q) Provisions
Provisions are recognized when there is a present legal or constructive obligation that can be estimated reliably,
because of a past event, when it is probable that an outflow of resources embodying economic benefits will be
required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions
are not recognized for future operating losses.
Any reimbursement that the Company can be virtually certain to collect from a third party with respect to the
obligation is recognized as a separate asset. However, this asset may not exceed the amount of the related
provision.
Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is no longer
probable that an outflow of economic resources will be required to settle the obligation, the provisions are
reversed. Where the effect of the time value of money is material, provisions are discounted using a current pre¬
tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase
in the provisions due to the passage of time is recognized as a finance cost.
r) Contingencies
Where it is not probable that an inflow or an outflow of economic resources will be required, or the amount
cannot be estimated reliably, the asset or the obligation is not recognized in the statement of balance sheet
and is disclosed as a contingent asset or contingent liability. Possible outcomes on obligations/rights, whose
existence will only be confirmed by the occurrence or non-occurrence of one or more future events, are also
disclosed as contingent assets or contingent liabilities.
s) Taxes on Income
Tax expense comprises of current and deferred tax. Current income tax is measured at the amount expected to
be paid to the tax authorities in accordance with the respective laws of the state. Current tax includes taxes to be
paid on the profit earned during the year and for the prior periods.
Deferred income taxes are provided based on the balance sheet approach considering the temporary differences
between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the
reporting date.
Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance
sheet date. Deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient
future taxable income will be available against which such deferred tax assets can be realized.
The carrying amount of deferred tax assets are reviewed at each balance sheet date. The Company writes down
the carrying amount of a deferred tax asset to the extent that it is no longer probable that sufficient future taxable
income will be available against which deferred tax asset can be realized. Any such write-down is reversed to the
extent that it becomes reasonably certain that sufficient future taxable income will be available.
t) Prior period items
In case prior period adjustments are material in nature the Company prepares the restated financial statement
as required under Ind AS 8 - "Accounting Policies, Changes in Accounting Estimates and Errors”. Immaterial
items pertaining to prior periods are shown under respective items in the Statement of Profit and Loss.
u) Cash and cash equivalents
Cash and cash equivalents include cash on hand and at bank, deposits held at call with banks, other short-term
highly liquid investments with original maturities of three months or less that are readily convertible to a known
amount of cash which are subject to an insignificant risk of changes in value and are held for meeting short-term
cash commitments.
For the Statement of Cash Flows, cash and cash equivalents consist of short-term deposits, as defined above, net
of outstanding bank overdraft as they are being considered as integral part of the Company’s cash management.
v) Financial Instrument
A financial instrument is any contract that gives rise to a financial asset of one entity and financial liability or
equity instrument of another entity.
a. Financial Asset
Initial recognition and measurement
All financial instruments are recognized initially at fair value plus, in the case of financial assets not recorded
at fair value through profit & loss account transaction costs that are attributable to the acquisition of the
financial asset, purchase or sales of financial assets that require delivery of assets within a time frame
established by regulation or convention in the market place are recognized on the trade date i.e. the date
that the company commits to purchase or sell the asset.
Subsequent Measurement
For subsequent measurement financial assets are classified as measured at:
1) Amortized Cost
2) Fair value through profit and loss (FVTPL)
3) Fair value through other comprehensive income (FVTOCI)
Financial Asset measured at amortized cost.
Financial Assets held within a business model whose objective is to hold financial assets to collect contractual
cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are
solely payments of principal and interest on the principal amount outstanding are measured at amortized
cost using effective interest rate (EIR) method. The EIR amortization is recognized as finance income in the
statement of Profit & Loss.
The company, while applying above criteria has classified all the financial assets (except investments in equity
shares) at amortized cost.
Financial Assets Measured at fair value through other comprehensive income.
Financial assets that are held within a business model whose objective is achieved by both, selling financial
assets, and collecting contractual cash flows that are solely payments of principal and interest, are subsequently
measured at fair value through other comprehensive income. Fair value movements are recognized in the
other comprehensive income (OCI). Interest income is measured using the EIR method and impairment losses,
if any are recognized in the Statement of Profit and Loss. On derecognition, cumulative gain or loss previously
recognized in OCI is reclassified from the equity to other income in the Statement of Profit and Loss.
