1. CORPORATE INFORMATION

Optiemus Infracom Limited (“the Company”) is a public company incorporated on 17.06.1993; equity shares of the company are listed on Bombay Stock Exchange and National Stock Exchange. The Company is primarily engaged in the trading of mobile handset and mobile accessories and renting of Immovable property, etc. The company is a public limited company incorporated and domiciled in India and has its registered office at New Delhi.

2.1 First-time adoption of Ind AS

These financial statements, for the year ended 31 March 2018, are the first the Company has prepared in accordancewith Ind AS. For periods up to and including the year ended 31 March 2017, the Company prepared its financial statements in accordance with accounting standards notified under section 133 of the Companies Act 2013, readtogether with paragraph 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP).

Accordingly, the Company has prepared financial statements which comply with Ind AS applicable for periods ending on31 March 2018, together with the comparative period data as at and for the year ended 31 March 2017, as describedin the summary of significant accounting policies. In preparing these financial statements, the Company’s opening balance sheet was prepared as at 1 April 2016, the Company’s date of transition to Ind AS. This note explains theprincipal adjustments made by the Company in restating its Indian GAAP financial statements, including the balance sheetas at 1 April 2016 and the financial statements as at and for the year ended 31 March 2017.

Exemptions applied

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

(i) Estimates exception - On an assessment of the estimates made under the Previous GAAP financial statements, the Company has concluded that there is no necessity to revise the estimates under Ind AS (except for adjustments to reflect any difference in accounting policies), as there is no objective evidence that those estimates were in error. However, estimates, that were required under Ind AS but not required under Previous GAAP, are made by the Company for the relevant reporting dates, reflecting conditions existing as at that date without using any hindsight.

(ii) De-recognition of financial assets and liabilities exception - Financial assets and liabilities derecognized before transition date are not re-recognized under Ind AS.

2.2. Recent Indian Accounting Standards (Ind AS)

Ministry of Corporate Affairs (“MCA”) through Companies (Indian Accounting Standards) Amendment Rules, 2018 has notified the following new and amendments to Ind ASs which the Company has not applied as they are effective for annual periods beginning on or after April 1, 2018:

Ind AS 115 - Revenue from Contracts with Customers

Ind AS 21 - The Effect of Changes in Foreign Exchange Rates

Ind AS 115 - Revenue from Contracts with Customers

Ind AS 115 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. Ind AS 115 will supersede the current revenue recognition standard Ind AS 18 - Revenue.

The core principle of Ind AS 115 is that an entity should recognize revenue to depict the transfer of promised goodsor services to customers in an amount that reflects the consideration to which the entity expects to be entitled inexchange for those goods or services. Specifically, the standard introduces a 5-step approach to revenue recognition:

Step 1: Identify the contract(s) with a customer

Step 2: Identify the performance obligation in contract

Step 3: Determine the transaction price

Step 4: Allocate the transaction price to the performance obligations in the contract

Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation

Under Ind AS 115, an entity recognizes revenue when (or as) a performance obligation is satisfied, i.e. when ‘control’of the goods or services underlying the particular performance obligation is transferred to the customer.

The Company has completed its evaluation of the possible impact of Ind AS 115 and will adopt the standard with allrelated amendments to all contracts with customers retrospectively with the cumulative effect of initially applyingthe standard recognized at the date of initial application. Under this transition method, cumulative effect of initiallyapplying Ind AS 115 is recognized as an adjustment to the opening balance of retained earnings of the annualreporting period. The standard is applied retrospectively only to contracts that are not completed contracts at thedate of initial application. The Company does not expect the impact of the adoption of the new standard to bematerial on its retained earnings and to its net income on an ongoing basis.

Ind AS 21 - The Effect of Changes in Foreign Exchange Rates

The amendment clarifies on the accounting of transactions that include the receipt or payment of advance consideration in a foreign currency. The appendix explains that the date of the transaction, for the purpose of determining the exchange rate, is the date of initial recognition of the nonmonetary prepayment asset or deferredincome liability. If there are multiple payments or receipts in advance, a date of transaction is established for each payment or receipt. The company is evaluating the impact of this amendment on its financial statements.

Note:

1. Term loans from Indusind bank of Rs. 19,816 lacs (comprising two loans) carries interest rate of 11% p.a. and is secured by first pari passu charge on future rent receivables from property located at Noida and first pari passu charge on land and building located at Noida. The loans are repayable in 144 and 84 monthly installments (not equal), from the date of loan, viz., 30 September, 2016.

3. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS

The preparation of the Company’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

Judgements

In the process of applying the Company’s accounting policies, management has made the following judgements, which have the most significant effect on the amounts recognised in the financial statements: Taxes

Significant judgements are involved in determining the provision for income taxes, including amount expected to be paid/recovered for uncertain tax positions.

