2.18. Provisions, Contingent Liabilities and Contingent
Assets
Provisions are recognised when the Company has a
present obligation (legal or constructive) as a result of
a past event, it is probable that an outflow of resources
embodying economic benefits will be required to settle
the obligation, and a reliable estimate can be made of
the amount of the obligation.
The amount recognised as a provision is the best
estimate of the consideration required to settle the
present obligation at the end of the reporting period,
considering the risks and uncertainties surrounding
the obligation. When a provision is measured using the
cash flows estimated to settle the present obligation, its
carrying amount is the present value of those cash flows.
Contingent assets are disclosed in the Financial
Statements by way of notes to accounts when an inflow
of economic benefits is probable.
Contingent liabilities are disclosed in the Financial
Statements by way of notes to accounts, unless the
possibility of an outflow of resources embodying
economic benefit is remote.
2.19. Government grants
Grants from the government are recognised where there
is a reasonable assurance that the grant will be received
and the Company will comply with all stipulated
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 and presented within other
operating income. Grants related to assets are reduced
from the carrying amount of the asset. Such grants are
recognised in the Statement of Profit and Loss over the
useful life of the related depreciable asset by way of
reduced depreciation charge.
2.20. Cash Flow Statement
Cash flows are reported using the indirect method.
The cash flows from operating, investing and financing
activities of the Company are segregated.
2.21. GST Credit
The GST credit available on purchase of materials, other
eligible inputs and capital goods is adjusted against
taxes payable. The unadjusted GST credit is shown
under the head "Other Current Assets".
2.22. Earnings per share
Basic earnings per share are computed by dividing the
net profit after tax by the weighted average number of
equity shares outstanding during the period. Ordinary
shares that will be issued upon the conversion of a
mandatorily convertible instrument are also included
in the calculation of basic earnings per share from the
date the contract is entered into. Diluted earnings
per share is computed by dividing the profit after tax
by the weighted average number of equity shares
considered for deriving basic earnings per share and
also the weighted average number of equity shares that
could have been issued upon conversion of all dilutive
potential equity shares.
2.23. 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, if any.
The current income tax charge is calculated on the basis
of the tax laws enacted or substantively enacted at 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 the amount 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
Statement. 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.
The carrying amount of deferred tax assets are reviewed
at the end of each reporting period and are recognised
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, branches and
associates and interest in joint arrangements where the
Company 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, associates 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.
(v) Terms/right attached to Equity/Preference Shares -
The Company has issued equity share of I 1/- each. On a show of hands, every holder of equity shares is entitled for one
vote and upon a poll shall have voting rights in proportion to the shares of the paid up equity capital of the Company held
by them. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining
assets of the Company, after distribution of all preferential amount in proportion to their shareholdings.
(vi) Shares reserved for issue under options:
Information related to Employee Stock Option Plan, including details of options issued, exercised, expired and forfeited
during the previous financial year and options outstanding at the end of the reporting period, is set out in note 56.
(1) *Brief description of Other Reserves:
a. Securities premium reserve is used to record the premium on issue of shares. The reserve is utilised in accordance
with the provision of the Companies Act, 2013.
b. Capital Redemption reserve is created to the extent of Preference Share Capital redeemed i.e. 80,50,000 (previous
year 80,50,000) CRPSs of I 100/- each
c. Employee share based payment reserve is created as required by Ind AS 102 'Share Based Payments' on the Employee
Stock Option Scheme operated by the Company for employees of the Group.
a) Term Loan of? 22.38 Crore (Previous year I 37.12 Crore) and I 169.69 Crore (Previous year I 178.00 Crore) from the
Banks are secured by pari-passu first charge on Land & Building of Unit- 1, 2 and 3 at Telangana and first charge on
plant & machinery of entire Optical Fibre Project Assets of Unit -1 and Unit -3, both present and future respectively,
by way of equitable mortgage. The loans are further secured by personal guarantee of Managing Director of the
Company and Corporate Guarantee of MN Ventures Private Limited. Repayment of these term loans would be made
in 28 structured quarterly instalments over a period of 7 years commencing after moratorium period i.e. 12 months
after date of commencement of the project and 23 structured quarterly instalments over a period of 5 years & 9
months commencing after moratorium period i.e. 3 months after date of commencement of the project respectively.
