Mar 31, 2023
The tax rate used for 2022-23 reconciliation above is the corporate tax rate of 34.944% (PY 34.944%) payable by corporate entities in India on taxable profits under Indian tax law.
The Company benefits from the tax holiday available for units set up under the Special Economic Zone Act, 2005. These tax holidays are available for a period of fifteen years from the date of commencement of operations. Under the SEZ scheme, the units which begins providing services on or after April 1, 2005 will be eligible for deductions of 100% of profits or gains derived from export of services for the first five years, 50% of such profit or gains for a further period of five years and 50% of such profits or gains for the balance period of five years subject to fulfilment of certain conditions. Pune unit 1, Thiruvananthapuram, Chennai unit and Pune Unit 2, will be eligible for deductions of 100% of profits or gains derived from export of services for the first five years, 50% of such profit or gains for a further period of five years and 50% of such profits or gains for the balance period of five years subject to fulfilment of certain conditions.
28. Employee benefit plansa. Defined contribution plans
The Company makes contribution to Provident Fund, Superannuation Fund and Employee State Insurance fund for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits.
The Company recognised i) '' 3,763.57 lakhs and '' 2,795.51 lakhs for Provident Fund contributions for the year ended March 31, 2023 and March 31, 2022, respectively. ii) '' 1,468.64 lakhs and '' 1,193.05 lakhs for Superannuation Fund contributions for the year ended March 31, 2023 and March 31, 2022, respectively. The contributions payable to these plans by the Company are at the rates specified in the rules of the schemes.
The Company offers gratuity (included as part of Contribution to Provident and other funds in Note 25 Employee benefit expenses) to its eligible employees under defined benefit plans.
The gratuity plan provides for a lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days basic salary payable for each completed year of service. Vesting occurs upon completion of five continuous years of service. The gratuity fund is managed by third party fund (Life Insurance Corporation of India).
The expected benefits are based on the same assumptions as are used to measure the Companyâs defined benefit plan obligations as at March 31, 2023. The Company is expected to contribute '' 1,808.77 lakhs to defined benefit obligations funds for the year ended March 31, 2024.
The discount rate is based on the prevailing market yields of Government of India securities as at the Balance sheet date for the estimated term of the obligations. The estimate of future salary increases considered, takes into account the inflation, seniority, promotion, increments and other relevant factors.
The significant actuarial assumptions for the determination of the defined benefit obligations are discount rate, expected salary increase and employee attrition. The sensitivity analysis below have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant.
If the discount rate increases (decreases) by 1%, the defined benefit obligations would decrease by '' 406.72 lakhs (increase by '' 464.28 lakhs) as at March 31, 2023. If the expected salary growth increases (decreases) by 1%, the defined benefit obligations would increase by '' 466.41 lakhs (decrease by '' 415.64 lakhs) as at March 31, 2023. If the employee attrition rate increases (decreases) by 1%, the defined benefit obligation would increase by '' 20.68 lakhs (decrease by '' 26.26 lakhs).
The sensitivity analysis has been performed based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant.
The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligations as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumption may be correlated.
Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligations has been calculated using the Projected Unit Credit Method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognised in the balance sheet. There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.
Each year an Asset - Liability matching study is performed in which the consequences of the strategic investment policies are analysed in terms of risk and return profiles. Investment and contribution policies are integrated within this study.
30. Financial instruments - Fair values and Risk management
The significant accounting policies, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 2.11 to the financial statements.
The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable and consists of the following three levels:
⢠Level 1 âInputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.
⢠Level 2 âInputs are other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
⢠Level 3 âInputs 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. The investments included in Level 2 of fair value hierarchy have been valued using quotes available for similar assets and liabilities in the active market. The investments included in Level 3 of fair value hierarchy have been valued using the cost approach to arrive at their fair value. The cost of unquoted investments approximate the fair value because there is a range of possible fair value measurements and the cost represents estimate of fair value within that range.
The following table summarises financial assets and liabilities measured at fair value on a recurring basis and financial assets that are not measured at fair value on a recurring basis (but fair value disclosures are required):
The Company is exposed primarily to fluctuations in Interest rate, credit, liquidity and market risks, which may adversely impact the fair value of its financial instruments. The Company has a risk management policy which covers risks associated with the financial assets and financial liabilities. The risk management policy is approved by the Board of Directors. The focus of risk management committee is to assess the unpredictability of the financial environment and to mitigate potential adverse effects on the financial performance of the Company.
The Companyâs investments are primarily in fixed rate interest bearing fixed deposits with banks. Hence the Company is not significantly exposed to interest rate risk.
Credit risk is the risk of financial loss arising from counter party 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 risks. Credit risk is controlled by analysing credit limits and creditworthiness of customers on a continuous basis to whom the credit has been granted after necessary approvals for credit.
Financial instruments that are subject to concentrations of credit risk principally consist of trade receivables, unbilled revenue, derivative financial instruments, cash and cash equivalents, other bank balances and other financial assets. Other bank balances include bank deposits for an amount of '' 1,10,950.00 lakhs (Previous year '' 92,000.00 lakhs) held with five schedule banks having high creditrating which are individually in excess of 10% or more of the Company bank deposits for the year ended March 31, 2023. Trade receivables- billed and Trade receivables-unbilled include an amount of '' 21,661.10 lakhs (Previous year '' 16,611.84 lakhs) held with two customers having high credit-rating which are individually in excess of 10% or more of Company Trade receivables- billed and Trade receivablesunbilled for the year ended March 31, 2023.
Exposure to credit risk
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to the credit risk was '' 2,28,384.83 lakhs and '' 1,79,169.74 lakhs as at March 31, 2023 and March 31, 2022, respectively, being the total of the carrying amount of balances principally with banks, other bank balances, Trade receivables- billed and Trade receivables- unbilled and other financial assets.
The Companyâs exposure to customers is diversified and except two customers, no single customer contributes to more than 10% and 10% of Trade receivables- billed and Trade receivables- unbilled as at March 31, 2023 and March 31, 2022, respectively.
Geographic concentration of credit risk
The Company also has a geographic concentration of Trade receivables- billed and Trade receivablesunbilled (gross and net of allowances) as given below:
Geographic concentration of credit risk is allocated based on the location of the customers.
Liquidity risk refers to the risk that Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and to ensure that sufficient funds are available for use as per requirements.
The Company consistently generates sufficient cash flows from operations to meet its financial obligations as and when they fall due.
The table below provides details regarding the contractual maturities of significant financial liabilities as at March 31, 2023
(g) Foreign currency exchange rate risk:
The fluctuation in foreign currency rates may have potential impact on the statement of profit or loss and other comprehensive income and equity, where any transaction references more than one currency or where assets/liabilities are denominated in a currency other than the functional currency of the Company.
Considering the countries and economic environment in which the Company operates, its operations are subject to risks arising from fluctuations in exchange rates in those countries. The risks primarily relate to fluctuations in US Dollar, Great Britain Pound and Euro against the functional currency of the Company.
The Company, as per its risk management policy, uses derivative instruments primarily to cover the exchange rate risks. Further, any movement in the foreign currency of the various operations of the Company against major foreign currencies may impact Companyâs revenue in international business.
The Company evaluates the impact of foreign exchange rate fluctuations by assessing its exposure to exchange risk. It covers a part of these risks by using derivative financial instruments in line with its risk management policies.
The foreign exchange rate sensitivity is calculated by aggregation of the net foreign exchange rate exposure and a simultaneous parallel foreign exchange rates shift of all the currencies by 10% against the functional currency of the Company.
The following analysis has been worked out based on the net exposures of the Company as of the date of balance sheet which could affect the statement of profit and loss and other comprehensive income and equity. Further the exposure indicated below is mitigated by some of the derivative contracts entered into by the Company.
10% appreciation/depreciation of the respective foreign currencies with respect to functional currency of the Company would result in decrease/ increase in the Companyâs profit before tax by approximately '' 7,409.42 lakhs for the year ended March 31, 2023 and '' 11,194.20 lakhs for the year ended March 31, 2022 respectively.
-Others include AED, AUD, CAD, JPY, KRW, MYR, SGD, ZAR etc.
The Company uses various derivative financial instruments governed by policies approved by the board of directors such as foreign exchange forward and option contracts to manage and mitigate its exposure to foreign exchange rates. The counter party is generally a bank. The Company can enter into contracts for period up to one year.
b. Remaining performance obligations
The remaining performance obligation disclosure provides the aggregate amount of the transaction price yet to be recognised as at the end of the reporting period and an explanation as to when the Company expects to recognise these amounts in revenue. Remaining performance obligation estimates are subject to change and are affected by several factors, including terminations, changes in the scope of contracts, periodic revalidations, adjustment for revenue that has not materialised and adjustments for currency.
Applying the practical expedient as given in Ind AS 115, the Company has not disclosed the remaining performance obligation related disclosures for contracts where the revenue recognised corresponds directly with the value to the customer of the Companyâs performance completed to date, typically those contracts where invoicing is on time and material, unit price basis and no information is provided about remaining performance obligations at March 31, 2023 that have an original expected duration of one year or less, as allowed by Ind AS 115.
The aggregate value of performance obligations that are completely or partially unsatisfied as of March 31, 2023 is '' 45,970.87 lakhs (March 31, 2022: '' 31,783.81 lakhs). Out of this, the Company expects to recognise revenue of around 47.11% (March 31, 2022: 56.14%) within the next one year and the remaining thereafter. This includes contracts that can be terminated for convenience without a substantive penalty since, based on current assessment, the occurrence of the same is expected to be remote.
Dues to micro and small enterprises have been determined to the extent such parties have been identified on the basis of information collected by the Management.
The Chief Executive Officer and Managing Director of the Company has been identified as the Chief Operating Decision Maker (CODM) as defined by Ind AS 108 - operating segments. The CODM evaluates the Companyâs performance and allocates resources based on an analysis of various performance indicators by industry classes. Accordingly, the segment information has been presented for industry classes.
The Company has identified business segments as its primary segment. Business segments are primarily system integration & support and software development & services.
Each segment item reported is measured at the measure used to report to the CODM for the purposes of making decisions about allocating resources to the segment and assessing its performance.
Revenues and expenses directly attributable to segments are reported under each reportable segment. All other expenses which are not attributable or allocable to segments have been disclosed as unallocable expenses.
Assets and liabilities of the Company are used interchangeably amongst segments. Allocation of such assets and liabilities is not practicable and any forced allocation would not result in any meaningful segregation. Hence, assets and liabilities have not been identified to any of the reportable segments.
Information about major customers:
The revenues of '' 3,06,594.75 lakhs (Previous year '' 2,42,131.14 lakhs) arising from the software development and services segment includes '' 84,968.17 lakhs (Previous year '' 62,141.51 lakhs) representing revenue of more than 10% of the total revenue of the Company is from two customers.
