Exhibit 99.4
WIPRO LIMITED AND SUBSIDIARIES
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS UNDER IFRS
AS AT AND FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2020
WIPRO LIMITED AND SUBSIDIARIES
INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(₹ in millions, except share and per share data, unless otherwise stated)
Notes | As at March 31, 2020 | As at December 31, 2020 | ||||||||||||||
Convenience translation into US dollar in millions (unaudited) Refer to Note 2(iii) | ||||||||||||||||
ASSETS | ||||||||||||||||
Goodwill | 6 | 131,012 | 136,322 | 1,867 | ||||||||||||
Intangible assets | 6 | 16,362 | 13,056 | 179 | ||||||||||||
Property, plant and equipment | 4 | 81,120 | 83,372 | 1,142 | ||||||||||||
Right-of-Use assets | 5 | 16,748 | 15,427 | 211 | ||||||||||||
Financial assets | ||||||||||||||||
Derivative assets | 17 | — | 51 | 1 | ||||||||||||
Investments | 8 | 9,302 | 8,679 | 119 | ||||||||||||
Trade receivables | 6,049 | 4,613 | 63 | |||||||||||||
Other financial assets | 11 | 5,881 | 6,657 | 91 | ||||||||||||
Investments accounted for using the equity method | 1,383 | 1,459 | 20 | |||||||||||||
Deferred tax assets | 6,005 | 1,690 | 23 | |||||||||||||
Non-current tax assets | 11,414 | 14,020 | 192 | |||||||||||||
Other non-current assets | 12 | 11,935 | 11,433 | 157 | ||||||||||||
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Total non-current assets | 297,211 | 296,779 | 4,065 | |||||||||||||
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Inventories | 9 | 1,865 | 1,205 | 17 | ||||||||||||
Financial assets | ||||||||||||||||
Derivative assets | 17 | 3,025 | 4,088 | 56 | ||||||||||||
Investments | 8 | 189,635 | 312,909 | 4,286 | ||||||||||||
Cash and cash equivalents | 10 | 144,499 | 139,435 | 1,910 | ||||||||||||
Trade receivables | 104,474 | 91,841 | 1,258 | |||||||||||||
Unbilled receivables | 25,209 | 23,105 | 316 | |||||||||||||
Other financial assets | 11 | 8,614 | 9,028 | 124 | ||||||||||||
Contract assets | 17,143 | 14,847 | 203 | |||||||||||||
Current tax assets | 2,882 | 2,354 | 32 | |||||||||||||
Other current assets | 12 | 22,505 | 22,144 | 303 | ||||||||||||
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Total current assets | 519,851 | 620,956 | 8,505 | |||||||||||||
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TOTAL ASSETS | 817,062 | 917,735 | 12,570 | |||||||||||||
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EQUITY | ||||||||||||||||
Share capital | 11,427 | 11,431 | 157 | |||||||||||||
Share premium | 1,275 | 1,815 | 25 | |||||||||||||
Retained earnings | 476,103 | 424,275 | 5,811 | |||||||||||||
Share-based payment reserve | 1,550 | 1,765 | 24 | |||||||||||||
SEZ Re-investment reserve | 43,804 | 57,217 | 784 | |||||||||||||
Other components of equity | 23,299 | 30,647 | 420 | |||||||||||||
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Equity attributable to the equity holders of the Company | 557,458 | 527,150 | 7,221 | |||||||||||||
Non-controlling interest | 1,875 | 1,489 | 20 | |||||||||||||
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TOTAL EQUITY | 559,333 | 528,639 | 7,241 | |||||||||||||
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LIABILITIES | ||||||||||||||||
Financial liabilities | ||||||||||||||||
Loans and borrowings | 13 | 4,840 | 213 | 3 | ||||||||||||
Derivative liabilities | 17 | 138 | — | — | ||||||||||||
Lease liabilities | 12,638 | 12,894 | 177 | |||||||||||||
Other financial liabilities | 14 | 151 | 929 | 13 | ||||||||||||
Deferred tax liabilities | 2,825 | 5,181 | 71 | |||||||||||||
Non-current tax liabilities | 13,205 | 12,442 | 170 | |||||||||||||
Other non-current liabilities | 15 | 7,537 | 7,803 | 107 | ||||||||||||
Provisions | 16 | 2 | 1 | ^ | ||||||||||||
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Total non-current liabilities | 41,336 | 39,463 | 541 | |||||||||||||
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Financial liabilities | ||||||||||||||||
Loans, borrowings and bank overdrafts | 13 | 73,202 | 73,256 | 1,003 | ||||||||||||
Derivative liabilities | 17 | 7,231 | 3,467 | 47 | ||||||||||||
Trade payables and accrued expenses | 78,129 | 83,461 | 1,143 | |||||||||||||
Lease liabilities | 6,560 | 7,502 | 103 | |||||||||||||
Other financial liabilities | 14 | 899 | 96,604 | 1,323 | ||||||||||||
Contract liabilities | 18,775 | 22,118 | 303 | |||||||||||||
Current tax liabilities | 11,731 | 15,913 | 218 | |||||||||||||
Other current liabilities | 15 | 19,254 | 46,627 | 639 | ||||||||||||
Provisions | 16 | 612 | 685 | 9 | ||||||||||||
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Total current liabilities | 216,393 | 349,633 | 4,788 | |||||||||||||
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TOTAL LIABILITIES | 257,729 | 389,096 | 5,329 | |||||||||||||
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TOTAL EQUITY AND LIABILITIES | 817,062 | 917,735 | 12,570 | |||||||||||||
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^ Value is less than 1
The accompanying notes form an integral part of these interim condensed consolidated financial statements
As per our report of even date attached | For and on behalf of the Board of Directors | |||||
for Deloitte Haskins & Sells LLP | Rishad A. Premji | M. K. Sharma | Thierry Delaporte | |||
Chartered Accountants | Chairman | Director | Chief Executive Officer & | |||
Firm Registration No: 117366W/W - 100018 | Managing Director | |||||
Vikas Bagaria | Jatin Pravinchandra Dalal | M. Sanaulla Khan | ||||
Partner | Chief Financial Officer | Company Secretary | ||||
Membership No. 60408 | ||||||
Bengaluru | ||||||
January 13, 2021 |
1
WIPRO LIMITED AND SUBSIDIARIES
INTERIM CONDENSED CONSOLIDATED STATEMENT OF INCOME
(₹ in millions, except share and per share data, unless otherwise stated)
Three months ended December 31, | Nine months ended December 31, | |||||||||||||||||||||||||
Notes | 2019 | 2020 | 2020 | 2019 | 2020 | 2020 | ||||||||||||||||||||
Convenience translation into US dollar in millions (unaudited) Refer to Note 2(iii) | Convenience translation into US dollar in millions (unaudited) Refer to Note 2(iii) | |||||||||||||||||||||||||
Revenues | 20 | 154,705 | 156,700 | 2,146 | 453,122 | 456,976 | 6,259 | |||||||||||||||||||
Cost of revenues | 21 | (109,673 | ) | (104,313 | ) | (1,429 | ) | (321,952 | ) | (313,400 | ) | (4,293 | ) | |||||||||||||
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Gross profit | 45,032 | 52,387 | 717 | 131,170 | 143,576 | 1,966 | ||||||||||||||||||||
Selling and marketing expenses | 21 | (11,030 | ) | (11,326 | ) | (155 | ) | (32,612 | ) | (30,721 | ) | (421 | ) | |||||||||||||
General and administrative expenses | 21 | (7,496 | ) | (7,814 | ) | (107 | ) | (22,142 | ) | (25,997 | ) | (356 | ) | |||||||||||||
Foreign exchange gains | 23 | 727 | 566 | 8 | 2,176 | 2,109 | 29 | |||||||||||||||||||
Other operating income/(loss), net | 26 | — | — | — | 749 | (81 | ) | (1 | ) | |||||||||||||||||
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Results from operating activities | 27,233 | 33,813 | 463 | 79,341 | 88,886 | 1,217 | ||||||||||||||||||||
Finance expenses | 22 | (1,844 | ) | (1,400 | ) | (19 | ) | (5,675 | ) | (3,966 | ) | (54 | ) | |||||||||||||
Finance and other income | 23 | 5,370 | 5,975 | 82 | 19,174 | 16,465 | 226 | |||||||||||||||||||
Share of net profit /(loss) of associates accounted for using the equity method | 34 | 101 | 1 | 16 | 126 | 2 | ||||||||||||||||||||
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Profit before tax | 30,793 | 38,489 | 527 | 92,856 | 101,511 | 1,391 | ||||||||||||||||||||
Income tax expense | 19 | (6,164 | ) | (8,524 | ) | (117 | ) | (18,594 | ) | (22,590 | ) | (309 | ) | |||||||||||||
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Profit for the period | 24,629 | 29,965 | 410 | 74,262 | 78,921 | 1,082 | ||||||||||||||||||||
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Profit attributable to: | ||||||||||||||||||||||||||
Equity holders of the Company | 24,558 | 29,667 | 406 | 73,958 | 78,225 | 1,072 | ||||||||||||||||||||
Non-controlling interest | 71 | 298 | 4 | 304 | 696 | 10 | ||||||||||||||||||||
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Profit for the period | 24,629 | 29,965 | 410 | 74,262 | 78,921 | 1,082 | ||||||||||||||||||||
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Earnings per equity share: | 24 | |||||||||||||||||||||||||
Attributable to equity holders of the Company | ||||||||||||||||||||||||||
Basic | 4.31 | 5.21 | 0.07 | 12.58 | 13.74 | 0.19 | ||||||||||||||||||||
Diluted | 4.30 | 5.17 | 0.07 | 12.55 | 13.46 | 0.18 | ||||||||||||||||||||
Weighted average number of equity shares used in computing earnings per equity share | ||||||||||||||||||||||||||
Basic | 5,692,132,118 | 5,696,798,493 | 5,696,798,493 | 5,879,588,157 | 5,694,731,405 | 5,694,731,405 | ||||||||||||||||||||
Diluted | 5,703,265,041 | 5,741,070,466 | 5,741,070,466 | 5,892,966,906 | 5,812,779,105 | 5,812,779,105 |
The accompanying notes form an integral part of these interim condensed consolidated financial statements
As per our report of even date attached | For and on behalf of the Board of Directors | |||||
for Deloitte Haskins & Sells LLP | Rishad A. Premji | M. K. Sharma | Thierry Delaporte | |||
Chartered Accountants | Chairman | Director | Chief Executive Officer & | |||
Firm Registration No: 117366W/W - 100018 | Managing Director | |||||
Vikas Bagaria | Jatin Pravinchandra Dalal | M. Sanaulla Khan | ||||
Partner | Chief Financial Officer | Company Secretary | ||||
Membership No. 60408 | ||||||
Bengaluru | ||||||
January 13, 2021 |
2
WIPRO LIMITED AND SUBSIDIARIES
INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(₹ in millions, except share and per share data, unless otherwise stated)
Three months ended December 31, | Nine months ended December 31, | |||||||||||||||||||||||||||
Notes | 2019 | 2020 | 2020 | 2019 | 2020 | 2020 | ||||||||||||||||||||||
Convenience translation into US dollar in millions (unaudited) Refer to Note 2(iii) | Convenience translation into US dollar in millions (unaudited) Refer to Note 2(iii) | |||||||||||||||||||||||||||
Profit for the period | 24,629 | 29,965 | 410 | 74,262 | 78,921 | 1,082 | ||||||||||||||||||||||
Other comprehensive income (OCI) | ||||||||||||||||||||||||||||
Items that will not be reclassified to statement of income in subsequent periods |
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Remeasurements of the net defined benefit liability/asset comprising actuarial gains and losses |
| (128 | ) | (57 | ) | (1 | ) | (354 | ) | (213 | ) | (3 | ) | |||||||||||||||
Net change in fair value of equity instruments measured at fair value through OCI | 550 | 273 | 4 | 625 | 465 | 6 | ||||||||||||||||||||||
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422 | 216 | 3 | 271 | 252 | 3 | |||||||||||||||||||||||
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Items that may be reclassified to statement of income in subsequent periods |
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Foreign currency translation differences | 18 | 2,175 | 1,009 | 14 | 3,978 | 798 | 11 | |||||||||||||||||||||
Net change in time value of option contracts designated as cash flow hedges | (136 | ) | (111 | ) | (2 | ) | (455 | ) | 43 | 1 | ||||||||||||||||||
Net change in intrinsic value of option contracts designated as cash flow hedges | (920 | ) | 20 | ^ | (896 | ) | 1,068 | 15 | ||||||||||||||||||||
Net change in fair value of forward contracts designated as cash flow hedges | (970 | ) | 233 | 3 | (1,149 | ) | 2,266 | 31 | ||||||||||||||||||||
Net change in fair value of debt instruments measured at fair value through OCI | (274 | ) | 257 | 4 | 1,140 | 2,868 | 39 | |||||||||||||||||||||
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(125 | ) | 1,408 | 19 | 2,618 | 7,043 | 97 | ||||||||||||||||||||||
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Total other comprehensive income, net of taxes | 297 | 1,624 | 22 | 2,889 | 7,295 | 100 | ||||||||||||||||||||||
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Total comprehensive income for the period | 24,926 | 31,589 | 432 | 77,151 | 86,216 | 1,182 | ||||||||||||||||||||||
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Total comprehensive income attributable to: | ||||||||||||||||||||||||||||
Equity holders of the Company | 24,842 | 31,306 | 428 | 76,793 | 85,573 | 1,173 | ||||||||||||||||||||||
Non-controlling interest | 84 | 283 | 4 | 358 | 643 | 9 | ||||||||||||||||||||||
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24,926 | 31,589 | 432 | 77,151 | 86,216 | 1,182 | |||||||||||||||||||||||
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^ Value is less than 1 |
The accompanying notes form an integral part of these interim condensed consolidated financial statements
As per our report of even date attached | For and on behalf of the Board of Directors | |||||
for Deloitte Haskins & Sells LLP | Rishad A. Premji | M. K. Sharma | Thierry Delaporte | |||
Chartered Accountants | Chairman | Director | Chief Executive Officer & | |||
Firm Registration No: 117366W/W - 100018 | Managing Director | |||||
Vikas Bagaria | Jatin Pravinchandra Dalal | M. Sanaulla Khan | ||||
Partner | Chief Financial Officer | Company Secretary | ||||
Membership No. 60408 | ||||||
Bengaluru | ||||||
January 13, 2021 |
3
WIPRO LIMITED AND SUBSIDIARIES
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(₹ in millions, except share and per share data, unless otherwise stated)
Other components of equity | Equity attributable to the equity holders of the Company | Non-controlling interest | Total equity | |||||||||||||||||||||||||||||||||||||||||||||
Particulars | Number of shares* | Share capital, fully paid- up | Share premium | Retained earnings | Share- based payment reserve | SEZ Re-investment reserve | Foreign currency translation reserve | Cash flow hedging reserve | Other reserves | |||||||||||||||||||||||||||||||||||||||
As at April 1, 2019 | 6,033,935,388 | 12,068 | 533 | 506,135 | 2,617 | 28,565 | 15,250 | 2,415 | 533 | 568,116 | 2,637 | 570,753 | ||||||||||||||||||||||||||||||||||||
Adjustment on adoption of IFRS 16 (net of tax) | — | — | — | (872 | ) | — | — | — | — | — | (872 | ) | — | (872 | ) | |||||||||||||||||||||||||||||||||
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Adjusted balances as at April 1, 2019 | 6,033,935,388 | 12,068 | 533 | 505,263 | 2,617 | 28,565 | 15,250 | 2,415 | 533 | 567,244 | 2,637 | 569,881 | ||||||||||||||||||||||||||||||||||||
Comprehensive income for the period | ||||||||||||||||||||||||||||||||||||||||||||||||
Profit for the period | — | — | — | 73,958 | — | — | — | — | — | 73,958 | 304 | 74,262 | ||||||||||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | — | 3,924 | (2,500 | ) | 1,411 | 2,835 | 54 | 2,889 | |||||||||||||||||||||||||||||||||||
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Total comprehensive income for the period | — | — | — | 73,958 | — | — | 3,924 | (2,500 | ) | 1,411 | 76,793 | 358 | 77,151 | |||||||||||||||||||||||||||||||||||
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Transaction with owners of the Company, recognized directly in equity | ||||||||||||||||||||||||||||||||||||||||||||||||
Issue of equity shares on exercise of options | 2,164,004 | 4 | 646 | — | (646 | ) | — | — | — | — | 4 | — | 4 | |||||||||||||||||||||||||||||||||||
Buyback of equity shares | (323,076,923 | ) | (646 | ) | — | (105,000 | ) | — | — | — | — | 646 | (105,000 | ) | — | (105,000 | ) | |||||||||||||||||||||||||||||||
Transaction cost related to buyback | — | — | — | (298 | ) | — | — | — | — | — | (298 | ) | — | (298 | ) | |||||||||||||||||||||||||||||||||
Issue of shares by controlled trust on exercise of | — | — | — | 667 | (667 | ) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Compensation cost related to employee share based payment | — | — | — | 6 | 899 | — | — | — | — | 905 | — | 905 | ||||||||||||||||||||||||||||||||||||
Cash dividend paid | — | — | — | — | — | — | — | — | — | — | (1,415 | ) | (1,415 | ) | ||||||||||||||||||||||||||||||||||
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Total transactions with owners of the Company | (320,912,919 | ) | (642 | ) | 646 | (104,625 | ) | (414 | ) | — | — | — | 646 | (104,389 | ) | (1,415 | ) | (105,804 | ) | |||||||||||||||||||||||||||||
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As at December 31, 2019 | 5,713,022,469 | 11,426 | 1,179 | 474,596 | 2,203 | 28,565 | 19,174 | (85 | ) | 2,590 | 539,648 | 1,580 | 541,228 | |||||||||||||||||||||||||||||||||||
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4
WIPRO LIMITED AND SUBSIDIARIES
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(₹ in millions, except share and per share data, unless otherwise stated)
Other components of equity | Equity | |||||||||||||||||||||||||||||||||||||||||||||||
Particulars | Number of shares* | Share capital, fully paid-up | Share premium | Retained earnings | Share- based payment reserve | SEZ Re-investment reserve | Foreign currency translation reserve | Cash flow hedging reserve | Other reserves | attributable to the equity holders of the Company | Non-controlling interest | Total equity | ||||||||||||||||||||||||||||||||||||
As at April 1, 2020 | 5,713,357,390 | 11,427 | 1,275 | 476,103 | 1,550 | 43,804 | 23,539 | (2,315 | ) | 2,075 | 557,458 | 1,875 | 559,333 | |||||||||||||||||||||||||||||||||||
Comprehensive income for the period | ||||||||||||||||||||||||||||||||||||||||||||||||
Profit for the period | — | — | — | 78,225 | — | — | — | — | — | 78,225 | 696 | 78,921 | ||||||||||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | — | 851 | 3,377 | 3,120 | 7,348 | (53 | ) | 7,295 | |||||||||||||||||||||||||||||||||||
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Total comprehensive income for the period | — | — | — | 78,225 | — | — | 851 | 3,377 | 3,120 | 85,573 | 643 | 86,216 | ||||||||||||||||||||||||||||||||||||
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Transaction with owners of the Company, recognized directly in equity | ||||||||||||||||||||||||||||||||||||||||||||||||
Issue of equity shares on exercise of options | 1,980,699 | 4 | 540 | — | (540 | ) | — | — | — | — | 4 | — | 4 | |||||||||||||||||||||||||||||||||||
Liability for Buyback of equity shares, including tax thereon (Refer to Note 31) | — | — | — | (117,021 | ) | — | — | — | — | — | (117,021 | ) | — | (117,021 | ) | |||||||||||||||||||||||||||||||||
Transaction cost related to proposed Buyback | — | — | — | (92 | ) | — | — | — | — | — | (92 | ) | — | (92 | ) | |||||||||||||||||||||||||||||||||
Issue of shares by controlled trust on exercise of | — | — | — | 468 | (468 | ) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Compensation cost related to employee share-based payment | — | — | — | 5 | 1,223 | — | — | — | — | 1,228 | — | 1,228 | ||||||||||||||||||||||||||||||||||||
Transferred to special economic zone re-investment reserve | — | — | — | (13,413 | ) | — | 13,413 | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Cash dividend paid | — | — | — | — | — | — | — | — | — | — | (960 | ) | (960 | ) | ||||||||||||||||||||||||||||||||||
Others | — | — | — | — | — | — | — | — | — | — | (69 | ) | (69 | ) | ||||||||||||||||||||||||||||||||||
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Total transactions with owners of the Company | 1,980,699 | 4 | 540 | (130,053 | ) | 215 | 13,413 | — | — | — | (115,881 | ) | (1,029 | ) | (116,910 | ) | ||||||||||||||||||||||||||||||||
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As at December 31, 2020 | 5,715,338,089 | 11,431 | 1,815 | 424,275 | 1,765 | 57,217 | 24,390 | 1,062 | 5,195 | 527,150 | 1,489 | 528,639 | ||||||||||||||||||||||||||||||||||||
Convenience translation into US dollar in millions (unaudited) Refer to Note 2(iii) | 157 | 25 | 5,811 | 24 | 784 | 334 | 15 | 71 | 7,221 | 20 | 7,241 |
