2.19 Provisions, contingent liabilities &
contingent assets

A provision is recognized when the Company has
a present obligation as a result of past event, it is
probable that an outflow of resources will be required
to settle the obligation and a reliable estimate can
be made of the amount of the obligation. If the effect
of the time value of money is material, provisions
are discounted using a current pre-tax rate that
reflects, when appropriate, the risks specific to the
liability. When discounting is used, the increase in the
provision due to the passage of time is recognised as
a finance costs.

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 the
obligation or a reliable estimate of the amount cannot
be made. Contingent assets are neither recognised
nor disclosed in the financial statements.

Rules as issued from time to time. During the year
ended March 31, 2025, MCA has notified Ind AS 117 -
Insurance Contracts and amendments to Ind As 116
- Leases, relating to sale and lease back transactions,
applicable from 1^st April 2024. The Company has
assessed that there is no impact on its standalone
financial statements.

On 9^th May 2025, MCA notifies the amendments to
Ind AS 21 - Effects of Changes in Foreign Exchange
Rates. These amendments aim to provide clearer
guidance on assessing currency exchangeability
and estimating exchange rates when currencies
are not readily exchangeable. The amendments are
effective for annual periods beginning on or after
1^st April 2025. The Company is currently assessing
the probable impact of these amendments on its
financial statements.

a. Security and terms of term loan borrowings

i. Vehicle loans are secured by hypothecation of the vehicles financed through the loan arrangements. Such
loans are repayable in equal monthly instalments over a period of 7 years commenced from May'17 and carry
interest rate at 9.4 % per annum.

The bank has sanctioned f2.88 crores in FY2020-21 and S1.29 crores in FY 2022-23 loan in under the scheme
of Guaranteed Emergency Credit Line (GECL) with interest rate of 8.25%, which will be paid over a period of 36
months from Aug'21 and Jul'24 respectively.

i. The Company obtained a cash credit facility from bank amounting to f8,000 lakhs during the year. As on
31^st March 2025, the cash credit facilities remain unutilised. Further, the Company also has a sanctioned
bank guarantee limit of fl,600 lakhs, with the cash margin of 10%, which was utilised during the year.
The above facilities are secured by charge on entire current assets and Property, plant and equipment, both present
and future.

In respect of the above facilities, there are no defaults or continuing defaults during the reporting period.

ii. Vehicle loans are secured by hypothecation of the vehicles financed through the loan arrangements. Such loans
are repayable in equal monthly instalments over a period of 7 years commenced from May'17 and carry interest
rate 9.4 % per annum.

Fixed price:

Fixed price arrangements with customers have defined delivery milestones with agreed scope of work and pricing for
each milestone. Revenue from fixed-price contracts, where the performance obligations are satisfied over time and
when there is no uncertainty as to measurement or collectability of consideration, is recognised as per the 'percentage-
of-completion' method. When there is uncertainty as to measurement or ultimate collectability, revenue is recognised
when such uncertainty is resolved. Percentage of completion is determined based on the project costs incurred to date
as a percentage of total estimated project costs required to complete the project. The input method has been used
to measure the progress towards completion as there is direct relationship between input and productivity. In certain
projects, a fixed quantum of service or output units is agreed at a fixed price for a fixed term. In such contracts, revenue is
recognised with respect to the actual output achieved till date as a percentage of total contractual output. Any residual
service unutilised by the customer is recognised as revenue on completion of the term.

Time and material:

Revenue from time and material contracts are recognised as and when services are rendered to the customer. These
are based on the efforts spent and rates agreed with the customer. (Revenue from the end of the last invoicing to the
reporting date is recognised as unbilled revenue)

34 Corporate Social Responsibility ("CSR")

a) As per Section 135 of the Companies Act, 2013, a Company, meeting the applicability threshold, needs to spend
at least 2% of its average net profit for the immediately preceding three financial years on corporate social
responsibility (CSR) activities. The areas for CSR activities of the Company mainly encompass activities relating to
promoting education.

