Orient Technologies Ltd Management Discussions

* Order book is the Outstanding purchase orders received from customers pending to be completed by the Company as on June 30, 2024.

Our business operations are, currently, concentrated in India and our revenues are predominantly generated from India, including from various multinational companies and transnational corporations. We operate out of our headquarters and corporate office situated in Mumbai, Maharashtra, with sales and services offices located across various cities in India such as Navi Mumbai and Pune in Maharashtra, Ahmedabad, Gujarat, New Delhi, Bengaluru, Karnataka and Chennai, Tamil Nadu. We also have a branch located in Singapore.

We are led by experienced and technically qualified Promoters i.e. Ajay Baliram Sawant, Jayesh Manharlal Shah, Ujwal Arvind Mhatre and Umesh Navnitlal Shah who have co-founded, conceptualised, incubated and nurtured our business and continue to be actively engaged in our business operations. Each of them brings a different set of operational strengths to Company. For details, see ‘Our Management Brief Profile of our Directors on page 250. In addition to our Promoters who are also our executive directors, our strong and robust Board of Directors comprise individuals who bring their respective experience and expertise to our operations. Our Board of Directors are also supported by a highly skilled management team comprising our key managerial personnel and senior managerial personnel viz., Sunil Arora, Chief Financial Officer, Suresh Bachwani, Chief Technology Officer, Ridhima Ajay Sawant, Product Manager, Data Management, Pradip Narayan Pillai, Product Manager, Cloud, Yashashree Vidyadhar Parab, Chief Sales Officer, Shailesh Girish Mandani, Finance Controller and Nayana Akhil Nair, Company Secretary and Compliance Officer. For details, see ‘Our Management Brief Profiles of the KMP of our Company and ‘Our Management Brief Profiles of our Senior Management on pages 267 and 267, respectively. As at June 30, 2024, we had 1,482 permanent employees.

Set out below are some of our key financial and operational metrics which we use to analyse our business:

( in million, unless stated otherwise)

Notes:

1. Gross Profit is calculated as revenue from operations for the period less cost of goods sold for the period. Cost of goods sold is taken as a sum of purchase of stock-in-trade and change in inventories of stock-in-trade plus direct expenses, while Gross Profit Margin is the percentage of Gross Profit divided by revenue from operations for the period.

2. EBITDA is calculated as profit for the year plus tax expense, depreciation and amortisation and finance cost less other income for the period, while EBITDA margin is the percentage of EBITDA divided by revenue from operations for the period.

3. PAT Margin is percentage of PAT divided by revenue from operations for the period.

4. Return on Capital Employed is calculated as Net operating income divided by Capital employed, where Net operating income is PBT plus Finance costs less Non-operating income and Capital employed is Total Equity plus Borrowings and Lease liabilities.

5. Inventory turnover ratio is calculated as Cost of goods sold divided by Average of opening and closing inventory for the period

6. DSCR is calculated as PBT plus Finance cost plus Depreciation charge divided by Finance cost plus Total Borrowings

7. Return on net assets is calculated as PAT divided by Total assets less Non current liabilities and current liabilities

8. Return on Equity is calculated as PAT divided by Average of opening and closing Shareholders fund for the period.

9. Current ratio is calculated as Current assets divided by Current liabilities.

10. Trade receivable turnover ratio is calculated as Revenue from operations divided by Average of opening and closing trade receivables for the period.

11. Net capital turnover ratio is calculated as Revenue from operations divided by Net working capital

Our ability to grow our business consistently requires us to (i) retain our existing customers; (ii) broad-base our engagement with our existing customers; and (iii) augment our customer base. We continually engage with our customers to understand their requirements better to be able to provide more holistic services and to identify new areas where we can engage with them and explore business opportunities as and when they arise. Our constant endeavour is to nurture every client relationship to ensure that it translates into a long term association. Our expertise, honed over the years, in conjunction with the strength of our collaborative efforts with our technology partners enables us to provide customised IT solutions to our customers. We also track the developments in the business segments we operate in to stay abreast of emerging trends and capitalise on new business opportunities. All these factors combined with our close interaction with our customers to understand their specific requirements enables us to strengthen, and forge long-term and more successful, relationships with our existing customers. We adopt a similar approach while seeking to establish new relationships. Further, we have broad-based the industry segments to which we cater including by venturing into newer business segments, and augmenting our product bouquet within each business segment.

Additionally, while currently we have 3 business verticals, IT Infrastructure Products and Services has been our largest revenue generating business verticals, and in Fiscal 2024, Fiscal 2023 and Fiscal 2022 contributed 3,146.47 million, 3,493.39 million and 3,294.62 million, constituting 52.19%, 65.28% and 70.48%, respectively, of our revenue from operations. Our top 10 customers have consistently contributed a significant part of our revenue from operations and in Fiscal 2024, Fiscal 2023 and Fiscal 2022, revenue from our top 10 customers aggregated 2,298.53 million, 1,730.67 million and 1,827.61 million constituting 38.11%, 32.34% and 39.10%, respectively, of our revenue from operations. Therefore, our continued success and growth will to a certain extent also depend on our continuing to receive the patronage of our existing Customers in this particular business segment, while simultaneously broadening and augmenting our customer base.

We are an IT solutions provider headquartered in Mumbai, Maharashtra. Our business and our reputation are, therefore, intrinsically linked to our ability to continuously augment our technology platforms and solutions and to provide improved product and service offerings catering to the specific needs of our customers. Over the years, we have expanded the range of our operations and currently our product portfolio comprises IT Infrastructure, Cloud and Data Management and ITeS which encompasses emergent technology such as HCI and hybrid cloud. The growth in the range of our product and service offerings is a direct consequence of constantly honing our technical skill-sets and focussing on developing/adapting newer technology. We constantly seek to keep abreast of the latest technology trend in the IT industry.

We will also be required to continuously update our existing systems. In addition, rapid and frequent technological changes and market demands can often render existing technologies obsolete and result in requirements for additional expenditures to replace or upgrade / update these technologies. The cost of replacing, updating or implementing new technologies, upgrading our existing technology, or expanding capacity could be significant. We propose to invest in Device-as-a-Service offerings, security operating centres and expanding our existing network operating centre, and offer our customers cyber security solutions. Our success will depend on our ability to anticipate these advances, enhance our existing offerings or develop new solution to meet customer needs in a timely manner. Our continued growth will to a large extent depend on our ability to continue our relentless focus on technological advancements and also continually deliver innovative solutions.

Our business operations are, currently, concentrated in India and our revenues are predominantly generated from India. While we cater to a large number of multinational companies and transnational corporations, and have offices in Singapore and Dubai, we are yet to expand our international operations significantly. The (Indian) IT Services industry is predominantly an export-oriented sector, with exports accounting for 84-86% of the total revenue with North America and Europe being key geographies. According to NASSCOM, Indian software product companies offer products which are well accepted by global companies and provide value for money. Indian IT sector provides value propositions such as cloud ready software, integrated readymade solutions, and hassle-free implementation. The global IT companies have increased investments in cutting-edge technologies like robotics, 3D printing, the IoT and connected devices, and the integration of social, mobile, analytics, and cloud (SMAC) solutions and the Indian service providers are able to derive significant benefits of this owing to their ability to offer domain-specific services and leverage big data analytics to achieve meaningful business results. (Source: CRISIL Report) In particular, the ITeS services export segment has witnessed growth in the recent past. Further, between Fiscal 2023 and Fiscal 2027, ITeS exports are expected to grow at a CAGR of 6-8% driven fast-growing knowledge services, as clients increasingly adopt analytics and robotic process automation (RPA) with business research. (Source: CRISIL Report).

We have set up a branch in Singapore viz., Orient Technologies Pvt. Ltd., Singapore Branch in Fiscal 2016. The Singapore branch is primarily engaged in the business of wholesale of computer peripheral equipments. Our Singapore branch caters to India and Singapore markets. Further, in Fiscal 2024, we have also generated revenues aggregating 22.21 million from countries including Denmark, United Arab Emirates and USA (other than Singapore). We propose to expand our geographic footprint and cater to a broader customer base globally.

(i) Statement Of Compliance and Basis of Accounting

The Restated Financial Information comprises of the Restated Statement of Assets and Liabilities as at March 31, 2024, March 31, 2023 and March 31, 2022 and Restated Statement of Profit and Loss (including Other comprehensive income), Restated Statement of Changes in Equity and Restated Cash Flow Statement for financial years ended March 31, 2024, March 31, 2023 and March 31, 2022 and the Material Accounting policies and other explanatory notes to the Restated Financial Information (collectively as the ‘Restated Financial Information). The Restated Financial Information have been prepared in accordance with Indian Accounting Standards (Ind AS) as prescribed under Section 133 of the Companies Act, 2013 and other relevant provisions of the Act as amended from time to time.

