United States Securities and Exchange Commission
Washington, DC 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of the
Securities Exchange Act of 1934
For the half-year ended September 30, 2019
Commission File Number 000-27663
SIFY TECHNOLOGIES LIMITED
(Translation of registrant’s name into
English)
Tidel Park, Second Floor
No. 4, Rajiv Gandhi Salai, Taramani
Chennai 600 113, India
(91) 44-2254-0770
(Address of principal executive office)
Indicate by check mark whether the registrant
files or will file annual reports under cover Form 20-F or Form 40-F. Form 20F þ Form
40 F ¨
Indicate by check mark if the registrant is
submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b) (1). Yes ¨
No þ
Indicate by check mark if the registrant is
submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b) (7). Yes ¨
No þ
Table
of Contents
SIFY TECHNOLOGIES LIMITED
FORM 6-K
For the half-year ended September 30, 2019
INDEX
Currency
of Presentation and Certain Defined Terms
Unless the context otherwise
requires, references in this report to “we,” “us,” the “Company,” “Sify” or “Satyam
Infoway” are to Sify Technologies Limited, a limited liability Company organized under the laws of the Republic of India.
References to “U.S.” or the “United States” are to the United States of America, its territories and its
possessions. References to “India” are to the Republic of India. In January 2003, we changed the name of our Company
from Satyam Infoway Limited to Sify Limited. In October 2007, we again changed our name from Sify Limited to Sify Technologies
Limited. “Sify”, “SifyMax.in,”, “Sify e-ports” and “Sify online” are trademarks
used by us for which we have already obtained registration certificates in India. All other trademarks or trade names used in this
report are the property of their respective owners. In this Report, references to “$,” “Dollars” or “U.S.
dollars” are to the legal currency of the United States, and references to “Rs,”, “₹.”, “rupees”
or “Indian rupees” are to the legal currency of India . References to a particular “fiscal” year are to
our fiscal year ended March 31 of such year.
For your convenience,
this Report contains translations of some Indian rupee amounts into U.S. dollars which should not be construed as a representation
that those Indian rupee or U.S. dollar amounts could have been, or could be, converted into U.S. dollars or Indian rupees, as the
case may be, at any particular rate, the rate stated below, or at all. Except as otherwise stated in this Report, all translations
from Indian rupees to U.S. dollars contained in this Report have been based on the reference rate in the City of Mumbai on September
30, 2019 for cable transfers in Indian rupees as published by the Reserve Bank of India (RBI), which was ₹70.69 per $1.00.
Our financial statements
are presented in Indian rupees and prepared in accordance with English version of International Financial Reporting Standards as
issued by the International Accounting Standards Board, or IFRS. In this Report, any discrepancies in any table between totals
and the sums of the amounts listed are due to rounding.
Information contained in our websites, including
our corporate website, www.sifytechnologies.com, is not part of our Annual Report for the year ended March 31, 2019 or this
Report.
Forward-looking Statements
In addition to historical information, this
Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Act of 1934, as amended. The forward-looking statements contained herein are subject to risks and uncertainties
that could cause actual results to differ materially from those reflected in the forward-looking statements. For a discussion of
some of the risks and important factors that could affect the Company’s future results and financial condition, please see
the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and
Results of Operations,” and our Annual Report on Form 20-F for the fiscal year ended March 31, 2019, filed with the Securities
and Exchange Commission (the “SEC”) on June 20, 2019.
The forward-looking statements contained herein
are identified by the use of terms and phrases such as “anticipate”, believe”, “could”, “estimate”,
“expect”, “intend”, “may”, “plan”, “objectives”, “outlook”,
“probably”, “project”, “will”, “seek”, “target” and similar terms and
phrases. Such forward-looking statements include, but are not limited to, statements concerning:
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•
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our expectations as to future revenue, margins, expenses and capital requirements;
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|
•
|
our exposure to market risks, including the effect of foreign currency exchange rates and interest
rates on our financial results;
|
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•
|
the effect of the international economic slowdown on our business;
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•
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our ability to generate and manage growth and to manage our international operations;
|
|
•
|
projections that our cash and cash equivalents, along with cash generated from operations will
be sufficient to meet certain of our obligations; and
|
|
•
|
the effect of future tax laws on our business.
|
You are cautioned not to place undue reliance
on these forward-looking statements, which reflect management’s analysis only as of the date of this Report. We undertake
no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events
or otherwise. In addition, you should carefully review the other information in this Report, our other periodic reports and other
documents filed with the SEC from time to time. Our filings with the SEC are available on its website at www.sec.gov.
