The deferred revenue of ?74.49 crores (March 31,2022: ?76.50 crores) arises primarily as a result of duty benefit received on import of plant and equipment under Export Promotion Capital Goods (EPCG) schemes of the Government of India. It also includes subsidy received on lease of immovable property from State Industries Promotion Corporation of Tamil Nadu. The deferred revenue will be recognised in the Statement of Profit and Loss in the proportion of depreciation charged on such assets.

Note 22: Assets classified as held for sale

Pursuant to approval granted by the Board of Directors at their meeting held on January 25, 2023, the Management entered into a Business Transfer Agreement (BTA), as amended with Amara Raja Advanced Cell Technologies Private Limited ("ARACT"), a wholly-owned subsidiary of the Company for sale/transfer of the New Energy Business of the Company as a going concern on a slump sale basis, effective June 1,2023, for a consideration specified in the said agreement. The completion of the transaction is subject to the conditions of the BTA.

The New Energy Business which is expected to be sold within 12 months has been classified as disposal group held for sale and presented separately in the balance sheet. The proceeds of disposal are expected to be at the carrying amount of the related net assets and accordingly no impairment losses have been recognized on the classification of this business as held for sale. The major classes of assets and liabilities comprising the business classified as held for sale are as follows:

Note 31: Exceptional items

On January 30, 2023, a fire broke out at one of the manufacturing facilities of the Company at Chittoor, Andhra Pradesh which caused damage to the Company's property, plant and equipment and inventories. There were no loss of lives. The Company has recognised a loss of ?438.56 crores arising from such incident for the year ended March 31,2023. The loss is estimated based on an evaluation of physical condition of property, plant and equipment and inventories, which is subject to a technical inspection by equipment manufacturers or chartered engineers and an assessment of recovery/salvage value by the designated vendors.

The Company has a valid mega all risk insurance policy covering the fire accident and has lodged a claim with the Insurance Company for losses suffered on account of the property, plant and equipment, inventories and loss of profits. The Insurance Company has admitted the claim based on an interim survey carried out by the surveyor appointed by it and the extent of final loss admissible under the policy is being evaluated by the surveyor. The Company has estimated and recognised an insurance claim receivable in respect of the claim in accordance with its accounting policy. As on the date of approval of these financial statements by the Board of Directors, the Company has received an adhoc payment of ?100 crores from the Insurance Company and is confident of realizing the balance amount on final determination of the loss and completion of the related activities.

The aforementioned losses and the corresponding credit arising from the insurance claim receivable has been presented on a net basis under Exceptional items in these standalone financial statements.

Note:

Includes an amount of ? 10.54 crores (March 31,2022: ? 8.04 crores) which has been claimed by Andhra Pradesh Gas Power Corporation Limited ('APGPCL') with respect to the power supplied by it to the Company through Andhra Pradesh Southern Power Distribution Corporation Limited ('APSPDCL'). The Management has contended that the said dues charged by APSPDCL as part of the regular electricity bills has been duly discharged by the Company to APSPDCL.

APGPCL has also consequently placed a lien on the investment held by the Company in it for non-payment of dues. The Management has initiated arbitration proceedings against the claim and the said action of APGPCL and is confident of a favourable outcome in this matter.

Note 34: Employee benefits

a. Defined contribution plans

The Company makes Provident Fund, Superannuation Fund and Employees' State Insurance Scheme contributions which are defined contribution plans, for qualifying employees. The Company recognised ?16.51 crores (Year ended March 31,2022: ?14.51 crores) for provident fund contributions, ?15.36 crores (Year ended March 31,2022: ?15.35 crores) for Superannuation Fund contributions and ?4.27 crores (Year ended March 31,2022: ?3.93 crores) towards Employees' State Insurance Scheme contributions in the Statement of Profit and Loss.

b. Defined benefit plans

The Company provides to the eligible employees defined benefit plans in the form of gratuity. The gratuity plan provides for a lump sum payment to vested employees at retirement, 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 continuous years of service. The measurement date used for determining retirement benefits for gratuity is March 31.

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

Investment risk - The probability or likelihood of occurrence of losses relative to the expected return on any particular investment.

