2.21Provisions and contingencies

Provisions are recognised when the Company has a
present obligation (legal / constructive) as a result of past
event, it is probable that the Company will be required to
settle the obligation, and a reliable estimate can be made
of the amount of the obligation.

The amount recognised as a provision is the best estimate
of the consideration required to settle the present
obligation at the end of the reporting period, taking
into account the risks and uncertainties surrounding
the obligation. When a provision is measured using the
cash flows estimated to settle the present obligation, its
carrying amount is the present value of those cash flows
(when the effect of the time value of money is material).

When some or all of the economic benefits required to
settle a provision are expected to be recovered from a
third party, a receivable is recognised as an asset if it is
virtually certain that reimbursement will be received and
the amount of receivable can be measured reliably.

Product warranty cost:

The estimated liability for product warranties is recorded
when products are sold. These estimates are established
using historical information on the nature, frequency
and average cost of warranty claims and management
estimates regarding possible future incidence based
on corrective actions on product failures. The timing of

outflows will vary as and when warranty claim will arise,
being typically upto three years.

The Company also has back-to-back contractual
arrangement with its suppliers in the event that a vehicle
fault is proven to be a supplier's fault. Estimates are
made of the expected reimbursement claim based upon
historical levels of recoveries from supplier, adjusted for
inflation and applied to the population of vehicles under
warranty as on Balance Sheet date. Expected recoveries
towards warranty cost from the vendors are estimated
and accounted for as receivable when it is certain that
such recoveries will be received if the Company incurs the
warranty cost. Supplier reimbursements are recognised
as separate asset.

Contingent liability:

Contingent liability is disclosed for:

♦ Possible obligations which will be confirmed only
by future events not wholly within the control of the
Company or

♦ Present obligations arising from past events where it
is not probable that an outflow of resources will be
required to settle the obligation or a reliable estimate
of the amount of the obligation cannot be made.

Contingent assets:

Contingent assets are not recognized in the standalone
financial statement since this may result in the recognition
of income that may never be realized.

Provisions, contingent liabilities and contingent assets
are reviewed at each Balance Sheet date

2.22Investments in wholly owned subsidiaries

Investments in wholly owned subsidiaries are measured
at cost as per Ind AS 27 - Separate Financial Statements.

2.23 Segment reporting

Operating segment reflect the Company's management
structure and the way the financial information is regularly
reviewed by the Board of Directors (the Company's Chief
Operating Decision Maker (CODM)). The CODM considers
the business from both business and product perspective
based on the dominant source, nature of risks and returns
and the internal organisation and management structure.
The operating segments are the segments for which
separate financial information is available and for which
operating profit / (loss) amounts are evaluated regularly
by the Board of Directors in deciding how to allocate
resources and in assessing performance.

Segment revenue, segment expenses, segment assets
and segment liabilities have been identified to the
segment on the basis of their relationship to the operating
activities of the segment.

Revenue, expenses, assets and liabilities which relate
to the Company as a whole and are not allocable to
segments on reasonable basis have been included under
unallocated revenue / expenses / assets / liabilities.

2.24Insurance claims

Insurance claims are recognized for on the basis of claims
admitted / expected to be admitted and to the extent
there is no uncertainty in receiving the claims.

2.25 Borrowing costs

Borrowing costs directly attributable to the acquisition,
construction or production of qualifying assets, which are
assets that necessarily take a substantial period of time
to get ready for their intended use or sale, are added to
the cost of those assets, until such time as the assets are
substantially ready for their intended use or sale.

Interest income earned on the temporary investment
of specific borrowings pending their expenditure on
qualifying assets is deducted from the borrowing costs
eligible for capitalization.

All other borrowing costs are recognised in profit or loss
in the period in which they are incurred.

2.26Current / Non-current classification

The Company classifies an asset as current asset when:

♦ it expects to realise the asset, or intends to sell or
consume it, in its normal operating cycle;

♦ it holds the asset primarily for the purpose of trading;

♦ it expects to realise the asset within twelve months
after the reporting period; or

♦ the asset is cash or a cash equivalent unless the
asset is restricted from being exchanged or used to
settle a liability for at least twelve months after the
reporting period.

All other assets are classified as non-current.

A liability is classified as current when -

♦ it expects to realise the asset, or intends to sell or
consume it, in its normal operating cycle;

♦ it holds the liability primarily for the purpose
of trading;

♦ the liability is due to be settled within twelve months
after the reporting period; or

♦ it does not have an unconditional right to defer
settlement of the liability for at least twelve months
after the reporting period. Terms of a liability that
could, at the option of the counterparty, result in its
settlement by the issue of equity instruments do not
affect its classification.

All other liabilities are classified as non-current.

