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Notes to Accounts of Kernex Microsystems (India) Ltd.

Mar 31, 2023

a) Out of the above Trade Receivables, an amount of Rs 423.91 lakhs (PY Rs 551 lakhs) due from Egyptian National Railways (ENR) is outstanding pending mile stones of the contract to be achieved.

b) Further an amount Rs 2,064.5 lakhs (PY Rs 2,056 lakhs) receivable from Konkan Railways Corporation Ltd (KRCL) is under arbitration / in the process of filing arbitration and provision for expected credit losses upto the extent of Rs 2062.74 is made in respect of this outstanding.

c) Due from Related party i.e Comptek Computer systems Pvt Ltd Rs 414.57 (PY 410.8)

d) Excludes unbilled revenue of Rs 183.47 (PY 203.47) against which allowance has been created for expected credit losses to an extent of Rs. 20 (PY nil)

a) Balances with statutory/government authorities represent input credit on goods and services purchased/received of Rs. 269.05 (PY 253.13 lakhs) lakhs and VAT claims receivable of Rs. 12.40 lakhs (PY 75.61 lakhs).

b) Unbilled revenue gross is 203.47 (PY 203.47) and allowance for expected credit loss is 20 lakhs and net unbilled revenue is 183.47 (PY 203.47)

Rights attached to the equity shares

The company has only one class of shares having a face value of Rs. 10/- per share. All equity shareholders rank pari-passu in respect of dividend and voting rights. Each holder of equity shares is entitled to one vote per share.In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the company after distribution of preferential amounts, in proportion to their shareholding.

a. Cash credit facilities from State Bank of India are secured by first charge of hypothecation on all current assets of the Company present and future and collaterally secured by extension of first charge on the fixed assets (movable and immovable) of the Company both present and future and extension of equitable mortagage of land and buildings situated at TSIIC Hardware park. The applicable interest rate is 3.0 % spread on EBLR ranged between 9.65 % to 12.15 %

b. Guaranteed Emergency Credit Term Loan (Unsecured) is repayable by May 2024 carrying interest rate at 9.25 %

c. Unsecured Loan from directors are repayable on demand and carrying interest at 18 %

d. Inter corporate Loan is repayable on demand and carrying interest rate of 15%.

e. Other Loans are interest free and repayable on demand

29 DETAILS OF CORPORATE SOCIAL RESPONSIBILITY EXPENDITURE

The company is not required to spend on corporate social responsibility under section 135 of the Companies Act, 2013 as the Company does not meet the criteria thereunder.

30 EMPLOYEE BENEFITS

a. Defined contribution plan

Eligible employees of the Company receive benefits from a provident fund, which is a defined contribution plan. Both the employee and Company make monthly contributions to the provident fund plan equal to a specified percentage of the eligible employee’s qualifying salary. The Company has no further obligations under the plan beyond its monthly contributions. The Company contributed INR 18.74 Lakhs (Previous year INR 13.62 Lakhs) towards provident fund plan during the years ended 31-Mar-23.

b. Defined Benefit Plan

The Company provides for gratuity, a defined benefit plan ("Gratuity Plan") covering eligible employees. The Gratuity Plan provides a lump sum gratuity payment to eligible employees at retirement or termination of their employment. The amount of the payment is based on the respective employee’s last drawn salary and the years of employment with the Company.

The following table sets out the amounts recognised in the financial statements in respect of retiring gratuity plan:

f. Local Agent Commission

i. The Company received an Order dated 19/02/2020 from Cairo Economic Court, Egypt, directing the Company to pay an amount of USD 3.42 Lakhs and Egyptian Pounds 4.98 Lakhs along with an interest of 5% to M/s Alkan Consult, Cairo, towards the Local Agent commission in relation to Egyptian National Railways contract that has been executed by the Company in Cairo, Egypt. The commission payable to the Local Agent is being deducted by the contractor, Egyptian National Railways who in turn have to pay to the Local Agent. The current claim of the Local Agent is even for the works that are yet to be executed. The Company is in the process of filing a suitable case against the Local Agent wherein the Company is confident of getting a favourable order.

35 OTHER SIGNIFICANT LITIGATIONS

In view of dispute with Konkan Railway Corporation Limited (KRCL), the company has filed arbitration on 09.05.2016 in respect of dues amounting to INR 1518.00 Lakhs . The Arbitration proceedings are under progress. Further the company has failed in the conciliation proceedings against KRCL for outstanding dues of INR 518.00 Lakhs and is in process of filing Arbitration petition. In view of the above, the company has made a provision of INR 2062.74 Lakhs in the books of accounts.

