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Notes to Accounts of OnMobile Global Ltd.

Mar 31, 2023

In earlier years, the Company had entered into agreement with VIVO SA, Brazil on March 01, 2010 for rendering Ring Back Tone (RBT) services and made a one-time upfront payment of $ 12.70 million (equivalent '' 325.70 million) for a period of 5 years. The Company deducted TDS @ 20% and deposited the same with the income tax department. However, the Company was of the view that the above amount was not subject to TDS and filed an application with Authority for Advance Ruling (''AAR'') seeking clarification in respect of the same. The Company had negotiated with VIVO SA, Brazil that Vivo will bear 10% of the TDS deducted and made the payment of $ 11.43 million to Vivo Brazil. After filling the application with AAR, the Company had created a receivable of '' 73.28 million in the books pertaining to 20% TDS amount deposited with the income tax department (after grossing up for the 10% TDS borne by the Company) and also created a deferred liability amounting to '' 20.49 millions as at March 31, 2023 (March 31, 2022 - '' 20.16 millions) pertaining to 10% TDS amount payable to Vivo Brazil if the application is decided in favor of the Company. The net amount of exposure involved (net of forex gain) as at March 31, 2023 is '' 52.80 millions (March 31, 2022 - '' 53.12 millions).

During the year ended March 31, 2020, application filed by the Company was disposed off by the Authority for Advance Ruling (''AAR'') thereby rejecting Company''s refund claim of TDS deposited earlier and hold that the amount of market access fees paid to VIVO SA, Brazil is in the nature of royalty and is liable for tax in India. During the previous year ended March 31, 2021, the Company has filed a writ application with the Honorable High Court of Karnataka in the month of June 2020. The said application is admitted by the Honorable High Court and the matter is yet to be taken up for regular hearings. The Company based on the legal evaluation believes that it will be able to sustain on appeals and accordingly no provisions are required to be recorded at this stage.

C) Aggregate number of shares allotted as fully paid up pursuant to contracts without payment being received in cash, bonus shares and buyback of shares for the period of five years immediately preceeding the balance sheet date:

a) During the year ended March 31, 2021, the Board of Directors of the Company in their Board meeting held on April 9, 2020 have approved buy back of 19,321,429 shares for a maximum value of ?541 millions. The Company has during the period from April 1, 2020 to March 31, 2021 bought back 2,247,881 equity shares of ?10 each at maximum price of ?28 per equity share. The total cash outflow towards shares bought back (including premium and buy-back expenses) amounts to ?68.61 millions. The window for the said buy-back was closed on October 23, 2020. An amount corresponding to face value of the shares bought back was transferred to Capital Redemption Reserve.

The Company has not allotted any fully paid up shares by way of bonus shares, or bought-back any equity shares or issues any shares in pursuance to contract without payment being received in cash during the period of five years immediately preceding the reporting date other than those mentioned above. There are no shares reserved for issue under options and contracts/ commitments for sale of shares/ disinvestment.

D) Total number of options outstanding under various employee stock option plans, that are convertible into equity shares, as on March 31, 2023 are 3,385,577 (March 31, 2022: 2,987,208)

F) Rights and restrictions attached to equity shares:

The Company has only one class of equity shares with voting rights (one vote per share). The dividend proposed by the Board of Directors is subject to approval of the shareholders in the Annual General Meeting. In the event of liquidation of the Company the equity shareholders are entitled to receive only the residual assets of the Company. The distribution of dividend is in proportion to the number of equity shares held by the shareholders.

Working Capital Loan from bank amounting to ? 80 Million (Previous year ? Nil), which carried interest of 10.15% per annum is repayable within 90 days from the date of availment of the loan. These were secured by charge over the receivables of the Company

The Company has satisfied all the covenants prescribed in terms of borrowings

1. In respect of working capital loans, the Company has inadvertently missed reporting values of certain receivables and forex impact recorded at the end of the month. The same was rectified subsequently

2. In respect of working capital loans, the Company has inadvertently missed reporting values of certain payables due to reclassification of entries and forex impact recorded at the end of the month. The same was rectified subsequently

3. The above differences in reporting have been subsequently rectified by the Company by submitting revised statements.

29 A. Contingent liabilities

The Company is involved in taxation and other disputes, lawsuits, proceedings etc. that arise from time to time in the ordinary course of business. Management is of the view that these claims are not tenable and will not have any material adverse effect on the Company''s financial position and result of operations.

a Claims against the company not acknowledged as debt amounts to ? 1,866.95 million (March 31, 2022: ? 2,319.61 million).

B. Capital commitments

Estimated amount of contracts (net of advances) remaining to be executed on capital account and not provided for is ? 11.03 million (March 31,2022: ?25.73 million).

C. Other matters

During the year ended March 31,2020, the Company had received a summon with respect to survey under section 133A of the Income Tax Act, 1961. The scope of the survey communicated to the Company was verifying the deduction under section 10AA claimed by the Company in relation to the income from its SEZ unit. During the FY 2020-21 and FY 2021-22 the Company received notices under Section 148 of the Act towards reopening of the assessment for the period from FY 2012-13 to FY 2015-16 and proposing to disallow the SEZ deduction under section 10AA granted earlier. The Company has challenged the said order and filed writ petitions (for all FY''s) before the Honourable High Court of Karnataka on April 03, 2021 (for FY2012-13 to FY2014-15) and September 06, 2022 ( for FY2016-17). The Honourable High Court has granted stay on the proceedings. The Company believes that there should be no adverse outcome against the Company on account of this matter.

II Defined benefit plans

The Company has a defined benefit gratuity plan as per the Payment of Gratuity Act, 1972. Under this legislation, employee who has completed five years of service is entitled to specific benefit. The level of benefits provided depends on the employee''s length of service and salary at retirement/termination age and maximum monetary limit for gratuity payments is ? 2 million. The gratuity plan is a funded plan and the Company makes contributions to a recognised fund in India. The following table sets out the status of the gratuity plan and the amounts recognised in the Company''s financial statements as at balance sheet date:

The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market.

The expected rate of return on plan assets is based on the average long term rate of return expected on investments of the fundduring the estimated term of obligation.

Assumptions regarding future mortality are based on published statistics and mortality tables.

Estimate of amount of contribution in the immediately next year is ? 103.62 Million (previous year ? 86.02 Million)

As at March 31,2023 and March 31, 2022, 100% of the plan assets were invested in insurer managed funds.

The defined benefit plan expose the Company to actuarial risks such as longevity risk, interest rate risk and market (investment) risk.

As at March 31, 2023, the weighted average duration of defined benefit obligation based on discounted cashflows is 12 years (March 31,2022- 12 years)

1 During the year, allowance of ?48.75 millions (March 31, 2022: ? 79.85 million) has been provided for expected credit loss on other financial assets from related parties. The total balance of allowance for expected credit loss as on March 31, 2023: ? 754.61 Million (March 31,2022: ? 662.35 Million).

2 Employment benefits excludes gratuity and compensated absences which cannot be separately identified from the composite amount advised by the actuary.

3 The transactions with related parties are made on terms equivalent to those that prevail in arm''s length transactions.

33 OTHER STATUTORY MATTERS

i) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.

ii) The Company has not traded or invested in Crypto currency or virtual currency during the current year.

iii) A) The Company has not advanced or loaned or invested funds to any persons or entities, including foreign entities

(Intermediaries) with the understanding that the Intermediary shall:

1) 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

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

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

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

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

iv) The Company does not have any transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961).

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

35 As per Sec 135 of the Companies act, 2013, a Company, meeting the applicability threshold, needs to spend at least 2 % of its average profit for the immediately preceding three financial years on corporate social responsibility (CSR) activities. The areas for CSR activities are eradication of hunger and malnutrition, promoting education, art and culture, healthcare, destitute care and rehabilitation, environment sustainability, disaster relief and rural development projects. A CSR committee has been formed by the Company as per the Act. The funds were utilised through the year on these activities which are specified in Schedule VII of the Companies Act, 2013.

37 TheMinistryofMicro,SmallandMedium Enterpriseshasissuedan Office Memorandumdated26August2008whichrecommends that the Micro and Small Enterprises should mention in their correspondence with its customers the Entrepreneurs Memorandum Number as allocated after filing of the Memorandum. Accordingly, the disclosure in respect of the amounts payable to such enterprises as at 31 March 2023 has been made in the financials statements based on information received and available with the Company. Further in view of the Management, the impact of interest, if any, that may be payable in accordance with the provisions ofthe Act is not expected to be material. The Company has not received any claim for interest from any supplier under the said Act.

Fair value heirarchy

This section explains the judgements and estimates made in determining the fair values of the financial instruments that are recognised at fair value and 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 under the accounting standard as follows:

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

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices), and

Level 3 - Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).

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

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

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

The following methods and assumptions were used to estimate the fair values:

i) Long-term fixed-rate receivables are evaluated by the Company based on parameters such as interest rates, specific country risk factors, individual creditworthiness of the customer. Based on this evaluation, allowances are taken into account for the expected losses of these receivables.

ii) The fair value of the unquoted mutual fund are based on market observable inputs at reporting date. The fair value of other financial liabilities is estimated by credit risk and remaining maturities.

iii) The Company enters into derivative financial instruments with various counterparties, principally financial institutions with investment grade credit ratings. Derivative financials instruments are valued based on quoted prices for similar assets and liabilities in active markets or inputs that are directly or indirectly observable in the marketplace.

Capital Management

The Company manages its capital to ensure that it will be able to continue as a going concern while maximising the return to stake holders to optimise equity. The Company''s Corporate Treasury reviews the capital structure on a quarterly basis.

The capital structure of the company consists of only equity as of March 31,2023. The company is not subject to any externally imposed capital requirements.

Financial risk management

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 along with credit risk and liquidity risk .

The Company seeks to minimise the effects of these forex by hedging the forex exposures through forward contracts, liquidity risk by diversifying its investments in various schemes of debt mutual funds and fixed deposits. The Company manages its credit risks by monitoring the credit rating of the customers, banks and mutual funds. Corporate Treasury Function reports quarterly to the Company''s risk management committee, an independent body that monitors risks and policies implemented to mitigate risk exposures.

Market Risk

Market risk is the risk of any loss in future earnings, in realizable fair values or in future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rate, equity price fluctuations, liquidity and other market changes. Future specific market movements cannot be normally predicted with reasonable accuracy.

(i) Interest rate risk:

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company''s exposure to the risk of changes in market interest rates relates primarily to Company''s investments. The Company''s investments are primarily short term, which do not expose it to significant interest rate risk.

(ii) Foreign currency exchange rate risk:

The fluctuation in foreign currency exchange rates may have potential impact on the income statement and equity, where any transaction references more than one currency or where assets/liabilities are denominated in a currency other than the functional currency of the respective foreign operations. The company enters into forward foreign exchange contracts to hedge its exposure to foreign currency risk arising on the net export of services.

Derivative financial instruments

The Company is exposed to foreign currency fluctuations on foreign currency assets/ liabilities and forecasted cash flows denominated in foreign currency. The Company follows established risk management policies, including the use of derivatives to hedge foreign currency assets/ liabilities and foreign currency forecasted cash flows. The counter party in these derivative instruments is a bank and the Company considers the risks of non-performance by the counterparty as non-material.

