1. Corporate Information

LEEL Electricals Limited (Formerly known as Lloyd Electric & Engineering Limited) is a public Company domiciled in India and incorporated under the provisions of the erstwhile Companies Act, 1956. Its shares are listed on National Stock Exchange of India Limited (NSE) & BSE Limited (BSE) in India. The Company is the largest manufacturer of heat exchangers coils in India

NOTES:-

1. Out of the above Equity Shares

a) Includes 92,00,000 underlying Equity Shares representing 46,00,000 Global Depository Receipts('GDRs') issued during the year 2005-06. As at March 31, 2018, no GDR is pending for conversion.

b) In the Financial Year 2006-07, the Company had forfeited 13,300 equity shares due to the non-payment of allotment money. The Board of Directors had annulled the forfeiture of 400 equity shares on receipt of payment advice by the shareholders and accordingly 400 Equity Shares had been restored back.

c) During the Financial Year 2013-14, 43,20,000 Equity Shares of Rs. 10/- each were alloted to the shareholders of Perfect Radiators & Oil Coolers Pvt. Ltd. (PROC) pursuant to the scheme of arrangement involving demerger and vesting of heat exchanger business of PROC into the Company.

(b) Terms/rights attached to equity shares

The Company has only one class of equity shares having par value of Rs. 10 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 if 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.

2) Borrowings

a) Term Loan

1. Indian rupee loan of Rs. 35.00 Crores from IDBI Bank Ltd. carries interest @ 12.25% p.a. on Rs. 17.50 Crores and @ 11.50% p.a. on Rs. 17.50 Crores. The Loan is repayable in 16 quarterly installment of Rs. 2.19 crores each after monotorium of 12 Months from the date of loan i.e. 31st March, 2013. The Company has taken disbursement of Rs. 31.50 Crores.

2. Indian rupee loan for Rs. 120.00 Crores from State Bank of India carries interest @ 11.00% p.a. The Loan is repayable in 24 quarterly installment of Rs. 5.00 crores each after monotorium of 12 Months from the date of loan i.e. 30.06.2013.

3. Indian rupees loan for Rs. 20.00 Crores from State Bank of India (Formerly State Bank of Bikaner & Jaipur) carries interest @ 12% p.a. The Loan is repayable in 16 Quarterly installment of Rs. 1.25 Crores each after monotorium of 9 Months from the date of Loan i.e. 01.09.2015.

4. The above loans were secured by way of first charge on Pari-Passu basis on the Property, Plant and Equipments of the Company and second hypothecation charge on the Stock/Book Debts.

5. The loan has been fully repaid during the current period.

b) Working Capital Loan from Banks

Working capital loans from banks carry an average interest rate of 10.50% to 11.50% (31st March, 2017 : 10.50% to 11.50%).

The working capital loans, fund based as well as non-fund based are secured by way of first hypothecation charge on the stocks/ book debts, both present and future and second charge on pari-passu basis on the Property, Plant and Equipments of the Company. This includes working capital loan in the form of Cash Credit Limit, Working Capital Demand Loan, Bill Discounted and Buyer's Credit etc.

c) Loan against Vehicle

1. Indian rupee loan for Rs. 4.4 Lacs from HDFC Bank Ltd. carries interest @ 9.78% p.a. The Loan is repayable in 36 equated monthly installments of Rs. 14,125 starting from 05.09.2016.

2. Indian rupee loan for Rs. 6.44 Lacs from HDFC Bank Ltd. carries interest @ 8.62% p.a. The Loan is repayable in 36 monthly installment of Rs. 20,329 starting from 07.08.2017.

3. Indian rupee loan for Rs. 7.15 Lacs from HDFC Bank Ltd. carries interest @ 9.53% p.a. The Loan is repayable in 48 monthly installment of Rs. 17,930 starting from 15.07.2016.

4. Indian rupee loan for Rs. 1.125 Crores from HDFC Bank carries interest @ 9.48% p.a. The Loan is repayable in 60 monthly installment of Rs. 234,925 starting from 07.10.2015.