36 CAPITAL MANAGEMENT

The company manages its capital to ensure that it will be able to continue as going concern while creating value for share holders by facilitating the meeting of long term and short term goals of the Company.

The company determines the amount of capital required on the basis of annual business plan and five year''s corporate plan coupled with long term and short term strategic investment and expansion plans.

The Company monitors the capital structure on the basis of net debt to equity ratio on a periodical basis.

37 Financial Risk Management

In couse of its business, the company is exposed to certain financial risk such as market risk , credit risk and liquidity risk that could have significant influence on the company''s business and operational/financial performance. The Board of directors and the Audit Commitee reviews and approves risk management framework and policies for managing these risks and monitor suitable mitigating actions taken by the management to minimize potential adverse effects and achieve greater predictability to earnings.

a. Credit risk

Credit Risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the company. The Company has a prudent and conservative process for managing its credit risk raising in the course of its business activities. Credit risk is managed through continuously monitoring the creditworthiness of customers and obtaining sufficient collateral, where appropriate, a means of mitigating the risk of financial loss from defaults.

The company makes an allowance for doubtful debts/advances using expected credit loss model. i. Trade Receivables:

The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the customer, including the default risk of the industry and country in which the customer operates, also has an influence on credit risk assessment. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business.

The Company allocates each exposure to a credit risk grade based on a variety of data that is determined to be predictive of the risk of loss (e.g. timeliness of payments, available press information etc.) and applying experienced credit judgment. Exposures to customers outstanding at the end of each reporting period are reviewed by the Company to determine incurred and expected credit losses. Historical trends of impairment of trade receivables do not reflect any significant credit losses. Given that the macro economic indicators affecting customers of the Company have not undergone any substantial change, the Company expects the historical trend of minimal credit losses to continue.

ii. Cash and Cash Equivalents

The Company held cash and cash equivalents of Rs. 11.26 Lakhs at 31-Mar-23 (Previous year INR 626.41 Lakhs). This includes the cash and cash equivalents held with the bank and the cash on hand with the Company.

b. Liquidity risk

Liquidity Risk refers to the risk that the company will not be able to meet its financial obligations as they become due. The Company manages its liquidity risk by ensuring, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risk to the Company’s reputation.

The Company has obtained fund and non-fund based working capital loans from banks. The borrowed funds are generally applied for Company’s own operational activities

c. Interest Rate Risk

Interest rate risk can be either fair value interest rate risk or cash flow interest rate risk. Fair value interest rate risk is the risk of changes in fair values of fixed interest bearing investments because of fluctuations in the interest rates. The company’s exposure to the risk of changes in the market interest rate relates primarily to the company’s long term debt obligations with floating interest rates. The company’s interest rate exposure is mainly related to variable interest rates debt obligations. The Company manages the liquidity and fund requirements for its day to day operations like working capital, suppliers/buyers credit

Fair value sensitivity analysis for fixed-rate instruments

The Company does not account for any fixed-rate financial assets or financial liabilities at fair value through profit or loss. Therefore, a change in interest rates at the reporting date would not affect profit or loss.

Cash flow sensitivity analysis for variable-rate instruments

The risk estimates provided assume a change of 25 basis points interest rate for the interest rate benchmark as applicable to the borrowings summarised above. This calculation assumes that the change occurs at the balance sheet date and has been calculated based on risk exposures outstanding as at that date assuming that all other variables, in particular foreign currency exchange rates, remain constant. The period end balances are not necessarily representative of the average debt outstanding during the period.

d. Market risk

Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from adverse changes in market rates and prices such as commodity prices, foreign currency exchange rates and other market changes.

e. Exchange rate risk

The company foreign exchange arised from its foreign operations, foreign currency revenues and expenses, (Primarly in US Dollars and Egyptian pounds). Consequently, the company is exposed to foreign exchange risk thourgh its sales, services and purchases from overseas suppliers in various foregin currencies.

The financial instruments are categorized into three levels based on the inputs used to arrive at fair value measurements as described below:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.

Level 2: Inputs other than the quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3: Unobservable Inputs for the asset or liability.

39 CAPITAL RISK MANAGEMENT

For the purpose of the Company’s capital management, capital includes issued capital and other equity reserves. The primary objective of the Company’s Capital Management is to maximize shareholders value. The Company manages its capital structure and makes adjustments in the light of changes in economic environment and the requirements of the financial covenants.

