l) Provisions, contingent liabilities and contingent asset
Provisions
Provisions are recognised when the Company has a present obligation (legal or
constructive) as a result of a past event and 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.
Provisions are discounted, if the effect of the time value of money is material, using
pre-tax rates that reflects the risks specific to the liability. When discounting is used, an
increase in the provisions due to the passage of time is recognised as finance cost. These
provisions are reviewed at each Balance Sheet date and adjusted to reflect the current
best estimates.
Necessary provision for doubtful debts, claims, etc., are made if realisation of money is
doubtful in the judgement of the management.
Contingent liability
A contingent liability is a possible obligation that arises from past events whose existence
will be confirmed by the occurrence or non-occurrence of one or more uncertain future
events beyond the control of the company or a present obligation that is not recognized
because it is not probable that an outflow of resources will be required to settle the
obligation. A contingent liability also arises in extremely rare cases where there is a liability
that cannot be recognized because it cannot be measured reliably. Contingent liabilities
are disclosed separately.
Show cause notices issued by various Government authorities are considered for
evaluation of contingent liabilities only when converted into demand.
Contingent assets
Where an inflow of economic benefits is probable, the Company discloses a brief
description of the nature of the contingent assets at the end of the reporting period, and,
where practicable, an estimate of their financial effect. Contingent assets are disclosed
but not recognised in the financial statements.
m) Cash and cash equivalents
Cash comprises cash on hand and demand deposits with banks. Cash equivalents are
short-term balances with original maturity of less than 3 months, highly liquid investments
that are readily convertible into cash, which are subject to insignificant risk of changes in
value.
n) Cash Flow Statement
Cash flows are presented using indirect method, whereby profit / (loss) before tax is
adjusted for the effects of transactions of non-cash nature and any deferrals or accruals
of past or future cash receipts or payments.
Bank borrowings are generally considered to be financing activities. However, where
bank overdrafts which are repayable on demand form an integral part of an entity’s cash
management, bank overdrafts are included as a component of cash and cash equivalents
for the purpose of Cash flow statement.
o) Earnings per share
The basic earnings per share are computed by dividing the net profit for the period
attributable to equity shareholders by the weighted average number of equity shares
outstanding during the period.
Diluted EPS is computed by dividing the net profit after tax by the weighted average
number of equity shares considered for deriving basic EPS and also weighted average
number of equity shares that could have been issued upon conversion of all dilutive
potential equity shares. Dilutive potential equity shares are deemed converted as of the
beginning of the period, unless issued at a later date. Dilutive potential equity shares are
determined independently for each period presented. The number of equity shares and
potentially dilutive equity shares are adjusted for bonus shares, as appropriate.”
3.1 Standards (including amendments) issued but not yet effective
Ministry of Corporate Affairs (“MCA”) notifies new standard or amendments to the existing
standards. There is no such notification which would have been applicable from April 1,
2022.
3.2 Recent accounting 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. On March 23, 2022, MCA amended the Companies (Indian Accounting Standards)
Amendment Rules, 2022, as below.
Ind AS 16 - Property Plant and equipment - The amendment clarifies that excess of net
sale proceeds of items produced over the cost of testing, if any, shall not be recognised
in the profit or loss but deducted from the directly attributable costs considered as part
of cost of an item of property, plant, and equipment. The effective date for adoption of
this amendment is annual periods beginning on or after April 1,2022. The Company has
evaluated the amendment and there is no impact on its consolidated financial statements.
Ind AS 37 - Provisions, Contingent Liabilities and Contingent Assets - The amendment
specifies that the ‘cost of fulfilling’ a contract comprises the ‘costs that relate directly to
the contract’. Costs that relate directly to a contract can either be incremental costs of
fulfilling that contract (examples would be direct labour, materials) or an allocation of other
costs that relate directly to fulfilling contracts (an example would be the allocation of the
depreciation charge for an item of property, plant and equipment used in fulfilling the
contract). The effective date for adoption of this amendment is annual periods beginning
on or after April 1,2022, although early adoption is permitted. The Company has evaluated
the amendment and the impact is not expected to be material.
(b) There is no movement in the number of equity shares during the year and in the
previous year.
(c) Rights, preferences and restrictions in respect of equity shares issued by the
Company are as follows:
1. The company has only one class of equity shares having a par value of Rs.10 each. Each
holder of Equity shares is entitled to one vote per share rank pari-passu in all respects
including voting rights and entitlement to dividend.
2. In the event of liquidation, shareholders will be entitled to receive the remaining assets
of the company after distribution of all preferential amounts. The distribution will be
proportionate to the number of equity shares held by the shareholder.
