SPEL Semiconductor Ltd. — Audit Report / Information 2023

Jun 27, 2023

BSE LIMITED Department of Corporate Affairs Phiroze Jeejeebhoy Tower Dalal Street Mumbai-400001

Dear Sir/Madam,

Scrip Code: 517166

Sub: Outcome of Board Meeting to consider and approve Audited Financial Results for the Quarter and Year ended 31st March 2023

Ref: BSE Notice No. 20230315-41 dated 15 Mar 2023

Pursuant to Regulation 30, 33 and other applicable provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, and pursuant to BSE Notice No. 20230315-41dated 15th March 2023, we wish to inform that the Board of Directors of the Company at its Meeting held today i.e., 27th June 2023 has inter-alia approved the following:-

• 1. Pursuant to the recommendations of the Audit Committee, the Board of Directors approved the Audited Financials Results as per Indian Accounting Standards (INDAS) for the Quarter and Financial Year ended 31st March 2023. (Copy enclosed herewith).
• 1. The Board took note of the Statutory Auditors' Report on the Audited Financials Results of the Company for the Quarter and Financial Year ended 31st March 2023. (Copy enclosed herewith).
• 1. Statement on Impact of Audit Qualifications (for audit report with modified opinion) submitted alongwith Annual Audited Financial Results – Standalone (enclosed herewith in Annexure-I)

The Meeting of Board of Directors commenced at 11.15 A.M and concluded at 9.15 P.M today. This is for your kind information and records.

Thanking You, Yours faithfully

For SPEL SEMICONDUCTOR LIMITED

SANKARANARAYANAN SIVARAMAN (FCS 2918) COMPANY SECRETARY

VENKATESH & CO Chartered Accountants

Independent Auditor's Report on Standalone Quarterly Financial Results and Year to Date results of the company pursuant to Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015

To the Board of Directors of SPEL Semiconductor Limited Report on the Audit of the Standalone Financial Results

Qualified Opinion

We have audited the accompanying standalone quarterly financial results of SPEL Semiconductor Limited (the company) for the quarter ended 31^st March 2023 and the year-to-date results for the period from 1^st April 2022 to 31^st March 2023 attached herewith, being submitted by the company pursuant to the requirement of Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended ("Listing Requlations").

In our opinion and to the best of our information and according to the explanations given to us these standalone financial results:

• i. are presented in accordance with the requirements of Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 in this regard; and
• ii. give a true and fair view subject to matters specified in Basis for Qualified Opinion paragraph in conformity with the recognition and measurement principles laid down in the applicable accounting standards and other accounting principles generally accepted in India of the net profit and other comprehensive income (loss) and other financial information for the quarter ended $31^st$ March 2023 (date of the quarter end) as well as the year-to-date results for the period from $1^st$ April 2022 to 31^st March 2023

Basis for Qualified Opinion:

i) We refer to Note 1.4 of the accompanying statement where in the Company has stated that it has changed its accounting policy with regard to Revenue recognition Ind AS 8 as recommended by Audit Committee and approved by Board. Prior to this change in accounting policy, the company is stated to have recognised goods invoiced and pending for acceptance, as sales in the years as follows:

2018 19		186.53 Lakhs
2019 20	-	2,760.78 Lakhs
2020 21	≃	1,193.36 Lakhs
2021 22	≕	615.89 Lakhs
2022 23 (01 & 02)		1,713.29 Lakhs

These amounts were classified under Sundry debtors amounting to Rs. 4,756.58 Lakhs in the balance sheet as on 31-03-22 and as Rs. 6.469.86 Lakhs in un-audited balance sheet as on 30-06-22. It is stated by the management that consequent to the change in accounting policy the goods in respect of above sales which were in the premises of the company and subject to acceptance by customers have since been reclassified as Inventory to the extent of Rs 5,499.38 Lakhs. The Company has provided for impairment of Rs. 714.92 Lakhs and disclosed Rs. 4,784.47 Lakhs as closing finished goods Inventory as at 31-03-2023. On account of this change in accounting policy and after considering the impairment of Rs. 714.92 Lakhs the loss for this year is Rs. 451.77 Lakhs. Had this change not been made the loss for the year would have been lower by Rs. 971.91 Lakhs, the Sundry debtors would have been higher by Rs. 6,469.86 Lakhs and the Inventories would have been lower by Rs. 4,784.47 Lakhs. The inventories are not verified by us at 31-03-2023 in view of the fact that, our appointment as Statutory Auditors of the company was made only during the month of May 2023.

