1) The Board of directors of TeamLease Digital Private Limited (TDPL), I.M.S.I. Staffing Private Limited (I.M.S.I.) and Keystone Business Solutions Private Limited (Keystone, a 100% subsidiary of TDPL), in their respective meetings held on 16 August 2022 approved the Scheme of Amalgamation of I.M.S.I and Keystone with TDPL ("Scheme") pursuant to Sections 230 to 232 of the Companies Act, 2013 ("the Act") and other relevant provisions of the Act, to the extent applicable, with appointed date as 01 April 2022. The Scheme was filed with the relevant jurisdictional office of National Company Law Tribunal (NCLT) on 06 September 2022.

During the year ended 31 March 2024, TDPL, I.M.S.I. and Keystone has received NCLT approval for the Scheme with the appointed date as 01 April 2022.

Pursuant to the Scheme, TDPL has issued and allotted 1,204,076 equity shares of face value H 10 each fully paid-up for 5,318,000 equity shares of face value H 10 each fully paid-up held by the Company in I.M.S.I Staffing Private Limited (12 fully paid-up equity shares for every 53 equity shares of face value H 10 each fully paid-up).

2) 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.

3) Based on impairment analysis, the Company had provided for impairment of H 12.93 crores in respect of Investments in HRTech.

Note: On 23 Dec 2022, Department of Higher Education vide notification number F.No.36-27/2018.NVEQF had discontinued National Employability Enhancement Mission Scheme and TLSU would not be eligible to take fresh enrolments of apprentices under the said Scheme, leading to uncertainty around recovery of loan from TLSU. Accordingly, management had impaired above outstanding loan.

As per amendment in the Finance Act, 2016, deduction under Section 80JJAA of the Income tax Act, 1961, was extended across to all the sectors. 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 46 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 eligible for one vote per share held. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding. 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 H 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 H 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 H 0.33 crores equal to the nominal value of the shares bought back as an appropriation from retained earnings.

Nature and purpose of other reserves

(i) Securities premium reserve

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) 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.

(iii) 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 general reserve.

Note 36: Employee benefit obligation Gratuity (Associate)

The Company has 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 5 years of service are eligible for gratuity on departure at 15 days salary (last drawn) for each completed year of service. The level of benefits provided depends on the member's length of service and salary at retirement. The Company has recognised gratuity liability and reimbursement rights in respect of associate employees in accordance with IND AS 19.

The weighted average duration of defined benefit obligation at the end of the reporting period is 2.36 years (31 March 2023: 2 years) Gratuity (Core employees)

The Company has 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 5 years of service are eligible for gratuity on departure at 15 days salary (last drawn) for each completed year of service. The level of benefits provided depends on the member's length of service and salary at retirement.

The following table summarise the components of net benefit expense recognised in the statement of profit and loss and the funded status and amounts recognised in the balance sheet for the gratuity plan:

Note 37: Share based payments Employee Share Option Scheme (ESOP)

TeamLease Services Limited has granted stock options to employees of the Company 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. The exercise price of option is H 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 2024 and 31 March 2023, valuation assumptions are not disclosed.

The weighted average remaining contractual life for the share options outstanding as at 31 March 2024 was Nil (31 March 2023: Nil).

The weighted average exercise price of the outstanding option is H 10 (31 March 2023: H 10).

Stock Option Compensation expense is H Nil (31 March 2023: H Nil) for the year.

Note 38: Employee Stock 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 at its meeting held on 9 June 2021, 3 September 2021, 17 May 2022, 21 September 2022, 8 November 2023 and 22 May 2024 respectively. The ESAR 2019 plan provides stock appreciation rights to eligible employees of the Company and its subsidiaries.

There are no transfers between levels during the year.

Management has assessed that the fair value of cash and cash equivalents, bank balances other than cash and cash equivalents, investments, loans, trade receivables, unbilled revenue, trade payables, borrowings, lease liabilities, other financial assets and liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments and these are measured at amortised cost.

The fair value of the financial assets and liabilities is included in the amount at which the instruments could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

Note 40: Financial risk management objectives and policies

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 two types of risk: interest rate risk and foreign currency risk.

Financial instruments affected by market risks include trade receivable, unbilled revenue, trade payable and borrowings.