Interest rate risk - The plan exposes the Company to the risk of fall in interest rates. A fall in interest rates will result in an increase in the ultimate cost of providing the above benefit and will thus result in an increase in the value of the liability.

Longevity risk - The present value of defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after employment. An increase in the life expectancy of the plan participants will increase the plan's liability.

Salary risk - The present value of the defined benefit plan is calculated with reference to the future salaries of participants under the plan. Increase in salary due to adverse inflationary pressures might lead to higher liabilities.

The sensitivity analysis above have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the year and may not be representative of the actual change. It is based on a change in the key assumption while holding all other assumptions constant. When calculating the sensitivity to the assumption, the same method used to calculate the liability recognised in the Balance Sheet has been applied. The methods and types of assumptions used in preparing the sensitivity analysis did not change compared with the previous year.

Note 35: Segment reporting

The Chairman & Managing Director of the Company has been identified as the Chief Operating Decision Maker (CODM) who evaluates the Company's performance and allocates resources for manufacture and marketing of lead acid and other storage batteries. Accordingly, manufacturing and trading of lead acid and other storage batteries is considered as the operating segment of the Company.

Geographical information

The Company operates in India and makes certain sales to customers situated outside India. The revenue from external customers by location of customers is detailed below. All the non-current assets of the Company are situated within India.

Note 42: Details of Provisions

(a) Provision for warranty is made for estimated warranty claims in respect of sale of certain storage batteries which are still under warranty at the end of the reporting period, the estimated cost of which is accrued at the time of sale. These claims are expected to be settled as and when warranty claims arise. The provision for warranty claims represents the present value of the Management's best estimate of the future outflow of economic benefits that will be required under the Company's obligation for warranties. Management estimates the provision based on historical warranty claim information and may vary as a result of new materials, altered manufacturing processes or other events affecting product quality. The products are generally covered under a free warranty period ranging from 6 months to 42 months.

Note 43: Financial instruments and related disclosures A. Capital Management

The Company's financial strategy aims to support its strategic priorities and provide adequate capital to its businesses for growth and creation of sustainable stakeholder value. The Company funds its operations through internal accruals. The Company aims at maintaining a strong capital base largely towards supporting the future growth of its businesses as a going concern. The capital structure of the Company is based on Management's judgment of its strategic day-to-day needs with a focus on total equity so as to maintain investor, creditors and market confidence.

The Management and the Board of Directors monitor the return on capital as well as the level of dividends to shareholders. The Company may take appropriate steps in order to maintain, or if necessary, adjust its capital structure.

Equity share capital and other equity are considered for the purpose of Company's Capital Management.

C. Financial risk management objectives

The Company has a system-based approach to risk management, anchored to policies and procedures and internal financial controls aimed at ensuring early identification, evaluation and management of key financial risks (such as market risk, foreign currency risk, credit risk and liquidity risk) that may arise as a consequence of its business operations as well as its investing and financing activities. Accordingly, the Company's risk management framework has the objective of ensuring that such risks are managed within acceptable and approved risk parameters in a disciplined and consistent manner and in compliance with applicable regulation. It also seeks to drive accountability in this regard. The key risks and mitigating actions are overseen by the Board of Directors of the Company.

Liquidity Risk

The Company manages its liquidity risk by ensuring, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due. Also, the Company has unutilised credit limits with banks.

The Company maintained a cautious liquidity strategy, with a positive cash balance throughout the year ended March 31, 2023 and March 31,2022. Cash flow from operating activities provides the funds to service the financial liabilities on a day to day basis.

The Company regularly maintains the rolling forecasts to ensure it has sufficient cash on an on-going basis to meet operational needs. Any short-term surplus cash generated, over and above the amount required for working capital management and other operational requirements, is retained as cash and cash equivalents (to the extent required) and any excess is invested in interest bearing term deposits and mutual funds with appropriate maturities to optimise the cash returns on investments while ensuring sufficient liquidity to meet its liabilities.