Segment Reporting

As per the assessment undertaken by CODM, the allocation of resources and assessment of the financial performance is undertaken at the company level. The Company has only one reportable business segment, which is safety systems for railways . Accordingly, the amounts appearing in the financial statements relate to the Company’s single business segment.

43. Other Statutory Information

(i) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.

(ii) The Company does not have any transactions with struck off companies

(iii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period,

(iv) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year

(v) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall

a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or

b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries

vi) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:

a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or

b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries,

(vii) The Company has not entered in to any transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).

(viii) The Company has not been declared as wilful defaulter by any bank or financial institution or other lender

(ix) The Company has complied with the number of layers prescribed under clause (87) of section 2 of the Act read with the Companies (Restriction on number of Layers) Rules, 2017

(x) No Scheme of Arrangements has been approved by the Competent Authority in terms of sections 230 to 237 of the Companies Act, 2013, during the year.

Notes 6, 8 & 12

44. The Company’s assessment of recoverability and impairment loss allowance on its trade receivables, income tax assets and other long pending dues from government authorities as on 31 Mach 2023 is subject to number of management judgments and estimates that are based on prevailing conditions and circumstances as on the date of approval of these standalone financial statements. However, actual results may differ from these estimates as on the date of approval of these standalone financial statements due to the following reasons.

A. Recoverability of income tax assets (Note 6) Rs 277.83 lakhs (PY Rs 260 lakhs) for respective years will depend on the outcome of the assessment proceedings which are yet to be closed. Recoverability of MAT credit would depend on the Company''s ability to earn taxable profits in future before expiry of the time limit prescribed for carry forward of mAt Credit. Further, the department may adjust the refunds against demands raised detailed in Note 34.

B. Dues from government authorities (Note 12) Rs 282.83 lakhs (PY Rs 328.74 lakhs) mainly comprise of Input Tax Credits under GST Act and depend on actions of government authorities, outcome of assessments and availability of Input Credit against future output liabilities.

C. Unbilled Revenue (Note 12) of Rs 183.46 Lakhs (PY 203.46 Lakhs) is net of allowance for expected credit loss made in books of Rs. 20 lakhs (PY Nil) and is subject to customer''s acceptance.

D. Trade receivables (Note 8) Rs 937.79 Lakhs (PY 1137.82 lakhs) may be affected due to delay in final deliverables, acceptance of performance claims by customers, Claims/ counter claims on quantum of work and company''s decision for continuing the projects and on account of COVID 19.

45. Previous year figures have been regrouped/reclassified wherever necessary to conform to the current year’s classification.


Mar 31, 2018

NOTES FORMING PART OF THE FINANCIAL STATEMENTS 36. RELATED PARTIES

a. List of the transacted Related Parties and description of relationship Nature of Relationship Name of the related party

Wholly owned subsidiary Avant-Garde Info Systems Inc, USA_

Anji Raju Manthena_Director_

Mantena Raju Narasa Director

Vinta Janardhana Reddy_Director_

Sreelakshmi M (from 20.11.17) Director

M.B.Narayana Raju (from 20.11.17) Whole Time Director

K.Krishnam Raju (from 29.10.16)_Chief Executive Officer_

Ramayya Vutukuri (from 14.04.17) Chief Financial Officer

"Key managerial personnel T.V.S.N. Raju (from 10.02.18)_Independent Director_

(KMP)" Venkata Ratnam Anugolu Independent Director

Arun Kumar Sanwalka Independent Director

M Gopala Krishna (till 17.01.18)_Independent Director_

L.V.Raju (till 30.11.16) Managing Director

B.Murali Mohan (till 31.03.17) Whole Time Director Jyothi Raju Manthena (till 09.08.16) Director

G.A.V.N.Murty (till 31.10.17) In-charge CFO S.Srinivasa Kiran (till 30.11.16) Company Secretary Relatives of KMP__Chenna Krishna Mantena_Son of Director_

c. Income tax

The Dy Commissioner of Income tax filed an appeal before the tribunal against the favorable order passed by the Commissioner of Income tax (Appeals-III) involving an amount of Rs. 8,00,000 for the assessment year 1998-99. The tribunal has decided the appeal against the Company, for which the Company has preferred an appeal before the honourable High Court, Telanagana and is expecting a favorable order.

d. Commercial taxes

The Company received vide final assessment order No. 41077 dated 28.05.2014 with a demand of Rs. 22,07,000/- Due to differential tax amount due to non-issue of Form C by KRCL for the financial year 2010-11. The Company is in the process of filing Arbitration with KRCL and is under final stage.

e. Provident fund

The Company received a demand amounting to Rs. 51,65,000 for the period 16th Jun, 2013 to 6th Jan, 2018 . The Company is representing the case before the Regional Commissioner and is expecting a favorable order.

f. Service tax

The tribunal has given stay in favour of the Company for the appeal filed against the order passed by commissioner(Appeals-II). As per the stay, the Company is given waiver in case of pre-deposit, recovery of balance amount of service tax and also the penalty imposed on the appellant. Case is still pending with High Court.

