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Notes to Accounts of 3i Infotech Ltd.

Mar 31, 2023

The Company has acquired certain Land and Building under a lease arrangement for a period of sixty years at a premium of '' 0.50 Crores starting from December 4, 2000 for Land, '' 15.62 Crores starting from March 13, 2000 and '' 5.05 Crores March 1, 2003 for building and the same are being amortised over the lease period.

ii. Property, Plant and Equipment pledged as security against borrowings by the Company

Refer to Note 36 for information on property, plant and equipment pledge as security by the Company

iii. Contractual Obligations

Refer to Note 31 for disclosure of contractual commitments for the acquisition of property, plant and equipment.

iv Pursuant to the business transfer agreement between the 3i Group and the Azentio Group, immovable property of 3i Group

was to be transferred to Azentio Group against a receivable of '' 50 Crores in the financial year 2020-2021. In the current year, this agreement was rescinded and consequently, the property remained with the Group. The counterparty, Azentio Group is released from its obligation to pay the consideration. The property, which was earlier transferred by way of a slump sale in the financial year 2020-2021, is recognised in the books of 3i Infotech Limited in the current year, and has resulted in an exceptional gain of '' 23.09 Crores. The retrospective depreciation for the same is '' 15.64 Crores for the year 2021-22 which has been charged in the current year.

i. Significant Estimate : Useful life of Intangible Assets

Refer to sub note (n) of Note 2 ‘Significant Accounting Policies'' .

ii. Intangible Assets with indefinite useful lives

The Entity provides IT based software solutions to variety of industry verticals which includes softwares meant for Banking industry, Insurance industry, Enterprise Resource Panning (ERP) softwares and softwares meant for financial service industry. These softwares have been capitalised as ‘Software Products - meant for sale'' category under intangible assets. The Company based on the analysis of product life cycle studies, market and competitive trends assesses that the ‘Software Products - meant for sale'' products will generate net cash flows for an indefinite period.

There are no projects in Other Intangible assets under development, which are overdue or has exceeded its cost compared to its original plan as at March 31, 2023.

The Company has started the concept of “Build” project, wherein it has planned a model of development of software / applications such as cloud, Artificial intelligence, BPAAS/KPAAS etc. These projects are typically expected to be ready in a period of 1 to 3 years. The management has considered that these products have an immediate market / economic value. The expenditure incurred are considered as “ Development “ Phase as it has already passed the research phase.

*Loans due by directors or other officers of the Company or any of them either severally or jointly with any other persons or amounts due by firms or private companies respectively in which any directors is a partner or a director or a member amounted to '' Nil (Previous year '' Nil).

** During the year, the Company has impaired its investment in 3i Infotech Saudi Arabia LLC and 3i Infotech Asia Pacific Pte Limited to the extent of '' 3.16 Crores and '' 4.19 Crores based on the valuation reports.

The recoverable value of the investment as per valuation report as on December 31, 2022 of 3i Infotech Saudi Arabia LLC and 3i Infotech Asia Pacific Pte Limited is '' Nil and '' 17.92 Crores respectively. As per the report, the value in use is greater than the fair value of investment and hence the recoverable value is value in use.

In case of 3i Infotech Saudi Arabia LLC, the liabilities exceeds the recoverable value of assets and hence the value in use Nil. The investment value is fully impaired.

In case of 3i Infotech Asia Pacific Pte Limited, the value in use is equal to the net assets of the subsidiary.

* The Company had held Series A, C and D Zero Coupon Redeemable Convertible Preference Shares in 3i Infotech Holdings Private Limited (together the ‘Preference Shares''), which got matured during the year on June 30, 2017. The said Preference Shares have then been renewed with same terms and are now having maturity date as March 24, 2025.

** Includes Unbilled Revenue from Related Parties as at March 31, 2023 of '' 4.92 Crores (as at March 31, 2022 of Rs NIL).

# Includes Interest Receivable from Related Parties as at March 31, 2023 of '' 28.58 Crores (as at March 31, 2022 of '' 24.50 Crores).

Trade or Other Receivable due from directors or other officers of the Company either severally or jointly with any other person amounted to '' Nil (Previous year '' Nil).

Trade or Other Receivable due from firms or private companies respectively in which any director is a partner, a director or a member amounted to '' Nil (Previous year '' Nil).

The Company offsets tax assets and Liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.

Business losses which arose in India of '' 87.98 Crores (Previous year '' 80.69 Crores) that are available for offsetting for eight years against future taxable profits of the Company. Majority of these losses will expire in March 2023.

Considering the probability of availability of future taxable profits in the period in which tax losses expire, deferred tax assets have not been recognised in respect of tax losses carried forward by the Company.

i) Terms / rights attached to equity shares

The Company has only one class of equity shares having a par value of '' 10 each. Each shareholder has right to vote in respect of such share, on every resolution placed before the Company and his voting right on a poll shall be in proportion to his share of the paid up equity capital of the Company. In the event of liquidation, the equity shareholders are entitled to receive the remaining assets of the Company after payments of preferential amounts in proportion to their shareholding.

iii) Shares held by holding/ ultimate holding company and / or their subsidiaries / associates

The Company does not have a holding company or ultimate holding company.

The Company has three share option schemes under which options to subscribe for the Company''s shares have been granted to certain executives and senior employees.

The Share based payment reserve is used to recognise the value of equity settled share based payments provided to employees, including key management personnel, as part of their remuneration. Refer to Note 30 for further details of these plans.

Property, Plant and Equipment Reserve represents reserve created on revaluation of Leasehold Building and it is a non distributable reserve.

Property, Plant and Equipment Reserve transferred to retained earnings in earlier F.Y. 2021 to 2020-21 has now been reinstated due to non transfer of respective asset.

*Contract assets represents revenue accrued and not billed and unbilled revenues. Contract Liabilities represents Billing in excess of revenue

The aggregate value of performance obligations that are unsatisfied as at March 31, 2023 other than those meeting the exclusion criteria mentioned in note 2(g)is '' 74.23 Crores ('' 54.03 Crores as at March 31, 2022) Out of this the Company expects to recognise revenue of around 57% within the next one year and remaining thereafter. This includes contracts that can be terminated for convenience without a substantive penalty since based on current assessment, the occurence of the same is expected to be remote.

(i) Leave Encashment

The Leave obligations cover the Company''s liability for sick and earned leave.

The amount of the provision of '' 0.66 Crores (March 31, 2022: '' 0.59 Crores) is presented as current, since the Company does not have an unconditional right to defer settlement for any of these obligations.

(ii) Post Employment obligations(a) Defined benefit plan - Gratuity

The company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of five years are eligible for gratuity. The amount of gratuity payable on retirement/ termination is the employees last drawn basic salary per month computed proportionately for 15 days salary multiplied by number of years of service upto 10 years and 26 days salary multiplied by number of years of service beyond 11 years.

The gratuity plan is a unfunded plan and the Company makes contributions to recognised funds in India. The Company does not fully fund the liability and maintains a target level of funding to be maintained over a period of time based on estimations of expected gratuity payments.

The sensitivity analysis above have been determined based on a method that extrapolates the impact on defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period.

The Company''s best estimate of future cash flows during the next 12 months is '' 11.93 Crores (as at March 31, 2022 : '' 12.07 Crores).

The average duration of the defined benefit plan obligation at the end of the reporting period is 4 years (March 31, 2022: 4 years)

(iii) Defined contribution plans

The Company also has defined contribution plans. Contributions are made to provident fund in India for employees at the rate of 12% of basic salary as per regulations. The contributions are made to registered provident fund administered by the government. The obligation of the Company is limited to the amount contributed and it has no further contractual nor any contructive obligation. The expense recognised during the year towards defined contribution plan is '' 6.00 Crores (March 31, 2022: '' 4.39 Crores)

] SHARE BASED PAYMENTS (a) Employee option plan

The Company''s Employee Stock Option Schemes are applicable to “Eligible Employees” as defined in the scheme which includes directors and employees of the Company and its subsidiaries. Currently, the Company has 3 schemes, ESOS 2000, ESOS 2007 and ESOS 2018 (as amended). ESOS Scheme 2000 and 2007 provide for issue of equity options up to 25% of the paid-up equity capital to eligible employees and ESOS Scheme 2018 provide for issue of equity options up to 15% of the paid-up equity capital to eligible employees.

The options granted under the ESOS scheme 2000 and 2007 vest in a phased manner over three years with 20%, 30% and 50% of the grants vesting at the end of each year commencing one year from the date of the grant and the same can be exercised within ten years from the date of the grant or five years from the date of vesting of options whichever is later by paying cash at a price determined on the date of the grant. The options granted under ESOS 2018 vest in a graded manner over a three year period, with 33%, 33% and 34% of the grants vesting in each year, commencing one year from the date of the grant and the same can be exercised within 5 years from the date of vesting. One Stock option if exercised will be equivalent to one equity share.

During the year ended March 31, 2013, the Board of Directors of the Company approved ESOS Plan -2013 under the existing scheme ESOS 2007. The plan consist of variations in certain terms with regard to vesting and certain other related matters in ESOS 2007. The options granted are convertible and one option is equivalent to one equity share each. This plan is applicable to all the new options granted to eligible employees for the year ended March 31, 2014.

During the year ended March 31, 2015, the Board of Directors of the Company approved ESOS Plan-2015 under the existing scheme ESOS 2007. The plan consists of variations in certain terms with regard to vesting and certain other related matters in ESOS 2007. The options granted are convertible and one option is equivalent to one equity share each. This plan is applicable to all the new options granted to eligible employees for the year ended March 31, 2015.

During the current year ended March 31, 2016, the Board of Directors of the Company approved ESOS Plan-2015 under the existing scheme ESOS 2007. The plan consists of variations in certain terms with regard to vesting and certain other related matters in ESOS 2007. The options granted are convertible and one option is equivalent to one equity share each. This plan is applicable to all the new options granted to eligible employees for the year ended March 31, 2016.

The option granted under ESOS Plan -2013 under ESOS Plan-2014 and ESOS Plan-2015 Vesting Criteria for ESOS plan 2013 and 2014 under ESOS Scheme 2007 is in the ratio of 33%, 33% and 34% vesting in each year, commencing one year from the date of grant.Vesting Criteria for ESOS plan 2015 under ESOS Scheme 2007 is in the ratio of 50%, 25% and 25% vesting in each year, commencing one year from the date of grant.

The existing options (other than those granted under ESOS plan-2013, ESOS plan-2014 & ESOS plan-2015) would continue to be governed by the existing terms.

During the year ended March 31, 2023, 21,36,500 Stock Options were granted (88,07,500 Options granted for the year ended March 31, 2022).

During the year, the Board of Directors of the Company have approved the ESOP scheme 2023 on February 2, 2023 and subsequently the shareholders have approved the same by postal ballot on June 25, 2023.

Note on transitioned employees :-

Under the employee stock options scheme 2007 - Plan 2013, Plan 2014, Plan 2015 and Plan 2018 the employees shall be permitted to exercise until 17 January, 2022 any employee stock options that have already been vested on or prior to the Transfer Date for the employees which are transferred under the Business Transfer Agreement.

In case the employee stock options issued to employee under the employee stock options scheme 2018 - Plan 2018 are due for vesting on 18 January 2022, then such options shall stand automatically vested to employee on the Transfer Date (“Accelerated Options”) and such Accelerated Options may be exercised by employee in the period from 18 January 2022 to 17 April 2022.

The valuation has been prepared as per Black-Scholes model and which takes into consideration the key inputs such as Historical Volatility, Exercise Price and Expected Dividends Yield. The inputs has been assessed using public market data and documents provided by the key management of the company, including the 3i Infotech Employee Stock Option Scheme and historic financial data.

* Includes claim in respect of legal cases relating to Registrar and Transfer Services, which are reimbursable by the Principal to the extent of '' 1.95 Crores (as at March 31, 2022 - '' 1.31 Crores).

The Company''s pending litigation is in respect of proceedings pending with Tax Authorities and customer claims with various courts. The Company has reviewed all its pending litigations and proceedings and has made adequate provisions, wherever required and disclosed the contingent liabilities, wherever applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have a material impact on its financial statements.

The amounts of Post employement benefits, Long term employee benefits and Employee share based payment cannot be seperately identified from the composite amount advised by the actuary / valuer.

(vii) Terms and conditions of transactions with related parties

The sales to and purchases from related parties are made on terms equivalent to those that prevail in arm''s length transactions. Outstanding balances at the year end are unsecured and interest bearing and settlement occurs in cash. The Provision for Bad and Doubtful debts on amount owed by related parties is NIL (March 31, 2022: NIL). The assessment for loss allowance is undertaken at each financial year through examining the financial position of the related party and market in which the related party operates.

The management assessed that the fair value of cash and cash equivalent, trade receivables, trade payables, and other current financial assets and liabilities approximate their carrying amounts largely due to the short term maturities of these instruments.

Financial instruments with fixed and variable interest rates are evaluated by the Company based on parameters such as interest rates and individual credit worthiness of the counterparty. Accordingly, fair value of such instruments is not materially different from their carrying amounts

The fair values for loans, security deposits and investments in preference shares were calculated based on cash flows discounted using a current lending rate. They are classified as level 3 fair values in the Fair value hierarchy due to the inclusion of unobservable inputs including counterparty credit risk.

The fair values of non current borrowings are based on discounted cash flows using a current borrowing rate. They are classified as level 3 fair values in the fair value hierarchy due to the use of unobservable inputs, including own credit risk.

The fair value of unquoted equity instruments carried at fair value through profit or loss are not materially different from their carrying amount. Hence the impact of fair valuation is considered to be insignificant in the financial statements.

ii. Fair Value Hierarchy

This section explains the judgments and estimates made in determining the fair values of the financial instruments that are measured at amortised cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into three levels prescribed under the accounting standard. An explanation of each level follows underneath the table: * 1 % increase/decrease of the respective discounting rate with respect to interest rates would result in decrease / increase in the company''s profit before tax by approximately 6.75 '' Crores for the year ended March 31, 2023 (March 31, 2022 '' 6.01 Crores).

The Fair valuation of Preference shares has resulted in a foreign exchange gain of Rs. 50.12 crores and Interest income on the same amounts to of Rs. 25.21 crores. It has been recognised in the statement of profit and loss.

There have been no transfers among Level 1, Level 2 and Level 3 during the period

Level 1 - Level 1 hierarchy includes Quoted (unadjusted) prices in active markets for identical assets or liabilities.

Level 2 - The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

Level 3 - If one or more of the significant inputs are not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity shares included in level 3.

iii. Valuation technique used to determine fair value

Specific Valuation techniques used to value financial instruments include:

- the use of quoted market prices or dealer quotes for similar instruments

- the fair value of the remaining financial instruments is determined using discounted cash flow analysis

iv. Valuation processes

The finance department of the Company includes a team that performs the valuations of financial assets and liabilities required for financial reporting purposes, including level 3 fair values. This team reports directly to the Managing Director (MD) and the audit committee (AC). Discussions of valuation processes and results are held between the MD, AC and the valuation team at least once every three months, in line with the Company''s quarterly reporting periods.

] FINANCIAL RISK MANAGEMENT

The Company is exposed primarily to fluctuations in foreign currency exchange rates ,credit liquidity and interest rate risk ,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 liabilities . The risk management policy is approved by Board of Directors . The focus of the 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.

i. Market Risk

Market risk is the risk that the fair value or the future cash flows of a financial instrument will fluctuate because of the change in market prices . Such changes in the value of financial instruments may result from changes in the foreign currency exchange, interest 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 exchange rate may have potential impact on the statement of profit and loss and the other comprehensive income and equity ,where any transaction reference 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 the economic environment in which the Company operates, its operations are subject to risk arising from fluctuations in exchange rates in those countries. The risks primarily relates to fluctuations in US Dollar, Great Britain Pound and Euro against the functional currency of the Company.

The Company, as per its current risk management policy ,does not use any derivatives instruments to hedge foreign exchange . Further ,any movement in the functional currency of the various operations of the Company against major foreign currencies may impact the Company''s revenue in international business.

The Company evaluates the impact of the foreign exchange rate fluctuation by assessing its exposure to exchange rate risks. Apart from exposures of foreign currency payables and receivables, which partially are naturally hedged against each other, the Company does not use any hedging instruments to hedge its foreign currency exposures; in line with the current 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 rate shift of all the currencies by 1% 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 the other comprehensive income and equity.

The following table set forth information relating to foreign currency exposure as at March 31, 2023:

1% 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 '' 11.46 Crores for the year ended March 31, 2023.

1% 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 INR 10.74 Crores for the year ended March 31, 2022.

(b) Interest rate risk

The Company''s fixed rate borrowings are carried at amortised cost. They are therefore not subject to interest rate risk as defined in Ind AS 107, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market.

(ii) Credit risk

Credit risk is the risk that the counterparty will not meet its obligations leading to a financial loss. Credit risk arises from cash and cash equivalents, investments carried at amortised cost and deposits with banks and financial institutions, as well as credit exposures to customers including outstanding receivables and unbilled revenues.

(1) Credit risk management- Trade receivables and Unbilled revenues

The credit risk has always been managed by the group through an assessment of the companies financials , market intelligence and customers credibility.

The Company makes provisions for Debtors and Unbilled based on a critical assessment of the amount in relation to the ageing combined with the historical trend observed in the respective geography, the past history of the client and comparison with similar projects to determine the recoverability of the receivables.

As a practical expedient, the Company uses a provision matrix to determine impairment loss allowance on portfolio of its trade receivables and unbilled revenue. The provision matrix is based on its historically observed default rates over the expected life of the trade receivables and is adjusted for forward-looking estimates. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analyzed.

- Other Financial Assets

The company considers the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in credit risk the company compares the risk of a default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition. It considers available reasonable and supportive forwarding-looking information.

A default on a financial asset is when the counterparty fails to make contractual payments when they fall due. This definition of default is determined by considering the business environment in which entity operates and other macroeconomic factors.

(2) Credit risk exposure- Trade receivables and Unbilled revenues

The carrying amount of trade receivables and unbilled revenues represents the maximum credit exposure from customers. The maximum exposure to credit risk from customers is '' 464.67 Crores (March 31, 2022: '' 491.62 Crores). The lifetime expected credit loss on customer balance for the year ended March 31, 2023 is '' 18.21 Crores (March 31, 2022: '' 16.69 Crores).

- Other Financial Assets

The carrying amount of cash and cash equivalents, investments carried at amortised cost, deposits with banks and financial institutions and other financial assets represents the maximum credit exposure. The maximum exposure to credit risk is 809.78 '' Crores (March 31, 2022: '' 769.52 Crores). The 12 months expected credit loss and lifetime expected credit loss on these financial assets for the year ended March 31, 2023 is '' 5.93 Crores (March 31, 2022: '' 4.94 Crores)

(iii) Liquidity risks

Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements.

The Company consistently generated sufficient cash flow from operations to meet its financial obligation as and when they fall due .

The table below provides details regarding the contractual maturities of significant financial liabilities as at :

] CAPITAL MANAGEMENT

For the purpose of the company''s capital management, capital includes issued equity capital, convertible instruments, share premium and all other equity reserves attributable to the equity holders. The primary objective of the Company''s capital management is to maximise the shareholder value.

The company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Company includes within debt, interest bearing loans and borrowings, trade and other payables, less cash and cash equivalents.

The Company does not face a significant Liquidity risk with regard to its Lease Liabilities as the current assets are sufficient to meet the obligations related to lease liabilities as and when they fall due.

Rental expense recorded for short-term leases was '' 9.09 Crores for the year ended March 31, 2023 and '' 1.07 Crores for the year ended March 31, 2022.

Rental income on assets given on operating lease to subsidiaries was '' NIL Crores for the year ended March 31, 2023.

The Lease payments are discounted using the interest rate implicit in the Lease or, if not readily determinable, using the incremental borrowing rates in the country of domiciLe of these Leases.

41. The accounts of certain Trade Receivables, Trade Payables, Loans and Advances and Banks are however, subject to formal confirmations / reconciliations and consequent adjustments, if any. However, the management does not expect any material difference affecting the current years financial statements on such reconciliations / adjustments.

42. The Company has a receivable balance from Azentio Group in various jurisdictions of '' 0.34 Crores and a payable balance of '' 2.17 Crores which results in a net payable of '' 1.83 Crores from Azentio Group. The business transfer agreement conditions are pending in various jurisdictions and due to which there could be certain adjustments to the amounts of receivable and payable.

H DETAILS OF BENAMI PROPERTY HELD

The Company do not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder.

I WILFUL DEFAULTER

The company has not been declared as a wilful Defaulter by any Financial Institution or bank as at the date of Standalone Balance Sheet.

| RELATIONSHIP WITH STRUCK OFF COMPANIES

The Company has not identified any transactions or balances in any reporting periods with companies whose name is struck off under section 248 of the Companies Act, 2013 or section 560 of Companies Act, 1956.

| REGISTRATION OF CHARGES OR SATISFACTION WITH REGISTRAR OF COMPANIES (ROC)

The company has no pending charges or satisfaction which are yet to be registered with the ROC beyond the Statutory period.

H COMPLIANCE WITH NUMBER OF LAYERS OF COMPANIES

The company has complied with the provision of the number of layers prescribed under clause (87) of section 2 of the Act read with the Companies (Restriction on number of Layers) Rules, 2017.

j| COMPLIANCE WITH APPROVED SCHEME(S) OF ARRANGEMENTS

There are no Schemes of Arrangements has been approved by the Competent Authority in terms of sections 230 to 237 of the Companies Act, 2013.

] DISCREPANCY IN UTILIZATION OF BORROWINGS

The company has used the borrowings from banks and financial institutions for the specific purpose for which it was taken at the standalone balance sheet date. There are no discrepancy in utilisation of borrowings.

Utilisation of Borrowed funds and share premium:

(A) The company has not advanced or loaned or invested funds (either borrowed funds or share premium or any other sources or kind of funds) to any other person(s) or entity(ies), including foreign entities (Intermediaries).

(B) the company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party).

The company have not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (intermediaries) with the understanding that the intermediary shall:

a) 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

b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries;

The Company have not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:

a) 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;

b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

H ADDITIONAL INFORMATION Undisclosed income

The Company has no transaction that is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).

Details of Crypto Currency or Virtual Currency

The company has not traded or invested in Crypto currency or Virtual Currency.

Corporate Social Responsibility

As per Section 135 of the Companies Act, 2013, the Company meet the applicability threshold. However there is no payment obligation due to carry forward losses.

As at 31 March 2023, the 3i Infotech Limited (standalone entity) has a receivable balance of '' 376.68 Crores (FY 21-22 352.68 Crores) and a payable balance of '' 1078.58 Crores from various foreign subsidiaries of which certain balances are long outstanding beyond the stipulated timelines as required under the FEMA and Reserve Bank of India rules and regulations. For this non-compliance the new management is in the process of taking corrective actions. Considering the receivable balances can be set off against the payable balances by making an application to the Reserve Bank of India (RBI), the management has not recognised a provision against the receivable balances.

| PREVIOUS YEAR''S FIGURES HAVE BEEN REGROUPED / REARRANGED WHEREVER NECESSARY TO CONFIRM TO THE CURRENT YEAR''S PRESENTATION.


