawn, nature of security, terms of repayment, rate of interest, instalments due and loan wise outstanding are
as under.
a) Term loan from Axis :
Term loan of H75.00 crores for refinancing the capital expenditure of the Company was fully repaid during the current year. The
loan was secured by a first Paripassu charge on present and future assets (movable or immovable) of the company alongwith other
term lenders.
b) HDFC Bank - vehicle loan
The term loans are secured by exclusive hypothecation of vehicles acquired through execution of demand promissory notes and
are repayable by equated monthly installments (EMIs') as per the loan schedule sanctioned by the bank. The tenure of the loans
is generally upto 36 months with interest rates specific to each loan.
23.6 As on the balance sheet date, there were no continuing defaults in repayment of borrowings and interest.
23.7 The company has utilized the borrowings from banks and financial institutions for the specific purpose for which it was taken.
23.8 In respect of borrowings from banks and financial institutions, the Quarterly returns or statements of current assets filed by the
company are in agreement with the books of accounts.
26.1 Working capital loans
a) The unutilised demand loans from Banks are secured by a first charge on all the chargeable current assets and by a second charge on
the PPE (both present and future) of the Company. All the loans are guaranteed by some of the promoters in their personal capacity.
b) The Company received sanction from ICICI Bank and Axis bank amounting H375 cr consisting fund based limit of H350 cr and non
fund based limits of H25 cr for execution of specific order for locomotive Kavach received from Chittaranjan Locomotive works
(CLW). The demand loans are secured by a exclisive first charge on the chargeable current assets/cash inflows of CLW order.
Company has utilised and repaid/closed fund based limits to the tune of H265 cr and non fund based limits of H13.55 crores during
FY 25-26.
26.2 Purchase bill discounting from Axis Bank Ltd. is guaranteed by some of the promoters in their personal capacity and undated cheque
of the Company equivalent to limit/standing instructions for making payment on due date by debiting to cash credit account held
with the bank. Purchase bill financing from ICICI Bank Ltd are unsecured and irrovocable mandate provided to bank for debiting to
ICICI Bank cash credit account held with the bank on the relavant due dates.
Supplier finance arrangements
The Company has supplier finance arrangements in the nature of bills discounting facilities. Under these arrangements, supplier invoices
are financed through finance providers as per the terms and conditions with credit period upto 90 days. The finance provider pays the
supplier net of applicbale rate of interest in respect of the invoices acknowledged by the company. On due dates, bank will recover the
amount from company bank account held with them.
The outstanding balances under such arrangements have been separately presented as Bills discounting under Borrowings (Refer Note
26 B ). Trade payables represent amounts payable directly to suppliers in the ordinary course of business and are not covered under any
supplier finance arrangement or similar financing arrangement.
Note: 32 Revenue recognition
Accounting policy:
i) Revenue from contracts with customers that meet the recognition criteria under paragraph 9 of Ind AS 115 are recognised when (or
as) a performance obligation is satisfied by transferring a promised good or service to a customer, for the amount of the transaction
price that is allocated to that performance obligation.
ii) Satisfaction of a performance obligation and recognition of revenue over time is followed when, transfer of control of a good or
service are made over time and, if one of the following criteria is met:
(a) the customer simultaneously receives and consumes the benefits provided by the entity's performance as the entity performs.
(b) the entity's performance creates or enhances an asset (for example, work in progress) that the customer controls as the asset
is created or enhanced; or
(c) the entity's performance does not create an asset with an alternative use to the entity and the entity has an enforceable right
to payment for performance completed to date.
Performance obligations that are not satisfied over time are treated as performance obligations satisfied at a point in time which
in case of goods are upon their despatch/delivery to domestic customers as per terms of sale and on the basis of proof of export/
delivery for export customers as per terms of sale and in case of services are upon completion of service.
Timing of satisfaction of performance obligations
For each performance obligation satisfied over time the company recognises revenue over time by measuring the progress
towards complete satisfaction of that performance obligation. The objective when measuring progress is to depict the company's
performance in transferring control of goods or services promised to a customer (ie the satisfaction of an entity's performance
obligation).