b) Term Loan of? Nil (Previous year ? 9.13 Crore) from the Banks is secured by pari-passu first charge on Land & Building
of Unit- 1, 2 and 3 at Telangana and first charge on Plant & Machinery of entire Optical Fibre Cable Project Assets of
Unit -2, both present and future, by way of equitable mortgage. The loan is further secured by personal guarantee
of Managing Director of the Company and Corporate Guarantee of MN Ventures Private Limited. Repayment of this
term loan would be made in 22 structured quarterly instalments over a period of 5 years & 6 months commencing
after moratorium period.
c) Term Loan of ? 36.52 Crore (Previous year ? 22.07 Crore) from the Bank is secured by exclusive charge on plant &
machinery financed out of the said Term Loan and residual charge on the current assets of the company, both
present and future. The loan is further secured by personal guarantee of Managing Director of the Company and
Corporate Guarantee of MN Ventures Private Limited. Repayment of this term loan would be made in 16 equated
quarterly instalments over a period of 4 years after moratorium period of 3 months.
d) Term Loans of? 7.87 Crore (Previous Year 5.14 Crore) from bank are secured by way of hypothecation of residential
properties situated at Gurugram which is yet to be registered in the name of the Company.
e) Term Loans of? 52.83 Crore (Previous Year ? 65.19 Crore) from others (NBFC) are secured by way of first pari passu
charge on entire fixed assets of the company (both present and future) excluding fixed assets of manufacturing
facility at Telangana and second pari passu charge on all current assets of the company (both present and future)
excluding project specific assets charged to the banks against which project specific limits have been availed. The
loan is further secured by personal guarantee of Managing Director of the Company and corporate guarantee of
MN Ventures Private Limited and secured by way of pledge of current investment as referred in note 14. Repayment
of this term loan would be made in 24 equated quarterly instalments over a period of 6 years.
f) Term Loan of I 60.23 Crore (Previous Year I Nil) from other (NBFC) is secured by way of exclusive charge on Movable
Fixed Assets funded through loan for IBR facility at Hyderabad and Goa Plants. The loan is further secured by
personal guarantee of Managing Director of the Company and corporate guarantee of MN Ventures Private Limited
and secured by way of pledge of mutual fund "Axis Liquid Fund - Direct Growth" as referred in note 14. Repayment
of this term loan would be made in 18 equated quarterly instalments over a period of 4.5 years.
g) Vehicle Loans of I 5.80 Crore (Previous Year I 4.19 Crore) from banks are secured by way of hypothecation of
respective vehicle.
h) Out of total un-secured term loan from banks of I 154.83 crore (Previous Year I 99.62 Crore), term loan of I 44.95
Crore (Previous Year I 40.00 Crore) is guaranteed by personal guarantee of Managing Director of the Company and
corporate guarantee of MN Ventures Private Limited.
i) Total un-secured term loan from others of I 14.92 crore (Previous Year I Nil) is guaranteed by personal guarantee
of Managing Director of the Company.
j) Term and other Loans - Repayment schedule and rate of interest -
*a) Working Capital Loans from banks aggregating to I 385.72 Crore (Previous year: I 340.50 Crore) are secured on
pari passu basis by way of hypothecation of all current assets of the company excluding assets of specific turnkey
projects as well as by way of first pari passu charge on entire fixed assets of the company (both present and future)
excluding fixed assets of manufacturing facility at Telangana and are also personally guaranteed by Managing
Director of the Company and further secured by way of corporate guarantee of MN Ventures Private Limited.
*b) Working Capital Loan from Bank aggregating to I 140.37 Crore (Previous year: I53.82 Crore) are secured by way of
first pari passu charge on all current assets, movable & immovable fixed assets (both present & future) of specific
turnkey projects. The loan is further secured by first pari passu charge on entire fixed assets of the company (both
present and future) excluding fixed assets of manufacturing facility at Telangana, personal guarantee by Managing
Director of the Company, corporate guarantee of MN Ventures Private Limited and first pari passu charge of cash
flows of the project for project specific lenders.
c) Unsecured vendor bills discounting is repayable on due dates as agreed with the respective banks.
