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Notes to Accounts of Hinduja Global Solutions Ltd.

Mar 31, 2023

Terms and rights attached to equity shares

Equity Shares: The company has one class of equity shares having a par value of R10 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of Interim Dividend which are approved by Board of Directors in Board Meeting . In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

Business Process Management

In response to the COVID-19 pandemic, the Company initiated business continuity program in March 2020 and facilitated its employees to work remotely/work from home where customers have consented. Our business continuity program and the design of our processes allow for remote execution with accessibility to secure data. Due to the nature of the pandemic, the Company will continue to monitor developments to identify significant uncertainties relating to revenue in future periods.

Revenue is recognized at Point in Time basis in respect of the services provided by the company.

The Company believes that the below disaggregation best depicts the nature, amount, timing and uncertainty of revenue and cash flows from economic factors.

ii) Media and Digital

While the Company believes strongly that it has a rich portfolio of services, the impact on future revenue streams could come from resource constraints or their services no-longer being availed by their customers due to pro-longed lock-down situations and the customers postponing their discretionary spends due to change in priorities. Media & Communications business, is India''s premier integrated Digital Delivery Platforms Company delivering services via satellite, digital cable and broadband to over 5 million customers across 1,500 cities and towns in India.

The Company earns installation revenue on activation of set-top boxes (''STB'') at customer premises, thus money is collected on or before installation of STB. In case of subscription income, the Company largely operates on limited customer base / geographies where the credit limit is less than a year. Also, channel placement / carriage income and LCN income from broadcasters have similar credit risks.

The following table provides a reconciliation of the revenue recognised in the statement of profit and loss with the contract price:

35 Contingent Liabilities

a) Contingent Liabilities

A) Claims against the Company not acknowledged as debts:

Particulars

March 31, 2023

March 31, 2022

1.

Income Tax demand

(i)

Prior AY 2007-08 (Refer note 1& 2 below and Note 48 (II))

16,786.39

16,616.33

(ii)

From AY 2007-08 (Refer note 2 below)

10,611.01

11,558.96

(iii)

Others

13,840.96

6,143.59

2

Claims against the company not acknowledged as debts relating to:

Entertainment tax (refer note 3 below)

2,192.55

2,193.00

Cable Television Related Cases

234.16

234.16

Service tax

12,794.00

12,794.00

Sales Tax and Value Added Tax

3,899.17

4,024.93

Custom Duty

1,961.33

1,961.33

Local Body Tax

73.42

73.42

License fee (Department of Telecommunication) (refe note 6 below)

58,711.82

58,711.82

Goods and Service Tax

99.94

99.94

3

Gaurantees/counter guarantees given by the company to:

Bank guarantees given to various authorities

198.00

4,198.00

Custom authorities

347.00

347.00

Other commitments

4

Provident fund

409.00

409.00

Notes:

1. NDL Ventures Limited (Formerly known as NXTDIGITAL Limited) has received income tax demand

pertaining to IT/ ITES business aggregating S 7,144.66 Lakhs in respect of period prior to October 1, 2006 which is reimbursable by the Company pursuant to the Scheme of Arrangement and Reconstruction for demerger of IT/ITES business into the Company sanctioned by High Court of Judicature of Bombay and made effective on March 7, 2007. In this regard, the Company had paid S 5,550 Lakhs to NDL Ventures Limited to discharge part payment of disputed income tax dues pertaining to IT/ITES business. Out of this amount, the Company has received refund of S Nil including interest of S Nil during the year (March 31,2022- S Nil including interest of S Nil).

NDL Ventures Limited (Formerly known as NXTDIGITAL Limited) also received income tax demand pertaining to IT/ ITES business in respect of the same issue for the A.Y 2002-03 to A.Y 200708. Pursuant to the Scheme of Arrangement and Reconstruction for merger of Digital, Media & Communications Business into the Company sanctioned by High Court of Judicature of Bombay and made effective on February 1,2022, all liabilites of the demerged undertaking stand transferred to Resulting Company. The aggregate demand is S 16,786.40 Lakhs including interest S7,985.72 Lakhs (March 31, 2022 - S16,616.33 Lakhs, S 7,815.61 Lakhs respectively).

2. The Company has received Income Tax Demand orders for the A.Y (Assessment Year) 2007-08 to A.Y 2011-12. In all the above assessment orders, demand has been raised mainly on account of denial of section 10A benefit as per the Income Tax Act 1961 in respect of profit earned by the Company''s undertaking in Software Technology Parks. The aggregate demand is S 10,611.01 Lakhs including interest S1,925.01 Lakhs (March 31, 2022 - S11,558.97 Lakhs, S1,925.01 Lakhs respectively).

Against the above demands, the respective companies have made various appeals before the relevant Appellate Authority; NDL Ventures Limited Limited received a favourable order from Honourable High Court of Bombay in respect of year 2005-06 dated July 26, 2017. The Honourable Supreme Court of India has admitted a Special Leave Petition (SLP) in respect of the same matter for the years A.Y 2002-03 to A.Y 2005-06. Future cash outflow in respect of above, if any, is determinable only on receipt of judgements/ decisions pending with relevant authorities and accordingly the amounts are disclosed as a contingent liability. In view of legal advice obtained the Management considers these disallowances as not tenable against us, and therefore no provision for this tax contingency has been recognised.

In response to the demand notice issued by the ET authorities in Nagpur, the Company has filed a writ petition with Hon''ble High Court of Bombay (Nagpur Bench) challenging the order of Collector and the validity of GR. The matter shifted to Bombay Bench for Consolidation with writ filed by other MSO''s and local cable operator (''LCO'') associations in Mumbai and Nashik for similar demand order issued. In the interim, for writ filed by the Company before Nagpur Bench, the Hon''ble High Court of Bombay has stayed any recovery proceeding against the Company and in all writ petitions, Hon''ble High Court of Bombay has directed the LCOs to deposit the ET directly to the Entertainment tax authorities or through the Hon''ble High Court of Bombay. Based on the Orders of the Court, collectors in Mumbai have started to collect the Entertainment tax from the LCO''s.

The Government of Maharashtra has vide an Ordinance dated 10 February 2014 amended the Maharashtra Entertainment Duty Act, 1923 and the said ordinance was replaced with an Act and amendments passed by the ordinance become part of the Maharashtra Entertainment Duty Act, 1923 vide amendment dated 25 July 2014. The constitutional validity of the Ordinance and the Amendments has been challenged by another MSO and a LCO federation in Maharashtra before the Hon''ble High Court of Bombay. The Company has amended its writ petitions filed before Hon''ble High Court of Bombay.

Based on the above facts, the Company is of the opinion that liability for payment of ET on LCO points for the period April 2013 to June 2017 is not required to be provided in its books as the amount of entertainment tax payable is not ascertainable by the company at this stage and it is not payable by the Company.

4 Order from Service tax authorities for reversal of Cenvat Credit on Counter-veiling duty (‘CVD'') paid on import of Set-top boxes (‘STB'')

Effective November 2012, Digital Access System (DAS) was introduced in the broadcasting industry in India, in a phased manner, pursuant to which the Company had paid CVD on imported STB''s. The Company issues STBs to end subscribers through LCOs (in some cases directly to subscribers) on payment of activation charges. These STBs are not sold to customers and continue to be asset of the Company. STB''s are used for providing output service i.e. Cable operator service. The Company has claimed input credit of CVD paid on import against the output liability on Cable operator services under Rule 3 of CENVAT Credit Rules, 2004. The Service Tax Authorities had issued two show cause notice for the period April 2010 to December 2014 and January 2015 to June 2017, denying the claim of the Company for providing Cable operator services for LCO Points, contending STBs are not necessary for providing said services, thus CVD paid on such STBs cannot be availed as input credit under Cenvat Credit Rules, 2004. The matter was heard by Commissioner of the Service Tax during the current year and an Order was passed confirming the demand in both the show cause notices along with penalty amounting to S 12,653 lakhs. In response to the Order, the Company has filed an appeal with the Central Excise and Appellate Tribunal (CESTAT) in April 2019. Based on the above facts, the Company is of the opinion that it still remains the owner of STBs and such STBs have direct nexus with providing of Cable operator services and is thus eligible for input credit and accordingly does not require to make any provisions in the books.

5 Value added tax (VAT) material disputes are given below :

The Company had paid service tax on the activation fees of set top boxes (STB). The VAT authorities in the state of Telangana, Uttar Pradesh, Andhra Pradesh, Karnataka and Chattisgarh passed orders respectively treating the transaction as transfer of Right to use/ Deemed sale and levied VAT. The Company has filed appeal with respective Appellate authorities.

The Company is of the opinion that it still remains the owner of STBs. Though physical control of STB is passed on to the end subscriber effective control remains with the Company hence the transaction is not required to be taxed as transfer of Right to use/ Deemed sale. Accordingly the Company is of the opinion that it does not require to make any provisions in the books for the said demand.

6 License fee demand notice from Department of Telecommunication :

The Company received notices during the financial year 2017-2018 from the Department of Telecommunication (DoT) towards alleged revenue loss due to license fees payable along with interest and penalty thereon, for the period 2010-2011 to 2014-2015, aggregating to R 50,775.24 lakhs, under the License No. 820-5/2002-LR dated 16 May 2002 (hereinafter referred to as ISP License) and Unified License bearing No. 821-52/2013-DS for ISP Category A for PAN India. During the said period i.e from 2010-15, the ISP license was in the name of IndusInd Media and Communications Limited (IMCL) which was subsequently transferred to ONEOTT Intertainment Limited (OIL) with effect from 1 April 2015. DoT demand on the Company was stayed by TDSAT vide its order dated 20 December 2017 and the said stay has not been vacated as on the date of balance sheet.

Although the above referred license has been transferred by IMCL to OIL, the amounts mentioned above have been reported under contingent liability in view of the counter indemnity given by IMCL in favour of OIL, against the indemnity given by OIL to DoT to service any past liability in connection with the said license.

Further, in connection with Network Operations Services availed by the Company from OIL, for the periods starting from Mar 2018 onwards, the Company has given an indemnity to reimburse a sum of S 940.17 lakhs (as at 31st Mar 2022: R937 lakhs) along with applicable interest, penalty and interest on penalty towards license fees payable on the adjusted gross revenues thereon, in the event the same becomes a crystallized liability in the hands of OIL.

In light of the Hon''ble Supreme Court''s judgement in FY 20, DoT decided to re-examine all demand orders raised and asked all license holders to submit comprehensive representations of the issues involved. The Company have filed representations at appropriate authorities denying the alleged liabilities.

TDSAT vide its order dated 12 June 2020 has set aside the impugned demands and directed DoT to issue directives for maintaining level playing field for all operators.

Relying on an independent legal expert''s opinion, the Company and OIL continue to believe that the demands will not be upheld and therefore has disclosed these as Contingent Liabilities.

The Company has received revised demand for F.Y2014-15, the earlier demand was R 9,017.85 lakhs, which got revised to R 16,014.27 lakhs.

7 Custom Duty on Activation Fee

The Company had received Show cause notice from the Directorate of Revenue Intelligence (DRI), Mumbai for evasion of Custom Duty on payment of activation fees to Nagra Vision SA and inadvertent claim of Exemption for payment of Special Additional Duty pursuant to Notification No. 21/2012 dated 17 March 2012.The Additional Director General DRI (Adjudication) vide its order dated 28 February 2018 rejected the submissions made by the

Company and passed the order confirming a demand of $ 927 Lakhs (including penalty and redemption fine). The Company has filed an Appeal before the CESTAT, Mumbai in June 2018. Based on the contention that the amount paid to Nagra Vision SA is towards activation fees and not licence fees, the Company expects that the outcome of the matter will be favorable to the Company on the basis of the Appeal and hence has included the demand as above under contingent liabilities. In addition to above order, during the Previous Year, Company had received a new Show Cause Notice on similar issue for Cable and HITS Division. The reply has already been filed by the Company and the matter got heared before the Adjudicating Authority in the previous year. Company has received a lettter dated 26th March, 2021, intimating that the adjudicatiion proceeding to be kept pending under the relevant provision of the Custom Act, 1962. The decision to keep the procedings on hold is on account of the Hon''ble Supreme Court Judgment dated 09/03/2021 in the case of M/s. Canon India Private Limited V/s. Commissioner of Customs.

8 Provident Fund

In February 2019, the Hon''ble Supreme Court of India vide its judgment and subsequent review petition of August 2019 has ruled in respect of compensation for the purpose of Provident Fund contribution under the Employee''s Provident Fund Act. The Company has assessed possible outcomes of the judgment on determination of provident fund contributions and based on the Company''s current evaluation of the judgment, it is not probable that certain allowances paid by the Company will be subject to payment of provident fund. The Company will continue to monitor and evaluate its position based on future events and developments.

9 The Company has proceedings pending with the Income tax, Service tax authorities, Customs tax authorities, Sales tax authorities and Local body tax authorities. The Company has reviewed all its pending proceedings and has adequately provided where provisions are required and disclosed as contingent liabilities where applicable and quantifiable, in these standalone financial statements. The Company does not expect the outcome of these proceedings to have a materially adverse effect on these standalone financial statements.

10 The Company has given an undertaking to three banks (i.e. Yes Bank Ltd., Axis Bank Ltd. and RBL Bank Ltd.) to retain shareholding to the extent of 51% in the subsidiary viz. IndusInd Media & Communications Limited (IMCL) until all the amounts outstanding under various Facility Agreements entered into by IMCL with the said banks are repaid in full by IMCL. As at the balance sheet date there are no outstanding amounts payable to RBL Bank Limited.

b) Capital and other commitments:

(i) Estimated Amount of Contracts (net of capital advances) remaining to be executed on capital account R 2,734.09 Lakhs. (March 31, 2022: R 4,310.11 Lakhs).

(ii) The Company has issued an Undertaking to the following step-down subsidiaries to provide need based financial support and is committed, if needed, to continue such support to meet the ongoing obligations.

i. HGS Mena FZ LLC

ii. C-Cubed B.V

iii. C-Cubed N.V

iv. HGS St. Lucia

v. HGS CX Technologies Inc.(including subsidiaries)

There has been no payments during the year against these undertakings.

Goodwill is tested for impairment at each reporting date. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to the Company Cash Generating Unit (“”CGU””) or groups of CGUs expected to benefit from the synergies arising from the business combinations. A CGU is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or group of assets.

Impairment occurs when the carrying amount of a CGU, including the goodwill, exceeds the estimated recoverable amount of the CGU. The recoverable amount of CGU is higher of its fair value less cost to sell and its value-in-use. Value-in-use is the present value of the future cash flows expected to be derived from the CGU.

The recoverable amount was computed based on value-in-use calculations. Value-in-use is calculated using the pre -tax discount rates.

The future cash flows are based on the medium and long-term business plans approved by the Management and reviewed by the board of directors

Based on the above no impairment was identified as of March 31, 2023 and March 31, 2022 as the recoverable value of CGU''s exceeded their carrying value. An analysis of the calculation''s sensitivity to a change in the key parameters (revenue growth, operating margin, discount rate and long-term growth rate) based on reasonably probable assumptions, did not identify any probable scenarios where the recoverable amount of the CGU would fall below their respective carrying amounts.

Reasonable sensitivities in the key assumptions consequent to the change in estimated future economic conditions is unlikely to cause the carrying amount of any of the cash generating units to exceed the recoverable amount.

41 Employee benefit obligations

(i) Compensated Absences

The leave obligations cover the Company''s liability for earned leaves of employees.

The amount of the provision of \1,883.69 Lakhs (As at March 31, 2022: \1,867.49 Lakhs) out of which, \ 621.39 Lakhs has been disclosed as current and \1,262.30 Lakhs is disclosed as non-current. Based on past experience, the Company does not expect all employees to take the full amount of accrued leaves to make payments in lieu of accrued leaves within the next 12 months.

(ii) Deferred Performance Incentive

The Board of Directors at their meeting held on March 28, 2019 approved an employee defined benefit plan called as “Deferred Payment Incentive'''' Plan (DPI 2019). The Scheme is applicable to eligible employees of the Company and its subsidiaries including eligible employees transferred pursuant to the sale of healthcare business and in the manner specifically provided for in the Scheme. Payments under this defined employee benefit plan is linked to the Company achieving certain profit targets by the financial year ending March 31, 2022. Pursuant to the plan, the Company carries a NIL provision of as at March 31, 2023. (As at March 31, 2022: \10,882.14 lakhs)

(iii) Post-employment obligations

a) Gratuity

The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/ termination is the employees last drawn basic salary per month computed proportionately for 15 days multiplied for the number of years of service. The gratuity plan is a funded plan and the Company makes contributions to Life Insurance Corporation of India (LIC) as per Investment Pattern stipulated for Pension and Group Schemes Fund by Insurance Regulatory and Development Authority Regulations. The Company does not fully fund the liability and maintains a target level of funding to be maintained over a period of time based on estimations of expected gratuity payments.

b) Pension benefits

The Branch has a non-contributory and actuarially computed defined benefit pension plan covering substantially all of its employees. The benefits are based on years of service and compensation at the date of retirement, as defined in the policies of the Company.

The plan provides lump sum benefits upon retirement, death, total and permanent disability and separation from service from completion of at least five years of service. Under the provisions of the retirement plan, the normal retirement age is 60 with at least 5 years of credited service, but early retirement is possible for employees reaching age 50 with at least 10 years of credited service. Normal retirement is entitled to 1.5 months basic salary per year of service while early retirement with 10 to 15 years'' service is entitled to 1 month basic salary per year of service or 1.5 months per year of service if tenure is beyond 15 years. Employees below 50 years old with at least 10 years of service are entitled to the retirement benefit in case of voluntary separation. 10 to 15 years of service is eligible for 50% of monthly basic pay per year of service, 75% for 15 to 20 years, and 100% of monthly basic pay for 20 years tenure or more.

Plan assets are held in trust by a trustee bank, which is governed by local regulations and practice in the Philippines.

Investments are well diversified, such that the failure of any single investment would not have a material impact on the overall level of assets. The largest proportion of assets is invested in debt securities. The Branch believes that debt securities offer the best returns over long term with an acceptable level of risk.

(iv) Defined contribution plans

The Company has classified various benefits provided to employees as under:

a) Provident Fund

b) Superannuation Fund

c) State Defined Contribution Plans:

i Employers'' Contribution to Employee''s State Insurance

d) Other Statutory contribution schemes

The discount rate is primarily based on the prevailing market yields of government securities for the estimated term of the obligations. The estimates of future salary increases takes into account the inflation, seniority and other relevant factors. Attrition rate considered is the Management estimate based on past experience of employee turnover. The expected return on plan assets is based on expectation of the average rate of return expected on investment of the fund.

(vii) Sensivity Analysis

The sensitivity of the defined benefit obligation to changes in the weighted principal assumptions is:

The above sensitivity analysis are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognized in the balance sheet.

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior year.

(ix) Risk exposure

Through its defined benefit plans, the Company is exposed to a number of risks, the most significant of which

are detailed below:

Asset volatility The plan liabilities are calculated using a discount rate set with reference to bond

yields; if plan assets underperform this yield, this will create a deficit. Most of the plan asset investments is in fixed income securities with high grades and in government securities.

Changes in bond yields A decrease in bond yields will increase plan liabilities, although this will be partially offset by an increase in the value of the plans'' bond holdings.

Life expectancy The pension is to provide benefits for the life of the member, so increases in life

expectancy will result in an increase in the plans'' liabilities. This is particularly significant where inflationary increases result in higher sensitivity to changes in life expectancy.

The Company ensures that the investment positions are managed within an asset-liability matching (ALM) framework that has been developed to achieve long-term investments that are in line with the obligations under the employee benefit plans. Within this framework, the Company''s ALM objective is to match assets to the pension obligations by investing in long-term fixed interest securities with maturities that match the benefit payments as they fall due and in the appropriate currency.

The Company actively monitors how the duration and the expected yield of the investments are matching the expected cash outflows arising from the employee benefit obligations. The Company has not changed the processes used to manage its risks from previous periods. Investments are well diversified, such that the failure of any single investment would not have a material impact on the overall level of assets.