ii) Attention is drawn to Note 2.2 of the accompanying statement where in the Company has incurred the losses and generated negative cash flows during the period under review and in earlier years. The above indicates that a material uncertainty exists that may cast significant doubt on Company's ability to continue as a going concern. Pending resolution of the above uncertainty, the Company has prepared the aforesaid statement on going concern basis.

Hence it is qualified by us in the basis for qualification section of our report on the standalone financial results.

We conducted our audit in accordance with the Standards on Auditing (SAs) specified under section 143 (10) of the Companies Act, 2013 (the Act). Our responsibilities under those Standards are further described in the Auditor's Responsibilities for the Audit of the Standalone Financial Results section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India together with the ethical requirements that are relevant to our audit of the financial results under the provisions of the Companies Act, 2013 and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion on the standalone financial results.

Mana gement's Responsibilities for the Standalone Financial Results

These quarterly financial results as well as the year-to-date standalone financial results have been prepared on the basis of the interim financial statements. The Company's Board of Directors are responsible for the preparation of the se financial results that give a true and fair view of the net profit/loss and other comprehensive income and other financial information in accordance with the recognition and measurement principles laid down in Indian Accounting Standard 34, 'Interim Financial Reporting' prescribed under Section 133 of the Act read with relevant rules issued thereunder and the accounting principles generally accepted in India and in compliance with Regulation 33 of the Listing Regulations. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safequarding of the assets of the company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone financial results that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the standalone financial results, the Board of Directors are responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

The Board of Directors are also responsible for overseeing the Company's financial reporting process.

Auditor's Responsibilities for the Audit of the Standalone Financial Results

Our objectives are to obtain reasonable assurance about whether the standalone financial results as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial results.

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the standalone financial results, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Board of Directors.
• Conclude on the appropriateness of the Board of Directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the

related disclosures in the financial results or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the standalone financial results, including the disclosures, and whether the financial results represent the underlying transactions and events in a manner that achieves fair presentation.

Materiality is the magnitude of misstatements in the standalone financial results that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the standalone financial results may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the standalone financial results.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We al 50 provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

for Venkatesh & Co

Chartered Accountants FRN: 04636S

CA Dasaraty V Partner M No: 026336

ICAI UDIN: 23026336BGULFS5094

Chennai, 27^th June 2023

SPEL Semiconductor Limited
-----------------------------------	--

Regd. Office: 5 CMDA, Industrial Estate, Maraimalai Nagar (Chennai) 603 209

CIN:L3220LTN1984PLC011434 eMail ID: info@spel.com Website: www.spel.com
STATEMENT OF AUDITED FINANCIAL RESULTS FOR THE QUARTER AND YEAR ENDED 31ST MARCH, 2023..

