00004,304,600 Options (Option Plan I): 3/5th of the options vest at the end of one year from the date of grant. The remaining 2/5th vests at the end of every half year during second and third years from the date of grant in four equal instalments6,612,700 Options (Option Plan II): 2/5th of the options vest at the end of one year from the date of grant. The remaining 3/5th vests at the end of every half year during second, third and fourth years in six equal instalments4,052,800 Options (Option Plan III): 2/5th of the options vest at the end of two years from the date of grant. The remaining 3/5th vests at the end of every half year during third, fourth and fifth years in six equal instalments.0trueFYSIFY TECHNOLOGIES LTD00010943240Trade receivables as of March 31, 2024 and March 31, 2023 are stated net of allowance for doubtful receivables. The Group maintains an allowance for doubtful receivables based on expected credit loss model. The Group’s exposure to credit and currency risks and impairment losses related to trade and other receivables, excluding construction work in progress is disclosed in note 34. Trade receivables consist of:Of the above, facilities amounting to ₹ 3,076 Million (Previous Year : ₹ 1,635 Million) by the Company is primarily secured by way of pari-passu charge on the project Receivables and charge on movable fixed assets disbursed under Noida DC Project..Of the above, facilities amounting to ₹ 1,810 Million (Previous Year : ₹ 747 Million) by the Company is primarily secured by way of pari-passu charge on the project Receivables and charge on movable fixed assets disbursed under Chennai DC Project.Out of this ₹ 346 Million is loan availed from others (NBFC).Of the above, facilities amounting to ₹ 5,001 Million (Previous Year : ₹ 2,804 Million) by the Company is primarily secured by way of pari-passu charge on the project Receivables and charge on movable fixed assets disbursed under Rabale T5 DC Project.i.Of total term loan balance ₹ 3,899 Million (previous year ₹ 3,867 Million) is primarily secured by charge on movable fixed assets funded by term loan and also secured by project receivables. Of the total term loan balance, an amount of ₹ 102 Million (previous year ₹ 306 Million) including current maturity is primarily secured against the specific project receivables of the company and ₹ 334 Million (previous year ₹ 553 Million) is secured by moveable fixed assets funded out of Term Loan. ii.Of total term loan balance ₹ 3,672 Million (previous year ₹ 1,958 Million), ₹ 770 Million (previous year ₹ 475 Million) and are primarily secured by a cover of 1.25 times charge on identifiable movable fixed assets and 402 Million (previous year ₹ 483 Million) and are primarily secured by movable fixed assets funded out of term loan. ₹ 1,000 Million (previous year ₹ NIL ) Exclusive Charge on assets created out of the capex for which reimbursement is sought, an amount of ₹ 1,500 Million (previous year ₹ 1,000 Million) is also primarily secured by the exclusive charge on Specific Movable Fixed Assets coverage of 1.10x, with Second pari-passu charge on entire current assets of the Borrower, including trade/ bills receivables, book debts, etc. both present & future, excluding the Cash margin lien marked or Current Assets specifically funded by other lenders. During the FY 2020-21, the company has entered into External Commercial Borrowing (ECB) facility agreement for $5 Million and drawn down $5 Million out of sanctioned loan during FY 2020-21 and repaid $ 0.5 Million in FY 2021-22, $ 10 in FY 2022-23 & $ 1 Million in FY 2023-24. The Company has also entered into agreement for currency swap (from USD to INR) to fully hedge foreign currency exposure towards principal repayment and interest rate swap from floating to fixed.The term loans bear interest rate ranging from 7.20% to 10.84% repayable in quarterly instalments within a tenor of 3 to 6 years after moratorium period ranging from 6 months to 2 years in certain cases.The Company has adjusted the processing charges paid with respect to borrowings from borrowings from banks ₹ 162 Million (Previous year ₹ 185 Million).The loans in the nature of Buyers Credit bear interest rate 2.97% to 6.23% (previous year 0.79% to 1.73%)..The Company has adjusted the processing charges paid with respect to borrowings from borrowings from banks ₹ 648 (Previous year ₹ 532).During the FY 2020-21, Print house (India) Pvt Ltd had issued 9% Non-Convertible Redeemable Preference Shares to Raju Vegesna Infotech & Industries Pvt Ltd., on private placement basis amounting to ₹ 500 Million. The Preference share capital are redeemable at par value at maturity, i.e. 20 years from the date of allotment. Accordingly, these are accounted for Financial instruments. During the year, The terms of the Preference Shares are changed to 6% Non-Cumulative compulsorily convertible preference shares.These bear interest rate ranging from 0% to 9.9% (Previous Year: 0% to 10.50%) and repayable over a period of 12 to 60 months on equated monthly / quarterly instalments.Of the above, facilities amounting to ₹ 1,575 Millions (Previous Year : ₹ 1,659 Millions), availed by the Company are primarily secured by way of pari-passu charge on the entire current assets of the Company to all working capital bankers under consortium.The above facilities amounting to ₹ 279 Millions (previous year ₹ 732 Millions), availed by the Company are primarily secured by way of pari-passu charge on the entire current assets of the Company to all working capital bankers under consortium.The above facilities amounting to ₹ 729 Millions (previous year ₹ 715 Millions), availed by the Company are primarily secured by way of pari-passu charge on the entire current assets of the Company to all working capital bankers under consortium.In addition to the above, out of these loans repayable on demand from banks,(i) exposure amounting to ₹ 2,224 Millions (previous year ₹ 2,586 Millions) is secured collaterally by way of pari-passu charge on the unencumbered movable fixed assets of the Company, both present and future.(ii) exposure amounting to ₹ 1,287 Millions (previous year ₹ 1,335 Millions) is secured collaterally by way of equitable mortgage over the properties at Tidel Park, Chennai, Vashi 6th floor, Vile Parle at Mumbai.(iii) exposure amounting to ₹ 1,287 Millions (previous year ₹ 1,335 Millions) is secured collaterally by way of equitable mortgage over the properties at Tidel Park, Chennai, Vashi 6th floor, Vile Parle at Mumbai.(iv) the exposure amounting to ₹ 426 Millions (previous year ₹ 876 Millions) is collaterally secured by equitable mortgage over the Vashi 5th floor property at Mumbai.Of fhe above, facilities amounting to ₹ 620 Millions (previous year ₹ Nil) are primarily secured by way of pari-passu charge on current assets of the Company, both present and future.Of the above, facilities amounting to ₹ Nil (previous year ₹ 374 Millions) are secured by way of pari-passu charge on current assets. Out of which ₹ Nil (previous year ₹ 25 Millions) has first pari-passu charge on unencumbered movable fixed assets of the Company.These working capital facilities bear interest ranging from 0% p.a. to 9.30%. [Previous year: 0% p.a. to 9.30% p.a.] and these facilities are subject to renewal annually.During the financial year 2021-22, Kotak Special Situations Fund (KSSF) subscribed to 2,00,00,000 (two crore) Series 1 Compulsorily Convertible Debentures (CCDs) with face value of ₹ 100 each amounting to ₹ 2,000 Million and 1% of 2,00,00,000 (two crore) Series 2 Compulsorily Convertible Debentures (CCD) with face value of ₹ 100 each amounting to ₹ 20 Millions. The CCDs shall be fully, mandatorily and compulsorily converted into equity shares by October 1, 2031 and the conversion ratio shall be decided based on the equity valuation as at March 31, 2023. Since the fixed to fixed test is satisfied as per Ind AS 32 the above CCDs are presented as Equity. During the year under review, Kotak Special Situations Fund (KSSF) subscribed to additional 1,98,00,000 Series 2 Compulsorily Convertible Debentures (CCD) with face value of ₹ 100 each amounting to ₹ 1,980 Million. Further, the Company has the option and right to require KSSF to acquire additional compulsory convertible debentures of the Company (“Additional CCDs”) in one or more tranches during FY 2023, FY 2024, FY 2025 or by October 1, 2026 for up to an aggregate subscription amount of ₹ 6,000 Million. The CCDs are secured by secondary charge over identified movable assets of Data Center facility. On July 20, 2023, SISL entered into an assignment letter with KSSF for the transfer of ₹ 6,000 Millions to Kotak Data Centre Fund (“KDCF”). During the financial year 2023-24, Kotak Data Center Fund (KDCF) subscribed to additional 1,20,00,000 Series 5 Compulsorily Convertible Debentures (CCD) with face value of INR 100 each amounting to ₹ 1,200. The CCDs shall be fully, mandatorily and compulsorily converted into equity shares by March 31, 2033 and the conversion ratio shall be decided based on the equity valuation of next financial year following the financial year of drawdown of CCD money. These CCD's carry a coupon rate of 6%p.a payable half-yearly. The Tranche - I, CCDs shall be fully, mandatorily and compulsorily converted into equity shares by October 1, 2031 and the conversion ratio is decided based on the equity valuation as at March 31, 2023 as 0.8112. Since the fixed to fixed test is satisfied as per IAS 32 the above CCDs are presented as Equity (refer note 16a) Bank charges of ₹ 164,980 ($ 1,979) have been allocated to respective segments in operating expensesBank charges of ₹ 147,089 ($ 1,789) have been allocated to respective segments in operating expensesThe Company incurred costs on Improvements comprising expenses for building interiors, electrical work, etc, which become an integral part of the building. These expenses are incurred to make the civil structure of the building ready for the intended use. These expenses on improvement are capitalized and depreciated over its estimated useful life of 5 years in accordance with the accounting policy consistently applied by the Company. The Company believes that it is more appropriate to disclose such improvements as a part of Buildings rather than as part of Furniture and Fittings. Hence the cost of such Improvements and the accumulated depreciation thereon, as on April 1, 2023 has been transferred as part of Building for a better presentation.Includes project inventory of ₹3,034,240 ( previous year: ₹ 1,692,378) 0001094324 ifrs-full:AccumulatedDepreciationAndAmortisationMember ifrs-full:LicencesAndFranchisesMember 2024-03-31
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
| | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
For the fiscal year ended March 31, 2024.
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
For the transition period from __________ to ______
| | SHELL COMPANY PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
Date of event requiring this shell Company report _____________
Commission file number 000-27663
Sify Technologies Limited
(Exact name of Registrant as specified in its charter)
(Translation at Registrant’s name into English)
Chennai, Tamil Nadu, India
(Jurisdiction of incorporation or organization)
Taramani, Chennai 600 113 India
(91) 44-2254-0770, Fax (91) 44 -2254 0771
(Address of principal executive office)
M.P.Vijay Kumar, Whole time director and Chief Financial Officer,
(91) 44-2254-0770; vijaykumar.mp@sifycorp.com
TIDEL Park, 2nd Floor, 4, Rajiv Gandhi Salai, Taramani, Chennai 600113 India
(Name, Telephone, Email and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act
| | | | Name of each Exchange on which registered |
American Depositary Shares, each represented by One Equity Share, par value ₹ 10 per share |
| |
| NASDAQ Capital Market (NASDAQ-CM) |
Securities registered or to be registered pursuant to Section 12(g) of the Act
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.
183,332,460 Equity Shares.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Note - Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically, if any, every Interactive Data file required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer or an emerging growth company. See definition of “large accelerated filer,” and “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer £ | | |
Emerging growth company £ | | |
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
¨
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).
☑
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
| International Financial Reporting Standards as | |
| issued by the International Accounting Standards | |
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow:
¨
Item 17
¨
Item 18
If this is an annual report, indicate by check mark whether the registrant is a shell Company (as defined in Rule 12b-2 of the Exchange Act).
This Amendment No. 1 on Form 20-F/A (the “Amendment No. 1”) amends the Annual Report on Form 20-F of Sify Technologies Limited (the “Company” or “Sify”) for the year ended March 31, 2024 (the “Original Form 20-F”), filed on May 7, 2024, with the Securities and Exchange Commission (the “SEC”) in response to certain comments raised by the Staff of the SEC.
In this Amendment No. 1, the Company is refiling its financial statements presented in the Original Form 20-F in order to restate the presentation of its Compulsorily Convertible Debentures (“CCDs”) in the Consolidated Statement of Financial Position and its resulting impact on the Consolidated Statements of Comprehensive Income, Consolidated Statements of Changes in Equity and Consolidated Statements of Cash Flows for each of the two years ended March 31, 2024 and March 31, 2023. As a result of the change in presentation, Series 1 and Series 2 CCDs amounting to Rs. 4,000 million are treated as liabilities instead of equity as previously presented in the financial statements in the Original Form 20-F. The present value of interest payments of the Series 4 CCDs of Rs. 2,076 million are also presented as a liability instead of equity as in the Original Form 20-F, but the remaining value of Rs. 2,724 million continues to be presented as equity. For the Series 5 CCDs, the present value of interest payments of Rs. 518 million is similarly now presented as a liability, while the remaining value of Rs. 682 million is assigned to the other component. The residual component of the Series 5 CCDs will be treated as a financial liability until the fixed conversion ratio of the Company’s equity shares is determined. These CCDs are presented separately as “Other Equity” and will be presented as non-controlling interest
s
upon issue of equity shares in the future. For additional information see Note 19 in the notes to our financial statements.
Additionally, the Company is expanding disclosure regarding conversion terms of CCDs and other items in the Financial Statements including: (i) changes describing the accounting treatment of the CCDs under Notes 16A, 19 and 28 to our financial statements; (ii) providing the depreciation policy for “improvements forming part of the building-5 years” under Item 18 , (iii) inclusion of a clarifying parenthetical for Other Bank deposits under Note 8 to our financial statements, denoting that such have a maturity period longer than 3 months; (iv) additional disclosure for “Financial assets included in Other Assets” under Note 10 to our financial statements; (v) additional disclosure relating to the accounting of Rs. 64.6 million under the Service tax contingency under Note 31 of our financial statements; (vi) additional disclosure related to contract breaches and conditions for conversion pursuant to the put option agreement under contingency under Note 31 to our financial statements; (vii) disclosure relating to conversion terms of CCDs under Note 19 to our financial statements; and (viii) minor typographical and clerical changes. We have also made corresponding changes to reflect the changes in our financial statement to Item 3 and Item 5 of this Amendment No. 1. This Amendment No. 1 also revises “Part I, Item 6 – Directors, Senior Management and Employees – F. Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation” to include a discussion of the Company’s conclusion with respect to the application of the Company’s Clawback Policy.
Due to the amendment in presentation of CCDs in the financial statements filed with the Original Form 20-F, the Company has re-evaluated the effectiveness of the Company’s internal control over financial reporting as of March 31, 2024 and identified material weakness in the Company’s internal control over financial reporting that existed, relating to the classification of the CCDs. As a result, Item 15 of Original Form 20-F has been similarly amended in this Amendment No. 1 and we have added a risk factor with regards to the found material weakness under Item 3 of this Amendment No.1 See Item 3. — Risk Factors. — “
We have identified material weakness in our internal control over financial reporting. If we are unable to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent or detect fraud. As a result, current and potential investors could lose confidence in our financial reporting, which could harm our business and have an adverse effect on our ADS price.
This Amendment No. 1 includes currently dated certifications from the Chief Executive Officer and Chief Financial Officer, as required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 (included in this Amendment No. 1 as Exhibits 12.1, 12.2, 13.1 and 13.2). Except as described above, this Amendment No. 1 does not amend, update or change any other items or disclosures in the Original Form 20-F and does not purport to reflect any information or events subsequent to the filing thereof. As such, this Amendment reflects all information as of the date the Original Form 20-F was filed, and the Company has not undertaken herein to amend, supplement or update any information contained in the Original Form 20-F to give effect to any subsequent events. Accordingly, this Amendment should be read in conjunction with the Original Form 20-F and any subsequent filings by the Company with the SEC.
Summary of Consolidated Financial Data
You should read the summary of consolidated financial data below in conjunction with the Company's consolidated financial statements and the related notes, as well as the section entitled “Operating and Financial Review and Prospects,” all of which are included elsewhere in this Annual Report. The summary of consolidated statements of income data for the five years ended March 31, 2024, 2023, 2022, 2021, and 2020 and the summary of consolidated Statement of Financial Position as of March 31, 2024, 2023, 2022, 2021, and 2020 have been derived from our audited consolidated financial statements and related notes to the consolidated financial statements which were prepared and presented in accordance with International Financial Reporting Standards (IFRS) as issued by International Accounting Standards Board (IASB). The Consolidated Statement of Income for the year ended March 31, 2024 and Consolidated Statement of Financial Position as of March 31, 2024 and 2023 are amended in the below summary. Historical results are not necessarily indicative of future results.
Sify Technologies Limited
Consolidated Statement of Income
(In thousands of Rupees, except share and per share data and as otherwise stated)
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Consolidated Statement of Financial Position
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| | Reference to shares and per share amounts refers to our equity shares. Our outstanding equity shares include equity shares held by a depository underlying our ADSs. Effective September 24, 2002, one ADS represented one equity share. |
| | Refer to note no:2( c) of the financial statement for the exchange translation. |
We have identified material weakness in our internal control over financial reporting. If we are unable to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent or detect fraud. As a result, current and potential investors could lose confidence in our financial reporting, which could harm our business and have an adverse effect on our ADS price.
For the year ended March 31, 2024, we identified material weakness in our internal control over financial reporting with respect to the design and implementation of effective controls to ensure the appropriate application of IFRS for reporting and presentation of complex financial instruments. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be detected or prevented on a timely basis.
Specifically, the material weakness that were identified, individually or in the aggregate, related to the design and implementation of effective controls to ensure the appropriate application of IFRS for reporting and presentation of complex financial instruments, as further explained in the Explanatory Note in this Amendment No. 1. We have taken steps to develop a remediation plan designed to address the material weakness described above and expect to take additional steps to fully remediate our material weakness. We intend to implement changes and procedures to address these issues; any proposed changes to address the material weakness. See Item 15 to this Amendment No. 1 for additional information on such changes and on the material weakness.
Due to the existence of this control deficiency, management concluded that there was a reasonable possibility that a material misstatement of the company’s annual financial statements may not have been prevented or detected on a timely basis. If we cannot effectively and efficiently improve our controls and procedures, we could suffer material misstatements in our financial statements and other information we report and fail to meet our reporting obligations, which would likely cause investors to lose confidence in our reported financial and other information. This could lead to a decline in the trading price of our ADSs.
Operating and Financial Review and Prospects
The financial statements of the Company included in this Annual Report on Form 20-F have been prepared in accordance with the English version of International Financial Reporting Standards as issued by International Accounting Standards Board. The information set forth in Operating and Financial Review and Prospects is also for the Company's three most recent fiscal years. The discussion, analysis and information presented in this section should be read in conjunction with our financial statements included herein and the notes thereto. See Note Regarding Forward-Looking Statements. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including, but not limited to, those described below and elsewhere in this annual report, particularly in the risk factors described in “Part I — Item 3 Key Information - Risk Factors.”
This information is set forth under the caption entitled 'Management's Discussion and Analysis of Financial Condition and Results of Operations' below. Further, information relating to any Governmental, economic policies or other factors which have materially affected, or could materially affect, directly or indirectly, the Company’s operations is set forth under the caption entitled ‘Risk Factors’ above.
Liquidity and Capital Resources
This information is set forth under the caption entitled 'Management's Discussion and Analysis of Financial Condition and Results of Operations' below.
This information is set forth under the caption entitled 'Management's Discussion and Analysis of Financial Condition and Results of Operations' below.
This information is set forth under the caption entitled 'Management's Discussion and Analysis of Financial Condition and Results of Operations' below.
Management’s Discussion and Analysis of Financial Condition and Results of Operations:
₹ in million, except share data and where otherwise stated)
We are among the largest integrated ICT solutions and services companies in India, offering end-to-end solutions with a comprehensive range of products delivered over a common data network infrastructure reaching more than 1600 cities and towns in India. This network also connects 53 Data Centers across India including Sify’s 12 concurrently maintainable Data Centers across the cities of Chennai, Mumbai, Kolkata, Delhi, Bengaluru and Hyderabad and other Data Centers.
Our mission is building a world in which our converged ICT ecosystem and our ‘bring it on’ attitude will be the competitive advantage to our customers. Our 7 core values which are called ‘The Sify way’ are 1) Put customers’ needs first, 2) Be accountable, 3) Treat others with dignity, 4) Be action oriented, 5) Have the courage to confront issues, 6) Always remember that you are a part of Sify’s team, and 7) Protect Sify’s interest always.
Our primary geographic markets is India. Our revenue is derived from services to enterprise customers, comprising Network services, Data Center services, Cloud and Managed services, Technology Integration services and Applications Integration services.
We were incorporated on December 12, 1995 in Andhra Pradesh, India as Satyam Infoway Private Limited, a Company under the Indian Companies Act to develop and offer connectivity-based corporate services in India. We shifted our registered office to Chennai, Tamil Nadu from April 1, 2003. We completed our initial public offering of ADSs in the United States in October 1999. We listed our ADS on the NASDAQ Global Market on October 19, 1999. In February 2000, we completed our secondary offering of ADSs in the United States.
Digital revolution is driving our customers and prospective customers to transformation in every aspect of their businesses, which would include the entire spectrum of ICT from network, storage, virtualization, network integration, analytics and applications on the cloud. We aim to keep our customers ahead in this journey of digital future with our innovative products and solutions.
Our strategy is driven by the theme “digital@core” which enhances the landscape of our current capabilities to provide advanced solutions that help our customers to embrace their digital transformation journey with ease. This strategy is natural expansion of our cloud@core strategy where we helped customers transition to their digital transformation journey with cloud migration, adoption and scalable infrastructure being the core pitch
Network Connectivity Services
These primarily include revenue from connectivity services, NLD/ILD services and to a lesser extent, revenues from the installation of the connectivity link. In certain cases, these elements are sold as a package consisting of all or some of the elements. We sell hardware and software purchased from third party vendors to our high value corporate clients. Our connectivity services include IPVPN services, Internet connectivity and last mile connectivity (predominantly through wireless). We provide these services for a fixed period of time at a fixed rate regardless of usage, with the rate for the services determined based on the type of service and capacity provided, scope of the engagement and the Service Level Agreement, or SLA. We provide NLD (National Long Distance) and ILD (International Long Distance) services and carry voice traffic for Inter-connect Operators. Revenue is recognized based upon metered call units of voice traffic terminated on our network. The Company offers services in the retail voice market in partnership with Skype Communications, S.a.r.l. The Company realizes revenue from the sale of voice credits and subscriptions of Skype.
Revenue from Data Center services includes revenue from co-location of space and racks on usage of power from large contracts. The contracts are mainly fixed rate for a period of time based on the racks used, and usage revenue is based on consumption of power on large contracts.
Revenue from Cloud and Managed services are primarily from “Cloud and on demand storage”, “Domestic managed services and “International managed services”. Contracts from Cloud and on demand storage, are primarily fixed and for a period of time. Revenues from Domestic and International managed services comprise of value-added services, operations and maintenance of projects and from remote infrastructure management. Contracts from this segment are fixed and could also be based on a time and material basis (T&M).
Revenues from Technology Integration Services (TIS) comprises of Data Centre build services and security services. Contracts under TIS are based on completion of projects and could also be based on T & M.
Revenue from Applications Integration Services (AIS) comprises of Online Assessment, Web development, supply chain solutions, content management, sale of Digital certificates and sale, implementation and maintenance of Industry Specific applications like SAP, Oracle and Microsoft. Contracts are primarily fixed in nature for a period of time and also could be based on T & M.
Cost of goods sold and services rendered
Network Connectivity Services
Cost of goods sold and services rendered for the corporate network/data services division consists of telecommunications costs necessary to provide services and cost of goods in respect of communication hardware and security services sold, commission paid to franchisees and cable television operators, the cost of voice termination for voice and VoIP services and other direct costs. Telecommunications costs include the costs of international bandwidth procured from Telcos and are required for access to the Internet, providing leased lines to our points of presence, the costs of using third-party networks pursuant to service agreements, leased line costs and costs towards spectrum fees payable to the Wireless Planning Commission (WPC) for provision of spectrum to enable connectivity to be provided on the wireless mode for the last mile. Other costs include cost incurred towards annual maintenance contract and the cost of installation in the connectivity business. In addition, the Government levies an annual license fee of 8% of the adjusted gross revenue generated from IP-VPN services and Voice services under the Unified License.
Cost of goods sold and services rendered for the Data Center services consists of cost of electrical power consumed and cost of rental servers offered to customers.
