to - majesco ltd. · we believe that the audit evidence we have obtained is sufficient and...

The Mis. 412 Mt Kemble /-\venue. Suite 11 OC. Morristown, NJ 07960

Report on the audit the ncial Statements

1. This report is issued in accordance with the terms of our engagement letter dated March 27. 2019.

Opinion

2. We have audited the accompanying special purpose financial statements of Majesco ("the

Company"), which Balance as at March 3 i, 2019. the statement of Profit and Loss (including Other Comprehensive I the Statement of in and the

of Flows for the year ended on that a surnrnary of the accounting policies and other explanatory infmmation.

3. In our opinion and to the best of our information and according to the explanations given to us. the special purpose financial statements, together with the notes thereon and attached thereto, fairly present, in all material respects, in conformity with the Ind AS and other accounting principles generally accepted in India, of the State of affairs of the Company as at March 31, 2019, its loss,

total Comprehensive income, changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

4. We conducted our audit in accordance with the Standards on Auditing (SAs) issued by the Institute of Chartered Accountants of India (!CAI). Our responsibilities under those Standards are further

5

in Auditor's the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI) together with the ethical requirements that are relevant to our audit of the Special Purpose financial statements, and we have fulfilled our etr1ical responsibilities in accordance with the the ICAl's Code of Ethics. We believe that the audit evidence we have obtained is sufficient and

appropriate to provide a basis for our audit opinion.

Material to concern

47 to the financial statements the losses incurred and the current the current assets. These conditions as set fortr1 in the indicate that a material uncertainty exists that may cast significant doubt on the to of infusion year and the continued

and other group the financial statements have been on a going concern vvhich is considered

opinion is not modified in respect of this matter.

Unit 01, ,MlDC Email·

the Our

4

with

6. The Company's Board of Directors' are responsible for preparation and presentation of these special financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards under Section i 33 of the 2013

Act) to U1e extent ci::msidered relevant by it for the purpose for which these special purpose financial statements have been prepared (the "accounting principles generally accepted in India")

7. This responsibility also includes the maintenance of adequate accounting records in accordance with the provision of the Act for safeguarding of the assets of the Company and for preventing and

frauds and other selection and of policies; and estimates are rnasonable and and implementation and maintenance of adequate internal financial controls, that were

for the accuracy and the records relevant to the

preparation and presentation the financial statements that a true and fair view and are free from material misstatement, whether due to fraud or error.

8. In preparing the financial statements, the Board of Directors' are responsible for assessing the

Company's ability to continue as a going concern, disclosing, as applicable, matters related to

going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do

so. The Board of Directors' are also responsible for overseeir.g the Company's financial reporting process.

Auditor's Responsibilities for the Audit of the Special purpose Financial Statements

9. Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance witr·1 SAs will always detect a rnatenal

misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the

economic decisions of users taken on the basis of these financial statements.

10. and maintain

and assess the risks of misstatement of the financial statements. whether due to fraud or error, design and audit procedures responsive to those risks. and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk ot not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the

override of internal control

2 4

of 1nternai controls relevant to the audit in order to audit are appropriate in the circumstances.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management

"' Conclude on the appropriateness of management's use of the going concern of accounting and, on the audit evidence obtained, a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However. future events or

may cause the to cease to continue as a concern.

"' the overall , structure and content of financial the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

1 i. We communicate with those charged with governance including the holding company regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit

12. We also provide those charged with governance including the holding company with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

Other Matters:

13. We report that:

a) We have sought and obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit

b) The Balance Sheet, the Statement of Profit and Loss including other cornprehensive lncorne, the Statement of Changes in equity and Cash Flow Statement dealt with by this

in with the of account and the other relevant records for of the statements.

14. The purpose financial statements dealt with by this have been for use m connection with of the financial statements of Limited and for no other person or purpose. These financial statements have been prepared based 011 the books of account which have been considered for the purpose of consolidated financial statements under LJS-GAAP, on which reliance is placed by us for the audit of these special purpose financial statements.

3 4

draw attention to f\lote 2.1 to the al purpose f111anc1ai statements. wh1cl1 describes tr1e basis of its preparation. The special purpose financial statements are not the statutory financial statements of the Company and are prepared for the purposes of including these financial statements in ihe consolidated financial statements of the holding company and accordingly the presentation and disclosures to the extent applicable for that purpose have been included in these

statements the and intended users of purpose statements for the purposes for which those have been prepared. Many other matters on which a

auditor under Companies Act. 201 3 is required to report are not mentioned here 111 view of the special nature of this audit as mentioned above. Our opinion is not qualified 111 respect of this matter.

16. We have no obligations, responsibility, liability in and in this

are the Statutory Auditors of the Company.

of this report as Statutory Auditors of the or done in the course of or in connection

will any of care we are not

·17. These financial statements are prepared for the purposes in SI. No i 4 above. As a result, these financial statements may not be suitable for another purpose. Our report is intended solely for Majesco Limited, the holding company, for the purposes of Consolidation and should not be distributed to or used by parties other than Majesco Limited.

Place: Navi Mumbai Date: May i 5, 2019

Unit 10

For VARMA & VARMA Chartered Accountants

FRN 0045328

P SRINlVAS Partner

M No.208520

4 of 4

MLlJfrSCO

Stanclalorw Balance Sheet as at March 31, 2019

Particulars

Non -current assets Property, p;unt and eqtJ:pment Goc-dwill

invcstrnents

Deferred tax asset {net; ;10n·current assets non.currnnt

Current 0ssets

EQUITY AND LIABILITIES Equity

snare O!ner equr:y Total equity

Liabilities Non·curronl liabilities

8cnov.ings Oiher financmJ l!ab1illif:S

Provisions Tot;:il non-current liabilities

Current liabilities F1nanc1al liab1lit:es

o;; Dues of cred11::;.rs o:ncr :t;Hn m:cro ~:i;:o-1pnses 31'.j s:Pai! emcrpnscs-

C)tn,::r f1nanc1a1 i:aod1tiCS

Current tnx l10.D ttt!CS i,rn.~1, Total current iiabilities Total liabilities

Tota! equity ancl liabilities

P1~1te

Dnt8

L1

Notes As at

8

j;

19

25

As at

13 13

VarrnJ Varma Chartered ;\ccountnnts

r:FN

t

Majesco Standalone Statement of Profit and Loss for the year ended March 31, 2019

Revenue trom op.ernncns Olher nKon1e TotM income

Exponsos

Particul;irs

Depreciation and amort1za!ion expense Other expenses Total expenses

Profit /(Loss) before exceptional items and tax ExceptionG:! iterns P!Ofit l{LossJ

1ncorne tax oxponso

tax

Tota! income tax expense I {benefit)

Prolil/(Loss) for tlw year

Other comprehensive income O!ner comprehe:1s1vt:: income 10 be rccLJss1f:E:cJ :o profit in snn''"'"';"'

Excnange differences on translat:on of foreign operat10ns

Notes

3\

Othor c:ornprei10ns1ve incon~e not !o be ;eclass1flcd t0 profit er loss m sucsequent por1c0s

Otlrnr comprehensive income I (loss) for the yenr

Total other comprehensive income for the year

Enrnings I (loss) oer share Basic earnings /(ioss1 per s!1arn {!NR;, Oi!uted earnings /(!oss) per share {!NH)

3i

{11

For and 011 behalf of the Board For Vanna & Varma

Arun M0!1eshwari D11cclor

t~e~ r~Jj_,_ Ketan Mehta Directer

Ch;irtered Accountants F RN 004.5325

f

Standalone Statement of cash flows fort/lo year ended Marcl131, 2019

Particulars

Adjustments for· Dcprecwt1on

rmance cost Interest income on {jeposits Provis1or1 for doubtful net of

Operating loss boforc working capital changes

Chtrn9es in workinn capital

tax paid Net cash flovJ; used in operating activiti% \A)

Cash flow from Investing activities Purchase of

Hl n1:.ifSW'>

!rwesrnwnt m CDs Interest received Net cash flow from investing activities (8)

Cash flow from Financing activities Procee(js from issue of ESOP shar0s Proc

Statement of changes in equity for Hie yenr ended Marc!13i, 2019

(A) Equity slrnrn cBpilal

fquily shares of USS 0.002 each issued, s:1bsc1med Opening Add. lSSUe Gur1ng tfH3 ycnr

Particulars

fu'.Jy pa1a

Reserves & Surplus (Ref or Noto 16)

Particulars C

General Corporate Information Majesco ("the Company") based in New York, United States of America is a provider of software, consulting and information technology services for Life & Annuity and Property & Casualty insurers.

