3.14 Provisions and contingent liability
Provision
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 resources
embodying economic benefits will be required to settle
the obligation and a reliable estimate can be made
of the amount of the obligation. When the Company
expects some or all of a provision to be reimbursed,
the reimbursement is recognised as a separate asset,
but only when the reimbursement is virtually certain.
The expense relating to a provision is presented in
the standalone statement of profit and loss net of
any reimbursement.
If the effect of the time value of money is material,
provisions are discounted using a current pre-tax rate
that reflects, when appropriate, the risks specific to the
liability. When discounting is used, the increase in the
provision due to the passage of time is recognised as
a finance cost.
Contingent liability
Contingent liability is:
(a) a possible obligation arising from past events and
whose existence will be confirmed only by the
occurrence or non-occurrence of one or more
uncertain future events not wholly within the
control of the entity or
(b) a present obligation that arises from past events
but is not recognised because:
- it is not probable that an outflow of resources
embodying economic benefits will be required
to settle the obligation, or
- the amount of the obligation cannot be
measured with sufficient reliability.
The Company does not recognize a contingent
liability but discloses its existence and other
required disclosures in notes to the financial
statements, unless the possibility of any outflow in
settlement is remote.
Provisions and contingent liabilities are reviewed at
each reporting date.
3.15 Dividend
The Company recognises a liability to pay dividend to
equity holders of the Company when the distribution
is authorised, and the distribution is no longer at the
discretion of the Company. As per the corporate laws in
India, a distribution is authorised when it is approved by
the shareholders. A corresponding amount is recognised
directly in equity.
3.16 Earnings Per Share (EPS)
Basic EPS is calculated by dividing the profit/loss for the
year attributable to equity shareholders of the Company
by the weighted average number of equity shares
outstanding during the year.
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.
3.17 Operating segment
Operating segments are identified as those components
of the Company (a) that engage in business activities to
earn revenues and incur expenses (including transactions
with any of the Company's other components (b)
whose operating results are regularly reviewed by the
Company's Chief Executive Officer to make decisions
about resource allocation and performance assessment
and (c) for which discrete financial information is
available. The accounting policies consistently used
in the preparation of the financial statements are
also applied to record revenue and expenditure in
individual segments.
The Company is engaged in the business relating to
rendering manpower staffing services and related
activities. These activities of the Company are reviewed
regularly by the chief operating decision maker from an
overall business perspective, rather than reviewing its
products/services as individual standalone components
and therefore subject to the same risk and reward and
accordingly falls within single business segment.
3.18 Investment in subsidiaries and joint venture
A subsidiary is an entity that is controlled by another entity.
A joint venture is a type of joint arrangement whereby
the parties that have joint control of the arrangement
have rights to the net assets of the joint venture. Joint
control is the contractually agreed sharing of control of
an arrangement, which exists only when decisions about
the relevant activities require unanimous consent of the
parties sharing control.
Investment in equity instruments issued by subsidiaries
and joint venture are measured at cost less impairment.
Investment in debentures of the subsidiaries are treated
as equity instruments if the same are convertible into a
fixed number of equity shares for no further consideration
and meet the definition of an equity instrument under
Ind AS 32. Investment in debentures not meeting the
aforesaid conditions are classified as debt instruments
at amortized cost.
When the Company acquires a business, it assesses the
financial assets and liabilities assumed for appropriate
classification and designation in accordance with
the contractual terms, economic circumstances and
pertinent conditions as at the acquisition date. This
includes the separation of embedded derivatives in host
contracts by the acquiree.
If the business combination is achieved in stages, any
previously held equity interest is re-measured at its
acquisition date fair value and any resulting gain or loss
is recognised in profit or loss or OCI, as appropriate.
When additional payments contingent on future events
are negotiated and agreed as part of the business
combination agreement, the entity analyses the nature
as well as economic substance of these payments,
particularly, payments made to those who remain
as employees of the business after it is acquired, to
determine whether these whether they are in the
nature of payment for future employee services or
they represent contingent consideration for business
combination. In the former case, depending on the
exact terms of the arrangement, the payments to be
made are accounted for as remuneration for services
to be received subsequent to the acquisition, rather
than as part of the consideration paid for the business.
Any contingent consideration to be transferred by
the acquirer, i.e., contingent payment to be treated as
such, is recognised at fair value at the acquisition date.
Contingent consideration classified as an asset or liability
that is a financial instrument and within the scope of Ind
AS 109 Financial Instruments, is measured at fair value
with changes in fair value recognised in profit or loss in
accordance with Ind AS 109.
3.19 Events after the reporting period
If the Company receives information after the reporting
period, but prior to the date of approved for issue, about
conditions that existed at the end of the reporting
period, it will assess whether the information affects the
amounts that it recognises in its financial statements.
The Company will adjust the amounts recognised in its
financial statements to reflect any adjusting events after
the reporting period and update the disclosures that
relate to those conditions in light of the new information.
For non-adjusting events after the reporting period, the
Company will not change the amounts recognised in
its financial statements but will disclose the nature of
the non-adjusting event and an estimate of its financial
effect, or a statement that such an estimate cannot be
made, if applicable.
