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Indegene Ltd Management Discussions

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You should read the following discussion in conjunction with our Restated Consolidated Financial Information included herein as of and for the nine months ended December 31, 2023 and 2022 and the Financial Years 2023, 2022 and 2021, including the related notes, schedules and annexures on page 207. Our Restated Consolidated Financial Information has been prepared in accordance with Ind AS, Section 26 of the Companies Act, the SEBI ICDR Regulations and the Guidance Note. Ind AS differs in certain material respects from IFRS and US GAAP. See "Risk Factors External Risk Factors Risks relating to investments in an Indian company Significant differences exist between Ind AS, which is used to prepare our financial information, and other accounting principles, such as U.S. GAAP and IFRS, which may be material to investors assessments of our financial condition" on page 53.

We have included various operational and financial performance indicators in this Red Herring Prospectus, many of which may not be derived from our Restated Consolidated Financial Information or otherwise be subject to an examination, audit or review by our auditors or any other expert. The manner in which such operational and financial performance indicators are calculated and presented, and the assumptions and estimates used in such calculations, may vary from that used by other companies in India and other jurisdictions. Investors are accordingly cautioned against placing undue reliance on such information in making an investment decision and should consult their own advisors and evaluate such information in the context of the Restated Consolidated Financial Information and other information relating to our business and operations included in this Red Herring Prospectus.

The industry-related information contained in this section is derived from the Industry Report dated March 20, 2024

(collectively, the "Everest Report") prepared and released by Everest Business Advisory India Private Limited, which has been exclusively commissioned and paid for by our Company in connection with the Offer pursuant to an engagement letter dated August 10, 2022, as supplemented by a letter dated February 19, 2024. A copy of the Everest Report will be made available on the website of our Company at www.indegene.com/investor-relations from the date of filing of this Red Herring Prospectus until the Bid/Offer Closing Date. Unless otherwise indicated, all financial, operational, industry and other related information derived from the Everest Report and included herein with respect to any particular year, refers to such information for the relevant Financial Year. The information included in this section includes excerpts from the Everest Report and may have been re-ordered by us for the purposes of presentation.

Our Financial Year commences on April 1 and ends on March 31 of the subsequent year, and references to a particular Financial Year are to the 12 months ended March 31 of that year. Unless otherwise stated, or the context otherwise requires, the financial information used in this section is derived from our "Restated Consolidated Financial Information" on page

207.

This discussion contains forward-looking statements that involve risks and uncertainties and reflects our current view with respect to future events and financial performance. Actual results may differ from those anticipated in these forward-looking statements as a result of factors such as those set forth under "Forward-looking Statements" and "Risk Factors" on pages

23 and 25, respectively.

Overview

We provide digital-led commercialization services for the life sciences industry, including biopharmaceutical, emerging biotech and medical devices companies, that assist them with drug development and clinical trials, regulatory submissions, pharmacovigilance and complaints management, and the sales and marketing of their products. Our solutions enable life sciences companies to develop products, launch them in the market, and drive sales through their life cycle in a more effective, efficient and modern manner. We achieve this by combining over two decades of healthcare domain expertise and fit-for-purpose technology. Our portfolio of solutions cover all aspects of commercial, medical, regulatory and R&D operations of life sciences companies.

We have established client relationships with each of the 20 largest biopharmaceutical companies in the world by revenue for the Financial Year 2023 (Source: Everest Report), having earned more than 69.00% of our total revenue from operations for each of the nine months ended December 31, 2023 and 2022 and the Financial Years 2023, 2022 and 2021 from these 20 customers. As of December 31, 2023, we had a total of 65 active clients (i.e., clients from whom we earned US$0.25 million or more in revenues during the 12 months preceding the relevant date). We had 27 clients from whom we earned between US$1 million and US$10 million in revenues, five clients from whom we earned between US$10 million and US$25 million in revenues, and three clients from whom we earned more than US$25 million in revenues, during the 12 months ended December 31, 2023.

Life sciences enterprises require a talent pool with in-depth domain expertise on the journey of a drug from the research lab to the market to organize and analyze scientific and clinical data, navigate the regulatory landscape and the ethical guidelines within which the industry operates, and to develop the requisite medical content for healthcare professionals, patients, and payers (Source: Everest Report). Despite these evolving needs, life sciences enterprises continue to struggle from a lack of a qualified in-house talent pool (Source: Everest Report). At the same time, drug pricing caps create margin pressures on biopharmaceutical companies, thus risking the overall profitability of the industry and consequently, operations spend (Source: Everest Report). Such margin pressures have been further compounded by the loss of exclusivity of drugs due to patent cliffs, leading to loss of revenue in high value drugs (Source: Everest Report). While there are such talent gaps and margin pressures, life sciences companies are placing greater emphasis on digital innovation and enterprise-wide transformation initiatives to improve operational efficiencies (Source: Everest Report). The growing maturity of technology tools is also leading to requirements of domain-centric digital expertise (Source: Everest Report). Life sciences companies are embracing technological partners with the requisite domain expertise to aid them in this digital journey (Source: Everest Report), and this is where our role lies.

Positioned at the intersection of healthcare and technology, our solutions span across different stages of the commercialization lifecycle of drugs and medical devices. Our Enterprise Commercial Solutions and our Omnichannel Activation solutions cater to the commercial functions of life sciences companies while our Enterprise Medical Solutions and Enterprise Clinical Solutions cater to their medical and R&D functions. Set forth below is a description of our solutions:

Enterprise Commercial Solutions. Our Enterprise Commercial Solutions primarily involve assisting life sciences companies with their digital marketing operations. Sales and marketing was the largest segment of life sciences operations expenditure in 2022 (Source: Everest Report). Service providers in this segment assist life sciences companies by creating customized marketing plans and campaigns, expanding their reach to HCPs, and providing insights on HCP preferences (Source: Everest Report). Through our Enterprise Commercial Solutions, we help life sciences companies drive scale efficiency as well as technology and analytics enabled personalization of their engagement strategies for HCPs and patients, and operations. Across products and geographies, we help our clients consolidate the widely fragmented activities involved in the development of promotional and educational content, as well as the design and execution of marketing campaigns directed at HCPs, i.e., physicians, and patients using digital communication channels such as websites, emails, and social media. We also provide digital asset management, marketing automation, customer data management and analytics solutions to measure the effectiveness of marketing campaigns. Our Enterprise Commercial Solutions leverage our proprietary NLP and Gen AI based tools and platforms for achieving reduction in dependence on manpower, efficiency and driving regulatory compliance. See "Our Business

Description of Our Business Technology and Data" on page 158.

Omnichannel Activation. Our Omnichannel Activation solutions help life sciences companies leverage a "digital first" approach for optimizing the last-mile promotion of biopharmaceutical products and medical devices to HCPs across multiple channels. Here, we play the role that has traditionally been played by medical representatives who promote products to HCPs through face-to-face interactions. However, using digital technologies and proprietary analytics, we seek to achieve the same outcome at higher efficiencies and reduced costs. The channels we use include emails, virtual sales representatives, social media and other digital platforms. This ability to provide ‘Digital Rep Equivalence is delivered through our NEXT HCP Journey Optimization platform, which assists with customer segmentation and channel optimization activities, and also helps our clients deploy medical representatives more effectively. See "Our Business Description of Our Business Technology and Data" on page 158. Further, through our subsidiary, Cult Health, we help life sciences companies with marketing strategies, creative design, and producing marketing content for deployment across channels.

Enterprise Medical Solutions. Under our Enterprise Medical Solutions, we establish CoEs to consolidate large scale regulatory and medical operations for our clients. See "Our Business Description of Our Business Delivery Models" on page 156. CoEs comprise multidisciplinary teams that work on one or more client engagements. Through these CoEs, we assist with: (i) writing medical content, regulatory submissions, product labels and other medical information; (ii) reviewing medical communications to ensure compliance with regulatory guidelines and ethical practices; (iii) pharmacovigilance services, i.e., the monitoring and processing of adverse occurrences arising from the use of biopharmaceutical products; and (iv) conducting RWE based medical research to support market access and pricing strategies. Our Enterprise Medical Solutions are offered through our proprietary NLP-based and Gen AI-based tools that are customized to handle medical information. Our tools help us improve the quality of medical content, ensure regulatory compliance of medical content, and achieve headcount-independent scalability. See "Our Business Description of Our Business Technology and Data" on page 158.

Others. We also offer Enterprise Clinical Solutions and consultancy services. Our Enterprise Clinical Solutions help drive efficiencies in the drug discovery and clinical trial operations of life sciences companies. These solutions include digitally-enabled patient recruitment for clinical trials, clinical data management and assistance with regulatory submissions. We leverage RWD to help identify the right sites for clinical trials, relevant patient cohorts to recruit and thereby fast track site selection and patient recruitment. We also bring in our expertise in data management and analytics in helping biopharmaceutical companies seamlessly handle and analyze multiple sources of data during clinical trials and build a case for regulatory approvals. We provide consultancy services through our subsidiary, DT Associates

Limited, under the "DT Consulting" brand. Under our consultancy business, we help life sciences companies take charge of their digital transformation efforts for continued customer experience success.

Given the breadth of our solutions, we believe that we are well positioned to benefit from the expected growth in life sciences operations expenditure, which was estimated at 12.0 trillion (US$156 billion) in 2022 and is expected to grow at a CAGR of 6.5% to reach 15.5 trillion (US$201 billion) in 2026. Sales and marketing was the largest segment of life sciences operations expenditure, contributing 4.2 trillion (US$55 billion) or 35% of overall life sciences operations expenditure, but with a low outsourcing penetration rate of 7 12%. However, outsourcing expenditure in this segment is projected to grow at a CAGR of approximately 14.5% between 2022 and 2026, representing room for growth (Source: Everest Report). We have already penetrated this segment through our Enterprise Commercial Solutions and derived 13,568.89 million or 58.84% of our revenue from operations for the Financial Year 2023 from this segment. The regulatory and medical affairs segment and the pharmacovigilance segment together accounted for 3.5 trillion (US$45 billion) or 29% of overall life sciences operations expenditure (Source: Everest Report). We cater to this segment through our Enterprise Medical Solutions and derived

5,602.27 million or 24.29% of our revenue from operations for the Financial Year 2023 from this segment.

As of December 31, 2023, we had 65 active clients. We deliver solutions to them from our operation hubs located across North America, Europe and Asia. We have internally developed AI and ML based proprietary platforms, which allow us to offer our solutions across the globe at scale. Our delivery model allows us to operate where our clients are located. As of December 31, 2023, we had 5,181 full-time employees across 10 countries, of which 4,510 employees were delivery employees (i.e., employees who do not belong to corporate and support functions). As of December 31, 2023, 20.49% of our delivery employees had healthcare-related educational backgrounds.

Our technological expertise primarily involves converting unstructured clinical data and information into structured content and analytics-ready data sets. Using such data sets, we are able to create scientific, medical and promotional content, accelerate patient recruitment for clinical trials, and deliver personalized omnichannel experiences to physicians and patients. See "Our Business Description of Our Business Technology and Data" on page 158. Our domain expertise in the life sciences industry and our technical capabilities have enabled us to deploy AI-powered solutions across the life sciences commercialization continuum. We have embedded a range of proprietary tools and platforms across each of the solutions we offer. Using these tools and platforms, we seek to improve cost efficiency, speed to market, regulatory compliance and product quality at scale in a manner that requires less manpower and human intervention. Further, we have developed our tools and platforms to be integrated with well-established third-party technology platforms that are used in the life sciences industry.

Several of our Key Managerial Personnel and Senior Management Personnel have several years of experience in the healthcare domain, which has helped us develop a deep understanding of the sector and enabled us to work closely with our clients to develop customized solutions.

The following table sets forth a breakdown of our revenue from operations by each category of solutions for the periods indicated.

For the nine months ended December 31, For the Financial Year CAGR (Between the Financial Years)
2023 2022 2023 2022 2021 2021 2023)(1
Revenue from Enterprise Commercial Solutions 11,360.31 9,860.06 13,568.89 10,161.57 5,645.75 55.03%
Revenue from Omnichannel Activation 2,312.08 1,911.91 2,826.84 1,414.15 787.38 89.48%
Revenue from Enterprise Medical Solutions 4,405.68 4,216.02 5,602.27 4,315.59 3,050.08 35.53%
Revenue from others 1,088.04 750.86 1,063.33 754.78 179.53 143.37%
Total revenue from operations(2) 19,166.11 16,738.85 23,061.33 16,646.09 9,662.74 54.49%

Notes:

(1) Represents the Compound Annual Growth Rate ("CAGR") for the relevant data between the Financial Years 2021 and 2023. CAGR (as a percentage) is calculated by dividing the end year value by the base year value, raising the result to an exponent of one divided by the number of years between the base year and end year, and subtracting 1 from the subsequent result. (2) Revenue from operations excludes revenue from discontinued operations.