* | Includes 24,354,793 and 20,469,844 treasury shares held as at December 31, 2019 and 2020, respectively by a controlled trust. 2,999,060 and 2,276,237 shares have been transferred by the controlled trust to eligible employees on exercise of options during the period ended December 31, 2019 and 2020. |
The accompanying notes form an integral part of these interim condensed consolidated financial statements
As per our report of even date attached | For and on behalf of the Board of Directors | |||||
for Deloitte Haskins & Sells LLP | Rishad A. Premji | M. K. Sharma | Thierry Delaporte | |||
Chartered Accountants | Chairman | Director | Chief Executive Officer & | |||
Firm Registration No: 117366W/W - 100018 | Managing Director | |||||
Vikas Bagaria | Jatin Pravinchandra Dalal | M. Sanaulla Khan | ||||
Partner | Chief Financial Officer | Company Secretary | ||||
Membership No. 60408 | ||||||
Bengaluru | ||||||
January 13, 2021 |
5
WIPRO LIMITED AND SUBSIDIARIES
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(₹ in millions, except share and per share data, unless otherwise stated)
Nine months ended December 31, | ||||||||||||
2019 | 2020 | 2020 | ||||||||||
Convenience translation into US dollar in millions (unaudited) Refer to Note 2(iii) | ||||||||||||
Cash flows from operating activities: | ||||||||||||
Profit for the period | 74,262 | 78,921 | 1,082 | |||||||||
Adjustments to reconcile profit for the period to net cash generated from operating activities: | ||||||||||||
(Gain)/ loss on sale of property, plant and equipment and intangible assets, net | 18 | (494 | ) | (7 | ) | |||||||
Depreciation, amortization and impairment expense | 15,064 | 20,661 | 283 | |||||||||
Unrealized exchange (gain)/ loss, net and exchange (gain)/ loss on borrowings | 3,602 | (1,742 | ) | (24 | ) | |||||||
Share-based compensation expense | 899 | 1,806 | 25 | |||||||||
Share of net profit of associates accounted for using equity method | (16 | ) | (126 | ) | (2 | ) | ||||||
Income tax expense | 18,594 | 22,590 | 309 | |||||||||
Finance and other income, net of finance expenses | (15,206 | ) | (13,150 | ) | (180 | ) | ||||||
(Gain)/loss from sale of business | (749 | ) | 81 | 1 | ||||||||
Changes in operating assets and liabilities, net of effects from acquisitions | ||||||||||||
Trade receivables | 1,135 | 14,896 | 204 | |||||||||
Unbilled receivables and contract assets | (603 | ) | 4,535 | 62 | ||||||||
Inventories | 1,889 | 666 | 9 | |||||||||
Other assets | 668 | 6,796 | 93 | |||||||||
Trade payables, accrued expenses, other liabilities and provisions | (8,109 | ) | 8,065 | 110 | ||||||||
Contract liabilities | (3,943 | ) | 3,217 | 44 | ||||||||
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Cash generated from operating activities before taxes | 87,505 | 146,722 | 2,009 | |||||||||
Income taxes paid , net | (933 | ) | (16,455 | ) | (225 | ) | ||||||
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Net cash generated from operating activities | 86,572 | 130,267 | 1,784 | |||||||||
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Cash flows from investing activities: | ||||||||||||
Purchase of property, plant and equipment | (17,537 | ) | (13,466 | ) | (184 | ) | ||||||
Proceeds from sale of property, plant and equipment | 710 | 612 | 8 | |||||||||
Purchase of investments | (855,465 | ) | (849,658 | ) | (11,638 | ) | ||||||
Proceeds from sale of investments | 914,556 | 742,959 | 10,176 | |||||||||
Payment for business acquisitions including deposits and escrow, net of cash acquired | (6,381 | ) | (6,095 | ) | (83 | ) | ||||||
Proceeds from sale of business | 7,459 | — | — | |||||||||
Escrow and term deposits pertaining to proposed buyback | — | (10,600 | ) | (145 | ) | |||||||
Interest received | 18,716 | 14,042 | 192 | |||||||||
Dividend received | 262 | 1 | ^ | |||||||||
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Net cash generated from/ (used in) investing activities | 62,320 | (122,205 | ) | (1,674 | ) | |||||||
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Cash flows from financing activities: | ||||||||||||
Proceeds from issuance of equity shares and shares pending allotment | 10 | 4 | ^ | |||||||||
Repayment of loans and borrowings | (73,096 | ) | (60,991 | ) | (835 | ) | ||||||
Proceeds from loans and borrowings | 65,245 | 58,607 | 803 | |||||||||
Repayment of lease liabilities | (5,046 | ) | (6,602 | ) | (90 | ) | ||||||
Payment for buy back of shares, including transaction cost | (105,298 | ) | — | — | ||||||||
Payment for transaction cost against proposed buyback | — | (87 | ) | (1 | ) | |||||||
Interest paid | (3,558 | ) | (2,639 | ) | (36 | ) | ||||||
Payment of cash dividend to Non-controlling interest holders | (1,415 | ) | (960 | ) | (13 | ) | ||||||
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Net cash used in financing activities | (123,158 | ) | (12,668 | ) | (172 | ) | ||||||
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Net increase in cash and cash equivalents during the period | 25,734 | (4,606 | ) | (62 | ) | |||||||
Effect of exchange rate changes on cash and cash equivalents | 1,276 | (112 | ) | (2 | ) | |||||||
Cash and cash equivalents at the beginning of the period | 158,525 | 144,104 | 1,974 | |||||||||
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Cash and cash equivalents at the end of the period (Note 10) | 185,535 | 139,386 | 1,910 | |||||||||
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^ Value is less than 1
The accompanying notes form an integral part of these interim condensed consolidated financial statements
As per our report of even date attached | For and on behalf of the Board of Directors | |||||
for Deloitte Haskins & Sells LLP | Rishad A. Premji | M. K. Sharma | Thierry Delaporte | |||
Chartered Accountants | Chairman | Director | Chief Executive Officer & | |||
Firm Registration No: 117366W/W - 100018 | Managing Director | |||||
Vikas Bagaria | Jatin Pravinchandra Dalal | M. Sanaulla Khan | ||||
Partner | Chief Financial Officer | Company Secretary | ||||
Membership No. 60408 | ||||||
Bengaluru | ||||||
January 13, 2021 |
6
WIPRO LIMITED AND SUBSIDIARIES
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(₹ in millions, except share and per share data, unless otherwise stated)
1. The Company overview
Wipro Limited (“Wipro” or the “Parent Company”), together with its subsidiaries and controlled trusts (collectively, “we”, “us”, “our”, “the Company” or the “Group”) is a global information technology (“IT”), consulting and business process services (“BPS”) company.
Wipro is a public limited company incorporated and domiciled in India. The address of its registered office is Wipro Limited, Doddakannelli, Sarjapur Road, Bengaluru – 560 035, Karnataka, India. The Company has its primary listing with Bombay Stock Exchange Ltd. and National Stock Exchange of India Ltd. The Company’s American Depository Shares (“ADS”) representing equity shares are also listed on the New York Stock Exchange.
These interim condensed consolidated financial statements were authorized for issue by the Company’s Board of Directors on January 13, 2021.
2. Basis of preparation of interim condensed consolidated financial statements
(i) Statement of compliance and basis of preparation
These interim condensed consolidated financial statements have been prepared in compliance with IAS 34, “Interim Financial Reporting”, as issued by the International Accounting Standards Board (“IASB”). Selected explanatory notes are included to explain events and transactions that are significant to understand the changes in financial position and performance of the Company since the last annual consolidated financial statements as at and for the year ended March 31, 2020. These interim condensed consolidated financial statements do not include all the information required for full annual financial statements prepared in accordance with International Financial Reporting Standards and its interpretations (“IFRS”).
The interim condensed consolidated financial statements correspond to the classification provisions contained in IAS 1 (revised), “Presentation of Financial Statements”. For clarity, various items are aggregated in the statements of income and statements of financial position. These items are disaggregated separately in the notes to the financial statement, where applicable. The accounting policies have been consistently applied to all periods presented in these interim condensed consolidated financial statements except for the adoption of new accounting standards, amendments and interpretations effective from April 1, 2020.
All amounts included in the interim condensed consolidated financial statements are reported in millions of Indian rupees (₹ in millions) except share and per share data, unless otherwise stated. Due to rounding off, the numbers presented throughout the document may not add up precisely to the totals and percentages may not precisely reflect the absolute figures.
(ii) Basis of measurement
The interim condensed consolidated financial statements have been prepared on a historical cost convention and on an accrual basis, except for the following material items which have been measured at fair value as required by relevant IFRS:
a. | Derivative financial instruments; |
b. | Financial instruments classified as fair value through other comprehensive income or fair value through profit or loss; |
c. | The defined benefit liability/(asset) recognized as the present value of defined benefit obligation less fair value of plan assets; and |
d. | Contingent consideration. |
(iii) Convenience translation (unaudited)
The accompanying interim condensed consolidated financial statements have been prepared and reported in Indian rupees, the functional currency of the Parent Company. Solely for the convenience of the readers, the interim condensed consolidated financial statements as at and for the three and nine months ended December 31, 2020, have been translated into United States dollars at the certified foreign exchange rate of US$1 = ₹ 73.01 as published by Federal Reserve Board of Governors on December 31, 2020. No representation is made that the Indian rupee amounts have been, could have been or could be converted into United States dollars at such a rate or any other rate. Due to rounding off, the translated numbers presented throughout the document may not add up precisely to the totals.
(iv) Use of estimates and judgment
The preparation of the interim condensed consolidated financial statements in conformity with IFRS requires the management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from those estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revision to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. In particular, information about significant areas of estimation, uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the interim condensed consolidated financial statements are included in the following notes:
a) | Revenue recognition: The Company applies judgement to determine whether each product or service promised to a customer is capable of being distinct, and is distinct in the context of the contract, if not, the promised product or service is combined and accounted as a single performance obligation. The Company allocates the arrangement consideration to separately identifiable performance obligation deliverables based on their relative stand-alone selling price. In cases where the Company is unable to |
7
determine the stand-alone selling price, the company uses expected cost plus margin approach in estimating the stand-alone selling price. The Company uses the percentage of completion method using the input (cost expended) method to measure progress towards completion in respect of fixed price contracts. Percentage of completion method accounting relies on estimates of total expected contract revenue and costs. This method is followed when reasonably dependable estimates of the revenues and costs applicable to various elements of the contract can be made. Key factors that are reviewed in estimating the future costs to complete include estimates of future labor costs and productivity efficiencies. Because the financial reporting of these contracts depends on estimates that are assessed continually during the term of these contracts, revenue recognized, profit and timing of revenue for remaining performance obligations are subject to revisions as the contract progresses to completion. When estimates indicate that a loss will be incurred, the loss is provided for in the period in which the loss becomes probable. Volume discounts are recorded as a reduction of revenue. When the amount of discount varies with the levels of revenue, volume discount is recorded based on estimate of future revenue from the customer. |
b) | Impairment testing: Goodwill and intangible assets with indefinite useful life recognized on business combination are tested for impairment at least annually and when events occur or changes in circumstances indicate that the recoverable amount of an asset or a cash generating unit to which an asset pertain is less than the carrying value. The Company assesses acquired intangible assets with finite useful life for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The recoverable amount of an asset or a cash generating unit is higher of value-in-use and fair value less cost of disposal. The calculation of value in use of an asset or a cash generating unit involves use of significant estimates and assumptions which include turnover, growth rates and net margins used to calculate projected future cash flows, risk-adjusted discount rate, future economic and market conditions. |
c) | Income taxes: The major tax jurisdictions for the Company are India and the United States of America. Significant judgments are involved in determining the provision for income taxes including judgment on whether tax positions are probable of being sustained in tax assessments. A tax assessment can involve complex issues, which can only be resolved over extended time periods. |
d) | Deferred taxes: Deferred tax is recorded on temporary differences between the tax bases of assets and liabilities and their carrying amounts, at the rates that have been enacted or substantively enacted at the reporting date. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable profits during the periods in which those temporary differences and tax loss carry-forwards become deductible. The Company considers expected reversal of deferred tax liabilities and projected future taxable income in making this assessment. The amount of deferred tax assets considered realizable, however, could reduce in the near term if estimates of future taxable income during the carry-forward period are reduced. |
e) | Business combination: In accounting for business combinations, judgment is required in identifying whether an identifiable intangible asset is to be recorded separately from goodwill. Additionally, estimating the acquisition date fair value of the identifiable assets acquired (including useful life estimates), liabilities assumed, and contingent consideration assumed involves management judgment. These measurements are based on information available at the acquisition date and are based on expectations and assumptions that have been deemed reasonable by management. Changes in these judgments, estimates, and assumptions can materially affect the results of operations. |
f) | Defined benefit plans and compensated absences: The cost of the defined benefit plans, compensated absences and the present value of the defined benefit obligations are based on actuarial valuation using the projected unit credit method. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date. |
g) | Expected credit losses on financial assets: The impairment provisions of financial assets are based on assumptions about risk of default and expected timing of collection. The Company uses judgment in making these assumptions and selecting the inputs to expected credit loss calculation based on the Company’s history of collections, customer’s creditworthiness, existing market conditions as well as forward looking estimates at the end of each reporting period. |
h) | Measurement of fair value of non-marketable equity investments: These instruments are initially recorded at cost and subsequently measured at fair value. Fair value of investments is determined using the market and income approaches. The market approach includes the use of financial metrics and ratios of comparable companies, such as revenue, earnings, comparable performance multiples, recent financial rounds and the level of marketability of the investments. The selection of comparable companies requires management judgment and is based on a number of factors, including comparable company sizes, growth rates, and development stages. The income approach includes the use of discounted cash flow model, which requires significant estimates regarding the investees’ revenue, costs, and discount rates based on the risk profile of comparable companies. Estimates of revenue and costs are developed using available historical and forecast data. |
i) | Useful lives of property, plant and equipment: The Company depreciates property, plant and equipment on a straight-line basis over estimated useful lives of the assets. The charge in respect of periodic depreciation is derived based on an estimate of an asset’s expected useful life and the expected residual value at the end of its life. The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact their life, such as changes in technology. The estimated useful life is reviewed at least annually. |
j) | Useful lives of intangible assets: The Company amortizes intangible assets on a straight-line basis over estimated useful lives of the assets. The useful life is estimated 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 assets. The estimated useful life is reviewed at least annually. |
8
k) | Leases: IFRS 16 defines a lease term as the non-cancellable period for which the lessee has the right to use an underlying asset including optional periods, when an entity is reasonably certain to exercise an option to extend (or not to terminate) a lease. The Company considers all relevant facts and circumstances that create an economic incentive for the lessee to exercise the option when determining the lease term. The option to extend lease is included in the lease term, if it is reasonably certain that the lessee will exercise the option. The Company reassesses the option upon occurrence of either a significant event or change in circumstances that are within the control of the lessee. |
l) | Other estimates: The share-based compensation expense is determined based on the Company’s estimate of equity instruments that will eventually vest. Fair valuation of derivative hedging instruments designated as cash flow hedges involves significant estimates relating to the occurrence of forecasted transaction. |
m) | Uncertainty relating to the global health pandemic on COVID-19: In assessing the recoverability of receivables including unbilled receivables, contract assets and contract costs, goodwill, intangible assets, and certain investments, the Company has considered internal and external information up to the date of approval of these interim condensed consolidated financial statements including credit reports and economic forecasts. The Company has performed sensitivity analysis on the assumptions used herein. Based on the current indicators of future economic conditions, the Company expects to recover the carrying amount of these assets. |
The Company basis its assessment believes that the probability of the occurrence of forecasted transactions is not impacted by COVID-19. The Company has also considered the effect of changes, if any, in both counterparty credit risk and own credit risk while assessing hedge effectiveness and measuring hedge ineffectiveness and continues to believe that there is no impact on effectiveness of its hedges.
