2.17 Provisions and contingencies liabilities
Provisions are recognised when the Company has a present obligation (legal or constructive), as a result of past events, and it is
probable that an outflow of resources, that can be reliably estimated, will be required to settle such an obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the
balance sheet date, taking into account 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 (when the
effect of the time value of money is material).
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable
is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be
measured reliably.
A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will
not, require an outflow of resources. When there is a possible obligation that the likelihood of outflow of resources is remote, no
provision or disclosure is made.
2.18 Financial Instruments
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the
instruments. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable
to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value
through Statement of Profit and Loss (FVTPL)) are added to or deducted from the fair value of the financial assets or financial liabilities,
as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities
at fair value through profit and loss are recognised immediately in Statement of Profit and Loss.
All financial instruments are recognised initially at fair value. Transaction costs that are attributable to the acquisition of the financial
asset and financial liabilities (other than financial assets and financial liabilities recorded at fair value through profit or loss) are added
to or deducted from the fair value of the financial assets or financial liabilities , as appropriate, on initial recognition. Purchase or sales
of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place
(regular way trade) are recognised on trade date.
For the purpose of subsequent measurement, financial instruments of the Company are classified in the following categories: non¬
derivative financial assets comprising amortised cost, debt instruments at fair value through other comprehensive income (FVTOCI),
equity instruments at FVTOCI or fair value through profit and loss account (FVTPL) and financial liabilities at amortised cost or FVTPL.
The classification of financial instruments depends on the objective of the business model for which it is held. Management
determines the classification of its financial instruments at initial recognition.
A) Non-derivative financial assets
(i) Financial assets at amortised cost
A financial asset shall be measured at amortised cost if both of the following conditions are met:
(a) the financial asset is held within a business model whose objective is to hold financial assets in order to collect
contractual cash flows and
(b) the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of
principal and interest (SPPI) on the principal amount outstanding.
They are presented as current assets, except for those maturing later than 12 months after the reporting date which are
presented as non-current assets. Financial assets are measured initially at fair value plus transaction costs and subsequently
carried at amortized cost using the effective interest method, less any impairment loss.
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest
income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts
(including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and
other premiums or discounts) through the expected life of the debt instrument, or where appropriate, a shorter period, to
the gross carrying amount on initial recognition.
Financial assets at amortised cost are represented by trade receivables, security deposits, cash and cash equivalents,
employee and other advances and eligible current and non-current assets.
Income is recognised on an effective interest basis for debt instruments other than those financial assets classified as at
FVTPL. Interest income is recognised in profit or loss and is included in the "Other Income" line item.
(ii) De-recognition of financial assets
The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when
it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the
Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the
transferred asset, the Company recognises its retained interest in the asset and an associated liability for amounts it may
have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred financial asset,
the Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds
received.
On De-recognition of a financial asset in its entirety, the difference between the asset's carrying amount and the sum of the
consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive
income and accumulated in equity is recognised in profit or loss if such gain or loss would have otherwise been recognised
in profit or loss on disposal of that financial asset.
On De-recognition of a financial asset other than in its entirety (e.g. when the Company retains an option to repurchase
part of a transferred asset), the Company allocates the previous carrying amount of the financial asset between the part it
continues to recognise under continuing involvement, and the part it no longer recognises on the basis of the relative fair
values of those parts on the date of the transfer. The difference between the carrying amount allocated to the part that
is no longer recognised and the sum of the consideration received for the part no longer recognised and any cumulative
gain or loss allocated to it that had been recognised in other comprehensive income is recognised in profit or loss if such
gain or loss would have otherwise been recognised in profit or loss on disposal of that financial asset. A cumulative gain
or loss that had been recognised in other comprehensive income is allocated between the part that continues to be
recognised and the part that is no longer recognised on the basis of the relative fair values of those parts.
B) Non-derivative financial liabilities
(i) Financial liabilities at amortised cost
Financial liabilities at amortised cost represented by borrowings, trade and other payables are initially recognized at fair
value, and subsequently carried at amortized cost using the effective interest rate method.
(ii) Financial liabilities at FVTPL
Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in profit
or loss. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liability and is included
in the 'Finance costs' line item. The Company derecognises financial liabilities when, and only when, the Company's
obligations are discharged, cancelled or they expire. The difference between the carrying amount of the financial liability
derecognised and the consideration paid and payable is recognised in Statement of Profit and Loss.
For financial liabilities that are denominated in a foreign currency and are measured at amortised cost at the end of each
reporting period, the foreign exchange gains and losses are determined based on the amortised cost of the instruments
and are recognised in the statement of profit and loss. The fair value of financial liabilities denominated in a foreign
currency is determined in that foreign currency and translated at the spot rate at the end of the reporting period. For
financial liabilities that are measured as at FVTPL, the foreign exchange component forms part of the fair value gains or
losses and is recognised in profit or loss.