Mar 31, 2021

The Company has acquired certain Land and Building under a lease arrangement for a period of sixty years at a premium of INR 0.50 crores starting from December 4, 2000 for Land, INR 15.62 crores starting from March 13, 2000 and INR 5.05 crores March 1, 2003 for building and the same are being amortized over the lease period.

ii. Property, Plant and Equipment pledged as security against borrowings by the Company

Refer to Note 36 for information on property, plant and equipment pledge as security by the Company

iii. Contractual Obligations

Refer to Note 31 for disclosure of contractual commitments for the acquisition of property, plant and equipment.

i. Significant Estimate : Useful life of Intangible Assets

Refer to sub note (n) of Note 2 ''Significant Accounting Policies'' .

ii. Intangible Assets with indefinite useful lives

The Entity provides IT based software solutions to variety of industry verticals which includes softwares meant for Banking industry, Insurance industry, Enterprise Resource Panning (ERP) softwares and softwares meant for financial service industry. These softwares have been capitalised as ''Software Products - meant for sale'' category under intangible assets. The Company based on the analysis of product life cycle studies, market and competitive trends assesses that the ''Software Products - meant for sale'' products will generate net cash flows for an indefinite period.

iii. Impairment testing of intangible assets with indefinite lives

Software Products - meant for sale

Software Products - meant for sale with indefinite lives have been allocated to the CGUs below forming part of IT Solution segment which is Company''s operating and reportable segment, for impairment testing :

- Banking

- Insurance

- ERP

- Financial Services

The Entity tests whether softwares have suffered any impairment periodically. The recoverable amount of a cash generating unit (CGU) is determined based on value in use of the underlying asset. The valuation is considered to be level 3 in the fair value hierarchy due to unobservable inputs used in the valuation. The calculations use cash flow projections based on financial budgets approved by management covering a five-year period.

The recoverable amount of CGUs (business units) based on value in use as at December 31, 2019 INR 1,595 crores (December 31, 2018: INR 1,654 crores). The recoverable amounts represents the fair value of the business of the software products over the periord of budgeted five years.

Based on estimates of the management, though the fair valuation of the product businesses are much higher than the carrying amount of the software products, these intangibles are carried at amounts which the management estimates to be the residual value of the development costs.

The Company had held Series A, C and D Zero Coupon Redeemable Convertible Preference Shares in 3i Infotech Holdings Private Limited (together the ''Preference Shares''), which got matured during the year on June 30, 2017. The said Preference Shares have then been renewed with same terms and are now having maturity date as March 24, 2025.

Includes Unbilled Revenue from Related Parties as at March 31, 2021 of INR 2.17 crores (as at March 31, 2020 of INR 2.17 crores).

Includes Interest Receivable from Related Parties as at March 31, 2021 of INR 20.42 crores (as at March 31, 2020 of INR 16.33 crores).

Trade or Other Receivable due from directors or other officers of the company either severally or jointly with any other person amounted to INR Nil (Previous year INR Nil).

Trade or Other Receivable due from firms or private companies respectively in which any director is a partner, a director or a member amounted to INR Nil (Previous year INR Nil).

The Company offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.

Business losses which arose in India of INR 330.67(Previous year INR 609.69) that are available for offsetting for eight years against future taxable profits of the company. Majority of these losses will expire in March 2021.

Considering the probability of availability of future taxable profits in the period in which tax losses expire, deferred tax assets have not been recognised in respect of tax losses carried forward by the Company.

Terms / rights attached to equity shares

The Company has only one class of equity shares having a par value of INR 10 each. Each shareholder has right to vote in respect of such share, on every resolution placed before the Company and his voting right on a poll shall be in proportion to his share of the paid up equity capital of the Company. In the event of liquidation, the equity shareholders are entitled to receive the remaining assets of the Company after payments of preferential amounts in proportion to their shareholding.

Terms / rights attached to preference shares

Class A and Class B Preference shareholders vide resolution passed by way of Postal Ballot on March 2, 2021 had granted approval for alternation of terms and conditions and redemption of both classes of preference shares.

Class A and Class B Preference shareholders vide resolution passed by way of Postal Ballot on March 2, 2021 had granted approval for alternation of terms and conditions and redemption of both classes of preference shares.

The terms of Class A Preference Shares having face value of INR 5 each, had been amended in financial year 2015-2016 where by their dividend was reduced to 0.01%and these were made redeemable on March 15, 2026. Redemption Premium shall be an amount that would provide the holder of the said shares an internal rate of return (IRR) of 6% per annum excluding the Dividend Rate on the outstanding amount of the said shares, to be paid at the time of redemption of the said shares.

Contingent liability in respect of arrears of dividend on these preference shares as at March 31, 2021 would be INR Nil crores (INR NIL crores as at March 31, 2020).

Class B Preference Shares of face value of INR 5 each are redeemable on March 15, 2026 and would carry a dividend of 0.10 % per annum.

Class C Preference Shares of face value of INR 1 each with a premium of INR 4 each and would carry a dividend of 0.10 % per annum.

vi. Aggregate number of equity shares issued as bonus, shares issued for consideration other than cash and shares bought back during the period of five years immediately preceding the reporting date are Nil.

vii. Shares reserved for issue under options

For details of shares reserved for issue under the Share based payment plan of the Company, please refer note 30

For details of shares reserved for issue on conversion of Foreign Currency Convertible Bonds , please refer note 14 related to terms of conversion/ redemption of Foreign Currency Convertible Bonds.

viii. Shares issued / to be issued under DRS

Appendix D ''Extinguishing Financial Liabilities with Equity Instruments'' of Ind AS 109 on Financial Instruments requires an entity to measure equity shares issued on extinguishment of liabilities at fair value on the date of extinguishment. Accordingly, fair value of equity shares issued under DRS scheme is the consideration paid against settlement of liabilities and the difference between the fair value of consideration and liability settled is to be charged to statement of profit and loss.

On the date of extinguishment of liability, which is the date of implementation of DRS scheme, the fair value of equity shares is below face value. Therefore as per Ind AS 109, the difference between the liability settled and fair value of equity shares issued is required to be charged to statement of profit and loss.

However, as per Section 53 of the Companies Act, 2013, a company shall not issue shares at a discount. Therefore, for the purpose of compliance of Companies Act, 2013, the Company has considered face value of shares issued as consideration paid towards extinguishment of liabilities and no impact is given in the statement of profit and loss.

The Debt Restructuring Scheme (DRS) proposal submitted by the Company in December 2015 was approved by the CDR-Empowered Group vide its Letter of Approval dated 14 Jun 2016. Accordingly, the Lenders executed a Supplementary Master Restructuring Agreement with the Company in FY2017. The Supplementary Master Restructuring Agreement was not executed by three lenders, viz. State Bank of Hyderabad (SBH) and State Bank of Travancore (SBT) (which subsequently got merged with State Bank of India (SBI)) as well as Indian Overseas Bank (IOB). Consequently, in the Books of the Company, for SBI and IOB, out of the debt to be restructured, the Equity portion and Preference portion, as per the DRS proposal computation is being reflected as Share Suspense under Other Equity. On the other hand, SBI and IOB are still reflecting the entire amount due, as debt.

Maturity Date, Terms of Repayment and coupon / interest rate for Rupee Term Loan from Lenders and Foreign Currency Convertible Bonds (FCCBs):

* Interest expense is calculated by applying the effective interest rate of 7.50% to the liability component

# The equity component of convertible bonds has been presented under other equity net of deferred tax of INR 18.88 crores (March 31, 2020: INR 18.88 crores)

Non Convertible Redeemable Preference Shares

The terms of Class A Preference Shares having face value of INR 5 each, had been amended in financial year 2015-2016 and these were made redeemable on March 15, 2026. Redemption Premium shall be an amount that would provide the holder of the said shares an internal rate of return (IRR) of 6% per annum excluding the Dividend Rate on the outstanding amount of the said shares, to be paid at the time of redemption of the said shares.

Class B Preference Shares of face value of INR 5 each are redeemable on March 15, 2026 and would carry a dividend of 0.10 % per annum.

* One-sixth portion of the outstanding principal amount of the FCCBs shall be redeemed on March 31 of each year starting from March 31, 2020 through March 31 2025.

The Company, on March 29, 2021, approached holders of its foreign currency convertible bonds (FCCBs) for their approval for inter alia redeeming the FCCBs early. The FCCB holders, at their meetings held on May 6, 2021, approved the proposal of early redemption. The Company shall approach the Reserve Bank of India (RBI) for its approval towards change in terms of outstanding FCCBs of the Company inter alia to facilitate early redemption. The Company will convene a separate meeting of its Board of Directors to obtain its approval for change in terms of redemption of outstanding Bonds and for fixing the Early Redemption Date for repayment of outstanding FCCBs to Bondholders post receipt of approval from RBI.

B. Securities offered

The borrowing from the CDR lenders (excluding Specified CDR lenders i.e. Axis Bank Limited, RBL Bank Limited, L&T Finance Limited, Reliance Capital Limited, SREI Equipment Finance Limited and EXIM Bank) together with all interest, default interest, additional interest, commitment fees, all and any other costs, charges, expenses, fees, financing charges/fees/ remuneration secured by the security created in terms of the original Master Restructuring Agreement including the Corporate Guarantee and pledge over the Subject Shares.

Certain Specified lenders referred above/ non CDR lenders shall have pari passu share in the cash flow of the Company.

“Upon Closing of Transaction on March 31, 2021 under the Business Transfer Agreement executed by and between the Company and Azentio Software Private Limited on December 28, 2020 for sale of global software product business of the Company (“”BTA””) and after receipt of purchase consideration as agreed thereunder, all secured lenders of the Company have been duly paid and their debts settled in full. Therefore, all encumbrances on assets (including Corporate Guarantee and pledge of share investments) of the Company and certain subsidiaries mentioned in the Master Restructuring Agreement dated March 31, 2012 as amended and supplemented (“"Material Obligors””) in favour IDBI Trusteeship Services Ltd (“Security Trustee”) stand released on March 31, 2021. The Security Trustee has executed deeds of release / release agreements with the Material Obligors towards release of the said encumbrances and of any secured corporate guarantees furnished by any of the Material Obligors in favour of the Security Trustee.

The Company has completed necessary filings with the ROC for release of charges appearing against the name of the Company.

b) Corporate guarantees from material subsidiaries:

Corporate guarantees of each of the material subsidiaries guaranteeing the Secured Obligations (“Corporate Guarantees"), in favour of all the CDR lenders. Each Corporate Guarantee was secured/credit enhanced by security interest over assets of the relevant material subsidiary providing the Corporate Guarantee, as permitted under applicable laws in the relevant jurisdictions, as detailed in the table below and shall have the ranking as mentioned against each security. Upon Closing of the Transaction under Business Transfer Agreement dated December 28, 2020 and after receipt of purchase consideration thereunder, below subsidiaries of the Company have executed deeds of release with Security Trustee and the Company for discharge of Corporate Guarantee issued in favour of CDR lenders pursuant to Master

(i) Leave Obligations

The leave obligations cover the company''s liability for sick and earned leave.

The amount of the provision of INR 0.43 crores (March 31, 2020: INR 0.64 crores) is presented as current, since the Company does not have an unconditional right to defer settlement for any of these obligations.

(ii) Post Employment obligations

(a) Defined benefit plan - Gratuity

The company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of five years are eligible for gratuity. The amount of gratuity payable on retirement/ termination is the employees last drawn basic salary per month computed proportionately for 15 days salary multiplied by number of years of service upto 10 years and 26 days salary multiplied by number of years of service beyond 11 years.

(iii) Defined contribution plans

The Company also has defined contribution plans. Contributions are made to provident fund in India for employees at the rate of 12% of basic salary as per regulations. The contributions are made to registered provident fund administered by the government. The obligation of the Company is limited to the amount contributed and it has no further contractual nor any contructive obligation. The expense recognised during the year towards defined contribution plan is INR 2.96 crores (March 31, 2020: INR 7.63 crores)

30. SHARE BASED PAYMENTS

(a) Employee option plan

The Company''s Employee Stock Option Schemes are applicable to “Eligible Employees" as defined in the scheme which includes directors and employees of the Company and its subsidiaries. Currently, the Company has 3 schemes, ESOS 2000, ESOS 2007 and ESOS 2018 (as amended). ESOS Scheme 2000 and 2007 provide for issue of equity options up to 25% of the paid-up equity capital to eligible employees and ESOS Scheme 2018 provide for issue of equity options up to 15% of the paid-up equity capital to eligible employees.

The options granted under the ESOS scheme 2000 and 2007 vest in a phased manner over three years with 20%, 30% and 50% of the grants vesting at the end of each year commencing one year from the date of the grant and the same can be exercised within ten years from the date of the grant or five years from the date of vesting of options whichever is later by paying cash at a price determined on the date of the grant. The options granted under ESOS 2018 vest in a graded manner over a three year period, with 33%, 33% and 34% of the grants vesting in each year, commencing one year from the date of the grant and the same can be exercised within 5 years from the date of vesting. One Stock option if exercised will be equivalent to one equity share.

During the year ended March 31, 2013, the Board of Directors of the Company approved ESOS Plan -2013 under the existing scheme ESOS 2007. The plan consist of variations in certain terms with regard to vesting and certain other related matters in ESOS 2007. The options granted are convertible and one option is equivalent to one equity share each. This plan is applicable to all the new options granted to eligible employees for the year ended March 31, 2014.

During the year ended March 31, 2015, the Board of Directors of the Company approved ESOS Plan-2014 under the existing scheme ESOS 2007. The plan consists of variations in certain terms with regard to vesting and certain other related matters in ESOS 2007. The options granted are convertible and one option is equivalent to one equity share each. This plan is applicable to all the new options granted to eligible employees for the year ended March 31, 2015.

During the current year ended March 31, 2016, the Board of Directors of the Company approved ESOS Plan-2015 under the existing scheme ESOS 2007. The plan consists of variations in certain terms with regard to vesting and certain other related matters in ESOS 2007. The options granted are convertible and one option is equivalent to one equity share each. This plan is applicable to all the new options granted to eligible employees for the year ended March 31, 2016.

Vesting Criteria for ESOS plan 2013 and 2014 under ESOS Scheme 2007 is in the ratio of 33%, 33% and 34% vesting in each year, commencing one year from the date of grant.Vesting Criteria for ESOS plan 2015 under ESOS Scheme 2007 is in the ratio of 50%, 25% and 25% vesting in each year, commencing one year from the date of grant.

The existing options (other than those granted under ESOS plan-2013, ESOS plan-2014 & ESOS plan-2015) would continue to be governed by the existing terms.

During the year ended March 31, 2021, NIL Stock Options were granted (10,00,000 Options granted for the year ended March 31, 2020).

"Note on transitioned employees

The Company hereby acknowledges that you shall be permitted to exercise, until 17 January, 2022 any employee stock options that have already been vested on or prior to the Transfer Date under the employee stock options scheme 2007 - Plan 2013, Plan 2014, Plan 2015 and Plan 2018.

In case the employee stock options issued to you under the employee stock options scheme 2018 -Plan 2018 are due for vesting on 18 January 2022, then such options shall stand automatically vested to you on the Transfer Date (“Accelerated Options") and such Accelerated Options may be exercised by you in the period from 18 January 2022 to 17 April 2022.

You agree and acknowledge that you shall not exercise the Accelerated Options (if any) prior to 18 January 2022."

* Includes claim in respect of legal cases relating to Registrar and Transfer Services, which are reimbursable by the Principal to the extent of INR 1.21 crores (as at March 31, 2020 - INR 1.20 crores).

The Company''s pending litigation is in respect of proceedings pending with Tax Authorities and customer claims with various courts. The Company has reviewed all its pending litigations and proceedings and has made adequate provisions, wherever required and disclosed the contingent liabilities, wherever applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have a material impact on its financial statements.

The Company had received approval from the Ministry of Corporate Affairs (MCA) for waiver of ''61,54,452 against a total remuneration of ''1,23,08,903 paid to Mr. Padmanabhan Iyer, Managing Director of the Company for the period from 11/8/2016 to 31/3/2017 with a direction to the Company to recover remaining (excess) remuneration of '' 61,54,451 paid to him for the period from 11/08/2016 to 31/03/2017, under intimation to the MCA.

The Company had obtained prior approval from lenders and also approval from Shareholders by means of Special Resolution at the Annual General Meeting held on September 6, 2017 and thus complied with the provisions of Section 197 of the Companies Act, 2013. The Company has received a notice from MCA dated April 5, 2018 in respect of recovery of the excess remuneration paid to Mr. Iyer in the year 2016-17 and the same was not recovered in view of the Companies Amendment Bill passed in 2018 and on the basis of the legal opinion obtained by the Company.

As advised by the Management of the Company, the Company again took approval of the Shareholders for waiver of recovery of excess remuneration paid to Mr. Iyer at the 26th Annual General Meeting held on December 12, 2019.

(vii) Terms and conditions of transactions with related parties

The sales to and purchases from related parties are made on terms equivalent to those that prevail in arm''s length transactions. Outstanding balances at the year end are unsecured and interest bearing and settlement occurs in cash. The Provision for Bad and Doubtful debts on amount owed by related parties is NIL (March 31, 2020 : NIL) . The assessment for loss allowance is undertaken at each financial year through examining the financial position of the related party and market in which the related party operates.

(viii) There are no Commitments with Related parties

The management assessed that the fair value of cash and cash equivalent, trade receivables, trade payables, and other current financial assets and liabilities approximate their carrying amounts largely due to the short term maturities of these instruments.

Financial instruments with fixed and variable interest rates are evaluated by the Company based on parameters such as interest rates and individual credit worthiness of the counterparty. Accordingly, fair value of such instruments is not materially different from their carrying amounts

The fair values for loans, security deposits and investments in preference shares were calculated based on cash flows discounted using a current lending rate. They are classified as level 3 fair values in the Fair value hierarchy due to the inclusion of unobservable inputs including counterparty credit risk.

The fair values of non current borrowings are based on discounted cash flows using a current borrowing rate. They are classified as level 3 fair values in the fair value hierarchy due to the use of unobservable inputs, including own credit risk.

The fair value of unquoted equity instruments carried at fair value through profit or loss are not materially different from their carrying amount. Hence the impact of fair valuation is considered to be insignificant in the financial statements.

Fair Value Hierarchy

This section explains the judgments and estimates made in determining the fair values of the financial instruments that are measured at amortised cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value,

There have been no transfers among Level 1, Level 2 and Level 3 during the period

Level 1 - Level 1 hierarchy includes Quoted (unadjusted) prices in active markets for identical assets or liabilities.

Level 2 - The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

Level 3 - If one or more of the significant inputs are not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity shares included in level 3.

iii. Valuation technique used to determine fair value

Specific Valuation techniques used to value financial instruments include:

- the use of quoted market prices or dealer quotes for similar instruments

- the fair value of the remaining financial instruments is determined using discounted cash flow analysis

iv. Valuation processes

The finance department of the Company includes a team that performs the valuations of financial assets and liabilities required for financial reporting purposes, including level 3 fair values. This team reports directly to the Managing Director (MD) and the audit committee (AC). Discussions of valuation processes and results are held between the MD, AC and the valuation team at least once every three months, in line with the Company''s quarterly reporting periods.

34. FINANCIAL RISK MANAGEMENT

The Company is exposed primarily to fluctuations in foreign currency exchange rates ,credit ,liquidity and interest rate risk ,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 liabilities . The risk management policy is approved by Board of Directors . The focus of the 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.

i. Market Risk

Market risk is the risk that the fair value or the future cash flows of a financial instrument will fluctuate because of the change in market prices . Such changes in the value of financial instruments may result from changes in the foreign currency exchange, interest 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 exchange rate may have potential impact on the statement of profit and loss and the other comprehensive income and equity ,where any transaction reference 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 the economic environment in which the Company operates, its operations are subject to risk arising from fluctuations in exchange rates in those countries. The risks primarily relates to fluctuations in US Dollar, Great Britain Pound and Euro against the functional currency of the Company.

The Company , as per its current risk management policy ,does not use any derivatives instruments to hedge foreign exchange . Further ,any movement in the functional currency of the various operations of the Company against major foreign currencies may impact the Company''s revenue in international business.

The Company evaluates the impact of the foreign exchange rate fluctuation by assessing its exposure to exchange rate risks. Apart from exposures of foreign currency payables and receivables, which partially are naturally hedged against each other, the Company does not use any hedging instruments to hedge its foreign currency exposures; in line with the current 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 rate shift of all the currencies by 1% 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 the other comprehensive income and equity .

1% 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 INR 11.36 crores for the year ended March 31,2020.

(b) Interest rate risk

The Company''s fixed rate borrowings are carried at amortised cost. They are therefore not subject to interest rate risk as defined in Ind AS 107, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market.

(ii) Credit risk

Credit risk is the risk that the counterparty will not meet its obligations leading to a financial loss. Credit risk arises from cash and cash equivalents, investments carried at amortised cost and deposits with banks and financial institutions, as well as credit exposures to customers including outstanding receivables and unbilled revenues.

(1) Credit risk management

- Trade receivables and Unbilled revenues

Credit risk has always been managed by the Company through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the company grants credit terms in the normal course of business.

As a practical expedient, the Company uses a provision matrix to determine impairment loss allowance on portfolio of its trade receivables and unbilled revenue. The provision matrix is based on its historically observed default rates over the expected life of the trade receivables and is adjusted for forward-looking estimates. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analyzed.

- Other Financails Assets

The company considers the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in credit risk the company compares the risk of a default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition. It considers available reasonable and supportive forwarding-looking information.

A default on a financial asset is when the counterparty fails to make contractual payments when they fall due. This definition of default is determined by considering the business environment in which entity operates and other macro-economic factors.

40. DEFERRAL/CAPITALISATION OF EXCHANGE DIFFERENCES

(Amount in INR Crores)

The Ministry of Corporate Affairs (MCA) has issued the amendment dated December 29, 2011 to AS 11 “The Effects of Changes in Foreign Exchange Rates", to allow companies deferral/capitalization of exchange differences arising on long-term foreign currency monetary items. In accordance with the amendment/ earlier amendment to AS 11, the Company has capitalised exchange loss, ''arising on long-term foreign currency loan to the cost of plant and equipments. The Company also has other long-term foreign currency monetary item, where the gain/(loss) due to fluctuation in foreign currency is accounted for as FCMITDA and disclosed under reserve and surplus.

42. The accounts of certain Trade Receivables, Trade Payables, Loans and Advances and Banks are however, subject to formal confirmations / reconciliations and consequent adjustments, if any. However, the management does not expect any material difference affecting the current years financial statements on such reconciliations / adjustments.

