L. Provisions and Contingencies
Provisions: Provisions are recognised when there is a
present obligation (legal or constructive) as a result of
a past event, it is probable that an outflow of resources
embodying economic benefits will be required to settle the
obligation and there is a reliable estimate of the amount
of the obligation. Provisions are measured at the best
estimate of the expenditure required to settle the present
obligation at the Balance sheet date and are discounted to
its present value as appropriate.
Provisions for onerous contracts are recognized when the
expected benefits to be derived by the Company from a
contract are lower than the unavoidable costs of meeting
the future obligations under the contract. Provisions for
onerous contracts are measured at the present value of
lower of the expected net cost of fulfilling the contract and
the expected cost of terminating the contract.
Provisions for the expected cost of warranty obligations
are recognised at the time of sale of the relevant products,
at the best estimate of the expenditure required to settle
the Company’s obligation.
Contingent Liabilities: Contingent liabilities are disclosed
when there is a possible obligation arising from past
events, the existence of which will be confirmed only by the
occurrence or non occurrence of one or more uncertain
future events not wholly within the control of the Company
or a present obligation that arises from past events where
it is either not probable that an outflow of resources will
be required to settle or a reliable estimate of the amount
cannot be made, is termed as a contingent liability.
Contingent assets are disclosed where an inflow of
economic benefits is probable.
Provisions, contingent liabilities and contingent assets
are reviewed at each Balance Sheet date. Where the
unavoidable costs of meeting the obligations under the
contract exceed the economic benefits expected to be
received under such contract, the present obligation under
the contract is recognised and measured as a provision.
M. Leases
At the inception of a contract, the Company assesses
whether the contract is, or contains, a lease. The
assessment is based on:
(1) whether the contract involves the use of a distinct
identified asset,
(2) whether the Company obtains the right to substantially
all the economic benefit from the use of the asset
throughout the period, and
(3) whether the Company has the right to direct the use of
the asset.
The Company has hired office premises under non¬
cancellable operating lease arrangements at stipulated
rentals.
Right-of-use assets represent right to use an underlying
asset during the reasonably certain lease term, and lease
liabilities represent obligation to make lease payments
arising from the lease. The lease terms include options to
extend or terminate the lease when it is reasonably certain
that the Company will exercise that option.
The Company measures the lease liability at the present
value of the lease payments that are not paid at the
commencement date of the lease. The lease liability is
subsequently remeasured by increasing the carrying
amount to reflect interest on the lease liability, reducing
the carrying amount to reflect the lease payments made
and remeasuring the carrying amount to reflect any
reassessment or lease modifications or to reflect revised
in-substance lease payments.
The right-of-use assets are initially recognized at cost,
which comprises the initial amount of the lease liability
adjusted for any lease payments made at or prior to the
commencement date of the lease plus any initial direct
costs less any lease incentives. They are subsequently
measured at cost less accumulated depreciation and
impairment losses.
The Company primarily uses incremental borrowing rate,
which is based on the information available at the lease
commencement date, in determining the present value of
the lease payments.
A right-of-use asset and corresponding lease liability are
not recorded for leases with an initial term of 12 months
or less (short-term leases) and low value leases. For these
short-term and low value leases, the Company recognizes
lease payments as operating expense as incurred over the
lease term.
The Company has also elected practical expedient
available within the standard:
• not to separate non-lease components from lease
components, and instead account for each lease
component and any associated non-lease components
as a single lease component.
• using hindsight in determining the lease term where
the contract contains options to extend or terminate
the lease.
N. Financial Instruments
Financial assets and financial liabilities are recognised
when a company becomes a party to the contractual
provisions of the instruments.
Financial assets and financial liabilities are initially
measured at fair value, except for trade receivables that
do not have a significant financing component which are
measured at transaction price. Transaction costs that are
directly attributable to the acquisition or issue of financial
assets and financial liabilities (other than financial assets
and financial liabilities at fair value through profit and loss)
are added to or deducted from the fair value of the financial
assets or financial liabilities, as appropriate, on initial
recognition. Transaction costs directly attributable to the
acquisition of financial assets or financial liabilities at fair
value through profit and loss are recognised immediately
in Statement of Profit and Loss.
For financial reporting purposes, fair value measurements
are categorised into Level 1, 2, or 3 based on the degree
to which the inputs to the fair value measurements are
observable and the significance of the inputs to the fair
value measurement in its entirety, which are described as
follows:
Level 1 inputs are quoted prices (unadjusted) in active
markets for identical assets or liabilities that the entity can
access at the measurement date;
Level 2 inputs are inputs, other than quoted prices
included within Level 1, that are observable for the asset or
liability, either directly or indirectly;
Level 3 inputs are unobservable inputs for the asset or
liability.
