3. The equity investments in a joint venture company can be transferred / pledged / disposed off / encumbered only with the consent of banks / financial institutions who have given loans to the joint venture company. The equity investments in certain subsidiaries and associates can be disposed off only with the consent of banks / financial institutions who have given loans to these companies.

5. During the year, Switch Mobility Automotive Limited, a step-down subsidiary of the Company, settled the consideration on transfer of Electric vehicle business along with the interest accrued and working capital adjustments thereon, aggregating to ' 301 crores by issuing 3,01,00,000 8.5% Non-Cumulative Non-Convertible Redeemable Preference Shares (NCRPS), at a nominal value and issue price of ' 100/- each. Consequently, the Company recognised a deemed equity portion on fair valuation of the aforementioned preference shares of Switch Mobility Automotive Limited, being a transaction between common control entities. Also refer Note 3.8.

6. Number of shares held by the Company includes joint holding / beneficial interest.

7. The Company holds 9.09% of Class A units in the special limited partnership.

8. The investments made by the Company is in compliance with section 180 and 186 with respect to layers of investment permitted under the Companies Act, 2013.

9. Hinduja Leyland Finance Limited (HLFL), a subsidiary of the Company has made an application to BSE Limited (Stock Exchange) for the proposed Merger with Nxtdigital Limited on November 25, 2022 and the said application is under process. HLFL is also in the process of filing application to Competition Commission of India (CCI) for the proposed merger and in this regard had a pre-filing consultation meetings with CCI during March / April 2023. Nxtdigital Limited (Transferee Company, whose name has been changed to NDL Ventures Limited w.e.f. April 20, 2023) has also submitted application to Bombay Stock Exchange (BSE) and National Stock Exchange of India Ltd (NSE) where its shares are listed and for merger they will be also filing application to CCI for the proposed merger. NDL Ventures Limited has also submitted application to RBI for registration as NBFC on December 23, 2022.

10. The Company has recorded a gain on fair valuation of equity investment in Hinduja Energy (India) Limited (HEIL) amounting to ' 65.67 crores (March 31, 2022: loss on fair valuation ' 107.13 crores) under exceptional item based on business plan of HEIL, external factors and the independent valuers report.

During the year ended March 31, 2022, the Company has recorded an impairment loss on equity investment in its subsidiary viz Albonair GmbH (Cash Generating Unit (CGU)) amounting to ' 239.36 crores based on future business plan, internal and external factors and the independent valuers report.

The Company has used discounted cash flow method for arriving at the value in use of the CGU. The discounted cash flow method uses post tax discount rate ranging between 10% - 20% for current and previous years for the aforementioned entities. Both pre tax discount rate and post tax discount rate gives the same recoverable amount.

In the meeting held on November 12, 2021, the Board of Directors of the Company had approved the transfer of “Electric Vehicle Mobility As A Service (EMAAS)" business to Ohm Global Mobility Private Limited (step down Subsidiary of the Company) with effect from October 1, 2021. The Company has since received the regulatory approvals and accordingly classified the associated assets and liabilities as “Held for sale". The provision relating to EMAAS business classified as assets held for sale is shown under Note 2.8.

The fair value of the EMAAS business was determined using the Income approach. In this approach, the discounted cash flow method is used to capture the present value of the expected future economic benefits to be derived from the business. This is a level 3 measurement as per the fair value hierarchy set out in fair value measurement disclosures. The key inputs are:

a) the estimated cash flows; and

b) the discount rate to compute the present value of the future expected cash flows

2. Shares issued in preceding 5 years for consideration other than cash

Hinduja Foundries Limited (amalgamating company) merged with the Company effective October 1, 2016 pursuant to the order received from National Company Law Tribunal on April 24, 2017. Consequently, 80,658,292 equity shares of ' 1 each of the Company has been allotted on June 13, 2017 as fully paid up to the shareholders of the amalgamating company.

3. As on March 31, 2023, there are 35,29,18,140 (March 2022: 35,31,58,140) equity shares representing the outstanding Global Depository Receipts (GDRs). The balance GDRs have been converted into equity shares.

