1. General Information
Elgi Equipments Limited ("the Company")
CIN:L29120TZ1960PLC000351 is engaged in
manufacturing of air compressors. The Company
has manufacturing plants and its registered office in
Coimbatore. The Company is a public limited company
and listed on both the Bombay Stock Exchange and the
National Stock Exchange.
2.1. Basis of preparation
(i) Compliance with Ind AS
The Standalone Financial Statements comply in all
material aspects with Indian Accounting Standards (Ind
AS) notified under Section 133 of the Companies Act,
2013 (the Act) [Companies (Indian Accounting Standards)
Rules, 2015] and other relevant provisions of the Act.
These financial statements have been approved by the
Board of Directors in their meeting held on May 27, 2026.
(ii) Historical cost convention
The Standalone Financial Statements have been prepared
on a historical cost basis, except for the following:
a) Certain financial assets and liabilities (including
derivative instruments) that are measured at fair
value,
b) Defined benefit plans - plan assets measured at fair
value and,
c) Share based payments - at grant date fair value.
(iii) New and amended standards adopted
by the Company
The Ministry of Corporate Affairs vide notification dated
7 May 2025 and 13 August 2025 notified the Companies
(Indian Accounting Standards) Amendment Rules, 2025
and Companies (Indian Accounting Standards) Second
Amendment Rules, 2025, respectively, which amended
certain accounting standards (see below), and are
effective for annual reporting periods beginning on or
after 1 April 2025:
(a) Classification of Liabilities as Current or Non¬
current and Non-current Liabilities with Covenants -
Amendments to Ind AS 1
As a result of the adoption of the amendments to Ind
AS 1, the group changed its accounting policy for the
classification of borrowings:
“Borrowing are classified as current liabilities unless,
at the end of the reporting period, the group has a
right to defer settlement of the liability for at least
12 months after the reporting period.
Covenants that the group is required to comply with,
on or before the end of the reporting period, are
considered in classifying loan arrangements with
covenants as current or non-current. Covenants
that the group is required to comply with after the
reporting period do not affect the classification”.
These amendments did not have any material impact
on the amounts recognised in prior periods and are
not expected to significantly affect the current or
future periods.
(b) Supplier Finance Arrangements - Amendments to
Ind AS 7 and Ind AS 107
As a result of the adoption of the amendments to
Ind AS 7 and Ind AS 107, the Company provided new
disclosures for liabilities under supplier finance
arrangements in note 45A.
(c) International Tax Reform - Pillar Two Model Rules -
Amendments to Ind AS 12
The Company is not within the scope of the OECD Pillar
Two Model Rules, as Pillar Two legislation has not yet
been enacted in any of the jurisdictions in which the
Company operates.
(d) Lack of Exchangeability - Amendments to Ind AS 21
The amended Ind AS 21 have added requirements
to help entities to determine whether a currency
is exchangeable into another currency, and the
spot exchange rate to use where it is not. These
amendments did not have any material impact on
the amounts recognised in prior periods and are
not expected to significantly affect the current or
future periods.
(iv) New and amended standards not adopted by the
Company
Classification of Liabilities as Current or Non-current and
Non-current Liabilities with Covenants - Amendments to
Ind AS 1:
This amendment also includes specific provisions that
will take effect for reporting periods beginning on or after
1 April 2026, as outlined below.
Under the existing Ind AS 1, where there is a breach of a
material provision of a long-term loan arrangement on or
before the end of the reporting period with the effect that
the liability becomes payable on demand on the reporting
date, the entity does not classify the liability as current, if
the lender agreed, after the reporting period and before
the approval of the financial statements for issue, not to
demand payment as a consequence of the breach.
However, the amended requirements stipulate that
entities will no longer be permitted to consider lender
waivers that are granted after the reporting date but
before the financial statements are approved for the
purpose of classification of loans. This amendment is
required to be applied retrospectively in accordance with
Ind AS 8.
These amendments did not have any material impact
on the amounts recognised in prior periods and are
not expected to significantly affect the current or
future periods.
(v) Determining material accounting policies
The Company describes its material accounting
policies applied, under each of the individual notes
to the Financial Statements and avoids repeating
the text of the standard, unless when it is considered
relevant to the understanding of the note’s content.
These accounting policies most frequently or
significantly require us to make judgments, estimates,
and assumptions, and therefore are critical to
understanding our results of operation.
Other accounting policies are provided under Note 50
for completeness purposes. The Company’s accounting
policies and methods are unchanged compared to
March 31, 2025.
(vi) Functional currency assessment:
Items included in the financial statements of the
Company are measured using the currency of the primary
economic environment in which the Company operates
(‘the functional currency’). The standalone financial
statements are presented in Indian rupee (INR), which is
the Company's functional and presentation currency.
