1. CORPORATE INFORMATION
E2E Networks Limited (‘the Company’) was incorporated on August 20, 2009. The Company is in the business of providing
Cloud computing services. The Company is listed on the Capital Market Segment (‘Main Board’) of National Stock Exchange.
The financial statements were authorized for issue in accordance with a resolution of the Board of Directors dated April 17,
2025.
2. BASIS OF PREPARATION OF FINANCIAL STATEMENTS AND MATERIAL ACCOUNTING POLICIES
2.1 Basis of preparation
These Standalone financial statements are prepared in accordance with Indian Accounting Standard (Ind AS), under
the historical cost convention on accrual basis except for certain financial instruments which are measured at fair
values, the provisions of the Companies Act, 2013 (“the Act”) (to the extent notified) and guidelines issued by the
Securities and Exchange Board of India (SEBI). The Ind AS are prescribed under Section 133 of the Act read with Rule
3 of the Companies (Indian Accounting Standards) Rules, 2015 and relevant amendment rules issued thereafter.
The financial statements are presented in Indian Rupees “INR” or “Rs.” and all amounts disclosed in the financial
statements have been rounded off to the nearest lakhs (as per requirement of Schedule III), unless otherwise stated.
2.2 Summary of material accounting policies
i. Material accounting judgements, estimates and assumptions.
The preparation of financial statements in conformity with principles of Ind AS requires the management to make
judgements, estimates and assumptions that effect the reported amounts of revenues, expenses, assets and
liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are
based on the management’s best knowledge of current events and actions, uncertainty about these assumptions
and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or
liabilities in future periods.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates
are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period
of the revision and future periods if the revision affects both current and future periods.
The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at
the end of the reporting period that may have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year:
a. Useful lives of property, plant and equipment and Intangible assets: As described in the significant
accounting policies, the Company reviews the estimated useful lives of property, plant and equipment and
intangible assets at the end of each reporting period.
b. Provisions and contingencies: A provision is recognised when the Company has a present obligation as a
result of a past event and it is probable that an outflow of resources will be required to settle the obligation,
in respect of which a reliable estimate can be made. These are reviewed at each balance sheet date and
adjusted to reflect the current best estimates. Contingent liabilities are disclosed when there is a possible
obligation arising from past events, the existence of which will be confirmed only by the occurrence or non¬
occurrence of one or more uncertain future events not wholly within the control of the Company or a present
obligation that arises from past events where it is either not probable that an outflow of resources will be
required to settle the obligation or a reliable estimate of the amount cannot be made. Contingent assets are
neither recognized nor disclosed in the financial statements.
c. Defined benefit plans (gratuity benefits): The cost of the defined benefit gratuity plan and the present
value of the gratuity obligation are determined using actuarial valuations. An actuarial valuation involves
making various assumptions that may differ from actual developments in the future. These include the
determination of the discount rate, future salary increases and mortality rates. Due to the complexities
involved in the valuation and its long term nature, a defined benefit obligation is highly sensitive to changes
in these assumptions. All assumptions are reviewed at each reporting date. The parameter most subject to
change is the discount rate. In determining the appropriate discount rate for plans operated, the management
considers the interest rates of government bonds in currencies consistent with the currencies of the post¬
employment benefit obligation. The mortality rate is based on publicly available mortality table. The mortality
table tend to change only at interval in response to demographic changes. Future salary increases and
gratuity increases are based on expected future inflation rates. Further details about gratuity obligations are
given in note 28.
d. Revenue recognition - refer accounting policy in note vii.
ii. Current versus non-current classification
The Company presents assets and liabilities in the balance sheet based on current/ non current classification. An
asset is treated as current when it is:
a. Expected to be realised or intended to be sold or consumed in normal operating cycle
b. Held primarily for the purpose of trading
c. Expected to be realised within twelve months after the reporting period, or
d. Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve
months after the reporting period.
All other assets are classified as non-current.
A liability is current when:
a. It is expected to be settled in normal operating cycle
b. It is held primarily for the purpose of trading
c. It is due to be settled within twelve months after the reporting period, or
d. There is no unconditional right to defer the settlement of the liability for at least twelve months after the
reporting period.
The Company classifies all other liabilities as non-current. Deferred tax assets and liabilities are classified as
non-current assets and liabilities.
