| Disclosure of accounting policies, change in accounting policies and changes in estimates explanatory 1. Background of the Company and principles of Consolidation These Consolidated Financial Statements relate to One97 Communications Limited (Parent Company), incorporated in the year 2000, and its subsidiary companies (hereinafter referred to as “One97 Group”). One97 Group is in the business of providing services primarily using voice and messaging platforms to the telecom operators and enterprise customers, providing digital goods, physical goods and mobile commerce platform, which enables third party vendors/merchants to sell their goods online in India (Retail Marketplace) and providing payment solution to ecommerce merchants using RBI approved semi-closed wallet. On May 11, 2010, the Parent Company converted to a Public Limited Company and changed its name from One97 Communications Private Limited to One97 Communications Limited. (A) The Subsidiaries included in the consolidated financial statements are as under:- Name of the Subsidiary Company Country of Incorporation Relationship Proportion of ownership as at March 31, 2015 (%) Date of acquisition/ Incorporation One97 Communications Nigeria Limited Nigeria Subsidiary 100 July 27, 2010 One97 Communications FZ-LLC Dubai Subsidiary 100 December 26, 2010 One97 Communications India Limited (formerly known as Always on Managed Services Private Limited) India Subsidiary 100 December 21, 2010 One97 Communications Singapore Private Limited Singapore Subsidiary 100 May 31, 2011 One97 USA Inc. USA Subsidiary 100 November 30, 2011 One Nine Seven Communications Kenya Limited Kenya Subsidiary of One97 Communications FZ-LLC 100 May 06, 2011 One97 Communications Rwanda Private Limited Rwanda Subsidiary of One97 Communications Singapore Private Limited 100 August 28, 2012 One97 Communications Tanzania Private Limited Tanzania Subsidiary of One97 Communications Singapore Private Limited 100 January 10, 2012 One97 Communications Bangladesh Private Limited Bangladesh Subsidiary of One97 Communications Singapore Private Limited 100 September 2, 2013 One97 Uganda Limited Uganda Subsidiary of One97 Communications Singapore Private Limited 100 October 24, 2013 One97 Communications Ghana Limited Ghana Subsidiary of One97 Communications Singapore Private Limited 100 March 12, 2014 One97 Ivory Coast SA Ivory Coast Subsidiary of One97 Communications Singapore Private Limited 100 March 05, 2014 One97 Communications Senegal-SUARL Senegal Subsidiary of One97 Communications Singapore Private Limited 100 March 31, 2014 O S Communications PLC Ethiopia Subsidiary of One97 Communications Singapore Private Limited 100 February 11, 2014 One97 Benin SA Benin Subsidiary of One97 Communications Singapore Private Limited 100 May 16,2014 PT.One97 Communications Indonesia Indonesia Subsidiary of One97 Communications Singapore Private Limited 100 January 30,2015 Paytm Labs Inc. Canada Subsidiary of One97 Communications Singapore Private Limited 100 January 01,2015 One97 Communications SA (PTY) Limited South Africa Subsidiary of One97 Communications Singapore Private Limited 100 December 3, 2015 Paytm Labs Ireland Limited Ireland Subsidiary of One97 Communications Singapore Private Limited 100 December 16, 2015 (B) About the One97 Group a. During the year ended March 31, 2012, the Company incorporated One97 Enterprises (USA) Inc. During the financial year 2013-2014 company has changed its name to One97 (USA) Inc. to provide value added services in USA. During the year as One97 (USA) Inc was incorporated by the Company, there is no goodwill on consolidation. b. During the year ended March 31, 2012, the Company incorporated One97 Communications Singapore Private Limited, Singapore to provide value added services in Singapore. As One97 Communications Singapore Private Limited was incorporated by the Company, there is no goodwill on consolidation. c. During the year ended March 31, 2013, the Company incorporated One97 Communications Rwanda Private Limited, Rwanda as wholly owned subsidiary of its subsidiary One97 Communications Singapore Private Limited, to provide value added services in Rwanda. As One97 Communications Rwanda Private Limited was incorporated by the Company, there is no goodwill on consolidation. d. During the year ended March 31, 2014, the Company incorporated One97 Communications Bangladesh Private Limited, Bangladesh; One97 Uganda Limited, Uganda; One97 Communications Ghana Limited, Ghana; One97 Ivory Coast SA, Ivory Coast; One97 Communications Senegal SUARL, Senegal and OS Communications PLC, Ethiopia as wholly owned subsidiaries of its subsidiary One97 Communications Singapore Private Limited, to provide value added services in respective countries of incorporation. As the above mentioned subsidiaries were incorporated by the Company, there is no goodwill on consolidation. e. During the year ended March 31, 2015, the Company incorporated One97 Benin SA, Benin; PT.One97 Communications Indonesia, Indonesia; One97 Communications SA (PTY) Limited, South Africa; Paytm Labs Ireland Limited, Ireland as wholly owned subsidiaries of its subsidiary One97 Communications Singapore Private Limited, to provide value added services in respective countries of incorporation. As the above mentioned subsidiaries were incorporated by the Company, there is no goodwill on consolidation. f. During the year ended March 31, 2015 One97 Group acquired 100% ownership of Paytm Labs Inc, Canada for consideration in cash amounting to CAD 100. (C) The consolidated financial statements are brpared on the following basis: i) The financial statements of the Parent Company and its subsidiary Companies have been combined on a line by line basis