(b) The title deeds of immovable properties (other than properties where the Company is the lessee and the lease agreements are duly executed in favour of the lessee) are held in the name of the Company except:
a. Flat at Kalyani Nagar in possession of the Company since April 01, 1987, whose title deed is in the name of Shri
Anajwala Khozema F & Smt. Anajwala Amina aggregating gross block ' 0.31 million and net block at ' 0.13 million
for which exchange deed is registered at authority, however, certified true copy and index II are awaited.
b. Hanger at Lohegoan in possession of the Company since April 01, 1977 aggregating gross block of ' 0.12 million
and net block of' 0.04 million and Tenements at Kharadi- Vimannagar in possession of the Company since April 01, 1981 aggregating gross block of' 0.16 million and net block of' 0.01 million for which title deeds are not available with the Company.
(c) Capitalised borrowing costs:
The Company capitalises borrowing costs in the capital work-in-progress (CWIP) first. The amount of borrowing costs capitalised as other adjustments in the above note reflects the amount of borrowing cost transferred from Capital work-inprogress (CWIP) balances. The borrowing costs capitalised during the year ended March 31, 2025 were ' Nil (March 31, 2024: ' 2.48 million). During the year, the Company did not capitalise any borrowing cost and for the previous year, the capitalisation rate ranges from LIBOR 60 bps to LIBOR 100 bps p.a. and EURIBOR 60 bps to EURIBOR 64 bps p.a. and SOFR 60 bps to SOFR 116 bps, refer note 18(a).
(d) Assets include assets lying with third parties amounting to net block of' 332.30 Million (March 31, 2024: ' 351.61 Million)
As at March 31, 2025 and March 31, 2024, the fair values of the properties are ' 1,168.98 million and '1,168.98 million respectively. The Company obtains independent valuations for its investment properties at least annually. These valuations are performed by an accredited independent valuer firm and this firm is a registered valuer as defined under rule 2 of Companies (Registered Valuers and Valuation) Rules, 2017. 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 ready reckoner rates. The main input used is the ready reckoner rate. All resulting fair value estimates for investment properties are included in Level 2.
The Company has no restrictions on the realisability of its investment properties and has no contractual obligations to either construct or develop investment properties or for repairs, maintenance and enhancement. Freehold land includes 25 acres of land situated at Pune, 24.13 acres of land situated at Satara and 8.40 acres of land situated at Chakan, which has been given on lease.
(a) Bharat Forge Global Holding GmbH (BFGH)
Contributions to the capital reserves of BFGH as per the German Commercial Code (code), form a part of the equity share capital and accordingly, have been considered as an investment and are redeemable subject to provisions of the code.
During the current year, the Company has made further capital contribution to BFGH of ' 3,455.75 million (Euro 39.00 million) for further investment in its subsidiaries Bharat Forge CDP GmbH, Bharat Forge Aluminiumtechnik GmbH and Bharat Forge Kilsta AB and has converted a loan of Euro 1.00 million amounting to ' 90.95 million
During the previous year, the Company had made further capital contribution to BFGH of? 3,157.45 million (Euro 35.00 million).
(b) Bharat Forge America Inc.
During the current year, the Company has invested an amount of? 8,833.86 million by way of additional paid in capital (USD 104.50 million) forfurther investment in its subsidiaries Bharat Forge Aluminium USA, Inc., Bharat Forge PMTTechnologie LLC and Bharat Forge Aluminium USA Inc. and has converted a loan of USD 12.00 million amounting to ' 1,025.28 million.
During the previous year, the Company had invested an amount of ' 1,248.30 million by way of additional paid in capital (USD 15.00 million) forfurther investment by Bharat Forge America Inc. into its subsidiary, Bharat Forge Aluminium USA, Inc.
6. INVESTMENT IN SUBSIDIARIES, JOINTVENTURES AND ASSOCIATES (CONTD.)
(c) Kalyani Powertrain Limited (KPL)
During the current year, the Company has invested an amount of' 3,779.50 million by acquiring 377,950,000 right shares of' 10 each in Kalyani Powertrain Limited for further investment in Tork Motors Private Limited, REFU Drive GmbH and Electro Forge Limited. Also the company has made provision for diminuhon in value of investment amounhng to ' 1,456.63 million in investment in equity instruments of KPL.
During the previous year, the Company had invested an amount of ' 2,612.85 million by acquiring 261,284,808 right shares of' 10 each in Kalyani Powertrain Limited for further investment into its subsidiary Kalyani Mobility Inc., a loan to its subsidiary Electroforge Limited and balance for other business achvihes.
(d) BF Industrial Solutions Limited (BFISL)
During the current year, the Company has invested an amount of ' 180 million by acquiring 7,826,087 right shares of ' 10 each at a premium of ' 13 each in BF Industrial Solutions Limited for futher investment in J S Auto Cast Foundry India Private Limited.
During the previous year, the Company had invested an amount of' 622.50 million by acquiring 41,499,999 right shares of? 10 each at a premium of' 5 each in BF Industrial Solutions Limited for further investment into its subsidiary JS Auto Cast Foundry India Private Limited.
(e) BF NTPC Energy Systems Limited (BFNTPCESL)
During an earlier year, the shareholders of BFNTPCESL, at their extraordinary general meeting held on October 9, 2018; decided to voluntarily liquidate the Company and engaged a liquidator to liquidate the Company under the provisions of Section 59 of the Insolvency and Bankruptcy Code 2016.
(f) BF Infrastructure Limited (BFIL)
During the previous year, the company had made provision for impairment in value of investment of ' 133.35 million in investment in equity instruments of BFIL. The provision was recognised as an exceptional item in the statement of profit and loss.
(g) REFU Drive GmbH (Refu)
During the current year, the company has transferred its investments in REFU Drive GmbH to Kalyani Powertrain Limited, its wholly owned subsidiary for an amount of' 1,054.50 million by transferring 12,500 equity shares of EUR 1 each, due to which REFU Drive GmbH ceased to be an joint venture of the company, in its standalone financial statements.
(h) BF Elbit Advanced Systems Private Limited
During the current year, the company has made provision for impairment in value of investment of ' 10.10 million in investment in equity instruments of BF Elbit. The provision has been recognised as an exceptional item in the statement of profit and loss.
(i) Avaada MHVidarbha Private Limited
During the earlier year, the Company had invested an amount of' 113.75 million by acquiring 11,375,000 equity shares of' 10 each for the procurement of solar power.
(j) Compliance with number of layers
The Company has invested funds in subsidiaries, associates and joint-ventures directly or through its wholly owned subsidiaries. The Company has complied with the number of layers prescribed under Section 2 (87) of the Companies Act, 2013 read with the Companies (Restriction on number of Layers) Rules, 2017.
(a) Gupta Energy Private Limited (GEPL)
Shares of GEPL pledged against the facility obtained by Gupta Global Resources Private Limited. This investment is carried at fair value of' Nil.
