Notes to Accounts of MosChip Technologies Ltd.

Mar 31, 2025

2.20 Events After the Reporting Period

These events are classified into adjusting and nonÂ¬
adjusting events. Adjusting events provide additional
evidence of conditions that existed at the end of
the reporting period and require adjustments to the
amounts recognized in the financial statements. NonÂ¬
adjusting events are indicative of conditions that
arose after the reporting period and are not adjusted
in the financial statements, but if material, must be
disclosed with the nature and an estimate of the
financial effect.The financial statements must also
disclose the date of authorization for issue and who
authorised them.

2.21 Recent pronouncements

Ministry of Corporate Affairs ("MCA") notifies new
standards or amendments to the existing standards
under Companies (Indian Accounting Standards)

2.19 Provisions, contingent liabilities &
contingent assets

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

Contingent liabilities are disclosed when there is
a possible obligation arising from past events, the
existence of which will be confirmed only by the
occurrence or non-occurrence of one or more
uncertain future events not wholly within the control
of the Company or a present obligation that arises
from past events where it is either not probable that
an outflow of resources will be required to settle the
obligation or a reliable estimate of the amount cannot
be made. Contingent assets are neither recognised
nor disclosed in the financial statements.

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

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

a. Security and terms of term loan borrowings

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

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

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

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

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

Fixed price:

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

Time and material:

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

34 Corporate Social Responsibility ("CSR")

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

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

d) Terms and conditions of transactions with related parties:

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

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

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

35 Segment information

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

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

i. Defined contribution plans

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

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

ii. Defined benefit plan

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

Nature of Benefits:

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

i. Regulatory Framework:

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

ii. Governance of the Plan:

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

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

iii. Risk exposures:

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

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

are as follows:

(a) Interest Rate risk: The plan exposes the Company to the rise of fall in interest rates. A fall in interest rates will
result in an increase in the ultimate cost of providing the above benefit and will thus result in an increase
in the value of the liability (as shown in financial statements).

(b) Liquidity Risk: This is the risk that the Company is not able to meet the short-term Benefit payouts. This may
arise due to non availability of enough cash / cash equivalent to meet the liabilities or holding of illiquid
assets not being sold in time.

(c) Salary escalation Risk: The present value of the defined benefit plan is calculated with the assumption of
salary increase rate of plan participants in future. Deviation in the rate of increase of salary in future for
plan participants from the rate of increase in salary used to determine the present value of obligation will
have a bearing on the plan''s liability.

(d) Demographic Risk: The Company has used certain mortality and attrition assumptions in valuation of the
liability. The Company is exposed to the risk of actual experience turning out to be worse compared to the
assumption.\

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

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

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

38 Employee stock option plans ( ESOP)

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

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

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

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

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

Valuation of stock options:

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

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

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

As of 31^st March 2025 and 31^st March 2024, there was ^5,382.93 lakhs and ^2,014.12 lakhs respectively of total unrecognised
compensation cost related to unvested stock options this cost is expected to be recognised over a weighted average
period of 29.35 months and 28.70 months, respectively.

39 Financial risk management framework

The Company''s Board of Directors has overall responsibility for the establishment and oversight of the Company''s risk
management framework. The Company''s risk management policies are established to identify and analyse the risks
faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk
management policies and systems are reviewed regularly to reflect changes in market conditions.

(a) Financial instruments by category

The carrying value and fair value of financial instruments by categories is as follows:

(b) Financial risk management objectives and policies

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

Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes
in market prices. Financial instruments affected by market risk include loans and borrowings and refundable deposits.
The sensitivity analysis in the following sections relate to the position as at 31^st March 2025 and 31^st March 2024. The
sensitivity analyses have been prepared on the basis that the amount of net debt and the interest rates of the debt.

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

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

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

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in market interest rates. The Company''s exposure to the risk of changes in market interest rates relates
primarily to the Company''s debt obligations with interest rates.

Interest rate sensitivity

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

Credit risk

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

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

Exposure to credit risk

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

Trade receivables

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

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

Liquidity risk

Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk
management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements.
The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing
facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of
financial assets and liabilities.

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 - The Company''s exposure to credit risk is influenced mainly by the individual characteristic of
each customer and the concentration of risk from the top few customers. Exposure to customers is diversified and
there is a single customer contributing more than 10% of outstanding trade receivables and unbilled revenues.

