(m) Provisions and Contingencies
Provisions are recognised when the Company has
a present obligation as a result of a past event, it is
probable that an outflow of resources embodying
economic benefits will be required to settle the obligation
and a reliable estimate can be made of the amount of
the obligation.
A disclosure for contingent liabilities is made 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 embodying economic benefits will be required
to settle or a reliable estimate of the amount cannot
be made.
NOTE-3 SUMMARY OF SIGNIFICANT JUDGEMENTS
AND ASSUMPTIONS
The preparation of financial statements requires the use
of accounting estimates which, by definition, will seldom
equal the actual results. Management also needs to exercise
judgement in applying the Company's accounting policies.
Estimates and judgements are continually evaluated.
They are based on historical experience and other factors,
including expectations of future events that may have a
financial impact on the Company and that are believed to be
reasonable under the circumstances.
Estimated Fair Valuation of certain Investments - Note 2(h)
and 35
Estimates used in Actuarial Valuation of Employee benefits
- Note 30
NOTE-3A RECENT PRONOUNCEMENTS
Ministry of Corporate Affairs (MCA) notifies new standards or
amendment to existing standards under Companies ( Indian
Accounting Standards) Rules as issued from time to time. For
the current year, MCA has notified the following amendments
in the existing standards applicable to the Company w.e.f. 1st
April, 2025:
(i) Amendments to Ind-AS 21 - Lack of exchangeability
(ii) Amendments to Ind-AS 1 - Classification of Liabilities
as Current or Non-current and Non-current Liabilities
with Covenants
(iii) Amendments to Ind-AS 7 and Ind-AS 107 - Supplier
Finance Arrangements
(iv) International Tax Reform- Pillar Two Model Rules -
Amendments to Ind-AS 12
The Company has reviewed the new pronouncements
and based on its evaluation has determined that these
amendments do not have a significant impact on the
financial statements.
Nature and Purpose of Reserves
Capital Reserve:
Capital Reserve represents the difference between assets and liabilities acquired pursuant to the scheme of restructuring,
reduced by shares issued as per the scheme.
Retained Earnings:
Retained Earnings represents profit earned by the Company, net of appropriation, if any.
Security Premium:
Security Premium represents the amount received in excess of face value of the Equity Shares/Compulsorily Convertible
Preference Shares. This reserve will be utilised in accordance with the specific provisions of the Companies Act, 2013.
Fair Value on Investment through Other Comprehensive Income
The Company has elected to recognise changes in the fair value of certain investments in Equity/other securities in other
comprehensive income. These changes are accumulated within the Equity/other instruments through Other Comprehensive
Income within equity. The Company transfers amounts from this reserve to retained earnings when the relevant equity/other
securities are derecognised.
b. Nature of Security:
The term loan from bank amounting to ' 142.76 Crore (31st March, 2025: NIL) is secured by way of first pari passu charge
on investments in the securities of certain unlisted subsidiaries of the Company and second pari passu charge by way of
hypothecation over entire current assets, movable Property, Plant and Equipments and loans and advances of the Company
both present and future.
Term loan amounting to ' 44.76 Crore (31st March, 2025: ' 49.68 Crore) is secured by way of second pari passu charge on
entire movable assets, current assets, receivables and loans and advances of the Company, both present and future and
first Pari Passu charge on investments in the securities of certain unlisted subsidiaries of the Company.
The term loan amounting to ' 399.1 1 Crore (31st March, 2025: ' 230.41 Crore) is secured by way of first pari passu charge
on investments in the securities of certain unlisted subsidiaries of the Company and second pari passu charge by way of
hypothecation over all movable Property, Plant and Equipments, entire current assets, receivables and loans and advances
of the Company both present and future.
The term loan amounting to ' 199.51 Crore (31st March, 2025: NIL) is secured by way of first pari passu charge on unquoted
investments of the Company, both present and future and second pari passu charge by way of hypothecation over entire
current assets, all movable Property, Plant and Equipments and loans and advances of the Company both present
and future.
c. Other Disclosure:
1) The term loan from bank amounting to ' 142.76 Crore (31st March, 2025: NIL) is repayable in 20 equal quarterly
instalments starting from May, 2027. The rate of interest charged by the lender is REPO plus 250 Spread.
