NOTES FORMING PART OF THE FINANCIAL STATEMENTS as at and for the year ended March 31, 2018

Note 01: Compucom Software limited (‘the Company’) operates in areas like E-Governance projects, ICT Education Projects, software design & development, electronic media, IT & media training &learning Solutions, Wind Power generation etc.

The Company is a public limited company incorporated and domiciled in India and has its registered office in Jaipur, Rajasthan, India. The Company has its primary listings on the BSE Limited and National Stock Exchange of India Limited and Calcutta stock exchange.

The financial statements are approved for issue by the Company’s Board of Directors in its meeting held on May 29, 2018.

Note 02: BASIS OF PREPARATION OF FINANCIAL STATEMENTS

a) Basis of preparation

These financial statements are prepared on a going concern basis, in accordance with Indian Accounting Standards (Ind AS) under the historical cost convention on the accrual basis except for financial instruments which are measured at fair values and the provisions of the Companies Act , 2013 (‘Act’) (to the extent notified). The Ind AS are prescribed under Section 133 of the Act read with relevant rule of the Companies (Indian Accounting Standards) Rules,

Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use. The financial statements were approved for issue by the Board of Directors in its meeting held on May 29, 2018.

These are Company’s first financial statements prepared in accordance with Ind AS, using April 1, 2016 as the transition date.

The Company has adopted all the relevant Ind AS based on the concern and the adoption was carried out in accordance with Ind AS 101 First time adoption of Indian Accounting Standards. The transition was carried out from Indian Accounting Principles generally accepted in India as prescribed under Section 133 of the Act, read with relevant Rule of the Companies (Accounts) Rules, (IGAAP), which was the previous GAAP.

An explanation of how the transition to Ind AS has affected the reporting of financial data in Balance sheet, Statement of Profit & loss and cash flows of the Company and the exemptions claimed by the Company on first time adoption of Ind AS ( Refer Note 34).

b) Critical accounting estimate and judgement

The preparation of the financial statements in conformity with Ind AS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amount of assets, liabilities, income, expenses and disclosures of contingent liabilities at the date of these financial statements. Actual results may differ from these estimates under different assumptions and conditions.

The management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Information about estimates and judgments made in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements are as follows:

Significant Estimates

(i) Restoration, expenses and handover costs:

Provision is made for costs associated with restoration, expenses & handover of projects as soon as the obligation to incur such costs arises. Such costs are typical on estimate basis and are based on information as provided by the appropriate authority and they are normally incurred as and when due to support the project requirements. The costs are estimated on the basis of various reports and estimates made by the competent personnel present and the Project sites and after due verification and from the contracts entered on earlier the provision is made for various expenses which will be required to settle the obligations. The management estimates that in the most likelihood the settlement of the provisions will be done in current year and hence no discounting is necessary.

(ii) Significant Judgement Contingencies:

In the normal course of business, contingent liabilities may arise from litigation, taxation and other claims against the Company. Where it is management’ assessment that the outcome cannot be reliably quantified or is uncertain, the claims are disclosed as contingent liabilities unless the likelihood of an adverse outcome is remote. Such liabilities are disclosed in the notes but are not provided for in the financial statements. While considering the possible, probable and remote analysis of taxation, legal and other claims, there is always a certain degree of judgement involved pertaining to the application of the legislation which in certain cases is supported by views of tax experts and/or earlier precedents in similar matters. Although there can be no assurance regarding the final outcome of the legal proceedings, the Company does not expect them to have a materially adverse impact on the Company’s financial position or profitability.

Terms/Rights attached to equity shares

The Company has one class of equity shares having a par value of Rs 2 per share. Each equity shareholder is eligible for one vote per share held. Each equity shareholder is entitled to dividend as and when declared by the Company. Interim dividend is paid as and when declared by the Board. Final dividend is paid after obtaining shareholders’ approval. Dividends are paid in Indian Rupees

The provision for Gratuity represents the Company’s best estimate of the costs which will be incurred in the future to meet the obligations under the laws of the Gratuity act 1972. The principal gratuity cost that the company will be required to pay on fulfillment of certain conditions based on actuarial valuation.

