t. Provisions and contingent liabilities

A provision is recognised when the Company has a present 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 in respect of which a reliable estimate can be made.

Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company 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. Contingent liabilities are disclosed in the notes. Contingent assets are not recognised in the financial statements.

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.

Provisions and contingent liabilities are reviewed at each balance sheet date.

u. Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial assets and liabilities are recognised when the Company becomes a party to the contractual provisions of an instrument. Financial assets and liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value measured on initial recognition of financial asset or financial liability.

A. Financial assets

i. Financial assets at amortised cost

Financial assets are subsequently measured at amortised cost using the effective interest rate (EIR) if these financial assets are held within a business whose objective is to hold these assets in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

ii. Financial assets at fair value through other comprehensive income (FVTOCI)

Financial assets are measured at fair value through other comprehensive income if these financial assets are held within a business whose objective is achieved by both collecting contractual cash flows that give rise on specified dates to solely payments of principal and interest on the principal amount outstanding and by selling financial assets.

The Company has made an irrevocable election to present in other comprehensive income subsequent changes in the fair value of equity investments not held for trading.

iii. Financial assets at fair value through profit or loss (FVTPL)

Financial assets are measured at fair value through profit or loss unless it is measured at amortised cost or at fair value through other comprehensive income on initial recognition. The transaction costs directly attributable to the acquisition of financial assets and liabilities at fair value through profit or loss are immediately recognised in profit or loss.

iv. De-recognition

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily de-recognised (i.e. removed from the Company's balance sheet) when:

• The rights to receive cash flows from the asset have expired, or

• The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a 'pass-through' arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at lower of the original carrying amount of the asset and maximum amount of consideration that the Company could be required to repay.

v. Impairment of financial assets

The Company assesses impairment based on expected credit loss (ECL) model to the following:

• Financial assets measured at amortised cost;

• Financial assets measured at fair value through other comprehensive Income

The Company follows 'simplified approach' for recognition of impairment loss allowance on trade receivables.

Under the simplified approach, the Company does not track changes in credit risk. Rather, it recognizes impairment loss allowance based on lifetime ECL at reporting date.

The Company uses a provision matrix to determine impairment loss allowance on the portfolio of trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivables and is adjusted for forward looking estimates. The historically observed default rates and forwardlooking changes in estimates are analyzed and updated annually.

For assessing ECL on a collective basis, financial assets have been grouped on the basis of shared risk characteristics and basis of estimation may change during the course of time due to change in risk characteristics.

B. Financial liabilities

i. Loans and borrowings

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost on accrual basis and using the EIR method.

ii. Guarantee fee obligations

Financial guarantee contracts are subsequently measured at the higher of the amount of loss allowance determined and the amount recognised less cumulative amortisation.

iii. De-recognition

A financial liability is de-recognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the de-recognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the Statement of Profit and Loss.

C. Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.

D. Derivative financial instruments - Initial and subsequent measurement

The Company uses derivative financial instruments, such as forward, option and cross currency swap contracts to hedge its foreign currency risks. Such derivative financial instruments are recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.

Any gains or losses arising from changes in the fair value of derivatives are taken directly to profit or loss, except for the effective portion of cash flow hedges, which is recognised in OCI and later reclassified to profit or loss when the hedge item affects profit or loss or treated as basis adjustment if a hedged forecast transaction subsequently

results in the recognition of a non-financial asset or non-financial liability.

At the inception of a hedge relationship, the Company formally designates and documents the hedge relationship to which the Company wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge. The documentation includes the Company's risk management objective and strategy for undertaking hedge, the hedging/ economic relationship, the hedged item or transaction, the nature of the risk being hedged, hedge ratio and how the entity will assess the effectiveness of changes in the hedging instrument's fair value in offsetting the exposure to changes in the hedged item's fair value or cash flows attributable to the hedged risk. Such hedges are expected to be highly effective in achieving offsetting changes in fair value or cash flows and are assessed on an ongoing basis to determine that they actually have been highly effective throughout the financial reporting periods for which they were designated.