Key Performance Indicators

The following table sets forth certain of our key performance indicators for the periods indicated.

As of and for the nine months ended December 31, As of and for the Financial Year
2023 2022 2023 2022 2021
Total number of active clients (number)(1) 65 62 62 46 44
Revenue from operations(2) 19,166.11 16,738.85 23,061.33 16,646.09 9,662.74
Revenue from operations(2) (3) (US$ in million) 231.78 210.38 287.45 223.81 130.54
YoY revenue growth from operations(4) (%) 14.50% N.A. 38.54% 72.27% N.A.

 

As of and for the nine months ended December 31, As of and for the Financial Year
2023 2022 2023 2022 2021
Restated profit from continuing operations after tax 2,419.02 2,172.79 2,660.99 1,628.18 1,856.82
Profit margin(5) (%) 12.62% 12.98% 11.54% 9.78% 19.22%
EBITDA(6) 4,198.51 3,435.42 4,541.89 2,659.10 2,639.65
Adjusted EBITDA(7) 4,198.51 3,435.42 4,541.89 3,128.09 2,611.76
Adjusted EBITDA Margin(7) (%) 21.91% 20.52% 19.69% 18.79% 27.03%

Notes:

(1) Active clients are clients from whom we have earned $0.25 million or more in revenues for the last twelve months preceding the relevant date. (2) Revenue from operations excludes revenue from discontinued operations for the period ended December 31, 2023: Nil, December 31, 2022: Nil, Year ended March 31, 2023: Nil, Year ended March 31, 2022: Nil and Year ended March 31, 2021: 125.74 million. (3) Based on the average exchange rate of 82.69 per USD as of December 31, 2023, 79.57 per USD as of December 31, 2022, 80.23 per USD as of March 31, 2023, 74.37 per USD as of March 31, 2022 and 74.02 per USD as of March 31, 2021, respectively. (4) YoY revenue growth from operations is based on INR revenue. (5) Profit margin represents restated profit from continuing operations after tax as a percentage of revenue from continuing operations. (6) Earnings before interest, taxes, depreciation and amortisation ("EBITDA") represents restated profit/(loss) from continuing operations for the period/year plus income tax expense, finance costs and depreciation and amortisation expense. For a detailed calculation of EBITDA, see "Other Financial Information Reconciliation of Non-GAAP Measures" on page 296. (7) Adjusted EBITDA is calculated by adjusting exceptional items and Share of (loss)/profit in an associate to EBITDA. Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA to Revenue from Continuing Operations. For a detailed calculation of Adjusted EBITDA and Adjusted EBITDA Margin, see "Other Financial Information Reconciliation of Non-GAAP Measures" on page 296.

Significant Factors Affecting our Results of Operations

Our results of operations and financial condition are affected by a number of important factors including:

Trends in the life sciences industry affecting demand for our solutions

All of our revenues are earned from clients in the life sciences industry, a significant portion of which is attributable to clients in the biopharmaceutical industry. Consequently, demand for our solutions and, in turn, our revenues, depend on the growth of the overall life sciences industry as well as trends in the life sciences industry, including outsourcing trends, healthcare reform and the pace of digitization.

The life sciences industry primarily comprises biopharmaceutical companies and medical devices companies, whose combined sales were estimated at 138.3 trillion (US$1.8 trillion) in 2023, with biopharmaceutical companies contributing to 69% or 95.4 trillion (US$1.2 trillion) of such sales (Source: Everest Report). Combined sales of biopharmaceutical companies and medical devices companies are estimated to reach 163.5 trillion (US$2.1 trillion) by 2026, with biopharmaceutical companies contributing to approximately 69% or 113.0 trillion (US$1.4 trillion) of such sales (Source: Everest Report). Our clients revenues and their projections of future revenues impact their R&D expenditures and investments in commercialization, which in turn affects demand for our services. Accordingly, economic factors and industry trends that affect life sciences companies affect our business. Life sciences companies are also affected by macroeconomic trends such as economic recession and inflation rates. For the life sciences industry, while the end consumption of drugs and medical devices has remained inelastic, certain cost pressures on companies have nudged them to adopt cost effective digital-enabled solutions (Source: Everest Report).

We are also affected by trends that affect the life sciences industry, including outsourcing trends, healthcare reform and the pace of digitization:

Outsourcing trends. Outsourcing trends in the life sciences industry are driven by various factors including: (i) deficit of in-house talent and domain expertise in life sciences; (ii) ability of outsourcing service providers to optimize regulatory and medical affairs operations by effectively navigating the regulatory landscape and enabling timely approvals; (iii) in-house digital challenges and proliferation of data; (iv) rising SG&A and R&D expenses; and (v) increase in the number and complexity of clinical trials (Source: Everest Report). Changes to outsourcing trends, such as internalization of operations or a shift to captive centers, especially for sales and marketing operations, may result in one or more of our clients reducing their engagements with us.

Healthcare reform. Various government bodies are considering or have adopted healthcare reforms and may undertake, or are in the process of undertaking, efforts to control growing healthcare costs through legislation and regulation. We are uncertain as to the effects of these recent reforms on our business and are unable to predict what legislative proposals, if any, will be adopted in the future. If regulatory cost containment efforts limit the profitability of new drugs, our clients may reduce their research and development spending or promotional, marketing and sales expenditures, which could reduce the business they outsource to us. Similarly, if regulatory requirements are relaxed or simplified drug approval procedures are adopted, the demand for our solutions could decrease.

Pace of digitization. The life sciences industry has been historically slow in the adoption of technology compared to other industries. However, over the past few years, life sciences companies are placing higher emphasis on digital innovation and enterprise-wide transformation initiatives to improve operational efficiencies (Source: Everest Report).

Accordingly, economic factors and industry trends that affect life sciences and medical companies affect demand for our solutions.

Ability to retain and increase wallet share of existing clients and establish new client relationships

Our revenues and continued growth are highly dependent upon the renewal and expansion of our existing service agreements with our clients and our ability to establish new client relationships.

Existing client relationships

We have established client relationships with each of the 20 largest biopharmaceutical companies in the world by revenue for the Financial Year 2023 (Source: Everest Report), having earned more than 69.00% of our total revenue from operations for each of the nine months ended December 31, 2023 and 2022 and the Financial Years 2023, 2022 and 2021 from these 20 customers. We have high client stickiness and retention (based on our retention rates) since our solutions, once implemented, are deeply integrated with our clients workflow. Due to the sticky nature of our solutions, recurring revenues account for a high proportion of our total revenues. Our retention rates (i.e., revenues from existing customers as a percentage of revenues from such customers earned in the previous year) were 122.83%, 159.89%, and 129.90% for the Financial Years 2023, 2022 and 2021, respectively. As of December 31, 2023, we had a total of 65 active clients (i.e., clients from whom we earned US$0.25 million or more in revenues during the 12 months preceding the relevant date). We had 27 clients from whom we earned between US$1 million and US$10 million in revenues, five clients from whom we earned between US$10 million and US$25 million in revenues, and three clients from whom we earned more than US$25 million in revenues, during the 12 months ended December 31, 2023.

We attribute our strong client relationships to our "land and expand strategy", through which we enter different stages of our clients commercialization process and thereafter grow the range of solutions we provide them over time. After making initial inroads with our clients, we scale our business by introducing them to the entire range of our solutions. Large biopharmaceutical companies typically have multiple functions including drug discovery and clinical trials, regulatory and medical affairs, marketing and sales, pharmacovigilance or complaints management, and manufacturing, supply chain and distribution (Source: Everest Report). Our wide range of solutions include offerings that help us cater to each of these functions, enabling us to offer our services to various departments within our clients organizations. As such, we continue to see cross-selling, up-selling and geographic expansion opportunities to drive revenue growth from our existing clients, in particular from clients for which our penetration is still low. For example, we are focused on leveraging our existing credentials with our existing clients to expand the geographic footprint of our business with them, such as to other geographies beyond North America and Europe. In recent years, the growth across our business segments has been mainly attributable to an increase in new engagements originating from North America and Europe.

We are also focused on expanding the range of solutions that our existing clients source from us. For example, for clients with whom we have an established medical content business, we seek to also provide them with related customer experience design or campaign operations support, both of which are part of our existing portfolio of solutions. We have also set up a dedicated team that is focused on capitalizing on high value opportunities with our key clients. We aim to focus on providing tailored solutions to address our clients specific needs, integrating offerings across our business units, and working closely with client stakeholders to increase the volume of business we win under a single deal with our key clients, further driving growth.

On the other hand, if we are unable to retain our clients, in particular our large clients, our results of operations would be adversely impacted. We have in the past derived, and we believe that we will continue to derive, a significant portion of our revenue from certain large clients. For the nine months ended December 31, 2023 and 2022, and the Financial Years 2023, 2022 and 2021, we derived revenue from operations of 9,154,30 million, 8,260.10 million, 11,344.67 million, 9,175.76 million and 5,446.52 million or 47.76%, 49.35%, 49.19%, 55.12% and 56.37%, respectively, of our total revenue from operations for the same periods, from our five largest clients by revenue during the relevant periods. Our results of operations and growth would be affected by our inability to retain our large clients as well as any downsizing of the scale of our clients business or any deterioration of their financial conditions or prospects, which may result in a reduction in their expenditure on the solutions we provide. The following diagram sets forth our revenues from our 10 largest clients by revenue (in Rupee millions) during the nine months ended December 31, 2023 and 2022 and the Financial Years 2023, 2022 and 2021.

New client relationships

Another key growth driver for the increase in our revenue from operations is our ability to successfully establish new client relationships in both the pharmaceutical industry and in newer market segments. Leveraging the experience and credibility that we have gained through our relationships with large biopharmaceutical companies, as well as our technology and our talent pool, we endeavor to make further inroads into other large biopharmaceutical companies and mid-tier specialty biopharmaceutical companies, with a focus on scaling up the model that we have deployed for our existing clients. We will focus on offering such companies the same solutions that have helped us build credibility with our existing clients. We also serve clients in the mid-sized pharma, emerging biotech and medical devices industries. We endeavor to add more companies from the medical devices and emerging biotech industries to our client base by leveraging our existing capabilities, expertise and experience. We have established a dedicated team of senior management members that is focused on growing our presence in these industries.

During the nine months ended December 31, 2023 and the Financial Years 2023, 2022 and 2021, we added a total of 31active clients (i.e., clients from whom we have earned $0.25 million or more in revenues for the last twelve months preceding the relevant date) to our client base. This growth has been largely led by our sales and marketing efforts and new client outreach, including through our account-based marketing, thought leadership, business unit-level councils and organization level marketing. In particular, we host the Indegene Digital Summit, our annual flagship thought leadership event with several keynote speakers and senior life sciences executive in attendance. Through this summit, we bring together key participants in the life sciences industry to share industry knowledge and discuss the future of healthcare. This interaction provides us with the opportunity to build relationships with both existing and potential clients. For further details, see "Our Business Description of Our Business Sales and Marketing of our Solutions" on page 157. Our costs incurred towards sales and marketing are primarily recognized as employee expenses.

Availability and costs of qualified professionals

Our ability to properly staff engagements, to maintain and renew existing engagements and to win new engagements depends, in large part, on our ability to hire and retain qualified professionals.

Our cost of operations have historically been significantly affected by expenses relating to employees and sub-contracting. Our employee benefits expense constitutes the largest components of our total expenses. Set forth below are our employee benefits expense for the periods indicated, which are also expressed as a percentage of our Companys total expenses and total income for such periods.