4. Shares held by the Holding Company

Hinduja Automotive Limited, the holding company, holds 1,16,43,32,742 (March 2022: 1,16,43,32,742) Equity shares and 54,86,669 (March 2022: 54,86,669) Global Depository Receipts (GDRs) equivalent to 32,92,00,140 (March 2022: 32,92,00,140) Equity shares of ' 1 (March 2022: ' 1) each aggregating to 50.87% (March 2022: 50.88%) of the total share capital.

5. Shareholders other than the Holding Company holding more than 5% of the equity share capital

There are no shareholders holding more than 5% of the equity share capital of the Company other than the Holding Company as at March 31, 2023 and March 31, 2022.

6. Rights, preferences and restrictions in respect of equity shares and GDRs issued by the Company

a) The Equity shareholders are entitled to receive dividends as and when declared; a right to vote in proportion to holding etc. and their rights, preferences and restrictions are governed by / in terms of their issue under the provisions of the Companies Act, 2013.

b) The rights, preferences and restrictions of the GDR holders are governed by the terms of their issue, and the provisions of the Companies Act, 2013. Each GDR holder is entitled to receive 60 equity shares [March 2022: 60 equity shares] of ' 1 each, per GDR, and their voting rights can be exercised through the Depository.

7. The Company allotted 6,00,000 (March 2022: Nil) equity shares pursuant to the exercise of options under Employee Stock Option Plan Scheme. For Information relating to Employees Stock Option Plan Scheme including details of options outstanding as at March 31, 2023 - Refer Note 3.4.

A. Capital reserve represents reserve created pursuant to the business combinations.

B. Securities premium represents premium received on equity shares issued, which can be utilised only in accordance with the provisions of the Companies Act, 2013 (the Act) for specified purposes.

C. Capital redemption reserve represent the reserve arising pursuant to the business combination during 2016-17.

D. Share options outstanding account relates to stock options granted by the Company to employees under an employee stock options plan. (Refer Note 3.4)

E. General reserve is created from time to time by transferring profits from retained earnings and can be utilised for purposes such as dividend payout, bonus issue, etc.

F. Cash flow hedge reserve represents the cumulative effective portion of gains or losses arising on changes in fair value of hedging instruments entered into for cash flow hedges. The cumulative gain or loss arising on changes in fair value of the hedging instruments that are recognised and accumulated in this reserve are reclassified to profit or loss only when the hedged transaction affects the profit or loss.

G. In respect of the year ended March 31, 2023, the Board of Directors has declared a dividend of ' 2.60 per equity share (March 2022: ' 1.00 per equity share) subject to approval by shareholders at the ensuing Annual General Meeting after which dividend will be accounted and paid out of the retained earnings available for distribution in accordance with the provisions of the Act. Revaluation reserve amounting to ' 1,210.21 crores transferred to retained earnings on transition date may not be available for distribution.

1. These are carried at amortised cost.

2. Refer Note 1.21 for current maturities of non-current borrowings.

3. Refer Note 3.11 for security and terms of the borrowing.

4. The Company has been authorised to issue 36,500,000 (March 2022: 36,500,000) Non-Cumulative Redeemable Non-Convertible Preference Shares of ' 10 each valuing ' 36.50 crores (March 2022: ' 36.50 crores) and 77,000,000 (March 2022: 77,000,000) Non-Convertible Redeemable Preference Shares of ' 100 each valuing ' 770.00 crores (March 2022: ' 770.00 crores). No preference shares has been issued during the year.

5. Refer Note 3.6 for details on debt covenants.

6. The Company has not obtained any fresh term loans during the year. For the previous year the borrowings were utilized for the purposes as mentioned in the respective agreements.

7. The Company is not declared as a wilful defaulter by any bank or financial institution or government or any government authority.

3.2 Retirement benefit plans3.2.1 Defined contribution plans

Payments to defined contribution plans i.e., Company's contribution to superannuation fund, employee state insurance and other funds are determined under the relevant schemes and / or statute and charged to the Statement of Profit and Loss in the period of incurrence when the services are rendered by the employees.

The total expense recognised in profit or loss of ' 28.40 crores (2021-22: ' 25.6 crores) represents contribution paid/ payable to these schemes by the Company at rates specified in the schemes.

