Contingent liabilities

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

Contingent Assets

Contingent assets is disclosed where an inflow of economic benefit is probable.

(m) Employee benefits

(i) Short-term obligations

All employee benefits payable wholly within twelve months of rendering the service including performance incentives and compensated absences are classified as short term employee benefits. The undiscounted amount of short term employee benefits expected to be paid in exchange for the services rendered by employees are charged off to the Statement of Profit and Loss/ Capital Work-inProgress, as applicable. The employee benefits which are not expected to occur within twelve months are classified as long term benefits and are recognised as liability at the net present value.

(ii) Defined contribution plan

Contributions to defined contribution schemes such as provident fund, Employees State Insurance and Pension Plans are charged off to the Statement of Profit and Loss/ Capital Work-in-Progress, as applicable, during the year in which the employee renders the related service.

III. Critical estimates and judgements

The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom equal the actual results. Management also need to exercise judgement in applying the company's accounting policies.

This note provides an overview of the areas that involved a higher degree of judgement or complexity, and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than those originally assessed. Detailed information about each of these estimates and judgements is included in relevant notes together with information about the basis of calculation for each affected line item in the financial statements.

The areas involving critical estimates or judgement are:

Estimation of tax expenses, utilisation of deferred tax assets (including MAT credit) and tax payable

(B) Notes on Financial Statements

1. In compliance with the requirement of the proviso to rule 3(1) of the Companies (Accounts) Rules, 2014, the management has represented that the company is in the process of implementing the audit trail feature required under the Companies Act, 2013. This feature will provide an edit log of all transactional changes, capturing modifications along with the date and details. The company expects the implementation to be completed soon.

2. The Company has made provisions for Professional Tax amounting to ^32,400 in the current financial year and ^57,200 in the previous year. However, the total amount of ^89,600 remains unpaid as of 31st March 2025.

3. The Company has an outstanding TDS liability of ^42,591, which has remained unpaid for several years. Interest and penalties related to this overdue amount have not been recorded in the books. Due to the historical and carried-forward nature of these balances, determining the exact interest and penalty liability is currently not feasible..

4. During the financial year 2024-25, the Company did not deduct TDS on legal and professional fees amounting to ^6,90,000 and on rent payments totaling ^3,08,200, as required under the Income Tax Act. Additionally, although TDS on salary was deducted, it was not deposited for any of the quarters during the year. Interest and penalties arising from these non-compliances have not been recorded in the books.

5. Trade payables outstanding as of 31st March 2025 have not been classified in accordance with the provisions of the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, as the Company has not received necessary confirmations from the concerned parties to determine their MSME status.

6. Trade receivables, trade payables, loans and advances, and unsecured loans have been accounted for at their book values and are subject to confirmation and reconciliation, wherever applicable. Adjustments, if any, will be made upon receipt and review of such confirmations.

8. The Company has outstanding loans amounting to Rs.6,16,84,640.69 as at 31st March 2025. These loans pertain to earlier financial years and were not disbursed during the current year. As per Section 186(2) of the Companies Act, 2013, a company may grant loans up to 60% of its paid-up share capital, free reserves, and securities premium, or 100% of its free reserves and securities premium, whichever is higher, without requiring prior approval by a special resolution.

As on 31st March 2025, the relevant financial figures are as follows:

Paid-up equity share capital: Rs.3,22,80,690 Paid-up preference share capital: Rs.78,51,290 Securities premium: Rs.14,62,04,086 Reserves and surplus: (11,73,32,843.93)

The total of paid-up capital and securities premium (excluding negative reserves) amounts to ^6,90,03,222.07. Accordingly, the permissible loan limit under Section 186(2), i.e., 60% of this amount, works out to Rs.4,14,01,933.24.

Since the outstanding loan amount of Rs.6,16,84,640.69 exceeds this limit and the Company has not obtained approval via special resolution as required, the Company is in violation of Section 186 of the Companies Act, 2013. Further, to the extent the loans involve directors or entities covered under Section 185, appropriate approvals have also not been obtained, leading to non-compliance under that section as well.

11. No provision has been made towards retirement benefits for employees during the year. The impact of such non-recognition on the Profit and Loss account has not been determined.

12. The Company, listed on BSE Limited, has not paid the annual listing fees for the financial years 2023-24 and 2024-25. As per applicable regulations, continuous non-payment of listing fees for three consecutive financial years may attract regulatory action, including suspension of trading or compulsory delisting of the Company's securities.

Due to the current non-payment, the Company is facing operational restrictions imposed by the stock exchange, limiting trading activity to only once or twice within a span of 5 to 10 days. The Company is actively evaluating the matter and exploring available options to regularize the outstanding dues. The Company is in the process of making the payment of the outstanding listing fees at the earliest.

As on the date of approval of these financial statements, no formal notice of delisting has been received from BSE Limited. The financial and operational impact of any potential regulatory action remains uncertain and presently unascertainable.

13. During the financial year 2024-25, the Company has recognized deferred tax income of ^1,57,61,181.55, resulting in a closing deferred tax asset of ^1,65,90,952.24 as on 31st March 2025, compared to ^8,29,770.69 in the previous year. The significant increase is due to the recognition of deferred tax on unabsorbed depreciation and brought forward losses which were not considered in earlier years. As a result, the profit for the current year is materially inflated due to the cumulative recognition of deferred tax assets in this period.

#Previous year figures have been regrouped/rearranged wherever necessary.