gaussian networks pvt ltd Management discussions

The following discussion should be read together with the information in the section titled "Summary of Financial Information", and our Restated Financial Statements included in the section titled "Financial Information " on pages 56 and 201, respectively. Unless the context requires otherwise, the following discussion and analysis of our financial condition and results of operations for Fiscals 2022, 2021 and 2020 is derived from our Restated Financial Statements, including the notes, annexures and schedules thereto, which have been derived from our audited financial statements for Fiscals 2022, 2021 and 2020, and prepared in accordance with the applicable provisions of the Companies Act and Ind AS, and restated in accordance with the Guidance Note on Reports in Company Prospectuses (Revised 2019) issued by ICAI and the SEBIICDR Regulations. Ind AS differs in certain material respects from IFRS, U.S. GAAP and GAAP in other countries and other accounting principles with which prospective investors may be familiar. Our Company does not provide reconciliation of its financial information to IFRS, U.S. GAAP or GAAP in other countries. Our Company has not attempted to explain those differences or quantify their impact on the financial data included in this Draft Red Herring Prospectus and it is urged that you consult your own advisors regarding such differences and their impact on our Companys financial information. Accordingly, the degree to which the financial information included in this Draft Red Herring Prospectus will provide meaningful information is entirely dependent on the readers level offamiliarity with Indian accounting principles, policies and practices, the Companies Act and the SEBI ICDR Regulations. Any reliance by persons not familiar with Indian accounting principles, policies and practices on the financial information presented in this section should accordingly be limited.

Our financial year ends on March 31 of each year. Accordingly, references to "Fiscal 2022", "Fiscal 2021" and "Fiscal 2020", are to the 12-month period ended March 31 of the relevant year.

Statements contained in this discussion that are not historical facts may be forward-looking statements. Such statements are subject to certain risks, uncertainties and assumptions that could cause actual results to differ materially from those forward-looking statements. Under no circumstances should the inclusion of such information herein be regarded as a representation, warranty or prediction with respect to the accuracy of the underlying assumptions by us or any other person, or that these results will be achieved or are likely to be achieved. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors and contingencies that could affect our financial condition, results of operations and cash flows. Prospective investors in the Equity Shares are cautioned not to place undue reliance on these forward-looking statements.

You are also advised to read the sections titled "Forward Looking Statements" and "Risk Factors" on pages 21 and 30, respectively, which discuss a number of factors or contingencies that could affect our business, financial condition and results of operations.

Unless otherwise indicated, industry and market data used in this section has been derived from industry publications, in particular, the report titled "Online Gaming Market in India" dated June 13, 2022 (the "RedSeer Report"), prepared and issued by RedSeer Management Consulting Private Limited, appointed on February 18, 2022, and exclusively commissioned by, and paid for, by us in connection with the Offer. The RedSeer Report is available on the website of our Company at https://www.deltatech.gg/wp- content/uploads/2022/06/Industry-Report-deltatech.pdf.

Overview

We are a digitally native, technology led gaming platform, delivering a gamer-centric gaming experience across our various offerings. We are one of the earliest companies in the real money gaming segment in India and Adda52 is Indias first online poker platform offering multiple poker variants. [Source: RedSeer Report], We have been considered as a category pioneer in India having a large gamer base and have had more than 34.5% of market share for over seven years till Fiscal 2021, [Source: RedSeer Report],

Our core competencies have been our investment in building our own in-house platforms and developing data intelligence capabilities. We believe that we offer a robust and seamless omni-channel digital offering, with fully integrated online play, through mobile, web and desktop versions, coupled with our offline capabilities.

We believe that our historical traction and gamer-first philosophy places us in an advantageous position to capture the opportunity for real money gaming. We aim to be the platform-of-choice for real money gaming gamers across the country. Our gaming platforms have witnessed a substantial increase in the number of registrations of gamers. The increase in the number of cumulative registered gamer base as on March 31, 2022, as highlighted below, implies a three-fold jump in the number of cumulative registered gamer base over the period.

i) There may be overlap of gamers between the platforms as the number of total registered gamers base is cumulative for all platforms.

ii) The increase in the cumulative registered gamer base for Fiscal 2021 was attributable to the increase in the number of gamers during the various lockdowns imposed on account of the COVID — 19 pandemic.

iii) The increase in the cumulative registered gamer base for Fiscal 2022 was on account of the acquisition of ‘Faboom and the subsequent launch of Adda.games. For details in relation to the acquisition of ‘Faboom see, "History and certain corporate matters - Details regarding material acquisitions or divestments of business/undertakings, mergers or amalgamation on page 169.

The increase in the cumulative registered gamer base increases the network liquidity on our platforms which helps in increasing Deposits over a period of time. An increase in the Deposits is an indication of a gamer spending more time on our platforms and engaging in higher number of games resulting in increase in our income from operations. Our increase in Deposits since the first quarter of Fiscal 2018, on an indexed basis, is highlighted below:

i) Deposits refer to the money that a gamer brings on the platform(s) to play games.

ii) The quarterly indexed base (100) = Sum of the Deposits on all platforms for the first quarter ofFiscal 2018 ("Deposit Base Index ").

iii) The indexed Deposits disclosed for the quarters above have been calculated as the total Deposits for such quarter divided by Deposit Base Index.

iv) Adda.games has been operational from April 2021.

We have, over the years, invested in building our in-house platforms and continue to evolve them. We believe investment in our gaming platform and offerings is essential to our business improvement, growth opportunities for onboarding of new gamers, and retention of our existing gamers such as adjacencies like game variants, promotions, etc. We believe that our platforms, developed by our engineers, are built on a distributed and scalable architecture, that provides a flexible, secure and uninterrupted playing experience to our gamers. We believe our agile development methodology provides us with the necessary speed for innovation. Our gamer data pools, and insights into gamer preferences has allowed us to drive innovations and relevance, leading to positive engagement for our gamers.

In line with our growth strategy, in April 2021, we acquired multi-gaming technology under the brand Faboom and re-branded it as the Adda.games platform, thereby expanding our footprint in the gaming industry.

Adda.games acts as a comprehensive gaming platform, providing gamers with a unique and diversified portfolio of real money games in a single destination. Our in-house technology team works in conjunction with third- party developers to create relevant, interactive and engaging games. Through Adda.games, we host different games, such as, rummy, poker, fantasy cricket and casual real money games like call break.

Significant factors affecting our results of operations

Our business, financial condition and results of operations have been, and are expected to be, influenced by numerous factors. A summary of the most important factors that have had, and that we expect will continue to have, a significant impact on our business, results of operations and financial condition is set out below:

New gamer acquisition & gamer base

Our ability to grow our business is dependent on acquiring new gamers as well as retaining our existing gamers. Our ability to attract new gamers to our platforms will affect our ability to grow our gamer base and revenue, and a higher gamer base increases our monetization funnel. We have invested in, and continue to invest in, sales promotion expenses to acquire new gamers and to retain our existing gamers.

