Notes to Accounts of Subex Ltd.

Mar 31, 2025

s. Provision and contingencies

Provisions are recognised when the Company has a present
obligation (legal or constructive) as a result of a past event
and it is probable that an outflow of resources embodying
economic benefits will be required to settle the obligation,
in respect of which a reliable estimate can be made of
the amount of the obligation. If the effect of time value
of money is material, provisions are discounted using a
current pre-tax rate that reflects, when appropriate, the
risks specific to the liability. When discounting is used,

the increase in the provision due to the passage of time is
recognised as a finance cost.

If the Company has a contract that is onerous, the present
obligation under the contract is recognised and measured
as a provision. However, before a separate provision for an
onerous contract is established, the Company recognises
any impairment loss that has occurred on assets dedicated
to that contract.

An onerous contract is a contract under which the
unavoidable costs (i.e., the costs that the Company
cannot avoid because it has the contract) of meeting
the obligations under the contract exceed the economic
benefits expected to be received under it. The unavoidable
costs under a contract reflect the least net cost of exiting
from the contract, which is the lower of the cost of fulfilling
it and any compensation or penalties arising from failure to
fulfil it. The cost of fulfilling a contract comprises the costs
that relate directly to the contract (i.e., both incremental
costs and an allocation of costs directly related to contract
activities).

Contingent liability is a possible obligation arising from past
events and whose existence will be confirmed only by the
occurrence or non-occurrence of one or more uncertain
future events not wholly within the control of the entity or
a present obligation that arises from past events but is not
recognized because;

- it is not probable that an outflow of resources
embodying economic benefits will be required to settle
the obligation or

- the amount of the obligation cannot be measured with
sufficient reliability.

The Company does not recognize a contingent liability but
discloses the same as per the requirements of Ind AS 37.

A contingent asset is a possible asset that arises from past
events and whose existence will be confirmed only by- the
occurrence or non-occurrence of one or more uncertain
future events not wholly within the control of the entity.
The Company does not recognize the contingent asset in
its standalone financial statements since this may result
in the recognition of income that may never be realised.
Where an inflow of economic benefits are probable, the
Company disclose a brief description of the nature of
contingent assets at the end of the reporting period.
However, when the realisation of income is virtually certain,
then the related asset is not a contingent asset and the
Company recognize such assets.

Provisions, contingent liabilities and contingent assets are
reviewed at each Balance Sheet date.

t. Cash dividend to the equity holders of the Company

The Company recognises a liability to make cash
distributions to equity holders of the Company when
the distribution is authorised, and the distribution is no
longer at the discretion of the Company. Final dividends on
shares is recorded as a liability on the date of approval by
the shareholders and interim dividends are recorded as a
liability on the date of declaration by the Company’s Board
of Directors.

u. Earnings/ (loss) per share

Basic earnings per share is calculated by dividing the net
profit or loss attributable to equity holder of the Company
by the weighted average number of equity shares
outstanding during the period. Partly paid equity shares
are treated as a fraction of an equity share to the extent
that they are entitled to participate in dividends relative
to a fully paid equity share during the reporting period.
For the purpose of calculating diluted earnings per share,
the net profit or loss for the period attributable to equity
shareholders of the parent company and the weighted
average number of shares outstanding during the period
are adjusted for the effects of all dilutive potential equity
shares.

v. Cash and cash equivalents

Cash and cash equivalent in the balance sheet comprise
cash at banks and on hand and short-term deposits with
an original maturity of three months or less, that are readily
convertible to a known amount of cash and subject to an
insignificant risk of changes in value.

For the purpose of the Standalone statement of cash flows,
cash and cash equivalents consist of cash and short-term
deposits, as defined above, are considered an integral part
of the Company’s cash management.

w. Exceptional Items

Exceptional Items represents the nature of transactions
which are not in recurring nature during the ordinary course
of business but lead to increase/ decrease in profit/ loss for
the year.

x. Events after reporting period

If the Company receives information after the reporting
period, but prior to the date of approved for issue, about
conditions that existed at the end of the reporting
period, it will assess whether the information affects the
amounts that it recognises in its separate standalone
financial statements. The Company will adjust the amounts
recognised in its standalone financial statements to reflect
any adjusting events after the reporting period and update
the disclosures that relate to those conditions in light
of the new information. For non-adjusting events after
the reporting period, the Company will not change the

amounts recognised in its standalone financial statements
but will disclose the nature of the non-adjusting event and
an estimate of its financial effect, or a statement that such
an estimate cannot be made, if applicable.

y. Changes in accounting policies and disclosures:

The Company applied for the first-time certain standards
and amendments, which are effective for annual periods
beginning on or after 1 April 2024. The Company has not
early adopted any standard, interpretation or amendment
that has been issued but is not yet effective.

(i) Ind AS 117 Insurance Contracts

The Ministry of Corporate Affairs (MCA) notified the Ind AS
117, Insurance Contracts, vide notification dated 12 August
2024, under the Companies (Indian Accounting Standards)
Amendment Rules, 2024, which is effective from annual
reporting periods beginning on or after April 01, 2024.

Ind AS 117 Insurance Contracts is a comprehensive new
accounting standard for insurance contracts covering
recognition and measurement, presentation and disclosure.
Ind AS 117 replaces Ind AS 104 Insurance Contracts. Ind AS
117 applies to all types of insurance contracts, regardless
of the type of entities that issue them as well as to certain
guarantees and financial instruments with discretionary
participation features; a few scope exceptions will apply.
Ind AS 117 is based on a general model, supplemented by:

• A specific adaptation for contracts with direct
participation features (the variable fee approach)

• A simplified approach (the premium allocation
approach) mainly for short-duration contracts

The application of Ind AS 117 does not have material impact
on the Company’s separate standalone financial statements
as the Company has not entered any contracts in the nature
of insurance contracts covered under Ind AS 117.

(ii) Amendments to Ind AS 116 Leases - Lease Liability in a Sale
and Leaseback

The MCA notified the Companies (Indian Accounting
Standards) Second Amendment Rules, 2024, which amend
Ind AS 116, Leases, with respect to Lease Liability in a Sale
and Leaseback.

The amendment specifies the requirements that a seller-
lessee uses in measuring the lease liability arising in a sale
and leaseback transaction, to ensure the seller-lessee does
not recognise any amount of the gain or loss that relates to
the right of use it retains.

The amendment is effective for annual reporting periods
beginning on or after 1 April 2024 and must be applied
retrospectively to sale and leaseback transactions entered
into after the date of initial application of Ind AS 116.

These amendments does not have material impact on the
standalone financial statements of the Company

z. Standards notified but not yet effective

There are no standards that are notified and not yet
effective as on the date.

aa. Climate - related matters

The Company considers climate-related matters in
estimates and assumptions, where appropriate. This
assessment includes a wide range of possible impacts on
the Company due to both physical and transition risks.
Even though the Company believes its business model
and products will still be viable after the transition to a
low-carbon economy, climate-related matters increase the
uncertainty in estimates and assumptions underpinning
several items in the financial statements. Even though
climate-related risks might not currently have a significant
impact on measurement, the Company is closely monitoring
relevant changes and developments.

a) Terms/ rights attached to equity shares

The Company has only one class of equity shares having par value of '' 5 per share. Each holder of equity shares is entitled
to one vote per share and such amount of dividend per share as declared by the Company. The Company declares and pays
dividend in Indian rupees.

The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General
Meeting.

In the event of liquidation of the Company, the holders of the equity shares will be entitled to receive remaining assets of the
Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares
held by the shareholders.

b) As at March 31, 2025 and as at March 31, 2024, there is no individual shareholder or shareholder (together with ‘Persons acting
in concert’) holding more than 5% shares of the Company.

c) Number of shares reserved for issue under options

For details of shares reserved for issue under the employee stock option plan (ESOP) of the Company, refer note 34.

28. Leases

The Company has lease contracts for office buildings and computer equipment. The leases for office buildings generally have lease
terms between 1 to 5 years while computer equipment have lease term of 5 years.

The Company also has certain leases for office buildings and computer equipment with lease term of 12 months or less and leases
with low value. The Company applies the ‘short-term lease’ and ‘lease of low-value assets’ recognition exemptions for these leases.

30. Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker.
The board of directors of the Company assesses the financial performance and position of the Company. The Chief Executive
Officer has been identified as the chief operating decision maker.

The Company is engaged in the business of software products and related services, which are monitored as a single segment by the
Chief Operating Decision Maker, accordingly, these, in the context of Ind AS 108 on Operating Segments Reporting are considered
to constitute one segment and hence the Company has not made any additional segment disclosures.

The Company’s operations spans across the world and are categorized geographically as (a) Americas, (b) EMEA (c) India and (d)
APAC and rest of the world. ‘Americas’ comprises the Company’s operations in North America, South America and Canada. ‘EMEA’
comprises the Company’s operations in Europe, Middle East and Africa and the Company’s operations in the rest of the world,
excluding India are organized under ‘APAC and the rest of the world’. Customer relationships are driven based on customer domicile.

32. During the year ended March 31, 2025, Subex Digital LLP (a wholly-owned subsidiary of Subex Limited), with the approval of the
board of directors of Subex Limited, sold ID Central to Handy Online Solution Private Limited (OnGrid) at a valuation of '' 526 lakhs via
a slump sale effective on July 15, 2024, without assigning values to individual assets and liabilities. The transaction involves payment
of aforesaid consideration of '' 526 lakhs by OnGrid by the allotment of 104 equity shares of OnGrid, representing 0.75% of OnGrid’s
fully diluted share capital, based on OnGrid’s valuation, to Subex Digital LLP. In this regard, profit on sale of business unit amounting
to '' 422 Lakhs, being excess of consideration over the carrying value of net assets transferred and related costs incurred, was
recognised as income during the year ended March 31, 2025 and is presented as exceptional item in the statement of standalone
financial statements for the year ended March 31, 2025.

33. Contingent liabilities and commitments

In the ordinary course of business, the Company faces claims and assertions by various parties and authorities. The Company
assesses such claims and assertions and monitors the legal environment on an ongoing basis with the assistance of external legal
counsel, wherever necessary. The Company records a liability for any claims where a potential loss is probable and capable of being
estimated and discloses such matters in its standalone financial statements, if material. For potential losses that are considered
possible, but not probable, the Company provides disclosure in the standalone financial statements but does not record a liability
in its accounts unless the loss becomes probable.

i. Income tax

a) During the year ended March 31, 2024, the Income tax Department had filed appeal before the Hon’ble Karnataka High Court
for Assessment years (‘AY’) 2013-14 and 2015-16, against Income Tax Appellate Tribunal, Bangalore (‘ITAT’) order in relation to
matters decided in favour of the Company.

During the year ended March 31, 2023, the Company had received partial favourable order from Income Tax Appellate Tribunal,
Bangalore (‘ITAT’) for AY 2014-15. The Company had filed an appeal before the Hon’ble Karnataka High Court for Assessment
year (‘AY’) 2014-15 against such ITAT order in relation to matters decided in favour of the Income Tax department. In relation to
matters decided in favour of the Company, Order Giving Effect (“OGE”) has been received during the year ended March 31, 2025.

Further during the year ended March 31, 2025, in respect of AY 2022-23, the Company has received order from department
proposing an transfer pricing adjustment. The Company has filed objections with Dispute Resolution Panel (‘DRP’) for said
transfer pricing adjustment.

Based on internal assessment, the management is confident that outcome of aforesaid matters would be in favour of the
Company and also has sufficient brought forward losses and unabsorbed depreciation. Accordingly, the Company has
disclosed the disputed amount related to aforementioned assessment years as contingent liability and has not made any
adjustments in the standalone financial statements in this regard.

b) Certain demands from the income tax authorities were set-off against the brought forward business losses and unabsorbed
depreciation of previous years for which no contingent liability has been disclosed.

c) The aforesaid demands do not include '' 379 lakhs amount of demand pertaining to AY 2011-12 for which the Company has
received a partial favourable orders from ITAT and favourable order from Karnataka high court for during the year ended
2021-22. The Company has not received OGE to such favourable orders and the department has not appealed further in
relation to such matter.

ii. Indirect tax

The Company has received demand order towards the service tax on import of certain services and equivalent amount of
penalties under the provisions of the Finance Act, 1994 along with the consequential interest during the period April 2006
to July 2009. These demands are disputed by the management and the Company has filed appeals against these orders
with various appellate authorities. The management is of the view that the service tax is not applicable on those import of
services, and is confident that the demands raised by the Assessing Officers are not tenable under law and has not made any
adjustments in the standalone financial statements in this regard.

iii. The aforesaid amounts under disputes are as per the demands from various authorities for the respective periods and has not
been adjusted to include further interest and penalty leviable, if any, at the time of final outcome of the appeals.

iv. Other matters

As at March 31, 2025, trade payables amounting to '' 1,809 lakhs and trade receivables amounting to '' 4,370 lakhs towards
purchase and sale of services respectively, which are outstanding beyond permissible time period stipulated under the Master
Circular on Import of Goods and Services and Master Circular on Export of Goods and Services issued by Reserve Bank of
India (‘the RBI’). Considering that the balances are outstanding for more than the stipulated time, the Company has intimated
the appropriate regulatory authorities seeking requisite approvals for extensions. The management is confident that required
approvals would be received and penalties, if any that may be imposed on the Company would not be material. Accordingly, no
adjustments have been made by the management to these standalone financial statements in this regard

33. Contingent liabilities and commitments (contd.)

v. The Company is subject to legal proceedings and claims, which have arisen in the ordinary course of business. The Company has
reviewed all its pending litigations and proceedings and is not carrying provisions for all the above mentioned amounts in its
books of account, as the Company’s Management is confident of successfully litigating the matters and these are disclosed as
contingent liability, where applicable in its standalone financial statements. The Company’s Management does not reasonably
expect that these legal actions, when ultimately concluded and determined, will have a material and adverse effect of the
Company’s results of operations or financial condition.

vi. The Company has committed to provide financial support to its subsidiaries to support their business operations and meet all
their obligation as and when due.

vii. The Hon’ble Supreme Court of India in the month of February 2019 had passed a judgement relating to definition of wages under
the Provident Fund Act, 1952. The Management is of the view that there are interpretative challenges on the application of the
judgement retrospectively. The Company will evaluate its position and update its provision, if required, on receiving further
clarity on the subject. The Company does not expect any material impact of the same.

viii. The Code on Social Security, 2020 (‘Code’) relating to employee benefits during employment and post employment benefits
received Presidential assent in September 2020. The Code has been published in the Gazette of India. Certain sections of the
Code came into effect on 3 May 2023. However, the final rules/interpretation have not yet been issued. Based on a preliminary
assessment, the entity believes the impact of the change will not be significant.

34. Employee stock options plans (‘ESOPs’)

During the year 2018-2019, the Board of Directors and the shareholders of the Company approved “Subex Employees Stock Option
Scheme - 2018” (referred to as the “ESOP Scheme 2018” or “ESOP - V” ) to be administered through Subex Employee Welfare and ESOP
Benefit Trust (referred to as the “ESOP Trust”). The ESOP Trust is authorised to acquire shares of the Company through secondary
market for administering ESOP for its employees. The ESOP Trust is consolidated in the standalone financial statements of the
Company and the shares reacquired and held by ESOP Trust are treated as treasury shares recognised at cost and deducted from
other equity. The ESOP trust held 77,77,049 and 77,77,049 treasury shares as at March 31, 2025 and March 31, 2024, respectively.

The Nomination and Remuneration Committee in their meeting held on November 08, 2024 granted 1,50,000 options under approved
“Subex Employees Stock Option Scheme - 2018” to the eligible employee. The options outstanding vest over a period of 1 to 3 years
and can be exercised over a maximum period of 2 years from the date of vesting.

35. Employee benefit plans

a) Defined contribution plan

The Company makes contributions for qualifying employees to Provident Fund which is defined contribution plan. Under the
scheme, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company
recognized '' 386 Lakhs (March 31, 2024: '' 390 Lakhs) for Provident Fund contributions.

b) Defined benefit plan

The Company offers Gratuity benefits to employees, a defined benefit plan. Gratuity plan is governed by the Payment of
Gratuity Act, 1972. Under gratuity plan, every employee who has completed at least five years of service gets a gratuity on
departure @15 days of last drawn salary for each completed year of service. The scheme is funded with an insurance company
in the form of qualifying insurance policy.

35. Employee benefit plans (contd.)

Notes:

1. Plan assets are fully represented by balance with the Life Insurance Corporation of India.

2. The expected return on plan assets is determined considering several applicable factors mainly the composition of the plan assets held, assessed
risks of asset management, historical results of the return on plan assets and the Company’s policy for plan asset management.

3. The estimates of future salary increase in compensation levels, considered in actuarial valuation, take account of inflation, seniority, promotion
and other relevant factors, such as supply and demand in the employment market.

4. As per Indian Assured Lives Mortality (2012-14) Ultimate (March 31, 2024 : Indian Assured Lives Mortality (2012-14) Ultimate)

5. Plan characteristics and associated risks:

The Gratuity scheme is a Defined Benefit Plan that provides for a lump sum payment made on exit either by way of retirement, death, disability or
voluntary withdrawal. The benefits are defined on the basis of final salary and the period of service and paid as lump sum at exit. The Plan design
means the risks commonly affecting the liabilities and the financial results are expected to be:

a. Interest rate risk : The defined benefit obligation calculated uses a discount rate based on government bonds. If bond yields fall, the defined
benefit obligation will tend to increase.

b. Salary Inflation risk : Higher than expected increases in salary will increase the defined benefit obligation.

c. Demographic risk : This is the risk of variability of results due to unsystematic nature of decrements that include mortality, withdrawal,
disability and retirement. The effect of these decrements on the defined benefit obligation is not straight forward and depends upon the
combination of salary increase, discount rate and vesting criteria. It is important not to overstate withdrawals because in the financial
analysis the retirement benefit of a short career employee typically costs less per year as compared to a long service employee.

This section gives an overview of the significance of financial instruments for the Company and provides additional information on
balance sheet items that contain financial instruments.

The details of significant accounting policies, including the criteria for recognition, the basis of measurement and the basis on
which income and expenses are recognised in respect of each class of financial asset, financial liability and equity instrument are
disclosed in Note 2(k), to the standalone financial statements.

(a) Financial assets and liabilities

The management assessed that cash and bank balances, trade receivables, trade payables, and other current financial assets and
liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments. Non-current financial
assets and liabilities are discounted using an appropriate discounting rate where the time value of money is material.

(b) Fair value hierarchy

Quoted prices in an active market (Level 1): This level of hierarchy includes financial assets that are measured by reference to quoted
prices (unadjusted) in active markets for identical assets or liabilities. This category consists of investment in quoted equity shares,
and mutual fund investments.

Valuation techniques with observable inputs (Level 2): This level of hierarchy includes financial assets and liabilities, measured using
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).

Valuation techniques with significant unobservable inputs (Level 3): This level of hierarchy includes financial assets and liabilities
measured using inputs that are not based on observable market data (unobservable inputs). Fair values are determined in whole
or in part, using a valuation model based on assumptions that are neither supported by prices from observable current market
transactions in the same instrument nor are they based on available market data.

The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value,
grouped into Level 1 to Level 3, as described below:

Note:

(i) Short-term financial assets and liabilities are stated at carrying value which is approximately equal to their fair value.

(ii) Management uses its best judgement in estimating the fair value of its financial instruments. However, there are inherent limitations in any
estimation technique. Therefore, for substantially all financial instruments, the fair value estimates presented above are not necessarily indicative
of the amounts that the Company could have realised or paid in sale transactions as of respective dates. As such, fair value of financial instruments
subsequent to the reporting dates may be different from the amounts reported at each reporting date.

(iii) Current investments pertains to investments in mutual funds which are mandatorily classified as fair value through statement of profit and loss.
The fair value of investments in mutual funds units is based on the net asset value (‘NAV’) as stated by the issuers of these mutual fund units in
the published statements as at balance sheet date. NAV represents the price at which the issuer will issue further units of mutual funds and the
price at which issuers will redeem such units from the investors.

(iv) The Company enters into derivative financial instruments with financial institutions having investment grade credit ratings. Foreign exchange
forward contracts are valued using valuation techniques, which employs the use of market observable inputs.

(v) The carrying value of investment in Privasapien Technologies Private Limited is a reasonable approximation of fair value determined based on prior
transactions, no further disclosures has been made in standalone financial statements.

(vi) There have been no transfers between Level 1, Level 2 and Level 3 for the years ended March 31, 2025 and March 31, 2024.

37. Financial risk management

The Company’s activities expose it to the following risks:

i. Market risk

ii. Credit risk

iii. Liquidity risk

i. Market risk

Market risk is the risk of any loss in future earnings, in realisable fair values or in future cash flows that may result from a
change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in interest
rates, foreign currency exchange rates and liquidity risk. Future specific market movements cannot be normally predicted with
reasonable accuracy.

(a) Market risk- Interest rate risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate due to changes in
market interest rates. The Company does not have any debt outstanding as at March 31, 2025 and as at March 31, 2024. Also,
the Company’s investments are primarily in fixed rate interest bearing investments. Hence, the Company is not significantly
exposed to interest rate risk.

(b) Market risk- Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes
in foreign exchange rates. The Company’s exchange risk arises from its foreign operations, foreign currency revenues and
expenses. The Company has exposures to United States Dollars (‘USD’), United Arab Emirates Dirham (‘AED’), Kuwaiti Dinar (‘KWD’),
Singapore Dollars (‘SGD’) and other currencies. The Company’s exposure to the risk of changes in foreign exchange rates relates
primarily to the Company’s operating activities.

ii. Credit risk

Credit risk is the risk that counter party will not meet its obligations under a financial instruments or customer contract leading
to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables and contract
assets) and from its financing activities including deposits with banks, investments and other financial instruments.

a. Trade receivables and contract assets

Credit risk is managed by each business unit as per the Company’s established policy, procedures and control relating to
customer credit risk management. Outstanding customer receivables are regularly monitored. Also refer note 30 for details of
customer concentration.

c. Other financial assets and deposits with banks

Credit risk from balances with bank and financial institutions and in respect to loans and security deposits is managed by the
Company’s treasury department in accordance with the Company’s policy. Investments of surplus funds are made only with
approved counterparties and within credit limits assigned to each counterparty. The limits are set to minimise the concentration
of risks and therefore mitigate financial loss through counterparty’s potential failure to make payments. The Company have
made certain strategic investments which have been approved by the Board of Directors.

iii. Liquidity risk

The Company’s principal sources of liquidity are cash and cash equivalents, investment of surplus funds in bank deposits and
mutual funds and the cash flow that is generated from operations. The Company believes that the cash and cash equivalents
is sufficient to meet its current requirements. Accordingly no liquidity risk is perceived.

38. Capital management

The Company’s objective for capital management is to maximize shareholder value, safeguard business continuity and support
the growth of the Company. The Company determines the capital requirement based on annual operating plans and long-term
and other strategic investment plans. The funding requirements are met through operating cash flows generated and surplus
funds available. The Company does not have any long term debts hence there is no capital gearing ratio. Surplus fund has been
invested into risk free highly liquid financial instruments.

39. As per section 135 of The Company’s Act, 2013, a Corporate Social Responsibility (‘CSR’) committee has been formed by Subex
Limited. The primary function of the Committee is to assist the Board of Directors in formulating the CSR policy and review
the implementation and progress of the same from time to time. The CSR Policy focuses on creating opportunities for the
disadvantaged with emphasis on persons with disabilities. During the year ended March 31, 2025 and March 31, 2024 considering
losses incurred in past years, the Company does not have the obligation to incur expenses in relation to CSR.

42. The Company has used accounting software SAP ECC for maintaining its books of account which has a feature of recording
audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the
software, except that audit trail feature is not enabled for certain changes made using privileged/ administrative access rights
to the SAP ECC application and the underlying database. Further no instance of audit trail feature being tampered with was
noted in respect of the aforesaid accounting software where the audit trail has been enabled. Additionally, the audit trail of
March 31, 2024 has been preserved by the Company as per the statutory requirements for record retention to the extent it was
enabled and recorded.

43. MCA has amended the Rule 3 of the Companies (Accounts) Rules, 2014 (the “Accounts Rules”) vide notification dated August 05,
2022, relating to the mode of keeping books of account and other books and papers in electronic mode. Back-ups of the books
of account and other books and papers of the Company maintained in electronic mode are now required to be retained on a
sever located in India on daily basis (instead of back-ups on a periodic basis as provided earlier) as prescribed under Rule 3(5) of
the Accounts Rules. With respect to the above, the Company has complied with the requirement for the relevant IT applications.

44. Other Regulatory Information

(i) The Company do not have any Benami property, where any proceeding has been initiated or pending against the Company
for holding any Benami property under the Benami Transactions (Prohibition) Act, 1988 and rules made thereunder.

(ii) The Company do not have any transactions with companies struck off.

(iii) The Company do not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.

(iv) The Company does not have any sanctioned working capital limits in excess of five crore rupees, in aggregate, from banks
or financial institutions on the basis of security of current assets.

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

(vi) The Company have not advanced or loaned or invested funds to any other person or entity, including foreign entities
(Intermediaries) with the understanding that the Intermediary shall:

(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of
the company (Ultimate Beneficiaries) or

(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

(vii) The Company have not received any fund from any person or entity, including foreign entities (Funding Party) with the
understanding (whether recorded in writing or otherwise) that the Company shall:

(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of
the Funding Party (Ultimate Beneficiaries) or

(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(viii) The Company have not entered into any such transaction which is not recorded in the books of accounts that has been
surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as search
or survey or any other relevant provisions of the Income Tax Act, 1961).

(ix) The Company has complied with the provisions of clause (87) of section 2 of the Act read with Companies (Restriction on
number of Layers) Rules, 2017.

44. Other Regulatory Information (contd.)

(x) The Company has not declared or paid any dividend during the year hence, compliance with the provisions of section 123
of the Companies Act, 2013 is not applicable.

(xi) The Company has not been declared wilful defaulter by any bank or financial institution or government or any government
authority.

As per our report of even date attached For and on behalf of the Board of Directors of Subex Limited

(CIN: L85110KA1994PLC016663)

For S.R. Batliboi & Associates LLP Anil Singhvi Nisha Dutt

Chartered Accountants Chairman, Non-Executive & Managing Director &

ICAI Firm registration number: 101049W/E300004 Non-Independent Director Chief Executive Officer

DIN : 00239589 DIN : 06465957

Place: Bengaluru, India Place: Bengaluru, India

per Sandeep Karnani Sumit Kumar Ramu Akkili

Partner Chief Financial Officer Company Secretary &

Membership No.: 061207 Compliance Officer

Membership No. A28296

Place: Bengaluru, India Place: Bengaluru, India Place: Bengaluru, India

Date: May 02, 2025 Date: May 02, 2025

---

Mar 31, 2024

s. Provision and contingencies

Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, in respect of which a reliable estimate can be made of the amount of the obligation. If the effect of time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

If the Company has a contract that is onerous, the present obligation under the contract is recognised and measured as a provision. However, before a separate provision for an onerous contract is established, the Company recognises any impairment loss that has occurred on assets dedicated to that contract.

An onerous contract is a contract under which the unavoidable costs (i.e., the costs that the Company cannot avoid because it has the contract) of meeting the obligations under the contract exceed the economic benefits expected to be received under it. The unavoidable costs under a contract reflect the least net cost of exiting from the contract, which is the lower of the cost of fulfilling it and any compensation or penalties arising from failure to fulfil it. The cost of fulfilling a contract comprises the costs that relate directly to the contract (i.e., both incremental costs and an allocation of costs directly related to contract activities).

Contingent liability is a possible obligation arising from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity or a present obligation that arises from past events but is not recognized because;

- it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation or

- the amount of the obligation cannot be measured with sufficient reliability.

The Company does not recognize a contingent liability but discloses the same as per the requirements of Ind AS 37.

A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by- the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity. The Company does not recognize the contingent asset in its standalone financial statements since this may result in the recognition of income that may never be realised. Where an inflow of economic benefits are probable, the Company disclose a brief description of the nature of contingent assets at the end of the reporting period. However, when the realisation of income is virtually certain, then the related asset is not a contingent asset and the Company recognize such assets.