Based on the nature of products / activities of the
Company and the normal time between acquisition of
assets and their realisation in cash or cash equivalents,
the Company has determined its operating cycle as 12
months for the purpose of classification of its assets and
liabilities as current and non-current.

3 Recent accounting pronouncements

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.
A liability was earlier classified as current if the
entity did not have an unconditional right to defer
settlement for at least 12 months after the reporting
date. Under the amendment, the requirement for the
right to be unconditional has been removed. Instead,
the entity must show that a substantive right to defer
settlement exists at the reporting date.

If a breach of a material covenant occurs on or before
the reporting date but the lender agrees after the
reporting date and before approval of the financial
statements not to demand repayment, the liability is
not classified as current, but the entity must provide
Ind AS 107 breach disclosures. Companies must also
disclose information about non-current liabilities

subject to future covenants in the notes to the
financial statements. The Company has no impact
on account of these amendments in 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 informing 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 has

adequately disclosed the impact of the amendment
in its financial statements.

3. Ind AS 12, International Tax Reform - Pillar Two Model

Rules applicable immediately - The amendments
provide a temporary mandatory relief from deferred
tax accounting for top-up tax and disclose that they
have applied the relief. This relief is immediate and
applies retrospectively. 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.

(i) Transferred trade receivables that are not derecognized

The Company had discounted trade receivables on a “With recourse” basis in the previous year and in respect of which
the risks existed with the Company. As at the Balance Sheet date, the carrying amount of the trade receivables that
have been transferred but have not been derecognised amounts to Nil (March 31, 2025: Nil) (refer note 22(a)).

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

(iii) Expected credit loss (Refer note 2.14 Impairment of financial assets)

The Company has assessed the trade receivables for impairment on a collective basis. Based on the analysis of objective
evidences, the Company expects that the evidences do not warrant any expected credit loss to be provided for.

(vii) Shares reserved for issue under options and contracts/ commitments for sale of shares / disinvestment

There are no shares reserved for issue under options and contracts/ commitments for sale of shares/ disinvestment as at
March 31, 2026 (March 31, 2025: Nil)

(viii) Aggregate number of bonus shares issued, shares issued for consideration other than cash and shares bought back
during the period of five years immediately preceding the reporting date:

No bonus shares have been issued during the period of five years immediately preceding the reporting date

No shares have been issued for consideration other than cash during the period of 5 years immediately preceding the
reporting date.

No shares have been bought back during the period of five years immediately preceding the reporting date

The Board of Directors in their meeting held on May 8, 2026 have proposed a final dividend of ? 21 per share (nominal value
of ? 10 per share) for the financial year 2025-2026. The dividend is subject to the approval of shareholders at the annual
general meeting. The total expected cash outflow is ? 17,063.36 million including withholding tax.

D. Changes to share capital

The Board of Directors of the Company, at its meeting held on May 17, 2024 had approved the sub division of the existing
authorised share capital of the Company from 1,40,00,000 equity shares of ? 1000 each into 1,40,00,00,000 equity shares
of ? 10 each and also approved the sub division of the existing paid up shares of the Company from 81,25,411 equity shares
of ? 1000 each into 81,25,41,100 equity shares of ? 10 each, which was approved by the shareholders in Extra-ordinary
General Meeting held on May 17, 2024. The record date for the share split was May 17, 2024.

Also refer note 40 to the standalone financial statements.

Notes:

(i) VAT / CST deferral loan (unsecured)

As per the Memorandum of Understanding ('the MoU'), dated July 18, 1996, between the Company and the Government
of Tamil Nadu (GoTN) read along with the deed of agreement dated September 23, 2005, the Company is eligible for
and has opted for sales tax (including VAT and CST) deferral on sale of vehicles. Each tranche of the loan is an interest
free loan and is repayable in equal quarterly instalments over a period of 5 years after the deferment period of 14 years.
The number of instalments outstanding as at March 31, 2026 are 16 (March 31, 2025 are 20). Refer table below for gross
amount outstanding.

(ii) CST soft loan (secured)

As per the MOU dated January 22, 2008 entered into between the Company and the GoTN, the Company is eligible for
infrastructure, labour and other support in the form of fiscal incentives on meeting certain specified milestones .The
amounts of such incentives have been determined and accounted for by the management based on the terms specified
in the MoU. Each tranche of the loan carries 0.1% interest and is repayable in equal quarterly instalments over a period of
5 years after 14 years. The number of instalments outstanding as at March 31, 2026 are 48 (March 31, 2025 are 52). Refer
table below for gross amount outstanding.

The loan is secured by a charge against specified Property Plant and Equipment of the Company to the extent of ? 6,000
million (March 31, 2025: ? 6,000 million). Also refer note 4(ii).

