Notes to Accounts of TeamLease Services Ltd.

Mar 31, 2018

1 Corporate information

TeamLease Services Limited (the “Company”) is a HR Services Company incorporated on 2 February 2000 and the registered office is located at Office No. 6, 3rd Floor, C wing Laxmi Towers, Bandra Kurla Complex, Mumbai, Maharashtra - 400 051. The Company provides to its clients, solution for their staffing and HR requirements offering a gamut of services that include Temporary Staffing, Permanent Recruitment, Payroll Process Outsourcing, Regulatory Compliance Services, Vocational Training / Education and Assessments.

The Company has been converted into a Public Limited company, changed its name from TeamLease Services Private Limited to TeamLease Services Limited and obtained a fresh certificate of incorporation dated 15 May 2015. The equity shares of the Company got listed on National Stock Exchange of India Limited (“NSE”) and BSE Limited (“BSE’) w.e.f. 12 February 2016.

The standalone financial statements are approved by the board of directors and authorized for issue in accordance with a resolution of the directors on 16 May 2018.

2 Basis of preparation

(i) Compliance with Ind AS

The standalone financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) specified under section 133 of Companies Act, (the act) read with the Companies (Indian Accounting Standards) Rules, 2015, (as amended).

The standalone financial statements of the Company for all the periods upto and including the year ended 31 March 2017 were prepared in accordance with the accounting standards notified under section 133 of the Companies Act 2013 (‘the Act’), read together with Rule 7 of the Companies (Accounts) Rules, 2014 (as amended) and other relevant provisions of the Act. These standalone financial statements for the year ended March 31 2018 are the first the Company has prepared in accordance with Ind AS. Refer note 45 for information on how the Company has adopted IND AS.

(ii) Historical cost convention

The financial statements have been prepared on a historical cost basis, except for the following:

a) Certain financial assets and liabilities measured at fair value as explained in the accounting policies;

b) Defined benefit plan assets measured at fair value; and

c) Share-based payments are measured at fair value.

Historical cost is generally based on the fair value of the consideration given in exchange for goods and services as at the date of respective transactions.

The standalone financial statements are presented in Indian Rupee and all values are rounded to nearest lakhs except when otherwise stated.

1) Provision for diminution in the value of investments includes RS.2,198.38 lakhs (31 March 2017 RS.2,198.38 lakhs and 1 April 2016: RS.2,198.38 lakhs) towards investment in IIJT and Rs. Nil (Previous Year Rs. Nil and 01 April 2016: RS.1 lakh) towards investment in ITHS.

2) The Company entered into a definitive agreement on 29 May 2017 to acquire 30% stake in Cassius Technologies Private Limited (‘CTPL’). CTPL is engaged in rendering end to end online services for software product engineering.

3) The Company entered into a definitive agreement on 8 November 2017, with School Guru Eduserve Private Limited (‘School Guru’) to acquire 16.31% equity stake in School Guru (on fully diluted basis) and further subscribed to CCCPS. School Guru is engaged in rendering technology-led specialized academic services.

4) On 31 March 2018, the Company subscribed to 1,325,000 equity shares 0 RS.50 per share (Face Value of RS.10 per share) and CCDs of RS.10 lakhs each in TDPL. The CCD’s are convertible into equity shares on or before 10 years from the date of allotment, at the fair value as at the conversion date.

5) On 27 December 2016, the Company has disposed off 100% of its investments in the equity shares of ITHS and NEAS at RS.1 lakh each. Accordingly ITHS and NEAS ceases to be subsidiaries of the Company.

a) No receivable is due from directors or other officers of the Company either severally or jointly with any other person. For trade or other receivable due from firms or private companies respectively in which any director is a partner, a director or a member, refer note 37.

b) Trade receivables are non-interest bearing and with credit period upto 90 days.

(iv) Terms/ rights attached to equity shares

The Company has one class of equity shares having a par value of RS.10 per share. Each shareholder is eligible for one vote per share held. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

(vi) There are no shares reserved for issue under options, except held by TeamLease Employee Stock Option Plan Trust. Also refer note 32.

(vii) Aggregate number of bonus shares issued, shares issued for consideration other than cash and shares bought back during the period of five years immediately preceding the reporting date:

(a) On 25 June 2015, the shareholders of the Company approved the issue and allotment of 29 Bonus equity shares of Re. 1 each for every equity share of Re. 1 each held by the members as on that date. Post such bonus issue, every 10 equity shares of Re 1 of the Company are consolidated into 1 equity share of RS.10 each thereby, 153,320,640 shares of Re.1 each had been consolidated into 15,332,064 shares of RS.10 each w.e.f. 10 July 2015.

(b) There are no shares allotted as fully paid up pursuant to contract without payment being received in cash during the period of five years immediately preceding the year ended 31 March 2018.

(c) There are no shares bought back by the Company during the period of five years immediately preceding the year ended 31 March 2018.

(viii) Pursuant to Initial Public Offering (IPO) during the year ended 31 March 2016, 1,764,705 equity shares of the Company of RS.10 each were allotted at RS.850 per equity share on 10 February 2016.

Nature and purpose of other reserves (i) Securities premium reserve

Securities premium reserve is used to record the premium on issue of shares. The reserve is utilised in accordance with the provisions of the Companies Act, 2013.

(ii) Stock option outstanding reserve

This reserve relates to stock options granted by the Company to employees under TeamLease Employee Stock Option Plan.

Based on the information available with the Company, there are no suppliers who are registered as micro or small enterprises under The Micro, Small and Medium Enterprises Development Act, 2006.

The following reflects the income and share data used in the basic and diluted EPS computation:

Note 3: Employee benefit obligation Provident fund

Provident Fund for eligible employees is managed by the Company through TeamLease Employees Provident Fund Trust (‘Trust’), in line with the Provident Fund and Miscellaneous Provisions Act, 1952. The plan guarantees interest at the rate notified by the Provident Fund Authorities. The contribution by the employer and employee together with the interest accumulated thereon are payable to the employees at the time of their separation from the Company or retirement, whichever is earlier. The benefits vests immediately on rendering of the services by the employee.

The expense recognised during the year towards provident fund is RS.16,080.43 lakhs (31 March 2017 RS.14,492.29 lakhs).

Gratuity (Associate)

The Company has recognised gratuity liability and reimbursement right in respect of associate employees in accordance with Ind AS 19.

The following table summarise the components of net benefit expense recognised in the statement of profit and loss and the funded status and amounts recognised in the balance sheet for the gratuity plan:

1) The estimates of future salary increases, considered in actuarial valuation, takes into account inflation, seniority, promotion and other relevant factors such as supply and demand factors in employment market.

2) The employee benefits expense towards gratuity and related reimbursement right for associate employees for year ended 31 March 2018 RS.2,436.24 lakhs (31 March 2017: RS.1,883.61 lakhs) have been netted off in the Statement of Profit and Loss.

