Mar 31, 2023
1. Corporate information
The Company provides critical business operations services to global Fortune 500 clients, including several of the worldâs leading companies across financial services, cable and telecommunications, retail, fashion, media & entertainment, manufacturing, travel and leisure, software and high-tech. The Company provides innovative business process management, change management, data-driven insights, advanced analytics powered by subject matter experts and smart automation. The Company is domiciled in India and has its registered office at Mumbai, Maharashtra, India.
The standalone financial statements for the year ended March 31, 2023 were authorised for issue in accordance with a resolution of the board of directors on May 25, 2023.
2. A. Significant accounting policies2.1 Basis of preparation
The financial statements of the Company have been prepared in accordance with Indian Accounting Standards ("Ind ASâ) notified under the Companies (Indian Accounting Standards) Rules, 2015, as amended from time to time and presentation requirements of Division II of Schedule III to the Companies Act, 2013, (Ind AS compliant Schedule III), as applicable to the Companyâs financial statements.
The financial statements have been prepared on a historical cost basis, except for the following assets and liabilities which have been measured at fair value :
⢠Derivative financial instruments
⢠Certain financial assets and liabilities measured at fair value (refer accounting policy regarding financial instruments)
⢠Share based payments
The standalone financial statements are presented in "Rs.â and all values are stated Rs. in million, except when otherwise indicated.
Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.
2.2. Summary of significant accounting policies
a. Foreign currencies
The Companyâs financial statements are presented in Indian Rupees ("Rs.â), which is also the Companyâs functional currency.
Transactions in foreign currencies are initially recorded by the Company in its functional currency using spot rates at the date the transaction first qualifies for recognition. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at exchange rates at the reporting date.
Exchange differences arising on settlement or translation of monetary items are recognised in profit or loss.
b. Fair value measurement
The Company measures financial instruments such as derivatives and certain investments, at fair value at each balance sheet date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
⢠In the principal market for the asset or liability or,
⢠In the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their best economic interest.
A fair value measurement of a non-financial asset takes into account a market participantâs ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
⢠Level 1 â Quoted (unadjusted) market prices in active markets for identical assets or liabilities
⢠Level 2 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
⢠Level 3 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
This note summarises accounting policy for fair value. Other fair value related disclosures are given in the relevant notes.
Revenue is recognised upon transfer of control of promised products or services to the customers in an amount that reflects the consideration which the Company expects to receive in exchange for those products or services.
Arrangement with customers for services rendered by the Company are either on time and material or on fixed price basis. Revenue from contracts on time-and-material basis is recognised as the related
services are performed. Revenue from fixed-price contracts where the performance obligations are satisfied over time and where there is no uncertainty as to measurement or collectability of consideration, is recognised as per the percentage-of-completion method. Efforts expended have been used to measure progress towards completion as there is a direct relationship between input and productivity. When there is uncertainty as to measurement or ultimate collectability, revenue recognition is postponed until such uncertainty is resolved. Revenue from maintenance contracts are recognised on pro-rata basis over the period of the contract.
Revenue is measured based on the transaction price, which is the consideration, adjusted for volume discounts and other variable considerations, if any, as specified in the contracts with the customers.
Contract modifications are accounted for when additions, deletions or changes are approved either to the contract scope or contract price. The accounting for modifications of contracts involves assessing whether the services added to an existing contract are distinct and whether the pricing is at the standalone selling price. Services added that are not distinct are accounted for on a cumulative catch up basis, while those that are distinct are accounted for prospectively, either as a separate contract, if the additional services are priced at the standalone selling price, or as a termination of the existing contract and creation of a new contract if not priced at the standalone selling price.
The Company presents revenue net of indirect taxes in its standalone statement of profit and loss.
Revenue in excess of billing is classified as contract asset i.e. unbilled revenue while billing in excess of revenue is classified as contract liability i.e. deferred revenue.Contract assets are classified as unbilled receivables when there is unconditional right to receive cash, and only passage of time is required, as per contractual terms. Unbilled Revenues are classified as non-financial asset if the contractual right to consideration is dependent on completion of contractual milestones.
The billing schedules agreed with customers include periodic performance based payments and / or milestone based progress payments. Invoices are payable within the contractually agreed period.
Deferred contract costs are incremental costs of obtaining a contract which are recognised as assets and amortized over the benefit period.
For all financial instruments measured at amortised cost, interest income is recorded using the effective interest rate (âEIRâ), which is the rate that exactly discounts the estimated future cash payments or receipts through the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument but does not consider the expected credit losses.
Dividend income is recognised when Companyâs right to receive dividend is established by the reporting date.
Government grants are recognised when there is reasonable assurance that grant will be received and all attached conditions will be complied with.
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted, at the reporting date in India where the Company operates and generates taxable income.
Current income tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in Other comprehensive income (âOCIâ) or in equity). Current tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate. Significant judgments are involved in determining the provision for income taxes, including amount
expected to be paid / recovered for uncertain tax positions. Also, refer to Notes 30.c and 38.
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax liabilities are recognised for all taxable temporary differences, except:
⢠When the deferred tax liability arises from an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss
⢠In respect of taxable temporary differences associated with investments in subsidiaries when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised, except:
⢠When the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax
laws) that have been enacted or substantively enacted at the reporting date.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in OCI or in equity). Deferred tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
e. Property, plant and equipment
Property, plant and equipment (âPPEâ) are stated at the cost of acquisition including incidental costs related to acquisition and installation less accumulated depreciation and impairment loss, if any.
Advances paid towards acquisition of property, plant and equipment are disclosed as capital advances under other non - current assets.
Capital work-in-progress includes cost of property, plant and equipment under installation/ under development as at the balance sheet date and are carried at cost, comprising of direct cost and directly attributable cost.
Gains or losses arising from disposal of property, plant and equipment are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the statement of profit and loss when the asset is disposed.
The Company provides depreciation on property, plant and equipment (other than leasehold improvements) using the Written Down Value method. The rates of depreciation are arrived at, based on useful lives estimated by the management as follows:
Block of assets |
Estimated useful life (in years) |
Office equipment |
5 |
Furniture and fixtures |
10 |
Computers |
3-6 |
Leasehold improvements |
Lease Term |
The residual values, useful lives and methods of depreciation of property, plant and equipment
are reviewed at each financial year end and adjusted prospectively, if appropriate.
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses, if any.
The useful lives of intangible assets are assessed as either finite or indefinite. There are no intangible assets assessed with indefinite useful life.
Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the statement of profit and loss unless such expenditure forms part of carrying value of another asset.
Gain or losses arising from the derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the statement of profit and loss when the asset is derecognised.
Intangible assets are amortised on straightline basis as follows:
Block of assets |
Estimated useful life (in years) |
Computer softwares |
1-5 |
g. Research and development expenses for software product
Research expenses for software product are expensed as incurred. Software product development cost are expensed as incurred unless technical feasibility of project is established, further economic benefit are probable, the Company has an intention and ability to complete and use or sell the software
and the cost can be measured reliably. The cost which can be captialised include the cost of material, direct labor and overhead cost that are directly attributable to preparing the asset for its intended use.
h. LeasesThe Company as lessee
The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the inception date. The arrangement is, or contains a lease if, fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.
The Company recognises right-of-use asset and a corresponding lease liability for all lease arrangements in which the Company is a lessee, except for a short term lease of 12 months or less and leases of lowvalue assets. For short term lease and low-value asset arrangements, the Company recognises the lease payments as an operating expense on straight-line basis over the lease term.
Certain lease arrangements include the options to extend or terminate the lease before the end of the lease arrangement. Right-of-use assets and lease liabilities are measured according to such options when it is reasonably certain that the Company will exercise these options.
The right-of-use asset are recognised at the inception of the lease arrangement at the amount of the initial measurement of lease liability adjusted for any lease payments made at or before the commencement date of lease arrangement reduced by any lease incentives received, added by initial direct costs incurred and an estimate of costs to be incurred by the Company in dismantling and removing the underlying asset or restoring the underlying asset or site on which it is located. The right-of-use assets are depreciated using the straightline method from the commencement date over the shorter of lease term or useful life of right-of-use asset. Estimated useful life of right-of-use assets is determined on the basis of useful life of property, plant and equipment. Right-of-use assets are tested for impairment whenever there is an indication that their carrying value may not be recoverable. Impairment loss, if any is recognised in the statement of profit and loss account.
The lease liability is measured at amortized cost, at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease arrangement or, if not readily determinable, at the incremental borrowing rate in the country of domicile of such leases. Lease liabilities are remeasured with corresponding adjustments to right-of-use assets to reflect any reassessment or lease modifications.
i. Impairment of non-financial assets
The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the assetâs recoverable amount. An assetâs recoverable amount is the higher of an assetâs or cash generating unitâs (âCGUâ) fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash flows that are largely independent of those from other assets or group of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators.The Company bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the Companyâs CGUs to which the individual assets are allocated.
For assets excluding goodwill, an assessment is made at each reporting date to determine whether there is an indication that previously recognised impairment losses no longer exists or have decreased. If such indication exists, the Company estimates the assetâs or CGUâs recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the assetâs recoverable amount since the last impairment loss was recognised.
The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the statement of profit and loss.
j. Provisions and contingencies
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Company expects some or all of a provision to be reimbursed, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the statement of profit and loss net of any reimbursement.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made. Contingent liabilities are disclosed in the notes.
k. Retirement and other employee benefits Provident Fund
Retirement benefit in the form of provident fund is a defined contribution scheme. Both the employee and the employer make monthly contributions to the plan at a predetermined rate of the employeesâ basic salary. These contributions are made to the fund administered and managed by the Government of India. The Company recognises contribution payable to the provident fund scheme as an expense, when an employee
renders the related service. The Company has no further obligations under these plans beyond its monthly contributions.
Defined benefit plan
The Company operates a defined benefit gratuity plan, which requires contributions to be made to a separately administered fund with the insurance service provider. The cost of providing benefits under the defined benefit plan is determined using the projected unit credit method, with actuarial valuations being carried out at periodic intervals.
Re-measurements, comprising of actuarial gains and losses and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability), are recognised immediately in the balance sheet with a corresponding charge or credit to retained earnings through OCI in the period in which they occur. Re-measurements are not reclassified to statement of profit and loss in subsequent periods.
Past service costs are recognised in profit or loss on the earlier of:
⢠The date of the plan amendment or curtailment, and
⢠The date that the Company recognises related restructuring costs
Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. The Company recognises the following changes in the net defined benefit obligation as an expense in the statement of profit and loss:
⢠Service costs comprising current service costs; and
⢠Net interest expense or income
Accumulated leave, which is expected to be utilised within the next 12 months, is treated as short-term employee benefit. The Company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date. The Company treats accumulated leave expected to be carried forward beyond twelve months, as long-term employee benefit for measurement purposes. Such long-term
compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the year-end. The Company treats the entire leave as current liability in the balance sheet, since it does not have an unconditional right to defer its settlement for 12 months after the reporting date.
The Code on Social Security, 2020 relating to employee benefits during the employment and post- employment benefits received Presidentâs assent on September 28, 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified. The Company will assess and record the impact of the Code, if any, when it becomes effective.
Employees of the Company receive remuneration in the form of share-based payments, whereby employees render services as consideration for equity instruments (equity-settled transactions).
The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model. The cost is recognised, together with a corresponding increase in share-based payment (âSBPâ) reserves in equity, over the period in which the performance and/or service conditions are fulfilled in employee benefits expense. The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Companyâs best estimate of the number of equity instruments that will ultimately vest. The statement of profit and loss expense or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period and is recognised in employee benefits expense.
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. The Company recognises a financial asset or a liability in its balance sheet only when the entity becomes party to the contractual provisions of the instrument.
Financial assetsInitial recognition and measurement
All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. The Company has accounted for its investment in subsidiaries at cost, less impairment, if any.
For purposes of subsequent measurement financial assets are classified into three categories:
⢠Financial assets at fair value through OCI
⢠Financial assets at fair value through profit or loss
⢠Financial assets at amortised cost
Where assets are measured at fair value, gains and losses are either recognised entirely in the statement of profit and loss (i.e. fair value through profit or loss), or recognised in other comprehensive income (i.e. fair value through other comprehensive income).
A financial asset that meets the following two conditions is measured at amortised cost (net of any write down for impairment) unless the asset is designated at fair value through profit or loss (âFVTPLâ) under the fair value option.
⢠Business model test: The objective of the Companyâs business model is to hold the financial asset to collect the contractual cash flows (rather than to sell the instrument prior to its contractual maturity to realise its fair value changes).
⢠Cash flow characteristics test: The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest (âSPPIâ) on the principal amount outstanding.
This category is the most relevant to the Company. After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (âEIRâ) method. The EIR amortisation is included in finance income in the profit or loss. The losses arising from impairment are recognised in the profit or loss.
A financial asset is classified as at the Financial assets measured at Fair value through other comprehensive income (âFVTOCIâ) if both of the following criteria are met:
⢠The objective of the business model is achieved both by collecting contractual cash flows and selling the financial assets, and
⢠The assetâs contractual cash flows represent SPPI.
A financial asset included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are recognised in the OCI. On derecognition of the asset, cumulative gain or loss previously recognised in OCI is reclassified from the equity to P&L.
FVTPL is a residual category for financial assets. Any instrument, which does not meet the criteria for categorization as at amortized cost or as FVTOCI, is classified as at FVTPL.
In addition, the Company may elect to designate a financial asset, which otherwise meets amortized cost or FVTOCI criteria, as at FVTPL. However, such election is allowed only if doing so reduces or eliminates a measurement or recognition inconsistency (referred to as âaccounting mismatchâ).
Financial assets included within the FVTPL category are measured at fair value with all changes recognised in the P&L.
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e. removed from the Companyâs statement of financial position) when:
⢠The rights to receive cash flows from the asset have expired, or
⢠The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a âpass-throughâ arrangement and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognise the transferred asset to the extent of the Companyâs continuing involvement. In that case, the Company also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay.
Impairment of financial assets
The Company assesses impairment based on expected credit losses (âECLâ) model to the following:
⢠Financial assets measured at amortised cost; and
⢠Financial assets measured at FVTOCI
Expected credit losses (âECLâ) are measured through a loss allowance at an amount equal to:
⢠the 12-month expected credit losses (expected credit losses that result from those default events on the financial instrument that are possible within 12 months after the reporting date); or
⢠full lifetime expected credit losses (expected credit losses that result from all possible default events over the life of the financial instrument).
For trade receivables or contract revenue receivables, the Company follows âsimplified approachâ for recognition of impairment loss allowance.
Under the simplified approach, the Company does not track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
As a practical expedient, the Company uses a provision matrix to determine impairment loss
allowance on the portfolio of trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivable 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 analysed.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the Company reverts to recognising impairment loss allowance based on 12-month ECL.
For assessing increase in credit risk and impairment loss, the Company combines financial instruments on the basis of shared credit risk characteristics with the objective of facilitating an analysis that is designed to enable significant increases in credit risk to be identified on a timely basis.
Financial liabilitiesInitial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, payables, or derivatives as appropriate or as derivatives designated as hedging instruments in an effective hedge as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of payables, net of directly attributable transaction costs.
The Company measures all financial liabilities at amortised cost using the Effective Interest Rate (âEIRâ) method except for financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. Financial liabilities held for trading are measured at fair value through profit and loss. The Company has not designated any financial liability as at fair value through profit or loss.
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a current enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
n. Derivative financial instruments and hedge accountingInitial recognition and subsequent measurement
The Company enters into derivative contracts to hedge foreign currency/price risk on highly probable forecast transactions. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
Any gains or losses arising from changes in the fair value of derivatives are recorded in the statement of profit or loss, except for the effective portion of cash flow hedges, which is recognised in other comprehensive income (âOCIâ) and later reclassified to profit or loss when the hedge item affects profit or loss.
At the inception of a hedge relationship, the Company formally designates and documents the hedge relationship to which the Company wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge. The documentation includes the Companyâs risk management objective and strategy for undertaking hedge, the hedging/ economic relationship, the hedged item or transaction, the nature of the risk being hedged, hedge ratio and how the entity will assess the effectiveness of changes in the hedging instrumentâs fair value in offsetting the exposure to changes in the hedged itemâs cash flows attributable to the hedged risk. Such hedges are expected to be highly effective in achieving offsetting changes in cash flows and are assessed on an ongoing basis to determine that they actually have been highly effective throughout the financial reporting periods for which they were designated.
Hedges that meet the strict criteria for hedge accounting are accounted for, as described below:
The effective portion of the gain or loss on the hedging instrument is recognised in OCI in the cash flow hedge reserve, while any ineffective portion is recognised immediately in the statement of profit and loss.
The Company uses forward currency contracts as hedges of its exposure to foreign currency risk in forecast transactions. The ineffective portion relating to foreign currency contracts is recognised in other income or expenses.
Amounts recognised as OCI are transferred to profit or loss when the hedged transaction affects profit or loss, such as when a forecast sale occurs.
If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover (as part of the hedging strategy), or if its designation as a hedge is revoked, or when the hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss previously recognised in OCI remains separately in equity until the forecast transaction occurs.
The Company has created an Employee Benefit Trust (âEBTâ) for providing share-based payment to its employees. The Company uses EBT as a vehicle for distributing shares to employees under the employee remuneration schemes. The EBT buys shares of the Company from the market, for giving shares to employees. The shares held by EBT are treated as treasury shares.
Own equity instruments that are reacquired (treasury shares) are recognised at cost and deducted from equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Groupâs own equity instruments. Any difference between the carrying amount and the consideration, if reissued / sold, is recognised in other equity (General Reserve).
Cash and cash equivalents comprise cash at bank and short term investments with an original maturity of three months or less which are subject to an insignificant risk of changes in value.
q. Cash dividend to equity holders of the Company
The Company recognises a liability to make cash or non-cash distributions to equity share holders when the distribution is authorised and the distribution is no longer at the discretion of the Company. As per the corporate laws in India, a distribution of interim dividend is authorised when it is approved by the Board of Directors and final dividend is authorised when it is approved by the shareholders of the Company. A corresponding amount is recognised directly in equity.
r. Earnings per share
The earnings considered in ascertaining the Companyâs earnings per share comprise the net profit after tax. The number of shares used in computing basic earnings per share are the weighted average number of shares outstanding during the year. The number of shares used in computing diluted earnings per share comprises the weighted average number of shares considered for deriving basic earnings per share, and also the weighted average number of shares, if any which would have been issued on the conversion of all dilutive potential equity shares. For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.
2.B. Significant accounting judgements, estimates and assumptions
The preparation of the Companyâs standalone financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
The key assumptions concerning the future and
other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the standalone financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.
The Company uses the percentage-of-completion method in accounting for its fixed-price contracts. Use of the percentage-of-completion method requires the Company to estimate the efforts expended to date as a proportion of the total efforts to be expended.
Judgement is also required to determine transaction price for the contract. The transaction price could be either a fixed amount of customer consideration or variable consideration with elements such as volume discounts, service level credits etc. The estimated amount of variable consideration is adjusted in the transaction price only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur and is reassessed at the end of each reporting period.
The Company has entered into commercial property leases for its offices.The Company evaluates if an arrangement qualifies to be a lease as per the requirements of Ind AS 116 âLeasesâ. Identification of a lease requires significant judgment. The Company uses significant judgement in assessing the lease term and the applicable discount rate. The Company has lease contracts which include extension and termination option and this requires exercise of judgement by the Company in evaluating whether it is reasonably certain whether or not to exercise the option to renew or terminate the lease. The discount rate is generally based on the incremental borrowing rate specific to the lease period.
The Company measures share-based payments and transactions at fair value and
recognises over the vesting period using Black Scholes valuation model. Estimating fair value for share-based payment transactions requires determination of the most appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimate also requires determination of the most appropriate inputs to the valuation model including the expected life of the share option, volatility and dividend yield and making assumptions about them. This requires a reassessment of the estimates used at the end of each reporting period. The Company is applying forfeiture rate based on historical trend. The assumptions and models used for estimating fair value for share-based payment transactions are disclosed in note 29.
d. Defined benefit plans (gratuity benefits)
The cost of the defined benefit gratuity plan and the present value of the gratuity obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
The parameter most subject to change is the discount rate. In determining the appropriate discount rate, the management considers the interest rates of government bonds in currencies consistent with the currencies of the post-employment benefit obligation.
The mortality rate is based on the rates given under Indian Assured Lives Mortality (200608) Ultimate. Those mortality tables tend to change only at interval in response to demographic changes. Future salary increases and gratuity increases are based on expected future inflation rates.
Further details about gratuity obligations are given in note 28.
e. Fair value measurement of financial instruments
When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques
including the discounted cash flow (âDCFâ) model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments. See note 34 & 35 for further disclosures.
f. Impairment of non-financial assets
Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at armâs length, for similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a DCF model. The cash flows are derived from the projections for the next three to five years and do not include restructuring
activities that the Company is not yet committed to or significant future investments that will enhance the assetâs performance of the CGU being tested. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes.
g. Impairment of other financial assets
For recognition of impairment loss on other financial assets (other than trade receivables or contract revenue receivables) and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the Company reverts to recognising impairment loss allowance based on 12-month ECL.
Mar 31, 2022
1. Corporate information
The Company provides critical business operations services to global Fortune 500 clients, including several of the worldâs leading companies across financial services, cable and telecommunications, retail, fashion, media & entertainment, manufacturing, travel and leisure, software and high-tech. The Company provides innovative business process management, change management, data-driven insights, advanced analytics powered by subject matter experts and smart automation. The Company is domiciled in India and has its registered office at Mumbai, Maharashtra, India.