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

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

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

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

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

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

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

42 Taxes

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

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

43 Other Income

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

44 Additional regulatory information

a. Details of benami property held

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

b. Relationship with struck off Companies

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

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

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

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

e. Undisclosed income

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

f. Details of crypto currency or virtual currency

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

g. Registration of charges or satisfaction with registrar of companies

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

h. Compliance with number of layers of companies

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

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

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

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

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

47 Events occurring after balance sheet

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

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

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

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

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

"â¢ Increased due to over all group profit Increased significantly.

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

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

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

Chartered Accountants

ICAI Firm Registration No: 011410S

Hima Bindu Sagala Srinivasa Rao Kakumanu Damodar Rao Gummadapu

Partner Managing Director & CEO Director

M No. 231056 DIN : 06726305 DIN : 07027779

UDIN : 25231056BMOVZH7304

Jayaram Susarla Suresh Bachalakura

Chief Financial Officer Company Secretary

M. No: ACS 39381

Place: Hyderabad Place: Hyderabad

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

Mar 31, 2024

2.17 Provisions, contingent liabilities & contingent assets

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

Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount cannot be made. Contingent assets are neither recognised nor disclosed in the financial statements.

2.18 Recent pronouncements

Ministry of Corporate Affairs (âMCAâ) notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. For the year ended March 31, 2024, MCA has not notified any new standards or amendments to the existing standards applicable to the Company.

Description of reserves

(a) Capital reserve: This reserve was created towards the forfeiture of monies received for share warrants issued in earlier years.

(b) Share application money pending allotment: Represents the amount of adjustments towards issue of employee stock options.

(c) Securities premium: Consists of the difference between the face value of the equity shares and the consideration received in respect of shares issued.

(d) Share option outstanding account: Represents the fair value of services received against employees stock options outstanding as at balance sheet date. These will be transferred to securities premium account after the exercise of the underlying options.

(e) Retained earnings: Represents previous years undistributed profits / losses.

(f) Other comprehensive income: Represents the actuarial gain / (loss) recognised on defined benefit plans and will not be reclassified to retained earning.

Fixed price:

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

Time and material:

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

35 Segment information

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

Segregation of assets (except for specific assets), liabilities (except for specific segment liabilities), depreciation and other non-cash expenses into various business segments have 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.

Information on reportable segments for the year ended 31 March 2024 and 31 March 2023 is given below

40 Employee Stock Option Plans (Continued..)

Valuation of stock options:

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

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

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

41 Financial risk management framework (continued)

(b) Financial risk management objectives and policies

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

Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Financial instruments affected by market risk include loans and borrowings and refundable deposits. The sensitivity analysis in the following sections relate to the position as at 31 March 2024 and 31 March 2023. The sensitivity analyses have been prepared on the basis that the amount of net debt and the interest rates of the debt.

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

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

The sensitivity of the relevant profit or loss item is the effect of the assumed changes in respective market risks. This is based on the financial assets and financial liabilities held at 31 March 2024 and 31 March 2023.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company''s exposure to the risk of changes in market interest rates relates primarily to the Company''s debt obligations with interest rates.

Interest rate sensitivity

If interest rates had been 100 basis points higher/lower and all other variables were held constant, the Company''s profit for the year ended March 31, 2024 would decrease/(increase) by ^29.15 (31 March 2023: decrease/increase by ?43.38. This is mainly attributable to the Companyâs exposure to interest rates on its variable rate borrowings.

Credit risk

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

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

Exposure to credit risk

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk was ? 11,027.52 and ? 9,090.70 as of 31 March 2024 and 31 March 2023 respectively, being the total of the carrying amount of trade receivables, investments, cash and cash equivalents, other balance with banks, loans and other financial assets.

Trade receivables

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

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

The expected credit loss allowance is based on the ageing of receivables and the rates in the provision matrix. Movement in the expected credit loss allowance is as follows:

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.âTrade receivable - The Company''s exposure to credit risk is influenced mainly by the individual characteristic of each customer and the concentration of risk from the top few customers. Exposure to customers is diversified and there is a single customer contributing more than 10% of outstanding trade receivables and unbilled revenues.