A large portion of assets in FY 2022-23 (PY 2021-22) consists of government & corporate bonds and LIC Pension. The plan asset mix is in compliance with the requirements of the respective local regulations.

(x) Defined benefit liability and employer contributions

Expected contributions to post-employment benefit plans for the year ending March 31, 2024 is \851.83 lakhs [Gratuity \571.71 Lakhs; Pension \280.12 Lakhs]

42. Capital management A) Capital Structure

The Company''s objectives when managing capital are to

- Safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholder''s and benefits for other stakeholder''s, and

- Maintain an optimaI capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholder''s, return capita! to shareholder''s, issue new shares or seII assets to reduce debt.

Consistent with others in the industry, the Company monitors capitaI on the basis of the foIIowing gearing ratio:

Net debt (totaI borrowings offset by net of cash and cash equivaIents)/Total ''equity'' as shown in the baIance sheet.

The Company has evaluated the impact of the COVID-19 event on its highly probable transactions and concluded that there was no impact on the probability of occurrence of the hedged transaction. The Company has considered the effect of changes, if any, in both counterparty credit risk and its own credit risk in assessing hedge effectiveness and measuring hedge ineffectiveness.

The fair value of loan, cash and cash equivalents, trade receivables, borrowings, trade payables, other current financial assets and liabilities approximate their carrying amount largely due to the short-term nature of these instruments. The Company''s long-term debt has been contracted at market rates of interest. Accordingly, the carrying value of such long-term debt approximates fair value. These financial asset & liabilities have been classified as Level 2.

Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices.

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

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

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

The Company''s activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Company''s primary focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance. The primary market risk to the Company is foreign exchange risk. The Company uses derivative financial instruments - foreign currency forward contracts to mitigate foreign exchange related risk exposures. The Company''s exposure to credit risk, excluding trade receivables from related parties, is influenced mainly by the individual characteristic of each customer and the concentration of risk from the top few customers.

The Company''s risk management is carried out by the finance department under direction of the Board of Directors. The company''s finance department identifies, evaluates and hedges financial risks in close cooperation with the Company''s operating units. The Board provides direction for overall risk management as well as policies covering specific areas, such as foreign exchange risk, credit risk, use of derivative financial instruments and managing the liquidity.

A) Credit risk

Credit risk arises from trade receivables including unbilled receivables, loans and intercorporate deposits, cash and cash equivalents and deposits with banks and financial institutions.

i) Credit risk management:

Credit risk arises from the possibility that customers and borrowers may not be able to settle their obligations as agreed. A default on a financial asset arises when the counterparty fails to make contractual payments within agreed credit terms or when they fall due. Credit risk is managed on a financial asset basis. For banks and financial institutions, only high rated banks/institutions are accepted.

Company''s maximum exposure to credit risk for each class of financial asset is the carrying amount of the financial assets recognized in the balance sheet.

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

- Historical default experience by class of financial asset

- the credit rating and financial condition of borrowers

- actual or expected significant adverse changes in business, financial or economic conditions that are expected to cause a significant change to the counterparty''s ability to meet its obligations

- Other applicable macro economic information such as regulatory changes

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

The major exposure to the credit risk at the reporting date is primarily from:

a. Trade receivables and unbilled receivables amounting to $37,481.11 Lakhs (March 31,2022 $ 28,592.21 Lakhs). Trade receivables are typically unsecured. The Company exposure to credit risk is influenced mainly by the individual characteristics of each customer. Accordingly, credit risk is managed through customer specific credit approvals, establishing credit limits and monitoring the creditworthiness of customers. In general, it is presumed that credit risk has significantly increased since initial recognition if the payments are more than 120 days past due from agreed credit terms with customer. Historically, the company has not experienced any significant non-payment or write-offs and the provision made as at reporting date is considered to be adequate. During the year, the Company made write-offs of $ 54.90 Lakhs (March 31, 2022 $ 252.72 Lakhs) of trade receivables.

Exposure to credit risk

Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss. The maximum exposure to the credit risk at the reporting date is primarily from trade and other receivables. “&”Trade receivables and unbilled revenue are typically unsecured and are derived from revenue earned from customers. “&”Credit risk has always been managed by the Company by continuously monitoring the credit worthiness of customers to which the Company grants credit terms in the normal course of business

Expected credit loss assessment for trade and other receivables from customers

The Company uses allowance matrix to measure the expected credit loss of trade and other receivables.

The following table provides information about the exposure to credit risk and expected credit loss allowance (including specific allowance) for trade and other receivables:

This assessment is not based on any mathematical model but an assessment considering the nature of and the financial strength of the customers in respect of whom amounts are receivable. Company closely monitors its customers who are going through financial stress and assesses actions such as change in payment terms, recognition of revenue on collection basis etc., depending on severity of each case.

b. The Company held cash and cash equivalents and Other bank balances with credit worthy banks of R 47,967.52 lakhs as at March 31,2023 (March 31,2022: R 2,37,258.96 lakhs) respectively. The credit worthiness of such banks and financial institutions is evaluated by management on an ongoing basis and is considered to be good.

c. Loans receivable and Intercorporate deposits amounting to R 261,557.98 Lakhs (March 31,2022 R 133,810.20 Lakhs). The loans and intercorporate deposits are placed with parties approved by the Audit Committee subject to the party-wise and overall limits established by the Board of Directors. The loans and intercorporate deposits are unsecured and are repayable on demand. The Company periodically assesses the credit rating and financial condition of the borrowers, historical experience of timely repayment, the current economic trends and other forward looking macroeconomic information.

d. Exposure of credit loss on security deposits given against the rented premises is considered to be low as recovery of these deposits is supported by contractual agreement. As an internal process management performs background check of counterparty before entering into contractual agreement where credit risk assessment is carried out. As at reporting date credit risk has not increased significantly since initial recognition.

B Liquidity risk

Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at a reasonable price. The Company''s corporate treasury department, overseen by senior management, is responsible for liquidity and funding as well as settlement management.

Prudent Liquidity risk management implies maintaining sufficient cash and marketable securities and the avaiIabiIity of funding through an adequate amount of committed credit facilities'' to meet obligation''s when due and to cIose out market positions. Due to the dynamic nature of the underIying businesses, the Company''s treasury maintains fIexibiIity in funding by maintaining avaiIabiIity under committed credit Iines. These Iimits vary by Iocation to take into account the Liquidity of the market in which the entity operates.

The Company''s liquidity management policy involves projecting cash flows in major currencies, considering the IeveI of Iiquid assets necessary to meet these, monitoring baIance sheet liquidity ratios and maintaining debt financing pIans. Management monitors rolling forecasts of the Company''s net liquidity position on the basis of expected cash fIows. The company invests its surplus funds in loans and intercorporate deposits with parties approved by the Board of Directors to generate better returns. These investments are subject to the party-wise and overall limits established by the Board of Directors. The limits are regularly assessed and determined based upon and analysis of the credit ratings and financial solvency reviews.

The bank overdraft facilities may be drawn at any time and may be terminated by the bank without notice subject to the continuance of satisfactory credit ratings.

ii) Maturities of financial liabilities

The tables below analyse the Company''s financial liabilities into relevant maturity groupings based on their contractual maturities for:

- all non-derivative financial liabilities, and

- net and gross settled derivative financial instruments for which the contractual maturities are essential for an understanding of the timing of the cash flows.

C) Market risk

i) Foreign currency risk

The Company operates internationally and is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to USD, GBP and CAD. Foreign exchange risk arises from highly probable forecast transactions (including inter-company transactions) and recognized assets and liabilities denominated in a currency that is not the functional currency.

The risk is measured through a forecast of highly probable foreign currency cash flows.

The company''s risk management policy is to hedge upto 75% of forecasted foreign currency sales for the next 12 months; 40% of forecasted foreign currency sales for the next 24 months and 20% of forecasted foreign currency sales for the next 36 months. As per the risk management policy, foreign exchange forward contracts are taken to hedge the forecasted sales.

As the critical terms of the foreign exchange forward contracts and their corresponding hedged items are the same, the Company performs a qualitative assessment of effectiveness and it is expected that the value of the foreign exchange forward contracts and the value of the corresponding hedged items will systematically change in opposite direction in response to movements in the underlying interest rates. The company monitors the aforesaid critical terms on a quarterly basis to assess if the hedging relationship remains highly effect.

In accordance with its risk management policies and procedures, the Company uses foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations relating to highly probable forecasted transactions. When derivative is entered for the purpose of being a hedge, the Company matches the terms of the derivatives to the terms of the hedged exposure and assesses the effectiveness of the hedged item match the terms of the hedged exposure and assesses the effectiveness of the hedged item and hedging relationship based on economic relationship. The objective of the hedges is to minimise the volatility of the functional currency cash flows of highly probable forecast transactions

iii) Sensitivity

The sensitivity of profit or loss to changes in the exchange rates arises mainly from foreign currency denominated financial instruments and the impact on other components of equity arises from foreign forward exchange contracts and Interest rate swap designated as cash flow hedges.

iv) Cash flow and fair value interest rate risk

The Company''s main interest rate risk arises from borrowings with variable rates, which expose the Company to cash flow interest rate risk. The Company manages it''s net exposure to interest rate risk relating to borrowings by entering into interest rate swap agreements, which allows it to exchange periodic payments based on a notional amounts and agreed upon fixed and floating interest rates. The Company''s investments are primarily in short-term loans and deposits and does not have any variable rate borrowings. Hence the company is not expose to significant interest rate risk.

46 Financial risk management Impact of hedging activities

(a) Disclosure of effects of hedge accounting on financial position:

The Company''s hedging policy only allows for effective hedge relationships to be established. Hedge effectiveness is determined at the inception of the hedge relationship and through periodic prospective effectiveness assessments to ensure that an economic relationship exists between the hedged item and hedging instrument. The company enters into hedge relationships where the critical terms of the hedging instrument match exactly with the terms of the hedged item.

As the critical terms of the hedging instruments and their corresponding hedged items are the same, the Company performs a qualitative assessment of effectiveness and whether it is expected that the value of the hedging instruments and the value of the corresponding hedged items will systematically change in opposite direction in response to movements in the underlying exchange rates/interest rates. The Company monitors the aforesaid critical terms on a quarterly basis to assess if the heding relationship remains highly effective.

Hedge ineffectiveness is recognised on a cash flow hedge in the statement of profit and loss. Ineffectiveness represents remaining portion of gain or loss on the hedging instrument that cannot be offset with the change in the fair value of the hedged item. The main source of hedge ineffectiveness in these hedging relationships is the effect of the counterparty and the Company''s own credit risk on the fair value of the forward contracts, which is not reflected in the fair value of the hedged item attributable to changes in foreign exchange rates and when the underlying hedged transaction is no longer expected to occur. No other sources of ineffectiveness emerged from these hedging relationships.

ii) Company as lessor

i) Operating Lease arrangement

The Company has entered into a non cancellable operating lease arrangement with its lessee. Total lease rental income (receivable on monthly basis) recognized in the statement of profit and loss for the year ended March 31, 2023 is R 2,233.37 Lakhs. (March 31 2022 - R 2,197.75 Lakhs). The average lease term is 5 years. (March 31, 2022- 5 years).

48 Discontinued operations and Business combinations

I. Discontinued operations

A. Healthcare services business (“HS Business”)

a) Disposal of healthcare services business (“HS Business”)

The Board of Directors of Hinduja Global Solutions Limited (the “Company”), in its meeting held on August 9, 2021, had approved the sale of its healthcare services business (“HS Business”) to wholly owned subsidiaries of Betaine BV (“Investor”), which is owned by funds affiliated with Baring Private Equity Asia. The shareholder and other regulatory approvals have been obtained and the transaction has been consummated on January 5, 2022. As a result, the Company has classified the HS Business as Discontinued Operations in its Financial Statements and related notes.

Discontinued Operations include direct expenses clearly identifiable to the businesses being discontinued. The Company does not expect to incur any significant recurring expenses relating to the HS Business under Continuing Operations except for certain tax adjustments that were required upon filling of tax returns during the year. Accordingly, necessary adjustments are made in the books of accounts.

B. Investment and Treasury segment operation of the Media & Communication segment

As on March 31, 2020, the Investment and Treasury segment operation of the Media & Communication segment was classified as discontinued operation. During the year, the company has sold its investments classified as Fair Value through Profit & Loss and investments classified as Fair Value through OCI. Accordingly, the profit on sale of quoted equity shares has been recognised in profit and loss and other comprehensive income during the current year.The impact of discontinued operations on income, expenses and tax is as under:

II Business combinations

A. Digital, Media & Communications Business

The Board of Directors of the Company, at its meeting held on February 17, 2022 had considered and approved the scheme of arrangement between Hinduja Global Solutions Limited (the “Resulting Company”) and NXTDIGITAL Limited (the “Demerged Undertaking”) for the demerger of Digital, Media & Communications Business Undertaking along with the investments in its subsidiaries of NXTDIGITAL Limited into Hinduja Global Solutions Limited and had recommended the swap ratio of 20 equity share of ?10/- each fully paid-up of Hinduja Global Solutions Limited for every 63 equity shares of ?10/- each fully paid-up held by the

public shareholders of NXTDIGITAL Limited. The Mumbai Bench of the Honourable National Company Law Tribunal (NCLT), through its order dated November 11, 2022 has approved the scheme with the appointed date of the merger being February 01, 2022. The effect of the scheme has been incorporated in the above financial results as per the requirements of Appendix C to Ind AS 103 “Business Combination”. Further, the comparative financial figures have therefore been restated to include the impact of the demerger. Accordingly financial information for year ended March 31, 2022 has been derived from audited financial information of the Company and reviewed financial information of demerged undertaking of NXTDIGITAL Limited.With effect from the Appointed Date, all debts, liabilities, contingent liabilities, duties and obligations of every kind, nature and description of Demerged Company relatable to the Demerged Undertaking shall, without any further act or deed be and stand transferred to Resulting Company so as to become as from the Appointed Date, the debts, liabilities, contingent liabilities, duties and obligations of Resulting Company and it shall not be necessary to obtain the consent of any third party or other person who is a party to any contract or arrangement by virtue of which such debts, liabilities, contingent liabilities, duties and obligations have arisen, in order to give effect to the provisions.

Subsequent to the demerger of Digital, Media & Communications Business Undertaking along with the investments in its subsidiaries of NXTDIGITAL Limited with the Company with effect from February 01, 2022, the Company has reassessed its provision for current taxes and deferred taxes and has written back an amount of R 14,890.40 Lakhs relating to previous year.

As per the swap ratio approved in the scheme, the shareholders of NXTDIGITAL Limited holding 3,36,71,621 equity shares (of NDL) to receive 1,06,89,403 equity shares of Hinduja Global Solutions Limited having face value of R 10 each. Pursuant to the Scheme of arrangement, shares of Hinduja Global Solutions Limited are issued to the public shareholders of NXTDIGITAL Limited. Earning per share and Diluted Earning per share have also been restated for comparative year considering the shares issued to public shareholders of NXTDIGITAL Limited.

1. TL-1- The Loan is repayable in 7 years in 28 quarterly instalments, for each tranche of disbursement. First repayment will commence from 4th month of the date of each tranche of disbursement. Interest rate 6 months MCLR and Yes Bank Limited shall reset the 6 months MCLR on 1st day of the month falling after six calendar months including the month in which drawdown has been made. First Charge on all current and movable assets (both present and future) and Escrow Account for collection of proceeds of lease rentals to be created in favour of Vistra ITCL India Ltd. During the previous year, the Company has made prepayment of S 7,763.29 lakhs over and above the payments of regular instalments.

2. TL-2 - Repayable in 24 Quarterly unequal instalments starting from January 2017 after an initial moratorium of 2 years. Interest rate 6 months MCLR plus spread of 2.35%. Interest ranging from 10.35%to 11.60% between April - 2022 to March 2023 with an exclusive charge on all Hits related Fixed assets.

3. TL-3 are secured by pari passu hypothecation on all current assets, movable fixed assets (present and future) and immovable properties.

4. TL-4 - Pertains to sales and lease back transaction conducted in the year ended 31st March 2020 which is payable in 32 unequal installments starting from April 2020, as per the operating lease agreement entered.

5. First Pari-passu charge on current assets and movable Fixed Assets present and future.

6. The quarterly returns / statements of current assets filed by the Company with banks / financial institutions are in agreement with the books of accounts.

* During FY22, the Company sold its healthcare business resulted in gain of INR 214,849.50 (net of tax). The sales proceeds have been utilized for investment purposes and repayment of borrowings. This has resulted in changes in Debt - Equity ratio, Debt Service Coverage Ratio, Return on Equity Ratio, Return on Capital Ratio, Net Profit Ratio,Current Ratio,Trade payables turnover ratio and Net capital turnover ratio. Increase in Return on Investment is due to timing difference and increase in interest rates charged.

@ Previous Year figures not comparable with current Year due to the sale of healthcare business and merger of the media business.

** Restated (Refer Note 48)

*** The Company holds certain inventories which is not the core line of business of the Company, hence this ratio may not reflect the health parameter appropriately.

52 Segment reporting

In accordance with paragraph 4 of Ind AS 108 “Operating segments”, the Company has presented segmental information only on the basis of the Consolidated financial statements (Refer Note 49 of the Consolidated financial statements).

53 Additional regulatory information required by Schedule III to the Companies Act, 2013

(i) The Company does not have any benami property held in its name. No proceedings have been initiated on or are pending against the Company for holding benami property under the Benami Transactions (Prohibition) Act, 1988 (as amended in 2016) and rules made thereunder.

(ii) The Company has not traded or invested in Crypto currency or Virtual Currency during the year.

(iii) The Company has not come across any transaction ocurred with struck-off companies under section 248 of the Companies Act, 2013 or section 560 of the Companies Act, 1956.

(iv) The Company has not been declared wilful defaulter by any bank or financial institution or other lender or government or any government authority.

(v) The Company does not have any charges or satisfaction of charges which is yet to be registered with the Registrar of the Companies beyond the statutory period.

(vi) Utilization of borrowed funds and share premium :

(I) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:

(a) Directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) except the loan granted by the company to it''s subsidiary for acqusition of Teklink International LLC.

(b) Provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries

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

(a) Directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or

(b) Provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries

(vii) There is no income surrendered or disclosed as income during the year in tax assessments under the Income Tax Act, 1961 (such as search or survey), that has not been recorded in the books of account.

54 Previous year figures have been regrouped / rearranged wherever considered necessary , to conform to current year''s classification. Considering the material events such as discontinued operations and Business combination took place in year 2022 and 2023, it is impractical to provide the quantitative details with respect to reclassification and re-grouping during the year.

55 Subsequent events:

The shareholders approved the proposal of buyback of Equity Shares recommended by its Board of Directors by way of e-voting on the postal ballot, the results of which were declared on December 19, 2022 at the Maximum buyback price of S1,700 /- per equity share and the Maximum buyback size of S102,000 lakhs. Subsequently, the Buyback Committee at its meeting held on 25th January, 2023 has approved the buyback scheme of 60 lakh Equity Shares at a price of S1,700 i.e. up to S102,000 lakhs (excluding transaction cost & taxes) with the Record Date of 6th March 2023. Public Announcement relating to the Buyback has been made on 31st January 2023 and the draft Letter of Offer has been filed with Securities & Exchange Board of India on 7th February 2023 and SEBI Observation letter dated 9th May 2023 has been received.

