1.       Corporate Information

Sandhar Group is primarily engaged in the manufacture and assembly of automotive components such as locksets, mirrors and various sheet metal components for two wheelers and four wheelers, designing and manufacturing of moulds, dies& dies parts, machine tools and jigs & fixtures and fabrication and assembly of construction and railways products.

2.       Significant Accounting Policies, Principles of Consolidation and Basis of brparation

2.1    Principles of Consolidation

The Consolidated Financial Statements relate to Sandhar Technologies Limited (“Parent Company”) and its subsidiary companies (the Parent Company and its subsidiaries together referred to as “the Group”) and jointly controlled entities. The Consolidated Financial Statements have been brpared on the following basis:

a.     The unconsolidated financial statements of the Parent Company and its subsidiarycompanies have been consolidated on a line-by-line basis by adding together the book values of like items of assets, liabilities, income and expenses, after fully eliminating intra-group balances and intra-group transactions resulting in unrealised profits or losses, if any, as per Accounting Standard 21 – "Consolidated Financial Statements" notified under section 133 of the Companies Act, 2013 read together with para 7 of the Companies (Accounts) Rules, 2014. The results of operations of subsidiary companies are included in the Consolidated Financial Statements from the date on which the parent subsidiary relationship came into existence.The subsidiary companies which are included in the consolidation and the Parent Company’s holding therein is as under:

S. No.	Name of the Subsidiary Company	Nature of relation	Ownership in % either directly or through subsidiaries		Country of Incorporation
2015-16	2014-15
1	Sandhar Toolings Private Limited (STPL)	Subsidiary	79.92	79.92	India
2	Sandhar Technologies Barcelona S.L. (STB)	Subsidiary	100	100	Spain
A	Breniar Project, SL (BP)	Step Down Subsidiary	100	100	Spain
B	Sandhar Technologies Poland sp.Zoo (STP)	Step Down Subsidiary	100	100	Poland
C	Sandhar Technologies de Mexico S de RL de CV (STM)	Step Down Subsidiary	100	100	Mexico
3	PT Sandhar  Indonesia (PTSI)	Subsidiary	100	100	Indonesia
4.	Sandhar Euro Holdings B.V. (SHBV)	Subsidiary	100	100	Netherlands

b.       Joint Venture Company- In accordance with “Accounting Standard 27 – Financial Reporting of Interests in Joint Ventures", issued by the Institute of Chartered Accountants of India and notified by Ministry of Corporate Affairs, the Parent Company has brpared the accompanyingConsolidated Financial Statements by including the Parent Company’s proportionate interest in the Joint Venture’s assets, liabilities, income, expenses and other relevant information. Details of Joint Venture Companies are as follows:

S. No.	Name of the Joint Venture Company	JV Partner	% Share in JV		Country of Incorporation	Remarks
2015-16	2014-15
1	Indo Toolings Private Limited (ITPL)	JBM Auto Limited	50	50	India
2	Sandhar Caama Components Private Limited (SCCPL)	Mr. AshimTalwar& Mrs. CharooTalwar	Nil	50	India	JV relation ceased and hence not consolidated during the year (also refer note 38)
3	Sandhar Han Sung Technologies Private Limited (SHTPL)	Han Sung Imp Co. Limited	50	50	India
4	Sandhar Ecco Green Energy Private Limited	DMRG Investment Private Limited and Tarun  Agarwal	50	50	India

c.        In case of foreign subsidiaries, being non-integral operations, items in Statement of Profit & Loss are converted at the period average rate which approximates the rate brvailing at the date of transaction. All assets and liabilities are converted at the rates brvailing at the end of the year. Reserves and Surplus is the balance derived from the statement of Profit and Loss of each year, these balances are converted at average rates applicable for the respective years. Any exchange difference arising on consolidation is recognised in the "Foreign Currency Translation Reserve" (Source for exchange rate: www.oanda.com).Further, these accounts have also been audited under the local laws of respective countries and also as per the Indian GAAP for the purpose of consolidation.

d.       The excess of cost to the Group of its investments in the subsidiary companies/ joint ventures, over its share of equity of the subsidiary companies/ joint ventures, at the date on which the investments are made, is recognized  as ‘Goodwill’ being an asset in the Consolidated Financial Statements. Such Goodwill is amortized over a period of five years. Alternatively where the share of equity in the subsidiary, as on the date of investment is in excess of cost of investment of the Group, it is recognized as ‘Capital Reserve’ and included under the head ‘Reserves and Surplus’ in the Consolidated Financial Statements. Capital reserve created on acquisition of investment is adjusted at the point of disposal of investment.

e.        Minorities’ interest in net profits of consolidated subsidiarycompanies for the yearis identified and adjusted against the income in order to arrive at the net income attributable to the shareholders of the Group. Minorities’ share of net assets is identified and brsented in the Consolidated Balance Sheet separately.  Where accumulated losses attributable to the minorities are in excess of their equity, in the absence of the contractual obligation on the minorities, the same is accounted for by the holding company.

f.        As far as possible, the Consolidated Financial Statements are brpared using uniform accounting policies for like transactions and other events in similar circumstances and are brsented, to the extent possible, in the same manner as the Parent Company’s standalonefinancial statements.

g.        The Consolidated Financial Statements of the subsidiarycompanies and the joint ventures used in the consolidation are drawn up to the same reporting date as that of the Parent company i.e. 31stMarch 2016.

2.2    Basis of brparation

The Consolidated Financial Statements of the Group have been brpared as a going concern in accordance with the generally accepted accounting principles in India (Indian GAAP). TheseConsolidated Financial Statements have been brparedto comply in all material respects with the accounting standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules 2014. The Consolidated Financial Statements have been brpared on an accrual basis and under the historical cost convention.