Part I		Quarter Ended			Year to Date
Sno	Particulars	31-Mar-23	31-Dec-22	31-Mar-22	31-Mar-23	31-Mar-22
		Refer Note 3	Un Audited	Refer Note 3	Audited	Audited
	Income
	Revenue from Operations	413.71	221.95	373.45	1,116.46	948.68
2	Other Income	602.27	36.39	45.72	696.10	135.73
3	Total Income $(1+2)$	1.015.97	258.34	419.17	1,812.55	1.084.41
4	Expenses
	a.Cost of Materials Consumed	(93.75)	76.47	311.23	668.47	504.50
	b.Changes in inventories of finished goods and work in progress	42.77	4.32	(412.09)	(1, 273, 05)	(615.34)
	c.Employee Benefits Expense	174.23	185.56	200.46	748.66	704.34
	d.Finance Cost	104.32	110.60	56.56	256.12	121.94
	e.Depreciation and Amortisation Expense	74.21	98.69	123.57	394.95	469.23
	f. Power & Fuel	70.65	75.47	78.37	278.53	277.92
	g.Other expenses	(26.80)	58.92	40.49	299.45	302.62
	Total expenses	345.64	610.03	398.59	1,373.13	1,765.22
5	Profit/ (Loss) from ordinary activities before Exceptional items (3-4)	670.33	(351.69)	20.58	439.42	(680.81)
6	Exceptional Items	339.08	552.11	567.00	891.19	567.00
7	Profit/ (Loss) from ordinary activities (5-6)	331.25	(903.80)	(546.42)	(451.77)	(1, 247.81)
8	Tax Expense
	1) Current tax
	a) Current Period
	b) Prior Period	16.39			16.39
	b) Deferred tax	(62.59)	(19.24)	74.40	(159.25)	28.93
	Total Tax expense (a+b)	(46.21)	(19.24)	74.40	(142.87)	28.93
9	Profit/ (Loss) for the year (7-8)	377.46	(884.56)	(620.82)	(308.90)	(1, 276.74)
10	Other comprehensive income
	A (i) Items that will not be reclassified to profit or loss	12.18	(8.21)	(155.64)	(12.44)	(32.82)
	(ii) Income tax relating to items that will not be reclassified to profit or loss
	B (i) Items that will be reclassified to profit or loss					٠
	(ii) Income tax relating to items that will be reclassified to profit or loss
	Other Comprehensive Income (10A + 10B)	12.18	(8.21)	(155.64)	(12.44)	(32.82)
11	Total comprehensive income for the period (9+10)	389.63	(892.77)	(776.46)	(321.35)	(1,309.56)
12	Paid-up Equity Share Capital	4,613.25	4,613.25	4,613.25	4,613.25	4,613.25
	(Face value of Rs 10/- Per Share)
13	Other Equity as per balance sheet of previous accounting year	٠	٠		339.74	661.09
14	Earnings Per Share (EPS) of Rs 10/- each (Not annualised)
	a) Basic	0.82	(1.92)	(1.35)	(0.67)	(2.77)
	b) Diluted	0.82	(1.92)	(1.35)	(0.67)	(2.77)

Notes

1. The above results were reviewed by the Audit Committee and then approved by the Board of Directors at their Meetings held on Jun 27,2023. The information for the year ended March 31, 2023 and March 31, 2022 presented above is extracted from the audited financial statements for the year ended Mar 31, 2023 and Mar 31, 2022. These financial statements are prepared in accordance with the Indian Accounting Standards (Ind AS) as prescribed under section 133 of the Companies Act, 2013.

2. The Head (Operations) based on the internal business reporting system, identified that the Company has only one segment viz. manufacture and sale of Integrated Circuits. Accordingly there are no other reportable segments in terms of Ind AS 108 'Operating Segments'.

3. The figures for the quarter ended March 31, 2023 and March 31, 2022 are the balancing figures between audited figures in respect of the full financial year after giving effect to the change in Revenue Recognition Accounting Policy and the published year to date figures up to the 9 months ended December 31, 2022 and December 31, 2021 respectively, which were subject to limited review by the statutory auditor.

Bah

SPEL Semiconductor Limited

Regd. Office: 5 CMDA, Industrial Estate, Maraimalai Nagar (Chennai) 603 209

CIN:L3220LTN1984PLC011434 eMail ID: info@spel.com Website: www.spel.com

STATEMENT OF AUDITED FINANCIAL RESULTS FOR THE QUARTER AND YEAR ENDED 31ST MARCH, 2023..

1. The Company had in the earlier years accounted for sales when the product is shipped to customer or appropriated in term of sale. This policy has been changed as under "Revenue from sale is products is recognized at the point in time when control of the asset is transferred to the customer, generally when the product is shipped to the customer and accepted by the customer".

