(k) Provisions and contingencies
Provisions: A provision is recognised when the Company has a present obligation as a result of past events and it is
probable that an outflow of resources will b required to settle the obligation, in respect of which a reliable
estimate can be made.
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, taking into account the risks and uncertainties surrounding the
obligation.
Contingent liabilities: Contingent liabilities are not recognised but are disclosed in notes to accounts.
(l) Cash and cash equivalents
Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an
original maturity of three months or less from the date of acquisition) and highly liquid investments that are
readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.
For the purposes of the cash flow statement, cash and cash equivalents include cash on hand, in banks and demand
deposits (with an original maturity of three months or less from the date of acquisition) with banks.
(m) Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are
assets that necessarily take a substantial period of time to get ready for their intended use or sale are added to the
cost of those assets, until such time the assets are substantially ready for their intended use or sale.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
(n) Use of estimates and judgement
Management develop accounting estimates if accounting policies require items in financial statements to be
measured in a way that involves measurement uncertainty. Accounting estimates typically involve use of
judgements and assumptions based on the latest available reliable information In IND AS 8,’Accounting policies,
changes to accounting estimate and errors’, The definition of a change in accounting estimates is replaced with a
definition of accounting estimates. Under the new definition, accounting estimates are “monetary amounts in
financial state-ments that are subject to measurement uncertainty”. IND AS 8 makes a distinction between how
an entity should present and disclose different types of accounting changes in its financial statements.
Changes in accounting policies must be applied retrospectively while changes in accounting estimates are
accounted for prospectively. A change in an accounting estimate may affect only the current period’s profit or
loss, or the profit or loss of both the current period and future periods. The effect of the change relating to the
current period is recognised as income or expense in the current period. The effect, if any, on future periods is
recognised as income or expense in those future periods.
(o) Disclosures for recent Amendment in Schedule III
On March 24, 2021, the Ministry of Corporate Affairs (MCA) through a notification, amended Schedule III of the
Companies Act, 2013. The amendments revise Division I, II and III of Schedule III and are applicable from April
1, 2021. The Company has evaluated the effect of the amendments on its financial statements and the following
are disclosed
a) There is no proceeding initiated against the Company for holding any Benami Properties under the Benami
tranaction (Prohibition) Act 1988
b) The Company not dealing with any struckoff Companies
c) The Company not dealing with any Crypto Currencies
d) The Title deeds of all immovable properties shown as Fixed Assets are held in the name of the Company
e) The Company has not been sanctioned any Working Capital Limit in excess of five crores against the
security of Current Assets
f) No transactions not recorded in the books of accounts have been surrendered as Income in any tax
assessment during the year
g) The CompaNy has not been declared as wilful defaulters by any Bank, Financial Institution or any other
lenders
h) No funds have been advanced or loaned or invested(either from the borrowed funds or share premium or
any other sources or kind of funds) by the company to any person or entities, including foreign entities
(“intermediaries”) with the understanding whether recorded in writing or otherwise, the intermediary shall
directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or
behalf of the company(“ultimate beneficiaries”), or provide any guarantee, or security or the like, on
behalf of the ultimate beneficiaries.
i) No funds have been received from any person or entities, including foreign entities(Funding party) with the
understanding whether recorded in writing or otherwise, the company shall 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 provide any guarantee or security or the like on behalf of the ultimate
beneficiaries
21 Segment information
The Managing Director of the company has been identified as the Chief Operating Decision Maker (CODM) as defined
by Ind AS 108, Operating Segments. The CODM evaluates the Company’s performance and allocates resources based on
an analysis of various performance indicators by industry classes. Accordingly, segment information has been presented.
The Chief Operating Decision Maker (CODM) of the company examines the performance from the perspective of
company as a whole viz. ‘Software business’ and hence there are no seperate reportable segments as per Ind AS 108.
Geographic information is based on business sources from that geographic region. Accordingly the geographical
secondary segments are determined as “North America” and “Rest of the World”.
Income and direct expenses in relation to segments are categorized based on items that are individually identifiable to that
segment, while the remainder of costs are apportioned on an appropriate basis. Certain expenses are not specifically
allocable to individual segments as the underlying services are used interchangeably. The management therefore believes
that it is not practicable to provide segment disclosures relating to such expenses and accordingly such expenses are
separately disclosed as “unallocated” and directly charged against total income.