d) Quarterly returns/statements of current assets filed by the Company with banks are in agreement with the books
of accounts.
i) While disclosing the aggregate amount of transaction price yet to be recognised as revenue towards unsatisfied
(or partially satisfied) performance obligations, along with the broad time band for the expected time to recognise
those revenues, the Company has applied the practical expedient in Ind AS 115.
ii) Unsatisfied (or partially satisfied) performance obligations are subject to variability due to several factors such as
terminations, changes in scope of contracts, periodic revalidations of the estimates, partial achievement of the
stipulated contractual milestones, economic factors (changes in currency rates, tax laws etc.). The aggregate value
of transaction price allocated to unsatisfied (or partially satisfied) performance obligations is I 23.75 Crore (Previous
year I 18.48 Crore) which is expected to be recognised as revenue in the next years.
40 Critical accounting estimates and judgments
The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom equal
the actual results. This note provides an overview of the areas that involved a higher degree of judgment 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 judgments is included in relevant
notes together with information about the basis of calculation for each affected line item in the financial statements. In
applying its accounting policies, management has exercised significant judgement in determining the classification &
presentation of the assets and liabilities in the financial statement.
The following are the key assumptions concerning the future, and other key sources of estimated uncertainty at the end
of the reporting period that have a significant risk of causing a material adjustment to the carrying amounts of assets
and liabilities within the next financial year.
1. Useful lives of property, plant and equipment and Intangible Assets
Property, plant and equipment represent a significant proportion of the asset base of the Company. The charge in respect
of periodic depreciation is derived after determining an estimate of an asset's expected useful life and the expected
residual value at the end of its life.
The useful lives and residual values of Company's assets are determined by management at the time the asset is acquired.
The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact
their life, such as changes in technology.
2. Recoverability of capital work-in-progress and intangible assets under development
The capitalisation of Capital Work-in-Progress and intangible assets under development is based on management's judgment that
technological and economic feasibility has been established and that the assets are expected to generate future economic benefits.
Based on the evaluations performed, management has determined that there are no indicators of impairment for these assets.
3. Employee benefits
Defined benefit plans and other long-term benefits are evaluated with reference to uncertain events and based upon
actuarial assumptions including among others discount rates, expected rates of return on plan assets, expected rates
of salary increases, estimated retirement dates, mortality rates. Further, the Company has exercised judgement in,
interpreting the provisions of the notified Labour Codes, particularly with respect to the definition of wages and assessing
the impact of ongoing salary restructuring initiatives.
Given that detailed Central and State Rules and clarifications are still evolving, the Company continues to monitor
regulatory developments. The ultimate impact on employee benefit obligations may differ from the amounts recognised
as at the reporting date. The significant assumptions used to account for Employee benefits are described in Note 44.
4. Revenue Recognition
The Company assesses the services promised in a contract and identifies distinct performance obligations in the contract.
Judgement is also required to determine the transaction price for the contract. The Company allocates the elements of
variable considerations to all the performance obligations of the contract unless there is observable evidence that they
pertain to one or more distinct performance obligations. The Company exercises judgement in determining whether
the performance obligation is satisfied at a point in time or over a period of time. The Company considers indicators such
as how customer consumes benefits. Provisions for estimated losses, if any, on uncompleted contracts are recorded in
the period in which such losses become probable based on the estimated efforts or costs to complete the contract.
5. Leases
The Company evaluates if an arrangement qualifies to be a lease as per the requirements of Ind AS 116. Identification of
a lease requires significant judgment. The Company uses significant judgement in assessing the lease term (including
anticipated renewals) and the applicable discount rate. The discount rate is generally based on the incremental borrowing
rate specific to the lease being evaluated or for a portfolio of leases with similar characteristics. Ind AS 116 requires
assessment of whether an underlying asset is of low value, if lessee opts for the option of not to apply the recognition
and measurement requirements of Ind AS 116 to leases where the underlying asset is of low value. For the purpose of
determining low value, the Company has considered nature of assets and concept of materiality as defined in Ind AS 1
and the conceptual framework of Ind AS which involve significant judgement.