Provisions, contingent liabilities and contingent assets are reviewed at each Balance Sheet date.

t. Cash dividend to the equity holders of the Company

The Company recognises a liability to make cash distributions to equity holders of the Company when the distribution is authorised, and the distribution is no longer at the discretion of the Company. Final dividends on shares is recorded as a liability on the date of approval by the shareholders and interim dividends are recorded as a liability on the date of declaration by the Company’s Board of Directors.

u. Earnings/ (loss) per share

Basic earnings per share is calculated by dividing the net profit or loss attributable to equity holder of the Company by the weighted average number of equity shares outstanding during the period. Partly paid equity shares are treated as a fraction of an equity share to the extent that they are entitled to participate in dividends relative to a fully paid equity share during the reporting period. For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders of the parent company and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

v. Cash and cash equivalents

Cash and cash equivalent in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less, that are readily convertible to a known amount of cash and subject to an insignificant risk of changes in value.

For the purpose of the Standalone statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above, are considered an integral part of the Company’s cash management.

w. Exceptional Items

Exceptional Items represents the nature of transactions which are not in recurring nature during the ordinary course of business but lead to increase/ decrease in profit/ loss for the year.

x. Changes in accounting policies and disclosures:

The Ministry of Corporate Affairs has notified Companies (Indian Accounting Standards) Amendment Rules, 2023 dated March 31, 2023 to amend the following Ind AS which are effective for annual periods beginning on or after April 01, 2023.

i. Disclosure of Accounting Policies - Amendments to Ind AS 1

The amendments aim to help entities provide accounting policy disclosures that are more useful by replacing the requirement for entities to disclose their ‘significant’ accounting policies with a requirement to disclose their ‘material’ accounting policies and adding guidance on how entities apply the concept of materiality in making decisions about accounting policy disclosures.

The amendments does not have material impact on the standalone financial statements of the Company

ii. Definition of Accounting Estimates - Amendments to Ind AS 8

The amendments clarify the distinction between changes in accounting estimates and, changes in accounting policies and the correction of errors. It has also been clarified how entities use measurement techniques and inputs to develop accounting estimates.

These amendments does not have material impact on the standalone financial statements of the Company.

iii. Deferred Tax related to Assets and Liabilities arising from a Single Transaction - Amendments to Ind AS 12

The amendments narrow the scope of the initial recognition exception under Ind AS 12, so that it no longer applies to transactions that give rise to equal taxable and deductible temporary differences.

The amendments should be applied to transactions that occur on or after the beginning of the earliest comparative period presented. In addition, at the beginning of the earliest comparative period presented, a deferred tax asset (provided that sufficient taxable profit is available) and a deferred tax liability should also be recognised for all deductible and taxable temporary differences

associated with leases and decommissioning obligations. Consequential amendments have been made in Ind AS 101. The amendments to Ind AS 12 are applicable for annual periods beginning on or after April 01, 2023.

These amendments does not have material impact on the standalone financial statements of the Company

y. Standards notified but not yet effective

There are no standards that are notified and not yet effective as on the date.

z. Climate - related matters

The Company considers climate-related matters in estimates and assumptions, where appropriate. This assessment includes a wide range of possible impacts on the Company due to both physical and transition risks. Even though the Company believes its business model and products will still be viable after the transition to a low-carbon economy, climate-related matters increase the uncertainty in estimates and assumptions underpinning several items in the financial statements. Even though climate-related risks might not currently have a significant impact on measurement, the Company is closely monitoring relevant changes and developments.

28. Leases

The Company has lease contracts for office buildings and computer equipment. The leases for office buildings generally have lease terms between 1 to 5 years while computer equipment have lease term of 5 years.

The Company also has certain leases for office buildings and computer equipment with lease term of 12 months or less and leases with low value. The Company applies the ‘short-term lease’ and ‘lease of low-value assets’ recognition exemptions for these leases.

During the year ended March 31, 2023, pursuant to approval of the Board of Directors and Shareholders of the Company for restructuring of the business, effective April 01, 2022, part of the premises in Subex Assurance LLP was transferred to Subex Limited amounting to additions of T 1,064 lakhs in right-of-use asset and corresponding lease liability.

30. Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The board of directors of the Company assesses the financial performance and position of the Company. The Chief Executive Officer has been identified as the chief operating decision maker.

The Company is engaged in the business of software products and related services, which are monitored as a single segment by the Chief Operating Decision Maker, accordingly, these, in the context of Ind AS 108 on Operating Segments Reporting are considered to constitute one segment and hence the Company has not made any additional segment disclosures.

The Company’s operations spans across the world and are categorized geographically as (a) Americas, (b) EMEA (c) India and (d) APAC and rest of the world. ‘Americas’ comprises the Company’s operations in North America, South America and Canada. ‘EMEA’ comprises the Company’s operations in Europe, Middle East and Africa and the Company’s operations in the rest of the world, excluding India are organized under ‘APAC and the rest of the world’. Customer relationships are driven based on customer domicile.

33. Contingent liabilities and commitments

In the ordinary course of business, the Company faces claims and assertions by various parties and authorities. The Company assesses such claims and assertions and monitors the legal environment on an ongoing basis with the assistance of external legal counsel, wherever necessary. The Company records a liability for any claims where a potential loss is probable and capable of being estimated and discloses such matters in its standalone financial statements, if material. For potential losses that are considered possible, but not probable, the Company provides disclosure in the standalone financial statements but does not record a liability in its accounts unless the loss becomes probable.

The following is a description of claims and assertions where a potential loss is possible, but not probable. The Company believes that none of the contingencies described below would have a material adverse effect on the Company’s financial condition, results of operations or cash flows.

i. Income tax

a) During the year ended March 31, 2024, the Income tax Department has filed appeal for Assessment years (‘AY’) 2013-14 and 2015-16, against Income Tax Appellate Tribunal, Bangalore (‘ITAT’) order in relation to matters decided in favour of the Company.

Further during the year ended March 31, 2023, the Company had received partial favourable order from Income Tax Appellate Tribunal, Bangalore (‘ITAT’) for AY 2014-15. The Company had filed an appeal before the Hon’ble Karnataka High Court for Assessment year (‘AY’) 2014-15 against such ITAT order in relation to matters decided in favour of the Income Tax department. Also, the Company has not received OGE to ITAT’s order for AY 2014-15, in relation to matters decided in favour of the Company.

Based on internal assessment, the management is confident that outcome of aforesaid matters would be in favour of the Company. Accordingly, the Company has disclosed the disputed amount related to aforementioned assessment years as contingent liability and has not made any adjustments in the standalone financial statements in this regard.

b) Certain demands from the income tax authorities were set-off against the brought forward business losses and unabsorbed depreciation of previous years for which no contingent liability has been disclosed.

33. Contingent liabilities and commitments (contd.)

c) The aforesaid demands do not include '' 379 lakhs amount of demand pertaining to AY 2011-12 for which the Company has received a partial favourable orders from ITAT and favourable order from Karnataka high court for during the year ended 2021-22. The Company has not received OGE to such favourable orders and the department has not appealed further in relation to such matter.

ii. Indirect tax

The Company has received demand order towards the service tax on import of certain services and equivalent amount of penalties under the provisions of the Finance Act, 1994 along with the consequential interest during the period April 2006 to July 2009. These demands are disputed by the management and the Company has filed appeals against these orders with various appellate authorities. The management is of the view that the service tax is not applicable on those import of services, and is confident that the demands raised by the Assessing Officers are not tenable under law and has not made any adjustments in the standalone financial statements in this regard.

iii. The aforesaid amounts under disputes are as per the demands from various authorities for the respective periods and has not been adjusted to include further interest and penalty leviable, if any, at the time of final outcome of the appeals.

iv. Other matters

As at March 31, 2024, certain trade payables and trade receivables towards purchase and sale of services respectively, which are outstanding beyond permissible time period stipulated under the Master Circular on Import of Goods and Services and Master Circular on Export of Goods and Services issued by Reserve Bank of India (‘the RBI’). Considering that the balances are outstanding for more than the stipulated time, the Company has intimated the appropriate regulatory authorities seeking requisite approvals for extensions. The management is confident that required approvals would be received and penalties, if any that may be imposed on the Company would not be material. Accordingly, no adjustments have been made by the management to these standalone financial statements in this regard

v. The Company is subject to legal proceedings and claims, which have arisen in the ordinary course of business. The Company has reviewed all its pending litigations and proceedings and is not carrying provisions for all the above mentioned amounts in its books of account, as the Company’s Management is confident of successfully litigating the matters and these are disclosed as contingent liability, where applicable in its standalone financial statements. The Company’s Management does not reasonably expect that these legal actions, when ultimately concluded and determined, will have a material and adverse effect of the Company’s results of operations or financial condition.

vi. The Company has committed to provide financial support to its subsidiaries to support their business operations and meet all their obligation as and when due.

vii. The Hon’ble Supreme Court of India in the month of February 2019 had passed a judgement relating to definition of wages under the Provident Fund Act, 1952. The Management is of the view that there are interpretative challenges on the application of the judgement retrospectively. The Company will evaluate its position and update its provision, if required, on receiving further clarity on the subject. The Company does not expect any material impact of the same.

34. Employee stock options plans (''ESOPs’)

During the year 2018-2019, the Board of Directors and the shareholders of the Company approved “Subex Employees Stock Option Scheme - 2018” (referred to as the “ESOP Scheme 2018” or “ESOP - V” ) to be administered through Subex Employee Welfare and ESOP Benefit Trust (referred to as the “ESOP Trust”). The ESOP Trust is authorised to acquire shares of the Company through secondary market for administering ESOP for its employees. The ESOP Trust is consolidated in the standalone financial statements of the Company and the shares reacquired and held by ESOP Trust are treated as treasury shares recognised at cost and deducted from other equity. The ESOP trust held 77,77,049 and 1,11,10,800 treasury shares as at March 31, 2024 and March 31, 2023, respectively.

The Nomination and Remuneration Committee in their meeting held on June 29, 2023 and February 7, 2024 granted 10,50,000 and 1,50,000 options respectively under approved “Subex Employees Stock Option Scheme - 2018” to the eligible employees. The options outstanding vest over a period of 1 to 3 years and can be exercised over a maximum period of 2 years from the date of vesting.

This section gives an overview of the significance of financial instruments for the Company and provides additional information on balance sheet items that contain financial instruments.

The details of significant accounting policies, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised in respect of each class of financial asset, financial liability and equity instrument are disclosed in Note 2(k), to the standalone financial statements.

(a) Financial assets and liabilities

The management assessed that cash and bank balances, trade receivables, trade payables, and other current financial assets and liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments. Non-current financial assets and liabilities are discounted using an appropriate discounting rate where the time value of money is material.

(b) Fair value hierarchy

Quoted prices in an active market (Level 1): This level of hierarchy includes financial assets that are measured by reference to quoted prices (unadjusted) in active markets for identical assets or liabilities. This category consists of investment in quoted equity shares, and mutual fund investments.

Valuation techniques with observable inputs (Level 2): This level of hierarchy includes financial assets and liabilities, measured using 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).

Valuation techniques with significant unobservable inputs (Level 3): This level of hierarchy includes financial assets and liabilities measured using inputs that are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part, using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data.

The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Level 1 to Level 3, as described below:

Note:

(i) Short-term financial assets and liabilities are stated at carrying value which is approximately equal to their fair value.

(ii) Management uses its best judgement in estimating the fair value of its financial instruments. However, there are inherent limitations in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates presented above are not necessarily indicative of the amounts that the Company could have realised or paid in sale transactions as of respective dates. As such, fair value of financial instruments subsequent to the reporting dates may be different from the amounts reported at each reporting date.

(iii) Current investments pertains to investments in mutual funds which are mandatorily classified as fair value through statement of profit and loss. The fair value of investments in mutual funds units is based on the net asset value (‘NAV’) as stated by the issuers of these mutual fund units in the published statements as at balance sheet date. NAV represents the price at which the issuer will issue further units of mutual funds and the price at which issuers will redeem such units from the investors.

(iv) The Company enters into derivative financial instruments with financial institutions having investment grade credit ratings. Foreign exchange forward contracts are valued using valuation techniques, which employs the use of market observable inputs.

(v) The carrying value of investment in Privasapien Technologies Private Limited is a reasonable approximation of fair value determined based on prior transactions, no further disclosures has been made in standalone financial statements.

(vi) There have been no transfers between Level 1, Level 2 and Level 3 for the years ended March 31, 2024 and March 31, 2023.

37. Financial risk management

The Company’s activities expose it to the following risks:

i. Market risk

ii. Credit risk

iii. Liquidity risk

i. Market risk

Market risk is the risk of any loss in future earnings, in realisable fair values or in future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in interest rates, foreign currency exchange rates and liquidity risk. Future specific market movements cannot be normally predicted with reasonable accuracy.

(a) Market risk- Interest rate risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate due to changes in market interest rates. The Company does not have any debt outstanding as at March 31, 2024 and as at March 31, 2023. Also, the Company’s investments are primarily in fixed rate interest bearing investments. Hence, the Company is not significantly exposed to interest rate risk.

(b) Market risk- Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company’s exchange risk arises from its foreign operations, foreign currency revenues and expenses. The Company has exposures to United States Dollars (‘USD’),United Arab Emirates Dirham (‘AED’), Kuwaiti Dinar (‘KWD’), Singapore Dollars (‘SGD’) and other currencies. The Company’s exposure to the risk of changes in foreign exchange rates relates primarily to the Company’s operating activities.

The following table shows foreign currency exposure at the end of reporting period:

ii. Credit risk

Credit risk is the risk that counter party will not meet its obligations under a financial instruments or customer contract leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables and contract assets) and from its financing activities including deposits with banks, investments and other financial instruments.

a. Trade receivables and contract assets

Credit risk is managed by each business unit as per the Company’s established policy, procedures and control relating to customer credit risk management. Outstanding customer receivables are regularly monitored. Also refer note 30 for details of customer concentration.

c. Other financial assets and deposits with banks

Credit risk from balances with bank and financial institutions and in respect to loans and security deposits is managed by the Company’s treasury department in accordance with the Company’s policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterparty’s potential failure to make payments. The Company have made certain strategic investments which have been approved by the Board of Directors.

iii. Liquidity risk

The Company’s principal sources of liquidity are cash and cash equivalents and the cash flow that is generated from operations. The Company believes that the cash and cash equivalents is sufficient to meet its current requirements. Accordingly no liquidity risk is perceived.

38. Capital management

The Company’s objective for capital management is to maximize shareholder value, safeguard business continuity and support the growth of the Company. The Company determines the capital requirement based on annual operating plans and long-term and other strategic investment plans. The funding requirements are met through operating cash flows generated and surplus funds available. The Company does not have any long term debts hence there is no capital gearing ratio. Surplus fund has been invested into risk free highly liquid financial instruments.

39. As per section 135 of The Company’s Act, 2013, a Corporate Social Responsibility (‘CSR’) committee has been formed by Subex Limited. The primary function of the Committee is to assist the Board of Directors in formulating the CSR policy and review the implementation and progress of the same from time to time. The CSR Policy focuses on creating opportunities for the disadvantaged with emphasis on persons with disabilities. During the year ended March 31, 2024 and March 31, 2023 considering losses incurred in past years, the Company does not have the obligation to incur expenses in relation to CSR.

41. The Company has entered into ‘International transactions’ with ‘Associated Enterprises’ which are subject to Transfer Pricing regulations in India. The Company is in the process of carrying out transfer pricing study for the year ended March 31, 2024 in this regard, to comply with the requirements of the Income Tax Act, 1961. The Management of the Company, is of the opinion that such transactions with Associated Enterprises are at arm’s length and hence in compliance with the aforesaid legislation. Consequently, this will not have any impact on the standalone financial statements, particularly on account of tax expense and that of provision for taxation.

42. Effective January 1, 2021, the Company had carried out strategic re-organization and decided to centralize certain key Sales and Business support functions, to drive better efficiency of scale and overall operations. Accordingly, all such employees in sales and business support functions from other group entities in India had been transferred to the Company. During the year ended March 31, 2024 and previous year ended March 31, 2023, the common costs pertaining to sales and business support

function amounting to '' 558 Lakhs and '' 1,121 Lakhs respectively had been recovered by the Company along with an agreed mark-up from other group entities and is reflected under revenue from operations.

43. Company has used accounting software, SAP ECC for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the software, except that audit trail feature is not enabled at the underlying database level. Further no instance of audit trail feature being tampered with was noted in respect of the accounting software, where the audit trail has been enabled.

44. MCA has amended the Rule 3 of the Companies (Accounts) Rules, 2014 (the “Accounts Rules”) vide notification dated August 05, 2022, relating to the mode of keeping books of account and other books and papers in electronic mode. Back-ups of the books of account and other books and papers of the Company maintained in electronic mode are now required to be retained on a sever located in India on daily basis (instead of back-ups on a periodic basis as provided earlier) as prescribed under Rule 3(5) of the Accounts Rules. With respect to the above, the Company has complied with the requirement for all the IT applications except for an application software wherein the backup maintained in electronic mode has not been maintained on servers physically located in India on daily basis.

45. Other Regulatory Information

(i) The Company do not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property under the Benami Transactions (Prohibition) Act, 1988 and rules made thereunder.

(ii) The Company do not have any transactions with companies struck off.

(iii) The Company do not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period.

(iv) The Company does not have any sanctioned working capital limits in excess of five crore rupees, in aggregate, from banks or financial institutions on the basis of security of current assets.

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

(vi) The Company have not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:

(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or

(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

(vii) The Company have not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:

(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or

(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(viii) The Company have not entered into any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as search or survey or any other relevant provisions of the Income Tax Act, 1961).

(ix) The Company has complied with the provisions of clause (87) of section 2 of the Act read with Companies (Restriction on number of Layers) Rules, 2017.

(xj ihe Company has not declared or paid any dividend during the year hence, compliance with the provisions of section 123 of the Companies Act, 2013 is not applicable.

(xi) The Company has not been declared wilful defaulter by any bank or financial institution or government or any government authority.

46 . The Code on Social Security, 2020 (‘Code’) relating to employee benefits during employment and post employment benefits received Presidential assent in September 2020. The Code has been published in the Gazette of India. Certain sections of the Code came into effect on 3 May 2023. However, the final rules/interpretation have not yet been issued. Based on a preliminary assessment, the entity believes the impact of the change will not be significant.

47. Previous year’s figures have been regrouped/reclassified , wherever necessary, to conform to the current year’s classification.

As per our report of even date For and on behalf of the Board of Directors of Subex Limited

For S.R. Batliboi & Associates LLP Anil Singhvi Nisha Dutt

Chartered Accountants Chairman, Non-Executive & Managing Director &

ICAI Firm registration number: 101049W/E300004 Non-Independent Director Chief Executive Officer

DIN : 00239589 DIN : 06465957

Place: Bengaluru, India Place: Bengaluru, India

per Sandeep Karnani Sumit Kumar G V Krishnakanth

Partner Chief Financial Officer Company Secretary &

Membership No.: 061207 Compliance Officer

Place: Bengaluru, India Place: Bengaluru, India Place: Bengaluru, India

Date: May 10, 2024 Date: May 10, 2024

---

Mar 31, 2023

Provision and contingencies

A provision is recognized when an enterprise has a present
obligation (legal or constructive) 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 of the amount of the obligation. If the effect of time value
of money is material, provision is discounted using a current pre¬
tax rate that reflects, when appropriate, the risks specific to the
liability. When discounting is used, the increase in the provision
due to the passage of time is recognised as a finance cost.

Provisions for onerous contracts, i.e. contracts where the
expected unavoidable costs of meeting obligations under
a contract exceed the economic benefits expected to be
received, are recognized when it is probable that an outflow
of resources embodying economic benefits will be required
to settle a present obligation as a result of an obligating event,
based on a reliable estimate of such obligation.

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 present 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 standalone financial statements.

t. Cash dividend to the equity holders of the Company

The Company recognises a liability to make cash distributions
to equity holders of the Company when the distribution is
authorised, and the distribution is no longer at the discretion
of the Company. Final dividends on shares is recorded as a
liability on the date of approval by the shareholders and interim
dividends are recorded as a liability on the date of declaration by
the Company''s Board of Directors

u. Earnings/ (loss) per share

Basic earnings/ (loss) per share is computed by dividing the
profit/ (loss) after tax attributable to the equity holders of the
Company by the weighted average number of equity shares
outstanding during the year. Diluted earnings per share is
computed by dividing the profit/ (loss) after tax as adjusted for
dividend, interest (net of any attributable taxes) other charges to
expense or income relating to the dilutive potential equity shares,
by the weighted average number of equity shares considered
for deriving basic earnings per share and the weighted average
number of equity shares which could have been issued on the
conversion of all dilutive potential equity shares. Potential equity
shares are deemed to be dilutive only if their conversion to equity
shares would decrease the net profit per share or increase the
net loss per share. Potential dilutive equity shares are deemed
to be converted as at the beginning of the period, unless they
have been issued at a later date. The dilutive potential equity
shares are adjusted for the proceeds receivable had the shares
been actually issued at fair value (i.e. average market value of
the outstanding shares). Dilutive potential equity shares are
determined independently for each period presented.

v. Segment reporting

Operating segments are reported in a manner consistent with
the internal reporting provided to the chief operating decision
maker.

The Company identifies primary segments based on the dominant
source, 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 the Executive Management in deciding how to
allocate resources and in assessing performance. The analysis
of geographical segments is based on the areas in which major
operating divisions of the Company operate.

The accounting policies adopted for segment reporting are in
line with the accounting policies of the Company. Segment
revenue, segment expenses, segment assets and segment
liabilities have been identified to the segments on the basis of
their relationship to the operating activities of the segment.

Common allocable costs are allocated to each segment
according to the relative contribution of each segment to the
total common costs.

Revenue, expenses, assets and liabilities which relate to the
Company as a whole and are not allocable to segments on
a reasonable basis have been included under ''unallocated
revenue/ expenses/ assets/ liabilities''

w. Recent accounting pronouncements:

Ministry of Corporate Affairs ("MCA") notifies new standard or
amendments to the existing standards under Companies (
Indian Accounting Standard) Rules as issued from time to time.

On Mar h 31, 2023 MCA amendment the Companies (Indian
Accounting Standards) Amendment Rules, 2023, as below

Ind AS 1 - Presentation of Financial Statements - This
amendment requires the entities to disclose their material
accounting polices rather than their significant accounting
policies. The effective date for adoption of this amendment
is annual periods beginning on or after April 1, 2023. The
Company has evaluated the amendment and the impact of
the amendment is insignificant in the standalone financial
statements.

Ind AS 8 - Accounting Policies, Changes in Accounting
Estimates and Errors - This amendment has introduced a
definition of ''accounting estimates'' and included amendments
to Ind AS 8 to help entities distinguish changes in accounting
policies from changes in accounting estimates. The effective
date for adoption of this amendment is annual periods beginning
on or after April 1, 2023. The Company has evaluated the
amendment and there is no impact on its standalone financial
statements.

Ind AS 12 - Income Taxes - This amendment has narrowed
the scope of the initial recognition exemption so that it does
not apply to transactions that give rise to equal and offsetting
temporary differences. The effective date for adoption of this
amendment is annual periods beginning on or after April 1,
2023. The Company has evaluated the amendment and there is
no impact on its standalone financial statements.

---

Mar 31, 2019

1. Corporate information

Subex Limited ("the Company" or "Subex") a public limited company incorporated in 1994, is a leading global provider of Operations and Business Support Systems ("OSS/BSS") to communication service providers ("CSPs") worldwide in the Telecom industry.

The Company pioneered the concept of a Revenue Operations Centre ("ROC") - a centralized approach that sustains profitable growth and financial health for the CSPs through coordinated operational control. Subex''s product portfolio powers the ROC and its best-in-class solutions enable new service creation, operational transformation, subscriber-centric fulfilment, provisioning automation, data integrity management, revenue assurance, cost management, fraud management and interconnect/ inter-party settlement. Subex also offers a scalable Managed Services Program. The CSPs achieve competitive advantage through Business Optimization and Service Agility and improve their operational efficiency to deliver enhanced service experiences to their subscribers. The Company has its registered office in Bengaluru and operates through its wholly owned subsidiaries in India, USA, UK, Singapore, Canada and UAE and branches in USA, UK, Canada, Australia, Italy, UAE and Saudi Arabia.

Effective November 1, 2017, the Company has restructured its business by way of transfer of its Revenue Maximisation Solutions and related businesses ("RMS business") and the Subex Secure and Analytics solutions and related businesses ("Digital business") to its newly formed subsidiaries, Subex Assurance LLP ("SA LLP") and Subex Digital LLP ("SD LLP") (together referred to as "LLPs"), respectively, hereinafter referred to as the "Restructuring" to achieve amongst other aspects, segregation of the Company''s business into separate verticals to facilitate greater focus on each business vertical, higher operational efficiencies, and to enhance the Company''s ability to enter into business specific partnerships and attract strategic investors at respective business levels, with an overall objective of enhancing shareholder value. Post such Restructuring, the Company continues to directly hold 99.99% share in the capital of, and in the profits and losses of, each of these LLPs and the entire economic interest as well as control and ownership of the RMS Business and Digital Business remains with the Company post such Restructuring. Also, refer note 30 in this regard.

These standalone financial statements for the year ended March.31, 2019 are approved by the Board of Directors on May 13, 2019.

*During the previous year, the Company, vide agreement dated June 7, 2017, purchased Intellectual Property Rights ("IPR"), pertaining to its Network Analytics portfolio from its subsidiary Subex Americas Inc., for a purchase consideration of US$ 9.4 Million (RS. 6,078 Lakhs) based on valuation carried out by an external valuer. The aforesaid acquisition would enable the Company to consolidate the Intellectual Property Rights embedded in various software products, which would enhance the product offering portfolio of the Company.

During the previous year, pursuant to the restructuring, Subex Limited has transferred its investments in equity shares of wholly owned subsidiaries Subex (UK) Limited and Subex Middle East (FZE) to Subex Assurance LLP Also, refer note 30.

*As at March.31, 2019, the Company has assessed the carrying value of the investment in its subsidiaries, based on future operational plan, projected cash flows and valuation carried out by an external valuer, which has been approved by the Board of Directors. Considering the aforesaid valuation, the management is of the view that, the carrying value of the investment in subsidiaries as at March.31, 2019 is appropriate.

a) As at March.31, 2018, the share of profit of RS. 635 lakhs with respect to Subex Assurance LLP and share of loss of H 598 lakhs with respect to Subex Digital LLP were adjusted with carrying value of investment considering management plan.

During the year, considering the financial position of the limited liability partnerships, management intends to fund the losses and withdraw the share of profit. Accordingly, cumulative share of loss of RS. 2,363 lakhs pertaining to Subex Digital LLP and drawings in excess of cumulative share of profit of RS. 235 lakhs pertaining to Subex Assurance LLP is disclosed under ''Other current financial liabilities'' (refer note 17).

**During the year ended March.31, 2019, the Company has written off bad debts amounting to RS. 9 Lakhs (March.31, 2018 : RS. 1,621 Lakhs) including related party receivables from its allowances for doubtful debts.

No trade or other receivable are due from directors or other officers of the company either severally or jointly with any other person. Further, refer note 32 for the balance receivable from Subex Assurance LLP and Subex Digital LLP where certain directors of the Company are appointed as designated partners / employee.

Trade receivables are non-interest bearing and are generally on terms of 30 to 180 days.

a) Terms/ rights attached to equity shares

The Company has only one class of equity shares having par value of RS. 10 per share. Each holder of equity shares is entitled to one vote per share and such amount of dividend per share as declared by the Company. The Company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

The Company has not declared any dividend during the years ended March.31, 2019 and March.31, 2018.

In the event of liquidation of the Company, the holders of the equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

b) Details of shares held by each shareholder [together with Persons Acting in Concert(PAC)] holding more than 5% shares in the Company

Equity shares of RS. 10 each issued, subscribed and fully paid-up

*Upon repayment of FCCBs, the residual portion of equity component of compound financial instrument in relation to the same, has been transferred to surplus/(deficit) in the statement of profit and loss.