(b) Birlasoft Limited and KPIT Technologies Limited
The Company had invested in 613,000 equity shares of? 2/- each of KPIT Technologies Limited. The Hon'ble National Company Law Tribunal, Mumbai Bench, had by its order approved the composite scheme of arrangement (Scheme), amongst Birlasoft (India) Limited, KPIT Technologies Limited, KPIT Engineering Limited and their respective shareholders pursuant to the scheme, the engineering business of KPIT Technologies Limited had been transferred to KPIT Engineering Limited.
Pursuant to the order during an earlier year, Birlasoft (India) Limited had merged with KPIT Technologies Limited and KPIT Technologies had been renamed "Birlasoft Limited". KPIT Engineering Limited had been renamed "KPITTechnologies Limited".
Pursuant to the scheme, the Company had received 1 equity share of KPIT Technologies Limited of ' 10/- each for 1 equity share of Birlasoft Limited of ' 2/- each. The ratio of cost of acquisition per share of Birlasoft Limited and KPIT Technologies Limited was 56.64%:43.36%.
(c) Investments at fair value through OCI (fully paid) reflect investment in quoted and unquoted equity. Refer note 48 for determination of their fair values.
(d) Investments at fair value through profit or loss (fully paid) reflect investment in quoted/unquoted equity and debt securities. Refer note 48 for determination of their fair values.
(e) TMJ Electric Vehicles Limited (Formerly Tevva Motors (Jersey) Limited) (Tevva)
"Duringthecurrentyear, the company has transferred its investments inTMJ ElectricVehicles Limited foran amount of ?0.54 million by transferring 11,09,132 ordinary shares of £0.00001 each to Bharat Lorge International Limited, its wholly owned subsidiary. During the previous year, the Company had considered a fair value adjustment as against the total carrying value of Tevva resulting in other comprehensive loss of' 2,794.23 million. This fair value adjustment was considered basis future projections and revenue market multiple for comparable companies in the segment."
(f) Sunsure Solarpark Twenty Eight Private Limited
During the current year, the Company has invested in Sunsure Solarpark Twenty Eight Private Limited of ' 12.94 million by acquiring 10,349 equity shares of ' 10 each at a premium of ' 1,240 each.
Derivative instruments at fair value through OCI reflect the negative change in fair value of foreign currency forward contracts, designated as cash flow hedges to hedge highly probable forecast sales in US Dollars (USD) and Euro (EUR).
Derivative instruments at fair value through profit or loss reflect the negative change in fair value of EUR/INR and foreign currency forward contracts to hedge exposure to changes in the fair value of underlying Euro liability and trade receivables respectively.
Derivative instruments not designated as hedge reflect the negative change in cross-currency swaps through which the Company has converted two of its long-term INR Non-Convertible Debentures and one of its term loan into a Euro. Also INR pre-shipment credit is converted into USD and EURO for positive interest arbitrage for previous year.
(a) Terms/rights attached to equity shares
The Company has only one class of issued equity shares having a par value of' 2/- per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
(b) Reconciliation of equity shares outstanding at the beginning and at the end of the reporting year
In the event of liquidation of Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholder.
(c) The Company raised capital of ' 16,500 million through Qualified Institutions Placement (“QIP") of equity shares. The Investment Committee constituted by Board of Directors of the Company, at its meeting held on December 09, 2024, approved the allotment of 12,500,000 equity shares of face value ' 2 each to eligible investors at a price ' 1,320 per equity share (including a premium of? 1,318 per equity share). The objectives of the QIP were repayment/prepayment of certain borrowings availed by certain subsidiaries, proposed acquisition of the equity shares of AAM India Manufacturing Corporation Private Limited, including all associated costs in relation to the proposed acquisition and general corporate purposes. Out of the total proceeds, ' 10,999.61 million was utilised during the period for repayment/prepayment of certain borrowings, general corporate purpose and expenses attributable to QIP issue. The unspent amount of' 5,500 million has been placed in fixed deposits with banks and ' 0.39 million in the Company's monitoring account. The equity shares issued as a result of QIP have been considered in calculating earnings per share (EPS) foryear ended March 31, 2025.
(h) Global depository receipts
The Company had issued 3,636,500 equity shares of ' 10/- each (later sub-divided into 18,182,500 equity shares of ' 2/- each) in April 2005 represented by 3,636,500 Global Depository Receipts (GDR) (on sub division 18,182,500 GDRs) evidencing "Master GDR Certificates" at a price of USD 27.50 per GDR (including premium). GDRs outstanding as at year end are Nil (March 31, 2024: 800). The funds raised had been utilised towards the object of the issue.
Holders of GDRs had no voting rights or other direct rights of a shareholder with respect to the shares underlying the GDR. Since the GDR holding have significantly declined, the termination of the GDR programme was initiated effective from January 15, 2024 and the GDRs were delisted from the Luxembourg Stock Exchange with effect on January 16, 2024.
(a) Special capital incentive:
Special capital incentive is created during the financial year 1999-2000, amounting to ' 2.50 million under the 1988 Package Scheme of Incentives.
(b) Warrants subscription money:
The Company had issued and allotted to Qualified Institutional Buyers, 10,000,000 equity shares of' 2/- each at a price of' 272/- per share aggregating to ' 2,720 million on April 28, 2010, simultaneous with the issue of 1,760, 10.75% Non Convertible Debentures (NCD) of a face value of ' 1,000,000/- at par, together with 6,500,000 warrants at a price of ' 2/- each entitling the holder of each warrant to subscribe for 1 equity share of ' 2/- each at a price of ' 272/- at any time within 3 years from the date of allotment. Following the completion of the three-year term, the subscription money received on issue of warrants was credited to capital reserve as the same is not refundable/adjustable. Further the warrants had lapsed and ceased to be valid from April 28, 2013.
(c) 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 Companies Act, 2013. The Company has issued 12,500,000 equity shares of ' 2/- each at a price of ' 1,320/- per share (including a premium of' 1,318 per equity share). The costs that are attributable directly to the above transaction amounting to ' 302.67 million, have been adjusted against securities premium.
(d) General reserve:
General reserve is created by way of transfer from profits for the year.
(e) Retained earnings:
Retained earnings in the statement of profit and loss represents the balanced undistributed profits of the Company as on Balance Sheet date.
(c) Preshipment credit
The loan is secured against hypothecation of inventories (refer note 11) and trade receivables (refer note 12)
Preshipment credit - Rupee (secured and unsecured) is repayable within 90 days and carries interest @ 7.00% to 8.50% p.a.
Pre-shipment credit - foreign currency (secured and unsecured) is repayable within 90 days to 180 days and carries interest @ SOFR/Euribor 55 bps to SOFR/Euribor 120 bps p.a. respectively.
(d) Billdiscounting withbanks
The loan is secured against hypothecation of inventories (refer note 11) and trade receivables (refer note 12).
