Mar 31, 2018
1 General Information
MosChip Semiconductor Technology Limited (âthe Company'') was incorporated in 1999 as a private limited company under the Companies Act, 1956 and got listed in BSE in 2001. The Registered office of the Company is located at Plot No. 83 & 84, 2nd Floor, Punnaiah Plaza, Road No. 2, Banjara Hills, Hyderabad, Telangana 500034.
The Company is engaged in to business of development and design of System on Chip (SOC) technologies (Semiconductor) and Internet on Things (IOT).
On 8 February 2018, the Scheme of amalgamation for amalgamating the wholly owned Indian subsidiaries which are Elite Plus Semiconductor Technologies Private Limited, Orange Semiconductors Private Limited and TexoTech Solutions Private Limited with MosChip (Parent Company) was approved by Regional Director, MCA, Hyderabad, with 01 April 2017 as appointed date. The effect of the same is given in the Standalone financial results for year ended 31 March 2018â and hence the previous year figures are not comparable to the current year.
2 Basis of preparation of financial statements
2.1 Statement of Compliance
The financial statements have been prepared in accordance of Indian Accounting Standards (Ind AS) as per the Companies (Indian Accounting Standards) Rules 2015 notified under Section 133 of Companies Act 2013 (the âAct'') and other relevant provisions of the Act.
The Company''s financial statements up to and for the year ended March 31, 2016 were prepared in accordance with the Companies (Accounting Standards) Rules 2006, notified under Section 133 of Companies Act 2013 (the âAct'') and other relevant provisions of the Act.
As these are the first financial statements prepared in accordance with Indian Accounting Standards (Ind AS), Ind AS 101, First-time Adoption of Indian Accounting Standards has been applied. An explanation of how the transition to Ind AS has affected the previously reported financial position is given in notes to accounts of the financial statements.
2.2 Preparation of financial statement
These financial statements have been prepared on the historical cost basis, except for certain financial instruments which are measured at fair values at the end of each reporting period, as explained in the accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services. In estimating the fair value of an asset or liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purpose in these consolidated financial statements is determined on such a basis, except for share-based payment transactions that are within the scope of Ind AS 102 Share-based Payment, leasing transactions that are within the scope of Ind AS 17 Leases, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in Ind AS 2 Inventories or value in use in Ind AS 36 Impairment of assets.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at measurement date; Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and Level 3 inputs are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data.
2.3 Functional currency
The financial statements are presented in Indian rupees, which is the functional currency of the Company and its Indian subsidiaries. Functional currency of foreign subsidiaries is the currency of their countries of domicile. Functional currency of an entity is the currency of the primary economic environment in which the entity operates.
2.4 Operating cycle
All the assets and liabilities have been classified as current or non-current as per the Company''s normal operating cycle and other criteria set out in the Schedule III to the Companies Act, 2013.
Assets:
An asset is classified as current when it satisfies any of the following criteria:
a) it is expected to be realized in, or is intended for sale or consumption in, the Company''s normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is expected to be realized within twelve months after the reporting date; or
d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting date.
Liabilities:
A liability is classified as current when it satisfies any of the following criteria:
a) it is expected to be settled in the Company''s normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is due to be settled within twelve months after the reporting date; or
d) the Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.
Current assets/ liabilities include the current portion of non-current assets/ liabilities respectively. All other assets/ liabilities are classified as non-current.
2.5 Critical accounting judgements and key sources of estimation uncertainty Operating cycle
In the application of the Company''s accounting policies, which are described in note 3, the management of the Company are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
The following are the areas of estimation uncertainty and critical judgements that the management has made in the process of applying the Company''s accounting policies and that have the most significant effect on the amounts recognised in the financial statements:
Provision and contingent liability
On an ongoing basis, Company reviews pending cases, claims by third parties and other contingencies. For contingent losses that are considered probable, an estimated loss is recorded as an accrual in financial statements. Loss Contingencies that are considered possible are not provided for but disclosed as Contingent liabilities in the financial statements. Contingencies the likelihood of which is remote are not disclosed in the financial statements. Gain contingencies are not recognized until the contingency has been resolved and amounts are received or receivable.
Useful lives of depreciable assets
Management reviews the useful lives of depreciable assets at each reporting. As at March 31, 2018 management assessed that the useful lives represent the expected utility of the assets to the Company. Further, there is no significant change in the useful lives as compared to previous year.
Investment in equity instruments of subsidiary companies
During the year, the Company assessed the investment in equity instrument of subsidiary companies carried at cost for impairment testing. These companies are expected to generate positive cash flows in the future years. Detailed analysis has been carried out on the future projections and the Company is confident that the investments do not require any impairment.
Impairment of Investments
The Group reviews its carrying value of investments in subsidiaries and other entities at cost annually, or more frequently when there is indication for impairment. If the recoverable amount is less than its carrying amount, the impairment loss is accounted for.
Provisions
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 adjusted to reflect the current best estimates.
On 8 February 2018, the Scheme of amalgamation for amalgamating the wholly owned Indian subsidiaries which are Elite Plus Semiconductor Technologies Private Limited and Orange Semiconductors Private Limited with MosChip (Parent Company) was approved by Regional Director, MCA, Hyderabad, with 01 April 2017 as appointed date. The effect of the same is given in the Standalone financial results for year ended 31 March 2018â and hence the invesments in Eliteplus Semiconductor Pvt Ltd. and Orange Semiconducors Pvt Ltd. are shown Nil. (Refer Note 1).
(b) Terms / rights attached to the equity shares
Equity shares of the Company have a par value of Rs. 2 per share. Each holder of equity shares is entitled to one vote per share. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
* âOn 8 February 2018, the Scheme of amalgamation for amalgamating the wholly owned Indian subsidiaries which are Elite Plus Semiconductor Technologies Private Limited, Orange Semiconductors Private Limited with MosChip (Parent Company) was approved by Regional Director, MCA, Hyderabad, with 01 April 2017 as appointed date. The effect of the same is given in the Standalone financial results for year ended 31 March 2018â and hence there is no outstanding balance from these companies as on 31 March 2018.
d) Terms and conditions of transactions with related parties:
The transactions with related parties are made on terms equivalent to those that prevail in arm''s length transactions. Outstanding balances at the year-end are unsecured and interest free. For the year ended March 31, 2018, the Company has not recorded any impairment of receivables relating to amounts owed by related parties (March 31, 2017 - Nil; April 1, 2016 - Nil). This assessment is undertaken each financial year through examining the financial position of the related party and the market in which the related party operates.
3 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 âmanagement approachâ as defined in Ind AS 108, the management evaluates the Companies performance and allocates resources based on an analysis of various performance indicators by business segments. Accordingly, information has been presented as per business segments. The accounting principles used in the preparation of the 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, stock compensation cost 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 âunallocatedâ 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 Companies'' decision maker is the Chief Executive Officer. The Company has identified business segments as reportable segments. Accordingly, Semiconductor division Business and IoT Business has been disclosed as business segments. The Company operates and its revenues are majorly derived from only one Geography and hence information relating to geography segment is not applicable / disclosed.
Segregation of assets (except for specific assets), liabilities (except for specific segment liabilities), depreciation and other non-cash expenses into various business segments has not been done as the assets are used interchangeably between segments and the Company is of the view that it is not practical to reasonably allocate liabilities and other non-cash expenses to individual segments and an ad-hoc allocation will not be meaningful.
4 Gratuity
The Company provides its employees with benefits under a defined benefit plan, referred to as the âGratuity Planâ. The Gratuity Plan entitles an employee, who has rendered at least five years of continuous service, to receive 15 days salary for each year of completed service (service of six months and above is rounded off as one year) at the time of retirement/exit, restricted to a sum of Rs. 1,000,000.
The following tables summarize the components of net benefit expense recognised in the statement of profit or loss and the amounts recognised in the balance sheet for the plan:
Reconciliation of opening and closing balances of the present value of the defined benefit obligations:
The sensitivity analyses above have been determined based on a method that extrapolates the impact on projected benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period.
5 Dues to Micro, small and medium enterprises
The Ministry of Micro, Small and Medium Enterprises has issued an office memorandum dated 26 August 2008 which recommends that the Micro and Small Enterprises should mention in their correspondence with its customers the Entrepreneurs Memorandum Number as allocated after filing of the Memorandum. Accordingly, the disclosure in respect of the amounts payable to such enterprises as at March 31, 2018 has been made in the financial statements based on information received and available with the Company. Further in view of the management, the impact of interest, if any, that may be payable in accordance with the provisions of the Micro, Small and Medium Enterprises Development Act, 2006 (âThe MSMED Act'') is not expected to be material. The Company has not received any claim for interest from any supplier.
6 Leases
Where the Company is a lessee:
The Company has taken various office premises under operating leases. The leases typically run for a term ranging from one to five years, with an option to renew the lease after the term completion. The escalation clause in these arrangement ranges from 5% to 15%.
7 Earnings per share
Basic EPS amounts are calculated by dividing the profit for the year attributable to equity holders by the weighted average number of Equity shares outstanding during the year.
8 Employee Stock Option Plans
The establishment of the MosChip Semiconductor Technology Limited Moschip Stock Option Plan 2008 was approved by shareholders at the 2008 annual general meeting. The Employee Option Plan is 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 2001, MosChip Stock Option Plan 2002, MosChip Stock Option Plan 2004, MosChip Stock Option Plan 2005 (MI), MosChip Stock Option Plan 2005 (WOS), MosChip Stock Option Plan 2008, MosChip Stock Option Plan 2008(ALR) and MosChip Stock Option Plan 2008(Director) with 600,000 equity shares, 300,000 equity shares, 700,000 equity shares, 1,000,000 equity shares, 500,000 equity shares, 500,000 equity shares, 3,000,000 equity shares, 1,000,000 equity shares and 1,000,000 equity shares respectively. Of these the Employee Stock Options Plan was established when the Company was unlisted and consequently, the Employee Stock Option Scheme and Employee Stock Purchase Guidelines, 1999 are not applicable to the options granted under this Plan.
Out of above plans Company has granted options in Moschip Stock Option Plan 2008.
Once vested, the options remain exercisable for a period of three 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.
The weighted average share price at the date of exercise of options exercised during the year ended 31 March 2017 was INR 2.84 (31 March 2016 - INR 2.84).
The fair value at grant date of options granted during the year ended 31 March 2018 was INR 3.09 per option for three year and INR 3.46 is for four year schemes (31 March 2017 - INR 2.64). The fair value at grant date is determined using the Black Scholes Model which takes into account the exercise price, the term of the option, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option.
The expected price volatility is based on the historic volatility (based on the remaining life of the options), adjusted for any expected changes to future volatility due to publicly available information.
9 Financial Risk Management Framework
The Company''s principal financial liabilities comprise loans and borrowings, trade and other payables. The main purpose of these financial liabilities is to finance and support Company''s operations. The Company''s principal financial assets include inventory, trade and other receivables, cash and cash equivalents and refundable deposits that derive directly from its operations.
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.
a) 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 two types of risk: interest rate risk and other price risk, such as equity price risk and commodity/ real estate risk. 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 March 31, 2018 and March 31, 2017. The sensitivity analyses have been prepared on the basis that the amount of net debt and the ratio of fixed to floating 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 March 31, 2018 and March 31, 2017.
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 long-term debt obligations with floating interest rates.
The Company manages its interest rate risk by having a balanced portfolio of fixed and variable rate loans and borrowings. The Company does not enter into any interest rate swaps.
Interest rate sensitivity
The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings affected. With all other variables held constant, the Company''s profit before tax is affected through the impact on floating rate borrowings, as follows:
b) Credit risk
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The credit risk arises principally from its operating activities (primarily trade receivables) and from its investing activities, including deposits with banks and financial institutions and other financial instruments.
Credit risk is controlled by analysing credit limits and creditworthiness of customers on a continuous basis to whom credit has been granted after obtaining necessary approvals for credit. The collection from the trade receivables are monitored on a continuous basis by the management.
Ind AS requires expected credit losses to be measured through a loss allowance based on historical collection pattern. During the year the Company started new line of business called Internet of Things (IoT), which has contributed around 49% of the revenue for year 2017-18 credit loss relating to this business couldn''t be measured based on historical collection pattern. There is no major credit loss related to Semiconductor business.
However, the Company has provided for credit loss whereever required on review of exposure on case to case basis.
c) Concentration risk
Credit risk on cash and cash equivalent is limited as the Company generally transacts with banks with high credit ratings assigned by credit rating agencies.
Trade receivable - During the year the Company has started new line of busienss IoT. Under IoT there are smart lighting and GEO HEMS streams. Smart lighting business is an Government of India Initiative. As a part of developing smart cities and energy saving by replacing normal street lights with LED lights. During the year the Company has won tenders relating to the supply of Central command monitering systems (CCMS) from KEONICS. This customer has contributed for more than 10% of the revenue and receivables as on 31 March 2018.
d) 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 continuously moniters forecast and actual cash flows. The table below summarises the maturity profile of the Company''s financial liabilities based on contractual undiscounted payments:
10 Capital management
The Company''s policy is to maintain a stable capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Management monitors capital on the basis of return on capital employed as well as the debt to total equity ratio.