Pursuant to the provisions of Section 135(9) of the Companies Act, 2013 and in view of the fact that the requirement
to make spends on account of CSR obligations was less than f50 lakh, the CSR Committee was not required to be
formed, and the Board of Directors will discharge the functions of CSR Committee.

d) Terms and conditions of transactions with related parties:

i. The transactions with related parties are made on terms equivalent to those that prevail at arm's length and
in ordinary course of business. Outstanding balances at the year-end are unsecured.

ii. The transactions are disclosed under various relationships (i.e. holding and other related parties) based on the
status of related parties on the date of transactions.

iii. The Company gives or receives trade advances during normal course of business. The transactions against
those trade advances are part of above-mentioned purchases or sales and accordingly, such trade advances
have not been shown separately.

35 Segment information

Ind AS 108 establishes standards for the way that companies report information about their operating segments and
related disclosures, as applicable about products and services, geographic areas, and major customers. Based on
the "management approach" as defined in Ind AS 108, the management evaluates the Company's performance and
allocates resources based on an analysis of various performance indicators by business segments and geographical
segments. Accordingly, information has been presented as per business segments. The accounting principles used
in the preparation of the standalone financial statements are consistently applied to record revenue and expenditure
in individual segments, and are as set out in the significant accounting policies. Revenue and identifiable operating
expenses in relation to segments are categorized based on items that are individually identifiable to that segment.
Certain expenses such as depreciation and finance cost, which form a significant component of total expenses, are not
specifically allocable to specific segments as the underlying assets are used interchangeably. Management believes
that it is not practical to provide segment disclosures relating to those expenses, and accordingly these expenses are
separately disclosed as "unallocated" and adjusted against the operating income of the Company. Operating segments
are defined as components of an enterprise for which discrete financial information is available that is evaluated regularly
by the decision maker, in deciding how to allocate resources and assessing performance. The Company decision maker
is the Chief Executive Officer. The Company has identified business segments as reportable segments. Accordingly,
Semiconductor and Software & System Design have been disclosed as business segments.

36 Details of employee benefits as required by the IND AS-19 - Employee Benefits are as under:

i. Defined contribution plans

The Company makes contributions to Provident Fund which is defined contribution plans for qualifying employees.
Under these Schemes, the Company contributes a specified percentage of the payroll costs to the respective funds.

The Company has recognized as expense in the Statement of Profit and Loss f250.34 lakhs (31^st March 2024: f230.98
lakhs) towards Provident Fund contributions.

ii. Defined benefit plan

I n accordance with the Payment of Gratuity Act, 1972, applicable for Indian companies, the Company operates a
scheme of gratuity which is a defined benefit plan. The gratuity plan is partially funded

Nature of Benefits:

The Company operates a defined benefit final salary gratuity plan which is open to new entrants. The gratuity
benefits payable to the employees are based on the employee's service and last drawn salary at the time of
leaving. The employees do not contribute towards this plan and the full cost of providing these benefits are met by
the Company.

i. Regulatory Framework:

There are no minimum funding requirements for a gratuity plan in India. The trustees of the gratuity fund
have a fiduciary responsibility to act according to the provisions of the trust deed and rules. Since the fund is
income tax approved, the Company and the trustees have to ensure that they are at all times fully compliant
with the relevant provisions of the income tax and rules. Besides this if the Company is covered by the Payment
of Gratuity Act, 1972 then the Company is bound to pay the statutory minimum gratuity as prescribed under
this Act.

ii. Governance of the Plan:

The Company has setup an income tax approved irrevocable trust fund to finance the plan liability. The trustees

of the trust fund are responsible for the overall governance of the plan.

iii. Risk exposures:

Valuations are performed on certain basic set of pre-determined assumptions and other regulatory framework

which may vary over time. Thus, the Company is exposed to various risks in providing the above benefit which

are as follows:

(a) Interest Rate risk: The plan exposes the Company to the rise 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).

(b) Liquidity Risk: This is the risk that the Company is not able to meet the short-term Benefit payouts. 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) 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.

(d) 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.\

(e) Regulatory Risk: Benefit is paid in accordance with the Provisions of Gratuity Act 1972 (as may be amended
from time to time). There is a risk of change in provisions of Gratuity Act requiring higher Plan Benefit pay
outs (e.g. change in benefit formula).