Consequent to this change in accounting policy, the sale made in earlier years and forming part of receivables of $\bar{\epsilon}$ 6,469.86 lakhs is reclassified as inventories at cost of $\bar{\epsilon}$ 5,499.38 lakhs, as these were in premises of the Company and were yet to be accepted by the customers. The Company has also considered an impairment of ₹ 714.92 lakhs on these inventories. On account of this change & after considering the impairment the loss for the year is higher ₹ 971.91 lakhs, the inventories are higher by ₹ 4,784.47 lakhs and receivables are lower by ₹ 6,469.86 lakhs.

The details of such sales, receivables & resultant inventories are as under:

		Year ended		Sales/ Sundry Debtors		Inventories
		$31 - 03 - 23$		1,713.29		1,456.30
		$31 - 03 - 22$		615.9		523.51
		$31 - 03 - 21$		1,193.36		1,014.36
		$31 - 03 - 20$		2,760.78		2,346.67
		$31 - 03 - 19$		186.53		158.56
		Total		6,469.86		5,499.39
	Exceptional Items consists of:
	Particulars			Quarter Ended			Year Ended
			31.03.2023	31.12.2022	31.03.2022	31.03.2023	31.03.2022
a.	Credit balances written back		(375.84)			(375.84)
b.	Termination Compensation for Employees				567.00	$\overline{\phantom{a}}$	567.00
C.	Inventory written off		714.92	552.11		1,267.03
	Total		339.08	552.11	567.00	80110	567.00

1. The global macroeconomic and geopolitical factors are emerging as the dominant forces shaping the semiconductor industry. Major recession in US and Europe, Longer lead times for supply of raw materials and consumables, working capital raising difficulties, rising interest rates, high inflation, lower consumer confidence has resulted in lower demand for the semiconductors.

2. The issue of negative operating cash flows and incurrence of operating losses over the years highlighted by Auditors are being addressed by restructuring of operations and infusion of necessary funds.

3. Statement of Asset and Liabilities as on Mar 21, 2023 and Statement of Cash Flow for the year ended Mar 31, 2023 are provided in Annexure 1 and Annexure 2 attached.

4. The previous period figures have been regrouped / reclassified wherever necessary to conform to current period.

Place: Chennai Date: Jun 27, 2023	For and on behalf of the Board of Directors P Balamurugan
	Head (Operation) & Whole Time Director

Annexure 1
SPEL Semiconductor Limited
5, CMDA INDUSTRIAL ESTATE, MARAIMALAI NAGAR TN 603209 IN
CIN: L32201TN1984PLC011434
Statement of Assets & Liabilities (Refer Note 8)			(₹ in lakhs)
Particulars	Notes	31-Mar-23	31-Mar-22
Assets
A) Non-Current Assets
a) Property, Plant and Equipment and Intangible assets
- (i) Property, Plant and Equipment	1.1	2,870.26
--- (ii) Intangible assets b) Investment Property	1.2
c) Financial Assets		4,896.42
--- (i) Others	1.3	56.57
Total Non Current Assets
B) Current Assets		7,823.25
a) Inventories	1.4	5,057.48
b) Financial Assets
- (i) Trade Receivables	1.5	185.26
- (ii) Cash and Cash Equivalents	1.6	0.41
- (iii) Others	1.7
c) Other Current Assets	1.8	212.21
d) Assets held for sale	1.9	3,079.81
Total Current Assets		8,535.18
Total Assets		16,358.43	17,218.12
EQUITY & LIABILITIES
A) Equity
a) Equity Share Capital	2.1	4,613.25
b) Other Equity	2.2	339.74
Total Equity		4,953.00
B) Liabilities Non - Current Liabilities
a) Financial Liabilities
- (i) Borrowings	2.3	1,909.48
- (ii) Others	2.4	108.63
b) Provisions	2.5	169.63
c) Deferred tax liabilities (Net)	2.6	2,013.64
d) Other non-current liabilities	2.7	91.37
Total Non - Current Liabilities		4,292.75
Current Liabilities
a) Financial Liabilities
--- (i) Borrowings	2.8	621.24
- (ii) Trade Payables total outstanding dues of micro enterprises and small enterprises; and		1.99
total outstanding dues of creditors other than micro enterprises and small enterprises	2.9	638.42
$-$ (iii) Others	2.10	100.82
b) Other Current Liabilities	2.11	5,616.47
c) Short Term Provisions	2.12	133.74
Total Current Liabilities Total Equity & Liabilities		7,112.68 16,358.43
		For and on Behalf of the Board P Balamurugan	17,218.12