For the purpose of debt to total equity ratio, debt considered is long-term and short-term borrowings. Total equity comprise of issued share capital and all other equity reserves.
11 Explanation on transition to Ind AS
As stated in Note 2.1, these are the first standalone financial statements prepared in accordance with Ind AS. For the year ended March 31, 2017, the Company had prepared its standalone financial statements in accordance with Companies (Accounting Standards) Rules, 2006 notified under section 133 of the Act and other relevant provision of the Act (âPrevious GAAP''). For the purpose of transition from Previous GAAP to Ind AS, the Company has followed the guidance prescribed under Ind AS 101-first time adoption of Indian Accounting Standards (âInd AS-101â), with effect from April 1, 2016 (âtransition date'').
The accounting policies set out in Note 3 have been applied in preparing these standalone financial statements for the year ended March 31, 2018 including the comparative information for the year ended March 31, 2017 and the opening standalone Ind AS balance sheet on the date of transition i.e. April 1, 2016.
In preparing its standalone Ind AS balance sheet as at April 1, 2016 and in presenting the comparative information for the year ended March 31, 2017, the Company has adjusted amounts reported previously in standalone financial statement prepared in accordance with the Previous GAAP. This note explains how the transition from Previous GAAP to Ind AS has affected the Company''s financial position and financial performance.
Optional exemptions and mandatory exceptions
In preparing these standalone financial statements, the Company has applied the below mentioned optional exemptions and mandatory exceptions.
Business Combination: Ind AS 101, provides the option to apply Ind AS 103, Business Combinations (âInd AS 103â) prospectively from the transition date or from a specific date prior to the transition date.
The Company has elected to apply Ind AS 103 from transition date. Business combinations occurring prior to the transition date have not been restated.
Fixed Assets: Freehold land and buildings (properties) were carried in the balance sheet prepared in accordance with the previous GAAP on the basis of carrying cost (cost model) on 31 March 2016. The company has elected to regard those carrying costs of property as deemed cost at the date of transition. Accordingly, the Company has not revalued the property at 1 April 2016.Investments in subsidiaries: The Company has elected to continue with the carrying value of its investments in subsidiary companies as of April 1, 2016 measured as per the previous GaAp and use that carrying value as its deemed cost as of the transition date.
Estimates: As per Ind AS 101, an entity''s estimates in accordance with Ind AS at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with the Previous GAAP unless there is objective evidence that those estimates were in error.
As per Ind AS 101, where application of Ind AS requires an entity to make certain estimates that were not required under Previous GaAp, those estimates should be made to reflect conditions that existed at the date of transition (for preparing opening Ind AS balance sheet) or at the end of the comparative period (for presenting comparative information as per Ind AS).
The Company''s estimates under Ind AS are consistent with the above requirement. Key estimates considered in preparation of the standalone financial statements that were not required under the Previous GAAP are listed below:
- Impairment of financial assets based on the expected credit loss model.
- Determination of the discounted value for financial instruments carried at amortised cost.
- Fair valuation of financial instruments carried at FVTPL.
Classification and measurement of financial assets: Ind AS 101 requires an entity to assess classification of financial assets on the basis of facts and circumstances existing as on the date of transition. Further, the standard permits measurement of financial assets accounted at amortised cost based on facts and circumstances existing at the date of transition if retrospective application is impracticable.
Accordingly, the Company has determined the classification of financial assets based on facts and circumstances that exist on the date of transition. Measurement of the financial assets accounted at amortised cost has been done retrospectively except where the same is impracticable.
Mar 31, 2016
The Company reports basic and diluted earnings per equity share in accordance with AS-20, âEarnings per Shareâ.
Basic earnings per equity share has been computed by dividing net loss after tax by the weighted average number of equity shares outstanding during the applicable periods. Diluted earnings per equity share has been computed using the weighted average number of equity shares and dilutive potential equity shares outstanding during the applicable periods. The reconciliation between basic and diluted earnings per equity share is as follows:
The Company recognizes design services as its only primary segment since its operations during the year consists of Services in application specific integrated circuits (ASICs), System on Chip (SOC) and Software technology services. Accordingly revenues from services comprise the primary basis of segmental information set out in these Financial Statements. Secondary segmental reporting is performed on the basis of the geographical location of customers.
The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The scheme is funded with an insurance company in the form of a qualifying insurance policy.
The following table summarizes the components of net benefit expense recognized in the profit and loss account and the funded status and amounts recognized in the balance sheet for the respective plans:
The principal assumptions used in determining gratuity and other post employment benefit obligations for the company''s plan are as follows:
Discount Rate - 8.00%
Expected rate of return on assets - 7.50%
The fund is administered by Life Insurance Corporation of India (âLICâ). The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled.
The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
Above figures have been adopted as per actuarial valuation done by Thanawala Consultancy Services.
The defined benefit obligation of compensated absence (leave encashment) in respect of the employees of the company as at 31st March 2016 is Rs. 2,076,603.
1 Prior Period Item
Prior Period Item consists of Interest on late payment of TDS for the previous financial years and interest charged by Bank on overdue loan of Export Packing Credit from 2013.
2. Provision for Doubtful Debts
Amount realizable from Moschip, USA has to be received only out of sale proceeds of Inventory lying with the Wholly Owned Subsidiary. In view of the fact that Moschip, USA has written down the value of Inventory by Rs.4.00 Crores, the realizable value of the debt also had to be adjusted accordingly. Hence a provision of Rs.4.00 Crores has been made towards doubtful debts.
3. Dues to Micro and Small Enterprises (SME):
In terms of Section 22 of the Micro, Small and Medium Enterprises Development Act 2006, (SME Act) the outstanding payable to Micro and Small enterprises, as defined under the SME Act, are required to be disclosed in the prescribed format. However, such Enterprises are required to be registered under the SME Act.
There are no dues to any small scale industrial undertakings and micro, small & medium enterprises which are outstanding for more than 30 days or 45 days respectively at the Balance Sheet date. This information has been determined to the extent such parties have been identified on the basis of information available with the company.
4. Regrouping/ Reclassification
The figures for previous year have been regrouped / reclassified wherever necessary.
Per and subject to our report of even date
Mar 31, 2015
1.1 Accounting for taxes on income
During the period under review, the Company carried its operations in
India through its 100% Export Oriented Unit, registered with the
Software Technology Parks of India (STPI), Hyderabad. The operations of
the STPI Unit have resulted in a net loss for the year ended 31 March
2015. Hence, no provision has been made in the books of account for the
tax liability for the year as well as for the deferred taxes as per the
Accounting Standard  22 on Accounting for Taxes on Income, issued by
the Institute of Chartered Accountants of India.
1.2 Reduction in Share Capital (Scheme of Capital Reduction)
During the year the Company has proposed for Scheme of Capital
Reduction. Under this Scheme the Company reduced Face Value of its
equity shares from 10/- to Rs.2/- per share. After the reduction, the
paid up share capital stands at Rs. 92,071,034/- divided into
46,035,517 equity shares of Rs.2/- each fully paid up. The reduction
in share capital amounting to Rs 368,284,136/- and the balance standing
in the share premium account of Rs 666,633,920/- has been used to set
off accumulated losses to the extent of Rs 1,034,918,056.
The Company has received necessary approval from High Court of
Judicature at Hyderabad for the State of Telangana and for the State of
Andhra Pradesh on 09 January 2015. The Company filed the form INC-28
with ROC and received necessary approvals.
1.3 Short Term Borrowings During the period the Company has obtained
further unsecured loans from Directors an amount of Rs.4.30 crores and
the outstanding as on 31.03.2015 is Rs. 14.60 crores at varying
interest rates payable. The provision for the same has been made in
these accounts in the financial year ending 31st March 2015.
1.4 Employee Stock Option Plans
As per the Employee Stock Option Scheme and Employee Stock Purchase
Guidelines, 1999 issued by the Securities and Exchange Board of India,
the excess of the market price of the underlying equity shares as of
the date of the grant of the options over the exercise price of the
options is to be recognized and amortized on a straight-line basis over
the vesting period.
The Company has established nine schemes i.c, Employee Stock Option
Plan, MosChip Stock Option Plan 2001, MosChip Stock Option Plan 2002,
MosChip Stock Option Plan 2004, MosChip Stock Option Plan 2005 (MI),
MosChip Stock Option Plan 2005 (WOS), MosChip Stock Option Plan 2008,
MosChip Stock Option Plan 2008(ALR) and MosChip Stock Option Plan
2008(Director) with 600,000 equity shares, 300,000 equity shares,
700,000 equity shares, 1,000,000 equity shares, 500,000 equity shares,
500,000 equity shares, 3,000,000 equity shares, 1,000,000 equity shares
and 1,000,000 equity shares respectively. Of these the Employee Stock
Options Plan was established when the Company was unlisted and
consequently, the Employee Stock Option Scheme and Employee Stock
Purchase Guidelines, 1999 are not applicable to the options granted
under this Plan.
1.5 Earnings per Share
The Company reports basic and diluted earnings per equity share in
accordance with AS-20, "Earnings per Share".
Basic earning per equity share has been computed by dividing net loss
after tax by the weighted average number of equity shares outstanding
during the applicable periods. Diluted earnings per equity share has
been computed using the weighted average number of equity shares and
dilutive potential equity shares outstanding during the applicable
periods. The reconciliation between basic and diluted earnings per
equity share is as follows:
1.6 Segment Reporting
The Company recognizes ASIC design as its only primary segment since
its operations during the year consists of ASIC design and sale/license
of related intellectual property developed by it. Accordingly revenues
from sale/license of software (designs/intellectual property) comprise
the primary basis of segmental information set out in these Financial
Statements. Secondary segmental reporting is performed on the basis of
the geographical location of customers
1.7 Gratuity Plan
The Company has a defined benefit gratuity plan. Every employee who has
completed five years or more of service gets a gratuity on departure at
15 days salary (last drawn salary) for each completed year of service.
The scheme is funded with an insurance company in the form of a
qualifying insurance policy.
The following table summarizes the components of net benefit expense
recognised in the profit and loss account and the funded status and
amounts recognised in the balance sheet for the respective plans:
The principal assumptions used in determining gratuity and other post
employment benefit obligations for the company''s plan are as follows:
Discount Rate - 7.90%
Expected rate of return on assets  7.50%
The fund is administered by Life Insurance Corporation of India
("LIC"). The overall expected rate of return on assets is determined
based on the market prices prevailing on that date, applicable to the
period over which the obligation is to be settled.
The estimates of future salary increases, considered in actuarial
valuation, take account of inflation, seniority, promotion and other
relevant factors, such as supply and demand in the employment market.
Above figures have been adopted as per actuarial valuation done by
Thanawala Consultancy Services.
The defined benefit obligation of compensated absence (leave
encashment) in respect of the employees of the company as at 31st March
2015 is Rs. 1,555,451.
1.8 Retained Earnings
Pursuant to the Companies Act, 2013 effective from April 1, 2014, the
Company has recomputed the depreciation based on the useful life of the
assets as prescribed in Schedule II of the Act. As a result an amount
of Rs. 135.63 lakhs has been adjusted against opening balance of
retained earnings for the assets which had no residual life as at April
1, 2014.
1.9 Dues to Micro and Small Enterprises (SME):
In terms of Section 22 of the Micro, Small and Medium Enterprises
Development Act 2006, (SME Act) the outstanding payable to Micro and
Small enterprises, as defined under the SME Act, are required to be
disclosed in the prescribed format. However, such Enterprises are
required to be registered under the SME Act.
There are no dues to any small scale industrial undertakings and micro,
small & medium enterprises which are outstanding for more than 30 days
or 45 days respectively at the Balance Sheet date. This information has
been determined to the extent such parties have been identified on the
basis of information available with the company.
1.10 Regrouping/ Reclassification
The figures for previous year have been regrouped / reclassified
wherever necessary.
Mar 31, 2014
Overview
MosChip Semiconductor Technology Limited ("MosChip" or "the
Company") is a fabless semiconductor company engaged in providing
customized application specific integrated circuits (ASICs), System on
Chip (SOC) and Software technology services to its clients across the
globe. MosChip has its headquarters in Hyderabad, India
1.1.1 Contingent Liabilities:
(Amount in Rupees)
As at 31 March
Particulars 2014 2013
Estimated amount of unexecuted capital
contracts not provided Nil Nil
Outstanding Bank Guarantee given by
bankers 9,844,364 9,075,000
Outstanding Bank Guarantee on account of
Bond executed by the Company
to Government of India towards execution
of Govt. contract 90,514,145 90,514,145
Outstanding amount payable to JI Corporate
Consulting (P) Ltd. towards
professional fee for Scheme of
Capital Reduction 7,30,000 Nil
1.1.2 Accounting for taxes on income During the period under review,
the Company carried its operations in India through its 100% Export
Oriented Unit, registered with the Software Technology Parks of India
(STPI), Hyderabad. The operations of the STPI Unit and overseas branch
have resulted in a net loss for the year ended 31 March 2014. Hence, no
provision has been made in the books of account for the tax liability
for the year as well as for the deferred taxes as per the Accounting
Standard - 22 on Accounting for Taxes on Income, issued by the
Institute of Chartered Accountants of India.