The buy-back is offered to all eligible equity shareholders of the Company on proportionate basis through the “Tender offer” route in accordance with SEBI (Buy-back of Securities) Regulations, 2018. The Buyback of equity shares through the stock exchange has commenced on 22nd May 2023 and will close on June 2, 2023. The buyback settlement is expected to be completed by June 13, 2023. If the Buy-back issue is fully subscribed, the Company will buy back and extinguish a total of 60 Lakh equity shares of Face Value of S10 each (i.e. S600 lakhs) at a price of S1,700 per equity share, comprising of 11.43% of pre-buyback paid up equity share capital of the Company as at March 31, 20


Mar 31, 2022

31 Contingent Liabilities

a) Contingent Liabilities

A) Claims against the Company not acknowledged as debts:

March 31,2022

March 31,2021

Income Tax demand

(i) Prior AY 2007-08 (Refer note 1 and 2 below)

(ii) From AY 2007-08 (Refer note 2 below)

(iii) Others

16,616.33

11,558.96

16,446.27

10,377.44

207.25

Notes:

1. NXTDIGITAL Limited (formerly known as Hinduja Ventures Limited) has received income tax demand pertaining to IT/ ITES business aggregating \ 7,144.66 Lakhs in respect of period prior to October 1, 2006 which is reimbursable by the Company pursuant to the Scheme of Arrangement and Reconstruction for demerger of IT/ITES business into the Company sanctioned by High Court of Judicature of Bombay and made effective on March 7, 2007. In this regard, the Company had paid \ 5,550 Lakhs to Hinduja Ventures Limited to discharge part payment of disputed income tax dues pertaining to IT/ITES business. Out of this amount, the Company has received refund of \ Nil including interest of \ Nil during the year (March 31, 2021- \ Nil including interest of \ Nil) and the net outstanding amount as at March 31, 2022 of \ 1,868.99 Lakhs (March 31, 2021 of \1,868.99 Lakhs) is included in “Receivable from related party - Note 9”.

NXTDIGITAL Limited (formerly known as Hinduja Ventures Limited) also received income tax demand pertaining to IT/ ITES business in respect of the same issue for the A.Y 2002-03 to A.Y 2007-08. These amounts are reimbursable by the Company pursuant to the Scheme of Arrangement and Reconstruction for demerger of IT/ITES business into the Company sanctioned by High Court of Judicature of Bombay and made effective on March 7, 2007. The aggregate demand is \ 16,616.33 Lakhs including interest \ 7,815.61 Lakhs (March 31, 2021 - \ \ 16,446.27 Lakhs, \ 7,645.50 Lakhs respectively).

2. The Company has received Income Tax Demand orders for the A.Y. (Assessment Year) 2007-08 to A.Y 201112. In all the above assessment orders, demand has been raised mainly on account of denial of section 10A benefit as per the Income Tax Act 1961 in respect of profit earned by the Company''s undertaking in Software Technology Parks. The aggregate demand is \ 11,558.97 Lakhs including interest \ 1,925.01 Lakhs (March 31, 2021 - \ 10,377.44 Lakhs, \ 1,926.87 Lakhs respectively).

Against the above demands, the respective companies have made various appeals before the relevant Appellate Authority; NXTDIGITAL Limited received a favourable order from Honourable High Court of Bombay in respect of year 2005-06 dated July 26, 2017. The Honourable Supreme Court of India has admitted a Special Leave Petition (SLP) in respect of the same matter for the years A.Y 2002-03 to A.Y 2005-06. Future cash outflow in respect of above, if any, is determinable only on receipt of judgements/ decisions pending with relevant authorities and accordingly the amounts are disclosed as a contingent liability. In view of legal advice obtained the Management considers these disallowances as not tenable against us, and therefore no provision for this tax contingency has been recognised.

3. During the current year, the Company recorded a tax expense of Rs. 72,360.00 lakhs towards gain from sale of the healthcare business. The Company''s estimate of tax liabilities may differ from interpretations by the relevant tax authorities as to how regulations should be applied to actual transactions.

Goodwill is tested for impairment at each reporting date. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to the Company Cash Generating Unit (“”CGU””) or groups of CGUs expected to benefit from the synergies arising from the business combinations. A CGU is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or group of assets.

Impairment occurs when the carrying amount of a CGU, including the goodwill, exceeds the estimated recoverable amount of the CGU. The recoverable amount of CGU is higher of its fair value less cost to sell and its value-in-use. Value-in-use is the present value of the future cash flows expected to be derived from the CGU.

Based on the above no impairment was identified as of March 31, 2022 and March 31, 2021 as the recoverable value of CGU''s exceeded their carrying value. An analysis of the calculation''s sensitivity to a change in the key parameters (revenue growth, operating margin, discount rate and long-term growth rate) based on reasonably probable assumptions, did not identify any probable scenarios where the recoverable amount of the CGU would fall below their respective carrying amounts.

Reasonable sensitivities in the key assumptions consequent to the change in estimated future economic conditions on account of possible effects relating to COVID 19 is unlikely to cause the carrying amount of any of the cash generating units to exceed the recoverable amount.

35 Income tax expense

The Company has elected to exercise the option permitted u/s 115BAA of the Income- tax Act, 1961 as introduced by the Taxation Laws (Amendment) Act, 2019. Accordingly, the Company has recognised provision for Income tax for the year ended March 31, 2022 (in the year March 31, 2021) and re-measured its Deferred Tax basis the rate prescribed in the said section. The full impact of this change has been recognised in the Statement of Profit and Loss and other comprehensive income respectively.

37 Employee benefit obligations

(i) Compensated Absences

The leave obligations cover the Company''s liability for earned leaves of employees.

The amount of the provision of \ 1,173.25 Lakhs (As at March 31, 2021: \ \3,772.38 Lakhs) is presented as current, since the Company does not have an unconditional right to defer settlement for any of these obligations. However, based on past experience, the Company does not expect all employees to take the full amount of accrued leaves to make payments in lieu of accrued leaves within the next 12 months.

(ii) Deferred Performance Incentive

The Board of Directors at their meeting held on March 28, 2019 approved an employee defined benefit plan called as “Deferred Payment Incentive'''' Plan (DPI 2019). The Scheme is applicable to eligible employees of the Company and its subsidiaries including eligible employees transferred pursuant to the sale of healthcare business and in the manner specifically provided for in the Scheme. Payments under this defined employee benefit plan is linked to the Company achieving certain profit targets by the financial year ending March 31, 2022. Pursuant to the plan, the Company carries a provision of \ 10,882.14 lakhs as at March 31,2022. (As at March 31, 2021: \5,632.83 lakhs)

(iii) Post-employment obligations

a) Gratuity

The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/ termination is the employees last drawn basic salary per month computed proportionately for 15 days multiplied for the number of years of service. The gratuity plan is a funded plan and the Company makes contributions to Life Insurance Corporation of India (LIC) as per Investment Pattern stipulated for Pension and Group Schemes Fund by Insurance Regulatory and Development Authority Regulations. The Company does not fully fund the liability and maintains a target level of funding to be maintained over a period of time based on estimations of expected gratuity payments.

b) Pension benefits

The Branch has a non-contributory and actuarially computed defined benefit pension plan covering substantially all of its employees. The benefits are based on years of service and compensation at the date of retirement, as defined in the policies of the Company.

The plan provides lump sum benefits upon retirement, death, total and permanent disability and separation from service from completion of at least five years of service. Under the provisions of the retirement plan, the normal retirement age is 60 with at least 5 years of credited service, but early retirement is possible for employees reaching age 50 with at least 10 years of credited service. Normal retirement is entitled to 1.5 months basic salary per year of service while early retirement with 10 to 15 years'' service is entitled to 1 month basic salary per year of service or 1.5 months per year of service if tenure is beyond 15 years. Employees below 50 years old with at least 10 years of service are entitled to the retirement benefit in case of voluntary separation. 10 to 15 years of service is eligible for 50% of monthly basic pay per year of service, 75% for 15 to 20 years, and 100% of monthly basic pay for 20 years tenure or more.

Plan assets are held in trust by a trustee bank, which is governed by local regulations and practice in the Philippines.

Investments are well diversified, such that the failure of any single investment would not have a material impact on the overall level of assets. The largest proportion of assets is invested in debt securities. The Branch believes that debt securities offer the best returns over long term with an acceptable level of risk.

(ix) Risk exposure

Through its defined benefit plans, the Company is exposed to a number of risks, the most significant of which are detailed below:

Asset volatility The plan liabilities are calculated using a discount rate set with reference to bond

yields; if plan assets underperform this yield, this will create a deficit. Most of the plan asset investments is in fixed income securities with high grades and in government securities.

Changes in bond yields A decrease in bond yields will increase plan liabilities, although this will be partially offset by an increase in the value of the plans'' bond holdings.

Life expectancy The pension is to provide benefits for the life of the member, so increases in life

expectancy will result in an increase in the plans'' liabilities. This is particularly significant where inflationary increases result in higher sensitivity to changes in life expectancy.

The Company ensures that the investment positions are managed within an asset-liability matching (ALM) framework that has been developed to achieve long-term investments that are in line with the obligations under the employee benefit plans. Within this framework, the Company''s ALM objective is to match assets to the pension obligations by investing in long-term fixed interest securities with maturities that match the benefit payments as they fall due and in the appropriate currency.

The Company actively monitors how the duration and the expected yield of the investments are matching the expected cash outflows arising from the employee benefit obligations. The Company has not changed the processes used to manage its risks from previous periods. Investments are well diversified, such that the failure of any single investment would not have a material impact on the overall level of assets.

A large portion of assets in FY 2021-22 (PY 2020-21) consists of government & corporate bonds and LIC Pension. The plan asset mix is in compliance with the requirements of the respective local regulations.

Derivative financial instruments

The Group has evaluated the impact of the COVID-19 event on its highly probable transactions and concluded that there was no impact on the probability of occurrence of the hedged transaction. The Group has considered the effect of changes, if any, in both counterparty credit risk and its own credit risk in assessing hedge effectiveness and measuring hedge ineffectiveness.

The fair value of loan, cash and cash equivalents, trade receivables, borrowings, trade payables, other current financial assets and liabilities approximate their carrying amount largely due to the short-term nature of these instruments. The Company''s long-term debt has been contracted at market rates of interest. Accordingly, the carrying value of such long-term debt approximates fair value. These financial asset & liabilities have been classified as Level 3.

Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices.

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

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

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

41 Financial risk management

The Company''s activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Company''s primary focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance. The primary market risk to the Company is foreign exchange risk. The Company uses derivative financial instruments - foreign currency forward contracts to mitigate foreign exchange related risk exposures. The Company''s exposure to credit risk, excluding trade receivables from related parties, is influenced mainly by the individual characteristic of each customer and the concentration of risk from the top few customers.

The Company''s risk management is carried out by the finance department under direction of the Board of Directors. The company''s finance department identifies, evaluates and hedges financial risks in close cooperation with the Company''s operating units. The Board provides direction for overall risk management as well as policies covering specific areas, such as foreign exchange risk, credit risk, use of derivative financial instruments and managing the liquidity.

A) Credit risk

Credit risk arises from trade receivables including unbilled receivables, loans and intercorporate deposits, cash and cash equivalents and deposits with banks and financial institutions.

i) Credit risk management:

Credit risk arises from the possibility that customers and borrowers may not be able to settle their

obligations as agreed. A default on a financial asset arises when the counterparty fails to make contractual payments within agreed credit terms or when they fall due. Credit risk is managed on a financial asset basis. For banks and financial institutions, only high rated banks/institutions are accepted.

Company''s maximum exposure to credit risk for each class of financial asset is the carrying amount of the financial assets recognized in the balance sheet.

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

- Historical default experience by class of financial asset

- the credit rating and financial condition of borrowers

- actual or expected significant adverse changes in business, financial or economic conditions that are expected to cause a significant change to the counterparty''s ability to meet its obligations

- Other applicable macroeconomic information such as regulatory changes

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

The major exposure to the credit risk at the reporting date is primarily from:

a. trade receivables and unbilled receivables amounting to \ 22,804.48 Lakhs (March 31,2021 \ 82,848.58 Lakhs). Trade receivables are typically unsecured. The Company exposure to credit risk is influenced mainly by the individual characteristics of each customer. Accordingly, credit risk is managed through customer specific credit approvals, establishing credit limits and monitoring the creditworthiness of customers. In general, it is presumed that credit risk has significantly increased since initial recognition if the payments are more than 120 days past due from agreed credit terms with customer. Historically, the company has not experienced any significant non-payment or write-offs and the provision made as at reporting date is considered to be adequate. During the year, the Company made write-offs of \ 62.37 Lakhs (March 31, 2021 \ 5.43 Lakhs) of trade receivables.

b. Loans receivable and Intercorporate deposits amounting to \ 142,810.20 Lakhs (March 31, 2021 \ 65,216.44 Lakhs). The loans and intercorporate deposits are placed with parties approved by the Audit Committee subject to the party-wise and overall limits established by the Board of Directors. The loans and intercorporate deposits are unsecured and are repayable on demand or March 31, 2023, whichever is earlier. The Company periodically assesses the credit rating and financial condition of the borrowers, historical experience of timely repayment, the current economic trends and other forward looking macroeconomic information.

c. Exposure of credit loss on security deposits given against the rented premises is considered to be low as recovery of these deposits is supported by contractual agreement. As an internal process management performs background check of counterparty before entering into contractual agreement where credit risk assessment is carried out. As at reporting date credit risk has not increased significantly since initial recognition.

B) Liquidity risk

Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at a reasonable price. The Company''s corporate treasury department, overseen by senior management, is responsible for liquidity and funding as well as settlement management.

Prudent Liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities'' to meet obligation''s when due and to cIose out market positions. Due to the dynamic nature of the underIying businesses, the Company''s treasury maintains fIexibiIity in funding by maintaining avaiIabiIity under committed credit Iines. These Iimits vary by Iocation to take into account the Liquidity of the market in which the entity operates.

The Company''s liquidity management policy involves projecting cash flows in major currencies, considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios and maintaining debt financing plans. Management monitors rolling forecasts of the Company''s net liquidity position on the basis of expected cash flows. The company invests its surplus funds in loans and intercorporate deposits with parties approved by the Board of Directors to generate better returns. These investments are subject to the party-wise and overall limits established by the Board of Directors. The limits are regularly assessed and determined based upon and analysis of the credit ratings and financial solvency reviews.

The bank overdraft facilities may be drawn at any time and may be terminated by the bank without notice subject to the continuance of satisfactory credit ratings.

ii) Maturities of financial liabilities

The tables below analyse the Company''s financial liabilities into relevant maturity groupings based on their contractual maturities for:

- all non-derivative financial liabilities, and

- net and gross settled derivative financial instruments for which the contractual maturities are essential for an understanding of the timing of the cash flows.

C) Market risk

i) Foreign currency risk

The Company operates internationally and is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to USD, GBP and CAD. Foreign exchange risk arises from highly probable forecast transactions (including inter-company transactions) and recognized assets and liabilities denominated in a currency that is not the functional currency . The risk is measured through a forecast of highly probable foreign currency cash flows. The company''s risk management policy is to hedge upto 75% of forecasted foreign currency sales for the next 12 months; 40% of forecasted foreign currency sales for the next 24 months and 20% of forecasted foreign currency sales for the next 36 months. As per the risk management policy, foreign exchange forward contracts are taken to hedge the forecasted sales.

As the critical terms of the foreign exchange forward contracts and their corresponding hedged items are the same, the Company performs a qualitative assessment of effectiveness and it is expected that the value of the foreign exchange forward contracts and the value of the corresponding hedged items will systematically change in opposite direction in response to movements in the underlying interest rates. The company monitors the aforesaid critical terms on a quarterly basis to assess if the heding relationship remains highly effect.

In accordance with its risk management policies and procedures, the Company uses foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations relating to highly probable forecasted transactions. When derivative is entered for the purpose of being a hedge, the Company matches the terms of the derivatives to the terms of the hedged exposure and assesses the effectiveness of the hedged item match the terms of the hedged exposure and assesses the effectiveness of the hedged item and hedging relationship based on economic relationship. The objective of the hedges is to minimise the volatility of the functional currency cash flows of highly probable forecast transactions.

iv) Cash flow and fair value interest rate risk

The Company''s main interest rate risk arises from borrowings with variable rates, which expose the Company to cash flow interest rate risk.

The Company manages it''s net exposure to interest rate risk relating to borrowings by entering into interest rate swap agreements, which allows it to exchange periodic payments based on a notional amounts and agreed upon fixed and floating interest rates.

The Company''s investments are primarily in short-term loans and deposits and does not have any variable rate borrowings. Hence the company is not expose to significant interest rate risk.

42 Financial risk management

Impact of hedging activities

(a) Disclosure of effects of hedge accounting on financial position:

The Company''s hedging policy only allows for effective hedge relationships to be established. Hedge effectiveness is determined at the inception of the hedge relationship and through periodic prospective effectiveness assessments to ensure that an economic relationship exists between the hedged item and hedging instrument. The company enters into hedge relationships where the critical terms of the hedging instrument match exactly with the terms of the hedged item.

As the critical terms of the hedging instruments and their corresponding hedged items are the same, the Company performs a qualitative assessment of effectiveness and whether it is expected that the value of the hedging instruments and the value of the corresponding hedged items will systematically change in opposite direction in response to movements in the underlying exchange rates/interest rates. The Company monitors the aforesaid critical terms on a quarterly basis to assess if the heding relationship remains highly effect.

Hedge ineffectiveness is recognised on a cash flow hedge in the statement of profit and loss. Ineffectiveness represents remaining portion of gain or loss on the hedging instrument that cannot be offset with the change in the fair value of the hedged item. The main source of hedge ineffectiveness in these hedging relationships is the effect of the counterparty and the Company''s own credit risk on the fair value of the forward contracts, which is not reflected in the fair value of the hedged item attributable to changes in foreign exchange rates and when the underlying hedged transaction is no longer expected to occur. No other sources of ineffectiveness emerged from these hedging relationships.

* The Board of Directors of Hinduja Global Solutions Limited (the “Company”), in its meeting held on August 9, 2021, had approved the sale of its healthcare services business (“HS Business”) and the transaction has been consummated on January 5, 2022. This has resulted in a gain from sale of INR 214,849.50 (net of tax). The sales proceeds has been utilized for investment purposes and repayment of borrowings. As a result previous year numbers are not comparable with current Year.

** All loans including interest are repaid during year.

47 Segment reporting

In accordance with paragraph 4 of Ind AS 108 “Operating segments”, the Company has presented segmental information only on the basis of the Consolidated financial statements (Refer Note 44 of the Consolidated financial statements).

48 Additional regulatory information required by Schedule III to the Companies Act, 2013

(i) The Company does not have any benami property held in its name. No proceedings have been initiated on or are pending against the Company for holding benami property under the Benami Transactions (Prohibition) Act, 1988 (as amended in 2016) and rules made thereunder.

(ii) The Company has not traded or invested in Crypto currency or Virtual Currency during the year.

(iii) The Company has not come across any transaction ocurred with struck-off companies under section 248 of the Companies Act, 2013 or section 560 of the Companies Act, 1956.

(iv) The Company has not been declared wilful defaulter by any bank or financial institution or other lender or government or any government authority.

(v) The Company does not have any charges or satisfaction of charges which is yet to be registered with the Registrar of the Companies beyond the statutory period.

(vi) Utilization of borrowed funds and share premium :

(I) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:

(a) Directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or

(b) Provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries

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

(a) Directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or

(b) Provide any guarantee, security or the like to or on behalf of the ultimate beneficiaries

(vii) There is no income surrendered or disclosed as income during the year in tax assessments under the Income Tax Act, 1961 (such as search or survey), that has not been recorded in the books of account.

48 Previous year figures have been regrouped / rearranged wherever considered necessary , to conform to current year''s classification.