1. OTHER SIGNIFICANT LITIGATIONS

i. In view of dispute with Konkan Railway Corporation Limited (KRCL), the company has filed arbitration in respect of dues amounting to Rs. 15.08 crores . The arbitration proceedings are under progress. Further the company has failed in the conciliation proceedings against KRCL for outstanding dues of Rs. 5.18 crores and is in the process of filing an arbitration petition. The Company has not made any provision in the books of accounts which may dilute the chances of recovery of these receivables. Provision in the books of accounts will be provided at the time of finalization of matters.

ii. A Show-cause notice was received u/s 279(1) of the Income Tax Act, 1961, initiating prosecution proceedings u/s 276B r.w.s 278B of the Income Tax Act, 1961 for financial year(s) 2013-14 to 2016

17. The Company has represented the case before the CIT (TDS) and is expecting a favorable order.

2. CAPITAL MANAGEMENT

The company manages its capital to ensure that it will be able to continue as going concern while creating value for shareholders by facilitating the meeting of long term and short term goals of the Company.

The company determines the amount of capital required on the basis of annual business plan coupled long term and short term strategic investment and expansion plans.

3. Financial Risk Management

In course of its business, the company is exposed to certain financial risk such as market risk , credit risk and liquidity risk that could have significant influence on the company''s business and operational/financial performance. The Board of directors and the Audit Committee reviews and approves risk management framework and policies for managing these risks and monitor suitable mitigating actions taken by the management to minimize potential adverse effects and achieve greater predictability to earnings.

a. Credit risk

Credit Risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the company. The Company has a prudent and conservative process for managing its credit risk raising in the course of its business activities. Credit risk is managed through continuously monitoring the creditworthiness of customers and obtaining sufficient collateral, where appropriate, a means of mitigating the risk of financial loss from defaults.

The company makes an allowance for doubtful debts/advances using expected credit loss model.

b. Liquidity risk

Liquidity Risk refers to the risk that the company will not be able to meet its financial obligations as they become due. The Company manages its liquidity risk by ensuring, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risk to the Company’s reputation.

c. Market risk

Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from adverse changes in market rates and prices such as commodity prices, foreign currency exchange rates and other market changes.

d. Exchange rate risk

The company foreign exchange arised from its foreign operations, foreign currency revenues and expenses, (Primarly in US Dollars and Egyptian pounds). Consequently, the company is exposed to foreign exchange risk through its sales, services and purchases from overseas suppliers in various foreign currencies.

* excludes Financial assets measured at cost

The financial instruments are categorized into three levels based on the inputs used to arrive at fair value measurements as described below:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.

Level 2: Inputs other than the quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3: Unobservable Inputs for the asset or liability.

Notes:

* Trade receivables

Under Ind AS 109, impairment allowance in respect of trade receivables has been determined based on Expected Credit Loss model (ECL). Due to ECL model, the Company impaired its trade receivable by Rs.

1,03,77,730/- on 1 April 2016 which has been eliminated against retained earnings.

** Defined benefit liabilities

Under Indian GAAP, the Company recognized costs related to its post-employment defined benefit plan i.e gratuity based on actuarial valuation made by the LIC as at the year end and the entire cost, including actuarial gains and losses, are charged to the statement of profit and loss. Under Ind AS, the liability in respect of gratuity benefit is determined based on acturial valuation, performed by an independent qualified actuary and remeasurements comprising of actuarial gains and losses are recognized immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI. Thus the employee benefit cost is reduced by Rs. 27,50,345/- and remeasurement gains/ losses on defined benefit plan has been recognized in the OCI.

4. The figures for the year ended 31 March 2017 were audited by previous statutory auditors.

5. Previous GAAP figures have been reclassified/regrouped wherever necessary to confirm with the financial statements prepared under Ind AS.