Hedges that meet the strict criteria for hedge accounting are accounted for, as described below:

i. Cash flow hedges

The Company uses derivatives such as Interest Rate Swaps, options and forwards etc. to hedge its exposure to interest rate risk on future cash flows on floating rate loans and foreign currency risk. The ineffective portion relating to such contracts is recognised in profit and loss and the effective portion is recognised in OCI. Amounts recognised as OCI are transferred to profit or loss when the hedged transaction affects profit or loss, such as when the hedged financial income or financial expense is recognised or when a forecast sale occurs. When the hedged item is the cost of a non-financial asset or nonfinancial liability, the amounts recognised as OCI are transferred to the initial carrying amount of the non-financial asset or liability. If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover (as part of the hedging strategy), or if its designation as a hedge is revoked, or when the hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss previously recognised in OCI remains separately in equity until the forecast transaction occurs or the foreign currency firm commitment is met.

ii. Embedded derivatives

Derivatives embedded in a host contract that is an asset within the scope of Ind AS 109 are not separated. Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest. Derivatives embedded in all other host contract are separated only if the economic characteristics and risks of the embedded derivative are not closely related to the economic characteristics and risks of the host and are measured at fair value through profit or loss. Embedded derivatives closely related to the host contracts are not separated.

v. Non-current assets held for sale

Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the asset (or disposal group) is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such asset (or disposal group) and its sale is highly probable. The Management must be committed to the sale, which should be expected to qualify for recognition as completed sale within one year from the date of classification.

Non-current assets held for sale/ for distribution to owners and disposal groups are measured at the lower of their carrying amount and the fair value less costs to sell/ distribute. Assets and liabilities classified as held for sale/ distribution are presented separately in the balance sheet. Property, plant and equipment and intangible assets once classified as held for sale/ distribution to owners are not depreciated or amortised.

w. Recent pronouncements

Ministry of Corporate Affairs ("MCA”) notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. For the year ended 31 March 2024, MCA has not notified any new standards or amendments to the existing standards applicable to the Company.

3. Business Combination

The Company had entered into Business Transfer Agreement dated 14 December 2022 with Tata Communications Collaboration Services Private Limited ("TCCSPL”, wholly owned subsidiary company) for transfer of the Internet of Things (IoT) business undertaking engaged in providing non-network services, including IoT enabled applications, devices, and other managed services (the "Non-network loT Business Undertaking”). This transaction did not have significant impact on the financial statements of the Company and hence the same was not disclosed as "Discontinued Operations”.

In accordance to above, the Company had transferred below assets and liabilities at their carrying values as at 01 January 2023 to TCCSPL for a consideration of H 50.82 crores.

I. The Company has an investment of H 3,733.41 crores (31 March 2023: H 2,521.15 crores) in equity shares of Tata Communications International Pte Limited ('TCIPL').

In the opinion of the management, having regard to the nature of the subsidiary's business and future business projections, there is no diminution, other than temporary in the value of investment despite significant accumulated losses (refer note 2(c)(ii)).

During the current year, the Company has made additional investment of H 1,212.26 crores (during previous year H Nil crores) in equity shares of TCIPL.

II. The Company has investment in its wholly owned subsidiary Tata Communications Payment Solutions Limited ('TCPSL'). Management performed impairment assessment as at 31 March 2024. The recoverable value was determined by Value in use ('VIU') of TCPSL business. The recoverable amount was greater than the carrying value of investment in TCPSL for the year ended 31 March 2024.

However, for the year ended 31 March 2023 the recoverable amount was lower than the carrying value of investment in TCPSL and hence the Company had recorded a diminution in the fair value of the investment of H 322.76 crores. This was disclosed as an exceptional item.

The approach and key assumptions used to determine the VIU are as follows:

The Company has considered it appropriate to undertake the impairment assessment with reference to the latest business plan which includes a 5 year cash flow forecast. The growth rates used in the value in use calculation reflect those inherent to the Company's business. The future cash flows consider potential

risks given the current economic environment and key assumptions, such as volume forecasts and margins.

TCPSL continues to implement various initiatives directed towards improving the profitability through transforming the business model and operational efficiencies. The license issued by the Reserve Bank of India ('RBI') authorising TCPSL for setting up and operating payment system for White Label ATMs is due for renewal on 30 June 2024 and TCPSL has filed the application for renewal of validity of Certificate of Authorisation (CoA) with RBI dated 29 March 2024.

During the current year, the Company has made additional investment of H 20 crores (during previous year H 50 crores) in equity shares of TCPSL.