Sensitivity analysis

A quantitative sensitivity analysis for significant assumptions on defined benefit obligation as at 31 March 2018 and 31 March 2017 are as shown below:

The Company expects to contribute RS.3,407.39 lakhs (31 March 2017: RS.3,725.53 lakhs) in 2018-19.

The weighted average duration of defined benefit obligation at the end of the reporting period is 2 years (31 March 2017: 2 years)

Gratuity (Core employees)

The Company has defined benefit gratuity plan for its employees. The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the Act, every employee who has completed 4 years and 240 days of service are eligible for gratuity on departure at 15 days salary (last drawn) for each completed year of service. The level of benefits provided depends on the member’s length of service and salary at retirement.

The following table summarise the components of net benefit expense recognised in the statement of profit and loss and the funded status and amounts recognised in the balance sheet for the gratuity plan:

1) The estimates of future salary increase, considered in actuarial valuation, takes into account inflation, seniority, parameter and other relevant factors such as supply and demand factors in employment matter.

Sensitivity analysis

A quantitative sensitivity analysis for significant assumptions on defined benefit obligation as at 31 March 2018 and 31 March 2017 are as shown below:

The Company expects to contribute RS.194.90 lakhs (31 March 2017: RS.165.37 lakhs) in 2018-19.

The weighted average duration of defined benefit obligation at the end of the reporting period is 4 years (31 March 2017: 4 years).

Note 4: Share based payments Employee Share Option Scheme (ESOP)

TeamLease Services Limited has granted stock options to employees of the Company. The purpose of the ‘TeamLease Services Limited ESOP Plan’ 2015 is to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to employees and to promote the success of the business. The options issued under the plan has a term of 4 years as provided in the stock grant agreement and vest based on the terms of individual grants. When exercisable, each option is convertible into one equity share. The exercise price of option is RS.10.

The stock options are restricted for sale, pledge or transfer. The Company has carried out an independent valuation of its ESOP grants for accounting and reporting purposes as on the grant dates.

The weighted average remaining contractual life for the share options outstanding as at 31 March 2018 was 0.82 years (31 March 2017: 1.82 years).

The weighted average exercise price of the outstanding option is RS.10 (31 March 2017: RS.10).

The weighted average fair value of options granted during the year was Rs. Nil (31 March 2017: RS.1,083).

The impact of the fair value of the options granted as an expense is RS.154.25 lakhs (31 March 2017: RS.294.06 lakhs) for the Company.

Note 5: Fair value measurements

Financial assets measured at fair value through profit/ loss:

There are no transfers between levels during the year.

Management has assessed that the fair value of cash and cash equivalents, bank balances other than cash and cash equivalents, investments, loans, trade receivables, trade payables, other financial assets and liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments and these are measured at amortised cost.

The fair value of the financial assets and liabilities is included in the amount at which the instruments could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

Note 6: Financial risk management objectives and policies

The Company has exposure to the following risks arising from financial instruments:

- Market risk;

- Credit risk; and

- Liquidity risk.

Risk management framework

The Company’s Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework. The Company’s risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company’s activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.

The Company’s audit committee oversees how management monitors compliance with the Company’s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The audit committee is assisted in its oversight role by internal auditors. Internal Audit function includes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee.

(a) Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises two types of risk: interest rate risk and foreign currency risk.

Financial instruments affected by market risks include trade receivable and trade payable.

(i) Foreign Currency Risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign currency rates. The Company does not have significant foreign currency exposure and hence is not exposed to any significant foreign currency risks.

(ii) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of the Company’s financial instruments will fluctuate because of changes in market interest rates. The Company does not have significant debt obligation with floating interest rates, hence is not exposed to any significant interest rate risks.

(b) Credit risk

Credit risk is the risk that counterparty will not meet its contractual obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and loans receivables, investments and other financial instruments.

Trade receivables

With respect to trade receivables/unbilled revenue, the Company has framed the policies to review the receivables on periodic basis and to take necessary mitigations, wherever required. The Company follows simplified approach’ for recognition of provision for ECL on trade receivables. The application of simplified approach does not require the Company to track changes in credit risk. Rather, it recognizes provision for ECL based on lifetime ECLs at each reporting date, right from its initial recognition.

Management does not expect any significant loss from non-performance by counterparties on credit granted during the financial year that has not been provided for.

The following table summarises the changes in the loss allowance measured using ECL:

Financial instruments

Credit risk from balances with the banks and financial institutions and current investment are managed by the Company’s treasury team based on the Company’s policy. Investment of surplus fund is made only with approved counterparties.

Counterparty credit limits are reviewed by the company periodically and the limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterparty’s potential failure to make payments.

(c) Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation. The Company monitors its risk of a shortage of funds on a regular basis. The Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts.

All financial liabilities are due within 1 year from the balance sheet date.

Note 7: Capital management

The key objective of the Company’s capital management is to ensure that it maintains a stable capital structure with the focus on total equity to uphold investor, creditor and customer confidence and to ensure future development of its business. The Company focused on keeping strong capital base to ensure independence, to ensure sustained growth in business.

The Company is predominantly equity financed. To maintain and adjust capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares.

The Company has very minimal amount of borrowings. The existing surplus funds along with the cash generated by the Company are sufficient to meet its current/non-current obligation and working capital requirements.

Note 8: Segment information Segment information

Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker (CODM). The Board of Directors of the Company is identified as the Chief Operating Decision Maker (‘CODM’) as defined by Ind AS 108, Operating Segment. The CODM evaluates the Company’s performance and allocate resources based on analysis of various performance indicators of the Company. Accordingly, segment information has been presented for the nature of services rendered by the Company.

Segment Policies:

a) The reportable business segments are in line with the segment wise information which is being presented to the CODM and for which discrete financial information is available.

b) The accounting policies consistently used in the preparation of the financial statements are also applied to record revenue and expenditure in individual segments. Assets, liabilities, revenues and direct expenses in relation to segments are categorised based on items that are individually identifiable to that segment, while other items, wherever allocable, are apportioned to the segments on an appropriate basis. Certain items are not specifically allocable to individual segments as the underlying services are used interchangeably and accordingly such items are separately disclosed as unallocated’.

(i) Reportable segments:

An operating segment is classified as reportable segment if reported revenue (including inter-segment revenue) or absolute amount of result or assets exceed 10% or more of the combined total of all the operating segments.

(ii) Segment results:

Performance of a segment is measured based on segment profit (before interest and tax), as included in the internal management reports that are reviewed by the CODM.

The Operative segment comprises of the following:

a) General Staffing and Allied Services - Comprises of Staffing Operations, Temporary Recruitment and Payroll & NETAPP.

b) Other HR Services - Comprises of Permanent Recruitment, Regulatory Compliance and Training Operations.

1. As the liability for gratuity and leave encashment is provided on actuarial valuation basis for the company as a whole, the amount pertaining to directors are not included.