The Company offers an integrated portfolio of software and services to the insurance industry, including: Core insurance software, Consulting, Application Development, Systems Integration, Application Management Outsourcing, Testing, Data Warehousing and Business Intelligence and Legacy Modernization.

2 Summary of Significant Accounting policies

2.1 Basis of preparation and presentation

{a) Statement of Compliance with Ind AS These special purpose financial statements have been prepared for the purposes of including the same in consolidated financial statements of the ultimate holding company. The financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) as prescribed under Section 133 of the Act read with Ruie 3 of the Cornpanies (Indian Accounting Standards) Rules, 2015 and Companies ( Indian Accounting Standards) Amendment Rules, 2016.

Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or ;i revision to an existing accounting standard requires a change in accounting policy hitherto in use.

These financial statements are prepared in Indian Rupees. The Indian Rupee is the functional currency for Majesco Limited ultimate Holding Company). However, U.S. Dollar "USO" is the functional currency of the Company. The translation of the functional currency into Indian Rupees (reporting currency) is performed for assets and liabilities using the exchange rates prevailing at the Balance Sheet date and for revenues and expenses using average exchange rates prevailing during the reporting period. All resulting exchange differences on translation are taken directly to reserves under Foreign Currency Translation Reserve.

(b) Basis of measurement The financial statements have been prepared on a historical cost convention on accrual basis, except for the following material items that have been measured at fair value as required by relevant Ind AS:-i) Certain financial assets and liabilities measured at fair value (refer accounting policy on financial instruments) ii) Share based payment transactions iii) Other long-term employee benefits iv) Deferred and Contingent consideration

All assets and liabilities have been classified as current or non-current as per the Company's operating cycle and other criteria set out in the Schedule Ill to the Companies Act, 2013. Based on the nature of services and the time between the rendering of service and their realization in cash and cash equivalents, the Company has asce1iained its operating cycle as twelve months for the purpose of current and noncurrent classification of assets and liabilities.

(c) Use 0f estimates The preparation of financial statements in conformity with Ind AS requires the Management to make estimate and assumptions that affect tho reported amount of assets and liabilities as at the Balance Sheet date, reported amount of revenue and expenses for the year and disclosures of contingent liabilities as at the Balance Sheet date. The estimates and assumptions used in the accompanying financial statements are based upon the Management's evaluation of the relevant facts and circumstances as at the date of the financial statements. Actual results could differ from t11ese estimates. Estimates and underlying assumptions are reviewed on a periodic basis. Revisions to accounting estimates. if any, are recognized in the year in which the estimates are revised and in any future years affected.

i) Useful lives of property, plant and equipment and intangible assets: As described in the significant accounting policy, the Company reviews the estimated useful lives of property, plant and equipment and intangible assets at the end of each reporting period.

ii) The fair value measurements and valuation processes: Some of the Company's assets and liabilities are measured at fair value for financial reporting purposes. In estimating the fair value of an asset or liability, the company's uses market-observable data to the extent it is available. Where level 1 input are not available, the Company engages third party valuers, where required, to perform the valuation. Information about the valuation techniques and inputs, used in determining the fair value of various assets. liabilities and share based payments are disclosed in notes to financial statements.

iii) Actuarial valuation The determination of Company's liability towards defined benefit obligation to employees is made through independent actuarial valuation including determination of amounts to be recognized in the statement of profit or loss and in other comprehensive income. Such valuation depend upon assumptions determined after taking into account inflation, seniority, promotion and other relevant factnrs such as supply and demand factors in the employment market. Information about such valuation is provided 111 notes to financial statements.

Page 5 of 30

the March , 201

Property, plant and equipment Property, plant and equipment are stated at cost of acquisition less accumulated depreciation and accumulated impairment losses, if any. Direct costs are capitalized until the assets are ready for use and include inward freight, and expenses incidental to acquisition and installation. Subsequent expenditures related to an item of Property, plant and equipment are added to its book

Depreciation methods, estimated useful lives Depreciation on Property, plant and equipment is provided on the straight line method, on a pro rata basis, over the estimated useful lives of assets, in order to reflect the period over which the depreciable asset is expected to be used by the Company. The management the useful

Plant and equipment Furniture and fixtures Office equipment Leasehold improvements

of of

years 2 - 5 years 5 years 2 5 years 5 years or the primary period of lease whichever is

Based on technical evaluation, the management believes that the useful lives as given above best represent the period over which management expects to use these assets. Hence the useful lives for these assets is different from the useful lives as prescribed under Part C of schedule II of the Companies Act, 2013.

Depreciation on addition to property plant and equipment is provided on pro .. rata basis from the elate of acquisition. Depreciation on sale/deduction from property plant and equipment is provided up to the elate preceding the date of sale, deduction as the case may be. Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in Statement of Profit and Loss under 'Other Income/Other Expenses'.

Depreciation methods, useful lives and residual values are reviewed periodically at each financial year encl and adjusted prospectively. as appropriate.

2.3 Intangible assets and amortization Intangible assets are recorded at the consideration paid for acquisition of such assets and are carried at cost of acquisition less accumulated amortization and impairment, if any.

Goodwill comprises the excess of purchase consideration over the net value of assets acquired at the date on which investment is made. Goodwill is not amortized but is tested for impairment.

The Company amortized intangible assets over their estimated useful lives using the straight line method. The estimated useful lives of intangible assets are as follows:

Research costs are expensed as incurred. Software product development costs are expensed as incurred unless technical and cornmercial feasibility of the project is demonstrated, future economic benefits are probable, the Company has an intention a110 ability to complete and use or sell the software and the costs can be measured reliably. The costs which can be capitalized include the cost of material, direct labor, overhead costs that are directly attributable to preparing the asset for its intended use. Research and development costs and software development costs incurred under contractual arrangements with customers are accounted as expenses in the Statement of Profit and Loss.

2.4 Foreign currency transactions and translation i) The USO is the functional currency of the Company. Considering the purpose for which these financials statements have been

prepared, the financial statements have been presented in Indian Rupees. The translation of USO to INR has been carried out as under :-a) Both monetary and non-monetary foreign currnncy assets and liabilities inciucling contingent liabilities are translated at closing exchange rates as at the Balance Sheet elate.

b) Income & Expenditure of transactions are translated at the rate on the elate of transactions.

c) Shareholders funds are not restated at the Balance sheet elate but carried at the amount initially recognized ii) Transactions denominated in foreign currencies are recorded at the rates of exchange prevailing on the date of transaction.

Monetary assets and liabilities denominated in foreign currency are converted at the rate of exchange prevailing on the elate of the Balance Sheet. Exchange differences arising on foreign currency transactions and balances are recognized as income or expense in the Profit and Loss Statement.

Page 6 of 30

'2019

value measurement The Company measures financial instruments, such as, Contingent consideration at fair value at each Balance Sheet date.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either: Ii>- In the principal market for the asset or liability, or ~ In the absence of a principal market, in the most advantageous market for the asset or liability accessible to tl1e Company.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole: lit- Level 1 Quoted (unadjusted) market prices in active markets for identical assets or liabilities It>- Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable !!>- Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

The management determines the policies and procedures for both recurring fair value measurement. For the purpose of ta1r value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above. This note summarises accounting policy for fair value.

Revenue recognition The Company derives revenues primarily from Information Technology se1vices. Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the censideraticn expect to receive in exchange for those products or services.

Arrangements with customers for software related services are either on a time and material or on a fixed-price or on a fixed-timeframe.

a) Time and material contracts Revenue on time-and-material contracts are recognized as the related services are performed and revenue from the end of the last invoicing to the reporting date is recognized as unbilled revenue.

b) Fixed-price contracts Revenue from fixed-price, fixed-timeframe contracts, where the performance obligations are satisfied over time and where there is no uncertainty as to measurement or collectability of consideration, is recognized as per the percentage-of-completion method. When there is uncertainty as to measurement or ultimate collectability, revenue recognition is postponed until such uncertainty is resolved. Efforts or costs expended are used to measure progress towards completion as there is a direct relationship between input and productivity.