样"。

Annexure 2
SPEL Semiconductor Limited
5, CMDA INDUSTRIAL ESTATE, MARAIMALAI NAGAR TN 603209 IN
CIN: L32201TN1984PLC011434
Statement of Cash Flow (Refer Note 8)		$($ ₹ in lakhs)
Particulars	31-Mar-23	31-Mar-22
Cash Flows From Operating Activities:
Profit/ (loss) for the year	(308.90)	(1,276.72)
Non cash & Non - operating items
Add:
Deferred tax	(159.25)	28.93
Depreciation & Amortisation Expenses	394.95	469.23
Bad & doubtful debts/advances provided	0.04	0.09
Foreign exchange (gains)/losses	33.38	0.18
Finance costs	234.59	86.41
Less:
Credit balances written back		÷
Interest received	7.74	12.29
Rent Income Profit on sales of PPE	135.95	123.27
Cash Flow Before Working Capital changes:	1.91 49.20
Change in operating assets and liabilities		(827.45)
Adjustments for changes for
(Increase)/decrease in Inventories	175.00	(653.56)
(Increase)/decrease in Trade receivables	(80.46)	(206.13)
(Increase)/decrease in Other non current & current financial assets	112.45	(107.92)
(Increase)/decrease in Other non current & current assets	278.94	(72.92)
Increase/(decrease) in Trade payables	(410.30)	129.76
Increase/(decrease) in Other non current & current financial liabilities	(594.94)	55.04
Increase/(decrease) in Other non current & current liabilities	184.31	(472.22)
Increase/(decrease) in Non current & current provisions	(20.49)	(40.53)
Cash generated from operations	(306.28)	(2, 195.92)
Less : Income taxes paid (net of refunds)	16.39	15.28
Net Cash Generated From Operating Activities (A)	(322.67)	(2, 211, 19)
Cash Flow from Investing Activities:
Purchase of PPE (including changes in CWIP)	(50.33)	(381.00)
Advance for sale of capital asset	1,054.50	2,380.00
Interest received	7.74	12.29
Rent received	135.95	123.27
Sale of PPE	13.60
Movement in other bank balances	$\blacksquare$
Net Cash flow used in Investing Activities (B)	1,161.46	2,134.56
Cash Flow from Financing Activities:
Proceeds from/ (repayment of) borrowings Finance costs	(604.50)	142.62
Net Cash flow used in Financing Activities (C)	(234.59) (839.09)	(66.39) 76.23
Net Increase/(Decrease) in Cash and Cash Equivalents: (A+B+C)	(0.31)	(0.41)
Cash and cash equivalents at the beginning of the financial year	0.72	1.15
Exchange difference relating to foreign currency cash on hand	Ξ	(0.02)
Cash and cash equivalents at end of the year	0.41	0.72
Components of cash and cash equivalents
Balances with banks (in current accounts)		0.28
Cash in Hand	0.41	0.44
	0.41	0.72
	For and on Behalf of the Board
	P Balamurugan
	Head (Operation) & Whole Time Director

Chennai., 27th June 2023

Annexure I

Statement on Impact of Audit Qualifications (for audit report with modified opinion) Submitted along-with Annual Audited Financial Results - Standalone

Ĩ.	SI. No.	Particulars	Audited Figures (as reported before adjusting for qualifications) (Rs. In Lakhs)	Adjusted Figures (audited figures after adjusting for qualifications) (Rs. In Lakhs)
	1.	Turnover / Total income	1,812.55	1,812.55
	2.	Total Expenditure	2,264.32	1,292.41
	3.	Net Profit/(Loss)	(451.77)	520.14
	4.	Earnings Per Share	(0.67)	0.14
	5.	Total Assets	16,358.43	17,328.91
	6.	Total Liabilities	11,405.43	11,405.43
	7.	Net Worth	4,953.00	5,923.48
	8.	Any other financial item(s) (as felt appropriate by the management)		P