Sify Technologies Limited
Unaudited Condensed Consolidated Interim Statement
of Financial Position
(In thousands of Rupees, except share data and
as otherwise stated)
|
|
Note
|
|
As at
|
|
|
As at
September 30,
2019
|
|
|
|
|
|
September 30,
2019
₹
|
|
|
March 31,
2019*
₹
|
|
|
Convenience
translation into
US$
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
4
|
|
|
10,025,020
|
|
|
|
8,636,012
|
|
|
|
141,827
|
|
Right of Use Assets
|
|
7A
|
|
|
3,847,421
|
|
|
|
-
|
|
|
|
54,432
|
|
Intangible assets
|
|
5
|
|
|
679,092
|
|
|
|
576,519
|
|
|
|
9,607
|
|
Lease prepayments
|
|
7
|
|
|
-
|
|
|
|
1,322,748
|
|
|
|
-
|
|
Other assets
|
|
|
|
|
1,104,542
|
|
|
|
1,831,937
|
|
|
|
15,626
|
|
Deferred contract costs
|
|
|
|
|
37,402
|
|
|
|
30,626
|
|
|
|
529
|
|
Other investments
|
|
|
|
|
200,628
|
|
|
|
194,639
|
|
|
|
2,838
|
|
Deferred tax assets
|
|
|
|
|
253,529
|
|
|
|
236,046
|
|
|
|
3,587
|
|
Total non-current assets
|
|
|
|
|
16,147,634
|
|
|
|
12,828,527
|
|
|
|
228,446
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventories
|
|
|
|
|
1,283,843
|
|
|
|
1,715,314
|
|
|
|
18,163
|
|
Trade and other receivables, net
|
|
8A
|
|
|
12,697,392
|
|
|
|
12,627,440
|
|
|
|
179,633
|
|
Contract assets
|
|
8B
|
|
|
38,932
|
|
|
|
33,634
|
|
|
|
551
|
|
Deferred contract costs
|
|
|
|
|
74,010
|
|
|
|
82,405
|
|
|
|
1,047
|
|
Prepayments for current assets
|
|
|
|
|
468,046
|
|
|
|
400,883
|
|
|
|
6,622
|
|
Restricted cash
|
|
6
|
|
|
340,213
|
|
|
|
313,057
|
|
|
|
4,813
|
|
Cash and cash equivalents
|
|
6
|
|
|
1,034,433
|
|
|
|
1,934,918
|
|
|
|
14,634
|
|
Total current assets
|
|
|
|
|
15,936,869
|
|
|
|
17,107,651
|
|
|
|
225,463
|
|
Total assets
|
|
|
|
|
32,084,503
|
|
|
|
29,936,178
|
|
|
|
453,909
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EQUITY AND LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share capital
|
|
|
|
|
1,804,547
|
|
|
|
1,804,258
|
|
|
|
25,529
|
|
Share premium
|
|
|
|
|
19,354,446
|
|
|
|
19,352,084
|
|
|
|
273,813
|
|
Share based payment reserve
|
|
|
|
|
320,428
|
|
|
|
306,080
|
|
|
|
4,533
|
|
Other components of equity
|
|
|
|
|
50,470
|
|
|
|
54,613
|
|
|
|
714
|
|
Accumulated deficit
|
|
|
|
|
(10,554,640
|
)
|
|
|
(10,738,207
|
)
|
|
|
(149,319
|
)
|
Equity attributable to equity holders of the Company
|
|
|
|
|
10,975,251
|
|
|
|
10,778,828
|
|
|
|
155,270
|
|
Sify Technologies Limited
Unaudited Condensed Consolidated Interim Statement
of Financial Position
(In thousands of Rupees, except share data and
as otherwise stated)
|
|
Note
|
|
As at
|
|
|
As at
September
30, 2019
|
|
|
|
|
|
September
30, 2019
₹
|
|
|
March
31, 2019*
₹
|
|
|
Convenience
translation
into US$
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance lease obligations, other than current instalments
|
|
|
|
|
-
|
|
|
|
27,027
|
|
|
|
-
|
|
Borrowings
|
|
|
|
|
3,522,350
|
|
|
|
3,328,544
|
|
|
|
49,832
|
|
Lease liabilities
|
|
7B
|
|
|
1,364,966
|
|
|
|
-
|
|
|
|
19,311
|
|
Employee benefits
|
|
9
|
|
|
202,621
|
|
|
|
170,811
|
|
|
|
2,867
|
|
Contract liabilities
|
|