Current Maturities of long term debts include loan installment due from HPFS which will be settled in the month of April 2018. Statutory and other liabilities include majorly the dues to government like GST payable etc.

Unpaid dividends represent the dividends not paid before they are transferred to investor education and protection fund.

(NOTE 3): RETIREMENT AND OTHER EMPLOYEE BENEFIT SCHEMES

a. Provident Fund

The Company offers its employees, benefits under defined benefit plans in the form of provident fund scheme which covers all employees. Contributions are paid during the year into Provident Fund. Both the employees and the Company pay predetermined contributions into the fund.

b. Employees State Insurance scheme

The Company offers its employees, benefits under defined benefit plans in the form of ESI scheme which covers all employees. Contributions are paid during the year into ESI Fund. Both the employees and the Company pay predetermined contributions into the fund.

c. Gratuity Plan

The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the Act, an employee who has completed five years of service is entitled to specific benefit. The level of benefits provided depends on the member’s length of service and salary at retirement.age.

Sensitivity Analysis

Below is the sensitivity analysis determined for significant actuarial assumptions for the determination of defined benefit obligations and based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period while holding all other assumptions constant.

The above sensitivity analysis may not be representative of the actual benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one.another.as.some.of.the.assumptions.may.be.correlated.

In presenting the above sensitivity analysis, the present value of defined benefit obligation has been calculated using the projected unit credit method at the end of reporting period, which is the same as that applied in calculating the defined obligation liability recognized in the balance sheet.

Risk Analysis

The Company is exposed to a number of risks in the defined benefit plans. Most significant risks pertaining to defined benefits plans and management estimation of the.impact.of these risks are as follows:

Interest Risk

A decrease in the interest rate on plan assets will increase the plan liability, however this will be partially offset by increase in the return on plan debt investment.

Longevity Risk/Life Expectancy

The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and at the end of the employment. An increase in the life expectancy of the plan participants will increase the plan liability.

Salary Growth Risk

The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. An increase in the salary of the plan participants will increase the plan liability.

There are certain income-tax related legal proceedings which are pending against the company. Potential liabilities, if any have been adequately provided for and the Company does not currently estimate any probable material incremental tax liabilities in respect of these matters.

Tax Reliefs and Holidays

Special Business U/s 35 AD of the Income Tax Act

With effect from assessment year 2010-11, a new deduction u/s 35AD was. Introduced to provide incentive to those assesses who set up new business units in certain specified Areas/Fields. This deduction shall be available if following conditions are satisfied:

(1) A unit is set up in specified businesses.

(2) Unit of the specified business should be a new one.

(3) Books of the assesse are audited.

Compucom Software Limited has begun the construction of a 3 star hotel which is covered in the above section and hence the company will avail the deduction of @ 100% of capital expenditure incurred in future years. This deduction shall be allowed in the year in which the commercial operation of the hotel commences.

Deductions In Respect Of Profits And Gains From Industrial Undertakings Or Enterprises Engaged In Infrastructure Development (section 80IA)

This section applies to any undertaking which fulfils all the specified conditions. As generation or generation and distribution of power if it begins to generate power at any time during the period beginning on the 1st day of April, 1993 and ending on the 31st day of March, 2010. The Company has 5 wind power generating units which are set up in 3 districts hence the company avail a tax holiday of 100% profits for a period of 15 years commencing from the year in which such generation begins. The company has 2 plants in Sikar, 2 in Jaisalmer and 1 in Krishna, Andhra Pradesh.

(NOTE 4): SEGMENT REPORTING

a. Basis of Segmentation

The Company is engaged in following reportable segments:

i) Software Development

ii) Wind power generation

iii) Learning Solution

Revenue and expenses directly attributable to segment are reported under each reportable segment. Expenses which are not directly identifiable to each reporting segment have been allocated on the basis of appropriate cost drivers of the segment.