by adding together the book values of like items of assets, liabilities, income and expense after fully eliminating intra group balances and intra group transactions resulting in unrealized profit and losses, if any as per Accounting Standard 21, on Consolidated Financial Statements, issued by The Institute of Chartered Accountants of India as notified by the Companies Accounting Standards Rules, 2006 (as amended). ii) Consolidated financial statements are brpared using uniform accounting policies for the like transactions and other events in similar circumstances and are brsented to the extent possible in the same manner as the Company’s stand alone financial statements. The impact of differences in accounting policies, if material, has been disclosed in the financial statements. iii) The financial statements of subsidiaries used for the purpose of consolidation are drawn up to the same reporting date as that of the Company. 2. Basis of brparation The financial statements of the Company have been brpared in accordance with generally accepted accounting principles in India (Indian GAAP). The Company has brpared these financial statements to comply in all material respects with the accounting standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules 2014. The financial statements have been brpared on an accrual basis and under the historical cost convention The accounting policies have been consistently applied by One97 Group and are consistent with those used in the brvious year except for the change in accounting policy explained below. 2.1 Statement of significant accounting policies a) Use of estimates The brparation of financial statements in conformity with Indian GAAP requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based on the management’s best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods. b) Tangible fixed assets Fixed assets are stated at cost less accumulated debrciation and impairment losses if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use. Subsequent expenditure related to an item of fixed asset is added to its book value only if it increases the future benefits from the existing asset beyond its brviously assessed standard of performance. All other expenses on existing fixed assets, including day-to-day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenses are incurred. Gains or losses arising from de-recognition of fixed assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized. c) Intangible assets i) Internally generated software Research costs are expensed as incurred. Development expenditure incurred on an individual project is recognized as an intangible asset when the Group can demonstrate: - The technical feasibility of completing the intangible asset so that it will be available for use or sale; - Its intention to complete the asset and use or sell it; - Its ability to use or sell the asset; - How the asset will generate probable future economic benefits; - The availability of adequate resources to complete the development and to use or sell the asset; and - The ability to measure reliably the expenditure attributable to the intangible asset during development. Any expenditure carried forward is amortized over the period of expected future sales from the related project, not exceeding ten years. The carrying value of development costs is reviewed for impairment annually when the asset is not yet in use, and otherwise when events or changes in circumstances indicate that the carrying value may not be recoverable. ii) Software Software and licenses acquired are recorded at consideration paid for acquisition. d) Debrciation Debrciation is provided using the written down value method as per the rates brscribed under schedule II of the Companies Act, 2013. Leasehold Improvements are debrciated over lower of the period of the lease or useful life. The Company, effective April 1, 2014 has changed debrciation rates from those brscribed under Schedule XIV to Companies Act, 1956 to rates brscribed under Schedule II to Companies Act, 2013 e) Amortization Internally generated software is amortized at the rate of 16.21% per annum on a straight Line basis. Other Software and licenses acquired are amortized over the estimated useful life at the rate of 40% on written down value method. f) Leases Where the Company is the lessee Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased term are classified as operating leases. Operating lease payments are recognized as an expense in the Profit and Loss account on a straight-line basis over the lease term g) Investments Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long term investments. Current investments are carried at lower of cost and fair value determined on an individual investment basis. Long-term investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary in the value of the investments. On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the statement of profit and loss. h) Revenue recognition Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. The following specific recognition criteria must also to be met before Revenue is recognized. (i) Sale of mobile value added services Revenue from services is recognized as and when services are rendered as per the terms of the agreement with customers. Revenues are disclosed net of the service tax charged on such services. In terms of the contract, excess of revenue over the billed at the period end is carried in the financial statement as unbilled revenue. (ii) Commission The Company facilitates recharge of talk time, bill payments, availability of bus tickets and various goods through market place platform and earns commission for the respective services. Commission income is