In respect of the Company''s forward contracts, a 1% decrease/increase in the respective exchange rates of each of the currencies underlying such contracts would have resulted in:

a) an approximately 0.28% increase and (0.28%) decrease in the Company''s net profit and approximately 0.08% increase and (0.08%) decrease in equity as at March 31, 2023;

b) an approximately 0.22% increase and (0.22%) decrease in the Company''s net profit and approximately 0.06% increase and (0.06%) decrease in equity as at March 31, 2022;"

Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company''s receivables from customers and investment securities. Credit risk arises from cash held with banks and financial institutions, as well as credit exposure to clients, including outstanding accounts receivable. The maximum exposure to credit risk is equal to the carrying value of the financial assets. The objective of managing counterparty credit risk is to prevent losses in financial assets. Credit risk encompasses both the direct risk of default and the risk of deterioration of creditworthiness as well as concentration risks. The Company assesses the credit quality of the counterparties, taking into account their financial position, past experience and other factors.

i) Trade and other receivables

The Company''s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the customer, including the default risk of the industry and country in which the customer operates, also has an influence on credit risk assessment. The following table gives details in respect of revenues generated from top customer and customers individually accounting for more than 10% of the total revenue of the Company: 2 customers for the year ended March 31, 2023 (2 customers for the year ended March 31, 2022) accounted for more than 10% of the revenue. No other single customer contributed 10% or more of the Company''s revenue for both 2022-23 and 2021-22.

ii) Investments

The Group limits its exposure to credit risk by generally investing in liquid securities and only with counterparties that have rating of AA/AAA. The Group does not expect any losses from non-performance by these counter-parties, and does not have any significant concentration of exposures to specific industry sectors.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company manages its liquidity risk by ensuring, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due. The Company''s corporate treasury department is responsible for liquidity management, funding as well as settlement management. In addition, processes and policies related to such risks are overseen by senior management.

43 SUBSEQUENT EVENT

The Company has evaluated subsequent events and determined that there have been no events that have occurred that would require adjustments to these standalone financial statements.

Mar 31, 2018

1 Company overview

OnMobile Global Limited (âOnMobileâ or âthe Companyâ) is a public limited company incorporated in India and has its registered office at Bengaluru, India. The Company has its primary listings on the Bombay Stock Exchange and National Stock Exchange in India. The key product offerings of the Company are Ringback Tones, Digital Content Store and Infotainment. OnMobile is the global leader in Ringback Tones. Digital Content Store is a one-stop mobile destination for discovering digital content like videos, games, music and images. Infotainment offers music, contest, news and sports to consumers over the mobile.

A) Aggregate number of shares allotted as fully paid up pursuant to contracts without payment being received in cash, bonus shares and buyback of shares for the period of five years immediately preceeding the balance sheet date:

a) During the year ended March 31, 2012 after obtaining approval of the shareholders and completion of the formalities prescribed for buyback of equity shares u/s.77A of the Companies Act, 1956, the Company bought back 2,936,000 equity shares of Rs.10 each by utilising the Securities Premium Account. Capital Redemption Reserve has been created out of Security Premium Account for Rs. 29.36 million being the nominal value of equity shares bought back in terms of Sec.77AA of the Companies Act, 1956.

During the year ended March 31, 2013, the Company completed the above referred buy-back of equity shares and bought back additional 1,064,000 equity shares of Rs.10 each by utilising the Securities Premium Account. Capital Redemption Reserve has been created out of Security Premium Account for Rs.10.64 million being the nominal value of equity shares bought back in terms of Sec.77AA of the Companies Act, 1956.

b) During the year ended March 31, 2015 after obtaining approval of the shareholders and completion of the formalities prescribed for buyback of equity shares u/s 68 of the Companies Act, 2013, the Company bought back 5,800,000 equity shares of Rs.10 each by utilising the Securities Premium Account. Capital Redemption Reserve has been created out of Security Premium Account for Rs. 58.00 million being the nominal value of equity shares bought back in terms of Sec.68 of the Companies Act, 2013.

c) The Company had made a public announcement on February 11, 2016 for buy back of maximum 5,600,000 equity shares of Rs.10 each for an amount not exceeding Rs.700 million. As on March 31, 2016, the buy back of 1,532,594 equity shares for Rs.176.37 million was finalised and executed by utilising the Securities Premium Account. Capital Redemption Reserve has been created out of Security Premium Account for Rs.15.33 million being the nominal value of equity shares bought back in terms of Sec.68 of the Companies Act, 2013.

During the year ended March 31, 2017, the Company completed the above referred buy-back of equity shares and bought back additional 4,067,406 equity shares of Rs.10 each by utilising the Securities Premium Account. Capital Redemption Reserve has been created out of Security Premium Account for Rs.40.67 million being the nominal value of equity shares bought back in terms of Sec.68 of the Companies Act, 2013.

D) Total number of options outstanding under various employee stock option plans, that are convertible into equity shares, as on March 31, 2018 are 4,581,624 (at March 31, 2017: 5,486,705) (Refer Note 32)

E) Rights and restrictions attached to equity shares:

The Company has only one class of equity shares with voting rights (one vote per share). The dividend proposed by the Board of Directors is subject to approval of the shareholders in the Annual General Meeting. In the event of liquidation of the Company, the equity shareholders are entitled to receive only the residual assets of the company. The distribution of dividend is in proportion to the number of equity shares held by the shareholders.

2 A. Contingent liabilities

a Disputed Service tax Rs. 14.18 Million (March 31, 2017: Rs. 19.69 Million), disputed Income Tax Rs. 901.08 Million (March 31, 2017: Rs. 457.80 Million) and disputed Value added tax Rs. 25.62 Million (March 31, 2017: Rs. 51.43 Million).

b Claims against the Company not acknowledged as debt is Rs. 8.82 Million (March 31, 2017: Rs. 7.62 Million).

c The Company, in January 2018, received a Show Cause Notice (SCN) related to a potential Service tax liability of Rs. 999.50 million. Management has responded on the SCN and believes that they have strong case on merits and expect to challenge the SCN issued to defend its position.

B. Capital commitments

Estimated amount of contracts (net of advances) remaining to be executed on capital account and not provided for is Rs. 8.83 Million (at March 31, 2017: Rs.4.85 Million).

3 Employee benefits:

I Defined contribution plans

During the year the Company has recognized the following amounts in the statement of profit and loss:

The expected rate of return on plan assets is based on the average long term rate of return expected on investments of the fund during the estimated term of obligation.

The following table sets out the status of the gratuity plan:

Sensitivity analysis

Reasonably possible changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant, would have effected the defined benefit obligation by the amount shown below:

Assumptions regarding future mortality are based on published statistics and mortality tables.

Estimate of amount of contribution in the immediately next year Rs. 15.79 Million.

As at March 31, 2018 and March 31, 2017 100% of the plan assets were invested in insurer managed funds.

The defined benefit plan expose the Company to actuarial risks such as longevity risk, interest rate risk and market (investment) risk.

As at March 31, 2018, the weighted average duration of defined benefit obligation based on discounted cashflows is 13 years (March 31, 201712 years)

III Other long- term benefits

Cost of compensated absences expensed in the Statement of Profit and Loss:

4 Operating lease:

The Company is obligated under non-cancellable operating lease for office space. Total rental expense and future lease payments under non-cancellable operating lease for office space are as follows:

5 Employee Stock Option Plans

The Company instituted the Employee Stock Option Plan (ESOP), which were approved by the Board of Directors. Each option is entitled to 1 equity share of Rs. 10 each. All options expires in 5 years after the vesting date. Details of ESOPs with the terms of vesting are as follows:

Notes:

1 Related party relationships are as identified by the Company on the basis of information available and relied by the auditors.

2 During the year, Provision of â Nil (March 31, 2017: Rs. 33.46 Milion) has been provided for expected credit loss on other financial assets from related parties. The total balance of provision for expected credit loss as on March 31, 2018: Rs.314.08 Million (March 31, 2017: Rs. 314.58 Million)

3 Employment benefits exclude gratuity and compensated absences which cannot be separately identified from the composite amount advised by the actuary.

Fair value hierarchy

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

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices), and

Level 3 - Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).

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

The following methods and assumptions were used to estimate the fair values:

Capital Management

The Company manages it capital to ensure that it will be able to continue as a going concern while maximising the return to stake holders to optimise equity. The Companyâs Corporate Treasury reviews the capital structure on a quarterly basis.

The capital structure of the Company consists of only equity. The Company is not subject to any externally imposed capital requirements. Financial risk management

The Companyâs Corporate Treasury function provides services to the business, coordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations of the Company through internal risk reports which analyse exposures by degree and magnitude of risk.

The Companyâs 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 along with credit risk and liquidity risk.

The Company seeks to minimise the effects of these forex by hedging the forex exposures through forward contracts, liquidity risk by diversifying its investments in various schemes of debt mutual funds and fixed deposits. The Company manages its credit risks by monitoring the credit rating of the customers, banks and mutual funds. Corporate Treasury Function reports quarterly to the Companyâs risk management committee, an independent body that monitors risks and policies implemented to mitigate risk exposures.

Market Risk

(i) Interest rate risk:

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Companyâs exposure to the risk of changes in market interest rates relates primarily to Companyâs investments. The Companyâs investments are primarily short term, which do not expose it to significant interest rate risk.

(ii) Foreign currency exchange rate risk:

The fluctuation in foreign currency exchange rates may have potential impact on the income statement and equity, where any transaction references more than one currency or where assets/liabilities are denominated in a currency other than the functional currency of the respective foreign operations. The Company enters into forward foreign exchange contracts to hedge its exposure to foreign currency risk arising on the net export of services.

The carrying amounts of the Companyâs foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as follows:

*Other currencies include BDT, EGP, BRL, CAD, MXN, MYR, SGD, COP, PEN, ZAR etc.

The Company is mainly exposed to USD and EUR for the year ended March 31,2018. Every 1% increase/decrease in the said currencies compared to Indian Rupee would impact profit and equity by 1.08%/(1.08%) and 0.38%/(0.38%) respectively. For the year ended March 31, 2017 the impact on profit and equity was 0.90%/(0.90%) and 0.41%/(0.41%) respectively.

Derivative financial instruments

The Company is exposed to foreign currency fluctuations on foreign currency assets/liabilities and forecasted cash flows denominated in foreign currency. The Company follows established risk management policies, including the use of derivatives to hedge foreign currency assets/liabilities and foreign currency forecasted cash flows. The counter party in these derivative instruments is a bank and the Company considers the risks of non-performance by the counterparty as non-material.

The foreign exchange forward contracts mature within 12 months. The table below analyzes the derivative financial instruments into relevant maturity groupings based on the remaining period as at the reporting date:

In respect of the Companyâs forward contracts, a 1% decrease/increase in the respective exchange rates of each of the currencies underlying such contracts would have resulted in:

a) an approximately 0.22% increase and (0.22%) decrease in the Companyâs net profit and approximately 0.08% increase and (0.08%) decrease in equity as at March 31, 2018;

b) an approximately 0.14% increase and (0.14%) decrease in the Companyâs net profit and approximately 0.06% increase and (0.06%) decrease in equity as at March 31, 2017.

Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Companyâs receivables from customers and investment securities. Credit risk arises from cash held with banks and financial institutions, as well as credit exposure to clients, including outstanding accounts receivable. The maximum exposure to credit risk is equal to the carrying value of the financial assets. The objective of managing counterparty credit risk is to prevent losses in financial assets. Credit risk encompasses both the direct risk of default and the risk of deterioration of creditworthiness as well as concentration risks. The Company assesses the credit quality of the counterparties, taking into account their financial position, past experience and other factors.

i) Trade and other receivables

The Companyâs exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the customer, including the default risk of the industry and country in which the customer operates, also has an influence on credit risk assessment. The following table gives details in respect of revenues generated from top customer and top 4 customers:

ii) Investments

The Company limits its exposure to credit risk by generally investing in liquid securities and only with counterparties that have a good credit rating. The Company does not expect any losses from non-performance by these counter parties, and does not have any significant concentration of exposures to specific industry sectors.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company manages its liquidity risk by ensuring, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due. The Companyâs corporate treasury department is responsible for liquidity management, funding as well as settlement management. In addition, processes and policies related to such risks are overseen by senior management.