The Company reviews the carrying amount of deferred tax assets at the end of each reporting period. The policy for the same is explained in Note 2.2.14 Useful life of property, plant and equipment

The Company reviews the useful life of property, plant and equipment at the end of each reporting period. This reassessment may result in change in depreciation expense in future periods.

Provisions and contingent liabilities

A provision is recognised when the Company has a present obligation as a result of past event if it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits and compensated absences) are not discounted to its present value and are determined based on best estimate required to settle the obligation at the Balance sheet date. These are reviewed at each Balance sheet date and adjusted to reflect the current best esitmates. Contingent liabilities are not recognised in financial statements. A contingent asset is neither recognised nor disclosed in the financial statements.

Defined benefit plans (gratuity benefits)

The cost of the defined benefit gratuity plan and the present value of the gratuity obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.

The parameter most subject to change is the discount rate. In determining the appropriate discount rate for plans operated in India, the management considers the interest rates of government bonds in currencies consistent with the currencies of the post-employment benefit obligation.

The mortality rate is based on publicly available mortality tables. Those mortality tables tend to change only at interval in response to demographic changes. Future salary increases and gratuity increases are based on expected future inflation rates for the respective countries.

Further details about gratuity obligations are given in Note 26.

Fair value measurement of financial instruments

When the fair values of financial assets and financial liabilities recorded in the balance sheet cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the DCF model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments. Carrying value and approximate fair values of financial instruments are same.

4. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Company’s activities expose it to a variety of financial risks : market risk, credit risk and liquidity risk. The primary market risk to the Company is foreign exchange risk. The Company’s exposure to credit risk is influenced mainly by the individual characteristic of each customer and the concentration of risk from the top few customers.

Market risk

The Company is exposed to foreign exchange risk through its sales and services outside India, and purchases and services from overseas suppliers in various foreign currencies. The exchange rate between the rupee and foreign currencies may fluctuate substantially in the future. Consequently, the results of the Company’s operations are affected as the rupee appreciates / depreciates against these currencies.

The foreign currency risks from financial instruments as of March 31, 2018 were as follows :

The above outstanding represent a Term Loan fully hedged by bank under Foreign Exchange Forward Contract until maturity on 30.09.2028. Under deferred payment plan. Accordingly, the above financial instrument has no marked to market gain or loss as on 31 March 2018 to be recognized.

Credit risk

Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss. The maximum exposure to the credit risk at the reporting date is primarily from unsecured trade receivables amounting to Rs. 18,366 lacs, Rs. 18,948 lacs and Rs. 22,095 lacs as of March 31, 2018, March 31, 2017 and March 31, 2016, respectively. Trade receivables are typically unsecured and are derived from revenue earned from customers located primarily in India. Credit risk has always been managed by the Company through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business.

Credit risk on cash and cash equivalents is limited as the Company generally invest in deposits with banks and financial institutions with high credit ratings. Investments primarily include investment in deposits with banks.

Liquidity risk

The Company’s principal sources of liquidity are cash and cash equivalents and the cash flow that is generated from operations.

5. POST EMPLOYMENT BENEFIT PLANS: GRATUITY

The Company has a funded defined benefit gratuity plan.

The gratuity plan is governed by the Payment of Gratuity Act, 1972. Under the act, employee who has completed five years of service is entitled to specific benefit.

The following tables summarise the components of net benefit expense recognised in the statement of profit or loss and the funded status and amounts recognised in the balance sheet for the respective plans: Reconciliation of opening and closing balances of the present value of the defined benefit obligation.

Due to its defined benefit plans, the Group is exposed to the following significant risks:

Changes in bond yields - A decrease in bond yields will increase plan liability.

Salary risk - The present value of the defined benefit plans liability is calculated by reference to the future salaries of the plan participants. As such, an increase in the salary of the plan participants will increase the plan’s liability.

6. DETAILS OF DUES TO MCIRO, SMALL AND MEDIUM ENTERPRISES AS DEFINED UNDER MSMED ACT, 2006.

There are no micro, small and medium enterprises, to whom the Company owes dues, which are outstanding for more than 45 days during the year and also as at March 31, 2017. This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006, has been determined to the extent such parties have been identified on the basis of information available with the Company.

7. BUSINESS COMBINATIONS

i. Amalgamation during the year ended 31 March 2018

a. Amalgamation of MPS Telecom Private Limited

During the year, a Company MPS Telecom Private Limited (“transferor company”) was merged with M/s Optiemus Infracom Limited (“transferee company”) as per the scheme of Amalgamation approved by the Regional Director, Northern Region, Ministry of Corporate Affairs, Delhi.

Copy of the order of Regional Director, Northern Region, Ministry of Corporate Affairs, Delhi was filed on 30.04.2018 with the registrar of companies, NCT of Delhi and Haryana by Transferee Company and erstwhile Transferor Company.