3.20 Exceptional items
Exceptional Items represents the nature of transactions
which are not in recurring nature during the ordinary
course of business and are of such size, nature or
incidence that their separate disclosure is considered
necessary to explain the performance of the Company
and lead to increase/decrease in profit/ loss for the year.
3.21 New and amended standards (Ind AS)
The following amended standard as considered
applicable was effective during the year, however, the
amendment had no material impact on the financial
statements of the Company.
Amendments to Ind AS 1 - Classification of Liabilities
as Current or Non-current and Non-current
Liabilities with Covenants
The MCA notified amendments to paragraphs 69
to 76 of Ind AS 1 to specify the requirements for
classifying liabilities as current or non-current. The
amendments clarify:
• What is meant by a right to defer settlement
• That a right to defer must exist at the end of the
reporting period
• That classification is unaffected by the likelihood
that an entity will exercise its deferral right
• That only if an embedded derivative in a convertible
liability is itself an equity instrument would the
terms of a liability not impact its classification.
In addition, a requirement has been introduced to require
disclosure when a liability arising from a loan agreement
is classified as non-current and the entity's right to defer
settlement is contingent on compliance with future
covenants within twelve months. If there is a breach of
a material covenant of a long-term loan arrangement
on or before the end of the reporting period, resulting
in the liability becoming payable on demand as at the
reporting date, and the lender agrees, after the reporting
period but before the financial statements are approved
for issue, not to demand repayment for at least 12 months
as a consequence of the breach, this shall be treated as
an adjusting event. Accordingly, the entity is not required
to classify the liability as current.
The amendments do not have any impact on the
classification of Company's liabilities.
3.22 Recent Indian Accounting Standards (Ind AS)
Amendments to Ind AS 1 - Classification of liabilities as
current or non-current and non-current liabilities with
covenants and Ind AS 10 Events after the reporting period
Ind AS 10 has been amended to remove the previous
treatment under which a lender's post reporting date
waiver granted before the financial statements were
approved for issue of a breach of a material covenant in
a long term loan arrangement that occurred on or before
the end of the reporting period, resulting in the liability
becoming payable on demand at the reporting date, was
regarded as an adjusting event.
For annual reporting periods beginning on or after 1
April 2026, any breach of a covenant whether material or
immaterial occurring on or before the reporting date will,
in accordance with Ind AS 1, require the related liability
to be classified as current, unless the lender has granted
a waiver of the breach on or before the reporting date
and has agreed not to demand repayment for at least
12 months after the reporting date as a consequence
of the breach. Such a waiver shall be treated as an
adjusting event.
The amendments are effective for annual reporting
periods beginning on or after 1 April 2026 retrospectively
in accordance with Ind AS 8. The amendments are not
expected to have a material impact on the Company's
financial statements.
3.23 Significant accounting judgments, estimates and
assumptions
The preparation of the Company's Standalone financial
statements requires management to make judgements,
estimates and assumptions that affect the reported
amounts of revenues, expenses, assets and liabilities,
and the accompanying disclosures, and the disclosure
of contingent liabilities. Uncertainty about these
assumptions and estimates could result in outcomes that
require a material adjustment to the carrying amount of
assets or liabilities affected in future periods.
Estimates and assumptions
The key assumptions concerning the future and
other key sources of estimation uncertainty at the
reporting date, that have a significant risk of causing
a material adjustment to the carrying amounts of
assets and liabilities within the next financial year, are
described below. The Company based its assumptions
and estimates on parameters available when the
Standalone financial statements were prepared.
Existing circumstances and assumptions about future
developments, however, may change due to market
changes or circumstances arising that are beyond the
control of the Company. Such changes are reflected in
the assumptions when they occur.
Defined benefit plans
The cost of the defined benefit plans and other post¬
employment benefits and the present value of the
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
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 calculation is most sensitive to changes in the
discount rate. In determining the appropriate discount
rate for plans operated in India, the management
considers the interest rates of government bonds
where remaining maturity of such bond correspond
to expected term of defined benefit obligation. The
mortality rate is based on publicly available mortality
tables. Those mortality tables tend to change only at
interval in response to demographic changes. Future
salary increases and gratuity increases are based on
expected future inflation rates.
In case of associate employees with reimbursement
right from customers, the Company recognises the
net benefit expense net of reimbursement from its
customers in the standalone statement of profit and loss
and recognises a right to reimbursement from customers
in the standalone balance sheet equivalent to the net
defined benefit liability.
Further details about gratuity obligations are
given in Note 36.
Provision for litigations and contingencies
The provision for litigations and contingencies
are determined based on evaluation made by the
management of the present obligation arising from past
events, the settlement of which is expected to result in
outflow of resources embodying economic benefits,
which involves judgements around estimating the
ultimate outcome of such past events and measurement
of the obligation amount. Due to the judgements involved
in such estimations the provisions are sensitive to the
actual outcome in future periods. Refer note 47
Intangible assets under development
The Company capitalises intangible assets under
development for a software project in accordance with the
accounting policy. Initial capitalisation of costs is based
on management's judgement that technological and
economic feasibility is confirmed, usually when a software
development project has reached a defined milestone
according to an established project management
model. In determining the amounts to be capitalised,
management makes assumptions regarding the expected
future cash generation of the project, discount rates to be
applied and the expected period of benefits. Refer note 7
Provision for expected credit losses of trade receivables
The impairment provisions for trade receivables are
made considering simplified approach based on
assumptions about risk of default and expected loss
rates. The Company uses judgement in making these
assumptions and selecting the inputs to the impairment
calculation based on the Company's past history and
other factors at the end of each reporting period. Refer
note 16 and 41(b).
