Notes to Accounts of Thermax Ltd.

Mar 31, 2026

18 PROVISIONS

Accounting policy

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. When the Company expects some or all of a
provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognised as a separate
asset, but only when the reimbursement is virtually certain.

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 recognised as a finance cost.

Warranty provisions

Provisions for warranty related costs are recognised when the product is sold or service provided to the customer.
Initial recognition is based on historical experience. The estimate of warranty related costs is revised annually.

Provision for onerous contracts

Present obligations arising under onerous contracts are recognised, measured and disclosed as provisions in
financial statements. An onerous contract is considered to exist where the Company has a contract under which
the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be
received from the contract.

Provision for litigation

Provision for litigation related obligations represents
liabilities that are expected to materialise in respect of
matters in appeal related to legal cases.

Decommissioning liability

The Company records a provision for
decommissioning costs of its manufacturing facilities.
Decommissioning costs are provided at the present
value of expected costs to settle the obligation using
estimated cash flows and are recognised as part of
the cost of the particular asset. The unwinding of the
discount is expensed as incurred and recognised
in the Standalone Statement of Profit and Loss
as a finance cost. The estimated future costs of
decommissioning are reviewed annually and adjusted
as appropriate. Changes in the estimated future
costs or in the discount rate applied are added to or
deducted from the cost of the asset.

Retirement and other employee benefits

Retirement benefit in the form of provident fund is a
defined contribution scheme. The Company has no
obligation, other than the contribution payable to the
provident fund. The Company recognises contribution
payable to the provident fund scheme as an expense
when an employee renders the related service. If
the contribution payable to the scheme for service
received before the balance sheet date exceeds the
contribution already paid, the deficit payable to the
scheme is recognised as a liability after deducting
the contribution already paid. If the contribution
already paid exceeds the contribution due for services
received before the balance sheet date, then excess
is recognised as an asset to the extent that the
pre-payment will lead to, for example, a reduction
in future payment or a cash refund. The obligation
of the Company is limited to the amount contributed
and it has no further contractual nor any constructive
obligation. The expense recognised during the period
towards defined contribution plan is Rs. 52.55
(March 31, 2025: Rs. 46.54).

The Government of India has implemented four
Labour Codes, viz., 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, by consolidating
29 existing labour laws on 21 November 2025. The
Ministry of Labour & Employment have published draft
Central Rules and FAQs to enable assessment of the
financial impact due to changes in the regulations. The
Labour Codes have prescribed a uniform definition
of “Wages” to be used for the purpose of calculating
employee benefits like gratuity and extending
eligibility to fixed-term employees (“FTEs”). Under
the Labour Codes, the base on which employee
benefits are calculated has increased, which has
resulted in increase in the Company’s liability for
employee benefits.

The Company operates a defined benefit gratuity plan
in India, which requires contributions to be made to a
separately administered fund. The Company provides
for gratuity, a defined benefit plan (the “Gratuity
Plan”) covering eligible employees in accordance
with the Code on Social Security, 2020, in line with the
notification of the Labour Codes with effect from 21
November 2025. The Gratuity Plan provides a lump
sum payment to vested employees at retirement,
death, incapacitation, or termination of employment,
of an amount based on the respective employee’s
salary and the tenure of employment. The Company’s
liability is determined by an independent actuary
(using the Projected Unit Credit method) at the end
of each year. Any increase in gratuity liability arising
due to implementation of Labour Codes in respect
of past service cost is recognised immediately in the
Standalone Statement of Profit and Loss, to the extent
that the benefits are already vested, and is recognised
over the vesting period in the Standalone Statement of
Profit and Loss in respect of the unvested portion. The
Company has considered a proposed restructuring
of its employees compensation, and assessed the
impact of the changes, consistent with the Labour
Codes, the draft rules, FAQs and opinion obtained
from the Company’s advisors.

The Company makes annual contributions through
trusts to a funded gratuity scheme administered by
the Life Insurance Corporation of India (LIC).

Remeasurements, comprising of actuarial gains
and losses, the effect of the asset ceiling, excluding

amounts included in net interest on the net defined
benefit liability and the return on plan assets
(excluding amounts included in net interest on the net
defined benefit liability), are recognised immediately in
the balance sheet with a corresponding debit or credit
to retained earnings through OCI in the period in which
they occur. Remeasurements are not reclassified
to the Standalone Statement of Profit and Loss in
subsequent periods. Further also refer note 40.

Past service costs are recognised in the
Standalone Statement of Profit and Loss
on the earlier of:

(a) The date of the plan amendment or
curtailment; and

(b) The date that the Company recognises related
restructuring costs.

Net interest is calculated by applying the discount
rate to the net defined benefit liability or asset. The
Company recognises the following changes in the
net defined benefit obligation as an expense in the
Standalone Statement of Profit and Loss:

• Service costs comprising current service
costs, past-service costs, gains and losses on
curtailments and non-routine settlements; and

• Net interest expense or income.

Accumulated leave, which is expected to be utilised
within the next 12 months, is treated as short-term
employee benefit. The Company measures the
expected cost of such absences as the additional
amount that it expects to pay as a result of the unused
entitlement that has accumulated at the reporting
date. The Company presents the leave as a current
liability in the balance sheet as it does not have an
unconditional right to defer its settlement for 12
months after the reporting date.

However, based on past experience and actuarial
valuation performed, the Company does not expect
all employees to avail the full amount of accrued leave
or require payment for such leave within the next 12
months. Leave obligations which are not expected to
be settled within the next 12 months amounts to Rs.
41.99 (March 31,2025 : Rs. 44.11).

Estimates and assumptions

• Provision for onerous contracts: The Company
provides for onerous contracts when a present
obligations arises as the unavoidable costs of
meeting an obligations under a contract exceed
the economic benefits expected to be received
from that contract. Estimating these future losses
involves a number of assumptions about the
achievement of contract performance targets and
the likely levels of future cost including escalation
over time.

• Warranty provision: The Company generally
offers warranty for its various products. Warranty
costs are provided based on a technical estimate
of the costs required to be incurred for repairs,
replacements, material costs, servicing cost and
past experience in respect of warranty costs.
Management estimates the related provision for
future warranty claims based on historical warranty
claim information, as well as recent trends that
might suggest that past cost information may
differ from future claims. The assumptions made in
current period are consistent with those in the prior
year. Factors that could impact the estimated claim
information include the success of the Company’s
productivity and quality initiatives. Warranty
provisions are discounted using a pre-tax discount
rate which reflects current market assessments

of time value of money and risks specific to
the liability.

Warranty costs are provided based on a technical
estimate of the costs required to be incurred for
repairs, replacements, material costs, servicing
cost and past experience in respect of such costs.

It is expected that this expenditure will be incurred
over the contracted warranty period ranging up to
2 years. If warranty claim costs vary by 10% from
management''s estimate, the warranty provisions
would be an estimated Rs. 9.57 higher or lower
(March 31, 2025: Rs. 9.70).

• Defined benefit plan - 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. The parameter which is most
subjected to change is the discount rate. In determining the appropriate discount rate for plans operated in India,
the management considers the interest rates of government bonds in currencies consistent with the currencies of
the post-employment benefit obligation. Further, another important parameter is salary considered while assessing
the definition of “wages” as given in The Code on Social Security, 2020. The mortality rate is based on Indian
Assured Lives Mortality (2012-14) Ultimate. Those mortality tables tend to change only at interval in response to
demographic changes. Future salary increases and gratuity increases are based on expected future inflation rates.

(c) GRATUITY

The Company operates a defined benefit plan viz. gratuity for its employees. Under the gratuity plan, every
employee who has completed at least specified years of service gets a gratuity on departure at 15 days
(minimum) of the last drawn salary for each completed year of service. The scheme is funded with an insurance
company. The fund has formed a trust and it is governed by the Board of Trustees.

The fund is subject to risks such as asset volatility, changes in assets yields and asset liability mismatch risk. In
managing the plan assets, Board of Trustees review and manage these risks associated with the funded plan.
Each year, the Board of Trustees reviews the level of funding in the gratuity plan. Such a review includes asset-
liability matching strategy and investment risk management policy (which includes contributing to plans that
invest in risk-averse markets). The Board of Trustees aim to keep annual contributions relatively stable at a level
such that no plan deficits (based on valuation performed) will arise.

The Company has considered a proposed restructuring of its employees compensation, and assessed the
impact of the changes, consistent with the Labour Codes, the draft rules, FAQs and opinion obtained from the
Company’s advisors. In accordance with Ind AS 19 and the FAQs issued by ICAI, the changes to gratuity benefit
resulting from the Labour Codes are treated as past service costs and accordingly, the increase in the Company’s
obligation due to application of the Labour Codes has been recognised in the Standalone Statement of Profit
and Loss. The Company continues to monitor the finalisation of Central/ State Rules and further clarifications
from the Government and would give appropriate accounting effect considering those developments, as may
be applicable.

VI Risk exposure

Through its defined benefit plans, the Company is exposed to a number of risks, the most significant of which
are detailed below:

Asset Volatility:

The plan liabilities are calculated using a discount rate set with reference to bond yields. If plan assets
underperform, this yield will create a deficit. The plan assets are maintained with fund manager of LIC. They
are subject to interest rate risk which is managed by the insurer.

Changes in bond yield:

A decrease in bond yields will increase plan liabilities.

Asset risk:

All plan assets are maintained in a trust fund managed by a public sector insurer viz; LIC. LIC has a sovereign
guarantee and has been providing consistent and competitive returns over the years. The Company has
opted for a traditional fund wherein all assets are invested primarily in risk averse markets. The Company has
no control over the management of funds but this option provides a high level of safety for the total corpus.

A single account is maintained for both the investment and claim settlement and hence 100% liquidity is
ensured. Also, interest rate and inflation risk are taken care of.

Future salary escalation and Inflation risks:

Rising salaries will often result in higher future defined benefit payments resulting in a higher present value
of liabilities especially unexpected salary increases provided at management''s discretion may lead to
uncertainties in estimating this risk.

Life expectancy:

These loans were secured by hypothecation of present and future stock of all inventories, stores and spares not related to plant and
equipment, book debts and other moveable assets as at the Balance Sheet date. The quarterly returns and statements of current
assets filed by the Company with banks are in agreement with the books of accounts.

#Unsecured loans pertains to packing credit of Rs. 35.16 (March 31, 2025: Rs. 26.08) carries an interest rate of 5.82% to 6.19% (March
31, 2025: 6.86%) due for repayment within 180 days (March 31, 2025: 90 days) from date of disbursement or expected shipment date
whichever is earlier.

During the previous year, the Company had taken an unsecured loan amounting to Rs. 345 from a related party, Thermax Babcock
&WilcoxEnergy SolutionsLimited (TBWES),forworking capital requirements, carrying an interest rate of 7.90%. The tenure of the loanwas182
days as per the agreement. The said loan was repaid during the previous year. (Refer note 32).

Note: Current borrowings include interest accrued on non-current and current borrowings.

Note: The Company was in compliance with all of its debt covenants for outstanding borrowings for both years.

Increases in life expectancy of employee will result in an increase in the plan liabilities. This is particularly
significant where inflationary increases result in higher sensitivity to changes in life expectancy.

19 OTHER LIABILITIES

Accounting policy

Contract liabilities: A contract liability is the obligation to transfer goods or services to a customer for which the
Company has received consideration (or an amount of consideration is due) from the customer. If a customer pays
consideration before the Company transfers goods or services to the customer, a contract liability is recognised when
the payment is made or the payment is due (whichever is earlier). Contract liabilities are recognised as revenue when
the Company satisfies the performance obligation. Contract liabilities are recorded in balance sheet as unearned
revenue or customer advances as the case may be.

21 REVENUE FROM OPERATIONS

Accounting policy

Revenue from contracts with customers: Revenue
from contracts with customers is recognised when
control of the goods or services are transferred to the
customer at an amount that reflects the consideration
to which the Company expects to be entitled in
exchange for those goods or services. Revenue is
recognised when it has approval and commitment
from both parties, the rights of the parties are
identified, payment terms are identified, the contract
has commercial substance and collectability of
consideration is probable. The Company has
concluded that it is the principal in all of its revenue
arrangements since it is the primary obligor in all the
revenue arrangements and has pricing latitude and is
also exposed to inventory risks. The Company collects
goods and services tax on behalf of the government
and, therefore, it is not an economic benefit flowing to
the Company. Hence, it is excluded from revenue.

The Company has the following streams of revenue:

• Revenue from Engineering, Procurement and
Construction contracts

Engineering, Procurement and Construction (EPC)
contracts are contracts (or a group of contracts
secured together) specifically negotiated for
the construction of an asset which refers to any
project for construction of plants and systems,
involving designing, engineering, fabrication,
supply, erection (or supervision thereof),
commissioning, guaranteeing performance
thereof etc., execution of which is spread over
different accounting periods. The Company
identifies distinct performance obligations in each
contract. For most of the project contracts, the
customer contracts with the Company to provide
a service of integrating a complex set of tasks and
components into a single project or capability.
Hence, the entire contract is accounted for as one
performance obligation.

The Company may promise to provide distinct
goods or services within a contract, in which
case the Company separates the contract
into more than one performance obligation.

If a contract is separated into more than one
performance obligation, the Company allocates

the total transaction price to each performance
obligation in an amount based on the estimated
relative standalone selling prices of the promised
goods or services underlying each performance
obligation. The Company uses the expected cost
plus margin approach to estimate the standalone
selling price of each performance obligation in
case of contracts with more than one distinct
performance obligations.

The Company assesses for the timing of revenue
recognition in case of each distinct performance
obligation. The Company first assesses whether the
revenue can be recognised over a period of time if
any of the following criteria is met:

(a) The customer simultaneously consumes the
benefits as the Company performs; or

(b) The customer controls the work-in¬
progress; or

(c) The Company’s performance does not
create an asset with alternative use to
the Company and the Company has right
to payment for performance completed
till date.

The Company uses cost-based measure of
progress (or input method) for contracts because it
best depicts the transfer of control to the customer
which occurs as it incurs costs on contracts. Under
the cost-based measure of progress, the extent of
progress towards completion is measured based
on the ratio of costs incurred to date to the total
estimated costs at completion of the performance
obligation. Revenues, including estimated profits,
are recorded proportionally as costs are incurred.

The Company estimates variable consideration
amount which it expects to be entitled under the
contract and includes it in the transaction price
to the extent it is highly probable that a significant
reversal of cumulative revenue recognised will not
occur and when the uncertainty associated with it
is subsequently resolved. The estimates of variable
consideration and determination of whether to
include estimated amounts in the transaction
price are based largely on an assessment of
the anticipated performance and all information
(historical, current and forecasted) that is
reasonably available. Penalties/claims for any delay

or improper execution of a contract are recognised
as a deduction from revenue. In the balance sheet,
such provisions are presented on net basis of the
contract receivables.

Costs associated with bidding for contracts are
charged to the Standalone Statement of Profit
and Loss when they are incurred. Costs that
relate directly to a contract and are incurred in
securing the contract are included as part of the
contract costs if they can be separately identified
and measured reliably and it is probable that the
contract will be obtained.

The Company provides for warranty provision
for general repairs up to 12 - 24 months on its
EPC contracts, in line with the industry practice.

A liability is recognised at the time the contract is
concluded. The Company does not provide any
extended warranties.

Contract modification, when approved by both
the parties to the contract, are considered as
modification, if it creates new or changes the
existing enforceable rights and obligations. Most of
the contract modifications are not distinct from the
existing contracts due to the significant integration
service provided under the contract prior to
modifications and are therefore, accounted for as
part of the existing contract. The effect of a contract
modification is recognised as an adjustment to
revenue on a cumulative catch-up basis.

The Company combines two or more contracts
entered into at or near the same time with the same
customer (or related parties of the customer) and
accounts for the contracts as a single contract if
one or more of the following criteria are met:

(a) the contracts are negotiated as a package
with a single commercial objective;

(b) the amount of consideration to be paid
in one contract depends on the price or
performance of the other contract; or

(c) the goods or services promised in the
contracts (or some goods or services
promised in each of the contracts) are a single
performance obligation.

• Revenue from sale of goods (Other than EPC
contracts)

If the criteria for revenue under over-a-period of
time as mentioned above are not met, the Company
recognises revenue at a point-in-time. The point-in¬
time is determined when the control of the goods
or services is transferred which is determined
based on when the significant risks and rewards of
ownership are transferred to the customer. Apart
from this, the Company also considers its present
right to payment, the legal title to the goods, the
physical possession and the customer acceptance
in determining the point in time when control has
been transferred. The Company provides for
warranty provision for general repairs up to 12 - 24
months on its products sold, in line with the industry
practice. A liability is recognised at the time the
product is sold. The Company does not provide any
extended warranties.

• Revenue from sale of services

Revenue in respect of operation and maintenance
contracts, awarded on a standalone basis or
included in long term contracts and identified as a
separate performance obligation, is recognised on
a time proportion basis under the contracts.

Estimates and assumptions

• Provisions for liquidated damages claims
(LDs): The Company provides for LD claims to the
extent that it is highly probable that a significant
reversal in the amount of cumulative revenue
recognised will not occur when the uncertainty
associated with the variable consideration

is subsequently resolved. This requires an
estimate of the amount of LDs payable under a
claim which involves management judgements
and assumptions regarding the amounts to
be recognised;

• Project cost to complete estimates: At each
reporting date, the Company is required to estimate
costs to complete on fixed-price contracts.
Estimating costs to complete on such contracts
requires the Company to make estimates of
future costs to be incurred, based on work to be
performed beyond the reporting date.

• Recognition of contract variations: The Company recognises revenues and margins from contract variations
where it is considered probable that they will be awarded by the customer and this requires management to
assess the likelihood of such an award being made by reference to customer communications and other forms of
documentary evidence.

Judgements

A significant portion of the Company’s business relates to EPC contracts which is accounted using cost-based input
method, recognising revenue as the performance on the contract progresses. This requires management to make
judgement with respect to identifying contracts for which revenue need to be recognised over a period of time,
depending upon when the customer consumes the benefit, whteher the customer controls the work-in-progress,
whether the asset created has no alternative use and the Company has right to payment for performance completed
till date, either contractually or legally. The input method requires management to make significant judgements of the
extent of progress towards completion including accounting of multiple contracts which need to be combined and
considered as a single contract.

iii) Performance obligations:

EPC and other than EPC contracts - Performance obligation in a project or a group of projects which
are contracted at or near same time with the same or related parties and negotiated simultaneously, are
combined for the purpose of evaluation. The Company has estimated that multiple commitments pertaining
to engineering, procurement and commissioning of such projects is a single performance obligation which is
spread over different accounting periods.

Performance obligation for products are evaluated on standalone basis, recognised at a point in time.
Generally, performance obligations for such contracts have an original expected duration of one year
or less.

There are no contracts with customers which have significant financing component included within them and
therefore there is no major difference between the timing of satisfaction of performance obligation vis-a-vis
the timing of the payment.

Due to change in transaction price, the Company has recognised revenue of Rs. 79.18 in the reporting period
from performance obligations satisfied (or partially satisfied) in previous periods.

Remaining performance obligations:

The following table includes revenue expected to be recognised in the future related to performance
obligations that are unsatisfied (or partially unsatisfied) at the reporting date.

The Company applies practical expedient included in para 121 of Ind AS 115 - "Revenue from Contracts with
Customers" and does not disclose information about its remaining performance obligations for contracts
that have an original expected duration of one year or less and for service revenue, where the Company
has a right to consideration from customers in an amount that corresponds directly with the value to the
customer of the entity’s performance completed to date.

iv) Reconciliation between revenue recognised in Standalone Statement of Profit and Loss and contract
price:

There is no significant variation between revenue recognised in Standalone Statement of profit and loss and
contract price except price variation claims, which are considered to be part of contract price.

28 EARNINGS PER SHARE (EPS)

Accounting policy

The Company presents the basic and diluted EPS data for its equity shares.

(i) Basic EPS is computed by dividing the net profit for the year attributable to the equity shareholders of the
Company by the weighted average number of equity shares outstanding during the year;

(ii) Diluted EPS is computed by adjusting the net profit for the year attributable to the equity shareholders and the
weighted average number of equity shares considered for deriving basic EPS for the effects of all the equity
shares that could have been issued upon conversion of all dilutive potential equity shares (which includes the
various stock options granted to employees).

30 CONTINGENT LIABILITIES AND COMMITMENTS

A CONTINGENT LIABILITIES

Accounting policy

A disclosure for a contingent liability is made where there is a possible obligation that arises from past events
and the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain
future events not wholly within the control of the Company or a present obligation that arises from the past events
where it is either not probable that an outflow of resources will be required to settle the obligation or a reliable
estimate of the amount cannot be made.

Judgements

Tax and Legal contingencies

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

The timing and amount of the cash flow which will arise from these matters, will be determined by the relevant authorities on
settlement of the cases or on receipt of claims from customers.

*Excluding of interest and penalty thereon.

*Includes a dispute with a customer amounting to Rs. 35.30 (March 31, 2025: Rs. 167.82). In June 2023, an arbitral award of Rs.
218.45, including interest, was passed against the Company and challenged before the Bombay High Court. Pursuant to the
stay granted by the High Court, the Company deposited Rs. Nil (March 31, 2025: Rs. 218.45), which was refundable with interest.
Based on independent legal opinion, the Company recognised a provision of Rs. Nil (March 31, 2025: Rs. 50.63), and no provision
was considered necessary for the balance. On December 9, 2025, the High Court set aside the award and directed refund of the
deposit with interest at 6% per annum. The customer’s special leave petition was dismissed by the Supreme Court on February
16, 2026, and the Group received the deposit along with interest of Rs. 31.62 on March 12, 2026. The customer has filed an
appeal under Section 37 of the Arbitration and Conciliation Act, 1996 before the Division Bench of the High Court. Based on legal
advice, the Company remains reasonably confident of a favourable outcome. Also refer note 40.

*Transfer Premium Demand - Chinchwad (MIDC) Land - The Company holds leasehold rights in respect of MIDC plots Nos. 13,
13A and 7/1 situated in the Pimpri Industrial Area, Pune, which were acquired prior to 1980. The Company had also owned MIDC
plots Nos. 25, 26, 12 (Part) and 21 (Part) in the same industrial area, which were disposed of during FY 2022-23. Pursuant to such
disposal, MIDC levied a differential premium of Rs. 9.93, which was duly paid by the Company in August 2023.

Subsequently, vide letter dated January 23, 2026, MIDC has raised a further demand of Rs. 33.55 (comprising Rs. 28.43 towards
differential premium and Rs. 5.12 towards GST) in respect of said plots, alleging that certain changes in shareholding constitute
a deemed transfer attracting premium. The Company has evaluated the said demand and based on its assessment and external
legal opinion obtained, believes that the liability is not probable and accordingly has disclosed the same as contingent liability.

d) During earlier years, the Company had received demand notices from the Excise department covering
period from October 2006 to September 2012 for Rs. 146.62 (March 31,2025: Rs. 146.62). These
demands are of excise duty payable on inclusion of the cost of bought out items in the assessable value
of certain products manufactured, though such duty paid bought out items are directly dispatched by the
manufacturers thereof to the ultimate customer, without being received in the factories. The Company had
filed an appeal against the same before CESTAT, Mumbai which was allowed in favour of the Company during
the financial year 2022-23.

Subsequently, the Commissioner of CGST & CE, Pune - I filed an appeal before the Hon’ble Supreme Court
of India challenging CESTAT order and appeal was admitted on July 10, 2024. Based on an independent
legal advice, the Company is confident of the issue being ultimately decided in its favour and accordingly, no
provision has been considered necessary.

B CAPITAL AND OTHER COMMITMENTS

a) Estimated amount of contracts remaining to be executed on capital account (net of advances) and not
provided for is Rs. 46.21 (March 31, 2025: Rs. 28.99).

b) Estimated amounts of contract remaining to be executed as part of other commitments is Rs. 2.85
(March 31, 2025: Rs. 21.62).

C LEASES

Accounting policy

The Company applies a single recognition and measurement approach for all leases, except for short-term
leases and leases of low-value assets. The Company recognises lease liabilities to make lease payments and
right-of-use assets representing the right to use the underlying assets.

Operating lease

i) WHERE THE COMPANY IS LESSOR:

Accounting policy

Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an
asset are classified as operating leases. Rental income from operating lease is recognised on a straight¬
line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an
operating lease are added to the carrying amount of the leased asset and recognised over the lease term on
the same basis as rental income.

Leases are classified as finance leases when substantially all of the risks and rewards of ownership
transfer from the Company to the lessee. Amounts due from lessees under finance leases are recorded as
receivables at the Company’s net investment in the leases. Finance lease income is allocated to accounting
periods so as to reflect a constant periodic rate of return on the net investment outstanding in respect of
the lease.

The Company has leased certain parts of its office and buildings. The tenure of such lease agreements
ranges from 1 to 5 years. All leases include a clause to enable upward revision of the rental charge on an
annual basis according to prevailing market conditions. For nature of assets refer note 4(a).

The Company has entered into an arrangement with its customer where the Company will provide energy
saving by providing energy saving equipment at the customers’ premises. The Company has determined,
that fulfilment of these arrangements is dependent on the use of a specific assets and the arrangement
conveys a right to use these specific asset to the customers. Accordingly, these arrangements qualify
as arrangements in the form of lease as specified in Ind-AS 116. Based on the evaluation of terms and
conditions of these arrangements, such as the contract term constituting a major part of the economic life of
the specific assets, the fair value of the asset and that it has transferred the significant risks and rewards in
these assets to the customers, these lease arrangements have been classified as finance leases.

ii) WHERE THE COMPANY IS LESSEE:

Accounting policy

The Company’s leases primarily consist of leases for land, office buildings, guest houses, vehicle and other
plant & equipment. The Company assesses whether a contract contains a lease, at inception of a contract.

A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for
a period of time in exchange for consideration. To assess whether a contract conveys the right to control the
use of an identified asset, the Company assesses whether:

(1) The contract involves the use of an identified asset;

(2) The Company has right to obtain substantially all of the economic benefits from use of the asset through
the period of the lease; and

(3) The Company has the right to direct the use of the asset.

At the date of commencement of the lease, the Company recognises a Right-of-Use (ROU) asset and a
corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of
twelve months or less (short-term leases) and low value leases. For these short-term and low value leases,
the Company recognises the lease payments as an operating expense on a straight-line basis over the term
of the lease.

Certain lease arrangements include the options to extend or terminate the lease before the end of the lease
term. ROU assets and lease liabilities includes these options when it is reasonably certain that they will
be exercised.

The ROU assets are initially recognised at cost, which comprises the initial amount of the lease liability
adjusted for any lease payments made at or prior to the commencement date of the lease plus any
initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated
depreciation and impairment losses.

ROU assets are depreciated from the commencement date on a straight-line basis over the shorter of the
lease term and useful life of the underlying asset. ROU assets are evaluated for recoverability whenever
events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the
purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell
and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash
flows that are largely independent of those from other assets. In such cases, the recoverable amount is
determined for the Cash Generating Unit (CGU) to which the asset belongs.

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily
determined, which is generally the case for leases in the Company, the lessee’s incremental borrowing rate
is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain
an asset of similar value to the right-of-use asset in a similar economic environment with similar terms,
security and conditions.

To determine the incremental borrowing rate, the Company:

• where possible, uses recent third-party financing received by the Company as a starting point, adjusted
to reflect changes in financing conditions since third party financing was received.

• uses a build-up approach that starts with a risk-free interest rate adjusted for credit risk for leases held by
the Company, which does not have recent third-party financing

• makes adjustments specific to the lease, for example, term, country, currency and security.

If a readily observable amortising loan rate is available to the individual lessee (through recent financing or
market data) which has a similar payment profile to the lease, then the Company use that rate as a starting
point to determine the incremental borrowing rate.

The lease liability is initially measured at present value of the future lease payments. The lease payments
include fixed payments less any lease incentives receivable, variable lease payments that depend on an
index or a rate, and amounts expected to be paid under residual value guarantees.

Lease liability and ROU asset have been separately presented in the Balance Sheet and lease payments
have been classified as financing cash flows.

For a contract that contains a lease component and one or more additional lease or non-lease components,
the Company allocates the consideration in the contract to each lease component on the basis of the
relative stand-alone price of the lease component and the aggregate stand-alone price of the non¬
lease components.

Details of Leases:

The Company has taken land, office buildings, factory sheds, guest house, warehouse, vehicles and other
plant and equipment on lease for a tenure of 5 to 99 years. The Company’s obligations under its leases
are secured by the lessor’s title to the leased assets. Some of the lease contracts further give rights on
subleasing the assets. The Company has sub-leased some portion of its land and building to its subsidiary.

There are no variable lease payments and residual value guarantees for these leases. The leases are
renewable on mutually agreeable terms. At the expiry of the lease term, either party has an option to
terminate the agreement or extend the term by giving notice in writing. The Company also has certain
leases of machinery with lease terms of 12 months or less and leases of office equipment with low value.
The Company applies the ‘short-term lease’ and ‘lease of low-value assets’ recognition exemptions for
these leases.

K Terms and conditions of related party transactions

Outstanding balances at the year-end are unsecured and interest free except loans given and settlement occurs in
cash. Refer note 31 (A) (a) for terms and conditions for loans to related parties.

The transactions with related parties (excluding relatives of KMPs) includes managerial remuneration which
is determined based on market conditions and is approved by Nomination and Remuneration Committee of
the Company.

Share-based payments include the perquisite value of stock incentives exercised during the year, determined in
accordance with provisions of Income Tax Act, 1961.

There have been no guarantees provided or received for any related party receivables or payables except as
disclosed in note 31.

In case of transactions with related parties during the year, the amounts are exclusive of applicable taxes.

As at year ended March 31,2026, the Company has recorded an impairment of receivables amounting to Rs. 2.32
(March 31, 2025: Rs. 2.32) and impairment of loan amounting to Rs. 4.12 relating to amounts owed by related parties
(March 31, 2025: Rs. 4.12). 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.

33 SEGMENT INFORMATION

Disclosure of segment information:

In accordance with para 4 of Ind AS 108 - "Operating Segments", the Company has disclosed segment information in
the consolidated financial statements.

34 FAIR VALUE MEASUREMENTS

Estimates and assumptions

Fair value measurement of unquoted 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 DCF
model. The inputs to these models are taken from observable markets where possible, but where this is not feasible,
a degree of assumption is required in establishing fair values. Assumptions 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.

forward rates, yield curves of the respective currencies and currency basis spreads between the respective
currencies. All derivative contracts are fully cash collateralised, thereby eliminating both counterparty and
the Company’s own non-performance risk. The changes in counterparty credit risk had no material effect
on the hedge effectiveness assessment for derivatives designated in hedge relationships and other financial
instruments recognised at fair value.

b) Fair value hierarchy

The following table provides the fair value measurement hierarchy of the Company’s assets and liabilities.

There has been no transfer between Level 1 and Level 2 during the year and during the previous year.

Valuation of financial assets in Level 3 has been done based on discounting of future cash flows. There are no
transfers into or out of Level 3 of the fair value hierarchy during the year.

c) Valuation technique used to determine fair value

Specific valuation techniques used to value financial instruments include:

• The use of quoted market prices or dealer quotes for similar instruments;

• For foreign currency forwards and principal swap - the present value of future cash flows based on the forward
exchange rates at the balance sheet date;

• For other financial instruments - discounted cash flow analysis.

All of the resulting fair value estimates are included in level 1 and level 2 except for unlisted equity securities,
where the fair values have been determined based on discounting of future cash flows.

Since Investment in level 3 is insignificant, additional disclosues required for level 3 has not been provided.

(a) FINANCIAL RISK MANAGEMENT

The Company’s principal financial liabilities, other than derivatives, comprise trade and other payables and
borrowings. 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 derive
directly from its operations. The Company also holds FVTPL and amortised cost investments and enters into
derivative transactions.

Risk is inherent in the Company’s activities but it is managed through a process of on going identification,
measurement and monitoring, subject to risk limits and other controls. This process of risk management is
critical to the Company’s continuing profitability and each individual within the Company is accountable for the
risk exposures relating to his or her responsibilities. The Company is exposed to market risk, credit risk and
liquidity risk.

The Company’s Board of Directors is ultimately responsible for the overall risk management approach and
for approving the risk strategies and principles. No significant changes were made in the risk management
objectives and policies during the years ended March 31,2026 and March 31,2025. The management of the
Company reviews and agrees policies for managing each of these risks which are summarised below:

I Market risk

Market risk is the risk that the value of a financial instrument will fluctuate as a result of changes in market
variables such as interest rates, foreign exchange rates and equity prices, whether those changes are caused by
factors specific to the individual investment or its issuer or factors affecting all investments traded in the market.

