1. General Information

eMudhra Limited is a public limited company engaged in providing various solutions and services like digital signatures, authentication solutions, paperless office solutions and other solutions around PKI technology. eMudhra is a licensed certifying authority under the Information Technology Act,2000.

Founded in 2008 from the seed of digital signatures, eMudhra has since grown to establish strong roots in solutions providing security to enterprises and end consumer for online transactions. eMudhra strives to stay relevant in the PKI and online security space by optimizing a market-based approach to drive solutions that address our customers financial and statutory needs. eMudhra s products include digital signature certificates, authentication solutions, paperless office solutions, solutions for securing data at rest and data in transit, solutions for Internet of Things(IoT), etc.

The consolidated financial statement of eMudhra Limited rebrsent the financials of eMudhra Ltd with its 100% foreign subsidiary eMudhra (Mu) Ltd , Indian subsidiaries Emudhra Technologies Limited and Emudhra Consumer Services Limited.

eMudhra (Mu) Limited is a Mauritius based company incorporated in 2013 for providing services like  digital signature and other authentication security solutions around PKI technology.

Emudhra Technologies Limited brviously known as Emudhra Technologies Private Limited is a public limited company engaged in providing solutions and services like authentication solutions, big data analytics, IT and IT enabled services, web enabled services and other services around PKI technologies.   

 eMudhra Consumer Service Limited is a public limited company incorporated on 20th August 2018 providing various solutions, software products, IT and IT enabled services, web enabled Services, web filling services, web based payment services, wired and/or wireless connectivity as well as internet connectivity, value added services, electronic commerce, Services in various forms such as voice, mail, chat and collaborating browing, database, data processing services and e-governance projects.

Summary of significant accounting policies

I. Basis of Preparation of Accounts

These financial statements have been brpared in accordance with the generally accepted accounting principles in India under the historical cost convention on accrual basis, the existing Accounting Standards notified under the Companies Act, 2013 shall continue to apply. Consequently, these financial statements have been brpared to comply in all material aspects with the accounting standards notified under Section 211(3C) [Companies (Accounting Standards) Rules, 2014, as amended] and other relevant provisions of the Companies Act, 2013.

II. Use of estimates

The brparation of financial statements in conformity with generally accepted accounting principles in India requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities on the date of the financial statements. Actual results could differ from those estimates. Any revision to accounting estimates is recognised prospectively in current and future periods.

III. Tangible Assets

Tangible assets are stated at acquisition cost, net of accumulated debrciation and accumulated impairment losses, if any, except in case of land. Subsequent expenditures related to an item of fixed asset are added to its book value only if they increase the future benefits from the existing asset beyond its brviously assessed standard of performance. The company capitalises all costs relating to the acquisition, installation and construction of fixed assets, up to the date when the assets are ready for commercial use.

Items of fixed assets that have been retired from active use and are held for disposal are stated at the lower of their net book value and net realizable value and are shown separately in the financial statements. Any expected loss is recognised in the Statement of Profit and Loss, losses arising from the retirement of, and gains or losses arising from disposal of fixed assets which are carried at cost are recognised in the Statement of Profit and Loss.

Debrciation on additions/ deletions to fixed assets is calculated on pro-rata basis from/upto the date of such additions/ deletions. The Company provides debrciation on straight-line basis method at the rates specified under Schedule II to the Act. The leasehold value of the land is amortized over the leasehold period.

IV. Intangible Assets

Intangible assets are stated at acquisition cost, net of accumulated amortization and accumulated impairment losses, if any. Intangible assets are amortised on straight-line basis over a period of 10 years, based on management estimate. The amortization period and the amortization method are reviewed at the end of each financial year.

Research costs are expensed as incurred. Software product development costs are expensed as incurred unless technical and commercial feasibility of the project is demonstrated, future economic benefits are probable, the company has an intention and ability to complete and use or sell the software and the costs can be measured reliably. The cost which can be capitalized include the cost of material, direct labour and overhead costs that are directly attributable to brparing the assets for the intended use.

V. Investments

Long term investments are carried at cost and necessary provisions are made to recognize any decline, other than temporary, in the value of such investments.

Current investments are carried at the lower of cost and fair value and provision is made to recognize any decline in the carrying value.

VI. Inventories

Inventories are valued at the lower of cost, computed on a FIFO basis and estimated net realizable value.

VII. Revenue Recognition

 The company use the following methods while recognizing revenue for any given period

1.  Percentage-of-completion method in accounting for its fixed price assignments.

2.  Digital signature related revenue is accounted based on billing.

3.  Revenue from traded materials are accounted on the basis of delivery.

VIII.   Other income

Interest: Interest income is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.

IX. Foreign Currency transactions

Initial Recognition

On initial recognition, all foreign currency transactions are recorded by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.

