Swaraj Engines Ltd. ಖಾತೆಯ ಉಪಯುಕ್ತ ಮಾಹಿತಿ

1.14 Provisions, contingent liabilities and contingent assets

Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event,
it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a
reliable estimate can be made of the amount of the obligation. If the effect of the time value of money is material,
provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability.
When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.

In respect of warranty on sale of engines, the estimated cost of warranty is accrued at the time of sale. The estimate for
accounting of warranty is periodically reviewed and revisions are made as and when required.

1.15 Use of estimates and judgments

The preparation of the Company''s financial statements requires management to make judgement, estimates and
assumptions that affect the reported amount of revenue, expenses, assets and liabilities and the accompanying
disclosures. 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.

Depreciation / amortisation and useful lives of property plant and equipment/ intangible assets:

Property, plant and equipment / intangible assets are depreciated / amortised over their estimated useful lives, after
taking into account estimated residual value. Management reviews the estimated useful lives and residual values of the
assets annually in order to determine the amount of depreciation / amortisation to be recorded during any reporting
period. The useful lives and residual values are based on the Company''s historical experience with similar assets and
take into account anticipated technological changes. The depreciation / amortisation for future periods is revised if there
are significant changes from previous estimates.

Fair value measurement of financial instruments

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. 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.

Provision for product warranty

The Company recognizes provision for product warranties in respect of its products that it sells. Provisions are discounted,
where necessary to its present value based on the best estimate required to settle the obligation at the balance sheet
date. These are reviewed at each balance sheet date and adjust to reflect the current best estimates.

1.16 Earnings per share

Basic EPS is calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted
average number of equity shares outstanding during the year. Diluted EPS is computed using the weighted average
number of equity and dilutive equity equivalent shares outstanding during the year.

1.17 Cash and cash equivalents

Cash and cash equivalents includes cash in hand and deposits with any qualifying financial institution repayable on
demand or maturing within three months from the date of acquisition and which are subject to an insignificant risk of
change in value.

1.18 Leases

The Company evaluates if an arrangement qualifies to be a lease as per the requirements of Ind AS116. The Company
uses significant judgement in assessing the lease term (including anticipated renewals) and the applicable discount rate
which is generally based on the interest rate specific to the lease being evaluated or if that cannot be easily determined
the incremental borrowing rate for similar term is used.

The Company recognises the lease payments associated with these leases as per expense on a straight-line basis over
the lease term.

The Company as a lessee

The Company recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use
asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease
payment made at or before the commencement date, plus any initial direct costs incurred and restoration cost, less any
lease incentives received.

The right-of-use assets are subsequently depreciated over the shorter of the asset''s useful life and the lease term on a
straight-line basis. In addition, the right-of-use asset is reduced by impairment losses, if any.

The lease liability is initially measured at amortised cost at the present value of the future lease payments.

1.19 Accounting Policies not specifically referred above are consistent with generally accepted Accounting practices.

(iv) Employee Stock Option

Under the Employee Stock Option Scheme - 2015 (ESOS-2015), 31,000 Equity Shares of the face value of Rs. 10/- are
available for being granted to eligible employees on the recommendation of the Nomination and Remuneration Committee.
Under the first cycle (Dec. 2015 - Dec. 2019), options granted were vested in four instalments on the expiry of 18 months, 30
months, 42 months and 54 months respectively. Options granted effective January 2020 & onwards are vested in 3 instalments
on the expiry of 12 months, 24 months and 36 months. These options may be exercised on any day over a period of 5 years
from the date of vesting. Numbers of vested options are exercisable subject to minimum of 50 or number of options vested
whichever is lower.

Further to grant given till previous financial years, the Company during the current financial year has given grant of 652 Equity
Shares at face value to the eligible employees.

Supplier Finance Arrangement

Some of our suppliers elect to factor some of their receivables from the company with financial institutions. In such cases, we
provide suppliers and/or banks with visibility of invoices approved for payment, which helps them receive cash from the bank/
financial institutions before the invoice due date, if they choose to do so. Payment dates and terms for the company do not vary
based on whether the supplier chooses to factor their receivable.

Capital management

Company''s capital management objectives are to:

- ensure the company''s ability to continue as a going concern

- provide an adequate return to shareholders by pricing products and services commensurately with the level of risk.

For the purposes of the Company''s Capital Management, capital includes issued capital and all other equity reserves. Company
manages its capital structure and makes adjustments in the light of changes in economic environment and the requirements of
the financial covenants.

Financial Risk Management Framework

Company''s activities expose it to financial risks viz credit risk and liquidity risk.

Credit Risk

Majority of Company''s receivables pertain to Mahindra & Mahindra Limited, a holding company. Based on the overall credit¬
worthiness of Receivables, coupled with their past track record, Company expect No / Minimum Risk with regard to its
outstanding receivables. Also, there is mechanism in place to periodically track the outstanding amount and assess the same
with regard to its realisation. Company expect all the debtors to be realised in full, accordingly no provision has been made in
the books of account.

Credit risk on cash and cash equivalents is limited as Company generally invest in deposits with banks, high rating financial
institutions & debt based Mutual Funds. Ratings are monitored periodically for re-adjustment of Portfolio , if any required.
Investment as on date of financial statement are as per latest available ratings.

Liquidity Risk

(i) Liquidity Risk Management

The Company manages liquidity risk by maintaining adequate reserves, banking facilities and by continuously monitoring
forecast & actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

(ii) Maturities of Financial Liabilities

The following table specifies the Company’s remaining contractual maturity for its non-derivative financial liabilities with
agreed repayment periods. The amounts disclosed in the table have been drawn up based on the earliest date on which
the Company can be required to pay. Financial Liabilities includes Trade Payables, Capital Purchases, Unpaid/Unclaimed
Dividend etc. which are in the normal course of business having maturity plan of less than 1 year and lease liabilities
having maturity of more than 1 year.

2.28 FAIR VALUE MEASUREMENT

The fair values of the Financial Assets and Liabilities are included in 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 Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation
technique

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

Level 2 - Other T echniques for which all inputs which have a significant effect on the recorded fair value are observable, either
directly or indirectly.

Level 3 - Techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable
market data.

*Assessment of Income Tax is complete upto Assessment Year 2020-21. There is no demand which is disputed in Appeal and
not provided for. For earlier Assessment Years, Company have filed appeals / references which involves an estimated liability
of Rs. 50.43 Lakhs (31.03.2025 - Rs. 50.43 Lakhs)

2.32 SEGMENT REPORTING

The Company is primarily engaged in the business of diesel engines, diesel engine components and spare parts. As the basic
nature of these activities are governed by the same set of risk, returns and internal business reporting system, accordingly
these have been grouped as single segment in above disclosures as per Ind AS- 108 dealing with "Operating Segment".

