3.8 Provisions, Contingent Liabilities and Contingent Assets

a. Provisions

Provisions are recognised when the Company has a present obligation 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. 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. When the effect of time value is material, the amount is determined by discounting the expected future cash flows.

b. Contingent liabilities

Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made.

c. Contingent Asset

A contingent asset is generally neither recognised nor disclosed.

Note on Valuation Methodology

a) Mutual Funds

The fair values of investments in mutual fund units is based on the net asset value (‘NAV’) as stated by the issuers of these mutual fund units in the published statements as at Balance Sheet date. NAV represents the price at which the issuer will issue further units of mutual fund and the price at which issuers will redeem such units from the investors.

b) Investment in equity investments (unquoted)

The Company has measured fair value for Investment in equity investments (unquoted) based on the additional shares allotted to the company.

33 Financial risk management

The Company’s management has overall responsibility for the establishment and oversight of the risk management framework.

The Company’s principal financial liabilities, comprises lease liabilities, trade and other payables. The Company’s principal financial assets include security deposits, trade and other receivables and cash and bank balances.

The Company’s activities expose it to a variety of financial risks: credit risk, liquidity risk and foreign currency risk. The Company’s primary focus is to foresee the unpredictability of financial markets and seek to minimise potential adverse effects on its financial performance. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below:

(i) 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 obligations, and arises principally from the Company’s receivables from customers. 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. Customer credit risk is subject to the Company’s policies, procedures and controls and any changes in the foreign policy of the export customer. Outstanding trade receivables are monitored at regular intervals. Impairment analysis is performed at each reporting date on individual customer basis.

Cash and cash equivalents and other bank balances

Credit risk on cash and cash equivalents is limited as the Company generally invests in deposits with banks.

(ii) 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 by ensuring, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due. The Company’s Accounts and 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 Company does not face a significant liquidity risk with regard to its financial liabilities as the current assets are sufficient to meet the obligations related to financial liabilities as and when they fall due.

Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, foreign currency risk and other price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk include deposits, payable, etc.

The analysis exclude the impact of movements in market variables on: the carrying values of post-retirement obligations and provisions. 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 has debt obligations with fixed interest rates. The Company’s investments are primarily in fixed rate interest bearing investments. Hence, the Company is not significantly exposed to interest rate risk.

34 Capital management

The Company manages its capital to ensure that it will be able to continue as going concern while maximising the return to stakeholders. The capital structure of the Company consists of equity only. The management of the Company reviews the capital structure of the Company on annual basis. The Company is not subject to any externally imposed capital requirements. The Capital Management policy focusses to maintain an optimal structure that balances growth and maximizes shareholder value.

B Defined benefit plans

Gratuity

(ii) Gratuity: The employees are covered under Employee Gratuity scheme which is a defined benefit plan funded by Vinyas Innovative Technologies (P) Ltd Group Gratuity Trust® managed by LIC of India. The Company provides for gratuity, a defined benefit plan (the Gratuity Plan), to its employees. The Gratuity Plan provides a lump sum payment to vested employees, at retirement or termination of employment, of an amount based on the respective employee's last drawn salary and years of employment with the Company.

Description of Risk Exposures:

Valuations are based on certain assumptions, which are dynamic in nature and vary over time. As such Company is exposed to various risks as follow -

(a) 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.

(b) 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.

(c) 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.

40 ADDITIONAL REGULATORY DISCLOSURES

(i) The Company has not been declared as an wilful defaulter by any bank or financial institution or other lenders.

(ii) The Company has no transactions with Companies that has been struck off.

(iii) The Company has not traded or invested in crypto currency or virtual currency during the financial year or in the previous year.

(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 the rules made thereunder.

(v) There are no charges registration or satisfaction of charge not created with ROC beyond the time period.

(vi) There are no immovable properties not held in the name of the company.

(vii) The Company has no transactions not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961),

(viii) The company has not made any revaluation to the Property, Plant and Equipment.

(ix) The company has not entered into any Scheme of arrangement.

(x) The company has not given any loans or advances to the Directors/KMP/Related Parties other than reported in the related party transaction disclosure

(i) All amounts disclosed in the financial statements and notes have been rounded off to the nearest lakhs as per the requirements of Schedule III, unless otherwise stated.

41 Trade Receivables, Trade Payables and Advances from Customers balances are subject to balance confirmation and reconciliation, if any.

42 The Company, in respect of financial year commencing on 1 April 2023, has used accounting software for maintaining its books of account which have the feature of recording audit trail (edit log) facility and the same has been enabled throughout the year for all relevant transactions recorded in the software.

43 Previous year's figures have been regrouped wherever necessary, to conform to the current year’s classification.

In terms of our report attached

For P Chandrasekar LLP for and on behalf of the Board of Directors of

Chartered Accountants Vinyas Innovative Technologies Limited

Firm registration number: 000580S/S200066

P CHANDRASEKARAN NARENDRA NARAYANAN T R SRINIVASAN

Partner Managing Director Director

Membership Number: 026037 DIN: 00396176 DIN: 00379256

Place: Bengaluru Date: 29-05-2024

AMITAVA MUJUMDAR SUBODH M R

Chief Financial Officer Company Secretary & Compliance Officer

M. No. : A43878

Place: Mysuru Date: 29-05-2024