The standalone financial statements for the year ended March 31, 2022 were authorised for issue in accordance with a resolution of the board of directors on May 24, 2022.
2. A. Significant accounting policies2.1 Basis of preparation
The financial statements of the Company have been prepared in accordance with Indian Accounting Standards (âInd ASâ) notified under the Companies (Indian Accounting Standards) Rules, 2015, as amended from time to time and presentation requirements of Division II of Schedule III to the Companies Act, 2013, (Ind AS compliant Schedule III), as applicable to the Companyâs financial statements.
The financial statements have been prepared on a historical cost basis, except for the following assets and liabilities which have been measured at fair value :
⢠Derivative financial instruments
⢠Certain financial assets and liabilities measured at fair value (refer accounting policy regarding financial instruments)
⢠Share based payments
The standalone financial statements are presented in (âRs.â) and all values are stated Rs. in million, except when otherwise indicated.
Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.
2.2. Summary of significant accounting policiesa. Foreign currencies
The Companyâs financial statements are presented in Indian Rupees (âRs.â), which is also the Companyâs functional currency.
Transactions in foreign currencies are initially recorded by the Company in its functional currency using spot rates at the date the transaction first qualifies for recognition. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at exchange rates at the reporting date.
Exchange differences arising on settlement or translation of monetary items are recognised in profit or loss.
The Company measures financial instruments such as derivatives and certain investments, at fair value at each balance sheet date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
⢠In the principal market for the asset or liability or,
⢠In the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their best economic interest.
A fair value measurement of a non-financial asset takes into account a market participantâs ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for
which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
⢠Level 1 â Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
⢠Level 2 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.
⢠Level 3 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
This note summarises accounting policy for fair value. Other fair value related disclosures are given in the relevant notes.
Revenue is recognised upon transfer of control of promised products or services to the customers in an amount that reflects the consideration which the Company expects to receive in exchange for those products or services.
Arrangement with customers for services rendered by the Company are either on time and material or on fixed price basis. Revenue from contracts on time-and-material basis is recognised as the related services are performed. Revenue from fixed-price contracts where the performance obligations are satisfied over time and where there is no uncertainty as to measurement or collectability of consideration, is recognised as per the percentage-of-completion method. Efforts expended have been used to measure progress towards completion as there is a direct relationship between input and productivity. When there is uncertainty as to measurement or ultimate collectability, revenue recognition is postponed until such uncertainty is resolved. Revenue from maintenance contracts are recognised on pro-rata basis over the period of the contract.
Revenue is measured based on the transaction price, which is the consideration, adjusted for volume discounts and other variable considerations, if any, as specified in the contracts with the customers.
Contract modifications are accounted for when additions, deletions or changes are approved either to the contract scope or contract price. The accounting for modifications of contracts involves assessing whether the services added to an existing contract are distinct and whether the pricing is at the standalone selling price. Services added that are not distinct are accounted for on a cumulative catch up basis, while those that are distinct are accounted for prospectively, either as a separate contract, if the additional services are priced at the standalone selling price, or as a termination of the existing contract and creation of a new contract if not priced at the standalone selling price.
The Company presents revenue net of indirect taxes in its standalone statement of profit and loss.
Revenue in excess of billing is classified as contract asset i.e. unbilled revenue while billing in excess of revenue is classified as contract liability i.e. deferred revenue. Advance billing is shown as contract liabilities under other current financial liabilities. Contract assets are classified as unbilled receivables when there is unconditional right to receive cash, and only passage of time is required, as per contractual terms. Unbilled Revenues are classified as non-financial asset if the contractual right to consideration is dependent on completion of contractual milestones.
The billing schedules agreed with customers include periodic performance based payments and / or milestone based progress payments. Invoices are payable within the contractually agreed period.
Deferred contract costs are incremental costs of obtaining a contract which are recognised as assets and amortized over the benefit period.
For all financial instruments measured at amortised cost, interest income is recorded using the effective interest rate (âEIRâ), which is the rate that exactly discounts the estimated future cash payments or receipts through the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument but does not consider the expected credit losses.
Dividend income is recognised when Companyâs right to receive dividend is established by the reporting date.
Government grants are recognised when there is reasonable assurance that grant will be received and all attached conditions will be complied with.
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted, at the reporting date in India where the Company operates and generates taxable income.
Current income tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in Other comprehensive income (âOCIâ) or in equity). Current tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate. Significant judgments are involved in determining the provision for income taxes, including amount expected to be paid / recovered for uncertain tax positions. Also, refer to Notes 30.c and 38.
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax liabilities are recognised for all taxable temporary differences, except:
⢠When the deferred tax liability arises from an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss
⢠In respect of taxable temporary differences associated with investments in subsidiaries when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised, except:
⢠When the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Deferred tax relating to items recognised outside profit or loss is recognised outside
profit or loss (either in OCI or in equity). Deferred tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
e. Property, plant and equipment
Property, plant and equipment (âPPEâ) are stated at the cost of acquisition including incidental costs related to acquisition and installation less accumulated depreciation and impairment loss, if any.
Advances paid towards acquisition of property, plant and equipment are disclosed as capital advances under other non - current assets.
Capital work-in-progress includes cost of property, plant and equipment under installation/ under development as at the balance sheet date and are carried at cost, comprising of direct cost and directly attributable cost.
Gains or losses arising from disposal of property, plant and equipment are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the statement of profit and loss when the asset is disposed.
The Company provides depreciation on property, plant and equipment (other than leasehold improvements) using the Written Down Value method. The rates of depreciation are arrived at, based on useful lives estimated by the management as follows:
Block of assets |
Estimated useful life (in years) |
Office equipment |
5 |
Furniture and fixtures |
10 |
Computers |
3-6 |
Leasehold improvements |
Lease term |
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
Intangible assets acquired separately are
measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses, if any.
The useful lives of intangible assets are assessed as either finite or indefinite. There are no intangible assets assessed with indefinite useful life.
Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the statement of profit and loss unless such expenditure forms part of carrying value of another asset.
Gain or losses arising from the derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the statement of profit and loss when the asset is derecognised.
Intangible assets are amortised on straightline basis as follows:
Block of assets |
Estimated useful life (in years) |
Computer softwares |
1-5 |
g. Research and development expenses for software product
Research expenses for software product are expensed as incurred. Software product development cost are expensed as incurred unless technical feasibility of project is established, further economic benefit are probable, the Company has an intention and ability to complete and use or sell the software and the cost can be measured reliably. The cost which can be captialised include the cost of material, direct labor and overhead cost that are directly attributable to preparing the asset for its intended use.
h. LeasesThe Company as lessee
The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the inception date. The arrangement is, or contains a lease if, fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.
The Company recognises right-of-use asset and a corresponding lease liability for all lease arrangements in which the Company is a lessee, except for a short term lease of 12 months or less and leases of lowvalue assets. For short term lease and low-value asset arrangements, the Company recognises the lease payments as an operating expense on straight-line basis over the lease term.
Certain lease arrangements include the options to extend or terminate the lease before the end of the lease arrangement. Right-of-use assets and lease liabilities are measured according to such options when it is reasonably certain that the Company will exercise these options.
The right-of-use asset are recognised at the inception of the lease arrangement at the amount of the initial measurement of lease liability adjusted for any lease payments made at or before the commencement date of lease arrangement reduced by any lease incentives received, added by initial direct costs incurred and an estimate of costs to be incurred by the Company in dismantling and removing the underlying asset or restoring the underlying asset or site on which it is located. The right-of-use assets are depreciated using the straightline method from the commencement date over the shorter of lease term or useful life of right-of-use asset. Estimated useful life of right-of-use assets is determined on the basis of useful life of property, plant and equipment. Right-of-use assets are tested for impairment whenever there is an indication that their carrying value may not be recoverable. Impairment loss, if any is recognised in the statement of profit and loss account.
The lease liability is measured at amortized cost, at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease arrangement or, if not readily determinable,
at the incremental borrowing rate in the country of domicile of such leases. Lease liabilities are remeasured with corresponding adjustments to right-of-use assets to reflect any reassessment or lease modifications.
i. Impairment of non-financial assets
The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the assetâs recoverable amount. An assetâs recoverable amount is the higher of an assetâs or cash generating unitâs (âCGUâ) fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash flows that are largely independent of those from other assets or group of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators. The Company bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the Companyâs CGUs to which the individual assets are allocated.
For assets excluding goodwill, an assessment is made at each reporting date to determine whether there is an indication that previously recognised impairment losses no longer exists or have decreased. If such indication exists, the Company estimates the assetâs or CGUâs recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the assetâs recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the statement of profit and loss.
j. Provisions and contingencies
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Company expects some or all of a provision to be reimbursed, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the statement of profit and loss net of any reimbursement.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made. Contingent liabilities are disclosed in the notes.
k. Retirement and other employee benefits Provident Fund
Retirement benefit in the form of provident fund is a defined contribution scheme. Both the employee and the employer make monthly contributions to the plan at a predetermined rate of the employeesâ basic salary. These contributions are made to the fund administered and managed by the Government of India. The Company recognises contribution payable to the provident fund scheme as an expense, when an employee renders the related service. The Company has no further obligations under these plans beyond its monthly contributions.
The Company operates a defined benefit gratuity plan, which requires contributions to be made to a separately administered fund with the insurance service provider. The cost of providing benefits under the defined benefit plan is determined using the projected unit credit method, with actuarial valuations being carried out at periodic intervals.
Re-measurements, comprising of actuarial gains and losses and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability), are recognised immediately in the balance sheet with a corresponding charge or credit to retained earnings through OCI in the period in which they occur. Re-measurements are not reclassified to statement of profit and loss in subsequent periods.
Past service costs are recognised in profit or loss on the earlier of:
⢠The date of the plan amendment or curtailment, and
⢠The date that the Company recognises related restructuring costs
Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. The Company recognises the following changes in the net defined benefit obligation as an expense in the statement of profit and loss:
⢠Service costs comprising current service costs; and
⢠Net interest expense or income
Accumulated leave, which is expected to be utilised within the next 12 months, is treated as short-term employee benefit. The Company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date. The Company treats accumulated leave expected to be carried forward beyond twelve months, as long-term employee benefit for measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the year-end. The Company treats the entire leave as current liability in the balance sheet, since it does not have an unconditional right to defer its settlement for 12 months after the reporting date.
The Code on Social Security, 2020 relating to employee benefits during the employment and post- employment benefits received Presidentâs assent on September 28, 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified. The Company will assess and record the impact of the Code, if any, when it becomes effective.
Employees of the Company receive remuneration in the form of share-based payments, whereby employees render services as consideration for equity instruments (equity-settled transactions).
The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model. The cost is recognised, together with a corresponding increase in share-based payment (âSBPâ) reserves in equity, over the period in which the performance and/ or service conditions are fulfilled in employee benefits expense. The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Companyâs best estimate of the number of equity instruments that will ultimately vest. The statement of profit and loss expense or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period and is recognised in employee benefits expense.
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. The Company recognises a financial asset or a liability in its balance sheet only when the entity becomes party to the contractual provisions of the instrument.
Financial assetsInitial recognition and measurement
All financial assets are recognised initially at fair value plus, in the case of financial assets
not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset.The Company has accounted for its investment in subsidiaries at cost, less impairment, if any.
For purposes of subsequent measurement financial assets are classified into three categories:
⢠Financial assets at fair value through OCI
⢠Financial assets at fair value through profit or loss
⢠Financial assets at amortised cost
Where assets are measured at fair value, gains and losses are either recognised entirely in the statement of profit and loss (i.e. fair value through profit or loss), or recognised in other comprehensive income (i.e. fair value through other comprehensive income).
A financial asset that meets the following two conditions is measured at amortised cost (net of any write down for impairment) unless the asset is designated at fair value through profit or loss (âFVTPLâ) under the fair value option.
⢠Business model test: The objective of the Companyâs business model is to hold the financial asset to collect the contractual cash flows (rather than to sell the instrument prior to its contractual maturity to realise its fair value changes).
⢠Cash flow characteristics test: The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest (âSPPIâ) on the principal amount outstanding.
This category is the most relevant to the Company. After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (âEIRâ) method. The EIR amortisation is included in finance income in the profit or loss. The losses arising from impairment are recognised in the profit or loss.
A financial asset is classified as at the Financial assets measured at Fair value through other comprehensive income (âFVTOCIâ) if both of the following criteria are met:
⢠The objective of the business model is achieved both by collecting contractual cash flows and selling the financial assets, and
⢠The assetâs contractual cash flows represent SPPI.
A financial asset included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are recognised in the OCI. On derecognition of the asset, cumulative gain or loss previously recognised in OCI is reclassified from the equity to P&L.
FVTPL is a residual category for financial assets. Any instrument, which does not meet the criteria for categorization as at amortized cost or as FVTOCI, is classified as at FVTPL. In addition, the Company may elect to designate a financial asset, which otherwise meets amortized cost or FVTOCI criteria, as at FVTPL. However, such election is allowed only if doing so reduces or eliminates a measurement or recognition inconsistency (referred to as âaccounting mismatchâ). Financial assets included within the FVTPL category are measured at fair value with all changes recognised in the P&L.
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e. removed from the Companyâs statement of financial position) when:
⢠The rights to receive cash flows from the asset have expired, or
⢠The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a âpass-throughâ arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognise the transferred asset to the extent of the Companyâs continuing involvement. In that case, the Company also recognises an
associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay.
Impairment of financial assets
The Company assesses impairment based on expected credit losses (âECLâ) model to the following:
⢠Financial assets measured at amortised cost; and
⢠Financial assets measured at FVTOCI
Expected credit losses (âECLâ) are measured through a loss allowance at an amount equal to:
⢠the 12-month expected credit losses (expected credit losses that result from those default events on the financial instrument that are possible within 12 months after the reporting date); or
⢠full lifetime expected credit losses (expected credit losses that result from all possible default events over the life of the financial instrument).
For trade receivables or contract revenue receivables, the Company follows âsimplified approachâ for recognition of impairment loss allowance.
Under the simplified approach, the Company does not track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
As a practical expedient, the Company uses a provision matrix to determine impairment loss allowance on the portfolio of trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivable 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 analysed.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has
been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the Company reverts to recognising impairment loss allowance based on 12-month ECL.
For assessing increase in credit risk and impairment loss, the Company combines financial instruments on the basis of shared credit risk characteristics with the objective of facilitating an analysis that is designed to enable significant increases in credit risk to be identified on a timely basis.
Financial liabilitiesInitial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, payables, or derivatives as appropriate or as derivatives designated as hedging instruments in an effective hedge as appropriate. All financial liabilities are recognised initially at fair value and, in the case of payables, net of directly attributable transaction costs.
The Company measures all financial liabilities at amortised cost using the Effective Interest Rate (âEIRâ) method except for financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. Financial liabilities held for trading are measured at fair value through profit and loss. The Company has not designated any financial liability as at fair value through profit or loss.
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the
balance sheet if there is a current enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
n. Derivative financial instruments and hedge accountingInitial recognition and subsequent measurement
The Company enters into derivative contracts to hedge foreign currency/price risk on highly probable forecast transactions. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
Any gains or losses arising from changes in the fair value of derivatives are recorded in the statement of profit or loss, except for the effective portion of cash flow hedges, which is recognised in other comprehensive income (âOCIâ) and later reclassified to profit or loss when the hedge item affects profit or loss.
At the inception of a hedge relationship, the Company formally designates and documents the hedge relationship to which the Company wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge. The documentation includes the Companyâs risk management objective and strategy for undertaking hedge, the hedging/ economic relationship, the hedged item or transaction, the nature of the risk being hedged, hedge ratio and how the entity will assess the effectiveness of changes in the hedging instrumentâs fair value in offsetting the exposure to changes in the hedged itemâs cash flows attributable to the hedged risk. Such hedges are expected to be highly effective in achieving offsetting changes in cash flows and are assessed on an ongoing basis to determine that they actually have been highly effective throughout the financial reporting periods for which they were designated.
Hedges that meet the strict criteria for hedge accounting are accounted for, as described below:
The effective portion of the gain or loss on the hedging instrument is recognised in OCI
in the cash flow hedge reserve, while any ineffective portion is recognised immediately in the statement of profit and loss.
The Company uses forward currency contracts as hedges of its exposure to foreign currency risk in forecast transactions. The ineffective portion relating to foreign currency contracts is recognised in other income or expenses.
Amounts recognised as OCI are transferred to profit or loss when the hedged transaction affects profit or loss, such as when a forecast sale occurs.
If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover (as part of the hedging strategy), or if its designation as a hedge is revoked, or when the hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss previously recognised in OCI remains separately in equity until the forecast transaction occurs.
The Company has created an Employee Benefit Trust (âEBTâ) for providing share-based payment to its employees. The Company uses EBT as a vehicle for distributing shares to employees under the employee remuneration schemes. The EBT buys shares of the Company from the market, for giving shares to employees. The shares held by EBT are treated as treasury shares.
Own equity instruments that are reacquired (treasury shares) are recognised at cost and deducted from equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Groupâs own equity instruments. Any difference between the carrying amount and the consideration, if reissued / sold, is recognised in other equity (General Reserve).
Cash and cash equivalents comprise cash at bank and short term investments with an original maturity of three months or less which are subject to an insignificant risk of changes in value.
q. Cash dividend to equity holders of the Company
The Company recognises a liability to make cash or non-cash distributions to equity share holders when the distribution is authorised and
the distribution is no longer at the discretion of the Company. As per the corporate laws in India, a distribution of interim dividend is authorised when it is approved by the Board of Directors and final dividend is authorised when it is approved by the shareholders of the Company. A corresponding amount is recognised directly in equity.
The earnings considered in ascertaining the Companyâs earnings per share comprise the net profit after tax. The number of shares used in computing basic earnings per share are the weighted average number of shares outstanding during the year. The number of shares used in computing diluted earnings per share comprises the weighted average number of shares considered for deriving basic earnings per share, and also the weighted average number of shares, if any which would have been issued on the conversion of all dilutive potential equity shares. For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.
2.B. Significant accounting judgements, estimates and assumptions
The preparation of the Companyâs standalone financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the standalone financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.
The Company uses the percentage-of-completion method in accounting for its fixed-price contracts. Use of the percentage-of-completion method requires the Company to estimate the efforts expended to date as a proportion of the total efforts to be expended.
Judgement is also required to determine transaction price for the contract. The transaction price could be either a fixed amount of customer consideration or variable consideration with elements such as volume discounts, service level credits etc. The estimated amount of variable consideration is adjusted in the transaction price only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur and is reassessed at the end of each reporting period.
The Company has entered into commercial property leases for its offices. Further, the Company has also adopted Ind AS 116 âLeasesâ with effect from April 1, 2019 using the modified retrospective method.
The Company evaluates if an arrangement qualifies to be a lease as per the requirements of Ind AS 116. Identification of a lease requires significant judgment. The Company uses significant judgement in assessing the lease term and the applicable discount rate. The Company has lease contracts which include extension and termination option and this requires exercise ofjudgement by the Company in evaluating whether it is reasonably certain whether or not to exercise the option to renew or terminate the lease. The discount rate is generally based on the incremental borrowing rate specific to the lease period.
The Company measures share-based payments and transactions at fair value and recognises over the vesting period using Black Scholes valuation model. Estimating fair value for share-based payment transactions requires determination of the most appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimate also requires determination of the most appropriate inputs to the valuation model including the expected life of the share option, volatility and dividend yield and making
assumptions about them. This requires a reassessment of the estimates used at the end of each reporting period. The Company is applying forfeiture rate based on historical trend. The assumptions and models used for estimating fair value for share-based payment transactions are disclosed in note 29.
d. Defined benefit plans (gratuity benefits)
The cost of the defined benefit gratuity plan and the present value of the gratuity obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
The parameter most subject to change is the discount rate. In determining the appropriate discount rate, the management considers the interest rates of government bonds in currencies consistent with the currencies of the post-employment benefit obligation.
The mortality rate is based on the rates given under Indian Assured Lives Mortality (200608) Ultimate. Those mortality tables tend to change only at interval in response to demographic changes. Future salary increases and gratuity increases are based on expected future inflation rates.
Further details about gratuity obligations are given in note 28.
e. Fair value measurement of financial instruments
When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the discounted cash flow (âDCFâ) model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments. See note 34 & 35 for further disclosures.
f. Impairment of non-financial assets
Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at armâs length, for similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a DCF model. The cash flows are derived from the projections for the next three to five years and do not include restructuring activities that the Company is not yet committed to or significant future investments that will enhance the assetâs performance of the CGU being tested. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes.
g. Impairment of financial assets
For recognition of impairment loss on other financial assets (other than trade receivables or contract revenue receivables) and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the Company reverts to recognising impairment loss allowance based on 12-month ECL.
2.C. Estimation of uncertainties relating to the global health pandemic from 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 revenue, investment in subsidiaries, intangible assets, other financial assets, revenues and costs, leases and its hedging program. In assessing the recoverability of its assets, the Company has used internal and external sources of information up to the date of approval of these standalone financial results and expects to recover the net carrying amount of its assets. The Company also expects the demand for services to remain volatile for some more time. However, the actual impact of COVID-19 on the Companyâs financial statements may differ from that estimated and the Company will continue to closely monitor any material changes to future economic conditions.