For the nine months ended December 31, For the Financial Year
2023 2022 2023 2022 2021
Employee benefits expense 12,232.42 10,472.84 14,647.57 10,143.43 5,355.96
Employee benefits expense as a percentage of total expenses 74.38% 72.98% 73.20% 71.58% 69.72%
Employee benefits as a percentage of total income 62.10% 60.93% 61.96% 60.00% 53.73%

The increase in employee benefits expense between the Financial Years 2021 and 2023 was driven by a significant increase in headcount in line with the growth of our business. As of March 31, 2023, 2022 and 2021, we had 5,431, 4,825 and 3,059 full time employees, respectively. During the Financial Years 2023, 2022 and 2021, we added 606, 1,766 and 1,057 full-time employees (after considering attrition), respectively. As of December 31, 2023, we had 5,181 full time employees, and during the nine months ended December 31, 2023, we had a reduction in headcount of 250 full-time employees.

In addition, our sub-contracting/technical fees, which also constitutes one of the largest components of our total expenses, has significantly increased in recent years due to additional subcontractors and third-party service providers being engaged to support our business expansion. Set forth below are details of sub-contracting/technical fees incurred by our Company for the periods indicated, which are also expressed as a percentage of our revenue from operations for such periods.

For the nine months ended December 31, For the Financial Year
2023 2022 2023 2022 2021
Sub-contracting/technical fees 1,267.37 1,537.63 2,005.92 2,144.11 1,193.99
Sub-contracting/technical fees as a percentage of revenue from operations 6.61% 9.19% 8.70% 12.88% 12.36%

We believe that there is significant competition in our industry for such professionals who possess the technical skills and experience necessary to deliver our solutions, and that such competition is likely to continue for the foreseeable future. We compete for talented individuals not only with other companies in our industry but also with companies in other industries, such as the healthcare industry and the software services industry, among others, and there is a limited pool of individuals who have the skills and training needed to help us grow. High attrition rates of qualified personnel could have an adverse effect on our ability to expand our business, as well as cause us to incur greater personnel expenses and training costs, which, in turn, could affect our margins. For the nine months ended December 31, 2023 and 2022 and the Financial Years 2023, 2022 and 2021, we incurred recruitment charges of 60.43 million, 149.00 million, 156.97 million, 139.40 million and 56.80 million, respectively. The following table sets forth the attrition rates for our full-time employees for the periods indicated.

For the nine months ended December 31, For the Financial Year
2023 2022 2023 2022 2021
Voluntary attrition rate 15.96% 23.21% 22.22% 22.63% 18.57%
No. of employees who resigned during the period 843 1164 1152 892 470

Further, salaries and wages may increase in the future due to various factors, including a raise in minimum wage levels, enhancement in social security measures, or through changes in regulations in the countries in which we operate. Unless we can maintain appropriate resource utilization levels, continue to increase the efficiency and productivity of our employees, effectively transition personnel from completed projects to new assignments, or source talent from other low-cost sources, the increase in employee benefits expense in the long term may reduce our profit margins and affect our ability to compete in the life sciences solutions industry, which would adversely affect our results of operations and financial condition.

Strategic acquisitions and integration of companies

We rely, in part, on inorganic growth to increase our revenues and grow our business. Since our inception, we have successfully completed a total of 13 acquisitions to expand our range of solutions offered, access new markets and diversify our revenue streams.

For example, in 2016, we acquired Encima in the United States, a company which provided marketing execution and analytics solutions to several large life sciences companies. This acquisition enhanced our Enterprise Commercial Solutions offerings by adding capabilities in digital marketing and campaign operations, as well as key additions to our senior management team. More recently, in 2019, we acquired a minority stake in DT Associates Limited, a digital transformation and client experience consulting firm in the United Kingdom, to expand our strategic consulting capabilities. In December 2020, we acquired a majority stake in DT Associates Limited. Post our acquisition, DT Associates Limiteds revenues have grown from 140.97 million in the Financial Year 2021 (beginning from January 2021, when we began consolidating DT Associates Limited) to

862.91 million in the Financial Year 2023. For the nine months ended December 31, 2023 and 2022, our revenues from DT Associates Limited amounted to 742.33 million and 653.94 million, respectively. Revenue from DT Associates Limited is included under "Others" in our Restated Consolidated Financial Information, representing revenue from consultancy services. In addition, we completed our acquisitions of Cult Health and Indegene Germany (formerly Sotus 852 GmbH) on October 12, 2022 and November 10, 2022, respectively. For the nine months ended December 31, 2023 and 2022 and the Financial

Year 2023, our revenues from Cult Health amounted to 1,703.31 million, 365.00 million and 890.94 million, respectively. Revenue from Cult Health is included under "Omnichannel Activation" in our Restated Consolidated Financial Information. While Indegene Germany does not have any business operations as of the date of this Red Herring Prospectus, we aim to expand our operations in Germany through this entity.

Most recently, on March 22, 2024, we completed the acquisition of Trilogy. Trilogy is a company incorporated in Germany and, along with its subsidiaries, offers medical writing consultancy services to customers. We expect this acquisition to expand and enhance our capabilities within our Enterprise Medical Solutions, particularly our medical writing capabilities.

During the nine months ended December 31, 2023 and past three Financial Years, we have paid purchase consideration aggregating to 5,139.35 million (US$62.84 million) towards acquisitions, comprising (i) 866.35 million (US$10.57 million) in connection with our acquisition of DT Associates Limited, (ii) 261.83 million (US$3.44 million) in connection with our acquisition of Medical Marketing Economics, LLC, (iii) 4,008.94 million (US$48.80 million) in connection with our acquisition of Cult Health, which is subject to ongoing earnout payments, and (iv) 2.23 million (US$0.03 million) in connection with our acquisition of Indegene Germany (based on an exchange rate of 83.04 per U.S. dollar as of December 31, 2023, 82.15 per U.S. dollar as of March 31, 2023, 75.51 per U.S. dollar as of March 31, 2022 and 72.98 per U.S. dollar as of March 31, 2021). For further details on the companies and businesses we have acquired over the years, see "Our Business

Our Competitive Strengths Track record of creating value through acquisitions" on page 149.

We have benefitted from the synergies, networks and talent pools of the companies that we have acquired. We aim to pursue acquisition opportunities across different business lines in the future. We are constantly in the process of evaluating such opportunities, some of which we may realize in the imminent future, and which may be material to our business, financial condition or results of operations. Identifying suitable acquisition and partnership opportunities can be difficult, time consuming and costly. In addition, the anticipated benefit of many of our future acquisitions may not materialize. The successful implementation of acquisitions depends on a range of factors, including funding arrangements, cultural compatibility and integration. If an acquisition turns out to be unsuccessful, we may face additional costs as well as divest the acquisition, which can be costly and time-consuming. The benefits and costs arising from our acquisitions affect our results of operations and cash flows.

Pricing and revenue mix for our solutions

The pricing for our solutions offerings has a significant impact on our results of operations. We typically employ two models to charge our clients, i.e., our resource utilization model and fixed price/unitized billing model, as further described below. The MSAs we execute with our clients typically provide for a combination of both pricing models. This hybrid approach provides us with flexibility to maximize profitability through strategic resource utilization and cost management.

Resource utilization model. Under this model, we charge our clients based on the number of employees assigned per engagement or by the number of hours spent on the engagement. Employees assigned to particular engagements work on a full-time basis and their utilization rate is not taken into account in our fees. We charge for the services performed by our employees at monthly or hourly rates that are agreed at the time the work order is executed. Such monthly or hourly rates we charge play a key factor in determining our profitability, and vary based on the complexity of the engagement, the mix of staffing we anticipate using to service the engagement, internal forecasts of our operating costs and predictions of increases in those costs influenced by wage inflation and other marketplace factors. Through continuously generating engagements from and developing our relationships with our existing clients, we expect to be able to maximize our revenues and profitability by expanding the scope of services offered and gaining projects with higher margins.

Fixed price/unitized billing model. Under this model, we charge our clients a fixed fee which is based on our estimate of the total costs to be incurred on the project. Our estimates depend on our assumptions and forecasts about the costs we expect to incur to complete the related engagement. The profitability of these projects depend on our ability to manage costs effectively during the course of the engagement, including by finding ways to execute the project more effectively and reduce spending. Any failure by us to accurately estimate the resources and time required to complete a project or any unexpected increase in costs could expose us to risks associated with cost overruns.

Further, as the margins we achieve vary based on our solutions offerings, our revenue mix also affects our results of operations. We have historically derived a significant percentage of our revenues from our Enterprise Commercial Solutions and Enterprise Medical Solutions, and we believe we will continue to see strong growth for these business segments. Set forth below are our revenues from our Enterprise Commercial Solutions and our Enterprise Medical Solutions for the periods indicated, which are also expressed as a percentage of our total revenue from operations for such periods.

For the nine months ended December 31, For the Financial Year
2023 2022 2023 2022 2021
Revenue Enterprise Commercial from Solutions 11,360.31 59.27% 9,860.06 58.91% 13,568.89 58.84% 10,161.57 61.04% 5,645.75 58.43%
Revenues Enterprise from Medical Solutions 4,405.68 22.99% 4,216.02 25.19% 5,602.27 24.29% 4,315.59 25.93% 3,050.08 31.57%

In addition, for certain Omnichannel Activation engagements, we may also charge our clients under an outcome-based model, where our fees are linked to factors such as the HCP engagement impact of our sales and marketing efforts for the clients products and may not be directly correlated to the costs incurred for the project. For the nine months ended December 31, 2023 and 2022 and the Financial Years 2023, 2022 and 2021, revenues from Omnichannel Activation contributed to 2,312.08 million, 1,911.91 million, 2,826.84 million, 1,414.15 million and 787.38 million, respectively, or 12.06%, 11.42%, 12.26%, 8.50% and 8.15%, respectively, of our total revenue from operations.As pricing for Omnichannel Activation utilizes an outcome-based model, we generally derive higher margins for such solutions as compared to our traditional Enterprise Commercial Solutions and Enterprise Medical Solutions.

Changes in currency exchange rates

Fluctuating currency exchanges rates affect our results of operations. We derive a large portion of our revenues from engagements originating outside India, particularly in the United States and Europe, and such engagements are predominantly denominated in U.S. dollars and Euros. While our cost of revenues are denominated in both U.S. dollars and Rupees, with costs associated with our international operations being typically denominated in U.S. dollars, the majority of our costs are still in Rupees. Accordingly, an appreciation in the value of the U.S. dollar or Euro against the Rupee will have a positive impact on our overall results of operations, the extent of the impact on our margins will be commensurate with the proportion of cost of revenue denominated in U.S. dollars or Euros.

Fluctuating exchange rates, in particular fluctuations in the U.S. dollar to Rupee exchange rates, also have an effect on our results of operations through foreign exchange gains or losses made on our working capital assets. Such gains or losses primarily arise (i) from the settlement of monetary items, mainly comprising receivables and payables that are not denominated in U.S. dollars, between us and third parties, and (ii) on re-translation of monetary items, such as cash, bank balances, receivables and payables that are held in currencies other than U.S. dollars. For the nine months ended December 31, 2023 and 2022 and the Financial Years 2023, 2022 and 2021, we recorded exchange gain on foreign exchange fluctuation

(net) of 117.77 million, 344.82 million, 398.13 million, 189.74 million and 62.46 million, respectively, with such increases and decreases being mainly driven by fluctuations in the U.S. dollar to Rupee exchange rate.

We have adopted a foreign exchange risk management policy pursuant to which we undertake hedging transactions to protect against fluctuations in exchange rates and for coverage of our expenditure, including by buying forward currency and exchange traded futures, buying vanilla call options and put options, and cross currency swaps. Despite such hedging transactions, changes in the value of the Rupee against other currencies, particularly the U.S. dollar, could affect our margins. The exchange rate between the Rupee and other currencies has been volatile in recent periods and may continue to fluctuate significantly in the future. See, "Risk Factors Internal Risk Factors Risks Relating to Our Business Our international operations expose us to complex management, legal, tax and economic risks, and exchange rate fluctuations, which could adversely affect our business, financial condition and results of operations" on page 38.

Significant Accounting Policies

The notes to our Restated Consolidated Financial Information included in this Red Herring Prospectus contain a summary of our significant accounting policies. Set forth below is a summary of our most significant accounting policies under Ind AS.

Basis of preparation

Our Restated Consolidated Financial Information has been prepared by our management for the purpose of inclusion in this Red Herring Prospectus to be filed by our Company with SEBI and the Stock Exchanges in connection with the Issue. The Restated Consolidated Financial Information has been prepared in accordance with the requirements of Ind AS, Section 26 of the Companies Act, the SEBI ICDR Regulations, the Guidance Note on Reports in Company Prospectuses (Revised 2019) issued by the ICAI.