Average MAU and ARPU

Our financial results are impacted by the number of average monthly active gamers and the average revenue per gamer. We have been able to consistently grow and maintain our base of MAU and ARPU on Adda52 from Fiscal 2018 to Fiscal 2022. We mobilise our efforts to increase the MAU and ARPU through marketing and promotional activities on Adda52.

i) MAU refers to the unique monthly active gamers who have played a minimum of one game during such a month on our platform and excludes gamers who have played only practice games.

ii) The Average MAUs have been calculated as the average of the total MAUs for a particular quarter of a Fiscal.

iii) The disproportionate increase in the average MAU for Fiscal 2021 was attributable to the increase in the number of gamers during the various lockdowns imposed on account of the COVID — 19 pandemic.

i) ARPUs have been calculated as the Gross Gaming Revenue for the month divided by MAU.

ii) The quarterly indexed base (100) = average of the ARPUs for the first quarter of Fiscal 2020. ("Adda52 Base Index ").

iii) The indexed ARPUs for a particular quarter have been calculated as the average ARPUs for a quarter divided by Adda52 Base Index.

iv) There was a spike in the active gamers in the first quarter of Fiscal 2021 due to the various lockdowns imposed on account of the COVID-19 pandemic.

v) The number of active gamers had amplified due to the various lockdowns imposed on account of the COVID-19 pandemic along with an OTT advertisement campaign run by the Company. This resulted in an increase in the number of active gamers, which resulted in lower ARPU.

In April, 2021, we acquired the multi-gaming technology under the brand ‘Faboom and re-branded it as ‘Adda.games". While Adda52Rummy is currently offered through a separate platform, for the growth of Adda.games, we intend to merge Adda52Rummy into Adda.games in the near future.

Since the launch of Adda.games, we have maintained an increasing number of gamers on our platform with a steady revenue per gamer.

For Adda.games, our quarterly average MAUs for Fiscal 2022 were as follows:

iii) Towards the end of the second quarter and during the third quarter, the Average MAUs were high on account of a busy sports calendar which gave rise to higher gamer traffic.

Our indexed quarterly ARPUs for Fiscal 2022 for Adda.games were as follows:

i) ARPUs have been calculated as the Gross Gaming Revenue for the month divided by MAU.

ii) The quarterly indexed base (100) = average of the ARPUs for the first quarter ofFiscal 2022. ("Adda. Games Base Index ").

iii) The indexed ARPUs for a particular quarter have been calculated as the average ARPUs for a quarter divided by Adda.Games Base Index.

iv) The increase in the second quarter, was on account of the launch of high ARP U games on Adda.games, such as, poker and rummy.

v) Numerous promotional activities pertaining to acquisition of gamers were undertaken by us through traditional and non-traditional channels during the first and second quarters of Fiscal 2022, leading to an increase in the MAUs, which translated to lower ARPUs. The decrease in the third quarter, was on account of the cricket season where we witnessed more gamers on our platforms, resulting in increased number of games played.

vi) The increase in the fourth quarter, was on account of the introduction of personalized promotions and contests for the gamers on our platform.

For Adda52Rummy, our quarterly average MAUs were as follows:

Quarter
Fiscal	Quarter 1	Quarter 2	Quarter 3	Quarter 4
2020	3,781	2,465	2,492	4,077
2021	14,342	17,045	9,839	13,051
2022	30,728	24,546	3,235	2,961

i) MAU refers to the unique monthly active gamers who have played a minimum of one game during such a month on our platform and excludes gamers who have played only practice games.

ii) The Average MAUs have been calculated as the average of the total MAUs for a particular quarter of a Fiscal.

Our indexed quarterly ARPUs for Adda52Rummy were:

Quarter
Fiscal	Quarter 1	Quarter 2	Quarter 3	Quarter 4
2020	100	132	156	135
2021	67	40	63	45
2022	24	27	100	163

iv) Numerous promotional activities pertaining to acquisition of gamers were undertaken by us through traditional and non-traditional channels during the first and second quarters of Fiscal 2022, leading to an increase in the MAUs, which translated to lower ARPUs.

Cost effectiveness of advertisement and sales promotion expenses

We incur a substantial part of our expenses on our sales promotion expenditure. Our sales promotion expenses include a) marketing and branding cost; and b) reward-based engagement and retention spends. We invest in marketing and branding for acquiring new gamers through marketing activities such as, amongst others, celebrity-led campaigns, influencer marketing, online and offline advertising campaigns. We also spend on retaining our existing gamers to encourage more gameplay by offering reward based engagement and retention activities such as, challenges, contests and gamer leader boards, cash backs and different incentives linked to the number of gameplay or number of visits to the platforms or stakes on which the gameplay is generated, as well as offering our gamers free and discounted tournament tickets, etc. We undertake such initiatives to increase gamer engagement on our platforms. Historically, we have experienced that gamer retention and engagement on our platforms for more than six months, leads to higher revenue contribution from such gamers.

For Fiscals 2022, 2021 and 2020, our expenditure on sales promotion for acquisition and retention of gamers stood at Rs. 848.11 million, Rs. 901.53 million and Rs. 593.25 million, respectively.

Our ability to optimize our existing offerings and new content according to gamer preferences

Our data analytics capabilities, powered by scalable data engineering, allows us to consume a large number of data points, helping us draw deep insights and intelligence into gamer behaviour, leading to improvements in product offerings and gamer engagement. These data points, to name a few, include gamers - preferred games, variant, range of buy-in and frequency of playing games. These data points enable us to sharpen our offering for our gamers, thus encouraging them to stick to our platform, which, in turn, helps us increase our network liquidity and profitability. Our ability to periodically develop and enhance product features, keeping in mind gamer expectations ensures retention of the gamers.

Based on our insights the prevailing market, we launched our multi-gaming platform in April, 2021, through which we have expanded our real money gaming offering.

a) Basis of preparation and significant accounting policies

The restated consolidated financial information relates to the Company and our erstwhile subsidiaries, i.e., Deltin Cruises and Entertainment Private Limited and Mind Sports League Private Limited (together, the "Group") and has been specifically prepared for inclusion in this Draft Red Herring Prospectus to be filed by the Company with SEBI in connection with the Offer. The restated consolidated financial information comprises the Restated Consolidated Statement of Assets and Liabilities as at March 31, 2022, March 31, 2021 and March 31, 2020, the Restated Consolidated Statement of Profit and Loss (including Other Comprehensive Income), the Restated Consolidated Statement of Cash Flow, the Restated Consolidated Statement of Changes in Equity and Statement of Significant Accounting Policies and other explanatory information for the years ended March 31, 2022, March 31, 2021 and March 31, 2020 (collectively referred to as "Restated Consolidated Financial Information").

The Restated Consolidated Financial Information has been prepared to comply, in all material respects, with the requirements of Section 26 of Part I of Chapter III of the Companies Act, read with the SEBI ICDR Regulations, in pursuance of provisions of SEBI Act.

The Restated Consolidated Financial Information has been compiled by the Management from:

The audited consolidated financial information as at and for the years ended March 31, 2022, special purpose consolidated financial information for the year ended March 31, 2021 and March 31, 2020 and has been prepared in accordance with Ind AS prescribed under Section 133 of the Companies Act, read with Companies (Indian Accounting Standards) Rules, 2015 (as amended) and other relevant provisions of the Companies Act, which have been approved by the Board of Directors at their meetings held on April 9, 2022 and June 15, 2022, respectively.