2) Term loan amounting to ' 79.45 Crore (31st March, 2025: ' 89.32 Crore) is repayable in 24 structured quarterly
instalments starting from June, 2024. The rate of interest charged by the lender is Lender’s Long Term Reference rate
plus (-10.45%) Spread.
3) Term loan amounting to ' 126.51 Crore (31st March, 2025: '141.09 Crore) is repayable in 24 structured quarterly
instalments starting from December, 2024. The rate of interest charged by the lender is Lender’s Long Term Reference
rate plus (-10.45%) Spread.
4) The term loan amounting to ' 193.15 Crore (31st March, 2025: NIL) is repayable in 24 structured quarterly instalments
starting from February, 2026. The rate of interest charged by the lender is Lender’s Long Term Reference rate plus
(-10.85%) Spread.
5) Term loan amounting to ' 44.76 Crore (31st March, 2025: '49.68 Crore) is repayable in 24 unequal quarterly instalments
starting from June, 2025. The rate of interest charged by the lender is Lender’s Long Term Reference rate plus (-6.25%)
Spread.
6) The term loan amounting to ' 199.51 Crore (31st March, 2025: NIL) is repayable in 20 equal quarterly instalments
starting from June, 2027. The rate of interest charged by the lender is Lender’s Floating Reference Rate plus 0.70%
Spread.
7) The Company has not defaulted in the repayment of borrowings during the current year and the previous year. Further
the Company has complied with all applicable covenants for the year ended 31st March, 2026 and for the year ended
31st March, 2025.
(i) Defined contribution plans
The Company makes contributions for provident fund and family pension schemes (including for superannuation) towards
retirement benefit plans for eligible employees. Under the said plan, the Company is required to contribute a specified
percentage of the employees’ salaries to fund the benefits. The fund has the form of trust and is governed by the Board
of Trustees. During the period, based on applicable rates, the Company has contributed ' 3.97 Crore (for the year ended
31st March, 2025: ' 2.82 Crore) on this account in the Statement of Profit and Loss .
Liabilities at the period end for gratuity, leave encashment and other retiral benefits including post-retirement medical
benefits have been determined on the basis of actuarial valuation carried out by an independent actuary, based on the
method prescribed in Ind AS 19 - "Employee Benefits" of the Companies (Indian Accounting Standards) Rules, 2015.
(ii) Defined benefit plans
No additional liability has been recognised as interest rate distributed by PF trust during the year for FY 2024-25 is not lower
than the statutory rate announced by Employee Provident Fund Organization.
The Government of India has consolidated existing 29 labour legislations into a unified framework comprising four labour
codes viz the Code on Wages, 2019, the Code on Social Security, 2020, the Industrial Relations Code, 2020, and the
Occupational Safety, Health and Working Conditions Code, 2020 (collectively referred to as the "Codes"). The Codes have
been made effective from November 21,2025.
The Company has estimated the impact of implementation of the New Labour Codes for the year ended 31st March 2026.
The impact of the same is not material to the financial statements.
NOTE - 30 EMPLOYEE BENEFITS EXPENSE (CONTD.)
(vii) Risk exposure
The Plans in India typically expose the Company to some risks, the most significant of which are detailed below:
Discount Rate Risk: Decrease in discount rate will increase the value of the liability.
Demographic Risk: In the valuation of the liability certain demographic (mortality and attrition rates) assumptions are
made. The Company is exposed to this risk to the extent of actual experience eventually being worse compared to the
assumptions thereby causing an increase in the scheme cost.
Regulatory Risk: New Act/Regulations may come up in future which could increase the liability significantly in case of
Leave obligation, PRMB & Pension. Gratuity Benefit must comply with the requirements of the Code on Social Security,
2020. Also in case of interest rate guarantee Exempt Provident Fund must comply with the requirements of the Employees
Provident Funds and Miscellaneous Provisions Act 1952 as amended up-to-date.
Future Salary Increase Risk: In case of gratuity & leave the scheme cost is sensitive to the assumed future salary escalation
rates for all final salary defined benefit Schemes. If actual future salary escalations are higher than that assumed in the
valuation actual scheme cost and hence the value of the liability will be higher than that estimated. But PRMB & pension are
not dependent on future salary levels.