43. The books of accounts of the parent and subsidiaries reflect debit balances / credit balances of the counter entity. In case of 3i Infotech Ltd, the parent and 3i Infotech Saudi Arabia LLC a subsidiary there is a difference in the balances reflected to the tune of INR 75.56 crores. This net difference represents entries passed in previous financial years in various accounts based on local accounting and compliance requirements. The company is in the process of obtaining required approvals to pass the necessary accounting entries to eliminate the differences.

44. Estimation of uncertainties relating to the global health pandemic from COVID-19 ( COVID-19): The

Company has considered the possible effects that may result from the pandemic relating to COVID-19 on the carrying amounts of receivables, unbilled revenues, goodwill and intangible assets. In developing the assumptions relating to the possible future uncertainties in the global economic conditions because of this pandemic, the Company, as at the date of approval of these financial statements has used internal and external sources of information including credit reports and related information, economic forecasts and consensus estimates from market sources on the expected future performance of the Company. The Company has performed sensitivity analysis on the assumptions used and based on current estimates expects the carrying amount of these assets will be recovered

45. Previous year''s figures have been regrouped / rearranged wherever necessary to conform to the current year''s presentation.


Mar 31, 2018

1 Corporate Information

3i Infotech Limited (referred to as “the Company”) is a Global Information Technology Company committed to Empowering Business Transformation. A comprehensive set of IP based software solutions, coupled with a

wide range of IT services, uniquely positions the Company to address the dynamic requirements of a variety

of industry verticals of Banking and Financial Services Industry (BFSI), predominantly Banking, Insurance,

Capital Markets, Asset & Wealth Management. The Company also provides solutions for other verticals such

as Government, Manufacturing, Retail, Distribution, Telecom and Healthcare.

The Company is a public limited Company incorporated and domiciled in India. Its shares are listed on Bombay

Stock Exchange and National Stock Exchange in India. The address of its registered office is International

Infotech Park, Tower No.5, 3rd to 6th floors, Vashi, Navi Mumbai-400 703.

The financial statements for the year ended March 31, 2018 were approved by the Board of Directors and authorised for issue on April 23, 2018.

* The Company had held Series A, C and D Zero Coupon Redeemable Convertible Preference Shares in 3i Infotech Holdings Private Limited (together the ‘Preference Shares’), which got matured during the year on June 30, 2017. The said Preference Shares have then been renewed with same terms and are now having maturity date as March 24, 2025.

Consequent to said renewal, the Loss amounting to Rs. 152.29 crores arising on fair valuation of these Preference Shares (Debt Instrument) was accounted as an addition to the Cost of Equity Investment held in 3i Infotech Holdings Private Limited and the same has been accounted as Impairment loss allowance during the year (Refer to Note 25 Other Expenses).

** Includes Unbilled Revenue from Related Parties as at March 31, 2018 of Rs. 2.17 crores (as at March 31, 2017 of Rs. 1.82 crores).

# Includes Interest Receivable from Related Parties as at March 31, 2018 of Rs. 13.07 crores (as at March 31, 2017 of Rs. 5.98 crores).

Trade or Other Receivable due from directors or other officers of the company either severally or jointly with any other person amounted to Rs. Nil (Previous year Rs. Nil).

Trade or Other Receivable due from firms or private companies respectively in which any director is a partner, a director or a member amounted to Rs. Nil (Previous year Rs. Nil).

The Company offsets tax assets and liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same tax authority.

Tax losses which arose in India of Rs. 918.45 crores (Previous year Rs. 949.66 crores) that are available for offsetting for eight years against future taxable profits of the company. Majority of these losses will expire in March 2021.

Considering the probability of availability of future taxable profits in the period in which tax losses expire, deferred tax assets have not been recognised in respect of tax losses carried forward by the Company.

Terms / rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs. 10 each. Each shareholder has right to vote in respect of such share, on every resolution placed before the Company and his voting right on a poll shall be in proportion to his share of the paid up equity capital of the Company. In the event of liquidation, the equity shareholders are entitled to receive the remaining assets of the Company after payments of preferential amounts in proportion to their shareholding.

Terms / rights attached to preference shares

The terms of Class A Preference Shares having face value of Rs. 5 each, had been amended in financial year 2015-2016 and these were made redeemable on March 15, 2026. Redemption Premium shall be an amount that would provide the holder of the said shares an internal rate of return (IRR) of 6% per annum excluding the Dividend Rate on the outstanding amount of the said shares, to be paid at the time of redemption of the said shares.

Contingent liability in respect of arrears of dividend on these preference shares as at March 31, 2018 would be Rs. Nil crores (Rs. 0.04 crores as at March 31, 2017).

Class B Preference Shares of face value of Rs. 5 each are redeemable on March 15, 2026 and would carry a dividend of 0.10 % per annum.

Class C Preference Shares of face value of Rs. 1 each with a premium of Rs. 4 each and would carry a dividend of 0.10 % per annum.

Issued, Subscribed and paid up Equity Share Capital as at March 31, 2017 was Rs. 1,183.65 crores; Rs. 40.02 crores (40,021,201 equity shares were held in abeyance) and shown under ‘Other Equity’. Shares held in abeyance were subsequently issued in FY 2017-18.

iv. Shares held by holding/ ultimate holding company and / or their subsidiaries / associates

The Company does not have a holding company or ultimate holding company.

v. Details of shareholders holding more than 5% shares in the Company

vi. Aggregate number of equity shares issued as bonus, shares issued for consideration other than cash and shares bought back during the period of five years immediately preceding the reporting date are Nil.

vii. Shares reserved for issue under options

For details of shares reserved for issue under the Share based payment plan of the Company, please refer note 29

For details of shares reserved for issue on conversion of foreign currency convertible bonds , please refer note 14 related to terms of conversion/ redemption of foreign currency convertible bonds.

viii. Shares issued / to be issued under Debt Restructuring Scheme (DRS)

Appendix D ‘Extinguishing Financial Liabilities with Equity Instruments’ of Ind AS 109 on Financial Instruments requires an entity to measure equity shares issued on extinguishment of liabilities at fair value on the date of extinguishment. Accordingly, fair value of equity shares issued under DRS scheme is the consideration paid against settlement of liabilities and the difference between the fair value of consideration and liability settled is to be charged to statement of profit and loss.

On the date of extinguishment of liability, which is the date of implementation of DRS scheme, the fair value of equity shares is below face value. Therefore as per Ind AS 109, the difference between the liability settled and fair value of equity shares issued is required to be charged to statement of profit and loss. However, as per Section 53 of the Companies Act, 2013, a company shall not issue shares at a discount. Therefore, for the purpose of compliance of Companies Act, 2013, the Company has considered face value of shares issued as consideration paid towards extinguishment of liabilities and no impact is given in the statement of profit and loss.

The Company has three share option schemes under which options to subscribe for the Company’s shares have been granted to certain executives and senior employees.

The Share based payment reserve is used to recognise the value of equity settled share based payments provided to employees, including key management personnel, as part of their remuneration. Refer to Note 29 for further details of these plans.

Maturity Date, Terms of Repayment and coupon / interest rate for Rupee Term Loan from Lenders and Foreign Currency Convertible Bonds (FCCBs):

Loan from Related Parties as reflected under Non Current Borrowings are due for repayment in FY 2020-21 and carries a rate of interest @ 10% p.a.

Convertible Bonds

For details of convertible bonds, repayable terms, coupon rate, conversion rate, etc refer to Note 14 Part A Summary of Amended terms and conditions of ‘Existing FCCBs’ and terms and conditions of New FCCBs

* Interest expense is calculated by applying the effective interest rate of 7.50% to the liability component

# The equity component of convertible bonds has been presented under other equity net of deferred tax of Rs. 19.32 crores (March 31, 2017: Rs. 20.13 crores)

Non Convertible Redeemable Preference Shares

The terms of Class A Preference Shares having face value of Rs. 5 each, had been amended in financial year 2015-2016 and these were made redeemable on March 15, 2026. Redemption Premium shall be an amount that would provide the holder of the said shares an internal rate of return (IRR) of 6% per annum excluding the Dividend Rate on the outstanding amount of the said shares, to be paid at the time of redemption of the said shares.

Class B Preference Shares of face value of Rs. 5 each are redeemable on March 15, 2026 and would carry a dividend of 0.10 % per annum.

Class C Preference Shares of face value of Rs. 1 each with a premium of Rs. 4 each and would carry a dividend of 0.10 % per annum.

The carrying amounts of financial and non-financial assets pledged as security for current and non current borrowings are disclosed in Note 35

There are no guarantees given by directors

There are no defaults in repayment of borrowings during the year.

B. Securities offered

The borrowing from the CDR lenders (excluding certain Specified lenders) together with all interest, default interest, additional interest, commitment fees, all and any other costs, charges, expenses, fees, financing charges/fees/ remuneration shall continue to be secured by the security created in terms of the original Master Restructuring Agreement including the Corporate Guarantee and pledge over the Subject Shares. Certain Specified lenders referred above/ non CDR lenders shall have pari passu share in the cash flow of the Company.

Details of ‘Security created’, ‘Corporate Guarantees from Material Subsidiaries’ and ‘Pledge of share’s are as described under:

b) Corporate guarantees from material subsidiaries:

Corporate guarantees of each of the material subsidiaries guaranteeing the secured obligations (“Corporate Guarantees”), in favour of all the CDR lenders. Each Corporate Guarantee shall be secured/credit enhanced by security interest over assets of the relevant material subsidiary providing the Corporate Guarantee, as permitted under applicable laws in the relevant jurisdictions, as detailed in the table below and shall have the ranking as mentioned against each security.

* Includes Interest accured on borrowings from related parties Rs. 14.88 Crores (March 31, 2017 : Rs. 13.27 Crores) ** There are no amounts which are due to be transferred to Investor Education and Protection Fund.

# Includes Deposits Payable to related parties Rs. 5 Crores (March 31, 2017 : Rs. 5 Crores)

2. RESEARCH AND DEVELOPMENT COSTS

The Company during the year has incurred cost on research and development activities which are not eligible for capitalisation in terms of Ind AS 38 and therefore they are recognised in statement of profit and loss. Amount charged to profit or loss during the year ended March 31, 2018 Rs. 18.38 crores (March 31, 2017: Rs. 9.87 crores ) details of which are as follows:

(i) Leave Obligations

The leave obligations cover the Company’s liability for sick and earned leave.

The amount of the provision of Rs. 0.72 crores (March 31, 2017: Rs. 0.66 crores) is presented as current, since the Company does not have an unconditional right to defer settlement for any of these obligations.

(ii) Post Employment obligations

(a) Defined benefit plan - Gratuity

The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of five years are eligible for gratuity. The amount of gratuity payable on retirement/ termination is the employees last drawn basic salary per month computed proportionately for 15 days salary multiplied by number of years of service upto 10 years and 26 days salary multiplied by number of years of service beyond 11 years.

The gratuity plan is a unfunded plan. The Company does not fund the liability and maintains a target level of funding to be maintained over a period of time based on estimations of expected gratuity payments.

The sensitivity analysis above have been determined based on a method that extrapolates the impact on defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period.

The Company’s best estimate of future cash flows during the next 12 months is Rs. 16.01 crores (as at March 31, 2017 : Rs. 14.43 crores).

The average duration of the defined benefit plan obligation at the end of the reporting period is 8 years (March 31, 2017: 9 years)

(iii) Defined contribution plans

The Company also has defined contribution plans. Contributions are made to provident fund in India for employees at the rate of 12% of basic salary as per regulations. The contributions are made to registered provident fund administered by the government. The obligation of the Company is limited to the amount contributed and it has no further contractual nor any contructive obligation. The expense recognised during the year towards defined contribution plan is Rs. 5.77 crores (March 31, 2017: Rs. 5.83 crores)

3. SHARE BASED PAYMENTS (a) Employee option plan

The Company’s Employee Stock Option Schemes are applicable to “Eligible Employees” as defined in the scheme which includes directors and employees of the Company and its subsidiaries. They provide for issue of equity options up to 25% of the paid-up equity capital to eligible employees. Currently, the Company has 2 schemes, ESOS 2000 and ESOS 2007 (as amended).

The options granted under the ESOS scheme 2000 and 2007 vest in a phased manner over three years with 20%, 30% and 50% of the grants vesting at the end of each year from the date of the grant and the same can be exercised within ten years from the date of the grant or five years from the date of vesting of options whichever is later by paying cash at a price determined on the date of the grant. One Stock option if converted will be equivalent to one equity share.

During the year ended March 31, 2013, the Board of Directors of the Company approved ESOS Plan -2013 under the existing scheme ESOS 2007. The plan consisted of variations in certain terms with regard to vesting and certain other related matters in ESOS 2007. The options granted are convertible and one option is equivalent to one equity share each. This plan is applicable to all the new options granted to eligible employees for the year ended March 31, 2014.

During the year ended March 31, 2015, the Board of Directors of the Company approved ESOS Plan- 2014 under the existing scheme ESOS 2007. The plan consisted of variations in certain terms with regard to vesting and certain other related matters in ESOS 2007. The options granted are convertible and one option is equivalent to one equity share each. This plan is applicable to all the new options granted to eligible employees for the year ended March 31, 2015.

During the year ended March 31, 2016, the Board of Directors of the Company approved ESOS Plan- 2015 under the existing scheme ESOS 2007. The plan consisted of variations in certain terms with regard to vesting and certain other related matters in ESOS 2007. The options granted are convertible and one option is equivalent to one equity share each. This plan is applicable to all the new options granted to eligible employees for the year ended March 31, 2016.

The options granted under ESOS Plan -2013; under ESOS Plan -2014 and under ESOS Plan -2015 would vest in a phased manner over three years with 33%, 33% and 34% of the grants vesting at the end of each year from the date of the grant and the same can be exercised within ten years from the date of grant of options or five years from the date of vesting of options, whichever is later.

The existing options (other than those granted under ESOS plan-2013, ESOS plan-2014 & ESOS plan-2015) would continue to be governed by the existing terms.

During the year ended March 31, 2018, no Options were granted (Nil Options granted for the year ended March 31, 2017).

Movement during the year

The number and weighted average exercise prices (WAEP) of the options and movement during the year is as follows

*During the year ended March 31, 2018, Nil options (for the year ended March 31, 2017 Nil Options) granted to Managing Director and Global CEO and Nil options (for the year ended March 31, 2017 Nil Options) granted to Executive Director.

**Includes 1,380,000 options granted to Managing Director/Executive Director and Non-Executive Directors (for the year ended March 31, 2016, 1,630,000 options).

4. COMMITMENTS AND CONTINGENCIES

A. Commitments

i. Capital Commitments

Capital expenditure contracted for at the end of the reporting period but not recognised as liabilities is as follows:

ii. Leases

Operating lease commitments - Company as lessee

(i) The lease arrangements in respect of properties from are renewable/ cancellable at the Company’s and/or lessors’ option as mutually agreed. The future lease rental payment committed is as under:

* Includes claim in respect of legal cases relating to Registrar and Transfer Services, which are reimbursable by the Principal to the extent of Rs. 1.19 crores (as at March 31, 2017 - Rs. 0.78 crores). The Company’s pending litigation is in respect of proceedings pending with Tax Authorities and customer claims with various courts. The Company has reviewed all its pending litigations and proceedings and has made adequate provisions, wherever required and disclosed the contingent liabilities, wherever applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have a material impact on its financial statements.

The remuneration paid / provided to the Managing Director and Global CEO for the financial year 201617 had been approved by both the shareholders as well as lenders of the Company. This remuneration was in excess of the limits prescribed under the erstwhile Section 197 of the Companies Act 2013 and was subject to the approval of the Ministry of Corporate Affairs (MCA). The management had made application to MCA for the necessary approval. Although, MCA has granted approval only for a part of the amount, the management is of the opinion that once the amended Section 197 of the Companies (Amendment) Act, 2017 is notified, the Company would be in compliance with the law.

* The amounts of Post employement benefits, Long term employee benefits and employee share based payments cannot be seperately identified from the composite amount advised by the actuary / valuer.

(vii) Terms and conditions of transactions with related parties

The sales to and purchases from related parties are made on terms equivalent to those that prevail in arm’s length transactions. Outstanding balances at the year end are unsecured and interest bearing and settlement occurs in cash. The Provision for Bad and Doubtful debts on amount owed by related parties is Rs. 5.21 crores (March 31, 2017 : Rs. 4.95 crores). The assessment for loss allowance is undertaken at each financial year through examining the financial position of the related party and market in which the related party operates.

(viii) There are no Commitments with Related parties

The management assessed that the fair value of cash and cash equivalent, trade receivables, trade payables, and other current financial assets and liabilities approximate their carrying amounts largely due to the short term maturities of these instruments.

Financial instruments with fixed and variable interest rates are evaluated by the Company based on parameters such as interest rates and individual credit worthiness of the counterparty. Accordingly, fair value of such instruments is not materially different from their carrying amounts

The fair values for loans, security deposits and investments in preference shares were calculated based on cash flows discounted using a current lending rate. They are classified as Level 3 fair values in the Fair value hierarchy due to the inclusion of unobservable inputs including counterparty credit risk.

The fair values of non current borrowings are based on discounted cash flows using a current borrowing rate. They are classified as Level 3 fair values in the fair value hierarchy due to the use of unobservable inputs, including own credit risk.

The fair value of investments in preference shares and unquoted equity instruments carried at fair value through profit or loss are not materially different from their carrying amount. Hence the impact of fair valuation is considered to be insignificant in the financial statements.

ii. Fair Value Hierarchy

This section explains the judgments and estimates made in determining the fair values of the financial instruments that are measured at amortised cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into three levels prescribed under the accounting standard. An explanation of each level follows underneath the table:

There have been no transfers among Level 1, Level 2 and Level 3 during the period

Level 1 - Level 1 hierarchy includes Quoted (unadjusted) prices in active markets for identical assets or liabilities.

Level 2 - The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in Level 2.

Level 3 - If one or more of the significant inputs are not based on observable market data, the instrument is included in Level 3. This is the case for unlisted equity shares and preference shares included in Level 3.

iii. Valuation technique used to determine fair value

Specific Valuation techniques used to value financial instruments include:

- the use of quoted market prices or dealer quotes for similar instruments

- the fair value of the remaining financial instruments is determined using discounted cash flow analysis

iv. Valuation processes

The finance department of the Company includes a team that performs the valuations of financial assets and liabilities required for financial reporting purposes, including level 3 fair values. This team reports directly to the Managing Director (MD) and the audit committee (AC). Discussions of valuation processes and results are held between the MD, AC and the valuation team at least once every three months, in line with the Company’s quarterly reporting periods.

5. FINANCIAL RISK MANAGEMENT

The Company is exposed primarily to fluctuations in foreign currency exchange rates ,credit ,liquidity and interest rate risk ,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 liabilities . The risk management policy is approved by Board of Directors . The focus of the 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.

i. Market Risk

Market risk is the risk that the fair value or the future cash flows of a financial instrument will fluctuate because of the change in market prices . Such changes in the value of financial instruments may result from changes in the foreign currency exchange, interest 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 exchange rate may have potential impact on the statement of profit and loss and the other comprehensive income and equity ,where any transaction reference 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 the economic environment in which the Company operates, its operations are subject to risk arising from fluctuations in exchange rates in those countries. The risks primarily relates to fluctuations in US Dollar, Great Britain Pound and Euro against the functional currency of the Company.

The Company , as per its current risk management policy ,does not use any derivatives instruments to hedge foreign exchange . Further ,any movement in the functional currency of the various operations of the Company against major foreign currencies may impact the Company’s revenue in international business.

The Company evaluates the impact of the foreign exchange rate fluctuation by assessing its exposure to exchange rate risks. Apart from exposures of foreign currency payables and receivables, which partially are naturally hedged against each other, the Company does not use any hedging instruments to hedge its foreign currency exposures; in line with the current 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 rate shift of all the currencies by 1% 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 the other comprehensive income and equity .

The following table set forth information relating to foreign currency exposure as at March 31,2018:

1% 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. 9.64 crores for the year ended March 31,2018

The following table set forth information relating to foreign currency exposure as at March 31,2017:

1% 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. 9.36 crores for the year ended March 31,2017

(b) Interest rate risk

The Company’s fixed rate borrowings are carried at amortised cost. They are therefore not subject to interest rate risk as defined in Ind AS 107, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market.

(ii) Credit risk

Credit risk is the risk that the counterparty will not meet its obligations leading to a financial loss. Credit risk arises from cash and cash equivalents, investments carried at amortised cost and deposits with banks and financial institutions, as well as credit exposures to customers including outstanding receivables and unbilled revenues.

(1) Credit risk management

- Trade receivables and Unbilled revenues

Credit risk has always been managed by the Company through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the company grants credit terms in the normal course of business.

As a practical expedient, the Company uses a provision matrix to determine impairment loss allowance on portfolio of its trade receivables and unbilled revenue. The provision matrix is based on its historically observed default rates over the expected life of the trade receivables and is adjusted for forward-looking estimates. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analyzed.

- Other Financial Assets

The company considers the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in credit risk the

Company compares the risk of a default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition. It considers available reasonable and supportive forwarding-looking information.

A default on a financial asset is when the counterparty fails to make contractual payments when they fall due. This definition of default is determined by considering the business environment in which entity operates and other macro-economic factors.

(2) Credit risk exposure

- Trade receivables and Unbilled revenues

The carrying amount of trade receivables and unbilled revenues represents the maximum credit exposure from customers. The maximum exposure to credit risk from customers is Rs. 647.16 crores (March 31, 2017: Rs. 628.23 crores). The lifetime expected credit loss on customer balance for the year ended March 31, 2017 is Rs. 44.19 crores (March 31, 2017: Rs. 49.18 crores).

- Other Financial Assets

The carrying amount of cash and cash equivalents, investments carried at amortised cost, deposits with banks and financial institutions and other financial assets represents the maximum credit exposure. The maximum exposure to credit risk is Rs. 572.97 crores (March 31, 2017: Rs. 739.53 crores). The 12 months expected credit loss and lifetime expected credit loss on these financial assets for the year ended March 31, 2017 is Rs. 2.88 crores (March 31, 2017: Rs. 2.79 crores)

(iii) Liquidity risks

Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements.

The Company consistently generated sufficient cash flow from operations to meet its financial obligation as and when they fall due.

6. CAPITAL MANAGEMENT

For the purpose of the Company’s capital management, capital includes issued equity capital, convertible preference shares, share premium and all other equity reserves attributable to the equity holders of the Company. The primary objective of the Company’s capital management is to maximise the shareholder value. The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Company includes within debt, interest bearing loans and borrowings, trade and other payables, less cash and cash equivalents.

7. OFFSETTING FINANCIAL ASSETS AND FINANCIAL LIABILITIES

The following table presents the recognised financial instruments that are offset and other agreements but not offset, as at March 31, 2018 and March 31, 2017. The column ‘net amount’ shows the impact on the company’s balance sheet if all set-off rights were exercised.