The right to payment for performance completed to date does not need to be for a fixed amount. However, at all times throughout
the duration of the contract, the company is entitled to an amount that at least compensates for performance completed to date if
the contract is terminated by the customer or another party for reasons other than the company's failure to perform as promised.
Output method is used for measurement where the units produced or units delivered faithfully depict the company's performance
in satisfying a performance obligation and, at the end of the reporting period, the companie's performance has produced work in
progress or finished goods that are not controlled by the customer.
Input method is used to recognise revenue where the company's efforts or inputs in satisfaction of a performance obligation (for
example, resources consumed, labour hours expended, costs incurred, time elapsed or machine hours used) is relative to the total
expected inputs to the satisfaction of that performance obligation and depict the company's performance in transferring control
of goods or services to the customer.
Note: 33 Other income
Accounting policy:
i) Claims against outside agencies are accounted for on certainty of realization.
ii) Interest income is recognized on an accrual basis using the effective interest rate (EIR) method. Dividends, are recognized at the
time the right to receive is established.
iii) Export incentives under various schemes are recognized as income on certainty of realization.
iv) Foreign currency transactions
a) Transactions relating to non-monetary items and purchase and sale of goods/services denominated in foreign currency are
recorded at the prevailing exchange rate or a rate that approximates to the actual rate on the date of transaction.
b) Assets & liabilities in the nature of monetary items denominated in foreign currencies are translated and restated at exchange
rates prevailing at the end of the reporting period.
Note: 36 Employee benefits
Accounting policy:
i) Short term benefits:
All employee benefits falling due within twelve months of rendering the service are classified as short term employee benefits.
The cost of the benefits like salaries, wages, medical, leave travel assistance, short term compensated absences, bonus, exgratia,
etc. is recognised as an expense in the period in which the employee renders the related service.
ii) Post-employment benefits:
A) Defined contribution plans:
The contribution paid/payable under provident fund scheme, ESI scheme and employee pension scheme is recognised as
expenditure in the period in which the employee renders the related service.
B) Defined benefit plans:
The Company's obligation towards Gratuity is a defined benefit plan. The present value of the estimated future cash flows of
the obligation under such plan is determined based on actuarial valuation using the Projected Unit Credit (PUC) method. Any
difference between the interest income on plan assets and the return actually achieved and any changes in the liabilities over
the year due to changes in actuarial assumptions or experienced adjustments within the plan are recognized immediately in
other comprehensive income and subsequently not reclassified to the statement of profit and loss.
All defined benefit plan obligations are determined based on valuation as at the end of the reporting period, made by
independent actuary using the PUC Method. The classification of the Company's net obligation into current and non-current
is as per the actuarial valuation report.
b) Defined benefit plan:
(i) Gratuity obligation of the Company :
To cover the employer's obligation towards gratuity, the Company has obtained actuarial valuation of the said liability.
As per the valuation made under Projected Unit Credit (PUC) method by the Actuary, the fund required to be maintained,
to cover the present value of past service benefit and current service cost, is fully funded/provided for by the Company.
To meet the actual liability, the company has taken a group gratuity policy of the LIC of India and to keep the policy
alive, the Company also paid the annual risk premium and recognised it as expense for the year.
Sensitivity Analysis
Significant actuarial assumptions for the determination of the defined benefit obligation are discount rate, expected
salary increase and mortality. The sensitivity analysis below have been determined based on reasonably possible changes
of the assumptions occurring at the end of the reporting period, while holding all other assumptions constant. The result
of sensitivity analysis is given below:
Note: 37
Accounting policy:
Borrowing costs
i) Borrowing costs incurred for obtaining assets which take substantial period to get ready for their intended use are capitalized to
the respective assets wherever the costs are directly attributable to such assets and in other cases by applying weighted average
cost of borrowings to the expenditure on such assets.
ii) Other borrowing costs are treated as expense for the year.
iii) Significant transaction costs in respect of long-term borrowings are amortized over the tenor of respective loans using effective
interest rate (EIR) method.
39.2 Provision for warranties:
The contracts for supply of Kavach systems to Railways that are either completed or at the completion stage have been evaluated for
the warranty cost during Defect Liability Period and the Company has provided H92.75 crores (undiscounted) towards warranty. Further
H12.45 crores (undiscounted) was provided for warranty cost on other products.