Leases - determining the lease term of contracts with
renewal and termination options and estimating the
incremental borrowing rate
The Company determines the lease term as the non¬
cancellable term of the lease, together with any periods
covered by an option to extend the lease if it is reasonably
certain to be exercised, or any periods covered by an
option to terminate the lease, if it is reasonably certain
not to be exercised.
The Company has several lease contracts that include
extension and termination options. The Company
applies judgement in evaluating whether it is reasonably
certain whether or not to exercise the option to renew or
terminate the lease. That is, it considers all relevant factors
that create an economic incentive for it to exercise either
the renewal or termination. After the commencement
date, the Company reassesses the lease term if there
is a significant event or change in circumstances that
is within its control and affects its ability to exercise or
not to exercise the option to renew or to terminate (e.g.,
construction of significant leasehold improvements or
significant customisation to the right-of-use assets).
The Company cannot readily determine the interest rate
implicit in the lease, therefore, it uses its incremental
borrowing rate (IBR) to measure lease liabilities. The
IBR is the rate of interest that the Company would
have to pay to borrow over a similar term, and with a
similar security, the funds necessary to obtain an asset
of similar value to the right of use asset in a similar
economic environment. The IBR therefore reflects
what the Company 'would have to pay; which requires
estimation when no observable rates are available or
when they need to be adjusted to reflect the terms and
conditions of the lease. The Company estimates the IBR
using observable inputs (such as market interest rates)
when available and is required to make certain entity-
specific estimates. Refer note 24 and 48(b).
Taxes
Deferred tax assets are recognised on deductible
temporary differences to the extent that it is probable
that taxable profit will be available against which the
deductible temporary differences can be utilised.
Significant management judgement is required to
determine the amount of deferred tax assets that can be
recognised, based upon the likely timing and the level of
future taxable profits together with future tax planning
strategies. Refer Note 13.
Impairment of non-current assets
Determining whether long-term investments and loans
are impaired requires an estimation of the value in
use of the individual investments in subsidiaries and
joint venture or the relevant cash generating units. The
value in use calculation is based on Discounted Cash
Flow ('DCF') model. Further, the cash flow projections
are based on estimates and assumptions relating to
operational performance, growth rate, operating margins
of the underlying investments, etc. Refer Note 8 and 10.
1) On 20 December 2024, the Company entered into a Share Sale and Purchase Agreement with TSR Darashaw Private
Limited ('Seller') and its promoters and acquired 90% stake in TSR Darashaw HR Services Private Limited ('TSR') by way of
allotment of equity shares on fully diluted basis at an agreed consideration of Rs.16.08 crores with an undertaking to acquire
the balance 10% stake in TSR for a fixed consideration of Rs.1.60 crores and an additional consideration of an amount
equivalent to 10% of the profits earned by TSR for the period commencing 21 December 2024 until 30 September 2025.
The Company has acquired balance 10% stake in TSR at a consideration of Rs. 1.64 Crores, whereby TSR has become a
wholly owned subsidiary of the Company with effect from 7 November 2025.
2) On 6 January 2025, the Company entered into a Share Purchase Agreement with Crystal HR & Security Solutions Private
Limited ('CHSSPL') and its promoters to acquire 30% stake by way of allotment of equity shares on fully diluted basis with
an intention to acquire the balance stake of 70% in multiple tranches, subject to approval of the Board of Directors of the
Company and on completion of the various terms and conditions set out in the Share Purchase Agreement. Further as per
the terms of the agreement, the Company has a sole discretion to terminate the agreement and is not under an obligation
to acquire the balance stake as mentioned above.
3) The CCD's are convertible into equity shares on or before 10 years from the date of allotment (ranging between FY 2016-17
to 2022-23), at the fair value as at the conversion date.
4) Based on the management assessment of future projections and profitability, the Company has provided an impairment
allowance of Rs. 6.42 crores in respect of Investments in HRTech during the year ended 31 March 2026, which has been
disclosed as an exceptional item for the year ended 31 March 2026. The Company had also provided an impairment
allowance of Rs. 12.93 crores in respect of Investment in HRTech in earlier years.
The Company has investments in subsidiaries/joint venture of Rs. 358.93 crores (net of impairment allowance) and has
outstanding loans of Rs. 10.57 crores from its subsidiaries as at 31 March 2026. Based on the valuation assessment carried
out by the external expert during the year ended 31 March 2026, the Company is of the view that the carrying value of the
aforesaid investments/loans is appropriate post impairment allowance in HRTech.