The Restated Financial Information have been approved by the Board of Directors on June 28, 2024.

The Restated Financial Information have been prepared by the Management as required under the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018, as amended from time to time, issued by the Securities and Exchange Board of India (SEBI), in pursuance of the Securities and Exchange Board of India Act, 1992 ("ICDR Regulations") for the purpose of inclusion in the Draft Red Herring Prospectus (‘DRHP), Red Herring Prospectus (‘RHP) and Prospectus (‘Offer Document) prepared by the Company in connection with the proposed initial public offering of equity shares of face value of 10 each of the Company comprising a fresh issue of equity shares and an offer for sale of equity shares held by the selling shareholders (the "Offer"), prepared by the Company in terms of the requirements of:

(a) Section 26 of Part I of Chapter III of the Companies Act, 2013, as amended (the "Act").

(b) The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 as amended from time to time; and

(c) The Guidance Note on Reports in Company Prospectuses (Revised 2019) issued by the Institute of Chartered Accountants of India (ICAI), as amended (the "Guidance Note").

The Restated Financial Information have been compiled from:

(a) Audited Financial Statements carried out in accordance with the requirements of the Companies Act, 2013 (Companies Act), the Companies (Indian Accounting Standards) Rules, 2015 (IND AS) as amended from time to time and Standards on Auditing specified under Section 143(10) of the Companies Act, of the financial statements of the Company for the financial year ended 31 March 2024 which is prepared as per IND AS (IND AS Financial Statements), which have been approved by the Board of Directors at their meeting held on June 28, 2024.

(b) Audited Financial Statements carried out in accordance with the requirements of the Companies Act, 2013 (Companies Act), the Companies (Indian Accounting Standards) Rules, 2015 (IND AS) as amended from time to time and Standards on Auditing specified under Section 143(10) of the Companies Act, of the financial statements of the Company for the financial year ended March 31, 2023 which is prepared as per IND AS (IND AS Financial Statements), which have been approved by the Board of Directors at their meeting held on August 30, 2023.

(c) Special Purpose Audited Financial Statements of the Company as at and for the year ended March 31, 2022 prepared in accordance with the Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 read with the Companies (Indian Accounting Standards) Rules, 2015 as amended from time to time, to the extent applicable, and the presentation requirements of the Companies Act, 2013 which have been approved by the Board of Directors at their meeting held on January 12, 2024 (Special Purpose Audited Financial Statements).

In pursuance to ICDR Regulations, the Company is required to provide Financial Statements (FS) prepared in accordance with Indian Accounting Standard (Ind AS) for the financial years ended March 31, 2024, March 31, 2023 and March 31, 2022 audited and certified by a chartered accountant who holds a valid certificate by the Peer

Review Board of the Institute of Chartered Accountants of India (ICAI). To comply with such requirements, the Company has prepared Special Purpose Audited financial statements for the financial years ending March 31, 2022. The Special Purpose Ind AS Financial statements which required restatement have been included in the Restated Financial Information prepared for the purpose of filing the DRHP.

The Restated Financial Information correspond to the classification provisions contained in Ind AS 1, "Presentation of Financial Statements". For clarity, various items are aggregated in the Restated Statement of Profit and loss and Restated Statement of Assets and liabilities. These items are disaggregated separately in the notes to the restated financial information, where applicable.

(ii) Basis of Measurement

The Restated Financial Information have been prepared on a historical cost convention and on an accrual basis, except for the following material items which have been measured at fair value as required by relevant Ind AS:

i. Financial instruments classified as fair value through other comprehensive income or fair value through profit or loss; and

ii. The defined benefit asset/(liability) is recognised as the present value of defined benefit obligation less fair value of plan assets.

(iii) Functional and presentation currency

The Restated Financial Information are presented in Indian Rupees (INR), which is also the Companys functional currency.

All amounts included in the Restated Financial Information are reported in Millions of Indian rupees (in Millions) except share and per share data, unless otherwise stated. Due to rounding off, the numbers presented throughout the document may not add up precisely to the totals and percentages may not precisely reflect the absolute figures.

(iv) Current and non-current classification

All assets and liabilities have been classified as current or non-current as per the Companys normal operating cycle and other criteria set out in Schedule III to the Act. Based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalents, the Company has ascertained its operating cycle up to twelve months for the purpose of current noncurrent classification of assets and liabilities.

(v) Use of estimates and judgements

The preparation of the Restated Financial Information in conformity with Ind AS requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the Restated Financial Information are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognized in the periods in which the results are known/materialised.

Assumptions and estimation uncertainties

Accounting estimates and underlying assumptions are reviewed on an ongoing basis. Changes to accounting estimates are recognised in the period in which the estimates are changed and in any future periods affected.

Information about critical judgments made in applying accounting policies, as well as estimates and assumptions that have the most significant effect to the carrying amounts of assets and liabilities within the next financial year, are included in the following accounting policies.

a) Measurement and likelihood of occurrence of provisions and contingencies

b) Impairment of non-financial assets

c) Impairment of financial assets

d) Provision for Income taxes and uncertain tax positions

Property, plant and equipment are measured at cost less accumulated depreciation and impairment losses, if any. Cost includes expenditures directly attributable to the acquisition of the asset. General and specific borrowing costs directly attributable to the construction of a qualifying asset are capitalised as part of the cost. Capital work-in-progress are measured at cost less accumulated impairment losses, if any

Depreciation

Depreciation on tangible assets is provided on straight line method and in the manner prescribed in Schedule II to the Companies Act, 2013, over its useful life specified in the Act, or based on the useful life of the assets as estimated by Management based on technical evaluation and advice. The residual value is 5% of the acquisition cost which is considered to be the amount recoverable at the end of the assets useful life. The residual values, useful lives and method of depreciation of property, plant and equipment is reviewed at each financial year end.

The Managements estimates of the useful life of various categories of fixed assets where estimates of useful life are lower than the useful life specified in Part C of Schedule II to the Companies Act, 2013 are as under:

When 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.

Subsequent expenditure relating to property, plant and equipment is capitalised only when it is probable that future economic benefits associated with these will flow to the Company and the cost of the item can be measured reliably.

Deposits and advances paid towards the acquisition of property, plant and equipment outstanding as at each reporting date is classified as capital advances under other non-current assets and the cost of property, plant and equipment not available for use before such date are disclosed under capital work-in-progress.

Assets costing less than Rs. 5,000 individually have been fully depreciated in the year of purchase.

The estimated useful life of the intangible assets and the amortization period are reviewed at the end of each financial year and the amortization period is revised to reflect the changed pattern, if any.

(ii) Goodwill

The excess of the cost of an acquisition over the acquirees identifiable assets and liabilities is recognised as goodwill. If the excess is negative, a bargain purchase gain is recognised in equity as capital reserve. Goodwill is measured at cost less accumulated impairment (if any). Goodwill associated with disposal of an operation that is part of cash-generating unit is measured based on the relative values of the operation disposed of and the portion of the cash-generating unit retained, unless some other method better reflects the goodwill associated with the operation disposed of.

(iii) Intangible assets

Intangible assets acquired separately are measured at cost of acquisition. Intangible assets acquired in a business combination are measured at fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less accumulated amortisation and impairment losses, if any. The amortisation of an intangible asset with a finite useful life reflects the manner in which the economic benefit is expected to be generated. The estimated useful life of amortisable intangibles is reviewed and where appropriate is adjusted, annually. The estimated useful lives of the amortisable intangible assets are as follows:

(iv) Leases

The Company enters into an arrangement for lease of land, buildings, plant and equipment including computer equipment and vehicles. Such arrangements are generally for a fixed period but may have extension or termination options. The Company assesses, whether the contract is, or contains, a lease, at its inception. A contract is, or contains, a lease if the contract conveys the right to:

a) control use of an identified asset,

b) obtain substantially all the economic benefits from use of the identified asset, and

c) direct the use of the identified asset

The Company determines the lease term as the noncancellable period of a lease, together with periods covered by an option to extend the lease, where the Company is reasonably certain to exercise that option. The Company at the commencement of the lease contract recognises a Right of Use ("RoU") asset at cost and corresponding lease liability, except for leases with term of less than twelve months (short-term leases) and low value assets. For these short-term and low value leases, the Company recognises the lease payments as an operating expense on a straight-line basis over the lease term. The cost of the RoU assets comprises the amount of the initial measurement of the lease liability, any lease payments made at or before the inception date of the lease, plus any initial direct costs, less any lease incentives received. Subsequently, the RoU assets are measured at cost less any accumulated depreciation and accumulated impairment losses, if any. The RoU assets are depreciated using the straight-line method from the commencement date over the shorter of lease term or useful life of RoU assets. The estimated useful lives of RoU assets are determined on the same basis as those of property, plant and equipment. The Company applies Ind AS 36 to determine whether a RoU asset is impaired and accounts for any identified impairment loss as described in the impairment of nonfinancial assets below.