Pay-as-you-go Risk: For unfunded schemes financial planning could be difficult as benefits payable will directly affect the
revenue and this could be fluctuating. There may be an opportunity cost of better investment returns affecting adversely the
cost of scheme.
Liquidity Risk: The risk arises from the short term asset and liability cash-flow mismatch thereby causing the company
being unable to pay the benefits as they fall due in the short term.
NOTE - 35 FINANCIAL INSTRUMENTS (CONTD.)
d) The following methods and assumptions were used to estimate the fair values
i. The carrying amount of Cash and Cash Equivalents is considered to be the same as their fair values, due to their short
term nature.
ii. Miscellaneous receivables/payables where carrying amount is reasonable approximation of fair value as settlement
period cannot be reliably measured.
iii. Considering the nature , risk profile and other qualitative factors of the financial instruments of the Company ,the
carrying amounts will be the reasonable approximation of the fair value.
e) Financial Risk Management
The business of the Company are exposed to a variety of financial risks, liquidity risks and credit risks which are dependent
on the nature of activity. The Senior Management oversees the management of these risks and reviews and agrees policies
for managing each of these risks.
1. Liquidity Risk:
Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquid risk
management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The
Company borrowings include fund based Rupee Term Loan from banks and financial institutions and short term
borrowing from a subsidary company. Also, the Company has sufficient quantities of liquid assets which are readily
saleable. Hence the risk that the Company may not be able to settle its financial liabilities as they become due does
not exist.
(i) Maturities of financial liabilities
The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months
equal their carrying balances as the impact of discounting is not significant.
NOTE - 35 FINANCIAL INSTRUMENTS (CONTD.)2. Credit Risk:
Credit risk arise from the possibility that the counter party may not be able to settle their obligations. Financial
instruments that are subject to such risk primarily consists of investments, trade receivables, loan given, bank deposits
and other financial assets.
Trade receivables of the Company are due from related parties and the Company have no liability of bad debts and
the bank deposit are with highly rated scheduled banks. The Company has also taken security deposits from its major
customers against the services which will be provided next year, hence risk of not settling the obligations from these
parties becomes negligible.
The Company considers the probability of default upon initial recognition of loan and whether there has been a
significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a
significant increase in credit risk, the Company compares the risk of a default occurring on the loan as at the reporting
date with the risk of default as a date of initial recognition. It considers available reasonable and supportive forward¬
looking information. The indicators are incorporated in the assessment are:
• Actual or expected significant adverse changes in the business, financial or economic conditions that are
expected to cause a significant change to the borrower's ability to meet its obligation.
• Actual or expected significant changes in the operating result of the borrower.
NOTE - 35A CAPITAL MANAGEMENT
The Company's objectives when managing capital are to
• Safeguard their ability to continue as going concern, so that they can continue to provide returns for shareholders, benefits
for other stakeholders and make investments in subsidiaries, and
• Maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Company may issue new shares and/or evaluate other options to pay
debts.
Consistent with others in the industry, the Company monitors capital on the basis of Gross Debt to equity ratio.
The gearing ratios were as follows:
NOTE-37 SEGMENT REPORTING
The Company is engaged in the fields of information technology and allied services and does not operate in any other separate
reportable segment. There are no reportable geographical segments, since all business is within India.
NOTE-38
An amount of ' 0.19 Crore (31st March, 2025: ' 0.04 Crore) is payable to Micro and Small Enterprises as at
31st March, 2026. There is no interest paid or outstanding for the year ended 31st March, 2026 and 31st March, 2025 to Micro
and Small Enterprises.
The above information regarding Micro and Small Enterprises has been determined to the extent such parties have been identified
on the basis of information available with the Company
NOTE-39 CONTINGENT LIABILITY & COMMITMENTS
(a) Commitment of the Company not provided for on account of necessary comfort in terms of respective terms of sanction
for borrowings by its subsidiaries aggregating to ' 3,913.14 Crore (as at 31st March, 2025: ' 3,224.95 Crore).