2.33 PARTICULARS IN RESPECT OF GOODS MANUFACTURED :2.37 DIVIDENDS

The Board of Directors, in their meeting held on 16th April, 2025, proposed a total dividend of Rs. 104.50/- per equity share and
the same was approved by the shareholders at the Annual General Meeting held on 15th July, 2025, this has resulted in a cash
outflow of Rs. 12694.10 lakhs during 2025-26.

The Board of Directors, in their meeting held on 13th April, 2026, proposed a total dividend of Rs. 110/- per equity share for the
financial year ended on 31st March 2026, subject to the approval of shareholders at the Annual General Meeting and if
approved, would result in a cash outflow of approximately Rs. 13364.85 lakhs.

2.38 Recent Accounting Pronouncements
Standard issued but not yet effective

Ministry of Corporate Affairs (“MCA”) notifies new standards or amendments to the existing standards under Companies (Indian
Accounting Standards) Rules as issued from time to time. As at the date of authorisation of these financial statements, the
Company has not applied the following new amendment to Ind AS that has been issued but is not yet effective:

Amendment to Ind AS 1 Presentation of Financial Statements

Where a covenant breach exists on or before the reporting date and, as a result, the liability becomes payable on demand on
that date, the liability must be classified as current, even if the lender subsequently (i.e. after the reporting date but before
approval of the financial statements) agrees not to demand payment.

The Company does not expect that the adoption of this amendment to have any impact on the financial statements of the
Company in future periods.

2.39 New Labour Codes Laws

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 (collectively “new Labour Codes”) - consolidating 29 existing labour laws.

In accordance with the new Labour Codes, the Company has currently estimated the incremental impact on retiral benefits to
be Rs. 340.51 lakhs. This has been presented under “Exceptional Items” in the financial statement.

The Company continues to monitor developments on the Rules to be notified by regulatory authorities, including clarifications/
additional guidance from authorities and will continue to assess the accounting implications, basis such developments /
guidance.

2.40 Other Disclosures

Additional regulatory information pursuant to the requirement in Division 11 of Schedule III to the Companies Act 2013.

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

b. The Company does not have any transactions with companies struck off.

c. The Company has not revalued its property, plant and equipment or intangible assets or both during the current year.

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

e. The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), 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

f. The Company has not received any fund from any person or entity, including foreign entities (Funding Party) with the
understanding (whether recorded in writing or otherwise) 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

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

h. The Company does not have any borrowings from banks and financial institutions on the basis of security of current
assets.

i. The Company has not been declared wilful defaulter by any bank or financial institution or government or any government
authority.

j. The Company has complied with the number of layers prescribed under the Companies Act, 2013.

(iv) Employee Stock Option

Under the Employee Stock Option Scheme - 2015 (ESOS-2015), 31,000 Equity Shares of the face value of Rs. 10/- are available for being granted to eligible employees on the recommendation of the Nomination and Remuneration Committee. Under the first cycle (Dec. 2015 - Dec. 2019), options granted were vested in four instalments on the expiry of 18 months, 30 months, 42 months and 54 months respectively. Options granted effective January 2020 & onwards are vested in 3 instalments on the expiry of 12 months, 24 months and 36 months. These options may be exercised on any day over a period of 5 years from the date of vesting. Numbers of vested options are exercisable subject to minimum of 50 or number of options vested whichever is lower.

Further to grant given till previous financial years, the Company during the current financial year has given grant of 1083 Equity Shares at face value to the eligible employees.

Financial Risk Management Framework

Company''s activities expose it to financial risks viz credit risk and liquidity risk.

Credit Risk

Majority of Company''s Receivables pertain to Mahindra & Mahindra Limited, a Holding Company. Based on the overall creditworthiness of Receivables, coupled with their past track record, Company expect No / Minimum Risk with regard to its outstanding receivables. Also, there is mechanism in place to periodically track the outstanding amount and assess the same with regard to its realisation. Company expect all the debtors to be realised in full, accordingly no provision has been made in the books of account.

Credit risk on cash and cash equivalents is limited as Company generally invest in deposits with banks, high rating financial institutions & debt based Mutual Funds. Ratings are monitored periodically for re-adjustment of Portfolio, if any required. Investment as on date of financial statement are as per latest available ratings.

Liquidity Risk

(i) Liquidity Risk Management

The Company manages liquidity risk by maintaining adequate reserves, banking facilities and by continuously monitoring forecast & actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

(ii) Maturities of Financial Liabilities

The following tables specify the Company’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The amounts disclosed in the tables have been drawn up based on the earliest date on which the Company can be required to pay. Financial Liabilities includes Trade Payables, Capital Purchases, Unpaid/Unclaimed Dividend etc. which are in the normal course of business having maturity plan of less than 1 year and lease liabilities having maturity more than 1 year.

As at 31st March, 2025, the Company had a working capital of Rs. 23,416.11 lakhs including cash and bank balance & bank deposits of Rs. 17290.59 lakhs and investment of Rs. 1919.40 lakhs and other corporate deposits of Rs. Nil.

As at 31st March, 2024, the Company had a working capital of Rs. 24077.14 lakhs including cash and bank balance & bank deposits of Rs. 17427.63 lakhs and investment of Rs. 2011.10 lakhs and other corporate deposits of Rs. Nil.

Accordingly, company do not perceive any liquidity risk.

2.28 FAIR VALUE MEASUREMENT

The fair values of the Financial Assets and Liabilities are included in 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 Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique

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

Level 2 - Other T echniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly.

Level 3 - Techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data.

2.37 DIVIDENDS

The Board of Directors, in their meeting held on 18th April, 2024, proposed a total dividend of Rs. 95/- per equity share and the same was approved by the shareholders at the Annual General Meeting held on 18th July, 2024, this has resulted in a cash outflow of Rs. 11539.89 lakhs during 2024-25.

The Board of Directors, in their meeting held on 16th April, 2025, proposed a total dividend of Rs. 104.50/- per equity share for the financial year ended on 31st March 2025, subject to the approval of shareholders at the Annual General Meeting and if approved, would result in a cash outflow of approximately Rs. 12694.10 lakhs.

2.38 Previous year''s figures have been regrouped, wherever necessary, so as to correspond with those of the current year.