23 Contingent liabilitites and comittments
A. Contingent liabilities
i) No provision has been made on a claim for non-payment of fixed deposit amounting to Rs.10.56 Lakhs by 6
complainants before the High Court, the company has disputed the claim and the case is pending.
ii) The Regional Provident Fund commissioner passed an order on 29.11.16 directing the company to enroll the
Home based worker and trainees in EPF . The said order has not quantified the demand . The Company had
appealed against the order passed by Regional Provident Fund Commissioner before the Employees Provident
Fund Appellate Tribunal and obtained a stay against the order passed by PF Commissioner on
20.12.2016.
24 Employee benefit plans
(a) Defined Contribution Plan
The Company makes Provident Fund and Employee State Insurance Scheme contributions which are defined
contribution plans, for qualifying employees. Under the Schemes, the Company is required to contribute a specified
percentage of the payroll costs towards the benefits. The Company has recognised Rs.66.28 lakhs (for the year ended
March 31, 2024: Rs.71.81 lakhs) as contribution to Provident Fund, and Rs.0.83 lakhs (for the year ended March 31,
2024: Rs.1.33 lakhs) as payment under Employee State Insurance Scheme in the Statement of Profit and Loss. These
contributions have been made at the rates specified in the rules of the respective schemes and has been recognised in the
Statement of Profit and Loss under the head Employee Benefits Expense.
(b) Defined Benefit Plans:
Gratuity
The Company has partly funded its gratuity obligations. The following table sets out the status of the defined benefit
schemes and the amount recognised in the financial statements as per the Actuarial Valuation done by an Independent
Actuary:
The retirement age of employees of the Company is 58 years.
The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion
and other relevant factors including supply and demand in the employment market. The above information is certified by the
actuary. The mortality rates considered are as per the published rates in the Indian Assured Lives Mortality (2012-14) Ultimate
table.
Sensitivity analysis
The key actuarial assumptions to which the defined benefit plans are particularly sensitive to are discount rate and full salary
escalation rate. The sensitivity analysis below, have been determined based on reasonably possible changes of the
assumptions occurring at end of the reporting period , while holding all other assumptions constant. The result of Sensitivity
As at March 31,2025 & March 31,2024, 100% of the plan assets were invested in insurer managed funds.
The Company has established an income tax approved irrevocable trust fund to which it regularly contributes to finance
liabilities of the plan. The fund’s investments are managed by certain insurance companies as per the mandate provided to
them by the trustees and the asset allocation is within the permissible limits prescribed in the insurance regulations.
The employee benefit obligations expose the Company to actuarial risks such as: longevity risk and salary risk.
Longevity Risk: The present value of the defined benefit obligation is calculated by reference to the best estimate of the
mortality of the participants during their employment. An increase in the life expectancy of the the participants will increase
the obligation.
Salary risk: The present value of the defined benefit obligation is calculated by reference to the future salaries of the
participants. As such, an increase in the salary of the the participants will increase the obligation.
Note 25 - Related party disclosures
List of related parties where control exists and also related parties with whom transactions have taken place and
relationships
The management has assessed that the fair values of cash and cash equivalents, bank balances, trade receivables, other
financial assets, trade payables and other financial liabilitie recorded at amortised cost is considered to be a reasonable
approximation of fair value.
The following methods and assumptions are used to estimate the fair values:
Fair values of the Company’s interest-bearing borrowings are determined by using Effective Interest Rate (EIR) method. The
own non- performance risk as at March 31,2025 was assessed to be insignificant.
The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a
current transaction between willing parties, other than in a forced or liquidation sale.
B. Fair value hierarchy
The Company uses the following hierarchy for determining and/or disclosing the fair value of financial instruments by
valuation techniques. The three levels are defined based on the observability of significant inputs to the measurement, as
follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
(i.e., as prices) or indirectly (i.e., derived from prices).
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
26.3 - Financial risk management objective
The Company’s activities expose it to certain / reasonable financial risks. The Company’s primary focus is to foresee the
unpredictability of such risks and seek to minimize potential adverse effects on its financial performance.
The Company has a risk management process and framework in place. This process is coordinated by the Board, which
meets regularly to review risks as well as the progress against the planned actions. The Board seeks to identify, evaluate
business risks and challenges across the Company through such framework. These risks include market risks, credit risk
and liquidity risk.
The risk management process aims to:
- improve financial risk awareness and risk transparency
- identify, control and monitor key risks
- identify risk accumulations
- provide management with reliable information on the Company’s risk situation
- improve financial returns
This note explains the sources of risk which the entity is exposed to and how the entity manages the risk and the related
impact in the financial statements:
Market risk - Foreign exchange
The Company is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to US Dollar.