6. Recent accounting pronouncements

Standards issued but not yet effective and not early adopted by the Company:

Ind AS 115, Revenue from Contracts with Customers

In March 2018, the Ministry of Corporate Affairs ("MCA”) has notified Ind AS 115, Revenue from Contracts with Customers, which is effective for accounting periods beginning on or after 1 April 2018. This comprehensive new standard will supersede existing revenue recognition guidance, and requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in

NOTES FORMING PART OF THE FINANCIAL STATEMENTS

exchange for those goods or services. The new standard also will result in enhanced disclosures about revenue, provide guidance for transactions that were not previously addressed comprehensively (for example, service revenue and contract modifications) and improve guidance for multiple-element arrangements.

Ind AS 115 is effective for annual reporting periods beginning on or after 1 April 2018.

The Company intends to adopt Ind AS 115 effective 1 April 2018, using the modified retrospective method. The adoption of Ind As 115 is not expected to have a significant impact on the Company’s recognition of revenues from product sales and service income.

Other Amendments:

On 28 March 2018, the MCA, issued certain amendments to Ind AS. The amendments relate to the following standards:

Ind AS 40, Investment Property

Ind AS 21, The Effects of Changes in Foreign Exchange Rates Ind AS 12, Income Taxes

The amendments are effective 1 April 2018. The Company believes that the aforementioned amendments will not materially impact the financial position, performance or the cash flows of the Company.


Mar 31, 2016

Of the above, the balances that meet the definition of

Cash and cash equivalents as per AS 3 Cash Flow Statement is: 52,392,530 55,972,075

Notes:

(I) Balances with banks include deposits amounting to Rs. NIL (As at 31 March, 2016 Rs. NIL) and margin monies amounting to Rs. NIL (As at 31 March, 2016 Rs. NIL) which have an original maturity of more than 12 months.

(ii) Balances with banks - Other earmarked accounts (Escrow A/c) include Rs. NIL (As at 31 March, 2016 Rs. NIL) which have restriction on repatriation

Dues to Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis of information collected by the Management.

NOTE NO.: 1

DISCLOSURE AS PER CLAUSE 32 OF THE LISTING AGREEMENTS WITH THE STOCK EXCHANGES

Loans and Advances in the nature of Advances given to Subsidiaries, Associates and Others

Employee Benefit Plans Defined Contribution Plans

The Company makes Provident Fund contributions to defined contribution plans for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognized Rs. 25.72 Lakhs (Year ended 31 March, 2015 Rs.32.75 Lakhs) for Provident Fund contributions in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

Defined Benefit Plans

(i) Leave Encashment : The company does not have any scheme for leave encashment.

(ii) Gratuity : Gratuity benefit is applicable to all the permanent and full time employees of the company. Gratuity paid out is based on last drawn basic salary and DA at the time of termination or retirement. The scheme takes into account each completed year of service or part thereof in excess of 6 months. Annual contribution to the Employee''s Gratuity Fund, established under LIC of India (LIC) are determined based on an actuarial valuation made by the LIC as at the year end.

NOTE NO.: 2

DISCLOSURES UNDER ACCOUNTING STANDARD - 17 Segment Information

Since the Company has no reportable Segment to report, "Segment Reporting" under "Accounting Standard -17" Issued by "Institute of Chartered Accountants of India (ICAI)" is not applicable.

3. Trade Debtors and Advances are subject to Reconciliation and Confirmation.

PREVIOUS YEARS FIGURES

Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosure. Disclosures are made in respect of items that are applicable to your company.

See Accompanying notes forming part of the financial statements In Terms of our report attached


Mar 31, 2015

CORPORATE INFORMATION

Kernex Microsystems(India) Limited is engaged in the manufacture and sale of Safety Systems and Software services for railways.

NOTE NO.: 1 - RELATED PARTY DISCLOSURES Details OF RELATED PARTIES:

DESCRIPTION OF RELATIONSHIP NAMES OF RELATED PARTIES

Subsidiaries Avant - Garde Info Systems Inc, USA (100% Wholly Owned Subsidiary)

Key Management Personnel 1) Col. L.V.Raju (Retd.) - Managing Director

2) B Murali Mohan - Whole Time Director

Diluted

The diluted earnings per share has been computed by dividing the Net Profit After Tax available for Equity Shareholders by the weighted average number of equity shares, after giving dilutive effect of the outstanding Warrants, Stock Options and Convertible bonds for the respective periods. Since, the effect of the conversion of Preference shares was anti-dilutive, it has been ignored.