The following table presents revenue and profit information regarding the Company’s business segments for the year ended March 31, 2018 and March 31, 2017.

(NOTE 5): FINANCIAL INSTRUMENTS

This section gives an overview of the significance of financial instruments for the Company and provides additional information on the balance sheet. Details of significant accounting policies including the criteria for recognition the basis of measurement and the basis on which income and expenses are recognized.

Financial assets and liabilities:

The accounting classification of each category of financial instruments, and their Carrying amounts, are set out below:

The management assessed that Cash and cash equivalents, other bank balances, Trade receivables, Trade payables, other current financial assets and liabilities approximate their carrying amounts largely due to the short term maturities of these instruments.

Fair value hierarchy

The table shown below analyses financial instruments carried at fair value, by measurement hierarchy. The different levels have been defined below:

- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities

- Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices)

- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs)

INTRODUCTION

The Securities and Exchange Board of India (“SEBI”) issued the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred to as the ‘Listing Regulations’) on September 02, 2015, effective from December 01, 2015. The Regulation 21 mandate listed entities to formulate a Policy on Risk Management. It is in the context that the Policy on Risk Management (“Policy”) is being framed and implemented from 11.02.2016 and approved by the Board.

This Policy is modified and/or amended with the approval of the Board of directors as on 29.05.2018.

OBJECTIVE & PURPOSE OF POLICY:

The main objective of this policy is to ensure sustainable business growth with stability and to promote a pro-active approach in reporting, evaluating and resolving risks associated with the business. In order to achieve the key objective, the policy establishes a structured and disciplined approach to Risk Management, in order to guide decisions on risk related issues.

The specific objectives of the Risk Management Policy are:

1. To ensure that all the current and future material risk exposures of the company are identified, assessed, quantified, appropriately mitigated, minimized and managed i.e. to ensure adequate systems for risk management.

2. To establish a framework for the company’s risk management process and to ensure its implementation.

3. To enable compliance with appropriate regulations, wherever applicable, through the adoption of best practices.

4. To assure business growth with financial stability.

Treasury management

The Company has a strong system of internal control which enables effective monitoring of adherence to Company’s policies. The internal control measures are effectively supplemented by regular internal audits.

Market risk

Market risk is the risk that the fair values of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises interest rate risk, currency risk and commodity risk.

The sensitivity analyses given elsewhere in the following sections relate to the position as at March 31, 2018, March31, 2017 and April 1, 2016.

Financial risk

The Company does not engage in speculative treasury activity but seeks to manage risk and optimize interest and pricing through proven financial instruments.

a. Liquidity risk

The Company requires funds both for short-term operational needs as well as for long-term investment programme mainly in growth projects. The Company generates sufficient cash flows from the current operations which together with the available cash and cash equivalents and short-term investments provide liquidity both in the short- term as well as in the long-term.

The Company remains committed to maintaining a healthy liquidity, gearing ratio and strengthening the balance sheet. The maturity profile of the Company’s financial liabilities based on the remaining period from the date of balance sheet to the contractual maturity date is given in the table below. The figures reflect the contractual undiscounted cash obligations of the Company.

b. Foreign Exchange Risk

Fluctuations in foreign currency exchange rates may have an impact on the Statement of Profit and Loss, where any transaction references more than one currency other than the functional currency of the Company.

The company during the year is not prone to any exchange risk as it has not entered in any foreign exchange contracts the difference in exchange rates on outstanding balance of subsidiary has been duly accounted for through statement of profit and loss.

c. Interest Rate Risk

Floating rate financial assets are largely mutual fund investments which have debt securities as underlying assets. The returns from these financial assets are linked to market interest rate movements; however the counterparty invests in the agreed securities with known maturity tenure and return and hence has manageable risk.

d. Counterparty and concentration of credit risk

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company has adopted a policy of obtaining sufficient security, where appropriate, as a means of mitigating the risk of financial loss from defaults. The Company is exposed to credit risk for receivables, cash and cash equivalents, short-term investments etc. Credit risk on receivables is limited as almost all credit sales are against letters of credit and guarantees of banks of good financial repute. No single customer accounted for 10% or more of revenue on % basis in any of the years indicated. The Company is mainly engaged in projects awarded from government of Rajasthan and Bihar and derives it’s key revenue from these projects. The company has booked bad debts in the years of March 31, 2018, March 31 ,2017 and April 1, 2016 and the company in future expects negligible credit risk after estimating for current year bad debts and hence has not impaired any financial instruments regarding the same.