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

6 Total expenditure required to be incurred and accordingly paid on Corporate Social Responsibility activities other than construction/ acquisition of assets, as per the requirements of Section 135 of the Companies Act, 2013 during the year ended March 31, 2018 is Rs. 7.34 Million (during the year ended March 31, 2017: Rs. 3.50 Million).

7 The Ministry of Micro, Small and Medium Enterprises has issued an Office Memorandum dated 26 August 2008 which recommends that the Micro and Small Enterprises should mention in their correspondence with its customers the Entrepreneurs Memorandum Number as allocated after filing of the Memorandum. Accordingly, the disclosure in respect of the amounts payable to such enterprises as at 31 March 2018 has been made in the financials statements based on information received and available with the Company. Further in view of the Management, the impact of interest, if any, that may be payable in accordance with the provisions of the Act is not expected to be material. The Company has not received any claim for interest from any supplier under the said Act.

Based on the information available with the Company, there are no dues to suppliers who are registered as micro, small or medium enterprises under âThe Micro, Small and Medium Enterprises Development Act, 2006â as at 31 March 2018.

8 The Company prepares consolidated financial statements, hence as per Indian Accounting Standard 108 Operating Segments, segment information has not been provided in the standalone financial statements.

9 As part of the Companyâs periodic review of its transfer pricing policy as also the substantial growth in its international operations, the Company has adopted a revised global transfer pricing policy with effect from April, 1 2012 and has cross charged expenses to its subsidiaries based on an allocation model. The same has been included as reimbursement of expenses under other operating revenue during the year. The cross charge of expenses are given below.

10 The Company has working capital lines and Buyers credit facility from banks. Security details of which are as follows:

- Buyers credit facility is secured by first pari-passu charge on movable fixed assets and second pari-passu charge on current assets.

- Working capital lines is secured by first pari-passu charge on present and future stocks and book debts.

11 During the year ended March 31, 2017, the Egyptian Government devalued the currency Egyptian pound (EGP). The effect of restatement of the amount receivable in EGP from the Companyâs subsidiary in Egypt on such devaluation amounting to Rs.116.56 million is presented as an exceptional item.

12 During the previous year, the Company had specified bank notes or other denomination note as defined in the MCA notification G.S.R. 308(E) dated March 31, 2017 on the details of Specified Bank Notes (SBN) held and transacted during the period from November 8, 2016 to December, 30 2016, the denomination wise SBNs and other notes as per the notification is given below:

*For the purposes of this clause, the term âSpecified Bank Notesâ shall have the same meaning provided in the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O. 3407(E), dated the 8th November, 2016.

Mar 31, 2017

The Company uses a provisional matrix to determine impairment loss on trade receivable. The provision matrix is based on its historically observed default rates over the expected life of the trade receivable and is adjusted for forward-looking estimates. At every reporting date, the historical observed default rates are updated and changes in forward-looking estimates are analyzed. The Company estimates the following matrix at the reporting date:

C) Aggregate Number of shares allotted as fully paid up pursuant to contracts without payment being received in cash, bonus shares and buyback of shares for the period of five years immediately preceding the Balance Sheet date:

a) (i) During the year ended March 31, 2012, the Company made a bonus issue of 58,954,543 shares in the ratio of 1 : 1 to the shareholders by capitalization of Securities Premium account.

(ii) During the year ended March 31, 2012, the Company has issued 102,540 bonus equity shares on exercise of eligible options.

b) During the year ended March 31, 2012 after obtaining approval of the shareholders and completion of the formalities prescribed for buy-back of equity shares u/s.77A of the Companies Act, 1956, the Company bought back 2,936,000 Equity Shares of Rs,10 each by utilizing the Securities Premium Account. Capital Redemption Reserve has been created out of Security Premium Account for '' 29.36 Million being the nominal value of equity shares bought back in terms of Sec.77AA of the Companies Act, 1956.

During the year ended March 31, 2013, the Company completed the above referred buy-back of equity shares and bought back 1,064,000 Equity Shares of''10 each by utilizing the Securities Premium Account. Capital Redemption Reserve has been created out of Security Premium Account for '' 10.64 Million being the nominal value of equity shares bought back in terms of Sec.77AA of the Companies Act, 1956.

c) During the year ended March 31, 2015 after obtaining approval of the shareholders and completion of the formalities prescribed for buy-back of equity shares u/s 68 of the Companies Act, 2013, the Company bought back 5,800,000 Equity Shares of ''10 each by utilizing the Securities Premium Account. Capital Redemption Reserve has been created out of Security Premium Account for '' 58.00 Million being the nominal value of equity shares bought back in terms of Sec.68 of the Companies Act, 2013.

d) The Company had made a public announcement on February 11, 2016 for buy back of maximum 5,600,000 equity shares of '' 10 each for an amount not exceeding Rs 700 Million. As on March 31, 2016, the buyback of 1,532,594 equity shares for Rs 176.37 Million was finalized and executed by utilizing the Securities Premium Account. Capital Redemption Reserve has been created out of Security Premium Account for '' 15.33 Million being the nominal value of equity shares bought back in terms of Sec.68 of the Companies Act, 2013.

During the year ended March 31, 2017, the Company completed the above referred buy-back of equity shares and bought back 4,067,406 Equity Shares of ''10 each by utilizing the Securities Premium Account. Capital Redemption Reserve has been created out of Security Premium Account for'' 40.67 Million being the nominal value of equity shares bought back in terms of Sec.68 of the Companies Act, 2013.

D) Total number of Options outstanding under various employee stock option plans, that are convertible into equity shares, as on March 31, 2017 are 5,486,705 (at March 31, 2016: 5,579,391 and April 1, 2015: 6,134,802) (Refer Note 34)

E) Rights and restrictions attached to equity shares:

28 Share application money represents amounts received from the employees against employee stock options, pending allotment.

29 A. Contingent liabilities

a Disputed Service tax '' 19.69 Million (at March 31, 2016: '' 19.69 Million and at April 1, 2015: Rs, 19.69 Million), disputed Income Tax Rs, 457.80 Million (at March 31, 2016: Rs, 146.31 Million and at April 1, 2015:Rs, 271.03 Million) and disputed Value added tax Rs, 51.43 Million (Previous year: Nil).

b Bank Guarantees given for loans availed by subsidiary (On Mobile Live Inc) Nil (at March 31, 2016 and April 1, 2015: Rs, 800 Million). The outstanding against the same as on March 31, 2017 Nil (at March 31, 2016: Rs,195.59 Million and at April 1, 2015:Rs, 461.38 Million)

c Claims against the Company not acknowledged as debt is Rs, 7.62 Million (March 31, 2016: Nil; April 1, 2015: Nil).

B. Capital Commitments

Estimated amount of contracts (net of advances) remaining to be executed on capital account and not provided for is Rs, 4.85 Million (at March 31, 2016: Rs, 15.32 Million and at April 1, 2015: Rs, 5.70 Million).

30 Loans to Subsidiaries

The Company has given loan to its subsidiaries for working capital requirement purpose, the details of which are given below and which in the opinion of the Management is realisable in full.

35 Transactions with related parties:

I List of Related parties and relationship:

Sl No. Relationship Related parties

(i) Subsidiaries On Mobile Singapore Pte. Ltd.

PT. On Mobile Indonesia .

On Mobile SA. (subsidiary of On Mobile Europe B.V.)

On Mobile Europe B.V.

On Mobile Servicios Corporativos De Telefonia S.A. DE C.V.

Servicios De Telefonia On Mobile, SA DE CV On Mobile USA LLC.

On Mobile Global S A

On Mobile Brasil Sistemas De Valor Agregado Para Comunicacoes Moveis Ltda OnMoible Global for Telecommunication Services On Mobile Senegal SARL

On Mobile De Venezuela C.A. (subsidiary of On Mobile USA LLC)

On Mobile Latam holdings SL (subsidiary of On Mobile USA LLC)

Sl No. Relationship Related parties

On Mobile Mali SARL On Mobile Bangladesh Private Limited On Mobile Kenya Telecom Limited On Mobile Costa Rica OBCR, SA On Mobile Ghana Telecom Limited On Mobile Madagascar Telecom Limited On Mobile Nigeria Telecom Limited On Mobile Zambia Telecom Limited On Mobile Telecom Sierra Leone Limited On Mobile Tanzania Telecom Limited On Mobile Global Spain S.L.U On Mobile Uruguay S.A On Mobile Uganda Limited On Mobile Rwanda Telecom Limited On Mobile Global Italy S.R.L.

On Mobile Telecom Limited

On Mobile Turkey Telekomunikasyon Sistemleri Limited Jirketi On Mobile Telecom Burkina Faso, SARL

On Mobile Portugal SGPS, Unipessoal LDA (Zona Franca Da Madeira)

On Mobile Live Inc (subsidiary of On Mobile USA LLC)

Fonestarz Media Group Limited (subsidiary of On Mobile Live Inc)

2dayUK Limited (subsidiary of On Mobile Live Inc)

Fonestarz Media (licensing) Limited (subsidiary of On Mobile Live Inc)

Daius Limited (subsidiary of On Mobile Live Inc)

Fonestarz Limited (subsidiary of On Mobile Live Inc)

Livewire Mobile (Australia) PTY Limited (subsidiary of On Mobile Live Inc) Fonestarz Media Limited (subsidiary of On Mobile Live Inc)

On Mobile Global Czech Republic s.r.o.

On Mobile Global Limited Colombia S.A.S.

On Mobile Global Solutions Canada Limited On Mobile Global South Africa (PTY) Limited

(ii) Other related parties with whom the Company had transactions

Key Management Personnel Rajiv Pancholy, Managing Director and Chief Executive Officer (till 28th Feb 2017)

Francois Charles Sirois, Executive Chairman and Chief Executive Officer

Rajiv Khaitan, Independent Director

Nancy Cruickshank, Independent Director

Sanjay Baweja, Independent Director

Nehchal Sandhu, Independent Director

Pascal Tremblay, Independent Director

Naresh Malhotra, Independent Director (till 30th July 2015)

Harit Nagpal, Independent Director (till 30th July 2015)

Bruno Ducharme, Independent Director (till 30th July 2015)

Praveen Kumar K J, Chief Financial Officer P V Varaprasad, Company Secretary

(iii) Associate Mobile Voice Konnect Private Limited

(iv) Enterprises owned or On Mobile Systems Inc., USA significantly influenced by

key management personnel/

Directors or their relatives

Notes:

1 Related party relationships are as identified by the Company on the basis of information available and relied by the auditors.

2 During the year, Provision of Rs,33.46 Million (March 31, 2016: Nil) has been provided for expected credit loss on receivables from related parties. The total balance of provision for expected credit loss as on March 31, 2017: Rs,314.58 Million (March 31, 2016: Rs,281.12 Million)

3 Employment benefits excludes gratuity and compensated absences which cannot be separately identified from the composite amount advised by the actuary.

Fair value hierarchy

This section explains the judgments and estimates made in determine the fair values of the financial instruments that are recognized at fair value and 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 under the accounting standard as follows: Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities, Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices), and Level 3 - Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).

The following table presents the fair value measurement hierarchy of financial assets and liabilities measured at fair value on recurring basis as at March 31, 2017, March 31, 2016 and April 1, 2015.