III. During the previous year, the Company had made investment of H 48.59 crores in equity shares of TCCSPL.

IV. On 5 October 2023, the Company has made investment of H 864.30 crores (includes H 30.95 crores costs directly attributable to the acquisition) in equity shares of Kaleyra Inc. (Kaleyra), a wholly owned direct subsidiary of the Company pursuant to the reverse merger between TC Delaware Technologies Inc (a direct subsidiary of the Company) and Kaleyra, wherein Kaleyra is the surviving entity. Additionally, the Company has assumed all of Kaleyra's outstanding adjusted gross and net debt of approximately H 1,803.61 crores and H 1,553.59 crores as on the acquisition date respectively. Consequent to the completion of the acquisition, Kaleyra, is now delisted on the New York Stock Exchange.

V. During the current year, the Company has made additional investment of H 267.21 crores (during previous year H 90.51 crores) in equity shares of STT Global Data Centers India Private Limited (STT GDC).

VI. Based on the assessment of the management, the carrying value of investment in TTSL does not require any adjustment.

VII. During the previous year, the Company had made investment of H 1.84 crores in equity shares of Nivade Windfarm Limited.

i. Based on the Supreme Court order dated 8 October 2018, Telecom Regulatory Authority of India ('TRAI') issued amendment Regulations dated 28 November 2018 specifying charges for Cable Landing Station ('CLS') access. The new amendment Regulation on CLS dated 28 November 2018 became effective from date of its publication in official Gazette i.e. 28 November 2018. The Company had already separately challenged the jurisdiction of TRAI on issue of regulation on CLS in the Hon'ble Supreme Court which is pending adjudication. In the meantime, CLS Access seekers RJIO, BSNL and Association of Competitive Telecom Operators ('ACTO') filed a petition in TDSAT for declaring retrospective applicability of the newly notified amendment regulations dated 28 November 2018 on CLS, which was dismissed by TDSAT vide its judgment dated 16 April 2020. The order of TDSAT was challenged by RJIO and ACTO before Supreme Court by way of separate Statutory appeal wherein no stay was granted and the matter is pending for final adjudication as at the year end. During the previous year, based on the Hon'ble Supreme Court direction, one of the customers paid H 70 crores for these services. The said receipt is without prejudice to the said customers' rights and subject to the final outcome of the appeals and application pending in the Hon'ble Supreme Court. The gross receivable balances for these services (included in disputed trade receivables- considered good and disputed trade receivables - which have significant increase in credit risk) of H 107.86 crores (As at 31 March 2023 - H 111.71 crores), being sub judice are disclosed accordingly.

i. Includes H 50.80 crores (31 March 2023: H 50.81 crores) held as lien towards bank guarantee issued for litigation matter and H 1.00 crore (31 March 2023: H 1.00 crore) for cash credit and overdraft limit.

19. Assets classified as held for sale

i. The Management intends to dispose off few staff quarters and few buildings of the Company having net block of H 7.66 crores (31 March 2023: H 154.94 crores). The Company was only able to partially dispose off its assets classified as held for sale as on 31 March 2023 on account of certain circumstances beyond its control that lead to extension of the period required to complete the sale. The addition during the year is on account of assets transferred in from Property, plant and equipment for H 2.13 crores. Accordingly, these assets have been classified as assets held for sale as on 31 March 2024.

ii. Further the fair value of these assets is higher than their carrying value as on 31 March 2024 and hence, no impairment loss has been recognised.

20. Equity share capital (Contd..)

a. Issued, subscribed and paid up

There is no change in the issued, subscribed and paid up share capital of the Company during the current and past five financial years.

b. Terms / rights attached to equity shares

The Company has only one class of equity shares with a face value of H 10 per share. Each shareholder of equity shares is entitled to one vote per share at any general meeting of shareholders. The Company declares and pays dividends in INR. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company, after distribution of all preferential amounts, in proportion to their shareholding.