The impact of COVID-19 remains uncertain and may be different from what we have estimated as of the date of approval of these interim condensed consolidated financial statements and the Company will continue to closely monitor any material changes to future economic conditions.
3. Significant accounting policies
Please refer to the Company’s Annual report for the year ended March 31, 2020, for a discussion of the Company’s other critical accounting policies except for the adoption of new accounting standards, amendments and interpretations effective on or after April 1, 2020.
New Accounting standards, amendments and interpretations adopted by the Company effective from April 1, 2020:
Amendment to IFRS 3 - Business combination
The International Accounting Standard Board has issued amendments to IFRS 3, ‘Business Combinations’, in connection with clarification of business definition, which help in determining whether an acquisition made is of a business or a group of assets. The amendment added a test that makes it easier to conclude that a Company has acquired a group of assets, rather than a business, if the value of the assets acquired is substantially all concentrated in a single asset or group of similar assets. The adoption of amendment to IFRS 3 is applicable to new acquisition on a prospective basis and did not have any impact on the interim condensed consolidated financial statements of the Company.
Amendment to IFRS 9, IAS 39 and IFRS 7 – Interest Rate Benchmark Reform
The IASB amended some of its requirements for hedge accounting. The amendments provide relief from potential effects of the uncertainty caused by the IBOR reform. In addition, the amendments require companies to provide additional information to investors about their hedging relationships that are directly affected by these uncertainties. The adoption of amendment to IFRS 9, IAS 39 and IFRS 7 did not have any significant material impact on the interim condensed consolidated financial statements of the Company.
Amendment to IAS 1 and IAS 8 – Definition of Material
The IASB issued Amendment to IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors to update a new definition of material in IAS 1. The amendments clarify the definition of “material” and how it should be applied by including in the definition guidance that until now has featured elsewhere in IFRS Standards. The new definition clarifies that, information is considered material if omitting, misstating, or obscuring such information, could reasonably be expected to influence the decisions that the primary users of general-purpose financial statements make on the basis of those financial statements. The definition of material in IAS 8 has been replaced by a reference to the definition of material in IAS 1. In addition, the IASB amended other Standards and the Conceptual Framework that contain a definition of material or refer to the term ‘material’ to ensure consistency. The adoption of the amendment to IAS 1 and IAS 8 did not have any material impact on its evaluation of materiality in relation to the interim condensed consolidated financial statements.
Amendment to IFRS 16 – Leases
The IASB issued amendments to IFRS 16, “Leases”, provide lessees with an exemption from assessing whether a COVID-19-related rent concession is a lease modification. The amendments allowed the expedient to be applied to COVID-19-related rent concessions to payments originally due on or before June 30, 2021 and also require disclosure of the amount recognized in profit or loss to reflect changes in lease payments that arise from COVID-19-related rent concessions. The reporting period in which a lessee first applies the amendment, it is not required to disclose certain quantitative information required under IAS 8. Accordingly, the Company recognized ₹ 6 and ₹ 34 as reversal of lease liability in the interim condensed consolidated statement of income for the three and nine months ended December 31, 2020 respectively.
9
New amendments not yet adopted:
Certain new standards, amendments to standards and interpretations are not yet effective for annual periods beginning after April 1, 2020 and have not been applied in preparing these interim condensed consolidated financial statements. New standards, amendments to standards and interpretations that could have potential impact on the interim condensed consolidated financial statements of the Company are:
Amendment to IAS 1 – Presentation of Financial Statements
On January 23, 2020, the IASB has issued “Classification of liabilities as Current or Non-Current (Amendments to IAS 1)” providing a more general approach to the classification of liabilities under IAS 1 based on the contractual arrangement in place at the reporting date. The amendments aim to promote consistency in applying the requirements by helping companies to determine whether, in the statement of financial position, debt and other liabilities with an uncertain settlement date should be classified as current (due or potentially due to be settled within one year) or non-current. The amendments also clarified the classification requirements for debt a company might settle by converting it into equity. These amendments are effective for annual reporting periods beginning on or after January 1, 2023 and are to be applied retrospectively, with earlier application permitted. The Company is currently evaluating the impact of amendment to IAS 1 on the consolidated financial statements.
Amendment to IAS 37 – Onerous Contracts – Cost of Fulfilling a Contract
On May 14, 2020, the IASB issued “Onerous Contracts — Cost of Fulfilling a Contract (Amendments to IAS 37)”, amending the standard regarding costs a company should include as the cost of fulfilling a contract when assessing whether a contract is onerous. The amendment specifies that the “cost of fulfilling” a contract comprises the “costs that relate directly to the contract”. Costs that relate directly to a contract can either be incremental costs of fulfilling that contract or an allocation of other costs that relate directly to fulfilling contracts. These amendments are effective for annual reporting periods beginning on or after January 1, 2022, with earlier application permitted. The Company is currently evaluating the impact of amendment to IAS 37 on the consolidated financial statements.
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 – Interest Rate Benchmark Reform (Phase 2)
In August 2020, the IASB issued Interest Rate Benchmark Reform (Phase 2), which amends other IFRS standards. The amendments complement those issued in 2019 and focus on the effects on financial statements when a company replaces the old interest rate benchmark with an alternative benchmark rate as a result of the reform. The amendments in this final phase relate to practical expedient for particular changes in contractual cash flows, relief from specific hedge accounting requirements and certain disclosure requirement. These amendments are effective for annual reporting periods beginning on or after January 1, 2021, with earlier application permitted. The Company is currently evaluating the impact of the amendment on the consolidated financial statements.
IFRS 9 – Annual Improvements to IFRS Standards—2018-2020
On May 14, 2020, IASB amended IFRS 9 as part of its Annual Improvements to IFRS Standards 2018-2020. The amendment clarifies which fees an entity includes when it applies the ‘10 percent’ test of IFRS 9 in assessing whether to derecognize a financial liability. This amendment is effective for annual reporting periods beginning on or after January 1, 2022, with earlier application permitted. The Company is currently evaluating the impact of amendment to IFRS 9 on the consolidated financial statements.
10
4. Property, plant and equipment
Land | Buildings | Plant and machinery * | Furniture fixtures and equipment | Vehicles | Total | |||||||||||||||||||
Gross carrying value: | ||||||||||||||||||||||||
As at April 1, 2019 | ₹ | 3,697 | ₹ | 27,490 | ₹ | 92,366 | ₹ | 16,505 | ₹ | 948 | ₹ | 141,006 | ||||||||||||
Reclassified on adoption of IFRS 16 | — | — | (3,420 | ) | — | — | (3,420 | ) | ||||||||||||||||
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Adjusted balance as at April 1, 2019 | ₹ 3,697 | ₹ 27,490 | ₹ 88,946 | ₹ 16,505 | ₹ 948 | ₹ 137,586 | ||||||||||||||||||
Translation adjustment | 4 | 91 | 889 | 80 | 2 | 1,066 | ||||||||||||||||||
Additions | 55 | 1,905 | 9,968 | 2,092 | 9 | 14,029 | ||||||||||||||||||
Additions through Business combinations | — | — | 392 | 2 | — | 394 | ||||||||||||||||||
Disposals | — | (85 | ) | (2,467 | ) | (201 | ) | (130 | ) | (2,883 | ) | |||||||||||||
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As at December 31, 2019 | ₹ 3,756 | ₹ 29,401 | ₹ 97,728 | ₹ 18,478 | ₹ 829 | ₹ 150,192 | ||||||||||||||||||
Accumulated depreciation/ impairment: |
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As at April 1, 2019 | ₹ | — | ₹ | 6,715 | ₹ | 73,188 | ₹ | 12,593 | ₹ | 682 | ₹ | 93,178 | ||||||||||||
Reclassified on adoption of IFRS 16 | — | — | (2,177 | ) | — | — | (2,177 | ) | ||||||||||||||||
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Adjusted balance as at April 1, 2019 | ₹ | — | ₹ | 6,715 | ₹ | 71,011 | ₹ | 12,593 | ₹ | 682 | ₹ | 91,001 | ||||||||||||
Translation adjustment | — | 35 | 651 | 52 | 1 | 739 | ||||||||||||||||||
Depreciation and impairment | — | 970 | 6,281 | 1,152 | 142 | 8,545 | ||||||||||||||||||
Disposals | — | (24 | ) | (1,960 | ) | (40 | ) | (113 | ) | (2,137 | ) | |||||||||||||
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As at December 31, 2019 | ₹ | — | ₹ | 7,696 | ₹ | 75,983 | ₹ | 13,757 | ₹ | 712 | ₹ | 98,148 | ||||||||||||
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Capital work-in-progress | ₹ | 26,508 | ||||||||||||||||||||||
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Net carrying value including Capital work-in-progress as at December 31, 2019 | ₹ 78,552 | |||||||||||||||||||||||
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Gross carrying value: | ||||||||||||||||||||||||
As at April 1, 2019 | ₹ | 3,697 | ₹ | 27,490 | ₹ | 92,366 | ₹ | 16,505 | ₹ | 948 | ₹ | 141,006 | ||||||||||||
Reclassified on adoption of IFRS 16 | — | — | (3,420 | ) | — | — | (3,420 | ) | ||||||||||||||||
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| |||||||||||||
Adjusted balance as at April 1, 2019 | ₹ 3,697 | ₹ 27,490 | ₹ 88,946 | ₹ 16,505 | ₹ 948 | ₹ 137,586 | ||||||||||||||||||
Translation adjustment | 9 | 84 | 1,437 | 129 | (5 | ) | 1,654 | |||||||||||||||||
Additions | 55 | 9,130 | 13,571 | 3,487 | 11 | 26,254 | ||||||||||||||||||
Additions through Business combinations | — | 5 | 417 | 7 | — | 429 | ||||||||||||||||||
Disposals | — | (199 | ) | (3,676 | ) | (258 | ) | (146 | ) | (4,279 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
As at March 31, 2020 | ₹ 3,761 | ₹ 36,510 | ₹ 100,695 | ₹ 19,870 | ₹ 808 | ₹ 161,644 | ||||||||||||||||||
Accumulated depreciation/ impairment: |
| |||||||||||||||||||||||
As at April 1, 2019 | ₹ | — | ₹ | 6,715 | ₹ | 73,188 | ₹ | 12,593 | ₹ | 682 | ₹ | 93,178 | ||||||||||||
Reclassified on adoption of IFRS 16 | — | — | (2,177 | ) | — | — | (2,177 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Adjusted balance as at April 1, 2019 | ₹ | — | ₹ | 6,715 | ₹ | 71,011 | ₹ | 12,593 | ₹ | 682 | ₹ | 91,001 | ||||||||||||
Translation adjustment | — | 32 | 1,066 | 91 | (2 | ) | 1,187 | |||||||||||||||||
Depreciation and impairment | — | 1,319 | 8,628 | 1,556 | 175 | 11,678 | ||||||||||||||||||
Disposals | — | (118 | ) | (2,649 | ) | (99 | ) | (128 | ) | (2,994 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
As at March 31, 2020 | ₹ | — | ₹ | 7,948 | ₹ | 78,056 | ₹ | 14,141 | ₹ | 727 | ₹ | 100,872 | ||||||||||||
Capital work-in-progress | ₹ | 20,348 | ||||||||||||||||||||||
|
| |||||||||||||||||||||||
Net carrying value including Capital work-in-progress as at March 31, 2020 | ₹ 81,120 | |||||||||||||||||||||||
|
| |||||||||||||||||||||||
Gross carrying value: | ||||||||||||||||||||||||
As at April 1, 2020 | ₹ | 3,761 | ₹ | 36,510 | ₹ | 100,695 | ₹ | 19,870 | ₹ | 808 | ₹ | 161,644 | ||||||||||||
Translation adjustment | 13 | 166 | 928 | 79 | 1 | 1,187 | ||||||||||||||||||
Additions | — | 2,724 | 10,197 | 1,457 | 2 | 14,380 | ||||||||||||||||||
Additions through Business combinations | — | — | 14 | 52 | — | 66 | ||||||||||||||||||
Disposals | (58 | ) | (546 | ) | (2,497 | ) | (648 | ) | (121 | ) | (3,870 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
As at December 31, 2020 | ₹ 3,716 | ₹ 38,854 | ₹ 109,337 | ₹ 20,810 | ₹ 690 | ₹ 173,407 | ||||||||||||||||||
Accumulated depreciation/ impairment: |
| |||||||||||||||||||||||
As at April 1, 2020 | ₹ | — | ₹ | 7,948 | ₹ | 78,056 | ₹ | 14,141 | ₹ | 727 | ₹ | 100,872 | ||||||||||||
Translation adjustment | — | 65 | 461 | 51 | 1 | 578 | ||||||||||||||||||
Depreciation and impairment ** | — | 1,129 | 8,121 | 1,368 | 56 | 10,674 | ||||||||||||||||||
Disposals | — | (486 | ) | (2,195 | ) | (321 | ) | (116 | ) | (3,118 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
As at December 31, 2020 | ₹ | — | ₹ | 8,656 | ₹ | 84,443 | ₹ | 15,239 | ₹ | 668 | ₹ | 109,006 | ||||||||||||
Capital work-in-progress | ₹ | 18,971 | ||||||||||||||||||||||
|
| |||||||||||||||||||||||
Net carrying value including Capital work-in-progress as at December 31, 2020 | ₹ 83,372 | |||||||||||||||||||||||
|
|
* | Includes computer equipment and software. |
** | Includes impairment charge on certain software platforms amounting to ₹ 45 and ₹ 283 for the three months and nine months ended December 31, 2020, respectively. |
11
5. Right-of-Use assets | Category of Right-of-Use asset | |||||||||||||||||||
Land | Buildings | Plant and machinery * | Vehicles | Total | ||||||||||||||||
Gross carrying value: | ||||||||||||||||||||
As at April 1, 2019 | ₹ | 2,003 | ₹ | 11,502 | ₹ | 2,941 | ₹ | 649 | ₹ | 17,095 | ||||||||||
Additions | — | 1,264 | 1,132 | 208 | 2,604 | |||||||||||||||
Additions through Business combinations | — | 197 | — | — | 197 | |||||||||||||||
Disposals | — | (27 | ) | (47 | ) | (45 | ) | (119 | ) | |||||||||||
Translation adjustment | — | 189 | 60 | 8 | 257 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
As at December 31, 2019 | ₹ 2,003 | ₹ 13,125 | ₹ 4,086 | ₹ 820 | ₹ 20,034 | |||||||||||||||
Accumulated depreciation: | ||||||||||||||||||||
Depreciation | ₹ | 21 | ₹ | 2,685 | ₹ | 1,256 | ₹ | 199 | ₹ | 4,161 | ||||||||||
Disposals | — | (18 | ) | (47 | ) | (4 | ) | (69 | ) | |||||||||||
Translation adjustment | — | 24 | 12 | 2 | 38 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
As at December 31, 2019 | ₹ | 21 | ₹ | 2,691 | ₹ | 1,221 | ₹ | 197 | ₹ | 4,130 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net carrying value as at December 31, 2019 | ₹ 15,904 | |||||||||||||||||||
|
| |||||||||||||||||||
Gross carrying value: | ||||||||||||||||||||
As at April 1, 2019 | ₹ | 2,003 | ₹ | 11,502 | ₹ | 2,941 | ₹ | 649 | ₹ | 17,095 | ||||||||||