The preparation of the Restated Consolidated Financial Information requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Companys accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to these Restated Consolidated Financial Information are disclosed in notes to the Restated Consolidated Financial Information.

i) Compliance with Ind AS

The Restated Consolidated Financial Information has been prepared in accordance with the Indian Accounting Standards (hereafter referred to as the "Ind AS") as notified by the Ministry of Corporate Affairs pursuant to Section 133 of the Companies Act, 2013, read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, and other relevant provisions of the Companies Act and rules framed thereunder.

ii) Historical Cost Convention

The Restated Consolidated Financial Information has been prepared on a historical cost basis, except certain financial assets and liabilities that are measured at fair value.

iii) Rounding of Amounts

All the amounts disclosed in the Restated Consolidated Financial Information and notes are presented in Indian Rupees and have been rounded off to the nearest Millions, as per the requirement of Schedule III to the Companies Act, unless otherwise stated. The amount ‘0.00 denotes an amount less than Rs. five thousand.

iv) Current and Non-Current classification

All assets and liabilities have been classified as current or non-current as per the Groups normal operating cycle (twelve months) and other criteria set out in the Schedule III to the Companies Act.

b) Principle of Consolidation

The Group consolidates all entities which are controlled by it. The Group established control when it has power over the entity, is exposed, or has rights, to variables, returns from its involvements, with the entity and has the ability to affect the entitys return by using power over the entity.

The Restated Consolidated Financial Information has been prepared on the following basis:

i. Entities controlled by our Company are consolidated from the date the control commences until the date such control ceases.

ii. The financial information of the subsidiary companies used in the consolidation are drawn up to the same reporting date as of the Holding Company,

iii. The financial Information of the Holding Company and its subsidiary companies have been combined on a line- by-line basis by adding together like items of assets, liabilities, income and expenses. The intra-group balances, intra-group transactions and unrealised profits have been fully eliminated.

iv. The excess of cost to the Company of its investments in the subsidiary companies over its share of equity of the subsidiary companies, as at the dates on which the investments in such subsidiary are made, is recognised as "Goodwill", being an asset in the Restated Consolidated Financial Information. Goodwill arising out of consolidation is not amortised. However, the same is tested for impairment at each balance sheet date. Alternatively, where the share of equity in the subsidiary companies as on the date of the investment is in excess of the cost of investment of the Company, it is recognised as "Capital Reserve on consolidation" and shown under the head "Other Equity", in the Restated Consolidated Financial Information.

v. Non-controlling interests in the net assets of subsidiaries consists of:

The amount of equity attributable to the minorities at the date on which investment in subsidiary is made; and the minorities share of movements in equity since the date the parent-subsidiary relationship came into existence.

vi. Changes in the Company interest in subsidiaries that do not result in a loss of control are accounted for as equity transactions. The carrying amount of the Companys interest and the non-controlling interest are adjusted to reflect the changes in their relative interest in the subsidiary. Any difference between the amount by which the non-controlling interest is adjusted and the fair value of the consideration paid or received is recognised directly in equity.

c) Significant management judgments in applying accounting policies and estimation uncertainty

The estimates and judgments used in the preparation of the financial information are continuously evaluated by the Group, and are based on historical experience and various other assumptions and factors (including expectations of future events) that the Group believes to be reasonable under the existing circumstances.

Difference between actual results and estimates are recognised in the period in which the results are known / materialised. The said estimates are based on the facts and events that existed as at the reporting date, or that occurred after that date, but provide additional evidence about conditions existing on the reporting date.

Impairment of non-financial assets

Assessment is done as at the date of each balance sheet to evaluate whether there is any indication that a nonfinancial asset may be impaired. If any indication exists, except goodwill, where impairment testing is done irrespective of the indicators, the Group estimates the assets recoverable amount. An assets recoverable amount is the higher of an assets or a Cash Generating Units (CGUs) fair value, less the costs of its disposal and its value in use. It is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or a group of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

In assessing value in use, the estimated future cash flows are discounted to their present value using pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account, if no such transactions can be identified, an appropriate valuation model is used.

Depreciation and useful lives of property, plant and equipment / Intangible assets

Property, plant and equipment are depreciated over the estimated useful lives of the assets, after taking into account their estimated residual value. Management reviews the estimated useful lives and residual values of the assets annually in order to determine the amount of depreciation to be recorded during any reporting period. The useful lives and residual values are based on the groups historical experience with similar assets and take into account anticipated technological changes. The depreciation for future periods is adjusted if there are significant changes from previous estimates.

Recoverability of trade receivables

Judgments are required in assessing the recoverability of overdue trade receivables and determining whether a provision against those receivables is required. Factors considered include the credit rating of the counter party, the amount and timing of anticipated future payments and any possible actions that can be taken to mitigate the risk of non-payment.

Provisions and Contingent Liabilities

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, and it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated.

If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

Contingent liabilities are disclosed in respect of possible obligations that arise from past events, but their existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group or where any present obligation cannot be measured in terms of future outflow of resources or where a reliable estimate of the obligation cannot be made.

Impairment of financial assets

The impairment provisions for financial assets are based on assumptions about risk of default and expected cash loss rates. The Group uses its judgement in making these assumptions and selecting the inputs to the impairment calculation, based on the Groups past history, existing market conditions as well as forward looking estimates at the end of each reporting period.

Defined benefit obligation (DBO)

Managements estimate of the DBO is based on a number of critical underlying assumptions such as standard rates of inflation, mortality, discount rate and anticipation of future salary increases. Variation in these assumptions may significantly impact the DBO amount and the annual defined benefit expenses.

Share-based payments

The grant date fair value of options granted to employees is recognised as employee expenses, with corresponding increase in equity, over the period that the employee become unconditionally entitled to the option. The increase in equity recognised in connection with share-based payment transaction is presented as a separate component in equity under "share option outstanding account". The amount recognised as expense is adjusted to reflect the impact of the revision estimates based on number of options that are expected to vest, in the statement of profit and loss with a corresponding adjustment to equity.

Leases

Ind AS 116 requires lessees to determine the lease term as the non-cancellable period of a lease adjusted with any option to extend or terminate the lease, if the use of such option is reasonably certain. The Group makes an assessment on the expected lease term on a lease-by-lease basis and thereby assesses whether it is reasonably certain that any options to extend or terminate the contract will be exercised. In evaluating the lease term, the Group considers factors such as any significant leasehold improvements undertaken over the lease term, costs relating to the termination of the lease and the importance of the underlying asset to Groups operations taking into account the location of the underlying asset and the availability of suitable alternatives. The lease term in future periods is reassessed to ensure that the lease term reflects the current economic circumstances.

Fair Value Measurement

The management uses valuation techniques to determine the fair value of financial instruments (where active market quotes are not available) and non-financial assets. This involves developing estimates and assumptions consistent with how market participants would price the instrument. The management bases its assumptions on observable data as far as possible, but this is not always available. In that case management uses the best information available. Estimated fair values may vary from the actual prices that would be achieved in an arms length transaction at the reporting date.

Liability for Promotional Expenses

The liability for discretionary awards is recorded based on the estimated utilisation of such awards by the customers, which is calculated based on the past trends. Based on the estimated liability promotional expenditure liability is booked at each reporting date.

d) Property, Plant and Equipment (including capital work-in-progress)

Property, plant and equipment are stated at cost, less accumulated depreciation and impairment losses, if any. Cost includes purchase price and expenditures directly attributable to bringing them into working condition for its intended use. Freehold land and capital work in progress are carried at cost, less accumulated impairment losses, if any.

Subsequent costs are included in the assets carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is de-recognised when replaced. All other repairs and maintenance expenses are charged to the Statement of Profit and Loss during the reporting period in which they are incurred.

Depreciation on property, plant and equipment is provided under the straight-line method over the useful lives of assets as prescribed in Schedule II to the Companies Act, and management believes that the useful lives of these assets are the same as those prescribed in Schedule II to the Companies Act.