recognized on completion of the Company’s obligation as per the terms of contract with its customer. (iii) Service fees The Company earns service fee from merchants when the transaction of sale of goods or provisioning of services by the merchants is completed and settled through its retail market place. Such service fee is generally determined as a percentage based on value of merchandise being sold/ service being rendered by the merchants. Amount received by the Company pending settlement are disclosed as Payable to the merchants under Current Liabilities. Company also provides payment gateway services to third party merchants and recognizes the commission on successful settlement of transaction. (iv) Sale of Goods Revenue is recognized when the significant risks and rewards of ownership of the goods have passed to the buyer. Revenues are disclosed net of the service tax and VAT charged on such sale of goods. (v) Interest Interest Income is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable. (vi) Dividend Dividend income is recognized when the shareholders’ right to receive payment is established by the balance sheet date. i) Semi-closed Wallet The Company received authorization from RBI to set up and operate Semi closed wallet (SCW) on August 06, 2013. Consequently, amounts received from subscribers to the SCW are deposited in Escrow Bank account and are recorded as wallet liability under other current liabilities. j) Cash Incentive The Company for the purpose of promoting its Retail Market place services gives cash incentive to subscribers of SCW and record the same as expense as marketing and business promotion expense. k) Foreign currency transactions i. Initial Recognition Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction. ii. Conversion Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction. iii. Exchange Differences Exchange differences arising on the settlement of monetary items or on reporting monetary items of Group at rates different from those at which they were initially recorded during the year, or reported in brvious financial statements, are recognised as income or as expenses in the year in which they arise. iv. Translation of non-integral foreign operations In translating the financial statements of a non-integral foreign operation for incorporation in consolidated financial statements, the assets and liabilities, both monetary and non-monetary, of the non-integral foreign operation are translated at the closing rate; income and expense items of the non- integral foreign operations are translated at yearly average exchange rates; and all resulting exchange differences are accumulated in a foreign currency translation reserve until the disposal of net investment. On the disposal of a non-integral foreign operation, the cumulative amount of the exchange differences which have been deferred and which relate to that operation are recognised as income or as expenses in the same period in which the gain or loss on disposal is recognised. v. Accounting for foreign operations A foreign operation which is integral to the operations of the Group is translated using the same procedure mentioned above as if the transactions were entered into by the Group on its own. l) Retirement and other employee benefits i. Retirement benefit in the form of Provident Fund and Employee State Insurance Schemes are defined contribution scheme and the contribution is charged to the Statement of Profit and Loss of the year when the contributions to the respective fund is due. There are no other obligations of the One97 Group other than the contribution to the fund. The provisions of Provident Fund are not applicable to the subsidiaries of the Company. ii. Gratuity liability is defined benefit obligation and is provided on the basis of an actuarial valuation on projected unit credit method made at the end of each financial year. iii. Short term compensated absences are provided for on the basis of estimates. Long term compensated absences are provided for based on actuarial valuation. The actuarial valuation is done as per projected unit credit method. iv. Actuarial gains/losses are immediately taken to profit and loss account and are not deferred. m) Income Taxes Tax expense comprises current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in India. Deferred income taxes reflects the impact of current year timing differences between taxable income and accounting income and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relate to the taxes on income levied by same governing taxation laws. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. In situations where the Group has unabsorbed debrciation or carry forward tax losses, deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits. At each balance sheet date the Group re-assesses unrecognized deferred tax assets. It recognizes unrecognized deferred tax assets to the extent that it has become reasonably certain or virtually certain, as the case may be that sufficient future taxable income will be available against which such deferred tax assets can be realized. The carrying amount of deferred tax assets are reviewed at each balance sheet date. The Group writes-down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realized. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available. n) Employee stock compensation cost Employees (including senior executives) of the Company receive remuneration in the form of share based payment transactions, whereby employees render services as consideration for equity instruments (equity-settled transactions). In accordance with the Guidance Note on Accounting for Employee Share-based Payments, the cost of equity-settled transactions is measured using the intrinsic value method. Compensation expense is amortized over the vesting period of the option on a graded vesting method. The cumulative expense recognized for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Company’s best estimate of the number of equity instruments that will ultimately vest. o) Earnings / (Loss) per share Basic earnings / (loss) are calculated by dividing the net profit for the year attributable to equity shareholders (after deducting applicable taxes) of the One97 group by the weighted average number of equity shares outstanding during the year. For the purpose of calculating diluted earnings per share, the net profit for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares. p) Provision A provision is recognized when the Group has a brsent obligation as a result of past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its brsent value and are determined based on management estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current management estimates. q) Segment policies Identification of segments: The Group’s operating businesses are organized and managed separately according to the nature of products and services provided, with each segment rebrsenting a strategic business unit that offers different products and serves different markets. The analysis of geographical segments is based on the areas in which major operating divisions of the Group operate. Inter segment Transfers: The Group generally accounts for intersegment sales and transfers as if the sales or transfers were to third parties at current market prices Allocation of common costs: Common allocable costs are allocated to each segment according to the relative contribution of each segment to the total common costs. Unallocated items: Includes general corporate income and expense items which are not allocated to any business segment. Segment Policies: The Group brpares its segment information in conformity with the accounting policies adopted for brparing and brsenting the financial statements of the Group. r) Cash and cash equivalents Cash and cash equivalents for the purpose of cash flow statement comprise cash at bank and in hand and short-term investments with an original maturity of three months or less. s) Contingent liabilities A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a brsent obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements. t) Measurement of Earnings / (Loss) before Interest, Tax, Debrciation and Amortization The Group has elected to brsent earnings before interest, tax, debrciation and amortization (EBITDA) as a separate line item on the face of the statement of profit and loss. The Company measures EBITDA on the basis of profit/ (loss) from continuing operations. In its measurement, the Company does not include debrciation and amortization expense, finance costs and tax expense. 24. Earnings/ (Loss) per share (EPS) (Amount in Rs.) Particulars March 31, 2016 March 31, 2015 Net loss as per statement of profit and loss (15,349,561,483) (3,720,076,679) Weighted Average number of Equity Shares for calculating basic EPS 40,202,354 27,149,204 Basic earnings per equity share (381.81) (137.02) Diluted earnings per equity share * (381.81) (137.02) * In view of losses during the current and brvious year, the options which are anti-dilutive have been ignored in the calculation of diluted earnings per share. Accordingly, there is no variation between basic and diluted earnings per share. 25. Gratuity The Group has defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn basic salary) for each completed year of service subject to maximum of Rs. 10 lacs. The scheme of the Company is funded while the scheme of all the subsidiaries is unfunded. Disclosures are as per actuarial report of independent actuary. The following tables summarize the components of net benefit expenses recognized in the statement of profit and loss and the funded status and amount recognized in the balance sheet for the respective plans. Statement of profit and loss Net employee benefit expenses recognized in the employee cost (Amount in Rs.) Description March 31, 2016 March 31, 2015 Current service cost 18,152,212 12,888,519 Interest cost on benefit obligation 3,367,823 2,316,872 Expected return on plan assets (906,482) (751,667) Net Actuarial(gain)/loss recognized in the year 16,370,466 (190,583) Net benefit expenses 36,984,019 14,263,141 Balance Sheet Benefit asset/liability (Amount in Rs.) Description March 31, 2016 March 31, 2015 Present Value of defined benefit obligation 74,648,249 42,097,789 Fair Value of plan assets 25,638,461 10,072,020 Plan assets/(liability) (49,009,788) (32,025,769) Changes in the brsent value of the defined benefit obligation are as follows: (Amount in Rs.) Description March 31, 2016 March 31, 2015 Present value of obligation as at the beginning of the period 42,097,789 28,960,898 Acquisition adjustment - - Interest cost 3,367,823 2,316,872 Past service cost - - Current service cost 18,152,212 12,888,519 Curtailment cost/(Credit) - - Settlement cost/(Credit) - - Benefit Paid (5,229,446) (2,074,552) Actuarial (gain)/loss on obligation 16,259,871 6,052 Present value of obligation as at the end of Period 7,46,48,249 42,097,789 Changes in the brsent value of the plan assets are as follows: (Amount in Rs.) Description March 31, 2016 March 31, 2015 Opening fair value of Plan assets 10,072,020 8,351,856 Expected return 906,482 751,667 Contributions by employer - - Recovery of Additional Contributions 20,000,000 3,000,000 Coverage Premium deducted - (153,586) Benefit Paid (5,229,446) (2,074,552) Actuarial gains/(losses) (110,595) 196,635 Closing fair value of Plan assets 25,638,461 10,072,020 The principal