Financial Assets
All purchases or sales of financial assets are recognised
and derecognised on a trade date basis including delivery
of assets within the time frame established by regulation
or convention in the marketplace.
All recognised financial assets are subsequently measured
in their entirety at either amortised cost or fair value,
depending on the classification of the financial assets
i. Classification of financial assets
All financial assets are subsequently measured at
amortised cost except derivative financial instruments.
ii. Impairment of financial assets
The Company applies the expected credit loss model
for recognising impairment loss on financial assets
measured at amortised cost trade receivables, other
contractual right to receive cash or other financial
asset.
Expected credit losses are the weighted average
of credit losses with the respective risks of default
occurring as the weights. Credit loss is the difference
between all contractual cash flows that are due to
the company in accordance with the contract and all
the cash flows that the company expects to receive,
discounted at the original effective interest rate (or
credit-Adjusted effective interest rate for purchased
or originated credit-impaired financial assets). The
Company estimates cash flows by considering all
contractual terms of the financial instrument (for
example, prepayment, extension, call and similar
options) through the expected life of that financial
instrument.
The Company measures the loss allowance for a
financial instrument at an amount equal to the
lifetime expected credit losses if the credit risk on
that financial instrument has increased significantly
since initial recognition. If the credit risk on a financial
instrument has not increased significantly since initial
recognition, the company measures the loss allowance
for that financial instrument at an amount equal to
12 month expected credit losses. 12 month expected
credit losses are portion of the life-time expected credit
losses and represent the lifetime cash shortfalls that
will result if default occurs within the 12 months after
the reporting date and thus, are not cash shortfalls
that are predicted over the next 12 months.
If the Company measured loss allowance for a
financial instrument at lifetime expected credit loss
model in the previous period, but determines at the
end of a reporting period that the credit risk has not
increased significantly since initial recognition due
to improvement in credit quality as compared to the
previous period, the company again measures the loss
allowance based on 12 month expected credit losses.
When making the assessment of whether there has
been a significant increase in credit risk since initial
recognition, the Company uses the change in the risk of
a default accruing over the expected life of the financial
instrument instead of the change in the amount of
expected credit losses. To make that assessment, the
Company compares the risk of a default occurring
on the financial instrument as at the reporting date
with the risk of a default occurring on the financial
instrument as at the date of initial recognition and
considers reasonable and supportable information,
that is available without undue cost or effort, that is
indicative of significant increases in credit risk since
initial recognition.
For trade receivables or any contractual right to
receive cash or another financials asset that results
from transactions that are within the scope of Ind AS
115, the Company measures the loss allowance at an
amount equal to lifetime expected credit losses.
Further, for the purpose of measuring lifetime expected
credit loss allowance for trade receivables, the
Company has used a practical expedient as permitted
under Ind AS 109. This expected credit loss allowance
is computed based on a provision matrix based on
judgement considering past experience.
The impairment requirements for the recognition and
measurement of a loss allowance are equally applied
to other financials assets.
iii. Derecognition of financial assets
The Company derecognises a financial asset when
the contractual rights to the cash flow from the asset
expired or when it transfers the financial asset and
substantially all the risks and rewards of ownership
of the asset to another party. If the Company neither
transfers nor retains substantially all the risks and
rewards of ownership and continues to control the
transferred assets the Company recognises its retained
interest in the asset and then associated liability for
amounts it may have to pay.
On derecognition of a financial asset in its entirety, the
difference between (a) the carrying amount (measured
at the date of derecognition) and (b) the consideration
received (including any new asset obtained less any
new liability assumed) shall be recognised in profit or
loss.
If the transferred asset is part of a larger financial
asset (eg when an entity transfers interest cash
flows that are part of a debt instrument, and the
part transferred qualifies for derecognition in its
entirety, the previous carrying amount of the larger
financial asset shall be allocated between the part
that continues to be recognised and the part that
is derecognised, on the basis of the relative fair
values of those parts on the date of the transfer.
For this purpose, a retained servicing asset shall be
treated as a part that continues to be recognised.
The difference between (a) the carrying amount
(measured at the date of derecognition) allocated
to the part derecognised and (b) the consideration
received for the part derecognised (including any new
asset obtained less any new liability assumed) shall be
recognised in profit or loss.
iv. Derivative financial instruments and hedge accounting
In the ordinary course of business, the Company uses
certain derivative financial instruments to reduce
business risks which arise from its exposure to foreign
exchange fluctuations. The instruments are confined
principally to foreign exchange forward contracts. The
instruments are employed as hedges of transactions
included in the financial statements or for highly
probable forecast transactions/firm contractual
commitments.