Bill discounting (secured and unsecured) with banks is repayable within 30 to 210 days.
Rupee and Foreign bill discounting (secured and unsecured) with banks carries interest @ 7.00% p.a. to 8.15% p.a. and SOFR 55 bps to SOFR 120 bps p.a. & EURIBOR 55 bps to EURIBOR 120 bps p.a. respectively.
(e) Loans availed for specific purpose and their utilisation for specified purpose:
During the previous year, the Company had availed of unsecured rupee term loan and issued listed, rated, unsecured, redeemable, non-convertible debentures on a private placement basis. Proceeds from the said term loan had been partially utilised for the intended purpose and the balance amount had been parked in a designated bank account. Proceeds from non-convertible debentures pending utilisations were parked in fixed deposits with a bank.
(f) Working capital facilities and statements filed with bank
The Company has availed working capital facilities from banks in the form of preshipment credit, bill discounting, working captial demand loan and cash credit. The Company has filed quarterly statements with banks with regard to the securities provided against such working capital facilities on a periodic basis. The statements filed by the Company are in agreement with the books of accounts of the Company.
18. BORROWINGS (CONTD.)
The Company has been sanctioned a fund-based limit of ?40,080 million and non-fund based limit of ' 7,250 million as on March 31, 2025 and (fund-based limit of' 34,080 million and non-fund based limit of' 7,250 million as on March 31, 2024) in respect of working capital facilities by its bankers.
(g) The Company has not been declared wilful defaulter by any bank or financial institution or government or any government authority.
Derivative instruments at fairvalue through OCI reflect the negative change in fair value of foreign exchange forward contracts, designated as cash flow hedges to hedge highly probable forecast sales in US Dollars (USD) and Euro (EUR). Derivative instruments at fairvalue through profit or loss reflect the negative change in fairvalue of EUR/INR and foreign currency forward contracts to hedge exposure to changes in the fairvalue of underlying Euro liability.
Derivative instruments not designated as hedge reflect the negative change in cross-currency swaps through which the Company has converted two of its long-term INR Non-Convertible Debentures and one of its term loans into a Euro.
# The Company has declared interim as well as final dividend in past years. Though a large portion of this dividend has been paid to members of the Company, an amount of' 0.13 million (March 31, 2024: ' 0.13 million) has been pending over the period. Pursuant to the provisions of Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, the unclaimed dividend shall be remitted online to the Investor Education and Protection Fund ('IEPF') along with a statement in relevant form, containing details of shareholders. Considering that all the particulars required for filing are not available, the company has not transferred the unclaimed dividend to IEPF and the relevant funds are available in separate bank accounts (refer Other Bank Balances in note 13).
(a) During the earlier year, the Company announced Voluntary Retirement Schemes (VRS) on April 28, 2022, and January 13, 2023 for its permanent eligible employees who have attained 40 years of age and have completed 10 years of service with the Company. The scheme announced on January 13, 2023 is extended until June 30, 2025, and the amount of expenditure under these schemes is disclosed as an exceptional item.
(b) REFU Drive GmbH (Refu)
During the current year, the Company has transferred shares of its joint venture REFU Drive GmbH to its subsidiary, Kalyani Powertrain Limited. The Company has recognised a gain on the transfer of this investment.
(c) TMJ Electric Vehicles Limited (Formerly Tevva Motors (Jersey) Limited) (Tevva)
During the current year, the company has transferred its investments in TMJ Electric Vehicles Limited to its subsidiary, Bharat Forge International Limited. The Company has recognised a loss on the transfer of this investment.
(d) BF Infrastructure Limited (BFIL)
During the previous year, the Company had made provision for impairment in value of investment of ' 133.35 million in investment in equity instruments of BFIL. The provision is recognised as an exceptional item in the statement of profit and loss.
(e) Kalyani Powertrain Limited (KPL)
During the current year, the company has made provision for impairment in value of investment of ' 1,456.63 million in investment in equity instruments of KPL.
35. LEASES
(a) Company as lessee
The Company has lease contracts for solar plants and various items of building and leasehold land, etc. used in its operahons. These leases generally have lease terms between 2 and 18 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. There are several lease contracts that include extension and termination options and variable lease payments, which are further mentioned below:
The Company also has certain leases of various assets 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.
The Company had total cash outflows for leases of ' 461.46 million (March 31, 2024: ' 457.20 million). The Company also had non-cash additions to right-of-use assets and lease liabilities of' 0.60 million (March 31, 2024: ' 0.60 million) respectively.
The Company has several lease contracts that include extension and termination options. These options are negotiated by management to provide flexibility in managing the leased-asset portfolio and align with the Company’s business needs. The Management exercises judgement in determining whether the extension and termination options are reasonably certain to be exercised. Refer note 52.
(b) Company as lessor
The Company has entered into agreements/arrangement in the nature of lease/sub-lease agreement with different lessees for the purpose of plant and machinery, land and building. These are generally in the nature of operating lease. Period of agreements/arrangement are generally from three years to twenty five years and cancellable with a notice of thirty days to six months and renewal being the option of the lessee/lessor.
36. SEGMENT INFORMATION
In accordance with paragraph 4 of notified Ind AS 108 "Operating segments", the Company has disclosed segment information only on the basis of the consolidated financial statements.
37. GRATUITY AND OTHER POST-EMPLOYMENT BENEFIT PLANS
(a) Gratuity plan Funded scheme
The Company has a defined benefit gratuity plan for its employees. The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the Act, every employee who has completed five years of service is entitled to specific benefits. The level of benefits provided depends on the employee's length of service and salary at retirement age. An employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn) for each completed year of service as per the provisions of the Payment of Gratuity Act, 1972. In case of certain category of employees who have completed 10 years of service, gratuity is calculated based on 30 days salary (last drawn) for each completed year of service and cap for gratuity is 20 years. The scheme is funded with insurance companies in the form of qualifying insurance policies. During the year, the Company amended its Gratuity plan to enhance the benefits provided to certain category of employees. As a result of this amendment, the Company recognised a past service cost. This cost represents the present value of the additional benefits granted for service in prior periods.
Risk exposure and asset-liability matching
Provision of a defined benefit scheme poses certain risks, some of which are detailed hereunder, as the Company takes on uncertain long-term obligations to make future benefit payments.
1) Liability risks
a) Asset-liability mismatch risk
Risk which arises if there is a mismatch in the duration of the assets relative to the liabilities. By matching duration with the defined benefit liabilities, the Company is successfully able to neutralise valuation swings caused by interest rate movements. Hence companies are encouraged to adopt asset-liability management.
b) Discount rate risk
Variations in the discount rate used to compute the present value of the liabilities may appear minor, but they can have a significant impact on the defined benefit liabilities.
c) Future salary escalation and inflation risk
Since price inflation and salary growth are linked economically, they are combined for disclosure purposes. 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 the Management's discretion may lead to uncertainties in estimating this increasing risk.