The accounting policies/estimates adopted in the brparation of Consolidated Financial Statements are consistent with those of brvious year, except for the change in accounting policy explained below.

The management has considered the effect of any adjustments that may be required for events occurring after the date of approval of the financial statements by the Board of Directors of the respective companies in the Group and jointly controlled entities, wherever applicable/required while brparing the consolidated financial statements of the Group.

2.3    Summary of significant accounting policies

Change in accounting policy

Component Accounting

The entities covered in the Group were brviously not identifying components of fixed assets separately for debrciation purposes; rather, a single useful life/ debrciation rate was used to debrciate each item of fixed asset.

In case of Indian entities and in order to bring uniformity in accounting policies in case of overseas entities, these entities have changed the manner of debrciation for its fixed assets. Now, the group identifies and determines separate useful life for each major component of the fixed asset, if they have useful life that is materially different from that of the remaining asset. However, it does not have impact on the Statement of Profit &Loss for the year.

a)    Use of estimates

The brparation of Consolidated Financial Statements is in conformity with Indian GAAPrequires the management to make judgments, estimates and assumptions that effect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting year. Although these estimates are based on the management’s best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to carrying amounts of assets or liabilities in future periods.

b) Tangible fixed assets

Fixed assets are stated at cost, net of accumulated debrciation and accumulated impairment losses,(if any). The cost comprises the purchase price, borrowing costs if capitalization criteria are met and directly attributable cost of bringing the asset to its working conditions for the intended use. Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is debrciated separately. This applies mainly to components for machinery. Any trade discounts and rebates are deducted in arriving at the purchase price. The cost of tangible assets acquired in an amalgamation in the nature of purchase is their fair value as at the date of amalgamation.

Subsequent expenditure related to an item of fixed asset is added to its book value only if it increases the benefits from the existing asset beyond its brviously assessed standard of performance. All other expenses on existing fixed assets, including day-to-day repair and maintenance expenditure and cost of replacing parts, are changed to the statement of profit and loss for the year during which such expenses are incurred.

The group does not adjust exchange differences arising on translation/settlement of long-term foreign currency monetary items pertaining to the acquisition of a debrciable asset to the cost of the asset but charges the same to the statement of profit & loss in the year in which such gain/loss arises.

Gains or losses arising from de-recognition of fixed assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized.

                c)Debrciation on tangible fixed assets

The group identifies and determines cost of asset significant to the total cost of asset having useful life that is materially different from that of the remaining life. Debrciation on fixed assets is calculated on a straight-line basis using the rates arrived at based on the useful lives estimated by the management. The identified components debrciated over the useful life, the remaining asset debrciated over the useful life of the principal asset. The Group has used the following rates for its entities to provide debrciation on its fixed assets.

Nature of Fixed Asset	Category in Fixed Asset Schedule	Useful lives estimated by the management (years)
Factory Buildings	Buildings	30
Other Buildings	Buildings	60
Temporary Erection	Buildings	1
Carpeted RCC Roads	Buildings	10
Tube wells	Buildings	5
Plant and Machinery	Plant and equipment	7.50-20
Electrical Installations	Plant and equipment	10-25
Office Equipment	Office equipment	5
Racks and Bins	Plant and equipment	10
Computers	Office equipment	3-4
Furniture & Fixtures	Furniture and fixtures	10-20
Cars	Vehicles	6
Commercial Vehicles	Vehicles	8
Tools, Moulds and Dies	Plant and equipment	5-6

Leasehold land is amortized on a straight line basis over the period of the lease ranges between 70-99 years.

The management of the Parent Company has estimated, supported by independent assessment by professionals, the useful lives of the following classes of assets:

Nature of Fixed Asset	Useful lives estimated by the management (years)	Remarks
Temporary Erection	1	Lower life than brscribed in Schedule II
Computers (Servers and networks)	3
Non Commercial Vehicles	6

In case of Sandhar Technologies Barcelona S.L., the costs of acquisition of equipment, systems or installations for the elimination, reduction or control of the possible environment impacts of the business are capitalized as environment fix assets. The rest of expenses are accounted as expenses of the year. Any possible environmental liability is covered by the liability insurance.

d)       Intangible assets

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in an amalgamation in the nature of purchase is their fair value as at the date of amalgamation. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, (if any). Intangible assets are assessed for impairment whenever there is an indication that the intangible asset may be impaired.The amortization period and the amortization method are reviewed at least at each financial year end. If the expected useful life of the asset is significantly different from brvious estimates, the amortization period is changed accordingly. If there has been a significant change in the expected pattern of economic benefits from the asset, the amortization method is changed to reflect the changed pattern. Such changes are accounted for in accordance with AS-5 Net Profit or Loss for the Period, Prior Period items and changes in Accounting Policies.

§  Technical knowhow

Amounts paid towards technical know-how fees for specifically identified projects/products being development expenditure incurred towards product design is carried forward based on assessment of benefits arising from such expenditure. Such expenditure is amortised over the period of expected future sales from the related product, i.e. the estimated period of 60 to 72 months on straight line basis based on past trends, commencing from the month of commencement of commercial production.

§  Software

Software purchased by the groupare amortised on a straight line basis i.e.non-standardsoftware (customised) in four years and standard software (non-customised) in five years.

Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset andare recognized in the statement of profit and loss when the asset is derecognized.

