Elgi Equipments Ltd. — Annual Report 2021

Jul 7, 2021

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BSE LIMITED NATIONAL STOCK EXCHANGE OF
INDIA LIMITED
PHIROZE JEEJEEBHOY TOWERS “EXCHANGE PLAZA”
DALAL STREET BANDRA KURLA COMPLEX
MUMBAI – 400001 BANDRA (E)
MUMBAI - 400051
Scrip Code: 522074 Scrip Code: ELGIEQUIP
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Dear Sir, DATE : 07-JUL-2021

Sub: Submission of Annual Report for the financial year 2020-21.

Pursuant to Regulation 34 (1) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, we are submitting herewith the Annual Report of the Company for the financial year 2020-21.

The said Annual Report 2020-21 has also been updated on the Company’s website at www.elgi.com.

Kindly acknowledge the receipt of this letter and update your records.

Thanking you,

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ANNUAL REPORT 2020-21

ELGI EQUIPMENTS LIMITED

CIN: L29120TZ1960PLC000351

61[st] Annual General Meeting

Board of Directors Non-Executive Directors

Mr. N. Mohan Nambiar Dr. T. Balaji Naidu Mr. B. Vijayakumar Mr. Sudarsan Varadaraj Dr. Ganesh Devaraj Mr. M. Ramprasad Mr. Harjeet Singh Wahan Ms. Aruna Thangaraj Mr. Anvar Jay Varadaraj

Managing Director

Mr. Jairam Varadaraj

Chief Financial Officer

Mr. Ragunathan Gunabooshanam (Resigned with effect from 22/10/2020) Mr. Jayakanthan R (Appointed with effect from 23/10/2020)

Company Secretary

Mr. Ragunathan K (Appointed with effect from 29/06/2020)

Statutory Auditors

Price Waterhouse Chartered Accountants LLP Chartered Accountants

Secretarial Auditor

M/s. MDS & Associates, Company Secretary in Practice

Cost Auditor

M/s. STR & Associates, Cost Accountants

Bankers

Central Bank of India State Bank of India The Hongkong and Shanghai Banking Corporation Limited HDFC Bank Limited Standard Chartered Bank

Registered Office

Elgi Industrial Complex, Trichy Road, Singanallur, Coimbatore – 641 005. Phone : 91-422-2589555 Fax: 91-422-2573697 Website : www.elgi.com

Registrar & Share Transfer Agents

Link Intime India Private Limited, Coimbatore Branch, “Surya”, 35 Mayflower Avenue, (2[nd] Floor) Behind Senthil Nagar, Sowripalayam Road, Coimbatore - 641 028.

Date of AGM: 2[nd] Day of August, 2021 | Day: Monday | Time: 4.30 PM Book Closure dates: 27[th] July, 2021 to 2[nd] August, 2021 (both days inclusive)

Table of Contents

05 Notice of the 61[st] Annual General Meeting

19 Management Discussion and Analysis

25 Board’s Report

96 Auditor’s Report

106 Standalone Financial Statements

187 Consolidated Financial Statements

72 Corporate Governance Report

ELGI EQUIPMENTS LIMITED

YEAR AT A GLANCE

Year at a glance

Consolidated Financial Statements

		(`In Million)
Particulars	2020-21	2019-20
Income
Revenue from operations	19,240	18,294
Other income	235	132
Total income	19,475	18,426

Expenditure

19,240 Revenue

1,025 Net profit

Expenditure
a. (Increase) / Decrease in inventories	306	(297)
b. Consumption of raw materials	9,970	10,103
c. Staf cost	4,117	4,046
d. Other expenditure	2,691	3,083
Finance Cost	135	155
Depreciation / Amortisation	743	652
Total expenditure	17,962	17,743

Profit / Loss

Proft / Loss
Proft / Loss Before Tax	1,513	683
Tax expenses	502	270
Share of proft from joint ventures	14	12
Net Proft	1,025	426

Others

Others
Paid up Equity share capital	317	**	158
Reserves and surplus	8,382		7,531
Capital expenditure	312		439
Cash fow from operations	2,400		355
Basic EPS (in`)	3.2		1.34
Dividend per share (in`)	0.8*		1.7
No. of shareholders	27648		18289
No. of employees	2142		2247

• Proposed Dividend

** After issue of bonus shares

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NOTICE OF THE 61[ST] ANNUAL GENERAL MEETING

ELGI EQUIPMENTS LIMITED

Notice of the 61[st] Annual General Meeting

NOTICE is hereby given that the 61[st] Annual General Meeting of the Shareholders of the Company will be held on Monday, 2[nd] August, 2021 at 4:30 PM Indian Standard Time (IST) through Video Conferencing (“VC”) / Other Audio-Visual Means (“OAVM”) without the in-person presence of shareholders to transact the following business(es):

Ordinary Business:

1. To receive, consider and adopt the standalone and consolidated audited financial statements including statement of profit and loss (including other comprehensive income), the statement of cash flows and the statement of changes in equity for the financial year ended 31[st] March, 2021, the balance sheet as at that date, the reports of the Board of Directors and the auditors thereon.

2. To declare dividend for the financial year ended 31[st] March, 2021.

3. To appoint a Director in the place of Dr.T.Balaji Naidu (DIN: 00002755), who retires by rotation and being eligible, offers himself for re-appointment.

Special Business:

4. To consider and if thought fit, to pass the following resolution as an Ordinary Resolution:

RESOLVED THAT pursuant to the provisions of Section 148 and all other applicable provisions of the Companies Act, 2013 and the Companies (Audit & Auditors) Rules, 2014 (including any statutory modification(s) or reenactment thereof, for the time being in force), M/s. STR & Associates, Cost Accountants, (Firm Registration No.000029) who were appointed as Cost Auditors by the Board of Directors of the Company, to conduct the audit of the cost records of the Company for the financial year ending 31[st] March, 2022 on a remuneration of Rs. 3,00,000/- (Rupees Three Lakhs only) (exclusive of applicable taxes and out of pocket expenses), be and is hereby ratified and confirmed.

RESOLVED FURTHER THAT the Board of Directors of the Company be and are hereby authorised to do all such acts, and take all such steps as may be necessary, proper or expedient to give effect to this resolution.

5. To consider and if thought fit, to pass the following resolution as a Special Resolution:

RESOLVED THAT pursuant to Regulation 17(6) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (as amended from time-to-time) read with Sections 197, 198 and other applicable provisions, if any, of the Companies Act, 2013 and the rules made thereunder (including any statutory modification or reenactment thereof for the time being in force), consent of the shareholders of the Company be and is hereby accorded for payment of consultancy fees not exceeding Rs.21,60,000/- exclusive of applicable taxes to Mr. Harjeet Singh Wahan (DIN: 00003358), Non-Executive Director for rendering services in the nature of Business Process Consulting with effect from 1[st] April, 2021 to 31[st] March, 2022.

RESOLVED FURTHER THAT the Board of Directors of the Company be and are hereby authorised to do all acts and take all such steps as may be necessary, proper or expedient to give effect to this resolution.

6. To consider and if thought fit, to pass the following resolution as an Ordinary Resolution:

RESOLVED THAT pursuant to the provisions of Sections 196, 197, 198, 203 and other applicable provisions of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (including any statutory modification(s) or reenactment thereof for the time being in force), the consent of the members be and is hereby accorded for the appointment of Mr. Anvar Jay Varadaraj (DIN: 07273942) as the Executive Director of the Company for a period of 5 years with effect from 2[nd] August, 2021 on the following terms and conditions as recommended by the Nomination and Remuneration Committee and approved by the Audit Committee and Board of Directors at their respective meetings.

1. A total remuneration not exceeding USD 3,50,000 per annum. The amount of USD 3,50,000 is on a cost to the Company basis and is inclusive of:

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• a. Bonus and all perquisites as applicable to all Senior Managerial Personnel of the Company.

• b. Company’s contribution towards PF, Gratuity and Superannuation Fund at rates to be from time to time.

• Of the total remuneration, 30% is variable component and the rest is guaranteed pay.

• The guaranteed pay will be structured based on the Company’s policy and the current pay structure as applicable to Senior Managerial Personnel.

• The quantum of variable pay would be linked to the achievement of specified performance parameters, similar to the scheme applicable to other Senior Managerial Personnel for each of the next 5 years.

• The annual increment would be decided on the same principles / methodology adopted for other Senior Managerial Personnel for each of the next 5 years. However, the total cost to the Company shall not exceed in any given year, an amount of USD 3,50,000.

• The overall remuneration as stated above shall not exceed the limits as specified under Section 197 of the Companies Act, 2013 and Regulation 17(6)(e) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as applicable and amended from time to time.

• During his tenure as Executive Director, he shall be liable to retire by rotation and the same shall not be treated as break in his service as Executive Director

RESOLVED FURTHER THAT the Board of Directors be and are hereby authorized to alter and vary the terms of appointment and / or remuneration payable to Mr.Anvar Jay Varadaraj, Executive Director, as it may deem fit, subject to the same not exceeding the limit as approved by the shareholders.

RESOLVED FURTHER THAT the Board of Directors be

and are hereby severally authorized to take all such steps as may be necessary and/or give such directions as may be necessary, proper or expedient to give effect to the above resolution without being required to seek any further consent or approval of the members and the members shall be deemed to have given their approval thereto expressly by the authority of this resolution.

7. To consider and if thought fit, to pass the following resolution as a Special Resolution:

RESOLVED THAT pursuant to Regulation 24(6) and other applicable provisions, if any, of the Securities

and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the applicable provisions, if any, of Companies Act, 2013 read with the relevant rules made thereunder and the Memorandum and Articles of Association of the Company and subject to such other requisite approvals, consents, permissions and sanctions as may be required, the consent of the members be and is hereby accorded to the Board of Directors of the Company (hereinafter referred to as ‘Board’, which term shall be deemed to include, unless the context otherwise requires, any Committee of the Board or any Director(s) or Officer(s) authorised by the Board to exercise the powers conferred on the Board under this resolution) for selling or disposing of the property of Pattons Inc, USA, a material subsidiary of the Company, more particularly described in the explanatory statement, to any third party in one or more parcels, at such price and on such terms and conditions as may be decided by, and in such manner as both, the Board of Directors of the Company and the said material subsidiary deem appropriate.

FURTHER RESOLVED THAT the Board of Directors be and are hereby severally authorized to take all such steps as may be necessary and/or give such directions as may be necessary, proper or expedient to give effect to the above resolution.

Statement Pursuant to Section 102 of the Companies Act, 2013

Item No. 4:

The Board of Directors of the Company on the recommendation of the Audit Committee, approved the appointment of M/s. STR & Associates, Cost Accountants as the Cost Auditors of the Company for the financial year 2021-22 for a fee of Rs. 3,00,000/(exclusive of applicable taxes and out of pocket expenses), for conducting the audit of the cost accounting records of the Company and for issuing an audit report on cost accounting records maintained by the Company.

Section 148(3) of the Companies Act, 2013 read with Rule 14 of the Companies (Audit and Auditors) Rules, 2014 (“the Act”), requires the Board to appoint an individual, who is a Cost Accountant or a firm of Cost Accountants, as Cost Auditors of the Company on such remuneration as may be determined by the Board of Directors subject to the ratification by the shareholders at the General Meeting.

Accordingly, for the resolution contained in Item No. 4 of the Notice, the Board of Directors seek the approval of

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NOTICE OF THE 61[ST] ANNUAL GENERAL MEETING

ELGI EQUIPMENTS LIMITED

the members for ratification of remuneration payable to the Cost Auditors of the Company for the financial year 2021-22.

The Board recommends this resolution for your approval.

None of the Directors and Key Managerial Personnel of the Company and their relatives is concerned or interested, financially or otherwise, in the resolution set out at Item No. 4 of the Notice.

Item No. 5

Pursuant to the provisions of Regulation 17(6)(ca) of SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015 (as amended) approval of shareholders by special resolution shall be obtained every year, in which the annual remuneration payable to a single Non-Executive Director exceeds fifty percent of the total annual remuneration payable to all Non-Executive Directors.

The Company pays consultancy fee to Mr. Harjeet Singh Wahan for the services rendered by him as Business Process Consultant. The remuneration payable to Mr. Harjeet Singh Wahan, Non-Executive Director, will exceed fifty percent of the annual remuneration payable to all the Non-Executive Directors. The Company does not pay any remuneration to the Non-Executive Directors other than sitting fee for attending the Board and Committee meetings.

In this regard, the Board of Directors, on recommendation of the Nomination and Remuneration Committee, have at their meeting held on 21[st] May, 2021 accorded their approval for the payment of consulting fees not exceeding ` 21,60,000/- exclusive of applicable taxes to Mr. Harjeet Singh Wahan, Non-Executive Director of the Company for rendering services in the nature of Business Process Consultancy with effect from 1[st] April, 2021 to 31[st] March, 2022. The payment of consultancy fee would be in addition to the sitting fees payable for attending the meetings of the Board and Committees thereof.

The Board recommends the resolution set out in Item No.5 of the Notice for the approval of the members of the Company.

Except Mr. Harjeet Singh Wahan, being the beneficiary, none of the Directors or Key Managerial Personnel of the Company and their relatives are concerned or interested, financial or otherwise, in the resolution set out at Item No.5 of the Notice.

the shareholders, appointed Mr. Anvar Jay Varadaraj as the Executive Director of the Company for a period of 5 years with effect from 2[nd] August, 2021 on such terms and conditions as set out in Item No. 6 of the Notice.

Mr.Anvar Jay Varadaraj has, in the recent past, partnered with senior leaders to define and execute projects within governance outcomes and leads the Strategic Business Plan initiative. He was also instrumental in defining roadmaps and strategic initiatives for the Company to achieve its mid-term goals on Sales, EBIDTA and ROCE goals by business and region. Mr. Anvar Jay Varadaraj has acquired adequate international exposure by handling the global marketing function successfully. Mr.Anvar Jay Varadaraj is taking on the responsibility of managing and driving the Company’s global strategy hereafter. Based on his contribution so far and considering the new responsibilities that he has assumed, he has to be elevated to the position of Executive Director to guide the Company at a global level.

Mr.Anvar Jay Varadaraj’s expertise and skills are imminently needed for achieving the global business plans of the Company.

Mr. Anvar Jay Varadaraj has been a Director of the Company since 01/04/2020 and during this tenure, he has performed his role very well. The appointment of Mr. Anvar Jay Varadaraj as Executive Director would augur well for the future growth of the Company.

As per Section 178 of the Companies Act, 2013 the Nomination and Remuneration Committee at their meeting held on 20[th] May, 2021 had, taking into consideration the factors detailed above, proposed the appointment of Mr. Anvar Jay Varadaraj as the Executive Director of the Company for a period of 5 years with effect from 2[nd] August, 2021 and determined his remuneration as set out in the resolution and recommended the same to the Board. The proposed remuneration is well within the limits prescribed in the Companies Act, 2013, the Schedule and Rules made thereunder.

Pursuant to the provisions of Regulation 23 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Audit Committee at the meeting held on 20[th] May, 2021 had also approved the remuneration payable to Mr. Anvar Jay Varadaraj as the Executive Director of the Company for a period of 5 years and recommended the same to the Board.

Item No.6

The Board of Directors of the Company at their meeting held on 21[st] May, 2021, have, subject to the approval of

Pursuant to the provisions of Sections 196, 197, 203 and other applicable provisions, if any, of the Companies Act, 2013 the appointment of the Executive Director shall

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NOTICE OF THE 61[ST] ANNUAL GENERAL MEETING

ELGI EQUIPMENTS LIMITED

be subject to the approval of the shareholders of the Company in the General Meeting. Hence, the necessary resolution has been set out in Item No. 6 of the Notice for the approval of the members.

The Board recommends the resolution set out in Item No. 6 of the Notice for the approval of the members.

The details as required under Regulation 36 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, brief bio-data of Mr. Anvar Jay Varadaraj and other disclosures as per Secretarial Standard 2 are furnished and forms a part of this notice.

Except Mr. Anvar Jay Varadaraj, being the appointee Director and Mr. Jairam Varadaraj, Managing Director, being his relative, none of the other Directors and Key Managerial Personnel of the Company and their relatives is concerned or interested, financially or otherwise, in the resolution set out at Item No. 6 of the Notice.

Item No.7

Pattons Inc, USA is a material subsidiary of the Company as defined under Regulation 16(c) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Pattons Inc proposes to sell the following property owned by it since the property has been facing infrastructural issues like unavailability of water connection, car parking etc., making it difficult to continue business activities from that place.

“The Properties identified in Mecklenburg County tax records as parcel numbers 14705104, 14705105, 14705106, 14705107, and 14705108 located at 3119 South Boulevard, Charlotte, NC 28209, USA, currently occupied by existing 40,160 square foot commercial buildings and comprising approximately 2.677 acres of land area; together with all improvements and fixtures thereto, and all rights, privileges and easements appurtenant and/or serving such real property or improvements, including without limitation, all minerals, water and air rights and rights of way related thereto, development rights, allocations of development density and other similar rights allocated to or attributable thereto, and all of the right, title and interest in any and all public and private roads, railways and rights-of-way crossing or abutting the said property development density (the “Property”).”

Pursuant to Regulation 24(6) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company is required to obtain the prior approval of

the members by way of a special resolution for selling, disposing or leasing of assets amounting to more than 20% of the assets of the material subsidiary.

The Board of Directors of the Company at their meeting held on 18[th] June, 2021 have, subject to the approval of the shareholders, granted their approval for selling the above-mentioned property. Accordingly, the necessary special resolution has been set out in Item No. 7 of the Notice for the approval of the members of the Company.

Further, the Board recommends the resolution set out in Item No. 7 of the Notice for the approval of the members.

None of the Directors and Key Managerial Personnel of the Company and their relatives is concerned or interested, financially or otherwise, in the resolution set out at Item No. 7 of the Notice.

By order of the Board For Elgi Equipments Limited

Ragunathan K

Place: Coimbatore Company Secretary Date: 18/06/2021 ACS No. 62397

Notes:

1. In view of the continuing Covid-19 pandemic, the Ministry of Corporate Affairs (“MCA”) has vide its circular dated 5[th] May, 2020 read with circulars dated 8[th] April, 2020, 13[th] April, 2020, 15[th] June, 2020, 28[th] September, 2020, 31[st] December, 2020 and 13[th] January, 2021 (collectively referred to as “MCA Circulars”) and the Securities and Exchange Board of India vide their circulars dated 12[th] May, 2020 and 15[th] January, 2021 (collectively referred to as “SEBI Circulars”) permitted the conduct of the Annual General Meeting (“AGM”) through Video Conferencing (“VC”) / Other Audio Visual Means (“OAVM”), without the physical presence of the Members at a common venue. The deemed venue for the AGM shall be the Registered Office of the Company. In compliance with the provisions of the Companies Act, 2013 (“Act”), SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“SEBI Listing Regulations”) MCA Circulars and SEBI Circulars the AGM of the Company is being held through VC / OAVM. Members desirous of participating in the meeting through VC/OAVM, may refer to the procedures mentioned below.

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NOTICE OF THE 61[ST] ANNUAL GENERAL MEETING

ELGI EQUIPMENTS LIMITED

1. Pursuant to the provisions of the Act, a Member entitled to attend and vote at the AGM is entitled to appoint a proxy to attend and vote on his/her behalf and the proxy need not be a Member of the Company. Since this AGM is being held pursuant to the MCA Circulars through VC / OAVM, physical attendance of Members has been dispensed with. Accordingly, the facility for appointment of proxies by the Members will not be available for the AGM and hence the Proxy Form and Attendance Slip are not annexed to this Notice.

2. Institutional / Corporate Shareholders (i.e., other than individuals / HUF, NRI, etc.) are required to send a scanned copy (PDF/JPG Format) of its Board or governing body Resolution/Authorization etc., authorizing its representative to attend the AGM through VC / OAVM on its behalf and to vote through remote e-voting. The said Resolution/Authorization shall be sent to the Scrutinizer by email through its registered email address to scrutinizerelgiequip@mdsassociates.in with a copy marked to the Company at investor@elgi.com and to its RTA at enotices@linkintime.co.in.

3. Pursuant to the provisions of Section 91 of the Companies Act, 2013 and Regulation 42 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Register of Members and Share Transfer Books of the Company will remain closed from 27/07/2021 to 02/08/2021 (both days inclusive).

4. Dividend as recommended by the Board of Directors, if declared at the Annual General Meeting will be paid within 30 days from the date of declaration to those Members whose names appear on the Register of Members in respect of shares held in physical form as well as in respect of shares held in electronic form as per the details received from the depositories for this purpose as at the close of the business hours on Monday, 26[th] July, 2021.

5. Members are advised to utilize the National Electronic Clearing System (NECS) for receiving dividends. Members holding shares in electronic form are requested to contact their respective Depository Participants for availing NECS facility. Members holding shares in physical form are requested to download the ECS form from the website of the Company viz., www.elgi.com and the same, duly filled up and signed along with original cancelled cheque leaf may be sent to the Company or to the Registrar and Share Transfer Agent.

6. Members holding shares in electronic form may note that bank particulars registered against their

7. respective depository accounts will be used by the Company for payment of Dividend. The Company or its Registrars and Share Transfer Agents, M/s. Link Intime India Private Limited cannot act on any request received directly from the members holding shares in electronic form for any change of bank particulars or bank mandates. Such changes are to be advised only to the Depository Participant by the members. Members holding shares in physical form and desirous of either registering bank particulars or changing bank particulars already registered against their respective folios for payment of Dividend are requested to write to the Company or its Registrar and Share Transfer Agents.

8. The Company has entered into agreements with National Securities Depository Limited (“NSDL”) and Central Depository Services (India) Limited (“CDSL”). The Depository System envisages the elimination of several problems involved in the scrip-based system such as bad deliveries, fraudulent transfers, fake certificates, thefts in postal transit, delay in transfers, mutilation of share certificates, etc. Simultaneously, Depository System offers several advantages like exemption from stamp duty, elimination of concept of market lot, elimination of bad deliveries, reduction in transaction costs, improved liquidity, etc. Members, therefore, now have the option of holdings and dealing in the shares of the Company in electronic form through NSDL or CDSL. Members are encouraged to convert their holding to electronic mode.

9. Securities and Exchange Board of India has mandated that the transfer of securities held in physical form, except in case of transmission or transposition, shall not be processed by the listed entities / Registrars and Share Transfer Agents with effect from 1[st] April, 2019. Therefore, members holding share(s) in physical form are requested to immediately dematerialize their shareholding in the Company. Necessary prior intimation in this regard was provided to the shareholders.

10. Change of Address: Members are requested to notify any change of address and bank details to their Depository Participants in respect of their holdings in electronic form and in respect of shares held in physical form, to the Secretarial Department at the registered office of the Company or to M/s. Link Intime India Pvt. Limited, “Surya”, 35 May Flower Avenue, II Floor, Behind Senthil Nagar, Sowripalayam, Coimbatore – 641028, the Registrar and Share Transfer Agent of the Company.

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NOTICE OF THE 61[ST] ANNUAL GENERAL MEETING

ELGI EQUIPMENTS LIMITED

1. Non-Resident Indian (“NRI”) Members are requested to inform the Company or its RTA or to the concerned Depository Participants, as the case may be, immediately:

2. a. the change in the residential status on return to India for permanent settlement or

3. b. the particulars of the NRE/NRO Account with a Bank in India, if not furnished earlier.

4. Pursuant to the provisions of Section 72 of the Companies Act, 2013, members may file nomination forms in respect of their physical shareholdings. Any member willing to avail this facility may submit to the Company’s registrar & share transfer agent in the prescribed statutory form. Should any assistance be desired, members should get in touch with the Company’s registrar and share transfer agent.

5. Members who hold shares in physical form in multiple folios in identical names or joint holding in the same order of names are requested to send the share certificates to the Registrar and Share Transfer Agent, for consolidation into a single folio.

6. Members are requested to forward their communications in connection with shares held by them directly to the Registrar and Share Transfer Agent of the Company M/s. Link Intime India Private Limited, “Surya”, 35, Mayflower Avenue, II Floor, Behind Senthil Nagar, Sowripalayam Road, Coimbatore – 641028.

7. In case of joint holders, the Member whose name appears as the first holder in the order of names as per the Register of Members of the Company will be entitled to vote at the AGM.

8. Members desirous of receiving any information on the accounts or operations of the Company are requested to forward his / her queries to the Company seven working days prior to the meeting. The same will be replied by the Company suitably.

9. Members who wish to claim dividends, which remain unclaimed, are requested to correspond with the Company / Registrar & Share Transfer Agent of the Company. Members are requested to note that pursuant to Section 124 of the Companies Act, 2013 dividends not claimed within seven years from the date of transfer to the Company’s Unpaid Dividend Account, will be transferred to the Investor Education and Protection Fund (“IEPF”) established by the Central Government under Section 125 of the Companies Act, 2013. The details of unpaid/ unclaimed dividend can be viewed on the Company’s website www.elgi.com. As per the provisions of Rule 6 of the

Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules 2016, the Company will be transferring the share(s) on which the beneficial owner has not encashed any dividend during the last seven years to the IEPF demat account as identified by the IEPF Authority. Details of shareholders whose shares are liable to be transferred to IEPF are available at the Company website: www.elgi.com. The shareholders whose unclaimed dividend /share has been transferred to the ‘Investor Education and Protection Fund’, may claim the same from IEPF authority by filing Form IEPF-5 along with requisite documents. Mr. Ragunathan K, Company Secretary, is the Nodal Officer of the Company for the purpose of verification of such claims.

18. Compulsory transfer of Equity Shares to Investor Education and Protection Fund (IEPF) Authority:

• Pursuant to the provisions of Section 124(6) of the Act and Rule 6 of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, (“the IEPF Rules”) and amendments thereto, the Company has transferred the shares in respect of Members who have not claimed/encashed dividend for the last seven consecutive years to the Demat Account of the IEPF Authority. Details of the Members whose shares have been transferred to the Demat account of the IEPF Authority are available at the Company’s website at www.elgi.com.

• In compliance with the aforesaid MCA Circulars and SEBI Circulars, Notice of the AGM along with the Annual Report for the financial year 2020-21 is being sent only through electronic mode to those Members whose email address is registered with the Company/ Depositories. Members may note that the Notice and Annual Report for the financial year 2020-21 will also be available on the Company’s website www.elgi.com, websites of the Stock Exchanges i.e., BSE Limited and National Stock Exchange of India Limited at www.bseindia.com and www.nseindia.com respectively, and on the website of Link Intime India Private Limited at instavote.linkintime.co.in. Members can attend and participate in the Annual General Meeting through VC/OAVM facility only.

• Members attending the meeting through VC/OAVM shall be counted for the purposes of reckoning the quorum under Section 103 of the Companies Act, 2013.

• Pursuant to Finance Act 2020, dividend income will be taxable in the hands of Shareholders with effect from

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1[st] April, 2020 and the Company is required to deduct tax at source from dividend paid to Shareholders at the prescribed rates. For the prescribed rates for various categories, the Shareholders are requested to refer to the Finance Act, 2020 and amendments thereof.

Detailed communication regarding the prescribed TDS rates for various categories, conditions for Nil/ preferential TDS and details / documents required thereof are being sent to the members. Members are requested to submit the documents as stated in the communication online by clicking on the following link https://linkintime.co.in/formsreg/submission-ofform-15g-15h.html on or before 2[nd] August, 2021.

1. Members may note that M/s. Price Waterhouse Chartered Accountants LLP, (Firm Registration No.012754N/N500016), Chennai, the statutory auditors of the Company were appointed by the shareholders at their Annual General Meeting (AGM) held on 28[th] July, 2017, to hold office for a period of 5 years till the conclusion of AGM to be held during the year 2022, subject to ratification by the shareholders at every AGM. However, the Ministry of Corporate Affairs vide notification dated 7[th] May, 2018 has amended Section 139 of the Companies Act, 2013 by omitting the requirement of seeking ratification of the members for appointment of statutory auditors at every AGM. Hence, no resolution is being proposed for ratification of appointment of statutory auditors at this 61[st] annual general meeting. The Board of Directors at their Meeting held on 21[st] May, 2021, based on the recommendation of the Audit Committee have fixed an amount of ` 50,00,000/- (exclusive of applicable taxes and reimbursement of out of pocket expenses incurred in connection with the Statutory Audit) as remuneration payable to Statutory Auditors for the financial year 2021-22.

2. Since the AGM will be held through VC / OAVM, the Route Map is not annexed in this Notice.

3. The Securities and Exchange Board of India (SEBI) has mandated the submission of Permanent Account Number (PAN) by every participant in securities market. Members holding shares in electronic form are therefore requested to submit the PAN to their Depository Participants with whom they are maintaining their demat account(s). Members holding shares in physical form can submit their PAN details to the Company or Registrar and Share Transfer Agent.

4. Members holding shares in electronic form may please note that as per the regulations of

5. Securities and Exchange Board of India (SEBI), National Security Depository Services Limited (NSDL) and Central Depository Services (India) Limited (CDSL), the Company is obliged to print the bank details on the dividend warrants as furnished by these depositories to the Company and the Company cannot entertain any request for deletion/ change of Bank details already printed on dividend warrants as per the information received from the concerned depositories. In this regard, Members should contact their Depository Participants (DP) and furnish particulars of any changes desired by them.

6. Brief resume, details of shareholding and Directors’ inter-se relationship of Directors seeking election/ re-election/ changes in terms as required under Regulation 36 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Secretarial Standards 2, are provided as Annexure to this Notice.

7. The shareholders are advised to register/update their e-mail address with the Company/RTA in respect of shares held in physical form and with the concerned Depository Participant in respect of shares held in electronic form in order to enable the Company to serve documents in electronic mode.

8. Members who have not received the split share certificates ( 1/- face value) are requested to receive the split share certificates by surrendering their old share certificates ( 10/- face value) to the Company’s Registrar & Share Transfer Agent immediately.

9. Annual financial statements and related details of the wholly owned subsidiary Companies are posted on the Company’s website and is also kept for inspection at the Registered Office of the Company and at the Subsidiary Company. A copy of the same will be provided to the members on request.

10. Soft copies the Register of Directors and Key Managerial Personal and their shareholding, maintained under Section 170 of the Companies Act, 2013 and the Register of Contracts or Arrangements in which Directors are interested, maintained under of Section 189 of the Companies Act, 2013 will be available for inspection by the members during the AGM.

31. Registration of email ID and Bank Account details:

In case the shareholder’s email ID is already registered with the Company/its Registrar & Share Transfer Agent

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ANNUAL REPORT 2020-21

NOTICE OF THE 61[ST] ANNUAL GENERAL MEETING

ELGI EQUIPMENTS LIMITED

(RTA)/Depositories, log in details for e-voting are being sent on the registered email address.

In case the shareholders has not registered his/ her/their email address with the Company/its RTA/ Depositories and or not updated the Bank Account mandate for receipt of dividend, the following instructions are to be followed:

• (i) In case of shares held in physical form, kindly log in to the website of our RTA, Link Intime India Private Ltd. at www.linkintime.co.in under Investor Services > Email/Bank detail Registration - fill in the details and upload the required documents and submit. (or)

• (ii) In the case of Shares held in Demat mode, the shareholder may please contact the Depository Participant (“DP”) and register the email address and bank account details in the demat account as per the process followed and advised by the DP.

Voting Through Electronic Means

Pursuant to the provisions of Section 108 of the Companies Act, 2013 read with Rule 20 of the Companies (Management and Administration) Rules, 2014, (as amended) (including any statutory modification(s), clarifications, exemptions or re-enactments thereof for the time being in force), Regulation 44 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Secretarial Standard on General Meetings (SS - 2), the Company is providing its Members with the facility to cast their vote electronically from a place other than venue of the Annual General Meeting (“remote e-voting”) using an electronic voting system provided by Link Intime India Private Ltd (‘LIIPL’), for all members of the Company to enable them to cast their votes electronically, on all the business items set forth in the Notice of Annual General Meeting and the business may be transacted through such remote e-voting. The instructions to e-voting, as given below, explain the process and manner for casting of vote(s) in a secure manner.

• I. Any person, who acquires shares of the Company and becomes Member of the Company after dispatch of Annual General Meeting Notice and holding shares as as on Friday, 2[nd] July, 2021, may refer to this Notice of the Annual General Meeting, posted on Company’s website www.elgi.com for detailed procedure with regard to remote e-voting. Any person who ceases to be the member of the Company as on the cut-off date and is in receipt of this Notice, shall treat this Notice for information purpose only.

• II. The Members who have cast their vote by remote e-voting prior to the AGM may also attend/ participate in the AGM through VC / OAVM but shall not be entitled to cast their vote again. Once the vote on a Resolution is cast by the Member, the Member shall not be allowed to change it subsequently.

• III. The voting period begins on 30[th] July, 2021 at 9.00 AM (IST) and ends on 1[st] August, 2021 at 5.00 PM (IST). During this period shareholders’ of the Company, holding shares either in physical form or in dematerialized form, as on the cut-off date (record date) of Monday, 26[th] July, 2021 may cast their vote electronically. The e-voting module shall be disabled by LIIPL for voting thereafter.

The instructions for members for voting electronically are as under: -

Pursuant to SEBI circular dated December 9, 2020 on e-Voting facility provided by Listed Companies, Individual shareholders holding securities in demat mode can vote through their demat account maintained with Depositories and Depository Participants only post 9[th] June, 2021.

Shareholders are advised to update their mobile number and email ID in their demat accounts to access e-Voting facility.

Login method for Individual shareholders holding securities in demat mode/ physical mode is given below:-

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ANNUAL REPORT 2020-21

NOTICE OF THE 61[ST] ANNUAL GENERAL MEETING

ELGI EQUIPMENTS LIMITED

Type of shareholders	Login Method
Individual Shareholders holding securities in demat mode with NSDL	• If you are already registered for NSDL IDeAS facility, please visit the e-Services website of NSDL. Open web browser by typing the following URL: https://eservices.nsdl.comeither on a Personal Computer or on a mobile. Once the home page of e-Services is launched, click on the “Benefcial Owner” icon under “Login” which is available under ‘IDeAS’ section. A new screen will open. You will have to enter your User ID and Password. • After successful authentication, you will be able to see e-Voting services under Value added services. Click on “Access to e-Voting” under e-Voting services and you will be able to see e-Voting page. Click on Company name or e-Voting service provider name and you will be re-directed to e-Voting service provider website for casting your vote during the remote e-Voting period or joining virtual meeting & voting during the meeting. • If the user is not registered for IDeAS e-Services, option to register is available at https://eservices.nsdl.com. Select “Register Online for IDeAS “Portal or click at https://eservices.nsdl.com/SecureWeb/IdeasDirectReg.jsp • Visit the e-Voting website of NSDL. Open web browser by typing the following URL: https://www.evoting.nsdl.com/ either on a Personal Computer or on a mobile. Once the home page of e-Voting system is launched, click on the icon “Login” which is available under ‘Shareholder/Member’ section. A new screen will open. You will have to enter your User ID (i.e. your sixteen digit demat account number held with NSDL), Password/OTP and a Verifcation Code as shown on the screen. After successful authentication, you will be redirected to NSDL Depository site wherein you can see e-Voting page. Click on Company name or e-Voting service provider name and you will be redirected to e-Voting service provider website for casting your vote during the remote e-Voting period or joining virtual meeting & voting during the meeting. • Shareholders/Members can also download NSDL Mobile App “NSDL Speede” facility by scanning the QR code mentioned below for seamless voting experience.
Individual Shareholders holding securities in demat mode with CDSL	• Users who have opted for CDSL Easi / Easiest facility, can login through their user id and password. Option will be made available to reach e-Voting page without any further authentication. The URL for users to login to Easi / Easiest are https://web.cdslindia.com/myeasi/home/loginor www.cdslindia.comand click on New System Myeasi. • After successful login of Easi / Easiest the user will be also able to see the E Voting Menu. The Menu will have links of e-Voting service provider i.e. NSDL, KARVY, LINK NTIME, CDSL. Click on e-Voting service provider (ESP) name to cast your vote. • If the user is not registered for Easi/Easiest, option to register is available at https://web.cdslindia.com/myeasi./Registration/EasiRegistration • Alternatively, the user can directly access e-Voting page by providing demat Account Number and PAN from a link in www.cdslindia.comhome page. The system will authenticate the user by sending OTP on registered Mobile & Email as recorded in the demat Account. After successful authentication, user will be provided links for the respective ESP where the E Votingis inprogress.

Type of shareholders	Login Method
Individual Shareholders holding securities in demat mode with NSDL	• If you are already registered for NSDL IDeAS facility, please visit the e-Services website of NSDL. Open web browser by typing the following URL: https://eservices.nsdl.comeither on a Personal Computer or on a mobile. Once the home page of e-Services is launched, click on the “Benefcial Owner” icon under “Login” which is available under ‘IDeAS’ section. A new screen will open. You will have to enter your User ID and Password. • After successful authentication, you will be able to see e-Voting services under Value added services. Click on “Access to e-Voting” under e-Voting services and you will be able to see e-Voting page. Click on Company name or e-Voting service provider name and you will be re-directed to e-Voting service provider website for casting your vote during the remote e-Voting period or joining virtual meeting & voting during the meeting. • If the user is not registered for IDeAS e-Services, option to register is available at https://eservices.nsdl.com. Select “Register Online for IDeAS “Portal or click at https://eservices.nsdl.com/SecureWeb/IdeasDirectReg.jsp • Visit the e-Voting website of NSDL. Open web browser by typing the following URL: https://www.evoting.nsdl.com/ either on a Personal Computer or on a mobile. Once the home page of e-Voting system is launched, click on the icon “Login” which is available under ‘Shareholder/Member’ section. A new screen will open. You will have to enter your User ID (i.e. your sixteen digit demat account number held with NSDL), Password/OTP and a Verifcation Code as shown on the screen. After successful authentication, you will be redirected to NSDL Depository site wherein you can see e-Voting page. Click on Company name or e-Voting service provider name and you will be redirected to e-Voting service provider website for casting your vote during the remote e-Voting period or joining virtual meeting & voting during the meeting. • Shareholders/Members can also download NSDL Mobile App “NSDL Speede” facility by scanning the QR code mentioned below for seamless voting experience.
Individual Shareholders holding securities in demat mode with CDSL	• Users who have opted for CDSL Easi / Easiest facility, can login through their user id and password. Option will be made available to reach e-Voting page without any further authentication. The URL for users to login to Easi / Easiest are https://web.cdslindia.com/myeasi/home/loginor www.cdslindia.comand click on New System Myeasi. • After successful login of Easi / Easiest the user will be also able to see the E Voting Menu. The Menu will have links of e-Voting service provider i.e. NSDL, KARVY, LINK NTIME, CDSL. Click on e-Voting service provider (ESP) name to cast your vote. • If the user is not registered for Easi/Easiest, option to register is available at https://web.cdslindia.com/myeasi./Registration/EasiRegistration • Alternatively, the user can directly access e-Voting page by providing demat Account Number and PAN from a link in www.cdslindia.comhome page. The system will authenticate the user by sending OTP on registered Mobile & Email as recorded in the demat Account. After successful authentication, user will be provided links for the respective ESP where the E Votingis inprogress.

13

ANNUAL REPORT 2020-21

NOTICE OF THE 61[ST] ANNUAL GENERAL MEETING

ELGI EQUIPMENTS LIMITED

Type of shareholders	Login Method
Individual Shareholders (holding securities in demat mode) & login through their depository participants	• You can also login using the login credentials of your demat account through your Depository Participant registered with NSDL/CDSL for e-Voting facility. • Once login, you will be able to see e-Voting option. Once you click on e-Voting option, you will be redirected to NSDL/CDSL Depository site after successful authentication, wherein you can see e-Voting feature. Click on Company name or e-Voting service provider name and you will be redirected to e-Voting service provider website for casting your vote during the remote e-Voting period or joining virtual meeting& votingduringthe meeting.
Individual Shareholders holding securities in Physical mode & evoting service Provider is LINKINTIME.	1. Open the internet browser and launch the URL: https://instavote.linkintime.co.in Click on“Sign Up”under‘SHARE HOLDER’tab and register with your following details: - A. User ID:Shareholders/ members holding shares inphysical form shall provide Event No + Folio Number registered with the Company. B. PAN:Enter your 10-digit Permanent Account Number (PAN) (Members who have not updated their PAN with the Depository Participant (DP)/ Company shall use the sequence number provided to you, if applicable. C. DOB/DOI:Enter the Date of Birth (DOB) / Date of Incorporation (DOI) (As recorded with your DP / Company - in DD/MM/YYYY format) D. Bank Account Number:Enter your Bank Account Number (last four digits), as recorded with your DP/Company. • Shareholders/ members holding shares inphysical formbut have not recorded ‘C’ and ‘D’, shall provide their Folio number in ‘D’ above Set the password of your choice (The password should contain minimum 8 characters, at least one special Character (@!#$&), at least one numeral, at least one alphabet and at least one capital letter). Click “confrm” (Your password is now generated). 2. Click on ‘Login’ under‘SHARE HOLDER’tab. 3. Enter your User ID, Password and Image Verifcation (CAPTCHA) Code and click on‘Submit’. 4. After successful login, you will be able to see the notifcation for e-voting. Select‘View’icon. 5. E-voting page will appear. 6. Refer the Resolution description and cast your vote by selecting your desired option ‘Favour / Against’(If you wish to view the entire Resolution details, click on the ‘View Resolution’fle link). 7. After selecting the desired option i.e. Favour / Against, click on‘Submit’. A confrmation box will be displayed. If you wish to confrm your vote, click on‘Yes’*, else to changeyour vote, click on ‘No’ and accordinglymodify your vote.

14

ANNUAL REPORT 2020-21

NOTICE OF THE 61[ST] ANNUAL GENERAL MEETING

ELGI EQUIPMENTS LIMITED

Institutional shareholders:

Institutional shareholders (i.e., other than Individuals, HUF, NRI etc.) and Custodians are required to log on the e-voting system of LIIPL at https://instavote.linkintime.co.in and register themselves as ‘Custodian / Mutual Fund / Corporate Body’ . They are also required to upload a scanned certified true copy of the board resolution /authority letter/power of attorney etc. together with attested specimen signature of the duly authorised representative(s) in PDF format in the ‘Custodian / Mutual Fund / Corporate Body’ login for the Scrutinizer to verify the same.

Individual Shareholders holding securities in Physical mode & evoting service Provider is LINKINTIME, who have forgotten the password:

• z Click on ‘Login’ under ‘SHARE HOLDER’ tab and further Click ‘forgot password?’

• z Enter User ID , select Mode and Enter Image Verification (CAPTCHA) Code and Click on ‘Submit’ .

• z In case shareholders/ members is having valid email address, Password will be sent to his / her registered e-mail address.

• z Shareholders/ members can set the password of his/her choice by providing the information about the particulars of the Security Question and Answer, PAN, DOB/DOI, Bank Account Number (last four digits) etc. as mentioned above.

• z The password should contain minimum 8 characters, at least one special character (@!#$&*), at least one numeral, at least one alphabet and at least one capital letter.

Individual Shareholders holding securities in demat mode with NSDL/ CDSL who have forgotten the password:

• z Shareholders/ members who are unable to retrieve User ID/ Password are advised to use Forget User ID and Forget Password option available at abovementioned depository/ depository participants website.

• » It is strongly recommended not to share your password with any other person and take utmost care to keep your password confidential.

• » For shareholders/ members holding shares in physical form, the details can be used only for voting on the resolutions contained in this Notice.

During the voting period, shareholders/ members can login any number of time till they have voted on the resolution(s) for a particular “Event”.

Helpdesk for Individual Shareholders holding securities in demat mode:

In case shareholders/ members holding securities in demat mode have any technical issues related to login through Depository i.e., NSDL/ CDSL, they may contact the respective helpdesk given below:

Login Type	Helpdesk Details
Individual Shareholders holding securities in demat mode with NSDL	Members facing any technical issue in login can contact NSDL helpdesk by sending a request at evoting@nsdl.co.inor call at toll free no.: 1800 1020 990 and 1800 22 44 30
Individual Shareholders holding securities in demat mode with CDSL	Members facing any technical issue in login can contact CDSL helpdesk by sending a request at helpdesk.evoting@cdslindia.comor contact at 022- 23058738 or 22-23058542-43.

Helpdesk for Individual Shareholders holding securities in physical mode/ Institutional shareholders & evoting service Provider is LINKINTIME.

In case shareholders/ members holding securities in physical mode/ Institutional shareholders have any queries regarding e-voting, they may refer the Frequently Asked Questions (‘FAQs’) and InstaVote e-Voting manual available at https://instavote.linkintime.co.in, under Help sectionor send an email to enotices@linkintime.co.in or contact on: - Tel: 022 –4918 6000. InstaVote Support Desk Link Intime India Private Limited

Process for those shareholders whose email address is not registered with the Company/Depositories for obtaining login credentials for e-voting for the resolutions proposed in this notice:

1. For physical shareholders – please provide necessary details like Folio No., Name of shareholder, scanned copy of the share certificate (front and back), PAN (self-attested scanned copy of PAN card), AADHAR (self-attested scanned copy of Aadhar Card) by email to coimbatore@linkintime.co.in.

2. For Demat shareholders – Members are requested to update their email address with the depository participants by following the procedure advised by them and then follow the instructions as detailed above to login for e-voting.

15

ANNUAL REPORT 2020-21

NOTICE OF THE 61[ST] ANNUAL GENERAL MEETING

ELGI EQUIPMENTS LIMITED

Instructions for Shareholders/Members to attend the Annual General Meeting through InstaMeet (VC/OAVM) are as under:

• z Shareholders/Members are entitled to attend the Annual General Meeting through VC/OAVM provided by Link Intime by following the below mentioned process. Facility for joining the Annual General Meeting through VC/OAVM shall open 30 minutes before the time scheduled for the Annual General Meeting and will be available to the Members on first come first serve basis.

• z Shareholders/Members are requested to participate on first come first serve basis as participation through VC/OAVM is limited and will be closed on expiry of 15 (fifteen) minutes from the scheduled time of the Annual General Meeting. Shareholders/ Members with >2% shareholding, Promoters, Institutional Investors, Directors, KMPs, Chairpersons of Audit Committee, Nomination and Remuneration Committee, Stakeholders Relationship Committee and Auditors etc. may be allowed to the meeting without restrictions of first-come-first serve basis. Members can log in and join 30 (Thirty) minutes prior to the schedule time of the meeting and window for joining shall be kept open till the expiry of 15 (fifteen) minutes after the schedule time.

• z Shareholders/ Members will be provided with InstaMeet facility wherein Shareholders/ Member shall register their details and attend the Annual General Meeting as under:

• Open the internet browser and launch the URL for InstaMeet https://instameet.linkintime.co.in and register with your following details:

  • a. DP ID / Client ID or Beneficiary ID or Folio No.: Enter your 16 digit DP ID / Client ID or Beneficiary ID or Folio Number registered with the Company

  • b. PAN: Enter your 10-digit Permanent Account Number (PAN) (members who have not updated their PAN with the Depository Participant or Company shall use the sequence number provided to you, if applicable)

  • c. Enter your Mobile No.

  • d. Enter your Email ID, as recorded with your DP/Company.

• Click “Go to Meeting”

Note:

Shareholders/ Members are encouraged to join the Meeting through Tablets/ Laptops connected through broadband for better experience.

Shareholders/ Members are required to use Internet with a good speed (preferably 2 MBPS download stream) to avoid any disturbance during the meeting.

Please note that Shareholders/Members connecting from Mobile Devices or Tablets or through Laptops connecting via Mobile Hotspot may experience Audio/ Visual loss due to fluctuation in their network. It is therefore recommended to use stable Wi-Fi or LAN connection to mitigate any kind of aforesaid glitches.

In case the shareholders/members have any queries or issues regarding e-voting, you can write an email to instameet@linkintime.co.in or Call us: - Tel: (022-49186175)

InstaMeet Support Desk Link Intime India Private Limited

Instructions for Shareholders/Members to register themselves as Speakers during Annual General Meeting:

• z Shareholders/ Members who would like to express their views/ask questions during the meeting may register themselves as a speaker by sending their request mentioning their name, demat account number/folio number, email id, mobile number at investor@elgi.com on or before Sunday, 1[st] August, 2021 at 12.00 PM.

• z The first 20 Speakers on first come basis will only be allowed to express their views/ask questions during the meeting.

• z Shareholders/ Members, who would like to ask questions, may send their questions in advance mentioning their name, demat account number/ folio number, email ID & mobile number at investor@elgi.com. The same will be replied by the Company suitably.

Note:

Those shareholders/members who have registered themselves as a speaker will only be allowed to express their views/ask questions during the meeting. The Company reserves the right to restrict the number of speakers depending on the availability of time for the Annual General Meeting.

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ANNUAL REPORT 2020-21

NOTICE OF THE 61[ST] ANNUAL GENERAL MEETING

ELGI EQUIPMENTS LIMITED

Shareholders/ Members should allow to use camera and are required to use Internet with a good speed (preferably 2 MBPS download stream) to avoid any disturbance during the meeting.

Instructions for Shareholders/Members to Vote during the Annual General Meeting through InstaMeet:

Once the electronic voting is activated during the meeting, shareholders/ members who have not exercised their vote through the remote e-voting can cast the vote as under:

1. On the Shareholders VC page, click on the link for e-Voting “Cast your vote”.

2. Enter Demat Account No. / Folio No. and OTP (received on the registered mobile number/ registered email ID) received during registration for InstaMeet and click on ‘Submit’.

3. After successful login, you will see “Resolution Description” and against the same the option “Favour/ Against” for voting.

4. Cast your vote by selecting appropriate option i.e., “Favour/Against” as desired.

5. Enter the number of shares (which represents no. of votes) as on the cut-off date under ‘Favour/Against’.

6. After selecting the appropriate option i.e., Favour/ Against as desired and you have decided to vote, click on “Save”. A confirmation box will be displayed. If you wish to confirm your vote, click on “Confirm”, else to change your vote, click on “Back” and accordingly modify your vote.

7. Once you confirm your vote on the resolution, you will not be allowed to modify or change your vote subsequently.

Note:

Shareholders/ Members, who will be present in the Annual General Meeting through InstaMeet facility and have not cast their vote on the resolutions through remote e-Voting and are otherwise not barred from doing so, shall be eligible to vote through e-Voting facility during the meeting.

Shareholders/ Members who have voted through Remote e-Voting prior to the Annual General Meeting will be eligible to attend/participate in the Annual General Meeting through InstaMeet. However, they will not be eligible to vote again during the meeting.

In case the shareholders/members have any queries or issues regarding e-voting, you can write an email to instameet@linkintime.co.in or Call us: - Tel: (022-49186175)

InstaMeet Support Desk Link Intime India Private Limited

• I. The voting rights of shareholders shall be in proportion to their shares of the paid up equity share capital of the Company as on the cut-off date of Monday, 26[th] July, 2021.

• II. Mr. M.D.Selvaraj, FCS of MDS & Associates, Company Secretaries, Coimbatore, has been appointed as the Scrutinizer to scrutinize the voting and remote e-voting process in a fair and transparent manner.

• III. The Chairman shall, at the Annual General Meeting, at the end of discussion on the resolutions on which voting is to be held, allow e-voting for all those members who are present at the Annual General Meeting by electronic means but have not cast their votes by availing the remote e-voting facility.

• IV. The Scrutinizer shall, after the conclusion of voting at the Annual General Meeting, first count the votes cast during the AGM and thereafter unblock the votes cast through remote e-voting in the presence of at least two witnesses not in the employment of the Company and shall make, not later than 48 hours of the conclusion of the AGM, a consolidated scrutinizer’s report of the total votes cast in favour or against, if any, to the Chairman or a person authorized by him in writing, who shall countersign the same and declare the result of the voting forthwith.

• V. The results shall be declared within 2 days from the conclusion of the Annual General Meeting. The results declared along with the report of the Scrutinizer shall be placed on the website of the Company www.elgi.com and on the website of LIIPL and be communicated to the Stock Exchanges, where the shares of the Company are listed, by the Chairman or a person authorized by him.

17

ANNUAL REPORT 2020-21

NOTICE OF THE 61[ST] ANNUAL GENERAL MEETING

ELGI EQUIPMENTS LIMITED

Additional information on Directors seeking appointment/ re-appointment as required under Regulation 36(3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Secretarial Standards – 2 (SS-2) issued by ICSI.

by ICSI.
Name	Dr. T.Balaji Naidu	Mr. Harjeet Singh Wahan	Mr. Anvar Jay Varadaraj
Director Identifcation Number	00002755	00003358	07273942
Date of Birth	22/01/1947	06/11/1948	25/04/1986
Nationality	Indian	Indian	USA
Date of appointment on the Board	26/07/1984	01/04/2015	01/04/2020
Relationship with other Directors or Key Managerial Personnel of the Company	He is not related to any of the directors or Key Managerial Personnel of the Company	He is not related to any of the directors or Key Managerial Personnel of the Company	Mr. Anvar Jay Varadaraj is the son of Mr. Jairam Varadraj, Managing Director of the Company.
Qualifcation	MBBS, DLO	BE., (Elec), BM	BA (Economics and Philosophy) & MBA
Experience/ Expertise in functional areas	Has more than 30 years of experience in Medical Profession	He has more than 30 years of experience in quality and businessprocess.	He has more than 10 years of experience in branding and marketing.
No. of shares held	68,500 equityshares	20,000 equityshares	19,25,248 equityshares
			He is presently a Non-
Board position held	Non-Executive, Non Independent Director	Non-Executive Director	Executive Director. He is proposed to be appointed as an Executive Director of
			the Company
Terms and conditions			As per the resolution set
of appointment /	Liable to retire by rotation	Liable to retire by rotation	out in Item No. 6 of the
re-appointment			Notice
Remuneration sought to be paid	Sitting fee only	As per the resolution set out in item No.5 of the Notice and sittingfees	As per the resolution set out in Item No. 6 of the Notice.
Remuneration last drawn (For theyear 2020-21)	Rs.2,20,000/-as sitting fees	Rs.3,80,000/- as sitting fees	Rs.1,50, 000/- as sitting fees
No. of Board meetings attended duringtheyear	6	6	5
Directorships held in other Companies	Adisons Precision Instruments Manufacturing Company Limited	Adisons Precision Instruments Manufacturing Company Limited	1. Elgi Ultra Limited 2. CAI Industries Private Limited 3. CAI Automobiles Private Limited
Chairman/Member of the
Committees of the Board of the other Companies in	Nil	Nil	Nil
which he is a Director

18

ANNUAL REPORT 2020-21

MANAGEMENT DISCUSSION AND ANALYSIS (MDA)

ELGI EQUIPMENTS LIMITED

Management Discussion and Analysis (MDA)

The year, 2020-21 was unique in many ways and the financials reported for the year do not truly reflect the challenges that the business faced. Starting a financial year with a complete lockdown of the economy in the two key markets for the Company, India and Italy, and recording a near-zero revenue in the first month (April, 2020) in some of the key markets, set a challenging tone for the year.

During this unprecedented period, there were three key areas that we focused on. The highest priority was for ensuring employees’ wellbeing and protecting their jobs. Next, was to support customers’ needs amidst the challenging environment. The third was for ensuring the health of the business and the interest of the stakeholders. The Company moved very quickly to address all of the above.

In the interest of employees, the Company shut down its facilities even before the Government of India announced a countrywide lockdown. We reopened the facility for manufacturing operations after ensuring that all the infrastructure was in place to ensure the health and safety of all employees who reported to work. All employees, except those in manufacturing and technology functions, were asked to work remotely and continued to do so through the year.

The sales, marketing, and product management teams increased customer engagement efforts and embraced new ways of reaching out to customers proactively, to understand and address their needs, while the backend team in the Company geared up for the safe and timely delivery of products and services.

The Company’s leadership teams at various levels across the geographies increased the frequency of their meetings, using all the technologies available, to remain strongly connected and engage with all stakeholders. Everyone in the Company pitched in to drive costs down and conserve cash, to address our commitment to protect employment and stakeholders’ interests even while ensuring that we emerged strong to leverage future opportunities. The Company also spent significant time in the second part of the year in creating a robust strategic business plan for the mid-term.

The result of the short-term focused efforts can be seen in the increased profits and reduced net debt position as at the end of the year. The benefits of long-term focused

efforts will be visible as we are poised to deliver consistent top-line and profitable growth in the next 5 years.

https://www.elgi.com/in-wp-content/uploads/2020/7/ ELGi-Annual-Report-2019-2020.pdf

In the MD&A of 2019-20, we had stated that we would present a financial direction for the future while presenting the Q1 results for 2020-21. We could not do this either at that time or during the subsequent quarters. We had to go back to the drawing board and collectively as a team review the context, our position and distill out directions so that we can confidently achieve the intended milestones within the time lines promised. We have developed a Strategic Business Plan (SBP), which embeds a financial plan focused on setting goals on revenue, profitability (measured by EBITDA) and returns (measured by ROCE). The Annual Business Plan (ABP) will be a subset of the SBP. In addition to sales EBITDA and ROCE are two additional goals we are setting for the medium term. Broad targets for the SBP to be achieved by 2025-26 are:

• z Revenue - $ 400Mn

• z EBITDA - 16%

• z ROCE - 30%

The SBP is focused on:

• z India, North America, Europe, SEA and Australia

• z Backward integration in manufacturing

• z New products and technology

• z Focus on growing the aftermarket revenue

• z Talent development and management

• z Digital strategy

While each business region and global function are identifying the strategic initiatives required to achieve their respective SBP goals, at a corporate level, the key drivers are:

• z Aggressive working capital management and cash generation

• z Judicious investments in organic and inorganic opportunities

• z Strategic divestiture of non-core portfolios and real estate

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ANNUAL REPORT 2020-21

MANAGEMENT DISCUSSION AND ANALYSIS (MDA)

ELGI EQUIPMENTS LIMITED

Detailed discussion on performance in the year 2020-21:

While 2018-19 was a strong year, slowdown was seen in 2019-20 starting from July 2019. There were some signs of an uptick in December 2019 which continued till the time the first wave of the pandemic hit market sentiments in March 2020. During the previous year 2019-20, the Company acquired Michigan Air Solutions, LLC, an independent compressor distributor in the USA and the Company’s European expansion plan gained full traction.

The year 2020-21 started amidst the raging pandemic and consequent lockdowns in many key markets. While the lockdown in India lasted for over 6 weeks during the year, other markets did not have such long lockdowns. However, there was a huge uncertainty around the business outlook for the year. The right thing to do was to conserve cash and contain costs. The Company spent significant time and efforts to build mitigation plans for a worst-case scenario while employee health and safety remained the primary focus.

We closed the first quarter of the year on a low note registering a drop in top-line and profits. We started witnessing the business bouncing back from the second quarter. While the initial belief was that it could be driven by some pent-up demand, the sales continued to grow with steady order inflow across most markets. The sales growth, our prudent cost measures, and governmental support for Covid in certain markets like the USA and Australia helped register good results for the second quarter. During the third quarter, while the sales continued to grow, the entire industry started facing severe cost pressures driven by volatile commodity prices. This definitely became a dampener as it was difficult to pass on the price increase impact to the market which had just started coming back to normal levels. The unexpected increase in material cost had a negative impact on our contribution margins. However, the Company’s continued efforts to keep other overheads in check helped offset loss of contribution margins to a certain extent. The buoyancy in the market continued well into the fourth quarter which helped us register some impressive sales growth. However, the volatility in commodity prices continued unabated. Even though we tried to roll out a price increase for our finished products and services, it was not commensurate with the cost increase. Overall for the full year, we have registered a small sales growth despite a very subdued first quarter. Our strong focus on containing people cost and overheads coupled with government subsidies

in two countries helped us deliver an improved, strong bottom-line for the year.

Our focus on cash conservation continued through the year. We realized significant cash from the working capital management and improved profitability during the year. Our net-debt position reduced significantly in 2020-21. While the opening net debt was 2599mn, we closed the year with a net debt of 925 mn.

International markets: Our key markets of focus continue to be the USA, Europe, and Australia.

USA: The impact of the pandemic was significant at the beginning of the year negatively impacting our served markets but we did experience recovery with increased demand for our products and services during the second half of the year. The region increased revenue by over 10% with the addition of Michigan Air Solutions, LLC to its portfolio of businesses and going direct to the market with the portable compressor products. Improvement in contribution was accomplished by price realization and product mix. Disciplined cost control measures further helped increase the overall profitability.

On the business development front, the region made further progress by entering into key strategic Distributor Served Areas. Besides expanding our independent distributor base, we also launched three new joint ventures with local partners as part of our Go-To-Market program. The implementation of this strategy is progressing to the expectations and we are experiencing favorable impact in these target markets. Furthermore, we gained traction in Oil-Free product installations in several key market segments positioning us for future growth in this attractive product category. Also, our initiative to develop new channels and penetrate target market segments with the portable compressor portfolio is creating new opportunities for this business. As we continue to develop new channel partners and expand our market coverage, we will make consistent progress towards achieving our growth aspirations.

Europe: The year began with the region continuing its efforts in hiring additional resources as per plan to enhance its presence and competitiveness in Europe. Italy - the key market for the Region was in lockdown as a consequence of the pandemic resulting in the closure of their Rotair facilities, postponement of hiring, and a total travel ban. While Italy slowly began to reopen in May 2020, Europe as a whole was impacted similarly, but at varying degrees of infection wave intensity and timing throughout the

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MANAGEMENT DISCUSSION AND ANALYSIS (MDA)

ELGI EQUIPMENTS LIMITED

year. During the crisis, Europe’s team prioritized the safety of employees while focusing on securing and developing new channel partners – oftentimes via video conferencing. As a prudent response to the emerging situation, the Region initiated measures to substantially reduce costs. The benefits of these efforts were realized during the second half of the year as the market began to reopen The team was well-positioned to serve their customers resulting in the profitable growth of 80% in the industrial business segment. This was made possible by the expansion of the Region’s market presence through the addition of 100 new channel partners in 26 countries. The team also created important reference installations within key customer segments and successfully introduced ELGi’s oil-free AB series screw technology throughout Europe thereby helping their customers realize dramatic reductions in the total cost of ownership, improved reliability, and a reduction of their environmental impact.

Australia: Our strategic acquisition of F.R.Pulford & Son Pty Ltd, an independent distributor, to gain customer access in key markets, has served us very well. In a tough and challenging year, under pandemic conditions, the team at Pulford delivered a commendable performance. Overall we registered more than 20% sales growth in Australia, including sales to various distributors. The growth in sales, coupled with cost-saving measures helped us deliver improved profit for the year. During the year, we increased our presence in target segments and secured key wins that would serve as good reference installations.

Domestic market - India: In the last quarter of the year, we had kick-started the second phase of the go-to-market initiative focused on enhancing our reach and market share. The year began with a countrywide lockdown and sales dropped significantly in the first quarter. On the back of a business revival post the lockdown, the order flow kept improving through the year. The business grew quarter on quarter for the next three quarters and we finished the year on a good note recording sales just above the previous year’s level despite two months of near-zero business. The team, besides quickly adapting to the new way of doing the business, ensured strong customer engagement leading to the continued flow of orders.

The Oil-free - Disrupted, AB series product has been gaining significant acceptance across different segments in the market. The customers are realizing the benefits of significant efficiency and lower life cycle cost which

has helped us win many break-through orders during the year. The portable products registered good growth over last year due to increased construction and mining activity The Rail segment faced challenges in the first half of the year due to lower running of trains but picked up gradually during the year.

ATS ELGI Limited: The Indian Automotive market was already facing headwinds and had slowed down during 2019-20. The year 2020-21 started on this backdrop and the industry suffered the most with the advent of pandemic and the consequential impact on the economy. The first half of the year was tough for this business and there was a moderate recovery in the second half.

The ATS ELGi team quickly looked for growth opportunities inside and beyond the passenger vehicles market and realized revenues that helped us close the year 10% below our previous year’s sales. Further, the business focused on better price realization to respond to the extraordinary escalation in domestic steel prices and took strong cost-savings measures which helped us close the year with an increase in profit over the previous year. The team also took this opportunity to optimize its working capital by reducing the receivables and inventory significantly which helped them generate good cash flow during the year.

ELGI Sauer Compressors Ltd: Established in the year 2008, ELGI Sauer Compressors Ltd is a joint venture between Elgi Equipments and J.P. Sauer & Sohn, Kiel, Germany. The joint venture manufactures highpressure air and gas compressors for the Navy, Shipping Industry, and Petro/offshore segment. The Joint venture has created a strong brand identity in India and neighboring countries, such as Sri Lanka, Nepal, Bhutan, and Maldives.

This Company is focused on projects business and has been providing standards and customized end to end solutions; from design, engineering, manufacturing to the installation of the compressor units at sites. The business is largely dependent on government budget allocation and capital budget investment by the nongovt segment. The sales grew by 12% during the year. The order book position continues to be healthy and has grown significantly over the previous year. The outlook for the business during 2021-22 is expected to be strong as the Government allocation to this sector is increasing. While the active enquiry level is encouraging, the pandemic situation has slowed down the order finalization as there is a focus on cash conservation across segments.

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ANNUAL REPORT 2020-21

MANAGEMENT DISCUSSION AND ANALYSIS (MDA)

ELGI EQUIPMENTS LIMITED

During the year, ELGi Sauer’s Engineering Support Team Coimbatore (ESTC) was established to provide exclusive engineering support to the parent Company, Sauer-Germany, and its global subsidiaries. It is fully operational now. The ESTC provides complete engineering support comprising of 3D modeling, FEA analysis, and shock calculation. ELGi Sauer has also commenced construction of a new factory in the outskirts of Coimbatore.

Product Management and Marketing: This key global function that connects the customers and the Company did a phenomenal job in converting some of the challenges into opportunities, working closely with the businesses and the technology function. Managing the planned launch of products in the pandemic situation has not been easy. The marketing function quickly embraced new technologies and platforms to engage with the customers and helped the sales organization to be effective in knowing and meeting market needs. They also utilized the lean periods to enhance awareness and educate end customers on compressor technology, products, energy conservation, etc.

Technology: As another key global function, the technology function adjusted to the new work norms quickly. The team adopted a judicious mix of working remotely and working from the office to keep all the product development and innovation projects progressing on schedule during this tough period. Product upgrades and new product roll-outs that were planned and executed helped us significantly in an otherwise challenging year.

Operations: The operations team seamlessly moved to the changing work environment and timings, including working in shifts. Significant productivity improvements were made and the team also ensured there was only minimal interruption to the supply chain, resulting in the consistent supply of raw materials to the factories. While focusing on the health, safety, and social distancing norms, the team ensured continuous delivery of products to meet market demands. The operations team also delivered record production across various product lines during the year.

Human Resources: Providing and ensuring health, safety, and environment for all became an imperative and required significant commitment more than ever before under the new pandemic situation. The other critical need was to maintain employee engagement at very high

levels in a tough environment. The Human Resources function demonstrated its commitment to employee wellbeing by being sensitive to employees’ changing needs and the challenges they faced. From creating awareness to extending all support to employees across functions and businesses remained the priority through the year. Employees were sensitized on COVID-19 protocols to be followed, both at factories and offices. The organization has enforced these protocols strictly with the co-operation of the employees.

Finance: The year began with lots of uncertainties across all the Geographies and the finance team started working right away with the CEO and the business leaders to create contingency business plans and upfront measures to mitigate the potential impact on the financials of the Company. During the year, the finance function was focused on efficiently managing working capital and implementing cost control measures. The finance team continued to extend support to the business and ensured on-time completion of financial reporting and auditing. It is commendable that the team completed their immense responsibilities by operating from remote locations for the most part of the year. The quick adoption of technology and the unflinching commitment of the team made this possible.

Overall summary: While the uncertainties around Covid continue to be a dampener, the Company is focused on staying the course while committing to the strategic initiatives to deliver the mid-term goals of the Company. In the short-term, the challenges are volatile commodity prices, high freight costs, delays in shipment, and disruption of production and movement of goods due to pandemic. Our technology function, with its continuous focus on cost reduction will help the Company mitigate some of the costrelated issues and alternate sourcing opportunities to minimize dependence on concentration and movement of goods.

The short-term opportunities are seen in the growing demand for our products in certain segments like pharma and medical equipment.

The Company is continuing to improve its internal controls and mitigate risks through continuous improvements and investments in systems and processes. Upgrading various IT platforms, moving to cloud storage in a phased manner, and investing in technologies to protect the IT system are given enhanced priority in the current situation. Besides

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MANAGEMENT DISCUSSION AND ANALYSIS (MDA)

ELGI EQUIPMENTS LIMITED

implementing sufficient protection and control systems, the Company regularly conducts vulnerability assessment and penetration testing (VAPT) audits to identify threats and mitigate issues if any.

The year under review has been abnormal due to the external environment. While sales did not grow as expected, the Company has managed to improve the profits and Return on Capital Employed (ROCE).

INR Mn	Compressor	Automotive	Consolidated
	2019-20 2020-21	2019-20 2020-21	2019-20 2020-21
Sales	16494 17624	1800 1616	18294 19241
Growth %	(1%) 7%	(9%) (10%)	(2%) 5%
Contribution	6815 7311	562 501	7377 7812
Contribution %	41.3% 41.5%	31.2% 31.0%	40.3% 40.6%
People cost	3759 3849	287 268	4046 4117
Growth %	21% 2%	(2%) (6%)	19% 2%
Other Fixed Cost	1841 1453	131 85	1972 1538
Growth %	0% (21%)	(13%) (35%)	(1%) (22%)
EBITDA	1215 2008	145 148	1359 2157
EBITDA %	7% 11%	8% 9%	7% 11%
PAT %	2% 5%	5% 6%	2% 5%
Average Capital employed	9173 9632	402 324	9574 9957
Growth %	12% 5%	(13%) (19%)	11% 4%
ROCE	8% 16%	31% 42%	9% 17%

A sales growth of 7% in the compressor segment, in spite of a very poor first quarter, was accomplished with the support of international business growth and a strong second half performance in domestic market.

The Company managed to contain the impact of volatile commodity prices through timely internal and external measures further supported by business mix.

The increase in employee cost to support Europe and North America expansions were partially off-set by Covid related Government subsidies that we received in geographies such as North America and Australia.

The Company kept very tight control on other expenses through the year. While lower levels of activity drove some costs down, there were deliberate efforts to reduce certain costs and such reduced levels can be sustained even during “business as usual” times.

EBITDA for the period grew by 65% on a sales growth of 7% aided by significant reduction in expenses.

The Return on Capital Employed grew by 100% this year.

The automotive business segment sales was impacted by the pandemic. However the business managed to retain EBITDA at the same level as previous year.

The Company’s working capital improved significantly during the year driven by focused efforts to reduce inventory and trade receivables. The improved cash flow helped the Company to reduce its net debt significantly as indicated earlier.

In summary, we have gained further traction and market share in many of the key markets in a difficult year. Tight working capital management and prudent cost measures that are getting institutionalized would help the Company improve profits and cash flow in the next year. These, along with the increased focus on talent management, continuous improvement and other strategic initiatives, will enable the Company to meet its mid-term goal and long-term aspirations.

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MANAGEMENT DISCUSSION AND ANALYSIS (MDA)

ELGI EQUIPMENTS LIMITED

Comments on Financial Ratios

During the year there was a significant improvement in the profitability ratio – (Operating profit margin and Net profit margin). This was primarily due to cost saving measures that were initiated and further aided by lower activity levels due to the pandemic situation that prevailed.

The company also witnessed an improvement in Debt Equity ratio as the international entities made repayment of their long term loan instalments which reduced the debt besides increase in equity from the profits for the year.