(iii) De-recognition of non-derivative financial liabilities
The Company derecognises financial liabilities when, and only when, the Company's obligations are discharged, cancelled
or have expired. An exchange between with a lender of debt instruments with substantially different terms is accounted
for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, a
substantial modification of the terms of an existing financial liability (whether or not attributable to the financial difficulty
of the debtor) is accounted for as an extinguishment of the original financial liability and the recognition of a new financial
liability. The difference between the carrying amount of the financial liability derecognised and the consideration paid and
payable is recognised in profit or loss.
2.19 Impairment
(i) Financial Assets
The Company assesses at each date of balance sheet whether a financial asset or a group of financial assets is impaired. Ind AS
109 requires expected credit losses to be measured through a loss allowance. The Company recognizes lifetime expected losses
for all contract assets and / or all trade receivables that do not constitute a financing transaction. For all other financial assets,
expected credit losses are measured at an amount equal to the 12- month expected credit losses or at an amount equal to the
life time expected credit losses, if the credit risk on the financial asset has increased significantly since initial recognition.
(ii) Non-financial assets
The Company periodically assesses whether there is any indication that an asset or a group of assets comprising a cash
generating unit may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset.
For an asset or group of assets that does not generate largely independent cash inflows, the recoverable amount is determined
for the cash-generating unit to which the asset belongs. If such recoverable amount of the asset or the recoverable amount
of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its
recoverable amount. The reduction is treated as an impairment loss and is recognised in the statement of profit and loss. If at
the balance sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable
amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciable historical cost.
An impairment loss is reversed only to the extent that the amount of asset does not exceed the net book value that would have
been determined if no impairment loss had been recognised
2.20 Fair Value Measurements
The Company measures financial instruments at fair value at each balance sheet date. Fair value is the price that would be received
to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair
value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
a) In the principal market for the asset or liability, or
b) In the absence of a principal market, in the most advantageous market for the asset or liability
The principal or the most advantageous market must be accessible by the Company. The fair value of an asset or a liability is
measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market
participants act in their economic best interest. A fair value measurement of a non financial assets takes into account a market
participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another
market participant that would use the asset in its highest and best use.
For assets and liabilities that are recognized in the financial statements on a recurring basis, the Company determines whether
transfers have occurred between levels in the hierarchy by re-assessing categorization (based on the lowest level Input that is
significant to the fair value measurement as a whole) at the end of each reporting period.
44.1 b) Defined benefit plan - gratuity
In accordance with applicable Indian laws, the Company provides for gratuity, a defined benefit retirement plan (Gratuity plan). The Gratuity plan
provides a lump sum payment to vested employees, at retirement or termination of employment, an amount based on the respective employee's
last drawn eligible salary and the years of employment with the Company. The Company provides the gratuity benefit through annual contribu¬
tions to a fund managed by the Insurer included as part of'Contribution to provident and other funds' in Note 34 Employee benefit expense. Under
this plan, the settlement obligation remains with the Company.
Description of Risk Exposures
i) Interest Rate Risk: The plan exposes the Company to the risk of fall in interest rates. A fall in interest rates will result in an increase in the
ultimate cost of providing the above benefit and will thus result in an increase in the value of the liability (as shown in financial statements).
ii) Investment Risk: The probability or likelihood of occurrence of losses relative to the expected return on any particular investment.
iii) Salary Escalation 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.
iv) 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.
v) Liquidity Risk: This is the risk that the Company is not able to meet the short-term gratuity pay-outs. This may arise due to non-availability
of enough cash/cash equivalent to meet the liabilities or holding of illiquid assets not being sold in time.
vi) In 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. N Srinivasan, 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.
The management assessed that fair value of cash and Balances with Bank, trade receivables, trade payables, and other current financial assets and
liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.
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.
The following methods and assumptions were used to estimate the fair values:
i) Long-term fixed-rate receivables/borrowings are evaluated by the Company based on parameters such as interest rates, specific country risk
factors, individual creditworthiness of the customer and the risk characteristics of the financed project. Based on this evaluation, allowances
are taken into account for the expected losses of these receivables.
ii) Fair values of the Company's interest-bearing borrowings and loans are determined by using DCF method using discount rate that reflects
the issuer's borrowing rate as at the end of the reporting period. The own non- performance risk as at March 31, 2025 was assessed to be
insignificant.
iii) The fair values of the unquoted equity shares have been estimated using a discounted cash flow model. The valuation requires management
to make certain assumptions about the model inputs, including forecast cash flows, discount rate, credit risk and volatility, the probabilities
of the various estimates within the range can be reasonably assessed and are used in management's estimate of fair value for these unquoted
equity investments.
51. Fair value hierarchy
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 assets or liabilities that are not based on observable market data (unobservable inputs).
53. Financial Risk Management
The Company's principal financial liabilities, comprise loans and borrowings, trade and other payables. The main purpose of these financial liabili¬
ties is to finance the company's operations and to provide guarantees to support its operations. The Company's principal financial assets include
loans, trade and other receivables, and cash and short-term deposits that derive directly from its operations.