2) Asset risks
All plan assets are managed by the Trust and are invested in various funds (majorly LIC of India). 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 and 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 and also interest rate and inflation risk are taken care of.
The following table summarises the components of the net benefit expense recognised in the statement of profit and loss and the funded status and amounts recognised in the balance sheet for the gratuity plans.
The Weighted average duration of the defined benefit plan obligation (based on discounted cash flows using mortality, withdrawal and interest rate) is 10.78 years (March 31, 2024: 10.49 years).
(b) Special gratuity
The Company has a defined benefit special gratuity plan. Under the gratuity plan, every eligible employee who has completed ten years of service gets an additional gratuity on departure which will be salary of specified months based on the last drawn basic salary. The scheme is unfunded.
1) Liability risks
a) Asset-liability mismatch risk
Risk which arises if there is a mismatch in the duration of the assets relative to the liabilities. By matching duration with the defined benefit liabilities, the Company is successfully able to neutralise valuation swings caused by interest rate movements. Hence companies are encouraged to adopt asset-liability management.
b) Discount rate risk
Variations in the discount rate used to compute the present value of the liabilities may appear minor, but they can have a significant impact on the defined benefit liabilities.
c) Future salary escalation and inflation risk
Since price inflation and salary growth are linked economically, they are combined for disclosure purposes. 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 the Management's discretion may lead to uncertainties in estimating this increasing risk.
2) Unfunded plan risk
This represents unmanaged risk and a growing liability. There is an inherent risk here that the Company may default on paying the benefits in adverse circumstances. Funding the plan removes volatility in the Company's financial statements and also benefit risk through return on the funds made available for the plan.
C. Provident Fund
In accordance with the law, all employees of the Company are entitled to receive benefits under the provident fund. The Company operates two plans for its employees to provide employee benefits in the nature of provident fund, viz. defined contribution plan and defined benefit plan.
Under the defined contribution plan, provident fund is contributed to the government administered provident fund. The Company has no obligation, other than the contribution payable to the provident fund (Refer to note 28).
Under the defined benefit plan, the Company contributes to the "Bharat Forge Company Limited Staff Provident Fund Trust". The Company has an obligation to make good the shortfall, if any, between the return from the investments of the Trust and the notified interest rate.
The details of the defined benefit plan based on actuarial valuation report are as follows:
1) Liability risks:
a) Asset-liability mismatch risk
Risk which arises if there is a mismatch in the duration of the assets relative to the liabilities. By matching duration with the defined benefit liabilities, the Company is successfully able to neutralize valuation swings caused by interest rate movements. Hence companies are encouraged to adopt asset-liability management.
b) Discount rate risk
Variations in the discount rate used to compute the present value of the liabilities may seem small, but in practice can have a significant impact on the defined benefit liabilities.
c) Future salary escalation and inflation risk
Since price inflation and salary growth are linked economically, they are combined for disclosure purposes. 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 The Management's discretion may lead to uncertainties in estimating this increasing risk.
2) Asset risks:
All plan assets are managed by the Trust and funds are invested in various securities as per the pattern prescribed by the Government. The Company has no control over the management of funds and this option provides a high level of safety for the total corpus.
(d) Pension and other obligation
The Company has a defined benefit pension and medical reimbursement plan for certain key managerial personnel and ex-employees as approved by the remuneration committee. The plan provides a lifetime monthly pension payments to such employees as stipulated in the policy. The Company accounts for liability of such future benefits based on an independent actuarial valuation on projected accrued credit method carried out for assessing the provision as on the reporting date.
1) Liability risks
a) Discount rate risk
Variations in the discount rate used to compute the present value of the liabilities may appear minor, but they can have a significant impact on the defined benefit liabilities.
b) Unfunded plan risk
This represents unmanaged risk and a growing liability. There is an inherent risk here that the Company may default on paying the benefits in adverse circumstances. Funding the plan removes volatility in the Company's financial statements and also benefit risk through return on the funds made available for the plan.
38. CONTINGENT LIABILITIES
|
|
In ' Million
|
Particulars
|
As at
March 31,2025
|
As at
March 31,2024
|
Guarantees given by the Company's Bankers on behalf of the Company, against the sanctioned guarantee limit of' 7,250 million (March 31, 2024: ' 7,250 million) for contracts undertaken by the Company and are secured by extension of charge byway of joint hypothecation of stock-in-trade, stores and spares, book debts, etc.
|
4,012.92
|
3,818.07
|
Claim against the Company not acknowledged as Debts- to the extent ascertained [(Refer note 38(a)]
|
645.07
|
548.03
|
Excise/Service tax demands - matters under dispute* [(Refer note 38(b)]
|
295.10
|
129.66
|
Customs demands - matters under dispute* [(Refer note 38(c)]
|
43.29
|
64.74
|
Income tax demands - matter under dispute [(Refer note 38(d)]
|
60.07
|
54.92
|
* includes interest calcuted fill reporfing date and penalty
(a) The Company is contesfing the demands raised pertaining to property tax.
(b) Includes amount pertaining to incenfive received under Government schemes, etc.
(c) Includes amount pertaining to dassificafion differences of products, etc.
(d) Includes amount pertaining to matter relafing to applicability of TDS
The Company is contesting the demands and the Management, including its tax/legal advisors, believe that its position will likely be upheld in the appellate process. No provision has been recognised in the financial statements for the tax demand raised. The management based on its internal assessment and advice by its legal counsel believes that it is only possible/ remote, but not probable, that the action will succeed.
Note: In cases where the amounts have been accrued, it has not been included above.
(a) The Company has issued various financial guarantees/support letters for working capital requirement of the subsidiary companies. The management has considered the probability for outflow of the same to be remote.
The Company, for its newly set up plant located at Mambattu, Nellore, Andhra Pradesh for the manufacture of aluminium casting, had imported capital goods under the Export Promotion Capital Goods Scheme of the Government of India, at concessional rates of duty on an undertaking to fulfil quantified exports. As at March 31, 2024; export obligation aggregates to ' 697.18 million. This is to be satisfied over a period of 6 years (block year 1st to 4th year - 50% and 5th to 6th year - 50%) from December 14, 2018, as specified. During the current financial year, the period has concluded, and any outstanding obligations will be fulfilled in due course.
41. CAPITAL MANAGEMENT
For the purpose of the Company’s capital management, capital includes issued equity share capital, securities premium and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Company’s capital management is to maximise the shareholder value.
The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using a net
(f) Details of shortfall, cumulative shortfall and reasons for shortfall
During the year ended March 31, 2025, as against required expenditure of' 306.00 million (March 31, 2024: ' 207.91 million), the Company has incurred expenditure of ' 244.78 million (March 31, 2024: ' 171.08 million) and an amount of' 61.22 million (March 31, 2024: ' 36.83 million) remained unspent due to the phase-wise implementahon of CSR activities. The unspent amount for the year ended March 31, 2025, has been transferred to the unspent CSR account and the same shall be utilised by the Company in the next year for CSR projects undertaken by the Company.