NOTE NO.: 2 - CONTINGENT LIABILITY

(a) Claims against the Company not acknowledged as a debt, inrespect of 4.13 4.13 Sales Tax for the year 2002-03 for which the Company appeal is pending before STAT

(b) Bank Guarantee Outstanding 1,395.87 1,689.72

(c) Income Tax (before High Court of A.P.) 8.00 8.00

COMMITMENTS

Estimated amount of contracts remaining to be executed on capital account and not provided for

Tangible Assets - 54.96

Intangible Assets

NOTE NO.: 3

DISCLOSURES UNDER ACCOUNTING STANDARD - 15 Employee Benefit Plans Defined Contribution Plans

The Company makes Provident Fund contributions to defined contribution plans for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognized Rs 32.75 Lakhs (Year ended 31 March, 2014 Rs 27.71 Lakhs) for Provident Fund contributions in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

Defined Benefit Plans

(i) Leave Encashment: The company does not have any scheme for leave encashment.

(ii) Gratuity: Gratuity benefit is applicable to all the permanent and full time employees of the company. Gratuity paid out is based on last drawn basic salary and DA at the time of termination or retirement. The scheme takes into account each completed year of service or part there of in excess of 6 months. Annual contribution to the Employee's Gratuity Fund, established under LIC of India (LIC) are determined based on an actuarial valuation made by the LIC as at the year end.

NOTE NO.: 4

DISCLOSURES UNDER ACCOUNTING STANDARD - 17 Segment Information

Since the Company has no reportable Segment to report, "Segment Reporting" under "Accounting Standard - 17" Issued by "Institute of Chartered Accountants of India (ICAI)" is not applicable.

Trade Debtors and Advances are subject to Reconciliation and Confirmation.

PREVIOUS YEARS FIGURES

Previous year's figures have been regrouped / reclassified wherever necessary to correspond with the current year's classification / disclosure. Disclosures are made in respect of items that are applicable to your company.


Mar 31, 2014

Note : CORPORATE INFORMATION

Kernex Microsystems(India) Limited is engaged in the manufacture and sale of Safety Systems and Software services for railways.

(i) Balances with banks include deposits amounting to '' NIL (As at 31 March, 2013 '' NIL) and margin monies amounting to '' NIL (As at 31 March, 2013 '' NIL) which have an original maturity of more than 12 months.

(ii) Balances with banks - Other earmarked accounts (Escrow A/c) include '' NIL (As at 31 March, 2013 '' NIL ) which have restriction on repatriation.

(Rs. in Lakhs) As at 31st As at 31st Particulars March, 2014 March, 2013

1. CONTINGENCIES

(i) Contingent liabilities

(a) Claims against the company not 4.13 4.13 ackonowledged as a debt, inrespect of SalesTax for the year 2002-03 for which the

Company appeal is pending before STAT

(b) Bank Guarantees Outstanding 1,689.72 1,384.61

(c) Income Tax (before High Court of A.P.) 8.00 8.00

(ii) Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for

Tangible assets - 54.96

Intangible assets - -

2. a Defined contribution plans

The Company makes Provident Fund contributions to defined contribution plans for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognized '' 27.71 Lakhs (Year ended 31 March, 2013''22.01 lakhs) for Provident Fund contributions in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

3. b Defined benefit plans

i) Leave Encashment : The Company does not have any scheme for Leave Encashment

ii) Gratuity : Gratuity benefit is applicable to all the permanent and full time employees of the company. Gratuity paid out is based on last drawn basic salary and DA at the time of termination or retirement. The scheme takes into account each completed year of service or part there of in excess of 6 months. Annual Contribution to the employee''s Gratuity fund, Established with LIC of India(LIC) are determined based on an actuarial valuation made by the LIC as at the year end.

4. DISCLOSURES UNDER ACCOUNTING STANDARD - 17

Segment information

Since the Company has no reportable Segment to report, "Segment Reporting" under "Accounting Standard - 17" Issued by "Institute of Chartered Accountants of India (ICAI)" is not applicable.

5. Trade debtors and Advances are subject to Reconciliation and Confirmation

6. PREVIOUS YEAR''S FIGURES

Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosure. Disclosures are made in respect of items that are applicable to your company.


Mar 31, 2013

Notes:

(i) Balances with banks include deposits amounting to Rs. NIL (As at 31 March, 2012 Rs. NIL) and margin monies amounting to Rs. NIL (As at 31 March, 2012 Rs. NIL) which have an original maturity of more than 12 months.

(ii) Balances with banks - Other earmarked accounts (Escrow A/c) include Rs. NIL (As at 31 March, 2012 Rs. NIL ) which have restriction on repatriation.