6. Loss allowance for receivables and unbilled revenues
The Company determines the allowance for credit losses based on historical loss experience adjusted to reflect current
and estimated future economic conditions. The Company considered current and anticipated future economic conditions
relating to industries the company deals with and the countries where it operates. In calculating expected credit loss,
the Company has also considered credit reports and other related credit information for its customers to estimate the
probability of default in future.
7. Taxes
Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be
available against which the losses can be utilised. Significant management judgment is required to determine the
amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits
together with future tax planning strategies.
8. Contingencies
On an ongoing basis, Company reviews pending cases, claims by third parties and other contingencies and obligations.
Obligations relating to Project Executions is largely depends upon performance of services by respective contractors.
For contingent losses that are considered probable, an estimated loss is recorded as an accrual in financial statements.
Loss contingencies that are considered possible are not provided for but disclosed as Contingent liabilities in the
financial statements. Contingencies the likelihood of which is remote are not disclosed in the financial statements. Gain
contingencies are not recognised until the contingency has been resolved and amounts are received or receivable.
9. Fair Value of Unquoted equity investments
In order to arrive at the fair value of unquoted investments (other than subsidiaries and associates), the Company obtains
independent valuations. The techniques used by the valuer is Asset approach - Net assets value method and Income
approach- discounted cash flow method. The Company reviews its carrying value of investments carried at cost (net of
impairment, if any) annually, or more frequently when there is indication for impairment. If the recoverable amount is
less than its carrying amount, the impairment loss is accounted for in the statement of profit and loss.
10. Assets held for sale
Management Judgment is required for identifying the assets which are classified as held for sale if their carrying amount will
be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only
when the asset is available for immediate sale in its present condition subject only to terms that are usual and customary for
sales of such asset and its sale is highly probable which could lead to significant judgment. Management must be committed to
the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.
41 Research & Development
The Company has extensive research capabilities, continued innovation and unique capabilities as it is able to innovate and
provide end to end solutions to its customers. R&D Centres of the company are focused on developing telecom, Defence
and networking products to be intensively deployed in communication networks and are situated at Bengaluru (Karnataka),
Gurugram (Haryana) and Hyderabad (Telangana). All the R&D centres are registered with Department of Scientific and Industrial
Research (DSIR) under Ministry of Science and Technology. Detail of amount spent on Research and Development is as below:
42 Dividend Distribution made and proposed
The amount of dividend recognised as distributions to equity shareholders during the year ended March 31,2026 is @ 10
%, i.e. I 0.10/- per equity share of face value of I 1/- each (Previous Year I 0.20/- per equity share). The Board of Directors
at its meeting held on May 22, 2025 had recommended such dividend of 10% for the financial year ended March 31,2025
which was approved by the shareholders at the Annual General Meeting held on September 15, 2025. The aforesaid
dividend was paid during the year ended March 31, 2026.
The Board of Directors have recommended a dividend of 20% (i.e. I 0.20/- per equity share of face value of I 1/- each) for the
financial year ended March 31,2026 which is subject to the approval of shareholders at the ensuing Annual General Meeting.
Interest on lease liabilities is I 3.27/- Crore and I 1.68/- Crore for the year ended March 31, 2026 and March 31,
2025 respectively.
Lease contracts entered by the Company majorly pertains for buildings taken on lease to conduct its business in the
ordinary course. The Company does not have any lease restrictions and commitment towards variable rent as per the
contract. The leases that the Company has entered with lessors towards properties used as warehouses/offices are long
term in nature.
44 During the year, Company has recognised the following amounts in the financial statements as per Ind AS - 19 "Employees
Benefits" as specified in the Companies (Indian Accounting Standards) Rules, 2015:
b) Defined Benefit Plan
The employees' gratuity fund scheme is managed by HDFC Standard Life Insurance Company Limited which is a defined
benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit
Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and
measures each unit separately to build up the final obligation and the obligation for leave encashment is recognised in
the same manner as gratuity.
d) On November 21, 2025, the Government of India notified four Labour Codes, effective immediately, subsuming the
existing 29 labour laws. In accordance with Ind AS 19 - Employee Benefits, changes to employee benefit obligations
arising from legislative amendments are treated as plan amendments, requiring immediate recognition of past service
cost in the Statement of Profit and Loss, consistent with guidance issued by the Institute of Chartered Accountants
of India. This has resulted in a net increase of ?8.46 crore in the provision for gratuity and remeasurement of leave
encashment, which has been recognised as employee benefit expense during the year. The Company is in process of
salary restructuring exercise in compliance with the notified Labour Codes and continues to monitor the finalisation of
Central and State Rules and any further clarifications issued by the Government in respect of the Labour Codes.