Quantitative disclosures of fair value measurement hierarchy for financial assets in Level 2 ( Measured using significant observable inputs)

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

The following methods and assumptions were used to estimate the fair values:

Capital Management

The Company manages it capital to ensure that it will be able to continue as a going concern while maximizing the return to stake holders to optimize equity. The Company''s Corporate Treasury reviews the capital structure on a quarterly basis .

The capital structure of the company consists of only equity. The company is not subject to any externally imposed capital requirements. Financial risk management

The Company''s Corporate Treasury function provides services to the business, coordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations of the Company through internal risk reports which analyze exposures by degree and magnitude of 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 along with credit risk and liquidity risk.

The Company seeks to minimize the effects of these forex by hedging the forex exposures through forward contracts, liquidity risk by diversifying its investments in various schemes of debt mutual funds and fixed deposits. The Company manages its credit risks by monitoring the credit rating of the customers, banks and mutual funds. Corporate Treasury Function reports quarterly to the Company''s risk management committee, an independent body that monitors risks and policies implemented to mitigate risk exposures.

Market Risk

(i) Interest rate risk:

(ii) Foreign currency exchange rate risk:

The fluctuation in foreign currency exchange rates may have potential impact on the income statement and equity, where any transaction references more than one currency or where assets/liabilities are denominated in a currency other than the functional currency of the respective foreign operations. The company enters into forward foreign exchange contracts s to hedge its exposure to foreign currency risk arising on the net export of services.

* Other currencies include BDT, EGP, BRL, CAD, MXN, MYR, SGD, COP, PEN, ZAR etc.

The Company is mainly exposed to USD and EUR for the year ended March 31,2017. Every 1% increase/decrease in the said currencies compared to Indian Rupee would impact profit and equity by 0.90%/(0.90%) and 0.41%/(0.41%) respectively. For the year ended Mar 31,2016 the impact on profit and equity was 0.86%/(0.86%) and 0.41%/(0.41%) respectively.

Derivative financial instruments

The following table presents the aggregate contracted principal amounts of the Company''s derivative contracts outstanding:

In respect of the Company''s forward contracts, a 1% decrease/increase in the respective exchange rates of each of the currencies underlying such contracts would have resulted in:

a) an approximately 0.14% increase and (0.14%) decrease in the Company''s net profit and approximately 0.06% increase and (0.06%) decrease in equity as at March 31, 2017;

b) an approximately 0.32% increase and (0.32%) decrease in the Company''s net profit and approximately 0.15% increase and (0.15%) decrease in equity as at March 31, 2016

Credit risk

i) Trade and other receivables

4 customers accounted for more than 10% of the revenue , no other single customer contributed 10% or more to the Company''s revenue for both 2016-2017 and 2015-2016.

ii) Investments

The Company limits its exposure to credit risk by generally investing in liquid securities and only with counterparties that have a good credit rating. The company does not expect any losses from non- performance by these counter-parties, and does not have any significant concentration of exposures to specific industry sectors.

Liquidity risk

The Fund Position of the Company is given below:

38 Total expenditure incurred on Corporate Social Responsibility activities other than construction/ acquisition of assets, during the year ended March 31, 2017 is Rs, 3.50 Million (during the year ended March 31, 2016: Rs, 1 Million)

39 There are no dues to Micro and Small Enterprises as at March 31, 2017. The information disclosure with regard to Micro and Small Enterprises is based on information collected by the Management on enquiries made with the vendors which have been relied upon by the auditors.

40 The Company prepares consolidated financial statements, hence as per Indian Accounting Standard 108 Operating Segments, segment information has not been provided in the standalone financial statements.

41 Value of imports calculated on CIF basis

42 Expenditure in Foreign Currency (on accrual basis)

45 The company has working capital lines and Buyers credit facility from banks. Security details of which are as follows:

- Buyers credit facility is secured by first pari-passu charge on movable fixed assets and second pari-passu charge on current assets.

- Working capital lines is secured by first pari-passu charge on present and future stocks and book debts.

46 During the year ended March 31, 2017 and year ended March 31, 2016, the Egyptian Government devalued the currency Egyptian pound (EGP). The effect of restatement of the amount receivable in EGP from the Company''s subsidiary in Egypt on such devaluation is presented as an exceptional item. Further, during the year ended March 31, 2016, the Argentina Government devalued its currency Argentine Peso (ARS). The effect of restatement of the amount receivable in ARS from the Company''s subsidiary in Argentina on such devaluation is presented as an exceptional item.

47 Transition to Ind AS

The Company has prepared financial statements which comply with Ind AS applicable for periods ending on March 31, 2017, together with the comparative period data as at and for the year ended March 31, 2016, as described in the summary of significant accounting policies. In preparing these financial statements, the Company''s opening balance sheet was prepared as at April 1, 2015, the Company''s date of transition to Ind AS. This note explains the principal adjustments made by the Company in restating its Previous GAAP financial statements, including the balance sheet as at April 1, 2015 and the financial statements as at and for the year ended March 31, 2016. In preparing these financial statements, the company has availed itself of optional exemptions and mandatory exceptions in accordance with Ind AS 101 as explained below:

Transition Policies

Cumulative translation difference on foreign operations

Ind AS 101 permits cumulative translations gains and losses to be reset to zero at the transition date. The Company has elected to reset all cumulative translations gains and losses relating to foreign operations to zero as at transition date.

Deemed cost for Property, Plant and Equipment and Intangible assets

Since there has been a change in the functional currency for certain foreign operations, the Company''s Property Plant and Equipment and Intangible assets have been recorded as per the provision of Ind AS16.

Derecognition of financial assets and financial liabilities

The Company has applied the derecognition requirements of financial assets and financial liabilities prospectively for transactions occurring on or after April 1, 2015 (the transition date).

Share based payments transactions

The Company has availed exemption available under Ind AS 101 on application of Ind AS 102, "Share Based Payment", to equity instruments that vested before the date of transition to Ind AS.

Investments in subsidiaries and associates

The Company has elected to apply deemed cost of investment based on the carrying amount as per previous GAAP as on the transition date. Estimates exception

As per Ind AS, an entity''s estimates in accordance with Ind ASs 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 differences in accounting policies), unless there is objective evidence that those estimates were in error. The Company made estimates for impairment of financial assets based on expected credit loss model in accordance with Ind AS at the date of transition as this was not required under previous GAAP. Other Ind AS estimates as at April 1, 2015 are consistent with the estimates as at the same date made in conformity with previous GAAP.

48 First-time Ind AS adoption reconciliations:

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

(c) Cash flow statement:

There were no significant reconciliation items between cash flows prepared under Indian GAAP and those prepared under Ind AS.

Notes:

i. Under the previous GAAP, foreign currency transactions of the Company''s integral foreign operations were accounted at the exchange rates prevailing on the date of the transaction or at rates that closely approximate the rate at the date of the transaction; and exchange differences arising on settlement/ restatement of Short-term foreign currency monetary assets and liabilities were recognized as income or expense in the Statement of Profit and Loss.

Under Ind AS, the functional currency of the foreign operations were assessed at transition date and were concluded as the currency of the economic environment of the foreign operations. The results and financial position of the entities whose functional currency is different from the reporting currency (INR) are recognized in Other Comprehensive Income as a Foreign Currency Translation Reserve as follows:

a. assets and liabilities are translated at the closing rate at the date of that balance sheet; and

b. income and expenses are translated at exchange rates at the dates of the transactions.

ii. Under the previous GAAP, the cost of employee stock options under the various stock options of the Company was recognized using the intrinsic value method. Under this method, no expense was recognized in the Statement of Profit and Loss as the fair value of the shares under the grant on the date of grant equaled its exercise price. Under Ind AS, the cost of the employee stock options is recognized in the Statement of Profit and Loss over the vesting period based on the fair value of the options at the grant date.

iii. Under the previous GAAP, all actuarial gains and losses were recognized in the Statement of Profit and Loss. Under Ind AS, actuarial gains and losses that form part of remeasurement of the net defined benefit liability / asset and the corresponding tax effect thereon are recognized in Other Comprehensive Income.

iv. Under Ind AS, liability for dividend is recognized in the period in which the obligation to pay is established. Under the previous GAAP, the liability for dividend was recognized in the period to which the dividend relates, though the dividend is approved by the shareholders subsequent to reporting date. Consequently dividend payable is lower and retained earnings is higher under Ind AS.

v. Under previous GAAP the Company would provide for doubtful receivables purely on individual assessment of various aged balances when such receivables were assessed to be doubtful of recovery. Under Ind AS, the Company provides for credit loss on its receivables on a progressive basis for anticipated defaults and delays in collection. The Company has made an adjustment as of March 31, 2015, net of tax, based on the anticipated defaults and collection trends. This credit loss is reviewed at each reporting date based on the prevailing collection trend and anticipated realizations.

Mar 31, 2016

A) Aggregate Number of shares allotted as fully paid up pursuant to contracts without payment being received in cash, bonus shares and buyback of shares for the period of five years immediately preceding the Balance Sheet date:

a) (i) During the year ended March 31, 2012, the Company made a bonus issue of 58,954,543 shares in the ratio of 1 : 1 to the shareholders by capitalization of Securities Premium account. (ii) During the year the Company has issued 102,540 bonus equity shares (Previous year: 361,805 bonus equity shares) on exercise of eligible options.

b) (i) During the year ended March 31, 2012 after obtaining approval of the shareholders and completion of the formalities prescribed for buy-back of equity shares u/s. 77A of the Companies Act, 1956, the Company bought back 2,936,000 Equity Shares of Rs,10 each by utilizing the Securities Premium Account. Capital Redemption Reserve has been created out of Security Premium Account for Rs, 29.36 Million being the nominal value of equity shares bought back in terms of Sec.77AA of the Companies Act, 1956. (ii) During the year ended March 31, 2013, the Company completed the above referred buy-back of equity shares and bought back 1,064,000 Equity Shares of Rs, 10 each by utilizing the Securities Premium Account. Capital Redemption Reserve has been created out of Security Premium Account forRs, 10.64 Million being the nominal value of equity shares bought back in terms of Sec.77AA of the Companies Act, 1956.

c) During the year ended March 31, 2015 after obtaining approval of the shareholders and completion of the formalities prescribed for buy-back of equity shares u/s 68 of the Companies Act, 2013, the Company bought back 5,800,000 Equity Shares for Rs, 442.79 Million by utilizing the Securities Premium Account. Capital Redemption Reserve has been created out of Security Premium Account for Rs, 58.00 Million being the nominal value of equity shares bought back in terms of Sec.68 of the Companies Act, 2013.

d) The Company had made a public announcement on February 11, 2016 for buy back of maximum 5,600,000 equity shares of Rs,10 each for an amount not exceedingRs, 700 Million. As on March 31, 2016, the buyback of 1,532,594 equity shares for Rs, 176.37 Million was finalized and executed by utilizing the Securities Premium Account. Capital Redemption Reserve has been created out of Security Premium Account for Rs, 15.33 Million being the nominal value of equity shares bought back in terms of Sec.68 of the Companies Act, 2013.

e) Total number of Options outstanding under various employee stock option plans, that are convertible into equity shares, as on March 31, 2016 are 5,579,391 (at March 31, 2015: 6,134,802) (Refer Note 28)

f) Rights and restrictions attached to equity shares:

The Company has only one class of equity shares with voting rights (one vote per share). The dividend proposed by the Board of Directors is subject to approval of the shareholders in the Annual General Meeting. In the event of liquidation of the Company the equity share hold- ers are entitled to receive only the residual assets of the Company. The distribution of dividend is in proportion to the number of equity shares held by the shareholders.

1. Share application money represents amounts received from the employees against employee stock options, pending allotment.