2. The above includes RS.36.03 lakhs (31 March 2017: RS.55.45 lakhs) for share based compensation.

Note 9: Commitments

(a) Capital commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for as at:

(b) Other commitments

Bank guarantees to customers as at 31 March 2018 RS.2,033.13 lakhs (31 March 2017 : RS.828.67 lakhs 1 April 2016 : RS.759.97 lakhs)

(c) Non-cancellable operating leases

The Company has entered into various cancellable and non-cancellable operating lease agreements for office premises at various locations. The lease period ranges between 1 year to 9 years. The lease rental charged during the year and obligation on the long term non-cancellable operating lease as per the lease agreement are as follows :

Note 10: Deduction under section 80JJAA

As per the amendment in the Finance Act, 2016, deduction under Section 80JJAA of the Income tax Act, 1961, was extended across to all the sectors. As per the provisions of Section 80JJAA, an assessee will be allowed a deduction of an amount equal to thirty per cent of additional wages paid to the new regular workmen employed by the assessee in the previous year for three assessment years including the assessment year relevant to the previous year in which such employment is provided subject to fulfilment of the other conditions mentioned in the Section 80JJAA. The Company has started availing such deduction from financial year 2016-17 onwards.

Note 11: Corporate Social Responsibility expenditure

Consequent to the requirements of Section 135 and Schedule VII of the Companies Act, 2013, the Company is required to contribute 2% of its average net profits during the immediately three preceding financial years in pursuance of its Corporate Social Responsibility Policy.

Gross amount required to be spent by the Company towards corporate social responsibility expense (CSR) during the year is RS.80.15 lakhs (31 March 2017 RS.61.12 lakhs). The Company has not spent any amount towards CSR expenditure.

Amount utilised for share issue expenses of RS.1,219.70 lakhs includes payments made to merchant bankers, attorneys, consultants and registrars towards Initial Public Offering of shares.

The Board of Directors in their meeting held on 8 August 2017 approved to seek the shareholder’s approval through Postal Ballot for the variation/deviation in the utilisation of the un-utilised portion of the IPO proceeds. The resolution was passed by the shareholders with requisite majority on 18 September 2017.

Note 12: First time adoption

A. First time adoption

For periods up to and including the year ended 31 March 2016, the Company prepared its financial statements in accordance with generally accepted accounting principle in India (Indian GAAP or IGAAP).

Accordingly, the Company has prepared standalone financial statements which comply with Ind AS applicable for year ending on 31 March 2018, together with the comparative period data as at and for the year ended 31 March 2017, as described in the summary of significant accounting policies. In preparing these financial statements, the Company’s opening statement of financial position was prepared as at 1 April 2016, i.e., the Company’s date of transition to Ind AS. This note explains the principal adjustments made by the Company in restating its Indian GAAP financial statements, including the statement of financial position as at 1 April 2016 and the financial statements as at and for the year ended 31 March 2017.

Exemptions and exceptions availed

Ind AS 101 allows first time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has applied the following exemptions :

a) Ind AS 101 permits a first-time adopter to elect to continue with the net carrying value for investments in subsidiaries as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition. Accordingly, the Company has elected to measure its investments in subsidiaries in the standalone financial statements at their previous GAAP net carrying value.

b) Appendix C to Ind AS 17, Leases, requires an entity to assess whether a contract or arrangement contains a lease. In accordance with Ind AS 17, Leases, this assessment should be carried out at the inception of the contract or arrangement. Ind AS 101, Firsttime Adoption of Indian Accounting Standards, provides an option to make this assessment on the basis of facts and circumstances existing at the date of transition to Ind AS. The Company has elected to apply this exemption for such contracts/arrangements.

c) Ind AS 101 permits a first-time adopter to elect to continue with the net carrying value for all of its property, plant and equipment as recognised in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition. This exemption can also be used for intangible assets covered by Ind AS 38, Intangible Assets. Accordingly, the Company has elected to measure all of its property, plant and equipment, intangible assets at their previous GAAP net carrying value.

d) Business combinations

Ind AS 101 provides the option to apply Ind AS 103 prospectively from the transition date or from a specific date prior to the transition date. This provides relief from full retrospective application that would require restatement of all business combinations prior to the transition date.

The Company elected to apply Ind AS 103 prospectively to business combinations occurring after its transition date.

e) Share based payment

Ind AS 102 Share Based Payment has not been applied to equity settled share-based payment transactions that vested before date of transition to Ind AS.

f) Estimates

In accordance with Ind AS, as at the date of transition to Ind AS an entity’s estimates shall be consistent with the estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error.

Ind AS estimates as at 1 April 2016 and as at 31 March 2017 are consistent with the estimates as at the same date made in conformity with previous GAAP apart from the impairment of financial assets based on expected credit loss model where the previous GAAP did not require estimate.

g) Classification and measurement of financial assets and liabilities

The classification and measurement of financial assets are made in accordance with Ind AS 109 Financial Instruments on the basis of facts and circumstances that exist at the date of transition to Ind AS.

h) De-recognition of financial assets and liabilities

The Company has elected to apply the de-recognition provisions of Ind AS 109, Financial Instruments, prospectively from the date of transition to Ind AS.

B. Reconciliations between previous GAAP and Ind AS

The following tables represent the reconciliations from previous GAAP to Ind AS.

A: Income tax

Under previous GAAP, deferred tax was accounted using the income statement approach, on the timing differences between the taxable profit and accounting profits for the period. Under Ind AS 12, Income Tax, requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of asset or liability in the balance sheet and its tax base.

The application of Ind AS approach has resulted in recognition of deferred tax on new temporary differences which was not required under previous GAAP.

B: Stock option compensation expense

Under the Previous GAAP, the share based compensation cost was not recognised. Under Ind AS, the share based compensation cost is determined based on the Company’s estimate of equity instruments that will eventually vest and amortized over the vesting period on an accelerated basis. However, the same does not result in difference in equity.

C: Actuarial (loss)/ gain

Under Ind AS, remeasurement i.e. actuarial gains and losses and the return on plan assets, excluding amounts included in the net interest expense on the net defined benefit liability/asset are recognised in other comprehensive income instead of profit or loss. Under the previous GAAP, these remeasurements were accounted for in profit or loss for the year.

D: Impact of provision for expected credit loss

The provision is made against trade receivable based on expected credit loss model as per Ind AS 109. Under I-GAAP the provision was made when the receivables turned doubtful based on the assessment on case to case basis.

E: Other comprehensive income

Under Ind AS, all items of income and expense recognised in a period should be included in profit or loss for the period, unless a standard requires or permits otherwise. Items of income and expense that are not recognised in profit or loss but are shown in the statement of profit and loss as ‘other comprehensive income’ comprise remeasurements of defined benefit plans. Under previous GAAP, Company has not presented other comprehensive income separately.