Market risk is managed on the basis of pre-determined asset allocations across various asset categories,
a continuous appraisal of market conditions and trends and management’s estimate of long and short term
changes in fair value.

a Interest rate risk

Interest rate risk 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 is not currently exposed significantly to such risk.

b Foreign currency risk

Foreign exchange risk arises when future commercial transactions and relevant assets and liabilities are
denominated in a currency that is not the Company’s functional currency. Foreign exchange risk is the risk
that the value of a financial instrument will fluctuate due to changes in foreign exchange rates.

Foreign exchange risk is managed on the basis of limits determined by management and a continuous
assessment of current and expected exchange rate movements and entering into derivative contracts
(foreign currency forward contracts) that hedge the exposure of underlying transactions (i.e., highly
probable forecast sales and purchases).

c Price risk

The Company’s investments are susceptible to market price risk arising from uncertainties about future values
of the investment securities. These securities are quoted and unquoted. The Company manages the price
risk through diversification and by placing limits on individual and total equity/mutual fund instruments. Further,
the price risk is also mitigated by switching the investment portfolio between investment in equity/mutual
fund instruments and investments in bank deposits. Reports on the investment portfolio are submitted to the
Company’s senior management on a regular basis. The Company’s Board of Directors reviews and approves all
equity investment decisions. The Company is not currently exposed significantly to such risk.

II 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. The Company is exposed to credit risk from its operating activities (primarily
trade receivables and contract assets) and from its investing activities, including deposits with banks, loans to
related parties and investment at amortised cost.

Trade receivables and contract assets

The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer.
However, management also considers the factors that may influence the credit risk of its customer base,
including the default risk of the industry and country in which customers operate.

A default on a financial asset is when the counterparty fails to make contractual payments when they fall due.

This definition of default is determined by considering the business environment in which Company operates and
other macro-economic factors.

Credit quality of a customer is assessed based on its credit worthiness and historical dealings with the Company,
market intelligence and goodwill. Outstanding customer receivables are regularly monitored. The Company
does not have a high concentration of credit risk to a single customer forming part of a Company exceeding 10%
of company revenue. While cash and cash equivalents are also subject to the impairment requirements of Ind
AS 109, the Company has not identified impairment loss in view of banks having high credit rating. In respect of
security deposits and other financial assets, the risk of financial loss on account of credit risk is not expected to
be material to the financial statements.

Credit risk arises from the possibility that customer will not be able to settle their obligations as and when agreed.
To manage this, the Company periodically assesses the financial reliability of customers, taking into account
the financial condition, current economic trends, analysis of historical bad debts, ageing of accounts receivable
and forward looking information. Individual credit limits are set accordingly. The Company has a detailed review
mechanism of overdue customer receivables at various levels within the organisation.

To measure the expected credit losses, trade receivables and contract assets have been grouped based on
shared credit risk characteristics and the days past due. The provision matrix takes into account a continuing
credit evaluation of Company’s customers’ financial condition; aging of trade accounts receivable; the value and
adequacy of security received from the customers in certain circumstances (if any); the Company’s historical
loss experience; and adjustment based on forward looking information The contract assets relate to unbilled
work in progress and have substantially the same risk characteristics as the trade receivables for the same types
of contracts. The Company has therefore concluded that the expected loss rates for trade receivables are a
reasonable approximation of the loss rates for the contract assets.

The expected loss rates are based on the payment profiles of sales over a period of 60 months before the
reporting date and the corresponding historical credit losses experienced within this period. The historical loss
rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the
ability of the customers to settle the receivables. The Company has identified the macroeconomic factors of the

countries in which it sells its goods and services to be the most relevant factors, and accordingly adjusts the
historical loss rates based on expected changes in these factors.

Impairment losses on trade receivables and contract assets are presented as net impairment losses. Subsequent
recoveries of amounts previously written off are credited against the same line item.

Bank deposits and other financial instruments

Credit risk from balances with banks, mutual funds and other financial instruments like derivative contracts
are managed by the Company’s treasury department in accordance with the Company’s policy. Investments of
surplus funds are made only with approved counterparties having a good market reputation and within credit
limits assigned to each counterparty. The limits are set to minimise the concentration of risks and therefore
mitigate financial loss through counterparty’s potential failure to make payments.

The Company’s maximum exposure to credit risk for bank balances and deposits as at March 31,2026 and
March 31, 2025 is the carrying amounts as disclosed in note 13, maximum exposure relating to financial
guarantees is disclosed in note 31 (A) and financial derivative instruments in notes 9(b) and 17 to the standalone
financial statements.

Loans to related parties

The Company considers the probability of default upon initial recognition of loan and whether there has been a
significant increase in credi

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Mar 31, 2025

(c) Intangible Assets Accounting policy

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses. Internally generated intangibles, excluding capitalised development costs, are not capitalised and the related expenditure is reflected in the Statement of Profit and Loss in the period in which the expenditure is incurred. Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the Statement of Profit and Loss unless such expenditure forms part of carrying value of another asset.

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the Statement of Profit and Loss when the asset is derecognised.

Following the initial recognition of the development expenditure as an asset, the cost model is applied requiring the asset to be carried at cost less any accumulated amortisation and accumulated impairment losses, if any. Amortisation of the asset begins when development is complete and the asset is available for use. It is amortised on a straight line basis over the period of expected future benefit from the related project, i.e., the estimated useful life subject to a maximum of ten years. Amortisation is recognised in the Statement of Profit and Loss unless such expenditure forms part of carrying value of another asset. During the period of development, the asset is tested for impairment annually.

*The Company had acquired 16.67% share in Covacsis Technologies Private Limited (Covacsis) on July 22, 2022, which is involved in business of developing digital enabled service solutions with respect to process improvement, through-put enhancement, specific energy consumption reduction.

The Company has entered into an agreement dated March 26, 2025 to dispose of its entire investment in Covacsis Technologies Private Limited (Covacsis), an associate in which the Company held 16.67% of the equity share capital. The sale is expected to be completed within the next 12 months and is considered highly probable. Accordingly, the investment in Covacsis has been classified as non-current assets held for sale in accordance with Ind AS 105 “Non-current Assets Held for Sale and Discontinued Operations”.

The Company had also acquired 15.71% share in ExactSpace Technologies Private Limited (ExactSpace) on January 25, 2022, which is involved in business of developing artificial intelligence solutions.

The Company has right to participate in policy-making decision as well as a director representing the Company in the Board of Directors of Covacsis and ExactSpace. As a result, the Company holds significant influence in Covacsis and ExactSpace and the interest in Covacsis and ExactSpace.

No trade or other receivables are due from directors or other officers of the company either severally or jointly with any other person. Nor any trade receivables due from firms or private companies respectively in which any director is a partner, a director or a member.

For terms and conditions relating to related party receivables, refer note 32.

Trade receivables are non-interest bearing and are generally on terms of 30 to 90 days.

As a practical expedient, the Company uses a provision matrix to determine ECL impairment allowance on portfolio of its trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivables and is adjusted for forward-looking estimates. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed. On that basis, the Company estimates a default rate of total revenue for trade receivables and contract revenue for contract assets. The Company follows provisioning norms based on ageing of receivables to estimate the impairment allowance under ECL. For retention receivables, the Company additionally categorises the receivables due from Public Sector Undertakings (PSUs) and Non-PSUs and follows a wider aged bucket provisioning norms as the performance guarantee tests require certain time period after the supplies are completed.

(c) Expected Credit Loss (ECL)

Estimates and assumptions

The impairment provisions for financial assets are based on assumptions about risk of default, expected loss rates and timing of cash flows. The Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on the Company’s past history, existing market conditions as well as forward looking estimates at the end of each reporting period.

Loans are various kinds of non-derivative financial assets which generate fixed interest income for the Company. The tenure of such loans has different time range based on employee''s eligibility.

No loans are due from directors or Key Managerial Personnel of the Company either severally or jointly with any other person or from private companies or firms in which any director is a partner, a director or a member respectively.

For terms and conditions relating to loans given to related parties, refer note 32.

9 Other Financial Assets

Accounting policy

Contract assets: A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Company performs by transferring goods or services to a customer before the customer pays consideration or before invoicing is done, a contract asset is recognised for the earned consideration and are transferred to trade receivables on completion of milestones and its related invoicing. Contract assets are recorded in balance sheet as unbilled revenue.

10 Income Taxes

Accounting policy

Tax expense comprises of current tax expense and deferred tax.

Current tax

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.

Current income tax relating to items recognised outside profit or loss is recognised either in OCI or in equity, in correlation to the underlying transaction. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

Deferred tax

Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in OCI or in equity), in correlation to the underlying transaction.

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity (or each tax Company of entities when applicable) and the same taxation authority.

The Company determines whether to consider each uncertain tax treatment separately or together with one or more other uncertain tax treatments and uses the approach that better predicts the resolution of the uncertainty.

The Company applies significant judgement in identifying uncertainties over income tax treatments.

Estimates and assumptions Recoverability of Deferred tax assets:

At each balance sheet date, the Company assesses whether the realisation of future tax benefits is sufficiently probable to recognise deferred tax assets. This assessment requires the use of significant estimates with respect to assessment of future taxable income. The recorded amount of total deferred tax assets could change if estimates of projected future taxable income or if changes in current tax regulations are enacted.

The Company offsets tax assets and liabilities of current tax if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and if, of defer tax, the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.

During previous year, the Company had not recognised deferred tax asset of Rs. 18.48 on provision of impairment in subsidiaries of Rs. 73.41.

The Company has tax losses (of capital in nature) of Rs. Nil (March 31, 2024: Rs. 47.87) that are available for offsetting for future taxable capital profits. Brought forward losses will expire by March 2029. Deferred tax assets have not been recognised in respect of these losses as they may not be used to offset taxable capital profits elsewhere in the Company as there are no other tax planning opportunities or other evidence of recoverability in the near future. If the Company were able to recognise all unrecognised deferred tax assets, the profit for the year would increase by Rs. Nil (March 31, 2024: Rs. 10.95).

12 Inventories

Accounting policy

Inventories are stated at the lower of cost and net realisable value (NRV). Cost of inventory includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition. Costs of all classes of inventories are determined on weighted average basis.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale. Write down of inventories are calculated based on an analysis of foreseeable changes in demand, technology, market conditions and ageing of inventories.

For the year ended March 31, 2025 Rs. 0.19 (March 31, 2024: Rs. (6.47)) was recognised (net of reversals) as an expense for inventories carried at net realisable value. These were recognised as expense during the year and included in cost of raw materials and components consumed in the Statement of Profit and Loss.

13

(a) Cash and Cash Equivalents Accounting policy

Cash and cash equivalents in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value. For the purpose of the Statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Company’s cash management.

(b) Terms/rights attached to equity shares

The Company has one class of equity shares having a par value of Rs. 2 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

Nature and purpose of reserves Capital redemption reserve

(f) The Company has several trusts (73 nos) set up for welfare of employees and an ESOP Trust named Thermax Employee ESOP and Welfare Trust. Such trusts together hold 6,516,354 (March 31, 2024: 6,535,552) equity shares representing 5.47% (March 31, 2024: 5.48%) of equity share in the Company.

(g) There were no issue of bonus shares/buy back of shares/issue of shares for consideration other than cash during the period of five years immediately preceding the reporting date.

Pertains to reserve created towards redemption of debentures and can be utilised in accordance with the provisions of the Act.

Capital reserve

Pertains to reserves arising on amalgamations in the past which is required to be maintained as per statute and cannot be distributed to the shareholders.

General reserve

Represents amounts transferred from retained earning.

Retained earnings

The profits/(loss) that the Company has earned/incurred till date, less any transfers to general reserve, dividends or other distributions paid to shareholders. Retained earnings include re-measurement loss/(gain) on defined benefit plans, net of taxes that will not be reclassified to Statement of Profit and Loss.

Securities premium

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

Share options outstanding account

The Company has established equity-settled share based payment plan for certain categories of employees of the Company. Refer note 38 for further details.

Cash flow hedge reserve

This reserve comprises the effective portion of the cumulative net change in the fair value of the cash flow hedge instruments related to hedged transactions that have not yet occurred.

18 Provisions

Accounting policy

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. When the Company expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the Statement of Profit and Loss net of any reimbursement.

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 recognised as a finance cost.

Warranty provisions

Provisions for warranty-related costs are recognised when the product is sold or service provided to the customer. Initial recognition is based on historical experience. The initial estimate of warranty related costs is reviewed annually. For EPC contracts, warranty provision is recorded basis significant progress.

Provision for onerous contracts

If the Company has a contract that is onerous, the present obligation under the contract is recognised and measured as a provision. However, before a separate provision for an onerous contract is established, the Company recognises any impairment loss that has occurred on assets dedicated to that contract.

An onerous contract is a contract under which the unavoidable costs (i.e., the costs that the Company cannot avoid because it has the contract) of meeting the obligations under the contract exceed the economic benefits expected to be received under it. The unavoidable costs under a contract reflect the least net cost of exiting from the contract, which is the lower of the cost of fulfilling it and any compensation or penalties arising from failure to fulfil it. The cost of fulfilling a contract comprises the costs that relate directly to the contract (i.e., both incremental costs and an allocation of costs directly related to contract activities).

Provision for litigation

Provision for litigation related obligations represents liabilities that are expected to materialise in respect of matters in appeal.

Decommissioning liability

The Company records a provision for decommissioning costs of its manufacturing facilities. Decommissioning costs are provided at the present value of expected costs to settle the obligation using estimated cash flows and are recognised as part of the cost of the particular asset. The unwinding of the discount is expensed as incurred and recognised in the Statement of Profit and Loss as a finance cost. The estimated future costs of decommissioning are reviewed annually and adjusted as appropriate. Changes in the estimated future costs or in the discount rate applied are added to or deducted from the cost of the asset.

Retirement and other employee benefits

Retirement benefit in the form of provident fund is a defined contribution scheme. The Company has no obligation, other than the contribution payable to the provident fund. The Company recognises contribution payable to the provident fund scheme as an expense when an employee renders the related service. If the contribution payable to the scheme for service received before the balance sheet date exceeds the contribution already paid, the deficit payable to the scheme is recognised as a liability after deducting the contribution already paid. If the contribution already paid exceeds the contribution due for services received before the balance sheet date, then excess is recognised as an asset to the extent that the pre-payment will lead to, for example, a reduction in future payment or a cash refund.

The Company operates a defined benefit gratuity plan in India, which requires contributions to be made to a separately administered fund. The cost of providing benefits under the defined benefit plan is determined using the projected unit credit method.

Remeasurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability), are recognised immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Remeasurements are not reclassified to the Statement of Profit and Loss in subsequent periods.

Past service costs are recognised in the Statement of Profit and Loss on the earlier of:

(a) The date of the plan amendment or curtailment; and

(b) The date that the Company recognises related restructuring costs.

Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. The Company recognises the following changes in the net defined benefit obligation as an expense in the Statement of Profit and Loss:

• Service costs comprising current service costs, past-service costs, gains and losses on curtailments and non-routine settlements; and

• Net interest expense or income.

Accumulated leave, which is expected to be utilised within the next 12 months, is treated as short-term employee benefit. The Company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date. The Company presents the leave as a current liability in the balance sheet as it does not have an unconditional right to defer its settlement for 12 months after the reporting date.

Estimates and assumptions

• Provision for onerous contracts: The Company provides for future losses on EPC contracts where it is considered highly probable that the contract costs are likely to exceed revenues in future years. Estimating these future losses involves a number of assumptions about the achievement of contract performance targets and the likely levels of future cost escalation over time.

A provision for expected loss on construction contracts is recognised when it is probable that the contracts costs will exceed total contract revenue. For all other contracts, provision is made when the unavoidable costs of meeting the obligation under the contract exceed the estimated economic benefits. The timing of cash outflows in respect of such provision is over the contract period.

• Warranty provision: The Company generally offers warranty for its various products. Warranty costs are provided based on a technical estimate of the costs required to be incurred for repairs, replacements, material costs, servicing cost and past experience in respect of warranty costs. Management estimates the related provision for future warranty claims based on historical warranty claim information, as well as recent trends that might suggest that past cost information may differ from future claims. The assumptions made in current period are consistent with those in the prior year. Factors that could impact the estimated claim information include the success of the Company’s productivity and quality initiatives. Warranty provisions are discounted using a pre-tax discount rate which reflects current market assessments of time value of money and risks specific to the liability.

Warranty costs are provided based on a technical estimate of the costs required to be incurred for repairs, replacements, material costs, servicing cost and past experience in respect of such costs. It is expected that this expenditure will be incurred over the contracted warranty period ranging up to 2 years. If warranty claim costs vary by 10% from management’s estimate, the warranty provisions would be an estimated Rs. 9.70 higher or lower (March 31, 2024: Rs. 9.12).

• Defined benefit plan - 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. The parameter which is most subjected to change is the discount rate. In determining the appropriate discount rate for plans operated in India, the management considers the interest rates of government bonds in currencies consistent with the currencies of the postemployment benefit obligation. The mortality rate is based on Indian Assured Lives Mortality (2012-14) Ultimate. Those mortality tables tend to change only at interval in response to demographic changes. Future salary increases and gratuity increases are based on expected future inflation rates.

(c) Gratuity

The Company operates a defined benefit plan viz. gratuity for its employees. Under the gratuity plan, every employee who has completed at least specified years of service gets a gratuity on departure at 15 days (minimum) of the last drawn salary for each completed year of service. The scheme is funded with an insurance Company. The fund has formed a trust and it is governed by the Board of Trustees.

The fund is subject to risks such as asset volatility, changes in assets yields and asset liability mismatch risk. In managing the plan assets, Board of Trustees review and manage these risks associated with the funded plan. Each year, the Board of Trustees reviews the level of funding in the gratuity plan. Such a review includes asset-liability matching strategy and investment risk management policy (which includes contributing to plans that invest in risk-averse markets). The Board of Trustees aim to keep annual contributions relatively stable at a level such that no plan deficits (based on valuation performed) will arise.

The above sensitivity analysis is based on a change in assumption while holding all other assumptions constant. In practice, this is unlikely to occur and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of defined benefit obligation calculated with the Projected Unit Credit Method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognised in the balance sheet.

The method and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous periods.

19 Other Liabilities

Accounting policy

Contract liabilities: A contract liability is the obligation to transfer goods or services to a customer for which the Company has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the Company transfers goods or services to the customer, a contract liability is recognised when the payment is made or the payment is due (whichever is earlier). Contract liabilities are recognised as revenue when the Company satisfies the performance obligation. Contract liabilities are recorded in balance sheet as unearned revenue or customer advances as the case may be.

21 Revenue from Operations

Accounting policy

Revenue from contracts with customers: Revenue from contracts with customers: Revenue from contracts with customers is recognised when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. Revenue is recognised when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. The Company has concluded that it is the principal in all of its revenue arrangements since it is the primary obligor in all the revenue arrangements as it has pricing latitude and is also exposed to inventory and credit risks. The Company collects goods and services tax on behalf of the government and, therefore, it is not an economic benefit flowing to the Company. Hence, it is excluded from revenue.

The Company has following streams of revenue:

• Revenue from Engineering, Procurement and Construction contracts

Engineering, Procurement and Construction (EPC) contracts are contracts (or a Company of contracts secured together) specifically negotiated for the construction of an asset which refers to any project for construction of plants and systems, involving designing, engineering, fabrication, supply, erection (or supervision thereof), commissioning, guaranteeing performance thereof etc., execution of which is spread over different accounting periods. The Company identifies distinct performance obligations in each contract. For most of the project contracts, the customer contracts with the Company to provide a significant service of integrating a complex set of tasks and components into a single project or capability. Hence, the entire contract is accounted for as one performance obligation.

The Company may promise to provide distinct goods or services within a contract, in which case the Company separates the contract into more than one performance obligation. If a contract is separated into more than one performance obligation, the Company allocates the total transaction price to each performance obligation in an amount based on the estimated relative standalone selling prices of the promised goods or services underlying each performance obligation. The Company uses the expected cost plus a margin approach to estimate the standalone selling price of each performance obligation in case of contracts with

more than one distinct performance obligations.

The Company assesses for the timing of revenue recognition in case of each distinct performance obligation. The Company first assesses whether the revenue can be recognised over a period of time if any of the following criteria is met:

(a) The customer simultaneously consumes the benefits as the Company performs; or

(b) The customer controls the work-in-progress; or

(c) The Company’s performance does not create an asset with alternative use to the Company and the Company has right to payment for performance completed till date.

The Company recognises revenue over time as it performs because of continuous transfer of control to the customers. For all project contracts, this continuous transfer of control to the customer is supported by the fact that the customers typically control the work in process as evidenced either by contractual termination clauses or by the rights of the Company to payment for work performed to date plus a reasonable profit to deliver products or services that do not have an alternative use.

The Company uses cost-based measure of progress (or input method) for contracts because it best depicts the transfer of control to the customer which occurs as it incurs costs on contracts. Under the cost-based measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Revenues, including estimated profits, are recorded proportionally as costs are incurred.

The Company estimates variable consideration amount which it expects to be entitled under the contract and includes it in the transaction price to the extent it is highly probable that a significant reversal of cumulative revenue recognised will not occur and when the uncertainty associated with it is subsequently resolved.

The estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of the anticipated performance and all information (historical, current and forecasted) that is reasonably available.

Costs associated with bidding for contracts are charged to the Statement of Profit and Loss when they are incurred. Costs that relate directly to a contract and are incurred in securing the contract are included as part of the contract costs if they can be separately identified and measured reliably and it is probable that the contract will be obtained.

Contract modification, when approved by both the parties to the contract, are considered as modification, if it creates new or changes the existing enforceable rights and obligations. Most of the contract modifications are not distinct from the existing contract due to the significant integration service provided under the contract prior to modifications and are therefore, accounted for as part of the existing contract. The effect of a contract modification is recognised as an adjustment to revenue on a cumulative catch-up basis.

When it becomes probable that the total contract costs will exceed the total contract revenue, the Company recognises the expected losses from onerous contract as an expense immediately. Penalties for any delay or improper execution of a contract are recognised as a deduction from revenue. In the balance sheet, such provisions are presented on net basis of the contract receivables.

• Revenue from sale of goods

If the criteria for revenue under over-a-period of time as mentioned above are not met, the Company recognises revenue at a point-in-time. The point-in-time is determined when the control of the goods or services is transferred which is determined based on when the significant risks and rewards of ownership are transferred to the customer. Apart from this, the Company also considers its present right to payment, the

legal title to the goods, the physical possession and the customer acceptance in determining the point in time where control has been transferred. The Company provides for warranty provision for general repairs up to 18 - 24 months on its products sold, in line with the industry practice. A liability is recognised at the time the product is sold. The Company does not provide any extended warranties.

• Revenue from sale of services

Revenue in respect of operation and maintenance contract, awarded on a standalone basis or included in long term contracts and identified as a separate performance obligation, is recognised on a time proportion basis under the contracts.

EPC contracts:

Estimates and assumptions

• Provisions for liquidated damages claims (LDs): The Company provides for LD claims to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur when the uncertainty associated with the variable consideration is subsequently resolved. This requires an estimate of the amount of LDs payable under a claim which involves a number of management judgements and assumptions regarding the amounts to be recognised;

• Project cost to complete estimates: At each reporting date, the Company is required to estimate costs to complete on fixed-price contracts. Estimating costs to complete on such contracts requires the Company to make estimates of future costs to be incurred, based on work to be performed beyond the reporting date. This estimate will impact revenues, cost of sales, work-in-progress, billings in excess of costs, estimated earnings and accrued contract expenses;

• Recognition of contract variations: The Company recognises revenues and margins from contract variations where it is considered probable that they will be awarded by the customer and this requires management to assess the likelihood of such an award being made by reference to customer communications and other forms of documentary evidence.

Judgments

A significant portion of the Company’s business relates to EPC contracts which is accounted using cost-based input method, recognising revenue as the performance on the contract progresses. This requires management to make judgement with respect to identifying contracts for which revenue need to be recognised over a period of time, depending upon when the customer consumes the benefit, when the control is passed to customer, whether the asset created has an alternative use and whether the Company has right to payment for performance completed till date, either contractually or legally. The input method requires management to make significant judgements of the extent of progress towards completion including accounting of multiple contracts which need to be combined and considered as a single contract.

Contract assets primarily relate to the Company’s rights to consideration for work completed but not billed at the reporting date from projects and customised contracts. The contract assets are transferred to trade receivables on completion of milestones and its related invoicing.

The contract liabilities relate to unearned revenue and customer advances where performance obligations are yet to be fulfilled as per the contracts. The fulfilment of the performance obligations will extinguish these liabilities and revenue will be recognised, with no impact on the Company’s cash positions on specific projects.

v) Performance obligations

Performance obligation in a project or a group of projects which are contracted at or near same time with the same or related parties and negotiated simultaneously, are combined for the purpose of evaluation.

The Company has estimated that multiple commitments pertaining to engineering, procurement and commissioning of such projects is a single performance obligation which is spread over different accounting periods.

Performance obligation for products are evaluated on standalone basis, recognised at a point in time. Generally, performance obligations for such contracts have an original expected duration of one year or less.

There are no major contracts with customers which have significant financing component included within them and therefore there is no difference between the timing of satisfaction of performance obligation vis-a-vis the timing of the payment.

Remaining performance obligations:

The following table includes revenue expected to be recognised in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the reporting date.

vi) Reconciliation between revenue recognised in Statement of Profit and Loss and contract price:

There is no significant variation between revenue recognised in Statement of Profit and Loss and contract price except price variation claims, which are considered to be part of contract price.

22 Other Income

Accounting policy

i) Interest income

For all debt instruments measured at amortised cost, interest income is recorded using the Effective Interest Rate (EIR). EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset or to the amortised cost of a financial liability. Interest income is included in finance income in the Statement of Profit and Loss.

ii) Dividend

Dividend is recognised when the Company’s right to receive the payment is established.

28 Earnings Per Share (EPS)

Accounting policy

The Company presents the basic and diluted EPS data for its equity shares.

(i) Basic EPS is computed by dividing the net profit for the year attributable to the equity shareholders of the Company by the weighted average number of equity shares outstanding during the year;

(ii) Diluted EPS is computed by adjusting the net profit for the year attributable to the equity shareholders and the weighted average number of equity shares considered for deriving basic EPS for the effects of all the equity shares that could have been issued upon conversion of all dilutive potential equity shares (which includes the various stock options granted to employees).

30 Contingent Liabilities and Commitments

A Contingent Liabilities Accounting policy

A disclosure for a contingent liability is made where there is a possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from the past events where it is either not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount cannot be made.

Judgements

Tax and legal contingencies

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

d) During earlier years, the Company had received demand notices from the Excise department covering period from October 2006 to September 2012 for Rs. 146.62 (March 31, 2024: Rs. 146.62). These demands are of excise duty payable on inclusion of the cost of bought out items in the assessable value of certain products manufactured, though such duty paid bought out items are directly dispatched by the manufacturers thereof to the ultimate customer, without being received in the factories. The Company had filed an appeal against the same before CESTAT, Mumbai which was allowed in favour of the Company during the financial year 2022-23.

Subsequently, the Commissioner of CGST & CE, Pune - I has filed an appeal before the Hon’ble Supreme Court of India challenging CESTAT order and appeal was admitted on July 10, 2024. Based on an independent legal advice, the Company is confident of the issue being ultimately decided in its favour and accordingly, no provision has been considered necessary.

B Capital and Other Commitments

a) Estimated amount of contracts remaining to be executed on capital account (net of advances) and not provided for is Rs. 28.99 (March 31, 2024: Rs. 60.73).

b) Parent unconditional support letter given to Thermax Bioenergy Solutions Private Limited during the year (March 31, 2024: Rs. 13).

c) Estimated amounts of contract remaining to be executed as part of Other commitments is Rs. 21.62 (March 31, 2024: Rs. Nil)

C Lease Commitments Accounting policy

The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Company recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.

Operating lease

i) Where the Company is Lessor:

Accounting policy

Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Rental income from operating lease is recognised on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income.

The Company has leased certain parts of its surplus office and buildings. The tenure of such lease agreements ranges from 1 to 5 years. All leases include a clause to enable upward revision of the rental charge on an annual basis according to prevailing market conditions. For nature of assets refer note 4(b).

Accounting policy

The Company lease asset classes primarily consist of leases for land, office buildings, guest house and other office equipment, etc. The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:

(1) The contract involves the use of an identified asset;

(2) The Company has substantially all of the economic benefits from use of the asset through the period of the lease; and

(3) The Company has the right to direct the use of the asset.

At the date of commencement of the lease, the Company recognises a Right-of-Use (ROU) asset and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less (short-term leases) and low value leases. For these short-term and low value leases, the Company recognises the lease payments as an operating expense on a straight-line basis over the term of the lease.

Certain lease arrangements include the options to extend or terminate the lease before the end of the lease term. ROU assets and lease liabilities includes these options when it is reasonably certain that they will be exercised.

The ROU assets are initially recognised at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses.

ROU assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset. ROU assets are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e., the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs.

The lease liability is initially measured at present value of the future lease payments. The lease payments include fixed payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees.

Lease liability and ROU asset have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows.

As a practical expedient, Ind AS 116 - “Property, plant and equipment”, permits a lessee not to separate non-lease components, and instead account for any lease and associated non-lease components as a single arrangement. The Company has not used this practical expedient. For a contract that contains a lease component and one or more additional lease or non-lease components, the Company allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate standalone price of the non-lease components.

The Company has taken land, office buildings, factory sheds, guest house, warehouse, vehicles, printers and other office equipment''s on lease for a tenure of 1 to 99 years. The Company’s obligations under its leases are secured by the lessor''s title to the leased assets. Generally, the Company is restricted from assigning and subleasing the leased assets. However, Company has sub-leased some portion of its land and building to its subsidiary. There are no variable lease payments and residual value guarantees for these leases. The leases are renewable on mutually agreeable terms. At the expiry of the lease term, either party has an option to terminate the agreement or extend the term by giving notice in writing. The Company also has certain leases of machinery with lease terms of 12 months or less and leases of office equipment with low value. The Company applies the ‘short-term lease'' and ‘lease of low-value assets'' recognition exemptions for these leases.

Other than as disclosed above, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities (“Intermediaries”), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, 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 provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries. The Company has complied with the relevant provisions of the Foreign Exchange Management Act, 1999 (42 of 1999) and the Companies Act for the above transactions and the transactions are not violative of the Prevention of Money-Laundering Act, 2002 (15 of 2003).

The Company have not received any fund from any person(s) or entity(ies), 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.

K Terms and conditions of related party transactions

The revenues and purchases from related parties are assessed to be at arm’s length transactions by the management. Outstanding balances at the year-end are unsecured and interest free except loans given and settlement occurs in cash. Refer note 31(A)(a) for terms and conditions for loans to related parties.

There have been no guarantees provided or received for any related party receivables or payables except as disclosed in Note 31.

As at year ended March 31, 2025, the Company has recorded an impairment of receivables amounting to Rs. 2.32 (March 31, 2024: Rs. 3.34) and impairment of loan amounting to Rs. 4.12 relating to amounts owed by related parties (March 31, 2024: Rs. 4.12). 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.

33 Segment Information

Accounting policy

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.

The Board of Directors of the Company has identified the Managing Director and Chief Executive Officer as the chief operating decision maker of the Company.

Judgments

Ind AS 108 - “Operating Segments”, requires Management to determine the reportable segments for the purpose of disclosure in standalone financial statements based on the internal reporting reviewed by Chief Operating Decision Maker (CODM) to assess performance and allocate resources. The standard also requires Management to make judgements with respect to aggregation of certain operating segments into one or more reportable segment.

Operating segments used to present segment information are identified based on the internal reports used and reviewed by the Managing Director and Chief Executive Officer to assess performance and allocate resources. The management has determined that some of the segments exhibit similar economic characteristics and meet other aggregation criteria and accordingly aggregated into three reportable segments i.e., Industrial Products, Industrial Infra and Chemicals.

Disclosure of segment information:

In accordance with para 4 of Ind AS 108 - “Operating Segments”, the Company has disclosed segment information in the consolidated financial statements.

34 Fair Value Measurements

Estimates and assumptions

Fair value measurement of unquoted 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 DCF model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of assumption is required in establishing fair values. Assumptions 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.

The Company enters into derivative financial instruments in the nature of forward exchange contracts with banks. Foreign exchange forward contracts are valued using valuation techniques, which employs the use of market observable inputs which captures credit quality of counterparties, foreign exchange spot and forward rates, yield curves of the respective currencies and currency basis spreads between the respective currencies. All derivative contracts are fully cash collateralised, thereby eliminating both counterparty and the Company’s own non-performance risk. The changes in counterparty credit risk had no material effect on the hedge effectiveness assessment for derivatives designated in hedge relationships and other financial instruments recognised at fair value.