8B
|
|
|
831,111
|
|
|
|
1,022,385
|
|
|
|
11,758
|
|
Other liabilities
|
|
|
|
|
32,453
|
|
|
|
172,423
|
|
|
|
458
|
|
Total non-current liabilities
|
|
|
|
|
5,953,501
|
|
|
|
4,721,190
|
|
|
|
84,226
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance lease obligations current instalments
|
|
|
|
|
-
|
|
|
|
69,852
|
|
|
|
-
|
|
Borrowings
|
|
|
|
|
3,903,941
|
|
|
|
3,329,767
|
|
|
|
55,230
|
|
Lease liabilities
|
|
7B
|
|
|
317,133
|
|
|
|
-
|
|
|
|
4,487
|
|
Bank overdraft
|
|
6
|
|
|
986,039
|
|
|
|
1,553,203
|
|
|
|
13,950
|
|
Trade and other payables
|
|
|
|
|
8,099,687
|
|
|
|
8,149,536
|
|
|
|
114,588
|
|
Contract liabilities
|
|
8B
|
|
|
1,848,951
|
|
|
|
1,333,802
|
|
|
|
26,158
|
|
Total current liabilities
|
|
|
|
|
15,155,751
|
|
|
|
14,436,160
|
|
|
|
214,413
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
|
|
21,109,252
|
|
|
|
19,157,350
|
|
|
|
298,639
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity and liabilities
|
|
|
|
|
32,084,503
|
|
|
|
29,936,178
|
|
|
|
453,909
|
|
The accompanying notes form an integral part
of these unaudited condensed consolidated interim financial statements
*Derived
from the audited consolidated financial statements
Sify Technologies Limited
Unaudited Condensed Consolidated Interim Statement
of Income
(In thousands of Rupees, except share
data and as otherwise stated)
|
|
Note
|
|
Quarter ended
September 30,
|
|
|
Quarter
ended
September 30,
2019
|
|
|
Half year ended
September 30,
|
|
|
Half year ended
September
30, 2019
|
|
|
|
|
|
2019
₹
|
|
|
2018
₹
|
|
|
Convenience
translation into
US$
(In thousands)
|
|
|
2019
₹
|
|
|
2018
₹
|
|
|
Convenience
translation
into US$
(In thousands)
|
|
Revenue
|
|
10
|
|
|
5,807,074
|
|
|
|
5,509,350
|
|
|
|
82,154
|
|
|
|
11,324,772
|
|
|
|
10,192,148
|
|
|
|
160,215
|
|
Cost of goods sold and services rendered
|
|
11
|
|
|
(3,576,679
|
)
|
|
|
(3,464,544
|
)
|
|
|
(50,600
|
)
|
|
|
(7,171,294
|
)
|
|
|
(6,281,670
|
)
|
|
|
(101,454
|
)
|
Other income
|
|
|
|
|
15,397
|
|
|
|
66,514
|
|
|
|
218
|
|
|
|
43,644
|
|
|
|
100,237
|
|
|
|
617
|
|
Selling, general and administrative expense
|
|
|
|
|
(1,177,701
|
)
|
|
|
(1,299,372
|
)
|
|
|
(16,661
|
)
|
|
|
(2,238,994
|
)
|
|
|
(2,477,254
|
)
|
|
|
(31,676
|
)
|
Depreciation and amortization
|
|
4&5
|
|
|
(527,430
|
)
|
|
|
(383,679
|
)
|
|
|
(7,462
|
)
|
|
|
(1,033,636
|
)
|
|
|
(770,588
|
)
|
|
|
(14,623
|
)
|
Profit from operating activities
|
|
|
|
|
540,661
|
|
|
|
428,269
|
|
|
|
7,649
|
|
|
|
924,492
|
|
|
|
762,873
|
|
|
|
13,079
|
|
Finance income
|
|
13
|
|
|
11,799
|
|
|
|
9,106
|
|
|
|
167
|
|
|
|
168,437
|
|
|
|
22,947
|
|
|
|
2,383
|
|
Finance expenses
|
|
13
|
|
|
(272,601
|
)
|
|
|
(184,725
|
)
|
|
|
(3,857
|
)
|
|
|
(492,676
|
)
|
|
|
(332,111
|
)
|
|
|
(6,970
|
)
|
Net finance expense
|
|
|
|
|
(260,802
|
)
|
|
|
(175,619
|
)
|
|
|
(3,690
|
)
|
|
|
(324,239
|
)
|
|
|
(309,164
|
)
|
|
|
(4,587
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before tax
|
|
|
|
|
279,859
|
|
|
|
252,650
|
|
|
|
3,959
|
|
|
|
600,253
|
|
|
|
453,709