2. A. Contingent liabilities

a The Company has been named as one of the 3 defendants in a civil dispute for injunction pending adjudication. However in the opinion of the management no liability would arise in this regard.

b Disputed Service taxRs, 5.52 Million (Previous year: Rs, 5.52 Million) and disputed Income TaxRs, 146.31 Million (Previous year: Rs, 271.03 Million)

c Bank Guarantees given for loans availed by subsidiary (On Mobile Live Inc) Rs, 800 Million (Previous year: Rs, 800 Million). The outstanding against the same as on March 31, 2016 Rs, 195.59 Million (Previous year: Rs, 461.38 Million).

B. Capital Commitments

Estimated amount of contracts (net of advances) remaining to be executed on capital account and not provided for is Rs, 15.32 Million (Previous year: Rs, 5.70 Million).

The Guidance Note issued by the Institute of Chartered Accountants of India requires the disclosure of pro forma net results and EPS both basic & diluted, had the Company adopted the fair value method. Had the Company accounted the option under fair value method, amortizing the stock compensation expense thereon over the vesting period, the reported Profit for the year ended March 31, 2016 would have been lower by Rs, 55.92 Million (Previous year Rs, 22.99 Million) and Basic and di- luted EPS would have been revised to Rs, 0.01 (Previous year Rs, 0.61) and Rs, 0.01 (Previous year Rs, 0.60) respectively as compared to Rs, 0.52 (Previous year Rs, 0.81) and Rs, 0.51 (Previous year Rs, 0.80) without such impact. Basic and Diluted Earnings Per Share (EPS) have been restated for all the corresponding period to give effect of the Bonus shares, in accordance with Accounting Standard (AS) 20 "Earnings Per Share".

The fair value of stock based award to employees is calculated through the use of option pricing models, requiring subjective assumptions which greatly affect the calculated values. The said fair value of the options have been calculated using Black- Scholes option pricing model, considering the expected weighted average term of the options to be 4.4 years (Previous year 4.4 years), a 2% (Previous year 3%) expected dividend yield on the underlying equity shares, weighted average volatility in the share price of 58.38% (Previous year 53.61%) and a risk free rate of 7.90% p.a. (Previous year 7.81% p.a.). The Company''s calculations are based on a single option valuation approach, and forfeitures are recognized as they occur. The expected volatility is based on historical volatility of the share price after eliminating the abnormal price fluctuations.

3. Transactions with related parties:

I List of Related parties and relationship:

Sl No. Relationship Related parties

(i) Subsidiaries On Mobile Singapore Pte. Ltd.

PT. On Mobile Indonesia .

Vox Mobili S.A. (subsidiary of On Mobile S.A. till July 11, 2014) On Mobile SA. On Mobile Europe B.V.

On Mobile Services Corporations De Telefonia S.A. DE C.V. Servicios De Telefonia On Mobile, SA DE CV On Mobile USA LLC. On Mobile Global S A

On Mobile Brasil Sistemas De Valor Agregado Para Communicators Movies'' Ltda OnMoible Global for Telecommunication Services On Mobile Senegal SARL

On Mobile De Venezuela C.A. (subsidiary of On Mobile USA LLC) On Mobile Latam holdings SL (subsidiary of On Mobile USA LLC) On Mobile Mali SARL On Mobile Bangladesh Private Limited On Mobile Kenya Telecom Limited On Mobile Costa Rica OBCR, SA On Mobile Ghana Telecom Limited On Mobile Madagascar Telecom Limited On Mobile Nigeria Telecom Limited On Mobile Zambia Telecom Limited On Mobile Telecom Sierra Leone Limited On Mobile Tanzania Telecom Limited On Mobile Global Spain S.L.U On Mobile Uruguay S.A On Mobile Uganda Limited On Mobile Rwanda Telecom Limited On Mobile Global Italy S.R.L. On Mobile Telecom Limited

On Mobile Turkey Telekomunikasyon Sistemleri Limited Sirketi On Mobile Telecom Burkina Faso, SARL

On Mobile Portugal SGPS, Unipessoal LDA (Zona Franca Da Madeira) On Mobile Live Inc (subsidiary of On Mobile USA LLC) Fonestarz Media Group Limited (subsidiary of On Mobile Live Inc) 2dayUK Limited (subsidiary of On Mobile Live Inc) Fonestarz Media (licensing) Limited (subsidiary of On Mobile Live Inc) Daius Limited (subsidiary of On Mobile Live Inc) Fonestarz Limited (subsidiary of On Mobile Live Inc)

Fonestarz Media (Australia) PTY Limited (subsidiary of On Mobile Live Inc) Fonestarz Media Limited (subsidiary of On Mobile Live Inc) On Mobile Global Czech Republic s.r.o.

Sl No. Relationship Related parties

On Mobile Global Limited Colombia S.A.S.

On Mobile Global Solutions Canada Limited

On Mobile Global South Africa (PTY) Limited

(ii) Other related parties with whom the Company had transactions

Key Management Personnel Rajiv Pancholy

Francois Charles Sirois

Chandramouli Janakiraman

(iii) Associate Mobile Voice Konnect Private Limited

(iv) Enterprises owned or Significantly influenced by key management On Mobile Systems Inc., USA personnel/Directors or their relatives

4. The Company had made an application to the Central Government for compounding of one of the contracts for a party covered under Section 297 of the Companies Act, 1956, which expired during an earlier year. The total transaction for which compounding application had been fled amounted to Rs, 3.01 Million. The approval from Central Government is awaited.

5. During the year ended March 31, 2016, the Argentina Government devalued its currency Argentine Peso (ARS) and the Egyptian Government devalued its currency Egyptian pound (EGP) respectively. The exceptional item of loss during the year ended March 31, 2016 amounting to Rs, 2.46 Million represents gain of Rs, 27.89 Million on restatement of the amounts payable in ARS to the Company''s subsidiary in Argentina and loss of Rs, 30.35 Million on restatement of the amounts receivable in EGP from the Company''s subsidiary in Egypt.

6. The Company has working capital lines and Buyers credit facility from banks. Security details of which are as follows:

-Buyers credit facility is secured by first pari-passu charge on moable fixed assets and second pari-passu charge on current assets.

-Working capital lines is secured by first pari-passu charge on present and future stocks and book debts.

7. Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification/ disclosures.

Mar 31, 2015

1. SHARE CAPITAL

A) Aggregate Number of shares allotted as fully paid up pursuant to contracts without payment being received in cash, bonus shares and buyback of shares for the period of five years immediately preceeding the Balance Sheet date:

a) During the year ended March 31, 2010, 75,862 Equity Shares have been issued to the promoters and employees of Telisma, S.A. France as a part of Purchase consideration for its acquisition.

b) During the year ended March 31, 2012, the company made a bonus issue of 58,954,543 shares in the ratio of 1 : 1 to the shareholders by capitalisation of Securities Premium account.

During the year the Company has issued 361,805 bonus equity shares (Previous year: 79,488 bonus equity shares) on exercise of eligible options.

c) During the year ended March 31, 2012 after obtaining approval of the shareholders and completion of the formalities prescribed for buy- back of equity shares u/s. 77A of the Companies Act, 1956, the Company bought back 2,936,000 Equity Shares of Rs. 10 each by utilising the Securities Premium Account. Capital Redemption Reserve has been created out of Security Premium Account for Rs. 29.36 Million being the nominal value of equity shares bought back in terms of Sec.77AA of the Companies Act, 1956.

During the year ended March 31, 2013, the Company completed the above referred buy-back of equity shares and bought back 1,064,000 Equity Shares of Rs. 10 each by utilising the Securities Premium Account. Capital Redemption Reserve has been created out of Security Premium Account for Rs. 10.64 Million being the nominal value of equity shares bought back in terms of Sec.77AA of the Companies Act, 1956.

d) During the current year ended March 31, 2015 after obtaining approval of the shareholders and completion of the formalities prescribed for buy-back of equity shares u/s 68 of the Companies Act, 2013, the Company bought back 5,800,000 Equity Shares of Rs. 10 each by utilising the Securities Premium Account. Capital Redemption Reserve has been created out of Security Premium Account for Rs. 58.00 Million being the nominal value of equity shares bought back in terms of Sec.68 of the Companies Act, 2013.

B) Total number of Options outstanding under various employee stock option plans, that are convertible into equity shares, as on March 31, 2015 are 6,134,802 (at March 31, 2014: 3,851,149) (Refer Note 30)

C) Rights and restrictions attached to equity shares:

The Company has only one class of equity shares with voting rights (one vote per share). The dividend proposed by the Board of Directors is subject to approval of the shareholders in the Annual General Meeting. In the event of liquidation of the Company the equity shareholders are entitled to receive only the residual assets of the Company. The distribution of dividend is in proportion to the number of equity shares held by the shareholders.

2. Opening share application money represented unencashed refund instruments issued to the investors which has been remitted during the year to the Investor Education and Protection Fund as per the provisions of the Companies Act. Closing balance of share application money represents amounts received from the employees against employee stock options, pending allotment.

3. A. Contingent liabilities

a The Company has been named as one of the 3 defendants in a civil dispute for injunction pending adjudication. However in the opinion of the management no liability would arise in this regard.

b Disputed Service tax Rs. 5.52 Million (Previous year: Rs. 17.55 Million) and disputed Income Tax Rs. 271.03 Million (Previous year: Rs. 67.82 Million)

B. Capital commitments

a Bank Guarantees given for loans availed by Subsidiary Company, On-Mobile Live Inc Rs. 461.38 Million (Previous year: Rs. 708.83 Million)

b Estimated amount of contracts (net of advances) remaining to be executed on capital account and not provided for is Rs. 5.70 Million (Previous year: Rs. 61.97 Million).

4. Deferred Payment liability includes Rs. 24.52 Million (BRL 1.27 Million) (previous year: Rs. 33.47 Million (BRL 1.27 Million) payable to a customer in Brazil towards deploying value added services on an exclusive basis in the region.

5. Finance Lease:

The lease transactions of the Company represent lease of electronic equipments on a non-cancellable basis.

6. Transactions with related parties:

List of Related parties and relationship:

Sl No. Relationship Related parties

(i) Subsidiaries On-Mobile Singapore Pte. Ltd.

PT. On-Mobile Indonesia .

Vox Mobili S.A. (subsidiary of On-Mobile S.A. till July 11, 2014)

On-Mobile SA.

Phonetize Solutions Private Limited (liquidated)

On-Mobile Europe B.V.

On-Mobile Servicios Corporativos De Telefonia S.A. DE C.V.

Servicios De Telefonia On-Mobile,SA DE CV

On-Mobile USA LLC.

On-Mobile Global S A

On-Mobile Brasil Sistemas De Valor Agregado Para Comunicacoes Moveis Ltda

On-Mobile Global for Telecommunication Services

On-Mobile Senegal SARL

On-Mobile De Venezuela C.A. (subsidiary of On-Mobile USA LLC)

On-Mobile Latam holdings Ltd (subsidiary of On-Mobile USA LLC wef June 18, 2014)

On-Mobile Mali SARL

On-Mobile Bangladesh Private Limited

On-Mobile Kenya Telecom Limited

On-Mobile Costa Rica OBCR, SA

On-Mobile Ghana Telecom Limited

On-Mobile Madagascar Telecom Limited

On-Mobile Nigeria Telecom Limited

On-Mobile Zambia Telecom Limited

On-Mobile Telecom (SL) Limited

On-Mobile Tanzania Telecom Limited

On-Mobile Global Spain S.A

On-Mobile Uruguay S.A

On-Mobile Uganda Telecom Limited

On-Mobile Rwanda Telecom Limited

On-Mobile Global Italy S.R.L.