46 Operational Buyers' Credit and Supplier Financing Arrangement
Operational Buyers' Credit is availed in foreign currency from Indian banks through their offshore foreign branches at
an interest rate ranging from 4.50%-8.50% per annum. These trade credits are generally repayable within 240 days from
the date of draw down. Operational Buyers' credit availed in foreign currency is partly backed by Standby Letter of Credit
issued under working capital facilities sanctioned by Indian banks.
The Company participates in a supply chain financing (SCF) arrangement with a bank. Under this arrangement, the bank
pays amounts to participating suppliers on behalf of the Company in respect of invoices raised and subsequently recovers
the settlement from the Company at a later date.
The arrangement was initiated by the Company with the objective of supporting its working capital management. As
part of the arrangement, the Company is able to avail an extended credit period of up to six months, compared to the
normal contractual credit period of 30-120 days agreed with suppliers. In return for this extended credit period, the
Company bears an interest cost payable to the finance provider.
Notes:
i) The Company's pending litigations comprise of claims against the Company and proceedings pending with Tax
Authorities. The Company has reviewed all its pending litigations and proceedings and has made adequate provisions,
wherever required and disclosed the contingent liabilities, wherever applicable, in its financial statements. The
Company does not expect the outcome of these proceedings to have a material impact on its financial position.
ii) The Company periodically reviews all its long term contracts to assess for any material foreseeable losses. Based
on such review wherever applicable, the Company has made adequate provisions for these long term contracts in
the books of account as required under any applicable law/accounting standard.
iii) The Company has provided guarantees to third parties on behalf of subsidiary and associates. The Company does
not expect any outflow of resources in respect of such guarantees.
iv) The Company has outstanding term derivative contracts as referred in Note 59.
v) There has been no delay in transferring amounts, required to be transferred if any, to the Investor Education and
Protection Fund by the Company.
48 During the previous year, the company had been allotted 7,00,000 unsecured, 0% Optionally Fully Convertible Debentures
(OFCDs) of face value I 1,000/- each, issued by its wholly owned subsidiary, against the conversion of loans and advances
amounting to I 70.00 Crore previously extended by the company to the said subsidiary. The said instruments are
convertible at the option of the holder after expiry of 10 years.
49 I n the opinion of the Board, all assets other than property, plant and equipment and non-current investments, have a
realisable value in the ordinary course of business which is not significantly differ from the amount at which it is stated.
Balances of some trade payables, trade receivables, loans and advances, security deposits and other parties are subject to
confirmation/reconciliation and consequential adjustments, if any. In the opinion of the management, such adjustments,
if any, will not have a material impact on the Financial Statements.
50 The Company's manufacturing facility at Solan has been operating at a significantly reduced capacity due to rapid
technological advancements and changes in the industry landscape. The facility is currently primarily engaged in job
work operations. The Management is currently evaluating various strategic options with respect to the Solan plant,
including the possibility of discontinuation of operations and disposal of the related assets.
Based on management assessment, the recoverable amount of the assets has been evaluated and impairment loss, if
any, has been recognised in the Statement of Profit and Loss. As at the reporting date, the criteria for classification of
assets as "held for sale" under Ind AS 105 have not been met. Accordingly, these assets continue to be classified under
property, plant and equipment in accordance with Ind AS 16.
Major Terms and Conditions of transactions with related parties:
i) Transactions with related parties are made on terms equivalent to those that prevail in arm's length transactions.
ii) The remuneration to Key Managerial Personnel are in line with the HR policies of the company.
iii) Loans and advances given to Directors/KMPs have specified terms/period of repayment and are in line with HR
policies of the Company.
iv) The company makes advances to its associate companies to cater their short term business requirements. Such
advances carry interest rates at the rate applicable to the term loans as per Company's policy.
v) The interest and/or dividend paid to the Trusts and Key Managerial Personnel are on account of their investments
in the equity shares of the Company and dividend paid on such securities is uniformly applicable to all the holders.
vi) Outstanding balances of group companies at the year-end are unsecured.