(g) Nature of activities Ongoing projects
As part of ongoing projects for CSR, the Company has undertaken initiatives such as village development (water, internal roads, Livelihood, health & education), environment sustenance (water harvesting, trees plantation, renewal of solar energy & waste management), skill development, education, community development & women empowerment, Health initiatives (telemedicine setups, cancer screening camps, strengthening of primary healthcare centres), protection of art and culture & promotion of sports
Other than ongoing projects
These include activities related to educational sponsorship, and various rural development initiatives.
(b) KPIT Technologies Limited
The Company had invested into 613,000 equity shares of' 2/- each of KPIT Technologies Limited. The Hon'ble Nahonal Company Law Tribunal, Mumbai Bench, has by its order approved the composite scheme of arrangement (Scheme), amongst Birlasoft (India) Limited, KPITTechnologies Limited, KPIT Engineering Limited and their respechve shareholders. Pursuant to the Scheme, the engineering business of KPITTechnologies Limited has been transferred to KPIT Engineering Limited.
Pursuant to the order, Birlasoft (India) Limited has merged with KPITTechnologies Limited and KPITTechnologies has been renamed as "Birlasoft Limited". KPIT Engineering Limited has been renamed as "KPITTechnologies Limited".
Pursuant to the Scheme, the Company had received 1 equity share of KPIT Technologies Ltd. of' 10/- each for 1 equity share of Birlasoft Ltd. of' 2/- each. The raho of cost of acquisihon per share of Birlasoft Ltd. and KPIT Technologies Ltd. was 56.64% to 43.36%.
The investment in shares has been classified under level 1 of the fair value hierarchy as on March 31,2025 and March 31, 2024.
49. FINANCIAL INSTRUMENTS BY CATEGORY
Set out below is a comparison, by class, of the carrying amounts and fair value of the Company’s financial instruments as of March 31, 2025; other than those with carrying amounts that are reasonable approximates of fair values:
(a) Gupta Energy Private Limited (GEPL)
The Company has an investment in the equity instrument of GEPL. The same is classified as at fair value through profit and loss. Over the years, GEPL has been making consistent losses. The management of the Company has made attempts to obtain the latest informahon for the purpose of valuahon. However, such informahon is not available as GEPL has not filed the financial statements with Ministry Of Corporate Affaires (MCA) since FY 2014-15. In view of the above, the management believes that the fair value of the investment is Nil as at April 1, 2015 and thereafter.
The management assessed that the fair value of cash and cash equivalent, trade receivables, derivahve instruments, trade payables, and other current financial assets and liabilihes approximate their carrying amounts largely due to the short-term maturihes of these instruments.
Further the management assessed that the fair value of security deposits, trade receivables and other non-current receivables approximate their carrying amounts largely due to discounhng/expected credit loss at rates which are an approximahon of current lending rates.
49. FINANCIAL INSTRUMENTS BY CATEGORY (CONTD.)
The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a
current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions
were used to estimate the fair values:
(i) Long-term fixed-rate and variable-rate receivables are evaluated by the Company based on parameters such as individual creditworthiness of the customer. Based on this evaluation, allowances are taken into account for the expected credit losses of these receivables.
(ii) The fair values of quoted instruments are based on price quotations at the reporting date. The fair value of unquoted instruments, loans from banks as well as other non-current financial liabilities is estimated by discounting future cash flows using rates currently available for debt on similar terms, credit risk and remaining maturities. In addition to being sensitive to a reasonably possible change in the forecast cash flows or the discount rate, the fair value of the equity instruments is also sensitive to a reasonably possible change in the growth rates. The valuation requires management to use unobservable inputs in the model, of which the significant unobservable inputs are disclosed in note 48. Management regularly assesses a range of reasonably possible alternatives for those significant unobservable inputs and determines their impact on the total fair value.
(iii) The fair values of the unquoted equity shares have been estimated using a cost method (KEIPL), comparable transaction method (Tevva) as well as current market value method (ASPL and AMPL). The valuation requires management to make certain assumptions about the model inputs, including forecast cash flows, discount rate, credit risk and volatility. The probabilities of the various estimates within the range can be reasonably assessed and are used in management’s estimate of fair value for these unquoted equity investments.
(iv) The Company enters into derivative financial instruments with various counterparties, principally financial institutions with investment grade credit ratings. Foreign exchange forward contracts are valued using valuation techniques, which employs the use of market observable inputs. The most frequently applied valuation techniques include forward pricing using present value calculations. The models incorporate various inputs including the credit quality of counterparties, foreign exchange spot and forward rates, yield curves of the respective currencies, currency basis spreads between the respective currencies and forward rate curves of the underlying. All derivative contracts are fully cash collateralised, thereby eliminating both counterparty and the Company’s own non-performance risk. As at March 31, 2025 the marked-to-market value of derivative asset positions is net of a credit valuation adjustment attributable to derivative counterparty default 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.
(v) The Company’s borrowings and loans are appearing in the books at fair value since they are interest bearing hence, discounting of the same is not required. The own non-performance risk as at March 31, 2025 and March 31, 2024 was assessed to be insignificant.
The cash flow hedges of the expected future sales during the year ended March 31, 2025 were assessed to be highly effective and a net unrealised (loss)/gain of' 748.93 million (March 31, 2024: ' 1,798.96 million), with a deferred tax liability of? 188.50 million (March 31, 2024: ' 452.76 million) relating to the hedging instruments, is included in OCI.
The amount removed from OCI during the year and included in the carrying amount of the hedged item as an adjustment for the year ended March 31, 2025 as detailed in note 33, totaling ' 1,130.69 million (gross of deferred tax) (March 31, 2024: ' 1,224.03 million). The amounts retained in OCI at March 31, 2025 are expected to mature and affect the statement of profit and loss till the year ended March 31, 2025.
Fair value hedges
At March 31, 2024 the Company had certain forward contracts outstanding, which are being used to hedge the exposure to changes in the fair value of its underlying trade receivables.
Derivatives not designated as hedging instruments
The Company has used foreign exchange forward contracts to manage the repayment of some of its foreign currency denominated borrowings. These foreign exchange forward contracts are not designated as cash flow hedges and are entered into for periods consistent with foreign currency exposure of the underlying transactions i.e. the repayments of foreign currency denominated borrowings.
During the current year, the company has coverted one of its term loan issues in Indian Rupees (INR) into a Euro loan for interest rate arbitrage. Under the original agreement, the interest rate for the term loan was fixed at 7.96%, but due to the cross-currency swap arrangement, the effective interest rate has been fixed at 3.58% on EURO equivalent.