actuarial assumptions used in determining gratuity for the Company are shown below: March 31, 2016 March 31, 2015 Discount rate 8.0% 8.0% Salary increment rate 10.0% 6.0% Expected rate of return on plan assets 8.0% 9.0% The estimates of future salary increases, considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. The overall expected rate of return on assets is determined based on the market prices brvailing on that date, applicable to the period over which the obligation is to be settled. There has been significant change in expected rate of return on assets due to change in the market scenario. Amounts for the current and brvious years are as follows: (Amount in Rs.) Description March 31, 2016 March 31, 2015 March 31, 2014 March 31, 2013 March 31, 2012 Defined Benefit obligations 74,648,249 42,097,789 28,960,898 22,094,912 16,543,102 Plan Assets 25,638,461 10,072,020 8,351,856 11,263,629 8,703,975 Surplus/ (deficit) (49,009,788) (32,025,769) (20,609,042) (10,831,283) (7,839,127) Experience adjustment on plan liabilities 59,774,001 (6,052) 94,603 749,998 278,709 Experience adjustment on plan assets (110,595) 196,635 (251,281) 102,422 328,777 26. Employee Stock Option Plans During the year ended March 31, 2009, the Company introduced One 97 Employee Stock Option Plan – I for the benefit of employees as approved by the Board of Directors in the meeting held on September 08, 2008 and by the members in the Extra Ordinary General Meeting held on October 22, 2008 for a total of 951,355 options. The Company has appropriated 795,056 options of Rs.10 each to be granted to eligible employees which were granted on December 31, 2008. These options were granted to all eligible, permanent employees who were on rolls of Company as at December 31, 2008 and to be settled in equity. These options have a vesting period of 4 years and were vested at one year interval in the following proportion: Date of vesting % of total options vesting December 31, 2009 10% December 31, 2010 20% December 31, 2011 30% December 31, 2012 40% Out of 795,056 options granted, exercise price of 233,602 options granted to employees who joined the Company till March 31, 2007 is Rs.10 per option and for 561,454 options granted to employees joining between April 01, 2007 and December 31, 2008 the exercise price is Rs 49 per option. On September 03, 2010, the Company has appropriated 252,101 options of Rs.10 each to be granted to eligible employees (including grant of 30,000 options to independent non-executive directors) at an exercise price of Rs. 180 each. Options granted to independent non-executive directors were approved in Extra-Ordinary General meeting of members held on November 22, 2010. These options have a vesting period of 4 years at one year interval in following proportion: Date of vesting % of total options vesting September 03, 2011 10% September 03, 2012 20% September 03, 2013 30% September 03, 2014 40% On September 01, 2011, the Company increased the ESOP pool by adding 107,407 options taking total ESOP pool to 1,058,762 as approved by the Board of Directors in the meeting held on August 02, 2011 and by the members in the Extra Ordinary General Meeting held on August 19, 2011. On January 30, 2012, the Company has appropriated 4,330 options of Rs.10 each to be granted to one eligible employee at an exercise price of Rs. 232 each. These options have a vesting period of 4 years at one year interval in following proportion: Date of vesting % of total options vesting January 30, 2012 10% January 30, 2013 20% January 30, 2014 30% January 30, 2015 40% On December 29, 2012, the Company has appropriated 196,163 options as approved by the Board of Directors in the meeting held on November 29, 2012 and by the members in the Extra Ordinary General Meeting held on December 29, 2012. These options have a vesting period of 4 years at one year interval in following proportion: Date of vesting % of total options vesting December 29, 2012 10% December 29, 2013 20% December 29, 2014 30% December 29, 2015 40% On August 01, 2013, the Company has appropriated 166,668 options as approved by the Board of Directors in the meeting held on January 31, 2014. 30% of these options have a vesting period of 4 years at one year interval in following proportion: Date of vesting % of total options vesting August 1, 2014 10% August 1, 2015 20% August 1, 2016 30% August 1, 2017 40% Remaining 70% of the options will be vested upon achievement of certain performance targets. On March 31, 2014, the Company increased the ESOP pool by adding 260,000 options taking total ESOP pool to 1,318,762 as approved by the Board of Directors in the meeting held on January 31, 2014 and by the members in the Extra Ordinary General Meeting held on August 31, 2014. On April 01, 2014 the Company has appropriated 313,446 options as ratified by the Board of Directors in the meeting held on June 10, 2015. Date of vesting % of total options vesting April 1, 2015 10% April 1,2016 20% April 1,2017 30% April 1,2018 40% On April 01, 2015, the Company has appropriated 491,722 options of Rs.10 each to be granted to eligible employees at an exercise price of Rs. 90 each. These options have a vesting period of 4 years at one year interval in following proportion: Date of vesting % of total options vesting April 1,2016 10% April 1,2017 20% April 1,2018 30% April 1,2019 40% On September 30, 2015, the Company increased the ESOP pool by adding 604,858 options taking total ESOP pool to 1,923,620 as approved by the Board of Directors in the meeting held on July 24, 2015 and by the members in the Annual General Meeting held on September 30, 2015. On October 01, 2015 the Company has appropriated 92,137 options of Rs.10 each to be