Financial Assets at fair value through profit or loss (FVTPL)
Financial Asset is measured at fair value through Profit & Loss if it does not meet the criteria for classification as
measured at amortized cost or at FVTOCI. All fair value changes are recognized in the statement of profit & loss.
De-recognition of Financial Assets
The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial
asset expire, or it transfers the contractual rights to receive the cash flows from the asset.
Impairment of Financial Assets
In accordance with Ind AS 109, the Company applies expected credit loss (ECL) model for measurement and
recognition of impairment loss on the debt instruments, that are measured at amortized cost e.g., loans, debt
securities, deposits, trade receivables and bank balance.
Expected 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 entity expects to receive.
The management uses a provision matrix to determine the impairment loss on the portfolio of trade and other
receivables. The provision matrix is based on its historically observed expected credit loss rates over the expected
life of the trade receivables and is adjusted for forward-looking estimates.
Expected credit loss allowance or reversal recognized during the period is recognized as income or expense in the
statement of profit and loss. In the case of a balance sheet, it is shown as reduction from the specific financial
asset.
b. Financial Liabilities
Initial recognition and measurement
Financial liabilities are recognized initially at fair value plus any transaction cost that is attributable to the
acquisition of the financial liability except financial liabilities at FVTPL that are measured at fair value.
Subsequent Measurement
Financial liabilities are subsequently measured at amortized cost using the EIR method. Financial liabilities
carried at fair value through profit or losses are measured at fair value with all changes in fair value recognized in
the Statement of Profit and Loss.
Financial Liabilities at amortized cost
Amortized cost for financial liabilities represents amount at which financial liability is measured at initial
recognition minus the principal repayments, plus or minus the cumulative amortization using the effective
interest method of any difference between the initial amount and the maturity amount.
All the financial liabilities of the company are subsequently measured at amortized cost using the Effective
Interest method.
De-recognition of Financial Liabilities
Financial liability shall be derecognized when, and only when, it is extinguished i.e. when the obligation specified
in the contract is discharged or cancelled or expires.
w) Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the balance sheet when, and
only when, the Company currently has a legally enforceable right to set off the amounts and it intends either to
settle them on a net basis or to realize the asset and settle the liability simultaneously.
d. Rights, preferences and restrictions attached to shares
The Company has only one class of equity shares having a face value of Rs. 10/- per share with one vote
per each share. The Company declares and pay dividends in Indian Rupees. The dividends proposed by the
Board of Directors is subject to the approval of the shareholders in the ensuring Annual General Meeting.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining asset of
the compnay, after distribution of all preferential amounts. The distribition will be in proportion to the number of
equity shares held by the shareholders.
1 The Loans referred at (a to f) above are Primary secured by hypothecation of entire current assets, present and future
on pari-passu basis with other working capital lenders and First charge by way of equitable mortgage of properties
standing in the name of the company and Second charge on Fixed Assets of the company raking pari-passu with
other lenders in the working capital consortium.
2 The Loans referred at (g) & (j) above are secured by 1st pari-passu charge by hypothecation of land & Buildings at
Toopran, Part -B, Industrial park, and guaranted by Managing Director and other two promoter directors.
3 The Loans referred at (h & i) above are secured by 1st pari-passu charge by hypothecation of land & Buildings at
Toopran, Part -A, Industrial park, & 1st parripassu charge by hypothecation of plant & machinery created our of the
finance and guaranted by Managing Director and other two promoter directors.
4 Hire Purchase Loans above are secured by hypothecation of the respective asset and guaranted by one of the
Directors of the Company and repayable in monthly installments.
5 Loan From Axis Finance Ltd are secured by hypothecation land of promoters at Medchel.
6 Loan From Oxyz Financial Services Ltd are secured by hypothecation land of promoters at Medchel.
7 Loan from Aditya Birla Capital Ltd., secured by way of registered mortgage of Plot No D-260/1, Ranjangaon Industrial
area, Koregaon Taluka, District Shirur, Pune 412220
8 Working capital limits from consortium banks are secured by way of:
Primary: Pari-passu first charge by way of hyphothecation of stocks of raw material, semi finished goods, finished
goods, stores and spares, book debts and all movable and other current assets of the company.
Collateral: (i) Pari-passu first charge by way of Equitable Mortage of land & buildings at B-36, 25&27, Plot No 41 at
Balanagar, Land & Buildings at Bonthapally and Medchel except the relating to the specific term loans.
Pari-passu second charge by way of Equitable Mortage of fixed assets of the Company.