1.1.a Defined contribution plans

The Company makes Provident Fund contributions to defined contribution plans for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognized Rs. 22.01 Lakhs (Year ended 31 March, 2012 Rs. 28.19 lakhs) for Provident Fund contributions in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

1.1.b Defined benefit plans

i) Leave Encashment : The Company does not have any scheme for Leave Encashment

ii) Gratuity: Gratuity benefit is applicable to all the permanent and full time employees of the company. Gratuity paid out is based on last drawn basic salary and DA at the time of termination or retirement. The scheme takes into account each completed year of service or part there of in excess of 6 months. Annual Contribution to the employee''s Gratuity fund, Established with LIC of India(LIC) are determined based on an actuarial valuation made by the LIC as at the year end.

Diluted

The diluted earnings per share has been computed by dividing the Net Profit After Tax available for Equity Shareholders by the weighted average number of equity shares, after giving dilutive effect of the outstanding Warrants, Stock Options and Convertible bonds for the respective periods. Since, the effect of the conversion of Preference shares was anti-dilutive, it has been ignored.

1.2 PREVIOUS YEAR''S FIGURES

Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosure. Disclosures are made in respect of items that are applicable to your company.


Mar 31, 2012

1.1 CONTINGENCIES

(i) Contingent liabilities As at 31 March As at 31 March 2012 Rs. 2011 Rs.

(a) Claims against the Company not acknowledged as debt 12.13 12.13 (In respect Of Income Tax Rs. 8 Lakhs for the Assessment Year 1998-99 for which the companies appeal is pending before the the High Court of Andhra Pradesh and Rs 4.13 Lakhs in respect of Sales Tax for the year 2002-03 for which the Company appeal is pending before STAT

(b) Bank Guarantees Outstanding 1,860.71 1,720.75

(ii) Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for Tangible assets 129.00 460.00

Intangible assets - -

Dues to Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis of information collected by the Management

2. DISCLOSURES UNDER ACCOUNTING STANDARD - 15

Employee benefit plans

a. Defined contribution plans

The Company makes Provident Fund contributions to defined contribution plans for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognized Rs. 28.19 Lakhs (Year ended 31 March, 2011 Rs. 24.34 lakhs) for Provident Fund contributions in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

b. Defined benefit plans

i) Leave Encashment : The Company does not have any scheme for Leave Encashment

ii) Gratuity: Gratuity benefit is applicable to all the permanent and full time employees of the company. Gratuity paid out is based on last drawn basic salary and DA at the time of termination or retirement. The scheme takes into account each completed year of service or part there of in excess of 6 months. Annual Contribution to the employee's Gratuity fund, Established with LIC of India(LIC) are determined based on an actuarial valuation made by the LIC as at the year end.

3. DISCLOSURES UNDER ACCOUNTING STANDARD - 17

Segment information

Since the Company has no reportable Segment to report, "Segment Reporting" under "Accounting Standard

- 17" Issued by "Institute of Chartered Accountants of India (ICAI)" is not applicable.

Note: Related parties have been identified by the Management.

Diluted

The diluted earnings per share has been computed by dividing the Net Profit After Tax available for Equity Shareholders by the weighted average number of equity shares, after giving dilutive effect of the outstanding Warrants, Stock Options and Convertible bonds for the respective periods. Since, the effect of the conversion of Preference shares was anti-dilutive, it has been ignored.

The Company has recognized deferred tax asset on unabsorbed depreciation to the extent of the corresponding deferred tax liability on the difference between the book balance and the written down value of fixed assets under Income Tax (or) The Company has recognized deferred tax asset on unabsorbed depreciation and brought forward business losses based on the Management's estimates of future profits considering the non-cancellable customer orders received by the Company.

4. PREVIOUS YEAR'S FIGURES

The Revised Schedule VI has become effective from 1 April, 2011 for the preparation of financial statements. During the year ended 31 March 2012, the revised Schedule VI notified under the Companies Act 1956, has become applicable to the company, for preparation and presentation of its financial statements. The adoption of revised Schedule VI does not impact recognition and measurement principles followed for preparation of financial statements. However, it has significant impact on presentation and disclosures made in the financial statements. The company has also reclassified the previous year figures in accordance with the requirements applicable in the current year. Previous year's figures have been regrouped / reclassified wherever necessary to correspond with the current year's classification / disclosure. Disclosures are made in respect of items that are applicable to your company.

Note CORPORATE INFORMATION

Kernex Microsystems(India) Limited is engaged in the manufacture and sale of Safety Systems and Software services for railways


Mar 31, 2011

Company Overview:

Kernex Microsystems (India) Limited is engaged in the Manufacture and sale of Safety Systems and Software Services for Railways.