F: Fair valuation of security deposits

Under previous GAAP, interest free lease security deposits that are refundable in cash on completion of the lease term were recorded at their transaction value. Under Ind AS, effect of discounting/ unwinding of refundable security deposits is recognised.

G: Statement of cash flows

The transition from Indian GAAP to Ind AS has not had a material impact on the statement of cash flows except for bank overdrafts, which has been netted off with the cash and cash equivalents.

During the financial year ended 31 March 2018, the Employees’ Provident Fund Organisation vide circular No. Pension-I/17(10)/2016-17/Jeevan Pramaan-Aadhar/4792 dated 5 June 2017 directed employers to link Aadhar number for all new members who join Employees’ Pension Scheme, 1 995 under Employees’ Provident Funds and Miscellaneous Provisions Act, 1 952 after 1 July 2017, thereby linking the Unique Account Number (UAN) with Aadhaar so as to make their provident fund (‘PF’) account linked.

Delay in remittance of the PF contributions was on account of the non-availability / mis-match of personal information of Aadhar number of employees who joined after the said notification came into force. The Company is constantly working towards getting this matter resolved by having the linking of UAN completed with the Aadhar information.

Note 13: Previous year

The figures of previous year were audited by a firm of chartered accountants other than S.R. Batliboi & Associates LLP. Previous years figures have been reclassified wherever necessary to conform to the current year classifications.

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Mar 31, 2017

1. General Information

TeamLease Services Limited (the “Company”) is an HR Services Company incorporated on February 2, 2000. The Company currently provides clients, solution for their staffing and HR requirements offering a gamut of services that include Temporary Staffing, Permanent Recruitment, Payroll Process Outsourcing, Regulatory Compliance Services, Vocational Training / Education and Assessments.

The Company has been converted into a Public Limited company, changed its name from TeamLease Services Private Limited to TeamLease Services Limited and obtained a fresh certificate of incorporation dated May 15, 2015. The equity shares of the Company got listed on National Stock Exchange of India Limited (“NSE”)and BSE Limited (“BSE”) w.e.f February 12, 2016.

2.1 Rights, Preferences and restrictions attached to shares

Equity Shares: The company has one class of equity shares having a par value of RS.10 per share. Each shareholder is eligible for one vote per share held. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend.

2.2 There are no shares reserved for issue under options, except held by TeamLease Employee Stock Option Plan Trust, as on March.31, 2017 and for the previous year.

2.3 There are no shares allotted as fully paid up pursuant to contract without payment being received in cash during the period of five years immediately preceding the year ended March.31, 2017.

2.4 There are no shares bought back by the Company during the period of five years immediately preceding the year ended March.31, 2017.

2.5 There are no securities that are convertible into equity / preference shares.

2.6 The shareholders of the Company on April 02, 2015 approved for increase of the Authorized Share Capital from RS.27,000,000 to RS.150,000,000 divided into 133,000,000 equity shares of RS.1 each and 170,000 12% Cumulative Convertible Redeemable Preference Shares of RS.100 each by way of additional 123,000,000 equity shares of RS.1 each. Further, on June 25, 2015, the shareholders of the Company approved for increase of the Authorized Share Capital from RS.150,000,000 to RS.250,000,000 divided into 233,000,000 equity shares of RS.1 each and 170,000 12% Cumulative Convertible Redeemable Preference Shares of RS.100 each by way of additional 100,000,000 equity shares of RS.1 each. Accordingly, the Authorized Share Capital of the Company is increased to RS.150,000,000 effective from April 02, 2015 and further increased to RS.250,000,000 effective from June 25, 2015 comprising 23,300,000 equity shares of RS.10 each and 170,000 preference shares of RS.100 each.

2.7 On June 25, 2015, pursuant to the provisions of the Companies Act, 2013, the shareholders of the Company approved for issue and allotment of 29 Bonus Equity Shares of RS.1 each for every equity share of RS.1 each held by the members as on that date of this meeting and accordingly a sum of RS.148,209,952 is capitalized out of the Company’s Securities Premium Account outstanding as on June 30, 2015 and transferred to the Share Capital Account towards issue of fully paid-up bonus shares pursuant to which the paid-up Capital of the Company has increased from RS.5,110,688 to RS.153,320,640 and the balance in the Securities Premium account reduced to RS.1,003,220,349 (also Refer Note 3.10).

2.8 During the previous year ended March.31, 2016, the Company had issued 148,209,952 bonus shares out of securities premium account thereby increasing the number of equity shares to 153,320,640 of RS.1 each and every 10 equity shares of RS.1 of the Company are consolidated into 1 equity share thereby increasing the face value of the equity share to RS.10 per share. Accordingly total 153,320,640 shares of RS.1 each post-bonus have been consolidated into 15,332,064 shares of RS.10 each by reducing 137,988,576 number of shares w.e.f July 10,2015.

2.9 During the previous year ended March.31, 2016, Directors of the Company i.e., Ashok Reddy, Manish Sabharwal and Mohit Gupta formed three Limited Liability Partnership firms namely NED Consultants LLP, MKS Management Consultancy Services LLP and Dhana Management Consultancy LLP. Post consolidation of equity shares, HR Offshoring Ventures Pte Limited (HROV) transferred 1,379,886 equity shares to Dhana Management Consultancy LLP, 1,709,900 equity shares to NED Consultants LLP, 300 equity shares to MKS Management Consultancy Services LLP, 201,114 equity shares to the ESOP Trust of the Company. Pursuant to these transfers, the shareholding of HROV in the Company reduced to 26.74% as on March.31, 2017 (Previous Year 31.74%).

2.10 Pursuant to Initial Public Offering (IPO) during the previous year ended March.31, 2016, 1,764,705 equity shares of the Company of RS.10 each were allotted at RS.850 per equity share.

2.11 During the previous year ended March.31, 2016 the Board of Directors of the Company on August 03, 2015 approved to cancel the previous ESOP Scheme which was issued by the Company on July 27, 2011 and to implement new “TeamLease Employee Stock Option Plan 2015” (“ESOP 2015 scheme”) which has been formulated and the existing ESOP Trust has been re-constituted in line with the Securities and Exchange Board of India (Share based employee benefits) Regulations, 2014, provisions of the Articles of Association of the Company and Companies Act, 2013 and Rules. The shareholders of the Company approved the ESOP 2015 Scheme on July 10, 2015. All unvested and unexercised ESOPs granted to employees under the previous ESOP scheme have been cancelled with effect from August 03, 2015. TeamLease Employee Stock Option Plan Trust (the “Trust”) has granted 97,170 options on October 01, 2015 to the employees of the Company and 29,470 options on October 01, 2016, which is out of the transfer of 201,114 equity shares by HROV. Since the options are issued by the Trust and not by the Company, there is no impact on the Financial Statements of the Company towards grant / allotment of ESOP. Refer Note 34 for further details.