**On July 31, 2018, the Board of Directors and the shareholders of the Company approved "Subex Employees Stock Option Scheme - 2018" (hereinafter referred to as the "ESOP Scheme 2018" or "ESOP - V" ) to be administered through Subex Employee Welfare and ESOP Benefit Trust (hereinafter referred to as the "ESOP Trust"). The ESOP Trust is authorised to purchase shares of the Company through secondary market for issuance to the employees of the Group under ESOP Scheme 2018. Such shares held by ESOP Trust are treated as treasury shares and recognised at cost and deducted from other equity. Also refer Note 35 for further details on ESOP scheme.

‘includes dues to related parties. Refer note 32.

Terms and conditions of the above financial liabilities:

- trade payables are non-interest bearing and are normally settled on 30 - 45 days terms.

- for explanations on the Company''s credit risk management, refer note 39.

2. Earnings/ (loss) per share

Basic earnings/ (loss) per share (EPS) amounts are calculated by dividing the profit/ (loss) for the year attributable to equity holders of the Company by the weighted average number of equity shares outstanding during the year.

Diluted EPS amounts are calculated by dividing the profit/ (loss) attributable to equity holders of the Company by the weighted average number of equity shares outstanding during the year plus the weighted average number of equity shares that would be issued on conversion of all the dilutive potential equity shares into equity shares.

*The weighted average number of shares takes into account the weighted average effect of changes in treasury shares transactions during the year.

**Employee stock options outstanding as at March.31, 2019 and as at March.31, 2018 are anti-dilutive and accordingly have not been considered for the purpose of computing dilutive EPS of the respective years.

3. Restructuring

During the previous year, the Board of Directors of the Company in its meeting held on August 21, 2017 approved the restructuring of the Company''s business by way of transfer of its Revenue Maximization Solutions and related businesses ("RMS business") and the Subex Secure and Analytics solutions and related businesses ("Digital business") to its subsidiaries, Subex Assurance LLP ("SA LLP") and Subex Digital LLP ("SD LLP") (together referred to as "LLPs"), respectively, hereinafter referred to as the "Restructuring", subject to shareholders and other requisite approvals, to achieve amongst other aspects, segregation of the Company''s business into separate verticals to facilitate greater focus on each business vertical, higher operational efficiencies, and to enhance the Company''s ability to enter into business specific partnerships and attract strategic investors at respective business levels, with an overall objective of enhancing shareholder value.

The shareholders of the Company approved the Restructuring by way of special resolution passed through postal ballot on September 23, 2017 and subsequently, the Board of Directors of the Company in its meeting held on October 4, 2017 approved November 1, 2017 to be the effective date of Restructuring.

Accordingly, effective November 1, 2017, the Company''s RMS business and the Digital business were transferred on a going concern basis for a fair value consideration of RS. 61,564 Lakhs and RS. 1,869 Lakhs, respectively, in the form of Company''s capital contribution in the aforesaid LLPs. Post such restructuring, the Company continues to directly hold 99.99% share in the capital of, and in the profits and losses of, each of these LLPs and the entire economic interest as well as control and ownership of the RMS Business and Digital Business remains with the Company post such Restructuring.

Pursuant to restructuring, the Company accounted for the transaction in accordance with Appendix C ("Common control transactions") to Ind AS 103 ("Business Combinations"), which requires common control transactions to be recorded at books values. Accordingly, the difference between net assets transferred and the capital contribution of RS. 2,776 Lakhs was recognised as Capital reserve.

4. Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The board of directors of the Company assesses the financial performance and position of the Company. The Chief Executive Officer has been identified as the chief operating decision maker.

The Company is engaged in the business of software products and related services, which are monitored as a single segment by the Chief Operating Decision Maker, accordingly, these, in the context of Ind AS 108 on Operating Segments Reporting are considered to constitute one segment and hence the Company has not made any additional segment disclosures.

The Company''s operations spans across the world and are categorized geographically as (a) Americas, (b) EMEA (c) India and (d) APAC. ''Americas'' comprises the Company''s operations in North America, South America and Canada. ''EMEA'' comprises the Company''s operations in Europe, Middle East and APAC comprises of the Company''s operations majorly in Singapore and Australia. Customer relationships are driven based on customer domicile.

No external customer individually accounted for more than 10% of the total revenue of the Company during the years ended March.31, 2019 and March.31, 2018. Revenue from certain subsidiaries accounts for more than 10% of the total revenues of the Company (refer note 32).

*Bad debts written off during the previous year ended March.31, 2018 were from allowances for doubtful debts.

**The remuneration to the key managerial personnel does not include the provision/ accruals made on best estimate basis as they are determined for the Company as a whole.

***During the year, the Company has granted 25 lakhs ESOPs to key management personnel under ESOP 2018 scheme, which includes options granted to designated partner/ employee of Subex Assurance LLP

****Loan given to Subex Employee Welfare and ESOP Benefit Trust has been reduced from other equity. Also refer note 15.

5. Commitments and contingent liabilities

a) Commitments Operating leases

The Company leases office facilities, residential facilities and servers under cancellable operating lease agreements. The Company intends to renew such leases in the normal course of its business. Total rental expense for the year under cancellable operating leases was RS. 128 Lakhs (March.31, 2018: Rs. 765 Lakhs)

i. Income tax

The Company has received assessment orders in respect of each of the financial years from March.31, 2002 to March.31, 2015, wherein certain adjustments were made to the taxable income in relation to various matters including adjustments in respect of transfer pricing under section 92CA of the Income Tax Act, 1961 and disallowances of certain expenditures. These demands are disputed by the management and the Company has filed appeals against these orders with various appellate authorities. The management is of the view that the prices determined by it are at arm''s length, expenditures are deductible based on outcome of previous litigations, and is confident that the demands raised by the Assessing Officers are not tenable under the Income Tax Act, 1961. Pending outcome of the aforesaid matters under litigation, no provision has been made in the books of account towards these tax demands.

ii. Service tax

The Company has received demand order towards the service tax on import of certain services and equivalent amount of penalties under the provisions of the Finance Act, 1994 along with the consequential interest during the period April 2006 to July 2009.

These demands are disputed by the management and the Company has filed appeals against these orders with various appellate authorities. The management is of the view that the service tax is not applicable on those import of services, and is confident that the demands raised by the Assessing Officers are not tenable under law. Pending outcome of the aforesaid matter under litigation, no provision has been made in the books of account for these tax demands.

iii. Others

The Company had received certain claims from two of its ex-directors for an amount of RS. 1,293 Lakhs. The Company disputed the same as these claims are not tenable. During the current year, in respect of arbitration concerning to one of the ex-directors, the Honorable Tribunal has passed an Award directing the Company to pay a sum of RS. 696 lakhs (including interest). The Company has filed an application before the Honorable City Civil Court, Bengaluru to set aside the Award and has also sought an interim stay in this regard. The Honorable City Civil Court, Bengaluru passed an interim order staying the Award passed by the Honorable Tribunal until disposal of the arbitral suit, subject to Company depositing a 60% bank guarantee of the award amount. The Company has deposited a bank guarantee for an amount of RS. 418 Lakhs i.e., 60% of the award amount. During the current year, in respect of the arbitration proceedings concerning to the other ex-director, the Honorable Tribunal passed an Award directing the company to pay a sum of H 770 lakhs. The Company filed a challenge application before the Honorable City Civil Court, Bengaluru to set aside the Arbitral Award which is pending. Since it is uncertain in both the matters if and what relief the Honorable City Civil Court, Bengaluru will grant, the management, basis opinion obtained from its legal counsel, is of the view that the outcome of the matter is not predictable at this point. Accordingly, no provision is made in this regard and the same has been disclosed as contingent liability

The Company has also claimed the excess managerial remuneration of RS. 124 Lakhs (March.31, 2018: RS. 124 Lakhs) paid to the aforementioned ex-directors during the year ended March.31, 2013, in excess of the limits prescribed under Schedule XIII of the Companies Act, 1956 which has been treated as monies due from the directors, being held by them in trust for the Company, and other advances paid to directors during the year 2012-13 amounting to RS. 110 Lakhs (March.31, 2018: RS. 110 Lakhs). The aggregate amount of RS. 234 Lakhs (March.31, 2018: RS. 234 Lakhs) is included in ''Other Financial Assets'' in the financial statements. Pending final outcome of the litigations, no provision has been made in the books of account in this regard.

iv. Corporate Guarantee

The Company has given corporate guarantee to the lenders of its subsidiary, Subex Assurance LLP, of RS. 4,500 lakhs (March.31, 2018: RS. 8,250 Lakhs) for the purpose of availing of working capital loan facilities by the said subsidiary.

v. The Company has issued comfort letter to provide continued financial support to its subsidiary viz., Subex Americas Inc., to ensure that the entity is able to meet its commitments and liabilities as they fall due and it continues as a going concern.

6. Employee stock options plans (''ESOPs'')

The Company during the years 2005-2006 and 2008-09 has established equity settled ESOP schemes of ESOP III and ESOP IV respectively. As per these schemes, the Compensation Committee grants the options to the employees deemed eligible by the Advisory Board constituted for the purpose. The options are granted at a price, which is not less than 85% of the average market price of the underlying shares based on the quotation on the Stock Exchange where the highest volume of shares are traded for 15 days prior to the date of grant. The shares granted vest over a period of 1 to 4 years and can be exercised over a maximum period of 3 years from the date of vesting.

The Board of Directors and the shareholders of the Company in their respective meetings held on July 31, 2018 approved "Subex Employees Stock Option Scheme - 2018" (hereinafter referred to as the "ESOP Scheme 2018" or "ESOP - V") in accordance with all the applicable provisions of the Companies Act, 2013 and the provisions of the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 ("SEBI ESOP Regulations") to be administered through Subex Employee Welfare and ESOP Benefit Trust (hereinafter referred to as the "ESOP Trust"). The ESOP Trust was registered as per provisions of Indian Trust Act, 1882 on September 6, 2018 and is authorised to acquire upto 5% of the outstanding share capital of the Company as on March.31, 2018 through secondary market for providing such share-based payments to its employees. The ESOP Trust is consolidated in the standalone financial results of the Company and the shares reacquired and held by ESOP Trust are treated as treasury shares and recognised at cost and deducted from other equity. Subsequently, the Nomination and Remuneration Committee of the Company in their meeting held on January 29, 2019 granted 1,06,50,000 options effective from February 05, 2019 to the eligible employees at RS. 6/- each per share. The shares granted vest over a period of 1 to 2 years and can be exercised over a maximum period of 2 years from the date of vesting.

The expected life of stock options is based on historical data and current expectations and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects assumption that the historical volatility over a period similar to the life of the options is indicative of future trends, which may also not necessarily be the actual outcome.

7. Employee benefit plans

a) Provident fund

The Company makes contributions for qualifying employees to Provident Fund which is defined contribution plan. Under the scheme, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognized RS. 23 Lakhs (March.31, 2018: RS. 198 Lakhs) for Provident Fund contributions.

b) Gratuity

The Company offers Gratuity benefits to employees, a defined benefit plan, Gratuity plan is governed by the Payment of Gratuity Act, 1972. Under gratuity plan, every employee who has completed at least five years of service gets a gratuity on departure @15 days of last drawn salary for each completed year of service. The scheme is funded with an insurance company in the form of qualifying insurance policy

8. Capital management

The Company''s objective is to maintain a strong capital base to ensure sustained growth in business and to maximise the shareholders value. The capital management focusses to maintain an optimal structure that balances growth and maximizes shareholder value.

*The carrying value of these accounts are considered to be the same as their fair value, due to their short term nature. Accordingly, these are classified as level 3 of fair value hierarchy.

"The fair value of these accounts was calculated based on cash flow discounted using a current lending/ borrowing rate, they are classified as level 3 fair value hierarchy due to inclusion of unobservable inputs including counterparty credit risk.

9. Financial risk management

The Company''s activities expose it to the following risks:

i. Credit risk

ii. Interest rate risk

iii. Liquidity risk

iv. Market risk

i. Credit risk:

Credit risk is the risk that counter party will not meet its obligations under a financial instruments or customer contract leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities including deposits with banks, investments, foreign exchange transactions and other financial instruments.

a. Trade receivables

Credit risk is managed by each business unit as per the Company''s established policy, procedures and control relating to customer credit risk management. Outstanding customer receivables are regularly monitored.

The impairment analysis is performed at each reporting date on an individual basis for major clients. In addition, a large number of minor receivables are grouped into homogeneous groups and assessed for impairment collectively. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets. The Company does not hold collateral as security.

The Company evaluates the concentration of risk with respect to trade receivables as low, since majority of its customers are group entities.

c. Other financial assets and deposits with banks

Credit risk is limited, as the Company generally invests in deposits with banks with high credit ratings assigned by international and domestic credit rating agencies. Counter-party credit limits are reviewed by the Company periodically and the limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterparty''s potential failure to make payments.

ii. Interest rate risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate due to changes in market interest rates. The Company''s risk of changes in interest rates relates primarily to the Company''s debt obligations with floating interest rates for the period the Company was holding the debts.

iii. Liquidity risk

The Company''s principal sources of liquidity are cash and cash equivalents and the cash flow that is generated from operations. The Company believes that the cash and cash equivalents is sufficient to meet its current requirements. Accordingly no liquidity risk is perceived.

iv. Market risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company''s exchange risk arises from its foreign operations, foreign currency revenues and expenses. The Company has exposures to United States Dollars (''USD''), Singapore Dollars (''SGD''), and other currencies. The Company''s exposure to the risk of changes in foreign exchange rates relates primarily to the Company''s operating activities and financing activities.

Sensitivity analysis

Every 1% appreciation or depreciation in the respective foreign currencies against functional currency of the Company would cause the loss before exceptional items in proportion to revenue of the Company to decrease or increase respectively by 0.19%. (Previous year ended March.31, 2018: profit before exceptional items to decrease or increase respectively by 0.04%).

10. Standards issued but not yet effective

Ind AS 116 - Leases:

On March.30, 2019, the Ministry of Corporate Affairs notified the Companies (Indian Accounting Standards) Amendment Rules, 2019 containing Ind AS 116 - Leases and related amendments to other Ind ASs. Ind AS 116 replaces Ind AS 17 - Leases and related interpretation and guidance. The standard sets out principles for recognition, measurement, presentation and disclosure of leases for both parties to a contract i.e., the lessee and the lessor. Ind AS 116 introduces a single lessee accounting model and requires a lessee to recognise assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. Currently, operating lease expenses are charged to the statement of profit and loss. The Standard also contains enhanced disclosure requirements for lessees. Ind AS 116 substantially carries forward the lessor accounting requirements as per Ind AS 17. Ind AS 116 is effective for annual periods beginning on or after April 1, 2019.

Ind AS 12 - Appendix C - Uncertainty over Income Tax treatments:

On March.30, 2019, Ministry of Corporate Affairs ("MCA") has notified the Companies (Indian Accounting Standards) Amendment Rules, 2019 containing Appendix C to Ind AS 12, Uncertainty over Income Tax treatments which clarifies the application and measurement requirements in Ind AS 12 when there is uncertainty over income tax treatments. The current and deferred tax asset or liability shall be recognized and measured by applying the requirements in Ind AS 12 based on the taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates determined by applying this appendix. The amendment is effective for annual periods beginning on or after April 1, 2019.

Amendment to Ind AS 19 - Employee benefits:

On March.30, 2019, the Ministry of Corporate Affairs has notified limited amendments to Ind AS 19 - Employee Benefits in connection with accounting for plan amendments, curtailments and settlements. The amendments require an entity to use updated assumptions to determine current service cost and net interest for the remainder of the period after a plan amendment, curtailment or settlement and to recognise in profit or loss as part of past service cost, or a gain or loss on settlement, any reduction in a surplus, even if that surplus was not previously recognised because of the impact of the asset ceiling. The amendment will come into force for accounting periods beginning on or after April 1, 2019, though early application is permitted.

Amendment to Ind AS 12 - ''Income Taxes'':

On March.30, 2019, the Ministry of Corporate Affairs has notified limited amendments to Ind AS 12 - Income Taxes. The amendments require an entity to recognise the income tax consequences of dividends as defined in Ind AS 109 when it recognises a liability to pay a dividend. The income tax consequences of dividends are linked more directly to past transactions or events that generated distributable profits than to distributions to owners. Therefore, an entity shall recognize the income tax consequences of dividends in profit or loss, other comprehensive income or equity according to where the entity originally recognised those past transactions or events. The amendment will come into force for accounting periods beginning on or after April 1, 2019.

The Company is evaluating the effect of the aforementioned on its standalone financial statements.

11. As per section 135 of The Company''s Act, 2013, a Corporate Social Responsibility (''CSR'') committee has been formed by Subex Limited. The primary function of the Committee is to assist the Board of Directors in formulating the CSR policy and review the implementation and progress of the same from time to time. The CSR Policy focuses on creating opportunities for the disadvantaged with emphasis on persons with disabilities. During the year ended March.31, 2019, the Company has voluntarily incurred an expense of RS. 10 lakhs (March.31, 2018 : H Nil) towards CSR activities.

12. During the previous year, the Company had remitted withholding taxes on interest on FCCBs III in accordance with the provisions of the Income Tax Act, 1961 amounting to RS. 1,067 Lakhs pertaining to FCCBs III which have been converted into equity shares of the Company. Pursuant to such conversion, the interest accrued but not due was considered no longer payable and the management basis expert advice, was of the view that the withholding taxes paid by the Company in respect of the aforesaid interest, were recoverable from income tax department and/ or are adjustable against its other withholding taxes obligations. Accordingly, upon revision of withholding taxes returns, the Company adjusted withholding taxes of Rs. Nil(March.31, 2018: RS.30 Lakhs) on salary, professional services and others by write-back of withholding taxes on interest on FCCBs paid earlier, and such write back is included under other income.

13. The Company has entered into ''International transactions'' with ''Associated Enterprises'' which are subject to Transfer Pricing regulations in India. The Company is in the process of carrying out transfer pricing study for the year ended March.31, 2019 in this regard, to comply with the requirements of the Income Tax Act, 1961. The Management of the Company, is of the opinion that such transactions with Associated Enterprises are at arm''s length and hence in compliance with the aforesaid legislation. Consequently, this will not have any impact on the standalone financial statements, particularly on account of tax expense and that of provision for taxation.

14. Consequent to the restructuring more fully described in note 1 and note 30, the current year figures are not comparable to previous year figures.

---

Mar 31, 2018

1. Corporate information

Subex Limited (“the Company” or “Subex”) a public limited company incorporated in 1994, is a leading global provider of Operations and Business Support Systems (“OSS/BSS”) to communication service providers (“CSPs”) worldwide in the Telecom industry.

The Company pioneered the concept of a Revenue Operations Centre (“ROC”) - a centralized approach that sustains profitable growth and financial health for the CSPs through coordinated operational control. Subex’s product portfolio powers the ROC and its best-in-class solutions enable new service creation, operational transformation, subscriber-centric fulfilment, provisioning automation, data integrity management, revenue assurance, cost management, fraud management and interconnect/ inter-party settlement. Subex also offers a scalable Managed Services Program. The CSPs achieve competitive advantage through Business Optimization and Service Agility and improve their operational efficiency to deliver enhanced service experiences to their subscribers. The Company has its registered office in Bengaluru and operates through its wholly owned subsidiaries in India, USA, UK, Singapore, Canada and UAE and branches in USA, UK, Canada, Australia, Italy, UAE and Saudi Arabia.

Effective November 1, 2017, the Company has restructured its business by way of transfer of its Revenue Maximisation Solutions and related businesses (“RMS business”) and the Subex Secure and Analytics solutions and related businesses (“Digital business”) to its newly formed subsidiaries, Subex Assurance LLP (“SA LLP”) and Subex Digital LLP (“SD LLP”) (together referred to as “LLPs”), respectively, hereinafter referred to as the “Restructuring” to achieve amongst other aspects, segregation of the Company’s business into separate verticals to facilitate greater focus on each business vertical, higher operational efficiencies, and to enhance the Company’s ability to enter into business specific partnerships and attract strategic investors at respective business levels, with an overall objective of enhancing shareholder value. Post such Restructuring, the Company continues to directly hold 99.99% share in the capital of, and in the profits and losses of, each of these LLPs and the entire economic interest as well as control and ownership of the RMS Business and Digital Business remains with the Company post such Restructuring. Also, refer note 31 in this regard.

These standalone financial statements for the year ended March 31, 2018 are approved by the Board of Directors on May 04, 2018.

*The Company, vide agreement dated June 7, 2017, purchased Intellectual Property Rights (“IPR”), pertaining to its Network Analytics portfolio from its subsidiary Subex Americas Inc., for a purchase consideration of US$ 9.4 Million (RS. 6,078 Lakhs) based on valuation carried out by an external valuer. The aforesaid acquisition would enable the Company to consolidate the Intellectual Property Rights embedded in various software products, which would enhance the product offering portfolio of the Company.

* As at March 31, 2018, the Company has assessed the carrying value of the investment in its subsidiaries, based on future operational plan, projected cash flows and valuation carried out by an external valuer. Considering the aforesaid valuation, the management is of the view that, the carrying value of the investment in subsidiaries as at March 31, 2018 is appropriate.

**Pursuant to the restructuring, Subex Limited has transferred its investment in equity shares of wholly owned subsidiaries Subex (UK) Limited and Subex Middle East (FZE) to Subex Assurance LLP Also, refer note 31.

‘includes dues from related parties. Refer note 33.

**During the year ended March 31, 2018, the Company has written off bad debts amounting to RS. 1,621 Lakhs (March 31, 2017 : Rs. 4,855 Lakhs) including related party receivables from its allowances for doubtful debts.

As at March 31, 2017, the Company had netted off RS. 28,735 Lakhs of trade receivables from its subsidiaries against trade payables to the respective subsidiaries pursuant to approval from its Authorised Dealer.

No trade or other receivable are due from directors or other officers of the Company either severally or jointly with any other person.

Further, there are no trade or other receivables which are due from firms or private companies in which any director is a partner, a director or a member.

Trade receivables are non-interest bearing and are generally on terms of 30 to 180 days.

*Balance represents service tax erroneously paid by the Company during the financial years 2004 to 2008, under reverse charge mechanism, for which refund application has been filed with the service tax department and the same is under dispute. The Company is contesting the same and the management including its tax advisors are confident of obtaining the refund.

*includes 243,207 (March 31, 2017: 243,207) shares in respect of which Global Depository Receipts of the Company are listed on London Stock Exchange.

(a) Terms/ rights attached to equity shares

The Company has only one class of equity shares having par value of RS. 10 per share. Each holder of equity shares is entitled to one vote per share and such amount of dividend per share as declared by the Company. The Company declares and pays dividend in Indian rupees.

The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

The Company has not declared any dividend during the years ended March 31, 2018 and March 31, 2017.

In the event of liquidation of the Company, the holders of the equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

(b) Details of shares held by each shareholder [together with Persons Acting in Concert(PAC)] holding more than 5% shares in the Company Equity shares of RS. 10 each issued, subscribed and fully paid-up

As per records of the Company, including its register of shareholders/members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownership of shares.

e) During the year ended March 31, 2018, the Company made an allotment of 55,094,999 equity shares of the Company on a preferential basis at an issue price of RS. 14 per equity share (Face value of RS. 10 per equity share) amounting to RS. 7,713 Lakhs under section 42 of the Companies Act, 2013.

*Upon repayment of FCCBs, the residual portion of equity component of compound financial instrument in relation to the same, has been transferred to surplus/(deficit) in the statement of profit and loss.

‘Secured FCCBs were carried at amortized cost at an effective interest rate of 9% p.a. (March 31, 2017: 9% p.a.) with maturity date of July 07, 2017. On June 30, 2017, the Company redeemed outstanding FCCBs III amounting to US$ 3.6 Million (RS. 2,336 Lakhs) and paid accrued interest of US$ 0.1 Million (RS. 67 Lakhs) on the aforesaid bonds. On July 6, 2017, the deferred interest in respect of aforesaid bonds for the period July 6, 2012 to January 6, 2016 amounting to US$ 0.72 Million (RS. 467 Lakhs) was paid. As at March 31, 2018, there are no outstanding FCCBs and related interest.

(i) The secured loan from banks were secured by primary charge on customer receivables and paripassu first charge on the current assets of the Company, and collateral paripassu first charge on the fixed assets of the Company. Pursuant to the restructuring of the Company, Loan type - I was transferred to Subex Assurance LLP and Loan type - II was repaid on October 31, 2017 and the aforesaid security was released.

(ii) Further, the Company had submitted a corporate guarantee by Subex Technologies Limited of RS. 4,205 Lakhs and Subex (UK) Limited of RS. 4,205 Lakhs and pledged it’s 100% shares in Subex (UK) Limited. Pursuant to the restructuring, the loan was repaid on October 31, 2017 and the aforesaid securities have been released.

(iii) Loans repayable on demand from bank as at March 31, 2018 consisted of Cash Credit (CC) H Nil (March 31, 2017: RS. 2,934 Lakhs), Pre-shipment Credit in Foreign Currency (PCFC) H Nil (March 31, 2017: RS. 1,420 Lakhs) and Export Bill Rediscounting (EBRD) H Nil (March 31, 2017: RS. 4,237 Lakhs), which carried an average interest rate of 10.14%, 3.10% and 4.16% (March 31, 2017: 11.67%, 3.89% and 5.51%) respectively. During the current year, the facilities in relation to Loan type - I were transferred to Subex Assurance LLP and Loan type - II were repaid, pursuant to the restructuring.

‘includes dues to related parties. Refer note 33.

Terms and conditions of the above financial liabilities:

- trade payables are non-interest bearing and are normally settled on 30 - 45 days terms.

- for explanations on the Company’s credit risk management, refer note 40.

‘‘There are no micro, small and medium enterprises to whom the Company owes any dues as at March 31, 2018 and March 31, 2017. This information has been determined to the extent such parties have been identified on the basis of information available with the Company.

2(i) Represent, provision for doubtful advances no longer required written back upon collection of the loans and advances from its overseas subsidiaries which were provided during the year ended March 31, 2016.

2(ii) As at March 31, 2017, basis the valuation carried out by an external valuer, the Company had made an impairment provision of RS.6,070 Lakhs and RS.100 Lakhs towards the carrying value of its investment in its subsidiaries viz., Subex Americas Inc. and Subex Technologies Limited, respectively.

3. Earnings/ (loss) per share

Basic earnings/ (loss) per share (EPS) amounts are calculated by dividing the profit/ (loss) for the year attributable to equity holders of the Company by the weighted average number of equity shares outstanding during the year.

Diluted EPS amounts are calculated by dividing the profit/ (loss) attributable to equity holders of the Company by the weighted average number of equity shares outstanding during the year plus the weighted average number of equity shares that would be issued on conversion of all the dilutive potential equity shares into equity shares.

*Employee stock options outstanding as at March 31, 2018 and Employee stock options outstanding and foreign currency convertible bonds outstanding as at March 31, 2017 are anti-dilutive and accordingly have not been considered for the purpose of computing dilutive EPS of the respective years.

4. Restructuring

The Board of Directors of the Company in its meeting held on August 21, 2017 approved the restructuring of the Company’s business by way of transfer of its Revenue Maximization Solutions and related businesses (“RMS business”) and the Subex Secure and Analytics solutions and related businesses (“Digital business”) to its subsidiaries, Subex Assurance LLP (“SA LLP”) and Subex Digital LLP (“SD LLP”) (together referred to as “LLPs”), respectively, hereinafter referred to as the “Restructuring”, subject to shareholders and other requisite approvals, to achieve amongst other aspects, segregation of the Company’s business into separate verticals to facilitate greater focus on each business vertical, higher operational efficiencies, and to enhance the Company’s ability to enter into business specific partnerships and attract strategic investors at respective business levels, with an overall objective of enhancing shareholder value.

The shareholders of the Company approved the Restructuring by way of special resolution passed through postal ballot on September 23, 2017 and subsequently, the Board of Directors of the Company in its meeting held on October 4, 2017 approved November 1, 2017 to be the effective date of Restructuring.