Liquidity risk

Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

42 Goodwill (continued)

For the purpose of impairment testing, goodwill is allocated to a cash generating unit, representing the lowest level within the Company at which goodwill is monitored for internal management purposes and which is not higher than the Company''s operating segment. The recoverable amounts of the above cash generating units have been assessed using a value-in-use model. Value-in-use is generally calculated as the net present value of the projected post-tax cash flows plus a terminal value of the cash generating unit to which the goodwill is allocated. Initially, a discount rate is applied to calculate the net present value of the post-tax cash flows. Key assumptions upon which the Company has based its determinations of value-in-use include:

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

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

c) A terminal value arrived at by extrapolating the last forecasted year cash flows to perpetuity, using a constant long-term growth rate of 0%. This long-term growth rate takes into consideration external macroeconomic sources of data. Such long-term growth rate considered does not exceed that of the relevant business and industry sector.

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

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

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

43 Taxes

The Company has carried forward unabsorbed depreciation amounting to ? 5,343,54 (as at 31 March 23 ? 5,413.61) under the Income tax Act, 1961, for which there is no expiry date for tax utilisation. Futher, the Company also has carried forward losses aggregating to ? 1,089.33 (as at 31 March 2023 ^ 1,006.38) under the Income tax Act, 1961 which gets expired within 8 years of the respective years, The carried forward losses will get expired mainly during the years 2030 to 2031.

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

44 Business combinations during the year 2023-24:

Softnautics Inc.,

On March 28, 2023, the Company entered into a Share Purchase Agreement (SPA) to acquire 100% of the issued capital of Softnautics Inc. Softnautics Inc became a subsidiary of the Company 07 June 2024 on satisfactory completion of the closing conditions under the SPA.

45 Additional regulatory information

a. Details of benami property held

The company does not hold any benami property as defined under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and the rules made thereunder. No proceedings has been initiated or pending against the company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and the rules made thereunder.

b. Relationship with struck off Companies

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

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

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

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

e. Undisclosed income

The Company does not have any such transactions which is not recorded in the boods of accounts that has been surrender or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (Such as, search or survey or any other relevant provisions of the Income Tax Act, 1961.)

f. Details of crypto currency or virtual currency

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

g. Registration of charges or satisfaction with registrar of companies

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

h. Compliance with number of layers of companies

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

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

j. The company has borrowings from Banks are Financial Institutions on the basis of security current assets, Monthly returns or Statement of the current assets filed by the Company with Banks or Financial Institutions are agreement with the Books of Accounts.

k. There are no Schemes of Arrangements approved by the Competent Authority in terms of sections 230 to 237 of the companies Act, 2013.

l. For ratios refer note 48

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

As per our report of even date attached

For ST Mohite & Co For and on behalf of the Board

Chartered Accountants MosChip Technologies Limited

ICAI Firm Registration No: 011410S

Hima Bindu Sagala Srinivasa Rao Kakumanu Damodar Rao Gummadapu

Partner Managing Director & CEO Director

Membership No.: 231056 DIN : 06726305 DIN : 07027779

ICAI UDIN: 24231056BKFSLW4085

Jayaram Susarla Suresh Bachalakura

Chief Financial Officer Company Secretary

M. No: ACS 39381

Place: Hyderabad Place: Hyderabad

Date: 06 May 2024 Date: 06 May 2024

Mar 31, 2023

Terms / rights attached to the equity shares

Equity shares of the Company have a par value of '' 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.

Description of reserves

(a) Capital reserve: This reserve was created towards the forfeiture of share warrants issued in earlier years.

(b) Share application money pending allotment: Represents the amount of adjustments towards issue of employee stock options.

(c ) Securities premium: Securities premium consists of the difference between the face value of the equity shares and the consideration received in respect of shares issued. The utilisation of the securities premium is governed by the Section 52 of the Act.

(d) Share option outstanding account: Share options outstanding account represents the fair value of services received against employees stock options outstanding as at balance sheet date. These will be transferred to securities premium account after the exercise of the underlying options.

(e) Retained earnings: Represents previous years undistributed profits / losses.

(f) Other comprehensive income: Represents the actuarial gain / (loss) recognised on defined benefit plans and will not be reclassified to retained earnings.

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

ii. The bank has sanctioned '' 2.88 crores in FY2020-21 and '' 1.29 crores in FY 2022-23 loan in under the scheme of Guaranteed Emergency Credit Line (GECL) with interest rate of 8.25%, which will be paid over a period of 36 months from Aug''21 and Jul''24.

iii. Pursuant to the loan agreement, mutually agreed between Mayuka and the company, the loan of '' 1,900 amount was converted to 3,112,203 equity shares of '' 2/- with the premium of '' 59.02 and the balance amount will be repaid in 42 monthly instalments from Oct''22.

i. The Company has obtained over draft facility from bank for an amount of '' 20.00 crores, which is secured by charge on time deposit of third party offered as collateral security.

ii During the current year unsecured capital expenditure loan from HDFC for an amount of '' 50 lakhs for the duration of 12 months is fully repaid.

iii Current maturities of long term loans refer note 16.