§  Plant Supervision Cost

Plant supervision cost rebrsents expense incurred by the Joint VentureCompany, Indo Toolings Private Limited, during the br-operative period for development of tool room facilities which has been provided and owned by PithampurAuto Cluster Limited. In view of the economic benefits derived by the company, expenditure incurred on supervision of the tool room facilities up to the date of commencement of production i.e. beginning of the cessation period shall be amortized over the period of 5 years.

§  Goodwill

Goodwill arising on consolidation is amortised over a period of five years on straight line basis.

e)     Leases

Where the Group is lessee

Leases, where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as operating leases. Operating lease payments are recognized as an expense in the statement of profit and loss on a straight-line basis over the lease term.

f)        Borrowing Costs

Borrowing cost includes interest, amortization of ancillary costs incurred in connection with the arrangement of borrowings and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost.

Borrowing costs directly attributable to the acquisition,construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur.

g)    Impairment of tangible and intangible assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset's recoverable amount. An asset's recoverable amount is the higher of an asset's or cash-generating unit's (CGU) net selling price and its value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their brsent value using a br-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining net selling price, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used.

The Group bases its impairment calculation on detailed budgets and forecast calculations which are brpared separately for each of the Group’s cash-generating units to which the individual assets are allocated.

Impairment losses, including impairment on inventories are recognized in the statement of profit and loss.

After impairment,debrciation is provided on the revised carrying amount of the asset over its remaining useful life.

h)                   Government grants and subsidies

Grants and subsidies from the government are recognized when there is reasonable assurance that (i) the Group will comply with the conditions attached to them, and (ii) the grant/subsidy will be received.

When the grant or subsidy relates to revenue,it is recognized as income on a systematic basis in the statement of profit and loss over the periods necessary to match them with the related costs, which they are intended to compensate. Where the grant relates to an asset, it is recognized as deferred income and released to income in equalamounts over the expected useful life of the related asset.

Where the Group receives non-monetary grants, the asset is accounted for on the basis of its acquisition cost. In case a non-monetary asset is given free of cost, it is recognized at a nominal value.

Government grants of the nature of promoters' contribution are credited to capital reserve and treated as a part of the shareholders' funds.

i)  Investments

Investments, which are readily realizable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as long-term investments.

On initial recognition, all investments are measured at cost. The cost comprises purchase price and directly attributable acquisition charges such as brokerage, fees and duties.If an investment is acquired,or partly acquired, by the issue of shares or other securities, the acquisition cost is the fair value of the securities issued.

Current investments are carried in the Consolidated Financial Statements at lower of cost and fair value determined on an individualinvestment basis.Long-term investments are carried at cost. Howeverprovision for diminution in value is made to recognize a decline other than temporary in the value of the investments.

On disposalof an investment,the difference between its carrying amount and net disposalproceeds is charged or credited to the statement of profit and loss.

j) Inventories

Inventories are valued as under:

Raw materials, components, stores and spares

Lower of cost and net realizable value. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Companies in the group, except ITPL, adopt First-in-first-out (FIFO) method for valuing raw materials, components, stores and spares (RM & Stores). ITPL adopt weighted average method for valuing raw materials, components, stores and spares. Amount of raw materials, components, stores and spares so valued and included in the Consolidated Financial Statements is 0.31% (i.e. Rs. 3,301,404) of the total value of group inventory for Raw Material& Stores, which is immaterial for group.

Work-in-progress and finished goods

Lower of cost and net realizable value. Cost includes direct materials, labour and a portion of manufacturing overheads based on normal operating capacity. Cost of finished goods includes excise duty.Cost of work-in-progress (WIP) and finished goods (FG) is based on FIFO method except for ITPL which adopt weighted average method. Amount of work-in-progress and finished goods so valued and included in the Consolidated Financial Statementsis 4.23% (i.e. Rs. 22,208,875) of the total value of group inventory for WIP and FG, which is immaterial for group.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.

k)                   Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured.The following specific recognition criteria must also be met before revenue is recognized:

§  Sale of goods

Companies in the group recognise revenue from sale of goods when all the significant risks and rewards of ownership of the goods have been passed to the buyer, usually on delivery of the goods.The Group collects sales taxes and value added tax (VAT) on behalf of the government and,therefore, these are not economic benefits flowing to the Group. Hence, they are excluded from revenue.Excise duty deducted from revenue (gross) is the amount that is included in the revenue (gross) and not the entire amount of liability arising during the year.Effect of price revision on sale is accounted on the basis of acknowledgement/confirmations received from customers. 

Sales of moulds are recognised when they are homologated by the client.

§  Income from services

Job work and development charges are recognised upon full completion of the job work and development services.

§  Interest

Interest income is recognized on a time proportion basis taking into account the amount outstanding and the applicable interest rate.

§  Dividend

Companies in the group recognise dividend income when the Group's right to receive dividend is established by the reporting date.

l)        Foreign currency translation

Foreign currency transactions and balances

(i) Initial recognition

Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount, the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

(ii)Conversion

Foreign currency monetary items are retranslated using the exchange rate brvailing at the reporting date. Non-monetary items, which are measured in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of the transaction.Non-monetary items,which are measured at fair value or other similar valuation denominated in a foreign currency, are translated using the exchange rate at the date when such value was determined.

(iii)  Exchange differences

Exchange differences arising on a monetary item that, in substance, form part of the Group's net investment in a non-integral foreign operation is accumulated in a foreign currency translation reserve in the ConsolidatedFinancial Statements until the disposal of the net investment, at which time they are recognised as income or as expenses.

Exchange differences arising on the settlement of monetary items not covered above, or on reporting such monetary items of Group at rates different from those at which they were initially recorded during the period, or reported in brvious financial statements, are recognized as income or as expenses in the period in which they arise.