Cost of goods sold and services rendered for the Cloud and Managed services consists of cost of licenses in providing services, cost of billable resources in case of Infrastructure Managed services, third party professionals engaged in providing services, associate costs of the delivery teams and cost of operations of Data Center build and build-operate-transfer BOT projects.
Cost of goods sold and services for TIS consists of cost of hardware and software supplied for Data Center build projects, cost of security hardware and software supplied and cost of hardware and software procured for System integration projects.
Cost of goods sold and services for AIS consists of professional charges payable to domain specialists and subject matter experts, cost of billable associates of e-learning business, cost of operating in third party facility for online assessment including invigilator costs and cost of procuring and managing content for the websites, cost of digital certificates and platform usage and other direct costs for the revenue streams.
Selling, general and administrative expenses
Selling, general and administrative expenses consist of salaries and commissions for sales and marketing personnel, salaries and related costs for executive, financial and administrative personnel, advertising and other brand building costs, travel costs, and occupancy and overhead costs.
Depreciation and amortization
We depreciate our tangible assets on a straight-line basis over the useful life of assets, ranging from three to eight years and, in the case of buildings, 28 years. Undersea cable capacity is amortised over a period of 12 years and other intangible assets with finite lives are amortised over three to five years.
The carrying amounts of the Group’s non-financial assets, other than inventories and deferred tax assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the “cash-generating unit”). The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to cash-generating units that are expected to benefit from the synergies of the combination. Corporate assets for the purpose of impairment testing are allocated to the cash generating units on a reasonable and consistent basis.
An impairment loss is recognized if the carrying amount of an asset or its cash-generating unit exceeds its estimated recoverable amount. Impairment losses are recognized in profit or loss. Impairment losses recognized in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit or group of units on a
pro rata
basis
.
Inventories comprising traded hardware and software are measured at the lower of cost (determined using first-in first-out principle) and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.
Deferred tax is recognized using the balance sheet method, providing for temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss, and differences relating to investments in subsidiaries and associates to the extent that it is probable that they will not reverse in the foreseeable future. In addition, deferred tax is not recognized for taxable temporary differences arising on the initial recognition of goodwill, as the same is not deductible for tax purposes. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.
Deferred tax arising on investments in subsidiaries and associates is recognized except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.
Stock compensation expense
A total of 25 million equity shares are reserved for issuance under our Associate Stock Option Plans (ASOPs). Our ASOP 2014 was adopted at the Eighteenth Annual General Meeting held on July 28, 2014. As of March 31, 2024, we had an aggregate outstanding of 6.33 million options under our ASOP with a weighted average exercise price equal to approximately ₹ 90.12 ($1.08) per equity share. Unamortized stock compensation expense as of March 31, 2024 on these options is ₹ 105.08 million ($ 1.26 million).
The following table sets forth certain financial information as a percentage of revenues:
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Cost of goods sold and services rendered | | | | | | | | | | | | |
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Results of year ended March 31, 2024 compared to year ended March 31, 2023
The growth in our revenues in fiscal 2024 from fiscal 2023 is given below:
Year 2023-24 had a 7% growth with an increase in revenues of ₹ 2,230 million ($26.75 million) contributed largely by Network-Centric Services with ₹ 1,371 million ($16.44 million) , Data center service with a revenue growth of ₹ 929 million ($11.14 million) which was off set with decrease in revenue growth of Digital Services with ₹ 70 million ($0.83 million).
The revenue by operating segments is as follows:
Revenue from Network Connectivity Services increased by ₹ 1,371 million ($16.44 million) primarily due to (i) increase in revenue of ₹ 1,053 million ($12.63 million) from connectivity services, contributed by a increase in capacity by existing and new customer engagements and (ii) increase in revenue of ₹ 318 million ($ 3.81million) in voice services, which is attributable to increase in revenue from ILD & Hubbing business by ₹ 300 million ($ 3.60 million), and increase in revenue of ₹ 18 million ($0.21 million) from retail voice business.
Revenue from Data Center services has increased by ₹ 929 Million ($ 11.14 Million) on account of new contracts and higher capacity utilisation by existing customers.
Revenue from Digital Services has decreased by ₹ 70 Million ($ 0.83 Million) majorly due to decrease in (i) revenue in Cloud and Managed Services by ₹ 151 Million ($ 1.81 Million) (ii) Technology Integration Services by ₹ 857 ($ 10.27 Million) and this decrease is offset by (i) increase in revenue from Application Integration Service by ₹ 293 Million ($ 3.51 Million) ) majorly from sale of licenses and eLearning services and (ii) increase in revenue from Network Managed Services by ₹ 645 Million ($7.74 Million).
The change in other income is as follows:
Other income has increased by ₹ 53 million ($0.64 Million). The increase is primarily on account of increase in Miscellaneous income by ₹ 197 million (2.37 Million), which is offset by decrease in foreign exchange gain by ₹144 (1.73 Million)
Cost of goods sold and services rendered (COGS)
Our cost of goods sold and services rendered in each of the business segment is set forth in the following table:
The cost of goods sold has increased by 5% on an overall basis and the movement in COGS by nature of expense is explained in detail below:
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Cost of Hardware / Software | | | | | | | | | | | | | | | | |
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Network costs comprises cost of Bandwidth leased out from TELCOS, Inter connect charges and IP termination costs payable to carriers. Bandwidth cost increased by ₹ 760 Million ($9.12 Million) due to capacity increase and IP termination costs increased by ₹271 Million ($3.25 Million) on account of increase in minutes.
Revenue share cost comprises of revenue share payable to DOT on ILD, NLD and other services. Increase in revenue share is on account of increase in revenue from licensed services.
The decrease in cost of hardware and software expenses is on account of non- completion of projects in systems integration and security services.
Power cost include electricity charges incurred for our Data Center operations. Power cost increased by ₹340 million ($4.08 million) due to increase in occupancy of newly commissioned Data Centers and also increase in consumption in existing Data Centers and increased power tariff.
Direct resources costs are comprised of (i) the cost of resources deployed on the network infrastructure delivery (ii) resources involved in delivery of application services (iii) cost of billable resources associated with the eLearning and infrastructure managed services. There is an increase in the resource costs by ₹452 Million ($5.42 Million).
Other direct costs are comprised of link implementation and maintenance charges for the Network services, onetime costs for data center services for on boarding new customers, platform costs for Cloud storage, direct cost of application services, digital certificate platform costs, content costs, delivery costs of application services, subject matter experts for international business. There is a marginal decrease in other direct costs by ₹ 59 Million ($0.71 Million).
General and Administrative expenses
Selling, General and Administrative expenses of the Company by nature of expenses are set forth as follows:
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Selling and Marketing Expenses | | | | | | | | | | | | | | | | |
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Allowance for doubtful receivables/advances | | | | | | | | | | | | | | | | |
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Operating costs includes rental, repairs and maintenance charges of our network operating centers, base stations and other co-location sites including the rent and maintenance for our Data Centers. Operating costs increased by ₹73 million ($0.88 million) on account of increase in repairs and maintenance and network operating cost.
Selling and Marketing expenses consist of, selling commission payable to sales partners, incentive to salesmen and, marketing and promotion costs. The Selling and Marketing expenses decreased by ₹43 million ($ 0.52 million).
Associate expenses consist of cost of the employees who are part of the Sales and marketing, Business development, General Management and support services. Associate expenses increased by ₹604 million ($7.24 million) between two periods due to increase in employees head count..
Other indirect expense consists of, rental and electricity cost of office, travel cost, legal charges, professional charges, communication, and others. During the year Other Indirect costs have increased by ₹234 million ($2.81 million).
Allowance for doubtful receivables/advances consists of the charge on account of the provisions created during the year against doubtful receivables/advances. Allowance for doubtful receivables/advances decreased by ₹107 million ($1.28 million) on account of prudent provisioning of debtors.
Forex (gain) / Loss incurred is ₹5 million ($0.06 million) compared to the previous year.
Depreciation and amortization
Depreciation and amortization are set forth in the table below:
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Depreciation and amortization | | | | | | | | | | | | | | | | |
As a percentage of carrying value | | | | | | | | | | | | | | | | |
The Depreciation and amortization expenses has been increased by ₹801 million ($9.61 million), the increase is on account of capitalization of new assets during the year.
Profit from operating activities
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Operating profit has decreased over the previous year due to higher utilization of assets and mix of revenue.
Finance income / (expense)
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Net finance income / (expense) | | | | | | | | | | | | | | | | |
The finance income primarily consists of interest received from bank deposits of ₹ 231 million ($ 2.77 million), and interest income on income tax refund of ₹ 77 million ($ 0.92 million).
The finance expenses is increased by ₹ 500 Million ($ 5.99 Million) the increase is primarily on account of increase in interest on borrowings from banks by ₹ 256 Million ($ 3.07 Million), interest on CCDs by ₹ 168 Million ($ 2.02 Million) interest on lease liability on account of IFRS 16 – Leases by ₹ 58 Million ($ 0.70 Million) and increase in bank charges by ₹ 18 Million ($ 0.21 Million).
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Results of year ended March 31, 2024 compared to year ended March 31, 2023
Refer to the section ‘Results of year ended March 31, 2024 compared to year ended March 31, 2023 ’ under ‘Management's Discussion and Analysis of Financial Condition and Results of Operations’ of Item 5 in our Annual Report on Form 20-F, for fiscal year 2023, filed with the U.S. Securities and Exchange Commission on June 28, 2023, for analysis of our results for fiscal year 2023 in comparison with fiscal year 2022.
Foreign Exchange Fluctuations and Forwards
We enter into foreign exchange derivative contracts to mitigate the risk of changes in foreign exchange rates on cash flows denominated in U.S. dollars. We enter into forward contracts where the counter party is a bank. Forward contracts generally mature between one to six months. These contracts do not qualify for hedge accounting under IFRS. These contracts are marked to market as at the balance sheet date and recognized in the consolidated income statement.
Liquidity and capital resources
We have financed our operations largely through cash generated from operations, equity issuance and bank borrowings. Our liquidity requirements are for meeting working capital needs and capital expenditures required to upgrade and maintain our existing infrastructure.
The following table summarizes our cash flows for periods presented:
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As of March 31, 2024, 2023 and 2022 we had working capital (current asset – current liabilities) of ₹ 577 million, 259 million and ₹ 902 million which includes cash and cash equivalents of ₹ 4,059 million, 3,894 million and ₹ 4,202 million. We believe that cash from operations and existing lines of credit are sufficient to meet our liquidity requirements.
Our short-term borrowings to finance working capital requirements are primarily financed by cash credit facilities with banks. Borrowings for capital expenditures are financed through capital leases and long-term loans.
We have borrowings of ₹ 33,058 million (including Lease Liability to the extent of ₹ 3,043 million) as of March 31, 2024 out of which ₹ 7,532 million will be repaid within a period of 12 months. Interest outflow on existing borrowings for next year is expected to be ₹ 1,633 million. We have utilized working capital facility of ₹ 1,870 million out of limit of ₹ 5,430 million during fiscal 2023. We have unutilized non fund limit of ₹ 2,930 million as of March 31, 2024.
Our ongoing working capital requirements are significantly affected by the profitability of our operations and we continue to periodically evaluate existing and new sources of liquidity and financing. We are taking steps to improve the cash position to meet our currently known requirements at least over the next twelve months. In light of the highly dynamic nature of our business, however, we cannot assure you that our capital requirements and sources will not change significantly in the future.
The Group has opted to transition to SOFR (Secured Overnight Financing Rate) from LIBOR. During the year under review, the Group entered into interest rate swaps in order to hedge the cash flows arising out of the interest payments of the underlying external commercial borrowing. The period of the swap contract is co terminus with the period of the underlying external commercial borrowing. As per the terms of the arrangement, the Company shall pay fixed rate of interest (8.9%) and receive variable rate of interest equal to SOFR + 2.5% on notional amount.
Compulsorily Convertible Debentures:
During the fiscal year 2021-2022, Sify Infinit Spaces Limited (“SISL”), a wholly owned subsidiary of Sify, in the business of providing data center services and operating the Company’s data centers, entered into a compulsorily convertible debentures subscription agreement with Kotak Special Situations Fund (“KSSF”) under which KSSF invested ₹ 4,000 million (USD 51.52 million) as of March 31, 2023. SISL can further draw up to ₹ 6,000 million (USD 77.27 million) in one or more tranches by October 1, 2026 with prior communication to KSSF in writing of its requirement for additional investments on or before October 1, 2023. On July 20, 2023, SISL entered into an assignment letter with KSSF for the transfer of ₹ 6,000 million (US $ 72.98 million) of CCDs to Kotak Data Centre Fund (“KDCF”). The proceeds from these instruments are planned to be utilized for expansion of new data centers, including land acquisition for data centers, investment in renewable energy for data centers and repayment of existing debt.
On July 20, 2023, SISL entered into a compulsorily convertible debentures subscription agreement with KDCF. Pursuant to this agreement, KDCF invested ₹6,000 million (approximately US$72.23 million) in the form of CCDs issued by SISL. SISL plans to use the proceeds from the issue of CCDs for the expansion of new data centers, including land acquisition for data centers, investment in renewable energy for data centers and repayment of existing debt.
Cash and cash equivalents:
Cash and cash equivalents comprise of ₹2,559 million, ₹2,470 million and ₹ 2,504 million in bank accounts and ₹3,275 million, ₹2,375 million and ₹ 1,888 million in the form of bank deposits as on March 31, 2024, 2023 and 2022 out of which cash deposits in the form of margin money restricted for use by us amounts to ₹ 440 million, ₹ 1,195 million and ₹ 792 million. Cheques on hand comprises of amount ₹ NIL million, ₹ NIL million and ₹ 182 million as on March 31, 2024, 2023 and 2022. Cash on hand comprises of amount ₹ 1 million, ₹ 1 million and ₹ NIL million as on March 31, 2024, 2023 and 2022.
Net cash generated from operating activities for the year ended March 31, 2024 was ₹ 4,983 million ($ 59.77 million). This is attributable to increases in trade and other payables by ₹ 2,827 million ($ 33.91 million), in contract liabilities ₹ 841 million ($ 10.09 million) due to advance billing and decrease in trade and other receivable by ₹ 481 million ($ 5.77 million), in other assets by ₹ 1,478 million ($ 17.72 million), due to payment of taxes by ₹ 1,284 million ($ 15.40 million).
Net cash generated from operating activities for the year ended March 31, 2023 was ₹ 8,338 million ($ 101.42 million). This is attributable to increases in trade and other payables by ₹ 2,843 million ($ 34.57 million), in contract liabilities ₹ 706 million ($ 8.59 million) due to advance billing and decrease in trade and other receivable by ₹ 400 million ($ 4.87 million), in other assets by ₹ 789 million ($ 9.60 million), due to payment of taxes by ₹ 1,363 million ($ 16.58 million).
Net cash generated from operating activities for the year ended March 31, 2022 was ₹ 2,245 million ($ 29.56 million). This is attributable to increases in trade and other payables by ₹ 1,362 million ($ 17.97 million), in contract liabilities ₹ 1,283 million ($ 16.92 million) due to advance billing and decrease in trade and other receivable by ₹ 4,083 million ($ 53.86 million), in Inventory by ₹ 992 million ($ 13.09 million), due to payment of taxes by ₹ 1,276 million ($ 16.83 million) and on account of decrease in contract asset and cost by ₹ 661 million ($ 8.72 million)
Net cash used in investing activities for the year ended March 31, 2024 was ₹ 12,263 million ($ 147.09 million) primarily on account of additional expenditure on Data Center facilities, investment in renewable energy for data centers, upgradation of network backbone, expansion of metro fiber to additional cities.
Net cash used in investing activities for the year ended March 31, 2023 was ₹ 13,592 million ($ 165.32 million) primarily on account of additional expenditure on Data Center facilities, investment in renewable energy for data centers, upgradation of network backbone, expansion of metro fiber to additional cities.
Net cash used in investing activities for the year ended March 31, 2022 was ₹ 7,593 million ($ 100.16 million) primarily on account of additional expenditure on Data Center facilities, investment in renewable energy for data centers, upgradation of network backbone, expansion of metro fiber to additional cities.
Net cash generated from financing activities for fiscal year 2024 was ₹ 7,444 million ($ 89.28 million). The increase is mainly due to borrowings amounting to ₹ 14,518 million ($ 174.14 million) out of which ₹ 6,000 million ($ 71.97 million) is on account of issue Compulsorily convertible debentures to Kotak Data Center Fund (KDCF) and proceeds from issue of shares including share premium under ESOP ₹ 41.79 million ($ 0.5 million) received during the year. The increase was significantly offset by repayment of long term borrowings, Short term borrowings and lease liabilities of ₹ 3,395 million ($40.72), ₹ 495 million ($5.93) and ₹ 377 million ($ 4.52 million) respectively and finance expenses amounting to ₹ 2,849 million ($ 34.17 million).
Net cash generated from financing activities for fiscal year 2023 was ₹ 4,944 million ($ 60.13 million). The increase was mainly due to borrowings amounting ₹ 9,075 million ($ 110.38 million) out of which ₹ 1,980 million ($ 24.08 million) was on account of the issuance of CCDs to KSSF and proceeds from issue of shares including share premium under the ESOP ₹ 8 million ($ 0.10 million) received during the year. The increase was significantly offset by repayment of long term borrowings, short term borrowings and lease liabilities of ₹ 2,705 million ($32.90), ₹ 1,520 million ($18.49) and ₹ 265 million ($ 3.22 million), respectively, and finance expenses amounting to ₹ 1,628 million ($ 19.80 million).
Net cash generated from financing activities for fiscal year 2022 was ₹ 4,170 million ($ 55.02 million). The increase was mainly due to borrowings amounting to ₹ 5,516 million ($ 72.77 million) out of which ₹ 2,020 million ($ 26.65 million) was on account of the issuance of CCDs to KSSF and proceeds from issue of shares including share premium under the ESOP ₹ 44 million ($ 0.59 million) received during the year. The increase was significantly offset by repayment of lease liabilities of ₹224 million ($ 2.95 million) and finance expenses amounting to ₹ 1,117million ($ 14.73 million).
For the outstanding long term obligations of ₹ 18,795 million ($225.43 million) as on March 31, 2024, we have obligation to pay ₹ 5,557 million ($66.65 million) within 1 year, ₹ 7,922 million ($ 95.02 million) in 1 to 3 years, ₹ 5,536 million ($ 66.40 million) in 3 to 5 years and ₹ 3,500 million ($ 41.98 million) in more than 5 years, amounting to ₹ 22,515 million ($ 270.05 million).
For the outstanding long term obligations of ₹ 16,160 million ($196.55 million) as on March 31, 2023, we have obligation to pay ₹ 3,302 million ($40.16 million) within 1 year, ₹ 7,385 million ($ 89.82 million) in 1 to 3 years, ₹ 5,744 million ($ 69.86 million) in 3 to 5 years and ₹ 5,078 million ($ 61.76 million) in more than 5 years, amounting to ₹ 21,509 million ($ 261.61 million).
For the outstanding long term obligations of ₹ 10,012 million ($132.07 million) as on March 31, 2022, we have obligation to pay ₹ 2,871 million ($37.87 million) within 1 year, ₹ 3,875 million ($ 51.12 million) in 1 to 3 years, ₹ 2,220 million ($ 29.28 million) in 3 to 5 years and ₹ 1,432 million ($ 18.89 million) in more than 5 years, amounting to ₹ 10,397 million ($ 137.15 million).
For the outstanding Lease Liability obligations of ₹ 3,043 million ($ 36.50 million) as on March 31, 2024, we have obligation to pay ₹ 588million ($ 7.05 million) within 1 year, ₹ 774 million ($9.28 million) in 1 to 3 years, ₹ 531 million ($ 6.37 million) in 3 to 5 years and ₹ 6,696 million ($ 80.31 million) in more than 5 years, amounting to ₹ 8,589 million ($ 103.02 million).
For the outstanding Lease Liability obligations of ₹ 2,451 million ($ 29.81 million) as on March 31, 2023, we have obligation to pay ₹ 586million ($ 7.13 million) within 1 year, ₹ 789 million ($9.60 million) in 1 to 3 years, ₹ 555 million ($ 6.75 million) in 3 to 5 years and ₹ 3,774 million ($ 45.90 million) in more than 5 years, amounting to ₹ 5,704 million ($ 69.38 million).
For the outstanding Lease Liability obligations of ₹ 2,207 million ($ 29.11 million) as on March 31, 2022, we have obligation to pay ₹ 507 million ($ 6.69 million) within 1 year, ₹ 733 million ($ 9.67 million) in 1 to 3 years, ₹ 430 million ($ 5.67 million) in 3 to 5 years and ₹ 2,612 million ($ 34.46 million) in more than 5 years, amounting to ₹ 4,282 million ($ 56.49 million).
We incurred ₹ 6,927 million (US$ 83.08 million) towards capital expenditure for the year ended March 31, 2024. We expect further capital expenditure to be incurred during the fiscal year 2024-25 to strengthen our infrastructure capabilities. The capital expenditure was funded out of internal accruals and bank borrowings. Also refer to section “Principal Capital Expenditures” under Item 4 for capital commitments as on March 31, 2024.
The Company does not have research and development activities and has also not undertaken any sponsored research and development activities.
The information is set forth under the caption ‘Management’s Discussion and Analysis of Financial Condition and Results of Operations’ - ‘Operating and Financial review and Prospects’.
Recent Accounting Pronouncements
Certain new standards, interpretations and amendments to existing standards have been published that are mandatory for the Company’s accounting periods beginning on or after April 1, 2024 or later periods. Those which are considered to be relevant to the Company’s operations are set out below.
On August 15, 2023, International Accounting Standards Board (IASB) has issued amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates, Lack of Exchangeability that will require companies to provide more useful information in their financial statements when a currency cannot be exchanged into another currency. These amendments specify when a currency is exchangeable into another currency and when it is not and specify how an entity determines the exchange rate to apply when a currency is not exchangeable.
The adoption of amendments to IAS 21 is not expected to have any material impact on the consolidated financial statements.
Critical Accounting Policies
Our accounting policies affecting our financial condition and results of operations are more fully described in Note 3 to our Consolidated Financial Statements included in Item 18 of this Annual Report on Form 20-F/A. Certain of our accounting policies require the application of judgment by management in selecting appropriate assumptions for calculating financial estimates, which inherently contain some degree of uncertainty. Management bases its estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the reported carrying values of assets and liabilities and the reported amounts of revenues and expenses that may not be readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
We believe the following are the critical accounting policies and related judgments and estimates used in the preparation of the Company’s Consolidated Financial Statements. Management has discussed the application of these critical accounting estimates with our Board of Directors and Audit Committee.
The Group derives revenue from converged ICT solutions comprised of Network-centric services, Data Center services, Digital services which includes Cloud and managed services, Technology integration services and Applications integration services.
The revenue recognition in respect of the various streams of revenue is described below:
(i) Network Connectivity Services:
Revenue from Network services includes Data network services and Voice services. Network services primarily include revenue from connectivity services, NLD/ILD services and to a lesser extent, revenues from the setup and installation of connectivity links. The group provides connectivity for a fixed period of time at a fixed rate regardless of usage. Revenue from Network services are series of distinct services. The performance obligations are satisfied overtime.
Service revenue is recognized when services are provided, based upon period of time. The setup and installation of connectivity links are deferred and recognized over the associated contract period.
Sale of equipment are accounted as separate performance obligations if they are distinct and its related revenues are recognized at a point in time when the control is passed on to the customer.
The Group provides NLD (National Long Distance) and ILD (International Long Distance) services through Group’s network. The Group carries voice traffic, both national and international, using the network back-bone and delivers voice traffic to Inter-connect Operators. Revenue is recognized when the services are provided based upon the usage (e.g: metered call units of voice traffic terminated on the Group’s network).
(ii) Data Center Services (DC):
Revenue from DC services consists co-location of racks and power charges. The contracts are mainly for a fixed rate for a period of time. Revenue from co-location of racks, power charges and cross connect charges are series of distinct services. The performance obligations are satisfied overtime. Service revenue is recognized as the related services are performed. Sale of equipment, such as servers, switches, networking equipment, cable infrastructure and racks, are accounted as separate performance obligations if they are distinct and its related revenues are recognized at a point in time when the control is passed on to the customer.
Revenue from Cloud and managed services include revenue from Cloud and storage solutions, managed services, value added services, domestic and International managed services.