3.2.2 Defined benefit plans

The Company has an obligation towards gratuity as per payment of gratuity act, 1972, a defined benefit retirement plan covering eligible employees. The plan provides for a lump-sum payment to vested employees at the time of retirement, separation, death while in employment or on termination of employment of an amount equivalent to 15 days salary payable for each completed year of service. Vesting occurs upon completion of five years of service. The Company accounts for the liability for gratuity benefits payable in the future based on an actuarial valuation. The Company makes annual contributions through trusts to a funded gratuity scheme administered by the Life Insurance Corporation of India.

Eligible employees of the Company are entitled to receive benefits in respect of provident fund, a defined benefit plan, in which both employees and the Company make monthly contributions at a specified percentage of the covered employees' salary. The contributions are made to the provident fund and pension fund set up as irrevocable trusts by the Company. The interest rates declared and credited by trusts to the members have been higher than / equal to the statutory rate of interest declared by the Central Government.

Company's liability towards gratuity (funded), provident fund, other retirement benefits and compensated absences are actuarially determined at the end of each reporting period using the projected unit credit method as applicable.

These plans typically expose the Company to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk.

The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation, since the above analysis are based on change in an assumption while holding other assumptions constant. In practice, it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of each reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognised in the balance sheet.

There was no change in the methods and assumptions used in preparing the sensitivity analysis from previous year.

The Company expects to make a contribution of ' 35.00 crores (March 2022: ' 36.00 crores) to the defined benefit plans (gratuity - funded) during the next financial year.

The average duration of the benefit obligation (gratuity) is 7.2 years (March 2022: 7.5 years).

3.2.9 Provident Fund Trust - actuarial valuation of interest guarantee :

Ashok Leyland has an obligation to fund any shortfall on the yield of the trust's investments over the administered interest rates on an annual basis. The administered rates are determined annually predominantly considering the social rather than the economic factors and in most cases, the actual return earned by the Company has been higher in the past years. The actuary has provided a valuation for provident fund liabilities on the basis of guidance issued by the Actuarial Society of India and based on the assumptions provided below.

3.4 Share based payments3.4.1 Details of employees stock option plan of the Company

The Company has Employees Stock Options Plan (ESOP) scheme granted to employees which has been approved by the shareholders of the Company. In accordance with the terms of the plan, eligible employees may be granted options to purchase equity shares of the Company if they are in service on exercise of the grant. Each employee share option converts into one equity share of the Company on exercise at the exercise price as per the scheme. The options carry neither rights to dividend nor voting rights. Options can be exercised at any time from the date of vesting to the date of their expiry.

3.4.2 Fair value of share options granted during the year

There are no options granted during the year. The weighted average fair value of the stock options granted during the financial year is ' Nil (2021-22: ' Nil). Options granted in the earlier years were priced using a binomial option pricing model. Where relevant, the expected life used in the model has been adjusted based on Management's best estimate for the effects of non-transferability, exercise restrictions and behavioural considerations. Expected volatility is based on the historical share price volatility.

3.4.4 Share options vested but not exercised during the year

ESOP 3: 2,00,000 options (Year ended March 31, 2022: ESOP 3: 4,00,000 options), ESOP 5: 44,17,500 (Year ended March 31, 2022: ESOP 5: Nil options)

3.4.5 Share options outstanding at the end of the year

The share options outstanding at the end of the year had a weighted average exercise price of ' 90.74 (as at March 31, 2022: ' 90.41) and a weighted average remaining contractual life of 5.71 years (as at March 31, 2022: 6.58 years).

3.5 Lease arrangements Company as lessee

Company has applied following practical expedients for the purpose of lease on initial recognition :

1) Single discount rate has been applied for leases with same characteristics.

2) Non - lease component which are difficult to be separated from the lease components are taken as the part of lease calculation.

3) Short term leases i.e. leases having lease term of 12 months or less had been ignored for the purpose of calculation of right-of-use asset. Expenses for the year ended March 31, 2023 includes lease expense classified as Short term lease expenses aggregating to ' 15.54 crores (March 31, 2022: ' 18.11 crores) and variable lease payments aggregating to ' 63.55 crores (March 31, 2022: ' 64.82 crores) which are not required to be recognised as part of the practical expedient under Ind AS 116 'Leases' mentioned above.