During the previous year, the Company has converted two of its Non Convertible Debetures (NCD) issued in Indian Rupees (INR) into a Euro loan for interest rate arbitrage. Under the original agreement, the interest rate for 5.80% BFL 2025 listed, rated, unsecured, redeemable, non-convertible debentures was fixed at 5.80%, but due to the cross-currency swap arrangement, the effective interest rate has been fixed at 2.40% on EURO equivalent. The interest rate for 7.80% Bharat Forge Limited 2027 listed, rated, unsecured, redeemable, non-convertible debentures was fixed at 7.80%, but due to the cross-currency swap arrangement, the effective interest rate has been fixed at 3.52% on EURO equivalent, decreasing the corresponding interest cost on borrowings from NCD issuance.
52. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The preparation of the Company’s financial statements requires managementto makejudgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the accompanying disclosures, including the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
Judgements
In the process of applying the Company’s accounting policies, the Management has made the following judgements, which have the most significant effect on the amounts recognised in the financial statements:
1) Leases
Determining the lease term of contracts with renewal and termination options - Company as lessee
The Company determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised.
The Company has several lease contracts that include extension and termination options. The Company applies judgement in evaluating whether it is reasonably certain whether or not to exercise the option to renew or terminate the lease. That is, it considers all relevant factors that create an economic incentive for it to exercise either the renewal or termination. After the commencement date, the Company reassesses the lease term if there is a significant event or change in circumstances that is within its control and affects its ability to exercise or not to exercise the option to renew or to terminate (e.g., construction of significant leasehold improvements or significant customisation to the leased asset).
Refer to Note 35 for information on potential future rental payments relating to periods following the exercise date of extension and termination options that are not included in the lease term.
52. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS (CONTD.)
Property lease classification - Company as lessor
The Company has entered into commercial property leases on its investment property portfolio. The Company has determined, based on an evaluation of the terms and conditions of the arrangements, such as the lease term not constituting a major part of the economic life of the commercial property and the present value of the minimum lease payments not amounting to substantially all of the fair value of the commercial property, that it retains substantially all the risks and rewards incidental to ownership of these properties and accounts for the contracts as operating leases.
2) Embedded derivatives
The Company has entered into certain hybrid contracts i.e. where an embedded derivative is a component of a non-derivative host contract, in the nature of financial liability. The Company has exercised judgement to evaluate if the economic characteristics and risks of the embedded derivative are closely related to the economic characteristics and risks of the host. Based on the evaluation, the Company has concluded that, these economic characteristics and risks of the embedded derivatives are closely related to the economic characteristics and risks of the host and thus not separated from the host contract and not accounted for separately.
3) Revenue from contracts with customers
The Company applied the following judgements that significantly affect the determination of the amount and timing of revenue from contracts with customers:
a) Identifying contracts with customers
The Company enters into Master service agreement ('MSA') with its customers which define the key terms of the contract with customers. However, the rates and quantities to be supplied are separately agreed through purchase orders. The Management has exercised judgement to determine that contract with customers for the purpose of Ind AS 115 is MSA and customer purchase orders for purpose of identification of performance obligations and other associated terms.
b) Identifying performance obligation
The Company enters into contract with customers for sale of goods and tooling income. The Company determined that both the goods and tooling income are capable of being distinct. The fact that the Company regularly sells these goods on a standalone basis indicates that the customer can benefit from it on an individual basis. The Company also determined that the promises to transfer these goods are distinct within the context of the contract. These goods are not input to a combined item in the contract. Hence, the tooling income and the sale of goods are separate performance obligations.
c) Determination of timing of satisfaction of performance obligation
The Company concluded that sale of goods and tooling income is to be recognised at a point in time because it does not meet the criteria for recognising revenue over a period of time. The Company has applied judgement in determining the point in time when the control of the goods and tooling income are transferred based on the criteria mentioned in the standard read along with the contract with customers, applicable laws and considering the industry practices which are as follows:
(1) Sale of goods
The goods manufactured are "Build to print" as per design specified by the customer for which the tools/ dies are approved before commercial production commences. Further, the dispatch of goods is made on the basis of the purchase orders obtained from the customer taking into account the just in time production model with customer.
(2) Tooling income
Tools are manufactured as per the design specified by the customer which is approved on the basis of the customer acceptance. The Management has used judgement in identification of the point in time where the tools are deemed to have been accepted by the customers.
d) Litigations
The Company has various ongoing litigations, the outcome of which may have a material effect on the financial position, results of operations or cash flows. The Company’s legal team regularly analyses current information about these matters and assesses the requirement for the provision for probable losses including estimates of legal expense to resolve such matters. In making the decision regarding the need for loss provision, management considers the degree of probability of an unfavourable outcome and the ability to make sufficiently reliable estimate of the amount of loss. The filing of a law 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.
Considering the facts on hand and the current stage of certain ongoing litigations where it stands, the Company foresees remote risk of any material claim arising from claims against the Company. Management has exercised significant judgement in assessing the impact, if any, on the disclosures in respect of litigations in relation to the Company.
Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.
1) Estimating the incremental borrowing rate to measure lease liabilities
The Company cannot readily determine the interest rate implicit in the lease, therefore, it uses its incremental borrowing rate (IBR) to measure lease liabilities. The IBR is the rate of interest that the Company would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. The IBR therefore reflects what the Company ‘would have to pay’, which requires estimation when no observable rates are available or when they need to be adjusted to reflect the terms and conditions of the lease. The Company estimates the IBR using observable inputs (such as market interest rates) when available and is required to make certain entity-specific estimates.
2) Impairment of non-financial assets (tangible and intangible)
The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or Cash Generating Unit's (CGU’s) fair value less costs of disposal and its value in use. It is determined for an individual asset, unless the asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing the value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and risks specific to the asset. In determining the fair value less costs to disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples or other available fair value indicators.
3) Warranty
Provision for assurance-type warranties predominantly cover the risk arising from expected claims for damages on the products sold by the Company, based on expectation of the level of repairs for the components. Provisions related to these assurance-type warranties are recognised when the product is sold to the customer and are accounted for as warranty provisions. The estimate of warranty-related costs is revised annually. The Company usually provides assurance type-warranty for period of two years.
Company also provides a warranty beyond fixing defects to ensure that the products are made available for pre-defined period during the tenure of warranty. These are classified as service-type warranties. Refer accounting policy on service type warranty.
Service type warranty
Apart from assurance-type warranties cover in warranty provisions, the Company also provides a warranty beyond fixing defects to ensure that the products are made available for pre-defined period during the tenure of warranty. These service-type warranties are usually sold bundled together with the product. Contracts for bundled sales of product and service-type warranty comprise two performance obligations because the product and service-type warranty are distinct within the context of the contract. Using the expected cost plus margin approach, a portion of the transaction price is allocated to the service-type warranty and recognised as a contract liability. Revenue for service-type warranties is recognised over the period in which the service is provided based on the time elapsed.