Revenues from Cloud and on demand compute and storage, are primarily fixed for a period of time. Revenue from Cloud and managed services are series of distinct services. The performance obligations are satisfied overtime. The group recognize service revenue as the related services are performed.
Revenues from domestic and international managed services, comprise of value added services, operations and maintenance of projects and from remote infrastructure management. Contracts from this segment are fixed and could also be based on time and material contracts.
In the case of time and material contracts, the group recognizes service revenue as the related services are performed.
In the case of fixed price contract, the group recognizes revenue over a period of time based on progress towards completion of performance obligation using efforts or cost to cost measure of progress (percentage completion method of accounting).
The stage of completion is measured by efforts spent to estimated total efforts over the term of the contract.
Revenue from Technology Integration Services include system integration Services, revenue from construction of Data Centers, network integration services, security solutions and to a lesser extent, revenue from sale of hardware and software. Revenue from construction contract includes revenue from construction of Data Centers to the specific needs and design of the customer. The Group recognize revenue at a point in time, when the customer does not take control of work-in-progress or over a period of time when the customer controls the work-in-progress. In the case where revenue is recognized over a period of time and progress is measured based on the costs incurred to date as a percentage of the total estimated costs to fulfill the contract.
If the Group does not have a sufficient basis to measure the progress of completion or to estimate the total contract revenues and costs, revenue is recognized only to the extent of contract cost incurred for which recoverability is probable.
When total cost estimates exceed revenues in an arrangement, the estimated losses are recognized in the statement of Income in the period in which such losses become probable based on the current contract estimates.
Revenue from Applications Integration services include online assessment, document management services, web development, digital certificate based authentication services, supply chain software and eLearning software development services. eLearning software development services consist of structuring of content, developing modules, delivery and training users in the modules developed. Revenue from Applications Integration Services is recognized over a period of time. The progress is measured based on the amount of time/effort spent on a project. Revenue in relation to ‘time’ is measured as the agreed rate per unit of time multiplied by the units of time expended. The element of revenue related to materials is measured in accordance with the terms of the contract. The Group enters into contracts with customers to serve advertisements in the portal and the Group is paid on the basis of impressions, click-throughs or leads and in each case the revenue is recognized ratably over the period of the contract based upon the usage (i.e. on actual impressions/click throughs / leads delivered.)
Revenue from commissions earned on electronic commerce transactions are recognized when the transactions are completed.
Digital Certification revenues include income received on account of Web certification. Generally the Group does not hold after sale service commitments after the activation of the Digital Certificates sold and accordingly, revenue is recognized fully on the date of activation of the respective certificate.
Multiple deliverable arrangements
In certain cases, some elements belonging to the services mentioned above are sold as a package consisting of all or some of the elements.
The Group accounts for goods or services of the package separately if they are distinct. i.e. if a good or service is separately identifiable from other promises in the contract and if the customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer.
The Group allocates the transaction price to each performance obligation identified in the contract on a relative stand-alone selling price basis. Standalone selling price is the price at which group would sell a promised good or service separately to the customer.
If the relative stand-alone selling prices are not available, the group estimates the same. In doing so, the group maximize the use of observable inputs and apply estimation methods consistently in similar circumstances.
Costs to fulfil customer contracts, i.e., the costs relating directly to a contract or to an anticipated contract that the Group can specifically identify or the costs generate/ enhance resources of the group that will be used in satisfying (or in continuing to satisfy) performance obligations in the future or the costs that are expected to be recovered are recognized as asset and amortized over the contract period.
Incremental costs of obtaining a contract are recognized as assets and amortized over the contract period if entity expects to recover those costs. The Group recognizes incremental cost of obtaining a contract as an expense when incurred if the amortisation period of the asset that the entity otherwise would have recognized is one year or less.
Costs to obtain a contract that is incurred regardless of whether the contract is obtained are recognized as an expense when incurred, unless those costs are explicitly chargeable to the customer regardless of whether the contract is obtained.
Income from operating leases:
Lease rentals arising on assets given on operating leases are recognized over the period of the lease term on a straight line basis.
Indefeasible Right of Use (IRU)
The Company has entered into IRU arrangements through which it entitles its customers to right of use of specified bandwidth capacity for a specified period of time. The upfront payment received towards right of use of bandwidth capacities under such agreements have been treated as deferred revenue and is recognized on a straight line basis over the term of the arrangement.
While preparing financial statements we make estimates and assumptions that affect the reported amount of assets, liabilities, disclosure of contingent liabilities at the date of financial statements and the reported amount of revenues and expenses for the reporting period.
Our estimate of liability relating to pending litigation is based on currently available facts and our assessment of the probability of an unfavorable outcome. Considering the uncertainties about the ultimate outcome and the amount of losses, we re-assess our estimates as additional information becomes available. Such revisions in our estimates could materially impact our results of operations and our financial position. Management believes that the estimates used in the preparation of the Consolidated Financial Statements are prudent and reasonable. The actual results could differ from these estimates.
Business Combinations, Goodwill and Intangible Assets
Business combinations are accounted for using IFRS 3 (Revised), Business Combinations. IFRS 3 requires the identifiable intangible assets and contingent consideration to be fair valued in order to ascertain the net fair value of identifiable assets, liabilities and contingent liabilities of the acquiree. Significant estimates are required to be made in determining the value of contingent consideration and intangible assets. These valuations are conducted by independent valuation experts.
Business combinations have been accounted for using the acquisition method under the provisions of IFRS 3 (Revised). The cost of acquisition is measured at the fair value of the assets transferred, equity instruments issued and liabilities incurred or assumed at the date of acquisition. The cost of acquisition also includes the fair value of any contingent consideration. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair value on the date of acquisition.
Transactions costs that the group incurs in connection with a business combination such as finder’s fees, legal fees, due diligence fees, and other professional and consulting fees are expensed as incurred.
When the fair value is concentrated towards a single asset, the acquisition shall be accounted as an asset acquisition. Also, the amendment provides that for an acquisition to be considered as business, the assessment of input and processes would depend on stage of the entity being acquired and hence it is important to assess whether the acquired process is substantive to be qualified as business. In other cases, the acquisition shall be accounted as an asset acquisition. We amortize intangible assets on straight line basis over their respective individual estimated useful lives. Our estimates of the useful lives of identified intangible assets are based on a number of factors including the effects of obsolescence, demand, competition, and other economic factors (such as the stability of the industry, and known technological advances), and the level of maintenance expenditures required to obtain the expected future cash flows from the asset.
Estimated Useful Lives of Property, Plant and Equipment
In accordance with IAS 16,
Property, Plant and Equipment
, we estimate the useful lives of plant and equipment in order to determine the amount of depreciation expense to be recorded during any reporting period. If technological changes were to occur more rapidly than anticipated or in a different form than anticipated, the useful lives assigned to these assets may need to be shortened, resulting in the recognition of increased depreciation expense in future periods. Likewise, if the anticipated technological or other changes occur more slowly than expected, the useful lives could be extended. This could result in a reduction of depreciation expense in future periods.
Impairment Financial assets
Trade receivables, contract assets, lease receivables under IFRS 9, investments in debt instruments that are carried at amortised cost, investments in debt instruments that are carried at FVTOCI are tested for impairment based on the expected credit losses for the respective financial asset.
An impairment analysis is performed at each reporting date. The expected credit losses over lifetime of the asset are estimated by adopting the simplified approach using a provision matrix which is based on historical loss rates reflecting current condition and forecasts of future economic conditions. In this approach assets are grouped on the basis of similar credit characteristics such as industry, customer segment and other factors which are relevant to estimate the expected cash loss from these assets.
Other financial assets are tested for impairment based on significant change in credit risk since initial recognition and impairment is measured based on probability of default over the lifetime when there is significant increase in credit risk.
The carrying amounts of the Group’s non-financial assets, other than inventories and deferred tax assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. For goodwill, the recoverable amount is estimated each year on 31 December.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the “cash-generating unit”). The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to cash-generating units that are expected to benefit from the synergies of the combination. Corporate assets for the purpose of impairment testing are allocated to the cash generating units on a reasonable and consistent basis.
An impairment loss is recognized if the carrying amount of an asset or its cash-generating unit exceeds its estimated recoverable amount. Impairment losses are recognized in profit or loss. Impairment losses recognized in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit or group of units on a
pro rata basis.
Reversal of impairment loss:
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.
Income tax expense comprises current and deferred tax. Income tax expense is recognized in profit or loss except to the extent that it relates to items recognized directly in equity, in which case it is recognized in other comprehensive income.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date. Minimum Alternate Tax (MAT) is accounted as current tax when the Company is subjected to such provisions of the Income Tax Act.
Deferred tax is recognized using the balance sheet method, providing for temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss, and differences relating to investments in subsidiaries and associates to the extent that it is probable that they will not reverse in the foreseeable future. In addition, deferred tax is not recognized for taxable temporary differences arising on the initial recognition of goodwill, as the same is not deductible for tax purposes. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously. Credit of MAT paid is available when the Company is subjected to tax as per normal provisions in the future. Credit on account of MAT is recognized as a deferred tax asset based on the management’s estimate of its recoverability in the future.
A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.
Deferred tax arising on investments in subsidiaries and associates is recognized except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.
Item 6. Directors, Senior Management and Employees.
F. Disclosure of a registrant’s action to recover erroneously awarded compensation.
We maintain a Clawback Policy (the “Clawback Policy”) in compliance with the SEC’s and NASDAQ’s final rules. The Clawback Policy requires the repayment of certain erroneously awarded incentive-based compensation paid to any current or former executive officers, in connection with a restatement of financial statements if such compensation exceeded the amount that such executive officers otherwise would have received had it been determined based on the restated financial statements. Our Compensation/Nomination and Remuneration Committee assessed the applicability of the Clawback Policy in light of the restatement of the financial statements in this Amendment No.1. The Company concluded that no compensation is required to be recouped as a result of the restatement of the financial statements under this Amendment No. 1.
I
tem 15. Controls and Procedures:
Disclosure Controls and Procedures
As of the end of the period covered by the Original Form 20-F, our management, with the participation of our CEO and Managing Director and Executive Director and CFO, carried out an evaluation of the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) or 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), on March 31, 2024 and concluded that our disclosure controls and procedures were effective.
Subsequent to the evaluation of our disclosure controls and procedures in connection with the Original Form 20-F, our management, with the participation of our CEO and Managing Director and Executive Director and CFO, re-evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)under the Exchange Act) as at March 31, 2024, in connection with the amendment in presentation discussed in the explanatory note to this Amendment No. 1. Based on that re-evaluation, our management, with the participation of our CEO and Managing Director and Executive Director and CFO, concluded that our disclosure controls and procedures were not effective as at March 31, 2024, due to the material weakness in internal control over financial reporting as described below.
Management’s Annual Report on Internal Control over Financial Reporting
(Amended)
| | Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with International Financial Reporting Standards, as issued by the International Accounting Standards Board. Our internal control over financial reporting includes those policies and procedures that: |
| | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets. |
| | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with applicable accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and |
| | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. |
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
| | Management assessed the effectiveness of our internal control over financial reporting as of March 31, 2024. |
A material weakness is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. Management identified the following material weakness in internal control over financial reporting as of March 31, 2024:
In connection with the amendment discussed in the explanatory note to this Amendment No.1, we identified material weakness in our internal control over financial reporting with respect to the design and implementation of effective controls to ensure the appropriate application of IFRS for reporting and presentation of complex financial instruments. Because of this material weakness, management has concluded that the Company did not maintain effective internal control over financial reporting as on March 31, 2024, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Management’s Plan to Remediate the Identified Material Weakness
The Company proposes to implement the below remediation actions to address this material weakness:
| | Strengthen the specific controls whereby senior finance and accounting policy personnel perform an in-depth comprehensive review of classification and presentation of financial instruments including a review of disclosures and specific presentation evaluation to enforce operating effectiveness. |
| | Augment the IFRS expertise in our accounting team by imparting specific training in evaluation and presentation of financial instruments. |
The Company’s internal control over financial reporting as on March 31, 2024 has been audited by Manohar Chowdhry & Associates, an independent registered public accounting firm, who also audited the Company’s consolidated financial statements. Their audit report, which expresses an adverse opinion on the effectiveness of internal control over financial reporting, is presented below.
Changes in Internal Control Over Financial Reporting
Except as described above in management’s annual report on internal control over financial reporting (as amended), there has been no change in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during 2024, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of Sify Technologies Limited
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Sify Technologies Limited (the “Company”) and its subsidiaries (the Company and its subsidiaries are together referred to as “Group”) as of March 31, 2024, based on criteria established in
Internal Control — Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, because of the effect of the material weakness identified below on the achievement of the objectives of the control criteria, the Group has not maintained effective internal control over financial reporting as of March 31, 2024, based on criteria established in
Internal Control — Integrated Framework (2013)
issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements as of and for the year ended March 31, 2024, of the Group and our report dated May 2, 2024 (January 13, 2025 as to the effects of the restatement discussed in the basis for preparation to the consolidated financial statements), expressed an unqualified opinion on those consolidated financial statements and included explanatory paragraph regarding the restatement of the Group’s consolidated financial statements to correct identified misstatements.
The Group’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting (as revised). Our responsibility is to express an opinion on the Group’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Group in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A Company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Group’s annual or interim financial statements will not be prevented or detected on a timely basis. The following material weakness has been identified and included in management’s assessment.
| | The Group did not design and implement effective controls to ensure the appropriate application of IFRS for reporting and presentation of complex financial instruments . |
This material weakness was considered in determining the nature, timing, and extent of audit tests applied in our audit of the consolidated financial statements as at and for the year ended March 31, 2024 of the Group, and this report does not affect our report on such consolidated financial statements.
Manohar Chowdhry & Associates (5341)
We have served as the Company's auditor since fiscal 2022.
May 2, 2024 (January 13, 2025, as to the effects of the material weakness as a result of the restatement of the previously issued consolidated financial statements described in Management’s Report on Internal Control over Financial Reporting (as revised))
Consolidated Statements and other Financial Information
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of Sify Technologies Limited
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Sify Technologies Limited (the “Company”) and its subsidiaries (the Company and its subsidiaries together are referred to as “Group”) as of March 31, 2024 and 2023, the related consolidated statements of comprehensive income, changes in equity, and cash flows, for each of the three years in the period ended March 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Group as of March 31, 2024 and 2023, and the consolidated results of its operations and its cash flows for each of the three years in the period ended March 31, 2024, in conformity with the International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”).
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Group's internal control over financial reporting as of March 31, 2024, based on criteria established in
Internal Control — Integrated Framework (2013)
issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated May 2, 2024 (January 13, 2025 as to the effects of the material weakness described in Management’s Report on Internal Control over Financial Reporting (as revised)), expressed an adverse opinion on the Group's internal control over financial reporting because of the identified material weakness.
Restatement of the Consolidated Financial Statements
As discussed in Note 2 ‘Basis of Preparation’ to the consolidated financial statements, the accompanying consolidated financial statements have been restated to correct identified misstatements.
These consolidated financial statements are the responsibility of the Group’s management. Our responsibility is to express an opinion on the Group's consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Group in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Valuation of Trade receivables
Critical Audit Matter Description
The collectability of the Group’s aged Trade Receivables and the valuation of allowance for impairment of Trade Receivables is a Critical Audit Matter due to the judgement involved in assessing the recoverability. The Trade Receivable as at March 31, 2024 is INR 10,155,223 thousand and Allowance for doubtful receivable charged in the Statement of Income for the year ended March 31, 2024 is INR 265,000 thousand.
How the Critical Audit Matter Was Addressed in the Audit
In view of the significance of the matter, we applied the following audit procedures in this area, among others, to obtain sufficient appropriate audit evidence:
| | We evaluated and tested the Group’s processes for trade receivables, including the credit control, collection and provisioning processes. |
| | We evaluated the management viewpoint and estimates used to determine the allowance for bad and doubtful debts. |
| | We have reviewed the ageing, tested the validity of the receivables, the subsequent collections of trade receivables, the past payment and credit history of the customer, disputes (if any) with customers and based on discussion with the Group’s management (information and explanation provided by them) and evidences collected, we understood and evaluated the reason for delay in realisation of the receivables and possibility of realisation of the aged receivables. |
| | Where there were indicators that trade receivables were unlikely to be collected, we assessed the adequacy of allowance for impairment of trade receivables . |
| | We tested the sufficiency of the allowance for bad and doubtful debts charged in the Statement of Income for the year ended March 31, 2024. |
Manohar Chowdhry & Associates
(5341)
We have served as the Company's auditor since fiscal 2022.
May 2, 2024 (January
13
, 2025 as to the effects of the restatement discussed in the basis for preparation to the consolidated financial statements)
Sify Technologies Limited
Consolidated Statement of Financial Position
(In thousands of Rupees, except share data and as otherwise stated)
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Sify Technologies Limited
Consolidated Statement of Financial Position
(In thousands of Rupees, except share data and as otherwise stated)
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Total non-current liabilities | | | | | | | | | | | | | | | | |
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Total current liabilities | | | | | | | | | | | | | | | | |
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Total equity and liabilities | | | | | | | | | | | | | | | | |
The accompanying notes form an integral part of these consolidated financial statements
Sify Technologies Limited
Consolidated Statement of Income
(In thousands of Rupees, except share data and as otherwise stated)
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Cost of goods sold and services rendered | | | | | | | | | | | | | | | | | | | | |
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- Profit on sale of property, plant and equipment (Net) | | | | | | | | | | | | | | | | | | | | |
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Selling, general and administrative expenses | | | | | | | | | | | | | | | | | | | | |
Depreciation and amortization | | | | | | | | | | | | | | | | | | | | |
Impairment Loss on goodwill | | | | | | | | | | | | | | | | | | | | |
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Profit from operating activities | | | | | | | | | | | | | | | | | | | | |
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Net finance income / (expense) | | | | | | | | | | | | | | | | | | | | |
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Income tax (expense) / benefit | | | | | | | | | | | | | | | | | | | | |
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Equity holders of the Company | | | | | | | | | | | | | | | | | | | | |
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Diluted earnings per share | | | | | | | | | | | | | | | | | | | | |
The accompanying notes form an integral part of these consolidated financial statements
Sify Technologies Limited
Consolidated Statement of Comprehensive Income
(In thousands of Rupees, except share data and as otherwise stated)
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Other comprehensive income | | | | | | | | | | | | | | | | |
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Items that will not be reclassified to profit or loss | | | | | | | | | | | | | | | | |
Remeasurements of the net defined benefit liability/asset | | | | | | | | | | | | | | | | |
Items that may be reclassified to profit or loss | | | | | | | | | | | | | | | | |
Exchange differences on translation of foreign operations | | | | | | | | | | | | | | | | |
Total other comprehensive income, net of taxes | | | | | | | | | | | | | | | | |
Total comprehensive income | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Total comprehensive income attributable to: | | | | | | | | | | | | | | | | |
Equity holders of the Company | | | | | | | | | | | | | | | | |
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Sify Technologies Limited
Consolidated Statement of Changes in Equity
(In thousands of Rupees, except share data and as otherwise stated)
For year ended March 31, 2024
(Restated)
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Total comprehensive income for the year | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Compulsorily Convertible Debentures | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Transactions with owners, recorded directly in equity | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Shares issued on exercise of ESOP | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Transaction costs related to equity | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Transferred from share based payment reserve on exercise of ESOP | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Share-based payment transactions | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance on March 31, 2024 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
For year ended March 31, 2023
(Restated)
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Total comprehensive income for the year | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Transactions with owners, recorded directly in equity | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Shares issued on exercise of ESOP | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Transaction costs related to equity | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Transferred from share based payment reserve on exercise of ESOP | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Share-based payment transactions | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance on March 31, 2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
For year ended March 31, 2022
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Total comprehensive income for the year | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Transactions with owners, recorded directly in equity | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Shares issued on exercise of ESOP | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Transaction costs related to equity | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Transferred from share based payment reserve on exercise of ESOP | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Share-based payment transactions | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Balance on March 31, 2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Sify Technologies Limited
Consolidated Statements of Cash Flows
For the fiscal years ended March 31
(In thousands of Rupees, except share data and as otherwise stated)
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Depreciation and amortization & Impairment of goodwill | | | | | | | | | | | | | | | | |
(Gain) / loss on sale of property, plant and equipment | | | | | | | | | | | | | | | | |
Provision for doubtful receivables/ advances | | | | | | | | | | | | | | | | |
Stock compensation expense | | | | | | | | | | | | | | | | |
Net finance (income) / expense | | | | | | | | | | | | | | | | |
Unrealized (gain)/ loss on account of exchange differences | | | | | | | | | | | | | | | | |
Amortization of leasehold prepayments | | | | | | | | ) | | | | | | | | |
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Cash flow from operating activities before working capital changes | | | | | | | | | | | | | | | | |
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Change in trade and other receivables | | | | | | | | | | | | | | | | |
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Change in Contract Assets | | | | | | | | | | | | | | | | |
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Change in Contract Liabilities | | | | | | | | | | | | | | | | |
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Change in trade and other payables | | | | | | | | | | | | | | | | |
Change in Other Bank Deposits | | | | | | | | | | | | | | | | |
Change in employee benefits | | | | | | | | | | | | ) | | | | |
Cash generated from operations | | | | | | | | | | | | | | | | |
Income taxes (paid)/ refund received | | | | | | | | | | | | | | | | |
Net cash from / (used in) operating activities | | | | | | | | | | | | | | | | |
Sify Technologies Limited
Consolidated Statements of Cash Flows
For the fiscal years ended March 31,
(In thousands of Rupees, except share and per share data and as otherwise stated)
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Cash flows from / (used in) investing activities | | | | | | | | | | | | | | | | |
Acquisition of property, plant and equipment | | | | | | | | | | | | | | | | |
Expenditure on intangible assets | | | | | | | | | | | | | | | | |
Proceeds from sale of property, plant and equipment | | | | | | | | | | | | | | | | |
Investments in corporate debt securities & Equity | | | | | | | | | | | | | | | | |
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Amount paid for acquisition of right of use assets | | | | | | | | | | | | | | | | |
Net cash from / (used in) investing activities | | | | | | | | | | | | | | | | |
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Cash flows from / (used in) financing activities | | | | | | | | | | | | | | | | |
Proceeds from issue of shares on exercise of options (including share premium) | | | | | | | | | | | | | | | | |
Proceeds from / (repayment) of borrowings (net) | | | | | | | | | | | | | | | | |
Proceeds from issue of Compulsorily convertible debentures | | | | | | | | | | | | | | | | |
Repayment of lease liabilities | | | | | | | | | | | | | | | | |
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Net cash from / (used in) financing activities | | | | | | | | | | | | | | | | |
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Net increase / (decrease) in cash and cash equivalents | | | | | | | | | | | | | | | | |
Cash and cash equivalents on April 1 | | | | | | | | | | | | | | | | |
Effect of exchange fluctuations on cash held | | | | | | | | | | | | | | | | |
Cash and cash equivalents on March 31 | | | | | | | | | | | | | | | | |
Refer note 3 (c) and note 8 for the composition of cash and cash equivalents.
Disclosure relating to changes in liabilities arising from financing activities – Refer note below
The accompanying notes form an integral part of these consolidated financial statements
Note: Reconciliation of liabilities from financing activities
SIFY TECHNOLOGIES LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of Rupees, except share data and as stated otherwise)
Sify Technologies Limited (‘Sify’ or ‘the Company’) is a Company domiciled in India. The address of the Company’s registered office is 2nd Floor, Tidel Park, 4, Rajiv Gandhi Salai, Taramani, Chennai – 600113, India. The Company and its subsidiaries Sify Technologies (Singapore) Pte. Limited, Sify Technologies North America Corporation, Sify Data and Managed Services Limited, Sify Infinit Spaces Limited, Sify Digital Services Limited , Print House (India) Private Limited
and Patel Auto Engineering Company India Private Limited
(are together referred to as the ‘Group’ and individually as ‘Group entities’). The Group offers converged Information and Communication Technology (ICT) solutions comprising
Network-
Connectivity
services,
Data Center services and Digital Services which include Cloud and Managed services, Applications Integration services and Technology Integration services. The Company was incorporated on December 12, 1995 and its ADRs are listed on the NASDAQ Capital Market. The financial statements are for the Group consisting of Sify Technologies Limited (the 'Company') and its subsidiaries.
The accompanying Consolidated Financial Statements of the Group have been prepared in accordance with the International Financial Reporting Standards (IFRS) and its interpretations as issued by the International Accounting Standards Board (IASB).