52 Segment Reporting
The Company publishes the Standalone financial statements of the Company along with the consolidated financial
statements. In accordance with Ind AS 108, Operating Segments, the Company has disclosed the segment information
in the consolidated financial statements.
56 On October 15, 2018, pursuant to the approval by the shareholders, the Board has been authorised to introduce, offer,
issue and allot share-based incentives to eligible employees of the Company and its subsidiaries under the Himachal
Futuristic Communications Limited Employees' Long Term Incentive Plan (“HFCL Plan 2017"). The maximum number
of shares under the HFCL Plan 2017 shall not exceed 1,40,98,000 equity shares. Out of this, 70,49,000 equity shares will
be issued against RSUs at par value and 70,49,000 equity shares will be issued against stock options at fair market price
immediately prior to date of the grant i.e. I 20.65 per share. The Employee can exercise the vested options/units with in
the maximum exercise period which shall be 5 years from the vesting date. The Stock options so granted shall vest over
a period of 3 years and 70% RSUs granted will be vest at the end of 3rd year and remaining 30% RSUs shall vest at the end
of 4th year from the date of grant.
The RSUs granted under the HFCL Plan 2017 were forfeited due to non-achievement of defined annual performance
parameters as determined by the Nomination, Remuneration and Compensation Committee in its meeting held on
April 23, 2022 and accordingly as on March 31, 2022 the share based payment reserve was adjusted. During FY 21-22,
this cancellation/forfeiture of unvested options had resulted into a reversal of share based payment expense in the
Standalone Statement of Profit and Loss.
The Nomination, Remuneration and Compensation Committee ('Committee') of the Board of Directors which comprises
a majority of Independent Directors is responsible for administration and supervision of the Stock Option Plans.
The activity in the HFCL Plan 2017 for equity-settled, share-based payment transactions during the years ended March
31, 2026 and March 31, 2025 is as follows:
Details of loans given, investment made and guarantees given, covered under Section 186(4) of the
Companies Act, 2013
- Loans given (refer notes 9 and 18) and investments (refer note 7, 8 and 14) made are given under the respective heads.
These loans has been granted for general corporate purpose, capital expenditure and working capital requirements.
- Corporate guarantees have been issued on behalf of subsidiary companies, details of which are given in related
party transactions. Refer note 50
- In addition to above, Company has given corporate Guarantee of I 13.66 crore to other Body Corporate
58 Financial Instruments and risk management
The Company's principal financial liabilities, other than derivatives, comprise loans and borrowings, trade and other
payables, lease liabilities and financial guarantee contracts. The main purpose of these financial liabilities is to finance
the Company's operations and to provide guarantees to support its operations. The Company's principal financial assets
include loans, cash and cash equivalents, trade and other receivables that derive directly from its operations.
The Company's business activities expose it to a variety of financial risks, namely liquidity risk, market risks and credit risk.
The management has the overall responsibility for the establishment and oversight of the Company's risk management
framework. The Company has constituted a Risk Management Committee, which is responsible for developing and
monitoring the Company's risk management policies. The Company's risk management policies are established to
identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and
adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions
and the Company's activities.
Liquidity risk is the risk that the Company will face in meeting its obligations associated with its financial liabilities. The
Company's approach to managing liquidity is to ensure that it will have sufficient funds to meet its liabilities when due
without incurring unacceptable losses. In doing this, management considers both normal and stressed conditions.
Market Risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes
in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such
as equity price risk. Financial instruments affected by market risk include loans and borrowings, deposits, FVTOCI &
FVTPL investments.
The Company has extended its credit facilities under supplier financing arrangements to support better working capital
planning. It ensures that sufficient liquidity is maintained to settle these obligations with financing institutions on their
revised due dates, thereby mitigating risks related to concentration and potential timing mismatches in cash outflows.
Credit Risk
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract,
leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables)
and from its financing activities, including deposits with banks and other financial instruments.
Trade Receivables
Customer credit risk is managed by each business unit subject to the Company established policy, procedures and
control relating to customer credit risk management. To manage trade receivable, the Company periodically assesses
the financial reliability of customers, taking into account the financial conditions, economic trends, analysis of historical
bad debts and aging of such receivables.