As per the provisions of Section 80JJAA, an assessee will be allowed a deduction of an amount equal to thirty per cent of
additional wages paid to the new regular workmen employed by the assessee in the previous year for three assessment years
including the assessment year relevant to the previous year in which such employment is provided subject to fulfilment of the
other conditions mentioned in the Section 80JJAA. The Company has started availing such deduction from financial year 2016-17
onwards. Also refer note 47 in respect of certain tax litigations.
(iv) Terms/ rights attached to equity shares
The Company has one class of equity shares having a par value of Rs. 10 per share. Each shareholder is entitled for one
vote per share. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining
assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number
of equity shares held by the shareholders. The Company declares and pays dividends in Indian rupees. The dividend
proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.
(v) Aggregate numbers of shares bought back during the period of five years immediately preceding the Balance
sheet date
The shareholders approved the proposal of buy back of equity shares recommended by its Board of Directors by way of
e-voting on the postal ballot, the results of which were declared on 16 March 2023. The buy back was offered to all equity
shareholders of the Company (including the Promoters, the Promoter Group and Persons in Control of the Company)
under the tender offer route through the stock exchange. The buy back of equity shares through the stock exchange
commenced on 12 May 2023 and was completed on 25 May 2023. During this buy back period, the Company purchased
and extinguished 327,869 equity shares at a buy back price of Rs. 3,050 per equity share comprising 1.92% of the pre buy
back paid-up equity share capital of the Company. The buy back resulted in a cash outflow of Rs. 100 crores (excluding
transaction costs and tax on buy back). The Company funded the buy back from its free reserves including securities
premium. In accordance with section 69 of the Companies Act, 2013, the Company has created 'Capital redemption reserve'
of Rs. 0.33 crores equal to the nominal value of the shares bought back as an appropriation from retained earnings. Also
refer note 54 for proposed buy back of equity shares approved by the Board of Directors on 20 May 2026.
(vii) There are no shares reserved for issue under options, except held by TeamLease Employee Stock Option Plan Trust (ESOP
Trust). The promoters and directors of the Company, in prior years had given certain equity shares free of cost to the ESOP
Trust and hence these treasury shares have not been disclosed separately. ESOP Trust held 4,832 and 6,050 treasury
shares as of 31 March 2026 and 31 March 2025 respectively. Also refer note 38.
Nature and purpose of other reserves
(i) Securities premium
Securities premium reserve is used to record the premium on issue of shares. The reserve is to be utilised in accordance
with the provisions of Section 52 of Companies Act, 2013.
(ii) Retained earnings
Retained earnings is comprised of the Company's undistributed earnings after taxes and is freely available for distribution.
Retained earnings include re-measurement loss / (gain) on defined benefit plans, net of taxes that will not be reclassified
to standalone statement of profit and loss.
(iii) Share based payment reserves
This reserve relates to stock options and stock appreciation rights granted by the Company to employees under TeamLease
Employee Stock Option Plan and Employee Stock Appreciation Rights Plan 2019 respectively. Refer note 38 and note 39.
(iv) Capital redemption reserve
In accordance with section 69 of the Companies Act, 2013, the Company created capital redemption reserve equal to the
nominal value of shares bought back, as an appropriation from the free reserves.
Note:
(a) New Labour codes: Effective 21 November 2025, The Government of India has consolidated multiple existing labour
legislations into a unified framework comprising four Labour Codes collectively referred to as the 'New Labour Codes'. The
Company has assessed and disclosed the incremental impact of these changes based on the best information available,
which has resulted in increase in gratuity and leave liability by Rs. 2.74 Crores and the same has been recognized as an
exceptional item during the year ended 31 March 2026. For billable employees, the Company is of the view that these
costs are contractually recoverable from customers and therefore did not have any incremental impact on the standalone
statement of profit and loss. However, the Company has considered the new labour codes for the determination of
provision of gratuity and compensated absences and the consequent reimbursement right for gratuity and compensated
absences as at 31 March 2026. The Company continues to monitor the developments pertaining to the implementation of
the New Labour Codes, including related rules there to and would continue to assess the accounting implications basis
such developments/ guidance as may be needed.
(b) Impairment allowance: Based on the management's assessment of future projections and profitability, the Company
has created a impairment allowance of Rs. 6.42 crores towards its investment in TeamLease HRTech Private Limited, a
subsidiary and the same has been recognised as an exceptional item during the year ended 31 March 2026.
Note 37: Employee benefit obligation
The Company has a defined benefit gratuity plan for its employees. The gratuity plan is governed by the Payment of Gratuity Act,
1972. Under the Act, every employee who has completed five years or more of service are eligible for gratuity on departure at 15
days salary (last drawn salary) for each completed year of service. Every fixed term employee who has completed one year or
more of service gets gratuity on departure at 15 days salary (last drawn salary) for each completed year of service. The level of
benefits provided depends on the member's length of service and salary at retirement age.
The gratuity plan of the Company is unfunded.
a. Gratuity (associate employees with reimbursement right from customers)
In case of associate employees with reimbursement right from customers, the Company recognises the net benefit
expense net of reimbursement from its customers in the standalone statement of profit and loss and recognises a right to
reimbursement from customers in the standalone balance sheet equivalent to the net defined benefit liability.