These Consolidated Financial Statements have been approved for issue by the Board of Directors on January 13, 2025
.
These Consolidated Financial Statements have been prepared on the historical cost basis except for the following:
| Derivative financial instruments are measured at fair value |
| Financial instruments at fair value through profit or loss are measured at fair value. |
| Financial assets at fair value through other comprehensive income are measured at fair value |
| |
| The defined benefit asset is recognized as the net total of the plan assets, plus unrecognized past service cost and unrecognized actuarial losses, less unrecognized actuarial gains and the present value of the defined benefit obligation. |
| In relation to lease prepayments, the initial fair value of the security deposit is estimated as the present value of the refundable amount, discounted using the market interest rates for similar instruments. The difference between the initial fair value and the refundable amount of the deposit is recognized as a Right of Use Asset and present value of lease liability |
The above items have been measured at fair value and the methods used to measure fair values are discussed further in Note 4.
| | Functional and presentation currency |
Items included in the financial statements of each Group entity are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). Indian rupee is the functional currency of Sify, its domestic subsidiaries. The U.S. dollar is the functional currency of Sify’s foreign subsidiaries i.e. Sify Technologies North America Corporation and Sify Technologies (Singapore) Pte. Ltd. located in North America, United States of America and in Singapore.
The Consolidated Financial Statements are presented in Indian Rupees which is the Group’s presentation currency. All financial information presented in Indian Rupees has been rounded up to the nearest thousand except where otherwise indicated.
Convenience translation :
Solely for the convenience of the reader, the financial statements as of and for the year ended March 31, 2024 have been translated into United States dollars (neither the presentation currency nor the functional currency of the Group) based on the reference rate in the City of Mumbai on March 31, 2024, for cable transfers in Indian rupees as published by the Reserve Bank of India which was ₹ 83.3739 per $1.00. No representation is made that the Indian rupee amounts have been, could have been or could be converted into United States dollar at such a rate or at any other rate on March 31, 2024 or at any other date.
| | Use of estimates and judgments |
The preparation of Consolidated Financial Statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, the disclosures of contingent assets and contingent liabilities at the date of financial statements, income and expenses during the period. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in future periods which are affected.
Application of accounting policies that require critical accounting estimates, judgments and assumptions having the most significant effect on the amounts recognized in the financial statements are
:
| | Useful lives of property, plant and equipment (Note 3 e and Note 5) |
| | Useful lives of intangible assets (Note 3 g and Note 6) |
| | Estimate of Lease term and measurement of Right of Use Assets and Lease Liabilities (Note 3 h, 7) |
| | Identification of performance obligation and timing of satisfaction of performance obligation, measurement of transaction price on revenue recognition (Note 3 o) |
| | Measurement of the recoverable amounts of cash-generating units containing goodwill (Note 3 k and Note 6) |
| | Utilization of tax losses and computation of deferred taxes (Note 3 r, 11) |
| | Measurement of defined employee benefit obligations (Note 17) |
| | Measurement of share-based payments (Note 3 m, 27) |
| | Valuation of financial instruments (Note 3 c, 4, 34 and 33) |
| | Provisions and contingencies (Note 3 n and 31) |
| | Expected Credit losses on Financial Assets (Note 3 c, 13) |
| | |
Amendment to Form 20-F for the year ended March 31, 2024:
Sify Infinit Spaces Limited, a subsidiary Company of Sify Technologies Limited had issued Compulsorily Convertible Debentures (“CCDs”) to Kotak Special Situation Fund and Kotak Data Center Fund in amounts of
million, respectively. The CCDs issued to Kotak Special Situations Fund are backed by a Put Option Agreement with the holding Company M/s Sify Technologies Limited. These CCDs carry an obligation to pay a fixed interest of
Previously, the Company presented these CCDs as financial liabilities in the financial statements until the fixed number of shares to be issued upon conversion of the CCDs was determined. Subsequently, once the fixed number of shares to be issued upon conversion was determined, these CCDs were presented as equity. The Company assessed and concluded that certain terms in the arrangement are contingent, which was not to be considered while presenting the CCDs in the financial statements as per IAS 32. The Company has recognized the entire interest paid as an expense in the Consolidated Statement of Income as there is an unconditional obligation on the Company to make the interest payments.
The Company re-evaluated the presentation of Compound Financial Instruments in accordance with IAS 32 and concluded that a change in presentation is required as below:
| | The present value of the future interest obligation should be presented as a financial liability. |
| | The residual value after deducting the financial liability component identified above is to be evaluated under Para 16 or 16A/16B of IAS 32 as may be applicable, for determining whether it is a financial liability or equity. |
Therefore, the CCDs issued to Kotak Special Situations Fund are to be presented as
f
inancial
l
iabilities because they are backed by the Put Option Agreement. In the case of the CCDs issued to Kotak Data Center Fund (“KDCF”), the residual portion of the CCDs is to be presented as a financial liability until the fixed number of shares to be issued upon conversion is determined. Once the fixed number of shares are determined, the residual value should be presented as equity. Further, the Company determined that only the interest on the present value of the future interest obligation on CCDs issued to KDCF should be recognized in the Consolidated Statement of Income rather than the interest amount on the entire KDCF CCDs. When the liquidity event happens as per the terms of CCDs, the unmatured portion of the present value of future interest obligation recognized as financial liability should be classified as equity. These CCDs are presented separately as “Other Equity” and will be presented as non-controlling interes
t
upon issue of equity shares in the future. For additional information, see Note 19 herein.
The Company has amended the consolidated financial statements for the years ended March 31, 2024 and March 31, 2023. These amendments impact the Consolidated Statement of Financial Position, Consolidated Statement of Income, Consolidated Statement of Cash Flows and the previously reported earnings per share amounts.
The following tables present the impact on previously reported amounts in specific line items in the consolidated financial statements for the years ended March 31, 2024 and March 31, 2023.
Changes in Consolidated Statement of Financial Position (In thousands of Rupees):
| | As per Original Form 20-F
(As at) | | | As per Form 20-F/A
(As at) | |
| | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Changes in Consolidated Statement of Income for the year ended March 31, 2024 (In thousands of Rupees):
| | As per Original Form 20-F | | | | |
Profit from operating activities | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Changes in Other Figures for the year ended March 31, 2024 (In Rupees)
:
| | As per Original Form 20-F | | | | |
| | | | | | | | |
Diluted earnings per share | | | | | | | | |
Summary of Amendment (In thousands of Rupees):
| | | | | | |
Consolidated Statement of Financial Position | | | | | | | | |
| | | | | | | | |
Decrease in Accumulated Deficit | | | | | | | | |
Increase/(Decrease) in Borrowings (non-current liabilities) | | | | | | | | |
Increase/(Decrease) in Borrowings (current liabilities) | | | | | | | | |
| | | | | | | | |
Consolidated Statement of Income | | | | | | | | |
Decrease in Finance expense | | | | | | | | |
Increase in Profit before tax | | | | | | | | |
Increase in Earnings per share | | | | | | | | |
| | | | | | | | |
Diluted earnings per share | | | | | | | | |
| | Material accounting policies |
The accounting policies set out below have been applied consistently to all periods presented in these Consolidated Financial Statements
The financial statements of the Group companies are consolidated on a line-by-line basis. Intra-group balances and transactions, and any unrealized income and expenses arising from intra-group transactions, are eliminated. These financial statements are prepared by applying uniform accounting policies in use at the Group.
Subsidiaries are entities controlled by the Company. Control exists when the Company is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Thus, the Company controls an investee if and only if the Company has all the following:
(a) power over the investee;
(b) exposure, or rights, to variable returns from its involvement with the investee; and
(c) the ability to use its power over the investee to affect the amount of the Company’s returns.
Generally, there is a presumption that majority of voting rights results in control. To support this presumption and when the Group has less than a majority of voting of similar rights of an investee, the group considers all relevant facts and circumstances in assessing whether it has power over an investee.
The financial statements of subsidiaries are consolidated from the date that control commences until the date that control ceases. The accounting policies of subsidiaries have been changed where necessary to align them with the policies adopted by the Group.
| Foreign currency transactions and balances |
Transactions in foreign currencies are initially recognized in the financial statements using exchange rates prevailing on the date of transaction. Monetary assets and liabilities denominated in foreign currencies are translated to the relevant functional currency at the exchange rates prevailing at the reporting date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Non-monetary assets and liabilities denominated in a foreign currency and measured at historical cost are translated at the exchange rate prevalent at the date of transaction. Foreign currency differences arising on translation are recognized in the income statement for determination of net profit or loss during the period.
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to the functional currency at exchange rates at the reporting date. The income and expenses of foreign operations and cash flows are translated to Indian Rupees using average exchange rates during the period. Any differences arising on such translation are recognized in other comprehensive income. Such differences are included in the foreign currency translation reserve “FCTR” within other components of equity. When a foreign operation is disposed of, in part or in full, the relevant amount in the FCTR is transferred to profit or loss.
Financial assets comprise of investments in equity and debt securities, trade and other receivables, cash and cash equivalents and other financial assets.
All financial assets are recognized initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognized on the trade date, i.e., the date that the Group commits to purchase or sell the asset.
Financial assets measured at amortized cost:
Financial assets held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding are measured at amortised cost using effective interest rate (EIR) method. The EIR amortisation is recognized as finance income in the Statement of Income.
The Group while applying above criteria has classified the following financial assets at amortised cost
- Other financial assets.
- Investment in debt securities
Financial assets at fair value through other comprehensive income (FVTOCI):
Financial assets that are held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial assets give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding are subsequently measured at FVTOCI. Fair value movements in financial assets at FVTOCI are recognized in other comprehensive income.
Equity instruments held for trading are classified as at fair value through profit or loss (FVTPL). For other equity instruments the Group classifies the same as at FVTOCI or FVTPL. The classification is made on initial recognition and is irrevocable. Fair value changes on equity investments at FVTOCI, excluding dividends, are recognized in other comprehensive income (OCI).
Financial assets at fair value through profit or loss (FVTPL):
Financial assets are measured at fair value through profit or loss if it does not meet the criteria for classification as measured at amortised cost or at fair value through other comprehensive income. All fair value changes are recognized in the Statement of Income.
Derecognition of financial assets:
Financial assets are derecognized when the contractual rights to the cash flows from the financial asset expire or the financial asset is transferred and the transfer qualifies for derecognition. On derecognition of a financial asset in its entirety, the difference between the carrying amount (measured at the date of derecognition) and the consideration received (including any new asset obtained less any new liability assumed) shall be recognized in the Statement of Income.
Impairment of financial assets:
Trade receivables, contract assets, lease receivables under IFRS 9, investments in debt instruments that are carried at amortised cost, investments in debt instruments that are carried at FVTOCI are tested for impairment based on the expected credit losses for the respective financial asset.
An impairment analysis is performed at each reporting date. The expected credit losses over lifetime of the asset are estimated by adopting the simplified approach using a provision matrix which is based on historical loss rates reflecting current condition and forecasts of future economic conditions. In this approach assets are grouped on the basis of similar credit characteristics such as industry, customer segment and other factors which are relevant to estimate the expected cash loss from these assets.
Other financial assets are tested for impairment based on significant change in credit risk since initial recognition and impairment is measured based on probability of default over the lifetime when there is significant increase in credit risk.
(ii) Financial liabilities
Financial liabilities are initially recognized at fair value and any transaction cost that are attributable to the acquisition of the financial liabilities except financial liabilities at fair value through profit or loss which are initially measured at fair value.
The financial liabilities are classified for subsequent measurement into following categories:
- at fair value through profit or loss
Financial liabilities at amortised cost
The Group is classifying the following financial liabilities at amortised cost;
b) Finance lease obligations
c) Trade and other payables
d) Other financial liabilities
Amortised cost for financial liabilities represents amount at which financial liability is measured at initial recognition minus the principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount.
Financial liabilities at fair value through profit or loss
Financial liabilities held for trading are measured at FVTPL.
Derecognition of financial liabilities:
A financial liability shall be derecognized when, and only when, it is extinguished i.e. when the obligation specified in the contract is discharged or cancelled or expires.
Compound Financial Instrument:
The terms of a non-derivative compound financial instrument, such as convertible debentures including the CCDs, are evaluated to determine whether it contains both a liability and an equity component. Such components are classified as financial liabilities, financial assets or equity instruments in accordance with the substance of the contractual arrangement. Interest, dividends and gains relating to the component that is a financial liability is recognized as income or expense in profit or loss. Distribution to holders of equity instruments is recognized directly in equity.
(iii) Derivative financial instruments
Foreign exchange forward contracts and options are entered into by the Group to mitigate the risk of changes in foreign exchange rates associated with certain payables, receivables and forecasted transactions denominated in certain foreign currencies. The group also enters into cross currency interest rate swaps for hedging the risk against variability in cash flows of its term loan.
These derivative contracts do not qualify for hedge accounting under IFRS 9 and are initially recognized at fair value on the date the contract is entered into and subsequently re-measured at their fair value. Gains or losses arising from changes in the fair value of the derivative contracts are recognized immediately in profit or loss.
(iv) Offsetting of Financial Assets and Financial Liabilities
Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realize the assets and settle the liability simultaneously.
(v) Reclassification of financial assets
The Group determines classification of financial assets and liabilities on initial recognition. After initial recognition, no reclassification is made for financial assets which are categorized
as equity instruments at FVTOCI and financial assets or liabilities that are specifically designated as FVTPL. For financial assets which are debt instruments, a reclassification is made only if there is a change in the business model for managing those assets. Changes to the business model are expected to be very infrequent. The management determines change in the business model as a result of external or internal changes which are significant to the Group’s operations. A change in the business model occurs when the Group either begins or ceases to perform an activity that is significant to its operations. If the Group reclassifies financial assets, it applies the reclassification prospectively from the reclassification date which is the first day of the immediately next reporting period following the change in business model. The Group does not restate any previously recognized gains, losses (including impairment gains or losses) or interest.
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new ordinary shares or share options are recognized as a deduction from equity, net of any tax effects.
| | Property, plant and equipment |
Property, Plant and Equipment is stated at cost less accumulated depreciation and where applicable accumulated impairment losses. Cost of an item of property, plant and equipment comprises its purchase price, including import duties and non-refundable purchases taxes, after deducting trade discounts and rebates and includes expenditure directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials, direct labour and any other costs directly attributable to bringing the asset to a working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located. Purchased software that is integral to the functionality of the related equipment is capitalized as part of that equipment.
When parts of an item of Property, Plant and Equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.
Gains and losses on disposal of an item of Property, Plant and Equipment are determined by comparing the proceeds from disposal with the carrying amount of Property, Plant and Equipment and are recognized net within “other income / other expenses” in the Statement of Income.
The cost of replacing part of an item of property, plant and equipment is recognized in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably. The carrying amount of the replaced part is de-recognized. The costs of the day-to-day servicing of property, plant and equipment are recognized in statement of income during the period in which it is incurred.
Depreciation is recognized in the Statement of Income on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment considering residual value to be zero.
Depreciation on contract-specific assets are charged co-
over the contract period. Management’s estimated useful lives for the year ended March 31, 2024 and March 31, 2023 were as follows:
| | Estimate of useful life in years | |
Buildings comprising Civil structure, etc | | | | |
Improvements forming part of the Building | | | | |
Plant and machinery comprising computers, servers etc. | | | | |
Plant and machinery comprising other items | | | | |
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Depreciation is not recorded on construction-in-progress until construction and installation are complete and the asset is ready for its intended use.
The depreciation method, useful lives and residual value are reviewed at each of the reporting date
(i) Business combinations
Business combinations are accounted for using IFRS 3 (Revised), Business Combinations. IFRS 3 requires the identifiable intangible assets and contingent consideration to be fair valued in order to ascertain the net fair value of identifiable assets, liabilities and contingent liabilities of the acquiree. Significant estimates are required to be made in determining the value of contingent consideration and intangible assets. These valuations are conducted by independent valuation experts.
Business combinations have been accounted for using the acquisition method under the provisions of IFRS 3(Revised). The cost of acquisition is measured at the fair value of the assets transferred, equity instruments issued and liabilities incurred or assumed at the date of acquisition. The cost of acquisition also includes the fair value of any contingent consideration. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair value on the date of acquisition.
Transactions costs that the group incurs in connection with a business combination such as finder’s fees, legal fees, due diligence fees, and other professional and consulting fees are expensed as incurred.
Business combinations between entities under common control is outside the scope of IFRS 3 (Revised), Business Combinations and is accounted for at carrying value of assets acquired and liabilities assumed.
The acquisition of an asset or a group of assets that does not constitute a ‘business’ as per IFRS 3 is accounted for by identifying and recognizing the individual identifiable assets acquired and liabilities assumed. The cost of the group is allocated to such individual identifiable assets and liabilities on the basis of their relative fair values on the date of purchase.
Business combinations involving entities or businesses under common control have been accounted for using the pooling of interests method.
Goodwill represents the cost of a business acquisition in excess of the Group's interest in the net fair value of identifiable assets, liabilities and contingent liabilities of the acquiree. When the excess is negative (negative goodwill), the Group reassesses the identification and measurement of identifiable assets, liabilities and contingent liabilities, and the measurement of the cost of acquisition, and recognizes any remaining excess in profit or loss immediately on acquisition.
Goodwill is measured at cost less accumulated impairment losses.
Other intangible assets that are acquired by the Group, which have finite useful lives, are measured at cost less accumulated amortization and accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the intangible asset.
(i) Subsequent expenditure
Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, are recognized in profit or loss as incurred.
(ii) Amortization of intangible assets with finite useful lives
Amortization is recognized in profit or loss on a straight-line basis over the estimated useful lives of intangible assets, other than goodwill, from the date that they are available for use. The estimated useful lives for the current and previous year are as follows:
| | Estimate of useful life in years | |
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Amortization methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.
The Group’s lease asset classes primarily consist of leases for land and buildings. The group assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the group assesses whether: (1) the contract involves the use of an identified asset (2) the group has substantially all of the economic benefits from use of the asset through the period of the lease and (3) the group has the right to direct the use of the asset.
At the date of commencement of the lease, the Group recognizes a right-of-use asset (“ROU”) and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less (short-term leases) and low value leases. For these short-term and low value leases, the Group recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease.
Certain lease arrangements include the options to extend or terminate the lease before the end of the lease term. ROU assets and lease liabilities includes these options when it is reasonably certain that they will be exercised.
The right-of-use assets are initially recognized at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation and impairment losses.
Right-of-use assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset. Right of use assets are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets.
The lease liability is initially measured at amortized cost at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates in the country of domicile of the leases. Lease liabilities are remeasured with a corresponding adjustment to the related right of use asset if the group changes its assessment if whether it will exercise an extension or a termination option.
Lease liability and ROU asset have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows.
Leases for which the group is a lessor is classified as a finance or operating lease. Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases.
When the Group is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease separately. The sublease is classified as a finance or operating lease by reference to the right-of-use asset arising from the head lease.
For operating leases, rental income is recognized on a straight line basis over the term of the relevant lease.
Inventories comprising traded hardware and software are measured at the lower of cost (determined using first-in first-out method) and net realizable value. Cost comprises cost of purchase and all directly attributable costs incurred in bringing the inventories to their present location and condition. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.
| Contract assets/liability |
Contract Assets (Unbilled revenue) represents revenue in excess of billing. Contract Liability (Deferred income) represents unserviced portion of billed contracts.
| | Impairment of non-financial assets |
The carrying amounts of the Group’s non-financial assets, other than inventories and deferred tax assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the “cash-generating unit”).
An impairment loss is recognized if the carrying amount of an asset or its cash-generating unit exceeds its estimated recoverable amount. Impairment losses are recognized in profit or loss. Impairment losses recognized in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit or group of units on a pro rata basis.
Reversal of impairment loss
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized directly in other comprehensive income and presented within equity.
Employee benefits are accrued in the period in which the associated services are rendered by employees of the Group, as detailed below:
| Defined contribution plan (Provident fund) |
Defined contribution plans are post-employment benefit plans under which an entity pays fixed contributions into a separate entity (a fund) and will have no legal or constructive obligation to pay further contributions if the fund does not hold sufficient assets to pay all employee benefits relating to employee service in the current and prior periods. The Group makes specified monthly contribution towards Government administered provident fund scheme. The Group also contributes to 401(K) plans on behalf of eligible employees. Obligations for contributions to defined contribution plans are recognized as an employee benefit expense in profit and loss in the periods during which the related services are rendered by employees.
| Defined benefit plans (Gratuity) |
In accordance with applicable Indian laws, the Group provides for a lump sum payment to eligible employees, at retirement or termination of employment based on the last drawn salary and years of employment with the Group. The gratuity fund is managed by the Life Insurance Corporation of India (LIC). The Group's net obligation in respect of defined benefit plan is calculated by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting any unrecognized past service cost and the fair value of any plan assets.
The discount rate is the yield at the reporting date on risk free Government bonds that have maturity dates approximating the terms of the Group’s obligations. The calculation is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a benefit to the Group, the recognized asset is limited to the total of any unrecognized past service costs and the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan.
Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest), are recognized in other comprehensive income and presented within equity. Remeasurements are not reclassified to profit or loss in subsequent periods. Service costs, net interest expenses and other expenses related to defined benefit plans are recognized in profit or loss.
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognized for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.
| Compensated leave of absence |
The employees of the Group are entitled to compensated absence. The employees can carry forward a portion of the unutilized accrued absence and utilize it in future periods or receive cash compensation at retirement or termination of employment for the unutilized accrued compensated absence. The Group recognizes an obligation for compensated absences in the period in which the employee renders the services. The Group provides for the expected cost of compensated absence in the Statement of Income as the additional amount that the Group expects to pay as a result of the unused entitlement that has accumulated based on actuarial valuations carried out by an independent actuary at the balance sheet date.
| | Share-based payment transactions |
The fair value of options on grant date, (equity-settled share based payments) granted to employees is recognized as an employee expense, with a corresponding increase in equity, over the period in which the options are vested. The increase in equity recognized in connection with a share based payment transaction is presented as a separate component in equity. The amount recognized as an expense is adjusted to reflect the actual number of share options that vest. In respect of options whose terms and conditions are modified, the Group includes the incremental fair value of the options in the measurement of the amounts recognized for services received from the employees. The incremental fair value is the difference between the fair value of the modified option and that of the original option both estimated as at the date of the modification. If the modification occurs during the vesting period, the incremental fair value granted is included in the measurement of the amount recognized for services received over the period from the modification date until the date when the modified equity instruments vest, in addition to the amount based on the grant date fair value of the original equity instruments, which is recognized over the remainder of the original vesting period. If the modification occurs after vesting date, the incremental fair value granted is recognized immediately, or over the vesting period if the employee is required to complete an additional period of service before becoming unconditionally entitled to those modified equity instruments.
Provisions are recognized if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect of the time value of money is material, provisions are discounted using a current pre tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
A provision for onerous contracts is recognized when the expected benefits to be derived by the Group from a contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Group recognizes any impairment loss on the assets associated with that contract.
The Group derives revenue from converged ICT solutions comprising Network- Connectivity services, Data Center services and Digital Services which includes cloud and managed services, applications integration services and technology integration services.
The Group recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services excluding the amount collected on behalf of third parties.
The revenue recognition in respect of the various streams of revenue is described as follows
Revenue from Network Connectivity services includes Data network services and Voice services. Network services primarily include revenue from connectivity services, NLD/ILD services and to a lesser extent, revenues from the setup and installation of connectivity links. The group provides connectivity for a fixed period of time at a fixed rate regardless of usage. Revenue from Network services are series of distinct services. The performance obligations are satisfied overtime.
Service revenue is recognized when services are provided, based upon period of time. The setup and installation of connectivity links are deferred and recognized over the associated contract period.
Sale of equipment’s are accounted as separate performance obligations if they are distinct and its related revenues are recognized at a point in time when the control is passed on to the customer.
The Group provides NLD (National Long Distance) and ILD (International Long Distance) services through Group’s network. The Group carries voice traffic, both national and international, using the network back-bone and delivers voice traffic to Inter-connect Operators. Revenue is recognized when the services are provided based upon the usage (e.g: metered call units of voice traffic terminated on the Group’s network).