Derivatives are initially accounted for and measured
at fair value from the date the derivative contract is
entered into and are subsequently re-measured to
their fair value at the end of each reporting period
The Company adopts hedge accounting for forward
contracts. At the inception of each hedge, there is
a formal, documented designation of the hedging
relationship. This documentation includes, inter alia,
items such as identification of the hedged item or
transaction and the nature of the risk being hedged. At
inception each hedge is expected to be highly effective
in achieving an offset of changes in fair value or cash
flows attributable to the hedged risk. The effectiveness
of hedge instruments to reduce the risk associated with
the exposure being hedged is assessed and measured
at the inception and on an ongoing basis. The
ineffective portion of designated hedges is recognised
immediately in the statement of profit and loss.
When hedge accounting is applied:
a. for fair value hedges of recognised assets and
liabilities, changes in fair value of the hedged
assets and liabilities attributable to the risk being
hedged, are recognised in the statement of profit
and loss and compensate for the effective portion
of symmetrical changes in the fair value of the
derivatives.
b. for cash flow hedges, the effective portion of
the change in the fair value of the derivative
is recognised directly in other comprehensive
income and the ineffective portion is taken to the
statement of profit and loss. If the cash flow hedge
of a firm commitment or forecasted transaction
results in the recognition of a nonfinancial asset
or liability, then, at the time the asset or liability is
recognised, the associated gains or losses on the
derivative that had previously been recognised in
other comprehensive income and accumulated in
equity are included in the initial measurement of
the asset or liability. For hedges that do not result in
the recognition of a non-financial asset or a liability,
amounts deferred in equity are recognised in the
statement of profit and loss in the same period in
which the hedged item affects the statement of
profit and loss.
In cases where hedge accounting is not applied,
changes in the fair value of derivatives are
recognised in the statement of profit and loss as
and when they arise.
Hedge accounting is discontinued when the
hedging instrument expires or is sold, terminated,
or exercised, or no longer qualifies for hedge
accounting. At that time, any cumulative gain or
loss on the hedging instrument recognised in
equity is retained in equity until the forecasted
transaction occurs. If a hedged transaction is no
longer expected to occur, the net cumulative gain
or loss recognised in equity is transferred to the
statement of profit and loss for the period.
The presumption under Ind AS 109 with reference
to significant increases in credit risk since initial
recognition (when financial assets are more than
30 days past due), has been rebutted and is not
applicable to the Company, as the Company is able
to collect a significant portion of its receivables that
exceed the due date.
Financial Liabilities and Equity Instruments
i. Classification as debt or equity
Debt and equity instruments issued by the Company
are classified as either financial liabilities or as equity
in accordance with the substance of the contractual
arrangements and the definitions of financial liability
and equity instrument.
ii. Equity instruments
An equity instrument is any contract that evidences
residual interest in the assets of an entity after
deducting all of its liabilities. Equity instruments
issued by the Company are recognised at the proceeds
received, net of direct issue cost.
iii. Financial liabilities
All financial liabilities are subsequently measured
at amortised cost using effective interest method of
FVTPL.
a) Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL
when the financial liability is held for trading or
designated as at FVTPL.
Financial liability at FVTPL are stated at fair value,
with any gains or losses arising on remeasurement
recognised in profit and loss. The net gain or loss
recognised in profit and loss incorporates any
interest paid on the financial liability and is included
in ‘Other Income’.
b) Financial liabilities subsequently measured at
amortised cost
Financial liabilities that are not held for trading and
are not designated as at FVTPL are measured at
amortised cost at the end of subsequent accounting
periods. The carrying amount of financial liabilities
that are subsequently measured at amortised cost
are determined based on the effective interest
method. Interest expenses that is not capitalised as
part of cost of an asset is included in ‘finance cost’.
The effective interest method is a method of
calculating the amortised cost of a financial liability
and of allocating interest expense over the relevant
period. The effective interest rate is the rate that
exactly discounts estimated future cash payments
through the expected life of the financial liability,
or (where appropriate) a shorter period, to the net
carrying amount on initial recognition.
c) Foreign exchange gains and losses
For financial liabilities that are denominated
in a foreign currency and are measured at
amortised cost at the end of each reporting
period, the foreign exchange gains and losses are
determined based on the amortised cost of the
instrument and are recognised in other income.
The fair value of financial liabilities denominated
in foreign currency is determined in that foreign
currency and translated at the spot rate at the
end of the reporting period. For financial liability
that are measured at FVTPL, the foreign exchange
component forms part of fair value gains or losses
and is recognised in the Statement of Profit and
Loss.
iv) Derecognition of financial liabilities
The Company derecognises financial liability when, and
only when, the Company obligations are discharged,
cancelled and have expired. An exchange between with
a lender of debt instrument is substantially different
term is accounted for as and extinguishment of the
original financial liability and the recognition of a new
financial liability. Similarly, a substantial modification
of a term of existing financial liability is accounted for
as and extinguishment of the original financial liability
and recognition of new financial liability. The difference
between the carrying amount of the financial liability
derecognised and the consideration paid and payable
is recognised in profit and loss.
