(i) Provisions and Contingent Liabilities
A provision is recognised when the Company has a present obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.
(j) Investments in subsidiaries
Investment in subsidiaries are carried at cost.
(k) Property, plant and equipment
Property, plant and equipment are stated at cost comprising of purchase price and any initial directly attributable cost of bringing the asset to its working condition for its intended use, less accumulated depreciation (other than freehold land) and impairment loss, if any.
Depreciation is provided for property, plant and equipment on a straight line basis so as to expense the cost less residual value over their estimated useful lives based on a technical evaluation. The estimated useful lives and residual value are reviewed at the end of each reporting period, with the effect of any change in estimate accounted for on a prospective basis.
Depreciation is not recorded on capital work-in-progress until construction and or installation is complete and the asset is ready for its intended use.
(l) Intangible assets:
Intangible assets are recognised when it is probable that the future economic benefits that are attributable to the asset will flow to the enterprise and the cost of the asset can be measured reliably. Intangible assets purchased are measured at cost as of the date of acquisition, as applicable, less accumulated amortisation and accumulated impairment, if any.
Product Development: Salaries and other cost paid to resources working on new products are capitalized as intangible asset under the head "Product Development”. Management has estimated life of this product is about 10 years subject to certain improvements to the same product/source code.
Computer Software: The company amortizes Computer software using the straight-line method over a period of 6 years.
(m) Impairment
(i) Financial assets (other than at fair value)
The Company assesses at each date of balance sheet whether a financial asset or a group of financial assets are impaired. Ind AS 109 requires expected credit losses to be measured through a loss allowance. For all other financial assets, expected credit losses are measured at an amount equal to the 12 months 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 Tangible and intangible assets
Property, plant and equipment and intangible assets with finite life are evaluated for recoverability whenever there is any indication that their carrying amounts may not be recoverable. If any such indication exists, the recoverable amount (i.e. higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs.
If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount. An impairment loss is recognised in the statement of profit and loss.
(n) Employee benefits
(i) Defined contribution plans
Contributions to defined contribution plans are recognised as expense when employees have rendered services entitling them to such benefits.
(ii) Short-term employee benefits
All employee benefits payable wholly within twelve months of rendering the service are classified as shortterm employee benefits. Benefits such as salaries, wages, Bonus, Earned Leave etc. and the expected cost of ex-gratia are recognised in the period in which the employee renders the related service. A liability is recognised for the amount expected to be paid when there is a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.
(o) Earnings per share
Basic earnings per share is computed by dividing profit or loss attributable to equity shareholders of the Company by the weighted average number of equity shares outstanding during the year. Diluted earnings per equity share is computed by dividing the net profit attributable to the equity holders of the Company by the weighted average number of equity shares considered for deriving basic earnings per equity share and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares. The dilutive potential equity shares are adjusted for the proceeds receivable had the equity shares been actually issued at fair value (i.e. the average market value of the outstanding equity shares). Dilutive potential equity shares are deemed converted as at 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 retrospectively for all periods presented for any share splits and bonus shares issues including for changes effected prior to the approval of the financial statements by the Board of Directors
(p) Lease:
At inception of the contract, the Company determines whether the contract is a lease or contains a lease arrangement. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
The Company recognises right-of-use asset representing its right to use the underlying asset for the lease term at the lease commencement date. The cost of the right-of-use asset measured at inception shall comprise of the amount of the initial measurement of the lease liability adjusted for any lease payments made at or before the commencement date less any lease incentives received, plus any initial direct costs incurred and an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset or restoring the underlying asset or site on which it is located. The right-of-use assets is subsequently measured at cost less any accumulated depreciation, accumulated impairment losses, if any and adjusted for any re-measurement of the lease liability. The right-of use assets is depreciated using the straight-line method from the commencement date over the shorter of lease term or useful life of right-of-use asset. The estimated useful lives of right-of-use assets are determined on the same basis as those of property, plant and equipment. Right-of-use assets are tested for impairment whenever there is any indication that their carrying amounts may not be recoverable. Impairment loss, if any, is recognised in the Standalone statement of profit and loss.
The Company measures the lease liability at the present value of the lease payments that are not paid at the commencement date of the lease. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company uses incremental borrowing rate. For leases with reasonably similar characteristics, the Company, on a lease by lease basis, may adopt either the incremental borrowing rate specific to the lease or the incremental borrowing rate for the portfolio as a whole. The lease payments shall include fixed payments, variable lease payments, residual value guarantees, exercise price of a purchase option where the Company is reasonably certain to exercise that option and payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease. The lease liability is subsequently re-measured by increasing the carrying amount to reflect interest on the lease liability, reducing the carrying amount to reflect the lease payments made and re-measuring the carrying amount to reflect any reassessment or lease modifications or to reflect revised insubstance fixed lease payments.
The Company recognises the amount of the re-measurement of lease liability as an adjustment to the right-of-use asset. Where the carrying amount of the right-of-use asset is reduced to zero and there is a further reduction in the measurement of the lease liability, the Company recognises any remaining amount of the re-measurement in Standalone statement of profit and loss.