Additions | — | 3,520 | 1,210 | 219 | 4,949 | |||||||||||||||
Additions through Business combinations | — | 364 | — | — | 364 | |||||||||||||||
Disposals | — | (41 | ) | (47 | ) | (59 | ) | (147 | ) | |||||||||||
Translation adjustment | — | 279 | 132 | 17 | 428 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
As at March 31, 2020 | ₹ 2,003 | ₹ 15,624 | ₹ 4,236 | ₹ 826 | ₹ 22,689 | |||||||||||||||
Accumulated depreciation: | ||||||||||||||||||||
Depreciation | ₹ | 27 | ₹ | 3,884 | ₹ | 1,731 | ₹ | 269 | ₹ | 5,911 | ||||||||||
Disposals | — | (18 | ) | (47 | ) | (10 | ) | (75 | ) | |||||||||||
Translation adjustment | — | 62 | 37 | 6 | 105 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
As at March 31, 2020 | ₹ | 27 | ₹ | 3,928 | ₹ | 1,721 | ₹ | 265 | ₹ | 5,941 | ||||||||||
Net carrying value as at March 31, 2020 | ₹ 16,748 | |||||||||||||||||||
|
| |||||||||||||||||||
Gross carrying value: | ||||||||||||||||||||
As at April 1, 2020 | ₹ | 2,003 | ₹ | 15,624 | ₹ | 4,236 | ₹ | 826 | ₹ | 22,689 | ||||||||||
Additions | — | 2,830 | 682 | 34 | 3,546 | |||||||||||||||
Disposals | — | (1,774 | ) | (224 | ) | (80 | ) | (2,078 | ) | |||||||||||
Additions through Business combinations | — | 185 | — | 84 | 269 | |||||||||||||||
Translation adjustment | — | 223 | 96 | 26 | 345 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
As at December 31, 2020 | ₹ 2,003 | ₹ 17,088 | ₹ 4,790 | ₹ 890 | ₹ 24,771 | |||||||||||||||
Accumulated depreciation: | ||||||||||||||||||||
As at April 1, 2020 | ₹ | 27 | ₹ | 3,928 | ₹ | 1,721 | ₹ | 265 | ₹ | 5,941 | ||||||||||
Depreciation | 21 | 3,339 | 1,170 | 210 | 4,740 | |||||||||||||||
Disposals | — | (1,245 | ) | (144 | ) | (52 | ) | (1,441 | ) | |||||||||||
Translation adjustment | — | 60 | 32 | 12 | 104 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
As at December 31, 2020 | ₹ | 48 | ₹ | 6,082 | ₹ | 2,779 | ₹ | 435 | ₹ | 9,344 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net carrying value as at December 31, 2020 | ₹ 15,427 | |||||||||||||||||||
|
|
* | Includes computer equipment. |
6. Goodwill and intangible assets
The movement in goodwill balance is given below:
For the period ended | ||||||||
March 31, 2020 | December 31, 2020 | |||||||
Balance at the beginning of the period | ₹ | 116,980 | ₹ | 131,012 | ||||
Translation adjustment | 9,199 | (850 | ) | |||||
Acquisition through business combinations, net * | 4,833 | 6,160 | ||||||
|
|
|
| |||||
Balance at the end of the period | ₹ | 131,012 | ₹ | 136,322 | ||||
|
|
|
|
* | Acquisition through business combinations for the nine months ended December 31, 2020 is net of ₹ (72) towards changes in the purchase price allocation of acquisitions made during the year ended March 31, 2020. |
12
The movement in intangible assets is given below:
Intangible assets | ||||||||||||
Customer related | Marketing related | Total | ||||||||||
Gross carrying value: | ||||||||||||
As at April 1, 2019 | ₹ | 26,924 | ₹ | 5,945 | ₹ | 32,869 | ||||||
Translation adjustment | 520 | 129 | 649 | |||||||||
Acquisition through business combinations | 2,618 | 102 | 2,720 | |||||||||
|
|
|
|
|
| |||||||
As at December 31, 2019 | ₹ | 30,062 | ₹ | 6,176 | ₹ | 36,238 | ||||||
Accumulated amortization/ impairment: | ||||||||||||
As at April 1, 2019 | ₹ | 15,345 | ₹ | 3,762 | ₹ | 19,107 | ||||||
Translation adjustment | 71 | 70 | ₹ | 141 | ||||||||
Amortization and impairment | 1,667 | 691 | ₹ | 2,358 | ||||||||
|
|
|
|
|
| |||||||
As at December 31, 2019 | ₹ | 17,083 | ₹ | 4,523 | ₹ | 21,606 | ||||||
|
|
|
|
|
| |||||||
Net carrying value as at December 31, 2019 | ₹ | 12,979 | ₹ | 1,653 | ₹ | 14,632 | ||||||
|
|
|
|
|
| |||||||
Gross carrying value: | ||||||||||||
As at April 1, 2019 | ₹ | 26,924 | ₹ | 5,945 | ₹ | 32,869 | ||||||
Translation adjustment | 1,031 | 382 | 1,413 | |||||||||
Acquisition through business combinations | 4,535 | 371 | 4,906 | |||||||||
|
|
|
|
|
| |||||||
As at March 31, 2020 | ₹ | 32,490 | ₹ | 6,698 | ₹ | 39,188 | ||||||
Accumulated amortization/ impairment: | ||||||||||||
As at April 1, 2019 | ₹ | 15,345 | ₹ | 3,762 | ₹ | 19,107 | ||||||
Translation adjustment | 220 | 226 | 446 | |||||||||
Amortization and impairment | 2,333 | 940 | 3,273 | |||||||||
|
|
|
|
|
| |||||||
As at March 31, 2020 | ₹ | 17,898 | ₹ | 4,928 | ₹ | 22,826 | ||||||
|
|
|
|
|
| |||||||
Net carrying value as at March 31, 2020 | ₹ | 14,592 | ₹ | 1,770 | ₹ | 16,362 | ||||||
|
|
|
|
|
| |||||||
Gross carrying value: | ||||||||||||
As at April 1, 2020 | ₹ | 32,490 | ₹ | 6,698 | ₹ | 39,188 | ||||||
Acquisition through business combinations | 981 | 566 | 1,547 | |||||||||
Translation adjustment | 38 | (134 | ) | (96 | ) | |||||||
|
|
|
|
|
| |||||||
As at December 31, 2020 | ₹ | 33,509 | ₹ | 7,130 | ₹ | 40,639 | ||||||
Accumulated amortization/ impairment: | ||||||||||||
As at April 1, 2020 | ₹ | 17,898 | ₹ | 4,928 | ₹ | 22,826 | ||||||
Translation adjustment | (122 | ) | (114 | ) | (236 | ) | ||||||
Amortization and impairment * | 3,538 | 1,455 | 4,993 | |||||||||
|
|
|
|
|
| |||||||
As at December 31, 2020 | ₹ | 21,314 | ₹ | 6,269 | ₹ | 27,583 | ||||||
|
|
|
|
|
| |||||||
Net carrying value as at December 31, 2020 | ₹ | 12,195 | ₹ | 861 | ₹ | 13,056 | ||||||
|
|
|
|
|
|
Amortization expense on intangible assets is included in selling and marketing expenses in the interim condensed consolidated statement of income.
* | During the period ended December 31, 2020, change in business strategy of a customer has led to a significant decline in the revenue and earnings estimates, resulting in revision of recoverable value of customer-relationship intangible assets recognized on business combination. Further, the Company integrated certain brands acquired as part of a business combination, resulting in discontinuance of the acquired brands. Consequently, the Company has recognized impairment charge of ₹ 1,628 and ₹ 1,890 for the three and nine months ended December 31, 2020 respectively, as part of amortization and impairment. |
7. Business combination:
During the nine months ended December 31, 2020, the Company has completed three business combinations (which individually are not material) for a total consideration of ₹ 7,853. These include (a) acquisition of IVIA Serviços de Informática Ltda. (“IVIA”), a specialized IT services provider to financial services, retail and manufacturing sectors in Brazil (b) acquisition of 4C NV and its subsidiaries (“4C”), a Salesforce multi-cloud partner in Europe, U.K. and the Middle East, and (c) acquisition of Encore Theme Technologies Private Limited (“ETT’), a Finastra trade finance solutions partner across the Middle East, Africa, India and Asia Pacific. The following table presents the provisional purchase price allocation:
13
Description | Purchase price allocated | |||
Net assets | ₹ | 503 | ||
Customer related intangibles | 981 | |||
Marketing related intangibles | 566 | |||
Deferred tax liabilities on intangible assets | (429 | ) | ||
|
| |||
Total | ₹ | 1,621 | ||
Goodwill | 6,232 | |||
|
| |||
Total purchase price | ₹ | 7,853 | ||
|
|
The total consideration for IVIA includes a deferred earn-out component of ₹ 497, which is linked to achievement of revenues and earnings over a period of 3 years ending September 30, 2023. The fair value of the earn-out liability was estimated by applying the discounted cash-flow approach considering discount rate of 5.7% and probability adjusted revenue and earnings estimates. This earn-out liability was fair valued at ₹ 460 and recorded as part of provisional purchase price allocation.
The total consideration for ETT includes a deferred earn-out component of ₹ 305, which is linked to achievement of revenues and earnings over a period of 1.5 years ending March 31, 2022. The fair value of the earn-out liability was estimated by applying the discounted cash-flow approach considering discount rate of 7.4% and probability adjusted revenue and earnings estimates. This earn-out liability was fair valued at ₹ 196 and recorded as part of provisional purchase price allocation.
Net assets acquired include ₹ 887 of cash and cash equivalents.
The goodwill of ₹ 6,232 comprises value of acquired workforce and expected synergies arising from the business combinations. Goodwill is allocated to IT Services segment and is not deductible for income tax purposes.
The pro-forma effects of these business combinations on the Company’s results were not material.
8. Investments
As at | ||||||||
March 31, 2020 | December 31, 2020 | |||||||
Non-current | ||||||||
Financial instruments at FVTOCI | ||||||||
Equity instruments | ₹ | 9,297 | ₹ | 8,676 | ||||
Financial instruments at amortized cost | ||||||||
Inter corporate and term deposits * | 5 | 3 | ||||||
|
|
|
| |||||
₹ | 9,302 | ₹ | 8,679 | |||||
Current | ||||||||
Financial instruments at FVTPL | ||||||||
Investments in liquid and short-term mutual funds | ₹ | 14,795 | ₹ | 87,720 | ||||
Financial instruments at FVTOCI | ||||||||
Commercial paper, Certificate of deposits and bonds | 155,587 | 183,819 | ||||||
Financial instruments at amortized cost | ||||||||
Inter corporate and term deposits * # | 19,253 | 41,370 | ||||||
|
|
|
| |||||
₹ 189,635 | ₹ 312,909 | |||||||
|
|
|
| |||||
₹ 198,937 | ₹ 321,588 | |||||||
|
|
|
|
* | These deposits earn a fixed rate of interest. Term deposits include non- current and current deposits in lien with banks primarily on account of term deposits held as margin money deposits against guarantees amounting to ₹ 3, and ₹ 507, respectively (March 31, 2020: Term deposits non-current of ₹ 5 and Term deposits current of ₹ 796). |
# | Term Deposits include ₹ 9,716 in lien with bank in lieu of escrow required for buyback of equity shares (Refer to Note 31) |
9. Inventories
As at | ||||||||
March 31, 2020 | December 31, 2020 | |||||||
Stores and spare parts | ₹ | 613 | ₹ | 232 | ||||
Finished and traded goods | 1,252 | 973 | ||||||
|
|
|
| |||||
₹ | 1,865 | ₹ | 1,205 | |||||
|
|
|
|
10. Cash and cash equivalents:
As at | ||||||||
March 31, 2020 | December 31, 2020 | |||||||
Cash and bank balances | ₹ | 34,087 | ₹ | 42,794 | ||||
Demand deposits with banks * | 110,412 | 96,641 | ||||||
|
|
|
| |||||
₹ | 144,499 | ₹ | 139,435 | |||||
|
|
|
|
* These deposits can be withdrawn by the Company at any time without prior notice and without any penalty on the principal.
Cash and cash equivalents consist of the following for the purpose of the statement of cash flows:
As at | ||||||||
December 31, 2019 | December 31, 2020 | |||||||
Cash and cash equivalents | ₹ | 186,637 | ₹ | 139,435 | ||||
Bank overdrafts | (1,102 | ) | (49 | ) | ||||
|
|
|
| |||||
₹ | 185,535 | ₹ | 139,386 | |||||
|
|
|
|
14
11. Other financial assets
As at | ||||||||
March 31, 2020 | December 31, 2020 | |||||||
Non-current | ||||||||
Security deposits | ₹ | 1,581 | ₹ | 1,476 | ||||
Interest receivables | 1,139 | 1,139 | ||||||
Finance lease receivables | 2,359 | 3,603 | ||||||
Others | 802 | 439 | ||||||
|
|
|
| |||||
₹ | 5,881 | ₹ | 6,657 | |||||
Current | ||||||||
Security deposits | ₹ | 1,127 | ₹ | 1,305 | ||||
Dues from officers and employees | 1,040 | 1,120 | ||||||
Finance lease receivables | 2,811 | 3,392 | ||||||
Interest receivables | 2,581 | 1,491 | ||||||
Escrow balances with bank for buyback of equity shares | — | 950 | ||||||
Others | 1,055 | 770 | ||||||
|
|
|
| |||||
₹ | 8,614 | ₹ | 9,028 | |||||
|
|
|
| |||||
₹ | 14,495 | ₹ | 15,685 | |||||
|
|
|
|
12. Other assets
As at | ||||||||
March 31, 2020 | December 31, 2020 | |||||||
Non-current | ||||||||
Prepaid expenses | ₹ | 4,535 | ₹ | 3,438 | ||||
Costs to obtain contract* | 4,030 | 3,580 | ||||||
Costs to fulfil contract | 305 | 328 | ||||||
Others | 3,065 | 4,087 | ||||||
|
|
|
| |||||
₹ | 11,935 | ₹ | 11,433 | |||||
Current | ||||||||
Prepaid expenses | ₹ | 9,876 | ₹ | 11,184 | ||||
Dues from officers and employees | 310 | 79 | ||||||
Advance to suppliers | 3,121 | 2,471 | ||||||
Balance with GST and other authorities | 7,805 | 7,524 | ||||||
Costs to obtain contract* | 1,258 | 795 | ||||||
Costs to fulfil contract | — | 37 | ||||||
Others | 135 | 54 | ||||||
|
|
|
| |||||
₹ | 22,505 | ₹ | 22,144 | |||||
|
|
|
| |||||
₹ | 34,440 | ₹ | 33,577 | |||||
|
|
|
|
* | Amortization of ₹ 258 and ₹ 317 during the three months ended December 31, 2019 and 2020 respectively, and ₹ 848 and ₹ 1,031 during the nine months ended December 31, 2019 and 2020 respectively. |
13. Loans, borrowings and bank overdrafts
As at | ||||||||
March 31, 2020 | December 31, 2020 | |||||||
Borrowings from banks | ₹ | 77,058 | ₹ | 73,014 | ||||
Bank overdrafts | 395 | 49 | ||||||
Loans from institutions other than bank | 589 | 406 | ||||||
|
|
|
| |||||
₹ | 78,042 | ₹ | 73,469 | |||||
|
|
|
| |||||
Non-current | 4,840 | 213 | ||||||
Current | 73,202 | 73,256 |
14. Other financial liabilities
As at | ||||||||
March 31, 2020 | December 31, 2020 | |||||||
Non-current | ||||||||
Cash Settled ADS RSUs | ₹ | 146 | ₹ | 293 | ||||
Contingent consideration | — | 527 | ||||||
Advance from customers | — | 106 | ||||||
Deposits and others | 5 | 3 | ||||||
|
|
|
| |||||
₹ | 151 | ₹ | 929 |
15
Current | ||||||||
Liability towards buyback of equity shares | ₹ | — | ₹ | 95,000 | ||||
Cash Settled ADS RSUs | 350 | 547 | ||||||
Contingent consideration | — | 149 | ||||||
Advance from customers | — | 106 | ||||||
Deposits and others | 549 | 802 | ||||||
|
|
|
| |||||
₹ | 899 | ₹ | 96,604 | |||||
|
|
|
| |||||
₹ | 1,050 | ₹ | 97,533 | |||||
|
|
|
|
15. Other liabilities
As at | ||||||||
March 31, 2020 | December 31, 2020 | |||||||
Non-current | ||||||||
Employee benefits obligations | ₹ | 3,767 | ₹ | 3,321 | ||||
Others | 3,770 | 4,482 | ||||||
|
|
|
| |||||
₹ | 7,537 | ₹ | 7,803 | |||||
Current | ||||||||
Tax on liability towards buyback of equity shares | ₹ | — | ₹ | 22,021 | ||||
Statutory and other liabilities | 4,919 | 8,724 | ||||||
Employee benefits obligations | 12,356 | 14,872 | ||||||
Advance from customers | 1,464 | 483 | ||||||
Others | 515 | 527 | ||||||
|
|
|
| |||||
₹ | 19,254 | ₹ | 46,627 | |||||
|
|
|
| |||||
₹ | 26,791 | ₹ | 54,430 | |||||
|
|
|
|
16. Provisions
As at | ||||||||
March 31, 2020 | December 31, 2020 | |||||||
Non-current | ||||||||
Provision for warranty | ₹ | 2 | ₹ | 1 | ||||
|
|
|
| |||||
₹ | 2 | ₹ | 1 | |||||
Current | ||||||||
Provision for warranty | ₹ | 317 | ₹ | 221 | ||||
Others | 295 | 464 | ||||||
|
|
|
| |||||
₹ | 612 | ₹ | 685 | |||||
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|
|
| |||||
₹ | 614 | ₹ | 686 | |||||
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|
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Provision for warranty represents cost associated with providing sales support services which are accrued at the time of recognition of revenues and are expected to be utilized over a period of 1 to 2 years. Other provisions primarily include provisions for compliance related contingencies. The timing of cash outflows in respect of such provision cannot be reasonably determined.