5. The above loans are secured by way of hypothecation of Company's Vehicle.

3) Micro and Small Scale Business Entities

This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company. Accordingly, there were no interest due on the principal amount, not there was necessity to pay interest for delayed payment in terms of section 16 of the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED).

a. The transactions with related parties are made on terms equivalent to those that prevail in arm's length transactions. Outstanding balances at the year-end are unsecured and interest free and settlement occurs in cash. There have been no guarantees provided or received for any related party receivables or payables. For the year ended March 31, 2018, the Company has recorded impairment/allowances for doubtful loan and advances of receivables relating to amounts owed by related parties. This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.

b. Purchase of goods and sale of goods has been reported gross off Value Added tax/Goods and Service Tax

4) Earnings Per Share

Basic & Diluted Earnings per Share: Earnings per share have been computed as under:

5) Segment Information

A. Primary Segment Reporting (Business Segment)

During the year the Company had following Business segments as its primary reportable segments

a. Consumer Durables (please refer note 48) (till 8th May 2017)

b. OEM & Packaged Air-conditioning

c. Heat Exchangers & Components

Property, Plant & Equipment as per Geographical Locations

The Company has common Property, Plant & Equipment , other assets and liabilities for domestic as well as overseas market. Hence, separate figures for assets and liabilities have not been furnished.

6. Employee Benefit Expenses

Disclosure figures of the gratuity liability of the employees, in accordance with Ind AS 19 "Employee Benefits". The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method.

7. Capital Management

For the purposes of Company's capital management, capital includes equity attributable to the equity holders of the Company and all other equity reserves. The Company manages its capital to ensure that the Company will be able to continue as going concern while maximizing the return to stakeholders through the optimization of the debt and equity balance.

The capital structure of the Company consists of net debt (borrowings offset by cash and bank balances) and total equity of the Company.

The Company reviews the capital structure of the Company on a semi-annual basis. As part of this review, the Company considers the cost of capital and the risks associated with each class of capital.

The Company monitors capital using gearing ratio, which is net debt divided by total capital plus net debt.

8. Financial risk management objectives and policies

The Company's principal financial liabilities, other than derivatives, comprise loans and borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the Company's operations. The Company's principal financial assets include loans, trade and other receivables and cash and cash equivalents that are derived directly from its operations.

The Company's financial risk management is an integral part of how to plan and execute its business strategies. The Company is exposed to market risk, credit risk and liquidity risk. The company's focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance.

The Board of Directors reviews and agrees policies for managing each of these risks which are summarized as below.

a) 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 rate risk, interest rate risk and other price risks, such as equity price risk and commodity price risk.

i) Currency rate risk

Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company's exposure to the risk of changes in foreign exchange rates relates primarily to the Company's operating activities (when revenue or expense is denominated in foreign currency). The Company holds derivative financial instruments such as foreign exchange forward and option contracts to mitigate the risk of changes in exchange rates on foreign currency exposures. 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 adversely affected as the rupee appreciates/ depreciates against these currencies.

Derivative financial instruments

The Company holds derivative financial instruments such as foreign currency forward and option contracts to mitigate the risk of changes in exchange rates on foreign currency exposures. The counter party 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.

ii) Interest rate risk

Interest rate is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes 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 obligation at floating interest rates. The Company's borrowings outstanding as at March 31, 2018 comprise of fixed rate loans and accordingly, are not expose to risk of fluctuation in market interest rate.

iii) Commodity price risk

The Company is affected by the price volatility of certain commodities. Its operating activities require the ongoing manufacture of industrial and domestic air conditioners and therefore require a continuous supply of copper and Aluminum being the major input used in the manufacturing. Due to the significantly increased volatility of the price of the Copper and aluminum, the Company has entered into various purchase contracts for these material for which there is an active market. The Company's Board of Directors has developed and enacted a risk management strategy regarding commodity price risk and its mitigation. The Company partly mitigated the risk of price volatility by entering into the contract for the purchase of these material based on average price of for each month.

b) Credit risk

Credit Risk is the risk that the counter party will not meet its obligation under a financial instrument or customer contract, leading to a financial loss. The maximum exposure to the credit risk at the reporting date is primarily from trade receivables. Trade receivables are typically unsecured and are derived from revenue earned from customers.

Customer credit risk is managed subject to the Company's established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on an extensive credit rating scorecard and individual credit limits are defined in accordance with this assessment.

c) Liquidity risk

Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time. The Company's objective is to at all times maintain optimum levels of liquidity to meet its cash and liquidity requirements. The Company closely monitors its liquidity position and deploys a robust cash management system. It maintains adequate source of financing through the use of short term bank deposits and cash credit facility. Processes and policies related to such risks are overseen by senior management. Management monitors the Company's liquidity position through rolling forecasts on the basis of expected cash flows. The Company assessed the concentration of risk with respect to its debt and concluded it to be low.