3.1 Provision for Diminution in the Value of Investments includes RS.219,837,780 (Previous Year RS.219,837,780) towards investment in IIJT and RS.NIL (Previous Year RS.100,000) towards investment in ITHS.

3.2 On December 27, 2016, the Company has disposed off 100% of its investments in the equity shares of India Tourism and Hospitality Skills Education Private Limited (“ITHS”) and National Employability Apprenticeship Services (“NEAS”) at RS.100,000 each, resulting into no gain/(loss) in the transaction. Accordingly, ITHS and NEAS ceases to be subsidiary of the Company.

3.3 During the year ended March.31, 2017, the Company incorporated a wholly owned subsidiary (“WOS”) in the name of TeamLease Staffing Services Private Limited (“TSSPL”) by subscribing to 10,000 equity shares face value of RS.10. The WOS got Certificate of Incorporation on July 04, 2016. Through this WOS, the Company acquired ASAP Info Systems Private Limited (“ASAP”), a company incorporated under Companies Act, 1956 w.e.f. September 01, 2016 at an agreed consideration of RS.670,000,000. This includes contingent consideration up to RS.100,500,000 lakhs depending upon the performance of ASAP and the same if any, will be appropriately accounted for at the time of certainty of the amount i.e. as at August 31, 2017. Further, TSSPL signed a definitive agreement on September 20, 2016 to acquire Nichepro Technologies Private Limited (“Nichepro”), a company incorporated under Companies Act, 1956 at an agreed consideration of RS.295,000,000. The control of Nichepro got transferred on completion of transaction on October 01, 2016. On January 16, 2017, the Company through TSSPL signed a definitive agreement to acquire Keystone Business Solutions Private Limited (“Keystone”), a company incorporated under Companies Act, 1956 at an agreed consideration of RS.82,000,000. The control of Keystone got transferred to TSSPL on February 01, 2017.

3.4 On December 30, 2016, the Company was alloted by TSSPL, 3,400,000 equity shares @ RS.50 per share (Face Value of RS.10 per share) and 686 Series “A” Compulsory Convertible Debentures (‘CCD’) of RS.1,000,000 each bearing interest @9% payable annually. On March.30, 2017, the Company was further allotted 111 Series “B” CCD of RS.1,000,000 each bearing interest @9% payable annually, aggregating investment in TSSPL to RS.967,100,000. The debentures are convertible into equity shares on or before 10 years from the date of allotment. On maturity date, the CCDs will be converted into appropriate number of equity shares of the Company for a price not less than RS.50 per equity share.

4.1 During the previous year ended March.31, 2016, the Company had adjusted share issue expenses with the securities premium account. During the year ended March.31, 2017, deferred tax asset of RS.33,670,556 related to share issue expenses has been recognized and adjusted with the securities premium account which is pertaining to previous year. Accordingly, tax expense for the year ended March.31, 2017, includes adjustments on account of current income tax reversal and reversal of deferred corresponding deferred tax charge for previous year of RS.6,734,111 (Net impact is RS.NIL). Further, deferred tax asset of RS.6,734,111 has been reversed which is pertaining to tax benefit for the current year.

4.2 Gross amount required to be spent by the Company towards corporate social responsibility expense (CSR) during the year is RS.6,111,792 (Previous Year RS.4,084,379). The Company has not spent any amount towards CSR expenditure and also has not created any provision thereof during the year and previous year. Accordingly, the movement in provision during the year is Nil.

5 CONTINGENT LIABILITIES AND COMMITMENTS

(a) Contingent Liability

i. With respect to Employee State Insurance (“ESI”) demand raised in 2006, the Company had furnished documents in the prior years to justify no ESI liability for the balance amount of RS.504,467 (Previous Year RS.504,467), which is pending for approval from ESI department.

ii. The Company had received Demand Order in the prior years under section 201(1) and 201(1A) of the Income Tax Act, 1961 for tax deducted at source of RS.770,794 (Previous Year RS.770,974) for the Assessment Year 2010-11. The Company had filed appeal against the aforesaid demand in the prior years with the Commissioner of Income Tax (Appeals). The matter is pending as on date.

iii. The Company has received Demand Order under section 156 of the Income Tax Act, 1961 of RS.2,965,803 for the Assessment Year 2013-14. The Company has filed appeal against the aforesaid demand on October 29, 2016 with the Commissioner of Income Tax (Appeals). The matter is pending as on date.

iv. The Company had received a demand of RS.14,941,812 (Previous year: RS.14,941,812) inclusive of penalty during the prior years from the Commissioner of Service Tax disallowing the cenvat availed against Group Medical Insurance and Personal Accident Policy for the period from October 2010 to July 2013. The said demand was disposed off in the Company’s favor by Central Excise and Service Tax Appellate Tribunal (CESTAT). The Commissioner of Service Tax Department had filed the case against this CESTAT order with the Hon’ble High court of Karnataka, Bangalore (‘High Court’). This petition was disposed off by the High court on April 2, 2014 in Company’s favor. In May 2015, the Commissioner of ServiceTax Department had filed a petition with Supreme Court of India for condonation of delay in filing the special leave to appeal. Against this petition, condonation is granted by Supreme Court of India and there has been no further update as of the reporting date. Further on April 19, 2016, the Company received show cause notice from the Commissioner of Service Tax, Bengaluru in respect of the above matter for the period from August 2013 to September 2015 for an amount of RS.13,928,550. The Company has responded against the show cause notice on June 17, 2016 and have not received any further communication from the Commissioner of Service Tax, Bengaluru.

v. During the prior year, the Company has provided a corporate guarantee on behalf of TeamLease Skills University (‘TLSU’) to Tata Capital Financial Services Limited (“TCFSL”) whereby the Company has guaranteed all the obligations of TLSU under the Operating Lease Agreement between TCFSL and TLSU dated July 24, 2014 executed in relation to the lease of computer equipment by TCFSL to TLSU of value not exceeding RS.20,000,000 (Previous year RS.20,000,000).

vi. Pursuant to the amendment of Payment of Bonus Act, 1965, the Company considers statutory bonus of RS.334,933,022 in respect of the financial year 2014-15 as contingent liability. This is based on expert legal opinion obtained by the Company and stay orders from various High Courts across the country, the amendment to the Payment of Bonus Act to the extent that it gives retrospective effect from 1.4.2014 in respect of statutory bonus has not been recognised. As per the contractual agreement with the customers, RS.333,296,946 in respect of associate employees is recoverable from the customers in case this liability arises.

(b) Capital Commitments

Estimated amount of contract remaining to be executed on capital account and not provided for (net of capital advance of Rs.NIL) as at March.31, 2017 is RS.NIL and (Previous Year RS.739,214).