The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets disclosed
in Note 15. The Company does not hold collateral as security. The Company evaluates the concentration of risk with
respect to trade receivables as low, as its customers are located in several jurisdictions and industries and operate in
largely independent markets.
Financial instruments and cash deposits
Credit risk from balances with banks and financial institutions is managed by the management in accordance with the
Company's policy. Counterparty credit limits are reviewed by the management on an annual basis, and may be updated
throughout the year. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through
counterparty's potential failure to make payments.
None of the Company's financial assets are either impaired or past due, and there were no indications that defaults in
payment obligations would occur.
59 Foreign Currency Exposure
a) The Company undertakes transactions denominated in foreign currencies; consequently, exposures to exchange rate
fluctuations will arise.
The Company uses foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations
relating to certain firm commitments and forecasted transactions. The use of foreign currency forward contracts is
governed by the Company's strategy, which provides principles on the use of such forward contracts consistent with
Company's Risk Management Policy. The Company does not use forward contracts for speculative purposes.
b) The carrying amounts of the Company's foreign currency denominated monetary assets and monetary liabilities at the
end of the reporting period are as follows:
61 Recent Indian Accounting Standards (Ind AS)
Recent pronouncements Ministry of Corporate Affairs ("MCA") notifies new standards or amendments to the existing
standards under Companies (Indian Accounting Standards) Rules as issued from time to time. In May 2025, MCA notified
amendments to Ind AS 21 - The Effects of Changes in Foreign Exchange Rates, applicable w.e.f. April 1,2025. The Company
has reviewed the amendment and based on its evaluation has determined that it does not have any significant impact
in its financial statements. In August 2025, MCA notified the following amendments to: 1. Ind AS 1, Presentation of
Financial Statements, applicable w.e.f. April 1, 2025 - The amendment relates to classification of liabilities as current or
non-current and non-current liabilities with covenants. In the context of classifying a liability as current, it removes the
requirement of existence of a right to defer settlement for at least 12 months after the reporting date and instead requires
that the said right should exist on the reporting date and have substance. The amendment also introduces guidance
on classification of liabilities with covenants. The Company has no impact of these amendments in its classification
criteria of current and non-current liabilities. 2. Ind AS 7, Statement of Cash Flows and Ind AS 107, Financial Instruments:
Disclosures, applicable w.e.f. April 1, 2025 - The amendment in Ind AS 7 requires to inform users of financial statements
of the existence of supplier finance arrangements and explain the nature of the arrangements, the carrying amount of
liabilities and the range of payment due dates. Ind AS 107 has been amended to add supplier finance arrangements as a
factor that may cause concentration of liquidity risk. The Company has evaluated these amendments and provided the
required disclosures in the financial statements and it does not have any significant impact in its financial statement.
63 Other statutory information:
i) The Company does not have any benami property, where any proceeding has been initiated or pending against
the Company for holding any benami property.
ii) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
iii) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign
entities (intermediaries) with the understanding that the intermediary shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on
behalf of the company (ultimate beneficiaries) or
(b) provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries
iv) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (funding party)
with the understanding (whether recorded in writing or otherwise) that the company shall:
(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on
behalf of the funding party (ultimate beneficiaries) or
(b) provide any guarantee, security or the like on behalf of the ultimate beneficiaries.
v) The Company does not have any such transactions which are not recorded in the books of accounts that has been
surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such
as, search or survey or any other relevant provisions of the Income Tax Act, 1961).
vi) The Company has complied with the number of layers prescribed under clause (87) of section 2 of the Companies
Act 2013 read with the Companies (restriction on number of layers) Rules, 2017.
vii) The Company is not declared wilful defaulter by bank or financial institution or lender during the year.
viii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the
statutory period.
ix) The Company has used the borrowings from banks and financial institutions for the specific purpose for which it
was obtained.
64 The company has used an accounting software including software operated by third party for maintaining its books of
account which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year
for all relevant transactions recorded in the respective software. Such audit trails are preserved as per the statutory
requirement for record retention.
65 Figures for the previous year have been regrouped/rearranged wherever considered necessary to confirm current year
classification/presentation.
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