(vii) Current/non-current classification:
The assets and liabilities have been classified as current/
non-current as per the Company's normal operating
cycle and other criteria set out in Schedule III to the
Companies Act, 2013. Based on the nature of entity's
products and the time between the acquisition of assets
for processing and their realisation in the form of cash or
cash equivalents, the Company considers twelve months
as it's normal operating cycle, and classifies assets/
liabilities as current when:
(a) it expects to realise the asset/settle the liability, or
intends to sell or consume the asset, in its normal
operating cycle
(b) it holds the asset/liability primarily for the purpose
of trading
(c) it expects to realise the asset/the liability is due to
be settled within twelve months after the reporting
period or
(d) the asset is cash or a cash equivalent (as defined in
Ind AS 7) unless the asset is restricted from being
exchanged or used to settle a liability/it does not
have the right at the end of the reporting period to
defer settlement of the liability for at least twelve
months after the reporting period.
2.2 Critical estimates and judgements
The preparation of financial statements requires the
use of accounting estimates which, by definition, will
seldom equal the actual results. Management also
needs to exercise judgement in applying the Company's
accounting policies.
This note provides an overview of the areas that involved
a higher degree of judgement or complexity and of items
which are more likely to be materially adjusted due to
estimates and assumptions turning out to be different
than those originally assessed. Detailed information
about each of these estimates and judgements is
included in relevant notes together with information
about the basis of calculation for each affected line item
in the financial statements.
The areas involving critical estimates or judgements are:
• Estimation of impairment of investments in
subsidiaries (including financial guarantee) and joint
ventures - Note 6(a)
• Impairment of trade receivables and contract assets
- Note 12 and 17
• Estimation of provision for warranty claims - Note 26
Estimates and judgements are continually evaluated.
They are based on historical experience and other
factors, including expectations of future events that
may have a financial impact on the Company and that
are believed to be reasonable under the circumstances.
3(a) Property, plant and equipment and Capital work-in progress
Freehold land is carried at historical cost. All other items of property, plant and equipment are stated at historical cost
less accumulated depreciation. Depreciation is calculated using the straight-line or written down value methods to
allocate their cost, net of their residual values, over their estimated useful lives.
The useful lives have been determined based on Schedule II to the Companies Act, 2013 except for roads (classified as
buildings) and tools, jigs and fixtures, patterns and mould and dies (classified as plant and machinery); where useful
lives have been determined based on technical evaluation carried out by the management's expert, in order to reflect
the actual usage of the assets. The residual values are not more than 5% of the original cost of the asset.
Notes
i) Property, plant and equipment pledged as security
Refer note 47 for information on property, plant and equipment pledged as security by the Company.
ii) Contractual obligations
Refer to note 44(a) for disclosure of contractual commitments for the acquisition of property, plant and equipment.
iii) Details of benami property held
The Company does not have any Benami property and therefore the question of whether any proceedings have been
initiated or pending against the Company for holding any benami property is not relevant.
iv) Title deeds of immovable properties not held in name of the Company
The title deeds of all the immovable properties (other than properties where the Company is the lessee and the lease
agreements are duly executed in favour of the lessee), as disclosed in note 3(a) and 4 to the financial statements, are
held in the name of the Company.
The title to the properties in Arasur Village is held in the name of the Company per the title deeds. In these
properties, a portion of SF No-100/1 was incorrectly claimed by an individual and a connected litigation filed by
him was dismissed in the Company’s favour. The Company has initiated legal action in the Madras High Court for
removing the Individual’s name from the sub registrar’s records.
3(b) Right of use assets and Lease liabilities
This note provides information for leases where the Company is a lessee.
The Company leases computers and servers, motor vehicles, as well as office and warehouse facilities. Lease
agreements are typically entered into for fixed terms ranging from 11 months to 29 years.
Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The
lease agreements do not impose any covenants other than the security interests in the leased assets that are held by
the lessor.
Refer Note 50(b) for other accounting policies relating to leases.
(ii) Cash outflow
The total cash outflow for leases is ' 59 million and ' 39 million for the year ended March 31, 2026 and year ended
March 31, 2025.
(iii) Extension and termination options
Extension and termination options are included in a number of property leases. The majority of extension options held
are exercisable mutually by the Company and the respective lessor. The termination option in three leases with related
party includes a mutual termination clause with a 90 days notice in writing.
(iv) Judgements in determining lease term:
In determining the lease term, management considers all facts and circumstances that create an economic incentive
to exercise an extension option, or not exercise a termination option. Extension options (or periods after termination
options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated).