32	Contingent liabilities and commitments
	Particulars	As at 31 March 2023	As at 31 March 2022
	Contingent liabilities:
	- Bank guarantees issued for Government Project	8.69	23.85
	- Claims against the Company not acknowledged as debt (refer note below)	1,057.93	1,057.93

The Company disputed demand raised by income tax authorities for the Assessment Year 2019-20 which are pending Commissioner (Appeals). The aggregate amount of disputed tax not provided for is '' 1,057.93 (31 March 2022 - '' 1,057.93 ).

d) Terms and conditions of transactions with related parties:

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

34 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 Company''s performance and allocates resources based on an analysis of various performance indicators by business segments and geographical segments. Accordingly, information has been presented as per business segments. The accounting principles used in the preparation of the standalone financial statements are consistently applied to record revenue and expenditure in individual segments, and are as set out in the significant accounting policies. Revenue and identifiable operating expenses in relation to segments are categorized based on items that are individually identifiable to that segment. Certain expenses such as depreciation and finance cost, which form a significant component of total expenses, are not specifically allocable to specific segments as the underlying assets are used interchangeably. Management believes that it is not practical to provide segment disclosures relating to those expenses, and accordingly these expenses are separately disclosed as 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 Company decision maker is the Chief Executive Officer. The Company has identified business segments as reportable segments. Accordingly, Semiconductor and Embedded have been disclosed as business segments.

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

i. Defined contribution plans

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

The Company has recognized as expense in the Statement of Profit and Loss ''180.89 (31 March 2022: '' 133.97 ) for Provident Fund contributions.

ii. Defined benefit plan

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

The sensitivity results above determine their individual impact on defined benefit obligation. In reality, the plan is subject to multiple external experience items which may move the defined benefit obligation in similar or opposite directions, while the Plan''s sensitivity to such changes can vary over time.

37 Leases

a The Company has elected not to apply the requirements of Ind AS 116 to leases which are expiring within 12 months from the date of transition by class of asset and leases for which the underlying asset is of low value on a lease-by-lease basis.

As a lessee, the Company determines the lease term as the non-cancellable period of a lease adjusted with any option to extend or terminate the lease, if the use of such option is reasonably certain. The Company makes an assessment on the expected lease term on a lease-by-lease basis and thereby assesses whether it is reasonably certain that any options to extend or terminate the contract will be exercised. The lease term in future periods is reassessed to ensure that the lease term reflects the current economic circumstances.

e The total Cash outflow for leases (excluding short term leases) for the year ended 31 March 2023 is '' 580.10 lakhs (31 March 2022: '' 270.00 lakhs )

38 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. Diluted EPS amounts are calculated by dividing the profit attributable to equity holders by the weighted average number of Equity shares outstanding during the year plus the weighted average number of Equity shares that would be issued on conversion of all the dilutive potential Equity shares into Equity Shares.

39 Employee stock option plans ( ESOP)

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

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

Out of above plans the Company has granted options during the year ended 31 March 2023 in Moschip Stock Option Plan 2008, Moschip Stock Option Plan 2005 (WOS) and Moschip Stock Option Plan 2018, Moschip Stock Option Plan 2022.

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

During the year a reserve was made towards outstanding of ESOP''s and Share based payment expenses for the year ended 31 March 2023 of '' 959.49 lakhs (31 March 2022''334.39) lakhs .

The Weighted average grant date fair value of the options grated during the years ended 31 March 2023 and 31 March 2022 was '' 77.77 and '' 65.72 per option respectively.

The weighted average share price at the date of exercise of options exercised during the years ended 31 March 2023 was '' 61.82 (31 March 2022 - '' 43.29) per share, respectively.

The aggregate intrinsic value of options exercised during the years ended 31 March 2023 and 31 March 2022 was '' 43.74 and '' 41.30, respectively

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

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

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

As of 31 March 2023 and 31 March 2022, there was '' 124.55 lakhs and '' 2,626.34 lakhs respectively of total unrecognised compensation cost related to unvested stock options this cost is expected to be recognised over a weighted average period of 28.73 months and 25.65 months, respectively.