38. The Company had in the earlier year entered into incubation agreement for providing services pertaining to promotion of business of the entrepreneurs and also providing infrastructure facilities and resources. In consideration for the services rendered shares has been allocated /transferred as under. These investments are valued at fair value through profit and loss.
Considering probability of successful outcome of such development and the ability of these entities to commercialise the product being developed, as a matter of prudence the Company has recorded these investments at '' 1/-.
39. The sitting fee and commission for non-executive directors is '' 625.30 lakhs and '' 539.30 lakhs for the financial year 2022-23 and 2021-22 respectively.
During the year ended March 31, 2023, the Company paid total dividends at '' 42.5 and dividend of '' 48 per equity share for the year ended March 31, 2022.
Dividends declared by the Company are based on the profit available for distribution. Distribution of dividend out of General Reserve and Retained earnings.
42. The Indian Parliament has approved the Code on Social Security, 2020 which would impact the contributions by the Company towards Provident Fund and Gratuity. The Ministry of Labour and Employment had released draft rules for the Code on Social Security, 2020 on November 13, 2020, and invited suggestions from stakeholders which are under consideration by the Ministry. The Company will assess the impact and its evaluation once the subject rules are notified. The Company will give appropriate impact in its financial statements in the period in which, the Code becomes effective and the related rules to determine the financial impact are published.
43. 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.
On May 18, 2023, the Board of Directors of the Company have proposed a dividend of '' 60.60 per share in respect of the year ended March 31, 2023 subject to the approval of shareholders at the Annual General Meeting.
Mar 31, 2022
The tax rate used for 2021-22 reconciliation above is the corporate tax rate of 34.944% (PY 34.944%) payable by corporate entities in India on taxable profits under Indian tax law.
The Company benefits from the tax holiday available for units set up under the Special Economic Zone Act, 2005. These tax holidays are available for a period of fifteen years from the date of commencement of operations. under the SEZ scheme, the units which begins providing services on or after April 1, 2005 will be eligible for deductions of 100% of profits or gains derived from export of services for the first five years, 50% of such profit or gains for a further period of five years and 50% of such profits or gains for the balance period of five years subject to fulfilment of certain conditions. pune unit 1, Thiruvananthapuram, Chennai unit and pune unit 2, will be eligible for deductions of 100% of profits or gains derived from export of services for the first five years, 50% of such profit or gains for a further period of five years and 50% of such profits or gains for the balance period of five years subject to fulfilment of certain conditions.
29| EMPLOYEE BENEFIT PLANS 29.1a Defined contribution plans
The Company makes contribution to Provident Fund, Superannuation Fund and Employee State Insurance fund for qualifying employees. under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits.
The Company recognised i) '' 2,795.51 lakhs and '' 2,201.36 lakhs for provident Fund contributions for the year ended March 31, 2022 and March 31, 2021, respectively.ii) '' 1,193.05 lakhs and '' 963.27 lakhs for Superannuation Fund contributions for the year ended March 31, 2022 and March 31, 2021, respectively. The contributions payable to these plans by the Company are at the rates specified in the rules of the schemes.
29.1b Defined benefit plans
The Company offers gratuity (included as part of Contribution to provident and other funds in Note 25 Employee benefit expenses) to its eligible employees under defined benefit plans.
The gratuity plan provides for a lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days basic salary payable for each completed year of service. Vesting occurs upon completion of five continuous years of service. The gratuity fund is managed by third party fund.
The expected benefits are based on the same assumptions as are used to measure the Companyâs defined benefit plan obligations as at March 31, 2022. The Company is expected to contribute '' 894.13 lakhs to defined benefit obligations funds for the year ended March 31, 2023.
The discount rate is based on the prevailing market yields of Government of India securities as at the Balance sheet date for the estimated term of the obligations. The estimate of future salary increases considered, takes into account the inflation, seniority, promotion, increments and other relevant factors. The significant actuarial assumptions for the determination of the defined benefit obligations are discount rate, expected salary increase and employee attrition. The sensitivity analysis below have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant.
If the discount rate increases (decreases) by 1%, the defined benefit obligations would decrease by '' 368.27 lakhs (increase by '' 422.16 lakhs) as at March 31, 2022. If the expected salary growth increases (decreases) by 1%, the defined benefit obligations would increase by '' 421.99 lakhs (decrease by '' 374.70 lakhs) as at March 31, 2022. If the employee attrition rate increases (decreases) by 1%, the defined benefit obligation would increase by '' 10.64 lakhs (decrease by '' 14.12 lakhs).
The sensitivity analysis has been performed based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant. The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligations as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumption may be correlated.
Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligations has been calculated using the projected unit Credit Method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognised in the balance sheet.
There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.
Each year an Asset - Liability matching study is performed in which the consequences of the strategic investment policies are analysed in terms of risk and return profiles. Investment and contribution policies are integrated within this study.
~| FINANCIAL INSTRUMENTS- FAIR VALUES AND RISK MANAGEMENT.
The significant accounting policies, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 2.11 to the financial statements.
(b) Fair value hierarchy:
The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable and consists of the following three levels:
⢠Level 1 âInputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.
⢠Level 2âInputs are other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
⢠Level 3âInputs 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.
The investments included in Level 2 of fair value hierarchy have been valued using quotes available for similar assets and liabilities in the active market. The investments included in Level 3 of fair value hierarchy have been valued using the cost approach to arrive at their fair value. The cost of unquoted investments approximate the fair value because there is a range of possible fair value measurements and the cost represents estimate of fair value within that range.
The following table summarises financial assets and liabilities measured at fair value on a recurring basis and financial assets that are not measured at fair value on a recurring basis (but fair value disclosures are required):
(c) Financial risk management
The Company is exposed primarily to fluctuations in credit, liquidity and market risks, which may adversely impact the fair value of its financial instruments. The Company has a risk management policy which covers risks associated with the financial assets and financial liabilities. The risk management policy is approved by the Board of Directors. The focus of risk management committee is to assess the unpredictability of the financial environment and to mitigate potential adverse effects on the financial performance of the Company.
(d) Interest rate risk
The Companyâs investments are primarily in fixed rate interest bearing fixed deposits with banks. Hence the Company is not significantly exposed to interest rate risk
(e) Credit risk:
Credit risk is the risk of financial loss arising from counter party 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 risks. Credit risk is controlled by analyzing credit limits and creditworthiness of customers on a continuous basis to whom the credit has been granted after necessary approvals for credit.
Financial instruments that are subject to concentrations of credit risk principally consist of trade receivables, unbilled revenue, derivative financial instruments, cash and cash equivalents, other bank balances and other financial assets. Other bank balances include bank deposits for an amount of '' 92,000.00 lakhs( Previous year '' 85,440.00 lakhs) held with five schedule banks having high creditrating which are individually in excess of 10% or more of the Company bank deposits for the year ended March 31, 2022. Trade receivables- billed and Trade receivables-unbilled include an amount of '' 16,611.84 lakhs (Previous year '' 5,901.77 lakhs) held with two customers having high credit-rating which are individually in excess of 10% or more of Company Trade receivables- billed and Trade receivablesunbilled for the year ended March 31, 2022.
Exposure to credit risk
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to the credit risk was '' 1,79,169.74 lakhs and '' 1,48,464.71 lakhs as at March 31, 2022 and March 31, 2021, respectively, being the total of the carrying amount of balances principally with banks, other bank balances, Trade receivables- billed and Trade receivables- unbilled and other financial assets.
The Companyâs exposure to customers is diversified and except two customers, no single customer contributes to more than 10% and 10% of Trade receivables- billed and Trade receivables- unbilled as at March 31, 2022 and March 31, 2021, respectively.
Geographic concentration of credit risk
The Company also has a geographic concentration of Trade receivables- billed and Trade receivablesunbilled (gross and net of allowances) as given below:
ii) Liquidity risk:
Liquidity risk refers to the risk that Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and to ensure that sufficient funds are available for use as per requirements.
The Company consistently generates sufficient cash flows from operations to meet its financial obligations as and when they fall due.
iii) Market risk:
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Such changes in the values of financial instruments may result from changes in the foreign currency exchange rates, credit, liquidity and other market changes. The Companyâs exposure to market risk is primarily on account of foreign currency exchange rate risk.
(a) Foreign currency exchange rate risk:
The fluctuation in foreign currency rates may have potential impact on the statement of profit or loss and other comprehensive income and equity, where any transaction references more than one currency or where assets/liabilities are denominated in a currency other than the functional currency of the Company.
Considering the countries and economic environment in which the Company operates, its operations are subject to risks arising from fluctuations in exchange rates in those countries. The risks primarily relate to fluctuations in US Dollar, Great Britain Pound and Euro against the functional currency of the Company.
The Company, as per its risk management policy, uses derivative instruments primarily to cover the exchange rate risks. Further, any movement in the foreign currency of the various operations of the Company against major foreign currencies may impact Companyâs revenue in international business. The Company evaluates the impact of foreign exchange rate fluctuations by assessing its exposure to exchange risk. It covers a part of these risks by using derivative financial instruments in line with its risk management policies.
The foreign exchange rate sensitivity is calculated by aggregation of the net foreign exchange rate exposure and a simultaneous parallel foreign exchange rates shift of all the currencies by 10% against the functional currency of the Company.
The following analysis has been worked out based on the net exposures of the Company as of the date of balance sheet which could affect the statement of profit and loss and other comprehensive income and equity. Further the exposure indicated below is mitigated by some of the derivative contracts entered into by the Company.
The following table sets forth information relating to foreign currency exposures as at March 31, 2022 and March 31, 2021.
The Company use various derivative financial instruments governed by policies approved by the board of directors such as foreign exchange forward and option contracts to manage and mitigate its exposure to foreign exchange rates. The counter party is generally a bank. The Company can enter into contracts for period up to one year.
34^ SEGMENT INFORMATION
The Chief Executive Officer and Managing Director of the Company has been identified as the Chief Operating Decision Maker (CODM) as defined by Ind AS 108 - operating segments. The CODM evaluates the Companyâs performance and allocates resources based on an analysis of various performance indicators by industry classes. Accordingly, the segment information has been presented for industry classes.
The Company has identified business segments as its primary segment. Business segments are primarily software development & services and system integration and support.
Each segment item reported is measured at the measure used to report to CODM for the purposes of making decisions about allocating resources to the segment and assessing its performance.
Revenues and expenses directly attributable to segments are reported under each reportable segment. All other expenses which are not attributable or allocable to segments have been disclosed as unallocable expenses. Assets and liabilities that are directly attributable or allocable to segments are disclosed under each reportable segment. All other assets and liabilities are disclosed as unallocable. Property, plant & equipment that are used interchangeably amongst segments are not allocated to primary segment.