3.6.1 Capital management

The Company manages its capital to ensure that it will be able to continue as going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance.

The Company determines the amount of capital required on the basis of annual master planning and budgeting and five year's corporate plan for working capital, capital outlay and long-term product and strategic involvements. The funding requirements are met through equity, internal accruals and a combination of both long-term and short-term borrowings.

The quarterly returns or statements of current assets filed by the Company with Banks and Financial Institutions are in agreement with the books of account.

The Company has complied with covenants given under the facility agreements executed for its borrowings.

3.6.2 Financial risk management

In course of its business, the Company is exposed to certain financial risks that could have significant influence on the Company's business and operational / financial performance. These include market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk.

The Board of Directors reviews and approves risk management framework and policies for managing these risks and monitors suitable mitigating actions taken by the management to minimise potential adverse effects and achieve greater predictability to earnings.

In line with the overall risk management framework and policies, the treasury function provides services to the business, monitors and manages through an analysis of the exposures by degree and magnitude of risks.

The Company uses derivative financial instruments to hedge risk exposures in accordance with the Company's policies as approved by the board of directors.

(A) Market risk

Market risk represent changes in market prices, liquidity and other factors that could have an adverse effect on realisable fair values or future cash flows to the Company. The Company's activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates as future specific market changes cannot be normally predicted with reasonable accuracy.

(1) Foreign currency risk management:

The Company undertakes transactions denominated in foreign currencies and thus it is exposed to exchange rate fluctuations. The Company actively manages its currency rate exposures, arising from transactions entered and denominated in foreign currencies, through a centralised treasury division and uses derivative instruments such as foreign currency forward contracts and currency swaps to mitigate the risks from such exposures. The use of derivative instruments is subject to limits and regular monitoring by Management.

The carrying amounts of the Company's foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as follows:

Movement in the functional currencies of the various operations of the Company against major foreign currencies may impact the Company's revenues from its operations. Any weakening of the functional currency may impact the Company's export proceeds, import payments and cost of borrowings.

The foreign exchange rate sensitivity is calculated for each currency by aggregation of the net foreign exchange rate exposure of a currency and a parallel foreign exchange rates shift in the foreign exchange rates of each currency by 2%, which represents Management's assessment of the reasonably possible change in foreign exchange rates.

The sensitivity of profit or loss to changes in the exchange rates arises mainly from foreign currency denominated financial instruments and the impact on the other components of equity arises from foreign currency forward contracts designated as cash flow hedges. The following table details the Company's sensitivity movement in the increase / decrease in foreign currencies exposures (net):

Included in the balance sheet under 'Current - other financial assets' and 'Current - other financial liabilities'. [Refer Notes 1.12 and 1.23]

# amount is below rounding off norms adopted by the Company.

(2) Interest rate risk management:

The Company is exposed to interest rate risk pertaining to funds borrowed at both fixed and floating interest rates. The risk is managed by the Company by maintaining an appropriate mix between fixed and floating rate borrowings by the use of interest rate swap contracts. Hedging activities are evaluated regularly to align with interest rate views and defined risk appetite, ensuring the most cost-effective hedging strategies. Further, in appropriate cases, the Company also effects changes in the borrowing arrangements to convert floating interest rates to fixed interest rates.

The sensitivity analysis below has been determined based on the exposure to interest rates at the end of the reporting period. For floating rate liabilities, the analysis is prepared assuming that the amount of the liability as at the end of the reporting period was outstanding for the whole year. A 25 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents Management's assessment of the reasonably possible change in interest rates.

If interest rates had been 25 basis points higher/ lower, the Company's profit / loss for the year ended March 31, 2023 would decrease / increase by ' 0.77 crores (March 31, 2022 decrease / increase by ' 0.69 crores). This is mainly attributable to the Company's exposure to interest rates on its variable rate borrowings.

(3) Foreign currency and interest rate sensitivity analysis for swap contracts:

The Company has taken foreign currency and interest rate swap (FCIRS) contracts for hedging its foreign currency and interest rate risks related to certain external commercial borrowings. The mark-to-market gain / (loss) as at March 31, 2023 is ' 96.93 crores (March 31, 2022: ' 39.89 crores). If the foreign currency movement is 2% higher / lower and interest rate movement is 200 basis points higher / lower with all other variables remaining constant, the Company's profit / loss for the year ended March 31, 2023 would approximately decrease/ increase by ' Nil (year ended March 31, 2022: decrease / increase by ' Nil).