Accordingly, effective November 1, 2017, the Company’s RMS business and the Digital business have been transferred on a going concern basis for a fair value consideration of RS. 61,564 Lakhs and RS. 1,869 Lakhs, respectively, in the form of Company’s capital contribution in the aforesaid LLPs.

The Company has accounted for the restructuring in accordance with Appendix C (“Common control transactions”) to Ind AS 103 (“Business Combinations”), which requires common control transactions to be recorded at books values. Accordingly, the difference between net assets transferred and the capital contribution of RS. 2,776 Lakhs has been recognised as Capital reserve.

5. Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The board of directors of the Company assesses the financial performance and position of the Company. The Chief Executive Officer has been identified as the chief operating decision maker.

The Company has identified a single business segment being software products and related services. This being a single segment no additional segment disclosure has been made for the business segment.

The Company’s operations spans across the world and are categorized geographically as (a) Americas, (b) EMEA (c) India and (d) APAC and rest of the World. ‘Americas’ comprises the Company’s operations in North America, South America and Canada. ‘EMEA’ comprises the

Group’s operations in Europe, Middle East and Africa and the Group’s operations in the rest of the world, excluding India are organized under ‘APAC and the rest of the world’. Customer relationships are driven based on customer domicile.

No external customer individually accounted for more than 10% of the total revenue of the Company during the years ended March 31, 2018 and March 31, 2017. Revenue from certain subsidiaries accounts for more than 10% of the total revenues of the Company. (Refer note 33).

6. Related party transactions

i. Related parties where control exists Wholly owned subsidiaries

Subex Americas Inc.

Subex (UK) Limited Subex Technologies Limited Subex Azure Holdings Inc.

Subex (Asia Pacific) Pte. Limited Subex Inc.

Subex Technologies Inc.(liquidated during the year ended March 31, 2018)

Subex Middle East (FZE)

Subex Assurance LLP (w.e.f. April 5, 2018)

Subex Digital LLP (w.e.f. April 5, 2018)

ii. Related parties under Ind AS 24 and Companies Act, 2013 Key management personnel

Anil Singhvi Chairman (w.e.f. May 25, 2017) and Independent Director

Surjeet Singh Managing Director and Chief Executive Officer (Up to March 31, 2018)

Vinod Kumar Padmanabhan Managing Director and Chief Executive Officer (w.e.f April 1, 2018)

Whole Time Director (w.e.f. May 25, 2017 to October 31, 2017)

Non Executive, Non Independent Director (w.e.f. November 1, 2017 to March 31, 2018) Ashwin Chalapathy Whole Time Director (w.e.f. May 25, 2017 to October 31, 2017)

Non Executive, Non Independent Director (w.e.f. November 1, 2017 to May 4, 2018) Nisha Dutt Independent Director

Poornima Kamalaksh Prabhu Independent Director Sanjeev Aga Independent Director (Up to October 27, 2016)

Priyanka Roy Independent Director (Up to March 10, 2017)

Mehernaz Dalal Chief Financial Officer (w.e.f. June 15, 2017)

Ganesh KV Chief Financial Officer, Global Head - Legal and Company Secretary (Up to June 15, 2017)

7. Disclosure as per Regulation 34(3) and Regulation 53(f) read with Para A of Schedule V of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 of the listing agreement with the Stock Exchanges.

‘Loans and advances to Subex Americas Inc., have been collected and related provision has been written back RS. 377 Lakhs (March 31, 2017: RS. 1,579 Lakhs).

‘‘Loans and advances to Subex Technologies Limited is provided as at March 31, 2018: RS. 1,706 Lakhs (March 31, 2017: RS. 1,718 Lakhs).

8. Commitments and contingent liabilities

a) Commitments Operating leases

The Company is obligated under non-cancellable lease for office and residential space that are renewable on a periodic basis at the option of both the lessor and lessee. The total rental expenses for the year under non-cancellable operating leases amounted to H Nil Lakhs (March 31, 2017: RS. 698 Lakhs).

Future minimum lease payments under non-cancellable operating lease payable within one year and subsequently, from balance sheet date is H Nil (March 31, 2017: H Nil).

The Company leases office facilities, residential facilities and servers under cancellable operating lease agreements. The Company intends to renew such leases in the normal course of its business. Total rental expense for the year under cancellable operating leases was RS. 765 Lakhs (March 31, 2017: RS. 567 Lakhs)

b) Contingent liabilities

i. Income tax

The Company has received assessment orders in respect of each of the financial years from March 31, 2002 to March 31, 2014, wherein certain adjustments were made to the taxable income in relation to various matters including adjustments in respect of transfer pricing under section 92CA of the Income Tax Act, 1961 and disallowances of certain expenditures. These demands are disputed by the management and the Company has filed appeals against these orders with various appellate authorities. The management is of the view that the prices determined by it are at arm’s length, expenditures are deductible based on outcome of previous litigations, and is confident that the demands raised by the Assessing Officers are not tenable under the Income Tax Act, 1961. Pending outcome of the aforesaid matters under litigation, no provision has been made in the books of account towards these tax demands.

ii. Service tax

The Company has received demand order towards the service tax on import of certain services and equivalent amount of penalties under the provisions of the Finance Act, 1994 along with the consequential interest during the period April 2006 to July 2009. These demands are disputed by the management and the Company has filed appeals against these orders with various appellate authorities. The management is of the view that the service tax is not applicable on those import of services, and is confident that the demands raised by the Assessing Officers are not tenable under law. Pending outcome of the aforesaid matter under litigation, no provision has been made in the books of account for these tax demands.

iii. Others

The Company had received certain claims from ex-directors for an amount of RS. 1,293 Lakhs. The aforesaid claims are disputed by the Company and the matter is presently under arbitration with the arbitration tribunal. The management is of the view that these claims are not tenable. Subsequent to the year ended March 31, 2018, in respect of arbitration concerning one of the ex-directors the Honorable Tribunal has passed an award directing the Company to pay a sum of RS. 700 Lakhs. The Company has filed an application to set aside the order and has also sought an interim stay in this regard. Basis opinion obtained from its legal counsel, the management is of the view that the outcome of the matter is not predictable at this point. Accordingly, no provision is made in this regard and the same has been disclosed as contingent liability.

The Company has also claimed the excess managerial remuneration of RS. 124 Lakhs (March 31, 2017: RS. 124 Lakhs) paid to the aforementioned ex-directors during the year ended March 31, 2013, in excess of the limits prescribed under Schedule XIII of the Companies Act, 1956 which has been treated as monies due from the directors, being held by them in trust for the Company, and other advances paid to directors during the year 2012-13 amounting to RS. 110 Lakhs (March 31, 2017: RS. 110 Lakhs). The aggregate amount of RS. 234 Lakhs (March 31, 2017: RS. 234 Lakhs) is included in ‘Other Financial Assets’ in the financial statements. Pending final outcome of the litigations, no provision has been made in the books of account in this regard.

iv. Corporate Guarantee

With effect from November 1, 2017, the Company has given corporate guarantee to the lenders of its subsidiary, Subex Assurance LLP, of RS. 8,250 Lakhs for the purpose of availing of working capital loan facilities by the said subsidiary.

v. The Company has issued comfort letter to provide continued financial support to its subsidiary viz., Subex Americas Inc., to ensure that the entity is able to meet its commitments and liabilities as they fall due and it continues as a going concern.

9. Employee stock options plans (‘ESOPs’)

The Company during the years 2005-2006 and 2008-09 has established equity settled ESOP schemes of ESOP III and ESOP IV respectively. As per these schemes, the Compensation Committee grants the options to the employees deemed eligible by the Advisory Board constituted for the purpose. The options are granted at a price, which is not less than 85% of the average market price of the underlying shares based on the quotation on the Stock Exchange where the highest volume of shares are traded for 15 days prior to the date of grant. The shares granted vest over a period of 1 to 4 years and can be exercised over a maximum period of 3 years from the date of vesting.

10. Employee benefit plans

a) Provident fund

The Company makes contributions for qualifying employees to Provident Fund which is defined contribution plan. Under the scheme, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognized RS. 198 Lakhs (March 31, 2017: RS. 281 Lakhs) for Provident Fund contributions.

b) Gratuity

The Company offers Gratuity benefits to employees, a defined benefit plan, Gratuity plan is governed by the Payment of Gratuity Act, 1972.

Under gratuity plan, every employee who has completed at least five years of service gets a gratuity on departure @15 days of last drawn salary for each completed year of service. The scheme is funded with an insurance company in the form of qualifying insurance policy.

The estimate of future salary increases considered, takes into account the inflation, seniority, promotion, increments and other relevant factors, benefit obligation such as supply and demand in the employment market.

11. Capital management

The Company’s objective is to maintain a strong capital base to ensure sustained growth in business and to maximise the shareholders value. The capital management focusses to maintain an optimal structure that balances growth and maximizes shareholder value.

**As at March 31, 2017 the current borrowings were in the nature of working capital loans from State Bank of India and Axis Bank. During the year, entire loan from State Bank of India has been paid off and loan from Axis bank has been transferred to Subex Assurance LLP pursuant to restructuring (refer note 31).

***Current maturities of long term borrowings as at March 31, 2017 represented FCCBs III of RS. 2,277 Lakhs and have been repaid on May 15, 2017.

Accordingly, the Company is entirely supported by equity funds as at March 31, 2018.

*The carrying value of these accounts are considered to be the same as their fair value, due to their short term nature. Accordingly, these are classified as level 3 of fair value hierarchy.

#These accounts are considered to be highly liquid/ liquid and the carrying amount of these are considered to be the same as their fair value. Accordingly, these are classified as level 3 of fair value hierarchy.

“ The fair value of these accounts was calculated based on cash flow discounted using a current lending/ borrowing rate, they are classified as level 3 fair value hierarchy due to inclusion of unobservable inputs including counterparty credit risk.

12. Financial risk management:

The Company’s activities expose it to the following risks:

i. Credit risk

ii. Interest rate risk

iii. Liquidity risk

iv. Market risk

i. Credit risk:

Credit risk is the risk that counter party will not meet its obligations under a financial instruments or customer contract leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables and unbilled revenue) from its financing activities including deposits with banks, investments, foreign exchange transactions and other financial instruments.

a. Trade receivables

Credit risk is managed by each business unit as per the Company’s established policy, procedures and control relating to customer credit risk management. Outstanding customer receivables are regularly monitored.

The impairment analysis is performed at each reporting date on an individual basis for major clients. In addition, a large number of minor receivables are grouped into homogeneous groups and assessed for impairment collectively. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets. The Company does not hold collateral as security.

b. Credit risk exposure

The Company’s credit period generally ranges from 30 - 180 days. The credit risk exposure of the Company is as below:

The Company evaluates the concentration of risk with respect to trade receivables as low, since majority of its customers are reputed telecom companies and are spread across multiple geographies.

c. Other financial assets and deposits with banks

Credit risk is limited, as the Company generally invests in deposits with banks with high credit ratings assigned by international and domestic credit rating agencies. Counter-party credit limits are reviewed by the Company periodically and the limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterparty’s potential failure to make payments.

ii. Interest rate risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate due to changes in market interest rates. The Company’s risk of changes in interest rates relates primarily to the Company’s debt obligations with floating interest rates for the period the Company was holding the debts.

The following table demonstrates the sensitivity to a reasonably possible change in interest rates, with all other variables held constant. The impact on entity’s loss before tax due to change in the interest rate/ fair value of financial liabilities are as disclosed below:

* The Company does not have any outstanding working capital loans as at March 31, 2018.

iii. Liquidity risk

The Company’s principal sources of liquidity are cash and cash equivalents and the cash flow that is generated from operations. The Company believes that the cash and cash equivalents is sufficient to meet its current requirements. Accordingly no liquidity risk is perceived.

iv. Market risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company’s exchange risk arises from its foreign operations, foreign currency revenues and expenses. The Company has exposures to United States Dollars (‘US$’), Great Britain Pound (‘GBP’), Euro (‘EUR’), United Arab Emirates Dirham (‘AED’) and other currencies. The Company’s exposure to the risk of changes in foreign exchange rates relates primarily to the Company’s operating activities and financing activities.

Sensitivity analysis

Every 1% appreciation or depreciation in the respective foreign currencies against functional currency of the Company would cause the loss before exceptional items in proportion to revenue of the Company to decrease or increase respectively by 0.04%. (Previous year ended March 31, 2017: profit before exceptional items to decrease or increase respectively by 0.02%).

13. Standards issued but not yet effective:

Ind AS 115- Revenue from contract with customers:

On March 28, 2018, the Ministry of Corporate Affairs notified Ind AS 115 Revenue from contracts with customers. The standard replaces Ind AS 11 Construction Contracts and Ind AS 18 Revenue.

The core principle of Ind AS 115 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

Ind AS 115 introduces a 5-step approach to revenue recognition:

- Identify the contract(s) with a customer

- Identify the performance obligation in contract

- Determine the transaction price

- Allocate the transaction price to the performance obligations in the contract

- Recognize revenue when (or as) the entity satisfies a performance obligation

Ind AS 115 establishes control-based revenue recognition model. An entity recognizes revenue when (or as) a performance obligation is satisfied, i.e. when ‘control’ of the goods or services underlying the performance obligation is transferred to the customer. Also, Ind AS 115 provides more guidance for deciding whether revenue is recognized at a point in time or over time.

Transitional options under Ind AS 115:

- Retrospectively to each prior period presented in accordance with Ind AS 8 Accounting Policies, Changes in Accounting Estimates and Errors, subject to some practical expedients mentioned in Ind AS 115

- Retrospectively with the cumulative effect of initial application recognized at the date of initial application

The standard is effective for annual periods beginning on or after April 1, 2018. The Company is currently evaluating the requirements and impact of Ind AS 115 on its financial statements.

Ind AS 21 - Appendix B:

The Appendix clarifies that, in determining the spot exchange rate to use on initial recognition of the related asset, expense or income (or part of it) on the derecognition of a non-monetary asset or non-monetary liability relating to advance consideration, the date of the transaction is the date on which an entity initially recognises the non-monetary asset or non-monetary liability arising from the advance consideration. If there are multiple payments or receipts in advance, then the entity must determine the transaction date for each payment or receipt of advance consideration.

Entities may apply the Appendix requirements on a fully retrospective basis. Alternatively, an entity may apply these requirements prospectively to all assets, expenses and income in its scope that are initially recognised on or after:

(i) The beginning of the reporting period in which the entity first applies the Appendix, or

(ii) The beginning of a prior reporting period presented as comparative information in the financial statements of the reporting period in which the entity first applies the Appendix.

The standard is effective for annual periods beginning on or after April 1, 2018. The Company is currently evaluating the requirements and impact of the aforesaid on its financial statements.

14. As per section 135 of The Company’s Act, 2013, a Corporate Social Responsibility (‘CSR’) committee has been formed by Subex Limited. The primary function of the Committee is to assist the Board of Directors in formulating the CSR policy and review the implementation and progress of the same from time to time. The CSR Policy focuses on creating opportunities for the disadvantaged with emphasis on persons with disabilities. The Company has incurred losses during the three immediately preceding years and accordingly, is not required to spend any amount during the current year for this purpose. Accordingly, the Company has not made any expenditure during the year ended March, 2018. Subsequent to the year end, on April 20, 2018, the Company has voluntarily incurred an expense of RS. 10 lakhs towards CSR activities.

15. The Company had remitted withholding taxes on interest on FCCBs III in accordance with the provisions of the Income Tax Act, 1961 amounting to RS. 1,067 Lakhs pertaining to FCCBs III which have been converted into equity shares of the Company. Pursuant to such conversion, the interest accrued but not due is considered no longer payable and the management basis expert advice, is of the view that the withholding taxes paid by the Company in respect of the aforesaid interest, are recoverable from income tax department and/ or are adjustable against its other withholding taxes obligations. Accordingly, upon revision of withholding taxes returns, the Group has adjusted withholding taxes of RS. 30 Lakhs (March 31, 2017: RS. 1,037 Lakhs) on salary, professional services and others by write-back of withholding taxes on interest on FCCBs paid earlier, and such write back is included under other income.

16. The Company has entered into ‘International transactions’ with ‘Associated Enterprises’ which are subject to Transfer Pricing regulations in India. The Company is in the process of carrying out transfer pricing study for the year ended March 31, 2018 in this regard, to comply with the requirements of the Income Tax Act, 1961. The Management of the Company, is of the opinion that such transactions with Associated Enterprises are at arm’s length and hence in compliance with the aforesaid legislation. Consequently, this will not have any impact on the standalone financial statements, particularly on account of tax expense and that of provision for taxation.

17. Consequent to the restructuring more fully described in note 1 and 31, the current year figures are not comparable to previous year figures. Previous year figures have been regrouped/ reclassified, wherever necessary to conform to current year’s classification.

---

Mar 31, 2017

* Represents the margin money deposits with banks towards the bank guarantees, having remaining maturity period of more than 12 months from the balance sheet date, these deposits are made for varying periods, depending on the requirements of business and earn interest at the respective term deposit rates.

* includes dues from related parties. Refer note 33.

** During the year ended March 31, 2017, the Company has written off bad debts amounting to Rs.4,854.64 Lakhs (March 31, 2016 : Rs,998.01 Lakhs) including intercompany receivables.

As at March 31, 2017, the Company has netted off Rs,28,734.61 Lakhs of trade receivables from its subsidiaries against trade payables to the respective subsidiaries pursuant to approval from its Authorized Dealer.

No trade or other receivable are due from directors or other officers of the company either severally or jointly with any other person. Further, there are no trade or other receivables due from firms or private companies in which any director is a partner, a director or a member.

Trade receivables are non-interest bearing and are generally on terms of 30 to 180 days.

* Balances represents service tax erroneously paid by the Company during the financial year 2004 to 2008, under reverse charge mechanism, for which refund application has been filed with the service tax department and the same is under dispute. The Company is contesting the same and the management including its tax advisors are confident of obtaining the refund.

* includes 243,207 (March 31, 2016: 243,207; April 1, 2015: 243,207) shares in respect of which Global Depository Receipts of the Company are listed on London Stock Exchange.

(a) Terms/ rights attached to equity shares

The Company has only one class of equity shares having par value of Rs,10 per share. Each holder of equity shares is entitled to one vote per share and such amount of dividend per share as declared by the Company. The Company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

The Company had not declared any dividend during the year ended March 31, 2017 and March 31, 2016.

In the event of liquidation of the Company, the holders of the equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

(b) Details of shares held by each shareholder (together with Persons Acting in Concert[PAC]) holding more than 5% shares in the Company

Equity shares of Rs,10 each issued, subscribed and fully paid

As per records of the Company, including its register of shareholders/ members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownership of shares.

* Secured FCCBs are carried at amortized cost at an effective interest rate of 9% (March 31, 2016: 9%, April 1, 2015: 9%) with maturity date July 07, 2017.

** Unsecured FCCBs are carried at amortized cost at an effective interest rate of 10.5% (March 31, 2016: 10.5%, April 1, 2015: 10.5%) with maturity date March 09, 2017. These FCCBs were repaid on due date.

(i) The secured loan from banks are secured by primary charge on customer receivables of the Company and pari-passu first charge on the current assets of the Company, and collateral pari-passu first charge on the fixed assets of the Company, collateral pari-passu first charge along with other working capital lenders and FCCB holders to the extent of the FCCBs III repayment fund to be set up with the working capital lenders.

(ii) The Company has also submitted a corporate guarantee by Subex Technologies Limited of RS,4,205.00 Lakhs (March 31, 2016 : RS,5,570.00, April 1, 2015: RS,6,495.00 Lakhs) and with effect from October 01, 2014 corporate guarantee by Subex (UK) Limited of RS,4,205.00 Lakhs (March 31, 2016: RS,5,570.00 Lakhs; April 1, 2015: RS,6,495.00 Lakhs) and pledged it''s 100% shares in Subex (UK) Limited.

(iii) Loans repayable on demand from banks consists of Cash Credit (CC) of RS,2,933.84 Lakhs (March 31, 2016: RS,1,762.89 Lakhs, April 1, 2015: RS,4,223.45 Lakhs), Pre-shipment Credit in Foreign Currency (PCFC) of RS,1,419.53 Lakhs (March 31, 2016: RS,3,945.39 Lakhs, April 1, 2015: RS,2,880.38 Lakhs) and Export Bill Rediscounting (EBRD) of RS,4,236.54 Lakhs (March 31, 2016: RS,4,687.46 Lakhs, April 1, 2015: RS,5,402.71 Lakhs), which carried an average interest rate of 11.67%, 3.89% and 5.51% (March 31, 2016: 12.91%, 4.05% and 5.89%, April 1, 2015: 14.25%, 5.05% and 8.88%) respectively. These facilities are renewable on a yearly basis.

Notes:

1(i) Provision for foreign withholding taxes represents provision in respect of withholding taxes deducted/deductible by customers. 21(ii) No deferred tax asset, other than MAT credit entitlement has been recognized in the absence of reasonable certainty that taxable profit will be available against which the unused tax losses, unused tax credit and other deductible temporary differences can be utilized.

2[i] As at March 31, 2016, the Company had assessed the recoverability of its receivables and loans and advances from its overseas subsidiaries. Based on future operational plan, projected cash flows and the financial position of these subsidiaries, the Company had made a provision of RS,2,455.31 Lakhs (net off adjustment towards provision for expected credit loss of RS,5,906.28 Lakhs) and RS,1,959.76 Lakhs towards trade receivables and loans and advances respectively due from these subsidiaries. Further, the Company had also written off RS,10,475.97 Lakhs as bad debts towards trade receivables from these subsidiaries as at March 31, 2016. During the year ended March 31, 2017, provision for doubtful advances amounting to RS,1,578.94 Lakhs has been written back on collection of the aforesaid loans and advances.

3[ii] As at March 31, 2017, the Company had assessed the carrying value of its investment in its wholly owned subsidiary viz., Subex Americas Inc., of RS,7,005.74 Lakhs (March 31, 2016: RS,12,495.74 Lakhs). Based on future operational plan, projected cash flows and valuation carried out by an external valuer, the Company has made an impairment provision of RS,6,070.00 Lakhs (March 31, 2016: RS,5,490.00 Lakhs) towards the carrying value of its investment in the said subsidiary. The management is of the view that, the carrying value of the aforesaid investment in in the said subsidiary of RS,935.74 Lakhs, as at March 31, 2017 is appropriate.

Also, during the current year the Company has made provision for impairment of RS,100.00 Lakhs (March 31, 2016: CNil) towards the carrying value of its investment in the Subex Technologies Limited as the said subsidiary is under liquidation.

Note 30. EARNINGS/(LOSS) PER SHARE

Basic earnings/(loss) per share (EPS) amounts are calculated by dividing the loss for the year attributable to equity holders of the Company by the weighted average number of equity shares outstanding during the year.

Diluted EPS amounts are calculated by dividing the loss attributable to equity holders of the Company by the weighted average number of equity shares outstanding during the year plus the weighted average number of equity shares that would be issued on conversion of all the dilutive potential equity shares into equity shares.

* Foreign currency convertible bonds and employee stock options outstanding as at March 31, 2017 and March 31, 2016 are anti-dilutive and accordingly have not been considered for the purpose of dilutive EPS.

Note 4. FOREIGN CURRENCY CONVERTIBLE BONDS

a) During the year 2006-07, the Company issued Foreign Currency Convertible Bonds ("FCCBs I") aggregating to US$ 180 Million, with an interest rate of 2% p.a. payable semi-annually in arrears, with terms of conversion being :

i) Exchange rate for conversion of FCCB : C44.08/ US$

ii) Conversion priRs,e : C656.20 per share

iii) Redemption date : March 09, 2012

iv) Premium payable on redemption : US$. 14.05 Million.

v) Listing on the London Stock Exchange

The bonds were available for conversion at any point in time during the period prior to the redemption date. During the year 2009 10, the Company presented to restructure the FCCBs I by offering a discount of ~30% on the face value of the existing bonds in return for new FCCBs ("FCCBs II")having a face value of US$ 126 Million.

Pursuant to the offer, the FCCBs I bondholders, with a face value of US$ 141 Million exchanged their bonds for new FCCBs with a face value of US$ 98.70 Million. The remaining FCCBs I bondholders holding bonds with a face value of US$ 39 Million (out of the original bondholders holding US$ 180 Million) did not choose the option for restructuring. The terms and conditions applicable for the new FCCB II bonds, for the US$ 98.70 Million face value, were as under :

i) Interest rate : 5% p.a. payable semi annually

ii) Exchange rate for conversion of FCCB : C48.17/ US$

iii) Conversion price : RS,80.31 per share

iv) Redemption date : March 09, 2012

v) Premium payable on redemption : US$. 23.23 Million.

vi) Listing on the Singapore Exchange Securities Trading Limited

Both the bonds were initially redeemable on or by March 9, 2012, if not converted into equity shares as per terms of issue. Based on an approval received from the Reserve Bank of India and bond holders, the redemption date was extended to July 09, 2012.

Out of the US$ 98.70 Million of FCCBs II, bonds having a face value of US$ 31.90 Million were converted into equity shares as of March 31, 2010 and bonds with a face value of US$ 12 Million were converted during the year ending March 31, 2011, retaining a closing balance of US$ 54.80 Million outstanding FCCBs II bonds.

b) Pursuant to the approval of the holders of "US$ 180 Million 2% convertible unsecured bonds", [of which US$ 39 Million was outstanding ("FCCBs I")] and "US$ 98.70 Million 5% convertible unsecured bonds", [of which US$ 54.80 Million was outstanding ("FCCBs II")], at their respective meetings held on July 5, 2012 and exchange offers received under the exchange offer memorandum dated June 13, 2012, holders of US$ 38 Million out of FCCBs I and US$ 53.40 Million out of FCCBs II offered their bonds for exchange and secured bonds with a face value of US$ 127.721 Million ("FCCBs III") were issued with maturity date of July 7, 2017. The Company has been legally advised that there is no tax incidence arising from the above restructuring.

The terms and conditions of FCCBs III are as under :

i) Interest rate : 5.70% p.a. payable semi annually

ii) Exchange rate for conversion of FCCB : C56.0545/ US$

iii) Equity Conversion price : RS,22.79 per share

iv) Redemption date : July 07, 2017

v) Listing on the Singapore Exchange Securities Trading Limited

vi) Second ranking pari-passu charge in respect of all movable properties, present & future, covered under the existing security and first ranking charge in respect of all movable properties, present & future, other than and to the extent covered by the existing security. First ranking charge on FCCB repayment fund on a paripassu basis jointly and equally with SBI and Axis Bank Ltd. The promoters of the company have pledged their shares towards securing the repayment of FCCBs III.

vii) Mandatory conversion of bonds with a face value of US$ 36.321 Million into equity shares at the aforesaid conversion price on July 07, 2012.

c) Pursuant to approval of the RBI dated April 27, 2012 and requisite approvals under the trust deed of the holders of the Company''s US$ 180 Million convertible unsecured bonds and US$ 98.70 Million convertible unsecured bonds, the maturity period of the unexchanged portion of FCCBs I of face value US$ 1 Million and FCCBs II of face value US$ 1.40 Million stands extended to March 9, 2017, with its other terms and conditions remaining unchanged.

During the year ended March 31, 2017, the FCCBs I and FCCBs II are repaid in full along with the accrual premium applicable on these bonds on the maturity date.

d) The Board in its meeting held on May 14, 2015, has approved the reset of conversion price of the FCCBs III, which are convertible into equity shares of the Company, from C22.79 to C13.00 per equity share. Subsequently, the reset of the conversion price has been approved by the shareholders in the annual general meeting held on June 19, 2015 and the bondholders in their meeting held on August 5, 2015. The Board in its meeting held on August 26, 2015 has approved August 26, 2015 as the effective date of reset of conversion price of C13 per share.