4) Defined benefit plans
The cost of the defined benefit gratuity plan, other defined benefit plan and other post-employment plans 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, expected returns on plan assets 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 mortality rate is based on publicly available mortality tables for India. Those mortality tables tend to change only at interval in response to demographic changes. Future salary increases, discount rate and return on planned assets are based on expected future inflation rates for India. Further details about defined benefit plans are given in note 37.
5) Fair value measurement of financial instruments
When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured usingdifferent valuationtechniques 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 judgement is required in establishing fair values. Judgements and estimates 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 48 and 49 for further disclosures.
6) Impairment of financial assets
The impairment provisions forfinancial assets are based on assumptions about risk of default and expected loss rates. The Company uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on Company’s past history, existing market conditions as well as forward looking estimates at the end of each reporting period. Further, the Company also evaluates risk with respect to expected loss on account of loss in time value of money which is calculated using average cost of capital for relevant financial assets.
The Company assesses impairment of investments in subsidiaries, associates and joint ventures which are recorded at cost. The recoverable amount requires estimates of profit, discount rate, future growth rate, terminal values, etc. based on the Management's best estimate.
7) Provision for inventories
The Management reviews the inventory age listing on a periodic basis. This review involves comparison of the carrying value of the aged inventory items with the respective net realisable value. The purpose is to ascertain whether an allowance is required to be made in the financial statements for any obsolete slow-moving items and net realisable value. The Management is satisfied that adequate allowance for obsolete and slow-moving inventories has been made in the financial statements.
53. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Company’s principal financial liabilities other than derivatives comprise loans and borrowings, trade payables and financial guarantee contracts. 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 FVTOCI and FVTPL investments and enters into derivative transactions.
The Company is exposed to market risk, credit risk and liquidity risk. The Company’s senior management oversees the management of these risks. The Company’s senior management is supported by a Finance and Risk Management Committee (FRMC) that advises on financial risks and the appropriate financial risk governance framework for the Company. The FRMC provides assurance that the Company’s financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company’s policies and risk objectives. Further, all the derivative activities for risk management purposes are carried out by experienced members from the senior management who have the relevant expertise, appropriate skills and supervision. It is the Company’s policy that no trading in derivatives for speculative purposes may be undertaken. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised as below.
Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk include loans and borrowings, deposits, investments in mutual funds, FVTOCI investments and derivative-financial instruments.
The sensitivity analysis in the following sections relate to the position as at March 31, 2025 and March 31, 2024.
The sensitivity analysis has been prepared on the basis that the amount of net debt, the ratio of fixed to floating interest rates of the debt and derivatives and the proportion of financial instruments in foreign currencies are all constant and on the basis of hedge designations in place at March 31, 2025 and comparatively as at March 31, 2024. The analysis excludes the impact of movements in market variables on the carrying values of gratuity and other post-retirement obligations and provisions.
The below assumptions have been made in calculating the sensitivity analysis:
• The sensitivity of the relevant profit or loss item is the effect of the assumed changes in respective market risks. This is based on the financial assets and financial liabilities held as at March 31, 2025 and March 31, 2024 including the effect of hedge accounting.
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’s exposure to the risk of changes in market interest rates relates primarily to the Company’s long-term debt obligations with floating interest rates, other than 5.97% rated unsecured non-convertible debentures, 5.80% rated unsecured non-convertible debentures, 7.80% rated unsecured non-convertible debentures & 5.90% rupee term loan from bank which have a fixed interest rate.
The Company generally borrows in foreign currency, considering natural hedge it has against its export. Long-term and short-term foreign currency debt obligations carry floating interest rates.
The Company avails short-term debt in foreign currency up to a tenure of 9 months, in the nature of export financing for its working capital requirements. LIBOR/SOFR or EURIBOR for the said debt obligations is fixed for the entire tenor of the debt, at the time of availment.
During the year, company has availed Rupee term loan with floating interest rate from a bank, which is linked to 3 months T-bill.
The Company has an option to reset LIBOR/SOFR or EURIBOR either for 6 Months or 3 months for its long-term debt obligations. To manage its interest rate risk, the Company evaluates the expected benefit from either of the LIBOR/SOFR or EURIBOR resetting options and accordingly decides. The Company also has an option for its long-term debt obligations to enter into interest rate swaps, in which it agrees to exchange, at specified intervals, the difference between fixed and variable rate interest amounts calculated by reference to an agreed-upon notional principal amount.
As at March 31 2025, the Company’s 39.75 % of total long-term borrowings are covered under floating rate of interest (March 31 2024: 45.93%).
Interest rate sensitivity
The Company’s total interest cost for the year ended March 31, 2025 was ' 2,498.14 million (March 31, 2024: ' 2,874.12 million). The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings affected, with all other variables held constant, the Company’s profit before tax is affected through the impact on floating rate long-term borrowings, as follows:
The assumed movement in basis points for the interest rate sensitivity analysis is based on the currently observable market environment, showing a significantly higher volatility than in prior years.
Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company’s exposure to the risk of changes in foreign exchange rates relates primarily to the Company’s export revenue and long-term foreign currency borrowings.
The Company manages its foreign currency risk by hedging its forecasted sales up to 3 to 4 years to the extent of 25%-65% on a rolling basis and the Company keeps its long-term foreign currency borrowings un-hedged which will be natural hedge against its un-hedged exports. The Company may hedge its long-term borrowing near to the repayment date to avoid rupee volatility in short term.
The Company avails preshipment credit and export bills discounting facility in INR to avail interest subvention benefit. The Company manages foreign currency risk by hedging the receivables against the said liability. The Company also manages foreign currency risk in relation to export receivable balances through forward exchange contracts.
53. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTD.)
The following analysis has been worked out based on the net exposures of the Company as of the date of balance sheet which could affect the statement of profit and loss and other comprehensive income and equity. Further the exposure as indicated below is mitigated by some of the derivative contracts entered into by the Company as disclosed in note number 50.
10% appreciation/depreciation of the functional currency of the Company with respect to various foreign currencies would result in increase/decrease in the Company’s profit before taxes by approximately ' 262.28 Million for the year ended March 31, 2025.
The company has not considered net non-current foreign currency loan exposure, being naturally hedged against future unhedged export receivables.
For the investments in subsidiaries, joint ventures and associates being strategic in nature, do not have any maturity or cash flow hence the same has not been considered for the purpose of unhedged foreign currency exposure.
10% appreciation/depreciation of the functional currency of the Company with respect to various foreign currencies would result in increase/decrease in the Company’s profit before taxes by approximately ' 176.62 Million for the year ended March 31, 2024.
The company has not considered net non-current loan exposure in foreign currency, being naturally hedged against future unhedged export receivables.
The investments in subsidiaries, joint ventures and associates being strategic in nature, do not have any maturity or cash flow hence the same has not been considered for the purpose of unhedged foreign currency exposure.