1. All Amounts in the financial statements are presented in Rupees.

The Previous Year's figures have been regrouped/reclassified, wherever necessary to confirm to the current year's presentation.

Figures are rounded off to the nearest rupee.

2. Sundry Debtors, Creditors and Capital Advances are Subject to Reconcilation and Confirmation..

3. Contingent Liabilities in respect of :- a) Claims against the Company not acknowledged as debt Rs. 8 Lakhs in respect of Income Tax for the Assessment Year 1998-99 for which the companies appeal is Pending before the High Court of Andhra Pradesh and Rs.4.13 Lakhs in respect of Sales Tax for the year 2002-03 for which the company appeal is pending before STAT

b) Bank guarantees outstanding Rs.1720.75 as on 31st March, 2011 (2010: Rs.1209.79 Lakhs)

c) Estimated amount of contracts remaining to be executed on capital account and not accounted are Rs.4.60 crores (Previous Year:Rs.5.60 crores)

4. Term Loans and Cash Credits:

a) Cash credit facility from SBH is primarily secured by hypothecation of current assets of the company and collaterally secured by first charge on fixed assets of the company and equitable mortgage of land & buildings situated at Madhapur.

b) Vehicle Loans are secured by Hypothecation of Vehicles.

c) Export Packing Credit facility is primarily secured by Hypothecation of Raw materials, stock in process, Finished goods in transit,stores spares, ranking paripassu with other banks under multiple banking agreement and collaterally secured by all Fixed Assets Land & Buildings under construction.

5. The Company is in the process of obtaining information with respect to parties covered, if any, under the Micro, Small and Medium Enterprises Development Act, 2006 (or the "Act").

The Company would account for significant interest obligations in this regard, If any, subsequently.

Accordingly required disclosures in this regard have not been given in the current year.

6. Loans and Advances :

Loans and advances include Rs. 2,31,98,656/- (Previous year Rs.2,07,06,495/-) including interest on working capital loan to Avant-Garde Infosystems Inc, a 100% subsidiary in USA.

7. Earning Per Share :

Earning / Diluted Earning Per Share of the Company has been calculated as per the Accounting Standard 20 " Earning Per Share " Issued by ICAI.


Mar 31, 2010

Company Overview:

Kernex Microsystems (India) Limited is engaged in the Manufacture and sale of Safety Systems for Railways and Software Services.

1. All Amounts in the financial statements are presented in Rupees. The Previous Years figures have been regrouped / reclassified, wherever necessary to confirm to the current years presentation.

Figures are rounded off to the nearest rupee.

2. Sundry Debtors and Creditors are Subject to Reconcilation and Confirmation.

3. Contingent Liabilities in respect of :-

a) Claims against the Company not acknowledged as debt Rs. 8 Lakhs in respect of Income Tax for the Assessment Year 1998-99 for which the companies appeal is Pending before the High Court of Andhra Pradesh and Rs.4.13 Lakhs in respect of Sales Tax for the year 2002-03 for which the company appeal is pending before STAT

b) Bank guarantees outstanding Rs.1209.79 Lakhs as on 31st March, 2010 (2009: Rs.1633.58 Lakhs)

c) Estimated amount of contracts remaining to be executed on capital account and not accounted are Rs.5.60 crores (Previous Year:Rs.5.48crores)

4. Term Loans and Cash Credits:

a) Cash credit facility from SBH is primarily secured by hypothecation of current assets of the companyand collaterally secured by first charge on fixed assets of the company and equitable mortgage of land & buildings situated at Madhapur.

b) Other Short term Loans are secured byFixed and Term Deposits

c) Vehicle Loans are secured by Hypothecation of Vehicles.

d) Export Packing Credit facility is Primarily Secured by Hypothecation of Raw Materials, Stock in Process, Finished Goods in transit,stores spares, accessories of Anti Collisiion Devices ranking paripassu with other banks under multiple banking agreement and collaterally secured by all Fixed Assets Land & Buildings under construction

5. The Company is in the process of obtaining information with respect to parties covered, If any, under the Micro, Small and Medium Enterprises Development Act, 2006 (or the "Act"). The Company would account for significant interest obligations in this regard, If any, subsequently. Accordingly required disclosures in this regard have not been given in the current year.

6. Loans and Advances :

Loans and advances include Rs. 2,07,06,495 /- (Previous year Rs.1,91,65,345/-) including interest on working capital loan to Avant-Garde Infosystems Inc, a 100% subsidiary in USA.

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