(i) Contract liabilities represents the amount collected / apportioned towards additional services provided to customers that
are satisfied over a period of time in line with requirements under Ind AS 115. These amounts are recognized on a straight
line basis over the respective contractual period. The related expenses are charged off to the statement of profit and loss
on an actual basis.

As at March 31, 2026, the Company carries ? 12,219.55 million as (March 31, 2025: Rs.12,028.15 million) income received
in advance. The amount that will be recognised as revenue during the next reporting period has been disclosed in Note
26(a) and balance would be recognized in subsequent period post that.

A Customs duty:

(i) The Directorate of Revenue Intelligence (DRI) had
initiated certain inspections/inquiries in connection
with customs compliances. During the year ended
March 31, 2012, the Company had received a
notice from the DRI alleging mis-declaration of
the transaction value of goods imported by the
Company. The Company had challenged the said
notice and also the inquiries/investigations and filed
writ petitions before the Honourable High Court of
Madras seeking a stay on the proceedings, which had
been granted. Subsequently the stay was vacated.
The Company received a demand of ? 5,777.77
million (including penalties of ? 3,018.89 million)
during the year ended March 31, 2016, (of which
? 88.62 Million was appropriated by the Customs
Authorities and charged off to the Statement of
Profit and Loss during the year ended March 31,
2012). The department had also mentioned that the
goods which are a subject matter of the demand
of customs duty, is also liable for confiscation
under Section 111 of the Customs Act, 1962. The
Company had filed stay of operation of order and
appeal against the order with the Customs, Excise
and Service Tax Appellate Tribunal (CESTAT) which is
pending for disposal as at March 31, 2026. The next
hearing is scheduled on June 1, 2026.

Since Fiscal 2011, all bill of entries declared by
the Company have been subject to a provisional
assessment by the Office of the Commissioner
of Customs (Sea Port). However, Company has
continued to pay the customs duty applicable on
such bill of entries under provisional assessment
in accordance with the applicable rate prescribed
by Central Board of Indirect Tax and Customs.
Further, the Company is not subject to any ongoing
investigation in this regard. The Company has
executed provisional duty bonds at reporting
period representing the assessable value of the
goods imported under the bill of entries submitted,
in favour of the Deputy Commissioner of Customs,
under the terms of which, the Deputy Commissioner
of Customs has agreed to make provisional
assessment of certain goods, as prescribed under
the Bonds, until the finalization of the bill of entries.

During the year 2023, the Company received
investigation report from Deputy Commissioner
of Customs, Special Valuation Branch rejecting the
transaction value made by Company from 2011
onwards stating the related overseas supplies
may be assessed at invoice value adjusted in
accordance with Rule 10 of the Customs Valuation
(Determination of Value of Imported Goods) Rules,
2007 read with section 14 (1) of the Customs Act,

1962 including principle envisaged in case stated
above. Investigation report also stated that if any
contemporary imports at higher prices are noticed
or there exists reasons other than the influence of
relationship to doubt the value, assessing groups
may evaluate the value of imported goods under
appropriate provisions of the Customs Valuation
(Determination of Value of Imported Goods) Rules,
2007. The Company had filed an appeal against the
investigation report, however the same was rejected
by the CESTAT stating that investigation is not an
appealable order. Subsequently, the Company has
filed letter with Customs authorities requesting
for finalization of bill of entries through their
communication dated February 18, 2025. Pursuant
to legal advice received along with management
evaluation performed, management believes
that any liability for the aggregate amount of duty
payable, if any, on the bill of entries under provisional
assessment for the period since Fiscal 2011, in
the future, will not be material basis evaluation
performed by the Company.

(ii) During the year ended March 31, 2013, the Company
received a demand notice for recovery of Extra Duty
Deposit refunded by the department during the prior
years amounting to ? 91.31 million from the Deputy
Commissioner of Customs on account of issue of
the above notice by DRI. The Company challenged
the demand and obtained stay of demand filing a
writ petition before the Honourable High Court of
Madras which is pending for disposal.

(iii) During the year ended March 31, 2016, the Company
also received certain other adjudication orders
rejecting the classification of certain goods imported
by the Company and reclassifying the same under
different heading of the customs tariff amounting
to ? 551.13 million. The Company had filed appeals
against these orders with Commissioner of Customs
(Appeals). Subsequently, the Commissioner of
Customs (Appeals) upheld the adjudication order
classifying the goods imported by the Company
under a different heading of the customs tariff.
The Company has paid the differential duty under
protest and filed appeals with CESTAT challenging
the Appellate Order and the hearings at CESTAT is
pending disposal as at March 31, 2026.