Further, while the Company's total equity stands at ?5,297.84 crores (March 31,2022: ?4,551.39 crores), it has borrowings of ?16.52 crores (March 31,2022: ?23.39 crores). In such circumstances, liquidity risk or the risk that the Company may not be able to settle or meet its obligations as they become due does not exist.

Market Risk

The Company continues to hold certain investments in equity for long term value accretion which are accordingly measured at fair value through Other Comprehensive Income. The value of investments in such equity and preference share instruments as at March 31, 2023 is ?261.66 crores (March 31,2022 ?42.47 crores). Accordingly, fair value fluctuations arising from market volatility is recognised in Other Comprehensive Income.

As the Company is virtually debt-free and its deferred payment liabilities do not carry interest, the exposure to interest rate risk from the perspective of financial liabilities is negligible. Further, treasury activities, focused on managing current investments are administered under a set of approved policies and procedures guided by the tenets of liquidity, safety and returns. This ensures that investments are only made within acceptable risk parameters after due evaluation. The Company invests in Mutual Fund schemes of leading fund houses. Such investments are susceptible to market price risk that arise mainly from changes in interest rate which may impact the return and value of such investments. However, given the relatively short tenure of underlying portfolio of the Mutual Fund schemes in which the Company has invested, such price risk is not significant. Fixed deposits are held with highly rated banks and have a short tenure and are not subject to interest rate volatility.

Foreign Currency Risk

The Company is subject to the risk that changes in foreign currency values impact the Company's export revenues and import of raw materials and property, plant and equipment. The Company is exposed to foreign exchange risk arising from currency exposures, primarily with respect to US Dollars, EURO and GBP. Financial assets and liabilities denominated in foreign currency, are also subject to reinstatement risk.

The Company manages currency exposures within prescribed limits.

The aim of the Company's approach to management of currency risk is to leave the Company with no material residual risk.

Foreign currency sensitivity analysis

For every percentage point increase in the underlying exchange rate of the outstanding foreign currency denominated assets and liabilities, holding all other variables constant, the profit before tax for the year ended March 31, 2023 would change by ?1.80 crores [March 31,2022: ?(0.93 crores)]. For every percentage point decrease in the underlying exchange rate would have led to an equal but opposite effect.

The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the year-end for a 1% change in foreign currency rates.

Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counter-party fails to meet its contractual obligation. Concentration of credit risk with respect to trade receivables are limited, due to Company's customer base being large and diverse. All trade receivables are reviewed and assessed for default on a monthly basis. The Company's historical experience of collecting receivables and the level of default indicate that credit risk is low and generally uniform across markets; consequently, trade receivables are considered to be a single class of financial assets. All overdue customer balances are evaluated taking into account the age of the dues, specific credit circumstances, the track record of the counterparty etc. loss allowances and impairment is recognised, where considered appropriate by responsible management.

Note 43: Financial instruments and related disclosures (Contd.)

D. Fair value measurement Fair value hierarchy

The fair value of financial instruments as referred to in Note 43.B above have been classified into three categories depending on the inputs used in the valuation technique. The hierarchy gives the highest priority to quoted prices in active markets for identified assets or liabilities [Level 1 measurements] and lowest priority to unobservable inputs [Level 3 measurements]

The following levels have been used for classification:

Level 1: Quoted prices (unadjusted) for identical instruments in active market.

Level 2: Directly or indirectly observable market inputs, other than Level 1 inputs Level 3: Inputs which are not based on observable market data.

If one or more of the significant inputs is not based on observable market data, the fair value is determined using generally accepted pricing models based on a discounted cash flow analysis, with the most significant inputs being the discount rate that reflects the credit risk of counterparty.

The fair value of trade receivables, trade payables and other current financial assets and liabilities is considered to be equal to the carrying amounts of these items due to their short-term nature. Where such items are non-current in nature, the same has been classified as Level 3 and fair value determined using discounted cash flow basis. Similarly for certain unquoted equity instruments where most recent information to measure fair value is insufficient, or if there is a wide range of possible fair value measurements, cost has been considered as the best estimate of fair value.

There has been no change in the valuation methodology for Level 3 inputs during the year. The Company has classified certain unquoted equity instruments under Level 3 of the fair value hierarchy. There were no transfers between Level 1 and Level 2 during the year.