S.No	Ratios	Analysis of performance table	2020-21	2019-20	% of change
1	Debtors turnover	Trade Receivables turnover ratio (DTR)	5.12	5.09	0.67%
2	Inventory turnover		5.58	5.87	(5.09%)
3	Interest coverage ratio	Interest component ratio (%)	0.70	0.86	(17.64%)
4	Current ratio	Current Ratio	1.51	1.42	6.40%
5	Debt equity ratio	Long Term Debt Equity Ratio	0.09	0.13	(30.16%)
6	Operating proft margin %	Gross Proft Margin (%)	12.28	8.10	51.58%
7	Net Proft margin %	Net Proft Margin (%)	5.26	2.31	127.53%
8	Change in return on net worth	RONW (%)	12.51	5.53	126.22%

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ANNUAL REPORT 2020-21

BOARD’S REPORT

ELGI EQUIPMENTS LIMITED

Board’s Report

Dear Shareholders,

Your Directors hereby present the 61[st] Annual Report along with the audited accounts for the year ended 31[st] March, 2021.

Financial Results

The highlights of the performance of your Company during the fiscal are given hereunder:

( ` In Million)

		(`In Million)
Particulars	2020 - 21	2019 - 20
Proft before depreciation, exceptional items & tax	1,755.21	1644.45
Less : Depreciation	353.29	366.52
: Exceptional items	–	–
Proft Before Tax	1401.92	1277.93
Less: Provision for tax (Net of tax expenses)	351.02	273.69
Net Proft	1050.90	1004.24
Add: Openingbalance in retained earnings	5184.71	4677.91
Less : Dividend & dividend distribution taxpaid duringtheyear	– –	(497.42)
: Transfer togeneral reserve	–	–
: Remeasurement of post-employment beneft obligation, net of tax	9.74	(0.02)
: Transfer to retained earnings of gain on FVOCI equity instruments	2.13	–
Add : Other adjustments	–	–
Closingbalance in P&L account	6247.48	5184.71

Review of Business Operations

The Company realized an operating revenue of 11,001 Million as against 10,811 Million in 2019-20. The details of division wise performance and other operational details are discussed at length in the Management Discussion and Analysis section.

There was no change in the nature of business of the Company during the financial year ended 31[st] March, 2021.

Transfer to reserves

The Company has not transferred any amount to the General Reserve during the year under review. However, an amount of ` 1050.90 million of the current profits has been carried forward under the head retained earnings.

Dividend

For the financial year 2020-21, the Board of Directors at their meeting held on 21[st] May, 2021, has recommended a dividend of ` 0.80/- per share (80%) on the paid-up share capital of 31,69,09,016 equity shares. Subject to the

approval of shareholders, an amount of 253.52 million will be paid as dividend after deducting applicable taxes. (Previous Year 261.45 million)

Pursuant to Regulation 43A of The SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (as amended), the Dividend Distribution Policy of the Company can be accessed on the Company’s website at the link - https://www.elgi.com/in/wp content/uploads/2020/02/ Dividend-Policy.pdf.

Share Capital

The paid-up share capital of the Company as at 31/03/2021 stood at 31,69,09,016/- divided into 31,69,09,016 equity shares of 1/- each.

During the year under review, pursuant to the resolution passed by the members through Postal Ballot on 18[th] September, 2020, the Board of Directors of the Company at their meeting held on 28[th] September, 2020 has issued and allotted 15,84,54,508 equity shares of ` 1/- each as bonus equity shares in the proportion of 1 (one) equity share for every 1 (One) existing equity share

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BOARD’S REPORT

ELGI EQUIPMENTS LIMITED

held by the members by capitalizing the securities premium account of the Company in compliance with the provisions of the Companies Act, 2013 and SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018.

Transfer of Unclaimed Dividend/Shares to Investor Education and Protection Fund

In terms of Sections 124 and 125 of The Companies Act, 2013, unclaimed or unpaid Dividend relating to the financial year 2013-14 is due for remittance to the Investor Education and Protection Fund established by the Central Government.

Further, pursuant to Section 124(6) of the Companies Act, 2013 read with Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, 1,21,859 equity shares of 1/- each on which dividend had remained unclaimed for a period of 7 years have been transferred to the credit of demat account identified by the IEPF Authority during the year under review. Further, the Company has also transferred 4,29,106 bonus equity shares of 1/- each which were allotted during the year under review to the credit of demat account identified by the IEPF Authority in respect of shares which have already been transferred to the Investor Education and Protection Fund.

Annual Return

The Annual Return of the Company for the financial year 2020-21 as required under Section 92(3) of the Companies Act, 2013 is available on the website of the Company and can be accessed on the Company’s website at the link “https://www.elgi.com/in/fnancials/”.

Board Meetings and its Committees conducted during the period under review

During the year under review, 6 (six) Meetings of the Board of Directors, 5 (five) Meetings of the Audit Committee, 2 (two) Meetings of the Nomination and Remuneration Committee, 2 (two) Meetings of the Corporate Social Responsibility Committee, 1 (one) meeting of the Risk Management Committee, 1 (one) meeting of the Compensation Committee and 13 (Thirteen) Meetings of the Stakeholders Relationship Committee were held. Further, the details of the same have been enumerated in the Corporate Governance Report annexed herewith.

Statement on compliance with Secretarial Standards

The Directors have devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards and such systems are adequate and operating effectively.

Directors’ Responsibility Statement

Pursuant to the requirement under Section 134(3)(c) of The Companies Act, 2013, with respect to Directors’ Responsibility Statement, it is hereby confirmed that –

• a. in the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures from those standards;

• b. the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;

• c. the Directors have taken proper and sufficient care for maintenance of adequate accounting records in accordance with the provisions of The Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

• d. the Directors have prepared the annual accounts on a going concern basis;

• e. the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

• f. the Directors had devised proper systems to ensure compliance with the provisions of all the applicable laws and such systems were adequate and operating effectively.

Details in respect of frauds reported by Auditors under Section 143(12) of The Companies Act, 2013 other than those which are reportable to the Central Government

There were no instances of frauds identified or reported by the Statutory Auditors during the course of their audit pursuant to Section 143(12) of The Companies Act, 2013.

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ANNUAL REPORT 2020-21

BOARD’S REPORT

ELGI EQUIPMENTS LIMITED

Declaration of Independent Directors

The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed both under the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Company’s Policy relating to Directors Appointment, Payment of Remuneration and other matters provided under Section 178(3) of the Companies Act, 2013

The Board has, on the recommendation of the Nomination and Remuneration Committee, framed a policy for fixing and revising remuneration of Directors, Key Managerial Personnel, Senior Management Personnel and other employees of the Company. The remuneration policy and criteria for determining qualifications, positive attributes, and independence of Directors and Senior Management Personnel have been stated in Annexure ‘A’ to this report. The Remuneration policy of the Company can be accessed on the Company’s website at the link https://www.elgi. - - com/in/wp content/uploads/2019/05/Remuneration Policy.pdf.

Comments on Auditors’ Report

There are no qualifications, reservations or adverse remarks or disclaimers made by M/s. Price Waterhouse Chartered Accountants LLP, Statutory Auditors and Mr. M.D. Selvaraj, Proprietor of MDS & Associates, Secretarial Auditor, in their respective reports.

Particulars of Loans, Guarantees or Investments made under Section 186 of the Companies Act, 2013

Details of loans given, investments made, guarantees given and securities provided pursuant to the provisions of Section 186 of The Companies Act, 2013, have been given in the notes to the Financial Statements.

Particulars of contracts or arrangements with Related Parties

All transactions entered into with related parties as defined under The Companies Act, 2013 and Regulation 23 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 during the financial year 2020-21 were in the ordinary course of business and on an arm’s length pricing basis. The particulars

of contract and arrangement entered into with related parties referred in Section 188(1) of the Companies Act, 2013, which are material in nature are disclosed in the prescribed Form No. AOC-2 and annexed herewith as ‘Annexure ‘B’ to this report.

The Policy on Related Party Transactions as approved by the Board of Directors of the Company has been uploaded on the Company’s website and may be accessed through the link at https://www.elgi.com/ - - - in/wp content/uploads/2019/05/Related Party Transactions-Policy.pdf.

Material Changes and commitments affecting the financial position of the Company:

There are no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year as on 31/03/2021 and the date of this report.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo:

The information on foreign exchange earnings and outgo, technology absorption, conservation of energy stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 is annexed herewith as Annexure ‘C’.

Risk management plan implementation

Pursuant to the requirement of Regulation 21 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the “SEBI LODR”), the Company has constituted a Risk Management Committee (RMC), consisting of Board members and senior executives of the Company. The Company has in place a Risk Management framework to identify, evaluate business risks and challenges across the Company both at corporate level as also separately for each subsidiary.

The top 10 risks for the Company have been mapped by the operating management (with additional support of external guidance) after extensive deliberations on the nature of the risk being a gross or a net risk and thereafter in a prioritized manner presented to the Board for their inputs on risk mitigation/management efforts. Based on this framework, a Risk Management policy has been adopted.

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BOARD’S REPORT

ELGI EQUIPMENTS LIMITED

The RMC engages in the Risk Management process and has set out a review process so as to report to the Board the progress on the initiatives for the major risks of each of the businesses that the Company is into. The The RMC reviewed the top 10 risks at its meeting held on 29[th] June, 2020 in the year under review. The results of the mitigation measures implemented by the Company will be visible in the below table that shows the comparative position on 29[th] June, 2020 vis-a-vis 20[th] May, 2021.

S.No Risk Category Risk Summary	Position as on 29/06/2020	Risk Response /Mitigation actions Position as on 20/05/2021
1 Compliance Risks The Company’s business is subject to legal and regulatory requirements globally; non-compliance could result in severe consequences	The Company has developed and implemented a process and a software tool to capture and report all applicable compliances in the Company’s geographies globally.	The Company has developed and implemented a process and a software tool to capture and report all applicable compliances in the Company’s geographies globally.
	The Company revisits the compliance checklist periodically and updates them to cover latest legal developments and changes in laws using external consultant’s help. Proof of compliance collected from the respective process owners.	Proof of compliance collected periodically from the respectiveprocess ownersglobally.
		Further, the Company revisits the compliance checklist periodically and updates them to cover latest legal developments and changes in laws using external consultant’s help.
2 Human Resource Risks Recruiting and retaining strong talent is key to achieving the Company’s aspirations; any gaps in these eforts could impact the achievement of revenue and proftability targets.	Competency framework has been developed and rolled out. This is expected to secure access to people with the right expertise in the geographies the Company operates in. The Company also actively monitors and implements its plans on talent development and attrition in key roles across theglobe.	The talent acquisition model is driven by a strong selection process, partnering with specialized search frms, industry contacts. Global competency framework, has been developed and rolled out. Access to people with the right expertise in the geographies the Company operates in is ensured with the above.
	From a compensation perspective, salaries and other conditions are benchmarked to the market and linked to business priorities	The Company also actively monitors and implements its plans on talent development and attrition in key roles across the globe. From a retention perspective, employee compensation and benefts are benchmarked to the marketperiodically.
3 Economic & Market Risks Our global operations are subject to economic and market risks in the geographies we operate in.	India is still a high growth market over a long term and the Company’s relatively diversifed portfolio may mitigate this risk to a certain extent.	India is still a high growth market over a long term and the Company’s relatively diversifed geographical presence will mitigate this risk to a certain extent.
	Well-diversifed sales to customers in multiple countries and industries. Sales of spare parts and services are relatively stable in comparison to equipment sales	Broad product portfolio serving very diverse industry segments mitigates the risks further. Sales of spare parts and services driven by growing installed base ofers sustainable revenue opportunities.

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Risk management plan implementation (Continued...)

S.No Risk Category Risk Summary	Position as on 29/06/2020	Risk Response /Mitigation actions Position as on 20/05/2021
4 Acquisitions, joint ventures and investments could be unsuccessful or consume management time and resources, which could adversely afect our operating results	The Company selects its acquisitions mostly after its own previous experience of dealing with this on a channel level; also, as a standard practice, detailed due diligence is performed with the help of external experts in the legal, fnancial and tax areas to fully understand and factor the risks in both making a decision on the deals as well as arriving at the acquisitionprice	The Company selects its acquisitions strategically and carefully basis its own previous experience and learnings. As a standard practice, detailed due diligence is performed with the help of external experts in the legal, fnancial and tax areas to fully understand and factor the risks in both making a decision on the deals as well as arriving at the acquisition price.
	The integration of the acquired Company is achieved through a judicious mix of centralization and decentralization approach. The Company also ensures that appropriate resources are invested to make the acquisition successful.	The integration of the acquired Company is achieved through a judicious mix of centralization and decentralization approach. The Company also ensures that appropriate resources are invested to make the acquisition successful.
5 Strategic Risk Business continuity could be severely afected due to natural disasters or unexpected events like COVID 19 pandemic	Insurance policies taken by the Company mitigate the risks to a certain extent but these can be revisited to strengthen the scope as required.	Insurance policies taken by the Company mitigates the risks to a certain extent and this is periodically reviewed to strengthen the scope as required.
	The Company has responded swiftly and efectively by managing its costs and cash fows to largely overcome the sales compression caused by COVID-19. The Company has a disaster management plan in place and continues to refne it regularly to meet the changingrequirements.	The Company has responded swiftly and efectively by managing its costs and cash fows to largely overcome the sales compression caused by COVID-19. The Company has a disaster management plan in place and continues to refne it regularly to meet the changing requirements.
6 Supply Chain Risks Disruptions in supplies due to concentration of manufacturing facilities in a single location and reliance on one or few suppliers present risks to business stability	The Company is exploring responses to manufacturing concentration including strategic stocking in various parts of India and the world. Actions would be undertaken on widening the supplier base and develop a global network of suppliers to prevent supplier dependency.	The Company is exploring responses to manufacturing concentration including strategic stocking in various parts of India and the world in the short to mid-term and having assembly operations in global regions in the mid to long-term.
		There is a continuous focus on widening the supplier base and develop a global network of suppliers toprevent supplier dependency.
		Strategic selective backward integration approach to manufacturing is ensuring that most criticalparts are moved in-house.

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Risk management plan implementation (Continued...)

S.No Risk Category Risk Summary	Position as on 29/06/2020 Risk Response /Mitigation actions Position as on 20/05/2021
7 Information Technology Risks Cyber security risks could disrupt the Company’s technology systems, infrastructure, and networks. Gaps in data protection could result in non-compliance of applicable regulations	Availability has been improved by adopting Cloud technologies for some of the critical systems. Emails are scanned and quarantined if risk is detected. Reliability in continuously enhanced by adopting and moving systematically critical systems to the Cloud. Up-to-date technology is deployed to ensure Emails are scanned and quarantined if risk is detected. Multi-factor authentication is implemented for minimizing cyber risks due topassword hacks.
	Multi-factor authentication is being implemented for minimizing cyber risks due topassword hacks.
	IT security audits are performed annually to assess the vulnerabilities in the existing systems. Intelligent security monitoring tools to be evaluated. Data privacy policy is being formulated to complywith GDPR. IT security audits are performed annually to assess the vulnerabilities in the existing systems. The Company is exploring the possibility to move to half-yearly audit besides Deploying intelligent security monitoring tools. Data privacy policy to comply with GDPR is implemented.
8 Financial Risks Exchange rate fuctuations in the various currencies that Company deals in could adversely afect the Company’s fnancial performance	To minimize fuctuation risks, the Company has a strong hedging process and policy in place. The Company also continuously monitors the exchange rates relevant for its geographies and takes suitable actions to ofset negative changes by adjusting selling prices and costs. To minimize fuctuation risks, the Company has a strong hedging process and policy in place besides leveraging the natural edge that is available. The Company also continuously monitors the exchange rates relevant for its geographies and takes suitable actions to ofset adverse changes by adjusting selling prices and costs.
	The Company is working closely with its bankers to understand the regulatory changes in the banking system with reference to managing exchange risks and leverage them suitably.
9 Environmental Risks Global climate change and related regulations can negatively impact our business	The Company expects to focus more on EPSAC and OFSAC machines for its future growth, gradually reducing the impact of DPSAC on its overall portfolio. Environmental factors and regulatory changes happening globally would be closely monitored to efect appropriate actions to align our products with these requirements. The Company expects to focus more on EPSAC and OFSAC machines for its future growth, gradually reducing the impact of DPSAC on its overall portfolio. Environmental factors and regulatory changes happening globally are closely monitored to efect appropriate actions to align our products with these requirements.
	The Company’s operation are constantly upgraded to adopt togreen manufacturing.

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Risk management plan implementation (Continued...)

						Risk Response /Mitigation actions Position as
S.No	Risk Category	Risk Summary			Position as on 29/06/2020	on 20/05/2021
10	Strategic Risks	The Company’s		large	The Company’s CK2	The Company’s CK2 aspiration makes it a
		dependence	on	India	aspiration makes it a goal	goal to diversify and reduce the business
		makes it susceptible to			to diversify and reduce the	concentration in India. The Company believes
		the economic fortunes of			business concentration in	that it now has assembled the infrastructure
		a single geography			India. The Company believes	and resources overseas to implement this
					that it now has assembled	aspiration and the revenue mix is steadily
					the infrastructure and	shifting more favorably.
					resources overseas to
					implement this aspiration
					over the next fewyears.

The Company’s strategic plan for the midterm and the strategic initiatives are aligned to this goal to diversify the revenue mix.

It was also decided by the RMC at its meeting on 20[th] May, 2021 that the above top 10 risks will be revisited and refined during the course of the financial year 2021-22, as appropriate.

Details of policy developed and implemented by the Company on its Corporate Social Responsibility Initiatives

The Board had formed a Corporate Social Responsibility Committee comprising of the following Directors

1. Mr. Jairam Varadaraj

2. Dr. T Balaji Naidu

3. Mr.B.Vijayakumar and

4. Ms. Aruna Thangaraj

The CSR policy of the Company deals with allocation of funds, activities, identification of programs, approval, implementation, monitoring and reporting mechanisms under the policy.

As part of its initiatives under CSR for the year 2020-21, the Company has undertaken projects in the areas of Education, Social Development, Medical Relief, Sports, etc. These projects are in accordance with Schedule VII of the Companies Act, 2013.

The CSR spend is predominantly directed through Registered Trusts. The Trusts expend the sums contributed by the Company towards educational and related activities.

The Trusts also expend the funds towards:

• i) Giving education assistance to the poor & bright students to pursue college education of both Arts and Technical courses.

• ii) Supporting school children whose parents are either poor or deceased to peruse studies from LKG to 12[th] STD.,

• iii) Supporting medical assistance to the poor patients through the recognised hospitals.

• iv) Supporting AMRIT school for special children, Coimbatore

• v) Supporting ELGI Matriculation Higher Secondary school, Vellalore, a village situated in the suburb of Coimbatore.

• vi) Supporting CanKids, a non-profit organization involved in helping cancer afflicted children.

vii. Supporting Coimbatore Cancer Foundation

The Annual Report on CSR activities undertaken by the Company during the financial year is set out in Annexure D to this report in the format prescribed under the Companies (Corporate Social Responsibility Policy) Rules, 2014.

Annual Evaluation of the Board on its own performance and of the Individual Directors

On the advice of the Board of Directors, the Nomination and Remuneration Committee of the Board of Directors of the Company formulated the criteria for evaluation of the performance of the Board of Directors & its committees, Independent Directors, Non-Independent Directors and the Managing Director of the Board. Based on that criteria, performance evaluation has been undertaken. The Independent Directors of the Company have also convened a separate meeting for this purpose.

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Statement regarding opinion of the Board with regard to integrity, expertise and experience (including the proficiency) of the Independent Directors appointed during the year

The Board of Directors have evaluated the Independent Directors during the year 2020-21 and opined that the integrity, expertise and experience (including proficiency) of the Independent Directors is satisfactory.

Directors and Key Managerial Personnel

Dr. T Balaji Naidu, Director of the Company, retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. Your Directors recommend his re-appointment.

During the year under review, Mr. Anvar Jay Varadaraj was appointed as an Additional Director (Non-Executive) of the Company with effect from 1[st] April, 2020 and was subsequently appointed as a Non-Executive Director of the Company by the members at the 60[th] Annual General Meeting held on 14[th] August, 2020.

During the year under review, pursuant to the approval granted by the Board of Directors & the members of the Company, Mr. Jairam Varadaraj was re-appointed as the Managing Director of the Company for a period of 5 years with effect from 1[st] April, 2021.

The Board of Directors of the Company, on the recommendation of the Nomination and Remuneration Committee, have proposed to appoint Mr.Anvar Jay Varadaraj (DIN: 07273942) as an Executive Director of the Company for a period of 5 years with effect from 2[nd] August, 2021 on the terms and conditions as set out in the notice convening the 61[st] Annual General Meeting. Necessary resolution in this regard has been included in the Agenda of the Notice convening the Annual General Meeting for the approval of the members. The Board recommends his appointment.

Mr.Ragunathan Gunabooshanam resigned as the Chief Financial Officer of the Company with effect from 22[nd] October, 2020 and Mr.Jayakanthan R was appointed as the Chief Financial Officer of the Company with effect from 23[rd] October, 2020.

The Company has appointed Mr.Ragunathan K (ACS No.62397) as a Company Secretary and Compliance Officer of the Company with effect from 29[th] June, 2020.

Key Managerial Personnel of the Company as required pursuant to Section 2(51) and 203 of the Companies Act, 2013 are Mr.Jairam Varadaraj, Managing Director

and Mr. Jayakanthan R, Chief Financial Officer and Mr.Ragunathan K, Company Secretary.

Subsidiaries, Joint Ventures and Associate Companies

The highlights of performance of subsidiaries, associates and joint venture companies and their contribution to the overall performance of the company during the period review have been disclosed in the Management Discussion and Analysis Report

The Company has 24 subsidiaries and 7 joint venture / associate entities. The statement pursuant to Section 129(3) of The Companies Act, 2013, containing the salient features of the financial statements of subsidiary Companies, forms part of this Annual report. The following Companies have become subsidiaries/joint ventures during the year under review and as on date of this report:

• a. Compressed Air Solutions of Texas LLC (Joint Venture)

• b. PLA Holding Company LLC (Joint Venture)

• c. Pattons of California LLC (Joint Venture)

• d. Elgi Compressors Nordics (Subsidiary)

• e. Elgi Compressors Eastern Europe sp. z.o.o. (Subsidiary)

• f. Elgi Compressors France SAS (Subsidiary)

• g. Elgi Compressors UK and Ireland Limited (Subsidiary)

• h. G3 Industrial Solutions, LLC (Joint Venture)

• i. ELGI COMPRESSORS (M) SDN. BHD (Subsidiary)*

• During the year 2020-21, Elgi Compressors (M) SDN.BHD was incorporated, but no capital infusion was made

During the year, the shareholding of Rotair SPA (1%) and Elgi Compressors Italy SRL (99%) in the step down subsidiary Elgi Compressors Europe SRL were transferred to the Company in an attempt to restructure the European Subsidiaries, so that Elgi Compressors Europe SRL is seen as the centre point of all European operations.

The Company has also initiated the procedure for winding up of the subsidiary viz. Elgi Equipments (Zhejiang) Limited commencing from 27[th] May, 2020.

As of 31/03/2021, the Company has three material subsidiaries, ATS Elgi Limited, Rotair SPA and Pattons Inc, whose net worth exceeds 10% of the consolidated net worth of the holding Company in the immediately preceding financial year or has generated 10% of the consolidated income of the Company during the previous financial year. The Board has approved a policy

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for determining material subsidiaries, which has been uploaded on the Company’s website viz. www.elgi.com.

The consolidated financial statements of the Company and its subsidiaries prepared in accordance with the applicable accounting standards have been annexed to the Annual Report.

The annual accounts of the subsidiary Companies are posted on the website of the Company viz. www.elgi.com and will also be kept open for inspection by the shareholders at the registered office of the Company. The Company will also provide a copy of the annual accounts of subsidiary Companies to the shareholders upon their request.

Fixed Deposits

Since the Company has not accepted any fixed deposit covered under Chapter V of the Companies Act, 2013, there are no deposits remaining unclaimed or unpaid as on 31[st] March, 2021 and accordingly, the question of default in repayment of deposits or payment of interest thereon during the year does not arise.

Details of significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and Company’s operations in future

There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company’s operations in future.

Adequacy of Internal Financial Controls with reference to the Financial Statements

The Company has adequate internal control systems to monitor business processes, financial reporting and compliance with applicable regulations. The systems are periodically reviewed for identification of control deficiencies and formulation of time bound action plans to improve efficiency at all the levels. The Audit Committee of the Board constantly reviews internal control systems and their adequacy, significant risk areas, observations made by the internal auditors on control mechanism and the operations of the Company and recommendations made for corrective action through the internal audit reports. The committee reviews the statutory auditors’ report, key issues, significant processes and accounting policies.

The Directors confirm that the Internal Financial Controls (IFC) are adequate with respect to the operations of the Company. A report of Auditors pursuant to Section 143(3) (i) of the Companies Act, 2013 certifying the adequacy of Internal Financial Controls is annexed with the Auditors Report.

Auditors:

Statutory Auditors

M/s. Price Waterhouse Chartered Accountants, LLP (FRN 012754N/N500016) Chartered Accountants, Chennai were appointed as the Statutory Auditors of the Company for a period of 5 years at the 57[th] Annual General Meeting of the Company held on 28th July, 2017. The Company has received a certificate from M/s. Price Waterhouse Chartered Accountants LLP, confirming that they are not disqualified from continuing as statutory auditors of the Company.

Secretarial Auditors

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. MDS & Associates, Company Secretaries in Practice, to undertake the secretarial audit of the Company. The report of the secretarial auditor is annexed herewith as Annexure ‘E’ . In accordance with Regulation 24 A of the SEBI (Listing Obligations & Disclosure Requirements), 2015, the Company carried out Secretarial Audit of its material unlisted subsidiary M/s.ATS Elgi Limited also through M/s. MDS & Associates, Company Secretaries in Practice. The report of the secretarial auditor is annexed herewith as Annexure ‘E-1’ .

Cost Auditors

The Board of Directors on the recommendation of the Audit Committee, has appointed M/s. STR & Associates, Cost Accountants as the Cost Auditors of the Company for the financial year 2021-22. The scope of audit was as follows:

• Verification of cost records maintained by the Company.

• Reconciliation of cost records with that of financial records.

• Verification of material consumption, overhead recovery rates, allocation of production, administration, selling and distribution overheads between various divisions and the basis for cost allocation.

• Verification of Quantity reconciliation and Costing Profit &Loss statement.

• The total turnover that was subject of audit was INR 10,811 Million.

Pursuant to Section 148 of the Companies Act, 2013 read with Rule 14 of the Companies (Accounts) Rules, 2014,

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the remuneration payable for the year 2021-22 to the Cost Auditors of the Company is subject to ratification by the shareholders at the ensuing Annual General Meeting. The remuneration of ` 3,00,000/- (Rupees Three Lakhs Only) to the Cost Auditors is commensurate with the size of the Company, work involved and scope of audit. The Board recommends their remuneration for members’ ratification.

Maintenance of cost records under sub-section (1) of Section 148 of the Companies Act, 2013

Pursuant to the provisions of Section 148(1) of the Companies Act, 2013 read with Companies (Cost Records and Audit) Rules, 2014, the Company was required to maintain cost records. Accordingly, the Company has duly made and maintained the cost records as mandated by the Central Government.

Details of application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 during the year

No applications have been made and no proceedings are pending against the Company under the Insolvency and Bankruptcy Code, 2016.

Details of difference between amount of the valuation done at the time of one time settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof.

The disclosure under this clause is not applicable as the Company has not undertaken any one-time settlement with the banks or financial institutions.

Human Resources and Industrial Relations

The Company continues to enjoy cordial relationship with its employees at all levels. The total strength of employees as on 31[st] March, 2021 was 2142. (Including subsidiaries).

Particulars of Employees

Details pursuant to Section 197(12) of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 form part of this Report as Annexure ‘F’.

Elgi Equipments Limited Employee Stock Option Plan, 2019

The Company has implemented the Elgi Equipments Limited Employee Stock Option Plan 2019 (Elgi ESOP 2019) to enable the Company and its subsidiaries to attract, retain and reward appropriate human talent in its employment and to create a sense of ownership and participation amongst the employees. The Compensation Committee administers and monitors the Employees’ Stock Option Plan of the Company through the Elgi Equipments Limited Employee Stock Option Trust. The compensation committee has during the year under review issued 1,53,800 options (against the 1,60,600 options already granted during 2019-20 to eligible employees) at a grant price of Rs.100.035 per share after considering the Bonus Issue @ 1:1 issued during the year, in accordance with the ESOP Scheme of the Company. Since Mr Ragunathan Gunabooshanam, the erstwhile Chief Financial Officer resigned with effect from 22[nd] October, 2020, the 6,800 options granted to him were forfeited. Total number of options issued under ESOP after reckoning for bonus issue now stands at 3,07,600. No options were granted to the Directors.

The disclosure pursuant to the provisions of Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 is given as Annexure ‘G’ to this report.

The Company has received a Certificate from the Statutory Auditors of the Company that the above referred Scheme had been implemented in accordance with the SEBI (Share Based Employee Benefits) Regulations, 2014 and the resolutions passed by the members in this regard.

Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

The Company has in place a policy for prevention of Sexual Harassment of Women at Workplace in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Company has complied with the statutory provisions relating to the constitution of the Internal Complaints Committee. All employees (permanent, contractual, temporary, trainees) are covered under this policy.

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• a. Number of complaints filed during the financial year : NIL

• b. Number of complaints disposed of during the financial year : NIL

• c. Number of complaints pending as on end of the financial year : NIL

Business Responsibility Reporting

Pursuant to Regulation 34 of SEBI (Listing Obligations and Disclosure Requirement) Regulations, 2015 read with SEBI Circular No. CIR/CFD/CMD/10/2015 dated 4[th] November, 2015, the business responsibility report is annexed as Annexure ‘H’ to this report.

Corporate Governance

A report on corporate governance is annexed to and forms part of this report. The Company has complied with the conditions relating to corporate governance as stipulated in SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015.

Audit Committee

The Company has constituted an Audit Committee in accordance with the provisions of Section 177 of the Companies Act, 2013 and Regulation 18 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Kindly refer to the Section on Corporate Governance, under the head, ‘Audit Committee’ for matters relating to the composition, meetings, and functions of the Committee. The Board has accepted the Audit Committee’s recommendations during the year wherever required and hence no disclosure is required under Section 177(8) of The Companies Act, 2013 with respect to rejection of any recommendations of Audit Committee by Board.

Whistle Blower Policy

The Company has a Whistle Blower policy to deal with unethical or improper practice or violation of Company’s Code of Business Conduct or any complaints regarding accounting, auditing, internal controls or disclosure

practices of the Company. The Policy gives a platform to the Whistle Blower to report the complaints on the above-mentioned practices to the Managing Director or Director (HR). Although the complainant is not expected to prove the truth of an allegation, the complainant aims to demonstrate that there are sufficient grounds for concern and that it is not done as a malicious act against an individual. The Audit Committee of the Board reviews the Complaints received, redressed, objected, withdrawn and dismissed for, every quarter in their meeting. During the year, there were no complaints under this policy. The Whistle Blower policy is available on the website of the Company at the following address - https://www.elgi.com/in/wp content/uploads/2019/10/ Whistle-Blower-Policy.pdf.

Shareholder Initiatives

• Your Company adheres strictly to all the statutory and other legal compliances.

• Your Company has in place the regulations for preventing and regulating Insider Trading. The designated persons are required to adhere to the Company’s Code of Conduct and Business Ethics

• Your Company regularly intimates the shareholders (through quarterly communique) on the performance of the Company, even though it is not mandatory.

• Your Company has consistently paid Dividend through the years.

• Your Company has been prompt and regular in its replies to your queries received by it.

• Your Company also replies within the stipulated time to all legal and statutory authorities.

• The custodial charges and listing fees are promptly paid by the Company to the depositories and the stock exchanges.

• During this year, your Company de-matted 3,09,285 shares; with this, the total number of shares dematted as on 31[st] March, 2021 are 31,45,83,101 shares, which represents 99.26% shares of the Company.

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Acknowledgement

Your Directors thank the shareholders, customers, suppliers, bankers and all other stakeholders for their continued support during the year. Your Directors also place on record their appreciation of the contributions made by employees at all levels towards the growth of the Company.

For and on behalf of the Board

Date: 21/05/2021

Jairam Varadaraj Managing Director DIN: 00003361 Place: Charlotte, North Carolina, USA

N. Mohan Nambiar Director DIN: 00003660 Place: Coimbatore

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ANNEXURE A

Annexure A

Criteria for selection of Non-Executive Directors:

The Non-Executive Director shall:-

• z have adequate skills, background, experience and knowledge

• z possess industry bias, i.e., should be reasonably conversant with and follow the compressor and automotive industry

• z be a person of intellect and integrity

• z not be discriminated on the basis of age, gender and race

• z believe in and be committed to practice the ELGi values

• z be capable of working in harmony with other board members and contribute effectively in Board and Shareholder meetings

• z be in alignment with the Company’s objectives and goals

Remuneration Policy

The Board of Directors (the “Board”) of Elgi Equipments Limited (the “Company”), upon recommendations of the Remuneration Committee, has adopted the following policy and procedures with regard to remuneration of the Board members, Key Managerial Personnel, Senior Management and Employees as below. The Board may review and amend this policy from time to time. This Policy will be applicable to the Company effective 1[st] October, 2014.

1. Background

A transparent, fair and reasonable process for determining the appropriate remuneration at all levels of the Company is required to ensure that Shareholders remain informed and confident in the management of the Company. The Company also understands the importance of attracting and maintaining competent personnel to manage and grow its business. In the policy, the following terms are defined as below:-

“Board” means the Board of Directors of the Company

“Company” means Elgi Equipments Limited, India

“Directors” means the Directors on the Board of the Company, including the Managing Director, Independent Directors and Non-Executive Directors

“Employees” means all other Employees of the Company

agreement that the Company has signed with the stock exchanges

“Key Managerial Personnel” means the Managing Director, Chief Financial Officer and Company Secretary of the Company

“Managing Director” means the person designated as such by the Board and shareholders of the Company and who has substantial powers of management of the Company

“Nomination and Remuneration Committee” means a committee constituted amongst Board members as per The Companies Act, 2013 and the listing agreement that the Company has signed with the stock exchanges

“Senior Management” means the senior managerial personnel directly reporting to the Managing Director and includes all persons in M5 cadre of the Company

2. Objective

The objectives of this policy are:

• (a) to create a transparent system of determining the appropriate level of remuneration throughout all levels of the Company aimed at attracting, retaining and motivating people of the quality required to run the Company successfully;

• (b) encourage people to perform to their highest level of competence;

• (c) allow the Company to compete in each relevant employment market;

• (d) to ensure the relationship of remuneration to performance is clear and meets appropriate performance benchmarks;

• (e) provide consistency in remuneration involving a balance between fixed and performance based remuneration throughout the Company; and

• (f) align the performance of the business with the performance of the Board, Key Managerial Personnel, Senior Management and other Employees within the Company.

“Independent Directors” shall carry the same meaning as in The Companies Act, 2013 and the listing

The policy details the types of remuneration to be offered by the Company and factors to be considered

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ANNEXURE A

by the Board on the basis of recommendations of the Nomination & Remuneration Committee in determining the appropriate remuneration for the Board, Key Managerial Personnel, Senior Management and all other Employees.

3. Contract

• i. The Managing Director, Independent Directors, Key Managerial Personnel, Senior Management and all other Employees will be provided a letter of appointment. This letter of appointment will set out the terms and conditions of the engagement, responsibilities for the role and the remuneration package. Independent Directors and other NonExecutive Directors are currently paid only sitting fees as remuneration. However, depending on the evolution of business and added responsibilities, the Nomination and Remuneration Committee may recommend to the Board for an increase in their remuneration package, subject to final approval of the shareholders. The Managing Director’s remuneration will be approved by the Board as well as the shareholders.

• ii. The Nomination & Remuneration Committee and the Board must approve all contracts for the Managing Director and Independent Directors. The Nomination and Remuneration Committee shall also formulate a criteria for determining the qualifications, positive attributes and independence of a Director while the Head-Human Resources of the Company will be responsible for formulating a criteria for all other Employees.

4. Forms of Remuneration

With the assistance of the Nomination & Remuneration Committee, the Board will approve the forms of remuneration to be offered to the Board members, Key Managerial Personnel, Senior Management and all other Employees, which may include:

4.1 Fixed Remuneration

The Board in consultation with the Nomination & Remuneration Committee and the Head-Human Resources, will from time to time determine the fixed remuneration level for each of the above categories. Such remuneration levels will be determined according to the role and responsibilities, job size, industry standards, relevant laws and regulations, labour market conditions and scale of Company’s business relating to the position. The fixed remuneration will reflect

the core performance requirements and expectations of the Company.

4.2 Performance Based Remuneration

In addition to fixed remuneration, the Company will implement a system of performance pay for select categories designed to create a strong relationship between performance and remuneration. Performance based remuneration will be linked to specific performance targets for the concerned individuals and of the Company, which will be communicated to all concerned regularly.

4.3 Equity Based Remuneration

To motivate Executives and the Management to pursue the long- term growth and success of the Company, the Company may grant equity based remuneration to the Board members, Key Managerial Personnel, Senior Management and all other Employees from time to time. In any case, Independent Directors will not be entitled to stock options.

4.4 Joining Bonuses and Termination payments

In rare cases, the letters of appointment/employment contract may set out in advance the entitlement to a bonus or other payment upon joining employment or upon termination of employment in respect of Key Managerial Personnel, Senior Management or other Employees. The Head-Human Resources is authorised to decide on the same in consultation with the Managing Director.

4.5 Employees Entitlements

The Company will comply with all legal obligations in determining the appropriate entitlement to salary advance, long service, annual, personal and parental leave. The Head-Human Resources, may in consultation with the Managing Director, introduce/provide on certain conditions, appropriate interest free salary advances, housing loan benefits, credit card policy, city grade allowance policy, death & PTD benefits policy, data card policy, Employees referral policy, transfer expenses policy, family meet allowance policy, mediclaim policy, personal accident benefit policy, superannuation scheme, increment policy, laptop policy, mobile phone policy, subsidized canteen policy, suggestions and rewards policy and any other similar policies aimed at motivating and encouraging the Key Managerial

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ANNEXURE A

Personnel, Senior Management and other Employees to perform better.

5. Review

5.1 Performance Appraisal

The Managing Director will conduct annual performance appraisals for all Key Managerial Personnel other than himself, and Senior Management to monitor and review the appropriateness of each remuneration package. The Nomination and Remuneration Committee shall lay down the evaluation criteria for performance evaluation of Independent Directors while the performance evaluation as such of the Independent Directors shall be done by the entire Board (excluding the Director being evaluated). The Independent Directors, in their separate meeting, shall review the performance of non- independent directors and the Board as a whole. The Head-Human Resources along with the respective department heads will be responsible for conducting annual performance appraisals for all other Employees.

other Employees. In determining whether to approve the relevant level of remuneration, the Board will consider the recommendations from the Nomination & Remuneration Committee, prevailing market conditions, performance by the individual and the business strategies and objectives of the Company. The Board will review the contents of, and compliance with, this Policy on an annual basis.

5.3 Nomination & Remuneration Committee

The Nomination & Remuneration Committee is responsible for the monitoring, implementation and review of this policy. The Nomination & Remuneration Committee will provide recommendations to the Board as to how to effectively structure and facilitate a remuneration strategy, which will meet the needs of the Company.

5.4 Monitoring the Policy

The Head-Human Resources of the Company will monitor the day to day compliance with this policy.

6. Disclosure & Deviation

5.2 Board

The Board will be responsible for approving the remuneration strategy for the Board (subject to approval of shareholders wherever and whenever necessary), Key Managerial Personnel, Senior Management and

The Company will disclose this remuneration policy in its Annual Report. To the extent permitted under applicable law, the Board may deviate from this policy in individual cases, if justified by extraordinary and exceptional circumstances

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ANNEXURE B

Annexure B

Form No. AOC-2

[Pursuant to clause (h) of sub-section (3) of section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014]

Form for disclosure of particulars of contracts/arrangements entered into by the Company with related parties referred to in sub-section (1) of section 188 of the Companies Act, 2013 including certain arm’s length transactions under third proviso thereto.

1. Details of contracts or arrangements or transactions not at arm’s length basis

Not Applicable

2. Details of material contracts or arrangement or transactions at arm’s length basis

a)	Name of the related party	Mr. Anvar Jay Varadaraj
	Nature of relationship	Mr.Anvar Jay Varadaraj is the son of Mr.Jairam Varadaraj,
		Managing Director and one of the promoters of the Company.
b)	Nature of contracts/ arrangements/	Mr.Anvar Jay Varadaraj, was appointed as Product Marketing Manager,
	transactions	in Elgi Compressors USA Inc, wholly owned subsidiary of the Company
		with efect from 20thAugust, 2018.
c)	Duration of the contracts/	Mr.Anvar Jay Varadaraj was appointed with efect from
	arrangements/ transactions	20thAugust, 2018.
d)	Salient terms of the contracts	Mr.Anvar Jay Varadaraj was appointed on the following remuneration:
	or arrangements or transactions	- Remuneration: Not Exceeding US$ 150,000 per annum
	including the value, if any;	- Bonus potential: 10%
		- Housing expense at approx. US$ 2000 pm
		The transaction is proposed to be carried out as a part of the business
		requirements of the Company and at arm’s length basis
e)	Date(s) of approval by the Board,	28thMay, 2018
	if any.
f)	Amount paid as advances, if any.	Nil

For and on behalf of the Board

Date: 21/05/2021

Jairam Varadaraj Managing Director DIN: 00003361 Place: Charlotte, North Carolina, USA

N. Mohan Nambiar

Director DIN: 00003660 Place: Coimbatore

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ELGI EQUIPMENTS LIMITED

ANNEXURE C

Annexure C

Conservation of Energy, Technology Absorption and Foreign Exchange Earning and Outgo [Section 134(3)(m) of The Companies Act, 2013 read with Rule 8(3) of The Companies (Accounts) Rules, 2014]

A. Conservation of Energy

I Steps taken for conservation of energy:

The financial Year 2020-21 was a tough year due to the effects of the pandemic. The business horizon itself was hazy in the first half. The Company was forced to optimize the power cost due to fluctuation in power demand requirements of the factories. Maximum demand is a fixed power cost irrespective of the factories’ usage of power. But it is a significant power cost. Hence, in the second quarter of the year, the Company analyzed the maximum demand requirement for each factory and surrendered the excess maximum demand to TANGEDCO after installing demand controllers to optimize the Maximum demand by tripping the few feeders in the system. For the Air center plant at Kinathukkadavu, the Company reduced the Maximum demand from 2250 KVA to 1750 KVA, at the Compressor Centere, Corporate office the Company reduced the maximum demand from 1620 KVA to 1500 KVA, similarly at motor plant the Company reduced the maximum demand from 400 KVA to 200 KVA, and for the foundry the Company reduced the maximum demand from 2750 to 2550 KVA. During the year, the Company took several energy saving initiatives that helped us to optimize the maximum demand. The total maximum demand thus reduced from 7420 KVA to 6400 KVA across the facilities. Reduction in Maximum demand significantly contributed to reduction in the power cost. Consequently, the Company has seen a positive impact by way of reduction in the Power to Sale ratio from 0.92% to 0.77%

The various energy management programs (EnMPs) were executed by identifying the gaps and opportunities using a systematic approach to energy analysis. The following are some of the measures:

• i. 90 KW Mechanical Generator sets were introduced to test the products with different volts and Hertz without operating the DG sets which contributed to reducing the Diesel consumption at compressor center.

• ii. Programmable timers were introduced in most of the equipment like lighting, Air handling units, Airconditioner units and Chiller units to auto switch off the power when there is no utilization. Energy efficient ceiling fans were installed in the office areas.

• iii. Air compressor capacity was optimized by studying the compressed Air requirements. Automatic operation of switchgear was executed in substation which in turn helped in eliminating human involvement for operation at Air Compressor Plant.

• iv. Variable Frequency Device (VFD) was installed for operation of the blowers in test booths at compressor center.

• v. Improvements in lighting have been made in assembly areas with installation of energy efficient lighting fixtures. There is a future scope for further optimizing energy by replacing the higher capacity motors with energy efficient motors. This will be taken up in the ensuing year. A systematic analysis of energy consumption data provides the optimization not only in energy consumption but also in energy demand as mentioned above.

• vi. Carbon emission reduction is also an integral part of the energy objectives of the Company. The Internet of Things (IoT) based energy management system that was implemented during the year provides carbon emission reduction by 12% when compared to the previous year.

• vii. The Air compressor plant (ACP) was certified with ISO 50001:2011 Energy management system in the year 2017. Now, this certificate has been upgraded to ISO 50001:2018 standards.

• viii. Energy baseline (EnB) was established for each Significant Energy Use areas (SEU) for comparing the energy performance of the year with previous year. The IoT based energy management system has reduced the power cost for Airend manufacturing by 9%, i.e. specific energy consumption per airend equivalent has been reduced from 360 kWh to 315 kWh per air end equivalent manufacturing.

II Steps taken by the Company for utilizing alternate sources of energy:

At present, the Company’s wind mill generators contribute 15% of the total energy consumption

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ANNEXURE C

III Capital investment on energy conservation equipment

Rs 20 Lakhs was spent during the year on Mechanical Generator Sets

B. Technology Absorption:

(i) Efforts made towards technology absorption

• z Development of rotational vibration system for screw compressor

• z In-house development of design tool for dynamic analysis of piping system

• z OTA ( Over The Air) software updation into controller which will reduce the quality concerns

• z Development and deployment of a fault detection and failure prediction mechanism which will reduce the downtime of the compressors

• z Installation of a switch less human interface for control panels –capacitive touch interface

• z Introduced a dynamic password for secured interface with compressor controller

• z Up gradation of the existing software tool for designing and predicting the compressor performance under various operating conditions.

• z Designed a comprehensive tool for controlling Electronic Thermal Valve (ETV) for oil flooded compressor models from EG55- EG250, which enhances the oil life and compressor efficiencies.

(ii) Benefits derived like product improvement, cost reduction, product development or import substitution

• z Designed and developed an energy efficient oil flooded screw compressor version from:

• z EN2.2, EN3.7, EN4, EN5.5, EN7, EN11 & EN15 for US region 200V.

• z EN2.2, EN3.7, EN4, EN5.5, EN7, EN11, EN15 and EG55 for Canada region 575V.

• z Designed and developed a cost efficient and energy efficient oil flooded version of compressor from

EV30, EV37 and EV45 for India market which can be extended to other markets.

• z Designed and developed an oil free disrupted version of compressor from 30 to 45kW and 55 to 110kW for USA markets

• z Designed and developed an oil free disrupted version of compressor from 11 to 22kW for India, Europe & USA markets

• z Designed and developed PG1200-330 T2 diesel engine driven rotary air compressors for 6 ½” water well application

• z Designed and developed PG1250 diesel engine driven rotary air compressors for 6 ½” water well application

• z Designed and developed a reciprocating oil free railway compressors (RR 20 100 OF) for ELECTRIC LOCOMOTIVE braking applications

• z Designed and developed a reciprocating oil lubricated railway compressors (RR 20 100 CC) for ELECTRIC LOCOMOTIVE braking applications.

• z Designed and developed a reciprocating oil free railway compressors (RR 20 070 OF) for MEMU braking applications

• z Designed and implemented ELGi motor variants (IE3, IE4, IE3 (cu), NEMA, PMSM) in 11 to 45 kw power range packages for India, Australia, US, Middle East & European markets

• z Designed and tested a reciprocating oil free railway compressor (RR 10 100 OF) for METRO & EMU applications.

• z Designed and tested PG1300-350 diesel engine driven rotary screw air compressors for 6 ½” & 7” water well application.

• z Designed and developed Indigenous ELGi seal from 32 mm, 45 mm & 110 mm for oil free air end & oil free disrupted compressor applications.

• (iii) Information regarding imported technology (imported during the last three years reckoned from the beginning of the financial year)

NIL

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ELGI EQUIPMENTS LIMITED

ANNEXURE C

(iv) Expenditure incurred on Research & Development:

		(`In Million)
Expenditure on R&D	2020-21	2019-20
Capital	33.83	17.01
Revenue	364.21	387.82
Total	398.04	404.83
R & D Expenditure as a percentage on turnover	3.6%	3.7%

C. Foreign Exchange Earnings and Outgo

Particulars are given in the notes forming part of Accounts. Kindly refer the same.

For and on behalf of the Board

Date: 21/05/2021

Jairam Varadaraj Managing Director DIN: 00003361 Place: Charlotte, North Carolina, USA

N. Mohan Nambiar

Director DIN: 00003660 Place: Coimbatore

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ELGI EQUIPMENTS LIMITED

ANNEXURE D

Annexure D

Annual Report on Corporate Social Responsibility (CSR) Activities

01. Brief outline on CSR Policy of the Company

The Company has been engaged in Education and Community development projects in and around Coimbatore for a number of decades. The Company has been contributing for treatment in cancer affected children through Cankids Kidscan, a registered charitable national society. During the year, the Company contributed to CanKids Kidscan through Ellargi Trust. The Company has always contributed its might to enhancing societal sustainability along with economic and environment sustainability. The Company’s CSR Policy and programs are directed mainly towards education. The Company through Registered Trusts supports a school financially as well as through involvement in its Management and Administration. Apart from education, Company’s CSR Policy is also to promote gender equality, women empowerment, environmental sustainability, protection of national heritage, music, drama, dance, sports, fine arts, helping Widows, aged persons, physically and mentally challenged persons and rural development projects. The Company was and continues to be one of the primary sponsors of the Coimbatore Marathon event. During the year, this event was conducted virtually. The Company also contributed to Karur Basket Ball Club, LRG foundation, Coimbatore Cancer Foundation and Amrit Centre for special needs and various other social welfare activities.

02. Composition of CSR Committee

The CSR Committee of the Board of Directors is optimally balanced between Independent and Non-Independent Directors. The current Committee comprises of the following members:

			Number of meetings	Number of meetings of CSR
		Designation / Nature	of CSR Committee held	Committee attended during
Sl. No.	Name of Director	of Directorship	duringtheyear	theyear
1	Jairam Varadaraj	Managing Director	2	2
		(Chairman of the
		Committee)
2	Dr.T.Balaji Naidu	Non-Executive Non-	2	2
		Independent Director
		(Member)
3	B Vijayakumar	Non-Executive	2	2
		Independent Director
		(Member)
4	Aruna Thangaraj	Non-Executive	2	2
		Independent Director
		(Member)

03. The web-link where Composition of CSR committee, CSR Policy and CSR projects approved by the board are disclosed on the website of the Company:

The web-link where the Composition of the CSR Committee is disclosed on the website of the Company is “ - ” https://www.elgi.com/in/Company leadership/

The web-link where the CSR policy is disclosed on the website of the Company is “ - - https://www.elgi.com/in/wp content/uploads/2019/05/CSR Policy.pdf”.

The web-link where the CSR projects approved by the board are disclosed on the website of the Company is https://www.elgi.com/in/corporate-social-responsibility/

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ANNEXURE D

04. The details of Impact assessment of CSR projects carried out in pursuance of sub-rule (3) of rule 8 of the Companies (Corporate Social responsibility Policy) Rules, 2014, if applicable:

The Company has not carried out Impact assessment of CSR projects in pursuance of sub-rule (3) of rule 8 of the Companies (Corporate Social responsibility Policy) Rules, 2014 as the same is not applicable to the Company.

05. Details of the amount available for set off in pursuance of sub-rule (3) of rule 7 of the Companies (Corporate Social responsibility Policy) Rules, 2014 and amount required for set off for the financial year, if any

There is no amount available for set off in pursuance of sub-rule (3) of rule 7 of the Companies (Corporate Social Responsibility Policy) Rules, 2014 and hence disclosure under this clause is not applicable to the Company.

06. Average Net Profit of the Company as per Section 135(5): ` 1186.65 Million

07. (a) Two percent of average net profit of the Company as per section 135(5): ` 23.73 Million

• (b) Surplus arising out of the CSR projects or programmes or activities of the previous financial years: NIL

• (c) Amount required to be set off for the financial year, if any: NIL

• (d) Total CSR obligation for the financial year (7a+7b-7c): ` 23.73 Million

08. (a) CSR amount spent or unspent for the financial year:

||Amount Unspent (in)|Amount Unspent (in)|
|---|---|---|
|Total Amount
Spent for the
Financial Year.
(in`)|Total Amount transferred to Unspent
CSR Account as per section 135(6).|Amount transferred to any fund specifed under
Schedule VII as per second proviso to section 135(5).|
||Amount.
Date of transfer.|Name of the Fund
Amount.
Date of transfer.|
|23.73 Million|NIL
Not Applicable|Not Applicable
NIL
Not Applicable|

(b) Details of CSR amount spent against ongoing projects for the financial year:

The Company has not spent any amount against ongoing projects during the financial year under review.

(c) Details of CSR amount spent against other than ongoing projects for the financial year:

The details of the CSR amount spent against other than ongoing projects for the financial year under review are given in the succeeding page.

(d) Amount spent in Administrative Overheads: Nil

(e) Amount spent on Impact Assessment, if applicable: Nil

• (f) Total amount spent for the Financial Year (8a+8b+8c+8d+8e): ` 23.73 Million

(g) Excess Amount for set off, if any:

Sl. No.	Particular	Amount (in`)
(i)	Twopercent of average netproft of the Companyasper section 135(5)	23.73 Million
(ii)	Total amount spent for the Financial Year	23.73 Million
(iii)	Excess amount spent for the fnancialyear [(ii)-(i)]	Nil
(iv)	Surplus arising out of the CSR projects or programmes or activities of the	Nil
	previous fnancialyears, if any
(v)	Amount available for set of in succeedingfnancialyears [(iii)-(iv)]	Nil

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ANNEXURE D

(1) (2) (3) (4) (5) (6) (7) (8)	Mode of implementation - Through implementing agency	Name CSR registration number	LRG Foundation CSR00002582	Coimbatore Cancer Foundation CSR00002518	Amrit Center for Special Needs Not Available	Total 23.73 Million
	Amount spent for the project (in`) Mode of implementation – Direct (Yes/No)		23.00 Million No	0.43 Million No	0.30 Million No
	Location of the project	State District	Tamil Nadu Coimbatore	Tamil Nadu Coimbatore	Tamil Nadu Coimbatore
	Sl. No. Name of the Project Item from the list of activities in schedule VII to the Act Local area (Yes/ No)		1. Promotion of Education & Rural Development Education Yes	2. Coimbatore Marathon Promoting health care including preventinve health care Yes	3. Improving the livelihoods of diferently abled children Promoting special education and employment enhancing vocation skills among diferently abled and livelihood enhancement projects Yes

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ELGI EQUIPMENTS LIMITED

ANNEXURE D

09. (a) Details of Unspent CSR amount for the preceding three financial years:

The Company does not have any unspent CSR amount in any of the preceding three financial years and hence disclosure under this clause does not arise.

(b) Details of CSR amount spent in the financial year for ongoing projects of the preceding financial year(s):

The Company does not have any ongoing projects in any of the preceding financial years and hence disclosure under this clause does not arise.

10. In case of creation or acquisition of capital asset, furnish the details relating to the asset so created or acquired through CSR spent in the financial year:

The Company has not created or acquired any capital asset through CSR spending in the financial year and hence reporting under this clause does not arise.

11. Reason if the Company has failed to spend 2% of the average net profits as per section 135(5):

The Company has spent the required amount on CSR activities as per section 135(5) and hence reporting under this clause does not arise.

For and on behalf of the Board

Date: 21/05/2021

Jairam Varadaraj

Managing Director & Chairman of CSR Committee DIN: 00003361 Place: Charlotte, North Carolina, USA

N. Mohan Nambiar

Director DIN: 00003660 Place: Coimbatore

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ANNEXURE E

Annexure E

Form No. MR-3 Secretarial Audit Report For the financial year ended 31[st] March, 2021

[Pursuant to Section 204(1) of the Companies Act, 2013 and Rule No.9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and Regulation 24A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015]

To

The Members,

ELGI EQUIPMENTS LIMITED

(CIN: L29120TZ1960PLC000351) Elgi Industrial Complex III, Trichy Road, Singanallur, Coimbatore – 641 005

I have conducted the secretarial audit of the compliance of applicable statutory provisions and the adherence to good corporate practices by M/s. ELGI EQUIPMENTS LIMITED (hereinafter called the Company). Secretarial Audit was conducted in a manner that provided me a reasonable basis for evaluating the corporate conducts/statutory compliances and expressing my opinion thereon.

Based on my verification of M/s. ELGI EQUIPMENTS LIMITED’s books, papers, minute books, forms and returns filed and other records maintained by the Company and also the information provided by the Company, its officers, agents and authorized representatives during the conduct of secretarial audit, I hereby report that in my opinion, the Company has, during the audit period covering the financial year ended 31[st] March, 2021, complied with the statutory provisions listed hereunder and also that the Company has proper Board-processes and compliance mechanism in place to the extent, in the manner and subject to the reporting made hereinafter.

I have examined the books, papers, minute books, forms and returns filed, and other records maintained by the Company for the financial year ended on 31[st] March, 2021 according to the provisions of:

• i. The Companies Act, 2013 (the Act) and the rules made thereunder.

• ii. The Securities Contracts (Regulation) Act, 1956 (‘SCRA’) and the rules made thereunder.

• iii. The Depositories Act, 1996 and the Regulations and bye-laws framed thereunder.

• iv. Foreign Exchange Management Act, 1999 and the rules and regulations made there under to the extent of Foreign Direct Investment and Overseas Direct Investment.

• v. The following Regulations prescribed under the Securities and Exchange Board of India Act, 1992 (‘SEBI Act’): -

• a. The Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015

• b. The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011

• c. The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015

• d. The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993, regarding the Companies Act and dealing with client and

• e. The Securities and Exchange Board of India (Depositories and Participants) Regulations, 2018

• f. The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018

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ANNEXURE E

• g. The Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014

I have also examined compliance with the applicable clauses of the following:

• a. Secretarial Standards with respect to Board Meetings (SS-1) and General Meetings (SS-2) issued by The Institute of Company Secretaries of India (ICSI)

• b. The Listing Agreement entered into by the Company with BSE Limited and the National Stock Exchange of India Limited

During the year under review the Company has complied with the provisions of the Act, Rules, Regulations and Standards etc., mentioned above.

I further report that, during the year under review, there were no actions/ events in pursuance of the following Rules/Regulations requiring compliance thereof by the Company:

• a. The Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008

• b. The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009 and

• c. The Securities and Exchange Board of India (Buyback of Securities) Regulations, 2018

I further report that based on the information provided by the Company, its officers and authorized representatives, there are no laws specifically applicable to the Company.

I further report that having regard to the compliance system prevailing in the Company and on the review of quarterly compliance reports taken on record by the Board of Directors and on examination of the relevant documents and records in pursuance thereof, on testcheck basis, the Company has complied with the labour and environmental laws as applicable.

I further report that the compliance by the Company of applicable financial laws, like direct and indirect tax laws, has not been reviewed in this Audit since the same has been subject to review by statutory financial auditor and other designated professionals.

I further report that

The Board of Directors of the Company is duly constituted with proper balance of Executive Directors, Non-Executive Directors, Independent Directors and

a Woman Director. The changes in the composition of the Board of Directors that took place during the period under review were carried out in compliance with the provisions of the Act.

Adequate notice is given to all Directors to schedule the Board Meetings, agenda and detailed notes on agenda were sent at least seven days in advance, and a system exists for seeking and obtaining further information and clarifications on the agenda items before the meeting and for meaningful participation at the meeting.

All decisions at Board meetings and Committee meetings are carried out unanimously as recorded in the minutes of the meetings of the Board of Directors or Committee of the Board, as the case may be.

I further report that there are adequate systems and processes in the Company commensurate with the size and operations of the Company to monitor and ensure compliance with all applicable laws, rules, regulations and guidelines.

I further report that during the period under review, pursuant to the resolution passed by the members through Postal Ballot on 18[th] September, 2020,

• a. the Company has increased the authorised share capital from Rs.30 Crores consisting of 30,00,00,000 equity shares of Re.1/- each to Rs.32 Crores consisting of 32,00,00,000 equity shares of Re.1/- each and has consequently amended Clause V (Capital Clause) of the Memorandum of Association in compliance with the provisions of the Companies Act, 2013.

• b. the Board of Directors of the Company at their meeting held on 28[th] September, 2020 has issued and allotted 15,84,54,508 equity shares of Re.1/each as bonus equity shares in the proportion of 1 (one) equity share for every 1 (One) existing equity share held by the members by capitalizing the securities premium account of the Company in compliance with the provisions of the Companies Act, 2013 and SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018.

• c. the members have accorded their approval to the Board of Directors for creation of mortgages/ charges/ hypothecation of the properties of the Company under Section 180(1)(a) of the Companies Act, 2013 in respect of the borrowings of the Company.

• d. the members have accorded their approval to the Board of Directors pursuant to Section 186

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ELGI EQUIPMENTS LIMITED

ANNEXURE E

of the Companies Act, 2013 to make investments or grant loans or provide guarantee or security up to an amount not exceeding Rs.900 Crores notwithstanding that the aggregate of loans and investments so far made, the amounts for which guarantee or security so far provided to, along with the investments, loans, guarantee or security proposed to be made or given by the Board may collectively exceed the limits prescribed under Section 186 of the Companies Act, 2013

I further report that during the period under review, the Compensation Committee at their meeting held on 28[th] September, 2020 has, in accordance with the provisions of Elgi Equipments Limited Employee Stock Option Plan 2019 and SEBI (Share Based Employee Benefits) Regulations, 2014,

• a. granted 1,53,800 bonus options to the employees of the Company and its subsidiaries.

• b. cancelled the 6,800 options granted to one of the employees of the Company consequent to his resignation from the Company.

I further report that during the period under review, the Company has filed an application with BSE Limited and National Stock Exchange of India Limited seeking their approval for the re-classification of certain members from the “Promoter Group” category to “Public” category pursuant to Regulation 31A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 pursuant to the approval granted by the Board of Directors at their meeting held on 6[th] November, 2020 and the members of the Company through Postal Ballot on 18[th] March, 2021.

Other than the above, there were no instances of

• Public / Rights / Preferential issue of shares / debentures / sweat equity.

• Redemption / buy-back of securities.

• Merger / amalgamation / reconstruction etc.

• Foreign technical collaborations

M D SELVARAJ

Place : Coimbatore Date : 21.05.2021

MDS & Associates, Company Secretaries in Practice FCS No.: 960; C P No.: 411 UDIN: F000960C000338858 Peer Review No. 985/2020

This report is to be read with our letter of even date which is annexed as Annexure A and forms an integral part of this report

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ANNEXURE E

‘Annexure A’

Annexure to Secretarial Audit Report Issued by Company Secretary in Practice

To

The Members,

ELGI EQUIPMENTS LIMITED

(CIN: L29120TZ1960PLC000351) Elgi Industrial Complex III, Trichy Road, Singanallur, Coimbatore – 641 005

My report of even date is to be read along with this letter.

1. Maintenance of Secretarial records is the responsibility of the management of the Company. My responsibility is to express an opinion on these secretarial records based on my audit.

2. I have followed the audit practices and processes as were appropriate to obtain reasonable assurance about the correctness of the contents of the Secretarial records. The verification was done on test basis to ensure that correct facts are reflected in secretarial records. I believe that the processes and practices I followed provide a reasonable basis for my opinion.

3. I have not verified the correctness and appropriateness of financial records and Books of Accounts of the Company.

4. Wherever required, I have obtained the Management representation about the compliance of laws, rules, and regulations and happening of events etc.

5. The compliance of the provisions of corporate and other applicable laws, rules and regulation, standards is the responsibility of the management. My examination was limited to the verification of procedures on random test basis.

6. The Secretarial Audit report is neither an assurance as to the future viability of the Company nor of the efficacy or effectiveness with which the management has conducted the affairs of the Company.

M D SELVARAJ

Place : Coimbatore Date : 21.05.2021

MDS & Associates, Company Secretaries in Practice FCS No.: 960; C P No.: 411 UDIN: F000960C000338858 Peer Review No. 985/2020

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ANNEXURE E-1

Annexure E-1

ATS Elgi Limited

Secretarial Audit Report of ATS Elgi Limited

Form No. MR-3 Secretarial Audit Report For the financial year ended 31[st] March, 2021

[Pursuant to Section 204(1) of the Companies Act, 2013 and Rule No.9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and pursuant to Regulation 24A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015]

To

The Members,

ATS ELGI LIMITED

(CIN: U34300TZ2007PLC014125) Kurichy Private Industrial Estate, Kurichy, Coimbatore – 641021.

I have conducted the secretarial audit of the compliance of applicable statutory provisions and the adherence to good corporate practices by M/s. ATS ELGI LIMITED (hereinafter called the Company). Secretarial Audit was conducted in a manner that provided me a reasonable basis for evaluating the corporate conducts/ statutory compliances and expressing my opinion thereon.

Based on my verification of M/s. ATS ELGI LIMITED’s books, papers, minute books, forms and returns filed and other records maintained by the Company and also the information provided by the Company, its officers, agents and authorized representatives during the conduct of secretarial audit, I hereby report that in my opinion, the Company has, during the audit period covering the financial year ended 31[st] March, 2021 complied with the statutory provisions listed hereunder and also that the Company has proper Board-processes and compliance mechanism in place to the extent, in the manner and subject to the reporting made hereinafter.

I have examined the books, papers, minute books, forms and returns filed and other records maintained by the Company for the financial year ended on 31[st] March, 2021 according to the provisions of:

• i) The Companies Act, 2013 (the Act) and the rules made thereunder

• ii) The Depositories Act, 1996 and the Regulations and bye-laws framed thereunder

• iii) Regulation 24A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015

I have also examined compliance with the applicable clauses of the Secretarial Standards with respect to Board Meetings (SS-1) and General Meetings (SS-2) issued by the Institute of Company Secretaries of India (ICSI).

During the year under review, the Company has complied with the provisions of the Acts, Rules, Regulations and Standards etc., mentioned above.

I further report that, during the year under review, there were no actions/ events in pursuance of Foreign Exchange Management Act, 1999 and the rules and regulations made there under to the extent of Foreign Direct Investment, Overseas Direct Investment and External Commercial Borrowings.

I further report that, the Company being an unlisted company, the following Acts/ Rules/ Regulations are not applicable to the Company during the year under review:

• a. The Securities Contracts (Regulation) Act, 1956 (‘SCRA’) and the rules made thereunder

• b. The following Regulations prescribed under the Securities and Exchange Board of India Act, 1992 (‘SEBI Act’): -

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ANNUAL REPORT 2020-21

ELGI EQUIPMENTS LIMITED

ANNEXURE E-1

• i. The Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 except Regulation 24A

• ii. The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011

• iii. The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015

• iv. The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 regarding the Companies Act and dealing with client

• v. The Securities and Exchange Board of India (Depositories and Participants) Regulations, 2018

• vi. The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018

• vii. The Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014

• viii. The Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008

• ix. The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009; and

• x. The Securities and Exchange Board of India (Buy back of Securities) Regulations, 2018

I further report that based on the information provided by the Company, its officers and authorized representatives, there are no laws specifically applicable to the Company.

I further report that having regard to the compliance system prevailing in the Company and on the review of quarterly compliance reports taken on record by the Board of Directors and on examination of the relevant documents and records in pursuance thereof, on testcheck basis, the Company has complied with the labour and environmental laws as applicable.

I further report, that the compliance by the Company of applicable financial laws, like direct and indirect tax laws, has not been reviewed in this Audit since the same have been subject to review by statutory financial auditor and other designated professionals.

I further report that

The Board of Directors of the Company is duly constituted with proper balance of Executive Directors and Non-Executive Directors. The changes in the composition of the Board of Directors that took place during the period under review were carried out in compliance with the provisions of the Act.

Adequate notice is given to all directors to schedule the Board Meetings, agenda and detailed notes on agenda were sent at least seven days in advance, and a system exists for seeking and obtaining further information and clarifications on the agenda items before the meeting and for meaningful participation at the meeting.

All decisions at Board meetings and Committee Meetings are carried out unanimously as recorded in the minutes of the meetings of the Board of Directors or Committees of the Board, as the case may be.

I further report that there are adequate systems and processes in the Company commensurate with the size and operations of the Company to monitor and ensure compliance with applicable laws, rules, regulations and guidelines.

I further report that during the period under review, there were no instances of:

• Public / Rights / Preferential issue of Shares / Debentures / Sweat Equity.

• Redemption / buy-back of securities

• Major decision taken by the members in pursuant to Section 180 of the Companies Act, 2013.

• Merger / Amalgamation / Reconstruction etc.

• Foreign technical collaborations

M D SELVARAJ

Place : Coimbatore Date : 19.05.2021

MDS & Associates, Company Secretaries in Practice FCS No.: 960; C P No.: 411 UDIN: F000960C000364873 Peer Review No. 985/2020

This report is to be read with my letter of even date which is annexed as Annexure A and forms an integral part of this report.

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ELGI EQUIPMENTS LIMITED

ANNEXURE E-1

‘Annexure A’

To

The Members,

ATS ELGI LIMITED

(CIN: U34300TZ2007PLC014125) Kurichy Private Industrial Estate, Kurichy, Coimbatore – 641021.

My report of even date is to be read along with this letter.

1. Maintenance of Secretarial records is the responsibility of the management of the Company. My responsibility is to express an opinion on these secretarial records based on my audit.

2. I have followed the audit practices and processes as were appropriate to obtain reasonable assurance about the correctness of the contents of the Secretarial records. The verification was done on test basis to ensure that correct facts are reflected in secretarial records. I believe that the processes and practices, I followed provide a reasonable basis for my opinion.

3. Wherever required, I have obtained the management representation about the compliance of laws, rules, and regulations and happening of events etc.

4. The compliance of the provisions of corporate and other applicable laws, rules, regulations and standards is the responsibility of management. My examination was limited to the verification of procedures on random test basis.

5. The Secretarial Audit report is neither an assurance as to the future viability of the Company nor of the efficacy or effectiveness with which the management has conducted the affairs of the Company.

6. I have not verified the correctness and appropriateness of financial records and Books of Accounts of the Company.

M D SELVARAJ

Place : Coimbatore Date : 19.05.2021

MDS & Associates, Company Secretaries FCS No.: 960; C P No.: 411 UDIN: F000960C000364873 Peer Review No. 985/2020

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ANNUAL REPORT 2020-21

ELGI EQUIPMENTS LIMITED

ANNEXURE F

Annexure F

Statement pursuant to Section 197(12) of The Companies Act, 2013 read with The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

Particulars of Employees

i) Names of top ten employees in terms of remuneration drawn and the name of every employee employed who was in receipt of remuneration not less than Rupees One Crore and Two lakhs per annum or Rupees Eight Lakhs Fifty Thousand per month

						Remu-
						neration
Name	Date of joining	Designation on 31-03-2021	Qualifcation & Experience	Age	% of Share holding	(`In Million)	Last employed
Ramesh Ponnuswami	07-11-2011	Executive Director	BE, MBA; 28years	52	–	16.67	EID Parry (I) Limited
Jairam Varadaraj	29-05-1992	Managing Director	B.Com, MBA, PhD (USA); 32years	59	9.44%	15.62	–
Ragunathan Gunabooshanam*	02-11-2018	Chief Financial Ofcer*	B.Com, MBA, ACA, CWA; 26years	50	–	9.16	Praxair India Private Limited
Sriram Srinivas	11-07-2007	Director- Operations	Bsc, FCA, FCMA & CISA; 38years	62	0	12.96	Cholayil Private Limited
Jayakanthan R#	07-01-2009	Chief Financial Ofcer	B.Com; 34 years	56	0	12.16	Kennametal India Limited
Ambat Rajesh Premchandran	04-06-2018	Director- ISAAME	B.E; 30 years	50	–	10.58	Danfoss Industries Pvt Limited
Venu Madhav K	31-01-1998	Director- Technology	M.Tech, PhD; 25 years	49	–	11.46	Gas Turbine Research Establishment
							Ergoform
Vijayakumar V.P	01-10-2012	Head-Design	ME; 28 years	54	–	8.72	Consulting
							Private Limited
Ajit Singh	01-04-2019	Director-PMMO	B.Tech, MBA; 32 years	53		10.53	Busch Vaccum India Pvt Limited
Salim P.R	09-03-2009	VP-Special Projects (Motor)	B.Tech, MS; 32years	55	–	8.51	LG Electronics Limited
Raajeshwar M.K	17-04-2006	VP & Head – Industrials (ISA)	BE; MBA; 28years	49	–	8.40	Tega Industries Limited
Sebi Chacko**	15-02-2021	Chief Human Resource Ofcer	B.Com, PGD PM & IR; 24 years	52	–	4.16	Syngene International Limited

• Mr. Ragunathan Gunabooshanam resigned as Chief Financial Officer with effect from 22[nd] October, 2020.