49 Subsequent events:

The Board of Directors of the Company, at their meeting held on February 17,2022, had, inter-alia, vide a Draft Scheme of Arrangement between NXTDIGITAL Limited (the “Demerged Company” or “NDL”) and Hinduja Global Solutions Limited (the “Resulting Company” or HGS”) and their respective shareholders accorded approval to the Demerger of Digital, Media & Communications Business Undertaking along with the investments in its subsidiaries of NDL. The said Scheme/Demerger is subject to necessary approvals of statutory/regulatory authorities and approval of shareholders. The Companies have made an application to the BSE Limited (BSE) and National Stock Exchange of India Limited (NSE) on February 25, 2022 and February 26, 2022 respectively for seeking their No Objection on the Scheme of Arrangement under Regulation 37 of the SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015 for proposed Scheme of Arrangement. BSE and NSE both vide their letters dated May 31,2022 had conveyed their No objection/ No adverse observation to the said Scheme. Thereafter, the Scheme has been filed before the Hon''ble National Company Law Tribunal, Mumbai (“NCLT”) on June 9, 2022. Hon''ble NCLT vide Order dated July 29, 2022 directed the Company to convene the Meeting of Equity Shareholders on September 2, 2022. Accordingly, on July 30, 2022, the Company has despatched the Notice to convene the Meeting of Equity Shareholders on September 2, 2022. Post approval of the Shareholders, the Scheme is subject to further approval/ confirmation of the Hon''ble NCLT.


Mar 31, 2018

1 Employee benefit obligations

(i) Leave obligations

The lease obligations cover the Company''s liability for earned leaves of employees.

The amount of the provision of R 3,220.14 Lakhs (March 31, 2017: R 1,816.26 Lakhs) is presented as current, since the Company does not have an unconditional right to defer settlement for any of these obligations. However, based on past experience, the Company does not expect all employees to take the full amount of accrued leaves to make payments in lieu of accrued leaves within the next 12 months.

(ii) Post-employment obligations

a) Gratuity

The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/ termination is the employees last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number of years of service. The gratuity plan is a funded plan and the Company makes contributions to Life Insurance Corporation of India (LIC) as per Investment Pattern stipulated for Pension and Group Schemes Fund by Insurance Regulatory and Development Authority Regulations. The Company does not fully fund the liability and maintains a target level of funding to be maintained over a period of time based on estimations of expected gratuity payments.

b) Pension benefits

The Branch has a non-contributory and actuarially computed defined benefit pension plan covering substantially all of its employees. The benefits are based on years of service and compensation as the date of retirement, as defined in the policies of the Company.

The plan provides lump sum benefits upon retirement, death, total and permanent disability and separation from service from completion of five years of service. Under the provisions of the retirement plan, the normal retirement age is 60, but employees reaching age 50 with at least 10 years of credited service and latest salary. Effective April, 2009, employees with less than five years of service are entitled to benefits calculated based on 1.5 days for every year of credited service while for employees with at least 5 years of service are entitled to benefits calculated based on 22.5 days for every year of credited service.

Plan assets are held in trust by a trustee bank, which is governed by local regulations and practice in the Philippines.

Investments are well diversified, such that the failure of any single investment would not have a material impact on the overall level of assets. The largest proportion of assets is invested in debt securities. The Branch believes that debt securities offer the best returns over long term with an acceptable level of risk.

(iii) Defined contribution plans

The Company has classified various benefits provided to employees as under:

a) Provident Fund

b) Superannuation Fund

c) State Defined Contribution Plans:

i. Employers'' Contribution to Employee''s State Insurance

ii. Employer''s Contribution to Employee''s Pension Scheme

d) Other Statutory contribution schemes

*Included in Contribution to Provident and Other Funds (Refer Note 22)

Assumptions regarding mortality experience are set based on advice from published statistics.

The discount rate is primarily based on the prevailing market yields of government securities for the estimated term of the obligations. The estimates of future salary increases takes into account the inflation seniority and other relevant factors. Attrition rate considered is the Management estimate based on employee turnover. The expected return on plan assets is based on expectation of the average rate of return expected on investment of the fund.

(vi) Sensivity Analysis

The sensitivity of the defined benefit obligation to changes in the weighted principal assumptions is:

The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognized in the balance sheet.

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.

(viii) Risk exposure

Through its defined benefit plans, the Company is exposed to a number of risks, the most significant of which are detailed below:

Asset volatility The plan liabilities are calculated using a discount rate set with reference to bond yields; if plan assets underperform this yield, this will create a deficit. Most of the plan asset investments is in fixed income securities with high grades and in government securities.

Changes in bond yields A decrease in bond yields will increase plan liabilities, although this will be partially offset by an increase in the value of the plans'' bond holdings.

Life expectancy The pension is to provide benefits for the life of the member, so increases in life expectancy will result in an increase in the plans'' liabilities. This is particularly significant where inflationary increases result in higher sensitivity to changes in life expectancy.

The Company ensures that the investment positions are managed within an asset-liability matching (ALM) framework that has been developed to achieve long-term investments that are in line with the obligations under the employee benefit plans. Within this framework, the Company''s ALM objective is to match assets to the pension obligations by investing in long-term fixed interest securities with maturities that match the benefit payments as they fall due and in the appropriate currency.

The Company actively monitors how the duration and the expected yield of the investments are matching the expected cash outflows arising from the employee benefit obligations. The Company has not changed the processes used to manage its risks from previous periods. The Company uses derivatives to manage some of its risk. Investments are well diversified, such that the failure of any single investment would not have a material impact on the overall level of assets.

A large portion of assets in 2018 consists of government bonds and LIC Pension and Group Scheme Fund. The plan asset mix is in compliance with the requirements of the respective local regulations.

(ix) Defined benefit liability and employer contributions

Expected contributions to post-employment benefit plans for the year ending March 31, 2019 are R 1,172.34 lakhs.

The company has no legal obligation to settle the deficit in the funded plans with an immediate contribution or additional one off contributions. The Company intends to continue to contribute the defined benefit plans based on short term expected pay-outs in line with the actuary''s recommendations.

33 Capital management

A) Capital Structure

The Company''s objectives when managing capital are to

- Safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholder''s, and

- Maintain an optima capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capita! to shareholder''s, issue new shares or sell assets to reduce debt.

Consistent with others in the industry, the Company monitors capital on the basis of the following gearing ratio:

Net debt (total borrowings offset by net of cash and cash equivalents)/Total ''equity'' as shown in the balance sheet, including non-controlling interests.

Loan covenants

Under the terms of the major borrowing facilities, there are no financial covenants mentioned by financial institution and therefore risk on account of non-fulfilment of financial covenant is not applicable to company.

2. Related Party Transactions and Balances

I) Individual having control with his relatives and associates

Mr. Ashok P. Hinduja

II) Subsidiaries of Hinduja Global Solutions Limited (Includes step-down subsidiaries)

1 HGS International

2 HGS International Services Private Limited

3 Hinduja Global Solutions Inc.

4 HGS Canada Inc.

5 C-Cubed N.V.

6 C-Cubed B.V.

7 Customer Contact Centre Inc.

8 Hinduja Global Solutions Europe Limited

9 Hinduja Global Solutions UK Limited

10 HGS France, S.A.R.L

11 HGS (USA) LLC

12 HGS Healthcare LLC.

13 Affina Company

14 HGS St. Lucia Limited

15 Team HGS Limited

16 HGS Properties LLC

17 HGS Canada Holdings LLC

18 HGS Italy, S.A.R.L (Liquidated effective July 31, 2017)

19 HGS EBOS LLC

20 HGS Mena FZ LLC

21 HGS Colibrium Inc

22 HGS Population Health LLC (w.e.f. February 20, 2018)

III) Key Management Personnel

Mr. Partha DeSarkar, Manager and Chief Executive Officer Non-executive directors:

Mr. Ramkrishan P. Hinduja, Chairman

Ms. Shanu S. P. Hinduja, Co-chairperson

Ms. Vinoo S. Hinduja

Mr. Anil Harish

Mr. Rajendra P. Chitale

Mr. Rangan Mohan

Mr. Yashodhan M. Kale

Mr. Pradeep Mukerjee

IV) Enterprises where common control exists

1 Hinduja Group Limited

2 Hinduja Ventures Limited

3 IndusInd Media and Communication Limited

4 National Health and Education Society

5 Hinduja Healthcare Limited

6 Hinduja Realty Ventures Limited

7 Gulf Oil Lubricant India Limited

8 Gulf Oil International Limited

9 UActiv Technology Private Limited

10 Cyqurex Systems Private Limited

11 Hinduja Foundation

12 Trunk Digital Studios LLC

V) Relatives of key management personnel

Mr. Pabitra DeSarkar (Father of Mr. Partha DeSarkar)

Rangan Mohan Associates (Firm in which Mr. Rangan Mohan is a Partner) D M Harish & Co (Firm in which Mr. Anil Harish is a Partner)

(i) Fair Value Heirarchy

Financial assets and liabilities include cash and cash equivalents, trade receivables, unbilled revenues, long and short-term loans and borrowings, finance lease payables, bank overdrafts, trade payable. This section explains the judgements and estimates made in determining the fair values of the financial instruments that are (a) recognized and measured at fair value and (b) measured at amortized cost and for which fair values are disclosed in the financial statements. To provide an indication about the reliability of the inputs used in determining fair value, the company has classified its financial instruments into the three levels prescribed under the accounting standard. An explanation of each level follows underneath the table.

The fair value of cash and cash equivalents, trade receivables, unbilled revenues, borrowings, trade payables, other current financial assets and liabilities approximate their carrying amount largely due to the short-term nature of these instruments. The Company''s long-term debt has been contracted at market rates of interest. Accordingly, the carrying value of such long-term debt approximates fair value.

*The fair value of derivative financial instruments is determined based on the observable market inputs including currency spot and forward rates, yield curves, currency volatility etc.

Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices.

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

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

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

3. Financial risk management

The Company''s activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Company''s primary focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance. The primary market risk to the Company is foreign exchange risk. The Company uses derivative financial instruments - foreign currency forward contracts to mitigate foreign exchange related risk exposures. The Company''s exposure to credit risk, excluding receivables from related parties, is influenced mainly by the individual characteristic of each customer and the concentration of risk from the top few customers.

This note explains the sources of risk which the Company is exposed to and how the Company manages the risk and the impact of hedge accounting in the financial statements.

The Company''s risk management is carried out by a finance department under direction of the Board of Directors. The company''s finance department identifies, evaluates and hedges financial risks in close cooperation with the Company''s operating units. The board provides direction for overall risk management as well as policies covering specific areas, such as foreign exchange risk, credit risk, use of derivative financial instruments and managing the liquidity.

A) Credit risk

Credit risk arises from trade receivables, cash and cash equivalents and deposits with banks and financial institutions.

i) Credit risk management:

Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss. Credit risk is managed on a financial asset basis. For banks and financial institutions, only high rated banks/institutions are accepted.

Company''s maximum exposure to credit risk for each class of financial asset is the carrying amount of the financial assets recognized in the statement of financial position.

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

- Historical trend default in case of applicable financial asset

- actual or expected significant adverse changes in business, financial or economic conditions that are expected to cause a significant change to the counterparty''s ability to meet its obligations

- Other applicable macroeconomic information such as regulatory changes

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

The maximum exposure to the credit risk at the reporting date is primarily from trade receivables amounting to R 45,000.63 Lakhs (March 31, 2017 - R 28,836.88 Lakhs) and unbilled revenue amounting to R16,156.62 Lakhs (March 31, 2017 - R14,828.38 Lakhs) as at reporting date. Trade receivables and unbilled revenue are typically unsecured. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. In general, it is presumed that credit risk has significantly increased since initial recognition if the payments are more than 120 days past due from agreed credit terms with customer. The Company expects that estimate of expected credit loss for impairment is not significant based on historical trend and the nature of business. The provision made as at reporting date is considered to be adequate as Management continuously assesses the requirement for provision on on-going basis. During the year, the Company made write-offs of R 63.62 lakhs (March 31, 2017 -R 2.28 lakhs) of trade receivables.

B) Liquidity risk

Prudent Liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities'' to meet obligation''s when due and to close out market positions. Due to the dynamic nature of the underlying businesses, the Company''s treasury maintains flexibility in funding by maintaining availability under committed credit lines.

Management monitors rolling forecasts of the Company''s liquidity position (comprising the undrawn borrowing facilities below) and cash and cash equivalents on the basis of expected cash flows. These limits vary by location to take into account the Liquidity of the market in which the entity operates. In addition, the company''s liquidity management policy involves projecting cash flows in major currencies and considering the level of liquid assets necessary to meet these, monitoring balance sheet Liquidity ratios and maintaining debt financing plans.

The bank overdraft facilities may be drawn at any time and may be terminated by the bank without notice subject to the continuance of satisfactory credit ratings.

ii) Maturities of financial liabilities

The tables below analyse the Company''s financial liabilities into relevant maturity groupings based on their contractual maturities for:

- all non-derivative financial liabilities, and

- net and gross settled derivative financial instruments for which the contractual maturities are essential for an understanding of the timing of the cash flows.

The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balance’s as the impact of discounting is not significant.

The average credit period of trade payables is 45 days.

C) Market risk

i) Foreign currency risk

The Company operates internationally and is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to USD, EUR and CAD. Foreign exchange risk arises from future commercial transactions and recognized assets and liabilities denominated in a currency that is not the functional currency (INR and Philippines Peso for Manila branch). The risk is measured through a forecast of highly probable foreign currency cash flows. The objective of the hedges is to minimise the volatility of the INR cash flows of highly probable forecast transactions.

The company''s risk management policy is to hedge up to 75% of forecasted foreign currency sales for the subsequent 12 months. As per the risk management policy, foreign exchange forward contracts are taken to hedge up to 75% of the forecasted sales.

In accordance with its risk management policies and procedures, the Company uses foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations relating to highly probable forecasted transactions. When derivative is entered into for the purpose of being a hedge, the Company negotiates the terms of those derivatives to match the terms of the hedge exposure and assesses the effectiveness of the hedged item and hedging relationship based on economic relationship.

4. Financial risk management Impact of hedging activities

(a) Disclosure of effects of hedge accounting on financial position:

The Company''s hedging policy only allows for effective hedge relationships to be established. Hedge effectiveness is determined at the inception of the hedge relationship and through periodic prospective effectiveness assessments to ensure that an economic relationship exists between the hedged item and hedging instrument. The Company enters into hedge relationships where the critical terms of the hedging instrument match exactly with the terms of the hedged item.

Ineffectiveness is recognized on a cash flow hedge where the cumulative change in the designated component value of the hedging instrument exceeds on an absolute basis the change in value of the hedged item attributable to the hedged risk.

5. Segment reporting

In accordance with paragraph 4 of Ind AS 108 “Operating segments”, the Company has presented segmental information only on the basis of the Consolidated financial statements (Refer Note 40 of the Consolidated financial statements).

6. The Board of Directors at their meeting held on February 8, 2018 considered and approved amalgamation of HGS International Services Private Limited (''the Transferor Company'' or ''HGSISPL''), wholly owned subsidiary of Hinduja Global Solutions Limited (''HGS'') with HGS pursuant to a Scheme of Amalgamation in accordance with Section 232(2)(c) of the Companies Act, 2013. The Scheme has been filed with the National Company Law Tribunal (NCLT) and the company is awaiting approval.

7. Previous year figures have been regrouped / rearranged wherever considered necessary , to conform to current year''s classification.


Mar 31, 2017

Background

Hinduja Global Solutions Limited (“HGS”), is engaged in Business Process Management. HGS with its subsidiaries offer voice and non-voice based services such as contact centre solutions and back office transaction processing across North America, Europe, Asia and Middle East. HGS is a public limited company, listed on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) in India. The address of its registered office is 171, Hinduja House, Dr. Annie Besant Road, Worli, Mumbai 400018. These financial statements were approved for issue by the board of directors on May 22, 2017.

Securities premium reserve

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

Cash flow hedging reserve

The company uses hedging instruments as part of its management of foreign currency risk associated with its highly probable forecast sale, as described within note 40. For hedging foreign currency risk, the company uses foreign currency forward contracts which are designated as cash flow hedges. To the extent these hedges are effective; the change in fair value of the hedging instrument is recognised in the cash flow hedging reserve. Amounts recognised in the cash flow hedging reserve is reclassified to profit or loss when the hedged item affects profit or loss.

Employee Stock Options Outstanding

The share options outstanding account is used to recognise the grant date fair value of options issued to employees under Hinduja Global Solutions Employee stock option plan.

Foreign currency translation reserve

Exchange differences arising on translation of the foreign operations are recognised in other comprehensive income as described in accounting policy and accumulated in a separate reserve within equity. The cumulative amount is reclassified to profit or loss when the net investment in the foreign branch is disposed-off.

Secured borrowings and assets pledged as security

* Secured by exclusive charge on the entire asset of the project.

** Secured by first charge on entire moveable fixed assets of the company (both present and future).

*** Secured by respective assets under lease.

**** Secured by first paripassu charge on entire current assets both present and future of the company and second paripassu charge on entire moveable fixed assets both present and future of the company (excluding vehicles/ equipment acquired under hire purchase).

a. The carrying amounts of financial and non-financial assets pledged as security for current and non-current borrowings are disclosed in Note 30.

Note

Provisions for litigations/ disputes represents claims against the Company not acknowleged as debts that are expected to materalise in respect of matters in litigation.

(i) Fair value of options granted

No employee stock options were granted during the year ended March 31, 2017. The fair value of options granted during the year ended March 31, 2016 was RS.173 per option. The fair value as at grant date is determined using the BIack SchoIes Merton ModeI which takes into account the exercise price, term of option, share price at grant date, expected price volatility of underlying share, expected dividend yield and risk free interest rate for the term of option.

The model inputs for options granted during the year ended 31 March 2017 included:

a) options are granted for a consideration and vest upon completion of vesting period as mentioned above.

b) exercise price: Nil (March 31, 2016 - RS.471.00)

c) grant date: Nil (March 31, 2016 - November 6, 2015)

d) expiry date: Nil (March 31, 2016 - November 5, 2020)

e) share price at grant date: Nil (March 31, 2016 - RS.471.00)

f) expected price volatility of the company’s shares: Nil (March 31, 2016 - 35.48%)

g) expected dividend yield: Nil (March 31, 2016 - 4.25%)

h) risk free interest rate: Nil (March 31, 2016 - 7.48%)

The expected price voIatiIity is based on the historic voIatiIity (based on the remaining Iife of the options), adjusted for any expected changes to future voIatiIity due to pubIicIy avaiIabIe information.

(b) Expense arising from share-based payment transactions

Total expenses arising from share-based payment transactions recognised in profit or loss as part of employee benefit expense were as follows:

1 Contingent Liabilities

a) Contingent Liabilities

A) Claims against the Company not acknowledged as debts:

Notes:

1 The Company had deposited amount of RS.633.08 Lakhs with the service tax authorities towards demand raised by them. Further, the Central Excise and Service Tax Appellate Tribunal South Zonal Bench, Bangalore in its final hearing on January 19, 2016 had alloted the appeal of the Company on merits in favour of the Company. Pursuant to this, durinng the current year, the Company has availed the credit of service tax paid RS.359.00 Lakhs (Previous year : Rs.Nil) from the service tax authorities. Accordingly, the net outstanding balance as at March 31, 2017 of RS.274.08 Lakhs ( As at March 31, 2016 : RS.633.08 Lakhs and April 1, 2015 : RS.633.08 Lakhs ) is included in “ Balance with Government Authorities - Note 7’’.

2 Hinduja Ventures Limited has received income tax demand pertaining to IT/ ITES business aggregating RS.7,144.06 Lakhs (As at March 31, 2016: RS.7,173.48 Lakhs and April 1, 2015: RS.7,173.48 Lakhs) in respect of period prior to OctobeRs.1, 2006 which is reimbursable by the Company pursuant to the Scheme of Arrangement and Reconstruction for demerger of IT/ITES business into the Company sanctioned by High Court of Judicature of Bombay and made effective on March 7, 2007. In this regard, the Company had paid RS.5,550 Lakhs to Hinduja Ventures Limited to discharge part payment of disputed income tax dues pertainig to IT/ITES business. Out of this amount, the Company has received refund of RS.2,231.01 Lakhs (including interest of RS.606.72 Lakhs) during the current year and the net outstanding amount as at March 31, 2017 of RS.3,318.99 Lakhs ( As at March 31, 2016: RS.5,550 Lakhs and April 1, 2015: RS.5,550 Lakhs) is included in “Other Receivable - Note 7”. Hinduja Ventures Limited has filed an appeal against the said demand. In view of Management and based on the legal advice obtained, the Company has strong case to succeed.