For lease liabilities at the commencement of the lease, the Company measures the lease liability at the present value of the lease payments that are not paid at that date. The lease payments are discounted using the interest rate implicit in the lease, if that rate is readily determined, if that rate is not readily determined, the lease payments are discounted using the incremental borrowing rate that the Company would have to pay to borrow funds, including the consideration of factors such as the nature of the asset and location, collateral, market terms and conditions, as applicable in a similar economic environment. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. The Company recognises the amount of the remeasurement of lease liability as an adjustment to the RoU assets. Where the carrying amount of the RoU asset is reduced to zero and there is a further reduction in the measurement of the lease liability, the Company recognises any remaining amount of the re-measurement in statement of profit and loss.

Payment of Lease liabilities are classified as cash used in financing activities in the statement of cash flows.

Leases under which the Company is a lessor are classified as a finance or operating lease. Lease contracts where all the risks and rewards are substantially transferred to the lessee are classified as a finance lease. All other leases are classified as operating lease. For leases under which the Company is an intermediate lessor, the Company accounts for the head-lease and the sub-lease as two separate contracts. The sub-lease is further classified either as a finance lease or an operating lease by reference to the RoU asset arising from the headlease.

Non derivative financial instruments consist of: financial assets, which include cash and cash equivalents, trade receivables, unbilled revenues, contract assets, employee and other advances, investments in equity, debt and mutual fund securities and eligible current and noncurrent assets.

Financial liabilities include long and short term loans and borrowings, bank overdrafts, trade payables, lease liabilities, eligible current and non-current liabilities, . Non derivative financial instruments are recognized initially at fair value.

Financial assets are derecognized when substantial risks and rewards of ownership of the financial asset have been transferred. In cases where substantial risks and rewards of ownership of the financial assets are neither transferred nor retained, financial assets are derecognized only when the Company has not retained control over the financial asset. Subsequent to initial recognition, non-derivative financial instruments are measured as described below

A. Cash and cash equivalents

The Companys cash and cash equivalents consist of cash on hand and in banks and demand deposits with banks, which can be withdrawn at any time, without prior notice or penalty on the principal. For the purposes of the cash flow statement, cash and cash equivalents include cash on hand, in banks and demand deposits with banks, net of outstanding bank overdrafts that are repayable on demand and are considered part of the Companys cash management system. In the balance sheet, bank overdrafts are presented under borrowings within current liabilities.

B. Investments

Financial instruments measured at amortised cost:

Debt instruments that meet the following criteria are measured at amortized cost (except for debt instruments that are designated at fair value through Profit or Loss (FVTPL) on initial recognition): the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows; and the contractual terms of thein strument give rise on specified dates to cash flows that are solely payment of principal and interest on the principal amount outstanding.

Financial instruments measured at fair value through other comprehensive income (FVOCI): Debt instruments that meet the following criteria are measured at fair value through other comprehensive income (FVTOCI) (except) for debt instruments that are designated at fair value through Profit or Loss (FVTPL) on initial recognition) the asset is held within a business model whose objective is achieved both by collecting contractual cash flows and selling financial asset; and the contractual terms of the instrument give rise on specified dates to cash flows that are solely payment of principal and interest on the principal amount outstanding. Interest income is recognized in statement of profit and loss for FVTOCI debt instruments. Other changes in fair value of FVTOCI financial assets are recognized in other comprehensive income. When the investment is disposed of, the cumulative gain or loss previously accumulated in reserves is transferred to statement of profit and loss. Financial instruments measured at fair value through profit or loss (FVTPL):

Instruments that do not meet the amortised cost or FVTOCI criteria are measured at FVTPL. Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any gains or losses arising on re-measurement recognized in statement of profit and loss. The gain or loss on disposal is recognized in statement of profit and loss. Interest income is recognized in statement of profit and loss for FVTPL debt instruments. Dividend on financial assets at FVTPL is recognized when the Companys right to receive dividend is established. Investments in equity instruments designated to be classified as FVTOCI: The Company carries certain equity instruments which are not held for trading. The Company has elected the FVTOCI irrevocable option for these instruments. Movements in fair value of these investments are recognized in other comprehensive income and the gain or loss is not reclassified to statement of profit and loss on disposal of these investments. Dividends from these investments are recognized in statement of profit and loss when the Companys right to receive dividends is established.

Other financial assets: Other financial assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are presented as current assets, except for those maturing later than 12 months after the reporting date which are presented as non-current assets. These are initially recognized at fair value and subsequently measured at amortized cost using the effective interest method, less any impairment losses. These comprise trade receivables, unbilled revenues, cash and cash equivalents and other assets.

Trade and other payables Trade and other payables are initially recognized at fair value, and subsequently carried at amortized cost using the effective interest method. For these financial instruments, the carrying amounts approximate fair value due to the short term maturity of these instruments.

Derecognition of financial instruments The Company derecognizes a financial asset 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 IFRS

9. If the Company retains substantially all the risks and rewards of a transferred financial asset, the Company continues to recognise the financial asset and also recognizes a borrowing for the proceeds received. A financial liability (or a part of a financial liability) is derecognized from the Companys balance sheet when the obligation specified in the contract is discharged or cancelled or expires

Financial instruments measured at amortised cost:

Debt instruments that meet the following criteria are measured at amortized cost (except for debt instruments that are designated at fair value through Profit or Loss (FVTPL) on initial recognition):

the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows; and

the contractual terms of the instrument give rise on specified dates to cash flows that are solely payment of principal and interest on the principal amount outstanding.

Debt instruments that meet the following criteria are measured at fair value through other comprehensive income (FVTOCI) (except) for debt instruments that are designated at fair value through Profit or Loss (FVTPL) on initial recognition)

the asset is held within a business model whose objective is achieved both by collecting contractual cash flows and selling financial asset; and the contractual terms of the instrument give rise on specified dates to cash flows that are solely payment of principal and interest on the principal amount outstanding.

Interest income is recognized in statement of profit and loss for FVTOCI debt instruments. Other changes in fair value of FVTOCI financial assets are recognized in other comprehensive income. When the investment is disposed of, the cumulative gain or loss previously accumulated in reserves is transferred to statement of profit and loss.

Instruments that do not meet the amortised cost or FVTOCI criteria are measured at FVTPL. Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any gains or losses arising on remeasurement recognized in statement of profit and loss.

The gain or loss on disposal is recognized in statement of profit and loss. Interest income is recognized in statement of profit and loss for FVTPL debt instruments. Dividend on financial assets at FVTPL is recognized when the Companys right to receive dividend is established.

Investments in equity instruments designated to be classified as FVTOCI:

The Company carries certain equity instruments which are not held for trading. The Company has elected the FVTOCI irrevocable option for these instruments. Movements in fair value of these investments are recognized in other comprehensive income and the gain or loss is not reclassified to statement of profit and loss on disposal of these investments.

Dividends from these investments are recognized in statement of profit and loss when the Companys right to receive dividends is established.

(vi) Other financial assets:

Other financial assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are presented as current assets, except for those maturing later than 12 months after the reporting date which are presented as non-current assets. These are initially recognized at fair value and subsequently measured at amortized cost using the effective interest method, less any impairment losses. These comprise trade receivables, unbilled revenues, cash and cash equivalents and other assets.

(vii) Trade and other payables

Trade and other payables are initially recognized at fair value, and subsequently carried at amortized cost using the effective interest method. For these financial instruments, the carrying amounts approximate fair value due to the short term maturity of these instruments.

The Company derecognizes a financial asset 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 IFRS 9. If the Company retains substantially all the risks and rewards of a transferred financial asset, the Company continues to recognise the financial asset and also recognizes a borrowing for the proceeds received. A financial liability (or a part of a financial liability) is derecognized from the Companys balance sheet when the obligation specified in the contract is discharged or cancelled or expires.

The Companys accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities.

The Company has an established control framework with respect to the measurement of fair values. This includes a treasury team that has overall responsibility for overseeing all significant fair value measurements, including Level 3 fair values, and reports directly to the Chief Financial Officer.