Mar 31, 2021
1. Corporate information
The Company provides critical business operations services to global Fortune 500 clients, including several of the world''s leading companies across financial services, cable and telecommunications, retail, fashion, media & entertainment, manufacturing, travel and leisure, software and high-tech. The Company provides innovative business process management, change management, data-driven insights, advanced analytics powered by subject matter experts and smart automation. The Company is domiciled in India and has its registered office at Mumbai, Maharashtra, India.
The standalone financial statements for the year ended March 31, 2021 were authorised for issue in accordance with a resolution of the board of directors on June 10, 2021.
2. A. Significant accounting policies2.1 Basis of preparation
The financial statements of the Company have been prepared in accordance with Indian Accounting Standards ("Ind ASâ) notified under the Companies (Indian Accounting Standards) Rules, 2015, as amended from time to time and presentation requirements of Division II of Schedule III to the Companies Act, 2013, (Ind AS compliant Schedule III), as applicable to the Company''s financial statements.
The financial statements have been prepared on a historical cost basis, except for the following assets and liabilities which have been measured at fair value :
⢠Derivative financial instruments
⢠Certain financial assets and liabilities measured at fair value (refer accounting policy regarding financial instruments)
⢠Share based payments
The standalone financial statements are presented in "Rs." and all values are stated Rs. in million, except when otherwise indicated.
Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.
2.2. Summary of significant accounting policiesa. Foreign currencies
The Company''s financial statements are presented in Indian Rupees ("Rs.â), which is also the Company''s functional currency.
Transactions in foreign currencies are initially recorded by the Company in its functional currency using spot rates at the date the transaction first qualifies for recognition. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at exchange rates at the reporting date.
Exchange differences arising on settlement or translation of monetary items are recognised in profit or loss.
The Company measures financial instruments such as derivatives and certain investments, at fair value at each balance sheet date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
⢠In the principal market for the asset or liability or,
⢠In the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their best economic interest.
A fair value measurement of a non-financial asset takes into account a market participant''s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that
are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
⢠Level 1 â Quoted (unadjusted) market prices in active markets for identical assets or liabilities
⢠Level 2 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
⢠Level 3 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
This note summarises accounting policy for fair value. Other fair value related disclosures are given in the relevant notes.
Revenue is recognised upon transfer of control of promised products or services to the customers in an amount that reflects the consideration which the Company expects to receive in exchange for those products or services.
Arrangement with customers for services rendered by the Company are either on time and material or on fixed price basis. Revenue from contracts on time-and-material basis is recognised as the related services are performed. Revenue from fixed-price contracts where the performance obligations are satisfied over time and where there is no uncertainty as to measurement or collectability of consideration, is recognised as per the percentage-of-completion method. Efforts expended have been used to measure progress towards completion as there is a direct relationship between input and productivity. When there is uncertainty as to measurement or ultimate collectability, revenue recognition is postponed until such uncertainty is resolved. Revenue from maintenance contracts are recognised on pro-rata basis over the period of the contract.
Revenue is measured based on the transaction price, which is the consideration, adjusted for volume discounts and other variable considerations, if any, as specified in the contracts with the customers.
Contract modifications are accounted for when additions, deletions or changes are approved either to the contract scope or contract price. The accounting for modifications of contracts involves assessing whether the services added to an existing contract are distinct and whether the pricing is at the standalone selling price. Services added that are not distinct are accounted for on a cumulative catch up basis, while those that are distinct are accounted for prospectively, either as a separate contract, if the additional services are priced at the standalone selling price, or as a termination of the existing contract and creation of a new contract if not priced at the standalone selling price.
The Company presents revenue net of indirect taxes in its standalone statement of profit and loss.
Revenue in excess of billing is classified as contract asset i.e. unbilled revenue while billing in excess of revenue is classified as contract liability i.e. deferred revenue. Advance billing is shown as contract liabilities under other current financial liabilities. Contract assets are classified as unbilled receivables when there is unconditional right to receive cash, and only passage of time is required, as per contractual terms. Unbilled Revenues are classified as non-financial asset if the contractual right to consideration is dependent on completion of contractual milestones.
The billing schedules agreed with customers include periodic performance based payments and / or milestone based progress payments. Invoices are payable within the contractually agreed period.
Deferred contract costs are incremental costs of obtaining a contract which are recognised as assets and amortized over the benefit period.
For all financial instruments measured at amortised cost, interest income is recorded using the effective interest rate (âEIR"), which is the rate that exactly discounts the estimated future cash payments or receipts through the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument but does not consider the expected credit losses.
Dividend income is recognised when Company''s right to receive dividend is established by the reporting date.
Government grants are recognised when there is reasonable assurance that grant will be received and all attached conditions will be complied with.
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted, at the reporting date in India where the Company operates and generates taxable income.
Current income tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in Other comprehensive income (â"OCI"") or in equity). Current tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate. Significant judgments are involved in determining the provision for income taxes, including amount expected to be paid / recovered for uncertain tax positions. Also, refer to Notes 31.c and 39.
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax liabilities are recognised for all taxable temporary differences, except:
⢠When the deferred tax liability arises from an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss
⢠In respect of taxable temporary differences associated with investments in subsidiaries when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised, except:
⢠When the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Deferred tax relating to items recognised
outside profit or loss is recognised outside profit or loss (either in OCI or in equity). Deferred tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
Appendix C to Ind AS 12 Uncertainty over Income Tax Treatments
The Appendix addresses the accounting for income taxes when tax treatments involve uncertainty that affects the application of Ind AS 12 Income Taxes and does not apply to taxes or levies outside the scope of Ind AS 12, nor does it specifically include requirements relating to interest and penalties associated with uncertain tax treatments. The interpretation specifically addresses the following:
i) Whether an entity considers uncertain tax treatments separately
ii) The assumptions an entity makes about the examination of tax treatments by taxation authorities
iii) How an entity determines taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates
iv) How an entity considers changes in facts and circumstances
An entity has to determine whether to consider each uncertain tax treatment separately or together with one or more other uncertain tax treatments. The approach that better predicts the resolution of the uncertainty should be followed. In determining the approach that better predicts the resolution of the uncertainty, an entity might consider, for example, (a) how it prepares its income tax filings and supports tax treatments; or (b) how the entity expects the taxation authority to make its examination and resolve issues that might arise from that examination.
The amendment is effective from April 1, 2019. The Company has evaluated the effect of the Appendix C to Ind AS 12 on the financial statements and an amount of Rs.16.46 million was debited to retained earnings on April 01 2019. There is no significant impact of the Appendix on the statement of profit and loss for the years ended March 31, 2021 and March 31, 2020.
e. Property, plant and equipment
Property, plant and equipment (âPPE") are stated at the cost of acquisition including incidental costs related to acquisition and installation less accumulated depreciation and impairment loss, if any.
Advances paid towards acquisition of property, plant and equipment are disclosed as capital advances under other non - current assets.
Capitalwork-in-progressincludescostofproperty, plant and equipment under installation/ under development as at the balance sheet date and are carried at cost, comprising of direct cost and directly attributable cost.
Gains or losses arising from disposal of property, plant and equipment are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the statement of profit and loss when the asset is disposed.
The Company provides depreciation on property, plant and equipment (other than leasehold improvements) using the Written Down Value method. The rates of depreciation are arrived at, based on useful lives estimated by the management as follows:
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
f. Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses, if any.
The useful lives of intangible assets are assessed as either finite or indefinite. There are no intangible assets assessed with indefinite useful life.
Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the statement of profit and loss unless such expenditure forms part of carrying value of another asset.
Gain or losses arising from the derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the statement of profit and loss when the asset is derecognised.
Intangible assets are amortised on straightline basis as follows:
Block of assets |
Estimated useful life (in years) |
Computer softwares |
1-5 |
g. Research and development expenses for software product
Research expenses for software product are expensed as incurred. Software product development cost are expensed as incurred unless technical feasibility of project is established, further economic benefit are probable, the Company has an intention and ability to complete and use or sell the software and the cost can be measured reliably. The cost which can be captialised include the cost of material, direct labor and overhead cost that are directly attributable to preparing the asset for its intended use.
h. Leases
The Company as lessee
The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the inception date. The arrangement is, or contains a lease if, fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.
The Company recognises right-of-use asset and a corresponding lease liability for all lease arrangements in which the Company is a lessee, except for a short term lease of 12 months or less and leases of low value assets. For short term lease and low-value asset arrangements, the Company recognises the lease payments as an operating expense on straight-line basis over the lease term.
Certain lease arrangements include the options to extend or terminate the lease before the end of the lease arrangement. Right-of-use assets and lease liabilities are measured according to such options when it is reasonably certain that the Company will exercise these options.
The right-of-use asset are recognised at the inception of the lease arrangement at the amount of the initial measurement of lease liability adjusted for any lease payments made at or before the commencement date of lease arrangement reduced by any lease incentives received, added by initial direct costs incurred and an estimate of costs to be incurred by the Company in dismantling and removing the underlying asset or restoring the underlying asset or site on which it is located. The right-of-use assets are depreciated using the straightline method from the commencement date over the shorter of lease term or useful life of right-of-use asset. Estimated useful life of right-of-use assets is determined on the basis of useful life of property, plant and equipment. Right-of-use assets are tested for impairment whenever there is an indication that their carrying value may not be recoverable. Impairment loss, if any is recognised in the statement of profit and loss account.
The lease liability is measured at amortized cost, at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease arrangement or, if not readily determinable, at the incremental borrowing rate in the country of domicile of such leases. Lease liabilities are remeasured with corresponding adjustments to right-of-use assets to reflect any reassessment or lease modifications.
The Company had adopted Ind AS 116 âLeases'' with effect from 1 April 2019 using the modified retrospective method. Cumulative effect of initially applying the standard had been recognised on the date of initial application and hence the Company had not restated comparative information. The Company had recorded Lease liability at the present value of the future lease payments discounted at the incremental borrowing rate and the right-of-use asset at its carrying amount as if the standard had been applied since the commencement date of the lease, but discounted at the incremental borrowing rate at the date of initial application.
The Company had selected practical expedient for the following:
a) Not recognising right-of-use asset and lease liability for leases having a lease term of 12 months or less as on date of initial application and leases of low-value assets. The Company recognises the lease payments associated with such leases as an expense over the lease term.
b) Excluded the initial direct cost from the measurement of the right of use asset at the date of initial application.
c) Ind AS 116 is applied only to those contracts that were previously identified as leases under Ind AS 17.
Accordingly, the Company had recognised right-of-use asset of Rs.884.30 million and a lease liability of Rs.1,091.65 million in the financial statements on the date of initial application. The cumulative effect of applying the standard, amounting to Rs.48.34 million was debited to opening retained earnings, net of taxes. Due to adoption of Ind AS 116, the nature of expenses changed from rent in previous periods to depreciation cost on right-of-use asset and finance cost for interest on lease liability. The effect of this standard is not significant on the profit for the year of the Company. Further as per Ind AS 116, the principal portion of lease payments and interest on lease liability has been disclosed under the cash outflow from financing activities. Operating lease payments as per Ind AS 17 - Leases were disclosed under the cash outflow from operating activities.
i. Impairment of non-f inancial assets
The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset''s recoverable amount. An asset''s recoverable amount is the higher of an asset''s or cash generating unit''s (âCGU") fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash flows that are largely independent of those from other assets or group of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators.The Company bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the Company''s CGUs to which the individual assets are allocated.
For assets excluding goodwill, an assessment is made at each reporting date to determine whether there is an indication that previously recognised impairment losses no longer exists or have decreased. If such indication exists, the Company estimates the asset''s or CGU''s recoverable amount. A previously recognised impairment loss is reversed only if there has been a change in the assumptions used to determine the asset''s recoverable amount since the last impairment loss was recognised. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in the statement of profit and loss.
j. Provisions and contingencies
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Company expects some or all of a provision to be reimbursed, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented
in the statement of profit and loss net of any reimbursement.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made. Contingent liabilities are disclosed in the notes.
k. Retirement and other employee benefits Provident Fund
Retirement benefit in the form of provident fund is a defined contribution scheme. Both the employee and the employer make monthly contributions to the plan at a predetermined rate of the employees'' basic salary. These contributions are made to the fund administered and managed by the Government of India. The Company recognises contribution payable to the provident fund scheme as an expense, when an employee renders the related service. The Company has no further obligations under these plans beyond its monthly contributions.
The Company operates a defined benefit gratuity plan, which requires contributions to be made to a separately administered fund with the insurance service provider. The cost of providing benefits under the defined benefit plan is determined using the projected unit credit method, with actuarial valuations being carried out at periodic intervals.
Re-measurements, comprising of actuarial gains and losses and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability), are recognised immediately in the balance sheet with a corresponding charge or credit to retained earnings through OCI in the period in which they occur. Re-measurements are not reclassified to statement of profit and loss in subsequent periods.
Past service costs are recognised in profit or loss on the earlier of:
⢠The date of the plan amendment or curtailment, and
⢠The date that the Company recognises related restructuring costs
Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. The Company recognises the following changes in the net defined benefit obligation as an expense in the statement of profit and loss:
⢠Service costs comprising current service costs; and
⢠Net interest expense or income Compensated Absences
Accumulated leave, which is expected to be utilised within the next 12 months, is treated as short-term employee benefit. The Company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date. The Company treats accumulated leave expected to be carried forward beyond twelve months, as long-term employee benefit for measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the year-end. The Company treats the entire leave as current liability in the balance sheet, since it does not have an unconditional right to defer its settlement for 12 months after the reporting date.
The Code on Social Security, 2020 relating to employee benefits during the employment and post- employment benefits received President''s assent on September 28, 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified. The Company will assess and record the impact of the Code, if any, when it becomes effective.
Employees of the Company receive remuneration in the form of share-based payments, whereby employees render services as consideration for equity instruments (equity-settled transactions).
The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate
valuation model. The cost is recognised, together with a corresponding increase in share-based payment (âSBP") reserves in equity, over the period in which the performance and/ or service conditions are fulfilled in employee benefits expense. The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Company''s best estimate of the number of equity instruments that will ultimately vest. The statement of profit and loss expense or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period and is recognised in employee benefits expense.
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. The Company recognises a financial asset or a liability in its balance sheet only when the entity becomes party to the contractual provisions of the instrument.
Financial assetsInitial recognition and measurement
All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset.The Company has accounted for its investment in subsidiaries at cost, less impairment, if any.
For purposes of subsequent measurement financial assets are classified into three categories:
⢠Financial assets at fair value through OCI
⢠Financial assets at fair value through profit or loss
⢠Financial assets at amortised cost"
Where assets are measured at fair value, gains and losses are either recognised entirely in the statement of profit and loss (i.e. fair value through profit or loss), or recognised in other comprehensive income (i.e. fair value through other comprehensive income).
A financial asset that meets the following two conditions is measured at amortised cost (net of any write down for impairment) unless the
asset is designated at fair value through profit or loss (âFVTPL") under the fair value option.
⢠Business model test: The objective of the Company''s business model is to hold the financial asset to collect the contractual cash flows (rather than to sell the instrument prior to its contractual maturity to realise its fair value changes).
⢠Cash flow characteristics test: The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest (âSPPI") on the principal amount outstanding.
This category is the most relevant to the Company. After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate (âEIR") method. The EIR amortisation is included in finance income in the profit or loss. The losses arising from impairment are recognised in the profit or loss.
A financial asset is classified as at the Financial assets measured at Fair value through other comprehensive income (â"FVTOCI"") if both of the following criteria are met:
⢠The objective of the business model is achieved both by collecting contractual cash flows and selling the financial assets, and
⢠The asset''s contractual cash flows represent SPPI.
A financial asset included within the FVTOCI category are measured initially as well as at each reporting date at fair value. Fair value movements are recognised in the OCI. On derecognition of the asset, cumulative gain or loss previously recognised in OCI is reclassified from the equity to P&L.
FVTPL is a residual category for financial assets. Any instrument, which does not meet the criteria for categorization as at amortized cost or as FVTOCI, is classified as at FVTPL. In addition, the Company may elect to designate a financial asset, which otherwise meets amortized cost or FVTOCI criteria, as at FVTPL. However, such election is allowed only if doing so reduces or eliminates a measurement or recognition inconsistency (referred to as âaccounting mismatch''). Financial assets included within the FVTPL category are measured at fair value with all changes recognised in the P&L.
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognised (i.e. removed from the Company''s statement of financial position) when:
⢠The rights to receive cash flows from the asset have expired, or
⢠The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a âpassthrough'' arrangements and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognise the transferred asset to the extent of the Company''s continuing involvement. In that case, the Company also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay.
Impairment of financial assets
The Company assesses impairment based on expected credit losses (ââECL"") model to the following:
⢠Financial assets measured at amortised cost; and
⢠Financial assets measured at FVTOCI
Expected credit losses (ââECL"") are measured through a loss allowance at an amount equal to:
⢠the 12-month expected credit losses (expected credit losses that result from those default events on the financial
instrument that are possible within 12 months after the reporting date); or
⢠full lifetime expected credit losses (expected credit losses that result from all possible default events over the life of the financial instrument).
For trade receivables or contract revenue receivables, the Company follows âsimplified approach'' for recognition of impairment loss allowance.
Under the simplified approach, the Company does not track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
As a practical expedient, the Company uses a provision matrix to determine impairment loss allowance on the portfolio of trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivable 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 analysed.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the Company reverts to recognising impairment loss allowance based on 12-month ECL.
For assessing increase in credit risk and impairment loss, the Company combines financial instruments on the basis of shared credit risk characteristics with the objective of facilitating an analysis that is designed to enable significant increases in credit risk to be identified on a timely basis.
Financial liabilitiesInitial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, payables, or derivatives as appropriate or as derivatives designated ashedging instruments in an effective hedge as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of payables, net of directly attributable transaction costs.
The Company measures all financial liabilities at amortised cost using the Effective Interest Rate (âEIR") method except for financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. Financial liabilities held for trading are measured at fair value through profit and loss. The Company has not designated any financial liability as at fair value through profit or loss.
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a current enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
n. Derivative financial instruments and hedge accountingInitial recognition and subsequent measurement
The Company enters into derivative contracts to hedge foreign currency/price risk on highly probable forecast transactions. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
Any gains or losses arising from changes in the fair value of derivatives are recorded in the statement of profit or loss, except for the effective portion of cash flow hedges, which is recognised in other comprehensive income (âOCI") and later reclassified to profit or loss when the hedge item affects profit or loss.
At the inception of a hedge relationship, the Company formally designates and documents
the hedge relationship to which the Company wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge. The documentation includes the Company''s risk management objective and strategy for undertaking hedge, the hedging/ economic relationship, the hedged item or transaction, the nature of the risk being hedged, hedge ratio and how the entity will assess the effectiveness of changes in the hedging instrument''s fair value in offsetting the exposure to changes in the hedged item''s cash flows attributable to the hedged risk. Such hedges are expected to be highly effective in achieving offsetting changes in cash flows and are assessed on an ongoing basis to determine that they actually have been highly effective throughout the financial reporting periods for which they were designated.
Hedges that meet the strict criteria for hedge accounting are accounted for, as described below:
The effective portion of the gain or loss on the hedging instrument is recognised in OCI in the cash flow hedge reserve, while any ineffective portion is recognised immediately in the statement of profit and loss.
The Company uses forward currency contracts as hedges of its exposure to foreign currency risk in forecast transactions. The ineffective portion relating to foreign currency contracts is recognised in other income or expenses.
Amounts recognised as OCI are transferred to profit or loss when the hedged transaction affects profit or loss, such as when a forecast sale occurs.
If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover (as part of the hedging strategy), or if its designation as a hedge is revoked, or when the hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss previously recognised in OCI remains separately in equity until the forecast transaction occurs.
Cash and cash equivalents comprise cash at bank and short term investments with an original maturity of three months or less which are subject to an insignificant risk of changes in value.
p. Cash dividend to equity holders of the Company
The Company recognises a liability to make cash or non-cash distributions to equity share holders when the distribution is authorised and the distribution is no longer at the discretion of the Company. As per the corporate laws in India, a distribution of interim dividend is authorised when it is approved by the Board of Directors and final dividend is authorised when it is approved by the shareholders of the Company. A corresponding amount is recognised directly in equity.
The earnings considered in ascertaining the Company''s earnings per share comprise the net profit after tax. The number of shares used in computing basic earnings per share are the weighted average number of shares outstanding during the year. The number of shares used in computing diluted earnings per share comprises the weighted average number of shares considered for deriving basic earnings per share, and also the weighted average number of shares, if any which would have been issued on the conversion of all dilutive potential equity shares. For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.
2.B. Significant accounting judgements, estimates and assumptions
The preparation of the Company''s standalone financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the standalone financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to
market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.
a. Revenue recognition
The Company uses the percentage-of-completion method in accounting for its fixed-price contracts. Use of the percentage-of-completion method requires the Company to estimate the efforts expended to date as a proportion of the total efforts to be expended.
Judgement is also required to determine transaction price for the contract. The transaction price could be either a fixed amount of customer consideration or variable consideration with elements such as volume discounts, service level credits etc. The estimated amount of variable consideration is adjusted in the transaction price only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur and is reassessed at the end of each reporting period.
b. Leases
The Company has entered into commercial property leases for its offices. Further, the Company has also adopted Ind AS 116 âLeases'' with effect from April 1,2019 using the modified retrospective method.