Appointed as Chief Financial Officer with effect from 23rd October, 2020

** Mr.Sebi Chako joined the Company in the last part of the Financial Year and therefore his salary is proportionately reflected to signify that he was employed only for part of the year.

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ANNUAL REPORT 2020-21

ELGI EQUIPMENTS LIMITED

ANNEXURE F

1. Nature of employment of Mr. Jairam Varadaraj, Managing Director of the Company is contractual. All other Executives are on the permanent rolls of the Company.

2. Mr. Jairam Varadaraj is related to Mr. Sudarsan Varadaraj and Mr. Anvar Jay Varadaraj, as per definition of “Relative” under Section 2 (77) of The Companies Act, 2013. No other employees mentioned above are related to any Directors of the Company.

3. Remuneration includes salary, allowances, contribution to Provident Fund and other taxable perquisites and also performance linked pay paid during the year.

4. Remuneration paid to the Managing Director, who is also the sole Executive Director is within the limit prescribed under 197 of Companies Act, 2013 read with Regulation 17 (6) (e) of the SEBI (Listing Obligations and Disclosure Requirements), 2015. The Managing Director was not paid any commissions either from the Company or any of its subsidiaries

5. Remuneration paid to the employees mentioned above comprises of two components; Fixed Component ( 70% to 80%) and Variable Component (ranging from 20% to 30%). Variable component of the Managing Director constitutes 30% of his total salary. The basis for payment of the variable component is the Company’s performance (50% weightage), his own individual performance as assessed through the performance of his immediate reportees (50% weightage).

6. ii) Particulars pursuant to Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

a) The ratio of the remuneration of each director to the median employee’s remuneration for the financial year is given below:

Name of Director	Ratio
Mr. Jairam Varadaraj (Managing Director)	22.36:1
Mr. Sudarsan Varadaraj (Director)	0.26:1
Dr. T Balaji Naidu (Director)	0.31:1
Mr. M Ramprasad (Director)	0.82:1
Dr. Ganesh Devaraj (Director)	0.60:1
Mr. B Vijayakumar (Director)	0.23:1
Mr. N Mohan Nambiar (Director)	0.60:1
Ms.Aruna Thangaraj	0.52:1
Mr. Harjeet Singh Wahan	2.13:1
Mr.Anvar JayVaradaraj	0.21:1

Sitting fees paid to the Non-Executive Directors has been considered as remuneration.

b) The percentage increase in remuneration of each Director, Chief Financial Officer, Chief Executive Officer, Company Secretary or Manager, if any, in the financial year:

Mr. Jairam Varadaraj	-	Managing Director	:	Nil
Mr. Ragunathan Gunabooshanam*	-	Chief Financial Ofcer	:	Nil
Mr. Jayakanthan R#	-	Chief Financial Ofcer	:	Nil
Mr. Ragunathan K $	-	Company Secretary	:	Nil

• Mr.Ragunathan Gunabooshanam resigned on 22/10/2020

• Mr.Jayakanthan R appointed on 23/10/2020

• $ Mr.Ragunathan K appointed on 29/06/2020

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ELGI EQUIPMENTS LIMITED

ANNEXURE F

c) The percentage increase in the median remuneration of employees in the financial year: 0.94 %

No increase in salaries was effected to the employees during the year. The increase of 0.94% in the median remuneration is purely on account of additions and deletions in the head count. Due to the reason that no salary increases was effected no comparison has been made between the increase in median remuneration of the employees with that of the Managing Director, who is the sole Executive Director.

d) The number of permanent employees on the rolls of Company: 1285 (excluding subsidiaries)

e) Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and any exceptional circumstances for increase in the managerial remuneration:

Average increase in remuneration is 0.94% for Employees and Managerial Personnel

f) Your Directors affirm that the remuneration is as per the remuneration policy of the Company.

For and on behalf of the Board

Date: 21/05/2021

Jairam Varadaraj Managing Director DIN: 00003361 Place: Charlotte, North Carolina, USA

N. Mohan Nambiar Director DIN: 00003660 Place: Coimbatore

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ELGI EQUIPMENTS LIMITED

ANNEXURE G

Annexure G

Disclosures in compliance with Regulation 14 of Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014

1. Disclosure in terms of the ‘Guidance note on accounting for employee share-based payments’ issued by ICAI:

The same has been disclosed in the notes to the financial statements which forms part of this Annual Report.

2. Material Changes in the Scheme:

No material change has been carried out during the financial year under review.

3. Diluted EPS on issue of shares pursuant to ESOP:

Not applicable as the Company does not propose to undertake a fresh issue of equity shares under the ESOP Plan.

4. Details related to Employee Stock Option Scheme (ESOP)

• i. A description of each ESOS that existed at any time during the year, including the general terms and conditions of each ESOP, including -

S. No.	Particulars	Details
a.	Date of shareholders’ approval	31.01.2020
b.	Total number of options approved	31,69,090 (1% of paid-up capital)*
	under ESOP
c.	Vesting requirements	The options granted shall have a vesting period of not more than
		3 years from the date of grant and all options granted shall vest as
		per the vesting schedule specifed in the Grant Letter. The vesting of
		options shall be subject to the fulflment of the terms and conditions
		mentioned in the Grant Letter.
d.	Exercise price or pricing formula	The Company had granted options at a grant price of`200.05 per
		equity share during the fnancial year 2019-20. During the fnancial
		year 2020-21, the Company issued bonus shares to its shareholders in
		the ratio of 1:1 and the beneft of the bonus issue was passed on to the
		eligible employees in terms of the ESOP scheme, resulting in the grant
		price beingmodifed to`100.03/-
e.	Maximum term of optionsgranted	The maximum term of optionsgranted will be for aperiod of 3years.
f.	Source of shares	SecondaryAcquisition
g.	Variation in terms of options	There has been no variation in the terms of the options during the
		year, except to reckon for the bonus issue.

• The shareholders of the Company had approved the issuance of 15,84,545 employee stock options not exceeding 1% of the outstanding Equity Shares i.e., 15,84,54,508 equity shares of ` 1/- each under the Elgi Equipments Limited Employee Stock Option Plan, 2019 (ELGi ESOP 2019) through postal ballot on 31[st] January, 2020. Subsequently, the Company had issued bonus equity shares in the proportion of 1 equity share for every 1 equity share held by the members on 28[th] September, 2020, consequent to which the number of total outstanding equity shares of the Company stands increased to 31,69,09,016. Accordingly, in line with the approval granted by the members the total number of options available for issuance under the ELGi ESOP 2019 stands increased to 31,69,090

ii. Method used to account for ESOP:

The method used is “Fair value method”. The fair value of stock options granted during the period has been measured using the Black Scholes option pricing model at the date of the grant.

• iii. Where the Company opts for expensing of the options using the intrinsic value of the options, the difference between the employee compensation cost so computed and the employee compensation cost that shall have been recognized if it had used the fair value of the options shall be disclosed. The impact of this difference on profits and on EPS of the Company shall also be disclosed:

Not applicable as Fair value method is followed.

• iv. Option movement during the year

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ELGI EQUIPMENTS LIMITED

ANNEXURE G

Particulars	Details
Number of options outstandingat the beginningof theperiod	1,60,600
Number of optionsgranted duringtheyear	1,53,800
Number of options forfeited / lapsed duringtheyear	6,800
Number of options vested duringtheyear	Nil
Number of options exercised duringtheyear	Nil
Number of shares arisingas a result of exercise of options	Nil
Moneyrealized byexercise of options (INR), if scheme is implemented directlybythe Company	Nil
Loan repaid bythe Trust duringtheyear from exerciseprice received	Nil
Number of options outstandingat the end of theyear	3,07,600
Number of options exercisable at the end of theyear	Nil

• v. Weighted-average exercise prices and weighted-average fair values of options shall be disclosed separately for options whose exercise price either equals or exceeds or is less than the market price of the stock

Exercise price for options granted during the year: ` 100.03

• vi. Employee wise details (name of employee, designation, number of options granted during the year, exercise price) of options granted:

			No. of	No of			Revised
			options	Bonus	Total No.	Original	Exercise
	Name of the		granted on	options	of options	Exercise	price due	Date of
S. No.	Employee	Designation	06/03/2020	granted	granted	Price	to Bonus	Vesting
1	Jayakanthan R	Chief	25000	25000	50000	200.05	100.03	05-06-2023
		Financial
		Ofcer
2	Ambat Rajesh	Director –	5800	5800	11600	200.05	100.03	05-06-2023
	Premchandran	ISAAME
3	Ramesh	Executive	19600	19600	39200	200.05	100.03	05-06-2023
	Ponnuswami	Director
4	Ajit Singh	Director –	5000	5000	10000	200.05	100.03	05-06-2023
		PMMO
5	Venu Madhav K	Director –	25000	25000	50000	200.05	100.03	05-06-2023
		Technology
6	Sriram S	Director –	6700	6700	13400	200.05	100.03	05-06-2023
		Operations
7	Chris Ringsltetter	President –	15700	15700	31400	200.05	100.03	05-06-2023
		Europe
8	David Jon Puck	President –	51000	51000	102000	200.05	100.03	05-06-2023
		Americas
	TOTAL		1,53,800	1,53,800	3,07,600

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ANNUAL REPORT 2020-21

ELGI EQUIPMENTS LIMITED

ANNEXURE G

S. No.	Category of employees	Details
a.	senior managerialpersonnel;	Asgiven in the above table
b.	any other employee who receives a grant in any one year of	As given in the above table
	option amounting to 5% or more of option granted during
	thatyear
c.	identifed employees who were granted option, during any	NIL
	one year, equal to or exceeding 1% of the issued capital
	(excluding outstanding warrants and conversions) of the
	Companyat the time ofgrant

• vii. A description of the method and significant assumptions used during the year to estimate the fair value of options including the following information.

• a. the weighted-average values of share price, exercise price, expected volatility, expected option life, expected dividends, the risk-free interest rate and any other inputs to the model:

The Black Scholes option pricing model includes assumptions regarding dividend yields, expected volatility, risk free interest rates, and expected term to maturity which incorporate expected early exercise. The key inputs and assumptions used are as follows:

• i. Share Price: INR 201.65 (share price as on the grant date)

• ii. Exercise Price: INR 100.03

• iii. Expected Volatility: 30.45% (expected volatility was computed by computing the standard deviation of returns on share prices, for a term equal to the residual maturity of the option)

• iv. Option Life: 3.125 years (expected life taken as the mid-point between the vesting date and exercise date, which is a period of 3 months)

• v. Expected Dividends: The dividend yield of 0.82% is determined based on the

• latest declared dividend of INR 1.65 per share

vi. Risk free Interest Rate: 5.48%

• b. the method used and the assumptions made to incorporate the effects of expected early exercise.

None.

• c. how expected volatility was determined, including an explanation of the extent to which expected volatility was based on historical volatility:

• Expected Volatility: 30.45% (expected volatility was computed by computing the standard deviation of returns on share prices, for a term equal to the residual maturity of the option)

• d. whether and how any other features of the option grant were incorporated into the measurement of fair value, such as a market condition:

The plan does not provide for change in the exercise price based on market conditions. All the features of the plan are considered in the measurement method as explained in (a) above.

Note: No ESOPs were granted to the Managing Director, who is also the Sole Executive Director.

5. Details related to Trust

i. General information on all schemes

S. No.	Particulars	Details
1	Name of the Trust	Elgi Equipments Limited Employee Stock
		Option Trust
2	Details of the Trustee(s)	Mr.B.Balakrishnan & Mr.M.Ramakrishnan.
		(Mr. R. Jeyachandran resigned as trustee on
		6thJuly, 2020 and Mr.B.Balakrishnan was
		appointed on 7thJuly, 2020)

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ANNEXURE G

S. No.	Particulars	Details
3	Amount of loan disbursed byCompanyduringtheyear	`4,44,01,000/-
4	Amount of loan outstanding (repayable to Company) as at	`4,44,01,000/-
	the end of theyear
5	Amount of loan, if any, taken from any other source for	Nil
	which Company / any Company in the group has provided
	anysecurityorguarantee
6	Anyother contribution made to the Trust duringtheyear	Nil

ii. Brief details of transactions in shares by the Trust

S. No.	Particulars	Details
a.	Number of shares held at the beginningof theyear	Nil
b.	Number of shares acquired during the year through (i)primaryissuance
	(ii) secondary acquisition, also as a percentage of paid up equity capital as at the end of the previous fnancial year, along with information on weighted average cost of acquisition per share	Number of shares acquired from the market: 1,85,000
		Number of bonus shares received 1,85,000
		% of paid-up equity capital as at the end of the fnancial year 0.12%
		Weighted average cost of acquisition per share 119.02 (After accounting for bonus)
c.	Number of shares transferred to the employees / sold alongwith thepurpose thereof	Nil
d.	Number of shares held at the end of theyear	3,70,000

iii. In case of secondary acquisition of shares by the Trust

	As a percentage of paid-up equity capital as at the end
	of the year immediately preceding the year in which
Number of Shares	shareholders’ approval was obtained
Held at the beginningof theyear	Nil
Acquired duringtheyear	0.12% (After accountingfor bonus)
Sold duringtheyear	Nil
Transferred to the employees	Nil
duringtheyear
Held at the end of theyear	0.12% (After accountingfor bonus)

For and on behalf of the Board

Date: 21/05/2021

Jairam Varadaraj Managing Director DIN: 00003361 Place: Charlotte, North Carolina, USA

N. Mohan Nambiar

Director DIN: 00003660 Place: Coimbatore

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ELGI EQUIPMENTS LIMITED

ANNEXURE H

Annexure H

Business Responsibility Report

The Directors present the business responsibility report of the Company for the financial year ended on 31[st] March, 2021, pursuant to Regulation 34 (2)(f) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations,2015.

Section A: General information about the Company

1.	Corporate IdentityNumber (CIN):	L29120TZ1960PLC000351
2.	Name of the Company:	ELGI EQUIPMENTS LIMITED
3.	Registered address:	ELGI INDUSTRIAL COMPLEX III,
		TRICHY ROAD, SINGANALLUR,
		COIMBATORE -641 005.
4.	Website:	www.elgi.com
5.	E-mail id:	investor@elgi.com
6.	Financialyear reported:	2020-2021
7.	Sector(s) that the Companyis engaged in (industrial activitycode-wise)	2813 – Manufacture of compressors
8.	Three key products/services manufactured (as in balance sheet):	Compressors
9.	Total number of locations where business activityis undertaken:	26 Locations
	Number of international locations (5 major):	Major locations- Australia, Brazil,
		Italy, Belgium, Middle-East, USA &
		Indonesia
	Number of national locations:	11 Locations
		(Jaipur, Delhi, Ahmedabad, Pune, Mumbai,
		Hyderabad, Chennai, Bangalore,Cochin,
		Trichengode, Coimbatore)
10.	Markets served bythe Company:	Local/State/National/International

Section B: Financial details of the Company

1.	Paid upcapital:	31,69,09,016
2.	Total turnover:	11,001.70 Million
3.	Totalproft after taxes:	1,050.90 Million
4.	Total spending on corporate social responsibility (CSR) as	2.26 %
	percentage of PAT:
5.	List of activities in which expenditure in 4 above has been incurred:	Predominantlyin education

Section C: Other details

1. Does the Company have any subsidiary Company/ Companies? Yes, the Company has the following subsidiaries:-

Sl. No	Name of the Company
1	ADISONS PRECISION INSTRUMENTS MFG. CO. LIMITED
2	ATS ELGI LIMITED
3	ERGO DESIGN PRIVATE LIMITED
4	ELGI EQUIPMENTS (ZHEJIANG) LTD
5	ELGI GULF FZE
6	ELGI COMPRESSORES DO BRASIL IMP.E.EXP.LTDA

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ELGI EQUIPMENTS LIMITED

ANNEXURE H

Sl. No	Name of the Company (continued)
7	ELGI EQUIPMENTS AUSTRALIA PTY LTD
8	INDUSTRIAL AIR COMPRESSORS PTY LTD
9	F.R. PULFORD & SON PTY LTD
10	ADVANCED AIR COMPRESSORS PTY LTD
11	ELGI COMPRESSORS ITALY S.R.L
12	ROTAIR SPA
13	ELGI COMPRESSORS USA INC
14	PATTONS INC
15	PATTONS MEDICAL LLC
16	PT.ELGI EQUIPMENTS INDONESIA
17	ELGI COMPRESSORS EUROPE SRL
18	ELGI COMPRESSORS IBERIA SL
19	MICHIGAN AIR LLC
20	ELGI GULF MECHANICAL AND TRADING COMPANY LLC
21	ELGI COMPRESSORS NORDICS
22	ELGI COMPRESSORS FRANCE SAS
23	ELGI COMPRESSORS EASTERN EUROPE SP. Z.O.O.
24	ELGI COMPRESSORS (M) SDN. BHD.

1. Do the subsidiary Company/Companies participate in the BR initiatives of the parent Company? If yes, then indicate the number of such subsidiary company(s).

ELGi has subsidiaries in India and in foreign countries and subsidiaries participate in business responsibility (BR) initiatives.

1. Do any other entity/entities (e.g. suppliers, distributors etc.) that the Company does business with participate in the BR initiatives of the Company? If yes, then indicate the percentage of such entity/entities?

The Company encourages suppliers, dealers and other stakeholders to support various initiatives taken by the Company towards its business responsibility.

Section D: BR information

1. a. Details of director/directors responsible for BR implementation of the BR policy/policies

2. i. Name: Mr. Jairam Varadaraj

3. ii. DIN Number: 00003361

4. iii. Designation: Managing Director

5. iv. Telephone Number: 0422-2589555

6. v. E-mail id: investor@elgi.com

7. b. Details of BR head

8. i. Name: Mr. Jairam Varadaraj

9. ii. Designation: Managing Director

iii. Telephone Number: 0422-2589555

iv. E-mail id: investor@elgi.com

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ANNEXURE H

2. Principle-wise (as per NVGs) BR policy/policies

P1	Business ethics	Business should conduct and govern themselves with
		ethics, transparencyand accountability
P2	Product responsibility	Businesses should provide goods and services that are
		safe and contribute to sustainability throughout their life
		cycle
P3	Wellbeing of employees	Businesses should promote the well-being of all
		employees
P4	Stakeholder engagement	Businesses should respect the interests of and be
		responsive towards all stakeholders, especially those who
		are disadvantaged, vulnerable and marginalized
P5	Human rights	Businesses should respect andpromote human rights
P6	Environment	Business should respect, protect and make eforts to
		restore the environment
P7	Public policy	Businesses, when engaged in infuencing public and
		regulatory policy, should do so in a responsible manner
P8	CSR	Businesses should support inclusive growth and equitable
		development
P9	Customer relations	Businesses should engage with and provide value to their
		customers and consumers in a responsible manner

2. (a) Details of compliance (reply in Y/N)

Sl. No Questions	P1 P2 P3 P4 P5 P6 P7 P8 P9 Y Y Y N N Y N Y Y Y Y Y N N Y N Y Y Y Y Y N N Y N Y N The policies are in line with international standards and practices such as ISO 9001: 2015 , ISO 14001: 2015, ISO 45001 :2018, ISO 50001:2018. Y N Y N N N N Y N (But it has been signed by the appropriate owner) Y N Y N N N N Y Y http://www.elgi.com Not all policies may be available in this link in due course access to allpolicies will beprovided. Y Y Y N N Y N Y Y Y Y Y N N Y N Y Y Y Y Y N N Y N Y Y N N N N N N N N N
1. Doyou have apolicy/policies for
2. Has the policy being formulated in consultation with the relevant stakeholders?
3. Does the policy conform to any national / international standards? If yes, specify? (50 words)
4. Has the policy being approved by the Board? Is yes, has it been signed by MD/ owner/ CEO/ appropriate board director?
5. Does the Company have a specifed committee of the board/ director/ ofcial to oversee the implementation of thepolicy?
6. Indicate the link for the policy to be viewed online?
7. Has the policy been formally communicated to all relevant internal and external stakeholders?
8. Does the Company have in-house structure to implement thepolicy/policies?
9. Does the Company have a grievance redressal mechanism related to the policy/ policies to address stakeholders’grievances related to thepolicy/policies?
10. Has the Company carried out independent audit/ evaluation of the working of this policy by an internal or external agency?

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2 (b) If answer to the question at serial number 1 against any principle, is ‘No’, please explain why: (tick up to 2 options)

Sl. No	Questions	P1	P2	P3	P4	P5	P6	P7	P8	P9
1.	The Company has				The Company has	The Company		The Company
	not understood the				understood the	has understood		has understood
	principles				principles but does	the principles but		the principles
					not have a policy	does not have a		but does not
					yet in place	policy yet in place		have a policy yet
								inplace
2.	The Company is not at				The Company	The Company is		The Company
	a stage where it fnds				has an unwritten	not in a position		is not at a
	itself in a position				policy of	to adequately put		stage where it
	to formulate and				respecting the	these policies in		fnds itself in
	implement the policies				interests of and	place.		a position to
	on specifed principles				be responsive			formulate and
					towards all			implement this
					stakeholders,			policy.
					Especially
					those who are
					disadvantaged,
					vulnerable and
					Marginalized.
					The Company does
					not discriminate
					Between
					Stakeholders.
3.	The Company does				The Company does	Since the		Since the
	not have fnancial or				not fnd a need	Company does		Company does
	manpower resources				to have a written	not fnd a need to		not fnd a need
	available for the task				policy. Hence, it	have this policy, it		to have this
					has not assessed	has not assessed		policy, it has
					manpower	manpower		not assessed
					resources for	resources for the		manpower
					the task.	task.		resources for the
								task.
4.	It is planned to be done within next 6 months				NO	NO		NO
5.	It is planned to be done within the next 1year				NO	NO		NO
6.	Any other reason (please specify)				None	None		None

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1. Governance related to BR:

2. Indicate the frequency with which the Board of Directors, Committee of the Board or CEO assess the BR performance of the Company. Within 3 months, 3-6 months, annually, more than 1 year.

There is no defined frequency. Assessment is an ongoing exercise and is an inherent part of corporate management.

• Does the Company publish a BR or a Sustainability Report? What is the hyperlink for viewing this report? How frequently it is published?

Yes BR report is published on annual basis. http://www.elgi.com

Section E: Principle-wise performance

Principle 1: Business should conduct and govern themselves with Ethics, Transparency and Accountability.

1. Does the policy relating to ethics, bribery and corruption cover only the Company? Yes/ No.

Does it extend to the Group/Joint Ventures/ Suppliers/ Contractors/NGOs /Others?

ELGi holds the highest standards of integrity and behavior, ensuring compliance and adherence to the law and internal regulations. ELGi has zero tolerance for corruption and violations of the principles of fair competition. Suppliers have to sign a code of conduct before transacting with the Company that they will not engage in unethical behaviour and will not bribe or attempt to bribe Company officials. The policy will be extended to subsidiaries and joint ventures.

1. How many stakeholder complaints have been received in the past financial year and what percentage was satisfactorily resolved by the management? If so, provide details thereof, in about 50 words or so.

There were no complaints from Shareholders and Customers on ethics, transparency or accountability during the 2020-21. Few complaints received from anonymous sources during 2020-21 were examined but not pursued due to lack of proof. Each and every complaint was addressed on time satisfactorily.

Principle 2: Businesses should provide goods and services that are safe and contribute to sustainability throughout their life cycle.

1. List up to 3 of your products or services whose design has incorporated social or environmental concerns, risks and / or opportunities.

2. 2 to 3% improvement in energy efficiency has been achieved in compressors through design changes. We have developed and launched several models with this improvements. We have also expanded the range of oil free compressors.

3. We have Launched OFD (Oil-free disrupted) compressors which potentially will replace traditional oil free compressors with a significant improvement in efficiency and lower initial cost. This product meets the requirement of sensitive applications like pharmaceuticals, food and beverages and electronics. We have also expanded the range of OFD compressors.

4. Our indigenously developed and manufactured motors deliver higher efficiency at lower cost and these motors are used in our compressors now.

5. For each such product, provide the following details in respect of resource use (energy, water, raw material etc.) per unit of product(optional):

The Company is not capturing resource use as of now. But the Company is working towards capturing details for energy and raw material alone.

(a) Reduction during sourcing/production/ distribution achieved since the previous year throughout the value chain?

The below savings apply to old and new products put together. We don’t have a method yet to capture details separately for old and new products; we are working towards it.

• a. Energy Consumption/ -For Manufacturing Air End (17 -18 : 433 Kwh/ Air end) (18 - 19 :386 Kwh/ Air end) (19 – 20 : 375 Kwh/ Air end)

• b. Water Consumption/ man (17-18 :90 Lts/Man) ( 18-19 : 85 Lts/ Man) (19 – 20 : 82 Lts/ Man)

• (a) Reduction during usage by consumers (energy, water) has been achieved since the previous year?

The usage of new products (compressors) with 3% energy efficiency will normally result in a corresponding 3% reduction in energy consumption at consumers’ sites. In Oil Free Disrupted (OFD) compressors, the amount of oil used is one fifth of its equivalent earlier models and also the efficiency will reduce the amount

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of electricity consumed and consequently the cost to the customers.

1. Does the Company have procedures in place for sustainable sourcing (including transportation)?

Yes

• (a) If yes, what percentage of your inputs was sourced sustainably? Also, provide details thereof, in about 50 words or so.

We have suppliers on board ranging from Micro, Small & Medium Enterprises (MSME) to large domestic and Multi-National Companies. The Company possesses a commodity specific sustainable sourcing plan. There are suppliers on board for more than two decades located within Coimbatore region itself, which is the result of a “Sustainable Sourcing Plan”. The Company supports many MSME’s.

1. Has the Company taken any steps to procure goods and services from local & small producers, including communities surrounding their place of work?

Yes, please see answer to 3 a above.

(a) If yes, what steps have been taken to improve their capacity and capability of local and small vendors?

Yes, the Company works with suppliers very closely and technically supports them to establish manufacturing capabilities and capacity. The Company does conduct supplier quality improvement programs, continuous improvement program and training on KANBAN systems. Because of these efforts, the Company was able to migrate its MSME suppliers to next level in-line with Company’s expectations.

1. Does the Company have a mechanism to recycle products and waste? If yes what is the percentage of recycling of products and waste (separately as <5%, 5 ,10%, >10%). Also, provide details thereof, in about 50 words or so.

The Company does recycle foundry sand waste and converts them to solid blocks to the extent of 140 Tons / Yr ., > 10%

UPS batteries used in the Air center Plant machines are re-utilized at ELGi School lab

Principle 3: Businesses should promote the well- being of all employees

1. Please indicate the total number of employees. 2142 (Including subsidiaries)

2. Please indicate the total number of employees hired on temporary/contractual/casual basis: 635

3. Please indicate the number of permanent women employees: 140

4. Please indicate the number of permanent employees with disabilities:3

Do you have an employee association that is recognized by management: There are no formal associations but the management engages with employee committees on a continuous basis

1. What percentage of your permanent employees is members of this recognized employee association? Not applicable

2. Please indicate the number of complaints relating to child labour, forced labour, involuntary labour, sexual harassment in the last financial year and pending, as on the end of the financial year

		No. of
		complaints	No. of
		fled	complaints
		during the	pending as
		fnancial	on end of the
Sl. No	Category	year	fnancialyear
1.	Child labour/forced	Nil	Nil
	labour/involuntary
	labour
2.	Sexual harassment	Nil	Nil
3.	Discriminatory	Nil	Nil
	employment

1. What percentage of your under mentioned employees were given safety & skill up-gradation training in the last year?

2. (a) Permanent employees: 72%

3. (b) Permanent women employees: 65%

The Company generates minimal quantities of hazardous waste, electronic waste, oil waste, used batteries and foundry fine sand and all of these are disposed of in accordance with prevailing pollution control laws.

• (c) Casual/temporary/contractual employees: 82%

• (d) Employees with disabilities: 67 % (3 employees)

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Principle 4: Businesses should respect the interests of and be responsive towards all stakeholders, especially those who are disadvantaged, vulnerable and marginalized

ELGi firmly believes that business sustainability is possible only by taking along all stakeholders, internal as well as external. The Company has mapped its key stakeholders and employs various mechanisms and practices to engage with them in a fruitful dialogue. ELGi seeks timely feedback and response through both formal and informal channels of communication to ensure that stakeholders are updated. The Company has well established processes for identifying and engaging with stakeholders groups.

1. Has the Company mapped its internal and external stakeholders? Yes/No

Yes.

1. Out of the above, has the Company identified the disadvantaged, vulnerable & marginalized stakeholders?

ELGi has identified the disadvantaged and marginalized stakeholders amongst its employees and vendors.

1. Are there any special initiatives taken by the Company to engage with the disadvantaged, vulnerable and marginalized stakeholders. If so, provide details thereof, in about 50 words or so

All stakeholders are treated on an equal footing. Though no special initiatives have been taken towards disadvantaged, marginalised and vulnerable stakeholders, the Company believes that an initiative directed against such stakeholders is not very relevant under current circumstances. The Company has however been procuring components from micro and small enterprises. The Company is sensitive to and has been promptly attending to their needs, believes in and has always paid all its vendors in time. Differently abled employees are given additional attention as required.

Principle 5: Businesses should respect and promote human rights

The Company does not have a standalone Human Rights policy; however aspects of human rights such as child labour, occupational safety, non-discrimination are covered by its various Human Resources policies. ELGi’s Code of Conduct demonstrates its commitment towards the preservation of human rights across the value chain. The Company has grievance redressal mechanism in place to deal with issues related to discrimination,

retaliation and harassment. These policies cover ELGi’s and its subsidiaries.

There have been no complaints received and disposed regarding violation of human rights during the year 2020-21.

1. Does the policy of the Company on human rights cover only the Company or extend to the group/joint ventures/suppliers/contractors/NGOs/others?

2. The Company proposes to gradually extend its policy to other stakeholders.

3. How many stakeholder complaints have been received in the past financial year and what percent was satisfactorily resolved by the management?

None

Principle 6: Business should respect, protect and make efforts to restore the environment

1. Does the policy related to principle 6 cover only the Company or extends to the group / Joint Ventures/ suppliers/contractors/NGOs/others.

Health, Safety and Environment policy, Energy policy apply to the Company, its suppliers and contractors.

1. Does the Company have strategies/ initiatives to address global environmental issues such as climate change, global warming, etc? Y/N. If yes, please give hyperlink for webpage etc.

The Company does have specific initiatives to address climate change and global warming. Energy conservation measures are an on going exercise and annually, the initiatives are spelt out in the Company’s annual report. Going forward, the Company has set itself an internal target of reducing carbon emissions, that are in any case very minimal, by 10% every year. The Company also owns 250 KW - 5 windmills that have contributed to minimizing the impact of global warming and climate change. It contributes 15% of the total energy.

All the manufacturing plants were certified for ISO 14001:2015 Standard (Environment Management System), ISO 14024 :2018 ( Green product certification), ISO 45001:2018 Standards ( Safety Management System), ISO 50001:2011 ( Energy Management System) with TUV Nord.

New initiative in ISO 14001:2015 - We utilized the foundry waste sand and converted as a solid blocks, we

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manufactured and used 40,000 solid blocks for internal civil construction purposes.

All the Air conditioner Ozone depletion gas has been converted to Environmental friendly gas.

Initiative carried out to optimize the Co2 emission reduction by various actions taken to optimize the Co2 emission

New initiative in ISO 45001: 2018 : In order to minimize/ eliminate the Risk in each Manufacturing process, we use Poka yoke, Administrative controls and usage of PPE in each stage. We are ensuing there is no safety incidents in all the manufacturing plants

New initiative in ISO 50001:2018: To reduce the High Speed Diesel consumption, we initiated 250 KVA MG Set (Mechanical Generator) for testing the compressor products of various volts and various Hertz for different countries. All the CNC and SPM machines have been equipped with IoT energy concept. On-line energy monitoring system at the Air center plant and remote operations of Power House are implemented to optimize energy consumption during the Non-operating days

As part of the product development policy, we are working towards ensuring that all our products are in top three positions in terms of loer energy consumption and in number one position in ensuring the UPTIME of the compressors. All new product developments and the Company’s future initiatives are aligned towards this policy.

Does the Company identify and assess potential environmental risks? Y/N

The Company has carried out an Aspect/Impact analysis for the entire manufacturing process. Addressing the Significant Aspect and Impact at shop floor. This will be carried out on a continuous basis based on the manufacturing process change.

Energy conservation projects are being undertaken from time to time. Currently no other initiatives are being undertaken.

The improved efficiency in products and the new OFD compressor will contribute to lower energy consumption and reduce the discharge of oil into the environment. This will have significant impact on environmental cleanliness.

• 5 Are the Emissions/Waste generated by the Company within the permissible limits given by CPCB/SPCB for the financial year being reported?

• Yes, we have implemented an interlock system to highlight this before it reaches the set value for foundry furnace

• Number of show cause/ legal notices received from CPCB/SPCB which are pending (i.e. not resolved to satisfaction) as on end of Financial Year.

None

Principle 7: Businesses, when engaged in influencing public and regulatory policy, should do so in a responsible manner

1. Is your Company a member of any trade and chamber or association? If Yes, Name only those major ones that your business deals with:

2. Confederation of Indian Industry, Coimbatore Chamber of Commerce, Indo Australian Chamber of Commerce

3. India Asian Srilanka chamber of commerce and industries

4. Indo German Chamber of Commerce and Industries

5. Indo Australian Chamber of Commerce and Industries

6. Indo Italian Chamber of Commerce and Industries

7. Indian Chamber of Commerce and Industries

8. Does the Company have any project related to clean development mechanism? If so, provide details thereof, in about 50 words or so. Also, if Yes, whether any environmental compliance report is filed?

The Company does not have any project related to clean development mechanism.

1. Has the Company undertaken any other initiatives on – clean technology, energy efficiency, renewable energy, etc. Y/N. If yes, please give hyperlink for web page etc.

2. Confederation of Indian Industry (CII)

3. Have you advocated/ lobbied through above associations for the advancement or improvement of public good? Yes/No; if yes specify the broad areas (drop box: Governance and Administration, Economic Reforms, Inclusive Development Policies, Energy security, Water, Food Security, Sustainable Business Principles, Others)

No

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Principle 8: Businesses should support inclusive growth and equitable development

1. Does the Company have specified programmes/ initiatives/projects in pursuit of the policy related to Principle 8? If yes details thereof.

Inclusive growth and equitable development are essential to foster sustainable local development and uplift the communities in which we operate. ELGi’s CSR Policy is consistent with and meets the compliance requirements of the Companies Act, 2013. The Company’s sustainability strategy is based on one main pillar – education. Details are available in the CSR Report 2020-21.

1. Are the programmes /projects undertaken through in house team / own foundation / external NGO/ government structures/any other organization?

Some important programmes are undertaken through registered trusts. Employees are encouraged to volunteer for cause of choice in pre-defined aspects that are aligned to the community development initiatives.

1. Have you done any impact assessment of your initiative?

No formal impact assessment has been done. However, the Company has been supporting a school through two registered trusts. It was found that wards of people living in the vicinity of Vellalore, Coimbatore area where the school is located, are predominantly benefitted. The school, through professional management and with eagle eyed focus on performance and all round development, has been able to achieve 100% pass result in Class 12 exams continuously for the last couple of years. The school is affiliated to the state board. 4. What is your Company’s direct contribution to community development projects- amount in INR and the details of the projects undertaken.

The Company is supporting a School with 1500 students through a registered trust in Vellalore, Coimbatore. Company has also contributed for constructing a new school building through the registered trusts. The Company is also extending financial support to Karur Basket Ball Club, Amrit Center for Special Needs, Coimbatore Cancer Foundation and Cankids- Kidscan, a NGO involved in holistic treatment of cancer afflicted children LRG Foundation. During the year, contribution to CanKids-Kidscan to an extent of Rs 10.00 lakhs were made through Ellargi Turst.

	CSR contribution
	(Amount in`) during the
Project undertaken	year 2020-21
Support to School and
construction of new school building through	23.00 Million
LRG Foundation
Amrit Center For Special Needs	0.30 Million
Contribution to
Coimbatore Cancer Foundation –	0.43 Million
Coimbatore Marathon

1. Have you taken steps to ensure that this community development initiative is successfully adopted by the community? Please explain in 50 words, or so.

2. Yes. The Company collects CSR spending reports on a quarterly basis from the Trusts and monitors school activities continuously on a day to day basis. With respect to other projects, the Company monitors by seeking progress reports from time to time.

Principle 9: Businesses should engage with and provide value to their customers and consumers in a responsible manner

1. What percentage of customer complaints/consumer cases are pending as on the end of financial year.

The Company has an on-line system of addressing consumer complaints that are attended to promptly. We have a strong customer care system in place with clear benchmarked targets for on time and reliable resolution with built escalation process. Since the complaints redressal mechanism is an on-going process, the number of complaints at any given point in time may not convey the correct picture. The Company strives to resolve all complaints to the satisfaction of its customers. For a company of this size, the number of consumer cases are very minimal. There are no consumer cases that have any material impact on the financials of the Company.

1. Does the Company display product information on the product label, over and above what is mandated as per local laws? Yes/ No/ N. A. / Remarks (additional information)

All products carry a metallic name plate that will have details of basic data required as per CE norms that are captured and incorporated

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1. Model number - Yes 2. Operating pressure - Yes 3. Flow - Yes 4. Fab no - Yes 5. Manufacturing year - Yes 6. Industry standards – Like CE marking - Yes In packing a) Box dimensions(wherever applicable) - Yes b) Weight (wherever applicable) - Yes c) Total no. of boxes (wherever applicable) - Yes d) Packing slip no. (wherever applicable) - Yes e) Customer name - No f) Item - Yes

g)	Description	- Yes
h)	MRP (Wherever applicable)	- Yes
i)	Month / year (Wherever applicable)	- Yes

In addition to the above, we are following ISO 3864 for safety decals and ISO 7010 for icons used in the safety decals that are used in the compressors.

1. Is there any case filed by any stakeholder against the Company regarding unfair trade practices, irresponsible advertising and/or anti-competitive behavior during the last five years and pending as on end of financial year? If so, provide details thereof, in about 50 words or so.

None.

1. Did your Company carry out any consumer survey/ consumer satisfaction trends?

We carry out surveys on an ongoing basis with customers who log into our on-line customer care system.

For and on behalf of the Board

Date: 21/05/2021

Jairam Varadaraj

Managing Director DIN: 00003361 Place: Charlotte, North Carolina, USA

N. Mohan Nambiar

Director DIN: 00003660 Place: Coimbatore

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REPORT ON CORPORATE GOVERNANCE

Report on Corporate Governance

The Directors present the Company’s Report on Corporate Governance for the year ended March 31, 2021, in terms of Regulation 34(3) read with Para C of Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Company’s Philosophy on Code of Governance

The Company has always believed in and followed the best business practices, and has been compliant with all the laws, exercised fairness and integrity in all its dealings, thereby reiterated its commitment to enhancement of stakeholders’ value. The Company has a defined set of guidelines for its internal governance based on business ethics, legal compliance and professional conduct. The Company has been transparent in its accounting practices and procedures, in framing and adhering to policies and guidelines, in insisting on responsibility and accountability and by regular audit of its policies and procedures.

Board of Directors – Composition, Category and Attendance

The Board of Directors of the Company consists of Ten Directors. Mr. Jairam Varadaraj is the Executive Director and all others are Non-executive Directors (out of which five are Independent Directors).

The Board met 6 (Six) times during the financial year on 29[th] June, 2020, 30[th] July, 2020, 14[th] August, 2020, 28[th] September, 2020, 6[th] November, 2020 and 8[th] February, 2021. The composition and attendance of Directors at the Board Meetings and the Annual General Meeting held during the year is as under: -

Name of the Director Category	Attendance Particulars	No. of Directorships in other Public Companies #	No. of Committee Positions held in all Companies $
	Board meeting Last AGM		Chairman Member
Mr. Jairam Varadaraj (DIN: 00003361) Managing Director Promoter	6 Yes	8	– 3
Mr. Sudarsan Varadaraj (DIN: 00133533) Non-Executive Promoter	6 Yes	5	– 2
Dr. T. Balaji Naidu (DIN: 00002755) Non-Executive Promoter	6 Yes	1	– 1
Mr. B. Vijayakumar (DIN: 00015583) Non-Executive Independent	4 Yes	2	– 2
Mr. N. Mohan Nambiar (DIN: 00003660) Non-Executive Independent	6 Yes	0	1 2
Mr. M. Ramprasad (DIN: 00004275) Non-Executive Independent	6 Yes	0	1 1
Dr. Ganesh Devaraj (DIN: 00005238) Non-Executive Independent	5 Yes	0	– 1
Mr. Harjeet Singh Wahan (DIN: 00003358) Non-Executive Non-Independent	6 Yes	1	– 1
Mrs. Aruna Thangaraj (DIN: 07444726) Non-Executive Independent	6 Yes	1	– 1
Mr. Anvar Jay Varadaraj (DIN: 07273942) (Appointed on 01.04.2020) Non-Executive Promoter	5 No	1	– –

excludes directorships in Private Companies and Foreign Companies

$ Only Audit Committee and Stakeholders Relationship Committee are considered.

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REPORT ON CORPORATE GOVERNANCE

Mr. Sudarsan Varadaraj, Director is the brother of Mr. Jairam Varadaraj, Managing Director and Mr. Anvar Jay Varadaraj, Director is the son of Mr. Jairam Varadaraj, Managing Director. None of the other directors are related to each other.

None of the Directors holds directorship in more than 20 Companies (including limit of maximum directorships in ten public companies) pursuant to the provisions of the Companies Act, 2013. Further, none of the Directors including Independent Directors hold directorships in more than the maximum number of Directorships prescribed under Regulation 17A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

As per the disclosures received from the directors, none of the directors serve as member of more than ten committees nor are they the Chairman / Chairperson of more than five committees, as per the requirements of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Details of the other listed entities where the Directors hold directorship:

Name of the Directors	Name of the listed entity Category
Mr. Jairam Varadaraj (DIN: 00003361)	Precot Limited Non-Executive, Independent Director
	Elgi Rubber Company Limited Non-Executive, Non-Independent Director
	Thermax Limited Non-Executive, Independent Director
	Magna Electro Castings Limited Non-Executive, Independent Director
Mr. Sudarsan Varadaraj (DIN: 00133533)	Kovilpatti Lakshmi Roller Flour Mills Limited Non-Executive, Non-Independent Director
	Super Spinning Mills Limited Non-Executive, Independent Director
	Elgi Rubber Company Limited Executive Chairman & Managing Director
Dr. T. Balaji Naidu (DIN: 00002755)	Nil Nil
Mr. B. Vijayakumar (DIN: 00015583)	LGB Forge Limited Chairman & Non-Executive Director
	L G Balakrishnan & Bros Limited Chairman & Managing Director
Mr. N. Mohan Nambiar (DIN: 00003660)	Nil Nil
Mr. M. Ramprasad (DIN: 00004275)	Nil Nil
Dr. Ganesh Devaraj (DIN: 00005238)	Nil Nil
Mrs. Aruna Thangaraj (DIN: 07444726)	Nil Nil
Mr. Harjeet Singh Wahan (DIN: 00003358)	Nil Nil
Mr. Anvar Jay Varadaraj (DIN: 07273942) Appointed on 01.04.2020	Nil Nil

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REPORT ON CORPORATE GOVERNANCE

Statement showing number of Equity Shares held by the Non-Executive Directors as on 31[st] March, 2021.

Name of the Director	No of Shares held (as on 31/03/2021)
Mr. M. Ramprasad	16,000
Mr. B. Vijayakumar	1,00,000
Dr. T. Balaji Naidu	68,500
Mr. Sudarsan Varadaraj	83,572
Mr. Harjeet Singh Wahan	20,000
Mr.Anvar Jay Varadaraj	19,25,248

The Company has not issued any type of convertible instruments to Non-Executive Directors.

There has been no materially relevant pecuniary transaction or relationship between the Company and its NonExecutive Independent Directors during the year.

None of the Directors were issued ESOPs.

Independent Directors

Familiarization Program for Independent Directors:

At every Board Meeting, the concerned Senior Management personnel of the Company presents to the Directors, region-wise operational and financial aspects of the Company and its subsidiaries. The Directors are also apprised about the new products and related aspects. During the year, a presentation on restructuring the European business was made to the Board of Directors. The Directors were also appraised of the COVID-19 related precautionary measures taken at the Company’s factories and offices. The Directors were also kept abreast of the latest legal developments like changes in consumer protection law and the new Corporate Social Responsibility rules.

The familiarization program for Independent Directors included the new Strategic Business Plan setting out the midterms goals of the Company. The Strategic Business Plan focused on setting fresh goals on profitability and returns besides revenue. All the business regions and global functions will now work on Strategic Initiatives required to achieve their Strategic Business Plan goals. The Annual Business Plan will be prepared based on the Strategic Business Plan.

The familiarization program for Independent Directors and appointment letters of the Independent Directors have been posted on the Company’s website www.elgi.com

Key Board Qualifications, expertise and attributes:

The Board of Directors comprises of qualified members who bring in the required skills, competence and expertise that allow them to make effective decisions or contributions to the Board, its committees and the management. During the year, the Nomination and Remuneration Committee mapped the board skills of Mr. Anvar Jay Varadaraj, Non-Executive Director and recommended the same for the approval of the Board of Directors. The Board of Directors approved the board skills matrix of Mr. Anvar Jay Varadaraj at its meeting held on 21-05-2021.

The list of core skills / expertise / competency identified by the Board of Directors as required in the context of its business (es) and sector(s) for functioning effectively and those already available with the Board are as follows:

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REPORT ON CORPORATE GOVERNANCE

ELGi Board of Directors Skill Matrix

No.	Skills / Core Competencies Ramprasad M Ganesh Devaraj Mohan Nambiar B. Vijayakumar Aruna Thangaraj Sudarsan Varadaraj Harjeet Singh Wahan T Balaji Naidu Jairam Varadaraj Anvar Jay Varadaraj
1	CEO / Board Experience in a Public Company; Corporate Governance         
2	Relevant Industry Experience includingCore Operations      
3	Capital Allocation and Mergers & Acquisitions      
4	Strategic Planning and Business Operations       
5	Executive Compensation and Human Capital Management   
6	Accounting and fnancial reportingexperience 
7	Risk Management      
8	Legal, Government, Public Policy, Regulatory     
9	Environment, Health, Safety, and Sustainability  
10	Marketing and Global Brand Building      
11	Innovation, R&D, Information technology & cyber security expertise   
12	International / Global Perspective       

Confirmation on the fulfillment of the conditions of independence:

Based on the declarations received from the Independent Directors, the Board of Directors are of the opinion that the Independent Directors fulfill the conditions specified in the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the Companies Act, 2013 and are independent of the management.

None of the Independent Directors have resigned before the expiry of the tenure during the year under review.

Separate Meeting of the Independent Directors:

The Independent Directors held a meeting on 29[th] June, 2020, without the attendance of Non-Independent

Directors and members of Management. The following matters were discussed in detail:

• I. Review of the performance of Non-independent directors and the Board as a whole

• II. Review of the performance of the Managing director of the Company, taking into account the views of Non-Executive Directors.

• III. Assessment of the quality, quantity and timeliness of flow of information between the Company Management and the Board that is necessary for the Board to effectively and reasonably perform their duties.

The Independent Directors were satisfied with all the above.

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Committees of the Board

The Board at present has six Committees:

1) Audit Committee 2) Nomination and Remuneration Committee 3) Stakeholders Relationship Committee 4) Risk Management Committee 5) Corporate Social Responsibility Committee and 6) Compensation Committee

The Board constitutes the committees and defines their terms of reference. The members of the Committees are co-opted by the Board.

Audit Committee

The Board has constituted a well-qualified Audit Committee in compliance with Section 177 of the Companies Act, 2013 read with Regulation 18 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. All the members of the Committee are Independent Directors including the Chairman except Mr.Harjeet Singh Wahan, who is a non-executive non-independent director. They possess sound knowledge on accounts, audit, finance, taxation, internal controls, etc.

The role, powers and functions of the Audit Committee are as per Section 177 of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The terms of reference of this Committee are as required by SEBI under Regulation 18 read with part C of Schedule II of the SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015. Besides having access to all the required information within the Company, the Committee can obtain external professional advice whenever required. The Committee acts as a link between the Statutory and Internal Auditors and the Board of Directors of the Company. It is authorized to select and establish accounting policies, review reports of the Statutory and the Internal Auditors and meet with them to discuss their findings, suggestions and other related matters. The Committee is empowered to recommend the appointment and remuneration payable to the Statutory Auditors.

During the year under review, the Committee met five times on 29[th] June, 2020, 30[th] July, 2020, 14[th] August, 2020, 6[th] November, 2020 and 8[th] February, 2021. The Composition of the Audit Committee and the attendance of each member of the Committee are given below.

		No. of Meetings	No. of
		held during	Meetings
Name of the Members	Category	theyear	attended
Mr. M. Ramprasad (Chairman)	Independent – Non-Executive	5	5
Mr. N. Mohan Nambiar (Member)	Independent – Non-Executive	5	5
Dr. Ganesh Devaraj (Member)	Independent – Non-Executive	5	4
Mr. Harjeet Singh Wahan (Member)	Non-Independent - Non-Executive	5	5
Mrs. Aruna Thangaraj (Member)	Independent – Non-Executive	5	4

The Chairman of the Audit Committee attended the Annual General Meeting held on 14[th] August, 2020.

The Company Secretary acts as the Secretary to the Committee. The Managing Director, Statutory Auditors, Internal Auditor and Chief Financial Officer of the Company have also attended the committee meetings. The minutes of the Audit Committee meetings were circulated to the Board, and the Board discussed and took note of the same. The Audit Committee considered and reviewed the financial statements, before it was placed in the Board.

Regulation 19 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and section 178 of the Companies Act 2013.

The terms of reference of this committee are as required under Regulation 19 read with Part D of Schedule II of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and also with the requirement of Section 178 of the Companies Act, 2013.

Nomination and Remuneration Committee

The Nomination and Remuneration Committee is constituted in compliance with the requirements of

The Committee comprises of the following Directors as its Members.

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		No. of Meetings
		held during	No. of Meetings
Name of the Members	Category	theyear	attended
Dr. Ganesh Devaraj (Chairman)	Independent – Non-Executive	2	2
Mr. N. Mohan Nambiar (Member)	Independent – Non-Executive	2	2
Mr. M. Ramprasad (Member)	Independent – Non-Executive	2	2

The Chairman of the Nomination and Remuneration Committee attended the Annual General Meeting held on 14[th] August, 2020.

This Committee would look into and determine the Company’s policy on remuneration packages of the Executive directors and Senior Management. During the year under review, the committee had met two times on 29[th] June, 2020 and 30[th] July, 2020.

This Committee shall identify the persons, who are qualified to become Directors of the Company / who may be appointed in Senior Management in accordance with the criteria laid down, recommend to the Board their appointment and removal and also shall carry out evaluation of every Director’s performance. Committee shall also formulate the criteria for determining qualifications, positive attributes, independence of the Directors and recommend to the Board a Policy, relating to the remuneration for the Directors, Key Managerial Personnel and other employees.

The remuneration policy of the Company is annexed to the Board’s Report and can also be accessed on the Company’s website at https://www.elgi.com/in/ wp-content/uploads/2019/05/Remuneration-Policy.pdf.

Performance Evaluation of non-executive and Independent Directors

Pursuant to the provisions of the Companies Act, 2013 and Regulation 37(10) of the SEBI (Listing Obligations

and Disclosure Requirements) Regulations, 2015, the Board has carried out the annual performance evaluation of its own performance, the Directors individually as well as the evaluation of the working of its Audit Committee, Nomination and Remuneration Committee, Corporate Social Responsibility Committee, Compensation Committee, Risk Management Committee and Stakeholders Relationship Committee. A peer review was done by all the Directors evaluating every other Director. They also evaluated various aspects of the Board such as adequacy of the composition of the Board and its Committees, Board Diversity, execution and performance of specific duties, obligations and governance. Feedback on the appraisal has been provided to the board members.

Stakeholders Relationship Committee

The Stakeholders Relationship Committee was constituted in compliance with the provisions of Section 178(5) of the Companies Act, 2013 read with Regulation 20 and Part D of Schedule II of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The Committee comprises of the following Directors as its Members:

		No. of Meetings
		held during	No. of Meetings
Name of the Member	Category	theyear	attended
Mr. N. Mohan Nambiar (Chairman)	Independent – Non-Executive	13	13
Mr. Jairam Varadaraj (Member)	Executive Managing Director -	13	13
	Promoter
Dr. T. Balaji Naidu (Member)	Non-Executive - Promoter	13	13

The Chairman of the Stakeholders Relationship ommittee had attended the Annual General Meeting of the Company held on 14[th] August, 2020.

Mr.Ragunathan K, was appointed as Company Secretary and Compliance officer on 29[th] June, 2020.

The terms of reference of this Committee are as required by SEBI under Regulation 20 read with Part D of Schedule II of the SEBI (Listing Obligations

and Disclosure Requirements) Regulation, 2015. The Stakeholders Relationship Committee of the Board is empowered to oversee the redressal of investors’ complaints pertaining to share transfer, non-receipt of annual reports, dividend payments, issue of duplicate certificates, transfers and transmission of shares and other miscellaneous complaints. The committee also approved transfer, transmission, transposition, name deletion and issue of duplicate share certificates.

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In addition, the Committee looks into other issues including status of dematerialization / re-materialization of shares as well as systems and procedures followed to track investor complaints and suggest measures for improvement from time to time.

The total number of complaints received and replied to the satisfaction of shareholders during the year ended on 31[st] March, 2021 was 2 (Two). All complaints were solved to the satisfaction of the shareholders. There were no outstanding complaints as on 31[st] March, 2021.

Pursuant to Regulation 40(9) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a certificate on half-yearly basis confirming due compliance of share transfer formalities by the Company from a Practicing Company Secretary has

been submitted to the Stock Exchanges within the stipulated time.

Risk Management Committee

The Risk Management Committee was constituted in compliance with the provisions of Regulation 21 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 with majority of Board of Directors as its members. The terms of reference of this Committee are as specified under Regulation 21 of SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015

The Risk Management Committee shall monitor and review the risk management plan of the Company and perform such other functions as mandated by the Board of Directors.

The Committee consists of the following members:

		No. of
		Meetings held	No. of Meetings
Name of the Member	Category	during theyear	attended
Mr. Harjeet Singh Wahan (Chairman)	Non-Independent – Non-Executive	1	1
Mr. Jairam Varadaraj (Member)	Executive Managing Director - Promoter	1	1
Mr. Ragunathan Gunabooshanam (Member) (Till 22ndOctober, 2020)	Chief Financial Ofcer*	1	1
Mr. R. Jayakanthan
(Appointed as member with efect from	Chief Financial Ofcer**	NA	NA
6thNovember, 2020)

*Resigned as Chief Financial Officer with effect from 22[nd] October, 2020

**Appointed as Chief Financial Officer with effect from 23[rd] October, 2020

Further, pursuant to the amendment to Regulation 21(2) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 dated 5[th] May, 2021, the Board of Directors of the Company at their meeting held on 21[st] May, 2021 had reconstituted the Risk Management Committee by inducting Ms.Aruna Thangaraj, Independent Director as the Chairman of the Committee.

The Committee met once during the year under review on 29[th] June, 2020. The top 10 risks affecting the enterprise were reviewed by the Committee. In accordance with regulation 21 of the SEBI (Listing Obligations & Disclosure Requirements), 2015, the Company has been regularly reviewing and upgrading the Cyber Security measures for safeguarding the network, systems and data. Some of the Cyber security measures that were operationalized in the recent past are:

The Company has implemented multiple levels of security for all incoming emails against possible cyber-threats. Internal processes are continuously

monitored to adhere to the ISMS(Information Security Management System) standards. Periodic assessment of IT systems are conducted by external auditors based on which potential vulnerabilities are identified and patched. End-points are protected with industry standard solutions and periodically updated to counter latest threat vectors. Network traffic is controlled and regulated by Firewall and VPN technologies. We have also implemented advanced security controls and threat analytics by leveraging industry-leading technologies to help identify and mitigate internal and external threats to the organization.

Corporate Social Responsibility (CSR) Committee

In compliance with the provisions of Section 135 of the Companies Act, 2013 and the Companies (Corporate Social Responsibility Policy) Rules, 2014, the Company has constituted the Corporate Social Responsibility Committee.

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The terms of reference of this Committee, assigned by their Board encompasses the following:

• a. To formulate and recommend to the Board, a CSR policy which shall indicate the activities to be undertaken by the Company as specified in Schedule VII

• b. To recommend the amount of expenditure to be incurred on the activities referred to in Clause A

• c. To monitor the Corporate Social Responsibility policy of the Company from time to time

• d. Any other matter that may be referred by the Board from time to time or as may be necessary for compliance with the Companies Act, 2013 or Rules made thereunder or any other statutory laws of India

The Committee comprises four members namely Mr. Jairam Varadaraj, Mr. B. Vijayakumar, Dr. T. Balaji Naidu and Mrs. Aruna Thangaraj. During the year under review, the Committee had met twice on 29[th] June, 2020 and 8[th] February, 2021.

Compensation Committee

The Board of Directors have constituted a Compensation Committee in accordance with the provisions of SEBI (Share Based Employee Benefits) Regulations, 2014 for dealing with matters relating to the implementation of the Elgi Equipments Limited Employee Stock Option Plan 2019. The Compensation Committee of the Board is authorised to perform all the functions and execute all powers as bestowed under the Elgi Equipments Limited Employee Stock Option Plan 2019.

The Committee consists of the following members:

Name of the Members	Category
Dr. Ganesh Devaraj (Chairman)	Independent – Non-Executive
Mr. N. Mohan Nambiar (Member)	Independent – Non-Executive
Mr. M. Ramprasad (Member)	Independent – Non-Executive

The Committee met once during the year under review on 28[th] September, 2020.

Details of Remuneration

Managing Director

The Company’s Board at present comprises of one Executive Director, Mr. Jairam Varadaraj – Managing Director. Remuneration of the Managing Director had earlier been approved by the Board of Directors and the shareholders. The remuneration comprises of fixed and variable components. The increment of the Managing Director is determined on the basis of the

Company’s performance and individual contribution. At the 60[th] Annual General Meeting of the Company, the shareholders consented to re-appointment of Mr. Jairam Varadaraj as a Managing Director for further period of 5 years with effect from 1[st] April, 2021 until 31[st] March, 2026 at a remuneration not exceeding ` 35 million for a three year period 1[st] April, 2021 to 31[st] March, 2024. The Managing Director is not entitled to sitting fees for attending meetings of the Board and Committees.

Details of remuneration paid to the directors for the year ended 31[st] March, 2021 as follows:

Name of the Director	Salary, Allowance and Perquisites (`in Million)	Service Contract
Mr. Jairam Varadaraj, Managing Director	Fixed Salary –13.32 Million<br>Variable Salary–2.29 Million	01/04/2016 to 31/03/2021

The variable salary of the Managing Director was evaluated based on a combination of both Company performance and individual performance. The Company’s performance is assessed as against achievement of sales, profit, cash flow and quality, and the Managing Director’s individual performance was assessed based on

the performance of senior management personnel on an average and own performance.

Except for Mr. Harjeet Singh Wahan, who is paid consultancy fees pursuant to approval of the members vide resolutions passed at the Annual General Meetings held on 31[st] July, 2015, 2[nd] August, 2019 &

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14[th] August, 2020, the Company does not pay remuneration to any of its Non-Executive Directors

except sitting fees for attending the Board/Committee Meeting(s).

Remuneration paid to Non-Executive Director (other than sitting fee)

Name of the Director	Salary, Allowance and Perquisites (`in Million)
Mr. Harjeet Singh Wahan, Non-Executive Director	1.11

Brief details of consultancy services rendered by Mr.Harjeet Singh Wahan are given below:

• 1) Review of existing business processes and aid to ensure control adequacy across all business functions.

• 2) Encourage to implement, execute and monitoring of Self-audits for ELGi & Subsidiaries.

• 3) Aid to implement best business practices / model at ELGi

The details of sitting fees paid during the year ended 31[st] March, 2021 to the Non-Executive Directors are as under:

	Sitting Fees
Name of the Director	(In`)
Mr. N. Mohan Nambiar	420000
Mr. M. Ramprasad	570000
Dr. Ganesh Devaraj	420000
Mr. B. Vijayakumar	160000
Mr. Anvar Jay Varadaraj	150000

	Sitting Fees
Name of the Director	(In`)
Dr. T. Balaji Naidu	220000
Mr. Sudarsan Varadaraj	180000
Mrs. Aruna Thangaraj	360000
Mr. Harjeet Singh Wahan	380000

The details on the criteria for making payments to the Non-Executive Director(s) is available on the Company’s website www.elgi.com.

The Company has not granted any stock options to its Directors.

The remuneration paid to the directors of the Company is within the limits prescribed under the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Elgi Equipments Limited Employee Stock Option Plan 2019:

The Company has implemented the Elgi Equipments Limited Employee Stock Option Plan 2019 (Elgi ESOP 2019) to enable the Company and its subsidiaries to attract, retain and reward appropriate human talent in its employment and to create a sense of ownership and participation amongst the employees. The Compensation Committee administers and monitors the Employees’ Stock Option Plan of the Company through the Elgi Equipments Limited Employee Stock Option

Trust. The compensation committee has during the year under review issued 1,53,800 bonus options (against the 1,60,600 options already granted during 2019-20 to eligible employees) at a grant price of ` 100.035 per share after considering the Bonus Issue @ 1:1 issued during the year, in accordance with the ESOP Scheme of the Company. Since Mr Ragunathan Gunabooshanam, the erstwhile chief financial officer resigned with effect from 22[nd] October, 2020, the 6800 options granted to him were forfeited. Total number of options issued under ESOP after reckoning for bonus issue now stands at 3,07,600.

The Company has received a Certificate from the Statutory Auditors of the Company that the above referred Scheme had been implemented in accordance with the SEBI (Share Based Employee Benefits) Regulations, 2014 and the resolutions passed by the members in this regard.

Management Discussion and Analysis

Management Discussion and Analysis Report forms part of this Annual Report.

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General Body Meetings

Location and time for last three AGMs held and the Special Resolutions, if any, passed thereat, are as given below:

	Date of	Time of
Year	Meeting	Meeting	Venue of the Meeting		Special Resolutionspassed, if any
2019-2020	14/08/2020	3.30 pm	Through Video Conferencing	1.	Approval for payment of consultancy fees
			(VC) / Other Audio Visual		to Mr.Harjeet Singh Wahan (DIN: 00003358),
			Means (OAVM)		Non-executive Director of the Company
					for rendering services in the nature of
					business process consulting with efect from
					1stApril, 2020 to 31stMarch, 2021.
				2.	Re-appointment of Mr.Jairam Varadaraj (DIN
					00003361) as the Managing Director of the
					Company for a further period of 5 years with
					efect from 1stApril, 2021.
2018-2019	02/08/2019	3.30 pm	ARDRA, No. 9,	1.	Re-appointment of Mr. M.Ramprasad
			North Huzur Road		(DIN: 00004275) as an Independent Director
			(Near Codissia Building)		of the Company for a second term of
			Coimbatore – 641 018		5 consecutive years with efect from
					2ndAugust, 2019.
				2.	Re-appointment of Dr. Ganesh Devaraj
					(DIN: 00005238) as an Independent Director
					of the Company for a second term of
					5 consecutive years with efect from
					2ndAugust, 2019
				3.	Re-appointment of Mr. B.Vijayakumar
					(DIN: 00015583) as an Independent Director
					of the Company for a second term of
					5 consecutive years with efect from
					2ndAugust, 2019
				4.	Re-appointment of Mr. N.Mohan Nambiar
					(DIN: 00003660) as an Independent
					Director of the Company for a second term
					of with efect from 2ndAugust, 2019 to
					10thApril, 2023
				5.	Approval for payment of consultancy fees
					to Mr.Harjeet Singh Wahan (DIN: 00003358),
					Non-executive Director of the Company with
					efect from 1stApril, 2019 to 31stMarch, 2020
2017-2018	10/08/2018	4.00 pm	ARDRA, No. 9,	1.	Adoption of New set of Articles of
			North Huzur Road		Association of the Company
			(Near Codissia Building)
			Coimbatore – 641 018

Extra Ordinary General Meeting:

During the year under review no Extra Ordinary General Meeting was held.

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Postal Ballots

During the year, the Company conducted Postal Ballot vide Notice dated 14[th] August, 2020, for obtaining

the approval of the members for the resolutions as detailed below.

The details of resolutions passed through Postal Ballot last year and the voting pattern for the said resolutions are disclosed as under:

disclosed as under:
Particulars of Resolution Type of resolution No. of valid votespolled	Votes cast in favour	Votes cast against	Invalid votes cast
	No. of votes % of votes	No. of votes % of votes
Approval for increasing the Authorized Share Capital and consequent amendment to Memorandum of Association of the Company Ordinary Resolution 8,56,07,924	8,56,07,272 99.99	652 0.01	NIL
Approval for issue of bonus shares Ordinary Resolution 8,56,07,994	8,56,07,332 99.99	662 0.01	NIL
Approval for creation of mortgages/ charges/ hypothecation of the properties of the Company under section 180(1)(a) of the Companies Act, 2013 in respect of the borrowings of the Company Special Resolution 8,56,07,774	8,54,77,659 99.85	1,30,115 0.15	NIL
Approval to make investments or grant loans or provide guarantee or security in excess of the limits specifed under section 186 of the Companies Act, 2013 Special Resolution 8,28,05,177	8,26,70,854 99.84	1,34,323 0.16	NIL
Further, the Company had conducted a Postal Ballot vide Notice dated 8thFebruary, 2021 for obtaining the approval of the members for reclassifcation of the shareholding of certain members from the “Promoter Group” category	to “Public” category pursuant to Regulation 31A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The details of resolutions passed through Postal Ballot last year and the voting pattern for the said resolutions are disclosed as under:

disclosed as under:
Particulars of Resolution Type of resolution No. of valid votespolled	Votes cast in favour	Votes cast against		Invalid votes cast
	No. of votes % of votes	No. of votes	% of votes
Approval of the requests received from shareholders for reclassifcation of their shareholding from “Promoter Group” category to “Public” Category pursuant to Regulation 31A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 Ordinary Resolution 10,05,57,002	10,05,56,315 99.999	687	0.001	1,63,572

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The Members have approved the proposal for reclassification of the shareholding of some individual promoters from “Promoter Group” category to “Public” category and the same is pending with the stock exchanges for their approval.

Sri. M.D. Selvaraj, FCS of MDS & Associates, Company Secretaries, Coimbatore, was appointed as the scrutinizer for carrying on the postal ballot process in a fair and transparent manner for both the postal ballots conducted during the year.

Postal Ballot proposed to be conducted:

As on date of this report, the Company does not foresee the need for postal ballot to pass any resolution in the financial year 2021-22.

Procedure for Postal Ballot:

Pursuant to the provisions of Section 108 & 110 of the Companies Act, 2013 read with Rule 22 of the Companies (Management and Administration) Rules, 2014 (as amended) and Regulation 44 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the resolutions as specified in the Notice of the Postal Ballot dated 14[th] August, 2020 and 8[th] February, 2021 (as specified above) were transacted through Postal Ballot / e-voting.

The Company had engaged the services of Link Intime India Private Limited (LIIPL) for providing e-voting facility to the members.

In respect of the Postal Ballot Notice dated 14[th] August, 2020, the members holding shares as on the cut-off date of Friday, 14[th] August, 2020 were provided the option of exercising their right to vote on the said resolution(s) through postal ballot / e-voting during the period commencing from Thursday, 20[th] August, 2020 to Friday, 18[th] September, 2020. Upon completion of the voting period, the scrutinizer completed the scrutiny of votes cast and submitted his report to the Managing Director. The results of the voting were declared on Saturday, 19[th] September, 2020 on the website of the Stock Exchanges, Company and LIIPL.

In respect of the Postal Ballot Notice dated 8[th] February, 2021, the members holding shares as on the cut-off date of Friday, 12[th] February, 2021 were provided the option of exercising their right to vote on the said resolution through postal ballot / e-voting during the period commencing from Wednesday, 17[th] February, 2021 to Thursday, 18[th] March, 2021. Upon completion of the voting period, the scrutinizer

completed the scrutiny of votes cast and submitted his report to the Managing Director. The results of the voting were declared on Friday, 19[th] March, 2021 on the website of the Stock Exchanges, Company and LIIPL.

Means of Communication

The quarterly results and annual results are published in newspapers viz. Business Line (all editions)/ Economic Times (all editions) (English newspapers) & The Hindu (Tamil)/ Dinamani (Vernacular newspapers) and simultaneously posted on the Company’s website (www.elgi.com).

The official news releases are also posted on the Company’s website www.elgi.com.

In addition to this, the Company has the practice of mailing Quarterly Results to the Company’s members and the members are also kept informed about important developments in the Company.

The presentations made to institutional investors or to the analysts are also posted on Company’s website www.elgi.com.

General Shareholder Information

61[st] Annual General Meeting

Date and Time: 2[nd] day of August 2021 at 4:30 PM

Venue: The meeting is being convened through video conferencing/ other audio-visual means and hence the registered office of the Company will be deemed to be the venue of the AGM.

Financial Year: 1[st] April, 2020 to 31[st] March, 2021

Date of Book closure: 27[th] July, 2021 to 2[nd] August, 2021

Dividend Payment Date: On or before 31[st] August, 2021.

Listing of shares on Stock Exchanges

BSE Limited

Phiroze Jeejeebhoy Towers, Dalal Street, Fort, Mumbai – 400 001.

National Stock Exchange of India Ltd

Exchange Plaza, 5[th] Floor, Plot No. C/1’G’ Block, BandraKurla Complex, Bandra (East), Mumbai – 400 051.

Annual listing fees has been duly paid to BSE Limited & National Stock Exchange of India Limited.