The treasury team regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the valuation team assesses the evidence obtained from the third parties to support the conclusion that these valuations meet the requirements of Ind AS, including the level in the fair value hierarchy in which the valuations should be classified.

Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.

o Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

o Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

o Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

When measuring the fair value of an asset or a liability, the Company uses observable market data as far as possible. If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

The Company recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

(ix) Inventories

Inventories are valued at the lower of the cost and the net realizable value. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and to make the sale. Cost is determined on a First in First out basis. A periodic review is made of slow-moving stock and appropriate provisions are made for anticipated losses, if any.

The Company applies the expected credit loss model for recognising impairment loss on financial assets measured at amortised cost, debt instruments classified as FVTOCI, trade receivables, unbilled receivables, contract assets, finance lease receivables and other financial assets. Expected credit loss is the difference between the contractual cash flows and the cash flows that the entity expects to receive discounted using the effective interest rate. Loss allowances for trade receivables, unbilled receivables, contract assets and finance lease receivables are measured at an amount equal to lifetime expected credit loss. Lifetime expected credit losses are the expected credit losses that result from all possible default events over the expected life of a financial instrument. Lifetime expected credit loss is computed based on a provision matrix which takes in to account, risk profiling of customers and historical credit loss experience adjusted for forward looking information. For other financial assets, expected credit loss is measured at the amount equal to twelve months expected credit loss unless there has been a significant increase in credit risk from initial recognition, in which case those are measured at lifetime expected credit loss.

The Company assesses long-lived assets such as property, plant and equipment, RoU assets and acquired intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or group of assets may not be recoverable. If any such indication exists, the Company estimates the recoverable amount of the asset or group of assets. Goodwill is tested for impairment at least annually at the same time and when events occur or changes in circumstances indicate that the recoverable amount of the cash generating unit is less than its carrying value. The goodwill impairment test is performed at the level of cash generating unit or groups of cash generating units which represents the lowest level at which goodwill is monitored for internal management purposes. The recoverable amount of an asset or cash generating unit is the higher of its fair value less cost of disposal ("FVLCD") and its value-in-use ("VIU").

The VIU of longlived assets is calculated using projected future cash flows. FVLCD of a cash generating unit is computed using turnover and earnings multiples. If the recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the statement of profit and loss. If at the reporting date, there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the impairment losses previously recognised are reversed such that the asset is recognised at its recoverable amount but not exceeding written down value which would have been reported if the impairment losses had not been recognised initially. An impairment in respect of goodwill is not reversed.

(xi) Foreign Currency transactions

Reporting and presentation currency

The Restated Financial Information are presented in Millions of Indian Rupees, which is also the functional currency of the Company.

Foreign currency transactions and balances

Transactions in foreign currency are translated into the functional currency using the exchange rates prevailing at the date of the transaction. Foreign exchange gains and losses resulting from the settlement of such transactions and from translation at the exchange rates prevailing at the reporting date of monetary assets and liabilities denominated in foreign currencies are recognized in the statement of profit and loss and reported within foreign exchange gains/(losses), net within results of operating activities except when deferred in other comprehensive income as qualifying cash flow hedges. Gains/(losses) relating to translation or settlement of borrowings denominated in foreign currency are reported within finance expense. Nonmonetary assets and liabilities denominated in foreign currency and measured at historical cost are translated at the exchange rate prevalent at the date of transaction. Translation differences on nonmonetary financial assets measured at fair value at the reporting date, such as equities classified as FVTOCI are included in other comprehensive income, net of taxes

The exchange differences arising from the translation of Restated Financial Information of foreign branch, differences arising from translation of long-term inter-branch receivables or payables relating to foreign operations settlement of which is neither planned nor likely in the foreseeable future, are recognized in other comprehensive income, net of taxes and presented within equity as FCTR

The Company derives revenue primarily from sale of IT and related other products, maintenance of software/hardware and related services.

Revenues from customer contracts are considered for recognition and measurement when the contract has been approved by the parties to the contract, the parties to contract are committed to perform their respective obligations under the contract, and the contract is legally enforceable. Revenue is recognised upon transfer of control of promised products or services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. To recognise revenues, the Company applies 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) recognise revenues when a performance obligation is satisfied. When there is uncertainty as to collectability, revenue recognition is postponed until such uncertainty is resolved.

At contract inception, the Company assesses its promise to transfer products or services to a customer to identify separate performance obligations. The Company applies 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. The Company allocates the arrangement consideration to separately identifiable performance obligations based on their relative selling price or residual method. selling prices are determined based on sale prices for the components when it is regularly

sold separately, in cases where the Company is unable to determine the selling price the Company uses third-party prices for similar deliverables or the Company uses expected cost-plus margin approach in estimating the selling price. For performance obligations where control is transferred over time, revenues are recognised 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 recognising revenues and costs depends on the nature of the services rendered:

Revenues and costs relating to time and materials contracts are recognised as the related services are rendered.

Revenues from fixed-price development contracts, including software development, and integration contracts, where the performance obligations are satisfied over time, are recognised using the "percentage-of-completion" method. The performance obligations are satisfied as and when the services are rendered since the customer generally obtains control of the work as it progresses. Percentage of completion is determined based on project costs incurred to date as a percentage of total estimated project costs required to complete the project.

The cost expended (or input) method has been used to measure progress towards completion as there is a direct relationship between input and productivity. If the Company is not able to reasonably measure the progress of completion, revenue is recognised only to the extent of costs incurred for which recoverability is probable. When total cost estimates exceed revenues in an arrangement, the estimated losses are recognised in the statement of profit and loss in the period in which such losses become probable based on the current contract estimates as an onerous contract provision. 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 receivables on other than fixed price development contracts are classified as a financial asset where the right to consideration is unconditional and only the passage of time is required before the payment is due.

Revenues related to fixed-price maintenance contracts are recognised on a straight-line basis when services are performed through an indefinite number of repetitive acts over a specified period or ratably using percentage of completion method when the pattern of benefits from the services rendered to the customers and the cost to fulfil the contract is not even through the period of contract because the services are generally discrete in nature and not repetitive. Revenue for contracts in which the invoicing is representative of the value being delivered is recognised based on our right to invoice. If our invoicing is not consistent with value delivered, revenues are recognised as the service is performed using the percentage of completion method.

In certain projects, a fixed quantum of service or output units is agreed at a fixed price for a fixed term. In such contracts, revenue is recognised with respect to the actual output achieved till date as a percentage of total contractual output. Any residual service unutilised by the customer is recognised as revenue on completion of the term

Element or Volume based contracts Revenues and costs are recognised as the related services are rendered

Revenue on product sales are recognised when the customer obtains control of the specified product.

Revenue is recognized from rendering of services when the performance obligation is satisfied, and the services are rendered in accordance with the terms and conditions of customer contracts. Revenue is measured based on the transaction price, which is the consideration, as specified in the contract with the customer. Revenue also excludes taxes collected from customers.

Revenue from time and material and job contracts is recognized on an output basis measured by units delivered, efforts expended, number of transactions processed, etc.

The Company accounts for variable considerations like, volume discounts, rebates, pricing incentives to customers and penalties as reduction of revenue on a systematic and rational basis over the period of the contract. The Company estimates an amount of such variable consideration using 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 the Company may be entitled and when it is probable that a significant reversal of cumulative revenue recognised will not occur when the uncertainty associated with the variable consideration is resolved. Revenues are shown net of allowances/returns, sales tax, value added tax, goods and services tax and applicable discounts and allowances.

The Company accrues the estimated cost of warranties at the time when the revenue is recognised. The accruals are based on the Companys 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 recognised as an asset when the Company expects to recover these costs and amortised over the contract term.

The Company recognises 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 recognised is amortised on a systematic basis consistent with the transfer of goods or services to customer to which the asset relates.

Estimates of transaction price and total costs or efforts are continuously monitored over the term of the contract and are recognised in net profit in the period when these estimates change or when the estimates are revised. Revenues and the estimated total costs or efforts are subject to revision as the contract progresses.

Contract Assets

Trade Receivables

A receivable represents the Companys right to an amount of consideration that is unconditional (i.e., only the passage of time is required before payment of the consideration is due).

Contract liabilities

A contract liability is the obligation to transfer goods to a customer for which the Company has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before the Company transfers goods or services to the customer, a contract liability is recognized when the payment is made, or the payment is due (whichever is earlier). Contract liabilities are recognized as revenue when the Company performs under the contract.