1.1.3 Short Term Borrowings
During the period the Company has obtained further unsecured loans from
a Director of an amount Rs.4.91 crores and the outstanding as on
31.03.2014 is Rs. 10.30 crores at varying interest rates payable. The
provision for the same has been made in these accounts in the financial
year ending 31st March 2014.
1.1.4 Employee Stock Option Plans
As per the Employee Stock Option Scheme and Employee Stock Purchase
Guidelines, 1999 issued by the Securities and Exchange Board of India,
the excess of the market price of the underlying equity shares as of
the date of the grant of the options over the exercise price of the
options is to be recognized and amortized on a straight-line basis over
the vesting period.
The Company has established nine schemes i.c, Employee Stock Option
Plan, MosChip Stock Option Plan 2001, MosChip Stock Option Plan 2002,
MosChip Stock Option Plan 2004, MosChip Stock Option Plan 2005 (MI),
MosChip Stock Option Plan 2005 (WOS), MosChip Stock Option Plan 2008,
MosChip Stock Option Plan 2008(ALR) and MosChip Stock Option Plan
2008(Director) with 600,000 equity shares, 300,000 equity shares,
700,000 equity shares, 1,000,000 equity shares, 500,000 equity shares,
500,000 equity shares, 3,000,000 equity shares, 1,000,000 equity shares
and 1,000,000 equity shares respectively. Of these the Employee Stock
Options Plan was established when the Company was unlisted and
consequently, the Employee Stock Option Scheme and Employee Stock
Purchase Guidelines, 1999 are not applicable to the options granted
under this Plan.
1.1.5 Earnings per Share
The Company reports basic and diluted earnings per equity share in
accordance with AS-20, "Earnings per Share".
Basic earning per equity share has been computed by dividing net loss
after tax by the weighted average number of equity shares outstanding
during the applicable periods. Diluted earnings per equity share has
been computed using the weighted average number of equity shares and
dilutive potential equity shares outstanding during the applicable
periods. The reconciliation between basic and diluted earnings per
equity share is as follows:
1.1.6 Segment Reporting
The Company recognizes ASIC design as its only primary segment since
its operations during the year consists of ASIC design and sale/license
of related intellectual property developed by it. Accordingly revenues
from sale/ license of software (designs/intellectual property) comprise
the primary basis of segmental information set out in these Financial
Statements. Secondary segmental reporting is performed on the basis of
the geographical location of customers
1.1.7 Gratuity Plan
The Company has a defined benefit gratuity plan. Every employee who has
completed five years or more of service gets a gratuity on departure at
15 days salary (last drawn salary) for each completed year of service.
The scheme is funded with an insurance company in the form of a
qualifying insurance policy.
The following table summarizes the components of net benefit expense
recognised in the profit and loss account and the funded status and
amounts recognised in the balance sheet for the respective plans:
The principal assumptions used in determining gratuity and other post
employment benefit obligations for the company''s plan are as follows:
Discount Rate - 9.30%
Expected rate of return on assets - 7.50%
The fund is administered by Life Insurance Corporation of India
("LIC"). The overall expected rate of return on assets is
determined based on the market prices prevailing on that date,
applicable to the period over which the obligation is to be settled.
The estimates of future salary increases, considered in actuarial
valuation, take account of inflation, seniority, promotion and other
relevant factors, such as supply and demand in the employment market.
Above figures have been adopted as per actuarial valuation done by
Thanawala Consultancy Services.
The defined benefit obligation of compensated absence (leave
encashment) in respect of the employees of the company as at 31st March
2014 is Rs. 2,309,034.
1.1.8 Investments
During the year, Moschip Semiconductor Technology Ltd., has written off
its investment of Rs.2,282,953 in its wholly owned subsidiary MosChip
Semiconductor Technology Pte. Ltd., Singapore, owing to the latter
closing down its business operations, which has resulted in a net loss
of Rs.1,604,750.
1.1.9 Extraordinary Items
The extraordinary item represents the diminution in value of
Rs.8,612,901 in the carrying cost of investment in MosChip USA which is
100% subsidiary of MosChip India. This diminution loss was due to
changes in underlying business conditions of MosChip USA.
1.1.10 Dues to Micro and Small Enterprises (SME):
In terms of Section 22 of the Micro, Small and Medium Enterprises
Development Act 2006, (SME Act) the outstanding payable to Micro and
Small enterprises, as defined under the SME Act, are required to be
disclosed in the prescribed format. However, such Enterprises are
required to be registered under the SME Act.
There are no dues to any small scale industrial undertakings and micro,
small & medium enterprises which are outstanding for more than 30 days
or 45 days respectively at the Balance Sheet date. This information has
been determined to the extent such parties have been identified on the
basis of information available with the company.
1.1.11 Regrouping/ Reclassification
The figures for previous year have been regrouped / reclassified
wherever necessary.
Mar 31, 2013
Company overview
MosChip Semiconductor Technology Limited ("MosChip" or "the Company")
is a fabless semiconductor company engaged in providing customized
application specific integrated circuits (ASICs), System on Chip (SOC)
and Software technology services to its clients across the globe.
MosChip has its headquarters in Hyderabad, India
1.1.1 Contingent Liabilities:
(Amount in Rupees)
As at 31 March
Particulars 2013 2012
Estimated amount of
unexecuted capital
contracts not provided Nil Nil
Outstanding Bank
Guarantee given by
bankers 9,075,000 585,301
Outstanding Bank
Guarantee on account
of Bond executed by
the Company to
Government of India
towards execution
of Govt. contract 90,514,145 5,500,000
1.1.2 Accounting for taxes on income
During the period under review, the Company carried its operations in
India through its 100% Export Oriented Unit, registered with the
Software Technology Parks of India (STPI), Hyderabad. The operations of
the STPI Unit and overseas branch have resulted in a net loss for the
year ended 31 March 2013. Hence, no provision has been made in the
books of account for the tax liability for the year as well as for the
deferred taxes as per the Accounting Standard  22 on Accounting for
Taxes on Income, issued by the Institute of Chartered Accountants of
India.
1.1.3 Short Term Borrowings
During the period the Company has obtained unsecured loans from a
Director of an amount Rs.6.63 crores and the outstanding as on
31.03.2013 is Rs. 5.87 crores at varying interest rates payable. The
provision for the same has been made in these accounts in the financial
year ending 31st March 2013.
1.1.4 Employee Stock Option Plans
As per the Employee Stock Option Scheme and Employee Stock Purchase
Guidelines, 1999 issued by the Securities and Exchange Board of India,
the excess of the market price of the underlying equity shares as of
the date of the grant of the options over the exercise price of the
options is to be recognized and amortized on a straight-line basis over
the vesting period. The Company has established nine schemes i.c,
Employee Stock Option Plan,
MosChip Stock Option Plan 2001, MosChip Stock Option Plan 2002, MosChip
Stock Option Plan 2004, MosChip Stock Option Plan 2005 (MI), MosChip
Stock Option Plan 2005 (WOS), MosChip Stock Option Plan 2008, MosChip
Stock Option Plan 2008(ALR) and MosChip Stock Option Plan
2008(Director) with 600,000 equity shares, 300,000 equity shares,
700,000 equity shares, 1,000,000 equity shares, 500,000 equity shares,
500,000 equity shares, 3,000,000 equity shares, 1,000,000 equity shares
and 1,000,000 equity shares respectively. Of these the Employee Stock
Options Plan was established when the Company was unlisted and
consequently, the Employee Stock Option Scheme and Employee Stock
Purchase Guidelines, 1999 are not applicable to the options granted
under this Plan.
1.1.5 Earnings per Share
The Company reports basic and diluted earnings per equity share in
accordance with AS-20, "Earnings per Share".
Basic earning per equity share has been computed by dividing net loss
after tax by the weighted average number of equity shares outstanding
during the applicable periods. Diluted earnings per equity share has
been computed using the weighted average number of equity shares and
dilutive potential equity shares outstanding during the applicable
periods. The reconciliation between basic and diluted earnings per
equity share is as follows:
1.1.6 Segment Reporting
The Company recognizes ASIC design as its only primary segment since
its operations during the year consists of ASIC design and sale/license
of related intellectual property developed by it. Accordingly revenues
from sale/ license of software (designs/intellectual property) comprise
the primary basis of segmental information set out in these Financial
Statements. Secondary segmental reporting is performed on the basis of
the geographical location of customers
1.1.7 Gratuity Plan
The Company has a defined benefit gratuity plan. Every employee who has
completed five years or more of service gets a gratuity on departure at
15 days salary (last drawn salary) for each completed year of service.
The scheme is funded with an insurance company in the form of a
qualifying insurance policy.
The following table summarizes the components of net benefit expense
recognised in the profit and loss account and the funded status and
amounts recognised in the balance sheet for the respective plans:
1.1.8 Extraordinary Items
The extraordinary item consists of diminution in value of Rs.
62,361,897 in the carrying cost of investment in MosChip USA which is
100% subsidiary of MosChip India. This diminution loss was due to
changes in underlying business conditions of MosChip USA. The charge on
account of diminution has been determined on the basis of the MosChip
USA''s Net Worth as on 31.03.2013.
1.1.9 Investments
During the year Moschip Semiconductor Technology Limited has further
invested in its 100% wholly owned Subsidiary in Singapore named Moschip
Semiconductor Technology PTE Limited an amount of Rs.974,584 (SGD
22,500).
1.1.10 Dues to Micro and Small Enterprises (SME):
In terms of Section 22 of the Micro, Small and Medium Enterprises
Development Act 2006, (SME Act) the outstanding payable to Micro and
Small enterprises, as defined under the SME Act, are required to be
disclosed in the prescribed format. However, such Enterprises are
required to be registered under the SME Act.
There are no dues to any small scale industrial undertakings and micro,
small & medium enterprises which are outstanding for more than 30 days
or 45 days respectively at the Balance Sheet date. This information has
been determined to the extent such parties have been identified on the
basis of information available with the company.
1.1.11 Regrouping/ Reclassification
The figures for previous year have been regrouped / reclassified
wherever necessary.
Mar 31, 2012
Company overview
MosChip Semiconductor Technology Limited ("MosChip" or "the
Company") is a fabless semiconductor company engaged in the business
of developing application specific integrated circuits (ASICs) and
System on Chip (SOC) technologies. The Company also sale application
specific integrated circuits (ASICs). The Company specializes in the
areas of computer peripherals, data communications and consumer
electronics. The development/design process is carried out at its
design centre located in Hyderabad. The Company also provides Software
Services to its clients across the globe. MosChip has its headquarters
in Hyderabad, India
1.1.1 Contingent Liabilities:
(Amount in Rupees)
As at 31 March
Particulars 2012 2011
Estimated amount of unexecuted capital
contracts not provided Nil Nil
Outstanding Bank Guarantee given by bankers 585,301 585,301
Outstanding Bank Guarantee on account
of Bond executed by the Company to
Government of India towards exemption
of customs duty 5,500,000 8,025,000
1.1.2 Forfeited Share Warrants
In FY 2009-10 the company allotted 250,000 convertible warrants at a
price of Rs.12.50 each and received 25% as upfront payment of Rs.
781,250. Due to non payment of the balance amount within the stipulated
time, the aforesaid 250,000 warrants stood lapsed and upfront payment
received against these warrants was forfeited and credited to Capital
Reserve Account.
1.1.3 Accounting for taxes on income
During the period under review, the Company carried its operations in
India through its 100% Export Oriented Unit, registered with the
Software Technology Parks of India (STPI), Hyderabad. The operations of
the STPI Unit and overseas branch have resulted in a net loss for the
year ended 31 March 2012. Hence, no provision has been made in the
books of account for the tax liability for the year as well as for the
deferred taxes as per the Accounting Standard - 22 on Accounting for
Taxes on Income, issued by the Institute of Chartered Accountants of
India.
1.1.4 Employee Stock Option Plans
As per the Employee Stock Option Scheme and Employee Stock Purchase
Guidelines, 1999 issued by the Securities and Exchange Board of India,
the excess of the market price of the underlying equity shares as of
the date of the grant of the options over the exercise price of the
options is to be recognized and amortized on a straight-line basis over
the vesting period.
The Company has established nine schemes i.c, Employee Stock Option
Plan, MosChip Stock Option Plan 2001, MosChip Stock Option Plan 2002,
MosChip Stock Option Plan 2004, MosChip Stock Option Plan 2005 (MI),
MosChip Stock Option Plan 2005 (WOS), MosChip Stock Option Plan 2008,
MosChip Stock Option Plan 2008(ALR) and MosChip Stock Option Plan
2008(Director) with 600,000 equity shares, 300,000 equity shares,
700,000 equity shares, 1,000,000 equity shares, 500,000 equity shares,
500,000 equity shares, 3,000,000 equity shares, 1,000,000 equity shares
and 1,000,000 equity shares respectively. Of these the Employee Stock
Options Plan was established when the Company was unlisted and
consequently, the Employee Stock Option Scheme and Employee Stock
Purchase Guidelines, 1999 are not applicable to the options granted
under this Plan.