21. Other equity (Contd..)

ii. Other comprehensive income: This represents the cumulative gains and losses arising on the revaluation of equity instruments measured at fair value through other comprehensive income, net of amounts reclassified to retained earnings when those assets have been disposed off, changes in fair value of derivatives designated as cash flow hedges (net of taxes) and remeasurements of defined employee benefit plans (net of taxes).

iii. Share based payment reserve : The fair value of the equity-settled share based payment transactions is recognised in standalone Statement of Profit and Loss with corresponding credit to Share based payment reserve (refer note 37).

iii. Unsecured Debentures

During the current year, the Company issued 175,000, 7.75% rated non-convertible redeemable unsecured debentures of face value H 1 lakh each at premium (net of arrangement fees) amounting to H 1,749.49 crores. The proceeds from these debentures were utilised towards refinancing of debts of its wholly owned subsidiaries. These are due for redemption with a bullet repayment on 29 August 2026. These debentures contain certain debt covenants and as at the year end, the Company has satisfied all debt covenants prescribed and there are no defaults during the current year.

i. Gain on sale of fixed assets (net)

During the year, the Company concluded the sale of few of its properties, for a total consideration of H 151.37 crores (2022-23: H 47.59 crores) (net of transaction cost) resulting in to a gain of H 1.97 crores (2022-23: H 46.74 crores). These assets were disclosed under assets held for sale.

ii. Provision for diminution in fair value of investment

The Company has investment in its wholly owned subsidiary TCPSL. During the previous year, there was diminution in the fair value of the investment resulting into a loss of H 322.76 crores (refer note 11 (A) (II)).

iii. Interest on tax on license fees

During the current year, the Hon'ble Supreme Court of India has pronounced a judgement regarding the treatment of Variable License Fee paid to DOT under New Telecom Policy 1999, since July 1999, to be treated as capital in nature and not revenue expenditure for the purpose of computation of taxable income. Pertinently, even though the Company is not a party to the above judgement and its case is different and distinguishable from the above judgment, as a matter of prudence the Company has assessed and recorded a provision of H 185.52 crores towards interest which has been disclosed as an exceptional item and a provision of H 21.09 crores towards tax (net) (current tax H 147.94 crores net off deferred tax of H 126.85 crores) due to change in effective tax rate on account of adoption of new tax regime.

iv. Staff cost optimisation

As part of its initiative to enhance the long term efficiency of the business during the year, the Company undertook organisational changes to align to the Company's current and prospective business

* During the current year, the Company has recorded a tax charge of H 147.94 crores on account of the judgement pronounced by Hon'ble Supreme Court of India on 16 October 2023 regarding the treatment of revenue share paid to DoT (Refer note 33(iii)). The Company has also recorded an impact of H 0.26 crores on account of APA signed for financing transactions. Based on the updated facts, circumstances and evaluation available at the time of filing of return of income for the year ended 31 March 2023, the Company has reversed tax provision of H 89.60 crores primarily towards tax deduction claimed on crystallization of a disputed liability in return of income.

** During the current year, the Company has recorded tax reversal of H 126.85 crores on account of the judgement pronounced by Hon'ble Supreme Court of India on 16 October 2023 regarding the treatment of revenue share paid to DoT (Refer note 33(iii)). Based on the updated facts, circumstances and evaluation available at the time of filing of return of income for the year ended 31 March 2023, the Company has recorded tax charge of H 92.14 crores primarily towards tax deduction claimed on crystallization of a disputed liability in return of income.

35. Employee benefits (Defined benefit plan)

Provident fund

The Company makes contributions towards a provident fund under a defined benefit retirement plan for qualifying

employees. The provident fund (the 'Fund') is administered by the Trustees of the Tata Communications Employees' Provident Fund Trust (the 'Trust') and by the Regional Provident Fund Commissioner. Under this scheme, the Company is required to contribute a specified percentage of payroll cost to fund the benefits.

The rules of the Fund administered by the Trust require that if the Board of Trustees are unable to pay interest at the rate declared for Employees' Provident Fund by the Government under the applicable law for the reason that the return on investment is lower or for any other reason, then the deficiency shall be made good by the Company. Having regard to the assets of the Fund and the return on the investments, the Company does not expect any deficiency in the foreseeable future. There has also been no such deficiency since the inception of the Fund.

Provident fund contributions amounting to H 80.29 crores (2022 - 2023: H 70.11 crores) have been charged to the Statement of Profit and Loss, under contributions to provident and other funds in note 29 "Employee benefit expenses”.