Finance and other income comprises interest income on deposits, dividend income, gains/(losses) on disposal of investments and net gain on translation or settlement of foreign currency borrowings. Interest income is recognised using the effective interest method. Dividend income is recognised when the right to receive payment is established.

Other Income

Profit on sale of investments is determined as the difference between the sales price and the carrying value of the investment upon disposal of investments.

Dividend income is recognized in profit or loss on the date on which the Companys right to receive payment is established.

Interest income or expense is recognized using the effective interest method.

The ‘effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to:

the gross carrying amount of the financial asset; or the amortized cost of the financial liability

In calculating interest income and expense, the effective interest rate is applied to the gross carrying amount of the asset (when the asset is not credit-impaired) or to the amortized cost of the liability. However, for financial assets that have become credit- impaired after initial recognition, interest income is calculated by applying the effective interest rate to the amortized cost of the financial asset. If the asset is no longer credit-impaired, then the calculation of interest income reverts to the gross basis.

Insurance claims are accounted for based on claims admitted / expected to be admitted and to the extent that the amount recoverable can be measured reliably and it is reasonable to expect ultimate collection.

Interest on Refund from Income Tax Department are accounted for on receipt basis.

Finance costs comprises interest cost on borrowings, lease liabilities and net defined benefit liability, gains or losses arising on re-measurement of financial assets measured at FVTPL, net loss on translation or settlement of foreign currency borrowings and changes in fair value and gains/(losses) on settlement of related derivative instruments. Borrowing costs that are not directly attributable to a qualifying asset are recognised in the statement of profit and loss using the effective interest method.

(xiv) Expenditure Recognition

Expenses are accounted on an accrual basis and on crystallization of such expenses. And provisions for all known losses and liabilities are made. Provisions are made for future unforeseeable factors, which may affect the ultimate profit on fixed price software development contracts. Expenses on software development on time-and-material basis are accounted for in the year in which it is expended. Expenses incurred for future software projects are carried forward and will be adjusted against revenue, based on the completion method. In case of new products, which are clearly defined, and the costs are attributable to the products, such costs are deferred and amortized equally over a period of three to five years based on Managements evaluation of expected sales volumes and duration of the product life cycle.

Post-employment benefit plans

The Company participates in various employee benefit plans. Pensions and other post-employment benefits are classified as either defined contribution plans or defined benefit plans. Under a defined contribution plan, the Companys sole obligation is to pay a fixed amount with no obligation to pay further contributions if the fund does not hold sufficient assets to pay all employee benefits. The related actuarial and investment risks are borne by the employee. The expenditure for defined contribution plans is recognised as an expense during the period when the employee provides service. Under a defined benefit plan, it is the Companys obligation to provide agreed benefits to the employees. The related actuarial and investment risks are borne by the Company. The present value of the defined benefit obligations is calculated by an independent actuary using the projected unit credit method. Remeasurements of the defined benefit plans, comprising actuarial gains or losses, and the return on plan assets (excluding interest) are immediately recognised in other comprehensive income, net of taxes and not reclassified to profit or loss in subsequent period. Net interest recognised in profit or loss is calculated by applying the discount rate used to measure the defined benefit obligation to the net defined benefit liability or asset. The actual return on the plan assets above or below the discount rate is recognised as part of remeasurements of the defined benefit plans through other comprehensive income, net of taxes.

Eligible employees receive benefits under the provident fund plan in which both the employer and employees make periodic contributions to the approved provident fund trust managed by the Company. A portion of the employers contribution is made to the government administered pension fund. The contributions to the trust managed by the Company is accounted for as a defined benefit plan as the Company is liable for any shortfall in the fund assets based on the government specified minimum rates of return. Certain employees receive benefits under the provident fund plan in which both the employer and employees make periodic contributions to the government administered provident fund. A portion of the employers contribution is made to the government administered pension fund. This is accounted as a defined contribution plan as the obligation of the Company is limited to the contributions made to the fund.

Defined Benefit plan

Define benefits plan includes gratuity payments in accordance with the Payment of Gratuity Act, 1972. The gratuity is not funded.

For defined benefit schemes, the cost of providing benefits is determined using Projected Unit Credit method, with actuarial valuations being carried out at each balance sheet date. Actuarial gains/losses are recognized in the period of occurrence under Other Comprehensive Income (OCI). Past service cost is recognized to the extent the benefits are already vested, and otherwise is amortized on a Straight-Line method over the average period until the benefits become vested. The retirement benefit obligation recognized in the balance sheet represents the present value of the defined benefit obligations as adjusted for unrecognized past service cost.

The employees of the Company are entitled to compensated absences. The employees can carry forward a portion of the unutilised accumulating compensated absences and utilise it in future periods or receive cash at retirement or termination of employment. The Company records an obligation for compensated absences in the period in which the employee renders the services that increases this entitlement. The Company measures the expected cost of compensated absences as the additional amount that the Company expects to pay as a result of the unused entitlement that has accumulated at the end of the reporting period. The Company recognises accumulated compensated absences based on actuarial valuation using the projected unit credit method. Non-accumulating compensated absences are recognised in the period in which the absences occur.

Short-term employee benefit obligations such as cash bonus, management incentive plans or profit sharing plans are measured on an undiscounted basis and are recorded as expense as the related service is provided. A liability is recognised for the amount expected to be paid under short-term cash bonus, management incentive plans or profit-sharing plans, if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

(xvi) Income Tax

Tax expense recognized in the statement of profit or loss comprises the sum of deferred tax and current tax not recognized in other comprehensive income or directly in equity. Calculation of current tax is based on tax rates in accordance with tax laws that have been enacted or substantively enacted by the end of the reporting period. Deferred income taxes are calculated using the liability method on temporary differences between tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at reporting date. Deferred taxes pertaining to items recognized in other comprehensive income are also disclosed under the same head. Deferred tax assets are recognized to the extent that it is probable that the underlying tax loss or deductible temporary difference will be utilized against future taxable income. This is assessed based on the respective entitys forecast of future operating results, adjusted for significant non-taxable income and expenses and specific limits on the use of any unused tax loss or credit. Deferred tax is not provided on the initial recognition of goodwill, or on the initial recognition of an asset or liability unless the related transaction is a business combination or affects tax or accounting profit.

The company recognizes income earned by its foreign branch as part of its total income for income tax purposes. Foreign tax credits are utilized under the relief provided by Section 90 of the Income Tax Act

Deferred income tax is recognised using the balance sheet approach. Deferred income tax assets and liabilities are recognised for deductible and taxable temporary differences arising between the tax base of assets and liabilities and their carrying amount in the Restated Financial Information, except when the deferred income tax arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and affects neither accounting nor taxable profits or loss at the time of the transaction. Deferred income tax assets are recognised to the extent it is probable that taxable profit will be available against which the deductible temporary differences and the carry forward of unused tax credits and unused tax losses can be utilised. Deferred income tax liabilities are recognised for all taxable temporary differences except in respect of taxable temporary differences that is expected to reverse within the tax holiday period, taxable temporary differences associated with investments in subsidiaries, associates and foreign branches where the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.

(xvii) Provisions (other than employee benefits) and contingencies

Provisions are recognised when the Company has a present obligation (legal or constructive), as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, considering the risks and uncertainties surrounding the obligation. When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset, if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

Provisions for onerous contracts are recognised when the expected benefits to be derived by the Company 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 lower of the expected net cost of fulfilling the contract and the expected cost of terminating the contract.

(xviii) Cash flow statement

Cash flows are reported using the indirect method, whereby profit for the period is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash from operating, investing and financing activities of the Company are segregated.

(xix) Earnings per share

Basic earnings per equity share is calculated by dividing the net profit or loss for the period attributable to equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period is adjusted for events including a bonus issue, bonus element in a rights issue to existing shareholders, share split and reverse share split (consolidation of shares). In this scenario, the number of equity shares outstanding increases without an increase in resources due to which the number of equity shares outstanding before the event is adjusted for the proportionate change in the number of equity shares outstanding as if the event had occurred at the beginning of the earliest period reported.

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

1.4 Ministry of Corporate Affairs (MCA), on March 31, 2023 through the Companies (Indian Accounting Standards (Ind AS) Amendment Rules, 2023 amended certain existing Ind Ass with effect from April 01, 2023. Following are few key amendments relevant to the Company:

(i) Ind AS 1 - Presentation of Financial Statements & Ind AS 34 Interim Financial Reporting Material accounting policy information (including focus on how an entity applied the requirements of Ind AS) shall be disclosed instead of significant accounting policies as part of the financial statements.