As a result of the aforesaid reset of conversion price, the said bonds with outstanding face value of US$ 3.60 Million as at March 31, 2017 would potentially be converted into 15,522,785 equity shares at an exchange rate of C56.0545/US$ with a conversion price of C13 per equity share.

f) The FCCB holders in their respective meetings have approved the deferral of aggregate interest of US$ 0.73 Million ( RS,473.41 Lakhs) in respect of outstanding FCCBs III with face value of US$ 3.60 Million ( RS,2,334.60 Lakhs) for the period July 6, 2012 to January 5, 2016 till redemption date of the bonds, being July 07, 2017.

g) Upon extinguishment of liability (i.e. principal and interest accrued), due to conversion of FCCBs III, the portion of liability in excess of share capital and securities premium as the date of conversion is credited to surplus/ deficit of profit and loss. Refer note 15.

h) The amortized cost of the borrowings and fair value and equity component of FCCBs outstanding as on March 31, 2017 is as follows:

Note 32. SEGMENT REPORTING

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The board of directors of the Company assesses the financial performance and position of the Company. The Chief Executive Officer has been identified as the chief operating decision maker.

The Company has identified a single business segment being software products and related services. This being a single segment no additional segment disclosure has been made for the business segment.

The Company''s operations spans across the world and are categorized geographically as (a) Americas, (b) EMEA (c) India and (d) APAC and rest of the World. ''Americas'' comprises the Company''s operations in North America, South America and Canada. ''EMEA'' comprises the Group''s operations in Europe, Middle East and Africa and the Group''s operations in the rest of the world, excluding India are organized under ''APAC and the rest of the world''. Customer relationships are driven based on customer domicile.

** Non-current operating assets includes Property, plant and equipment, Intangible assets, Balance with statutory/ government authorities and Prepaid expenses.

Note 5. RELATED PARTY TRANSACTIONS

i. Related parties where control exists

Wholly owned subsidiaries Subex Americas Inc.

Subex (UK) Limited Subex Technologies Limited Subex Azure Holdings Inc.

Subex (Asia Pacific) Pte. Limited Subex Inc.

Subex Technologies Inc.

Subex Middle East (FZE)

ii. Related parties under Ind AS 24 and as per The Companies Act, 2013 Key management personnel

Surjeet Singh Managing Director and Chief Executive Officer

Anil Singhvi Independent Director

Nisha Dutt Independent Director

Poornima Prabhu Independent Director - Appointed w.e.f March 24, 2017

Sanjeev Aga Independent Director - Resigned w.e.f October 27, 2016

Priyanka Roy Independent Director - Resigned w.e.f March 10, 2017

Ganesh KV Chief Financial Officer, Global Head- Legal and Company Secretary

*Bad debts written off during the year ended March 31, 2017 from provision for doubtful debts.

**The Company has netted off trade receivables from its subsidiaries against trade payables to the respective subsidiaries pursuant to approval from its Authorized Dealer. Also refer note 8.

*** The remuneration to the key managerial personnel does not include the provision/accruals made on best estimate basis as they are determined for the Company as a whole.

* Loans and advances to Subex Americas Inc., is provided as at March 31, 2017: RS,376.80 Lakhs (March 31, 2016: RS,1,947.76 Lakhs, April 1, 2015: RS, Nil).

** Loans and advances to Subex Technologies Limited is provided as at March 31, 2017: RS,1,717.67 Lakhs (March 31, 2016: RS,1,717.67 Lakhs, April 1, 2015: RS, 1,705.67 Lakhs).

Note 6. COMMITMENTS AND CONTINGENT LIABILITIES

a) Commitments Operating leases

The Company is obligated under non-cancellable lease for office and residential space that are renewable on a periodic basis at the option of both the lessor and lessee. The total rental expenses for the year under non-cancellable operating leases amounted to RS,697.65 Lakhs (March 31, 2016: RS,482.11 Lakhs).

Future minimum lease payments under non-cancellable operating lease payable within one year from balance sheet date is RS,Nil (March 31, 2016: RS,723.59 Lakhs, April 1, 2015: RS,Nil).

The Company leases office facilities, residential facilities and servers under cancellable operating lease agreements. The Company intends to renew such leases in the normal course of its business. Total rental expense for the year under cancellable operating leases was RS,566.79 Lakhs (March 31, 2016: RS,705.89 Lakhs)

i. Income tax

The Company has received assessment orders in respect of each of the financial years from March 31, 2002 to March 31, 2007 and from March 31, 2009 to March 31, 2013, wherein certain adjustments were made to the taxable income in relation to various matters including adjustments in respect of transfer pricing under section 92CA of the Income Tax Act, 1961 and disallowances of certain expenditures. These demands are disputed by the management and the Company has filed appeals against these orders with various appellate authorities. The management is of the view that the prices determined by it are at arm''s length, expenditures are deductible based on outcome of previous litigations, and is confident that the demands raised by the Assessing Officers are not tenable under the Income Tax Act, 1961. Pending outcome of the aforesaid matters under litigation, no provision has been made in the books of account towards these tax demands.

ii. Service tax

The Company has received demand order towards the service tax on import of certain services and equivalent amount of penalties under the provisions of the Finance Act, 1994 along with the consequential interest during the period April 2006 to July 2009. These demands are disputed by the management and the Company has filed appeals against these orders with various appellate authorities. The management is of the view that the service tax is not applicable on those import of services, and is confident that the demands raised by the Assessing Officers are not tenable under law. Pending outcome of the aforesaid matter under litigation, no provision has been made in the books of account towards these tax demands.

iii. Others

The Company has received certain claims from ex-directors of the Company for an amount of RS,1,293.44 Lakhs. The aforesaid claims are disputed by the Company and the matter is presently under arbitration with the arbitral tribunal. The management is of the view that these claims are not tenable.

The Company has also claimed the excess managerial remuneration of RS,123.80 Lakhs (March 31, 2016: RS,123.80 Lakhs, April 1, 2015: RS,123.80 Lakhs) paid to the aforementioned ex-directors during the year ended March 31, 2013, in excess of the limits prescribed under Schedule XIII of the Companies Act, 1956 which has been treated as monies due from the directors, being held by them in trust for the Company, and other advances paid to directors during the year 2012-13 amounting to RS,110.00 Lakhs (March 31, 2016: RS,110.00 Lakhs, April 1, 2015: RS,110.00 Lakhs). The aggregate amount of RS,233.80 Lakhs (March 31, 2016: RS,233.80 Lakhs, April 1, 2016: RS,233.80 Lakhs) is included in ''Other Financial Assets'' in the financial statements. Pending final outcome of the litigations, no provision has been made in the books of account in this regard.

iv. The Company does not have any commitments as at balance sheet date except towards the operating lease as disclosed in note 35(a).

v. The Company has issued a comfort letter to provide continued financial support to its wholly owned subsidiary viz., Subex Americas Inc., to ensure that the entity is able to meet its debts, commitments and liabilities as they fall due and it continues as a going concern.

Note 7. EMPLOYEE STOCK OPTION PLAN (''ESOPs'')

The Company during the years 1999-2000, 2005-2006 and 2008-09 has established equity settled ESOP schemes of ESOP II, ESOP III and ESOP IV respectively. As per these schemes, the Compensation Committee grants the options to the employees deemed eligible by the Advisory Board constituted for the purpose. The options are granted at a price, which is not less than 85% of the average market price of the underlying shares based on the quotation on the Stock Exchange where the highest volume of shares are traded for 15 days prior to the date of grant. The shares granted vest over a period of 1 to 4 years and can be exercised over a maximum period of 3 years from the date of vesting.

The expected life of stock options is based on historical data and current expectations and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects assumption that the historical volatility over a period similar to the life of the options is indicative of future trends, which may also not necessarily be the actual outcome.

Note 8. EMPLOYMEE BENEFIT PLANS

a) Provident fund

The Company makes contributions to Provident Fund, Employee State Insurance scheme contributions which are defined contribution plan for qualifying employees. Under the scheme, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognized RS,281.33 Lakhs (March 31, 2016: RS,261.42 Lakhs) for Provident Fund contributions and C Nil (March 31, 2016: RS,0.08 Lakhs) for Employee State Insurance scheme contribution in the Statement of profit and loss.

b) Gratuity

The Company offers Gratuity benefits to employees, a defined benefit plan, Gratuity plan is governed by the Payment of Gratuity Act, 1972. Under gratuity plan, every employee who has completed at least five years of service gets a gratuity on departure @15 days of last drawn salary for each completed year of service. The scheme is funded with an insurance company in the form of qualifying insurance policy.

Note 9. CAPITAL MANAGEMENT

The Company''s objective is to maintain a strong capital base to ensure sustained growth in business and to maximize the shareholders value. The Capital Management focuses to maintain an optimal structure that balances growth and maximizes shareholder value.

The Company has transformed from a debt dominated Company to an equity dominated Company from financial year 2015-16. Current maturities represent FCCBs III of RS,2,277.17 Lakhs, due for repayment in July 07, 2017. The current borrowings are in the nature of working capital loans from banks. The Company has sufficient cash and cash equivalents and other financial assets which are liquid to meet the aforesaid FCCBs debt and current borrowings.

In order to achieve this overall objective, the Company''s capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. There have been no breaches in the financial covenants of any interest-bearing loans and borrowing in the current year.

* The carrying value of these accounts are considered to be the same as their fair value, due to their short term nature. Accordingly, these are classified as level 3 of fair value hierarchy.

# These accounts are considered to be highly liquid/ liquid and the carrying amount of these are considered to be the same as their fair value value. Accordingly, these are classified as level 3 of fair value hierarchy.

" The fair value of these accounts was calculated based on cash flow discounted using a current lending/ borrowing rate, they are classified as level 3 fair value hierarchy due to inclusion of unobservable inputs including counterparty credit risk.

Note 10. FINANCIAL RISK MANAGEMENT:

The Company''s activities expose it to the following risks:

i. Credit risk

ii. Interest rate risk

iii. Liquidity risk

iv. Market risk

1 Credit risk:

Credit risk is the risk that counter party will not meet its obligations under a financial instruments or customer contract leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables and unbilled revenue) from its financing activities including deposits with banks and financial institutions, investments, foreign exchange transactions and other financial instruments. a. Trade receivables

Credit risk is managed by each business unit subject to the Company''s established policy, procedures and control relating to customer credit risk management. Outstanding customer receivables are regularly monitored.

The impairment analysis is performed at each reporting date on an individual basis for major clients. In addition, a large number of minor receivables are grouped into homogeneous groups and assessed for impairment collectively. The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets. The Company does not hold collateral as security.

The Company evaluates the concentration of risk with respect to trade receivables as low as majority of its customers are reputed telecom companies and are spread across multiple geographies.

c. Other financial assets and deposits with banks

Credit risk is limited as Company generally invests in deposits with banks with high credit ratings assigned by international and domestic credit rating agencies. Counter-party credit limits are reviewed by the Company periodically and the limits are set to minimize the concentration of risks and therefore mitigate financial loss through counterparty''s potential failure to make payments.

ii Interest rate risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate due to changes in market interest rates. The Company''s debt obligations are: 1) FCCBs which carry a fixed coupon rate and 2) Short term borrowings in nature of working capital loans, which carry floating interest rates. Accordingly, the Company''s risk of changes in interest rates relates primarily to the Company''s debt obligations with floating interest rates.

The following table demonstrates the sensitivity to a reasonably possible change in interest rates, with all other variables held constant. The impact on entity''s loss before tax due to change in the interest rate/ fair value of financial liabilities are as disclosed below: iv Market risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company''s exchange risk arises from its foreign operations, foreign currency revenues and expenses, (primarily in United States Dollars (''USD''). Company also has exposures to Great Britain Pound (''GBP'') and United Arab Emirates Dirham (''AED''). The Company''s exposure to the risk of changes in foreign exchange rates relates primarily to the Company''s operating activities and financing activities.

Sensitivity analysis

Every 1% increase or decrease of the respective foreign currencies compared to functional currency of the Company would cause the profit before exceptional items in proportion to revenue to decrease or increase respectively by 0.02% (loss before exceptional items for the year ended March 31, 2016 by 0.27%).

Note 11. ADOPTION OF IND AS A First time adoption

These financial statements, for the year ended March 31, 2017, have been prepared in accordance with Ind AS. For the year ended March 31, 2016, the Company prepared its financial statements in accordance with accounting standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (''Indian GAAP'' or '' Previous GAAP'').

Accordingly, the Company has prepared financial statements which comply with Ind AS applicable for year ending on March 31, 2017 together with the comparative period data, as described in the summary of significant accounting policies. In preparing these financial statements, the Company''s opening balance sheet was prepared as at April 1, 2015, the Company''s date of transition to Ind AS. This note explains the principal adjustments made by the Company in restating its Indian GAAP financial statements, including the balance sheet as at April 1, 2015 and the financial statements as at and for the year ended March 31, 2016.

B Exemption applied

Ind AS 101 allows first time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has applied the following exemptions:

1 The Company has elected to avail exemption under Ind AS 101 to use Indian GAAP carrying value as deemed cost at the date of transition for all items of property, plant and equipment and intangible assets as per the statement of financial position prepared in accordance with previous GAAP.

2 Ind AS 102 Share-based Payment has not been applied to equity instruments in share-based payment transactions that vested before April 1, 2015.

D Notes to reconciliation between Previous GAAP and Ind AS:

1 Fair valuation of foreign currency convertible bonds:

In accordance with the recognition and measurement principles laid down in Ind AS, the Company has revised the accounting treatment in respect of FCCBs with effect from the transition date. As required by the applicable Ind AS, the Company has identified FCCBs as compound financial instruments and identified the equity component on the date of inception of the bonds. The fair value of the liability component is re-evaluated at each date of significant modification. The fair value of the liability is computed by amortized cost method by discounting the liability using the applicable effective interest rate as at the date of the last significant modification. The difference between the carrying value as per previous GAAP and as per Ind AS as at April 1, 2015 is adjusted through ''Surplus/ (deficit) in the statement of profit and loss''. Subsequently interest cost is recognized at the effective interest rate in the ''standalone statement of profit and loss''.

Similarly, the non-current portion of interest accrued but not due on FCCBs is carried at amortized cost by discounting the same to its fair value and the difference between the carrying value as per previous GAAP and as per Ind AS as at April 1, 2015 is adjusted through ''Surplus/ (deficit) in statement of profit and loss''. Subsequently interest cost is recognized at the effective interest rate in the ''standalone statement of profit and loss''.

Under the previous GAAP, upon conversion of FCCBs III into equity shares, the interest accrued but not due pertaining to the converted FCCBs and foreign exchange gain on FCCBs conversion was credited to the ''standalone statement of profit and loss'' as ''exceptional item''. Under Ind AS, such conversion is treated as extinguishment of liability and the gain on such extinguishment of liability of FCCBs is required to be credited to ''other equity'' and not recognized through the ''standalone statement of profit and loss''. Accordingly, the excess of amortized cost of liability (i.e., principle and interest accrued but not due pertaining to converted FCCBs) over share capital and securities premium on conversion of FCCBs is credited to ''Surplus/ (deficit) in the statement of profit and loss''.

Under previous GAAP, exchange gain/ loss on restatement of FCCBs was not immediately charged to the standalone statement of profit and loss and deferred over the contractual life of the FCCBs, by crediting/ debiting ''Foreign currency monetary item translation difference'', under reserves and surplus. Under Ind AS gain/ loss on restatement of FCCBs is immediately recognized in the standalone statement of profit and loss in the period in which such gain/ loss occurs.

12 Provision for expected credit loss

Under the previous GAAP the Company had provided for trade receivables from its subsidiaries based on management’s assessment regarding recoverability of such balances as at March 31, 2016. Under Ind AS the Company has provided for the expected credit loss on aged trade receivables from its subsidiaries, by discounting the net trade receivables to its present value on the basis of expected date of collection and risk free interest rate. The difference between the carrying value and discounted value of such net trade receivables as at April 1, 2015 was charged to ''Surplus/ (deficit) in the statement of profit and loss'' as provision for doubtful receivables (expected credit loss). Accordingly, the provision recognized under previous GAAP during the year ended March 31, 2016 is reduced by such amount.

13 Deferred revenue

Under the previous GAAP, the cost related to free support services was deferred and charged to the ''standalone statement of profit and loss'' over the period of the free support services. Under Ind AS, the fair value of revenue in relation to free support services is deferred and recognized over the period of free support services. Accordingly, the adjustment of deferred revenue as at April 1, 2015 is debited to ''Surplus/ (deficit) in the statement of profit and loss'' and debited to revenue for the year ended March 31, 2016. Further, the cost deferred under previous GAAP is reversed through the ''standalone statement of profit and loss'' for the year ended March 31, 2016 as a transition adjustment.

14 Security deposits and rent equalization reserve

Under Ind AS interest free security deposits are carried at amortized cost by, discounting the same using interest rates applicable to the counter party. The difference between transaction cost and fair value is recognized as prepaid lease and amortized over the period of the lease on a straight-line basis. Further, interest income is recognized on the amortized cost of the security deposits over the lease period.

Under previous GAAP operating lease expenses were recognized in the ''standalone statement of profit and loss'' on a straight line basis over the lease term. The difference between lease expense recognized in the ''standalone statement of profit and loss'' and contractual lease payments was recognized as ''rent equalization reverse''. Under Ind AS when the escalations in lease payments are linked to inflation, the operating lease expenses are recognized in the ''standalone statement of profit and loss'' as per the terms of the lease arrangement. Accordingly, rent equalization as at April 1, 2015 was reversed to ''Surplus/ (deficit) in the statement of profit and loss'' and for the year ended March 31, 2016, the same was reversed through the ''standalone statement of profit and loss''.

15 Employee benefits

Under previous GAAP, actuarial gains and losses were recognized in the statement of profit and loss. Under Ind AS, the actuarial gains and losses form part of remeasurement of net defined benefit liability/asset which is recognized in other comprehensive income in the respective periods.

Note 16. STANDARDS ISSUED BUT NOT YET EFFECTIVE:

In March 2017, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) (Amendments) Rules, 2017, notifying amendments to Ind AS 7,''Statement of cash flows'' and Ind AS 102, ''Share-based payment.'' These amendments are in accordance with the recent amendments made by International Accounting Standards Board (IASB) to IAS 7, ''Statement of cash flows'' and IFRS 2, ''Share-based payment,'' respectively. The amendments are applicable to the Company from April 1, 2017.

Amendment to Ind AS 7:

The amendment to Ind AS 7 requires the entities to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes, suggesting inclusion of a reconciliation between the opening and closing balances in the balance sheet for liabilities arising from financing activities, to meet the disclosure requirement.

The Company is currently evaluating the requirements of the amendment and has not yet determined the impact on the financial statements.

Amendment to Ind AS 102:

The amendment to Ind AS 102 provides specific guidance to measurement of cash-settled awards, modification of cash-settled awards and awards that include a net settlement feature in respect of withholding taxes. It clarifies that the fair value of cash-settled awards is determined on a basis consistent with that used for equity-settled awards. Market-based performance conditions and non-vesting conditions are reflected in the ''fair values'', but non-market performance conditions and service vesting conditions are reflected in the estimate of the number of awards expected to vest. Also, the amendment clarifies that if the terms and conditions of a cash-settled share-based payment transaction are modified with the result that it becomes an equity-settled share-based payment transaction, the transaction is accounted for as such from the date of the modification. Further, the amendment requires the award that include a net settlement feature in respect of withholding taxes to be treated as equity-settled in its entirety. The cash payment to the tax authority is treated as if it was part of an equity settlement.

The Company is currently evaluating the requirements of the amendment and has not yet determined the impact on the financial statements.

For the purposes of this clause, the term ''Specified Bank Notes'' shall have the same meaning provided in the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O. 3407(E), dated the November 08, 2016.

Note 17. COST OF HARDWARE, SOFTWARE AND SUPPORT CHARGES:

The Company purchases hardware and software to fulfill its obligations under contracts for sale of its products or rendering of its services. There was no inventory of such hardware/software at the beginning and end of the year.

Cost of hardware, software and support charges for the year ended March 31, 2017 is net of reversal of provision no longer required amounting to RS, Nil (March 31, 2016: RS,173.46 Lakhs)

Note 18

As at March 31, 2017, the Company has assessed the carrying value of the investment in its wholly owned subsidiary viz., Subex (UK) Limited of RS,64,738.68 Lakhs. Considering the future operational plan, projected cash flows and the valuation carried out by an external valuer, the management is of the view that, the carrying value of its aforesaid investment in Subex (UK) Limited as at March 31, 2017 is appropriate.

Note 19

Subsequent to balance sheet date, the Company has made an allotment of 55,094,999 equity shares of the Company on a preferential basis, at an issue price of C14 per equity share (Face value of C10 per equity share) amounting to RS,7,713.30 Lakhs.

Note 20

The Company had remitted the withholding taxes on interest on FCCBs III in accordance with the provisions of the Income Tax Act, 1961 amounting to RS,1,051.60 Lakhs pertaining to FCCBs III which have been converted into equity shares of the Company. Pursuant to such conversion, the interest accrued but not due is considered no longer payable and the management basis expert advice, is of the view that the withholding taxes paid by the Company in respect of the aforesaid interest, are recoverable from income tax department and/ or are adjustable against its other withholding taxes obligations. Accordingly, in the current year the Company has revised the returns of withholding taxes and adjusted withholding taxes of RS,1,036.59 Lakhs (March 31, 2016: C Nil) on salary, professional services and others by write-back of withholding taxes on interest on FCCBs paid earlier, and such write back is included under other income.

Note 21

The Company has entered into ''International transactions'' with ''Associated Enterprises'' which are subject to Transfer Pricing regulations in India. The Company is in the process of carrying out transfer pricing study for the year ended March 31, 2017 in this regard, to comply with the requirements of the Income Tax Act, 1961. The Management of the Company, is of the opinion that such transactions with Associated Enterprises are at arm''s length and hence in compliance with the aforesaid legislation. Consequently, this will not have any impact on the standalone financial statements, particularly on account of tax expense and that of provision for taxation.

Note 22

As per Section 135 of the Companies Act, 2013, a Corporate Social Responsibility (''CSR'') committee has been formed by Subex Limited. The primary function of the Committee is to assist the Board of Directors in formulating a CSR Policy and review the implementation and progress of the same from time to time. The CSR Policy focuses on creating opportunities for the disadvantaged with emphasis on persons with disabilities. The Company has incurred losses during the three immediately preceding financial years and accordingly, is not required to spend any amount for this purpose. However, during the year ended March 31, 2017, the Company has voluntarily incurred an expense of RS,3.60 Lakhs towards CSR activities.

Note 23

The standalone financial information of the Company for transition date i.e. opening standalone balance sheet date being April 01, 2015 included in these standalone financial statements, are based on the previously issued standalone financial statements which were prepared under previous GAAP and audited by a firm of Chartered Accountants other than S.R. Batliboi & Associates LLP as adjusted for the differences in the accounting principles adopted by the Company on transition to Ind AS, which have been audited by us.

The comparative standalone financial information as at and for the year ended March 31, 2016 have been compiled after making necessary Ind AS adjustments to the audited standalone financial statements prepared under previous GAAP to give a true and fair view in accordance with Ind AS.

---

Mar 31, 2016

Note - 1. EXCEPTIONAL ITEMS (contd.)

(iii) As at March 31, 2016, the Company has assessed the carrying value of its investment in its wholly owned subsidiary viz., Subex Americas Inc., of RS. 12,495.74 Lakhs. Based on future operational plan, projected cash flows and valuation carried out by an external value, the Company has made a provision of Rs. 5,490.00 Lakhs towards diminution, other than temporary, in the carrying value of its investment in the said subsidiary.

Note - 2. FOREIGN CURRENCY CONVERTIBLE BONDS (FCCBs)

a) During the year 2006-07, the Company issued Foreign Currency Convertible Bonds (FCCB I) aggregating to US$ 180 Million, with an interest rate of 2% p.a. payable semi-annually in arrears, with terms of conversion being:

i) Exchange rate for conversion of FCCB: Rs.44.08/ US$

ii) Conversion price: Rs.656.20 per share

iii) Redemption date: March 09, 2012

iv) Premium payable on redemption: US$. 14.05 Million.

v) Listing on the London Stock Exchange

The bonds were available for conversion at any point in time during the period prior to the redemption date. During the year 2009-10, the Company presented to restructure the FCCBs I by offering a discount of ~30% on the face value of the existing bonds in return for new FCCBs ("FCCBs II") having a face value of US$ 126 Million.

Pursuant to the offer, the FCCBs I Bondholders, with a face value of US$ 141 Million exchanged their bonds for new FCCBs with a face value of US$ 98.70 Million. The remaining FCCBs I bondholders holding bonds with a face value of US$ 39 Million (out of the original bondholders holding US$ 180 Million) did not choose the option for restructuring. The terms and conditions applicable for the new FCCB II bonds, for the US$ 98.70 Million face value, were as under:

i) Interest rate : 5% p.a. payable semi annually

ii) Exchange rate for conversion of FCCB: Rs.48.17/ US$

iii) Conversion price : Rs.80.31 per share

iv) Redemption date: March 09, 2012

v) Premium payable on redemption: US$. 23.23 Million.

vi) Listing on the Singapore Exchange Securities Trading Limited

Both the bonds were initially redeemable on or by March 9, 2012, if not converted into equity shares as per terms of issue. Based on an approval received from the Reserve Bank of India and bond holders, the redemption date was extended to July 09, 2012.

Out of the US$ 98.70 Million of FCCBs II, bonds having a face value of US$ 31.90 Million were converted into equity shares as of March 31, 2010 and bonds with a face value of US$ 12 Million were converted during the year ending March 31, 2011, retaining a closing balance of US$ 54.80 Million outstanding FCCBs II bonds.

b) Pursuant to the approval of the holders of "US$ 180 Million 2% convertible unsecured bonds", [of which US$ 39 Million was outstanding ("FCCBs I")] and "US$ 98.70 Million 5% convertible unsecured bonds", [of which US$ 54.80 Million was outstanding ("FCCBs II")], at their respective meetings held on July 5, 2012 and exchange offers received under the exchange offer memorandum dated June 13, 2012, holders of US$ 38 Million out of FCCBs I and US$ 53.40 Million out of FCCBs II offered their bonds for exchange and secured bonds with a face value of US$ 127.721 Million ("FCCBs III") were issued with maturity date of July 7, 2017. The Company has been legally advised that there is no tax incidence arising from the above restructuring.

Note - 3. FOREIGN CURRENCY CONVERTIBLE BONDS (FCCBs)

The terms and conditions of FCCB III are as under:

i) Interest rate : 5.70% p.a. payable semi annually

ii) Exchange rate for conversion of FCCB: Rs.56.0545/ US$

iii) Equity Conversion price : Rs.22.79 per share

iv) Redemption date : July 07, 2017

v) Listing on the Singapore Exchange Securities Trading Limited

vi) Second ranking paripassu charge in respect of all movable properties, present & future, covered under the existing security and first ranking charge in respect of all movable properties, present & future, other than and to the extent covered by the existing security. First ranking charge on FCCB repayment fund on a paripassu basis jointly and equally with SBI and Axis Bank Ltd. The promoters of the Company have pledged their shares towards securing the repayment of FCCB III.

vii) Mandatory conversion of bonds with a face value of US$ 36.321 Million into equity shares at the aforesaid conversion price on July 07, 2012.

c) Pursuant to approval of the RBI dated April 27, 2012 and requisite approvals under the trust deed of the holders of the Company''s US$ 180 Million convertible unsecured bonds and US$ 98.70 Million convertible unsecured bonds, the maturity period of the un-exchanged portion of FCCBs I of face value US$ 1 Million and FCCBs II of face value US$ 1.40 Million stands extended to March 9, 2017, with its other terms and conditions remaining unchanged.

d) The Board in its meeting held on May 14, 2015, has approved the reset of conversion price of the FCCBs III, which are convertible into equity shares of the Company, from Rs. 22.79 to Rs. 13.00 per equity share. Subsequently, the reset of the conversion price has been approved by the shareholders in the annual general meeting held on June 19, 2015 and the bondholders in their meeting held on August 5, 2015. The Board in its meeting held on August 26, 2015 has approved August 26, 2015 as the effective date of reset of conversion price of Rs. 13 per share.

As a result of the aforesaid reset of conversion price, the said bonds with outstanding face value of US$ 4.55 Million as at March 31, 2016 would potentially be converted into 19,619,075 equity shares at an exchange rate of Rs. 56.0545/US$ with a conversion price of Rs. 13 per equity share.