1.1.5 Earnings per Share
The Company reports basic and diluted earnings per equity share in
accordance with AS-20, "Earnings per Share".
Basic earning per equity share has been computed by dividing net loss
after tax by the weighted average number of equity shares outstanding
during the applicable periods. Diluted earnings per equity share has
been computed using the weighted average number of equity shares and
dilutive potential equity shares outstanding during the applicable
periods. The reconciliation between basic and diluted earnings per
equity share is as follows:
1.1.6 Segment Reporting
The Company recognizes ASIC design as its only primary segment since
its operations during the year consists of ASIC design and sale/license
of related intellectual property developed by it. Accordingly revenues
from sale/ license of software (designs/intellectual property) comprise
the primary basis of segmental information set out in these Financial
Statements. Secondary segmental reporting is performed on the basis of
the geographical location of customers
1.1.7 Gratuity Plan
The Company has a defined benefit gratuity plan. Every employee who has
completed five years or more of service gets a gratuity on departure at
15 days salary (last drawn salary) for each completed year of service.
The scheme is funded with an insurance company in the form of a
qualifying insurance policy.
The following table summarizes the components of net benefit expense
recognised in the profit and loss account and the funded status and
amounts recognised in the balance sheet for the respective plans:
The principal assumptions used in determining gratuity and other post
employment benefit obligations for the company''s plan are as follows:
Discount Rate - 8.65%
Expected rate of return on assets - 7.50%
The fund is administered by Life Insurance Corporation of India
("LIC"). The overall expected rate of return on assets is
determined based on the market prices prevailing on that date,
applicable to the period over which the obligation is to be settled.
The estimates of future salary increases, considered in actuarial
valuation, take account of inflation, seniority, promotion and other
relevant factors, such as supply and demand in the employment market.
Above figures have been adopted as per actuarial valuation done by
Thanawala Consultancy Services.
The defined benefit obligation of compensated absence (leave
encashment) in respect of the employees of the company as at 31st March
2012 is Rs.1,377,651.
1.1.8 Extraordinary Items
The extraordinary Item consists of diminution in value of Rs.
303,647,300 in the carrying cost of investment in MosChip USA which is
100% subsidiary of MosChip India This diminution loss was due to
changes in underlying business conditions of MosChip USA. The charge on
account of diminution has been determined on the basis of the MosChip
USA''s Net Worth as on 31st March 2012.
1.1.9 Discontinuing Operations
Revenue on discontinuing operation consist of Rs.45,070,000 towards
sale of MosChip India''s I/O division Intellectual Property Rights.
1.1.10 Investments
During the year MosChip Semiconductor Technology Limited has
incorporated a 100% wholly owned Subsidiary in Singapore named MosChip
Semiconductor Technology PTE Limited with an initial investment of
Rs.39 (One Singapore Dollar) and further Invested an amount of Rs.
13,08,330 (SGD 32,500) for which allotment is pending at the end of the
financial year 31st March 2012.
Company has eroded the value of investment in wholly owned subsidiary
MosChip Semiconductor Technology, USA in view of significant
accumulated losses incurred by the Subsidiary & in the absence of
certainty of recovery of such Losses in visible time, the Company has
written off its investment to the extent of Rs.303,647,300.
1.1.11 Dues to Micro and Small Enterprises (SME):
In terms of Section 22 of the Micro, Small and Medium Enterprises
Development Act 2006, (SME Act) the outstanding payable to Micro and
Small enterprises, as defined under the SME Act, are required to be
disclosed in the prescribed format. However, such Enterprises are
required to be registered under the SME Act.
There are no dues to any small scale industrial undertakings and micro,
small & medium enterprises which are outstanding for more than 30 days
or 45 days respectively at the Balance Sheet date. This information has
been determined to the extent such parties have been identified on the
basis of information available with the company.
1.1.13 Regrouping/ Reclassification
The figures for previous year have been regrouped / reclassified
wherever necessary.
Mar 31, 2011
Company overview
MosChip Semiconductor Technology Limited ("MosChip" or "the Company")
is a fabless semiconductor company engaged in the business of
developing application specific integrated circuits (ASICs) and System
on Chip (SOC) technologies. The Company also sale application specific
integrated circuits (ASICs). The Company specializes in the areas of
computer peripherals, data communications and consumer electronics.
The development/design process is carried out at its design centre
located in Hyderabad. The Company also provides Software Services to
its clients across the globe.
MosChip has its headquarters in Hyderabad, India with a branch office
in Santa Clara, CA, USA.
14.2.1 Contingent Liabilities:
(Amount in Rupees)
As at 31 March
Particulars 2011 2010
Estimated amount of
unexecuted capital
contracts not provided Nil Nil
Outstanding Bank
Guarantee given by
bankers 585,301 907,433
Outstanding Bank
Guarantee on account
of Bond executed by
the Company to
Government of India
towards exemption
of customs duty 8,025,000 8,025,000
14.2.2 Secured Loans
Export Packing Credit facility obtained from UCO Bank is secured by
hypothecation by way of first charge on stocks of finished goods, raw
materials, work in progress, stores and spares and book debts, and
second charge in respect of other movable assets, and guaranteed by
Chairman and Managing Director.
14.2.3 Unsecured Loans
The Company has obtained unsecured loan from director of an amount of
Rs. 1.60 Crores at the rate of 12% interest payable. The provision for
the same has been made in these accounts in the financial year ending
31st March 2011.
Similarly the company has also obtained interest bearing Inter
Corporate Deposit of Rs. 1 Crore at the rate of 10% interest. The
provision for the same has been made in these accounts in the financial
year ending 31st March 2011.
The interest and other terms and conditions are not prejudicial to the
interest of the company
14.2.4 Accounting for taxes on income
During the period under review, the Company carried its operations in
India through its 100% Export Oriented Unit, registered with the
Software Technology Parks of India (STPI), Hyderabad. The operations of
the STPI Unit and overseas branch have resulted in a net loss for the
year ended 31 March 2011. Hence, no provision has been made in the
books of account for the tax liability for the year as well as for the
deferred taxes as per the Accounting Standard  22 on Accounting for
Taxes on Income, issued by the Institute of Chartered Accountants of
India.
14.2.5 Employee Stock Option Plans
As per the Employee Stock Option Scheme and Employee Stock Purchase
Guidelines, 1999 issued by the Securities and Exchange Board of India,
the excess of the market price of the underlying equity shares as of
the date of the grant of the options over the exercise price of the
options is to be recognized and amortized on a straight-line basis over
the vesting period.
The Company has established nine schemes i.c, Employee Stock Option
Plan, MosChip Stock Option Plan 2001, MosChip Stock Option Plan 2002,
MosChip Stock Option Plan 2004, MosChip Stock Option Plan 2005 (MI),
MosChip Stock Option Plan 2005 (WOS), MosChip Stock Option Plan 2008,
MosChip Stock Option Plan 2008(ALR) and MosChip Stock Option Plan
2008(Director) with 600,000 equity shares, 300,000 equity shares,
700,000 equity shares, 1,000,000 equity shares, 500,000 equity shares,
500,000 equity shares, 3,000,000 equity shares, 1,000,000 equity shares
and 1,000,000 equity shares respectively. Of these the Employee Stock
Options Plan was established when the Company was unlisted and
consequently, the Employee Stock Option Scheme and Employee Stock
Purchase Guidelines, 1999 are not applicable to the options granted
under this Plan.
14.2.6 Earnings per Share
The Company reports basic and diluted earnings per equity share in
accordance with AS-20, "Earnings per Share".
Basic earning per equity share has been computed by dividing net loss
after tax by the weighted average number of equity shares outstanding
during the applicable periods. Diluted earnings per equity share has
been computed using the weighted average number of equity shares and
dilutive potential equity shares outstanding during the applicable
periods. The reconciliation between basic and diluted earnings per
equity share is as follows:
14.2.10 Segment Reporting
The Company recognizes ASIC design as its only primary segment since
its operations during the year consists of ASIC design and sale/license
of related intellectual property developed by it. Accordingly revenues
from sale/ license of software (designs/intellectual property) comprise
the primary basis of segmental information set out in these Financial
Statements. Secondary segmental reporting is performed on the basis of
the geographical location of customers
14.2.12 Gratuity Plan
The Company has a defined benefit gratuity plan. Every employee who has
completed five years or more of service gets a gratuity on departure at
15 days salary (last drawn salary) for each completed year of service.
The scheme is funded with an insurance company in the form of a
qualifying insurance policy.
The following table summarizes the components of net benefit expense
recognised in the profit and loss account and the funded status and
amounts recognised in the balance sheet for the respective plans:
The principal assumptions used in determining gratuity and other post
employment benefit obligations for the company''s plan are as follows:
Discount Rate - 8.30%
Expected rate of return on assets  7.50%
The fund is administered by Life Insurance Corporation of India
("LIC"). The overall expected rate of return on assets is determined
based on the market prices prevailing on that date, applicable to the
period over which the obligation is to be settled.
The estimates of future salary increases, considered in actuarial
valuation, take account of inflation, seniority, promotion and other
relevant factors, such as supply and demand in the employment market.
Above figures have been adopted as per actuarial valuation done by
Thanawala Consultancy Services.
The defined benefit obligation of compensated absence (leave
encashment) in respect of the employees of the company as at 31st March
2011 is Rs. 1,142,895.
14.2.13 Dues to Micro and Small Enterprises (SME):
In terms of Section 22 of the Micro, Small and Medium Enterprises
Development Act 2006, (SME Act) the outstanding payable to Micro and
Small enterprises, as defined under the SME Act, are required to be
disclosed in the prescribed format. However, such Enterprises are
required to be registered under the SME Act.
There are no dues to any small scale industrial undertakings and micro,
small & medium enterprises which are outstanding for more than 30 days
or 45 days respectively at the Balance Sheet date. This information has
been determined to the extent such parties have been identified on the
basis of information available with the company.
14.2.14 Quantitative Details
During the year the Company is engaged in computer software development
and selling of ASICs (Semiconductor Chips). The production and sale of
software cannot be expressed in any generic unit. Hence, it is not
possible to give the quantitative details computer software development
sales. The following statement shows the quantitative details of ASIC''s
as required under Paragraphs 3 and 4C of Part II of Schedule VI of the
Companies Act, 1956.
14.2.15 Regrouping/ Reclassification
The figures for previous year have been regrouped / reclassified
wherever necessary.
Mar 31, 2010
1. Company overview
MosChip Semiconductor Technology Limited ("MosChip" or "the Company")
is a fabless semiconductor company engaged in the business of
developing application specific integrated circuits (ASICs) and System
on Chip (SOC) technologies. The Company also sale application specific
integrated circuits (ASICs). The Company specializes in the areas of
computer peripherals, data communications and consumer electronics.
The development/design process is carried out at its design centre
located in Hyderabad.
MosChip has its headquarters in Hyderabad, India with a branch office
in Santa Clara, CA, USA.
1.2.1 Contingent Liabilities:
(Amount in Rupees)
As at 31 March
Particulars
2010 2009
Estimated amount of
unexecuted capital
contracts not provided Nil Nil
Outstanding Bank
Guarantee given by
Bankers 907,433 889,185
Outstanding Bank
Guarantee
on account of
Bond executed
by the Company to
Government of India
towards exemption of
customs duty 2,525,000 2,525,000
1.2.2 Share Capital
The Company has allotted 2,650,000 equity shares of Rs.10 each at a
price of Rs.12.50 per share (including premium of Rs.2.50) to the
subscribers on a preferential basis during the financial year, raising
an amount of Rs.33,125,000/-.
Convertible warrants
During the year under review, the Company has issued 250,000
convertible warrants at a price of Rs.12.50 each. The said warrants
represent a right to acquire, but not exceeding, 250,000 equity shares
of Rs.10 each at the price of Rs.12.50 (including premium) per share.
The warrants can be exercised within a period of 18 months from the
date of issue of such warrants. The warrants were issued for an upfront
consideration of Rs.781,250. Non-exercise of warrants within 18 months
from the date of issue will result in forfeiture of upfront
consideration.
1.2.3 Secured Loans
Export Packing Credit facility obtained from UCO Bank is secured by
hypothecation by way of first charge on stocks of finished goods, raw
materials, work in progress, stores and spares and book debts, and
second charge in respect of other movable assets, and guaranteed by
Chairman and Managing Director.
1.2.4 Unsecured Loans
The Company has obtained unsecured loan from director of an amount of
Rs. 1 Crore at the rate of 10% interest payable. The provision for the
same has been made in these accounts in the financial year ending 31st
March 2010. The due date for the loan repayment is on or before 03rd
September 2010.
Similarly the company has also obtained interest bearing Inter
Corporate Deposit of Rs. 1 Crore at the rate of 10% interest. The
provision for the same has been made in these accounts in the financial
year ending 31st March 2010. Due date for the repayment of loan is on
or before 06th September 2010.
