Provisions, Contingent Liabilities and Contingent Assets (Ind AS 37)
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 Liabilities
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 recognized in the financial statements.
Details of contingent liabilities and contingent assets are tabulated as follows (? in Lakhs)
Non - Current Assets Held for Sale: (Ind AS 105)
Non-current assets or disposal groups comprising of assets and liabilities are classified as ‘held for sale
’ when all of the following criteria's are met:
i. Decision has been made to sell.
ii. The assets are available for immediate sale in its present condition.
iii. The assets are being actively marketed and
iv. Sale has been agreed or is expected to be concluded within 12 months of the Balance Sheet date.
Subsequently, such non-current assets and disposal groups classified as held for sale are measured at the
lower of its carrying value and fair value less costs to sell. Non-current assets held for sale are not
depreciated or amortized.
Operating Segment Reporting (Ind AS 108)
The Company is engaged in the business of "wafer sort, assembly, test and drop-shipment services of IC
chips." and therefore, has reported under each reportable segment as per Ind AS 108 "Operating
Segments"
Financial Instrument: (Ind AS 109)
Financial Assets^
Initial recognition and measurement
Financial assets are measured at fair value on initial recognition, except for trade receivables that do not
contain a significant financing component which are initially measured at transaction price. Transaction
costs that are directly attributable to the acquisition of financial assets, which are not at fair value through
profit or loss, are added to the fair value on initial recognition.
Subsequent measurement
All recognised financial assets are subsequently measured in their entirety either at amortised cost or at
fair value depending on the classification of the financial assets.
Where financial assets are measured at fair value, gains and losses are either recognised entirely in the
statement of profit and loss (i.e.. fair value through profit or loss or ‘FVTPL'), or recognised in other
comprehensive income (i.e. fair value through other comprehensive income or ‘FVTOCI’).
A financial asset is measured at amortised cost (net of any write down for impairment) if it is held within a
business model whose objective is to hold the asset in order to collect contractual cash flows and the
contractual terms of the financial asset give rise on specified dates to cash flows that represent solely
payments of principal and interest on the principal amount outstanding.
A financial asset is measured at FVTOCI if it is held within a business model whose objective is achieved
by both collecting contractual cash flows and selling financial assets and the contractual terms of the
financial asset give rise on specified dates to cash flows that represents solely payments of principal and
interest on the principal amount outstanding.
All other financial assets are measured at fair value through profit or loss.
All equity investments are measured at fair value, with fair value changes recognised in the statement of
profit and loss, except for those equity investments for which the entity has elected to present fair value
changes in other comprehensive income. However, dividend on such equity investments are recognised in
statement of profit and loss when the Company’s right to receive payment is established.
Investment in associates, joint venture and subsidiaries
The Company accounts for its investment in subsidiaries, associates and joint venture, at cost less
impairment loss except where investments is accounted for in accordance with Ind AS 105, Non-current
Assets Held for Sale and Discontinued Operations, when they are classified as held for sale.
Impairment of Financial Assets:
The Company uses ‘Expected Credit Loss’ (ECL) model, for evaluating impairment of financial assets other
than those measured at fair value through profit and loss. Expected credit losses are measured through a
loss allowance at an amount equal to:
• The 12 months expected credit losses (expected credit losses that result from those default events on
the financial instrument that are possible within 12 months after the reporting date); or
• Full lifetime expected credit losses (expected credit losses that result from all possible default events
over the life of the financial instrument).
For trade receivables the Company applies a simplified approach under which loss allowance is
recognised based on expected lifetime ECL losses to be recognised on each reporting date. The Company
uses a provision matrix that is based on its historical credit loss experience adjusted for relevant forward¬
looking factors. For other assets, the Company uses 12 months ECL to provide for impairment loss were
there is no significant increase in credit risk. If there is significant increase in credit risk since initial
recognition, full lifetime ECL is used.
De-recognition
The Company derecognises a financial asset when the contractual rights to the cash flows from the
financial asset expire or it transfers the financial asset, and the transfer qualifies for de-recognition under
Ind AS 109.
Financial Liabilities
Initial recognition and measurement
Financial liabilities are measured at fair value on initial recognition. Transaction costs that are directly
attributable to the issue of financial liabilities, which are not at fair value through profit or loss, are
deducted from the fair value on initial recognition.
The Company’s financial liabilities include trade and other payables, loans and borrowings including bank
Overdrafts, and derivative financial instruments.
Subsequent measurement
Financial liabilities are classified as measured at amortised cost or fair value through profit or loss (‘FVTPL’).
A financial liability is classified as at FVTPL if it is classified as held-for-trading, it is a derivative or it is
designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net
gains and losses, including any interest expense, are recognised in profit or loss.
Other financial liabilities are subsequently measured at amortised cost using the effective interest method.
Interest expense and foreign exchange gains and losses are recognised in profit or loss. Any gain or loss
on de-recognition is also recognised in profit or loss.
De-recognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or
expires. When an existing financial liability is replaced by another from the same lender on substantially
different terms, or the terms of an existing liability are substantially modified, such an exchange or
modification is treated as the de-recognition of the original liability and the recognition of a new liability.
The difference in the respective carrying amounts is recognised in the statement of profit and loss
Leases: (Ind AS 116)
Leases in which a substantial portion of the risks and rewards of ownership are retained by the lessor are
classified as operating leases. Payments and receipts under such leases are recognized to the Statement
of Profit and Loss on a straight-line basis over the term of the lease unless the lease payments to the lessor
are structured to increase in line with expected general inflation to compensate for the lessor's expected
inflationary cost increases, in which case the same are recognized as an expense in line with the contractual
term.
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.
for Venkatesh & Co..
For and Behalf of the Board
Chartered Accoutants
FRN: 004636S
Sd /- Sd /- Sd I-
Sd/- S Chandramohan P Balamurugan R. Venkatesh
CA Dasaraty V Director Director Director
Partner DIN: 00052571 DIN: 07480881 DIN:07242631
M No: 026336
Chennai., May 24, 2025
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