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Stock Market Data

Type of Security: Equity

ISIN allotted for equity shares: INE285A01027 (Fully paid ` 1/- each)

Stock Price Data:

Stock Code:

BSE Limited - 522074

For the Period: April 2020 to March 2021

National Stock Exchange of India Limited - ELGI EQUIP

National Stock Exchang	e of India Limited -ELGI EQUIP
Month	BSE	NSE
	HIGH LOW	HIGH LOW
	(In**)**<br>**(In**) QTY	(In**)**<br>**(In**) QTY
APRIL	148.00 102.25 7,74,909	147.95 101.20 49,25,268
MAY	138.00 125.00 5,75,830	135.90 126.00 9,14,111
JUNE	173.65 134.90 1,78,244	174.45 133.00 26,85,233
JULY	173.90 142.15 1,94,233	174.00 141.75 33,45,164
AUGUST	256.90 157.40 3,52,463	258.30 156.90 42,68,845
SEPTEMBER	258.15 118.00 2,82,945	258.00 117.50 24,46,380
OCTOBER	123.85 103.40 95,910	123.95 101.30 10,19,677
NOVEMBER	137.95 104.70 1,86,406	138.00 103.25 31,72,106
DECEMBER	169.00 126.75 6,58,111	169.00 131.00 49,25,880
JANUARY	193.80 146.80 9,45,139	193.00 149.80 78,81,572
FEBRUARY	192.30 155.90 3,46,129	192.50 155.45 47,81,488
MARCH	218.70 173.15 3,25,612	211.60 175.05 58,47,858
TOTAL	49,15,931	4,62,13,582

==> picture [427 x 309] intentionally omitted <==

*** Record date for bonus shares - 26.09.2020 and Bonus Shares allotted on 28.09.2020.**

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Registrar and Share Transfer Agents

(For both physical and demat segments)

Link Intime India Private Ltd Head Office:

C-13, 247 Park, L.B.S. Marg, Vikroli (West), Mumbai - 400083

Tel: 022-49186270, E-mail: rnt.helpdesk@linkintime.co.in

Coimbatore Branch:

“Surya”, 35, May Flower Avenue, II Floor, Behind Senthil Nagar, Sowripalayam Road, Coimbatore -641028.

Tel: 91-0422- 2314792 & 2315792, E-mail: coimbatore@linkintime.co.in

Mr. Ragunathan K

Elgi Equipments Ltd, Elgi Industrial Complex, Trichy Road, Singanallur, Coimbatore – 641005

Tel: 91- 422- 2589136, 2589187 Fax: 91-422-2573697, e-mail: investor@elgi.com

In order to facilitate investor servicing, the Company has designated an e-mail-id: investor@elgi.com mainly for registering complaints by investors.

The shares of the Company are regularly traded and in no point of time the shares were suspended for trading in the stock exchanges.

Reconciliation of Share Capital Audit

A qualified Company Secretary in Practice carried out reconciliation of share capital audit to reconcile the total admitted capital with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) and the total issued and listed capital. The reconciliation of share capital audit report confirms that the total issued/ paid up capital is in agreement with the total number of shares in physical form and the total number of dematerialised shares held with NSDL & CDSL.

Share Transfer System

The Company’s shares being in compulsory dematerialized (demat) list are transferable through the depository system. Securities and Exchange Board of India has mandated that the transfer of securities held in physical form, except in case of transmission or transposition, shall not be processed by the listed entities / Registrars and Share Transfer Agents with effect from 1[st] April, 2019. Therefore, members holding share(s) in physical form are requested to immediately dematerialize their shareholding in the Company. All requests for dematerialization of shares are processed and confirmed to the depositories, NSDL and CDSL, within 15 days. The Stakeholders Relationship Committee generally meets as and when required.

Categories of Shareholders as on 31[st] March, 2021

Category	No. of Shares	% To Total
Promoters	10,11,09,962	31.91
Foreign Portfolio Investors	7,27,24,348	22.95
Mutual Funds	2,62,78,282	8.29
Alternate Investment Funds	38,40,821	1.21
Financial Institutions/ Banks	5,238	0.00
Insurance Companies	34,316	0.01
Bodies Corporate	3,86,96,484	12.21
Non-Resident Indians	26,43,824	0.83
Unclaimed Shares	4,59,476	0.14
ClearingMembers	63,167	0.02
Employees	3,53,361	0.11
Public	7,03,29,737	22.19
Employee Beneft Trust	3,70,000	0.12
TOTAL	31,69,09,016	100

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REPORT ON CORPORATE GOVERNANCE

Distribution of Shares as on 31[st] March, 2021

				% of total
No. of shares	No. of holders	% of holders	No. of shares	shares
1 to 5000	26420	95.6	87,50,939	2.8
5001 to 10000	484	1.8	35,75,621	1.1
10001 to 20000	281	1.0	41,51,641	1.3
20001 to 30000	127	0.5	31,29,754	1.0
30001 to 40000	70	0.3	24,95,917	0.8
40001 to 50000	26	0.1	11,89,398	0.4
50001 to 100000	88	0.3	62,44,267	2.0
100001 & above	152	0.5	28,73,71,479	90.7
Total	27648	100.0	31,69,09,016	100.0

Dematerialization of Shares and liquidity

The Company has arrangement with National Securities Depository Ltd. (NSDL) as well as Central Depository Services (India) Limited (CDSL) for demat facility.

During the financial year 2020-21, 3,09,285 shares were dematted. As on 31[st] March, 2021, out of 31,69,09,016 shares, total shares in demat form are 31,45,83,101 shares and 23,25,915 shares in physical form. The dematted portion represents 99.26% shares of the Company and 0.74% shares are in physical form. The shares are compulsorily tradable in demat form with effect from 26/06/2000 for all investors.

Outstanding GDRs/ ADRs/ Warrants or any Convertible Instruments and their likely impact on equity

There are no outstanding warrants or any convertible instruments. The Company has not issued GDR/ADR.

Commodity price risk or foreign exchange risk and hedging activities

Nil

Plant locations

ELGI EQUIPMENTS LIMITED

Elgi Industrial Complex Trichy Road, Singanallur, Coimbatore – 641 005

ELGI EQUIPMENTS LIMITED

With effect from 1[st] April, 2019, the applications for transfer of shares held in physical form will not be processed by the listed entity / Registrar and Share Transfer Agent, except in case or transmission or transposition, in accordance with the amended Regulation 40 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

ELGi Demat Percentage

==> picture [25 x 8] intentionally omitted <==

----- Start of picture text -----

0.74%
----- End of picture text -----

SF No 221, 221/2 & 221/3 Kothavadi Road, Kodangipalayam Village Singarampalayam (PO), Kinathukkadavu Taluk Coimbatore – 642 109

Address for Correspondence

Mr. Ragunathan K

Compliance Officer Elgi Equipments Ltd Elgi Industrial Complex, Trichy Road, Singanallur, Coimbatore – 641 005. e-mail: investor@elgi.com Tel: 91- 422- 2589136, 2589187 Fax: 91-422-2573697

Credit Rating:

The Company does not have any Debt instruments or fixed deposit programme or any scheme or proposal involving mobilization of funds either in India or abroad that requires Credit Rating.

Disclosures:

• a) Disclosures on materially significant related party transactions that may have potential conflict with the interest of the Company at large.

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REPORT ON CORPORATE GOVERNANCE

All the related party transactions are entered into on arm’s length basis, in the ordinary course of business and are in compliance with the applicable provisions of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. There are no materially significant related party transactions made by the Company with Promoters, Directors or Key Managerial Personnel or otherwise which may have potential conflict with the interest of the Company at large.

The details of the transactions with Related Parties are provided in the Company’s financial statements in accordance with the Accounting Standards. All Related Party Transactions are presented to the Audit Committee and the Board. Omnibus approval is obtained for the transactions which are foreseen and repetitive in nature. A statement of all related party transactions is presented before the Audit Committee on a quarterly basis, specifying the nature, value and terms and conditions of the transactions.

Kindly refer to the notes forming part of accounts for the details of Related Party Transactions.

• b) Details of non-compliance by the Company, penalties, and strictures imposed on the Company by Stock Exchanges or SEBI or any Statutory Authorities, on any matter relating to capital markets, during the last three years.

No penalties and/or strictures were imposed on the Company by Stock Exchanges or SEBI or any Statutory Authorities, on any matter relating to capital markets, during the last three years.

• c) Whistle Blower policy and affirmation that no personnel have been denied access to the Audit Committee.

The Company has in place a vigil mechanism/ whistle blower policy in accordance with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 & the Companies Act, 2013. The Company conducts regular ‘Employee Meets’ every quarter where all the employees have a chance to interact directly with the Managing Director of the Company. Besides this, the Managing Director is reachable via e-mail and landline. Any issue brought to the attention of the

management, whether resolved or not, is placed before the Audit Committee for its perusal and comments. No personnel has been denied access to the Audit Committee of the Company.

d) Details of compliance with mandatory requirements and adoption of the nonmandatory requirements. The Company has complied with all the mandatory requirements of Corporate Governance norms as enumerated in the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The Company has adopted the following nonmandatory requirements.

• i. Quarterly results are being sent to each household of shareholders.

• ii. Reporting of internal Auditors to Audit Committee as recommended in terms of Regulation 27(1) read with part E of Schedule II of the SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015

• e) Web link where policy for determining “material” subsidiaries is disclosed.

The Company has framed a Material Subsidiaries Policy and the same is placed on the Company’s website and the web link for the same is https:// - www.elgi.com/in/wp content/uploads/2019/05/ Policy-for-Material-Subsidiaries.pdf

• f) Web link where policy on dealing with related party transactions.

The Company has framed a Related Party Transaction Policy and the same is placed on the Company’s website and the web link for the same is https://www.elgi.com/in/wp-content/ uploads/2019/05/Related-Party-TransactionsPolicy.pdf

• g) Disclosure of commodity price risks and commodity hedging activities.

During the financial year ended 31/03/2021, the Company did not engage in commodity hedging activities

• h) Details of utilization of funds raised through preferential allotment or qualified institutions placement as specified under Regulation 32(7A)

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REPORT ON CORPORATE GOVERNANCE

The Company has not raised any funds through preferential allotment or qualified institutional placement as specified under Regulation 32 (7A) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015

• i) Certificate on non-disqualification of directors

A certificate from a Company Secretary in practice that none of the Directors on the Board of the Company have been debarred or disqualified from being appointed or continuing as Directors of companies by the Securities and Exchange Board of India / Ministry of Corporate Affairs or any such statutory authority has been obtained and is annexed to this report.

• j) Recommendation of the Committees of the Board

During the year under review, the recommendations made by the different Committees have been accepted and there were no instances where the Board of Directors had not accepted any recommendation of the Committees

• k) Total fees for all services paid to the Statutory Auditor

The Company and its Material Indian Subsidiary ATS Elgi Limited have paid a sum of ` 60,00,000/plus out of pocket expenses and applicable taxes as fees on consolidated basis to the statutory auditor and all entities in the network firm / entity of which the statutory auditor is a part for the services rendered by them.

• l) Disclosures in relation to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

As per the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company has constituted an Internal Complaints Committee. During the year 2020-21, no complaints were received by the Committee. As such, there are no complaints pending as at the end of the financial year.

• m) Disclosure on accounting treatment.

In the preparation of the financial statements, the Company has followed the Indian Accounting

Standards (Ind AS) referred to in Section 133 of The Companies Act, 2013. The significant accounting policies which are consistently applied are set out in the Notes to the Financial Statements.

• n) Disclosure on risk management

Business risk evaluation and management is an ongoing process within the Company. The top 10 risks as identified as affecting the enterprise is being assessed by the Risk Management Committee and is further periodically examined by the Board for the mitigation steps and residual risks.

There has been no instance of non-compliance of any requirement of corporate governance report as stated above.

The Company regularly intimates the shareholders through quarterly communiques on the performance of the Company. Apart from the above, the Company has not adopted any of the discretionary requirements as specified in Part E of Schedule II of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015

The Company has complied with all the mandatory requirements specified in Regulations 17 to 27 and clauses (b) to (i) of Regulation 46(2) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The CEO and CFO certification of the financial statements for the year has been submitted to the Board of directors in its meeting held on 21[st] May, 2021 as required under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. All Board Members and Senior Management personnel have affirmed their compliance with the code of conduct for the year under review.

Code Of Conduct

The Board of Directors has laid down a Code of Conduct for all Board Members and Senior Management Personnel of the Company. The same has been posted on the website of the Company. All board members and senior management personnel have affirmed their compliance with the code of conduct for the year under review.

Code of Conduct for Prevention of Insider Trading

The Company has framed a code of conduct for monitoring the trading done by designated persons based on the

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ELGI EQUIPMENTS LIMITED

REPORT ON CORPORATE GOVERNANCE

SEBI (Prohibition of Insider Trading) Regulations, 2015. This code is applicable to all Directors, officers and such designated persons who are expected to have access to unpublished price sensitive information relating to the Company. The Company has also implemented an insider trading software for a more robust approach to monitoring compliance and reporting as per the said regulations.

The Company has also formulated “The Code of Practices and Procedures for Fair Disclosure of Unpublished Price Sensitive Information (UPSI)” in compliance with the SEBI (Prohibition of Insider Trading) Regulations, 2015.

Declaration for Code of Conduct

I hereby affirm and state that all Board Members and senior management personnel of the Company have given declaration in accordance with Regulation

26(3) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and I hereby affirm compliance with the said code of conduct for the financial year 2020-21

Jairam Varadaraj Place: Charlotte, North Carolina, USA Managing Director Date: 21.05.2021 DIN:00003361

Unclaimed Suspense Account

Pursuant to Regulation 39(4) read with Schedule VI of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company had transferred on 07/12/2015, its unclaimed shares to Elgi Equipments Limited unclaimed suspense account opened with M/s. Coimbatore Capital Limited. The details of the Unclaimed Securities Suspense Account are given below:

Particulars	Number of Shareholders	Number of Equity shares
Aggregate number of shareholders and the outstanding
shares in the suspense account lying at the beginning	450	2,67,114
of the year
Number of shareholders who approached the Company
for transfer of shares from suspense account during	–	2,34,598
the year
Shares transferred to IEPF from unclaimed suspense
account during the year	236	35,840
Number of shareholders whose shares were transferred
from suspense account during of the year	9	4,996
Total shares transferred from suspense account	245	40,836
Aggregate number of shareholders and the outstanding shares in the suspense account lyingas on 31stMarch, 2021	205	4,60,876

The voting rights on the outstanding unclaimed shares as on 31[st] March, 2021 shall remain frozen till the rightful owner of such shares claims the shares by submission of the requisite documentary proof of their identity to the Company’s Registrar & Share Transfer Agent.

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ELGI EQUIPMENTS LIMITED

REPORT ON CORPORATE GOVERNANCE

Certificate on Corporate Governance for the year ended 31/03/2021

To

The Members of M/s. Elgi Equipments Limited

Dear Sir,

I have examined the compliance conditions of Corporate Governance by M/s. Elgi Equipments Limited (“the Company”) for the financial year ended 31[st] March, 2021 as stipulated under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The compliance of conditions of Corporate Governance is the responsibility of the Management. My examination was limited to a review of the procedures and implementations thereof adopted by the Company for ensuring compliance with the conditions of Corporate Governance as stipulated under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. It is neither an audit nor an expression of opinion on the financial statements of the Company.

In my opinion and to the best of my information and according to the explanation given to me and based on the representations made by the Directors and Management, I certify that the Company has complied with the conditions of Corporate Governance as stipulated under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 for the financial year ended 31[st] March, 2021.

I further state that such compliance is neither an assurance as to the future viability of the Company nor of the efficiency or effectiveness with which the management has conducted the affairs of the Company.

M D SELVARAJ MDS & Associates

Place: Coimbatore Date: 21.05.2021

Company Secretaries in Practice FCS No.: 960; C P No.: 411 UDIN: F000960C000338935 Peer Review No. 985/2020

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ELGI EQUIPMENTS LIMITED

CERTIFICATE OF NON-DISQUALIFICATION OF DIRECTORS

Certificate of Non-Disqualification of Directors

(pursuant to Regulation 34(3) and Schedule V, Para C, Clause (10)(i) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015)

To

The Members of

M/s. ELGI EQUIPMENTS LIMITED

(CIN: L29120TZ1960PLC000351) Elgi Industrial Complex III, Trichy Road, Singanallur, Coimbatore – 641005

I have examined the relevant registers, records, forms, returns and disclosures received from the Directors of M/s. ELGI EQUIPMENTS LIMITED having CIN L29120TZ1960PLC000351 and having registered office at Elgi Industrial Complex III, Trichy Road, Singanallur, Coimbatore – 641005 (hereinafter referred to as ‘the Company’), produced before me by the Company for the purpose of issuing this Certificate, in accordance with Regulation 34(3) read with Schedule V Para-C Sub clause 10(i) of the Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

In my opinion and to the best of my information and according to the verifications (including Directors Identification Number (DIN) status at the portal www.mca.gov.in) as considered necessary and explanations furnished to me by the Company & its officers, I hereby certify that none of the Directors on the Board of the Company as stated below for the Financial Year ending on 31[st] March, 2021 have been debarred or disqualified from being appointed or continuing as Directors of companies by the Securities and Exchange Board of India, Ministry of Corporate Affairs or any such other Statutory Authority.

			Date of appointment
Sr. No.	Name of Director	DIN	in Company
1	Mr. Jairam Varadaraj	00003361	29/05/1992
2	Mr. Sudarsan Varadaraj	00133533	18/11/1993
3	Dr. Thumala Balaji Naidu	00002755	26/07/1984
4	Mr. Balakrishnan Vijayakumar	00015583	11/01/1993
5	Mr. Mohan Nambiar	00003660	16/02/1983
6	Mr. Ramprasad Mathrubutham	00004275	25/09/2004
7	Dr. Ganesh Devaraj	00005238	30/10/2003
8	Mr. Harjeet Singh Wahan	00003358	01/04/2015
9	Mrs. Aruna Thangaraj	07444726	27/05/2019
10	Mr. Anvar JayVaradaraj	07273942	01/04/2020

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ELGI EQUIPMENTS LIMITED

CERTIFICATE OF NON-DISQUALIFICATION OF DIRECTORS

Ensuring the eligibility for the appointment / continuity of every Director on the Board is the responsibility of the management of the Company. My responsibility is to express an opinion on these based on my verification. This certificate is neither an assurance as to the future viability of the Company nor of the efficiency or effectiveness with which the management has conducted the affairs of the Company.

Place: Coimbatore Date: 21.05.2021

M D SELVARAJ MDS & Associates Company Secretaries in Practice FCS No.: 960; C P No.: 411 UDIN: F000960C000338946 Peer Review No. 985/2020

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ANNUAL REPORT 2020-21

ELGI EQUIPMENTS LIMITED

GROUP PERFORMANCE FOR TEN YEARS

(`In Million)	Particulars 2020-21 2019-20 2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12	Revenue from operations 19,240 18,294 18,635 16,222 14,381 14,660 13,621 14,081 12,101 10,490	Total income 19,475 18,426 18,731 16,336 14,501 14,751 13,945 14,172 12,263 10,637	Total expenditure 17,084 16,935 16,717 14,488 12,989 13,453 12,737 13,088 11,106 9,389	PBDIT 2,392 1,491 2,014 1,848 1,513 1,299 1,208 1,084 1,157 1,248	Depreciation / Amortisation 743 652 511 438 446 436 366 262 182 135	Finance cost 135 155 90 60 78 122 158 97 45 7	Proft Before Tax 1,513 683 1,413 1,350 989 741 684 725 931 1,106	Income tax 503 270 404 413 264 244 203 269 329 350	Share of proft from joint ventures 14 12 22 16 16 13 – – – –	Proft After Tax 1,025 426 1,031 953 740 509 481 455 602 756	Dividend (%) 80 165 130 120 100 100 100 100 100 100	Capital Employed 9,624 10,289 8,860 8,462 7,530 7,164 7,449 7,332 6,482 2,586	Net worth 8,699 7,690 7,709 6,889 6,069 5,462 4,934 4,636 4,336 3,976	Long Term Borrowings 812 1,027 763 603 966 1,391 1,688 2,145 2,198 –	Net Block incl. Capital WIP 5,761 6,039 5,099 4,469 4,445 4,526 4,643 4,772 3,726 1,162	Investments 85 49 75 91 102 60 148 149 149 149	Current assets 11,333 8,968 8,244 7,760 6,354 6,198 6,706 6,484 6,332 4,819	Current liabilities 7,485 6,303 5,209 4,962 3,931 4,079 4,728 4,696 3,823 2,196	Net working capital 3,848 2,666 3,034 2,798 2,424 2,119 1,978 1,788 2,509 2,624	Total assets 17,667 15,551 13,855 12,589 11,163 11,208 11,668 11,758 10,549 6,216	Notes:	Figures beginning from fnancial year 2015-16 are not comparable with earlier years due to change in the method of consolidation of joint operations and joint ventures	as per Ind AS.

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ELGI EQUIPMENTS LIMITED

ANALYSIS OF PERFORMANCE

Analysis of Performance

RATIO CATEGORY / Ratio	2020-21	2019-20	2018-19	2017-18	2016-17	2015-16	2014-15	2013-14
Operationalperformance
Material Consumption ratio (%)	53.73	53.99	55.71	56.75	55.43	55.94	56.03	58.26
Personnel expenses (%)	21.53	22.27	18.41	17.64	18.66	18.42	19.16	17.40
Other Expenses ratio (%)	14.07	16.97	16.19	15.24	16.41	17.16	18.52	17.56
Interest component ratio (%)	0.70	0.86	0.49	0.37	0.57	0.88	1.21	0.73
Depreciation component ratio (%)	3.89	3.59	2.76	2.75	3.28	3.13	2.80	1.96
Tax component ratio (%)	2.58	1.47	2.16	2.53	1.82	1.66	1.48	1.90
Other Income / Total Income (%)	1.79	1.31	1.18	1.35	1.52	1.08	1.19	1.25
Sales (net)per employee (`in million)	8.72	8.18	8.77	7.90	6.78	7.00	6.50	6.54
Financial structuring
LongTerm Debt EquityRatio	0.09	0.13	0.10	0.09	0.16	0.25	0.34	0.46
Net WorkingCapital / Total Assets	0.38	0.29	0.35	0.37	0.34	0.31	0.29	0.25
Investments / Total Assets	0.01	0.01	0.01	0.01	0.01	0.01	0.02	0.02
Inventory/ Current Assets	0.30	0.38	0.34	0.35	0.36	0.36	0.40	0.39
Trade Receivables/ Current Assets	0.35	0.39	0.45	0.44	0.38	0.41	0.36	0.37
Liquidity
Current Ratio	1.51	1.42	1.58	1.56	1.62	1.52	1.42	1.38
LiquidityRatio	1.06	0.88	1.05	1.01	1.04	0.97	0.86	0.84
Efciency
Current Assets Turnover Ratio (CATR)	1.88	2.11	2.31	2.26	2.17	2.08	1.98	2.09
Average Current Assets - no. of days	194	173	158	162	168	176	185	175
Average Inventory- No. of days
RM & Components	46	43	41	43	47	50	57	53
WIP	5	4	3	5	7	6	7	9
Finished Goods	36	35	28	29	29	32	33	26
Trade Receivables turnover ratio (DTR)	5.12	5.09	5.21	5.50	5.69	5.83	5.57	5.99
Trade Receivables - no of days of net sales	71	72	70	66	64	63	66	61
Trade Creditors’ Turnover Ratio (TCTR)	4.13	4.43	4.48	4.92	4.35	4.36	4.10	4.57
Trade Creditors - no of days	88	82	81	74	84	84	89	80
Capital Turnover Ratio	1.92	1.90	2.14	1.99	1.85	1.91	1.77	1.94
Net Fixed Assets Turnover Ratio (NFATR)	3.26	3.29	3.89	3.60	3.05	3.08	3.09	3.89
Proftability
Gross Proft Margin (%)	12.28	8.10	10.75	11.48	10.43	9.10	7.17	7.65
PBIT Margin (%)	8.46	4.56	8.02	8.80	7.35	6.15	4.51	5.80
Pre-tax Proft Margin (%)	7.77	3.71	7.54	8.43	6.82	5.11	4.98	5.11
Net Proft Margin (%)	5.26	2.31	5.50	5.83	5.10	3.45	3.51	3.21
Post Tax Margin from Operations (%)	4.53	1.90	5.19	5.48	4.79	3.21	1.94	2.57
ROCE (%)	16.70	8.89	17.61	17.83	14.73	13.42	11.40	11.91

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ELGI EQUIPMENTS LIMITED

ANALYSIS OF PERFORMANCE

Analysis of Performance (Continued)

RATIO CATEGORY / Ratio	2020-21	2019-20	2018-19	2017-18	2016-17	2015-16	2014-15	2013-14
Shareholder’s earnings
RONW (%)	12.51	5.53	14.12	14.71	12.83	9.64	5.38	10.15
Earnings Per Share (current equity) (`)	3.24	2.69	6.51	6.02	4.67	3.22	3.04	2.87
Dividend Per Shares (`) - (Refer note No.3)	0.80	1.65	1.30	1.20	1.00	1.00	1.00	1.00
Dividend Payout Ratio (%)	24.74	61.42	19.99	19.96	21.41	31.11	32.94	34.79
Price Earnings Ratio (current equity)	60.64	62.51	38.95	45.67	45.29	40.23	51.57	34.48
Dividend Yield	0.41	0.98	0.51	0.44	0.47	0.77	0.64	1.01
Dividend to Net Worth Ratio (%)	2.91	3.40	2.67	2.76	2.61	2.90	3.21	3.42
Book Valueper share (`)	27.45	48.57	48.69	43.51	38.33	34.50	31.14	29.26

Notes :

1. Net Profit margin includes Exceptional Items

2. Earnings per share, Dividend per share and Book value per share for 2020-21 are after considering the increase in the number of shares on account of bonus issue made at the ratio of 1:1 during the year

3. The Board of Directors have recommended a dividend of ` 0.80/- per share (80%) for the year ended March 31, 2021.

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INDEPENDENT AUDITORS’ REPORT

ELGI EQUIPMENTS LIMITED

Independent Auditors’ Report To the Members of Elgi Equipments Limited Report on the audit of the Standalone financial statements

Opinion

1. We have audited the accompanying standalone financial statements of Elgi Equipments Limited (“the Company”), which comprise the balance sheet as at March 31, 2021, the statement of Profit and Loss (including Other Comprehensive Income), statement of changes in equity and the statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information in which are included the financial information of two joint operations.

2. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 (“the Act”) in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2021, and total comprehensive income (comprising of profit and other comprehensive income), changes in equity and its cash flows for the year then ended.

Basis for opinion

1. We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the ‘Auditor’s Responsibilities for the Audit of the Standalone Financial Statements’ section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of

Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained and the audit evidence obtained by the other auditors in terms of their reports referred to in sub-paragraph 14 of the Other Matter paragraph below is sufficient and appropriate to provide a basis for our opinion.

Emphasis of Matter

1. We draw your attention to Note 51 to the standalone financial statements, which explains the management’s assessment of the impact of the outbreak of Coronavirus (COVID-19) pandemic on the business operations of the Company. In view of the uncertain economic environment, a definitive assessment of the impact on the subsequent periods is highly dependent upon circumstances as they evolve.

Our opinion is not modified in respect of this matter.

Key audit matters

1. Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements of the current year. These matters were addressed in the context of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

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INDEPENDENT AUDITORS’ REPORT

ELGI EQUIPMENTS LIMITED

Key Audit Matter

Assessment of carrying value of investment in subsidiaries and joint ventures (Refer Note 6 to the standalone financial Statements)

As at March 31, 2021, the Company has equity investments of ` 1,692.46 million in its subsidiaries and joint ventures.

The Company reviews the carrying value of these investments at each reporting period. Where considered necessary, the Company performs a detailed assessment as required under Ind AS 36

We considered the assessment of carrying value of investments as a key audit matter, considering its significance to the standalone financial statements, and where applicable, the judgement involved in estimating future cash flows, particularly with respect to factors such as discount rates, cash flow projections and terminal growth rates.

How our audit addressed the key audit matter Our audit procedures included the following:

• z Understood and performed procedures to assess the design and tested the operating effectiveness of relevant controls related to the annual evaluation on assessment of carrying value of investments.

• z Obtained the audited financial statements of the subsidiaries and joint ventures and tested the Company’s assessment with regard to key financial indicators including net worth of those respective subsidiaries and joint ventures with the carrying value of the investments made in those entities.

• z In relation to a subsidiary where future cash flow projections were prepared, evaluated the reasonableness of these projections by discussing with the management, understanding the assumptions involved, and our knowledge and understanding of current business conditions. Evaluated, along with the auditor’s experts, the key assumptions such as discount rate and growth rate used in the preparation of the cash flow projections.

• z Read the subsidiaries and joint ventures financial statements and auditors’ report and discussed with the auditors of the subsidiary companies in relation to the work performed by them on the subsidiary Company financial statements including any impairment evaluation carried out by them at the subsidiary level.

• z We evaluated the adequacy of the disclosures made in the standalone financial statements.

Based on above procedures performed, the management’s assessment of carrying value of investments in subsidiaries and joint ventures was reasonable.

Other Information

1. The Company’s Board of Directors is responsible for the other information. The other information comprises the information included in the Management Discussion and Analysis, Board’s Report including Annexures to Board report and Report on Corporate Governance, but does not include the standalone financial statements and our auditor’s report thereon.

Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed and the reports of the other auditors as furnished to us (Refer paragraph 14 below), we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

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ELGI EQUIPMENTS LIMITED

Responsibilities of management and those charged with governance for the standalone financial statements

1. The Company’s Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

2. In preparing the standalone financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Those Board of Directors are also responsible for overseeing the Company’s financial reporting process.

Auditors’ responsibilities for the audit of the standalone financial statements

1. Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements

can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements.

1. As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

2. [Identify and assess the risks of material ] misstatement of the standalone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

3. [Obtain an understanding of internal control ] relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under Section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls with reference to financial statements in place and the operating effectiveness of such controls.

4. [Evaluate the appropriateness of accounting ] policies used and the reasonableness of accounting estimates and related disclosures made by management.

5. [Conclude ] on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the standalone financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

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INDEPENDENT AUDITORS’ REPORT

ELGI EQUIPMENTS LIMITED

• [Evaluate the overall presentation, structure and ] content of the standalone financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

• [Obtain sufficient appropriate audit evidence ] regarding the financial information of the Company and its joint operations to express an opinion on the Standalone financial statements. We are responsible for the direction, supervision and performance of the audit of the financial statements of the Company of which we are the independent auditors. For the joint operations included in the standalone financial statements, which have been audited by other auditors, such other auditors remain responsible for the direction, supervision and performance of the audits carried out by them. We remain solely responsible for our audit opinion.

• We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

• We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

• From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Other Matter

1. We did not audit the financial statements of two joint operations included in the standalone financial

2. statements of the Company, which constitute Company’s share of total assets of 126.76 million and net assets of 124.40 million as at March 31, 2021, total revenue of Nil, total net profit after tax of 0.05 million, total comprehensive income (comprising of profit and other comprehensive income) of 0.05 million and net cash outflows amounting to 0.26 million for the year then ended. These financial statements and other financial information have been audited by other auditors whose reports have been furnished to us, and our opinion on the standalone financial statements (including other information) to the extent they have been derived from such financial statements is based solely on the report of such other auditors.

3. Our opinion is not modified in respect of the above matter.

Report on other legal and regulatory requirements

1. As required by the Companies (Auditor’s Report) Order, 2016 (“the Order”), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the Annexure B a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.

2. As required by Section 143(3) of the Act, we report that:

3. (a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

4. (b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books.

5. (c) The balance sheet, the statement of profit and loss (including other comprehensive income), the statement of changes in equity and the statement of cash flow dealt with by this Report are in agreement with the books of account.

6. (d) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act.

7. (e) On the basis of the written representations received from the directors on April 1, 2021 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2021 from being appointed as a director in terms of Section 164 (2) of the Act.

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ELGI EQUIPMENTS LIMITED

• (f) With respect to the adequacy of the internal financial controls with reference to financial statements of the Company and the operating effectiveness of such controls, refer to our separate Report in “Annexure A”.

• (g) With respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

• i. The Company has disclosed the impact, if any, of pending litigations on its financial position in its standalone financial statements - Refer Note 43 to the standalone financial statements.

• ii. The Company has long-term contracts including derivative contracts as at March 31, 2021 for which there were no material foreseeable losses.

• iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

• iv. The reporting on disclosures relating to Specified Bank Notes is not applicable to the Company for the year ended March 31, 2021.

• The Company has paid/ provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Act.

For Price Waterhouse Chartered Accountants LLP Firm Registration Number: 012754N/N500016 Chartered Accountants

BASKAR PANNERSELVAM

Place: Coimbatore Date: May 21, 2021

Partner Membership Number: 213126 UDIN: 21213126AAAAEI1476

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ANNUAL REPORT 2020-21

ANNEXURE A TO INDEPENDENT AUDITORS’ REPORT

ELGI EQUIPMENTS LIMITED

Annexure A to Independent Auditors’ Report Referred to in paragraph 16(f) of the Independent Auditors’ Report of even date to the members of Elgi Equipments Limited on the standalone financial statements for the year ended March 31, 2021

Report on the Internal Financial Controls with reference to financial statements under Clause (i) of Sub-section 3 of Section 143 of the Act

1. We have audited the internal financial controls with reference to financial statements of Elgi Equipments Limited (“the Company”) as of March 31, 2021 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.

Management’s Responsibility for Internal Financial Controls

1. The Company’s management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India (ICAI). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.

Auditors’ Responsibility

1. Our responsibility is to express an opinion on the Company’s internal financial controls with reference to financial statements based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the “Guidance Note”) and the Standards on Auditing deemed to be prescribed under section 143(10) of the Act to the extent applicable to an audit of internal financial controls, both applicable to an audit of internal financial controls and both issued by the ICAI. Those Standards and the Guidance Note require that we comply with ethical requirements

and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls with reference to financial statements was established and maintained and if such controls operated effectively in all material respects.

1. Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system with reference to financial statements and their operating effectiveness. Our audit of internal financial controls with reference to financial statements included obtaining an understanding of internal financial controls with reference to financial statements, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

2. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company’s internal financial controls system with reference to financial statements.

Meaning of Internal Financial Controls with reference to financial statements

1. A company’s internal financial controls with reference to financial statements is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal financial controls with reference to financial statements includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are

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ANNEXURE A TO INDEPENDENT AUDITORS’ REPORT

ELGI EQUIPMENTS LIMITED

being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls with reference to financial statements

1. Because of the inherent limitations of internal financial controls with reference to financial statements, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls with reference to financial statements to future periods are subject to the risk that the internal financial controls with

reference to financial statements may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

1. In our opinion, the Company has, in all material respects, an adequate internal financial controls system with reference to financial statements and such internal financial controls with reference to financial statements were operating effectively as at March 31, 2021, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India. Also refer paragraph 4 of the main audit report.

For Price Waterhouse Chartered Accountants LLP

Firm Registration Number: 012754N/N500016 Chartered Accountants

BASKAR PANNERSELVAM

Partner

Place: Coimbatore Date: May 21, 2021

Membership Number: 213126 UDIN: 21213126AAAAEI1476

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ANNEXURE B TO INDEPENDENT AUDITORS’ REPORT

ELGI EQUIPMENTS LIMITED

Annexure B to Independent Auditors’ Report

Referred to in paragraph 15 of the Independent Auditors’ Report of even date to the members of Elgi Equipments Limited on the standalone financial statements for the year ended March 31, 2021

• i. (a) The Company is maintaining proper records showing full particulars, including quantitative details and situation, of fixed assets.

• (b) The fixed assets are physically verified by the Management according to a phased programme designed to cover all the items over a period of three years which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Pursuant to the programme, a portion of the fixed assets has been physically verified by the Management during the year and no material discrepancies have been noticed on such verification.

• (c) The title deeds of immovable properties, as disclosed in Note 3(a) and 4 on Property Plant and Equipment and Investment Property respectively to the financial statements, are held in the name of the Company.

• ii. The physical verification of inventory excluding stocks with third parties have been conducted at reasonable intervals by the Management during the year. In respect of inventory lying with third parties, these have substantially been confirmed by them. The discrepancies noticed on physical verification of inventory as compared to book records were not material.

• iii. The Company has granted unsecured loans, to four parties being wholly-owned subsidiaries covered in the register maintained under Section 189 of the Act.

• (a) In respect of the aforesaid loans, the terms and conditions under which such loans were granted are not prejudicial to the Company’s interest.

• (b) In respect of the loans to two parties, the schedule of repayment of principal and payment of interest has been stipulated. However, in the absence of any amount falling due during the year, the situation for commenting on the regularity of repayment of principal and payment of interest does not arise.

  • In respect of loans to other two parties, loans and interest are repayable on demand. With

respect to one of the above loan, the Company has demanded repayment of loan and interest during the year and the same has been duly repaid in full. With respect to other loan relating to a wholly-owned subsidiary amounting to INR 73.56 million which is under liquidation, the Company received the final settlement of INR 18.21 million and the remaining balance of loan amounting to INR 55.35 million has been provided for in the standalone financial statements.

• (c) In respect of the aforesaid loans, there is no amount which is overdue for more than ninety days.

• iv. In our opinion, and according to the information and explanations given to us, the Company has complied with the provisions of Section 185 and 186 of the Companies Act, 2013 in respect of the loans and investments made, and guarantees and security provided by it.

• v. The Company has not accepted any deposits from the public within the meaning of Sections 73, 74, 75 and 76 of the Act and the Rules framed there under to the extent notified.

• vi. Pursuant to the rules made by the Central Government of India, the Company is required to maintain cost records as specified under Section 148(1) of the Act in respect of its products. We have broadly reviewed the same, and are of the opinion that, prima facie, the prescribed accounts and records have been made and maintained. We have not, however, made a detailed examination of the records with a view to determine whether they are accurate or complete.

• vii. (a) According to the information and explanations given to us and the records of the Company examined by us, in our opinion, the Company is generally regular in depositing undisputed statutory dues in respect of provident fund, though there has been a slight delay in a few cases, and is regular in depositing undisputed statutory dues, including employees’ state insurance, income tax, duty of customs, goods and service tax and other material statutory dues, as applicable, with the appropriate authorities.

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ANNEXURE B TO INDEPENDENT AUDITORS’ REPORT

ELGI EQUIPMENTS LIMITED

Also refer note 43 to the financial statements regarding management’s assessment on certain matters relating to provident fund.

Further, for the period April 01, 2020 to April 30, 2020, the Company has paid Goods and Services Tax and filed GSTR-3B after the due date but within the timelines allowed by Central Board of Indirect Taxes and Customs under the Notification 31/2020 - Central Tax dated April 03, 2020 and Notification 32/2020 - Central Tax dated April 03, 2020 on fulfillment of conditions specified therein.

• (b) According to the information and explanations given to us and the records of the Company examined by us, there are no dues of incometax, duty of customs and goods and service tax which have not been deposited on account of any dispute. The particulars of dues of sales tax, service tax, duty of excise and value added tax as at March 31, 2021 which have not been deposited on account of a dispute, are as follows:

		Amount	Period to which the	Forum where the dispute
Name of the statute	Nature of dues	(in Million)*	amount relates	ispending
The Central Excise Act, 1944	Excise Duty	2.57	FY 2011-12	Additional Commissioner
Finance Act,1994	Service Tax	3.56	FY 2007-08 to FY 2012-13	Customs Excise Service tax Appellate Tribunal
The Central Sales Tax Act, 1956	Central Sales Tax	–	FY 2015-16	Joint Commissioner (CT), Appeals
The Central Sales Tax Act, 1956	Central Sales Tax	–	FY 2012-13 to FY 2014-15	Central Sales Tax, Appellate Authority
The Central Sales Tax Act, 1956	Central Sales Tax	5.31	FY 2004-05, 2011-12	Honourable High Court of Madras
Tamil Nadu Value Added Tax Act, 2006	VAT	7.70	FY 2004-05, 2013-14	Honourable High Court of Madras

*Net of amount paid under protest amounting to INR 44.08 Million.

• viii. According to the records of the Company examined by us and the information and explanation given to us, the Company has not defaulted in repayment of loans or borrowings to any financial institution or bank or Government, as applicable at the balance sheet date. The Company has not issued any debentures.

• ix. The Company has not raised any moneys by way of initial public offer, further public offer (including debt instruments) and term loans. Accordingly, the provisions of Clause 3(ix) of the Order are not applicable to the Company.

• x. During the course of our examination of the books and records of the Company, carried out in accordance with the generally accepted auditing practices in India, and according to the information and explanations given to us, we have neither come across any instance of material fraud by the Company or on the Company by its officers or employees, noticed or reported during the year, nor have we been informed of any such case by the Management.

• xi. The Company has paid/ provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Act. Also refer paragraph 17 of our main audit report.

• xii. As the Company is not a Nidhi Company and the Nidhi Rules, 2014 are not applicable to it, the provisions of Clause 3(xii) of the Order are not applicable to the Company.

• xiii. The Company has entered into transactions with related parties in compliance with the provisions of Sections 177 and 188 of the Act. The details of such related party transactions have been disclosed in the financial statements as required under Indian Accounting Standard (Ind AS) 24, Related Party Disclosures specified under Section 133 of the Act.

• xiv. The Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review. Accordingly, the provisions of Clause 3(xiv) of the Order are not applicable to the Company.

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ANNEXURE B TO INDEPENDENT AUDITORS’ REPORT

ELGI EQUIPMENTS LIMITED

• xv. The Company has not entered into any non-cash transactions with its directors or persons connected with him. Accordingly, the provisions of Clause 3(xv) of the Order are not applicable to the Company.

• xvi. The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934. Accordingly, the provisions of Clause 3(xvi) of the Order are not applicable to the Company.

For Price Waterhouse Chartered Accountants LLP Firm Registration Number: 012754N/N500016 Chartered Accountants

Baskar Pannerselvam

Place: Coimbatore Date: May 21, 2021

Partner Membership Number: 213126 UDIN: 21213126AAAAEI1476

105

ANNUAL REPORT 2020-21

ELGI EQUIPMENTS LIMITED

STANDALONE FINANCIAL STATEMENTS

Standalone Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

Standalone Balance Sheet as at March 31, 2021

Particulars	Notes	March 31, 2021	March 31, 2020
Assets
Non-current assets
Property, plant and equipment	3(a)	1,972.37	2,189.93
Right of use assets	3(b)	27.78	39.14
Capital work-in-progress	3(a)	40.18	35.99
Investment properties	4	55.04	55.49
Goodwill	5	1.23	1.23
Other intangible assets	5	53.06	52.98
Financial assets
(i) Investments	6	1,777.28	1,735.78
(ii) Loans	7	565.81	603.68
(iii) Other fnancial assets	8	34.83	60.28
Current tax assets (net)	9	–	34.32
Deferred tax assets (net)	22	29.16	18.63
Other non-current assets	10	54.32	51.45
Total non-current assets		4,611.06	4,878.90
Current assets
Inventories	11	1,385.84	1,302.01
Financial assets
(i) Trade receivables	12	3,301.57	2,558.93
(ii) Cash and cash equivalents	13	742.78	161.50
(iii) Bank balances other than (ii) above	14	859.06	284.25
(iv) Deposits with fnancial institutions	15	305.00	300.00
(v) Loans	16	59.81	152.11
(vi) Other fnancial assets	17	103.95	32.89
Other current assets	18	327.20	342.51
Total current assets		7,085.21	5,134.20
Total assets		11,696.27	10,013.10
Equity and liabilities
Equity
Equity share capital	19	316.91	158.45
Other equity	20	7,840.29	6,941.74
Total equity		8,157.20	7,100.19

ANNUAL REPORT 2020-21

106

ELGI EQUIPMENTS LIMITED

STANDALONE FINANCIAL STATEMENTS

Standalone Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

Standalone Balance Sheet as at March 31, 2021 (Continued...)

Particulars	Notes	March 31, 2021	March 31, 2020
Liabilities
Non-current liabilities
Financial liabilities
(i) Lease liabilities	3(b)	23.81	34.20
Provisions	21	52.64	58.84
Total non-current liabilities		76.45	93.04
Current liabilities
Financial liabilities
(i) Borrowings	23	1,013.84	975.00
(ii) Lease liabilities	3(b)	6.32	6.66
(iii) Trade payables	24
(a) Total outstanding dues of micro
enterprises and small enterprises		432.80	271.48
(b) Total outstanding dues of creditors
other than micro enterprises and
small enterprises		1,371.73	1,020.95
(iv) Other fnancial liabilities	25	252.39	298.20
Provisions	26	114.41	124.06
Current tax liabilities (Net)	9	139.09	-
Other current liabilities	27	132.04	123.52
Total current liabilities		3,462.62	2,819.87
Total liabilities		3,539.07	2,912.91
Total equity and liabilities		11,696.27	10,013.10

The above Standalone Balance Sheet should be read in conjunction with the accompanying notes.

For and on behalf of the Board of Directors

As per our report of even date

N. MOHAN NAMBIAR

Director DIN: 00003660 Place: Coimbatore

JAIRAM VARADARAJ

Managing Director DIN: 00003361 Place: Charlotte, North Carolina, USA

For Price Waterhouse Chartered Accountants LLP

Firm Registration Number: 012754N/N500016 Chartered Accountants

RAGUNATHAN K

Company Secretary ACS: 62397 Place: Coimbatore

Date: May 21, 2021

JAYAKANTHAN R

Chief Financial Officer Place: Coimbatore

BASKAR PANNERSELVAM

Partner Membership No: 213126

Place: Coimbatore Date: May 21, 2021

ANNUAL REPORT 2020-21

107

ELGI EQUIPMENTS LIMITED

STANDALONE FINANCIAL STATEMENTS

Standalone Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

Standalone Statement of Profit and Loss for the year ended March 31, 2021

Particulars	Notes	March 31, 2021	March 31, 2020
Revenue from operations	28	11,001.70	10,811.44
Other income	29	240.60	494.31
Total Income		11,242.30	11,305.75
Expenses
Cost of materials consumed	30	5,330.47	5,363.64
Purchases of stock-in-trade	31	944.19	1,067.47
Changes in inventories of fnished goods, work-in- progress and stock-in-trade	32	114.08	(190.43)
Employee benefts expenses	33	1,563.13	1,631.32
Finance costs	34	36.80	43.08
Depreciation and amortisation expenses	35	353.29	366.52
Other expenses	36	1,498.42	1,746.22
Total expenses		9,840.38	10,027.82
Proft before tax		1,401.92	1,277.93
Income tax expense	37
- Current tax		361.55	326.71
- Deferred tax		(10.53)	(53.02)
Proft for the year		1,050.90	1,004.24
Other comprehensive income
Items that will not be reclassifed to
proft or loss:
Change in fair value of FVOCI equity instruments	20 (h)	37.59	(26.04)
Remeasurement of post-employment beneft obligations	20 (f)	13.02	(0.03)
Income tax relating to these items	20 (f)	(3.28)	0.01
Other comprehensive income for the year, net of tax		47.33	(26.06)
Total comprehensive income for the year		1,098.23	978.18

ANNUAL REPORT 2020-21

108

ELGI EQUIPMENTS LIMITED

STANDALONE FINANCIAL STATEMENTS

Standalone Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

Standalone Statement of Profit and Loss for the year ended March 31, 2021 (Continued...)

(Continued...)
Particulars	Notes	March 31, 2021	March 31, 2020
Earnings per equity share	46
Nominal value of the shares		1.00	1.00
(1) Basic		3.32	3.17
(2) Diluted		3.32	3.17

The above Standalone Statement of Profit and Loss should be read in conjunction with the accompanying notes.

For and on behalf of the Board of Directors

As per our report of even date

N. MOHAN NAMBIAR

Director DIN: 00003660 Place: Coimbatore

JAIRAM VARADARAJ

Managing Director DIN: 00003361 Place: Charlotte, North Carolina, USA

For Price Waterhouse Chartered Accountants LLP

Firm Registration Number: 012754N/N500016 Chartered Accountants

RAGUNATHAN K

Company Secretary ACS: 62397 Place: Coimbatore

JAYAKANTHAN R

Chief Financial Officer Place: Coimbatore

BASKAR PANNERSELVAM

Partner Membership No: 213126

Date: May 21, 2021

Place: Coimbatore Date: May 21, 2021

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ELGI EQUIPMENTS LIMITED

STANDALONE FINANCIAL STATEMENTS

Standalone Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

Standalone Statement of Changes in Equity

i) Equity Share Capital

Equity Share Capital
Particulars	Notes	Amounts
Balance as at April 01, 2019	19	158.45
Changes in equity share capital during the year		–
Balance as at March 31,2020	19	158.45
Issue of bonus shares (refer note 19 (iii))		158.46
Balance as at March 31,2021		316.91

ii) Other equity

Description Notes	Reserve and Surplus	Other reserve	Total equity
	Capital reserve Statutory reserve Securities Premium General reserve Treasury stock Share options outstanding account Retained earnings Total	FVOCI - Equity instruments Total
Balance at April 01, 2019	181.41 5.49 409.37 1,140.60 (11.40) – 4,677.91 6,403.38	57.39 57.39	6,460.77
Proft for the year 20	– – – – – – 1,004.24 1,004.24	– –	1,004.24
Other comprehensive income 20	– – – – – – (0.02) (0.02)	(26.04) (26.04)	(26.06)
Total comprehensive income for the year	– – – – – – 1,004.22 1,004.22	(26.04) (26.04)	978.18
Transactions with owners in their capacity as owners: Dividend paid (including dividend distribution tax) 20	– – – – – – (497.42) (497.42)	– –	(497.42)
Employee stock option expense 20	– – – – – 0.21 – 0.21	– –	0.21
Balance as at March 31,2020	181.41 5.49 409.37 1,140.60 (11.40) 0.21 5,184.71 6,910.39	31.35 31.35	6,941.74

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ELGI EQUIPMENTS LIMITED

STANDALONE FINANCIAL STATEMENTS

Standalone Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

Standalone Statement of Changes in Equity (Continued...)

Description Notes	Reserve and Surplus	Other reserve	Total equity
	Capital reserve Statutory reserve Securities Premium General reserve Treasury stock Share options outstanding account Retained earnings Total	FVOCI - Equity instruments Total
Balance at April 01, 2020	181.41 5.49 409.37 1,140.60 (11.40) 0.21 5,184.71 6,910.39	31.35 31.35	6,941.74
Proft for the year 20	– – – – – – 1,050.90 1,050.90	– –	1,050.90
Other comprehensive income 20	– – – – – – 9.74 9.74	37.59 37.59	47.33
Total comprehensive income for the year Transactions with owners in their capacity as owners: Purchase of shares for ESOP scheme 20	– – – – – – 1,060.64 1,060.64 – – – – (44.04) – – (44.04)	37.59 37.59 – –	1,098.23 (44.04)
Issue of bonus shares (refer note 19(iii)) 20	– – (158.45) – – – – (158.45)	– –	(158.45)
Employee stock option expense 20	– – – – – 2.81 – 2.81	– –	2.81
Transfer of gain on FVOCI equity instruments 20	– – – – – – 2.13 2.13	(2.13) (2.13)	–
Balance as at March 31,2021	181.41 5.49 250.92 1,140.60 (55.44) 3.02 6,247.48 7,773.48	66.81 66.81	7,840.29

The above Standalone Statement of Changes in Equity should be read in conjunction with the accompanying notes.

For and on behalf of the Board of Directors

As per our report of even date

N. MOHAN NAMBIAR

Director DIN: 00003660 Place: Coimbatore

JAIRAM VARADARAJ

Managing Director DIN: 00003361 Place: Charlotte, North Carolina, USA

For Price Waterhouse Chartered Accountants LLP

Firm Registration Number: 012754N/N500016 Chartered Accountants

RAGUNATHAN K

Company Secretary ACS: 62397 Place: Coimbatore

JAYAKANTHAN R

Chief Financial Officer Place: Coimbatore

BASKAR PANNERSELVAM

Partner Membership No: 213126

Date: May 21, 2021

Place: Coimbatore Date: May 21, 2021

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ELGI EQUIPMENTS LIMITED

STANDALONE FINANCIAL STATEMENTS

Standalone Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

Standalone Statement of Cash Flows

Standalone Statement of Cash Flows
Particulars	March 31, 2021	March 31, 2020
Cash fow from operating activities
Proft before income tax	1,401.92	1,277.93
Adjustments for :
Depreciation and amortisation expense	353.29	366.52
Provision for bad and doubtful debts	23.27	35.94
Gain on disposal of property, plant and equipment	(0.18)	(0.84)
Rental income from Investment property (net of expenses)	(10.81)	(12.39)
Dividend and interest income classifed as investingcash fows	(102.67)	(392.45)
Net unrealised exchange diferences	(21.65)	(30.92)
Finance costs	36.80	43.08
Financial guarantee commission	(4.45)	–
Non-cash employee share based payments	1.60	0.13
Write back of provision made for loan to subsidiary	(18.21)	–
Change in operating assets and liabilities
(Increase)/decrease in trade receivables	(807.55)	323.20
Increase in inventories	(83.83)	(174.06)
Increase/(decrease) in trade payables	520.15	(355.37)
(Increase)/decrease in other fnancial assets	10.59	(8.26)
Decrease in other current assets	15.31	9.24
Increase/(decrease) in provisions	(2.83)	47.04
Increase/(decrease) in other fnancial liabilities	30.91	(80.01)
Increase in other current liabilities	8.52	21.67
Cash generated from operations	1,350.18	1,070.45
Income taxes paid (net of refund)	(191.42)	(340.88)
Net cash infow from operating activities	1,158.76	729.57

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ELGI EQUIPMENTS LIMITED

STANDALONE FINANCIAL STATEMENTS

Standalone Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

Standalone Statement of Cash Flows (Continued...)

Standalone Statement of Cash Flows (Continued...)
Particulars	March 31, 2021	March 31, 2020
Cash fows from investing activities
Payments forproperty,plant and equipment and intangible assets	(161.48)	(356.44)
Payments for acquisition of business/assets	–	(34.50)
Investments in subsidiaries	(4.51)	(15.76)
Proceeds from buy-back of FVOCI equityinstruments	2.35	–
Subscription to rights issue of FVOCI equityinstruments	(0.81)	–
Investment in deposits with Banks/Financial institutions	(579.81)	(198.99)
Rental income from Investmentproperty(net of expenses)	10.81	12.39
(Loans to)/repayment from subsidiaries	112.79	(511.54)
Loans recovered from employees (net)	23.58	5.72
Proceeds from sale ofproperty,plant and equipment	0.86	3.05
Dividends received	10.48	340.86
Interest received	60.56	45.44
Net cash outfow from investing activities	(525.18)	(709.77)
Cash fows from fnancing activities
Net Short term Loans borrowed from banks	38.84	546.18
Payment of lease liabilities	(6.81)	(6.42)
Purchase of shares for ESOP scheme	(44.04)	–
Dividendspaid to Company’s shareholders	(1.93)	(464.57)
Interestpaid	(38.36)	(40.58)
Dividend taxpaid	–	(30.32)
Net cash infow /(outfow) from fnancingactivities	(52.30)	4.29
Net increase/(decrease) in cash and cash equivalents	581.28	24.09
Cash and cash equivalents at the beginningof the fnancialyear	161.50	137.41
Cash and cash equivalents at end of the year*	742.78	161.50

• includes restricted cash and cash equivalents in relation to balance in unclaimed dividend account (refer note 13).

The above Standalone Statement of Cash Flows should be read in conjunction with the accompanying notes.

For and on behalf of the Board of Directors

As per our report of even date

N. MOHAN NAMBIAR

Director DIN: 00003660 Place: Coimbatore

JAIRAM VARADARAJ

Managing Director DIN: 00003361 Place: Charlotte, North Carolina, USA

For Price Waterhouse Chartered Accountants LLP

Firm Registration Number: 012754N/N500016 Chartered Accountants

RAGUNATHAN K

Company Secretary ACS: 62397 Place: Coimbatore

Date: May 21, 2021

JAYAKANTHAN R

Chief Financial Officer Place: Coimbatore

BASKAR PANNERSELVAM

Partner Membership No: 213126

Place: Coimbatore Date: May 21, 2021

ANNUAL REPORT 2020-21

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ELGI EQUIPMENTS LIMITED

STANDALONE FINANCIAL STATEMENTS

Notes to the Standalone Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

General Information

Elgi Equipments Limited (“the Company”) is engaged in manufacturing of air compressors. The Company has manufacturing plants in different locations in India and has its registered office in Coimbatore. The Company is a public limited Company and listed on both the Bombay Stock Exchange and the National Stock Exchange.

1 Significant accounting policies

1. COVID-19 related concessions – amendments to Ind AS 116

2. Interest Rate Benchmark Reform – amendments to Ind AS 109 and Ind AS 107

The amendments listed above did not have any impact on the amounts recognised in prior periods and are not expected to significantly affect the current or future periods.

(b) Accounting for Joint Operations

This note provides a list of the significant accounting policies adopted in the preparation of these standalone financial statements. These policies have been consistently applied to all the years presented, unless otherwise stated.

( a) Basis of preparation

(i) Compliance with Ind AS

The standalone financial statements comply in all material aspects with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (the Act) [Companies (Indian Accounting Standards) Rules, 2015] and other relevant provisions of the Act. This financial statement has been approved by the Board of Directors in their meeting held on May 21, 2021.

(ii) Historical cost convention

The financial statements have been prepared on a historical cost basis, except for the following:

• a) certain financial assets and liabilities (including derivative instruments) that are measured at fair value,

• b) defined benefit plans — plan assets measured at fair value and,

• c) share based payments.

The Company recognises its direct right to the assets, liabilities, revenues and expenses of joint operations and its share of any jointly held or incurred assets, liabilities, revenues and expenses. These have been incorporated in the financial statements under the appropriate headings. Details of the joint operations are set out in note 49.

(c) Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The Managing Director (MD) of the Company has been identified as the chief operating decision maker of the Company. He assesses the financial performance and position of the Company and makes strategic decisions. The business activities of the Company comprise of manufacturing and sale of compressors. Accordingly, there is no other reportable segment as per Ind AS 108 Operating Segments.

(d) Foreign currency translation

(i) Functional and presentation currency

Items included in the financial statements of the Company are measured using the currency of the primary economic environment in which the Company operates (‘the functional currency’). The financial statements are presented in Indian rupee (INR), which is the Company’s functional and presentation currency.

(iii) New and amended standards adopted by the Company

The Company has applied following amendments to Ind AS for the first time in their annual reporting period commencing April 01, 2020:

1. Definition of Material – amendments to Ind AS 1 and Ind AS 8

2. Definition of a Business – amendments to Ind AS 103, Also refer note 1(i) Business Combinations.

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally recognised in profit

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or loss. A monetary item for which settlement is neither planned nor likely to occur in the foreseeable future is considered as a part of the entity’s net investment in that foreign operation.

Foreign exchange differences regarded as an adjustment to borrowing costs are presented in the statement of profit and loss, within finance costs. All other foreign exchange gains and losses are presented in the statement of profit and loss on a net basis within other gains/(losses).

Non-monetary items that are measured at fair value in a foreign currency are translated using exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as a part of the fair value gain or loss.

(e) Revenue recognition

Revenue is recognised when a customer obtains control of a promised goods or service and thus has the ability to direct the use and obtain the benefits from the goods or service in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. For each contract with a customer, the Company applies the below five step process before revenue can be recognised:

• z identify contracts with customers

• z identify the separate performance obligation

• z determine the transaction price of the Contract

• z allocate the transaction price to each of the separate performance obligations, and

• z recognise the revenue as each performance obligation is satisfied.

(i) Sale of products: The Company manufactures and sells a range of air compressors and related parts. Sales are recognised when control of the product has transferred, being when the products are delivered to the customers, and there is no unfulfilled obligations that could effect the customer’s acceptance of products. Delivery occurs when the product have been shipped from the Company’s warehouse to the specific location in case of domestic sales, and when a bill of lading is generated in case of exports, the risk of obsolescence and loss have been transferred to the customer and either the customer has accepted the product in accordance with the sales contract, the acceptance provision have lapsed, or the Company has objective evidence that all criteria for acceptance have been satisfied. Where the Company sells goods and also has transportation obligation, and where the control of the goods get

transferred, the sale of goods and transportation is treated as separate performance obligation.

The Company’s obligation to repair/replace faulty product under the standard warranty terms is recognised as a provision. Refer note no 26.

A receivable is recognised when the goods are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due. The credit facility is as per standard industry terms, thus there is no significant financing component.

(ii) Sale of Services: The performance obligation under service contract are installation, maintenance and other ancillary services set forth in the contracts. Revenue from rendering of services are recognised over a period of time by reference to the stage of completion as the customer simultaneously receives and consumes the benefit provided by the Company’s performance as the Company performs. In case of transportation revenue, the Company recovers actual cost of transportation from the customers. The cost is either billed separately in the invoice or included in the total transaction price. Where the transaction price is inclusive of cost of transportation, the Company splits the transaction price into Sale of product and Sale of services. Payment for the service rendered is made as per the credit terms in the agreements with the customers. The credit period is generally short term, thus there is no significant financing component.

(iii) Duty drawback : Income from duty drawback is recognised on an accrual basis.

(iv) Royalty : Royalty is recognised on accrual basis in accordance with terms of respective agreements.

(f) Government grants

Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Company will comply with all the attached conditions.

Government grants relating to income are deferred and recognised in the profit or loss over the period necessary to match them with the costs that they are intended to compensate. Government grant is recognised either as other income or adjusted against expenses depending upon the nature of the grant and the same is followed consistently.

Government grants relating to purchase of property, plant and equipment are presented by deducting the grant from carrying amount of the asset.

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(g) Income taxes

The income tax expense or credit for the period is the tax payable on the current period’s taxable income based on the applicable income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.

Current tax liabilities (assets) for the current and prior periods are measured at the amount expected to be paid to (recovered from) the taxation authorities, using the tax rates (and laws) that have been enacted or substantively enacted by the end of the reporting period. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the standalone financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting profit nor taxable profit (tax loss). Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred tax assets are recognised for all deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

(h) Leases

As a lessee

Leases are recognised as a right of use asset and a corresponding liability at the date at which the leased asset is available for the use by the Company. Contracts may contain both lease and non-lease components. The Company allocates the consideration in the contract to the lease and non-lease components based on their relative stand-alone prices. However for leases of real estate for which the Company is the lessee, it has elected not to separate the lease and non-lease components and instead accounts for these as single lease component.

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:

• z fixed payments (including in-substance fixed payments), less any lease incentives receivable

• z variable lease payment that are based on an index or a rate, initially measured using the index or rate as at the commencement date

• z amounts expected to be payable by the Company under residual value guarantees

• z the exercise price of a purchase option if the Company is reasonably certain to exercise that option, and

• z payments of penalties for terminating the lease, if the lease term reflects the Company exercising that option.

Lease payments to be made under reasonably certain extension options are also included in the measurement of the liability. The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for leases in the Company, the lessee’s incremental borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions.

To determine the incremental borrowing rate, the Company:

• z where possible, uses recent third-party financing received by the individual lessee as a starting point, adjusted to reflect changes in financing conditions since third party financing was received,

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• z uses a build-up approach that starts with a risk-free interest rate adjusted for credit risk for leases held by Elgi equipments limited, which does not have recent third party financing, and

• z makes adjustments specific to the lease, such as term, country, currency and security.

Right-of-use assets are measured at cost comprising the following:

• z the amount of the initial measurement of lease liability

• z any lease payments made at or before the commencement date less any lease incentives received

• z any initial direct costs and

Deferred consideration payable is measured at its acquisition-date fair value. Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value. At each reporting date subsequent to the acquisition, contingent consideration payable is measured at its fair value with any changes in the fair value recognised in profit or loss unless the contingent consideration is classified as equity, in which case the contingent consideration is carried at its acquisition-date fair value.

Goodwill is recognised initially at the excess of: (a) the aggregate of the consideration transferred,over (b) the net fair value of the identifiable assets acquired and liabilities assumed. Acquisition related costs are expensed as incurred.

• z restoration costs

Right-of-use assets are generally depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis. If the Company is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset’s useful life.

Payments associated with short-term leases are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less.

As a lessor

Lease income from operating leases where the Company is a lessor is recognised in income on a straight-line basis over the lease term unless the receipts are structured to increase in line with expected general inflation to compensate for the expected inflationary cost increases. The respective leased assets are included in the balance sheet based on their nature.

(i) Business Combinations

A business combination is a transaction or other event in which an acquirer obtains control of one or more businesses and results in the consolidation of the assets and liabilities acquired. Business combinations are accounted for by applying the acquisition method. The Company also elects to apply the optional test (the concentration test) which permits a simplified assessment of whether an acquired set of activities and assets is not a business on each transaction basis.

The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity instruments issued or liabilities incurred by the acquirer to former owners of the acquiree.

(j) Impairment of assets

Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets (including investments) are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period.

(k) Cash and cash equivalents

For the purpose of presentation in the statement of cash flows, cash and cash equivalents include cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

Cash Flow Statement: The Cash flow from Operating activities are prepared under the Indirect method, whereby profit or loss is adjusted for the effects of transactions of a non-cash nature, any deferrals or

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accruals of past or future operating cash receipts or payments and items of income or expense associated with investing or financing cash flows.

(l) Trade receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment, if any.

(m) Inventories

Raw materials and stores, work in progress, traded and finished goods

Raw materials and stores, work in progress, traded and finished goods are stated at the lower of cost and net realisable value. Cost of raw materials and traded goods comprises cost of purchases. Cost of work-in-progress and finished goods comprises direct materials, direct labour and an appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on the basis of normal operating capacity. Cost of inventories also include all other costs incurred in bringing the inventories to their present location and condition. Costs are assigned to individual items of inventory on the basis of first-in first-out basis. Costs of purchased inventory are determined after deducting rebates and discounts. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

(n) Investments and other financial assets

(i) Classification

The Company classifies its financial assets in the following measurement categories:

• a) those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss), and

• b) those measured at amortised cost.

The classification depends on the Company’s business model for managing the financial assets and the contractual terms of the cash flows. For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income. For investments in debt instruments, this will depend on the business model in which the investment is held. For investments in equity instruments, this will depend on whether the Company has made an irrevocable election

at the time of initial recognition to account for the equity investment at fair value through other comprehensive income.

The Company reclassifies debt investments when and only when its business model for managing those assets changes.

(ii) Measurement

At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.

Debt instruments

Subsequent measurement of debt instruments depends on the Company’s business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which the Company classifies its debt instruments:

• a) Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. Interest income from these financial assets is included in finance income using the effective interest rate method. Any gain or loss arising on derecognition is recognised direct in profit or loss and presented in other gains/ (losses). Impairment losses are presented as separate line item in the statement of profit or loss.

• b) Fair value through other comprehensive income (FVOCI): Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets’ cash flows represent solely payments of principal and interest, are measured at fair value through other comprehensive income (FVOCI). Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognised in profit and loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss and recognised in other income/ (expense). Interest income from these financial assets is included in other income using the effective interest rate method.

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• c) Fair value through profit or loss: Assets that do not meet the criteria for amortised cost or FVOCI are measured at fair value through profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value through profit or loss and is not part of a hedging relationship is recognised in profit or loss and presented net in the statement of profit and loss within other income/ (expense) in the period in which it arises. Interest income from these financial assets is included in other income.

Equity instruments

The Company measures all equity investments at fair value, except for investments forming part of interest in subsidiaries and joint ventures, which are measured at cost. Where the Company’s management has elected to present fair value gains and losses on equity investments in other comprehensive income, there is no subsequent reclassification of fair value gains and losses to profit or loss. Dividends from such investments are recognised in profit or loss as other income when the Company’s right to receive payments is established.

Changes in the fair value of financial assets at fair value through profit or loss are recognised in other income/ (expense) in the statement of profit and loss. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.

Impairment of financial assets

The Company assesses on a forward looking basis the expected credit losses associated with its assets carried at amortised cost and FVOCI debt instruments. The impairment methodology applied depends on whether there has been a significant increase in credit risk. Note 39 details how the Company determines whether there has been a significant increase in credit risk.

For trade receivables only, the Company applies the simplified approach permitted by Ind AS 109 Financial Instruments, which requires expected lifetime losses to be recognised from initial recognition of the receivables.

Derecognition of financial assets

A financial asset is derecognised only when

• a) The Company has transferred the rights to receive cash flows from the financial asset or

• b) The Company retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients.

Where the Company has transferred an asset, it evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognised. Where the Company has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognised.

Where the Company has neither transferred a financial asset nor retains substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognised if the Company has not retained control of the financial asset. Where the Company retains control of the financial asset, the asset is continued to be recognised to the extent of continuing involvement in the financial asset.

Income recognition

• a) Interest income

Interest income on financial assets at amortised cost is calculated using the effective interest rate method is recognised in the statement of profit and loss as part of other income.

Interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial assets except for financial assets that subsequently become credit impaired. For credit-impaired financial assets the effective interest rate is applied to the net carrying amount of the financial asset (after deduction of loss allowance).

b) Dividends

Dividends are recognised in profit or loss only when the right to receive payment is established, it is probable that the economic benefits associated with the dividend will flow to the Company and the amount of the dividend can be measured reliably.

(o) Derivatives

Derivatives are only used for economic hedging purposes and not as speculative investment. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value at the end of each reporting period. The accounting for subsequent changes in fair value depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged and the type of hedge relationship designated.

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Derivatives that are not designated as hedges:

The Company enters into certain derivative contracts to hedge risks which are not designated as hedges. Such contracts are accounted for at fair value through profit or loss and are included in other income / (expense).

(p) Offsetting financial instruments

Financial assets and liabilities are offset and the net amount is reported in the balance sheet where there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.

(q) Property, plant and equipment

Freehold land is carried at historical cost. All other items of property, plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred.

Depreciation methods, estimated useful lives and residual value

Depreciation is calculated using the straight-line and written down value methods to allocate their cost, net of their residual values, over their estimated useful lives.

Useful Life (years)

	As adopted by	As per
Asset	Company	Schedule II
Roads	10	5
Tools, Jigs &
Fixture, Patterns,	5-8	15
Moulds & Dies
The assets’ residual	values and useful lives are reviewed
and adjusted if appropriate, at the end of each reporting
period.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit or loss within other income / (expense).

(r) Investment Properties

Property that is held for long-term rental yields or for capital appreciation or both and that is not occupied by the Company, is classified as investment property. Investment property is measured initially at its cost, including related transaction costs. Subsequent expenditure is capitalised to the asset’s carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance costs are expensed when incurred. When part of an investment property is replaced, the carrying amount of the replaced part is derecognised.

Investment properties (other than land) are depreciated using the written down value method over their estimated useful lives. Investment properties have a useful life of 30 years. The useful lives have been determined based on Schedule II to the Companies Act, 2013.

(s) Intangible assets

The useful lives have been determined based on Schedule II to the Companies Act, 2013 except roads (classified as buildings), tools, Jigs and fixtures, patterns and mould and dies (classified as plant and machinery), where useful lives have been determined based on technical evaluation done by the management’s expert which are higher than those specified by Schedule II to the Companies Act; 2013, in order to reflect the actual usage of the assets. The residual values are not more than 5% of the original cost of the asset.

(i) Goodwill

Goodwill on acquisition of business is included in intangible assets. Goodwill is not amortised but tested for impairment annually, or more frequently if events or changes in the circumstances indicate that it might be impaired and is carried at cost less accumulated impairment losses. Gains and losses on the disposal of a business include the carrying amount of goodwill relating to the business sold.

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Goodwill is allocated to cash generating units for the purpose of impairment testing. The allocation is made to cash generating unit which is expected to benefit from business combination in which the goodwill arose.

(ii) Other intangible assets

The intangible assets include computer software and drawings which are recorded at the cost of acquisition and are amortised using the straight-line method over a period of five years or their legal / useful life whichever is less.

(t) Research and development

Development costs that are directly attributable to the design and testing of identifiable and unique products controlled by the Company are recognised as intangible assets when the following criteria are met:

• z it is technically feasible to complete the asset so that it will be available for use

• z management intends to complete the asset and use or sell it

• z there is an ability to use or sell the product

• z it can be demonstrated how the asset will generate probable future economic benefits

• z adequate technical, financial and other resources to complete the development and to use or sell the asset are available and

• z the expenditure attributable to the asset during its development can be reliably measured.

Directly attributable costs that are capitalised as part of the products include employee costs and an appropriate portion of relevant overheads. Capitalised development costs are recorded as intangible assets and amortised from the point at which the asset is available for use. Research and development expenditure that do not meet the criteria for recognition as intangible assets are recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as an asset in the subsequent period.

