Notes to Accounts of VELS Film International Ltd.

Mar 31, 2025

P) Provisions and contingencies

A provision is recognised when the Company has
a present obligation as a result of past events
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.
Provisions are not discounted to their present
value and are determined based on the best
estimate required to settle the obligation at the
Balance Sheet date. These are reviewed at each
Balance Sheet date and adjusted to reflect the
current best estimates.

For the year ended 31^st March, 2025 there are no
contingencies.

3) Notes on Accounts

A) Inventories:

The Company holds work in progress of movie
projects amounting to Rs 10,40,537.64 (PY:
6,76,140.76) at the end of the reporting period.
Opening balance of work-in-progress includes the
costs of the films sold during the current financial
year, which have been recognised in the
Statement of Profit and Loss.

B) Investments

The Company has invested in Unquoted Equity
shares of M/s Vels Studios and Entertainment
Private Limited on various dates, the details of
which are below:

• During the period, the Company did not earn any income from the investment which needs to be
recognised in the Statement of Profit and Loss.

• During the current year, the Company converted Rs.2,39,900 (in lakhs) its Compulsorily Convertible
Preference Shares (CCPS) in M/s Vels Studios and Entertainment Private Limited into equity shares
and subsequently sold a portion of resulting equity which amounts to Rs.2,75,130 (in lakhs) costing
Rs.45,000 (in lakhs) which led to a profit of Rs.2,30,130 (in lakhs).

• Additionally, the Company did not participate in the rights issue offered M/s Vels Studios and
Entertainment Private Limited, leading to a further reduction in its shareholding percentage.

• Consequently, the Company''s holding fell below the threshold required for classification as a
subsidiary or an associate, and M/s Vels Studios and Entertainment Private Limited (Previously
known as M/s Innovative Studio Private Limited) ceased to be a subsidiary with effect from 25-03¬
2025.

• The remaining investment has been reclassified as a long-term investment in accordance with
Accounting Standard (AS) 13 - Accounting for Investments.

• The profit arising on sale of shares has been recognized in the Statement of Profit and Loss under
"Other Income".

(*) Note : During the current financial year, the Company has sold a portion of its investment in Vels
Studios and Entertainment Private Limited. Additionally, the Company opted not to participate in the
rights issue undertaken by Vels Studios. As a result of these actions, the Company''s shareholding in
Vels Studios has decreased, leading to the loss of control and, consequently, its status as a subsidiary.
Furthermore, as the voting power has decreased to below 20%, it also does not meet the criteria to be
classified as an associate under applicable accounting standards.

However, Vels Studios and Entertainment Private Limited continues to be classified as a related party
under Accounting Standard (AS) 18, by virtue of the significant influence exercised by key management
personnel (KMP) or their relatives over the entity.

G) Trade Payables ageing:

This ageing is with reference to Note 9 of the Standalone Balance Sheet as at 31^st March 2025

A) Contingent Liabilities:

1. Vels Film International Limited is a co-applicant for a loan obtained by M/s. Vels Studios and
Entertainment Private Limited. The details of the contingent liability are as follows:

The Subsidiary has obtained a secured loan of Rs. 15,00,00,000 from Hinduja Leyland Finance Limited.
The Loan is repayable within a period of 120 months on a monthly installments basis from the month
of January 2022, chargeable with a floating interest rate of 11.50% p.a (till Jan -23 - 11.00%) and is
secured by plot No.24 & 26, KIADB Industrial Area, Bidadi-562109 of subsidiary.

2. The Company filed a petition seeking relief of Rs.4.50 crores with interest at 24% per annum from
a film artist in connection with a project in progress along with damages of Rs.10 crores for not
performing his part of obligation before the Hon''ble sole Arbitrator on 18^th August 2023. The respondent
filed a counter claim to dismiss the claim and to direct the company to pay a claim of Rs.8.5 crores
towards compensatory damages.

The company (claimant) withdrew the petition as per the order 8^Th April 2024 of the Hon''ble Tribunal.
The respondent has also correspondingly withdrew the counter- petition. Hence, the case is dismissed
on the date of approval of financial statement.

J) Disclosure for Corporate Social Responsibility:

As per the Companies Act, 2013, the Company is required to spend at least 2% of the average net
profits of the three immediately preceding financial years on CSR.

The head wise amounts spent during the year are as follows:

L) Additional Regulatory Information:

The clauses (i) to (xiv) under Additional Regulatory Information are not applicable to the Company.
Hence, only those clauses applicable {(iii) - Loans and Advances, (x) - Registration of Charges and
(xii) - Ratios} are disclosed.

b) The hypothecation of the Vehicle purchased with loan financed by Bank of Baroda of Rs 20 lakhs
has been registered with the Transport Authority as per the Motor Vehicles Act. In view of the
hypothecation endorsement of the Registration Certificate and the non-insistence of the bank, a
charge on the Vehicle has not been created under the Companies Act, 2013.

M) Previous year figures have been regrouped and amended wherever necessary.