Information about major customers:
The revenues of '' 2,42,131.14 (Previous year '' 1,78,167.42) lakhs arising from the software development and services segment includes '' 62,141.51 (previous year '' 42,556.58) lakhs representing revenue of more than 10% of the total revenue of the Company is from two customers.
B. Remaining performance obligations
The remaining performance obligation disclosure provides the aggregate amount of the transaction price yet to be recognised as at the end of the reporting period and an explanation as to when the Company expects to recognise these amounts in revenue. Remaining performance obligation estimates are subject to change and are affected by several factors, including terminations, changes in the scope of contracts, periodic revalidations, adjustment for revenue that has not materialised and adjustments for currency Applying the practical expedient as given in Ind AS 115, the Company has not disclosed the remaining performance obligation related disclosures for contracts where the revenue recognised corresponds directly with the value to the customer of the Companyâs performance completed to date, typically those contracts where invoicing is on time and material, unit price basis and no information is provided about remaining performance obligations at March 31, 2022 that have an original expected duration of one year or less, as allowed by Ind AS 115.
The aggregate value of performance obligations that are completely or partially unsatisfied as of March 31, 2022 is '' 31,783.81 lakhs. Out of this, the Company expects to recognise revenue of around 56.14% within the next one year and the remaining thereafter. This includes contracts that can be terminated for convenience without a substantive penalty since, based on current assessment, the occurrence of the same is expected to be remote.
Mar 31, 2021
The Company makes Provident Fund, Superannuation Fund, Compensated Absences Pension and contributions to Employee State Insurance as defined contribution plans for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits.
The Company recognised i) '' 2,201.36 lakhs and '' 1,899.33 lakhs for Provident Fund contributions for the year ended March 31, 2021 and March 31, 2020, respectively. ii) '' 963.27 lakhs and '' 809.95 lakhs for Superannuation Fund contributions for the year ended March 31, 2021 and March 31, 2020, respectively. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.
The Company offers gratuity (included as part of Contribution to Provident and other funds in Note 25 Employee benefit expenses) to its eligible employees under defined benefit plans.
The gratuity plan provides for a lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days basic salary payable for each completed year of service. Vesting occurs upon completion of five continuous years of service. The gratuity fund is managed by third party fund.
The following table sets out the funded status of the defined benefit schemes and the amount recognised in the financial statements:
The expected benefits are based on the same assumptions as are used to measure the Company''s defined benefit plan obligations as at March 31, 2021. The Company is expected to contribute '' 474.69 lakhs to defined benefit obligations funds for the year ended March 31, 2022.
The discount rate is based on the prevailing market yields of Government of India securities as at the Balance Sheet date for the estimated term of the obligations. The estimate of future salary increases considered, takes into account the inflation, seniority, promotion, increments and other relevant factors.
The significant actuarial assumptions for the determination of the defined benefit obligations are discount rate, expected salary increase and employee turnover. The sensitivity analysis below have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant.
If the discount rate increases (decreases) by 1%, the defined benefit obligations would decrease by '' 329.43 lakhs (increase by ''379.72 lakhs) as at March 31, 2021. If the expected salary growth increases (decreases) by 1%, the defined benefit obligations would increase by '' 381.42 lakhs (decrease by '' 336.63 lakhs) as at March 31, 2021. If the employee turnover rate increases (decreases) by 1%, the defined benefit obligation would increase by '' 27.07 lakhs (decrease by '' 32.38 lakhs).
The sensitivity analysis has been performed based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant.
The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligations as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumption may be correlated.
Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligations has been calculated using the Projected Unit Credit Method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognised in the balance sheet.
There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.
Each year an Asset - Liability matching study is performed in which the consequences of the strategic investment policies are analysed in terms of risk and return profiles. Investment and contribution policies are integrated within this study.
The significant accounting policies, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 2.11 to the financial statements.
The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable and consists of the following three levels:
⢠Level 1 â Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.
⢠Level 2 â Inputs are other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
⢠Level 3 â 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.
The investments included in Level 2 of fair value hierarchy have been valued using quotes available for similar assets and liabilities in the active market. The investments included in Level 3 of fair value hierarchy have been valued using the cost approach to arrive at their fair value. The cost of unquoted investments approximate the fair value because there is a range of possible fair value measurements and the cost represents estimate of fair value within that range.
The Company is exposed primarily to fluctuations in credit, liquidity and market risks, which may adversely impact the fair value of its financial instruments. The Company has a risk management policy which covers risks associated with the financial assets and financial liabilities. The risk management policy is approved by the Board of Directors. The focus of risk management committee is to assess the unpredictability of the financial environment and to mitigate potential adverse effects on the financial performance of the Company.
(d) Interest rate risk
The Company''s investments are primarily in fixed rate interest bearing fixed deposits with banks. Hence the Company is not significantly exposed to interest rate risk
(e) Credit risk:
Credit risk is the risk of financial loss arising from counter party 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 risks. Credit risk is controlled by analyzing credit limits and creditworthiness of customers on a continuous basis to whom the credit has been granted after necessary approvals for credit.
Financial instruments that are subject to concentrations of credit risk principally consist of trade receivables, unbilled revenue, derivative financial instruments, cash and cash equivalents, other bank balances and other financial assets. Other bank balances include bank deposits for an amount of '' 85,440.40 lakhs held with five schedule banks having high credit-rating which are individually in excess of 10% or more of the company bank deposits for the year ended March 31, 2021. Trade receivables and unbilled revenue include an amount of '' 5,901.77 lakhs held with one customer (related party of the Company) having high credit-rating which are individually in excess of 10% or more of company trade receivables and unbilled revenue for the year ended March 31, 2021.
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to the credit risk was'' 1,45,884.83 lakhs and '' 1,15,873.31 lakhs as at March 31, 2021 and March 31, 2020, respectively, being the total of the carrying amount of balances principally with banks, other bank balances, trade receivables, unbilled revenue and other financial assets.
The Company''s exposure to customers is diversified and except one customer, no single customer contributes to more than 10% and 10% of outstanding accounts receivable and unbilled revenue as at March 31, 2021 and March 31, 2020, respectively.
The Company also has a geographic concentration of trade receivables (gross and net of allowances) and unbilled revenue as given below:
Liquidity risk refers to the risk that Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and to ensure that sufficient funds are available for use as per requirements.
The Company consistently generates sufficient cash flows from operations to meet its financial obligations as and when they fall due.
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Such changes in the values of financial instruments may result from changes in the foreign currency exchange rates, credit, liquidity and other market changes. The Company''s exposure to market risk is primarily on account of foreign currency exchange rate risk.
The fluctuation in foreign currency rates may have potential impact on the statement of profit or loss and other comprehensive income and equity, where any transaction references more than one currency or where assets/ liabilities are denominated in a currency other than the functional currency of the Company.
Considering the countries and economic environment in which the Company operates, its operations are subject to risks arising from fluctuations in exchange rates in those countries. The risks primarily relate to fluctuations in US Dollar, Great Britain Pound and Euro against the functional currency of the Company.
The Company, as per its risk management policy, uses derivative instruments primarily to cover the exchange rate risks. Further, any movement in the foreign currency of the various operations of the company against major foreign currencies may impact company''s revenue in international business.
The Company evaluates the impact of foreign exchange rate fluctuations by assessing its exposure to exchange risk. It covers a part of these risks by using derivative financial instruments in line with its risk management policies.
The foreign exchange rate sensitivity is calculated by aggregation of the net foreign exchange rate exposure and a simultaneous parallel foreign exchange rates shift of all the currencies by 10% against the functional currency of the company.
The following analysis has been worked out based on the net exposures of the company as of the date of balance sheet which could affect the statement of profit and loss and other comprehensive income and equity. Further the exposure indicated below is mitigated by some of the derivative contracts entered into by the company.
10% appreciation/depreciation of the respective foreign currencies with respect to functional currency of the company would result in decrease/ increase in the company''s profit before tax by approximately '' 4,341.50 lakhs for the year ended March 31, 2021 and '' 4,545.34 lakhs for the year ended March 31, 2020 respectively.
*Others include AED, CAD, JPY, KRW, MYR, SGD, ZAR, CNY, etc.
The Company use various derivative financial instruments governed by policies approved by the board of directors such as foreign exchange forward and option contracts to manage and mitigate its exposure to foreign exchange rates. The counter party is generally a bank. The Company can enter into contracts for period up to one year.
Considering the current COVID-19 situation, we have analysed the credit risk and the consequential delay in realisation from our customers. This assessment is based on market outlook and the financial strength of the customers in respect of whom amounts are receivable. Based on our assessment, the valuation of receivable, unbilled receivable, contract assets and the provision for doubtful trade receivables as at March 31, 2021 is considered adequate. The Company continues to closely monitor the business outlook and the financial stress in the market and shall consider taking appropriate steps as may be needed to secure the financial interests of the Company.
i. Pending resolution of the respective proceedings, it is not practicable for the Company to estimate the timings of cash outflows, if any, in respect of the above as it is determinable only on receipt of judgements/decisions pending with various forums/authorities.
The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed as contingent liabilities where applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have a materially adverse effect on its financial position.
The Chief Executive Officer and Managing Director of the Company has been identified as the Chief Operating Decision Maker (CODM) as defined by Ind AS 108 - operating segments. The CODM evaluates the Company''s performance and allocates resources based on an analysis of various performance indicators by industry classes. Accordingly, the segment information has been presented for industry classes.
The Company has identified business segments as its primary segment. Business segments are primarily system integration & support and software development & services.
Each segment item reported is measured at the measure used to report to CODM for the purposes of making decisions about allocating resources to the segment and assessing its performance.
Revenues and expenses directly attributable to segments are reported under each reportable segment. All other expenses which are not attributable or allocable to segments have been disclosed as unallocable expenses. Assets and liabilities that are directly attributable or allocable to segments are disclosed under each reportable segment. All other assets and liabilities are disclosed as unallocable. Property, plant & equipment that are used interchangeably amongst segments are not allocated to primary segment.
The revenues of ''1,78,167.42 (Previous year ''1,56,278.24) lakhs arising from the software development and services segment includes ''42,556.58 (Previous year ''25,895.35) lakhs representing revenue of more than 10% of the total revenue of the Company is from two customers. .
The remaining performance obligation disclosure provides the aggregate amount of the transaction price yet to be recognized as at the end of the reporting period and an explanation as to when the Company expects to recognize these amounts in revenue. Remaining performance obligation estimates are subject to change and are affected by several factors, including terminations, changes in the scope of contracts, periodic revalidations, adjustment for revenue that has not materialized and adjustments for currency
Applying the practical expedient as given in Ind AS 115, the Company has not disclosed the remaining performance obligation related disclosures for contracts where the revenue recognized corresponds directly with the value to the customer of the Company''s performance completed to date, typically those contracts where invoicing is on time and material, unit price basis and no information is provided about remaining performance obligations at March 31, 2021 that have an original expected duration of one year or less, as allowed by Ind AS 115.