(ii) Ind AS 107 Financial Instruments: Disclosures Information about the measurement basis for financial instruments shall be disclosed as part of material accounting policy information.

(iii) Ind AS 8 Accounting policies, changes in accounting estimate and errors clarification on what constitutes an accounting estimate provided.

(iv) Ind AS 12 Income Taxes This amendment has narrowed the scope of the initial recognition exemption so that it does not apply to transactions that give rise to equal and offsetting temporary differences.

The above amendments did not have any material impact on the amounts recognized in prior periods and are not expected to significantly affect the current or future period.

Ministry of Corporate Affairs (MCA) notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. During the year ended March 31, 2024 MCA has not notified any new standards or amendments to the existing standards applicable to the Company.

In addition to our results determined in accordance with Ind AS, we believe the following Non-GAAP measures are useful to investors in evaluating our operating performance and liquidity. We use the following Non-GAAP financial information to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that Non-GAAP financial information, when taken collectively with financial measures disclosed in the financial statements prepared in accordance with Ind AS, may be helpful to investors because it provides an additional tool for investors to use in evaluating our ongoing operating results and trends and in comparing our financial results with other companies in our industry because it provides consistency and comparability with past financial performance. However, our management does not consider these Non-GAAP measures in isolation or as an alternative to financial measures.

Gross margin, EBITDA, EBITDA margin, return on net asset, PAT margin and return on equity (Non-GAAP Measures) presented in this Red Herring Prospectus is a supplemental measure of our performance and liquidity that is not required by, or presented in accordance with, Ind AS, IFRS or US GAAP. Further, EBITDA is not a measurement of our financial performance or liquidity under Ind AS, IFRS or US GAAP and should not be considered in isolation or construed as an alternative to cash flows, profit/ (loss) for the years or any other measure of financial performance or as an indicator of our operating performance, liquidity, profitability or cash flows generated by operating, investing or financing activities derived in accordance with Ind AS, IFRS or US GAAP. In addition, Non-GAAP Measures are not standardised terms, hence a direct comparison of Non-GAAP Measures between companies may not be possible. Other companies may calculate the Non-GAAP Measure differently from us, limiting its usefulness as a comparative measure. Although Non-GAAP Measures is not a measure of performance calculated in accordance with applicable accounting standards, our Companys management believes that it is useful to an investor in evaluating us because it is a widely used measure to evaluate a companys operating performance. See ‘Risk Factors Certain non-GAAP financial measures and certain other statistical information relating to our operations and financial performance like Gross Margin, EBITDA, EBITDA Margin, return on net assets, PAT Margin, and Return on Equity have been included in this Red Herring Prospectus. These non-GAAP financial measures are not measures of operating performance or liquidity defined by Ind AS and may not be comparable on page 52.

Our total income for Fiscal 2024, Fiscal 2023 and Fiscal 2022 was 6,068.64 million, 5,420.09 million and 4,691.23 million, respectively.

Total income comprises revenue from operations and other income.

Revenue from operations

Our revenue from operations comprises revenue from our 3 business segments set out below: (i) IT Infrastructure; (ii) Cloud and Data management services; and (iii) ITeS.

Other income

Our other income primarily comprises interest income from financial assets at amortized cost, net gain on sale/fair valuation of investment carried at fair value through profit or loss (FVTPL), liabilities no longer required written back, net sundry balances written back and gain on disposal of property, plant and equipment.

Our total expenses comprise purchase of stock-in-trade, changes in inventories of stock in trade, direct expenses, employee benefit expenses, finance cost and other expenses.

Purchase of stock-in-trade

This relates to the purchase of IT products, spare parts and related accessories.

The change in inventories of stock in trade is the difference between the total of opening and closing inventory of stock in trade.

Direct expenses comprise salaries, incentives and allowances (employees cost for billable resources i.e. cost incurred on employees who are deputed to customer locations), transportation expense, consumption of spare parts, installation charges, hire rent and implementation and labour charges.

Employee benefits expenses

Employee benefit expenses comprise salaries, incentives and allowances, remuneration of directors, contribution to provident fund and other funds, gratuity expenses and staff welfare expenses.

Finance cost comprises interest expenses to financial institutions, debenture holders and others, interest on lease liability, interest on delay in payment of advance tax and bank charges.

Depreciation and amortisation expenses comprises depreciation of property, plant and equipment, and amortization of intangible i.e. right to use assets.

Other expenses

Other expenses comprise primarily legal and professional fees expenses, commission and brokerage travelling and conveyance, communication expenses and bad debt expenses and provision for doubtful debts.

Tax expense comprises current year tax expenses, tax expense relating to earlier years and deferred tax.

The following table provides certain information with respect to our results of operations for the Fiscal 2024, Fiscal 2023 and Fiscal 2022 from our Restated Financial Statements and each item as a percentage of total income for the periods indicated.

Our total income increased by 11.97% from 5,420.09 million in Fiscal 2023 to 6,068.64 million in Fiscal 2024, primarily due to an increase in revenue from operations from 5,351.02 million to 6,028.93 million.

Revenue from operations

Our revenue from operations increased from 5,351.02 million in Fiscal 2023 to 6,028.93 million in Fiscal 2024 due to an increase in (i) revenue from Cloud and Data Management Services from 805.56 million in Fiscal 2023 to 1,543.30 million in Fiscal 2024, and (ii) revenue from ITeS from 1,052.07 million in Fiscal 2023 to 1,339.16 million in Fiscal 2024, which was partially offset by a decrease in revenue from IT Infrastructure from 3,493.39 million in Fiscal 2023 to 3,146.47 million in Fiscal 2024. Such decrease IT Infrastructure was primarily due to reduction in end user computing orders from our customers.

Other income

Our other income decreased by 42.50% from 69.07 million in Fiscal 2023 to 39.71 million in Fiscal 2024 primarily due to a decrease in interest income from deposit with banks from 5.63 million in Fiscal 2023 to 2.26 million in Fiscal 2024, ‘Nil gain on disposal of property, plant and equipment as compared to 28.43 million in Fiscal 2023, which was partially offset by an increase in Net gain from investment carried at FVTPL from 12.32 million in Fiscal 2023 to 16.01 million in Fiscal 2024 and increase in liabilities no longer required to be written back (net) from 11.34 million in Fiscal 2023 to 17.54 million in Fiscal 2024.

Our total expenses increased by 12.63% from 4,900.55 million in Fiscal 2023 to 5,519.52 million in Fiscal 2024 primarily due to an increase in operating expenses from 4,864.58 million to 5,462.75 million.

Purchase of stock-in-trade and change in inventories of stock-in-trade

Purchase of stock-in-trade and change in inventories of stock-in-trade increased by 11.64% from 4,048.57 million in Fiscal 2023 to 4,519.84 million in Fiscal 2024 primarily due to an increase in the purchase of IT products, spare parts and related accessories from 3,994.94 million in Fiscal 2023 to 4,573.35 million in Fiscal 2024 partially offset by a lower closing of (135.45) million in Fiscal 2024 compared to (81.94) million in Fiscal 2023.

Direct expenses

Our direct expenses increased by 45.32% from 276.67 million in Fiscal 2023 to 402.05 million in Fiscal 2024 primarily due to an increase in salaries, incentives and allowances (employees cost for billable resources) from 269.83 million in Fiscal 2023 to 396.38 million in Fiscal 2024 on account of increase in ITeS revenue correspondingly increase in manpower required for ITeS business.

Employee benefit expenses

Our employee benefit expenses increased by 15.91% from 342.48 million in Fiscal 2023 to 396.98 million in

Fiscal 2024 primarily due to an increase in salaries, incentives and allowances (net of allocated to direct expenses above) from 267.69 million in Fiscal 2023 to 312.62 million in Fiscal 2024 on account of an increase in the number of employees from 1,252 to 1,434.

Finance cost

Our finance cost increased by 13.39% from 18.08 million in Fiscal 2023 to 20.50 million in Fiscal 2024 primarily due to an increase (i) in interest expenses to other from 0.67 million in Fiscal 2023 to 5.20 million in Fiscal 2024 and (ii) increase in interest on lease liability from 3.11 million Fiscal 2023 to 6.52 million in

Fiscal 2024 which was partially offset by a decrease in (i) interest delay on payment of advance tax from 3.12 million in Fiscal 2023 to ‘Nil in Fiscal 2024 and (ii) bank charges (including bank guarantee charges) from 9.23 million Fiscal 2023 to 7.57 million in Fiscal 2024.