1

Assessment of Income Tax is complete upto Assessment Year 2020-21. There is no demand which is disputed in Appeal and not provided for. For earlier Assessment Years, Company have filed appeals / references which involve an estimated liability of Rs. 50.43 Lakhs (31.03.2024 - Rs. 50.43 Lakhs)

2.32 SEGMENT REPORTING

The Company is primarily engaged in the business of diesel engines, diesel engine components and spare parts. As the basic nature of these activities are governed by the same set of risk, returns and internal business reporting system, accordingly these have been grouped as single segment in above disclosures as per Ind AS- 108 dealing with "Operating Segment".

Fair value disclosure on Company’s Investment Properties

Part of Company''s administrative building/block is letted out and the same is classified as Investment Property based on the nature, characteristics and risks.

As at 31st March, 2024, the Fair Value of the property is Rs. 105.17 Lakhs. This valuation is performed by accredited independent valuer and same is categorised at Level 2.

(iv) Employee Stock Option

Under the Employee Stock Option Scheme - 2015 (ESOS-2015), 31,000 Equity Shares of the face value of Rs. 10/- are available for being granted to eligible employees on the recommendation of the Nomination and Remuneration Committee. Under the first cycle (Dec. 2015 - Dec. 2019), options granted were vested in four instalments on the expiry of 18 months, 30 months, 42 months and 54 months respectively. Options granted effective January 2020 & onwards are vested in 3 instalments on the expiry of 12 months, 24 months and 36 months. These options may be exercised on any day over a period of 5 years from the date of vesting. Numbers of vested options are exercisable subject to minimum of 50 or number of options vested whichever is lower.

Further to grant given till previous financial years, the Company during the current financial year has given grant of 1409 Equity Shares at face value to the eligible employees.

Capital management

Company''s capital management objectives are to:

- ensure the company''s ability to continue as a going concern

- provide an adequate return to shareholders by pricing products and services commensurately with the level of risk.

For the purposes of the Company''s Capital Management, capital includes issued capital and all other equity reserves. Company manages its capital structure and makes adjustments in the light of changes in economic environment and the requirements of the financial covenants.

Financial Risk Management Framework

Company''s activities expose it to financial risks viz credit risk and liquidity risk.

Credit Risk

Majority of Company''s Receivables pertain to Mahindra & Mahindra Limited, a Holding Company. Based on the overall creditworthiness of Receivables, coupled with their past track record, Company expect No / Minimum Risk with regard to its outstanding receivables. Also, there is mechanism in place to periodically track the outstanding amount and assess the same with regard to its realisation. Company expect all the debtors to be realised in full, accordingly no provision has been made in the books of account.

Credit risk on cash and cash equivalents is limited as Company generally invest in deposits with banks, high rating financial institutions & debt based Mutual Funds. Ratings are monitored periodically for re-adjustment of Portfolio, if any required.

Investment as on date of financial statement are as per latest available ratings.

Liquidity Risk

(i) Liquidity Risk Management

The Company manages liquidity risk by maintaining adequate reserves, banking facilities and by continuously monitoring forecast & actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

(ii) Maturities of Financial Liabilities

The following tables specify the Company’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The amounts disclosed in the tables have been drawn up based on the earliest date on which the Company can be required to pay. Financial Liabilities includes Trade Payables, Capital Purchases, Unpaid/Unclaimed Dividend etc. which are in the normal course of business having maturity plan of less than 1 year and lease liabilities having maturity more than 1 year.

As at 31st March, 2024, the Company had a working capital of Rs. 24,077.13 lakhs including cash and bank balance & bank deposits of Rs. 17427.63 lakhs and investment of Rs. 2011.10 lakhs and other corporate deposits of Rs. Nil.

As at 31st March, 2023, the Company had a working capital of Rs. 20233.65 lakhs including cash and bank balance & bank deposits of Rs. 10758.75 lakhs and investment of Rs. 2612.61 lakhs and other corporate deposits of Rs. 2000 lakhs.

Accordingly, company do not perceive any liquidity risk.

2.28 FAIR VALUE MEASUREMENT

The fair values of the Financial Assets and Liabilities are included in 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 Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique

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

Level 2 - Other T echniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly.

Level 3 - Techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data.

2.37 DIVIDEND

The Board of Directors, in their meeting held on 27th April, 2023, proposed a total dividend of Rs. 92/- per equity share and the same was approved by the shareholders at the Annual General Meeting held on 28th July, 2023, this has resulted in a cash outflow of Rs. 11174.54 lakhs during 2023-24.

The Board of Directors, in their meeting held on 18th April, 2024, proposed a total dividend of Rs. 95/- per equity share for the financial year ended on 31st March, 2024, subject to the approval of shareholders at the Annual General Meeting and if approved, would result in a cash outflow of approximately Rs. 11539.89 lakhs.

2.38 Previous year''s figures have been regrouped, wherever necessary, so as to correspond with those of the current year.

1

Assessment of Income Tax is complete upto Assessment Year 2020-21. There is no demand which is disputed in Appeal and not provided for. For earlier Assessment Years, Company have filed appeals / references which involve an estimated liability of Rs. 50.43 Lakhs (31.03.2023 - Rs. 77.78 Lakhs)

2.32 SEGMENT REPORTING

The Company is primarily engaged in the business of diesel engines, diesel engine components and spare parts. As the basic nature of these activities are governed by the same set of risk, returns and internal business reporting system, accordingly these have been grouped as single segment in above disclosures as per Ind AS- 108 dealing with "Operating Segment".

Pursuant to the inter-se transfer of shares amongst the promoters of Swaraj Engines Limited (“the Company”), Mahindra & Mahindra Limited ("M&M") acquired 21,14,349 equity shares constituting 17.41% of the paid up equity share capital of the Company from Kirloskar Industries Limited (“KIL”) on 27th September, 2022. Post this acquisition, the shareholding and voting rights of M&M in the Company has increased from 34.72% to 52.13% of the equity share capital of the Company. Consequently, the Company, which was earlier an associate of M&M, has now become a subsidiary of M&M with effect from 27th September, 2022.

(iv) Employee Stock Option

Under the Employee Stock Option Scheme - 2015 (ESOS-2015), 31,000 Equity Shares of the face value of Rs. 10/- are available for being granted to eligible employees on the recommendation of the Nomination and Remuneration Committee. Under the first cycle (Dec. 2015 - Dec. 2019), options granted were vested in four instalments on the expiry of 18 months, 30 months, 42 months and 54 months respectively. Options granted effective January 2020 & onwards are vested in 3 instalments on the expiry of 12 months, 24 months and 36 months. These options may be exercised on any day over a period of 5 years from the date of vesting. Numbers of vested options are exercisable subject to minimum of 50 or number of options vested whichever is lower.