(c) Other Commitments

Guarantees given by banks against Fixed Deposits as at March.31, 2017 is RS.82,867,169 (Previous year RS.75,996,838)

6 LEASES

(a) The Company has taken on operating lease office premises at various locations. The agreements are executed for a period ranging from 1 year to 9 years. Rents are accounted as per agreement and the effect of lease equalisation are accepted based on the inflation factor.

(b) Rent payments are recognised in the Statement of Profit and Loss under the head “Rent” in Note 26 “Other Expenses” for the year ended March.31, 2017 amounting to RS.118,224,153 (Previous year: RS.99,297,953).

(c) The future minimum lease payments under non-cancellable operating lease are as below:

7 a) EMPLOYEE BENEFITS - GRATUITY (Un-funded)

The following tables summarize the components of the net employee benefit expenses recognised in the Statements of Profit and Loss the fund status and the amount recognised in the Balance Sheet for the Gratuity.

Disclosure relating to actuarial valuation of Gratuity:

7 d) EMPLOYEE BENEFITS - GRATUITY (Un-funded)

The Company has recognised gratuity liability and reimbursement right in respect of associate employees pursuant to paragrapRs.103 of Accounting Standard -15 notified under Companies (Accounting Standards) Rules, 2006 and accordingly disclosure has been made as required and to the extent provided by actuary.

8 SEGMENT REPORTING

(a) Business Segment:

The business segment has been considered as the primary segment.

The Company is primarily engaged in the business of providing manpower services. The Company had earlier disclosed reportable segments as “Staffing Operations”, “Recruitment Operations” and “Training Operations” for the year ended March.31, 2016. With effect from April 01, 2016, based on the risk, rewards and nature, the Company has revised the business segments into the following broad categories, which in context of Accounting Standard 17 on ‘Segment Reporting’ constitute reportable segments:

a) Staffing and Allied Services - Comprises of Staffing Operations, Temporary Recruitment and Payroll.

b) Other HR Services - Comprises of Permanent Recruitment, Regulatory Compliance and Training Operations.

Revenue and expenses directly attributable to segments are reported under each reportable segment. Revenue and expenses have been identified to segments on the basis of their relationship to the operating activities of the segments. Revenue and expenses, which relate to the Company as a whole and are not allocable to segments on a reasonable basis have been included under unallocated expenses/income.

Assets (including fixed assets) and liabilities that are directly attributable to segments are disclosed under each reportable segment. Common assets and liabilities have been allocated to each segment on the basis of their relationship to the operating activities of their segments. All other assets and liabilities are disclosed as unallocable.

Consequently, previous year’s figures have been reclassified to conform to the current reportable segments of the Company.

(b) Geographical Segment:

The Company operates in one Geographic segment namely “Within India” and hence no separate information for Geographic segment wise disclosure is required.

9 During the prior years, TeamLease received service tax Order for RS.37,850,377 from Commissioner of Central Excise. As per the Order there is a penalty of equivalent amount. Further, interest at the applicable rate has also been levied. The management has already filed an appeal against this Order. The penalty and interest has neither been accounted for nor disclosed as contingent liability in the financial statements since in the opinion of the management and based on the legal opinion obtained from a Service Tax Practitioner, possibility of outflow of funds are remote. The appeal is pending before the Tribunal, Kolkata, which is yet to come up for hearing.

10 During the previous year ended March.31, 2016, Payment of Bonus Act, 1965 (“the Act”) has been amended by the Payment of Bonus (Amendment) Act, 2015. The Company has recognized additional statutory bonus of RS.261,866,742 for the year ended March.31, 2016 forming part of salaries, wages and bonus with a corresponding amount included in provision for employee benefits payable as at March.31, 2016. Based on the contractual agreements with the customers, the amount in respect of associate employees is recoverable from them with the stated mark-ups and accordingly, revenue from sale of services to the tune of RS.266,732,063 (net of service tax) had been recognised with a corresponding amount included in unbilled revenue of RS.305,408,213 with service tax thereon as at March.31, 2016. During the year ended March.31, 2017, the Company has raised the invoice for the aforesaid unbilled revenue. Out of the total invoice raised, RS.142,004,505 is recoverable from client and also the corresponding amount of bonus liability appearing in provision for employee benefits payable. There are stay orders from various High Courts on the applicability of the Act. Considering the same, there have delays on receipt of the said billed amounts from clients. The Company has obtained legal opinion on the said matter and is confident of recovering the said amounts as per the contractual agreements alongwith consequential payments to the respective employees on legal determination of the above matters by relevant judicial authorities.

10 A) Amount utilised for share issue expenses

Amount utilised for share issue expenses of RS.121,970,622 includes payments made to merchant bankers, attorneys, consultants and registrars towards Initial Public Offering of shares.

B) Utilisation of funds raised through fresh issue of equity shares pursuant to Initial Public Offering (IPO) is as follows:

11 As per the amendment in the Finance Act 2016, deduction under section 80JJAA was extended across to all sectors. The Company has taken the benefit during the current year and the benefit will be available to the Company for the next two assessment years subject to fulfilment of the conditions. As a result of this, the Company is required to pay MAT as per Section 115JB of the Income Tax Act, 1961.

12 Previous Year Figures

Figures of previous year have been regrouped, re-arranged and reclassified wherever necessary to conform to the Current Period’s Classification.

The accompanying notes are an integral part of these Financial Statements.

---

Mar 31, 2016

1. Rights, Preferences and restrictions attached to shares

Equity Shares: The company has one class of equity shares having a par value of Rs.10 per share. Each shareholder is eligible for
one vote per share held. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the
Company after distribution of all preferential amounts, in proportion to their shareholding.

The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General
Meeting, except in case of interim dividend.

2. There are no shares reserved for issue under options, except held by Team Lease Employee Stock Option Plan Trust, as on March
31, 2016 and for the previous year.

3. There are no shares allotted as fully paid up pursuant to contract without payment being received in cash during the period
of five years immediately preceding the year ended March 31, 2016.

4. There are no shares bought back by the Company during the period of five years immediately preceding the year ended March 31,
2016.

5. There are no securities that are convertible into equity / preference shares.

6. The shareholders of the Company on April 02, 2015 approved for increase of the Authorized Share Capital from Rs. 27,000,000
to Rs.150,000,000 divided into 133,000,000 equity shares of Re. 1 each and 170,000 12% Cumulative Convertible Redeemable
Preference Shares of Rs. 100 each by way of additional 123,000,000 equity shares of Re. 1 each. Further, on June 25, 2015, the
shareholders of the Company approved for increase of the Authorized Share Capital from Rs. 150,000,000 to Rs.250,000,000 divided
into 233,000,000 equity shares of Re. 1 each and 170,000 12% Cumulative Convertible Redeemable Preference Shares of Rs. 100 each
by way of additional 100,000,000 equity shares of Re. 1 each.

Accordingly, the Authorized Share Capital of the Company is increased to Rs. 150,000,000 effective from April 02, 2015 and
further increased to Rs.250,000,000 effective from June 25, 2015 comprising 23,300,000 equity shares of Rs.10 each and 170,000
preference shares of Rs.100 each.