Foreign exchange risk arises from recognised assets and liabilities denominated in a currency that is not the Company’s functional
currency. Exposures to foreign currency balances are periodically reviewed to ensure that the results from fluctuating currency
exchange rates are appropriately managed.
The Company does not have any derivatives financial instruments either for hedging or for speculation purpose.
Foreign currency sensitivity analysis
The following information details the Company’s sensitivity to a 5% increase and decrease in the Rupee against the
relevant foreign currencies. The sensitivity analysis includes only outstanding foreign currency denominated monetary
items and adjusts their translation at the period end for a 5% change in foreign currency rates. A positive number below
indicates an increase in profit where the Rupee strengthens 5% against the relevant currency will increase the profit and
equity by Rs.3.22 Lakhs (Previous year Rs. 1.15 lakhs). For a 5% weakening ofthe Rupee against the relevant currency,
there would be an equal and opposite impact on profit and equity.
Market risk - Interest rate
(i) Liabilities:
The Company’s policy is to minimise interest rate cash flow risk exposures on long-term financing. At March 31,2025,
the Company is exposed to changes in market interest rates through bank borrowings at variable interest rates. Below is
the overall exposure ofthe Company to interest rate risk:
Interest rate sensitivity analysis:
For non derivative instruments there is no change in the the floating rate borrowings during the year. Hence there is no impact
in the Company’s profit for the year ended March 31,2025 (year ended March 31,2024 Nil).
(ii) Assets:The Company’s financial assets are carried at amortised cost and are at fixed rate only. They are, therefore, not
subject to interest rate risk since neither the carrying amount nor the future cash flows will fluctuate because of a change in
market interest rates.
Credit Risk
Credit risk is the risk that a customer or counterparty to a financial instrument will fail to perform or pay amounts due to the
Company causing financial loss. It arises from cash and cash equivalents, deposits with banks, security deposits, loans given
and principally from credit exposures to customers relating to outstanding receivables. The Company’s maximum exposure
to credit risk is limited to the carrying amount of financial assets recognised at reporting date.In respect of trade and other
receivables, the Company is not exposed to any significant credit risk exposure to any single counterparty or any company of
counterparties having similar characteristics. The Company has very limited history of customer default, and considers the
credit quality of trade receivables, that are not past due or impaired, to be good. Therefore, the Company does not expect any
material risk on account of non performance by any of the Company’s counterparties.The credit risk for cash and cash
equivalents, bank deposits, security deposits and loans is considered negligible, since the counterparties are reputable
organisations.
Liquidity risk
The Company requires funds both for short-term operational needs as well as for long-term expansion programmes. The
Company remains committed to maintaining a healthy liquidity ratio, deleveraging and strengthening the balance sheet. The
Company manages liquidity risk by maintaining adequate support of facilities and by continuously monitoring forecast and
actual cash flows and by matching the maturity profiles of financial assets and liabilities.
The Company’s Finance department is responsible for liquidity, funding as well as settlement management. In addition,
processes and policies related to such risks are overseen by senior management.
The Company’s financial liability is represented significantly by long term and short term borrowings from banks and trade
payables. The maturity profile of the Company’s short term and long term borrowings and trade payables based on the
remaining period from the date of balance sheet to the contractual maturity date is given in the table below. The figures reflect
the contractual undiscounted cash obligation of the Company.
27 Leases
The Company has adopted Ind AS 116 ‘Leases’ with the date of initial application being April 1,2019. IndAS 116 replaces Ind
AS 17 - Leases and related interpretation and guidance. The Company has applied Ind AS 116 using the modified
retrospective approach (Modified Retrospective (ROU asset = Lease Liability and incremental borrowing rate)). As a result,
the comparative information has not been restated. In adopting Ind AS 116, the Company has applied the below practical
expedients:
The Company has applied a single discount rate to a portfolio of leases with reasonably similar characteristics
The Company has used hindsight, in determining the lease term if the contract contains options to extend or terminate the lease
The Company has treated the leases with lease term of less than 12 months as “short term leases”
The Company has not applied the requirements of Ind AS 116 for leases of low value assets.
29 The financial statements of CG-VAK Software and Exports Limited were approved by the Board of Directors and
authorised for issue on 23.05.2025
For and on Behalf of the Board of Directors In terms of our report attached
G.Suresh P.S. Subramanian For M/s. SPP & Co
Managing Director Chief Financial Officer Chartered Accountants
DIN : 00600906 Firm Regn.No.011059S
K.Kathirvel Harcharan J S.Prabhu
Independent Director Company Secretary Partner
DIN : 09091676 Membership No.A33394 Membership No.213598
Place : Coimbatore
Date : 23rd May, 2025
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