The Company evaluates if an arrangement qualifies to be a lease as per the requirements of Ind AS 116. Identification of a lease requires significant judgment. The Company uses significant judgement in assessing the lease term and the applicable discount rate. The Company has lease contracts which include extension and termination option and this requires exercise of judgement by the Company in evaluating whether it is reasonably certain whether or not to exercise the option to renew or terminate the lease. The discount rate is generally based on the incremental borrowing rate specific to the lease period.
c. Share - based payments
The Company measures share-based payments and transactions at fair value and recognises over the vesting period using Black Scholes valuation model. Estimating fair value for share-based payment transactions requires determination of the most appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimate also requires determination of the
most appropriate inputs to the valuation model including the expected life of the share option, volatility and dividend yield and making assumptions about them. This requires a reassessment of the estimates used at the end of each reporting period. The Company is applying forfeiture rate based on historical trend. The assumptions and models used for estimating fair value for share-based payment transactions are disclosed in note 30.
d. Defined benefit plans (gratuity benefits)
The cost of the defined benefit gratuity plan and the present value of the gratuity obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
The parameter most subject to change is the discount rate. In determining the appropriate discount rate, the management considers the interest rates of government bonds in currencies consistent with the currencies of the post-employment benefit obligation.
he mortality rate is based on the rates given under Indian Assured Lives Mortality (2006-08) Ultimate. Those mortality tables tend to change only at interval in response to demographic changes. Future salary increases and gratuity increases are based on expected future inflation rates.
Further details about gratuity obligations are given in note 29.
e. Fair value measurement of financial instruments
When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the discounted cash flow (âDCF") model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments. See note 35 & 36 for further disclosures.
f. Impairment of non-financial assets
Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at arm''s length, for similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a DCF model. The cash flows are derived from the projections for the next three to five years and do not include restructuring activities that the Company is not yet committed to or significant future investments that will enhance the asset''s performance of the CGU being tested. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes.
g. Impairment of financial assets
For recognition of impairment loss on other financial assets (other than trade receivables or contract revenue receivables) and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the Company reverts to recognising impairment loss allowance based on 12-month ECL.
For calculating impairment on investment in eClerx Employee Welfare Trust (âESOP Trust") and significant increase in credit risk on loan to the ESOP Trust, the Company has applied significant judgements. Most critical judgments / estimate used by the Company in making determination relates to cashflows that the Company expects to receive after considering exercise price of share options / market price of shares held by the ESOP Trust and timing of those cash flows. Refer note 8.
2.C. Estimation of uncertainties relating to the global health pandemic from 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 revenue, investment in subsidiaries, intangible assets, other financial assets, revenues and costs, leases and its hedging program. In assessing the recoverability of its assets, the Company
has used internal and external sources of information up to the date of approval of these standalone financial results and expects to recover the net carrying amount of its assets. The Company also expects the demand for services to remain volatile for some more time. However, the actual impact of COVID-19 on the Company''s financial statements may differ from that estimated and the Company will continue to closely monitor any material changes to future economic conditions.
Mar 31, 2018
1. Corporate information
The Company is engaged in providing Knowledge Process Outsourcing ("KPO") services to global companies. The Company is domiciled in India and has its registered office at Mumbai, Maharashtra, India. The Company provides data management, analytics solutions and process outsourcing services to a host of global clients through a network of multiple locations in India, and abroad.
The standalone financial statements for the year ended March 31, 2018 were authorized for issue in accordance with a resolution of the directors on May 23, 2018.
2.A. Significant accounting policies 2.1 Basis of preparation
The financial statements of the Company have been prepared in accordance with Indian Accounting Standards ("Ind AS") notified under the Companies (Indian Accounting Standards) Rules, 2015, as amended from time to time.
The financial statements have been prepared on a historical cost basis, except for the following assets and liabilities which have been measured at fair value :
- Derivative financial instruments
- Certain financial assets and liabilities measured at fair value (refer accounting policy regarding financial instruments)
- Share based payments
The standalone financial statements are presented in "''" and all values are stated '' million, except when otherwise indicated.
2.2. Summary of significant accounting policies a. Business combinations
Business combinations involving entities or businesses under common control shall be accounted for using the pooling of interests method - wherein:
(a) The assets and liabilities of the combining entities are reflected at their carrying amounts.
(b) The excess, if any, in the value of net assets and reserves to be vested in the transferee Company, would be credited to the ''Capital Reserve Account''.
(c) No adjustments are made to reflect fair values, or recognize any new assets or liabilities. The only adjustments that are made are to harmonies accounting policies.
b. Foreign currencies
The Company''s financial statements are presented in Indian Rupees ("'' "), which is also the Company''s functional currency.
Transactions and balances
Transactions in foreign currencies are initially recorded by the Company in its functional currency using spot rates at the date the transaction first qualifies for recognition. Monetary assets and liabilities denominated in foreign currencies are translated into the relevant functional currency at exchange rates at the reporting date.
Exchange differences arising on settlement or translation of monetary items are recognized in profit or loss.
c. Fair value measurement
The Company measures financial instruments such as derivatives and certain investments, at fair value at each balance sheet date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
- In the principal market for the asset or liability or,
- In the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their best economic interest.
A fair value measurement of a non-financial asset takes into account a market participant''s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
- Level 1 â Quoted (unadjusted) market prices in active markets for identical assets or liabilities
- Level 2 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
- Level 3 â Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
For assets and liabilities that are recognized in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
This note summarizes accounting policy for fair value. Other fair value related disclosures are given in the relevant notes.
d. Revenue recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the government.
Rendering of services
Revenue from time and material and unit priced contracts are recognized when services are rendered and related costs are incurred. Revenue from fixed price contracts, are recognized over the life of the contract using the proportionate completion method, with contract costs determining the degree of completion. Foreseeable losses on such contracts are recognized when probable. Revenue from maintenance contracts are recognized on pro-rata basis over the period of the contract.
Unbilled revenues included in other financial assets represent revenue in excess of billings as at the balance sheet date.
Advance billing included in other financial liabilities represents billing in excess of revenue recognized.
The Company presents revenues net of service tax, value added tax and goods and service tax in its statement of profit and loss.
Interest Income
For all financial instruments measured at amortized cost, interest income is recorded using the effective interest rate ("EIR"), which is the rate that exactly discounts the estimated future cash payments or receipts through the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument but does not consider the expected credit losses.
Dividends
Dividend income is recognized when Company''s right to receive dividend is established by the reporting date.
Government Grants
Government grants are recognized when there is reasonable assurance that grant will be received and all attached conditions will be complied with (refer note 21).
e. Taxes Current income tax
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date in India where the Company operates and generates taxable income.
Current income tax relating to items recognized outside profit or loss is recognized outside profit or loss (either in Other comprehensive income ("OCI") or in equity). Current tax items are recognized in correlation to the underlying transaction either in OCI or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Deferred tax
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax liabilities are recognized for all taxable temporary differences, except:
- When the deferred tax liability arises from an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss
- In respect of taxable temporary differences associated with investments in subsidiaries when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred tax assets are recognized for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised, except when the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are reassessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss (either in OCI or in equity). Deferred tax items are recognized in correlation to the underlying transaction either in OCI or directly in equity.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
f. Property, plant and equipment
Property, plant and equipment ("PPE") are stated at the cost of acquisition including incidental costs related to acquisition and installation less accumulated depreciation and impairment loss, if any.
Advances paid towards acquisition of property, plant and equipment are disclosed as capital advances under other non - current assets.
Capital work-in-progress includes cost of property, plant and equipment under installation/ under development as at the balance sheet date and are carried at cost, comprising of direct cost and directly attributable cost.
Gains or losses arising from disposal of property, plant and equipment are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is disposed.
Research and development expenses for software product
Research cost are expensed as incurred. Software product development cost are expensed as incurred unless technical feasibility of project is established, further economic benefit are probable, the Company has an intention and ability to complete and use or sell
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
g. Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any.
The useful lives of intangible assets are assessed as either finite or indefinite. There are no intangible assets assessed with indefinite useful life.
Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortization period or method, as appropriate, and are treated as changes in accounting estimates. The amortization expense on intangible assets with finite lives is recognized in the statement of profit and loss unless such expenditure forms part of carrying value of another asset.
Gain or losses arising from the derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized. the software and the cost can be measured reliably. The cost which can be capitalized include the cost of material, direct labor and overhead cost that are directly attributable to preparing the assets for its intended use.
h. Leases
The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the inception date. The arrangement is, or contains a lease if, fulfillment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.
The Company as lessee
Leases where the lessor retains substantially all the risks and rewards of ownership are classified as operating leases. Payments made under operating leases are recognized in the statement of profit and loss on a straight-line basis over the lease term unless the payments are structured to increase in line with expected general inflation to compensate for the less orâs expected inflationary cost increases.
i. Impairment of non-financial assets
The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset''s recoverable amount. An asset''s recoverable amount is the higher of an asset''s or cash - generating unit''s ("CGU") fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash flows that are largely independent of those from other assets or group of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators. The Company bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the Company''s CGUs to which the individual assets are allocated.
For assets excluding goodwill, an assessment is made at each reporting date to determine whether there is an indication that previously recognized impairment losses no longer exists or have decreased. If such indication exists, the Company estimates the asset''s or CGU''s recoverable amount. A previously recognized impairment loss is reversed only if there has been a change in the assumptions used to determine the asset''s recoverable amount since the last impairment loss was recognized. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in the statement of profit and loss.
j. Provisions and contingencies
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Company expects some or all of a provision to be reimbursed, the reimbursement is recognized as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the statement of profit and loss net of any reimbursement.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made. Contingent liabilities are disclosed in the notes.
k. Retirement and other employee benefits Provident Fund
Retirement benefit in the form of provident fund is a defined contribution scheme. Both the employee and the employer make monthly contributions to the plan at a predetermined rate of the employees'' basic salary. These contributions are made to the fund administered and managed by the Government of India. The Company recognizes contribution payable to the provident fund scheme as an expense, when an employee renders the related service. The Company has no further obligations under these plans beyond its monthly contributions.
Defined Benefit plan Gratuity
The Company operates a defined benefit gratuity plan, which requires contributions to be made to a separately administered fund with the insurance service provider. The cost of providing benefits under the defined benefit plan is determined using the projected unit credit method, with actuarial valuations being carried out at periodic intervals.
Re-measurements, comprising of actuarial gains and losses and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability), are recognized immediately in the balance sheet with a corresponding charge or credit to retained earnings through OCI in the period in which they occur. Re-measurements are not reclassified to statement of profit and loss in subsequent periods.
Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. The Company recognizes the following changes in the net defined benefit obligation as an expense in the statement of profit and loss:
- Service costs comprising current service costs; and
- Net interest expense or income Compensated Absences
Accumulated leave, which is expected to be utilized within the next 12 months, is treated as short-term employee benefit. The Company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date. The Company treats accumulated leave expected to be carried forward beyond twelve months, as long-term employee benefit for measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the year-end. The Company treats the entire leave as current liability in the balance sheet, since it does not have an unconditional right to defer its settlement for 12 months after the reporting date.
l. Share - based payments
Employees of the Company receive remuneration in the form of share-based payments, whereby employees render services as consideration for equity instruments (equity-settled transactions).
The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model. The cost is recognized, together with a corresponding increase in share-based payment ("SBP") reserves in equity, over the period in which the performance and/or service conditions are fulfilled in employee benefits expense. The cumulative expense recognized for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Company''s best estimate of the number of equity instruments that will ultimately vest.
m. Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. The Company recognizes a financial asset or a liability in its balance sheet only when the entity becomes party to the contractual provisions of the instrument.
Financial assets Initial recognition and measurement
All financial assets are recognized initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. The Company has accounted for its investment in subsidiaries at cost, less impairment, if any.
Subsequent measurement
For purposes of subsequent measurement financial assets are classified into three categories:
- Financial assets at fair value through OCI
- Financial assets at fair value through profit or loss
- Financial assets at amortized cost
Where assets are measured at fair value, gains and losses are either recognized entirely in the statement of profit and loss (i.e. fair value through profit or loss), or recognized in other comprehensive income (i.e. fair value through other comprehensive income).
A financial asset that meets the following two conditions is measured at amortized cost (net of any write down for impairment) unless the asset is designated at fair value through profit or loss under the fair value option.
- Business model test: The objective of the Company''s business model is to hold the financial asset to collect the contractual cash flows (rather than to sell the instrument prior to its contractual maturity to realize its fair value changes).
- Cash flow characteristics test: The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Even if an instrument meets the two requirements to be measured at amortized cost or fair value through other comprehensive income, a financial asset is measured at fair value through profit or loss if doing so eliminates or significantly reduces a measurement or recognition inconsistency (sometimes referred to as an ''accounting mismatch'') that would otherwise arise from measuring assets or liabilities or recognizing the gains and losses on them on different bases.
All other financial assets are measured at fair value through profit or loss.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognized (i.e. removed from the Company''s statement of financial position) when:
- The rights to receive cash flows from the asset have expired, or
- The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ''pass-through'' arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognize the transferred asset to the extent of the Company''s continuing involvement. In that case, the Company also recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay.
Impairment of financial assets
The Company assesses impairment based on expected credit losses ("ECL") model to the following:
- Financial assets measured at amortized cost; and
- Financial assets measured at Fair value through other comprehensive income ("FVTOCI")
Expected credit losses ("ECL") are measured through a loss allowance at an amount equal to:
- the 12-month expected credit losses (expected credit losses that result from those default events on the financial instrument that are possible within 12 months after the reporting date); or
- full lifetime expected credit losses (expected credit losses that result from all possible default events over the life of the financial instrument).
For trade receivables or contract revenue receivables, the Company follows ''simplified approach'' for recognition of impairment loss allowance.
Under the simplified approach, the Company does not track changes in credit risk. Rather, it recognizes impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
The Company uses a provision matrix to determine impairment loss allowance on the portfolio of trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivable 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 analysed.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the Company reverts to recognizing impairment loss allowance based on 12-month ECL.
For assessing increase in credit risk and impairment loss, the Company combines financial instruments on the basis of shared credit risk characteristics with the objective of facilitating an analysis that is designed to enable significant increases in credit risk to be identified on a timely basis.
Financial liabilities Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, payables, or derivatives as appropriate or as derivatives designated as hedging instruments in an effective hedge as appropriate.
All financial liabilities are recognized initially at fair value and, in the case of payables, net of directly attributable transaction costs.
Subsequent measurement
The Company measures all financial liabilities at amortized cost using the Effective Interest Rate
("EIR") method except for financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. Financial liabilities held for trading are measured at fair value through profit and loss. The Company has not designated any financial liability as at fair value through profit or loss.
Derecognition
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.
n. Derivative financial instruments and hedge accounting Initial recognition and subsequent measurement
The Company enters into derivative contracts to hedge foreign currency/price risk on highly probable forecast transactions. Such derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently premeasured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
Any gains or losses arising from changes in the fair value of derivatives are recorded in the statement of profit or loss, except for the effective portion of cash flow hedges, which is recognized in other comprehensive income ("OCI") and later reclassified to profit or loss when the hedge item affects profit or loss.
At the inception of a hedge relationship, the Company formally designates and documents the hedge relationship to which the Company wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge. The documentation includes the Company''s risk management objective and strategy for undertaking hedge, the hedging/ economic relationship, the hedged item or transaction, the nature of the risk being hedged, hedge ratio and how the entity will assess the effectiveness of changes in the hedging instrument''s fair value in offsetting the exposure to changes in the hedged item''s cash flows attributable to the hedged risk. Such hedges are expected to be highly effective in achieving offsetting changes in cash flows and are assessed on an ongoing basis to determine that they actually have been highly effective throughout the financial reporting periods for which they were designated.
Hedges that meet the strict criteria for hedge accounting are accounted for, as described below:
Cash flow hedges
The effective portion of the gain or loss on the hedging instrument is recognized in OCI in the cash flow hedge reserve, while any ineffective portion is recognized immediately in the statement of profit and loss.
The Company uses forward currency contracts as hedges of its exposure to foreign currency risk in forecast transactions. The ineffective portion relating to foreign currency contracts is recognized in other income or expenses.
Amounts recognized as OCI are transferred to profit or loss when the hedged transaction affects profit or loss, such as when a forecast sale occurs.
If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover (as part of the hedging strategy), or if its designation as a hedge is revoked, or when the hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss previously recognized in OCI remains separately in equity until the forecast transaction occurs.
o. Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and short term investments with an original maturity of three months or less which are subject to an insignificant risk of changes in value.
p. Cash dividend to equity holders of the Company
The Company recognizes a liability to make cash or non-cash distributions to equity share holders when the distribution is authorized and the distribution is no longer at the discretion of the Company. As per the corporate laws in India, a distribution of interim dividend is authorized when it is approved by the Board of Directors and final dividend is authorized when it is approved by the shareholders of the Company. A corresponding amount is recognized directly in equity.
q. Earnings per share
The earnings considered in ascertaining the Company''s earnings per share comprise the net profit after tax. The number of shares used in computing basic earnings per share is the weighted average number of shares outstanding during the year. The number of shares used in computing diluted earnings per share comprises the weighted average number of shares considered for deriving basic earnings per share, and also the weighted average number of shares, if any which would have been issued on the conversion of all dilutive potential equity shares. For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.
2.B. Significant accounting judgments, estimates and assumptions
The preparation of the Company''s financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.
a. Share - based payments
The Company measures share-based payments and transactions at fair value and recognizes over the vesting period using Black Scholes valuation model. Estimating fair value for share-based payment transactions requires determination of the most appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimate also requires determination of the most appropriate inputs to the valuation model including the expected life of the share option, volatility and dividend yield and making assumptions about them. This requires a reassessment of the estimates used at the end of each reporting period. The Company is applying forfeiture rate based on historical trend. The assumptions and models used for estimating fair value for share-based payment transactions are disclosed in note 31.
b. Defined benefit plans (gratuity benefits)
The cost of the defined benefit gratuity plan and the present value of the gratuity obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
The parameter most subject to change is the discount rate. In determining the appropriate discount rate, the management considers the interest rates of government bonds in currencies consistent with the currencies of the post-employment benefit obligation.
The mortality rate is based on the rates given under Indian Assured Lives Mortality (2006-08) Ultimate. Those mortality tables tend to change only at interval in response to demographic changes. Future salary increases and gratuity increases are based on expected future inflation rates.
Further details about gratuity obligations are given in note 30.
c. Fair value measurement of financial instruments
When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the discounted cash flow ("DCF") model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values. Judgments include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments. See note 36 & 37 for further disclosures.
d. Impairment of non-financial assets
Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at arm''s length, for similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a DCF model. The cash flows are derived from the projections for the next five years and do not include restructuring activities that the Company is not yet committed to or significant future investments that will enhance the asset''s performance of the CGU being tested. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes
Terms / rights attached to equity shares
The Company has only one class of equity shares having a par value of '' 10 per share. Each holder of equity shares is entitled to one vote per equity share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
Subject to the provisions of Companies Act 2013 as to preferential payments, the assets of the Company shall, on its winding-up be applied in satisfaction of its liabilities pari-passu and, subject to such application, shall, unless the articles otherwise provide, will be distributed among the members according to their rights and interests in the Company.
Aggregate number of bonus shares issued, shares issued for consideration other than cash
The Company has issued 10,180,609 shares by way of bonus issue by capitalizing securities premium during the period of five years immediately preceding the balance sheet date. The Company has bought back 1,290,000 shares during the year ended March 31, 2018 (FY 2016-17:1,170,000 & FY 2013-14: 37,623) during the period of 5 years immediately preceding the balance sheet date.
Shares reserved for issue under options
For details of shares reserved for issue under the employee stock option ("ESOP") plan of the Company, please refer note 31.
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.
During the year ended March 31, 2018 and March 31, 2017, the Company has paid dividend to its shareholders. This has resulted in payment of Dividend Distribution Tax ("DDT") to the taxation authorities. The Company believes that DDT represents additional payment to taxation authority on behalf of the shareholders. Hence DDT paid is charged to equity.
21 (a). During the financial year 2017-18, the Company has recognized net SEIS income of '' 121.85 million for financial year 2015-16 (on realization basis) and '' 90.74 million for financial year 2016-17 (on estimation basis). The total net SEIS income for financial year 201516 and 2016-17 of '' 212.59 million has been disclosed as exceptional item (refer note 28 for further details). During the financial year 2017-18, based on the public notice 45/2015-2020 dated December 05, 2017 issued by Director General of Foreign Trade, the Company has accounted SEIS income of '' 107.17 million for the year ended March 31, 2018 under other operating revenue.
The merger of Agilyst Consulting Private Limited ("ACPL") with the Company resulted in a tax liability in Agilyst Inc. Eclerx Investments Limited was also wound-up on March 28, 2017 for administrative convenience and maintaining lean corporate structure. The Company had hence reviewed the carrying value of investment in eClerx Investments Limited and made a provision for diminution in value of '' 80.41 million in the standalone financial statements for the year ended March 31, 2017.
During the financial year 2017-18, the Company has recognized net SEIS income of '' 121.85 million for financial year 2015-16 (on realization basis) and '' 90.74 million for financial year 2016-17 (on estimation basis). The total net SEIS income for financial year 2015-16 and 2016-17 of '' 212.59 million has been disclosed as exceptional item.
The basic earnings per equity share are computed by dividing the net profit attributable to the equity shareholders for the year by the weighted average number of equity shares outstanding during the reporting period. The number of shares used in computing diluted earnings per share comprises the weighted average number of equity shares considered for deriving basic earnings per equity share, and also the weighted average number of equity shares, which would be issued on the conversion of all dilutive potential equity shares into equity shares, unless the results would be anti-dilutive.