(a) Financial Risk Management

The Company’s principal financial liabilities, other than derivatives, comprise trade and other payables and borrowings. 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 derive directly from its operations. The Company also holds FVTPL and amortised cost investments and enters into derivative transactions.

Risk is inherent in the Company’s activities but it is managed through a process of on going identification, measurement and monitoring, subject to risk limits and other controls. This process of risk management is critical to the Company’s continuing profitability and each individual within the Company is accountable for the risk exposures relating to his or her responsibilities. The Company is exposed to market risk, credit risk and liquidity risk.

The Company’s Board of Directors is ultimately responsible for the overall risk management approach and for approving the risk strategies and principles. No significant changes were made in the risk management objectives and policies during the years ended March 31, 2025 and March 31,2024. The management of the Company reviews and agrees policies for managing each of these risks which are summarised below:

I Market risk

Market risk is the risk that the value of an asset will fluctuate as a result of changes in market variables such as interest rates, foreign exchange rates and equity prices, whether those changes are caused by factors specific to the individual investment or its issuer or factors affecting all investments traded in the market.

Market risk is managed on the basis of pre-determined asset allocations across various asset categories, diversification of assets in terms of geographical distribution and industry concentration, a continuous appraisal of market conditions and trends and management’s estimate of long and short term changes in fair value.

a Interest rate risk

Interest rate risk 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 is not currently exposed significantly to such risk.

b Foreign currenc

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Mar 31, 2024

(c) Right-of-Use (ROU) Assets Accounting policy

The Company recognises ROU assets at cost at the commencement date of the lease. The cost of ROU assets includes the amount of lease liabilities recognised, initial direct costs incurred, lease payments made at or before the commencement date less any lease incentives received and estimate of costs to dismantle. After the commencement date, ROU assets are measured at cost, less any accumulated depreciation and impairment losses and adjusted for any remeasurement of lease liabilities. ROU assets are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs. ROU assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated remaining useful lives of the assets, as follows:

(d) Intangible Assets Accounting policy

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses. Internally generated intangibles, excluding capitalised development costs, are not capitalised and the related expenditure is reflected in the Statement of profit and loss in the period in which the expenditure is incurred. Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the Statement of profit and loss unless such expenditure forms part of carrying value of another asset.

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the Statement of profit and loss when the asset is derecognised.

Following the initial recognition of the development expenditure as an asset, the cost model is applied requiring the asset to be carried at cost less any accumulated amortisation and accumulated impairment losses, if any. Amortisation of the asset begins when development is complete and the asset is available for use. It is amortised on a straight line basis over the period of expected future benefit from the related project, i.e., the estimated useful life subject to a maximum of ten years. Amortisation is recognised in the Statement of profit and loss unless such expenditure forms part of carrying value of another asset. During the period of development, the asset is tested for impairment annually.

The above ageing includes retention receivables which are classified as due or not due on the basis of the contractual terms with respective customers.

(c) Expected Credit Loss (ECL)

Accounting policy

In accordance with Ind AS 109 “Financial Instruments”, the Company applies ECL model for measurement and recognition of impairment loss and credit risk exposure on the financial assets that are debt instruments measured at amortised costs e.g. loans, deposits, trade receivables, contractual receivables and bank balances. The Company follows ‘simplified approach’ for recognition of impairment allowance. The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognises impairment allowance based on lifetime ECLs at each reporting date, right from its initial recognition.

For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts to recognising impairment allowance based on 12-month ECL. The Company considers current and anticipated future economic conditions relating to industries the Company deals with and the countries where it operates.

ECL impairment allowance (or reversal) recognised during the period is recognised as income/expense in the Statement of profit and loss under the head ‘other expenses’. ECL is presented as an allowance, i.e. as an integral part of the measurement of those assets in the balance sheet. The allowance reduces the net carrying amount. Until the asset meets write-off criteria, the Company does not reduce impairment allowance from the gross carrying amount.

Esitimates and Judgements

The impairment provisions for financial assets are based on assumptions about risk of default, expected loss rates and timing of cash flows. The Company uses judgment in making these assumptions and selecting the inputs to the impairment calculation, based on the Company’s past history, existing market conditions as well as forward looking estimates at the end of each reporting period.

As a practical expedient, the Company uses a provision matrix to determine ECL impairment allowance on portfolio of its trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivables and is adjusted for forward-looking estimates. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed. On that basis, the Company estimates a default rate of total revenue for trade receivables and contract revenue for contract assets. The Company follows provisioning norms based on ageing of receivables to estimate the impairment allowance under ECL. For retention receivables, the Company additionally categorises the receivables due from Public Sector Undertakings (PSUs) and Non-PSUs and follows a wider aged bucket provisioning norms as the performance guarantee tests require certain time period after the supplies are completed.

Loans are various kinds of non-derivative financial assets which generate fixed interest income for the Company. The tenure of such loans has different time range based on employee''s eligibility.

No loans are due from directors or Key Managerial Personnel of the Company either severally or jointly with any other person or from private companies or firms in which any director is a partner, a director or a member respectively.

9 Other Financial Assets

Accounting policy

Contract assets: A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Company performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration and are transferred to trade receivables on completion of milestones and its related invoicing. Contract assets are recorded in balance sheet as unbilled revenue.

10 Income Taxes

Accounting policy

Tax expense comprises of current tax expense and deferred tax.

Current tax

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.

Current income tax relating to items recognised outside profit or loss is recognised either in OCI or in equity. Current tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

Deferred tax

Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in OCI or in equity). Deferred tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity.

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity (or each tax Company of entities when applicable) and the same taxation authority.

The Company determines whether to consider each uncertain tax treatment separately or together with one or more other uncertain tax treatments and uses the approach that better predicts the resolution of the uncertainty.

The Company applies significant judgement in identifying uncertainties over income tax treatments.

Estimates and assumptions

At each balance sheet date, the Company assesses whether the realisation of future tax benefits is sufficiently probable to recognise deferred tax assets. This assessment requires the use of significant estimates with respect to assessment of future taxable income. The recorded amount of total deferred tax assets could change if estimates of projected future taxable income or if changes in current tax regulations are enacted.

The Company offsets tax assets and liabilities if and only if it has a legally enforceable right to set off income tax assets and liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.

The Company has not recognised deferred tax asset of Rs. 18.48 (March 31,2023: Rs. 0.76) on provision of impairment in subsidiaries of Rs. 73.41 (March 31, 2023: Rs. 3).

The Company has tax losses (of capital in nature) of Rs. 47.87 (March 31, 2023: Rs. 80.84) that are available for offsetting for future taxable capital profits. These losses will expire by March 2029. Deferred tax assets have not been recognised in respect of these losses as they may not be used to offset taxable capital profits elsewhere in the Company and there are no other tax planning opportunities or other evidence of recoverability in the near future. If the Company were able to recognise all unrecognised deferred tax assets, the profit for the year would increase by Rs. 10.95 (March 31,2023: Rs. 18.50).

12 Inventories

Accounting policy

Inventories are stated at the lower of cost and net realisable value (NRV). Cost of inventory includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition. Costs of inventories are determined on weighted average basis.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale. Write down of inventories are calculated based on an analysis of foreseeable changes in demand, technology, market conditions and ageing of inventories.

For the year ended March 31, 2024 Rs. (6.47) (March 31, 2023: Rs. (6.44)) was recognised (net of reversals) as an expense for inventories carried at net realisable value. These were recognised as expense during the year and included in cost of raw materials and components consumed in the Statement of profit and loss.

13

(a) Cash and Cash Equivalents Accounting policy

Cash and cash equivalents in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value. For the purpose of the Statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Company’s cash management.

There were no advances due by directors or officers of the Company or any of them severally or jointly with any other persons or amounts due by firms or private companies respectively in which such director is a partner or a member.

(b) Terms/rights attached to equity shares

The Company has one class of equity shares having a par value of Rs. 2 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

Nature and purpose of reserves Capital redemption reserve

(f) The Company has several trusts (73 nos) set up for welfare of employees and an ESOP Trust named Thermax Employee ESOP and Welfare Trust. Such trusts together hold 6,535,552 (March 31, 2023: 6,541,440) equity shares representing 5.48% (March 31,2023: 5.49%) of equity share in the Company.

(g) There were no buy back of shares/issue of shares for consideration other than cash during the period of five years immediately preceding the reporting date.

Pertains to reserve created towards redemption of debentures and can be utilised in accordance with the provisions of the Act.

Securities premium

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

Capital reserve

Pertains to reserves arising on amalgamations in the past which is required to be maintained as per statute and cannot be distributed to the shareholders.

General reserve

Represents amounts transferred from retained earning in earlier years as per the requirements of the erstwhile Companies Act, 1956.

Cash flow hedge reserve

This reserve comprises the effective portion of the cumulative net change in the fair value of the cash flow hedge instruments related to hedged transactions that have not yet occurred.

Share based payment reserve

The Company has established equity-settled share based payment plan for certain categories of employees of the Company. Refer note 38 for further details.

(b) Distribution Made and Proposed Dividend

Accounting policy

Dividend to equity shareholders is recognised as a liability in the period in which the dividends are approved by the equity shareholders. Interim dividends that are declared by the Board of Directors without the need for equity shareholders'' approvals are recognised as a liability and deducted from shareholders'' equity in the year in which the dividends are declared by the Board of Directors.

18 Provisions

Accounting policy

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. When the Company expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the Statement of profit and loss net of any reimbursement.

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 recognised as a finance cost.

Warranty provisions

Provisions for warranty-related costs are recognised when the product is sold or service provided to the customer. Initial recognition is based on historical experience. The initial estimate of warranty related costs is reviewed annually. For EPC contracts, warranty provision is recorded basis significant progress.

Provision for onerous contracts

If the Company has a contract that is onerous, the present obligation under the contract is recognised and measured as a provision. However, before a separate provision for an onerous contract is established, the Company recognises any impairment loss that has occurred on assets dedicated to that contract.

An onerous contract is a contract under which the unavoidable costs (i.e., the costs that the Company cannot avoid because it has the contract) of meeting the obligations under the contract exceed the economic benefits expected to be received under it. The unavoidable costs under a contract reflect the least net cost of exiting from the contract, which is the lower of the cost of fulfilling it and any compensation or penalties arising from failure to fulfil it. The cost of fulfilling a contract comprises the costs that relate directly to the contract (i.e., both incremental costs and an allocation of costs directly related to contract activities).

Provision for litigation

Provision for litigation related obligations represents liabilities that are expected to materialise in respect of matters in appeal.

Decommissioning liability

The Company records a provision for decommissioning costs of its manufacturing facilities. Decommissioning costs are provided at the present value of expected costs to settle the obligation using estimated cash flows and are recognised as part of the cost of the particular asset. The unwinding of the discount is expensed as incurred and recognised in the Statement of profit and loss as a finance cost. The estimated future costs of decommissioning are reviewed annually and adjusted as appropriate. Changes in the estimated future costs or in the discount rate applied are added to or deducted from the cost of the asset.

Retirement and other employee benefits

Retirement benefit in the form of provident fund is a defined contribution scheme. The Company has no obligation, other than the contribution payable to the provident fund. The Company recognises contribution payable to the provident fund scheme as an expense when an employee renders the related service. If the contribution payable to the scheme for service received before the balance sheet date exceeds the contribution already paid, the deficit payable to the scheme is recognised as a liability after deducting the contribution already paid. If the contribution already paid exceeds the contribution due for services received before the balance sheet date, then excess is recognised as an asset to the extent that the pre-payment will lead to, for example, a reduction in future payment or a cash refund.

The Company operates a defined benefit gratuity plan in India, which requires contributions to be made to a separately administered fund. The cost of providing benefits under the defined benefit plan is determined using the Projected Unit Credit Method.

Remeasurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts

included in net interest on the net defined benefit liability), are recognised immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Remeasurements are not reclassified to the Statement of profit and loss in subsequent periods.

Past service costs are recognised in the Statement of profit and loss on the earlier of:

(a) The date of the plan amendment or curtailment; and

(b) The date that the Company recognises related restructuring costs.

Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. The Company recognises the following changes in the net defined benefit obligation as an expense in the Statement of profit and loss:

• Service costs comprising current service costs, past-service costs, gains and losses on curtailments and non-routine settlements; and

• Net interest expense or income.

Accumulated leave, which is expected to be utilised within the next 12 months, is treated as short-term employee benefit. The Company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date.

The Company treats accumulated leave expected to be carried forward beyond twelve months, as long-term employee benefit for measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the Projected Unit Credit Method at the year-end. The Company presents the leave as a current liability in the balance sheet as it does not have an unconditional right to defer its settlement for 12 months after the reporting date.

Estimates and assumptions

• Provision for onerous contracts: The Company provides for future losses on EPC contracts where it is considered highly probable that the contract costs are likely to exceed revenues in future years. Estimating these future losses involves a number of assumptions about the achievement of contract performance targets and the likely levels of future cost escalation over time.

A provision for expected loss on construction contracts is recognised when it is probable that the contracts costs will exceed total contract revenue. For all other contracts, provision is made when the unavoidable costs of meeting the obligation under the contract exceed the estimated economic benefits. The timing of cash outflows in respect of such provision is over the contract period.

• Warranty provision: The Company generally offers warranty for its various products. Warranty costs are provided based on a technical estimate of the costs required to be incurred for repairs, replacements, material costs, servicing cost and past experience in respect of warranty costs. Management estimates the related provision for future warranty claims based on historical warranty claim information, as well as recent trends that might suggest that past cost information may differ from future claims. The assumptions made in current period are consistent with those in the prior year. Factors that could impact the estimated claim information include the success of the Company’s productivity and quality initiatives. Warranty provisions are discounted using a pre-tax discount rate which reflects current market assessments of time value of money and risks specific to the liability.

Warranty costs are provided based on a technical estimate of the costs required to be incurred for repairs, replacements, material costs, servicing cost and past experience in respect of such costs. It is expected that this expenditure will be incurred over the contracted warranty period ranging up to 2 years. If warranty claim costs vary by 10% from management''s estimate, the warranty provisions would be an estimated Rs. 9.12 higher or lower (March 31, 2023: Rs. 8.07).

• Defined benefit plan - 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. The parameter which is most subjected to change is the discount rate. In determining the appropriate discount rate for plans operated in India, the management considers the interest rates of government bonds in currencies consistent with the currencies of the postemployment benefit obligation. The mortality rate is based on Indian Assured Lives Mortality (2012-14) Ultimate. Those mortality tables tend to change only at interval in response to demographic changes. Future salary increases and gratuity increases are based on expected future inflation rates.

(c) Gratuity

The Company operates a defined benefit plan viz. gratuity for its employees. Under the gratuity plan, every employee who has completed at least specified years of service gets a gratuity on departure at 15 days (minimum) of the last drawn salary for each completed year of service. The Scheme is funded with an Insurance Company.

The fund has formed a trust and it is governed by the Board of Trustees.

The fund is subject to risks such as asset volatility, changes in assets yields and asset liability mismatch risk. In managing the plan assets, Board of Trustees review and manage these risks associated with the funded plan. Each year, the Board of Trustees reviews the level of funding in the gratuity plan. Such a review includes asset-liability matching strategy and investment risk management policy (which includes contributing to plans that invest in risk-averse markets). The Board of Trustees aim to keep annual contributions relatively stable at a level such that no plan deficits (based on valuation performed) will arise.

The above sensitivity analysis is based on a change in assumption while holding all other assumptions constant. In practice, this is unlikely to occur and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of defined benefit obligation calculated with the Projected Unit Credit Method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognised in the balance sheet.

The method and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous periods.

19 Other Liabilities

Accounting policy

Contract liabilities: A contract liability is the obligation to transfer goods or services to a customer for which the Company has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the Company transfers goods or services to the customer, a contract liability is recognised when the payment is made or the payment is due (whichever is earlier). Contract liabilities are recognised as revenue when the Company satisfies the performance obligation. Contract liabilities are recorded in balance sheet as unearned revenue and customer advances as the case may be.

21 Revenue from Operations

Accounting policy

Revenue from contracts with customers: Revenue from contracts with customers is recognised when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. Revenue is recognised when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. The Company has concluded that it is the principal in all of its revenue arrangements since it is the primary obligor in all the revenue arrangements as it has pricing latitude and is also exposed to inventory and credit risks. The Company collects goods and services tax on behalf of the government and, therefore, it is not an economic benefit flowing to the Company. Hence, it is excluded from revenue.

The Company has following streams of revenue:

• Revenue from Engineering, Procurement and Construction contracts

Engineering, Procurement and Construction (EPC) contracts are contracts (or a Company of contracts secured together) specifically negotiated for the construction of an asset which refers to any project for construction of plants and systems, involving designing, engineering, fabrication, supply, erection (or supervision thereof), commissioning, guaranteeing performance thereof etc., execution of which is spread over different accounting periods. The Company identifies distinct performance obligations in each contract. For most of the project contracts, the customer contracts with the Company to provide a significant service of integrating a complex set of tasks and components into a single project or capability. Hence, the entire contract is accounted for as one performance obligation.

The Company may promise to provide distinct goods or services within a contract, in which case the Company separates the contract into more than one performance obligation. If a contract is separated into more than one performance obligation, the Company allocates the total transaction price to each performance obligation in an amount based on the estimated relative standalone selling prices of the promised goods or services underlying each performance obligation. The Company uses the expected cost plus a margin approach to estimate the standalone selling price of each performance obligation in case of contracts with more than one distinct performance obligations.

The Company assesses for the timing of revenue recognition in case of each distinct performance obligation. The Company first assesses whether the revenue can be recognised over a period of time if any of the following criteria is met:

(a) The customer simultaneously consumes the benefits as the Company performs; or

(b) The customer controls the work-in-progress; or

(c) The Company’s performance does not create an asset with alternative use to the Company and the Company has right to payment for performance completed till date.

The Company recognises revenue over time as it performs because of continuous transfer of control to the customers. For all project contracts, this continuous transfer of control to the customer is supported by the fact that the customers typically control the work in process as evidenced either by contractual termination clauses or by the rights of the Company to payment for work performed to date plus a reasonable profit to deliver products or services that do not have an alternative use.

The Company uses cost-based measure of progress (or input method) for contracts because it best depicts the transfer of control to the customer which occurs as it incurs costs on contracts. Under the cost-based measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Revenues, including estimated profits, are recorded proportionally as costs are incurred.

The Company estimates variable consideration amount which it expects to be entitled under the contract and includes it in the transaction price to the extent it is highly probable that a significant reversal of cumulative revenue recognised will not occur and when the uncertainty associated with it is subsequently resolved.

The estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of the anticipated performance and all information (historical, current and forecasted) that is reasonably available.

Costs associated with bidding for contracts are charged to the Statement of profit and loss when they are incurred. Costs that relate directly to a contract and are incurred in securing the contract are included as part of the contract costs if they can be separately identified and measured reliably and it is probable that the contract will be obtained.

Contract modification, when approved by both the parties to the contract, are considered as modification, if it creates new or changes the existing enforceable rights and obligations. Most of the contract modifications are not distinct from the existing contract due to the significant integration service provided under the contract prior to modifications and are therefore, accounted for as part of the existing contract. The effect of a contract modification is recognised as an adjustment to revenue on a cumulative catch-up basis.

When it becomes probable that the total contract costs will exceed the total contract revenue, the Company recognises the expected losses from onerous contract as an expense immediately. Penalties for any delay or improper execution of a contract are recognised as a deduction from revenue. In the balance sheet, such provisions are presented on net basis of the contract receivables.

• Revenue from sale of goods

If the criteria for revenue under over-a-period of time as mentioned above are not met, the Company recognises revenue at a point-in-time. The point-in-time is determined when the control of the goods or services is transferred which is determined based on when the significant risks and rewards of ownership are transferred to the customer. Apart from this, the Company also considers its present right to payment, the legal title to the goods, the physical possession and the customer acceptance in determining the point in time where control has been transferred. The Company provides for warranty provision for general repairs up to 18 - 24 months on its products sold, in line with the industry practice. A liability is recognised at the time the product is sold. The Company does not provide any extended warranties.

• Revenue from sale of services

Revenue in respect of operation and maintenance contract, awarded on a standalone basis or included in long term contracts and identified as a separate performance obligation, is recognised on a time proportion basis under the contracts.

EPC contracts:

Estimates and assumptions

• Provisions for liquidated damages claims (LDs): The Company provides for LD claims to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur when the uncertainty associated with the variable consideration is subsequently resolved. This requires an estimate of the amount of LDs payable under a claim which involves a number of management judgments and assumptions regarding the amounts to be recognised;

• Project cost to complete estimates: At each reporting date, the Company is required to estimate costs to complete on fixed-price contracts. Estimating costs to complete on such contracts requires the Company to make estimates of future costs to be incurred, based on work to be performed beyond the reporting date. This estimate will impact revenues, cost of sales, work-in-progress, billings in excess of costs, estimated earnings and accrued contract expenses;

• Recognition of contract variations: The Company recognises revenues and margins from contract variations where it is considered probable that they will be awarded by the customer and this requires management to assess the likelihood of such an award being made by reference to customer communications and other forms of documentary evidence.

Judgments

A significant portion of the Company’s business relates to EPC contracts which is accounted using cost-based input method, recognising revenue as the performance on the contract progresses. This requires management to make judgement with respect to identifying contracts for which revenue need to be recognised over a period of time, depending upon when the customer consumes the benefit, when the control is passed to customer, whether the asset created has an alternative use and whether the Company has right to payment for performance completed till date, either contractually or legally. The input method requires management to make significant judgments of the extent of progress towards completion including accounting of multiple contracts which need to be combined and considered as a single contract.

Contract assets primarily relate to the Company’s rights to consideration for work completed but not billed at the reporting date from projects and customised contracts. The contract assets are transferred to trade receivables on completion of milestones and its related invoicing.

The contract liabilities relate to unearned revenue and customer advances where performance obligations are yet to be fulfilled as per the contracts. The fulfilment of the performance obligations will extinguish these liabilities and revenue will be recognised, with no impact on the Company’s cash positions on specific projects.

v) Performance obligations

Performance obligation in a project or a group of projects which are contracted at or near same time with the same or related parties and negotiated simultaneously, are combined for the purpose of evaluation.

The Company has estimated that multiple commitments pertaining to engineering, procurement and commissioning of such projects is a single performance obligation which is spread over different accounting periods.

Performance obligation for products are evaluated on standalone basis, recognised at a point in time. Generally, performance obligations for such contracts have an original expected duration of one year or less.

There are no major contracts with customers which have significant financing component included within them and therefore there is no difference between the timing of satisfaction of performance obligation vis-a-vis the timing of the payment.

Remaining performance obligations:

The following table includes revenue expected to be recognised in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the reporting date.

The Company applies practical expedient included in para 121 of Ind AS 115 - “Revenue from Contracts with Customers” and does not disclose information about its remaining performance obligations for contracts that have an original expected duration of one year or less.

vi) Reconciliation between revenue recognised in Statement of profit and loss and contract price:

There is no significant variation between revenue recognised in Statement of profit and loss and contract price except price variation claims, which are considered to be part of contract price.

22 Other Income

Accounting policy

(i) Interest income

For all debt instruments measured at amortised cost, interest income is recorded using the Effective Interest Rate (EIR). EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset or to the amortised cost of a financial liability. Interest income is included in finance income in the Statement of profit and loss.

(ii) Dividend

Dividend is recognised when the Company’s right to receive the payment is established.

28 Earnings Per Share

Accounting policy

The Company presents the basic and diluted EPS data for its equity shares.

(i) Basic EPS is computed by dividing the net profit for the year attributable to the equity shareholders of the Company by the weighted average number of equity shares outstanding during the year;

(ii) Diluted EPS is computed by adjusting the net profit for the year attributable to the equity shareholders and the weighted average number of equity shares considered for deriving basic EPS for the effects of all the equity shares that could have been issued upon conversion of all dilutive potential equity shares (which includes the various stock options granted to employees).

30 Contingent Liabilities and Commitments

A Contingent Liabilities Accounting policy

A disclosure for a contingent liability is made where there is a possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from the past events where it is either not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount cannot be made.

Judgements

Tax and legal contingencies

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

*Includes a case against the Company in dispute with customer amounting to Rs. 167.82 whereby in June 2023, an arbitrator ruled against the Company in a dispute with a customer who had been supplied Gas Turbo Generators (GTGs) procured from a third party as part of a composite contract. The GTGs had failed and the arbitrator ruled that Company must repair and restore them and bear other related costs, estimated in aggregate as Rs. 218.45, including interest. The award has been appealed by the Company in the Bombay High Court. A stay has been granted, for which Company has deposited with the customer Rs. 218.45. The deposit is refundable, with interest, depending on the outcome of the case. The final hearings challenging the award is in progress before the Bombay High Court.

Pursuant to an independent legal opinion, the Company had made a provision of Rs. 50.63 and for the balance amount, no provision had been considered necessary. The Company is reasonably confident of the issue being ultimately decided in its favour.

B Capital and Other Commitments

a) Liability in respect of partly paid shares Rs. Nil (March 31, 2023: Rs. Nil).

b) Estimated amount of contracts remaining to be executed on capital account (net of advances) and not provided for is Rs. 60.73 (March 31,2023: Rs. 19.39).

c) Parent support letter given to Thermax Bioenergy Solutions Private Limited amounting to Rs. 13 (March 31,2023: Rs. Nil).

C Lease Commitments Accounting policy

The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Company recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.

Operating lease

i) Where the Company is Lessor:

Accounting policy

Leases in which the Company does not transfer substantially all the risks and rewards of ownership of an asset are classified as operating leases. Rental income from operating lease is recognised on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income.

The Company has leased certain parts of its surplus office and buildings. The tenure of such lease agreements ranges from 1 to 5 years. All leases include a clause to enable upward revision of the rental charge on an annual basis according to prevailing market conditions. For nature of assets refer note 4(c).

ii) Where the Company is Lessee:

Accounting policy

The Company lease asset classes primarily consist of leases for land, office buildings, guest house and other office equipment, etc. The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:

(1) The contract involves the use of an identified asset;

(2) The Company has substantially all of the economic benefits from use of the asset through the period of the lease; and

(3) The Company has the right to direct the use of the asset.

At the date of commencement of the lease, the Company recognises a Right-of-Use (ROU) asset and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less (short-term leases) and low value leases. For these short-term and low value leases, the Company recognises the lease payments as an operating expense on a straight-line basis over the term of the lease.

Certain lease arrangements include the options to extend or terminate the lease before the end of the lease term. ROU assets and lease liabilities includes these options when it is reasonably certain that they will be exercised.

The ROU assets are initially recognised at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses.

ROU assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset. ROU assets are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e., the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs.

The lease liability is initially measured at present value of the future lease payments. The lease payments include fixed payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees.

Lease liability and ROU asset have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows.

As a practical expedient, Ind AS 116 - “Property, plant and equipment”, permits a lessee not to separate non-lease components, and instead account for any lease and associated non-lease components as a single arrangement. The Company has not used this practical expedient. For a contract that contains a lease component and one or more additional lease or non-lease components, the Company allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate standalone price of the non-lease components.

Details of Leases:

The Company has taken land, office buildings, factory sheds, guest house, warehouse, vehicles, printers and other office equipment''s on lease for a tenure of 1 to 99 years. The Company’s obligations under its leases are secured by the lessor''s title to the leased assets. Generally, the Company is restricted from assigning and subleasing the leased assets. However, Company has sub-leased some portion of its land and building to its subsidiary. There are no variable lease payments and residual value guarantees for these leases. The leases are renewable on mutually agreeable terms. At the expiry of the lease term, either party has an option to terminate the agreement or extend the term by giving notice in writing. The Company also has certain leases of machinery with lease terms of 12 months or less and leases of office equipment with low value. The Company applies the ‘short-term lease'' and ‘lease of low-value assets'' recognition exemptions for these leases.

Other than as disclosed above, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities (“Intermediaries”), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, 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 provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries. The Company has complied with the relevant provisions of the Foreign Exchange Management Act, 1999 (42 of 1999) and the Companies Act for the above transactions and the transactions are not violative of the Prevention of Money-Laundering Act, 2002 (15 of 2003).

The Company have not received any fund from any person(s) or entity(ies), 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.

K Terms and conditions of related party transactions

The revenues and purchases from related parties are assessed to be at arm’s length transactions by the management. Outstanding balances at the year-end are unsecured and interest free except loans given and settlement occurs in cash. Refer note 31(A)(a) for terms and conditions for loans to related parties.

There have been no guarantees provided or received for any related party receivables or payables except as disclosed in Note 31.

As at year ended March 31, 2024, the Company has recorded an impairment of receivables amounting to Rs. 3.34 (March 31, 2023: Rs. 4.21) and impairment of loan amounting to Rs. 4.12 relating to amounts owed by related parties (March 31, 2023: Rs. 4.12). 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.

33 Segment Information

Accounting policy

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.

The Board of Directors of the Company has identified the Managing Director and Chief Executive Officer as the chief operating decision maker of the Company.

Judgments

Ind AS 108 - “Operating Segments”, requires Management to determine the reportable segments for the purpose of disclosure in standalone financial statements based on the internal reporting reviewed by Chief Operating Decision Maker (CODM) to assess performance and allocate resources. The standard also requires Management to make judgments with respect to aggregation of certain operating segments into one or more reportable segment.

Operating segments used to present segment information are identified based on the internal reports used and reviewed by the Managing Director and Chief Executive Officer to assess performance and allocate resources. The management has determined that some of the segments exhibit similar economic characteristics and meet other aggregation criteria and accordingly aggregated into three reportable segments i.e. Industrial Products, Industrial Infra and Chemical.

Disclosure of segment information:

In accordance with para 4 of Ind AS 108 - Operating Segments, the Company has disclosed segment information in the consolidated financial statements.

The Company enters into derivative financial instruments in the nature of forward exchange contracts with banks. Foreign exchange forward contracts are valued using valuation techniques, which employs the use of market observable inputs which captures credit quality of counterparties, foreign exchange spot and forward rates, yield curves of the respective currencies and currency basis spreads between the respective currencies. All derivative contracts are fully cash collateralised, thereby eliminating both counterparty and the Company’s own non-performance risk. The changes in counterparty credit risk had no material effect on the hedge effectiveness assessment for derivatives designated in hedge relationships and other financial instruments recognised at fair value.

b) Fair value hierarchy

The following table provides the fair value measurement hierarchy of the Company’s assets and liabilities.

(a) Financial Risk Management

The Company’s principal financial liabilities, other than derivatives, comprise trade and other payables and borrowings. 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 derive directly from its operations. The Company also holds FVTPL and amotised cost investments and enters into derivative transactions.

Risk is inherent in the Company’s activities but it is managed through a process of on going identification, measurement and monitoring, subject to risk limits and other controls. This process of risk management is crit

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Mar 31, 2023

31 Contingent Liabilities and Commitments A Contingent liabilities a) Taxes*"
	March 31, 2023	March 31,2022
Excise, Customs Duty and Service tax	8.05	159.12
Sales tax	16.76	19.72
Income tax demands disputed in appellate proceedings#	85.01	68.43
References/appeals preferred by the Income tax department in respect of which, should the ultimate decision be unfavourable to the Company	16.36	16.91
Others	0.12	0.10
* Excluding of interest and penalty thereon. # The above excludes the effects of similar disallowances, if any, for any subsequent period that are pending for open assessments. A Against income tax disputed demand, the Company has received favourable ITAT orders in earlier years (similar issues) for Rs. 93.62 (March 31, 2022: Rs. 59.45)
b) Guarantees on behalf of subsidiaries
	March 31, 2023	March 31,2022
Counter corporate guarantees issued to banks (Also refer note 32)	147.51	92.64
Indemnity bonds, letter of support/comfort and corporate guarantees (Also refer note 32)	2,527.98	2,001.17
The Company has issued various guarantees for performance, deposits, tender money, advances, etc. The management has considered the probability for outflow of the same to be remote and accordingly no amount has been disclosed here.
c) Others"
	March 31, 2023	March 31,2022
Liability for export obligations	0.61	0.58
Claims against the Company not acknowledged as debt*	206.43	209.13

The timing and amount of the cash flow which will arise from these matters, will be determined by the relevant authorities on settlement of the cases or on receipt of claims from customers.

^A Excluding of interest and penalty thereon.

*Claims against the Company not acknowledged as debt on account of ongoing arbitration/ legal dispute with the various customers / vendors of the Company. Based on the legal opinion on few matters and management assessments of the facts of the case, no provision against the above claim is considered. Pending resolution of the matters, it is not practicable to estimate the timing of cash outflows, if any.