* Amount includes due and unpaid of Rs. Nil (March 31, 2017: Rs. Nil)

The information has been given in respect of such vendors to the extent they could be identified as “Mico and Small” enterprises on the basis of information available with the Company.

8. DEFERRAL/CAPITALISATION OF EXCHANGE DIFFERENCES

The Ministry of Corporate Affairs (MCA) has issued the amendment dated December 29, 2011 to AS 11 “The Effects of Changes in Foreign Exchange Rates”, to allow companies deferral/capitalization of exchange differences arising on long-term foreign currency monetary items. In accordance with the amendment/earlier amendment to AS 11, the Company had capitalised exchange loss, ‘arising on long-term foreign currency loan to the cost of plant and equipments. The Company also had other long-term foreign currency monetary item, where the gain/(loss) due to fluctuation in foreign currency is accounted for as FCMITDA and disclosed under reserve and surplus.

Accordingly foreign exchange gain/(loss) adjusted against:

9. The accounts of certain Trade Receivables, Trade Payables, Loans and Advances and Banks are however, subject to formal confirmations / reconciliations and consequent adjustments, if any. However, the management does not expect any material difference affecting the current years financial statements on such reconciliations / adjustments.

10. STANDARDS ISSUED BUT NOT YET EFFECTIVE

Ind AS 115 - Revenue from Contracts with Customers

Ind AS 115 was issued in February 2016 and establishes a five-step model to account for revenue arising from contracts with customers. Under Ind AS 115 revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. The new revenue standard will supersede all current revenue recognition requirements under Ind AS. This standard will come into force from accounting period commencing on or after April 1, 2018. The Company will adopt the new standard on the required effective date.

11. Previous year’s figures have been regrouped / rearranged wherever necessary to conform to the current year’s presentation.


Mar 31, 2017

1. Reconciliation of statement of cash flows:

There are no material adjustments to the Statement of Cash flows as reported under the previous GAAP C. Notes to first-time adoption:

Note 2: Redeemable preference shares

The Company has issued non convertible redeemable preference shares. The preference shares carry fixed cumulative dividend which is non-discretionary. Under Indian GAAP, the preference shares were classified as equity and dividend payable thereon was treated as distribution of profit.

Under Ind AS, non convertible redeemable preference shares are classified as financial liability as per Ind AS 32 and accounted at fair value. Interest on financial liability is recognized using the effective interest method.

Note 2: Foreign currency convertible bonds

The Company has issued foreign currency convertible bonds. The bonds carry fixed interest rate. Under Indian GAAP, the bonds were classified as liability and interest payable on principal amount was treated as interest expense.

Under Ind AS, convertible bonds are separated into liability and equity component based on the terms of the contract. Interest on liability component is recognized using the effective interest method.

Note 3: Fair valuation of other financial instruments

Under Indian GAAP, the Company accounted for long term investments in unquoted debt instruments (preference shares) as investments measured at cost less provision for other than temporary diminution in the value of investments. Under Ind AS, such investments are to be measured initially at fair value and these investments have been designated as financial assets at amortized cost.

Under Indian GAAP, interest free borrowing is initially measured at the transaction value at the time of initial measurement without any adjustments in regard to the fair value. Under Ind AS, interest free borrowings is to be initially measured at fair value. Subsequently these liabilities are measured at amortized cost.

Ind AS 109 requires transaction costs incurred towards origination of borrowings to be deducted from the carrying amount of borrowings on initial recognition. These costs are recognized in the profit or loss over the tenure of the borrowing as part of the interest expense by applying the effective interest rate method. Under previous GAAP, these transaction costs were charged to profit or loss as and when incurred.

Under Indian GAAP, interest free security deposit given is measured at the transaction value at the time of initial measurement without any adjustments in regard to the fair value. Under Ind AS, interest free security deposit is to be initially measured at fair value. As at the date of transition, the interest free security deposit has been recognized at fair value based on the facts and circumstances which existed at the date of initial measurement by giving corresponding effect to retained earnings for the period from initial measurement to the date of transition and to other current assets (pre-paid expense) for the remaining period of deposit post the date of transition.

Note 4: Employee stock option expense

Under the previous GAAP, the cost of equity-settled employee share-based plan were recognized using the intrinsic value method. Under Ind AS, the cost of equity settled share-based plan is recognized based on the fair value of the options as at the grant date.

Note 5: Re-measurements of post-employment benefit obligations

Under Ind AS, re-measurements 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 are recognized in other comprehensive income instead of profit or loss. Under the previous GAAP, these re-measurements were forming part of the profit or loss for the year.

Note 5: Deferred tax

Indian GAAP requires deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind AS 12 requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. The application of Ind AS 12 approach has resulted in recognition of deferred tax on new temporary differences which was not required under Indian GAAP.

In addition, the various transitional adjustments lead to temporary differences. According to the accounting policies, the Company has to account for such differences. Deferred tax adjustments are recognized in correlation to the underlying transaction either in retained earnings or a separate component of equity.

Note 6: Financial Guarantees

Under Indian GAAP, the bank guarantees issued to banks in relation to loans availed by subsidiaries is only disclosed by way of a note in Contingent Liabilities disclosure. Under Ind AS, liability from such financial guarantees is to be recorded initially at fair value. The adjustment represents the fair value of the guarantee given by the Company.

Note 7: Retained earnings

Retained earnings as at April 1, 2015 has been adjusted consequent to the above Ind AS transition adjustments.

Note 8: Other comprehensive income

Under Ind AS, all items of income and expense recognized in a period should be included in statement of profit and loss for the period, unless a standard requires or permits otherwise. Items of income and expense that are not recognized in statement of profit and loss but are shown in the statement of profit and loss as ''OCI'' includes re-measurements of defined benefit plans. The concept of OCI did not exist under previous GAAP

9. Property, Plant and Equipment pledged as security against borrowings by the Company

Refer to Note 38 for information on property, plant and equipment pledge as security by the Company

10.. Additional Depreciation on Leased Assets

On physical verification of ''Assets under Finance Lease'', the management on consideration of their wear and tear had decided to provide additional depreciation of Rs. 35.21 crores during the previous year and the same had been included under ''Exceptional Items''.

11. Contractual Obligations

Refer to Note 33 for disclosure of contractual commitments for the acquisition of property, plant and equipment.

12. Significant Estimate : Useful life of Intangible Assets

Refer to sub note (n) of Note 2 ''Significant Accounting Policies'' .

13. Intangible Assets with indefinite useful lives

The Entity provides IT based software solutions to variety of industry verticals which includes software’s meant for Banking industry, Insurance industry, Enterprise Resource Planning (ERP) software’s and software’s meant for financial service industry. These software’s have been capitalized as ''Software Products - meant for sale'' category under intangible assets. The Company based on the analysis of product life cycle studies, market and competitive trends assesses that the ''Software Products - meant for sale'' products will generate net cash flows for an indefinite period.

14. Impairment testing of goodwill and intangible assets with indefinite lives Software Products - meant for sale

Software Products - meant for sale with indefinite lives have been allocated to the CGUs below forming part of IT Solution segment which is Company''s operating and reportable segment, for impairment testing :

- Banking

- Insurance

- ERP

- Financial Services

The Entity tests whether software’s have suffered any impairment periodically. The recoverable amount of a cash generating unit (CGU) is determined based on value in use of the underlying asset. The valuation is considered to be level 3 in the fair value hierarchy due to unobservable inputs used in the valuation. The calculations use cash flow projections based on financial budgets approved by management covering a five-year period.

The recoverable amount of CGUs (business units) based on value in use as at December 31, 2016 Rs. 1,034 crore (December 31, 2015: Rs. 1,100 crore, December 31, 2014: Rs. 1,275 crore). The recoverable amounts represents the fair value of the business of the software products over the period of budgeted five years.

Based on estimates of the management, though the fair valuation of the product businesses are much higher than the carrying amount of the software products, these intangibles are carried at amounts which the management estimates to be the residual value of the development costs.

15. SHARE CAPITAL

Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs. 10 each. Each shareholder has right to vote in respect of such share, on every resolution placed before the Company and his voting right on a poll shall be in proportion to his share of the paid up equity capital of the Company. In the event of liquidation, the equity shareholders are entitled to receive the remaining assets of the Company after payments of preferential amounts in proportion to their shareholding.

Terms/rights attached to preference shares

The terms of Class A Preference Shares having face value of INR 5 each, had been amended in financial year 20152016 and these were made redeemable on March 15, 2026, dividend premium payable on redemption; which would have provided the preference share holder an internal rate of return @ 6% per annum would no longer be payable. Contingent liability in respect of arrears of dividend on these preference shares as at March 31, 2016 would be INR 0.03 crores (INR 0.02 crores as at March 31, 2015).

Class B Preference Shares of face value of Rs. 5 each are redeemable on March 15, 2026 and would carry a dividend of 0.10 % per annum.

Class C Preference Shares of face value of Rs. 1 each with a premium of Rs. 4 each and would carry a dividend of 0.10 % per annum.

16. Shares issued / to be issued under DRS

"Appendix D ''Extinguishing Financial Liabilities with Equity Instruments'' of Ind AS 109 on Financial Instruments requires to measure equity shares issued on extinguishment of liabilities at fair value on the date of extinguishment. Accordingly, fair value of equity shares issued under DRS scheme is the consideration paid against settlement of liabilities and the difference between the fair value of consideration and liability settled is to be charged to statement of profit and loss.

On the date of extinguishment of liability, which is the date of implementation of DRS scheme, the fair value of equity shares is below face value. Therefore as per Ind AS 109, the difference between the liability settle and fair value of equity shares issued is required to be charged to statement of profit and loss.

However, as per Section 53 of the Companies Act, 2013, a company shall not issue shares at a discount. Therefore, for the purpose of compliance of Companies Act, 2013, the Company has considered face value of shares issued as consideration paid towards extinguishment of liabilities and no impact is given in the statement of profit and loss.

* Interest expense is calculated by applying the effective interest rate of 7.50% to the liability component

# The equity component of convertible bonds has been presented under other equity net of deferred tax of Rs. 20.13 crores (March 31, 2016: Rs. 20.13 crores, April1, 2015: Rs. 99.71 crores)

Non Convertible Redeemable Preference Shares

The terms of Class A Preference Shares having face value of Rs. 5 each, had been amended in financial year 2016-17 and these were made redeemable on March 15, 2026 and the premium payable on redemption; which would have provided the preference share holder an internal rate of return @6% per annum would no longer be payable and would carry a dividend of 0.10 % per annum.

Class B Preference Shares of face value of Rs. 5 each are redeemable on March 15, 2026 and would carry a dividend of 0.10 % per annum.

Class C Preference Shares of face value of Rs. 1 each with a premium of Rs. 4 each and would carry a dividend of 0.10 % per annum.

17. BORROWINGS

DEBT RESTRUCTURING SCHEME

During the previous year, with an objective to serve interests of the lenders in the long term, by offering the possibility of value enhancement, and simultaneously support the growth of the Company, the Company submitted a second scheme herein after called as ''Debt Restructuring Scheme (''DRS'')'' to its lenders and FCCB holders.

The DRS was approved by the CDR Empowered Group (''CDR EG'') at its meeting held on April 27, 2016, and the CDR has issued a letter of approval dated June 14, 2016 approving the said scheme.

The Company had also submitted a restructuring proposal for its existing FCCB Holders in respect of the outstanding 5% and 4.75% Bonds due in 2017 (Existing FCCBs). The restructuring proposal envisaged the exchange of Existing FCCBs for new U.S. Dollar denominated 2.5% Foreign Currency Convertible Bonds 2025 (''New FCCBs''), and amendment of the terms and conditions of the Existing FCCBs, which were not tendered for exchange (Amended FCCBs). The restructuring proposal was approved by the Existing FCCB Holders at their meetings held on July 27, 2016 and August 10, 2016 respectively. During the current year, the Company has executed Supplemental Restructuring Agreement to the Master Restructuring Agreement dated March 30, 2012; with CDR Lenders on June 29, 2016. The approvals to DRS from Reserve Bank of India was received on November 25, 2016 and from SEBI was received on July 28, 2016. The significant highlights of the said scheme are as under:

18 Cutoff date: April 01, 2016.

19. Waiver of all unpaid interest dues from April 01, 2014 till March 31, 2016 including Liquidated Damages and Penal Interest.

20. If there is any shortfall in servicing of interest/unpaid interest till March 31, 2014, lenders would be allotted equity shares of 3i Infotech Limited (''the Company'') at face value towards the shortfall amount/ unpaid amount.

21. Existing covenants and terms and conditions as approved by CDR EG to continue; including maintaining of Trust and Receipt account with Monitoring Institution (''MI'').

22. All lenders participating in DRS shall have pari-passu sharing of cash flows of the Company.

23. Foreign Currency Non Resident (Bank) loans /Foreign Currency Loans crystallized and converted into Rupee debt.

24. Loans from lenders in subsidiaries are to be recognized in the Company and to be converted into a Rupee debt.

25. Waiver of all liquidated damages, penal charges, penal interest or excess interest in excess of documented rate on any facility from Cut-off date till implementation of the package.

26. Corporate guarantees and pledge of shares from the offshore and overseas subsidiaries as stipulated in the original CDR package shall be continued to be obtained.

27. The terms of existing Class A Preference Shares having face value of Rs. 5 each, have been amended and these are now redeemable on March 15, 2026, dividend premium payable on redemption; which would have provided the preference share holder an internal rate of return @ 6% per annum would no longer be payable.

28. Securities offered consequent to Debt Restructuring

The borrowing from the CDR lenders (excluding certain Specified lenders) together with all interest, default interest, additional interest, commitment fees, all and any other costs, charges, expenses, fees, financing charges/fees/ remuneration shall continue to be secured by the security created in terms of the original Master Restructuring Agreement including the Corporate Guarantee and pledge over the Subject Shares.

Certain Specified lenders referred above/ non CDR lenders shall have pari passu share in the cash flow of the Company.

29. Corporate guarantees from material subsidiaries:

Corporate guarantees of each of the material subsidiaries guaranteeing the secured obligations (“Corporate Guarantees”), in favour of all the CDR lenders. Each Corporate Guarantee shall be secured/credit enhanced by security interest over assets of the relevant material subsidiary providing the Corporate Guarantee, as permitted under applicable laws in the relevant jurisdictions, as detailed in the table below and shall have the ranking as mentioned against each security.

30. Leave Obligations

The lease obligations cover the company''s liability for sick and earned leave.

The amount of the provision of Rs. 0.98 crore (March 31, 2016: Rs. 1.51 crores) is presented as current, since the company does not have an unconditional right to defer settlement for any of these obligations.

31. Post Employment obligations

Gratuity

The company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of five years are eligible for gratuity. The amount of gratuity payable on retirement/ termination is the employees last drawn basic salary per month computed proportionately for 15 days salary multiplied by number of years of service up to 10 years and 26 days salary multiplied by number of years of service beyond 11 years.

The gratuity plan is a funded plan and the Company makes contributions to recognized funds in India. The Company does not fully fund the liability and maintains a target level of funding to be maintained over a period of time based on estimations of expected gratuity payments.

32. Defined contribution plans

The Company also has defined contribution plans. Contributions are made to provident fund in India for employees at the rate of 12% of basic salary as per regulations. The contributions are made to registered provident fund administered by the government. The obligation of the Company is limited to the amount contributed and it has no further contractual nor any constructive obligation. The expense recognized during the year towards defined contribution plan is Rs. 3.23 crores (March 31, 2016: Rs. 4.17 crores)

33. SHARE BASED PAYMENTS

34. Employee option plan

The Company''s Employee Stock Option Schemes are applicable to “Eligible Employees” as defined in the scheme which includes directors and employees of the Company and its subsidiaries. They provide for issue of equity options up to 25% of the paid-up equity capital to eligible employees. Currently, the Company has 2 schemes, ESOS 2000 and ESOS 2007 (as amended).

The options granted under the ESOS scheme 2000 and 2007 vest in a phased manner over three years with 20%, 30% and 50% of the grants vesting at the end of each year from the date of the grant and the same can be exercised within ten years from the date of the grant or five years from the date of vesting of options whichever is later by paying cash at a price determined on the date of the grant. One Stock option if converted will be equivalent to one equity share.

During the year ended March 31, 2013, the Board of Directors of the Company approved ESOS Plan -2013 under the existing scheme ESOS 2007. The plan consisted of variations in certain terms with regard to vesting and certain other related matters in ESOS 2007. The options granted are convertible and one option is equivalent to one equity share each. This plan is applicable to all the new options granted to eligible employees for the year ended March 31, 2014.

During the year ended March 31, 2015, the Board of Directors of the Company approved ESOS Plan-2014 under the existing scheme ESOS 2007. The plan consisted of variations in certain terms with regard to vesting and certain other related matters in ESOS 2007. The options granted are convertible and one option is equivalent to one equity share each. This plan is applicable to all the new options granted to eligible employees for the year ended March 31, 2015.

During the year ended March 31, 2016, the Board of Directors of the Company approved ESOS Plan-2015 under the existing scheme ESOS 2007. The plan consisted of variations in certain terms with regard to vesting and certain other related matters in ESOS 2007. The options granted are convertible and one option is equivalent to one equity share each. This plan is applicable to all the new options granted to eligible employees for the year ended March 31, 2016.

The options granted under ESOS Plan -2013; under ESOS Plan -2014 and under ESOS Plan -2015 would vest in a phased manner over three years with 33%, 33% and 34% of the grants vesting at the end of each year from the date of the grant and the same can be exercised within ten years from the date of grant of options or five years from the date of vesting of options, whichever is later.

The existing options (other than those granted under ESOS plan-2013, ESOS plan-2014 & ESOS plan-2015) would continue to be governed by the existing terms.

During the year ended March 31, 2016, the Company granted 11,290,000 (11,569,000 during year ended March 31, 2015), options to the employees of the Company and its Key Managerial Personnel at an exercise price of Rs. 10 each.

35. Leases

Operating lease commitments - Company as lessee

36. The Company has acquired certain Land and Building under a lease arrangement for a period of sixty years at a premium of Rs. 0.50 crores starting from December 4, 2000 for Land, Rs. 15.62 crores starting from March 13, 2000 and Rs. 5.05 crores March 1, 2003 for building and the same are being amortized over the lease period. All other lease arrangements in respect of properties from are renewable/ cancellable at the Company''s and/or lessors’ option as mutually agreed. The future lease rental payment committed is as under :

Finance lease - Company as lessee

The Company has finance leases and hire purchase contracts for various items of plant and machinery/investment properties. The Company''s obligations under finance leases are secured by the lessor''s title to the leased assets. Future minimum lease payments under finance leases and hire purchase contracts together with the present value of the net minimum lease payments are, as follows:

The Company has paid remuneration to the managerial personnel amounting to Rs.1.23 crores in the current financial year ended March 31, 2017 ,which is subject to the approval of the Central Government. The Company is in process of filing an application with the Central Government for obtaining the approval.

* The amounts of Post employment benefits, Long term employee benefits and employee share based payments cannot be separately identified from the composite amount advised by the actuary / valuer.

37. Terms and conditions of transactions with related parties

The sales to and purchases from related parties are made on terms equivalent to those that prevail in arm''s length transactions. Outstanding balances at the yearend are unsecured and interest bearing and settlement occurs in cash. For the year ended March 31, 2017, the Company has reversed Rs. 0.49 crore impairment of receivables relating to amount owed by related parties (March 31, 2016: Rs. 5.44 crores provided as impairment loss). This assessment is undertaken each financial year through examining the financial position of the related party and market in which the related party operates.

38. There are no Commitments with Related parties

current financial assets and liabilities approximate their carrying amounts largely due to the short term maturities of these instruments.

Financial instruments with fixed and variable interest rates are evaluated by the Company based on parameters such as interest rates and individual credit worthiness of the counterparty. Accordingly, fair value of such instruments is not materially different from their carrying amounts

The fair values for loans, security deposits and investments in preference shares were calculated based on cash flows discounted using a current lending rate. They are classified as level 3 fair values in the Fair value hierarchy due to the inclusion of unobservable inputs including counterparty credit risk.

The fair values of noncurrent borrowings are based on discounted cash flows using a current borrowing rate. They are classified as level 3 fair values in the fair value hierarchy due to the use of unobservable inputs, including own credit risk.

The fair value of investments in preference shares and unquoted equity instruments carried at fair value through profit or loss are not materially different from their carrying amount. Hence the impact of fair valuation is considered to be insignificant in the financial statements.

39. Fair Value Hierarchy

This section explains the judgments and estimates made in determining the fair values of the financial instruments that are measured at amortised cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into three levels prescribed under the accounting standard. An explanation of each level follows underneath the table:

There have been no transfers among Level 1, Level 2 and Level 3 during the period

Level 1 - Level 1 hierarchy includes financial instruments measured using quoted prices. This includes listed equity instruments, traded bonds and mutual funds that have quoted price. The fair value of all equity instruments (including bonds) which are traded in the stock exchanges is valued using the closing price as at the reporting period. The mutual funds are valued using the closing NAV.

Level 2 - The fair value of financial instruments that are not traded in an active market (for example, traded bonds, over the counter derivatives) is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

Level 3 - If one or more of the significant inputs are not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity shares, contingent consideration and indemnification assets included in level 3.

40. Valuation technique used to determine fair value

Specific Valuation techniques used to value financial instruments include:

- the use of quoted market prices or dealer quotes for similar instruments

- the fair value of foreign currency option contracts is determined using discounted cash flow analysis

41.. Valuation processes

The finance department of the Company includes a team that performs the valuations of financial assets and liabilities required for financial reporting purposes, including level 3 fair values. This team reports directly to the Managing Director (MD) and the audit committee (AC). Discussions of valuation processes and results are held between the MD, AC and the valuation team at least once every three months, in line with the Company''s quarterly reporting periods.

42.. FINANCIAL RISK MANAGEMENT

The Company is exposed primarily to fluctuations in foreign currency exchange rates ,credit ,liquidity and interest rate risk ,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 liabilities . The risk management policy is approved by Board of Directors . The focus of the 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.

43. Market Risk

Market risk is the risk that the fair value or the future cash flows of a financial instrument will fluctuate because of the change in market prices . Such changes in the value of financial instruments may result from changes in the foreign currency exchange, interest rates ,credit ,liquidity and other market changes. The Company''s exposure to market risk is primarily on account of foreign currency exchange rate risk.

44. Foreign currency exchange rate risk

The fluctuation in foreign currency exchange rate may have potential impact on the statement of profit and loss and the other comprehensive income and equity ,where any transaction reference 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 the economic environment in which the Company operates, its operations are subject to risk arising from fluctuations in exchange rates in those countries. The risks primarily relates to fluctuations in US Dollar, Great Britain Pound and Euro against the functional currency of the Company.

The Company, as per its current risk management policy, does not use any derivatives instruments to hedge foreign exchange . Further ,any movement in the functional currency of the various operations of the Company against major foreign currencies may impact the Company''s revenue in international business.