Subsequent Recognition

As at the reporting date, non-monetary items which are carried in terms of historical cost denominated in a foreign currency is reported using the exchange rate at the date of the transaction. All non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined.

All monetary assets and liabilities in foreign currency are restated at the end of accounting period. With respect to long-term foreign currency monetary items, from April 1, 2011 onwards, the Company has adopted the following policy:

Foreign exchange difference on account of a debrciable asset, is adjusted in the cost of the debrciable asset, which would be debrciated over the balance life of the asset.

In other cases, the foreign exchange difference is accumulated in a Foreign Currency Monetary Item Translation Difference Account, and amortised over the balance period of such long-term asset/ liability.

A monetary asset or liability is termed as a long-term foreign currency monetary item, if the asset or liability is exbrssed in a foreign currency and has a term of 12 months or more at the date of origination of the asset or liability.

Exchange differences on restatement of all other monetary items are recognised in the Statement of Profit and Loss.

 In respect of foreign subsidiary

All the assets and liabilities, both monetary and non-monetary items, are translated into the reporting       currency at the exchange rate in effect at March 31, 2019 and income and expense items are translated at the average rate applicable for the year ended March 31, 2019. Functional currency of the Company is the Mauritian Rupee (MUR) and the reporting currency, the Indian Rupee (INR).

X. Employee Benefits

(a) Defined Contribution Plan

Contribution towards provident fund and pension scheme for employees is made to the regulatory authorities which are recognised by the Income Tax Authorities and administered through appropriate authorities, where the Company has no further obligations. Such benefits are classified as Defined Contribution Schemes as the Company does not carry any further obligations, apart from the contributions made on a monthly basis.

(b) Defined Benefit Plan

The Company provides for gratuity, a defined benefit plan (the Gratuity Plan) covering eligible employees in accordance with the Payment of Gratuity Act, 1972. The Gratuity Plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employees salary and the tenure of employment. The Companys liability is actuarially determined by an independent actuary (using the Projected Unit Credit method) at the end of each year. Actuarial losses/ gains are recognised in the Statement of Profit and Loss in the year in which they arise.

(c) Other Employee Benefits

Compensated Absences: Accumulated compensated absences, which are expected to be availed or encashed within 12 months from the end of the year are treated as short term employee benefits. The obligation towards the same is measured at the expected cost of accumulating compensated absences as the additional amount expected to be paid as a result of the unused entitlement as at the year end.

Accumulated compensated absences, which are expected to be availed or encashed beyond 12 months from the end of the year are treated as other long-term employee benefits. The Companys liability is actuarially determined (using the Projected Unit Credit method) at the end of each year. Actuarial losses/ gains are recognised in the Statement of Profit and Loss in the year in which they arise.

XI. Borrowing Cost

General and specific borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. All other borrowing costs are recognised in the Statement of Profit and Loss in the period in which they are incurred.

XII. Current and Deferred Tax

Tax expense for the period, comprising current tax and deferred tax, are included in the determination of the net profit or loss for the period. Current tax is measured at the amount expected to be paid to the tax authorities in accordance with the taxation laws brvailing in the respective jurisdictions.

Deferred tax is recognised for all the timing differences, subject to the consideration of prudence in respect of deferred tax assets. Deferred tax assets are recognised and carried forward only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date. At each Balance Sheet date, the Company reassesses unrecognised deferred tax assets, if any.

Current tax assets and current tax liabilities are offset when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle the asset and the liability on a net basis. Deferred tax assets and deferred tax liabilities are offset when there is a legally enforceable right to set off assets against liabilities rebrsenting current tax and where the deferred tax assets and the deferred tax liabilities relate to taxes on income levied by the same governing taxation laws.

Minimum Alternative Tax credit is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the specified period. Such asset is reviewed at each Balance Sheet date and the carrying amount of the MAT credit asset is written down to the extent there is no longer a convincing evidence to the effect that the Company will pay normal income tax during the specified period.

XIII. Provisions and Contingent Liabilities

Provisions: Provisions are recognised when there is a brsent obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and there is a reliable estimate of the amount of the obligation. Provisions are measured at the best estimate of the expenditure required to settle the brsent obligation at the Balance Sheet date and are not discounted to its brsent value.

Contingent Liabilities: Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or a brsent obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made.

XIV. Cash and Cash Equivalents

In the cash flow statement, cash and cash equivalents include cash on hand, demand deposits with banks, other short term highly liquid investments with original maturities of three months or less.

XV. Earnings per share

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Earnings considered in ascertaining the Companys earnings per share is the net profit for the period after deducting brference dividends and any attributable tax thereto for the period. The weighted average number of equity shares outstanding during the period and for all periods brsented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares that have changed the number of equity shares outstanding, without a corresponding change in resources. For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares.