The Company's revenue is categorized broadly into the following types:

i) Support and Maintenance Services ii) Professional Services iii) License Fee iv) Cloud Services/ Usage based Subscription Services

i) Support and Maintenance Services:

Support and maintenance are time bound obligations for the Company to be provided over the term of the contract and hence recognized ratably over the term of the contract.

in Contracts for software customization, related services and maintenance services, the Company has applied the guidance 111 Ind AS 115. Revenue from contracts with customer, by applying the revenue recognition criteria afier identifying distinct performance obligation. The arrangements with customers generally meet the criteria for considering sofiware customization. development, support and maintenance and related services as distinct performance obligations and income is assigned accordingly.

ii) Professional Services:

The professional services do not significantly change !he base software or its functionalities. They are considered as a distinct deliverable and recognized as a separate obligation over the period of delivery on a percentage completion basis.

iii) License Fee:

The contracted license fee arises from sale of out of the box software and is generally accompanied by an customization implementation contract. Hence income from both are recognized in proportion to the work completed for implementation as they are considered integral part of sale of the product Where licensing contracts comes with significant obligations beyond the implementation period other than support and maintenance such as hosting the software and other efforts to be put in and costs incurred, revenue from such license is recognized over the licensing period for which these obligation run.

Page 7 of 30

in i!VF

'201

2. Impairment assets At each Balance Sheet date, the Company assesses whether there is any indication that an asset may be impaired. If any suci1 indication exists, management estimates the recoverable amount. Recoverable amount is higher of an asset's net selling price and vaiue in use. Vaiue in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of the its useful life. If the carrying amount of the asset exceeds its recoverable amount an impairment loss is recognized in the Profit and Loss Statement to the extent carrying amount exceeds recoverable amount. Assessment is also done at each Balance sheet date as to whether there is any indication that an impairment loss recognized for an asset in prior accounting periods may no longer exists or may have decreased.

2. i 2 Provisions and contingent liabilities Provisions are recognized when the Company has a present legal obligation as a result of past events, and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation. Provisions are determined by the best estimate of the outflow of economic benefits required to settle the obligation at the reporting date. When no reliable estimate can be made, a disclosure is made as a contingent liability. A disclosure for a contingent liability is also made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Provisions are reviewed regularly and are adjusted where necessary to reflect the current best estimates of the obligaiion. Where the Company expects a provision to be reimbursed, the reimburse1nent is recognized as a separate asset, only when such reimbursement 1s virtually certain.

If the effect of the 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.

Contingent liabilities are disclosed when there is a possible obligation arising from past events, tile existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the

or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made. A contingent liability recognised in a business combination is initially measured at its fair value. Subsequently, it is measured at the higher of the amount that would be recognised in accordance with the requirements for provisions above or the amount initially recognised less, when appropriate, cumulative amortisation recognised in accordance with the requirements for revenue recognition.

2.13 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 Jess, which are subject to an insignificant risk of changes in value.

Cash flows are reported using the indirect method, whereby profit before tax is adjusted for the effect of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and items of income or expenses associate with investing or financing cash flows. The cash flows from operating, investing and financing activities are segregated.

2.14 Financial instruments Ali financial instruments are recognised initially at fair value. Transaction costs that are attributable to the acquisition of the financial asset (other than financial assets recorded at fair value through profit or loss) are included in the fair value of the financial assets. Purchase or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trade) are recognised on trade date. While, loans and borrowings and payables are recognised net of directly attributable transaction costs.

For the purpose of subsequent measurement, financial instruments of the Company are ciassi11ed in the following categones: non derivative financial assets comprising amortised cost, debt instruments at fair value through other comprehensive income (FVTOCI), equity instruments at FVTOCI or fair value through profit and loss account (FVTPL), non derivative financial liabilities at amortised cost or FVTPL and derivative financial instruments (under the category of financial assets or financial liabilities) at FVTPL.

The classification of financial instruments depends on the objective of the business model for which it is held. Management determines the classification of its financial instruments at initial recognition.

a) Non,derivative financial assets (i) Financial assets at amortised cost A financial asset is measured at amortised cost if both of the following conditions are met (a) the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractuai cash flows and (b) the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding.

They are presented as current assets, except for those maturing later than 12 months after the reporting date which are presented as non-current assets. Financial assets are measured initially at fair value plus transaction costs and subsequently carried at amortized cost using the effective interest method, less any impairment Joss.

Amortised cost are represented by trade receivables, security deposits, cash and cash equivalents. employee and other advances and eligible current and non,current assets.

Page 9 of 30

Debt instruments included within FVTOCI category are measured initially as well as at each reporting period at fair value plus transaction costs. Fair value movements are recognised in other comprehensive income (OCI). However, the Company recognises interest income, impairment losses & reversals and foreign exchange gainl(loss) in statement of profit and loss. On derecognition of the asset, cumulative gain or loss previously recognised in OCI is reclassified from equity to profit and loss. Interest earned is recognised under the effective interest rate (EIR) model.

(iii) Equity instruments at E\!TOCI All equity instruments are measured at fair value. Equity instruments held for trading is classified as EVTPL. For all other equity instruments, the Company may make an irrevocable election to present subsequent changes in the fair value in OCI. The Company makes such election on an instrument-by-instrument basis. If the Company decides to classify an equity instrument as at FVTOCI, then all fair value changes on the instrument, excluding dividend are recognised in OCI which is not subsequently recycled to statement of profit and loss.

(iv) Financial assets at FVTPL FVTPL is a residual category for financial assets. Any financial asset which does not meet the criteria for categorization as 2t amortised cost or as FVTOCI. is classified as FVTPL. In addition the Company may elect to designate the financial asset, which otherwise meets amortised cost or FVTOCI criteria, as FVTPL if doing so eliminates or significantly reduces a measurement or recognition inconsistency. The Company has not designated any financial asset as FVTPL. Financial assets included within the FVTPL category are measured at fair values with all changes in the statement of profit and loss.

b) Non-derivative financial liabilities (i) Financial liabilities at amortised cost Financial liabilities at amortised cost represented by borrowings. trade and other payables are initially recognized at fair value. and subsequently carried at amortized cost using the effective interest rate method. (ii) Financial liabilities at FVTPL Financial liabilities at FVTPL represented by contingent and deferred consideration are measured at fair value with all changes recognised in the statement of profit and loss.

c) Derivative financial instruments The Company holds derivative financial instruments such as foreign exchange forward contracts to mitigate the risk of changes in foreign exchange rates on foreign currency assets or liabilities and forecasted cash flows denominated in foreign currencies. The counterparty for these contracts is generally a bank. Derivatives are recognized and measured at fair value. Attributable transaction costs are recognized in statement of profit and loss. (i) Cash flow hedges: Changes in the fair value of the derivative hedging instrument designated as a cash flow hedge are recognized in other comprehensive income and presented within equity in the cash flow hedging reserve to the extent that the hedge is effective. To the extent that the hedge is ineffective, changes in fair value are recognized in the statement of profit and Joss. If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised, then hedge accounting is discontinued prospectively. The cumulative gain or loss previously recognized in the cash flmN hedging reserve is transferred to the statement of profit and loss upon the occurrence of the related forecasted transaction. (ii) Others: Changes in fair value of foreign currency derivative instruments not designated as cash flow hedges and the ineffective portion of cash flow hedges are recognized in the statement of profit and loss and reported within foreign exchange gains I (losses).

2. ·15 Em pioyee Benefits (a) Short-term obligations

The undiscounted amount of short term employee benefits expected to be paid in exchange for the services rendered by employees is recognized in the year during which the employee rendered the services. These benefits comprise compensated absences such as paid annual leave and performance incentives.

(b) Other long"term employee benefit obligations (i} Defined contribution plan

The Company contributes to 401 (k) plan whicr1 is administered through the US revenue agency. The Company also make social security contributions for its employees. The Company has no fu1iher obligation beyond making the contributions. Such contributions are charged to the Profit and Loss Statement as incurred.

(ii) Compensated Absences: The employees of the Company are also entitled for other long-term benefit in the form of compensated absences as per the policy of the Company. Leave encashment vests to employees on an annual basis for leave balance above the upper limit as per the Company's policy. At the time of retirement. death while in employment or on termination of employment leave encashmeni vests equivaient to salary payable for number of days of accumuiated leave balance subject to an upper limit as per the Company's policy. Liabiiity for such benefit is provided on ihe basis of actu2ri2i valuations, as at the Balance Sheet date, carried out by an independent actuary. The actuarial valuation method used by independent actuary for measuring the liability is the projected unit credit method. Actuarial gains and losses are recognized immediately in the Profit and Loss Statement as income or expense.