On-Mobile Telecom Limited

On-Mobile Turkey Telekomunikasyon Sistemleri Limited Sirketi

On-Mobile Telecom Burkina Faso, SARL

On-Mobile Portugal SGPS

On-Mobile Live Inc

Fonestarz Media Group Limited

2dayUK Limited

Fonestarz Media (licensing) Limited Daius Limited Fonestarz Limited

Fonestarz Media (Australia) PTY Limited

Fonestarz Media Limited

On-Mobile Global Czech Republic s.r.o.

On-Mobile Global Limited Columbia S.A.S.

On-Mobile Global South Africa (PTY) Ltd

On-Mobile Global Solutions Canada Limited

(ii)Other related parties with whom the Company had transactions

Key Management Personnel Rajiv Pancholy

FranÃ§ois-Charles Sirois

Chandramouli Janakiraman

(iii) Associate Mobile Voice Konnect Private Limited

(iv)Enterprises owned or On-Mobile Systems Inc., USA significantly influenced by key management personnel/ Directors or their relatives

7. a. The Company has 'international transactions with associated enterprises' which are subject to Transfer Pricing regulations in India. These regulations, inter alia, require the maintenance of prescribed documents and information for the basis of establishing arm's length price including furnishing a report from an Accountant within the due date of filing the return of income. The Company has undertaken necessary steps to comply with the regulations. The Management is of the opinion that the international transactions are at arm's length, and hence the aforesaid legislation will not have any material impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.

8. The Company prepares consolidated financial statements, hence as per Accounting Standard 17 on Segment Reporting, segment information has not been provided in the standalone financial statements.

9. The Company had made an application to the Central Government for compounding of one of the contracts for a party covered under Section 297 of the Companies Act, 1956, which expired during an earlier year. The total transaction for which compounding application had been filed amounted to Rs. 3.01 Million. The approval from Central Government is awaited.

10. During the year, the Company has completed the divestiture of Voxmobili SA, a step-down subsidiary of the Company. The Company had signed the Share Purchase Agreement (SPA) with Synchronoss Technologies France, a leading player in synchronization technology products, in May 2014. With the closure of this deal, the Company realised an amount of USD 26 Million, subject to escrows and other conditions customarily contracted as part of such deal.

11. During the previous year ended March 31, 2014, the Company had recognised provision for diminution in value of Investment in its subsidiary On-Mobile Europe B.V. which has underlying investment in On-Mobile S.A., of Rs. 559.48 Million, which was included under exceptional items in the Statement of Profit and Loss.

12. Previous year's figures have been regrouped/reclassified wherever necessary to correspond with the current year's classification/ disclosures.

Mar 31, 2014

1. Share application money represents unencashed refund instruments issued to the investors. This does not include any amount, due and outstanding, to be credited to the Investor Education and Protection Fund as per the provisions of the Companies Act.

2. Contingent liabilities and Commitments

a The Company has been named as one of the 3 defendants in a civil dispute for injunction pending adjudication. However in the opinion of the management no liability would arise in this regard.

b Disputed Value Added Tax Rs. Nil (Previous year: Rs 59.08 Million), Disputed Service tax Rs. 17.55 Million (Previous year: Rs. 14.18 Million) and disputed Income Tax Rs.67.82 Million (Previous year: Rs.111.74 Million )

c Bank Guarantees given for loans availed by subsidiaries Rs 708.83 Million (Previous year: Rs.170.29 Million)

d Estimated amount of contracts (net of advances) remaining to be executed on capital account and not provided for is Rs. 61.97 Million (Previous year: Rs. 123.35 Million).

3. Loans to Subsidiaries

The Company has given loan to its subsidiaries the details of which are given below and which in the opinion of the Management is realisable in full.

4. Deferred Payment liability includes Rs. 33.47 Million (BRL 1.27 Million) (previous year: Rs. 34.35 Million (BRL 1.27 Million)) payable to a customer in Brazil towards deploying value added services on an exclusive basis in the region and Rs. Nil (previous year: Rs. 354.68 Million (Euro 5.1 Million)) Payable to a customer in Europe towards deploying value added services on an exclusive basis.

5. Accounting For Taxes On Income

b. The Company has ''international transactions with associated enterprises'' which are subject to Transfer Pricing regulations in India. These regulations, inter alia, require the maintenance of prescribed documents and information for the basis of establishing arm''s length price including furnishing a report from an Accountant within the due date of filing the return of income.

The Company has undertaken necessary steps to comply with the regulations. The Management is of the opinion that the international transactions are at arm''s length, and hence the aforesaid legislation will not have any material impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.

6. The Company prepares consolidated financial statements, hence as per Accounting Standard 17 on Segment Reporting, segment information has not been provided in the standalone financial statements.

7. As part of the Company''s periodic review of its transfer pricing policy as also the substantial growth in its international operations, the Company has adopted a revised global transfer pricing policy with effect from April, 1 2012 and has cross charged expenses to its subsidiaries based on an allocation model. The same has been included as reimbursement of expenses under other operating revenue during the year. The cross charge of expenses are given below:

8. The Company had made an application to the Central Government for compounding of one of the contracts for a party covered under Section 297 of the Companies Act, 1956, which expired during an earlier year. The total transaction for which compounding application had been filed amounted to Rs 3.01 Million. The approval from Central Government is awaited.

9. Subsequent to the Balance Sheet date, the Company has executed a binding Share Purchase Agreement (SPA) with Synchronoss Technologies Inc., a Company headquartered in New jersey and a leading player in synchronization technology products, for divestment of Voxmobili SA, a step-down subsidiary of the Company. The proposed deal will be subject to and contingent upon certain events, including applicable regulatory and shareholders'' approvals. Upon the consummation of the deal, the Company will realise an amount of USD 26 Million, subject to escrows and other conditions customarily contracted as a part of such a deal.

10. During the year, the Company has recognised provision for diminution in value of Investment in its subsidiary OnMobile Europe B.V. which has underlying investment in OnMobile S.A., of Rs. 559.48 Million, which is included under exceptional items in the Statement of Profit and Loss.

11. Previous year''s figures have been regrouped/reclassified wherever necessary to correspond with the current year''s classification/ disclosures.

Mar 31, 2013

1. Share application money represents unencashed refund instruments issued to the investors. This does not include any amount, due and outstanding, to be credited to the Investor Education and Protection Fund as per the provisions of the Companies Act, 1956.

2. Contingent liabilities and Commitments:

a. The Company has been named as one of the 3 defendants in a civil dispute for injunction pending adjudication. However in the opinion of the management no liability would arise in this regard.

b. A suit against the Company has been filed by one party for infringement of its patents and the matter is pending adjudication. However in the opinion of the management, no liability would arise in this regard.

c. Disputed Value Added Tax Rs. 59.08 Million (Previous year: Rs 299.32 Million ) and disputed Income Tax Rs.111.74 Million (Previous year: Rs.57.70 Million).

d. Claims against the Company not acknowledged as debts is Rs. Nil (Previous year: Rs 67.16 Million ).

e. Bank Guarantees given for loans availed by subsidiaries Rs 170.29 Million (Previous year: Rs.177.63 Million).

f. Estimated amount of contracts (net of advances) remaining to be executed on capital account and not provided for is Rs. 123.35 Million (Previous year: Rs. 149.90 Million).

g. Pending amount for buyback of equity shares Nil (Previous year Rs. 54.78 Million)

3. Divestment in Ver se Innovation Pvt Ltd.:

During the year the Company sold its balance stake in Ver se Innovation Private Limited for a consideration of Rs. 55 Million (Sale during previous year Rs.500 Million).

4. Loans to Subsidiaries:

The Company has given loan to its subsidiaries the details of which are given below and which in the opinion of the Management is realisable in full.

5. Deferred Payment liability includes Rs. 34.35 Million (BRL1.27 Million) (previous year: Rs. 36.37 Million (BRL 1.27 Million)) payable to a customer in Brazil towards deploying value added services on an exclusive basis in the region and Rs. 354.68 Million (Euro 5.1 Million) (Previous year: Nil) Payable to a customer in Europe towards deploying value added services on an exclusive basis.

6. The Company had circulated request to all suppliers to confirm their status under the Micro, Small and Medium Enterprises Development Act, 2006 and the Company has received confirmations from some of the suppliers and the amounts unpaid as at the year end together with interest paid / payable under this Act is follows:

7. The Company prepares consolidated financial statements, hence as per Accounting Standard 17 on Segment Reporting, segment information has not been provided in the standalone financial statements.

8. As part of the Company''s periodic review of its transfer pricing policy as also the substantial growth in its international operations, the Company has adopted a revised global transfer pricing policy with effect from April 1, 2012 and has cross charged expenses to its subsidiaries based on an allocation model. The same has been included as reimbursement of expenses in other income during the year (Refer Note 18). The cross charge of expenses are given below:

9. The Company had made an application to the Central Government for compounding of one of the contracts for a party covered under Section 297 of the Companies Act, 1956, which expired during the previous year. The total transaction entered into during the year, for which compounding application has been filed amounted to Rs. 0.48 Million (Previous year: Rs 2.53 Million). The approval from Central Government is awaited.

10. Previous year''s figures have been regrouped/reclassif ied wherever necessary to correspond with the current year''s classification/ disclosures.

Mar 31, 2012

A) During the year ended March 31, 2008,

- the Company made a bonus issue in the ratio of 12 :1 to the shareholders by capitalisation of Capital Redemption Reserve an Securities Premium account.

- 567,749 Equity shares were issued to erstwhile shareholders of ITfinity Solutions Private Limited at the time of amalgamation (inclusive of 524,076 bonus shares).

- 423,722 Equity Shares have been issued to the promoters and employees of Vox Mobili, S.A. France as a part of Purchase consideration for its acquisition [inclusive of 391,126 bonus shares].

b) During the year ended March 31,2010, 75,862 Equity Shares have been issued to the promoters and employees of Telisma, S.A. France as a part of Purchase consideration for its acquisition

c) During the year ended March 31, 2012, the Company made a bonus issue in the ratio of 1 :1 to the shareholders by capitalisation of Securities Premium account.

d) During the year after obtaining approval of the shareholders and completion of the formalities prescribed for buy-back of equity shares u/s. 77A of the Companies Act, 1956, the Company has bought back 2,936,000 Equity Shares of Rs.10 each by utilising the Securities Premium Account. Capital Redemption Reserve has been created out of Security Premium Account for Rs. 29.36 Million being the nominal value of equity shares bought back in terms of Sec.77AA of the Companies Act, 1956.

1. Share application money represents unencashed refund instruments issued to the investors. This does not include any amount, due and outstanding, to be credited to the Investor Education and Protection Fund as per the provisions of the Companies Act, 1956.

2. Contingent liabilities and Commitments

a. The Company has been named as one of the 20 defendants in a civil dispute for injunction pending adjudication. However in the opinion of the management no liability would arise in this regard.

b. The Company has been named as one of the 3 defendants in a civil dispute for injunction pending adjudication. However in the opinion of the management no liability would arise in this regard.

c. A suit against the Company has been filed by one party for infringement of its patents and the matter is pending adjudication. However in the opinion of the management, no liability would arise in this regard.

d Disputed Value Added Tax Rs. 299.32 Million (Previous year: Rs 692.8 Million ) and disputed Income Tax Rs.57.7 Million (Previous year: Rs.55.31 Million)

e. Claims against the Company not acknowledged as debts is Rs. 67.16 Million (Previous year: Rs 61.68 Million).

f. Bank Guarantees given for loans availed by subsidiaries Rs 177.63 Million (Previous year: Rs.2.27 Million)

g. Estimated amount of contracts (net of advances) remaining to be executed on capital account and not provided for is Rs. 149.90 Million (Previous year: Rs. 101.72 Million).

h. Pending amount for buyback of equity shares Rs. 54.78 Million (Previous year: Nil).