The interest and other terms and conditions are not prejudicial to the
interest of the company
1.2.5 Accounting for taxes on income
During the period under review, the Company carried its operations in
India through its 100% Export Oriented Unit, registered with the
Software Technology Parks of India (STPI), Hyderabad. Pursuant to the
scheme of Amalgamation, the Company continues to carry on the business
of erstwhile Verasity Technologies and treats it as an overseas branch
office. The operations of the STPI Unit and overseas branch have
resulted in a net loss for the year ended 31 March 2010. Hence, no
provision has been made in the books of account for the tax liability
for the year as well as for the deferred taxes as per the Accounting
Standard  22 on Accounting for Taxes on Income, issued by the
Institute of Chartered Accountants of India.
1.2.6 Employee Stock Option Plans
As per the Employee Stock Option Scheme and Employee Stock Purchase
Guidelines, 1999 issued by the Securities and Exchange Board of India,
the excess of the market price of the underlying equity shares as of
the date of the grant of the options over the exercise price of the
options is to be recognized and amortized on a straight-line basis over
the vesting period.
The Company has established nine schemes Employee Stock Option Plan,
MosChip Stock Option Plan 2001, MosChip Stock Option Plan 2002, MosChip
Stock Option Plan 2004, MosChip Stock Option Plan 2005 (MI), MosChip
Stock Option Plan 2005 (WOS), MosChip Stock Option Plan 2008, MosChip
Stock Option Plan 2008(ALR) and MosChip Stock Option Plan
2008(Director) with 600,000 equity shares, 300,000 equity shares,
700,000 equity shares, 1,000,000 equity shares, 500,000 equity shares,
500,000 equity shares, 3,000,000 equity shares, 1,000,000 equity shares
and 1,000,000 equity shares respectively. Of these the Employee Stock
Options Plan was established when the Company was unlisted and
consequently, the Employee Stock Option Scheme and Employee Stock
Purchase Guidelines, 1999 are not applicable to the options granted
under this Plan.
1.2.7 Earnings per Share
The Company reports basic and diluted earnings per equity share in
accordance with AS-20, "Earnings per Share".
Basic earning per equity share has been computed by dividing net loss
after tax by the weighted average number of equity shares outstanding
during the applicable periods. Diluted earnings per equity share has
been computed using the weighted average number of equity shares and
dilutive potential equity shares outstanding during the applicable
periods. The reconciliation between basic and diluted earnings per
equity share is as follows:
1.2.8. Segment Reporting
The Company recognizes ASIC design as its only primary segment since
its operations during the year consists of ASIC design and sale/license
of related intellectual property developed by it. Accordingly revenues
from sale/license of software (designs/intellectual property) comprise
the primary basis of segmental information set out in these Financial
Statements. Secondary segmental reporting is performed on the basis of
the geographical location of customers
1.2.9 Gratuity Plan
The Company has a defined benefit gratuity plan. Every employee who has
completed five years or more of service gets a gratuity on departure at
15 days salary (last drawn salary) for each completed year of service.
The scheme is funded with an insurance company in the form of a
qualifying insurance policy.
The following table summarizes the components of net benefit expense
recognised in the profit and loss account and the funded status and
amounts recognised in the balance sheet for the respective plans:
The principal assumptions used in determining gratuity and other post
employment benefit obligations for the companys plan are as follows:
Discount Rate - 8.30%
Expected rate of return on assets - 7.50%
The fund is administered by Life Insurance Corporation of India
("LIC"). The overall expected rate of return on assets is determined
based on the market prices prevailing on that date, applicable to the
period over which the obligation is to be settled.
The estimates of future salary increases, considered in actuarial
valuation, take account of inflation, seniority, promotion and other
relevant factors, such as supply and demand in the employment market.
Above figures have been adopted as per actuarial valuation done by
Thanawala Consultancy Services.
The defined benefit obligation of compensated absence (leave
encashment) in respect of the employees of the company as at 31st March
2010 is Rs. 1,392,309.
1.2.10 Utilization of Preferential Issue Proceeds
The following statement shows the total funds raised through issue of
Preferential Issue, the amounts utilized up to 31 March 2010 and the
balance available as on that date:
1.2.11 Dues to Micro and Small Enterprises (SME):
In terms of Section 22 of the Micro, Small and Medium Enterprises
Development Act 2006, (SME Act) the outstanding payable to Micro and
Small enterprises, as defined under the SME Act, are required to be
disclosed in the prescribed format. However, such Enterprises are
required to be registered under the SME Act.
There are no dues to any small scale industrial undertakings and micro,
small & medium enterprises which are outstanding for more than 30 days
or 45 days respectively at the Balance Sheet date. This information has
been determined to the extent such parties have been identified on the
basis of information available with the company.
1.2.11 Quantitative Details
During the year the Company is engaged in computer software development
and selling of ASICs (Semiconductor Chips). The production and sale of
software cannot be expressed in any generic unit. Hence, it is not
possible to give the quantitative details computer software development
sales. The following statement shows the quantitative details of ASICs
as required under Paragraphs 3 and 4C of Part II of Schedule VI of the
Companies Act, 1956.
1.2.12 Regrouping/ Reclassification
The figures for previous year have been regrouped reclassified wherever
necessary.
Mar 31, 2009
1. Company overview
MosChip Semiconductor Technology Limited (ÂMosChip or Âthe CompanyÂ)
is a fabless semiconductor company engaged in the business of
developing application specific integrated circuits (ASICs) and System
on Chip (SOC) technologies. The Company
specializes in the areas of computer peripherals, data communications
and consumer electronics The development/ design process is carried out
at its design centre located in Hyderabad.
MosChip has its headquarters in Hyderabad, India with a branch office
in Santa Clara, CA, USA.
1.1.1 Contingent Liabilities:
(Amount in Rupees)
As at 31 March
Particulars 2009 2008
Estimated amount of
unexecuted capital
Nil Nil
ontracts not provided
Outstanding Bank
Guarantee given by
Bankers 889,185 889,185
Outstanding Bank
Guarantee
on account of
Bond executed
by the Company to
Government of India 2,525,000 2,525,000
towards exemption of
customs duty
1.1.2 Working Capital Borrowing from Bank
The Company has availed a working capital loan from UCO Bank during the
financial year. This borrowing is secured by hypothecation by way of
first charge on stocks of finished goods, raw materials, work in
progress, stores and spares and book debts, and second charge in
respect of other movable assets, and guaranteed by Chairman and
Managing Director.
1.1.3 Forfeited Share Warrants
In FY 2006-07 the company allotted 15,00,000 convertible warrants at
the price of Rs.31 each and received 10% as upfront payment of
Rs.46,50,000. Due to non payment of the balance amount within the
stipulated time, the aforesaid 15,00,000 warrants stood lapsed and
upfront payment received against these warrants was forfeited and
credited to Capital Reserve Account.
1.1.4 Accounting for taxes on income
During the period under review, the Company carried its operations in
India through its 100% Export Oriented Unit, registered with the
Software Technology Parks of India (STPI), Hyderabad. Pursuant to the
scheme of Amalgamation, the Company continues to carry on the business
of erstwhile Verasity Technologies and treats it as an overseas branch
office. The operations of the STPI Unit and overseas branch have
resulted in a net loss for the year ended 31 March 2009. Hence, no
provision has been made in the books of account for the tax liability
for the year as well as for the deferred taxes as per the Accounting
Standard  22 on Accounting for Taxes on Income, issued by the
Institute of Chartered Accountants of India.
Fringe Benefits Tax (FBT) payable under the provisions of section 115WC
of the Income-tax Act, 1961 is in accordance with the Guidance Note on
Accounting for Fringe Benefits Tax issued by the ICAI regarded as an
additional income tax and considered in determination of the
profits/(losses) for the year.
1.1.5 Employee Stock Option Plans
As per the Employee Stock Option Scheme and Employee Stock Purchase
Guidelines, 1999 issued by the Securities and Exchange Board of India,
the excess of the market price of the underlying equity shares as of
the date of the grant of the options over the exercise price of the
options is to be recognized and amortized on a straight-line basis over
the vesting period.
The Company has established nine schemes Employee Stock Option Plan,
MosChip Stock Option Plan 2001, MosChip Stock Option Plan 2002, MosChip
Stock Option Plan 2004, MosChip Stock Option Plan 2005 (MI), MosChip
Stock Option Plan 2005 (WOS), MosChip Stock Option Plan 2008, MosChip
Stock Option Plan 2008(ALR) and MosChip Stock Option Plan
2008(Director) with 600,000 equity shares, 300,000 equity shares,
700,000 equity shares, 1,000,000 equity shares, 500,000 equity shares,
500,000 equity shares, 3,000,000 equity shares, 1,000,000 equity shares
and 1,000,000 equity shares respectively. Of these the Employee Stock
Options Plan was established when the Company was unlisted and
consequently, the Employee Stock Option Scheme and Employee Stock
Purchase Guidelines, 1999 are not applicable to the options granted
under this Plan.
1.1.6 Earnings per Share
The Company reports basic and diluted earnings per equity share in
accordance with AS-20, ÂEarnings per ShareÂ.
Basic earning per equity share has been computed by dividing net loss
after tax by the weighted average number of equity shares outstanding
during the applicable periods. Diluted earnings per equity share has
been computed using the weighted average number of equity shares and
dilutive potential equity shares outstanding during the applicable
periods. The reconciliation between basic and diluted earnings per
equity share is as follows:
1.1.7. Segment Reporting
The Company recognizes ASIC design as its only primary segment since
its operations during the year consists of ASIC design and sale/license
of related intellectual property developed by it. Accordingly revenues
from sale/license of software (designs/intellectual property) comprise
the primary basis of segmental information set out in these Financial
Statements. Secondary segmental reporting is performed on the basis of
the geographical location of customers
1.1.8 Gratuity Plan
The Company has a defined benefit gratuity plan. Every employee who has
completed five years or more of service gets a gratuity on departure at
15 days salary (last drawn salary) for each completed year of service.
The scheme is funded with an insurance company in the form of a
qualifying insurance policy.
The principal assumptions used in determining gratuity and other post
employment benefit obligations for the companys plan are as follows:
Discount Rate - 7.95%
Expected rate of return on assets  7.50%
The fund is administered by Life Insurance Corporation of India
(ÂLICÂ). The overall expected rate of return on assets is determined
based on the market prices prevailing on that date, applicable to the
period over which the obligation is to be settled.
The estimates of future salary increases, considered in actuarial
valuation, take account of inflation, seniority, promotion and other
relevant factors, such as supply and demand in the employment market.
Above figures have been adopted as per actuarial valuation done by
Thanawala Consultancy Services.
The defined benefit obligation of compensated absence (leave
encashment) in respect of the employees of the company as at 31st March
2009 is Rs. 1, 787, 053.
1.1.9 Dues to Micro and Small Enterprises (SME):
In terms of Section 22 of the Micro, Small and Medium Enterprises
Development Act 2006, (SME Act) the outstanding payable to Micro and
Small enterprises, as defined under the SME Act, are required to be
disclosed in the prescribed format. However, such Enterprises are
required to be registered under the SME Act.
There are no dues to any small scale industrial undertakings and micro,
small & medium enterprises which are outstanding for more than 30 days
or 45 days respectively at the Balance Sheet date. This information has
been determined to the extent such parties have been identified on the
basis of information available with the company.
1.1.10 Quantitative Details
During the year the Company is engaged in computer software development
and selling of ASICs (Semiconductor Chips). The production and sale of
software cannot be expressed in any generic unit. Hence, it is not
possible to give the quantitative details computer software development
sales. The following statement shows the quantitative details of ASICs
as required under Paragraphs 3 and 4C of Part II of Schedule VI of the
Companies Act, 1956.
1.1.11 Regrouping/ Reclassification
The figures for previous year have been regrouped / reclassified
wherever necessary.
Mar 31, 2008
13. 2.1 Contingent Liabilities:
(Amount in Rupees)
As at 31 March
Particulars 2008 2007
Estimated amount Nil 44,092
unexecuted on capital
contracts not provided
Outstanding Bank 889,185 712,761
Guarantee given by bankers
Outstanding Bank Guarantee 2,525,000 2,525,000
on account of Bond executed
by the Company to
Government of India towards
exemption of customs duty
13. 2.2 Share Capital
During the year under review, the Company has allotted 2,000 equity
shares of Rs. 10/- each at a price of Rs. 26,75/- per share to the
employees upon exercise of Stock Options
13. 2.3 Accounting for taxes on income
During the period under review, the Company carried its operations in
India through its 100% Export Oriented Unit, registered with the
Software Technology Parks of India (STPI), Hyderabad. Pursuant to the
scheme of Amalgamation, the Company continues to carry on the business
of erstwhile Verasity Technologies and treats it as an overseas branch
office. The operations of the STPI Unit and overseas branch have
resulted in a net loss for the year ended 31 March 2008. Hence, no
provision has been made in the books of account for the tax liability
for the year as well as for the deferred taxes as per the Accounting
Standard - 22 on Accounting for Taxes on Income, issued by the
Institute of Chartered Accountants of India.