Subsequent to balance sheet date, conversion requests from the bondholders of FCCBs III amounting to US$ 0.45 Million have been received by the Company, which have been approved by the Board of Directors in the Board meeting dated April 28, 2016, and allotted 1,940,348 equity shares at an exchange rate of Rs. 56.0545/US$ with a conversion price of Rs. 13 per equity share.

f) The FCCB bond holders in their respective meetings have approved the deferral of aggregate interest of US$ 0.92 Million (Rs. 610.48 Lakhs) in respect of outstanding FCCBs III of USD 4.55 Million for the period July 6, 2012 to January 5, 2016 till redemption date of the bonds, being July 07, 2017. Accordingly, interest on FCCBs III included under finance costs in the statement of profit and loss to the extent of above deferrals is due for payment on July 07, 2017. These amounts have accordingly been categorized as long-term liabilities.

g) The premium payable on maturity of FCCB I and FCCB II has been accrued by charge to securities premium account, and exchange fluctuation on restatement of such outstanding balance is also adjusted with securities premium account.

h) Interest accrued but not due pertaining to FCCBs converted during the current year has been written back as the same is considered no longer payable due to the conversion of FCCBs III into equity shares of the Company, and FCMITD balance pertaining to converted bonds till the date of conversion has been charged off to the statement of profit and loss net of foreign exchange gain on account of conversion of these FCCBs into equity shares of the Company. These amounts have been disclosed as exceptional items, refer note 24(i) for details.

Note - 4.

The Company adopted the amendments to Accounting Standard 11 "The Effects of Changes in Foreign Exchange Rates" that were notified during the year ended March 31, 2012. Pursuant to this amendment, exchange fluctuations arising on restatement of all long term monetary foreign currency assets and liabilities at rates different from those at which they were initially recorded or reported in the previous financial statements (whichever is later), are accumulated in a Foreign Currency Monetary Item Translation Difference account (''FCMITD'') and are amortized over the balance period of such long term asset/ liability, and/or charged off on settlement/ conversion of such long term monetary foreign currency assets/ liabilities. Consequently, exchange fluctuation losses (net) arising on restatement of such items have been deferred to the extent of Rs. 376.63 Lakhs as at March 31, 2016 (March 31, 2015: Rs.5, 111.21 Lakhs).

Note - 5.

The Company had remitted the withholding taxes in respect of FCCBs in accordance with the provisions of Income Tax Act, 1961 amounting to Rs. 1,016.81 Lakhs Pursuant to the conversion of FCCBs III in to equity shares of the Company, the interest accrued but not due has been reversed as the same is considered no longer payable. The management basis expert advice, is of the view that the withholding taxes paid by the Company is recoverable from income tax department and/or is adjustable against its other withholding taxes obligations. The management has initiated necessary steps for revision of withholding tax returns of prior years and accordingly, H204.98 Lakhs pertaining to withholding taxes on salary, professional services and others have not been paid.

Note - 6.

As at March 31, 2016, the Company has trade receivables of Rs.41,272.75 Lakhs (net of provision for doubtful debts of Rs.11,287.42 Lakhs) from its subsidiaries and trade payables of Rs. 44,128.19 Lakhs to its subsidiaries. The management is in the process of filing necessary application with the Reserve Bank of India (''RBI'') for settlement of these balances by setting off aforesaid trade payables against trade receivables. Pending filing of application with RBI and requisite approval from RBI, no adjustments have been made in these financial statements.

Note - 7.

As at March 31, 2016, the Company has an investment of Rs.64, 738.68 Lakhs in its wholly owned subsidiary viz., Subex (UK) Limited. Considering the future operational plan, projected cash flows and the valuation carried out by an external valuer, the management is of the view that, the carrying value of its aforesaid investment in Subex (UK) Limited as at March 31, 2016 is appropriate.

Note - 8. RELATED PARTY INFORMATION

i) Related parties where control exists Wholly owned subsidiaries

Subex Americas Inc.

Subex (UK) Limited

Subex Technologies Limited

Subex Azure Holdings Inc.

Subex (Asia Pacific) Pte. Limited

Subex Inc.

Subex Technologies Inc.

Subex Middle East (FZE)

ii) Related parties under AS 18 and as per Companies Act, 2013.

Key management personnel

Surjeet Singh Managing Director and Chief Executive Officer

Ganesh KV Chief Financial Officer, Global Head- Legal and Company Secretary

Note - 9. LOANS AND ADVANCES GIVEN TO SUBSIDIARIES

Disclosure as per Regulation 34(3) and Regulation 53(f) read with Para A of Schedule V of the Securities and Exchange Board of Ir (Listing Obligations and Disclosure Requirements) Regulations, 2015 of the listing agreement with the Stock Exchanges

Note - 10.SEGMENT REPORTING

Since the Company prepares consolidated financial statements in addition to these financial statements, both of which form part of the annual report of the Company, as permitted by Accounting Standard 17 "Segment reporting", the segment information is presented on the basis of the consolidated financial statements.

i. Income tax

The Company has received assessment orders for the financial years ended March 31, 2002, March 31, 2003, March 31, 2004, March 31, 2005, March 31, 2006, March 31, 2007, March 31, 2009, March 31, 2010, March 31, 2011 and March 31, 2012, wherein certain adjustments were made to the taxable income in relation to various matters including adjustments in respect of transfer pricing under section 92CA of the Income Tax Act, 1961 and disallowances of certain expenditures. These demands are disputed by the management and the Company has filed appeals against these orders with various appellate authorities. The management is of the view that the prices determined by it are at arm''s length, expenditures are deductible based on outcome of previous litigations, and is confident that the demands raised by the Assessing Officers are not tenable under the Income Tax Act, 1961. Pending outcome of the aforesaid matters under litigation, no provision has been made in the books of account towards these tax demands.

ii. Service tax

The Company has received demand order towards the service tax on import of certain services and equivalent amount of penalties under the provisions of the Finance Act, 1994 along with the consequential interest during the period April 2006 to July 2009. These demands are disputed by the management and the Company has filed appeals against these orders with various appellate authorities. The management is of the view that the service tax is not applicable on that import of services, and is confident that the demands raised by the Assessing Officers are not tenable under law. Pending outcome of the aforesaid matter under litigation, no provision has been made in the books of account towards these tax demands.

iii. Others

The Company has received certain claims from ex-directors of the Company for an amount of Rs.1, 293.44 Lakhs. The aforesaid claims are disputed by the Company and these matters are presently under arbitration with the tribunal. The management is of the view that these claims are not tenable. The Company has also claimed the excess managerial remuneration of Rs.123.80 Lakhs paid to the aforementioned ex-directors during the year ended March 31, 2013, in excess of the limits prescribed under Schedule XIII of the Companies Act, 1956, which has been treated as monies due from the directors, being held by them in trust for the Company, and other advances paid to such ex-directors during the year 2012-13 amounting to Rs.110.00 Lakhs (March 31, 2015: Rs.110.00 Lakhs). The aggregate amount of Rs.233.80 Lakhs (March 31, 2015: Rs. 233.80 Lakhs) is included in ''Long-term loans and advances'' in the financial statements. Pending final outcome of the litigations, no provision has been made in the books of account in this regard.

iv. The Company does not have any other commitments as at balance sheet date except towards the operating lease as disclosed in note 34.

v. The Company has issued a comfort letter to provide continued financial support to its wholly owned subsidiary viz., Subex Americas Inc, to ensure that the entity is able to meet its debts, commitments and liabilities as they fall due and it continues as a going concern.

Note - 11. OPERATING LEASES

The Company is obligated under non-cancellable lease for office and residential space that are renewable on a periodic basis at the option of both the lessor and lessee. The total rental expenses under non-cancellable operating leases amounted to Rs. 449.02 Lakhs and H Nil for the year ended March 31, 2016 and March 31, 2015 respectively.

Future minimum lease payments under non-cancellable operating lease payable within one year from balance sheet date is Rs.723.59 Lakhs (March 31, 2015: Rs. Nil).

The Company leases office facilities, residential facilities and servers under cancellable operating lease agreements. The Company intends to renew such leases in the normal course of its business. Total rental expense under cancellable operating leases was Rs.705.89 Lakhs and Rs.1, 085.74 Lakhs for the year ended March 31, 2016 and March 31, 2015 respectively.

Note - 12 EMPLOYEES STOCK OPTION PLAN (ESOP)

The Company during the years 1999-2000, 2005-2006 and 2008-09 has established equity settled ESOP schemes i.e. ESOP II, ESOP III and ESOP IV respectively. As per these schemes, the Compensation Committee grants the options to the employees deemed eligible by the Advisory Board constituted for the purpose. The options are granted at a price, which is not less than 85% of the average market price of the underlying shares based on the quotation on the Stock Exchange where the highest volume of shares are traded for 15 days prior to the date of grant. The shares granted vest over a period of 1 to 4 years and can be exercised over a maximum period of 3 years from the date of vesting.

The Company has obtained in-principle approval for listing of shares up to a limit as mentioned below.

ESOP II: 883,750 shares ESOP III: 2,000,000 shares ESOP IV: 2,000,000 shares

Note - 13. EMPLOYEE BENEFIT PLANS

a) Defined contribution plans

The Company makes contributions to Provident Fund, Employee State Insurance scheme contributions which are defined contribution plan for qualifying employees. Under the scheme, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognized Rs. 261.42 Lakhs (March 31, 2015: Rs. 219.18 Lakhs) for Provident Fund contributions (excluding administration charges) and Rs. 0.08 Lakhs (March 31, 2015: Rs. 0.55 Lakhs) for Employee State Insurance scheme contribution in the Statement of profit and loss.

b) Defined benefit plans

The Company offers Gratuity benefits to employees, a defined benefit plan. Under gratuity plan, every employee who has completed at least five years of service gets a gratuity on departure @15 days of last drawn salary for each completed year of service. The scheme is funded with an insurance company in the form of qualifying insurance policy.

Note - 14. EMPLOYEE BENEFIT PLANS

The following table’s summaries 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.

Note - 15. UNHEDGED FOREIGN CURRENCY EXPOSURES

The Company does not have any outstanding forward foreign exchange contracts or other derivative instruments for the purposes of hedging the risks associated with foreign exchange exposures as at the year end. The net foreign currency exposure that has not been hedged by derivative instruments or otherwise as at March 31, 2016 is Rs. 9,353.40 Lakhs (March 31, 2015: Rs. 46,608.80 Lakhs).

Note - 16. COSTS OF HARDWARE, SOFTWARE AND SUPPORT CHARGES:

(i) The Company purchases hardware and software to fulfill its obligations under contracts for sale of its products or rendering of its services. There was no inventory of such hardware/software at the beginning and end of the year.

(ii) Cost of hardware, software and support charges for the year ended March 31, 2016 is net of reversal of provision no longer required amounting to Rs.173.46 Lakhs ( March 31, 2015: Rs. Nil).

Note - 17

The Company has entered into ''International transactions'' with ''Associated Enterprises'' which are subject to Transfer Pricing regulations in India. The Company is in the process of carrying out transfer pricing study for the year ended March 31, 2016 in this regard, to comply with the requirements of the Income Tax Act, 1961. The Management of the Company, is of the opinion that such transactions with Associated Enterprises are at arm''s length and hence in compliance with the aforesaid legislation. Consequently, this will not have any impact on the financial statements, particularly on account of tax expense and that of provision for taxation.

Note - 18.

During the previous year, the Company has transferred the unclaimed dividend outstanding for a period more than 7 years of Rs. 1.31 Lakhs to Investor Education and Protection Fund.

Note - 19.

The figures of the previous year were audited by a firm of Chartered Accountants other than S.R. Batliboi & Associates LLP. Previous year figures have been regrouped/ reclassified, wherever necessary to conform to the current year''s classification.

Benefits Provided to Mr. Surjeet Singh:

a. Medical Reimbursement: Reimbursement of medical expenses incurred, including premium paid on health insurance policies, whether in India or aboard, for self and family as per the policy of the Company or as approved by the Board of Directors .

b. Insurance: Personal accident insurance and Keyman or other insurance as per the policy of the Company or as approved by the Board of Directors.

c. Taxes: All taxes, duties, levies, surcharge etc. shall be borne solely by him.

d. Expenses: Reimbursement of all reasonable travelling, entertainment and other similar out of pocket expenses necessarily and reasonably incurred by him wholly in the proper performance of his duties and responsibilities. He shall be entitled to travel business class on all Company related travel which involves travel of more than five hours at any time.

---

Mar 31, 2015

1. CORPORATE INFORMATION

Subex Limited, a public limited company incorporated in 1994, is a leading global provider of Operations and Business Support Systems (OSS/ BSS) to communication service providers (CSPs) worldwide in the Telecom industry.

The Company pioneered the concept of a Revenue Operations Center (ROC) - a centralized approach that sustains profitable growth and financial health for the CSPs through coordinated operational control. Subex''s product portfolio powers the ROC and its best-in-class solutions enable new service creation, operational transformation, subscriber-centric fulfilment, provisioning automation, data integrity management, revenue assurance, cost management, fraud management and interconnect / inter-party settlement. Subex also offers a scalable Managed Services Program. The CSPs achieve competitive advantage through Business Optimization and Service Agility and improve their operational efficiency to deliver enhanced service experiences to their subscribers. The Company has a development center in India and sales offices in the form of wholly owned subsidiaries/ branches in UK, USA, Singapore, Australia, Dubai and Canada.

2. ACCOUNTING UNDER THE PROPOSAL APPROVED BY THE HON''BLE HIGH COURT

(a) During the year ended March 31, 2010, the shareholders of the Company approved the Board''s proposal (hereinafter referred to as ''the Proposal'' for transferring amounts from the Securities Premium and Capital Reserves as on or arising after April 1,2009) (upto March 31,2012) to a Business Restructuring Reserve (BRR) to be utilised from April 1,2009 for certain Permitted Utilisations as mentioned in the Proposal.

The Proposal was approved by the Hon''ble High court of Karnataka on May 4, 2010 and was registered with the Registrar of Companies on May 11,2010, thereby completing all the requirements for the order to be effective.

3. FOREIGN CURRENCY CONVERTIBLE BONDS (FCCBs)

a) During the year 2006-07, the Company issued Foreign Currency Convertible Bonds (FCCB I) aggregating to US$ 180 Million, with an interest rate of 2% p.a. payable semi-annually in arrears, with terms of conversion being :

i) Exchange rate for conversion of FCCB : RS. 44.08/ US1$

ii) Conversion price : RS. 656.20 per share

iii) Redemption date : March 09, 2012

iv) Premium payable on redemption : US$ 14.05 Million.

v) Listing on the London Stock Exchange

The bonds were available for conversion at any point in time during the period prior to the redemption date. During the year 2009-10, the Company presented to restructure the FCCBs I by offering a discount of ~30% on the face value of the existing bonds in return for new FCCBs ("FCCBs II") having a face value of US$ 126 Million.

Pursuant to the offer, the FCCBs I Bondholders, with a face value of US$ 141 Million exchanged their bonds for new FCCBs with a face value of US$ 98.70 Million. The remaining FCCBs I bondholders holding bonds with a face value of US$ 39 Million (out of the original bondholders holding US$ 180 Million) did not choose the option for restructuring. The terms and conditions applicable for the new FCCB II bonds, for the US$ 98.70 Million face value, were as under :

i) Interest rate : 5% p.a. payable semi annually

ii) Exchange rate for conversion of FCCB : RS. 48.17/ US1$

iii) Conversion price : RS. 80.31 per share

iv) Redemption date : March 09, 2012

Note - 26| FOREIGN CURRENCY CONVERTIBLE BONDS (FCCBS)

v) Premium payable on redemption : US$. 23.23 Million.

vi) Listing on the Singapore Exchange Securities Trading Limited

Both the bonds were initially redeemable on or by March 9, 2012, if not converted into equity shares as per terms of issue. Based on an approval received from the Reserve Bank of India and bond holders, the redemption date was extended to July 09, 2012.

Out of the US$ 98.70 Million of FCCBs II, bonds having a face value of US$ 31.90 Million were converted into equity shares as of March 31,2010 and bonds with a face value of US$ 12 Million were converted during the year ending March 31,2011, retaining a closing balance of US$ 54.80 Million outstanding FCCBs II bonds.

b) Pursuant to the approval of the holders of ”US$ 180 Million 2% convertible unsecured bonds",[of which US$ 39 Million was outstanding ("FCCBs I")] and "US$ 98.70 Million 5% convertible unsecured bonds", [of which US$ 54.80 Million was outstanding ("FCCBs II")], at their respective meetings held on July 5, 2012 and exchange offers received under the exchange offer memorandum dated June 13, 2012, holders of US$ 38 Million out of FCCBs I and US$ 53.40 Million out of FCCBs II offered their bonds for exchange and secured bonds with a face value of US$ 127.72 Million ("FCCBs III") were issued with maturity date of July 7, 2017. The Company has been legally advised that there is no tax incidence arising from the above restructuring.

c) The terms and conditions of FCCB III are as under:

i) Interest rate : 5.70% p.a. payable semi annually

ii) Exchange rate for conversion of FCCB : RS. 56.06/ US1$

iii) Equity Conversion price : RS. 22.79 per share

iv) Redemption date : July 07, 2017

v) Listing on the Singapore Exchange Securities Trading Limited

vi) Second ranking paripassu charge in respect of all movable properties, present & future, covered under the Existing security and First ranking charge in respect of all movable properties, present & future, other than & to the extent covered by the existing security. First ranking charge on FCCB Repayment fund on a paripassu basis jointly & equally with SBI & Axis Bank Ltd. The promoters of the company have pledged their share towards securing the repayment of FCCB III.

vii) Mandatory conversion of bonds with a face value of US$ 36.32 Million into equity shares at the aforesaid conversion price on July 07, 2012. During 2012-13, 2013-14 and 2014-15, FCCB III with a face value of US$ 3.25 Million, US$ Nil and US$ 6.62 Million, respectively, were converted into equity shares of the Company, retaining a closing balance of US$ 81.53 Million as at March 31,2015 (Previous Year : US$ 88.15 Million).

The Company has, during 2013-14 and 2014-15, received approvals from the FCCB holders for deferment of the semi-annual interest payments falling due on January 2013, July 2013, January 2014, July 2014 and January 2015 to be settled with the principal on the redemption date. These have accordingly been categorized as long-term liabilities.

d) Pursuant to approval of the RBI dated April 27, 2012 and requisite approvals under the trust deed of the holders of the Company''s US$ 180 Million convertible unsecured bonds and US$ 98.70 Million convertible unsecured bonds, the maturity period of the un-exchanged portion of FCCBs I of face value US$ 1 Million and FCCBs II of face value US$ 1.40 Million stands extended to March 9, 2017, with its other terms and conditions remaining unchanged.

e) FCCB I : As at March 31,2015, the face value of the US$ 1 Million FCCBs (Previous Year US$ 1 Million) amounts to RS. 625.03 Lakhs (Previous Year: RS. 599.16 Lakhs) and is included in Note 5 - Long Term Borrowings.

The premium payable on maturity has been accrued by a charge to Securities Premium.

FCCB II :As at March 31, 2015, the face value of the US$ 1.40 Million FCCBs (Previous Year US$ 1.40 Million) amounts to RS. 875.05 Lakhs (Previous Year: RS. 838.87 Lakhs) and is included in Note 5 - Long Term Borrowings.

The premium payable on maturity has been accrued by a charge to Securities Premium.

FCCB III :As at March 31, 2015, the face value of the US$ 81.53 Million FCCBs (Previous Year US$ 88.15 Million) amounts to RS. 50,956.17 Lakhs (Previous Year: RS. 52,815.00 Lakhs) and is included in Note 5 - Long Term Borrowings. Subsequent to the year ended March 31, 2015, the company has received an intimation for conversion of FCCB''s III of US$ 5 Million, leaving an outstanding of FCCB III bonds of face value of US$ 76.53 Million.

f) The Board in its meeting on May 14, 2015 has approved the reset of conversion price of the FCCB III which are convertible into equity shares of the Company, from RS. 22.79 to RS. 13.00 per equity share. As a result of the reset of conversion price, subject to necessary approvals, the said bonds of face value of US$ 76.53 Million would potentially be converted into 329,988,530 shares at an exchange rate of RS. 56.05.

4. EMPLOYEES STOCK OPTION PLAN (ESOP)

The Company during the years 1999-2000, 2005-2006 and 2008-09 has established ESOP II, ESOP III and ESOP IV respectively.

These schemes have been formulated in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. As per these schemes, the Compensation Committee grants the options to the employees deemed eligible by the Advisory Board constituted for the purpose. The options are granted at a price, which is not less than 85% of the average market price of the underlying shares based on the quotation on the Stock Exchange where the highest volume of shares are traded for 15 days prior to the date of grant. The shares granted vest over a period of 1 to 4 years and can be exercised over a maximum period of 3 years from the date of vesting.

The Company has obtained in-principle approval for listing of shares upto a limit as mentioned below.

ESOP II : 8,83,750 shares ESOP III : 20,00,000 shares ESOP IV : 20,00,000 shares

5. EMPLOYEES STOCK OPTION PLAN (ESOP)

Fair Value Methodology

The fair value of options used to compute pro-forma net income and earnings per equity share have been estimated on the date of grant using Black-Scholes model.

The key assumptions used in Black-Scholes model for calculating fair value is: risk-free interest rate of 8% (Previous year 8%), expected life: 3 years (Previous year: 3 years), expected volatility of share: 54.49% (Previous year 54.49%), and expected dividend yield: 0% (Previous year 0%) The variables detailed herein represent the average of the assumptions during the pendency of the grant dates.

The Company adopted the amendments to Accounting Standard 11 "The Effects of Changes in Foreign Exchange Rates" that were notified during the year ended March 31, 2012. Pursuant to this amendment, exchange fluctuations arising on restatement of all long term monetary foreign currency assets and liabilities at rates different from those at which they were initially recorded or reported in the previous financial statements (whichever is later), are accumulated in a Foreign Currency Monetary Item Translation Difference account and are amortised over the balance period of such long term asset/liability. Consequently, exchange fluctuation losses (net) arising on restatement of such items have been deferred to the extent of RS. 5,111.21 Lakhs (Previous Year RS. 5,801.74 Lakhs) at March 31,2015.

6. EMPLOYEE BENEFIT PLANS

a) Defined Contribution Plans

The Company makes contributions to Provident Fund, Employee State Insurance scheme contributions which are defined contribution plan for qualifying employees. Under the Scheme, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognized RS. 219.18 Lakhs (Year ended 31 March, 2014 RS. 203.99 Lakhs) for Provident Fund contributions (excluding administration charges) and RS. 0.55 Lakhs (Year ended 31 March 2014 RS. 1.89 Lakhs) for Employee state insurance scheme contribution in the Statement of Profit and Loss.

* The estimate of future salary increases considered, takes into account the inflation, seniority, promotion, increments and other relevant factors, benefit obligation such as supply and demand in the employment market.

* The mortality rate is based on the table as specified by the Indian Assured Lives Mortality (2006-08) (modified) Ult.

Since the Company prepares consolidated financial statements in addition to these financial statements, both of which form part of the annual report of the Company, as permitted by Accounting Standard 17 "Segment reporting", the segment information is presented on the basis of the consolidated financial statements.

7. RELATED PARTY INFORMATION

i) Related Parties

Wholly Owned Subsidiaries

Subex Americas Inc.

Subex (UK) Ltd

Subex Technologies Ltd

Subex Azure Holdings Inc.

Subex (Asia Pacific) Pte Ltd

Subex Inc.

Subex Technologies Inc.

Key Management Personnel

Surjeet Singh, Managing Director & CEO

8. OPERATING LEASES

The Company has entered into lease agreement for certain properties and servers/computers which are cancellable at the option of the Company. The total rent charged to the Statement of Profit and Loss for the year towards such leases amount to RS. 1085.74 Lakhs (Previous year - RS. 1,081.32 Lakhs)

9. DEFERRED TAX

The Company has a net deferred tax asset as at March 31,2015 significantly arising from brought forward unabsorbed depreciation and tax losses, which has not been recognized as a matter of prudence in the absence of virtual certainty.

10. OTHERS

1 During the year, the Company has transferred RS. 1.31 Lakhs (Previous Year - RS. 1.60 Lakhs) to Investor Education and Protection Fund. Unclaimed dividend of RS. Nil as at March 31, 2015 (Previous Year - RS.1.31 Lakhs) represent dividends not claimed for the financial year NIL (Previous Year : for 2006-2007).

2 The Company has during the year revised certain estimatess on useful life of the assets based on the assesment carried out on account of the application of Schedule II of the Companies Act, 2013. This has resulted in the depreciation charge and the loss for the year to be higher by RS. 51.32 Lakhs. The Company has in accordance with the transitional provisions available, adjusted RS. 9.46 Lakhs to retained earnings representing the value of assets whose life was Nil as of April 01,2014.

3 Research and Development cost for the year includes expenditure of RS. 1,414.96 Lakhs (Previous year - RS. 1,366.10 Lakhs). This is as certified by the management and relied upon by the auditors.

4 The Company does not have any outstanding foreign exchange forward contracts or other derivative instruments for the purposes of hedging the risks associated with foreign exchange exposures as at the year end.

5 The Company has RS. International transactions'' with ''Associated Enterprises which are subject to Transfer Pricing regulations in India. The Management of the Company, is of the opinion that such transactions with Associated Enterprises are at arm''s length and hence in compliance with the aforesaid legislation. Consequently, this will not have any impact on the financial statements, particularly on account of tax expense and that of provision for taxation.

6 In view of the losses incurred by the Company during the year ended March 31, 2013, the excess of the managerial remuneration paid to the directors during the FY 2012-13 over the limits prescribed under Schedule XIII of the Companies Act, 1956 has been treated as monies due from the directors, being held by them in trust for the Company, and is included under ''Short-term loans and advances'' amounting to RS. 123.80 Lakhs (Previous year RS.123.80 Lakhs). Other advances to directors paid during FY 2012-13 is RS. 110 Lakhs (Previous Year RS. 110 Lakhs)

The Company has taken necessary steps for recovery of the above amounts and these items along with other claims are a subject matter of arbitration which is in progress.

9 In the opinion of the management, considering the future operational plans and cash flows of its subsidiary, viz. Subex Americas Inc., the net outstanding being trade receivables of '' 13,046.76 Lakhs (Previous Year : RS. 14,521.33 lakhs) and of RS. 4,345.54 Lakhs (Previous Year : RS. 5,411.57 Lakhs) under Note 14 "Other Non-current Assets" and Note 15 "Trade Receivables", respectively, and loans and advances of RS. 1,844.20 Lakhs (Previous Year RS. 1,838.22 Lakhs) under Note 13 "Long-term Loans and Advances", are considered good and recoverable.

Further, based on the management''s assessment, there is no diminution, other than temporary, in the carrying value of its investment in the said subsidiary of RS. 12,495.74 Lakhs included in Note 12 "Non-Current Investments" and accordingly, no provision is required to be made at this stage.

Schedule III of the Companies Act, 2013 has become effective from April 1,2014 for the preparation of financial statements. Previous year''s figures have been regrouped / reclassified to be comparable with current year''s classification / disclosures.

---

Mar 31, 2013

1. CORPORATE INFORMATION

Subex Limited, a public limited Company incorporated in 1994, is a leading global provider of Operations and Business Support Systems (OSS/BSS) to Communication Service Providers (CSPs) worldwide in the Telecom industry.

The Company pioneered the concept of a Revenue Operations Center (ROC) - a centralized approach that sustains profitable growth and financial health for the CSPs through coordinated operational control. Subex'' s product portfolio powers the ROC and its best-in-class solutions enable new service creation, operational transformation, subscriber-centric fulfillment, provisioning automation, data integrity management, revenue assurance, cost management, fraud management and interconnect/inter-party settlement. Subex also offers a scalable Managed Services Program. The CSPs achieve competitive advantage through Business Optimization and Service Agility and improve their operational efficiency to deliver enhanced service experiences to their subscribers. The Company has a development center in India and sales offices in the form of wholly owned subsidiaries/ branches in UK, USA, Singapore, Australia, Dubai and Canada.