B Capital and other commitments

a) Liability in respect of partly paid shares Rs. Nil (March 31, 2022: Rs. 0.09).

b) Estimated amount of contracts remaining to be executed on capital account (net of advances) and not provided for is Rs. 19.39 (March 31, 2022: Rs. 12.29).

C Lease commitments i) Operating lease: Company as lessor

The Company has leased certain parts of its surplus office and buildings. The tenure of such lease agreements ranges from 1 to 5 years. All leases include a clause to enable upward revision of the rental charge on an annual basis according to prevailing market conditions. For nature of assets refer note 4(a).

	March 31,2023	March 31,2022
Lease rental received for the year	5.09	4.19

ii) Where the Company is lessee

The Company has taken land, office buildings, factory sheds, guest house, warehouse, vehicles, printers and other office equipments on lease for a tenure of 1 to 99 years. The Company’s obligations under its leases are secured by the lessor’s title to the leased assets. Generally, the Company is restricted from assigning and subleasing the leased assets. However, Company has sub-leased some portion of its land and building to its subsidiary. There are no variable lease payments and residual value guarantees for these leases. The leases are renewable on mutually agreeable terms. At the expiry of the lease term, either party has an option to terminate the agreement or extend the term by giving notice in writing. The Company also has certain leases of machinery with lease terms of 12 months or less and leases of office equipment with low value. The Company applies the ‘short-term lease’ and ‘lease of low-value assets’ recognition exemptions for these leases.

Other than as disclosed above, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities (“Intermediaries”), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, 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 provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries. The Company has complied with the relevant provisions of the Foreign Exchange Management Act, 1999 (42 of 1999) and the Companies Act for the above transactions and the transactions are not violative of the Prevention of Money-Laundering Act, 2002 (15 of 2003).

The Company have not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Group 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.

33 Gratuity

The Company operates a defined benefit plan viz. gratuity for its employees. Under the gratuity plan, every employee who has completed at least specified years of service gets a gratuity on departure at 15 days (minimum) of the last drawn salary for each completed year of service. The scheme is funded with an insurance Company. The fund has formed a trust and it is governed by the Board of Trustees.

The fund is subject to risks such as asset volatility, changes in assets yields and asset liability mismatch risk. In managing the plan assets, Board of Trustees review and manage these risks associated with the funded plan. Each year, the Board of Trustees reviews the level of funding in the gratuity plan. Such a review includes asset-liability matching strategy and investment risk management policy (which includes contributing to plans that invest in risk-averse markets). The Board of Trustees aim to keep annual contributions relatively stable at a level such that no plan deficits (based on valuation performed) will arise.

The above sensitivity analysis is based on a change in assumption while holding all other assumptions constant. In practice, this is unlikely to occur and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of defined benefit obligation calculated with the Projected Unit Credit Method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognised in the balance sheet.

The method and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous periods.

K Terms and conditions of related party transactions

The revenues and purchases from related parties are assessed to be at arm’s length transactions by the management. Outstanding balances at the year-end are unsecured and interest free except loans given and settlement occurs in cash. Refer note 32(A)(a) for terms and conditions for loans to related parties.

There have been no guarantees provided or received for any related party receivables or payables except as disclosed in Note 32.

As on year ended March 31, 2023, the Company has recorded an impairment of receivables amounting to Rs. 4.21 (March 31, 2022: Rs. 0.30) and impairment of loan amounting to Rs. 4.12 relating to amounts owed by related parties (March 31, 2022: Rs. 4.12). 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.

35 Segment Information

In accordance with para 4 of Ind AS 108 “Operating Segments”, the Company has disclosed segment information in the consolidated financial statements.

There has been no transfer between Level 1 and Level 2 during the year and during the previous year.

The Company enters into derivative financial instruments in the nature of forward exchange contracts with banks.

Foreign exchange forward contracts are valued using valuation techniques, which employs the use of market observable inputs which captures credit quality of counterparties, foreign exchange spot and forward rates, yield curves of the respective currencies and currency basis spreads between the respective currencies. All derivative contracts are fully cash collateralised, thereby eliminating both counterparty and the Company’s own non-performance risk. The changes in counterparty credit risk had no material effect on the hedge effectiveness assessment for derivatives designated in hedge relationships and other financial instruments recognised at fair value.

Valuation of financial assets in Level 3 has been done based on discounting of future cash flows. There are no transfers into or out of Level 3 of the fair value hierarchy during the year.

* The movement in Level 3 is on account of interest accretion which is recognised under interest income in the statement of profit and loss.

37 (a) Financial Risk Management

The Company’s principal financial liabilities, other than derivatives, comprise trade and other payables and borrowings.

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 derive directly from its operations.

The Company also holds FVTPL and amortised cost investments and enters into derivative transactions.

Risk is inherent in the Company’s activities but it is managed through a process of on going identification, measurement and monitoring, subject to risk limits and other controls. This process of risk management is critical to the Company’s continuing profitability and each individual within the Company is accountable for the risk exposures relating to his or her responsibilities. The Company is exposed to market risk, credit risk and liquidity risk.

The Company’s Board of Directors is ultimately responsible for the overall risk management approach and for approving the risk strategies and principles. No significant changes were made in the risk management objectives and policies during the years ended March 31, 2023 and March 31, 2022. The management of the Company reviews and agrees policies for managing each of these risks which are summarised below:

I Market risk

Market risk is the risk that the value of an asset will fluctuate as a result of changes in market variables such as interest rates, foreign exchange rates and equity prices, whether those changes are caused by factors specific to the individual investment or its issuer or factors affecting all investments traded in the market.

Market risk is managed on the basis of pre-determined asset allocations across various asset categories, diversification of assets in terms of geographical distribution and industry concentration, a continuous appraisal of market conditions and trends and management’s estimate of long and short term changes in fair value.

a Interest rate risk

Interest rate risk 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 is not currently exposed significantly to such risk.

b Foreign currency risk

Foreign exchange risk arises when future commercial transactions and relevant assets and liabilities are denominated in a currency that is not the Company’s functional currency. Foreign exchange risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates.

Foreign exchange risk is managed on the basis of limits determined by management and a continuous assessment of current and expected exchange rate movements and entering into derivative contracts (foreign currency forward contracts) that hedge the maximum period of exposure of underlying transactions (i.e. highly probable forecast sales and purchases).

When a derivative is entered into for the purpose of being a hedge, the Company negotiates the terms of those derivatives to match the terms of the hedged exposure. For hedges of forecast transactions the derivatives cover the period of exposure from the point the cash flows of the transactions are forecasted up to the point of expected settlement of the resulting receivable or payable that is denominated in the foreign currency.

Foreign currency sensitivity

The following table demonstrates the sensitivity to a reasonably possible change in USD, JPY, SEK and EUR exchange rates, with all other variables held constant. The impact on the Company’s profit before tax is due to changes in the fair value of monetary assets and liabilities including foreign currency derivatives not designated as cash flow hedge and foreign currency derivatives with underlying foreign currency monetary assets/liabilities designated as cash flow hedge. The impact on the Company’s pre-tax equity is due to changes in the fair value of forward exchange contracts designated as cash flow hedges.

c Price risk

The Company’s investments are susceptible to market price risk arising from uncertainties about future values of the investment securities. These securities are unquoted. The Company manages the price risk through diversification and by placing limits on individual and total equity/mutual fund instruments. Further, the price risk is also mitigated by switching the investment portfolio between investment in equity/mutual fund instruments and investments in bank deposits. Reports on the investment portfolio are submitted to the Company’s senior management on a regular basis. The Company’s Board of Directors reviews and approves all equity investment decisions. The Company is not currently exposed significantly to such risk.

II 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. The Company is exposed to credit risk from its operating activities (primarily trade receivables and contract assets) and from its financing activities, including deposits with banks, foreign exchange transactions and other financial instruments.

Trade receivables

Customer credit risk is managed by each business unit subject to the Company’s established policy, procedures and control relating to customer credit risk management. An impairment analysis is performed at each reporting date on an individual basis for major clients. In addition, a large number of minor receivables are grouped into homogenous group and assessed for impairment collectively. The calculation is based on losses as per historical data. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in notes 7 and 9(b) above. The charge of impairment to Statement of profit and loss is disclosed in note 28(a) above.

The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and industries and operate in largely independent markets.

Financial instruments and bank deposits

Credit risk from balances with banks, mutual funds, loans and other financial assets are managed by the Company’s treasury department in accordance with the Company’s policy. Investments of surplus funds are made only with approved counterparties having a good market reputation and within credit limits assigned to each counterparty.

The limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterparty’s potential failure to make payments.

The Company’s maximum exposure to credit risk for bank balances and deposits as at March 31, 2023 and March 31, 2022 is the carrying amounts as disclosed in Note 9(a) and 13, maximum exposure relating to financial guarantees is disclosed in note 32 (A) and financial derivative instruments in notes 9(b) and 17(b) to the financial statements.”

III Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying businesses, company treasury maintains flexibility in funding by maintaining availability under committed credit lines.

The management monitors rolling forecasts of the Company’s liquidity position (comprising the undrawn borrowing facilities below) and cash and cash equivalents on the basis of expected cash flows. This is generally carried out at operating segments level in the Company in accordance with practice and limits set by the Company. In addition, the Company’s liquidity management policy involves projecting future cash flows and considering the level of liquid assets necessary to meet these and monitoring balance sheet liquidity ratios against internal requirements.

37(b) Hedging Activities and Derivatives Cash flow hedges Foreign currency risk

Foreign exchange forward contracts measured at fair value through OCI are designated as hedging instruments in cash flow hedges of forecast sales in USD, EUR, SEK and forecast purchases in USD, JPY, SEK, EUR. These forecast transactions are highly probable, and cover the Company’s expected future sales and future purchases based on the orders received.

While the Company also enters into other foreign exchange forward contracts with the intention to reduce the foreign exchange risk of expected sales and purchases, these other contracts are not designated in hedge relationships and are measured at fair value through profit or loss.

The foreign exchange forward contract balances vary with the level of expected foreign currency sales and purchases and changes in foreign exchange forward rates.

Explanations:

Debt service coverage ratio- Debt service coverage ration has increased by 26% on account of higher net profts for the current year

Return on Equity ratio- Return on equity has increased by 55% on account of higher net profts for the current year

Net Capital Turnover ratio- Reduction in working capital due to increase in execution activities from operations on account of growth in order booking and order backlog.

Net Profit ratio- Net profit has increased by 28% on account of higher net profts for the current year. Previous year net profit was impacted due to lower order execution and diminution of investment in subsidiaries.

Return on capital employed (ROCE) ratio- Return on capital employed has increased by 46% on account of higher net profts for the current year

^A Profit after tax Finance Cost Loss on sale of fixed assets Depreciation and Amortisation for the period * Current borrowings Non-current lease liability Current lease liability Interest & Lease Payments paid ** Total Current Assets - Total Current Liabilities *** Total Equity Non-current borrowings

40 Share Based Payments

Employees Stock Option Plan 2021 (ESOP 2021)

The Board of Directors and the shareholders of the Company approved Employee Stock Option Plan at their meeting in January 2022. Pursuant to this approval, the Company instituted ESOP 2021 Plan in January 2022. The nomination and remuneration committee of the Company administers this Plan. Each option carries with it the right to purchase one equity share of the Company. The Options have been granted to employees of the Company and its subsidiaries at an exercise price that is not less than the face value of shares as on date of grant of such option. Option granted under ESOP 2021 shall vest not earlier than minimum period of 1 (One) year and not later than maximum period of 3 (Three) years from the date of grant. The vesting of the options is 33%, 33% and 34% of total options granted after end of first, second and third year respectively from the date of grant. The maximum exercise period is 5 years from the date of vesting.

43 Assets Classified as Held for Sale

The Company has identified certain assets like Land, Building etc. which are available for sale in its present condition.

The Company is committed to plan the sale of asset and an active programme to complete the sale has been initiated.

The Company expects to dispose off this asset in the due course. Accordingly, non-current assets held for sale amounting to Rs. 6.53 crore (net book value) has been classified in the books of account.

44 Other Statutory Information

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

(ii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.

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

(iv) The Company has not made 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).

(v) The Company has not been declared as a wilful defaulter by any bank or financial institution or any other lender.

45 Compliance with Section 143 (3) for Maintenance of Books of Account

With effect from August 5, 2022, the Ministry of Corporate Affairs (MCA) has amended the Companies (Accounts) Rules, 2014, relating to maintenance of electronic books of account and other relevant books and papers. Pursuant to this amendment, the Company is required to maintain the books of account which are accessible in India at all times and their backup is to be kept on servers located in India on a daily basis.

The Company has a process to take daily back-up of books of account maintained in electronic mode and alongwith the logs of the back-up of such books of account. However, the backup of certain books and records pertaining to employee reimbursement system maintained in electronic mode has not been maintained on servers physically located in India on daily basis. The Company will take appropriate measures to comply with regulations.

46 Standards Issued but Not Yet Effective

Ministry of Corporate Affairs (“MCA”) notifies new standard or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. On March 31, 2023, MCA amended the Companies (Indian Accounting Standards) Rules, 2015 by issuing the Companies (Indian Accounting Standards) Amendment Rules, 2023, applicable from April 1, 2023, as below:

(i) Ind AS 1 - Presentation of Financial Statements - The amendments require companies to disclose their material accounting policies rather than their significant accounting policies. Accounting policy information, together with other information, is material when it can reasonably be expected to influence decisions of primary users of general purpose financial statements. The Company does not expect this amendment to have any significant impact in its financial statements.

(ii) Ind AS 12 - Income Taxes - The amendments clarify how companies account for deferred tax on transactions such as leases and decommissioning obligations. The amendments narrowed the scope of the recognition exemption in paragraphs 15 and 24 of Ind AS 12 (recognition exemption) so that it no longer applies to transactions that, on initial recognition, give rise to equal taxable and deductible temporary differences. The Company is in process of evaluating this amendment.

(iii) Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors - The amendments will help entities to distinguish between accounting policies and accounting estimates. The definition of a change in accounting estimates has been replaced with a definition of accounting estimates. Under the new definition, accounting estimates are “monetary amounts in financial statements that are subject to measurement uncertainty”. Entities develop accounting estimates if accounting policies require items in financial statements to be measured in a way that involves measurement uncertainty. The Company has evaluated the amendment and there is no impact on its financial statements.

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Mar 31, 2022

Provision for decommissioning liability

A provision has been recognised for decommissioning costs associated with the properties taken on lease by the Company. The Company is committed to restore the sites as a result of the conclusion of manufacturing activities. The timing of cash outflows in respect of such provision cannot be reasonably determined.

Provision for warranties

Warranty costs are provided based on a technical estimate of the costs required to be incurred for repairs, replacements, material costs, servicing cost and past experience in respect of such costs. It is expected that this expenditure will be incurred over the contracted warranty period ranging up to 2 years. If warranty claim costs vary by 10% from management''s estimate, the warranty provisions would be an estimated Rs. 8.56 higher or lower (March 31, 2021: Rs. 5.62).

Provision for onerous contracts

A provision for expected loss on construction contracts is recognised when it is probable that the contracts costs will exceed total contract revenue. For all other contracts, provision is made when the unavoidable costs of meeting the obligation under the contract exceed the estimated economic benefits. The timing of cash outflows in respect of such provision is over the contract period.

Contract assets primarily relate to the Company’s rights to consideration for work completed but not billed at the reporting date from projects and customised contracts. The Contract assets are transferred to Trade receivables on completion of milestones and its related invoicing.

The contract liabilities relate to unearned revenue and customer advances where performance obligations are yet to be fulfilled as per the contracts. The fulfilment of the performance obligations will extinguish these liabilities and revenue will be recognised, with no impact on the Company’s cash positions on specific projects.

vii) Performance obligations:

Performance obligation in a project or a group of projects which are contracted at or near same time with the same or related parties and negotiated simultaneously, are combined for the purpose of evaluation. The Company has estimated that multiple commitments pertaining to engineering, procurement and commissioning of such projects is a single performance obligation which is spread over different accounting periods.

Performance obligation for products are evaluated on standalone basis, recognised at a point in time.

Generally, performance obligations for such contracts have an original expected duration of one year or less.

There are no major contracts with customers which have significant financing component included within them and therefore there is no difference between the timing of satisfaction of performance obligation vis a vis the timing of the payment.

Remaining performance obligations:

The following table includes revenue expected to be recognised in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the reporting date.

The Company expects that a significant portion of the remaining performance obligation will be completed in next 1 to 2 years. However, the contracts with customers for supply of utilities are for a longer period.

The timing and amount of the cash flow which will arise from these matters, will be determined by the relevant authorities on settlement of the cases or on receipt of claims from customers.

*Claims against the Company not acknowledged as debt on account of ongoing arbitration/ legal dispute with the various customers / vendors of the Company. Based on the legal opinion on few matters and management assessments of the facts of the case, no provision against the above claim is considered. Pending resolution of the matters, it is not practicable to estimate the timing of cash outflows, if any.

B Capital and other commitments

a) Liability in respect of partly paid shares Rs. 0.09 (March 31, 2021: Rs.0.09).

b) Estimated amount of contracts remaining to be executed on capital account (net of advances) and not provided for is Rs. 12.29 (March 31, 2021: Rs. 23.71).

C Lease commitments

i) Operating lease: Company as lessor

The Company has leased certain parts of its surplus office and buildings. The tenure of such lease agreements ranges from 1 to 5 years. All leases include a clause to enable upward revision of the rental charge on an annual basis according to prevailing market conditions. For nature of assets refer note 4(a).

ii) Where the Company is lessee

The Company has taken land, office buildings, factory sheds, guest house, warehouse, vehicles, printers and other office equipments on lease for a tenure of 1 to 99 years. The Company’s obligations under its leases are secured by the lessor’s title to the leased assets. Generally, the Company is restricted from assigning and subleasing the leased assets. However, Company has sub-leased some portion of its land and building to its subsidiary. There are no variable lease payments and residual value guarantees for these leases. The leases are renewable on mutually agreeable terms. At the expiry of the lease term, either party has an option to terminate the agreement or extend the term by giving notice in writing. The Company also has certain leases of machinery with lease terms of 12 months or less and leases of office equipment with low value. The Company applies the ‘short-term lease’ and ‘lease of low-value assets’ recognition exemptions for these leases.

33 Gratuity

The Company operates a defined benefit plan viz. gratuity for its employees. Under the gratuity plan, every employee who has completed at least specified years of service gets a gratuity on departure at 15 days (minimum) of the last drawn salary for each completed year of service. The scheme is funded with an insurance Company. The fund has formed a trust and it is governed by the Board of Trustees.

The fund is subject to risks such as asset volatility, changes in assets yields and asset liability mismatch risk. In managing the plan assets, Board of Trustees review and manage these risks associated with the funded plan. Each year, the Board of Trustees reviews the level of funding in the gratuity plan. Such a review includes asset-liability matching strategy and investment risk management policy (which includes contributing to plans that invest in risk-averse markets). The Board of Trustees aim to keep annual contributions relatively stable at a level such that no plan deficits (based on valuation performed) will arise.

The above sensitivity analysis is based on a change in assumption while holding all other assumptions constant.

In practice, this is unlikely to occur and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of defined benefit obligation calculated with the Projected Unit Credit Method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognised in the balance sheet.

The method and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous periods.

K Terms and conditions of related party transactions

The revenues and purchases from related parties are assessed to be at arm’s length transactions by the management. Outstanding balances at the year-end are unsecured and interest free except loans given and settlement occurs in cash. Refer note 32(A)(a) for terms and conditions for loans to related parties.

There have been no guarantees provided or received for any related party receivables or payables except as disclosed in Note 32.

As on year ended March 31, 2022, the Company has recorded an impairment of receivables amounting to Rs. 0.30 (March 31, 2021: Rs. 3.30) and impairment of loan amounting to Rs. 4.12 relating to amounts owed by related parties (March 31, 2021: Rs. 4.12). 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.

35 Segment Information

In accordance with para 4 of Ind AS 108 “Operating Segments”, the Company has disclosed segment information in the consolidated financial statements.

The Company enters into derivative financial instruments in the nature of forward exchange contracts with banks. Foreign exchange forward contracts are valued using valuation techniques, which employs the use of market observable inputs which captures credit quality of counterparties, foreign exchange spot and forward rates, yield curves of the respective currencies and currency basis spreads between the respective currencies.

All derivative contracts are fully cash collateralised, thereby eliminating both counterparty and the Company’s own non-performance risk. The changes in counterparty credit risk had no material effect on the hedge effectiveness assessment for derivatives designated in hedge relationships and other financial instruments recognised at fair value.

There has been no transfer between Level 1 and Level 2 during the year and during the previous year.

Valuation of financial assets in Level 3 has been done based on discounting of future cash flows. There are no transfers into or out of Level 3 of the fair value hierarchy during the year.

* The movement in Level 3 is on account of interest accretion which is recognised under interest income in the statement of profit and loss.

37 (a) Financial risk management

The Company’s principal financial liabilities, other than derivatives, comprise trade and other payables and borrowings. 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 derive directly from its operations. The Company also holds FVTPL investments and enters into derivative transactions.

Risk is inherent in the Company’s activities but it is managed through a process of on going identification, measurement and monitoring, subject to risk limits and other controls. This process of risk management is critical to the Company’s continuing profitability and each individual within the Company is accountable for the risk exposures relating to his or her responsibilities. The Company is exposed to market risk, credit risk and liquidity risk.

The Company’s Board of Directors is ultimately responsible for the overall risk management approach and for approving the risk strategies and principles. No significant changes were made in the risk management objectives and policies during the years ended March 31, 2022 and March 31, 2021. The management of the Company reviews and agrees policies for managing each of these risks which are summarised below:

I Market risk

Market risk is the risk that the value of an asset will fluctuate as a result of changes in market variables such as interest rates, foreign exchange rates and equity prices, whether those changes are caused by factors specific to the individual investment or its issuer or factors affecting all investments traded in the market.

Market risk is managed on the basis of pre-determined asset allocations across various asset categories, diversification of assets in terms of geographical distribution and industry concentration, a continuous appraisal of market conditions and trends and management’s estimate of long and short term changes in fair value.

a Interest rate risk

Interest rate risk 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 is not currently exposed significantly to such risk.

b Foreign currency risk

Foreign exchange risk arises when future commercial transactions and relevant assets and liabilities are denominated in a currency that is not the Company’s functional currency. Foreign exchange risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates.

Foreign exchange risk is managed on the basis of limits determined by management and a continuous assessment of current and expected exchange rate movements and entering into derivative contracts (foreign currency forward contracts) that hedge the maximum period of exposure of underlying transactions (i.e. highly probable forecast sales and purchases).

When a derivative is entered into for the purpose of being a hedge, the Company negotiates the terms of those derivatives to match the terms of the hedged exposure. For hedges of forecast transactions the derivatives cover the period of exposure from the point the cash flows of the transactions are forecasted up to the point of expected settlement of the resulting receivable or payable that is denominated in the foreign currency.

Foreign currency sensitivity

The following table demonstrates the sensitivity to a reasonably possible change in USD, JPY, SEK and EUR exchange rates, with all other variables held constant. The impact on the Company’s profit before tax is due to changes in the fair value of monetary assets and liabilities including foreign currency derivatives not designated as cash flow hedge and foreign currency derivatives with underlying foreign currency monetary assets/liabilities designated as cash flow hedge. The impact on the Company’s pre-tax equity is due to changes in the fair value of forward exchange contracts designated as cash flow hedges.

Favourable impact shown as positive and adverse impact as negative.

The exposure to other foreign currencies is not significant to the Company’s financial statements.

c Price risk

The Company’s investments are susceptible to market price risk arising from uncertainties about future values of the investment securities. These securities are unquoted. The Company manages the price risk through diversification and by placing limits on individual and total equity/mutual fund instruments. Further, the price risk is also mitigated by switching the investment portfolio between investment in equity/mutual fund instruments and investments in bank deposits. Reports on the investment portfolio are submitted to the Company’s senior management on a regular basis. The Company’s Board of Directors reviews and approves all equity investment decisions. The Company is not currently exposed significantly to such risk.

II 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. The Company is exposed to credit risk from its operating activities (primarily trade receivables and contract assets) and from its financing activities, including deposits with banks, foreign exchange transactions and other financial instruments.

Trade receivables

Customer credit risk is managed by each business unit subject to the Company’s established policy, procedures and control relating to customer credit risk management. An impairment analysis is performed at each reporting date on an individual basis for major clients. In addition, a large number of minor receivables are grouped into homogenous group and assessed for impairment collectively. The calculation is based on losses as per historical data. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in notes 7 and 9(b) above. The charge of impairment to Statement of profit and loss is disclosed in note 28(a) above. The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and industries and operate in largely independent markets.

Financial instruments and bank deposits

Credit risk from balances with banks, mutual funds, loans and other financial assets are managed by the Company’s treasury department in accordance with the Company’s policy. Investments of surplus funds are made only with approved counterparties having a good market reputation and within credit limits assigned to each counterparty.

The limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterparty’s potential failure to make payments.

The Company’s maximum exposure to credit risk for bank balances and deposits as at March 31, 2022 and March 31, 2021 is the carrying amounts as disclosed in Note 9(a) and 13, maximum exposure relating to financial guarantees is disclosed in note 32 (A) and financial derivative instruments in notes 9(b) and 17(b) to the financial statements.

III Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying businesses, company treasury maintains flexibility in funding by maintaining availability under committed credit lines.

The management monitors rolling forecasts of the Company’s liquidity position (comprising the undrawn borrowing facilities below) and cash and cash equivalents on the basis of expected cash flows. This is generally carried out at operating segments level in the Company in accordance with practice and limits set by the Company. In addition, the Company’s liquidity management policy involves projecting future cash flows and considering the level of liquid assets necessary to meet these and monitoring balance sheet liquidity ratios against internal requirements.

(i) Maturities of financial liabilities

The tables below summarises the Company’s financial liabilities into relevant maturity profile based on contractual undiscounted payments :

37 (b) Hedging activities and derivatives Cash flow hedges Foreign currency risk

Foreign exchange forward contracts measured at fair value through OCI are designated as hedging instruments in cash flow hedges of forecast sales in USD, EUR, SEK and forecast purchases in USD, JPY, SEK, EUR. These forecast transactions are highly probable, and cover the Company’s expected future sales and future purchases based on the orders received.

While the Company also enters into other foreign exchange forward contracts with the intention to reduce the foreign exchange risk of expected sales and purchases, these other contracts are not designated in hedge relationships and are measured at fair value through profit or loss.

The foreign exchange forward contract balances vary with the level of expected foreign currency sales and purchases and changes in foreign exchange forward rates.

Return on Equity ratio- Return on equity has increased by 36% on account of higher net profts as previous year net profit was impacted due to lower order execution and diminution of investment in subsidiaries.

Net Capital Turnover ratio- Reduction in working capital due to increase in execution activities from operations on account of growth in order booking and order backlog.

^A Profit after tax Finance Cost Loss on sale of fixed assets Depreciation and Amortization for the period * Current borrowings Non-current lease liability Current lease liability Interest & Lease Payments paid ** Total Current Assets - Total Current Liabilities *** Total Equity Non-current borrowings

39 Struck Off Companies"

Below are details of investment, receivable, payable and any other transactions outstanding with struck off companies. For the year ended March 31, 2022

^A Information in this regard is on basis of intimation received, on requests made by the Company, with regards to registration of vendors and customers under the Act.

40 Capital Management

The Company’s objective for capital management is to maximise long term shareholder value, safeguard business continuity and support the growth of the Company. The Company determines the capital requirement based on annual operating plans and long- term and other strategic investment plans. The funding requirements are met through equity and operating cash flows generated. No changes were made in the objectives, policies or processes during the year ended March 31, 2022 and March 31, 2021. Capital represents equity attributable to equity holders of the Company.

* Considering the current market scenario and performance of certain subsidiaries, the Company has accounted for impairment on certain investments in subsidiaries.

The Company as on October 05, 2020 announced a Voluntary Retirement Scheme (VRS) for its eligible employees. The amount of scheme benefits payable to employees who opted for it is Rs. Nil (March 31,2021 : Rs. 5.86). The outstanding amount of scheme benefits payable to employees as on March 31, 2022 is Rs. 2.29 (March 31,2021: Rs. 4.63).

42 Other Statutory Information

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

(ii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period,

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

(iv) The Company has not made 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).

(v) The Company has not been declared as a wilful defaulter by any bank or financial institution or any other lender.

43 Standards 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. On March 23, 2022, MCA amended the Companies (Indian Accounting Standards) Amendment Rules, 2022, as below.

(i) Ind AS 16 - Property Plant and equipment - The amendment clarifies that excess of net sale proceeds of items produced over the cost of testing, if any, shall not be recognised in the profit or loss but deducted from the directly attributable costs considered as part of cost of an item of property, plant, and equipment. The effective date for adoption of this amendment is annual periods beginning on or after April 1, 2022. The Company is in the process of evaluating the amendment.

(ii) Ind AS 37 - Provisions, Contingent Liabilities and Contingent Assets - The amendment specifies that the cost of fulfilling’ a contract comprises the ‘costs that relate directly to the contract’. Costs that relate directly to a contract can either be incremental costs of fulfilling that contract (examples would be direct labour, materials) or an allocation of other costs that relate directly to fulfilling contracts (an example would be the allocation of the depreciation charge for an item of property, plant and equipment used in fulfilling the contract). The effective date for adoption of this amendment is annual periods beginning on or after April 1, 2022, although early adoption is permitted. The Company is in the process of evaluating the amendment.

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Mar 31, 2019

1. Corporate information

Thermax Limited (‘the Company¹) offers solutions to energy, environment and chemical sectors. The Company’s portfolio includes boilers and heaters, absorption chillers/ heat pumps, power plants, solar equipment, air pollution control equipment/system, water and waste recycle plant, ion exchange resins and performance chemicals and related services.

The Company is a public limited company Incorporated and domiciled in India. It is listed on the BSE Limited (BSE) and National Stock Exchange Limited (NSE) in India. The address of its registered office is D-13, MIDC Industrial Area, R.D. Aga Road, Chinchwad, Pune- 411019, India. The Board of Directors have authorized to issue these standalone financial statements on May 22,2019. The CIN of the Company Is L29299PN1980PLC022787.

The Company had elected to continue with the carrying value of property, plant and equipment and Intangible assets as recognised In the financial statements as per previous GAAP and had regarded those values as the deemed cost on the date of transition (i.e. April 1, 2015). The Company has disclosed the gross block and accumulated depreciation / amortisation above, for information purpose only. The total accumulated depreciation / amortisation as at April 1,2015 was Rs. 429.75

# Includes internally developed assets of net block Rs. 8.06 (March 31,2018 Rs 12.37)

2. (a) Capitalisation of expenses

During the year, the Company has capitalized the following expenses of revenue nature to the cost of Property, plant and equipment / intangible asset. Consequently, expenses disclosed under the respective notes are net of amounts capitalized by the Company.

# Deemed cost is considered to be Rs. Nil as on April 1,2015

##The Company has completed the acquisition process for the equity shares held by Baboock and Wlloox India Holding Inc. (B&W) In Thermax Babcock & Wilcox Energy Solutions Private Limited (TBWES)on July 19,2016. Accordingly, TBWES has become a wholly owned subsidiary of the Company.

^A The company on February 25,2019 entered Into a share purchase agreement with Mutares Holding-24 AG and Balcke-Duerr GmbH to acquire the remaining 49% stake In Thermax SPX Energy Technologies Limited (SPX). All the conditions precedent to the transaction was completed before March 31,2019 and hence SPX has become a wholly owned subsidiary of the Company.

No trade or other receivables are due from directors or other officers of the company either severally or jointly with any other person. Nor any trade receivables due from firms or private companies respectively in which any director is a partner, a director or a member.

Provision amounting to Rs. 3.13 (March 31,2018:50.80) is already taken in books for trade receivables which has a significant increase in credit.

For terms and conditions relating to related party receivables, refer note 35.

Trade receivables are non-interest bearing and are generally on terms of 30 to 90 days.

“Includes lease deposits given to directors of Rs. 0.53 (March 31,2018 Rs. 0.53). The maximum amount due from directors during the year amounted to Rs. 0.53 (March 31,2018 Rs. 0.53). This also includes deposits given to various other parties for rent, utilities etc. Refer note 35.

Loans are various kinds of non-derivative financial assets which generate fixed interest income for the Company. The carrying value may be affected by the changes In the credit risk of the counterparties. The tenure of such loans has different time range based on employee’s eligibility.

No loans are due from directors or Key managerial personnel of the Company either severally or jointly with any other person or from private companies or firms in which any director is a partner, a director ora member respectively.

For terms and conditions relating to loans given to related parties, refer note 35.

Financial assets at fair value through other comprehensive income reflect the change In fair value of foreign exchange forward contracts, designated as cash flow hedges to hedge highly probable forecast sales and purchases in various foreign currencies.