The Restated Consolidated Financial Information has been compiled by us from our audited special purpose consolidated interim financial statements as at and for the nine month periods ended December 31, 2023 and 2022 prepared in accordance with the recognition and measurement principles under Indian Accounting Standard 34 "Interim Financial Reporting" as prescribed under Section 133 of the Companies Act, as amended, and other accounting principles generally accepted in India and presentation requirements of Division II of Schedule III to the Companies Act, 2013.

Our audited Ind AS consolidated financial statements as at and for the Financial Years 2023, 2022 and 2021 have been prepared in accordance with Indian Accounting Standards as prescribed under Section 133 of the Companies Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, and other accounting principles generally accepted in India.

Use of estimates or judgement

The preparation of the Restated Consolidated Financial Information in conformity with Ind AS requires our management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Our management bases its estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from those estimates.

Basis of consolidation

The Restated Consolidated Financial Information comprises the financial statements of our Company and our subsidiaries and associate for the nine months ended December 31, 2023 and 2022 and the Financial Years ended March 31, 2023, 2022 and 2021.

Subsidiaries

We determine the basis of control in line with the requirement of Ind AS 110 Consolidated Financial Statements. Our subsidiaries are entities controlled by our Company. Our Company controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and can affect those returns through its power over the entity. The financial statements of our subsidiaries are included in the Restated Consolidated Financial Information from the date on which control commences until the date on which control ceases.

The restated consolidated financial information of all entities used for the purpose of consolidation are drawn up to the same reporting date as that of our Company. When the end of the reporting period of our Company is different from that of a subsidiary, the subsidiary prepares, for consolidation purposes, additional financial information as of the same date as the Restated Consolidated Financial Information of our Company to enable us to consolidate the financial information of the subsidiary, unless it is impracticable to do so.

The Restated Consolidated Financial Information is prepared using uniform accounting policies for like transactions and other events in similar circumstances. If any of our subsidiaries uses accounting policies other than those adopted in the Restated Consolidated Financial Information for like transactions and events in similar circumstances, appropriate adjustments are made in preparing the Restated Consolidated Financial Information to ensure conformity with our accounting policies.

Transactions eliminated on consolidation

All intra-group balances, transactions, income, expenses including unrealized income and expenses are eliminated in preparation of the Restated Consolidated Financial Information. Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there is no evidence of impairment.

Investments accounted for using the equity method

Investments accounted for using the equity method are entities in respect of which, our Company has significant influence, but not control, over the financial and operating policies. Investments in such entities are accounted for using the equity method and are initially recognized at cost. The carrying amount of investment is increased/decreased to recognize investors share of profit or loss of the investee after the acquisition date.

Non-controlling Interest

Non-controlling interests in the net assets (excluding goodwill) of consolidated subsidiaries are identified separately from our Companys equity. The interest of non-controlling shareholders may be initially measured either at fair value or at the non-controlling interests proportionate share of the fair value of the acquirees identifiable net assets. The choice of measurement basis is made on an acquisition to acquisition basis. Subsequent to acquisition, the carrying amount of non-controlling interest is the amount of those interests at initial recognition plus the non-controlling interests share of subsequent changes in equity. Changes in the our equity interest in a subsidiary that do not result in loss of control are accounted for as equity transactions. Total comprehensive income is attributed to non-controlling interests even if it results in the non-controlling interest having a deficit balance.

Business combinations

Business combinations are accounted for using the purchase method as at the acquisition date i.e. when the control is transferred to us. We measure the goodwill at the acquisition date as: (i) the fair value of consideration transferred; plus (ii) the recognized amount of any non-controlling interest in the acquiree; plus (iii) if the control is achieved in stages, the fair value of pre-existing equity interest in the acquiree; less (iv) the net recognized amount of the identifiable assets acquired and liabilities assumed.

When the excess is negative, a bargain purchase gain is recognized immediately in the consolidated statement of profit and loss and other comprehensive income. Transaction costs, other than those associated with the issue of debt or equity securities, that we incur in connection with a business combination are expensed as incurred. Any contingent consideration payable is measured at fair value at the acquisition date. If the contingent consideration is classified as equity, then it is not measured and settlement is accounted within equity. Otherwise, subsequent changes in the fair value of the contingent consideration are recognized in the restated consolidated statement of profit and loss and other comprehensive income.

Revenue

Revenue is recognized upon transfer of control of promised products or services to clients in an amount that reflects the consideration we expect to receive in exchange for those products or services. To recognize revenues, we apply the following five step approach: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenues when a performance obligation is satisfied.

At contract inception, we assess its promise to transfer products or services to a customer to identify separate performance obligations. We apply judgement to determine whether each product or service promised to a customer is capable of being distinct, and are distinct in the context of the contract, if not, the promised products or services are combined and accounted as a single performance obligation. We allocate the arrangement consideration to separately identifiable performance obligation based on their relative stand-alone selling price or residual method. Stand-alone selling prices are determined based on sale prices for the components when it is regularly sold separately, in cases where we are unable to determine the stand-alone selling price we use third-party prices for similar deliverables or we use expected cost-plus margin approach in estimating the stand-alone selling price.

For performance obligations where control is transferred over time, revenues are recognized by measuring progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the promised products or services to be provided.

The method for recognizing revenues and costs depends on the nature of the services rendered.

Time and materials contracts

Revenues and costs relating to time and material contracts are recognized as the related services are rendered.

Fixed-price contracts

Revenues related to fixed-price contracts, namely maintenance and testing and business process services are recognized based on our right to invoice for services performed for contracts in which the invoicing is representative of the value being delivered. When services are performed through an indefinite number of repetitive acts over a specified period, revenue is recognized on a straight-line basis over the specified period unless some other method better represents the stage of completion.

In certain projects, a fixed quantum of service or output units is agreed at a fixed price for a fixed term. Revenue is recognized based on the achievement of the output. Any residual service unutilized by the customer is recognized as revenue on completion of the term. Revenue from other fixed price contracts is recognized using the percentage-of-completion method, calculated as the proportion of the cost of effort incurred up to the reporting date to estimated cost of total effort.

A contract asset is a right to consideration that is conditional upon factors other than the passage of time. Contract assets primarily relate to unbilled amounts on fixed-price development contracts and are classified as non-financial asset as the contractual right to consideration is dependent on completion of contractual milestones. A contract liability is an entitys obligation to transfer goods or services to a customer for which the entity has received consideration (or the amount is due) from the customer.

Unbilled revenues on other than fixed price development contracts are classified as a financial asset where the right to consideration is unconditional upon passage of time.

Others

Any change in scope or price is considered as a contract modification. We account for modifications to existing contracts by assessing whether the services added are distinct and whether the pricing is at the stand-alone selling price. Services added that are not distinct are accounted for on a cumulative catch-up basis, while those that are distinct are accounted for prospectively, either as a separate contract if the additional services are priced at the stand-alone selling price, or as a termination of the existing contract and creation of a new contract if not priced at the stand-alone selling price.

We account for variable considerations like, volume discounts, rebates and pricing incentives to clients as reduction of revenue on a systematic and rational basis over the period of the contract. We estimate an amount of such variable consideration using the expected value method or the single most likely amount in a range of possible consideration depending on which method better predicts the amount of consideration to which we may be entitled.

Revenues are shown net of allowances/returns, sales tax, value added tax, goods and services tax and applicable discounts.

We accrue the estimated cost of warranties at the time when the revenue is recognized. The accruals are based on our historical experience of material usage and service delivery costs.

Incremental costs that relate directly to a contract and incurred in securing a contract with a customer are recognized as an asset when we expect to recover these costs and amortized over the contract term.

We recognize contract fulfilment cost as an asset if those costs specifically relate to a contract or to an anticipated contract, the costs generate or enhance resources that will be used in satisfying performance obligations in future; and the costs are expected to be recovered. The asset so recognized is amortized on a systematic basis consistent with the transfer of goods or services to customer to which the asset relates.

We assess the timing of the transfer of goods or services to the customer as compared to the timing of payments to determine whether a significant financing component exists. As a practical expedient, we do not assess the existence of a significant financing component when the difference between payment and transfer of deliverables is a year or less. If the difference in timing arises for reasons other than the provision of finance to either the customer or us, no financing component is deemed to exist.

We may enter into arrangements with third party suppliers to resell products or services. In such cases, we evaluate whether we are the principal (i.e., report revenues on a gross basis) or agent (i.e., report revenues on a net basis). In doing so, we first evaluate whether we control the good or service before it is transferred to the customer. If we control the good or service before it is transferred to the customer, we are the principal; if not, we are the agent.

Revenues in excess of invoicing are classified as contract assets (which we refer as unbilled revenue) while invoicing in excess of revenues are classified as contract liabilities (which we refer to as unearned revenues).

Financial and other income

Other income comprises interest income on savings account, deposits and gains/(losses) on disposal of investments. Interest income is recognized using the effective interest method.

Property, plant and equipment

Recognition and measurement

Items of property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment loss. Cost includes expenditure that is directly attributable to the acquisition of the asset. Where significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. Gains and losses on disposal of an item of plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and are recognized net within "other income" in the restated consolidated statement of profit and loss and other comprehensive income.

Deposits and advances paid towards the acquisition of property, plant and equipment outstanding as of each reporting date and the cost of property, plant and equipment not available for use before such date are disclosed under capital advance.

Subsequent costs

We recognize, as a part of the carrying amount of an item of property, plant and equipment, the cost of replacing part of such an item when that cost is incurred if it is probable that the future economic benefits embodied with the item will flow to us and the cost of the item can be measured reliably. All other costs are recognized in the restated consolidated statement of profit and loss and other comprehensive income as an expense as incurred. Ongoing repairs and maintenance are expensed as incurred.

Depreciation

Depreciation is charged to the restated consolidated statement of profit and loss and other comprehensive income on a straight-line basis over the estimated useful lives of items of property, plant and equipment. The estimated useful lives are as follows:

Asset classification Useful life as per Companies Act, 2013 Estimated useful life
Computers and accessories 3 years 3 years
Furniture and fittings 10 years 3 5 years
Office equipment 5 years 3 5 years
Vehicle 8 years 5 years

Leasehold improvements are depreciated over the lease period or over the useful lives of assets, whichever is shorter. Useful life and residual value are reviewed at each reporting date and adjusted if appropriate. Assets acquired through business combination are depreciated on straight line basis over the remaining useful life of asset estimated by the management on the date of acquisition. The asset category and the useful lives estimated by management are as per schedule II to Companies Act, 2013, except for furniture and fittings and vehicles.

Goodwill, intangible assets and amortization

Goodwill on acquisition of a business is presented as an intangible asset and is measured at cost less any accumulated impairment loss. Internally generated goodwill is not recognized as an asset. Goodwill is not amortized. Goodwill is tested for impairment annually.

Intangible assets that are acquired by us and having finite useful life are measured initially at cost. After initial recognition, these are carried at cost less any accumulated amortization and any accumulated impairment loss. Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. Intangible assets are amortized on a straight-line basis over their estimated useful lives, from the date that they are available for use, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset. Amortization methods and the estimated useful life of assets are reviewed, and where appropriate are adjusted, annually.

Expenditure incurred on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognized in the restated consolidated summary statement of profit and loss and other comprehensive income as and when incurred. Development expenditure is capitalized only if development costs can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and we intend to and have sufficient resources to complete development and to use the asset. Development activities involve a plan or design for the production of new or substantially improved products or processes. The expenditure capitalized includes the cost of materials, staff costs, overhead costs that are directly attributable to preparing the asset for its intended use, and directly attributable borrowing costs (in the same manner as in the case of property, plant and equipment). Other development expenditure is recognized in the restated consolidated statement of profit and loss and comprehensive income as and when incurred.

We amortize trademarks, technologies and customer relations over their estimated useful life from the date they are available for use depending on the expected period over which these are expected to give economic benefits.

Asset classification Estimated useful life
Trademarks 3-5 years
Technologies, customer relations and non-compete 2-10 years
Internally developed software 3 years

Foreign currency transactions

Transactions and balances

All transactions in foreign currencies are translated to the respective functional currencies using the prevailing exchange rates on the date of such transactions. All monetary assets and liabilities denominated in foreign currencies are translated to the functional currency at the exchange rate at the reporting date. All non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated to the functional currency at the exchange rate when the fair value was determined. All foreign currency differences are generally recognized in the restated consolidated statement of profit and loss, except for non-monetary items denominated in foreign currency and measured based on historical cost, as they are not translated.