The Company has elected not to apply the requirements of Ind AS 116 to short-term leases of all assets that have a lease term of 12 months or less and leases for which the underlying asset is of low value. The lease payments associated with these leases are recognized as an expense on a straight-line basis over the lease term.
Current year effect on Lease Accounting:
(i) Financial Charges on Lease Rs 197.44 lakhs
(ii) Amortization cost on Right of Use Asset Rs 205.83 lakhs
Note No: 24
Details of Primary and Collateral Securities (For Liabilities referred in Note No.12 & 16)
Hypothecation of Plant & Machinery, Equipment, Commercial Property and Company promoter's personal guarantee.
Hypothecation of Movable Assets:
Ý M/s. Canara Bank, Spl. Mid Corporate Branch, Hyderabad, having 1st charge on all movable assets such as Plant & Machinery, Electrical & Office Equipment, Computers and Furniture of the company on Foreign Currency Term Loan (FCLR) availed with them.
Ý Hypothecation of Receivables.
Collateral Security:
Ý EMT on 875 sq yards open land at Road.No.1 Banjara Hills, Hyderabad-500034 in the name of Virinchi Limited given to M/s. ICICI Bank Ltd
Ý EMT of Land of extent Ac 2.0 and Building 46,590 Sq yards situated at Sy No. 15/A, 15B and 15/C, Suraram, Jeedemetla Industrial Area, Quthubullapur, in the name of the M/s. Virinchi Limited given to ICICI Bank Ltd.
Ý EMT on 649 sq yards at Plot No 37, Nandagiri Hills, Shaikpet Village, Jubilee Hills, Hyderabad-500033 in the name of promoter M/s. Madhivilatha Kompella given to M/s. ICICI Bank Ltd for Loans availed in M/s. Virinchi Limited.
Ý EMT of Land & Building admeasuring 3 acres 36 Guntas situated at Sy.No. 121 Pothaipally Village, Shameerpet Mandal, RR District, Telangana in the name Virinchi Limited given to M/s. Canara Bank, Spl. Mid Corporate Branch, Hyderabad.
Ý EMT of factory land measuring 1 acre 36.5 guntas at Survey No.441, Hakimpet Village, in Shamirpet Mandal, R R Dist, Telangana in the name of Virinchi Limited given to M/s. Canara Bank, Spl. Mid Corporate Branch, Hyderabad.
Ý EMT on property located at Flat No.608, Lingapur Plaza, Himayathnagar owned by Mr.Viswanath Kompella given to M/s. Canara Bank, Spl. Mid Corporate Branch, Hyderabad.
Note No: 26
The Company has identified Business Segments which comprise Development of Computer Software and Services and IT Enabled Services.
Revenue and expenses directly attributable to segments are reported under each segment. Expenses which are not directly identifiable to specific segment have been allocated on the basis of associated revenue of the segment and manpower efforts. All other expenses which are not attributable or allocable to segments have been disclosed as unallocable expenses.
Note No: 34 Amount spent on CSR activities
As per the Section 135(5) of the Companies Act, 2013, the Company shall ensure that an amount of 2% of the average Net
Profits of the Company made during the three immediately preceding financial years shall be spent towards Corporate
Social Responsibility activities. For the Financial Year 2023-24, the amount to be spent towards CSR activities works out
to Rs.22.67 Lacs and the Company had spent Rs.32.10 Lacs towards the CSR activities in the financial year 2023-24.
Note No: 35 Additional Regulatory information
i. The Company is in possession of immovable property and Title Deeds are held in the Name of the company.
ii. The Company has not revalued any of its Property, Plant and Equipment during the year.
iii. The Company has not granted any loans or advances in the nature of loans to directors, KMPs
iv. There are no proceedings initiated or pending against the company for holding any Benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made there under.
v. The Company has borrowings from banks or financial institutions on the basis of security of current assets and the quarterly returns or statements filed by the company with such banks or financial institutions are in agreement with the books of account of the Company.
vi. The Company is not declared as wilful defaulter by any bank or financial Institution or other lenders.
vii. The Company did not have any transactions with Companies struck off under Section 248 of Companies Act, 2013 or Section 560 of Companies Act, 1956 considering the information available with the Company.
Note No: 43
Previous year's numbers have been regrouped, rearranged, recasted, wherever necessary to conform to Current Year Classification.
Note No: 44
Previous figures have been regrouped wherever necessary and the figures have been rounded off to the nearest Lakhs.
Notes referred to above form an integral part of the Standalone Financial Statements
As per our Report of Even Date For and on behalf of the Board of Directors of
For P.Murali & Co. Virinchi Limited
Chartered Accountants Firm Registration No.007257S
M.V. Joshi M.V.Srinivasa Rao V. Satyanarayana
Partner CFO & Wholetime Director Whole Time Director
M. No. 024784 DIN: 00816334 DIN: 09070986
K.Ravindranath Tagore
Place : Hyderabad Company Secretary
Date: 03/05/2024 M.No.A18894
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