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.
Commodity price risk
The Company is affected by the price volatility of certain commodities. Its operating activities require on-going purchase of steel. Due to significant volatility of the price of steel, the Company has agreed with its customers for pass-through of increase/decrease in prices of steel. There may be lag effect in case of such pass-through arrangements.
Commodity price sensitivity
The Company has back to back pass through arrangements for volatility in raw material prices for most of the customers. However, in a few cases there may be lag effect in case of such pass-through arrangements and might have some effect on the Company’s profit and equity.
Equity price risk
The Company is exposed to price risk in equity investments and classified on the balance sheet as fair value through profit and loss and through other comprehensive income. To manage its price risk arising from investments in equity, the Company diversifies its portfolio. Diversification and investment in the portfolio is done in accordance with the limits set by the Board of Directors.
At the reporting date, the exposure to unlisted equity securities at fair value was ' 1,423.35 million (March 31, 2024: ' 1,374.12 million). Sensitivity analysis of major investments have been provided in Note 48.
At the reporting date, the exposure to listed equity securities at fair value was ' 1,039.13 million (March 31, 2024: ' 1,366.01 million). A increase/decrease of 10% on the NSE market index could have an impact of approximately? 103.91 million (March 31, 2024: ' 136.60 million) on the OCI or equity attributable to the Company. These changes would not have an effect on profit and loss.
Other price risks
The Company invests its surplus funds in mutual funds which are linked to debt markets. The Company is exposed to price risk for investments that are classified as fair value through profit and loss. To manage its price risk arising from investments in mutual funds, the Company diversifies its portfolio. Diversificahon and investments in the portfolio are done in accordance with Company’s investment policy approved by the Board of Directors. Accordingly, increase/decrease in interest rates by 0.25% will have an impact of' 25.92 million (March 31, 2024: ' 26.37 million).
Credit risk
Credit risk is the risk that counterparty will not meet its obligahons 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 from its financing activities, including deposits with banks and financial institutions, investment in mutual funds, other receivables and deposits, foreign exchange transactions and other financial instruments.
Trade receivables
Customer credit risk is managed by the Company’s established policy, procedures and control relating to customer credit risk management. Further, Company’s customers include marquee Original Equipment
Manufacturers and Tier I companies, having long-standing relationships with the Company. Outstanding customer receivables are regularly monitored and reconciled. At March 31, 2025, receivable from Company’s top 5 customers accounted for approximately 73.52% (March 31, 2024: 73.73%) of all the receivables outstanding. The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on provision matrix (Refer table below). Further, an impairment analysis is performed at each reporting date on an individual basis for major customers. In addition, a large number of minor receivables are grouped in to homogeneous groups and assessed for impairment collectively. The calculation is based on historical data and subsequent expectation of receipts. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in note 12. The Company does not hold collateral as security except in case of a few customers. 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.
Liquidity risk
Cash flow forecasting is performed by the Treasury function. Treasury monitors rolling forecasts of the Company’s liquidity requirements to ensure it has sufficient cash to meet operational needs. Such forecasting takes into consideration the compliance with internal cash management. The Company’s treasury invests surplus cash in marketable securities as per the approved policy, choosing instruments with appropriate maturities or sufficient liquidity to provide sufficient headroom as determined by the above-mentioned forecasts. At the reporting date, the Company held mutual funds of ' 12,207.33 million (March 31, 2024: ' 12,283.37 million) and other liquid assets of? 3,591.84 million (March 31, 2024: ' 10,420.09 million) that are expected to readily generate cash inflows for managing liquidity risk.
As per the Company’s policy, there should not be concentration of repayment of loans in a particular financial year. In case of such concentration of repayment, the Company evaluates the option of refinancing entire or part of repayments for extended maturity. The Company assessed the concentration of risk with respect to refinancing its debt and concluded it to be low. The Company has access to a sufficient variety of sources of funding and debt maturing within 12 months can be rolled over with existing lenders and the Company is also maintaining surplus funds with short-term liquidity for future repayment of loans.
Other receivables, deposits with banks, mutual funds and loans given
Credit risk from balances with banks, financial institutions and mutual funds is managed in accordance with the Company’s approved investment policy. Investments of surplus funds are made only with approved Counterparties and within credit limits assigned to each counterparty. Counterparty credit limits are reviewed by the Company’s Board of Directors on a regular basis and the said limits gets revised as and when appropriate. 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 the components of the balance sheet at March 31, 2025 and March 31, 2024 is the carrying amounts as illustrated in the respective notes except for financial guarantees and derivative financial instruments. The Company’s maximum exposure relating to financial guarantees and financial derivative instruments is noted in note 38 and note 50 respectively.
The Management believes that the probability of any outflow on account of financial guarantees issued by the Company being called on is remote. Hence the same has not been included in the above table. Further, as and when required, the Company also gives financial support letters to subsidiaries.
54. 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. For the year ended March 31, 2025, MCA has notified Ind AS - 117 Insurance Contracts and amendments to Ind AS 116 - Leases, relating to sale and leaseback transactions, applicable to the Company w.e.f. April 1, 2024. The Company has reviewed the new pronouncements and based on its evaluation has determined that it does not have any impact in its financial statements.
55. The Company has entered into a share purchase agreement (“SPA") for the acquisition of 100% shareholding in AAM India Manufacturing Corporation Private Limited (“AAMIMCPL"), a leading manufacturer of axles for light, medium and heavy commercial vehicles in India. The completion of acquisition shall be subject to fulfilment of conditions precedent and in accordance with the terms agreed upon in the SPA.
56. OTHER STATUTORY INFORMATION
a. There is no proceeding initiated or pending against the Company for holding any Benami property under Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder.
b. The Company does not have any charge which is yet to be registered with Registrar of Companies beyond the statutory period. With regard to satisfaction of charges, few cases of the company is outstanding with ROC due to technical reasons and company is in the process of obtaining no dues certificates from the lenders, which the Company will be filing with the Registrar of Companies for satisfaction of the related charges.
c. The Company have not traded or invested in Crypto currency or Virtual Currency during the financial year.
d. During the year ended March 31, 2025, the Company was not party to any approved scheme which needs approval from competent authority in terms of section 230 to 237 of the Companies Act, 2013.
e. As per proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 for maintaining books of account using accounting software which has a feature of recording audit trail (edit log) facility is applicable to the Company w.e.f. April 1, 2023, and accordingly the Company has used accounting softwares for maintaining its books of account which have a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the respective softwares. However the audit trail functionality is not enabled at database level and also in case of few fields in SAP at application layer. The company is in the process of evaluation of the feasibility of extending the audit trail facility on such fields in SAP as well as at database layer of accounting software's used for maintaining the books of accounts. Additionally, the audit trail has been preserved by the company as per the statutory requirements for records retention.
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