NOTE 2 Accounting under the Proposal approved by the Hon''ble High court

a) During the year ended March 31, 2010, the shareholders of the Company approved the Board''s proposal (hereinafter referred to as ‘the Proposal'' for transferring amounts from the Securities Premium and Capital Reserves as on or arising after April 1, 2009) (upto March 31, 2012) to a Business Restructuring Reserve (BRR) to be utilised from April 1, 2009 for certain Permitted Utilisations as mentioned in the Proposal.

The Proposal was approved by the Hon''ble High court of Karnataka on May 4, 2010 and was registered with the Registrar of Companies on May 11, 2010, thereby completing all the requirements for the order to be effective.

b) Adjustments in the BRR during the previous year ended March 31, 2011

In accordance with the Proposal, the Board of Directors of the Company have approved the following for financial year ended March 31, 2011: transfer of 717,400.00 Lakhs during the year from the balances in Securities Premium Account and Capital Reserve to the BRR utilization of the BRR for permitted utilisations to the extent of 715,503.70 Lakhs (net).

c) Adjustments in the BRR during the previous year ended March 31, 2012

In accordance with the Proposal, the Board of Directors of the Company have approved the following for financial year ended March 31, 2012: transfer of 7346.69 Lakhs during the year from the balances in Capital Reserve to the BRR utilization of the BRR for permitted utilisations to the extent of 7 2,574.93 Lakhs (net of reversals).

d) Adjustments in the BRR during the current year ended March 31, 2013

In accordance with the Proposal, the Board of Directors of the Company have approved the following for financial year ended March 31, 2013: transfer of 7271.10 Lakhs during the year to Securities Premium, towards FCCB restructuring expenses 7359.58 Lakhs, towards reversal of unbilled revenue 7 206.00 Lakhs, towards provision for Receivables 7 752.90 Lakhs.

NOTE 3 Foreign Currency Convertible Bonds

a) During the year 2006-07, the Company issued Foreign Currency Convertible Bonds (FCCB I) aggregating to US$ 180 Million, with an interest rate of 2% p.a. payable semi-annually in arrears, with terms of conversion being :

i) Exchange rate for conversion of FCCB :744.08/ US$ 1

ii) Conversion price :Rs. 656.20 per share

iii) Redemption date : March 09, 2012

iv) Premium payable on redemption : US$ 14.05 Million

v) Listing on the London Stock Exchange

The bonds were available for conversion at any point in time during the period prior to the redemption date. During the year 2009-10, the Company presented to restructure the FCCBs I by offering a discount of ~30% on the face value of the existing bonds in return for new FCCBs ("FCCBs II") having a face value of US$ 126 Million.

Pursuant to the offer, the FCCBs I Bondholders, with a face value of US$ 141 Million exchanged their bonds for new FCCBs with a face value of US$ 98.70 Million. The remaining FCCBs I bondholders holding bonds with a face value of US$ 39 Million (out of the original bondholders holding US$ 180 Million) did not choose the option for restructuring. The terms and conditions applicable for the new

FCCB II bonds, f or the US$ 98.70 Million face value, were as under :

i. Interest rate : 5% p.a. payable semi annually

ii. Exchange rate for conversion of FCCB : 748.17/ US$ 1

iii. Conversion price : 7 80.31 per share

iv. Redemption date : March 09, 2012

v. Premium payable on redemption : US$. 23.23 Million

vi. Listing on the Singapore Exchange Securities Trading Limited

Both the bonds were initially redeemable on or by March 9, 2012, if not converted into equity shares as per terms of issue. Based on an approval received from the Reserve Bank of India and bond holders, the redemption date was extended to July 09, 2012.

Out of the US$ 98.70 million of FCCBs II, bonds having a face value of US$ 31.90 million were converted into equity shares as of March 31, 2010 and bonds with a face value of US$ 12 million were converted during the year ending March 31, 2011, retaining a closing balance of US$ 54.80 Million outstanding FCCBs II bonds.

b) Pursuant to the approval of the holders of "US$ 180 Million 2% convertible unsecured bonds", [of which US$ 39 Million was outstanding ("FCCBs I")] and "US$ 98.70 Million 5% convertible unsecured bonds", [of which US$ 54.80 was outstanding ("FCCBs II")], at their respective meetings held on July 5, 2012 and exchange offers received under the exchange offer memorandum dated June 13, 2012, holders of US$ 38 Million out of FCCBs I and US$ 53.40 Million out of FCCBs II offered their bonds for exchange and secured bonds with a face value of US$ 127.72 million ("FCCBs III") were issued with maturity date of July 7, 2017. The Company has been legally advised that there is no tax incidence arising from the above restructuring.

c) The terms and conditions of FCCB III are as under:

i. Interest rate : 5.70% p.a. payable semi annually

ii. Exchange rate for conversion of FCCB : 7 56.06/ US$ 1

iii. Equity Conversion price : 722.79 per share

iv. Redemption date : July 07, 2017

v. Listing on the Singapore Exchange Securities Trading Limited

vi. Second ranking paripassu charge in respect of all movable properties, present & future, covered under the Existing security and

First ranking charge in respect of all movable properties, present & future, other than & to the extent covered by the existing security First ranking charge on FCCB Repayment fund on a paripassu basis jointly & equally with SBI & Axis Bank Ltd. The promoters of the

Company have pledged their share towards securing the repayment of FCCB III.

vii. Mandatory conversion of bonds with a face value of US$ 36.32 Million into equity shares at the aforesaid conversion price on July 17, 2012.

During the year FCCB III with face value of US$ 3.25 Million were converted into equity shares of the Company retaining a closing balance of US$ 88.15 Million.

d) Pursuant to approval of the RBI dated April 27, 2012 and requisite approvals under the trust deed of the holders of the Company''s US$ 180 million convertible unsecured bonds and US$ 98.70 million convertible unsecured bonds the maturity period of the un- exchanged portion of FCCBs I of face value US$ 1 Million and FCCBs II of face value US$ 1.40 Million stands extended to March 9, 2017, with its other terms and conditions remaining unchanged.

e) FCCB I : As at March 31, 2013, the face value of the US$ 1 Million FCCBs (Previous Year: US$ 39 Million) amounts to 7 542.81 Lakhs (Previous Year: 719,841.27 Lakhs) and is included in Note 5 - Long Term Borrowings.

The premium payable on maturity has been accrued by a charge to Securities Premium.

FCCB II : As at March 31, 2013, the face value of the US$ 1.40 Million FCCBs (Previous Year: US$ 54.80 Million) amounts to 7 759.99 Lakhs (Previous Year: 727,879.48 Lakhs) and is included in Note 5 - Long Term Borrowings.

The premium payable on maturity has been accrued by a charge to Securities Premium.

FCCB III : As at March 31, 2013, the face value of the US$ 88.15 Million FCCBs (Previous Year: US$ Nil) amounts to 7 47,852.27 Lakhs (Previous Year: 7 Nil) and is included in Note 5 - Long Term Borrowings.

NOTE 4 Employees Stock Option Plan (ESOP)

The Company during the years 1999-2000, 2005-2006 and 2008-2009 has established ESOP II, ESOP III and ESOP IV respectively.

These schemes have been formulated in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. As per these schemes, the Compensation Committee grants the options to the employees deemed eligible by the Advisory Board constituted for the purpose. The options are granted at a price, which is not less than 85% of the average market price of the underlying shares based on the quotation on the Stock Exchange where the highest volume of shares are traded for 15 days prior to the date of grant. The shares granted vest over a period of 1 to 4 years and can be exercised over a maximum period of 3 years from the date of vesting.

The Company has obtained in-principle approval for listing of shares upto a limit as mentioned below.

ESOP II : 8,83,750 shares

ESOP III : 20,00,000 shares ESOP IV : 20,00,000 shares

NOTE

The Company adopted the amendments to Accounting Standard 11 "The Effects of Changes in Foreign Exchange Rates" that were notified during the year ended March 31, 2012. Pursuant to this amendment, exchange fluctuations arising on restatement of all long term monetary foreign currency assets and liabilities at rates different from those at which they were initially recorded or reported in the previous financial statements (whichever is later), are accumulated in a Foreign Currency Monetary Item Translation Difference account and are amortised over the balance period of such long term asset/liability. Consequently, exchange fluctuation losses (net) arising on restatement of such items have been deferred to the extent of 7 2,765.65 Lakhs (Previous Year: 7 357.00 Lakhs) at March 31, 2013 and the loss for the year is lower by a corresponding amount.

NOTE 5 Employees Benefit''s Plans

a) Defined Contribution Plans

The Company makes contributions to Provident Fund, Employee State Insurance scheme contributions which are defined contribution plan for qualifying employees. Under the Scheme, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognizedRs.229.59 Lakhs (Year ended March 31, 2012 Rs.307.51 Lakhs) for Provident Fund contributions 7 2.04 Lakhs (Year ended March 31, 2012 7 2.09 Lakhs) for Employee state insurance scheme contribution in the Statement of Profit and Loss.

b) Defined Benefit Plans

The Company offers Gratuity benefits to employees, a defined benefit plan. The following table sets out the funded status of Gratuity

liability and the amounts recognised in the financial statements:

¦ The discount rate is based on the prevailing market yields of Government of India securities as at the Balance Sheet date for the estimated term of the obligations.

¦ The estimate of future salary increases considered, takes into account the inflation, seniority, promotion, increments and other relevant factors

NOTE 6

Since the Company prepares consolidated financial statements in addition to these financial statements, both of which form part of the annual report of the Company, as permitted by Accounting Standard 17 "Segment reporting", the segment information is presented on the basis of the consolidated financial statements.

NOTE 7 Related Party Information

i. Related Parties

Wholly Owned Subsidiaries

Subex Americas Inc.

Subex (UK) Ltd

Subex Technologies Ltd

Subex Azure Holdings Inc.

Subex (Asia Pacific) Pte Ltd

Subex Inc.

Subex Technologies Inc.

Key Management Personnel

Surjeet Singh, Managing Director & CEO, October 5, 2012 onwards

Subash Menon, Managing Director & CEO upto September 27, 2012

Sudeesh Yezhuvath, Wholetime Director & Chief Operating Officer upto October 5, 2012

NOTE 8 Operating Leases

The Company had non-cancellable leasing arrangement for its office premises which on renewal during the year got converted into cancellable operating lease arrangement. Rental expenses for operating leases included in the Statement of Profit and Loss for the year is 7 940.95 Lakhs (Previous year: 7 906.12 Lakhs)

NOTE 8 Commitments and Contingent Liabilities

(a) Receivables factored: Current Year -Nil (Previous Year: 72,661.10 Lakhs).

(b) Claims against the Company not acknowledged as debt:

I. Current Year - 715.97 Lakhs (Previous Year: 715.97 Lakhs). These claims relate to Indian Income Tax demands which are being contested by the Company.

II. Others : Current year - 7 956.84 Lakhs (Previous Year: Nil)

(c) Guarantees given to Subex Technologies Inc 7 2,171.40 Lakhs (Previous year: 7 2,171.40 Lakhs)

(d) The Company has received a demand of service tax of 7 3,607.60 Lakhs and equivalent amount of penalties under the provisions of the Finance Act, 1994 along with the consequential interest, for the period from April, 2006 to July, 2009 towards service tax payable on import of certain services. The Company has filed an appeal contesting the demand before the Central Excise and Service Tax Appellate Tribunal (CESTAT), Bangalore. The Company has also obtained a stay against the said demand on March 27, 2013. In view of the Company, the demand is not sustainable. Further, the Company contends that in the event of the demand being upheld by the Appellate Authority, the Company is eligible to avail the service tax as input credit upon payment of the tax, excluding penalty and interest, if any.

NOTE 9 Others

1. Estimated amount of contracts, remaining to be executed on capital account and not provided for (net of advances paid) Nil (Previous year -Rs. 17.31 Lakhs)

2. Unclaimed dividend of 7 2.92 Lakhs as at March 31, 2013 (Previous Year - 7 4.08 Lakhs) represent dividends not claimed for the period from 2005-2006. No part thereof has remained unpaid or unclaimed for a period of seven years from the date they become due for payment requiring a transfer to the Investor Education and Protection Fund''. During the current year, the Company has transferredRs.0.59 Lakhs (Previous Year -71.80 Lakhs) to Investor Protection Fund.

3. Direct Taxes paid and others in the Cash Flow Statement comprises outflows on account of permitted utilizations from the BRR of 7 359.58 Lakhs (Previous Year -7120.50 Lakhs) and Direct Taxes Nil. (Previous Year - 7 391.70 Lakhs).

4. Personnel Cost for the year includes expenditure on Research and Development of 7 1,108.71 Lakhs (Previous year - 7 1,295.12 Lakhs). This is as certified by the management and relied upon by the auditors.

5. The Company has entered into the following derivative instruments for the purposes of hedging the risks associated with foreign exchange exposures.

NOTE 10

Previous year''s figures have been regrouped/reclassified wherever necessary to correspond with the current year''s classification/ disclosures.

---

Mar 31, 2012

1. CORPORATE INFORMATION

Subex Limited, a public limited company incorporated in 1994, is a leading global provider of Operations and Business Support Systems (OSS/BSS) to Communication Service Providers (CSPs) worldwide in the Telecom industry.

The Company pioneered the concept of a Revenue Operations Center (ROC) – a centralized approach that sustains Profitable growth and financial health for the CSPs through coordinated operational control. Subex's product portfolio powers the ROC and its best-in- class solutions enable new service creation, operational transformation, subscriber-centric fulfillment, provisioning automation, data integrity management, revenue assurance, cost management, fraud management and interconnect/ inter-party settlement. Subex also offers a scalable Managed Services Program. The CSPs achieve competitive advantage through Business Optimization and Service Agility and improve their operational efficiency to deliver enhanced service experiences to their subscribers. The Company has a development center in India and sales offices in the form of wholly owned subsidiaries/ branches in UK, USA, Singapore, Australia, Dubai and Canada.

2. Accounting Under the Proposal Approved by the Hon'ble High Court

a) During the year ending March 31, 2010, the shareholders of the Company approved the Board's proposal (hereinafter referred to as 'the Proposal') for transferring amounts from the Securities Premium and Capital Reserves as on or arising after April 1, 2009 (upto March 31, 2012) to a Business Restructuring Reserve (BRR) to be utilised from April 1, 2009 for certain Permitted Utilisations as mentioned in the Proposal.

The Proposal was approved by the Hon'ble High court of Karnataka on May 4, 2010 and was registered with the Registrar of Companies on May 11, 2010, thereby completing all the requirements for the order to be effective.

b) Adjustments in the BRR during the previous year ended March 31, 2011

In accordance with the Proposal, the Board of Directors of the Company have approved the following for financial year ended March 31, 2011:

- transfer of Rs. 1,740 million during the year from the balances in Securities Premium Account and Capital Reserve to the BRR

- utilization of the BRR for permitted utilisations to the extent of Rs. 1,550.37 million (net)

c) Adjustments in the BRR during the current year ended March 31, 2012

In accordance with the Proposal, the Board of Directors of the Company have approved the following for financial year ended March 31, 2012:

- transfer of Rs. 34.67 million during the year from the balances in Capital Reserve to the BRR

- utilization of the BRR for permitted utilisations to the extent of Rs. 257.49 million (Net).

3. A. Foreign Currency Convertible Bonds (FCCBs)

During the year 2006-07, the Company issued Foreign Currency Convertible Bonds (the Old FCCBs) aggregating to US$ 180 million. During the year 2009-10, the Company restructured the Old FCCBs by offering in exchange new FCCBs having a face value of US$ 126 million. Pursuant to the offer, Old FCCBs with a face value of US$ 141 million were exchanged for new FCCBs with a face value of US$ 98.7 million. The remaining bondholders holding Old FCCBs with a face value of US$ 39 million (out of the original bondholders holding US$ 180 million) did not choose the option for restructuring. The bonds were initially redeemable on or by March 9, 2012, if not converted into equity shares as per terms of issue. Based on an approval received from the Reserve Bank of India and bond holders, these bonds are now redeemable on July 9, 2012.

As at March 31, 2012, the face value of the US$ 39 million FCCBs amounts toRs. 1,984.13 million (Previous Year: 1,739.21 million) and is included in Note 8 - Other Current Liabilities as Current Maturities of Long-term borrowings-FCCBs (Unsecured).

The other terms and conditions governing the US$ 39 million Old FCCBs outstanding are as follows:

a) Conversion Price - Rs. 656.20 per share

b) Exchange Rate for purpose of conversion - 1 US$ = Rs. 44.08

c) Interest of 2% per annum payable semi-annually in arrears

d) Premium payable on maturity US$ 14.05 million

e) Listing on the London Stock Exchange

The premium payable on maturity is being accrued prorata by a charge to Securities Premium/BRR over the term of the FCCBs.

B. New Foreign Currency Convertible Bonds (New FCCBs)

During the financial year 2009-10, in terms of the Company's offer to exchange and restructure its outstanding Old FCCBs, the Company received Old FCCBs with a face value of US$ 141 million for issue of New FCCBs with a face value of US$ 98.7 million. The bonds were initially redeemable on or by March 9, 2012, if not converted into equity shares as per terms of issue. Based on an approval received from the Reserve Bank of India and bond holders, these bonds are now redeemable on July 9, 2012.

Other terms and conditions governing the new FCCBs are as follows:

a) Conversion Price -Rs. 80.31 per share

b) Exchange Rate for purpose of conversion - 1 US$ = Rs. 48.17

c) Compensating the bond holders for the reduction in principal amount by providing an increased interest element in the New FCCBs of 5% per annum payable semi-annually in arrears

d) Premium payable on maturity - US$ 23.23 million.

e) Listing on the Singapore Exchange Securities Trading Limited

Out of the US$ 98.7 million new FCCBs, bonds having a face value of US$ 31.9 million were converted into equity shares as of March 31, 2010 and bonds with a face value of US$ 12 million were converted during the year ending March 31, 2011. Consequently new FCCBs outstanding at March 31, 2012 amount to US$ 54.8 million (Rs. 2,787.95 million), (Previous Year: Rs. 2,443.80 million) and are included in other current liabilities under Note 8 - Other Current Liabilities as Current Maturities of Long-term borrowings-FCCBs (Unsecured).

The premium payable on maturity is being accrued prorata by a charge to Securities Premium/BRR over the term of the FCCBs.

4. Employees Stock Option Plan (ESOP)

The Company during the years 1999-2000, 2005-2006 and 2008-09 has established ESOP II, ESOP III and ESOP IV respectively.

These schemes have been formulated in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. As per these schemes, the Compensation Committee grants the options to the employees deemed eligible by the Advisory Board constituted for the purpose. The options are granted at a price, which is not less than 85% of the average market price of the underlying shares based on the quotation on the Stock Exchange where the highest volume of shares are traded for 15 days prior to the date of grant. The shares granted vest over a period of 1 to 4 years and can be exercised over a maximum period of 3 years from the date of vesting.

The Company has obtained in-principle approval for listing of shares upto a limit as mentioned below.

ESOP II : 883,750 shares ESOP III : 2,000,000 shares ESOP IV : 2,000,000 shares

Fair Value Methodology

The fair value of options used to compute pro-forma net income and earnings per equity share have been estimated on the date of grant using Black-Scholes model.

The key assumptions used in Black-Scholes model for calculating fair value is: risk-free interest rate of 8%, expected life: 3 years, expected volatility of share: 33.73% (Previous Year: 48.39%) and expected dividend yield: 0% (Previous Year: 0%).The variables detailed herein represent the average of the assumptions during the pendency of the grant dates.

5. The Company adopted the amendments to Accounting Standard 11 "The effects of Changes in Foreign Exchange Rates" that were notified during the year ended March 31, 2012. Pursuant to this amendment, exchange fluctuations arising on restatement of all long term monetary foreign currency assets and liabilities at rates different from those at which they were initially recorded or reported in the previous financial statements (whichever is later), are accumulated in a Foreign Currency Monetary Item Translation Diference account and are amortised over the balance period of such long term asset/liability. Consequently, exchange fluctuation losses (Net) arising on restatement of such items have been deferred to the extent of Rs. 35.7 million at March 31, 2012 and the Profit for the year is higher by a corresponding amount.

6. Employee benefit Plans

a) defined Contribution Plans

The Company makes contributions to Provident Fund, a defined contribution plan for qualifying employees. Under the Scheme, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised Rs. 30.96 million (Year ended March 31, 2011 Rs. 29.18 million) for Provident Fund contributions in the Statement of Profit and Loss.

7. Since the Company prepares consolidated financial statements in addition to these financial statements, both of which form part of the annual report of the Company, as permitted by Accounting Standard 17 "Segment reporting", the segment information is presented on the basis of the consolidated financial statements.

8. Related Party Information i) Related Parties

Wholly Owned Subsidiaries

Subex Americas Inc.

Subex (UK) Limited

Subex Technologies Limited

Subex Azure Holdings Inc.

Subex (Asia Pacifc) Pte. Ltd

Subex Inc.

Subex Technologies Inc.

Key Management Personnel

Subash Menon, Founder Chairman, Managing Director & CEO Sudeesh Yezhuvath, Chief Operating officer & Wholetime Director

Note – Related parties are as identified by the Company based on information available and relied upon by auditors.

9. Operating Leases

The Company has entered into operating lease arrangements for its office facilities. These leases are for periods ranging from 1 to 5 years with an option to the Company for renewing at the end of the initial term. Rental expenses for operating leases included in the Statement of Profit and Loss for the year isRs. 90.61 million (Previous year -Rs. 88.49 million).

10. Contingent Liabilities

(a) Receivables factored: Current Year -Rs. 266.11 million (Previous year -Rs. 368.01 million).

(b) Claims against the Company not acknowledged as debt: Current Year -Rs. 1.59 million (Previous year -Rs. 64.52 million). These claims relate to Indian Income Tax demands which are being contested by the Company.

11. Others

1. Estimated amount of contracts, remaining to be executed on capital account and not provided for (net of advances paid) Rs. 1.73 million (Previous year -Rs. 3.41 million)

2. Unclaimed dividend of Rs. 0.41 million as at March 31, 2012 (Previous Year -Rs. 0.59 million) represent dividends not claimed for the period from 2004-2007. No part thereof has remained unpaid or unclaimed for a period of seven years from the date they become due for payment requiring a transfer to the 'Investor Education and Protection Fund'. During the current year, the Company has transferred Rs. 0.18 million (Previous Year -Rs. 0.05 million) to Investor Protection Fund.

3. Direct Taxes paid and others in the Cash Flow Statement comprisesoutflows on account of permitted utilisations from the BRR of Rs. 12.05 million (Previous Year -Rs. 20.91 million) and Direct Taxes ofRs. 39.17million. (Previous Year -Rs. 36.10 million).

4. Personnel Cost for the year includes expenditure on Research and Development of Rs. 129.51 million (Previous year - Rs. 107.42 million). This is as certified by the management and relied upon by the auditors.

5. The Company has entered into the following derivative instruments for the purposes of hedging the risks associated with foreign exchange exposures.

6. The dues to Micro and Small enterprises as defined in The Micro, Small & Medium Enterprises Development Act, 2006, are identified by the Company based on inquiries with the parties and information available with the Company is Rs. Nil (Previous Year : Nil). This has been relied upon by the auditors.

7. Revenue is net of Rs. Nil (Previous Year:Rs. 20.62 million) being reversal of Unbilled Revenues.

8. The Company purchases hardware and software to fulfill its obligations under contracts for sale of its Products. There were no inventory of such hardware/software at the beginning and end of the year.

9. The Company has 'International transactions' with 'Associated Enterprises which are subject to Transfer Pricing regulations in India. The Management of the Company, is of the opinion that such transactions with Associated Enterprises are at arm's length and hence in compliance with the aforesaid legislation. Consequently, this will not have any impact on the financial statements, particularly on account of tax expense and that of provision for taxation.

10. Remuneration to wholetime directors relating to earlier years which were subject to approval of Central Government as at March 31, 2010 aggregated to Rs. 56.26 million. During the year ended March 31, 2011, the Company received the approval for a portion of the above and accordingly, an amount of Rs. 33.27 million was charged to the Statement of Profit and Loss for the year ended March 31, 2011 and the balance was recovered from the wholetime directors by March 31, 2011.

11. The Company has been legally advised that exchange differences arising out of the restatement/settlement of FCCBs, is of a capital nature as contemplated under Section 349(5)(d) of the Companies Act, 1956 and not be deducted from the Profits of the Company in determining the remuneration and commission payable to directors. Accordingly, exchange losses of Rs. 553.36 million (Previous year - exchange gain of Rs. 2.98 million) have been adjusted in determining the net Profits of the Company under Section 349 of the Companies Act.

12. The Revised Schedule VI has become effective from 1 April, 2011 for the preparation of financial statements. This has significantly impacted the disclosure and presentation made in the financial statements. Previous year's fgures have been regrouped/reclassified wherever necessary to correspond with the current year's classifcation/disclosures.

---

Mar 31, 2011

I.1. Accounting Under the Proposal Approved by the Honble High court

During the year ending March 31, 2010, the shareholders of the Company approved the Boards proposal (hereinafter referred to as the Proposal) for transferring amounts from the Securities Premium and Capital reserves as on or arising after April 1, 2009 (upto March 31, 2012) to a Business Restructuring Reserve (BRR) to be utilized from April 1, 2009 for certain Permitted Utilisations as mentioned in the Proposal.

The Proposal was approved by the Honble High court of Karnataka on May 4, 2010 and was registered with the Registrar of Companies on May 11, 2010, thereby completing all the requirements for the order to be effective.

Adjustments in the BRR in the previous year ended March 31, 2010

In accordance with the Proposal, the Board of Directors of the Company had thus approved the following for financial year ended March 31, 2010

transfer of amounts standing to the credit of Securities premium and Capital reserve (including the Profit of Rs. 1,583.49 Million arising out of reduction in liability to the Foreign currency convertible bond holders pursuant to the Restructuring of the US$ 180 Million Foreign currency convertible bonds. Refer Note II.3.A below) to the extent of Rs. 6,700 Million to the BRR.

utilization of the BRR for certain Permitted utilisations for the amounts aggregating to Rs. 6,499.79 Million.

Adjustments in the BRR during the current year ended March 31, 2011

In accordance with the Proposal, the Board of Directors of the Company have approved the following for financial year ended March 31, 2011 transfer of Rs. 1,740 Million during the year from the balances in Securities Premium Account and Capital Reserve to the BRR.

Utilization of the BRR for permitted utilisations to the extent of Rs. 1,550.37 Million (net).

Had the Proposal not provided for the above, the effect of accounting under the Accounting Standards referred to in Section 211(3C) of the Companies Act, 1956 would have been as under:

Out of the balance outstanding in the Business Restructuring Reserve as at March 31, 2011, an amount of Rs. 280 Million is reserved for adjustment in Consolidation.

11.2. Contingent Liabilities

Receivables factored: Current Year - Rs. 368.01 Million (Previous year - Rs. 286.65 Million)

Claims against the Company not acknowledged as debt: Current Year – Rs. 64.52 Million (Previous year - Rs. 69.06 Million). These claims relate to Indian Income Tax demands which are being contested by the Company.

The Company has provided Corporate Guarantees to Banks for credit facilities availed by its wholly owned subsidiaries to the amount of Rs. Nil (Previous Year - Rs. 500 Million) at the year end. These facilities were utilized to the extent of Rs. Nil (Previous Year - Rs. 155.26 Million) by the subsidiaries.

11.3. A. Foreign Currency Convertible Bonds (FCCBs)

During the year 2006-07, the Company issued Foreign Currency Convertible Bonds (the Old FCCBs) aggregating to US$ 180 Million. The bonds carry an initial interest rate of 2% per annum and are redeemable by March 9, 2012, if not converted into equity shares as per terms of issue.

During the year 2009-10, the Company restructured the Old FCCBs by offering in exchange new FCCBs having a face value of US$ 126 Million. Pursuant to the offer, Old FCCBs with a face value of US$ 141 Million were exchanged for new FCCBs with a face value of US$ 98.7 Million. The remaining bondholders holding US$ 39 Million worth of Old FCCBs (out of the original bondholders holding US$ 180 Million) didnt chose the option for restructuring and are thus outstanding at March 31, 2011 (were outstanding at March 31, 2010 also). Liability in respect of the US$ 39 Million FCCBs at March 31, 2011 amounts to Rs. 1,739.21 Million (Previous Year: 1,751.10 Million) (included in Long Term Unsecured loans in Schedule E, under the head Foreign currency convertible bonds).