Gratuity

The Company makes annual contributions under the Employees Gratuity Scheme to a fund administered by Trustees of the Tata Communications Employees' Gratuity Fund Trust covering all eligible employees. The plan provides for lump sum payments to employees whose right to receive gratuity had vested at the time of resignation, retirement, death while in employment or on termination of employment of an amount equivalent to 15 days' salary for each completed year of service or part thereof in excess of six months. Vesting occurs upon completion of five years of service except in case of death.

Medical benefit

The Company reimburses domiciliary and hospitalisation expenses not exceeding specified limits incurred by eligible and qualifying employees and their dependent family members under the Tata Communications Employee's Medical Reimbursement Scheme.

Pension plan

The Company's pension obligations relate to certain employees transferred to the Company from OCS. The Company purchases life annuity policies from an insurance company to settle such pension obligations.

35. Employee benefits (Defined benefit plan) (Contd..)

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

There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.

35. Employee benefits (Defined benefit plan) (Contd..)

in the event of death or permanent disablement or resignation, subject to a maximum leave of 300 days.

The liability for compensated absences as at the year end is H 64.26 crores (31 March 2023: H 56.17 crores) as shown under non-current provisions H 55.70 crores (31 March 2023: H 37.26 crores) and current provisions H 8.56 crores (31 March 2023: H 18.91 crores). The amount charged to the Statement of Profit and Loss under Salaries and related costs in note 29 "Employee benefit expenses” is H 11.56 crores (2022 - 2023: H 12.47 crores).

37. Share based payments to employees (Contd..)

terms of the provisions of the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, the details of the Stock Options and Restricted Stock Units granted under the Scheme are available on the Company's website.

The description of RSU's granted during the year are as follows:

37. Share based payments to employees (Contd..)

The expected life of the RSU is estimated based on the vesting term and contractual term of the RSU, as well as expected exercise behavior of the employee who receives the RSU.

X Leave plan and compensated absences For executives

Leaves unavailed by eligible employees may be carried forward upto 60 days and for employees who have joined post 1 January 2020 carry forward shall be restricted to 45 days. Encashment will be maximum of 30 days by them / their nominees in the event of death or permanent disablement or resignation.

For non executives

Leave unavailed of by eligible employees may be carried forward / encashed by them / their nominees

Above amount excludes goods and services tax.

37. Share based payments to employees

Equity Settled Share based payment

During the year, the Company's Board of Directors approved the Employee Stock Unit Plan which was also approved by the Company's shareholders on 18 July 2023. As per the plan, the Company would grant up to 3,000,000 Restricted Stock Units (RSU's) in one or more tranches to such employees as may be determined by the Nomination and Remuneration Committee (NRC).

On 1 January 2024 and 1 February 2024, the Company granted 346,239 RSU's of Face value of H 10 each to eligible employees of the Company and 249,351 RSUs of Face value of H 10 each to eligible employees of its subsidiaries respectively. The employees of the international subsidiaries were given an option to opt for RSU's or cash settled plan, employees who were granted 177,135 RSU's opted for cash settled plan, which will be settled by the respective subsidiaries.

The RSUs shall vest based on the satisfaction of time-based and a performance-based criteria as prescribed by NRC. In

39. Segment reporting

The Board of Directors and the Managing Director of the Company together constitute the Chief Operating Decision Makers ("CODM”) which allocate resources to and assess the performance of the segments of the Company. The Company's reportable segments are Voice Solutions ("VS”), Data and Managed Services ("DMS”) and Real Estate ("RE”). The composition of the reportable segments is as follows:

Voice Solutions (VS)

VS includes international and national long distance voice services.

Data and Managed Services (DMS)

DMS includes corporate data transmission services, virtual private network signalling and roaming services, television and other network and managed services.

Real Estate (RE)

Real Estate includes lease rentals for premises given on lease and does not include premises held for capital appreciation.

42. Financial risk management objectives and policies

The Company's principal financial liabilities other than derivatives, comprise loans and borrowings, trade and other payables and financial guarantee contracts. The main purpose of these financial liabilities is to finance the Company's operations and to provide guarantees to support its subsidiaries' operations. The Company's principal financial assets include loans, trade and other receivables, current investments and cash and cash equivalents that derive directly from its operations. The Company has investments on which gain or loss on fair value is recognised through other comprehensive income and also enters into derivative transactions.