3 Future cash outflow in respect of above, if any, is determinable only on receipt of judgements/ decisions pending with relevant authorities.

b) Capital and other commitments:

(i) Estimated Amount of Contracts (net of capital advances) remaining to be executed on Capital Account - RS.1,542.66 Lakhs (As at March 31, 2016: RS.1,118.88 Lakhs and April 1, 2015: RS.523.02 Lakhs).

(ii) The Company has issued an Undertaking to provide need based financial support and is committed, if needed, to continue such support to meet the ongoing obligations of its following step-down subsidiaries.

i. HGS Mena FZ LLC

ii. C-Cubed B. V

iii. Hinduja Global Solutions Europe Limited

iv. HGS St. Lucia

v. HGS Colibrium Inc.

vi. Hinduja Global Solutions Inc

vii. C-Cubed N. V

viii. HGS Canada Inc

There has been no payments during the year against these undertakings.

c) Non-cancellable operating leases:

The Company leases various offices premises under non-cancellable operating leases expiring within twenty years from the date inception. The leases have varying terms, escalation clauses and renewal rights. On renewal, the terms of the leases are renegotiated.

(a) Offsetting arrangements

i) Master netting arrangements - not currently enforceable

Agreements with derivative counterparties are based on an International Swaps and Derivatives Associations (ISDA) Master Agreement. Under the terms of these arrangements, only where certain credit events occur (such as default), the net position owing/ receivable to a single counterparty in the same currency will be taken as owing and all the relevant arrangements terminated. As the Company does not presently have a legally enforceable right of set-off, these amounts have not been offset in the balance sheet, but have been presented separately in the table above.

ii) Collateral against borrowings

The Company has pledged financial instruments as collateral against number of its borrowings. Refer Note 30 for further information on financial and non-financial collateral pledged as security against borrowings.

2 First-time adoption of Ind AS

These are the Company’s first financial statements prepared in accordance with Ind AS.

The accounting policies set out in Note 1 have been applied in preparing the financial statements for the year ended March 31, 2017, the comparative information presented in these financial statements for the year ended March 31, 2016 and in the preparation of an opening Ind AS balance sheet as at April 1, 2015 (the Company’s date of transition). In preparing its opening Ind AS balance sheet, the Company has adjusted the amounts reported previously in financial statements prepared in accordance with the accounting standards notified under Companies (Accounting Standards) Rules, 2006 (as amended) and other relevant provisions of the Act (previous GAAP or Indian GAAP). An explanation of how the transition from previous GAAP to Ind AS has affected the Company’s financial position, financial performance and cash flows is set out in the following tables and notes.

A. Exemptions And Exceptions Availed

Set out below are the applicable Ind AS 101 optional exemptions and mandatory exceptions applied in the transition from previous GAAP to Ind AS.

a) Ind AS optional exemptions

i) Business combinations

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

The Company elected to apply Ind AS 103 prospectively to business combinations occurring after its transition date. Business combinations occurring prior to the transition date have not been restated.

ii) Prospective application of Ind AS 21 to business combinations

Ind AS 101 allows a first-time adopter not to apply Ind AS 21 Effects of changes in Foreign Exchange Rates retrospectively for business combinations that occurred before the date of transition to Ind AS. Cases, where the Company does not apply Ind AS 21 retrospectively to fair value adjustments and goodwill, the Company treats them as assets and liabilities of the acquirer entity and not as the acquiree.

iii) Cumulative translation differences

Ind AS 101 permits cumulative translation gains and losses to be reset to zero at the transition date. This provides relief from determining cumulative currency translation differences in accordance with Ind AS 21 from the date a subsidiary or equity method investee was formed or acquired.

The Company elected to reset all cumulative translation gains and losses to zero by transferring it to opening retained earnings at its transition date.

iv) Deemed cost

Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognised in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition after making necessary adjustments to all assets and liabilities whose recognition is required by Ind AS. This exemption can also be used for intangible assets covered by Ind AS 38 Intangible Assets.

Accordingly, the Company has elected to measure all of its property, plant and equipment and intangible assets at their previous GAAP carrying value adjusted for certain adjustments whose recognition is required by Ind AS.

v) Share based payments

Ind AS 101 permits a first-time adopter not to apply the requirements of Ind AS 102 to equity instruments vested before transition date. But it requires to disclose the information required by Ind AS 102 for all grants of equity instruments to which Ind AS 102 has not been applied.

The Company has elected to apply this exemption and accordingly it has only accounted for the options granted but not vested before its transition date and it has disclosed the information for equity instruments vested before transition date as required by Ind AS 102.

vi) Investments in subsidiaries

Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its investment in subsidiaries as recognised in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition after making necessary adjustments to all assets and liabilities whose recognition is required by Ind AS.

Accordingly, the Company has elected to measure all its investments in subsidiaries at their previous GAAP carrying value adjusted for adjustments whose recognition is required by Ind AS.

b) Ind AS mandatory exceptions

i) Hedge accounting

Hedge accounting can only be applied prospectively from the transition date to transactions that satisfy the hedge accounting criteria in Ind AS 109, at that date. Hedging relationships cannot be designated retrospectively, and the supporting documentation cannot be created retrospectively. As a result, only hedging relationships that satisfied the hedge accounting criteria as of April 1, 2015 are reflected as hedges in the Company’s balance sheet under Ind AS.

The Company had designated various hedging relationships as cash flow hedges under the previous GAAP. On date of transition to Ind AS, the Company had assessed that all the designated hedging relationship qualifies for hedge accounting as per Ind AS 109. Consequently, the Company continues to apply hedge accounting on and after the date of transition to Ind AS.

ii) Estimates

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

Ind AS estimates as at April 1, 2015 are consistent with the estimates as at the same date made in conformity with previous GAAP. The Company made estimates for following items in accordance with Ind AS at the date of transition as these were not required under previous GAAP:

- Impairment of financial assets based on expected credit loss model.

- Financial assets as well as financial liability recognised at FVPL

iii) De-recognition of financial assets and liabilities

Ind AS 101 requires a first-time adopter to apply the de-recognition provisions of Ind AS 109 prospectively for transactions occurring on or after the date of transition to Ind AS. However, Ind AS 101 allows a first-time adopter to apply the de-recognition requirements in Ind AS 109 retrospectively from a date of the entity’s choosing, provided that the information needed to apply Ind AS 109 to financial assets and financial liabilities derecognised as a result of past transactions was obtained at the time of initially accounting for those transactions.

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

iv) Classification and measurement of financial assets

As required under Ind AS 101, the Company has classified and measured the financial assets on the basis of the facts and circumstances existing at the date of transition to Ind AS.

B. Reconciliations between previous GAAP and Ind AS

The following reconciliations provide a quantification of the effect of significant differences arising from the transition from Previous GAAP to Ind AS in accordance with Ind AS 101:

Ind AS 101 requires an entity to reconcile equity, total comprehensive income and cash flows for prior periods. The following tables represent the reconciliations from previous GAAP to Ind AS.

C. Notes to first-time adoption

These are the companies first financial statements prepared in accordance with Ind AS.

i) Proposed dividend - Short Term Provisions

Under the previous GAAP, dividends proposed by the board of directors after the balance sheet date but before the approval of the financial statements were considered as adjusting events. Accordingly, provision for proposed dividend was recognised as a liability. Under Ind AS, such dividends are recognised when the same is approved by the shareholders in the general meeting. Accordingly, the liability for proposed dividend included under provisions has been reversed with corresponding adjustment to retained earnings. Consequently, the total equity has been increased.

ii) Re-measurements of post-employment benefit obligations

Under Ind AS, re-measurements i. e. actuarial gains and losses and the return on plan assets, excluding amounts included in the net interest expense on the net defined benefit liability are recognised in other comprehensive income instead of profit or loss. Under the previous GAAP, these re-measurements were forming part of the profit or loss for the year. There is no impact on the total equity and profit.

iii) Employee stock option expense

Under the previous GAAP, the cost of equity-settled employee share-based plan were recognised using the intrinsic value method. Under Ind AS, the cost of equity settled share-based plan is recognised based on the fair value of the options as at the grant date using graded vesting method. There is no impact on total equity.

iv) Deferred tax

Adjustment to deferred tax is related to Ind AS adjustments which will be reversed in the future. Under previous GAAP no deferred tax was created on hedging reserve. Under Ind AS deferred tax is required to be created on adjustment to hedging reserve.

v) Security deposits

Under the previous GAAP, interest free lease security deposits (that are refundable in cash on completion of the lease term) are recorded at their transaction value. Under Ind AS, all financial assets are required to be recognised at fair value. Accordingly, the Company has fair valued these security deposits under Ind AS. Difference between the fair value and transaction value of the security deposit has been recognised as prepaid rent. Prepaid rent is recognised as an expense over the period of lease with corresponding recognition of interest income on the outstanding amount.

vi) Deferred revenue

The Company has entered into a contractwith customerwhere specific facility was developed forthe customer. Underthe previous GAAP, non refundable amount received against the development activities was recognised as a revenue. Under Ind AS, sales consideration received has been recognised over the period of contract over which the Company will provide the services. Accordingly, the Company has recognised deferred revenue

vii) Property, plant and equipment

Under Indian GAAP, land is excluded from the provisions of AS 19 and therefore accounted as asset based on general accounting framework and cost paid towards land is disclosed as fixed asset and apportioned over the lease period. Under Ind-AS land is covered under standard on accounting for lease and contract is required to be assessed under provisions of standard. For the lands held under lease where there is no clause for renewal, the same has been classified as operating lease transaction. Therefore leasehold land has been derecognised and cost paid towards land is recognised as deferred rent.

viii) Functional currency assessment

The Company has availed the exemption provided under the Ind AS 101 First Time Adoption of Indian Accounting Standard not to apply the requirements of Ind AS 21 with respect to classification of the exchange differences arising from translation of balances and transaction of foreign operations with functional currency different from the Company’s functional currency. Consequently, the Cumulative Translation Reserve balance as at the transition date has been set to zero as of the transition date. All non monetary assets have been restated at the exchange rate on transition date with corresponding increase in the value of non monetary assets.

ix) Retained earnings

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

x) Other comprehensive income

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

xi) Bank overdrafts

Under Ind AS, bank overdrafts repayable on demand and which form an integral part of the cash management process are included in cash and cash equivalents for the purpose of presentation of statement of cash flows. Under previous GAAP, bank overdrafts were considered as part of borrowings and movements in bank overdrafts were shown as part of financing activities.

3 Income Tax Expense

This note provides an analysis of the company’s income tax expense, show amounts that are recognised directly in equity and how the tax expense is affected by non-assessable and non-deductible items.

4 Employee Benefit obligations

(i) Leave obligations

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

The amount of the provision of RS.1,816.26 Lakhs (March 31, 2016: RS.1,687.77 Lakhs, April 1, 2015: RS.1,214.47 Lakhs) is presented as current, since the Company does not have an unconditional right to defer settlement for any of these obligations. However, based on past experience, the Company does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months.

(ii) Post-employment obligations

a) Gratuity

The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/ termination is the employees last drawn basic salary per month computed proportionately foRs.15 days salary multiplied for the number of years of service. The gratuity plan is a funded plan and the Company makes contributions to Life Insurance Corporation of India (LIC) as per Investment Pattern stiputlated for Pension and Group Schemes Fund by Insurance Regulatory and Development Authority Regulations. The Company does not fully fund the liability and maintains a target level of funding to be maintained over a period of time based on estimations of expected gratuity payments.

b) Pension benefits

The Company operates defined benefit pension plans at a foreign branch under broadly similar regulatory frameworks. All of the plans are final salary pension plans, which provide benefits to members in the form of a guaranteed lump sum amount of pension payable at the time of retirement. The level of benefits provided depends on members’ length of service and their salary in the final years leading up to retirement.

The Plan assets are administered by the Investment department of Deutsche Bank AG.

(iii) Defined contribution plans

The Company has classified various benefits provided to employees as under:

a) Provident Fund

b) Superannuation Fund

c) State Defined Contribution Plans:

i. Employers’ Contribution to Employee’s State Insurance

ii. Employer’s Contribution to Employee’s Pension Scheme

Amounts recognised in the Statement of Profit and Loss pertaining to the contribution to the above contribution plans is as follows:

(iv) Defined Benefit Plan

Balance sheet amounts - Pension plan

The amounts recognised in the balance sheet and the movements in the net defined benefit obligation over the year are as follows:

The Company has no legal obligation to settle the deficit in the funded plans with an immediate contribution or additional one off contributions. The Company intends to continue to contribute the defined benefit plans based on short term expected payouts in line with the actuary’s recommendations.

Balance sheet amounts - Gratuity

The amounts recognised in the balance sheet and the movements in the net defined benefit obligation over the year are as follows:

The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognised in the balance sheet.

The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the prior period.

(viii) Risk Exposure

Through its defined benefit plans, the Group is exposed to a number of risks, the most significant of which are detailed below:

Asset volatility The plan liabilities are calculated using a discount rate set with reference to bond yields; if plan assets underperform this yield, this will create a deficit. Most of the plan asset investments is in fixed income securities with high grades and in government securities.

Changes in bond yields A decrease in bond yields will increase plan liabilities, although this will be partially offset by an increase in the value of the plans’ bond holdings.

Inflation risks In the pension plans, the pensions in payment are not linked to inflation, so this is a less material risk.

Life expectancy The pension is to provide benefits for the life of the member, so increases in life expectancy will result in an increase in the plans’ liabilities. This is particularly significant where inflationary increases result in higher sensitivity to changes in life expectancy.

The Company ensures that the investment positions are managed within an asset-liability matching (ALM) framework that has been developed to achieve long-term investments that are in line with the obligations under the employee benefit plans. Within this framework, the Company’s ALM objective is to match assets to the pension obligations by investing in long-term fixed interest securities with maturities that match the benefit payments as they fall due and in the appropriate currency.

The Company actively monitors how the duration and the expected yield of the investments are matching the expected cash outflows arising from the employee benefit obligations. The Company has not changed the processes used to manage its risks from previous periods. The Company uses derivatives to manage some of its risk. Investments are well diversified, such that the failure of any single investment would not have a material impact on the overall level of assets.

A large portion of assets in 2017 consists of government bonds and LIC Pension and Group Scheme Fund. The plan asset mix is in compliance with the requirements of the respective local regulations.

(ix) Defined benefit liability and employer contributions

Expected contributions to post-employment benefit plans for the year ending March 31, 2018 are RS.669.10 Lakhs.

The weighted average duration of Gratuity plan obligation is 7.87 years (2016 - 7.68 years, 2015 - 7 years). The weighted average duration of Pension plan obligation is 22.1 years (2016 - 22.2 years, 2015 - 21.3 years). The expected maturity analysis of undiscounted pension and gratuity is as follows:

5 Capital management

A) Risk management

The Company’s objectives when managing capital are to

- Safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholder’s and benefits for other stakehoIders, and

- Maintain an optimaI capita! structure to reduce the cost of capitaI.

In order to maintain or adjust the capitaI structure, the Company may adjust the amount of dividends paid to sharehoIders, return capitaI to sharehoIders, issue new shares or seII assets to reduce debt.

Consistent with others in the industry, the Company monitors capitaI on the basis of the foIIowing gearing ratio:

Net debt (totaI borrowings net of cash and cash equivaIents) divided by Total ‘equity’ as shown in the baIance sheet, incIuding non-controIIing interests.

The Company’s strategy is to maintain a gearing ratio in the range of 45-50%. The gearing ratios were as foIIows:

Loan covenants

Under the terms of the major borrowing facilities, there are no financial covenants mentioned by financial institution and therefore risk on account of non-fulfillment of financial covenant is not applicable to company.

6 Related Party Transactions

I Individual having control with his relatives and associates

Mr. Ashok P. Hinduja

II Subsidiaries of Hinduja Global Solutions Limited (Includes step-down subsidiaries)

1 HGS International, Mauritius

2 HGS International Services Private Limited, India

3 Hinduja Global Solutions Inc. , U.S.A.

4 HGS Canada Inc. , Canada

5 C-Cubed B.V. , Netherlands

6 C-Cubed N.V. , Curacao

7 Customer Contact Centre Inc. , Philippines

8 Hinduja Global Solutions Europe Limited, U.K.

9 Hinduja Global Solutions UK Limited, U.K.

10 HGS France, S.A.R.L

11 HGS (USA), LLC

12 HGS Healthcare (Previously RMT LLC., U.S.A. )

13 Affina Company, Canada

14 HGS St. Lucia Ltd, Saint Lucia

15 Team HGS Limited, Jamaica

16 HGS Properties LLC, U.S.A.

17 HGS Canada Holdings LLC, U.S.A.

18 HGS Italy, S.A.R.L

19 HGS EBOS LLC , U.S.A.

20 HGS Mena FZ LLC, U.A.E

21 HGS Colibrium Inc

22 HGS Extensya Holdings Ltd (w. e. f November 25, 2015)

23 Extensya Investment Holdings Ltd (w. e. f November 25, 2015)

24 HGS Extensya Cayman Ltd (w. e. f November 25, 2015)

III Key Management Personnel

Mr. Partha DeSarkar, Chief Executive Officer and Manager Non executive directors:

Mr. Ramkrishan P. Hinduja, Chairman

Ms. Shanu S. P. Hinduja, Co-chairperson

Ms. Vinoo S. Hinduja

Mr. Anil Harish

Mr. Rajendra P. Chitale

Mr. Rangan Mohan

Mr. Yashodhan M. Kale (w. e. f. September21, 2016)

Mr. Pradeep Mukerjee (w. e. f. September21, 2016)

IV Enterprises where common control exists

1 Hinduja Group Limited

2 Hinduja Ventures Limited

3 IndusInd Media and Communication Limited

4 Hinduja Hospital Limited

V Relatives of Key Management personnel Mr. Pabitra DeSarkar (Father)

Rangan Mohan Associates (Firm in which Mr. Rangan Mohan is a Partner)

D M Harish & Co (Firm in which Mr. Anil Harish is a Partner)

The following details pertain to transactions carried out with the related parties in the ordinary course of business and the balances outstanding at the year-end:

(i) Fair Value Heirarchy

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

Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. The mutual funds are valued using the closing NAV.

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

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

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

(ii) Valuation technique used to fair value Specific valuation techniques used to value financial instruments include:

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

- the fair value of forward foreign exchange contracts and principal swap is determined using forward exchange rates at the balance sheet date

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

All of the resulting fair value estimates are included in level 2 where the fair values have been determined based on present values and the discount rates used were adjusted for counterparty or own credit risk.

(iii) Fair value measurements using significant unobservable inputs (level 3)

Fair value of the current financial assets and current financial liabilities carried at amortised cost is not materially different from the carrying amount. In general, fair value is determined primarily based on the present value of the expected future cash flows.

(iv) Valuation processes

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

The main level 3 inputs for unlisted equity securities, contingent considerations and indemnification asset used by the group are derived and evaluated as follows:

-Discount rates are determined using a capital asset pricing model to calculate a pre-tax rate that reflects current market assessments of the time value of money and the risk specific to the asset. -Risk adjustments specific to the counterparties are derived from credit risk grading determined by the Company’s internal credit risk management group.

Changes in level 2 and 3 fair values are analysed at the end of each reporting period during the quarterly valuation discussion between the CFO and the valuation team. As part of this discussion the team presents a report that explains the reason for the fair value.

The carrying amounts of trade receivables, treasury bills, security deposits, trade payables, capital creditors, cash and cash equivalents and borrowings are considered to be the same as their fair values, due to their short-term nature.

For financial assets and liabilities that are measured at fair value, the carrying amounts are equal to the fair values.

7 Financial risk management

- The Company’s activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Company’s primary focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance. The primary market risk to the Company is foreign exchange risk. The Company uses derivative financial instruments - foreign currency forward contracts to mitigate foreign exchange related risk exposures. The Company’s exposure to credit risk, excluding receivables from related parties, is influenced mainly by the individual characteristic of each customer and the concentration of risk from the top few customers.