17. Financial instruments:
Derivative assets and liabilities:
The Company is exposed to foreign currency fluctuations on foreign currency assets / liabilities, forecasted cash flows denominated in foreign currency and net investment in foreign operations. The Company follows established risk management policies, including the use of derivatives to hedge foreign currency assets / liabilities, foreign currency forecasted cash flows and net investment in foreign operations. The counter parties in these derivative instruments are primarily banks and the Company considers the risks of non-performance by the counterparty as non-material.
16
The following table presents the aggregate contracted principal amounts of the Company’s derivative contracts outstanding:
(in millions)
As at | ||||||||||||||||||||||||
March 31, 2020 | December 31, 2020 | |||||||||||||||||||||||
Notional | Fair value | Notional | Fair value | |||||||||||||||||||||
Designated derivative instruments | ||||||||||||||||||||||||
Sell: Forward contracts | USD | 1,011 | ₹ | (2,902 | ) | USD | 1,412 | ₹ | 2,519 | |||||||||||||||
€ | 121 | ₹ | 231 | € | 109 | ₹ | (621 | ) | ||||||||||||||||
£ | 52 | ₹ | 240 | £ | 75 | ₹ | (317 | ) | ||||||||||||||||
AUD | 144 | ₹ | 741 | AUD | 103 | ₹ | (631 | ) | ||||||||||||||||
Range forward option contracts | USD | 474 | ₹ | (1,057 | ) | USD | 233 | ₹ | 677 | |||||||||||||||
€ | 39 | ₹ | 85 | € | 20 | ₹ | (27 | ) | ||||||||||||||||
£ | 98 | ₹ | (13 | ) | £ | 56 | ₹ | (206 | ) | |||||||||||||||
AUD | — | ₹ | — | AUD | 34 | ₹ | (39 | ) | ||||||||||||||||
Non-designated derivative instruments | ||||||||||||||||||||||||
Sell: Forward contracts * | USD | 1,314 | ₹ | (3,116 | ) | USD | 1,254 | ₹ | 899 | |||||||||||||||
€ | 59 | ₹ | 34 | € | 100 | ₹ | (204 | ) | ||||||||||||||||
£ | 81 | ₹ | 112 | £ | 86 | ₹ | (224 | ) | ||||||||||||||||
AUD | 56 | ₹ | 115 | AUD | 29 | ₹ | (60 | ) | ||||||||||||||||
SGD | 7 | ₹ | 8 | SGD | 13 | ₹ | (10 | ) | ||||||||||||||||
ZAR | 17 | ₹ | 1 | ZAR | 37 | ₹ | (3 | ) | ||||||||||||||||
CAD | 51 | ₹ | 153 | CAD | 21 | ₹ | (11 | ) | ||||||||||||||||
SAR | 60 | ₹ | (1 | ) | SAR | 102 | ₹ | (1 | ) | |||||||||||||||
PLN | 34 | ₹ | 13 | PLN | 8 | ₹ | 2 | |||||||||||||||||
CHF | 7 | ₹ | 4 | CHF | 9 | ₹ | (14 | ) | ||||||||||||||||
QAR | 19 | ₹ | (8 | ) | QAR | 13 | ₹ | (7 | ) | |||||||||||||||
TRY | 30 | ₹ | 31 | TRY | 43 | ₹ | (45 | ) | ||||||||||||||||
NOK | 19 | ₹ | 16 | NOK | 9 | ₹ | (3 | ) | ||||||||||||||||
OMR | 2 | ₹ | 1 | OMR | 2 | ₹ | (1 | ) | ||||||||||||||||
SEK | 13 | ₹ | 4 | SEK | 58 | ₹ | (26 | ) | ||||||||||||||||
MYR | 20 | ₹ | 1 | MYR | — | ₹ | — | |||||||||||||||||
JPY | 325 | ₹ | ^ | JPY | 736 | ₹ | (6 | ) | ||||||||||||||||
Buy: Forward contracts | USD | 480 | ₹ | 972 | USD | 255 | ₹ | (1,009 | ) | |||||||||||||||
MXN | 11 | ₹ | (9 | ) | MXN | — | ₹ | — | ||||||||||||||||
SEK | — | ₹ | — | SEK | 37 | ₹ | 22 | |||||||||||||||||
DKK | 9 | ₹ | ^ | DKK | 47 | ₹ | 13 | |||||||||||||||||
CHF | — | ₹ | — | CHF | 2 | ₹ | 5 | |||||||||||||||||
€ | — | ₹ | — | € | 1 | ₹ | ^ | |||||||||||||||||
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₹ | (4,344 | ) | ₹ | 672 | ||||||||||||||||||||
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^ | Value is less than ₹ 1. |
* | USD 1,314 and USD 1,254 includes USD/PHP sell forward of USD 176 and USD 231 as at March 31, 2020 and December 31, 2020, respectively. |
The following table summarizes activity in the cash flow hedging reserve within equity related to all derivative instruments classified as cash flow hedges:
Nine months ended December 31, | ||||||||
2019 | 2020 | |||||||
Balance as at the beginning of the period | ₹ | 3,019 | ₹ | (2,876 | ) | |||
Deferred cancellation gain/(loss), net | (206 | ) | — | |||||
Changes in fair value of effective portion of derivatives | (198 | ) | 3,082 | |||||
Net (gain)/loss reclassified to interim condensed consolidated statement of income on occurrence of hedged transactions * | (2,667 | ) | 1,149 | |||||
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| |||||
Gain/(loss) on cash flow hedging derivatives, net | ₹ | (3,071 | ) | ₹ | 4,231 | |||
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| |||||
Balance as at the end of the period | ₹ | (52 | ) | ₹ | 1,355 | |||
Deferred tax thereon | (33 | ) | (293 | ) | ||||
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Balance as at the end of the period, net of deferred tax | ₹ | (85 | ) | ₹ | 1,062 | |||
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* | Includes net (gain)/loss reclassified to revenue of ₹ (3,807) and ₹ 1,248 for the nine months ended December 31, 2019 and 2020, respectively and net (gain)/loss reclassified to cost of revenues of ₹ 1,140 and ₹ (99) for the nine months ended December 31, 2019 and 2020, respectively. |
As at December 31, 2019 and 2020, there were no significant gains or losses on derivative transactions or portions thereof that have become ineffective as hedges or associated with an underlying exposure that did not occur.
Fair value:
Financial assets and liabilities include cash and cash equivalents, trade receivables, unbilled receivables, finance lease receivables, employee and other advances, eligible current and non-current assets, loans, borrowings and bank overdrafts, trade payables and accrued expenses, and eligible current liabilities and non-current liabilities.
The fair value of cash and cash equivalents, trade receivables, unbilled receivables, loans, borrowings and bank overdrafts, trade payables and accrued expenses, other current financial assets and liabilities approximate their carrying amount largely due to the short-term nature of these instruments. The Company’s long-term debt has been contracted at market rates of interest. Accordingly, the carrying value of such long-term debt approximates fair value. Further, finance lease receivables are periodically evaluated based on individual credit worthiness of customers.
17
Based on this evaluation, the Company records allowance for estimated losses on these receivables. As at March 31, 2020 and December 31, 2020, the carrying value of such receivables, net of allowances approximates the fair value.
Investments in liquid and short-term mutual funds, which are classified as FVTPL are measured using net asset values at the reporting date multiplied by the quantity held. Fair value of investments in commercial papers, certificate of deposits and bonds classified as FVTOCI is determined based on the indicative quotes of price and yields prevailing in the market at the reporting date. Fair value of investments in equity instruments classified as FVTOCI is determined using market and income approaches.
The fair value of derivative financial instruments is determined based on observable market inputs including currency spot and forward rates, yield curves, currency volatility etc.
Fair value hierarchy
The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:
Level 1 – Quoted prices (unadjusted) in active markets for identical assets or 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 – Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).
The following table presents fair value of hierarchy of assets and liabilities measured at fair value on a recurring basis:
Particular | As at March 31, 2020 | As at December 31, 2020 | ||||||||||||||||||||||||||||||
Fair value measurements at reporting date | Fair value measurements at reporting date | |||||||||||||||||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||
Derivative instruments: | ||||||||||||||||||||||||||||||||
Cash flow hedges | ₹ | 1,382 | ₹ | — | ₹ | 1,382 | ₹ | — | ₹ | 3,196 | ₹ | — | ₹ | 3,196 | ₹ | — | ||||||||||||||||
Others | 1,643 | — | 1,643 | — | 943 | — | 943 | — | ||||||||||||||||||||||||
Investments: | ||||||||||||||||||||||||||||||||
Investment in liquid and short-term mutual funds | 14,795 | 14,795 | — | — | 87,720 | 87,720 | — | — | ||||||||||||||||||||||||
Investment in equity instruments | 9,297 | — | 119 | 9,178 | 8,676 | 45 | 201 | 8,430 | ||||||||||||||||||||||||
Commercial paper, Certificate of deposits and bonds | 155,587 | 12,983 | 142,604 | — | 183,819 | 1,902 | 181,917 | — | ||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||
Derivative instruments: | ||||||||||||||||||||||||||||||||
Cash flow hedges | ₹ | (4,057 | ) | ₹ | — | ₹ | (4,057 | ) | ₹ | — | ₹ | (1,841 | ) | ₹ | — | ₹ | (1,841 | ) | ₹ | — | ||||||||||||
Others | (3,312 | ) | — | (3,312 | ) | — | (1,626 | ) | — | (1,626 | ) | — | ||||||||||||||||||||
Contingent consideration (Refer to Note 7) | — | — | — | — | (676 | ) | — | — | (676 | ) |
The following methods and assumptions were used to estimate the fair value of the level 2 financial instruments included in the above table.
Derivative instruments (assets and liabilities): The Company enters into derivative financial instruments with various counterparties, primarily banks with investment grade credit ratings. Derivatives valued using valuation techniques with market observable inputs are mainly interest rate swaps, foreign exchange forward contracts and foreign exchange option contracts. The most frequently applied valuation techniques include forward pricing, swap models and Black Scholes models (for option valuation), using present value calculations. The models incorporate various inputs including the credit quality of counterparties, foreign exchange spot and forward rates, interest rate curves and forward rate curves of the underlying. As at December 31, 2020, the changes in counterparty credit risk had no material effect on the hedge effectiveness assessment for derivatives designated in hedge relationships and other financial instruments recognized at fair value.
Investment in commercial papers, certificate of deposits and bonds: Fair value of these instruments is derived based on the indicative quotes of price and yields prevailing in the market as at reporting date.
The following methods and assumptions were used to estimate the fair value of the level 3 financial instruments included in the above table.
Investment in equity instruments: Fair value of these instruments is determined using market and income approaches
18
Details of assets and liabilities considered under Level 3 classification
As at | ||||||||
Investment in equity instruments | March 31, 2020 | December 31, 2020 | ||||||
Balance at the beginning of the period | ₹ | 6,668 | ₹ | 9,178 | ||||
Additions | 2,124 | 412 | ||||||
Disposals | (1,327 | ) | (1,263 | ) | ||||
Transfers out of Level 3 | — | (27 | ) | |||||
Gain/(loss) recognized in foreign currency translation reserve | 855 | (229 | ) | |||||
Gain/(loss) recognized in other comprehensive income | 858 | 359 | ||||||
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| |||||
Balance at the end of the period | ₹ | 9,178 | ₹ | 8,430 | ||||
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As at | ||||||||
Contingent consideration | March 31, 2020 | December 31, 2020 | ||||||
Balance at the beginning of the period | ₹ | — | ₹ | — | ||||
Additions (Refer to note 7) | — | (656 | ) | |||||
Finance expense recognized in statement of income | — | (11 | ) | |||||
Gain/(loss) recognized in foreign currency translation reserve | — | (9 | ) | |||||
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| |||||
Balance at the end of the period | ₹ | — | ₹ | (676 | ) | |||
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18. Foreign currency translation reserve
The movement in foreign currency translation reserve attributable to equity holders of the Company is summarized below:
Nine months ended December 31, | ||||||||
2019 | 2020 | |||||||
Balance at the beginning of the period | ₹ | 15,250 | ₹ | 23,539 | ||||
Translation difference related to foreign operations, net | 3,924 | 851 | ||||||
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Balance at the end of the period | ₹ | 19,174 | ₹ | 24,390 | ||||
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19. Income taxes
Three months ended December 31, | Nine months ended December 31, | |||||||||||||||
2019 | 2020 | 2019 | 2020 | |||||||||||||
Income tax expense as per the interim condensed consolidated statement of income | ₹ | 6,164 | ₹ | 8,524 | ₹ | 18,594 | ₹ | 22,590 | ||||||||
Income tax included in other comprehensive income on: |
| |||||||||||||||
Unrealized gains/ (losses) on investment securities | (47 | ) | 63 | (275 | ) | 586 | ||||||||||
Gains/(losses) on cash flow hedging derivatives | (449 | ) | 65 | (571 | ) | 854 | ||||||||||
Remeasurements of the net defined benefit liability /(asset) comprising actuarial gains and losses | (43 | ) | (20 | ) | (61 | ) | (61 | ) | ||||||||
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| |||||||||
₹ | 5,625 | ₹ | 8,632 | ₹ | 17,687 | ₹ | 23,969 | |||||||||
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Income tax expense consists of the following:
Three months ended December 31, | Nine months ended December 31, | |||||||||||||||
2019 | 2020 | 2019 | 2020 | |||||||||||||
Current taxes | ||||||||||||||||
Domestic | ₹ | 3,914 | ₹ | 4,195 | ₹ | 12,478 | ₹ | 12,516 | ||||||||
Foreign | 1,814 | 2,629 | 5,510 | 5,351 | ||||||||||||
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| |||||||||
₹ | 5,728 | ₹ | 6,824 | ₹ | 17,988 | ₹ | 17,867 | |||||||||
Deferred taxes | ||||||||||||||||
Domestic | ₹ | 845 | ₹ | 2,153 | ₹ | 1,176 | ₹ | 5,383 | ||||||||
Foreign | (409 | ) | (453 | ) | (570 | ) | (660 | ) | ||||||||
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₹ | 436 | ₹ | 1,700 | ₹ | 606 | ₹ | 4,723 | |||||||||
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₹ | 6,164 | ₹ | 8,524 | ₹ | 18,594 | ₹ | 22,590 | |||||||||
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Income tax expenses are net of reversal of taxes pertaining to earlier periods, amounting to ₹ 1,263 and ₹ 1,564 for the three months ended December 31, 2019 and 2020 respectively, and ₹ 6,516 and ₹ 3,124 for the nine months ended December 31, 2019 and 2020 respectively.
The Special Economic Zone (“SEZ”) Re-Investment Reserve has been created out of profit of eligible SEZ units as per provisions of section 10AA(1)(ii) of the Income–tax Act, 1961 for acquiring new plant and machinery. The said reserve should be utilized by the Company for acquiring plant and machinery as per terms of Section 10AA(2) of the Income-tax Act, 1961. This reserve is not freely available for distribution.