O. New Accounting Standards, Amendments to
Existing Standards, Annual Improvements,
Interpretations, etc. applicable to the
Company effective subsequent to March 31,
2025
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.
In May 2025, MCA notified amendments to Ind AS 21 - The
Effects of Changes in Foreign Exchange Rates, applicable
w.e.f. April 1, 2025.
The Company has reviewed the amendment
and based on its evaluation has determined that
it does not have any significant impact in its
financial statements.
In August 2025, MCA notified the following amendments
to:
1. Ind AS 1, Presentation of Financial Statements,
applicable w.e.f. April 1, 2025 - The amendment relates
to classification of liabilities as current or non-current
and non-current liabilities with covenants. In the
context of classifying a liability as current, it removes the
requirement of existence of a right to defer settlement
for at least 12 months after the reporting date and
instead requires that the said right should exist on the
reporting date and have substance. The amendment
also introduces guidance on classification of liabilities
with covenants. The Company has no impact of these
amendments in its classification criteria of current and
non-current liabilities.
2. Ind AS 7, Statement of Cash Flows and Ind AS 107,
Financial Instruments: Disclosures, applicable w.e.f.
April 1, 2025 - The amendment in Ind AS 7 requires to
inform users of financial statements of the existence of
supplier finance arrangements and explain the nature
of the arrangements, the carrying amount of liabilities
and the range of payment due dates. Ind AS 107 has
been amended to add supplier finance arrangements
as a factor that may cause concentration of liquidity
risk. The Company has reviewed the amendment and
based on its evaluation has determined that it does not
have any significant impact in its financial statements
(Refer note 18).
3. Ind AS 12, International Tax Reform - The Organisation
for Economic Co-operation and Development (OECD)
has published the model rules for global minimum
tax (Pillar Two model rules). Based on the current
assessment, the Company does not expect a material
financial impact from the application of the Pillar Two
rules.
Note 3 - Critical Judgements, estimations and
assumptions in applying Accounting Policies:
The preparation of the financial statements in conformity
with Ind AS requires the management to make estimates,
judgments and assumptions. These estimates, judgments
and assumptions affect the application of accounting
policies and the reported amounts of assets and liabilities,
the disclosures of contingent assets and liabilities at the
date of the financial statements and reported amounts of
revenues and expenses during the year. The application
of accounting policies that require critical accounting
estimates involving complex and subjective judgments and
the use of assumptions in these financial statements have
been disclosed appropriately. Accounting estimates could
change from period to period. Actual results could differ from
those estimates. The estimates and underlying assumptions
are reviewed on an ongoing basis. Appropriate changes
in estimates are made as management becomes aware
of changes in circumstances surrounding the estimates.
Changes in estimates and judgements are reflected in the
financial statements in the period in which changes are
made.
The Company uses the following critical accounting
judgements, estimates and assumptions in preparation of
its financial statements:
1. The preparation of financial statements involves
estimates and assumptions that affect the reported
amount of assets, liabilities, disclosure of contingent
liabilities at the date of financial statements and the
reported amount of revenues and expenses for the
reporting period. Specifically, the Company estimates
the probability of collection of accounts receivable
by analysing historical payment patterns, customer
concentrations, customer credit-worthiness and current
economic trends. If the financial condition of a customer
deteriorates, additional allowances may be required.
2. The Company uses the percentage-of-completion
method in accounting for its contract revenue. Use of
the percentage-of-completion method requires the
Company to estimate the efforts or costs expended to
date as a proportion of the total efforts or costs to be
expended. Efforts or costs expended have been used to
measure progress towards completion as there is a direct
relationship between input and productivity. Provisions
for estimated losses, if any, on uncompleted contracts
are recorded in the period in which such losses become
probable based on the expected contract estimates at
the reporting date.
3. In case of Property, Plant and Equipment and Intangible
assets, the charge in respect of periodic depreciation/
amortisation is derived after determining an estimate
of an asset’s expected useful life and the expected
residual value at the end of its life. The useful lives and
residual values of Company’s assets are determined
by management at the time the asset is acquired and
reviewed periodically, including at each financial year end.
The lives are based on historical experience with similar
assets as well as anticipation of future events, which may
impact their life, such as changes in technology.