Further to grant given till previous financial years, the Company during the current financial year has given grant of 1647 Equity Shares at face value to the eligible employees.

Financial Risk Management Framework

Company''s activities expose it to financial risks viz credit risk and liquidity risk.

Credit Risk

Majority of Company''s Receivables pertain to Mahindra & Mahindra Limited, an Holding Company. Based on the overall credit worthiness of Receivables, coupled with their past track record, Company expect No / Minimum Risk with regard to its outstanding receivables. Also, there is mechanism in place to periodically track the outstanding amount and assess the same with regard to its realisation. Company expect all the debtors to be realised in full, accordingly no provision has been made in the books of account.

Credit risk on cash and cash equivalents is limited as Company generally invest in deposits with banks, high rating financial institutions & debt based Mutual Funds. Ratings are monitored periodically for re-adjustment of Portfolio, if any required.

Investment as on date of financial statement are as per latest available ratings.

Liquidity Risk

(i) Liquidity Risk Management

The Company manages liquidity risk by maintaining adequate reserves, banking facilities and by continuously monitoring forecast & actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

(ii) Maturities of Financial Liabilities

The following tables specifies the Company’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The amounts disclosed in the tables have been drawn up based on the earliest date on which the Company can be required to pay. Financial Liabilities includes Trade Payables, Capital Purchases, Unpaid/Unclaimed Dividend etc. which are in the normal course of business having maturity plan of less than 1 year and lease liabilities having maturity more than 1 year.

As at 31st March, 2023, the Company had a working capital of Rs. 20233.65 lakhs including cash and bank balance & bank deposits of Rs. 10758.75 lakhs and investment of Rs. 2612.61 lakhs and other corporate deposits of Rs. 2000 lakhs.

As at 31st March, 2022, the Company had a working capital of Rs. 17840.80 lakhs including cash and bank balance & bank deposits of Rs. 8935.21 lakhs and investment of Rs. 3620.47 lakhs and other corporate deposits of Rs. 1000 lakhs.

Accordingly, company do not perceive any liquidity risk.

(iii) Financing arrangements

The Company had access to the following undrawn borrowing facilities at the end of the reporting period:

2.28 Fair Value Measurement

The fair values of the Financial Assets and Liabilities are included in 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 Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique

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

Level 2 - Other T echniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly.

Level 3 - Techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data.

2.37 Dividends

The Board of Directors, in their meeting held on 27th April, 2022, proposed a total dividend of Rs. 80/- per equity share and the same was approved by the shareholders at the Annual General Meeting held on 25th July, 2022, this has resulted in a cash outflow of Rs. 9715.57 lakhs during 2022-23.

The Board of Directors, in their meeting held on 27th April 2023, proposed a total dividend of Rs.92/- per equity share for the financial year ended on 31st March 2023, subject to the approval of shareholders at the Annual General Meeting and if approved, would result in a cash outflow of approximately Rs. 11174.24 lakhs.

2.38 Previous year''s figures have been regrouped, wherever necessary, so as to correspond with those of the current year.

1

Assessment of Income Tax is complete upto Assessment Year 2020-21. There is no demand which is disputed in Appeal and not provided for. For earlier Assessment Years, Company have filed appeals / references which involve an estimated liability of Rs. 77.78 Lakhs (31.03.2022 - Rs. 72.35 Lakhs).

2.32 Segment Reporting

The Company is primarily engaged in the business of diesel engines, diesel engine components and spare parts. As the basic nature of these activities are governed by the same set of risk, returns and internal business reporting system, accordingly these have been grouped as single segment in above disclosures as per Ind AS- 108 dealing with "Operating Segment".

(iv) Employee Stock Option

Under the Employee Stock Option Scheme - 2015 (ESOS-2015), 31,000 Equity Shares of the face value of Rs. 10/- are available for being granted to eligible employees on the recommendation of the Nomination and Remuneration Committee. Under the first cycle (Dec. 2015 - Dec. 2019), options granted were vested in four instalments on the expiry of 18 months, 30 months, 42 months and 54 months respectively. Options granted effective January, 2020 & onwards are vested in 3 instalments on the expiry of 12 months, 24 months and 36 months. These options may be exercised on any day over a period of 5 years from the date of vesting. Numbers of vested options are exercisable subject to minimum of 50 or number of options vested whichever is lower.

Further to grant given till previous financial years, the Company during the current financial year has given grant of 633 Equity Shares at face value to the eligible employees.

Financial Risk Management Framework

Company''s activities expose it to financial risks viz credit risk and liquidity risk.

Credit Risk

Majority of Company''s Receivables pertain to Mahindra & Mahindra Limited, an Associate Company. Based on the overall credit worthiness of Receivables, coupled with their past track record, Company expect No / Minimum Risk with regard to its outstanding receivables. Also, there is mechanism in place to periodically track the outstanding amount and assess the same with regard to its realisation. Company expect all the debtors to be realised in full, accordingly no provision has been made in the books of account.

Credit risk on cash and cash equivalents is limited as Company generally invest in deposits with banks, high rating financial institutions & debt based Mutual Funds. Ratings are monitored periodically for re-adjustment of Portfolio, if any required. Investment as on date of financial statement are as per latest available ratings.

Liquidity Risk

(i) Liquidity Risk Management

"The Company manages liquidity risk by maintaining adequate reserves, banking facilities and by continuously monitoring forecast & actual cash flows, and by matching the maturity profiles of financial assets and liabilities.”

(ii) Maturities of Financial Liabilities

The following table specifies the Company’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The amounts disclosed in the tables have been drawn up based on the earliest date on which the Company can be required to pay. Financial Liabilities includes Trade Payables, Capital Purchases, Unpaid/Unclaimed Dividend etc. which are in the normal course of business having maturity plan of less than 1 year and non-interest bearing.

As at 31st March, 2022, the Company had a working capital of Rs. 17790.90 lakhs including cash and bank balance & bank deposits of Rs. 8935.21 lakhs and investment of Rs. 3620.47 lakhs and other corporate deposits of Rs. 1000 lakhs.

As at 31st March, 2021, the Company had a working capital of Rs. 18783.22 lakhs including cash and bank balance & bank deposits of Rs. 11569.87 lakhs and investment of Rs. 3416.89 lakhs and other corporate deposits of Rs. 1000 lakhs. Accordingly, company do not perceive any liquidity risk.

(iii) Financing arrangements

The Company had access to the following undrawn borrowing facilities at the end of the reporting period:

2.29 Fair Value Measurement

The fair values of the Financial Assets and Liabilities are included in 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 Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique

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

Level 2 - Other T echniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly.