Foreign operations

For the purpose of presenting the Restated Consolidated Financial Information, the assets and liabilities of our foreign operations that have a functional currency other than Indian rupees are translated into Indian rupees using exchange rates prevailing at the reporting date. Income and expense items are translated at the average exchange rates for the period.

Exchange differences arising, if any, are recognized in other comprehensive income ("OCI") and held in foreign currency translation reserve ("FCTR"), a component of equity. When a foreign operation is disposed of, the relevant amount recognized in FCTR is transferred to the restated consolidated statement of profit and loss as part of the profit or loss on disposal. Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the exchange rate prevailing at the reporting date.

Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial instruments in the form of financial assets and financial liabilities are generally presented separately. Financial instruments are recognized on the balance sheet when we become a party to the contractual provisions of the instrument.

Upon initial recognition, financial instruments are measured at fair value. Transaction costs directly attributable to the acquisition or issue of financial instruments are recognized in determining the carrying amount, if it is not classified as at fair value through profit or loss. Subsequently, financial instruments are measured according to the category in which they are classified.

Financial assets

Financial assets are classified into following categories (i) financial assets carried at amortized cost, (ii) financial assets fair valued through other comprehensive income ("FVTOCI"), and (iii) financial assets at fair value through profit or loss

("FVTPL"). Financial assets primarily comprise of trade receivables, loan and receivables, cash and bank balances and marketable securities and investments.

The subsequent measurement of financial assets depends on their classification as follows:

Financial assets carried at amortized cost

A financial asset is subsequently measured at amortized cost if it meets both the following criteria: (a) the asset is held within a business model whose objective is to hold the asset to collect contractual cash flows, and (b) the contractual terms of the financial assets give rise on a specified date to cash flows that are solely payments of principal and interest on the principal outstanding.

Financial assets at FVTOCI

A financial asset is subsequently measured at fair value through other comprehensive income if it meets both the following criteria: (a) the asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and (b) 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.

Further, in cases where we have made an irrevocable election based on its business model, for our investments which are classified as equity instruments, the subsequent changes in fair value are recognized in the restated consolidated statement of other comprehensive income. For equity investments elected to be measured at FVTOCI, all fair value changes in the instruments excluding dividends, are recognized in OCI and is never recycled to restated consolidated statement of profit and loss, even on sale of the instrument. Interest income earned on FVTOCI instruments are recognized in the restated consolidated statement of profit and loss.

Financial assets at FVTPL

A financial asset which does not meet the amortized cost or FVTOCI criteria is measured as FVTPL. Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any gains or losses on re-measurement recognized in statement of profit or loss. The gain or loss on disposal and interest income earned on FVTPL is recognized in the restated consolidated statement of profit and loss.

Financial liabilities

Financial liabilities are classified into financial liabilities at FVTPL and other financial liabilities. Financial liabilities primarily include trade payables, liabilities to banks, derivative financial liabilities and other liabilities.

Financial liabilities measured at amortized cost

After initial recognition, financial liabilities are subsequently measured at amortized cost using the effective interest method, except for contingent considerations recognized in a business combination which is subsequently measured at FVTPL. For trade and other payables, the carrying amounts approximate fair value due to the short-term maturity of these instruments.

Compound financial instruments

Compound financial instruments have both a financial liability and an equity component from the issuers perspective. The components are defined based on the terms of the financial instrument and presented and measured separately according to their substance. At initial recognition of a compound financial instrument, the financial liability component is recognized at fair value and the residual amount is allocated to equity.

Derivative financial instruments

All derivatives are recognized initially at fair value on the date a derivative contract is entered into and subsequently remeasured at fair value. Embedded derivatives are separated from the host contract and accounted for separately if they are not closely related to the host contract. We measure all derivative financial instruments based on fair values derived from market prices of the instruments or from option pricing models, as appropriate. Changes in the fair value of any derivative instruments that do not qualify for hedge accounting are recognized immediately in the restated consolidated statement of profit and loss, except for derivatives that are highly effective and qualify for cash flow or net investment hedge accounting.

Non-financial underlying variable

The definition of a derivative excludes instruments with a non-financial underlying variable that is specific to a party to the contract. We have considered the accounting policy choice of considering EBITDA, profit, sales volume, revenue or the cash flows of one counterparty to be a non-financial underlying variable that are specific to a party to the contract.

De-recognition of financial assets and liabilities

We derecognize a financial asset only when the contractual rights to the cash flows from the financial asset expires or it transfers the financial asset and the transfer qualifies for derecognition under Ind AS 109. If we retain substantially all the risks and rewards of ownership of a transferred financial asset, we continue to recognize the financial asset and also recognize a borrowing for the proceeds received.

A financial liability (or a part of financial liability) is derecognized from our balance sheet when obligation specified in the contract is discharged or cancelled or expires.

Impairment

Financial assets

Ind AS 109 requires us to record expected credit losses on all of its financial assets which are debt securities, loans and receivables, either on a 12-month or life time expected credit losses. We recognize loss allowances using the expected credit loss (ECL) model for the financial assets which are not fair valued through profit or loss. Loss allowance for trade receivable with no significant financing component is measured at an amount equal to life time ECL. For all other financial assets, ECL is measured at an amount equal to 12-month ECL, unless there is a significant increase in the credit risk from initial recognition in which case those are measured at lifetime ECL. The amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognized is recognized as an impairment gain or loss in the restated consolidated statement of profit and loss.

Non-financial assets

We assess whether there are any indicators of impairment for all non-financial assets at each reporting date. Goodwill and intangible assets with indefinite economic lives are tested for impairment annually and at other times when such indicators exist.

Other non-financial assets are tested for impairment when there are indicators that the carrying amounts may not be recoverable.

Impairment exists when the carrying value of an asset or cash generating unit ("CGU") exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The value in use calculation is based on a discounted cash flow ("DCF") model. The cash flows are derived from the internal forecasts for future years. These do not include restructuring activities that we have not yet committed to or significant future investments that will enhance the assets performance or the CGU being tested for impairment. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the long-term growth rates. These estimates are most relevant to goodwill recognized by us. An impairment loss recognised for goodwill is not reversed in subsequent periods.

Employee benefits

Defined contribution plans

A defined contribution plan is a post-employment benefit plan under which we pay fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognized as an employee benefit expense in the restated consolidated statement of profit and loss and other comprehensive income in the periods during which services are rendered by employees. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in future payments is available. Contributions to a defined contribution plan that is due more than 12 months after the end of the period in which the employees render the service are discounted to their present value.

Defined benefit plans

Our gratuity benefit scheme is a defined benefit plan. Gratuity benefits are unfunded. Our obligation in respect of a defined benefit plan is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value. Any unrecognized past service cost and the fair value of any plan assets are deducted. The calculation of our obligation is performed annually by a qualified actuary using the projected unit credit method. We recognize all actuarial gains and losses arising from defined benefit plans immediately in the restated consolidated statement of other comprehensive income, net of taxes. All expenses related to defined benefit plans are recognized as employee benefit expense in the restated consolidated statement of profit and loss. When the benefits of a plan are improved, the portion of the increased benefit related to past service by employees is recognized in the restated consolidated statement of profit and loss on a straight-line basis over the average period until the benefits become vested. We recognize gains and losses on the curtailment or settlement of a defined benefit plan when the curtailment or settlement occurs.

Leases

Our leases primarily consist of leases for office premises. We assess 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, we assess whether: (1) the contract involves the use of an identified asset (2) we have substantially all of the economic benefits from use of the asset through the period of the lease and (3) we have the right to direct the use of the asset. At the date of commencement of the lease, we recognize a right-of-use asset ("ROU") and a corresponding lease liability for all lease arrangements in which we are 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, we recognize the lease payments as an operating expense on a straight-line basis over the term of the lease.

ROU assets are initially recognized 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. ROU 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.

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

Financing cost

Finance costs comprise of interest expenses including interest on tax, dividend on preference shares issued which are classified as financial liabilities, foreign currency loss on financial assets and liabilities arising due to financing activities and discounting charges of trade receivable.

Borrowing cost

Borrowing costs are interest and other costs incurred in connection with the borrowing of funds. Borrowing costs directly attributable to acquisition or construction of an asset which necessarily take a substantial period of time to get ready for their intended use are capitalized as part of the cost of that asset. Other borrowing costs are recognized as an expense in the period in which they are incurred.

Income tax

Tax expense comprises current and deferred tax. Current tax and deferred tax expense is recognized in the restated consolidated statement of profit and loss and other comprehensive income except to the extent that it relates to items recognized directly in equity.

Current tax

Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the reporting date in the countries where we operate and generates taxable income.

Current income tax relating to items recognized directly in equity is recognized in equity and not in the restated consolidated statement of profit and loss. We periodically evaluate positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

Deferred tax

Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date.

Deferred tax liabilities are recognized for all taxable temporary differences, except:

When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.

In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint arrangements, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.

Provisions

A provision is recognized in the restated consolidated statement of assets and liabilities when we have a present legal or constructive obligation as a result of a past event that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation.

Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognized as finance cost. The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation.

Provisions for onerous contracts are recognized when the expected benefits to be derived from a contract are lower than the unavoidable costs of meeting the future obligations under the contract. Provisions for onerous contracts are measured at the present value of the lower of (i) the expected net cost of fulfilling the contract, and (ii) the expected cost of terminating the contract.

Contingent liability and asset

A disclosure for contingent liabilities is made where there is a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity. A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity.

Key Components of our Statement of Profit and Loss

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

Income

Income consists of revenue from operations and other income.

Revenue from operations. Revenue from operations comprises revenue from rendering of services, which includes revenues from rendering Enterprise Commercial Solutions, Enterprise Medical Solutions, Omnichannel Activation and other services. Revenue from rendering other services relates to our Enterprise Clinical Solutions and our consultancy business, which we undertake through DT Associates Limited.

Other income. Other income comprises interest income and dividend income, exchange gain on foreign exchange fluctuation (net), liability no longer required reversed, reversal of provision on doubtful debts and advances, export incentive income, net gain on disposal/fair valuation of investments carried through profit and miscellaneous income. Miscellaneous income relates to income from sub-leasing and sale of scrap, among other things. For the Financial Year 2021, other income also included remeasurement to fair value of pre-existing interest in an acquiree, which related to our gain from fair valuation of our existing interests in connection with our step-up acquisition of DT Associates Limited.

Expenses

Expenses consist of employee benefits expense, finance costs, depreciation and amortization expense and other expenses.

Employee benefits expense. Employee benefits expense comprises salaries and bonus, contribution to provident and other funds, gratuity and other defined plans, staff welfare and share-based compensation. Bonuses are discretionary performance-linked bonuses paid in July and December of each year.

Finance costs. Finance costs comprise interest expense on lease liabilities, interest expense on others, and bank and other incidental charges. Bank and other incidental charges relates to expenses arising from foreign currency payments and other banking activities.

Depreciation and amortization expense. Depreciation and amortization expense includes depreciation and amortization on property, plant and equipment and intangible assets, and amortization of ROU assets. Intangible assets include our goodwill, trademarks, technologies and customer relations and internally developed software. ROU assets include the buildings we lease to conduct our business.

Other expenses. The largest component of other expenses are sub-contracting/technical fees (which relates to subcontractors and third-party service providers engaged in connection with our projects), repairs and maintenance expenses (for computer consumables, office maintenance and others), and legal and professional fees. Other components of other expenses include travelling and conveyance expenses, rent, recruitment charges, communication charges, subscriptions and periodicals expenses, insurance, bad debts written off, provision/(reversals) for doubtful debts and advance, corporate social responsibility expenses, rates, fees and taxes, and miscellaneous expenses.

Tax Expense

Tax expense consists of current tax and deferred tax.