32 Earnings per share
Earnings per Share (EPS) is determined based on the Net profit/Loss attributable to the
Shareholders. Basic EPS is computed using the weigted average numbers of shares.
Diluted earnings per share is computed using the weighted average number of common
and dilutive common equivalent shares outstanding during the period, except where the
result would be anti-dilutive.
The Company’s activities expose it to a variety of financial risks, credit risks, liquidity risks and
market risks.
The Company’s board of directors has overall responsibility for the establishment and oversight
of the risk management framework.
The 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 adhere to limits.
Risk management policies and systems are reviewed regularly to reflect changes in market
conditions and company’s activities. The company, through its training and management
standards and procedures, aims to maintain a disciplined and constructive control enviornment
in which all employees understand their roles and obligations.
Market risk
Market risk is the risk of any loss in future earnings, in realizable fair values or in future cash
flows that may result from a change in the price of a financial instrument. The Company’s
activities do not have any exposure to such risks.
Foreign currency risk management & Sensitivity Analysis
The Company’s operations do not involve transactions denominated in foreign currencies;
consequently, exposure to exchange rate fluctuations does not arise. Accordingly, the Company
does not have any exposure to such risks.
There are no hedged or unhedged foreign currency exposure outstanding as at March 31,
2025 & March 31,2024
Interest rate risk management & Sensitivity Analysis
The Company has only interest free short term borrowings and accordingly is not exposed to
interest rate risk.
Credit risk management
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting
in financial loss to the Company. The Company is not subject to major credit risk as the majority
of its trade receivables are covered by means of interest free security deposit taken at the
inception of the agreement.
Exposure to credit risk
The carrying amount of financial assets represents the maximum credit exposure. The
maximum exposure is the total of the carrying amount of balances with banks, short term
deposits with banks, trade receivables, margin money and other financial assets excluding
equity investments.
(a) Trade Receivables
Trade receivables are consisting of a large number of customers. The Company has
credit evaluation policy for each customer and, based on the evaluation, credit limit of
each customer is defined. Wherever the Company assesses the credit risk as high, the
exposure is backed by security deposits taken at the time of entering into agreement with
the customers.
The Company does not have higher concentration of credit risks to a single customer. As
per simplified approach, the Company makes provision of expected credit losses on trade
receivables using a provision matrix to mitigate the risk of default in payments and makes
appropriate provision at each reporting date wherever outstanding is for longer period and
involves higher risk.
(b) Investments, Cash and Cash Equivalents and Bank Deposits
Credit Risk on cash and cash equivalents, deposits with the banks/financial institutions is
generally low as the said deposits have been made with the banks/financial institutions,
who have been assigned high credit rating by international and domestic rating agencies.
Investments of surplus funds are made only with approved Financial Institutions/
Counterparty. Investments primarily include investment in units of quoted Mutual Funds,
etc. These Mutual Funds and Counterparties have low credit risk.
Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The
objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds
are available for use as per requirements. The Company invests its surplus funds in bank
fixed deposit and mutual funds, which carry minimal mark to market risks. The Company also
constantly monitors funding options available in the debt and capital markets with a view to
maintaining financial flexibility.
Liquidity tables
The following tables detail the Company’s remaining contractual maturity for its non-derivative
financial liabilities with agreed repayment periods. The tables have been drawn up based on
the undiscounted cash flows of financial liabilities based on the earliest date on which the
Company can be required to pay.
39 Operating Segments
The company is engaged in the business of ‘Developing and maintaining integrated
software technology parks’ and therefore, has only one reportable segment in accordance
with Ind AS 108 ‘Operating Segments’. The Company’s revenue is generated only within
India and all operating assets are also located only in India. Accordingly, no disclosure
relating to geographical location is applicable.
40 Employee benefit obligation
The Company has in accordance with the IND AS -19 ‘Employee Benefits’ calculated
various benefits provided to employees as under:
Defined contribution plans
The total expense recognised in profit or loss of Rs.12.76 lakhs (for the year ended March
31,2024: Rs. 15.76 lakhs) represents contribution paid to these plans by the Company at
rates specified in the rules of the plan.
Defined benefit plans
In respect of Gratuity plan and Compensated absences plan, the most recent actuarial
valuation of the plan assets and the present value of the defined benefit obligation were
carried out as on March 31, 2025. The present value of the defined benefit obligation,
and the related current service cost and past service cost, were measured using the
projected unit cost method. The following table sets forth the status of the Gratuity Plan &
Compensated absences plan of the Company and the amount recognised in the Balance
Sheet and Statement of Profit and Loss. The Company provides the gratuity benefit
through annual contributions to insurer managed funds.
These plan typically expose the Company to actuarial risks such as: investment risk,
interest rate risk, demographic risk and salary risk.