(4) Equity price risk:

Equity price risk is related to the change in market reference price of the investments in quoted equity securities. The fair value of some of the Company's investments exposes the Company to equity price risks. In general, these securities are not held for trading purposes.

(B) Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The Company's exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties.

Trade receivables consist of a large number of customers, spread across diverse industries and geographical areas. Ongoing credit evaluation is performed on the financial condition of accounts receivable and, where appropriate, credit guarantee cover is taken. The Company operates predominantly on cash and carry basis excepting sale to State Transport Undertaking (STU), Government project customers based on tender terms and certain export / domestic customers which are on credit basis. The average credit period is in the range of 7 days to 90 days. However, in select cases, credit is extended which is backed by Security deposit/ Bank guarantee/ Letter of credit and other forms. The Company's trade and other receivables consists of a large number of customers, across geographies, hence the Company is not exposed to concentration risk except in case of a STU.

The Company makes a loss allowance using simplified approach for expected credit loss (ECL) and on a case to case basis. ECL are the weighted average of credit losses with the expected risk of default occurring as the weights (historically not significant). ECL is difference between all contractual cash flows that are due to the Company in accordance with the contract and all the cash flows that the Company expects to receive.

Expected credit loss for other than trade receivables has been assessed and based on life-time expected credit loss, loss allowance provision has been made. The ageing on trade receivable is given in Note 1.10.

The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with high credit-ratings.

(C) Liquidity risk

Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company has obtained fund and non-fund based working capital limits from various banks. Furthermore, the Company has access to funds from debt markets through commercial paper programs, non-convertible debentures, and other debt instruments. The Company invests its surplus funds in bank fixed deposit and mutual funds, which carry minimal mark to market risks.

3.6.4 Fair value measurements:

(A) Financial assets and liabilities that are not measured at fair values but in respect of which fair values are as follows:

The carrying amounts of trade receivables, trade payables, capital creditors and cash and cash equivalents are considered to be the same as their fair values, due to their short-term nature. The fair values for loans, security deposits were calculated based on cash flows discounted using a current lending rate. The fair values of non-current borrowings are based on discounted cash flows using a current borrowing rate. For financial assets and liabilities that are measured at fair value, the carrying amounts are equal to the fair values.

(B) Financial assets and financial liabilities that are measured at fair value on a recurring basis as at the end of each reporting period:

Some of the Company's financial assets and financial liabilities are measured at fair value at the end of each reporting period. The following table gives information about how the fair values for material financial assets and material financial liabilities have been determined (in particular, the valuation technique(s) and inputs used).

1) There were no transfers between Level 1, 2 and 3 during the year.

2) Other things remaining constant, a 5% increase / decrease in the WACC or discount rate used would decrease / increase the fair value of

the unquoted preference shares by ' 83.66 crores / ' 165.18 crores (as at March 31, 2022: ' 14.61 crores / ' 20.27 crores).

3) Other things remaining constant, a 50 basis points increase / decrease in the WACC or discount rate used would decrease / increase the

fair value of the unquoted equity instruments by ' 14.98 crores / ' 14.37 crores (as at March 31, 2022: ' 12.96 crores / ' 13.70 crores).

4) Other things remaining constant, a 5% increase / decrease in the revenue would increase / decrease the fair value of the unquoted equity

instruments by ' 48.61 crores / ' 49.59 crores (as at March 31, 2022: ' 44.82 crores / ' 44.76 crores).

5) Gain / loss recognised in profit or loss included in other income (Refer Note 2.2) arising from fair value measurement of Level 3 financial assets is a gain of ' 6.34 crores (as at March 31, 2022: gain of ' 1.44 crores). The Company has also recorded a fair value gain of ' 65.67 crores (March 31, 2022: loss of ' 107.13 crores) in equity investment of Hinduja Energy India Limited and presented the same under exceptional items in Note 2.8.