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and
cash equivalents. The Company has identified twelve months as its operating cycle.
iii. Fair Value Measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. The fair value measurement is based on the presumption
that the transaction to sell the asset or transfer the liability takes place either:
a. In the principal market for the asset or liability, or
b. In the absence of a principal market, in the most advantageous market for the asset or liability.
c. The principal or the most advantageous market must be accessible by the Company.
d. The fair value of an asset or a liability is measured using the assumptions that market participants would use
when pricing the asset or liability, assuming that market participants act in their economic best interest.
e. A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate
economic benefits by using the asset in its highest and best use or by selling it to another market participant
that would use the asset in its highest and best use.
f. The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient
data is available to measure fair value, maximizing the use of relevant observable inputs and minimizing the
use of unobservable inputs.
g. All assets and liabilities for which fair value is measured or disclosed in the financial statements are
categorized within the fair value hierarchy, described as follows, based on the lowest level input that is
significant to the fair value measurement as a whole:
Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value
measurement is directly or indirectly observable.
Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value
measurement is unobservable.
For assets and liabilities that are recognised in the Balance Sheet on a recurring basis, the Company
determines whether transfers have occurred between levels in the hierarchy by re assessing
categorization (based on the lowest level input that is significant to the fair value measurement as a
whole) at the end of each reporting period.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities
on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value
hierarchy as explained above.
iv. Property, Plant and Equipment
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 is stated at cost, net of accumulated impairment loss, if any.
Considering the application of Schedule II, the management believes that useful life currently used, fairly reflect
its estimate of the useful lives and residual value of property plant and equipment,
The management estimate of the useful lives of the property plant and equipment and intangibles assets based
on the technical evaluation is as follows:
The residual values, useful lives and methods of depreciation of property, plant and equipment are reviewed at
each financial year end and adjusted prospectively, if appropriate.
Depreciation on property plant and equipment is provided on the straight line method based on estimated useful
lives, as estimated by the management. Depreciation is charged on a pro-rata basis for assets purchased/sold
during the year.
An item of property, plant and equipment and any significant part initially recognised is derecognised upon
disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising
on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying
amount of the asset) is included in the income statement when the asset is derecognised.
v. Intangible assets
Intangible assets with definite life
Intangible assets acquired separately are measured on initial recognition at cost.
Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and
accumulated impairment losses. Internally generated intangibles, excluding capitalised development costs, are
not capitalised and the related expenditure is reflected in profit or loss in the period in which the expenditure is
incurred.
Intangible assets (other than those acquired in business combination) with finite lives are amortised on a straight¬
line basis over the estimated useful economic life being 3-10 years. All Intangible assets are assessed for
impairment whenever there is an indication that the intangible asset may be impaired. The estimated useful life of
amortizable intangibles is reviewed and where appropriate is adjusted, annually. Changes in the expected useful
life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to
modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates.
The amortisation expense on intangible assets with finite lives is recognised in the statement of profit and loss
unless such expenditure forms part of carrying value of another asset.
An intangible asset is derecognised upon disposal (i.e., at the date the recipient obtains control) or when no future
economic benefits are expected from its use or disposal. Any gains or losses arising from derecognition of an
intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of
the asset and are recognised in the statement of profit or loss when the asset is derecognised.
The amortisation period and method are reviewed at least annually. If the expected useful life of the asset is
significantly different from previous estimates, the amortisation period is changed accordingly.
Intangible assets with indefinite life
Indefinite-lived intangible assets consist of Internet Protocol (“IP”) addresses. IP are the numerical addresses
used to identify a particular piece of hardware connected to the Internet. Since the IP Address’s usefulness to the
business is not limited by time, or any other factors, the life of these assets have been taken as indefinite, hence
not amortised. The useful life of Indefinite-lived intangible assets are reviewed annually to determine whether
events and circumstances continue to support an indefinite useful life assessment for that asset.
After initial recognition, an Indefinite-lived intangible assets is carried at revalued amount, being its fair value at
the date of the revaluation less any subsequent accumulated amortisation and any subsequent accumulated
impairment losses. For the purpose of revaluations, fair value is measured by reference to an active market.
Revaluations shall be made with such regularity that at the end of the financial year the carrying amount of the
asset does not differ materially from its fair value.