The Company evaluates the impact of the foreign exchange rate fluctuation by assessing its exposure to exchange rate risks. Apart from exposures of foreign currency payables and receivables, which partially are naturally hedged against each other, the Company does not use any hedging instruments to hedge its foreign currency exposures; in line with the current 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 rate shift of all the currencies by 1% 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 the other comprehensive income and equity .

45. Interest rate risk

The Company''s fixed rate borrowings are carried at amortized cost. They are therefore not subject to interest rate risk as defined in Ind AS 107, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market.

46. Credit risk

Credit risk is the risk that the counterparty will not meet its obligations leading to a financial loss. Credit risk arises from cash and cash equivalents, investments carried at amortized cost and deposits with banks and financial institutions, as well as credit exposures to customers including outstanding receivables and unbilled revenues.

47. Credit risk management

- Trade receivables and Unbilled revenues

Credit risk has always been managed by the Company through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the company grants credit terms in the normal course of business.

As a practical expedient, the Company uses a provision matrix to determine impairment loss allowance on portfolio of its trade receivables and unbilled revenue. The provision matrix is based on its historically observed default rates over the expected life of the trade receivables and is adjusted for forward-looking estimates. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analyzed.

- Other Financials Assets

The Company considers the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in credit risk the company compares the risk of a default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition. It considers available reasonable and supportive forwarding-looking information.

A default on a financial asset is when the counterparty fails to make contractual payments when they fall due. This definition of default is determined by considering the business environment in which entity operates and other macro-economic factors.

48. Credit risk exposure

- Trade receivables and Unbilled revenues

The carrying amount of trade receivables and unbilled revenues represents the maximum credit exposure from customers. The maximum exposure to credit risk from customers is Rs. 628.23 crores (March 31, 2016: Rs. 670.46 crores, April 1, 2015: Rs. 660.04 crores). The lifetime expected credit loss on customer balance for the year ended March 31, 2017 is Rs. 49.18 crores (March 31, 2016: Rs. 50.31 crores, April 1, 2015: Rs. 41.90 crores).

- Other Financial Assets

The carrying amount of cash and cash equivalents, investments carried at amortized cost, deposits with banks and financial institutions and other financial assets represents the maximum credit exposure. The maximum exposure to credit risk is Rs. 755.37 crores (March 31, 2016: Rs. 676.37 crores, April 1, 2015: Rs. 535.97 crores). The 12 months expected credit loss and lifetime expected credit loss on these financial assets for the year ended March 31, 2017 is Rs. 2.79 crores (March 31, 2016: Rs. 2.79 crores, April 1, 2015 : Rs. 3.55 crores)

49. CAPITAL MANAGEMENT

For the purpose of the Company''s capital management, capital includes issued equity capital, convertible preference shares, share premium and all other equity reserves attributable to the equity holders of the parent. The primary objective of the Company''s capital management is to maximize the shareholder value.

The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. To maintain or adjust the capital structure, the Company may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The Company monitors capital using a gearing ratio, which is net debt divided by total capital plus net debt. The Company includes within debt, interest bearing loans and borrowings, trade and other payables, less cash and cash equivalents.

50. DEFERRAL/CAPITALISATION OF EXCHANGE DIFFERENCES

The Ministry of Corporate Affairs (MCA) has issued the amendment dated December 29, 2011 to AS 11 "The Effects of Changes in Foreign Exchange Rates", to allow companies deferral/capitalization of exchange differences arising on long-term foreign currency monetary items. In accordance with the amendment/earlier amendment to AS 11, the Company has capitalized exchange loss, ''arising on long-term foreign currency loan to the cost of plant and equipments. The Company also has other long-term foreign currency monetary item, where the gain/(loss) due to fluctuation in foreign currency is accounted for as FCMITDA and disclosed under reserve and surplus.

51. DISCLSOURE ON SPECIFIED BANK NOTES (SBNs)

The Company did not hold specified bank notes or other denomination note as defined in the MCA notification G.S.R. 308(E) dated March 31, 2017 on the details of Specified Bank Notes (SBN) and hence there are no transactions during the period from November 8, 2016 to December, 30 2016.

52. The accounts of certain Trade Receivables, Trade Payables, Loans and Advances and Banks are however, subject to formal confirmations / reconciliations and consequent adjustments, if any. However, the management does not expect any material difference affecting the current years financial statements on such reconciliations / adjustments.


Mar 31, 2016

1. Notes forming part of the Financial Statements as at and for the year ended March 31, 2016

2. The Company has only one class of equity shares having a par value of '' 10 each. Each shareholder has right to vote in respect of such share, on every resolution placed before the Company and his voting right on a poll shall be in proportion to his share of the paid up equity capital of the Company. In the event of liquidation, the equity shareholders are entitled to receive the remaining assets of the Company after payments of preferential amounts in proportion to their shareholding.

Subsequent to the year end, the Authorized equity share capital of the Company has been increased from 2,000,000,000 equity shares of Rs. 10 each to 2,200,000,000 equity shares of Rs. 10 each.

The Company has not issued any class of shares as fully paid up shares pursuant to contract(s) without payment being received in cash and bonus shares during the period of 5 years immediately preceding the Balance Sheet date.

The Company has not bought back any class of shares during the period of 5 years immediately preceding the Balance Sheet date.

3. The terms of Class A Preference Shares having face value of Rs. 5 each, have been amended and these are now redeemable on March 15, 2026, dividend payable for the period unto March 31, 2016 has been waived, and the premium payable on redemption; which would have provided the preference share holder an internal rate of return @ 6% per annum would no longer be payable (Refer Note 2.3.1).

Consequently, the accrual of the said premium payable on redemption of Rs. 11.70 crores for the 3 years from the date of allotment; viz. March 31, 2012 to March 31, 2015; which was accounted as ''adjustment against ''Securities Premium account has been reversed and Contingent liability in respect of arrears of dividend on these preference shares as at March 31, 2016 would be Rs. NIL (Rs. 4.83 crores as at March 31, 2015).

4. Class B Preference Shares of face value of Rs. 5 each are redeemable on March 15, 2026 and would carry a dividend of 0.10 % per annum.

5. Class C Preference Shares of face value of Rs. 1 each with a premium of Rs. 4 each are redeemable on March 15, 2026 and would carry a dividend of 0.10 % per annum.

d) Employee Stock Option Scheme (ESOS)

The Company''s Employee Stock Option Schemes are applicable to “Eligible Employees” as defined in the scheme which includes directors and employees of the Company and its subsidiaries. They provide for issue of equity options up to 25% of the paid-up equity capital to eligible employees. Currently, the Company has 2 schemes, ESOS 2000 and ESOS 2007 (as amended).

The options granted under the ESOS scheme 2000 and 2007 vest in a phased manner over three years with 20%, 30% and 50% of the grants vesting at the end of each year from the date of the grant and the same can be exercised within ten years from the date of the grant or five years from the date of vesting of options whichever is later by paying cash at a price determined on the date of the grant. One Stock option if converted will be equivalent to one equity share.

During the year ended March 31, 2013, the Board of Directors of the Company approved ESOS Plan -2013 under the existing scheme ESOS 2007. The plan consist of variations in certain terms with regard to vesting and certain other related matters in ESOS 2007. The options granted are convertible and one option is equivalent to one equity share each. This plan is applicable to all the new options granted to eligible employees for the year ended March 31, 2014.

During the year ended March 31, 2015, the Board of Directors of the Company approved ESOS Plan-2014 under the existing scheme ESOS 2007. The plan consists of variations in certain terms with regard to vesting and certain other related matters in ESOS 2007. The options granted are convertible and one option is equivalent to one equity share each. This plan is applicable to all the new options granted to eligible employees for the year ended March 31, 2015.

During the current year ended March 31, 2016, the Board of Directors of the Company approved ESOS Plan-2015 under the existing scheme ESOS 2007. The plan consists of variations in certain terms with regard to vesting and certain other related matters in ESOS 2007. The options granted are convertible and one option is equivalent to one equity share each. This plan is applicable to all the new options granted to eligible employees for the year ended March 31, 2016.

The options granted under ESOS Plan -2013; under ESOS Plan -2014 and under ESOS Plan -2015 would vest in a phased manner over three years with 33%, 33% and 34% of the grants vesting at the end of each year from the date of the grant and the same can be exercised within ten years from the date of grant of options or five years from the date of vesting of options, whichever is later.

The existing options (other than those granted under ESOS plan-2013, ESOS plan-2014 & ESOS plan-2015) would continue to be governed by the existing terms.

During the year ended March 31, 2016, the Company granted 11,290,000 (11,569,000 during year ended March 31, 2015), options to the employees of the Company and its Key Managerial Personnel at an exercise price of Rs. 10 each.

Method used for accounting for share based payment scheme.

The Company has elected to use the intrinsic value method to account for the compensation cost of stock options to eligible employees. Intrinsic value is the amount by which the quoted market price of the underlying share as on the date of grant exceeds the exercise price of the option.

Summary of the options outstanding under the ESOS''s and the Weighted Average Exercise Price (WAEP):

*During the year ended March 31, 2016, 1,050,000 options (for the year ended March 31, 2015 1,050,000 Options) granted to Managing Director and Global CEO and Nil options (for the year ended March 31, 2015 720,000 Options) granted to Executive Director.

**Includes 3,600,000 options granted to Managing Director/Executive Director and Non-Executive Directors (for the year ended March 31, 2015, 4,360,000 options).

In view of the losses, the potential number of equity shares; which could arise on exercise of stock options granted under ESOS scheme are anti dilutive.

C. Securities offered consequent to Debt Restructuring

The borrowing from the CDR lenders (excluding certain Specified lenders) together with all interest, default interest, additional interest, commitment fees, all and any other costs, charges, expenses, fees, financing charges/fees/ remuneration shall continue to be secured by the security created in terms of the original Master Restructuring Agreement including the Corporate Guarantee and pledge over the Subject Shares.

Certain Specified lenders referred above/ non CDR lenders shall have pari passu share in the cash flow of the Company.

Details of ''Security created'', ''Corporate Guarantees from Material Subsidiaries'' and ''Pledge of share''s are as described under:

b) Corporate guarantees from material subsidiaries:

Corporate guarantees of each of the material subsidiaries guaranteeing the secured obligations (“Corporate Guarantees”), in favour of all the CDR lenders. Each Corporate Guarantee shall be secured/credit enhanced by security interest over assets of the relevant material subsidiary providing the Corporate Guarantee, as permitted under applicable laws in the relevant jurisdictions, as detailed in the table below and shall have the ranking as mentioned against each security.

6. Pursuant to the Act coming into effect from April 1, 2014, based on internal technical evaluation, the management reassessed the remaining useful life of tangible assets with effect from April 1, 2014. Accordingly, the useful lives of certain assets required a change from the previous estimates

The existing useful lives of tangible fixed assets as at April 1, 2014 and the useful lives as revised with effect from April 1, 2014 are as below:

Consequently, in case of assets which had completed their useful lives, the carrying value (net of residual value) as at April 1, 2014 amounting to Rs. 15.57 crores had been adjusted to the Opening Deficit in Statement of Profit and Loss during the year ended March 31, 2015.

7. During the previous year ended March 31, 2015, the Company had revalued its Leasehold Building (60 years lease period) based on the fair market valuation obtained from an independent expert valuer. Accordingly, Rs. 125.50 crores had been credited to revaluation reserve.

8. Depreciation for the year includes gain on sale/discarding of various assets amounting to Rs. 0.12 crores (for the year ended March 31, 2015 Rs. 0.09 crores).

9. Pledge of shares

Investments in these companies have been pledged as per the Master Restructuring Agreement entered by the Company with CDR Lenders. (Also refer note no. 2.3.1 C)

10. During the year ended March 31, 2015, pursuant to Board resolution dated May 28, 2015, Company had re-converted its unsecured loan receivable from its wholly owned subsidiary viz. 3i Infotech Holdings Private Limited, Mauritius to investment in zero coupon redeemable preference shares redeemable at a premium with retrospective effect from July 1, 2012.

Further, Premium receivable of Rs. 241.79 crores (as at March 31, 2015 Rs. 226.44 crores) on aforesaid preference shares will be recognized as income as and when the uncertainty as to the realization ceases to exist.

11 Deferred tax asset (net)

Based on the uncertainty of realization of Deferred Tax Asset, as a prudent measure, during the year the Company has derecognized the deferred tax asset; earlier recognized on brought forward tax losses, and has accounted the charge of Rs. 121.33 crores under ''Tax expense''.

12. Gain on sale of long term investment of Rs. 3.14 crores represents net gain recognized on divestment of wholly owned subsidiary; viz. 3i Infotech Trusteeship Services Limited.

13. During the current year, consequent to completion by UK Subsidiary; of regulatory formalities in connection with declaration of dividend, dividend remitted by UK Subsidiary aggregating to Rs. 39.84 crores; (including Rs. 33.97 crores received till the previous year ended March 31, 2015 which was disclosed under ''Unsecured Short term borrowings from subsidiaries'') has been recognized as dividend income.

14. Liabilities & Commitments (to the extent not provided for)

15. Contingent liabilities

* Includes claim in respect of legal cases relating to Registrar and Transfer Services, which are reimbursable by the Principal to the extent of Rs. 0.78 crores (as at March 31, 2015 - Rs. 0.78 crores).

The Company''s pending litigation is in respect of proceedings pending with Tax Authorities and customer claims with various courts. The Company has reviewed all its pending litigations and proceedings and has made adequate provisions, wherever required and disclosed the contingent liabilities, wherever applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have a material impact on its financial statements

During the last few years commencing from financial year 2011-12, due to financial crunch, the Company has not been regular in payment of statutory dues and also has other unpaid dues. Further, there are delays/defaults in payment to certain lenders and others as per the payment schedule. The delayed payment/defaults of statutory dues, in payment to certain lenders and others may result into consequential substantial additional liability, as may arise, on such delays/defaults, amount whereof is presently not ascertainable.

16. Commitments:

(a) Capital Commitments

Capital commitments as at March 31, 2016 Rs. 0.18 crores (Rs. 0.09 crores as at March 31, 2015)

(b) Derivative Instruments:

During the financial year ended March 31, 2012, the Company had entered into a cross currency interest rate swap (''the Swap'') to the tune of USD 26 mn (Rs. 115 crores). The Company designated this instrument as cash flow hedge against its forecasted foreign currency inflows. For hedge transactions, the Company identified the hedged item (asset or liability) at the inception of the hedge itself. The effectiveness was assessed at the time of inception of the hedge and periodically thereafter. The Swap was matured in March 2015 and the amount of Rs. 22.60 crores was recognized during the year ended March 31, 2015 in Cash flow hedging reserve account as effective fair value changes on derivative under cash flow hedge accounting. Accordingly, the Company carried '' Nil balance as at March 31, 2015 in ''Cash flow Hedging Reserve account'' and the fair value of outstanding derivative designated under cash flow hedge accounting as at March 31, 2015 was '' Nil.

(c) Leases:

a. Operating Lease:

(i) The Company has acquired certain Land and Building under a lease arrangement for a period of sixty years at a premium of Rs. 0.50 crores starting from December 4, 2000 for Land, Rs. 15.62 crores starting from March 13, 2000 and Rs. 5.05 crores March 1, 2003 for building and the same are being amortized over the lease period. All other lease arrangements in respect of properties from are renewable/ cancellable at the Company''s and/or lessors'' option as mutually agreed. The future lease rental payment committed is as under:

17. In the opinion of the Board of Directors of the Company, the investments, current and non - current assets, long term and short term loans and advances are realizable at a value, which is at least equal to the amount at which these are stated, in the ordinary course of business and provision for all known and determined liabilities are adequate and not in excess of the amount stated.

18. The accounts of certain Trade Receivables, Trade Payables, Loans and Advances and banks are, however, subject to formal confirmations/reconciliations and consequent adjustments, if any. However, the management does not expect any material difference affecting the current year financial statements on such reconciliation/adjustments.

19 Impairment Analyses of Cash Generating Units (CGUs):

The Company, as per its Accounting Policy and in accordance with the requirements of the Accounting Standard (AS) 28 - ''Impairment of Assets'' and Accounting Standard (AS) - 13 Accounting for Investments, specified under Section 133 of the Act, carried out an impairment analysis of its Cash Generating Units / Long term Investments on a going concern basis, with the assistance of an independent expert valuer and accordingly provision for Impairment Loss of Rs. 150 crores (Previous year ended March 31, 2015 Rs. 350 crores). Besides, the Company has provided loss of Rs. Nil (Rs. 305.79 crores during the previous year ended March 31, 2015) on account of divestment of stake in step down subsidiaries and provided for loss of Rs. 31.75 crores (Rs. Nil during the previous year ended March 31, 2015) on account of discontinuance of businesses of subsidiaries.

20. Going Concern:

Post the approval of Debt Restructuring Scheme (Refer note Note 2.3.1), the Company is confident of meeting its financial obligations as projected in the said scheme. Accordingly, these financial statements have been prepared on going concern basis.

21. Employee Benefit Plans

The expected return on plan assets is based on market expectations at the beginning of the year for the returns over the entire life of the related obligations. The estimates for future salary increases considered take into account, inflation, seniority, promotion and other relevant factors.

The following table set out the status of the gratuity plan as required under AS 15 (Revised) and figures given below are as per actuarial valuation.

Notes:

Managerial Remuneration includes Basic Salary, House Rent Allowance, Bonus, use of Company''s Car, Furniture & Equipment and perquisites, the monetary value of which has been calculated in accordance with the provisions of the Income Tax Act, 1961 (excluding perquisites arising on account of exercise of ESOPs) and Rules made there under but does not include Company''s Contribution to Gratuity Fund, Leave Encashment, etc

22. (b) Foreign Exchange Fluctuation on Payable towards IPR purchase :

The Company has a liability of Rs. 1097.58 crores (as at March 31, 2015 Rs. 1038.31 crores) towards acquisition of Intellectual Property Rights (IPRs) to its step down subsidiary, 3i Infotech (Middle East) FZLLC, for Company''s software products meant for sale in respect of which, the Company had approached Reserve Bank of India (RBI) through authorized dealer during the period to extend the timeline for repayment of the aforesaid liability till March 31, 2017 and is awaiting. In view of the same, the said liability has been considered long term from inception and the resulting foreign exchange translation loss of Rs. 59.27 crores (for the year ended March 31, 2015 loss of Rs. 46.48 crores) for the year have been capitalized to the cost of the software.

23. Share Application Money Pending Allotment:

During the previous year ended March 31, 2015; in line with the CDR Scheme and execution of the Deed of Accession to Master Restructuring Agreement (MRA) with one of the Non CDR lenders, the Company had transferred the Principal outstanding of Rs. 16.75 crores and accumulated interest payable for the period from October 1, 2011 to March 31, 2012 of Rs. 16.75 crores to “Share Application Money pending allotment”; against which the equity shares have been issued on October 07, 2015 at a price of Rs. 19.74 per equity share.

24. The details of amounts outstanding to Micro, Small and Medium Enterprises under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act), based on the available information with the Company are as under:

25.

a) Figures for the previous year have been re-grouped/re-arranged, wherever considered necessary to conform to current year''s presentation.

b) Rs. 0.00 crores denote figures less than Rs. 50,000.

To review the adequacy of internal audit function, if any, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure, coverage and frequency of internal audit;

- Discussion with Internal Auditors on any significant findings and follow up thereon;

- Review the Company’s financial and risk management policies;

- Evaluation of internal financial controls and risk management systems;

- Review the functioning of the Whistle Blower mechanism;

- Review the financial statements of subsidiary companies;

Determine the Director(s) who shall be liable to retire by rotation;


Mar 31, 2015

1.1.1 Pursuant to the Act coming into effect from April 1, 2014, based on internal technical evaluation, the management reassessed the remaining useful life of tangible assets with effect from April 1, 2014. Accordingly, the useful lives of certain assets required a change from the previous estimates.

1.1.2 Buildings - Leasehold:

During the year, the Company has revalued its Leasehold Building (60 years lease period) based on the fair market valuation obtained from an independent expert valuer. Accordingly, Rs. 125.50 crores has been credited to revaluation reserve and incremental depreciation thereon ofRs. 0.91 crores has been included in Depreciation and Amortisation Charge. Also, Rs. 146.35 crores remain substituted for historical cost in the gross block.

1.1.3 Depreciation for the year includes gain on sale/discarding of various assets amounting toRs.0.09 crores (for the year ended March 31, 2014 loss of Rs.4.36 crores) and certain intangible assets have been fully amortized having Gross Block of Rs.7.26 crores (as at March 31, 2014 Rs.15.40 crores), Accumulated Depreciation Rs.6.54 crores (as at March 31, 2014 Rs.2.66 crores) and Net Block of Rs.0.72 crores (as at March 31, 2014 Rs.12.74 crores) due to technological obsolescence/commercial unviability

1.2.1 Pledge of shares

Investments in these companies have been pledged as per the Master Restructuring Agreement entered by the Company with CDR Lenders. (Also refer note on securities offered under Corporate Debt Restructuring)

1.2.2 During the year, pursuant to Board resolution dated May 28, 2015, Company has re-converted its unsecured loan receivable from its wholly owned subsidiary viz. 3i Infotech Holdings Private Limited, Mauritius to investment in zero coupon redeemable preference shares redeemable at a premium with retrospective effect from July 1, 2012. Accordingly, the Company has accountedRs. 22.80 crores as a debit to FCMITDA being long term monetary asset and Rs. 0.43 crores as additional foreign exchange gain amortized for the period upto March 31, 2015 with respect to the aforesaid amount accounted under FCMITDA.

Further, Premium receivable of Rs.226.44 crores (as at March 31, 2014 Rs. 230.15 crores) on aforesaid preference shares will be recognized as income as and when the uncertainty as to the realization ceases to exist.

1.3.2 Commitments:

(a) Capital Commitments

Capital commitments as at March 31, 2015 Rs. 0.09 crores (Rs. Nil as at March 31, 2014)

(b) Derivative Instruments:

During the financial year ended March 31, 2012, the Company had entered into a cross currency interest rate swap to the tune of USD 26 mn (Rs.115 crores). The Company designated this instrument as cash flow hedge against its forecasted foreign currency inflows. For hedge transactions, the Company identifies the hedged item (asset or liability) at the inception of the hedge itself. The effectiveness is assessed at the time of inception of the hedge and periodically thereafter.

For the year ended March 31, 2015, the Company recognized Rs. 22.60 crores (for the year ended March 31, 2014 Rs. 1.21 crores) in Cash flow hedging reserve account as effective fair value changes on derivative under cash flow hedge accounting.

The balance of the Cash flow Hedging Reserve account as at Mar 31, 2015 is Nil. (as at March 31, 2014 negative Rs. 22.60 crores).