(iv) During the year ended March 31, 2021, the Company
had received an order rejecting the classification of
"Cover Assembly Front door Quadrant" imported
by the Company and reclassifying the same under
different heading of the customs tariff. The said
order has imposed an additional duty of ? 64.94
million and an Penalty amount ? 65.59 million for
the imports made during the period from June 2016
to Mar 2018. The Company has filed appeals with

CESTAT challenging the Appellate Order and the
hearings at CESTAT is pending for disposal as at
March 31, 2026.

Further, the Company received an order during the
year 2010, stating the company has not fulfilled
Export Obligation for Capital items valuing ? 479.52
million imported during the period from Nov 2010 to
Feb 2011.The said order has imposed an additional
duty of ? 126.09 million and a penalty of ? 11
million. Further it has also levied interest in terms
of Notification No 102/2009 dated September 11,
2009 .The Company has filed appeals with CESTAT
and CESTAT Order dated November 3, 2023 set aside
the department order.

(v) In addition to the above, the outstanding demand
under dispute towards various other Customs cases
in respect of which the hearings are in progress at
various levels at Customs Authorities / Appeals as at
March 31, 2026 amounts to ? 12.99 million (March
31, 2025: ? 12.99 million)

(vi) The Company paid an amount of ? 313.32 million
under protest to Directorate of Revenue Intelligence
towards investigation proceedings commenced
against the Company for incorrect classification of
Electronic Control Unit for certain goods imported
during the period (from March 4, 2020 - March 11,
2022). The Company received a refund of the same,
however Department gone for an appeal.

B Anti-dumping duty

During the year ended March 31, 2015, the Directorate
General of Anti-Dumping and Allied Duties initiated
an investigation on import of cast and aluminium alloy
wheels exported from China, Korea and Thailand and
levied anti dumping duty on cast aluminium alloy wheels
which have been imported into India allegedly at less than
its normal value and passed a provisional order for a period
of six months from April 11, 2014. The Company had filed
four writ petitions before the Honourable High Court of
Madras in this connection challenging the provisional
order passed by the department and paid ? 165.66 million
under protest, as against the Anti Dumping Duty payable
of ? 320.40 million and charged to the Statement of Profit
and Loss Account. Consequent to the legal suit filed, the
Company also carries the amount paid as receivable and
on grounds of prudence, provided for the same. However,
in December 2014, the Honourable High Court of Madras
had dismissed the writ petitions. The Company had filed
writ appeal with the division bench of the Honourable
High Court of Madras against the said order of the single
member bench. During the year ended March 31, 2016,
the Company received a transfer petition transferring the
appeal to the Honourable Supreme Court of India and
the Company has filed required counter petitions with

the Honourable Supreme Court of India and the same is
pending disposal as at March 31, 2026.

In the meanwhile, the Directorate General of Anti¬
Dumping and Allied Duties had issued final order on
May 22, 2015 levying Anti-Dumping duty for a period
of five years commencing April 11, 2014. The Company
is of the opinion that Anti-Dumping Duty shall not be
levied with retrospective effect, based on the precedent
judgement of the Honourable Supreme Court of India in a
similar case and has not provided for / paid Anti-Dumping
duty for the period from October 2014 to May 2015.

Further, the Company has paid Anti-dumping duty
commencing from the period May 22, 2015 (date of
notification of Final Order) till financial year ended
March 31, 2024 under protest, total outstanding balance
as at March 31, 2026 amounting to ? 6,976.53 million
(March 31, 2025: ? 6,976.53 million) which has been
charged off to the Statement of Profit and Loss Account.

C Excise duty, Service tax and GST

(i) During October 2021, the Company had received
order from the Additional Director General
demanding payment of Differential Central excise
duty amounting to ? 3,574.10 million and penalty
amounting to ? 3,574.10 million. The Company has
filed a writ petition with the Honourable Madras
High court, and the Company deposited minimum
amount required under section 35F of the Central
excise Act, 1944. The Company has paid ? 100
million pre-deposit as at March 31, 2026 (March 31,
2025: ? 100 million). The Hon'ble Madras High Court
informed the company to file appeal before Tribunal
(CESTAT) and accordingly the company had filed
appeal before CESTAT in Oct 2024. Further there
are pending litigations for various other matters
relating to Service Tax involving demands, for which
the Company has filed appeals against the orders
received which are pending at various forums as at
March 31, 2026.

(ii) The Company received orders from Commissioner
(Appeals) rejecting the appeal for refund of input
tax credit on account of zero-rated supply and
confirming the GST demand amounting to INR
820.98 million up to March 31, 2023, and received
order from Additional Commissioner for the matters
relating TRAN 1 credit ? 711.99 million as at the year
ended March 31, 2024. The Company has filed Writ
Petitions before the Hon'ble Madras High court and
has obtained stay of the operation and all further
proceedings pursuant to the demand order received
by the Company. The Company had paid ? 82.10
million as pre-deposit as at March 31, 2026 (as at
March 31, 2025: ? 82.10 million).