42. Financial risk management objectives and policies (Contd..)

The Company is exposed to market risk, credit risk and liquidity risk. The Company's senior management oversees the management of these risks.

The Company's senior management ensures that financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company's policies and risk objectives. All derivative activities for risk management purposes are carried out by specialist teams that have the appropriate skills, experience and supervision. It is the Company's policy that no trading in derivatives for speculative purposes may be undertaken. The senior management reviews and agrees policies for managing each of these risks, which are summarised below:

a) Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk include loans and borrowings, deposits, FVTPL and FVTOCI investments and derivative financial instruments.

b) Interest rate risk

Interest rate risk is the risk that the future cash flows with respect to interest receipts and payments on loans extended or availed will fluctuate because of changes in market interest rates. The Company does not have exposure to the risk of changes in market interest rates as it has long-term debt obligations and loan receivables with fixed interest rates and loans extended on variable rate are classified as short term.

c) Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company's exposure to the risk of changes in foreign exchange rates relates primarily to the Company's operating activities (when revenue or expense is denominated in a foreign currency) and the Company's net investments in foreign subsidiaries.

The Company's objective is to try and protect the underlying values of the Company's balance sheet forex exposures. Exposures are broadly categorised into receivables and payable exposures.

The Company manages its foreign currency risk by entering into derivatives on net exposures, i.e. netting off the receivable and payable exposures in order to take full benefit of natural hedge.

42. Financial risk management objectives and policies (Contd..)

Non-crystalised (not in books) exposures for which cash flows are highly probable are considered for hedging after due consideration of cost of cover, impact of such derivatives on profit and loss due to MTMs (mark to market loss or gains), market / industry practices, regulatory restrictions etc.

As regard net investments in foreign operations, hedging decisions are guided by regulatory requirement, accounting practices and in consultation and approval of senior management on such hedging action.

The foreign exchange rate sensitivity is calculated by aggregation of the net foreign exchange rate exposure and a simultaneous parallel foreign exchange rate shift of all the currencies by 5% against the functional currency of the Company.

The following analysis has been worked out based on the net exposures of the Company as of the date of balance sheet which would affect the Statement of Profit and Loss and equity.

The following tables sets forth information relating to unhedged foreign currency exposure (net) as at 31 March 2024 and 31 March 2023.

5% appreciation/ depreciation of the respective foreign currencies with respect to functional currency of the Company would result in decrease/ increase in the Company's profit before tax by approximately H 12.76 crores and H 9.63 crores for the year ended 31 March 2024 and 31 March 2023 respectively.

d) Equity price risk

The Company's non-listed equity securities are not susceptible to market price risk arising from uncertainties about future values of the investment in securities as these investments are accounted for at cost in the financial statements.

e) Credit risk

Credit risk is the risk that the counterparty will not meet its obligations under a financial instrument or a customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its

42. Financial risk management objectives and policies (Contd..)

financing activities including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments.

In determining the allowances for doubtful trade receivables, the Company has used a simplified approach by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and is adjusted for forward looking information. The expected credit loss allowance is based on the ageing of the gross receivables as at the reporting date and the net receivables after considering expected credit loss allowance is as mentioned below:

f) Liquidity risk

The Company monitors its risk of a shortage of funds using a liquidity planning tool.

The Company's objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts, bank loans, debentures, preference shares, finance leases and hire purchase contracts.

45. Operating lease arrangements

a. As lessee

The Company has lease contracts for immovable properties across various locations used in its operations. Such leases generally have lease terms between 1 to 80 years. Generally, the Company is restricted from assigning and subleasing the leased assets. There are several lease contracts that include extension and termination options and variable lease payments.

The Company also has certain leases with lease terms of 12 months or less.

The following is the break-up of current and non-current lease liabilities

45. Operating lease arrangements (Contd..)

The Company does not face a significant liquidity risk with regard to its lease liabilities as the current assets are sufficient to meet the obligations related to lease liabilities as and when they fall due.

b. As lessor

i. In case of certain operating lease agreements relating to dark fiber contracts aggregating H 120.61 crores (31 March 2023: H 101.15 crores) as at 31 March 2024, the gross block, accumulated depreciation and depreciation expense of the assets given on an IRU basis cannot be identified as these assets are not exclusively leased. The lease rentals associated with such IRU arrangements for the year ended 31 March 2024 amount to H 8.17 crores (2022 - 2023: H 5.73 crores).