Guarantees given during the year amounts to ' 463.39 crores (2022: ' 140.97 crores), which are given for the borrowings availed by Switch Mobility Limited, UK (March 31, 2022: Optare Pic and Ashley Alteams India Limited). Guarantees released during the year amounts to ' 3.12 crores (2022: ' 14.70 crores), pertaining to borrowing availed by Ashley Alteams India Limited.

The terms are in compliance with Section 186(7) of the Companies Act, 2013.

$ These relates to issues of deductibility and taxability in respect of which the Company is in appeal and inclusive of the effect of similar matters in respect of assessments remaining to be completed.

# These have been disputed by the Company on account of issues of applicability and classification.

Future cash outflows in respect of the above are determinable only on receipt of judgement / decisions pending with various forums / authorities. Notes :

The Company evaluated the impact of the recent Supreme Court Judgement in relation to non-exclusion of certain allowances from the definition of “basic wages" of the relevant employees for the purposes of determining contribution to provident fund under the Employees' Provident Funds & Miscellaneous Provisions Act, 1952 and the Management believes that further clarity is required on this matter for the time period prior to 31st March 2019. However, it is not likely to have a significant impact and accordingly, no provision has been made in these Financial Statements.

The Company is involved in various claims and actions in the ordinary course of business. The Company accrues a liability when a loss is considered probable and the amount can be reasonably estimated. In the opinion of the management the outcome of any existing claims, legal and regulatory proceedings, if decided adversely, is not expected to have a material adverse effect on the business, financial condition, results of operations and cash flows of the Company based on the current position of such claims / legal actions.

i) Financial support given to certain subsidiaries, joint ventures, etc.

(including undertaking provided to customers of certain subsidiaries).

ii) Lock-in commitment in shareholders agreement [Refer Note 1.3]

The outflow in respect of the above is not practicable to ascertain in view of the uncertainties involved. # Amount is below rounding off norms adopted by the Company.

(i) TL -12 - Term loan was secured by way of first ranking charge on the specified plant and machinery of a manufacturing unit of the Company located at Pantnagar to the extent of ' 400 crores.

(ii) TL - 13 - Term loan was secured by way of first ranking charge on the specified plant and machinery of the manufacturing units of the Company located at Hosur to the extent of 1.25 times of the amount of loan.

(iii) TL - 14 - Term loan was secured by way of exclusive charge on the specified plant and machinery and other moveable fixed assets of a manufacturing unit of the Company located at Pantnagar to the extent of 1.10 times of the amount of loan.

(iv) TL - 15 - Term loan was secured by way of exclusive charge on the specified plant and machinery and other moveable fixed assets of the manufacturing units of the Company located at Pantnagar and Hosur to the extent of 1.25 times of the amount of loan.

(v) TL -16 - Term loan was secured by way of first ranking charge on the specified plant and machinery of the manufacturing units of the Company located at Chennai to the extent of ' 200 crores.

(vi) TL -17 - Term loan was secured by way of first ranking charge on the specified plant and machinery of the manufacturing units of the Company located at Hosur and Bhandara to the extent of 1.10 times of the amount of loan.

(vii) NCD - Series 1 - 8% AL 2023 are secured by way of first ranking charge over specific plant and machinery of manufacturing and research and development units situated at Ennore, Pantnagar, Hosur and Vellivoyalchavadi and specific immoveable properties of manufacturing unit at Ennore to the extent of 1.10 times of the amount of debentures and interest accrued thereon.

(viii) NCD - Series 2 - 7.65% AL 2023 are secured by way of First Ranking charge over specific plant and machinery of the manufacturing units situated at Hosur and Alwar and specific immoveable properties situated at manufacturing unit at Ennore to the extent of 1.10 times of the amount of debentures and interest accrued thereon.

(ix) NCD - Series 3 - 7.30% AL 2027 are secured by way of First Ranking charge over specific plant and machinery of manufacturing unit situated at Hosur to the extent of 1.10 times of the amount of debentures and interest accrued thereon.

(x) The above SIPCOT soft loan are secured by way of first charge on the fixed assets created and the same shall be on pari passu with other first charge holders of LCV division.

The company has registered the charges / satisfaction of charges with the Registrar of Companies within the stipulated period.