Notes:

(i) During the year ended March 31,2023, the performance of investment in unquoted shares of Andhra Pradesh Gas Power Corporation Limited along with the relevant economic and market indicators, Supply chain challenges and closure of power plants resulted in indicators of impairment. Accordingly, the Company determined the fair value of the Investment as ? Nil and recorded the impairment loss in Other Comprehensive Income.

(ii) During the previous year, the Company as part of its strategic initiatives has made an investment of ?36.99 crores in Series A of Log 9 Materials Scientific Private Limited ('Log 9 Materials') by acquiring 11.86% (on a fully diluted basis) of shareholding in Log 9 Materials. Log 9 Materials is an advanced battery and deep-tech start up providing state of art batteries in terms of EV batteries, energy storage on fuel cells, etc. The investment was recognised at transaction cost and irrevocably designated at fair value through other comprehensve income.

During the the current year, the Company made an additional investment of ?77 crores in the Series B of Log 9 Materials increasing its shareholding to 14.33% (on a fully diluted basis). The Series A investment was fair valued to the transaction cost of Series B funding and based on the market observable inputs the transaction cost of Series B was considered as the best estimate of fair value as at March 31,2023.

Considering the availability of market observable inputs indirectly, the investment was reclassified under Level 2 from Level 3.

Note 47:

The Board of Directors of the Company at its meeting held on September 26, 2022, have approved a Scheme of Arrangement amongst Mangal Industries Limited ('Demerged Company') and Amara Raja Batteries Limited ('ARBL' or the 'Resulting Company', or the 'Company') and their respective shareholders and creditors, under the provisions of Sections 230 to 232 and other applicable provisions of the Companies Act, 2013 ("Scheme") with an appointed date of April 1,2022 or such other date as may be agreed. The Scheme, inter-alia, provides for demerger of the plastic component for battery business ('Demerged Undertaking') from the Demerged Company to the Resulting Company, and consequent issue of fully paid-up equity shares by the Company to the shareholders of the Demerged Company as per the share entitlement ratio defined in the Scheme. The Scheme is subject to the fulfilment of certain conditions including receipt of approval of shareholders (majority of public shareholders) and creditors of the Company, approval of other regulatory authorities as may be required, including those of the Stock Exchanges, Securities and Exchange Board of India ("SEBI") and the Hon' ble jurisdictional National Company Law Tribunal ("NCLT") and any other authority as may be applicable.

As on the date of approval of these standalone financial statements by the Board, the Company has received no objection from the stock exchanges and an approval from the equity shareholders and unsecured creditors of the Company at the NCLT convened meetings held on April 12, 2023. Thereafter, an application has been filed with the Hon'ble NCLT, Amaravati Bench for its approval.

The necessary effects of scheme would be given in the standalone financial statements in the period in which the Scheme is approved. Note 48:

The Company on April 30, 2021 received closure orders from the Andhra Pradesh Pollution Control Board ('APPCB') for the Company's plants situated at Karakambadi, Tirupati and Nunegundlapalli Village, Chittoor District. Consequently, the Company went in appeal against the said orders to the Hon'ble High Court of Andhra Pradesh at Amravati, which granted interim suspension of the closure orders. The plants of the Company were closed for a period of 5 days during the quarter ended June 30, 2021, from the date of closure orders till the date of the said interim suspension. The Company did not incur any material loss during the period of closure.

APPCB also issued two show cause notices in February, 2022 against which the Company filed a special leave petition with the Hon'ble Supreme Court which vide its order dated February 20, 2023 disposed off the matter for it to be heard at the lower courts and the same is pending disposal.

The Management has also been working with the APPCB to satisfactorily resolve the matter.

Note 49:

The Code on Social Security, 2020 ('Code') relating to employee benefits during employment and post employment benefits has been enacted. However, the date on which the Code will come into effect has not yet been notified. The Management will complete its evaluation and will give appropriate impact in its financial statements in the period in which the Code becomes effective.

Note 50:

The standalone financial statements are approved for issue by the Audit Committee and Board of Directors at their meetings held on May 23, 2023.