19
20. Revenues
Three months ended December 31, | Nine months ended December 31, | |||||||||||||||
2019 | 2020 | 2019 | 2020 | |||||||||||||
Rendering of services | ₹ | 152,103 | ₹ | 155,143 | ₹ | 444,718 | ₹ | 451,430 | ||||||||
Sale of products | 2,602 | 1,557 | 8,404 | 5,546 | ||||||||||||
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₹ | 154,705 | ₹ | 156,700 | ₹ | 453,122 | ₹ | 456,976 | |||||||||
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20
Information on disaggregation of revenues for the three months ended December 31, 2019 is as follows:
IT Services | IT Products | ISRE | Total | |||||||||||||||||||||||||||||||||||||||||
BFSI | Health BU | CBU | ENU | TECH | MFG | COMM | Total | |||||||||||||||||||||||||||||||||||||
A. Revenue | ||||||||||||||||||||||||||||||||||||||||||||
Rendering of services | ₹ | 46,370 | ₹ | 19,724 | ₹ | 25,325 | ₹ | 19,448 | ₹ | 18,486 | ₹ | 12,380 | ₹ | 8,524 | ₹ | 150,257 | ₹ | — | ₹ | 1,846 | ₹ | 152,103 | ||||||||||||||||||||||
Sale of products | — | — | — | — | — | — | — | — | 2,602 | — | 2,602 | |||||||||||||||||||||||||||||||||
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₹ | 46,370 | ₹ | 19,724 | ₹ | 25,325 | ₹ | 19,448 | ₹ | 18,486 | ₹ | 12,380 | ₹ | 8,524 | ₹ | 150,257 | ₹ | 2,602 | ₹ | 1,846 | ₹ | 154,705 | |||||||||||||||||||||||
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B. Revenue by geography | ||||||||||||||||||||||||||||||||||||||||||||
India | ₹ | 1,618 | ₹ | 624 | ₹ | 267 | ₹ | 426 | ₹ | 236 | ₹ | 443 | ₹ | 484 | ₹ | 4,098 | ₹ | 1,374 | ₹ | 1,846 | ₹ | 7,318 | ||||||||||||||||||||||
Americas * | 26,851 | 15,364 | 17,988 | 6,422 | 13,868 | 6,060 | 2,369 | 88,922 | 209 | — | 89,131 | |||||||||||||||||||||||||||||||||
Europe | 11,147 | 1,774 | 4,428 | 7,937 | 3,534 | 4,794 | 2,030 | 35,644 | 454 | — | 36,098 | |||||||||||||||||||||||||||||||||
Rest of the World | 6,754 | 1,962 | 2,642 | 4,663 | 848 | 1,083 | 3,641 | 21,593 | 565 | — | 22,158 | |||||||||||||||||||||||||||||||||
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₹ | 46,370 | ₹ | 19,724 | ₹ | 25,325 | ₹ | 19,448 | ₹ | 18,486 | ₹ | 12,380 | ₹ | 8,524 | ₹ | 150,257 | ₹ | 2,602 | ₹ | 1,846 | ₹ | 154,705 | |||||||||||||||||||||||
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C. Revenue by nature of contract | ||||||||||||||||||||||||||||||||||||||||||||
Fixed price and volume based | ₹ | 25,222 | ₹ | 13,226 | ₹ | 14,346 | ₹ | 13,213 | ₹ | 12,455 | ₹ | 8,785 | ₹ | 5,715 | ₹ | 92,962 | ₹ | — | ₹ | 1,527 | ₹ | 94,489 | ||||||||||||||||||||||
Time and materials | 21,148 | 6,498 | 10,979 | 6,235 | 6,031 | 3,595 | 2,809 | 57,295 | — | 319 | 57,614 | |||||||||||||||||||||||||||||||||
Products | — | — | — | — | — | — | — | — | 2,602 | — | 2,602 | |||||||||||||||||||||||||||||||||
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₹ | 46,370 | ₹ | 19,724 | ₹ | 25,325 | ₹ | 19,448 | ₹ | 18,486 | ₹ | 12,380 | ₹ | 8,524 | ₹ | 150,257 | ₹ | 2,602 | ₹ | 1,846 | ₹ | 154,705 | |||||||||||||||||||||||
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Information on disaggregation of revenues for the three months ended December 31, 2020 is as follows:
IT Services | IT Products | ISRE | Total | |||||||||||||||||||||||||||||||||||||||||
BFSI | Health BU | CBU | ENU | TECH | MFG | COMM | Total | |||||||||||||||||||||||||||||||||||||
A. Revenue | ||||||||||||||||||||||||||||||||||||||||||||
Rendering of services | ₹ | 46,630 | ₹ | 21,209 | ₹ | 24,994 | ₹ | 19,991 | ₹ | 19,318 | ₹ | 12,627 | ₹ | 7,984 | ₹ | 152,753 | ₹ | — | ₹ | 2,390 | ₹ | 155,143 | ||||||||||||||||||||||
Sale of products | — | — | — | — | — | — | — | — | 1,557 | — | 1,557 | |||||||||||||||||||||||||||||||||
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₹ | 46,630 | ₹ | 21,209 | ₹ | 24,994 | ₹ | 19,991 | ₹ | 19,318 | ₹ | 12,627 | ₹ | 7,984 | ₹ | 152,753 | ₹ | 1,557 | ₹ | 2,390 | ₹ | 156,700 | |||||||||||||||||||||||
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B. Revenue by geography | ||||||||||||||||||||||||||||||||||||||||||||
India | ₹ | 1,660 | ₹ | 544 | ₹ | 223 | ₹ | 324 | ₹ | 216 | ₹ | 444 | ₹ | 281 | ₹ | 3,692 | ₹ | 428 | ₹ | 2,390 | ₹ | 6,510 | ||||||||||||||||||||||
Americas * | 26,334 | 15,781 | 17,177 | 6,365 | 14,343 | 5,949 | 2,111 | 88,060 | 392 | — | 88,452 | |||||||||||||||||||||||||||||||||
Europe | 11,536 | 2,560 | 5,082 | 8,452 | 3,284 | 5,594 | 1,981 | 38,489 | 221 | — | 38,710 | |||||||||||||||||||||||||||||||||
Rest of the World | 7,100 | 2,324 | 2,512 | 4,850 | 1,475 | 640 | 3,611 | 22,512 | 516 | — | 23,028 | |||||||||||||||||||||||||||||||||
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₹ | 46,630 | ₹ | 21,209 | ₹ | 24,994 | ₹ | 19,991 | ₹ | 19,318 | ₹ | 12,627 | ₹ | 7,984 | ₹ | 152,753 | ₹ | 1,557 | ₹ | 2,390 | ₹ | 156,700 | |||||||||||||||||||||||
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C. Revenue by nature of contract | ||||||||||||||||||||||||||||||||||||||||||||
Fixed price and volume based | ₹ | 25,905 | ₹ | 14,704 | ₹ | 12,547 | ₹ | 13,913 | ₹ | 13,090 | ₹ | 9,078 | ₹ | 5,263 | ₹ | 94,500 | ₹ | — | ₹ | 2,015 | ₹ | 96,515 | ||||||||||||||||||||||
Time and materials | 20,725 | 6,505 | 12,447 | 6,078 | 6,228 | 3,549 | 2,721 | 58,253 | — | 375 | 58,628 | |||||||||||||||||||||||||||||||||
Products | — | — | — | — | — | — | — | — | 1,557 | — | 1,557 | |||||||||||||||||||||||||||||||||
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₹ | 46,630 | ₹ | 21,209 | ₹ | 24,994 | ₹ | 19,991 | ₹ | 19,318 | ₹ | 12,627 | ₹ | 7,984 | ₹ | 152,753 | ₹ | 1,557 | ₹ | 2,390 | ₹ | 156,700 | |||||||||||||||||||||||
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21
Information on disaggregation of revenues for the nine months ended December 31, 2019 is as follows:
IT Services | IT Products | ISRE | Total | |||||||||||||||||||||||||||||||||||||||||
BFSI | Health BU | CBU | ENU | TECH | MFG | COMM | Total | |||||||||||||||||||||||||||||||||||||
A. Revenue | ||||||||||||||||||||||||||||||||||||||||||||
Rendering of services | ₹ | 137,028 | ₹ | 57,306 | ₹ | 71,000 | ₹ | 56,553 | ₹ | 56,083 | ₹ | 35,460 | ₹ | 25,258 | ₹ | 438,688 | ₹ | — | ₹ | 6,030 | ₹ | 444,718 | ||||||||||||||||||||||
Sale of products | — | — | — | — | — | — | — | — | 8,404 | — | 8,404 | |||||||||||||||||||||||||||||||||
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₹ | 137,028 | ₹ | 57,306 | ₹ | 71,000 | ₹ | 56,553 | ₹ | 56,083 | ₹ | 35,460 | ₹ | 25,258 | ₹ | 438,688 | ₹ | 8,404 | ₹ | 6,030 | ₹ | 453,122 | |||||||||||||||||||||||
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B. Revenue by geography | ||||||||||||||||||||||||||||||||||||||||||||
India | ₹ | 3,560 | ₹ | 1,807 | ₹ | 775 | ₹ | 1,349 | ₹ | 742 | ₹ | 1,445 | ₹ | 1,578 | ₹ | 11,256 | ₹ | 5,534 | ₹ | 6,030 | ₹ | 22,820 | ||||||||||||||||||||||
Americas * | 80,873 | 44,330 | 50,187 | 18,041 | 42,148 | 17,411 | 6,720 | 259,710 | 645 | — | 260,355 | |||||||||||||||||||||||||||||||||
Europe | 33,509 | 5,603 | 12,455 | 23,037 | 10,826 | 13,572 | 6,078 | 105,080 | 1,065 | — | 106,145 | |||||||||||||||||||||||||||||||||
Rest of the World | 19,086 | 5,566 | 7,583 | 14,126 | 2,367 | 3,032 | 10,882 | 62,642 | 1,160 | — | 63,802 | |||||||||||||||||||||||||||||||||
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₹ | 137,028 | ₹ | 57,306 | ₹ | 71,000 | ₹ | 56,553 | ₹ | 56,083 | ₹ | 35,460 | ₹ | 25,258 | ₹ | 438,688 | ₹ | 8,404 | ₹ | 6,030 | ₹ | 453,122 | |||||||||||||||||||||||
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C. Revenue by nature of contract | ||||||||||||||||||||||||||||||||||||||||||||
Fixed price and volume based | ₹ | 75,724 | ₹ | 37,351 | ₹ | 39,608 | ₹ | 38,993 | ₹ | 36,253 | ₹ | 25,125 | ₹ | 16,338 | ₹ | 269,392 | ₹ | — | ₹ | 4,864 | ₹ | 274,256 | ||||||||||||||||||||||
Time and materials | 61,304 | 19,955 | 31,392 | 17,560 | 19,830 | 10,335 | 8,920 | 169,296 | — | 1,166 | 170,462 | |||||||||||||||||||||||||||||||||
Products | — | — | — | — | — | — | — | — | 8,404 | — | 8,404 | |||||||||||||||||||||||||||||||||
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₹ | 137,028 | ₹ | 57,306 | ₹ | 71,000 | ₹ | 56,553 | ₹ | 56,083 | ₹ | 35,460 | ₹ | 25,258 | ₹ | 438,688 | ₹ | 8,404 | ₹ | 6,030 | ₹ | 453,122 | |||||||||||||||||||||||
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Information on disaggregation of revenues for the nine months ended December 31, 2020 is as follows:
IT Services | IT Products | ISRE | Total | |||||||||||||||||||||||||||||||||||||||||
BFSI | Health BU | CBU | ENU | TECH | MFG | COMM | Total | |||||||||||||||||||||||||||||||||||||
A. Revenue | ||||||||||||||||||||||||||||||||||||||||||||
Rendering of services | ₹ | 136,945 | ₹ | 61,080 | ₹ | 71,877 | ₹ | 58,033 | ₹ | 57,248 | ₹ | 36,483 | ₹ | 23,141 | ₹ | 444,807 | ₹ | — | ₹ | 6,623 | ₹ | 451,430 | ||||||||||||||||||||||
Sale of products | — | — | — | — | — | — | — | — | 5,546 | — | 5,546 | |||||||||||||||||||||||||||||||||
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₹ | 136,945 | ₹ | 61,080 | ₹ | 71,877 | ₹ | 58,033 | ₹ | 57,248 | ₹ | 36,483 | ₹ | 23,141 | ₹ | 444,807 | ₹ | 5,546 | ₹ | 6,623 | ₹ | 456,976 | |||||||||||||||||||||||
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B. Revenue by geography | ||||||||||||||||||||||||||||||||||||||||||||
India | ₹ | 5,017 | ₹ | 1,790 | ₹ | 637 | ₹ | 1,145 | ₹ | 514 | ₹ | 1,360 | ₹ | 949 | ₹ | 11,412 | ₹ | 2,417 | ₹ | 6,623 | ₹ | 20,452 | ||||||||||||||||||||||
Americas * | 78,382 | 45,850 | 49,906 | 18,254 | 44,171 | 17,565 | 5,536 | 259,664 | 661 | — | 260,325 | |||||||||||||||||||||||||||||||||
Europe | 33,196 | 6,790 | 13,709 | 24,091 | 8,792 | 15,218 | 6,009 | 107,805 | 1,304 | — | 109,109 | |||||||||||||||||||||||||||||||||
Rest of the World | 20,350 | 6,650 | 7,625 | 14,543 | 3,771 | 2,340 | 10,647 | 65,926 | 1,164 | — | 67,090 | |||||||||||||||||||||||||||||||||
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₹ | 136,945 | ₹ | 61,080 | ₹ | 71,877 | ₹ | 58,033 | ₹ | 57,248 | ₹ | 36,483 | ₹ | 23,141 | ₹ | 444,807 | ₹ | 5,546 | ₹ | 6,623 | ₹ | 456,976 | |||||||||||||||||||||||
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C. Revenue by nature of contract | ||||||||||||||||||||||||||||||||||||||||||||
Fixed price and volume based | ₹ | 75,842 | ₹ | 42,458 | ₹ | 36,351 | ₹ | 39,235 | ₹ | 38,521 | ₹ | 26,299 | ₹ | 15,511 | ₹ | 274,217 | ₹ | — | ₹ | 5,275 | ₹ | 279,492 | ||||||||||||||||||||||
Time and materials | 61,103 | 18,622 | 35,526 | 18,798 | 18,727 | 10,184 | 7,630 | 170,590 | — | 1,348 | 171,938 | |||||||||||||||||||||||||||||||||
Products | — | — | — | — | — | — | — | — | 5,546 | — | 5,546 | |||||||||||||||||||||||||||||||||
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₹ | 136,945 | ₹ | 61,080 | ₹ | 71,877 | ₹ | 58,033 | ₹ | 57,248 | ₹ | 36,483 | ₹ | 23,141 | ₹ | 444,807 | ₹ | 5,546 | ₹ | 6,623 | ₹ | 456,976 | |||||||||||||||||||||||
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* | Substantially related to operations in the United States of America. |
22
21. Expenses by nature
Three months ended December 31, | Nine months ended December 31, | |||||||||||||||
2019 | 2020 | 2019 | 2020 | |||||||||||||
Employee compensation | ₹ | 82,381 | ₹ | 82,769 | ₹ | 241,123 | ₹ | 246,199 | ||||||||
Sub-contracting/ technical fees | 22,764 | 20,657 | 67,750 | 62,115 | ||||||||||||
Cost of hardware and software | 2,702 | 1,441 | 8,381 | 5,465 | ||||||||||||
Travel | 4,956 | 1,394 | 14,138 | 3,948 | ||||||||||||
Facility expenses | 4,881 | 4,996 | 14,662 | 14,967 | ||||||||||||
Depreciation, amortization and impairment* | 5,295 | 7,927 | 15,064 | 20,661 | ||||||||||||
Communication | 1,213 | 1,462 | 3,495 | 4,617 | ||||||||||||
Legal and professional fees | 1,142 | 1,437 | 3,477 | 3,972 | ||||||||||||
Rates, taxes and insurance | 692 | 636 | 1,853 | 2,540 | ||||||||||||
Marketing and brand building | 690 | 283 | 1,953 | 679 | ||||||||||||
Lifetime expected credit loss | (72 | ) | (230 | ) | 649 | 1,615 | ||||||||||
Miscellaneous expenses** | 1,555 | 681 | 4,161 | 3,340 | ||||||||||||
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Total cost of revenues, selling and marketing expenses and general and administrative expenses | ₹ | 128,199 | ₹ | 123,453 | ₹ | 376,706 | ₹ | 370,118 | ||||||||
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* | Depreciation, amortization and impairment includes impairment charge on certain software platforms, capital work-in-progress and intangible assets amounting to ₹ 1,673 and ₹ 2,427, for the three months and nine months ended December 31, 2020, respectively. |
** | Miscellaneous expenses for the three months and nine months ended December 31, 2020, includes an amount of ₹ Nil, and ₹ 991, respectively towards COVID-19 contributions. |
22. Finance expenses
Three months ended December 31, | Nine months ended December 31, | |||||||||||||||
2019 | 2020 | 2019 | 2020 | |||||||||||||
Interest expense | ₹ | 1,267 | ₹ | 1,220 | ₹ | 3,968 | ₹ | 3,315 | ||||||||
Exchange fluctuation on foreign currency borrowings, net | 577 | 180 | 1,707 | 651 | ||||||||||||
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₹ 1,844 | ₹ 1,400 | ₹ 5,675 | ₹ 3,966 | |||||||||||||
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23. Finance and other income and Foreign exchange gains/(losses), net
Three months ended December 31, | Nine months ended December 31, | |||||||||||||||
2019 | 2020 | 2019 | 2020 | |||||||||||||
Interest income | ₹ | 4,969 | ₹ | 5,072 | ₹ | 17,277 | ₹ | 14,710 | ||||||||
Dividend income | 73 | — | 262 | 1 | ||||||||||||
Net gain from investments classified as FVTPL | 245 | 582 | 983 | 1,171 | ||||||||||||
Net gain from investments classified as FVTOCI | 83 | 321 | 652 | 583 | ||||||||||||
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Finance and other income | ₹ 5,370 | ₹ 5,975 | ₹ 19,174 | ₹ 16,465 | ||||||||||||
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Foreign exchange gains/(losses), net, on financial instruments measured at FVTPL | ₹ | (367 | ) | ₹ | 270 | ₹ | 2,207 | ₹ | 3,422 | |||||||
Other foreign exchange gains/(losses), net | 1,094 | 296 | (31 | ) | (1,313 | ) | ||||||||||
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Foreign exchange gains/(losses), net | ₹ | 727 | ₹ | 566 | ₹ | 2,176 | ₹ | 2,109 | ||||||||
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24. Earnings per share:
A reconciliation of profit for the period and equity shares used in the computation of basic and diluted earnings per equity share is set out below:
Basic: Basic earnings per share is calculated by dividing the profit attributable to equity shareholders of the Company by the weighted average number of equity shares outstanding during the period, excluding equity shares purchased by the Company and held as treasury shares.