granted to eligible employees at an exercise price of Rs. 90 each. These options have a vesting period of 4 years at one year interval in following proportion: Date of vesting % of total options vesting October 1,2016 10% October 1,2017 20% October 1,2018 30% October 1,2019 40% The total options outstanding as at March 31, 2016 are 1,035,434 (March 31, 2015: 709,789) out of which 67,756 (March 31, 2015: 88,755) options have an exercise price of Rs. 10 each, 100,268 (March 31, 2015: 107,654) options have an exercise price of Rs. 49 each, 203,833 (March 31, 2015: 223,433) options have an exercise price of Rs. 180 each and 663,577 (March 31, 2015: 289,946) options have an exercise price of Rs. 90 each. The details of activity are summarized below: Particulars March 31, 2016 March 31, 2015 Number of Options Weighted Average Exercise Price (in Rs.) Number of Options Weighted Average Exercise Price (in Rs.) Outstanding at the beginning of the year 709,789 102.11 579,123 133.92 Options granted during the year 583,859 90 313,446 90 Options exercised during the year (104,022) 91.57 (60,834) 180 Options forfeited during the year (154,192) 87.52 (121,946) 150.88 Options outstanding at the end of the year 1,035,434 98.51 709,789 102.11 Vested options outstanding at the end of the year (exercisable ) 328,294 95.34 282,529 76.68 The details of exercise price for stock options outstanding at the end of the year are: March 31,2016 Exercise Prices (in Rs.) Number of options outstanding Weighted average remaining contractual life of options (in years) 10 67,756 - 49 100,268 - 180 203,833 0.75 90 663,577 2.13 Total 1,035,434 March 31, 2015 Exercise Prices (in Rs.) Number of options outstanding Weighted average remaining contractual life of options (in years) 10 88,756 - 49 107,654 - 180 223,433 1.75 90 289,946 3.00 Total 709,789 Accounting for stock options Guidance note on “Accounting for Employees Share Based Payments” issued by The Institute of Chartered Accountants of India establishes financial accounting and reporting principles for employees share based payments plans. The Company has elected to apply intrinsic-value based method for accounting for stock options plan and accordingly the difference between the fair value of the underlying shares and the exercise price is expensed to the statement of profit & loss over the period of the vesting. Had the stock options plan been determined applying the fair value approach described in the guidance note the Company’s net income and basic earnings per share would have changed to the Performa amount as indicated : (Amount in Rs.) Particulars March 31, 2016 March 31, 2015 Profit available to equity shareholders (15,349,561,483) (3,720,076,679) Add: Stock based employee compensation expense (intrinsic value method) 219,490,881 12,757,624 Less: Stock based employee compensation expense (fair value method) 228,202,974 27,888,116 Proforma net profit available to equity shareholders (15,358,273,576) (3,735,207,171) Basic earnings per share - As reported (381.81) (137.02) - Pro forma (382.02) (137.58) The weighted average fair value of options granted under the One 97 ESOP Scheme during the year ended March 31, 2009 (computed using Black-Scholes model) was Rs. 100. The estimation of fair value on date of grant was made using the Black-Scholes model with the following assumptions: Weighted average share price Rs. 126.35 Weighted average exercise price Rs. 37.54 Dividend yield % 0% Expected life (years) 5 Risk free interest rate 7.5% Volatility 0% The weighted average fair value of options granted under the One 97 ESOP Scheme during the year ended on March 31, 2012 (computed using Black-Scholes model) was Rs. 47. The estimation of fair value on date of grant was made using the Black-Scholes model with the following assumptions: Weighted average share price Rs. 180 Weighted average exercise price Rs. 180 Dividend yield % 0% Expected life (years) 4 Risk free interest rate 7.5% Volatility 0% The weighted average fair value of options granted under the One 97 ESOP Scheme during the year ended on March 31, 2015 (computed using Black-Scholes model) was Rs. 148.99. The estimation of fair value on date of grant was made using the Black-Scholes model with the following assumptions: Weighted average share price Rs. 200 Weighted average exercise price Rs. 90 Dividend yield % 0% Expected life (years) 4 Risk free interest rate 8,62% Volatility 0% The weighted average fair value of options granted under the One 97 ESOP Scheme during the year ended on March 31, 2016 (computed using Black-Scholes model) was Rs. 1,065 for grant date April 1, 2015 and Rs. 2,637 for grant date October 1, 2015. The estimation of fair value on date of grant was made using the Black-Scholes model with the following assumptions: Grant Date:- April 1, 2015 Weighted average share price Rs. 1,065 Weighted average exercise price Rs. 90 Dividend yield % 0% Expected life (years) 4 Risk free interest rate 7.79% Volatility 0% Grant Date:- October 1, 2015 Weighted average share price Rs. 2,637 Weighted average exercise price Rs. 90 Dividend yield % 0% Expected life (years) 4 Risk free interest rate 7.58% Volatility 0% The risk free interest rate is the yield on 10 year government bonds in India. Expected volatility is considered as ‘Nil’ as the Company is not listed on any recognized stock exchange. The expected option life is based on exercise period. 