The following tables detail the Company's remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the company can be required to pay.

9. Exceptional Item and Discontinued operation a. Exceptional Item

1. In May 2018, Noske Kaeser Rail and Vehicle Germany Gmbh, a wholly owned subsidiary has filed insolvency. The Company does not expect any further recovery of loan, investment and other advances and has fully provided for the value of Investments, Loans and advances given and other advances as per detail given below:

2. The Company has sold its Consumer Durables Business comprising of business of importing, trading, marketing, exporting, distribution, sale of air conditioners, televisions, washing machines and other household appliances and assembling of televisions under the brand "LLOYD" and all of the rights, title, interest and assets, licenses, intellectual property including the brand, logo, trade mark "LLOYD" as a going concern on slump sale basis to Havells India Limited. The said transaction was concluded on May 08, 2017 for a consideration of Rs. 1,550 Crores subject to the closing adjustments.

Post the transaction, the Company's OEM business would however continue to supply room air conditioners to the Havells India Limited as a third party supplier. Further, the sale of the Consumer Durables Business does not have any impact on the Company's existing B2B air conditioning business.

Pursuant to aforesaid sale, the Company has also changed its name from 'Lloyd Electric & Engineering Ltd.' to 'LEEL Electricals Ltd.' with the approval of Central Government dated May 23, 2017. The gain on sale of consumer durable business in respect of the activity attributable to above discontinuing operation included in the financial statement under the Exceptional item is as follows:

3. The Company sold its Consumer Durable Business as a going concern basis for an enterprise value of Rs. 1550.00 crores on cash free debt free basis which was inclusive of pre-determined net working capital. Of this, a total of Rs. 1458.00 crores of the consideration have been received and balance, as per terms of business transfer agreement (BTA) was to be released upon finalization of the closing financials as at 8th May'17, i.e. date of the transfer of business, after appropriate adjustments. Since the business sold was as ongoing concern basis, few of the final adjustment/reconciliation has been pending finalization with the buyer and considering the impact thereof, the Company, has arrived at the gain arising from the deal as per prudent accounting norms. Accordingly, the gain has been computed considering the impact of assets and liabilities transferred in terms of BTA, unserviceable left over inventory and unrealizable receivables of the discontinued business, deal associated cost/expenses, impact of financial obligations pertaining to 10 years of prior operations arising under E-waste Management Rules, which has been made mandatory with retrospective effect, post the BTA finalization. The total impact of all the above factors comes to Rs. 887 Crores, resulting in Profit of Rs. 662.80 Crores arising from the sale of Consumer Durable Business to Havells India Ltd., as stated in table appended above.

10. Corporate Social Responsibility

As per the provisions of Section 135 of the Companies Act, 2013, the Company has to incur at least 2% of average net profits of the preceding three financial years towards Corporate Social Responsibility ("CSR"). Accordingly, a CSR committee has been formed for carrying out CSR activities as per the Schedule VII of the Companies Act, 2013. The Company has contributed a sum of Rs. 3.13 crores (March 31, 2017: Rs. 1.36 crores) towards this cause and debited the same to the Statement of Profit And Loss. The funds are primary allocated to Pandit Kanahaya Lal Punj Trust (PKLP Trust), a registered trust, acting as an implementing agency of the Company, towards various activities of Corporate Social Responsibility as prescribed under section 135 of the Companies Act, 2013.

11. Information pursuant to G.S.R. 308( E) dated 30th March 2017 issued by Ministry of Corporate Affairs

The disclosures regarding details of specified bank notes held and transacted during 8 November 2016 to 30 December 2016 has not been made since the requirement does not pertain to financial year ended 31 March 2018. Corresponding amounts as appearing in the audited Ind AS financial statements for the period ended 31 March 2017 have been disclosed.

*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 Economic Affairs number S.O. 340(E), dated the 8th November, 2016.

** rounded off

12. All leases are cancellable, thus there are nil future minimum rentals payable under non-cancellable operating leases.

13. The comparative figures have been regrouped/ rearranged wherever considered necessary to make them comparable with current year numbers.

14. Notes '1' to '54' form an integral part of accounts and are duly authorized.