Estimation of Fair Value
The Company obtained independent valuations for its investment properties. The best evidence of fair value is current
prices in an active market for similar properties. Where such information is not available, the Company considers
information from a variety of sources including:
a) current prices in an active market for properties of different nature or recent prices of similar properties in less
active markets, adjusted to reflect those differences,
b) discounted cash flow projections based on reliable estimates of future cash flows,
c) capitalised income projections based upon a property’s estimated net market income, and a capitalisation rate
derived from an analysis of market evidence.
The fair values of investment properties have been determined by "S. Pichaiya & associates", who is a registered
valuer as defined under rule 2 of Companies (Registered Valuers and Valuation) Rules, 2017. The main inputs used
are the rental growth rates, expected vacancy rates, terminal yields and discount rates based on comparable
transactions and industry data. All resulting fair value estimates for investment properties are included in level 3.
6 Financial assets - Investments
i) Classification of financial assets at amortised cost
The Company classifies its financial assets at amortised cost only if both of the following criteria are met:
• the asset is held within a business model whose objective is to collect the contractual cash flows, and
• the contractual terms give rise to cash flows that are solely payments of principal and interest.
Financial assets classified at amortised cost comprise trade receivables, loans and other financial assets such as
security deposits.
ii) Classification of financial assets at fair value through other comprehensive income:
Financial assets at fair value through other comprehensive income (FVOCI) comprise:
Equity securities (listed and unlisted) which are not held for trading, and for which the Company has irrevocably elected
at initial recognition to recognise changes in fair value through OCI rather than profit or loss. These are strategic
investments and the Company considers this classification to be more relevant.
iii) Derivatives
Derivatives are only used for economic hedging purposes and not as speculative investments. However, where
derivatives do not meet the hedge accounting criteria, they are classified as ‘held for trading’ for accounting purposes
and are accounted for at fair value through profit or loss (FVTPL). They are presented as current assets or liabilities to
the extent they are expected to be settled within 12 months after the end of the reporting period.
iv) Classification of financial assets at fair value through profit or loss
The Company classifies investment in mutual funds at fair value through profit or loss (FVTPL) as they do not qualify
for measurement at either amortized cost or FVOCI and are held for trading.
Refer note 50(e) for other accounting policies relating to financial assets.
12 Trade receivables
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of
business and reflect the Company’s unconditional right to consideration (that is payment is due, only on the passage
of time. Trade receivables are recognized initially at the transaction price as they do not contain significant financing
components. The Company holds the trade receivables with the objective of collecting the contractual cash flows and
therefore measures them subsequently at amortised cost using the effective interest method, less loss allowance.
For trade receivables and contract assets, the Company applies the simplified approach required by Ind AS 109, which
requires expected lifetime losses to be recognized at the initial recognition of receivables.
Terms and rights attached to equity shares:
The Company has one class of equity shares having a par value of ' 1/- 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 the 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. During the year ended March 31, 2026, the amount of final dividend per share
recognised as distributions to equity shareholders is ' 2.20 per share (March 31, 2025: ' 2 per share).
20 Other equity (Continued...)
Nature and purpose of other reserves
Capital reserve
Represents profit of a capital nature which is not available for distribution as dividend.
Securities premium
Securities premium is used to record the premium on issue of shares. The reserve is utilised in accordance with the
provisions of Companies Act, 2013
Statutory reserve
Represents reserve created for statutory purpose not available for distribution as dividend.
General reserve
This is available for distribution to shareholders.
Retained earnings
Company's share of cumulative earnings since its formation minus the dividends/capitalisation and earnings
transferred to general reserve.
Treasury stock
Represents the purchase value of shares of the Company held by Elgi Equipments Limited Employee Stock Option Trust
as given below:
Where the Company purchases its own shares and holds them in treasury (‘treasury shares’):
a) The amount paid for the treasury shares is deducted from equity and are not recognised as a financial asset.
b) No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of Company's own equity
instruments. This is because the acquisition and subsequent resale of treasury shares are transactions with the
Company's owners, rather than a gain or loss to the Company.
c) Consideration paid or received for the purchase or sale of an entity’s own equity instruments is recognised directly
in equity.
Share options outstanding account
The share options outstanding account is used to recognise the grant date fair value of options issued to employees
under Elgi Equipments Limited Employee Stock Option Plan, 2019.
FVOCI Equity investments
The Company has elected to recognise changes in the fair value of certain investments in equity securities in other
comprehensive income. These changes are accumulated within the FVOCI equity investments reserve within equity.
The Company transfers amounts from this reserve to retained earnings when the relevant equity securities are
derecognised.
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