Level 3 - Techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data.

*Assessment of Income Tax is complete upto Assessment Year 2018-19. There is no demand which is disputed in Appeal and not provided for. For earlier Assessment Years, Company have filed appeals / references which involve an estimated liability of Rs. 72.35 Lakhs (31.03.2021 - Rs. 35.11 Lakhs)

2.33 Segment Reporting

The Company is primarily engaged in the business of diesel engines, diesel engine components and spare parts. As the basic nature of these activities are governed by the same set of risk, returns and internal business reporting system, accordingly these have been grouped as single segment in above disclosures as per Ind AS- 108 dealing with "Operating Segment".

There is no significant change (> 25%) in the above ratios over previous year except T rade receivables turnover ratio because of change in credit terms from FY 2021 which impacted the average for FY2021 as compared to FY2022.

2.41 Dividends

The Board of Directors, in their meeting held on 20th April, 2021, proposed a total dividend of Rs. 69/- per equity share (including Rs. 19/- per share as special dividend) and the same was approved by the shareholders at the Annual General Meeting held on 19th July, 2021, this has resulted in a cash outflow of Rs. 8375.48 lakhs during 2021 -22.

The Board of Directors, in their meeting held on 27th April 2022, proposed a total dividend of Rs.80/- per equity share for the financial year ended on 31st March 2022, subject to the approval of shareholders at the Annual General Meeting and if approved, would result in a cash outflow of approximately Rs.9715.20 lakhs.

2.42 Recent Accounting Pronouncements

Standard issued but not yet effective

On 23rd March 2022, the Ministry of Corporate Affairs (MCA) notified the Companies (Indian Accounting Standard) Rules, 2022 which will come into force from 1st April, 2022. In the rules,MCA has notified new standards and amendments to the existing standards. The Company is evaluating and assessing the impact of the amended rules on the Financial Statements.

2.43 Previous year''s figures have been regrouped, wherever necessary, so as to correspond with those of the current year.

Level 1 - Quoted (unadjusted prices) in active markets for identical assets or liabilities

Level 2 - Other Techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly

Level 3 - Techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data

*Assessment of Income Tax is complete upto Assessment Year 2015-16. There is no demand which is disputed in Appeal and not provided for. For earlier Assessment Years, tax authorities have filed appeals / references which involve an estimated liability including interest of Rs. 471.52 Lakhs (31.03.2017 - Rs. 458.69 Lakhs)

1.Segment Reporting

The Company is primarily engaged in the business of diesel engines, diesel engine components and spare parts. As the basic nature of these activities are governed by the same set of risk, returns and internal business reporting system, accordingly these have been grouped as single segment in above disclosures as per Ind AS- 108 dealing with " Operating Segment".

2. Recent Accounting Pronouncements Standards issued but not yet effective

In March 2018, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) (Amendments) Rules, 2018, notifying Ind AS 115 - ‘Revenue from Contracts with Customers’ and consequential amendments to various Ind AS standards. The amended Rules also notified amendments to Ind AS 12 - ‘Income Taxes’, Ind AS 21 - ‘The Effect of Changes in Foreign Exchange Rates’, Ind AS 28 - ‘Investments in Associates and Joint Ventures’ and Ind AS 40 - ‘Investment Property’. These amendments are in accordance with the recent amendments made by International Accounting Standards Board (IASB). The amendments are effective from accounting periods beginning from 1 st April, 2018.

Ind AS 115 - Revenue from Contracts with Customers

This standard establishes a single comprehensive model for accounting of revenue arising from contracts with customers. Ind AS 115 will supersede the current revenue recognition guidance under Ind AS 11 Construction Contracts and Ind AS 18 Revenue. The Company is currently assessing the impact of application of Ind AS 115 on Company’s financial statements.

Amendment to Ind AS 12 - Income Taxes

The amendments clarify the requirement for recognising deferred tax assets on unrealised losses on debt instruments that are measured at fair value. The amendment also clarify certain other aspects of accounting for deferred tax assets. The amendments are not applicable to the Company’s financial statements..

Amendment to Ind AS 21 - The Effect of Changes in Foreign Exchange Rates

This amendment clarifies translation of advance payments denominated in foreign currency into functional currency at the spot rate on the day of payment. The guidance aims to reduce diversity in practice. These amendments are not applicable to the Company’s financial statements.

Amendment to Ind AS 28 - Investments in Associates and Joint Ventures

The amendment clarifies accounting options in consolidated financial statements of a venture capital or similar entity and investment entity. These amendments are not applicable to the Company’s financial statements.

Amendment to Ind AS 40 - Investment Property

The amendments clarify transfers of investment property to or from the portfolio in the case of a change of use. The changes will not have any material impact on the financial statements of the Company.

3. Previous year''s figures have been regrouped, wherever necessary, so as to correspond with those of the current year.

1. Financial Instruments

(Refer Note 1.11)

Capital management

Company''s capital management objectives are to:

- ensure the company''s ability to continue as a going concern

- provide an adequate return to shareholders by pricing products and services commensurately with the level of risk.

For the purposes of the Company''s Capital Management, capital includes issued capital and all other equity reserves. Company manages its capital structure and makes adjustments in the light of changes in economic environment and the requirements of the financial covenants.

realization. Company expect all the debtors to be realized in full, accordingly no provision has been made in the books of account.

Credit risk on cash and cash equivalents is limited as Company generally invest in deposits with banks. Further, Investments are primarily in debt based liquid mutual funds only and the same are fairly spread across various schemes.

Liquidity Risk

(i) Liquidity Risk Management

The Company manages liquidity risk by maintaining adequate reserves, banking facilities and by continuously monitoring forecast & actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

(ii) Maturities of Financial Liabilities

The following tables detail the Company’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The amount disclosed in the tables have been drawn up based on the earliest date on which the Company can be required to pay. Financial Liabilities include Trade Payables, Capital Purchases, Unpaid/Unclaimed Dividend etc. which are in the normal course of business having maturity plan of less than 1 year and non-interest bearing.

As at 31st March, 2017, the Company had a working capital of Rs. 196.60 crores including cash and bank balance & bank deposits of Rs. 178.27 crores and investment of Rs. 48.91 crores.

As at 31st March 2016, the Company had a working capital of Rs. 167.32 crores including cash and bank balance & bank deposits of Rs. 173.11 crores and investment of Rs. 10.40 crores.

Accordingly, company do not perceive any liquidity risk.

2. Fair Value Measurement

The fair values of the Financial Assets and Liabilities are included in 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 Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique.