As at March 31, 2015, the fair value of outstanding derivative designated under cash flow hedge accounting was Rs. Nil (as at March 31, 2014Rs. 22.60 crores), of which Rs. Nil (as at March 31, 2014, Rs. 22.60 crores) is presented under "Other current liabilities".

(c) Leases:

a. Operating Lease:

(i) The Company has acquired certain Land and Building under a lease arrangement for a period of sixty years at a premium ofRs. 0.50 crores starting from December 4, 2000 for Land, Rs. 15.62 crores starting from March 13, 2000 and Rs. 5.05 crores March 1, 2003 for building and the same are being amortized over the lease period. All other lease arrangements in respect of properties from are renewable/ cancellable at the Company's and/or lessors' option as mutually agreed. The future lease rental payment committed is as under:

1.4.1 Going Concern:

During the financial year 2011-12, the Company undertook restructuring of its debts through CDR cell and also renegotiated with the FCCB holders with respect to its obligations. Post the debts restructuring, there have been substantial delays in repayments of Principal and payment of Interest in respect of CDR lenders as well as for the interest on FCCBs, which may be construed as Default as per the MRA and the terms of FCCB. The Company is negotiating with the aforesaid lenders as also with the lease financiers to restructure the debt and is reasonably certain to renegotiate and meet its financial obligations.

1.4.2 Impairment Analyses of Cash Generating Units (CGUs):

The Company, as per its Accounting Policy and in accordance with the requirements of the Accounting Standard (AS) 28-'Impairment of Assets' and Accounting Standard (AS) -13 Accounting for Investments, specified under Section 133 of the Act, has carried out an impairment analysis of its Cash Generating Units / Long term Investments on a going concern basis, with the assistance of an independent expert valuer and accordingly provision for diminution in value of long term investments (subsidiaries) ofRs. 350 crores (Previous yearRs. Nil) has been made. Besides, the Company has provided loss ofRs. 305.79 crores on account of divestment of stake in step down subsidiaries during the year.

1.5 Employee Benefit Plans

The expected return on plan assets is based on market expectations at the beginning of the year for the returns over the entire life of the related obligations. The estimates for future salary increases considered take into account, inflation, seniority, promotion and other relevant factors.

The following table set out the status of the gratuity plan as required under AS 15 (Revised) and figures given below are as per actuarial valuation.

1.6 a In the opinion of the Board of Directors of the Company, the investments, current and non - current assets, long term and short term loans and advances are realizable at a value, which is at least equal to the amount at which these are stated, in the ordinary course of business and provision for all known and determined liabilities are adequate and not in excess of the amount stated.

1.6 b The accounts of certain Trade Receivables, Trade Payables, Loans and Advances and banks are, however, subject to formal confirmations/reconciliations and consequent adjustments, if any. However, the management does not expect any material difference affecting the current year financial statements on such reconciliation/ adjustments.

1.7 Foreign Currency Monetary Item Translation Difference:

(a) During the year, in compliance with Accounting Standard (AS) 11 -The Effects of Changes in Foreign exchange Rates, exchange loss ofRs. 15.40 crores (for the year ended March 31, 2014 loss ofRs. 52.34 crores) arising on FCCBs and exchange gain ofRs. 2.79 crores (for the year ended March 31, 2014 gain ofRs. 49.88 crores) on long term foreign currency investment in Preference shares/loan, exchange gain ofRs. 0.42 crores (for the year ended March 31, 2014 loss ofRs. 0.42 crores) on foreign currency loan being long term monetary liability/asset, has been debited/credited to "Foreign Currency Monetary Item Translation Difference Account" to be amortized over the balance period of the liability/asset. The amount of exchange loss amortized during the year is Rs. 7.35 crores (for the year ended March 31, 2014 Rs. 9.93 crores).

(b) The Company has a liability of Rs.1038.31 crores (as at March 31, 2014 Rs. 987.48 crores) towards acquisition of Intellectual Property Rights (IPRs) to its step down subsidiary, 3i Infotech (Middle East) FZLLC, for Company's software products meant for sale in respect of which, the Company has approached Reserve Bank of India (RBI) through authorized dealer during the period to extend the timeline for repayment of the aforesaid liability till March 31, 2017 and is awaiting. In view of the same, the said liability is considered long term from inception and the resulting foreign exchange translation loss ofRs. 46.48 crores (for the year ended March 31, 2014 loss of Rs. 89.28) for the year have been capitalized to the cost of the software.

1.8 Share Application Money Pending Allotment:

During the year, in line with the CDR Scheme and execution of the Deed of Accession to Master Restructuring Agreement (MRA) with one ofthe Non CDR lenders, the Company has transferred the Principal outstanding ofRs.16.75 crores and accumulated interest payable for the period from October 1, 2011 to March 31, 2012 of Rs.16.75 crores to "Share Application Money pending allotment"; against which the equity shares are to be issued at a price of Rs.19.74 per equity share.

1.9 a) Figures for the previous year have been re-grouped/re-arranged, wherever considered necessary to conform to current quarter's presentation,

b) Rs. 0.00 crores denote figures less than Rs. 50,000.


Mar 31, 2014

1.1.1 Contingent liabilities (to the extent not provided for)

'' crores

As at As at Particulars March 31,2014 March 31,2013

Contingent liabilities not provided for in respect of:-

Corporate Guarantee on behalf of subsidiaries (to the extent of outstanding) 157.17 161.25

Outstanding bank guarantees 0.10 0.22

Arrears of cumulative preference dividend (including dividend distribution tax thereon) 4.83 4.82

Estimated amount of claims against the company not acknowledged as debts in respect of:-

- Disputed income tax matters 38.28 102.52

- Disputed service tax matters (excluding interest as applicable) 181.56 10.54

- Disputed sales tax matters 3.10 -

- Customer claims 0.19 0.24

- Others* 49.80 12.79

Total 435.03 292.38

* Includes claim in respect of legal cases relating to Registrar and Transfer Services, which are reimbursable by the Principal to the extent of Rs.0.85 crores (as at March 31, 2013 - Rs.0.79 crores).

During the year, due to financial crunch, the Company has not been regular in payment of statutory dues and also has unpaid dues. Further, there are delays/defaults in payment to lenders and others as per the payment schedule. The delayed payment/defaults of statutory dues, in payment to lenders and others may result into consequential additional liability, as may arise, on such delays/defaults, amount whereof is not presently ascertainable.

(b) Derivative Instruments:

During the financial year ended March 31, 2012, the Company had entered into a cross currency interest rate swap to the tune of USD 26 mn (''115 crores).The Company designated this instrument as cash flow hedge against its forecasted foreign currency inflows. For hedge transactions, the Company identifies the hedged item (asset or liability) at the inception of the hedge itself. The effectiveness is assessed at the time of inception of the hedge and periodically thereafter.

For the year ended March 31,2014, the Company recognized Rs.1.21 crores (for the year ended March 31,2013 Rs.6.03 crores) in Cash flow hedging reserve account as effective fair value changes on derivative under cash flow hedge accounting.

The balance of the Cash flow Hedging Reserve account as at March 31, 2014 was negative Rs.22.60 crores (as at March 31, 2013 negative Rs.21.39 crores).

As at March 31 2014, the fair values of outstanding derivatives designated under cash flow hedge accounting was Rs.22.60 crores (as at March 31, 2013 Rs.23.15 crores), of which Rs.Nil (as at March 31, 2013 Rs.15.67 crores) is presented in the balance sheet under ''Other long term liabilities'' and the balance Rs.22.60 crores (as at March 31, 2013 Rs.48 crores) is presented under "Other current liabilities".)

2.1 Debt Restructuring

The Company had restructured its debt and Foreign Currency Convertible Bonds in the year ended March 31, 2012. The details of the restructuring are as under:

A. Corporate Debt Restructuring:

In line with the CDR scheme and Master Restructuring Agreement (MRA) entered into with certain lenders, during the year the Company has allotted 384,498 equity shares of Rs.10 each at a price of Rs.19.74 against the conversion of Sacrifice amount of Rs.0.76 crores as per the Master Restructuring Agreement in pursuance of the CDR scheme.

During the year ended March 31,2013, the Company allotted 264,725,928 equity shares of Rs.10 each at a price of Rs.19.74 against principal outstanding of Rs.252.81 crores and interest of Rs.269.76 crores was accrued for the period October 1, 2011 to March 31, 2013.

On 22rd March 2012, the Company launched an Exchange Offer for the Third and Fourth series of outstanding FCCBs(subsequent to buy back) of USD 20 million and USD 66.37 million respectively, whereby the Company offered a new series of FCCBs to the existing bond holders on surrender of the earlier series of FCCBs for a value including the premium payable on those FCCBs. Out of the Third Issue, 100% of the bond holders and out of the Fourth Issue, 96.33% of the bond holders have surrendered the earlier series of the FCCBs in exchange for the new series of FCCBs, which is effective from April 3, 2012. Consequent to this, during the previous year ended March 31, 2013 the Company cancelled 100% of the bonds under the Third Issue and 96.33% of the bonds under the Fourth Issue and replaced them with a new series of FCCBs (''Fifth Issue''). The terms of the remaining FCCBs under the Fourth Issue had also been amended by the Company.

During the year ended March 31,2014, the Company allotted 7,04,914 equity shares (For the year ended March 31 2013, 97,111,993 equity shares) of Rs.10 each against conversion of 229 numbers (For the year ended March 31 2013, 31,548 numbers) of above mentioned FCCBs amounting to Rs.1.16 crores (For the year ended March 31, 2013 Rs.160.22 crores equivalent to USD 2,29,000 (For the year ended March 31, 2013 USD 31,548,000).

The conversion price as per the Offering Circular dated March 22, 2012 was Rs.16.50 per share.

2.2.1 Going Concern:

During the financial year 2011-12, the Company undertook to restructuring of its debts through CDR cell and also renegotiated with the FCCB holders with respect to its obligations. Post the debts restructuring, the Company is confident of successful implementation of the CDR package and is also confident of meeting its FCCB obligations. Therefore, financial statements have been prepared on a going concern basis.

2.2.2 Impairment Analysis of Cash Generating Units (CGUs):

The Company, as per its Accounting Policy and in accordance with the requirements of the Accounting Standard (AS) 28 - Impairment of Assets and Accounting Standard (AS) - 13 Accounting for Investments, prescribed under Companies (Accounting Standard) Rules 2006, has carried out an impairment analysis of its Cash Generating Units / Long term Investments, in order to ascertain the extent of impairment, if any, in their carrying values.

The valuation analysis carried out by an independent expert valuer was used to assess the values generated by these CGUs/Long Term Investment on a going concern basis for the above purpose. Based on the valuation exercise so carried out, current year''s performance and the future earnings estimates of the Company, there is no impairment revealed.

2.2.3 Deferred tax asset:

In respect of Net Deferred Tax Asset of Rs.121.33 crores (as at March 31, 2013 Rs.103.66 crores) being carried forward, the management, based on the order book on hand and relying on the Restructuring Scheme approved by the CDR Cell, is confident of having taxable income in foreseeable future, which would enable reversals of deferred tax assets already recognized in earlier years.

2.3 Employee Benefit Plans

The expected return on plan assets is based on market expectations at the beginning of the year for the returns over the entire life of the related obligations. The estimates for future salary increases considered take into account, inflation, seniority, promotion and other relevant factors.

The following table set out the status of the gratuity plan as required under AS 15 (Revised) and figures given below are as per actuarial valuation.

The liability recognized with respect to Gratuity within the balance sheet as at March 31, 2014 is Rs.18.45 crores (as at March 31, 2013 is Rs.18.13 crores)

The liability recognized with respect to leave encashment/entitlement in the balance sheet as at March 31, 2014 is Rs.2.16 crores (as at March 31, 2013 is Rs.1.91 crores)

2.4 The Company had acquired till March 31, 2014, 74% of the equity of Locuz Enterprise Solutions Ltd. (''Locuz'') for an aggregate consideration of Rs.22.80 crores. As per the share purchase agreement, the Company was committed to acquire the balance stake at a future date for additional consideration payable on achieving certain measurable criteria such as future revenue/profitability etc., as per the agreement. However, given the current liquidity constraints, the Company is exploring divestment options of its current equity interest in Locuz.

2.5 (a) In the opinion of the Board of Directors of the Company, the investments, current and non - current assets, long term and short term loans and advances are realizable at a value, which is at least equal to the amount at which these are stated, in the ordinary course of business and provision for all known and determined liabilities are adequate and not in excess of the amount stated.

(b) The accounts of certain Trade Receivables, Trade Payables, Loans and Advances and banks are, however, subject to formal confirmations/reconciliations and consequent adjustments, if any. However, the management does not expect any material difference affecting the current year financial statements on such reconciliation/ adjustments.

2.6 Exceptional items

a) Exceptional item represents "losses on litigation" accounted of Rs.35.85 crores on settlement reached with Dangold Investments Corporation in connection with dispute relating to acquisitions in subsidiaries.

b) The Company had during the financial year ended March 31,2013 capitalized expenditure on Intangible Assets viz. internally developed Software Products (meant for sale) incurred during the years from FY 2006-07 up to FY 2011-12 as also for the financial year ended March 31,2013 in terms of Accounting Standard 26 - "Intangible Assets". The software development costs so capitalized have been amortized at the lower of 10 years or the estimated economic useful life of each of these products from the date of their being put to use in terms of the accounting policy followed by the Company. Consequently, the product developement expenses aggregating to '' 160.43 crores (net of amortization) charged off in the earlier years (FY 2006-07 to FY 2011-12) have been capitalised during the Financial Year ended March 31, 2013.

c) The Company had provided for/reversed certain slow moving trade receivables and unbilled revenue amounting to '' 21.90 crores during the financial year ended March 31, 2013 which have arisen largely due to the tight liquidity situation, resource constraints etc. faced by the Company in the year immediately preceding the financial year ended March 31, 2013.

d) The items referred above in (b) and (c) have been disclosed as a net adjustment in the Statement of Profit and Loss as an exceptional item.

2.7 Foreign Currency Monetary Item Translation Difference:

(a) During the year, in compliance with Accounting Standard (AS) 11 - The Effects of Changes in Foreign exchange Rates, exchange loss of Rs. 52.34 crores (for the year ended March 31, 2013 loss of Rs.23.53 crores) arising on FCCBs (which hitherto was charged upto June 30, 2012 to Statement of profit and loss) and exchange gain of Rs.49.88 crores (for the year ended March 31, 2013 loss of Rs.15.69 crores) on long term foreign currency loan, exchange loss of Rs.0.42crores (for the year ended March 31, 2013 Rs.Nil) on foreign currency loan being long term monetary liability/asset, has been debited/credited to "Foreign Currency Monetary Item Translation Difference Account" to be amortized over the balance period of the liability/asset. The amount of exchange gain amortized during the year is Rs.9.93 crores (For the year ended March 31, 2013 Rs.7.62 crores).

(b) The Company has a liability of Rs.987.48 crores (as at March 31, 2013 Rs.898.20 crores) towards acquisition of Intellectual Property Rights (IPRs) to its step down subsidiary, 3i Infotech (Middle East) FZLLC, for Company''s software products meant for sale in respect of which, the Company has approached Reserve Bank of India (RBI) through authorized dealer during the period to extend the timeline for repayment of the aforesaid liability till March 31, 2017 and is expecting the response shortly. In view of the same, the said liability is considered long term from inception and the resulting foreign exchange translation loss of Rs.89.28 crores (for the year ended March 31,2013 Rs.Nil) for the year have been capitalized to the cost of the software, which hitherto was charged up to March 31, 2013 to the Statement of Profit and Loss.

2.8 a) Figures for the previous year have been re-grouped/re-arranged, wherever considered necessary to conform to current quarter''s presentation.

b) Rs.0.00 crores denote figures less than Rs.50,000.


Mar 31, 2013

1.1.1 Pledge of shares

Investments in these companies have been pledged as per the Master Restructuring Agreement entered by the Company with CDR Lenders. (Also refer note on securities offered under Corporate Debt Restructuring)

1.2.1 Contingent liabilities (to the extent not provided for)

Rs.crores

As at As at March 31, 2013 March 31, 2012

Contingent liabilities not provided for in respect of :-

Corporate Guarantee on behalf of subsidiaries 272.40 264.13

Outstanding bank guarantees 0.22

Arrears of cumulative preference dividend (including dividend distribution tax 4.82 7.40 thereon)

Estimated amount of claims against the company not acknowledged as debts in respect of:-

Disputed income tax matters 102.52 51.41

Disputed service tax matters (excluding interest as applicable) 10.54 175.55

Disputed sales tax matters 1.72

Customer claims 0.24 1.20

Others* 12.79 14.25

Total 403.53 515.66

* Includes claim in respect of legal cases relating to Registrar and Transfer Services, which are reimbursable by the Principal to the extent ofRs. 0.79 crores (as at March 31, 2012 - Rs. 1.27 crores).

During the year, due to financial crunch, the Company was not regular in payment of statutory dues and also has unpaid dues. Further, there are delays/defaults in payment to lenders & others as per the payment schedule. The delayed payment/defaults of statutory dues, in payment to lenders & others may result into consequential additional liability, as may arise, on such delays/defaults, amount whereof is not presently ascertainable.

1.3 Debt Restructuring

The Company had restructured its debt and Foreign Currency Convertible Bonds in the year ended March 31, 2012. The details of the restructuring are as under:

A. Corporate Debt Restructuring :

In line with the CDR scheme and Master Restructuring Agreement (MRA) entered into with certain lenders, during the year the Company has allotted 26,47,25,928 equity shares of Rs. 10 each at a price ofRs. 19.74 against principal outstanding ofRs. 252.81 crores and interest of Rs. 269.76 crores accrued for the period October 1, 2011 to March 31, 2013.

On 22nd March 2012, the Company launched an Exchange Offer for the Third and Fourth series of outstanding FCCBs(subsequent to buy back) of USD 20 million and USD 66.37 million respectively, whereby the Company offered a new series of FCCBs to the existing bond holders on surrender of the earlier series of FCCBs for a value including the premium payable on those FCCBs. Out of the Third Issue, 100% of the bond holders and out of the Fourth Issue, 96.33% of the bond holders have surrendered the earlier series of the FCCBs in exchange for the new series of FCCBs, which is effective from April 3, 2012. Consequent to this, during the year the Company cancelled 100% of the bonds under the Third Issue and 96.33% of the bonds under the Fourth Issue and replaced them with a new series of FCCBs (''Fifth Issue''). The terms of the remaining FCCBs under the Fourth Issue have been amended by the Company.

During the year, the Company allotted 9,71,11,993 equity shares of Rs. 10 each against conversion of 31,548 numbers of above mentioned FCCBs amounting to Rs. 160.22 crores (equivalent to USD 3,15,48,000). The conversion price as per the Offering Circular dated March 22, 2012 was Rs. 16.50 per share.

1.4.1 Proposed plan for capital restructuring

The Board of Directors of the Company at its meeting held on November 2, 2012 resolved in principle to approach the High Court of Mumbai with regard to a Re-organization Scheme which inter-alia includes capital re-organization under section 100 read with section 391/394 of the Companies Act, 1956 subject to necessary approvals of the shareholders, CDR Cell, creditors and other agencies. The Company is in the process of evaluating the same.

1.4.2 Going Concern

During the previous year, the Company undertook restructuring of its debts through CDR cell and also renegotiated with the FCCB holders with respect to its obligations. Post the debts restructuring, the Company is confident of successful implementation of the CDR package and is also confident of meeting its FCCB obligations. Accordingly the financial statements have been prepared on a going concern basis.

1.4.3 Impairment Analysis of Cash Generating Units (CGUs)

The Company, as per its Accounting Policy and in accordance with the requirements of the Accounting Standard (AS) 28- Impairment of Assets and Accounting Standard (AS) -13 ''Accounting for Investments", as per Companies Accounting

Standard Rules 2006, had carried out an impairment analysis of its Cash Generating Units / Long term Investments, in order to ascertain the extent of impairment, if any, in their carrying values.

The valuation analysis carried out by an independent expert valuer was used to assess the values generated by these CGUs / Long Term Investments on a going concern basis for the above purpose. Based on the valuation exercise so carried out, current year''s performance and the future earnings estimates of the Company, there is no impairment revealed.

1.4.4 Deferred tax asset

In respect of Net Deferred Tax Asset of Rs. 103.66 crores (as at March 31, 2012 - Rs. 103.66 crores) being carried forward, the management, based on the order book on hand and relying on the Restructuring Scheme approved by the CDR Cell, is confident of having taxable income in foreseeable future, which would enable reversals of deferred tax assets already recognized in earlier years.

1.5 Employee Benefit Plans

The following table sets out the status of the gratuity plan as required under AS 15 (Revised) and figures given below are as per actuarial valuation.

The liability recognized with respect to Gratuity within the balance sheet as at March 31, 2013 is Rs. 18.13 crores (as at March 31, 2012 - f 25.15 crores).

The liability recognized with respect to leave encashment/entitlement in the balance sheet as at March 31, 2013 is Rs. 1.91 crores (as at March 31, 2012 - f 1.32 crores).

1.6 The Company had acquired till March 31, 2013, 74% of the equity of Locuz Enterprise Solutions Ltd. (''Locuz'') for an aggregate consideration of Rs. 22.80 crores. As per the share purchase agreement, the Company was committed to acquire the balance stake at a future date for additional consideration payable on achieving certain measurable criteria such as future revenue/profitability etc., as per the agreement. However, given the current liquidity constraints, the Company is exploring divestment options of its current equity interest in Locuz..

1.7

(a) In the opinion of the Board of Directors of the Company, the investments, current and non - current assets, long term and short term loans and advances are realizable at a value, which is at least equal to the amount at which these are stated, in the ordinary course of business and provision for all known and determined liabilities are adequate and not in excess of the amount stated.

(b) The accounts of certain Trade Receivables, Trade Payables, Loans and Advances and banks are, however, subject to formal confirmations/reconciliations and consequent adjustments, if any. However, the management does not expect any material difference affecting the current year''s financial statements on such reconciliation/ adjustments.

1.8 Exceptional items

(a) Effective 1st April 2006, expenditure on Intangible Assets viz. internally developed Software Products (Meant for sale) was recognized in the Statement of Profit and Loss, as the Company perceived such costs were bringing in innovation in base products and not new products. However, on a review of the performance of these products which resulted in economic benefits of enduring nature from those respective years of usage, over and above the originally estimated benefits of the base software, the management felt it appropriate to capitalize such costs incurred during the years from FY 2006-07 up to FY 2011-12 in terms of Accounting Standard (AS)26 - "Intangible Assets". The software development costs so capitalized have been amortized at the lower of 10 years or the estimated economic useful life of each of these products from the date of their being put to use in terms of the accounting policy followed by the Company. Consequently, the product development expenses, aggregating to Rs. 160.43 crores (net of amortization) charged off in the earlier years (FY 2006-07 up to FY 2011 - 12) have been capitalized during the year.