(iii) The Company has filed a writ petition in March,
2024 before the Hon'ble Madras High Court against
an order dated December 23, 2023 passed by the
Additional Commissioner, Office of Commissioner
of GST & Central Excise (Chennai - Outer) (“Order”)
in relation to a show-cause cum demand notice
dated September 28, 2023 (“SCN”) issued by the
Directorate General of GST, Intelligence, Gurugram
Zonal Unit, in connection with an investigation
conducted for demand of integrated goods and
services tax of ?1,666.77 million under the reverse
charge mechanism on secondment/ deployment
of employees by the Company. It was alleged that
the secondment of employees to our Company
is a form of supply of manpower service from an
overseas supplier and thus constitutes a “supply” in
terms of Section 7 of the Central Goods and Services
Act, 2017. While the matter is currently pending, the
Hon'ble Madras High Court has issued an interim
stay on the Order.

(iv) During October 2023, the Company received an
order from the Additional Commissioner of Central
tax demanding payment of differential Goods and
Services tax (Compensation Cess) amounting
to ? 2,586.76 million and penalty amounting to
? 2,586.76 million towards certain SUV cars sold. The
Company's appeals before Commissioner (Appeals)
was rejected and the Company had preferred Writ
Petition before Hon'ble Madras High Court which
was admitted and the Company has obtained stay of
operation and all further proceedings pursuant to the
demand Order. The Company has paid an amount of
? 258.60 million pre-deposit as at March 31, 2026 (as
at March 31, 2025: 258.60)

D Investigation by the Competition Commission of India

(i) In 2012, the Directorate General of the Competition
Commission of India (CCI) had submitted its final
investigation report to the CCI regarding violations
of the provisions of Competition Act, 2002.

In the meanwhile, the Company filed a writ petition
before the Honourable High Court of Madras
challenging the jurisdiction of the CCI to expand
the investigation in respect of the above matter
and requesting for a stay which was granted
initially. During the year ended March 31, 2015, the
Honourable High Court of Madras dismissed the
Company's petition challenging the jurisdiction of
the CCI stating that CCI has powers to expand the
investigation. The Company had filed a writ appeal
before the Divisional Bench of the Honourable
High Court of Madras, and obtained Interim order
that CCI should not pass final order till disposal of
writ appeal. Meanwhile, CCI had issued final order
imposing a penalty of ? 4,202.61 million violating

Division Bench Order. However CCI has clarified that
the order shall be enforceable based on and subject
to the direction of the Honourable High Court of
Madras in connection with the writ appeal filed by
the Company.

The writ appeal was subsequently dismissed by the
High Court of Judicature at Madras on July 23, 2018.
The Company filed an appeal before the National
Company Law Appellate Tribunal (NCLAT) against
the CCI Order. On October 29, 2018, the NCLAT
heard the matter for admission and directed the
Company to deposit 10% of ? 4,202.61 million
within three weeks. The Company filed an appeal
before the Supreme Court of India (SC) against the
NCLAT Interim Order. On November 16, 2018, the
SC granted a interim stay on the operation of the
CCI Order. Further in January 20, 2020, the Supreme
Court granted Permanent Stay on of NCLAT order
for deposit of ? 420.00 million and directed NCLAT
to decide HMIL's Appeal on Merits. Consequently,
the Company is not required to deposit 10% of ?
4,202.61 million with the NCLAT till the SC Order is
operational. The pleadings in the NCLAT appeal are
complete and the appeal is now listed on July 24,
2026 for final arguments.

(ii) Further, the CCI had directed the Director General
for an investigation to be made in respect of the
complaints made by two terminated dealers against
the Company. The Company received notices
seeking certain information for the purpose of
investigation and the Company had furnished
the required details. During the year ended
March 31, 2018, CCI passed an order imposing a
penalty of ? 870.00 million on the Company. The
Company filed an appeal before NCLAT against
the order and received an order in favour of the
Company during the year ended March 31, 2019
by setting aside the CCI Order. CCI has further
filed an appeal before Supreme Court in November
2018 against our favourable order. This case is now
pending before Supreme Court and it is yet to be
listed for hearing.

The Company believes that it has a good case to obtain
a favourable judgement in respect of the above matters
and there is no additional financial exposure in respect of
the same.