Revenue from DC services consists co-location of racks and power charges. The contracts are mainly for a fixed rate for a period of time. Revenue from co-location of racks, power charges and cross connect charges are series of distinct services. The performance obligations are satisfied overtime. Service revenue is recognized as the related services are performed. Sale of equipment such as servers, switches, networking equipment, cable infrastructure and racks etc., are accounted as separate performance obligations if they are distinct and its related revenues are recognized at a point in time when the control is passed on to the customer.
Revenue from Cloud and managed services include revenue from Cloud and storage solutions, managed services, value added services, domestic and International managed services.
Revenues from Cloud and on demand compute and storage, are primarily fixed for a period of time. Revenue from Cloud and managed services are series of distinct services. The performance obligations are satisfied overtime. The group recognize service revenue as the related services are performed.
Revenues from domestic and international managed services, comprise of value added services, operations and maintenance of projects and from remote infrastructure management. Contracts from this segment are fixed and could also be based on time and material contracts.
In the case of time and material contracts, the group recognizes service revenue as the related services are performed.
In the case of fixed price contract, the group recognize revenue over a period of time based on progress towards completion of performance obligation using efforts or cost to cost measure of progress (percentage completion method of accounting).
The stage of completion is measured by efforts spent to estimated total efforts over the term of the contract.
Revenue from Technology Integration Services include system integration Services, revenue from construction of Data Centers, network services, security solutions and to a lesser extent, revenue from sale of hardware and software.
Revenue from construction contract includes revenue from construction of Data Centers to the specific needs and design of the customer. The Group recognize revenue at point in time, when the customer does not take control of work-in-progress or over a period of time when the customer controls the work-in-progress. In the case where revenue is recognized over a period of time and progress is measured based on the costs incurred to date as a percentage of the total estimated costs to fulfill the contract. If the Group does not have a sufficient basis to measure the progress of completion or to estimate the total contract revenues and costs, revenue is recognized only to the extent of contract cost incurred for which recoverability is probable. When total cost estimates exceed revenues in an arrangement, the estimated losses are recognized in the statement of Income in the period in which such losses become probable based on the current contract estimates.
Revenue from Applications Integration services include online assessment, document management services, web development, digital certificate based authentication services, supply chain software and eLearning software development services. eLearning software development services consist of structuring of content, developing modules, delivery and training users in the modules developed.
Revenue from Applications Integration Services is recognized over a period of time. The progress is measured based on the amount of time/effort spent on a project. Revenue in relation to ‘time’ is measured as the agreed rate per unit of time multiplied by the units of time expended. The element of revenue related to materials is measured in accordance with the terms of the contract.
The Group enters into contracts with customers to serve advertisements in the portal and the Group is paid on the basis of impressions, click-throughs or leads and in each case the revenue is recognized ratably over the period of the contract based upon the usage (i.e., on actual impressions/click throughs / leads delivered.)
Revenue from commissions earned on electronic commerce transactions are recognized when the transactions are completed.
Digital Certification revenues include income received on account of Web certification. Generally the Group does not hold after sale service commitments after the activation of the Digital Certificates sold and accordingly, revenue is recognized fully on the date of activation of the respective certificate.
Multiple deliverable arrangements
In certain cases, some elements belonging to the services mentioned above are sold as a package consisting of all or some of the elements.
The Group accounts for goods or services of the package separately if they are distinct. i.e., if a good or service is separately identifiable from other promises in the contract and if the customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer.
The Group allocate the transaction price to each performance obligation identified in the contract on a relative stand-alone selling price basis. Standalone selling price is the price at which group would sell a promised good or service separately to the customer.
If the relative stand-alone selling prices are not available, the group estimates the same. In doing so, the group maximise the use of observable inputs and apply estimation methods consistently in similar circumstances.
Costs to fulfil customer contracts i.e., the costs relate directly to a contract or to an anticipated contract that the Group can specifically identify or the costs generate/ enhance resources of the group that will be used in satisfying (or in continuing to satisfy) performance obligations in the future or the costs that are expected to be recovered are recognized as asset and amortized over the contract period.
Incremental costs of obtaining a contract are recognized as assets and amortized over the contract period if entity expects to recover those costs. The Group recognize incremental cost of obtaining a contract as an expense when incurred if the amortisation period of the asset that the entity otherwise would have recognized is one year or less.
Costs to obtain a contract that is incurred regardless of whether the contract is obtained are recognized as an expense when incurred, unless those costs are explicitly chargeable to the customer regardless of whether the contract is obtained.
Significant judgments on applying IFRS 15
The group contracts with customer include promises or arrangements to transfer multiple goods or services to a customer. The group assess whether such arrangements in the contract has distinct goods or services (performance obligation). Identification of distinct performance obligation involves judgment to determine ability of customer to benefit independently from other promises in the contract.
The judgment is required to measure the transaction price for the contract. The transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer. The consideration could be fixed amount or variable amount or could be both. Transaction price could also be adjusted for time value of money if contract includes a significant financing component.
In the case of multiple arrangements in a contract, the group allocate transaction price to each performance obligation based on standalone transaction price. The determination of standalone transaction price involves judgment.
The group uses judgment in determining timing of satisfaction of performance obligation. The group considers how customer benefits from goods or services as the services are rendered, who controls as the assets is created or enhanced, whether asset has an alternate use and the entity has an enforceable right to payment for performance completed to date, transfer of significant risk and reward to the customer, acceptance or sign off from the customer etc.,
The group uses judgement when capitalising the contract cost as to whether it generates or enhances resources of the entity that will be used in satisfying performance obligation in the future.
Finance income comprises interest income on funds invested, dividend income and gains on the disposal of financial assets at fair value through profit or loss. Interest income is recognized as it accrues in profit or loss, using the effective interest method. Dividend income is recognized in profit or loss on the date when the Group’s right to receive payment is established, which in the case of quoted securities is the ex-dividend date.
Finance expense comprises borrowing costs, bank charges, unwinding of discount on provision, fair value losses on financial assets at fair value through profit or loss that are recognized in Statement of Income. Fair value changes attributable to hedged risk are recognized in the Statement of Income.
Borrowing costs are interest and other costs (including exchange difference relating to foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs) incurred in connection with the borrowing of funds. Interest expense is recognized using effective interest method.
Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized as part of the cost of that asset. Other borrowing costs are recognized as expenses in the period in which they are incurred. To the extent the Group borrows funds generally and uses them for the purpose of obtaining a qualifying asset, the Group determines the amount of borrowings costs eligible for capitalization by applying a capitalization rate to the expenditure incurred on such asset. The capitalization rate is determined based on the weighted average of borrowing costs applicable to the borrowings of the Group which are outstanding during the period, other than borrowings made specifically towards purchase of the qualifying asset. The amount of borrowing costs that the Group capitalizes during a period does not exceed the amount of borrowing costs incurred during that period.
Income tax expense comprises current and deferred tax. Income tax expense is recognized in profit or loss except to the extent that it relates to items recognized directly in equity or in other comprehensive income. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date. Minimum Alternate Tax (MAT) is accounted as current tax when the Group is subjected to such provisions of the Income Tax Act. However, credit of such MAT paid is available when the Group is subjected to tax as per normal provisions in the future. Credit on account of MAT is recognized as a deferred tax asset based on the management’s estimate of its recoverability in the future. Significant judgments are involved in determining the provision for income taxes, including amount expected to be paid/recovered for uncertain tax positions.
Deferred tax is recognized using the balance sheet method, providing for temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized for the following temporary differences:
(i) the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss.
(ii) differences relating to investments in subsidiaries and associates to the extent that it is probable that they will not reverse in the foreseeable future.
(iii) arising due to taxable temporary differences on the initial recognition of goodwill, as the same is not deductible for tax purposes.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.
A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.
Deferred taxation arising on investments in subsidiaries and associates is recognized except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred taxation on temporary differences arising out of undistributed earnings of the equity method accounted investee is recorded only when it is expected to be distributed in foreseeable future based on the management's intention.
The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period. Where ordinary shares are issued but not fully paid, they are treated in the calculation of basic earnings per share as a fraction of an ordinary share to the extent that they were entitled to participate in dividends during the period relative to a fully paid ordinary share. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which includes share options granted to employees. To the extent that partly paid shares are not entitled to participate in dividends during the period they are treated as the equivalent of warrants or options in the calculation of diluted earnings per share.
| Dividend distribution to equity shareholders |
Dividend distributed to Equity shareholders is recognized as distribution to owners of capital in the Statement of Changes in Equity, in the period in which it is paid after approval of shareholders.
| Current/ non-current classification |
An asset is classified as current if:
(a) it is expected to be realized or sold or consumed in the Group's normal operating cycle;
(b) it is held primarily for the purpose of trading;
(c) it is expected to be realized within twelve months after the reporting period;
(d) it is cash or a cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
All other assets are classified as non-current.
A liability is classified as current if:
(a) it is expected to be settled in normal operating cycle;
(b) it is held primarily for the purpose of trading;
(c) it is expected to be settled within twelve months after the reporting period;
(d) it has no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
All other liabilities are classified as non-current.
The operating cycle is the time between acquisition of assets for processing and their realisation in cash and cash equivalents. The Group's normal operating cycle is twelve months.
Recent accounting pronouncements
New amendments not yet adopted:
Certain new standards, amendments to standards and interpretations are not yet effective for annual periods beginning after April 1, 2024 and have not been applied in preparing these consolidated financial statements. New standards, amendments to standards and interpretations that could have potential impact on the consolidated financial statements of the Company are:
On August 15, 2023, International Accounting Standards Board (IASB) has issued amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates, Lack of Exchangeability that will require companies to provide more useful information in their financial statements when a currency cannot be exchanged into another currency. These amendments specify when a currency is exchangeable into another currency and when it is not and specify how an entity determines the exchange rate to apply when a currency is not exchangeable.
The adoption of these amendments to IAS 21 are not expected to have any material impact on the consolidated financial statements.
| Determination of fair values |
A number of the Group’s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value measurement assumes that the transaction to sell the asset or transfer the liability takes place either in the principal market for the asset or liability or in the absence of a principal market, in the most advantageous market for the asset or liability. The principal market or the most advantageous market must be accessible to the Group.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing
the use of relevant observable inputs and minimizing
the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized
within the fair value hierarchy based on the lowest level input that is significant to the fair value measurement as a whole. The fair value hierarchy is described as below:
Level 1 - unadjusted quoted prices in active markets for identical assets and liabilities.
Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3 - unobservable inputs for the asset or liability.
For assets and liabilities that are recognized in the financial statements at fair value on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization
at the end of each reporting period.
For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of fair value hierarchy.
Fair values have been determined for measurement and / or disclosure purposes based on the following methods. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.
| Property, plant and equipment |
The fair value of property, plant and equipment recognized as a result of a business combination is an estimated amount for which a property could be exchanged on the date of acquisition in an orderly transaction between market participants. The fair value of items of plant, equipment, fixtures and fittings is based on the market approach and cost approach using quoted market prices for similar items when available and replacements costs when appropriate.
The fair value of inventories acquired in a business combination is determined based on the estimated selling price in the ordinary course of business less the estimated costs of completion and sale, and a reasonable profit margin based on the effort required to complete and sell the inventories.
The fair value of intangible assets acquired in the business combinations is based on discounted cash flows expected to be derived from the use and eventual sale of assets (terminal value).
| Investments in equity and debt securities |
The fair value is determined by reference to their quoted price at the reporting date. In the absence of quoted price, the fair value of the financial asset is measured using valuation techniques.
| Trade and other receivables |
The fair value of trade and other receivables expected to be realized beyond twelve months, excluding construction contracts in progress, is estimated as the present value of future cash flows, discounted at the market rate of interest at the reporting date. However in respect of such financial instruments, fair value generally approximates the carrying amount due to the short term nature of such assets. This fair value is determined for disclosure purposes or when acquired in a business combination.
The fair value of forward exchange contracts is based on their quoted price, if available. If a quoted price is not available, the fair value is estimated by discounting the difference between the contractual forward price and the current forward price for the residual maturity of the contract using a risk free interest rate (based on Government bonds). The fair value of foreign currency option contracts is determined based on the appropriate valuation techniques, considering the terms of the contract. Fair values reflect the credit risk of the instrument and include adjustments to take account of the credit risk of the Group entity and the counter party when appropriate. The fair value of the cross currency swaps (principal only swaps) and interest rate swaps is determined based on the discounting of the future cash flows at the market rates existing on the reporting date.
| Non derivative financial liabilities |
Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the reporting date. For finance leases, the market rate of interest is determined by reference to similar lease agreements.
| Share-based payment transactions |
The fair value of employee stock options is measured using the Black-Scholes method. Measurement inputs include share price on grant date, exercise price of the instrument, expected volatility (based on weighted average historic volatility adjusted for changes expected due to publicly available information), expected term of the instrument (based on historical experience and general option holder behavior), expected dividends, and the risk free interest rate (based on Government bonds).
| | Property, plant and equipment |
The following table presents the changes in property, plant and equipment during the year ended March 31, 2024
| | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Add: Construction in progress | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
*
The Company incurred costs on Improvements comprising expenses for building interiors, electrical work, etc, which become an integral part of the building. These expenses are incurred to make the civil structure of the building ready for the intended use. These expenses on improvement are capitalized and depreciated over its estimated useful life of 5 years in accordance with the accounting policy consistently applied by the Company. The Company believes that it is more appropriate to disclose such improvements as a part of Buildings rather than as part of Furniture and Fittings. Hence the cost of such Improvements and the accumulated depreciation thereon, as on April 1, 2023 has been transferred as part of Building for a better presentation.
The following table presents the changes in property, plant and equipment during the year ended March 31, 2023
| | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Add: Construction in progress | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
As of March 31, 2024 and 2023, the Company had committed to spend approximately
₹ 9,352,551 and ₹ 10,678,787 respectively, under agreements to purchase property, plant and equipment.
Amounts paid towards acquisition of property, plant and equipment outstanding at each balance sheet date and the cost of property, plant and equipment that are not available for use are disclosed under construction-in-progress.
As of March 31, 2024 property, plant and equipment with a carrying amount of ₹ 12,260,778 (March 31, 2023: ₹ 16,910,327) are subject to a registered charge to secure bank borrowings.
Capitalized borrowing costs
Borrowing costs capitalized during the year amounted to ₹ 514,022 (March 2023, ₹ 149,297)
Intangible assets comprise the following:
The following table presents the changes in intangible assets during the years ended March 31, 2024
and
2023.
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Balance as of April 01, 2022 | | | | | | | | | | | | | | | | |
Acquisitions during the year | | | | | | | | | | | | | | | | |
Disposals during the year | | | | | | | | | | | | | | | | |
Balance as of March 31, 2023 | | | | | | | | | | | | | | | | |
Acquisitions during the year | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Disposals during the year | | | | | | | | | | | | | | | | |
Balance as of March 31, 2024 | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Balance as of April 01, 2022 | | | | | | | | | | | | | | | | |
Amortization for the year | | | | | | | | | | | | | | | | |
Impairment loss on intangibles | | | | | | | | | | | | | | | | |
Balance as of March 31, 2023 | | | | | | | | | | | | | | | | |
Amortization for the year | | | | | | | | | | | | | | | | |
Disposals during the year | | | | | | | | | | | | | | | | |
Balance as of March 31, 2024 | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Intangible assets that were fully impaired / amortised were removed from the block.
The Company had not committed to spend any amount under agreements to purchase intangible assets during the year ending March 31, 2024 and 2023.
Following are the changes in the carrying value of right of use assets for the year ended March 31, 2024:
| | | | | | | |
| | | | | | | | | | | | | | | |
Balance as of April 1, 202 3 | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Balance as of March 31, 202 4 | | | | | | | | | | | | | | | | | | | | |
Following are the changes in the carrying value of right of use assets for the year ended March 31, 2023:
| | | | | | | |
| | | | | | | | | | | | | | | |
Balance as of April 1, 2022 | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Balance as of March 31, 2023 | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Current lease liabilities | | | | | | | | |
Non-current lease liabilities | | | | | | | | |
| | | | | | | | |
The following is the movement in lease liabilities during the Year ended
| | | | | | |
| | | | | | | | |
| | | | | | | | |
Finance cost accrued during the period | | | | | | | | |
| | | | | | | | |
Payment of lease liabilities | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
The table below provides details regarding the contractual maturities of lease liabilities as of March 31, 2024 and March 31, 2023 on an undiscounted basis (including finance expenses):
| | Cash and cash equivalents |
Cash and cash equivalents as per consolidated statement of financial position, as of March 31, 2024 amounted to ₹
4,105,489
(March 31, 2023: ₹
3,650,446 and
March 31, 2022: ₹
3,781,978
). This excludes cash-restricted of ₹ 440,445 (March 31, 2023: ₹ 1,194,787 and March 31, 2022: ₹ 792,035), representing deposits held under lien against working capital facilities availed and bank guarantees given by the Group towards future performance obligations.
| | | | | | | | | |
| | | | | | | | | | | | |
Bank deposits held under lien against borrowings / guarantees from banks / Government authorities | | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
(maturity period more than 3 months) | | | | | | | | | | | | |
Total Non restricted cash | | | | | | | | | | | | |
| | | | | | | | | | | | |
Bank overdraft used for cash management purposes | | | | | | | | | | | | |
(maturity period more than 3 months) | | | | | | | | | | | | |
Cash and cash equivalents for the statement of cash flows | | | | | | | | | | | | |
The following table provides information about receivables, contract assets and contract liabilities from the contracts with the customers
| | | | | | |
| | | | | | | | | | | | | | | | |
Contract Assets – Unbilled Revenue | | | | | | | | | | | | | | | | |
Contract liabilities – Deferred Income | | | | | | | | | | | | | | | | |
Current contract liabilities | | | | | | | | | | | | | | | | |
Non-current contract liabilities | | | | | | | | | | | | | | | | |
Total Contract liabilities – Deferred Income | | | | | | | | | | | | | | | | |
The following table provides the movement in contract assets (unbilled revenue) for the year ended March 31, 2024 and March 31, 2023:
| | | | | | |
| | | | | | | | |
Add: Revenue recognized during the year | | | | | | | | |
Less: Invoiced during the year | | | | | | | | |
Add: Translation gain or (loss) | | | | | | | | |
| | | | | | | | |
The /following table provides the movement in contract liabilities (Deferred Income) for the year ended March 31, 2024 and March 31, 2023:
| | | | | | |
| | | | | | | | |
Less: Revenue recognized during the period | | | | | | | | |
Add: Invoiced during the period but revenue not recognized | | | | | | | | |
Add: Translation gain or (loss) | | | | | | | | |
| | | | | | | | |
Contract Cost and Amortisation
Costs to fulfil customer contracts are deferred and amortized over the contract period. For the year ended March 31, 2024 the Company has capitalised
₹
23,763 (March 31, 2023:
₹
119,312) and amortised
₹
37,084 (March 31, 2023:
₹
304,439). There was no impairment loss in relation to the capitalised cost.
Incremental costs of obtaining a contract are recognized as assets and amortized over the contract period. The Company recognizes incremental cost of obtaining a contract as an expense when incurred if the amortisation period of the asset that the entity otherwise would have recognized is one year or less.
| | | | | | |
Other deposits and receivables | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Financial assets included in other assets | | | | | | | | |
“Financial assets included in Other assets” comprise security deposits and Bank deposits having a maturity period of more
than
12
months, interest accrued on investments, and other non-current advances made in the ordinary course of business. While non-current deposits are included as part of Other Assets and disclosed as “Financial assets included in other assets,” the receivables are separately disclosed as part of Note 13.
| | Deferred tax assets and liabilities |
The tax effects of significant temporary differences that resulted in deferred tax assets and a description of the items that created these differences is given below
.
Recognized deferred tax assets / (liabilities) | | | | | | | | | |
| | | | | | | | | |
Deductible temporary difference | | | | | | | | | | | | |
Property, Plant and Equipment | | | | | | | | | | | | |
Lease obligations on right of use assets | | | | | | | | | | | | |
Provision for employee benefits | | | | | | | | | | | | |
| | | | | | | | | | | | |
Payment to the MSME Vendors | | | | | | | | | | | | |
Provision for Doubtful Advances | | | | | | | | | | | | |
| | | | | | | | | | | | |
Taxable temporary difference | | | | | | | | | | | | |
| | | | | | | | | | | | |
Finance Lease obligations | | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Net deferred tax asset (liability) recognized in Balance Sheet | | | | | | | | | | | | |
In assessing the realizability of deferred tax assets, management considers whether some portion or all of deferred tax assets will not be realized. The ultimate realization of deferred tax assets and tax loss carry forwards is dependent upon the generation of future taxable income during the periods in which the temporary differences become deductible. Management considers the scheduled reversals of deferred tax liabilities, projected future taxable income and tax planning strategy in making this assessment. Based on the level of historical taxable income and projections of future taxable income over the periods in which deferred tax assets are deductible, management believes that the Group will realize the benefits of those recognized deductible differences. The amount of deferred tax assets considered realizable, however, could be reduced in the near term if estimates of future taxable income are reduced.
Movement in temporary differences during the year
| | Balance as of March 31, 202 2 | | | Recognized
in
income
statement | | | Recognized
in
Equity /
Balance
sheet | | | Balance
as of
March 31,
2023 | | | Recognized
in
income
statement | | | Recognized
in
Equity /
Balance
sheet | | | Balance
as of
March
31, 2024 | |
Property, plant and equipment | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Lease obligations on right of use assets | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Finance Lease obligations | | | | ) | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Provision for employee benefits | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Unrecognized deferred tax assets / (liabilities)
| | | | | | |
Deductible temporary differences | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Considering the probability of availability of future taxable profits in the period in which tax losses expire, deferred tax assets have not been recognized in respect of tax losses carried forward by the Group. The above tax losses expire at various years.
Income tax expense recognized in profit or loss
| | | | | | | | | |
Current tax expense / (benefit) | | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Deferred tax expense / (benefit) | | | | | | | | | | | | |
Origination and reversal of temporary differences | | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Total income tax expense / (benefit) | | | | | | | | | | | | |
There are no income taxes directly recognized in other comprehensive income.