II. Audit Qualification (Qualification 1):

A. Details of Audit Qualification:

We refer to Note 1.4 of the accompanying statement where in the Company has stated that it has changed its accounting policy with regard to Revenue recognition Ind AS 8 as recommended by Audit Committee and approved by Board. Prior to this change in accounting policy, the company is stated to have recognised goods invoiced and pending for acceptance, as sales in the years as follows:

2018 19		186.53 Lakhs
2019 20		2,760.78 Lakhs
2020 21	÷	1,193.36 Lakhs
2021 22	$\equiv$	615.89 Lakhs
2022 23 (Q1 & Q2)	÷	1,713.29 Lakhs

These amounts were classified under Sundry debtors amounting to Rs. 4,756.58 Lakhs in the balance sheet as on 31-03-22 and as Rs. 6,469.86 Lakhs in un-audited balance sheet as on 30-06-22. It is stated by the management that consequent to the change in accounting policy the loods in respect of above sales which were in the premises of the company and subject to acceptance by customers have since been reclassified as Inventory to the extent of Rs 5,499.38 Lakhs. The Company has provided for impairment of Rs. 714.92 Lakhs and disclosed Rs. 4,784.47 Lakhs as closing finished goods Inventory as at 31-03-2023. On account of this change in accounting policy and after considering the impairment of Rs. 714.92 Lakhs the loss for this year is Rs. 451.77 Lakhs. Had this change not been made the loss for the year would have been lower by Rs. 971.91 Lakhs, the Sundry debtors would have been higher by Rs. 6,469.86 Lakhs and the Inventories would have been lower by Rs. 4,784.47 Lakhs. The inventories are not verified by us at 31-03-2023 in view of the fact that, our appointment as Statutory Auditors of the company was made only during the month of May 2023.

B. Type of Audit Qualification:

Qualified Opinion

C. Frequency of qualification:

First Time

D. For Audit Qualification(s) where the impact is quantified by the auditor, Management views:

Due to pandemic issues worldwide and various logistics issues, the Customers could not take delivery of the products. The product integrity in inventory was evaluated since the storage conditions during the pandemic period could not be ensured as per Customer requirements and hence impairment losses amounting to Rs. 714.92 Lakhs has been considered for the current financial year.

E. For Audit Qualification(s) where the impact is not quantified by the auditor: NA

(i) Management's estimation on the impact of audit qualification: NA

(ii) If management is unable to estimate the impact, reasons for the same: NA

(iii) Auditors' Comments on (i) or (ii) above: Noted.,

Audit Qualification (Qualification 2):

A. Details of Audit Qualification:

Attention is drawn to Note 2.2 of the accompanying statement where in the Company has incurred the losses and generated negative cash flows during the period under review and in earlier years. The above indicates that a material uncertainty exists that may cast significant doubt on Company's ability to continue as a going concern. Pending resolution of the above uncertainty, the Company has prepared the aforesaid statement on going concern basis.

B. Type of Audit Qualification:

Qualified Opinion

C. Frequency of qualification:

Repetitive

D. For Audit Qualification(s) where the impact is quantified by the auditor, Management views: NA

E. For Audit Qualification(s) where the impact is not quantified by the auditor:

The global macroeconomic and geopolitical factors are emerging as the dominant forces shaping the semiconductor industry. Market slowdown in US and Europe, Longer lead times for supply of raw materials and consumables, working capital raising difficulties, rising interest rates, high inflation & lower consumer confidence has affected the business operations of the Company. The issue of negative operating cash flows and incurrence of operating losses over the years highlighted by Auditors are being addressed by infusion of necessary funds.

(i) Management's estimation on the impact of audit qualification: NA

(ii) If management is unable to estimate the impact, reasons for the same: NA

(iii) Auditors' Comments on (i) or (ii) above: Not Applicable

III. Signatories:

Whole Time Director

P Balamurugan DIN: 07480881

Statutory Auditor

CA Dasaraty V Partner M No: 026336

Venkatesh & Co., Chartered Accountants FRN: 04636S

Chennai., 27^th June 2023