7. On June 25, 2015, pursuant to the provisions of the Companies Act, 2013, the shareholders of the Company approved for issue
and allotment of 29 Bonus Equity Shares of Re. 1 each for every equity share of Re. 1 each held by the members as on that date of
this meeting and accordingly a sum of Rs. 148,209,952 is capitalized out of the Company''s Securities Premium Account outstanding
as on June 30, 2015 and transferred to the Share Capital Account towards issue of fully paid-up bonus shares pursuant to which
the paid-up Capital of the Company has increased from Rs.5,110,688 to Rs.153,320,640. and the balance in the Securities Premium
account reduced to Rs.1,003,220,349.

8. During the year ended March 31, 2016, the Company has issued 148,209,952 bonus shares out of securities premium account
thereby increasing the number of equity shares to 153,320,640 of Re 1 each and every 10 equity shares of Re 1 of the Company are
consolidated into 1 equity share thereby increasing the face value of the equity share to Rs. 10 per share. Accordingly total
153,320,640 shares of Re.1 each post-bonus have been consolidated into 15,332,064 shares of Rs.10 each by reducing 137,988,576
number of shares w.e.f July 10,2015.

9. During the year ended March 31, 2016, Directors of the Company i.e., Ashok Reddy, Manish Sabharwal and Mohit Gupta formed
three Limited Liability Partnership firms namely NED Consultants LLP, MKS Management Consultancy Services LLP and Dhana
Management LLP. Post consolidation of equity shares, HR Off shoring Ventures Pte Limited (HROV) transferred 1,379,886 equity
shares to Dhana Management LLP, 855,100 equity shares to NED Consultants LLP, 300 equity shares to MKS Management Consultancy
Services LLP, 201,114 equity shares to the ESOP Trust of the Company. Pursuant to these transfers, the shareholding of HROV in
the Company reduced from 52.28% to 41.97% from March 31, 2015 to July 31, 2015 and then further reduced to 31.74% as on March 31,
2016 .

Notes to the Financial Statements forming part of Balance Sheet as at March 31, 2016 and Statement of Profit and Loss for the
year ended March 31, 2016

10. As of March 31, 2015 total number of equity shares held by the employees of the Company amounting to 265,321 equity shares
of Re. 1 each and all such shares have been transferred to employees by way of dilution of shareholding of ILCHPL and HROV over
the years ended March 31, 2009, 2010, 2012, 2013, 2014 and 2015 . The Board of Directors of the Company on August 03, 2015
approved to cancel the previous ESOP Scheme which was issued by the Company on July 27, 2011 and to implement new "Team Lease
Employee Stock Option Plan 2015" ("ESOP 2015 scheme") which has been formulated and the existing ESOP Trust has been re-
constituted in line with the Securities and Exchange Board of India (Share based employee benefits) Regulations, 2014, provisions
of the Articles of Association of the Company and Companies Act, 2013 and Rules. The shareholders of the Company approved the
ESOP 2015 Scheme on July 10, 2015. All unvested and unexercised ESOPs granted to employees under the previous ESOP scheme have
been cancelled with effect from August 03, 2015. Team Lease Employee Stock Option Plan Trust (the "Trust") has granted 32,390
options on October 01, 2015 to the employees of the Company, which is out of the transfer of 201,114 equity shares by HROV. Since
the options are issued by the Trust and not by the Company, there is no impact on the Financial Statements of the Company towards
grant / allotment of ESOP.Refer Note 33 for further details.

* During the previous year, the Company had passed a special resolution in its Extraordinary General Meeting held on January 15,
2015 and made an application to the High Court of Judicature at Bombay to approve for the reduction of the Securities Premium
Account of the Company from Rs. 1,533,689,602 to Rs. 1,151,430,301 and to affect such reduction by adjusting the entire debit
balance in the Surplus/ (Deficit) in the Statement of Profit and Loss amounting to Rs. 382,259,301 as on 31st March, 2014. The
Order of the High Court was passed on March 27, 2015 and the minutes approved by the Court were registered by the Registrar of
Companies on May 29, 2015. Accordingly, Securities Premium as on March 31, 2015 had been adjusted with the debit balance of
profit and loss to the extent of Rs. 382,259,301 in accordance with Accounting Standard (AS) - 4 : Contingencies and events
occurring after the Balance Sheet Date.

11. Provision for Diminution in the Value of Investments includes Rs.219,837,780 (Previous Year Rs.219,837,780) towards
investment in IIJT and Rs.100,000 (Previous Year Rs.100,000) towards investment in ITHS.

* Fixed deposits of Rs. 250,044,142 as at March 31, 2016 (Previous year Rs. 192,332,471) which are under lien with various banks
for the Overdraft facilities and Guarantees issued by the Bank on behalf of the Company, Refer Note 26 (c).

Provident Fund Trust

Provident Fund for eligible employees is managed by the Company through "Team Lease Employees Provident Fund Trust ("Trust"), in
line with the Provident Fund and Miscellaneous Provisions Act, 1952. The plan guarantees interest at the rate notified by the
provident Fund Authorities. The contribution by the employer and employee together with the interest accumulated thereon are
payable to the employees at the time of their separation from the Company or retirement, whichever is earlier. The benefits vests
immediately on rendering of the services by the employee.

Gratuity

Every employee is entitled to a benefit equivalent to Fifteen days salary last drawn for each completed year of service in line
with the Payment of Gratuity Act, 1972. The same is paid at the time of separation from the Company or retirement, whichever is
earlier. The benefits vest in accordance with the Payment of Gratuity Act, 1972.

Leave Encashment

Every employee is entitled to a leave encashment of 15 days of Paid Leave (Maximum carry forward of 30 days) calculated on gross
pay. The same is paid at the time of separation from the Company or Retirement whichever is earlier.

In addition to above provision, the Company had paid Auditor''s Remuneration of Rs. 15,771,992 (Previous Year Rs 2,247,200)
towards Initial Public Offer of equity shares to the Statutory Auditors of the Company. Out of above, the Company has recovered
Rs. 11,712,475 from the selling shareholders and Rs. 6,306,717 has been adjusted with the Securities Premium as share issue
expense.

12. Gross amount required to be spent by the Company towards corporate social responsibility expense (CSR) during the year is
Rs. 4,084,379 (Previous Year Rs.732,723). The Company has not spent any amount towards CSR expenditure neither has created any
provision thereof during the year and previous year. Accordingly, the movement in provision during the year is Nil.