The following table summarise the components of net benefit expense recognised in the standalone statement of profit and
loss and amounts recognised in the standalone balance sheet for the gratuity benefit:
The sensitivity analysis above have been determined based on a method that extrapolates the impact on defined
benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period.
The sensitivity analysis are based on a change in a significant assumption, keeping all other assumptions constant.
The sensitivity analysis may not be representative of an actual change in the defined benefit obligation as it is unlikely
that changes in assumptions would occur in isolation from one another.
b. Gratuity (Core employees)
The following table summarise the components of net benefit expense recognised in the standalone statement of profit and
loss and amounts recognised in the standalone balance sheet for the gratuity plan:
The sensitivity analysis above have been determined based on a method that extrapolates the impact on defined
benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period.
The sensitivity analysis are based on a change in a significant assumption, keeping all other assumptions constant.
The sensitivity analysis may not be representative of an actual change in the defined benefit obligation as it is unlikely
that changes in assumptions would occur in isolation from one another.
Note:
1) The estimates of future salary increases, considered in actuarial valuation, takes into account inflation, seniority,
promotion and other relevant factors such as supply and demand factors in employment market.
2) Plan Characteristics and Associated Risks:
The Gratuity scheme is a Defined Benefit Plan that provides for a lump sum payment made on exit either by way
of retirement, death or disability. The benefits are defined on the basis of final salary and the period of service
and paid as lump sum at exit. The Plan design means the risks commonly affecting the liabilities and the financial
results are expected to be:
a) Discount rate risk : The defined benefit obligation calculated uses a discount rate based on government
bonds. If bond yields fall, the defined benefit obligation will tend to increase.
b) Salary inflation risk : Higher than expected increases in salary will increase the defined benefit obligation.
c) Demographic risk : This is the risk of variability of results due to unsystematic nature of decrements that
include mortality, withdrawal, disability and retirement. The effect of these decrements on the defined benefit
obligation is not straight forward and depends upon the combination of salary increase, discount rate and
vesting criteria. It is important not to overstate withdrawals because in the financial analysis the retirement
benefit of a short career employee typically costs less per year as compared to a long service employee.
Note 38: Share based payments
Employee Stock Option Plan (ESOP)
The Company has granted stock options to employees of the Company and its subsidiaries under 'TeamLease Services Limited
ESOP Plan' 2015. The options issued under the plan has term of 3-4 years and vest based on the terms of individual grants. When
exercisable, each option is convertible into one equity share of the Company. The exercise price of option is Rs. 10. The stock
options are restricted for sale, pledge or transfer.
Tranche I and II - Total number of options granted were 126,640, out of which 110,522 options were exercised and 16,118 options
were expired in earlier years.
Fair value of options granted
The fair value of stock options granted is estimated using Black-Scholes valuation model, which incorporates various
assumptions including expected life, volatility, risk free rate, interest rates and dividend yield. As no stock options were
granted for the year ended 31 March 2026 and 31 March 2025, valuation assumptions are not disclosed.
The weighted average remaining contractual life for the share options outstanding as at 31 March 2026 was Nil (31
March 2025: Nil).
The weighted average exercise price of the outstanding option is Rs. Nil (31 March 2025: Rs. 10).
Stock Option Compensation expense is Rs. Nil (31 March 2025: Rs. Nil) for the year.
Note 39: Employee Stock options Appreciation Rights Plan 2019 (ESAR 2019)
On recommendation of the Nomination and Remuneration Committee, the Board of Directors and Shareholders approved the
ESAR 2019 plan. The ESAR 2019 plan provides stock options appreciation rights to eligible employees of the Company and its
subsidiaries in various tranches.
During the year ended 31 March 2026, 37,800 stock appreciation rights granted under the Employee Stock Appreciation
Rights Plan, 2019 scheme have been forfeited due to resignation of employees to whom ESARs were granted. Subsequent
to the year ended 31 March 2026, the balance 79,300 stock appreciation rights have been forfeited due to performance
conditions not been met and the same has been approved by the Board of directors at its meeting held on 20 May 2026.
No further appreciation rights have been granted during the year ended 31 March 2026.
Note 40: Financial instruments: Fair value measurements
This section gives an overview of the significance of financial instruments for the Company and provides additional information
on balance sheet items that contain financial instruments.
The details of material accounting policies, including the criteria for recognition, the basis of measurement and the basis on
which income and expenses are recognised in respect of each class of financial asset, financial liabilities and equity instrument
are disclosed in the financial statements.
(a) Fair value of financial assets and financial liabilities
The carrying amount of all financial assets and liabilities appearing in the financial statements is reasonable approximation
of fair value. The following tables presents the carrying value and fair value / amortised cost of each category of financial
assets and liabilities:
Notes:
i) Investment in equity shares of subsidiaries and joint venture are carried at cost and hence not disclosed above.
(b) Fair value hierarchy
The following provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value,
grouped into Level 1 to Level 3, as described below:
Quoted prices in an active market (Level 1): This level of hierarchy includes financial assets that are measured by
reference to quoted prices (unadjusted) in active markets for identical assets or liabilities. This category consists of
investment in quoted equity shares and mutual fund investments.