The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the Act, the employee who has completed five years of service is entitled to specific benefit. The level of benefits provided depends on the memberâs length of service and salary at retirement age. The gratuity scheme is managed by a trust which regularly contributes to insurance service provider which manages the funds of the trust . The fund''s investments are managed by certain insurance companies as per the mandate provided to them by the trustees and the asset allocation is within the permissible limits prescribed in the insurance regulations. The Company recognizes actuarial gains and losses immediately in other comprehensive income, net of taxes.
The following tables summaries the components of net benefit expense recognized in the statement of profit or loss and the funded status and amounts recognized in the balance sheet:
31. Share-based payments
Employee Stock Option Plan
Under the employee stock option plan, the Company, grants options to senior executive employees of the Company and its subsidiaries as approved by the Nomination and Remuneration Committee. Vesting period is three years from the date of grant. Further, vesting of certain portion of the stock options is dependent on the Compounded Annual Growth Rate of the organic operating revenues of the Company. The fair value of the stock options is estimated at the grant date using a Black and Scholes model, taking into account the terms and conditions upon which the share options were granted. The contractual term of each option granted is six years. There are no cash settlement alternatives. The Company does not have a past practice of cash settlement of these options.
ESOP 2008 scheme:
The Company instituted ESOP 2008 scheme under which 1,000,000 stock options have been allocated for grant to the employees. The scheme was approved by the shareholders by way of postal ballot, the result of which was declared on May 19, 2008. The Scheme was subsequently amended to increase the number of options to 1,600,000 stock options vide resolution passed at Ninth Annual General Meeting held on August 26, 2009. Pursuant to bonus issue by the Company on July 29, 2010, the number of options available under the scheme accordingly increased to 2,400,000 pursuant to relevant SEBI regulations. During the year ended March 31, 2016, the Nomination and Remuneration Committee approved that no further options will be granted under ESOP 2008 Scheme, however active options there under would continue to vest as per the respective terms.
The weighted average share price at the date of exercise of these options was Rs, 1,376 per share. (March 31, 2017: Rs, 1,465)
ESOP 2011 scheme:
The Company instituted ESOP 2011 scheme under which 1,600,000 stock options have been allocated for grant to the employees. The scheme was approved by the shareholders at the Eleventh Annual General Meeting held on August 24, 2011. The Scheme was subsequently amended to increase the number of options to 2,600,000 stock options vide resolution passed at Thirteenth Annual General Meeting held on August 22, 2013.
Movements during the year
The following table illustrates the number and weighted average exercise prices "WAEP" of, and movements in, share options during the year:
The weighted average share price at the date of exercise of these options was Rs, 1,319 per share. (March 31, 2017: Rs, 1,444)
The weighted average remaining contractual life for the share options outstanding as at March 31, 2018 was 2.92 years (March 31, 2017: 2.68 years).
The range of exercise prices for options outstanding at the end of the year was Rs, 463.91 to Rs, 1,196.25 (March 31, 2017: Rs, 463.91 to Rs, 1,196.25). The expected life of the share options is based on historical data and current expectations and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility over a period similar to the life of the options is indicative of future trends, which may not necessarily be the actual outcome.
ESOP 2015 scheme:
Pursuant to the applicable requirements of the erstwhile Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 ("the SEBI guidelines"), the Company had framed and instituted Employee Stock Option Plan 2015 ("ESOP 2015") to attract, retain, motivate and reward its employees and to enable them to participate in the growth, development and success of the Company.
ESOP 201 5 envisages an ESOP trust which is authorised for secondary acquisition and accordingly during the year under review, ESOP Trust has bought 412,547 shares (in financial year 2016-17: 75,113 shares) from open market.
Movements during the year
The following table illustrates the number and weighted average exercise prices (WAEP) of, and movements in, share options during the year under ESOP 2015 scheme:
These options are not yet vested as of March 31, 2018.
The weighted average remaining contractual life for the share options outstanding as at March 31, 2018 was 5.07 years (March 31, 2017: 5 years). The range of exercise prices for options outstanding at the end of the year was Rs, 1,294 to Rs, 1,379.15 (March 31, 2017: Rs, 1379.15).
The weighted average fair value of options granted during the year was Rs, 455.97 (March 31, 2017: Rs, 462.43)
The average vesting period is 2.86 years and exercise period is 3 years.
The expected life of the share options is based on historical data and current expectations and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility over a period similar to the life of the options is indicative of future trends, which may not necessarily be the actual outcome.
32. Commitments and contingencies
a. Leases Operating lease commitments â Company as lessee
The Company has entered into operating leases for office facilities and residential premises for employees, which include leases that are renewable on a yearly basis, cancellable at its option and other long term leases.
Notes:
(a) The Company has received Income Tax demands amounting to Rs, 101.76 million (excluding interest) for financial years 2009-10, 2010-11, 2011-12, 2012-13 and 2013-14 against which appeals are pending with Commissioner of Income Tax (Appeals) and Income Tax Appelate Tribunal.
(b) The Company has received Indirect tax demands amounting to Rs, 141.10 million (excluding interest and penalties) for the period April 2007 to March 2013 against which appeals are pending with Commissioner-Appeals and Custom, Excise and Service Tax Appellate Tribunal.
With respect to tax refund claims for the period April 2012 till March, 2017 to the extent rejected by the service tax department for Rs, 12.58 million, the company''s appeals are pending before the Commissioner of Central Excise & CGST (Appeals).
The amounts represent best possible estimates arrived at on the basis of available information. The uncertainties and possible reimbursements are dependent on the outcome of the different legal processes which have been invoked by the Company or the claimants as the case may be and therefore cannot be predicted accurately. The Company engages reputed professional advisors to protect its interest and has been advised that it has strong legal positions against each of such disputes. Hence, no provision has been made in the financial statements for these disputes.
Mar 31, 2017
1. Corporate information
The Company is engaged in providing Knowledge Process Outsourcing (KPO) services to global companies. The Company is domiciled in India and has its registered office at Mumbai, Maharashtra, India. The Company provides data management, analytics solutions and process outsourcing services to a host of global clients through a network of multiple locations in India, and abroad.
The standalone financial statements for the year ended March 31, 2017 were authorized for issue in accordance with a resolution of the directors on May 30, 2017.
2.A. Significant accounting policies 2.1 Basis of preparation
The financial statements of the Company have been prepared in accordance with Indian Accounting Standards ("Ind AS") notified under the Companies (Indian Accounting Standards) Rules, 2015 as amended by Companies (Indian Accounting standards) (Amendment) Rules, 2016.
For all periods up to and including the year ended March 31, 2016, the Company prepared its financial statements in accordance with the accounting standards notified under the section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 ("Indian GAAP").
These financial statements for the year ended March 31, 2017 are the first financial statements of the Company prepared in accordance with Ind AS. Refer note 40 for information on how the Company adopted Ind AS.
The financial statements have been prepared on a historical cost basis, except for the following assets and liabilities which have been measured at fair value :
- Derivative financial instruments
- Certain financial assets and liabilities measured at fair value (refer accounting policy regarding financial instruments)
- Share based payments
The standalone financial statements are presented in "Rs." and all values are stated Rs. Millions, except when otherwise indicated.
2.2. Summary of significant accounting policies a. Business combinations
Business combinations involving entities or businesses under common control shall be accounted for using the pooling of interests method - wherein:
(a) The assets and liabilities of the combining entities are reflected at their carrying amounts.
(b) The excess, if any, in the value of net assets and reserves to be vested in the transferee company, would be credited to the ''Capital Reserve Accountâ.
(c) No adjustments are made to reflect fair values, or recognize any new assets or liabilities. The only adjustments that are made are to harmonies accounting policies.
b. Foreign currencies
The Companyâs financial statements are presented in Indian Rupees ("Rs."), which is also the Companyâs functional currency.
Transactions and balances
Transactions in foreign currencies are initially recorded by the Company in its functional currency using spot rates at the date the transaction first qualifies for recognition.
Monetary assets and liabilities denominated in foreign currencies are translated into the relevant functional currency at exchange rates at the reporting date.
Exchange differences arising on settlement or translation of monetary items are recognized in profit or loss.
c. Fair value measurement
The Company measures financial instruments such as derivatives and certain investments, at fair value at each balance sheet date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
- In the principal market for the asset or liability or,
- In the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their best economic interest.
A fair value measurement of a non-financial asset takes into account a market participantâs ability to generate economic
benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
- Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
- Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
- Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
For assets and liabilities that are recognized in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
This note summarizes accounting policy for fair value. Other fair value related disclosures are given in the relevant notes.
d. Revenue recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the government.
Rendering of services
Revenue from time and material and unit priced contracts are recognized when services are rendered and related costs are incurred. Revenue from fixed price contracts, are recognized over the life of the contract using the proportionate completion method, with contract costs determining the degree of completion. Foreseeable losses on such contracts are recognized when probable. Revenue from maintenance contracts are recognized on pro-rata basis over the period of the contract.
Unbilled revenues included in other financial assets represent revenue in excess of billings as at the balance sheet date.
Advance billing included in other financial liabilities represents billing in excess of revenue recognized.
The Company presents revenues net of service tax and value added tax in its statement of profit and loss.
Interest Income
For all financial instruments measured at amortized cost, interest income is recorded using the effective interest rate (EIR), which is the rate that exactly discounts the estimated future cash payments or receipts through the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset. When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument but does not consider the expected credit losses.
Dividends
Dividend income is recognized when Companyâs right to receive dividend is established by the reporting date.
e. Taxes Current income tax
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date in India where the Company operates and generates taxable income.
Current income tax relating to items recognized outside profit or loss is recognized outside profit or loss (either in Other comprehensive income (OCI) or in equity). Current tax items are recognized in correlation to the underlying transaction either in OCI or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Deferred tax
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax liabilities are recognized for all taxable temporary differences, except:
- When the deferred tax liability arises from an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
- In respect of taxable temporary differences associated with investments in subsidiaries when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred tax assets are recognized for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised, except when the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognized deferred tax assets are re-assessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss (either in OCI or in equity). Deferred tax items are recognized in correlation to the underlying transaction either in OCI or directly in equity.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
f. Property, plant and equipment
Property, plant and equipment (PPE) are stated at the cost of acquisition including incidental costs related to acquisition and installation less accumulated depreciation and impairment loss, if any.
Advances paid towards acquisition of property, plant and equipment are disclosed as capital advances under other non - current assets.
On transition to Ind AS , the Company has elected to continue with the carrying value of all its property, plant and equipment recognized as at April 1, 2015 measured as per the Indian GAAP and use that carrying value as the deemed cost of the Property, plant and equipment.
Capital work-in-progress includes cost of property, plant and equipment under installation/ under development as at the balance sheet date and are carried at cost, comprising of direct cost and directly attributable cost.
Gains or losses arising from disposal of property, plant and equipment are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is disposed.
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
g. Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any.
The useful lives of intangible assets are assessed as either finite or indefinite. There are no intangible assets assessed with indefinite useful life.
Intangible assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortization period or method, as appropriate, and are treated as changes in accounting estimates. The amortization expense on intangible assets with finite lives is recognized in the statement of profit and loss unless such expenditure forms part of carrying value of another asset.
Gain or losses arising from the derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized.
On transition to Ind AS , the Company has elected to continue with the carrying value of all its intangible assets recognized as at April
1, 2015 measured as per the Indian GAAP and use that carrying value as the deemed cost of the intangible assets.
h. Leases
The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the inception date. The arrangement is, or contains a lease if, fulfillment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement. For arrangements entered into prior to April 1, 2015, the Company has determined whether the arrangement contains lease on the basis of facts and circumstances existing on the date of transition.
The Company as lessee
Leases where the less or retains substantially all the risks and rewards of ownership are classified as operating leases. Payments made under operating leases are recognized in the statement of profit and loss on a straight-line basis over the lease term unless the payments are structured to increase in line with expected general inflation to compensate for the less orâs expected inflationary cost increases.
i. Impairment of non-financial assets
The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the assetâs recoverable amount. An assetâs recoverable amount is the higher of an assetâs or cash - generating units (CGU) fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash flows that are largely independent of those from other assets or group of assetâs. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators. The Company bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the Companyâs CGUs to which the individual assets are allocated.
For assets excluding goodwill, an assessment is made at each reporting date to determine whether there is an indication that previously recognized impairment losses no longer exists or have decreased. If such indication exists, the Company estimates the assetâs or CGUâs recoverable amount. A previously recognized impairment loss is reversed only if there has been a change in the assumptions used to determine the assetâs recoverable amount since the last impairment loss was recognized. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in the statement of profit and loss.
j. Provisions and contingencies
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Company expects some or all of a provision to be reimbursed, the reimbursement is recognized as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the statement of profit and loss net of any reimbursement.
If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by occurrence or nonoccurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made. Contingent liabilities are disclosed in the notes.
k. Retirement and other employee benefits Provident Fund
Retirement benefit in the form of provident fund is a defined contribution scheme. Both the employee and the employer make monthly contributions to the plan at a predetermined rate of the employeesâ basic salary. These contributions are made to the fund administered and managed by the Government of India. The Company recognizes contribution payable to the provident fund scheme as an expense, when an employee renders the related service. The Company has no further obligations under these plans beyond its monthly contributions.
Defined Benefit plan Gratuity
The Company operates a defined benefit gratuity plan, which requires contributions to be made to a separately administered fund with the insurance service provider. The cost of providing benefits under the defined benefit plan is determined using the projected unit credit method, with actuarial valuations being carried out at periodic intervals.
Re-measurements, comprising of actuarial gains and losses and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability),
are recognized immediately in the Balance Sheet with a corresponding charge or credit to retained earnings through OCI in the period in which they occur. Re measurements are not reclassified to statement of profit and loss in subsequent periods.
Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. The Company recognizes the following changes in the net defined benefit obligation as an expense in the statement of Profit and Loss:
- Service costs comprising current service costs; and
- Net interest expense or income
Compensated Absences
Accumulated leave, which is expected to be utilized within the next 12 months, is treated as short-term employee benefit. The Company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date. The Company treats accumulated leave expected to be carried forward beyond twelve months, as long-term employee benefit for measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the year end. Re-measurements, comprising of actuarial gains and losses are recognized immediately in the Balance Sheet with a corresponding charge or credit to retained earnings through OCI in the period in which they occur. Re measurements are not reclassified to statement of profit and loss in subsequent periods. The Company treats the entire leave as current liability in the balance sheet, since
it does not have an unconditional right to defer its settlement for 12 months after the reporting date.
l. Share - based payments
Employees of the Company receive remuneration in the form of share-based payments, whereby employees render services as consideration for equity instruments (equity-settled transactions).
The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model. The cost is recognized, together with a corresponding increase in share-based payment (SBP) reserves in equity, over the period in which the performance and/or service conditions are fulfilled in employee benefits expense. The cumulative expense recognized for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Companyâs best estimate of the number of equity instruments that will ultimately vest.
m. Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. The Company recognizes a financial asset or a liability in its balance sheet only when the entity becomes party to the contractual provisions of the instrument.
Financial assets
Initial recognition and measurement
All financial assets are recognized initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. The Company has accounted for its investment in subsidiaries at cost, less impairment, if any.
Subsequent measurement
For purposes of subsequent measurement financial assets are classified into three categories:
- Financial assets at fair value through OCI
- Financial assets at fair value through profit or loss
- Financial assets at amortized cost
Where assets are measured at fair value, gains and losses are either recognized entirely in the statement of profit and loss (i.e. fair value through profit or loss), or recognized in other comprehensive income (i.e. fair value through other comprehensive income).
A financial asset that meets the following two conditions is measured at amortized cost (net of any write down for impairment) unless the asset is designated at fair value through profit or loss under the fair value option.
- Business model test: The objective of the Companyâs business model is to hold the financial asset to collect the contractual cash flows (rather than to sell the instrument prior to its contractual maturity to realize its fair value changes).
- Cash flow characteristics test: The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Even if an instrument meets the two requirements to be measured at amortized cost or fair value through other comprehensive income, a financial asset is measured at fair value through profit or loss if doing so eliminates or significantly reduces a measurement or recognition inconsistency (sometimes referred to as an ''accounting mismatchâ) that would otherwise arise from measuring assets or liabilities or recognizing the gains and losses on them on different bases.
All other financial assets are measured at fair value through profit or loss.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognized (i.e. removed from the Companyâs statement of financial position) when:
- The rights to receive cash flows from the asset have expired, or
- The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ''pass-throughâ arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership.
When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognize the transferred asset to the extent of the Companyâs continuing involvement. In that case, the Company also recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay.
Impairment of financial assets
The Company assesses impairment based on expected credit losses (ECL) model to the following:
- Financial assets measured at amortized cost; and
- Financial assets measured at Fair value through other comprehensive income (FVTOCI)
Expected credit losses (ECL) are measured through a loss allowance at an amount equal to:
- the 12-month expected credit losses (expected credit losses that result from those default events on the financial instrument that are possible within 12 months after the reporting date); or
- full lifetime expected credit losses (expected credit losses that result from all possible default events over the life of the financial instrument).
For trade receivables or contract revenue receivables, the Company follows ''simplified approachâ for recognition of impairment loss allowance.
Under the simplified approach, the Company does not track changes in credit risk. Rather, it recognizes impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.
The Company uses a provision matrix to determine impairment loss allowance on the portfolio of trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivable 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.
For recognition of impairment loss on other financial assets and risk exposure, the Company determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the Company reverts to recognizing impairment loss allowance based on 12-month ECL.
For assessing increase in credit risk and impairment loss, the Company combines financial instruments on the basis of shared credit risk characteristics with the objective of facilitating an analysis that is designed to enable significant increases in credit risk to be identified on a timely basis.
Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, payables, or derivatives as appropriate or as derivatives designated as hedging instruments in an effective hedge as appropriate.
All financial liabilities are recognized initially at fair value and, in the case of payables, net of directly attributable transaction costs.
Subsequent measurement
The Company measures all financial liabilities at amortized cost using the Effective Interest Rate (EIR) method except for financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. Financial liabilities held for trading are measured at fair value through profit and loss. The Company has not designated any financial liability as at fair value through profit or loss.
Derecognition
A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
n. Derivative financial instruments and hedge accounting
Initial recognition and subsequent measurement
The Company enters into derivative contracts to hedge foreign currency/price risk on highly probable forecast transactions. Such derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently premeasured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
Any gains or losses arising from changes in the fair value of derivatives are recorded in the statement of profit or loss, except for the effective portion of cash flow hedges, which is recognized in other comprehensive income (OCI) and later reclassified to profit or loss when the hedge item affects profit or loss.
At the inception of a hedge relationship, the Company formally designates and documents the hedge relationship to which the Company wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge. The documentation includes the Companyâs risk management objective and strategy for undertaking hedge, the hedging/ economic relationship, the hedged item or transaction, the nature of the risk being hedged, hedge ratio and how the entity will assess the effectiveness of changes in the hedging instrumentâs fair value in offsetting the exposure to changes in the hedged itemâs cash flows attributable to the hedged risk. Such hedges are expected to be highly effective in achieving offsetting changes in cash flows and are assessed on an ongoing basis to determine that they actually have been highly effective throughout the financial reporting periods for which they were designated.
Hedges that meet the strict criteria for hedge accounting are accounted for, as described below:
Cash flow hedges
The effective portion of the gain or loss on the hedging instrument is recognized in OCI in the cash flow hedge reserve, while any ineffective portion is recognized immediately in the statement of profit and loss.
The Company uses forward currency contracts as hedges of its exposure to foreign currency risk in forecast transactions. The ineffective portion relating to foreign currency contracts is recognized in other income or expenses.
Amounts recognized as OCI are transferred to profit or loss when the hedged transaction affects profit or loss, such as when a forecast sale occurs.
If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover (as part of the hedging strategy), or if its designation as a hedge is revoked, or when the hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss previously recognized in OCI remains separately in equity until the forecast transaction occurs.
o. Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and short term investments with
an original maturity of three months or less which are subject to an insignificant risk of changes in value.
p. Cash dividend to equity holders of the Company
The Company recognizes a liability to make cash or non-cash distributions to equity shareholders when the distribution is authorized and the distribution is no longer at the discretion of the Company. As per the corporate laws in India, a distribution of interim dividend is authorized when it is approved by the Board of Directors and final dividend is authorized when it is approved by the shareholders of the Company. A corresponding amount is recognized directly in equity.
2.B. Significant accounting judgments, estimates and assumptions
The preparation of the Companyâs financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.
Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.
a. Share-based payments
The Company measures share-based payments and transactions at fair value and recognizes over the vesting period using Black Scholes valuation model. Estimating fair value for share-based payment transactions requires determination of the most appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimate also requires determination of the most appropriate inputs to the valuation model including the expected life of the share option, volatility and dividend yield and making assumptions about them. This requires a reassessment of the estimates used at the end of each reporting period. The Company is applying forfeiture rate based on historical trend. The assumptions and models used for estimating fair value for share-based payment transactions are disclosed in note 31.
b. Defined benefit plans (gratuity benefits)
The cost of the defined benefit gratuity plan and the present value of the gratuity obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
The parameter most subject to change is the discount rate. In determining the appropriate discount rate, the management considers the interest rates of government bonds in currencies consistent with the currencies of the postemployment benefit obligation.
The mortality rate is based on the rates given under Indian Assured Lives Mortality (2006-08) Ultimate. Those mortality tables tend to change only at interval in response to demographic changes. Future salary increases and gratuity increases are based on expected future inflation rates.
Further details about gratuity obligations are given in note 30.
c. Fair value measurement of financial instruments
When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the discounted cash flow model (DCF) model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values. Judgments include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments. See note 36 & 37 for further disclosures.
d. Impairment of non-financial assets
Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at armâs length, for similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a DCF model. The cash flows are derived from the projections for the next five years and do not include restructuring activities that the Company is not yet committed to or significant future investments that will enhance the assetâs performance of the CGU being tested. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes.