(f) Asset Liability Mismatching or Market Risk: The duration of the liability is longer compared to duration of
assets, exposing the Company to market risk for volatilities/fall in interest rate.

(g) Investment Risk: The probability or likelihood of occurrence of losses relative to the expected return on any
particular investment.

38 Employee stock option plans ( ESOP)

The Employee Stock Option Plans are designed to provide incentives to employees to deliver long-term returns.
Participation in the plan is at the Board's discretion and no individual has a contractual right to participate in the plan
or to receive any guaranteed benefits.

The Company has established Nine schemes i.e., Employee Stock Option Plan, MosChip Stock Option Plan 2005 (MI),
MosChip Stock Option Plan 2005 (WOS), MosChip Stock Option Plan 2008, MosChip Stock Option Plan 2008(ALR), MosChip
Stock Option Plan 2008(Director), MosChip Stock Option Plan 2018, MosChip Stock Option Plan 2022 and MosChip Stock
Option Plan 2024 with 600,000 equity shares, 500,000 equity shares, 500,000 equity shares, 3,000,000 equity shares,
1,000,000 equity shares, 1,000,000 equity shares 10,000,000 equity shares, 10,000,000 equity shares, 15,000,000 equity
shares respectively.

Out of above plans the Company has granted options during the year ended 31^st March 2025 in Moschip Stock Option
Plan 2018, Moschip Stock Option Plan 2022 and MosChip Stock Option Plan 2024.

Once vested, the options remain exercisable for a period of three / four years. When exercisable, each option is convertible
into one equity share. The exercise price of the options is based on the previous day closing rate on which options are
granted which the Company's shares are traded on the stock exchange during the previous day.

Set out below is a summary of options granted under the plan:

Valuation of stock options:

The fair value of services received in return for stock options granted to employees is measured by reference to the fair
value of stock options granted. The fair value of stock options granted under various schemes have been measured using
the Black-Scholes-Merton model at the date of the grant.

The Black-Scholes-Merton model includes assumptions regarding dividend yields, expected volatility, expected terms
and risk free interest rates. In respect of par value options granted, the expected term of an option (or "option life") is
estimated based on the vesting term and contractual term, as well as the expected exercise behaviour of the employees
receiving the option. In respect of fair market value options granted, the option life is estimated based on the simplified
method. Expected volatility of the option is based on historical volatility, during a period equivalent to the option life, of
the observed market prices of the Company's publicly traded equity shares. Dividend yield of the options is based on
recent dividend activity. Risk-free interest rates are based on the government securities yield in effect at the time of
the grant. These assumptions reflect management's best estimates, but these assumptions involve inherent market
uncertainties based on market conditions generally outside of the Company's control. As a result, if other assumptions
had been used in the current period, stock-based compensation expense could have been materially impacted. Further,
if management uses different assumptions in future periods, stock-based compensation expense could be materially
impacted in future years.

The estimated fair value of stock options is recognised in the statement of profit and loss on a straight-line basis
over the requisite service period for each separately vesting portion of the award as if the award was, in-substance,
multiple awards.

(b) Financial risk management objectives and policies

The Company is exposed to market risk, credit risk and liquidity risk. The Company's senior management oversees
the management of these risks. The Board of Directors reviews and agrees policies for managing each of these risks,
which are summarized below.

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. Financial instruments affected by market risk include loans and borrowings and refundable deposits.
The sensitivity analysis in the following sections relate to the position as at 31^st March 2025 and 31^st March 2024. The
sensitivity analyses have been prepared on the basis that the amount of net debt and the interest rates of the debt.

The analysis excludes the impact of movements in market variables on: the carrying values of gratuity and other
post retirement obligations; provisions.

The below assumption has been made in calculating the sensitivity analysis:

The sensitivity of the relevant profit or loss item is the effect of the assumed changes in respective market risks. This
is based on the financial assets and financial liabilities held at 31^st March 2025 and 31^st March 2024.

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 interest rates.