Three months ended December 31, | Nine months ended December 31, | |||||||||||||||
2019 | 2020 | 2019 | 2020 | |||||||||||||
Profit attributable to equity holders of the Company | ₹ | 24,558 | ₹ | 29,667 | ₹ | 73,958 | ₹ | 78,225 | ||||||||
Weighted average number of equity shares outstanding | 5,692,132,118 | 5,696,798,493 | 5,879,588,157 | 5,694,731,405 | ||||||||||||
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Basic earnings per share | ₹ | 4.31 | ₹ | 5.21 | ₹ | 12.58 | ₹ | 13.74 | ||||||||
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Diluted: Diluted earnings per share is calculated by adjusting the weighted average number of equity shares outstanding during the period for assumed conversion of all dilutive potential equity shares and buyback of equity shares. Employee share options are dilutive potential equity shares for the Company.
The calculation is performed in respect of share options to determine the number of shares that could have been acquired at fair value (determined as the average market price of the Company’s shares during the period). The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the share options.
23
The calculation of the potential dilutive effect on earnings per share on buyback of equity shares includes the incremental equity shares arrived as the difference between the number of ordinary shares assumed at the fair value (determined as the average market price of the Company’s shares during the period) and the number of ordinary shares received from satisfying the buyback offer.
Three months ended December 31, | Nine months ended December 31, | |||||||||||||||
2019 | 2020 | 2019 | 2020 | |||||||||||||
Profit attributable to equity holders of the Company | ₹ | 24,558 | ₹ | 29,667 | ₹ | 73,958 | ₹ | 78,225 | ||||||||
Weighted average number of equity shares outstanding | 5,692,132,118 | 5,696,798,493 | 5,879,588,157 | 5,694,731,405 | ||||||||||||
Effect of dilutive equivalent share options | 11,132,923 | 12,157,947 | 13,378,749 | 12,356,425 | ||||||||||||
Dilutive effect from proposed buyback of equity shares | — | 32,114,026 | — | 105,691,275 | ||||||||||||
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Weighted average number of equity shares for diluted earnings per share | 5,703,265,041 | 5,741,070,466 | 5,892,966,906 | 5,812,779,105 | ||||||||||||
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Diluted earnings per share | ₹ | 4.30 | ₹ | 5.17 | ₹ | 12.55 | ₹ | 13.46 | ||||||||
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Diluted earnings per share for each of the three months ended June 30, September 30 and December 31 will not add up to diluted earnings per share for the nine months ended December 31, 2020, on account of dilutive effect of liability for proposed buyback of equity shares.
25. Employee benefits
Three months ended December 31, | Nine months ended December 31, | |||||||||||||||
2019 | 2020 | 2019 | 2020 | |||||||||||||
Salaries and bonus | ₹ | 79,871 | ₹ | 79,432 | ₹ | 232,870 | ₹ | 236,124 | ||||||||
Employee benefits plans | ||||||||||||||||
Gratuity and other defined benefit plans | 334 | 552 | 1,053 | 1,570 | ||||||||||||
Defined contribution plans | 2,176 | 2,208 | 6,301 | 6,699 | ||||||||||||
Share-based compensation | — | 577 | 899 | 1,806 | ||||||||||||
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₹ 82,381 | ₹ 82,769 | ₹ 241,123 | ₹ 246,199 | |||||||||||||
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The employee benefit cost is recognized in the following line items in the interim condensed consolidated statement of income:
Three months ended December 31, | Nine months ended December 31, | |||||||||||||||
2019 | 2020 | 2019 | 2020 | |||||||||||||
Cost of revenues | ₹ | 70,509 | ₹ | 70,286 | ₹ | 205,785 | ₹ | 209,540 | ||||||||
Selling and marketing expenses | 7,851 | 7,779 | 23,134 | 23,163 | ||||||||||||
General and administrative expenses | 4,021 | 4,704 | 12,204 | 13,496 | ||||||||||||
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₹ 82,381 | ₹ 82,769 | ₹ 241,123 | ₹ 246,199 | |||||||||||||
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The Company has granted 2,402,440 and 2,472,440 options under RSU option plan during the three and nine months ended December 31, 2020 (30,000 and 2,957,000 for the three and nine months ended December 31, 2019); 1,085,420 and 1,701,420 options under ADS option plan during the three and nine months ended December 31, 2020, respectively (40,000 and 2,710,400 for three and nine months ended December 31, 2019).
The Company has also granted 2,879,860 and 2,969,860 Performance based stock options (RSU) during the three and nine months ended December 31, 2020, respectively (Nil and 2,244,500 for the three and nine months ended December 31, 2019); 1,452,980 and 2,376,980 Performance based stock options (ADS) during the three and nine months ended December 31, 2020, respectively (Nil and 2,440,600 for three and nine months ended December 31, 2019).
The RSU grants were issued under Wipro Employee Restricted Stock Unit plan 2007 (WSRUP 2007 plan) and the ADS grants were issued under Wipro ADS Restricted Stock Unit Plan (WARSUP 2004 plan).
26. Other operating income/(loss), net
The Company has partially met the first and second-year business targets pertaining to sale of hosted data center business concluded during the year ended March 31, 2019. Change in fair value of the callable units pertaining to achievement of the business targets amounting to ₹ Nil for the three months ended December 31, 2019 and 2020, and ₹ 597 and ₹ (81) for the nine months ended December 31, 2019, and December 31, 2020 respectively has been recognized under other operating income/(loss), net.
The Company concluded the sale of assets pertaining to Workday business and Cornerstone OnDemand business in Portugal, France and Sweden during the year ended March 31, 2020. Gain arising from such transaction of ₹ Nil and ₹ 152 for the three months and nine months ended December 31, 2019 respectively, has been recognized under other operating income/(loss), net.
27. Commitments and contingencies
Capital commitments: As at March 31, 2020 and December 31, 2020 the Company had committed to spend approximately ₹ 14,011 and ₹ 9,571 respectively, under agreements to purchase/ construct property and equipment. These amounts are net of capital advances paid in respect of these purchases.
Guarantees: As at March 31, 2020 and December 31, 2020, performance and financial guarantees provided by banks on behalf of the Company to the Indian Government, customers and certain other agencies amount to approximately ₹ 18,655 and ₹ 27,626 (including ₹ 9,650 towards Buyback as referred in Note 31) respectively, as part of the bank line of credit.
24
Contingencies and lawsuits: The Company is subject to legal proceedings and claims (including tax assessment orders/ penalty notices) which have arisen in the ordinary course of its business. Some of the claims involve complex issues and it is not possible to make a reasonable estimate of the expected financial effect, if any, that will result from ultimate resolution of such proceedings. However, the resolution of these legal proceedings is not likely to have a material and adverse effect on the results of operations or the financial position of the Company. The significant of such matters are discussed below.
In March 2004, the Company received a tax demand for year ended March 31, 2001 arising primarily on account of denial of deduction under section 10A of the Income Tax Act, 1961 in respect of profit earned by the Company’s undertaking in Software Technology Park at Bengaluru. The same issue was repeated in the successive assessments for the years ended March 31, 2002 to March 31, 2011 and the aggregate demand is ₹ 47,583 (including interest of ₹ 13,832). The appeals filed against the said demand before the Appellate authorities have been allowed in favor of the Company by the second appellate authority for the years up to March 31, 2011. Further appeals have been filed by the Income tax authorities before the Hon’ble High Court. The Hon’ble High Court has heard and disposed-off majority of the issues in favor of the Company up to years ended March 31, 2008. Department has filed a Special Leave Petition before the Supreme Court of India for the year ended March 31, 2001 to March 31, 2004. Further, for the financial years ending March 31, 2009 to March 31, 2014, the Hon’ble Income Tax Appellate Tribunal (“ITAT”) has heard and disposed-off majority of the issues in favor of the Company. Out of six financial years, aggregate demand for year ending March 31, 2009 to March 31, 2011 of ₹ 8,226 (including interest of ₹ 1,798) is included above. Remaining three years ending from March 31, 2012 to March 31, 2014 has aggregate demand of ₹ 4,316 (including interest of ₹ 1,165).
For the year ended March 31, 2015, the Company received the final assessment order in October 2019 with an estimated demand of ₹ 1,347 (including nil interest), arising primarily on account of capitalization of wages. The Company has filed an appeal before the Hon’ble ITAT, Bengaluru within the prescribed timelines.
For the year ended March 31, 2016, the Company received the draft assessment order in December 2019 with an estimated demand of ₹ 704 (including nil interest), arising primarily on account of capitalization of wages. The Company has filed the objections before the Dispute Resolution Panel (Bengaluru) within the prescribed timelines.
For the year ended March 31, 2007 to year ended March 31, 2012, the company has received tax demand of ₹ 227 (including interest of ₹ 102) for non-deduction of tax at source on some payments. The Company has already deposited the demand under protest. The Company received order issued by ITAT, Bengaluru rejecting Company’s appeal. The Company has received a favorable order on this issue from the Hon’ble High Court of Karnataka for the earlier years and has filed appeal with Hon’ble High Court of Karnataka challenging order from ITAT. Hon’ble High Court of Karnataka has admitted the appeal and has granted stay for penalty proceeding initiated by the department.
Income tax demands against the Company amounting to ₹ 77,873 and ₹ 84,797 are not acknowledged as debt as at March 31, 2020 and December 31, 2020, respectively. These matters are pending before various Appellate Authorities and the management expects its position will likely be upheld on ultimate resolution and will not have a material adverse effect on the Company’s financial position and results of operations.
The contingent liability in respect of disputed demands for excise duty, custom duty, sales tax and other matters amounting to ₹ 8,033 and ₹ 10,298 as of March 31, 2020 and December 31, 2020, respectively. However, the resolution of these disputed demands is not likely to have a material and adverse effect on the results of operations or the financial position of the Company.
The Hon’ble Supreme Court of India, through a ruling in February 2019, provided interpretation on the components of Salary on which the Company and its employees are to contribute towards Provident Fund under the Employee’s Provident Fund Act. Based on the current evaluation, the Company believes it is not probable that certain components of Salary paid by the Company will be subject to contribution towards Provident Fund due to the Supreme Court order. The Company will continue to monitor and evaluate its position based on future events and developments.
28. Segment information
The Company is organized into the following operating segments: IT Services, IT Products and India State Run Enterprise segment (“ISRE”).
IT Services: The IT Services segment primarily consists of IT Service offerings to customers organized by industry verticals. The industry verticals are as follows: Banking, Financial Services and Insurance (“BFSI”), Health Business unit (“Health BU”), Consumer Business unit (“CBU”), Energy, Natural Resources & Utilities (“ENU”), Manufacturing (“MFG”), Technology (“TECH”) and Communications (“COMM”). Key service offerings to customers includes software application development and maintenance, research and development services for hardware and software design, business application services, analytics, consulting, infrastructure outsourcing services and business process services.
As announced on November 12, 2020, in order to broad base our growth, effective January 1, 2021, we re-organized our IT Services segment from seven industry verticals to four Strategic Market Units (“SMUs”) as follows—Americas 1, Americas 2, Europe and Asia Pacific Middle East Africa (“APMEA”). We will report our IT Services segment information organized by SMUs from quarter ending March 31, 2021.
IT Products: The Company is a value-added reseller of desktops, servers, notebooks, storage products, networking solutions and packaged software for leading international brands. In certain total outsourcing contracts of the IT Services segment, the Company delivers hardware, software products and other related deliverables. Revenue relating to the above items is reported as revenue from the sale of IT Products.
25
ISRE: This segment consists of IT Services offerings to entities or departments owned or controlled by Government of India and/ or any State Governments.
The Chairman of the Company has been identified as the Chief Operating Decision Maker (“CODM”) as defined by IFRS 8, “Operating Segments.” The Chairman of the Company evaluates the segments based on their revenue growth and operating income.
Assets and liabilities used in the Company’s business are not identified to any of the operating segments, as these are used interchangeably between segments. Management believes that it is currently not practicable to provide segment disclosures relating to total assets and liabilities since a meaningful segregation of the available data is onerous.
26
Information on reportable segment for the three months ended December 31, 2019, is as follows:
IT Services | IT Products | ISRE | Reconciling Items | Total | ||||||||||||||||||||||||||||||||||||||||||||
BFSI | Health BU | CBU | ENU | TECH | MFG | COMM | Total | |||||||||||||||||||||||||||||||||||||||||
Revenue | 46,612 | 19,799 | 25,443 | 19,553 | 18,584 | 12,450 | 8,565 | ₹ | 151,006 | ₹ | 2,576 | ₹ | 1,847 | ₹ | 3 | ₹ | 155,432 | |||||||||||||||||||||||||||||||
Other operating income | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Segment Result | 8,246 | 3,186 | 4,725 | 3,130 | 3,256 | 2,385 | 1,444 | 26,372 | (140 | ) | (528 | ) | 169 | 25,873 | ||||||||||||||||||||||||||||||||||
Unallocated | 1,360 | — | — | — | 1,360 | |||||||||||||||||||||||||||||||||||||||||||
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Segment Result Total | ₹ | 27,732 | ₹ | (140 | ) | ₹ | (528 | ) | ₹ | 169 | ₹ | 27,233 | ||||||||||||||||||||||||||||||||||||
Finance expense | (1,844 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Finance and other income | 5,370 | |||||||||||||||||||||||||||||||||||||||||||||||
Share of profit/ (loss) of associates accounted for using the equity method | 34 | |||||||||||||||||||||||||||||||||||||||||||||||
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Profit before tax | ₹ | 30,793 | ||||||||||||||||||||||||||||||||||||||||||||||
Income tax expense | (6,164 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
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Profit for the period | ₹ | 24,629 | ||||||||||||||||||||||||||||||||||||||||||||||
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Depreciation, amortization and impairment | ₹ | 5,295 |
Information on reportable segment for the three months ended December 31, 2020, is as follows:
IT Services | IT Products | ISRE | Reconciling Items | Total | ||||||||||||||||||||||||||||||||||||||||||||
BFSI | Health BU | CBU | ENU | TECH | MFG | COMM | Total | |||||||||||||||||||||||||||||||||||||||||
Revenue | ₹ | 46,825 | ₹ | 21,266 | ₹ | 25,077 | ₹ | 20,076 | ₹ | 19,394 | ₹ | 12,677 | ₹ | 8,016 | ₹ | 153,331 | ₹ | 1,552 | ₹ | 2,393 | ₹ | (10 | ) | ₹ | 157,266 | |||||||||||||||||||||||
Other operating income/(loss), net | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
Segment Result | 9,820 | 4,359 | 6,166 | 3,688 | 3,128 | 2,552 | 1,445 | 31,158 | 89 | 473 | 47 | 31,767 | ||||||||||||||||||||||||||||||||||||
Unallocated | 2,046 | — | — | — | 2,046 | |||||||||||||||||||||||||||||||||||||||||||
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Segment Result Total | ₹ | 33,204 | ₹ | 89 | ₹ | 473 | ₹ | 47 | ₹ | 33,813 | ||||||||||||||||||||||||||||||||||||||
Finance expense | (1,400 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Finance and other income | 5,975 | |||||||||||||||||||||||||||||||||||||||||||||||
Share of profit/ (loss) of associates accounted for using the equity method | 101 | |||||||||||||||||||||||||||||||||||||||||||||||
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Profit before tax | ₹ | 38,489 | ||||||||||||||||||||||||||||||||||||||||||||||
Income tax expense | (8,524 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
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Profit for the period | ₹ | 29,965 | ||||||||||||||||||||||||||||||||||||||||||||||
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| |||||||||||||||||||||||||||||||||||||||||||||||
Depreciation, amortization and impairment | ₹ | 7,927 |
27
Information on reportable segment for the nine months ended December 31, 2019, is as follows:
IT Services | IT Products | ISRE | Reconciling Items | Total | ||||||||||||||||||||||||||||||||||||||||||||
BFSI | Health BU | CBU | ENU | TECH | MFG | COMM | Total | |||||||||||||||||||||||||||||||||||||||||
Revenue | ₹ | 137,767 | ₹ | 57,651 | ₹ | 71,339 | ₹ | 56,873 | ₹ | 56,392 | ₹ | 35,672 | ₹ | 25,387 | ₹ | 441,081 | ₹ | 8,218 | ₹ | 6,059 | ₹ | (60 | ) | ₹ | 455,298 | |||||||||||||||||||||||
Other operating income | — | — | — | — | — | — | — | 749 | — | — | — | 749 | ||||||||||||||||||||||||||||||||||||
Segment Result | 25,988 | 8,978 | 12,183 | 8,410 | 10,406 | 6,916 | 4,006 | 76,887 | (398 | ) | (1,341 | ) | 320 | 75,468 | ||||||||||||||||||||||||||||||||||
Unallocated | 3,124 | 3,124 | ||||||||||||||||||||||||||||||||||||||||||||||
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Segment Result Total | ₹ | 80,760 | ₹ | (398 | ) | ₹ | (1,341 | ) | ₹ | 320 | ₹ | 79,341 | ||||||||||||||||||||||||||||||||||||
Finance expense | (5,675 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Finance and other income | 19,174 | |||||||||||||||||||||||||||||||||||||||||||||||
Share of net profit /(loss) of associates accounted for using the equity method | 16 | |||||||||||||||||||||||||||||||||||||||||||||||
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Profit before tax | ₹ | 92,856 | ||||||||||||||||||||||||||||||||||||||||||||||
Income tax expense | (18,594 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
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Profit for the period | ₹ | 74,262 | ||||||||||||||||||||||||||||||||||||||||||||||
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| |||||||||||||||||||||||||||||||||||||||||||||||
Depreciation, amortization and impairment | 15,064 |
Information on reportable segment for the nine months ended December 31, 2020, is as follows:
IT Services | IT Products | ISRE | Reconciling Items | Total | ||||||||||||||||||||||||||||||||||||||||||||
BFSI | Health BU | CBU | ENU | TECH | MFG | COMM | Total | |||||||||||||||||||||||||||||||||||||||||
Revenue | ₹ | 137,648 | ₹ | 61,320 | ₹ | 72,183 | ₹ | 58,345 | ₹ | 57,542 | ₹ | 36,672 | ₹ | 23,258 | ₹ | 446,968 | ₹ | 5,501 | ₹ | 6,629 | ₹ | (13 | ) | ₹ | 459,085 | |||||||||||||||||||||||
Other operating income/(loss), net | — | — | — | — | — | — | — | (81 | ) | — | — | — | (81 | ) | ||||||||||||||||||||||||||||||||||
Segment Result | 27,546 | 11,092 | 16,092 | 10,586 | 9,927 | 7,159 | 3,656 | 86,058 | (87 | ) | 487 | (891 | ) | 85,567 | ||||||||||||||||||||||||||||||||||
Unallocated | — | — | — | — | — | — | — | 3,400 | — | — | — | 3,400 | ||||||||||||||||||||||||||||||||||||
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| |||||||||||||||||||||||||||||||||||||||
Segment Result Total | ₹ | 89,377 | ₹ | (87 | ) | ₹ | 487 | ₹ | (891 | ) | ₹ | 88,886 | ||||||||||||||||||||||||||||||||||||
Finance expense | (3,966 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Finance and other income | 16,465 | |||||||||||||||||||||||||||||||||||||||||||||||
Share of net profit /(loss) of associates accounted for using the equity method | 126 | |||||||||||||||||||||||||||||||||||||||||||||||
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| |||||||||||||||||||||||||||||||||||||||||||||||
Profit before tax | ₹ | 101,511 | ||||||||||||||||||||||||||||||||||||||||||||||
Income tax expense | (22,590 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
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| |||||||||||||||||||||||||||||||||||||||||||||||
Profit for the period | ₹ | 78,921 | ||||||||||||||||||||||||||||||||||||||||||||||
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| |||||||||||||||||||||||||||||||||||||||||||||||
Depreciation, amortization and impairment | ₹ | 20,661 |
28
The Company has four geographic segments: India, Americas, Europe and Rest of the world. Revenues from the geographic segments based on domicile of the customer are as follows:
Three months ended December 31, | Nine months ended December 31, | |||||||||||||||
2019 | 2020 | 2019 | 2020 | |||||||||||||
India | ₹ | 7,321 | ₹ | 6,509 | ₹ | 22,765 | ₹ | 20,463 | ||||||||
Americas * | 89,549 | 88,757 | 261,654 | 261,480 | ||||||||||||
Europe | 36,279 | 38,871 | 106,701 | 109,682 | ||||||||||||
Rest of the world | 22,283 | 23,129 | 64,178 | 67,460 | ||||||||||||
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| |||||||||
₹ | 155,432 | ₹ | 157,266 | ₹ | 455,298 | ₹ | 459,085 | |||||||||
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* | Substantially related to operations in the United States of America. |
No customer individually accounted for more than 10% of the revenues during the three and nine months ended December 31, 2019 and 2020.