Fringe Benefits Tax (FBT) payable under the provisions of section 115WC
of the Income-tax Act, 1961 is in accordance with the Guidance Note on
Accounting for Fringe Benefits Tax issued by the ICAI regarded as an
additional income tax and considered in determination of the
profits/(losses) for the year.
13. 2.4 Extraordinary Item
During the year, Company has received the final payment of Rs. 50.05
lakhs from Insurance Company against the replacement cost of assets
that were destroyed in fire on 5 November 2006. The Company has
accordingly recognized the extraordinary income of Rs. 38.51 lakhs that
is over and above the written down value of destroyed assets and
customs duty liability on account of debonding the destroyed assets.
The Company has disclosed the amount as an Extraorindary item" in the
profit and loss account.
13. 2.5 Exceptional Item
During the year, Company has undertaken physical verification of all
fixed assets in line with the requirements of AS-28 on Impairment of
Assets. Based on verification fixed assets having Gross Block value of
Rs. 9,451,272/- and Accumulated Depreciation of Rs. 6,986,158/- were
retired from active use as no further benefit was expected. Therefore,
these fixed assets were discarded on 31 December 2007. On discarding,
Rs. 2,465,114/- was debited to "Fixed Assets Discarded" account. The
amount being material in nature has been disclosed under Exceptional
Item for the year under review.
13. 2.6 Dues to Micro and Small Enterprises (SME):
In terms of Section 22 of the Micro, Small and Medium Enterprises
Development Act, 2006 (SME Act) the outstanding payable to Micro and
Small enterprises, as defined under the SME Act, are required to be
disclosed in the prescribed format. However, such Enterprises are
required to be registered under the SME Act.
There are no dues to any small scale industrial undertaking and micro,
small & medium enterprises which are outstanding for more than 30 days
of 45 days respectively at the Balance Sheet date. This information has
been determined to the extend such parties have been identified on the
basis of information available with the company.
13. 2.7 Quantitative Details
The Company is engaged in the development of computer software. The
production and sale of such software cannot be expressed in any generic
unit. Hence, it is not possible to give the quantitative details of
sales and the information as required under Paragraphs 3 and 4C of Part
11 of Schedule VI of the Companies Act, 1956.
13. 2.8 Regrouping/ Reclassification
The figures for previous year have been regrouped / reclassified
wherever necessary.
Mar 31, 2007
1. Description of Business
MosChip Semiconductor Technology Limited ("MosChip" or "the Company")
is a fabless semiconductor company engaged in the business of
developing application specific integrated circuits (ASICs)
specializing in the areas of computer peripherals, data communications
and consumer electronics The development/design process is carried out
at its design centre located in Hyderabad.
MosChip has its headquarters in Hyderabad, India with a Branch Office
in Santa Clara, CA, USA.
2. Contingent Liabilities:
i. Estimated amount of Contracts remaining to be executed on Capital
Account and not provided for: Rs. 44,092/-(as at 31 March 2006 Rs.
11,250/-).
ii. On account of Bank Guarantee given by bankers: Rs. 712,760/- (as at
31 March 2006 Rs. 618.040/-)
iii. On account of Bond executed by the Company to Government of India
towards exemption of customs Duty on Imported Equipment and Excise Duty
on Indigenous Equipment: Rs. 2,525,000/- (as at 31 March 2006 Rs.
2,525,000/-)
3. Convertible Warrants
During the year under review, the Company has allotted 1,500,000
convertible warrants at a price of Rs.31 each. The said warrants
represent a right to acquire 1,500,000 equity shares of Rs.10 each at a
price of Rs.31 per share. The warrants can be exercised at any time on
or before 28 June 2008. The warrants were issued for an upfront
consideration of Rs. 4,650,000. Non-exercise of warrants on or before
28 June 2008 will result in forfeiture of upfront consideration,
4. Accounting for taxes on income
During the period under review, the Company carried its operations in
India through its 100% Export Oriented Unit, registered with the
Software Technology Parks of India (STPI), Hyderabad. Pursuant to the
scheme of Amalgamation, the Company continues to carry on the business
of erstwhile Verasity Technologies and treats it as an overseas branch
office. The operations of the STPI Unit and overseas branch have
resulted in a net loss for the year ended 31 March 2007. Hence, no
provision has been made in the books of account for the tax liability
for the year as well as for the deferred taxes as per the Accounting
Standard - 22 on Accounting for Taxes on Income, issued by the
Institute of Chartered Accountants of India.
Fringe Benefits Tax (FBT) payable under the provisions of section 115WC
of the Income-tax Act, 1961 is in accordance with the Guidance Note on
Accounting for Fringe Benefits Tax issued by the ICAI regarded as an
additional income tax and considered in determination of the
profits/(losses) for the year.
5. Extraordinary and Prior Period Item
a. Due to a fire which occurred in part of the premises of the Company
on 5 November 2006, certain fixed assets were destroyed. The Company
has received an interim payment of Rs.80 lakhs (Insurance Policy on
Replacement Cost basis) from Insurance Company against the replacement
cost of assets that were destroyed. The Company has accordingly
recognized the extraordinary income of Rs. 18.21 lakhs that is over and
above the written down value of destroyed assets and customs duty
liability on account of debonding the destroyed assets. The Company has
disclosed the amount as an "Extraordinary item in the profit and loss
account.
b. Extraordinary and Prior Period item includes Rs. 22.33 lakhs on
account of write back of excess depreciation provision on Computer
Software pertaining to financial year 2005-2006.
6. Fixed Assets discarded
Computer Software having Gross Block of Rs. 12,755,325/- and
Accumulated Depreciation of Rs. 12,577,986/- as on 3t.03.2007, were
retired from active use as no further benefit was expected. Therefore,
these were discarded at the end of the year. On discarding, Rs.
177,339/- was debited to "Loss on Fixed Assets Sold/Discarded" account.
7. Quantitative Details
The Company is engaged in the development of computer software. The
production and sale of such software cannot be expressed in any generic
unit. Hence, it is not possible to give the quantitative details of
sales and the information as required under Paragraphs 3 and 4C of Part
II of Schedule VI of the Companies Act, 1956.
Mar 31, 2006
1. Contingent Liabilities:
(i) Estimated amount of Contracts remaining to be executed on Capital
Account and not provided for : Rs. 11,250/- (as at 31 March 2005 Rs.
156,338/-).
(ii) On account of Bank Guarantee given by bankers : Rs.618,040/- (as
at 31 March 2005 Rs.601,250/-)
(iii) On account of Bond executed by the Company to Government of India
towards exemption of customs Duty on Imported Equipment and Excise Duty
on Indigenous Equipment: Rs. 2,525,000/- (as at 31 March 2005 Rs.
2,525,000/-)
2. Share Capital
Increase in Share. Capital for the Year is on account of the following
allotments:
Particulars No. of Shares Price Per Share
On exercise of Employee Stock Options 38,326 26.75
On exercise of Employee Stock Options 3,000 30.50
On exercise of Employee Stock Options 76,125 31.00
On exercise of Employee Stock Options 100,050 33.00
In lieu of shares underlying GDRs 9,107,454 34.95
On exercise of Employee Stock Options 1,000 40.50
On exercise of Employee Stock Options 1,000 42.85
Total 9,326,955
3. Accounting for taxes on income
During the period under review, the Company carried its operations in
India through its 100% Export Oriented Unit, registered with the
Software Technology Parks of India (STPI), Hyderabad. Pursuant to the
scheme of Amalgamation, the Company continues to carry on the business
of erstwhile Verasity Technologies and treats it as an overseas branch
office. The operations of the STPI Unit and overseas branch have
resulted in a net toss for the year ended 31 March 2006. Hence, no
provision has been made in the books of account for the tax liability
for the year as well as for the deferred taxes as per the Accounting
Standard-22 on Accounting For Taxes on Income, issued by the
Institute of Chartered Accountants of India.
4. Employee Stock Option Plans
As per the Employee Stock Option Scheme and Employee Stock Purchase
Guidelines, 1999 issued by the Securities and Exchange Board of India,
the excess of the market price of the underlying equity shares as of
the date of the grant of the options over the exercise price of the
options is to be recognized and amortized on a straight-line basis over
the vesting period.
The Company has established six schemes Employee Stock Option Plan,
MosChip Stock Option Plan 2001, MosChip Stock Option Plan 2002, MosChip
Stock Option Plan 2004, MosChip Stock Option Plan 2005 (Ml) and MosChip
Stock Option Plan 2005 (WOS) with 600,000 equity shares, 300,000 equity
shares, 700,000 equity shares, 1,000,000 equity shares, 500,000 equity
shares and 500,000 equity shares respectively. Of these the Employee
Stock Options Plan was established when the Company was unlisted and
consequently, the Employee Stock Option Scheme and Employee Stock
Purchase Guidelines, 1999 are not applicable to the options granted
under this Plan.
Stock Options Outstanding under the Employee Stock Option Plan
Particulars Year ended Year ended
31 March 2006 31 March 2005
Options outstanding at the
beginning of the year 310,840 246,620
Granted during the year 4,000 208,000
Forfeited during the year 77,500 77,970
Exercised during the year 74,840 65,810
Outstanding at the end of the year 162,500 310,840
Stock Options Outstanding under the MosChip Stock Option Plan 2001
Particulars Year ended Year ended
31 March 2006 31 March 2005
Options outstanding at the
beginning of the year 287,000 273,000
Granted during the year 40,000 66,000
Forfeited during the year 53,000 41,000
Exercised during the year 108,375 11,000
Outstanding at the end of the year 165,625 287,000
Stock Options Outstanding under the MosChip Stock Option Plan 2002
Particulars Year ended Year ended
31 March 2006 31 March 2005
Options outstanding at the
beginning of the year 556,029 688,300
Granted during the year 14,000 148,000
Forfeited during the year 62,074 239,587
Exercised during the year 108,376 40,684
Outstanding at the end of the year 399,579 556,029
Stock Options Outstanding under the MosChip Stock Option Plan 2004
Particulars Year ended Year ended
31 March 2006 31 March 2005
Options outstanding at the
beginning of the year 75,000 Nil
Granted during the year 723,000 75,000
Forfeited during the year 72,000 Nil
Exercised during the year 1,000 Nil
Outstanding at the end of the year 725,000 75,000
As on the balance sheet date no options have been granted to any of the
employees of the Company or its Wholly owned subsidiary under MosChip
Stock Option Plan 2005 (Ml) and MosChip Stock Option Plan 2005 (WOS).
5. Earnings Per Share
The basic earnings per share has been computed using the weighted
average number of equity shares outstanding during the applicable
periods.
Diluted earnings per share are computed using the weighted average
number of equity shares and dilutive potential equity shares
outstanding during the applicable periods. Potential equity shares
include equity shares that can be issued against the share application
money received during the year.
(Amounts in Rupees)
Particulars Year ended Year ended
31 March 2006 31 March 2005
BASIC EARNINGS/(LOSS) PER SHARE
Net ProfiV(Loss) for the period (65,615,961) (97,024,496)
Weighted average number of equity shares 42,569,215 32,916,612
Basic Eamings/(Loss) per equity share (1.54) (2.95)
DILUTED EARNINGS/(LOSS) PER SHARE
Net Profit/(Loss) for the year (65,615,961) (97,024,496)
Adjustments Nil Nil
Diluted Net ProfiV(Loss) for the period (65,615,961) (97,024,496)
Weighted average number of equity shares 42,569,215 32,916,612
Potential weighted average number of equity shares
applicable to share application money 490 136
Weighted average number of diluted
equity shares 42,569,705 32,916,748
Diluted eamings/(loss) per share (1.54) (2.95)
6. Directors Remuneration;
(Amounts in Rupees)
Particulars Year ended Year ended
31 March 2006 31 March 2005
1. Salary and allowances 5,332,064 3,858,000
2. No Provision for Commission, to Whole Time Directors has been made
in the books, as there is no profit in accordance with Section 198 of
the Companies Act, 1956.
7. Related Party Transactions
The. Company entered into related party transactions during the period
with its wholly owned subsidiary, MosChip Semiconductor Technology,
USA. The transactions with subsidiary include investment in equity
shares, purchase of capital equipments, consumables, reimbursement of
expenses, loans given to meet the working capital requirements and
interest receivable on such loans. The key management personnel are:
Name of Personnel Designation
Whole-time Directors
K. Ramachandra Reddy Chairman & CEO
C. Dayakar Reddy Managing Director
Key Management Personnel
Vivek Bhargava Chief Financial Officer
The transactions with the related parties, are summarized below:
(Amounts in Rupees)
Nature of Transactions Transactions Balance as on
during the year 31 March 2006
Transactions with Subsidiary
Purchases of Fixed Assets/Payable 2,401,655 72,800
Reimbursement of expenses/Payable 986,615 506,416
Revenue/Receivable 2,6520,751 4,896,063
Advance License Fee Refunded 9,091,440 Nil
Equity Investment in MosChip USA (WOS) 66,359,989 375,579,087
Loan Refunded/Balance loan Receivable 16,085,550 17,848,000
Transactions with whole time directors
Remuneration to Chairman & CEO 2,666,032 Nil
Remuneration to Managing Director 2,666,032 Nil
Transactions with Key management personnel
Remuneration to Key Management Personnel 1,744,373 Nil
Stock Options Granted/Outstanding to
key management personnel Nil 37,500
8. Additional information as required under Part, II of Schedule VI of
the Companies Act, 1956:
(Amounts in Rupees)
For the year ended For the year ended
31 March 2006 31 March 2005
Rs. Rs.