Interest rate sensitivity

If interest rates had been 1 basis points higher/lower and all other variables were held constant, the Company's profit
for the year ended March 31, 2025 would decrease/(increase) by fNil lakhs (31^st March 2024: decrease/increase by
f29.15 lakhs). This is mainly attributable to the Company's exposure to interest rates on its variable rate borrowings.

Credit risk

Credit risk is the risk of financial loss arising from counterparty failure to repay or service debt according to
the contractual terms or obligations. Credit risk encompasses of both, the direct risk of default and the risk of
deterioration of creditworthiness as well as concentration of risk. Credit risk is controlled by analysing credit limits
and creditworthiness of customers on a continuous basis to whom the credit has been granted after obtaining
necessary approvals for credit.

Credit risk on cash and cash equivalents is limited as the Company generally invest in deposits with banks and
financial institutions with high credit ratings assigned by international and domestic credit rating agencies.

Exposure to credit risk

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit
risk was ^12,481.89 and ^11,027.52 as of 31^st March 2025 and 31^st March 2024 respectively, being the total of the carrying
amount of trade receivables, investments, cash and cash equivalents, other balance with banks, loans and other
financial assets.

Trade receivables

Ind AS requires expected credit losses to be measured through a loss allowance. The Company assesses at each
Balance Sheet date whether a financial asset or a Company of financial assets is impaired.

The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables
based on a provision matrix. The provision matrix takes into account historical credit loss experience and adjusted
for forward-looking information.

Liquidity 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 manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing
facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of
financial assets and liabilities.

For the purpose of impairment testing, goodwill is allocated to a cash generating unit, representing the lowest level
within the Company at which goodwill is monitored for internal management purposes and which is not higher than the
Company's operating segment.

The recoverable amounts of the above cash generating units have been assessed using a value-in-use model. Value-in¬
use is generally calculated as the net present value of the projected post-tax cash flows plus a terminal value of the cash
generating unit to which the goodwill is allocated. Initially, a discount rate is applied to calculate the net present value of
the post-tax cash flows. Key assumptions upon which the Company has based its determinations of value-in-use include:

a) The values assigned to the assumption reflect past experience and are consistent with the management's plans
for focusing operations in these markets. The management believe that the planned market share growth per year
for the next flve years is reasonably achievable.

b) Average gross margins achieved in the period immediately before the budget margin period, increased for expected
efficiency improvements. This reflects past experience, except for efficiency improvements.

c) A terminal value arrived at by extrapolating the last forecasted year cash flows to perpetuity, using a constant long¬
term growth rate. This long-term growth rate takes into consideration external macroeconomic sources of data.
Such long-term growth rate considered does not exceed that of the relevant business and industry sector.

d) The after tax discount rates used are based on the Company's weighted average cost of capital.

e) The after tax discount rates used for various cash generating units.

The Company believes that any reasonably possible change in the key assumptions on which a recoverable amount
is based would not cause the aggregate carrying amount to exceed the aggregate recoverable amount of the cash¬
generating unit.

42 Taxes

The Company has decided to opt for taxation under Section 115BAA of the Income Tax Act, 1961 (""Act""), which provides
for a concessional tax rate of 22% (plus applicable surcharge and cess), subject to the condition that the Company
foregoes specified exemptions and deductions. As per Section 115JB(5A), the provisions of Minimum Alternate Tax (mat)
under Section 115JB shall not apply to a company that exercises the option under Section 115BAA. Accordingly, the
Company has decided to opt for Section 115BAA, hence current tax (mat) is not applicable for the current financial year.
The Company has brought forward unabsorbed depreciation amounting to ^4,991.32 lakhs (as at 31^st March 24 ^5,343,54
lakhs) under the Income tax Act, 1961, for which there is no time limit for tax utilisation. Further, the Company also has
carried forward losses aggregating to ^1,386.14 lakhs (as at 31^st March 2024 ^4,26749 lakhs) under the Income tax Act,
1961 which gets expired within 8 years of the respective years, The carried forward losses will get expired mainly during
the years 2030 to 2031.

Accordingly, deferred tax asset has not been recognised in respect of unabsorbed losses as they may not be used to offset
taxable profits and there are no other tax planning opportunities or other evidence of recoverability in the near future.