Valuation techniques with observable inputs (Level 2): This level of hierarchy includes financial assets and liabilities,
measured using inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly (i.e., as prices) or indirectly (i.e., derived from prices).
Valuation techniques with significant unobservable inputs (Level 3): This level of hierarchy includes financial assets
and liabilities measured using inputs that are not based on observable market data (unobservable inputs). Fair values are
determined in whole or in part, using a valuation model based on assumptions that are neither supported by prices from
observable current market transactions in the same instrument nor are they based on available market data.
(i) Short-term financial assets and liabilities are stated at carrying value which is approximately equal to their fair value.
(ii) Management uses its best judgement in estimating the fair value of its financial instruments. However, there are
inherent limitations in any estimation technique. Therefore, for substantially all financial instruments, the fair value
estimates presented above are not necessarily indicative of the amounts that the Company could have realised or
paid in sale transactions as of respective dates. As such, fair value of financial instruments subsequent to the reporting
dates may be different from the amounts reported at each reporting date.
(iii) There have been no transfers between Level 1, Level 2 and Level 3 for the year ended 31 March 2026 and 31 March 2025.
Note 41: Financial risk management objectives and policies
The Company's principal financial liabilities, comprise Employee related payables, loans and borrowings, lease liabilities, trade
and other payables. The main purpose of these financial liabilities is to support its operations. The Company's principal financial
assets include investments, loans, trade and other receivables (including reimbursement right from customers towards employee
benefits), cash and cash equivalents and other bank balances that derive directly from its operations.
The Company has exposure to the following risks arising from financial instruments:
• Market risk;
• Credit risk; and
• Liquidity risk.
Risk management framework
The Company's Board of Directors has overall responsibility for the establishment and oversight of the Company's risk
management framework. The Company's risk management policies are established to identify and analyse the risks faced by
the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies
and systems are reviewed regularly to reflect changes in market conditions and the Company's activities. The Company, through
its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in
which all employees understand their roles and obligations.
The Company's audit committee oversees how management monitors compliance with the Company's risk management policies
and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company.
The audit committee is assisted in its oversight role by internal auditors. Internal Audit function includes regular reviews of risk
management controls and procedures, the results of which are reported to the Audit Committee.
(a) Market risk
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 three types of risk: interest rate risk, foreign currency risk and equity price risk.
(i) Foreign Currency Risk
Foreign currency risks is the risk that the fair value or future cash flows of an exposure will fluctuate because of
changes in foreign currency rates. The Company does not have significant foreign currency exposure and hence is
not exposed to any significant foreign currency risks.
(ii) interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of the Company's financial instruments will fluctuate
because of changes in market interest rates. The Company does not have significant interest rate exposure and hence
is not exposed to any significant interest rate risks.
(iii) Equity price risk
The Company's unlisted equity securities/convertible debentures are susceptible to market price risk arising from
uncertainties about future values of the investment securities. The Company's Board of Directors reviews and approves
all such investment decisions. At every year end, valuation assessment is carried out by the management and external
expert. The Company does not have price risk except to the extent of impairment of non-current investments. At the
reporting date, the exposure to unlisted equity securities/convertible debenture at cost was Rs. 358.93 crores (net of
impairment of Rs. 19.35 crores).
(b) Credit risk
Credit risk is the risk that counterparty will not meet its contractual obligations under a financial instrument or customer
contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade
receivables and unbilled revenue) and loans receivables, investments and other financial assets.
(i) Trade receivables (including unbilled revenue)
With respect to trade receivables/unbilled revenue, the Company has framed the policies to review the receivables
on periodic basis and to take necessary mitigations, wherever required. The Company follows 'simplified approach'
for recognition of provision for ECL on trade receivables. The application of simplified approach does not require
the Company to track changes in credit risk. Rather, it recognizes provision for ECL based on lifetime ECLs at each
reporting date, right from its initial recognition.
Management does not expect any significant loss from non-performance by counterparties on credit granted that has
not been provided for.
(ii) Credit risk from balances with the banks and financial institutions and in respect of investments in mutual funds are
managed by the Company's treasury department in accordance with the Company's policy. Investment of surplus
fund is made only with approved counterparties within credit limits assigned to each counterparty.
Counterparty credit limits are reviewed by the Company periodically and the limits are set to minimise the concentration
of risks and therefore mitigate financial loss through counterparty's potential failure to make payments.
(iii) The Company's investments and loans are primarily to its subsidiaries and joint venture, the performance of which are
reviewed on a periodic basis.
(c) Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The
objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available to meet its
liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage
to the Company's reputation. The Company's objective is to maintain a balance between continuity of funding and flexibility
through the use of bank borrowings.
Note 42: Capital management
The key objective of the Company's capital management is to ensure that it maintains a stable capital structure with the focus
on total equity to uphold investor, creditor and customer confidence and to ensure future development of its business. The
Company is focused on keeping strong capital base to ensure independence and sustained growth in business.
The Company is predominantly equity financed. To maintain and adjust capital structure, the Company may adjust the dividend
payment to shareholders, return capital to shareholders or issue new shares.