(u) Trade and other Payables

These amounts represent liabilities for goods and services provided to the Company prior to the end of financial year which are unpaid. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting

period. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.

(v) Borrowings

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates.

Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss as other income/other expenses.

Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period. Where there is a breach of a material provision of a long-term loan arrangement on or before the end of the reporting period with the effect that the liability becomes payable on demand on the reporting date, the entity does not classify the liability as current, if the lender agreed, after the reporting period and before the approval of the financial statements for issue, not to demand payment as a consequence of the breach.

(w) Borrowing costs

General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale.

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

Other borrowing costs are expensed in the period in which they are incurred.

(x) Provisions

Provisions for legal claims, service warranties, volume discounts and returns are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense.

(y) Employee Benefits

(i) Short-term obligations

Liabilities for wages and salaries, including nonmonetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised in respect of employees’ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as other financial liabilities in the balance sheet.

(ii) Other long-term employee benefit obligations

The liabilities for earned leave that are not expected to be settled wholly within 12 months after the end of the period in which the employees render the

related service are measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in profit or loss.

The obligations are presented as current liabilities in the balance sheet if the Company does not have an unconditional right to defer settlement for at least 12 months after the reporting period, regardless of when the actual settlement is expected to occur.

(iii) Post-employment obligations

The Company operates the following postemployment schemes:

• (a) defined benefit plans such as gratuity and

• (b) defined contribution plans such as provident fund and Superannuation fund.

Gratuity obligations

The liability or asset recognised in the balance sheet in respect of defined benefit gratuity plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by actuaries using the projected unit credit method.

The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation.

The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the statement of profit and loss.

Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the statement of changes in equity and in the balance sheet.

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Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in profit or loss as past service cost.

Defined contribution plans

The Company pays provident fund and superannuation fund contributions to Employee Provident Fund Account as per Employees Provident Fund Act, 1952 and a Life Insurance Corporation of India respectively. The Company has no further payment obligations once the contributions have been paid. The contributions are accounted for as defined contribution plans and the contributions are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.

(iv) Bonus plans

The Company recognises a liability and an expense for bonuses. The Company recognises a provision where contractually obliged or where there is a past practice that has created a constructive obligation.

(v) Termination benefits

Termination benefits are payable when employment is terminated by the Company before the normal retirement date, or when an employee accepts voluntary redundancy in exchange for these benefits. The Company recognises termination benefits at the earlier of the following dates: (a) when the Company can no longer withdraw the offer of those benefits; and (b) when the Company recognises costs for a restructuring that is within the scope of Ind AS 37 and involves the payment of termination benefits. In the case of an offer made to encourage voluntary redundancy, the termination benefits are measured based on the number of employees expected to accept the offer. Benefits falling due more than 12 months after the end of the reporting period are discounted to present value.

(vi) Share based payments

Share based compensation benefits are provided to the employees via Elgi Equipments Limited Employees Stock Option Plan, 2019, an employee stock option scheme.

The fair value of options granted under the Elgi Equipments Limited Employee Stock Option Plan,2019 is recognised as an employee benefit expense with a corresponding increase in the equity. The total amount to be expensed is determined by reference to the fair value of the options granted,

• z including any market performance conditions (e.g. the entity’s share price)

• z excluding the impact of any service and nonmarket performance vesting conditions (e.g. profitability, sales growth targets and remaining of an employee of the entity over a specified time period) and

• z including the impact of any non-vesting conditions (e.g. the requirement for employees to hold the shares for a specific period of time).

The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number of options that are expected to vest based on the non-market vesting and service conditions. It recognises the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity.

(z) Contributed Equity

Equity shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

(aa) Dividends

Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the entity, on or before the end of the reporting period but not distributed at the end of the reporting period.

(ab) Insurance Claims

Insurance claims are accounted for on the basis of claims admitted / expected to be admitted and to the extent that the amount recoverable can be measured reliably and it is reasonable to expect ultimate collection.

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STANDALONE FINANCIAL STATEMENTS

(ac) Earnings Per Share

2 Critical estimates and judgements

(i) Basic earnings per share

Basic earnings per share is calculated by dividing:

• a) the profit attributable to owners of the Company

• b) by the weighted average number of equity shares outstanding during the financial year, adjusted for bonus elements in equity shares issued during the year and excluding treasury shares (note 46).

(ii) Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:

• a) the after income tax effect of interest and other financing costs associated with dilutive potential equity shares, and

• b) the weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares.

(ad) Rounding of amounts

All amounts disclosed in the financial statements and notes have been rounded off to the nearest millions as per the requirement of Schedule III, unless otherwise stated.

The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom equal the actual results. Management also needs to exercise judgement in applying the Company’s accounting policies.

This note provides an overview of the areas that involved a higher degree of judgement or complexity and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed. Detailed information about each of these estimates and judgements is included in relevant notes together with information about the basis of calculation for each affected line item in the financial statements.

The areas involving critical estimates or judgements are:

Estimation of defined benefit obligation – Note 26(a)

Estimation of provision for warranty claims – Note 26

Estimation of impairment of investments in subsidiaries and joint ventures – Note 6

Estimates and judgements are continually evaluated. They are based on historical experience and other factors, including expectations of future events that may have a financial impact on the Company and that are believed to be reasonable under the circumstances.

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STANDALONE FINANCIAL STATEMENTS

Notes to the Standalone Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

3(a) Property, plant and equipment and Capital work-in progress

					Furniture				Capital
			Plant &	Ofce	and		Canteen		Work in
Particulars	Land	Building	Machinery	equipment	Fixtures	Vehicle	Equipments	Total	Progress
Year ended March 31, 2020
Gross carrying amount
Opening gross carrying amount	233.57	1,033.64	2,016.34	29.98	110.48	3.86	16.07	3,443.94	51.42
Business acquisition	–	–	1.20	–	–	–	–	1.20	–
Additions	–	15.59	399.40	4.80	9.13	–	0.29	429.21	413.78
Disposal	–	(0.12)	(5.99)	(0.21)	(0.77)	–	(0.06)	(7.15)	–
Transfers	–	–	–	–	–	–	–	–	(429.21)
Closing gross carrying amount	233.57	1,049.11	2,410.95	34.57	118.84	3.86	16.30	3,867.20	35.99
Accumulated depreciation
Opening accumulated depreciation	–	431.88	789.83	21.52	88.06	1.39	13.10	1,345.78	–
For the year	–	86.87	231.66	5.03	11.25	0.47	1.15	336.43	-
Disposal	–	(0.08)	(3.92)	(0.19)	(0.69)	-	(0.06)	(4.94)	–
Closing accumulated depreciation	–	518.67	1,017.57	26.36	98.62	1.86	14.19	1,677.27	–
Net carrying amount	233.57	530.44	1,393.38	8.21	20.22	2.00	2.11	2,189.93	35.99
Year ended March 31, 2021
Gross carrying amount
Opening gross carrying amount	233.57	1,049.11	2,410.95	34.57	118.84	3.86	16.30	3,867.20	35.99
Additions	–	7.14	100.50	1.78	0.88	–	–	110.30	114.49
Disposal	–	(0.06)	(0.26)	(0.81)	(2.51)	–	–	(3.64)	–
Transfers	–	–	–	–	–	–	–	–	(110.30)
Closing gross carrying amount	233.57	1,056.19	2,511.19	35.54	117.21	3.86	16.30	3,973.86	40.18
Accumulated depreciation
Opening accumulated depreciation	–	518.67	1,017.57	26.36	98.62	1.86	14.19	1,677.27	–
For the year	–	78.30	235.65	3.69	8.31	0.46	0.77	327.18	–
Disposal	–	(0.02)	(0.24)	(0.75)	(1.95)	–	–	(2.96)	–
Closing accumulated depreciation	–	596.95	1,252.98	29.30	104.98	2.32	14.96	2,001.49	–
Net carrying amount	233.57	459.24	1,258.21	6.24	12.23	1.54	1.34	1,972.37	40.18

Notes

i) Property, plant and equipment pledged as security

Refer note 47 for information on property, plant and equipment pledged as security by the Company.

ii) Contractual obligations

Refer to note 44(a) for disclosure of contractual commitments for the acquisition of property, plant and equipment. iii) Capital work-in-progress

Capital work-in-progress mainly comprises of additions to plant & machinery under construction.

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ELGI EQUIPMENTS LIMITED

STANDALONE FINANCIAL STATEMENTS

Notes to the Standalone Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

3(b) Leases

This note provides information for leases where the Company is a lessee.

The Company leases various offices and warehouses. Rental contracts are typically made for fixed periods of 3 months to 8 years.

Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants other than the security interests in the leased assets that are held by the lessor.

i) Amounts recognised in the balance sheet

The balance sheet shows following amounts relating to leases:

Right of use assets

Right of use assets
Particulars	March 31, 2021	March 31, 2020
	Land Building Total	Land Building Total
Gross carrying amount	2.60 38.56 41.16	2.60 44.68 47.28
Accumulated depreciation	(0.21) (13.17) (13.38)	(0.10) (8.04) (8.14)
Net carrying amount	2.39 25.39 27.78	2.50 36.64 39.14

Additions and disposals to the gross carrying amount of right of use assets are Nil ( March 31, 2020: 4.62 million) and 6.12 million (March 31, 2020: Nil) respectively.

Lease Liabilities

Particulars	March 31, 2021	March 31, 2020
Current	6.32	6.66
Non-Current	23.81	34.20
	30.13	40.86
Reconciliation:
Opening balance	40.86	–
Lease Liability recognised on Ind AS 116 Transition date- April 01, 2019	–	42.66
Add: New leases recognised during the year (non-cash in nature)	–	4.62
Less: Termination of lease contracts	(3.92)	–
Less: Payment of lease liabilities	(6.81)	(6.42)
Closing balance	30.13	40.86

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STANDALONE FINANCIAL STATEMENTS

Notes to the Standalone Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

3(b) Leases (Continued...)

ii) Amounts recognised in the statement of profit and loss

The statement of profit or loss shows the following amounts relating to leases:

Particulars	March 31, 2021	March 31, 2020
Depreciation of Right of use assets
-Land	0.11	0.10
-Buildings	7.35	8.04
	7.46	8.14
Particulars	March 31, 2021	March 31, 2020
Interest expense (included in fnance cost)	2.89	4.04
Expenses relating to short term leases (included in Other expenses)	15.39	19.01

(iii) Cash outflow

The total cash outflow for leases is 25.09 million and 29.47 million for the year ended March 31, 2021 and March 31, 2020, respectively.

(iv) Extension and termination options

Extension and termination options are included in a number of property leases. The majority of extension and termination options held are exercisable only by the Company and not by respective lessor.

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ELGI EQUIPMENTS LIMITED

STANDALONE FINANCIAL STATEMENTS

Notes to the Standalone Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

4 Investment properties

Particulars	March 31, 2021	March 31, 2020
	Land Buildings Total	Land Buildings Total
Gross carrying amount
Opening gross carrying amount	46.25 12.53 58.78	46.25 12.53 58.78
Additions	– – –	– – –
Closing gross carrying amount	46.25 12.53 58.78	46.25 12.53 58.78
Accumulated depreciation
Opening accumulated depreciation	– 3.29 3.29	– 2.80 2.80
Depreciation charge	– 0.45 0.45	– 0.49 0.49
Closing accumulated depreciation	– 3.74 3.74	– 3.29 3.29
Net carrying amount	46.25 8.79 55.04	46.25 9.24 55.49

(i) Amounts recognised in profit or loss for investment properties

Particulars	March 31, 2021	March 31, 2020
Rental income	11.86	13.75
Direct operating expenses from property that generated rental income	(1.05)	(1.36)
Proft from investment properties before depreciation	10.81	12.39
Depreciation	(0.45)	(0.49)
Proft from investment property	10.36	11.90

(ii) Fair value

(ii) Fair value
Particulars	March 31, 2021	March 31, 2020
	Land Buildings Total	Land Buildings Total
Investment property	493.12 8.79 501.91	493.12 9.24 502.36

Estimation of fair value

a) The fair values of investment properties have been determined with reference to the guideline value as determined by the Government for the location at which the property is located, increased by the depreciated value of buildings. All the resulting fair value estimates of investment properties are included in Level 2.

b) Guideline values were revised by the Government of Tamil Nadu with effect from June 9, 2017.

Investment properties pledged as security

Refer note 47 for information on property, plant and equipment pledged as security by the Company.

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ELGI EQUIPMENTS LIMITED

STANDALONE FINANCIAL STATEMENTS

Notes to the Standalone Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

5 Intangible assets and Goodwill

Particulars	Computer software	Drawings	Total intangible assets	Goodwill
Year ended March 31, 2020
Gross carrying amount
Opening gross carrying amount	79.29	–	79.29	–
Business acquisition	–	24.75	24.75	1.23
Additions	7.31	–	7.31	–
Disposal	–	–	–	–
Closing gross carrying amount	86.60	24.75	111.35	1.23
Accumulated depreciation
Opening accumulated depreciation	36.91	–	36.91	–
For the year	17.73	3.73	21.46	–
Disposal	–	–	–	–
Closing accumulated depreciation	54.64	3.73	58.37	–
Net carrying amount	31.96	21.02	52.98	1.23
Year ended March 31, 2021
Gross carrying amount
Opening gross carrying amount	86.60	24.75	111.35	1.23
Additions	18.28	–	18.28	–
Disposal	–	–	–	–
Closing gross carrying amount	104.88	24.75	129.63	1.23
Accumulated depreciation
Opening accumulated depreciation	54.64	3.73	58.37	–
For the year	13.26	4.94	18.20	–
Disposal	–	–	–	–
Closing accumulated depreciation	67.90	8.67	76.57	–
Net carrying amount	36.98	16.08	53.06	1.23

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ELGI EQUIPMENTS LIMITED

STANDALONE FINANCIAL STATEMENTS

Notes to the Standalone Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

6 Financial assets - Non current investments

		Face Value
Particulars	No. of Shares	Per Share	March 31, 2021	March 31, 2020
(i) Investments in equity instruments
(fully paid-up) (Unquoted)
At cost
Investment In Subsidiaries (wholly owned)
ATS Elgi Limited	90,000	`10/-	180.90	180.90
Elgi Gulf-FZE	150,000	AED 1/-	1.78	1.78
Elgi Equipments (Zhejiang) Limited			485.85	485.85
Less : Impairment			(485.85)	(485.85)
Elgi Compressor Do Brasil IMP.E.EXP.LTDA	356,440	BRL 1/-	–	–
Elgi Equipments Australia PtyLimited	100		0.01	3.53
Elgi Compressors ItalyS.R.L.	2,555,000	€ 1/-	292.64	292.64
Elgi Compressors Europe S.R.L.	50,000	€ 1/-	8.96	–
Elgi Compressors USA Inc. (common stock withoutpar value)	1,000	–	1,057.76	1,057.76
PT Elgi Equipments Indonesia	99.71%	–	19.00	19.00
Ergo Design Private Limited	10,000	` 1/-	0.10	0.10
Adisons Precision Instruments Manufacturing CompanyLimited	1,091,500	` 10/-	125.61	125.61
Industrial Air Compressors PtyLtd	120	AUD 1/-	0.01	0.01
Investment In Joint Ventures
ELGI Sauer Compressors Ltd [Share 26%]	168,994	` 10/-	1.69	1.69
(ii) Investment In Limited Liability Partnership
At cost
Industrial Air Solutions LLP			4.00	4.00

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ELGI EQUIPMENTS LIMITED

STANDALONE FINANCIAL STATEMENTS

Notes to the Standalone Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

6 Financial assets - Non current investments (Continued...)

		Face Value
Particulars	No. of Shares	Per Share	March 31, 2021	March 31, 2020
(iii) Investment in Equity Instruments
(fully paid-up) (Quoted)
At Fair Value through Other Comprehensive
Income
Lakshmi Machine Works Ltd	50	`10/-	0.34	0.12
State Bank of India	3,600	`1/-	1.31	0.71
HDFC Bank Limited	5,000	`1/-	7.47	4.31
Housing Development Finance Corp. Ltd.	12,000	`2/-	29.99	19.56
Magna Electro Castings Ltd [March 31, 2020 : 80,000 shares]	66,454	`10/-	11.41	8.09
Rajshree Sugars & Chemicals Ltd	229,000	`10/-	3.90	3.21
Pricol Ltd [March 31, 2020 : 94,245 shares]	121,172	`1/-	8.49	3.45
L.G.Balakrishnan & Bros.Ltd.	4,992	`10/-	1.53	0.80
LGB Forge Limited	18,720	`1/-	0.07	0.03
Elgi Rubber Company Limited	763,700	`1/-	20.31	8.48
(iv) Investment in Equity Instruments (fully
paid-up) (Unquoted)
At Fair Value through Other Comprehensive
Income
The Mill Ofcers Co-Op Housing Colony Ltd. Ahmedabad	5	`50/-	–*	–*
Total			1,777.28	1,735.78
* amounts are below the rounding of norm adopted by the Company.
Aggregate amount of quoted investments and market value thereof			84.82	48.76
Aggregate amount of unquoted investments			1,692.46	1,687.02
Aggregate amount of impairment in the value of investments			485.85	485.85

The Company assesses the recoverability of carrying value of investments in subsidiaries and joint ventures as per the requirement of Ind AS 36 atleast on an annual basis.

ANNUAL REPORT 2020-21

131

ELGI EQUIPMENTS LIMITED

STANDALONE FINANCIAL STATEMENTS

Notes to the Standalone Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

7 Loans (Non-current)

7 Loans (Non-current)
Particulars	March 31, 2021	March 31, 2020
Unsecured, considered good
Loans to subsidiary (refer note 41 & 50)	515.39	532.91
Loans to employees	50.42	70.77
	565.81	603.68

8 Other financial assets (Non-current)

Security deposits	34.83	60.28
	34.83	60.28

9 Current tax assets/ (Current tax liabilities)

9 Current tax assets/ (Current tax liabilities)
Opening balance	34.32	20.14
Add: Tax paid (net of refund received)- refer note below	191.42	340.88
Less : Current tax payable for the year	(364.83)	(326.70)
Net Current tax assets/ (Current tax liabilities)	(139.09)	34.32

Note: Tax paid for the year ended March 31, 2021 is net of refund received during the year amounting to ` 182.43 million.

10 Other non-current assets

10 Other non-current assets
Capital advances	54.32	51.45
	54.32	51.45

11 Inventories

11 Inventories
(a) Raw materials and components*	910.56	692.68
(b) Work-in-progress	65.50	112.91
(c) Finished goods	246.71	292.95
(d) Stock-in-trade*	99.60	126.58
(e) Stores and spares (including packing materials)*	31.04	44.37
(f) Loose tools*	32.43	32.52
	1,385.84	1,302.01

• Include goods in-transit 123.26 million and 48.77 million as on March 31, 2021 and March 31, 2020, respectively. Note: Raw materials, Work in progress and Finished goods include R&D inventory also.

ANNUAL REPORT 2020-21

132

ELGI EQUIPMENTS LIMITED

STANDALONE FINANCIAL STATEMENTS

Notes to the Standalone Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

12 Trade receivables

12 Trade receivables
Particulars	March 31, 2021	March 31, 2020
Unsecured, considered good	3,301.57	2,558.93
Unsecured, considered doubtful	54.76	35.04
	3,356.33	2,593.97
Less : Allowance for doubtful debts (expected credit loss allowance)	(54.76)	(35.04)
	3,301.57	2,558.93

Note : The trade receivables of the Company do not contain a significant financing component and accordingly, the Company has adopted the simplified approach under Ind AS 109 for recognition of impairment losses on trade receivables. Consequently, the disclosure of trade receivables into “Trade receivables which have significant increase in credit risk” and “Trade receivables - credit impaired” have not been given since it is not relevant to the Company. Also, for receivables from related parties refer note 41.

13 Cash and cash equivalents

13 Cash and cash equivalents
(a) Cash on hand	0.01	0.04
(b) Balance with banks
- In current accounts	40.18	29.84
- In EEFC accounts	–*	2.10
- In deposit accounts (with original maturity of 3 months or less)	695.00	120.00
- In unclaimed dividend account**	7.59	9.52
	742.78	161.50

There are no repatriation restrictions with regard to cash and cash equivalents as at the end of the reporting period and prior periods.

*amount is below the rounding off norm adopted by the Company.

• ** Earmarked for payment of unclaimed dividend.

14 Other bank balances

Other bank balances
- In deposit accounts (with original maturity period of more than 3 months but remaining maturity less of than 12 months)*	859.06	284.25
	859.06	284.25

• Includes margin money deposit of 242.86 million and 224.25 million as at March 31, 2021 and March 31, 2020, respectively.

ANNUAL REPORT 2020-21

133

ELGI EQUIPMENTS LIMITED

STANDALONE FINANCIAL STATEMENTS

Notes to the Standalone Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

15 Deposits with financial institutions

15 Deposits with fnancial institutions
Particulars	March 31, 2021	March 31, 2020
Deposits with Housing Development Finance Corp. Ltd. (HDFC Limited)	305.00	300.00
	305.00	300.00

16 Loans (Current)

16 Loans (Current)
Loans considered good - Unsecured
Loan to subsidiaries (refer note 41 & 50)	10.29	99.36
Loan to employees	49.52	52.75
	59.81	152.11
Loans - credit impaired
Loan to subsidiaries (refer note 41 & 50)	55.35	73.56
	115.16	225.67
Loss allowance	(55.35)	(73.56)
	59.81	152.11

17 Other financial assets

17 Other fnancial assets
Derivatives not designated as hedges
Foreign exchange forward contract	24.57	–
Others
Interest accrued	49.62	17.99
Others	29.76	14.90
	103.95	32.89

18 Other current assets

18 Other current assets
Income / refund receivable	50.34	49.84
Prepaid expenses	76.48	71.12
Balance with Government authorities	53.34	33.09
Rent advances	8.44	11.04
Advance to suppliers	96.64	82.48
Others	41.96	94.94
	327.20	342.51

ANNUAL REPORT 2020-21

134

ELGI EQUIPMENTS LIMITED

STANDALONE FINANCIAL STATEMENTS

Notes to the Standalone Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

19 Equity share capital

(i) Authorised :

Particulars Number of shares (in millions) Amount	Particulars Number of shares (in millions) Amount	Particulars Number of shares (in millions) Amount
Equity shares of`1 each
At April 01, 2019	300	300
Increase during the year	–	–
At March 31, 2020	300	300
Increase during the year	20	20
At March 31, 2021 320 320

(ii) Issued, Subscribed and fully paid up :

Particulars Number of shares (in millions) Equity share capital (par value)	Particulars Number of shares (in millions) Equity share capital (par value)	Particulars Number of shares (in millions) Equity share capital (par value)
Equity shares of`1 each
At April 01, 2019	158.45	158.45
Increase during the year	–	–
At March 31, 2020	158.45	158.45
Issue of bonus shares (refer (iii) below)	158.46	158.46
At March 31, 2021 316.91 316.91

Terms and rights attached to equity shares:

The Company has one class of equity shares having a par value of ` 1/- per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in the case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

(iii) Aggregate number and class of shares allotted as fully paid up by way of bonus shares during the period of five years immediately preceding the reporting date:

Particulars	Number of shares (in millions)	Number of shares (in millions)
	March 31, 2021	March 31, 2020
Equity shares allotted as fully paid up bonus shares by capitalizing a part of the securities premium duringtheyear ended March 31, 2021	158.46	–

On September 28, 2020, the Company alloted bonus equity shares of ` 1/- each, credited as fully paid up equity shares to the holders of the existing equity shares of the Company in the proportion of one equity share of the Company for every one existing equity shares of the Company, by way of capitalizing a part of the securities premium account of the Company.

ANNUAL REPORT 2020-21

135

ELGI EQUIPMENTS LIMITED

STANDALONE FINANCIAL STATEMENTS

Notes to the Standalone Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

19 Equity share capital (Continued...)

Also, the calculation of basic and diluted earnings per share for all periods presented are adjusted retrospectively for the above-mentioned bonus issue.

(iv) Details of shareholders holding more than 5% shares in the Company

Particulars	March 31, 2021 *	March 31, 2020
	Number of shares % holding	Number of shares % holding
Dark Horse Portfolio Investment Limited	51,928,780 16.39%	25,964,390 16.39%
SBI Small Cap Fund	25,879,428 8.17%	14,043,957 8.86%
Mr. Jairam Varadaraj	29,933,216 9.45%	13,705,478 8.65%
Pari Washington India Master Fund, Ltd.	26,419,723 8.34%	13,714,611 8.66%
Gagandeep Credit Capital Pvt. Limited	16,305,150 5.15%	8,152,575 5.15%

*after issue of bonus shares.

Note: In December 2020, Mr. Jairam Varadaraj acquired 25,22,260 equity shares of ` 1/- each of the Company from L.G.B Public Welfare Society by way of inheritance.

20 Other equity

20 Other equity
Particulars	March 31, 2021	March 31, 2020
Reserves & Surplus
Capital reserve	181.41	181.41
Securities premium	250.92	409.37
Statutory reserve	5.49	5.49
General reserve	1,140.60	1,140.60
Share options outstanding account	3.02	0.21
Retained earnings	6,247.48	5,184.71
Treasury stock	(55.44)	(11.40)
Other reserves
FVOCI - Equity instruments	66.81	31.35
	7,840.29	6,941.74
a) Capital reserve
Opening balance	181.41	181.41
Additions during the year	–	–
Deductions/adjustments during the year	–	–
Closing balance	181.41	181.41

ANNUAL REPORT 2020-21

136

ELGI EQUIPMENTS LIMITED

STANDALONE FINANCIAL STATEMENTS

Notes to the Standalone Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

20 Other equity (Continued...)

20 Other equity (Continued...)
Particulars	March 31, 2021	March 31, 2020
b) Securities Premium
Opening balance	409.37	409.37
Additions during the year	–	–
Issue of bonus shares (refer note 19 (iii))	(158.45)	–
Closing balance	250.92	409.37
c) Statutory reserve
Opening balance	5.49	5.49
Additions during the year	–	–
Deductions/adjustments during the year	–	–
Closing balance	5.49	5.49
d) General reserve
Opening balance	1,140.60	1,140.60
Additions during the year	–	–
Deductions/adjustments during the year	–	–
Closing balance	1,140.60	1,140.60
e) Share options outstanding account
Opening balance	0.21	–
Employee stock option expense	2.81	0.21
Closing balance	3.02	0.21
f) Retained earnings
Opening balance	5,184.71	4,677.91
Net proft for the year	1,050.90	1,004.24
Item of other comprehensive income recognised directly in retained
earnings
- Remeasurement of post-employment beneft obligation, net of tax	9.74	(0.02)
-Transfer to retained earnings of gain on FVOCI equity instruments	2.13	–
Appropriations:
Dividend on equity shares (including dividend distribution tax)	–	(497.42)
Closing balance	6,247.48	5,184.71
g) Treasury stock
Opening balance	(11.40)	(11.40)
Purchase of shares for ESOP scheme	(44.04)	–
Closing balance	(55.44)	(11.40)

ANNUAL REPORT 2020-21

137

ELGI EQUIPMENTS LIMITED

STANDALONE FINANCIAL STATEMENTS

Notes to the Standalone Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

20 Other equity (Continued...)

20 Other equity (Continued...)
Particulars	March 31, 2021	March 31, 2020
h) Other Reserves
FVOCI - Equity instruments
Opening balance	31.35	57.39
Change in fair value of FVOCI equity instruments	37.59	(26.04)
Transfer of gain on FVOCI equity instruments	(2.13)	–
Closing balance	66.81	31.35

Nature & purpose of other reserves

Capital reserve

Represents profit of a capital nature which is not available for distribution as dividend.

Securities premium

Securities premium is used to record the premium on issue of shares. The reserve is utilised in accordance with the provisions of Companies Act, 2013.

Statutory reserve

Represents reserve created for statutory purpose not available for distribution as dividend.

General reserve

This is available for distribution to shareholders.

Retained earnings

Company’s share of cumulative earnings since its formation minus the dividends/capitalisation and earnings transferred to general reserve.

Treasury stock

Represents the purchase value of 2,28,064 shares ( 11.40 million) of the Company held by its joint operation and 3,70,000 shares ( 44.04 million) of the Company held by its Elgi Equipments Limited Employee Stock Option Trust.

Share options outstanding account

The share options outstanding account is used to recognise the grant date fair value of options issued to employees under Elgi Equipments Limited Employee Stock Option Plan, 2019.

FVOCI Equity investments

The Company has elected to recognise changes in the fair value of certain investments in equity securities in other comprehensive income. These changes are accumulated within the FVOCI equity investments reserve within equity. The Company transfers amounts from this reserve to retained earnings when the relevant equity securities are derecognised.

21 Provisions (Non-current)

21 Provisions (Non-current)
Particulars	March 31, 2021	March 31, 2020
Provision for compensated absences (Refer note 26(a))	52.64	58.84
	52.64	58.84

ANNUAL REPORT 2020-21

138

ELGI EQUIPMENTS LIMITED

STANDALONE FINANCIAL STATEMENTS

Notes to the Standalone Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

22 Deferred tax (asset)/liabilities (net)

Particulars	March 31, 2021	March 31, 2020
	Deferred tax (asset) Deferred tax liabilities	Deferred tax (asset) Deferred tax liabilities
Depreciation	– 26.21	– 46.23
Right of use assets	– 6.99	– 9.85
Provision for compensated absences	(17.05) –	(20.34) –
Provision for warranty	(22.38) –	(21.87) –
Allowance for doubtful debts	(13.78) –	(8.80) –
Lease liabilities	(7.58) –	(10.28) –
Foreign exchange forward contracts	– 6.18	(11.93) –
VRS	(7.95) –	(1.15) –
Other timingdifferences	– 0.20	(0.34) –
	(68.74) 39.58	(74.71) 56.08
Net deferred tax (asset)/liabilities	(29.16) –	(18.63) –

Movements in deferred tax (assets)/ liabilities

				Allowance			Foreign
		Provision for	Provision	for	Right		exchange		Other
		compensated	for	doubtful	of use	Lease	forward		timing
Particulars	Depreciation	absences	warranty	debts	assets	liabilities	contracts	VRS	differences	Total
At April 01, 2019	93.11	(15.33)	(31.80)	(3.80)	–	–	(1.74)	(2.34)	(3.71)	34.39
Adjustment on adoption of Ind AS 116	–	–	–	–	14.91	(14.91)	–	–	–	–
Restated April 01, 2019	93.11	(15.33)	(31.80)	(3.80)	14.91	(14.91)	(1.74)	(2.34)	(3.71)	34.39
Charged / (credited):
- to profit or loss	(46.88)	(5.01)	9.93	(5.00)	(5.06)	4.63	(10.19)	1.19	3.37	(53.02)
- to other compre-	–	–	–	–	–	–	–	–	–	–
hensive income
At March 31, 2020	46.23	(20.34)	(21.87)	(8.80)	9.85	(10.28)	(11.93)	(1.15)	(0.34)	(18.63)
Charged/(credited):
- to profit or loss	(20.02)	3.29	(0.51)	(4.98)	(2.86)	2.70	18.11	(6.80)	0.54	(10.53)
- to other compre-
hensive income	–	–	–	–	–	–	–	–	–	–
At March 31, 2021	26.21	(17.05)	(22.38)	(13.78)	6.99	(7.58)	6.18	(7.95)	0.20	(29.16)

23 Borrowings (Current)

23 Borrowings (Current)
Particulars	March 31, 2021	March 31, 2020
Packingcredit loans
Secured
- from Banks	–	260.00
Unsecured
- from Banks	1,005.00	715.00
Bills discounted
Unsecured
- from Banks	8.84	–
	1,013.84	975.00

ANNUAL REPORT 2020-21

139

ELGI EQUIPMENTS LIMITED

STANDALONE FINANCIAL STATEMENTS

Notes to the Standalone Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

23 Borrowings (Current) (Continued..)

Secured borrowings and assets pledged as security:

(a) The borrowings from banks as at March 31, 2021 and March 31, 2020 are secured by charges on assets as disclosed on note 47.

(b) The packing credit loans from Bank are repayable within 180 days from the date of borrowing. The borrowings carry an interest rate at six months Repo rate plus agreed spread after reduction of eligible interest subsidy under Interest equalisation scheme of Reserve Bank of India.

There are no defaults in the repayments of above borrowings.

Net debt reconciliation

This section sets out an analysis of net debt and the movements in net debt for each of the periods presented.

	Particulars	March 31, 2021	March 31, 2020
	Current borrowings (refer note 23)	1,013.84	975.00
	Interest accrued and due on borrowings (refer note 25)	0.94	2.50
	Lease liabilities (refer note 3(b))	30.13	40.86
	Cash and cash equivalents (refer note 13)	(742.78)	(161.50)
	Deposits with banks and fnancial institutions (refer 8 & 15)	(1,164.06)	(584.25)
		(861.93)	272.61
	Reconciliation:
	Opening net debt / (net cash)	272.61	(98.91)
	Recognition of lease liabilities on Ind AS 116 transition date, April 01, 2019	–	42.66
	Opening net debt / (net cash) - Restated	272.61	(56.25)
	Cash fows	(1,122.25)	323.10
	Acquisitions- Leases	–	4.62
	Termination of Lease Contracts	(3.92)	–
	Cash outfows relating to payment of lease liabilities	(6.81)	(6.42)
	Interest expense	36.80	43.08
	Interest paid	(38.36)	(40.58)
	Exchange diference	–	5.06
	Closing net debt / (net cash)	(861.93)	272.61
24 Trade payables
	Due to micro enterprises and small enterprises (refer note 45)	432.80	271.48
	Due to creditors other than micro enterprises and small enterprises	1,371.73	1,020.95
		1,804.53	1,292.43

Note : Trade payable to related parties- refer note-41

ANNUAL REPORT 2020-21

140

ELGI EQUIPMENTS LIMITED

STANDALONE FINANCIAL STATEMENTS

Notes to the Standalone Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

25 Other financial liabilities

25 Other fnancial liabilities
Particulars	March 31, 2021	March 31, 2020
Derivatives not designated as hedges
Foreign exchange forward contracts	–	47.41
Others
Interest accrued and due on borrowings	0.94	2.50
Unclaimed dividends	7.59	9.52
Dealer deposits	22.20	22.12
Employee beneft expensespayable*	198.43	167.85
Capital creditors	13.98	39.80
Others	9.25	9.00
	252.39	298.20

• (a) includes short term leave encashments amounting to Nil and 15.56 million as at March 31, 2021 and March 31, 2020, respectively,

• (b) includes compensation payable under Voluntary Retirement Scheme amounting to ` 35.49 million as at March 31, 2021.

26 Provisions

26 Provisions
Provision for Warranty	88.91	86.91
Provision for compensated absences (Refer note 26(a))	15.09	15.50
Provision for Gratuity (Refer Note 26(a))	10.41	21.65
	114.41	124.06

(i) Information about individual provisions and significant estimates

Provision for Warranty

Provision is made for estimated warranty claims in respect of products sold which are still under warranty at the end of the reporting period. These claims are expected to be settled in the next financial year and therefore the time value of money not being material, no adjustment has been warranted. Management estimates the provision based on historical warranty claim information and any recent trends that may suggest future claims could differ from historical amounts.

(ii) Movements in provisions

Movements in each class of provision during the financial year, are set out below:

Particulars	Provision for Warranty
As at April 01, 2020	86.91
Additional provisions recognised	88.91
Amounts used during the year	(86.91)
As at March 31, 2021	88.91

ANNUAL REPORT 2020-21

141

ELGI EQUIPMENTS LIMITED

STANDALONE FINANCIAL STATEMENTS

Notes to the Standalone Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

26(a) Employee benefit obligations

(i) Leave obligations

The leave obligations cover the Company’s liability for earned leave.

The total provision for compensated absences amounts to 67.73 million and 74.34 million for March 31, 2021 & March 31, 2020, respectively.

The provision amount of 15.09 million (March 31, 2020: 15.50 million) is presented as current, since the Company expects to settle the full amount of current leave obligation in the next 12 months.

Also refer note 25 for details on short term leave encashments.

(ii) Defined contribution plans

Provident Fund:

The Company also has certain defined contribution plans. Contributions are made to provident fund in India for employees at the rate of 12% of basic salary as per regulations. The contributions are made to registered provident fund administered by the government. The obligation of the Company is limited to the amount contributed and it has no further contractual nor any constructive obligation.

Superannuation Fund:

The Company contributes a percentage of eligible employees salary towards superannuation fund administered by Elgi Equipments Superannuation Fund and managed by Life Insurance Corporation of India.

The expense recognised during the period towards defined contribution plan is 85.36 million (March 31, 2020 – 85.25 million).

(iii) Post-employment benefit obligations - Gratuity

The Company provides for gratuity for employees in India as per the payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of Gratuity payable on retirement/ termination is the employees last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number of years of service. The gratuity is a funded plan and the Company makes contribution to recognised fund in India. The Company does not fully fund the liability and maintains a target level of funding to be maintained over a period of time based on estimations of expected gratuity payments.

Particulars	Present value of obligation Fair value of plan assets Total
	(A) (B) (A)-(B)
April 01, 2019	247.92 237.35 10.57
Current service cost	21.03 – 21.03
Past service cost	– – –
Interest expense/ income	18.14 17.78 0.36
Total amount recognised in proft or loss	39.17 17.78 21.39

ANNUAL REPORT 2020-21

142

ELGI EQUIPMENTS LIMITED

STANDALONE FINANCIAL STATEMENTS

Notes to the Standalone Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

26(a) Employee benefit obligations (Continued...)

Particulars	Present value of obligation Fair value of plan assets Total
	(A) (B) (A)-(B)
Remeasurements
(Gain)/loss from change in demographic assumptions	(0.25) – (0.25)
(Gain)/loss from change in fnancial assumptions	(5.02) (0.26) (4.76)
Experience (gains)/losses	5.24 0.20 5.04
Total amount recognised in other comprehensive income	(0.03) (0.06) 0.03
Employer contributions	– 10.34 (10.34)
Beneft payments	(18.37) (18.37) –
March 31, 2020	268.69 247.04 21.65
April 01, 2020	268.69 247.04 21.65
Current service cost	22.49 – 22.49
Past service cost	– – –
Interest expense/ income	17.63 16.92 0.71
Total amount recognised in proft or loss	40.12 16.92 23.20
Remeasurements
(Gain)/loss from change in demographic assumptions	– – –
(Gain)/loss from change in fnancial assumptions	6.96 (1.99) 8.95
Experience (gains)/losses	(19.71) 2.26 (21.97)
Total amount recognised in other comprehensive income	(12.75) 0.27 (13.02)
Employer contributions	– 21.42 (21.42)
Beneft payments	(19.00) (19.00) –
March 31, 2021	277.06 266.65 10.41
The net liability disclosed above relates to funded and unfunded plans are as follows:
Particulars March 31, 2021 March 31, 2020
Present value of funded obligations 277.06 268.69
Fair value ofplan assets 266.65 247.04
Defcit of fundedplan 10.41 21.65

ANNUAL REPORT 2020-21

143

ELGI EQUIPMENTS LIMITED

STANDALONE FINANCIAL STATEMENTS

Notes to the Standalone Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

26(a) Employee benefit obligations (Continued...)

(iv) Post-employment benefits

The significant actuarial assumptions were as follows

(iv) Post-employment benefts The signifcant actuarial assumptions were as follows
Particulars	March 31, 2021	March 31, 2020
Discount Rate	6.40%	6.80%
Rate of increase in compensation levels	6.50%	6.50%
Attrition Rate	6.00%	6.00%

(v) Sensitivity Analysis

(v) Sensitivity Analysis
A. Discount Rate + 50 BP	6.90%	7.30%
Defned Beneft Obligation [PVO]	268.42	260.22
B. Discount Rate - 50 BP	5.90%	6.30%
Defned Beneft Obligation [PVO]	286.25	277.69
C. Salary Escalation Rate +50 BP	7.00%	7.00%
Defned Beneft Obligation [PVO]	284.95	276.45
D. Salary Escalation Rate -50 BP	6.00%	6.00%
Defned Beneft Obligation [PVO]	269.56	261.31

The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognised in the balance sheet.

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.

(vi) Major Category of Plan Assets as a % of total Plan Assets

Particulars	March 31, 2021	March 31, 2020
Funds managed by LIC of India	100.00%	100.00%

The expected rate of return on assets is determined based on the assessment made at the beginning of the year on the return expected on its existing portfolio, along with the estimated increment to the plan assets and expected yield on the respective assets in the portfolio during the year.

(vii) Risk exposure

The Company operates the Gratuity Plan through Elgi Equipments Gratuity Fund, which invests in Life Insurance Corporation of India.

Asset Volatility: A large portion of the investment made by the LIC is in government bonds and securities and other approved securities. Hence, the Company is not exposed to the risk of asset volatility as at the balance sheet date.

Changes in bond yield: A decrease in bond yield will increase plan liabilities, although this will be partially offset by an increase in value of plan’s bond holdings.

Inflation Risk: In the pension plans, the pensions in the payment are not linked to inflation, so this is a less material risk.

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ELGI EQUIPMENTS LIMITED

STANDALONE FINANCIAL STATEMENTS

Notes to the Standalone Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

26(a) Employee benefit obligations (Continued...)

(viii) Defined benefit liability and employer contributions

The weighted average duration of the defined benefit obligation is 9.43 years (March 31, 2020 – 9.48 years).

The following payments are expected contribution to defined benefit obligation in the future years.

Particulars	March 31, 2021	March 31, 2020
Within next 12 months (next annual reporting period)	49.89	41.60
Between 1 to 2years	30.17	31.16
Between 2 to 5years	95.60	97.81
Beyond 5years	199.56	205.21
	375.22	375.78

27 Other current liabilities

27 Other current liabilities
Contract liabilities	99.60	91.20
Statutory payable	30.94	30.82
Rental advances received	1.50	1.50
	132.04	123.52

28 Revenue from contracts with customers

28 Revenue from contracts with customers
The Company derives following types of revenue:
-Sale of products	10,556.08	10,396.27
-Sale of services	353.19	298.25
Other operating revenues	92.43	116.92
	11,001.70	10,811.44

Disaggregation of Revenue information:

The table below represents disaggregated revenue from contracts with customers by geography, the Company believes that disaggregation best depicts how the nature and cash flows are effected by industry, market and other economic factors.

other economic factors.
Geography	March 31, 2021	March 31, 2020
India	8,516.43	8,444.24
Outside India	2,485.27	2,367.20
	11,001.70	10,811.44

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ELGI EQUIPMENTS LIMITED

STANDALONE FINANCIAL STATEMENTS

Notes to the Standalone Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

29 Other Income

29 Other Income
Particulars	March 31, 2021	March 31, 2020
Interest income - Bank Deposits	59.76	28.26
Interest income - Others	32.43	23.33
Financialguarantee commission	4.45	–
Dividend income*	10.48	340.86
Proft on sale of assets	0.44	2.67
Share ofproft frompartnershipfrm	4.00	1.50
Rental receipts	19.17	21.80
Provision no longer required written back	18.21	–
Net gain on foreign currency transaction and translation
(other than considered as fnance cost)	75.55	48.24
Miscellaneous income (net)	16.11	27.65
	240.60	494.31

• All dividends from equity investments designated at FVOCI and from investments in subsidiaries and joint venture designated at cost relate to investments held at the end of reporting period. There were no investments derecognised during the reporting period.

30 Cost of material consumed

30 Cost of material consumed
Openingstock of raw materials*	676.29	670.34
Purchases	5,549.38	5,369.59
	6,225.67	6,039.93
Less:
Inventory of materials at the end of the year*	895.20	676.29
	5,330.47	5,363.64

*excluding R & D inventory.

31 Purchases of stock-in-trade

*excluding R & D inventory. 31 Purchases of stock-in-trade	5,330.47	5,363.64
Oil	237.63	252.38
Others	706.56	815.09
	944.19	1,067.47

32 Changes in inventory

32 Changes in inventory
Openinginventory*
-Finishedgoods	269.78	148.05
-Work-in-progress	98.66	35.21
-Stock- in-trade	126.58	121.33
Closinginventory*
-Finishedgoods	228.86	269.78
-Work-in-progress	52.48	98.66
-Stock- in-trade	99.60	126.58
	114.08	(190.43)

*excluding R & D inventory.

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ELGI EQUIPMENTS LIMITED

STANDALONE FINANCIAL STATEMENTS

Notes to the Standalone Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

33 Employee benefit expenses

33 Employee beneft expenses
Particulars	March 31, 2021	March 31, 2020
Salaries, wages and bonus	1,313.06	1,392.44
Contribution to Provident fund & Superannuation scheme	85.36	85.25
Gratuity(refer note 26(a))	23.20	21.39
Employee stock option expense (refer note 42)	1.60	0.13
VoluntaryRetirement scheme (VRS)	36.85	–
Staf welfare expenses	103.06	132.11
	1,563.13	1,631.32

Note: For managerial remuneration refer note 41.

34 Finance costs

34 Finance costs
Interest expenses- related to lease liabilities	2.89	4.04
Interest expenses- on other fnancingarrangements	33.91	39.04
	36.80	43.08

35 Depreciation and amortisation expense

35 Depreciation and amortisation expense
Depreciation ofproperty,plant and equipment	327.18	336.43
Depreciation on investmentproperties	0.45	0.49
Depreciation of right of use assets	7.46	8.14
Amortisation of intangible assets	18.20	21.46
	353.29	366.52

36 Other expenses

36 Other expenses
Packing& forwarding	136.01	125.79
Consumption of stores	60.98	61.69
Tools consumed	45.68	50.74
Commission	75.58	89.98
Repairs and maintenance
Building	26.14	41.89
Plant and machinery	41.87	49.28
Others	22.97	24.70
Communication expenses	12.55	15.95
Power and fuel	133.30	151.46
Transport charges	290.89	205.67
Travelling& conveyance	53.36	142.26
Insurance	15.82	11.47
Advertisement &publicity	26.84	59.82
Printingand stationery	6.93	11.47
Research & Development material cost (refer note 48)	67.60	69.53

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ELGI EQUIPMENTS LIMITED

STANDALONE FINANCIAL STATEMENTS

Notes to the Standalone Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

36 Other expenses (Continued...)

36 Other expenses (Continued...)
Particulars	March 31, 2021	March 31, 2020
After sales expenses	125.47	145.77
Factory expenses	15.02	19.12
Rates and taxes	7.89	11.13
Payment to the auditors (refer note 36(a) below)	5.25	3.30
Subscription & membership	5.32	5.96
CSR expenses (refer note 36(b) below)	23.73	21.10
Rent	15.39	19.01
Legal and consultancy charges	172.79	256.45
Directors' sitting fees	2.86	2.08
Bank charges	8.55	8.52
Excise duty	–	0.99
Assets condemned & written of	0.26	1.83
Bad debts written of & Provision for doubtful advances and debts	23.27	35.94
Miscellaneous expenses	76.10	103.32
	1,498.42	1,746.22

36(a) Details of payment to auditors

36(a) Details of payment to auditors
Payment to auditors
-audit fees	3.65	2.10
-limited review	1.05	0.75
-other services	0.30	0.20
-reimbursement of out ofpocket expenses	0.25	0.25
	5.25	3.30

36(b) Corporate Social responsibility expenditure

36(b) Corporate Social responsibility expenditure
Contribution to LRG Foundation	23.00	12.88
Contribution to PM Cares- COVID19 Fund	–	5.00
Contribution to Others	0.73	3.22
	23.73	21.10
Amount required to be spent as per Section 135 of the Companies Act, 2013	23.73	21.10
Amount spent during the year on
(i) Construction/ acquisition of asset	–	–
(ii) On purposes other than (i) above	23.73	21.10

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ELGI EQUIPMENTS LIMITED

STANDALONE FINANCIAL STATEMENTS

Notes to the Standalone Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

37 Income tax expense

37 Income tax expense
Particulars	March 31, 2021	March 31, 2020
(a) Income tax expense
Current tax
Current tax on profts for the year	361.55	326.71
Total current tax expense	361.55	326.71
Deferred tax
Decrease (increase) in deferred tax assets	6.17	(6.14)
(Decrease) increase in deferred tax liabilities	(16.70)	(46.88)
Total deferred tax expense/(beneft)	(10.53)	(53.02)
Income tax expense	351.02	273.69
(b) Reconciliation of tax expense and the accounting proft
multiplied byIndia’s tax rate
Proft from operations before income tax expense	1,401.92	1,277.93
Tax at the Indian tax rate of 25.168% (2019-2020 – 25.168%)	352.84	321.63
Tax efect of amounts which are not deductible (taxable) in
calculatingtaxable income:
Provision no longer required written back	(4.58)	–
Dividend Income from equity instruments exempt u/s 10(34)	–	(18.37)
Corporate social responsibility expenditure (net of 80G beneft)	3.02	2.66
Deduction u/s 24 of IT Act (Income from house property)	(1.33)	(1.65)
Diferential tax rate on Foreign dividend received	–	(20.62)
Diferential impact on remeasurement of deferred tax on adoption of new tax rate	–	(9.60)
Share of proft from Partnership frms exempt u/s 10(2A)	(1.01)	(0.38)
Others	2.08	0.02
Income tax expense	351.02	273.69

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149

ELGI EQUIPMENTS LIMITED

STANDALONE FINANCIAL STATEMENTS

Notes to the Standalone Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

38 Fair value measurements

Financial instruments by category
Particulars	March 31, 2021	March 31, 2020
	FVTPL FVOCI Amortised cost	FVTPL FVOCI Amortised cost
Financial assets Investments
- Equity instruments*	– 84.82 –	– 48.76 –
Loans	– – 625.62	– – 755.79
Trade receivables	– – 3,301.57	– – 2,558.93
Cash and bank balances	– – 1,601.84	– – 445.75
Deposits with fnancial institutions	– – 305.00	– – 300.00
Derivative fnancial assets	24.57 – –	– – –
Security deposits	– – 34.83	– – 60.28
Others	– – 79.38	– – 32.89
Total fnancial assets	24.57 84.82 5,948.24	- 48.76 4,153.64
Financial liabilities Borrowings	– – 1,013.84	– – 975.00
Trade payables	– – 1,804.53	– – 1,292.43
Dealer deposits	– – 22.20	– – 22.12
Derivative fnancial liabilities	– – –	47.41 – –
Employee beneft expenses payable	– – 198.43	– – 167.85
Capital creditors	– – 13.98	– – 39.80
Others	– – 17.78	– – 21.02
Total fnancial liabilities	– – 3,070.76	47.41 – 2,518.22

• excluding investments in subsidiaries and joint ventures.

The equity securities which are not held for trading, and for which the Company has made an irrecovable election at initial recognition to recognise changes in fair value through OCI rather than profit or loss as these are strategic investments and the Company considers this to be more relevant.

(i) Fair value hierarchy

This section explains the judgements and estimates made in determining the fair values of the financial instruments that are (a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows underneath the table.

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ELGI EQUIPMENTS LIMITED

STANDALONE FINANCIAL STATEMENTS

Notes to the Standalone Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

38 Fair value measurements (Continued...)

Financial assets and liabilities measured at fair value - recurring fair value measurements

As at March 31, 2021	Notes	Level 1	Level 2	Level 3	Total
Financial assets
Derivatives not designated as hedges
Foreign exchange forward contracts	17	–	24.57	–	24.57
Financial Investments at FVOCI:
Quoted equityinvestments	6	84.82	–	–	84.82
Unquoted equityinvestments	6	–	-	– *	–
Total fnancial assets		84.82	24.57	–	109.39
* amounts are below the rounding of norm adopted by the		Company.
Assets and liabilities which are measured at amortised cost for which fair			values are disclosed
As at March 31, 2021	Notes	Level 1	Level 2	Level 3	Total
Loans
Loans to subsidiairies	7	–	–	515.39	515.39
Loans to employees	7, 16	–	–	99.94	99.94
Securitydeposits	8	–	–	34.83	34.83
Total fnancial assets		–	–	650.16	650.16

Financial assets and liabilities measured at fair value - recurring fair value measurements

As at March 31, 2020	Notes	Level 1	Level 2	Level 3	Total
Financial assets
Financial Investments at FVOCI:
Quoted equityinvestments	6	48.76	–	–	48.76
Unquoted equityinvestments	6	–	–	– *	–
Total fnancial assets		48.76	–	–	48.76
Financial liabilities
Derivatives not designated as hedges
Foreign exchange forward contracts	25	–	47.41	–	47.41
Total fnancial liabilities		–	47.41	–	47.41
* amounts are below the rounding of norm adopted by the		Company.
Assets and liabilities which are measured at amortised cost for which fair			values are disclosed
As at March 31, 2020	Notes	Level 1	Level 2	Level 3	Total
Financial assets
Loans
Loans to subsidiairies	7	–	–	532.91	532.91
Loans to employees	7, 16	–	–	123.52	123.52
Securitydeposits	8	–	–	60.28	60.28
Total fnancial assets		–	–	716.71	716.71

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ELGI EQUIPMENTS LIMITED

STANDALONE FINANCIAL STATEMENTS

Notes to the Standalone Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

38 Fair value measurements (Continued...)

Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This consists of listed equity instruments, that have quoted price. The fair value of all equity instruments which are traded in the stock exchanges is valued using the closing price as at the reporting period.

Level 2: The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for deposits included in level 3.

There are no transfers between level 1, level 2 and level 3 during the year.

The Company’s policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period.

(ii) Valuation technique used to determine fair value

Specific valuation techniques used to value financial instruments include:

• -the use of quoted market prices or dealer quotes for similar instruments

• the fair value of forward foreign exchange contracts is determined using forward exchange rates at the balance sheet date

• -the fair value of the remaining financial instruments is determined using discounted cash flow analysis.

(iii) Fair value of financial assets and liabilities measured at amortised cost

Particulars	March 31, 2021	March 31, 2020
	Carrying amount Fair value	Carrying amount Fair value
Financial assets Loans
Loan to Subsidiaries	515.39 515.39	532.91 532.91
Loans to employees	99.94 99.94	123.52 123.52
Security deposits	34.83 34.83	60.28 60.28
Total fnancial assets	650.16 650.16	716.71 716.71

The carrying amounts of trade receivables, trade payables, cash and bank balances, deposits with financial institutions, current loans to subsidiaries, borrowings and other current financial liabilities and financial assets are considered to be the same as their fair values, due to their short-term nature.

The fair values for non-current loan to subsidiaries, loans to employees were calculated based on cash flows discounted using a current lending rate. They are classified as level 3 fair values in the fair value hierarchy due to the inclusion of unobservable inputs including counterparty credit risk. The security deposits are payable on demand and hence their carrying amount is considered as fair value.

For financial assets and liabilities that are measured at fair value, the carrying amounts are equal to the fair values.

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ELGI EQUIPMENTS LIMITED

STANDALONE FINANCIAL STATEMENTS

Notes to the Standalone Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

39 Financial risk management

The Company’s activities expose it to market risk, liquidity risk and credit risk.

This note explains the sources of risk which the entity is exposed to and how the entity manages the risk and the impact of hedge accounting in the financial statements.

Risk	Exposure arising from	Measurement Management
Credit risk	Cash and cash equivalents, deposit with fnancial institutions, trade receivables, loan to subsidiaries, derivative fnancial instruments, fnancial assets measured at amortised cost.	Ageing analysis, Credit ratings Diversifcation of Bank / Financial institutions deposits, credit limits and letters of credit. Investment guidelines for debt investment.
Liquidity risk	Borrowings and other liabilities	Rolling cash fow forecasts Availability of committed credit lines and borrowingfacilities
Market risk – foreign exchange	Recognised fnancial assets and liabilities not denominated in Indian rupee (INR)	Cash fow forecasting Sensitivity analysis Forward foreign exchange contracts
Market risk – security prices	Investments in equity securities	Sensitivity analysis Portfolio diversifcation

The Company’s risk management is carried out by a central treasury department under policies approved by the board of directors. Company’s treasury identifies, evaluates and hedges financial risks in close co-operation with the Company’s operating units. The board provides written principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.

(a) Credit risk

Credit risk arises from cash and cash equivalents, contractual cash flows from debt instruments carried at amortised cost, favourable derivative financial instruments and deposits with banks and financial institutions, as well as credit exposures to customers including outstanding receivables.

(i) Credit risk management

For banks and financial institutions, only high rated banks/institutions are accepted.

The Company assesses the credit quality of the customer, taking into account its financial position, past experience and other factors. Individual risk limits are set based on internal and external ratings in accordance with the limits set by the Company. The finance function consists of a separate team who assess and maintain an internal credit rating system. The compliance with the credit limits by customers is regularly monitored by the finance function.

The Company’s debt investments are considered to be low risk investments. The credit ratings of the investments are monitored for credit deterioration.

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ELGI EQUIPMENTS LIMITED

STANDALONE FINANCIAL STATEMENTS

Notes to the Standalone Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

39 Financial risk management (Continued...)

(ii) Security

For some trade receivables, the Company may obtain security in form of guarantees, deeds of undertaking or letter of credit, which can be called upon if counter party is in default under the terms of the agreement. However, the Company has not obtained any such securities for its trade receivables outstanding at the reporting date.

(iii) Impairment of financial assets

The Company assigns the following internal credit ratings to each class of financial assets based on the assumptions, inputs and factors specific to the class of the financial asset. The Company provides for expected credit loss based on the following:

the following:
Internal rating Category Description of category	Basis for recognition of expected credit loss provision
	Investments Loans and deposits Trade receivables
C1 High quality assets, negligible credit risk Assets where the counter- party has strong capacity to meet the obligations and where the risk of default is negligible or nil	12-month expected credit losses 12-month expected credit losses Life-time expected credit losses (simplifed approach)
C2 Doubtful assets, credit impaired Assets are written of when there is no reasonable expectation of recovery, such as a debtor declaring bankruptcy or failing to engage in a repayment plan with the Company. Where loans or receivables have been written of, the Company continues to engage in enforcement activity to attempt to recover the receivable due. Where recoveries are made, these are recognised inproft or loss.	Asset is written of

For the years ended March 31, 2021 and March 31, 2020

(a) Expected credit loss for loans, security deposits and investments.

The estimated gross carrying amount at default is ` 541.20 million (March 31, 2020: 559.41 million) for Investments and loans and deposits. There is no expected credit loss recognised for the year ended March 31, 2021 and March 31, 2020.

(b) Expected credit loss for trade receivables under simplified approach.

Customer credit risk is managed by the Company based on the Company’s established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on an internal credit rating system. Outstanding customer receivables are regularly monitored and assessed for its recoverability.

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ELGI EQUIPMENTS LIMITED

STANDALONE FINANCIAL STATEMENTS

Notes to the Standalone Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

39 Financial risk management (Continued...)

An impairment analysis is performed at each reporting date on an individual basis for major clients. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed in Note 12. The Company evaluates the concentration of risk with respect to trade receivables as low, as its customers has sufficient capacity to meet the obligations and the risk of default is negligible.

(iv) Reconciliation of loss allowance provision – Trade receivables

Loss allowance on April 01, 2019	10.89
Changes in loss allowance	24.15
Loss allowance on March 31, 2020	35.04
Changes in loss allowance	19.72
Loss allowance on March 31, 2021	54.76

(b) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying businesses, Company treasury maintains flexibility in funding by maintaining availability under committed credit lines. Management monitors rolling forecasts of the Company’s liquidity position (comprising the undrawn borrowing facilities below) and cash and cash equivalents on the basis of expected cash flows.

(i) Financing arrangements

The Company had access to the following undrawn borrowing facilities at the end of the reporting period:

Particulars	March 31, 2021	March 31, 2020
Floating rate
Expiringwithin oneyear (includingother facilities)	2,055.82	1.887.50

The credit facility sanctioned by the banks are subject to renewal every year.

Subject to the continuance of satisfactory credit ratings, the bank loan facilities may be drawn at any time in INR and can be renewed for further period of 1 year.

(ii) Maturities of financial liabilities

The tables below analyse the Company’s financial liabilities into relevant maturity groupings based on their contractual maturities for:

a) all non-derivative financial liabilities, and

b) net and gross settled derivative financial instruments for which the contractual maturities are essential for an understanding of the timing of the cash flows.

The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.

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ELGI EQUIPMENTS LIMITED

STANDALONE FINANCIAL STATEMENTS

Notes to the Standalone Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

39 Financial risk management (Continued...)

Contractual maturities of financial liabilities:

Particulars	Less than 3 months	3 months to 6 months	6 months to 1year	Between 1 and 2years	Between 2 and 5years	Total
March 31, 2021
Non-derivatives
Borrowings	623.84	390.00	–	–	–	1,013.84
Lease liabilities	1.53	1.56	3.23	6.92	16.89	30.13
Trade payables	1,804.53	–	–	–	–	1,804.53
Other fnancial liabilities	252.39	–	–	–	–	252.39
Total non-derivative liabilities	2,682.29	391.56	3.23	6.92	16.89	3,100.89
Derivatives (net settled)	–	–	–	–	–	–
Total derivative liabilities	–	–	–	–	–	–
March 31, 2020
Non-derivatives
Borrowings	400.00	575.00	–	–	–	975.00
Lease liabilities	1.73	1.78	3.16	8.53	25.66	40.86
Trade payables	1,292.43	–	–	–	–	1,292.43
Other fnancial liabilities	250.79	–	–	–	–	250.79
Total non-derivative liabilities	1,944.95	576.78	3.16	8.53	25.66	2,559.08
Derivatives (net settled)	22.42	24.92	0.07	–	–	47.41
Total derivative liabilities	22.42	24.92	0.07	–	–	47.41

(c) Market risk

(i) Foreign currency risk

The Company operates internationally and is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the USD, EUR and AUD. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the Company’s functional currency (INR). The risk is measured through a forecast of highly probable foreign currency cash flows.

(Amounts in million in respective currencies)

Particulars	March 31,2021	March 31,2020
	USD EUR AUD	USD EUR AUD
Financial assets
Trade receivables	10.69 6.27 2.40	9.08 2.56 1.66
Loans	7.45 0.12 –	7.13 0.12 1.98
Cash and Cash equivalent	– * – –	– 0.03 –
Net exposure to foreign currency risk (assets)	18.14 6.39 2.40	16.21 2.71 3.64
Financial liabilities
Foreign currency loan	– – –	– – –
Trade payables	0.52 0.53 –	0.36 0.33 –
Net exposure to foreign currency risk (liabilities)	0.52 0.53 –	0.36 0.33 –

• amounts are below the rounding off norm adopted by the Company.

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ELGI EQUIPMENTS LIMITED

STANDALONE FINANCIAL STATEMENTS

Notes to the Standalone Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

39 Financial risk management (Continued...)

Sensitivity

The sensitivity of profit or loss to changes in the exchange rates arises mainly from foreign currency denominated financial instruments.

The sensitivity of proft or loss to changes in the exchange rates arises fnancial instruments.	mainly from foreign currency denominated	mainly from foreign currency denominated
Particulars	Impact onproft after tax (in INR million)*
	March 31, 2021	March 31, 2020
USD sensitivity
INR/USD increases by5%	48.20	44.83
INR/USD decreases by5%	(48.20)	(44.83)
EURO sensitivity
INR/EURO increases by5%	18.80	7.42
INR/EURO decreases by5%	(18.80)	(7.42)
AUD sensitivity
INR/AUD increases by5%	4.99	6.25
INR/AUD decreases by5%	(4.99)	(6.25)

• amount in bracket represents losses.

(ii) Price risk

The Company’s exposure to equity securities price risk arises from investments held by the Company and classified in the balance sheet as fair value through OCI.

To manage its price risk arising from investments in equity securities, the Company diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the Company.

Sensitivity

The table below summarises the impact of increases/decreases of the index on the Company’s equity and total comprehensive income for the period. The analysis is based on the assumption that the equity index had increased by 5% or decreased by 5% with all other variables held constant, and that all the Company’s equity instruments moved in line with the index.

line with the index.
Particulars	Impact on other components of equity
	March 31, 2021	March 31, 2020
NSE Nifty50 – increase 5%	4.24	2.44
NSE Nifty50 – decrease 5%	(4.24)	(2.44)

Other components of equity would increase/decrease as a result of gains/losses on equity securities classified as fair value though other comprehensive income.

ANNUAL REPORT 2020-21

157

ELGI EQUIPMENTS LIMITED

STANDALONE FINANCIAL STATEMENTS

Notes to the Standalone Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

40 Capital management

(a) Risk management

The Company’s objectives when managing capital are to

• z provide returns for shareholders and benefits for other stakeholders, and

• z maintain an optimal capital structure to reduce the cost of capital.

Consistent with others in the industry, the Company monitors capital on the basis of the following gearing ratio:

Net debt (total borrowings and lease liabilities net of cash and cash equivalents and deposits with banks and financial institutions) divided by Total ‘equity’ (as shown in the balance sheet).

The current gearing ratio of the Company is as follows:

Particulars	March 31, 2021	March 31, 2020
Net debt (refer note 23)	–	272.61
Total equity	8,157.20	7,100.19
Net debt to equityratio	–	3.84%

(i) Loan covenants

The Company has complied with all the loan covenants throughout the reporting period.

(b) Dividends

(b) Dividends
Particulars	March 31, 2021	March 31, 2020
(i) Equityshares
Final dividend for theyear ended March 31, 2019	–	205.99
DDT on final dividend	–	30.32
Interim dividend for theyear ended March 31, 2020	–	261.44
DDT on interim dividend	–	–

(ii) Dividends not recognised at the end of the reportingperiod

Subsequent to the year end the directors have recommended the payment of a final dividend of ` 0.80 per fully paid equity share. This – 253.53 proposed dividend is subject to the approval of shareholders in the ensuing annual general meeting.

ANNUAL REPORT 2020-21

158

ELGI EQUIPMENTS LIMITED

STANDALONE FINANCIAL STATEMENTS

Notes to the Standalone Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

41 Related party transactions

(a) Name of the related parties and nature of relationship:

(i) Where control exists:

Subsidiaries

Name of entity Place of business	Ownershipinterest held bythe Company March 31, 2021 March 31, 2020 Principal Activities % %
ATS Elgi Limited India	100 100 Manufacture and trading of automotive equipments
Elgi Equipments (Zhejiang) Limited China	100 100 Trading of air compressors
Elgi Gulf FZE U.A.E.	100 100 Tradingof air compressors
Elgi Gulf Mechanical and Engineering Equipment TradingLLC U.A.E.	100 100 Trading of air compressors
Elgi Compressors Do Brasil Imp.E.ExpLTDA Brazil	100 100 Assembly and trading of air compressors
Elgi Equipments Australia Pty Limited Australia	100 100 Trading of air compressors
Elgi Compressors Italy S.R.L Italy	100 100 Manufacture and trading of compressors
Rotair SPA Italy	100 100 Manufacture and trading of compressors,hydraulic hammers and rampi cars
Elgi Compressors Europe S.R.L Belgium	100 100 Tradingof air compressors
Elgi Compressors Iberia S.L. Spain	100 100 Tradingof air compressors
Elgi Compressors Nordics (refer note (a) below) Sweden	100 – Trading of air compressors
Elgi Compressors Eastern Europe sp. z.o.o.(refer note (b) below) Poland	100 – Trading of air compressors
Elgi Compressors UK and Ireland Limited (refer note (c) below) United Kingdom	100 – Trading of air compressors
Elgi Compressors France SAS (refer note (d) below) France	100 – Trading of air compressors
Elgi Compressors USA Inc. USA	100 100 Tradingof air compressors
Patton's Inc USA	100 100 Tradingof air compressors
Patton's Medical LLC. USA	100 100 Marketing and sale of compressed air systems and vacuum pumps for medical applications

ANNUAL REPORT 2020-21

159

ELGI EQUIPMENTS LIMITED

STANDALONE FINANCIAL STATEMENTS

Notes to the Standalone Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

41 Related party transactions (Continued...)

Name of entity Place of business	Ownershipinterest held bythe Company March 31, 2021 March 31, 2020 Principal Activities % %
Michigan Air Solutions USA	100 100 Tradingof air compressors
Industrial Air Compressors Pty Ltd Australia	100 100 Trading of air compressors
F.R. Pulford & Son Pty Limited Australia	100 100 Trading of air compressors, nitrogen systems, altitude trainingsystems
Advanced Air Compressors Pty Ltd Australia	100 100 Trading of air compressors
Adisons Precision Instruments Manufacturing Company Limited India	100 100 Renting out of property
PT Elgi Equipments Indonesia Indonesia	100 100 Tradingof air compressors
Elgi Compressors (M) SDN. BHD. (refer note (e) below) Malaysia	100 – Trading of air compressors
Ergo Design Private Limited India	100 100 Design services

Notes:

• a) In September 2020, the Company through its wholly owned subsidiary Elgi Compressors Europe S.R.L incorporated a wholly owned subsidiary Elgi Compressors Nordics in Sweden.

• b) In December, 2020, the Company through its wholly owned subsidiary Elgi Compressors Europe S.R.L incorporated a wholly owned subsidiary Elgi Compressors Eastern Europe sp. z.o.o. in Poland.

• c) In February 2021, the Company through its wholly owned subsidiary Elgi Compressors Europe S.R.L incorporated a wholly owned subsidiary Elgi Compressors UK and Ireland Limited in United Kingdom.

• d) In February, 2021, the Company through its wholly owned subsidiary Elgi Compressors Europe S.R.L incorporated a wholly owned Elgi Compressors France SAS in France.

• e) In March, 2021, the Company incorporated a wholly owned subsidiary Elgi Compressors (M) SDN. BHD. in Malaysia.

ANNUAL REPORT 2020-21

160

ELGI EQUIPMENTS LIMITED

STANDALONE FINANCIAL STATEMENTS

Notes to the Standalone Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

41 Related party transactions (Continued...)

(ii) Other related parties with whom transactions have taken place during the year

Joint venture		Elgi Sauer Compressors Limited
		Industrial Air Solutions LLP
		Evergreen Compressed Air and Vacuum LLC (jointly controlled entity of Elgi Compressors USA Inc.)
		Compressed Air Solutions of Texas, LLC (jointly controlled entity of Elgi Compressors USA Inc.)
		PLA HoldingCompanyLLC.(jointlycontrolled entityof Elgi Compressors USA Inc.)
		Patton’s Of California LLC.(whollyowned subsidiaryof PLA HoldingCompanyLLC)
		G3 Industrial Solutions,LLC.(jointlycontrolled entityof Elgi Compressors USA Inc.)
Post employment beneft plan (Refer note 26 (a))		Elgi Equipments GratuityFund
		Elgi Equipments Superannuation Fund
Employee stock optionplan		Elgi Equipments Limited Employees Stock Option Trust
Key management personnel		Mr. Jairam Varadaraj,ManagingDirector,Elgi Equipments Limited
		Mr. Ragunathan Gunabooshanam, Chief Financial Ofcer, Elgi Equipments Limited [Till October 22, 2020]
		Mr. Jayakanthan R, Chief Financial Ofcer, Elgi Equipments Limited [with efect from October 23,2020]
		Mr. Ragunathan K, Company Secretary [with efect from June 29, 2020]
		Non-Executive Directors Mr. N. Mohan Nambiar
		Dr. T.Balaji Naidu
		Mr. B. Vijaykumar
		Mr. Sudarsan Varadaraj
		Dr. Ganesh Devaraj
		Mr. M. Ramprasad
		Mr. Harjeet Singh Wahan
		Ms. Aruna Thangaraj
		Mr. Anvar Jay Varadaraj (Appointed with efect from April, 01, 2020)
Other companies / frms in which directors or their relatives are interested		L.G. Balakrishnan & Bros Limited
		Elgi Ultra Industries Limited
		Elgi Ultra Limited
		Ellargi & Co
		Elgi Rubber CompanyLimited
		LGB Forge Limited
		Pricol Travels Limited
		Festo Controls Private Limited
		Magna Electro Castings Limited
		LGB Fuel Systems Private Limited
		AGT Electronics Limited
		Super Transports Private Limited
		Elgi Automotive Services Private Limited

ANNUAL REPORT 2020-21

161

ELGI EQUIPMENTS LIMITED

STANDALONE FINANCIAL STATEMENTS

Notes to the Standalone Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

41 Related party transactions (Continued...)

Details of Joint Ventures

The Company has 26% interest in Joint venture called Elgi Sauer Compressors Limited which was set up as Company together with JP Sauer & Sohn Maschinenbau GMBH in India, to sell compressors and their parts along with rendering engineering services.