Derivative instruments at fair value through OCI refect the positive change in fair value of foreign exchange forward contracts, designated as cash flow hedges to hedge highly probable forecast sales in US dollars (USD) and Euros (EUR).
Derivative instruments at fair value through profit and loss reflect the positive change in fair value of those foreign exchange forward contracts, that are not designated in hedge relationships, but are, nevertheless, intended to reduce the level of foreign currency risks for expected sales.
Cash at banks earns interest at floating rates based on the daily bank deposit rates and the daily balances. Time deposits are placed for varying periods ranging from 7 days to 380 days, depending on the immediate cash requirements of the Company. The time deposits earn interest at the respective deposit rates.
As on November 8, 2016 and December 30, 2016, the Company did not hold any Specified Bank Notes and other denomination notes as defined in the MCA notification G.S.R. 308(E) dated March 31, 2017. The Company has not transacted during the period from November 8, 2016 to December 30, 2016 in Specified Bank Notes and other denomination notes.
During the year ended March 31, 2016, the authorized share capital was increased by Rs. 100,000 i.e. 10,000 equity shares of Rs. 10 each on account of merger (refer note 41).
Terms / rights attached to equity shares
The Company has only one class of equity shares having a par value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per equity share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
Subject to the provisions of Companies Act 2013 as to preferential payments, the assets of the Company shall, on its winding-up be applied in satisfaction of its liabilities pari-passu and, subject to such application, shall, unless the articles otherwise provide, will be distributed among the members according to their rights and interests in the Company.
Aggregate number of bonus shares issued, shares issued for consideration other than cash
The Company has issued 10,180,609 shares by way of bonus issue by capitalizing securities premium during the period of five years immediately preceding the balance sheet date. The Company has bought back 1,207,623 shares (P.Y. 37,623) during the period of 5 years immediately preceding the balance sheet date.
- Trade payables are non-interest bearing and are normally settled on 30-day terms.
- For terms and conditions with related parties, refer note 33
- For explanations on the Companyâs credit risk management processes, refer note 38.
- Trade payables are measured at amortized cost
Based on the information available with the Company, there are no dues payable to micro and small enterprises as defined in the Micro Small & Medium Enterprises Development Act, 2006.
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.
During the year ended March 31, 2017 and March 31, 2016, the Company has paid dividend to its shareholders. This has resulted in payment of Dividend Distribution Tax (DDT) to the taxation authorities. The Company believes that DDT represents additional payment to taxation authority on behalf of the shareholders. Hence DDT paid is charged to equity.
The Honâble High Court of Bombay vide its order dated July 1, 2016 has sanctioned the Scheme of Amalgamation of Agilyst Consulting Private Limited (ACPL) with the Company with an appointed date of April 1, 2015. The Scheme has been given effect to in the books of accounts of the Company with effect from April 1, 2015. The Company had hence reviewed the carrying value of investment in Agilyst Inc. made through its subsidiary eClerx Investments Limited and made a provision for diminution in value of Rs 266.12 Million in the standalone financials as on April 1, 2015.
The Company, through its subsidiary eClerx Investment Limited, acquired Agilyst Inc. in May 2012. One of the major clients of Agilyst Inc. decided to move its service agreement from Agilyst Inc. to the Company for better physical and IT infrastructure and stronger financial position, with effect from October 22, 2015. The Company had hence reviewed the carrying value of investment in Agilyst Inc. made through its subsidiary eClerx Investments Ltd and made a provision for diminution in value of Rs 259.14 Million in the standalone financials for the year ended March 31, 2016.
The merger of ACPL with the Company resulted in a tax liability in Agilyst Inc. eClerx Investments Ltd was also wound-up on March 28, 2017 for administrative convenience and maintaining lean corporate structure. The Company had hence reviewed the carrying value of investment in eClerx Investments Ltd and made a provision for diminution in value of Rs 80.41 Million in the standalone financials for the year ended March 31, 2017.
Mar 31, 2016
A) Use of estimates
The preparation of the financial statements in conformity with
generally accepted accounting principles (''GAAP'') in India requires
management to make estimates and assumptions that affect the reported
amount of assets and liabilities and disclosure of contingent
liabilities on the date of the financial statements. Management
believes that the estimates made in the preparation of financial
statements are prudent and reasonable. Actual future period''s results
could differ from those estimates. Any revision to accounting estimates
is recognised prospectively in current and future periods.
b) Revenue recognition
Revenue from time and material and unit priced contracts are recognised
when services are rendered and related costs are incurred. Revenue from
fixed price contracts, are recognised over the life of the contract
using the proportionate completion method, with contract costs
determining the degree of completion. Foreseeable losses on such
contracts are recognised when probable. Revenue from maintenance
contracts are recognised on pro- rata basis over the period of the
contract. Unbilled revenues included in other current assets represent
revenue in excess of billings as at the balance sheet date.
Advance billing included in other current liabilities represents
billing in excess of revenue recognised.
Revenue is recognised net of rebate. The rebate is accrued evenly based
on the probability of achievement of the specified level of sales.
Interest income is recognised on time proportion basis taking into
account the amount outstanding and the Interest rate applicable.
Interest income is included under the head "Other Income" in the
statement of profit and loss.
Dividend income is recognised when Company''s right to receive dividend
is established by the reporting date.
c) Fixed assets
Tangible Assets
Assets are stated at the cost of acquisition including incidental costs
related to acquisition and installation less accumulated depreciation
and impairment loss, if any. Advances paid towards acquisition of fixed
assets are disclosed as Capital Advances under Loans and Advances and
cost of assets not ready for use before the year-end, are disclosed as
capital work in progress.
Gains or losses arising from disposal of tangible assets are measured
as the difference between the net disposal proceeds and the carrying
amount of the asset and are recognised in the statement of profit and
loss when the asset is disposed.
Intangible Assets
Intangible assets acquired separately are measured on initial
recognition at cost. Following initial recognition, intangible assets
are carried at cost less accumulated amortisation and accumulated
impairment losses, if any.
d) Depreciation and amortisation
The Company provides depreciation on tangible fixed assets using the
Written Down Value method (other than leasehold assets) using the rates
arrived at, based on useful lives estimated by the management.
The Company has used the following rates to provide depreciation on all
its tangible fixed assets
Useful lives estimated by the management (years)
Office Equipment 5 years
Furniture and Fixtures 10 years Computers
-End User Devices 3 years
-Servers 6 years
Leasehold improvements Lease term
Computer Software 1-5 years
Intangible assets in the form of computer software are amortised over
their respective individual estimated useful lives on a straight line
basis.
e) Investments
Investments, which are readily realisable and intended to be held for
not more than one year from the date on which such investments are
made, are classified as current investments. All other investments are
classified as non-current investments.
On initial recognition, all investments are measured at cost. The cost
comprises purchase price and directly attributable acquisition charges
such as brokerage, fees and duties.
Current investments are carried in the financial statements at lower of
cost and fair value determined on an individual investment basis.
Non-current investments are carried at cost and provisions recorded to
recognise any decline, other than temporary, in the carrying value of
each investment.
Profit or loss on sale of investments is recorded on transfer of title
from the Company and is determined as the difference between the sales
price and the carrying value of the investment.
f) Impairment of Assets
The Company assesses at each reporting date whether there is an
indication that an asset may be impaired. If any indication exists, or
when annual impairment testing for an asset is required, the Company
estimates the asset''s recoverable amount. The recoverable amount of the
assets (or where applicable, that of the cash generating unit to which
the asset belongs) is estimated as the higher of its net selling price
and its value in use. An impairment loss is recognised whenever the
carrying amount of an asset or a cash generating unit exceeds its
recoverable amount. Impairment loss is recognised in the statement of
profit and loss or against revaluation surplus where applicable. If at
the balance sheet date there is an indication that a previously
assessed impairment loss no longer exists, the recoverable amount is
reassessed and the asset is reflected at the recoverable amount subject
to a maximum of depreciable historical cost.
g) Retirement and Other Employee Benefits
Provident Fund
Retirement benefit in the form of provident fund is a defined
contribution scheme. Both the employee and the employer make monthly
contributions to the plan at a predetermined rate of the employees''
basic salary. These contributions are made to the fund administered and
managed by the Government of India. The Company''s contributions are
charged to statement of profit and loss on accrual basis. The Company
has no further obligations under these plans beyond its monthly
contributions.
Gratuity
The Company provides for gratuity benefit, which is a defined benefit
plan, covering all its eligible employees. Actuarial valuation is done
by an independent actuary as at the balance sheet date using the
projected unit credit method and actuarial gains and losses are
recognised in full in the period in which they occur in the statement
of profit and loss.
Compensated Absences
Accumulated leave, which is expected to be utilised within the next 12
months, is treated as short-term employee benefit. The Company measures
the expected cost of such absences as the additional amount that it
expects to pay as a result of the unused entitlement that has
accumulated at the reporting date. The Company treats accumulated leave
expected to be carried forward beyond twelve months, as long-term
employee benefit for measurement purposes. Such long-term compensated
absences are provided for based on the actuarial valuation using the
projected unit credit method at the year-end. The Company treats the
entire leave as current liability in the balance sheet, since it does
not have an unconditional right to defer its settlement for 12 months
after the reporting date. Actuarial gains / losses are immediately
taken to the statement of profit and loss and are not deferred.
h) Taxation
Current taxes
Current income-tax expense is recognised in accordance with the
provisions of Indian Income Tax Act, 1961.
Minimum alternate tax (MAT) paid in a year is charged to the statement
of profit and loss as current tax. The Company recognises MAT credit
available as an asset only to the extent that there is convincing
evidence that the Company will pay normal income tax during the
specified period, i.e., the period for which MAT credit is allowed to
be carried forward. Accordingly, MAT credit is recognised as an asset
in the balance sheet when it is probable that the future economic
benefit associated with it will flow to the Company and the asset can
be measured reliably.
Deferred taxes
Deferred income taxes reflect the impact of timing differences between
taxable income and accounting income originating during the current
year and reversal of timing differences for the earlier years. Deferred
tax is measured using the tax rates and the tax laws enacted or
substantively enacted at the reporting date.
Deferred tax liabilities are recognised for all taxable timing
differences. Deferred tax assets are recognised for deductible timing
differences only to the extent that there is reasonable certainty that
sufficient future taxable income will be available against which such
deferred tax assets can be realised. In situations where the Company
has unabsorbed depreciation or carry forward tax losses, all deferred
tax assets are recognised only if there is virtual certainty supported
by convincing evidence that they can be realised against future taxable
profits.
In the situations where the Company is entitled to a tax holiday under
the Income-tax Act, 1961 enacted in India or tax laws prevailing in the
respective tax jurisdictions where it operates, no deferred tax (asset
or liability) is recognised in respect of timing differences which
reverse during the tax holiday period, to the extent the Company''s
gross total income is subject to the deduction during the tax holiday
period. Deferred tax in respect of timing differences which reverse
after the tax holiday period is recognised in the year in which the
timing differences originate.
The carrying amount of deferred tax assets are reviewed at each
reporting date. The Company writes down the carrying amount of deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realised. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available.
i) Leases
Operating Lease
Leases, where the lessor effectively retains substantially all the
risks and benefits of ownership of the leased item, are classified as
operating leases. Operating lease payments are recognised as an expense
in the statement of profit and loss on a straight-line basis over the
lease term.
j) Derivative Instruments and Hedge Accounting
The Company uses derivative financial instruments (foreign currency
forward contracts) to hedge its risks with foreign currency
fluctuations relating to certain highly probable forecast transactions.
The use of forward contracts to hedge foreign currency risk is governed
by the Company''s strategy, which provides principles on the
use of such forward contracts, consistent with the Company''s
ForeignExchange Risk Management Policy. The Company does not use
derivative financial instruments for speculative purposes. The
derivative instruments are initially measured at fair value, and are
re-measured at subsequent reporting dates. From April 1, 2014 the
Company has adopted the principles of Accounting Standard 30, Financial
Instruments: Recognition and Measurement (AS-30) issued by Institute of
Chartered Accountants of India (''ICAI'') to the extent the adoption of
AS-30 does not conflict with existing accounting standards specified
under section 133 of the Companies Act, 2013, read with paragraph 7 of
the Companies (Accounts) Rules, 2014. In respect of derivatives entered
into on or after April 1, 2014 and designated as hedges, the Company
follows the hedge accounting principles of AS 30 and formally documents
all relationships between hedging instruments and hedged items, as well
as its risk management objective and strategy for undertaking various
hedge transactions. The Company also formally assesses both at the
inception of the hedge and on an ongoing basis, whether each derivative
is highly effective in offsetting changes in cash flows of the hedged
item. Changes in the fair value of these derivatives that are
designated and effective as hedges of future cash flows are recognised
directly in the hedging reserve account under shareholders'' funds.
Changes in the fair value relating to the ineffective portion of the
hedges and also relating to the forward contracts that do not qualify
for hedge accounting are recognised in the statement of profit and
loss. Hedge accounting is discontinued from the last testing date when
the hedging instrument expires or is sold, terminated, or exercised, or
no longer qualifies for hedge accounting. Cumulative gain or loss on
such hedging instrument recognised in shareholders'' funds is retained
until the forecast transaction occurs. If a hedged transaction is no
longer expected to occur, the net cumulative gain or loss recognised in
shareholders funds is transferred to the statement of profit and loss
for the year.
k) Foreign Currency Transactions
Transactions in foreign currency are recorded at the exchange rate
prevailing on the date of transaction. Net exchange gain or loss
resulting in respect of foreign exchange transactions settled during
the year is recognised in the statement of profit and loss.
Foreign currency denominated monetary items at year end are translated
at exchange rates as on the reporting date and the resulting net gain
or loss is recognised in the statement of profit and loss. Non-monetary
items, which are measured in terms of historical cost denominated in a
foreign currency, are reported using the exchange rate at the date of
the transaction.
l) Employee Stock Compensation Cost
The Company grants stock options from time to time to its employees and
also to employees of its subsidiaries.
In accordance with the Securities and Exchange Board of India (Share
Based Employee Benefits) Regulations, 2014 and the Guidance Note on
Accounting for Employee Share-based Payments issued by Institute of
Chartered Accountants of India(''ICAI''), the cost of equity-settled
transactions is measured using the intrinsic value method. The
cumulative expense recognised for equity-settled transactions at each
reporting date until the vesting date reflects the extent to which the
vesting period has expired and the Company''s best estimate of the
number of equity instruments that will ultimately vest. The expense or
credit recognised in the statement of profit and loss for a period
represents the movement in cumulative expense recognised as at the
beginning and end of that period and is recognised in employee benefits
expense.
m) Cash and Cash Equivalent
Cash and cash equivalents for the purposes of cash flow statement
comprise cash at bank and in hand and short- term investments with an
original maturity of three months or less.
n) Provisions and Contingencies
The Company creates a provision when there is a present obligation as a
result of a past event that probably requires an outflow of resources
embodying economic benefits and a reliable estimate can be made of the
amount of the obligation. A disclosure for a contingent liability is
made when there is a possible obligation or a present obligation that
may, but probably will not, require an outflow of resources. When there
is a possible obligation or a present obligation in respect of which
the likelihood of outflow of resources is remote, no provision or
disclosure is made.
Mar 31, 2015
1. CORPORATE INFORMATION
eClerx Services Limited (''the Company'') is engaged in providing
Knowledge Process Outsourcing (KPO) services to global companies.
Established in 2000, the Company provides data analytics and customized
process solutions to a host of global clients through a network of
multiple locations in India, and is headquartered in Mumbai. The
Company is listed on the BSE Limited and National Stock Exchange of
India,
2. BASIS OF PREPARATION
The financial statements of the company have been prepared in
accordance with the generally accepted accounting principles in India
(Indian GAAP), The company has prepared these financial statements to
comply in all material respects with the accounting standards notified
under section 133 of the Companies Act 2013, read together with
paragraph 7 of the Companies (Accounts) Rules 2014, The financial
statements have been prepared on an accrual basis and under the
historical cost convention, except derivative financial instruments
which have been measured at fair value,
The accounting policies adopted in the preparation of financial
statements are consistent with those of previous year, except for the
change in accounting policy which has been disclosed in note 3(I)
below,
3. 3.1 CHANGE IN ACCOUNTING POLICY
(I) Derivative Instruments and hedge accounting
Upto March 31, 2014 the Company was amortising the premium or discount
on all forward contracts entered into to hedge the foreign currency
risk arising at the inception of each contract as income or expense
over the life of the contract, Any profit or loss arising on maturity,
cancellation or renewal of forward contracts was recognised as income
or as expense for the year, From April 1, 2014 the Company has adopted
the principles of Accounting Standard 30, Financial Instruments:
Recognition and Measurement (AS-30) issued by Institute of Chartered
Accountants of India (''ICAI'')to the extent the adoption of AS-30 does
not conflict with existing accounting standards specified under section
133 of the Companies Act, 2013, read with paragraph 7 of the Companies
(Accounts) Rules, 2014, Accordingly, in respect of forward contracts
taken on or after April 1, 2014, the Company designates the forward
contracts in a hedging relationship by applying the hedge accounting
principles of AS 30 in respect of cash flow hedge whereby the effective
portion of the gain or loss on the hedging instrument is recognised
directly under shareholders fund in the hedging reserve and
reclassified into the statement of profit and loss upon the occurrence
of the hedged transaction, Changes in the fair value relating to the
ineffective portion of the hedges and also relating to forward
contracts that do not qualify for hedge accounting are recognised in
the statement of profit and loss, Had the Company continued to follow
the earlier policy, its total other income and profit after tax for the
year ended March 31, 2015 would have been higher by Rs, 149,54 million
and Rs, 118,20 million, respectively,
(II) Depreciation on fixed assets
Depreciation on assets costing less than Rs 5,000,
Upto the year ended March 31, 2014, to comply with the requirements of
Schedule XIV to the Companies Act, 1956, the Company was charging 100%
depreciation on assets costing less than Rs, 5,000 in the year of
purchase, However, Schedule II to the Companies Act 2013, applicable
from the current year, does not recognise such practice, Hence, to
comply with the requirement of Schedule II to the Companies Act, 2013,
the Company has changed its accounting policy for depreciations of
assets costing less than Rs, 5,000, As per the revised policy, the
Company is depreciating such assets over their useful life as assessed
by the management, The management has decided to apply the revised
accounting policy prospectively from accounting periods commencing on
or after April 1, 2014,
The change in accounting for depreciation of assets costing less than
Rs, 5,000 did not have any material impact on financial statements of
the Company for the current year,
(III) Employee Stock Compensation Cost
Upto October 27, 2014, the SEBI (Employee Stock Option Scheme and
Employee Stock Purchase Scheme) Guidelines, 1999, dealt with the grant
of share-based payments to employees. Among other matters, these
guidelines prescribed accounting for grant of share-based payments to
employees. Hence, the Company being a listed entity was required to
comply with these Guidelines as well as the Guidance Note on Accounting
for Employee Share-based Payments with regard to accounting for
employee share-based payments. Particularly, in case of conflict
between the two requirements, the SEBI guidelines were prevailing over
the ICAI Guidance Note.
From October 28, 2014, the SEBI (Employee Stock Option Scheme and
Employee Stock Purchase Scheme) Guidelines, 1999 have been replaced by
the SEBI (Share Based Employee Benefits) Regulations, 2014. The new
regulations do not contain any specific accounting treatment; rather,
they require ICAI Guidance Note to be followed. Consequent to the
application of the new regulations, the Company has changed its
accounting for equity settled option expiring unexercised after vesting
in line with accounting prescribed in the Guidance Note, i.e., expense
is not reversed through the statement of profit and loss. The
management has decided to apply the revised accounting policy
prospectively from the date of notification of new regulation, i.e.,
October 28, 2014.
Since there are no equity settled options expiring unexercised after
October 28, 2014, the change in accounting policy did not have any
material impact on financial statements of the Company for the current
year.
3.2 SIGNIFICANT ACCOUNTING POLICIES
a) Use of estimates
The preparation of the financial statements in conformity with
generally accepted accounting principles (''GAAP'') in India requires
management to make estimates and assumptions that affect the reported
amount of assets and liabilities and disclosure of contingent
liabilities on the date of the financial statements. Management
believes that the estimates made in the preparation of financial
statements are prudent and reasonable. Actual future period''s results
could differ from those estimates. Any revision to accounting estimates
is recognised prospectively in current and future periods.
b) Revenue recognition
Revenue from time and material and unit priced contracts are recognised
when services are rendered and related costs are incurred. Revenue from
fixed price contracts, are recognised over the life of the contract
using the proportionate completion method, with contract costs
determining the degree of completion. Foreseeable losses on such
contracts are recognised when probable. Revenue from maintenance
contracts are recognised on pro-rata basis over the period of the
contract. Unbilled revenues included in other current assets represent
revenue in excess of billings as at the balance sheet date.
Advance billing included in other current liabilities represents
billing in excess of revenue recognised.
Revenue is recognised net of rebate. The rebate is accrued evenly based
on the probability of achievement of the specified level of sales.
Interest income is recognised on time proportion basis taking into
account the amount outstanding and the rate applicable Dividend income
is recognised when Company''s right to receive dividend is established.
c) Fixed assets
Tangible Assets
Assets are stated at the cost of acquisition including incidental costs
related to acquisition and installation less accumulated depreciation
and impairment loss. Advances paid towards acquisition of fixed assets
are disclosed as Capital Advances under Loans and Advances and cost of
assets not ready for use before the year-end, are disclosed as capital
work in progress.