^AUnbilled revenue is disclosed net of impairment allowance of Rs. 10.12 (March 31,2018: Rs. 12.16) for contract assets.

The Company offsets tax assets and liabilities if and only If it has a legally enforceable right to set off income tax assets and liabilities and the deferred tax assets and deferred tax Liabilities relate to income taxes levied by the same tax authority.

The Company has tax losses which arose In India of Rs. Nil (March 31,2018: Rs. 6.95) that are available for offsetting for eight years against future taxable profits.

Deferred tax assets have not been recognised i n respect of these losses as they may not be used to offset taxable profits elsewhere I n the Company and there are no other tax planning opportunities or other evidence of recoverability In the near future. If the Company were able to recognise all unrecognised deferred tax assets, the profit for the year would increase by Rs. Nil (March 31,2018: Rs. 1.62).

During the year, the Company has paid dividends to its shareholders. This has resulted in payment of Dividend Distribution Tax (DDT) to the taxation authorities. The Company believes that DDT represents additional payment to taxation authority on behalf of the shareholders. Hence, DDT paid is charged to equity.

-Others includes interest on tax refunds, other recovery of expenses, etc

There were no advances due by directors or officers of the Company or any of them severally or jointly with any other persons or amounts due by firms or private companies respectively in which such director is a partner or a member.

For terms and conditions relating to loans given to related parties, refer note 35.

“includes goods in transit Rs. 1.61 (March 31,2018 Rs. 9.85)

For the year ended March 31,2019 Rs. 5.10 (March 31,2018 Rs. 2.51) was recognised (net of reversals)as an expense for inventories carried at net realisable value. These were recognised as expense during the year and included in ‘cost of raw materials and components consumed In the Statement of profit and loss.

Short-term deposits are made for varying periods ranging between one day and three months, depending on the immediate cash requirements of the Company, and earn Interest at the respective short-term deposit rates.

There are no repatriation restrictions with regard to cash and cash equivalents as at the end of the reporting period and prior periods.

(b) Terms/ rights attached to equity shares

The Company has one class of equity shares having a par value of Rs. 2 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

(e) The Company has several trusts (73 nos) set up for welfare of employees and ESOP named Thermax Employee ESOP and Welfare Trust. Such trusts together hold 65,41,440 (March 31,2018:65,41,440) equity shares representing 5.49% (March 31, 2018:5.49%) of equity share in the Company.

Capital redemption reserve

Pertains to reserve created towards redemption of debentures and can be utilised in accordance with the provisions of the Act. Securities premium

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

Capital reserve

Pertains to reserves arising on amalgamations in the past which is required to be maintained as per statute and cannot be distributed to the shareholders.

General reserve

Represents amounts transferred from retained earning in earlier years as per the requirements of the erstwhile Companies Act 1956. Cash flow hedge reserve

This reserve comprises the effective portion of the cumulative net change in the fair value of the cash flow hedge instruments related to hedged transactions that have not yet occurred.

A provision has been recognised for decommissioning costs associated with the property taken on lease by the Company. The Company is committed to decommission the site as a result of the construction of manufacturing facility. The timing of cash outflows In respect of such provision cannot be reasonably determined.

Provision for warranties

Warranty costs are provided based on a technical estimate of the costs required to be Incurred for repairs, replacements, material costs, servicing cost and past experience in respect of such costs. It is expected that this expenditure will be incurred over the contracted warranty period ranging upto 2 years. If warranty claim costs vary by 10% from management’s estimate, the warranty provisions would bean estimated Rs. 3.37 higher or lower (March 31,2018 Rs. 8.76)

Provision for onerous contracts

A provision is made when the unavoidable costs of meeting the obligation under the contract exceed the estimated economic benefits. The timing of cash outflows in respect of such provision is over the contract period.

Secured loans pertains to bills discounted by suppliers amounting to Rs. 40.00 (March 31,2018: Rs. 76.49) that are payable by the Company within 60to 120 days from the invoice date.

These loans are secured by hypothecation of present and future stock of all inventories, stores and spares not related to plant and machinery, book debts and other moveable assets.

Unsecured loans pertains to packing credit of Rs. Nil (March 31,2018: Rs. 40) carries an interest rate of 4.5% due for repayment within 280 days from date of disbursement or expected shipment date whichever is earlier.

Revenue from operations includes excise duty collected from customers or Rs. Nil (March 31, 2018 Rs.18.75). Post applicability of Goods and Services Tax (GST) with effect from July 1,2017, the revenue is disclosed net of GST. Accordingly, the revenue from operations is inclusive of excise duty invoiced till June 30,2017 and are not comparable with revenue for year ended March 31,2019 to that extent

Refer note 2.2 in significant accounting policies relating to ‘Adoption of Ind AS 115’.

Contract assets primarily relate to the Company’s rights to consideration for work completed but not billed at the reporting date from projects and customised contracts. The Contract assets are transferred to Trade receivables on completion of milestones and its related Invoicing.

The contract liabilities relate to unearned revenue and customer advances where performance obligations are yet to be fulfilled as per the contracts. The fulfilment of the performance obligations will extinguish these liabilities and revenue will be recognised, with no impact on the Company’s cash positions on specific projects.

v) Performance obligations

Performance obligation in project or a group of projects which are contracted at or near same time and negotiated simultaneously, are combined for the purpose of evaluation. The Company has estimated that multiple commitments pertaining to engineering procurement and commissioning of such projects is a single performance obligation which is spread over different accounting periods.

Performance obligation for products are evaluated on standalone basis, recognised at point in time. Generally, performance obligations for such contracts have an original expected du ration of one year or less.

vi) Reconciliation between revenue recognised in Statement of profit and loss and contract price

There is no significant variation between revenue recognised in Statement of profit and loss and contract price except price variation claims, which are considered to be part of contract price.

3. Discontinued Operation:

The Company has acquired equity shares held by Babcock and Wilcox India Holding Inc. (B&W) in Thermax Babcock & Wilcox Energy Solutions Private Limited (TBWES) on July 19,2018, Accordingly, TBWES has become a wholly owned subsidiary of the Company. Subsequent to this acquisition, as part of organisational restructuring the Board of Directors of the Company at Its meeting held on February 8, 2019 and subsequent approval of share holders on March 27, 2019, have approved the transfer of its Boiler & Heater (B&H) business to TBWES on a going concern basis through slump sale. The consideration for this transaction, which will not be less than the book value of B&H business and its effective date are not yet concluded. TTie operations form part of Energy segment Considering management’s intention to transfer B&H business to TBWES, the B&H business has been classified as discontinued operations in the standalone financial statement as at March 31, 2019 in accordance with Ind AS 105. The financial parameters In respect of discontinued operations are stated below. The items of Statement of profit and loss of the previous period have accordingly been restated.

4. Contingent liabilities and commitments

A Contingent Liabilities

a) During earlier years and In the current period, the Company has received demand notices/show cause-cum-demand twice from the Excise department covering period from June 2000 till June 2017 for Rs. 1,383.51 (March 31, 2018: Rs.1,376.92) (including penalty but excluding Interest and further penalty thereon) These demands are of excise duty payable on inclusion of the cost of bought out items In the assessable value of certain products manufactured by the Company, though such duty paid bought out items are directly dispatched by the manufacturers thereof to the ultimate customer, without being received in the Company’s factory. The Company has filed an appeal against the said orders received before CESTAT, Mumbai. Based on Independent legal advice, the Company Is confident of the Issue being ultimately decided in its favour and accordingly no provision has been considered necessary.

The timing and amount of the cash flow which will arise from these matters, will be determined by the relevant authorities on settlement of the cases or on receipt of claims from customers.

b) There are numerous interpretation issues relating to the Supreme Court judgement dated 28th February, 2019 on Provident fund. Pending clarity on this Issue, the Company has not recorded any Impact of the same In the accounts.

c) There are certain law suits, disputes, warranty claims, etc., including commercial matters that arises from time to time In the ordinary course of business for which amounts are not quantifiable by the management Based on management’s assessment under IND AS 37 ‘Provisions, Contingent Liabilities and Contingent Assets’, the claims against the Company are not tenable/ probability of final outcome against the Company is low and therefore not disclosed as contingent liability.

B Capital and other commitments

a) Liability in respect of partly paid shares Rs. 0.19 (March 31,2018 Rs.0.19)

b) Estimated amount of contracts remaining to be executed on capital account (net of advances) and not provided for is Rs. 18.64 (March 31,2018 Rs. 44.49). This excludes Rs 2.00 pertaining to discontinued operations, c) Lease commitments

i. Operating lease:

Company as lessee

The Company has taken office buildings and factory shed on operating lease. The tenure of such leases ranges from 1 to 5 years. Lease rentals are charged to the Statement of profit and loss for the year. There are no subleases. The leases are renewable on mutually agreeable terms. At the expiry of the lease term, the company has an option to terminate the agreement or extend the term by giving notice in writing.

ii. Operating lease:

Company as lessor

The Company has leased certain parts of its surplus office and buildings. The tenure of such lease agreements ranges from 1 to 5 years. All leases include a clause to enable upward revision of the rental charge on an annual basis according to prevailing market conditions. For nature of assets refer note 4(a)

The Company operates a defined benefit plan of gratuity for its employees. Under the gratuity plan, every employee who has completed at least specified years of service gets a gratuity on departure at 15 days (minimum) of the last drawn salary for each completed year of service. The scheme is funded with an insurance Company in the form of qualifying insurance policy. The fund has formed a trust and it is governed by the Board of Trustees.

The fund is subject to risks like changes in assets yields. In managing the plan assets, Board of Trustees reviews and manages these risks associated with the funded plan. Each year, the Board of Trustees reviews the level of funding in the gratuity plan. The Board of Trustees aim to keep annual contributions relatively stable at a level such that no plan deficits (based on valuation performed) will arise.

The above sensitivity analysis is based on a change in assumption while holding all other assumptions constant. In practice, this is unlikely to occur and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of defined benefit obligation calculated with the Projected Unit Credit Method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognised in the balance sheet.

The method and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous periods.

5. Related party disclosures

A Subsidiaries

Unless otherwise stated, the subsidiaries have share capital consisting solely of equity shares that are held directly or indirectly by the Company, and the proportion of ownership interests held equals the voting rights held by the Company. The country of incorporation or registration is also their principal place of business.

B Terms and conditions of related party transactions

The sales to and purchases from related parties are assessed to be at arm’s length transactions by the management 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 31,2019, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (March 31, 2018: Rs. Nil). 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. All outstanding balances are unsecured and repayable in cash.

6. Segment Information

In accordance with para 4 of Ind AS 106 “Operating Segments’, the Company has disclosed segment information In the consolidated financial statements.

The management has assessed that the carrying amounts of the above financial instruments approximate their fair values.

The Company enters into derivative financial instruments with banks. Foreign exchange forward contracts are valued using valuation techniques, which employs the use of market observable inputs which captures credit quality of counterparties, foreign exchange spot and forward rates, yield curves of the respective currencies and currency basis spreads between the respective currencies. All derivative contracts are fully cash collateralised, thereby eliminating both counterparty and the Company’s own non-performance risk. The changes In counterparty credit risk had no material effect on the hedge effectiveness assessment for derivatives designated in hedge relationships and other financial instruments recognised at fair value.

There has been no transfer between Level 1 and Level 2 during the year.

Valuation of financial assets in Level 3 has been done based on discounting of future cash flows. There are no changes from previous year.

-The movement in Level 3 Is on account of additional Investment in Preference shares, provision for Impairment and Interest accretion.

The Company’s principal financial liabilities, other than derivatives, comprise trade and other payables and borrowings. 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 derive directly from its operations. The Company also holds FVTPL investments and enters into derivative transactions.

Risk is inherent in the Company’s activities but it is managed through a process of ongoing identification, measurement and monitoring, subject to risk limits and other controls. This process of risk management Is critical to the Company’s continuing profitability and each Individual within the Company Is accountable for the risk exposures relating to his or her responsibilities. The Company is exposed to market risk, credit risk and liquidity risk.

The Company’s Board of Directors is ultimately responsible for the overall risk management approach and for approving the risk strategies and principles. No significant changes were made in the risk management objectives and policies during the years ended March 31,2019 and March 31,2018. The management of the Company reviews and agrees policies for managing each of these risks which are summarised below:

I Market risk

Market risk is the risk that the value of an asset will fluctuate as a result of changes in market variables such as interest rates, foreign exchange rates and equity prices, whether those changes are caused by factors specific to the individual investment or its Issuer or factors affecting all investments traded In the market.

Market risk is managed on the basis of pre-determined asset allocations across various asset categories, diversification of assets in terms of geographical distribution and industry concentration, a continuous appraisal of market conditions and trends and management’s estimate of long and short-term changes in fair value,

a Interest rate risk

Interest rate risk 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 is not currently exposed significantly to such risk,

b Foreign currency risk

Foreign exchange risk arises when future commercial transactions and relevant assets and liabilities are denominated in a currency that is not the Company’s functional currency. Foreign exchange risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates.

Foreign exchange risk is managed on the basis of limits determined by management and a continuous assessment of current and expected exchange rate movements and entering into derivative contracts(foreign currency forward contracts) that hedge the maximum period of exposure of underlying transactions (i.e. highly probable forecast sales and purchases).

When a derivative is entered into for the purpose of being a hedge, the Company negotiates the terms of those derivatives to match the terms of the hedged exposure. For hedges of forecast transactions the derivatives cover the period of exposure from the point the cash flows of the transactions are forecasted up to the point of settlement of the resulting receivable or payable that Is denominated in the foreign currency.

Foreign currency sensitivity

The following table demonstrates the sensitivity to a reasonably possible change In USD, SEK, EUR and JPY exchange rates, with all other variables held constant. The impact on the Company’s profit before tax is due to changes in the fair value of monetary assets and liabilities including foreign currency derivatives not designated as cash flow hedge and foreign currency derivatives with underlying foreign currency monetary assets/liabilities designated as cash flow hedge. The impact on the Company’s pre-tax equity is due to changes in the fair value of forward exchange contracts designated as cash flow hedges.

c Prices risk

The Company’s equity securities are susceptible to market price risk arising from uncertainties about future values of the Investment securities. These securities are unquoted. The Company manages the equity price risk through diversification and by placing limits on individual and total equity instruments. Reports on the equity portfolio are submitted to the Company’s senior management on a regular basis. The Company’s Board of Directors reviews and approves all equity Investment decisions.

As at balance sheet, the exposure to equity shares at fair value was Rs.0.18 (March 31,2018: Rs 0.29). At the reporting date, an increase / decrease of 10% market index would have a impact of approx gain / loss of Rs. 0.02 (March 31,2018: Rs 0.03) respectively on Statement of profit and loss.

II 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. The Company Is exposed to credit risk from Its operating activities (primarily trade receivables and contract assets) and from its financing activities, including deposits with banks, foreign exchange transactions and other financial instruments.

Trade receivables

Customer credit risk is managed by each business unit subject to the Company’s established policy, procedures and control relating to customer credit risk management. An impairment analysis is performed at each reporting date on an individual basis for major clients. In addition, a large number of minor receivables are grouped into homogenous group and assessed for Impairment collectively. The calculation is based on losses as per historical data. The maximum exposure to credit risk at the reporting date Is the carrying value of each class of financial assets disclosed In notes 7 and 9(b) above. The charge of impairment to Statement of profit and loss is disclosed in note 28(a) above. The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several Jurisdictions and industries and operate in largely independent markets.

Financial instruments and bank deposits

Credit risk from balances with banks, mutual funds, loans and other financial assets are managed by the Company’s treasury department in accordance with the Company’s policy. Investments of surplus funds are made only with approved counterparties having a good market reputation and within credit limits assigned to each counterparty. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterparty’s potential failure to make payments.

The Company’s maximum exposure to credit risk for bank balances and deposits as at March 31,2019 and March 31,2016 is the carrying amounts as disclosed In Note 9(a) and 13, maximum exposure relating to financial guarantees is disclosed In note 33and financial derivative instruments in notes 9(b)and 17(b)to the financial statements.

Ill Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying businesses, company treasury maintains flexibility In funding by maintaining availability under committed credit lines.

The management monitors rolling forecasts of the Company’s liquidity position (comprising the undrawn borrowing facilities below) and cash and cash equivalents on the basis of expected cash flows. This is generally carried out at operating segments level in the Company in accordance with practice and limits set by the Company. In addition, the Company’s liquidity management policy Involves projecting future cash flows and considering the level of liquid assets necessary to meet these and monitoring balance sheet liquidity ratios against internal requirements.

7(a) Hedging activities and derivatives Cashflow hedges Foreign currency risk

Foreign exchange forward contracts measured at fair value through OCI are designated as hedging instruments in cash flow hedges of forecast sales in USD, EUR, SEK and forecast purchases in USD, SEK, JPY. These forecast transactions are highly probable, and fully cover the Company’s expected future sales and future purchases based on the orders received.

While the Company also enters into other foreign exchange forward contracts with the intention to reduce the foreign exchange risk of expected sales and purchases, these other contracts are not designated in hedge relationships and are measured at fair value through profit or loss.

The foreign exchange forward contract balances vary with the level of expected foreign currency sales and purchases and changes In foreign exchange forward rates.

All the derivative contracts mature within the next 12 months.

The cash flow hedges of the expected future sales during the year ended March 31,2019 were assessed to be highly effective and a net unrealised gain of Rs. 13.32 (March 31,2018: Rs.0.26), with a deferred tax liability of Rs.4.65 (March 31,2018: Rs 0.09) relating to the hedging instruments, Is Included In OCI.

The cash flow hedges of the expected future purchases during the year ended March 31,2016 were assessed to be highly effective, and as at 31 March 2019, a net unrealised loss of Rs. 11.42 (March 31,2016: Rs. Nil) with a related deferred tax asset of Rs.3.99 (March 31,2016: Rs Nil) was Included in OCI In respect of these contracts.

The amounts retained in OCI at March 31,2019 are expected to mature and affect the Statement of profit and loss within the next 12 months. Reclassifications to profit or loss during the year gains or losses included in OCI are shown in Note 31.

8. Capital Management

The Company’s objective for capital management is to maximise shareholder value, safeguard business continuity and support the growth of the Company. The Company determines the capital requirement based on annual operating plans and long- term and other strategic investment plans. The funding requirements are met through equity and operating cash flows generated. No changes were made In the objectives, policies or processes during the years ended March 31,2019 and March 31,2018. Capital represents equity attributable to equ ity holders of the Parent Company.

* Considering the current market scenario and performance of certain subsidiaries, the Company has accounted for impairment on certain investments in subsidiaries.

# Subsequent to the acquisition of TBWES, as part of organisational restructuring the Board of Directors of the Company at its meeting held on February 8,2019, subject to share holders approval, have approved the transfer of Boilers & Heaters (B&H) division of Thermax Limited to TBWES on a going concern basis through slump sale. The consideration for the transaction will be at book value of B&H division. In view of the expected business synergies, available order book and current and expected performance of B&H business, management has assessed the carrying value of Investments in TBWES in financial statements and have accordingly reversed the earlier impairment loss of Rs 111.84 (disclosed as exceptional item).

9. Standards issued but not yet effective

(a) Ind AS 116, Leases:

Ind AS 116 Leases was notified on March 30,2019 and it replaces Ind AS 17 Leases, including appendices thereto. Ind AS 116 is effective for period beginning on or after April 1,2019. It sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under Ind AS 17. The Standard includes two recognition exemptions for lessees - leases of low-value’ assets and short-term leases. At the commencement date of a lease, a lessee will recognise a liability to make lease payments and an asset representing the right to use the underlying asset during the lease term. Lessees will be required to separately recognise the interest expense on the lease liability and the depreciation expense on the right-of-use asset.

Lessor accounting under Ind AS 116 is substantially unchanged from current accounting under Ind AS 17. Lessors will continue to classify all leases using the same classification principle as In Ind AS 17 and distinguish between two types of leases: operating and finance leases.

The Company continues to evaluate the available transition methods and its contractual arrangements. The ultimate impact on lease accounting from the application of Ind AS 116 will be subject to assessments that are dependent on many variable including, but not limited to, composition of the lease portfolio and the relevant discount rates at the date of adoption. The Company Is In the process to evaluate the changes to accounting system and processes, and additional disclosure requirements that may be necessary.

10. Event after reporting date

There are no significant events that occurred after reporting date.

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Mar 31, 2018

1. Corporate information

Thermax Limited (‘the Company’) offers solutions to energy, environment and chemical sectors. The Company’s portfolio includes boilers and heaters, absorption chillers/ heat pumps, power plants, solar equipment, air pollution control equipment/system, water and waste recycle plant, ion exchange resins and performance chemicals and related services.

The Company is a public limited company incorporated and domiciled in India. It is listed on the BSE Limited (BSE) and National Stock Exchange Limited (NSE)in India. The address of its registered office is D-13, MIDC Industrial Area, R.D. Aga Road, Chinchwad, Pune- 411019, India. The Board of Directors have authorized to issue this separate financial statements on May 18,2018. The CIN of the Company is L29299PN1980PLC022787.

2. Significant accounting policies

2.1. Basis of preparation, measurement

(a) Basis of preparation

These separate financial statements have been prepared in accordance with the Indian Accounting Standards (Ind AS), notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended from time to time).

The preparation of the separate financial statements requires the use of certain critical accounting estimates and judgments. It also requires the management to exercise judgment in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the separate financial statements are disclosed in note 3.

The employee welfare trusts (including ESOP trust) being separate legal entities, are not considered for the purpose of consolidation in the separate financial statements. However, these trusts have been consolidated in the Consolidated financial statements under Ind AS 110.

(b) Basis of measurement

The separate financial statements have been prepared on the accrual and going concern basis under historical cost convention except the following:

- Derivative financial instruments;

- Certain financial assets and liabilities measured at fair value (refer accounting policy regarding financial instruments); and

- Defined benefit plans whereby the plan assets are measured at fair value.

In addition, the carrying values of recognised assets and liabilities designated as hedged items in fair value hedges that would otherwise be carried at amortised cost are adjusted to record changes in the fair values attributable to the risks that are being hedged in effective hedge relationships.

3. Significant accounting judgments, estimates and assumptions

The preparation of the Company’s separate financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenue, expenses, assets and liabilities, and the accompanying disclosures and the disclosure of contingent liabilities as at the reporting date. However, 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.

3.1 Judgments

In the process of applying the Company’s accounting policies, management has made the following judgments, which have the most significant effect on the amounts recognized in the separate financial statements:

i. Revenue recognition on construction contracts

A significant portion of the Company’s business relates to construction activity which is accounted using percentage-of-completion method, recognizing revenue as the performance on the contract progresses. This requires Management to make judgement with respect to identifying contracts which need to be accounted under percentage-of-completion method, depending upon the level of customization and the period of the fulfilment of the performance obligations under the contract. The percentage-of-completion method requires Management to make significant estimates of the extent of progress towards completion including accounting of multiple contracts which need to be combined and considered as a single contract.

ii. Legal contingencies

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

iii. Segment reporting

Ind AS 108 ‘Operating Segments’ requires Management to determine the reportable segments for the purpose of disclosure in separate financial statements based on the internal reporting reviewed by Chief Operating Decision Maker (CODM) to assess performance and allocate resources. The standard also requires Management to make judgments with respect to aggregation of certain operating segments into one or more reportable segment.

Operating segments used to present segment information are identified based on the internal reports used and reviewed by the Managing Director and Chief Executive Officer to assess performance and allocate resources. The management has determined that some of the segments exhibit similar economic characteristics and meet other aggregation criteria and accordingly aggregated into three reportable segments i.e. energy, environment and chemical.

3.2 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 separate 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.

i. Constructions contracts:

- Provisions for liquidated damages claims (LDs): the Company provides for LD claims where there have been significant contract delays and it is considered probable that the customer will successfully pursue such a claim. This requires an estimate of the amount of LDs payable under a claim which involves a number of management judgments and assumptions regarding the amounts to be recognized.

- Project cost to complete estimates: at each reporting date, the Company is required to estimate costs to complete on fixed-price contracts. Estimating costs to complete on such contracts requires the Company to make estimates of future costs to be incurred, based on work to be performed beyond the reporting date. This estimate will impact revenues, cost of sales, work-in-progress, billings in excess of costs and estimated earnings and accrued contract expenses.

- Recognition of contract variations: the Company recognises revenues and margins from contract variations where it is considered probable that they will be awarded by the customer and this requires management to assess the likelihood of such an award being made by reference to customer communications and other forms of documentary evidence

- Provision for onerous contracts: the Company provides for future losses on long-term contracts where it is considered probable that the contract costs are likely to exceed revenues in future years. Estimating these future losses involves a number of assumptions about the achievement of contract performance targets and the likely levels of future cost escalation over time. Refer note 18(b) for details for provision for onerous contract.

ii. Impairment of non-financial assets

Impairment exists when the carrying value of an asset or cash generating unit (CGU) 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 (DCF) model. The cash flows are derived from the budget for the next five years as approved by the Management and do not include restructuring activities that the Company is not yet committed to or significant future investments that will enhance the asset’s performance of the CGU being tested. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the terminal growth rate used.

iii. Defined 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. The parameter which is most subjected to change is the discount rate. In determining the appropriate discount rate for plans operated in India, the management considers the interest rates of government bonds in currencies consistent with the currencies of the post-employment benefit obligation. The mortality rate is based on Indian Assured Lives Mortality (2006-08) Ultimate. Those mortality tables tend to change only at interval in response to demographic changes. Future salary increases and gratuity increases are based on expected future inflation rates. Further details about gratuity obligations are given in note 33.

iv. Fair value measurement of unquoted 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 DCF 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. Refer note 36forfurtherdisclosures.

v. Warranty provision

The Company generally offers warranty for its various products. Warranty costs are provided based on a technical estimate of the costs required to be incurred for repairs, replacements, material costs, servicing cost and past experience in respect of warranty costs. Management estimates the related provision for future warranty claims based on historical warranty claim information, as well as recent trends that might suggest that past cost information may differ from future claims. The assumptions made in current period are consistent with those in the prior year. Factors that could impact the estimated claim information include the success of the Company’s productivity and quality initiatives. Warranty provisions are discounted using a pre-tax discount rate which reflects current market assessments of time value of money and risks specific to the liability. Refer note 18 for further details.

vi. Impairment of financial assets

The impairment provisions for financial assets are based on assumptions about risk of default, expected loss rates and timing of cash flows. The Company uses judgment in making these assumptions and selecting the inputs to the impairment calculation, based on the Company’s past history, existing market conditions as well as forward looking estimates at the end of each reporting period.

As a practical expedient, the Company uses a provision matrix to determine ECL impairment allowance on portfolio of its trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivables and is adjusted for forward-looking estimates. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed. On that basis, the Company estimates a default rate of total revenue for trade receivables and contract revenue for contract receivables. The Company follows provisioning norms based on ageing of receivables to estimate the ECL provision. For retention receivables, the Company additionally categorizes the receivables due from Public Sector Undertakings (PSUs) and Non-PSUs and follows a wider aged bucket provisioning norms as the performance guarantee tests require certain time period after the supplies are completed. Refer note 7 and 9(b) for details of impairment allowance recognized at the reporting date.

vii. Useful lives of property, plant and equipment and intangible assets

The Company determines, based on independent technical assessment, the estimated useful lives of its property, plant and equipment and intangible assets for calculating depreciation and amortisation. This estimate is determined after considering the expected usage of the asset or physical wear and tear. Management reviews the residual value and useful lives annually and future depreciation and amortisation charge would be adjusted where the management believes the useful lives differ from previous estimates. Refer note 2(e) and 2(f) above for further details.

viii. Intangible asset under development

The Company capitalises intangible asset under development in accordance with the accounting policy. Initial capitalisation of costs is based on management’s judgement that technological and economic feasibility is confirmed, usually when a product development project has reached a defined milestone according to an established project management model. In determining the amounts to be capitalised, management makes assumptions regarding the expected future cash generation of the project, discount rates to be applied and the expected period of benefits. The carrying amount of capitalised intangible asset under development includes significant investment in the development of power plants using alternative energy solutions. The innovative nature of the product gives rise to some uncertainty as to performance parameters stated in the contract would be satisfied. Refer note 4(b) for details of intangible asset under development.

ix. Deferred taxes

At each balance sheet date, the Company assesses whether the realization of future tax benefits is sufficiently probable to recognize deferred tax assets. This assessment requires the use of significant estimates with respect to assessment of future taxable income. The recorded amount of total deferred tax assets could change if estimates of projected future taxable income or if changes in current tax regulations are enacted. Refer note 10 for further information on potential tax benefits for which no deferred tax asset is recognized.

The Company has tax losses which arose in India of Rs. 6.95 (March 31, 2017: Rs. 9.14) that are available for offsetting for eight years against future taxable profits. The losses will expire overthe next 5 financial years till March 2023.

Deferred tax assets have not been recognised in respect of these losses as they may not be used to offset taxable profits elsewhere in the Company and there are no other tax planning opportunities or other evidence of recoverability in the near future. If the Company were able to recognise all unrecognised deferred tax assets, the profit for the year would increase by Rs. 1.62 (March 31, 2017: Rs. 2.50).

During the year, the Company has paid dividends to its shareholders. This has resulted in payment of Dividend Distribution Tax (DDT) to the taxation authorities. The Company believes that DDT represents additional payment to taxation authority on behalf of the shareholders. Hence DDT paid is charged to equity.

For the year ended March 31, 2018 Rs. 2.51 (March 31, 2017 Rs. 1.65) was recognised (net of reversals) / (reversed) as an expense for inventories carried at net realisable value. These were recognised as expense during the year and included in ‘cost of raw materials and components consumed in the Statement of profit and loss.

Short-term deposits are made for varying periods ranging between one day and three months, depending on the immediate cash requirements of the Company, and earn interest at the respective short-term deposit rates.

There are no repatriation restrictions with regard to cash and cash equivalents as at the end of the reporting period and prior periods.

4 (a) Details of Specified Bank Notes held and transacted during the period November 8,2016 to December 30,2016

The Company had Specified Bank Notes (SBNs)and other denomination note as defined in the MCA notification G.S.R. 308(E) dated March 30, 2017. Details of SBNs and other denomination notes held and transacted during the period from November 8, 2016 to December 30,2016 are given below:

For the purpose of this clause, the term ‘Specified Bank Notes’ shall have the same meaning as 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 November 8, 2016. This disclosure is not applicable for year ended March 31,2018.

Effective April 1, 2017, the Company adopted the amendment to Ind AS 7, which require the entities to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes, suggesting inclusion of a reconciliation between the opening and closing balances in the Balance Sheet for liabilities arising from financing activities, to meet the disclosure requirement.

(b) Terms/ rights attached to equity shares

The Company has one class of equity shares having a par value of Rs. 2 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

(e) The Company has several trusts set up for welfare of employees (including ESOP trust). Such trusts together hold 65,41,440 (March 31,2017:65,41,440) equity shares representing 5.49% (March 31,2017:5.49%) of equity share in the Company.

Capital redemption reserve

Pertains to reserve created towards redemption of preference shares and can be utilised in accordance with the provisions of the Act.

Securities premium reserve

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

Capital reserve

Pertains to reserves arising on amalgamations in the past which is required to be maintained as per statute and cannot be distributed to the shareholders.

General reserve

Represents amounts transferred from retained earning in earlier years as perthe requirements of the erstwhile Companies Act, 1956. Cash flow hedge reserve

This reserve comprises the effective portion of the cumulative net change in the fair value of the cash flow hedge instruments related to hedged transactions that have not yet occurred.

Provision for decommissioning liability

A provision has been recognised for decommissioning costs associated with the property plant and equipment taken on lease by the Company. The Company is committed to decommission the site as a result of the construction of manufacturing facility. The timing of cash outflows in respect of such provision cannot be reasonably determined.

Provision for warranties

Warranty costs are provided based on a technical estimate of the costs required to be incurred for repairs, replacements, material costs, servicing cost and past experience in respect of such costs. It is expected that this expenditure will be incurred over the contracted warranty period ranging upto 2 years. If warranty claim costs vary by 10% from management’s estimate, the warranty provisions would be an estimated Rs. 8.76 higher or lower (March 31,2017 Rs. 8.35)

Provision for onerous contracts

A provision for expected loss on construction contracts is recognised when it is probable that the contracts costs will exceed total contract revenue. For all other contracts, provision is made when the unavoidable costs of meeting the obligation under the contract exceed the estimated economic benefits. The timing of cash outflows in respect of such provision is over the contract period.

Secured loans include bills discounted by suppliers amounting to Rs. 76.49 (March 31,2017: Rs. 65.21) that are repayable within 60 to 120 days of the invoice date.

Secured loans include post-shipment credit of Rs Nil (March 31, 2017: Rs 1.01) and carries an interest rate ranging between 2% to 5% due for repayment on various dates ranging upto 180 days.