A. C I F Value of Imports :
Capital Goods 4,522,422 1,449,546
Computer Software 19,654,654 Nil
B. Expenditure in Foreign currency
Software Charges 3,506,702 Nil
Traveling Expenses 2,810,438 1,825,715
Salaries 1,506,409 7,812,599
Professional Charges 4,439,250 13,560,249
Consumables 1,556,722 1,444,728
GDR Issue Expenses 10,473,960 3,376,408
Other Expenses 3,388,365 1,753,289
C. Earnings in Foreign Exchange
Sales Revenue 49,898,022 23,289,723
9. Segment Reporting
The Company recognizes ASIC design as its only-primary segment since
its operations during the year consists of ASIC design and sale/license
of related intellectual property developed by it. Accordingly revenues
from sale/
10. Amounts paid/payable to Auditors:
Particulars Year ended Year ended
31 March 2006 31 March 2005
Rs. Rs.
As Auditors 77,140 66,120
For Tax Audit 27,550 27,880
For Certification 102,510 68,000
Total 207,200 162,000
12. Regrouping/Reclassification
The figures for previous year have been regrouped/reclassified
wherever necessary.
13. Quantitative Details
The Company is engaged in the development of computer software. The
production and sale of such software cannot be expressed in any generic
unit. Hence, it is not possible to give the quantitative details of
sales and the information as required under Paragraphs 3 and 4C of Part
II of Schedule VI of the Companies Act, 1956.
Mar 31, 2004
1. Contingent Liabilities:
(i) Estimated amount of Contracts remaining to be executed on Capital
Account and not provided for Rs. 108,745/- (Previous Year Rs.
82,662/-).
(ii) On account of Bank Guarantee given by bankers Rs. 580,000/-
(Previous Year Rs. 580.000/-)
(iii) On account of Bond executed by the Company to Government of India
towards exemption of Customs Duty on Imported Equipment and Excise Duty
on Indigenous Equipment Rs. 2,100,000/- (Previous Year Rs.
2,100,000/-)
(iv) On account of disputed demand for income tax Rs.5,56,162. The
Company tiled an appeal against such demand.
2. Amalgamation of Verasity Technologies, Inc
(a) Pursuant to Scheme of Amalgamation of Verasity Technologies, Inc, a
Company incorporated under the California Corporation Code, with the
Company as approved by the shareholders in the Court convened meeting
held on 28th April, 2003 and subsequently sanctioned by the Honourable
High Court of Andhra Pradesh as per order dated 13th August 2003, the
assets and liabilities of Verasity Technologies, Inc were transferred
to and vested in the Company with effect from 1st January, 2003.
Accordingly the said scheme has been given effect to in these Accounts.
(b) The nature of business of Verasity Technologies, Inc., is designing
internet security ASICs.
(c) The amalgamation has been accounted for under the "Pooling of
Interest" method as prescribed by Accounting Standard (AS-14).
Accounting for Amalgamations, issued by the Institute of Chartered
Accountants of India. Accordingly, the assets and liabilities as at
1st January 2003 have been taken over at their book values, subject to
adjustments made for the differences in the Accounting Policies between
the two companies.
(d) The expenditure in revenue nature, incurred by erstwhile Verasity
Technologies, Inc., during the period from 1st January 2003 to 21st
November 2003, the effective date of amalgamation, amounting to Rs.
31,215,760/- has been debited to the Profit and Loss Account of the
Company. It had no revenues during the said period.
(e) The percentage of equity shares held by the shareholders of
erstwhile Verasity Technologies, Inc., in the Company is 20.16%.
(f) The resultant goodwill, amounting to Rs. 129,966,773/-, on account
of difference between the consideration for the amalgamation and the
net identifiable assets acquired, has been adjusted against the
reserves of the Company.
(g) In view of the aforesaid amalgamation with effect from 1st January,
2003, the figures for the current year are not comparable to those of
the previous year.
3. Share Capital
During the period under review, 300,000 equity shares of Rs. 10 each at
a price of Rs.33 per share and 950,000 equity shares of Rs.10 each at a
price of Rs.30 per share have been allotted to the holders of the
convertible warrants upon their exercise of the option for conversion
of the warrants into equity shares.
Pursuant to the Scheme of Amalgamation of Verasity Technologies Inc.,
with the Company 6,177,778 equity shares of Rs. 10 each at a price of
Rs.31 per share have been allotted to the shareholders of erstwhile
Verasity Technologies Inc., for consideration other than cash.
4. Balance in Profit and Loss Account
The balance in Profit & Loss Account as on 31st March, 2004 is arrived
at as follows:
Particulars Amount in Rs.
Opening Balance as on 1st April 2003 113,385,579
Add; Balance in profit and loss account of erstwhile
Verasity Technologies, Inc as on 1st January, 2003 35,047,429
Sub-total 148,433,008
Add: Loss for the period 119,912,301
Balance as on 31st March 2004 268,345,309
5. Accounting for taxes on income
During the period under review, the Company carried its operations in
India through two 100% Export Oriented Units, one registered with the
Software Technology Parks of India (STPI), Hyderabad and the other with
NOIDA Special Economic Zone (NSEZ). The STPI unit is entitled to a tax
holiday for a period of ten years from the date of commencement of
operations. The NSEZ unit is entitled to a tax exemption to the extent
of 100% for a period of five years from the date of commencement of
operations and to the extent of 50% during the subsequent two years.
Pursuant to the scheme of Amalgamation, the Company continues to carry
on the business of erstwhile Verasity Technologies and treats it as an
overseas branch office. The operations of the overseas branch for the
period ended 31st March 2004 have resulted in a net loss. Hence, no
provision has been made in the books of account for the tax liability
for the year as well as for the deferred taxes as per the Accounting
Standard - 22 on Accounting For Taxes on Income, issued by the
Institute of Chartered Accountants of India.
6. Employee Stock Option Plans
As per the Employee Stock Option Scheme and Employee Stock Purchase
Guidelines, 1999 issued by the Securities and Exchange Board of India,
the excess of the market price of the underlying equity shares as of
the date of the grant of the options over the exercise price of the
options is to be recognized and amortised on a straight-line basis over
the vesting period.
The Company has established three schemes Employee Stock Options Plan,
MosChip Stock Option Plan 2001 and MosChip Stock Option Plan 2002 with
600,000 equity shares, 300,000 equity shares and 700,000 equity shares
respectively. Of these three the Employee Stock Options Plan was
established when the Company was unlisted and consequently, the
Employee Stock Option Scheme and Employee Stock Purchase Guidelines,
1999 are not applicable to the options granted under this Plan.
Stock Options Outstanding under the Employee Stock Options Plan
Particulars Year ended Year ended
31-03-2004 31-03-2003
Options outstanding at the beginning of the year 398,900 354,600
Granted during the year 24,300 149,500
Forfeited during the year 126,900 86,600
Exercised during the year 49,680 18,600
Outstanding at the end of the year 246,620 398,900
Stock Options Outstanding under the MosChip Stock Option Plan 2001
Particulars Year ended Year ended
31-03-2004 31-03-2003
Options outstanding at the beginning of the year 260,500 Nil
Granted during the year 79,500 262,500
Forfeited during the year 67,000 2,000
Exercised during the year Nil Nil
Outstanding at the end of the year 273,000 260,500
Stock Options Outstanding under the MosChip Stock Option Plan 2002
Particulars Year ended Year ended
31-03-2004 31-03-2003
Options outstanding at the beginning of the year 255,800 Nil
Granted during the year 490,500 255,800
Forfeited during the year 58,000 Nil
Exercised during the year Nil Nil
Outstanding at the end of the year 688,300 255,800
7. Earnings Per Share
Basic earnings per share is computed using the weighted average number
of equity shares outstanding during the applicable periods.
Diluted earnings per share are computed using the weighted average
number of equity shares and dilutive potential equity shares
outstanding during the applicable periods. Potential equity shares
include equity shares issuable against the share application money
received during the year.
8. Related Party Transactions
The Company entered into related party transactions during the period
with its wholly owned subsidiary, MosChip Semiconductor Technology,
USA. The transactions with subsidiary include purchase of capital
equipments, consumables, reimbursement of expenses, loans given to meet
the working capital requirements and interest receivable on such loans.
The key management personnel are:
Name of Personnel Designation
Whole-time Directors
K. Ramachandra Reddy Chairman & CEO
C. Dayakar Reddy Managing Director
Key Management Personnel
Vinay D. Kumar Executive Vice President - Operations
Vivek Bhargava Chief Financial Officer
P.S.Narayanan Vice President - Engineering
9. Segment Reporting
The Company recognises ASIC design as its only primary segment since
its operations during the year consists of ASIC design and sale/license
of related intellectual property developed by it. Accordingly revenues
from sale/license of software (designs/intellectual property) comprise
the primary basis of segmental information set out in these Financial
Statements. Secondary segmental reporting is performed on the basis of
the geographical location of customers
10. Amounts paid/payable to Auditors:
Year Ended Year Ended
31-03-2004 31-03-2003
Rs. Rs.
As Auditors 48,600 37,800
For Tax Audit 16,200 10,500
For Certification 58,000 48,400
Total 122,800 96,700
11. Utilisation of Preferential Issue Proceeds
The following statement shows the total funds raised through
preferential issues, the amounts utilized up to 31st March 2004 and the
balance available as on that date:
Particulars Amounts in Rs. Amounts in Rs.
Iggyg proceeds
Share Capital 43,960,000
Share Premium 91,628,000
Conversion of Warrants
Share Capital 12,500,000
Share Premium 25,900,000
Total Issue Proceeds 173,988,000
Utilisation
Loan to Subsidiary to meet product development expenditure for
the products developed by the parent Company 31,486,250
Payments for purchase of fixed assets 21,726,686
Working Capital 120,775,064
Total Funds Utilised 173,988,000
Funds Available Out of Issue Proceeds Nil
12. Regrouping/Reclasssification
The figures for previous year have been regrouped/reclassified wherever
necessary. In view of the amalgamation of erstwhile Verasity
Technologies, Inc., with the Company with effect from 1st January,
2003, the figures for the current year are not comparable to those of
the previous year.
13. Quantitative Details
The Company is engaged in the development of computer software. The
production and sale of such software cannot be expressed in any generic
unit. Hence, it is not possible to give the quantitative details of
sales and the information as required under Paragraphs 3 and 4C of Part
II of Schedule VI of the Companies Act, 1956.
Mar 31, 2003
1. Contingent Liabilities:
(i) Estimated amount of Contracts remaining to be executed on Capital
Account and not provided for Rs. 82.662/- (Previous Year Rs.
1,276,076/-).
(ii) On account of Bank Guarantee given by bankers Rs. 580,000/-
(Previous Year Rs. 475.000/-)
(iii) On account of Bond executed by the Company to Government of India
towards exemption of customs Duty on Imported Equipment and Excise Duty
on Indigenous Equipment Rs. 2,100,000/- (Previous Year Rs. 5,500,000/-)
2. Share Capital
Pursuant to the resolutions of the members of the Company passed in the
Extraordinary General Meetings held on 27th March, 2002 and 22nd May,
2002, the Company issued 3,160,000 equity shares of Rs.10 each at a
premium of Rs.20 per share and 1,266,000 equity shares of Rs.10 each at
a premium of Rs.23 per share respectively. During the year under
review, out of such issued capital, the Company has allotted 3,160,000
equity shares of Rs.10 each at a premium of Rs.20 per share and
1,236,000 equity shares of Rs.10 each at a premium of Rs.23 per share.
3. Convertible Warrants
(a) During the year under review, the Company has allotted 950,000
convertible warrants at a price of Rs.30 each. The said warrants
represent a right to acquire 950,000 equity shares of Rs.10 each at a
price of Rs.30 per share. The warrants can be exercised at any time on
or before 25th December, 2003. The warrants were issued for an upfront
consideration of Rs.2,850,000.
(b) The Company has also allotted 300,000 convertible warrants at a
price of Rs.33 each. The said warrants represent a right to acquire
300,000 equity shares of Rs.10 each at a price of Rs.33 per share
respectively. The warrants can be exercised at any time on or before
9th January, 2004. The warrants were issued for an upfront
consideration of Rs.990,000.
4. Amalgamation of Verasity Technologies, Inc
The Scheme of Amalgamation of Verasity Technologies, Inc, a Company
incorporated under the California Corporation Code, with the Company as
approved by the shareholders in the Court convened meeting held on 28th
April, 2003, along with a petition seeking the sanction for the same
has been filed with the High Court of Andhra Pradesh, the Order in
respect of which is awaited. The assets and liabilities of Verasity
Technologies, Inc will be transferred to and vested in the Company with
retrospective effect from 1st January, 2003, subject to the approval of
High Court of Andhra Pradesh in this regard. No effect of the
amalgamation/operations has been given in preparing the Accounts of the
Company.