Allocation of goodwill to cash-generating units

Pursuant to business combination, Light Commercial Vehicle division (LCV division) is identified as a separate cash generating unit. Goodwill has been allocated for impairment testing purposes to this cash-generating unit.

Cash-generating units to which goodwill is allocated are tested for impairment annually at each reporting date, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to that unit. The Company has used post tax discount rate of 17% (March 2022: 16%) and terminal growth rate of 3% (March 2022: 3%) for the purpose of impairment testing based on the next five years projected cash flows. Both pre tax and post tax discount rates give the same recoverable amount. The Company believes that any reasonable further change in the key assumptions on which recoverable amount is based, would not cause the carrying amount to exceed its recoverable amount.

Also Refer Notes 1B.16 and 1C.

3.18 The Company does not have any transactions with struck off companies under Companies Act, 2013 or Companies Act, 1956, during the year.

3.19 The Company has not advanced or loaned or invested funds to any other person or entities, including foreign entities (Intermediaries) with the understanding that the Intermediary shall:

a. directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or

b. provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries

The Company has not received any fund from any person or entity, including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:

a. directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or

b. provide any guarantee, security or the like on behalf of the ultimate beneficiaries.

3.20 No proceedings have been initiated on or are pending against the Company for holding benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and Rules made thereunder.

3.21 The Company has complied with the number of layers prescribed under the Companies Act.

3.22 There is no income surrendered or disclosed as income during the current or previous year in the tax assessments under the Income Tax Act, 1961, that has not been recorded in the books of account.

3.23 The Company has not traded or invested in crypto currency or virtual currency during the current or previous year.

3.24 The Code on Social Security, 2020 ('Code') relating to employee benefits during employment and post-employment benefits received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the date on which the certain provisions of the Code will come into effect and the rules thereunder has not been notified. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period the Code becomes effective.

3.25 Impairment loss reversal in Optare PLC

The Company holds 91.63% equity stake in Optare Plc and has invested ' 931.58 crores till March 31, 2022. Optare Plc has around 98.90% stake in Switch Mobility Limited, UK and Switch Mobility Limited, UK in turn holds 100% stake in Switch Automotive Mobility Limited (India), with focus on manufacture and sale of electric commercial vehicles globally. Till March 31, 2021, the Company has recognised an impairment of ' 781.19 Crores against the equity investment made in Optare Plc.

As at March 31, 2022, the Company identified certain triggers for reversal of the previously recorded impairment based on both external and internal indicators.

The key drivers for this improved outlook include:

- Improved market conditions especially on account of growing demand for adoption of electric vehicles

- Product positioning in markets where it did not have a presence earlier

- Global Sourcing and Cost reduction initiatives

- Restructuring of operations

Considering factors above, the recoverable amount has been determined using fair value less costs of disposal which is based on recent equity infusion by an external investor in Switch Mobility Limited, UK at a valuation of approximately $ 1.6 Bn and the interest shown by potential investors in Switch Mobility Limited, UK which indicates that the fair value of the investment is significantly higher than the cost of investment in the books.

The fair value of investment determined is also supported by a report obtained from an independent valuer. The fair value less cost of disposal has been determined using a discounted cash flow model, which requires the use of assumptions. The valuation is considered to be Level 3 in the fair value hierarchy. The calculations include cash flow projections based on financial budgets for the next nine years, approved by the Board. Cashflows beyond the nine years period are extrapolated using the estimated growth rate of 1.5% and post-tax discount rate of 15% has been used. Other key assumptions include revenue growth rate and EBITDA margins. The management believes that any reasonable further change in the key assumptions (if revenue and EBITDA changes by 5% - 10%) on which recoverable amount is based, would not cause the carrying amount to exceed its recoverable amount. The fair value range obtained by discounted cash flow model is also corroborated by the fair value of similar companies listed in global stock exchanges.

Based on the above the Company has reversed the impairment of ' 781.19 crores and ' 33.26 crores of provisions for obligations in the previous financial year.

3.26 The Company has not entered into any scheme of arrangement which has an accounting impact on current or previous financial year.

3.27 The figures for the previous year have been reclassified / regrouped wherever necessary including for amendments relating to Schedule III of the Companies Act, 2013 for better understanding and comparability.