These loans are secured by hypothecation of present and future stock of all inventories, stores and spares not related to plant and machinery, book debts and other moveable assets.

Unsecured loans pertains to packing credit of Rs. 40 (March 31, 2017: Rs. Nil) carries an interest rate of 4.5% due for repayment within 280 days from date of disbursement or expected shipment date whichever is earlier.

Sale of goods includes excise duty collected from customers of Rs. 20.76 (March 31,2017 Rs.106.64). Post applicability of Goods and Service Tax (GST) with effect from July 1, 2017, the revenue from operations are disclosed net of GST. Accordingly, the revenue from operations are inclusive of excise duty invoiced till June 30, 2017 and are not comparable with revenue for year ended March 31, 2017 to that extent.

# Includes revenue from construction contracts of Rs. 2,388.54 (March 31,2017: Rs. 2,318.18). Refer note 21 (b)for details.

* Includes mark to market gain on forward contracts not subjected to hedge accounting Rs. 0.30 (March 2017 Rs.1.98) ‘Government grants have been received for the purchase of certain items of property, plant and equipment. These grants are of the nature of grants related to income. There are no unfulfilled conditions or contingencies attached to these grants as at March 31, 2018 and March 31,2017.

“Includes rent income of Rs 2.28 (March 31,2017: Rs2.31); refer note 31 B (ii)

(d) Research and development costs

The Company has incurred expenses on research and development at research and development facilities approved and recognised by the Ministry of Science and Technology, Government of India.

(e) Capitalisation of expenses

During the year, the Company has capitalized the following expenses of revenue nature to the cost of fixed asset (tangible / intangible). Consequently, expenses disclosed under the respective notes are net of amounts capitalized by the Company.

5 Contingent liabilities and commitments A Contingent liabilities

a) During the previous years, the Commissioner of Central Excise, upon adjudication of the show cause-cum demand notices issued by the Department for the period June 2000 till September 2015, has raised demands of Rs. 1,330.64 crores on the Company (including penalty but excluding interest not presently quantified). During the year, the Company was served an additional demand order of Rs. 46.28 crores (including penalty but excluding interest not presently quantified) for the period October 2015 to March 2017 for the same matter. These demands are of excise duty payable on inclusion of the cost of bought out items in the assessable value of certain products manufactured by the Company, though such duty paid bought out items are directly dispatched by the manufacturers thereof to the ultimate customer, without being received in the Company’s factory. The Company filed an appeal against the said orders received before CESTAT, Mumbai. Based on an independent legal advice, the Company is confident of the issue being ultimately decided in its favour and accordingly, no provision has been considered necessary as at March 31,2018.

b) Taxes*

The timing and amount of the cash flow which will arise from these matters, will be determined by the relevant authorities on settlement of the cases or on receipt of claims from customers.

e) There are certain law suits, disputes, etc., including commercial matters that arises from time to time in the ordinary course of business for which amounts are not quantifiable by the management. However, based on management’s assessment under IND AS 37 “Provisions, Contingent Liabilities and Contingent Assets”, that the claims against the Company are not tenable/ probability of final outcome against the Company is low and therefore have not been disclosed as contingent liabilities.

B Capital and other commitments

a) Liability in respect of partly paid shares Rs. 0.19 (March 31,2017 Rs.0.19)

b) Estimated amount of contracts remaining to be executed on capital account (net of advances) and not provided for is Rs. 44.49 (March 31,2017 Rs. 43.93)

c) Lease commitments

i. Operating lease: Company as lessee

The Company has taken office buildings and factory shed on operating lease. The tenure of such leases ranges from 1 to 5 years. Lease rentals are charged to the Statement of profit and loss for the year. There are no subleases. The leases are renewable on mutually agreeable terms. At the expiry of the lease term, the Company has an option to terminate the agreement or extend the term by giving notice in writing.

ii. Operating lease: Company as lessor

The Company has leased certain parts of its surplus office and buildings. The tenure of such lease agreements ranges from 1 to 5 years. All leases include a clause to enable upward revision of the rental charge on an annual basis according to prevailing market conditions. For nature of assets refer note 4(a)

6 Gratuity

The Company operates a defined benefit plan viz. gratuity for its employees. Under the gratuity plan, every employee who has completed at least specified years of service gets a gratuity on departure at 15 days (minimum) of the last drawn salary for each completed year of service. The scheme is funded with an insurance Company in the form of qualifying insurance policy. The fund has formed a trust and it is governed by the Board of Trustees. The fund is subject to risks such as asset volatility, changes in assets yields and asset liability mismatch risk. In managing the plan assets, Board of Trustees reviews and manages these risks associated with the funded plan. Each year, the Board of Trustees reviews the level of funding in the gratuity plan. Such a review includes asset-liability matching strategy and investment risk management policy (which includes contributing to plans that invest in risk-averse markets). The Board of Trustees aim to keep annual contributions relatively stable at a level such that no plan deficits (based on valuation performed) will arise.

The above sensitivity analysis is based on a change in assumption while holding all other assumptions constant. In practice, this is unlikely to occur and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of defined benefit obligation calculated with the Projected Unit Credit Method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognised in the balance sheet. The method and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous periods.

7 Related party disclosures

A Subsidiaries

Unless otherwise stated, the subsidiaries have share capital consisting solely of equity shares that are held directly or indirectly by the Company, and the proportion of ownership interests held equals the voting rights held by the Company. The country of incorporation or registration is also their principal place of business.

# Held indirectly

## DateofacquisitionMay4,2017 ^A Date of incorporation August 8,2017

** The Company has ESOP trust and Employee Welfare Trusts set up for the welfare of the employees. Pursuant to the arrangement between the Trusts and the Company, the Company has determined that it has power to direct the relevant activities of the trust while being exposed to variable returns from its involvement with these entities.

D Individuals having significant influence over the Company by reason of voting power, and their relatives

1 Mrs. Meher Pudumjee - Chairperson

2 Mrs.AnuAga-Director

3 Mr. Pheroz Pudumjee - Director

4 Mr. Zahaan Pudumjee - Relative of Chairperson / Director

E Enterprises, over which control is exercised by individuals listed in ‘D’ above:

1 KRAHoldings Private Limited, India

2 Thermax Foundation, India

3 ARATrusteeship Company Private Limited, India

F Key Management Personnel:

1 Mr. M S Unnikrishnan - Managing Directorand Chief Executive Officer

2 Dr. Raghunath A. Mashelkar- Independent Director

3 Dr. Valentin A. H. von Massow - Independent Director

4 Dr. Jairam Varadaraj - Independent Director

5 Mr. Nawshir Mirza - Independent Director

6 Mr. Harsh Mariwala - Independent Director

7 Mr. SashishekharBalakrishna(Ravi) Pandit-Independent Director (w.e.f. May 30,2017)

8 Mr. Amitabha Mukhopadhyay - Chief Financial Officer

9 Mr. Kedar Phadke - Company Secretary (w.e.f. August 08,2017)

II. Terms and conditions of related party transactions and outstanding balances

The sales to and purchases from related parties are assessed to be at arm’s length transactions by the management. 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 not recorded any impairment of receivables relating to amounts owed by related parties (March 31, 2017: Rs. Nil). 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. All outstanding balances are unsecured and repayable in cash.

8 Segment information

In accordance with para 4 of Ind AS 108 “Operating Segments”, the Company has disclosed segment information in the consolidated financial statements.

9 Fair value measurements

a) Category of financial instruments and valuation techniques Break-up of financial assets carried at amortised cost

The management has assessed that the carrying amounts of the above financial instruments appoximate their fair values.

The fair values of the quoted shares and mutual funds are based on price quotations at the reporting date.

The Company enters into derivative financial instruments with banks. Foreign exchange forward contracts are valued using valuation techniques, which employs the use of market observable inputs which captures credit quality of counterparties, foreign exchange spot and forward rates, yield curves of the respective currencies, currency basis spreads between the respective currencies. All derivative contracts are fully cash collateralised, thereby eliminating both counterparty and the Company’s own non-performance risk. The changes in counterparty credit risk had no material effect on the hedge effectiveness assessment for derivatives designated in hedge relationships and other financial instruments recognised at fair value.

b) Fair value hierarchy

The following table provides the fair value measurement hierarchy of the Company’s assets and liabilities. Quantitative disclosures fair value measurement hierarchy for assets as at March 31,2018

There has been no transfer between Level 1 and Level 2 during the year.

Valuation of financial assets in Level 3 has been done based on discounting of future cash flows. There are no changes from previous year.

* The movement in Level 3 is on account of additional Investment in Preference shares and Interest accretion.

10(a) Financial risk management

The Company’s principal financial liabilities, other than derivatives, comprise trade and other payables and loans and borrowings. 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 derive directly from its operations. The Company also holds FVTPL investments and enters into derivative transactions.

Risk is inherent in the Company’s activities but it is managed through a process of ongoing identification, measurement and monitoring, subject to risk limits and other controls. This process of risk management is critical to the Company’s continuing profitability and each individual within the Company is accountable for the risk exposures relating to his or her responsibilities. The Company is exposed to market risk, credit risk and liquidity risk. The Company’s Board of Directors is ultimately responsible for the overall risk management approach and for approving the risk strategies and principles. No significant changes were made in the risk management objectives and policies during the years ended March 31, 2018 and March 31, 2017. The management of the Company reviews and agrees policies for managing each of these risks which are summarised below:

I Market risk

Market risk is the risk that the value of an asset will fluctuate as a result of changes in market variables such as interest rates, foreign exchange rates, and equity prices, whether those changes are caused by factors specific to the individual investment or its issuer orfactors affecting all investments traded in the market.

Market risk is managed on the basis of pre-determined asset allocations across various asset categories, diversification of assets in terms of geographical distribution and industry concentration, a continuous appraisal of market conditions and trends and management’s estimate of long and short term changes in fair value,

a Interest rate risk

Interest rate risk 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 is not currently exposed significantly to such risk,

b Foreign currency risk

Foreign exchange risk arises when future commercial transactions and recognised assets and liabilities are denominated in a currency that is not the Company’s functional currency. Foreign exchange risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates.

Foreign exchange risk is managed on the basis of limits determined by management and a continuous assessment of current and expected exchange rate movements and entering into derivative contracts that hedge the maximum period of exposure of underlying transactions (i.e. highly probable forecast sales and purchases).

When a derivative is entered into for the purpose of being a hedge, the Company negotiates the terms of those derivatives to match the terms of the hedged exposure. For hedges of forecast transactions the derivatives cover the period of exposure from the point the cash flows of the transactions are forecasted up to the point of settlement of the resulting receivable or payable that is denominated in the foreign currency.

Foreign currency sensitivity

The following tables demonstrate the sensitivity to a reasonably possible change in USD, SEK, EUR and JPY exchange rates, with all other variables held constant. The impact on the Company’s profit before tax is due to changes in the fair value of monetary assets and liabilities including foreign currency derivatives not designated as cash flow hedge and foreign currency derivatives with underlying foreign currency monetary assets/liabilities designated at cash flow hedge. The impact on the Company’s pre-tax equity is due to changes in the fair value of forward exchange contracts designated as cash flow hedges.

Favourable impact shown as positive and adverse impact as negative.

The exposure to other foreign currencies is not significant to the Company’s financial statements,

c Price risk

The Company’s equity securities are susceptible to market price risk arising from uncertainties about future values of the investment securities. These securities are unquoted. The Company manages the equity price risk through diversification and by placing limits on individual and total equity instruments. Reports on the equity portfolio are submitted to the Company’s senior management on a regular basis. The Company’s Board of Directors reviews and approves all equity investment decisions.

As at balance sheet, the exposure to equity shares at fair value was Rs. 0.29 (March 31, 2017: Rs 0.40). At the reporting date, an increase/decrease of 10% market index would have a impact of approx gain / loss of Rs. 0.03 (March 31, 2017: Rs 0.04) respectively on statement of profit and loss.

II 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. The Company is exposed to credit risk from its operating activities (primarily trade receivables and contract assets) and from its financing activities, including deposits with banks, foreign exchange transactions and other financial instruments.

Trade receivables

Customer credit risk is managed by each business unit 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 individual credit limits and riskof potential default based on defined credit risk parameters. An impairment analysis is performed at each reporting date on an individual basis for major clients. In addition, a large number of minor receivables are grouped into homogenous group and assessed for impairment collectively. The calculation is based on losses as per historical data. The maximum exposure to credit riskat the reporting date is the carrying value of each class of financial assets disclosed in notes 7 and 9(b) above. The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and industries and operate in largely independent markets.

Financial instruments and bank deposits

Credit risk from balances with banks, mutual funds, loans and other financial assets are managed by the Company’s treasury department in accordance with the Company’s policy. Investments of surplus funds are made only with approved counterparties having a good market reputation and within credit limits assigned to each counterparty. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterparty’s potential failure to make payments.The Company’s maximum exposure to credit risk for bank balances and deposits as at March 31, 2018 and March 31, 2017 is the carrying amounts as disclosed in Note 9(a) and 13, maximum exposure relating to financial guarantees is disclosed in note 33 and financial derivative instruments in notes 9(b) and 17(b) to the financial statements.

Ill Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying businesses, company treasury maintains flexibility in funding by maintaining availability undercommitted credit lines.The management monitors rolling forecasts of the Company’s liquidity position (comprising the undrawn borrowing facilities below) and cash and cash equivalents on the basis of expected cash flows. This is generally carried out at operating segments level in the Company in accordance with practice and limits set by the Company. In addition, the Company’s liquidity management policy involves projecting future cash flows and considering the level of liquid assets necessary to meet these and monitoring balance sheet liquidity ratios against internal requirements.

(i) Maturities of financial liabilities

The tables below summarises the company’s financial liabilities into relevant maturity profile based on contractual undiscounted payments:

10 (b) Hedging activities and derivatives Cash flow hedges Foreign currency risk

Foreign exchange forward contracts measured at fair value through OCI are designated as hedging instruments in cash flow hedges of forecast sales in USD, EUR, SEK and forecast purchases in USD, SEK, JPY. These forecast transactions are highly probable, and fully cover the Company’s expected future sales and future purchases based on the orders received.While the Company also enters into other foreign exchange forward contracts with the intention to reduce the foreign exchange risk of expected sales and purchases, these other contracts are not designated in hedge relationships and are measured at fair value through profit or loss.The foreign exchange forward contract balances vary with the level of expected foreign currency sales and purchases and changes in foreign exchange forward rates.

The cash flow hedges of the expected future sales during the year ended March 31, 2018 were assessed to be highly effective and a net unrealised gain of Rs. 0.26 (March 31, 2017: Rs 41.45), with a deferred tax liability of Rs. 0.09 (March 31, 2017: Rs 14.35) relating to the hedging instruments, is included in OCI.The cash flow hedges of the expected future purchases during the year ended March 31, 2018 were assessed to be highly effective, and as at 31 March 2018, a net unrealised loss of Rs. Nil (March 31, 2017: Rs 11.60) with a related deferred tax asset of Rs. Nil (March 31, 2017: Rs 4.02) was included in OCI in respect of these contracts.The amounts retained in OCI at March 31, 2018 are expected to mature and affect the statement of profit and loss during the year ended March 31, 2019.Reclassifications to profit or loss during the year gains or losses included in OCI are shown in Note 30.

11 Capital Management

The Company’s objective for capital management is to maximise shareholder value, safeguard business continuity and support the growth of the Company. The Company determines the capital requirement based on annual operating plans and long-term and other strategic investment plans. The funding requirements are met through equity and operating cash flows generated. No changes were made in the objectives, policies or processes during the years ended March 31,2018 and March 31, 2017. Capital represents equity attributable to equity holders of the Parent Company.

12 (a) Standards issued but notyet effective

IndAS 115, Revenue from Contracts with Customers:

Ind AS 115 was notified on 28 March 2018 and establishes a five-step model to account for revenue arising from contracts with customers. Under Ind AS 115, revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer.

The new revenue standard will supersede all current revenue recognition requirements under Ind AS. This new standard requires revenue to be recognized when promised goods or services are transferred to customers in amounts that reflect the consideration to which the Company expects to be entitled in exchange for those goods or services. Adoption of the new rules could affect the timing of revenue recognition for certain transactions of the Company. IndAS 115 is effective for the Company (in the first quarter of financial year 2018-19) using either one of two methods: (i) retrospectively to each prior reporting period presented in accordance with IndAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, with the option to elect certain practical expedients as defined within Ind AS 115 (the full retrospective method); or (ii) retrospectively with the cumulative effect of initially applying Ind AS 115 recognized at the date of initial application (April 1, 2018) and providing certain additional disclosures as defined in IndAS 115 (the modified retrospective method).

The Company continues to evaluate the available transition methods and its contractual arrangements. The ultimate impact on revenue resulting from the application of Ind AS 115 will be subject to assessments that are dependent on many variables, including, but not limited to, the terms of the contractual arrangements and the mix of business. The Company’s considerations also include, but are not limited to, the comparability of its financial statements and the comparability within its industry from application of the new standard to its contractual arrangements. The Company has established an implementation team to implement Ind AS 115 related to the recognition of revenue from contracts with customers and it continues to evaluate the changes to accounting system and processes, and additional disclosure requirements that may be necessary.

Upon adoption the Company expects there to be a change in the manner that variable consideration in certain revenue arrangements is recognized from the current practice of recognizing such revenue as the services are performed and the variable consideration is earned to estimating the achievability of the variable conditions when the Company begins delivering services and recognizing that amount over the contractual period. The Company also expects a change in the manner that it recognizes certain incremental and fulfilment costs from expensing them as incurred to deferring and recognizing them over the contractual period. A reliable estimate of the quantitative impact of Ind AS 115 on the financial statements will only be possible once the implementation project has been completed.

Appendix B to Ind AS 21 Foreign Currency Transactions and Advance Consideration:

On March 28, 2018, MCA has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 containing Appendix B to Ind AS 21, Foreign currency transactions and advance consideration which clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency. This amendment will come into force from April 1, 2018. The Company is assessing the effect of this on the financial statements. Other amendments are not applicable and hence have not been disclosed here.

12(b) Event after reporting date

The Company has entered into a preliminary understanding with Babcock & Wilcox India Holding Inc. (B&W) to acquire the shareholding of the latter in the joint venture, Thermax Babcock & Wilcox Energy Solutions Private Limited (TBWES). The parties are working towards a definitive agreement to conclude the transaction.

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Mar 31, 2017

1. Significant accounting judgments, estimates and assumptions

The preparation of the Company’s separate financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenue, expenses, assets and liabilities, and the accompanying disclosures and the disclosure of contingent liabilities as at the reporting date. However, 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.

2 Judgments

In the process of applying the Company’s accounting policies, management has made the following judgments, which have the most significant effect on the amounts recognized in the separate financial statements:

i. Revenue recognition on construction contracts

A significant portion of the Company’s business relates to construction activity which is accounted using percentage-of-completion method, recognizing revenue as the performance on the contract progresses. This requires Management to make judgment with respect to identifying contracts which need to be accounted

under percentage-of-completion method, depending upon the level of customization and the period of the fulfillment of the performance obligations under the contract. The percentage-of-completion method requires Management to make significant estimates of the extent of progress towards completion including accounting of multiple contracts which need to be combined and considered as a single contract.

ii. Legal contingencies

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

iii. Segment reporting

Ind AS 108 Operating Segments requires Management to determine the reportable segments for the purpose of disclosure in separate financial statements based on the internal reporting reviewed by Chief Operating Decision Maker (CODM) to assess performance and allocate resources. The standard also requires Management to make judgments with respect to aggregation of certain operating segments into one or more reportable segment.

Operating segments used to present segment information are identified based on the internal reports used and reviewed by the Board of Directors to assess performance and allocate resources. The management has determined that some of the segments exhibit similar economic characteristics and meet other aggregation criteria and accordingly aggregated into three reportable segments i.e. energy, environment and chemical.

3. 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 separate 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.

i. Constructions contracts:

- Provisions for liquidated damages claims (LDs): the Company provides for LD claims where there have been significant contract delays and it is considered probable that the customer will successfully pursue such a claim. This requires an estimate of the amount of LDs payable under a claim which involves a number of management judgments and assumptions regarding the amounts to be recognized.

- Project cost to complete estimates: at each reporting date, the Company is required to estimate costs to complete on fixed-price contracts. Estimating costs to complete on such contracts requires the Company to make estimates of future costs to be incurred, based on work to be performed beyond the reporting date. This estimate will impact revenues, cost of sales, work-in-progress, billings in excess of costs and estimated earnings and accrued contract expenses.

- Recognition of contract variations: the Company recognizes revenues and margins from contract variations where it is considered probable that they will be awarded by the customer and this requires management to assess the likelihood of such an award being made by reference to customer communications and other forms of documentary evidence

-Provision for onerous contracts: the Company provides for future losses on long-term contracts where it is considered probable that the contract costs are likely to exceed revenues in future years. Estimating these future losses involves a number of assumptions about the achievement of contract performance targets and the likely levels of future cost escalation over time. Refer note 19(b) for details for provision for onerous contract.

ii. Impairment of non-financial assets

Impairment exists when the carrying value of an asset or cash generating unit (CGU) 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 (DCF) model. The cash flows are derived from the budget for the next five years as approved by the Management and do not include restructuring activities that the Company is not yet committed to or significant future investments that will enhance the asset’s performance of the CGU being tested. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the terminal growth rate used.

iii. Defined 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. The parameter which is most subjected to change is the discount rate. In determining the appropriate discount rate for plans operated in India, the management considers the interest rates of government bonds in currencies consistent with the currencies of the post-employment benefit obligation. The mortality rate is based on Indian Assured Lives Mortality (2006-08) Ultimate. Those mortality tables tend to change only at interval in response to demographic changes. Future salary increases and gratuity increases are based on expected future inflation rates. Further details about gratuity obligations are given in note 34.

iv. Fair value measurement of unquoted 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 DCF 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. Refer note 37 for further disclosures.

v. Warranty provision

The Company generally offers warranty for its various products. Warranty costs are provided based on a technical estimate of the costs required to be incurred for repairs, replacements, material costs, servicing cost and past experience in respect of warranty costs. Management estimates the related provision for future warranty claims based on historical warranty claim information, as well as recent trends that might suggest that past cost information may differ from future claims. The assumptions made in current period are consistent with those in the prior year. Factors that could impact the estimated claim information include the success of the Company’s productivity and quality initiatives. Warranty provisions are discounted using a pretax discount rate which reflects current market assessments of time value of money and risks specific to the liability. Refer note 19 for further details.

vi. Impairment of financial assets

The impairment provisions for financial assets are based on assumptions about risk of default, expected loss rates and timing of cash flows. The Company uses judgment in making these assumptions and selecting the inputs to the impairment calculation, based on the Company’s past history, existing market conditions as well as forward looking estimates at the end of each reporting period.

As a practical expedient, the Company uses a provision matrix to determine ECL impairment allowance on portfolio of its trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivables and is adjusted for forward-looking estimates. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analyzed. On that basis, the Company estimates a default rate of total revenue for trade receivables and of contract revenue for contract receivables. The Company follows provisioning norms based on ageing of receivables to estimate the ECL provision. For retention receivables, the Company additionally categorizes the receivables due from Public Sector Undertakings (PSUs) and Non-PSUs and follows a wider aged bucket provisioning norms as the performance guarantee tests require certain time period after the supplies are completed. Refer note 7 and 9(b) for details of impairment allowance recognized at the reporting date.

vii. Useful lives of property, plant and equipment and intangible assets

The Company determines, based on independent technical assessment, the estimated useful lives of its property, plant and equipment and intangible assets for calculating depreciation and amortization. This estimate is determined after considering the expected usage of the asset or physical wear and tear. Management reviews the residual value and useful lives annually and future depreciation and amortization charge would be adjusted where the management believes the useful lives differ from previous estimates. Refer note 2(e) above for further details.

viii. Intangible asset under development

The Company capitalizes intangible asset under development in accordance with the accounting policy. Initial capitalization of costs is based on management’s judgment that technological and economic feasibility is confirmed, usually when a product development project has reached a defined milestone according to an established project management model. In determining the amounts to be capitalized, management makes assumptions regarding the expected future cash generation of the project, discount rates to be applied and the expected period of benefits. The carrying amount of capitalized intangible asset under development includes significant investment in the development of power plants using alternative energy solutions. The innovative nature of the product gives rise to some uncertainty as to performance parameters stated in the contract would be satisfied. Refer note 4(b) for details of intangible asset underdevelopment.

ix. Deferred taxes

At each balance sheet date, the Company assesses whether the realization of future tax benefits is sufficiently probable to recognize deferred tax assets. This assessment requires the use of significant estimates with respect to assessment of future taxable income. The recorded amount of total deferred tax assets could change if estimates of projected future taxable income or if changes in current tax regulations are enacted. Refer note 10 for further information on potential tax benefits for which no deferred tax asset is recognized.

Financial assets at fair value through other comprehensive income reflect the positive change in fair value of foreign exchange forward contracts, designated as cash flow hedges to hedge highly probable forecast sales and purchases in various foreign currencies.

Unbilled revenue is disclosed net of impairment allowance of Rs. 11.04 (March 31,2016: Rs. 15.35; April 1,2015: Rs. 17.19) for contract assets.

The Company offsets tax assets and liabilities if and only if it has a legally enforceable right to set off income tax assets and liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.

The Company has tax losses which arose in India of Rs. 9.14 (March 31, 2016: Rs. 12.37, April 1, 2015: Rs. 12.37) that are available for offsetting for eight years against future taxable profits. The losses will expire over the next 5 financial years till March 2022.

Deferred tax assets have not been recognized in respect of these losses as they may not be used to offset taxable profits elsewhere in the Company and there are no other tax planning opportunities or other evidence of recoverability in the near future. If the Company were able to recognize all unrecognized deferred tax assets, the profit for the year would increase by Rs. 2.50 (March 31,2016: Rs. 2.48).

During the year, the Company has paid dividends to its shareholders. This has resulted in payment of Dividend Distribution Tax (DDT) to the taxation authorities. The Company believes that DDT represents additional payment to taxation authority on behalf of the shareholders. Hence DDT paid is charged to equity.

(b) Terms /rights attached to equity shares

The Company has one class of equity shares having a par value of Rs. 2 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

As per records of the Company, including its register of shareholders/ members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents the legal ownerships of shares.

(e) The Company has several trusts set up for welfare of employees (including ESOP trust). Such trusts together hold 65,41,440 (March 31, 2016: 65,41,440; April 1, 2015: 65,41,440) equity shares representing 5.49% (March 31, 2016:5.49%; April 1,2015:5.49%) of equity share in the Company.

General reserve

Represent amounts transferred from retained Earnings in earlier years as per the requirements of the erstwhile Companies Act 1956 and transition adjustments on implementation of new accounting standards.

Cash flow hedge reserve

This reserve comprises the effective portion of the cumulative net change in the fair value of the cash flow hedge instruments related to hedged transactions that have notyet occurred.

Secured loan pertained to loan from Department of Bio Technology. As per the agreement, the loan was to be repaid in ten half yearly installments starting from December 2014 however the balance loan outstanding was repaid during the year. Loan was secured by hypothecation of equipment purchased for research and development out of these funds.

Unsecured loan represents loan from Indo-German Science & Technology Centre. As per the agreement, the loan was to be repaid in ten half yearly installments starting from November 2015 however the balance loan outstanding was repaid during the year.

Secured loans include bill discounted by suppliers amounting to Rs. 65.21 (March 31, 2016: Rs. 83.11; April 1, 2015: Rs. 97.43) that are repayable within 60 to 120 days of the invoice date.

Secured loans include post-shipment credit of Rs 1.01 (March 31,2016: Rs 7.64; April 1,2015: Rs. 6.78) carries an interest rate ranging between 2 to 5% due for repayment on various dates ranging upto 180 days.

These loans are secured by hypothecation of present and future stock of all inventories, stores and spares not related to plant and machinery, book debts and other moveable assets.

Provision for decommissioning liability

A provision has been recognized for decommissioning costs associated with the land taken on lease by the Company. The Company is committed to decommission the site as a result of the construction of manufacturing facility. The timing of cash outflows in respect of such provision cannot be reasonably determined.

Provision for warranties

Warranty costs are provided based on a technical estimate of the costs required to be incurred for repairs, replacements, material costs, servicing cost and past experience in respect of such costs. It is expected that this expenditure will be incurred over the contracted warranty period ranging up to 2 years. If warranty claim costs vary by 10% from management’s estimate, the warranty provisions would be an estimated Rs. 8.35 higher or lower (March 31,2016 Rs. 7.92; April 1,2015: Rs. 7.64)

Provision for onerous contracts

A provision for expected loss on construction contracts is recognized when it is probable that the contracts costs will exceed total contract revenue. For all other contracts, provision is made when the unavoidable costs of meeting the obligation under the contract exceed the estimated economic benefits. The timing of cash outflows in respect of such provision is over the contract period.

4Contingent liabilities and commitments A Contingent liabilities

a) During the previous year, the Commissioner of Central Excise, upon adjudication of the show cause-cum demand notices issued by the Department for the period June 2000 till March 2015, has raised demands of Rs. 1,263.24 crores on the Company (including penalty but excluding interest not presently quantified). During the year, the Company was served an additional demand order of Rs.67.40 crores (including penalty but excluding interest not presently quantified) for the period April 2015 to September 2015 for the same matter.

These demands are of excise duty payable on inclusion of the cost of bought out items in the assessable value of certain products manufactured by the Company, though such duty paid bought out items are directly dispatched by the manufacturers thereof to the ultimate customer, without being received in the Company''s factory. The Company filed an appeal against the said orders received before CESTAT, Mumbai. Based on an independent legal advice, the Company is confident of the issue being ultimately decided in its favour and accordingly, no provision has been considered necessary as at March 31,2017.

The Company has issued various guarantees for performance, deposits, tender money etc. The management has considered the probability for outflow of the same to be remote and accordingly no amount has been disclosed here.

The timing and amount of the cash flow which will arise from these matters, will be determined by the relevant authorities on settlement of the cases or on receipt of claims from customers.

B Capital and other commitments

a) Liability in respect of partly paid shares Rs. 0.19 (March 31,2016 Rs.0.19, April 1,2015 Rs. 0.19)

b) Estimated amount of contracts remaining to be executed on capital account (net of advances) and not provided for is Rs. 43.93 (March 31,2016 Rs. 69.11 April 1,2015 Rs. 6.92)

c) Lease commitments

i. Operating lease: Company as lessee

The Company has taken office buildings on operating lease. The tenure of such leases ranges from 1 to 5 years. Lease rentals are charged to the Statement of profit and loss for the year. There are no subleases. The leases are renewable on mutually agreeable terms. At the expiry of the lease term, the company has an option to terminate the agreement or extend the term by giving notice in writing.

ii. Operating lease: Company as less or

The Company has leased certain parts of its surplus office and buildings. The tenure of such lease agreements ranges from 1 to 5 years. All leases include a clause to enable upward revision of the rental charge on an annual basis according to prevailing market conditions. For nature of assets refer note 4(a)

5 Gratuity

The Company operates a defined benefit plan viz. gratuity for its employees. Under the gratuity plan, every employee who has completed at least specified years of service gets a gratuity on departure @ 15 days (minimum) of the last drawn salary for each completed year of service. The scheme is funded with an insurance Company in the form of qualifying insurance policy. The fund has formed a trust and it is governed by the Board of Trustees.

The fund is subject to risks such as asset volatility, changes in bond yields and asset liability mismatch risk. In managing the plan assets, Board of Trustees reviews and manages these risks associated with the funded plan. Each year, the Board of Trustees reviews the level of funding in the gratuity plan. Such a review includes asset-liability matching strategy and investment risk management policy (which includes contributing to plans that invest in risk-averse markets). The Board of Trustees aim to keep annual contributions relatively stable at a level such that no plan deficits (based on valuation performed) will arise.

The above sensitivity analysis is based on a change in assumption while holding all other assumptions constant. In practice, this is unlikely to occur and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of defined benefit obligation calculated with the Projected Unit Credit Method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognized in the balance sheet.

The method and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous periods.