XVI. Impairment of Assets

Assessment is done at each Balance Sheet date as to whether there is any indication that an asset (tangible and intangible) may be impaired. For the purpose of assessing impairment, the smallest identifiable group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows from other assets or groups of assets, is considered as a cash generating unit. If any such indication exists, an estimate of the recoverable amount of the asset/cash generating unit is made. Assets whose carrying value exceeds their recoverable amount are written down to the recoverable amount. Recoverable amount is higher of an assets or cash generating units net selling price and its value in use. Value in use is the brsent value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. Assessment is also done at each Balance Sheet date as to whether there is any indication that an impairment loss recognized for an asset in prior accounting periods may no longer exist or may have decreased.

31 Disclosures under accounting standard 15

a) Post Retirement Benefit- Defined Contribution Plans                     

The Company has recognised an amount of Rs.63,75,607 (2018: Rs. 49,83,508) as expenses under the defined contribution plans in the Statement of  Profit and Loss in respect of contribution to Provident Fund for the year ended March 31, 2019.

b) Post Retirement Benefit- Defined Benefit Plan

The Company makes provision for gratuity based on actuarial valuation done on projected unit credit method at each balance sheet date.

The Company makes annual contribution to the Gratuity Fund Trust which is maintained by LIC of India, a defined benefit plan for qualifying employees. The Scheme provides for lump sum payment to vested employees at retirement, death while in employment or on termination of employment as per provisions of Payment of Gratuity Act, 1972.

The brsent value of the defined benefit obligation and the related current service cost are measured using the projected unit credit method with actuarial valuation being carried out at the balance sheet date.                      

(i)  Present Value of Defined Benefit Obligation Gratuity

	For the Year endedMarch 31, 2019	For the Year ended March 31, 2018
Balance at the beginning of the year	1,24,34,198	1,11,00,509
Current service cost	32,01,324	33,46,278
Interest cost	8,72,146	7,57,449
Actuarial (gain)/loss	38,24,719	(22,10,410)
Benefits paid	(9,08,353)	(5,59,628)
Balance at the end of the period/ year	1,94,24,034	1,24,34,198
(ii) Fair value of Plan Assets
Balance at the beginning of the year	33,53,617	16,47,940
Expected return on plan assets	2,91,583	2,05,120
Contribution	19,76,654	22,36,345
Actuarial gain/(loss)	1,89,356	(1,76,160)
Benefits paid	(9,08,353)	(5,59,628)
Balance at the end of the year	49,02,857	33,53,617
(iii) Assets and liabilities recognised in the Balance Sheet
Present value of defined benefit obligation	1,94,24,034	1,24,34,198
Present value of plan assets	49,02,857	33,53,617
Amount recognised as assets/(liability)	(1,45,21,177)	(90,80,581)
Recognised under:
Long term provision (Refer Note 8)	(1,33,21,177)	(87,63,928)
Short term provision (Refer Note 12)	(12,00,000)	(12,00,000)
Total	(1,45,21,177)	(99,63,928)
(iv) Expenses recognised in the Statement of Profit and Loss
Current service cost	32,01,324	33,46,278
Interest cost	8,72,146	7,57,449
Expected return plan assets	(2,91,583)	(2,05,120)
Actuarial (gain)/loss	36,35,363	(20,34,250)
Total expenses	74,17,250	18,64,357

(v) Major Category of Plan Assets as % of total Plan Assets

	As at March 31,2019	As at March 31,2018
Insurer managed funds	100%	100%
(vi) Actuarial assumptions
Discount rate	7.17%	7.00%
Salary growth	10.00%	10.00%
Attrition rate	15.00%	20.00%
Expected rate of return on plan assets	7.50%	8.25%

(vii) Amounts recognised in current period and brvious five years

	As atMarch 31,2019	As at March 31,2018	As at March 31,2017	As at March 31,2016	As at March 31,2015
Present value of obligation	1,94,24,034	1,24,34,198	1,11,00,509	61,11,773	37,11,413
Present value of plan assets	49,02,857	33,53,617	16,47,940	16,46,215	4,95,939
Amount recognised in balance sheet (Liability)/asset	(1,45,21,177)	(90,80,581)	(94,52,569)	(44,65,558)	(32,15,474)

(viii) Expected contribution to the fund next year

	As at March 31,2019	As at March 31,2018
Gratuity	12,00,000	12,00,000

Notes:                                                             

1) The discount rate is based on the brvailing market yields of Indian government securities as at the balance sheet date for the estimated term of the obligation.

2) Expected rate of return on plan assets is based on our expectation of the average long term rate of return expected on investment of the fund during the estimated term of the obligations.

3) The salary escalation rate is the estimate of future salary increase considered taking into account the inflation, seniority, promotion and other relevant factors.

Other employee benefit plan: The liability for leave encashment and compensated balances as at year end is Rs. 51,30,852 (2018: Rs. 44,63,801).