(iv)      Forward exchange contracts entered into to hedge foreign currency risk of an existingassets/liabilitynot intended for trading or speculation purposes

The brmium or discount arising at the inception of forward exchange contracts is amortised and recognised as an expense or income over the life of the contract. Exchange differences on such contracts are recognised in the statement of profit and loss in the period in which the exchange rates change. Any profit or loss arising on cancellation or renewal of forward exchange contract is alsorecognized as income or as expense for the year.

m)     Retirement and other employee benefits

India

Retirement benefit in the form of provident fund is a defined contribution plan. The Group has no obligation, other than the contribution payable to the provident fund. The Group recognizes contribution payable to the provident fund scheme as expenditure, when an employee renders the related service. If the contribution payable to the scheme for service received before the balance sheet date exceeds the contribution already paid, the deficit payable to the scheme is recognized as a liability after deducting the contribution already paid. If the contribution already paid exceeds the contribution due for services received before the balance sheet date, then excess is recognized as an asset to the extent that the br-payment will lead to, for example, a reduction in future payment or a cash refund.

The Parent Company and its subsidiaries and joint ventures in India provide for gratuity, a defined benefit plan (the “Gratuity Plan”) covering eligible employees. The cost of providing benefits under this plan is determined on the basis of actuarial valuation at each year-end using the projected unit credit method. Actuarial gains and losses for the said defined benefit plan is recognized in full in the yearin which they occur in the statement of profit and loss.

Accumulated leave, which is expected to be utilized within the next 12 months, is treated as short-term employee benefit. The Group measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date.

The Group treats accumulated leave expected to be carried forward beyond twelve months, as long –term employee benefit for measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the year-end. Actuarial gains/losses are immediately taken to the statement of profit and loss and are not deferred. The Group brsents the leave as a current liability in the balance sheet, to the extent it does not have an unconditional right to defer its settlement for 12 months after the reporting date. Where Group has the unconditional legal and contractual right to defer the settlement for a period exceeding 12 months, the same is brsented as non- current liability.

Europe

In case of Sandhar Technologies Barcelona S.L. according the sector social agreement (ConvenioSiderometalúrgico de la provincia de Barcelona) the company pays 2 additional payrolls in June and December. The 2 additional payments, as well as the holydays payroll are provisioned every month on accrual basis.

n)       Income taxes

Tax expense comprises current and deferred tax.Current income-tax is measured at the amount expected to be paid to the tax authoritiesin accordance with the Income-Tax Act,1961 enacted in India and tax laws brvailing in the respective tax jurisdictions where the group companies operate.The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Current income tax relating to items recognized directly in equity is recognized in equity and not in the statement of profit and loss.

Deferred income taxes reflect the impact of timing differences between taxable income and accounting income originating during the current yearand reversal of timing differences for the earlier years. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted at the reporting date. Deferred income tax relating to items recognized directly in equity is recognized in equity and not in the statement of profit and loss.

Deferred tax liabilities are recognized for all taxable timing differences.Deferred tax assets are recognized for deductible timing differences 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.In situations where the Group has unabsorbed debrciation or carry forward tax losses,all deferred tax assets are recognized only if there is virtualcertainty supported by convincing evidence that they can be realized against future taxable profits.

In the situations where any Company within the Group is entitled to a tax holiday under the Income-tax Act, 1961 enacted in India or the tax laws brvailing in the respective tax jurisdictions where it operates, no deferred tax (asset or liability) is recognized in respect of timing differences which are reversed during the tax holiday period, to the extent such Company's gross total income is subject to the deduction during the tax holiday period. Deferred tax in respect of timing differences which reverse after the tax holiday period is recognized in the yearin which the timing differences originate. However, such Company restricts recognition of deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realized. For recognition of deferred taxes, the timing differences which originate first are considered to reverse first.

At each reporting date, such Company re-assesses unrecognized deferred tax assets.It recognizes unrecognized deferred tax asset to the extent that it has become reasonably certain or virtually certain, as the case may be,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 reporting date. The group writes-down the carrying amount of deferred tax asset to the extent that it is no longer reasonably certain or virtually certain,as the case may be, 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 or virtually certain,as the case may be, that sufficient future taxable income will be available

Deferred tax assets and deferred tax liabilities are offset,if a legally enforceable right exists to set-off current tax assets against current tax liabilities and the deferred tax assets and deferred taxes relate to the same taxable entity and the same taxation authority.

Minimum alternate tax (MAT) paid in a yearis charged to the statement of profit and loss as current tax. TheGroubrcognizes MAT credit available as an asset only to the extent that there is convincing evidence that the Group will pay normal income tax during the specified period, i.e., the period for which MAT credit is allowed to be carried forward. In the yearin which the Group recognizes MAT credit as an asset in accordance with the Guidance Note on Accounting for Credit Available in respect of Minimum Alternative Tax under the Income-tax Act, 1961, the said asset is created by way of credit to the statement of profit and loss and shown as “MAT Credit Entitlement.” The Group reviews the “MAT credit entitlement” asset at each reporting date and writes down the asset to the extent the Group does not have convincing evidence that it will pay normal tax during the specified period.

o)          Segment reporting

Identification of segments

The Group is primarily engaged in the business of manufacture of auto components for two wheeler, four wheelers & commercial vehicle industry, which are governed by the same set of risk and returnsbut subject to the geographical industry trends and hence the Group’s business activities fall within a single primary business segment.The principal geographical segments are classified as India, Europe and others since there are different risks and returns of the geographies. These geographical segments are on the basis of location of entities.