Management believes that it is currently not practicable to provide disclosure of geographical location wise assets, since the meaningful segregation of the available information is onerous.
Notes:
a) | “Reconciling items” includes elimination of inter-segment transactions and other corporate activities. |
b) | During the three and nine months ended December 31, 2020, the Company has contributed ₹ Nil and ₹ 991, respectively towards COVID-19 and is reported in Reconciling items. |
c) | Revenue from sale of traded cloud-based licenses is reported as part of IT Services revenues. |
d) | Revenue from sale of company owned intellectual properties is reported as part of IT Services revenues |
e) | For the purpose of segment reporting, the Company has included the impact of “foreign exchange gains / (losses), net” in revenues (which is reported as a part of operating profit in the interim condensed consolidated statement of income). |
f) | For evaluating performance of the individual operating segments, stock compensation expense is allocated on the basis of straight-line amortization. The differential impact of accelerated amortization of stock compensation expense over stock compensation expense allocated to the individual operating segments is reported in Reconciling items. |
g) | The Company generally offers multi-year payment terms in certain total outsourcing contracts. These payment terms primarily relate to IT hardware, software and certain transformation services in outsourcing contracts. The finance income on deferred consideration earned under these contracts is included in the revenue of the respective segment and is eliminated under Reconciling items. |
h) | Other operating income/(loss) of ₹ Nil is included as part of IT Services segment results for three months ended December 31, 2019 and 2020, and ₹ 749 and ₹ (81) for the nine months ended December 31, 2019 and 2020 respectively. Refer to Note 26. |
i) | Segment results are after considering the impact of impairment charge of ₹ 1,040 in TECH industry vertical for the three months ended December 31, 2020 and ₹ 1,302 and ₹ 192 in TECH and BFSI industry vertical, respectively, for the nine months ended December 31, 2020. Further, an impairment charge of ₹ 633 for the three and nine months ended December 31, 2020, towards certain marketing-related intangible assets recognized on acquisitions, is allocated to all IT Services industry vertical. The remaining impairment charge of ₹ Nil and ₹ 300 for the three and nine months ended December 31, 2020, respectively is included under unallocated. (Refer to Note 4, 6 and 21). |
j) | Segment results of IT Services segment are after recognition of share-based compensation expense of ₹ 16 and ₹ 642, for the three months ended December 31, 2019 and 2020 respectively, and ₹ 847 and ₹ 1,880 for the nine months ended December 31, 2019 and 2020, respectively. The share-based compensation expense pertaining to other segments is not material. |
29. List of subsidiaries and investments accounted for using equity method as at December 31, 2020 is provided below:
Subsidiaries | Subsidiaries | Subsidiaries | Country of | |||
Wipro, LLC | USA | |||||
Wipro Gallagher Solutions, LLC | USA | |||||
Opus Capital Markets Consultants, LLC | USA | |||||
Wipro Promax Analytics Solutions Americas, LLC | USA | |||||
Wipro Insurance Solutions, LLC | USA | |||||
Wipro IT Services, LLC | USA | |||||
HealthPlan Services, Inc. ** | USA | |||||
Appirio, Inc. ** | USA | |||||
Designit North America, Inc. (formerly known as Cooper Software Inc.) | USA | |||||
Infocrossing, LLC | USA | |||||
Wipro US Foundation | USA | |||||
International TechneGroup Incorporated ** | USA | |||||
Rational Interaction, Inc. ** | USA | |||||
Wipro Overseas IT Services Pvt. Ltd
| India | |||||
Wipro Japan KK | Japan |
29
Wipro Shanghai Limited
| China | |||||
Wipro Trademarks Holding Limited
| India | |||||
Wipro Travel Services Limited | India | |||||
Wipro Holdings (UK) Limited | U.K. | |||||
Designit A/S | Denmark | |||||
Designit Denmark A/S | Denmark | |||||
Designit Germany GmbH | Germany | |||||
Designit Oslo A/S | Norway | |||||
Designit Sweden AB | Sweden | |||||
Designit T.L.V Ltd. | Israel | |||||
Designit Tokyo Ltd. | Japan | |||||
Designit Spain Digital, S.L. ** | Spain | |||||
Wipro Europe Limited | U.K. | |||||
Wipro UK Limited | U.K. | |||||
Wipro Financial Services UK Limited | U.K. | |||||
Wipro IT Services S.R.L. | Romania | |||||
4C NV | Belgium | |||||
4C Danmark ApS | Denmark | |||||
4C Nederland B.V | Netherlands | |||||
Weare4C UK Limited ** | U.K. | |||||
4C Consulting France | France | |||||
Wipro IT Services UK Societas | U.K. | |||||
Wipro Doha LLC # | Qatar | |||||
Wipro Technologies SA DE CV | Mexico | |||||
Wipro Philippines, Inc. | Philippines | |||||
Wipro Holdings Hungary Korlátolt Felelosségu Társaság | Hungary | |||||
Wipro Holdings Investment Korlátolt Felelosségu Társaság | Hungary | |||||
Wipro Information Technology Egypt SAE | Egypt | |||||
Wipro Arabia Co. Limited * | Saudi Arabia | |||||
Women’s Business Park Technologies Limited * | Saudi Arabia | |||||
Wipro Poland SP Z.O.O | Poland | |||||
Wipro IT Services Poland SP Z.O.O | Poland | |||||
Wipro Technologies Australia Pty Ltd | Australia | |||||
Wipro Corporate Technologies Ghana Limited | Ghana | |||||
Wipro Technologies South Africa (Proprietary) Limited | South Africa | |||||
Wipro Technologies Nigeria Limited | Nigeria | |||||
Wipro IT Service Ukraine, LLC | Ukraine | |||||
Wipro Information Technology Netherlands BV. | Netherlands | |||||
Wipro Portugal S.A. ** | Portugal | |||||
Wipro Technologies Limited | Russia | |||||
Wipro Technology Chile SPA | Chile | |||||
Wipro Solutions Canada Limited | Canada | |||||
Wipro Information Technology Kazakhstan LLP | Kazakhstan | |||||
Wipro Technologies W.T. Sociedad Anonima | Costa Rica | |||||
Wipro Outsourcing Services (Ireland) Limited | Ireland |
30
Wipro Technologies VZ, C.A. | Venezuela | |||||
Wipro Technologies Peru S.A.C. | Peru | |||||
Wipro do Brasil Servicos de Tecnologia S.A. | Brazil | |||||
Wipro do Brasil Technologia Ltda ** | Brazil | |||||
Wipro Technologies SA | Argentina | |||||
Wipro Technologies S.R.L. | Romania | |||||
PT. WT Indonesia | Indonesia | |||||
Wipro (Thailand) Co. Limited | Thailand | |||||
Wipro Bahrain Limited Co. S.P.C. | Bahrain | |||||
Wipro Gulf LLC | Sultanate of Oman | |||||
Rainbow Software LLC | Iraq | |||||
Wipro Networks Pte Limited | Singapore | |||||
Wipro (Dalian) Limited | China | |||||
Wipro Technologies SDN BHD | Malaysia | |||||
Wipro Chengdu Limited | China | |||||
Wipro IT Services Bangladesh Limited | Bangladesh | |||||
Wipro HR Services India Private Limited | India | |||||
Encore Theme Technologies Private Limited * | India |
* | All the above direct subsidiaries are 100% held by the Company except that the Company holds 83.4% of the equity securities of Encore Theme Technologies Private Limited, 66.67% of the equity securities of Wipro Arabia Co. Limited and 55% of the equity securities of Women’s Business Park Technologies Limited are held by Wipro Arabia Co. Limited. |
The remaining 16.6% equity securities of Encore Theme Technologies Private Limited will be acquired subject to and after receipt of certain regulatory approvals/confirmations.
# | 51% of equity securities of Wipro Doha LLC are held by a local shareholder. However, the beneficial interest in these holdings is with the Company. The Company controls ‘The Wipro SA Broad Based Ownership Scheme Trust’, ‘Wipro SA Broad Based Ownership Scheme SPV (RF) (PTY) LTD incorporated in South Africa and Wipro Foundation in India. |
** | Step Subsidiary details of Wipro Portugal S.A, Wipro do Brasil Technologia Ltda, Designit Spain Digital, S.L, HealthPlan Services, Inc, Appirio, Inc, International TechneGroup Incorporated, Rational Interaction, Inc. and Weare4C UK Limited are as follows: |
Subsidiaries | Subsidiaries | Subsidiaries | Country of | |||
Wipro Portugal S.A. | Portugal | |||||
Wipro Technologies GmbH | Germany | |||||
Cellent GmbH | Austria | |||||
Wipro do Brasil Technologia Ltda | Brazil | |||||
Wipro Do Brasil Sistemetas De Informatica Ltd | Brazil | |||||
IVIA Servicos de Informatica Ltda | Brazil | |||||
Designit Spain Digital, S.L. | Spain | |||||
Designit Colombia S A S | Colombia | |||||
Designit Peru SAC | Peru | |||||
HealthPlan Services, Inc. | USA | |||||
HealthPlan Services Insurance Agency, LLC | USA | |||||
International TechneGroup Incorporated | USA | |||||
International TechneGroup Ltd. | U.K. |
31
ITI Proficiency Ltd | Israel | |||||
International TechneGroup S.R.L. | Italy | |||||
MechWorks S.R.L. | Italy | |||||
Appirio, Inc. | USA | |||||
Appirio, K.K | Japan | |||||
Topcoder, LLC. | USA | |||||
Appirio Ltd | Ireland | |||||
Appirio Ltd (UK) | U.K. | |||||
Rational Interaction, Inc. | USA | |||||
Rational Consulting Australia Pty Ltd | Australia | |||||
Rational Interaction Limited | Ireland | |||||
Weare4C UK Limited | U.K. | |||||
CloudSocius DMCC | UAE | |||||
As at December 31, 2020 the Company held 43.7% interest in Drivestream Inc, 33% interest in Denim Group Limited and 33.3% in Denim Group Management, LLC, accounted for using the equity method. | ||||||
The list of controlled trusts are:
| ||||||
Name of the entity | Country of incorporation | |||||
Wipro Equity Reward Trust | India | |||||
Wipro Foundation | India |
30. | The Indian Parliament has approved the Code on Social Security, 2020 which would impact the contributions by the company towards Provident Fund and Gratuity. The Ministry of Labour and Employment has released draft rules for the Code on Social Security, 2020 on November 13, 2020, and has invited suggestions from stake holders which are under active consideration by the Ministry. Based on an initial assessment by the Company and its Indian subsidiaries, the additional impact on Provident Fund contributions by the Company and its Indian subsidiaries is not expected to be material, whereas, the likely additional impact on Gratuity liability / contributions by the Company and its Indian subsidiaries could be material. The Company and its Indian subsidiaries will complete their evaluation once the subject rules are notified and will give appropriate impact in the financial statements in the period in which, the Code becomes effective and the related rules to determine the financial impact are published. |
31. | Buyback of equity shares |
On October 13, 2020, the Board of Directors approved a proposal to Buyback up to 237,500,000 equity shares of ₹ 2 each (representing 4.16% of total paid-up equity share capital as at September 30, 2020) from the shareholders of the Company on a proportionate basis by way of a tender offer at a price of ₹ 400 per equity share for an aggregate amount not exceeding ₹ 95,000 (“Buyback”), in accordance with the provisions contained in the Securities and Exchange Board of India (Buy-back of Securities) Regulations, 2018, as amended and the Companies Act, 2013 and rules made thereunder (“Buyback Regulations”). Subsequently, the shareholders of the Company approved the Buyback through postal ballot (including e-voting) on November 16, 2020 and December 11, 2020 was fixed as the record date for the Buyback. In accordance with the provisions of the Buyback Regulations, the Letter of offer for the buyback was approved by SEBI on December 21, 2020 and tender period for Buyback opened on December 29, 2020 and will close on January 11, 2021. Consequently, the Company has recorded a liability towards gross obligation on Buyback of equity shares of ₹ 95,000 and the corresponding liability for tax on buyback of ₹ 22,021 as at December 31, 2020.
32. | On October 13, 2020, the Company entered into a definitive agreement to acquire Eximius Design, LLC and Eximius Design India Private Limited, a leading engineering services company with expertise in semiconductor, software and systems design for a total consideration of USD 80 million. The acquisition is subject to customary closing conditions and regulatory approvals and is expected to be concluded in the quarter ending March 31, 2021. |
33. | On December 22, 2020, as part of strategic partnership, the Company entered into a definitive agreement with Metro AG to take over the IT units in Germany and Romania. The consummation of the transaction is subject to receipt of regulatory approvals and customary closing conditions and is expected to be completed by April 30, 2021. |
32
34. | Events after the reporting period |
The Board of Directors in their meeting held on January 13, 2021, declared an interim dividend of ₹ 1/- (USD 0.01) per equity share and ADR (50% on an equity share of par value of ₹ 2/-).
The accompanying notes form an integral part of these interim condensed consolidated financial statements
As per our report of even date attached | For and on behalf of the Board of Directors | |||||
for Deloitte Haskins & Sells LLP | Rishad A. Premji | M. K. Sharma | Thierry Delaporte | |||
Chartered Accountants | Chairman | Director | Chief Executive Officer & | |||
Firm Registration No: 117366W/W - 100018 | Managing Director | |||||
Vikas Bagaria | Jatin Pravinchandra Dalal | M. Sanaulla Khan | ||||
Partner | Chief Financial Officer | Company Secretary | ||||
Membership No. 60408 | ||||||
Bengaluru | ||||||
January 13, 2021 |
33