This note explains the sources of risk which the Company is exposed to and how the Company manages the risk and the impact of hedge accounting in the financial statements

The Company’s risk management is carried out by a finance department under direction of the Board of Directors. The company’s finance department identifies, evaluates and hedges financial risks in close cooperation with the Company’s operating units. The board provides direction for overall risk management as well as policies covering specific areas, such as foreign exchange risk, credit risk, use of derivative financial instruments and managing the liquidity.

A) Credit risk

Credit risk arises from trade receivables, cash and cash equivalents and deposits with banks and financial institutions.

i) Credit risk management:

Credit risk refers to the risk of default on its obligation by the counter party resulting in a financial loss. Credit risk is managed on a financial asset basis. For banks and financial institutions, only high rated banks/institutions are accepted.

Company’s maximum exposure to credit risk for each class of financial asset is the carrying amount of the financial assets recognised in the statement of financial position.

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

- Historical trend default in case of applicable financial asset

- actual or expected significant adverse changes in business, financial or economic conditions that are expected to cause a significant change to the counter party’s ability to meet its obligations

- Other applicable macroeconomic information such as regulatory changes

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

The maximum exposure to the credit risk at the reporting date is primarily from trade receivables amounting to RS.28,836.88 Lakhs (March 31, 2016 - RS.27,856.45 Lakhs) and unbilled revenue amounting to RS.14,828.38 Lakhs (March 31, 2016 - RS.16,340.30 Lakhs) as at reporting date. Trade receivables and unbilled revenue are typically unsecured. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. In general, it is presumed that credit risk has significantly increased since initial recognition if the payments are more than 120 days past due from agreed credit terms with customer. The Company expects that estimate of expected credit loss for impairment is immaterial based on historical trend and the nature of business. No provision is considered necessary as at reporting date other than disclosed in Note 8 and Management continuously assesses the requirement for provision on ongoing basis. During the period, the Company made no write-offs of trade receivables except for those disclosed in Note 25.

Exposure of credit loss on security deposits given against the rented premises is considered to be low as recovery of these deposits is supported by contractual agreement. As an internal process, Management performs background check of counter party before entering into contractual agreement where credit risk assessment is carried out. As at reporting date credit risk has not increased significantly since initial recognition.

B) Liquidity risk

Prudent Iiquidity risk management impIies maintaining sufficient cash and marketabIe securities and the avaiIabiIity of funding through an adequate amount of committed credit faciIities to meet obIigations when due and to cIose out market positions. Due to the dynamic nature of the underIying businesses, the Company’s treasury maintains fIexibiIity in funding by maintaining avaiIabiIity under committed credit Iines.

Management monitors rolling forecasts of the Company’s liquidity position (comprising the undrawn borrowing faciIities beIow) and cash and cash equivaIents on the basis of expected cash fIows. These Iimits vary by Iocation to take into account the Iiquidity of the market in which the entity operates. In addition, the company’s liquidity management policy involves projecting cash flows in major currencies and considering the IeveI of Iiquid assets necessary to meet these, monitoring baIance sheet Iiquidity ratios against internaI and externaI reguIatory requirements and maintaining debt financing pIans.

i) Financing arrangements

The Company had access to the foIIowing undrawn borrowing faciIities at the end of the reporting period:

The bank overdraft faciIities may be drawn at any time and may be terminated by the bank without notice subject to the continuance of satisfactory credit ratings.

ii) Maturities of financial liabilities

The tables below analyse the Company’s financial liabilities into relevant maturity groupings based on their contractuaI maturities for:

- aII non-derivative financiaI IiabiIities, and

- net and gross settIed derivative financiaI instruments for which the contractuaI maturities are essentiaI for an understanding of the timing of the cash fIows.

The amounts discIosed in the tabIe are the contractuaI undiscounted cash fIows. BaIances due within 12 months equaI their carrying baIances as the impact of discounting is not significant.

C) Market risk

i) Foreign currency risk

The Company operates internationally and is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the USD, EUR and CAD. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the Company’s functional currency (INR and Phillipines Peso for Manila branch). The risk is measured through a forecast of highly probable foreign currency cash flows. The objective of the hedges is to minimise the volatility of the INR cash flows of highly probable forecast transactions.

The company’s risk management policy is to hedge upto 75% of forecasted foreign currency sales for the subsequent 12 months. As per the risk management policy, foreign exchange forward contracts are taken to hedge upto 75% of the forecasted sales.

In accordance with its risk management policies and procedures, the Company uses foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations relating to highly probable forecasted transactions. When derivative is entered into for the purpose of being a hedge, the Company negotiates the terms of those derivatives to match the terms of the hedge exposure and assesses the effectiveness of the hedged item and hedging relationship based on economic relationship.

ii) Foreign currency risk exposure

The companies exposure to foreign currency risk at the end of the reporting period expressed in INR, are as follows

iii) Sensitivity

The sensitivity of profit or loss to changes in the exchange rates arises mainly from foreign currency denominated financial instruments and the impact on other components of equity arises from foreign forward exchange contracts designated as cash flow hedges.

iv) Cash flow and fair value interest rate risk

The Company’s main interest rate risk arises from short-term borrowings with variable rates, which expose the Company to cash flow interest rate risk. The Company’s policy is to manage its borrowings to ensure lower interest outflow.

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

The Company’s manages its interest rate risk by having a balanced portfolio of fixed and variable rate loans and borrowings. Company manages it’s finance cost in a manner where significant portion of interest expenses can be predicted with reasonable certainty.

(a) Interest rate risk exposure

The exposure of the Company’s borrowing to interest rate changes at the end of the reporting period are as follows:

(b) Sensitivity

Profit or loss is sensitive to higher/lower interest expense from borrowings as a result of changes in interest rates. Other components of equity change as a result of an increase/decrease in the fair value of the cash flow hedges related to borrowings.

8 Financial risk management Impact of hedging activities

(a) Disclosure of effects of hedge accounting on financial position: March 31, 2017

(b) Disclosure of effects of hedge accounting on financial performance

The Company’s hedging policy only allows for effective hedge relationships to be established. Hedge effectiveness is determined at the inception of the hedge relationship and through periodic prospective effectiveness assessments to ensure that an economic relationship exists between the hedged item and hedging instrument. The Company enters into hedge relationships where the critical terms of the hedging instrument match exactly with the terms of the hedged item, and so a qualitative assessment of effectiveness is performed. If changes in circumstances affect the terms of the hedged item such that the critical terms no longer match exactly with the critical terms of the hedging instrument, the Company uses the hypothetical derivative method to assess effectiveness.

Ineffectiveness is recognised on a cash flow hedge where the cumulative change in the designated component value of the hedging instrument exceeds on an absolute basis the change in value of the hedged item attributable to the hedged risk. In hedges of foreign currency forecast sale may arise if:

- the critical terms of the hedging instrument and the hedged item differ (i.e. nominal amounts, timing of the forecast transaction, interest resets changes from what was originally estimated), or

- differences arise between the credit risk inherent within the hedged item and the hedging instrument.

Refer note 12b for the details related to movement in cash flow hedging reserve.

9 Business combinations

(a) Summary of acquisition

Effective September1, 2015 the Company has acquired significant portion of the domestic BPO business from Mphasis Limited and its wholly owned subsidiary Msource India Private Limited. Details of Net assets acquired, purchase consideration and bargain purchase are as follows:

The above information has been determined to the extent such parties have been identified on the basis of the information available with the Company.

10 Segment reporting

In accordance with paragraph 4 of Ind AS 108 “Operating segments”, the Company has presented segmental information only on the basis of the Consolidated financial statements (Refer Note 44 of the Consolidated financial statements).


Mar 31, 2016

A. Rights, preferences and restrictions attached to equity shares:

The Company has one class of Equity Shares having a par value of < 10 each. Each Shareholder is eligible for one vote per share held.

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

In the event of liquidation, the Equity Shareholders are eligible to receive the remaining assets of the Company, after distribution of all preferential amounts, in proportion to their shareholding.

* For the financial year ended March 31, 2016, the amount of per share dividend distributed to Equity Shareholders was Rs, 5 per share each on August 12, 2015 and November 6, 2015 and was Rs, 3.75 per share on February 9, 2016.

** During the year ended March 31, 2016 and March 31, 2015, the amount of per share dividend proposed as distribution to Equity Shareholders was Rs, 1.25 and Rs, 5, respectively, recognized in respective years.

Notes:

1 The Company has deposited an amount of Rs, 633.08 Lacs (Previous year: Rs, 633.08 Lacs) with the service tax authorities, which is included in "Balance with Government Authorities - Note 13". The Central Excise and Service Tax Appellate Tribunal South Zonal Bench, Bangalore in its fnal hearing on January 19, 2016 has allowed the appeal on merits in favour of the Company.

2 Hinduja Ventures Limited has received income tax demand pertaining to IT/ ITES business aggregating Rs,7,173.48 Lacs (Previous Year: Rs, 7,173.48 Lacs) in respect of period prior to October 1, 2006 which is reimbursable by the Company pursuant to the Scheme of Arrangement and Reconstruction for demerger of IT/ITES business into the Company sanctioned by High Court of Judicature of Bombay and made effective on March 7, 2007. In this regard, the Company has paid Rs, 5,550 Lacs (Previous Year: Rs, 5,550 Lacs) to Hinduja Ventures Limited to discharge part payment of disputed Income tax dues pertaining to IT/ITES business, which is included in the ''Loans and Advances to related parties'' under Note 13 – ''Long-term loans and advances''. Hinduja Ventures Limited has filed an appeal against the said demand. In view of Management and based on the legal advice obtained, the Company has strong case to succeed.

3 Future cash outfow in respect of above, if any, is determinable only on receipt of judgments''/ decisions pending with relevant authorities.

B) Guarantees given in favour of:

Zurich Services Corporation, Schaumburg to secure the performance of Hinduja Global Solutions Inc., a subsidiary company, under the Master Service Agreement, pursuant to which Hinduja Global Solutions Inc. has contracted to perform certain services.

California Physicians'' Service dba Blue Shield of California to secure the performance of Hinduja Global Solutions Inc., a subsidiary company, under the Master Service Agreement, pursuant to which Hinduja Global Solutions Inc. has contracted to perform certain services.

b) Capital and other commitments:

(i) Estimated Amount of Contracts (net of capital advances) remaining to be executed on Capital Account – Rs, 1,118.88 Lacs (Previous Year-Rs,'' 523.02 Lacs).

(ii) The Company has issued an Undertaking to provide need based financial support and is committed, if needed, to continue such support to meet the ongoing obligations of its following step-down subsidiaries.

i. HGS Mena FZ LLC

ii. C-Cubed N.V.

iii. Hinduja Global Solutions Europe Limited

iv HGS St. Lucia

v. HGS Colibrium Inc.

There has been no payments during the year against these undertakings.

2. disclosures in terms of Accounting Standard 15 (Revised 2005) ''employee Benefits''.

The Company has classified various benefits provided to employees as under: -

I Defined contribution Plans

a) Provident Fund

b) Superannuation Fund

c) State Defined Contribution Plans

i. Employers'' Contribution to Employee''s State Insurance

ii. Employers'' Contribution to Employee''s Pension Scheme 1995

c) Percentage of each category of Plan Assets to total fair Value of Plan Assets as at March 31, 2016

The Plan Assets for Defined Benefit Plan in India are administered by Life Insurance Corporation of India (''LIC'') as per Investment Pattern stipulated for Pension and Group Schemes Fund by Insurance Regulatory and Development Authority Regulations. In case of Defined benefit plan at a foreign branch, the Plan Assets are administered by the Investment department of Deutsche Bank AG. The Plan Assets consists of investment in Government Bonds 57.30% (Previous Year: 68.43%), Cash and Cash Equivalents 17.51% (Previous Year: 15.61%), Corporate Bonds 23.98% (Previous Year: 15.58%) and Others 1.21% (Previous Year: 0.38%) for amounts aggregating Rs, 960.99 Lacs (Previous YearRs," 1,345.07 Lacs).

III The liability for compensated absences as at March 31, 2016 aggregates Rs, 1,687.77 Lacs (Previous Year -Rs,1,214.47 Lacs).

3. Segment Information

In accordance with paragraph 4 of Accounting Standard 17 "Segment Reporting", the Company has presented segmental information only on the basis of the Consolidated financial statements (Refer Note 27 of the Consolidated financial statements).

4. Related Party Disclosures

I Individual having control with his relatives and associates

Mr. Ashok P. Hinduja

II Subsidiaries of Hinduja Global Solutions Limited (Includes step-down subsidiaries)

1. HGS International, Mauritius

2. HGS International Services Private Limited, India

3. Hinduja Global Solutions Inc., U.S.A.

4. HGS Canada Inc., Canada

5. C-Cubed B.V., Netherlands

6. C-Cubed N.V., Curacao

7. Customer Contact Centre Inc., Philippines

8. Hinduja Global Solutions Europe Limited, U.K.

9. Hinduja Global Solutions UK Limited, U.K.

10. HGS France, S.A.R.L

11. HGS (USA), LLC

12. HGS Healthcare (Previously RMT L.L.C., U.S.A.)

13. Affna Company, Canada

14. HGS St. Lucia Ltd, Saint Lucia

15. Team HGS Limited, Jamaica

16. HGS Properties LLC, U.S.A.

17. HGS Canada Holdings LLC, U.S.A.

18. HGS Italy, S.A.R.L

19. HGS EBOS LLC , U.S.A.

20. HGS Mena FZ LLC, U.A.E

21. HGS Colibrium Inc (w.e.f March 26, 2015)

22. HGS Extensya Holdings Ltd (w.e.f November 25, 2015)

23. Extensya Investment Holdings Ltd (w.e.f November 25, 2015)

24. HGS Extensya Cayman Ltd (w.e.f November 25, 2015)

III Key Management Personnel

Mr. Partha DeSarkar, Chief Executive Officer and Manager

IV Enterprises where common control exists

1. Hinduja Group Limited

2. Hinduja Ventures Limited

3. IndusInd Media and Communication Limited

4. Hinduja Hosiptal Limited

Notes:

1. There are no transactions with parties referred in I above.

2. Figures in bracket pertain to the previous year.

28 Operating Leases

The operating lease arrangement relating to office premises extend up to a period of twenty years from the respective dates of inception, which includes both cancellable and non-cancellable leases. Most of the leases are renewable for further period on mutually agreeable terms and also include escalation clauses.

Figures in bracket pertain to the previous year.

Provisions for litigations/ disputes represents claims against the Company not acknowledged as debts that are expected to materialize in respect of matters in litigation.

Figures in bracket pertain to the previous year.

The hedged highly probable forecast transactions denominated in foreign currency are expected to occur at various dates during the next 12 months. The (gain)/loss recognized in hedging reserve in equity during the year amounts to Rs, (879.55) Lacs [Previous Year: Rs, (55.56) Lacs].

The losses/(gain) on ineffective portion recognized in the Statement of Profit and Loss that arises from cash fow hedges amounts to Rs, (47.85) Lacs (Previous Year: Rs, 2.92 Lacs).

Gains and losses recognized in the hedging reserve in equity (Note 4) on forward foreign exchange contracts as of March 31, 2016 would be recognized in the income statement in the period or periods during which the hedged forecast transaction affects the related transaction in the Statement of Profit and Loss.

Had the Company adopted fairvalue method in respect of options granted, the employee compensation cost would have been higher/ (lower) by Rs,28.62 Lacs (Previous Year-Rs," (83.11) Lacs), Profit After Tax and the basic and diluted earning per share would have been lower/(higher) byRs, 28.62 Lacs (Previous Year-Rs," (83.11) Lacs) and Re. 0.14 (Previous Year- Re. (0.40)), respectively.

5. Pursuant to Schedule II of the Companies Act, 2013 (w.e.f. April 1, 2014), depreciation charge for the year ended March 31, 2015 is higher byRs," 939.71 lacs, and written down value aggregating Rs, 1,612.64 lacs (net of deferred tax of Rs, 572.62 lacs) for fixed assets with no residual life as at April 1, 2014 having being charged off to retained earnings.

6. Current tax includes provision for tax of Rs, 458.60 Lacs (Previous Year: Rs, 362.68 Lacs) pertaining to overseas branches which is determined as per the laws applicable in the relevant country.

7. As per Section 135 of the Companies Act, 2013, a CSR committee has been formed by the company. The areas for CSR activities are eradication of tuberculosis, promoting education, art and culture, healthcare, and rehabilitation and rural development projects. These contributions by the Company were spent on activities, which are specified in Schedule VII of the Companies Act, 2013.

The difference, being the excess of net assets acquired over the consideration paid/payable is disclosed as Capital Reserve (Refer Note 4).

8. In view of the acquisition noted in Note 41 above, the figures of the current year are not strictly comparable year with figures of the previous year.

9. Previous Year''s figures have been regrouped/ rearranged, wherever considered necessary, to conform to current year''s classification.


Mar 31, 2015

1 General Information

Hinduja Global Solutions Limited ("HGS"), is engaged in Business Process Management. HGS with its subsidiaries offer voice and non-voice based services such as contact centre solutions and back office transaction processing across North America, Europe, Asia and Middle East. HGS is a public limited company, listed on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) in India.

2. a) Contingent Liabilities

A) Claims against the Company not acknowledged as debts:

(Rs. in Lacs) Sr. No. Particulars As at 31.03.2015 As at 31.03.2014

(i) Service Tax demand raised by authorities against which 633.08 633.08 appeal has been fled by the Company (Refer Note 1 below)

(ii) Income Tax demand raised by authorities against which 9,607.60 5,448.23 appeal has been fled by the Company

(iii) ESIC demand raised by authorities 329.38 -

(iv) Others (to the extent ascertainable) 33.48 2,473.85

(v) Other matters (Refer Note 2 below) 7,173.48 12,209.79

Notes:

1 The Company has deposited an amount of Rs. 633.08 Lacs (Previous year: Rs. 633.08 Lacs) with the service tax authorities, which is included in "Balance with Government Authorities – Note 13".

2 Hinduja Ventures Limited has received income tax demand pertaining to IT/ ITES business aggregating Rs. 7,173.48 Lacs (Previous Year: Rs. 12,209.79 Lacs) in respect of period prior to October 1, 2006 which is reimbursable by the Company pursuant to the Scheme of Arrangement and Reconstruction for demerger of IT/ITES business into the Company sanctioned by High Court of Judicature of Bombay and made effective on March 7, 2007. In this regard, the Company has paid Rs. 5,550 Lacs (Previous Year: Rs. 5,550 Lacs) to Hinduja Ventures Limited to discharge part payment of disputed Income tax dues pertaining to IT/ ITES business, which is included in the 'Loans and Advances to related parties' under Note 13 – 'Long-term loans and advances'. Hinduja Ventures Limited has fled an appeal against the said demand. In view of Management and based on the legal advice obtained, the Company has strong case to succeed.

3 Future cash outflow in respect of above, if any, is determinable only on receipt of judgments/decisions pending with relevant authorities.

B) Guarantees given in favour of:

Zurich Services Corporation, Schaumburg to secure the performance of Hinduja Global Solutions Inc., a subsidiary company, under the Master Service Agreement, pursuant to which Hinduja Global Solutions Inc. has contracted to perform certain services.

California Physicians' Service dba Blue Shield of California to secure the performance of Hinduja Global Solutions Inc., a subsidiary company, under the Master Service Agreement, pursuant to which Hinduja Global Solutions Inc. has contracted to perform certain services.

b) Capital and other commitments:

(i) Estimated Amount of Contracts (net of capital advances) remaining to be executed on Capital Account - Rs. 523.02 Lacs (Previous Year - Rs. 367.77 Lacs).

(ii) The Company has issued an Undertaking to provide need based financial support and is committed, if needed, to continue such support to meet the ongoing obligations of its following step-down subsidiaries.

i. Hinduja Global Solutions Inc.

ii. C-Cubed N.V.

iii. Hinduja Global Solutions Europe Limited

iv HGS St. Lucia

There has been no payments during the year against these undertakings.