Future lease rental receipts will be recognized in the Statement of Profit and Loss of subsequent years as follows:

1. Claims for taxes on income

Significant claims by the revenue authorities in respect of income tax matters relate to disallowance of deductions claimed under section 80 IA of the Income Tax Act, 1961 from assessment years 1996-97 onwards and transfer pricing adjustments carried out by revenue authorities. The Company has contested the disallowances / adjustments and has preferred appeals which are pending.

The Company has certain tax receivables against the ongoing litigations which will be settled on completion of the respective litigation. The Company is of the view that the said balances are recoverable subject to favourable outcome of the same and hence does not require any adjustments as at 31 March 2024.

2. Other claims

i. Telecom Regulatory Authority of India ("TRAI”) reduced the Access Deficit Charge ("ADC”) rates effective 1 April 2007. All telecom service providers including National Long Distance ("NLD”) and International Long Distance ("ILD”) operators in India are bound by the TRAI regulations. Accordingly, the Company has recorded the cost relating

46. Contingent liabilities and commitments: (Contd..)

to ADC at revised rates as directed by TRAI. However, BSNL continued to bill at the ADC rate applicable prior to 1 April 2007. BSNL had filed an appeal against TRAI Interconnect Usage Charges ("IUC”) regulation of reduction in ADC and currently this matter is pending with the Hon'ble Supreme Court. The excess billing of BSNL amounting to H 311.84 crores (31 March 2023: H 311.84 crores) has been disclosed as contingent liability.

ii. During the year ended 31 March 2020, the Company had received demands from Department of Telecommunications (DoT) aggregating to H 6,633.43 crores towards License Fee on its Adjusted Gross Revenue (AGR) for the financial years (FYs) 2006-07 till 2017-18 in respect of its ILD, NLD and ISP licenses. During the earlier year, the Company had made a payment of H 379.51 crores under protest to DoT as disclosed in note 15.

During the previous year, in October 2022, the Company received "Revised Show Cause cum Demand Notices" (Notices) aggregating to H 4,980.56 crores for the above mentioned financial years, except FY 2010-11 for ISP license, and FYs 2006-07 & FY 2009-10 for NLD licenses. These Notices replaces the earlier Demand issued during the year ended 31 March 2020. In its assessment, DoT accepted the Company's submissions along with relevant certificates in respect of disallowed deductions in the demands issued earlier, resulting into crystallization of a disputed liability against which the amount was paid under protest.

During the current year, the Company received 'Show Cause-cum Demand Notices' ('demand notices') from Department of Telecommunications of India ('DOT') aggregating to H 8,082.80 crores for financial years (FY) ranging from FY 2005-06 to FY 2022-23. These demand notices replace the earlier demand notices received by the Company in the past and include H 276.68 crores towards disallowance of deductions claimed by the Company on payment basis for FY 2010-11 under ISP license and FY 2006-07 & FY 2009-10 under NLD license ('three years'). The Company, through various appeals filed in Telecom Disputes Settlement and Appellate

46. Contingent liabilities and commitments: (Contd..)

Tribunal (TDSAT), has obtained a stay order for payment of these demands.

Also, the DOT has amended the definition of Gross Revenue (GR) /Adjusted Gross Revenue ('AGR') in the Unified License and including licenses held by the Company effective 1 October 2021. The new definition allows for deduction of revenue from activities other than telecom activities / operations. The demand notices received for FY 2021-22 & 2022-23 includes H 89.58 crores towards disallowance of certain components of revenue from activities other than telecom activities / operations.

The Company has existing appeals relating to its ILD, NLD & ISP licenses which were filed in the past and are pending at the Hon'ble Supreme Court and Hon'ble Madras High Court and the Company's appeals are not covered by the Hon'ble Supreme Court judgement dated 24 October 2019, on AGR under UASL. Further, the Company believes that all its licenses are different from UASL, which was the subject matter of Hon'ble Supreme Court judgement of 24 October 2019. The Company, based on its assessment and independent legal opinions, believes that it will be able to defend its position.