39.3 Provision for extended producer responsibility:
Pursuant to the notification dated 22nd August, 2022 issued by Ministry of Environment, Forest & Climate change under the Battery waste
management rules, 2022, the Company has the obligation of Extended Producer Responsibility (EPR) to meet the collection and recycling
and/or refurbishment of certain percentage of the quantity of batteries sold. It also has the obligation for minimum use of domestically
recycled materials in new batteries. The Company can discharge the obligations by purchasing EPR credits from eligible entities. The
Company has made provision for the quantities sold for the period up to 31st March 2026 based on its estimates of recovery percentages
through internal recycling, market pricing of credits availabile on the EPR Portal and safe disposal letters obtained. The obligation was
discounted, and the net present value of the obligation for the year worked out to H4.10 crores (P.Yr 10.90 crores). However, in view of
the evolving nature of the statute, uncertainties remain with regards to Recovery Percentages, Minimum Floor Price for credits, Eligibility
of Safe disposal letters from parties, EPR credit availability in the market and environmental compensation. Given the situation the
possbile impact of these issues cannot be estimated at this point in time. The company will continue to monitor the situtation and take
suitable remedial measures if required.
39.4 Provision for impact on new labour codes :
On November 21,2025, the Government of India notified the four Labour Codes - the Code on Wages, 2019, the Industrial Relations Code,
2020, the Code on Social Security, 2020, and the Occupational Safety, Health and Working Conditions Code, 2020 - consolidating 29
existing labour laws. The Ministry of Labour & Employment subsequently published draft Central Rules and FAQs to enable assessment
of the financial impact due to changes in regulations. The Company has assessed and disclosed the impact of these changes in the
standalone statement of profit and loss for the quarter ended December 31, 2025 and year ended March 31, 2026. The Company
continues to monitor the finalisation of Central/State Rules and clarifications from the Government on other aspects of the Labour Code
and would provide appropriate accounting effect on the basis of such developments as needed.
Note: 41 Current tax and deferred tax
Accounting policy:
i) Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax.
ii) Current tax
The tax currently payable is based on taxable profit for the year. Taxable profits differ from the profit as reported in the statement
of profit and loss because of items of income or expense that are taxable or deductible in other years and items that are not taxable
or deductible. The Company's current tax is calculated using tax rates that have been enacted or substantively enacted upto the
end of the reporting period.
iii) Deferred tax
Deferred tax is recognised on temporary differences between the carrying amount of assets and liabilities in the financial statements
and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all
taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent
that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no
longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is
settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the
reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which
the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
iv) Current and deferred tax for the year
Current and deferred tax are recognised in statement of profit or loss, except when they relate to items that are recognised in other
comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive
income or directly in equity respectively.
Income tax and Sales tax assessments:
Income tax:
Taxes were paid in accordance with income tax returns filed and were charged off to revenue. In respect of pending assessments,
the liability, if any, that may arise upon completion of assessments is not ascertainable at this stage. During the year, in the income
tax assessments, there were no transactions that were not recorded in the books of accounts but have been surrenderd or disclosed
as income.
Sales tax:
The Company has paid/provided for VAT/CST as per the records and returns filed upto December 31, 2017 after considering
the input VAT on purchases and also on the basis of concessional forms expected to be received from customers. The related
assessments for various years are pending at various stages in different states. The liability, if any, in respect of such pending
assessments is not ascertainable at this stage.
Note: 42 Earnings Per Share (EPS)
Accounting policy:
i) Basic EPS is computed by dividing the profit after tax attributable to equity shareholders by the weighted average number of equity
shares outstanding during the year / period.
ii) Diluted EPS is computed by dividing the profit after tax attributable to equity shareholders, as adjusted for dividend, interest and
other charges to expense or income relating to the dilutive potential equity shares, by the weighted average number of equity
shares considered for deriving basic EPS and the weighted average number of equity shares which could have been issued on the
conversion of all dilutive potential equity shares.