The Company has very minimal amount of borrowings. The existing surplus funds along with the cash generated by the Company,
are sufficient to meet its current/non-current obligation and working capital requirement. Considering, the Company do not have
any borrowings as at 31 March 2026 and had only Bank overdraft of Rs. 6.25 crores in the previous year with significant cash and
bank surplus balances, capital gearing ratio is not disclosed.
Note 43: Segment information
Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision
Maker (CODM). As the Company is primarily engaged in rendering manpower staffing services, its business activities falls
within a single business segment and accordingly there are no additional disclosures to be provided under Ind AS 108 'Segment
Reporting' The Company renders services in India and hence there is no geographical segment. There are no individual
customers contributing more than 10% of total revenue.
Terms and conditions of transactions with related parties
All transactions entered into with related parties defined under the Companies Act, 2013 were as per the contractual terms with
the respective related parties on arm's-length pricing basis. The loans to subsidiaries are generally for periods upto 5 years and
interest charged is prevalent to the market interest rate. Outstanding balances at the year-end are unsecured and settlement
occurs in cash as per the credit terms with the respective related parties. This assessment of impairment is undertaken each
financial year through examining the financial position of the related party and the market in which the related party operates.
1. In addition to aforesaid service tax matters in dispute, the Company has filed writ petition with the Hon'ble High Court
of Kolkata for service tax demands pertaining to the period April 2006 to December 2008 aggregating to Rs. 8.88 crores
(including penalty etc.) against which the Company has already settled Rs. 4.43 crores and balance is largely provided for
as a matter of abundant caution (Refer note 22).
2. Bonus liability pursuant to the amendment of Payment of Bonus Act, 1965, for financial year 2014-15 is considered as
contingent liability, based on expert legal opinion obtained by the Company and stay orders from various High Courts
across the country. As per the contractual agreement with the customers, both bonus liability and minimum wages in
respect of associate employees is recoverable from the customers in case such liability arises.
3. In addition to above tax demands, there are certain tax litigations for earlier years in respect of deduction claimed by the
Company under Section 80JJAA of the Income Tax Act, 1961 ("Act"), with respect to eligible expenditure incurred for net
additional associate employees hired in each year with effect from financial year 2016-17 till date. The Company's claim
for the financial years 2016-17 and 2017-18 was allowed in tax assessments completed earlier under Section 143(3) of the
Act. Subsequently, the Income Tax authorities disallowed the deduction u/s 80JJAA for financial year 2018-19 (AY 2019-20)
and issued notice for reassessment u/s 148 of the Act for financial year 2016-17 (AY 2017-18) and 2017-18 (AY 2018-19). The
Company filed appeal before National Faceless Appeal Centre under Section 246(1)(a) of the Act for AY 2019-20 and a
writ petition before the Hon'ble Karnataka High Court for AY 2017-18 and AY 2018-19, challenging the stand taken by tax
authorities. During the year ended 31 March 2026, the Hon'ble Karnataka High Court quashed aforesaid notice and re¬
assessment proceedings for AY 2017-18 against which, tax authorities have filed an appeal with Honourable High Court of
Karnataka and the matter is pending final resolution.
The Company believes that the deduction claimed under Section 80JJAA is in accordance with the provisions of the Income
Tax Act. Based on legal advice, the Company is reasonably confident of a positive outcome in the matter for the aforesaid
assessment years. Accordingly, no provision is considered necessary by the management in the said matter.
4. In addition to aforesaid GST matters, the Company has received various show cause notices from GST authorities for
various years on account of mismatches/pending reconciliations, etc. that are pending final assessment.
5. During the year ended 31 March 2026, the Company received notice from the Employees' Provident Fund Organisation
(EPFO) demanding Rs. 184.58 crores in relation to alleged losses in the erstwhile TeamLease PF Trust. The Company had
earlier surrendered the PF Trust exemption and transferred the entire fund balance to EPFO on March 31, 2022, including
the shortfall of Rs. 54 crores, which was recognised as an exceptional item in the standalone statement of profit and
loss in that year.
Subsequently, EPFO rejected the Company's response and issued a show cause notice directing payment of the alleged
dues. The Company has filed a writ petition before the Hon'ble High Court of Karnataka challenging the demand. Based on
legal advice obtained, management believes that the demand is not tenable.
6. TeamLease Foundation (TLF), a subsidiary is a sponsoring body of TeamLease Skills University (TLSU). TLSU is registered
under All India Council for Technical Education [(National Employability Enhancement Mission (NEEM) Regulations, 2013]
and provides trainees to its customers under NEEM regulation and pays stipend to these trainees as a single consolidated
amount without any statutory deductions or payments. Based on verification of the records of NEEM trainees supplied by
TLSU to its customers during the previous years, the Regional Provident Fund (PF) Department of Vadodara was of the
view that social security benefits in form of Provident Fund, Pension and Insurance, etc. shall be extended to the trainees
registered under NEEM regulation and accordingly, issued a demand towards the aforesaid dues amounting to Rs. 395
crores for the period July 2014 to June 2022. During the ongoing hearings, TLSU submitted the necessary clarifications
to the Regional Provident Fund (PF) Department of Vadodara. However, during the current year ended 31 March 2026,
the Regional PF commissioner passed an order under Para 26B of the EPF Scheme, 1952 stating that NEEM trainees are
covered under the ambit of the EPF Act and allied schemes and benefits there on. Subsequent to the year end, TLSU has
filed an writ petition with Honourable High Court of Gujarat against the said order and the matter is pending final resolution.