The Company has 50% share in Industrial Air Solutions LLP which was set up as Limited liability partnership in India with Mr. Rajeev Sharma, for distribution of products of Elgi Equipments Limited.

The Company through its wholly owned subsidiary Elgi Compressors USA Inc, has set up a joint venture called Evergreen Compressed Air and Vacuum LLC, with Mr.Michael Keim for a share of 50% each. The joint venture is having registered office at Seattle, USA and will be the distributor of products of Elgi Equipments Limited.

In May 2020, the Company through its wholly owned subsidiary Elgi Compressors USA Inc, has set up a joint venture called Compressed Air Solutions of Texas, LLC, with Mr.Bryan Becker for a share of 50% each. The joint venture is a distributor of products for compressed air systems mainly in the state of Texas.

In September 2020, the Company through its wholly owned subsidiary Elgi Compressors USA Inc, has set up a joint venture called PLA Holding Company, LLC, with Mr. Jeffery Brandon Todd for a share of 50% each. The joint venture was formed in the state of North Carolina. PLA Holding Company, LLC, wholly owns Pattons of California, LLC, a California Company which is a distributor of products for compressed air systems mainly in the state of California.

In October 2020, the Company through its wholly owned subsidiary Elgi Compressors USA Inc, has set up a joint venture called G3 Industrial Solutions, LLC, with Mr.Chad Gooding and Mr.Luke Johnson for a share of one third for each. The joint venture is a distributor of products for compressed air systems mainly in the states of Kansas city and Missouri.

Details of Joint Operations

The Company has 98% interest in a joint arrangement called L.G. Balakrishnan & Bros (Firm) which was set up as partnership firm in India together with Elgi Ultra Industries Limited to earn rental income.

The Company has 80% interest in a Joint arrangement called ELGi Services which was set up as partnership firm in India together with Elgi Ultra Industries Limited.

ANNUAL REPORT 2020-21

162

ELGI EQUIPMENTS LIMITED

STANDALONE FINANCIAL STATEMENTS

Notes to the Standalone Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

41 Related party transactions (Continued...)

(b) Particulars of transactions with related parties

The following transactions occurred with related parties:

Description	Subsidiaries	Joint Venture & Others	Key Management Personnel
	2020-21 2019-20	2020-21 2019-20	2020-21 2019-20
Purchase ofgoods	79.04 88.72	14.52 21.65	– –
Sale ofgoods	1,673.79 1,482.66	240.11 235.25	– –
Receivingservices	6.47 12.88	9.74 18.23	– –
Providingservices	24.65 25.06	10.02 10.35	– –
Payment for business acquisition	– –	– 34.50	– –
Loans
- Given to relatedparties	– 620.98	– –	– –
Repayment of Loans
- Given to relatedparties	128.74 105.38	– –	– –
Interest
- Received from related parties	26.64 12.56	– 0.38	– –
Reimbursement of expenses
- To relatedparties	66.81 55.26	2.38 1.65	– –
- Byrelatedparties	99.92 38.13	0.41 –	– –
Investments	8.96 15.76	– –	– –
Proceeds from buy back of FVOCI Equityinstruments	– –	2.37 –	– –
Dividend
- Received from related parties	– 326.38	14.22 15.72	– –
- Paid to relatedparties	– –	– 23.67	– –
Key management personnel compensation*
Short-term employee benefts	– –	– –	33.14 32.90
Other long-term benefts	– –	– –	1.88 1.46

*The above Key management personnel compensation does not include gratuity since the same is computed actuarially for all the employees and amount attributable to key management personnel cannot be ascertained separately. The remuneration paid to the Managing Director amounting to ` 15.62 million is in accordance with the provisions of Section 197 read with schedule V to the Companies Act, 2013.

ANNUAL REPORT 2020-21

163

ELGI EQUIPMENTS LIMITED

STANDALONE FINANCIAL STATEMENTS

Notes to the Standalone Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

41 Related party transactions (Continued...)

(c) Outstanding balances

The following balances are outstanding at the end of the reporting period in relation to transactions with related parties:

parties:
Description	Subsidiaries	Joint Venture & Others
	March 31, 2021 March 31, 2020	March 31, 2021 March 31, 2020
Payable at the end of the year	67.58 29.68	6.50 3.90
Total payables to related parties	67.58 29.68	6.50 3.90
Trade receivable at the end of the year	1,368.85 861.47	35.23 44.10
Other receivables at the end of the year	2.38 3.78	7.33 3.04
Loans receivable at the end of the year	581.03 705.83	– –
Interest accrued on the loans at the end of theyear	30.56 9.07	– –
Total receivables from related parties	1,982.82 1,580.15	42.56 47.14

An allowance of 55.35 million as at March 31, 2021 (March 31, 2020: 73.56 million) has been recognised in respect of loans to related parties and an allowance of 0.73 million as at March 31, 2021 (March 31, 2020: 0.73 million) has been recognised in respect of Interest accrued on loans to related parties.

(d) Terms and conditions

Transactions relating to dividends, subscriptions for new equity shares were on the same terms and conditions that applied to other shareholders.

ANNUAL REPORT 2020-21

164

ELGI EQUIPMENTS LIMITED

STANDALONE FINANCIAL STATEMENTS

Notes to the Standalone Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

41A Details of material transactions with related parties

(i) Transactions during the year
Particulars	Subsidiaries	Joint ventures & Others
	2020-21 2019-20	2020-21 2019-20
Purchase ofgoods
ATS Elgi Limited	68.81 78.34	– –
LGB Forge Limited	– –	9.53 13.59
Sale ofgoods
Elgi Gulf FZE	178.90 278.41	– –
Elgi Compressors Do Brasil Imp.E.ExpLTDA	62.92 76.99	– –
Elgi Equipments Australia PtyLimited	229.12 139.50	– –
Rotair SPA	618.76 415.80	– –
Elgi Compressors USA Inc.	556.32 511.29	– –
PT Elgi Equipments Indonesia	25.59 53.67	– –
Industrial Air Solutions LLP	– –	231.83 215.69
LGB Forge Limited	– –	3.71 8.69
Elgi Sauer Compressors Limited	– –	4.55 3.20
Receivingservices
Ergo Design Private Limited	5.91 7.68	– –
AGT Electronics Limited	– –	4.32 12.89
Providingservices
ATS Elgi Limited	24.65 25.06	– –
Elgi Sauer Compressors Limited	– –	4.29 5.56
Elgi Ultra Industries Limited	– –	4.20 0.99
Business acquisition
Elgi Ultra Industries Limited	– –	– 34.50
Loans- Given to relatedparty
Elgi Compressors USA Inc.	– 508.06	– –
Elgi Compressors ItalyS.R.L	– 15.92	– –
Industrial Air Compressors PtyLtd	– 97.00	– –
Repayment of Loans-Given to relatedparty
Elgi Compressors ItalyS.R.L	– 6.26	– –
Industrial Air Compressors PtyLtd	– 99.12	– –
Elgi Equipments Australia PtyLimited	110.53 –	– –
Elgi Equipments (Zhejiang) Limited	18.21 –	– –

ANNUAL REPORT 2020-21

165

ELGI EQUIPMENTS LIMITED

STANDALONE FINANCIAL STATEMENTS

Notes to the Standalone Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

41A Details of material transactions with related parties (Continued...)

Particulars	Subsidiaries	Joint ventures & Others
	2020-21 2019-20	2020-21 2019-20
Interest- Received from relatedparty
Elgi Equipments Australia Pty Limited	3.54 4.33	– –
Elgi Compressors USA Inc.	22.94 6.60	– –
Elgi Compressors Italy S.R.L	0.17 0.12	– –
Industrial Air Compressors Pty Ltd	– 1.51	– –
Investments
Elgi Compressors Italy S.R.L	– 15.76	– –
Elgi Compressors Europe S.R.L*	8.96 –	– –
Dividends- Received from relatedparty
ATS Elgi Limited	– 58.50	– –
Elgi Gulf FZE	– 224.11	– –
PT Elgi Equipments Indonesia	– 43.77	– –
Elgi Sauer Compressors Limited	– –	10.22 13.45
Industrial Air Solutions LLP	– –	4.00 1.50

*In Sep, 2020, the Company has entered into Share transfer agreements separately with its subsidiary Elgi Compressors Italy S.R.L for 4.46 million and its subsidiary Rotair SPA for 0.05 million to acquire 100% of the Equity shares of Elgi Compressors Europe S.R.L (Belgium) thereby making it wholly owned subsidiary of the Company. Further, the total investment value also includes the fair value of corporate guarantee provided to the subsidiary amounting to ` 4.45 million.

ANNUAL REPORT 2020-21

166

ELGI EQUIPMENTS LIMITED

STANDALONE FINANCIAL STATEMENTS

Notes to the Standalone Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

41A Details of material transactions with related parties (Continued...)

(ii) Outstanding balances

(ii) Outstanding balances
Particulars	Subsidiaries	Joint Ventures & Others
	2020-21 2019-20	2020-21 2019-20
Payables at the end of theyear
Elgi Compressors USA Inc.	21.85 3.63	– –
Elgi Gulf FZE	21.12 4.77	– –
ATS Elgi Limited	11.98 13.10	– –
Trade Receivable at the end of theyear
Elgi Compressors USA Inc.	467.51 352.28	– –
Elgi Gulf FZE	173.14 171.06	– –
Industrial Air Solutions LLP	– –	33.17 23.58
Rotair SPA	532.09 211.35	– –
Elgi Equipments Australia PtyLimited	132.42 67.39	– –
Loan receivables at the end of theyear
Elgi Compressors USA Inc.	515.39 532.91	– –
Elgi Equipments (Zhejiang) Limited	55.35 73.56	– –
Elgi Equipments Australia PtyLimited	– 89.36	– –
Elgi Compressors ItalyS.R.L	10.29 10.00	– –
Interest accrued on the loans at the end of theyear
Elgi Compressors USA Inc.	29.54 6.60	– –
Elgi Equipments (Zhejiang) Limited	0.73 0.84	– –
Industrial Air Compressors PtyLtd	– 1.51	– –
Elgi Compressors ItalyS.R.L	0.29 0.12	– –

ANNUAL REPORT 2020-21

167

ELGI EQUIPMENTS LIMITED

STANDALONE FINANCIAL STATEMENTS

Notes to the Standalone Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

42 Share based payments

Employee Stock Option Plan

The establishment of Elgi Equipments Limited Employee Stock Options Plan, 2019 (Elgi ESOP 2019) was approved by the Board of Directors at its meeting held on December 16, 2019 and the shareholders by way of postal ballot on January 31, 2020. The plan shall be administered through a Trust via acquisition of the equity shares from the secondary market.

The Elgi ESOP 2019 plan is designed to provide benefits to the eligible employees of the Company and its subsidiaries. Under the plan, the participants are granted options which vest upon completion of three years of service from the grant date. Participation in the plan is at the board’s discretion and no individual has a contractual right to participate in the plan or to receive any guaranteed benefits.

Once vested, the options remain exercisable for a period of three months.

Options are granted under the plan for no consideration and carry no dividend or voting rights. When exercisable, each option is convertible into one equity share.

Set out below is the summary of options granted under the plan:

Particulars	March 31, 2021	March 31, 2020
	Average exercise price per share option ()<br>Number of<br>Options|Average exercise<br>price per share<br>option () Number of Options
Opening balance	200.05 1,60,600	– –
Granted during the year (on March 06, 2020)	– –	200.05 1,60,600
Exercised during the year	– –	– –
Forfeited during the year	200.05 6,800	– –
Adjustment for Bonus issue (refer note 19 (iii))	(100.03) 153,800	– –
Closing balance	100.03 3,07,600	200.05 1,60,600
Vested and exercisable	– –	– –

Share options outstanding at the end of the year March 31, 2021 and March 31, 2020:

Grant date Expiry date	March 31, 2021	March 31, 2020
	Exercise price ()<br>Share Options|Exercise price () Share Options
March 6, 2020 June 5, 2023	100.03 307,600	200.05 160,600

The remaining contractual life of options outstanding at the end of the year ended March 31, 2021 and March 31, 2020 is 2.18 years and 3.2 years, respectively.

ANNUAL REPORT 2020-21

168

ELGI EQUIPMENTS LIMITED

STANDALONE FINANCIAL STATEMENTS

Notes to the Standalone Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

42 Share based payments (Continued...)

(i) Fair value of options granted

The fair value at grant date of options granted during the year ended March 31, 2020 is 27.71 per option after allotment of bonus shares. The fair value of these options before bonus issue were 55.42. The fair value at grant date is independently determined using the Black-Scholes Model which takes into account the exercise price, the term of the option the share price at the grant date and expected volatility of the underlying share, the expected dividend yield and the risk-free rate for the term of the option.

The model inputs for the options granted during the year ended March 31, 2020 included:

a) Options are granted for no consideration and vest upon completion of service for a period of three years. Vested options are exercisable for a period of three months after vesting.

b) Exercise price: ` 200.05

c) Grant date: March 06, 2020

• d) Expiry date: June 05, 2023

• e) Share price at grant date: ` 201.65

f) expected price volatility of the Company’s shares: 30.45%

g) expected dividend yield: 0.82% (determined based on latest dividend declared at ` 1.65 per share)

h) risk-free interest rate: 5.48%

The expected volatility is calculated using market data for stock prices of ELGi. (Source: Bloomberg)

(ii) Expense arising from the share based transactions

Total expense arising from the employee stock options plan recognised in profit or loss as a part of employee benefit expenses for March 31, 2021 and March 31, 2020 is:

Particulars	March 31, 2021	March 31, 2020
Employee stock option expense	2.81	0.21
Less: Amount recovered from subsidiaries	(1.21)	(0.08)
Net expense carried to statement of proft and loss (refer note 33)	1.60	0.13

ANNUAL REPORT 2020-21

169

ELGI EQUIPMENTS LIMITED

STANDALONE FINANCIAL STATEMENTS

Notes to the Standalone Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

43 Contingent liabilities and contingent assets

Contingent liabilities

(a) Claims against the Company not acknowledged as debts

• (i) The Company has disputed demands for excise duty, service tax and sales tax and other matters amounting to 54.42 million and 56.52 million as on March 31, 2021 and March 31, 2020 respectively. The Company has deposited 44.08 million and 43.54 million against the above mentioned disputes as on March 31, 2021 and March 31, 2020, respectively.

The Company has filed appeals with appropriate authorities of Central Excise and Sales Tax Department against their claims.

• (ii) The Company had deposited a sum of ` 18.80 million with Railways department of the Government of India in respect of a Road Under Bridge (RUB) project undertaken by the Railways near the Company’s factory at Kodangipalayam village. As Railways had planned for a Limited Use Subway and as the RUB project undertaken would benefit the public at large, the deposit was made as directed by the Madras High Court as an interim measure, pending finality as to whether the Company has to bear the full cost or only the differential cost. The Company

received an unfavourable order on June 03, 2020 from the single judge of the Madras High Court holding that neither party is required to make any payment to the other. The Company filed an appeal against this order before the Division bench and was able to get the stay of the order of the single judge. As the Company is confident of defending the case successfully, no provision has been made in the books of account.

• (iii) The Company has evaluated the impact of the recent Supreme Court Judgment in case of “Vivekananda Vidyamandir And Others Vs The Regional Provident Fund Commissioner (II) West Bengal” and the related circular (Circular No. C-I/1(33)2019/Vivekananda Vidya Mandir/284) dated March 20, 2019 issued by the Employees’ Provident Fund Organisation 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. In the assessment of the management, the aforesaid matter is not likely to have a significant impact and accordingly, no provision has been made in these Financial Statements.

44 Commitments

(a) Capital commitments

Capital expenditure contracted for at the end of the reporting period but not recognised as liabilities is as follows:

Particulars	March 31, 2021	March 31, 2020
Estimated amount of contracts remaining to be executed on capital account	119.16	137.06

ANNUAL REPORT 2020-21

170

ELGI EQUIPMENTS LIMITED

STANDALONE FINANCIAL STATEMENTS

Notes to the Standalone Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

45 Details of dues to Micro enterprises and Small enterprises under the Micro, Small and Medium Enterprise Development Act 2006.

Particulars	March 31, 2021	March 31, 2020
Principal amount due to suppliers registered under the MSMED Act and remaining unpaid at the year end.	426.93	267.27
Interest due to suppliers registered under the MSMED Act and remaining unpaid at the year end.	5.87	4.21
Principal amounts paid to suppliers registered under the MSMED Act, beyond the appointed day during the year.	126.70	393.17
Interest paid (other than Section 16 of MSMED Act) to suppliers
registered under the MSMED Act, beyond the appointed day during the	Nil	Nil
year.
Interest paid under Section 16 of MSMED Act to suppliers registered under the MSMED Act, beyond the appointed day during the year.	Nil	Nil
Interest due and payable towards suppliers registered under MSMED Act, for the payments already made.	1.66	1.21
Further interest remaining due and payable for earlier years.	4.21	3.00

The information has been given in respect of vendors to the extent they could be identified as “Micro and Small enterprises” on the basis of information available with the Company.

ANNUAL REPORT 2020-21

171

ELGI EQUIPMENTS LIMITED

STANDALONE FINANCIAL STATEMENTS

Notes to the Standalone Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

46 Earnings per share

Particulars	March 31, 2021	March 31, 2020
(a) Basic earnings per share
Basic earnings per share attributable to the equity holders of the Company	3.32	3.17
(b) Diluted earnings per share
Diluted earnings per share attributable to the equity holders of the Company	3.32	3.17
(c) Reconciliations of earnings used in calculating earnings per share
Basic earnings per share
Proft attributable to equity holders of the Company used in calculating basic earnings per share	1,050.90	1,004.24
Diluted earnings per share
Proft attributable to equity holders of the Company
- used in calculating basic earnings per share	1,050.90	1,004.24
- used in calculating diluted earnings per share	1,050.90	1,004.24
Proft attributable to equity holders of the Company used in calculating basic earnings per share	1,050.90	1,004.24
(d) Weighted average number of equity shares used as the denominator in calculating basic earnings per share	316.48	316.68
Adjustments for calculation of diluted earnings per share*:	–	–
Weighted average number of equity shares used as the denominator in calculating diluted earnings per share	316.48	316.68

• There is no dilution to the Basic Earnings per share as the potential equity shares are anti-dilutive in nature.

47 Assets pledged as security

Particulars	March 31, 2021	March 31, 2020
Current
a. Charge on entire Stocks and Receivables, both present and future	4,687.41	3,860.94
b. Charge on specifc land, building & machinery	1,296.98	1,432.96
c. Cash Margin	242.86	224.25
	6,227.25	5,518.15

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STANDALONE FINANCIAL STATEMENTS

Notes to the Standalone Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

48 Details of R & D expenses

Particulars	March 31, 2021	March 31, 2020
i) Capital	33.83	17.01
ii) Salaries & Wages	273.49	264.63
iii) R&D Materials	67.60	69.53
iv) Maintainence	0.30	0.55
v) Other expense	22.82	53.11
	398.04	404.83

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STANDALONE FINANCIAL STATEMENTS

Notes to the Standalone Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

49 Joint Operations

The Company has two joint operations as detailed in note-41

The Company has determined its interest in the assets and liabilities relating to the joint operation on the basis of its rights and obligations in a specified proportion in accordance with the contractual arrangement.

(i) The following share of assets and liabilities arising from the financial statements of joint operation has been recognised under Ind AS

recognised under Ind AS
Particulars	L.G. Balakrishnan & Bros.	ELGi Services
	March 31, 2021 March 31, 2020	March 31, 2021 March 31, 2020
Non-current assets
Property,plant and equipment	112.21 112.21	0.43 0.43
Financial assets
(i) Investments	11.40 11.40	– –
Total non-current assets	123.61 123.61	0.43 0.43
Current assets
(i) Cash and cash equivalents	1.46 1.72	0.01 0.01
(ii) Other financial assets	0.05 0.04	– –
Current Tax Assets (Net)	0.41 1.29	– –
Other current assets	0.71 0.35	– –
Total current assets	2.63 3.40	0.01 0.01
Total Assets	126.24 127.01	0.44 0.44
Current liabilities
Financial liabilities
(i) Tradepayables	0.11 0.03	0.04 0.04
Other current liabilities	0.01 0.92	– –
Total current liabilities	0.12 0.95	0.04 0.04
Partners current account	2.12 2.18	– –
Net Assets	124.00 123.88	0.40 0.40

(ii) Consequent to the above, the following inter Company assets and liabilities have been derecognised.

Particulars	L.G. Balakrishnan & Bros.	ELGi Services
	March 31, 2021 March 31, 2020	March 31, 2021 March 31, 2020
Investment	124.00 124.00	0.40 0.40
TreasuryStock	(11.40) (11.40)	– –
Inter-Companyassets & liabilities	2.12 2.17	0.04 0.04
	114.72 114.77	0.44 0.44

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STANDALONE FINANCIAL STATEMENTS

Notes to the Standalone Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

49 Joint Operations (Continued...)

(iii) The following share of Income and expenditure has been recognised under Ind AS (net of Inter Company income/expenses) :

(net of Inter Company income/expenses) :
Particulars	L.G. Balakrishnan & Bros.	ELGi Services
	March 31, 2021 March 31, 2020	March 31, 2021 March 31, 2020
Revenue :	0.11 0.86	– –
Expenses:
Other expenses	0.37 0.72	– –
Current tax expense	0.08 0.21	– –
Loss after tax	(0.34) (0.07)	– –

50 Disclosures pursuant to securities and exchange board of india (listing obligation and disclosures and disclosures requirements) regulations, 2015 and section 186 of the companies act, 2013

of the companies act, 2013
Particulars	March 31, 2021	March 31, 2020
(a) Loans and advances to subsidiaries
Elgi Australia PtyLtd - Australia
Balance as at theyear end	–	89.36
Maximum amount outstandingat anytime duringtheyear	98.38	97.27
Elgi Equipments (Zhejiang) Limited- China
Balance as at theyear end	55.35	73.56
Maximum amount outstandingat anytime duringtheyear	73.56	73.56
Elgi Compressors USA Inc.-USA
Balance as at theyear end	515.39	532.91
Maximum amount outstandingat anytime duringtheyear	533.06	532.91
Elgi Compressors ItalyS.R.L- Italy
Balance as at theyear end	10.29	10.00
Maximum amount outstandingat anytime duringtheyear	10.71	15.77
Industrial Air Compressors PtyLtd- Australia
Balance as at theyear end	–	–
Maximum amount outstandingat anytime duringtheyear	–	97.60

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STANDALONE FINANCIAL STATEMENTS

Notes to the Standalone Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

50 Disclosures pursuant to securities and exchange board of india (listing obligation and disclosures and disclosures requirements) regulations, 2015 and section 186 of the companies act, 2013 (Continued...)

Particulars	March 31, 2021	March 31, 2020
(b) Guarantees to Subsidiaries
Balance as at the year end
Elgi Compressors USA Inc.-USA	1257.41	1300.15
Industrial Air Compressors Pty Ltd- Australia	1,647.45	1384.57
Elgi Compressors Europe S.R.L- Belgium	857.52	833.30
(c) Standby Letter of Credits (SBLC) to Subsidiaries
Balance as at the year end
Elgi Compressors USA Inc.-USA	182.76	226.77
Elgi Compressors Italy, S.R.L- Italy	–	297.90

Nature & purpose of loans and guarantees:

(i) The Company has advanced loan and provided guarantee to its subsidiaries- Elgi Compressors USA Inc. and Industrial Air Compressors Pty Ltd. to fund the business acquisition and additional working capital requirements. The loans advanced and guarantees provided to other subsidiaries are for the purpose of meeting working capital requirements.

(ii) The loans carry interest rates which are at par with the prevailing market rates. These loans are repayable as follows,

Elgi Australia Pty Ltd - Australia -repayable on demand Elgi Equipments (Zhejiang) Limited- China -repayable on demand Elgi Compressors USA Inc.-USA -repayable within March 31, 2025 Elgi Compressors Italy S.R.L- Italy -repayable within August 27, 2021

51 Impact of COVID-19 Pandemic:

The spread of COVID-19 has severely impacted businesses around the globe. While the Company’s operations and the financial results for the quarter ended June 30, 2020 were adversely impacted, the Company experienced significant recovery beginning from the quarter ended September 30, 2020.

The situation is constantly evolving and Governments in certain states have imposed various restrictions with the increase in the number of COVID 19 cases during the month of March 2021. The Company has considered various internal and external information available up to the date of approval of financial statements in assessing the impact of COVID-19 pandemic on the financial statements for the year ended March 31, 2021. The uncertainty caused by the current situation is causing delays in the confirmation of customer orders and in executing the orders in hand and increase in lead times in sourcing components. Besides the volatility in commodity prices, container availability and increasing shipping costs are causing inefficiencies and cost challenges in both inbound and outbound supply chain. The situation is likely to continue for next few quarters based on the current assessment. The Company is actively monitoring the pandemic situation and its impact on the sales performance across its geographies and taking necessary actions to contain costs to reduce the impact of revenue compression from COVID-19.

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STANDALONE FINANCIAL STATEMENTS

Notes to the Standalone Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

51 Impact of COVID-19 Pandemic: (Continued...)

As at March 31, 2021, the Company has made detailed assessment of its liquidity position for the next one year and of the recoverability and carrying values of its assets comprising Property, plant and equipment, Intangible assets, Trade receivables, Inventory and Investments as at the balance sheet date and has concluded that there are no material adjustments required in the standalone financials results. The Company has also evaluated the internal controls including internal controls with reference to financial statements. All the controls are operating effectively and the Company has not diluted any controls.

The Management believes that it has taken into account all the possible impact of known events arising from COVID-19 pandemic in the preparation of standalone financial statements. However, the impact assessment of COVID-19 is a continuous process given the uncertainties associated with its nature and duration. The Company will continue to monitor any material changes to the future economic conditions.

The Statutory auditors have drawn attention to the above matter.

52 Previous year figures have been regrouped/reclassified to conform to current year’s classification.

For and on behalf of the Board of Directors

As per our report of even date

N. MOHAN NAMBIAR

JAIRAM VARADARAJ

Director Managing Director DIN: 00003660 DIN: 00003361 Place: Coimbatore Place: Charlotte, North Carolina, USA

For Price Waterhouse Chartered Accountants LLP

Firm Registration Number: 012754N/N500016 Chartered Accountants

RAGUNATHAN K

JAYAKANTHAN R

Company Secretary Chief Financial Officer ACS: 62397 Place: Coimbatore Place: Coimbatore

BASKAR PANNERSELVAM

Partner Membership No: 213126

Date: May 21, 2021

Place: Coimbatore Date: May 21, 2021

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Independent Auditors’ Report To the Members of Elgi Equipments Limited Report on the Audit of the Consolidated Financial Statements

Opinion

1. We have audited the accompanying consolidated financial statements of Elgi Equipments Limited (hereinafter referred to as the “Holding Company”) and its subsidiaries (Holding Company and its subsidiaries together referred to as “the Group”), its joint operations and its joint ventures (refer Note 42 to the attached consolidated financial statements), which comprise the consolidated balance sheet as at March 31, 2021, and the consolidated statement of profit and loss (including Other Comprehensive Income), the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies and other explanatory information prepared based on the relevant records (hereinafter referred to as “the consolidated financial statements”).

2. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid consolidated financial statements give the information required by the Companies Act, 2013 (“the Act”) in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the consolidated state of affairs of the Group, its joint operations and its joint ventures as at March 31, 2021, of consolidated total comprehensive income (comprising of profit and other comprehensive loss), consolidated changes in equity and its consolidated cash flows for the year then ended.

Basis for Opinion

1. We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group, its joint operations and joint ventures in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in India in terms of the Code of Ethics issued by Institute of

Chartered Accountants of India and the relevant provisions of the Act, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained and the audit evidence obtained by the other auditors in terms of their reports referred to in sub-paragraph 20, 21 and 22 of the Other Matters paragraph below, is sufficient and appropriate to provide a basis for our opinion.

Emphasis of Matters

1. We draw your attention to Note 49 to the consolidated financial statements, which explains the impact of the outbreak of Coronavirus (COVID-19) on the business operations of the Holding Company and one of its subsidiary ATS Elgi Limited, audited by us. In view of the uncertain economic environment, a definitive assessment of the impact on the subsequent periods is highly dependent upon circumstances as they evolve.

Our opinion is not modified in respect of this matter.

1. The following ‘Emphasis of matter’ paragraph was included in the auditor’s report on the financial statements of Elgi Compressors Italy S.r.l., a subsidiary of the Holding Company issued by a sole statutory auditor vide his report dated May 4, 2021 reproduced by us as under:

2. ‘In light of the warning issued during the previous fiscal year and given the elements that were found during periodic verifications, I deem it appropriate to raise the Sole Auditor’s attention to the violation of the principles of proper administration that manifest potential fallouts on the Company patrimonial liability and its governance body in relation to the setting aside of funds in favor of the pledgee.

As for the quantification of deposits made in favor of the pledgee, page 13 of the Financial Statement reads: “In relation to the garnishee proceedings… OMISSIS … the Company has paid the Italian Revenue Agency (Agenzia delle Entrate) 20% of the amount owed” therefore outlining a conduct ascribable to Article 545 of the Italian Code of Civil Procedure, irrelevant to the garnishee proceedings, as it had already been indicated to your Company, since the deposit had

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to be 100% of the accrued amount. The economic entity of the paid amount, based on the contested principle, is incorrect considering the funds that were set aside as of the date of the deposit.

All this considered, even though the consistency of the errors does not reach the materiality threshold, the significant and reiterated violation of the principles of proper administration set forth in article 2403 of the Italian Civil Code must be reported, given the conflict of interest that had already been pointed out in the previous correspondence.’

Key audit matter

Assessment of carrying value of goodwill arising on consolidation of a subsidiary as per Ind AS 36

The Group has a goodwill balance of ` 490.07 million, as at March 31, 2021 (Refer Note 5) relating to the acquisition of a subsidiary in Italy, which is considered as a Cash Generating Unit (CGU).

For the year ended March 31, 2021, the Group performed an assessment of the carrying value of goodwill as required under Ind AS 36 by:

• [Calculating the recoverable amount for the ] CGU using a discounted cash flow model (DCF model); and

• [Comparing the recoverable amount to the ] respective carrying amount of assets and liabilities

The preparation of discounted cash flows requires assumptions for projections of cash flows for a specific period, typically for 5 years. A terminal growth rate is applied in determining the terminal value.

We considered the carrying value of goodwill as a key audit matter, considering its significance to the financial statements, and where applicable, judgement involved in estimating future cash flows, particularly with respect to factors such as discount rates, cash flow projections and terminal growth rates.

Our opinion is not modified in respect of this matter.

Key audit Matters

1. Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters

How our audit addressed the key audit Matter

Our audit procedures in relation to assessment of carrying value of goodwill relating to the CGU, included the following:

• [Understood and performed procedures to assess ] the design and test the operating effectiveness of relevant controls related to the annual evaluation on assessment of carrying value of goodwill.

• [Together with auditors valuation experts, evaluated ] the assumptions and methodologies used in the DCF models, in particular those relating to the cash flow projections used, discount rates and terminal growth rates applied, by:

• a. Evaluating the reasonableness of the cash flow projections by comparing with the approved budgets, previous year performance, discussions with the subsidiary auditors and our knowledge and understanding of current business conditions.

• b. Determining a range of acceptable discount rates and terminal growth rates, with reference to valuations of similar companies and other relevant external data, and comparing this range to the discount rates and terminal growth rates adopted by the Company.

• c. Performing sensitivity tests on the DCF Model by analysing the impact of using other possible growth rates and discount rates within a reasonable and foreseeable range.

• [Tested the arithmetical accuracy of the calculations ] carried out by the Management.

• [Evaluating the sufficiency of disclosures made in ] the consolidated financial statements

Based on above procedures performed, we found the management's assessment of carrying value of goodwill to be reasonable.

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1. The following Key Audit Matter is included in the Memorandum of work performed dated May 13, 2021, issued by an independent auditor of Elgi Compressors USA Inc., a subsidiary of the Holding Company reproduced by us as under:

2. ‘Auditing of assessment of potential for goodwill impairment. For the year ended March 31, 2021, the Company performed a goodwill impairment analysis using a discounted cash flow model both at a consolidated level and at reporting unit levels. The preparation of discounted cash flows required assumptions for projections of future cash flows. The Company projected future cash flows over a period of five years with a terminal value growth rate applied in determining a terminal value. This was considered to be a Key Audit Matter due to its significance to the financial statements and

Key audit matter

Assessment of carrying value of goodwill as per Ind AS 36 (refer Note 3 of the group reporting package)

Industrial Air compressors Pty Limited in its consolidated financial Statement, has a goodwill balance of AUD 4.96 million as at March 31, 2021 relating to acquisition of F.R. Pulford & Sons and its subsidiary Advanced Air Compressors Pty Ltd. For the year ended March 31, 2021, the management performed an assessment of the carrying value of goodwill as required under Ind AS 36 by:

• a. Calculating the recoverable amount for the cash generating unit (CGU) to which the goodwill has been allocated using a discounted cash flow model (DCF); and

• b. Comparing the recoverable amount of the respective carrying amount of assets and liabilities.

The preparation of discounted cash flows requires assumptions for projections of cash flows for a specific period, typically for 5 years. A terminal growth rate is applied in determining the terminal value.

We considered the carrying value of goodwill as a key audit matter, considering its significance to the consolidated financial statements, and where applicable, the management judgement involved in estimating future cash flows, particularly with respect to factors such as discount rates, cash flow projections and terminal growth rates.

the degree of management judgment involved in performing the discounted cash flow analysis.

• Our audit procedures included discussing with management and understanding the projections, comparing the previous year projections to the results of operations for the year ended March 31, 2021, and reviewing supporting documentation of potential real estate sales. Based on the procedures performed, we found that management's conclusion of no goodwill impairment to be correct.’

• The following Key Audit Matter is included in the Memorandum of work performed dated May 13, 2021, issued by an independent auditor of Industrial Air Compressors Pty Limited, a subsidiary of the Holding Company reproduced by us as under:

How our audit addressed the key audit matter

Our audit procedures in relation to the assessment of carrying value of goodwill included the following:

• [Understood and performed procedures to assess ] the design and test the operating effectiveness of relevant controls related to the annual evaluation on assessment of carrying value of goodwill.

• [Evaluated the assumptions and methodologies used ] in the DCF models, in particular those relating to the cash flow projections used, discount rates and terminal growth rates applied, by:

• о Evaluating the reasonableness of the cash flow projections by comparing with the approved budgets, previous year performance and our knowledge and understanding of current business conditions.

• о Determining a range of acceptable discount rates and terminal growth rates, with reference to valuations of similar companies and other relevant external data and comparing this range to the discount rates and terminal growth rates adopted by the management.

• о Performing sensitivity tests on the DCF model by analysing the impact of using other possible growth rates and discount rates within a reasonable and foreseeable range.

• [Tested the arithmetical accuracy of the calculations ] carried out by the management.

Based on above procedures performed, we found the management's assessment of carrying value of goodwill to be reasonable.

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Other Information

1. The Holding Company’s Board of Directors is responsible for the other information. The other information comprises the information included in the Management Discussion and Analysis, Board's Report including Annexures to Board's Report and Report on Corporate Governance, but does not include the consolidated financial statements, standalone financial statements and our auditor’s report thereon.

2. Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

3. In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed and the reports of the other auditors as furnished to us (Refer paragraphs 20, 21 and 22 below), we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

1. The Holding Company’s Board of Directors is responsible for the preparation and presentation of these consolidated financial statements in terms of the requirements of the Act that give a true and fair view of the consolidated financial position, consolidated financial performance and consolidated cash flows, and changes in equity of the Group including its joint operations and joint ventures in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under section 133 of the Act. The respective Board of Directors of the companies included in the Group and of its joint ventures are responsible for maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Group and of its joint ventures and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent;

2. and the design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error, which have been used for the purpose of preparation of the consolidated financial statements by the Directors of the Holding Company, as aforesaid.

3. In preparing the consolidated financial statements, the respective Board of Directors of the companies included in the Group and of its joint ventures are responsible for assessing the ability of the Group and of its joint ventures to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

4. The respective Board of Directors of the companies included in the Group and of its joint ventures are responsible for overseeing the financial reporting process of the Group and of its joint ventures.

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

1. Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

2. As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

3. [Identify and assess the risks of material ] misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive

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• to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• [Obtain an understanding of internal control ] relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Holding Company has adequate internal financial controls with reference to financial statements in place and the operating effectiveness of such controls.

• [Evaluate the appropriateness of accounting ] policies used and the reasonableness of accounting estimates and related disclosures made by management.

• [Conclude ] on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability of the Group, its joint operations and joint ventures to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group, its joint operations and joint ventures to cease to continue as a going concern.

• [Evaluate the overall presentation, structure and ] content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

• [Obtain sufficient appropriate audit evidence ] regarding the financial information of the entities or business activities within the Group, its joint operations and joint ventures to

• express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the audit of the financial statements of such entities included in the consolidated financial statements of which we are the independent auditors. For the other entities included in the consolidated financial statements, which have been audited by other auditors, such other auditors remain responsible for the direction, supervision and performance of the audits carried out by them. We remain solely responsible for our audit opinion.

• We communicate with those charged with governance of the Holding Company and such other entities included in the consolidated financial statements of which we are the independent auditors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

• We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

• From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Other Matters

1. We did not audit the financial information of two joint operations included in the standalone financial statements of the Holding Company whose financial information reflect total assets of 126.76 million and net assets of 124.40 million as at March 31, 2021, total revenues of Nil, total net profit after tax of 0.05 million, total comprehensive income (comprising of profit and other comprehensive

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income) of 0.05 million and net cash outflows of 0.26 million for the year ended March 31, 2021, as considered in the Standalone financial statements of the Holding Company included in the Group. The financial information of these joint operations have been audited by other auditors whose reports have been furnished to us by other auditors, and our opinion in so far as it relates to the amounts and disclosures included in respect of these joint operations, is based solely on the reports of such other auditors.

1. We did not audit the Consolidated/Standalone financial statements/financial information of 13 subsidiaries (including their relevant stepdown subsidiaries and joint ventures), whose financial statements/financial information reflect total assets of 9,255.28 million and net assets of 1,822.94 million as at March 31, 2021, total revenue of 8,940.53 million, total net profit after tax of 85.43 million, total comprehensive income (comprising of profit and other comprehensive loss) of 73.50 million and net cash inflows amounting to 249.78 million for the year ended on that date, as considered in the consolidated financial statements. The consolidated financial statements also include the Group’s share of total net profit after tax of 26.51 million and total comprehensive income (comprising of profit and other comprehensive income) of 43.05 million for the year ended March 31, 2021 as considered in the consolidated financial statements, in respect of two joint ventures respectively, whose financial statements/financial information have not been audited by us. These financial statements/financial information have been audited by other auditors whose reports have been furnished to us by the Management, and our opinion on the consolidated financial statements in so far as it relates to the amounts and disclosures included in respect of these subsidiaries and joint ventures and our report in terms of sub-section (3) of Section 143 of the Act including report on Other Information in so far as it relates to the aforesaid subsidiaries and joint ventures, is based solely on the reports of the other auditors.

2. Of the above, the financial statements of one subsidiary, located outside India, included in the consolidated financial statements, which constitute total assets of 907.58 million and net assets of 858.87 million as at March 31, 2021, total revenue of Nil, net profit after tax of 103.48 million, total comprehensive income (comprising of profit and

other comprehensive income) of 123.68 million and net cash inflow amounting to 5.01 million for the year ended March 31, 2021 have been prepared in accordance with accounting principles generally accepted in their country and have been audited by other auditors under generally accepted auditing standards applicable in their country. The Company’s management has converted the financial statements of the subsidiary located outside India from the accounting principles generally accepted in their country to the accounting principles generally accepted in India. We have audited these conversion adjustments made by the Company’s management. Our opinion in so far as it relates to the balances and affairs of the subsidiary located outside India, including other information, is based on the report of other auditors and the conversion adjustments prepared by the management of the Company and audited by us.

Our opinion on the consolidated financial statements, and our report on Other Legal and Regulatory Requirements below, is not modified in respect of the above matters with respect to our reliance on the work done and the reports of the other auditors.

Report on Other Legal and Regulatory Requirements

1. As required by Section 143(3) of the Act, we report, to the extent applicable, that:

2. (a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit of the aforesaid consolidated financial statements.

3. (b) In our opinion, proper books of account as required by law relating to preparation of the aforesaid consolidated financial statements have been kept so far as it appears from our examination of those books and the reports of the other auditors.

4. (c) The Consolidated Balance Sheet, the Consolidated Statement of Profit and Loss (including other comprehensive income), Consolidated Statement of Changes in Equity and the Consolidated Statement of cash flow dealt with by this Report are in agreement with the relevant books of account and records maintained for the purpose

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of preparation of the consolidated financial statements.

• (d) In our opinion, the aforesaid consolidated financial statements comply with the Accounting Standards specified under Section 133 of the Act.

• (e) On the basis of the written representations received from the directors of the Holding Company as on April 1, 2021 taken on record by the Board of Directors of the Holding Company and the reports of the statutory auditors of its subsidiary companies and of its joint venture Company incorporated in India, none of the directors of the Group companies and of its joint venture Company incorporated in India is disqualified as on March 31, 2021 from being appointed as a director in terms of Section 164(2) of the Act.

• (f) With respect to the adequacy of internal financial controls with reference to financial statements of the Holding Company, its subsidiary companies and joint venture Company incorporated in India and the operating effectiveness of such controls, refer to our separate report in Annexure A.

• (g) With respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies (Audit and Auditor’s) Rules, 2014, in our opinion and to the best of our

information and according to the explanations given to us:

• i. The consolidated financial statements disclose the impact, if any, of pending litigations on the consolidated financial position of the Group and its joint venture Company - Refer Note 44 to the consolidated financial statements.

• ii. The Group and its joint venture Company had long-term contracts including derivative contracts as at March 31, 2021 for which there were no material foreseeable losses.

• iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Holding Company, its subsidiary companies and its joint venture Company incorporated in India.

• iv. The reporting on disclosures relating to Specified Bank Notes is not applicable to the Holding Company, its subsidiary companies and its joint venture Company incorporated in India for the year ended March 31, 2021.

• The Group and its joint venture Company incorporated in India has paid/provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Act.

For Price Waterhouse Chartered Accountants LLP

Firm Registration Number: 012754N/N500016 Chartered Accountants

Baskar Pannerselvam

Place: Coimbatore Date: May 21, 2021

Partner Membership Number: 213126 UDIN: 21213126AAAAEK8170

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184

ANNEXURE A TO INDEPENDENT AUDITORS’ REPORT

ELGI EQUIPMENTS LIMITED

Annexure A to Independent Auditors’ Report

Referred to in paragraph 23(f) of the Independent Auditors’ Report of even date to the members of Elgi Equipments Limited on the consolidated financial statements for the year ended March 31, 2021

Report on the Internal Financial Controls with reference to financial statements under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (‘the Act’)

1. In conjunction with our audit of the consolidated financial statements of Elgi Equipments Limited (hereinafter referred to as “the Holding Company”) as of and for the year ended March 31, 2021, we have audited the internal financial controls with reference to financial statements of the Holding Company, its subsidiary companies and a joint venture company, which are companies incorporated in India, as of that date.

Management’s Responsibility for Internal Financial Controls

1. The respective Board of Directors of the Holding company, its subsidiary companies and joint venture company, to whom reporting under clause (i) of sub section 3 of Section 143 of the Act in respect of the adequacy of the internal financial controls with reference to financial statements is applicable, which are companies incorporated in India, are responsible for establishing and maintaining internal financial controls based on Internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India (ICAI). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the respective company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.

Auditor’s Responsibility

1. Our responsibility is to express an opinion on the Company’s internal financial controls with reference to financial statements based on our audit. We

conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the “Guidance Note”) issued by the ICAI and the Standards on Auditing deemed to be prescribed under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of internal financial controls and both issued by the ICAI. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls with reference to financial statements was established and maintained and if such controls operated effectively in all material respects.

1. Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system with reference to financial statements and their operating effectiveness. Our audit of internal financial controls with reference to financial statements included obtaining an understanding of internal financial controls with reference to financial statements, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

2. We believe that the audit evidence we have obtained and the audit evidence obtained by the other auditors in terms of their reports referred to in the Other Matters paragraph below, is sufficient and appropriate to provide a basis for our audit opinion on the Company’s internal financial controls system with reference to financial statements.

Meaning of Internal Financial Controls with reference to financial statements

1. A company’s internal financial control with reference to financial statements is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with

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ANNEXURE A TO INDEPENDENT AUDITORS’ REPORT

ELGI EQUIPMENTS LIMITED

• generally accepted accounting principles. A company’s internal financial control with reference to financial statements includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls with reference to financial statements

1. Because of the inherent limitations of internal financial controls with reference to financial statements, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls with reference to financial statements to future periods are subject to the risk that the internal financial control with reference to financial statements may become inadequate because of changes in conditions, or

that the degree of compliance with the policies or procedures may deteriorate.

Opinion

1. In our opinion, the Holding Company, its subsidiary companies and its joint venture company, which are companies incorporated in India, have, in all material respects, an adequate internal financial controls system with reference to financial statements and such internal financial controls with reference to financial statements were operating effectively as at March 31, 2021, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India. Also refer paragraph 4 and 5 of the main audit report.

Other Matters

1. Our aforesaid reports under Section 143(3)(i) of the Act on the adequacy and operating effectiveness of the internal financial controls with reference to financial statements insofar as it relates to two subsidiary companies and one joint venture company, which are companies incorporated in India, is based on the corresponding reports of the auditors of such companies incorporated in India. Our opinion is not qualified in respect of this matter.

For Price Waterhouse Chartered Accountants LLP

Firm Registration Number: 012754N/N500016 Chartered Accountants

BASKAR PANNERSELVAM

Place: Coimbatore Date: May 21, 2021

Partner Membership Number: 213126 UDIN: 21213126AAAAEK8170

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186

ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

Consolidated Balance Sheet as at March 31, 2021

Particulars	Notes	March 31, 2021	March 31, 2020
Assets
Non-current assets
Property, plant and equipment	3 (a)	2,577.27	3,025.24
Right of use assets	3 (b)	624.62	422.32
Capital work-in-progress	3 (a)	41.23	37.21
Investment properties	4	168.01	166.78
Goodwill	5	1,879.12	1,855.26
Other intangible assets	5	470.98	532.08
Investments accounted for usingthe equitymethod	42	152.65	75.41
Financial assets
(i) Investments	6	85.02	48.94
(ii) Loans	7	54.29	74.97
(iii) Other fnancial assets	8	61.31	79.06
Deferred tax assets (Net)	27 (c)	145.62	160.61
Current tax assets (Net)	27 (b)	19.71	52.96
Other non-current assets	9	54.32	51.45
Total non-current assets		6,334.15	6,582.29
Current Assets
Inventories	10	3,426.93	3,434.30
Financial assets
(i) Trade receivables	11	3,997.32	3,467.62
(ii) Cash and cash equivalents	12	1,278.19	455.10
(iii) Bank balances other than (ii) above	13	1,342.70	402.05
(iv) Deposits with fnancial institutions	14	430.00	585.00
(v) Loans	15	60.13	69.43
(vi) Other fnancial assets	16	95.93	46.36
Assets held for sale	17	223.54	–
Other current assets	18	478.21	508.51
Total current assets		11,332.95	8,968.37
Total assets		17,667.10	15,550.66
Equity and Liabilities
Equity
Equityshare capital	19	316.91	158.45
Other equity	20	8,381.95	7,531.48
Total equity		8,698.86	7,689.93

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ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

Consolidated Balance Sheet as at March 31, 2021 (Continued...)

Particulars	Notes	March 31, 2021	March 31, 2020
Liabilities
Non-current liabilities
Financial liabilities
(i) Longterm borrowings	21 (a)	811.60	1,027.23
(ii) Lease liabilities	3 (b)	504.20	333.94
(iii) Other fnancial liabilities	22	26.46	36.97
Provisions	23	120.15	120.14
Deferred tax liabilities (Net)	27 (c)	20.78	39.76
Total non-current liabilities		1,483.19	1,558.04
Current Liabilities
Financial liabilities
(i)Borrowings	21(b)	2,884.01	2,871.16
(ii)Lease liabilities	3(b)	159.41	105.57
(iii)Tradepayables	24
(a) Total outstanding dues of micro enterprises and small enterprises		482.70	308.13
(b) Total outstanding dues of creditors
other than micro enterprises and small		2,406.54	1,779.79
enterprises
(iv)Other fnancial liabilities	25	919.85	810.02
Provisions	26	132.41	140.41
Current tax liabilities(Net)	27(b)	198.70	–
Other current liabilities	28	301.43	287.61
Total current liabilities		7,485.05	6,302.69
Total liabilities		8,968.24	7,860.73
Total equityand liabilities		17,667.10	15,550.66

The above Consolidated Balance Sheet should be read in conjunction with the accompanying notes.

For and on behalf of the Board of Directors

As per our report of even date

N. MOHAN NAMBIAR

Director DIN: 00003660 Place: Coimbatore

JAIRAM VARADARAJ

Managing Director DIN: 00003361 Place: Charlotte, North Carolina, USA

For Price Waterhouse Chartered Accountants LLP

Firm Registration Number: 012754N/N500016 Chartered Accountants

RAGUNATHAN K

Company Secretary ACS: 62397 Place: Coimbatore

Date: May 21, 2021

JAYAKANTHAN R

Chief Financial Officer Place: Coimbatore

BASKAR PANNERSELVAM

Partner Membership No: 213126

Place: Coimbatore Date: May 21, 2021

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ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

Consolidated Statement of Profit and Loss for the year ended March 31, 2021

Particulars	Notes	March 31, 2021	March 31, 2020
Revenue from operations	29	19,240.50	18,293.92
Other income	30	234.98	132.14
Total income		19,475.48	18,426.06
Expenses
Cost of materials consumed	31	7,055.28	7,571.66
Purchases of stock-in-trade	32	2,914.02	2,531.23
Changes in inventories of fnished goods, work-in- progress and stock-in-trade	33	306.40	(296.57)
Employee benefts expenses	34	4,117.42	4,045.64
Finance costs	35	134.83	155.47
Depreciation and amortisation expenses	36	743.38	652.32
Other expenses	37	2,690.81	3,083.10
Total expenses		17,962.14	17,742.85
Proft before share of net profts of investments accounted for usingequitymethod and tax		1,513.34	683.21
Share of proft of joint ventures accounted for usingequitymethod		14.16	12.40
Proft before tax		1,527.50	695.61
Income tax expense	27(a)
- Current tax		515.57	378.94
- Deferred tax		(12.92)	(109.00)
Proft for theyear		1,024.85	425.67
Other comprehensive income
Items that will not be reclassifed to proft or loss
Change in fair value of FVOCI equity instruments	20 (h)	37.59	(26.04)
Remeasurement of post-employment beneft obligations	20 (f)	13.78	3.76
Income tax relatingto these items	20 (f)	(3.46)	(0.95)
Share of other comprehensive income of joint ventures accounted for using equity method	20 (f)	(0.43)	(0.04)
Items that will be reclassifed toproft or loss
Changes in fair value of interest rate swap	20 (h)	12.60	(13.21)
Deferred tax relatingto above	20 (h)	(3.78)	3.96
Changes in foreign currency translation	20 (h)	(31.00)	142.39
reserve
Other comprehensive income for the year, net of tax		25.30	109.87
Total comprehensive income for theyear		1,050.15	535.54

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ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

Consolidated Statement of Profit and Loss for the year ended March 31, 2021 (Continued...)

Particulars	Notes	March 31, 2021	March 31, 2020
Earnings per equity share for proft attributable to the owners of Elgi Equipments limited	48	–	–
Nominal value of the shares		1.00	1.00
(1) Basic		3.24	1.34
(2) Diluted		3.24	1.34

The above Consolidated Statement of Profit and Loss should be read in conjunction with the accompanying notes.

For and on behalf of the Board of Directors

As per our report of even date

N. MOHAN NAMBIAR

Director DIN: 00003660 Place: Coimbatore

JAIRAM VARADARAJ

Managing Director DIN: 00003361 Place: Charlotte, North Carolina, USA

For Price Waterhouse Chartered Accountants LLP

Firm Registration Number: 012754N/N500016 Chartered Accountants

RAGUNATHAN K

Company Secretary ACS: 62397 Place: Coimbatore

JAYAKANTHAN R

Chief Financial Officer Place: Coimbatore

BASKAR PANNERSELVAM

Partner Membership No: 213126

Date: May 21, 2021

Place: Coimbatore Date: May 21, 2021

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190

ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

Consolidated Statement of Changes in Equity

i)	Equity Share Capital
	Particulars	Notes	Amounts
	Balance as at April 01, 2019	19	158.45
	Changes in equity share capital during the year		–
	Balance as at March 31, 2020	19	158.45
	Issue of bonus shares(refer note 19(iii))		158.46
	Balance as at March 31, 2021		316.91

ii) Other Equity

Description Notes	Attributable to the owners of Elgi Equipments Limited	Attributable to the owners of Elgi Equipments Limited	Total equity
	Reserve and Surplus	Other reserve
	Capital Reserve Statutory reserve Securities premium General reserve Treasury stock Share options outstanding account Retained earnings Total	FVOCI - Equity instruments Cash Flow hedge reserve Foreign currency translation reserve Total
Balance as at April 01, 2019	181.41 5.49 409.37 1,162.63 (11.40) – 5,591.45 7,338.95	57.39 (20.38) 174.41 211.42	7,550.65
Proft for the year 20	– – – – – – 425.67 425.67	– – – –	425.67
Other comprehensive income 20	– – – – – – 2.81 2.81	(26.04) (9.25) 142.39 107.10	109.91
Share of other comprehensive income of joint ventures accounted for using equity method 20	– – – – – – (0.04) (0.04)	– – – –	(0.04)
Total comprehensive income for the year	– – – – – – 428.44 428.44	(26.04) (9.25) 142.39 107.10	535.54
Transactions with owners in their capacity as owners: Employee stock option expense	– – – – – 0.21 – 0.21	– – – –	0.21
Dividend paid (including dividend distribution tax)* 20	– – – – – – (554.92) (554.92)	– – – –	(554.92)
Balance as at March 31, 2020	181.41 5.49 409.37 1,162.63 (11.40) 0.21 5,464.97 7,212.68	31.35 (29.63) 316.80 318.52	7,531.48

*includes tax paid on dividend received from foreign subsidiaries and redistributed to the shareholders.

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ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

Consolidated Statement of Changes in Equity (Continued...)

Description Notes	Attributable to the owners of Elgi Equipments Limited	Attributable to the owners of Elgi Equipments Limited	Total equity
	Reserve and Surplus	Other reserve
	Capital Reserve Statutory reserve Securities premium General reserve Treasury stock Share options outstanding account Retained earnings Total	FVOCI - Equity instruments Cash Flow hedge reserve Foreign currency translation reserve Total
Balance at April 01, 2020	181.41 5.49 409.37 1,162.63 (11.40) 0.21 5,464.97 7,212.68	31.35 (29.63) 316.80 318.52	7,531.48
Proft for the year 20	– – – – – – 1,024.85 1,024.85	– – – –	1,024.85
Other Comprehensive Income 20	– – – – – – 10.32 10.32	37.59 8.82 (31.00) 15.41	25.73
Share of other comprehensive income of joint ventures accounted for using equity method 20	– – – – – – (0.43) (0.43)	– – – –	(0.43)
Total Comprehensive Income for the year	– – – – – – 1,034.74 1,034.74	37.59 8.82 (31.00) 15.41	1,050.15
Transactions with owners in their capacity as owners: Purchase of shares for ESOP scheme 20	– – – – (44.04) – – (44.04)	– – – –	(44.04)
Issue of bonus shares (refer note 19 (iii)) 20	– – (158.45) – – – – (158.45)	– – – –	(158.45)
Dividend paid (including dividend distribution tax) 20	– – – – – – – –	– – – –	–
Employee stock option expense 20	– – – – – 2.81 – 2.81	– – – –	2.81
Transfer of gain on FVOCI equity instruments 20	– – – – – – 2.13 2.13	(2.13) – – (2.13)	–
Balance as at March 31, 2021	181.41 5.49 250.92 1,162.63 (55.44) 3.02 6,501.84 8,049.87	66.81 (20.81) 285.80 331.80	8,381.95

The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.

For and on behalf of the Board of Directors

As per our report of even date

N. MOHAN NAMBIAR

Director DIN: 00003660 Place: Coimbatore

JAIRAM VARADARAJ

Managing Director DIN: 00003361 Place: Charlotte, North Carolina, USA

For Price Waterhouse Chartered Accountants LLP

Firm Registration Number: 012754N/N500016 Chartered Accountants

RAGUNATHAN K

Company Secretary ACS: 62397 Place: Coimbatore

Date: May 21, 2021

JAYAKANTHAN R

Chief Financial Officer Place: Coimbatore

BASKAR PANNERSELVAM

Partner Membership No: 213126

Place: Coimbatore Date: May 21, 2021

ANNUAL REPORT 2020-21

192

ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

Consolidated Statement of Cash Flows

Particulars	March 31, 2021	March 31, 2020
Cash fow from operatingactivities
Proft before tax	1,527.50	695.61
Adjustments for
Depreciation and amortisation expense	743.38	652.32
Bad debts and allowance for doubtful debts	34.46	53.53
Gain on disposal ofproperty,plant and equipment	(3.95)	(4.13)
Share ofprofts of associates andjoint ventures	(14.16)	(12.40)
Rental income from Investmentproperty(net of expenses)	(4.85)	(7.14)
Net unrealised exchange diferences	(61.49)	38.56
Non-cash employee share basedpayments	2.81	0.21
Dividend and interest income classifed as investingcash fows	(93.77)	(66.31)
Finance costs	134.83	155.47

Change in operating assets and liabilities, net of effects from purchase of subsidiary/business

Change in operating assets and liabilities, net of efects frompurchase of subsidiary/business
Increase in trade receivables	(564.16)	(48.57)
(Increase)/decrease in inventories	7.37	(268.85)
Increase/(decrease) in tradepayables	801.32	(437.62)
(Increase)/decrease in other fnancial assets	7.30	(15.32)
(Increase)/decrease in other current assets	30.30	(58.21)
Increase inprovisions	5.79	63.83
Increase/(decrease) in other fnancial liabilities	120.99	(15.29)
Increase in other current liabilities	13.82	55.60
Cashgenerated from operations	2,687.49	781.29
Income taxespaid (net of refund)	(287.08)	(426.49)
Net cash infow from operatingactivities	2,400.41	354.80
Cash fows from investingactivities
Payments forproperty, plant and equipment and intangible assets	(311.68)	(439.19)
Payment for acquisition of subsidiary/business,net of cash acquired	–	(386.26)
Payments for settlement of contingent consideration in relation to acquisition of subsidiary/ business	(73.49)	(180.87)
Payment for acquisition of business/assets	–	(138.46)
Investment in Joint ventures	(77.73)	(9.43)
Loans(given to)/recovered from employees(net)	29.98	(5.41)
Proceeds from buy–back of FVOCI equityinstruments	2.35	–
Subscription to rights issue of FVOCI equityinstruments	(0.81)	–
Proceeds from sale ofproperty, plant and equipment	23.61	21.19

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ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

Consolidated Statement of Cash Flows (Continued...)

Particulars	March 31, 2021	March 31, 2020
Cash fows from investing activities (continued...)
Rental income from Investmentproperty(net of expenses)	4.85	7.14
Dividends received on equityinstruments	0.25	1.03
Dividends received from associate andjoint venture	14.22	15.33
Investments in Deposits with Banks/Financial institutions	(785.65)	(462.77)
Interest received	78.97	61.91
Net cash outfow from investingactivities	(1,095.13)	(1,515.79)
Cash fows from fnancing activities
Interestpaid	(133.40)	(144.70)
Purchase of shares under ESOP scheme	(44.04)	–
Proceeds from Longterm borrowings from banks	125.82	443.34
Repayment of Longterm borrowings to banks	(304.29)	(442.69)
Net Short term loans borrowed from Banks	12.85	1,703.24
Payment of lease liabilities	(137.20)	(92.88)
Dividendspaid to Company’s shareholders	(1.93)	(464.58)
Dividend taxpaid	–	(88.02)
Net cash infow/(outfow) from fnancingactivities	(482.19)	913.71
Net increase/(decrease) in cash and cash equivalents	823.09	(247.28)
Cash and cash equivalents at the beginningof the fnancialyear	455.10	702.38
Cash and cash equivalents at end of theyear*	1,278.19	455.10

• includes restricted cash and cash equivalents in relation to balance in unclaimed dividend account (refer note 12).

The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.

For and on behalf of the Board of Directors

As per our report of even date

N. MOHAN NAMBIAR

JAIRAM VARADARAJ

Director Managing Director DIN: 00003660 DIN: 00003361 Place: Coimbatore Place: Charlotte, North Carolina, USA

For Price Waterhouse Chartered Accountants LLP

Firm Registration Number: 012754N/N500016 Chartered Accountants

RAGUNATHAN K

Company Secretary ACS: 62397 Place: Coimbatore

JAYAKANTHAN R

Chief Financial Officer Place: Coimbatore

BASKAR PANNERSELVAM

Partner Membership No: 213126

Place: Coimbatore Date: May 21, 2021

Date: May 21, 2021

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ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

General Information

Elgi Equipments Limited (“the Company”) is engaged in manufacturing of air compressors. The Company has manufacturing plants in different locations in India and has its registered office in Coimbatore. Along with its subsidiaries, Elgi Equipments Limited is engaged in manufacture, trading of air compressors and automotive garage equipments and also providing related after sales services. Elgi Equipments limited together with its subsidiaries is herein after referred as ‘the Group’ The Company is a public limited Company and listed on both the Bombay Stock Exchange and the National Stock Exchange.

1 Significant accounting policies

This note provides a list of the significant accounting policies adopted in the preparation of the consolidated financial statements. These policies have been consistently applied to all the years presented unless otherwise stated.

(a) Basis of preparation

(i) Compliance with Ind AS

The consolidated financial statements comply in all material aspects with Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 (the Act), Companies (Indian Accounting Standards) Rules, 2015 and other relevant provisions of the Act. The Consolidated Financial Statement has been approved by the Board of Directors in their meeting held on May 21, 2021.

(ii) Historical cost convention

The financial statements are prepared on a historical cost basis, except for the following:

• a) certain financial assets and liabilities (including derivative instruments) and commitments that are measured at fair value,

• b) defined benefit plans — plan assets measured at fair value and

• c) share based payments.

(iii) New and amended standards adopted by the group

The group has applied following amendments to Ind AS for the first time in their annual reporting period commencing April 01, 2020:

1. Definition of Material – amendments to Ind AS 1 and Ind AS 8.

2. Definition of a Business – amendments to Ind AS 103, Also refer note 1(i) Business Combinations.

3. Long-term Interests in Associates and Joint Ventures – Amendments to Ind AS 28, Investment in Associates and Joint Venture.

4. Prepayment Features with Negative Compensation - Amendments to Ind AS 109, Financial Instruments.

5. COVID-19 related concessions – amendments to Ind AS 116.

6. Interest Rate Benchmark Reform – amendments to Ind AS 109 and Ind AS 107.

The amendments listed above did not have any impact on the amounts recognised in prior periods and are not expected to significantly affect the current or future periods.

(b) Segment Reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.

The Managing Director (MD) of the Company has been identified as the chief operating decision maker of Elgi Equipments Limited who assesses the financial performance and position of the Company and makes strategic decisions. Refer note 41 for segment information presented.

(c) Principles of consolidation and equity accounting

(i) Subsidiaries

Subsidiaries are all entities (including structured entities) over which the group has control. The group controls an entity when the group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the relevant activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are deconsolidated from the date that control ceases.

The acquisition method of accounting is used to account for business combinations by the group.

The group combines the financial statements of the parent and its subsidiaries line by line adding

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ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

together like items of assets, liabilities, equity, income and expenses. InterCompany transactions, balances and unrealised gains on transactions between group Companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group.

(ii) Joint arrangements

Under Ind AS 111 Joint Arrangements, investments in joint arrangements are classified as either joint operations or joint ventures. The classification depends on the contractual rights and obligations of each investor, rather than the legal structure of the joint arrangement. Elgi Equipments Limited has both joint operations and joint ventures.

Joint operations

The group recognises its direct right to the assets, liabilities, revenues and expenses of joint operations and its share of any jointly held or incurred assets, liabilities, revenues and expenses.

Joint ventures

Interests in joint ventures are accounted for using the equity method (see (iii) below), after initially being recognised at cost in the consolidated balance sheet.

(iii) Equity method

Under the equity method of accounting, the investments are initially recognised at cost and adjusted thereafter to recognise the group’s share of the post-acquisition profits or losses of the investee in profit and loss and the group’s share of other comprehensive income of the investee in other comprehensive income. Dividends received or receivable from associates and joint ventures are recognised as a reduction in the carrying amount of the investment.

When the group’s share of losses in an equity-accounted investment equals or exceeds its interest in the entity, including any other unsecured long-term receivables, the group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the other entity.

Unrealised gains on transactions between the group and its associates and joint ventures are eliminated to the extent of the group’s interest in these entities. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of equity accounted investees have been changed where necessary to ensure consistency with the policies adopted by the group.

The carrying amount of equity accounted investments are tested for impairment in accordance with the policy described in note 1(j) below.

(d) Foreign currency translation

(i) Functional and presentation currency

Items included in the financial statements of the group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in Indian rupee (INR), which is Elgi Equipment Limited’s functional and presentation currency.

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally recognised in profit or loss. A monetary item for which settlement is neither planned nor likely to occur in the foreseeable future is considered as a part of the entity’s net investment in that foreign operation.

Non-monetary items that are measured at fair value in a foreign currency are translated using exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as a part of the fair value gain or loss. For example, translation differences on non-monetary assets and liabilities such as equity instruments held at fair value through profit or loss are recognised in profit or loss account as a part of fair value gain or loss and translation differences on non-monetary assets such as equity investments classified as at FVOCI are recognised in other comprehensive income.

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ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

(iii) Group Companies

The results and financial position of foreign operations (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows :

• assets and liabilities are translated at the closing rate at the date of that balance sheet

• income and expenses are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which incomes and expenses are translated at the dates of the transactions) and

• all resulting foreign exchange differences are recognised in other comprehensive income.

On Consolidation, exchange differences arising from the translation of any net investment in foreign entities and of borrowings and other financial instruments designated as hedges of such investments, are recognised in other comprehensive income.

When a foreign operation is sold, the associated exchange differences are reclassified to profit or loss as a part of the gain or loss on sale.

Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate.

The results and financial position of foreign operation which have a functional currency similar to the group are translated using the same principle enumerated in Note (d)(ii) above.

(e) Revenue recognition

Revenue is recognised when a customer obtains control of promised goods or service and thus has the ability to direct the use and obtain the benefits from the goods or service in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. For each contract with a customer, the group applies the below five step process before revenue can be recognised:

• identify contracts with customers

• identify the separate performance obligation

• determine the transaction price of the Contract

• allocate the transaction price to each of the separate performance obligations and

• recognise the revenue as each performance obligation is satisfied.

(i) Sale of products:

The group manufactures and sells a range of air compressors, automotive equipments and related parts. Sales are recognised when control of the product has transferred, being when the products are delivered to the customers and there is no unfulfilled obligations that could effect the customer’s acceptance of products. Delivery occurs when the products have been shipped from the warehouse to the specific location in case of domestic sales and when a bill of lading is generated in case of exports, the risk of obsolescence and loss have been transferred to the customer and either the customer has accepted the product in accordance with the sales contract, the acceptance provision has lapsed, or the group has objective evidence that all criteria for acceptance have been satisfied. Where the group sells goods and also has transportation obligation and where the control of the goods get transferred, the sale of goods and transportation is treated as separate performance obligation.

The group’s obligation to repair/replace faulty product under the standard warranty terms is recognised as a provision. See note no 26.

A receivable is recognised when the goods are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due. The credit facility is as per standard industry terms, thus there is no significant financing component.

(ii) Sale of Services:

The performance obligation under service contract are installation, maintenance and other ancillary services set forth in the contracts. Revenue from rendering of services are recognised over a period of time by reference to the stage of completion as the customer simultaneously receives and consumes the benefit provided by the

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ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

group’s performance as the group performs. In case of transportation revenue, the group recovers actual cost of transportation from the customers. The cost is either billed separately in the invoice or included in the total transaction price. Where the transaction price is inclusive of cost of transportation, the group splits the transaction price into Sale of product and Sale of services. Payment for the service rendered is made as per the credit terms in the agreements with the customers. The credit period is generally short term, thus there is no significant financing component.

Duty drawback : Income from duty drawback is recognised on accrual basis.

Royalty : Royalty is recognised on accrual basis in accordance with terms of respective agreements.

Rent : Rental Income is recognised on accrual basis in accordance with terms of respective rent agreements.

(f) Government grants

Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the group will comply with all the attached conditions.

Government grants relating to income are deferred and recognised in the profit or loss over the period necessary to match them with the costs that they are intended to compensate. Government grant is recognised either as other income or adjusted against expenses depending upon the nature of the grant and the same is followed consistently.

Government grants relating to purchase of property, plant and equipment are presented by deducting the grant from carrying amount of the asset.

(g) Income taxes

The income tax expense or credit for the period is the tax payable on the current period’s taxable income based on the applicable income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.

Current tax liabilities (assets) for the current and prior periods are measured at the amount expected to be paid to (recovered from) the taxation authorities, using the tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting

period. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting profit nor taxable profit (tax loss). Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred tax assets are recognised for all deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

Deferred tax liabilities are not recognised for temporary differences between the carrying amount and tax bases of investments in subsidiaries and interest in joint arrangements where the group is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.

Deferred tax assets are not recognised for temporary differences between the carrying amount and tax bases of investments in subsidiaries and interest in joint arrangements where it is not probable that the differences will reverse in the foreseeable future and taxable profit will not be available against which the temporary difference can be utilised.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability, simultaneously.

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ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

(h) Leases

As a lessor

Lease income from operating leases where the group is a lessor is recognised in other income on a straightline basis over the lease term unless the receipts are structured to increase in line with expected general inflation to compensate for the expected inflationary cost increases. The respective leased assets are included in the balance sheet based on their nature.

As a lessee

Leases are recognised as right of use assets and corresponding liabilities at the date at which the leased asset are available for use by the group. Contracts may contain both lease and non-lease components. The group allocates the consideration in the contract to the lease and non-lease components based on their relative stand-alone prices. However for leases of real estate for which the group is the lessee, it has elected not to separate the lease and non-lease components and instead accounts for these as single lease component.

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:

• fixed payments (including in-substance fixed payments), less any lease incentives receivable

• variable lease payment that are based on an index or a rate, initially measured using the index or rate as at the commencement date

of the liability. The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for leases in the group, the lessee’s incremental borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security and conditions.

To determine the incremental borrowing rate, the group:

• where possible, uses recent third-party financing received by the individual lessee as a starting point, adjusted to reflect changes in financing conditions since third party financing was received

• uses a build-up approach that starts with a risk-free interest rate adjusted for credit risk for leases held by group, which does not have recent third party financing and

• makes adjustments specific to the lease, such as term, country, currency and security.

Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

Right-of-use assets are measured at cost comprising the following:

• the amount of the initial measurement of lease liability

• any lease payments made at or before the commencement date less any lease incentives received

• any initial direct costs and

• restoration costs.