Our Results of Operations

The following tables set forth our selected financial data from our restated consolidated statement of profit and loss for the nine months ended December 31, 2023 and 2022 and the Financial Years 2023, 2022 and 2021, the components of which are also expressed as a percentage of total income for such periods:

For the nine months ended December 31,
2023 2022
Income:
Revenue from operations 19,166.11 97.30% 16,738.85 97.39%
Other income (net) 531.38 2.70% 448.73 2.61%
Total income 19,697.49 100.00% 17,187.58 100.00%
Expenses:
Employee benefits expense 12,232.42 62.10% 10,472.84 60.93%
Finance costs 371.13 1.88% 196.67 1.14%
Depreciation and amortization expense 576.31 2.93% 401.06 2.33%
Other expenses 3,266.56 16.58% 3,279.32 19.08%
Total expenses 16,446.42 83.50% 14,349.89 83.49%
Restated profit before exceptional items, share of profit in associates and tax 3,251.07 16.50% 2,837.69 16.51%
Share of loss in an associate
Restated profit before exceptional items and tax 3,251.07 16.50% 2,837.69 16.51%
Exceptional items (net)
Restated profit before tax from continuing operations 3,251.07 16.50% 2,837.69 16.51%
Tax expense:
Current tax 1,123.95 5.71% 615.65 3.58%
Deferred tax (291.90) (1.48)% 49.25 0.29%
Total tax expense 832.05 4.22% 664.90 3.87%
Restated profit from continuing operations after tax 2,419.02 12.28% 2,172.79 12.64%
Discontinued operation:
Loss from discontinued operation
Tax expense of discontinued operation
Loss from discontinued operation after tax
Restated profit for the period/year 2,419.02 12.28% 2,172.79 12.64%

 

For the Financial Year
2023 2022 2021
Income:
Revenue from operations 23,061.33 97.55% 16,646.09 98.47% 9,662.74 96.93%
Other income (net) 579.65 2.45% 258.88 1.53% 306.46 3.07%
Total income 23,640.98 100.00% 16,904.97 100.00% 9,969.20 100.00%
Expenses:
Employee benefits expense 14,647.57 61.96% 10,143.43 60.00% 5,355.96 53.73%
Finance costs 313.32 1.33% 59.63 0.35% 69.57 0.70%
Depreciation and amortization expense 598.10 2.53% 334.51 1.98% 255.46 2.56%
Other expenses 4,451.52 18.83% 3,633.45 21.49% 2,001.48 20.08%
Total expenses 20,010.51 84.64% 14,171.02 83.83% 7,682.47 77.06%
Restated profit before exceptional items, share of profit in associates and tax 3,630.47 15.36% 2,733.95 16.17% 2,286.73 22.94%
Share of loss in an associate (2.00) (0.02)%
Restated profit before exceptional items and tax 3,630.47 15.36% 2,733.95 16.17% 2,284.73 22.92%
Exceptional items (net) (468.99) (2.77)% 29.89 0.30%
Restated profit before tax from continuing operations 3,630.47 15.36% 2,264.96 13.40% 2,314.62 23.22%
Tax expense:
Current tax 902.03 3.82% 947.08 5.60% 471.31 4.73%
Deferred tax 67.45 0.29% (310.30) (1.84)% (13.51) (0.14)%
Total tax expense 969.48 4.10% 636.78 3.77% 457.80 4.59%
Restated profit from continuing operations after tax 2,660.99 11.26% 1,628.18 9.63% 1,856.82 18.63%
Discontinued operation:
Loss from discontinued operation 356.15 3.57%
Tax expense of discontinued operation 6.54 0.07%
Loss from discontinued operation after tax 362.69 3.64%
Restated profit for the period/year 2,660.99 11.26% 1,628.18 9.63% 1,494.13 14.99%

Nine months ended December 31, 2023 compared to nine months ended December 31, 2022

Total income. Total income increased by 14.60% to 19,697.49 million for the nine months ended December 31, 2023 from 17,187.58 million for the nine months ended December 31, 2022 due to increases in revenue from operations and other income.

Revenue from operations. Revenue from operations increased by 14.50% to 19,166.11 million for the nine months ended December 31, 2023 from 16,738.85 million for the nine months ended December 31, 2022 as a result of growth across all of our business segments, which was driven by higher volume of new engagements from clients, and an increase in our revenues attributable to Cult Health, as we completed our acquisition of Cult Health in October 12, 2022 and accordingly only began consolidating Cult Healths revenues post such date.

Enterprise Commercial Solutions. Revenue from rendering Enterprise Commercial Solutions increased by 15.22% to 11,360.31 million for the nine months ended December 31, 2023 from 9,860.06 million for the nine months ended December 31, 2022, and such growth was primarily attributable to an increase in engagements from existing clients, mainly originating in North America and Europe. Our revenues from our five largest clients in this segment grew by 14.05% to 6,933.57 million for the nine months ended December 31, 2023 from 6,079.21 million for the nine months ended December 31, 2022.

Enterprise Medical Solutions. Revenue from rendering Enterprise Medical Solutions increased by 4.50% to

4,405.68 million for the nine months ended December 31, 2023 from 4,216.02 million for the nine months ended December 31, 2022, and such growth was primarily attributable to an increase in engagements from existing clients, mainly originating in North America and Europe. Our revenues from our five largest clients in this segment grew by

2.61% to 2,284.39 million for the nine months ended December 31, 2023 from 2,226.22 million for the nine months ended December 31, 2022.

Omnichannel Activation. Revenues from Omnichannel Activation increased by 20.93% to 2,312.08 million for the nine months ended December 31, 2023 from 1,911.91 million for the nine months ended December 31, 2022, and such growth was primarily attributable to an increase in such revenues attributable to Cult Health to 1,703.31 million from 365.00 million, as we completed our acquisition of Cult Health on October 12, 2022 and accordingly only began consolidating Cult Healths revenues post such date. Our revenues from our five largest clients in this segment (excluding Cult Health) grew by 89.89% to 441.17 million for the nine months ended December 31, 2023 from 232.33 million for the nine months ended December 31, 2022.

Others. Revenue from rendering other services, which relates to our Enterprise Clinical Solutions and consultancy business, increased by 44.91% to 1,088.04 million for the nine months ended December 31, 2023 from 750.86 million for the nine months ended December 31, 2022, and such growth was primarily attributable to an increase in engagements from existing clients, mainly originating in North America and Europe. Our revenues from our five largest clients in this segment significantly grew to 768.26 million for the nine months ended December 31, 2023 from 383.86 million for the nine months ended December 31, 2022.

Other income. Other income increased by 18.42% to 531.38 million for the nine months ended December 31, 2023 from 448.73 million for the nine months ended December 31, 2022 primarily due to (i) an increase in interest income and dividend income to 208.97 million from 50.86 million as well as an increase in net gain on disposal/fair valuation of investments carried through profit or loss to 107.19 million from 43.57 million, which were mainly driven by higher income from our investments in mutual funds and treasury bills, (ii) liability no longer required reversed of amounting to 59.95 million, which related to the reversal of provisions made for earnout payments in connection with our acquisition of Medical Marketing Economics, LLC, and (iii) reversal of provision on doubtful debts and advances of 34.44 million recorded for the nine months ended December 31, 2023, as the relevant outstanding receivables were subsequently paid by our clients, while no such income was recorded for the nine months ended December 31, 2022. The increase in other income was partially offset by a decrease in exchange gain on foreign exchange fluctuation (net) to 117.77 million for the nine months ended December 31, 2023 from 344.82 million for the nine months ended December 31, 2022, which was mainly driven by fluctuations in the

U.S. dollar to Rupee exchange rate.

Total expenses. Total expenses increased by 14.61% to 16,446.42 million for the nine months ended December 31, 2023 from 14,349.89 million for the nine months ended December 31, 2022 primarily due to an increase in employee benefits expense.

Employee benefits expense. Employee benefits expense increased by 16.80% to 12,232.42 million for the nine months ended December 31, 2023 from 10,472.84 million for the nine months ended December 31, 2022 primarily due to an increase in salaries and bonus to 11,509.31 million from 9,851.82 million, which was mainly on account of annual increments in employee salaries, wages and benefits. The increase in employee benefits expense was also attributable to an increase in such expenses attributable to Cult Health, as we completed our acquisition of Cult Health in October 12, 2022 and accordingly only began consolidating Cult Healths expenses post such date.

Finance costs. Finance costs increased by 88.71% to 371.13 million for the nine months ended December 31, 2023 from 196.67 million for the nine months ended December 31, 2022 primarily due to an increase in interest expense on others to

306.16 million from 97.31 million, which was mainly driven by interest paid on a term loan obtained to finance our acquisition of Cult Health. The increase in finance costs was partially offset by a decrease in bank and other incidental charges to 21.46 million for the nine months ended December 31, 2023 from 61.56 million for the nine months ended December

31, 2022, which was mainly on account of loan drawdown fees incurred during the nine months ended December 31, 2022.

Depreciation and amortization expense. Depreciation and amortization expense increased by 43.69% to 576.31 million for the nine months ended December 31, 2023 from 401.06 million for the nine months ended December 31, 2022 due to increases in (i) depreciation and amortization on property, plant and equipment and intangible assets to 380.93 million from 244.35 million, which was mainly driven by amortization of intangible assets resulting from our acquisition of Cult Health, and(ii) amortization of right-of-use assets to 195.38 million from 156.71 million, due to amortization of buildings we lease to conduct our business.

Other expenses. Other expenses slightly decreased to 3,266.56 million for the nine months ended December 31, 2023 from 3,279.32 million for the nine months ended December 31, 2022 primarily due to decreases in (i) sub-contracting/technical fees to 1,267.37 million from 1,537.63 million, which was mainly driven by a reduction in subcontractors and third-party service providers hired, and (ii) recruitment charges to 60.43 million from 149.00 million, which was mainly due to higher reliance on in-house recruitment activities instead of third-party recruitment agencies. These decrease in other expenses was partially offset by increases in (i) repairs and maintenance for computer consumables to 417.33 million from 273.45 million, which was mainly driven by higher license subscription fees for off-the-shelf software licenses, and (ii) legal and professional fees to 537.32 million from 408.52 million, which was mainly due to legal advisors engaged in connection with due diligence exercises conducted for potential acquisitions and other corporate activities.

Tax expenses. Total tax expense increased by 25.14% to 832.05 million for the nine months ended December 31, 2023 from 664.90 million for the nine months ended December 31, 2022 due to an increase in current tax to 1,123.95 million from 615.65 million, in line with the increase in our restated profit before tax. The increase in total tax expense was partially offset by deferred tax credit of 291.90 million recorded for the nine months ended December 31, 2023, as compared to deferred tax charge of 49.25 million recorded for the nine months ended December 31, 2022, which was primarily on account of an increase in taxable temporary differences.

Restated profit for the period. As a result of the foregoing, our restated profit for the period increased by 11.33% to 2,419.02 million for the nine months ended December 31, 2023 from 2,172.79 million for the nine months ended December 31, 2022.

Financial Year 2023 compared to Financial Year 2022

Total income. Total income increased by 39.85% to 23,640.98 million for the Financial Year 2023 from 16,904.97 million for the Financial Year 2022 due to increases in revenue from operations and other income.

Revenue from operations. Revenue from operations increased by 38.54% to 23,061.33 million for the Financial Year 2023 from 16,646.09 million for the Financial Year 2022 as a result of growth across all of our business segments, which was driven by higher volume of new engagements from clients, expansion of our solutions into new channels and functions of existing clients, and an overall increase in the volume of projects executed.

Enterprise Commercial Solutions. Revenue from rendering Enterprise Commercial Solutions increased by 33.53% to 13,568.89 million for the Financial Year 2023 from 10,161.57 million for the Financial Year 2022, and such growth was primarily attributable to an increase in engagements from existing clients, mainly originating in North America and Europe. Our revenues from our five largest clients in this segment grew by 28.34% to 8,384.56 million for the Financial Year 2023 from 6,532.98 million for the Financial Year 2022.

Enterprise Medical Solutions. Revenue from rendering Enterprise Medical Solutions increased by 29.81% to

5,602.27 million for the Financial Year 2023 from 4,315.59 million for the Financial Year 2022, and such growth was primarily attributable to an increase in engagements from existing clients, mainly originating in North America and Europe. Our revenues from our five largest clients in this segment grew by 17.62% to 3,012.61 million for the Financial Year 2023 from 2,561.24 million for the Financial Year 2022.

Omnichannel Activation. Revenue from Omnichannel Activation increased by 99.90% to 2,826.84 million for the Financial Year 2023 from 1,414.15 million for the Financial Year 2022, and such growth was primarily attributable to revenues from Cult Health (which we acquired in October 2022) amounting to 890.94 million. Further, our revenues from our five largest clients in this segment (excluding Cult Health) significantly grew to 1,340.96 million for the Financial Year 2023 from 638.43 million for the Financial Year 2022.