Page ~c of 3C

the

stock option Employee stock option represents the cost related to stock-based awards granted to employees. The measures stock based compensation costs at the grant date, based on the estimated fair value of the award and recognizes the cost (net of estimated forfeitures) over the employee's requisite service period for the entire award. Forfeitures are estimated on the date of grant and revised if actual or expected forfeiture activity differs materially from the original estimates. The Company estimates the fair value of stock options using a Black-Scholes valuation model.

Certain employees of the Company are also granted ESOPS by the ultimate parent company in India. The fair value of the parent perlodicaliy expense vvith corresponding

credit in Capital Contribution for Share based payment.

2. i 6 Contributed equity Equity shares are classified as equity share capital. Incremental costs directly attributable to the issue of new shares are shown in other equity under securities premium as a deduction, net of tax, from the proceeds.

2. 17 Earnings per share Basic earnings per share (EPS) are calculated by dividing the net loss I profit after tax for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by adjusting the number of shares used for basic EPS with the weighted average number of shares that could have been issued on the conversion of all dilutive potential equity shares. Dilutive potential equity shares are deemed converted as of the beginning of the year, unless they have been issued at a later date. The diluted potential equity shares have been adjusted for the proceeds receivable had the shares been actually issued at fair value i.e. average market value of outstanding shares. The number of shares and potentially dilutive shares are adjusted for share splits and bonus shares, as appropriate. In calculating diluted earnings per share, the effects of anti dilutive potential equity shares are ignored, Potential equity shares are anti-dilutive when their conversion to equity shares would increase earnings per share or decrease !oss per share.

2, 18 Rounding off amounts All amounts disclosed in financial statements and notes have been rounded off to the nearest lakhs as per permitted in of Schedule Ill of the Act, unless otherwise stated.

3(a) lndAS115 Effective from April 1, 2018, the Company has adopted Ind AS 115 "Revenue from Contracts with Customers" using the cumulative effect method, applied to contracts that were not completed as at April 1, 2018. In accordance with the cumulative effect method, the comparatives have not been retrospectively adjusted. The policies in effect for revenue recognition prior to April 1, 2018 is disclosed in Note 2.6 under Summary of Significant Accounting Policies in the financial statements for the year ended March 31, 2018. The adoption of the standard did not have any material impact on the financial statements for the year ended March 31, 2019.

3(b) Recent accounting pronouncements On 30 March, 2019, Ministry of Corporate Affairs ('MCA') has notified the Companies (Indian Accounting Standards) Amendment Rules, 2019 containing Ind AS 116 Leases that will supersede Ind AS 17 Leases.

The new standard will come into force from 1 April, 2019. The Company is evaluating the requirements of the new standard and its effect on the financial statements,

Ind AS 116 requires lessees to recognize assets and liabilities arising from all leases (except for short-term leases and leases of low-value assets) in the statement of financial position. The company will have to capitalise all assets currenify held under operating leases. Operating lease expenses will be replaced by a depreciation expense on Right of Use assets recognised and an interest expense as the implicit interest rate in the lease liabilities unwinds.

The standard allows for two transition methods: retrospectively for all periods presented, or using a modified retrospective approach where the cumulative effect of adoption is recognised at the date of initial application. The Company is evaluating which of these transition methods will be adopted.

Also, the notified (Indian Standards) Amendment Rules, 2019 amended to other Ind AS standards: Ind AS 103 Business Combinations and Ind AS 111 Joint Operations, Ind AS 109 Financial Instruments, Ind AS 12 Income Taxes, Ind AS 19 Benefits and Ind AS 23 Borrowing Costs. These arnendments shall come into effect from 1 April 2019. The Company is evaluating the impact of these amendments

Page 11of30

Majesco

Notes forming part of the Financial Statements for the year ended March 31, 2019

4 Property, plant and equipment

As at March 31, 2019

Pa:-ticulars

A)Owned assets Computers Plant and equipment Furniture and fixtures Office equi2men_t _____ _

Total (A)

B) Leased assets

--·-----~-··-------·

As at April 1,

2018

1,030 276 115

9 1,430

Additions! Adjustments

99 137

236

Gross block

Foreign exchange translation adjustment

62 15

7

Leasehold improvements . ____ 9 __________ _

_Tot~---------- --·---·---------

Total A+ 8


Particulars

A)Owned assets

Computers Plant and equipment Furniture and fixtures

Total (A)

8) Leased assets Leasehold improvements

Total (B)

Total (A+ B)

236

As at Additions/

April i, 2017

Adjustments

941 83 275 115

86

9

1

Foreign exchange

translation adjustment

6 1 1

8

8

As at Deductions/ March 31,

Adjustments 2019

1, 191 428 122 rn

As at April ·1,

2018

941 234 105

3 1,751 - 1,284

9 9 ---9

1,760 1,292

As at As at Deductions/

March 31, April 1, Adjustments

2018 2017

1,030 795 276 208 115 99

1,430 1,103

Depreciation

Deductions! For the year Adjustments

109 28

4 2

143

143

Deductions/ For the year Adjustments

141 25

6

174


(56)


(6) (1) (1)

(8)

As at March

2019

1,107

1

As at March 31,

2018

941 234 105

1,284

9 9

1,439 -~'------~---~~~~--~------~---'-'~~~-~-

As at March 31,

2019

247

As at March 31,

2018

Goodwill

Gross Opening as at April 1 , 2017 Additions during the year 2017-18 Foreign exchange translation adjustment

As at March 31, 2018 Additions Foreign exchange translation adjustment

Closing as at March 31, 2019

Accumuiated amortization and impairment, if any Opening as at April 1, 2017 For the year 2017-18 Foreign exchange translation adjustment

As at March 31, 2018 For the year 2018-19 Foreign exchange translation adjustment

Closing as at March 31, 2019

Net block As at March 31, 2019 As at March 31, 2018

4.657

1,446

7

The group tests goodwill for impairment annually on March 31. The impairment assessment is based on value in use calculations in case of goodwill arising on consolidation as well as goodwill arising on acquisition of business. During the year ended March 31, 2019 the testing did not result in any impairment in the carrying amount of goodwill. The carrying amount of goodwill is attributable to the following CGUs I group of CGUs.

*The above amounts vary due to exchange fluctuations.

The recoverable amount of above CGUs are based on value-in-use, which is determined based on five year business plans that have been prepared by management for internal purposes. The cash flows beyond the planning period are extrapolated using appropriate terminal growth rates. The terminal growth rates used do not exceed the long term average growth rates of the respective industry and country in which the entity operates and are consistent with the internal! external sources of information.

The key assumptions used in value-in-use calculations are as follows: Earnings before interest and taxes (EBIT)

- Discount rate Growth rates

- Anticipated capital expenditure

EBIT MARGINS:

The margins have been estimated based on past experience after considering incremental revenue arising out of services from the existing and new customers. Margins will be positively impacted from the efficiencies and initiatives driven by the company; whereas, factors like increased cost of operations may impact the margins negatively.

Discount rate:

Discount rates reflects current market assessment of the specific CGUs and is estimated based on the weighted average cost of capital for respective CGU/group of CGUs. Pre-tax discount rate used was ranging frorn 4.5% to 5.75% for the year ended March 31, 2019 (Previous Year 7. 78%).

Growth rates: The growth rates used is 1n line with the long term average growth rates of the respective industry and country which the entity operates considering the technology involved and are consistent with the internal I external sources of information. The average growth rates used in extrapolating cash flows ranged from 12% to 16% (Previous Year 12% to 16%).

Capital expenditure: The cash flow forecasts of capital expenditure are based on past experience after considering the additional capital expenditure required which is expected to be very nominal.