Segment accounting polices

The accounting principles consistently used in the brparation of theConsolidated Financial Statements and consistently applied to record revenue and expenditure in individual segments are as set out in the note to the ConsolidatedFinancial Statements on significant accounting policies.

p)          Earnings per share

Basic earnings per share are calculated by dividing the net profit or loss for the yearattributable to equity shareholders by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year is adjusted for events of bonus issue, that have changed the number of equity shares outstanding, without a corresponding change in resources.

For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

q)          Provisions

A provision is recognized when the Group has a brsent obligation as a result of past event. 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 discounted to their brsent value and are determined based on the best estimate required to settle the obligation at the reporting date.These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.

Where the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain.The expense relating to any provision is brsented in the statement of profit and loss net of any reimbursement.

Warranty provisions

Provision for warranty related costs are recognized when the product is sold or service provided, provision is based on historical experience. The estimate of such warranty related costs is revised annually.

r)          Contingent liabilities

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Group or a brsent obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Group does not recognize a contingent liability but discloses its existence in the ConsolidatedFinancial Statements.

s)        Cash and Cash equivalents

Cash and cash equivalents for the purposes of cash flow statement comprise cash at bank and in hand and short-term investments with an original maturity of three months or less.

t)     Derivative Instruments and hedge accounting

In accordance with the ICAI announcement, derivative contracts,other than foreign currency forward contracts covered under AS 11 are marked to market on a portfolio basis,and the net loss,if any,after considering the offsetting effect of gain on the underlying hedged item, is charged to the statement of profit and loss.Net gain, if any,after considering the offsetting effect of loss on the underlying hedged item,is ignored.

u)       Measurement of EBITDA

The Group has elected to brsent earnings before interest, tax debrciation and amortization (EBITDA) as a separate line item on the face of the statement of profit and loss. The Group measures EBITDA on the basis of profit/ (loss) from continuing operations. In its measurement, the Group does not include debrciation and amortization expense, interest income, finance costs and tax expense.

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1.       Corporate Information

Sandhar Group is primarily engaged in the manufacture and assembly of automotive components such as locksets, mirrors and various sheet metal components for two wheelers and four wheelers, designing and manufacturing of moulds, dies& dies parts, machine tools and jigs & fixtures and fabrication and assembly of construction and railways products.

2.1    Summary of significant accounting policies

Change in accounting policy

Component Accounting

The entities covered in the Group were brviously not identifying components of fixed assets separately for debrciation purposes; rather, a single useful life/ debrciation rate was used to debrciate each item of fixed asset.

In case of Indian entities and in order to bring uniformity in accounting policies in case of overseas entities, these entities have changed the manner of debrciation for its fixed assets. Now, the group identifies and determines separate useful life for each major component of the fixed asset, if they have useful life that is materially different from that of the remaining asset. However, it does not have impact on the Statement of Profit &Loss for the year.

a)    Use of estimates

The brparation of Consolidated Financial Statements is in conformity with Indian GAAPrequires the management to make judgments, estimates and assumptions that effect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting year. Although these estimates are based on the management’s best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to carrying amounts of assets or liabilities in future periods.

b) Tangible fixed assets

Fixed assets are stated at cost, net of accumulated debrciation and accumulated impairment losses,(if any). The cost comprises the purchase price, borrowing costs if capitalization criteria are met and directly attributable cost of bringing the asset to its working conditions for the intended use. Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is debrciated separately. This applies mainly to components for machinery. Any trade discounts and rebates are deducted in arriving at the purchase price. The cost of tangible assets acquired in an amalgamation in the nature of purchase is their fair value as at the date of amalgamation.

Subsequent expenditure related to an item of fixed asset is added to its book value only if it increases the benefits from the existing asset beyond its brviously assessed standard of performance. All other expenses on existing fixed assets, including day-to-day repair and maintenance expenditure and cost of replacing parts, are changed to the statement of profit and loss for the year during which such expenses are incurred.

The group does not adjust exchange differences arising on translation/settlement of long-term foreign currency monetary items pertaining to the acquisition of a debrciable asset to the cost of the asset but charges the same to the statement of profit & loss in the year in which such gain/loss arises.

Gains or losses arising from de-recognition of fixed assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized.

                c)Debrciation on tangible fixed assets

The group identifies and determines cost of asset significant to the total cost of asset having useful life that is materially different from that of the remaining life. Debrciation on fixed assets is calculated on a straight-line basis using the rates arrived at based on the useful lives estimated by the management. The identified components debrciated over the useful life, the remaining asset debrciated over the useful life of the principal asset. The Group has used the following rates for its entities to provide debrciation on its fixed assets.

Nature of Fixed Asset	Category in Fixed Asset Schedule	Useful lives estimated by the management (years)
Factory Buildings	Buildings	30
Other Buildings	Buildings	60
Temporary Erection	Buildings	1
Carpeted RCC Roads	Buildings	10
Tube wells	Buildings	5
Plant and Machinery	Plant and equipment	7.50-20
Electrical Installations	Plant and equipment	10-25
Office Equipment	Office equipment	5
Racks and Bins	Plant and equipment	10
Computers	Office equipment	3-4
Furniture & Fixtures	Furniture and fixtures	10-20
Cars	Vehicles	6
Commercial Vehicles	Vehicles	8
Tools, Moulds and Dies	Plant and equipment	5-6

Leasehold land is amortized on a straight line basis over the period of the lease ranges between 70-99 years.