Others. Revenue from rendering other services, which relates to our Enterprise Clinical Solutions and consultancy business, increased by 40.88% to 1,063.33 million for the Financial Year 2023 from 754.78 million for the

Financial Year 2022, and such growth was primarily attributable to an increase in engagements from existing clients, mainly originating in North America and Europe. Our revenues from our five largest clients in this segment significantly grew to 644.75 million for the Financial Year 2023 from 300.92 million for the Financial Year 2022.

Other income. Other income significantly increased to 579.65 million for the Financial Year 2023 from 258.88 million for the Financial Year 2022 primarily due to increases in (i) exchange gain on foreign exchange fluctuations (net) to 398.13 million from 189.74 million, which was mainly driven by a significant depreciation of the Rupee against the U.S. dollar during the Financial Year 2023, and (ii) interest income and dividend income to 103.05 million from 8.03 million as well as net gain on disposal/fair valuation of investments carried through profit or loss to 68.67 million from 50.14 million, which were mainly driven by higher income from our investments in mutual funds and treasury bills.

Total expenses. Total expenses increased by 41.21% to 20,010.51 million for the Financial Year 2023 from 14,171.02 million for the Financial Year 2022 primarily due to increases in employee benefits expense and other expenses.

Employee benefits expense. Employee benefits expense increased by 44.40% to 14,647.57 million for the Financial Year 2023 from 10,143.43 million for the Financial Year 2022 primarily due to increases in (i) salaries and bonus to 13,717.95 million from 9,445.71 million, (ii) contribution to provident and other funds to 336.55 million from 241.07 million, and (iii) shared-based compensation to 158.46 million from 75.40 million. Such increases were on account of an increase in our full-time employee head count to 5,431 employees as of March 31, 2023 from 4,825 employees as of March 31, 2022, in line with the growth of our business, as well as annual increments in employee salaries, wages and benefits.

Finance costs. Finance costs significantly increased to 313.32 million for the Financial Year 2023 from 59.63 million for the Financial Year 2022 primarily due to increases in (i) interest expense on others to 179.13 million from 27.34 million, which was mainly on account of interest paid on a bridge loan obtained to finance our acquisition of Cult Health and interest accrued on the earnout payments relating to our acquisition of Cult Health, (ii) bank and other incidental charges to 80.41 million from 12.93 million, which was mainly on account of facility fees paid on the conversion of the aforementioned bridge loan to a term loan, and (iii) interest expense on lease liabilities to 53.78 million from 19.36 million, which was mainly on account of leases acquired as part of our acquisition of Cult Health.

Depreciation and amortization expense. Depreciation and amortization expense increased by 78.80% to 598.10 million for the Financial Year 2023 from 334.51 million for the Financial Year 2022 primarily due to increases in (i) depreciation and amortization on property, plant and equipment and intangible assets to 371.86 million from 193.82 million, which was mainly driven by amortization of intangible assets recognized resulting from our acquisition of Cult Health and the full-year amortization of intangible assets of Medical Marketing Economics, LLC, and (ii) amortization of right-of-use assets to

226.24 million from 140.69 million due to amortization of buildings we lease to conduct our business.

Other expenses. Other expenses increased by 22.51% to 4,451.52 million for the Financial Year 2023 from 3,633.45 million for the Financial Year 2022 primarily due to increases in (i) travelling and conveyance to 375.65 million from 64.39 million, on account of an increase in travel activities, (ii) legal and professional fees to 647.53 million from 381.56 million, which was mainly due to legal advisors engaged in connection with our acquisition of Cult Health and other corporate activities, (iii) subscription and periodicals to 292.34 million from 126.17 million, which was mainly driven by an increase in project-related subscriptions of medical e-journals and articles as well as subscriptions of additional software, and (iv) repairs and maintenance for computer consumables to 395.47 million from 279.74 million, an increase in our headcount leading to higher license subscription fees for off-the-shelf software licenses. The increase in other expenses was partially offset by a decrease in sub-contracting and technical fees to 2,005.92 million for the Financial Year 2023 from 2,144.11 million for the Financial Year 2022, which was mainly driven by a reduction in subcontractors and third-party service providers hired.

Exceptional items. We recorded cost from exceptional items of 468.99 million for the Financial Year 2022, which related to the impact of a change in the carrying value of liabilities towards our acquisition of further shares in DT Associates Limited. We did not record any exceptional items for the Financial Year 2023.

Tax expenses. Total tax expense increased by 52.25% to 969.48 million for the Financial Year 2023 from 636.78 million for the Financial Year 2022 due to deferred tax charge of 67.45 million recorded for the Financial Year 2023, as compared to deferred tax credit of 310.30 million recorded for the Financial Year 2022, which was primarily on account of a decrease in taxable temporary differences. The increase in total tax expense was partially offset by a decrease in current tax to 902.03 million for the Financial Year 2023 from 947.08 million for the Financial Year 2022, which was primarily on account of a decrease in taxable temporary differences.

Restated profit for the year. As a result of the foregoing, our restated profit for the year increased by 63.43% to 2,660.99 million for the Financial Year 2023 from 1,628.18 million for the Financial Year 2022.

Financial Year 2022 compared to Financial Year 2021

Total income. Total income increased by 69.57% to 16,904.97 million for the Financial Year 2022 from 9,969.20 million for the Financial Year 2021 due to an increase in revenue from operations, partially offset by a decrease in other income.

Revenue from operations. Revenue from operations increased by 72.27% to 16,646.09 million for the Financial Year 2022 from 9,662.74 million for the Financial Year 2021 as a result of growth across all our business segments, which was driven by an increase in demand for our solutions by our clients due to higher adoption of digital technologies, higher volume of new engagements from clients, expansion of our solutions into new geographies, channels and functions of existing clients, and an overall increase in the volume of projects executed.

Enterprise Commercial Solutions. Revenue from rendering Enterprise Commercial Solutions increased by 79.99% to 10,161.57 million for the Financial Year 2022 from 5,645.75 million for the Financial Year 2021, and such growth was primarily attributable to an increase in engagements from existing clients, mainly originating in North America and Europe. Our revenues from our five largest clients in this segment grew by 90.03% to 6,532.98 million for the Financial Year 2022 from 3,437.92 million for the Financial Year 2021.

Enterprise Medical Solutions. Revenue from rendering Enterprise Medical Solutions increased by 41.49% to

4,315.59 million for the Financial Year 2022 from 3,050.08 million for the Financial Year 2021, and such growth was primarily attributable to an increase in engagements from existing clients, mainly originating in North America. Our revenues from our five largest clients in this segment grew by 43.15% to 2,669.11 million for the Financial Year 2022 from 1,864.58 million for the Financial Year 2021.

Omnichannel Activation. Revenue from Omnichannel Activation increased by 79.60% to 1,414.15 million for the Financial Year 2022 from 787.38 million for the Financial Year 2021, and such growth was primarily attributable to an increase in engagements from existing clients, mainly originating in North America. Our revenues from our five largest clients in this segment significantly grew to 1,011.19 million for the Financial Year 2022 from 406.27 million for the Financial Year 2021.

Others. Revenue from rendering other services, which relates to our Enterprise Clinical Solutions and consultancy business, significantly increased to 754.78 million for the Financial Year 2022 from 179.53 million for the

Financial Year 2021. Such growth was primarily attributable to revenues from our consultancy business, which we undertake through DT Associates Limited. We acquired a majority stake in DT Associates Limited in December

2020 and began consolidating DT Associates Limiteds revenues beginning from January 2021. Therefore, revenues from our consultancy business were recorded for the entirety of the Financial Year 2022 as compared to only a portion of the Financial Year 2021.

Other income. Other income decreased by 15.53% to 258.88 million for the Financial Year 2022 from 306.46 million for the Financial Year 2021 primarily due to (i) export incentive income of 143.04 million recorded for the Financial Year 2021, which related to income earned under the Service Exports from India Scheme ("SEIS") while no such income was recorded in the Financial Year 2022, and (ii) remeasurement to fair value of pre-existing interest in an acquiree of 82.39 million recorded in the Financial Year 2021, which related to gain from fair valuation of our existing interests in connection with our step-up acquisition of DT Associates Limited, while no such income was recorded in the Financial Year 2022. The decrease in other income was partially offset by increases in (i) exchange gain on foreign exchange fluctuation (net) to 189.74 million from 62.46 million, which was mainly driven by fluctuations in the U.S. dollar to Rupee exchange rate, (ii) net gain on disposal/fair valuation of investments carried through profit of 50.14 million recorded in the Financial Year 2022, which related to gain on investments in mutual funds, while no such income was recorded in Financial Year 2021, and (iii) miscellaneous income to 10.97 million from 9.72 million.

Total expenses. Total expenses increased by 84.46% to 14,171.02 million for the Financial Year 2022 from 7,682.47 million for the Financial Year 2021 primarily due to increases in employee benefits expense and other expenses.

Employee benefits expense. Employee benefits expense increased by 89.39% to 10,143.43 million for the Financial Year 2022 from 5,355.96 million for the Financial Year 2021 primarily due to increases in (i) salaries and bonus to 9,445.71 million from 5,095.59 million, (ii) gratuity and other defined plans to 296.10 million from 133.04 million, and (iii) contribution to provident and other funds to 241.07 million from 100.14 million. Such increases were on account of an increase in our full-time employee head count to 4,825 employees as of March 31, 2022 from 3,059 employees as of March 31, 2021, in line with the growth of our business, as well as annual increments in employee salaries, wages and benefits.

Finance costs. Finance costs decreased by 14.29% to 59.63 million for the Financial Year 2022 from 69.57 million for the

Financial Year 2021 primarily due to decreases in interest expense on lease liabilities, interest expense on others, and bank and other incidental charges.

Depreciation and amortization expense. Depreciation and amortization expense increased by 30.94% to 334.51 million for the Financial Year 2022 from 255.46 million for the Financial Year 2021 due to increases in (i) depreciation and amortization on property, plant and equipment and intangible assets to 193.82 million from 128.08 million, which was mainly driven by higher capitalization of plant and equipment as well as intangibles acquired pursuant to business combinations during the year, and (ii) amortization of right-of-use assets to 140.69 million from 127.38 million, which was mainly driven by renewal of ROU assets.

Other expenses. Other expenses increased by 81.54% to 3,633.45 million for the Financial Year 2022 from 2,001.48 million for the Financial Year 2021 primarily due to increases in (i) in sub-contracting/technical fees to 2,144.11 million from 1,193.99 million, which was on account of additional subcontractors and third-party service providers being engaged to support our business expansion, (ii) repairs and maintenance for computer consumables to 279.74 million from 146.98 million, which was mainly driven by an increase in our headcount leading to higher license subscription fees for off-the-shelf software licenses, (iii) legal and professional fees to 381.56 million from 248.34 million, which was mainly due to legal advisors engaged in connection with acquisitions, due diligence exercises and other corporate activities, (iv) recruitment charges to 139.40 million from 56.80 million, driven by increased hiring activity, (v) subscription and periodicals expenses to 126.17 million from 42.15 million, which was mainly driven by an increase in project-related subscriptions of medical e-journals and articles, and (vi) an increase in travelling and conveyance expenses to 64.39 million from 6.83 million, on account of an increase in travel activities as a result of the easing of COVID-19 related travel restrictions.

Share of loss in an associate. We recorded a loss from share of profit in an associate of 2.00 million in the Financial Year

2021 in connection with the conversion of an associate entity into a subsidiary as a result of our step-up acquisition of DT Associates Limited.

Exceptional items. We recorded cost from exceptional items of 468.99 million for the Financial Year 2022, which related to the impact of a change in the carrying value of liabilities towards our acquisition of further shares in DT Associates Limited, as compared to revenue from exceptional items of 29.89 million for the Financial Year 2021, which related to the net impact of the conversion of convertible preference share liability to equity.

Tax expenses. Total tax expense increased by 39.09% to 636.78 million for the Financial Year 2022 from 457.80 million for the Financial Year 2021 due to an increase in current tax to 947.08 million from 471.31 million, in line with an increase in our restated profit before tax from continuing operations, partially offset by an increase in deferred tax credit to 310.30 million from 13.51 million, primarily on account of deferred tax being calculated at a new tax rate due to expiry of special economic zone ("SEZ") tax benefits as well as an increase in certain deferred revenues.