As per clause 3.18 of part-II of the scheme of amalgamation, the business carried on by the transferor company from the appointed date till the effective date is carried on for and on behalf of the transferee company and all profits accruing to the transferor companies are profits of the transferee company. Therefore, the profits of the transferor companies from 1st April’2017 to 31st March’2018 are reflected in the profit & loss a/c of the Transferee Company. Various items of income and expenditure of the company include corresponding figures of erstwhile transferor companies. The corresponding figures of assets and liabilities of the transferor companies as on 31st March’2017 have merged with the assets and liabilities of the transferee company.

Assets acquired and liabilities assumed

The fair values of the identifiable assets and liabilities of Transferor Company as at the date of acquisition were:

b. Amalgamation of One World Teleservices Private Limited

During the year, a Company One World Teleservices Private Limited (“transferor company”) was merged with M/s Optiemus Infracom Limited (“transferee company”) as per the scheme of Amalgamation approved by the Regional Director, Northern Region, Ministry of Corporate Affairs, Delhi.

Copy of the order of Regional Director, Northern Region, Ministry of Corporate Affairs, Delhi was filed on 30.04.2018 with the registrar of companies, NCT of Delhi and Haryana by Transferee Company and erstwhile Transferor Company.

As per clause 3.18 of part-II of the scheme of amalgamation, the business carried on by the transferor company from the appointed date till the effective date is carried on for and on behalf of the transferee company and all profits accruing to the transferor companies are profits of the transferee company. Therefore, the profits of the transferor companies from 1st April’2017 to 31st March’2018 are reflected in the profit & loss a/c of the Transferee Company. Various items of income and expenditure of the company include corresponding figures of erstwhile transferor companies. The corresponding figures of assets and liabilities of the transferor companies as on 31st March’ 2017 have merged with the assets and liabilities of the transferee company.

Assets acquired and liabilities assumed

The fair values of the identifiable assets and liabilities of Transferor Company as at the date of acquisition were:

8. COMMITMENTS AND CONTINGENCIES

a. Leases

Operating lease commitments — Company as lessee

Company’s significant leasing arrangements are in respect of operating leases for premises (office, warehouses etc.). The group has entered into agreements to take certain land and buildings on operating leases for warehousing activities from third parties during the year. These leasing arrangements which are not non-cancellable, range between 3 years and 5 years generally, or longer, and are usually renewable by mutual consent on mutually agreeable terms. The lease rent of Rs. 149 lacs (31 March 2017: Rs. 372 lacs) on such lease is included in Rent.

Operating lease commitments - Company as lessor

Company has also given certain land and building on operating lease to a third party. The lease arrangement was for 9 years and remained for a period of next 4.5 years. The rental of Rs. 3,600 lacs (2016-17 - Rs. 3,966 lacs) on such lease is included in other operating revenue.

Future minimum rentals receivable under non-cancellable operating leases are as follows:

Carrying value and approximate fair values of financial instruments are same.

9. BUSINESS SEGMENTS

The Company has identified business segments. Business segments are primarily Mobile & Mobile Accessories and Renting of Immovable Property. Revenues and expenses directly attributable to segments are reported under each reportable segment. Expenses which are not directly identifiable to each reportable segment have been allocated on the basis of associated revenues of the segment and manpower efforts. All other expenses which are not attributable or allocable to segments have been disclosed as unallocable expenses. Assets and liabilities that are directly attributable or allocable to segments are disclosed under each reportable segment. All other assets and liabilities are disclosed as unallocable. Fixed Assets that are used interchangeably amongst segments are not allocated to primary and secondary segments.

Notes

1. Non-current financial assets / liabilities

Under previous GAAP, certain non-current financial assets / liabilities which were measured at cost at the balance sheet date without considering the effect of discounting whereas these are measured at the present value on the balance sheet date under Ind AS. Accordingly, the Company has recognised the adjustment to the respective carrying amount and the consequent impact on finance cost / finance income due to the unwinding of the discounting impact. Further, the Company has recognised difference between present value under Ind AS and value under previous GAAP as Deferred lease rent income and is recognised as lease income on straight line basis. The corresponding impact on the date of transition has been recognised in equity.

2. Current Investments at fair value

Under previous GAAP, investments were booked at cost, however under Ind AS, investments are booked fair value through profit or loss, using the market rates available .The corresponding impact on the date of transition has been recognised in equity.

3. Remeasurement differences

Under previous GAAP, there was no concept of other comprehensive income and hence, previous GAAP profit is reconciled to total comprehensive income as per Ind AS. Under previous GAAP, the remeasurements of the net defined benefit liability were recognised in the statement of profit and loss. Under Ind AS, the said remeasurement differences net of the related tax impact are recognised in other comprehensive income.