The residual values are not more than 5% of the original cost of the asset. The assets residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

Gain or losses arising from de-recognition of property, plant and equipment are measured as difference between the net disposal proceeds and the carrying amount of the assets and are recognised in the statement of profit and loss when the asset is de-recognised.

e) Intangible assets

Intangible Assets with finite useful lives that are acquired separately are stated at acquisition cost, net of recoverable taxes, trade discount and rebate less accumulated amortisation and accumulated impairment losses, if any. Such cost includes purchase price and any expenditure directly attributable to bringing the asset to its working condition for the intended use.

An intangible asset is de-recognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from de-recognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, and are recognised in the statement of profit and loss when the asset is de-recognised.

Intangible assets are amortised over the period of three years on a straight-line basis from date they are available for use. The estimated useful life of an identifiable intangible asset is based on number of factors including the effect of obsolesce, demand, competition and other economic factors and level of maintenance expenditures required to obtain the expected future cash flows from the assets. Intangible asset under work in progress represents software under development.

f) Leases

A. The Group as a lessee

The Groups lease asset classes primarily consist of leases for land and buildings. The Group assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group assesses whether:

(i) the contract involves the use of an identified asset

(ii) the Group has substantially all of the economic benefits from use of the asset through the period of the lease and

(iii) the Group has the right to direct the use of the asset.

At the date of commencement of the lease, the Group recognises a right-of-use asset ("ROU") and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less (short-term leases) and low value leases. For these short-term and low value leases, the Group recognises the lease payments as an operating expense on a straight- line basis over the term of the lease.

Certain lease arrangements include the options to extend or terminate the lease before the end of the lease term. ROU assets and lease liabilities includes these options when it is reasonably certain that they will be exercised.

The right-of-use assets are initially recognised at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses, if any and adjusted for any remeasurement of the lease liability.

Right-of-use assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset. Right of use assets are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e., the higher of the fair value less cost to sell and the value-inuse) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs.

The lease liability is initially measured at amortised cost at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates in the country of domicile of these leases. Lease liabilities are re-measured with a corresponding adjustment to the related right of use asset if the Group changes its assessment if whether it will exercise an extension or a termination option.

The lease liability is subsequently remeasured by increasing the carrying amount to reflect interest on the lease liability, reducing the carrying amount to reflect the lease payments made and remeasuring the carrying amount to reflect any reassessment or lease modifications or to reflect revised in-substance fixed lease payments. The Group recognises the amount of the re- measurement of lease liability due to modification as an adjustment to the right-of-use asset and statement of profit and loss depending upon the nature of modification. Where the carrying amount of the right-of-use asset is reduced to zero and there is a further reduction in the measurement of the lease liability, the Group recognises any remaining amount of the re- measurement in statement of profit and loss.

Lease liability and ROU asset have been separately presented under heads "Other Financial Liabilities" and "Property, Plant and Equipment" respectively and lease payments have been classified as financing cash flows.

New standards, interpretations and amendments adopted by the Group:

The amendments introduce a practical expedient that simplifies how a lessee accounts for COVID-19 related rent concessions, and a lessee may elect not to assess whether rent concessions occurring as a direct consequence of the COVID-19 pandemic are lease modifications. A lease that makes this election shall account for any change in lease payments resulting from the rent concession the same way it would account for the change applying this standard if the change were not a lease modification. The impact of the amendment on the financial information has been disclosed in Note No. 37.

B. The Group as a lessor

Leases for which the Group is a lessor is classified as a finance or operating lease. Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases.

For operating leases, rental income is recognised on a straight-line basis on a straight-line basis over the term of the lease.

g) Borrowings

Borrowings are initially recognised at net of transaction costs incurred and measured at amortised cost using effective interest method. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer the settlement of the liability for at least 12 months after the reporting period.

Effective interest method:

The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest expenses over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payment (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the gross carrying amount on initial recognition.

h) Revenue Recognition

Revenue is measured at the fair value of consideration received or receivable. The Group recognises revenue when the amount of revenue can be reliably measured. Revenue comprises the following elements:

Revenue from Online Skill Gaming: Online gaming revenue represents the commission charged from each game less the fair value of certain promotional bonuses paid out of earned revenue and the value of loyalty points accrued. In Poker tournaments certain promotional costs are accounted for, and entry fee revenue is recognised when the tournament has concluded and there is no longer a service obligation to each user that participated in the tournament.

Dividend and interest income

Dividend income from investments is recognised when the shareholders right to receive payment has been established (provided that it is probable that the economic benefits will flow to the Group and the amount of income can be measured reliably).

Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the group and the amount of income can be measured reliably. Interest income is accrued on a timely basis, by reference to the amortised cost and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that assets net carrying amount on initial recognition.

i) Employee benefits

Short-term employee benefits

The amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised as an expense during the period when the employees render the services.

Post-employment benefits

Defined benefit plan

The liability recognised in the balance sheet in respect of defined benefit gratuity plans is the present value of the defined benefit obligation at the end of the reporting period. The defined benefit obligation is calculated annually by actuaries using the projected unit credit method.

The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows by reference to market yields at the end of the reporting period on government bonds that have terms approximating to the terms of the related obligation.

The net interest cost is calculated by applying the discount rate to the defined benefit obligation. This cost is included in employee benefit expense in the Statement of Profit and Loss.

Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income and is not reclassified to statement of profit and loss. Defined benefit costs are categorised as follows:

• service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements);

• net interest expense; and

• remeasurement.

The Group presents the first two components of defined benefit costs in statement of profit and loss in the line item ‘Employee benefit expenses. Curtailment gains and losses are accounted for as past service costs.

Defined Contribution Plan

Payments to defined contribution benefit plans are recognised as an expense in the Statement of Profit and Loss in the period in which employee renders related service.

j) Shares based payments arrangements

Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date. Details regarding the determination of the fair value of equity-settled share-based transactions are set out in note No. 40.

The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straightline basis over the vesting period, based on the groups estimate of equity instruments that will eventually vest, with a corresponding increase in equity. At the end of each reporting period, the Group revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in statement of profit and loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the equity- settled employee benefits reserve.

The impact of modification of share-based payment arrangement, if any, resulting in incremental fair value, i.e., the difference between the fair value of the modified equity instrument and that of the original equity instrument, both estimated as at the date of the modification is expensed over the remaining vesting period in the statement of profit and loss account.

The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share.

k) Foreign currency transactions and balances

i. Transactions denominated in foreign currencies are recorded at the exchange rate prevailing on the date of transaction. Monetary assets and liabilities denominated in foreign currencies at the year-end are restated at the closing rate of exchange prevailing on the reporting date.

ii. Any exchange difference arising on account of settlement of foreign currency transactions and restatement of monetary assets and liabilities denominated in foreign currency is recognised in the Statement of Profit and Loss.

iii. Non-monetary items that are measured in terms of historical cost in a foreign currency are recorded using the exchange rates at the date of the transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was measured. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of the item (i.e., translation differences on items whose fair value gain or loss is recognised in other comprehensive income or Statement of Profit and Loss are also recognised in other comprehensive income or Statement of Profit and Loss, respectively).

iv. Assets and liabilities of entities with functional currency other than presentation currency have been translated to the presentation currency using exchange rates prevailing on the Balance Sheet date. Statement of the profit loss has been translated using weighted average exchange rate. Translation adjustments have been reported as foreign currency translation reserve in the statement of changes in equity.

l) Income tax

The tax expense for the period comprises current and deferred tax. Tax is recognised in the Statement of Profit and Loss, except to the extent that it relates to items recognised in the other comprehensive income or in equity in which case, the tax is also recognised in other comprehensive income or equity.

Current Tax

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities, based on tax rates and laws that are enacted or substantively enacted at the Balance sheet date. The tax liabilities are presented as net of advance tax for that particular assessment year.