E Export Promotion Capital Goods Scheme (“EPCG
Scheme”)

The Director General of Foreign Trade (“DGFT”) under
the Export Promotion Capital Goods Scheme (“EPCG
Scheme”) (“EPCG Authorisations”) had issued a show-
cause notice dated June 6, 2015 (“SCN”) that our
Company had not installed the capital goods imported
under the EPCG Scheme at the locations approved under

the EPCG Authorisations and subsequently ordered our
Company to pay the duty amount of ?872.70 million.
Further, pursuant to an order dated October 28, 2016
(“Order”), the Commissioner of Customs, Chennai - IV
had issued an order to our Company, wherein a duty of
?0.29 million, a redemption fine of ?1.00 million and a
penalty of ?0.40 million were levied against our Company.
However, the duty demand of ?872.70 million issued by
the DRI in the SCN had been dismissed under the Order.

Aggrieved by the Order, the DRI has filed an appeal before
the CESTAT (“Appeal”) challenging the dismissal of the
duty demand by the DRI, and the matter is currently
pending. These pertain to 53 EPCG Authorizations, for
which believes that it has fulfilled 100% of the required
export obligations. However, the department appeal
has been dismissed and set aside vide final order dated
December 16, 2025.

35.2Compliance with Corporate Average Fuel
Efficiency Norms ('CAFE')

The management has performed an evaluation of the
Corporate Average Fuel Efficiency Norms and confirmed
that it is in compliance with the necessary norms. The
Company also confirms that the amendments pursuant
to the Energy Conservation (Amendment) Bill, 2022 read
with The Motor Vehicles (Amendment) Act, 2019 norms
is effective from April 1, 2023.

As at the reporting date, in determining the compliance
for the financial year 2025-26, the Company has
satisfied the applicable technical requirements and

has maintained adequate documentation in support of
its evaluation. Accordingly, the Company believes that
computation of average fuel efficiency based on sales
recorded is in compliance with the prevalent norms as at
the reporting period end. It may be noted in this context
that such compliance will be subject to scrutiny by the
regulatory authorities on the basis of the filings made by
the Company.

Based on their assessment, management has confirmed
that they do not expect any material impact on the
financial position for the year ended March 31, 2026 post
such scrutiny by the regulatory authorities.

Note:

The Company had received show cause notices from the Department demanding an amount of ? 364.81 million
(March 31, 2025:? 369.47 million) in connection with various customs matters. The Company has filed / is in the process of
filings replies for the same and expects a favorable outcome in respect of the same.

G Guarantees

The Company had executed a Deed of Corporate
Guarantee in favour of SIPCOT for CST Soft Loan of ?
6,000.00 million.

H Management's assessment

The amounts shown under contingent liabilities and
disputed claims represent the best possible estimates
arrived at on the basis of the available information.
The Company's tax jurisdiction is in India. Significant
judgements are involved in determining the provision
for income taxes including judgement on whether
tax positions are probable of being sustained in tax
assessments. A tax assessment can involve complex
issues, which can only be resolved over extended
time periods.

Further, various government authorities raise issues/
clarifications in the normal course of business and the
Company has provided its responses to the same and no
formal demands/claims has been made by the authorities

in respect of the same other than those pending before
various judicial/regulatory forums as disclosed above.
The uncertainties and possible reimbursement in respect
of the above are dependent on the outcome of the
various legal proceedings which have been initiated by
the Company or the claimants, as the case may be and,
therefore, cannot be predicted accurately or relate to a
present obligations that arise from past events where it
is either not probable that an outflow of resources will
be required to settle or a reliable estimate cannot be
made. Consequential impact of interest, if any, in case
of adverse ruling of above litigations have not considered
in above disclosure. However, the Company expects a
favorable decision with respect to the above disputed
demands / claims based on professional advice, as
applicable and, hence, no specific provision for the
same has been made. Any subsequent interest or penalty
arising on final settlement of the above matters cannot
be determined with qualitative or quantitative certainty
at this stage. Accordingly, such amounts have not been
included above. Also refer note 27(b)."

Notes:

(i) The Holding Company / certain other Group Companies (together referred to as “Group Companies”), incur certain
common costs on behalf of the Company / other entities in the Group. These costs primarily relate to certain world¬
wide marketing, infrastructure and other costs incurred at an overall Group Level. Such costs have been accounted
for in the financial statements of the Company based on and to the extent of actual debits received from the Group
Companies. The Group Companies have confirmed to the Management that, as at 31 March 2026, there are no further
amounts payable to them by the Company, on this account other than the amounts disclosed in these standalone
financial statements.

(ii) The Company incurs certain costs on behalf of other Companies in the Group. These costs have been allocated /
recovered from the Group Companies on a basis mutually agreed to with the Group Companies.

(iii) Refer note 36 for information on transactions with post employment benefit plans.