The aggregate value of performance obligations that are completely or partially unsatisfied as of March 31, 2021 is '' 8,300.42 lakhs. Out of this, the Company expects to recognize revenue of around 73.66% within the next one year and the remaining thereafter. This includes contracts that can be terminated for convenience without a substantive penalty since, based on current assessment, the occurrence of the same is expected to be remote.
40. During the previous year, the board had approved for special retiral benefits to the Managing Director who retired in October 2019. Accordingly, the Company had made a provision of '' 2,163 lakhs towards future pension and medical benefits by giving corresponding charge in the statement of profit and loss under employee benefit expense. The pension liability is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at the date of each statement of financial position.
During the year ended March 31, 2021, the Company paid total dividends at '' 16.50 per equity share for the year ended March 31, 2020.
Dividends declared by the Company are based on the profit available for distribution. Distribution of dividend out of General Reserve and Retained earnings.
On April 22, 2021, the Board of Directors of the Company have proposed a dividend of '' 24.00 and special dividend of '' 24.00 per share in respect of the year ended March 31, 2021 subject to the approval of shareholders at the Annual General Meeting.
Mar 31, 2019
Notes forming part of the financial statements
34. Segment information
The Chief Executive Officer and Managing Director of the Company has been identified as the Chief Operating Decision Maker (CODM) as defined by Ind AS 108 - operating segments. The CODM evaluates the Company''s performance and allocates resources based on an analysis of various performance indicators by industry classes. Accordingly, the segment information has been presented for industry classes.
The Company has identified business segments as its primary segment. Business segments are primarily system integration & support and software development & services.
Each segment item reported is measured at the measure used to report to CODM for the purposes of making decisions about allocating resources to the segment and assessing its performance.
Revenues and expenses directly attributable to segments are reported under each reportable segment. All other expenses which are not attributable or allocable to segments have been disclosed as unallocable expenses. Assets and liabilities that are directly attributable or allocable to segments are disclosed under each reportable segment. All other assets and liabilities are disclosed as unallocable. Property, plant & equipment that are used interchangeably amongst segments are not allocated to primary segment.
|
Rs lakhs |
|
Particulars |
Year ended March 31, 2019 |
Year ended March 31, 2018 |
Segment revenue |
||
Software development & services |
1,54,313.33 |
1,32,938.93 |
System integration & support services |
5,379.83 |
5,690.62 |
Total |
1,59,693.16 |
1,38,629.55 |
Segment results |
||
Software development & services |
45,590.46 |
39,620.14 |
System integration & support services |
923.20 |
842.34 |
Total |
46,513.66 |
40,462.48 |
Less: Unallocable expenditure (net of unallocable income) |
3,173.79 |
4,071.82 |
Profit before tax |
43,339.87 |
36,390.66 |
Tax expense |
14,342.98 |
12,386.87 |
Net profit for the period / year |
28,996.89 |
24,003.79 |
Segment assets |
As at March 31, 2019 |
As at March 31, 2018 |
Software development & services |
54,239.86 |
47,067.43 |
System integration & support services |
1,915.11 |
1,707.87 |
Unallocable assets |
58,183.91 |
45,713.97 |
Total |
1,14,338.88 |
94,489.27 |
Segment liabilities |
||
Software development & services |
12,683.88 |
10,639.64 |
System integration & support services |
1,125.11 |
1,494.45 |
Unallocable liabilities |
6,254.62 |
8,520.05 |
Total |
20,063.61 |
20,654.14 |
The geographic segments individually contributing 10 percent non-current assets are shown separately: or more of the Company''s revenues and segment
Notes forming part of the financial statements
Rs lakhs
Geographic Segment |
Revenues For the year ended March 31, 2019 |
Non-current assets As at March 31, 2019 |
Revenues For the year ended March 31, 2018 |
Non-current assets As at March 31, 2018 |
India |
19,282.17 |
11,409.49 |
17,596.39 |
12,122.85 |
US |
48,980.71 |
9.18 |
41,003.27 |
10.41 |
Europe |
70,577.16 |
7.17 |
60,680.52 |
12.32 |
Others |
20,853.12 |
1.35 |
19,349.37 |
2.62 |
Total |
1,59,693.16 |
11,427.19 |
1,38,629.55 |
12,148.20 |
Geographical non-current assets (property, plant and equipment, intangible assets, income tax assets and other non-current assets) are allocated based on the location of the assets.
Information about major customers:
The revenues of Rs 1,54,313.33 (previous year Rs 1,32,938.93) lakhs arising from the software development and services segment includes Rs 36,749.39 (Previous year Rs 35,079.76) lakhs representing revenue of more than 10% of the total revenue of the Company is from one customer.
35. Ind AS 115 - Revenue
The effect of initially applying Ind AS 115 on the Company''s revenue from contracts with customers is described in Note 2.4. Due to the transition method chosen in applying Ind AS 115, comparative information has not been restated to reflect the new requirements.
A. Contract balances
The following table provides information about receivables, contract assets and contract liabilities from contracts with customers.
As at March 31, 2019 |
As at March 31, 2018 |
|
Trade receivables |
35,654.12 |
30,666.64 |
Unbilled receivables (March 31, 2018: Unbilled revenue) |
5,089.10 |
7,047.45 |
Contract assets (previous year included in unbilled revenue) |
2,873.82 |
- |
Contract liabilities |
1,592.18 |
1,272.00 |
The following table discloses the movement in contract assets during the year ended March 31, 2019:
As at March 31, 2019 |
|
Balance at the beginning |
1,526.11 |
Add: Revenue recognized during the year |
14,184.44 |
Less: Invoiced during the year |
12,833.60 |
Less : Translation gain/(loss) |
(3.13) |
Balance at the end |
2,873.82 |
The following table discloses the movement in unearned revenue balances during the year ended March 31. 2019:
As at March 31, 2019 |
|
Balance at the beginning |
1,272.00 |
Less: Revenue recognized during the year |
11,605.46 |
Add: Invoiced during the year |
11,915.54 |
Less: Translation gain/(loss) |
(10.10) |
Balance at the end |
1,592.18 |
B. Remaining performance obligations
The remaining performance obligation disclosure provides the aggregate amount of the transaction price yet to be recognized as at the end of the reporting period and an explanation as to when the Company expects to recognize these amounts in revenue. Remaining performance obligation estimates are subject to change and are affected by several factors, including terminations, changes in the scope of contracts, periodic revalidations, adjustment for revenue that has not materialized and adjustments for currency
Applying the practical expedient as given in Ind AS 115, the Company has not disclosed the remaining performance obligation related disclosures for contracts where the revenue recognized corresponds directly with the value to the customer of the Company''s performance completed to date, typically those contracts where invoicing is on time and material, unit price basis and no information is provided about remaining performance obligations at March 31, 2019 that have an original expected duration of one year or less, as allowed by Ind AS 115.
The aggregate value of performance obligations that are completely or partially unsatisfied as of March 31, 2019 is Rs 6,108.92 lakhs. Out of this, the Company expects to recognize revenue of around 93.40% within the next one year and the remaining thereafter. This includes contracts that can be terminated for convenience without a substantive penalty since, based on current assessment, the occurrence of the same is expected to be remote.
36. Disclosures required under Section 22 of the Micro, Small and Medium Enterprises Development Act, 2006
Particulars |
As at March 31, 2019 |
As at March 31, 2018 |
(i) Principal amount remaining unpaid to any supplier as at the end of the accounting year |
- |
- |
(ii) Interest due thereon remaining unpaid to any supplier as at the end of the accounting year |
- |
- |
(iii) The amount of interest paid along with the amounts of the payment made to the supplier beyond the appointed day |
539.30 |
190.45 |
(iv) The amount of interest due and payable for the year |
- |
- |
(v) The amount of interest accrued and remaining unpaid at the end of the accounting year |
- |
- |
(vi) The amount of further interest due and payable even in the succeeding year, until such date when the interest dues as above are actually paid |
" |
" |
37. Corporate Social Responsibility:
a. Gross amount required to be spent by the Company during the year Rs 484.13 lakhs (March 31, 2018 Rs 375.09 lakhs)
b. Amount spent during the year on :
For the year ended March 31, 2019 |
For the year ended March 31, 2018 |
|||||
Particulars |
In cash |
Yet to be paid in cash |
Total |
In cash |
Yet to be paid in cash |
Total |
Construction/acquisition of any asset |
Nil |
Nil |
Nil |
Nil |
Nil |
Nil |
On purpose other than (i) above |
575.16 |
Nil |
575.16* |
284.86 |
Nil |
284.86* |
* Includes overhead expense of Rs 24.21 lakhs (March 31, 2018 Rs 8.75 lakhs)
38. The Company has entered into incubation agreement for providing services pertaining to promotion of business of the entrepreneurs and also providing infrastructure facilities and resources. In consideration for the services rendered shares has been allocated /transferred as under.
Name of the Company |
No shares allotted / transferred |
Face value of shares (Rs) |
Big V Telecom Private Limited |
22,250 |
10 |
Sismatik Solutions Private Limited |
1,000 |
10 |
Street Smart Mobile Technologies Private Limited |
2,000 |
10 |
Considering probability of successful outcome of such development and the ability of these entities to commercialise the product being developed, as a matter of prudence the company has recorded these investments at Rs 1/-. Any gain on such investment will be recognized on its disposal.
39. The aggregate amount of research and development expenditure recognised as an expense during the year is Rs 2,254.28 lakhs (Previous year Rs 1,990.67 lakhs)
40. The sitting fee and commission for non-executive directors is Rs 361.90 lakhs and Rs 309.00 lakhs for the financial year 2018-19 and 2017-18 respectively.
41. The disclosure regarding specified bank notes
The disclosures regarding details of specified bank notes held and transacted during November 8, 2016 to December
30, 2016 has not been made in these financial statements since the requirement does not pertain to financial year ended March 31, 2019
42. Subsequent event note Dividends
During the year ended March 31, 2019, the Company paid total dividends at Rs 11 per equity share for the year ended March 31, 2018.
Dividends declared by the Company are based on the profit available for distribution. Distribution of dividend out of General Reserve and Retained earnings is subject to applicable dividend distribution tax. On April 24, 2019, the Board of Directors of the Company have proposed a final dividend of Rs 13.50 per share in respect of the year ended March
31, 2019 subject to the approval of shareholders at the Annual General Meeting.
43. Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosure.