3. Issue of Bonus Shares

During the year, on April 21, 2011, the shareholders of the Company have approved through Postal ballot process, the issue of one equity share of face value of Rs 101- each as bonus share for every one share held by the equity shareholders of the Company whose name appear in the register of members as on the record date, by capitalisation of Securities premium account and also shareholders have approved for increase of authorised share capital from Rs 750 Million to Rs.1,500 Million. Basic and Diluted Earnings Per Share (EPS) have been restated for the corresponding year to give effect of the said issue of Bonus shares, in accordance with Accounting Standard (AS) 20 "Earnings Per Share".

4. Divestment in Ver se Innovation Pvt Ltd

During the year the Company sold 228,668 Equity Shares in Ver se Innovation Private Limited for a consideration of Rs. 485 Million (Net of expenses).

5. Loans to wholly owned Subsidiaries.

The Company has given loan to its wholly owned subsidiaries the details of which are given below and which in the opinion of the Management is realisable in full.

6. Deferred Payment liability includes:

1. Nil (previous year: Rs. 139.44 Million (Euro 2.21 Million)) payable to Telefonica International, S.A.U, Spain towards accrual of liability relating to acquisition of market development and deployment rights.

2. Nil (previous year: Rs. 282.12 Million (Euro 4.46 Million)) payable to a customer in Europe towards deploying value added services on an exclusive basis in the region.

3. Rs. 36.37 Million (BRL 1.27 Million) (previous year: Rs. 35.09 Million (BRL 1.27 Million)) payable to a customer in Brazil towards deploying value added services on an exclusive basis in the region.

4. Nil (previous year: Rs. 0.5 Million) being balance consideration payable relating to acquisition of Intellectual Property Rights.

7. Employee Benefits:

I. Defined Contribution Plans

During the year the Company has recognized the following amount in the Statement of Profit and Loss:

II. Defined Benefit Plans Gratuity

In accordance with Accounting Standard 15 (Revised 2005) - "Employee Benefits", actuarial valuation as on March 31, 2012 was done in respect of the aforesaid defined benefit plan of Gratuity based on the following assumptions:

The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market.

8. Operating lease:

a. The Company is obligated under non-cancellable operating lease for office space and vehicles provided to employees.

b. The Company has sub let office space under cancellable operating lease for the part of the year.

The Company accounted the above options using the intrinsic value method and thus, the difference between the fair value of the underlying shares in the year of grant and the options exercise value was charged to the statement of profit and Loss. Accordingly, the compensation charge there on in the current year Nil (Previous year Rs. 0.04 Million) as the differences completely charged off to the Statement of Profit and Loss.

The guidance note issued by the Institute of Chartered Accountants of India requires the disclosure of pro forma net results and EPS both basic & diluted, had the Company adopted the fair value method. Had the Company accounted the option under fair value method, amortising the stock compensation expense thereon over the vesting period, the reported profit for the year ended March 31, 2012 would have been lower by Rs.157.22 Million (Previous year Rs.95.65 Million) and Basic and diluted EPS would have been revised to Rs. 3.0/- (Previous year Rs. 7.0/-) and Rs.2.9/- (Previous year Rs 6.8/-) respectively as compared to Rs.4.3/- (Previous year Rs 7.8/-) and Rs.4.2/-(Previous year Rs 7.6/-) without such impact. Basic and Diluted Earnings Per Share (EPS) have been restated for all the corresponding period to give effect of the said issue of Bonus shares, in accordance with Accounting Standard (AS) 20 "Earnings Per Share" notified under Section 211 (3C) of the Companies Act, 1956.

The fair value of stock based awards to employees is calculated through the use of option pricing models, requiring subjective assumptions which greatly affect the calculated values. The said fair value of the options have been calculated using Black-Scholes option pricing model, considering the expected weighted average term of the options to be 4.3 years (Previous year 3.9 years), a 2% (Previous year Nil %) expected dividend yield on the underlying equity shares, weighted average volatility in the share price of 51.58 % (Previous year range of 53.17%) and a risk free rate of 8.50 % p.a. (Previous year 8.25% p.a.). The Company's calculations are based on a single option valuation approach, and forfeitures are recognized as they occur. The expected volatility is based on historical volatility of the share price during the year after eliminating the abnormal price fluctuations.

As per the provisions of SEBI (ESOS) Guidelines, 1999, the Shareholders, vide their resolution dated December 2, 2011 through postal ballot process, approved the repricing of options grated but not exercised. Consequently the Board of Directors vide their circular resolution dated December 21, 2011 re-priced the unexercised options at Rs. 63.78 each.

The incremental fair value of stock based award consequent to re-pricing of exercise price of stock options to employees is calculated through the use of option pricing models as on the date of re-pricing, requiring subjective assumptions which greatly affect the calculated values. The said fair value of the options have been calculated using Black-Scholes option pricing model, considering the expected weighted average term of the options to be 4.3 years, a "2%" expected dividend yield on the underlying equity shares, weighted average volatility in the share price of 51.95% and a risk free rate of 8.50% p.a. The Company's calculations are based on a single option valuation approach, and forfeitures are recognized as they occur. The expected volatility is based on historical volatility of the share price during the year after eliminating the abnormal price fluctuations.

9. Accounting For Taxes On Income

a. During the year, the Company has provided for Minimum Alternative Tax (MAT) under section 115JB of the Income tax Act, 1961 since the tax liability as per regular provisions of the Act is lower. Correspondingly, the Company has also claimed credit of Rs.6.85 Million (Previous year Rs.92.72 Million) under section 115JAA of the said Act, which is disclosed as 'MAT credit entitlement' in the Statement of Profit and Loss.

b. In accordance with the Accounting Standard 22 - "Accounting for Taxes on Income", the Company has reversed the deferred tax liability to the extent of Rs.5.46 Million for the current year, which has been credited to the Statement of Profit and Loss. Details of Deferred Tax Asset and Liabilities are:

10. The Company prepares consolidated financial statements, hence as per Accounting Standard 17 on Segment Reporting, segment information has not been provided in the standalone financial statements.

11. The company has made an application to the Central Government for compounding of one of the contracts for a party covered under Section 297 of The Companies Act, 1956 which expired during the year. The total transaction entered into during the year for which compounding application has been filed is amounting to Rs. 2.53 Million.

12. The Revised Schedule VI has become effective from 1 April, 2011 for the preparation of financial statements. This has significantly impacted the disclosure and presentation made in the financial statements. Previous year's figures have been regrouped I reclassified wherever necessary to correspond with the current year's classification I disclosure.

Mar 31, 2011

1. Share application money represents unencashed refund instruments issued to the investors. This does not include any amount, due and outstanding, to be credited to the Investor Education and Protection Fund as per the provisions of the Companies Act, 1956.

2. Contingent liabilities and Commitments

a. The Company has been named as one of the 20 defendants in a civil dispute for injunction pending adjudication. However in the opinion of the management no liability would arise in this regard.

b. Disputed Value Added Tax Rs. 692.8 Million (Previous year: Rs. 451.73 Million) and disputed Income Tax Rs.55.31 Million (Previous year: Rs.Nil)

c. Claims against the Company not acknowledged as debts is Rs. 61.68 Million (Previous year: Rs. 56.63 Million).

d. Estimated amount of contracts (net of advances) remaining to be executed on capital account and not provided for is Rs. 101.72 Million (Previous year: Rs. 495.78 Million).

3. Issue of Bonus Shares

Subsequent to the balance sheet date, on April 21, 2011, the shareholders of the Company have approved through Postal ballot process, the issue of one equity share of face value of Rs 10/- each as bonus share for every one share held by the equity shareholders of the Company whose name appear in the register of members as on the record date, by capitalisation of Securities premium account and also shareholders have approved for increase of authorised share capital from Rs. 750 Million to Rs.1,500 Million.

4. Divestment in Ver se Innovation Pvt Ltd

During the year the Company sold 295,217 Equity Shares in Ver se Innovation Private Limited for a consideration of Rs. 397.04 Million. As a result of the above, the Company's shareholding in Ver se Innovation Private Limited stands reduced and thus ceased to be an associate of the Company.

5. Market development and deployment rights

The Company has entered into agreements with Telfonica Internacional, S.A.U, Spain and the telecom operators towards deploying Value Added Services on exclusive and non-exclusive basis in Latin America and Europe with an initial investment of Rs. 2,717.09 Million (Euro 40.5 Million) and during the year has started operations in these regions.

6. Investments and loans to wholly owned Subsidiaries and employees

(a) Investment in the wholly owned Subsidiaries has been made considering strategic business expansion plan. In the opinion of the management and considering intrinsic value and the business potential of the subsidiaries, the investment has been carried at cost.

(b) The Company has given loan to its wholly owned subsidiaries the details of which are given below and which in the opinion of the Management is realisable in full.

7. Deferred Payment liability includes:

1. Rs 139.44 Million (Euros 2.21 Million) (previous year: Rs. 1,389.85 Million (Euro 22.95 Million)) payable to Telefonica Internacional, S.A.U, Spain towards accrual of liability relating to acquisition of market development and deployment rights.

2. Rs 282.12 Million (Euros 4.46 Million) (previous year: Rs. 330.05 Million (Euro 5.45 Million)) payable to a customer in Europe towards deploying value added services on an exclusive basis in the region.

3. Rs. 35.09 Million (BRL 1.27 Million) (previous year: Rs. Nil) payable to a customer in Brazil towards deploying value added services on an exclusive basis in the region.

4. Rs 0.5 Million (previous year: Rs. 0.5 Million) being balance consideration payable relating to acquisition of Intellectual Property Rights.

8. Operating lease:

a. The Company is obligated under non-cancellable operating lease for office space and vehicles provided to employees.

b. During the year the Company has sub let office space under non-cancellable operating lease.

The Company accounted the above options using the intrinsic value method and thus, the difference between the fair value of the underlying shares at the time of grant and the options exercise value was charged to the profit and loss account. Accordingly, the compensation charge thereon in the current year is Rs. 0.04 Million. (Previous year-Rs.0.11 Million).

The guidance note issued by the Institute of Chartered Accountants of India requires the disclosure of pro forma net results and EPS both basic & diluted, had the Company adopted the fair value method. Had the Company accounted the option under fair value method, amortising the stock compensation expense thereon over the vesting period, the reported profit for the year ended March 31, 2011 would have been lower by Rs.95.65 Million (Previous year-Rs.21.05 Million) and Basic and diluted EPS would have been revised to Rs.14.0/- (Previous year-Rs 8.7/-) and Rs.13.6/- (Previous year-Rs 8.5/-) respectively as compared to Rs.15.6/- (Previous year-Rs 9.2/-) and Rs.15.2/- (Previous year-Rs 9.0/-) without such impact.

The fair value of stock based awards to employees is calculated through the use of option pricing models, requiring subjective assumptions which greatly affect the calculated values. The said fair value of the options have been calculated using Black-Scholes option pricing model, considering the expected weighted average term of the options to be 3.9 years (Previous year 3.6 years), a "Nil%"(Previous year Nil %) expected dividend rateon the underlying equity shares, weighted average volatility in the share price of 53.17% (Previous year range of 41%-53%) and a risk free rate of 8.25% p.a. (Previous year 7.4% p.a.). The Company's calculations are based on a single option valuation approach, and forfeitures are recognized as they occur. The expected volatility is based on historical volatility of the share price during the year after eliminating the abnormal price fluctuations.