Deferred Tax

Deferred tax is recognised on temporary differences arising between the tax bases of assets and liabilities used in the computation of taxable profit and their carrying amount in the financial statement. Deferred tax assets and liabilities are measured using tax rates (and laws) that have been enacted or substantively enacted by the end of the reporting period. The carrying amount of deferred tax liabilities and assets are reviewed at the end of each reporting period.

Deferred tax assets are recognised for all deductible temporary differences and unused tax losses, only if, it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are off set where the Group has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

m) Earnings per share Basic earnings per share

Basic earnings per share is calculated by dividing the profit attributable to owners of the holding company by the weighted average number of equity shares outstanding during the Financial Year. Earnings considered in ascertaining the Groups earnings per share is the net profit for the period.

Diluted earnings per share

For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares.

n) Business combination

In accordance with Ind AS 103 "Business Combination", the Group accounts for the business combinations using the acquisition method when control is transferred to the group. The consideration transferred for the business combination is generally measured at fair value as at the date the control is acquired (acquisition date), as are the net identifiable assets acquired. Any goodwill that arises is tested annually for impairment. Any gain on bargain purchase is recognised directly in equity as capital reserve on business combination. Transaction costs are expensed as incurred, except to the extent related to the issue of debt or equity securities.

o) Promotional expenses

These are discretionary awards provided to the customers for the online skill gaming business on part of the Group. These expenses are recorded as and when incurred and reported as marketing and sales promotion in the statement of profit and loss.

p) Financial instruments

A financial instrument is any contract that gives rise to a financial asset in one entity and a financial liability or equity instrument in another entity.

I) Financial assets

i. Initial recognition and measurement

All financial assets are initially recognised at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets, which are not at fair value through profit and loss, are adjusted to the fair value on initial recognition. Purchase and sale of financial assets are recognised using trade date accounting.

ii. Subsequent measurement

For purposes of subsequent measurement, financial assets are categorised as follows:

a) Financial assets carried at amortised cost (AC)

A financial asset is measured at amortised cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

b) Financial assets at fair value through other comprehensive income (FVTOCI)

A financial asset is measured at FVTOCI if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

c) Financial assets at fair value through profit or loss (FVTPL)

A financial asset which is not classified in any of the above categories are measured at FVTPL.

iii. Other equity and mutual fund investments

All other equity and mutual fund investments are measured at fair value, with value changes recognised in Statement of Profit and Loss as per the business model of the Group, except for those investment for which the Group has elected to present the value changes in Other Comprehensive Income.

iv. Impairment of financial assets

In accordance with Ind AS 109, the Group applies the expected credit loss model for evaluating impairment of financial assets other than those measured at fair value through profit and loss (FVTPL).

Expected credit losses (ECL) are measured through a loss allowance at an amount equal to:

• The twelve- months expected credit losses (expected credit losses that result from those default events on the financial instrument that are possible with twelve months after the reporting date); or

• Full lifetime expected credit losses (expected credit losses that result from all possible default events over the life of the financial instrument).

For trade receivables Group applies ‘simplified approach which requires expected lifetime losses to be recognised from initial recognition of the receivables. The Group uses historical default rates to determine impairment loss on the portfolio of trade receivables. At every reporting date these historical default rates are reviewed and changes in the forward-looking estimates are analysed.

For other assets, the Group uses twelve months ECL to provide for impairment loss where there is no significant increase in credit risk. If there is significant increase in credit risk full lifetime ECL is used.

II) Financial liabilities

i. Initial recognition and measurement

All financial liabilities are recognised initially at fair value and, in the case of loans, net of directly attributable transaction costs.

ii. Subsequent measurement

a) Financial liabilities at FVTPL

Financial liabilities at FVTPL include financial liabilities held for trading and financial liabilities designated upon initial recognition as FVTPL. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. Gains or losses on liabilities held for trading are recognised in the Statement of Profit and Loss.

Financial guarantee contracts issued by the Group are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the amount of loss allowance determined as per impairment requirements of Ind AS 109 and the amount recognised less cumulative amortisation. Amortisation is recognised as finance income in the Statement of Profit and Loss.

For trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short-term maturity of these instruments.

b) Financial liabilities at amortised cost

After initial recognition, interest-bearing loans are subsequently measured at amortised cost using the effective interest rate method.

Where the term of a financial liability is re-negotiated and the Group issues equity instruments to a creditor to extinguish all or part of the liability (debt for equity swap), a gain or loss is recognised in the Statement of Profit and Loss; measured as a difference between the carrying amount of the financial liability and the fair value of equity instrument issued.

III) Offsetting financial instruments

Financial assets and financial liabilities are offset, and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.

Change in Accounting Policies / Estimates

Other than as mentioned below, there has been no change in the accounting policies of the Company in the preceding three Financial Years, i.e., the years ended March 31, 2022, March 31, 2021, and March 31, 2020:

Sr. No.	Accounting Period	Change in Accounting Policy	Impact on the Reserves of the Companys Standalone and Consolidated Financial Statements
1.	Financial Year 2020	Adoption on Ind AS 116, Leases	The impact of adoption of the IND AS 116 on the Standalone and Consolidated Financial Statements of the Company is Rs. 0.03 million.

Key Components of our Statement of Profit and Loss Based on our Restated Financial Statement

The following descriptions set forth information with respect to the key components of our profit and loss statements.

Revenue

Revenue consists of revenue from operations and other income.

Revenue from operations. Revenue from operations comprises revenue from sale of services that we provide on our platforms.

Other income. Other income primarily comprises interest income on inter corporate deposits and lease deposits. The other income also includes non-operating income from net gain on investments carried on fair value through profit and loss, profit on sales of property, plant and equipment and sundry balance written back.

Expenses

Expenses consist of employee benefits expenses, depreciation and amortization expense, finance cost and other expenses such as expenses on sales promotion, website hosting and maintenance and gateway charges.

Employee benefits expenses. Employee benefits expenses comprise of salaries and wages, contribution to provident fund and other funds, gratuity and leave encashment expenses, employee share-based compensation expenses and staff welfare expenses.

Finance costs. Finance cost comprises of interest on statutory dues and interest on lease liabilities, which primarily consists of lease for office premises.

Depreciation and amortization expense. Depreciation relates to depreciation on property, plant and equipment and amortization of intangible assets.

Other expenses. Other expenses primarily comprise expenses relating to sales promotion expenses, gateway charges, website hosting and conveyance charges, software maintenance charges, legal and professional fees and CSR expenses.

Tax Expense

Tax expense consists of current tax expense and deferred tax benefits.

Non-GAAP measures

Certain non-GAAP measures like EBITDA, EBITDA margins, return on equity and return on capital employed ("Non-GAAP Measures") presented in this Draft Red Herring Prospectus are a supplemental measure of our performance and liquidity that are not required by, or presented in accordance with, Ind AS or Indian GAAP. Further, these Non-GAAP Measures are not a measurement of our financial performance or liquidity under Ind AS, Indian GAAP, or IFRS and should not be considered in isolation or construed as an alternative to cash flows, profit/ (loss) for the year/ period or any other measure of financial performance or as an indicator of our operating performance, liquidity, profitability or cash flows generated by operating, investing or financing activities derived in accordance with Ind AS or Indian GAAP.

In addition, these Non-GAAP Measures are not a standardized term, hence a direct comparison of similarly titled Non-GAAP Measures between companies may not be possible. Other companies may calculate the Non- GAAP Measures differently from us, limiting its usefulness as a comparative measure. Although the Non- GAAP Measures are not a measure of performance calculated in accordance with applicable accounting standards, our Companys management believes that it is useful to an investor in evaluating us because it is a widely used measure to evaluate a companys operating performance.