(b) The Company have the right to acquire an additional 10% of the total issued and paid-up share capital of FSP Design Private
Limited, within 18 to 24 months from the completion of the Proposed Transaction, as per the terms of the Transaction
Documents.
(c) There are no Contingent Liabilities as at 31st March, 2026.
NOTE-41
Donation in Note 33, includes a Contribution of ' 8.00 Crore (31st March, 2025: ' 8.50 Crore) towards donation under Section
182 of the Companies Act, 2013.
NOTE-42 AUDIT TRAIL AS PER PROVISO TO RULE 3(1) OF COMPANIES (ACCOUNTS) RULE, 2014
The Company is maintaining its books of accounts in electronic mode and these books of accounts are accessible in India at all
times and back up of the books of accounts has been kept in servers physically located in India, on a daily basis. The Company
has used various accounting software for maintaining its books of accounts which has a feature of recording audit trail (edit log)
facility and the same has operated throughout the year for all relevant transactions recorded in the software. Further no instance
of audit trail feature being tampered with was noted in respect of those accounting software. Additionally, the audit trail of the
previous year has been preserved by the Company as per the statutory requirements for record retention to the extent it was
enabled and recorded in the previous year.
Note: Ratio for Return on Investment has not been presented, since the Company has not earned income on all of its
investment in the current year except from one of its subsidiary Firstsource Solutions Limited amounting to ' 205.69 Crore
(31st March, 2025: ' 149.59 Crore). Further, income received from one subsidiary may not be representative of total investments
held by the Company.
Current Ratio = Total Current Assets / Total Current Liabilities
Debt Equity Ratio = Non Current Borrowings (including current maturities of long-term debts) Current Borrowings / Total
Equity
Debt Service Coverage Ratio = profit after tax depreciation deferred tax other non-cash expenses finance costs / finance
costs lease rent expenses (excluding short term lease rent) debt repayments
Return on Equity (ROE) = Profit After Tax / Average Total Equity
Inventory Turnover Ratio = Sale of Products and Service / Average Inventory
Trade Receivables Turnover Ratio = Revenue from Operations / Average Trade Receivables
Trade Payables Turnover Ratio = Purchases / Average Trade Payables
Net Working Capital Turnover Tatio = Revenue from Operations / Average Working Capital
Net Profit Ratio = Profit After Tax / Revenue from operation
Return on Capital Employed (ROCE) = Earning Before Interest and Taxes / Capital Employed (Total Equity Total Debt Deferred
Tax Liability)
NOTE - 44 KEY RATIO (CONTD.)
Return on Investment = Income generated from investments / Average invested funds in treasury investment
*Net working capital ratio has increased due to increase in trade receivables on the year-end date, most of the same has since
been realised.
#Though the Debt Equity ratio has increased during the current year due to higher borrowings it is still less than 1 and at a very
comfortable position.
$Trade Receivables Turnover Ratio has decreased due to higher debtors on the year-end date, most of the same has since been
realised.
NOTE- 45 OTHER STATUTORY INFORMATION (FOR THE FINANCIAL YEAR 2025-26 AND 2024-25)
(i) The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company
for holding any Benami property.
(ii) The Company does not have any transactions with companies struck off.
(iii) The Company does not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.
(iv) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
(v) The Company has not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities
(Intermediaries) with the understanding that the Intermediary shall:
a. directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of
the Company (Ultimate Beneficiaries) or
b. provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries
(vi) The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the
understanding (whether recorded in writing or otherwise) that the Company shall:
a. directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of
the Funding Party (Ultimate Beneficiaries) or
b. provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries,
(vii) The Company has no such transaction which is not recorded in the books of accounts that has been surrendered or
disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or
any other relevant provisions of the Income Tax Act, 1961).
(viii) The Company is in compliance with the number of layers prescribed under clause (87) of section 2 of the Companies Act
read with Companies (Restriction on number of Layers) Rules, 2017.
(ix) The Company is maintaining its books of accounts in electronic mode and these books of accounts are accessible in India
at all times and the back-up of books and accounts has been kept in servers physically located in India on daily basis.
NOTE- 46
Previous year figures have been regrouped/reclassified wherever necessary to correspond with current year classification/
disclosure.
|