Depreciation and amortization expenses

Our depreciation and amortization expenses increased by 102.73% from 17.89 million in Fiscal 2023 to 36.27 million in Fiscal 2024 primarily due to an increase in (i) depreciation on tangible assets from 10.97 million in Fiscal 2023 to 17.49 million in Fiscal 2024 and (ii) depreciation / amortization on right of use assets from 6.92 million in Fiscal 2023 to 18.78 million in Fiscal 2024.

Other expenses

Our other expenses decreased by 26.91% from 196.86 million in Fiscal 2023 to 143.88 million in Fiscal 2024 primarily due to a decrease in (i) legal and professional fees from 98.36 million in Fiscal 2023 to 38.32 million in Fiscal 2024 which was partially off-set by an increase in office expenses from 5.57 million Fiscal 2023 to 10.01 million in Fiscal 2024.

Due to the aforementioned factors our tax expenses decreased marginally from 136.56 million in Fiscal 2023 to 134.64 million in Fiscal 2024.

Accordingly, our profit after tax increased by 8.22% from 382.98 million in Fiscal 2023 to 414.48 million in Fiscal 2024 primarily due to an increase in our revenue from operations from our business verticals i.e., (i) Cloud and Data Management Services from 805.56 million in Fiscal 2023 to 1,543.30 million in Fiscal 2024 and ITeS from 1,052.07 million in Fiscal 2023 to 1,339.16 million in Fiscal 2024.

Our total income increased by 15.54% from 4.691.23 million in Fiscal 2022 to 5,420.09 million in Fiscal 2023 primarily due to an increase in revenue from operations from 4,674.43 million to 5,351.02 million.

Revenue from operations

Our revenue from operations increased from 4,674.43 million in Fiscal 2022 to 5,351.02 million in Fiscal 2023 due to an increase in (i) revenue from IT Infrastructure from 3,294.62 million in Fiscal 2022 to 3,493.39 million in Fiscal 2023, (ii) revenue from Cloud and Data Management Services from 581.44 million in Fiscal 2022 to 805.56 million in Fiscal 2023, and (iii) revenue from ITeS from 798.37 million in Fiscal 2022 to 1,052.07 million in Fiscal 2023.

Other income

Our other income increased by 311.13% from 16.80 million in Fiscal 2022 to 69.07 million in Fiscal 2023 primarily due to an increase in net gain from investment carried at FVTPL from 5.76 million in Fiscal 2022 to 12.32 million in Fiscal 2023, gain on disposal of property, plant and equipment of 28.43 million in Fiscal 2023 as against NIL in Fiscal 2022 and liabilities no longer required written back (net) of 11.34 million in Fiscal 2023 as against NIL in Fiscal 2022.

Our total expenses increased by 15.42% from 4,245.69 million in Fiscal 2022 to 4,900.55 million in Fiscal 2023 primarily due to an increase in operating expenses from 4,216.18 million to 4,864.58 million.

Purchase of stock-in-trade and change in inventories of stock-in-trade

Purchase of stock-in-trade and change in inventories of stock-in-trade increased by 13.98% from 3,551.90 million in Fiscal 2022 to 4,048.57 million in Fiscal 2023 primarily due to an increase in the purchase of IT products, spare parts and related accessories from 3,642.65 million in Fiscal 2022 to 3,994.94 million in Fiscal 2023.

Direct expenses

Our direct expenses increased by 6.23% from 260.45 million in Fiscal 2022 to 276.67 million in Fiscal 2023 primarily due to an increase in salaries, incentives and allowances (employees cost for billable resources) from 255.36 million in Fiscal 2022 to 269.83 million in Fiscal 2023 on account of increase in ITeS revenue correspondingly increase in manpower required for ITeS business.

Employee benefit expenses

Our employee benefit expenses increased by 38.60% from 247.10 million in Fiscal 2022 to 342.48 million in Fiscal 2023 primarily due to an increase in salaries, incentives and allowances (net of allocated to direct expenses above) from 192.08 million in Fiscal 2022 to 267.69 million in Fiscal 2023 on account of an increase in the number of employees from 984 to 1,248.

Finance cost

Our finance cost increased by 78.48% from 10.13 million in Fiscal 2022 to 18.08 million in Fiscal 2023 primarily due to an increase in (i) bank charges (including Bank Guarantee charges) from 5.70 million to 9.23 million, (ii) interest on lease liability of 0.45 million to 3.11 million, which was partially off-set by a decrease in interest expenses to debenture holders from 3.04 million to 1.95 million. Further, in Fiscal 2023 we incurred an expense of 3.12 million towards interest on delay in payment of advance tax.

Depreciation and amortization expenses

Our depreciation and amortization expenses decreased by 7.68% from 19.38 million in Fiscal 2022 to 17.89 million primarily due to change in depreciation on tangible assets from 16.09 million in Fiscal 2022 to 10.97 million in Fiscal 2023 and change in depreciation / amortisation on right of use assets from 3.29 million in Fiscal 2022 to 6.92 million in Fiscal 2023.

Other expenses

Our other expenses increased by 25.60% from 156.73 million in Fiscal 2022 to 196.86 million in Fiscal 2023 primarily due to an increase in (i) legal and professional fees from 76.48 million to 98.36 million, (ii) commission and brokerage from 13.56 million to 28.27 million and (iii) provision for doubtful debts from NIL to 9.71 million which was partially off-set by a decrease in bad debts written off from 13.51 million to NIL.

Due to the aforementioned factors our tax expenses increased by 23.46% from 110.61 million in Fiscal 2022 to 136.56 million in Fiscal 2023 primarily due to an increase in current year tax expenses from 111.88 million of 128.27 million.

Our profit after tax increased by 14.35% from 334.93 million in Fiscal 2022 to 382.98 million in Fiscal 2023 primarily due to increase in our revenue from operations from our business verticals i.e., (i) IT Infrastructure from 3,294.62 million in Fiscal 2022 to 3,493.39 million in Fiscal 2023; (ii) Cloud and Data Management Services from 581.44 million in Fiscal 2022 to 805.56 million in Fiscal 2023; and (iii) ITeS from 798.37 million in Fiscal 2022 to 1,052.07 million in Fiscal 2023.

As on March 31, 2024, we had trade receivables of 1,575.89 million. In addition, we had a sum of 189.93 million in cash and cash equivalents (balance in current accounts and cash in hand)

Historically, we have been able to finance our capital requirements and the expansion of our business through a combination of funds generated from our operations, working capital facilities from banks and factoring, and we expect to continue to do so.

Our primary capital requirements are working capital for our operations. We believe that considering the expected cash to be generated from our business, we will have sufficient capital to meet our anticipated working capital requirements for the 12 months following the date of this Red Herring Prospectus.

The following table sets forth certain information in relation to our cash flows with respect to operating activities, investing activities and financing activities for Fiscal 2024, Fiscal 2023 and Fiscal 2022:

(in million)

Fiscal 2024

Our net cash flow generated from operating activities in Fiscal 2024 was 222.94 million. While our net profit before tax and exceptional items was 549.12 million, our operating cash flow before working capital changes stood at 584.24 million. This was primarily due to adjustments for depreciation charges (net), borrowing cost, old liabilities written back, profit on disposal of assets (net) and provision for doubtful debts. Changes in working capital primarily reflect adjustments for increase in (i) trade receivables of 403.31 million (ii) trade payables of 304.58 million, (iii) other current assets of 102.35 million and (iv) inventories of 53.51 million.

Fiscal 2023

Our net cash flow generated from operating activities in Fiscal 2023 was 19.54 million. While our net profit before tax and exceptional items was 519.54 million, our operating cash flow before working capital changes stood at 501.73 million. This was primarily due to adjustments for old liabilities written back, profit on disposal of assets (net) and mark to market gain on investments, depreciation charges (net), interest on income tax refund and borrowing cost. Changes in working capital primarily reflect adjustments for increase in (i) trade receivables of 229.48 million, (ii) other current assets of 141.17 million, which was partially off-set by decrease in (i) inventories of 24.90 million and (ii) trade payables of 29.04 million.

Fiscal 2022

Our net cash flow generated from operating activities in Fiscal 2022 was 304.78 million. While our net profit before tax and exceptional items was 445.54 million, our operating cash flow before working capital changes stood at 477.84 million. This was primarily due to adjustments for loss on disposal of assets (net) and mark to market gain on investments, depreciation charges (net), interest on income tax refund and borrowing cost. Changes in working capital primarily reflect adjustments for increase in (i) trade receivables of 406.03 million, (ii) trade payables of 260.50 million and (iii) inventories of 90.75 million.