Restated profit for the year. As a result of the foregoing, our restated profit for the year increased by 8.97% to 1,628.18 million for the Financial Year 2022 from 1,494.13 million for the Financial Year 2021.

Liquidity and Capital Resources

Our primary sources of liquidity include cash generated from operating activities, and from borrowings, both short-term and long-term, including cash credit, term and working capital facilities. As of December 31, 2023, we had cash and cash equivalents of 1,199.44 million.

Our financing requirements are primarily for working capital, capital expenditures for property, plant and equipment, and acquisitions of companies. We expect that cash flow from operating activities and borrowings will continue to be our principal sources of funds in the long-term. We evaluate our funding requirements periodically in light of our net cash flow from operating activities, the requirements of our business and operations, acquisition opportunities and market conditions.

Cash flows

The following table summarizes our cash flows data for the periods indicated:

For the nine months ended December 31, For the Financial Year
2023 2022 2023 2022 2021
Net cash generated from operating activities 3,542.67 745.05 1,302.18 2,970.42 1,720.33
Net cash used in investing activities (2,634.93) (8,112.74) (8,933.48) (1,602.07) (242.49)
Net cash (used in)/generated from financing activities
(436.66) 3,674.69 3,330.89 2,334.77 (1,315.06)
Net increase/(decrease) in cash and cash equivalents 471.08 (3,693.00) (4,300.41) 3,703.12 162.78
Cash and cash equivalents at the beginning of the period/year 735.85 5,062.79 5,062.79 1,333.62 1,738.61
Cash and cash equivalents transferred pursuant to demerger (543.51)
Effect of exchange differences on translation of foreign currency cash and cash equivalents (7.49) (248.50) (26.53) 26.05 (24.26)
Cash and cash equivalent at the end of the period/year 1,199.44 1,121.29 735.85 5,062.79 1,333.62

Net cash generated from operating activities

Net cash generated from operating activities was 3,542.67 million for the nine months ended December 31, 2023. We had a profit before tax for the period of 3,251.07 million, which was primarily adjusted for depreciation and amortization expense of 576.31 million, finance costs of 349.50 million, interest income and dividend income of 208.97 million, employee stock option plan expense of 152.41 million, net gain on disposal/fair valuation of investments of 107.19 million and expected credit loss on trade receivables and advances of 30.74 million. This was further adjusted for working capital changes, which consisted of an increase in liabilities and provisions of 1,031.55 million, an increase in trade receivables of 651.00 million and a decrease in loans and advances and other assets of 8.68 million. As a result, cash generated from operating activities was 4,319.65 million before adjusting for income tax paid (net) of 776.98 million.

Net cash generated from operating activities was 1,302.18 million for the Financial Year 2023. We had a profit before tax for the year of 3,630.47 million, which was primarily adjusted for depreciation and amortization expense of 598.10 million, finance costs of 232.91 million, employee stock option expense of 157.76 million interest income and dividend income of 103.05 million and effect of exchange differences on restatement of monetary assets and liabilities of 98.84 million. This was further adjusted for working capital changes, which consisted of an increase in trade receivables of 1,153.04 million, an increase in loans and advances and other assets of 592.94 million and a decrease in liabilities and provisions of 413.81 million. As a result, cash generated from operating activities was 2,384.57 million before adjusting for income tax paid (net) of 1,082.39 million.

Net cash generated from operating activities was 2,970.42 million for the Financial Year 2022. We had a profit before tax for the year of 2,264.96 million for the Financial Year 2022, which was primarily adjusted for exceptional items of 468.99 million, depreciation and amortization expense of 334.51 million, employee stock option plan expense of 75.40 million and net gain on disposal/fair valuation of investments of 50.14 million. This was further adjusted for working capital changes, which consisted of an increase in liabilities and provisions of 2,207.95 million, an increase in trade receivables of 1,516.90 million and an increase in loans and advances and other assets of 152.81 million. As a result, cash generated from operating activities for the Financial Year 2022 was 3,673.88 million before adjusting for income tax paid (net) of 703.46 million.

Net cash generated from operating activities was 1,720.33 million for the Financial Year 2021. We had a profit before tax for the year of 1,958.47 million for the Financial Year 2021, which was primarily adjusted for depreciation and amortization expense of 346.02 million, effect of exchange differences on restatement of monetary assets and liabilities of 120.76 million, remeasurement to fair value of pre-existing interest in an acquiree of 82.39 million and finance costs of 55.05 million. This was further adjusted for working capital changes, which consisted of an increase in liabilities and provisions of

817.51 million, an increase in trade receivables of 700.64 million and an increase in loans and advances and other assets of 31.81 million. As a result, cash generated from operating activities for the Financial Year 2021 was 2,216.40 million before adjusting for income tax paid (net) of 496.07 million.

Net cash used in investing activities

Net cash used in investing activities was 2,634.93 million for the nine months ended December 31, 2023. This was primarily due to purchase of investments accounted for using the FVTPL method of 10,992.70 million, payment for business acquisitions, net of cash acquired of 782.80 million and purchase of property, plant and equipment, net of 89.67 million; partially offset by redemption of investments of 8,943.94 million, interest received of 190.31 million and redemption/maturity of fixed deposit of 122.47 million.

Net cash used in investing activities was 8,933.48 million for the Financial Year 2023. This was primarily due to purchase of investments accounted for using the FVTPL method of 4,874.14 million, payment for business acquisitions, net of cash acquired of 3,924.86 million, purchase of property, plant and equipment, net of 188.34 million and investment in fixed deposit of 121.86 million; partially offset by redemption/maturity of fixed deposit of 110.00 million and interest received of 65.72 million.

Net cash used in investing activities was 1,602.07 million for the Financial Year 2022. This was primarily due to purchase of investments accounted for using the FVTPL method of 3,747.18 million, purchase of property, plant and equipment, net of 247.09 million, payment for business acquisitions, net of cash acquired of 164.19 million and investments in fixed deposits (net) of 110.26 million; partially offset by redemption of investments of 2,598.20 million and redemption/maturity of fixed deposit of 65.38 million.

Net cash used in investing activities was 242.49 million for the Financial Year 2021. This was primarily due to purchase of plant and equipment of 206.16 million and payment for business acquisitions, net of cash acquired of 44.66 million.

Net cash (used in)/generated from financing activities

Net cash used in financing activities was 436.66 million for the nine months ended December 31, 2023. This was primarily due to interest and financial charges paid of 230.00 million and payment of lease liability of 214.03 million.

Net cash generated from financing activities was 3,330.89 million for the Financial Year 2023. This was primarily due to proceeds from loans of 3,943.36 million, which was partially offset by payment of lease liability of 254.19 million, repayment of loans of 182.38 million and interest and financial charges paid of 175.99 million.

Net cash generated from financing activities was 2,334.77 million for the Financial Year 2022. This was primarily due to proceeds from the issue of shares of 2,629.02 million, which was partially offset by payment of lease liability of 166.99 million, repayment of loans of 511.26 million, interest and financial charges paid of 27.34 million, transaction cost on issue of shares of 24.51 million and purchase of treasury shares of 10.15 million.

Net cash used in financing activities was 1,315.06 million for the Financial Year 2021. This was primarily due to repayment of loans of 1,111.15 million, payment of lease liability of 153.26 million, interest and financial charges paid of 35.04 million and purchase of treasury shares of 15.61 million.

Capital expenditures

Our historical capital expenditures have primarily related to the purchase of property, plant and equipment. For the nine months ended December 31, 2023 and 2022 and the Financial Years 2023, 2022 and 2021, our cash outflows towards purchase of property plant and equipment, net amounted to 89.67 million, 49.15 million, 188.34 million, 247.09 million and 206.16 million, respectively.

Financial indebtedness

As December 31, 2023, we had outstanding borrowings (current and non-current) amounting to 3,993.33 million, which primarily consisted of term loans from banks. For further details related to our indebtedness, see "Financial Indebtedness" on page 328.

Contractual Obligations

As of December 31, 2023, we had no contractual obligations.

Contingent Liabilities

The following table sets forth a breakdown of our contingent liabilities (as per Ind AS 37) as of December 31, 2023:

Particulars As of December 31, 2023
Bank guarantee issued by the bank in favor of government department 0.40
Income tax matters 6.55
Total 6.95

Off-Balance Sheet Commitments and Arrangements

We do not have any off-balance sheet arrangements, derivative instruments, swap transactions or relationships with affiliates or other unconsolidated entities or financial partnerships that would have been established for the purpose of facilitating off-balance sheet arrangements.

Quantitative and Qualitative Analysis of Market Risks

We are exposed to various types of market risks during the normal course of business. The market risks we are exposed to include interest rate risk, currency risk, credit risk and liquidity risk.

Interest Rate Risk

Interest rate risk primarily arises from borrowings with floating interest rates, including various revolving and other lines of credit. We manage our net exposure to interest rate risk relating to borrowings by entering into interest rate swap agreements, which allows us to exchange periodic payments based on a notional amount and agreed upon fixed and floating interest rates. Certain borrowings are also transacted at fixed interest rates.

Currency risk

We operate internationally and a major portion of our business is transacted in several currencies. Consequently, we are exposed to foreign exchange risk through receiving payment for sales and services in the United States and elsewhere, and making purchases from overseas suppliers in various foreign currencies for electronic equipment, such as laptops. The exchange rate risk primarily arises from foreign exchange revenue, receivables, cash balances, forecasted cash flows and payables. A significant portion of our revenue is in the U.S. Dollar and the Euro, while a large portion of our costs are in Indian rupees. The exchange rate between the rupee and these currencies has fluctuated significantly in recent years and may continue to fluctuate in the future. Appreciation of the rupee against these currencies can adversely affect our results of operations. We evaluate exchange rate exposure arising from our transactions and enter into foreign currency derivative instruments to mitigate such exposure. We follow established risk management policies, including the use of derivatives such as foreign exchange forward/option contracts to hedge forecasted cash flows denominated in foreign currencies.

Credit risk

Credit risk is the risk of financial loss to us if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from our receivables from clients. The carrying amount of financial assets represents the maximum credit exposure. Our exposure to credit risk is influenced mainly by the individual characteristics of each customer. The majority of our revenue is derived from clients located in North America and Europe. In addition, we derive a significant portion of our revenue from a limited number of clients. We have established a credit policy under which each new customer is analyzed individually for credit worthiness before our standard payment and delivery terms and conditions are offered. Our review includes external ratings, when available, and in some cases bank references. We analyze trade receivables periodically and allowances for doubtful receivables are created on a customer specific basis if required.

Liquidity risk

Liquidity risk is the risk that we will encounter difficulty in meeting our financial obligations as they fall due. Our approach to managing liquidity is to ensure, as far as possible, that we will always have sufficient liquidity to meet our liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to our reputation. Our management monitors our net liquidity position through rolling forecasts on the basis of expected cash flows. We hold cash and cash equivalents with major banks and financial institutions.

Unusual or Infrequent Events or Transactions

Except as disclosed in this 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.

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 302 and 25, respectively. Except as disclosed in this 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 above in " Significant Factors Affecting our Results of Operations" on pages 25, 142 and 302, 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

Except as disclosed in this Red Herring Prospectus, there are no new products or business segments that have or are expected to have a material impact on our business prospects, results of operations or financial condition.

Supplier or Customer Concentration

We do not have any material dependence on a single or few suppliers. A significant portion of our business is attributable to certain large clients, see "Risk Factors As our business is solely focused on the life sciences industry and a significant portion of our business is attributable to certain large clients located in North America and Europe, our business and profitability is dependent on factors affecting the life sciences industry and our continuing relationships with such key clients." on page 26.

Competitive Conditions

We expect competition in our industry from existing and potential competitors to intensify. For details, please refer to the discussions of our competition in the sections "Risk Factors" and "Our Business" on pages 25 and 142, respectively, of this Red Herring Prospectus.

Seasonality

Our business is not seasonal in nature.

Significant Developments Occurring after December 31, 2023

Except as disclosed above and in this Red Herring Prospectus, there are no circumstances that have arisen since December 31, 2023, the date of the last financial statements included in this Red Herring Prospectus, which materially and adversely affect or is likely to affect our operations or profitability, or the value of our assets or our ability to pay our material liabilities within the next twelve months.

Recent Accounting Pronouncements

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

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