D Individuals having significant influence over the Company by reason of voting power, and their relatives

1 Mrs. Meher Pudumjee-Chairperson

2 Mrs. Anu Aga-Director

3 Mr. Pheroz Pudumjee-Director

E Enterprise, over which control is exercised by individuals listed in ‘D’ above:

1 Thermax Foundation, India (formerly known as Thermax Social Initiative Foundation)

2 KRA Holdings Private Limited, India

F Key Management Personnel:

1 Mr. M S Unnikrishnan - Managing Director and Chief Executive Officer

2 Dr Raghunath A. Mashelkar - Independent Director

3 Dr Valentin A. H. von Massow-Independent Director

4 Dr Jairam Varadaraj - Independent Director

5 Mr. Nawshir Mirza - Independent Director

6 Mr. Harsh Mariwala - Independent Director (w.e.f. November 10,2016)

7 Mr. Amitabha Mukhopadhyay - Chief Financial Officer

8 Mr. Amit Atre - Company Secretary (Up to January 12,2017)

II. Commitments

Pursuant to the agreement between the Company, First Energy Private Limited, India (FEPL) and the shareholders of FEPL, the Company has a call option to increase its equity holding in FEPL up to 76% and counter party has corresponding put option. This commitment and the related consideration is subject to certain pre-conditions, including conditions linked to future performance, and timelines, which are not disclosed due to sensitivity of the information.

III. Terms and conditions for outstanding balances

1. All outstanding balances are unsecured and repayable in cash.

2. Loan to joint venture has been given on a short-term basis at market rates of interest.

IV. Terms and conditions of related party transactions

The sales to and purchases from related parties are assessed to be at arm’s length transactions by the management. 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, 2017, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (March 31, 2016: Rs. Nil, April 1, 2015: Rs. Nil). 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.

6 Segment information

In accordance with para 4 of Ind AS 108 “Operating Segments”, the company has disclosed segment information in the consolidated financial statements.

The management has assessed that the carrying amounts of the above financial instruments approximate their fair values.

The Company enters into derivative financial instruments with banks. Foreign exchange forward contracts are valued using valuation techniques, which employs the use of market observable inputs which captures credit quality of counterparties, foreign exchange spot and forward rates, yield curves of the respective currencies, currency basis spreads between the respective currencies. All derivative contracts are fully cash collateralized, thereby eliminating both counterparty and the Company’s own non-performance risk. The changes in counterparty credit risk had no material effect on the hedge effectiveness assessment for derivatives designated in hedge relationships and other financial instruments recognized at fair value.

7 (a) Financial risk management

The Company’s principal financial liabilities, other than derivatives, comprise trade and other payables and loans and borrowings. 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 derive directly from its operations. The Company also holds FVTPL investments and enters into derivative transactions.

Risk is inherent in the Company’s activities but it is managed through a process of ongoing identification, measurement and monitoring, subject to risk limits and other controls. This process of risk management is critical to the Company’s continuing profitability and each individual within the Company is accountable for the risk exposures relating to his or her responsibilities. The Company is exposed to market risk, credit risk and liquidity risk.

The Company’s Board of Directors is ultimately responsible for the overall risk management approach and for approving the risk strategies and principles. No significant changes were made in the risk management objectives and policies during the years ended March 31, 2017 and March 31, 2016. The management of the Company reviews and agrees policies for managing each of these risks which are summarized below:

I Market risk

Market risk is the risk that the value of an asset will fluctuate as a result of changes in market variables such as interest rates, foreign exchange rates, and equity prices, whether those changes are caused by factors specific to the individual investment or its issuer or factors affecting all investments traded in the market.

Market risk is managed on the basis of pre-determined asset allocations across various asset categories, diversification of assets in terms of geographical distribution and industry concentration, a continuous appraisal of market conditions and trends and management’s estimate of long and short term changes in fair value.

a Interest rate risk

Interest rate risk 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 is not currently exposed significantly to such risk.

b Foreign currency risk

Foreign exchange risk arises when future commercial transactions and recognized assets and liabilities are denominated in a currency that is not the Company’s functional currency. Foreign exchange risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates.

Foreign exchange risk is managed on the basis of limits determined by management and a continuous assessment of current and expected exchange rate movements and entering into derivative contracts that hedge the maximum period of exposure of underlying transactions (i.e. highly probable forecast sales and purchases).

When a derivative is entered into for the purpose of being a hedge, the Company negotiates the terms of those derivatives to match the terms of the hedged exposure. For hedges of forecast transactions the derivatives cover the period of exposure from the point the cash flows of the transactions are forecasted up to the point of settlement of the resulting receivable or payable that is denominated in the foreign currency.

Foreign currency sensitivity

The following tables demonstrate the sensitivity to a reasonably possible change in USD, SEK and EUR exchange rates, with all other variables held constant. The impact on the Company’s profit before tax is due to changes in the fair value of monetary assets and liabilities including foreign currency derivatives not designated as cash flow hedge and foreign currency derivatives with underlying foreign currency monetary assets/liabilities designated as cash flow hedge. The impact on the Company’s pre-tax equity is due to changes in the fair value of forward exchange contracts designated as cash flow hedges.

Favorable impact shown as positive and adverse impact as negative.

The exposure to other foreign currencies is not significant to the company’s financial statements, c Price risk

The Company’s equity securities are susceptible to market price risk arising from uncertainties about future values of the investment securities. These securities are unquoted. The Company manages the equity price risk through diversification and by placing limits on individual and total equity instruments. Reports on the equity portfolio are submitted to the Company’s senior management on a regular basis. The Company’s Board of Directors reviews and approves all equity investment decisions.

II 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. The Company is exposed to credit risk from its operating activities (primarily trade receivables and contract assets) and from its financing activities, including deposits with banks, foreign exchange transactions and other financial instruments.

Trade receivables

Customer credit risk is managed by each business unit 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 individual credit limits and risk of potential default based on defined credit risk parameters. An impairment analysis is performed at each reporting date on an individual basis for major clients. In addition, a large number of minor receivables are grouped into homogenous group and assessed for impairment collectively. The calculation is based on losses as per historical data. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in notes 7 and 9(b) above. The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several jurisdictions and industries and operate in largely independent markets.

Financial instruments and bank deposits

Credit risk from balances with banks, mutual funds, loans and other financial assets are managed by the Company’s treasury department in accordance with the Company’s policy. Investments of surplus funds are made only with approved counterparties having a good market reputation and within credit limits assigned to each counterparty. The limits are set to minimize the concentration of risks and therefore mitigate financial loss through counterparty’s potential failure to make payments.

The Company’s maximum exposure to credit risk for bank balances and deposits as at March 31,2017, March 31, 2016 and April 1, 2015 is the carrying amounts as disclosed in Note 9(a) and 13, maximum exposure relating to financial guarantees is disclosed in note 33 and financial derivative instruments in notes 9(b) and 18(b) to the financial statements.

Ill Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying businesses, company treasury maintains flexibility in funding by maintaining availability under committed credit lines.

The management monitors rolling forecasts of the Company’s liquidity position (comprising the undrawn borrowing facilities below) and cash and cash equivalents on the basis of expected cash flows. This is generally carried out at operating segments level in the Company in accordance with practice and limits set by the Company. In addition, the Company’s liquidity management policy involves projecting future cash flows and considering the level of liquid assets necessary to meet these and monitoring balance sheet liquidity ratios against internal requirements.

(i) Maturities of financial liabilities

The tables below summarizes the company’s financial liabilities into relevant maturity profile based on contractual undiscounted payments:

38(b) Hedging activities and derivatives Cash flow hedges Foreign currency risk

Foreign exchange forward contracts measured at fair value through OCI are designated as hedging instruments in cash flow hedges of forecast sales in EUR, USD, SEK, and forecast purchases in USD, SEK, JPY, USD . These forecast transactions are highly probable, and fully cover the Company’s expected future sales and future purchases based on the orders received.

While the Company also enters into other foreign exchange forward contracts with the intention to reduce the foreign exchange risk of expected sales and purchases, these other contracts are not designated in hedge relationships and are measured at fair value through profit or loss.

The foreign exchange forward contract balances vary with the level of expected foreign currency sales and purchases and changes in foreign exchange forward rates.

All the derivative contracts expire in next 12 months.

The cash flow hedges of the expected future sales during the year ended March 31, 2017 were assessed to be highly effective and a net unrealized gain of Rs. 41.45, with a deferred tax liability of Rs.14.35 relating to the hedging instruments, is included in OCI. Comparatively, the cash flow hedges of the expected future sales during the year ended March 31,2016 were assessed to be highly effective and an unrealized gain of Rs. 13.34 with a deferred tax liability of Rs. 4.62 was included in OCI in respect of these contracts.

The cash flow hedges of the expected future purchases during the year ended March 31,2017 were assessed to be highly effective, and as at 31 March 2017, a net unrealized loss of Rs. 11.60 with a related deferred tax asset of Rs. 4.02 was included in OCI in respect of these contracts. Comparatively, the cash flow hedges of the expected future purchases during the year ended March 31,2016 were also assessed to be highly effective and an unrealized gain of Rs. 0.23 with a deferred tax liability of Rs. 0.08 was included in OCI in respect of these contracts.

The amounts retained in OCI at March 31,2017 are expected to mature and affect the statement of profit and loss during the year ended March 31,2018.

Reclassifications to profit or loss during the year gains or losses included in OCI are shown in Note 30.

8 Capital Management

The Company’s objective for capital management is to maximize shareholder value, safeguard business continuity and support the growth of the Company. The Company determines the capital requirement based on annual operating plans and long- term and other strategic investment plans. The funding requirements are met through equity and operating cash flows generated. No changes were made in the objectives, policies or processes during the years ended March 31,2017 and March 31,2016. Capital represents equity attributable to equity holders of the Parent Company.

9 Impairment of Investment in Subsidiaries and Joint Venture

The Management has assessed the recoverability of its investment in Thermax Babcock & Wilcox Energy Solutions Private Limited, a joint venture, following continued losses on account of low demand, fewer committed orders resulting in lower capacity utilization and intense competition. Consequently, the investment has been impaired by Rs. 111.84 and the related charge has been disclosed as an exceptional item in the statement of profit and loss.

The significant judgments used by an independent valuer in the valuation of the entity mainly include the government published land rates for industrial property in the vicinity of the property under valuation, estimated remaining useful life, cost of construction for similar buildings and replacement cost of the buildings, and price trends in the cost of plant and machinery.

First Energy Private Limited (FEPL), a subsidiary, witnessed significant deterioration due to structural change in energy price dynamics and delayed recoveries from customers. The Company therefore tested the investment in FEPL for impairment as at the year-end. The recoverable value has been determined based on value-in-use calculation using cash flow projections from financial budgets approved by senior management covering a 5-year period. The projected cash flows have been updated to reflect the decreased demand for the products and services. The pre-tax discount rate applied to cash flow projections is 18% and the cash flows beyond the 5-year period have been extrapolated using a long-term average growth rate of 4%. As a result of this analysis, The Company has recorded an impairment loss of Rs. 16 which has been presented as an exceptional item in the Statement of profit and loss.

The Management has assessed the recoverability of its investment in Thermax (Zhejiang) Cooling & Heating Engineering Company Ltd., a subsidiary in China, following continued losses on account of low demand resulting in lower capacity utilization and intense competition. Consequently, the investment has been impaired by Rs. 5 and the related charge has been disclosed as an exceptional item in the statement of profit and loss.

Total impairment of investments on subsidiaries and joint venture presented as an exceptional item in the Statement of Profit and Loss amounts to Rs. 132.84.

10 (a) Standards issued but not yet effective

In March 2017, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) (Amendments)

Rules, 2017, notifying amendments to Ind AS 7, ‘Statement of cash flows ‘and Ind AS 102, ‘Share-based payment. ‘These amendments are in accordance with the recent amendments made by International Accounting Standards Board (IASB) to IAS 7, ‘Statement of cash flows’ and IFRS 2, ‘Share-based payment,’ respectively. The amendments are applicable to the company from April 1,2017.

Amendment to Ind AS 7:

The amendment to Ind AS 7 requires the entities to provide disclosures that enable users of separate financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and noncash changes, suggesting inclusion of a reconciliation between the opening and closing balances in the balance sheet for liabilities arising from financing activities, to meet the disclosure requirement. Application of these amendment will result in additional disclosures in the financial statement.

Amendment to Ind AS 102:

The amendment to Ind AS 102 provides specific guidance to measurement of cash-settled awards, modification of cash-settled awards and awards that include a net settlement feature in respect of withholding taxes. It clarifies that the fair value of cash-settled awards is determined on a basis consistent with that used for equity-settled awards. Market-based performance conditions and non-vesting conditions are reflected in the ‘fair values’, but non-market performance conditions and service vesting conditions are reflected in the estimate of the number of awards expected to vest. Also, the amendment clarifies that if the terms and conditions of a cash-settled share-based payment transaction are modified with the result that it becomes an equity-settled share-based payment transaction, the transaction is accounted for as such from the date of the modification. Further, the amendment requires the award that include a net settlement feature in respect of withholding taxes to be treated as equity-settled in its entirety. The cash payment to the tax authority is treated as if it was part of an equity settlement.

The Company has evaluated the requirements of the amendment and concluded that there is no impact on the separate financial statements.

11(b) Event after reporting date

The Company, through its step-down subsidiary in Denmark, has acquired 100% stake in Barite Investments SP. Z.O.O., Poland (“Barite”) from Weiss SP. Z.O.O. in Poland. With this, Barite became a step-down subsidiary of the Company. Subsequent to March 31,2017, as part of a definitive agreement entered into with Weiss SP. Z.O.O. in Poland, Thermax acquired the assets and production activities related to boiler manufacturing. The transaction was completed on May 4, 2017, on which date the control has been transferred to the Company for a total consideration of Rs 23 Crores and is payable in cash.

The initial accounting of the transaction has not been completed till the date of authorization of these financial statements given a short time period between the acquisition date and the date of authorization of the financial statements. Accordingly, the acquisition date fair values of each major classes of assets acquired and liabilities assumed, including the computation of Goodwill, if any cannot be presented.

The Company expects to finalize identifying and measuring the identifiable assets acquired and liabilities assumed at their acquisition date fair value within the measurement period of 12 months from the date of acquisition as defined in Ind AS 103.

12 First-time adoption

Transition to Ind AS

These financial statements for the year ended March 31,2017, are the first financial statements prepared in accordance with Ind AS. For all periods up to and including the year ended March 31, 2016, the Company prepared its financial statements in accordance with accounting standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP).

Accordingly, the Company has prepared financial statements which comply with Ind AS applicable as at March 31,2017, together with the comparative period data for the year ended March 31,2016, as described in note 2.1 above. In preparing these financial statements, the Company’s opening balance sheet was prepared as at April 1,2015, 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 April 1, 2015 and the financial statements as at and for the year ended March 31,2016.

Ind AS 101 allows first-time adopters certain exemptions/ exceptions from the retrospective application of certain requirements under Ind AS as follows:

i) Leases

Appendix C to Ind AS 17 requires an entity to assess whether a contract or arrangement contains a lease. In accordance with Ind AS 17, this assessment should be carried out at the inception of the contract or arrangement. However, the Company has used Ind AS 101 exemption and assessed all arrangement based for embedded leases based on conditions in place as at the date of transition.

ii) Deemed cost

Ind AS 101 permits a first time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognized in the financial statements as at the date of transition after making necessary adjustments for de-commissioning liabilities. This exemption can also be used for intangible assets covered by Ind AS 38 Intangible Assets and Capital work-in-progress and intangible assets under development. Accordingly, the Company has elected to measure all of its property, plant and equipment, intangible assets, capital work-in-progress and intangible assets under development at their Previous GAAP carrying value.

iii) Designation of previously recognized financial instruments

Financial assets and financial liabilities are classified at fair value through profit and loss or fair value through other comprehensive income based on facts and circumstances as at the date of transition to Ind AS i.e. April 1, 2015. Financial assets and liabilities are recognized at fair value as at the date of transition to Ind AS i.e. April 1,2015 and not from the date of initial recognition.

iv) Investments in subsidiaries and joint ventures

The Company has elected to apply previous GAAP carrying amount for its investment in subsidiaries and joint ventures as deemed cost at the date of transition to Ind-AS, except for investment in Thermax (Zhejiang) Cooling & Heating Engineering Company Limited (a subsidiary) and Thermax Babcock & Wilcox Energy Solutions Private Limited (a joint venture) where the Company has elected to use fair value as deemed cost on the date of transition to Ind-AS.

v) Estimates

The estimates as at April 1, 2015 and March 31, 2016 are consistent with those made for the same dates in accordance with Indian GAAP except impairment of financial assets based on expected credit loss model and unquoted equity shares at fair value through profit and loss. The estimates used by the Company to present these amounts in accordance with Ind AS reflect conditions at April 1,2015 the date of transition to Ind AS and as of March 31,2016.

vi) Hedge accounting

The Company uses derivative financial instruments namely forward currency contracts, to hedge its foreign currency risks. Under Previous GAAP, there was no mandatory standard that deals comprehensively with hedge accounting, which has resulted in the adoption of varying practices. The Company has designated various economic hedges and applied economic hedge accounting principles to avoid profit or loss mismatch. All the hedges designated under Indian GAAP are of types which qualify for hedge accounting in accordance with Ind AS 109 also. Moreover, the Company, before the date of transition to Ind AS, has designated a transaction as hedge and also meets all the conditions for hedge accounting in Ind AS 109. Consequently, the Company continues to apply hedge accounting after the date of transition to Ind AS.

vii) Classification and measurement of financial assets

Ind AS 101 requires an entity to assess classification and measurement of financial assets (investment in debt instruments) on the basis of the facts and circumstances that exist at the date of transition to Ind AS.

Notes to first-time adoption a Proposed dividend

Under Previous GAAP, proposed dividends including Dividend Distribution Tax (DDT) are recognized as a liability in the period to which they relate, irrespective of when they are declared. Under Ind AS, a proposed dividend is recognized as a liability in the period in which it is declared by the company (usually when approved by shareholders in a general meeting) or paid.

In the case of the Company, the declaration of dividend occurs after period end. Therefore, the liability of Rs. 86.04 for the year ended on March 31, 2016 (April 1, 2015 Rs. 100.39) recorded for dividend has been reversed with corresponding adjustment to retained earnings. Correspondingly, total equity increased by this amount.

b Fair value adjustments on financial instruments

Current investments: Under Previous GAAP, current investments in equity instruments such as mutual funds are recognized at cost or net realizable value, whichever is lower. Long-term investments in equity instruments were recorded at cost less provision for other than temporary decline in the value of investments. Under Ind AS, these investments are required to be measured at fair value. The resulting fair value changes of these investments have been recognized in retained earnings as at the date of transition and subsequently in Statement of profit and loss for the year ended March 31,2016. This resulted in an increase in retained earnings as at March 31, 2016 by Rs 1.61 (April 1,2015: Rs0.82).

Financial guarantees: The Company has issued certain financial guarantees to banks in relation to loans availed by a joint venture from these banks. Ind-AS requires liability from such financial guarantees to be recorded initially at fair value. This has no impact on equity as on the date of transition. However, the amortization of financial guarantee has resulted in a gain amounting to Rs 1.78 for the year ended March 31, 2016 as the loan is repaid by the joint venture.

Investment in preference shares of a subsidiary: The Company’s investment in preference shares of one of its

subsidiaries, Thermax Instrumentation Limited, is fair valued on initial recognition which resulted in a fair value adjustment of Rs. 2.65 resulting a decrease in the retained earnings as on the transition date. According to the Company’s accounting policy, this difference has been adjusted to the retained earnings on the economic substance of the adjustment. The fair value adjustment on account of interest accretion for the year ended March 31,2016 amounted to Rs 0.78 which has been charged to the Statement of profit and loss.

c Provision for expected credit loss under Ind AS 109

Under Previous GAAP, the Company has created provision for impairment of receivables and contract assets i.e. unbilled revenue consists only in respect of specific amount for incurred losses. Under Ind AS, impairment allowance has been determined based on Expected Credit Loss (ECL) model. The total ECL provision amounting to Rs 135.57 considered as on the transition date has been adjusted against the retained earnings. The impact of Rs 20.68 for the year ended March 31,2016 has been charged off to the Statement of profit and loss.

d Fair value as deemed cost for investment in subsidiaries and joint ventures

Ind-AS 101 allows considering fair value as deemed cost for the Company’s investment in subsidiaries, associates and joint ventures. This choice is available for each investment individually. The deemed cost for all investment in equity instruments has been considered as the cost under the Previous GAAP except for Thermax (Zhejiang) Cooling & Heating Engineering Company Limited (a subsidiary) and Thermax Babcock & Wilcox Energy Solutions Private Limited (a joint venture) wherein the Company has their fair value as the deemed cost. Consequently, a total fair value adjustment amounting to Rs 130 has been considered as on the transition date thereby leading to a decrease in retained earnings as on that date.

e Others

These adjustments pertain to the provisions which under the Previous GAAP were accounted for at the undiscounted amount. In contrast, Ind AS 37 requires that where the effect of time value of money is material, the amount of provision should be the present value of the expenditures expected to be required to settle the obligation. The discount rate should not reflect risks for which future cash flow estimates have been adjusted. Ind AS 37 also provides that where discounting is used, the carrying amount of a provision increases in each period to reflect the passage of time. This increase is recognized as borrowing cost. This led to a decrease in provision on the date of transition by Rs. 4.35 which was adjusted against retained earnings. The corresponding adjustment for the year ended March 31,2016 led to a decrease in provision by Rs 2.93 which was taken to the Statement of profit and loss.

The adjustment also includes provision for decommissioning liabilities on lease hold land as required under Ind AS 16 added to the cost of property, plant and equipment amounting to Rs. 0.41 which was adjusted against the retained earnings. The corresponding adjustment for the year ended March 31, 2016 amounted to loss of Rs. 0.32 which was taken to the Statement of Profit and Loss.

f Deferred tax

The various transitional adjustments have led to temporary differences and accordingly, the Company has accounted for such differences. Deferred tax adjustments are recognized in correlation to the underlying transaction either in retained earnings or a separate component of equity.

g Actuarial loss transferred to Other Comprehensive Income

Under Ind AS, remeasurements i.e. actuarial gains and losses and the return on plan assets, excluding amounts included in the net interest expense on the net defined benefit liability are recognized in other comprehensive income instead of statement of profit and loss. As a result of this change, the profit for the year ended March 31, 2016 has increased by Rs. 4.03. There is no impact on total equity.

h Other comprehensive income

Under Ind AS, all items of income and expense recognized in a period should be included in profit or loss for the period, unless a standard requires or permits otherwise. Items of income and expense that are not recognized in profit and loss but are shown in the Statement of profit and loss as ‘other comprehensive income’ includes remeasurements of defined benefit plans and net gain on cash flow hedge

The concept of other comprehensive income did not exist under the Previous GAAP.

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Mar 31, 2015

1. Contingent Liabilities - Income Tax

i. Demands disputed in appellate proceedings Rs. 47.53 Crore (Previous Year Rs. 20.40 Crore).

ii. References / Appeals preferred by Income Tax department in respect of which, should the ultimate decision be unfavourable to the company, the liability is estimated to be Rs. 53.01 Crore (Previous Year Rs. 58.56 Crore)

2. Other Contingent Liabilities & Commitments

a. Other Contingent Liabilities

i. Counter Guarantees given by the company to banks on behalf of group companies : Rs.43.11 Crore on behalf of Thermax Instrumentation Ltd.(Previous Year Rs. 46.09 Crore), Rs.1.43 Crore on behalf of Thermax Onsite Energy Solutions Ltd. (Previous Year Rs. 1.43 Crore), Rs. 0.68 Crore on behalf of Thermax SPX Energy Technologies Ltd.(Previous Year Rs. Nil) and Rs. 0.90 Crore on behalf of Thermax Senegal S.A.R.L (Previous Year Rs. Nil)

ii. Indemnity Bonds, Letter of Comfort and Corporate Guarantees given by the Company on behalf of group companies : Thermax Engineering Construction Company Ltd. Rs. 90 Crore (Previous Year Rs. 90 Crore ) Thermax Babcock & Wilcox Energy Solutions Pvt. Ltd. Rs. 66.30 crore (Previous Year Rs. Nil), Rifox - Hans Richter GmbH Rs. 3.02 crore (Previous Year Rs. Nil)

iii. Liability for unexpired export obligations Rs. 32.46 Crore (Previous Year Rs. 10.30 Crore).

iv. Claims against the company not acknowledged as debts Rs. 18.90 Crore (Previous Year Rs. 10.01 Crore).

v. Bills Discounted with banks Rs. 16.79 Crore (Previous Year Rs. 5.95 Crore).

b. Commitments

i. Liability in respect of partly paid shares Rs. 0.19 Crore (Previous Year Rs. 0.19 Crore).

ii. Estimated amount of contracts remaining to be executed on capital account (net of advances) and not provided for Rs. 6.92 Crore (Previous year Rs. 3.04 Crore).

3. The Company has received show cause-cum-demand notices from the Commissioner of Central Excise (duty amount aggregating to Rs. 873.63 crore against which the Company should be entitled to claim CENVAT credit in accordance with provisions of law) for the periods up to September 2014, as to why Excise Duty should not be levied on assessable value of Boilers inclusive of cost of ''Bought Out items''. The Company has from time to time replied to these notices contesting the same. The Excise authorities are yet to adjudicate the issue. Based on an independent legal opinion, the Company is confident of the issue being ultimately decided in its favour.

4 Micro & Small Enterprises

Micro & Small enterprises as defined under the Micro, Small and Medium Enterprises Development Act 2006 (MSMED) have been identified to the extent of information available with the company. This has been relied upon by the auditors.

a. Pursuant to the provisions of Section 135 of the Companies Act, 2013, the company has contributed Rs. 9.96 crore to Thermax Social Initiative Foundation as donation towards carrying out activities eligible under Corporate Social Responsibility Rules.

b. Secured Loan

Secured loans represent following categories of borrowings :

i) Working Capital Loans (Cash Credits & Overdrafts) taken from consortium of banks. These are secured by hypothecation of present and future stock of raw materials, stock in process, semi finished & finished goods, stores and spares not relating to plant & machinery, consumables & book debts. These are repayable on demand. Working Capital loans outstanding as on March 31, 2015 are Rs. 24.14 Crore (Previous Year Rs. 13.88 Crore).

ii) Post Shipment Credit of Rs. 6.78 Crore (Previous Year Rs. 11.78 Crore) due for repayment on various dates between April 1,2015 to August 1,2015. These loans are secured by hypothecation of present and future stock of raw materials, stock in process, semi finished & finished goods, stores and spares not relating to plant & machinery, consumables & book debts.

iii) Packing Credit of Rs. Nil (Previous Year Rs. 67 Crore) outstanding as on March 31, 2015. These loans were secured by hypothecation of present and future stock of raw materials, stock in process; semi finished & finished goods, stores and spares not relating to plant & machinery, consumables & book debts.

iv) Loan from Department of Bio Technology Rs. 0.23 Crore (Previous Year Rs.0.15 Crore) and is being repaid in ten half yearly instalments starting from December 2014. Loan is secured by hypothecation of R&D equipments purchased out of these funds.

c. Unsecured Loan

i) Packing Credit of Rs. Nil (Previous Year Rs. 96 Crore) is availed of from banks.

ii) Unsecured loan from Indo-German Science & Technology Centre Rs. 0.60 Crore (Previous year Rs. 0.50 Crore) due for repayment in ten half yearly instalments starting from November 2015.

d. Diminution in Value of Investment and loan

i) The Company has reviewed the overall outlook of the business of Thermax Sustainable Energy Solutions Ltd. In view of very low prices of CERs, the viability of this business is severely affected. The Company has provided for diminution in value of its entire investment in this subsidiary and also provided for the loan extended to this Company.

ii) During the year, the company has written back the provision for diminution in value of its investment in Thermax International Limited (Mauritius) of Rs. 12.09 crore, as it is evident from the performance of its step-down subsidiaries that such provision is no longer required.

5 Segment Reporting (AS 17)

a. The Company has disclosed Business Segment as the primary segment. Segments have been identified by the management taking into account the nature of the products, manufacturing process, customer profiles, risk and reward parameters and other relevant factors.

b. Segment Revenue, Segment Results, Segment Assets and Segment Liabilities include the respective amounts identifiable to each of the segments as also amounts allocated on a reasonable basis.

The expenses, which are not directly attributable to a business segment, are shown as unallocated cost.

Assets and Liabilities that cannot be allocated between the segments are shown as a part of unallocated Assets and Liabilities respectively.

c. Secondary segments have been identified with reference to geographical location of external customers. Composition of secondary segments is as follows:

i. India

ii. Outside India

d. Inter-segment transfer price is arrived at on the basis of cost plus a reasonable mark-up.

41 Related Party Disclosures

Related party disclosures as required under Accounting Standard 18 issued by The Institute of Chartered Accountants of India are given below:

Relationship :

A. Holding Company RDA Holdings Pvt. Ltd.

B. Enterprises controlled by the Company :

Subsidiary Companies:

i. Domestic:

Thermax Sustainable Energy Solutions Ltd. Thermax Instrumentation Ltd.

Thermax Engineering Construction Co. Ltd. Thermax Onsite Energy Solutions Ltd.

Thermax SPX EnergyTechnologies Ltd. (Joint venture with SPX Netherlands BV)

Thermax Babcock & Wilcox Energy Solutions Pvt. Ltd. (Joint venture with Babcock & Wilcox India Holdings Inc)

C. Individuals having control or significant influence over the Company by reason of voting power, and their relatives : Mrs. Meher Pudumjee - Chairperson

Mrs. Anu Aga - Director

Mr. Pheroz Pudumjee - Director

D. Enterprise, over which control is exercised by individuals listed in ''C'' above Thermax Social Initiative Foundation

KRA Holdings Pvt. Ltd.

Shuffle Realtors Pvt. Ltd. (Up to April 30, 2014)

ARATrusteeship Company Pvt. Ltd.

E. Key Management Personnel:

Mr. M S Unnikrishnan - Managing Director & CEO

The following transactions were carried out during the year with related parties in the ordinary course of business.

6 Disclosure, as required by AS - 28 (Impairment of Assets):

In terms of Accounting Standard 28 (AS-28) there was no impairment loss on assets during the year under report.

7 Previous year''s figures have been regrouped wherever necessary to conform to current year''s classification.

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Mar 31, 2014

1 Contingent Liability

a. Disputed demands in respect of Excise, Customs Duty and Service Tax Rs. 16.24 Crore (Previous Year Rs. 13.91 Crore), Sales Tax Rs. 16.44 Crore (Previous Year Rs. 14.69 Crore) and other Statutes Rs. 0.14 Crore (Previous Year Rs. 0.14 Crore).

b. Income Tax

i. Demands disputed in appellate proceedings Rs. 20.40 Crore (Previous Year Rs. 82.21 Crore).

ii. References / Appeals preferred by Income Tax department in respect of which, should the ultimate decision be unfavourable to the company, the liability is estimated to be Rs. 58.56 Crore (Previous Year Rs. 25.49 Crore).

c. Counter Guarantees given by the company to banks on behalf of group companies : Rs. 46.09 Crore on behalf of Thermax Instrumentation Ltd.(Previous Year Rs. 76.14 Crore), Rs. 1.43 Crore on behalf of Thermax Onsite Energy Solutions Ltd. (Previous Year Rs. 0.60 Crore) and Rs. Nil on behalf of Thermax Sustainable Energy Solutions Ltd. (Previous Year Rs. 0.09 Crore).

d. Indemnity Bonds and Corporate Guarantees given by the Company on behalf of group companies : Thermax Engineering Construction Company Ltd. Rs. 90 Crore (Previous Year Rs. Nil).

e. Liability for unexpired export obligations Rs. 10.30 Crore (Previous Year Rs. 2.50 Crore).

f. Claims against the company not acknowledged as debts Rs. 10.01 Crore (Previous Year Rs. 9.43 Crore).

g. Bills Discounted with banks Rs. 5.95 Crore (Previous Year Rs. 45.32 Crore).

h. Liability in respect of partly paid shares Rs. 0.19 Crore (Previous Year Rs. 0.19 Crore).

2 Micro & Small Enterprises

Micro & Small enterprises as defined under the Micro, Small and Medium Enterprises Development Act 2006 (MSMED) have been identified to the extent of information available with the company. This has been relied upon by the auditors.

3 Secured Loan

Secured loans represent following categories of borrowings :

i) Working Capital Loans (Cash Credits & Overdrafts) taken from consortium of banks. These are secured by hypothecation of present and future stock of raw materials, stock in process, semi finished & finished goods, stores and spares not relating to plant & machinery, consumables & book debts. These are repayable on demand. Working Capital loans outstanding as on March 31, 2014 are Rs. 13.88 Crore (Previous Year Rs. 4.76 Crore).

ii) Post Shipment Credit of Rs.11.78 Crore (Previous Year Rs. 7.12 Crore) due for repayment on various dates between April 1, 2014 to Aug 1, 2014. These loans are secured by hypothecation of present and future stock of raw materials, stock in process, semi finished & finished goods, stores and spares not relating to plant & machinery, consumables & book debts.

iii) Packing Credit of Rs. 67 Crore (Previous Year Rs. NIL) due for repayment on various dates between April 2014 to March 2015. These loans are secured by hypothecation of present and future stock of raw materials, stock in process, semi finished & finished goods, stores and spares not relating to plant & machinery, consumables & book debts.

iv) Loan from Department of Bio Technology Rs. 0.15 Crore (Previous Year Rs.0.15 Crore) is due for repayment in ten half yearly instalments starting from June 30, 2014 and carrying interest rate of 2% p.a.. Loan is secured by hypothecation of R&D equipments purchased out of these funds.