27. Leases Operating lease: Company as Lessee The Group has taken certain office space on non-cancellable operating lease. Rental expense towards non- cancellable leases charged to statement of profit and loss for the year ended March 31, 2016 amount to Rs. 79,274,817 (Previous Year Rs. 20,751,106). Future minimum rentals payable under non-cancellable operating leases are as follows: (Amount in Rs.) Particulars March 31, 2016 March 31, 2015 Not later than one year 81,543,500 51,665,210 Later than one year but not later than five years 51,922,192 73,238,000 Later than five years - - 28. Related Party Disclosures 1) Names and description of related parties where control exists irrespective of whether transactions have occurred or not a) Individuals having substantial interest in voting power and power to direct the financials and operating policies of the Group Vijay Shekhar Sharma b) Investing party SAIF III Mauritius Company Limited SAIF Partners India V Limited Alipay Singapore E-Commerce Private Limited Alibaba.com Singapore E-Commerce Private Limited 2) Other related parties with whom transactions have taken place during the year. a) Relatives of Individuals owning interest in the voting power of the Company that gives the control or significant influence Ajay Shekhar Sharma (Brother of Mr. Vijay Shekhar Sharma) Details of transactions with related parties during the year ended March 31, 2016 and March 31, 2015 (Amount in Rs.) Particulars Investing Parties Key Management Personnel and relative of Key Management Personnel March 31, 2016 March 31, 2015 March 31, 2016 March 31, 2015 Remuneration Mr. Vijay Shekhar Sharma - - 31,009,161 23,000,000 Mr. Ajay Shekhar Sharma - - 5,310,994 5,455,750 Issue of Equity Shares Alipay Singapore E-Commerce Private Limited 119,101,650 30,751,130 - - Alibaba.com Singapore E-Commerce Private Limited 39,434,940 - - - SAIF Partners India V Limited - 4,730,940 - - Security Premium received Alipay Singapore E-Commerce Private Limited 26,735,798,350 3,976,498,870 - - Alibaba.com Singapore E-Commerce Private Limited 12,931,565,060 - - - SAIF Partners India V Limited - 618,269,060 - - Total 39,825,900,000 4,630,250,000 36,955,540 28,798,529 Note: Working Capital Facility of Rs. 149,812,855 has been backed by irrevocable and personal guarantee of Mr. Vijay Shekhar Sharma, Managing Director of the Company. 29. Additional Information: Name of the entity Net Assets, i.e., total assets minus total liabilities Share in profit or loss As % of consolidated net assets Amount As % of consolidated profit or loss Amount Parent One97 Communications Limited 98.95% 27,786,302,617 100.45% (15,485,141,359) Subsidiaries Indian One97 Communications India Limited 0.02% 3,364,421 (0.001%) 132,932 Foreign One97 Communications Singapore Private Limited 0.82% 214,899,876 (0.293%) 44,998,000 One97 Communications FZ-LLC 0.04% 7,432,114 (0.183%) 28,060,747 One97 Communications Nigeria Limited 0.16% 34,173,280 (0.002%) 345,830 One97 USA Inc. 0.01% 1,679,858 (0.012%) 1,866,340 Interest in Associate Indian Loginext Solutions Private Limited - - 0.039% (5,977,683) 100.00% 28,110,040,381 100.00% (15,349,561,483) 30. Segment Information The Company has identified “Mobile Value Added Services”, “Market Place” and “Payments” as three distinct business segments with risks and reward of each being different from the other. Segmental Reporting The Company identified primary segments based on the dominant source and nature of risks and returns and the internal organization and management structure. The operating segments are the segments for which separate financial information is available and for which operating profit/loss amounts are evaluated regularly by executive Management in deciding how to allocate resources and in assessing performance, as brscribed by Notified Accounting Standard 17 – “Segment Reporting” by Companies (Accounting Standards) Rules, 2006 a) Primary Segment The Company operates in three primary business segments viz. “Mobile Value Added Services”, “Market Place” and “Payments”. b) Secondary Segment The secondary segment is identified to geographical locations and Company’s substantial revenues and assets base primarily relates to operations inside India only. The “Mobile Value Added Services” includes the services given to enterprises for promoting their products and services. It also includes the services given to end customers through telecom operators where services are sold to and consumed directly by end customer. The “Marketplace” includes the services provided to merchants and customers as an e-commerce platform to facilitate selling/ buying of goods and services. The “Payments” includes the services provided by acting as a payment facilitator through payment gateway or wallet on third party merchant websites/ mobile applications or offline merchants. The Company has re-assessed its focus in different business segments pursued by the Company and has re-aligned its business segments along the risks and rewards. Accordingly, the Company has identified Mobile value added services, Marketplace and payments as three distinct business segments with risks and reward of each being different from the other. This is also in line with significant increase in volume of business in respective segments. Previous year comparatives have been reported, as applicable. Particulars Market Place Mobile Value Added Services Payments Corporate & Others Total Year ended Year ended Year ended Year ended Year ended Year ended Year ended Year ended Year ended Year ended March 31, 2016 March 31, 2015 March 31, 2016 March 31, 2015 March 31, 2016 March 31, 2015 March 31, 2016 March 31, 2015 March 31, 2016 March 31, 2015 REVENUE External Sales 3,820,965,522 371,170,014 3,149,499,036 2,334,183,775 1,580,391,336 528,457,531 - - 8,550,855,894 3,233,811,320 Inter Segment sales - - - - - - - - - - Other Income - - - - - - - - - - Total revenue 3,820,965,522 371,170,014 3,149,499,036 2,334,183,775 1,580,391,336 528,457,531 - - 8,550,855,894 3,233,811,320 RESULT Segment