36. FAIR VALUE MEASUREMENT
The Company measures financial instruments at fair value at each balance sheet date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. The fair value measurement is based on the presumption
that the transaction to sell the asset or transfer the liability takes place either in the principal market for such asset
or liability, or in the absence of a principal market, in the most advantageous market which is accessible to the
Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when
pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate
economic benefits by using the asset in its highest and best use or by selling it to another market participant that
would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data
are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of
unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized
within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair
value measurement as a whole:
a. Level 1 - Quoted (unadjusted market prices) in active markets for identical assets or liabilities.
38. EMPLOYEE BENEFITS PLAN
a) Defined contribution plans
Refer Note 30 for the Company's contribution to the defined contribution plans with respect to employee benefit
funds i.e Provident Fund and Employees' State Insurance Scheme.
b) Defined benefit plan
The Company has a defined benefit gratuity plan (funded). The gratuity plan is governed by the Payment of Gratuity
Act, 1972. Under the Gratuity Act, an employee who has completed five years of service is entitled to specific
benefits. The level of benefits provided depends on the member's length of service, managerial grade and salary at
retirement age.
40. SEGMENT INFORMATION
(a) The primary reporting of the company has been performed on the basis of business segment. The company is
organized into two business segments i.e. Machines Division and Component Division. Segments have been
identified and reported based on the nature of the products, risks and returns, the organization structure and the
internal financial reporting system.
The expenses that are not directly attributable to the business segments are shown as unallocated corporate costs.
Segment assets include all operating assets used by a segment and consist principally of debtors, inventories,
advances and fixed assets, net of allowances.
Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities.
41. FINANCIAL RISK MANAGEMENT
The Company's activities expose it to market risk, credit risk and liquidity risk. Company's overall risk management
focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the financial
performance.
I. Market Risk
Market risk is the risk of loss of the future earnings, 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 currency exchange rates, commodity prices and other market changes that affect
market risk sensitive instruments. Market risk is attributable to all market risk sensitive financial instruments
including investments and deposits, foreign currency receivables, payables and borrowings.
a. Foreign Currency Risk - Foreign Currency Risk is the risk of impact related to fair value or future cash flows
of an exposure in foreign currency, which fluctuate due to change in foreign currency rates. The Company's
exposure to the risk of changes in foreign exchange rates relates primarily to impact of raw materials and
spare parts, capital expenditure and export of Machines. The company does not enter into any derivative
instruments for trading or speculative purposes and the impact foreign currency risk is negligible.
b. Interest Rate Risk - Interest rate risk is the risk that the fair value or future cash flows of a financial
instrument will fluctuate because of changes in market interest rates. The Company's exposure to the risk of
changes in market rates relates primarily to the Company's short term borrowing. The Company constantly
monitors the credit markets and rebalances its financing strategies to achieve an optimal maturity profile
and financing cost. Since all the borrowings are on floating rate and constantly monitored, no significant
risk of change in interest rate.
II. Credit Risk
Credit risk arises when a customer or counterparty does not meet its obligations under a financial instrument or
customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities
(primarily trade receivables) and from its financing/investing activities, including deposits with banks. The
company has a prudent and conservative process for managing its credit risk arising in the course of its business
activities. The Company is receiving payments regularly from its customers and hence the Company has no
significant credit risk.
III. Liquidity Risk
Liquidity risk is defined as the risk that the company will not be able to settle or meet obligations on time or
at reasonable price. Prudent liquidity risk management implies maintaining sufficient cash and marketable
securities and the availability of funding through an adequate amount of credit facilities to meet obligations
when due. The Company's treasury team is responsible for liquidity, funding as well as settlement management.
In addition, processes and policies related to such risks are overseen by senior management. Management
monitors the Company's liquidity position through rolling forecasts based on expected cash flows.