The terms and conditions governing the US$ 39 Million FCCBs outstanding are as follows:

a) Conversion of the bonds into equity shares at the option of

the bond holders at any time after April 18, 2007

b) Conversion Price – Rs.656.20 per share

c) Exchange Rate for purpose of conversion - 1 US$ = Rs.44.08

d) Interest of 2% per annum payable semi-annually in arrears

e) Redemption with yield to maturity guaranteed return of 8% per annum, calculated on semi-annual basis

f) The Company can exercise an option to redeem the bonds in whole or in part on or any time after March 9, 2010, but prior to January 29, 2012, subject to appropriate approvals at a price determined on the terms defined in the offer document.

g) Listing on the Professional Securities Market of London Stock Exchange

h) Redeemable on March 9, 2012, if not converted into Equity shares earlier.

The difference between the yield to maturity guaranteed rate of return of 8% and the coupon rate of 2% represents the premium payable on redemption and is charged to Securities Premium over the life of the bonds.

B. New Foreign Currency Convertible Bonds (New FCCBs)

During the financial year 2009-10, in terms of the Companys offer to exchange and restructure its outstanding Old FCCBs, the Company received Old FCCBs with a face value of US$ 141

Million for issue of New FCCBs with a face value of US$ 98.7 Million. The new bonds carry an initial interest rate of 5% per annum and are redeemable by March 9, 2012, if not converted in to equity shares as per terms of issue.

Other terms and conditions governing the new FCCBs are as follows:

a) Conversion of the bonds into equity shares at the option of the bond holders at any time after November 2, 2009

b) Conversion Price - Rs.80.31per share

c) Exchange Rate for purpose of conversion - 1 US$ = Rs.48.17

d) Compensating the bond holders for the reduction in principal amount by providing an increased interest element in the New FCCBs of 5% per annum payable semi-annually in arrears.

e) Redemption with yield to maturity guaranteed return of 20% per annum, calculated on semi-annual basis

f) The Company can exercise an option to redeem the bonds in whole or in part on or any time after March 9, 2010, but prior to January 29, 2012, subject to appropriate approvals at a price determined on the terms defined in the offer document.

g) Listing on the Singapore Exchange Securities Trading Limited.

h) Redeemable on March 9, 2012, if not converted into Equity shares earlier.

The difference between the yield to maturity guaranteed rate of return of 20% and the coupon rate of 5% represents the premium payable on redemption and is charged to Securities Premium over the life of the bonds.

Out of the US$ 98.7 Million new FCCBs, bonds having a face value of US$ 31.9 Million were converted into equity shares as of March 31, 2010 and bonds with a face value of USD 12 Million were converted during the year ending March 31, 2011. Consequently new FCCBs outstanding at March 31, 2011 amount to US$ 54.8 Million (Rs. 2,443.80 Million) (Previous Year: 2,999.32 Million) and is included in Long Term Unsecured loans in Schedule E, under the head Foreign currency convertible bonds.

II.4. Operating Leases

The Company has entered into operating lease arrangements for its office facilities. These leases are for periods ranging from 1 to 5 years with an option to the Company for renewing at the end of the initial term. Rental expenses for operating leases included in the Profit and Loss account for the year is Rs. 88.49 Million (Previous year - Rs. 95.34 Million)

The lease agreement for the above non-cancellable lease provides for escalation of rentals at the end of 3 years of the lease, which has been factored in the future minimum rentals disclosed above.

II.5. Employees Stock Option Plan (ESOP)

ESOP - II

During 1999-2000, the Company established the Employee Stock Option Scheme 2000 ("ESOP 2000") under which options have been allocated for grant to the employees of the Company and its subsidiaries. The Company has obtained in-principle approval for listing upto a maximum of 883,750 shares to be allotted pursuant to exercise of options granted under the scheme. Each option comprises one underlying equity share of Rs.10/- each and carries an entitlement of bonus shares if and when declared. This scheme has been formulated in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. As per the scheme, the Compensation Committee grants the options to the employees deemed eligible by the Advisory Board constituted for the purpose. The options are granted at a price, which is not less than 85% of the average market price of the underlying shares based on the quotation on the Stock Exchange where the highest volume of shares are traded for 15 days prior to the date of grant. The shares granted vest over a period of 1 to 4 years and can be exercised over a maximum period of 3 years from the date of vesting.

The difference between the market price of the share underlying the options granted on the date of grant of option and the exercise price of the option are expensed over the vesting period as per the SEBI guidelines. The net impact of the movement in option grants during the period resulted in a charge of Rs. 0.03 Million (Previous Year: Rs. 2.12 Million) to the Profit & Loss Account during the year.

ESOP - III

During 2005-2006, the Company established the Employee Stock Option Scheme 2005 ("ESOP 2005") under which 500,000 options have been allocated for grant to the employees. Subsequently, during the year 2006-2007, the number of options allocated for grant to the employees was increased to 2,000,000 options. The Company has obtained in-principle approval for listing upto a maximum of 2,000,000 shares pursuant to exercise of options granted under the scheme. Each option comprises one underlying equity share of Rs.10/- each. This scheme has been formulated in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. As per the scheme, the Compensation Committee grants the options to the employees deemed eligible by the Advisory Board constituted for the purpose. The options are granted at a price, which is not less than 85% of the average market price of the underlying shares based on the quotation on the Stock Exchange where the traded volume is the highest for 15 days prior to the date of grant. The shares granted vest over a period of 1 to 4 years and can be exercised over a maximum period of 3 years from the date of vesting.

The difference between the market price of the share underlying the options granted on the date of grant of option and the exercise price of the option are expensed over the vesting period as per the SEBI guidelines. The net impact of the movement in option grants during the period resulted in a charge of Rs. 2.43 Million (Previous Year: credit of Rs. 8.24 Million) to the Profit & Loss Account during the year.

ESOP - IV

During 2008-2009, the Company established the Employee Stock Option Scheme 2008 ("ESOP 2008") under which 2,000,000 options have been allocated for grant to the employees. The Company has obtained in-principle approval for listing upto a maximum of 2,000,000 shares pursuant to exercise of options granted under the scheme. Each option comprises one underlying equity share of Rs.10/- each. This scheme has been formulated in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. As per the scheme, the Compensation Committee grants the options to the employees deemed eligible by the Advisory Board constituted for the purpose. The options are granted at a price, which is not less than 85% of the average market price of the underlying shares based on the quotation on the Stock

Exchange where the traded volume is the highest for the 15 days prior to the date of grant. The shares granted vest over a period of 1 to 4 years can be exercised over a maximum period of 3 years from the date of vesting.

The difference between the market price of the share underlying the options granted on the date of grant of option and the exercise price of the option are expensed over the vesting period as per the SEBI guidelines. The net impact of the movement in option grants during the period resulted in a charge of Rs. 3.75 Million (Previous Year : Rs. 0.54 Million) to the Profit & Loss Account during the year.

Method Used for Accounting for Share Based Payment Plan:

The Company has used intrinsic value method to account for the compensation cost of stock option to employees of the Company. Intrinsic value is the amount by which the quoted market price of the underlying share exceeds the exercise price of the option.

Fair Value Methodology

The fair value of options used to compute proforma net income and earnings per equity share have been estimated on the date of grant using Black-Scholes model.

The key assumptions used in Black-Scholes model for calculating fair value is: risk-free interest rate of 8%, expected life: 3 years,

expected volatility of share: 48.39% (Previous Year: 34.267%) and expected dividend yield: 0% (Previous Year: 0.71%). The variables detailed herein represent the average of the assumptions during the pendency of the grant dates.

The impact on the EPS of the Company if fair value method is adopted is given below:

II.13. Others

1. Estimated amount of contracts, remaining to be executed on capital account and not provided for (net of advances paid) Rs. 3.41 Million (Previous year - Rs 6.05 Million)

2. Unclaimed Dividend of Rs. 0.59 Million as at March 31, 2011 (Previous Year - Rs. 0.64 Million) represent dividends not claimed for earlier years. During the current year, the Company has transferred Rs. 0.05 Million (Previous Year Rs. 0.10 Million) to Investor Education and Protection Fund. As on March 31, 2011, no portion of the unclaimed dividends are outstanding for a period of seven years from the due date of payment, requiring a transfer to Investor Education and Protection Fund.

3. Cash & Cash Equivalents include balance with Scheduled Banks on Dividend Account of Rs. 0.59 Million (Previous Year - Rs. 0.64 Million), Fixed Deposit of Rs. 5.97 Million (Previous Year - Rs. 25.97 Million) which are not available for use by the Company. The breakup of Cash and Cash Equivalents are given in Schedule I of financial statements.

Direct Taxes paid and Others in the Cash Flow Statement includes outflows on account of permitted utilisations from the BRR of Rs. 20.91 Million (Previous Year - Rs. 43.56 Million) and Direct Taxes of Rs. 36.10 Million (Previous Year - Rs. 44.14 Million).

4. Other Provisions comprises of -

Provision for Redemption - Rs. 1,140.35 Million

Premium on FCCBs (Previous Year Rs. 612.71 Million)

Provision for Other Long - Rs. 79.20 Million

Term Employee Benefits (Previous Year: Rs. 628.60 Million)

Differential Interest on - Rs. 80.79 Million

Restructured FCCBs (Previous Year: Rs. 203.06 Million)

MTM Losses on Option - Rs. Nil

Contracts (Previous Year: Rs. 0.95 Million)

5. Personnel Cost for the year includes expenditure on Research and Development of Rs. 107.42 Million (Previous year - Rs. 85.14 Million). This is as certified by the management and relied upon by the auditors.

6. A director of the Company has provided a personal guarantee in respect of short term loans from Banks/ Financial Institutions included in Schedule D and Schedule E of the financial statements. Further, portion of promoters shares have also been pledged towards portion of these loans.

7. As per the guidelines on accounting for Derivatives issued by the Institute of Chartered Accountants of India, the Company has provided for Mark to Market losses of Rs. Nil (Previous Year - Rs. 0.95 Million) on outstanding option contracts.

8. The Company has entered into the following derivative instruments for the purposes of hedging the risks associated with foreign exchange exposures.

The composition of the plan assets held under the funds managed by the Insurer is not provided, since the information is not available.

Payments to Provident fund, a defined contribution plan Rs. 29.18 Million (Previous Year Rs. 26.15 Million)

10. The dues to Micro and Small enterprises as defined in The Micro, Small & Medium Enterprises Development Act, 2006, are identified by the Company based on inquiries with the parties and information available with the Company. This has been relied upon by the auditors.

11. Revenue is net of Rs. 20.62 Million (Previous Year: Rs. 23.87 Million) being reversal of Unbilled Revenues.

12. Since the Company prepares consolidated financial statements, no segment information is disclosed in these financial statements.

13. The Company purchases hardware and software to fulfill its obligations under contracts for sale of its Products.

There were no inventory of such hardware/software at the beginning and end of the year. No quantitative information of purchases of hardware/software items have been disclosed since none of the individual items of such purchases constitute more than 10% of the total value of Purchases of hardware and / software.

14. The Company has International transactions with Associated Enterprises which are subject to Transfer Pricing regulations in India. The Management of the company is of the opinion that such transactions with Associated Enterprises are at arms length and hence in compliance with the aforesaid legislation and consequently that, these transactions do not have any impact on the financials statements, particularly on account of tax expense and that of provision for taxation.

15. Previous years figures have been regrouped to conform to the classifications for the current year.

---

Mar 31, 2010

I.1. Business Restructuring Reserve

The shareholders of the Company approved the Boards Proposal (hereinafter referred to as the Proposal) for transferring amounts from the Securities premium and Capital Reserves as on or arising after April 1, 2009 (upto March 31, 2012), to a Business Restructuring Reserve (BRR) to be utilized from or after April 1, 2009 for certain Permitted Utilizations as mentioned in the Proposal

The Companys petition seeking the approval of the above Proposal from the Honble High Court of Karnataka was filed with the Court on March 2, 2010. The Company has received the order of the Honble High Court approving the Proposal on May 4, 2010 and has registered the same with the Registrar of Companies on May 11, 2010, thereby completing all the requirements for the order to be effective.

In accordance with the Proposal, the Board of Directors of the Company have thus approved the following:

- transfer of amounts standing to the credit of Securities premium and Capital reserve (including the Profit of Rs.1,583,488,419 arising out of reduction in liability to the Foreign currency convertible bond holders pursuant to the Restructuring of the US$ 180 Million Foreign currency convertible bonds. Refer Note II.3.A below) to the extent of Rs. 6,700,000,000 to the BRR.

- Utilisation of the BRR for certain Permitted utilisations to the tune of Rs.6,499,792,468 Consequently the Company carries a balance of Rs.200,207,532 in the BRR as at March 31, 2010 which shall be used for such Permitted utilizations in the future as the Board may deem fit. Had the Proposal not provided for (a) transferring Profits arising out of restructuring of US$ 180 Million FCCBs (refer Note II.3.A of Schedule P) into the BRR and (b) utilisation of the BRR for Permitted utilisations as defined in the Proposal the effect of accounting under the Accounting Standards referred in to Section 211(3C) of the Companies Act, 1956 would have been as under:

1.2. Contingent Liabilities

Receivables factored: Current Year - Rs.286,654,667, Previous year - Rs.401,044,585.

Claims against the Company not acknowledged as debt – Rs.69,065,359 (Previous year - Rs.54,272,325). These claims relate to Indian Income Tax demands which are being contested by the Company.

The Company has provided Corporate Guarantees to Banks for credit facilities availed by its wholly owned subsidiaries to the amount of Rs.500,000,000 (Previous Year- Rs.731,850,000) at the year end. These facilities were utilized to the extent of Rs.155,264,299 (Previous Year Rs.657,229,872) by the subsidiaries.

1.3. A. Foreign Currency Convertible Bonds (FCCBs)

During the year 2006-07, the company issued Foreign Currency Convertible Bonds (the Old FCCBs) aggregating to US$ 180 Million to Institutional Investors. The bonds carry an initial interest rate of 2% per annum and were redeemable by March 9, 2012, if not converted in to equity shares as per terms of issue.

During the year 2009-10, the Company restructured the Old FCCBs by offering in exchange new FCCBs having a face value of US$ 126 Million. Pursuant to the offer, Old FCCBs with a face value of US$ 141 Million were exchanged for new FCCBs with a face value of US$ 98.7 Million. The remaining bondholders holding US$ 39 Million worth of Old FCCBs (out of the original bondholders holding US$ 180 Million) didnt chose the option for restructuring and are thus outstanding at March 31, 2010. Liability in respect of the US$ 39 Million FCCBs at March 31, 2010 amounts to Rs.1,751,100,000 (included in Long term Unsecured loans in Schedule E, under the head Foreign currency convertible bonds).

Consequent to the exchange of the bonds as referred above, the reduction in liability (net of issue expenses and incremental interest payable on the new FCCBs vis-à-vis the old FCCBs) of Rs.1,583,488,419 has been credited to the Capital reserve during the year ended March 31 2010. The said amount has been transferred to Business Restructuring Reserve, in accordance with the Proposal approved by the shareholders of the Company and confirmed by the Honourable Judge of High Court of Karnataka. [Refer Note II.1 above].

The terms and conditions governing the US$ 39 Million FCCBs outstanding at March 31, 2010 are as follows:

a) Conversion of the bonds into equity shares at the option of the bond holders at any time after April 18, 2007

b) Conversion Price – Rs.656.20 per share

c) Exchange Rate for purpose of conversion - 1 US$ = Rs.44.08

d) Interest of 2% per annum payable semi-annually in arrears

e) Redemption with yield to maturity guaranteed return of 8% per annum, calculated on semi-annual basis

f) The Company can exercise an option to redeem the bonds in whole

or in part on or any time after March 9, 2010, but prior to January 29, 2012, subject to appropriate approvals at a price determined on the terms defined in the offer document.

g) Listing on the Professional Securities Market of London Stock Exchange

The difference between the yield to maturity guaranteed rate of return of 8% and the coupon rate of 2% represents the premium payable on redemption and is charged to Securities Premium over the life of the bonds.

B. New Foreign Currency Convertible Bonds (New FCCBs)

During the year 2009-10, in terms of the companys offer to exchange and restructure its outstanding Old FCCBs, the company received Old FCCBs with a face value of US$ 141 Million for issue of New FCCBs with a face value of US$ 98.7 Million. The new bonds carry an initial interest rate of 5% per annum and are redeemable by March 9, 2012, if not converted in to equity shares as per terms of issue.

Other terms and conditions governing the new FCCBs are as follows:

a) Conversion of the bonds into equity shares at the option of the bond holders at any time after November 2, 2009.

b) Conversion Price – Rs.80.31 per share.

c) Exchange Rate for purpose of conversion - 1 US$ = Rs.48.17.

d) Compensating the bond holders for the reduction in principal amount by providing an increased interest element in the New FCCBs of 5% per annum payable semi-annually in arrears.

e) Redemption with yield to maturity guaranteed return of 20% per annum, calculated on semi-annual basis.

f) The Company can exercise an option to redeem the bonds in whole or in part on or any time after March 9, 2010, but prior to January 29, 2012, subject to appropriate approvals at a price determined on the terms defined in the offer document.

g) Listing on the Singapore Exchange Securities Trading Limited.

The difference between the yield to maturity guaranteed rate of return of 20% and the coupon rate of 5% represents the premium payable on redemption and is charged to Securities Premium over the life of the bonds.

Out of the US$ 98.7 Million new FCCBs, bonds having a face value of US$ 31.9 Million have been converted into equity shares as of March 31, 2010. Consequently new FCCBs outstanding at March 31, 2010 amount to US$ 66.8 Million (Rs.2,999,320,000 and is included in Long term Unsecured loans in Schedule E, under the head Foreign currency convertible bonds).

1.4. Monies Received Pending Allotment

During financial year 2007-08, the Company allotted 2,230,000 warrants to promoters/ promoters group, entitling each holder to obtain allotment of one equity share against each such warrant on a preferential basis at a price of Rs.630.31. Under the terms of issue, the Company has received 10% of the total consideration amounting to Rs.140,559,130. To obtain the underlying equity shares, the balance 90% was to be paid within 18 months from the date of allotment of the warrants in one or more tranches.

During financial year 2008-09, the warrants issued, lapsed and were forfeited and the money was transferred to Capital Reserve. The money received by the Company has been utilized for long term working capital requirements.

1.5. Operating Leases

The Company has entered into operating lease arrangements for its office facilities. These leases are for periods ranging from 1 to 5 years with an option to the Company for renewing at the end of the initial term. Rental expenses for operating leases included in the Profit and Loss account for the year is Rs.95,344,518 (Previous year Rs.94,686,746)

The future minimum lease payments for non-cancelable operating leases were:

Amount in Rs.

March 31, 2010 March 31, 2009

Within one year 90,728,870 86,881,548

Due in a period between

one year and five years 159,254,801 253,011,623

Due after five years - -

The lease agreement for the above non-cancellable lease provides for escalation of rentals at the end of 3 years of the lease, which has been factored in the future minimum rentals disclosed above.

1.6. Employees Stock Option Plan (ESOP)

ESOP - II

During 1999-2000, the Company established the Employee Stock Option Scheme 2000 (“ESOP 2000”) under which options have been allocated for grant to the employees of the Company and its subsidiaries. The Company has obtained in-principle approval for listing upto a maximum of 883,750 shares to be allotted pursuant to exercise of options granted under the scheme. Each option comprises one underlying equity share of Rs.10/- each and carries an entitlement of bonus shares if and when declared. This scheme has been formulated in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. As per the scheme, the Compensation Committee grants the options to the employees deemed eligible by the Advisory Board constituted for the purpose. The options are granted at a price, which is not less than 85% of the average market price of the underlying shares based on the quotation on the Stock Exchange where the highest volume of shares are traded for 15 days prior to the date of grant. The shares granted vest over a period of 1 to 4 years and can be exercised over a maximum period of 3 years from the date of vesting.

During 2008-09, the Company amended the ESOP 2000 scheme by inclusion of provisions allowing employees to voluntarily surrender their vested/unvested options at any time during their employment with the Company. Pursuant to this, 156,211 options were surrendered by 122 employees during 2008-09. Due to this, Rs.6,611,773, being the previously recognized ESOP compensation cost on these options, was reversed and credited to personnel costs in 2008-09.

During the year, the Company has allotted 1,210 equity shares under its ESOP 2000 scheme to the option holders upon exercise of stock options.

Under this scheme 669,188 (net) options have been granted to 624 employees as at March 31, 2010. Out of the above 161,663 options are vested and exercisable. The difference between the market price of the share underlying the options granted on the date of grant of option and the exercise price of the option are expensed over the vesting period as per the SEBI guidelines. The net impact of the movement in option grants during the period resulted in a charge of Rs.2,118,869 (Previous Year: Rs.1,759,270) to the Profit & Loss Account during the year.

ESOP- III

During 2005-2006, the Company established the Employee Stock Option Scheme 2005 (“ESOP 2005”) under which 500,000 options have been allocated for grant to the employees. Subsequently, during the year 2006-2007, the number of options allocated for grant to the employees was increased to 2,000,000 options. The Company has obtained in- principle approval for listing upto a maximum of 2,000,000 shares pursuant to exercise of options granted under the scheme. Each option comprises one underlying equity share of Rs.10/- each. This scheme has been formulated in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. As per the scheme, the Compensation Committee grants the options to the employees deemed eligible by the Advisory Board constituted for the purpose. The options are granted at a price, which is not less than 85% of the average market price of the underlying shares based on the quotation on the Stock Exchange where the traded volume is the highest for 15 days prior to the date of grant. The shares granted vest over a period of 1 to 4 years and can be exercised over a maximum period of 3 years from the date of vesting.

During 2008-09, the Company amended the ESOP 2005 scheme by inclusion of provisions allowing employees to voluntarily surrender their vested/unvested options at any time during their employment with the Company. Pursuant to this, 1,069,407 options were surrendered by 538 employees during 2008-09. Due to this, Rs.41,876,574, being the previously recognized ESOP compensation cost on these options, was reversed and credited to personnel costs in 2008-09.

During the year, the Company has allotted 1,203 equity shares under its ESOP 2005 scheme to the option holders upon exercise of stock options.

Under this scheme 1,590,558 (net) options have been granted to 1,618 employees as at March 31, 2010. Out of the above 468,088 options are vested and exercisable. The difference between the market price of the share underlying the options granted on the date of grant of option and the exercise price of the option are expensed over the vesting period as per the SEBI guidelines. The net impact of the movement in option grants during the period resulted in a charge of Rs.8,238,058 (Previous Year: credit of Rs.25,098,927) to the Profit & Loss Account during the year.

ESOP - IV

During 2008-2009, the Company established the Employee Stock Option Scheme 2008 (“ESOP 2008”) under which 2,000,000 options have been allocated for grant to the employees. The Company has obtained in-principle approval for listing upto a maximum of 2,000,000 shares pursuant to exercise of options granted under the scheme. Each option comprises one underlying equity share of Rs.10/- each. This scheme has been formulated in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. As per the scheme, the Compensation Committee grants the options to the employees deemed eligible by the Advisory Board constituted for the purpose. The options are granted at a price, which is not less than 85% of the average market price of the underlying shares based on the quotation on the Stock Exchange where the traded volume is the highest for the 15 days prior to the date of grant. The shares granted vest over a period of 1 to 4 years can be exercised over a maximum period of 3 years from the date of vesting.

Under this scheme 598,954 (net) options have been granted to 272 employees as at March 31, 2010. The difference between the market price of the share underlying the options granted on the date of grant of option and the exercise price of the option are expensed over the vesting period as per the SEBI guidelines. The net impact of the movement in option grants during the period resulted in a credit of Rs.537,915 (Previous Year : Nil) to the Profit & Loss Account during the year.

Method Used for Accounting for Share Based Payment Plan:

The Company has used intrinsic value method to account for the compensation cost of stock option to employees of the Company. Intrinsic value is the amount by which the quoted market price of the underlying share exceeds the exercise price of the option.

Fair Value Methodology

The fair value of options used to compute pro forma net income and earnings per equity share have been estimated on the date of grant using Black-Scholes model.

The key assumptions used in Black-Scholes model for calculating fair value is: risk-free interest rate of 8%, expected life: 3 years, expected

volatility of share: 34.267% and expected dividend yield: 0.71%. The variables detailed herein represent the average of the assumptions during the pendency of the grant dates.

1.7. Others

1. Estimated amount of contracts, remaining to be executed on capital account and not provided for (net of advances paid) Rs.6,048,373 (Previous year: Rs.981,108)

2. Unclaimed dividend of Rs. 642,243 as at March 31, 2010 (Previous Year: Rs.751,860) represent dividends not claimed for the period from 2002-2008. No part thereof has remained unpaid or unclaimed for a period of seven years from the date they become due for payment requiring a transfer to the Investor Education and Protection Fund. During the current year, the Company has transferred Rs.105,835 (Previous Year: Rs.52,514) to Investor Protection Fund.

3. Cash & Cash Equivalents include balance with Scheduled Banks on Dividend Account of Rs.642,243 (Previous Year: Rs.751,860), fixed deposit of Rs.25,969,391 (Previous Year: Rs.31,907,440) which are not available for use by the Company. The breakup of Cash and Cash Equivalents are given in Schedule I of financial statements.

Direct taxes paid and Others in the Cash Flow Statement includes outflows on account of permitted utilisations from the BRR of Rs.43,559,667 (Previous Year: Nil) and Direct Taxes of Rs.44,138,205 (Previous Year: Rs.34,765,054).

4. Other Provisions comprise of -

Redemption Reserve on FCCB - Rs.612,713,322

(Previous Year: Rs.1,361,916,700)

Provision for Other Long Term - Rs.628,600,000 Employee Benefits (Previous Year: Rs. Nil)

Differential Interest on - Rs.203,050,568

Restructured FCCBs (Previous Year: Rs. Nil)

MTM Losses on Option - Rs.954,666

Contracts (Previous Year: Rs.102,731,040)

5. Personnel Cost for the year includes expenditure on Research and Development of Rs.85,139,573 (Previous year: Rs.70,461,643). This is as certified by the management and relied upon by the auditors.

6. A director of the Company has provided a personal guarantee in respect of long term loans from Banks included in Schedule D (For Current Year) and Schedule E (For Previous Year) of the financial statements. Further, portion of promoters shares have also been pledged towards portion of these loans.

7. As per the guidelines on accounting for Derivatives issued by the Institute of Chartered Accountants of India, the Company has provided for Mark to Market losses of Rs.954,666 (Previous Year: Rs.102,731,040) on outstanding option contracts.

8. The Company has entered into the following derivative instruments for the purposes of hedging the risks associated with foreign exchange exposures:

10. The dues to Micro and Small enterprises as defined in The Micro, Small & Medium Enterprises Development Act, 2006, are identified by the Company based on inquiries with the parties and information available with the Company. This has been relied upon by the auditors.

11. Since the Company prepares consolidated financial statements, no segment information is disclosed in these financial statements.

12. Revenue is net of Rs.23,872,350/- (Previous Year: Rs.46,562,941) being reversal of Unbilled Revenues written-off or provided.

13. The Company purchases hardware and software to fulfill its obligations under contracts for sale of its Products. There were no inventory of such hardware/software at the beginning and end of the year. No quantitative information of purchases of hardware/software items have been disclosed since none of the individual items of such purchases constitute more than 10% of the total value of Purchases of hardware and / software.

14. The Company has International transactions with Associated Enterprises which are subject to Transfer Pricing regulations in India. The Management of the Company, is of the opinion that such transactions with Associated Enterprises are at arms length and hence in compliance with the aforesaid legislation. Consequently, this will not have any impact on the financials statements, particularly on account of tax expense and that of provision for taxation.

15. Current Taxes include Foreign Taxes of Rs. Nil (Previous Year: Rs.6,976,548)

16. Previous years figures have been regrouped to conform to the classifications for the current year.