The increase in Indefinite-lived intangible assets carrying amount as a result of a revaluation is recognised in
other comprehensive income and accumulated in equity under the heading of revaluation surplus. Any increase
is recognised in profit or loss to the extent that it reverses a revaluation decrease of the same asset previously
recognised in profit or loss. If an Indefinite-lived intangible assets carrying amount is decreased as a result of
a revaluation, the decrease is recognised in profit or loss. The decrease is recognised in other comprehensive
income to the extent of any credit balance in the revaluation surplus in respect of that asset. The decrease
recognised in other comprehensive income reduces the amount accumulated in equity under the heading of
revaluation surplus.
vi. Leases
The Company assesses at contract inception whether a contract is, or contains, a lease.
That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange
for consideration.
Company as a lessee
The Company applies a single recognition and measurement approach for all leases, except for short-term
leases and leases of low-value assets. The Company recognises lease liabilities to make lease payments and
right-of-use assets representing the right to use the underlying assets.
a. Right-of-use assets
The Company recognises right-of-use assets at the commencement date of the lease (i.e., the date the
underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated
depreciation and accumulated impairment losses, and adjusted for any remeasurement of lease liabilities.
The cost of right-of use assets includes the amount of lease liabilities recognised, initial direct costs incurred,
and lease payments made at or before the commencement date less any lease incentives received. Right-
of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated
useful lives of the assets The Company has lease contracts for leased equipment’s having a lease term
ranging up to 5 years.
If ownership of the leased asset transfers to the Company at the end of the lease term or the cost reflects
the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset.
The right-of-use assets are also subject to impairment. Refer to the note xiv Impairment of non-financial
assets.
b. Lease Liabilities
At the commencement date of the lease, the Company recognises lease liabilities measured at the present
value of lease payments to be made over the lease term. The lease payments include fixed payments
(including in-substance fixed payments) less any lease incentives receivable, variable lease payments that
depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The
lease payments also include the exercise price of a purchase option reasonably certain to be exercised by
the Company and payments of penalties for terminating the lease, if the lease term reflects the Company
exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are
recognised as expenses (unless they are incurred to produce inventories) in the period in which the event or
condition that triggers the payment occurs.
In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the
lease commencement date because the interest rate implicit in the lease is not readily determinable. After
the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and
reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if
there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future
payments resulting from a change in an index or rate used to determine such lease payments) or a change
in the assessment of an option to purchase the underlying asset.
c. Short-term leases and leases of low-value assets
The Company applies the short-term lease recognition exemption to its short-term leases of office premises
and equipment (i.e., those leases that have a lease term of 12 months or less from the commencement date
and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption
to leases of office equipment that are considered to be low value. Lease payments on short term leases and
leases of low-value assets are recognised as expense on a straight line basis over the lease term.
vii. Revenue recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the
revenue can be reliably measured. The Company’s revenue from cloud computing services and managed hosting
services are recognized when the said services are rendered to the customers over the period of the contracts
or based on actual utilization of such services and when no significant uncertainty exists regarding the amount of
the consideration that will be derived from the sale / rendering of services and regarding its collection.
a. Interest
Interest income is recognized on a time proportion basis taking into account the amount outstanding and the
applicable interest rate. Interest income is included under the head “other income” in the statement of profit
and loss.
b. Contract balances
The policies for contract balances, i.e. contract assets, trade receivables and contract liabilities, are as
follows:
Contract assets
A contract asset is the right to consideration in exchange for services transferred to the customer (which consist
of unbilled revenue). If the Company performs by transferring services to a customer before the customer pays
consideration or before payment is due, a contract asset is recognised for the earned consideration that is
unconditional.
Trade receivables
A receivable represents the Company’s 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). Refer to accounting policies of financial
assets in financial instruments-initial recognition and subsequent measurement.
Contract liabilities
A contract liability is the obligation to transfer services 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 services to the customer, a contract liability is recognised when the payment is made
or the payment is due (whichever is earlier). Contract liabilities are recognised as revenue when the Company
performs under the contract.
viii. Taxes
Tax expense comprises current and deferred tax.
a. Current tax
Current income-tax is measured at the amount expected to be paid to the tax authorities in accordance with
the Income-tax Act, 1961 enacted in India and tax laws prevailing in the respective tax jurisdictions where
the company operates. The tax rates and tax laws used to compute the amount are those that are enacted
or substantively enacted, at the reporting date. Current income tax relating to items recognized directly in
equity is recognized in equity and not in the statement of profit and loss.
b. Deferred Tax
Deferred income taxes reflect the impact of temporary differences between taxable income and accounting
income originating during the current year and reversal of temporary differences for the earlier years.
Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted at the
reporting date. Deferred income tax relating to items recognized directly in equity is recognized in equity and
not in the statement of profit and loss.
Deferred tax liabilities are recognized for all taxable temporary differences. Deferred tax assets are
recognized for deductible temporary differences only to the extent that there is reasonable certainty that
sufficient future taxable income will be available against which such deferred tax assets can be realized.
In situations where the company has unabsorbed depreciation or carry forward tax losses, all deferred tax
assets are recognized only if there is virtual certainty supported by convincing evidence that they can be
realized against future taxable profits.
At each reporting date, the company re-assesses unrecognized deferred tax assets. It recognizes
unrecognized deferred tax asset to the extent that it has become reasonably certain or virtually certain,
as the case may be, that sufficient future taxable income will be available against which such deferred tax
assets can be realized.
ix. Employee benefits
a. Short term employee benefits
Short term employee benefits are expensed as the related service is provided. A liability is recognized for the
amount expected to be paid 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.
Benefits such as salaries, wages and bonus etc., are recognized in the statement of profit and loss in the
period in which the employee provides the related service.
b. Post-employment benefits
Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions
into a separate entity and will have no legal or constructive obligation to pay further amounts.
Provident Fund: Provident fund is a defined contribution plan. The Company expenses its contributions
towards provident fund which are being deposited with the Regional Provident Fund Commissioner.
Defined benefit plans: Gratuity is a post-employment defined benefit plan covering eligible employees.
The Gratuity Plan provides a lump sum payment to eligible employees at retirement, death, incapacitation or
termination of employment, of an amount based on the respective employee’s base salary and the tenure of
employment. The liability is actuarially determined (using the projected unit credit method) at the end of each
year. Changes due to service cost and net interest cost /income is recognized in the statement of profit and
loss. Re-measurements of net defined benefit liability/(asset) which comprise of actuarial gains and losses
are recognized in other comprehensive income.
c. Other long term employee benefits: Benefits under compensated absences constitute other employee
benefits. Employee entitlements to annual leave are recognized when they accrue to the eligible employees.
An accrual is made for the estimated liability for annual leave as a result of services provided by the
eligible employees up to the Balance Sheet date. The obligation is measured on the basis of independent
actuarial valuation at the end of each year using the projected unit credit method. Expenses are recognized
immediately in the statement of profit and loss.
d. Share based payment
Equity-settled share-based payments to employees and others providing similar services are measured at
the fair value of the equity instruments at the grant date. Details regarding the determination of the fair value
of equity-settled share-based transactions are set out in note 35.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on a
straight-line basis over the vesting period, based on the Company’s estimate of equity instruments that will
eventually vest, with a corresponding increase in equity. At the end of each reporting year, the Company
revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the
original estimates, if any, is recognised in Statement of profit and loss such that the cumulative expense
reflects the revised estimate, with a corresponding adjustment to the share based payment reserve.
The Company has created an Employee Benefit Trust for providing share-based payment to its employees.
The Company uses the Trust as a vehicle for distributing shares to employees under the employee
remuneration schemes. The Trust buys shares of the Company from the market, for giving shares to
employees. The Company treats Trust as its extension and shared held by the Trust are treated as treasury
shares.
Own equity instruments that are reacquired (treasury shares) are recognised at cost and deducted from
Equity. No gain or loss is recognised in profit and loss on the purchase, sale, issue or cancellation of the
Company’s own equity instruments. Any difference between the carrying amount and the consideration, if
reissued, is recognised in capital reserve. Share options exercised during the reporting year are satisfied
with treasury shares reserve.
x. Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision maker. The Board of directors of the Company has been identified as the Chief Operating Decision
Maker which reviews and assesses the financial performance and makes the strategic decisions.
xi. Earnings per share
Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity
shareholders (after deducting preference dividends and attributable taxes) by the weighted average number of
equity shares, compulsorily convertible cumulative preference shares and compulsorily convertible preference
share outstanding during the period.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity
shareholders of the Company and the weighted average number of shares outstanding during the period are
adjusted for the effects of all dilutive potential equity shares.
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