43. CORPORATE SOCIAL RESPONSIBILITY
As per Section 135 of the Companies Act, 2013, a company, meeting the applicability threshold, needs to spend
at least 2% of its average net profit for the immediately preceding three financial years on corporate social
responsibility (CSR) activities. A CSR committee has been formed by the company as per the Act. The funds were
primarily allocated to a corpus and utilized through the year on these activities which are specified in Schedule VII of
the Companies Act, 2013:
i) The PAT margin improved during FY 2025-26, primarily on account of a favorable shift in product mix and stringent
expense control measures implemented during the year.
ii) The inventory turnover ratio declined during FY 2025-26. This was primarily due to Reduced sales volumes following
the imposition of OFAC sanctions and Higher inventory levels maintained to ensure timely fulfillment of urgent
customer requirements.
iii) The trade receivables turnover ratio declined from 5.14 times in FY 2024-25 to 3.81 in FY 2025-26 due to reduction
in sales revenue during the year on account of OFAC sanctions and increase in trade receivables due to extended
credit terms and delayed collections.
iv) The trade payables turnover ratio declined from 3.74 times in FY 2024-25 to 2.73 times in FY 2025-26 due to
reduction in purchases during the year on account of lower sales volumes and increase in trade payables due to
extended credit periods availed from suppliers.
v) The Net Capital Turnover ratio declined during FY 2025-26 due to a reduction in sales and an increase in working
capital.
vi) The Net Profit margin improved during FY 2025-26, primarily on account of a favorable shift in product mix and
stringent expense control measures implemented during the year.
vii) ROCE improved during FY 2025-26, primarily driven by higher earnings before interest and tax (EBIT) resulting
from stringent expense control measures and a favorable product mix.
45. ADDITIONAL DISCLOSURES AS PER SCHEDULE III OF THE COMPANIES ACT, 2013
i) The Company do not have any Benami property and neither any proceedings have been initiated or is pending
against the Company for holding any Benami property.
ii) The Company do not have any transactions with companies struck off.
iii) The Company do not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory
period.
iv) The Company has not been declared a willful defaulter by any bank or financial institution or any other lender
during the current period.
v) No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any
other sources or kind of funds), other than in the ordinary course of business 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 lend or invest in party identified by or on behalf of the
Company (Ultimate Beneficiaries). The Company has not received any fund from any party(s) (Funding Party)
with the understanding that the Company shall whether, directly or indirectly lend or invest in other persons or
entities identified by or on behalf of the Company (“Ultimate Beneficiaries”) or provide any guarantee, security
or the like on behalf of the Ultimate Beneficiaries
vi) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year
vii) The Company has not made any such transaction which is not recorded in the books of accounts that has been
surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such
as, search or survey or any other relevant provisions of the Income Tax Act, 1961).
viii) The Company has complied with number of layers prescribed under clause (87) of Section 2 of the Act read with
the Companies (Restriction on number of Layers) Rules, 2017
46.OFAC SANCTIONS
The Company, soon after becoming aware that its name was featured in the sanctions list published by the United
States Department of Treasury on 30 October 2024, informed the Stock Exchanges vide letter dated 02 November
2024, stating that the Company is not aware of any machines being sold to, or having dealt with, any sanctioned
entities or individuals which may have led to the inclusion of the Company's name in the list.
Consequent to the aforesaid designation, the Company has been unable to enter into foreign currency transactions
with effect from 30 October 2024. This restriction continued throughout the financial year ended 31 March 2026
and remains in force as on the date of approval of these financial statements.
The Company is in the process of getting its name removed from the Specially Designated Nationals and Blocked
Persons ("SDN”) list maintained by the United States Department of the Treasury. In this regard, the Company,
through its US-based legal counsel, filed an application before the Office of Foreign Assets Control ("OFAC”) on 31
January 2025 (EST) for expedited removal/reconsideration of its designation, and intimated the Stock Exchanges
vide letter dated 01 February 2025 (IST).
On 06 June 2025, OFAC’s Reconsideration Team issued a questionnaire ("First Questionnaire”) seeking follow¬
up information in relation to the Company’s delisting petition. The Company, through Blank Rome, submitted
comprehensive responses to the First Questionnaire on 20 August 2025.
On 23 September 2025, OFAC issued a further questionnaire ("Second Questionnaire”), to which the Company
submitted comprehensive responses on 05 November 2025. As on the date of these financial statements, the
application for removal/reconsideration remains pending before OFAC, and no formal outcome has been received.
In view of the OFAC sanctions and prevailing macroeconomic conditions, the Company undertook certain cost¬
cutting initiatives during the year, which enabled it to minimise the impact of the sanctions on its operations. The
Company also undertook renewed strategic initiatives to recoup its business, which have yielded positive outcomes,
evidenced by the emergence of new business opportunities and the onboarding of new customers.
47. Previous Year’s figures have been regrouped wherever necessary to correspond with the current year’s figures.
Except when otherwise stated, the figures are presented in Rupees in lakh.
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