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

Level 2 - Other Techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly.

Level 3 - Techniques which use inputs that have a significant effect on the recorded fair value that are not based on observable market data.

‘Assessment of Income Tax is completed upto Assessment Year 2014-15. There is no demand which is disputed in Appeal and not provided for. For earlier Assessment Years, tax authorities have filed appeals/references which involve an estimated liability of Rs. 148.94 Lacs (31.03.2016 - Rs. 148.94 Lacs)

**Represents demand for enhanced compensation for land allotted to Company in 1988. Company is in appeal with Honble Supreme Court of India. Pending appeal, Rs. 100.00 lacs was deposited with the court during the financial year 2008-09 and the same forms part of Other Non-Current assets under Note 2.4.

3.While letters for confirmation of balance of sundry creditors, sundry debtors and material lying with vendors have been sent, only few responded. Rests are subject to confirmation.

4. Segment Reporting

The Company is primarily engaged in the business of diesel engines, diesel engine components and spare parts. As the basic nature of these activities are governed by the same set of risk, returns and internal business reporting system, accordingly these have been grouped as single segment in above disclosures as per Ind AS-108 dealing with " Operating Segment".

5. Disclosure on Specified Bank Notes (SBNs) :

During the year, the Company had specified bank notes or other denomination note as defined in the MCA notification G.S.R. 308(E) dated March 31, 2017 on the details of Specified Bank Notes (SBNs) held and transacted during the period from November 9, 2016 to December 30, 2016, the denomination-wise SBNs and other notes as per the notification is given below:

* 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. 3407 (E), dated the 8th November, 2016.

6. First-time adoption of Ind-AS

These financial statements, for the year ended 31st March, 2017, are the Company''s first financial statements prepared in accordance with Ind-AS. For periods up to and including the year ended 31st March, 2016, the Company prepared its financial statements in accordance with statutory reporting requirement in India immediately before adopting Ind-AS (previous GAAP). Accordingly, the Company has prepared financial statements which comply with Ind-AS applicable for periods ending on or after 31st March, 2017, together with the comparative period data as at and for the year ended 31st March, 2016, as described in the summary of significant accounting policies. In preparing these financial statements, the Company''s Opening Balance Sheet was prepared as at 1 st April, 2015, the Company''s date of transition to Ind-AS. This note explains the principal adjustments made by the Company in restating its Indian GAAP financial statements, including the balance sheet as at 1st April, 2015 and the financial statements as at and for the year ended 31st March, 2016.

Exemptions applied - Company has not opted for any exemptions as given in Ind-AS 101 First Time Ind-AS Adoption reconciliations

The effect of the company’s transition to Ind-AS is summarized in this note as follows:

(i) Reconciliation of Equity and Net Profit as previously reported under Indian GAAP to Ind-AS;

(ii) Adjustments to the statement of cash flows.

Note: No statement of comprehensive income was produced under previous GAAP. Therefore, the reconciliation starts with profit under previous GAAP.

The Company has issued only one class of shares referred to as Equity Shares having a par value of Rs.10/-. Each Equity Shareholder is entitled to one vote per share.

The Company declares and pays dividend in Indian Rupees. The Board of Directors, in their meeting held on 26th April, 2016 proposed a dividend of Rs. 33 per equity share (including Rs 18 per share as special dividend). Dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. The total dividend appropria- tion for the year ended 31st March, 2016 amounted to Rs. 4932.91 lacs (2015- Rs.4932.91 lacs) including corporate dividend tax of Rs.834.37 lacs (2015 - Rs.834.37 lacs)

* Assessment of Income Tax is complete up to assessment year 2013-14. There is no demand which is disputed in Appeal and not provided for (31.03.2015- Rs.43.07 lacs). For earlier Assessment Years, tax authorities have filed appeals / references which involve an estimated liability of Rs. 148.94 lacs (31.03.2015- Rs.185.32 lacs).

** Represents demand for enhanced compensation for land allotted to Company in 1988. Company is in appeal with Hon''ble Supreme Court of India. Pending appeal, Rs. 100.00 lacs was deposited with the court during the financial year 2008-09 and the same forms part of Long-Term Loans & Advances under Note 2.9.

1. While letters for confirmation of balance of sundry creditors, sundry debtors and material lying with vendors have been sent, only few responded. Rest are subject to confirmation.

2. Related party disclosures as required under Accounting Standard -18 are given below:

a) Names of related parties and description of relationships having transactions during the year: i) Associate Company Mahindra & Mahindra Limited (M&M)

ii) Key Management Personnel Shri M.N. Kaushal (Whole-time Director)

3. Segment Reporting

The Company''s business activities relate to diesel engines, diesel engine components & spare parts and fall within a single primary business segment. As such, no separate segment reporting is required under Accounting Standard 17, issued by the Institute of Chartered Accountants of India.

4. Employee Stock Option

During the year, Company has approved Employee Stock Option Scheme-2015 (ESOS-2015). Under the scheme, 31,000 Equity Shares of the face value of Rs.10/- are available for being granted to eligible employees on the recommendation of the Nomination and Remuneration Committee. Further, Company during the year, has granted 9389 Equity Shares at face value to the eligible employees. As per the ESOS-2015, Options granted vest in four installments on the expiry of 18 months, 30 months, 42 months and 54 months respectively. The options may be exercised on any day over a period of 5 years from the date of vesting. Numbers of vested options are exercisable subject to minimum of 50 or number of options vested whichever is lower.

Employee benefit expenses includes Rs.10.32 lacs (2015-Nil) being the amortization of Deferred Employee Compensation expense.

Had the Company adopted fair value method in respect of options granted during the year, the Employee benefit expenses would have been lower by Rs.0.90 lacs.

Note:

i) The amounts of all the items in Analysis of Raw Materials consumed represent the issues during the year. The figure of others (including components) is a balancing figure based on total consumption shown in Note no. 2.18 and includes adjustments for excess/shortage/damages/obsolete found on physical verification.

5. Research & Development Expenses includes an amount of Rs. Nil (2015- Rs.41.66 lacs) amortized during the year.

1.1 Contingent Liabilities and Commitments (To the extent not provided for)

Particulars 2015 2014 Rs. in lacs Rs. in lacs

Contingent Liabilities :

Claim against the Company not acknowledged as debt

- Excise matters in dispute 101.59 127.61

- Income Tax matters in dispute 228.39* 243.65

- Others 241.67** 241.67

Commitments :

Estimated amount of unexecuted capital contracts 2562.71 1139.23 (net of advances and deposits)

* Assessment of Income Tax is complete upto assessment year 2012-13.No provision has been made in the Books of Accounts for the disputed demands of Rs. 43.07 lacs (31.03.2014 - Rs 58.33 lacs),where company is in appeal. For earlier Assessment Years, tax authorities have filed appeals / references which involve an estimated liability of Rs. 185.32 lacs (31.03.2014- Rs.185.32 lacs).