result (11,689,945,286) (1,548,691,432) 247,783,209 (133,024,858) (4,761,289,414) (2,030,189,778) - - (16,203,451,492) (3,711,906,069) Unallocated corporate expenses - - - - - - 24,115,427 73,324,419 24,115,427 73,324,419 Operating profit - - - - - - - - (16,227,566,919) (3,785,230,488) Interest expenses - - - - - - 13,672,366 23,416,613 13,672,366 23,416,613 Interest income - - - - - - 132,349,640 25,806,355 132,349,640 25,806,355 Other income - - - - - - 761,760,569 109,407,307 761,760,569 109,407,307 Taxes - - - - - - 2,432,407 46,643,240 2,432,407 46,643,240 Net profit - - - - - - - - (15,349,561,483) (3,720,076,679) · There are no inter-segment sales. Particulars Market Place Mobile Value Added Services Payments Corporate & Others Total Year ended Year ended Year ended Year ended Year ended Year ended Year ended Year ended Year ended Year ended March 31, 2016 March 31, 2015 March 31, 2016 March 31, 2015 March 31, 2016 March 31, 2015 March 31, 2016 March 31, 2015 March 31, 2016 March 31, 2015 OTHER INFORMATION Segment assets 3,709,790,806 795,547,622 2,447,553,710 2,252,988,143 3,201,237,354 1,987,694,857 - - 9,358,581,869 5,036,230,622 Unallocated corporate assets - - - - 25,142,396,490 1,973,086,188 25,142,396,490 1,973,086,188 Total assets 3,709,790,806 795,547,622 2,447,553,710 2,252,988,143 3,201,237,354 1,987,694,857 25,142,396,490 1,973,086,188 34,500,978,359 7,009,316,810 Segment liabilities 2,183,981,391 480,390,207 1,382,692,696 1,198,867,892 2,660,784,026 1,377,575,675 - - 6,227,458,114 3,056,833,773 Unallocated corporate liabilities - - - - - - 147,083,142 106,936,632 147,083,142 106,936,632 Total liabilities 2,183,981,391 480,390,207 1,382,692,696 1,198,867,892 2,660,784,026 1,377,575,675 147,083,142 106,936,632 6,374,541,256 3,163,770,405 Debrciation & Amortization 125,553,939 23,892,100 103,490,075 150,250,692 51,930,423 34,016,649 - - 280,974,438 208,159,441 Capital Expenditure 66,621,275 29,091,412 54,913,775 182,947,704 27,555,257 41,419,229 - - 149,090,307 253,458,345 Provision for doubtful debts - - 92,764,348 73,305,870 4,945,421 - - - 97,709,769 73,305,870 31. Capital Commitments Estimated amount of contracts remaining to be executed on capital account and not provided for is Rs. 129,150,019 Net of capital advance of Rs 33,411,912 (March 31 2015: 61,563,953 (Net of capital advances of Rs. 15,250,862)). 32. The Company is involved in various litigations, the outcomes of which are considered probable, and in respect of which the Company has made aggregate provisions of Rs. 20,703,100 (brvious year Rs. 9,869,320) as at March 31, 2016. 33. Contingent liabilities (Amount in Rs.) March 31, 2016 March 31, 2015 Claims against the Company not acknowledged as debts 25,520,228 40,000,000 Total 25,520,228 40,000,000 Claims against the Company not acknowledged as debts rebrsents certain claims which the Company considers to be frivolous. The group has contingent Liability towards Bank Guarantees provided of Rs.563,731,000 (Previous year Rs.3,306,000). 34. Unhedged Foreign Currency exposures The One97 Group does not use derivative financial instruments such as forward exchange contracts and interest rate swaps to hedge its risks associated with foreign currency fluctuations and interest rate or for trading/speculation purpose. Particulars of unhedged foreign currency exposure as at the Balance Sheet date Particulars March 31, 2016 March 31, 2015 Amount in Foreign Currency Amount (Rs.) Amount in Foreign Currency Amount (Rs.) Liabilities: Creditors- -USD 4,299,622 284,389,053 2,099,574 130,759,586 -NGN 186,000 61,425 1,86,000 57,848 -EURO 2,512 187,918 2,495 169,286 Assets: Debtors - -USD 444,728 29,415,551 282,222 17,063,096 -AFA - - 3,215,539 3,449,476 -BDT 12,892,982 12,404,080 18,357,029 14,434,315 Advance given to suppliers - -USD 2,546 168,400 13,516 845,155 -EURO 375 28,059 2,555 173,346 -ZAR - - 15,050 77,787 Investments -USD - - 300,000 18,759,000 Bank balance- -USD 213,146 14,097,499 212,945 13,315,429 Cash Balance- -USD 12 794 - - -EURO 910 68,086 20 1,357 -KES 2,200 1,408 2,200 1,461 -AED 1,530 27,540 1,530 26,043 -JPY 6,000 3,540 6,000 3,136 -GBP 304 28,941 304 28,198 -HKD 1,330 11,345 590 4,757 -SGD 717 35,054 717 32,622 -IDR 298,000 1,490 298,000 1,418 -YUAN 8,190 83,784 11,952 121,876 Rates used Currency Conversion Rate March 31, 2016 Conversion Rate March 31, 2015 1 US Dollar (USD) 66.14 62.53 1 Bangladeshi Taka (BDT) 0.83 0.79 1 Nigerian Naira (NGN) 0.33 0.31 1 EURO 74.82 67.85 1 AFA (Afghani) 0.96 1.08 1 KES 0.64 0.66 1 AED 18.00 17.02 1 TZS 0.03 0.03 1 GBP 95.20 92.76 1 HKD 8.53 8.06 1 SGD 48.89 45.50 1 JPY 0.59 0.52 1 IDR 0.005 0.004 1 YUAN 10.23 10.20 35. The Company is in the process of investing in another company (to be incorporated) for the purpose of carrying out banking business pursuant to the in principle approval received from Reserve Bank of India vide letter dated August 19, 2015. The incorporation expenses incurred by the Company amounting to Rs.79,105,623 on behalf of another company shall be adjusted against the equity contribution of the Company upon incorporation of the company. 36. Previous Year Comparatives Previous year’s figures have been re-grouped/re-arranged where necessary to conform to current year’s classification. As per our report of even date For S.R. BATLIBOI & ASSOCIATES LLP ICAI Firm registration number: 101049W/E300004 Chartered Accountants For and on behalf of the Board of Directors of One97 Communications Limited per Yogender Seth Partner Membership No. 94524 Place: Date: Vijay Shekhar Sharma Managing Director DIN No. 00466521 Amit Gupta Company Secretary Vikas Garg Vice President - Finance Vivek Kumar Mathur Director DIN No. 03581311 Amit Sinha Chief Financial Officer |