Page 13 of 30

Majesco

Notes forming part of the Financial Statements for the year ended March 31, 2019

(Amount in !NR Laf,!E}_. unless otherwise staled)

6 intangible assets


Particulars ·-----·

As at Foreign

As at As at Foreign

As at As at As April i,

Additions/ exchange Deductions/ March 31, April 1, For the year D~ductionsl exchange March 3·1, March 31,

2018 Adjustments translation Adjustments

2019 2018 Adjustments translation

2019 2019 adjustment adjustment

·--81

Tota! 812 50 862 731 35


----~---- -··

-·-------As at

Foreign As at As at

Foreign As at As at F articulars Aprll 1,

Additions/ exchange Deductions/ March 31, April 1,

Deductions! exchang& March 31, March 31,

As at

2017 Adjustments translation Adjustments

2018 2017 For the year Adjustments translation

2018 2018 1,

adjustment adjustment

Total 742 65 4 812 693 34

30

7 Financial Assets· Investments

Investment in subsidiaries - fully paid equity shares (Unquoted, at cost) Cover All Systems Inc, USA

Majesco Software and Solution Inc., USA 27,218,500 (Previous year: 27,218,500) Equity Shares of US$ 0.0001 each, fully paid up

Majesco Sdn. Bhd., Malaysia 11,262,000 (Previous year: 11,262,000) Equity Shares of RM 1 each, fully paid up

Majesco Canada Limited, Canada 3,500,000 (Previous year: 3,500,000) Equity Shares of CN $ 1 each, fully paid up

Exaxe Holdings Limited., Dublin 6,45, 150 (Previous year NIL) Equity Shares of EO. 1269738 each, fully paid up Total


23,323

2,319

523

8.030


1.144

20.540

2. 180

491

Page 15 of 30

8 Non-Current Financial assets - Loans

Unsecured, considered good Security deposits Total

9 Other non-current assets Prepaid expenses- Long Term Unamortised transaction cost Unbilled Revenue Total

10 Trade receivables Unsecured

Considered good - Considered doubtful Less · Allowance for bad and doubtful debts Total

Further classified as: Receivable from related parties (Refer note 38 (C) (b) (iii)) Receivable from others Total

11 Cash and bank balances Cash and cash equivalents Balances with banks

In current accounts Deposits having maturity for less than 3 months Total

12 Bank balances other than cash and cash equivalents

In with banks having maturity for more than 3 months but less than 12 months

13 Current Financial assets - Others Reimbursable expenses receivables Unbilled Revenue - Considered Good Total Due from related parties (Refer note 38 (C)(b)(iv))

14 Other current assets Advance to vendors

Advance to employees Prepaid expenses Unamortised transaction cost Total

'201

As at

3

6,639 251

1,560

584

16,165

7,741 7,449

15, 190

48

355

As at

8

12

5,488 227

901

403

2,463

32

5 187 22

Page 16 of 30

i5 Equity share capital

Authorized 450,000,000 (March 31, 2018: 450.000,000) Equity Shares of US $ 0.002 each

Issued, subscribed and paid up 42,846,273 (March 31, 2018: 36,600,457) equity shares of US S 0.002 each fully paid Total

(a) There are no shares that have been issued, subscribed and not fully paid up (b) There are no forfeited shares


USS 9,00,000

US$ 9,00,000

40


USS 9.00,000

32

(c) There are no shares reserved for issue under options and contractsi commitments for the sale of shares/ disinvestment.

(d) Reconciliation of equity shares outstanding at the beginning and at the end of the year

Outstanding at the beginning of t11e year Add : Shares issued during the year Less: Reverse stock split and adjustments thereto Outstanding at the end of the year

62,45,816 8.83 92,254 0.12

During the financial year, the Company had allotted 6, 123,463 equity shares with a face value of· $ 0.0021- each at a premium of· S 7.098/- pnr equity share for an amount aggregating to · $ 43,476,587.30/- on a rigl1ts basis on Feburary 25, 2019. The said fully paid up equity sl1ares were admitted to dealings on the NYSE with effect from Feburary 25, 2019, pursuant to their trading approvals, vide circulars dated Feburary 25, 2019.

(e) Rights, preferences and restrictions attached to shares The Company has one class of equity shares having a par value of US$ 0.002 per share. Eacll shareholder is eligible for one vote per share held.

(f) The Company has not issued any securities convertible into equity shares.

(g) On June 26, 2015, !!ie Company made a reverse split of its stock by issuing one stock for each existing six stocks.

(h) Shares reserved for issue under options (Refer Note 36 (b))

(i) In the period of five years immediately preceding March 31, 2019: (i) No shares were allotted as fully paid up by way of bonus shares. (ii) No shares were bought back.

As at March 31, As at March 31, 2019 2018 32,59,267 32,78, 143

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the Company in (j) proportion to the number of equity shares held by them

(k) Details of shares held by shareholders holding more than 5% of the aggregate shares in the Company Name of the shareholder As at March 31, 2019 As at March 31, 2018

Equity shares of US$0.002 held by: Majesco Limited Mastek (UK) Limited

16 Other equity

Number of shares

3,01, 11,234 50,44,875

(A) Employee Stock options outstanding account (ESOOA)'

Balance at the beginning of the year Add: Employee stock option expense Closing Balance as at the end of the year

% of holding in the

11.77%

*ES001\ recognizes the fair value of options as at the grant date spread over the vesting period. (Refer note 28)

Number of shares

50,44,875

% of holding in the class

13.78%

As at March 31,

P~lgc 17 sf 30

of

(B) Securities premium (SP)*

Opening balance Add: Right issue expenses capitalised Add : Securities premium credited on share issue Closing Balance as at the end of the year

As at March

(71) 31,255 48,899

As at March 31,

*SP record premium on issue of shares to be utilized in accordance with the Act.

(C) Capital contribution for share based payment

Opening balance 1,866 1.417 Add : Fair value charge of options granted to employees by parent (Refer note 28) Closing Balance as at the end of the year