13. CONTINGENT LIABILITIES AND COMMITMENTS

(a) Contingent Liability

i. With respect to Employee State Insurance ("ESI")demand raised in 2006, the Company had furnished documents in the prior year
to justify no ESI liability for the balance amount of Rs. 504,467 (Previous year Rs. 504,467) which is pending for approval from
ESI department.

ii. The Company had received Demand Order in the prior under section 201(1) and 201(1A) of the Income Tax Act, 1961 for tax
deducted at source of Rs. 770,794 (previous year Rs.770,974) for the Assessment Year 2010-11. The Company had filed appeal
against the aforesaid demand in the prior year with the Commissioner of Income Tax (Appeals).The matter is pending as on date.

iii. The Company had received a demand of Rs.14,941,812 (Previous year: Rs.14,941,812) inclusive of penalty during the prior year
from the Commissioner of Service Tax disallowing the cenvat availed against Group Medical Insurance and Personal Accident Policy
for the period from October 2010 to July 2013. The said demand was disposed off in the Company''s favor by Central Excise and
Service Tax Appellate Tribunal (CESTAT). The Commissioner of Service Tax Department had filed the case against this CESTAT order
with the Hon''ble High court of Karnataka, Bangalore (''High Court'') . This petition was disposed off by the High court on April 2,
2014 in Company''s favor. In May 2015, the Commissioner of Service Tax Department had filed a petition with Supreme Court of India
for condo nation of delay in filing the special leave to appeal. Against this petition, condo nation is granted by Supreme Court
of India and there has been no further update as of the reporting date.

Further on April 19, 2016, the Company received show cause notice from the Commissioner of Service Tax, Bengaluru in respect of
the above matter for the period from August 2013 to September 2015 for an amount of Rs 13,928,550. The Company on May 12, 2016,
has responded against the show cause notice received and has sought one month extension from the department which is pending as
on date.

iv. The Company has provided a corporate guarantee on behalf of Team Lease Skills University (''TLSU'') to Tata Capital Financial
Services Limited ("TCFSL") whereby the Company has guaranteed all the obligations of TLSU under the Operating Lease Agreement
between TCFSL and TLSU dated July 24, 2014 executed in relation to the lease of computer equipment by TCFSL to TLSU of value not
exceeding Rs.20,000,000 (Previous year Rs 15,000,000).

vi. Pursuant to the amendment of Payment of Bonus Act, 1965, the Company considers statutory bonus of Rs 334,933,022 in respect
of the financial year 2014-15 as contingent liability (Refer Note 35 for further details).

As per the contractual agreement with the customers, Rs 333,296,946 in respect of associate employees is recoverable from the
customers in case this liability arises.

(b) Capital Commitments

Estimated amount of contract remaining to be executed on capital account and not provided for (net of capital advance of Rs
232,332) as at March 31, 2016 is Rs 739,214 and (Previous Year Rs. NIL).

Note a: During the year ended March 31, 2016, the Company has issued 148,209,952 bonus shares thereby increasing the number of
equity shares to 153,320,640 of Re 1 each and every 10 equity shares of Re 1 of the Company are consolidated into 1 equity share
thereby increasing the face value of the equity share to Rs. 10 per share. Accordingly total 153,320,640 shares of Re.1 each
post-bonus have been consolidated into 15,332,064 shares of Rs.10 each by reducing 137,988,576 number of shares. Accordingly,
Basic and Diluted earnings per share has been adjusted for the year ended March 31, 2015 presented above in line with the
Accounting Standard (AS)- 20 "Earnings per share" (Refer Note 3.10 and 3.11).

14 LEASES

(a) The Company has taken on operating lease office premises at various locations. The agreements are executed for a period
ranging from 1 year to 9 years. Rents are accounted as per agreement and the effect of lease equalization are accepted based on
the inflation factor.

(b) Rent payments are recognized in the Statements of Profit and Loss under the head "Rent" in Notes 25 "Other Expenses" for the
year ended March 31, 2016 amounting to Rs. 99,297,953 respectively (previous year: Rs 71,239,724).

15. RELATED PARTY DISCLOSURE

(a) Related parties where control exists(Refer Note 3.3): Nature of Relationship

Subsidiary Companies IIJT Education Private Limited (''IIJT'')

Team Lease Education Foundation (''TLEF'')

India Tourism and Hospitality Skills Education Private Limited

National Employability Apprenticeship Services (''NEAS'')

(b) Other Related Parties:

Key Management personnel & their relatives Mr. Manish Sabharwal - Chairman & Promoter

Mr. Ashok Kumar Nedurumalli - Managing Director & Promoter

Mr. Mohit Gupta - Director (Resigned w.e.f July 31, 2015)

Mr. Ravi Vishwanath - Chief Financial Officer

Mr. Mruthunjaya Murthy- Company Secretary (w.e.f. May 07, 2015)

Mrs. Asha Vishwanath - relative of Mr. Ravi Vishwanath

Enterprises over which key Management Hansini Management Consultants Private Limited (''HANSINI'')

Personnel are able to exercise significant Team Lease Skills University (''TLSU'')

influence with whom transactions have taken India Life Capital Private Limited (''ILCPL'')

place HR Off shoring Ventures Pte Limited (''HROV'') (Refer Note 3.3)

16. During the prior year, Team Lease received service tax Order for Rs 37,850,377 from Commissioner of Central Excise. As per the
Order there is a penalty of equivalent amount. Further, interest at the applicable rate has also been levied. The management has
already filed an appeal against this Order. The penalty and interest has neither been accounted for nor disclosed as contingent
liability in the financial statements since in the opinion of the management and based on the legal opinion obtained from a
Service Tax Practitioner, possibility of outflow of funds are remote.

17.During the year ended March 31, 2016, Payment of Bonus Act, 1965 ('' the Act") has been amended vide the Payment of Bonus
(Amendment) Act, 2015. The Act has been amended to take retrospective effect w.e.f. April 01, 2014 and accordingly revised bonus
(including arrears related to the year ended March 31, 2015) is required to be paid to the eligible employees. Based on expert
legal opinion obtained by the Company and stay orders from various High Courts across the country, the amendment to the Payment
of Bonus Act to the extent that it gives retrospective effect from 1.4.2014 in respect of statutory bonus has not been recognized
and treated as contingent liability. Hence, the Company has recognized additional statutory bonus of Rs. 261,866,742 for the year
ended March 31, 2016 forming part of salaries, wages and bonus with a corresponding amount included in provision for employee
benefits payable as at March 31, 2016. Based on the contractual agreements with the customers, the amount in respect of associate
employees is recoverable from them with the stated mark-ups and accordingly, revenue from sale of services to the tune of Rs.
266,732,063 (net of service tax) has been recognized with a corresponding amount included in unbilled revenue of Rs. 305,408,213
with service tax thereon as at March 31, 2016.

18.A) Amount utilized for share issue expenses

Amount utilized for share issue expenses Rs. 120,377,368 includes payments made to merchant bankers, attorneys, consultants and
registrars towards Initial Public Offering of shares.

19. Previous Year Figures

Figures of previous year have been regrouped, re-arranged and reclassified wherever necessary to conform to the Current Period''s
Classification.