Intangible Assets
Intangible assets acquired separately are measured on initial
recognition at cost. Following initial recognition, intangible assets
are carried at cost less accumulated amortization and accumulated
impairment losses, if any,
d) Depreciation and amortisation
The Company provides depreciation on tangible fixed assets using the
Written Down Value Method, Pursuant to the Companies Act 2013, being
effective from April 01,2014, the management has re-estimated useful
lives and residual values of its fixed assets, The Company has revised
the depreciation rates on all its tangible fixed assets (other than
lease hold assets) as per the useful life specified in Part ''C'' of
Schedule II to the Act, Till the year ended March 31, 2014, the Company
charged depreciation at the rates computed based on estimated useful
lives of the assets as estimated by the management, which were equal to
the corresponding rates prescribed in Schedule XIV to the Companies
Act, 1956,
As per the provisions of Schedule II, depreciation of Rs,14,93 million
(Rs,19,98 million net of deferred tax effect of Rs,5,05 million) is
charged against General Reserve, Additional depreciation Rs, 102,11
million is charged to the statement of profit and loss for the year
ended March 31, 2015 due to this change,
The Company has used the following rates to provide depreciation on its
fixed assets,
Useful lives estimated by the management (years)
Office Equipment 5 years
Furniture and Fixtures 10 years
Computers
- End User Devices 3 years
- Servers 6 years
heasehold improvements hease term
Intangible assets in the form of computer software are amortised over
their respective individual estimated useful lives on a straight line
basis which generally do not exceed ten years,
e) Investments
Investments, which are readily realisable and intended to be held for
not more than one year from the date on which such investments are
made, are classified as current investments, All other investments are
classified as non-current investments,
On initial recognition, all investments are measured at cost, The cost
comprises purchase price and directly attributable acquisition charges
such as brokerage, fees and duties,
Current investments are carried in the financial statements at lower of
cost and fair value determined on an individual investment basis,
Non-current investments are carried at cost and provisions recorded to
recognise any decline, other than temporary, in the carrying value of
each investment,
Profit or loss on sale of investments is recorded on transfer of title
from the Company and is determined as the difference between the sales
price and the carrying value of the investment,
f) Impairment of Assets
The Company assesses at each reporting date whether there is an
indication that an asset may be impaired, If any indication exists, or
when annual impairment testing for an asset is required, the Company
estimates the asset''s recoverable amount, The recoverable amount of the
assets (or where applicable, that of the cash generating unit to which
the asset belongs) is estimated as the higher of its net selling price
and its value in use, An impairment loss is recognised whenever the
carrying amount of an asset or a cash generating unit exceeds its
recoverable amount, Impairment loss is recognised in the statement of
profit and loss or against revaluation surplus where applicable. If at
the balance sheet date there Is an Indication that a previously
assessed impairment loss no longer exists, the recoverable amount is
reassessed and the asset is reflected at the recoverable amount subject
to a maximum of depreciable historical cost.
g) Retirement and Other Employee benefits Provident Fund
Retirement benefit in the form of provident fund is a defined
contribution scheme. Both the employee and the employer make monthly
contributions to the plan at a predetermined rate of the employees''
basic salary. These contributions are made to the fund administered and
managed by the Government of India. The Company''s contributions are
charged to statement of profit and loss on accrual basis. The Company
has no further obligations under these plans beyond its monthly
contributions.
Gratuity
The Company provides for gratuity benefit, which is a defined benefit
plan, covering all its eligible employees. Actuarial valuation is done
by an independent actuary as at the balance sheet date using the
projected unit credit method and actuarial gains and losses are
recognised in full in the period in which they occur in the statement
of profit and loss.
Compensated Absences
Accumulated leave, which is expected to be utilised within the next 12
months, is treated as short-term employee benefit. The Company
measures the expected cost of such absences as the additional amount
that it expects to pay as a result of the unused entitlement that has
accumulated at the reporting date. The Company treats accumulated leave
expected to be carried forward beyond twelve months, as long-term
employee benefit for measurement purposes. Such long-term compensated
absences are provided for based on the actuarial valuation using the
projected unit credit method at the year- end. The Company treats the
entire leave as current liability in the balance sheet, since it does
not have an unconditional right to defer its settlement for 12 months
after the reporting date. Actuarial gains / losses are immediately
taken to the statement of profit and loss and are not deferred.
h) Taxation Current taxes
Current income-tax expense is recognised in accordance with the
provisions of Indian Income Tax Act, 1961.
Minimum alternate tax (MAT) paid in a year is charged to the statement
of profit and loss as current tax. The Company recognises MAT credit
available as an asset only to the extent that there is convincing
evidence that the Company will pay normal income tax during the
specified period, i.e., the period for which MAT credit is allowed to
be carried forward. Accordingly, MAT credit is recognised as an asset
in the balance sheet when it is probable that the future economic
benefit associated with it will flow to the Company and the asset can
be measured reliably.
Deferred taxes
Deferred income taxes reflect the impact of timing differences between
taxable income and accounting income originating during the current
year and reversal of timing differences for the earlier years. Deferred
tax is measured using the tax rates and the tax laws enacted or
substantively enacted at the reporting date.
Deferred tax liabilities are recognised for all taxable timing
differences. Deferred tax assets are recognised for deductible timing
differences only to the extent that there is reasonable certainty that
sufficient future taxable income will be available against which such
deferred tax assets can be realised. In situations where the Company
has unabsorbed depreciation or carry forward tax losses, all deferred
tax assets are recognised only if there is virtual certainty supported
by convincing evidence that they can be realised against future taxable
profits.
In the situations where the Company is entitled to a tax holiday under
the Income-tax Act, 1961 enacted in India or tax laws prevailing in the
respective tax jurisdictions where it operates, no deferred tax (asset
or liability) is recognised in respect of timing differences which
reverse during the tax holiday period, to the extent the Company''s
gross total income is subject to the deduction during the tax holiday
period. Deferred tax in respect of timing differences which reverse
after the tax holiday period is recognised in the year in which the
timing differences originate.
The carrying amount of deferred tax assets are reviewed at each
reporting date. The Company writes down the carrying amount of deferred
tax asset to the extent that it is no longer reasonably certain or
virtually certain, as the case may be, that sufficient future taxable
income will be available against which deferred tax asset can be
realised. Any such write-down is reversed to the extent that it becomes
reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available.
i) Leases Operating Lease
Leases, where the lessor effectively retains substantially all the
risks and benefits of ownership of the leased item, are classified as
operating leases. Operating lease payments are recognised as an expense
in the statement of profit and loss on a straight-line basis over the
lease term.
j) Derivative Instruments and Hedge Accounting
The Company uses derivative financial instruments (foreign currency
forward contracts) to hedge its risks with foreign currency
fluctuations relating to certain highly probable forecast transactions.
The use of forward contracts to hedge foreign currency risk is governed
by the Company''s strategy, which provides principles on the use of such
forward contracts, consistent with the Company''s Foreign Exchange Risk
Management Policy, The Company does not use derivative financial
instruments for speculative purposes. The derivative instruments are
initially measured at fair value, and are re-measured at subsequent
reporting dates. In respect of derivatives entered into on or after
April 1, 2014 and designated as hedges, the Company follows the hedge
accounting principles of AS 30 Financial Instruments: Recognition and
Measurement and formally documents all relationships between hedging
instruments and hedged items, as well as its risk management objective
and strategy for undertaking various hedge transactions. The Company
also formally assesses both at the inception of the hedge and on an
ongoing basis, whether each derivative is highly effective in
offsetting changes in cash flows of the hedged item. Changes in the
fair value of these derivatives that are designated and effective as
hedges of future cash flows are recognised directly in the hedging
reserve account under shareholders'' funds. Changes in the fair value
relating to the ineffective portion of the hedges and also relating to
the forward contracts that do not qualify for hedge accounting are
recognised in the statement of profit and loss. Hedge accounting is
discontinued from the last testing date when the hedging instrument
expires or is sold, terminated, or exercised, or no longer qualifies
for hedge accounting. Cumulative gain or loss on such hedging
instrument recognised in shareholders'' funds is retained until the
forecast transaction occurs. If a hedged transaction is no longer
expected to occur, the net cumulative gain or loss recognised in
shareholders funds is transferred to the statement of profit and loss
for the year.
k) Foreign currency transactions
Transactions in foreign currency are recorded at the exchange rate
prevailing on the date of transaction. Net exchange gain or loss
resulting in respect of foreign exchange transactions settled during
the year is recognised in the statement of profit and loss.
Foreign currency denominated monetary items at year end are translated
at exchange rates as on the reporting date and the resulting net gain
or loss is recognised in the statement of profit and loss. Non-monetary
items, which are measured in terms of historical cost denominated in a
foreign currency, are reported using the exchange rate at the date of
the transaction.
l) Employee stock compensation cost
The Company grants stock options from time to time to its employees and
also to employees of its subsidiaries.
In accordance with the Securities and Exchange Board of India (Share
Based Employee Benefits) Regulations, 2014 and the Guidance Note on
Accounting for Employee Share-based Payments issued by ICAI, the cost
of equity-settled transactions is measured using the intrinsic value
method. The cumulative expense recognised for equity-settled
transactions at each reporting date until the vesting date reflects the
extent to which the vesting period has expired and the Company''s best
estimate of the number of equity instruments that will ultimately vest.
The expense or credit recognised in the statement of profit and loss
for a period represents the movement in cumulative expense recognised
as at the beginning and end of that period and is recognised in
employee benefits expense.
m) Cash and Cash Equivalent
Cash and cash equivalents for the purposes of cash flow statement
comprise cash at bank and in hand and short-term investments with an
original maturity of three months or less.
n) Provisions and contingencies
The Company creates a provision when there is a present obligation as a
result of a past event that probably requires an outflow of resources
embodying economic benefits and a reliable estimate can be made of the
amount of the obligation. A disclosure for a contingent liability is
made when there is a possible obligation or a present obligation that
may, but probably will not, require an outflow of resources. When there
is a possible obligation or a present obligation in respect of which
the likelihood of outflow of resources is remote, no provision or
disclosure is made.
Mar 31, 2014
1. a) Basis of preparation
The financial statements have been prepared and presented under the
historical cost convention on the accrual basis of accounting are in
accordance with the applicable requirements of the Companies Act, 1956
(the ''Act'') and comply in all material aspects with the Accounting
Standards notified under the Companies Act, 1956 ("the Act") read with
the General Circular 15/2013 dated September 13,2013 of the Ministry of
Corporate Affairs in respect of section 133 of the Companies Act, 2013.
b) Use of estimates
The preparation of the financial statements in conformity with
generally accepted accounting principles (''GAAP'') in India requires
management to make estimates and assumptions that affect the reported
amount of assets and liabilities and disclosure of contingent
liabilities on the date of the financial statements. Management
believes that the estimates made in the preparation of financial
statements are prudent and reasonable. Actual future period''s results
could differ from those estimates. Any revision to accounting estimates
is recognised prospectively in current and future periods.
a) Revenue recognition
Revenue from time and material and unit priced contracts are recognised
when services are rendered and related costs are incurred. Revenue from
fixed price contracts, are recognised over the life of the contract
using the proportionate completion method, with contract costs
determining the degree of completion. Foreseeable losses on such
contracts are recognised when probable. Revenue from maintenance
contracts are recognised on pro-rata basis over the period of the
contract. Unbilled revenues included in other current assets represent
cost and earnings in excess of billings as at the Balance Sheet date.
Advance billing included in other current liabilities represent billing
in excess of revenue recognised.
Revenue is recognised net of rebate. The rebate is accrued evenly based
on the probability of achievement of the specified level of sales.
Interest income is recognised on time proportion basis taking into
account the amount outstanding and the rate applicable
Dividend income is recognised when Company''s right to receive dividend
is established.
b) Fixed assets, depreciation and amortization
Fixed assets are stated at the cost of acquisition including incidental
costs related to acquisition and installation less accumulated
depreciation / amortisation. Fixed assets under construction, advances
paid towards acquisition of fixed assets are disclosed as Capital
Advances under Loans and Advances and cost of assets not ready for use
before the year-end, are disclosed as capital work in progress.
Depreciation on fixed assets is provided under Written Down Value
method at the rates specified in Schedule XIV to the Companies Act,
1956 read with the General Circular 15/2013 dated September 13, 2013 of
the Ministry of Corporate Affairs in respect of section 133 of the
Companies Act, 2013. Leasehold improvements are amortised over the
remaining primary period of lease. Intangible assets are amortised over
their respective individual estimated useful lives on a straight line
basis which generally do not exceed ten years. Assets costing less than
Rs. 5,000 are depreciated over a period of one year from date of
acquisition.
c) Investments
Investments, which are readily realisable and intended to be held for
not more than one year from the date on which such investments are
made, are classified as current investments. All other investments are
classified as non-current investments.
On initial recognition, all investments are measured at cost. The cost
comprises purchase price and directly attributable acquisition charges
such as brokerage, fees and duties.
Current investments are carried in the financial statements at lower of
cost and fair value. Non-current investments are carried at cost and
provisions recorded to recognise any decline, other than temporary, in
the carrying value of each investment.
Profit or loss on sale of investments is recorded on transfer of title
from the Company and is determined as the difference between the sales
price and the carrying value of the investment.
d) Impairment of Assets
In accordance with AS 28 ''Impairment of Assets'' notified under the
Companies Act, 1956 read with the General Circular 15/2013 dated
September 13, 2013 of the Ministry of Corporate Affairs in respect of
section 133 of the Companies Act, 2013, the carrying amounts of the
Company''s assets are reviewed at each Balance Sheet date to determine
whether there is any impairment. The recoverable amount of the assets
(or where applicable, that of the cash generating unit to which the
asset belongs) is estimated as the higher of its net selling price and
its value in use. An impairment loss is recognised whenever the
carrying amount of an asset or a cash generating unit exceeds its
recoverable amount. Impairment loss is recognised in the Statement of
Profit and Loss or against revaluation surplus where applicable.
e) Employee benefits
Provident Fund
All employees of the Company are entitled to receive benefits under the
Provident Fund, which is a defined contribution plan. Both the employee
and the employer make monthly contributions to the plan at a
predetermined rate of the employees'' basic salary. These contributions
are made to the fund administered and managed by the Government of
India. The Company''s contributions are charged to Statement of Profit
and Loss account on accrual basis. The Company has no further
obligations under these plans beyond its monthly contributions.
Gratuity
The Company provides for gratuity benefit, which is a defined benefit
plan, covering all its eligible employees. Liability under gratuity
plan is determined on actuarial valuation done by Life Insurance
Corporation of India (LIC) during the year, based upon which the
Company contributes to the scheme with LIC. The Company also provides
for the additional liability over the amount determined by LIC based on
an actuarial valuation done by an independent actuary as at the Balance
Sheet date.
Compensated Absences
The employees are entitled to leave encashment. Provision for the
liability of employee''s unutilised leave balances has been made based
on an actuarial valuation carried out by an independent actuary as at
the Balance Sheet date.
f) Taxation
Current taxes
Current income-tax expense is recognised in accordance with the
provisions of Indian Income Tax Act, 1961.
Minimum Alternate Tax (MAT) paid in accordance with the tax laws gives
rise to future economic benefits in the form of adjustment of future
income tax liability. The same is considered as an asset if there is
convincing evidence that the Company will pay normal income tax after
the tax holiday period. Accordingly, MAT credit is recognised as an
asset in the Balance Sheet when it is probable that the future economic
benefit associated with it will flow to the Company and the asset can
be measured reliably.
Deferred taxes
Deferred tax assets and liabilities are recognised for the future tax
consequences attributable to timing differences that result between the
profits offered for income taxes and the profits as per the financial
statements. Deferred tax assets and liabilities are measured using the
tax rates and the tax laws that have been enacted or substantively
enacted as at the Balance Sheet date.
Deferred tax assets are recognised only if there is reasonable
certainty that they will be realised and are reviewed for the
appropriateness of their respective carrying values at each Balance
Sheet date.
g) Leases
Operating Lease
Aggregate of lease rentals payable under the non-cancellable operating
lease arrangements (over the initial and subsequent periods of lease)
are expensed to the Statement of Profit and Loss as computed under the
straight line method.
h) Foreign currency transactions
Transactions in foreign currency are recorded at the exchange rate
prevailing on the date of transaction. Net exchange gain or loss
resulting in respect of foreign exchange transactions settled during
the year is recognised in the Statement of Profit and Loss.
Foreign currency denominated assets and liabilities at year end are
translated at exchange rates as on that date and the resulting net gain
or loss is recognised in the Statement of Profit and Loss.
i) Forward contracts and options in foreign currencies
Forward contracts are entered into to hedge the foreign currency risk.
The premium or discount on all such contracts arising at the inception
of each contract is amortised as income or expense over the life of the
contract. Any profit or loss arising on maturity, cancellation or
renewal of forward contracts is recognised as income or as expense for
the year.
The premium on option contract is recognised as an expense over the
life of the contract.
j) Provisions and contingencies
The Company creates a provision when there is a present obligation as a
result of a past event that probably requires an outflow of resources
embodying economic benefits and a reliable estimate can be made of the
amount of the obligation. A disclosure for a contingent liability is
made when there is a possible obligation or a present obligation that
may, but probably will not, require an outflow of resources. When there
is a possible obligation or a present obligation in respect of which
the likelihood of outflow of resources is remote, no provision or
disclosure is made.
Mar 31, 2013
A) Revenue recognition
Revenue from data analytics services and process solutions comprise of
both time/unit price and fixed fee based service contracts. Revenue
from time/unit price based contracts is recognised on completion of the
related services and is billed in accordance with the contractual terms
specified in the respective customer contracts. Revenue from fixed fee
based service contracts is recognised on achievement of performance
milestones specified in the customer contracts. Unbilled revenue
represents costs incurred and revenue recognised on contracts to be
billed in subsequent periods as per the terms of the contract.
Revenue is recognised net of rebate. The rebate is accrued evenly based
on the probability of achievement of the specified level of sales.
Interest income is recognised using the time proportion method, based
on rates implicit in the transaction. Dividend income is recognised
when Company''s right to receive dividend is established.
b) Fixed assets, depreciation and amortisation
Fixed assets are stated at the cost of acquisition including incidental
costs related to acquisition and installation less accumulated
depreciation / amortisation. Fixed assets under construction, advances
paid towards acquisition of fixed assets are disclosed as Capital
Advances under Loans and Advances and cost of assets not ready for use
before the year-end, are disclosed as capital work in progress.
Depreciation on fixed assets is provided under Written Down Value
method at the rates specified in Schedule XIV to the Companies Act,
1956. Leasehold improvements are amortised over the remaining primary
period of lease. Intangible assets are amortised over their respective
individual estimated useful lives on a straight line basis which
generally do not exceed ten years. Assets costing less than Rs. 5,000
are depreciated over a period of one year from date of acquisition.
c) Investments
Investments, which are readily realisable and intended to be held for
not more than one year from the date on which such investments are
made, are classified as current investments. All other investments are
classified as non-current investments.
On initial recognition, all investments are measured at cost. The cost
comprises purchase price and directly attributable acquisition charges
such as brokerage, fees and duties.
Current investments are carried in the financial statements at lower of
cost and fair value. Non-current investments are carried at cost and
provisions recorded to recognise any decline, other than temporary, in
the carrying value of each investment.
Profit or loss on sale of investments is recorded on transfer of title
from the Company and is determined as the difference between the sales
price and the carrying value of the investment.
d) Impairment of Assets
In accordance with AS 28 ''Impairment of Assets'' notified under the
Companies Act, 1956, the carrying amounts of the Company''s assets are
reviewed at each balance sheet date to determine whether there is any
impairment. The recoverable amount of the assets (or where applicable,
that of the cash generating unit to which the asset belongs) is
estimated as the higher of its net selling price and its value in use.
An impairment loss is recognised whenever the carrying amount of an
asset or a cash generating unit exceeds its recoverable amount.
Impairment loss is recognised in the Statement of Profit and Loss or
against revaluation surplus where applicable.
e) Employee benefits Provident Fund
All employees of the Company are entitled to receive benefits under the
Provident Fund, which is a defined contribution plan. Both the employee
and the employer make monthly contributions to the plan at a
predetermined rate of the employees'' basic salary. These
contributions are made to the fund administered and managed by the
Government of India. The Company''s contributions are charged to the
Statement of Profit and Loss on accrual basis. The Company has no
further obligations under these plans beyond its monthly contributions.
Gratuity
The Company provides for gratuity benefit, which is a defined benefit
plan, covering all its eligible employees. Liability under gratuity
plan is determined on actuarial valuation done by Life Insurance
Corporation of India (LIC) during the year, based upon which the
Company contributes to the scheme with LIC. The Company also provides
for the additional liability over the amount determined by LIC based on
an actuarial valuation done by an independent actuary as at the balance
sheet date.
Compensated Absences
The employees are entitled to leave encashment. Provision for the
liability of employee''s unutilized leave balances has been made based
on an actuarial valuation carried out by an independent actuary as at
the balance sheet date.
f) Taxation Current taxes
Current income-tax expense is recognised in accordance with the
provisions of Indian Income Tax Act, 1961.
Minimum alternative tax (MAT) paid in accordance with the tax laws
gives rise to future economic benefits in the form of adjustment of
future income tax liability. The same is considered as an asset if
there is convincing evidence that the Company will pay normal income
tax after the tax holiday period. Accordingly, MAT credit is recognised
as an asset in the balance sheet when it is probable that the future
economic benefit associated with it will flow to the Company and the
asset can be measured reliably.