499 449

~~~-2_,_36_5_ -~~~-1~,8_6_6_

*The reserve relates to share options granted by the holding company to its specific employees of its subsidiaries under its employee stock option plan.

(D) Surplus/( deficit) in !he Statement of Profit and

Opening balance Add: Net Profit I (loss) for the current year as per lnd·AS Closing Balance as at the end of the year

(E) Foreign currency translation reserve

Opening balance Exchange gain/ (loss) on translation during the year Closing Balance as at the end of the year

Total other equity

17 Financial liabilities- Borrowings

Secured: Term loan from bank (Refer note (a) below) Total

Nature of security

(a) Secured by SBDC given by HSBC Bank on the security of bank deposits of sanctioned amount of USO 1 O million, given by il1e parent Company Majesco Limited. The loan is been repaid fully on Feburary 28, 2019.

18 Other non-current financial liabilities

Deferred consideration payable on business acquisition·Non Current Security deposits Total

19 Non-Current Provisions

Provision for leave encashment (unfunded) (Refer note 35) Total Provisions

(11, 142) (2.207)

(381) (412)

Terms of repayment

Commencing January 1, 2018 and on each January and July 1 thereafter, instalments of principal in the amount of USD 1.67 millio11 shall be due and payable semi·annually, and all principal.

2.001

20 Current Borrowings

Working Capital Loans from Bank (Secured) -HSBC Bank (Refer (b) below)

Nature of securitv

(i) Secured against current assets including receivables of Majesco, USA sanctioned maximum borrowing limit of USD lO million.

As at March 31 2019


Terms of rcpa:yrncnt

(i) The working capital facility is valid till May 9, 2016. (ii) Repayable at the discretion of the Company up to the earlier of 360 days or validity date of !lie facility.

On January 13, 2017 Majesco, USA and step down subsidiaries, Majesco Software and Solution Inc. and Cover-All Systems, jointly and severally entered into the Receivable Purchase Agreement with HSBC. Under the Receivable Purchase Agreement, HSBC may advance funds against the Receivables at an agreed advance rate. The outstanding aggregate amount of all advances shall not exceed the Facility Limit. The facility also bears interest at two (2%) per cent plus the ninety (90) day L.IBOR rate. The term of the Receivable Purchase Agreement is for a minimum period of twelve (12) months and shall continue unless terminated by either party. As of Marcl1 31. 2019, outstanding balance under this facility amounted to iN!c;z 278 laklls.

21 Trade payables

Trade Payables a) Dues of micro enterprises and small enterprises

h) Dues of creditors other th1ir1 micro small enterprises

Total {I) Due to related parties (Hefer Note 38 (C)(b) (ii))

22 Other financial liabilities- Current

Interest accrued on loans Current maturities of finance lease obligations (Refer note 37 (ii)) Current maturities of long term borrowings

Contingent consideration payable

Deferred consideration payable on business acquisition

Accrued Expenses

Employee benefits payable Payable to Group company (Refer Note 38 (C)(b) (ii)) Reimbursable expenses payable to Group Company (Refer Note 38(C)(b)(ii)) Total (II)

Total financial liability (1+11)

23 Other current liabilities

Unearned revenue Statutory dues payable Advance from Group company (Refer Note 38 (C)(b) (v)) Total

24 Current Provisions

i0 rovision for leave encashment (unfunded) (Refer note 35) Total

25 Current tax liabilities (net)

Provision for taxes. net of advance tax

Totai

As at March 31,2019

16,277


2,975

·----~ ="==~~= 15,373

896

295 160

16 21

2,172

544

1,102 2,680 8,767

310 402

26 Revenue from operations Year ended Year ended March 3i, 2019 March 31, 2018

Information technology services 33,917 25.193 Reimbursement of expenses from customers Total

Disaggregate revonuno information by

License fees 383 Professional Services 18.406 16.460 Suppo1i & Maintenance 18 Cloud Implementation 12,885 8,124 Cloud Subscription

Total

Revenue by contract type Fixed Price contracts 22.224 12,147 Time and Material contracts

Total

27 Other income

Miscellaneous income 4 15 Foreign exchange fluctuation. net ·122 5 interest income accrued on deposits Total

28 Employee benefits expense

Salaries, wages, bonus and other allowances 13,119 14.649 Contribution to defined contribution plans 938 1.017 Employee stock option scheme compensation (Refernote 16(A &C)) 1.729 1,072 Staff welfare expenses 669 Total 17,407

29 Finance costs

Interest on working capital facility 155 222 Interest on term loan 98 16 Other Finance Charges 52 Total 305

30 Depreciation and amortization expense

Depreciation (Refer note 4) 143 174 Amortization of Intangible assets (Refer note 6) 35 Total 178

31 Other expenses

Recruitment and training 216 213 Rent (Refer note 37) 155 270 Repairs and maintenance

Buildings Others 19 13

Travel and conveyance 1.768 2.223 Printing & Stationery 105 106 Communication, broadband and internet expenses 338 329 Consultancy and sub .. contracting charges 2 036 'J .716 Legal and professional charges 1.784 950 Advertisement 247 216 Software license fees 1,073 655 Software development costs 14,506 10,015 Purchase of hardware and software 283 291 Guarantee commission 22 31 Bank charges 28 13 Insurance 115 85 Provision for Doubtful Debts 11 25 Rates & taxes 161 14 Subscriptions 166 223 Stock Exchange Listing f"ees 36 48 Miscellaneous expenses Total

Page 20 of 30

32 Exceptional items

Merger and acquisition expenses (Refer Note 51) Agile Contigent consideration reversal (Refer Note 42)

33 Income Tax (A} tax relates to following:

Deferred tax assets On property, plant and equipment On provision fN employee benefits On provision for doubtful debts On research and development carryforward I carryback On net operating loss On purchase price contingency

On others

(B) Deferred tax liabilities On upfront fees paid on loan

Deferred tax income

(C) Reconciliation of deferred tax assets/ (liabilities) (net): Balance sheet Opening balance

Tax asset I (liability) recognized in Statement of Profit and Loss Tax asset I (liability) recognized in OCI Translation difference

Closing balance

(D) Income tax expense - Current tax taxes - Deferred tax charge I (income)

Total

(E) Reconciliation of tax charge Profit before tax Income tax expense at tax rates applicable Tax effects of:

- item not deductible for tax - impact of R&D credit current and previous years - Tax of earlier period

Effect of deferred tax effect created at different rate - lntercompany NOL allocation - Change in valuation allowance related to NOL adjustrnents

Others Income tax expense

at March 31, 2019

595 771

69 573

1,353

3,276 637

204

March 31, 2019 310


479 604

62 422

1,576 148

3,478 (183)

(19)

Year ended March 31, 2019

(381) (637)

(1,018)

(5,390) (1,634)

700 (91)

5


(1,183) 183

(9,935) (3,905)

352 (118)

1,295 1,368

Page 21 of 30

the March

34 Earnings/ Loss per share

Basic earnings /(loss) per share amounts are calculated by dvid:ng the prcfitlloss for the year attributable to equity holders by the weighted average number of equity shares outstanding during the year.

Diluted earnings /(loss) per share amounts are calculated by dividing the profit/loss attributable to equity holders after adjusting by the weighted average number of equity shares outstanding during the year pl us the weighted average number of equity shares that would be issued on outstanding stock options.

The components of basic and diluted earnings per share for total operations are as follows:

(a) Net loss attributable to equity shareholders (b) Weighted average number of outstanding equity shares

Considered for basic EPS Considered for diluted EPS

(c) Loss Per share in Rs. (Earnings per share (face value per share USD 0.002/- eacl1 (Previous year USD 0,002)

Basic earnings /(loss) per share (!NH) Diluted earnings /(loss) per share (INH)

Since there is loss for the year ended Marci131, 2019 and 20 potential equity share are not considered dilutive and hence diluted EPS is same as basic EPS

35 Employee benefits

{A) Defined Contribution Plans

Contribution to defined contribution plan (Refer note 28)

(B) Other long Term Benefit Plans - Leave Encashment

(a) Assets and liabilities recognized in the Balance Sheet:

Opening Balance Charged during the year Amount paid during the year

Net

Disclosed as non-current provision (Refer note 19) Disclosed as current provision (Heier note 24)

36 Employee Stock Option Scheme (a) Nature and extent of empioyee share-based payment plans that existed during the year:

Majesco 2015 Equity Incentive Plan

As at

March 31, 2019

969 283

553 290

Year ended

3,77.04,882 3,77.04,882

{11.59) 1.59)

Year ended

March 31, 2019

As at

March 31, 2018

844 254 (129) 969

657 312

Year ended March 31,

3,66,00.457 3,66.00.457

(24.41) (24A1)

Year ended March 31,

···--~lQ_!_L_"

In June 2015, Majesco adopted the Majesco 2015 Equity Incentive Plan (the "2015 PlanT Options and stock awards for the purchase of up to 3,877,263 shares may be granted by the Board of Directors to our employees. consultants and directors at an exercise or grant price determined by the Board of Directors on the date of grant. Options may be granted as incentive or nonqualified stock options with a term of not more than ten years. The 2015 Plan allows the Board of Directors to grant restncted or unrestricted stock awards or awards denominated in stock equivalent units or any ccrnbination of the foregoing and may be paid in comrnon stcck or other securities, in cash, or ln a combination of corrnllvn stod:; or other securities and cash. On March 31, 2019, an aggregate of 2,081,983 shares were available for grant under the 2015 Plan. In June 2015, Majesco adopted the Majesco 2015 Equity Incentive Plan (the ··2015 Plan·'). On May 9, 2018, the Board of Directors of Majesco approved an increase of 2,000,000 shares in the amount of shares available for issuance under the 2015 Plan thereby increasing the number of shares available under such plan from 3.877,263 shares to 5,877,263 shares.