*The erstwhile promoters of M/s. SCIL Infracon Private Limited filed a petition with the Sole Arbitrator making several new claims against the Company
and others. The Arbitration award allowed, only one claim of theirs, relating to Unsecured Loans of H2.08 cr to be paid along with interest of 12% p.a.,
effective from 31.01.2011 till the date of the payment. On an appeal preferred by the Company against the arbitral award, the Hon'ble Civil Court granted
stay on the operation of the award on condition of depositing 50% of the amount awarded with interest till date of the order. The Company deposited
the 50% amount along with interest amounting to H2.71 crores on 17th April 2023 in compliance of the Hon'ble Civil Court's order as modified by the
Hon'ble High Court. However, the appeal against the arbitral award is yet to be decided by the Hon'ble Civil Court and the matter is still sub-judice. The
company's legal counsel, based on the facts of the case, opined that the claim is not admissible and is likely to be dismissed by the Hon'ble City Civil
Court. Based on the above facts, the claim is not acknowledged as debt against the company and is appropriately reported as a contingent liability.
The Company has other commitments, for purchase / sale orders which are issued after considering requirements per operating cycle for
purchase / sale of goods and services, employee benefits in the normal course of business. The company does not have any long term
committments or material non-cancellable contractual committments / contracts, which might have material impact on the financial
statements.
43.3 Commitment towards dividend
During the financial year the Board in its meeting held on February 07, 2026, declared an interim dividend of 200% (H2/- per equity share
of H1 each) on fully paid-up share capital aggregating to H55.44 crores and the same was paid on February 27, 2026.
The Board in its meeting held on May 23, 2026 has recommended a dividend of Hi/- per Equity Share of H1/- each for the financial year
ended March 31,2026. The proposal is subject to the approval of shareholders at the annual general meeting to be held, and if approved
would result in a cash outflow of H27.72 crores towards dividend.
43.4 Contingent assets:
During the year 2014, there was a heavy damage to the assets and inventory at two plants of the Company, due to hud-hud cyclone.
The Company's claim for the resultant losses was partly allowed by the Insurers and the balance claims were repudiated. The matter
relating to the claim of H4.00 crores towards damage to assets and inventory and H9.22 crores towards loss of profits, apart from interest
thereon, on being referred to arbitration was partly awarded infavour of the company. Subsequently on an appeal by the insurer further
proceedings of arbitration were stayed by the commercial Court. The matter is sub judice.
43.5 Confirmation of balances
The Company had sent letters seeking confirmation of balances to various parties under trade payables, trade receivables, advance to
suppliers and others and advance from customers. Based on the confirmations received and upon proper review, corrective actions
have been initiated and the amounts have been trued up, accounting adjustments have been made wherever found necessary. Such
confirmations are awaited from some parties, comprising of government departments and public sector undertakings.
43.6
In the opinion of the board, assets other than fixed assets and non-current investments have a value, on realisation in the ordinary course
of business, which is at least equal to the amount at which they are stated in the financial statements.
43.7Relationship with Struck off Companies:
The Company has no transactions / relationships to report with the"Struck Off companies" hosted in the MCA website.
This financial report contains both the consolidated financial statements of parent, that is within the scope of this Ind AS, as well as
the parent's separate financial statements. Therefore, in accordance with Para 4 of Ind AS 108, segment information is given in the
consolidated financial statements.
As per section 135 of the Companies Act, 2013, a company, meeting the applicability threshold, needs to spend, on Corporate Social
Responsibility (CSR) activities, atleast two percent of its average net profits for the immediately preceding three years calculated in
accordance with the provisions of Section 198 of the Companies Act, 2013. The areas for CSR activities are eradication of hunger and
malnutrition, promotion of education, art and culture, health care, destitute care and rehabilitation, environment sustainability, disaster
relief, rural development projects and promotion of sports. A CSR committee has been formed by the Company as per the Act. The funds
were utilized through the year on these activities which are specified in schedule VII of the Companies Act, 2013.
a) Gross amount required to be spent by the Company during the year H5.88 crores (Previous year H4.15 crores).
b) Amount approved by the Board to be spent during the year H6.00 crores (Previous year H4.25 crores).
43.12
Previous year's figures have been regrouped / reclassified wherever necessary to correspond with the current year's classification /
disclosure.
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