3. Disclosures in terms of Accounting Standard 15 (Revised 2005) 'Employee Benefits'.

The Company has classified various benefits provided to employees as under: -

I Defined Contribution Plans

a) Provident Fund

b) Superannuation Fund

c) State Defined Contribution Plans

i. Employers' Contribution to Employee's State Insurance

ii. Employers' Contribution to Employee's Pension Scheme 1995

4. Segment Information

In accordance with paragraph 4 of Accounting Standard 17 "Segment Reporting", the Company has presented segmental information only on the basis of the Consolidated financial statements (Refer Note 26 of the Consolidated financial statements).

5. Related Party Disclosures

I Individual having control with his relatives and associates

Mr. Ashok P. Hinduja

II Subsidiaries of Hinduja Global Solutions Limited (Includes step-down subsidiaries)

1. HGS International, Mauritius

2. HGS International Services Private Limited, India

3. HGS Business Services Private Limited, India (Upto June 30, 2013) [Amalgamated with HGS International Services Private Limited having appointed date as July 1, 2013]

4. Hinduja Global Solutions Inc., U.S.A.

5. HGS Canada Inc., Canada

6. C-Cubed B.V., Netherlands

7. C-Cubed N.V., Curacao

8. Customer Contact Centre Inc., Philippines

9. Hinduja Global Solutions Europe Limited, U.K.

10. Hinduja Global Solutions UK Limited, U.K.

11. HGS France, S.A.R.L

12. HGS (USA), LLC

13. RMT L.L.C., U.S.A.

14. Affina Company, Canada

15. HGS St. Lucia Ltd, Saint Lucia

16. Team HGS Limited, Jamaica P

17. HGS Properties LLC, U.S.A.

18. HGS Canada Holdings LLC, U.S.A.

19. HGS Italy, S.A.R.L

20. HGS EBOS LLC, U.S.A.

21. HGS Mena FZ LLC, U.A.E

22. HGS Colibrium Inc (w.e.f March 26, 2015)

III Key Management Personnel

Mr. Partha DeSarkar, Chief Executive Officer and Manager

IV Enterprises where common control exists

1. Hinduja Group India Limited

2. Hinduja Group Limited

3. Hinduja Ventures Limited

4. IndusInd Media and Communication Limited

V Relatives of Key Management personnel

Mr. Pabitra DeSarkar

6. Operating Leases

The operating lease arrangement relating to office premises extend up to a period of twenty years from the respective dates of inception, which includes both cancellable and non-cancellable leases. Most of the leases are renewable for further period on mutually agreeable terms and also include escalation clauses.

7. Pursuant to Schedule II of the Companies Act, 2013 (w.e.f. April 1, 2014), depreciation charge for the year ended March 31, 2015 is higher by Rs. 939.71 lacs , and written down value aggregating Rs. 1,612.64 lacs (net of deferred tax of Rs. 572.62 lacs) for fixed assets with no residual life as at April 1, 2014 having being charged off to retained earnings.

8. Current tax includes provision for tax of Rs. 362.68 Lacs (Previous Year: Rs. 338.70 Lacs) pertaining to overseas branches which is determined as per the laws applicable in the relevant country.

9. As per Section 135 of the Companies Act, 2013, a CSR committee has been formed by the company. The areas for CSR activities are eradication of tuberculosis, promoting education, art and culture, healthcare, and rehabilitation and rural development projects. These contributions by the Company were spent on activities, which are specified in Schedule VII of the Companies Act, 2013.

10. Previous Year's figures have been regrouped/ rearranged, wherever considered necessary, to conform to current year's classification.


Mar 31, 2014

1. a) Contingent Liabilities

A) Claims against the Company not acknowledged as debts:

(Rs. in Lacs)

Sr. No. Particulars As at 31.03.2014 As at 31.03.2013

(i) Service Tax demand raised by authorities against which 633.08 633.08 appeal has been fled by the Company (Refer Note 1 below)

(ii) Income Tax demand raised by authorities against which 5,448.23 5,196.73 appeal has been fled by the Company

(iii) Others (to the extent ascertainable) 2,432.49 1,127.10

(iv) Other matters (Refer Note 2 below) 12,209.79 18,275.72

Notes:

1. The Company has deposited an amount of Rs. 633.08 Lacs (Previous year: Rs.633.08 Lacs) with the service tax authorities, which is included in "Balance with Government Authorities – Note 13".

2. Hinduja Ventures Limited has received income tax demand pertaining to IT/ITES business aggregating Rs. 12,209.79 Lacs (Previous Year: Rs.18,275.72 Lacs) in respect of period prior to October 1, 2006 which is reimbursable by the Company pursuant to the Scheme of Arrangement and Reconstruction for demerger of IT/ITES business into the Company sanctioned by High Court of Judicature of Bombay and made effective on March 7, 2007. In this regard, the Company has paid Rs.5,550 Lacs (Previous Year: Rs.3,750 Lacs) to Hinduja Ventures Limited to discharge part payment of disputed Income tax dues pertaining to IT/ITES business, which is included in the ''Loans and Advances to related parties'' under Note 13 – ''Long-term loans and advances''. Hinduja Ventures Limited has fled an appeal against the said demand. In view of Management and based on the legal advice obtained, the Company has strong case to succeed.

3. Future cash outflow in respect of above, if any, is determinable only on receipt of judgments/decisions pending with relevant authorities.

B) Guarantees given in favour of:

Zurich Services Corporation, Schaumburg to secure the performance of Hinduja Global Solutions Inc., a subsidiary company, under the Master Service Agreement, pursuant to which Hinduja Global Solutions Inc. has contracted to perform certain services.

California Physicians'' Service dba Blue Shield of California to secure the performance of Hinduja Global Solutions Inc., a subsidiary company, under the Master Service Agreement, pursuant to which Hinduja Global Solutions Inc. has contracted to perform certain services.

b) Capital and other commitments:

(i) Estimated Amount of Contracts (net of capital advances) remaining to be executed on Capital Account – Rs.367.77Lacs (Previous Year – Rs. 41.53 Lacs).

(ii) The Company has issued an Undertaking to provide need based financial support and is committed, if needed, to continue such support to meet the ongoing obligations of its following step-down subsidiaries.

i. Hinduja Global Solutions Inc.

ii. C-Cubed N.V

iii. Hinduja Global Solutions Europe Limited

iv HGS St. Lucia

There has been no payments during the year against these undertakings.

2. Disclosures in terms of Accounting Standard 15 (Revised 2005) ''Employee Benefits''.

The Company has classified various benefits provided to employees as under: –

I Defined Contribution Plans

a) Provident Fund

b) Superannuation Fund

c) State Defined Contribution Plans

i. Employers'' Contribution to Employee''s State Insurance

ii. Employers'' Contribution to Employee''s Pension Scheme 1995

C) Percentage of each Category of Plan Assets to total Fair Value of Plan Assets as at March 31, 2014

The Plan Assets for Defined Benefit Plan in India are administered by Life Insurance Corporation of India (''LIC'') as per Investment Pattern stipulated for Pension and Group Schemes Fund by Insurance Regulatory and Development Authority Regulations. In case of defend benefit plan at a foreign branch, the Plan Assets are administered by the Investment department of Deutsche Bank AG. The Plan Assets consists of investment in Government Bonds 29.27% (Previous Year: 71.93%), Cash and Cash Equivalents 67.55% (Previous Year: 1.27%), Corporate Bonds 2.86% (Previous Year: 0.88%) and Others 0.32% (Previous Year: 25.92%) for an amounts aggregating Rs.1,360.58 Lacs (Previous Year Rs." 1,500.03 Lacs).

3. Segment Information

In accordance with paragraph 4 of Accounting Standard 17 "Segment Reporting", the Company has presented segmental information only on the basis of the Consolidated financial statements (Refer Note 26 of the Consolidated financial statements).

4. Related Party Disclosures (as identified by the Management)

I Individual having control with his relatives and associates

Mr. Ashok P. Hinduja

II Subsidiaries of Hinduja Global Solutions Limited (Includes step-down subsidiaries)

1. HGS International, Mauritius

2. HGS International Services Private Limited, India

3. HGS Business Services Private Limited, India (Up to June 30, 2013. Also refer foot note to Note 12)

4. Hinduja Global Solutions Inc., U.S.A.

5. HGS Canada Inc., Canada

6. C-Cubed B.V., Netherlands

7. C-Cubed N.V., Curacao

8. Customer Contact Centre Inc., Philippines

9. Hinduja Global Solutions Europe Limited, U.K.

10. Hinduja Global Solutions UK Limited, U.K.

11. HGS France, S.A.R.L

12. HGS (USA), LLC

13. RMT L.L.C., U.S.A.

14. Affina Company, Canada

15. HGS St. Lucia Ltd, Saint Lucia

16. Team HGS Limited, Jamaica

17. HGS Properties LLC, U.S.A.

18. HGS Canada Holdings LLC, U.S.A.

19. HGS Italy, S.A.R.L

20. HGS EBOS LLC , U.S.A. (w.e.f. October 8, 2012)

21. HGS Mena FZ LLC, U.A.E (w.e.f February 4, 2014)

III Key Management Personnel

Mr. Partha DeSarkar, Chief Executive Officer and Manager

IV Enterprises where common control exists

1. Hinduja Group India Limited

2. Hinduja Group Limited (formerly Aasia Management and Consultancy Private Limited)

3. Hinduja Ventures Limited

4. IndusInd Media and Communication Limited

5. In Entertainment (India) Limited

6. Ashley Aviation Limited

V Relatives of Key Management personnel Rs. Mr. Pabitra DeSarkar

5. Operating Leases

The operating lease arrangement relating to office premises extend up to a period of twenty years from the respective dates of inception, which includes both cancellable and non-cancellable leases. Most of the leases are renewable for further period on mutually agreeable terms and also include escalation clauses.

B. The Company has entered into other various cancellable leasing arrangements for office and residential premises and towards which an amount of Rs.279.44 Lacs (Previous Year - Rs.179.25 Lacs) have been recognised in the Statement of Profit and Loss.

6. Exceptional Item for the year ended March 31, 2013 represents net claims receivable written-off consequent to settlement of dispute with a bank.

7. Current tax includes provision for tax of Rs.338.70 Lacs (Previous Year: Rs.304.20 Lacs) pertaining to overseas branches which is determined as per the laws applicable in the relevant country.

8. Previous Year''s figures have been regrouped/ rearranged, wherever considered necessary, to conform to current year''s classification.


Mar 31, 2013

1. General Information

Hinduja Global Solutions Limited ("HGS"), is engaged in Business Process Management. HGS with its subsidiaries offer voice and non-voice based services such as contact centre solutions and back office transaction processing across North America, Europe and Asia. HGS is a public limited company, listed on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) in India.

2. a) Contingent Liabilities

A) Claims against the Company not acknowledged as debts:

(Rs. in Lacs)

Particulars As at 31.03.2013 As at 31.03.2012

(i) Service Tax demand raised by authorities against which appeal 633.08 633.08 has been filed by the Company (Refer Note 1 below)

(ii) Income Tax demand raised by authorities against which appeal 5,196.73 1,336.31 has been filed by the Company

(iii) Others (to the extent ascertainable) 1,124.15 694.64

(iv) Other matters (Refer Note 2 below) 18,275.72 16,662.50

Notes:

1. The Company has deposited an amount of R 633.08 Lacs (Previous year: R 633.08 Lacs) with the service tax authorities, which is included in "Balance with Government Authorities - Note 13".

2. Hinduja Ventures Limited has received income tax demand pertaining to IT/ ITES business aggregating R18,275.72 Lacs (Previous Year: R16,662.50 Lacs) in respect of period prior to October 1, 2006 which is reimbursable by the Company pursuant to the Scheme of Arrangement and Reconstruction for demerger of IT/ITES business into the Company sanctioned by High Court of Judicature of Bombay and made effective on March 7, 2007. In this regard, the Company has paid R 3,750 Lacs (Previous Year: R 3,750 Lacs) to Hinduja Ventures Limited to discharge part payment of disputed Income tax dues pertaining to IT/ ITES business, which is included in the ''Loans and Advances to related parties'' under Note 13 - ''Long-term loans and advances''. Hinduja Ventures Limited has filed an appeal against the said demand. In view of Management and based on the legal advice obtained, the Company has strong case to succeed.

3. Future cash outflow in respect of above, if any, is determinable only on receipt of judgements/ decisions pending with relevant authorities.

B) Guarantees given in favour of:

- Zurich Services Corporation, Schaumburg to secure the performance of Hinduja Global Solutions Inc., a subsidiary company, under the Master Service Agreement, pursuant to which Hinduja Global Solutions Inc. has contracted to perform certain services.

- California Physicians'' Service dba Blue Shield of California to secure the performance of Hinduja Global Solutions Inc., a subsidiary company, under the Master Service Agreement, pursuant to which Hinduja Global Solutions Inc. has contracted to perform certain services.

b) Capital and other commitments:

(i) Estimated Amount of Contracts (net of capital advances) remaining to be executed on Capital Account - R 41.53 Lacs (Previous Year - R 98.27 Lacs).

(ii) The Company has issued an Undertaking to provide need based financial support and is committed, if needed, to continue such support to meet the ongoing obligations of its following step-down subsidiaries.

i. Hinduja Global Solutions Inc.

ii. C-Cubed N.V.

iii. Hinduja Global Solutions Europe Limited

3. Disclosures in terms of Accounting Standard 15 (Revised 2005) ''Employee Benefits''.

The Company has classified various benefits provided to employees as under: -

I Defined Contribution Plans

a) Provident Fund

b) Superannuation Fund

c) State Defined Contribution Plans

i. Employers'' Contribution to Employee''s State Insurance

ii. Employers'' Contribution to Employee''s Pension Scheme 1995

4. Segment Information

In accordance with paragraph 4 of Accounting Standard 17 "Segment Reporting", the Company has presented segmental information only on the basis of the Consolidated financial statements (Refer Note 26 of the Consolidated financial statements).

5. Related Party Disclosures (as identified by the Management)

I Individual having control with his relatives and associates

Mr. Ashok P. Hinduja

II Subsidiaries of Hinduja Global Solutions Limited (Includes step-down subsidiaries)

1. HGS International, Mauritius

2. HGS International Services Private Limited, India (formerly known as Hinduja Outsourcing Solutions India Private Limited)

3. HGS Business Services Private Limited, India (formerly known as HCCA Business Services Private Limited)

4. Hinduja Global Solutions Inc., U.S.A.

5. HGS Canada Inc., Canada (formerly known as Online Support Inc.)

6. C-Cubed B.V., Netherlands

7. C-Cubed N.V., Curacao

8. Customer Contact Centre Inc., Philippines

9. Hinduja Global Solutions Europe Limited, U.K.

10. Hinduja Global Solutions UK Limited, U.K. (formerly known as Careline Services Limited)

11. HGS France, S.A.R.L (formerly known as Hinduja TMT France, S.A.R.L)

12. HGS (USA), LLC

13. RMT L.L.C., U.S.A.

14. Affina Company, Canada

15. HGS St. Lucia Ltd, Saint Lucia

16. Team HGS Limited, Jamaica

17. HGS Properties LLC, U.S.A.

18. HGS Canada Holdings LLC, U.S.A.

19. HGS Italy, S.A.R.L

20. HGS EBOS LLC , U.S.A. (w.e.f. October 8, 2012 )

III Key Management Personnel

Mr. Partha DeSarkar, Chief Executive Officer and Manager

IV Enterprises where common control exists

1. Hinduja Group India Limited

2. Aasia Management and Consultancy Private Limited

3. Hinduja Ventures Limited

4. IndusInd Media and Communication Limited

5. Hinduja Healthcare Private Limited

V Relatives of Key Management personnel Mr. Pabitra DeSarkar

6. Exceptional Item represents net claims receivable writtten-off consequent to settlement of dispute with a bank.

7. Current tax includes provision for tax of R 304.20 Lacs (Previous Year: R 256.36 Lacs) pertaining to overseas branches which is determined as per the laws applicable in the relevant country.

8. Previous Year''s figures have been regrouped/ rearranged, wherever considered necessary, to conform to current year''s classification.


Mar 31, 2012

1. General Information

Hinduja Global Solutions Limited ("HGS"), is engaged in the business of Information Technology/ Information Technology Enabled Services. HGS with its subsidiaries offer voice and non-voice based services such as contact centre solutions and back office transaction processing across North America, Europe and Asia. HGS is a public limited company, listed on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) in India.

a. Rights, preferences and restrictions attached to equity shares:

The Company has one class of Equity Shares having a par value of R 10 each. Each Shareholder is eligible for one vote per share held.

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

In the event of liquidation, the Equity Shareholders are eligible to receive the remaining assets of the Company, after distribution of all preferential amounts, in proportion to their shareholding.

b. 20,538,003 Equity Shares issued for consideration other than cash pursuant to the Scheme of Arrangement and Reconstruction for demerger of IT/ITES business into the Company, sanctioned by Honourable High Court of Bombay effective March 7, 2007.

2. a) Contingent Liabilities

A) Claims against the Company not acknowledged as debts:

(R in Lacs)

Particulars As at 31.03.2012 As at 31.03.2011

(i) Service Tax demand raised by authorities against which appeal 633.08 633.08 has been filed by the Company (Refer Note 1 below)

(ii) Income Tax demand raised by authorities against which appeal 1,336.31 1,336.31 has been filed by the Company

(iii) Others (to the extent ascertainable) 694.64 80.24

(iv) Other matters (Refer Note 2 below) 16,662.50 15,390.48

Notes:

1. The Company has deposited an amount of R 633.08 Lacs (Previous year: R 633.08 Lacs) with the service tax authorities, which is included in "Balance with Government Authorities - Note 13".

2. Hinduja Ventures Limited has received income tax demand pertaining to IT/ ITES business aggregating R 16,662.50 Lacs (Previous Year: R15,390.48 Lacs) in respect of period prior to October 1, 2006 which is reimbursable by the Company pursuant to the Scheme of Arrangement and Reconstruction for demerger of IT/ITES business into the Company sanctioned by High Court of Judicature of Bombay and made effective on March 7, 2007. In this regard, the Company has paid R 3,750 Lacs (Previous Year: R 3,150 Lacs) to Hinduja Ventures Limited to discharge part payment of disputed Income tax dues pertaining to IT/ ITES business, which is included in the 'Loans and Advances to related parties' under Note 13 - 'Long-term loans and advances'. Hinduja Ventures Limited has filed appeal/ is in process of filing an appeal against the said demand. In view of Management and based on the legal advice obtained, the Company has fairly a strong case for a favourable decision.

3. Future cash outflow in respect of above, if any, is determinable only on receipt of judgements/ decisions pending with relevant authorities.

4. Subsequent to the demerger of IT/ ITES business from Hinduja Ventures Limited into the Company, certificates in respect of tax deducted at source by the customers under the Income Tax Act, 1961 of India aggregating R1,315.03 Lacs (Previous Year: R 1,315.03 Lacs) were received in the name of Hinduja TMT Limited (now known as 'Hinduja Ventures Limited'). In view of the Management, the Company is eligible for the benefits of such tax deducted at source since the services were provided by the Company. Further, certificates of tax deducted at source aggregating R1,081.70 Lacs (Previous year: R 1,606.53 Lacs) are in process of being collected from the customers.

B) Guarantees given in favour of:

- Zurich Services Corporation, Schaumburg to secure the performance of Hinduja Global Solutions Inc., a subsidiary company, under the Master Service Agreement, pursuant to which Hinduja Global Solutions Inc. has contracted to perform certain services.

- California Physicians' Service dba Blue Shield of California to secure the performance of Hinduja Global Solutions Inc., a subsidiary company, under the Master Service Agreement, pursuant to which Hinduja Global Solutions Inc. has contracted to perform certain services.

b) Capital and other commitments:

(i) Estimated Amount of Contracts (net of capital advances) remaining to be executed on Capital Account - R 98.27 Lacs (Previous Year - R 216.38 Lacs).