4. Ind AS 116 requires lessee to determine the lease term
as the non-cancellable period of a lease adjusted with
any option to extend or terminate the lease, if the use
of such option is reasonably certain. The Company
makes an assessment on the expected lease term on
a lease-by-lease basis and thereby assesses whether
it is reasonably certain that any options to extend or
terminate the contract will be exercised. In evaluating
the lease term, the Company considers factors such as
any significant leasehold improvements undertaken
over the lease term, costs relating to the termination of
the lease and the importance of the underlying asset
to the Company’s operations taking into account the
location of the underlying asset and the availability of
suitable alternatives. The lease term in future periods
is reassessed to ensure that the lease term reflects the
current economic circumstances. After considering
current and future economic conditions, the company
has concluded that no material changes are required to
lease period relating to the existing lease contracts. Refer
note no 2 (M).
5. The cost of defined benefit plans, compensated
absences and the present value of defined benefit
obligations based on current actuarial valuations using
the projected unit credit method. An actuarial valuation
involves making various assumptions that may differ
from actual developments in the future. These include
the determination of discount rate, salary increment
and mortality rates. Due to complexities involved in
the valuation and its long term nature, defined benefit
obligation is sensitive to changes in these assumptions.
All assumptions are reviewed at each reporting date.
The concentration of credit risk is limited due to the fact that the customer base is large.
The Company determines the impairment loss based on historical loss experience adjusted to reflect current and estimated
future economic conditions. The Company has specifically evaluated the potential impact with respect to customers which
could have an immediate impact and the rest which could have an impact with expected delays. Basis this assessment, the
impairment loss for trade receivables as at March 31, 2026 is considered adequate.
The average credit period on sales of goods and services is 30-90 days. No interest is charged on outstanding trade receivables.
(a) Rights, preferences and restrictions attached to the shares
Equity shares: The Company has one class of equity shares having a par value of '10 per share. Each shareholder is
eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the
shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation,
the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential
amounts, in proportion to their shareholding.
e) 6,631,142 (March 31, 2025 : 6,631,142) Equity shares constituting 75% (March 31, 2025 : 75%) of the paid-up capital
of the Company are held by Honeywell International Inc., the ultimate holding company, through its 100% subsidiary,
HAIL Mauritius Limited.
f) The Company has neither allotted any shares as fully paid up bonus shares nor pursuant to contract(s) payment being
received in cash during 5 years immediately preceding March 31, 2026.
Securities premium
Securities premium represents the excess of the issue price of shares over their face value less registration, other regulatory
fees and net of related tax benefits and is utilised in accordance with the provisions of the Companies Act, 2013
Group share based payment reserve
The Company has share option schemes under which Honeywell International Inc. (HII), the ultimate holding company,
may grant stock options and restricted stock awards to certain employees under its stock incentive plan. The share-based
payment reserve is used to recognise the value of equity-settled share-based payments provided to employees, including key
management personnel, as part of their remuneration. Refer Note 33 for further details of these plans.
General reserve
The general reserve is used from time to time to transfer profits from retained earnings for appropriation purpose. There is no
policy for regular transfer.
Retained Earnings
Retained earnings represents the profits that the Company has earned till date.
Effective portion of cash flow hedge
When a derivative is designated as a cash flow hedging instrument, the effective portion of changes in the fair value of the
derivative is recognized in other comprehensive income and accumulated in the Effective portion of cash flow hedge reserve.
The cumulative gain or loss previously recognized in the cash flow hedging reserve is transferred to the Statement of Profit and
Loss upon the occurrence of the related forecasted transaction.
Trade payables principally comprise amounts outstanding for trade purchases. The average credit period taken for trade
purchases is 90-180 days. For most of the suppliers, no interest is charged on trade payable. The Company has financial risk
management policies in place to ensure that all payables are paid within pre-agreed credit terms.
The company has supplier finance arrangements with its suppliers. However, this arrangement does not result in extended
credit terms for the Company. The Company obtains a credit period in the range of 90-180 days irrespective of the arrangement.
The total liabilities outstanding as on March 31, 2026, under suppliers financing arrangement is '768 million (refer note 37 for
liquidity risk analysis)
* Refer note 37-B for ageing schedule from due date of payment and note 44 for struck off companies. Refer note 29 for related
party transactions.
B. Contract balances
Progress on satisfying performance obligations under contracts with customers and the related billings and cash collections
are recorded in accounts receivable and the unbilled receivables in Other current assets. The customer advances are
recorded as Contract Liabilities in Other Current Liabilities. Unbilled receivables (Contract Assets) arise when the timing
of cash collected from customers differs from the timing of revenue recognition, such as when contract provisions require
specific milestones to be met before a customer can be billed. Those assets are recognized when the revenue associated
with the contract is recognized prior to billing and derecognized when billed in accordance with the terms of the contract.
Contract liabilities are recorded when a milestone is met triggering the contractual right to bill but revenue recognised over
time is not recognized.