Our Results of Operations

The following table sets forth select financial data from our restated consolidated statement of profit and loss for Fiscals 2022, 2021 and 2020, the components of which are also expressed as a percentage of total revenue for such periods:

	2022		2021		2020
	(Rs. in million)	(% of Total Revenue)	(Rs. in million)	(% of Total Revenue)	(Rs. in million)	(% of Total Revenue)
Income:
Revenue from operations	1,372.27	99.71%	1,553.65	99.56%	1,316.45	99.61%
Other income	4.05	0.29%	6.86	0.44%	5.19	0.39%
Total Income	1,376.32		1,560.51		1,321.64
Expenses:
Employee benefits expenses	335.07	24.35%	234.19	15.01%	146.18	11.06%
Finance Costs	0.59	0.04%	2.24	0.14%	3.76	0.28%
Depreciation and amortization expense	80.99	5.88%	65.00	4.17%	31.41	2.38%
Other expenses	1,006.36	73.12%	1,043.82	66.89%	748.24	56.61%
Total expenses	1,423.01		1,345.25		929.59
(Loss) / Profit before exceptional item and tax	(46.69)		215.26		392.05
Exceptional item	0.11	0.00%	_-		6.99	0.53%
(Loss) / Profit before tax	(46.58)		215.26		399.04
Tax expense:
Current tax	5.45	0.40%	59.33	3.80%	104.62	7.92%
Deferred tax charge / (Benefit)	(8.04)	(0.58%)	(3.57)	(0.23%)	(4.07)	(0.31%)
(Loss) / Profit for the year	(43.99)		159.50		298.49
Non-Controlling Interest	_-		_-		(2.20)
(Loss) / Profit attributable to shareholders	(43.99)		159.50		300.69

Fiscal 2022 compared to Fiscal 2021

Our results of operations for Fiscal 2022 were particularly affected by the following factors:

• We experienced a reduction in revenue from operations and other income during Fiscal 2022 primarily on account (i) reduction in the number of first-time gamers and depositors across our platforms due to normalisation post easing of COVID-19 lockdown restrictions, (ii) more fund allocation towards the growth of Adda.games, which led to reduced acquisition spends on Adda52 and reduction in issuances of joining bonus.

• We incurred additional expenditure mainly due to increased employee benefit expenses and depreciation and amortisation expenses. This was mainly due to (i) an increase in the retention cost of our technology team which was attributable to an increase in competition for tech talent, (ii) an increase in spends towards product development, marketing, acquisition and talent augmentation, and (iii) expansion of Adda.games and amortization of intangible assets created during the year.

Total Income

Our total income decreased by 11.80% to Rs. 1,376.32 million for Fiscal 2022, from Rs. 1,560.51 million in Fiscal 2021, primarily as a result of post-COVID-19 normalization and reduction in acquisition spends on Adda52. In Fiscal 2022, due to easing of COVID-19 lockdown restrictions, our platforms witnessed a reduction in the number of first-time gamers and depositors, which led to a decrease in our total income.

Revenue from Operations: Our revenue from operations decreased by 11.67% to Rs. 1,372.27 million for Fiscal 2022, from Rs. 1,553.65 million for Fiscal 2021, as a result of post-COVID-19 normalization. In Fiscal 2022, due to easing of COVID-19 lockdown restrictions, our platforms witnessed a reduction in the number of first-time gamers and depositors, which led to a decrease in our revenue from operations.

Other income: Our other income decreased by 40.96% to Rs. 4.05 million for Fiscal 2022 from Rs. 6.86 million for Fiscal 2021. This was primarily on account of a decrease in the net gain on our investments carried at fair value.

Expenses

Our total expenses increased by 5.78% to Rs. 1,423.01 million for Fiscal 2022, from Rs. 1,345.25 million for Fiscal 2021, primarily due to (a) an increase in our employee benefit expenses, and (b) an increase in the depreciation and amortization of assets on account of the capitalization of the remuneration of the technology team.

Employee benefit expenses: Employee benefit expenses incurred in Fiscal 2022 increased by 43.08% to Rs. 335.07 million for Fiscal 2022, from Rs. 234.19 million in Fiscal 2021. This was primarily on account of hiring additional human resources for Adda.games, augmentation of our leadership team and due to the increase in the retention cost of our technology team.

Finance costs: Our finance costs decreased by 73.66% to Rs. 0.59 million in Fiscal 2022 from Rs. 2.24 million for Fiscal 2021, primarily as a result of the termination of the lease for our Bangalore office in January 2021 that resulted in reduction in lease liabilities due to discount on lease rentals from January 2021 to March 2022.

Depreciation and amortization expense: Our depreciation and amortization expenses increased by 24.60% to Rs. 80.99 million for Fiscal 2022 from Rs. 65.00 million for Fiscal 2021. This was primarily due to the increase in the capitalization of the remuneration of the technology team, which further resulted in the increase in the amortization expenses of intangible assets during the year.

Other expenses: Our other expenses decreased by 3.59% to Rs. 1,006.36 million for Fiscal 2022, from Rs. 1,043.82 million for Fiscal 2021, primarily on account of lower spends on sales promotion expenses and reduction in acquisition spends on Adda52 and reduction in issuance of joining bonus to our new gamers.

Total tax expenses: Our total tax expenses decreased to Rs. (2.59) million for Fiscal 2022 from Rs. 55.76 million for Fiscal 2021, as a result of the loss incurred by us during Fiscal 2022.

Profit/Loss after tax: Our Company incurred a loss of Rs. 43.99 million for Fiscal 2022 as compared to a profit after tax of Rs. 159.50 million for Fiscal 2021, as a result of reduction in revenue from operations due to post - COVID-19 normalization and increase in expenditure due to increased employee benefit expenses and, depreciation and amortisation expenses in Fiscal 2022.

Fiscal 2021 compared to Fiscal 2020

Our results of operations for Fiscal 2021 were particularly affected by the following factors:

• We experienced an increase in revenue from operations and other income primarily on account of increase in number of gamers and depositors, coupled with higher number of games played by the existing and first-time gamers and increase in registration of first-time gamers as a result of campaigns on television and OTT platforms during the COVID-19 induced lockdowns and restrictions.

• We incurred additional expenditure mainly due to increased employee benefit expenses and depreciation and amortisation expenses. This was mainly due to increase in the ESOP cost as well as augmentation of our leadership team resulting in an increase in employee benefits and increase in capitalization of our technology teams remuneration into intangible assets, which further resulted in an increase in amortisation of intangible assets.

Total Income

Our total income increased by 18.07% to Rs. 1,560.51 million for Fiscal 2021 from Rs. 1,321.64 million for Fiscal 2020, primarily due to increase in number of gamers and depositors, coupled with higher number of games played by the existing and first-time gamers and increase in registration of first-time gamers during the COVID- induced lockdowns and restrictions.

Revenue from Operations: Our revenue from operations increased by 18.02% to Rs. 1,553.65 million for Fiscal 2021 from Rs. 1,316.45 million for Fiscal 2020, primarily due to increase in number of gamers and depositors, coupled with higher number of games played by the existing and first-time gamers and increase in registration of first-time gamers during the COVID-induced lockdowns and restrictions.

Other income: Our other income increased by 32.18% to Rs. 6.86 million for Fiscal 2021 from Rs. 5.19 million for Fiscal 2020, primarily on account of writing back of sundry balances.