Reconciliation of effective tax rate
A reconciliation of the income tax provision to the amount computed by applying the statutory income tax rate to the income before taxes is summarized below:
| | | | | | | | | |
Profit before income taxes | | | | | | | | | | | | |
Enacted tax rates in India | | | | | | | | | | | | |
Computed expected tax expense / (benefit) | | | | | | | | | | | | |
| | | | | | | | | | | | |
Share based payment expense not deductible for tax purposes | | | | | | | | | | | | |
Unrecognized deferred tax assets on losses incurred during the year (net of temporary differences, if any) | | | | | | | | | | | | |
Recognition of previously unrecognised deferred tax asset on temporary differences | | | | | | | | | | | | |
Difference on account differential tax rates in different jurisdictions | | | | ) | | | | | | | | |
Effect of Unrecognised business loss including reversal of previously recognised DTA on business loss | | | | | | | | | | | | |
Expenses/income not taxable | | | | | | | | | | | | |
Recognition of current year temporary differences | | | | | | | | | | | | |
Recognition of previously unrecognized tax losses | | | | | | | | | | | | |
Difference on account of differential tax rates in different companies | | | | | | | | | | | | |
Effect of expenses that are not deductible in determining taxable profit | | | | | | | | | | | | |
Expenses/income not taxable | | | | | | | | | | | | |
Unrecognized temporary differences | | | | | | | | | | | | |
Utilisation of previously unrecognised temporary differences | | | | | | | | | | | | |
Effect of rate difference in opening and closing deferred tax | | | | | | | | | | | | |
Permanent difference on account of coupon charges on CCDs | | | | ) | | | | | | | | |
| | | | | | | |
| | | | ) |
Reversal of previously recognised temporary differences | | | | | | | | | | | | |
| | | | | | | | | | | | |
* Includes project inventory of ₹3,034,240 ( previous year: ₹ 1,692,378)
| | Trade and other receivables |
Trade and other receivables comprise:
| | | | | | |
(i) Trade receivables, net | | | | | | | | |
(ii) Other receivables including deposits | | | | | | | | |
(iii) Contract related accruals | | | | | | | | |
| | | | | | | | |
| | Trade receivables as of March 31, 2024 and March 31, 2023 are stated net of allowance for doubtful receivables. The Group maintains an allowance for doubtful receivables based on expected credit loss model. The Group’s exposure to credit and currency risks and impairment losses related to trade and other receivables, excluding construction work in progress is disclosed in note 34. Trade receivables consist of: |
| | | | | | |
Trade receivables from related parties | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Less: Allowance for doubtful receivables | | | | | | | | |
Balance at the end of the year | | | | | | | | |
The activity in the allowance for doubtful accounts receivable is given below: | | | |
| | | | | | |
Balance at the beginning of the year | | | | | | | | |
Add : Additional provision, net | | | | | | | | |
Less : Bad debts written off | | | | | | | | |
Balance at the end of the year | | | | | | | | |
| | Other receivables comprise of the following items: |
| | | | | | |
Advances and other deposits (Refer Note (a) below) | | | | | | | | |
Withholding taxes (Refer Note (b) below) | | | | | | | | |
| | | | | | | | |
Financial assets included in other receivables | | | | | | | | |
| | Advances and other deposits primarily comprise of receivables in the form of deposits, sales tax/VAT, service tax, GST and other advances given in the ordinary course of business. |
| | |
| | Includes withholding taxes recoverable from the Department of Income-tax for which the Company has filed tax returns for refund. The Company expects to realize such refund of withholding taxes within the next 12 months. |
| | |
| | Non – current trade receivables is ₹. Nil (March 31, 2023: NIL ) |
| | Prepayments for current assets |
Prepayments for current assets comprise of the following:
| | | | | | |
Prepayments for purchase of bandwidth | | | | | | | | |
Prepayments related to insurance | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Other Investments comprise investment in unquoted equity instruments classified as financial assets at FVTOCI and investment in unquoted debt securities classified as financial assets at amortised cost. The details of such investments are given below:
| | | | | | |
Investment in equity instruments – unquoted | | | | | | |
Investment in equity shares of Vashi Railway Station Commercial Complex Limited | | | | | | | | |
Investment in equity shares of Sarayu Clean Gen Private Limited | | | | | | | | |
Investment in The Gizmo App Company | | | | | | | | |
Investment in Tasoula Energy Private Limited | | | | | | | | |
Investment in Padvest Corporation | | | | | | | | |
Investment in Digifresh Corporation | | | | | | | | |
Investment in VEH Srishti Energy Private Limited | | | | | | | | |
Investment in Chatter Inc | | | | | | | | |
Investment in Passerine technologies Inc | | | | | | | | |
Investment in Cloudfabrix Software Inc | | | | | | | | |
Investment in Sylvie Unlimited Inc | | | | | | | | |
Investment in debt securities – unquoted | | | | | | | | |
Investment in Elevo Corporation(Erstwhile Attala Systems Corporation) # | | | | | | | | |
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Issued for consideration other than cash | | | | | | | | |
Exercise of share options | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
In fiscal 2015, the authorized share capital of the Company was enhanced by an amount of ₹ 189,000.
Subsequently
the
authorized share capital
was
increased to ₹ 2,040,000 divided into 204,000,000 Equity Shares, having a par value
of
₹ 10 per share.
Subsequently
the
authorized share capital
was
increased to 750,000,000 Equity Shares, having a par value ₹ 10 per share
and
250,000,000 Preference Shares, having a par value ₹ 10 per share.
The holders of ordinary shares are entitled to receive dividends from time to time and are entitled to vote at meetings of the Group. All shares rank equally with regard to Group’s residual assets.
The directors have not recommended any dividend
for paid up Equity Share of ₹ 10 each for the year 2023-24 (2022-23: ₹ Nil)
.
Also refer
to
note 35 – Issue of share on private basis to existing promoter group and Note 27 – Share-based payment
| | Fully paid Compulsorily Convertible debentures: |
| | | | | | |
| | | | | | |
Compulsorily convertible Debentures issued to Kotak Data Center Fund | | | | | | | | |
| | | | | | | | |
During the current financial year, Kotak Data Center Fund (KDCF) subscribed to 48,000,000 (Four crore and Eighty Lacs only) Series 4 Compulsorily Convertible Debentures (CCDs) with face value of INR 100 each amounting to ₹ 4,800 millions ("series 4 CCD"). Conversion ratio was fixed at 0.5434 pursuant to the DSA dated July 20, 2023.
Share based payment reserve
Share based payment reserve represents the stock compensation expense recognized in the statement of changes in equity.
Share Premium used to record the premium on issue of shares. The reserve is utilized in accordance with the provisions of the Act
Other components of equity:
The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign operations.
The fair value reserve comprises the cumulative net change in the fair value of investments classified as at FVTOCI until the investments are derecognized or impaired.
c) Remeasurements of the net defined benefit liability/asset
Remeasurements of the net defined benefit liability/asset represent the cumulative actuarial gain / loss on account of Change in demographic assumptions, change in financial assumption and experience variance and remeasurement in return on plan assets, excluding amounts recognized in net interest expense/ income.
The components of gratuity costs recognized in the consolidated income statement for the years ending March 31, 2024, 2023, and March 31, 2022 consist of the following:
Details of employee benefit obligation and plan asset are as follows:
| | | | | | |
Projected benefit obligation at the end of the year | | | | | | | | |
Plan assets at the end of the year | | | | | | | | |
Funded status amount of liability recognised in the Balance Sheet | | | | | | | | |
The following table set out the status of the gratuity plan:
Change in defined benefit obligation | | | | | | | | | |
Projected benefit obligation at the beginning of the year | | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Remeasurements - Actuarial (gain) / loss | | | | | | | | | | | | |
| | | | | | | | | | | | |
Projected benefit obligation at the end of the year | | | | | | | | | | | | |
| | | | | | | | | |
Fair value of plan assets at the beginning of the year | | | | | | | | | | | | |
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Return on plan assets, excluding amount recognised in net interest expense | | | | | | | | | | | | |
Fair value of plan assets at the end of the year | | | | | | | | | | | | |
| | | | | | | | | | | | |
Actual return on plan assets | | | | | | | | | | | | |
Actuarial assumptions at end of the year
:
The principal actuarial assumptions as on March 31, 2024, 2023, and 2022 were as follows:
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| | | | | | | | | | | | |
Long-term rate of compensation increase | | | | | | | | | | | | |
Expected long term rate of return on plan assets | | | | | | | | | | | | |
Average future working life time | | | | | | | | | | | | |
The discount rate is based on prevailing market yields of Indian Government securities as at the end of the year for the estimated term of the obligations
.
Long term rate of compensation increase:
The estimates of future salary increase considered take into account inflation, seniority, promotion and other factors.
Expected long term rate of return on plan assets:
This is based on the average long term rate of return expected on investments of the fund during the estimated term of the obligations.
Salary escalation rate: The estimates of future salary increases considered take into account the inflation, seniority, promotion and other relevant factors.
Assumptions regarding future mortality are based on published statistics and mortality tables.
The Group assesses these assumptions with the projected long-term plans of growth and prevalent industry standards.
: The Group expects to contribute ₹89,083 to its gratuity fund during the year ending March 31, 2025.
The expected benefit payments to be made in the next few years are as under:
The Gratuity plan’s weighted-average asset allocation on March 31, 2024 and March 31, 2023, by asset category is as follows:
| | | | | | |
Funds managed by insurers | | | | | | | | |
Remeasurements of the net defined benefit liability recognized in other comprehensive income
Amount recognized in other comprehensive income for the years ending March 31, 2024, 2023, and 2022 are as follows:
| | | | | | | | | |
Remeasurements of the net defined benefit liability | | | | | | | | | | | | |
| | | | | | | | | | | | |
- Change in demographic assumptions | | | | | | | | | | | | |
- change in financial assumptions | | | | | | | | | | | | |
| | | | | | | | | | | | |
- return on plan assets, excluding amounts recognized in net interest expense/ income | | | | | | | | | | | | |
| | | | | | | | | | | | |
Sensitivity Analysis of significant actuarial assumption
Sensitivity analysis for the defined benefit obligations will increase/ decrease by the amounts mentioned below if there is a variation of 100 basis points in the discount rate and salary escalation rate.
| | | | | | |
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Present Value of Defined Benefit Obligation | | | | | | | | | | | | | | | | |
The present value of defined benefit obligation has been arrived at using the same method as is used for valuing the defined benefit obligation as per the current assumptions. The increase/decrease in defined benefit obligation has been arrived assuming the other assumptions are constant though such increase/decrease do not happen in isolation in real scenarios.
Contributions to defined contribution plans
In accordance with Indian law, all employees receive benefits from a provident fund, which is a defined contribution plan. Both the employee and employer make monthly contributions to the plan, each equal to a specified percentage of employee’s basic salary. The Group has no further obligations under the plan beyond its monthly contributions. The Group contributed ₹ 244,403, ₹ 194,451and ₹ 135,589 for the years ended March 31, 2024, 202
3
and 20
22
. The Group has contributed to 401(K) plans on behalf of eligible employees amounting to ₹ 19,912 (March 31, 20
23
: ₹ 17,537) during the year ended March 31, 202
4
.
| | | | | | | |
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Financial liabilities included in other liabilities | | | | | | | | |
| | | | | | | |
| | | | | | | | |
Term bank loans (Refer note (a) to ( f ) below) | | | | | | | | |
Other working capital facilities (Refer note ( j ) to ( r ) below) | | | | | | | | |
Borrowings from others (Refer note ( b ), ( i ) below) | | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Term bank loans (Refer note (a) to (g) below) | | | | | | | | |
Borrowings from others (Refer note ( b ), (d), (h) ,(i) & (s) below) | | | | | | | | |
| | | | | | | | |
(a) Of the above, facilities amounting to ₹ 3,076
million (previous year:
₹ 1,635
m
illion) by the Company is primarily secured by way of pari-passu charge on the project
r
eceivables and charge on movable fixed assets disbursed under Noida DC Project.
(b) Of the above, facilities amounting to ₹ 1,810
m
illion
(previous year: ₹
747
m
illion) by the Company is primarily secured by way of pari-passu charge on the project Receivables and charge on movable fixed assets disbursed under Chennai DC Project.
Out of this ₹ 346 Million is loan availed from others (NBFC).
(c) Of the above, facilities amounting to ₹ 5,001
million (previous year: ₹
2,804
m
illion) by the Company is primarily secured by way of pari-passu charge on the project Receivables and charge on movable fixed assets disbursed under Rabale T5 DC Project.
(d) i.
Of total term loan balance ₹ 3,899
m
illion (previous year
:
₹ 3,867
m
illion) is primarily secured by charge on movable fixed assets funded by term loan and also secured by project receivables. Of the total term loan balance, an amount of ₹ 102
m
illion (previous year
:
₹ 306
m
illion) including current maturity is primarily secured against the specific project receivables of the company and ₹ 334
m
illion (previous year
:
₹ 553
illion) is secured by moveable fixed assets funded out of Term Loan.
ii.
Of
the
total term loan balance ₹ 3,672
m
illion (previous year
:
₹ 1,958
m
illion), ₹ 770
m
illion (previous year
:
₹ 475
m
illion
)
are primarily secured by a cover of 1.25 times charge on identifiable movable fixed assets and 402
m
illion (previous year
:
₹ 483
m
illion) are primarily secured by movable fixed assets funded out of term loan. ₹ 1,000
m
illion (previous year
:
₹
NIL
) Exclusive Charge on assets created out of the capex for which reimbursement is sought, an amount of ₹ 1,500
m
illion (previous year
:
₹ 1,000
m
illion) is also primarily secured by the exclusive charge on Specific Movable Fixed Assets coverage of 1.10x, with Second pari-passu charge on entire current assets of the Borrower, including trade/ bills receivables, book debts, etc. both present & future, excluding the Cash margin lien marked or Current Assets specifically funded by other lenders.
(e)
During the 2020-2021 fiscal year, the Company entered into an External Commercial Borrowing (ECB) facility agreement for $
million. The Company drew down $
million out of the loan during the 2020-2021 fiscal year and repaid: $
million in the 2021-2022 fiscal year, $
million in the 2022-2023 fiscal year and $
1
million in the 2023-2024 fiscal year. The Company also entered into a currency swap agreement (from USD to INR) to fully hedge foreign currency exposure towards principal repayment and interest rate swap from floating to fixed
.
(f) The term loans bear interest rate ranging from 7.85% to 10.84% repayable in quarterly instalments within a tenor of 3 to 6 years after moratorium period ranging from 6 months to 2 years in certain cases.
(g) The Company has adjusted the processing charges paid with respect to borrowings from borrowings from banks ₹ 162
m
illion (Previous year ₹ 185
m
illion).
(h)
Compulsorily Convertible Debentures
Kotak Special Situations Fund (KSSF):
During the 2021-2022 fiscal year, pursuant to a Debenture Subscription Agreement (“DSA”) dated November 1, 2021, KSSF subscribed to (i) 20,000,000 Series 1 Compulsorily Convertible Debentures (the “Series 1 CCDs”) with a face value of ₹ 100 each, amounting to ₹ 2,000 million in Series 1 CCDs and (ii) 1% of 20,000,000 Series 2 Compulsorily Convertible Debentures (“Series 2 CCDs”) with a face value of ₹ 100 each, amounting to ₹ 20 million in Series 2 CCDs, in each case, issued by SISL.
During the 2022-2023 fiscal year, KSSF subscribed to an additional 19,800,000 Series 2 CCDs with a face value of ₹ 100 each, amounting to an additional ₹ 1,980 million in Series 2 CCDs issued by SISL.
Further, SISL has the option and right to require KSSF to acquire additional CCDs to be issued by SISL (“Additional CCDs”) in one or more tranches before October 1, 2026 for up to an aggregate subscription amount of ₹ 6,000 million.
The conversion ratio for CCDs is decided based on the equity valuation of the next financial year following the financial year of drawdown of CCD money.
During the 2022-2023 fiscal year, the Company valued the share price and fixed the conversion ratio of 0.8112 for the Series 1 CCDs subscribed by KSSF pursuant to the formula provided in the DSA.
During the 2023-2024 fiscal year, the Company valued the share price and fixed the conversion ratio of 0.8026 for the Series 2 CCDs subscribed by KSSF pursuant to the formula provided in the DSA.
On July 20, 2023, SISL entered into an assignment letter with KSSF for the transfer of ₹ 6,000 million to Kotak Data Centre Fund (“KDCF”).
The Series 1 CCDs and Series 2 CCDs carry a coupon rate of 6% per annum, payable half-yearly. The Series 1 CCDs and Series 2 CCDs shall be fully, mandatorily and compulsorily converted into equity shares by October 1, 2031, as provided for in the DSA.
The Series 1 CCDs and Series 2 CCDs are secured by a secondary charge over identified movable assets of Data Center facility.
Kotak Data Center Fund (“KDCF”):
During the 2024-2025 fiscal year, pursuant to the Debenture Subscription Agreement (“Second DSA”), dated July 20, 2023, KDCF subscribed to 48,000,000 Series 4 Compulsorily Convertible Debentures (“Series 4 CCDs”) with a face value of ₹ 100 each, amounting to ₹ 4,800 million in Series 4 CCDs. The conversion ratio was fixed at 0.5434 pursuant to the Second DSA.
During the 2024-2025 fiscal year, KDCF subscribed to 12,000,000 Series 5 Compulsorily Convertible Debentures (“Series 5 CCDs”) with a face value of ₹ 100 each, amounting to ₹ 1,200 million in Series 5 CCDs.
The Series 5 CCD conversion ratio will be fixed by a formula based on (i) SISL’s operating performance as represented by a multiple of SISL’s EBITDA for the financial year 2024-2025, (ii) SISL’s net debt and (iii) the total number of shares outstanding on the applicable closing date. The number of shares to be issued for Series 5 CCD
s
is determined by subtracting the number of shares issued for Series 4 CCDs from the total number of shares to be issued as arrived above.
The Series 4 CCDs and Series 5 CCDs carry a coupon rate of 6% per annum, payable half-yearly. The Series 4 CCDs and Series 5 CCDs shall be fully, mandatorily and compulsorily converted into equity shares by March 31, 2033, as provided for in the Second DSA.
The Series 4 CCDs and Series 5 CCDs are secured by a secondary charge over identified movable assets of Data Center facility.
The CCDs issued by SISL to KSSF and KDCF have been evaluated based on para 28 of IAS 32 as the instruments have both a liability and equity component. In accordance with para 15 of IAS 32, the present value of the future interest payments is presented as a separate component, and the remaining value of the instrument is treated as a separate component.
The present value of the future interest payments of all the CCDs is treated as a financial liability, as there is an unconditional obligation on the Company to make these payments.
For the Series 1 CCDs and Series 2 CCDs, the entire value of Rs.4,000 million is treated as a financial liability. The present value of the interest payments amounting to Rs.1,686 million is treated as a financial liability as there is an unconditional obligation on the Company to make these payments. The remaining value of Rs.2,314 million is evaluated based on para 16A and 16B of IAS 32, as these are puttable instruments since these CCDs are subject to the Put Option Agreement executed by the Company. As these CCDs do not qualify for the exception to the definition of a financial liability, the residual component is also treated as a financial liability. Accordingly, the Company changed the presentation of the Series 1 CCDs and Series 2 CCDs from equity and is presenting these instruments as a financial liabilities in the Consolidated Statement of Financial Position for the
ended March 31, 2023 and 2024.
For the Series 4 CCDs, the present value of the interest payments, amounting to Rs.2,076 million, is presented as a financial liability. The remaining value of Rs.2,724 million is presented as equity, as the Series 4 CCDs satisfy the conditions prescribed in para 16 of IAS 32.
For the Series 5 CCDs, the present value of interest payments of Rs. 518 million is similarly now presented as a
financial
liability, while the remaining value of Rs. 682 million is assigned to the other component. The residual component of the Series 5 CCDs will be treated as a financial liability until the fixed conversion ratio of the Company’s equity shares is determined.
(i). These bear interest rate ranging from 0% to 9.9% (Previous Year: 0% to 10.50%) and repayable over a period of 12 to 60 months on equated monthly / quarterly instalments
(
primarily taken from NBFC’s
)
.
(j). Of the above, facilities amounting to ₹ 1,575
m
illion (Previous Year : ₹ 1,659
m
illion), availed by the Company are primarily secured by way of pari-passu charge on the entire current assets of the Company to all working capital bankers under consortium.
(k). The above facilities amounting to ₹ 279
m
illion (previous year ₹ 732
m
illion), availed by the Company are primarily secured by way of pari-passu charge on the entire current assets of the Company to all working capital bankers under consortium.
(l). The above facilities amounting to ₹ 729
m
illion (previous year ₹ 715
m
illion), availed by the Company are primarily secured by way of pari-passu charge on the entire current assets of the Company to all working capital bankers under consortium.
(m). In addition to the above, out of these loans repayable on demand from banks,
(i) exposure amounting to ₹ 2,224
m
illion (previous year ₹ 2,586
m
illion) is secured collaterally by way of pari-passu charge on the unencumbered movable fixed assets of the Company, both present and future.
(ii) exposure amounting to ₹ 1,287
m
illion (previous year ₹ 1,335
m
illion) is secured collaterally by way of equitable mortgage over the properties at Tidel Park, Chennai, Vashi 6th floor, Vile Parle at Mumbai.
(iii) exposure amounting to ₹ 360
m
illion (previous year ₹ 470
m
illion)
is collaterally secured by equitable mortgage over the land and building at Noida and also covered by WDV of specific movable fixed assets funded out of their Term loan (since closed) at Noida Data Center, Uttar Pradesh.
(iv) the exposure amounting to ₹ 426
m
illion (previous year ₹ 876
m
illion) is collaterally secured by equitable mortgage over the Vashi 5th floor property at Mumbai.
(n). Of
t
he above, facilities amounting to ₹ 620
illion (previous year ₹ Nil) are primarily secured by way of pari-passu charge on current assets of the Company, both present and future.
(o). Of the above, facilities amounting to ₹ Nil (previous year ₹ 374
m
illion) are secured by way of pari-passu charge on current assets. Out of which ₹ Nil (previous year ₹ 25
m
illion) has first pari-passu charge on unencumbered movable fixed assets of the Company.
(p). These working capital facilities bear interest ranging from
7.6
% p.a. to 9.30%.
(
Previous year:
5.40
% p.a. to 9.30% p.a.
)
and these facilities are subject to renewal annually.
(q). The loans in the nature of Buyers Credit bear interest rate 2.97% to 6.23% (previous year 0.79% to 1.73%).
(r). The Company has adjusted the processing charges paid with respect to borrowings from borrowings from banks ₹ 648 (Previous year ₹ 532).
(s). During the FY 2020-21, Print house (India) Pvt Ltd had issued 9%
Cumulative
Non-Convertible Redeemable Preference Shares to Raju Vegesna Infotech & Industries Pvt Ltd., on private placement basis amounting to ₹ 500
m
illion. The Preference share capital are redeemable at par value at maturity, i.e. 20 years from the date of allotment. Accordingly, these are accounted for Financial instruments. During the year, The terms of the Preference Shares
re changed to 6% Non-Cumulative compulsorily convertible preference shares.
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| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
Financial liabilities included in trade and other payables | | | | | | | | |
| | | | |
| | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Installation service revenue | | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Note: Revenue disaggregation as per business segment and geography has been included in segment information (See Note 30).
| | Performance obligations and remaining performance obligations |
The Group has applied the practical expedient provided in the standard and accordingly not disclosed the remaining performance obligation relating to the contract where the performance obligation is part of a contract that has an original expected duration of one year or less and has also not disclosed the remaining performance obligation related disclosures for contracts where the revenue recognized corresponds directly with the value to the customer of the entity's performance completed to date.
The following table provides revenue expected to be recognized in the future related to performance obligation that are unsatisfied (or partially satisfied) at the reporting date:
| | Cost of goods sold and services rendered |
Cost of goods sold and services rendered information is presented before any depreciation or amortization that is direct and attributable to revenue sources. The Group’s asset base deployed in the business is not easily split into a component that is directly attributable to a business and a component that is common / indirect to all the businesses. Since a gross profit number without depreciation and amortization does not necessarily meet the objective of such a disclosure, the Group has not disclosed gross profit numbers but disclosed all expenses, direct and indirect, in a homogenous group leading directly from revenue to operating income.
| | Selling, general and administrative expenses |
| | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | | | |
Marketing and promotion expenses | | | | | | | | | | | | |
Administrative and other expenses*# | | | | | | | | | | | | |
| | | | | | | | | | | | | |
# Includes Contract associates costs | | | | | | | | | | | | |
Attributable to cost of goods sold and services rendered | | | | | | | | | | | | |
Attributable to selling, general and administrative expenses | | | | | | | | | | | | |
| | | |
| | | | | | | | | |
| | | | | | | | | | | | |
Contribution to provident fund and other funds | | | | | | | | | | | | |
| | | | | | | | | | | | |
Employee stock compensation expense | | | | | | | | | | | | |
| | | | | | | | | | | | |
Attributable to cost of goods sold and services rendered | | | | | | | | | | | | |
Attributable to selling, general and administrative expenses | | | | | | | | | | | | |
| | | | | | | | | | | | |
The Group had issued stock options under Associate Stock Option Plan (ASOP) 1999, ASOP 2000, ASOP 2002, ASOP 2005, ASOP 2007 and ASOP 2014. The Compensation Committee grants the options on the basis of performance, criticality and potential of the employees as identified by the management. Each option entitles the holder to purchase one American Depository Share (ADS) at an exercise price determined by the Compensation committee on the date of the grant. There are no options outstanding in respect of ASOP 1999, ASOP 2000, ASOP 2002, ASOP 2005 and ASOP 2007 as of March 31, 2024. The plan details of ASOP 2014 are as follows:
Associate Stock Option Plan 2014
During July 2014, the shareholders of the Company approved a new scheme for allotment of shares to employees i.e. Associate Stock Option Plan 2014. 2,50,00,000 shares are reserved for this plan. Consequently 58,70,800 options were granted to the employees on January 20, 2015. The Company has granted additional 25,000, 1,95,000, 4,65,000, 72,20,000. 3,35,000, 1,50,000, 5,25,000 and 1,84,300 options to employees during the year 2022-23, 2021-22, 2020-21, 2019-20, 2018-19, 2017-18, 2016-17 and 2015-16 respectively.
The options vest in the following manner:
4,304,600 Options (Option Plan I): | | 3/5th of the options vest at the end of one year from the date of grant. The remaining 2/5th vests at the end of every half year during second and third years from the date of grant in four equal instalments |
6,612,700 Options (Option Plan II): | | 2/5th of the options vest at the end of one year from the date of grant. The remaining 3/5th vests at the end of every half year during second, third and fourth years in six equal instalments |
4,052,800 Options (Option Plan III): | | 2/5th of the options vest at the end of two years from the date of grant. The remaining 3/5th vests at the end of every half year during third, fourth and fifth years in six equal instalments. |
The stock options can be exercised within a period of twelve months from the date of last vesting.