The management of the Parent Company has estimated, supported by independent assessment by professionals, the useful lives of the following classes of assets:

Nature of Fixed Asset	Useful lives estimated by the management (years)	Remarks
Temporary Erection	1	Lower life than brscribed in Schedule II
Computers (Servers and networks)	3
Non Commercial Vehicles	6

In case of Sandhar Technologies Barcelona S.L., the costs of acquisition of equipment, systems or installations for the elimination, reduction or control of the possible environment impacts of the business are capitalized as environment fix assets. The rest of expenses are accounted as expenses of the year. Any possible environmental liability is covered by the liability insurance.

d)       Intangible assets

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in an amalgamation in the nature of purchase is their fair value as at the date of amalgamation. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, (if any). Intangible assets are assessed for impairment whenever there is an indication that the intangible asset may be impaired.The amortization period and the amortization method are reviewed at least at each financial year end. If the expected useful life of the asset is significantly different from brvious estimates, the amortization period is changed accordingly. If there has been a significant change in the expected pattern of economic benefits from the asset, the amortization method is changed to reflect the changed pattern. Such changes are accounted for in accordance with AS-5 Net Profit or Loss for the Period, Prior Period items and changes in Accounting Policies.

§  Technical knowhow

Amounts paid towards technical know-how fees for specifically identified projects/products being development expenditure incurred towards product design is carried forward based on assessment of benefits arising from such expenditure. Such expenditure is amortised over the period of expected future sales from the related product, i.e. the estimated period of 60 to 72 months on straight line basis based on past trends, commencing from the month of commencement of commercial production.

§  Software

Software purchased by the groupare amortised on a straight line basis i.e.non-standardsoftware (customised) in four years and standard software (non-customised) in five years.

Gains or losses arising from de-recognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset andare recognized in the statement of profit and loss when the asset is derecognized.

§  Plant Supervision Cost

Plant supervision cost rebrsents expense incurred by the Joint VentureCompany, Indo Toolings Private Limited, during the br-operative period for development of tool room facilities which has been provided and owned by PithampurAuto Cluster Limited. In view of the economic benefits derived by the company, expenditure incurred on supervision of the tool room facilities up to the date of commencement of production i.e. beginning of the cessation period shall be amortized over the period of 5 years.

§  Goodwill

Goodwill arising on consolidation is amortised over a period of five years on straight line basis.

e)     Leases

Where the Group is lessee

Leases, where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as operating leases. Operating lease payments are recognized as an expense in the statement of profit and loss on a straight-line basis over the lease term.

f)        Borrowing Costs

Borrowing cost includes interest, amortization of ancillary costs incurred in connection with the arrangement of borrowings and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost.

Borrowing costs directly attributable to the acquisition,construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur.

g)    Impairment of tangible and intangible assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset's recoverable amount. An asset's recoverable amount is the higher of an asset's or cash-generating unit's (CGU) net selling price and its value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their brsent value using a br-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining net selling price, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used.

The Group bases its impairment calculation on detailed budgets and forecast calculations which are brpared separately for each of the Group’s cash-generating units to which the individual assets are allocated.

Impairment losses, including impairment on inventories are recognized in the statement of profit and loss.

After impairment,debrciation is provided on the revised carrying amount of the asset over its remaining useful life.

h)                   Government grants and subsidies

Grants and subsidies from the government are recognized when there is reasonable assurance that (i) the Group will comply with the conditions attached to them, and (ii) the grant/subsidy will be received.

When the grant or subsidy relates to revenue,it is recognized as income on a systematic basis in the statement of profit and loss over the periods necessary to match them with the related costs, which they are intended to compensate. Where the grant relates to an asset, it is recognized as deferred income and released to income in equalamounts over the expected useful life of the related asset.

Where the Group receives non-monetary grants, the asset is accounted for on the basis of its acquisition cost. In case a non-monetary asset is given free of cost, it is recognized at a nominal value.

Government grants of the nature of promoters' contribution are credited to capital reserve and treated as a part of the shareholders' funds.

i)  Investments

Investments, which are readily realizable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as long-term investments.

On initial recognition, all investments are measured at cost. The cost comprises purchase price and directly attributable acquisition charges such as brokerage, fees and duties.If an investment is acquired,or partly acquired, by the issue of shares or other securities, the acquisition cost is the fair value of the securities issued.

Current investments are carried in the Consolidated Financial Statements at lower of cost and fair value determined on an individualinvestment basis.Long-term investments are carried at cost. Howeverprovision for diminution in value is made to recognize a decline other than temporary in the value of the investments.

On disposalof an investment,the difference between its carrying amount and net disposalproceeds is charged or credited to the statement of profit and loss.

j) Inventories

Inventories are valued as under:

Raw materials, components, stores and spares

Lower of cost and net realizable value. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Companies in the group, except ITPL, adopt First-in-first-out (FIFO) method for valuing raw materials, components, stores and spares (RM & Stores). ITPL adopt weighted average method for valuing raw materials, components, stores and spares. Amount of raw materials, components, stores and spares so valued and included in the Consolidated Financial Statements is 0.31% (i.e. Rs. 3,301,404) of the total value of group inventory for Raw Material& Stores, which is immaterial for group.