(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 debt obligation with floating interest rates, hence is not exposed to any significant interest rate risks.

(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 loans receivables, investments and other financial instruments.

Trade receivables

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.

Financial instruments

Credit risk from balances with the banks and financial institutions and current investments are managed by the Company's treasury team based on the Company's policy. Investment of surplus fund is made only with approved counterparties.

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.

(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 overdrafts and bank borrowings. The summary of the maturity profile of the Company's financial liabilities is as below:

Note 41: 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.

Note 42: Segment information Segment information

Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker (CODM). The Board of Directors of the Company is identified as the Chief Operating Decision Maker ("CODM") as defined by Ind AS 108, Operating Segment. The CODM evaluates the Company's performance and allocate resources based on analysis of various performance indicators of the Company.

The reportable business segments are in line with the segment wise information which is being presented to the CODM and 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. Assets, liabilities, revenues and direct expenses in relation to segments are categorised based on items that are individually identifiable to that segment, while other items, wherever allocable, are apportioned to the segments on an appropriate basis. Certain items are not specifically allocable to individual segments as the underlying services are used interchangeably and accordingly such items are separately disclosed as 'unallocated'

(i) Reportable segments:

Reportable operating segments of the Company are as follows:

a) General Staffing and Allied Services - Comprises of Staffing, Temporary Recruitment and Payroll & NETAP.

b) Other HR Services - Comprises of Regulatory Compliance and Training etc.

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 H 8.88 crores

(including penalty etc.) against which the Company has already settled H 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, H 33.49 crores 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 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 have disallowed 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 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 2018-19, challenging the stand taken by tax authorities.

Subsequent to the year end 31 March 2024, the Income Tax authorities issued notice for reassessment u/s 148A of the act for the financial year 2016-17 (AY 2017-18) towards disallowance of 80JJAA of the Act. The Company is in the process of filing the appeal against the said order.

The Company believes that deduction under Section 80JJAA has been claimed in accordance with the provisions of the Act, and as advised by the legal experts, is reasonably confident of favourable outcome in the matter. Accordingly, no provision is considered necessary by the management in the said matter.

4. In addition to aforesaid GST matters:

(a) There are certain demands where the probability assessment is remote and hence not disclosed above.

(b) 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.

Note 51: Disclosure for struck off companies

The Company has undertaken certain transactions in normal course of business with struck off companies, i.e, Galaxe E Solutions India Pvt Ltd, Perfekt Labs Pvt Ltd, Protishruti Marketing Pvt Ltd, A2R Skills Pvt Ltd, Excell Media Pvt Ltd and Akarshan People Management Pvt Ltd. The aggregate of transactions with such companies for sale of services is H 0.04 crores (31 March 2023: H 0.05 crores) and for purchases is H 0.05 crores (31 March 2023: H 0.76 crores). Outstanding net payable balance is H 0.04 crores (31 March 2023: H 0.02 crores).

Note 52: Other Statutory Information

(i) No proceeding has 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 period.

(iii) The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.

(iv) The Company has not advanced or loaned or invested funds to any other persons or entities, 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.

(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 transactions which is not recorded in the books of account 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) The Company is maintaining its books of account in electronic mode and these books of account are accessible in India at all times and the back-up of books of account has been kept in servers physically located in India on a daily basis from the applicability date of the Companies (Accounts) Rules, 2014, as amended i.e. 5 August, 2022 onwards.

(ix) The Company has used accounting software 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 software, except that, audit trail feature is not enabled for direct changes to data using privileged/ administrative access rights in so far it relates to Associate Life Cycle System (ALCS), Trainee Life Cycle System (TLCS) and Sage Accpac. Additionally for Sage Accpac, edit log feature is not enabled for master data changes. Further, there is no known instance of audit trail feature being tampered with in respect of the accounting software used by the Company.

Note 53: The Code on Social Security, 2020

The Code on Social Security, 2020 ('Code') relating to employee benefits during employment and post-employment benefits received Presidential assent in September 2020. The Code has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified and the final rules/ interpretation have not yet been issued. The Company will assess the impact of the Code when it comes into effect and will record any related impact in the period the Code becomes effective.