Derivative financial instruments

The Company does not acquire or issue derivative financial instruments for trading or speculative purposes. The Company does not enter into complex derivative transactions to manage the treasury and commodity risks. The company is not enrolled in any hedging contracts and is not party to any derivative financial instruments either directly or indirectly through any party.

(NOTE 6): RELATED PARTY DISCLOSURES

A. List of Related Parties:

(i) Parties where control exists: Subsidiary Companies:

- ITneer Inc.

- CSL Infomedia Private Limited

(ii) Other related parties with whom transactions have taken place during the year:

a) Key Management Personnel:

- Mr. Surendra Kumar Surana, Managing Director

- Mr. Sanjeev Nigam, Chief Financial Officer

- Mrs. Swati Jain, Company Secretary

b) Enterprises over which the key management personnel exercise Significant influence:

- Rishabh Infotech Private Limited

- Sambhav Infotech Private Limited

- Compucom Technologies Private Limited

- Compucom Foundation

- Compucom (India) Private Limited

- Compucom Software Limited Employee Welfare Trust

(iii) Others:

- Mrs. Trishla Rampuria (Relative of Key Managerial Personnel)

- Mr. Ajay Kumar Surana, Director

- Mr. Shubh Karan Surana, Director

1) All the transactions entered by the company with the related parties are at arm’s length. Price.

2) The Company had taken a loan from CTPL of Rs. 124 Lacs carrying an interest of 10% p.a. for meeting short term commitments. The loan amount has been repaid to CTPL along with interest thereon of 0.88 Lacs.

(NOTE 7): FIRST TIME ADOPTION ON IND AS 101

These are the Company’s first financial statements prepared in accordance with Ind AS. For all period’s upto and including the year ended March 31, 2015, 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, hereafter referred to as ‘Previous GAAP’.

Ind AS 101 First-time Adoption of Indian Accounting Standards allows first-time adopters to certain exemptions from retrospective application of certain requirements under Ind AS. The Company has in accordance with the exemptions provided, opted to capitalize stripping cost of a surface mine (incurred during the production phase) from the date of transition to Ind AS.

Notes on adjustments:

1. Re-measurement gains or losses: Ind AS 19 Employee Benefits requires the impact of re-measurement in net defined benefit liability (asset) to be recognized in Other Comprehensive Income (OCI). Re-measurement of net defined benefit liability (asset) comprises actuarial gains and losses, return on plan assets (excluding interest on net defined benefit asset/liability). However, under IGAAP this was being recognized in the Statement of Profit and Loss. Accordingly, the net effect of actuarial gain/loss on employee defined benefit liability and related tax effect is recognized in OCI.

2. Fair valuation of financial assets: Under IGAAP, current investments were being measured at cost in accordance with provisions of erstwhile AS 30 ‘Financial Instruments-Measurement and Recognition’. Accordingly, there are changes with regard to fair valuation of the Company’s investments in mutual funds , shares & national saving certificate which are measured at FVTPL and amortized cost respectively in compliance with Ind AS 109 ‘Financial Instruments’.

3. Under Ind AS, all items of income and expense recognized in a period should be included in profit or loss for the period, unless a standard requires or permits otherwise. Items of income and expense that are not recognized in profit or loss but are shown in ‘other comprehensive income’

The concept of other comprehensive income did not exist under previous GAAP

The transition from previous GAAP to Ind AS did not have any impact on the statement of cash flows.