• amounts expected to be payable by the group under residual value guarantees

• the exercise price of a purchase option, if the group is reasonably certain to exercise that option and

• payments of penalties for terminating the lease, if the lease term reflects the group exercising that option.

Lease payments to be made under reasonably certain extension options are also included in the measurement

Right-of-use assets are generally depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis. If the group is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset’s useful life.

Payments associated with short-term leases of equipment are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less.

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ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

As a lessor

Lease income from operating leases where the group is a lessor is recognised in income on a straight-line basis over the lease term unless the receipts are structured to increase in line with expected general inflation to compensate for the expected inflationary cost increases. The respective leased assets are included in the balance sheet based on their nature.

The group did not need to make any adjustments to the accounting for the assets held as lessor as a result of adopting the new standard.

(i) Business combinations

A business combination is a transaction or other event in which an acquirer obtains control of one or more businesses and results in the consolidation of the assets and liabilities acquired. Business combinations are accounted for by applying the acquisition method. The group also elects to apply the optional test (the concentration test) which permits a simplified assessment of whether an acquired set of activities and assets is not a business on each transaction basis.

The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity instruments issues or liabilities incurred by the acquirer to former owners of the acquiree. Deferred consideration payable is measured at its acquisition-date fair value. Contingent consideration to be transferred by the acquirer is recognised at the acquisition-date fair value. At each reporting date subsequent to the acquisition, contingent consideration payable is measured at its fair value with any changes in the fair value recognised in profit or loss unless the contingent consideration is classified as equity, in which case the contingent consideration is carried at its acquisitiondate fair value.

Goodwill is recognised initially at the excess of: (a) the aggregate of the consideration transferred, the fair value of the non-controlling interest and the acquisition date fair value of the acquirer’s previously held equity interest (in case of step acquisition); over (b) the net fair value of the identifiable assets acquired and liabilities assumed. If the net fair value of the acquirer’s interest in the identifiable assets acquired and liabilities assumed is greater than the aggregate of the consideration transferred, the fair value of the non-controlling interest and the acquisition date fair value of the

acquirer’s previously held equity interest, the difference is immediately recognised as a gain in the profit or loss.

Acquisition related costs are expensed as incurred.

(j) Impairment of assets

Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period.

(k) Cash and cash equivalents

For the purpose of presentation in the statement of cash flows, cash and cash equivalents include cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Other facilities availed from Bank are shown within borrowings in current liabilities in the balance sheet.

Cash Flow Statement: The Cash flow from Operating activities are prepared under the Indirect method, whereby profit or loss is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and items of income or expense associated with investing or financing cash flows.

(l) Trade receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment, if any.

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ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

(m) Inventories

Raw materials and stores, work in progress, traded and finished goods

Raw materials and stores, work in progress, traded and finished goods are stated at the lower of cost and net realisable value. Cost of raw materials and traded goods comprises cost of purchases. Cost of work-in-progress and finished goods comprises direct materials, direct labour and an appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on the basis of normal operating capacity. Cost of inventories also include all other costs incurred in bringing the inventories to their present location and condition. Costs are assigned to individual items of inventory on the basis of first-in first-out basis. Costs of purchased inventory are determined after deducting rebates and discounts. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

(n) Investments and other financial assets

(i) Classification

The group classifies its financial assets in the following measurement categories:

• a) those to be measured subsequently at fair value (either through other comprehensive income or through profit or loss) and

• b) those measured at amortised cost.

The classification depends on the entity’s business model for managing the financial assets and the contractual terms of the cash flows. For assets measured at fair value, gains and losses will either be recorded in profit or loss or other comprehensive income. For investments in equity instruments, that are not held for trading, this will depend on whether the group has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income.

The group reclassifies debt investments when and only when its business model for managing those assets changes.

(ii) Recognition

Regular way purchases and sales of financial assets are recognised on trade-date, the date on which the group commits to purchase or sale of financial asset.

(iii) Measurement

At initial recognition, the group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.

Debt instruments

Subsequent measurement of debt instruments depends on the group’s business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which the group classifies its debt instruments:

• a) Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. Interest income from these financial assets is included in the finance income using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in other gains/(losses). Impairment losses are presented as separate line item in the statement of profit and loss.

• b) Fair value through other comprehensive income (FVOCI): Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets’ cash flows represent solely payments of principal and interest, are measured at fair value through other comprehensive income (FVOCI). Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest income and foreign exchange gains and losses which are recognised in profit and loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss and recognised in other income/ (expense). Interest income from these financial assets is included in other income using the effective interest rate method. Foreign exchange gains and losses are presented in other gains/ (losses) and impairment expenses are presented as separate line item in statement of profit and loss.

• c) Fair value through profit or loss: Assets that do not meet the criteria for amortised cost or FVOCI are

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ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

measured at fair value through profit or loss. A gain or loss on a debt investment that is subsequently measured at fair value through profit or loss and is not part of a hedging relationship is recognised in profit or loss and presented net in the statement of profit and loss within other income/ (expense) in the period in which it arises. Interest income from these financial assets is included in other income.

Equity instruments

The group measures all equity investments at fair value, except for investments forming part of interest in subsidiaries and joint ventures, which are measured at cost. Where the group’s management has elected to present fair value gains and losses on equity investments in other comprehensive income, there is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investment. Dividends from such investments are recognised in profit or loss as other income when the group’s right to receive payments is established.

Changes in the fair value of financial assets at fair value through profit or loss are recognised in other income/ (expense) in the statement of profit and loss. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value.

(iv) Impairment of financial assets

The group assesses on a forward looking basis the expected credit losses associated with its assets carried at amortised cost and FVOCI debt instruments. The impairment methodology applied depends on whether there has been a significant increase in credit risk. Note 39 details how the group determines whether there has been a significant increase in credit risk.

For trade receivables only, the group applies the simplified approach permitted by Ind AS 109 Financial Instruments, which requires expected lifetime losses to be recognised from initial recognition of the receivables.

(v) Derecognition of financial assets

A financial asset is derecognised only when

• a) The group has transferred the rights to receive cash flows from the financial asset or

• b) The group retains the contractual rights to receive the cash flows of the financial asset, but assumes a

contractual obligation to pay the cash flows to one or more recipients.

Where the group has transferred an asset, it evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is derecognised. Where the group has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not derecognised.

Where the group has neither transferred a financial asset nor retained substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognised if the group has not retained control of the financial asset. Where the group retains control of the financial asset, the asset is continued to be recognised to the extent of continuing involvement in the financial asset.

(vi) Income recognition

a) Interest income

Interest income from financial assets at fair value through profit or loss is disclosed as interest income within other income. Interest income on financial assets at amortised cost and financial assets at FVOCI is calculated using effective interest method is recognised in statement of profit and loss as part of other income.

Interest income is calculated by applying the effective interest rate to the gross carrying amount of financial assets except for financial assets that subsequently become credit impaired. For credit-impaired financial assets the effective interest rate is applied to the net carrying amount of the financial asset (after deduction of loss allowance).

b) Dividends

Dividends are recognised in profit or loss only when the right to receive payment is established, it is probable that the economic benefits associated with the dividend will flow to the group and the amount of the dividend can be measured reliably.

(o) Derivatives and hedging activities

Derivatives are only used for economic hedging purposes and not as speculative investments. However where derivatives do not meet the hedge accounting criteria, they are classified as ‘held for trading’ for accounting purposes and are accounted for FVPL. They

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ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

are presented as current assets and liabilities to the extent they are expected to be settled within 12 months after the end of the reporting period.

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured to their fair value at the end of each reporting period. The accounting for subsequent changes in fair value depends on whether the derivative is designated as hedging instrument and if so, the nature of item being hedged.

The group designates derivatives as hedges of a particular risk associated with cash flows of recognised assets and liabilities and highly probable forecast transactions (cash flow hedges).

At inception of hedge relationship, the group documents the economic relationship between hedging instruments and hedged items including whether the changes in the cash flows of hedging instruments are expected to offset changes in cash flows of hedged items. The group documents its risk management objective and strategy for undertaking its hedge transactions.

The full fair value of hedging derivative is classified as a non current asset or liability when the remaining maturity of the hedged item is more than 12 months, it is classified as current asset or liability when the remaining maturity of the hedged item is less than 12 months.

(i) Cash flow hedges that qualify for hedge accounting

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in cash flow hedging reserve within equity. The gain or loss relating to ineffective portion is recognised immediately in profit or loss, within other gains/(losses).

Changes in the fair value of derivative that are designated and qualified as cash flow hedges are recognised in equity in the cash flow hedging reserve (net of tax). This gain or loss is released to profit or loss in the same period when the forecast transactions occur, thereby offsetting any exchange fluctuations that would have been recognised in the absence of the hedge.

The gain or loss relating to the effective portion of the interest rate swaps hedging variable rate borrowings is recognised in profit or loss within ‘finance cost’ at

the same time as the interest expense on the hedged borrowings.

(ii) Derivatives that are not designated as hedges

The group enters into certain derivative contracts to hedge risks which are not designated as hedges. Such contracts are accounted for at fair value through profit or loss and are included in other income / (expense).

(p) Offsetting financial instruments

Financial assets and liabilities are offset and the net amount is reported in the balance sheet where there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the group or the counterparty.

(q) Property, plant and equipment

Freehold land is carried at historical cost. All other items of property, plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred.

Depreciation methods, estimated useful lives and residual value:

Depreciation is calculated using the straight-line and written down value methods to allocate their cost, net of their residual values, over their estimated useful lives.

The useful lives have been determined based on Schedule II to the Companies Act, 2013 except roads (classified as buildings), tools, jigs and fixtures, patterns and mould and dies (classified as plant and machinery),

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ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

where useful lives have been determined based on technical evaluation done by the management’s expert which are higher than those specified by Schedule II to the Companies Act; 2013, in order to reflect the actual usage of the assets. The residual values are not more than 5% of the original cost of the asset.

	Useful Life (years)
	As adopted by	As per
Asset	group	Schedule II
Roads	10	5
Tools, Jigs &
Fixture, Patterns,	5-8	15
Moulds & Dies

In relation to Elgi Compressors USA, Inc, the depreciation is recorded on the straight-line basis and written down value method over the estimated useful lives of 3 to 7 years for machinery and equipment, office furniture and fixtures and automobiles, over the life of the lease for leasehold improvements and 20 years for buildings. In Rotair SPA, the depreciation is recorded on the straight line method over the estimated useful lives of 10 years for light weight constructions classified under buildings, over 33 years for other buildings and over 4 to 10 years for other tangible assets.

The assets’ residual values and useful lives are reviewed and adjusted if appropriate, at the end of each reporting period.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit or loss within other income/(expense).

(r) Investment properties

Property that is held for long-term rental yields or for capital appreciation or both and that is not occupied by the group, is classified as investment property. Investment property is measured initially at its cost, including related transaction costs. Subsequent expenditure is capitalised to the asset’s carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the

group and the cost of the item can be measured reliably. All other repairs and maintenance costs are expensed when incurred. When part of an investment property is replaced, the carrying amount of the replaced part is derecognised.

Investment properties (other than land) are depreciated using the written down value method over their estimated useful lives. Investment properties have a useful life of 30 years. The useful lives have been determined based on Schedule II to the Companies Act, 2013.

(s) Goodwill and Other Intangible assets

Goodwill represents the future economic benefits arising from other assets acquired in a business combination that are not individually identifiable or separately recognised.

Goodwill is not amortized but it is tested for impairment annually or more frequently if events or changes in circumstances indicate that it might be impaired and is carried at cost less accumulated impairment losses.

The intangible assets includes technical know-how, customer relationships, brand, non-compete fees and computer software which are recorded at the cost of acquisition and are amortized over a period of their legal / useful life as below,

	Useful Life	(years)
	Elgi USA	Industrial Air	Elgi
	Compressors	Compressors	Equipments
	Inc.	Pty Ltd	Ltd & Others
Computer softwares	–	5	5
Drawings	–	–	5
Customer
relationships	8-10	15	–
Brand
	20	5	–
names
Non-
	5	3	3
compete

(t) Research and development

Development costs that are directly attributable to the design and testing of identifiable and unique products

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CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

controlled by the group are recognised as intangible assets when the following criteria are met:

• it is technically feasible to complete the asset so that it will be available for use

• management intends to complete the asset and use or sell it

• there is an ability to use or sell the product

• it can be demonstrated how the asset will generate probable future economic benefits

• adequate technical, financial and other resources to complete the development and to use or sell the asset are available and

• the expenditure attributable to the asset during its development can be reliably measured.

Directly attributable costs that are capitalised as part of the products include employee costs and an appropriate portion of relevant overheads.

Capitalised development costs are recorded as intangible assets and amortised from the point at which the asset is available for use.

Research and development expenditure that do not meet the criteria for recognition as intangible assets are recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as an asset in the subsequent period.

(u) Trade and Other Payables

These amounts represent liabilities for goods and services provided to the group prior to the end of financial year which are unpaid. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method.

of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates.

Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss as other gains / (losses).

Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period.

(w) Borrowing costs

General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale.

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

Other borrowing costs are expensed in the period in which they are incurred.

(v) Borrowings

(x) Provisions

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period

Provisions for legal claims, service warranties, volume discounts and returns are recognised when the group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount

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CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

can be reliably estimated. Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense.

(y) Employee Benefits

(i) Short-term obligations

Liabilities for wages and salaries, including nonmonetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised in respect of employees’ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as other financial liability in the balance sheet.

(ii) Other long-term employee benefit obligations

The liabilities for earned leave that are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting period that have terms approximating to the terms of the related obligation. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in profit or loss.

The obligations are presented as current liabilities in the balance sheet if the group does not have an

unconditional right to defer settlement for at least 12 months after the reporting period, regardless of when the actual settlement is expected to occur.

(iii) Post-employment obligations

The group operates the following post-employment schemes:

• (a) defined benefit plans such as gratuity and

• (b) defined contribution plans such as provident fund and Superannuation fund.

Gratuity obligations

The liability or asset recognised in the balance sheet in respect of defined benefit gratuity plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by actuaries using the projected unit credit method.

The present value of the defined benefit obligation denominated in INR is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation.

The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the statement of profit and loss.

Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the statement of changes in equity and in the balance sheet.

Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in profit or loss as past service cost.

Defined contribution plans

The group pays provident fund and superannuation fund contributions to Employee Provident Fund Account as per Employees Provident Fund Act, 1952 and Life Insurance Corporation of India, respectively.

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CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

The group has no further payment obligations once the contributions have been paid. The contributions are accounted for as defined contribution plans and the contributions are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available.

(z) Contributed Equity

Equity shares are classified as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

(aa) Dividends

(iv) Bonus plans

The group recognises a liability and an expense for bonuses. The group recognises a provision where contractually obliged or where there is a past practice that has created a constructive obligation.

Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the entity, on or before the end of the reporting period but not distributed at the end of the reporting period.

(v) Share based payments

Share based compensation benefits are provided to the employees via Elgi Equipments Limited Employees Stock Option Plan, 2019, an employee stock option scheme.

Employee Options:

The fair value of options granted under the Elgi Equipments Limited Employee Stock Option Plan,2019 is recognised as an employee benefit expense with a corresponding increase in the equity. The total amount to be expensed is determined by reference to the fair value of the options granted. Refer note 47.

• including any market performance conditions (e.g. the entity’s share price)

• excluding the impact of any service and non-market performance vesting conditions (e.g. profitability, sales growth targets and remaining an employee of the entity over a specified time period) and

• including the impact of any non-vesting conditions (e.g. the requirement for employees to hold the shares for a specific period of time).

The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each period, the entity revises its estimates of the number of options that are expected to vest based on the non-market vesting and service conditions. It recognises the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity.

(ab) Earnings Per Share

(i) Basic earnings per share

Basic earnings per share is calculated by dividing:

• the profit attributable to owners of the group

• by the weighted average number of equity shares outstanding during the financial year, adjusted for bonus elements in equity shares issued during the year and excluding treasury shares (note 48).

(ii) Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account:

• the after income tax effect of interest and other financing costs associated with dilutive potential equity shares and

• the weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares.

(ac) Insurance Claims

Insurance claims are accounted for on the basis of claims admitted / expected to be admitted and to the extent that the amount recoverable can be measured reliably and it is reasonable to expect ultimate collection.

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ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

(ad) Rounding of amounts

All amounts disclosed in the financial statements and notes have been rounded off to the nearest millions as per the requirement of Schedule III, unless otherwise stated.

included in relevant notes together with information about the basis of calculation for each affected line item in the financial statements.

The areas involving critical estimates or judgements are:

2 Critical estimates and judgements

Estimation of goodwill impairment – Note 5

Estimation of provision for warranty claims – Note 26

The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom equal the actual results. Management also needs to exercise judgement in applying the group’s accounting policies.

This note provides an overview of the areas that involved a higher degree of judgement or complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed. Detailed information about each of these estimates and judgements is

Estimation of defined benefit obligations and other employee terminal benefits – Note 26(a)

Estimation of current tax expense and payable – Note 27

Estimates and judgements are continually evaluated. They are based on historical experience and other factors, including expectations of future events that may have a financial impact on the group and that are believed to be reasonable under the circumstances.

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ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

3(a) Property, plant and equipment and capital work-in progress

					Furniture				Capital
			Plant &	Ofce	and		Canteen		work in
Particulars	Land	Building	Machinery	equipment	fxtures	Vehicle	equipments	Total	progress
Year ended March 31, 2020
Gross carrying amount
Opening gross carrying amount	578.90	1,341.25	2,349.29	39.06	184.53	139.59	26.52	4,659.14	51.42
Acquisition of subsidiary	–	–	1.20	–	–	6.11	–	7.31	–
Additions	–	16.55	423.09	7.67	27.84	8.86	3.69	487.70	473.49
Disposal	–	(0.12)	(24.47)	(0.21)	(0.77)	(5.83)	(0.21)	(31.61)	–
Exchange diference	19.99	26.57	13.65	0.05	9.10	3.05	1.48	73.89	–
Transfer to Right of use assets	–	–	(1.84)	–	(1.77)	(96.54)	–	(100.15)	–
Transfers	–	–	–	–	–	–	–	–	(487.70)
Closing gross carryingamount	598.89	1,384.25	2,760.92	46.57	218.93	55.24	31.48	5,096.28	37.21
Accumulated depreciation
Opening accumulated	–	498.00	926.91	26.96	139.61	58.00	20.97	1,670.45	–
depreciation
For theyear	–	101.71	284.39	7.33	19.72	7.86	3.58	424.59	–
Disposal	–	(0.08)	(10.87)	(0.19)	(0.69)	(3.62)	(0.06)	(15.51)	–
Exchange diference	–	9.10	14.98	0.01	7.36	3.97	1.16	36.58	–
Transfer to Right of use assets	–	–	(0.71)	–	(1.77)	(42.59)	–	(45.07)	–
Closingaccumulated depreciation	–	608.73	1,214.70	34.11	164.23	23.62	25.65	2,071.04	–
Net carryingamount	598.89	775.52	1,546.22	12.46	54.70	31.62	5.83	3,025.24	37.21
Year ended March 31, 2021
Gross carryingamount
Opening gross carryingamount	598.89	1,384.25	2,760.92	46.57	218.93	55.24	31.48	5,096.28	37.21
Additions	–	9.51	131.15	3.27	59.65	7.41	26.26	237.25	241.27
Disposal	–	(1.10)	(29.92)	(0.81)	(11.16)	(11.19)	(5.95)	(60.13)	–
Exchange diference	(6.48)	(0.11)	5.67	0.27	(1.47)	5.10	(0.71)	2.27	–
Transfers to Assets held for sale	(183.78)	(68.16)	–	–	–	–	–	(251.94)	–
Transfers	(1.28)	–	–	–	–	–	–	(1.28)	(237.25)
Closing gross carryingamount	407.35	1,324.39	2,867.82	49.30	265.95	56.56	51.08	5,022.45	41.23
Accumulated depreciation
Opening accumulated	–	608.73	1,214.70	34.11	164.23	23.62	25.65	2,071.04	–
depreciation
For theyear	–	96.47	291.36	5.90	24.67	15.73	5.42	439.55	–
Disposal	–	(0.31)	(13.59)	(0.25)	(9.79)	(10.36)	(5.95)	(40.25)	–
Exchange diference	–	(0.87)	4.68	0.11	(1.16)	1.05	(0.57)	3.24	–
Transfers to Assets held for sale	–	(28.40)	–	–	–	–	–	(28.40)	–
Closing accumulated depreciation	–	675.62	1,497.15	39.87	177.95	30.04	24.55	2,445.18	–
Net carrying amount	407.35	648.77	1,370.67	9.43	88.00	26.52	26.53	2,577.27	41.23

i) Property, plant and equipment pledged as security

Refer Note 46 for information on property, plant and equipment pledged as security by the group.

ii) Contractual obligations

Refer to note 45 for disclosure of contractual commitments for the acquisition of property, plant and equipment. iii) Capital work-in-progress

Capital work-in-progress mainly comprises of additions to plant & machinery under construction.

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ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

3(a) Property, plant and equipment and Capital work-in progress (Continued...)

iv) Assets given under operating lease

Reconciliation of gross and net carrying amount of assets given under lease as at March 31, 2021 and March 31, 2020 is given as follows:

iv) Assets given under operating lease Reconciliation of gross and net carrying amount of assets given under given as follows:	lease as at March 31, 2021 and March 31, 2020 is	lease as at March 31, 2021 and March 31, 2020 is
Particulars	Plant & Machinery
	March 31, 2021	March 31, 2020
Gross carryingamount	12.06	23.84
Accumulated depreciation	(3.78)	(5.76)
Net carryingamount	8.28	18.08

3(b) Leases

This note provides information for leases where the group is a lessee.

The group leases various offices, warehouses, equipment and vehicles. Rental contracts are typically made for fixed periods of 3 months to 20 years.

Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants other than the security interests in the leased assets that are held by the lessor.

i) Amounts recognised in the balance sheet

The balance sheet shows following amounts relating to leases:

a) Right of use assets

a) Right of use assets
		Plant &	Ofce	Furniture and
Particulars	Building	Machinery	equipment	Fixtures	Vehicle	Total
Year ended March 31, 2020
Gross carryingamount
Opening gross carryingamount	–	–	–	–	–	–
Contracts assessed as Right of use	306.36	–	–	–	5.22	311.58
assets on April 01, 2019
Finance Leases reclassifed from	–	1.84	–	1.77	96.54	100.15
Property, plant & equipment on
April 01, 2019
Additions (non-cash in nature)	63.06	1.53	3.15	0.68	82.05	150.47
Disposal	–	–	–	–	(3.20)	(3.20)
Exchange diference	9.86	0.27	(0.30)	0.21	13.94	23.98
Closing gross carryingamount	379.28	3.64	2.85	2.66	194.55	582.98

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ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

3(b) Leases (Continued...)

		Plant &	Ofce	Furniture and
Particulars	Building	Machinery	equipment	Fixtures	Vehicle	Total
Accumulated depreciation
Openingaccumulated depreciation	–	–	–	–	–	–
Finance Leases reclassifed from	–	0.71	–	1.77	42.59	45.07
Property, Plant & Equipments on
April 01, 2019
For theyear	76.05	0.36	0.85	0.14	33.71	111.11
Disposal	–	–	–	–	(2.24)	(2.24)
Exchange diference	0.68	0.09	(0.08)	0.17	5.86	6.72
Closingaccumulated depreciation	76.73	1.16	0.77	2.08	79.92	160.66
Net carryingamount	302.55	2.48	2.08	0.58	114.63	422.32
Year ended March 31, 2021
Gross carryingamount
Opening gross carryingamount	379.28	3.64	2.85	2.66	194.55	582.98
Additions (non-cash in nature)	323.51	–	0.09	1.00	36.75	361.35
Disposal	(32.41)	–	–	(0.95)	(3.08)	(36.44)
Exchange diference	12.27	(0.12)	0.60	(0.09)	(3.52)	9.14
Closing gross carryingamount	682.65	3.52	3.54	2.62	224.70	917.03
Accumulated depreciation
Openingaccumulated depreciation	76.73	1.16	0.77	2.08	79.92	160.66
For theyear	119.41	0.64	1.06	0.99	42.62	164.72
Disposal	(29.11)	–	–	(0.95)	(2.98)	(33.04)
Exchange diference	2.57	(0.05)	0.20	(0.07)	(2.58)	0.07
Closingaccumulated depreciation	169.60	1.75	2.03	2.05	116.98	292.41
Net carryingamount	513.05	1.77	1.51	0.57	107.72	624.62

b) Lease liabilities

Particulars	March	31, 2021	March 31, 2020
Current		159.41	105.57
Non-Current		504.20	333.94
		663.61	439.51

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ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

3(b) Leases (Continued...)

Particulars	March 31, 2021	March 31, 2020
Reconciliation:
Rental Contracts assessed as Leases on April 01, 2019	–	311.58
Add: Finance leases- reclassifed from Non-current borrowings	–	59.50
Add: Finance leases- reclassifed from Current fnancial liabilities	–	6.07
Restated openingbalance	439.51	377.15
Add: New leases recognised duringtheyear (non-cash in nature)	361.35	150.47
Less: Termination of lease contracts	(3.92)	–
Less: Repayment of leases liabilities	(137.20)	(92.88)
Add/Less: Exchange diference	3.87	4.77
Closingbalance	663.61	439.51

ii) Amounts recognised in the statement of profit and loss

The statement of profit or loss shows the following amounts relating to leases:

Particulars	Note	March 31, 2021	March 31, 2020
Depreciation of Right of	36
use assets
Building		119.41	76.05
Plant & Machinery		0.64	0.36
Ofce equipment		1.06	0.85
Furniture and Fixtures		0.99	0.14
Vehicle		42.62	33.71
		164.72	111.11
Included in Finance costs	35
Interest expense		27.90	20.27
Included in other expenses	37
Expenses relating to short		59.79	58.93
term leases (included in
Other expenses)
		87.69	79.20

(iii) Cash outflow

The total cash outflow for leases is 224.89 million and 172.08 million for the year ended March 31, 2021 and March 31, 2020, respectively.

(iv) Extension and termination options

Extension and termination options are included in a number of property leases. The majority of extension and termination options held are exercisable only by the group and not by respective lessor.

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ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

4 Investment properties

Particulars	March 31, 2021	March 31, 2020
	Land Building Total	Land Building Total
Gross carryingamount
Opening gross carrying amount	162.27 4.99 167.26	162.27 4.99 167.26
Additions	– – –	– – –
Transfers	1.28 – 1.28	– – –
Closing gross carryingamount	163.55 4.99 168.54	162.27 4.99 167.26
Accumulated depreciation
Opening accumulated depreciation	– 0.48 0.48	– 0.42 0.42
Depreciation charge	– 0.05 0.05	– 0.06 0.06
Closing accumulated depreciation	– 0.53 0.53	– 0.48 0.48
Net carryingamount	163.55 4.46 168.01	162.27 4.51 166.78
(i) Amounts recognised inproft or loss for investmentproperties
Particulars March 31, 2021 March 31, 2020
Rental income		5.57 7.86
Direct operating expenses from property that generated rental income		(0.72) (0.72)
Proft from investmentproperties before depreciation		4.85 7.14
Depreciation		(0.05) (0.06)
Proft from investmentproperty		4.80 7.08
(ii) Fair value
Particulars	March 31, 2021	March 31, 2020
	Land Building Total	Land Building Total
Investmentproperty	522.19 4.46 526.65	522.19 4.51 526.70

Estimation of fair value

The fair values of investment properties have been determined as follows:

• (i) for the investment property purchased during the year, the transaction price has been considered as the fair value, considering the shorter time period between date of acquisition of the asset and the reporting date.

• (ii) for others, the fair values of investment properties have been determined with reference to the guideline value as determined by the Government for the location at which the property is located, increased by the depreciated value of buildings. All the resulting fair value estimates of investment properties are included in Level 2. The Guideline values were revised by the Government of Tamil Nadu with effect from June 09, 2017.

Investment properties pledged as security

Refer note 46 for information on property, plant and equipment pledged as security by the group.

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ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

5 Intangible assets and Goodwill

					Non-	Total
	Computer		Customer	Brand	compete	intangible
Particulars	software	Drawings	relationships	names	fees	assets	Goodwill
Year ended March 31, 2020
Gross CarryingAmount
Opening gross carryingamount	100.92	–	110.21	123.22	116.63	450.98	1,528.84
Acquisition of subsidiary	–	24.75	220.80	–	13.52	259.07	217.61
Additions	30.36	–	–	–	–	30.36	–
Disposal	–	–	–	–	–	–	–
Exchange diferences	2.43	–	9.61	(7.85)	(6.52)	(2.33)	108.81
Closing gross carryingamount	133.71	24.75	340.62	115.37	123.63	738.08	1,855.26
Accumulated amortisation
Openingaccumulated amortisation	45.95	–	4.90	16.43	25.92	93.20	–
For theyear	26.38	3.73	22.91	24.21	39.33	116.56	–
Disposal	–	–	–	–	–	–	–
Exchange diferences	1.29	–	0.38	(2.13)	(3.30)	(3.76)	–
Closingaccumulated amortisation	73.62	3.73	28.19	38.51	61.95	206.00	–
Closingnet carryingamount	60.09	21.02	312.43	76.86	61.68	532.08	1,855.26
Year ended March 31, 2021
Gross CarryingAmount
Opening gross carryingamount	133.71	24.75	340.62	115.37	123.63	738.08	1,855.26
Additions	41.72	–	–	–	–	41.72	–
Disposal	(0.22)	–	–	–	–	(0.22)	–
Exchange diferences	2.18	–	13.83	24.14	22.41	62.56	23.86
Closing gross carryingamount	177.39	24.75	354.45	139.51	146.04	842.14	1,879.12
Accumulated amortisation
Openingaccumulated amortisation	73.62	3.73	28.19	38.51	61.95	206.00	–
For theyear	24.69	4.94	37.85	26.96	44.62	139.06	–
Disposal	(0.20)	–	–	–	–	(0.20)	–
Exchange diferences	1.25	–	1.75	9.04	14.26	26.30	–
Closingaccumulated amortisation	99.36	8.67	67.79	74.51	120.83	371.16	–
Closingnet carryingamount	78.03	16.08	286.66	65.00	25.21	470.98	1,879.12

(i) Impairment tests for goodwill

Goodwill is monitored by management at the level of each Cash generating unit (CGU) :

A CGU level summary of the goodwill allocation is presented below.

Particulars	Italy	USA	Australia	India	Total
	Rotair business	Pattons business Michigan business FTG business	Pulford business	Others
March 31, 2021	489.58	887.82 171.06 53.43	275.51	1.72	1,879.12
March 31, 2020	475.75	917.94 176.86 55.25	227.74	1.72	1,855.26

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ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

5 Intangible assets and Goodwill (Continued...)

(ii) Significant estimate:

Key assumptions used for value-in-use calculations

The group tests whether goodwill has suffered any impairment on an annual basis. The recoverable amount of a cash generating unit (CGU) is determined based on value-in-use calculations which require the use of assumptions. The calculations use cash flow projections based on financial budgets approved by management covering a five year period. Cash flows beyond the five year period are extrapolated using the estimated growth rates stated below.

The following table sets out the key assumptions:

Particulars	Italy	USA	Australia
	Rotair business	Pattons business Michigan business Portables business	Pulford business
March 31, 2021
Longtermgrowth rate (%)	2.00	3.00 3.00 3.00	2.50
Post-tax discount rate (%)	10.00	10.50 22.20 21.80	10.00
March 31, 2020
Longtermgrowth rate (%)	3.00	2.50 2.50 2.50	2.50
Post-tax discount rate (%)	10.00	7.77 7.77 7.77	10.00

Management has determined the values assigned to the assumptions as follows:

Assumption	Approach used to determiningvalues
Sales	Average annual growth rate over the explicit forecast period; based on past performance
	and management’s expectations of market development.
Budgetedgross margin	Based onpastperformance and management’s expectations for the future.
Other operating costs	Management forecasts these costs based on the current structure of the business, adjusting
	for infationaryincreases but not refectinganyfuture restructurings.
Annual capital	Expected cash costs in the CGUs. This is based on the historical experience of management,
expenditure	and the planned refurbishment expenditure. No incremental revenue or cost savings are
	assumed in the value-in-use model as a result of this expenditure.
Long-term growth rate	This is the weighted average growth rate used to extrapolate cash fows beyond the budget
	period. The rates are consistent with forecasts included in industryreports.
Post-tax discount rates	Refect specifc risks relating to the relevant businesses and the countries in which
	theyoperate.

The group has considered and assessed reasonably possible changes for key assumptions and have not identified any instances that could cause carrying amount of the above mentioned CGU’s to exceed its recoverable amount.

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ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

6 Financial assets - non-current investments

		Face Value
Particulars	No. of Shares	Per Share	March 31, 2021	March 31, 2020
(i) Investment in Equity Instruments
(fully paid-up) (Quoted)
At Fair Value through Other Comprehensive Income
Lakshmi Machine Works Ltd	50	`10/-	0.34	0.12
State Bank of India	3,600	`1/-	1.31	0.71
HDFC Bank Limited	5,000	`1/-	7.47	4.31
HousingDevelopment Finance Corp. Ltd.	12,000	`2/-	29.99	19.56
Magna Electro Castings Ltd	66,454	`10/-	11.41	8.09
[March 31, 2020 : 80,000 shares ]
Rajshree Sugars & Chemicals Ltd	2,29,000	`10/-	3.90	3.21
Pricol Ltd	1,21,172	`1/-	8.49	3.45
[March 31, 2020 : 94,245 shares ]
L.G.Balakrishnan & Bros.Ltd	4,992	`10/-	1.53	0.80
LGB Forge Limited	18,720	`1/-	0.07	0.03
Elgi Rubber CompanyLimited	7,63,700	`1/-	20.31	8.48
Insurance Australia GroupLimited	258	AUD 1/-	0.07	0.10
(ii) Investment in Equity Instruments (fully paid-up)
(Unquoted)
At Fair Value through Other Comprehensive Income
The Mill Ofcers Co-Op Housing Colony Ltd.	5	`50/-	–*	–*
Ahmedabad
Marol Co-operative Industrial Estate Limited	1,053	`100/-	0.11	0.06
B.C.C. Caraglio	258	Euro 1/-	0.02	0.02
Total			85.02	48.94
* amounts are below the rounding of norm adopted	by the group.
Aggregate amount of quoted investments and			84.89	48.86
market value thereof
Aggregate amount of unquoted investments			0.13	0.08
Aggregate amount of impairment in the value of			–	–
investments

ANNUAL REPORT 2020-21

216

ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

7 Loans (Non-current)

Particulars	March 31, 2021	March 31, 2020
Loans considered good - Unsecured
Loans to employees	54.29	74.97
	54.29	74.97

8 Other financial assets (non-current)

Security deposits	61.31	79.06
	61.31	79.06

9 Other non-current assets

Capital advances	54.32	51.45
	54.32	51.45

10 Inventories

(a) Raw materials and components*	1,392.05	1,072.91
(b) Work-in-progress	216.84	257.05
(c) Finished goods*	1,426.51	1,674.17
(d) Stock-in-trade*	323.06	348.14
(e) Stores and spares and packing materials*	33.82	47.79
(f) Loose tools*	34.65	34.24
	3,426.93	3,434.30

• Include goods in-transit 152.18 million and 86.20 million as on March 31, 2021 and March 31, 2020, respectively. Note: Raw materials, Work in progress and Finished goods include R&D inventory also.

11 Trade receivables

Unsecured, considered good	3,997.32	3,467.62
Unsecured, considered doubtful	89.23	55.41
	4,086.55	3,523.03
Less: Allowance for doubtful debts(expected credit loss	(89.23)	(55.41)
allowance)
	3,997.32	3,467.62

Note: For receivables from related parties refer note 43.

ANNUAL REPORT 2020-21

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ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

12 Cash and cash equivalents

Particulars	March 31, 2021	March 31, 2020
(a) Cash on hand	1.17	1.05
(b) Balance with banks
- In current accounts	558.32	276.51
- In EEFC accounts	–*	2.10
- In deposit accounts (with original maturity of	711.11	165.92
3 months or less)
- Balance in unclaimed dividend account**	7.59	9.52
	1,278.19	455.10

There are no repatriation restrictions with regard to cash and cash equivalents as at the end of the reporting period and prior periods.

*amount is below the rounding off norm adopted by the Company.

** Earmarked for payment of unclaimed dividend.

13 Other bank balances

- In deposit accounts (with original maturity period of more	1,342.70	402.05
than 3 months but remaining maturity less than 12 months)*
	1,342.70	402.05

*Includes margin money deposit of 242.86 million and 224.25 million as at March 31, 2021 and March 31, 2020, respectively.

14 Deposits with financial institutions

	Deposits with Housing Development Finance Corp. Ltd.	430.00	585.00
	(HDFC Limited)
		430.00	585.00
15	Loans (Current)
	Loans considered good - Unsecured
	Loan to employees	60.13	69.43
		60.13	69.43

16 Other financial assets

Particulars	March 31, 2021	March 31, 2020
Derivatives not designated as hedges
Foreign exchange forward contract	24.57	–

ANNUAL REPORT 2020-21

218

ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

16 Other financial assets (Continued...)

Particulars	March 31, 2021	March 31, 2020
Others
Interest accrued	33.76	19.21
Securitydeposits	7.84	12.25
Others	29.76	14.90
	95.93	46.36

17 Assets held for sale

17 Assets held for sale
- Land	183.78	–
- Buildings	39.76	–
	223.54	–

The assets held for sale, owned by the subsidiary Patton’s Inc are located at Charlotte, North Carolina, USA. As the subsidiary moved into a leased facility during the year 2020-21, the assets which were used in the subsidiary’s compressor business are now being marketed for sale and the subsidiary expects to complete the sale during the year 2021-22. As on March 31, 2021, the assets are measured at carrying amount which is lower than fair value less costs to sell.

18 Other current assets

18 Other current assets
Income / refund receivable	50.49	50.31
Prepaid expenses	148.48	124.63
Balance with Government authorities	91.66	68.48
Rent advances	5.94	15.52
Advance to suppliers	138.38	156.00
Others*	43.26	93.57
	478.21	508.51

*includes assets related to Gratuity fund Nil and 2.15 million for the year ended March 31, 2021 and March 31, 2020, respectively.

19 Equity share capital

(i) Authorised :

Particulars	Number of shares (in millions)	Amount
Equity shares of`1 each
At April 01, 2019	300	300
Increase during the year	–	–
At March 31, 2020	300	300
Increase during the year	20	20
At March 31, 2021	320	320

ANNUAL REPORT 2020-21

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ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

19 Equity share capital (Continued...)

(ii) Issued, Subscribed and fully paid up :

	Number of shares	Equity share
Particulars	(in millions)	capital (par value)
Equity shares of`1 each
At April 01, 2019	158.45	158.45
Increase during the year	–	–
At March 31, 2020	158.45	158.45
Issue of bonus shares (refer (iii) below)	158.46	158.46
At March 31, 2021	316.91	316.91

Terms and rights attached to equity shares

The Company has one class of equity shares having a par value of ` 1/- per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in the case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

(iii) Aggregate number and class of shares allotted as fully paid up by way of bonus shares during the period of five years immediately preceding the reporting date:

Particulars	Number of shares (in millions)	Number of shares (in millions)
	March 31, 2021	March 31, 2020
Equity shares allotted as fully paid up bonus shares by capitalizing a part of the securities premium during the year ended March 31, 2021	158.46	–

On September 28, 2020, the Company alloted bonus equity shares of ` 1/- each, credited as fully paid up equity shares to the holders of the existing equity shares of the Company in the proportion of one equity share of the Company for every one existing equity shares of the Company, by way of capitalizing a part of the securities premium account of the Company.

Also, the calculation of basic and diluted earnings per share for all periods presented are adjusted retrospectively for the above-mentioned bonus issue.

(iv) Details of shareholders holding more than 5% shares in the Company

Particulars	March 31, 2021*	March 31, 2020
	Number of shares % holding	Number of shares % holding
Dark Horse Portfolio Investment Limited	5,19,28,780 16.39%	2,59,64,390 16.39%
SBI Small CapFund	2,58,79,428 8.17%	1,40,43,957 8.86%
Mr. Jairam Varadaraj	2,99,33,216 9.45%	1,37,05,478 8.65%
Pari Washington India Master Fund,Ltd.	2,64,19,723 8.34%	1,37,14,611 8.66%
GagandeepCredit Capital Pvt. Limited	1,63,05,150 5.15%	81,52,575 5.15%

*after issue of bonus shares.

Note: In December 2020, Mr. Jairam Varadaraj acquired 25,22,260 equity shares of ` 1/- each of the Company from L.G.B Public Welfare Society by way of inheritance.

ANNUAL REPORT 2020-21

220

ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

20 Other equity

Particulars	March 31,2021	March 31,2020
Reserves & Surplus
Capital reserve	181.41	181.41
Securitiespremium	250.92	409.37
Statutoryreserve	5.49	5.49
General reserve	1,162.63	1,162.63
Treasurystock	(55.44)	(11.40)
Share options outstandingaccount	3.02	0.21
Retained earnings	6,502.12	5,465.25
Other reserves	331.80	318.52
	8,381.95	7,531.48
Particulars	March 31, 2021	March 31, 2020
a) Capital reserve
Openingbalance	181.41	181.41
Additions duringtheyear	–	–
Deductions/adjustments duringtheyear	–	–
Closingbalance	181.41	181.41
b) Securitiespremium reserve
Openingbalance	409.37	409.37
Issue of bonus share (refer note 19 (iii))	(158.45)	–
Closingbalance	250.92	409.37
c) Statutoryreserve
Openingbalance	5.49	5.49
Additions duringtheyear	–	–
Deductions/adjustments duringtheyear	–	–
Closingbalance	5.49	5.49
d) General reserve
Openingbalance	1,162.63	1,162.63
Additions duringtheyear	–	–
Deductions/adjustments duringtheyear	–	–
Closingbalance	1,162.63	1,162.63
e) Share options outstandingaccount
Openingbalance	0.21	–
Employee stock option expense	2.81	0.21
Closingbalance	3.02	0.21

ANNUAL REPORT 2020-21

221

ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

20 Other equity (Continued...)

Particulars	March 31, 2021	March 31, 2020
f) Retained earnings
Openingbalance	5,465.25	5,591.73
Netproft for theyear	1,024.85	425.67
Item of other comprehensive income recognised directly
in retained earnings
- Remeasurement of post-employment beneft	10.32	2.81
obligation,
net of tax
- Share of other comprehensive income of joint ventures	(0.43)	(0.04)
accounted for usingthe equitymethod
-Transfer to retained earnings of gain on FVOCI equity	2.13	–
instruments
Appropriations:
Dividend on equity shares (including Dividend	–	(554.92)
distribution tax)*
Closingbalance	6,502.12	5,465.25
*includes tax paid on dividend received from foreign subsidiaries and redistributed to the shareholders for the year
ended March 31, 2020.
g) Treasurystock
Openingbalance	(11.40)	(11.40)
Purchase of shares for ESOP scheme	(44.04)	–
Closingbalance	(55.44)	(11.40)
h) Other reserves
FVOCI - Equityinstruments
OpeningBalance	31.35	57.39
Change in fair value of equityinstruments	37.59	(26.04)
Transfer ofgain on FVOCI equityinstruments	(2.13)	–
Closingbalance	66.81	31.35
Cash fow hedging reserve
Opening balance	(29.63)	(20.38)
Change in fair value of interest rate swap (net of tax)	8.82	(9.25)
(refer note 39(C) (ii))
Closing balance	(20.81)	(29.63)
Foreign currency translation reserve
Opening Balance	316.80	174.41
Movement during the year	(31.00)	142.39
Closing balance	285.80	316.80
Total Other reserves	331.80	318.52

ANNUAL REPORT 2020-21

222

ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

20 Other equity (Continued...)

Nature and purpose of other reserves

Capital reserve:

Represents the profit of a capital nature which is not available for distribution as dividend.

Securities Premium:

Securities premium is used to record the premium on issue of shares. The reserve is utilised in accordance with the provisions of the Companies Act, 2013.

Statutory reserve:

Represents reserve created for statutory purpose not available for distribution as dividend.

General reserve:

This is available for distribution to shareholders.

Retained earnings:

Group’s share of cumulative earnings since its formation minus the dividends/capitalisation and earnings transferred to general reserve.

Share options outstanding account:

The share options outstanding account is used to recognise the grant date fair value of options issued to employees under Elgi Equipments Limited Employee Stock Option Plan, 2019.

Treasury stock:

Represents the purchase value of 2,28,064 shares ( 11.40 million) of the Company held by its joint operation and 3,70,000 shares ( 44.04 million) of the Company held by its Elgi Equipments Limited Employee Stock Option Trust.

Cash flow hedging reserve:

The cash flow hedging reserve is used to recognise effective portion of gain or losses on derivatives that are designated and qualify as cash flow hedges. Amounts are subsequently reclassified to profit or loss account.

FVOCI equity investments

The group has elected to recognise changes in the fair value of certain investments in equity securities in other comprehensive income. These changes are accumulated within the FVOCI equity investments reserve within equity. The group transfers amounts from this reserve to retained earnings when the relevant equity securities are derecognised.

Foreign currency translation reserve

Exchange Differences arising on translation of the foreign operations are recognised in other comprehensive income as described in the accounting policy and accumulated in a separate reserve within equity.

ANNUAL REPORT 2020-21

223

ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

21 Borrowings

(a) Borrowings (Non-Current)

(a) Borrowings (Non-Current)
Particulars	Terms of Repayment	Coupon rate	March 31, 2021	March 31, 2020
Secured
Term Loan
from Banks
Foreign Currency Loan
-USD	15 equated quarterly	90 day LIBOR +	441.29	469.65
	installments starting	Agreed Spread
	from June 30, 2021
-EURO	20 equated quarterly	0.8%	–	175.11
	installments
-AUD	20 equated quarterly	90 day	574.59	527.75
	installments starting	AUD-BBR-BBSW +
	from Oct 27, 2020	Agreed Spread
Unsecured
from Banks
-EURO	15 equated quarterly	0.75%	77.32	–
	installments
Total non- current borrowings			1,093.20	1,172.51
Less: Current maturities of long			(280.68)	(143.05)
term debt (Note no- 25)
Less: Interest accrued but not			(0.92)	(2.23)
due on borrowings (Note no- 25)
Non- current borrowings			811.60	1,027.23

(a) Nature of security:

(i) The term loan of 441.29 million (USD 6.04 million) as on March 31, 2021 ( 469.65 million i.e USD 6.21 million as on March 31, 2020) availed by Elgi Compressors USA Inc from HSBC (USA) is secured by substantially all the assets of USA subsidiaries and backed by a corporate guarantee issued by the Holding Company.

(ii) The term loan of Nil as on March 31, 2021 ( 175.11 million i.e. EUR 2.10 million as on March 31, 2020) availed by Elgi Compressors Italy SRL, from HSBC (Italy) was secured by a standby letter of credit (SBLC) that is backed by pari passu charge created on specific assets of the Holding Company.

(iii) The term loan of 574.59 million (AUD 10.35 million) as on March 31, 2021 ( 527.75 million i.e AUD 11.50 million as on March 31, 2020) availed by Industrial Air Compressors Pty Limited from Standard Chartered Bank (United Kingdom) is secured by a corporate guarantee issued by the Holding Company with charge created on specific assets of the Holding Company.

Also refer note 46 for value of assets pledged as security.

ANNUAL REPORT 2020-21

224

ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

21 Borrowings ( Continued...)

(b) Current Borrowings

(b) Current Borrowings
			March 31,	March 31,
Particulars	Terms of Repayment	Coupon rate	2021	2020
Secured
from Banks
Lines of credit
-USD	Payable on Demand	30 day	749.38	1,058.26
		LIBOR + Agreed Spread
-INR	Payable within 180 days	REPO rate + Agreed Spread	–	260.00
Other facilities
-EURO	Payable within 360 days	EURIBOR +	745.60	255.82
	with renewal option	Agreed Spread
-AUD	Payable within 90 days	BBSY+	–	55.07
	with renewal option	Agreed Spread
Total (A)			1,494.98	1,629.15
Unsecured
from Banks
Lines of credit
-EURO	Payable on Demand	0.8 % to 1%	375.19	527.01
PackingCredit
-INR	Payable within 180	REPO rate + Agreed	1,005.00	715.00
	days	Spread
Bills discounted			8.84	–
Total (B)			1,389.03	1,242.01
Total current borrowings (A) + (B)			2,884.01	2,871.16

(a) Nature of security:

(i) The line of credit of 749.38 million (USD 10.25 million) as on March 31, 2021 ( 1,058.26 million i.e. USD 14.00 million as on March 31, 2020) availed by Elgi Compressors USA Inc. from HSBC (USA) is secured by substantially all the assets of USA subsidiaries and also by a Standby letter of credit (SBLC) backed by margin deposits made by the Holding Company.

(ii) The packing credit of Nil as on March 31, 2021 ( 260.00 million as on March 31, 2020) availed by the Holding Company from HSBC (India) is secured by way of pari-passu charge on the specific assets of the Holding Company.

(iii) The Other facility of 745.60 million (EUR 8.70 million) as on March 31, 2021 ( 255.82 million i.e. EUR 3.07 million as on March 31, 2020) availed by Elgi Compressors Europe SRL from Citi Bank (United Kingdom) is secured by a corporate guarantee issued by the Holding Company and a pari passu charge on the specific assets of Holding Company.

(iv) The Other facility of Nil as on March 31, 2021 ( 55.07 million i.e AUD 1.20 million as on March 31, 2020) availed by Industrial Air Compressors Pty Limited from Citi Bank (United Kingdom) is secured by corporate guarantee issued by the Holding Company and a pari passu charge on the specific assets of Holding Company.

Also refer note 46 for value of assets pledged as security.

There are no defaults in the repayments of above borrowings during the current year.

ANNUAL REPORT 2020-21

225

ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

21 Borrowings ( Continued...)

Net debt reconciliation

This section sets out an analysis of net debt and the movements in net debt for each of the periods presented.

Particulars	Note	March 31, 2021	March 31, 2020
Borrowings (including current maturities and interest accrued) 21(a) 1,093.20 1,172.51
Current borrowings 21(b) 2,884.01 2,871.16
Interest accrued and due on Current Borrowings 25 6.36 3.62
Lease liabilities 3(b) 663.61 439.51
Cash and cash equivalents 12 (1,278.19) (455.10)
Deposits with banks and fnancial institutions 13,14 (1,772.70) (987.05)
1,596.29 3,044.65
Opening net debt 3,044.65 1,154.92
Recognition of lease liabilities on Ind AS 116 transition date, April 01, 2019 – 317.65
Openingnet debt (restated) 3,044.65 1,472.57
Cash fows (1,774.36) 1,488.40
Acquisitions - Leases 361.35 150.47
Termination of Lease Contracts (3.92) –
Cash fows arising from payment of lease liabilities (137.20) (92.88)
Interest expense 134.83 155.47
Interest paid (133.40) (144.70)
Translation diference 104.34 15.32
Closing net debt 1,596.29 3,044.65

22 Other financial liabilities (Non-current)

22 Other financial liabilities (Non-current)
Particulars	March 31, 2021	March 31, 2020
Derivatives designated as hedges
Interest rate swap 26.46 36.97
26.46 36.97
23 Provisions (Non-current)
Provision for compensated absences (Refer Note 26(a)) 71.01 72.56
Provision for defnedpension benefts (Refer Note 26(a)) 49.14 47.58
120.15 120.14
24 Trade payables
Due to micro enterprises and small enterprises 482.70 308.13
Due to creditors other than micro enterprises and small enterprises 2,406.54 1,779.79
2,889.24 2,087.92

Note: For payables to related parties refer note 43.

ANNUAL REPORT 2020-21

226

ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

25 Other financial liabilities (Current)

	Particulars	March 31, 2021	March 31, 2020
Derivatives not designated as hedges
Foreign exchange forward contracts – 47.41
Derivatives designated as hedges
Interest rate swap 7.56 1.95
Others
Current maturities of long-term debt 280.68 143.05
Interest accrued but not due on Non-Current borrowings 0.92 2.23
Interest accrued and due on Current borrowings 6.36 3.62
Unclaimed dividends 7.59 9.52
Dealer deposits 32.33 30.50
Employee beneft expensespayable* 558.43 436.10
Contingent consideration** – 80.67
Others 25.98 54.97
919.85 810.02

*includes short term leave encashments amounting to Nil and 76.23 million as on March 31, 2021 and March 31, 2020, respectively.

**Contingent consideration of ` 80.67 million as at March 31, 2020 pertains to success fees payable in respect to acquisition of portables business from FTG Equipment Solutions which has been paid during the current year.

26 Provisions (Current)

26 Provisions (Current)
Provision for warranty	101.93	99.97
Provision forgratuity (Refer note 26(a))	12.10	21.65
Provision for compensated absences(Refer note 26(a))	18.38	18.79
	132.41	140.41

(i) Information about individual material provisions and significant estimates

Provision for Warranty

Provision is made for estimated warranty claims in respect of products sold which are still under warranty at the end of the reporting period. These claims are expected to be settled in the next financial year and therefore the time value of money not being material, no adjustment has been warranted. Management estimates the provision based on historical warranty claim information and any recent trends that may suggest future claims could differ from historical amounts.

(ii) Movements in provisions

Movements in each class of provision during the financial year, are set out below:

Particulars	Provision for Warranty
As at April 01,2020	99.97
Additionalprovisions recognised	101.93
Amounts used duringtheyear	(99.97)
As at March 31,2021	101.93

ANNUAL REPORT 2020-21

227

ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

26(a) Employee benefit obligations

(i) Leave obligations

The leave obligations cover the group’s liability for earned leave.

The total provision for compensated absences amounts to 89.39 million and 91.35 million for March 31, 2021 & March 31, 2020, respectively.

The provision amount of 18.38 million (March 31, 2020: 18.79 million) is presented as current, since the group expects to settle the full amount of current leave obligation in the next 12 months.

Also refer note 25 for details on short term leave encashments.

(ii) Defined contribution plans

Provident Fund:

The group also has certain defined contribution plans. Contributions are made to provident fund in India for employees at the rate of 12% of basic salary as per regulations. The contributions are made to registered provident fund administered by the government. The obligation of the group is limited to the amount contributed and it has no further contractual nor any constructive obligation.

Superannuation Fund:

The group contributes a percentage of eligible employees salary towards superannuation fund administered by a fund managed by Life Insurance Corporation of India.

The expense recognised during the period towards defined contribution plan is 127.59 million (March 31, 2020 – 122.85 million)

(iii) Post-employment benefit obligations - Gratuity

The group provides for gratuity for employees in India as per the payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of Gratuity payable on retirement/ termination is the employees last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number of years of service. The gratuity is a funded plan and the group makes contribution to recognised fund in India. The group does not fully fund the liability and maintains a target level of funding to be maintained over a period of time based on estimations of expected gratuity payments.

Balance sheet amounts- Gratuity (India)

Balance sheet amounts- Gratuity (India)
Particulars	Present value of obligation Fair value of plan assets Total
	(A) (B) (A)-(B)
April 01, 2019	278.57 269.99 8.58
Current service cost	25.47 – 25.47
Past service cost	– – –
Interest expense/ (income)	20.22 19.68 0.54
Total amount recognised inproft or loss	45.69 19.68 26.01

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CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

26(a) Employee benefit obligations ( Continued...)

Balance sheet amounts- Gratuity (India) (Continued...)

Particulars	Present value of obligation Fair value of plan assets Total
	(A) (B) (A)-(B)
Remeasurements
(Gain)/loss from change in demographic assumptions	(0.25) – (0.25)
(Gain)/loss from change in assumptions	(5.02) (0.26) (4.76)
Experience (gains)/losses	1.59 0.34 1.25
Total amount recognised in other comprehensive income	(3.68) 0.08 (3.76)
Employer contributions	– 10.34 (10.34)
Beneftpayments	(23.40) (22.41) (0.99)
March 31, 2020	297.18 277.68 19.50
Gratuity assets grouped under Other current assets (refer note 18)	2.15
Gratuity liabilities grouped under Current provisions (refer note 26)	21.65

Particulars	Present value of obligation Fair value of plan assets Total
	(A) (B) (A)-(B)
April 01, 2020	297.18 277.68 19.50
Current service cost	26.92 – 26.92
Past service cost	– – –
Interest expense/ (income)	19.46 18.77 0.69
Total amount recognised inproft or loss	46.37 18.77 27.61
Remeasurements
(Gain)/loss from change in fnancial assumptions	6.96 (1.99) 8.95
Experience (gains)/losses	(20.33) 2.40 (22.73)
Total amount recognised in other comprehensive income	(13.37) 0.41 (13.78)
Employer contributions	– 21.42 (21.42)
Beneftpayments	(20.22) (20.41) 0.19
March 31, 2021	309.97 297.87 12.10
Gratuity liabilities grouped under Current provisions (refer note 26)	12.10

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CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

26(a) Employee benefit obligations ( Continued...)

(iv) Post-employment benefits

The significant actuarial assumptions were as follows

(iv) Post-employment benefts The signifcant actuarial assumptions were as follows
Particulars	March 31, 2021	March 31, 2020
Discount Rate*	6.40%	6.77%
Rate of increase in compensation levels*	6.45%	6.45%
Attrition Rate*	6.85%	6.77%
*represents weighted average rate
(v) Sensitivity Analysis
Particulars	March 31, 2021	March 31, 2020
A. Discount Rate + 50 BP
Defned Beneft Obligation [PVO]	300.46	287.95
B. Discount Rate - 50 BP
Defned Beneft Obligation [PVO]	319.99	306.93
C. SalaryEscalation Rate +50 BP
Defned Beneft Obligation [PVO]	318.54	305.56
D. SalaryEscalation Rate -50 BP
Defned Beneft Obligation [PVO]	301.74	289.27

The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognised in the balance sheet.

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.

(vi) Major Category of Plan Assets as a % of total Plan Assets

Particulars	March 31, 2021	March 31, 2020
Funds managed byLIC of India	100.00%	100.00%

The expected rate of return on assets is determined based on the assessment made at the beginning of the year on the return expected on its existing portfolio, along with the estimated increment to the plan assets and expected yield on the respective assets in the portfolio during the year.

(vii) Risk exposure

The group operates the India Gratuity Plan through a trust fund which invests in Life Insurance Corporation of India.

Asset Volatility: A large portion of the investment made by the LIC is in government bonds and securities and other approved securities. Hence, the group is not exposed to the risk of asset volatility as at the balance sheet date.

Changes in bond yield: A decrease in bond yield will increase plan liabilities, although this will be partially offset by an increase in value of plan’s bond holdings.

Inflation Risk: In the pension plans, the pensions in the payment are not linked to inflation, so this is a less material risk.

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CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

26(a) Employee benefit obligations ( Continued...)

(viii) Defined benefit liability and employer contributions

The weighted average duration of the defined benefit obligation is 9.17 years (March 31, 2020 – 9.27 years).

The following payments are expected towards the defined benefit obligation in the future years.

Particulars	March 31, 2021	March 31, 2020
Within next 12 months (next annual reporting	55.74	46.82
period)
Between 1 to 2years	35.36	34.94
Between 2 to 5years	111.08	111.77
Beyond 5years	224.44	227.48
Total	426.62	421.01

(ix) Provision for other employee terminal benefits

The group operates defined benefit pension plans in United Arab Emirates (UAE),Italy and Indonesia under the respective regulatory group framework. The terminal benefits are paid to the employees on termination or completion of their term of employment.

Balance sheet amounts- other employee terminal benefits (UAE, Italy and Indonesia)

Particulars	UAE	Italy	Indonesia	Total
Balance as at the April 1, 2019	14.08	27.14	–	41.22
Provided duringtheyear	6.24	15.05	–	21.29
Paid duringtheyear	(1.97)	(14.44)	–	(16.41)
Exchange diference	1.37	0.11	–	1.48
Balance as at the March 31, 2020	19.72	27.86	–	47.58
Balance as at the April 1, 2020	19.72	27.86	–	47.58
Provided duringtheyear	5.31	18.67	3.81	27.79
Paid duringtheyear	(4.82)	(21.54)	–	(26.36)
Exchange diference	(0.43)	0.84	(0.28)	0.13
Balance as at the March 31, 2021	19.78	25.83	3.53	49.14
Provision for defnedpension benefts- Non-Current (refer note 23)				49.14

The above plans are unfunded as on March 31, 2021 and March 31, 2020.

(x) Summary for funded and Unfunded Plan

Particulars	March 31, 2021	March 31, 2020
Funded Plans
Present value of funded obligations	309.97	297.18
Fair value ofplan assets	297.87	277.68
Net Defcit (A)	12.10	19.50
Unfunded Plans (B)	49.14	47.58
Total Defcit (A) + (B)	61.24	67.08

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CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

27 Income Taxes

(a)Income tax expense
Particulars	March	31,2021	March 31,2020
(a) Income tax expense
Current tax
Current tax onprofts for theyear		515.57	378.94
Total current tax expense		515.57	378.94
Deferred tax
Deferred tax expense/(benefts)for theyear		(12.92)	(109.00)
Total deferred tax expense/(beneft)		(12.92)	(109.00)
Income tax expense		502.65	269.94
(b) Reconciliation of tax expense and the accounting proft multiplied by
India’s tax rate
Proft from operations before income tax expense		1,527.50	695.61
Tax at the Indian tax rate of 25.168%(2019-2020– 25.168%)		384.44	175.07
Tax efect of amounts which are not deductible (taxable) in
calculating taxable income:
Tax efect due to non-taxable income for India taxpurposes
-Corporate social responsibilityexpenditure(net of 80G beneft)		3.33	2.93
-Deduction u/s 24 of IT Act(Income from houseproperty)		(1.33)	(1.46)
-Diferential impact on remeasurement of deferred tax		–	(9.60)
-Others		2.08	(0.52)
Deferred tax asset not recognised on accumulated unabsorbed tax losses in		133.38	80.83
overseas subsidiaries
Non-taxable Governmentgrants		(49.61)	–
Efect of diferential overseas tax rate*		28.66	30.69
Others		1.70	(8.00)
Income tax expense		502.65	269.94
*Applicable tax rates in the following subsidiaries that are material are as follows:
United Arab Emirates(UAE)		0%	0%
Australia		30%	30%
Italy		24%	24%
Belgium		25%	25%
United State of America(USA)		26.50%	26.50%
(b)Income Tax Assets/Liabilities
Current Tax Assets(Net)		19.71	52.96
Current Tax Liabilities(Net)		198.70	–
Net Current tax asset/ (liability)at the end of theyear		(178.99)	52.96
OpeningBalance		52.96	6.36
Add : Taxpaid(net of refund received)- refer note below		287.08	426.49
Less: Current taxpayable for theyear		(515.57)	(378.94)
Less: Income tax on other comprehensive income		(3.46)	(0.95)
Net Current tax asset/(liability)at the end of theyear		(178.99)	52.96

Note: Tax paid for the year ended March 31, 2021 is net of refund received by the holding company during the year amounting to ` 182.43 million.

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ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

27 Income Taxes (Continued...)

(c) Deferred Tax Asset / Liabilities

(c) Deferred Tax Asset / Liabilities
Particulars	Deferred Tax Asset (Net)	Deferred Tax Liabilities (Net)
	March 31, 2021 March 31, 2020	March 31, 2021 March 31, 2020
Depreciation	(68.99) (70.36)	56.27 65.10
Right of use assets	(89.12) (34.15)	31.56 24.13
Foreign exchange forward contracts	(6.18) –	– –
Set-of of deferred tax assets in relation to:
Provisionfor compensated absences	21.08 23.33	– –
Provision for Warranty	25.42 24.96	– –
Allowance for doubtful debts	19.02 14.64	– (0.23)
Lease liabilities	95.30 35.26	(33.45) (24.79)
Foreign exchange forward contracts	– 11.93	– –
VRS	7.95 1.15	– –
Other timingdiferences	17.52 16.35	(33.60) (24.45)
Accumulated Loss	49.51 75.59	– –
Unrealised Gain in Stock	74.11 61.91	– –
	145.62 160.61	20.78 39.76

The group has recognised deferred tax assets on carried forward losses of Elgi Compressors USA Inc. The group has concluded that deferred tax assets will be recoverable using the estimated future taxable income based on the approved business plans and the budgets of the respective subsidiaries. The losses can be carried forward till financial year ending March 31, 2034, for Elgi Compressors USA Inc, as per the local regulations and the group expects to recover the losses.

The gross movement in the deferred income tax account for the year ended March 31, 2021 and March 31, 2020 is as follows,

is as follows,
Particulars	March 31, 2021	March 31, 2020
Net deferred tax (asset)/ liabilityat the beginningof theyear	(120.85)	(1.23)
(Credits) / charge inproft and loss relatingto temporarydiferences	(12.92)	(109.00)
(Credits) / charge in other comprehensive income relating to temporary	3.78	(3.96)
diferences
Translation diferences	5.15	(6.66)
Net deferred tax (asset)/liabilityat the end of theyear	(124.84)	(120.85)
Tax losses
Particulars	March 31, 2021	March 31, 2020
Unused accumulated tax losses for which no deferred tax asset has been	851.83	318.31
recognised
Potential tax beneft at 25%	212.96	79.58

Certain subsidiaries of the group have undistributed earnings, which if distributed, would be subject to tax. An assessable temporary difference exists but, no deferred tax liability has been recognised as the parent entity is able to control the timing of the distribution from the subsidiaries. These subsidiaries are not expected to distribute the dividends out of accumulated earnings in the foreseeable future.

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ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

28 Other current liabilities

Particulars	March 31, 2021	March 31, 2020
Contract liabilities	192.26	199.76
Statutory payable	85.57	72.70
Rental advances received	1.50	1.50
Other liabilities	22.10	13.65
	301.43	287.61

29 Revenue from operations

The group derives following types of revenue:
Revenue from contracts with customers
Sale of products	17,601.29	16,759.64
Sale of services	1,525.17	1,404.84
Other operating revenues	114.04	129.44
	19,240.50	18,293.92

The group has disaggregated revenue from contracts with customers for the year ended March 31, 2021 and March 31, 2020 by nature of product and geography. The group believes that disaggregation best depicts how the nature and cash flows are effected by industry, market and other economic factors. Refer note 41 Segment information for information related to disaggregation of revenue.

30 Other Income

30 Other Income information for information related to disaggregation of revenue.
Interest income - Bank Deposits	87.05	53.19
Interest income - Others	6.47	12.09
Dividend income*	0.25	1.03
Proft on sale of assets	4.43	5.96
Governmentgrants**	20.10	-
Rental receipts	11.95	14.58
Net gain on foreign currency transaction and translation (other than considered as fnance cost)	55.88	–
Miscellaneous income (net)	48.85	45.29
	234.98	132.14

• All dividends from equity investments designated at FVOCI relate to investments held at the end of reporting period. There were no investments derecognised during the reporting period.

**There are no unfulfilled conditions and other contingencies attaching to government grants that has been recognised. Also refer note 49.

31 Cost of material consumed

31 Cost of material consumed recognised. Also refer note 49.
Openingstock of raw materials*	1,056.52	1,063.70
Purchases	7,375.45	7,564.48
	8,431.97	8,628.18
Less:
Inventoryof materials at the end of theyear*	1,376.69	1,056.52
	7,055.28	7,571.66

*Excluding R & D inventory.

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ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

32 Purchases of stock-in-trade

Particulars	March 31, 2021	March 31, 2020
Oil	237.63	264.18
Others	2,676.39	2,267.05
	2,914.02	2,531.23

33 Changes in inventory

Opening inventory*
-Finishedgoods	1,651.00	1,477.26
-Work-in-progress	242.80	162.70
-Stock- in-trade	348.15	305.42
Closinginventory*
-Finishedgoods	1,408.66	1,651.00
-Work-in-progress	203.83	242.80
-Stock- in-trade	323.06	348.15
	306.40	(296.57)

*Excluding R & D inventory.

34 Employee benefit expenses

Salaries, wages and bonus*	3,728.51	3,683.14
Contribution to Provident fund & Superannuation scheme	127.59	122.85
Gratuity(Refer note 26(a))	27.61	26.01
Post employmentpension benefts (refer note 26(a))	27.79	21.29
VoluntaryRetirement scheme (VRS)	36.85	–
Employee stock option expense (refer note 47)	2.81	0.21
Staf welfare expenses	166.26	192.14
	4,117.42	4,045.64

*net of Government grants recognised during the year ended March 31, 2021 amounting to ` 241.51 million. There are no unfulfilled conditions and other contingencies attaching to government grants that has been recognised. Also refer note 49.

35 Finance costs

Also refer note 49. 35 Finance costs
Interest expenses (relatingto lease liabilities)	27.90	20.27
Interest expenses (other fnancingarrangements)	106.93	135.20
	134.83	155.47

36 Depreciation and amortisation expense

36 Depreciation and amortisation expense
Depreciation ofproperty, plant and equipment	439.55	424.59
Depreciation on investmentproperties	0.05	0.06
Depreciation of right of use assets	164.72	111.11
Amortisation of intangible assets	139.06	116.56
	743.38	652.32

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ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

37 Other expenses

Particulars	March 31, 2021	March 31, 2020
Packing & forwarding	172.68	164.63
Consumption of stores	77.52	80.57
Tools consumed	48.62	54.54
Commission	158.11	223.13
Repairs and maintenance
-Building	40.37	50.22
-Plant and machinery	55.18	60.59
-Others	171.42	149.67
Communication expenses	49.06	53.83
Power and fuel	166.52	186.72
Transport charges	495.25	349.69
Travelling & conveyance	119.16	278.97
Insurance	86.90	71.20
Advertisement & publicity	87.10	108.13
Printing and stationery	23.28	27.39
Research & Development material cost	71.39	73.18
After sales expenses	190.92	219.88
Factory expenses	18.06	22.05
Rates and taxes	26.08	29.50
Payment to the auditors	5.25	3.30
Subscription & membership	11.13	12.04
CSR expenses	26.23	23.73
Rent	59.79	58.93
Legal and consultancy charges	368.68	534.22
Directors' sitting fees	2.86	2.28
Bank charges	14.90	16.83
Excise duty	2.82	1.83
Net loss on foreign currency transaction and translation	–	13.42
Assets condemned & written of/ loss on sale of assets	0.48	1.83
Bad debts and allowance for doubtful debts	34.46	53.53
Miscellaneous expenses	106.59	157.27
	2,690.81	3,083.10

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ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

38 Fair value measurements

Financial instruments by category

Particulars	March 31, 2021	March 31, 2020
	FVTPL FVOCI Amortised cost	FVTPL FVOCI Amortised cost
Financial assets
Investments
- Equity instruments	– 85.02 –	– 48.94 –
Loans	– – 114.42	– – 144.40
Trade receivables	– – 3,997.32	– – 3,467.62
Cash and bank balances	– – 2,620.89	– – 857.15
Deposits with fnancial institutions	– – 430.00	– – 585.00
Derivative fnancial asset	24.57 – –	– – –
Security deposits	– – 69.15	– – 91.31
Others	– – 63.52	– – 34.11
Total fnancial assets	24.57 85.02 7,295.30	– 48.94 5,179.59
Financial liabilities
Borrowings	– – 3,983.57	– – 4,047.29
Trade payables	– – 2,889.24	– – 2,087.92
Dealer deposits	– – 32.33	– – 30.50
Derivative fnancial liabilities	– 34.02 –	47.41 38.92 –
Employee beneft expenses payable	– – 558.43	– – 436.10
Contingent consideration	– – –	– – 80.67
Others	– – 33.57	– – 64.49
Total fnancial liabilities	– 34.02 7,497.14	47.41 38.92 6,746.97

*The equity shares which are not held for trading and for which the group has made irrevocable election at initial recognition to recognise the changes in fair value through Other Comprehensive Income (OCI) rather than profit or loss as these are strategic investments and the group considered this to be more relevant.