9. Transactions with related parties:

I. List of Related parties and relationship:

Sl. Relationship Related parties No.

(i) Subsidiaries OnMobile Singapore Pte. Ltd.

OnMobile Australia Pty. Ltd.

PT. OnMobile Indonesia .

Vox Mobili S.A. (subsidiary of Telisma S.A. w.e.f. October 14, 2009)

Telisma S.A.

Phonetize Solutions Private Limited

OnMobile Europe B.V.

Servicios De Telefonia OnMobile, SA DE CV

OnMobile USA LLC.

Ver se Innovation Private Limited ( Till September 29, 2009)

OnMobile Global S A

OnMobile Brasil Sistemas De Valor Agregado Para Comunicacoes Moveis Ltda

OnMoible Global for Telecommunication Services

OnMobile Senegal SARL

OnMobile Uruguay S A

OnMobile De Venezuela C.A. (subsidiary of OnMobile USA LLC)

(ii) Other related parties with whom the Company had transactions

Key Management Personnel

Arvind Rao

Chandramouli Janakiraman

Associate

Ver se Innovation Private Limited ( w.e.f September 29, 2009 till February 7, 2011)

Enterprises owned or significantly influenced by key Management personnel/Directors or their relatives.

OnMobile Systems INC, USA.

Mobile Traffik Private Limited (Till January 18, 2010)

Riff Mobile Private limited.

10. Accounting For Taxes On Income

a. During the year, the Company has provided for Minimum Alternative Tax (MAT) under section 115JB of the Income tax Act, 1961 since the tax liability as per regular provisions of the Act is lower. Correspondingly, the Company has also claimed credit of Rs.92.72 Million under section 115JAA of the said Act, which is disclosed as ÃMAT credit availed' in the Profit and Loss Account.

11. Cash and cash equivalents include deposits of Rs.301.74 Million (March 31, 2010: Rs 11.30 Million) the use of which was restricted and also includes unrealised foreign exchange gain of Rs. 4.86 Million (March 31, 2010- loss of Rs.3.67 Million).

12. Since the Company prepares consolidated financial statements, hence as per Accounting Standard 17 on Segment Reporting, segment information has not been provided in the standalone financial statements.

13. Quantitative Details

The Company is engaged in the development and maintenance of computer software. The production and sale of such software cannot be expressed in any generic unit. Hence, it is not possible to give the quantitative details of sales and certain information as required under paragraphs 3 and 4C of part II of Schedule VI of the Companies Act, 1956. Further there are no traded goods during the year.

14. Previous year's figures have been regrouped/ reclassified wherever necessary.

Mar 31, 2010

1. Utilization of Proceeds from Initial Public Offer (IPO)

The actual utilization of the proceeds of the Initial Public Offer during 2007-08 issue of Rs. 3,544.54 Million (net of share issue expenses) is as under:

The unutilised funds as at March 31, 2010 have been temporarily invested in Short term investments/Fixed Deposits with banks.

2. Share application money represents unencashed refund instruments issued to the investors. This does not include any amount, due and outstanding, to be credited to the Investor Education and Protection Fund as per the provisions of the Companies Act, 1956.

3. Contingent liabilities and Commitments

a. The Company has been named as one of the 20 defendants in a civil dispute for injunction pending adjudication. However in the opinion of the management no liability would arise in this regard.

b. Disputed Value Added Tax Rs. 451.73 Million (Previous year Rs 339.24 Million).

c. Claims against the Company not acknowledged as debts is Rs. 56.63 Million (Previous year Rs 10.00 Million).

d. Estimated amount of contracts (net of advances) remaining to be executed on capital account and not provided for is Rs. 495.78 Million (Previous year Rs. 73.44 Million).

4. Market development and deployment rights

The Company is in the process of expanding its business in Latin America and has made an initial commitment of Euro 37 Million (Rs.2,240.72 Million) to start its operations in this region. Various business agreements dated June 30, 2009 have been formalised with Telefonica Internacional, S.A.U, Spain (Telefonica) towards deploying Value Added Services on exclusive and non-exclusive basis across 13 countries in the region.

5. Business Expansion Plans

In continuation of CompanyÃs business expansion plans an agreement dated March 1, 2010 has been signed with a customer in Europe towards deploying value added services on an exclusive basis in the region with an initial commitment of Euro 5.50 Million (Rs.342.71 Million).

6. Divestment in Ver se Innovation Pvt Ltd

During the year the Company sold 67,475 Equity Shares in Ver se Innovation Private Limited for a consideration of Rs. 30 Million. As a result of the above, the CompanyÃs share holding in Ver se Innovation Private Limited (erstwhile subsidiary of the Company) stands reduced and as a result of which the said subsidiary has become an associate of the Company.

7. Group Restructuring Plan

Pursuant to a group restructuring plan during the previous year, the Company had transferred the share holdings in its wholly owned subsidiaries Vox mobili S.A. and Telisma S.A. to a newly formed wholly owned subsidiary OnMobile Europe B.V. Further to this restructuring plan, during the current year the shares of Vox mobili S.A. has been transferred from OnMobile Europe B.V. to Telisma S.A as a result of which Vox Mobili S.A. has become a wholly owned subsidiary of Telisma S.A.

8. Investment in new Subsidiaries/Additional Investment in existing Subsidiaries

During the year, the Company has vide resolution of the Board of Directors dated October 26, 2009 incorporated OnMobile USA LLC a wholly owned subsidiary, with an initial investment of USD 10,000/- (Rs. 0.45 Million) towards 100 units of common stock of USD 100/- each.

Subsequently during the year, the Company has vide resolution of the Board of Directors dated January 29, 2010 has made an additional investment of USD 200,000/- (Rs. 9.16 Million) towards 2,000 units of common stock of USD 100 each.

During the year, the Company has vide resolution of the Board of Directors dated October 26, 2009 incorporated Servicios De Telefonia OnMobile Sa De Cv, Mexico a wholly owned subsidiary, with an initial investment of Mexican Peso 1,829,877/- (Rs 6.86 Million) towards 1,829,877 equity shares of Mexican Peso 1/- each.

During the year, the Company has vide resolution of the Board of Directors dated April 30, 2009 made an additional investment of SGD 2,500,000/- (Rs. 87.05 Million) towards 2,500,000 equity shares of SGD 1 each in OnMobile Singapore Pte Ltd.

During the year, the Company has vide resolution of the Board of Directors dated April 30, 2009 made an additional investment of Euro 125,000/- (Rs 8.8 Million) towards 125,000 equity shares of Euro 1/- each in OnMobile Europe B.V.,Netherlands.

9. Telisma Earn out payment

During the year the Company has vide resolution of the shareholders dated August 01, 2009 and the resolution of the committee of the Board of Directors dated August 13, 2009 allotted 75,862 equity shares of face value Rs. 10 each to the founders and employees of Telisma S.A. by way of preferential allotment for a value equivalent to Euro 0.5 Million (Rs. 33.03 Million). This is in accordance with the share purchase agreement signed by and between the Company and the shareholders of Telisma S.A. on May 13, 2008 and the FounderÃs agreement signed by and between the Company and the Founders of Telisma S.A. on May 13, 2008 as a full and final discharge of the balance consideration of Euro 1 million (Rs. 67.93 Million) which was included as a deferred payment liability in the Balance Sheet as at March 31, 2009.

As a result of the above, the Company has adjusted the remaining amount of Euro 0.5 million (Rs.34.90 Million) against the Investment and Deferred Payment liability.

10. Investments and loans to wholly owned Subsidiaries and employees

a. Investment in the wholly owned Subsidiaries has been made considering strategic business expansion plan. In the opinion of the management and considering intrinsic value and the business potential of the subsidiaries, the investment has been carried at cost.

b. The Company has given loan to its wholly owned subsidiaries the details of which are given below and which in the opinion of the Management is realisable in full.

11. Deferred Payment liability includes:

1. Euro 22.95 Million (Rs. 1,389.85 Million) payable to Telefonica Internacional, S.A.U, Spain towards accrual of liability relating to acquisition of market development and deployment rights.

2. Euro 5.45 Million (Rs. 330.05 Million) payable to a customer in Europe towards deploying value added services on an exclusive basis in the region.

3. Rs. 0.5 Million being balance consideration payable relating to acquisition of Intellectual Property Rights.

The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, senior- ity, promotion and other relevant factors including supply and demand in the employment market.

Details of investment composition of Plan Assets has not been provided by the Fund managers and hence not given.

12. Finance Lease:

The lease transactions of the Company represent lease of electronic equipments on a non-cancellable basis.

13. Operating lease:

a. The Company is obligated under non-cancellable operating lease for office space and vehicles provided to employees.

b. During the year the Company has sub let office space under non-cancellable operating lease.

The Company accounted the above options using the intrinsic value method and thus, the difference between the fair value of the underlying shares in the year of grant and the options exercise value was charged to the profit and loss account. Accordingly, the compensation charge thereon in the current year is Rs. 0.11 Million.(Previous year Rs.0.06 Million).

The guidance note issued by the Institute of Chartered Accountants of India requires the disclosure of pro forma net results and EPS both basic & diluted, had the Company adopted the fair value method. Had the Company accounted the option under fair value method, amortising the stock compensation expense thereon over the vesting period, the reported profit for the year ended March 31, 2010 would have been lower by Rs.21.05 Million (Previous year Rs.26.12 Million) and Basic and diluted EPS would have been revised to Rs.8.7/- (Previous year Rs 11.8/-) and Rs.8.5/- (Previous year - Rs 11.4/-) respectively as compared to Rs.9.2/- (Previous year Rs 12.2/-) and Rs.9.0/-(Previous year Rs 11.8/-) without such impact.

The fair value of stock based awards to employees is calculated through the use of option pricing models, requiring subjective assumptions which greatly affect the calculated values. The said fair value of the options have been calculated using Black-Scholes option pricing model, considering the expected term of the options to be 3.6 years (Previous year 2.4 years), a ÃNil%Ã(Previous year Nil %) expected dividend rate on the underlying equity shares, volatility in the share price range of 41%-53% (Previous year range of 61%) and a risk free rate of 7.4% p.a. (Previous year 7% p.a.). The CompanyÃs calculations are based on a single option valuation approach, and forfeitures are recognized as they occur. The expected volatility is based on historical volatility of the share price during the year after eliminating the abnormal price fluctuations.

14. Change in the useful life of Telefony Cards

Based on an internal technical evaluation, the Company has revised the estimated useful life of Telefony Cards grouped under Computer and Electronic Equipment from 3 years to 5 years, the impact being the profit before tax during the year ended March 31, 2010 is higher by Rs. 100.38 Million.

15. During the year commercial operation has not comm- enced from marketing development and deployment rights as the services are in the process of being deployed and hence no amortisation of cost considered.

16. Pursuant to the Accounting Standard-28 on ÃImpair- ment of AssetsÃ the Company has assessed its assets for impairment and provided an impairment loss of Rs. 7.9 Million on Intellectual Property Rights and the related assets.

17. Cash and cash equivalents include deposits of Rs.11.30 Million (March 31, 2009: Rs 11.09 Million) the use of which was restricted and also includes unrealised foreign exchange loss of Rs. 3.67 Million (March 31, 2009- gain of Rs.4.47 Million).

18. Quantitative Details

The Company is engaged in the development and maintenance of computer software. The production and sale of such software cannot be expressed in any generic unit. Hence, it is not possible to give the quantitative details of sales and certain information as required under paragraphs 3 and 4C of part II of

Schedule VI of the Companies Act, 1956. Further there are no traded goods during the year.

19. Previous yearÃs figures have been regrouped/ reclassified wherever necessary.

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