Accordingly, the Company has included H 7,751.94 crores as part of the contingent liability and has considered H 276.68 crores as remote, being the disallowance of deductions claimed by the Company on payment basis for three years.

Upon expiry of the Company's Internet Service Provider ('ISP') license on 24 January 2014, DoT vide letter dated 20 February 2014 extended the validity of the said license for 3 months with condition that entire ISP revenue will be subject to license fees. This conditional extension by DoT, was challenged by the Company in TDSAT and on 18 October 2019 the Company's petition has been allowed by TDSAT. DoT has filed an appeal in Hon'ble

46. Contingent liabilities and commitments: (Contd..)

Supreme Court, against the said order, but no stay has been granted by the Hon'ble Supreme Court and appeal is yet to be heard. The Company has continued to assess the matter for contingent liability. In the year 2021-22, the Company has signed UL-ISP License on 6 August 2021 and is duly paying the license fees there under.

The total contingent liability in respect of all AGR dues including above demands and interest computed from the date of the demand till the year end, amounts to H 8,679.06 crores (As at 31 March 2023 - H 8,026.09 crores) and has considered H 276.68 crores as remote, being the disallowance of deductions claimed by the Company on payment basis for three years.

iii. Other claims of H 341.73 crores (31 March 2023: H 329.97 crores) mainly pertain to routine suits for collection, commercial disputes, claims from customers and/or suppliers, BSNL port charges and claim from Employee State Insurance Corporation.

Based on the management assessment and legal advice (wherever taken), the Company believes that the above claims are not probable and would not result in outflow of resources embodying economic benefits.

b. Commitments

i. Capital commitments

Estimated amount of contracts remaining to be executed on capital account, not provided for amount to H 214.90 crores (31 March 2023: H 539.68 crores) (net of capital advances).

ii. Other commitments

1. The Company has committed loan facility to wholly owned subsidiaries to the tune of H 3,085.87 crores (31 March 2023: H 3,586.87 crores) as at 31 March 2024, utilisation of which is subject to future requirements and appropriate approval processes from time to time.

a. Decreased mainly due to short-term borrowings availed and repayment of secured debentures as per the terms.

b. Increased mainly due to issuance of unsecured debentures, short-term borrowings availed and repayment of secured debentures as per the terms.

c. Increased mainly due to short-term borrowings availed and repayment of secured debentures as per the terms.

d. Bad debts written off H 29.59 crores (2022-23: H 21.65 crores).

51. During the current year, the Company entered into a business transfer agreement ('Agreement') for the hive-off of the Company's identified new edged digital services business ('identified business undertaking') to its wholly-owned subsidiary Novamesh Limited as a going concern on 'slump sale' basis. The slump sale shall be effective 1 April 2024 and is subject to satisfaction of conditions precedent as stipulated in the Agreement.

52. The Company has used accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the software, except that, audit trail feature is not enabled at the database level and certain master fields (asset master, supplier master and general ledger account master) for users with certain privileged access rights which relates to SAP application.

Also, the Company has used an accounting software which is operated by a third-party software service provider, for processing the payroll for its employees, for which the Management is in possession of Service Organisation Controls report for the period 1 April 2023 to 31 December 2023.

53. The Company maintains its sales order in a third party operated software. The backup of the same is taken on a daily basis and available to the Company at any point of time, however, the server on which the backup is maintained is not in India.

54. Events after the reporting period

There are no significant subsequent events between the year ended 31 March 2024 and signing of financial statements as on 17 April 2024 which have material impact on the financials of the Company.

55. Approval of financial statements

The financial statements were approved for issue by the board of directors on 17 April 2024.

For S.R. Batliboi & Associates LLP For and on behalf of the Board of Directors

Chartered Accountants Tata Communications Limited

ICAI Firm Registration No. 101049W/ E300004 CIN-L64200MH1986PLC039266

PRASHANT SINGHAL RENUKA RAMNATH A. S. LAKSHMINARAYANAN

Partner Chairperson Managing Director & CEO

Membership No. 93283 DIN : 00147182 DIN : 08616830

Mumbai Mumbai

KABIR AHMED SHAKIR ZUBIN ADIL PATEL

Chief Financial Officer Company Secretary

Mumbai Mumbai Mumbai

Date: 17 April 2024 Date: 17 April 2024