(i) Fair value hierarchy

This section explains the judgements and estimates made in determining the fair values of the financial instruments that are (a) recognised and measured at fair value and (b) measured at amortised cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the group has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows underneath the table.

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ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

38 Fair value measurements (Continued...)

Financial assets and liabilities measured at fair value - recurring fair value measurements

As at March 31, 2021	Notes	Level 1	Level 2	Level 3	Total
Financial assets
Derivatives not designated as hedges
Foreign exchange forward contracts	16	–	24.57	–	24.57
Financial Investments at FVOCI:
Quoted EquityInvestments	6	84.89	–	–	84.89
Unquoted EquityInvestments	6	–	–	0.13	0.13
Total fnancial assets		84.89	24.57	0.13	109.59
Financial liabilities
Derivatives not designated as hedges
Foreign exchange forward contracts	25	–	–	–	–
Derivatives designated as hedges
Interest rate swap	22 , 25	–	34.02	–	34.02
Total fnancial liabilities		–	34.02	–	34.02

Assets and liabilities which are measured at amortised cost for which fair values are disclosed

As at March 31, 2021	Notes	Level 1	Level 2	Level 3	Total
Financial assets
Loans
Loans to employees	7,15	–	–	114.42	114.42
Securitydeposits	8,16	–	–	69.15	69.15
Total fnancial assets		–	–	183.57	183.57
Financial Liabilities
Borrowings	21 (a)	–	–	1,093.20	1,093.20
Total fnancial liabilities		–	–	1,093.20	1,093.20

Financial assets and liabilities measured at fair value - recurring fair value measurements

As at March 31, 2020	Notes	Level 1	Level 2	Level 3	Total
Financial assets
Financial Investments at FVOCI:
Quoted EquityInvestments	6	48.86	–	–	48.86
Unquoted EquityInvestments	6	–	–	0.08	0.08
Total fnancial assets		48.86	–	0.08	48.94

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ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

38 Fair value measurements (Continued...)

As at March 31, 2020	Notes	Level 1	Level 2	Level 3	Total
Financial liabilities
Derivatives not designated as hedges
Foreign exchange forward contracts	25	–	47.41	–	47.41
Derivatives designated as hedges
Interest rate swap	22,55	–	38.92	–	38.92
Total fnancial liabilities	–	–	86.33	–	86.33

Assets and liabilities which are measured at amortised cost for which fair values are disclosed

As at March 31, 2020	Notes	Level 1	Level 2	Level 3	Total
Financial assets
Loans
Loans to employees	7,15	–	–	144.40	144.40
Securitydeposits	8,16	–	–	91.31	91.31
Total fnancial assets		–	–	235.71	235.71
Financial Liabilities
Borrowings	21 (a)	–	–	1,172.51	1,172.51
Total fnancial liabilities	–	–	–	1,172.51	1,172.51

Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This consists of listed equity instruments, that have quoted price. The fair value of all equity instruments which are traded in the stock exchanges is valued using the closing price as at the reporting period.

Level 2: The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for deposits included in level 3.

There are no transfers between level 1, level 2 and level 3 during the year.

The group’s policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period.

(ii) Valuation technique used to determine fair value

Specific valuation techniques used to value financial instruments include:

-the use of quoted market prices or dealer quotes for similar instruments

• the fair value of forward foreign exchange contracts is determined using forward exchange rates at the balance sheet date

-the fair value of the remaining financial instruments is determined using discounted cash flow analysis.

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ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

38 Fair value measurements (Continued...)

(iii) Fair value of financial assets and liabilities measured at amortised cost

Particulars	March 31, 2021	March 31, 2020
	Carrying amount Fair value	Carrying amount Fair value
Financial assets Loans
Loans to employees	114.42 114.42	144.4 144.4
Security deposits	69.15 69.15	91.31 91.31
Total fnancial assets	183.57 183.57	235.71 235.71
Financial Liabilities
Borrowings	1093.2 1093.2	1172.51 1172.51
Total fnancial liabilities	1093.2 1093.2	1172.51 1172.51

The carrying amounts of trade receivables, trade payables, cash and cash equivalents, deposits with financial institutions, current borrowings and other current financial liabilities and financial assets are considered to be the same as their fair values, due to their short-term nature and in the case of borrowings due to fact that they are subject to variable rate of interest.

The fair values for loans to employees were calculated based on cash flows discounted using a current lending rate. They are classified as level 3 fair values in the fair value hierarchy due to the inclusion of unobservable inputs including counterparty credit risk. The security deposits are payable on demand and hence their carrying amount is considered as fair value. The borrowings carry a variable rate of interest and hence their carrying amount is considered as fair value.

For financial assets and liabilities that are measured at fair value, the carrying amounts are equal to the fair values.

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ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

39 Financial risk management

This note explains the group’s exposure to financial risks and how these risks could affect the group’s future financial performance. Current years profit and loss information has been included where relevant to add further context.

Risk	Exposure arising from	Measurement Management
Credit risk	Cash and cash equivalents, deposit with fnancial institutions, trade receivables, derivative fnancial instruments, fnancial assets measured at amortised cost.	Ageing analysis, Credit ratings Diversifcation of bank/ Financial institutions deposits, credit limits and letters of credit. Investment guidelines for debt investment.
Liquidity risk	Borrowings and other liabilities	Rolling cash fow forecasts Availability of committed credit lines and borrowingfacilities
Market risk – foreign exchange	Recognised fnancial assets and liabilities not denominated in Indian rupee (INR)	Cash fow forecasting Sensitivity analysis Foreign exchange forward contracts
Market risk – Interest rate	Long term borrowings at Variable rates	Sensitivity analysis Interest rate swaps
Market risk – security prices	Investments in equity securities	Sensitivity analysis Portfolio Diversifcation

The group’s risk management is carried out by a central treasury department under policies approved by the board of directors. Group’s treasury identifies, evaluates and hedges financial risks in close co-operation with the group’s operating units. The board provides written principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and nonderivative financial instruments, and investment of excess liquidity.

Where all relevant criteria are met, hedge accounting is applied to remove the accounting mismatch between the hedging instrument and hedged item. This will effectively result in recognising interest expense at the fixed interest rate for the hedged floating rate loans.

(A) Credit risk

Credit risk arises from cash and cash equivalents, contractual cash flows from debt instruments carried at amortised cost, favourable derivative financial instruments and deposits with banks and financial institutions, as well as credit exposures to customers including outstanding receivables.

(i) Credit risk management

Credit risk is managed at individual company level. In relation to banks and financial institutions, only high rated banks/ institutions are accepted.

The group assesses the credit quality of the customer, taking into account its financial position, past experience and other factors. Individual risk limits are set based on internal and external ratings in accordance with the limits set by the Company. The finance function consists of a separate team who assess and maintain an internal credit rating system. The compliance with the credit limits by customers is regularly monitored by the finance function.

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ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

39 Financial risk management (Continued...)

(ii) Security

For some trade receivables, the group may obtain security in the form of guarantees, deeds of undertaking or letter of credit, which can be called upon if counter party is in default under the terms of the agreement. However, the group has not obtained any such securities for its trade receivables outstanding at the reporting date.

(iii) Impairment of financial assets

The group provides for expected credit loss based on the following:

Internal rating Category Description of category	Basis for recognition of expected credit loss provision
	Investments Loans and deposits Trade receivables
C1 High quality assets, negligible credit risk Assets where the counter- party has strong capacity to meet the obligations and where the risk of default is negligible or nil	12-month expected credit losses 12-month expected credit losses Life-time expected credit losses (simplifed approach)
C2 Doubtful assets, credit impaired Assets are written of when there is no reasonable expectation of recovery, such as a debtor declaring bankruptcy or failing to engage in a repayment plan with the group. Where loans or receivables have been written of, the group continues to engage in enforcement activity to attempt to recover the receivable due. Where recoveries are made, these are recognised inproft or loss.	Asset is written of

For the years ended March 31, 2021 and March 31, 2020

(a) Expected credit loss for loans, security deposits and investments

During the year ended March 31, 2021 and March 31, 2020, the estimated gross carrying amount at default is ` Nil.

(b) Expected credit loss for trade receivables under simplified approach

Customer credit risk is managed by the group based on the group’s established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on an internal credit rating system. Outstanding customer receivables are regularly monitored and assessed for its recoverability.

An impairment analysis is performed at each reporting date on an individual basis for major clients. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed

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ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

39 Financial risk management (Continued...)

in Note 11. The group evaluates the concentration of risk with respect to trade receivables as low, as its customers has sufficient capacity to meet the obligations and the risk of default is negligible.

(iv) Reconciliation of loss allowance provision – Trade receivables

(iv) Reconciliation of loss allowance provision – Trade receivables
Loss allowance on April 1, 2019	50.91
Changes in loss allowance	4.50
Loss allowance on March 31, 2020	55.41
Changes in loss allowance	33.82
Loss allowance on March 31, 2021	89.23

(B) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the underlying businesses, Group’s treasury maintains flexibility in funding by maintaining availability under committed credit lines. Management monitors rolling forecasts of The group’s liquidity position (comprising the undrawn borrowing facilities below) and cash and cash equivalents on the basis of expected cash flows.

(i) Financing arrangements

The group had access to the following undrawn borrowing facilities at the end of the reporting period:

Particulars	March 31, 2021	March 31, 2020
Floating rate	2,919.24	2,687.21
Expiring within one year (including other facilities)

The credit facility sanctioned by the banks are subject to renewal every year.

Subject to the continuance of satisfactory credit ratings, the bank loan facilities may be drawn at any time and can be renewed for further period of 1 year.

(ii) Maturities of financial liabilities

The tables below analyse the group’s financial liabilities into relevant maturity groupings based on their contractual maturities for:

• a) all non-derivative financial liabilities, and

• b) net and gross settled derivative financial instruments for which the contractual maturities are essential for an understanding of the timing of the cash flows.

The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant. For interest rate swaps the cash flows have been estimated using forward interest rate applicable at the end of the reporting period.

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ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

39 Financial risk management (Continued...)

Contractual maturities of fnancial	liabilities:
	Less than	3 months to	6 months to	Between 1	Between 2
Particulars	3 months	6 months	1year	and 2years	and 5years	Total
March 31, 2021
Non-derivatives
Borrowings	1,073.83	1,215.22	882.91	236.50	575.11	3,983.57
Lease liabilities	39.85	39.85	79.71	159.41	344.79	663.61
Tradepayables	2,889.24	–	–	–	–	2,889.24
Other fnancial liabilities	624.33	–	–	–	–	624.33
Total non-derivative liabilities	4,627.25	1,255.07	962.62	395.91	919.90	8,160.75
Derivatives (net settled)	1.89	1.89	3.78	7.56	18.90	34.02
Total derivative liabilities	1.89	1.89	3.78	7.56	18.90	34.02
March 31, 2020
Non-derivatives
Borrowings	1,017.09	604.17	1,398.80	287.74	739.49	4,047.29
Lease liabilities	26.39	26.39	52.79	105.57	228.37	439.51
Tradepayables	2,087.92	–	–	–	–	2,087.92
Other fnancial liabilities	611.76	–	–	–	–	611.76
Total non-derivative liabilities	3,743.16	630.56	1,451.59	393.31	967.86	7,186.48
Derivatives (net settled)	22.91	25.41	1.05	1.95	35.01	86.33
Total derivative liabilities	22.91	25.41	1.05	1.95	35.01	86.33

(C) Market risk

(i) Foreign currency risk

The group operates internationally and a portion of the business is transacted in several currencies and consequently the group is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the USD, EUR,AUD,BRL. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the Company’s functional currency (INR). The risk is measured through a forecast of highly probable foreign currency cash flows.

(Amounts in million in respective currencies)

Particulars	March 31, 2021	March 31, 2020
	USD EUR AUD BRL	USD EUR AUD BRL
Financial assets
Trade receivables	11.96 6.30 2.40 2.70	11.51 2.56 1.66 2.71
Loans (includingaccrued interest)	7.45 0.12 – 14.53	7.13 0.12 2.13 15.53
Cash and Cash equivalent	0.07 – – –	0.00 0.03 – –
Net exposure to foreign currency risk (assets)	19.48 6.42 2.40 17.23	18.64 2.71 3.79 18.24
Financial liabilities
Foreign currencyloan	– – – –	– – – –
Tradepayables	1.29 0.66 – –	0.41 0.39 – –
Net exposure to foreign currency risk (liabilities)	1.29 0.66 – –	0.41 0.39 – –

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ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

39 Financial risk management (Continued...)

Sensitivity

The sensitivity of profit or loss to changes in the exchange rates arises mainly from foreign currency denominated financial instruments

fnancial instruments
Particulars	Impact onproft after tax
	March 31, 2021	March 31, 2020
USD sensitivity
Functional currency/USD Increases by5%	49.75 51.57
Functional currency/USD decreases by5%	(49.75) (51.57)
EURO sensitivity
Functional currency/EURO Increases by5%	18.49 7.21
Functional currency/EURO decreases by5%	(18.49) (7.21)
AUD sensitivity
Functional currency/AUD Increases by5%	4.99 6.50
Functional currency/AUD decreases by5%	(4.99) (6.50)
BRL sensitivity
Functional currency/BRL Increases by5%	3.63 3.59
Functional currency/BRL decreases by5%	(3.63) (3.59)

The above sensitivity has been computed assuming there is no change in functional currency to INR.

(ii) Cash flow and Fair value interest rate risk

The group’s main interest rate risk arises from long term borrowings with variable rates, which exposes the group to cash flow interest rate risk. During the year ended March 31, 2021 and March 31, 2020, the groups borrowings at variable rate are mainly denominated in USD and AUD.

The group’s fixed rate borrowings are carried at amortised cost. They are therefore not subject to interest rate risk as defined in Ind AS 107, since neither the carrying amount nor the future cash flows will fluctuate because of a change in the market interest rate.

At the end of the reporting period the group has following variable rate long term borrowings and interest rate swap contracts outstanding,

Particulars	March 31, 2021	March 31, 2021	March 31, 2020	March 31, 2020
	Weighted average interest rate	Amount	Weighted average interest rate	Amount
Term Loan - Variable rate borrowings
-USD	2.00% 441.29		2.52% 469.65
-AUD	1.77% 574.59		2.84% 527.75
Interest rate swap
-AUD	4.45% (574.59)		4.45% (527.75)
	441.29		469.65

The analysis for maturities of borrowings is provided in the note no 37 B(ii) above.

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ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

39 Financial risk management (Continued...)

Sensitivity

Profit or loss is sensitive to higher/lower interest expenses from borrowings as the result of change in interest rate.

Particulars	Impact on Proft after tax	Impact on other components of equity
	March 31, 2021 March 31, 2020	March 31, 2021 March 31, 2020
Interest rate increase by50 basispoints*	1.62 1.73	(8.76) (4.10)
Interest rate decrease by50 basispoints*	(1.62) (1.73)	8.76 4.10

*Holding all other variables constant

Impact of Hedging activities

a) Disclosure of effects of hedge accounting of Interest rate swap on financial position:

Particulars	March 31, 2021	March 31, 2020
Type of hedge & risk	Cash Flow Hedge -Interest rate risk	Cash Flow Hedge Interest rate risk
Nominal Value
-Assets	574.59	527.75
-Liabilities	–	–
Carryingamount of hedgingInstrument
-Assets	–	–
-Liabilities	34.02	38.92
MaturityDate	August 2018 - July2025	August 2018 - July2025
Hedge ratio	1:1	1:1
Rate	4.45%	4.45%
Change in fair value of hedging	(3.66)	(22.34)
instrument (net of tax)
Change in value of hedging instrument	3.66	22.34
used as basis for recognising hedge
efectiveness

Refer table below in relation to disclosures of effect of hedge accounting on financial performance.

(b) Disclosure of effect of hedge accounting on financial performance:

Interest rate swap	March 31, 2021	March 31, 2020
Cash fow hedgingreserve
Openingbalance	(29.63)	(20.38)
Add: Changes in fair value of interest rate swaps	(3.66)	(22.34)
Less: Amounts of loss reclassifed toproft or loss	16.26	9.13
Less: Deferred tax asset relatingto above (net)	(3.78)	3.96
Closingbalance	(20.81)	(29.63)

(ii) Price risk

The group’s exposure to equity securities price risk arises from investments held by the group and classified in the balance sheet as fair value through OCI.

To manage its price risk arising from investments in equity securities, the group diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the group.

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ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

39 Financial risk management (Continued...)

Sensitivity

The table below summarises the impact of increases/decreases of the index on the group’s equity and total comprehensive income for the period. The analysis is based on the assumption that the equity index had increased by 5% or decreased by 5% with all other variables held constant, and that all the group’s equity instruments moved in line with the index.

Particulars	Impact on other components of equity
	March 31, 2021 March 31, 2020
NSE Nifty50 – increase 5%	4.24 2.44
NSE Nifty50 – decrease 5%	(4.24) (2.44)

Other components of equity would increase/decrease as a result of gains/losses on equity securities classified as fair value though other comprehensive income.

40 Capital management

(a) Risk management

The group’s objectives when managing capital are to

• safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders, and

• maintain an optimal capital structure to reduce the cost of capital.

Consistent with others in the industry, The group monitors capital on the basis of the following gearing ratio:

Net debt (total borrowings and lease liabilities net of cash and cash equivalents and deposits with Banks and Financial Institutions) divided by Total ‘equity’ (as shown in the balance sheet).

The current gearing ratio of the group is as follows:

The current gearing ratio of the group is as follows:
Particulars	March 31, 2021	March 31, 2020
Net debt (refer note 21)	1,596.29	3,044.65
Total equity	8,698.86	7,689.93
Net debt to equityratio	18.4%	39.6%

(i) Loan covenants

The group has complied with all the loan covenants throughout the reporting period.

(b) Dividends

(b) Dividends
Particulars	March 31, 2021	March 31,2020
(i) Equity shares
Final dividend for theyear ended March 31,2019	–	205.99
DDT on final dividend	–	42.34
Interim dividend for theyear ended March 31,2020	–	261.44
Tax on foreign dividend received and redistributed to the shareholders as Interim dividend	–	45.68
(ii) Dividends not recognised at the end of the reporting period
Subsequent to the year end the directors have recommended the
payment of a final dividend of`0.80 per fully paid equity share. This proposed dividend is subject to the approval of shareholders in the	253.53	–
ensuingannualgeneral meeting.

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ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

41 Segment Information

(a) Description of segments and principal activities

The chief operating decision maker (CODM) (i.e. the Managing Director of Elgi Equipments Limited) examines the group’s performance from a product perspective and has identified two reportable segments of its business: a) Air compressors

b) Automotive equipments

(b) Segment Revenue

The segment revenue is measured in the same way as in the statement of profit or loss.

The segment revenue is measured in the same wayas	in the statement ofproft or loss.
Particulars	March 31,2021	March 31,2020
Air Compressors	17,694.53	16,575.42
Automotive equipments	1,547.32	1,721.86
Less: Inter segment revenue	(1.35)	(3.36)
Income from operations	19,240.50	18,293.92

(c) Segment profit before tax

Segment profit before tax is measured as the profit before other income, interest expense and share of net profit of joint ventures accounted for using the equity method.

joint ventures accounted for usingthe equitymethod.
Particulars	March 31,2021	March 31,2020
Air Compressors	1,379.09	562.95
Automotive equipments	133.77	119.39
Add/(Less): Inter segmentproft/(loss)	0.48	0.87
Total	1,513.34	683.21
Share of net proft of joint ventures accounted for using the equity	14.16	12.40
method
Totalproft before tax	1,527.50	695.61

(d) Segment Assets

Segment assets are measured in the same way as in the financial statements. These assets are allocated based on the operations of the segment.

the operations of the segment.
Particulars	March 31,2021	March 31,2020
Air Compressors	16,390.70	14,364.35
Automotive equipments	1,290.27	1,204.80
Less: Inter segment assets	(13.87)	(18.49)
Total Segment Assets	17,667.10	15,550.66

(e) Segment Liabilities

Segment liabilities are measured in the same way as in the financial statements. These liabilities are allocated based on the operations of the segment.

on the operations of the segment.
Particulars	March 31,2021	March 31,2020
a)Air Compressors	8,615.90	7,497.35
b)Automotive equipments	367.56	382.74
Less: Inter segment liabilities	(15.22)	(19.36)
Total Segment Liabilities	8,968.24	7,860.73

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ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

41 Segment Information (Continued...)

(f) Capital Employed

Capital employed is measured as the difference between segment assets and segment liabilities.

Particulars	March 31, 2021	March 31, 2020
a) Air Compressors	7,774.80	6,867.00
b) Automotive equipments	922.71	822.06
Add: Inter segment capital employed	1.35	0.87
Total Capital employed	8,698.86	7,689.93

Note:

i) The group has provided the segment information to the extent consistently reviewed by the CODM. ii) Revenues from transactions with no single external customer amount to 10 per cent of the group’s revenues. iii) Previous year segment information have been presented in accordance with current year classification.

(g) Disaggregation of revenue from contracts with customers

Geography	Total revenue Inter-company revenue Revenue from external customers
	(A) (B) (A)+(B)
March 31, 2021
India	10,056.26 (89.47) 9,966.79
Other regions
Americas	5,571.00 (899.06) 4,671.94
Europe	2,407.86 (649.96) 1,757.90
Australia	1,807.91 (382.10) 1,425.81
Others	1,715.35 (297.29) 1,418.06
	21,558.38 (2,317.88) 19,240.50
March 31, 2020
India	10,135.77 (96.58) 10,039.19
Other regions
Americas	4,528.94 (521.18) 4,007.76
Europe	2,399.69 (1,005.25) 1,394.44
Australia	1,277.92 (212.46) 1,065.46
Others	2,214.28 (427.21) 1,787.07
	20,556.60 (2,262.68) 18,293.92
(h) The total non-current assets other than fnancial instruments, investments accounted under equity method and deferred tax assets broken down bylocation of assets in shown below,
Particulars March 31, 2021 March 31, 2020
India 2,540.99 2,842.02
USA 1,839.01 1,906.34
Italy 717.25 720.96
Australia 598.02 569.78
Other countries 139.99 104.20
Total non-current assets 5,835.26 6,143.30

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ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

42 Interests in other entities

(a) Subsidiaries

The group’s subsidiaries are set out below. Unless otherwise stated, they have share capital consisting solely of equity shares that are held directly by the group, and the proportion of ownership interests held equals the voting rights held by the group. The country of incorporation or registration is also their principal place of business.

Name of entity	Place of business	Ownershipinterest held bythegroup Principal Activities March 31, 2021 March 31, 2020 % %
		March 31, 2021
		%
ATS Elgi Limited India		100 100 Manufacture and trading of automotive equipments
Elgi Equipments (Zhejiang) Limited China		100 100 Trading of air compressors
Elgi Gulf FZE U.A.E.		100 100 Tradingof air compressors
Elgi Gulf Mechanical and Engineering Equipment TradingLLC U.A.E.		100 100 Trading of air compressors
Elgi Compressors Do Brasil Imp.E.ExpLTDA Brazil		100 100 Assembly and trading of air compressors
Elgi Equipments Australia Pty Limited Australia		100 100 Trading of air compressors
Elgi Compressors Italy S.R.L Italy		100 100 Manufacture and trading of compressors
Rotair SPA Italy		100 100 Manufacture and trading of compressors, hydraulic hammers and rampi cars
Elgi Compressors Europe S.R.L Belgium		100 100 Tradingof air compressors
Elgi Compressors Iberia S.L. Spain		100 100 Tradingof air compressors
Elgi Compressors Nordics (refer note (a) below) Sweden		100 – Trading of air compressors
Elgi Compressors Eastern Europe sp. z.o.o. (refer note (b) below) Poland		100 – Trading of air compressors
Elgi Compressors UK and Ireland Limited (refer note (c) below) United Kingdom		100 – Trading of air compressors
Elgi Compressors France SAS (refer note (d) below) France		100 – Trading of air compressors
Elgi Compressors USA Inc. USA		100 100 Tradingof air compressors
Patton's Inc. USA		100 100 Tradingof air compressors
Patton's Medical LLC. USA		100 100 Marketing and sale of compressed air systems and vacuum pumps for medical applications

ANNUAL REPORT 2020-21

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ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

42 Interests in other entities (Continued...)

Name of entity	Place of business	Ownershipinterest held bythe Company Principal Activities March 31, 2021 March 31, 2020 % %
		March 31, 2021
		%
Michigan Air Solutions LLC. USA		100 100 Tradingof air compressors
Industrial Air Compressors PtyLtd Australia		100 100 Tradingof air compressors
F.R. Pulford & Son Pty Limited Australia		100 100 Trading of air compressors, nitrogen systems, altitude trainingsystems
Advanced Air Compressors PtyLtd Australia		100 100 Tradingof air compressors
Adisons Precision Instruments Manufacturing Company Limited India		100 100 Renting out of property
PT Elgi Equipments Indonesia Indonesia		100 100 Tradingof air compressors
Elgi Compressors (M) SDN. BHD. (refer note (e) below) Malaysia		100 – Trading of air compressors
Ergo Design Private Limited India		100 100 Design services

• a) In September, 2020, the Company through its wholly owned subsidiary Elgi Compressors Europe S.R.L incorporated a wholly owned subsidiary Elgi Compressors Nordics in Sweden.

• b) In December, 2020, the Company through its wholly owned subsidiary Elgi Compressors Europe S.R.L incorporated a wholly owned subsidiary Elgi Compressors Eastern Europe sp. z.o.o. in Poland.

• c) In February, 2021, the Company through its wholly owned subsidiary Elgi Compressors Europe S.R.L incorporated a wholly owned subsidiary Elgi Compressors UK and Ireland Limited in United Kingdom.

• d) In February, 2021, the Company through its wholly owned subsidiary Elgi Compressors Europe S.R.L incorporated a wholly owned Elgi Compressors France SAS in France.

• e) In March, 2021, the Company incorporated a wholly owned subsidiary Elgi Compressors (M) SDN. BHD. in Malaysia.

(b) Joint Operations

The group has 98% interest in a joint arrangement called L.G. Balakrishnan & Bros (Firm) which was set up as partnership together with Elgi Ultra Industries Limited to earn rental income from Investment Property.

The group has 80% interest in a joint arrangement called Elgi Services which was set up as partnership together with Elgi Ultra Industries Limited.

The principal place of business of the joint operations is in India.

• (i) Significant judgement: classification of joint arrangements

The joint venture agreements in relation to the above joint arrangements require unanimous consent from both parties for all relevant activities. The two partners have direct rights to the assets of the partnership and are jointly and severally liable for the liabilities incurred by the partnership. This entity is therefore classified as a joint operation and the group recognises its direct right to the jointly held assets, liabilities, revenues and expenses.

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ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

42 Interests in other entities (Continued...)

(c) Joint Venture

Set out below are the associates and joint ventures of the group as at March 31, 2020 which, in the opinion of the directors, are material to the group. The entities listed below have share capital consisting solely of equity shares, which are held directly by the group. The country of incorporation or registration is also their principal place of business, and the proportion of ownership interest is the same as the proportion of voting rights held.

Name of the entity	Principal Place of business	Proportion of the ownership interest	Relationship	Quoted fair value	Quoted fair value	Carryingamount	Carryingamount
				March 31, 2021	March 31, 2020	March 31, 2021	March 31, 2020
Elgi Sauer Compressors Limited India 26% Joint venture						73.36 63.30
Industrial Air Solutions LLP India 50% Joint venture						5.92 6.83
Evergreen Compressed Air and Vacuum LLC** USA 50% Joint venture						12.82 5.28
PLA HoldingCompanyLLC** USA 50% Joint venture						45.31 –
Immaterial joint ventures (iii) below						15.24 –
Total equityaccounted investments						152.65 75.41

Unlisted entity – no quoted price available. *jointly controlled entity of Elgi Compressors USA Inc.

Elgi Sauer Compressors Limited was set up as a Company together with JP Sauer & Sohn Maschinenbau GMBH to sell compressors and their parts along with rendering engineering services.

Industrial Air Solutions LLP was set up as Limited liability partnership in India with Mr. Rajeev Sharma for distribution of products of Elgi Equipments Limited.

The Company through its wholly owned subsidiary Elgi Compressors USA Inc, has set up a joint venture called Evergreen Compressed Air and Vacuum LLC, with Mr.Michael Keim for a share of 50% each. The joint venture is having registered office at Seattle, USA and will be the distributor of products of Elgi Equipments Limited.

In May 2020, the Company through its wholly owned subsidiary Elgi Compressors USA Inc, has set up a joint venture called Compressed Air Solutions of Texas, LLC, with Mr.Bryan Becker for a share of 50% each. The joint venture is a distributor of products for compressed air systems mainly in the state of Texas.

In September 2020, the Company through its wholly owned subsidiary Elgi Compressors USA Inc, has set up a joint venture called PLA Holding Company, LLC, with Mr. Jeffery Brandon Todd for a share of 50% each. The joint venture was formed in the state of North Carolina. PLA Holding Company, LLC, wholly owns Pattons of California, LLC, a California company which is a distributor of products for compressed air systems mainly in the state of California.

In October 2020, the Company through its wholly owned subsidiary Elgi Compressors USA Inc, has set up a joint venture called G3 Industrial Solutions, LLC, with Mr.Chad Gooding and Mr.Luke Johnson for a share of one third for each. The joint venture is a distributor of products for compressed air systems mainly in the states of Kansas city and Missouri.

(i) Commitments and contingent liabilities in respect of joint ventures

(i) Commitments and contingent liabilities in respect of joint ventures
Particulars	March 31, 2021	March 31, 2020
Commitments –joint ventures – –
Contingent liabilities –joint ventures
Share of joint ventures contingent liabilities in respect of legal matters against the entityandguarantees 24.63 22.95

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252

ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

42 Interests in other entities (Continued...)

(ii) Summarised financial information for material joint ventures

The tables below provide summarised financial information for the joint ventures that are material to the group. The information disclosed reflects the amounts presented in the financial statements of the joint ventures and not the group’s share of those amounts. They have been amended to reflect adjustments made by the entity when using the equity method, including fair value adjustments made at the time of acquisition and modifications for differences in accounting policies.

Summarised balance sheet	Elgi Sauer Compressors Limited*	Elgi Sauer Compressors Limited*	Industrial Air Solutions LLP	Industrial Air Solutions LLP	Evergreen Compressed Air and Vacuum LLC	Evergreen Compressed Air and Vacuum LLC	PLA Holding CompanyLLC	PLA Holding CompanyLLC
	March 31, 2021	March 31, 2020	March 31, 2021	March 31, 2020	March 31, 2021	March 31, 2020	March 31, 2021	March 31, 2020
Current assets
Cash and cash equivalents	153.41 1.10		26.52 0.09		4.13 3.50		25.78 –
Other assets	195.86 282.77		44.23 55.29		19.23 18.90		56.13 –
Total current assets	349.27 283.87		70.75 55.38		23.37 22.40		81.91 –
Total non-current assets *	57.33 63.14		14.24 12.92		10.91 –		33.16 –
Current liabilities
Financial liabilities (excludingtradepayables)	35.38 33.12		2.70 1.71		1.35 4.90		0.05 –
Other liabilities	85.71 67.77		43.18 32.50		6.47 6.94		60.71 –
Total current liabilities	121.09 100.89		45.88 34.21		7.82 11.84		60.76 –
Non-current liabilities
Employee beneft obligations & Others	3.26 2.39		– –		7.53 –		– –
Total non-current liabilities	3.26 2.39		– –		7.53 –		– –
Net assets	282.25 243.73		39.11 34.09		18.93 10.56		54.31 –

* Excludes the impact of fair value gain on shares held by Elgi Sauer Compressors Limited in Elgi Equipments Limited

Reconciliation to carryingamounts	Elgi Sauer Compressors Limited*	Elgi Sauer Compressors Limited*	Industrial Air Solutions LLP	Industrial Air Solutions LLP	Evergreen Compressed Air and Vacuum LLC	Evergreen Compressed Air and Vacuum LLC	PLA Holding CompanyLLC	PLA Holding CompanyLLC
	March 31, 2021	March 31, 2020	March 31, 2021	March 31, 2020	March 31, 2021	March 31, 2020	March 31, 2021	March 31, 2020
Share Capital-Opening	6.50 6.50		8.00 8.00		18.86 –		– –
Capital Investments	– –		– –		– 18.86		14.62 –
Share Capital- Closing(A)	6.50 6.50		8.00 8.00		18.86 18.86		14.62 –
Share Capital- Class B Interest* (B)	– –		– –		7.31 –		43.04 –
Other Equity-Opening	237.23 247.05		26.09 19.38		(8.30) –		– –
Proft for theyear	79.49 52.42		11.70 10.47		1.40 (9.08)		(3.40) –
Other comprehensive income**	(1.64) 0.14		– –		– –		– –
Interest on capital	– –		(0.70) (0.76)		– –		– –

ANNUAL REPORT 2020-21

253

ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

42 Interests in other entities (Continued...)

Reconciliation to carryingamounts	Elgi Sauer Compressors Limited*	Elgi Sauer Compressors Limited*	Industrial Air Solutions LLP	Industrial Air Solutions LLP	Evergreen Compressed Air and Vacuum LLC	Evergreen Compressed Air and Vacuum LLC	PLA Holding CompanyLLC	PLA Holding CompanyLLC
	March 31, 2021	March 31, 2020	March 31, 2021	March 31, 2020	March 31, 2021	March 31, 2020	March 31, 2021	March 31, 2020
Dividends paid including dividend distribution tax and Partners Drawings	(39.33) (62.38)		(5.98) (3.00)		– –		– –
Translation diference	– –		– –		(0.34) 0.78		0.05 –
Other Equity- Closing (C)	275.75 237.23		31.11 26.09		(7.24) (8.30)		(3.35) –
Closingnet assets((A)+(B)+(C))	282.25 243.73		39.11 34.09		18.93 10.56		54.31 –
Group's share in %	26% 26%		50% 50%		50% 50%		50% –
Group’s share in Share Capital in INR millions (A*D+B) (including Class B interest)	1.69 1.69		4.00 4.00		16.74 9.43		50.35 –
Group's share in Other Equity in INR millions(C*D)	71.69 61.68		15.55 13.05		(3.62) (4.15)		(1.68) –
Unrealisedproft in stock	(0.02) (0.07)		(13.63) (10.22)		(0.30) –		(3.36) –
Carryingamount	73.36 63.30		5.92 6.83		12.82 5.28		45.31 –

* Class B Shareholder have certain preferences over the ordinary equity shareholders.

** Excludes the impact of fair value gain on shares held by Elgi Sauer Compressors Limited in Elgi Equipments Limited.

Summarised statement ofproft and loss	Elgi Sauer Compressors Limited*	Elgi Sauer Compressors Limited*	Industrial Air Solutions LLP	Industrial Air Solutions LLP	Evergreen Compressed Air and Vacuum LLC	Evergreen Compressed Air and Vacuum LLC	PLA Holding CompanyLLC	PLA Holding CompanyLLC
	March 31, 2021	March 31, 2020	March 31, 2021	March 31, 2020	March 31, 2021	March 31, 2020	March 31, 2021	March 31, 2020
Revenue	425.13 370.35		302.76 293.93		84.31 49.79		100.80 –
Interest income	3.12 0.66		0.14 –		– –		– –
Depreciation and amortisation	1.15 (1.20)		(2.04) 1.60		– –		(0.24) –
Income tax expense	27.08 19.25		6.28 5.63		0.40 –		– –
Proft for theyear	79.49 52.42		11.70 10.47		1.40 (9.08)		(3.40) –
Other comprehensive income*	(1.64) 0.14		– –		– –		– –
Total comprehensive income	77.85 52.56		11.70 10.47		1.40 (9.08)		(3.40) –

* Excludes the impact of fair value gain on shares held by Elgi Sauer Compressors Limited in Elgi Equipments Limited.

(iii) Individually immaterial joint ventures

In addition to the interest in joint ventures disclosed above, the group has interests in a number of individually immaterial joint ventures that are accounted for using equity method:

joint ventures that are accounted for using equity method:
Particulars	March 31, 2021	March 31, 2020
Aggregate carryingamount of individuallyimmaterialjoint ventures 15.24 –
Aggregate amounts ofgroup's share of:
Proft for theyear (4.93) –
Other comprehensive income - –
Total comprehensive income (4.93) –

ANNUAL REPORT 2020-21

254

ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

43 Related party transactions

(a) Name of the related parties and nature of relationship:

(i) Where control exists: Subsidiaries

Interests in subsidiaries are set out in note 42.

• (ii) Other related parties with whom transactions have taken place during the year

Joint venture	Elgi Sauer Compressors Limited
	Industrial Air Solutions LLP
	Evergreen Compressed Air and Vacuum LLC (jointly controlled entity of Elgi Compressors USA Inc.)
	Compressed Air Solutions of Texas, LLC (jointly controlled entity of Elgi Compressors USA Inc.)
	PLA Holding Company LLC. (jointly controlled entity of Elgi Compressors USA Inc.)
	Patton’s Of California LLC. (wholly owned subsidiary of PLA Holding CompanyLLC.)
	G3 Industrial Solutions, LLC. (jointly controlled entity of Elgi Compressors USA Inc.)
Post employment beneft plan (Refer note 26(a) )	Elgi Equipments Gratuity Fund
	Elgi Equipments Superannuation Fund
Key management personnel	Mr. Jairam Varadaraj, Managing Director, Elgi Equipments Ltd Mr. Ragunathan Gunabooshanam, Chief Financial Ofcer, Elgi Equipments Ltd [ Till October 22, 2020]
	Mr. Jayakanthan R, Chief Financial Ofcer, Elgi Equipments Ltd [ with efect from October 23, 2020]
	Mr. Ragunathan K, Company Secretary [with efect from June 29, 2020]
	Non-Executive Directors
	Mr. N. Mohan Nambiar
	Dr. T.Balaji Naidu
	Mr. B. Vijaykumar
	Mr. Sudarsan Varadaraj
	Dr. Ganesh Devaraj
	Mr. M. Ramprasad
	Mr. Harjeet Singh Wahan
	Ms. Aruna Thangaraj
	Mr. Anvar Jay Varadaraj ((Appointed with efect from April 01, 2020)

ANNUAL REPORT 2020-21

255

ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

43 Related party transactions (Continued...)

Other companies / frms in which directors or their relatives are interested	L.G. Balakrishnan & Bros Limited
	Elgi Ultra Industries Limited
	Elgi Ultra Limited
	Ellargi & Co
	Elgi Rubber Company Limited
	LGB Forge Limited
	Pricol Travels Limited
	Festo Controls Private Limited
	Magna Electro Castings Limited
	LGB Fuel Systems Private Limited
	AGT Electronics Limited
	Super Transports Private Limited
	Elgi Automotive Services Private Limited

(b) Particulars of transactions with related parties

Description	Joint Ventures & Others	KeyManagement Personnel	Total
	2020-21 2019-20	2020-21 2019-20	2020-21 2019-20
Transactions duringtheyear
Purchase ofgoods	15.04 22.73	– –	15.04 22.73
Sale ofgoods	331.52 236.14	– –	331.52 236.14
Receivingof services	11.96 32.82	– –	11.96 32.82
Providingof services	10.02 10.35	– –	10.02 10.35
Payment for acquisition of business	– 34.50	– –	– 34.50
Interest received	– 0.38	– –	– 0.38
Reimbursement of expenses
To relatedparties	2.38 1.65	– –	2.38 1.65
Byrelatedparties	0.41 –	– –	0.41 –
Investments	77.73 9.43	– –	77.73 9.43
Proceeds from buy back of FVOCI Equityinstruments	2.37 –	– –	2.37 –
Dividends received	14.22 15.72	– –	14.22 15.72
Dividendspaid	– 23.67	– –	– 23.67
Key management personnel compensation*
Short-term employee benefts	– –	41.30 32.90	41.30 32.90
Other long-term benefts	– –	1.88 1.46	1.88 1.46
Remuneration	– 10.06	– –	– 10.06

ANNUAL REPORT 2020-21

256

ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

43 Related party transactions (Continued...)

*The Key management personnel compensation does not include gratuity since the same is computed actuarially for all the employees and amount attributable to key management personnel cannot be ascertained separately.

The remuneration paid to the Managing Director of the Holding Company amounting to ` 15.62 million is in accordance with the provisions of Section 197 read with schedule V to the Companies Act, 2013.

The Key management personnel compensation includes remuneration paid to Mr. Anvar Jay Varadaraj amounting to ` 8.16 million from Elgi Compressors USA Inc.

Description	Joint Ventures & Others	KeyManagement Personnel	Total
	2020-21 2019-20	2020-21 2019-20	2020-21 2019-20
Balances atyear end
Investments accounted for using the equitymethod	152.65 75.41	– –	152.65 75.41
Trade receivable at the end of theyear	69.78 44.35	– –	69.78 44.35
Other receivables at the end of theyear	7.33 3.04	– –	7.33 3.04
Payable at the end of theyear	6.50 5.89	– –	6.50 5.89

(c) Terms and conditions

Transactions relating to dividends, subscriptions for new equity shares were on the same terms and conditions that applied to other shareholders.

ANNUAL REPORT 2020-21

257

ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

44 Contingent liabilities and contingent assets

Contingent liabilities

(i) The group has disputed demands for excise duty, service tax and sales tax and other matters amounting to 108.48 million and 108.70 million in India as on March 31, 2021 and March 31, 2020 respectively. The group has deposited 56.35 million and 55.33 million against the above mentioned disputes as on March 31, 2021 and March 31, 2020, respectively.

The group has filed appeals with appropriate authorities of Central Excise and Sales Tax Department against their claims.

(ii) The group had deposited a sum of ` 18.80 million with Railways department of the Government of India in respect of a Road Under Bridge (RUB) project undertaken by the Railways near the Holding Company’s factory at Kodangipalayam village. As Railways had planned for a Limited Use Subway and as the RUB project undertaken would benefit the public at large, the deposit was made as directed by the Madras High Court as an interim measure, pending finality as to whether the group has to bear the full cost or only the differential cost. The group received an unfavourable order on June 03, 2020 from the single judge of the Madras High Court holding that neither party is required to make any payment to the other. The group filed an appeal against this order before the Division bench and was able to get the stay of the order of the single judge . As the group is confident of defending the case successfully, no provision has been made in the books of account.

(iii) The group has evaluated the impact of the recent Supreme Court Judgment in case of “Vivekananda Vidyamandir And Others Vs The Regional Provident Fund Commissioner (II) West Bengal” and the related circular (Circular No. C-I/1(33)2019/Vivekananda Vidya Mandir/284) dated March 20, 2019 issued by the Employees’ Provident Fund Organisation 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. In the assessment of the management, the aforesaid matter is not likely to have a significant impact.

45 Commitments

(a) Capital commitments

(a) Capital commitments
Particulars	March 31, 2021	March 31, 2020
Estimated amount of contracts remainingto be executed on capital account 119.16 153.07

46 Assets Pledged as security

Particulars	March 31, 2021	March 31, 2020
a. Charge on Assets 6,575.17 5,803.56
b. Charge on Property, Plant & equipment 1,543.16 1,876.02
c. Cash Margin 242.86 224.25
8,361.19 7,903.83

ANNUAL REPORT 2020-21

258

ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

47 Share based payments

Employee Stock Option Plan

The establishment of Elgi Equipments Limited Employee Stock Options Plan, 2019 (Elgi ESOP 2019) was approved by the Board of Directors at its meeting held on December 16, 2019 and the shareholders by way of postal ballot on January 31, 2020.

The plan shall be administered through a Trust via acquisition of the equity shares from the secondary market..

The Elgi ESOP 2019 plan is designed to provide benefits to the eligible employees of the Parent and its subsidiaries. Under the plan, the participants are granted options which vest upon completion of three years of service from the grant date. Participation in the plan is at the board’s discretion and no individual has a contractual right to participate in the plan or to receive any guaranteed benefits.

Once vested, the options remain exercisable for a period of three months.

Options are granted under the plan for no consideration and carry no dividend or voting rights. When exercisable, each option is convertible into one equity share.

Set out below is the summary of options granted under the plan:

Particulars	March 31, 2021	March 31, 2020
	Average exercise price per share option ()<br>Number of<br>Options|Average exercise<br>price per share<br>option () Number of Options
Openingbalance	200.05 160,600	– –
Granted duringtheyear (on March 06, 2020)	– –	200.05 160,600
Exercised duringtheyear	– –	– –
Forfeited duringtheyear	200.05 6,800	– –
Adjustment for Bonus issue (refer note 19 (iii))	(100.03) 153,800	– –
Closingbalance	100.02 307,600	200.05 160,600
Vested and exercisable	– –	– –

Share options outstanding at the end of the year March 31, 2021 and March 31, 2020:

Grant date Expirydate	March 31, 2021	March 31, 2020
	Exerciseprice ()<br>Share Options|Exerciseprice () Share Options
March 6, 2020 June 5, 2023	100.03 307,600	200.05 160,600

The remaining contractual life of options outstanding at the end of the year ended March 31, 2021 and March 31, 2020 is 2.18 years and 3.2 years, respectively.

(i) Fair value of options granted

The fair value at grant date of options granted during the year ended March 31, 2020 is 27.71 per option after allotment of bonus shares. The fair value of these options before bonus issue were 55.42. The fair value at grant date is independently determined using the Black-Scholes Model which takes into account the exercise price, the term of the option the share price at the grant date and expected volatility of the underlying share, the expected dividend yield and the risk-free rate for the term of the option.

ANNUAL REPORT 2020-21

259

ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

47 Share based payments (Continued...)

The model inputs for the options granted during the year ended March 31, 2020 included the following:

• a) Options are granted for no consideration and vest upon completion of service for a period of three years. Vested options are exercisable for a period of three months after vesting.

• b) Exercise price: ` 200.05

• c) Grant date: March 06, 2020

• d) Expiry date: June 05, 2023

• e) Share price at grant date: ` 201.65

• f) expected price volatility of the Company’s shares: 30.45%

• g) expected dividend yield: 0.82% (determined based on latest dividend declared at ` 1.65 per share)

• h) risk-free interest rate: 5.48%

The expected volatility is calculated using market data for stock prices of ELGi. (Source: Bloomberg)

(ii) Expense arising from the share based transactions

Total expense arising from the employee stock options plan recognised in profit or loss as a part of employee benefit expenses for March 31, 2021 and March 31, 2020 is:

Particulars	March 31, 2021	March 31, 2020
Employee stock option expense	2.81	0.21
Expense carried to statement of proft and loss (refer note 34)	2.81	0.21

ANNUAL REPORT 2020-21

260

ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

48 Earnings per share

Particulars	March 31, 2021	March 31, 2020
(a) Basic earningsper share
Basic earningsper share attributable to the equityholders of the Company	3.24	1.34
(b) Diluted earningsper share
Diluted earningsper share attributable to the equityholders of the Company	3.24	1.34
(c) Reconciliations of earnings used in calculatingearningsper share
Basic earningsper share
Proft attributable to equity holders of the Company used in calculating basic earningsper share	1,024.85	425.67
Diluted earningsper share
Proft attributable to equityholders of the Company
-used in calculatingbasic earningsper share	1,024.85	425.67
-used in calculatingdiluted earningsper share	1,024.85	425.67
Proft attributable to equity holders of the Company used in calculating basic	1,024.85	425.67
earningsper share
(d) Weighted average number of equity shares used as the denominator in	316.48	316.68
calculatingbasic earningsper share
Adjustments for calculation of diluted earningsper share*:	–	–
Weighted average number of equity shares used as the denominator in calculatingdiluted earningsper share	316.48	316.68

*There is no dilution to the Basic Earnings per share as the potential equity shares are anti-dilutive in nature.

ANNUAL REPORT 2020-21

261

ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

49 Impact of COVID-19 Pandemic:

The spread of COVID-19 has severely impacted businesses around the globe. While the Group’s operations and the Consolidated financial results for the quarter ended June 30, 2020 were adversely impacted, the Group experienced significant recovery beginning from the quarter ended September 30, 2020. The Company, its subsidiaries and jointly controlled entities continue to execute measures to address the operational challenges and to reduce costs, including availing of benefits under the various government support schemes announced in the countries where the Group operates. During the year ended March 31, 2021 the Group has recognised subsidies/benefits from government support schemes amounting to 241.51 million and 20.10 million in Employee benefit expense and Other income, respectively.

The situation of pandemic is varying across the global regions we operate in. We had weathered the impact of the second wave in Europe and currently dealing with the challenges of the second wave in the domestic market. The Company, its subsidiaries and jointly controlled entities have considered various internal and external information available up to the date of approval of financial statements in assessing the impact of COVID-19 pandemic on the financial statements for the year ended March 31, 2021. The uncertainty caused by the current situation is causing delays in the confirmation of customer orders and in executing the orders in hand and increase in lead times in sourcing components. Besides the volatility in commodity prices, container availability and increasing shipping costs are causing inefficiencies and cost challenges in both inbound and outbound supply chain. The situation is likely to continue for next few quarters based on the current assessment. The Company, its subsidiaries and jointly controlled entities are actively monitoring the pandemic situation and its impact on the sales performance across its geographies and taking necessary actions to contain costs to reduce the impact of revenue compression from COVID-19.

As at March 31, 2021, the Company, its subsidiaries and jointly controlled entities have made detailed assessment of its liquidity position for the next one year and of the recoverability and carrying values of its assets comprising Property, plant and equipment, Intangible assets, Trade receivables, Inventory and Investments as at the balance sheet date and has concluded that there are no material adjustments required in the consolidated financials results. The Company, its subsidiaries and jointly controlled entities have also evaluated the internal controls including internal controls with reference to financial statements. All the controls are operating effectively and the Company, its subsidiaries and jointly controlled entities have not diluted any controls.

The Management believes that it has taken into account all the possible impact of known events arising from COVID-19 pandemic in the preparation of consolidated financial statements. However, the impact assessment of COVID-19 is a continuous process given the uncertainties associated with its nature and duration. The Company, its subsidiaries and jointly controlled entities will continue to monitor any material changes to the future economic conditions.

The Statutory auditors have drawn attention to the above matter.

50 Other Matters

In respect of the subsidiary Elgi Compressors Italy S.R.L, its auditor has included an emphasis of matter relating to payment of his fees in his audit report, which the Statutory Auditors of the Company have reproduced in their audit report. The auditor of the Italian subsidiary has income tax dues against which the Italian tax authorities have a garnishee order which covered the payments due from the subsidiary to the auditor. The subsidiary, as per advice received, remitted a portion of the said fees to the Inland Revenue authority and is awaiting further instructions from the authority in this regard.

ANNUAL REPORT 2020-21

262

ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

51 Additional information required by Schedule III

Name of the entity in the Group	Net Asset i.e. Total assets minus total liabilities	Net Asset i.e. Total assets minus total liabilities		Share in proft or loss	Share in proft or loss	Share in other comprehensive income	Share in other comprehensive income		Share in total comprehensive income	Share in total comprehensive income
	As % of consolidated net assets	Amount		As % of consolidated proft or loss	Amount	As % of consolidated other comprehensive income	Amount		As % of total comprehensive income	Amount
Parent
Elgi Equipments Limited
(refer note 1)
March 31, 2021 94% 8,157.24				103% 1,050.93		186% 47.33			105% 1,098.26
March 31, 2020 92% 7,100.19				236% 1,004.24		(24%) (26.06)			183% 978.18
Subsidiaries
Indian
ATS Elgi Limited
March 31, 2021 11% 933.40				10% 97.74		2% 0.42			9% 98.16
March 31, 2020 11% 835.24				21% 89.08		3% 2.83			17% 91.91
Adisions Precision Instruments Manufacturing Company Limited
March 31, 2021 1% 112.50				0% (0.91)		0% –			0% (0.91)
March 31, 2020 1% 113.41				0% (0.73)		0% –			0% (0.73)
Ergo Design Private Limited
March 31, 2021 0% 3.73				0% (0.06)		0% –			0% (0.06)
March 31, 2020 0% 3.78				0% 1.43		0% –			0% 1.43
Foreign
Elgi Equipments (Zhejiang) Limited
March 31, 2021 0% 0.09				7% 75.17		(12%) (2.93)			7% 72.24
March 31, 2020 (1%) (62.23)				(3%) (13.24)		(1%) (1.51)			(3%) (14.75)
Elgi Gulf FZE
March 31, 2021 0% (25.69)				(7%) (75.22)		0% (0.06)			(7%) (75.28)
March 31, 2020 1% 49.59				(19%) (79.57)		10% 11.01			(13%) (68.56)
Elgi Compressors Do Brasil Imp.E.Exp LTDA
March 31, 2021 (1%) (79.09)				2% 15.38		37% 9.46			2% 24.84
March 31, 2020 (1%) (103.93)				1% 2.76		22% 24.31			5% 27.07
Elgi Equipments Australia Pty Limited
March 31, 2021 0% 24.74				5% 54.19		(14%) (3.46)			5% 50.73
March 31, 2020 0% (25.99) Elgi Compressors Italy S.R.L				8% 33.48		2% 2.49			7% 35.97
March 31, 2021 10% 858.87				10% 103.48		80% 20.20			12% 123.68
March 31, 2020 10% 735.18				29% 123.35		43% 47.38			32% 170.73
Rotair SPA
March 31, 2021 4% 378.98				4% 43.75		3% 0.81			4% 44.56
March 31, 2020 6% 432.00				21% 91.44		10% 10.98			19% 102.42

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ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021

(All amounts are in Millions in INR unless otherwise stated)

51 Additional information required by Schedule III (Continued...)

Name of the entity in the Group	Net Asset i.e. Total assets minus total liabilities	Net Asset i.e. Total assets minus total liabilities	Share in proft or loss	Share in proft or loss	Share in other comprehensive income	Share in other comprehensive income	Share in total comprehensive income	Share in total comprehensive income
	As % of consolidated net assets	Amount	As % of consolidated proft or loss	Amount	As % of consolidated other comprehensive income	Amount	As % of total comprehensive income	Amount
Elgi Compressors Europe S.R.L(Consolidated)
March 31, 2021 (10%) (869.55)			(52%) (533.52)		(15%) (3.86)		(51%) (537.38)
March 31, 2020 (4%) (332.29)			(73%) (310.68)		(17%) (18.31)		(61%) (328.99)
Elgi Compressors USA Inc. (Consolidated) (refer note 2)
March 31, 2021 15% 1,325.37			29% 301.72		(154%) (38.89)		25% 262.83
March 31, 2020 14% 1,062.54			(15%) (65.27)		82% 90.55		5% 25.28
PT Elgi Equipments Indonesia
March 31, 2021 0% 35.32			0% 3.62		13% 3.24		1% 6.86
March 31, 2020 0% 28.47			2% 6.58		(4%) (4.83)		0% 1.75
Industrial Air Compressors Pty Ltd (Consolidated)
March 31, 2021 0% 57.69			10% 97.86		14% 3.57		10% 101.43
March 31, 2020 (2%) (43.74)			(1%) (4.32)		(6%) (6.52)		(2%) (10.84)
Joint Ventures (Investment as per equity method) Indian Elgi Sauer Compressors Limited
March 31, 2021 1% 73.36			2% 20.67		(2%) (0.43)		2% 20.24
March 31, 2020 1% 63.30			3% 10.66		0% (0.04)		2% 10.62
Industrial Air Solutions LLP							1% 5.85
March 31, 2021 0% 5.92			1% 5.85		0% –
March 31, 2020 0% 6.83			1% 6.30		0% –		1% 6.30
Sub-total
March 31, 2021 124% 10,992.88			120% 1,260.65		138% 35.40		125% 1,296.05
March 31, 2020 127% 9,862.35			211% 895.51		120% 132.28		192% 1,027.79
Add/(less): Consolidation adjustments and inter- Company eliminations
March 31, 2021 (24%) (2,294.02)			(20%) (235.80)		(38%) (10.10)		(25%) (245.90)
March 31, 2020 (27%) (2,172.42)			(111%) (469.84)		(20%) (22.41)		(92%) (492.25)
Total
March 31, 2021 100% 8,698.86			100% 1,024.85		100% 25.30		100% 1,050.15
March 31, 2020 100% 7,689.93			100% 425.67		100% 109.87		100% 535.54

Note:

1. Elgi Equipments limited includes the group’s share in the assets and results of L.G. Balakrishnan & Bros. and Elgi Services classified as Joint Operations.

2. Elgi Compressors USA Inc. includes share of profit or loss of joint ventures - Evergreen Compressed Air and Vacuum LLC,Compressed Air Solutions of Texas LLC, PLA Holding Company LLC, Patton’s Of California LLC and G3 Industrial Solutions LLC.

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ELGI EQUIPMENTS LIMITED

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2021 (All amounts are in Millions in INR unless otherwise stated)

52 Previous year figures have been regrouped/reclassified to conform to current year’s classification.

For and on behalf of the Board of Directors

As per our report of even date

N. MOHAN NAMBIAR JAIRAM VARADARAJ For Price Waterhouse Chartered Accountants LLP Director Managing Director Firm Registration Number: 012754N/N500016 DIN: 00003660 DIN: 00003361 Chartered Accountants Place: Coimbatore Place: Charlotte, North Carolina, USA

RAGUNATHAN K JAYAKANTHAN R BASKAR PANNERSELVAM Company Secretary Chief Financial Officer Partner ACS: 62397 Place: Coimbatore Membership No: 213126 Place: Coimbatore

Date: May 21, 2021

Place: Coimbatore Date: May 21, 2021

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FORM AOC-1 PART “A” : SUBSIDIARIES

ELGI EQUIPMENTS LIMITED

Name of the Subsidiary Company ATS Elgi Limited Elgi Equipments Zhejiang Ltd. Elgi Gulf (FZE) Elgi Compressors Do Brasil Imp.E.Exp LTDA Elgi Australia Pty Ltd. Industrial Air Compressors Pty Ltd F.R.Pulford & Son Pty Ltd Advanced Air Compressors Pty Ltd Elgi Compressors Italy S.r.l. Rotair Spa Elgi Compressors Europe S.R.L	Reporting Currency INR RMB DHS BRL AUD AUD AUD AUD EURO EURO EURO	Financial Year of the Subsidiary ended on 31stMarch, 2021 31stMarch, 2021 31stMarch, 2021 31stMarch, 2021 31stMarch, 2021 31stMarch, 2021 31stMarch, 2021 31stMarch, 2021 31stMarch, 2021 31stMarch, 2021 31stMarch, 2021	Exchange Rate 1.00 11.16 19.90 12.98 55.52 55.52 55.52 55.52 85.75 85.75 85.75	Share Capital 0.90 485.85 1.78 110.06 0.01 0.01 75.72 0.00 319.79 51.62 4.29	Reserves and Surplus 932.50 (485.76) (27.47) (189.15) 24.73 (276.97) 264.19 267.61 539.08 327.36 (875.65)	Share Application Money pending allotment –	Total Liabilities 367.56 – 285.60 240.71 154.44 788.56 383.90 (145.20) 48.71 1,657.86 996.92	Total Assets (Excluding Investments) 1,300.96 0.09 259.91 161.62 179.18 511.60 723.81 122.41 907.58 2,036.84 125.56	Investments (Other than Investments in Subsidiaries) – – – – – – – 0.07 – 0.02 –	Turnover 1,616.13 8.02 333.56 179.19 372.05 – 899.60 314.46 – 2,088.61 –	Profit before Tax 133.77 75.17 (75.22) 21.57 77.41 (106.89) 157.62 84.82 103.63 62.29 (543.03)	Provision for Taxation 36.03 – – 6.19 23.22 (8.86) 45.88 23.89 0.15 18.55 1.07	Profit after Tax 97.74 75.17 (75.22) 15.38 54.19 (98.03) 111.74 60.93 103.48 43.75 (544.10)	Proposed Dividend – – – – – – – – – 40.73 –	% of Shareholding 100 100 100 100 100 100 100 100 100 100 100

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FORM AOC-1 PART “A” : SUBSIDIARIES

ELGI EQUIPMENTS LIMITED

Name of the Subsidiary Company Elgi Compressors Iberia S.L. Elgi Compressors Eastern Europe sp. z.o.o. Elgi Compressors Nordics. Elgi Compressors France SAS Elgi Compressors USA Inc. Michigan Air Solutions, LLC Patton’s Inc. Patton’s Medical LLC. PT Elgi Equipments Indonesia Ergo Design Private Limited Adisons Precision Instruments Mfg. Co.Limited	Reporting Currency EURO EURO EURO EURO USD USD USD USD IDR INR INR	Financial Year of the Subsidiary ended on 31stMarch, 2021 31stMarch, 2021 31stMarch, 2021 31stMarch, 2021 31stMarch, 2021 31stMarch, 2021 31stMarch, 2021 31stMarch, 2021 31stMarch, 2021 31stMarch, 2021 31stMarch, 2021	Exchange Rate 85.75 85.75 85.75 85.75 73.11 73.11 73.11 73.11 0.01 1.00 1.00	Share Capital 0.26 0.10 0.86 0.41 1,088.29 399.42 - 7.31 19.05 0.10 10.92	Reserves and Surplus 2.23 (0.41) – – 86.10 62.41 1,649.26 (276.62) 16.26 3.63 101.59	Share Application Money pending allotment	Total Liabilities 54.87 0.53 – – 4,001.03 145.38 982.35 813.42 28.00 7.67 2.98	Total Assets (Excluding Investments) 57.35 0.22 0.86 0.41 5,175.42 607.21 2,631.62 544.11 63.32 11.40 115.49	Investments (Other than Investments in Subsidiaries) – – – – – – – – – – 0.11	Turnover 57.15 – – – 2,084.40 717.73 1,441.11 902.57 72.15 14.78 –	Profit before Tax 11.00 (0.42) – – 110.54 64.90 95.95 74.29 7.31 (0.05) (0.91)	Provision for Taxation – – – – 2.62 9.89 10.76 13.93 3.69 0.00 –	Profit after Tax 11.00 (0.42) – – 107.91 55.01 85.19 60.36 3.62 (0.06) (0.91)	Proposed Dividend – – – – – – – – – – –	% of Shareholding 100 100 100 100 100 100 100 100 100 100 100

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PART “B” : ASSOCIATES AND JOINT VENTURES

ELGI EQUIPMENTS LIMITED

Sl. No. Name of Joint Ventures Elgi Sauer Compressor Ltd Industrial Air Solutions LLP Evergreen Compressed Air & Vaccum LLC PLA Holding Company LLC Compressed Air Solutions of Texas, LLC G3 Compressors LLC L.G.Balakrishnan & Bros (Firm) Elgi Services	1 Latest Audited Balance Sheet Date 31stMarch, 2021 31stMarch, 2021 31stMarch, 2021 31stMarch, 2021 31stMarch, 2021 31stMarch, 2021 31stMarch, 2021 31stMarch, 2021	2 Shares if Associate / Joint Ventures held by the Company on the year end : No of Shares 1,68,994	Amount of Investment in Associates/Joint Venture 1.69 4.0 17.1 50.4 11.0 9.1 124.0 0.40	Extent of Holding 26% 50% 50% 50% 50% 33.33% 98% 80%	3 Description of how there is significant influence Joint Venture Joint Venture Joint Venture Joint Venture Joint Venture Joint Venture Joint Operation Joint Operation	4 Reason why the associate/ joint venture is not consolidated Consolidated to the extent of holding i.,e 26 % Consolidated to the extent of holding i.,e 50 % Consolidated to the extent of holding i.,e 50 % Consolidated to the extent of holding i.,e 50 % Consolidated to the extent of holding i.,e 50 % Consolidated to the extent of holding i.,e 33.33 % Consolidated to the extent of holding i.,e 98 % Consolidated to the extent of holding i.,e 80 %	5 Networth attributable to Shareholding as per latest audited Balance Sheet 73.38 19.55 13.12 48.67 8.27 6.97 124.05 0.40	6 Profit / Loss for the Year i. Considered in Consolidation 20.67 5.85 0.70 (1.70) (2.73) (2.20) 0.05 –	ii. Not Considered in Consolidation 58.82 5.85 0.70 (1.70) (2.73) (4.40) 0.00 –

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ELGI EQUIPMENTS LIMITED

ELGI EQUIPMENTS LIMITED

CIN: L29120TZ1960PLC000351

Regd. Off.: Elgi Industrial Complex III, Trichy Road, Singanallur, Coimbatore - 641005 Phone: 0422-2589555 Fax: 0422-2589187

Email: investor@elgi.com Website: www.elgi.com

Email / Bank details Registration Form (For shares held in physical form)

1. First Shareholder’s Name

:

1. Shareholder’s Folio No.

:

1. PAN (Self-attested copy to be enclosed) :

2. E-mail ID

:

1. Phone/ Mobile Number

:

1. Particulars of Bank Account

:

• a) Bank Name :

• b) Branch Name & Address :

• c) Account No.

:

• d) Account Type

: SB / Current (CA) / Cash Credit

(tick whichever is applicable)

• f) MICR NO. :

• (9 Digit code no. of the Bank & Branch appearing on the Cheque issued by the Bank)

• g) IFSC Code :

(Please attach the Original cheque issued by your Bankers, duly cancelled, relating to your above account for verifying the accuracy of the details.)

I, hereby declare that the particulars given above are correct and complete. If the transaction is delayed or not effected at all for reasons of incomplete or incorrect information, I would not hold the Company responsible.

Date:

Signature of First Shareholder

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ELGI EQUIPMENTS LIMITED

OVERSEAS ADDRESS

Overseas Offices

Thailand : ELGI EQUIPMENTS LIMITED, 223/66 14th Floor, Country Complex BLDG A, Sanphawut Rd, Bangna Tai, 5 Bangna, Bangkok 10260. Tel: +662-7455160, E-mail: thailand-enquiry@elgi.com, Web: www.elgi.com/th/

Overseas Subsidiaries

Australia: ELGI EQUIPMENTS AUSTRALIA PTY LTD, 7/66, Pritchard Road, Virginia, Queensland – 4014, Australia. Web: www.elgi.com/au/, Email: enquiry@elgi.com.au Phone no : 07 3106 0589.

INDUSTRIAL AIR COMPRESSORS PTY LTD Level 38, 345 Queen St, Brisbane Old 4000, Australia

F.R. PULFORD & SON PTY LTD 3 Squill Place, Arndell Park NSW 2148. Web: www.pulford.com.au/ Phone no: 1300 138 124 Email: sales@pulford.com.au

ADVANCED AIR COMPRESSORS PTY LTD 3 Squill Place, Arndell Park NSW 2148. www.advancedair.com.au/ E-mail: aacair@advancedair.com.au. Phone no: 02 9193 8100 196

Brazil: ELGI COMPRESSORS DO BRASIL IMP.E.EXP LTDA, Rua Quinze de Novembro, 200 Galpão II – Bairro Paineiras, Itupeva – São Paulo CEP: 13.295-000, Brasil. Tel: +55 (11) 4496 5519, 4496 6611, E-mail: enquiry@elgi.com.br, Web: www.elgi.com/br/

Indonesia: P T ELGI EQUIPMENTS INDONESIA, Kawasan Pergudangan, Bizpark Commercial Estate, Pulogadung Jl, Raya Bekai Km. 21, 5 Block A3 No. 12, Kel. Rawa Terate, Kec. Cakung, Pulogadung Jakarta Timur 13920, Tel: +62-21-46822216, 46827388, E mail: indonesia-enquiry@elgi.com, Web: www.elgi.co/id/

Italy: ROTAIR Spa, Via Bernezzo-67, 12023, Caraglio (CN), Italy, Tel: +39-0171619676, Fax: +39 0171619677, E-mail: info@rotairspa.com, Web: www.rotairspa.com

Belgium: ELGI COMPRESSORS S.R.L, Dreve Richelle 167, 1410 Waterloo, Brussels, Belgium, E-mail : euenquiry@elgi.com, Web: www.elgi.com/eu/

Middle East: ELGI GULF FZE, PO Box: 120695, P6-27, SAIF Zone, Sharjah, U.A.E. Tel: +971 6 557 9970, +971 50 457 6470, Fax: +971 6 557 9980, E-mail: gulfenquiry@elgi.com, Web: www.elgi.com/me/

USA: ELGI COMPRESSORS USA, INC. 4610 Entrance Drive, Suite A, Charlotte, NC 28273, USA. Tel: 704-943-7966, E-mail: usa.sales@elgi.com, Web: www.elgi/us/

UK: ELGI COMPRESSORS UK & IRELAND, 4th Floor Imperial House, 8 Kean Street, London. Tel: 0800 844 52 60. E-Mail : elgi-uk_ireland@elgi.com.

Sweden : ELGI COMPRESSORS NORDICS, Box 11920, 404 39 Goteborg, Gothenburg,Sweden. Tel: +46812111175, Email: elgi_nordics@elgi.com.

Poland : ELGI COMPRESSORS EASTERN EUROPE SP. Z.O.O. UL. bitwy Warszawskiej 1920 R., NR 7, Lok,Warsaw, Poland. Tel: +48221530318 E-Mail : elgi_easterneurope@elgi.com, Web :- https://www.elgi.com/eu/pl/

France : ELGI COMPRESSORS FRANCE SAS, 10 Rue De Penthièvre 75008 Paris, France. Tel + 33 9 73038248, E-Mail: elgi_france@elgi.com Web: https://www.elgi.com/eu/fr/

Spain : ELGI COMPRESSORS IBERIA SL, Calle Marques de Urquijo 28008 Madrid, Espana VAT : B88550454. Tel : + 34910602138, E-Mail: elgi_iberia@elgi.com, Web: https://www.elgi.com/eu/es/

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ELGI EQUIPMENTS LIMITED

OVERSEAS ADDRESS

Joint Ventures

ELGI SAUER COMPRESSORS LIMITED, Elgi Industrial Complex III, Singanallur, Coimbatore - 641 005, India, Tel: +91-422-2589555, 2589634, 2589510, Fax: +91-422-2573697, E-mail: info@elgisauer.com, Web: www.elgisauer.com

INDUSTRIAL AIR SOLUTIONS LLP, FIRST FLOOR, 7/9, ELGi Industrial Complex, Singanallur, Coimbatore, Tamilnadu – 641005. Ph.9500395000, Email : sales@industrialairsolutions.in, Web: https://www.industrialairsolutions.in

Subsidiaries and Joint Ventures in USA*

PATTONS INC. 3201 South Boulevard. Charlotee, NC 28209, USA. Tel.: 704-523-4122, E-Mail: info@pattonsinc.com, Web: https://www.pattonsinc.com

PATTONS MEDICAL LLC. 3201 South Boulevard. Charlotee, NC 28209, USA. Tel: 704-529-5442, E-Mail: sales@pattonsmedical.com, Web: https://www.pattonsmedical.com.

MICHIGAN AIR SOLUTIONS LLC. 4511 Clay Ave SW Grand Rapids, MI 49548,USA. Tel: 800-727-2479. E-Mail: info@mi-air.com, Web: https://www.mi-air.com

EVERGREEN COMPRESSED AIR & VACCUM LLC. 3217, 44th Ave, SW, Seattle, WA 98116, USA. Tel: 206-474-4451, E-Mail: info@evergreencompressedair.com, Web: https://www.evergreencompressedair.com

COMPRESSED AIR SOLUTIONS OF TEXAS LLC, 1500-N Continental Blvd, Charlotte, North Carolina 28273, Mecklenburg, USA. Tel: 346-388-4198, E-Mail : info@castcompressor.com, Web: https://www.castcompressor.com.

PATTONS’ of CALIFORNIA LLC, 16312 Bloomfield Avenue, Cerritos, CA 90703, USA. Tel: 562 229 0955, E-Mail: info@pattonsca.com, Web: https://www.pattonsca.com

G3 Industrial Solutions LLC, 8291 Melrose Drive Lenexa, KS 66214, USA. Tel: 816 381 4883, E-Mail: info@g3ind.com. Web: https://www.g3industrialsolutions.com/

• Pattons, Inc and Pattons Medical,LLC are subsidiaries while all others are joint ventures

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