Based on the legal opinion obtained by TLSU and a stay order from honourable High Court of Madras for a similar PF notice
in the past for one of its customer, management is of the view that PF and other statutory deductions are not applicable on
the stipend paid to the trainees.
7 The aforementioned amounts under disputes are as per the demands from various authorities for the respective periods
and has not been adjusted to include further interest and penalty leviable, if any, at the time of final outcome of the appeals.
(b) Leases
Company as a Lessee
The Company has lease contracts of office premises and vehicles used in its operations. Leases of office premises and
vehicles have lease terms between 1.5 to 9 years. The Company's obligations under its leases are secured by the lessor's title
to the leased assets. These lease agreements have escalation clauses primarily linked to inflation rates over the lease period
and includes extension and termination option. The Company applies judgement in evaluating whether it is reasonably
certain whether or not to exercise the option to renew or terminate the lease. That is, it considers all relevant factors
that create an economic incentive for it to exercise either the renewal or termination. After the commencement date, the
Company reassesses the lease term if there is a significant event or change in circumstances that is within its control and
affects its ability to exercise or not to exercise the option to renew or to terminate (e.g., construction of significant leasehold
improvements or significant customisation to the leased asset).
The Company also has certain leases of office premises/laptops with lease terms of 12 months or less and with low value.
The Company applies the 'short-term lease' and 'lease of low-value assets' recognition exemptions for these leases.
Note 49: Corporate social responsibility expenditure
As per the Section 135 of the Companies Act 2013 ('Act'), the Board shall ensure that the Company spends, in every financial
year, at least two per cent of the average of the net profits of the three immediately preceding financial years, in pursuance of
its Corporate Social Responsibility ('CSR') Policy. Hence, the Company falls within the ambit of Section 135 of the Act and is
required to contribute the amount stipulated under the aforesaid provisions of the Act.
Note 53: Other Statutory Information
(i) No proceedings have been initiated or are pending against the Company for holding any Benami property under the
Benami Transactions (Prohibition) Act, 1988 and rules made thereunder.
(ii) There are no charges or satisfaction which is yet to be registered with ROC beyond the statutory year.
(iii) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
(iv) During the year ended 31 March 2026, the Company has not advanced or loaned or invested funds to any other person or
entities, including foreign entities (intermediaries) with the understanding the intermediaries 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 on behalf of the Ultimate Beneficiaries.
Following are the details of the funds advanced by the Company to Intermediaries for further advancing to the Ultimate
beneficiaries for the year ended 31 March 2025:
The Company has complied with the relevant provisions of the Foreign Exchange Management Act, 1999 (42 of 1999) and
the Companies Act, 2013 for the above transactions and the transactions are not violative of the Prevention of Money¬
Laundering Act, 2002 (15 of 2003).
(v) The Company has not received any fund from any persons or entities, 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.
(vi) The Company does not have any transaction which is not recorded in the books of accounts that has been surrendered or
disclosed any 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).
(vii) The Company has not been declared as wilful defaulter by any bank or financial institution or other lender.
(viii) MCA has amended the Rule 3 of the Companies (Accounts) Rules, 2014 (the "Accounts Rules") vide notification dated 5
August 2022, relating to the mode of keeping books of account and other books and papers in electronic mode. Back-ups
of the books of account and other books and papers of the Company maintained in electronic mode are now required to be
retained on a server located in India on daily basis (instead of back-ups on a periodic basis as provided earlier) as prescribed
under Rule 3(5) of the Accounts Rules. With respect to the above, the Company has complied with the requirement.
(ix) The Company has used accounting softwares for maintaining its books of account 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 softwares, except
that, audit trail feature is not enabled for direct changes to data using privileged/ administrative access rights. Additionally for
one of the accounting software edit log is enabled for master data changes w.e.f. 11 April 2024. Further, during the course of
our audit we did not come across any instance of audit trail feature being tampered with, in respect of accounting softwares
where the audit trail has been enabled. Additionally, the audit trail of prior years have been preserved by the Company as per
the statutory requirements for record retention to the extent it was enabled and recorded in respective years.
Note 54: Material events after reporting date
On 20 May 2026, the Board of Directors approved a proposal to buyback equity shares, subject to shareholders approval
representing 8.87% of the total equity shares from the shareholders of the Company on a proportionate basis for an aggregate
amount not exceeding Rs. 238 crores (excluding taxes and expenses incurred in connection with the buyback), in accordance
with the provisions contained in the Securities and Exchange Board of India (Buy-back of Securities) Regulations, 2018, as
amended, and the Companies Act, 2013 and the rules made thereunder.
Note 55: Certain amounts (currency value or percentages) shown in the various tables and paragraphs included in the financial
statements have been rounded off or truncated as deemed appropriate by the management of the Company. The figures of the
previous year end have been regrouped or reclassified, wherever necessary.
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