Risk exposure
“Through its defined benefit plans, the company is exposed to a number of
risks, the most significant of which are detailed below:
The Gratuity scheme is a Defined Benefit Plan that provides for a lump sum payment
made on exit either by way of retirement, death, disability or voluntary withdrawal. The
benefits are defined on the basis of final salary and the period of service and paid as lump
sum at exit. The Plan design means the risks commonly affecting the liabilities and the
financial results are expected to be.”
Interest rate risk:
The defined benefit obligation calculated using a discount rate based on government
bonds. If bond yields fall, the defined benefit obligation will tend to increase.
Demographic risk:
The company has used certain mortality and attrition assumptions in valuation of the
liability. The company is exposed to the risk of actual experience turning out to be worse
compared to the assumption.
Salary risk:
The present value of the defined benefit plan is calculated with the assumption of salary
increase rate of plan participants in future. Deviation in the rate of increase of salary
in future for plan participants from the rate of increase in salary used to determine the
present value of obligation will have a bearing on the plan’s liability.
I n respect of the plan in India, the most recent actuarial valuation of the plan assets
and the present value of the defined benefit obligation were carried out as at March 31,
2025 by Mr.Srinivasan Nagasubramanian, Fellow of the Institute of Actuaries of India. The
present value of the defined benefit obligation, and the related current service cost and
past service cost, were measured using the projected unit credit method.
No other post-retirement benefits are provided to these employees.
(a) Gratuity
Gratuity is payable as per Payment of Gratuity Act, 1972. In terms of the same,
gratuity is computed by multiplying last drawn salary (basic salary including dearness
Allowance if any) by completed years of continuous service with part thereof in excess
of six months and again by 15/26. The Act provides for a vesting period of 5 years for
withdrawal and retirement and a monetary ceiling on gratuity payable to an employee
on separation, as may be prescribed under the Payment of Gratuity Act, 1972, from
time to time. However, in cases where an enterprise has more favourable terms in this
regard the same has been adopted.
Sensitivity Analysis
Sensitivity analysis presented above may not be representative of the actual change in
the defined benefit obligation as it is unlikely that the change in assumptions would occur
in isolation of one another as some of the assumptions may be correlated. Furthermore, in
presenting the above sensitivity analysis, the present value of the defined benefit obligation
has been calculated using the projected unit credit method at the end of the reporting
period, which is the same as that applied in calculating the defined benefit obligation
liability recognised in the balance sheet.
(b) Compensated absences
The compensated absences scheme is a final salary defined benefit plan, that provides
for a lumpsum payment at the time of separation; based on scheme rules the benefits are
calculated on the basis of last drawn salary and the leave count at the time of separation
and paid as lumpsum.
As the Company does not have any plan assets, the movement of present value of defined
benefit obligation and fair value of plan assets has not been presented.
Sensitivity Analysis
Sensitivity analysis presented above may not be representative of the actual change
in the defined benefit obligation as it is unlikely that the change in assumptions would
occur in isolation of one another as some of the assumptions may be correlated.
Furthermore, in presenting the above sensitivity analysis, the present value of
the defined benefit obligation has been calculated using the projected unit credit
method at the end of the reporting period, which is the same as that applied in
calculating the defined benefit obligation liability recognised in the balance sheet.
There was no change in the methods of assumptions used in preparing the sensitivity
analysis from prior years.
43 The Code on Social Security 2020 (‘the Code’) relating to employee benefits, during the
employment and post-employment, has received Presidential assent on September 28,
2020. The Code has been published in the Gazette of India. Further, the Ministry of Labour
and Employment has released draft rules for the Code on November 13, 2020. However,
the effective date from which the changes are applicable is yet to be notified and rules for
quantifying the financial impact are also not yet issued.
The Company will assess the impact of the Code and will give appropriate impact in the
financial statements in the period in which, the Code becomes effective and the related
rules to determine the financial impact are published.
44 The financial statements were approved for issue by the Board of Directors on
13th May 2025.
45 The figures for the previous year have been reclassified/regrouped wherever
necessary for better understanding and comparability
As per our report of even date
attached
For and on behalf of the Board of Directors of for Selvam & Suku
Elnet Technologies Limited Chartered Accountants
Firm Registration Number: 003701S
Unnamalai Thiagarajan Dr.K.P.Karthikeyan Mrs. Madura Ganesh PNivetha
Managing Director Director/Chairman Director Partner
DIN:00203154 DIN: 08218878 DIN: 02456676 Membership No. 268215
Chennai
D Srinivas Rao
Chief Financial Officer pla,ce „ Chenna™oiT
Date : 13-May-2025
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