When contracts are modified to account for changes in contract specifications and requirements, the Company considers
whether the modification either creates new or changes the existing enforceable rights and obligations. Contract
modifications that are for goods or services that are not distinct from the existing contract, due to the significant integration
with the original good or service provided, are accounted for as if they were part of that existing contract. The effect of a
contract modification on the transaction price and the measure of progress for the performance obligation to which it
relates, is recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) on a cumulative catch¬
up basis. When the modifications include additional performance obligations that are distinct, they are accounted for as a
new contract and performance obligation, which are recognized prospectively.
C. Performance obligation
A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. A contract’s transaction
price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is
satisfied. When contracts with customers require highly complex integration or manufacturing services that are not separately
identifiable from other promises in the contracts and, therefore, not distinct, then the entire contract is accounted for as a single
performance obligation. Performance obligations are satisfied as of a point in time or over time. Performance obligations
are supported by contracts with customers, providing a framework for the nature of the distinct goods, services or bundle of
goods and services. The timing of satisfying the performance obligation is typically indicated by the terms of the contract.
Typical payment terms of fixed-price over time contracts include progress payments based on specified events or
milestones, or based on project progress. For some contracts the Company may be entitled to receive an advance payment.
The Company provides standard warranty on its products and records obligation on the same based on past trend.
The Company has applied the practical expedient for certain revenue streams to exclude the value of remaining performance
obligations for contracts with an original expected term of one year or less. Performance obligations recognized as at the
year end will be satisfied over the course of future periods. The disclosure of the timing for satisfying the performance
obligation is based on the requirements of contracts with customers. Remaining performance obligation estimates are
subject to change and are affected by several factors, including terminations, changes in the scope of contracts and periodic
revalidations.
There is no significant financing component included in the transaction price for any of the contracts with customers.
The Company generates a large percentage of its sales and profits from its business with the Honeywell group (Honeywell),
its major shareholder. Sales to Honeywell group accounted for approximately 40% and 41% of our total net sales for the year
ended March 31, 2026 and year ended March 31, 2025 respectively. The Company’s ability to maintain or grow its business
with Honeywell depends upon a number of performance factors. However, the Company cannot be assured that its level of
sales and profits associated with its relationship with Honeywell will continue. Honeywell-specific business considerations
(independent of its shareholding in the Company), including changes in Honeywell’s strategies regarding utilization of alternate
opportunities available to it to source products and services currently provided by the Company (including from alternate
sources which Honeywell may acquire or develop within its own group), may also reduce the level and/or mix of Honeywell’s
business with the Company.
Note 30 - Leases
The Company has entered into leases for office premises. These lease arrangements range for a period between 36 months
and 120 months.
The Company has compiled this information based on intimations received from suppliers of their status as Micro or Small
enterprises and / or its registration with the appropriate authority under Micro, Small and Medium Enterprises Development
Act, 2006 (as amended from time to time).
Note 33 - Share Based Payments
Employee share option plan of the company
Honeywell International Inc. (HII), the ultimate holding company, may grant stock options and restricted stock awards to certain
employees under its stock incentive plan.
Stock Options—The exercise price, term and other conditions applicable to each option granted under the stock plans are
generally determined by the Management Development and Compensation Committee of the Board of Honeywell International
Inc. The exercise price of stock options is set on the grant date and may not be less than the fair market value per share of the
stock on that date. The fair value is recognized as an expense over the employee’s requisite service period (generally the vesting
period of the award). Options generally vest over a four-year period and expire after ten years.
Restricted Stock Units—Restricted stock unit (RSU) awards entitle the holder to receive one share of common stock for each
unit when the units vest. RSUs are issued to certain employees as compensation at fair market value at the date of grant. RSUs
typically become fully vested over periods ranging from three to seven years and are payable in Honeywell common stock upon
vesting.
Fair value of share options granted in the year
The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option-pricing model.
Expected volatility is based on implied volatilities from traded options on common stock of HII and historical volatility of
common stock of HII. Monte Carlo simulation model is used to derive an expected term which represents an estimate of the
time options are expected to remain outstanding. Such model uses historical data to estimate option exercise activity and post¬
vest termination behaviour. The risk-free rate for periods within the contractual life of the option is based on the U.S. treasury
yield curve in effect at the time of grant.
Note: It is not practicable for the Company to estimate the timing of cash outflow, if any, in respect of the above pending
resolutions of the respective proceedings.
As at March 31, 2026, Contingent liability majorly represent demands arising on completion of assessment proceedings
under the Income-tax Act, 1961 and other indirect tax act including GST, excise, custom and sales tax.
These claims are on account of various issues of disallowances, GSTR 2A/2B and GSTR 3B mismatches, or addition in liability
by tax liabilities related to various issues including C- forms, WCT TDS etc.
These matters are pending before various appellate authorities and the Management including its tax advisors expect that
its position will likely be upheld on ultimate resolution and will not have a material adverse effect on the Company’s financial
position and results of operations.