5. Accounting for taxes on income
The Company carries on its operations through two 100% Export Oriented
Units, one registered with the Software Technology Parks of India
(STPI), Hyderabad and the other with NOIDA Special Economic Zone
(NSEZ). The STPI unit is entitled to a tax holiday for a period of ten
years from the date of commencement of operations. The NSEZ unit is
entitled to a tax exemption to the extent of 100% for a period of five
years from the date of commencement of operations and to the extent of
50% during the subsequent two years. Hence, no provision has been made
in the books of account for the tax liability for the year as well as
for the deferred taxes as per the Accounting Standard 22 on Accounting
For Taxes on Income, issued by the Institute of Chartered Accountants
of India.
6. Employee Stock Option Plans
As per the Employee Stock Option Scheme and Employee Stock Purchase
Guidelines, 1999 issued by the Securities and Exchange Board of India,
the excess of the market price of the underlying equity shares as of
the date of the grant of the options over the exercise price of the
options is to be recognized and amortised on a straight-line basis over
the vesting period.
The Company has established three schemes Employee Stock Options Plan,
MosChip Stock Option Plan 2001 and MosChip Stock Option Plan 2002 with
600,000 equity shares, 300,000 equity shares and 700,000 equity shares
respectively. Of these three the Employee Stock Options Plan was
established when the Company was unlisted and consequently, the
Employee Stock Option Scheme and Employee Stock Purchase Guidelines,
1999 are not applicable to the options granted under this Plan.
Stock Options Outstanding under the Employee Stock Options Plan
Particulars Year ended Year ended
31-03-2003 31-03-2002
Options outstanding at the beginning of the year 354,600 239,600
Granted during the year 149,500 218,000
Forfeited during the year 86,600 82,400
Exercised during the year 18,600 20,600
Outstanding at the end of the year 398,900 354,600
Stock Options Outstanding under the MosChip Stock Option Plan 2001
Particulars Year ended Year ended
31-03-2003 31-03-2002
Options outstanding at the beginning of the year Nil Nil
Granted during the year 262,500 Nil
Forfeited during the year 2,000 Nil
Exercised during the year Nil Nil
Outstanding at the end of the year 260,500 Nil
Stock Options Outstanding under the MosChip Stock Option Plan 2002
Particulars Year ended Year ended
31-03-2003 31-03-2002
Options outstanding at the beginning of the year Nil Nil
Granted during the year 255,800 Nil
Forfeited during the year Nil Nil
Exercised during the year Nil Nil
Outstanding at the end of the year 255,800 Nil
7. Earnings Per Share
Basic earnings per share is computed using the weighted average number
of equity shares outstanding during the applicable periods.
Diluted earnings per share is computed using the weighted average
number of equity shares and dilutive potential equity shares
outstanding during the applicable periods. Potential equity shares
include equity shares issuable against the share application money
received during the year.
(Amounts in Rupees)
Year Ended Year Ended
31-03-2003 31-03-2002
BASIC EARNINGS/(LOSS) PER SHARE
Net Profit/(Loss) for the year (72,753,346) (43,864,289)
Weighted average number of equity shares 22,149,923 16,658,789
Basic Eamings/(Loss) per equity share -3.28 -2.63
DILUTED EARNINGS/(LOSS) PER SHARE
Net Profit/(Loss) for the year (72,753,346) (43,864,289)
Adjustments Nil Nil
Diluted Net Proflt/(Loss) for the year (72,753,346) (43,864,289)
Weighted average number of equity shares 22,149,923 16,658,789
Potential Equity Shares applicable to
share application money 924,110 55,757
Weighted average number of diluted
equity shares 23,074,033 16,714,546
Diluted eamings/(loss) per share -3.15 -2.62
8. Directors Remuneration:
Year Ended Year Ended
31-03-2003 31-03-2002
Rs. Rs.
1 Salary and allowances 3,000,000 3,000,000
2 No Provision for Commission to Whole Time Directors
has been made in the books, as there is no profit in
accordance with Section 198 of the Companies Act, 1956.
9. Related Party Transactions
Transactions with Subsidiary
Person/Entity Relationship Nature of Transaction Amount (Rs.)
MosChip Wholly owned Purchase of Channel Analyzer 465,868
Semiconductor subsidiary
Technology, USA
-do- -do- Purchase of Hardware items 1,202,227
-do- -do- Purchase of PCS Boards 14,263
-do- -do- Purchase of Hard Ware Items 236,660
-do- -do- Consultancy Fee 482,460
-do- -do- Transfer of Audio Codec
NRE charges 2,164,343
-do- -do- Loan 17,264,500
-do- -do- Interest on loan 291,487
Amount due from MosChip Semiconductor Technology, USA as at 31st March
2003 is Rs. 18,810,549.
Transactions with Whole time Directors and Key Management Personnel:
The key management personnel are:
Name of Personnel Designation
Whole-time Directors
K. Ramachandra Reddy Chairman & CEO
C. Dayakar Reddy Managing Director
Key Management Personnel
Vinay D. Kumar Executive Vice President - Operations
Vivek Bhargava Chief Financial Officer
Vivek Kumar Gupta Vice President - Engineering
Transactions with whole time directors and key management personnel are
summarized below:
(Amounts in Rupees)
Nature of Transaction Transactions Balance as at
during the year March 31, 2003
Remuneration to Chairman & CEO 1,500,000 Nil
Remuneration to Managing Director 1,500,000 Nil
Remuneration to Key Management Personnel 4,591,541 Nil
Stock Options Granted/Outstanding to
key management personnel 40,000 105,000
10. Additional information as required under Part II of Schedule VI of
the Companies Act, 1956:
Year Ended Year Ended
31-03-2003 31-03-2002
Rs. Rs.
A. GIF Value of Imports
Capital Goods 6,436,309 1,818,519
Computer Software 209,113 19,940,316
B. Expenditure in Foreign currency
Software Charges 4,659,999 97,274
Traveling Expenses 1,172,013 699,346
Advertising Expenses 2,528,510 1,767,463
Professional Charges 567,600 Nil
Consumables 509,309 Nil
Other Expenses 514,578 620,724
C. Earnings in Foreign Exchange - Sales Revenue Nil 3,396,400
11. Segment Reporting
The Company recognises ASIC design as its only primary segment since
its operations during the year consists of ASIC design and sale of
related intellectual property developed by it. Accordingly revenues
from sale of software (designs/intellectual property) comprise the
primary basis of segmental information set out in these Financial
Statements. Secondary segmental reporting is performed on the basis of
the geographical location of customers Business Segment Performance of
business segment is as follows:
Year Ended Year Ended
31-03-2003 31-03-2002
Rs. Rs.
Revenue
Sales to external customers Nil 3,396,400
Segment result Profitless) -77,821,942 -45,605,603
Interest expense 176 29,354
Other Income 5,068,772 1,792,719
Income Taxes - -
Net profit(loss) -72,753,346 -43,842,238
Other Segment Information
Depreciation 13,932,680 11,379,257
Non-cash expenses other than depreciation 1,376,072 1,376,072
Particulars of Segment Assets and Liabilities
Segment Assets 90,875,506 77,943,229
Investments 337,219,098 314,771,139
Cash and Bank Deposits 13,268,950 2,774,469
Other Assets 559,133 98,184
Total Assets 441,922,687 395,587,021
Segment Liabilities 3,368,635 8,122,085
Total Liabilities 3,368,635 8,122,085
Geographic Segment Revenue attributable to location of customers is as
follows:
Geographic Location North America Nil 3,396,400
Segment assets based on their location are as follows
Carrying amount of segment assets India 90,071,462 78,075,713
Additions to fixed assets India 11,995,749 39,024,224
12. Amounts paid/payable to Auditors:
Year Ended Year Ended
31-03-2003 31-03-2002
Rs. Rs.
As Auditors 37,800 37,800
For Tax Audit 10,500 10,500
For Certification 48,400 39,000
Total 96,700 87,300
13. Utilisation of Preferential Issue Proceeds
The following statement shows the total funds raised through
preferential issues, the amounts utilized upto 31st March, 2003 and the
balance available as on that date:
Particulars Amounts in Rs. Amounts in Rs.
Issue Proceeds Share Capital 43,960,000
Share Premium 91,628,000
Convertible Warrants 3,840,000
Total Issue Proceeds 139,428,000
Utilisation
Loan to Subsidiary to meet product development expenditure
for the products developed by the parent Company 17,264,500
Payments for purchase of fixed assets 15,903,710
Working Capital 68,777,630
Total Funds Utilised 101,945,840
Funds Available Deposits with Mutual Funds 28,000,000
Deposits with Banks in current accounts 3,336,891
in fixed deposit accounts 6,145,269
Total Funds Available 37,482,160
14. Regrouping/Reclasssification
The figures for previous year have been regrouped/reclassified wherever
necessary, to conform to the current year figures.
Mar 31, 2002
1. Contingent Liabilities:
i. On account of Bank Guarantee given by bankers Rs. 475,000/-
(Previous Year Rs. 556,034/-)
ii. On account of Bond executed by the Company to Government of India
towards exemption of customs Duty on Imported Equipment and Excise Duty
on Indigenous Equipment Rs. 5,500,000/- (Previous Year Rs.
5,500,000/-)
2. Estimated amount of Contracts remaining to be executed on Capital
Account and not provided for Rs. 1,276,076/- (Previous Year Rs.
14,249,788/-).
3. Previous year figures have been regrouped wherever necessary and
paise have been rounded to the nearest rupee.
4. During the year the Company has issued 31,60,000 equity shares of
Rs. 10/- each and 9,50,000 warrants convertible into one equity share
of Rs. 10/- each to (a) ESS Technology Inc, USA, (b) Flextronics
Semiconductor Inc, USA, (c) Silutions Technologies Inc USA, (d) UTI
A/c. India Technology Venture Unit Scheme and (e) Dr. S. Sivakumar and
the same are yet to be subscribed by them as at the date of the Balance
Sheet.
5. As per the Employee Stock Option Scheme and Employee Stock Purchase
Guidelines, 1999 issued by the Securities and Exchange Board of India,
the excess of the market price of the underlying equity shares as of
the date of the grant of the options over the exercise price of the
options is to be recognized and amortised on a straight-line basis over
the vesting period.
The options granted by the company during the year are under the
Employee Stock Options Plan, which was established when the Company was
unlisted. Consequently, the Employee Stock Option Scheme and Employee
Stock Purchase Guidelines, 1999 are not applicable to the Company in
relation to the options granted under the aforesaid Plan.
During the year under review no options have been granted by the
Company under the Employee Stock Option Scheme framed in accordance
with the Employee Stock Option Scheme and Employee Stock Purchase
Guidelines, 1999 issued by SEBI.
6. Earnings Per Share
Basic earnings per share is computed using the weighted average number
of equity shares outstanding during the applicable periods.
Diluted earnings per share is computed using the weighted average
number of equity shares and dilutive potential equity shares
outstanding during the applicable periods. Potential equity shares
include equity shares issuable against the share application money
received during the year.
7. Unallocated Expenditure incurred upto 30.06.2001 for setting up of
the new unit at NOIDA Export Processing Zone amounting to Rs.
62,98,737/- has been allocated to Plant and Machinery, Electrical
Installations and Computers in the ratio of their direct costs.
Mar 31, 2001
1. Contingent Liabilities:
i. On account of Bank Guarantee given by bankers Rs.556034/-(Previous
Year Rs.25000/-)
ii. On account of Bond executed by the Company to Government of India
towards exemption of customs Duty on Imported Equipment and Excise Duty
on Indigenous Equipment Rs.55,00,000/- (Previous Year Rs.500000/-)
2. Estimated amount of Contracts remaining to be executed on Capital
Account and not provided for Rs. 1,42,49,788/- (Previous Year Rs.Nil).
3. Previous year figures have been regrouped wherever necessary and
paise have been rounded to the nearest rupee. This being the first
Profit and Loss Account no previous year figures have been given.
4. The Securities and Exchange Board of India recently issued the
Employee Stock Option Scheme and Employee Stock Purchase Guidelines,
1999 that is effective for all stock option schemes of listed companies
established after 19th June 2000. In accordance with these guidelines,
the excess of the market price of the underlying equity shares as of
the date of the grant of the options over the exercise price of the
options is to be recognized and amortised on a straight-line basis over
the vesting period.
The Employee Stock Options Plan of the Company was established when the
Company was unlisted. Consequently, the Employee Stock Option Scheme
and Employee Stock Purchase Guidelines, 1999 are not applicable to the
Company.
5. Unallocated Expenditure incurred upto 30.06.2000 amounting to
Rs.36,49,546/- has been allocated to Plant and Machinery, Electrical
Installations, Computers and Software in the ratio of their direct
costs.
6. Provision for Taxation has been made under section 115-JB of the
Income Tax Act, 1961.
7. Deposits Recoverable includes an amount of Nil (Previous Year
Rs.1,08,000/-) representing rental deposit with a director of the
Company. Maximum amount outstanding during the period Nil (Previous
Year Rs.1,08,000/-).
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