(ii) The Company has issued an Undertaking to provide need based financial support and is committed, if needed, to continue such support to meet the ongoing obligations of its following step-down subsidiaries:

i. Hinduja Global Solutions Inc.

ii. C-Cubed (Antilles) N.V.

iii. C-Cubed B.V.

iv. Hinduja Global Solutions Europe Limited

3. Disclosures in terms of Accounting Standard 15 (Revised 2005) 'Employee Benefits'.

The Company has classified various benefits provided to employees as under: -

I Defined Contribution Plans

a) Provident Fund

b) Superannuation Fund

c) State Defined Contribution Plans

i. Employers' Contribution to Employee's State Insurance

ii. Employers' Contribution to Employee's Pension Scheme 1995

During the year, the Company has recognised the following amounts in the Statement of Profit and Loss -

C) Percentage of each Category of Plan Assets to total Fair Value of Plan Assets as at March 31, 2012

The Plan Assets for Defined Benefit Plan in India are administered by Life Insurance Corporation of India ('LIC') as per Investment Pattern stipulated for Pension and Group Schemes Fund by Insurance Regulatory and Development Authority Regulations. In case of defined benefit plan at a foreign branch, the Plan Assets are administered by the Investment department of Deutsche Bank AG. The Plan Assets consists of deposits with a bank aggregating R 837.12 Lacs (Previous Year R 228.50 Lacs).

4. Segment Information

Primary Segment

The Company has identified business segment as its primary segment. In accordance with Accounting Standard 17 "Segmental Reporting", the Company has determined its operations as a single reportable business segment, namely Information Technology/ Information Technology Enabled Services. Hence, it has no other primary reportable segments. Thus, the segment revenue, segment results, total carrying value of segment assets and liabilities, capital expenditure incurred to acquire the assets, the total amount of charge for depreciation are all as reflected in the financial statements as of and for the year ended March 31, 2012.

Secondary Segment

The Company has identified geographical segment as its secondary segment. The details of geographical segment are as follows:

5. Related Party Disclosures (as identified by the Management)

I Individual having control with his relatives and associates

Mr. Ashok P. Hinduja

II Subsidiaries of Hinduja Global Solutions Limited (Includes step-down subsidiaries)

1. HGS International, Mauritius (formerly known as Pacific Horizon Limited, Mauritius)

2. Hinduja Outsourcing Solutions India Private Limited, India

3. HCCA Business Services Private Limited, India (w.e.f. August 12, 2011)

4. Hinduja Global Solutions Inc., U.S.A.

5. Online Support Inc., Canada (w.e.f. August 2, 2011)

6. C-Cubed B.V., Netherlands

7. C-Cubed (Antilles) N.V., Curacao

8. Customer Contact Centre Inc., Manila

9. Hinduja Global Solutions Europe Limited, U.K. (formerly known as HTMT Europe Limited, U.K.)

10. Careline Services Limited, U.K.

11. Hinduja TMT France, S.A.R.L

12. HGS (USA), LLC (formerly known as Affina L.L.C ., U.S.A)

13. RMT L.L.C., U.S.A

14. Affina Company, Canada

15. HGS St. Lucia Ltd, Jamaica

16. Team HGS Limited, Jamaica

17. HGS Properties LLC, U.S.A. (w.e.f. November 28, 2011)

18. HGS Canada Holdings LLC, U.S.A.

19. HGS Italy, S.A.R.L

III Key Management Personnel Mr. Partha DeSarkar

IV Enterprises where common control exists

1. Hinduja Group India Limited

2. Aasia Management and Consultancy Private Limited

3. Hinduja Ventures Limited

4. IndusInd Media and Communication Limited

5. Hinduja Healthcare Private Limited

6. Hinduja Realty Ventures Limited

V Relatives of Key Management personnel Mr. Pabitra DeSarkar

Mrs. Samya Ahmed

6. Current tax includes provision for tax of R 256.36 Lacs (Previous Year: R 274.80 Lacs) pertaining to overseas branches which is determined as per the laws applicable in the relevant country.

7. The financial statements for the year ended March 31, 2011 had been prepared as per the then applicable, pre- revised Schedule VI to the Companies Act, 1956. Consequent to the notification of Revised Schedule VI under the Companies Act, 1956, the financial statements for the year ended March 31, 2012 are prepared as per Revised Schedule VI. Accordingly, the previous year figures have also been reclassified to conform to this year's classification. The adoption of Revised Schedule VI for previous year figures does not impact recognition and measurement principles followed for preparation of financial statements.


Mar 31, 2011

1. Commitments and Contingent Liabilities

a) Estimated Amount of Contracts (net of capital advances) remaining to be executed on Capital Account - Rs. 216.38 Lacs (Previous Year - Rs. 193.05 Lacs).

b) Contingent liabilities in respect of:

(Rs. in Lacs)

Particulars As at As at 31.03.2011 31.03.2010

(i) Service Tax demand raised by authorities against which appeal 633.08 359.02 has been filed by the Company (Refer Note 1 below)

(ii) Other claims against the Company not acknowledged as debts 80.24 4.79 (to the extent ascertainable)

(iii) Income Tax demand raised by authorities against which appeal has been filed by the Company 1,336.31 --

(iv) Other matters (Refer Note 2 below) 15,390.48 14,042.81

Notes:

1. The Company has deposited an amount of Rs. 633.08 Lacs (Previous year - Rs. Nil) with the service tax authorities, which is included in "Balance with Excise and Custom Authorities - Schedule J".

2. Hinduja Ventures Limited has received income tax demand pertaining to IT/ ITES business aggregating Rs. 15,390.48 Lacs (Previous Year - Rs. 14,042.81 Lacs) in respect of period prior to October 1, 2006 which will be reimbursed by the Company pursuant to the Scheme of Arrangement and Reconstruction for demerger of IT/ITES business into the Company sanctioned by High Court of Judicature of Bombay and made effective on March 7, 2007. In this regard, the Company has paid Rs. 3,150 Lacs (Previous Year - Rs. 1,350 Lacs) to Hinduja Ventures Limited to discharge part payment of disputed Income tax dues pertaining to IT/ ITES business, which is included in the Advances Recoverable in Cash or in Kind or for value to be received. Hinduja Ventures Limited has fi led appeal against the said demand. In view of Management and based on the legal advice obtained, the Company has fairly a strong case for a favourable decision.

3. Future cash outfl ow in respect of above, if any, is determinable only on receipt of judgements/ decisions pending with relevant authorities.

4. Subsequent to the demerger of IT/ ITES business from Hinduja Ventures Limited into the Company, certifi cates in respect of tax deducted at source by the customers under the Income Tax Act, 1961 of India aggregating Rs. 1,315.03 Lacs (Previous Year - Rs. 1,315.03 Lacs) were received in the name of Hinduja Ventures Limited. In view of the Management, the Company is eligible for the benefits of such tax deducted at source since the services were provided by the Company. Further, certifi cates of tax deducted at source aggregating Rs. 1,606.53 Lacs (Previous year - Rs. 1,423.31 Lacs) are in process of being collected from the customers.

c) Guarantees/ Bonds outstanding as at March 31, 2011 are as follows:

Guarantees given by banks on behalf of the Company - Rs. 241.77 Lacs (Previous Year - Rs. 216.75 Lacs)

Indemnity Bond given by Company to Deputy Commissioner and Assistant Commissioner of Customs and Assistant Commissioner of Central Excise towards obtaining 100% EOU status for its locational Offices - Rs. 4,330.55 Lacs (Previous Year - Rs. 4,617.36 Lacs)

Corporate Guarantees given in favour of:

Ryder System, Inc., to guarantee the payment and performance of Hinduja Global Solutions Inc., a subsidiary company, under the Outsourcing Master Services Agreement entered between the two.

Zurich Services Corporation, Schaumburg to secure the performance of Hinduja Global Solutions Inc., a subsidiary company, under the Master Service Agreement, pursuant to which Hinduja Global Solutions Inc. has contracted to perform certain services.

California Physicians Service dba Blue Shield of California to secure the performance of Hinduja Global Solutions Inc., a subsidiary company, under the Master Service Agreement, pursuant to which Hinduja Global Solutions Inc. has contracted to perform certain services.

Irrevocable Letter of Credit aggregating USD 2,000,000 (Previous Year - USD 2,000,000) [equivalent Rs. 888.00 Lacs (Previous Year - Rs. 899.50 Lacs)] issued towards performance of an overseas contract against charge on current and fixed assets of the Company, both present and future.

4. Segment Information

Primary Segment

The Company has identifi ed primary segment to be business segment. In accordance with Accounting Standard 17 "Segmental Reporting", the Company has determined its operations as a single reportable business segment, namely Information Technology/ Information Technology Enabled Services. Hence, it has no other primary reportable segments. Thus, the segment revenue, segment results, total carrying value of segment assets and liabilities, capital expenditure incurred to acquire the assets, the total amount of charge for depreciation are all as refl ected in the fi nancial statements as of and for the year ended March 31, 2011.

5. Related Party Disclosures (as identifi ed by the Management)

I Individual having control with his relatives and associates

Mr. Ashok P. Hinduja

II Subsidiaries of Hinduja Global Solutions Limited (includes indirect subsidiaries)

1. Pacifi c Horizon Limited, Mauritius

2. Hinduja Outsourcing Solutions India Private Limited (w.e.f. May 13, 2010)

3. Hinduja Global Solutions Inc., U.S.A. (formerly known as Source1 HTMT Inc., U.S.A.)

4. C-Cubed B.V., Netherlands

5. C-Cubed (Antilles) N.V., Netherlands

6. Customer Contact Centre Inc., Manila

7. HTMT Europe Limited, U.K.

8. Careline Services Limited, U.K. (w.e.f. June 21, 2010)

9. Hinduja TMT France, S.A.R.L

10. Affi na L.L.C ., U.S.A

11. RMT L.L.C, U.S.A

12. Affi na Company, Canada

III Key Management Personnel

Mr. Partha De Sarkar

IV Enterprises where common control exists

1. Impeccable Imaginations Private Limited (formerly known as Serendipity Films Private Limited)

2. Hinduja Group India Limited

3. Aasia Management and Consultancy Private Limited

4. Hinduja Ventures Limited

5. IndusInd Media and Communication Limited

6. Hinduja Healthcare Private Limited

7. Hinduja Realty Ventures Limited

V Relatives of Key Management personnel

Mrs. Samya Ahmed

12. There are no delays in payments to Micro and Small Enterprises as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006. Further, there are no outstanding dues payable to micro and small enterprises at the year-end.

This has been determined to the extent such parties have been identifi ed on the basis of information available with the Company.

13. Exceptional income of Rs. 576.05 Lacs in the previous year ended March 31, 2010 represents write back of provision for mark-to-market losses on outstanding forward exchange contracts held for hedging future customer receivables on account of appreciation of rupee against US dollar.

14. Disclosures in terms of Accounting Standard 15 (Revised 2005) Employee Benefits.

The Company has classifi ed various benefits provided to employees as under:

I Defi ned Contribution Plans

a) Provident Fund

b) Superannuation Fund

c) State Defi ned Contribution Plans

i. Employers Contribution to Employees State Insurance

ii. Employers Contribution to Employees Pension Scheme 1995.

15. The details of Employee Stock Option Plan [ESOP] of the Company are as follows:

The Shareholders of the Company at their Annual General Meeting held on 27th September 2008 granted approval to the HTMT Global Solutions Limited Employees Stock Option Plan 2008 (now Hinduja Global Solutions Employees Stock Option Plan 2008) ("ESOP 2008"). Subsequently, the Compensation Committee approved the terms and conditions relating to ESOP 2008 and options were granted on 31st July, 2009. The details of ESOP 2008 is as follows:

Maximum grant of options

The maximum number of options that could be issued under ESOP 2008 is 205,380 (being 1% of the outstanding equity shares of the Company as at April 1, 2009)

Vesting Period

Options to vest over a period of three years from the date of their grant as under:

- 1/6th of the options granted will vest on the first anniversary of the grant date.

- 1/3rd of the options granted will vest on the second anniversary of the grant date.

- 1/2 of the options granted will vest on the third anniversary of the grant date.

Exercise Period

Options vested with an employee will be exercisable prior to completion of the 48th month from the date of their grant by subscribing to the number of equity shares in the ratio of one equity share for every option. In the event of cessation of employment due to death, resignation or otherwise the options may lapse or be exercisable in the manner specifi cally provided for in the Scheme.

Exercise Price

Rs. 400.10 per share

The exercise price per share is determined on the basis of closing price at the

National Stock Exchange of India Limited immediately preceding the date of grant.

Method of Accounting and Intrinsic Value

The compensation costs of stock options granted to employees are accounted using the intrinsic value method. Intrinsic value is the amount by which the quoted market price of the underlying share exceeds the exercise price of the option. In view of exercise price being equal to closing market price on the day prior to the date of the grant, the intrinsic value of the option is Rs. Nil.

Fair Value and Model Used

Rs. 178.04 per option.

The fair value of stock option has been calculated using Black-Scholes Option Pricing Model.

16. Current tax includes provision for tax of Rs. 274.80 Lacs (Previous Year - Rs. 114.09 Lacs) pertaining to overseas branches which is determined as per the laws applicable in the relevant country.

17. Previous Years figures have been regrouped/ rearranged, wherever necessary, to conform to the current years classification.


Mar 31, 2010

1. Commitments and Contingent Liabilities

a) Estimated Amount of Contracts (net of capital advances) remaining to be executed on Capital Account - Rs. 193.05 Lacs (Previous Year - Rs. 36.69 Lacs).

b) Contingent liabilities in respect of:

(Rs. in Lacs)

Particulars As at As at 31.03.2010 31.03.2009

(i) Bank Guarantees given in favour of:

President of India, Commissioner, Deputy Commissioner 216.53 230.87 and Assistant Commissioner of Customs

President of India, The Telegraph Authority -- 50.00

Mauritius Telecom Limited for indemnifying against any -- 11.05

loss for supply of an International Private Leased Circuit (IPLC) to the Company, to the maximum extent of USD Nil (Previous Year - USD 21,735)

Ministry of Labour, Mauritius for expense maintenance 0.22 0.24 and repartition of two employees of the Company [MUR 15,000 (Previous Year - MUR 15,000)]

(ii) Indemnity Bond given by Company to Commissioner, Deputy 4,617.36 4,617.36 Commissioner and Assistant Commissioner of Customs and Assistant Commissioner of Central Excise towards obtaining 100% EOU status for its locational offices

(iii) Indemnity Bond given by the Company in connection with -- 61.03 telemarketing work undertaken by a subsidiary company [USD Nil (Previous Year - USD 120,000)]

(iv) Claims raised by service tax authorities which is not 359.02 359.02 acknowledged by the Company

(v) Other claims against the Company not acknowledged as debts 4.79 4.79 (to the extent ascertainable)

(vi) Claims towards Income Tax (Refer Note 1 below) 14,042.81 3,081.64

Notes:

1. Hinduja Ventures Limited has received income tax demand pertaining to IT/ ITES business aggregating Rs. 12,208.43 Lacs (Previous Year: Rs. 3,081.64 Lacs) in respect of period prior to October 1, 2006 which will be reimbursed by the Company pursuant to the Scheme of Arrangement and Reconstruction for demerger of IT/ITES business into the Company sanctioned by High Court of Judicature of Bombay and made effective on March 7, 2007. In this regard, the Company has paid Rs. 1,350 Lacs (Previous Year: Rs. 500 Lacs) to Hinduja Ventures Limited to discharge part payment of disputed Income tax dues pertaining to IT/ ITES business, which is included in the Advances Recoverable in Cash or in Kind or for value to be received. Hinduja Ventures Limited has filed appeal against the said demand. Additionally, an objection in respect of income tax matters pertaining to IT/ ITES business has been filed by Hinduja Ventures Limited with Dispute Resolution Panel involving an amount of Rs. 1,834.38 Lacs [Previous Year - Rs. Nil], which is pending disposal. In view of Management and based on the legal advice obtained, the Company has fairly a strong case for a favourable decision.

2. Future cash outflow in respect of (iv), (v) and (vi) above, if any, is determinable only on receipt of judgements/ decisions pending with relevant authorities.

3. Subsequent to the demerger of IT/ ITES business from Hinduja Ventures Limited into the Company, certificates in respect of tax deducted at source by the customers under the Income Tax Act, 1961 of India aggregating Rs. 1,315.03 Lacs were received in the name of Hinduja Ventures Limited. In view of the Management, the Company is eligible for the benefits of such tax deducted at source since the services were provided by the Company. Further, certificates of tax deducted at source aggregating Rs. 1,423.31 Lacs are in process of being collected from the customers.

c) The Company has given corporate guarantees in favour of:

- Ryder System, Inc., to guarantee the payment and performance of Source 1 HTMT Inc., a subsidiary company, under the Outsourcing Master Services Agreement entered between the two.

- Zurich Services Corporation, Schaumburg to secure the performance of Source 1 HTMT Inc., a subsidiary company, under the Master Service Agreement, pursuant to which Source 1 HTMT Inc. has contracted to perform certain services.

d) Irrevocable Letter of Credit aggregating USD 2,000,000 (Previous Year - USD 2,000,000) [equivalent Rs. 899.50 Lacs (Previous Year – Rs. 1,017.23 Lacs)] issued towards performance of an overseas contract against charge on current and fixed assets of the Company, both present and future.

4. Segment Information

In accordance with Accounting Standard 17 “Segmental Reporting”, the Company has determined its operations as a single reportable business segment, namely Information Technology/ Information Technology Enabled Services. Hence, it has no other reportable segments. Thus, the segment revenue, segment results, total carrying value of segment assets and liabilities, capital expenditure incurred to acquire the assets, the total amount of charge for depreciation are all as reflected in the financial statements as of and for the year ended March 31, 2010.

5. Related Party Disclosures (as identified by the Management)

I Individual having control with his relatives and associates. Mr. Ashok P. Hinduja

II Subsidiaries of Hinduja Global Solutions Limited (includes indirect subsidiaries)

1. Pacific Horizon Limited, Mauritius

2. Source1 HTMT Inc., U.S.A.

3. C-Cubed B.V., Netherlands

4. C-Cubed (Antilles) N.V., Netherlands

5. Customer Contact Centre Inc., Manila

6. HTMT Europe Limited, U.K.

7. Hinduja TMT France, S.A.R.L

8. Affina L.L.C ., U.S.A

9. RMT L.L.C., U.S.A

10. Affina Company, Canada

III Key Management Personnel Mr. Partha De Sarkar

IV Enterprises where common control exists

1. Serendipity Films Private Limited

2. Hinduja Group India Limited

3. Aasia Management & Consultancy Private Limited

4. Hinduja Ventures Limited

5. IndusInd Media and Communication Limited

6. Hinduja Realty Ventures Limited

V Associate Company Ashley Airways Limited

VI Relatives of Key Management personnel Mrs. Samya Ahmed

6. There are no delays in payments to Micro and Small Enterprises as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006. Further, there are no outstanding dues payable to micro and small enterprises at the year-end.

This has been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the Auditors.

7. Exceptional income for the year ended March 31, 2010 of Rs. 576.05 Lacs represents write back of provision for mark-to-market losses on outstanding forward exchange contracts held for hedging future customer receivables on account of appreciation of rupee against US dollar. Provision of mark-to-market losses on aforesaid contracts aggregated Rs. 1,061.40 Lacs as at March 31, 2009.

8. Disclosures in terms of Accounting Standard 15 (Revised 2005) ‘Employee Benefits’ The Company has classified various benefits provided to employees as under: - I Defined Contribution Plans

a. Provident Fund

b. Superannuation Fund

c. State Defined Contribution Plans

i. Employers’ Contribution to Employee’s State Insurance

ii. Employers’ Contribution to Employee’s Pension Scheme 1995.

9. Previous Year’s figures have been regrouped/ rearranged, wherever considered necessary.

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