Third party claims against company not acknowledged as debts includes ongoing cases pending in commercial court/ Arbitral
Tribunal in relation to claims/ counter claims raised by few vendors/ customers and the Company for certain commercial
teams disagreements.
B) Estimated amount of contracts remaining to be executed on capital accounts and not provided for (net of advances) -
' 1.6 million [March 31, 2025'17 million].
A Litigations/ disputes mainly include:
a) Provision for disputed statutory matters comprises matters under litigation with Sales Tax and Local authorities.
b) The amount of provision made by the Company is based on the estimate made by the Management considering the
facts and circumstances of each case.
To the extent the Company is confident that it may have a strong case that portion is disclosed under contingent
liabilities.
c) The timing and the amount of cash flows that will arise from these matters will be determined when the matters are
settled with respective Appellate Authorities.
B Warranty
Provision for warranty is considered based on the rolling average warranty expense incurred in the preceding 12 months,
the warranty period for which ranges from 12 months to 24 months as per provisions of the contracts.
C Provision for Estimated Cost to complete on Contracts
A provision for estimated cost to complete on construction contracts is recognized when it is probable that the total
contract cost will exceed total contract revenue. The provision shall be utilized as and when the contract gets executed.
Note 36 - Employee Benefit plans
A) Defined contribution plans
The company has recognized the following amounts in the Statement of Profit and Loss for the year.
The Company has a defined contribution plan in form of provident fund. Contributions are made to the fund for
employees at the rate of 12% of basic salary as per regulations. The contributions are made to registered provident
fund administered by the government. The obligation of the Company is limited to the amount contributed and it has no
further contractual nor any constructive obligation.
2 - The assumptions used in preparing the sensitivity analysis is
Discount rate at 100 bps and - 100 bps
Salary escalation rate at 100 bps and -100 bps
3 - The method used to calculate the liability in these scenarios is by keeping all the other parameters and the data same
as in the base liability calculation except for the parameters to be stressed.
4 - There is no change in the method from the previous period and the points/percentage by which the assumptions are
stressed are same as that in the previous year.
A note on other risks
Investment risk - The funds are invested with an external insurer (LIC of India). The insurer manages the gratuity fund and
provides quarterly interest returns. Considering LIC is a state insurer with a sovereign guarantee and no history of defaults the
investment risk is not significant.
Interest Risk - The gratuity fund managed by an external insurer (LIC of India) is in the form of cash accumulation scheme
with interest rates declared annually - A significant fall in interest (discount) rates may not be offset by an increase in value of
gratuity fund, hence may pose an interest rate risk.
Longevity Risk - Since gratuity is paid at retirement in form of lump sum and also during service at the time of termination to
vested members, longevity risk is not applicable since maximum duration for benefit is till retirement age.
Salary Risk - The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan
participants. As such, an increase in the salary of the plan participants will increase the plan’s liability.
The Company expects to make a contribution of '162 million (31 March 2025: '117 million) to the defined benefit plans during
the next financial year.
Impact of New Labour Code:
In view of the recent changes to the Labour Codes, the Company has carried out a financial impact assessment of the Code
on Wages, 2019, which resulted in an increase in liabilities relating to gratuity (' 306 million) and compensated absences
(' 5 million) arising from past service cost.
As a result, the Company has recognised a net impact amounting to ' 123 million, after adjusting related revenue, amounting
to ' 188 million, summarized as below:
Financial risk management objectives
Company is exposed to foreign exchange risk on account of import risk and hedging activities; and export transactions which
is monitored periodically. The Company leverages the global treasury operations of Honeywell to improve mitigation of risk
relating to foreign exchange.
Foreign currency risk management
The Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate
fluctuations arise. The carrying amounts of the Company’s foreign currency denominated monetary assets and monetary
liabilities at the end of the reporting period are as follows:
Foreign currency exchange rate risk:
The fluctuation in foreign currency exchange rates may have potential impact on the income statement and equity, where
any transaction references more than one currency or where assets/liabilities are denominated in a currency other than the
functional currency of the Company. Considering the countries and economic environment in which the Company operates,
its operation are subject to risks arising from fluctuations in exchange rates in those countries. The risk primarily relate to U.S.
Dollars against the functional currency of Honeywell Automation India Limited.
The Company, as per its Hedging policy, uses forward contracts to hedge foreign exchange exposure. The Company evaluates
the impact of foreign exchange rate fluctuations by assessing its exposure to exchange rate risks. It hedges a part of these risks
by using forward contracts in accordance with its risk management policies.
The Company uses forward exchange contracts to hedge its exposure in foreign currency. The information on derivative
instruments is as follows :
Foreign currency sensitivity analysis
The Company is exposed mainly to the fluctuation in the value of USD and EURO. The following table details the company
sensitivity to a 5% increase and decrease in functional currency against the relevant foreign currency. The sensitivity analysis
includes only outstanding foreign currency denominated monetary items and adjust there translation at the period end for a
5% change in foreign currency rate.