40 Financial risk management framework

The Company''s Board of Directors has overall responsibility for the establishment and oversight of the Company''s risk management framework. The Company''s risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions.

*The fair value of cash and cash equivalents, other balances with bank, trade receivables, unbilled receivables, loans, trade payables, borrowing and certain other financial assets and liabilities approximate their carrying amount largely due to the short term nature of these instruments.

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

Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Financial instruments affected by market risk include loans and borrowings and refundable deposits. The sensitivity analysis in the following sections relate to the position as at 31 March 2023 and 31 March 2022. The sensitivity analysis have been prepared on the basis that the amount of net debt and the interest rates of the debt.

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

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

The sensitivity of the relevant profit or loss item is the effect of the assumed changes in respective market risks. This is based on the financial assets and financial liabilities held at 31 March 2023 and 31 March 2022.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company''s exposure to the risk of changes in market interest rates relates primarily to the Company''s debt obligations with interest rates.

Interest rate sensitivity

If interest rates had been 1 basis points higher/lower and all other variables were held constant, the Company''s profit for the year ended March 31,2023 would decrease/increase by '' 43.38 lakhs (31 March 2022: decrease/ increase by '' 56.56 lakhs). This is mainly attributable to the Company''s exposure to interest rates on its variable rate borrowings.

Credit risk

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

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

Exposure to credit risk

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk was '' 9,090.70 lakhs and '' 5,889.18 lakhs as of 31 March 2023 and 31 March 2022 respectively, being the total of the carrying amount of trade receivables, investments, cash and cash equivalents, other balance with banks, loans and other financial assets.

Trade receivables

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

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

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 - The Company''s exposure to credit risk is influenced mainly by the individual characteristic of each customer and the concentration of risk from the top few customers. Exposure to customers is diversified and there is a single customer contributing more than 33% of outstanding trade receivables and unbilled revenues.

Liquidity risk

Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

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.

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

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

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

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

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

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

42 Disaggregated revenue information

The table below presents disaggregated revenues from contracts with customers by offerings for the years ended March 31,2023 and March 31,2022, respectively. The Company believes that this disaggregation best depicts how the nature, amount, timing and uncertainty of our revenues and cash flows are affected by industry, market and other economic factors.

43 Deferred tax asset / liability

As per Ind AS 12 Income tax - A deferred tax asset shall be recognised for the carry forward of unused tax losses and unused tax credits to the extent that it is probable that future taxable profit will be available against which the unused tax losses and unused tax credits can be utilised. However, the existence of unused tax losses is strong evidence that future taxable profit may not be available. Accordingly, no deferred tax has been created during the current year.

44 Acquisition details

Pursuant to Share Purchase Agreement (âSPA'') dated 28 March 2023, the Company has proposed to acquire 100% of the issued capital of Softnautics Inc for USD 17.25 million to be paid $ 9.08 (52.6%) in Swap Shares and $ 8.17 (47.4%) in cash over a period. The same was approved by the shareholders in their meeting held on 26 April 2023, the Company is awaiting for in-principle approval from BSE to complete the acquisition.

45 Additional regulatory information

a. Details of benami property held

The Company does not hold any benami property as defined under the Benami Transaction (Prohibition) Act. 1988 (45 of 1988) and the rules made thereunder. No proceding has been initiated or pending against the company for holding any benami property under the Benami Transactions (Prohiition) Act, 1988 and the rules made thereunder.

b. Relationship with struck off Companies

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

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

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

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

e. Undisclosed income

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

f. Details of crypto currency or virtual currency

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

g. Registration of charges or satisfaction with registrar of companies

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

h. Compliance with number of layers of companies

The Company is in compliance with the number of layers prescribed under clause (87) of section 2 of the Companies Act read with the Companies (Restriction on member of Layers) Rules, 2017.

i. For ratios refer note 49

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

46 Corporate Social Responsibility - As per section 135 of the Companies Act 2013, The Company is not required to spend any amount towards CSR during the year ended 31 March 2023.

47 Disclosure as per section 186 of the Companies Act, 2013

The details of investments made under Section 186 of the Companies Act, 2013 read with the Companies (Meeting of Board and its Powers) Rules, 2014 are given in Note 5, these investments are made for business activities.

48 The Company have 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

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

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

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

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 Â 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 Â 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 Â 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 Â 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 Â 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 Â 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 (ÂMosChipÂ 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 Â 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 Â 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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