4 Unsecured Loan

i) Packing Credit of Rs. 96 Crore (Previous Year Rs. NIL) is availed of from banks. This is due for repayment on various dates between July 2014 to March 2015.

ii) Unsecured loan from Indo-German Science & Technology Centre Rs. 0.50 Crore (Previous year Rs. 0.30 Crore) due for repayment in 10 half yearly instalments starting from November 2015 and carrying interest rate of 3% p.a.

5 Unpaid Dividend

Unpaid dividends include following amounts which will be credited to Investor Education and Protection Fund (on expiry of the specified period, if the amount remains unclaimed at that time):

6 Capital and other Commitments

a. Capital Commitments : Estimated amount of contracts remaining to be executed on capital account (net of ad- vances) and not provided for Rs. 3.04 Crore (Previous year Rs. 15.51 Crore).

7 Capitalisation of expenses

Raw materials, labour and overheads capitalised in respect of Plant & Machinery Rs. 2.84 Crore (Previous Year Rs. 0.21 Crore).

8 Segment Reporting

a. The Company has disclosed Business Segment as the primary segment. Segments have been identified by the management taking into account the nature of the products, manufacturing process, customer profiles, risk and reward parameters and other relevant factors.

b. Segment Revenue, Segment Results, Segment Assets and Segment Liabilities include the respective amounts identifiable to each of the segments as also amounts allocated on a reasonable basis.

The expenses, which are not directly attributable to a business segment, are shown as unallocated cost.

Assets and Liabilities that cannot be allocated between the segments are shown as a part of unallocated Assets and Liabilities respectively.

c. Secondary segments have been identified with reference to geographical location of external customers. Compo- sition of secondary segments is as follows:

i. India

ii. Outside India

d. Inter-segment transfer price is arrived at on the basis of cost plus a reasonable mark-up.

9 Related Party Disclosures

Related party disclosures as required under Accounting Standard 18 issued by The Institute of Chartered Accountants of India are given below:

Relationship :

A. Holding Company

RDA Holdings Pvt. Ltd.

B. Enterprises controlled by the Company :

Subsidiary Companies:

i. Domestic:

Thermax Sustainable Energy Solutions Ltd. Thermax Instrumentation Ltd.

Thermax Engineering Construction Co. Ltd. Thermax Onsite Energy Solutions Ltd.

Thermax SPX Energy Technologies Ltd. (Joint venture with SPX Netherlands BV)

Thermax Babcock & Wilcox Energy Solutions Pvt. Ltd. (Joint venture with Babcock & Wilcox India Holdings Inc)

ii. Overseas:

Thermax Europe Ltd., U.K. Thermax do Brasil Energia-e Equipamentos Ltda., Brazil

Thermax International Ltd., Mauritius Thermax Inc., USA

Thermax Hong Kong Ltd., Hong Kong

Thermax (Zhejiang) Cooling & Heating Engineering Co. Ltd., China Thermax Netherlands BV. Thermax Denmark ApS, Denmark

Danstoker A/S, Denmark Boilerworks A/S, Denmark

Boilerworks Properties ApS, Denmark

Ejendomsanpartsselskabet Industrivej Nord 13 (EIN), Denmark Omnical Kessel & Apparatebau GmbH, Germany Thermax SDN. BHD.

Rifox-Hans Richter GmbH Spezialarmaturen

C. Individuals having control or significant influence over the Company by reason of voting power, and their relatives : Mrs. Meher Pudumjee - Chairperson

Mrs. Anu Aga - Director

Mr. Pheroz Pudumjee - Director

D. Enterprise, over which control is exercised by individuals listed in ''C'' above Thermax Social Initiative Foundation

KRA Holdings Pvt. Ltd.

ARA Trusteeship Company Pvt. Ltd.

Shuffle Realtors Pvt. Ltd.

E. Key Management Personnel:

Mr. M S Unnikrishnan - Managing Director

10 Tax expense includes Rs. 29 Crore being provision made for estimated liability likely to arise upon its claim for deduction of certain business expenses being held inadmissible consequent to a survey u/s 133A of the Income Tax Act, conducted by the Income Tax Department in October 2013. Consequential orders, to the extent received, have been contested by the company in appeal.

11 Disclosure as required by AS - 28 (Impairment of Assets):

In terms of Accounting Standard 28 (AS-28) there was no impairment loss on assets during the year under report.

12 The Ministry of Corporate Affairs, Government of India, vide General Circular No. 2 and 3 dated 8th February 2011 and 21st February 2011 respectively has granted a general exemption from compliance with section 212 of the Companies Act, 1956, subject to fulfilment of conditions stipulated in the circular. The Company has satisfied the conditions stipulated in the circular and hence is entitled to the exemption.

13 Previous year''s figures have been regrouped wherever necessary to conform to current year''s classification.

---

Mar 31, 2013

Note 1

Contingent Liability

a. Disputed demands in respect of Excise, Customs Duty and Service Tax Rs. 13.91 Crore (Previous Year Rs. 14.82 Crore), Sales Tax Rs. 14.69 Crore (Previous Year Rs. 17.40 Crore) and other Statutes Rs. 0.14 Crore (Previous Year Rs. 0.10 Crore).

b. Income Tax

i. Demands disputed in appellate proceedings Rs. 82.21 Crore (Previous Year Rs. 73.01 Crore).

ii. References / Appeals preferred by Income Tax department in respect of which, should the ultimate decision be unfavourable to the company, the liability is estimated to be Rs. 25.49 Crore (Previous Year Rs. 19.44 Crore).

c. Counter Guarantees given by the company to the banks on behalf of group companies : Rs. 76.14 Crore on behalf of Thermax Instrumentation Ltd. (Previous Year Rs. 56.84 Crore), Rs. 0.60 Crore on behalf of Thermax Onsite Energy Solutions Ltd. (Previous Year Rs. NIL) and Rs. 0.09 Crore on behalf of Thermax Sustainable Energy Solutions Ltd. (Previous Year Rs. NIL )

d. Indemnity Bonds and Corporate Guarantees given by the Company on behalf of group companies : Thermax Engineering Construction Company Ltd. Rs. NIL (Previous Year Rs. 14 Crore).

e. Liability for unexpired export obligations Rs. 2.50 Crore (Previous Year Rs. 7.97 Crore).

f. Claims against the company not acknowledged as debts Rs. 9.43 Crore (Previous Year Rs. 8.64 Crore).

g. Bills Discounted with banks Rs. 45.32 Crore (Previous Year Rs. 38.21 Crore).

h. Liability in respect of partly paid shares in Parasrampuria Synthetics Ltd. Rs. 0.19 Crore (Previous Year Rs. 0.19 Crore).

Note 2 Micro & Small Enterprises

Micro & Small enterprises as defined under the Micro, Small and Medium Enterprises Development Act 2006 (MSMED) have been identified to the extent of information available with the company. This has been relied upon by the auditors.

Note 3 Secured Loan

Secured loans represent following categories of borrowings :

i) Working Capital Loans (Cash Credits & Overdrafts) taken from consortium of banks. These are secured by hypothecation of present and future stock of raw materials, stock in process, semi finished & finished goods, stores and spares not relating to plant & machinery, consumables & book debts. These are repayable on demand. Working Capital loans outstanding as on March 31, 2013 are Rs. 4.76 Crore (Previous Year Rs. NIL).

ii) Post Shipment Credit of Rs. 7.12 Crore (Previous Year Rs. 3.56 Crore) due for repayment on various dates between April 1, 2013 to July 19, 2013. These loans are secured by hypothecation of present and future stock of raw materials, stock in process, semi finished & finished goods, stores and spares not relating to plant & machinery, consumables & book debts.

iii) Loan from Department of Bio Technology Rs. 0.15 Crore (Previous YearRs.0.08 Crore) due for repayment in ten half yearly instalments starting from December 31, 2013 and carrying interest rate of 2% p.a. Loan is secured by hypothecation of R&D equipments purchased out of these funds.

Note 4 Unsecured Loan

i) Buyers Credit availed from bank. The loan amount outstanding on March 31, 2013 is Rs. NIL (Previous Year Rs. 162.80 Crore).

ii) Unsecured loan from Indo-German Science & Technology Centre Rs. 0.30 Crore (Previous year NIL) due for repayment in 10 half yearly instalments starting from November 2015 and carrying interest rate of 3% p.a.

Note 5

In cases where letters of confirmation have been received from parties, book balances have been generally reconciled and adjusted, if required. In other cases, balances in accounts of sundry debtors, sundry creditors and advances or deposits have been taken as per books of accounts.

Note 6 Capital and other Commitments

a. Capital Commitments : Estimated amount of contracts remaining to be executed on capital account (net of advances) and not provided for Rs. 15.51 Crore (Previous year Rs. 54.31 Crore).

b. Other Commitments : Current Year Rs. NIL (Previous Year Rs. 13.39 Crore for Share Purchase Agreement).

Note 7 Capitalisation of expenses

Raw materials, labour and overheads capitalised in respect of Plant & Machinery Rs. 0.21 Crore (Previous Year Rs. 1.16 Crore).

Note 8 Segment Reporting

a. The Company has disclosed Business Segment as the primary segment. Segments have been identified by the management taking into account the nature of the products, manufacturing process, customer profiles, risk and reward parameters and other relevant factors.

The Company''s operations have been mainly classified between two primary segments, ''Energy'' and ''Environment''. Composition of business segments is as follows:

b. Segment Revenue, Segment Results, Segment Assets and Segment Liabilities include the respective amounts identifiable to each of the segments as also amounts allocated on a reasonable basis.

The expenses, which are not directly attributable to a business segment, are shown as unallocated cost.

Assets and Liabilities that cannot be allocated between the segments are shown as a part of unallocated Assets and Liabilities respectively.

c. Secondary segments have been identified with reference to geographical location of external customers. Composition of secondary segments is as follows:

i. India

ii. Outside India

d. Inter-segment transfer price is arrived at on the basis of cost plus a reasonable mark-up.

Note 9 Related Party Disclosures

Related party disclosures as required under Accounting Standard 18 issued by The Institute of Chartered Accountants of India are given below:

Relationship :

A. Holding Company

RDA Holding & Trading Pvt. Ltd.

B. Enterprises controlled by the Company :

Subsidiary Companies:

i. Domestic:

Thermax Sustainable Energy Solutions Ltd. Thermax Instrumentation Ltd.

Thermax Engineering Construction Co. Ltd. Thermax Onsite Energy Solutions Ltd.

Thermax SPX Energy Technologies Ltd. (Joint venture with SPX Netherlands BV)

Thermax Babcock & Wilcox Energy Solutions Pvt. Ltd.(Joint venture with Babcock & Wilcox India Holdings Inc)

ii. Overseas:

Thermax Europe Ltd., U.K. Thermax do Brasil Energia-e Equipamentos Ltda., Brazil

Thermax International Ltd., Mauritius Thermax Inc., USA

Thermax Hong Kong Ltd., Hong Kong

Thermax (Zhejiang) Cooling & Heating Engineering Co. Ltd., China

Thermax Netherlands BV. Thermax Denmark ApS, Denmark

Danstoker A/S, Denmark

Ejendomsanpartsselskabet Industrivej Nord 13 (EIN), Denmark Omnical Kessel & Apparatebau GmbH, Germany Thermax SDN. BHD.

Rifox-Hans Richter GmbH Spezialarmaturen

C. Individuals having control or significant influence over the Company by reason of voting power, and their relatives: Mrs. Meher Pudumjee - Chairperson

Mrs. Anu Aga - Director

Mr. Pheroz Pudumjee - Director

D. Enterprise, over which control is exercised by individuals listed in ''C'' above Thermax Social Initiative Foundation

E. Key Management Personnel:

Mr. M S Unnikrishnan - Managing Director

The following transactions were carried out during the year with related parties in the ordinary course of business.

Note 10 Disclosure, as required by AS - 28 (Impairment of Assets):

In terms of Accounting Standard 28 (AS-28) there was no impairment loss on assets during the year under report.

Note 49 The Ministry of Corporate Affairs, Government of India, vide General Circular No. 2 and 3 dated 8th February 2011 and 21st February 2011 respectively has granted a general exemption from compliance with section 212 of the Companies Act, 1956, subject to fulfilment of conditions stipulated in the circular. The Company has satisfied the conditions stipulated in the circular and hence is entitled to the exemption.

Note 11 Previous year''s figures have been regrouped wherever necessary to conform to current year''s classification.

---

Mar 31, 2012

Note 28 Contingent Liability

a. Disputed demands in respect of Excise, Customs Duty and Service Tax Rs. 14.82 Crore (Previous Year Rs. 19.88 Crore), Sales Tax Rs. 17.40 Crore (Previous Year Rs. 14.41 Crore) and other Statutes Rs. 0.10 Crore (Previous Year Rs. 0.09 Crore).

b. Income Tax

i. Demands disputed in appellate proceedings Rs. 73.01 Crore (Previous Year Rs. 41.99 Crore).

ii. References / Appeals preferred by Income Tax department in respect of which, should the ultimate decision be unfavourable to the company, the liability is estimated to be Rs. 19.44 Crore (Previous Year Rs. 19.44 Crore)

c. Counter Guarantees given by the company to the banks on behalf of group companies : Rs. 56.84 Crore on behalf of Thermax Instrumentation Ltd. (TIL) (Previous Year Rs. 64.78 Crore).

d. Indemnity Bonds/Corporate Guarantees given by the Company on behalf of group companies: Thermax Denmark ApS, Denmark Rs. Nil (Previous Year Rs. 62.84 Crore) and Thermax Engineering Construction Company Ltd. (TECC) Rs. 14 crore (Previous Year Rs. Nil).

e. Liability for unexpired export obligations Rs. 7.97 Crore (Previous Year Rs. 56.84 Crore).

f. Claims against the company not acknowledged as debts Rs. 8.64 Crore (Previous Year Rs. 9.00 Crore).

g. Bills Discounted with banks Rs. 152.42 Crore (Previous Year Rs. 119.43 Crore).

h. Liability in respect of partly paid shares in

Parasrampuria Synthetics Ltd. Rs. 0.19 Crore (Previous Year Rs. 0.19 Crore).

Note 29 Micro & Small Enterprises

Micro & Small enterprises as defined under the Micro, Small and Medium Enterprises Development Act 2006 (MSMED) have been identified to the extent of information available with the company. This has been relied upon by the auditors.

Note 33 Secured Loan

Secured loans represent following categories of borrowings :

i) Working Capital Loans (Cash Credits & Overdrafts) taken from consortium of banks. These are secured by hypothecation of present and future stock of raw materials, stock in process, semi finished & finished goods, stores and spares not relating to plant & machinery, consumables & book debts. These are repayable on demand. Working Capital loans outstanding as on March 31, 2012 are Rs. NIL (Previous Year Rs. 0.56 Crore).

ii) Post Shipment Credit of Rs. 3.56 Crore (Previous Year Nil) due for repayment on various dates between April 16, 2012 to July 16, 2012. These loans are secured by hypothecation of present and future stock of raw materials, stock in process, semi finished & finished goods, stores and spares not relating to plant & machinery, consumables & book debts.

iii) Loan from Department of Bio Technology Rs 0.08 Crore (Previous Year Rs.0.08 Crore) due for repayment in 36 months from July 1, 2013. and carrying interest rate of 2% p.a.. Loan is secured by hypothecation of R&D equipments purchased out of these funds.

Note 34 Unsecured Loan

Buyers Credit availed from bank. The loan amount outstanding on March 31, 2012 is Rs 162.80 Crore (Previous Year Rs. 48.04 Crore).

a. Rs. 32.72 Crore due for repayment on June 5, 2012.

b. Rs. 47.01 Crore due for repayment on Oct 29, 2012.

c. Rs. 83.07 Crore due for repayment on Nov 29, 2012.

Note 36

In cases where letters of confirmation have been received from parties, book balances have been generally reconciled and adjusted, if required. In other cases, balances in accounts of sundry debtors, sundry creditors and advances or deposits have been taken as per books of account.

Note 38 Capital and other Commitments

a. Capital Commitments : Estimated amount of contracts remaining to be executed on capital account (net of advances) and not provided for Rs. 54.31 Crore (Previous year Rs. 13.49 Crore).

b. Other Commitments : The Company has entered into "Share Purchase Agreement" (SPA) with two Indian Companies to acquire their share holding in an overseas Company. The amount involved in this contract and not provided for is Rs. 13.39 Crore (Previous year Rs. Nil).

Note 39 Capitalisation of expenses

Raw materials, labour and overheads capitalised in respect of Plant & Machinery Rs. 1.16 Crore (Previous Year Rs. 0.18 Crore).

Note 41 Segment Reporting

a. The Company has disclosed Business Segment as the primary segment. Segments have been identified by the management taking into account the nature of the products, manufacturing process, customer profiles, risk and reward parameters and other relevant factors.

b. Segment Revenue, Segment Results, Segment Assets and Segment Liabilities include the respective amounts identifiable to each of the segments as also amounts allocated on a reasonable basis.

The expenses, which are not directly attributable to the business segment, are shown as unallocated cost.

Assets and Liabilities that cannot be allocated between the segments are shown as a part of unallocated Assets and Liabilities respectively.

c. Secondary segments have been identified with reference to geographical location of external customers. Composition of secondary segments is as follows:

i. India

ii. Outside India

d. Inter-segment transfer price is arrived at on the basis of cost plus a reasonable mark-up.

Note 42 Related Party Disclosures

Related party disclosures as required under Accounting Standard 18 issued by The Institute of Chartered Accountants of India are given below:

Relationship :

A) Holding Company

RDA Holding & Trading Pvt. Ltd.

B) Enterprises controlled by the Company : Subsidiary Companies:

i. Domestic:

Thermax Sustainable Energy Solutions Ltd. Thermax Instrumentation Ltd.

Thermax Engineering Construction Co. Ltd. Thermax Onsite Energy Solutions Ltd.

Thermax SPX Energy Technologies Ltd. (Joint venture with SPX Netherlands BV)

Thermax Babcock & Wilcox Energy Solutions Pvt. Ltd. (Joint Venture with Babcock & Wilcox India Holdings Inc.)

ii. Overseas:

Thermax Europe Ltd., U.K. Thermax do Brasil Energia-e Equipamentos Ltda., Brazil

Thermax International Ltd., Mauritius Thermax Inc., USA

Thermax Hong Kong Ltd., Hong Kong

Thermax (Zhejiang) Cooling & Heating Engineering Co. Ltd., China

Thermax Netherlands BV., Netherlands Thermax Denmark ApS, Denmark

Danstoker A/S, Denmark Danstoker (UK) Ltd., UK

Ejendomsanpartsselskabet Industrivej Nord 13 (EIN), Denmark

Omnical Kessel & Apparatebau GmbH, Germany

C) Individuals having control or significant influence over the Company by reason of voting power, and their relatives:

Mrs. Meher Pudumjee – Chairperson

Mrs. Anu Aga – Director

Mr. Pheroz Pudumjee – Director

D) Enterprise, over which control is exercised by individuals listed in 'C' above

Thermax Social Initiative Foundation

E) Key Management Personnel:

Mr. M S Unnikrishnan – Managing Director

Note 46 Disclosure, as required by AS - 28 (Impairment of Assets):

In terms of Accounting Standard 28 (AS-28) there was no impairment loss on assets during the year under report.

Note 49

The Ministry of Corporate Affairs, Government of India, vide General Circular No. 2 and 3 dated 8th February 2011 and 21st February 2011 respectively has granted a general exemption from compliance with section 212 of the Companies Act, 1956, subject to fulfilment of conditions stipulated in the circular. The Company has satisfied the conditions stipulated in the circular and hence is entitled to the exemption.

Note 50

The financial statements have been prepared in accordance with the requirement of the revised schedule VI to the Companies Act, 1956 as per the Government Notification no. F.No.2/6/2008-C.L-V dated March 30, 2011. The comparative figures for previous year have also been accordingly restated to conform to the current year's presentation.

---

Mar 31, 2011

1. Contingent Liability

a) Disputed demands in respect of Excise, Customs Duty and Service Tax Rs. 19.88 Crore (Previous Year Rs. 22.11 crore), Sales Tax Rs. 14.41 Crore (Previous Year Rs. 13.38 Crore) and other Statutes Rs. 0.09 Crore (Previous Year Rs. 0.09 Crore).

b) Income Tax

i) Demands disputed in appellate proceedings Rs. 41.99 Crore (Previous Year Rs. 34.55 Crore).

ii) References / Appeals preferred by Income Tax department in respect of which, should the ultimate decision be unfavourable to the company, the liability is estimated to be Rs.19.44 Crore (Previous Year Rs.19.38 Crore)

c) Counter Guarantees given by the company to the banks on behalf of group companies : Rs. 64.78 Crore on behalf of Thermax Instrumentation Ltd. (TIL) (Previous Year Rs. 92.64 Crore for TIL and Rs. 0.34 Crore for Thermax Engineering Construction Co. Ltd.).

d) Indemnity Bonds/Corporate Guarantees given by the Company on behalf of group companies : Thermax Denmark ApS, Denmark Rs. 62.84 Crore (Previous Year Nil).

e) Liability for unexpired export obligations Rs. 56.84 Crore (Previous Year Rs. 48.71 Crore).

f) Claims against the company not acknowledged as debts Rs. 9.00 Crore (Previous Year Rs. 9.45 Crore).

g) Bills Discounted with banks Rs.119.43 Crore (Previous Year Rs. 43.39 Crore).

h) Liability in respect of partly paid shares in Parasrampuria Synthetics Ltd. Rs. 0.19 Crore (Previous Year Rs. 0.19 Crore).

2. Micro & Small Enterprises

Micro & Small enterprises as defined under the Micro, Small and Medium Enterprises Development Act 2006 (MSMED) have been identified to the extent of information available with the company. This has been relied upon by the auditors.

3. Directors Remuneration **

@ includes Rs. 0.55 Crore (Previous Year Rs. 0.42 Crore) commission payable to the Managing Director.

** Within the limits specified by Schedule XIII of the Companies Act, 1956.

Note : Provisions for contribution to employee retirement / post retirement and other employee benefits which are based on valuation done on an overall company basis are excluded above.

4. Share Capital

Issued, Subscribed & Paid up Equity Capital includes 1,06,78,200 Equity Shares of Rs. 2/- each allotted as fully paid up for consideration other than cash as per various schemes of amalgamation and 1,71,37,500 shares of Rs. 2/- each issued by way of bonus shares on capitalisation of General Reserve.

5. Extraordinary items of expenses/income

Extraordinary expense for the year ended 31.03.2010, Rs. 174 crore (Rs 114.86 crore, net of tax), represents the rupee equivalent of USD 38 million payable under a business settlement agreement dated 23.02.2010 with Purolite International Ltd., a US competitor, in settlement of a business dispute concerning, inter alia, their trade secrets. As per the agreement, the amount was payable in four instalments of USD 9.5 million each, spread over the calendar year, beginning April 2010.

6. Secured Loan

Working capital facilities (packing credits, shipping loans, cash credits & overdrafts) from banks are secured by hypothecation of present and future stock of raw materials, consumables, spares, semi-finished goods, finished goods & book debts.

7. In cases where letters of confirmation have been received from parties, book balances have been generally reconciled and adjusted, if required. In other cases, balances in accounts of sundry debtors, sundry creditors and advances or deposits have been taken as per books of account.

8. Estimated amount of contracts remaining to be executed on capital account (net of advances) and not provided for Rs.13.49 Crore (Previous year Rs. 15.57 Crore).

9. Capitalisation of expenses

Raw materials, labour and overheads capitalised in respect of Plant & Machinery Rs. 0.18 Crore (Previous Year Rs.3.07 Crore).

10. Companies acquired during the year

During the year, the company, through its wholly owned subsidiary Thermax Denmark ApS, acquired 100% stake in Danstoker A/S, Denmark and Ejendomsanpartsselskabet Industrivej Nord 13 (EIN), Denmark. In turn, Danstoker A/S has wholly owned subsidiaries namely Omnical Kessel & Apparatebau GmbH, Germany and Danstoker (UK) Ltd., UK. As a result of these acquisitions, the company now owns boiler manufacturing facilities in Denmark and Germany.

11. Segment Reporting

i The Company has disclosed Business Segment as the primary segment. Segments have been identified by the management taking into account the nature of the products, manufacturing process, customer profiles, risk and reward parameters and other relevant factors.

The Companys operations have been mainly classified between two primary segments, Energy and Environment. Composition of business segments is as follows:

Segment Products Covered

a) Energy Boilers and Heaters, Absorption Chillers/Heat Pumps, Power Plants

b) Environment Air Pollution Control Equipments/ Systems, Water & Waste Recycle Plants,

Ion Exchange Resins & Performance Chemicals.

ii Segment Revenue, Segment Results, Segment Assets and Segment Liabilities include the respective amounts identifiable to each of the segments as also amounts allocated on a reasonable basis.

The expenses, which are not directly attributable to the business segment, are shown as unallocated cost.

Assets and Liabilities that cannot be allocated between the segments are shown as a part of unallocated Assets and Liabilities respectively.

iii Secondary segments have been identified with reference to geographical location of external customers. Composition of secondary segments is as follows:

a) India

b) Outside India

iv Inter-segment transfer price is arrived at on the basis of cost plus a reasonable mark-up.

21. Related Party Disclosures

Related party disclosures as required under Accounting Standard 18 issued by The Institute of Chartered Accountants of India are given below:

Relationship :

A) Holding Company

RDA Holding & Trading Pvt. Ltd.

B) Enterprises controlled by the Company :

Subsidiary Companies:

i. Domestic:

Thermax Sustainable Energy Solutions Ltd. Thermax Instrumentation Ltd.

Thermax Engineering Construction Co. Ltd. Thermax Onsite Energy Solutions Ltd.

Thermax SPX Energy Technologies Ltd. (Joint venture with SPX Netherlands BV)

Thermax Babcock & Wilcox Energy Solutions Pvt. Ltd. (Joint Venture with Babcock & Wilcox India Holdings Inc.)

ii. Overseas:

Thermax Europe Ltd., U.K. Thermax do Brasil Energia-e Equipamentos Ltda., Brazil

Thermax International Ltd., Mauritius Thermax Inc., USA

Thermax Hong Kong Ltd., Hong Kong

Thermax (Zhejiang) Cooling & Heating Engineering Co. Ltd., China

Thermax Netherlands BV., Netherlands Thermax Denmark ApS, Denmark

Danstoker A/S, Denmark Danstoker (UK) Ltd., UK

Ejendomsanpartsselskabet Industrivej Nord 13 (EIN), Denmark

Omnical Kessel & Apparatebau GmbH, Germany

C) Individuals having control or significant influence over the Company by reason of voting power, and their relatives:

Mrs. Meher Pudumjee – Chairperson

Mrs. Anu Aga – Director

Mr. Pheroz Pudumjee – Director

D) Enterprise, over which control is exercised by individuals listed in C above

Thermax Social Initiative Foundation

E) Key Management Personnel:

Mr. M S Unnikrishnan – Managing Director

12. Disclosure, as required by AS - 28 (Impairment of Assets)

In terms of Accounting Standard 28 ( there was no impairment loss on assets during the year under report.)

13. Disclosure in relation to in-house Research & Development (R&D) expenses and fixed assets.

A) Details of R&D Revenue Expenses incurred during the year :

Expenses included in respective category of Schedule 13, 14, 15 & 16, incurred for the purpose of in-house Research and Development activity.

14. The Ministry of Corporate Affairs, Government of India, vide General Circular No. 2 and 3 dated 8th February 2011 and 21st February 2011 respectively has granted a general exemption from compliance with section 212 of the Companies Act, 1956, subject to fulfillment of conditions stipulated in the circular. The Company has satisfied the conditions stipulated in the circular and hence is entitled to the exemption.

15. Previous years figures have been regrouped wherever necessary to conform to this years classification.

---

Mar 31, 2010

1. Micro & Small Enterprises

Micro & Small enterprises as defined under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED) have been identified to the extent of information available with the company. This has been relied upon by the auditors.

2. Share Capital

Issued, Subscribed & Paid up Equity Capital includes 1,06,78,200 Equity Shares of Rs. 2/- each allotted as fully paid up for consideration other than cash as per various schemes of amalgamation and 1,71,37,500 shares of Rs.2/- each issued by way of bonus shares on capitalisation of General Reserve.

3. Extraordinary items of expenses/income during the year are as follows

Extraordinary expense for the year ended 31.03.2010, Rs. 174 crore (Rs 114.86 crore, net of tax), represents the rupee equivalent of USD 38 million payable under a business settlement agreement dated 23.02.2010 with Purolite International Ltd., a US competitor, in settlement of a business dispute concerning, inter alia, their trade secrets. As per the agreement, the amount is payable in four instalments of USD 9.5 million each, spread over the calendar year, beginning April 2010.

Extraordinary income for the year ended 31.03.2009 Rs. 1.36 crore represents write back of the provision made by the company towards possible financial obligations on account of counter guarantees given by the company in relation to ME Engineering Ltd., UK.

4. Secured Loan

Working capital facilities (packing credits, shipping loans, cash credits & overdrafts) from banks are secured by hypothecation of present and future stock of raw materials, consumables, spares, semi-finished goods, finished goods & book debts.

5. Other Liabilities

Other Liabilities include following amounts which will be credited to Investor Education and Protection Fund (on expiry of the specified period, if the amount remains unclaimed at that time):-

6. In cases where letters of confirmation have been received from parties, book balances have been generally reconciled and adjusted, if required. In other cases, balances in accounts of sundry debtors, sundry creditors and advances or deposits have been taken as per books of account.

7. Estimated amount of contracts remaining to be executed on capital account (net of advances) and not provided for Rs. 15.57 Crore (Previous year Rs. 39.16 Crore).

8. Capitalisation of expenses

Raw materials, labour and overheads capitalised in respect of Plant & Machinery Rs. 3.07 Crore (Previous Year Rs.1.71 Crore).

9. Segment Reporting

i The Company has disclosed Business Segment as the primary segment. Segments have been identified by the management taking into account the nature of the products, manufacturing process, customer profiles, risk and reward parameters and other relevant factors.

The Company’s operations have been mainly classified between two primary segments, ‘Energy’ and ‘Environment’. Composition of business segments is as follows:

ii Segment Revenue, Segment Results, Segment Assets and Segment Liabilities include the respective amounts identifiable to each of the segments as also amounts allocated on a reasonable basis.

The expenses, which are not directly attributable to the business segment, are shown as unallocated cost.

Assets and Liabilities that cannot be allocated between the segments are shown as a part of unallocated Assets and Liabilities respectively.

iii Secondary segments have been identified with reference to geographical location of external customers. Composition of secondary segments is as follows:

a) India

b) Outside India

iv Inter-segment transfer price is arrived at on the basis of cost plus a reasonable mark-up.

10. Related Party Disclosures

Related party disclosures as required under Accounting Standard 18 issued by The Institute of Chartered Accountants of India are given below:

Relationship :

A) Holding Company

RDA Holding & Trading Pvt. Ltd.

B) Enterprises controlled by the Company : Subsidiary Companies:

i. Domestic:

Thermax Sustainable Energy Solutions Ltd. Thermax Instrumentation Ltd.

Thermax Engineering Construction Co. Ltd. Thermax Onsite Energy Solutions Ltd.

Thermax SPX Energy Technologies Ltd. (Joint venture with SPX Netherlands BV)

ii. Overseas:

Thermax Europe Ltd., U.K. Thermax do Brasil Energia-e Equipamentos Ltda., Brazil

Thermax International Ltd., Mauritius Thermax Inc., USA

Thermax Hong Kong Ltd., Hong Kong

Thermax (Zhejiang) Cooling & Heating Engineering Co. Ltd., China

C) Individuals having control or significant influence over the Company by reason of voting power, and their relatives :

Mrs. Meher Pudumjee – Chairperson

Mrs. Anu Aga – Director

Mr. Pheroz Pudumjee – Director

D) Enterprise, over which control is exercised by individuals listed in ‘C’ above

Thermax Social Initiative Foundation

E) Key Management Personnel:

Mr. M S Unnikrishnan – Managing Director

The following transactions were carried out during the year with related parties in the ordinary course of business.

11. Disclosure, as required by AS - 28 (Impairment of Assets)

In terms of Accounting Standard 28 (AS-28) there was no impairment loss on assets during the year under report.

12. Previous year’s figures have been regrouped wherever necessary to conform to this year’s classification.