Work-in-progress and finished goods

Lower of cost and net realizable value. Cost includes direct materials, labour and a portion of manufacturing overheads based on normal operating capacity. Cost of finished goods includes excise duty.Cost of work-in-progress (WIP) and finished goods (FG) is based on FIFO method except for ITPL which adopt weighted average method. Amount of work-in-progress and finished goods so valued and included in the Consolidated Financial Statementsis 4.23% (i.e. Rs. 22,208,875) of the total value of group inventory for WIP and FG, which is immaterial for group.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.

k)                   Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured.The following specific recognition criteria must also be met before revenue is recognized:

§  Sale of goods

Companies in the group recognise revenue from sale of goods when all the significant risks and rewards of ownership of the goods have been passed to the buyer, usually on delivery of the goods.The Group collects sales taxes and value added tax (VAT) on behalf of the government and,therefore, these are not economic benefits flowing to the Group. Hence, they are excluded from revenue.Excise duty deducted from revenue (gross) is the amount that is included in the revenue (gross) and not the entire amount of liability arising during the year.Effect of price revision on sale is accounted on the basis of acknowledgement/confirmations received from customers. 

Sales of moulds are recognised when they are homologated by the client.

§  Income from services

Job work and development charges are recognised upon full completion of the job work and development services.

§  Interest

Interest income is recognized on a time proportion basis taking into account the amount outstanding and the applicable interest rate.

§  Dividend

Companies in the group recognise dividend income when the Group's right to receive dividend is established by the reporting date.

l)        Foreign currency translation

Foreign currency transactions and balances

(i) Initial recognition

Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount, the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

(ii)Conversion

Foreign currency monetary items are retranslated using the exchange rate brvailing at the reporting date. Non-monetary items, which are measured in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of the transaction.Non-monetary items,which are measured at fair value or other similar valuation denominated in a foreign currency, are translated using the exchange rate at the date when such value was determined.

(iii)  Exchange differences

Exchange differences arising on a monetary item that, in substance, form part of the Group's net investment in a non-integral foreign operation is accumulated in a foreign currency translation reserve in the ConsolidatedFinancial Statements until the disposal of the net investment, at which time they are recognised as income or as expenses.

Exchange differences arising on the settlement of monetary items not covered above, or on reporting such monetary items of Group at rates different from those at which they were initially recorded during the period, or reported in brvious financial statements, are recognized as income or as expenses in the period in which they arise.

(iv)      Forward exchange contracts entered into to hedge foreign currency risk of an existingassets/liabilitynot intended for trading or speculation purposes

The brmium or discount arising at the inception of forward exchange contracts is amortised and recognised as an expense or income over the life of the contract. Exchange differences on such contracts are recognised in the statement of profit and loss in the period in which the exchange rates change. Any profit or loss arising on cancellation or renewal of forward exchange contract is alsorecognized as income or as expense for the year.

m)     Retirement and other employee benefits

India

Retirement benefit in the form of provident fund is a defined contribution plan. The Group has no obligation, other than the contribution payable to the provident fund. The Group recognizes contribution payable to the provident fund scheme as expenditure, when an employee renders the related service. If the contribution payable to the scheme for service received before the balance sheet date exceeds the contribution already paid, the deficit payable to the scheme is recognized as a liability after deducting the contribution already paid. If the contribution already paid exceeds the contribution due for services received before the balance sheet date, then excess is recognized as an asset to the extent that the br-payment will lead to, for example, a reduction in future payment or a cash refund.

The Parent Company and its subsidiaries and joint ventures in India provide for gratuity, a defined benefit plan (the “Gratuity Plan”) covering eligible employees. The cost of providing benefits under this plan is determined on the basis of actuarial valuation at each year-end using the projected unit credit method. Actuarial gains and losses for the said defined benefit plan is recognized in full in the yearin which they occur in the statement of profit and loss.

Accumulated leave, which is expected to be utilized within the next 12 months, is treated as short-term employee benefit. The Group measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date.

The Group treats accumulated leave expected to be carried forward beyond twelve months, as long –term employee benefit for measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the year-end. Actuarial gains/losses are immediately taken to the statement of profit and loss and are not deferred. The Group brsents the leave as a current liability in the balance sheet, to the extent it does not have an unconditional right to defer its settlement for 12 months after the reporting date. Where Group has the unconditional legal and contractual right to defer the settlement for a period exceeding 12 months, the same is brsented as non- current liability.

Europe

In case of Sandhar Technologies Barcelona S.L. according the sector social agreement (ConvenioSiderometalúrgico de la provincia de Barcelona) the company pays 2 additional payrolls in June and December. The 2 additional payments, as well as the holydays payroll are provisioned every month on accrual basis.

n)       Income taxes

Tax expense comprises current and deferred tax.Current income-tax is measured at the amount expected to be paid to the tax authoritiesin accordance with the Income-Tax Act,1961 enacted in India and tax laws brvailing in the respective tax jurisdictions where the group companies operate.The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Current income tax relating to items recognized directly in equity is recognized in equity and not in the statement of profit and loss.

Deferred income taxes reflect the impact of timing differences between taxable income and accounting income originating during the current yearand reversal of timing differences for the earlier years. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted at the reporting date. Deferred income tax relating to items recognized directly in equity is recognized in equity and not in the statement of profit and loss.

Deferred tax liabilities are recognized for all taxable timing differences.Deferred tax assets are recognized for deductible timing differences 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.In situations where the Group has unabsorbed debrciation or carry forward tax losses,all deferred tax assets are recognized only if there is virtualcertainty supported by convincing evidence that they can be realized against future taxable profits.

In the situations where any Company within the Group is entitled to a tax holiday under the Income-tax Act, 1961 enacted in India or the tax laws brvailing in the respective tax jurisdictions where it operates, no deferred tax (asset or liability) is recognized in respect of timing differences which are reversed during the tax holiday period, to the extent such Company's gross total income is subject to the deduction during the tax holiday period. Deferred tax in respect of timing differences which reverse after the tax holiday period is recognized in the yearin which the timing differences originate. However, such Company restricts recognition of deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realized. For recognition of deferred taxes, the timing differences which originate first are considered to reverse first.