As per our report of even date attached
for B S R & Co. LLP Chartered Accountants |
||
Firm Registration No.: 101248W/W-100022 |
For and on behalf of the Board |
|
N G Subramaniam DiN:07006215 |
Chairman |
|
Shyamala Gopinath DIN-. 02362921 |
Director |
|
Sanjay Sharma |
Madhukar Dev DIN:00082W3 |
Managing Director |
Partner |
Muralidharan H.V |
Chief Financial Officer |
Membership No,: 063980 |
G. Vaidyanathan |
Company Secretary |
Bengaluru, April 24, 2019 |
Bengaluru, April 24, 2019 |
Mar 31, 2018
1. The bonus issue in the proportion of 1:1 i.e.1 (One) bonus equity share of ''10 each for every 1 (one) fully paid-up equity share held was approved by the shareholders of the Company on September 7, 2017 through postal ballot. For this purpose, September 19, 2017, was fixed as the record date. Consequently, on September 20, 2017, the Company allotted 31,138,220 shares and of '' 311,382,200 (representing par value of '' 10 per share) has been transferred from general reserve to share capital.
2. Employee benefit plans
3.1a Defined contribution plans
The Company makes Provident Fund, Superannuation Fund and contributions to Employee State Insurance as defined contribution plans for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits.
The Company recognized i) Rs, 1239.70 lakhs and Rs, 1,170.26 lakhs for Provident Fund contributions for the year ended March 31, 2018 and March 31, 2017, respectively. ii) Rs, 604.77 lakhs and Rs, 476.91 lakhs for Superannuation Fund contributions for the year ended March 31, 2018 and March 31, 2017, respectively and iii) Rs, 6.34 lakhs and Rs, 4.77 lakhs for Employee State Insurance Scheme for the year ended March 31, 2018 and March 31, 2017, respectively in the Statement of profit and loss. The Company also had contributed towards Employee Social benefit Schemes outside India amounting to Rs, 2,309.90 lakhs and Rs, 1,925.83 lakhs for the year ended March 31, 2018 and March 31, 2017, respectively. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.
4.1b Defined benefit plans
The Company offers gratuity (included as part of Contribution to Provident and other funds in Note 23 Employee benefits expense) to its eligible employees under defined benefit plans.
The gratuity plan provides for a lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days basic salary payable for each completed year of service. Vesting occurs upon completion of five continuous years of service. The gratuity fund is managed by third party fund.
The following table sets out the funded status of the defined benefit schemes and the amount recognized in the financial statements:
The expected benefits are based on the same assumptions as are used to measure the CompanyRs,s defined benefit plan obligations as at March 31, 2018. The Company is expected to contribute Rs, 990.00 lakhs to defined benefit obligations funds for the year ending March 31, 2019.
The discount rate is based on the prevailing market yields of Government of India securities as at the Balance Sheet date for the estimated term of the obligations. The estimate of future salary increases considered, takes into account the inflation, seniority, promotion, increments and other relevant factors.
The significant actuarial assumptions for the determination of the defined benefit obligations are discount rate, expected salary increase and employee turnover. The sensitivity analysis below have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant.
If the discount rate increases (decreases) by 1%, the defined benefit obligations would decrease by Rs, 151.79 lakhs (increase by Rs, 173.95 lakhs) as at March 31, 2018. If the expected salary growth increases (decreases) by 1%, the defined benefit obligations would increase by Rs, 176.70 lakhs (decrease by Rs, 156.64 lakhs) as at March 31, 2018. If the employee turnover rate increases (decreases) by 1%, the defined benefit obligation would increase by Rs, 28.03 lakhs (decrease by Rs, 32.47 lakhs).
The sensitivity analysis have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant.
The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligations as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumption may be correlated.
Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligations has been calculated using the Projected Unit Credit Method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognized in the balance sheet.
There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years. Each year an Asset - Liability matching study is performed in which the consequences of the strategic investment policies are analysed in terms of risk and return profiles. Investment and contribution policies are integrated within this study.
5. Financial instruments- Fair values and Risk management
The significant accounting policies, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognized, in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 2.11 to the financial statements.
(b) Fair value hierarchy:
The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable and consists of the following three levels:
⢠Level 1 âInputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.
⢠Level 2âInputs are other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
⢠Level 3 âInputs 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.
The investments included in Level 2 of fair value hierarchy have been valued using quotes available for similar assets and liabilities in the active market. The investments included in Level 3 of fair value hierarchy have been valued using the cost approach to arrive at their fair value. The cost of unquoted investments approximate the fair value because there is a range of possible fair value measurements and the cost represents estimate of fair value within that range.
The following table summarises financial assets and liabilities measured at fair value on a recurring basis and financial assets that are not measured at fair value on a recurring basis (but fair value disclosures are required):
(c) Financial risk management
The Company is exposed primarily to fluctuations in credit, liquidity and market risks, which may adversely impact the fair value of its financial instruments. The company has a risk management policy which covers risks associated with the financial assets and financial liabilities. The risk management policy is approved by the Board of Directors. The focus of risk management committee is to assess the unpredictability of the financial environment and to mitigate potential adverse effects on the financial performance of the company.
(d) Interest rate risk
The Company''s investments are primarily in fixed rate interest bearing fixed deposits with banks. Hence the Company is not significantly exposed to interest rate risk.
(e) Credit risk:
Credit risk is the risk of financial loss arising from counter party 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 risks. Credit risk is controlled by analyzing credit limits and creditworthiness of customers on a continuous basis to whom the credit has been granted after necessary approvals for credit.
Financial instruments that are subject to concentrations of credit risk principally consist of trade receivables, unbilled revenue, derivative financial instruments, cash and cash equivalents, other bank balances and other financial assets. Other bank balances include bank deposits for an amount of Rs, 3070.00 lakhs held with two schedule banks having high credit-rating which are individually in excess of 10% or more of the company bank deposits for the year ended March 31, 2018. Trade receivables and unbilled revenue include an amount of Rs, 10,116.71 lakhs held with one customer having high credit-rating which are individually in excess of 10% or more of company trade receivables and unbilled revenue for the year ended March 31, 2018.
Exposure to credit risk
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to the credit risk was Rs, 79,069.99 lakhs and Rs, 55,699.91 lakhs as at March 31, 2018 and March 31, 2017, respectively, being the total of the carrying amount of balances principally with banks, other bank balances, trade receivables, unbilled revenue and other financial assets.
The Company''s exposure to customers is diversified and except one customer, no single customer contributes to more than 10% and 10% of outstanding accounts receivable and unbilled revenue as at March 31, 2018 and March 31, 2017, respectively.
Geographic concentration of credit risk is allocated based on the location of the customers.
ii) Liquidity risk:
Liquidity risk refers to the risk that Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and to ensure that sufficient funds are available for use as per requirements.
The Company consistently generates sufficient cash flows from operations to meet its financial obligations as and when they fall due.
iii) Market risk:
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Such changes in the values of financial instruments may result from changes in the foreign currency exchange rates, credit, liquidity and other market changes. The Company''s exposure to market risk is primarily on account of foreign currency exchange rate risk.
(a) Foreign currency exchange rate risk:
The fluctuation in foreign currency rates may have potential impact on the statement of profit or loss and other comprehensive income and equity, where any transaction references more than one currency or where assets/liabilities are denominated in a currency other than the functional currency of the Company.
Considering the countries and economic environment in which the Company operates, its operations are subject to risks arising from fluctuations in exchange rates in those countries. The risks primarily relate to fluctuations in US Dollar, Great Britain Pound and Euro against the functional currency of the Company.
The Company, as per its risk management policy, uses derivative instruments primarily to cover the exchange rate risks. Further, any movement in the foreign currency of the various operations of the company against major foreign currencies may impact company''s revenue in international business.
The Company evaluates the impact of foreign exchange rate fluctuations by assessing its exposure to exchange risk. It covers a part of these risks by using derivative financial instruments in line with its risk management policies.
The foreign exchange rate sensitivity is calculated by aggregation of the net foreign exchange rate exposure and a simultaneous parallel foreign exchange rates shift of all the currencies by 10% against the functional currency of the company.
The following analysis has been worked out based on the net exposures of the company as of the date of balance sheet which could affect the statement of profit and loss and other comprehensive income and equity. Further the exposure indicated below is mitigated by some of the derivative contracts entered into by the company.
10% appreciation/depreciation of the respective foreign currencies with respect to functional currency of the company would result in decrease/ increase in the company''s profit before tax by approximately Rs, 3,596.88 lakhs for the year ended March 31, 2018 and Rs, 3,507.32 lakhs for the year ended March 31, 2017 respectively.
*Others include AED, CAD, JPY, KRW, MYR, SGD, ZAR , CNY, etc.
The Company use various derivative financial instruments governed by policies approved by the board of directors such as foreign exchange forward and option contracts to manage and mitigate its exposure to foreign exchange rates. The counter party is generally a bank. The Company can enter into contracts for period up to one year.
The following table presents the aggregate contracted principal amounts of the Company''s derivative contracts outstanding:
6. Related party transactions
The Company''s material related party transactions and outstanding balances are with its group companies with whom the Company routinely enters into transactions in the ordinary course of business.
Related parties with their relationship
Names of related parties Description of relationship
Tata Sons Limited Company with significant influence
Mr. Madhukar Dev, Managing Director Key Managerial Personnel
Mr. Muralidharan H.V, Chief Financial Officer (w.e.f. July 27, Key Managerial Personnel 2017)
Mr. Ramaseshan K, Chief Financial Officer(Up to May 31, Key Managerial Personnel 2017)
Mr. G. Vaidyanathan, Company Secretary Key Managerial Personnel
Tata Elxsi Employees'' Provident Fund Trust Post-employment benefit plan of Tata Elxsi Limited
Tata Elxsi Employees'' Gratuity Fund Trust Post-employment benefit plan of Tata Elxsi Limited
Tata Elxsi Employees'' Superannuation Fund Trust Post-employment benefit plan of Tata Elxsi Limited
Tata Consultancy Services Limited Subsidiary of Tata Sons Ltd
Tata Sky Limited Subsidiary of Tata Sons Ltd
Tata Capital Financial Services Ltd Subsidiary of Tata Sons Ltd
Tata Housing Development Company Ltd Subsidiary of Tata Sons Ltd
Tata International West Asia DMCC Subsidiary of Tata Sons Ltd
Tata Limited Subsidiary of Tata Sons Ltd
Tata-Aig General Insurance Company Limited Subsidiary of Tata Sons Ltd
TC Travel And Services Ltd ( Up to Oct 30, 2017) Subsidiary of Tata Sons Ltd
The remuneration of directors and key executives is determined by the remuneration committee having regard to the performance of individuals and market trends. The above figures do not include provisions for compensated absences leave, gratuity and premium paid for group health insurance as separate actuarial valuation / premium paid are not available.
The transactions during the year ended March 31, 2017 and balances outstanding as at March 31, 2017:
Notes:
i. Pending resolution of the respective proceedings, it is not practicable for the Company to estimate the timings of cash outflows, if any, in respect of the above as it is determinable only on receipt of judgments/decisions pending with various forums/authorities.
ii. The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed as contingent liabilities where applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have a materially adverse effect on its financial position.