Mawsco uses the Black-Scholes-Me1ion opt1on-pnc111g model CBlack-Scholes ') to measure fair value of the snare-based awards. The Black-Scholes model requires us to make significant judgments regarding the assumptions used within the model. the most significant of which are ti1e expected stock price volatility, the expected life of the option award, the risk-free interest rate of return and dividends during tile expected term.

For the year ended March 31, 2019 and March 31. 2018 the fair value of the options both vested and unvested granted to ti1e employees of tl10 Company, amounting to Rs 1.729 and Rs 1,072 respectively was charged to the employee benefit expense wit1·1 a correspondm9 credit to Employee stock options outstanding account.

Page 22 of 30

Particulars

Options outstanding at beginning of year Aprii 1, 2017 Add: Options granted during the year Less; Options exercised during the year Options cancelled during the year Options outstanding at the end of year March 31, 2018 Add: Options wanted during the year Less: Options exercised during the year Options cancelled during the year Options outstanding at the end of year March 31, 2019

(c) Stock options exercised during ti1e year Number of options exercised during the year Weighted average share price at ihe date of exerc;se (iNR)

28,68,642 346

7, 15,000 327

51,249 322 351 343

3,70,890 492

1,07,681 351 2,82,085 367

32,59,267 384

Year ended Year ended March 31, March 31, 2018

20i9

1,07.681 51,248 351 322

(d) For stock options outstanding at the end of the year. the range of exercise prices and weighted average remaining contractual life (vesting period ·t exercise period)

As at March 31, 2019 Range of exercise price (IN R) Rs 335- 435 l'l.s 504 -540

As at March 31, 2018 Range of exercise price (IN R) Rs 312- 404 Rs 490 -501

{e) Information on stock options granted durinQ the year:

Number of options granted durinq the year Option pricinQ model used Weiqhted average share price (INR) Exercise price (INR) Expected volatility (%) Expected term of Share Options Dividend yield (%) Risk free interest rate (%)

Options Outstanding

27,92,561 4,66,709

31,22,327 1,55,816

As at March 31,

2019

Weighted Average

Exercise Price

522 587

336 498


3,70,890 7, 15,000 Black-Scholes option-pricing model

273 144 Rs 365- 534 Rs 316- 367 41% - 50%

0 2.51

41°/o 50% Years

0 0.46

Weighted Average

remaining

7.9 8.4

7.9 3,9

*The USO value of the option and stock price has been converted with the closing rate exchange rate 1 USS= 69.905, 65. 18 for 2019 and 2018 respectively.

Page

Majesco forming of the

(f) Restricted Stock Unit Awards

Balance, April i, 2018 Granted Balance, March 31, 2019

!nform2tion on options

No of excersiable option outstanding

WAEP

37 Leases

the

(i) Operating leases where Company is a lessee:

March

Number of RS Us

3,75,000 3 75,000

As at March 31,

2019

17,29,358

370

Vveighted Average

Grant-Date F~ir \/~i!IP

As at Marcil 31, 2018

12,00 212

353

The company leases certain office premises under operating ieases. many of these leases include a renewal option on a periodic basis at the company's option, wit11 the renewal periods extending in the range of 2 - 5 years The schedule for future minimum rental payments over the lease term in respect of operating leases is set out below.

ai Future minimum lease payments under non cancellable operatinq leases:

Within one year After one year but not more than five years More than five years Total minimum lease payments

As at Marcil 31, 2019

110

'As on March 31, 2019 and March 31, 2018 t11ere were no non-cancellable operating leases.

(b) Operating lease rentals recognized in the Profit and Loss Statement (Refer note-31)

c) Description of significant operating lease arrangements:


155

The Company has given refundable interest free security deposits under the lease agreements. All agreements contain provision for renewal at the option of either parties. The agreement provides restriction on sub lease.

(ii) Capital lease obligations

Total minimum finance lease payments outstanding ·

Within one year After one year but not rnore than five years Total minimum lease payments Less: Interest not due Present value of net minimum leases payments

Disclosed under: Long-term borrowings (Refer note 17) Other current liabilities (Refer note 22)

38 Related Party Disclosures:


(A) Names of related pariies and description of relationsr1ip as identified and certified by the Company:

Name of the Related Party Majesco Limited Majesco Canada Limited (Forrncrlv ~ •. 1ajescoMastsk Cannada Limited) Ma1esco Sdn. Bhd. (Formerly Mastek MSC Sdn. Bhd.) Majesco SoftNare and Solution (Fonneriy MajescoMastek Insurance Software and Solutions Inc) Cover-All Systems Inc. (Merged wit11 Majesco Software and Solution Inc.) Majesco Software and Solutions India Private Limited Majesco UK Ltd Majesco Sdn. Bhd. Exaxe Hoidinqs Ltd

Country India Canada Malasyia

USA

USA India United Kingdom Malaysia Ireland


202


270


21

21

Relationsl1ip Holding Company Subsidiary Subsidiary

Subsidiary

Subsidiary Subsidiary Subsidiary Subsidiar1 Subsidiary

the year 2019

(8) Other related parties with whom the Company had transactions durinq the year

List of key manaf]ement personnel: Ketan Mehta Chief Executive Officer (Retired w.eJ October 31 2018) Adam Eisler Chief Executive Officer (Appointed w.e.f. October 01. 2018) Edward Ossie Chief Operating Officer Chad Hersh Executive Vice President - Life and Annuity William Freitag Executive Vice President - Insurance Consultinq

(C) Details of transactions with related party in the ordinary course of business for the year ended:

(a) Transactions during the year:

i. information Technoloqy Services Ma1esco Sdn. Bhd. Majesco Asia Pacific Pte. Ltd. Majesco UK Ltd

ii. Software development costs Majesco Software and Solutions India Private Limited

iii. Secondment Char'1eS Majesco Software and Solutions India Private Limited

iv. Guarantee commission for SBLC facility Majesco Limited

v. Other reimbursable expenses recovered Majesco Soft11are and Soiuiions inc. Cover-All Systems Inc. Majesco Canada Limited

vi. Other reimbursable expenses paid Majesco Software and Solutions Inc. Cover¥AH Systerns Inc. Majesco Canada Limited Majesco Software and Solutions India Private Limited Majesco Limited

vii. Remuneration paid to Key Manaqerial Personnel Ketan Mehta Edward Ossie Adam Elster Chad Herst1

William Freitag

viii. Other benefits to Key Management Personnel (Share Based Payments)

\'ear ended

March 31. 2019

1.973 347

1,539

15,588

68

22

6,64l 642

21

2.297

114 110

47

146 242 187

Vear enUed March 31,

2018

1 167 220

1,188

10.721

73

31

2.072

164 149

24

229 222

143

218

31.03.19 31.03.18

Ketan Mehta

Edward Ossie

Adam E!ster

Chad Hersh

William Freita,:i

{b) Balances : i. Investment in equity shares

Majesco Canoda Limited Majesco Sdn. Bhd. Majesco Software and Solutions inc. Cover-Ali Systems Inc. Exaxe Lim.ited

ii. Trade and Other Payables* Majesco Software and Solutions India Private Limited Majesco Software and Solutions inc. Cover-All Systems Inc. Majesco Canada Limited

iii. Trade Receivable Majesco Sdn. Bhd. Majesco Asia Pacific Pte. Ud. Majesco UK Ltd

iv. Reimbursable expenses/Other receivables

Leave

Encashment

6

Share Based Leave

Payments Encashment

107

47 6

26:3

As at As at March 31, 2019 March 31, 2018

523 2,319 2,180

23,323 20,540 1:144

8.030

2.l80 2,078 27,593 6,329

6.586

525 389 498 222 435 290

Majesco Canada Limited 86 Cover-All Systems Inc. 38 Ma1esco Software and Solutions inc. G.044

v. Advance from Group company Majesco Software and Solutions me. 2.059 '!.841

vi. Advances Majesco Limited 68

Share Based

Efil'. men ts 68

43

"Other current financial liabilities represents amount payable to Cover-all towards customer invoices routed ti1rougl1 t11e Company.

31 20Hl

39 Contingent liabilities and commitments (a) Contingent consideration in respect or Agile acquisition

40 Segment reporting As per Ind AS 108 - Operating Segment, if a financial report contains bot11 consolidated financial statements of a parent t!1at is within the scope of this Ind AS as well as the parent's separate financial statements, segment information is required only in the consolidated financial statements.

41 Fair values of financial assets and financial liabilities Group·s financial instrurriems consist primarily of cash and casi1 equivalents, shon term investments ffl tirne deposits. restncted casr·1. ae11vauve

financial instruments, accounts receivables, unbilled accounts receivable, accounts payable, contingent consideration liability and accrued liabilities The carrying amount of cash and cash equivalents, short term investments in time deposits, restricted cash, accounts receivables, unbilled accounts receivable, accounts payable and accrued iiabililies as of ti'le reporting dale approximates their fair market value due to tne relatively short period of time of original maturity tenure of these instruments.

42 Fair value hierarchy The following is the hierarchy for determining and disclosing the fair value of financial instruments by valuation technique: ·Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities. ~Level 2 - Inputs other than quoted prices included \vithin Leve! 1 that are observable for the asset or !iabi!ity, either directly (ie. derived from prices) •Level 3 - Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).

No financial assets/liabilities have been valued using level 1 fair value measurements.

The fellowing table presents fair value hierarchy of assets and liabilities measured at fair value on a recurring basis: As at As at

as prices) or

March 2019 March 2018 Level 3 Contingent consideration

Other financial liabilities Total

The following table presents the change in level 3 instruments: Opening balance Additions Total (Losses)/gains recognized in Statement of operations Translation gain/loss Settlements/Reversals Closing balance

544

544

544 498

(83) 51 89 (4)

(544) 544