At each reporting date, such Company re-assesses unrecognized deferred tax assets.It recognizes unrecognized deferred tax asset to the extent that it has become reasonably certain or virtually certain, as the case may be,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 reporting date. The group writes-down the carrying amount of deferred tax asset to the extent that it is no longer reasonably certain or virtually certain,as the case may be, 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 or virtually certain,as the case may be, that sufficient future taxable income will be available

Deferred tax assets and deferred tax liabilities are offset,if a legally enforceable right exists to set-off current tax assets against current tax liabilities and the deferred tax assets and deferred taxes relate to the same taxable entity and the same taxation authority.

Minimum alternate tax (MAT) paid in a yearis charged to the statement of profit and loss as current tax. TheGroubrcognizes MAT credit available as an asset only to the extent that there is convincing evidence that the Group will pay normal income tax during the specified period, i.e., the period for which MAT credit is allowed to be carried forward. In the yearin which the Group recognizes MAT credit as an asset in accordance with the Guidance Note on Accounting for Credit Available in respect of Minimum Alternative Tax under the Income-tax Act, 1961, the said asset is created by way of credit to the statement of profit and loss and shown as “MAT Credit Entitlement.” The Group reviews the “MAT credit entitlement” asset at each reporting date and writes down the asset to the extent the Group does not have convincing evidence that it will pay normal tax during the specified period.

o)          Segment reporting

Identification of segments

The Group is primarily engaged in the business of manufacture of auto components for two wheeler, four wheelers & commercial vehicle industry, which are governed by the same set of risk and returnsbut subject to the geographical industry trends and hence the Group’s business activities fall within a single primary business segment.The principal geographical segments are classified as India, Europe and others since there are different risks and returns of the geographies. These geographical segments are on the basis of location of entities.

Segment accounting polices

The accounting principles consistently used in the brparation of theConsolidated Financial Statements and consistently applied to record revenue and expenditure in individual segments are as set out in the note to the ConsolidatedFinancial Statements on significant accounting policies.

p)          Earnings per share

Basic earnings per share are calculated by dividing the net profit or loss for the yearattributable to equity shareholders by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year is adjusted for events of bonus issue, that have changed the number of equity shares outstanding, without a corresponding change in resources.

For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

q)          Provisions 

A provision is recognized when the Group has a brsent obligation as a result of past event. 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 discounted to their brsent value and are determined based on the best estimate required to settle the obligation at the reporting date.These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.

Where the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain.The expense relating to any provision is brsented in the statement of profit and loss net of any reimbursement.

Warranty provisions

Provision for warranty related costs are recognized when the product is sold or service provided, provision is based on historical experience. The estimate of such warranty related costs is revised annually.

r)          Contingent liabilities

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Group or a brsent obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Group does not recognize a contingent liability but discloses its existence in the ConsolidatedFinancial Statements.

s)        Cash and Cash equivalents

Cash and cash equivalents for the purposes of cash flow statement comprise cash at bank and in hand and short-term investments with an original maturity of three months or less.

t)     Derivative Instruments and hedge accounting

In accordance with the ICAI announcement, derivative contracts,other than foreign currency forward contracts covered under AS 11 are marked to market on a portfolio basis,and the net loss,if any,after considering the offsetting effect of gain on the underlying hedged item, is charged to the statement of profit and loss.Net gain, if any,after considering the offsetting effect of loss on the underlying hedged item,is ignored.

u)       Measurement of EBITDA

The Group has elected to brsent earnings before interest, tax debrciation and amortization (EBITDA) as a separate line item on the face of the statement of profit and loss. The Group measures EBITDA on the basis of profit/ (loss) from continuing operations. In its measurement, the Group does not include debrciation and amortization expense, interest income, finance costs and tax expense.

d)       Retirement and other employee benefits

India

Retirement benefit in the form of provident fund is a defined contribution plan. The Group has no obligation, other than the contribution payable to the provident fund. The Group recognizes contribution payable to the provident fund scheme as expenditure, when an employee renders the related service. If the contribution payable to the scheme for service received before the balance sheet date exceeds the contribution already paid, the deficit payable to the scheme is recognized as a liability after deducting the contribution already paid. If the contribution already paid exceeds the contribution due for services received before the balance sheet date, then excess is recognized as an asset to the extent that the br-payment will lead to, for example, a reduction in future payment or a cash refund.

The Parent Company and its subsidiaries and joint ventures in India provide for gratuity, a defined benefit plan (the “Gratuity Plan”) covering eligible employees. The cost of providing benefits under this plan is determined on the basis of actuarial valuation at each year-end using the projected unit credit method. Actuarial gains and losses for the said defined benefit plan is recognized in full in the yearin which they occur in the statement of profit and loss.

Accumulated leave, which is expected to be utilized within the next 12 months, is treated as short-term employee benefit. The Group measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date.

The Group treats accumulated leave expected to be carried forward beyond twelve months, as long –term employee benefit for measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the year-end. Actuarial gains/losses are immediately taken to the statement of profit and loss and are not deferred. The Group brsents the leave as a current liability in the balance sheet, to the extent it does not have an unconditional right to defer its settlement for 12 months after the reporting date. Where Group has the unconditional legal and contractual right to defer the settlement for a period exceeding 12 months, the same is brsented as non- current liability.

Europe

In case of Sandhar Technologies Barcelona S.L. according the sector social agreement (ConvenioSiderometalúrgico de la provincia de Barcelona) the company pays 2 additional payrolls in June and December. The 2 additional payments, as well as the holydays payroll are provisioned every month on accrual basis.