(iv) All related party transactions entered during the year were in ordinary course of the business and on arm's length basis.
Outstanding balances at the year-end are settled in cash or credit as per the terms of the arrangement. There have
been no guarantees provided or received for any related party receivables or payables other than those disclosed.

38 Segment reporting

The Company publishes these standalone financial statements along with the consolidated financial statements. In

accordance with Ind AS 108, Operating Segments, the Company has disclosed the segment information in the consolidated

financial statements.

(i) The investments in subsidiaries (refer note 7.A) is accounted at cost less impairment, if any.

(ii) The Company has not disclosed the fair values of financial instruments such as trade receivables, loans, cash and cash
equivalents, bank balances other than cash and cash equivalents, bank overdrafts and trade payables, because their
carrying amounts are a reasonable approximation of fair value.

41.3Financial risk management

The Company has exposure to the following risks from its use of financial instruments:

- Credit risk

- Liquidity risk

- Market risk

The Company's treasury function provides services to the business, co-ordinates access to domestic and international
financial markets, monitors and manages the financial risks relating to the operations of the Company through internal
risk reports which analyse the exposure by degree and magnitude of risks. The treasury function reports periodically
to the Board of Directors of the Company. The Board of Directors has overall responsibility for the establishment and
oversight of the Company's risk management framework. The Board of Directors has established a risk management policy
to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risk and
adherence to limits. Risk management systems are reviewed periodically to reflect changes in market conditions and the
Company's activities.

Credit risk:

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to
meet its contractual obligations and arises principally from the Company's trade receivables, treasury operations and
Government receivables.

Trade and other receivables

The Company's exposure to credit risk is influenced mainly by the individual characteristics of each customer. Management
considers that the demographics of the Company's customer base, including the default risk of the industry and country
in which customers operate, has less of an influence on credit risk. The Company is not exposed to concentration of credit
risk to any one single customer since the products are sold to and services are provided to customers who are spread over
a vast spectrum and hence, the concentration of risk with respect to trade receivables is low.

The credit worthiness of the customers are assessed through a strong credit risk assessment policy of the Company. The
Company's domestic sales operates primarily on a cash and carry / advance model and do not carry significant credit risk.
The Company's credit period on export sales varies on case to case basis based on market conditions and are normally
backed by a letter of credit to cover the risk.

Cash and cash equivalents and other investments

In the area of treasury operations, the Company is presently exposed to counter-party risks relating to liquid funds and
short term and medium term deposits placed with public / private sector banks. The credit risk is limited considering that
the counterparties are banks with high credit ratings and repute.

Government receivables

The credit risk on receivables from government agencies / authorities is nil considering the sovereign nature of
the receivables.

Liquidity risk:

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial
liabilities that are settled by delivering cash or another financial asset. The Company's approach to managing liquidity is
to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under normal and
stressed conditions, without incurring unacceptable losses or risking damage to the Company's reputation. Typically the
Company ensures that it has sufficient cash on demand to meet expected operational expenses, servicing of financial
obligations. In addition, the Company has concluded arrangements with well reputed banks, and has unused lines of credit
that could be drawn upon, should there be a need. The Company invests its surplus funds in bank fixed deposits.

The following tables detail the Company's remaining contractual maturity for its non-derivative financial liabilities with
agreed repayment periods. The amounts are gross and undiscounted, and include contractual interest payments. The
contractual maturity is based on the earliest date on which the Company may be required to pay.

Market risk:

Market risk is the risk of loss of future earnings or fair values or future cash flows that may result from a change in the price
of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign
exchange rates and other market changes that affect market risk sensitive instruments. Market risk is attributable to all
market risk sensitive financial instruments including foreign currency receivables and payables. The Company is exposed
to market risk primarily related to foreign exchange rate risk (currency risk), interest rate risk and the market value of its
investments. Thus the Company's exposure to market risk is a function of investing and borrowing activities and revenue
generating and operating activities in foreign currencies.

Currency risk - Exposure to foreign currency

The Company's exposure in USD, Korean Won and other foreign currency denominated transactions mainly on import of
components and export of vehicles gives rise to exchange rate fluctuation risk. These financial exposures are managed in
accordance with the company's risk management policies and procedures. The Company majorly adopts natural hedge
strategy by utilizing Exports proceeds to make payments for imports of components. The appropriateness / adequacy of
the natural hedging principle is reviewed periodically with reference to the approved foreign currency risk management
policy followed by the Company. It also utilizes foreign currency loans and foreign currency forward contracts to mitigate
fluctuation risk. Company enters into foreign currency forward contracts in USD and Korean Won. Fair value of these forward
contracts is determined using valuation provided by authorized dealers dealing in foreign exchange. Forward Contracts
are used exclusively for hedging foreign currency risk and not for trading or speculative purpose

Currency risk - Sensitivity analysis

The Company is mainly exposed to the currencies of USD, EUR and KRW.