** Represents demand for enhanced compensation for land allotted to Company in 1988. Company is in appeal with Hon''ble Supreme Court of India. Pending appeal, Rs. 100.00 lacs was deposited with the court during the financial year 2008-09 and the same forms part of Long-Term Loans & Advances under Note 2.9.

1.2 While letters for confirmation of balance of sundry creditors, sundry debtors and material lying with vendors have been sent, only few responded. Rests are subject to confirmation.

1.3 Segment Reporting

The Company''s business activities relate to diesel engines, diesel engine components & spare parts and fall within a single primary business segment. As such, no separate segment reporting is required under Accounting Standard 17, issued by the Institute of Chartered Accountants of India.

1.4 Earnings per Share (EPS)

Earnings per share are calculated by dividing net profit for the year attributable to equity shareholders by number of equity shares outstanding during the year. The Company has not issued any potential equity shares, and accordingly, the basic earning per share and diluted earning per share are the same.

1.5 Research & Development Expenses includes an amount of Rs. 41.66 lacs (2014- Rs.118.34 lacs) amortized during the year being the expense towards upgradation of engine and improvement in fuel efficiency.

1.6 In compliance with the provisions of the Companies Act 2013, the company has reworked depreciation with reference to estimated economic life of Fixed Assets prescribed by Schedule II of the Act except for Patterns, Block & Dies and Vehicles where lower useful life has been considered in line with the existing practice.

Due revision in estimated economic life, the charge for depreciation is higher by Rs. 321.55 lacs for the year ended March 31,2015. Further, Rs.31.40 lacs (net of tax) has been adjusted to opening Surplus/Retained Earnings being the carrying value of assets having Nil revised remaining useful life as on April 1, 2014.Tax impact on the same, Rs. 16.17 Lacs, has been adjusted in the opening Deferred Tax Liability pertaining to Depreciation.

1.7 Previous year figures have been regrouped, wherever necessary, so as to correspond with those of the current year.

1.1 Contingent Liabilities and Commitments (To the extent not provided for)

Particulars 2013 2012 Rs. in lacs Rs. in lacs

Contingent Liabilities :

Claim against the Company not acknowledged as debt

- Excise matters in dispute 127.61 126.42

– Income Tax matters in dispute 232.29* 214.94

– Others 241.67** 241.67

Commitments :

Estimated amount of unexecuted capital contracts 1167.86 3283.05 (net of advances and depsits)

* Assessment of Income Tax is complete upto assessment year 2010-11.No provision has been made in the Books of Accounts for the disputed demands of Rs. 46.97 lacs (31.03.2012 - Rs. Nil), where company is in appeal. For earlier Assessment Years, tax authorities have filed appeal / references which involve an estimated liability of Rs. 185.32 lacs (31.03.2012- Rs.214.94 lacs).

** Represents demand for enhanced compensation for land allotted to Company in 1988. Company is in appeal with Hon''ble Supreme Court of India. Pending judgment, Rs. 100.00 lacs was deposited with the court during the financial year 2008-09 and the same forms part of Long-Term Loans & Advances under Note 2.10.

1.2 While letters for confirmation of balance of sundry creditors, sundry debtors and material lying with vendors have been sent, only few responded. Rests are subject to confirmation.

1.3 Related party disclosures as required under Accounting Standard –18 are given below:

a) Names of related parties and description of relationships having transactions during the year:

i) Associate Companies Mahindra & Mahindra Limited (M&M)

Kirloskar Industries Limited (KIL) Swaraj Automotives Limited (SAL)

ii) Key Management Personnel Shri M.N. Kaushal (Whole-time Director)

1.4 Segment Reporting The Company''s business activities relate to diesel engines, diesel engine components & spare parts and fall within a single primary business segment. As such, no separate segment reporting is required under Accounting Standard 17, issued by the Institute of Chartered Accountants of India.

1.5 Earnings per Share (EPS) Earnings per share are calculated by dividing net profit for the year attributable to equity shareholders by number of equity shares outstanding during the year. The Company has not issued any potential equity shares, and accordingly, the basic earning per share and diluted earning per share are the same.

1.6 Research & Development Expenses includes an amount of Rs.170.69 lacs (2012- Rs.119.02 lacs) amortized during the year being the expense towards upgradation of engine and improvement in fuel efficiency.

1.7 Previous year figures have been regrouped, wherever necessary, so as to correspond with those of the current year.

The Company has issued only one class of shares referred to as Equity Shares having a par value of Rs. 10/-. Each Equity Shareholder is entitled to one vote per share.

The Company declares and pays dividend in Indian Rupees. The Board of Directors, in their meeting held on 25th April, 2012 proposed a dividend of Rs. 13.00 per equity share. Dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. The total dividend appropriation for the year ended 31st March, 2012 amounted to Rs. 1876.50 lacs including corporate dividend tax of Rs. 261.92 lacs (2011 - Rs. 1443.46 lacs including corporate dividend tax of Rs. 201.48 lacs).

1.1 Contingent Liabilities and Commitments (To the extent not provided for)

Particulars 2012 2011 Rs. in lacs Rs. in lacs

Contingent Liabilities :

Claim against the Company not acknowledged as debt

- Excise matters in dispute 126.42 140.83

- Income Tax matters in dispute 214.94* 214.94

- Others 241.67** 241.67

Commitments :

Estimated amount of unexecuted capital contracts 3283.05 1257.70 (net of advances and deposits)

* Assessment of Income Tax is complete upto assessment year 2009-10. There is no demand which is disputed in Appeal and not provided for (2011 - Rs. Nil). For earlier Assessment Years, tax authorities have filed appeal / references which involves an estimated liability of Rs. 214.94 lacs.

** Represents demand for enhanced compensation for land allotted to Company in 1988. Company is in appeal with Hon'ble Supreme Court of India. Pending judgment, Rs. 100.00 lacs was deposited with the court during the financial year 2008-09 and the same forms part of Long-Term Loans & Advances under Note 2.10.

1.2 While letters for confirmation of balance of sundry creditors, sundry debtors and material lying with vendors have been sent, only few responded. Rests are subject to confirmation.

1.3 Segment Reporting

The Company's business activities relate to diesel engines, diesel engine components & spare parts and fall within a single primary business segment. As such, no separate segment reporting is required under Accounting Standard 17, issued by the Institute of Chartered Accountants of India.