Expenses

Our total expenses increased by 44.71% to Rs. 1,345.25 million for Fiscal 2021, from Rs. 929.59 million for Fiscal 2020, primarily due to augmenting our leadership team by hiring the CPO, CRO and CTO, increase in the ESOP cost, increase in the retention cost of our technology team and an increase in our sales promotion expenses.

Employee benefit expenses: Our employee benefit expenses increased by 60.21% to Rs. 234.19 million for Fiscal 2021 from Rs. 146.18 million for Fiscal 2020, primarily due to an increase in hiring and retaining talent in the field of technology, and due to the increase in ESOP costs.

Finance costs: Our finance cost decreased by 40.43% to Rs. 2.24 million in Fiscal 2021 from Rs. 3.76 million for Fiscal 2020, primarily as a result of decrease in the interest amount payable by us on the statutory dues (attributable to a shorter delay in payment of tax deducted at source and income tax in Fiscal 2021, as opposed to Fiscal 2020 and, therefore, lower interest on tax deducted at source and income tax).

Depreciation and amortization expense: Our depreciation and amortization expenses increased by 106.94% to Rs. 65.00 million for Fiscal 2021 from Rs. 31.41 million for Fiscal 2020, mainly on account of increase in the capitalization of the remuneration of the technology team, which led to an increase in depreciation and amortization expenses.

Other expenses: Our other expenses increased by 39.50% to t 1,043.82 million for Fiscal 2021 from t 748.24 million for Fiscal 2020, primarily on account of an increase in promotional expenses to acquire, retain and reengage our gamers.

Total tax expenses: Our total tax expenses decreased by 44.55% to t 55.76 million for Fiscal 2021 from t 100.55 million for Fiscal 2020, as a result of a reduction in profit before tax for Fiscal 2021.

Profit after tax. As a result of the increased employee benefit expenses, increase in promotional expenses to acquire, retain and re-engage our gamers, and depreciation and amortization of the expenses, our profit after tax reduced to t159.50 million for Fiscal 2021, from a profit after tax of t 298.49 million in Fiscal 2020.

Liquidity and Capital Resources

Historically, our primary liquidity requirements have been to finance our capital expenditure and working capital needs for our operations We have met these requirements through cash flows from operations and borrowings. As of March 31, 2022, we had t 247.97 million in cash and cash equivalents (includes the wallet balances of the gamers) and t 4.24 million in other bank balances other than cash and cash equivalents. We believe that, after taking into account the expected cash to be generated from operations, we will have sufficient liquidity for our present and anticipated requirements for capital expenditure and working capital for the next 12 months

Cash Flows

The following table sets forth our cash flows for the periods indicated:

(Rs.in million)

		Fiscal
	2022	2021	2020
Net cash generated from / (used in) operating activities	48.74	241.26	433.31
Net cash generated / (used in) investing activities	148.36	3.63	(483.41)
Net cash generated / (used in) financing activities	(211.67)	(273.16)	136.08
Cash and Cash Equivalents at the end of the year / period	247.97	262.64	290.91

Operating Activities

Net cash generated from operating activities was t 48.74 million for Fiscal 2022. Our loss before tax for Fiscal 2022, aggregating to t 46.58 million, was adjusted primarily for depreciation and amortization expenses of t 80.99 million and ESOP costs of t 59.01 million. Operating profit before working capital changes was t 89.85 million in Fiscal 2022. Our changes in working capital primarily consisted of adjustments in other current liabilities, other financial liabilities and other financial assets. Our cash generated from operations in Fiscal 2022 amounted to t 68.59 million, adjusted by payment of taxes of t 19.85 million.

Net cash from operating activities was t 241.26 million for Fiscal 2021. Our net profit before tax for Fiscal 2021, aggregating to t 215.26 million, was adjusted primarily for depreciation and amortization expenses of t 65.00 million, ESOP costs of t 49.54 million and other non-cash expenses. Operating profit before working capital changes was t 329.43 million in Fiscal 2021. Our changes in working capital primarily consisted of adjustments in other current assets and other financial assets. Our cash generated from operations amounted to t 315.43 million, adjusted by payment of taxes of t 74.17 million.

Net cash from operating activities was t 433.31 million for Fiscal 2020. Our net profit before tax for Fiscal 2020, aggregating to t 399.04 million, was adjusted primarily for depreciation and amortization expenses of t 31.41 million and other non-cash expenses. Operating profit before working capital changes was t 422.06 million in Fiscal 2020. Our changes in working capital primarily consisted of adjustments in other financial liabilities and trade payable, and our cash generated from operations was t 522.19 million, adjusted by payment of taxes of t 88.88 million.

Investing Activities

Net cash flows generated from investing activities was Rs. 148.36 million for Fiscal 2022, primarily comprising sales of investments in Halaplay Technologies Private Limited which was partially offset by purchase of property, plant and equipment.

Net cash flows generated from investing activities was Rs. 3.63 million for Fiscal 2021, primarily comprising sales of current investments, which was partially offset by purchase of plant, property and equipment, and addition of intangible assets, which, in terms of IndAS, included capitalization of the remuneration of our technology team, which worked on development of our proprietary technology.

Net cash flows used in investing activities was Rs. 483.41 million for Fiscal 2020, primarily comprising purchase of investments, plant, property and equipment, and addition of intangible assets, which, in terms of IndAS, included capitalization of the remuneration of our technology team, which worked on development of our proprietary technology.

Financing Activities

Net cash flows used in financing activities was Rs. 211.67 million for Fiscal 2022, primarily comprising repayment of a loan availed from our Promoter, and issue of Equity Shares pursuant to a rights issue.

Net cash flows used in financing activities was Rs. 273.16 million for Fiscal 2021, primarily comprising repayment of inter-corporate borrowings availed from our Promoter.

Net cash flows generated from financing activities was Rs. 136.08 million for Fiscal 2020, primarily comprising inter-corporate borrowings availed from our Promoter, which was partially offset by dividend payment to the shareholders of our Company.

Indebtedness

As of March 31, 2022, our Company does not have any indebtedness.

Contractual Obligations and Commitments

As of March 31, 2022, our Company has not contractual obligations and commitments.

Contingent Liabilities

The following table sets forth certain information relating to our contingent liabilities which have not been provided for, as of March 31, 2022, as per IND AS-37 issued by the ICAI:

Particulars	Amount (Rs. in million)
Claims against the companys disputed liabilities not acknowledged as debt - Income tax	1.69
Total	1.69

For details, see "Financial Information" on page 201.

Credit Ratings

As of the date of this Draft Red Herring Prospectus, our Company has not received any credit ratings.

Related Party Transactions

We have engaged in the past, and may engage in the future, in transactions with related parties. For details of our related party transactions, see "Related Party Transactions on page 256.

Quantitative and Qualitative Disclosures about Market Risk

We are exposed to various types of market risks during the normal course of business such as credit risk and other price risks.

a) Credit Risk

Credit risk arises from the possibility that the counter party may not be able to settle their obligations as agreed. To manage this, the Group periodically assesses financial reliability of customers and other counter parties, taking into account the financial condition, current economic trends, and analysis of historical bad debts and ageing of financial assets. Individual risk limits are set and periodically reviewed on the basis of such information.

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

i) Actual or expected significant adverse changes in business,

ii) Actual or expected significant changes in the operating results of the counterparty,

iii) Financial or economic conditions that are expected to cause a significant change to the counterpartys ability to meet its obligations,

iv) The Group does not have significant exposure to the credit risk as there are no trade receivables at the year end because of its business model.

b) Other Price Risks

The Group is exposed to price risk arising from mutual fund Investments. Certain of the Groups mutual fund investments are held for strategic rather than trading purposes.