8. Segment information
The Chief Executive Officer and Managing Director of the Company has been identified as the Chief Operating Decision Maker (CODM) as defined by Ind AS 108 - operating segments. The CODM evaluates the Company''s performance and allocates resources based on an analysis of various performance indicators by industry classes. Accordingly, the segment information has been presented for industry classes.
The Company has identified business segments as its primary segment. Business segments are primarily system integration & support and software development & services.
Each segment item reported is measured at the measure used to report to CODM for the purposes of making decisions about allocating resources to the segment and assessing its performance.
Revenues and expenses directly attributable to segments are reported under each reportable segment. All other expenses which are not attributable or allocable to segments have been disclosed as unallocable expenses. Assets and liabilities that are directly attributable or allocable to segments are disclosed under each reportable segment. All other assets and liabilities are disclosed as unallocable. Property, plant & equipment that are used interchangeably amongst segments are not allocated to primary segment.
The geographic segments individually contributing 10 percent or more of the Company''s revenues and segment noncurrent operating assets are shown separately:
Information about major customers:
The revenues of Rs, 132,938.93 (previous year Rs, 117,072.39) lakhs arising from the software development and services segment includes Rs, 35,079.76 (Previous year Rs, 32,763.89) lakhs representing revenue of more than 10% of the total revenue of the Company is from one customer.
9. Disclosures required under Section 22 of the Micro, Small and Medium Enterprises Development Act, 2006
10. Corporate Social Responsibility:
a. Gross amount required to be spent by the Company during the year Rs, 375.09 lakhs (March 31, 2017 Rs, 282.09 lakhs)
* Includes overhead expense of Rs, 18.75 lakhs (March 31, 2017 Rs, 14.10 lakhs)
36. The Company has entered into incubation agreement for providing services pertaining to promotion of business of the entrepreneurs and also providing infrastructure facilities and resources. In consideration for the services rendered shares has been allocated /transferred as under.
Considering probability of successful outcome of such development and the ability of these entities to commercialise the product being developed, as a matter of prudence the company has recorded these investments at Rs, 1/-. Any gain on such investment will be recognized on its disposal.
11. The aggregate amount of research and development expenditure recognized as an expense during the year is Rs, 1,990.67 lakhs (Previous year Rs, 1,689.82 lakhs ).
12. Subsequent event note Dividends
During the year ended March 31, 2018 the Company paid total dividends of Rs, 16 per equity share for the year ended March 31, 2017. During the year ended March 31, 2017 the Company paid total dividends of Rs, 14 per equity share for the year ended March 31, 2016.
Dividends declared by the Company are based on the profit available for distribution. Distribution of dividend out of General Reserve and Retained earnings is subject to applicable dividend distribution tax. On April 26, 2018, the Board of Directors of the Company have proposed a final dividend of Rs, 11 per share in respect of the year ended March 31, 2018 subject to the approval of shareholders at the Annual General Meeting.
13. Previous year''s/period figures have been regrouped / reclassified wherever necessary to correspond with the current year''s/periods classification / disclosure.
14. Previous year financial statements were audited by a firm other than B S R & Co LLP.
Mar 31, 2017
II. Forward exchange contracts and options [being derivative instruments], which are not intended for trading or speculative purposes but for hedge purposes to establish the amount of reporting currency required or available at the settlement date of certain payables and receivables.
1 Employee benefit plans
2 a Defined contribution plans
The Company makes Provident Fund, Superannuation Fund and contributions Employee State Insurance as defined contribution plans for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognized Rs,,170.26 lakhs (Year ended 31 March, 2016 Rs,902.21 lakhs) for Provident Fund contributions, Rs, 476.91 lakhs (Year ended 31 March, 2016 Rs, 434.13 lakhs) for Superannuation Fund contributions and Employee State Insurance Scheme Rs,4.77 lakhs (Year ended 31 March, 2016 Rs,3.62 lakhs) in the Statement of Profit and Loss. Company also had contributed towards Employee Insurance Schemes outside India amounting to Rs, 130.87 lakhs (Year ended 31st March. 2016 Rs,87.56 lakhs). The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.
3 b Defined benefit plans
The Company offers gratuity (included as part of Contribution to Provident and other funds in Note 20 Employee benefits expense) to its employees under defined benefit plans.
The following table sets out the funded status of the defined benefit schemes and the amount recognized in the financial statements:
4 Segment information
The Company has identified business segments as its primary segment and geographic segments as its secondary segment. Business segments are primarily System integration & support and Software development & services. Revenues and expenses directly attributable to segments are reported under each reportable segment.
All other expenses which are not attributable or allocable to segments have been disclosed as unallowable expenses. Assets and liabilities that are directly attributable or allocable to segments are disclosed under each reportable segment. All other assets and liabilities are disclosed as unallowable. Fixed assets that are used interchangeably amongst segments are not allocated to primary and secondary segments. Geographical revenues are allocated based on the location of the customer. Geographic segments of the Company are India, Europe, US, Japan and others.
Note: Figures in bracket with respect to statement of profit and loss items pertain to year ended 31st Mar 2016. Segment revenue in India comprises revenue from System Integration and Software development and services. Segment revenue outside India predominantly comprises revenue from software development and services. Segment assets include all assets relating to the segment and consist principally of fixed assets, receivables, inventory, other current and non-current assets. Assets located outside India primarily relate to trade receivables.
Considering probability of successful outcome of such development and the ability of these entities to commercialize the product being developed, as a matter of prudence the company has recorded these investments at Re.1/-. Any gain on such investment will be recognized on its disposal.
5. The aggregate amount of research and development expenditure recognized as an expense during the year is Rs, 1689.82 lakhs (Previous year Rs, 1556.00 lakhs )
6 The Board of Directors at its meeting held on April 27, 2017 have recommended a dividend of 160% (Rs, 16 per equity share of par value Rs,10/- each) which is subject to approval of shareholders. If approved, this would result in a cash outflow of approximately Rs,5,996.36 lakhs, inclusive of dividend distribution tax.
7. Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s/ periods classification / disclosure.
Mar 31, 2015
1 Corporate information
Tata Elxsi Limited was incorporated in 1989. The Company provides
product design and engineering services to the consumer electronics,
communications & transportation industries and systems integration and
support services for enterprise customers. It also provides digital
content creation for media and entertainment industry.
The company is headquartered in Bengaluru, and operates through
delivery centers in Bengaluru, Chennai, Pune, Mumbai and
Tiruvananthapuram. Its sales operations are located in multiple cities
in India, and in multiple international locations including Dubai,
France, Germany, Japan, UK, Ireland and USA.
Rs lakhs
As at As at
31 March, 2015 31 March, 2014
2.1 Contingent liabilities and
commitments (to the extent not provided
for)
(i) Contingent liabilities
(a) Claims against the Company not
acknowledged as debt
1. Disputed demands for Income Tax
aggregates. 580.83 502.40
2. Disputed demands for Wealth Tax
aggregates. 25.89 25.89
3. Service tax matters 842.26 842.26
4. Bank Guarantees 766.16 865.07
(b) Guarantees - Guarantees given to a
Housing Finance Company for 37.06 51.85
housing loans availed by employees during
their employment with the company
(ii) Capital Commitments:
Estimated amount of contracts remaining
to be executed on capital account and
not provided for Tangible fixed assets 184.73 780.00
Intangible assets 61.94 314.99
2.2 Details on derivatives instruments and unhedged foreign currency
exposures
I. The following derivative positions are open as at 31 March, 2015.
These transactions have been undertaken to act as economic hedges for
the Company''s exposures to various risks in foreign exchange markets
and may/ may not qualify or be designated as hedging instruments. The
accounting for these transactions is stated in Notes 2.10 and 2.21
(a) Forward exchange contracts and options [being derivative
instruments], which are not intended for trading or speculative
purposes but for hedge purposes to establish the amount of reporting
currency required or available at the settlement date of certain
payables and receivables.
(i) Outstanding forward exchange contracts entered into by the Company
as on 31 March, 2015 - Nil Previous year (Nil)
In accordance with the transition provisions prescribed in Schedule II
to the Companies Act, 2013, the Company has fully depreciated the
carrying value of assets, net of residual value, where the remaining
useful life of the asset was determined to be nil as on April 1, 2014,
and has adjusted an amount of Rs. 1,329.58 lakhs (net of deferred tax of
Rs. 684.63 lakhs) against the opening Surplus balance in the Statement of
Profit and Loss under Reserves and Surplus.
The depreciation expense in the Statement of Profit and Loss for the
year is higher by Rs. 311.72 lakhs consequent to the change in the useful
life of the assets.
2.3 Employee benefit plans
2.3.a Defined contribution plans
The Company makes Provident Fund and Superannuation Fund contributions
to defined contribution plans for qualifying employees. Under the
Schemes, the Company is required to contribute a specified percentage
of the payroll costs to fund the benefits. The Company recognised Rs.
697.13 lakhs (Year ended 31 March, 2014 Rs. 608.74 lakhs) for Provident
Fund contributions and Rs. 360.38 lakhs (Year ended 31 March, 2014Rs.242.41
lakhs) for Superannuation Fund contributions, Employee state Insurance
Scheme Rs.3.86 lakhs (Year ended 31 March, 2014 Rs. 3.46 lakhs) in the
Statement of Profit and Loss.Company makes foreign contribution towards
ESIC Rs. 92.33 lakhs (Year ended 31 March, 2014Rs.60.08 lakhs) The
contributions payable to these plans by the Company are at rates
specified in the rules of the schemes.
2.4 Segment information
The Company has identified business segments as its primary segment and
geographic segments as its secondary segment. Business segments are
primarily System integration & support and Software Development &
Services. Revenues and expenses directly attributable to segments are
reported under each reportable segment. All other expenses which are
not attributable or allocable to segments have been disclosed as
unallocable expenses. Assets and liabilities that are directly
attributable or allocable to segments are disclosed under each
reportable segment. All other assets and liabilities are disclosed as
unallocable. Fixed assets that are used interchangeably amongst
segments are not allocated to primary and secondary segments.
Geographical revenues are allocated based on the location of the
customer. Geographic segments of the Company are India, US, UK, Europe,
and Others
3 The schedule III to the Companies Act, 2013 has become effective
from 01 April, 2014 for the preparation of financial statements and
accordingly, disclosure and presentation have been made in the
financial statements.
4 Previous year''s figures have been regrouped/reclassified wherever
necessary to correspond with the current year''s classification/
disclosure.
Mar 31, 2014
1 Corporate information
Tata Elxsi Limited was incorporated in 1989. The Company provides
product design and engineering services to the consumer electronics,
communications & transportation industries and systems integration and
support services for enterprise customers. It also provides digital
content creation for media and entertainment industry.