The Company's activities expose it to a variety of financial risks: credit risk, liquidity risk, foreign currency risk and interest rate risk. The Company's
primary focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance.
The primary market risk to the company is foreign exchange risk. The Company uses foreign currency borrowings to mitigate foreign exchange
related risk exposures.
The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below:
Credit Risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obliga¬
tions, and arises principally from the Company's receivables from customers and investment securities. Credit risk arises from cash held with banks
and financial institutions, as well as credit exposure to clients, including outstanding accounts receivable. The maximum exposure to credit risk is
equal to the carrying value of the financial assets. The objective of managing counterparty credit risk is to prevent losses in financial assets. The
Company assesses the credit quality of the counterparties, taking into account their financial position, past experience and other factors.
Trade and Other Receivables
The Company's exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the customer,
including the default risk of the industry and country in which the customer operates, also has an influence on credit risk assessment.
The following table gives details in respect of percentage of revenues generated from top customer and top 5 customers:
Market Risk
The Company limits its exposure to credit risk by generally investing in liquid securities and only with counterparties that have a good credit rat¬
ing. The company does not expect any losses from non- performance by these counter-parties, and does not have any significant concentration
of exposures to specific industry sectors.
Liquidity Risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company manages its liquidity
risk through credit limits with banks.
The Company's corporate treasury 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 working capital position of the Company is given below:
Foreign Currency risk
The Company's exchange risk arises from its foreign operations, foreign currency revenues and expenses, (primarily in U.S. dollars, British pound
sterling and Euros and foreign currency borrowings (primarily in U.S. dollars, British pound sterling and Euros). A significant portion of the Com¬
pany's revenues are in these foreign currencies, while a significant portion of its costs are in Indian rupees. As a result, if the value of the Indian
rupee appreciates relative to these foreign currencies, the Company's revenues measured in rupees may decrease. The exchange rate between the
Indian rupee and these foreign currencies has changed substantially in recent periods and may continue to fluctuation substantially in the future.
The Company's management meets on a periodic basis to formulate the strategy for foreign currency risk management.
Consequently, the Company management believes that the borrowings in foreign currency and its assets in foreign currency shall mitigate the
foreign currency risk mutually to some extent
Foreign Currency Sensitivity Analysis
The company has very minimal presence in the export market .The Company is mainly exposed to the currency USD/EURO on account of outstand¬
ing trade receivables and trade payables in USD.
The following table details the Company's sensitivity to a 5% increase and decrease in INR against the relevant foreign currency. 5% is the
sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management's assessment
of the reasonably possible change in foreign exchange rates. 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 or equity where the INR strengthens 5% against the relevant currency. For a 5% weakening of the INR against the relevant
currency, there would be a comparable impact on the profit or equity as shown in the below table
Interest Rate Risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.
The Company's exposure to the risk of changes in market interest rates relates primarily to the Company's debt obligations with floating interest
rates and investments.
55. Additional Disclosure relating to Schedule III Amendment of Companies Act ,2013
(i) Details of Benami property :
No proceedings have been initiated or are pending against the Company for holding any Benami property under the Benami
Transactions (Prohibition) Act, 1988 (45 of 1988) and the rules made thereunder.
(ii) Utilisation of borrowed funds and share premium:
A) 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.
B) 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.
(iii) Compliance with number of layers of companies:
The Company has complied with the number of layers prescribed under the Companies Act,2013.
(iv) Undisclosed income:
There is no income surrendered or disclosed as income during the current or previous year in the tax assessments under the Income
Tax Act, 1961, that has not been recorded in the books of account.
(v) Details of crypto currency or virtual currency:
The Company has not traded or invested in crypto currency or virtual currency during the current or previous year.
(vi) Valuation of Property, Plant and Equipment, intangible asset and investment property:
The Company has not revalued its property, plant and equipment (including Right of Use Assets) or intangible assets or both during the
current or previous year.
(vii) Struck off Companies:
The company does not have any transaction with companies struck off .
(viii) Wilful Defaulter:
The Company had not been declared a wilful defaulter by any bank or financial institution or other lender (as defined under the
Companies Act, 2013) or consortium thereof, in accordance with the guidelines on wilful defaulters issued by the Reserve Bank of India.
(ix) The Company does not have any charges or satisfaction which is yet to be registered with Registrar of Companies (ROC) beyond the
statutory period.
56. The amounts and disclosures included in the financial statements of the previous year have been reclassified wherever necessary to conform
to the current year classification.
57. All figures are in lakhs unless otherwise stated and rounded off to the nearest two decimals.
Subject to our report of even date attached For and on behalf of the Board of Directors
For VKS Aiyer & Co,
Chartered Accountants S V Alagappan S K Sundararaman
C S Sathyanarayanan Chairman Managing Director
Partner DIN:00002450 DIN:00002691
Membership No. 028328 C Krishnakumar R Srinivasan
Coimbatore Chief Financial Officer Company Secretary
22-05-2025 ACS No.21254
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