Rights, preferences and restrictions on equity shares:

The Company has only one class of equity shares having a par value of ' 2/- per share.

Each holder of equity shares is entitled to one vote per share.

The Company declares and pays dividends in Indian Rupees.

During the financial year 2023-24, ' 0.40 per share of ' 2/- has been paid as final dividend for the financial year 2022-23.

The Board of Directors have recommended a dividend of ' 0.40 per share of ' 2/- each for the year ended 31^st March 2024 subject to the Shareholder's approval.

In the event of liquidation of the Company, the shareholders will be entitled to receive the remaining assets of the Company, in proportion to their shareholding.

30. The Company has Exceptional Items for an amount of ' 1779.79 Lakhs on account of profit on sale of surplus land which is part of Property, Plant & Equipment during the year ended 31^st March 2024 (' Nil for the year ended 31^st March 2023).

Basic EPS amounts are calculated by dividing the profit for the year attributable to equity holders of the Company by the weighted average number of Equity Shares outstanding during the year. Diluted EPS amounts are calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of Equity Shares outstanding during the year plus the weighted average number of Equity Shares that would be issued on conversion of all the dilutive potential Equity Shares in to Equity Shares.

The Basic and Diluted EPS calculations are given below:

33. (i). Term Loans from Banks are secured by equitable mortgage of land, building and hypothecation of plant and machinery present and future. Working Capital Loans repayable on demand is fully secured by hypothecation of raw materials, stocks in process, finished goods, stores, book debts and second charge on Plant & Equipment situated at Gudur Plant.

(ii). The monthly statements of book debts and inventories filed by the Company with the Banks are in agreement with the books of accounts.

The preparation of the Company’s financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.

Defined employee benefit plans (Gratuity)

The cost of the defined benefit gratuity plan and the present value of the gratuity obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date. Further details about defined benefit gratuity plan are given in Note No. 43.

Fair value measurement of financial instruments

When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the discounted cash flow model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values. Judgments include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.

Impairment of non-financial assets

Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at arm’s length, for similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a discounted cash flow model.

Claims against the company not acknowledged as debts represent demands raised by sales tax authorities, as reduced by the amounts paid by the company. Against these demands the company has already filed appeals with concerned appellate authorities. As per the experts' opinion these disputed matters are likely be decided in company's favour and as such the management believes the ultimate outcome of the proceedings will not have a material adverse effect on the company's financial position and results of operations.

The Company has only short term leases with lease term of 12 months or low value. The Company applies short term leases and low value leases recognition exemption from the leases. The amount debited to P&L Account is ' 144.01 Lakhs for the year ended 31.03.2024 (' 139.71 Lakhs for the year ended 31.03.2023).

(i) The Company provides Gratuity for employees as per the Payment of Gratuity Act, 1972. Employees who are in continuous services for a period of five years are eligible for Gratuity. The amount of Gratuity payable on retirement / termination is the employees last drawn basic salary per month computed proportionately for fifteen days’ salary multiplied for the number of years of service. The Gratuity plan is a funded plan and maintained with Life Insurance Corporation of India.

The management assessed that cash and cash equivalents, trade receivables, trade payables, bank overdrafts and other current liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments. Further, management has assessed the fair value of the borrowings approximate their current value largely since they are carried at floating rate of interest.

The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

The primary objective of the Company’s capital management is to maximise the shareholder value. For the purpose of the Company’s capital management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders.

The Company manages its capital to ensure that it will be able to continue as going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance.

The Company determines the amount of capital required on the basis of annual operating plan coupled with long term, strategic investment and expansion plans. The funding requirements are met through equity, internal accruals and a combination of both long-term and short-term borrowings.

46. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Company’s principal financial liabilities comprise borrowings, trade and other payable. The main purpose of these financial liabilities is to finance the Company operations. The Company’s principal financial assets include trade and other receivables and cash and cash equivalents derived directly from its operations.