Mutual Fund Price Sensitivity analysis:

The sensitivity analysis below have been determined based on the exposure to mutual fund price risks at the end of the reporting period.

				(Rs. in millions)
Particulars	Investment Amount measured at FVTPL	Change in mutual fund Price	Impact on profit before tax for the year Increase by 5%	Impact on profit before tax for the year decrease by 5%
As at March 31, 2022	_-	_-	_-	-
As at March 31, 2021	-	-	-	-
As at March 31, 2020	112.92	0.01	5.65	(565

c) Capital Risk Management

The Group manages its capital to ensure that it will be able to continue as going concern while maximising the return to the stakeholders. The capital structure of the Group consists of cash and cash equivalents and total equity of the Group.

			(Rs. in millions)
Particulars	31 March, 2022	31 March, 2021	31 March, 2020
Total Equity	97.52	5.99	(223.41)
Borrowings	-	294.65	559.50
Total Debt	-	294.65	559.50
Cash and cash equivalents	247.97	262.64	290.91
Net Debt	(247.97)	32.01	(268.59)

Unhedged Foreign currency (FC) exposure:

The Group does not have significant exposure to the risk of change in foreign currency as the Group is not having any receivable and payable in foreign currency.

Liquidity Risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due and to close out market positions. Management monitors rolling forecasts of the Groups liquidity position.

			(Rs. in millions)
Maturities of Financial Liabilities		March 31, 2022
	Up to 1 year	1 to 5 years	5 years & above
Trade Payables	2.26	_-	_-
Lease Liability	-	-	-
Borrowings	-	-	-
Other Financial Liabilities	350.12	-	-
Total	352.38	_-	_-
			(Rs. in millions)
Maturities of Financial Liabilities		March 31, 2021
	Up to 1 year	1 to 3 years	5 years & above
Trade Payables	6.50	-	-
Lease Liability	7.34	_-	_-
Borrowings	294.65	_-	_-
Other Financial Liabilities	307.65	-	-
Total	616.14	-	-
			(Rs. in millions)
Maturities of Financial Liabilities		March 31, 2020
	Up to 1 year	1 to 3 years	5 years & above
Trade Payables	1.67	-	_-
Lease Liability	6.52	7.26	-
Borrowings	559.50	-	-
Other Financial Liabilities	315.50	-	-
Total	883.19	7.26	-

Unusual or Infrequent Events or Transactions

Except as described in this Draft Red Herring Prospectus, to our knowledge, there have been no unusual or infrequent events or transactions that have in the past or may in the future affect our business operations or future financial performance.

There have been no other events or transactions that, to our knowledge, that may be described as "unusual" or "infrequent.

Significant Economic Changes that Materially affect or are likely to affect Income from Continuing Operations

Our business has been subject, and we expect it to continue to be subject, to significant economic changes that materially affect or are likely to affect our income from continuing operations identified above in "- Significant Factors Affecting our Results of Operations" and the uncertainties described in "Risk Factors" on pages 259 and 30, respectively.

Known Trends or Uncertainties

Our business has been subject, and we expect it to continue to be subject, to significant economic changes arising from the trends identified above in "Significant Factors affecting our Results of Operations and the uncertainties described in "Risk Factors" on pages 259 and 30, respectively. To our knowledge, except as discussed in this Draft Red Herring Prospectus, there are no known trends or uncertainties that have or had or are expected to have a material adverse impact on revenues or income of our Company from continuing operations.

Future Relationship between Cost and Revenue

Other than as described in "Risk Factors", "Our Business" and "Managements Discussion and Analysis of Financial Condition and Results of Operations" on pages 30, 135 and 257 respectively, to our knowledge there are no known factors that may adversely affect our business prospects, results of operations and financial condition.

New Products or Business Segments

Other than as disclosed in this section and in "Our Business" on page 135, we have not announced and do not expect to announce in the near future any new business segments.

Seasonality of Business

Our business is not seasonal in nature.

Suppliers or Gamer Concentration

We do not have any concentration of suppliers or gamers in our business.

Competitive Conditions

We operate in a competitive environment. Please see "Our Business", "Industry Overview and "Risk Factors" on pages 135, 110 and 30, respectively for further information on our industry and competition.

Recent Accounting Pronouncements

As of the date of this Draft Red Herring Prospectus, there are no recent accounting pronouncements which would have a material effect on our financial condition or results of operations.

Summary of reservations or qualifications or adverse remarks of auditors

Except as disclosed below, there are no reservations, qualifications or adverse remarks highlighted by the previous and current Statutory Auditors in their reports to our financial statements as at and for the year ended March 31, 2022:

Fiscal 2022

Clauses (vii)(a) and (xvii) of CARO 2016 Order:

"(vii)(a) In our opinion and according to the information and explanations given to us, undisputed statutory dues including goods and services tax, provident fund, employees state insurance, income-tax, sales-tax, service tax, duty of customs, duty of excise, value added tax, cess and other material statutory dues, as applicable, have generally been regularly deposited with the appropriate authorities by the Company, though there have been slight delays in a few cases. Further, no undisputed amounts payable in respect thereof were outstanding at the year-end for a period of more than six months from the date they became payable. "

"(xvii) The Company has incurred cash losses amounting to Rs. 4,772.48 lakhs in the current financial year but had not incurred cash losses in the immediately preceding financial year"

Fiscal 2021

Clause (vii)(a) of CARO 2016 Order:

"(vii)(a) Undisputed statutory dues including provident fund, employees state insurance, income-tax, sales-tax, service tax, duty of customs, duty of excise, value added tax, goods and service tax, cess and other material statutory dues, as applicable, have generally been regularly deposited to the appropriate authorities, though there has been slight delay in a few cases."

Fiscal 2020

Clause (vii)(a) of CARO 2016 Order:

"(vii)(a) Undisputed statutory dues including provident fund, employees state insurance, sales-tax, service tax, duty of customs, duty of excise, value added tax, goods and service tax ("GST"), cess and other material statutory dues, as applicable, have generally been regularly deposited to the appropriate authorities, though in case of equalization levy and income-tax there have been significant delays in a large number of cases."

Emphasis of matter:

"Without modifying our opinion, we draw attention to Note 1(a) to the accompanying Special Purpose Consolidated Financial Statements, which describes the basis of its preparation. The Special Purpose Consolidated Financial Statements have been prepared by the Holding Companys management solely for the preparation of the restated consolidated financial information for the year ended 31 March 2020 for its inclusion in the Draft Red Herring Prospectus (‘DRHP) which is to be filed by the Holding Company with Securities and Exchange Board of India, National Stock Exchange of India Limited and BSE Limited as per the requirements of Section 26 of Part I of Chapter III of the Act, read with the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirement) Regulations, 2018, in connection with the proposed Initial Public Offering (‘IPO) of equity shares of the Holding Company. Therefore, these Special Purpose Consolidated Financial Statements may not be suitable for any other purpose. Our report is issued solely for the aforementioned purpose and accordingly, should not be used, referred to or distributed for any other purpose or to any other party without our prior written consent. Further, we do not accept or assume any liability or any duty of care for any other purpose for which or to any other person to whom this report is shown or into whose hands it may come without our prior consent in writing""

For details, see "Restated Financial Statements"" on page 201.

Significant developments subsequent to March 31, 2022

There are no significant developments after March 31, 2022, that may affect our results of operations.

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