As per our report of even date attached
For S R B R & Associates LLP

Chartered Accountants For and on behalf of the Board of Directors

FRN: 004997S/S200051

-Sd- -Sd- -Sd- -Sd- -Sd¬
R. Sundararajan Ishari Ganesh Kadhirvelan Arthi Sampath Kumar Sujatha Rajagopal Srinivasan

Partner Managing Director Director Company Secretary Chief Financial Officer

M.No. 029814 DIN :00269445 DIN : 00568101 A32181

Place : Chennai
Date : 07.05.2025

---

Mar 31, 2024

P) Provisions and contingencies

A provision is recognised when the Company has a present obligation as a result of past events 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. Provisions are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates.

For the year ended 31^st March, 2024 there are no contingencies.

3) Notes on Accounts

A) Inventories:

The Company holds work in progress of movie projects amounting to Rs 6,76,140.76 (PY: 4,21,257.53) at the end of the reporting period. Opening balance of work-in-progress includes the costs of the films sold during the current financial year, which have been recognised in the Statement of Profit and Loss.

B) Investments

The Company has invested in Unquoted Equity shares and unquoted compulsorily convertible preference shares of its subsidiary M/s Vels Studios and Entertainment Private Limited (Previously known as M/s Innovative Studio Private Limited) on various dates, the details of which are below:

During the period, the Company did not earn any income from the investment which needs to be recognised in the Statement of Profit and Loss. There are no significant restrictions on the right of ownership, realisability of investments or the remittance of income and proceeds of disposal.

C) Foreign Currency translations and transactions Earnings in Foreign Exchange:

I. Earnings from export of services by selling of theatrical, satellite and digital rights overseas:

b) The hypothecation of the Vehicle purchased with loan financed by Bank of Baroda of Rs 20 lakhs has been registered with the Transport Authority as per the Motor Vehicles Act. In view of the hypothecation endorsement of the Registration Certificate and the non-insistence of the bank, a charge on the Vehicle has not been created under the Companies Act, 2013.

L) Contingent Liabilities

i. Vels Film International Limited is a co-applicant for a loan obtained by its subsidiary, Vels Studios and Entertainment Private Limited. The details of the contingent liability are as follows:

The Subsidiary has obtained a secured loan of Rs. 15,00,00,000 from Hinduja Leyland Finance Limited. The Loan is repayable within a period of 120 months on a monthly installments basis from the month of January 2022, chargeable with a floating interest rate of 11.50% p.a (till Jan -23 - 11.00%) and is secured by plot No.24 & 26, KIADB Industrial Area, Bidadi-562109 of subsidiary.

As at 31 March 2024, Loan shows the outstanding balance of Rs.13.94 Crores.

ii. The Company filed a petition seeking relief of Rs 4.50 crores with interest at 24% per annum from a film artist in connection with a project in progress along with damages of Rs 10 crores for not performing his part of obligations before the Hon''ble Sole Arbitrator on 18^th August 2023. The respondent filed a counter claim to dismiss the claim and to direct the Company to pay a claim amount of Rs 8.5 Crores towards compensatory damages.

The Company (claimant) withdrew the petition as per the order dated 8^th April 2024 of the Hon''ble Tribunal. The respondent has also correspondingly withdrew the counter-petition. Hence, the case is dismissed on the date of approval of financial statements.

M) Previous year figures have been regrouped and amended wherever necessary.

As per our report of even date attached For S R B R & Associates LLP

Chartered Accountants For and on behalf of the Board of Directors

FRN: 004997S/S200051

-Sd- -Sd- -Sd- -Sd- -SdR. Sundararajan Ishari Ganesh Kadhirvelan Arthi Sampath Kumar Sujatha Rajagopal Srinivasan

PartnerManaging Director Director Director Company Secretary Chief Financial Officer

M.No. 029814 DIN :00269445 DIN : 00568101 A32181

---

Mar 31, 2023

J) Provisions and contingencies

A provision is recognised when the Company has a present obligation as a result of past events 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. Provisions are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates.

For the year ended 31^st March, 2023 there are no contingencies.

3) Notes on Accounts

A) Inventories:

The Company holds work in progress of movie projects amounting to Rs 4,21,257.53 (PY: 2,46,006.38) at the end of the reporting period. Opening balance of work-in-progress includes the costs of the films sold during the current financial year, which have been recognised in the Statement of Profit and Loss.

B) Investments

The Company has invested in Unquoted Equity shares and unquoted compulsorily convertible preference shares of its subsidiary M/s Vels Studios and Entertainment Private Limited (Previously known as M/s Innovative Studio Private Limited) on various dates, the details of which are below:

b) The hypothecation of the Vehicle purchased with loan financed by Bank of Baroda of Rs 20 lakhs has been registered with the Transport Authority as per the Motor Vehicles Act. In view of the hypothecation endorsement of the Registration Certificate and the non-insistence of the bank, a charge on the Vehicle has not been created under the Companies Act, 2013.

M) Previous year figures have been regrouped and amended wherever necessary.

As per our report of even date attached For S R B R & Associates LLP

Chartered Accountants For and on behalf of the Board of Directors

FRN: 004997S/S200051

-Sd- -Sd- -Sd- -Sd- -SdR. Sundararajan Ishari Ganesh Kadhirvelan Arthi Sampath Kumar Sujatha Ganesan Thiagarajan

Partner Managing Director Director Company Secretary Chief Financial Officer

M.No. 029814 DIN :00269445 DIN : 00568101 A32181