(b) The Company has provided for/reversed certain slow moving trade receivables and unbilled revenue amounting to Rs. 21.90 crores during the current year which have arisen largely due to the tight liquidity situation, resource constraints etc. faced by the Company in the last one year.

(c) The items referred above in (a) and (b) have been disclosed as a net adjustment in the Statement of Profit and Loss as an exceptional item. This net adjustment is proposed to be part of the re-organization scheme as referred in note no. 2.27.1

1.9 Foreign Currency Monetary Item Translation Difference Account

During the year, in compliance with Accounting Standard (AS) 11 - "The Effects of Changes in Foreign Exchange Rates", exchange loss of Rs. 23.53 crores arising on FCCBs (which hitherto was charged to Statement of Profit and Loss) and exchange loss of Rs. 15.69 crores on long term foreign currency loan being long term monetary liability/ asset, has been debited to "Foreign Currency Monetary Item Translation Difference Account" to be amortized over the balance period of the liability/asset. In accordance with the clarification in AS-11, the amount of exchange loss amortized during the year is Rs. 7.62 crores

1.10

a) Figures for the previous year have been re-grouped/re-arranged, wherever considered necessary to conform to current year''s presentation.

b) Rs. 0.00 crores denote figures less than Rs. 50,000.


Mar 31, 2012

1. Notes forming part of the Financial Statements

The Company has only one class of equity shares having a par value of Rs10 each. Each holder of equity shares is entitled to one vote per share. Of the total number of equity shares issued, 8,47,88,331 equity shares were allotted as fully paid-up Bonus shares of which 2,00,00,700 equity shares were issued in July 1999 and 6,47,87,631 equity shares in August 2007, by capitalization of Securities Premium Account and accumulated profits.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the Company, after distribution of all preferential amounts including in respect of Preference shares issued. The distribution will be in proportion to the number of equity shares held by the shareholders.

The Preference Shares redeemable at par on expiry of nine years from the date of allotment i.e. March 31, 2003 were due on March 31, 2012. The Company is in the process of obtaining Equity Shareholders approval for amending the terms and conditions with respect to one of the Preference shareholder viz., IDBI Trusteeship Services Limited and conversion into equity in respect of the other .

Also refer note no. 2.21 A in respect of Corporate Debt Restructuring (CDR).

i) Employee Stock Option Scheme (ESOS) -

The Company's Employees Stock Option Scheme provides for issue of equity option upto 25% of the paid-up Equity Capital to eligible employees. The Scheme covers the managing director, whole time directors and the employees of the subsidiaries, the erstwhile holding Company and subsidiaries of the erstwhile holding Company, apart from the employees of the Company. The options vest in a phased manner over three years with 20%, 30% and 50% of the grants vesting at the end of each year from the date of grant and the same can be exercised within ten years from the date of the grant by paying cash at a price determined on the date of grant. One option is available for conversion to one equity share.

Method used for accounting for the share based payment Scheme:

The Company has elected to use the intrinsic value method to account for the compensation cost of stock options to employees of the Company. Intrinsic value is the amount by which the quoted market price of the underlying share as on the date of grant exceeds the exercise price of the option.

Summary of the options outstanding under the Employees Stock Option Scheme (ESOS) and Weighted Average Exercise Price (WAEP):

*Includes 31,37,000 options granted to managing director/whole time directors and non-executive directors (as at March 31, 2011 - 31,87,000 options).

Weighted average market price of the shares with respect to stock options exercised during the year ended March 31, 2012 is Rs33.75 (for the year ended March 31, 2011 is Rs60.28).

Fair Value methodology for the option

The fair value of options used to compute net income and earnings per equity share have been estimated on the dates of each grant within the range of Rs37.00 to Rs150.00 using the Black - Scholes pricing model. The Company estimated the volatility based on the historical share prices. The various assumptions considered in the pricing model for the options granted under ESOP are:

Security Note:

As at March 31, 2012

The Company is yet to create security as envisaged in the CDR package. The security offered by the Company is as follows:

Facilities covered by the security proposed:

Tranche A : Term Loan facility of Rs141.07 crores Tranche

B : Term Loan facility of Rs250.00 crores

Tranche C : Fund based facility of Rs79.86 crores and non fund based facility of Rs2.77 crores Tranche

D : Term Loan facility of Rs95.00 crores

Tranche E : Cash Credit (Working capital) facility of Rs100.00 crores and non fund based facility of Rs60.00 crores Tranche

F : Term Loan facility of Rs2.75 crores Tranche

G : Term Loan facility of Rs25.00 crores Tranche

H : Term Loan facility of Rs8.37 crores

Tranche I : Fund based facility of Rs5.22 crores and non fund based facility of Rs2.00 crores

Tranche J : Term Loan facility of Rs13.68 crores

Tranche K : Cash Credit (Working capital) facility of Rs108.63 crores

Tranche L : Term Loan facility of Rs100.42 crores

B. Corporate guarantees from Material Subsidiaries:

Corporate guarantees of each of the Material Subsidiaries guaranteeing the Secured Obligations ("Corporate Guarantees"), in favour of all the CDR Lenders. Each Corporate Guarantee shall be secured/credit enhanced by Security Interest over assets of the relevant Material Subsidiary providing the Corporate Guarantee, as permitted under Applicable laws in the relevant jurisdictions, as detailed in the table below and shall have the ranking as mentioned against each security.

In addition:

a. Corporate guarantees from Professional Access Software Development Pvt. Ltd. and Professional Access Limited, shall be further secured by a second ranking pari passu charge on all the present and future movable fixed assets and Current Assets of the relevant guarantor, while the first charge shall be held by Bank of India, New York in respect of the facilities advanced by them, after settlement of an existing promissory note issued in favour of erstwhile promoters of the above mentioned Companies.

b. Pledge of shareholding in Professional Access (India) and Professional Access (US) in favour of the CDR Lenders.

C. Pledge of shares:

Pledge of shares held by the Companies set out in column I of the table below in respect of their respective investments set out in column II and with details of shares mentioned in column III:

The pledge over subject Shares (except 3i Infotech (UK) Ltd) shall be created as a first ranking charge in favour of CDR Lenders. The amounts realized from enforcement of such pledge over equity shares of 3i Infotech (UK) Ltd shall be utilized first towards satisfaction of Tranche B - to the extent of Rs25 crores and Tranche D, and thereafter, towards satisfaction of other Tranches.

D. Security & terms and condition for Other Parties (Vehicle loans):

Rs1.93 crores is secured by way of hypothecation of certain Company owned vehicles.

As at March 31, 2011 :

1. Security and terms and conditions for Term Loans :

a. Rs 249.99 crores secured by first pari passu charge over all movable tangible fixed assets and immovable fixed assets of the Company located at its offices at Navi Mumbai & Goregaon. A part of this loan (Rs125 crores) is further secured by pledge of the shares held by the Company in its subsidiary, 3i Infotech (UK) Ltd.

b. Rs125 crores is secured by subordinated charge over all movable tangible fixed assets and immovable fixed assets of the Company located at its offices at Navi Mumbai & Goregaon.

c. Rs53 crores loan is secured by way of pari passu charge on Trade Receivables.

d. Rs115 crores secured by hypothecation charge over the Intellectual Property Rights of Company's software products namely Orion and Premia.

2. Certain non-fund facilities of Rs46.83 crores and Cash Credit are secured by way of floating charge on Trade Receivables.

3. Security and terms and conditions for Other Parties (Vehicle Loans):

Rs1.98 crores loan is secured by way of hypothecation on certain Company owned vehicles.

1.1.1 Buildings - Leasehold include :

(i) Gross Block of Rs20.85 crores (as at March 31, 2011 Rs20.85 crores), Accumulated Depreciation of Rs3.69 crores (as at March 31, 2011 Rs3.58 crores) and Net Block of Rs17.16 crores (as at March 31, 2011 Rs17.27 crores) being lease premium paid in respect of building taken on lease for sixty years.

(ii) Gross Block of RsNil crores (as at March 31, 2011 Rs11.49 crores), Accumulated Depreciation of RsNil crores (as at March 31, 2011 Rs3.46 crores) and Net Block RsNil crores (as at March 31, 2011 Rs8.03 crores) being lease premium paid in respect of building taken on lease for ninety nine years.

1.2.1 Pledge of shares

Investment in these companies are to be pledged as per the Master Restructuring Agreement entered by the Company with CDR lenders. (Also Refer Note No. 2.3 Security note C)

1.3.1 Deferred tax balance in respect of Companies merged/business purchased during the year is included.

1.3.2 In respect of Net Deferred Tax Asset of Rs103.66 crores (Previous Year- Rs103.66 crores) being carry forward, the management, based on the order book on hand and relying on the Restructuring Scheme approved by the CDR Cell, is confident of having taxable income in foreseeable future, which would enable reversals of deferred tax assets already recognized in earlier years.

1.4.1 Contingent liabilities to the extent not provided for:

Rs in crores As at As at March 31, 2012 March 31, 2011

Contingent Liabilities not provided for in respect of:-

Outstanding guarantees on behalf of Subsidiaries 264.13 679.10

Premium payable on redemption of FCCB (Refer Note no 2.21 B) - 43.32

Arrears of Cumulative Preference Dividend (including Dividend 7.40 - Distribution Tax thereon)

Estimated amount of claims against the Company not acknowledged as debts in respect of :

- Disputed Income tax matters 51.41 6.22

- Disputed Service tax matters (excluding interest as applicable) 175.55 -

- Disputed Sales tax matters 1.72 1.08

- Customer Claims 1.20 0.37

- Others* 14.25 15.42

*Includes claim in respect of legal cases relating to Registrar & Transfer Services, which are reimbursable by the Principal to the extent of Rs1.27 crores (as at March 31, 2011 - Rs0.74 crores).

(b) Derivative Instruments:

i) During the year, the Company entered into a foreign currency cum interest rate swap to the tune of USD 26mn (~ Rs 115 crores). The Company designates this instrument as cash flow hedge against its forecasted foreign currency inflows. The difference in the fair value of the instrument from the date of inception is recognized in Cash Flow Hedging Reserve Account. Accordingly Rs15.36 crores has been debited to Cash Flow Hedging Reserve Account.

ii) The movement in Hedging Reserve Account during the year ended March 31, 2012 for derivatives designated as Cash Flow Hedges is (debit) Rs15.36 crores.

(c) Leases:

a. Operating Lease:

(i) The Company has acquired certain Land and Building under a lease arrangement for a period of sixty years at a premium of Rs0.50 crores starting from December 4, 2000 for Land and Rs15.62 crores starting from March 13, 2000 and Rs5.05 crores from March 1, 2003 for building and the same is being amortized over the lease period. All other lease arrangements in respect of properties are renewable/ cancelable at the Company's and/or lessors' option as mutually agreed. The future lease rental payment that the Company is committed to make is:

1.5 Debt Restructure

A. Corporate Debt Restructure :

During the year several external factors such as meltdown in overseas financial markets, RBI monetary policy, ECB guidelines etc impacted the Company's ability to refinance its debts in a timely manner. This led to severe liquidity challenges arising out of a mismatch of loan maturities vis-a-vis the cash flows to the Company which then impacted the timely payment of its loans and interest. As a result of this, the Company filed an application with Corporate Debt Restructuring Cell ("CDR") to recast its debt obligations. A Letter of Approval was issued by the CDR on March 29, 2012, based on which all the lenders connected with the proposal signed a Master Restructure Agreement ("MRA") on March 30, 2012. The significant highlights of the package are as under:

a. Out of the total loans of Rs1,674.12 crores, the CDR package covered Rs1,560.34 crores.

b. 15% of the secured borrowings amounting to Rs130.86 crores and 20% of the unsecured borrowings amounting to Rs122.69 crores, to get converted into equity shares.

c. A common pool of security to be created and the lenders to have charge on those assets in a structured manner as enumerated in the MRA.

d. The principal payments to start after a moratorium of 2 years from the cut-off date, which is October 1, 2011, over 96 structured monthly installments. The interest accrued from the cut-off date till 18 months shall be converted into equity shares at the beginning of every quarter.

e. The rate of interest has been fixed at 14.75% per annum from October 1, 2011 till March 31, 2013 and to be reset at the beginning of every year, thereafter.

f. Additional funding in the form of Terms loans to the tune of Rs58.37 crores to be extended by the lenders upon completion of documentation of MRA.

The financial impacts arising out of aforesaid CDR are as under:

a. Upto March 12, Rs344.76 crores have been taken under Share application money. Interest payable for 2012-13 will be converted into equity capital in terms of CDR package.

b. Share application money of Rs344.76 crores represents principal portion of 'loan' and interest payable from cut off date till March 31, 2012 to be converted into equity capital for which necessary approval from shareholders is being obtained. The lenders would be allotted 17,58,97,959 equity shares of Rs10 each at a premium of Rs9.60 per share. The company has adequate authorized Share Capital for the aforesaid issue.

c. Expenses related to the above restructuring exercise of Rs11.82 crores has been shown under exceptional item.

* Subject to certain criteria as per offer document.

On March 22, 2012 the Company launched an Exchange Offer for the Third and Fourth series of FCCBs whereby the Company offered a new series of FCCBs to the existing bond holders on surrender of the earlier series of FCCBs. Out of the Third Issue, 100% of the bond holders and out of the Fourth Issue, 96.33% of the bond holders have surrendered the earlier series of the FCCBs in exchange for the new series of FCCBs, which is effective from April 25, 2012. Consequent to this the Company cancelled 100% of the bonds under the Third Issue and 96.33% of the bonds under the Fourth Issue and replaced them with the new series of FCCBs ('Fifth Issue').

C. Leases:

During the year, the Company has also approached certain leasing companies to reassess the existing leases and reschedule the same in order to ensure payment obligations match with the cash flows of the Company. Arising out of the restructuring, the lease liabilities have been re-estimated and considering the characteristics of these leases, they are treated as finance leases effective from October 1, 2011.

Consequently, the assets are capitalized at their respective fair value so assessed as at October 1, 2011 aggregating to Rs239.00 crores. As a result, the depreciation for the year has increased by Rs28.87 crores and the interest and financial charges has increased by Rs8.08 crores.

The documentation in respect of certain leases are in the process of being executed.

D. Going Concern & Impairment:

During the year, the Company underwent various challenges in form of increase in interest rates, non availability of financial assistance at certain crucial time, attrition of senior employees etc. All these led to drop in revenues and profit therefrom, in the last two quarters of this financial year.

As explained earlier, the Company undertook to restructuring of its debts through CDR cell and also renegotiated with the bond holders with respect of its FCCB. Post the debts restructuring, the Company is confident of successful implementation of the CDR package and is also confident of meeting its FCCB obligation. Therefore it has prepared the financial statements on a going concern basis.

Besides the above, the management has also written off on account of unrealizable trade receivables/reversal of unbilled revenue aggregating to Rs75.40 crores & has been shown under exceptional item.

Impairment Analysis of Cash Generating Units (CGUs):

The Company, as per its Accounting Policy and in accordance with the requirements of the Accounting Standard (AS) 28 - Impairment of Assets and Accounting Standard (AS) -13 Accounting for Investments, as per Companies Accounting Standard Rules 2006, had carried out an impairment analysis of its Cash Generating Units/Long term Investments, in order to ascertain the extent of impairment, if any, in their carrying values.

The valuation analysis was carried out by an independent expert valuer who has reckoned the projections as considered in the Scheme approved by the CDR Cell, to assess the values generated by these CGUs/Long Term Investments on a going concern basis for the above purpose and such exercise did not reveal any impairment. Besides the above, the Company is also carrying a payment solution software product of Rs27.23 crores, to be adapted for application in different geographies which is pending for quite some time due to manpower/financial constraints. The management is confident of localizing the product in due course of time and commercially exploit thereafter.

In view of the above, no provision thereof is considered necessary.

Changes in estimates:

Hitherto, the Company's foreign branch was considered as 'non- integral operations' in terms of AS-11 "Accounting for Changes in the Exchange Rates" which on business restructuring during the year is being considered as 'integral operations' w.e.f. January 1, 2012. Consequently, loss for the year is stated lower by Rs0.23 crores.

1.6 Employee Benefit Plans

The following table set out the status of the gratuity plan as required under AS 15 (Revised) and below figures are as per actuarial valuation.

The liability recognized with respect to Gratuity in the balance sheet as on March 31, 2012 is Rs25.15 crores (as on March 31, 2011 - Rs15.75 crores).

The liability recognized with respect to leave encashment/entitlement in the balance sheet as on March 31, 2012 is Rs1.33 crores (as on March 31, 2011 - Rs7.41 crores). Further due to change in leave policies of the Company, leave entitlement provision is lower by Rs6.52 crores.

As the contribution expected to be paid to the plan during the annual period beginning after the balance sheet date is based on various internal/ external factors, a best estimate of the contribution is not determinable

1.6.1 The Company has upto previous year acquired 74% of the equity of Locuz Enterprise Solutions Ltd. ('Locuz') for aggregate consideration of Rs22.80 crores. As per the share purchase agreement, the Company has committed to acquire the balance stake at a future date for additional consideration payable on achieving certain measurable criteria such as future revenue/profitability etc., as per the agreement. However, given the current liquidity constraints, the Company is exploring divestment of its interest in Locuz.

1.6.2 (a) In August 2011, the Company has sold its 100% stake in HCCA Business Services Pvt. Ltd. for a consideration of Rs38.50 crores. The net gain on sale of investment being Rs16.53 crores. As per terms of agreement, Rs4.24 crores has been deposited in Joint Escrow Account to be released by August 2012.

(b) During the year, the Company merged one of its wholly owned subsidiary company viz., Fineng Solutions Private Limited, whose business was already acquired by the Company subsequent to receiving court sanction and complying with necessary compliance thereof. The said merger was accounted under 'Pooling of interest Method' as prescribed in the AS -14 "Accounting for Amalgamations". The appointed date of the merger was April 1, 2010. Consequently the excess of investment over networth of Fineng Solutions Private Limited, being Rs27.15 crores is debited to opening balance of Statement of Profit & Loss as envisaged in the scheme and Rs0.01 crores is credited to Capital Reserve Account.

(c) During the year, the Company merged with itself one of its wholly owned subsidiary company viz., J&B Software (India) Private Limited, whose business was acquired by the Company subsequent to receiving court sanction and complying with necessary compliance thereof. The said merger was accounted under 'Pooling of interest Method' as prescribed in the AS -14 "Accounting for Amalgamations". The appointed date of the merger was April 1, 2010. Consequently the excess of investment over networth of J&B Software (India) Private Limited, being Rs7.23 crores is credited to opening balance of Statement of Profit & Loss as envisaged in the scheme.

1.7 As at March 31, 2012, the Company has no outstanding dues to micro, small and medium enterprises. There is no liability towards interest on delayed payments under the Micro, Small and Medium Enterprises Development Act, 2006 during the year.There is also no amount of outstanding interest in this regard brought forward from the previous year.

The above information is on the basis of intimation received by the Company, on request made to all vendors in the course of vendors' registration under the said Act.

1.8 (a) In the opinion of the Board, the investments, current and non - current assets, long term and short term loans and advances are realizable at a value, which is at least equal to the amount at which these are stated, in the ordinary course of business and provision for all known and determined liabilities are adequate and not in excess of the amount stated.

(b) The accounts of certain Trade Receivables, Trade Payables, Loans & Advances and banks are, however, subject to formal confirmations/reconciliations and consequent adjustments, if any. However there is no indication of dispute on these accounts, other than those mentioned in the Financial Statements.The management does not expect any material difference affecting the current year's financial statements on such reconciliation/ adjustments.

2. Other related parties with whom transactions have been entered into in the ordinary course of business:-

Directors / Key Management Personnel (KMP): Mr. V. Srinivasan (Managing Director), Mr. Amar Chintopanth (Deputy Managing Director & CFO), Mr. Anirudh Prabhakaran (Executive Director & President - South Asia) till November 2, 2010.

Enterprise in which relative of key managerial personnel has substantial interest - Cadenza Solutions Private Limited, India.

3. Related party as identified by the management and relied upon by the auditor.

4. No balances in respect of the related parties have been provided for/written back/ written off except as stated above.

* This foreign exchange currency exposure is covered by derivative instruments (Cross Currency and Interest Rate Swap) as at March 31, 2012.

1.9 Residual Dividend represents dividend on shares issued (entitled to previous year dividend) between the date of proposed dividend and record date. Residual dividend of RsNil crores (inclusive of tax of RsNil crores), for the year ended March 31, 2011 Rs4.03 crores (inclusive of tax of Rs0.57 crores)), is appropriated out of Statement of Profit & Loss.

1.10 a) During the year, the Financial Statements have been prepared in accordance with Revised Schedule VI. Figures for the previous year have been re-grouped/re-arranged, wherever considered necessary to conform to current year's presentation.

b) Rs0.00 crores denotes figures less than Rs50,000.


Mar 31, 2011

1.1 Figures for the previous year have been re-grouped / re-arranged, wherever considered necessary, to conform to current years presentation. The current years fgures are not comparable with those of the previous year to the extent of acquisitions / divestments made by the Group during the current year and those made during the previous year.

1.2 Capital commitments and contingent liabilities

Rs.in crores As at As at

March 31, 2011 March 31, 2010 Capital Commitments*

Estimated amount of contracts remaining to be executed on capital ac- 2.96 6.92 count and not provided for (net of advances)

Contingent Liabilities

Outstanding guarantees 20.40 7.19

Premium on redemption of FCCB (Refer Note No. 2.5) 43.32 84.21

Estimated amount of claims against the Group not acknowledged as debts in respect of :

-Disputed Income Tax matter 8.02 5.75

-Disputed Sales Tax matter 2.12 1.08

-Customer claims 0.37 0.20

-Others** 83.56 18.38

*Except where amount is not ascertainable in respect of acquisition as mentioned in note no.2.4.1

**Includes expenses of legal cases relating to Registrar & Transfer Services, which are reimbursable by the Principal to the extent of Rs. 0.74 crores (as at March 31, 2010 -Rs. 1.21 crores).

1.3 Qualifed Institutional Placement Issue -

During the year, the Parent Company has issued and allotted 2,29,00,099 fully paid-up Equity Shares at a price of Rs. 78.60 per Equity Share (including premium ofRs. 68.60 per Equity Share) aggregating Rs. 179.99 crores on April 7, 2010. These shares rank pari passu with the existing shares of the Parent Company with respect to dividend.

1.4.1 In April 2008, the Parent Company entered into a share purchase agreement with the owners of Locuz Enterprise Solutions Limited, Hyderabad, to acquire the 2,60,000 shares (representing 26% of the paid-up equity capital of Locuz Enterprise Solutions Limited) for a consideration of Rs. 6.93 crores. In November, 2009, the Parent Company acquired further 25% stake in Locuz Enterprise Solutions Limited for a consideration of Rs. 5.32 crores along with a commitment to acquire the balance of the paid-up capital at a future date for additional consideration payable on achieving certain measurable criteria such as future revenue / proftability etc., as per the agreement. In September 2010, the Parent Company acquired further 23% stake in Locuz Enterprise Solutions Limited for a consideration of Rs. 10.55 crores along with a commitment to acquire the balance of the paid-up capital at a future date for additional consideration payable on achieving certain measurable criteria such as future revenue / proftability etc., as per the agreement.