Credit risk management
Credit risk refers to the risks that a counterparty may default on its contractual obligations resulting in financial loss to
the Company. The Company deals only with credit worthy counterparties and takes appropriate measures to mitigate
the risk of financial loss from defaults. Trade receivable consists of a large number of customers, spread across diverse
industries and geographical areas. Ongoing credit evaluation is performed on the financial condition of accounts receivable.
The credit risk in respect of bank balances held with banks and deposits with banks are managed via diversification of bank
deposits, and are only with major reputable financial institutions.
Liquidity risk management
The Company manages liquidity risk by maintaining adequate reserves, banking facility and by continuously monitoring
forecasts and actual cash flows and by matching the maturity profiles of financial assets and liabilities.
The Company’s principal sources of liquidity are cash and cash equivalents and the cash flow that is generated from operations.
The Company has no outstanding borrowings. The Company believes that the working capital is sufficient to meet its current
requirements.
iii) No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or
kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities (“Intermediaries”), with
the understanding, whether recorded in writing or otherwise, that the Intermediary shall, directly or indirectly lend or invest
in other persons or entities identified in any manner whatsoever by or on behalf of the Company (“Ultimate Beneficiaries”)
or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
iv) No funds have been received by the Company from any person(s) or entity(ies), including foreign entities (“Funding
Parties”), with the understanding, whether recorded in writing or otherwise, that the Company shall, directly or indirectly, lend
or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (“Ultimate
Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
Note 38
As set out in section 135 of the Companies Act, 2013 the Company is required to contribute/ spend ' 130 million (previous year
ended March 31, 2025: ' 113 million) towards Corporate Social Responsibility activities, as calculated basis 2% of its average
net profits of the last three financial years calculated in accordance with section 135 of the Companies Act, 2013.
Company has contributed to Honeywell Hometown Solution India Foundation (HHSIF), trust controlled by Honeywell group
for CSR activities. The trust has spent funds on activities such as “Education, skill and research” and “sustainable and holistic
community development program” etc. Refer note 29 for related party disclosure.
Note 39
The financial statements were approved for issue by the board of directors on May 20, 2026 (previous year ended March 31,
2025 on May 13, 2025). The Board of Directors have recommended dividend of ' 110 per equity share for the financial year
ended March 31, 2026 (previous year ended March 31, 2025: ' 105 per equity share) for approval of shareholders. The face
value of the equity share is ' 10 each. This payment is subject to the approval of shareholders in the Annual General Meeting of
the Company. This final dividend if approved by shareholders would result in a net cash outflow of approximately ' 973 million
(previous year ended March 31, 2025: ' 928 million approved by shareholder in Annual General Meeting held on June 27,
2025).
The Company maintains the books of account electronically and its back-up on daily-basis on a server located outside of India.
These data are accessible in India at all times. The Company notifies the Registrar of Companies (ROC) about the person in
control of the data in its annual filing.
Note 42
No direct database changes in accounting software are allowed and all data changes are governed at application layer to avoid
system performance problems and to follow the principle of data minimization. There are alternate governing processes in
place to mitigate any risk of unauthorized access to database.
The Company uses a third-party hosted application (Software-as-a-Service) for maintenance and processing of payroll records.
The application is operated and administered by the external service provider and the Company does not have access to, or
rights to, make direct changes at the database level of the said application.
Note 45 Additional regulatory disclosures as per Schedule III of Companies Act, 2013
(i) The Company has not traded or invested in crypto currency or virtual currency during the financial year.
(ii) No proceedings have been initiated or pending against the Company for holding any Benami property under the Benami
Transactions (Prohibition) Act, 1988 (45 of 1988) and the rules made thereunder.
(iii) There are no charges or satisfaction yet to be registered with Registrar of Companies beyond the statutory period.
(iv) The Company has not been declared wilful defaulter by any bank or financial institution or other lender or government
or any government authority.
(v) The Company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with the
Companies (Restriction on number of Layers) Rules, 2017.
(vi) The Company is not a Core Investment Company (CIC) as defined in the regulations made by the Reserve Bank of India.
Further, the Group as defined in Core Investment Companies (Reserve Bank) directions 2016, does not have any CIC.
(vii) The Company does not have any such transaction which is not recorded in the books of account that has been
surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as,
search or survey or any other relevant provisions of the Income Tax Act, 1961).
During the year ended March 31, 2026. the Company has re-classified the following comparatives, which are primarily to
conform to the current year’s classification. This reclassification do not have material impact on the Financial Statements and
has been done for the better presentation and to enhance the understanding of the users of the Financial Statements.
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