43 Other Income

Pursuant to an arbitration award received during the year in favour of the Company, a compensation amounting to f1
crore was received, pertaining to the business operations of the Company. As the amount is not considered material, it
has been included under "Other Income."

44 Additional regulatory information

a. Details of benami property held

The Company does not hold any benami property as defined under the Benami Transactions (Prohibition) Act, 1988
(45 of 1988) and the rules made thereunder. No proceeding has been 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.

b. Relationship with struck off Companies

The Company doesn't have any transactions with companies struck off under section 248 of the Companies Act,
2013 or section 560 of Companies Act, 1956

c. Revaluation of property, plant and equipment, intangible assets and investment property

The Company has not done revaluation of property, plant and equipment / intangible assets/ investment property.

d. The Company has not been declared as willful defaulter by any bank or financial institution or RBI or other lenders.

e. Undisclosed income

The Company does not have any such transaction which is 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).

f. Details of crypto currency or virtual currency

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

g. Registration of charges or satisfaction with registrar of companies

The company does not have any charges or satisfaction, which is yet to be registered with ROC beyond the
statutory period.

h. Compliance with number of layers of companies

The Company has complied with the number of layers for its holding in downstream companies prescribed under
clause (87) of section 2 of the Companies Act, 2013 read with the Companies (Restriction on number of Layers)
Rules, 2017.

i. The company has not advanced any loan / advances in the nature of loan to promoters, directors, KMP's or related
parties as defined under Companies Act, 2013 either jointly or severally with any persons except a demand loan to
a wholly owned step-down subsidiary company with an interest.

j. The Company has been sanctioned working capital limits in excess of flve crore rupees, in aggregate, from banks
on the basis of security of current assets. The monthly statements flled by the Company with such banks are in
agreement with the books of account of the Company

46 No funds have been advanced / loaned / invested (from borrowed funds or from share premium or from any other
sources / kind of funds) by the Company to any other person(s) or entity(ies), including foreign entities (Intermediaries),
with the understanding (whether recorded in writing or otherwise) that the Intermediary shall (i) 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 (ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

No funds have been received by the Company from any person(s) or entity(ies), including foreign entities (Funding Parties),
with the understanding (whether recorded in writing or otherwise) that the Company shall (i) 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 (ii) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

47 Events occurring after balance sheet

a On 4^th April 2025, the exisiting Softnautics LLP is converted into a private limited company Viz., Softnautics Private Limited.

b On 8^th April 2025, The Board of Directors has approved the Scheme of Amalgamation of Wholly Owned Subsidiaries i.e

Softnautics Inc (USA) and Softnautics Private Limited (Formerly known as "Softnautics LLP") with MosChip Technologies
Limited with an appointed date as 1^st April 2025. This Scheme is pending before NCLT for approval and has no bearing
on the financial statement for the period.

c MosChip Institute of Silicon Systems Pvt.Ltd (100% Subsidiary of the Company) name was changed to "Moschip
Academy Of Silicon Systems & Technologies Private Limited" w.e.f 6^th May 2025.

d The Standalone Financial Statements for the year ended March 31, 2025 were approved by the Board of Directors
and authorised for issue on 21^st May 2025.

"• Increased due to over all group profit Increased significantly.

Increase is due to increase in cost of materials consumed & cost of other operating expenses

49 Figures have been rounded off to nearest lakhs and previous year figures have been regrouped wherever necessary,
to correspond with the current period classification / disclosure.

As per our report of even date attached For and on behalf of the Board of Directors
For ST Mohite & Co MosChip Technologies Limited

Chartered Accountants

ICAI Firm Registration No: 011410S

Hima Bindu Sagala Srinivasa Rao Kakumanu Damodar Rao Gummadapu

Partner Managing Director & CEO Director

M No. 231056 DIN : 06726305 DIN : 07027779

UDIN : 25231056BMOVZH7304

Jayaram Susarla Suresh Bachalakura

Chief Financial Officer Company Secretary

M. No: ACS 39381

Place: Hyderabad Place: Hyderabad

Date: 21^st May 2025 Date: 21^st May 2025