The Company is exposed to credit risk, liquidity risk and market risk (including input cost risk, interest rate risk and foreign currency risk), which may adversely impact the fair value of its financial instruments. The Company assesses the unpredictability of the financial environment and seeks to mitigate potential adverse effects on the financial performance of the Company. The Company does not enter into or trade financial instruments for speculative purposes.

a. Credit Risk:

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. Credit risk encompasses of both, the direct risk of default and the risk of deterioration of creditworthiness as well as concentration of risks. Credit risk is controlled by analysing credit limits and creditworthiness of customers on a continuous basis to whom the credit has been granted after obtaining necessary approvals for credit. Financial instruments that are subject to concentrations of credit risk principally consist of trade receivables, investments, derivative financial instruments, cash and cash equivalents, loans and other financial assets. None of the financial instruments of the Company result in material concentration of credit risk.

b. Liquidity Risk:

Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

c. Market Risk:

External factors such as government policies and rainfall could have a significant impact on sales of Tractors and Commercial Vehicles, which are cyclical in nature. To mitigate the risk of seasonality & cyclicality in the domestic market, the Company has been developing its exports and products in other segments viz. off-highway, railways etc.,

Input Cost Risk:

Our profitability and cost effectiveness may be affected due to change in the prices of raw materials, power and other input costs. While we are typically able to pass on these costs to our customers with a slight lag. This risk is significant and is carefully monitored.

Interest Rate Risk:

The Company is exposed to interest rate risk pertaining to funds borrowed from Banks. The Company works closely with our banks and using its working capital effectively to minimize the overall interest costs. The exposure of Company's borrowings to interest rate changes at the end of the reporting period is as follows:

Interest rate sensitivity analysis:

The below given sensitivity analysis has been determined based on the exposure to interest rates at the end of the reporting period. The analysis is prepared assuming that the amount of the liability as at the end of the reporting period was outstanding for the whole year. A 30 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents Management's assessment of the reasonably possible change in interest rates.

If interest rates had been 30 basis points higher / lower, the Company's profit / loss for the year ended 31^st March 2024 would decrease / increase by ' 98.68 lakhs (31^st March 2023 decrease / increase by ' 91.10 lakhs).

Foreign Currency Risk:

The Company's exposure on foreign currency is primarily through earnings from exports. The company also import some capital goods and raw materials only when prices are favourable. However, this exposure is typically short term. The company does selective hedging of imports and exports to hedge its risks associated with exchange rates. Any substantial long-term liabilities viz. ECBs are fully hedged by the Company.

Foreign Currency sensitivity analysis:

The Company is exposed mainly to US Dollar and EURO currencies. A 4% sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents Management's assessment of the reasonably possible change in foreign currency rates. The below given table shows the Company's sensitivity to a 4% increase or decrease against the relevant foreign currencies.

If the currency had been fluctuated by 4% higher / lower, the Company's profit / loss for the year ended 31^st March 2024 would increase / decrease by ' 674.65 lakhs (31^st March 2023 increase / decrease by ' 407.10 lakhs).

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

(ii) The Company has not traded or invested in Crypto currency or virtual currency during the current or previous year.

(iii) The Company has availed term loans during the current financial year and were applied for the purpose for which those were raised. The funds raised on short-term basis have, prima facie, not been used during the year for long-term purposes.

(iv) The monthly statements of stock and book debts filed by the Company with Banks are in agreement with the books of account.

(v) The Company has not been declared as wilful defaulters by any bank or financial institution or government or any government authority.

(vi) The Company has not advanced or loaned or invested funds to any persons or entities, including foreign entities (Intermediaries) with the understanding that the Intermediary shall:

a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or

b) provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries.

(vii) The Company has not received any fund from any persons or entities, including foreign entities with the understanding that the Company shall:

a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or

b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

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

(ix) The Company does not have any charges or satisfaction which is yet to be registered with Registrar of Companies (ROC) beyond statutory period.

(x) The Company has no transactions with struck off companies during the current or previous year.

(xi) The Company has complied with the number of layers prescribed under the Companies Act.

(xii) The Company has not entered into any scheme of arrangement which has an accounting impact on current or previous financial year.

49. RELATED PARTY DISCLOSURE

Related parties under Ind AS 24 with whom transactions have taken place during the year: Subsidiary Company: NC Energy Limited

Key Management Personnel (KMP):

1. Mr. P. Deepak, Managing Director

2. Mr. S.K. Sivakumar, Chief Financial Officer & Company Secretary

3. Mr. D. Sesha Reddy, Independent Director

4. Mr. A. Balasubramanian, Independent Director

5. Ms. Maheswari Mohan, Independent Director

6. Mr. R. Sridharan, Independent Director

50. Previous year’s figures have been regrouped and reclassified wherever necessary to conform to this year’s classification.