The following table details the Company's sensitivity to a 5% increase in the INR against the relevant foreign currencies. 5% is
the rate used in order to determine the sensitivity analysis considering the past trends and expectation of the management
for changes in the foreign currency exchange rate. The sensitivity analysis includes the outstanding foreign currency
denominated monetary items and adjusts their translation at the period end for a 5% change in foreign currency rates. A
positive number below indicates an increase in profit or equity where the INR increases 5% against the relevant currency.

Fair value sensitivity for fixed rate instruments

The Company does not account for any fixed rate financial assets and liabilities at fair value through profit or loss. Therefore
a change in interest rates at the reporting date would not affect profit or loss.

42 Fair value measurement

Financial assets and financial liabilities that are not measured at fair value:

The management considers that the carrying amount of all the financial asset and financial liabilities that are not measured
at fair value in the standalone financial statements approximate the fair values and, accordingly, no disclosures of the fair
value hierarchy is required to be made in respect of these assets / liabilities.

43.5Transfer pricing - International transactions

The Company has entered into international transactions with associated enterprises. For the financial year ended March 31,
2025, the Company has obtained the Accountant's report from a Chartered Accountant as required by the relevant provisions
of the Income-tax Act, 1961 and has filed the same with the tax authorities. For the year ended March 31, 2026, the Company
maintains documents as prescribed by the Income-tax Act to prove that these transactions are at arm's length and believes
that the aforesaid legislation will not have any impact on the standalone financial statements, particularly on the amount of tax
expense and that of provision for taxation.

45 Initial Public Offering - Offer for sale (OFS)

During the year ended March 31, 2025, the Company has completed initial public offer (IPO) of 142,194,700 equity shares of face
value of INR 10 each at an issue price of INR 1,960 per share, comprising offer for sale of shares by Hyundai Motor Company,
South Korea Limited (Holding Company). Pursuant to the IPO, the equity shares of the Company were listed on National Stock
Exchange of India Limited (NSE) and BSE Limited (BSE) on October 22, 2024. The Company has not received any proceeds
from the offer and all such proceeds (net of any offer related expenses which are borne by Holding Company) have gone to
the Holding Company. The offer has been authorised by resolution of Board of Directors at their meeting held on May 17, 2024.

49 The Government of India has notified the four Labour Codes — the Code on Wages, 2019, the Industrial Relations Code,
2020, the Code on Social Security, 2020, and the Occupational Safety, Health and Working Conditions Code, 2020 on
November 21, 2025, consolidating 29 existing labour laws. The Ministry of Labour and Employment has also published
draft Central Rules and FAQs to facilitate assessment of the financial impact arising from changes in regulations.

Over the past few years, the Company has proactively undertaken initiatives in its systems, processes, and work force
policies in accordance with the emerging requirement of labour codes. The associated costs have been recognized in the
Company's standalone financial statements as and when such measures were implemented. Based on the steps taken to
date and the latest available guidance, the Company has recognized the estimated impact of the Labour Codes in these
standalone financial statements under employee benefits expense. The Company will continue to monitor the finalization
of the Central and State Rules and make further policy alignments as necessary. Additional impact, if any, arising from such
developments will be assessed and recognized in the financial statements appropriately.

50 As per the notification issued by the Ministry of Environment, Forest and Climate Change on the Environment Protection
(End-of-Life Vehicles) Rules, 2025 (EPR rules),which is effective from April 1, 2025, the Company has an obligation to scrap
the End of Life Vehicles as per the table mentioned therein for vehicles sold in domestic market and including put to self¬
use from 01 April 2005 till 31 March 2026.

The obligation mentioned in this rule has to be met by way of obtaining extended producer responsibility (“EPR”) Certificates,
the pricing mechanism for which is yet to be notified. Further, the implementation details and operational procedures of
the EPR rules including the modalities of the pricing mechanism for the EPR certificates are yet to be developed.

Due to the absence of information regarding the pricing mechanism and pending approval of registration on the centralized
online portal for EPR certificates, there is currently insufficient data to reliably arrive at a range of possible outcomes or
estimate the financial impact of this obligation. Consequently, the recognition criteria under the applicable accounting
standards are not met. Accordingly, no provision has been recognized. The Company will continue to assess the ability
to measure its obligations pursuant to the EPR Rules, as and when the aforesaid details of implementation framework
are available.

51 Subsequent events

The Company evaluates events or transactions that occur after the standalone balance sheet date but prior to the issuance
of standalone financial statements and concluded that no material subsequent events have occurred through 8 May 2026
that require adjustment to or disclosure in the standalone financial statements.