On November 27, 2018 we entered into a share purchase agreement (the "SPA") for the acquisition of all the issued sl1are capital (collectively, the "Securities") of Exaxe Holdings Limited, a private limited company incorporated in Ireland ("Exaxe"). Exaxe is an EMEA (Europe, the Middle East and Africa) based cloud software leader in the life, pensions and wealth management segment. Headquartered in Dublin, Ireland, Exaxe serves a growing list of top European insurers. This acquisition will strengthen and expand the Group's software offerings in EMEA for the individual life, pensions and wealth management market while complemenling the Group's software and Group focused customer base in the UK. On NovembGr 27, 2018, we corsummated the purchase of 90% of the Securities. We have agreed to purchase, and the sellers have agreed to sell to us, the rernainlng 10% of the Securities on August ·r, 20·19.

In consideration for the purchase of !lie Securities, on November 27, 2018, we paid the sellers EUR 6,382. In addition, we agreed to make an additional payment to the sellers of EUR 717 for the remainder of the Securities on August 1. 2019. We aiso agreed to make certain earnout payments to the sellers if certain adjusted EBITDA (as defined in the SPA) targets for Exaxe are met.

We always look at additional acquisitions to complement our service offerings and growi11 strategy. Our success. in the near term. will depeno. in large part, on our ability to: (a) successfully integrate our acquisitions into our business. (b) build up momentum for new sales, (c) cross-sell to existing customers and (d) exceed customer satisfaction through our state of the art products and solutions.

The Company paid 593 to Agile as earn-out consideration in the fiscal year ended March 31.2019 and 699 for Marc11 31. 2018.

Pogc 26 of :)O

Notes forming of tho March

The Company is exposed to various financial risks. These risks are categorized into market risk. credit risk and liquidity risk. The Company's risk management is coordinated by the Board of Directors and focuses on securing long term and short term cash flows. The Company does not engage in trading of financial assets for speculative purposes.

(A) Market risk Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. We are exposed to market risk primarily due to fluctuations in foreign currency exchange rates and interest rates. each as described more fuliy below. We do not ho!d or (i) Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company(s exposure to the risk of changes in market interest rates re!ates primarily to the Company"s !ong··tenn debt obligations vvith floating interest rates. The Company manages its interest rate risk by having a balanced portfolio of fixed and variable rate loans and borrowings.

Interest rate sensitivity Our exposure to market risk for changes in interest rates relates primarily to our cash and cash equivalents and investments. We do not use derivative financial instruments to hedge interest rate exposure. Our cash and cash equivalents and Bank balances as of March 31, 2019 were 3.437 and 16, 165 respectively. The rate of interest on our receivables facility with HSBC were in effect as of March 31. 2019, is variable and is based on Lll30R plus a fixed margin As of March 31, 2019, we l1ad 278 and Nil in borrowings outsianding under our receivables facility and term loan with HSBC respectively. As of March 31, 2018, we had 1.847 and 3,259 in borrowings outstanding under our receivables facility and term loan HSBC term loan respectively.

(B) Credit risk Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash and cash equivalents. time deposits. derivative financial instruments and accounts receivables, The Company rnaintains its cash and cash equivalents, time deposits. derivative financ1ai instruments with banks having good reputation, good past track record, and who meet the minimum threshold requirements under the counterparty risk assessment process. and reviews their credit-worthiness on a periodic basis. Accounts receivables of the Company are typically

(C) Liquidity risk Our cash and cash equivalent and short term investments position was 3,437 at March 31. 2019 and 403 at March 31, 2018. Net cash generated by operating activities was 12,569 for financial year 2018-19 and 116 for financial year 2017-18.

We had accounts receivable of 6,639 at March 31, 2019 and 5,488 at March 31, 2018. We had revenues in excess of billings of 7,752 as at March 31, 2019, and 2, 142 at March 31, 2018. Accounts payable and accrued expenses amounted to 17,883 at March 31. 2019, and 12)07 at March 31. 2018. The average days sales outstanding for financial year 2018-19 and financial year 2017-18 were 154 days and 72 days, respectively. The days sales outstanding have been calculated by taking into consideration the combined balances of accounts receivable and unbilled accounts receivable.

Net cash used by investing activities amounted to (16,446) for financial year 2017-18 compared to (153) for financial year 2017-18. Net cash used by investing activities for financial year 2018-19 included the purchase of plant, property & equipment and intangible assets aggregating to 236, compared to net cash used by purchase of plant, property & equipment aggregating to 153 for financial year 2017-18. Net cash generated by financing activities was 22,316 for financial year 2018-19, compared to net cash used by financing activities of (12) for financial year 2017-18. We believe that our current cash balances and anticipated cash flows from operations will be sufficient to meet our normal operating needs for at least the next twelve months. We do not expect need for a change in the mix or relative cost of our sources of capital.

44 Capital management For the purpose of the Company's capital management, capital includes issued equity capital, share prerniurn and all other equity reserves attributable to the equity holders. The primary objective of the Company's capital management is to maximize the shareholder value and to ensure the Company's ability to continue as a going concern.

The Company has not distributed any dividend to its shareholders. The Company monitors gearing ratio i.e. total debt in proportion to its overall financing structure. i.e. equity and debt. Total debt comprises of non-current borrowings which represents term loans. auto loans from banks and finance lease obligations and current borrowings represents working capital facility loan from banks and current maturities of non current borrowings. The Company manages the capital structure and mai(es adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets.

Pogc 27 of ~~o

tile ended 2019

March 31, 2019 March 31, 2018

Total equity (i) 39,308 10.520 Total debt (ii) 278 Overall financing (iii)= (i) + (ii) 39,586 Gearing ratio (ii)/ (iii) 0.01 0.41

No changes were made in the objectives, policies or processes for managing capital during the years ended 31 March 2019, 31 March 2018.

45 Majesco Reorganization On June 1, 2015, Mastek's insurance-related business was separated from Mastek's non-insurance related businesses and all insurance-related operations of Mastek that were not directly owned by Majesco were contributed to MaJesco.

The offshore insurance business operations business in India was transferred from Mastek Limited to Majesco Software Solutions India Private Limited, a wholly owned subsidary of Majesco Software and Solutions Inc,, USA Accordingly the Company became a subsidairy of Majesco Limited.

46 Majesco USA has also issued warrants to purcl1ase its shares to the lenders of Cover-All (subsidiary of the Company) and advisor to Ma1esco Number of warrants outstanding as at March 31, 2019 is 25,000 and as at March 31, 2018 is 25,000.

47 The Company has incurred losses during the year and in the previous years. The current liabilities exceed the current assets as at March 31, 2019 by Rs. 486 (previous year Rs. 16,676). The company continues to carry on it's operations in the normal course and in of the capital infusion during the year and continued suppo1i from the holding company and other group companies these financial statements have been prepared on a going concern basis which is considered appropriate by the management.

rage 28 of 30

Majesco the for the

During the previous year, the subsidiary in USA has obtained tax refunds relating io earlier periods and is certain of obtaining similar refunds

48 benefits for the balance earlier periods and current period Since virtual certainty has been established, deferred tax assets have been continuea to be recognised in this year

49 New Zealand Branch On March 23, 2016, the Company has incorporated a branch in New Zealand. There are no revenue generated through branch for the year ended Mar 31, 2019 and Mar 31, 2018 respectively.

50 Mexico Branch On June 22, 2016, the Company l1as incorporated a branch in Mexico. Impact of its operations and balances are included in the financial statements.

51 Acquisition of business of Exaxe Holdings Limited

On November 27, 2018 (the effective date), Majesco, USA, (Majesco US), subsidiary of the Company entered into a share purchase agreement (SPA) for the acquisiton of all the issued share capital of Exaxe Holdings Limited, Ireland (Exaxe). On the effective date. Majesco US consummated the purchase of 90% of the issued share capital of Exaxe. As per the SPA. the remaining 10% of the issued share capital will be transferred on August 1, 2019. The economic transfer date of the business is October 1. 2018.

Accordingly, Exaxe became direct subsidiary of MaJesco US and step-down subsidiar; of tl1e Company. MaJ8sco US has made an upfront payment of approximately INR 5,367 lakhs. and will make deferred payment of approximately INR 2,897 lakiis (which include approximately INR 405 lakhs to be paid to designated employees of Exaxe) over the next three years. For tho remaining 10%, Majesco US wili pay approximately INI~ 557 lakhs on Aug 1. 2019.

For the purpose of preparing the consolidated financial statements of the company, Majesco US has obtained an independent fair valuation of the assets taken over and in the process recognized a Goodwill of approximately of INR .236 lakhs. The expenses related to the acquisiton. INF\ 31 o lakhs has

to - majesco ltd. · we believe that the audit evidence we have obtained is sufficient and...

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