Fiscal 2024

Net cash from investing activities in Fiscal 2024 was (121.05) million, which primarily comprised investment in mutual funds of (53.48) million, acquisition of fixed assets aggregating (42.26) million, and investment in fixed deposits of (42.78) million which was partially offset by profit on the sale of investments of 13.77 million.

Fiscal 2023

Net cash from investing activities in Fiscal 2023 was (117.15) million, which primarily comprised investment in mutual funds of (143.29) million, acquisition of fixed assets aggregating (38.45) million, proceeds from the sale of fixed assets aggregating 34.99 million and interest income of 12.88 million.

Fiscal 2022

Net cash from investing activities in Fiscal 2022 was (84.08) million, which comprised investment in mutual funds of (70.74) million and acquisition of fixed assets aggregating (20.10) million, maturity of fixed deposits (margin money) aggregating 2.55 million, proceeds from the sale of investments aggregating 1.49 million and interest income of 2.72 million.

Fiscal 2024

Net cash from financing activities in Fiscal 2024 was (97.24) million primarily due to loan repaid of (86.80) million, dividend paid during the year including tax of (60.00) million which was partially offset by the proceeds from the issue of shares (net of expenses) of 83.06 million.

Fiscal 2023

Net cash from financing activities in Fiscal 2023, was 44.05 million primarily due to loan taken (from institutions other than banks and short term borrowings) of 118.17 million, loan (including non-convertible debentures) repaid of (12.40) million, dividend paid during the year including tax of (40.00) million.

Fiscal 2022

Net cash from financing activities in Fiscal 2022, was (84.98) million due to loan (including non-convertible debentures) repaid of (69.44) million and interest on loan paid during the period of (8.09) million.

Our historical capital expenditure was, and we expect our future capital expenditure to be, primarily for purchase of office, expansion of NOC, setting up of SOC and IT equipments. During the Fiscal 2024, Fiscal 2023 and Fiscal 2022, our capital expenditure towards additions to fixed assets viz., computer & related equipment & accessories, furniture and fixtures, leasehold improvements, and office equipment was 42.26 million, 38.45 million and 20.10 million.

The following table sets forth the net block of our capital assets:

(in million)

As of June 30, 2024, we had total outstanding borrowings aggregating 217.11 million comprising fund-based borrowings aggregating 42.41 million and non-fund-based borrowings aggregating 174.70 million. For further details of our indebtedness, please see ‘Financial Indebtedness on page 343.

Set out in the table below are details of our contingent liabilities based on our Restated Financial Statements.

( million)

We do not have any off-balance sheet arrangements.

We have engaged in the past, and may engage in the future, in transactions with related parties, including with our promoters, directors, key managerial personnel and their relatives and group companies, on an arms length basis and in compliance with applicable law. Such transactions could be for dividend paid, salaries and remuneration, loans given, debentures issued etc. For further details of our related party transactions, please see

‘Restated Financial Statements Note no. 37 - Related Party Transactions on page 277.

Our Restated Financial Statements do not contain any qualifications, reservations and matters of emphasis by our Statutory Auditor in their examination report.

Other than as disclosed in the Restated Financial Statements, there have been no changes in accounting policies in the last three Fiscals.

Our Company is exposed to credit risk, liquidity risk, foreign currency risk and interest rate risks. Our Companys senior management oversees the mitigation of these risks. Our Companys financial risk activities are governed by appropriate policies and procedures and financial risks are identified, measured and managed in accordance with our Companys policies and risk objectives.

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises two types of risk: (a) interest rate risk and (b) currency risk. Financial instruments affected by market risk include loans and borrowings, deposits and derivative financial instruments.

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Our Companys fixed rate borrowings are carried at amortized cost. They are, therefore, not subject to interest rate risk as defined in Ind AS 107, since neither the carrying amount nor the future cash flows will fluctuate on account of a change in market interest rates. Our Companys investments in fixed deposits with bank are mostly towards margin and, therefore, do not expose the company to significant interest rate risks.

b. Foreign currency risk

Our Company is exposed to foreign exchange risk arising from direct transactions in foreign currency and also indirectly through transactions denominated in foreign currency though settled in functional currency (INR), primarily with respect to the US Dollar (USD). Foreign exchange risk arises from future commercial transactions and recognized assets and liabilities denominated in a currency that is not our Companys functional currency (INR). Our Companys foreign currency exposure is primarily unhedged.

Foreign currency denominated financial assets and financial liabilities which expose our Company to currency risk are disclosed below:

Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss. Our Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities and deposits with banks. Our Companys maximum exposure to credit risk is limited to the carrying amount of the financial assets recognised reporting periods.

Customer credit risk is managed by each business unit subject to our established policy, procedures and control relating to customer credit risk management. Trade receivables are non-interest bearing and are generally on 60 to 120 days credit term. Credit limits are established for all customers based on internal rating criteria. Outstanding customer receivables are regularly monitored. Further, our Company performs an impairment analysis at each reporting date on an individual basis for major clients.

Based on our Companys accounting policy 25.38 million been created as an expected credit loss in our books of accounts for Fiscal 2024.

(in million)

Rs

Financial instruments and cash deposits

Credit risk from balances with banks and financial institutions is managed by our Companys treasury department in accordance with our Companys policy. Investments of surplus funds are made in accordance with the guidelines and within limits approved, and periodically reviewed, by our Board of Directors. Our Board of Directors/ management reviews and update guidelines, from time to time as per requirement. These guidelines are set to minimize the concentration of risks and therefore mitigate financial loss through counterpartys potential failure to make payments.

Liquidity risk is defined as a risk that our Company will not be able to settle or meet its obligations on time. Our Companys treasury department is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risks are overseen by the senior management.

The tables below analyse the Companys financial liabilities into relevant maturity groupings based on their contractual maturities for all non-derivative financial liabilities.

( million)

We operate in an intensely competitive environment, and we expect to continue to face competition going forward. Further, with our Company proposing to expand its geographical presence internationally, we will face competition from entities operating in such geographies too. For further information, please see ‘Risk Factors,

‘Industry Overview, ‘Our Business Competition on pages 29, 147, and 233, respectively.

Our Companys business is not subject to seasonal changes.

Except as set out in this Red Herring Prospectus, there have been, to our knowledge, 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.

We have 3 reportable business segments viz.,

(a) IT Infrastructure;

(b) Cloud Data Management Services; and (c) ITeS.

Set out below is our revenue from operations from each of our business segments.

Our Company operates in only industry segment viz., Information technology.

Not applicable.

While revenue from any particular Customer may vary between financial reporting periods depending on the nature and term of on-going contracts, historically, we have been dependent on a select group of Customers for a majority of our revenue from operations. Our top 10 customers have consistently contributed a significant part of our revenue from operations and in Fiscal 2024, Fiscal 2023 and Fiscal 2022, revenue from our top 10 customers aggregated 2,298.53 million, 1,730.67 million and 1,827.61 million constituting 38.11%, 32.34% and 39.10%, respectively, of our revenue from operations.

Further, we are also reliant on a few vendors/suppliers. During the Fiscal 2024, Fiscal 2023 and Fiscal 2022, our expenses to our top 10 vendors/suppliers was constituted 3,938.36 million 3,387.19 million and 2,894.69 million constituting 71.35%, 69.12% and 68.18%, respectively, of our total expenses. For further details see ‘Risk Factors We are heavily reliant on a few vendors/ suppliers and we typically do not enter into long-term contracts or arrangements with our vendors. Any loss of such vendors/suppliers or any increase in the price will have a material adverse impact on our business and our revenue and ‘Our Business, on pages 31 and 215, respectively.

Our business has been subject, and we expect it to continue to be subject, to significant economic changes that materially affect or are likely to affect income from continuing operations identified above in this chapter. For further details see ‘Risk Factors and ‘Industry Overview, on pages 29 and 147, respectively.

Our business has been, and we expect will continue to be, subject to significant economic changes arising from the trends identified above under ‘Principal factors affecting our financial condition and results of operations and the uncertainties described in the section ‘Risk Factors on page 29. To our knowledge, except as has been described 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 our revenues from continuing operations.

Other than as described in ‘Risk Factors, ‘Our Business and ‘Managements Discussion and Analysis of Financial Condition and Results of Operations on pages 29, 215 and 350, respectively, to our knowledge, there are no known factors that may have a material adverse impact on our business, results of operations and financial condition.

Except as disclosed in this Red Herring Prospectus, we have not announced and do not expect to announce any new services or business segments in the near future.

Except as disclosed in this Red Herring Prospectus, there are, to our knowledge, no significant developments after the date of the last financial statements contained in this Red Herring Prospectus which materially and adversely affects, 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 12 months.