1.4 Earnings per Share (EPS)

Earnings per share are calculated by dividing net profit for the year attributable to equity shareholders by number of equity shares outstanding during the year. The Company has not issued any potential equity shares, and accordingly, the basic earning per share and diluted earning per share are the same.

Note:

i) The amounts of all the items in Analysis of Raw Materials consumed represent the issues during the year. The figure of others (including components) is a balancing figure based on total consumption shown in Note no. 2.17 and includes adjustments for excess/shortage/ damages/obsolete found on physical verification.

1.5 Research & Development Expenses includes an amount of Rs.119.02 lacs (2011- Rs.151.98 lacs) amortized during the year being the expense towards upgradation of engine and improvement in fuel efficiency.

1.6 Based on the information available with the company, the balance due to Micro & Small enterprises as defined under the MSMED Act, 2006 are Rs. 410.21 lacs (2011-Rs.186.24 lacs). Further, while no interest is paid during the year, interest amounting to Rs. 0.54 lacs (2011 - Nil) is payable under the terms of the MSMED Act, 2006.

1.7 Previous year figures have been regrouped, wherever necessary, so as to correspond with those of the current year.

1. There are contingent liabilities in respect of

2011 2010

Rs. in lacs Rs. in lacs

Claim against the Company not

acknowledged as debt

- Excise matters in dispute 140.83 116.60

- Income Tax matters in dispute 214.94* 214.94

- Others 241.67** 241.67

* Assessment of Income Tax is complete upto assessment year 2008-09. There is no demand which is disputed in Appeal and not provided for (2010 - Rs. Nil). For earlier Assessment Years, tax authorities have filed appeal / references which involves an estimated liability of Rs. 214.94 Lacs.

** Represents demand for enhanced compensation for land allotted to Company in 1988. Company is in appeal with Honble Supreme Court of India. Pending judgment, Rs. 100.00 lacs was deposited with the court during the financial year 2008-09 and the same forms part of Loans & Advances under Schedule F.

2. While letters for confirmation of balance of sundry creditors, sundry debtors and material lying with vendors have been sent, only few responded. Rests are subject to confirmation.

3. Related party disclosures as required under Accounting Standard -18 are given below :

a) Names of related parties and description of relationships having transactions during the year:

i) Associate Companies :

Mahindra & Mahindra Limited (M&M)

Kirloskar Industries Limited (KIL)

Swaraj Automotives Limited (SAL)

ii) Key Management Personnel:

Whole time Director

Shri Bishwambhar Mishra (Vice Chairman)

b) Volume of Transactions with related parties

* Due to demerger of Kirloskar Oil Engines Limited (KOEL), KIL became related party w.e.f 01.04.2010 in place of KOEL. ii) Key Management Personnel

Remuneration - 51.20A

Note:A The remuneration was paid to Sh. G.S Rihal, Ex Managing Director.

4. Segment Reporting

The Companys business activities relate to diesel engines, diesel engine components & spare parts and fall within a single primary business segment. As such, no separate segment reporting is required under Accounting Standard 17, issued by the Institute of Chartered Accountants of India.

5. Earnings per Share (EPS)

Earnings per share are calculated by dividing net profit for the year attributable to equity shareholders by number of equity shares outstanding during the year. The Company has not issued any potential equity shares, and accordingly, the basic earning per share and diluted earning per share are the same.

6. Estimated amount of contracts remaining to be executed on capital account and not provided for is Rs. 1257.70 lacs net of advance (2010 -Rs.304.77 lacs).

The tax impact for the above purpose has been arrived at by applying the prevailing tax rate as on Balance Sheet date under the Income Tax Act, 1961.Gross reduction in Net Deferred Tax Liability amounting Rs 75.85 Lacs has been credited to Profit and Loss Account.

Notes:

i) It is not practicable to furnish quantitative information of all the components in view of large number of items varied in size and nature.

ii) The quantities and amounts of all the items in Analysis of Raw Materials consumed represent the issues during the year. The figure of others (including components) is a balancing figure based on total consumption shown in Schedule "H" and includes adjustments for excess/shortage/ damages/obsolete found on physical verification.

7. Research & Development Expenses includes an amount of Rs. 151.98 lacs (2010- Rs. 106.77 lacs) amortized during the year being the expense towards upgradation of engine and improvement in fuel efficiency.

8. Based on the information available with the company, the balance due to Micro & Small enterprises as defined under the MSMED Act, 2006 is Rs 186.24 lacs (2010- Rs. 107.21 lacs). Further, no interest during the year has been paid or payable under the terms of the MSMED Act, 2006.

9. Previous year figures have been regrouped, wherever necessary, so as to correspond with those of the current year.

1. There are contingent liabilities in respect of

2010 2009

Rs. in lacs Rs. in lacs Claim against the Company not acknowledged as debt

Excise matters in dispute 116.60 116.46

- Income Tax matters in dispute 214.94* 106.90

Others 241.67** 241.67

* Assessment of Income Tax is complete upto assessment year 2007-08. There is no demand which is disputed in Appeal and not provided for (2009 - Rs. Nil). For earlier Assessment Years, tax authorities have filed appeal / references which involves an estimated liability of Rs. 214.94 Lacs.

** Represents demand for enhanced compensation for land allotted to Company in 1988. Company is in appeal with Honble Supreme Court of India. Pending judgment, Rs. 100.00 lacs was deposited with the court during the financial year 2008-09 and the same forms part of Loans & Advances under Schedule F.

2. While letters for confirmation of balance of sundry creditors, sundry debtors and material lying with vendors have been sent, only few responded. Rests are subject to confirmation.

3. Earnings per Share (EPS)

Earnings per share are calculated by dividing net profit for the year attributable to equity shareholders by number of equity shares outstanding during the year. The Company has not issued any potential equity shares, and accordingly, the basic earning per share and diluted earning per share are the same.

4. Estimated amount of contracts remaining to be executed on capital account and not provided for is Rs.304.77 lacs net of advance (2009 -Rs. 7.39 lacs).

5. Research &Development Expenses includes an amount of Rs.106.77 (2009 Rs.105.09 lacs)amortized during the year being the expense towards upgradation of engine and improvement in fuel efficiency.

6.Based on the information available with the company,the balance due to Micro &Small enterprises as defined under the MSMED Act,2006 is Rs.107.21 lacs (2009 Rs.60.80 lacs).Further,no interest during the year has been paid or payable under the terms of the MSMED Act,2006.

7.Previous year figures have been regrouped,wherever necessary,so as to correspond with those of the current year.