The Company is headquartered in Bangalore, and operates through
delivery centers in Bangalore, Chennai, Pune, Mumbai and
Tiruvananthapuram.
Its sales operations are located in multiple cities in India, and in
multiple international locations including Dubai, France, Germany,
Japan, UK and USA.
Rs. lakhs
As at 31 As at 31
March,
2014 March, 2013
2 Contingent liabilities and commitments
(to the extent not provided for)
(i) Contingent liabilities
(a) Claims against the Company not
acknowledged as debt
1. Disputed demands for Income Tax
aggregates 502.40 502.40
2. Disputed demands for Wealth Tax
aggregates 25.89 25.89
3. Disputed amount of Sales Tax aggregates  656.72
4. Service tax matters 842.26 842.26
5. Other claims not acknowledged as debts  484.85
(b) Guarantees- Guarantees given to a
Housing Finance Company for 51.85 73.96
housing loans availed by employees
during their employment with
the company
(ii) Capital Commitments :
Estimated amount of contracts remaining to
be executed on capital
account and not provided for
Tangible fixed assets 780.00 465.29
Intangible assets 314.99 250.39
3.1 Details on derivatives instruments and unhedged foreign currency
exposures
I. The following derivative positions are open as at 31 March, 2014.
These transactions have been undertaken to act as economic hedges for
the Company''s exposures to various risks in foreign exchange markets
and may / may not qualify or be designated as hedging instruments. The
accounting for these transactions is stated in Notes 2.10 and 2.21.
(a) Forward exchange contracts and options (being derivative
instruments), which are not intended for trading or speculative
purposes but for hedge purposes to establish the amount of reporting
currency required or available at the settlement date of certain
payables and receivables.
(i) Outstanding forward exchange contracts entered into by the Company
as on 31st March, 2014-Nil Previous year (Nil)
(ii) Outstanding option contracts entered into by the Company as on
31st March, 2014
4 Disclosures under Accounting Standards
4.1 Employee benefit plans
4.1.a Defined contribution plans
The Company makes Provident Fund and Superannuation Fund contributions
to Defined contribution plans for qualifying employees. Under the
Schemes, the Company is required to contribute a specified percentage of
the payroll costs to fund the Benefits. The Company recognised Rs. 608.74
lakhs (Year ended 31st March, 2013 Rs. 628.74 lakhs) for Provident Fund
contributions and Rs. 242.41 lakhs (Year ended 31st March, 2013 Rs. 232.69
lakhs) for Superannuation Fund contributions, Employee state Insurance
Scheme Rs. 3.46 lakhs (Year ended 31st March, 2012 Rs. 3.57 lakhs) in the
Statement of Profit and Loss. The contributions payable to these plans
by the Company are at rates specified in the rules of the schemes.
4.1.b Defined benefit plans
The Company offers gratuity (included as part of Contribution to
Provident and other funds in Note 21 Employee Benefits expense) to its
employees under Defined benefit plans.
4.2 Segment information
The Company has identified business segments as its primary segment and
geographic segments as its secondary segment. Business segments are
primarily System integration & support and Software Development &
Services. Revenues and expenses directly attributable to segments are
reported under each reportable segment. All other expenses which are
not attributable or allocable to segments have been disclosed as
un-allocable expenses. Assets and liabilities that are directly
attributable or allocable to segments are disclosed under each
reportable segment. All other assets and liabilities are disclosed as
un-allocable. Fixed assets that are used interchangeably amongst
segments are not allocated to primary and secondary segments.
Geographical revenues are allocated based on the location of the
customer. Geographic segments of the Company are India, Europe, US,
Japan and Others
Segment revenue in India comprises revenue from System Integration and
software development and services. Segment revenue outside India
predominantly comprises revenue from software development and services.
Segment assets include all assets relating to the segment and consist
principally of Fixed assets, Receivables, Inventory, Other Current and
Non-Current Assets. Assets located outside India primarily relate to
Trade Receivables.
4.3.c Advance to A Squared Elxsi Entertainment LLC, USA
Exceptional item in the previous year relates to the settlement of the
demand received from the Banker to whom the Company had given a
financial guarantee on behalf of A Squared Elxsi Entertainment LLC, USA
("A2E2"), an entity that was proposed to be a joint venture company of
the Company.
5 Previous year''s figures have been regrouped/reclassified wherever
necessary to correspond with the current year''s
classification/disclosure.
Mar 31, 2013
1 Corporate information
Tata Elxsi Limited was incorporated in 1989. The Company provides
product design and engineering services to the consumer electronics,
communications & transportation industries and systems integration and
support services for enterprise customers. It also provides digital
content creation for media and entertainment industry
The company is headquartered in Bangalore, and operates through
delivery centers in Bangalore, Chennai, Pune, Mumbai and
Thiruvananthapuram.
Its sales operations are located in multiple cities in India, and in
multiple international locations including Dubai, France, Germany,
Japan, UK and USA.
2.1 Details on derivatives instruments and unhedged foreign currency
exposures
I. The following derivative positions are open as at 31 March, 2013.
These transactions have been undertaken to act as economic hedges for
the Company''s exposures to various risks in foreign exchange markets
and may / may not qualify or be designated as hedging instruments. The
accounting for these transactions is stated in Notes 2.10 and 2.21
(a) Forward exchange contracts and options (being derivative
instruments), which are not intended for trading or speculative
purposes but for hedge purposes to establish the amount of reporting
currency required or available at the settlement date of certain
payables and receivables.
3.1 Employee benefit plans 24.1.a Defined contribution plans
The Company makes Provident Fund and Superannuation Fund contributions
to defined contribution plans for qualifying employees. Under the
Schemes, the Company is required to contribute a specified percentage
of the payroll costs to fund the benefits. The Company recognised
Rs.628.74 lakhs (Year ended 31 March, 2012 Rs. 471.93 lakhs) for
Provident Fund contributions and Rs.232.69 lakhs (Year ended 31 March,
2012 Rs. 197.99 lakhs) for Superannuation Fund contributions, Employee
state Insurance Scheme Rs. 3.57 lakhs (Year ended 31 March, 2012 Rs
5.41 lakhs) in the Statement of Profit and Loss. The contributions
payable to these plans by the Company are at rates specified in the
rules of the schemes.
3.2 Segment information
The Company has identified business segments as its primary segment and
geographic segments as its secondary segment. Business segments are
primarily System integration & support and Software Development &
Services. Revenues and expenses directly attributable to segments are
reported under each reportable segment. All other expenses which are
not attributable or allocable to segments have been disclosed as
unallocable expenses. Assets and liabilities that are directly
attributable or allocable to segments are disclosed under each
reportable segment. All other assets and liabilities are disclosed as
unallocable. Fixed assets that are used interchangeably amongst
segments are not allocated to primary and secondary segments.
Geographical revenues are allocated based on the location of the
customer. Geographic segments of the Company are India, Europe, US,
Japan and Others
3.3.a Advance to A Squared Elxsi Entertainment LLC, USA
The Company had entered into an agreement with A Squared Entertainment
LLC, USA ("A2") for carrying on business in the field of animated
content development, development of related characters/intellectual
property and licensing thereof to merchandising companies, pursuant to
which A Squared Elxsi Entertainment LLC ("A2E2") was incorporated to
carry on the activities stated in the agreement. In the previous year,
the Company remitted USD 1,000,001 as Share Application Money to A2E2
against which shares were yet to be allotted. The Company had
recognised Rs.411 lakhs (Approximately USD 7,95,000) in the previous
year ended 31.03.2012 and Rs.107 lakhs (Approximately USD 2,05,000)
during the current year as provision against such Share Application
Money. On June 22nd 2012, the company had intimated A2E2 of it''s
decision not to further finance the operation of A2E2, pursuant to
which the company ceased its association with A2 and A2E2. Subsequently
the company received a demand from the Banker of A2E2 to whom the
company had given a financial guarantee towards the outstanding dues of
Rs. 1,589.57 lakhs (USD 30.19 lakhs) due by A2E2 to its banker. The
Company has settled it''s obligation towards the bank guarantee and
accrued the said amount, which is included as exceptional item in the
financials.
4 Previous year''s figures have been regrouped / reclassified wherever
necessary to correspond with the current year''s classification /
disclosure.
Mar 31, 2012
1 Corporate information
Tata Elxsi Limited was incorporated in 1989. The Company provides
product design and engineering services to the consumer electronics,
communications & transportation industries and systems integration and
support services for enterprise customers. It also provides digital
content creation for media and entertainment industry.
The company is headquartered in Bangalore, and operates through
delivery centers in Bangalore, Chennai, Coimbatore, Pune, Mumbai and
Tiruvananthapuram.
Its sales operations are located in multiple cities in India, and in
multiple international locations including Dubai, France, Germany,
Japan, UK and USA.
Rs. lakhs
As at 31, As at 31,
March March
2012 2011
2.1 Contingent liabilities and
commitments (to the extent not provided for)
(i) Contingent liabilities
(a) Claims against the Company not
acknowledged as debt
1. Disputed demands for Income Tax aggregates. 1,038.12 1,040.69
Rs. lakhs
As at 31, As at 31,
March March
2012 2011
2. Disputed demands for Wealth Tax aggregates. 25.89 25.89
3. Disputed amount of Sales Tax aggregates. 656.83 656.83
4. Service tax matters. 842.26 193.61
5. Amount not recognised as debts. 292.44 -
(b) Guarantees- Guarantees given to a Housing
Finance Company for housing loans 104.96 122.87
availed by employees during their
employment with the company
(c) Guarantee given to a bank for a loan to
be secured by A Squared Elxsi Entertainment 1,594.50 -
LLC, USA(A2E2)
(d) Loan drawn by A2E2 against the above
guarantee 1,024.38 -
(ii) Capital Commitments :
Estimated amount of contracts remaining to be
executed on capital account and not
provided for :
Tangible assets 198.30 215.10
Intangible assets 141.50 37.51
2.2 Details on derivatives instruments and unhedged foreign currency
exposures
I. The following derivative positions are open as at 31 March, 2012.
These transactions have been undertaken to act as economic hedges for
the Company's exposures to various risks in foreign exchange markets
and may / may not qualify or be designated as hedging instruments. The
accounting for these transactions is stated in Notes 2.11 and 2.22
(a) Forward exchange contracts and options [being derivative
instruments], which are not intended for trading or speculative
purposes but for hedge purposes to establish the amount of reporting
currency required or available at the settlement date of certain
payables and receivables.
3.1 Employee benefit plans
3.1 .a Defined contribution plans
The Company makes Provident Fund and Superannuation Fund contributions
to defined contribution plans for qualifying employees. Under the
Schemes, the Company is required to contribute a specified percentage
of the payroll costs to fund the benefits. The Company recognised Rs.