Excess of consideration over the value of the net worth of Locuz is shown as goodwill arising on consolidation.

1.4.2 a) In May 2008, the Parent Company entered into a share purchase agreement with the owners of Fineing Solutions Private Limited, Mumbai to acquire the 60,165 shares (representing 51% of the paid-up equity capital of FinEng Solutions Private Limited) for a consideration of Rs. 17.73 crores. In June 2009, the Parent Company has acquired additional 9% of the paid-up capital of FinEng Solutions Private Limited for a consideration of Rs. 3.67 crores. As agreed in the Share Purchase Agreement, in October 2009 the Parent Company made an upside payment of Rs. 2.71 crores to the Promoter Shareholders of FinEng Solutions Private Limited. In June 2010, the Parent Company acquired the balance 40% stake for a consideration of Rs. 15.86 crores.

b) In July 2010, the Parent Company entered into business purchase agreement with FinEng Solutions Private Limited.The Parent Company has acquired / assumed the assets and liabilities at their respective book values.

1.4.3 The Board of Directors of the Parent Company have approved the amalgamation of J&B Software India Pvt. Ltd. (J&B) with the Parent Company. In this regard, the Parent Company has received an in-principle approval from the Stock Exchange. The Parent Company is now in the process of fling a single petition for J & B in Madras High Court.

1.4.4 a) During the year, the Parent Company has sold its 100% stake in eMudhra Consumer Services Limited (formerly known as 3i Infotech Consumer Services Limited) (including its subsidiaries) at a value of Rs. 29.88 crores, out of which Rs. 6.00 crores has been received in the current year and balance consideration of Rs. 23.88 crores will be received as per the terms of agreement before December 2011;and

b) Other receivable amounts of Rs. 25.00 crores from eMudhra Consumer Services Limited (formerly known as 3i Infotech Consumer Services Limited) have been converted into Zero Coupon Non Convertible Redeemable Preference Shares, redeemable by December 14, 2015.

1.4.5 During the year, the Parent Company has sold its 100% stake in its subsidiary 3i Infotech Insurance & Reinsurance Brokers Limited for a consideration of Rs. 0.05 crores. The difference between the carrying value of investment and sale proceeds is accounted as loss on sale of investment and charged to Proft and Loss Account.

1.4.6 In February 2010, 3i Infotech (Middle East) FZ LLC, Soft Solutions Ltd, Skye Bank PLC and Unity Bank PLC entered into a joint venture contract for the establishment of Joint Venture Company in Lagos, Nigeria. In pursuance to this, a Joint Venture Company, Process Central Limited was set up in Nigeria in May 2010, wherein the 3i Infotech (Middle East) FZ LLC interest in the equity was 47.50% and other partners having share of 17.5% each. 3i Infotech (Middle East) FZ LLC would have an option to raise its stake to 51% from 47.50% within 3 years.

In July 2010, 3i Infotech (Middle East) FZ LLC has invested USD 285,000 being 60% of the Groups share of interest in Equity of the Joint Venture.

1.6 (i) During the previous year, the Parent Company has bought back and cancelled FCCBs (out of the third and the fourth issues) of face value of EURO 6,000,000 and USD 8,500,000 equivalent to Rs. 82.42 crores at a discount resulting in reduction of liability by Rs. 29.19 crores. The same has been shown as exceptional income in the Proft & Loss Account.

(ii) During the previous year, the Parent Company has incurred an amount of Rs. 1.33 crores towards professional fees in respect of the aforesaid buyback. The same has been shown as exceptional expenditure in the Proft & Loss Account.

1.7 During the previous year, the Parent Company had exited from agreements with various State Governments in respect of setting up and operating Citizen Service Centers and loss of Rs. 260.46 crores thereon was disclosed as Impact Of Discontinuing Operations

1.8 a) In the opinion of the Board, the investments, current assets, loans and advances are realizable at a value, which is at least equal to the amount at which these are stated, in the ordinary course of business and provision for all known and determined liabilities are adequate and not in excess of the amount stated.

b) The accounts of certain Sundry Debtors, Creditors, Loans & Advances and Banks are however, subject to confrmations / reconciliations and consequent adjustments, if any. The management does not expect any material difference affecting the current years fnancial statements on such reconciliation / adjustments.

1.9 Leases:

a) Operating Lease:

(i) The Parent Company has acquired certain Land and Building under a lease arrangement for a period of sixty years at a premium of Rs. 0.50 crores starting from December 4, 2000 for Land and Rs. 15.62 crores starting from March 13, 2000 and Rs. 5.05 crores from March 1, 2003 for building and the same is being amortized over the lease period. All other lease arrangements in respect of properties are renewable / cancelable at the Groups and / or lessors option as mutually agreed. The future lease rental payment that the Group is committed to make is:

1.10 Employee Stock Option Plan (ESOP):

The Parent Companys Employees Stock Option Plan provides for issue of equity option up to 25% of the paid- up Equity Capital to eligible employees. The scheme covers the managing director, whole time directors and the employees of the subsidiaries, the erstwhile holding Company and subsidiaries of the erstwhile holding Company, apart from the employees of the Parent Company. The options vest in a phased manner over three years with 20%, 30% and 50% of the grants vesting at the end of each year from the date of grant and the same can be exercised within ten years from the date of the grant by paying cash at a price determined on the date of grant.

Method used for accounting for the share based payment plan:

The Parent Company has elected to use the intrinsic value method to account for the compensation cost of stock options to employees of the Parent Company. Intrinsic value is the amount by which the quoted market price of the underlying share as on the date of grant exceeds the exercise price of the option.

Fair Value methodology for the option

The fair value of options used to compute net income and earnings per equity share have been estimated on the dates of each grant within the range of Rs. 58.00 to Rs. 143.38 using the Black - Scholes pricing model. The Parent Company estimated the volatility based on the historical share prices. The various assumptions considered in the pricing model for the options granted under ESOP are:

1.11 Related Party Transactions:

Directors / Key Management Personnel: Mr. V Srinivasan (Managing Director), Mr. Amar Chintopanth (Deputy Managing Director & CFO), Mr. Anirudh Prabhakaran (Executive Director & President – South Asia (till November 2, 2010)).

Enterprise in which relative of key managerial personnel has substantial interest – Cadenza Solutions Private Limited

The following transactions were carried out with the related parties in the ordinary course of business during the year

1.12 Disclosures pursuant to AS 17 – Segment Reporting:

a) The Parent Company has started reporting two Operating Segments, "IT Solutions" and "Transaction Services" from this year as against to the segments "IT Products", "IT Services" and "Transaction Services" hitherto being reported.

b) As the Parent Company has increasingly commenced providing bundled solutions to clients, combining products & services, the management is viewing the entire IT business as a solution based segment. The change in reporting segment is in line with this change in the business offering.

e) Considering the nature of the Groups business, the assets and liabilities cannot be identifed to any specifc business segment.

1.13 Residual Dividend represents dividend on shares issued (entitled to previous year dividend) between the date of proposed dividend and record date.

Residual dividend of Rs. 4.03 crores (inclusive of tax Rs. 0.57 crore) (for the year ended March 31, 2010 Rs. 0.02 crores (inclusive of tax Rs. 0.00 crore)), is appropriated out of Proft & Loss Account.

1.14 Amount of exchange difference (net) credited to Proft & Loss Account during the year ended March 31, 2011 is Rs. 2.99 crores (for the year ended March 31, 2010 credited Rs. 8.46 crores).

1.15 a) Figures for the previous year have been re-grouped / re-arranged, wherever considered necessary to conform to current years presentation.

b) Rs. 0.00 crores denotes fgures less than Rs. 50,000.


Mar 31, 2010

1.1 Figures for the previous year have been re-grouped/re-arranged, wherever considered necessary, to conform to current year’s presentation. The current year’s fgures are not comparable with those of the previous year to the extent of acquisitions/divestments made by the Group during the current year.

1.2 Capital commitments and contingent liabilities

Rs. in Crores As at As at March 31, 2010 March 31, 2009 Capital Commitments* - Estimated amount of contracts remaining to be executed on capital 6.92 127.14 account and not provided for (net of advances) Contingent Liabilities - Outstanding guarantees 7.19 6.70 - Premium on redemption of FCCB (Refer Note No. 2.5) 84.21 165.21 Estimated amount of claims against the Group not acknowledged as debts in respect of : - Disputed demands for Income Taxes 5.75 2.76 - Disputed Sales Tax Matter 1.08 - - Customer claims 0.20 19.27 - Others** 18.38 0.74

*Including commitments pertaining to acquisitions, except where amount is not ascertainable as mentioned in note no.2.4.

**Includes expenses of legal cases relating to Registrar & Transfer Services, which are reimbursable by the Principal to the extent of Rs. 1.21 crores (as at Mar 31, 2009 - Rs.0.34 crores).

1.3 (a) Pursuant to the shareholders’ approval at the Annual General Meeting held on July 28, 2009, the Committee of Board of Directors of the Parent Company has, at its meeting held on September 25, 2009, issued and allotted 37,500,000 fully paid-up Equity Shares, at a price of Rs.84.75 per Equity Share (including a premium of Rs.74.75 per Equity Share), aggregating to Rs. 317.81 crores. The entire amount has been utilized towards the object of the issue.

(b) Further, subsequent to the year end, the Parent Company has issued and allotted 22,900,099 fully paid-up Equity Shares, at a price of Rs.78.60 per Equity Share (including a premium of Rs.68.60 per Equity Share) aggregating to Rs 179.99 crores on April 7, 2010. These shares allotted rank pari passu with the existing shares of the Parent Company with respect to the dividend as may be paid by the Parent Company for the year ended March 31, 2010 and an additional amount of Rs 3.44 crores would be payable in addition to proposed dividend on the equity share capital as on the close of the year.

1.4.1 Effective April 2009, the Parent Company acquired balance 49% paid-up capital of

a) aok In-house BPO Services Limited, New Delhi, for a consideration of Rs 15.67 crores.

b) aok In-house Factoring Services Pvt. Limited, New Delhi, for a consideration of Rs 2.41 crores.

c) Delta Services (India) Pvt Ltd., Mumbai, (DSIPL) for a consideration of Rs 15.93 crores.

d) HCCA Business Services Private Ltd., Mumbai, for a consideration of Rs 13.50 crores.

Excess of consideration over the value of the net worth is shown as goodwill arising on consolidation.

1.4.2 In April 2008, the Parent Company entered into a share purchase agreement with the owners of Locuz Enterprise Solutions Ltd., Hyderabad, to acquire the 260,000 shares (representing 26% of the paid-up equity capital of Locuz Enterprise Solutions Ltd.) for a consideration of Rs.6.93 crores. In November, 2009, the Parent Company acquired further 25% stake in Locuz Enterprise Solutions Limited for a consideration of Rs 5.32 crores along with a commitment to acquire the balance of the paid up capital at a future date for additional consideration payable on achieving certain measurable criteria such as future revenue/proftability etc., as per the agreement.

Excess of consideration over the value of the net worth of Locuz is shown as goodwill arising on consolidation.

1.4.3 In May 2008, the Parent Company entered into a share purchase agreement with the owners of FinEng Solutions Private Limited, Mumbai to acquire the 60,165 shares (representing 51% of the paid-up equity capital of FinEng Solutions Private Limited) for a consideration of Rs 17.73 crores. In June 2009, the Parent Company has acquired additional 9% of the paid-up capital of FinEng Solutions Private Limited for a consideration of Rs 3.67 crores. As agreed in the Share Purchase Agreement, in October 2009 the Parent Company made an upside payment of Rs. 2.71 crores to the Promoter Shareholders of FinEng Solutions Private Limited. The Parent Company has a commitment to acquire the balance of the paid-up capital at a future date for additional consideration payable on achieving certain measurable criteria such as future revenue/proftability etc., as per the agreement.

Excess of consideration over the value of the net worth of FinEng is shown as goodwill arising on consolidation.

1.4.4 In July 2009, Regulus Holding, Inc., acquired membership interest in Regulus Group II LLC. for a consideration of USD 9.25 million (approximately equivalent to INR 44.99 crores) and possible obligations of USD 9.91 million (approximately equivalent to INR 47.90 crores).

Accordingly, consideration paid (net of assets acquired) and further expenditure incurred of USD 9.9 miilion (out of possible obligations) has been recognized as goodwill aggregating to INR 98.35 crores arising on consolidation.

1.4.5 In September 2007, the Parent Company entered into a share purchase agreement with the owners of Taxsmile.com India Pvt. Ltd., Mumbai, to acquire the 1,040,000 shares (representing 26% of the paid-up equity capital of Taxsmile. com India Pvt. Ltd., Mumbai) for a consideration of Rs 2.08 crores. In May 2009, the Parent Company acquired additional 25% of the paid-up capital for a consideration of Rs 2.00 crores along with a commitment to acquire the balance of the paid-up capital at a future date for additional consideration payable on achieving certain measurable criteria such as future revenue/ proftability etc., as per the agreement. In October 2009, the Parent Company acquired the balance 49% stake for a consideration of Rs. 3.92 crores.

The Parent Company vide a Share Purchase Agreement dated December 30, 2009 has transferred entire investment in Taxsmile.com India Pvt. Ltd. to its wholly owned subsidiary 3i Infotech Consumer Services Limited.

Excess of consideration over the value of the net worth of Taxsmile.com India Pvt. Ltd. is shown as goodwill arising on consolidation.

1.4.6 In May 2007, 3i Infotech Holdings Private Limited, Mauritius, entered into a share purchase agreement with the owners of Professional Access Limited to acquire 51 shares (representing 51% of the paid-up equity capital of Professional Access) for a consideration of USD 2.04 million along with a commitment to acquire the balance 49% of the paid-up capital at a future date for further consideration payable on achieving certain measurable criteria such as future revenue/proftability etc., as per the agreement . In November 2009, 3i Infotech Holdings Private Limited acquired the balance 49% stake for a consideration of USD 2.45 million.

Excess of consideration over the value of the net worth of Professional Access is shown as goodwill arising on consolidation.

1.4.7 (a) In May 2007, 3i Infotech Holdings Private Limited, Mauritius, entered into a share purchase agreement with the owners of Black Barret Holdings Limited to acquire Class ‘A’ shares (representing 51% of the paid-up equity capital of Black Barret Holdings Limited) for a consideration of USD 10.20 million along with a commitment to acquire the balance 49% of the paid-up capital at a future date for further consideration payable on achieving certain measurable criteria such as future revenue/proftability etc. In November 2009, 3i Infotech Holdings Private Limited acquired the balance 49% stake for a consideration of USD 28.70 million.

Excess of consideration over the value of the net worth of Black Barret is shown as goodwill arising on consolidation.

(b) In February 2007, the Parent Company had approved the grant of stock options to certain employees (including Managing Director) in its subsidiary, Black Barret Holdings Limited. In January 2009, Black Barret had allotted Class ‘B’ shares to the said employees which was accounted as compensation cost in the current year amounting to Rs. 5.50 crores.

In January 2010, 3i Infotech Holding Private Limited purchased these shares from the employees at fair value. The difference of Rs. 8.13 crores between the fair value and compensation cost is accounted as Goodwill on Consolidation.

1.4.8 The Board of directors of the Parent Company have approved the Amalgamation of KNM Services Private Limited (KNM), Stex Software Private Limited (Stex), E-Enable Technologies Private Limited (E-Enable) and J&B Software India Private Limited (J&B) with the Parent Company . In this regard, the Parent Company has received an in- principle approval from both the Stock Exchanges. The Parent Company is in the process of fling a joint petition with KNM, Stex and E-Enable before the Bombay High Court and a single petition for J & B in Madras High Court.

1.4.9 In January 2010, Taxmile.com India Pvt. Ltd. has divested 30% of its stake in Antriksh Interactive Pvt. Ltd. for sale of Antriksh’s Product IPR ‘CA Offce’, to Wolters Kluwer (WK) for a consideration of USD 2 Million with a commitment to sell balance 70% stake for further consideration at future dates receivable on achieving certain measurable criteria as per the agreement. The proft on divestment of Rs. 9.95 crores has been disclosed under income from operations.

1.4.10 In January, 2010, Delta Services (India) Private Limited, Mumbai has entered into business purchase agreement with 3i Infotech Consultancy Services Limited to transfer its assets & liabilities at book values.

1.4.11 (a) In May 2008, 3i Infotech Ltd. and Yucheng Technologies Limited, China (Yucheng) entered into a joint venture contract for the establishment of Joint Venture Company in China. In pursuance to this, a Joint Venture Company, Elegon Infotech Limited (Elegon) was set up in China in August 2008, wherein the Parent Company’s interest in the equity was 51%. In June 2009, an Equity Transfer Agreement was signed between the Parent Company and Yucheng, whereby, the entire 49% interest held by Yucheng was acquired by the Parent Company for a total consideration of Rs 5.93 crores. In November 2009, Elegon Infotech Limited has become a wholly-owned subsidiary after obtaining necessary approvals.

The aggregate amounts of the assets, liabilities, income and expenses related to Group’s share till it was considered as JV were as under:

(b) Income for the year includes Rs. Nil (for the year ended March 31, 2009 Rs.18.27 crores) arising out of transfer of Intellectual Property Rights and Marketing rights in certain products to the Joint Venture which was recoverable as per the Joint Venture Agreement. During the year, consequent to Elegon becoming a wholly owned subsidiary as mentioned above, the aforesaid income has been included in opening reserves and corresponding assets have been reversed on consolidation.

2. (i) During the year, the Parent Company has bought back and cancelled FCCBs (out of the third and the fourth issues) of face value of EUR 6,000,000 and USD 8,500,000 equivalent to Rs. 82.42 crores (for the year ending March 31, 2009, EURO 4,000,000 and USD 25,133,000 equivalent to Rs. 152.99 crores) at a discount resulting in reduction of liability by Rs 29.19 crores (for the year ending March 31, 2009, Rs. 77.05 crores). The same has been shown as exceptional income in the Proft & Loss account.

(ii) The Parent Company has incurred an amount of Rs. 1.33 crores towards professional fees (for the year ending March 31, 2009 Rs.51.09 crores towards the advisory fees, legal & other professional fees and other expenses for various fnancial restructuring assignments) in respect of the aforesaid buyback. The same has been shown as exceptional expenditure in the Proft & Loss account.

2.1 Commencing from March 2007, the Parent Company had entered into Agreements with some State Governments towards setting up and operating Citizen Service Centers across those states for providing certain government services as well as non government retail services to consumers.

The Parent Company had decided to exit from the Master Service Agreements (MSA) of some of the State Governments by paying a compensation of Rs.10.92 crores under these contracts and further decided during the fourth quarter to exit totally from this line of business owing to prevailing business environment. Accordingly the assets attributed to this business are being carried as ‘assets held for disposal’ at their net realizable values. The loss thereof of Rs. 260.46 crores for the current year (net of tax of Rs. 70.73 crores) has been charged to the Proft & Loss account and has been disclosed as ‘Impact of Discontinuing Operations’, the computation thereof is given hereunder:

2.2 (a) In the opinion of the Board, the investments, current assets, loans and advances are realizable at a value, which is at least equal to the amount at which these are stated, in the ordinary course of business and provision for all known and determined liabilities are adequate and not in excess of the amount stated.

(b) The accounts of certain Sundry Debtors, Creditors, Loans & Advances and Banks are however, subject to confrmations/reconciliations and consequent adjustments, if any. The management does not expect any material difference affecting the current year’s fnancial statements on such reconciliation/adjustments.

2.3 Leases:

a. Operating Lease:

(i) The Parent Company has acquired certain Land and Building under a lease arrangement for a period of sixty years at a premium of Rs.0.50 crores starting from December 4, 2000 for Land and Rs.15.62 crores starting from March 13, 2000 and Rs.5.05 crores from March 1, 2003 for building and the same is being amortized over the lease period. All other lease arrangements in respect of properties are renewable/ cancelable at the Group’s and/or lessors’ option as mutually agreed. The future lease rental payment that the Group is committed to make is:

2.4 Employee Stock Option Plan:

The Parent Company’s Employees Stock Option Plan provides for issue of equity option up to 25% of the paid- up Equity Capital to eligible employees. The scheme covers the managing director, whole time directors and the employees of the subsidiaries, the erstwhile holding Company and subsidiaries of the erstwhile holding Company, apart from the employees of the Parent Company. The options vest in a phased manner over three years with 20%, 30% and 50% of the grants vesting at the end of each year from the date of grant and the same can be exercised within ten years from the date of the grant by paying cash at a price determined on the date of grant.

Method used for accounting for the share based payment plan:

The Parent Company has elected to use the intrinsic value method to account for the compensation cost of stock options to employees of the Parent Company. Intrinsic value is the amount by which the quoted market price of the underlying share as on the date of grant exceeds the exercise price of the option.

Fair Value methodology for the option

The fair value of options used to compute net income and earnings per equity share have been estimated on the dates of each grant within the range of Rs. 58.00 to Rs. 143.38 using the Black - Scholes pricing model. The Parent Company estimated the volatility based on the historical share prices. The various assumptions considered in the pricing model for the options granted under ESOP are:

Impact of Fair value method on Net proft and EPS before Exceptional Items and Impact of Discontinuing Operations

Had the compensation cost for the Parent Company’s Stock Option Plan outstanding been determined based on the fair value approach, the Parent Company’s net proft income and earnings per share would have been, as indicated below:

2.5 Related Party Transactions:

Directors/Key Management Personnel: Mr. V Srinivasan (MD & CEO), Mr. Amar Chintopanth (Executive Director & CFO), Mr. Anirudh Prabhakaran (Executive Director & President – South Asia).

Enterprise in which relative of key managerial personnel has substantial interest – Cadenza Solutions Private Limited

The following transactions were carried out with the related parties in the ordinary course of business during the year:

2.6 Disclosures pursuant to AS 17 – Segment Reporting:

a) IT Service, Software Products and Transaction Service businesses have been considered as primary segments. The Proft & Loss account of the reportable segments is set out here below:

d) Considering the nature of the Group’s business, the assets and liabilities cannot be identifed to any specifc business segment.

e) Disclosure of details of Secondary segments, being geographies, is as under:

2.7 Residual Dividend represents dividend on shares issued (entitled to previous year dividend) between the date of proposed dividend and record date.

Residual dividend of Rs 0.02 crores (inclusive of tax) (for the year ended March 31, 2009 Rs. 0.02 crores), is appropriated out of Proft & Loss account.

2.8 Provision for Warranty and Contingencies:

2.9 Amount of exchange difference (net) credited to Proft & Loss account during the year ended March 31, 2010 is Rs. 8.46 crores (for the year ended March 31, 2009 Rs. 8.31 crores).

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