Deferred taxes
Deferred tax assets and liabilities are recognised for the future tax
consequences attributable to timing differences that result between the
profits offered for income taxes and the profits as per the financial
statements. Deferred tax assets and liabilities are measured using the
tax rates and the tax laws that have been enacted or substantively
enacted as at the balance sheet date.
Deferred tax assets are recognized only if there is reasonable
certainty that they will be realised and are reviewed for the
appropriateness of their respective carrying values at each balance
sheet date.
g) Leases Operating Lease
Aggregate of lease rentals payable under the non-cancellable operating
lease arrangements (over the initial and subsequent periods of lease)
are expensed to the Statement of Profit and Loss as computed under the
straight line method.
h) Foreign currency transactions
Transactions in foreign currency are recorded at the exchange rate
prevailing on the date of transaction. Net exchange gain or loss
resulting in respect of foreign exchange transactions settled during
the year is recognised in the Statement of Profit and Loss.
Foreign currency denominated assets and liabilities at year end are
translated at exchange rates as on that date and the resulting net gain
or loss is recognised in the Statement of Profit and Loss.
i) Forward contracts and options in foreign currencies
Forward contracts are entered into to hedge the foreign currency risk.
The premium or discount on all such contracts arising at the inception
of each contract is amortised as income or expense over the life of the
contract. Any profit or loss arising on maturity, cancellation or
renewal of forward contracts is recognised as income or as expense for
the year.
The premium on option contract is recognised as an expense over the
life of the contract.
j) Provisions and contingencies
The Company creates a provision when there is a present obligation as a
result of a past event that probably requires an outflow of resources
embodying economic benefits and a reliable estimate can be made of the
amount of the obligation. A disclosure for a contingent liability is
made when there is a possible obligation or a present obligation that
may, but probably will not, require an outflow of resources. When there
is a possible obligation or a present obligation in respect of which
the likelihood of outflow of resources is remote, no provision or
disclosure is made.
Mar 31, 2012
A) Presentation and disclosure of financial statements
During the year ended March 31, 2012, the revised Schedule VI notified
under the Companies Act 1956, has become applicable to the Company, for
preparation and presentation of its financial statements. The adoption
of revised Schedule VI does not impact recognition and measurement
principles followed for preparation of financial statements. However,
it has significant impact on presentation and disclosures made in the
financial statements. The Company has also reclassified the previous
year figures in accordance with the requirements applicable in the
current year.
b) Revenue recognition
Revenue from data analytics services and process solutions comprise of
both time/unit price and fixed fee based service contracts. Revenue
from time/unit price based contracts is recognised on completion of the
related services and is billed in accordance with the contractual terms
specified in the respective customer contracts. Revenue from fixed fee
based service contracts is recognised on achievement of performance
milestones specified in the customer contracts. Unbilled revenue
represents costs incurred and revenue recognised on contracts to be
billed in subsequent periods as per the terms of the contract.
Revenue is recognised net of rebate. The rebate is accrued evenly based
on the probability of achievement of the specified level of sales.
Interest income is recognised using the time proportion method, based
on rates implicit in the transaction.
Dividend income is recognised when Company's right to receive dividend
is established.
c) Fixed assets, depreciation and amortisation
Fixed assets are stated at the cost of acquisition including incidental
costs related to acquisition and installation less accumulated
depreciation/amortisation. Fixed assets under construction, advances
paid towards acquisition of fixed assets are disclosed as Capital
Advances under Loans and Advances and cost of assets not ready for use
before the year-end, are disclosed as capital work in progress.
Depreciation/amortisation on fixed assets is provided underwritten Down
Value method at the rates specified in Schedule XIV to the Companies
Act, 1956, except in respect of leasehold improvements which are
amortised over the period of lease and computer software which are
amortised over the estimated useful lives which generally do not exceed
six years. Assets costing less than Rs. 5,000 are fully depreciated in
the year of purchase.
d) Investments
Investments, which are readily realizable and intended to be held for
not more than one year from the date on which such investments are
made, are classified as current investments. All other investments are
classified as non-current investments.
On initial recognition, all investments are measured at cost. The cost
comprises purchase price and directly attributable acquisition charges
such as brokerage, fees and duties.
Current investments are carried in the financial statements at lower of
cost and fair value. Non-current investments are carried at cost and
provisions recorded to recognise any decline, other than temporary, in
the carrying value of each investment.
Profit or loss on sale of investments is recorded on transfer of title
from the Company and is determined as the difference between the sales
price and the carrying value of the investment.
e) Impairment of Assets
In accordance with AS 28 'Impairment of Assets' notified under the
Companies Act, 1956, the carrying amounts of the Company's assets are
reviewed at each balance sheet date to determine whether there is any
impairment. The recoverable amount of the assets (or where applicable,
that of the cash generating unit to which the asset belongs) is
estimated as the higher of its net selling price and its value in use.
An impairment loss is recognised whenever the carrying amount of an
asset or a cash generating unit exceeds its recoverable amount.
Impairment loss is recognised in the Statement of Profit and Loss or
against revaluation surplus where applicable.
f) Retirement benefits Provident Fund
All employees of the Company are entitled to receive benefits under the
Provident Fund, which is a defined contribution plan. Both the employee
and the employer make monthly contributions to the plan at a
predetermined rate of the employees' basic salary. These contributions
are made to the fund administered and managed by the Government of
India. The Company's contributions are charged to Profit and Loss
account on accrual basis. The Company has no further obligations under
these plans beyond its monthly contributions.
Gratuity
The Company provides for gratuity benefit, which is a defined benefit
plan, covering all its eligible employees. Liability under gratuity
plan is determined on actuarial valuation done by Life Insurance
Corporation of India (LIC) during the year, based upon which the
Company contributes to the scheme with LIC. The Company also provides
for the additional liability over the amount determined by LIC based on
an actuarial valuation done by an independent actuary as at the balance
sheet date.
Compensated Absences
The employees are entitled to leave encashment. Provision for the
liability of employee's unutilised leave balances has been made based
on an actuarial valuation carried out by an independent actuary as at
the balance sheet date.
g) Taxation Current taxes
Current income-tax expense is recognised in accordance with the
provisions of Indian Income Tax Act, 1961.
Minimum alternative tax (MAT) paid in accordance with the tax laws
gives rise to future economic benefits in the form of adjustment of
future income tax liability. The same is considered as an asset if
there is convincing evidence that the
Company will pay normal income tax after the tax holiday period.
Accordingly, MAT credit is recognised as an asset in the balance sheet
when it is probable that the future economic benefit associated with it
will flow to the Company and the asset can be measured reliably.
Deferred taxes
Deferred tax assets and liabilities are recognised for the future tax
consequences attributable to timing differences that result between the
profits offered for income taxes and the profits as per the financial
statements. Deferred tax assets and liabilities are measured using the
tax rates and the tax laws that have been enacted or substantively
enacted as at the balance sheet date.
Deferred tax assets are recognized only if there is reasonable
certainty that they will be realised and are reviewed for the
appropriateness of their respective carrying values at each balance
sheet date.
h) Leases
Operating Lease
Aggregate of lease rentals payable under the non-cancellable operating
lease arrangements (over the initial and subsequent periods of lease)
are expensed to the Statement of Profit and Loss as computed under the
straight line method.
i) Foreign currency transactions
Transactions in foreign currency are recorded at the exchange rate
prevailing on the date of transaction. Net exchange gain or loss
resulting in respect of foreign exchange transactions settled during
the year is recognised in the Statement of Profit and Loss.
Foreign currency denominated assets and liabilities at year end are
translated at exchange rates as on that date and the resulting net gain
or loss is recognised in the Statement of Profit and Loss.
j) Forward contracts and options in foreign currencies
Forward contracts are entered into to hedge the foreign currency risk.
The premium or discount on all such contracts arising at the inception
of each contract is amortised as income or expense over the life of the
contract. Any profit or loss arising on maturity, cancellation or
renewal of forward contracts is recognised as income or as expense for
the year.
The premium on option contract is recognised as an expense over the
life of the contract.
k) Provisions and contingencies
The Company creates a provision when there is present obligation as a
result of a past event that probably requires an outflow of resources
embodying economic benefits and a reliable estimate can be made of the
amount of the obligation. A disclosure for a contingent liability is
made when there is a possible obligation or a present obligation that
may, but probably will not, require an outflow of resources. When there
is a possible obligation or a present obligation in respect of which
the likelihood of outflow of resources is remote, no provision or
disclosure is made.
Mar 31, 2011
I. a) Basis of preparation
The financial statements have been prepared and presented under the
historical cost convention on the accrual basis of accounting and
comply with the Accounting Standards (AS) as notified under the
Companies Act, 1956.
b) Use of estimates
The preparation of the financial statements in conformity with
generally accepted accounting principles (ÃGAAP') in India requires
management to make estimates and assumptions that affect the reported
amount of assets and liabilities and disclosure of contingent
liabilities on the date of the financial statements. Management
believes that the estimates made in the preparation of financial
statements are prudent and reasonable. Actual future period's results
could differ from those estimates. Any revision to accounting estimates
is recognised prospectively in current and future periods.
II. Significant Accounting Policies
a) Revenue recognition
Revenue from data analytics services and process solutions comprise of
both time/unit price and fixed fee based service contracts. Revenue
from time/unit price based contracts is recognised on completion of the
related services and is billed in accordance with the contractual terms
specified in the respective customer contracts. Revenue from fixed fee
based service contracts is recognised on achievement of performance
milestones specified in the customer contracts. Unbilled revenue
represents costs incurred and revenue recognised on contracts to be
billed in subsequent periods as per the terms of the contract.
Revenue is recognised net of rebate. The rebate is accrued evenly based
on the probability of achievement of the specified level of sales.
Interest income is recognised using the time proportion method, based
on rates implicit in the transaction.
Dividend income is recognised when Company's right to receive dividend
is established.
b) Fixed assets, depreciation and amortisation
Fixed assets are stated at the cost of acquisition including incidental
costs related to acquisition and installation less accumulated
depreciation/amortisation. Fixed assets under construction, advances
paid towards acquisition of fixed assets and cost of assets not ready
for use before the year-end, are disclosed as capital work in progress.
Depreciation/amortisation on fixed assets is provided under Written
Down Value method at the rates specified in Schedule XIV to the
Companies Act, 1956, except in respect of leasehold improvements which
are amortised over the period of lease and computer software which are
amortised over the estimated useful lives which generally do not exceed
six years. Assets costing less than Rs. 5,000 are fully depreciated in
the year of purchase.
c) Investments
Trade investments are the investments made to enhance the Company's
business interests. Investments are either classified as current or
long-term based on the management's intention at the time of purchase.
Cost for overseas nvestments comprises the Indian Rupee value of the
consideration paid for the investment.
Long-term investments are carried at cost and provisions recorded to
recognise any decline, other than temporary, in the carrying value of
each investment. Current investments are carried at the lower of cost
and fair value.
Profit or loss on sale of investments is recorded on transfer of title
from the Company and is determined as the difference between the sales
price and the then carrying value of the investment.
d) Impairment of Assets
In accordance with AS 28 Impairment of Assets' notified under the
Companies Act, 1956, the carrying amounts of the Company's assets are
reviewed at each balance sheet date to determine whether there is any
impairment. The recoverable amount of the assets (or where applicable,
that of the cash generating unit to which the asset belongs) is
estimated as the higher of its net selling price and its value in use.
An impairment loss is recognised whenever the carrying amount of an
asset or a cash generating unit exceeds its recoverable amount.
Impairment loss is recognised in the Profit and Loss Account or against
revaluation surplus where applicable.
e) Retirement benefits
Provident Fund
All employees of the Company are entitled to receive benefits under the
Provident Fund, which is a defined contribution plan. Both the employee
and the employer make monthly contributions to the plan at a
predetermined rate of the employees' basic salary. These contributions
are made to the fund administered and managed by the Government of
India. The Company's contributions are charged to Profit and Loss
account on accrual basis. The Company has no further obligations under
these plans beyond its monthly contributions.
Gratuity
The Company provides for gratuity benefit, which is a defined benefit
plan, covering all its eligible employees. Liability under gratuity
plan is determined on actuarial valuation done by Life Insurance
Corporation of India (LIC) during the year, based upon which the
Company contributes to the scheme with LIC. The Company also provides
for the additional liability over the amount determined by LIC based on
an actuarial valuation done by an ndependent actuary as at the balance
sheet date.
Compensated Absences
The employees are entitled to leave encashment. Provision for the
liability of employee's unutilised leave balances has been made based
on an actuarial valuation carried out by an independent actuary as at
the balance sheet date.
f) Taxation
Current taxes
Current income-tax expense is recognised in accordance with the
provisions of Indian Income Tax Act, 1961
Minimum alternative tax (MAT) paid in accordance to the tax laws gives
rise to future economic benefits in the form of adjustment of future
income tax liability. The same is considered as an asset if there is
convincing evidence that the Company will pay normal income tax after
the tax holiday period. Accordingly, MAT credit is recognised as an
asset in the balance sheet when it is probable that the future economic
benefit associated with it will flow to the Company and the asset can
be measured reliably.
Deferred taxes
Deferred tax assets and liabilities are recognised for the future tax
consequences attributable to timing differences that result between the
profits offered for income taxes and the profits as per the financial
statements. Deferred tax assets and liabilities are measured using the
tax rates and the tax laws that have been enacted or substantively
enacted as at the balance sheet date.
Deferred tax assets are recognised only if there is reasonable
certainty that they will be realised and are reviewed for the
appropriateness of their respective carrying values at each balance
sheet date.
g) Leases
Operating Lease
Aggregate of lease rentals payable under the non-cancellable operating
lease arrangements (over the initial and subsequent periods of lease)
are expensed to the Profit and Loss Account as computed under the
straight line method.
h) Foreign currency transactions
Transactions in foreign currency are recorded at the exchange rate
prevailing on the date of transaction. Net exchange gain or loss
resulting in respect of foreign exchange transactions settled during
the year is recognised in the Profit and Loss Account.
Foreign currency denominated assets and liabilities at year end are
translated at exchange rates as on that date and the resulting net gain
or loss is recognised in the Profit and Loss Account.
i) Forward contracts and options in foreign currencies
Forward contracts are entered into to hedge the foreign currency risk
of firm commitments or highly probable forecast transactions. The
premium or discount on all such contracts arising at the inception of
each contract is amortised as income or expense over the life of the
contract. Any profit or loss arising on maturity, cancellation or
renewal of forward contracts is recognised as income or as expense for
the year.
The premium on option contract is recognised as an expense over the
life of the contract.
j) Provisions and contingencies
The Company creates a provision when there is present obligation as a
result of a past event that probably requires an outflow of resources
embodying economic benefits and a reliable estimate can be made of the
amount of the obligation. A disclosure for a contingent liability is
made when there is a possible obligation or a present obligation that
may, but probably will not, require an outflow of resources. When there
is a possible obligation or a present obligation in respect of which
the likelihood of outflow of resources is remote, no provision or
disclosure is made.
Mar 31, 2010
I. a) Basis of preparation
The financial statements have been prepared and presented under the
historical cost convention on the accrual basis of accounting and
comply with the Accounting Standards (AS) as notified under the
Companies Act, 1956.
b) Use of estimates
The preparation of the financial statements in conformity with
generally accepted accounting principles (GAAP) in India requires
management to make estimates and assumptions that affect the reported
amount of assets and liabilities and disclosure of contingent
liabilities on the date of the financial statements. Management
believes that the estimates made in the preparation of financial
statements are prudent and reasonable. Actual future periods results
could differ from those estimates. Any revision to accounting estimates
is recognized prospectively in current and future periods.
II. Significant Accounting Policies
a) Revenue recognition
Revenue from data analytics services and process solutions comprises
from both time/unit price and fixed fee based service contracts.
Revenue from time/unit price based contracts is recognised on
completion of the related services and is billed in accordance with the
contractual terms specified in the respective customer contracts.
Revenue from fixed fee based service contracts is recognised on
achievement of performance milestones specified in the customer
contracts. Unbilled revenue represent costs incurred and revenues
recogniseds on contracts to be billed in subsequent periods as per the
terms of the contract.
Interest income is recognised using the time proportion method, based
on rates implicit in the transaction.
Dividend income is recognised when Companys right to receive dividend
is established.
b) Fixed assets, depreciation and amortisation
Fixed assets are stated at the cost of acquisition including incidental
costs related to acquisition and installation less accumulated
depreciation/amortisation. Fixed assets under construction, advances
paid towards acquisition of fixed assets and cost of assets not ready
for use before the year-end, are disclosed as capital work in progress.
Depreciation/amortisation on fixed assets is provided under Written
Down Value method at the rates specified in Schedule XIV to the
Companies Act, 1956, except in respect of leasehold improvements which
are amortised over the period of lease and computer software which are
amortised over the estimated useful lives which generally do not exceed
six years. Assets costing less than Rs. 5,000 are fully depreciated in
the year of purchase.
c) Investments
Trade investments are the investments made to enhance the Companys
business interests. Investments are either classified as current or
long-term based on the managements intention at the time of purchase.
Cost for overseas investments comprises the Indian Rupee value of the
consideration paid for the investment.
Long-term investments are carried at cost and provisions recorded to
recognise any decline, other than temporary, in the carrying value of
each investment. Current investments are carried at the lower of cost
and fair value.
Profit or loss on sale of investments is recorded on transfer of title
from the Company and is determined as the difference between the sales
price and the then carrying value of the investment.
d) Impairment of Assets
In accordance with AS 28 Impairment of Assets notified under the
Companies Act, 1956, the carrying amounts of the Companys assets are
reviewed at each balance sheet date to determine whether there is any
impairment. The recoverable amount of the assets (or where applicable,
that of the cash generating unit to which the asset belongs)
is estimated as the higher of its net selling price and its value in
use. An impairment loss is recognised whenever the carrying amount of
an asset or a cash generating unit exceeds its recoverable amount.
Impairment loss is recognised in the Profit and Loss Account or against
revaluation surplus where applicable.
e) Retirement benefits
Provident Fund
All employees of the Company are entitled to receive benefits under the
Provident Fund, which is a defined contribution plan. Both the employee
and the employer make monthly contributions to the plan at a
predetermined rate of the employees basic salary. These contributions
are made to the fund administered and managed by the Government of
India. The Companys contributions are charged to Profit and Loss
account on accrual basis. The Company has no further obligations under
these plans beyond its monthly contributions.
Gratuity
The Company provides for gratuity benefit, which is a defined benefit
plan, covering all its eligible employees. Liability under gratuity
plan is determined on actuarial valuation done by Life Insurance
Corporation of India (LIC) during the year, based upon which the
Company contributes to the scheme with LIC. The Company also provides
for the additional liability over the amount contributed to LIC based
on an actuarial valuation done by an independent actuary as at the
balance sheet date.
Leave Encashment
The employees are entitled to leave encashment. Provision for the
liability of employees unutilised leave balances has been made based
on an actuarial valuation carried out by an independent actuary as at
the balance sheet date.
f) Taxation
Current taxes
Current income-tax expense is recognised in accordance with the
provisions of Indian Income Tax Act, 1961.
Minimum alternative tax (MAT) paid in accordance to the tax laws gives
rise to future economic benefits in the form of adjustment of future
income tax liability. The same is considered as an asset if there is
convincing evidence that the Company will pay normal income tax after
the tax holiday period. Accordingly, MAT credit is recognised as an
asset in the balance sheet when it is probable that the future economic
benefit associated with it will flow to the Company and the asset can
be measured reliably.
Deferred taxes
Deferred tax assets and liabilities are recognised for the future tax
consequences attributable to timing differences that result between the
profits offered for income taxes and the profits as per the financial
statements. Deferred tax assets and liabilities are measured using the
tax rates and the tax laws that have been enacted or substantively
enacted as at the balance sheet date.
Deferred tax assets are recognised only if there is reasonable
certainty that they will be realised and are reviewed for the
appropriateness of their respective carrying values at each balance
sheet date.
Fringe Benefits
Provision for Fringe Benefits Tax is made in accordance with the Income
Tax Act, 1961.
g) Leases
Operating Lease
Aggregate of lease rentals payable under the non-cancellable operating
lease arrangements (over the initial and subsequent periods of lease)
are expensed to the Profit and Loss Account as computed under the
straight line method.
h) Foreign currency transactions
Transactions in foreign currency are recorded at the exchange rate
prevailing on the date of transaction. Net exchange gain or loss
resulting in respect of foreign exchange transactions settled during
the year is recognised in the Profit and Loss Account.
Foreign currency denominated assets and liabilities at year end are
translated at exchange rates as on that date and the resulting net gain
or loss is recognised in the Profit and Loss Account.
i) Forward contracts and options in foreign currencies
Forward contracts are entered into to hedge the foreign currency risk
of firm commitments or highly probable forecast transactions. The
premium or discount on all such contracts arising at the inception of
each contract is amortised as income or expense over the life of the
contract. Any profit or loss arising on maturity, cancellation or
renewal of forward contracts is recognised as income or as expense for
the year.
The premium on option contract is recognised as an expense over the
life of the contract.
j) Provisions and contingencies
The Company creates a provision when there is present obligation as a
result of a past event that probably requires an outflow of resources
embodying economic benefits and a reliable estimate can be made of the
amount of the obligation. A disclosure for a contingent liability is
made when there is a possible obligation or a present obligation that
may, but probably will not, require an outflow of resources. When there
is a possible obligation or a present obligation in respect of which
the likelihood of outflow of resources is remote, no provision or
disclosure is made.