471.93 lakhs (Year ended 31 March, 2011 Rs. 415.99 lakhs) for Provident
Fund contributions and Rs.197.99 lakhs (Year ended 31 March, 2011 Rs.
150.95 lakhs) for Superannuation Fund contributions in the Statement of
Profit and Loss. The contributions payable to these plans by the
Company are at rates specified in the rules of the schemes.
3.2 Segment information
The Company has identified business segments as its primary segment and
geographic segments as its secondary segment. Business segments are
primarily System Integration & Support and Software Development &
Services. Revenues and expenses directly attributable to segments are
reported under each reportable segment. All other expenses which are
not attributable or allocable to segments have been disclosed as
unallocable expenses. Assets and liabilities that are directly
attributable or allocable to segments are disclosed under each
reportable segment. All other assets and liabilities are disclosed as
unallocable. Fixed assets that are used interchangeably amongst
segments are not allocated to primary and secondary segments.
Geographical revenues are allocated based on the location of the
customer. Geographic segments of the Company are India, Europe, US,
Japan and Others Segment asset include all assets relating to the
segment and consist principally of fixed assets, receivables, other
current assets and non-current assets.
Segment liabilities include all liabilities relating to the segment and
consist principally of trade payables on other operating liabilities.
Note: Figures in bracket relates to the previous year Segment revenue
in India comprises revenue from System Integration and software
development and services. Segment revenue outside India predominantly
comprises revenue from software development and services. Segment
assets include all assets relating to the segment and consist
principally of Fixed assets, Receivables, Inventory, Other Current and
Non-Current Assets. Assets located outside India primarily relate to
Trade Receivables.
3.3.c Investment in A Squared Elxsi Entertainment LLC, USA
The Company has entered into a Joint Venture Agreement with A Squared
Entertainment LLC, USA ("A2") for carrying on business in the field of
animated content development, development of related characters/
intellectual property, and licensing thereof to merchandising
companies, pursuant to which A Squared Elxsi Entertainment LLC, USA
("A2E2") has been incorporated to carry on the activities of the joint
venture. The Company has remitted USD 1,000,001 as Share Application
Money to A2E2, against which shares are yet to be allotted as at March
31, 2012. The JV Partner, A2 is in the process of completing its
obligation under the agreement, on completion of which and issuance of
equity to both the parties, A2E2 will become a subsidiary of the Company.
4 The Revised Schedule VI has become effective from 1 April, 2011 for
the preparation of financial statements. This has significantly
impacted the disclosure and presentation made in the financial
statements. Previous year's figures have been regrouped / reclassified
wherever necessary to correspond with the current year's classification
/ disclosure.
Mar 31, 2011
1. Estimated amount of contracts remaining to be executed on capital
account (net of advances) Rs.252.61 lakhs (Previous year Rs. 248.59
lakhs).
2. Contingent liabilities
a) Disputed demands for Income Tax aggregates to Rs. 1,040.69 lakhs
(Previous year Rs. 921.90 lakhs).
b) Disputed demands for Wealth Tax aggregates to Rs. 25.89 lakhs
(Previous year Rs. 25.89 lakhs).
c) Guarantees given to Housing Finance Company for housing loans
availed by employees during their employment with the Company Rs.122.87
lakhs (Previous year Rs. 135.03 lakhs).
d) Disputed amount of Sales Tax aggregates to Rs. 656.83 lakhs
(Previous year Rs. 0.11 Lakhs).
e) Service tax matters Rs. 193.61 lakhs (Previous year: Nil)
The above information that is given in Schedule 11 - "Current
Liabilities & Provisions" regarding Micro and Small Enterprises has
been determined to the extent such parties have been identified on the
basis of information collected by the Management based on enquiries
made with the vendors. This has been relied upon by the auditors.
Basic Earnings per Share is calculated by dividing the net profit or
loss for the year attributable to equity shareholders by the weighted
average number of equity shares outstanding during the period.
3. Provision for tax includes Rs. 135.00 lakhs (Previous year Rs.
140.04 lakhs) in respect of overseas operations.
4. Employee benefits
The estimates of future salary increase considered in the actuarial
valuation take into account inflation, seniority, promotion and other
relevant factors such as supply and demand in the employment market.
The above information is certified by the actuary and relied upon by
the auditors.
The employers best estimates of the contribution expected to be paid to
the plan during the next year is Rs 163.61 lakhs (Previous year: Rs.
130.18 lakhs)
b) Defined contribution plans
The Company makes Provident Fund and Superannuation Fund contributions
to defined contribution retirement benefit plans for qualifying
employees. Under the schemes, the Company is required to contribute a
specified percentage of the payroll costs to fund the benefits.
The Provident Fund scheme additionally requires the Company to
guarantee payment of interest at rates notified by the Central
Government from time to time. However considering the size of the
investment in the Provident Fund and the Provident Fund liabilities
accrued to the employees at the Balance Sheet Date, the Company
believes that there would not be any shortfall in the Fund balance and
hence no actuarial valuation has been carried out towards interest
payments to be made in the future.
The Company recognised Rs. 415.99 Lakhs (Previous year Rs.425.97 Lakhs)
for provident fund contributions and Rs. 150.95 Lakhs (Previous year:
Rs. 161.62 Lakhs) for superannuation contributions in the Profit and
Loss account. The contributions payable to these plans by the Company
are at rates specified in the rules of the schemes.
5. Related party disclosure
A. Related parties and their relationships
Tata Elxsi (Singapore) Pte Ltd. Subsidiary Company
Tata Sons Limited Company with significant
influence
Mr. Madhukar Dev - Managing Director Key management personnel
Note:
Related party relationship is as identified by the Company on the basis
of information available with them and relied upon bythe auditors.
There have been no dues from or to related parties which have been
written off or written back during the year.
6. Operating Lease
The Company has entered into operating leases in respect of office
premises. The lease rentals charged to the Profit & Loss account in
respect of these leases amount to Rs. 1,193.81 lakhs. (Previous Year
Rs. 1,136.12 Lakhs).
7. Segment reporting
The Companys operations predominantly relate to providing systems
integration and software development services in the Information
Technology field.
Accordingly the Systems Integration & Support and Software Development
& Services comprise the primary basis for segmental information. The
secondary segment is geographical, determined based on the location of
the clients. Clients are classified as either India or Overseas.
8. Derivative Financial Instruments
Outstanding Forward Exchange Contracts, which are not intended for
trading or speculative purposes, but for hedge purposes, to establish
the amount of reporting currency required or available at the
settlement date of certain payables and receivables, are as follows.
9. Notes relating to Cash Flow Statement
a) The cash flow statement has been prepared under the "Indirect
Method" as set out in the Accounting Standard 3 - Cash Flow Statements
as per the Companies (Accounting Standards) Rules, 2006.
b) Cash and cash equivalents include balances with scheduled banks on
dividend account Rs.235.82 Lakhs (Previous year Rs. 220.85 Lakhs) which
are not available for use by the company.
c) Cash and cash equivalents include balances in deposit accounts Rs.
1.72 Lakhs (Previous year Rs. 1.72 Lakhs) which are not available for
use by the company.
10. The Board of Directors of the company has given consent with
regard to non-disclosure of information referred to in paragraphs
3(i)(a) and 3(ii)(b) of Schedule VI part II of the Companies Act, 1956
under notification S.0.301 (E) dated February 08,2011 issued by the
Ministry of Corporate Affairs, Government of India.
11. Figures for the previous year have been regrouped and rearranged
wherever necessary to conform to the current years classifications.
Mar 31, 2010
1. Estimated amount of contracts remaining to be executed on capital
account (net of advances) Rs.248.59 lakhs (previous year Rs. 308.11
lakhs).
2. Contingent liabilities
a) Disputed demands for Income Tax aggregates to Rs. 921.90 lakhs
(Previous year Rs. 685.99 lakhs).
b) Disputed demands for Wealth Tax aggregates to Rs. 25.89 lakhs
(Previous year Rs. 25.89 lakhs).
c) Guarantees given to Housing Finance Company for housing loans
availed by employees during their employment with the Company Rs.
135.03 lakhs (Previous year Rs. 152.88 lakhs).
d) Disputed amount of Sales Tax aggregates to Rs. 0.11 lakhs (Previous
year Rs. 1.50 Lakhs).
e) Debts discounted / factored with a banker Rs Nil ( Previous year: Rs
928 lakhs).
3. There are no Micro, Small and Medium Enterprises, to whom the
Company owes dues, as at March 31,2010.This information has been
determined to the extent such parties have been identified on the basis
of information available with the company and relied upon by the
auditors.
4. Provision for tax includes Rs. 140.04 lakhs (previous year Rs.
225.00 lakhs) in respect of overseas operations.
b Defined contribution plans
The Company makes Provident Fund and Superannuation Fund contributions
to defined contribution retirement benefit plans for qualifying
employees. Under the schemes, the Company is required to contribute a
specified percentage of the payroll costs to fund the benefits.
The Provident Fund scheme additionally requires the Company to
guarantee payment of interest at rates notified by the Central
Government from time to time. However considering the size of the
investment in the Provident Fund and the Provident Fund liabilities
accrued to the employees at the Balance Sheet Date, the Company
believes that there would not beany shortfall in the Fund balance and
hence no actuarial valuation has been carried out towards interest
payments to be made in the future.
The Company recognised Rs. 785.00 Lakhs (Previous year Rs. 776.15
Lakhs) for provident fund contributions and Rs. 161.62 Lakhs (Previous
year: Rs. 159.05 Lakhs) for superannuation contributions in the Profit
and Loss account. The contributions payable to these plans by the
Company are at rates specified in the rules of the schemes.
5. Operating Lease
The Company has entered into operating leases in respect of office
premises. The lease rentals charged to the Profit & Loss account in
respect of these leases amount to Rs. 1,136.12 lakhs. (Previous Year
Rs. 1,205.34 Lakhs)
6. Segment reporting
The CompanyÃs operations predominantly relate to providing systems
integration and software development services in the Information
Technology field.
Accordingly the systems integration & support and software development
& services comprise the primary basis for segmental information. The
secondary segment is geographical, determined based on the location of
the clients. Clients are classified as either India or overseas.
7. Notes relating to Cash Flow Statement
a) The cash flow statement has been prepared under the ÃIndirect
Methodà as set out in Ãthe Accounting Standard 3 à Cash Flow
Statementsà as per the Companies (Accounting Standards) Rules, 2006.
b) Cash and cash equivalents include balances with scheduled banks on
dividend account Rs.220.85 Lakhs (Previous year Rs. 205.94 Lakhs) which
are not available for use by the company.
8. Figures for the previous year have been regrouped and rearranged
wherever necessary to conform to the current yearÃs classifications.