As the number of stock options and the price of those options were made known to each allottee, the Plan has been considered as a fixed price grant. Stock option activity under the ASOP 2014 Plan is as follows:
| | | | | | | | | | | | | | | | | | |
No. of options granted, exercised and forfeited | | | | | | | | | | | | | | | | | | |
Outstanding at the beginning of the year | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Forfeited during the year | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Exercised during the year | | | | | | | | | | | | | | | | | | | | | | | | |
Outstanding at the end of the year | | | | | | | | | | | | | | | | | | | | | | | | |
Exercisable at the end of the year | | | | | | | | | | | | | | | | | | | | | | | | |
The fair value of stock options granted has been measured using the Black Scholes model at the date of the grant. The Black Scholes model includes assumptions regarding dividend yields, expected volatility, expected term (or “option life”) and risk free interest rates. In respect of the options granted, the expected term is estimated based on the vesting term, contractual term as well as expected exercise behavior of the employees receiving the option. Expected volatility of the option is based on historical volatility, during a period equivalent to the option life, of the observed market prices of the Company’s publicly traded equity shares. Share prices for the year 2011-12 have been eliminated in determining volatility as there had been extra ordinary price movements during the said period on account of capital infusion by promoters. Dividend yield of the options is based on the recent dividend activity. Risk-free interest rates are based on the Government securities yield in effect at the time of the grant. These assumptions reflect management’s best estimates, but these assumptions involve inherent market uncertainties based on market conditions generally outside the Company’s control. As a result, if other assumptions had been used in the current period, stock-based compensation expense could have been materially impacted. Further, if management uses different assumptions in the future periods, stock compensation expense could be materially impacted in future years.
The estimated fair value of stock options is charged to income on a straight-line basis over the requisite service period for each separately vesting portion of the award as if the award were, in substance, multiple awards.
A summary of information about fixed price stock options outstanding with respect to ASOP 2014 is furnished below:
| | Financial income and expense |
| | | |
| | | | | | | | | | |
Interest income on bank deposits | | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Interest expense on lease obligations | | | | | | | | | | | | |
Bank charges (including letter of credit, bill discounting and buyer’s credit charges) | | | | | | | | | | | | |
Interest expense on borrowings | | | | | | | | | | | | |
| | | | | | | | | | | | |
Net finance income / (expense) recognized in profit or loss | | | | | | | | | | | | |
The calculation of basic earnings per share for the years ended March 31, 2024, 2023, and 2022 is based on the profit / (loss) attributable to ordinary shareholders of ₹168,939, ₹674,522, and ₹1,257,945 respectively and a weighted average number of shares outstanding of 183,033,950, 182,803,189 and 182,468,672 respectively, calculated as follows:
| | | |
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| | | | | | | | | | | | |
Weighted average number of shares – basic | | | | | | | | | | | | |
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| | | | | | | | | | | | |
Weighted average number of shares – diluted | | | | | | | | | | | | |
Diluted earnings per share | | | | | | | | | | | | |
Weighted average number of ordinary shares basic
| | | |
| | | | | | | | | |
Issued fully paid ordinary shares on April 01 | | | | | | | | | | | | |
Effect of shares issued on exercise of stock options | | | | | | | | | | | | |
Effect of partly paid shares | | | | | | | | | | | | |
Weighted average number of equity shares and equivalent shares outstanding | | | | | | | | | | | | |
Weighted average number of ordinary shares diluted
| | | |
| | | | | | | | | |
Weighted average number of ordinary shares (basic) | | | | | | | | | | | | |
Effect of stock options (Note 1) | | | | | | | | | | | | |
Weighted average number of equity shares outstanding (diluted) | | | | | | | | | | | | |
Note 1: The Company has issued Associate Stock Options of which 6,329,187 (Previous year : 6,972,978 ) options are outstanding as at March 31, 2024. These could potentially dilute basic earnings per share in future. Refer Note (27).
The operating segments of the Group has been reclassified in the Financial Year with effect from April 1, 2021 pursuant to the business reorganization done in the 2020-21 pursuant to Business Transfer Agreement (BTA) dated January 28, 2021. Consequently, Group's operating segments are as follows:
| Consists of domestic data, international data, wholesale voice |
| |
| Consists of co-location services, cross connects and other allied managed services |
| |
| Consists of Cloud and Managed Services, Network Managed Services, Applications Integration Services, Technology Integration Services |
The Network services consist of network services addressing the domestic connectivity needs of Indian enterprises and international inward and outward connectivity needs of International Enterprises. The services include a comprehensive range of Internet protocol based Virtual Private Network, offerings, including intranets, extranets, and remote access applications to both small and large corporate customers. The Group provides MPLS-enabled IP VPN’s through entire network. The Group also provides last mile connectivity to customers.
The cable landing station and investment in submarine cable consortium are other assets extended to international partners for international inward and outward connectivity needs. The cable landing station currently lands 2 major submarine cables; namely Gulf Bridge International (GBI) and the Middle Eastern and North African cable (MENA)
The Group operates 12 Concurrently Maintainable Data Centers, of which six are located in Mumbai (Bombay), one each at Noida (Delhi), Chennai (Madras), Bengaluru, Kolkata and Hyderabad to host mission-critical applications. The Group offers co-location services which allow customers to bring in their own rack-mountable servers and house them in shared racks or hire complete racks, and even rent ‘secure cages’ at the hosting facility as per their application requirements. It also offers a wide variety of managed hosting services, such as storage, back-up and restoration, performance monitoring and reporting hardware and software procurement and configuration and network configuration under this business line.
The Group offers following services under Digital Services segment:
On-demand hosting (cloud) services offer end-customers with the solutions to Enterprises. On-demand cloud services giving companies the option to “pay as you go” basis.
Remote and Onsite Infrastructure Management services which provide management and support of customer operating systems, applications, and database layers.
Network Operations Center (NOC) services, managed SDWAN and managed Wi-Fi solutions.
Data Centre Build, Network Integration, Information security and End User computing.
Web-applications which include sales force automation, supply chain management, intranet and extranets, workflow engine and knowledge management systems.
Online portals, such as
www.sify.com
with content on technology and food (Sify Bawarchi). The Group also offers value-added services to organizations such as website design, development, content management, digital certification services, Online assessment tools, search engine optimization, including domain name management, secure socket layer (SSL) certificate for websites, and server space in required operating system and database. It provides messaging and collaboration services and solutions such as e-mail servers, LAN mail solutions, anti-spam appliances, bulk mail services, instant messaging, and also offer solutions and services to enable data and access security over the Internet, Infrastructure-based services on demand, including on-line testing engine and network management. On-line testing services include test management software, required servers and proctored examination facilities at Sify’s franchisee points. On-line exam engine offered allows a secure and flexible way of conducting examinations involving a wide range of question patterns.
The Chief Operating Decision Maker (“CODM”), i.e., The Board of Directors and the senior management, evaluate the Group’s performance and allocate resources to various strategic business units that are identified based on the products and services that they offer and on the basis of the market served. The measure of profit / loss reviewed by the CODM is “Earnings/loss before interest, taxes, depreciation and amortization” also referred to as “segment operating income / loss”. Revenue in relation to segments is categorized based on items that are individually identifiable to that segment.
Bandwidth costs, which form a significant part of the total expenses, is allocated to Network Services. Manpower costs of Technology resources rendering services to support Infrastructure operations, Managed services and Application services, are identified to respective operating segments specifically. The Group believes that the resulting allocations are reasonable.
Certain expenses, such as depreciation, technology infrastructure and administrative overheads, which form a significant component of total expenses, are not allocable to specific segments as the underlying services are used interchangeably. Management believes that it is not practical to provide segment disclosure of these expenses and, accordingly, they are separately disclosed as “unallocated” and adjusted only against the total income of the Group.
A significant part of the Property, plant and equipment used in the Group’s business are not identifiable exclusively to any of the reportable segments and can be used interchangeably between segments. Management believes that it is not feasible to provide segment disclosures relating to total assets since a meaningful segregation of the available data is onerous.
The Group’s operating segment information for the years ended March 31, 2024, 2023 and 2022 are presented below:
Year ended March 31, 2024
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| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Segment operating income / (loss) | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Support Service Unit Costs | | | | | | | | | | | | | | | | |
Depreciation and amortization | | | | | | | | | | | | | | | | |
Other income / (expense), net | | | | | | | | | | | | | | | | |
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Profit / (loss) before tax | | | | | | | | | | | | | | | | |
Income tax (expense) / benefit | | | | | | | | | | | | | | | | |
Profit / (loss) for the year | | | | | | | | | | | | | | | | |
*Bank charges of ₹ 164,980 ($ 1,979) have been allocated to respective segments in operating expenses
Year ended March 31, 2023
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Segment operating income / (loss) | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Support Service Unit Costs | | | | | | | | | | | | | | | | |
Depreciation and amortization | | | | | | | | | | | | | | | | |
Other income / (expense), net | | | | | | | | | | | | | | | | |
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Profit / (loss) before tax | | | | | | | | | | | | | | | | |
Income tax (expense) / benefit | | | | | | | | | | | | | | | | |
Profit / (loss) for the year | | | | | | | | | | | | | | | | |
*Bank charges of ₹ 147,089 ($ 1,789) ha
ve
been allocated to respective segments in operating expenses
Year ended March 31, 2022
| | | | | | | | | | | | |
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| | | | | | | | | | | | | | | | |
Allocated segment expenses | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Segment operating income / (loss) | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Support Service Unit Costs | | | | | | | | | | | | | | | | |
Depreciation and amortization | | | | | | | | | | | | | | | | |
Other income / (expense), net | | | | | | | | | | | | | | | | |
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| | | | | | | | | | | | | | | | |
Profit / (loss) before tax | | | | | | | | | | | | | | | | |
Income tax (expense) / benefit | | | | | | | | | | | | | | | | |
Profit / (loss) for the year | | | | | | | | | | | | | | | | |
The Group has two geographic segments India and rest of the world. Revenues from the geographic segments based on domicile of the customer are as follows:
| | | | | | | | | |
| | | | | | | | | |
Year ended March 31, 2024 | | | | | | | | | | | | |
Year ended March 31, 2023 | | | | | | | | | | | | |
Year ended March 31, 2022 | | | | | | | | | | | | |
The Group does not disclose information relating to non-current assets located in India and rest of the world as the necessary information is not available and the cost to develop it would be excessive.
During the year under review revenue from one customer of the Group's Data center services segment is ₹ 4,171 million which is more than 10% of the Group's total revenue.
| | Claims against the Group not acknowledged as debts include demands from Indian Income Tax authorities for payment of tax amounting to ₹ Nil (previous year: ₹ Nil). |
| | Contingencies due to certain Service Tax claims as at March 31, 2024 amounted to ₹ 416 million (previous year: ₹ 416 million). |
| | Contingencies due to certain Sales Tax claims as at March 31, 2024 amounted to ₹ 15 million (previous year: ₹ 224 million)*. |
| | Contingencies due to certain Goods And Services Tax claims as at Mar 31, 2024 amounted to ₹ 24million (Previous Year: ₹ NIL ). |
| | The Group is subject to legal proceedings and claims which are arising in the ordinary course of business. The management does not reasonably expect that these legal actions, when ultimately concluded and determined, will have material and adverse effect on the Group's results of operations or financial conditions. |
*Out of the above, an amount of ₹1 million has been paid under protest.
Sify Infinit Spaces Limited (“SISL”), wholly owned subsidiary of the Company issued Compulsorily Convertible Debentures (“CCDs”) to Kotak Special Situations Fund (“KSSF”) pursuant to a Debenture Subscription Agreement (“DSA”), dated November 1, 2021, with an initial subscription of ₹ 2,020 million during the 2021-2022 fiscal year, and a subsequent subscription of ₹ 1,980 million during the 2022-2023 fiscal year. Further, SISL has the option and right to require KSSF to acquire additional CCDs be issued by SISL in one or more tranches before October 1, 2026 for up to an aggregate subscription amount of ₹ 6,000 million. On July 20, 2023, ₹ 6,000
million
of these CCDs were assigned to Kotak Data Center Fund (KDCF).
The DSA is supplemented by a put option agreement with the Company to ensure KSSF has protective rights in case there is contract breach or conditions for conversion is not met over the term of the instrument.
The put option agreement (the “Agreement”) was entered into between the Company, SISL and KSSF on November 1, 2021 in relation to CCDs subscribed by KSSF. The Agreement was filed with the Securities and Exchange Commission on November 2, 2021. As per the Agreement, KSSF can exercise the put option on or after October 1, 2027, and upon exercise of put option, the Company shall be obligated to purchase all of the CCDs from KSSF.
The put option can be triggered by KSSF upon the occurrence of any of the following events:
| | an event of default under the DSA, or |
| | if the Company fails to provide exit to the KSSF by way of qualified IPO or alternate listing by October 31, 2029 (each such term as defined in the DSA), or |
| | breach by the Company of any of its obligation or covenants under the Agreement. |
The Company is required to pay to KSSF no later than ninety (90) days from the date of put option notice delivered by KSSF to the Company, the entire put amount into a bank account, subject to applicable withholding taxes and the Company will hold the CCD in such case as an asset.
The terms for conversion are described in the DSA in clauses 6 and 7 of Schedule IV.
Pursuant to the clause, the CCDs shall be fully, mandatorily, compulsorily and automatically converted into equity shares, upon the earlier of:
| | October 1, 2031 without any act or application by KSSF; or |
| | the filing of a prospectus by SISL with the Securities and Exchange Board of India or for any alternate listing or the register of companies or any stock exchange in relation to an initial public offering of its equity shares; or |
| | at any time as required by KSSF prior to October 1, 2031 . |
The Group has entered into a contract with Emirates Integrated Telecom (‘the Emirates’) for the construction and supply of undersea cable capacity from the Europe India Gateway. As per the contract with Emirates, the Group is required to pay its share of decommissioning costs, if any, that may arise in the future. No provision has been made by the Group for such decommissioning costs as the amount of provision cannot be measured reliably as of March 31, 2023. The capacity under the mentioned facility would be upgraded over a period of time.
Export obligation under EPCG:
Effective 2012-13, the Company has participated in the Export Promotion Capital Goods Scheme (“the scheme”) under which capital equipment’s are permitted to be imported against a specific license at a substantially reduced customs duty, subject to fulfilment of obligation to export services rendered by use of capital equipment imported under the scheme to the extent of over 6 times the value of duty saved over a period of 6 years from the date of obtaining the license. In case of failure to meet the export obligation, the company would be liable to pay the difference between the normal duty and the duty saved under the scheme along with interest.
As of March 31, 2024, the company is holding
NIL
(previous year :
NIL
) licenses with a corresponding export obligation of
NIL
million (previous year : ₹
Nil
million).
| | Proceedings before Department of Telecommunications |
Demand of License fee on Non-Telecom Revenue:
DOT issued a demand notice on August 22, 2023 to the Company demanding license fee on the Non-Telecom Revenue against which the Company filed petitions before The Hon’
ble Madras High Court and obtained Order of Status Quo and also submitted representations to DOT to withdraw the demands pursuant to the Orders passed by The TDSAT and Hon’ble Supreme Court in similar petitions. After hearing both the parties, Hon’ble High Court has reserved petition for final orders. These demands were made while the petitions are pending since 2013 for adjudication before the Hon'ble Madras High Court. Meanwhile it was understood that DOT had disallowed the allowable deductions applicable for pass through charges for non-submission of certificate from Statutory Auditors as per the new template issued by DOT. However, the said certificate required by DOT in new template submitted by the company and pursuant to the submission of Certificate issued by Statutory Auditors, DOT had allowed the deduction in favour of the Company. The Hon'ble Madras High Court vide its Judgement dated 30.04.2024 quashed all the demands made by DoT seeking to levy license fee on the non-telecom revenue and allowed the Writ Petitions in favour of the Company.
TDSAT, through its Order dated February 28, 2022, quashed the demands made by DOT seeking license fee, interest on license fee, penalty & interest on penalty on the revenue accruing from other business revenue (Non-Telecom) other than the licensed based activities. The Said Order was passed in favor of one of the Service Provider having similar line of business of Sify. Meanwhile DOT withdrew the demands against Public Sector undertakings having similar licenses and filed affidavit before the
Hon’ble Supreme Court.
The Company has fully paid the license fee on the telecom revenue in terms of the licenses issued by DOT and challenged the demands made by DOT on the revenue arising from other Business activities (Non Licensed businesses). The petitions are pending for adjudication before the Hon’
ble Madras High Court.
It is important to note that
Hon’
Supreme Court had by its Order dated June 10, 2020, accepted the stance of the DOT that the licenses of PSUs are different and the judgement of 24.10.2019 could not be made the basis for raising demands against PSUs as they are not in the actual business of providing Mobile Services to the General Public. Sify also has licenses similar to PSU. TDSAT also held that there is no scope to differentiate between 2 sets of licensees (PSU & Others) having same or similar licenses only on the basis of ownership, private or public. The statutory rights and liabilities must remain the same for both the classes in so far as they arise from the licenses/agreements under consideration.
DOT had issued separate licenses to Sify Technologies Ltd (Sify) for providing Internet, National Long Distance & International Long Distance services. The license fee was payable to the DOT on the Adjusted Gross Revenue (AGR) as per the terms of each license. Sify has been regularly paying license fee on the revenue arising out of services as per the license conditions.
In the year 2013, DOT had raised demands on service providers providing Internet, NLD, ILD services etc. demanding license fee on the revenue made by the service providers from other business income such as Data Center, Cloud, application services, power, gas, etc. DOT contended that all the income of the company irrespective of the business was required to be considered as part of 'income' for the purpose of calculation of the license fee. The company filed a Writ Petition before The Hon’ble
Madras High Court challenging the demand made by DOT on the Income accruing from other business units and the demands have been stayed by the Hon’ble
Madras High Court. The case is pending for final hearing.
The service providers which had different license conditions for ISP, NLD & ILD and having revenue from other business units approached Hon’ble Supreme Court stating that Hon’ble Supreme Court judgement dated October 24, 2019 on the access Telecom Service Providers is not applicable to other services providers as license conditions were different from the Access Telecom Service Providers. Hon’ble Supreme Court observed that if the license conditions of Other Service Providers including ISP, NLD & ILD are different from the license conditions of the Mobile Service providers (Access Providers), then the other service providers should adjudicate the license fee issue before the appropriate forum. Meanwhile DOT withdrew the demands against Public Sector Undertaking on account of different license conditions.
The Company which had approached the Hon'ble Madras High Court in 2013 by filing a writ petition prohibiting Department of Telecommunications (DOT) from levying a license fee on non-licensed activities obtained stay of the demands. The Hon'ble Madras High Court restrained DOT from recovering the license fee in respect of non- telecom activities and the case is pending for hearing.
The Company believes that it has adequate legal defense against the demand raised by DOT and that the ultimate outcome of these actions will not have a material adverse effect on the Company's financial position and result of operations. ISPAI, association representing the internet service providers including the company issued a letter to DOT stating that the Supreme Court judgement dated October 24, 2019 is not applicable to Internet Service Providers and the license conditions are different. The Company which had received notices for earlier years from DoT claiming license fee on the total Income (including income from Non Licensed activities) has already responded to these notices stating that license fees are not payable on income from non-licensed activities.
It is important to point out that DOT in its written submission made before the Hon’ble Supreme Court had clearly mentioned that non telecom revenue would stand excluded from the purview of the gross revenue . In 2017, the Hon’ble Tripura High Court held that Service Providers are not liable to pay license fee on the income accruing from other businesses.
License fee on Pure Internet:
DOT has issued a notification calling upon all the licensees to pay license fee on pure internet services effective from April 1, 2022 and since then Sify has been paying the license fee on the Pure Internet on account of level playing field.
Originally DOT migrated the licenses of few service providers, whole licenses expired in 2013 to UL regime and demanded license fee on pure Internet only from those migrated service providers without providing level playing field on pure internet services. However, the Company through Internet Service Providers Association of India (ISPAI) challenged the said condition before TDSAT. TDSAT set aside the demand made by the DOT and passed the order in favor of the ISP. DoT has challenged the Order of the TDSAT and the appeal is pending before Hon’ble Supreme Court. The Company has appropriately accounted for any adverse effect that may arise in this regard in the books of account. However TDSAT by its order dated October 18, 2019 held that license fee is not chargeable on the Internet Service Providers. DoT has filed appeal before Hon’ble Supreme Court and the appeal is pending for final hearing. However the company has started paying AGR on pure internet effective from April 1, 2022 pursuant to the notification issued by DOT.
The Company is conducting Online examination for more than a decade using its platform (I-Test) and delivered large volume online examinations for several reputed clients including Staff Selection Commission (customer), and is certified on quality and security for CMMI Level 5 and CERT-in. After technical evaluation, the company was awarded a contract dated April 12, 2016 for a period of 2 years and accordingly Sify had successfully conducted 15 such Pan India online examination under the supervision of customer for more than 20 million applied candidates with 40,000 unique questions. In one of the combined group level examinations dated February 21, 2018, screenshots of a few of the questions appeared on social media. The company immediately brought to the notice of the Chairman of the customer and the said question paper was cancelled and the candidates were asked to redo the examination with different set of question paper within couple of hours. Further at the request of customer, re-examination was also conducted after couple of weeks. Hence there was no damage to the sanctity of the examination as immediate action was taken jointly by the Company and customer. However, some parties had provoked candidates and continued to claim that the question paper was leaked and insisted customer to cancel the entire examination process. As few candidates continued to protest, the Governmentt of India directed the investigating authority to conduct enquiry into the allegations.
Public Interest Litigation (“PIL”) was also filed before the Hon’ble Court for cancellation of the examination process. However, the Hon’ble Special CBI Court, Delhi appointed high level technical committee to conduct enquiry and submit the report the Court.
A detailed report was submitted by the Committee & Investigating team before the Hon’ble Special CBI Court,Delhi holding that there was no evidence to show that the examination process was tainted and hence PIL stood dismissed. And accordingly, SSC also released all the payments to Sify for the examination. In 2018, the investigating authority also filed its final report stating that one of the candidate along with her husband engaged in malpractice with a sole intention to cancel the examinations uploaded few questions in the social media. There was no allegations against Sify or its employee. After 4 years, to utter shock and surprise, the investigating authority chose to file 3 additional supplementary chargesheet naming the company and one of its employee for not following the Standard Operating Procedure. It is important to note that company successfully delivered the examination in terms of RFP and the consideration was released by customer after receiving the report from the Committee. The only allegation made by investigating officer to name the company in the chargesheet is on the assumption that Company did not follow the SOP. Since there is no allegations of malpractices made against the company, the company is in the process of filing discharge petition before the trial court.
b) The Company is party to additional legal actions arising in the ordinary course of business. Based on the available information as on September 30, 2023, the Company believes that it has adequate legal defenses for these actions and that the ultimate outcome of these actions will not have a material adverse effect on the Company's financial position and results of operations.
c) The
company has received an adverse arbitration award for a sum of INR
20
million
along with interest at 18% from the date of filing the claim i.e.27.01.2021 in the petition filed by one of the vendor and The company has filed an appeal on 30.04.2024 before the Hon’ble
Madras High Court challenging the award passed by the Arbitrator. Although the company has a good case to defend, the company has provided provisions in its books.
d) The Company has received an order passed under section 7A of the Employees Provident Fund & Miscellaneous Provisions Act, 1952 from Employees Provident Fund Organisation (EPFO) claiming provident fund contribution aggregating to ₹ 6.4 million
on special allowances paid to employees. The company has filed a writ petition before
Hon’ble
Madras High Court and obtained the stay of demand. In February 2019, Hon’ble Supreme Court held, in a similar case, that Special allowances paid by the employer to its employee will be included in the scope of basic wages and subject to provident fund contribution. However, Hon’ble Supreme Court has not fixed the effective date of order.
d)
During the financial year 2019-2020, Directorate General of Goods and Services Tax Intelligence (DGGI) did an inspection based on the analysis of service tax returns filed by the Company in the past. The Company has been categorizing services relating to e-Learning and Infrastructure Management Services provided to foreign customers billed in convertible foreign currency under OIDAR services while filing its half-yearly service tax return. However, based on the Place of Provision of Services Rules then applicable under the Finance Act, 1994, Service Tax has to be paid for OIDAR services provided to foreign customers even if the conditions for qualifying as export of services are met. Hence, the DGGI contended that Service Tax should be paid on the services classified as OIDAR services in the returns. The total contended during the period April 2014 to November 2016 of Service Tax was ₹ 161.8 million and the Interest & Penalty as applicable. The Company believes that the services relating to e-learning and infrastructure management services will not fall under OIDAR services and also the activities covered under E-learning and IMS does not meet the conditions for taxation under the provisions applicable as OIDAR and hence there is no liability. However, during the investigation, the Company has paid ₹ 64.6 million under protest to continue the proceeding with the relevant adjudicating authorities. Thereafter, the DGGI has issued Show Cause Notice and the Company has replied on the same. The matter is pending with the Adjudicating Authority. The company believes that no provision is required to be made against this demand.
The amount of
₹
64.6 million paid under protest is accounted as Balance with Service Tax authorities and disclosed under “Other assets” – Note.10 to the Financial Statements.
| | Related party transaction: |
The related parties where control / significant influence exists are subsidiaries and associates. Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any director whether executive or otherwise. Key management personnel include the board of directors and other senior management executives. The other related parties are those with whom the Group has had transaction during the years ended March 31, 2024, 2023 and 2022 are as follows:
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | | | | |
| Infinity Satcom Universal Private Limited | | | | | | | | | | | | |
| Raju Vegesna Infotech & Industries Private Limited (Subsidiary of Infinity Satcom Universal Private Limited) | | | | | | | | | | | | |
| Ramanand Core Investment Company Private Limited (Subsidiary of Raju Vegesna Infotech & Industries Private Limited) | | | | | | | | | | | | |
| | | | | | | | | | | | |
| Sify Technologies (Singapore) Pte. Limited | | | | | | | | | | | | |
| Sify Technologies North America Corporation | | | | | | | | | | | | |
| Sify Data and Managed Services Limited | | | | | | | | | | | | |
| Sify Infinit Spaces Limited | | | | | | | | | | | | |
| Sify Digital Services Limited | | | | | | | | | | | | |
| Print House (India) Private Limited | | | | | | | | | | | | |
| Patel Auto Engineering Private Limited | | | | | | | | | | | | |
| SKVR Software Solution Private Limited | | | India | | | | | | | | | |
| | | | | | | | | | | | |
| Raju Vegesna Foundation | | | | | | | | | | | | |
The following is a summary of the related party transactions for the year ended March 31, 2024:
| | | | | | | | | |
Consultancy services received | | | | | | | | | | | | |
| | | | | | | | | | | | |
Salaries and other short term benefits* | | | | | | | | | | | | |
Contributions to defined contribution plans* | | | | | | | | | | | | |
Share based payment transactions* | | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Amount of outstanding balances | | | | | | | | | | | | |
6 % Non- Cumulative Compulsorily convertible preference shares# | | | | | | | | | | | | |
Advance lease rentals and refundable deposits made** | | | | | | | | | | | | |
| | | | | | | | | | | | |
All transactions between Sify Technologies Limited and its subsidiaries up to March 31, 2024 of this Annual Report have been in the ordinary course of business
The following is a summary of the related party transactions for the year ended March 31, 2023:
| | | | | | | | | |
Consultancy services received | | | | | | | | | | | | |
| | | | | | | | | | | | |
Salaries and other short term benefits* | | | | | | | | | | | | |
Contributions to defined contribution plans* | | | | | | | | | | | | |
Share based payment transactions* | | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Amount of outstanding balances | | | | | | | | | | | | |
6% Non-Cumulative compulsorily convertible preference shares s## | | | | | | | | | | | | |
Advance lease rentals and refundable deposits made** | | | | | | | | | | | | |
| | | | | | | | | | | | |
All transactions between Sify Technologies Limited and its subsidiaries up to March 31, 2023 of this Annual Report have been in the ordinary course of business
The following is a summary of the related party transactions for the year ended March 31, 2022:
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Consultancy services received | | | | | | | | | | | | | | | | |
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Salaries and other short term benefits* | | | | | | | | | | | | | | | | |
Contributions to defined contribution plans* | | | | | | | | | | | | | | | | |
Share based payment transactions* | | | | | | | | | | | | | | | | |
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Preference shares issued# | | | | | | | | | | | | | | | | |
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Amount of outstanding balances | | | | | | | | | | | | | | | | |
Advance lease rentals and refundable deposits made** | | | | | | | | | | | | | | | | |
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* Represents salaries and other benefits of Key Management Personnel comprising of Mr. Kamal Nath - Chief Executive Officer (Sify Technologies Limited), Mr. M P Vijay Kumar – Whole Time Director and Chief Financial Officer and Mr. C R Rao - Chief Operating Officer.
**During the year 2011-2012, the Group had entered into a lease agreement with M/s Raju Vegesna Infotech and Industries Private Limited, the holding Group, to lease the premises owned by it for a period of three years effective February 1, 2012 on a rent of ₹
0.075
million (Rupees Seventy Five Thousand) per month. Subsequently, the Group entered into an amendment agreement with effect from April 1, 2013, providing for automatic renewal for a further period of two blocks of 3 years with an escalation of 15% on the last paid rent after the end of every three years. Subsequently on account of expiry of the said agreement, the Group entered into a fresh agreement for a period of three years effective February 1, 2024 on a rent of ₹ 0.160 million (Rupees One Lakh Sixty Thousand Only) per month.
During the year 2011-12, the Group had also entered into a lease agreement with M/s Raju Vegesna Developers Private Limited, a Group in which Mr. Ananda Raju Vegesna, the then Executive Director of the Group and Mr. Raju Vegesna, Chairman and Managing director of the Group, exercise significant influence, to lease the premises owned by it for a period of three years effective February 1, 2012 on a rent of ₹ 0.030 million (Rupees Thirty Thousand) per month. The agreement provides for the automatic renewal for further period of two blocks of 3 years with an escalation of 15% on the last paid rent after the end of every three years. Subsequently on account of expiry of the said agreement, the Group entered into a fresh agreement for a period of three years effective February 1, 2024 on a rent of ₹ 0.059 million (Rupees Fifty Nine Thousand) per month..
During the year 2010-2011, the Group had entered into a lease agreement with Ms
.
Radhika Vegesna, daughter of Mr
.
Anand Raju Vegesna, the then Executive Director of the Group, to lease the premises owned by her for a period of three years effective June 1, 2010 on a rent of ₹ 0.3 million (Rupees Three Lakhs) per month and payment of refundable security deposit of ₹ 2.6 million. This arrangement will automatically be renewed for a further period of two blocks of three years with all the terms remaining unchanged. Subsequently on account of expiry of the said agreement, the Group entered into a fresh agreement for a period of three years effective June 1, 2019 on a rent of ₹ 0.556 million (Rupees Five Lakhs Fifty Six Thousand) per month and payment of additional refundable security deposit of ₹ 3.0 million. This arrangement will automatically be renewed for a further period of two blocks of three years with all the terms remaining unchanged.
# # During the FY 2020-21, Print house (India) Pvt Ltd had issued 9%
Cumulative
Non-Convertible Redeemable Preference Shares to Raju Vegesna Infotech & Industries Pvt Ltd., on private placement basis. The Preference share capital are redeemable at par value at maturity, i.e. 20 years from the date of allotment. Accordingly these are accounted for Financial instruments.
During the year, The terms of the Preference Shares are changed to 6% Non-Cumulative compulsorily convertible preference shares.
Financial instruments by category
The carrying value and fair value of financial instruments by each category as of March 31, 2024 were as follows:
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Cash and cash equivalents | | | | | | | | | | | | | | | | | | | | | | | |
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Derivative financial liabilities | | | | | | | | | | | | | | | | | | | | | | | | |
Other financial liabilities | | | | | | | | | | | | | | | | | | | | | | | | |
6% Compulsory Convertible Debentures | | | | | | | | | | | | | | | | | | | | | | | | |
6 % Non Cumulative Compulsory convertible preference shares | | | | | | | | | | | | | | | | | | | | | | | | |
The carrying value and fair value of financial instruments by each category as of March 31, 2023 were as follows:
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Cash and cash equivalents | | | | | | | | | | | | | | | | | | | | | | | | |
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Derivative financial instruments | | | | | | | | | | | | | | | | | | | | | | | | |
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Other financial liabilities | | | | | | | | | | | | | | | | | | | | | | | | |
6% Compulsory Convertible Debentures | | | | | | | | | | | | | | | | | | | | | | | | |
9% Cumulative Non-convertible preference shares | | | | | | | | | | | | | | | | | | | | | | | | |
Details of financial assets hypothecated as collateral
The carrying amount of financial assets as at March 31, 2024 and 2023 that the Group has provided as collateral for obtaining borrowings and other facilities from its bankers are as follows:
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Cash and cash equivalents | | | | | | | | |
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Derivative financial instruments
Foreign exchange forward contracts and options are purchased to mitigate the risk of changes in foreign exchange rates associated with certain payables, receivables and forecasted transactions denominated in certain foreign currencies. These derivative contracts do not qualify for hedge accounting under IFRS 9 and are initially recognized at fair value on the date the contract is entered into and subsequently re-measured at their fair value. Gains or losses arising from changes in the fair value of the derivative contracts are recognized immediately in profit or loss. The counterparties for these contracts are generally banks or financial institutions. The following table gives details in respect of the notional amount of outstanding foreign exchange contracts as at March 31, 2024 and 2023
The Company recognized a net loss on the forward contracts of ₹ (1,440) (March 31, 2023: ₹ (1,387)– Net gain) for the year ended March 31, 2024.
The forward exchange contracts and option contracts mature between one and twelve months. The table below summarizes the notional amounts of derivative financial instruments into relevant maturity groupings based on the remaining period as at the end of the year:
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Later than one month and not later than three months | | | | | | | | |
Later than three months and not later than six months | | | | | | | | |
Later than six months and not later than one year | | | | | | | | |
The Group has entered into Cross Currency Swaps in order to hedge the cash flows arising out of the Principal and Interest payments of the underlying External Commercial Borrowing denominated in USD. The period of the swap contracts is co terminus with the period of the underlying ECB. As per the terms of the arrangement, the Company shall pay INR fixed and receive fixed USD principal and interest cash flows during the term of the contract. The swap arrangement is marked to market at the end of every period and losses are recognized in the Statement of Income. The swap contracts outstanding balances as on March 31, 2024 and March 31, 2023 is as follows.
| | Value of the outstanding INR | | | Value of the outstanding USD | | | Mark to Market losses/ (gain) | |
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| | Value of the outstanding INR | | | Value of the outstanding USD | | | Mark to Market losses/ (gain) | |
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The maturity of these contracts extends for five years and six months. The table below summarizes the cash flows (principal) of these derivative financial instruments into relevant maturity groupings based on the remaining period as at the end of the year:
The Group recognized a net loss on the cross currency swaps of ₹ Nil [Previous year : ₹ Nil]
for the year ended March 31, 2024.
The Group has entered into Interest Rate Swaps in order to hedge the cash flows arising out of the Interest payments of the underlying ECB. The period of the swap contract is co terminus with the period of the underlying ECB. As per the terms of the arrangement, the Company shall pay fixed rate of interest (8.9%) and receive variable rate of interest equal to SOFR + 2.5% on notional amount. The swap arrangement is marked to market at the end of every period and losses are recognized in the Statement of income.
The maturity of these contracts extends for five years and six months. The table below summarizes the cash flows (interest) of these derivative financial instruments into relevant maturity groupings based on the remaining period as at the end of the year:
* Amount below rounding off norm adopted by the Group
Total notional amount outstanding as of March 31, 2024
i
s US $ 2,500 (March 31, 20
23
Net Loss on account of interest rate swaps amount to ₹ 8,493 for the year ended March 31, 202
4
(March 31, 20
23
: ₹ 25,263 – Net gain).
The details of assets and liabilities that are measured on fair value on recurring basis are given below:
| | Fair value as of March 31, 2024 | | | Fair value as of March 31, 2023 | |
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Derivative financial assets – gain on outstanding forward/options contracts | | | | | | | | | | | | | | | | | | | | | | | | |
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Derivative financial liabilities – loss on outstanding forward/options contracts | | | | | | | | | | | | | | | | | | | | | | | | |
Derivative financial liabilities - loss on outstanding cross currency swaps | | | | | | | | | | | | | | | | | | | | | | | | |
Derivative financial liabilities - loss on outstanding interest rate swaps | | | | | | | | | | | | | | | | | | | | | | | | |
| | Level 1 – unadjusted quoted prices in active markets for identical assets and liabilities. |
| | Level 2 – 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). |
| | Level 3 – unobservable inputs for the asset or liability. |
Interest income/ (expenses), gains/ (losses) recognized on financial assets and liabilities
Recognized in profit or loss
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Financial assets at amortised cost | | | | | | | | | | | | |
Interest income on bank deposits | | | | | | | | | | | | |
Interest income from other financial assets | | | | | | | | | | | | |
Impairment loss of trade receivables | | | | | | | | | | | | |
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Financial assets at fair value through profit or loss | | | | | | | | | | | | |
Net change in fair value of derivative financial instruments gain/(loss) | | | | | | | | | | | | |
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Financial liabilities at amortised cost | | | | | | | | | | | | |
Interest expenses on lease obligations | | | | | | | | | | | | |
Interest expenses on borrowings from banks, others and overdrafts | | | | | | | | | | | | |
| | Financial Risk Management |
The Group has exposure to the following risks from its use of financial instruments:
The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework. The Board of Directors has established a risk management policy to identify and analyze the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management systems are reviewed periodically to reflect changes in market conditions and the Group’s activities. The Group Audit Committee oversees how management monitors compliance with the Group’s risk management policies and procedures and reviews the risk management framework. The Group Audit Committee is assisted in its oversight role by Internal Audit. Internal Audit undertakes reviews of risk management controls and procedures, the results of which are reported to the Audit Committee.
: Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Group’s trade receivables, treasury operations and other activities that are in the nature of leases.
Trade and other receivables
The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. Management considers that the demographics of the Group’s customer base, including the default risk of the industry and country in which customers operate, has less of an influence on credit risk. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the credit worthiness of the customers to which the Group grants credit terms in the normal course of the business.
Cash and cash equivalents and other investments
In the area of treasury operations, the Group is presently exposed to counter-party risks relating to short term and medium term deposits placed with public-sector banks, and also to investments made in mutual funds.
The Chief Financial Officer is responsible for monitoring the counterparty credit risk and has been vested with the authority to seek Board’s approval to hedge such risks in case of need.
The gross carrying amount of financial assets, net of any impairment losses recognized represents the maximum credit exposure. The maximum exposure to credit risk as of March 31, 2024 and 2023 was as follows:
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Cash and cash equivalents (Including other bank deposits) | | | | | | | | |
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Impairment for financial assets
Allowances for impairment for trade receivables have been provided based on Expected Credit Loss Method adopting a simplified approach provided in IFRS 9. The ageing analysis of trade receivables has been considered from the due date for the practical expedient. The ageing of trade receivables, net of allowances, is given below:
See note 13 for the activity in the allowance for impairment of trade account receivables.
: Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. Typically the Group ensures that it has sufficient cash on demand to meet expected operational expenses, servicing of financial obligations. In addition, the Group has concluded arrangements with well reputed Banks, and has unused lines of credit that could be drawn upon should there be a need. The Company is also in the process of negotiating additional facilities with Banks for funding its requirements.
The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements:
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Non-derivative financial liabilities | | | | | | | | | | | | | | | | | | | | | | | | |
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6% Compulsory Convertible Debentures | | | | | | | | | | | | | | | | | | | | | | | | |
9% Cumulative Non-convertible preference shares | | | | | | | | | | | | | | | | | | | | | | | | |
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Non-derivative financial liabilities | | | | | | | | | | | | | | | | | | | | | | | | |
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6% Compulsory Convertible Debentures | | | | | | | | | | | | | | | | | | | | | | | | |
6 % Non Cumulative Compulsory convertible preference shares | | | | | | | | | | | | | | | | | | | | | | | | |
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Non-derivative financial liabilities | | | | | | | | | | | | | | | | | | | | | | | | |
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6% Compulsory Convertible Debentures | | | | | | | | | | | | | | | | | | | | | | | | |
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Market risk is the risk of loss of future earnings or fair values or future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign exchange rates and other market changes that affect market risk sensitive instruments. Market risk is attributable to all market risk sensitive financial instruments including foreign currency receivables and payables. The Group is exposed to market risk primarily related to foreign exchange rate risk (currency risk), interest rate risk and the market value of its investments. Thus the Group’s exposure to market risk is a function of investing and borrowing activities and revenue generating and operating activities in foreign currencies.
: The Group’s exposure in US $, Euro and other foreign currency denominated transactions gives rise to Exchange Rate fluctuation risk. Group’s policy in this regard incorporates:
| | Forecasting inflows and outflows denominated in US$ for a twelve-month period |
| | Estimating the net-exposure in foreign currency, in terms of timing and amount |
| | Determining the extent to which exposure should be protected through one or more risk-mitigating instruments to maintain the permissible limits of uncovered exposures. |
| | Carrying out a variance analysis between estimate and actual on an ongoing basis and taking stop-loss action when the adverse movements breach the 5% barrier of deviation, subject to review by Audit Committee. |
The Group’s exposure to foreign currency risk as of March 31, 2024 was as follows:
All amounts in respective currencies as mentioned (in thousands)
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Cash and cash equivalents | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Net balance sheet exposure | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
The Group’s exposure to foreign currency risk as of March 31, 2023 was as follows:
All amounts in respective currencies as mentioned (in thousands)
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Cash and cash equivalents | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Net balance sheet exposure | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
The Group’s exposure to foreign currency risk as of March 31, 2022 was as follows:
All amounts in respective currencies as mentioned (in thousands)
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Cash and cash equivalents | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Net balance sheet exposure | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
All amounts in respective currencies as mentioned (in thousands)
A 10% strengthening of the rupee against the respective currencies as of March 31, 2024 and
2023 would have increased / (decreased) other comprehensive income and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant. The analysis is performed on the same basis for 2023.
| | Other comprehensive income | | | | |
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A 10% weakening of the rupee against the above currencies as of March 31, 2024 and 2023 would have had the equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain constant.
Interest rate risk is the risk that an upward movement in interest rates would adversely affect the borrowing costs of the group.
At the reporting date the interest rate profile of the Group’s interest –bearing financial instruments were as follows:
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- Fixed deposits with banks | | | | | | | | |
- Investment in debt securities | | | | | | | | |
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Variable rate instruments | | | | | | | | |
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Fair value sensitivity for fixed rate instruments
The Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss, and the Group does not designate derivatives (interest rate swaps) as hedging instruments under a fair value hedge accounting model. Therefore a change in interest rates at the reporting date would not affect profit or loss.
Cash flow sensitivity for variable rate instruments
An increase of 100 basis points in interest rates at the reporting date would have increased / (decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant. The analysis has been performed on the same basis as 2023.
A decrease of 100 basis points in the interest rates at the reporting date would have had equal but opposite effect on the amounts shown above, on the basis that all other variables remain constant.
| | Issue of shares on a private placement basis to the existing promoter group |
On August 4, 2010, the Board of Directors of the Group proposed the issuance, in a private placement, of up
to an aggregate of 12,50,00,000 of the company’s equity shares, par value ₹10 per share (“Equity shares”), for an aggregate purchase price of ₹ 40,000, to a group of investors affiliated with the Group’s promoter, including entities affiliated with Mr
.
Raju Vegesna, the Group’s Chairman and Managing Director and Mr
.
Ananda Raju Vegesna, Executive Director and brother of Mr Raju Vegesna (the “Offering”). The company’s shareholders approved the terms of the Offering at the Company’s Annual General Meeting held on September 27, 2010.
On October 22, 2010, the
C
ompany entered into a Subscription Agreement with Mr
.
Ananda Raju Vegesna, acting as representative of the acquirers in connection with the offering. Accordingly, the company issued 12,50,00,000 equity shares to Raju Vegesna Infotech and Industries Private Limited, a company affiliated with the promoter group on October 30, 2010. The above shares were subsequently transferred by Raju Vegesna Infotech & Industries Private Limited to Ramanand Core Investment Company Private Limited.
On August 14, 2011, the Company received a letter from RVIIPL expressing its intention to transfer the above partly paid shares to its wholly owned subsidiary M/s Ramanand Core Investment Company Private limited (“RCICPL”). The Company, on August 26, 2011, registered such transfer of partly paid shares in the name of RCICPL.
On September 7, 2011, the parties entered into an amendment to the Subscription Agreement (the “Amendment”) extending the validity of the agreement period to September 26, 2013. This Amendment provides the Board of Directors of the Company with additional time to call upon the purchasers to pay the balance money, in accordance with the terms of the Subscription Agreement.
During the year ended March 31, 2019, the Company has called–up and received a sum of ₹ 10 per share and hence the shares have become fully paid up.
As of March 31, 2024, entities affiliated with our CEO, Chairman and Managing Director, Raju Vegesna, beneficially owned approximately 84.03% of our outstanding equity shares.
| | Corporate Social Responsibility (CSR) expenditure |
Section 135 of the Companies Act, 2013, requires Company to spend towards Corporate Social Responsibility (CSR). The Company is expected to spend ₹ 32,850 towards CSR in compliance of this requirement. A sum of ₹ 32,850 has been spent during the current year towards CSR activities as per details given below.
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Sri Venkateswara institute of Research and Rehabilitation for the disabled trust, Dwarakha Tirumala | | | | | | | | |
Voluntary Health Services Hospital, Taramani | | | | | | | | |
Raju Vegesna Foundation, Visakapatanam | | | | | | | | |
Shree Anand Charitable Trust, Mumbai | | |
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Sri Hanuman Mani Education & Culture Trust | | | | | | | | |
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Nayaki vidya mandir school | | | | | | | | |
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The Group's capital comprises equity share capital, share premium, and other equity attributable to equity holders. The primary objective of Group's capital management is to maximize shareholders value. The Group manages its capital and makes adjustment to it in light of the changes in economic and market conditions. The Group does so by adjusting dividend paid to shareholders. The total capital as on March 31, 2024 is ₹ 18,327,024 (Previous Year: ₹ 15,251,761
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. No changes were made in the objectives, policies or processes for managing capital of the Group during the current and previous year.
| | Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on October 17, 2007 and incorporated herein by reference. |
| | Previously filed as an exhibit to the Annual Report on Form 20-F filed with the SEC on July 1, 2002 and incorporated herein by reference. |
| | Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on October 17, 2007 and incorporated herein by reference. |
| | Previously filed as an exhibit to the Registration Statement on Form F-6 filed with the Commission on May 11, 2009 and incorporated herein by reference. |
| | Previously filed as an exhibit to the Annual Report on Form 20-F filed with the Commission on June 29, 2004 and incorporated herein by reference. |
| | Previously filed as an exhibit to Amendment No. 2 to the Registration Statement on Form F-1 filed with the Commission on October 13, 1999 and incorporated herein by reference. |
| | Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on November 30, 2004 and incorporated herein by reference. |
| | Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on November 21, 2005 and incorporated herein by reference. |
| | Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on December 7, 2005 and incorporated herein by reference. |
| | Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on December 23, 2005 and incorporated herein by reference. |
| | Previously filed as an exhibit to the Annual Report on Form 20-F filed with the Commission on June 30, 2006 and incorporated herein by reference. |
| | Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on April 14, 2008 and incorporated herein by reference. |
| | Previously filed as an exhibit to the Report on Form 20-F filed with the Commission on October 11, 2008 and incorporated herein by reference. |
| | Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on January 23, 2009 and incorporated herein by reference. |
| | Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on November 15, 2010 and incorporated herein by reference. |
| | Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on September 8, 2011 and incorporated herein by reference. |
| | Previously filed as an exhibit to the Report on Form 20-F filed with the Commission on June 19, 2015 and incorporated herein by reference. |
| | Previously filed as an exhibit to the Registration on Form F-1 filed with the Commission on March 21, 2024 and incorporated herein by reference. |
| | Previously filed as an exhibit to the Annual Report on Form 20-F filed with the Commission on May 7, 2024 and incorporated herein by reference. |
The Company hereby certifies that it meets all of the requirements for filing on Form 20-F/A and that it has duly caused and authorized the undersigned to sign this Annual Report on its behalf.
| | SIFY TECHNOLOGIES LIMITED |
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| | Title: | Executive director and Chief Financial Officer |
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