|
|
|
|
8,492
|
|
Income tax (expense)/ benefit
|
|
|
|
|
(88,888
|
)
|
|
|
4
|
|
|
|
(1,258
|
)
|
|
|
(193,085
|
)
|
|
|
4
|
|
|
|
(2,732
|
)
|
Profit for the period
|
|
|
|
|
190,971
|
|
|
|
252,654
|
|
|
|
2,701
|
|
|
|
407,168
|
|
|
|
453,713
|
|
|
|
5,760
|
|
Basic earnings per share
|
|
14
|
|
|
1.07
|
|
|
|
1.68
|
|
|
|
0.02
|
|
|
|
2.27
|
|
|
|
3.01
|
|
|
|
0.03
|
|
Diluted earnings per share
|
|
14
|
|
|
1.06
|
|
|
|
1.66
|
|
|
|
0.02
|
|
|
|
2.25
|
|
|
|
2.97
|
|
|
|
0.03
|
|
The accompanying notes form an integral part
of these unaudited condensed consolidated interim financial statements
Sify Technologies Limited
Unaudited Condensed Consolidated Interim Statement
of Comprehensive Income
(In thousands of Rupees, except share data and
as otherwise stated)
|
|
|
|
Quarter ended
September 30
|
|
|
Quarter
ended
September 30,
2019
|
|
|
Half year ended
September 30
|
|
|
Half year
ended
September 30,
2019
|
|
|
|
Note
|
|
2019
₹
|
|
|
2018
₹
|
|
|
Convenience
Translation
into US$
(In thousands)
|
|
|
2019
₹
|
|
|
2018
₹
|
|
|
Convenience
translation
into US$
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the period
|
|
|
|
|
190,971
|
|
|
|
252,654
|
|
|
|
2701
|
|
|
|
407,168
|
|
|
|
453,713
|
|
|
|
5,760
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income/(loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items that will not be reclassified to profit or loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Remeasurement of defined benefit plans
|
|
9
|
|
|
(8,659
|
)
|
|
|
3,140
|
|
|
|
(123
|
)
|
|
|
(10,011
|
)
|
|
|
10,208
|
|
|
|
(142
|
)
|
Items that will be reclassified to profit or loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation differences of foreign operations
|
|
|
|
|
7,189
|
|
|
|
18,302
|
|
|
|
102
|
|
|
|
5,868
|
|
|
|
34,484
|
|
|
|
83
|
|
Other comprehensive income/(loss) for the period
|
|
|
|
|
(1,470
|
)
|
|
|
21,442
|
|
|
|
(21
|
)
|
|
|
(4,143
|
)
|
|
|
44,692
|
|
|
|
(59
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income for the period
|
|
|
|
|
189,501
|
|
|
|
274,096
|
|
|
|
2,680
|
|
|
|
403,025
|
|
|
|
498,405
|
|
|
|
5,701
|
|
The accompanying notes form an integral part
of these unaudited condensed consolidated interim financial statements
Sify Technologies Limited
Unaudited Condensed Consolidated Interim Statement
of Changes in Equity
(In thousands of Rupees, except share data and
as otherwise stated)
For the half year ended September 30, 2019
Particulars
|
|
Share
capital
|
|
|
Share
premium
|
|
|
Share
based
payment
reserve
|
|
|
Other
components
of
equity
|
|
|
Retained
Earnings/
(accumulated
deficit)
|
|
|
Total
|
|
|
Non-
controlling
interest
|
|
|
Total
Equity
|
|
Balance at April 1, 2019
|
|
|
1,804,258
|
|
|
|
19,352,084
|
|
|
|
306,080
|
|
|
|
54,613
|
|
|
|
(10,738,207
|
)
|
|
|
10,778,828
|
|
|
|
-
|
|
|
|
10,778,828
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
comprehensive income/ (loss) for the period
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(4,143
|
)
|
|
|
407,168
|
|
|
|
403,025
|
|
|
|
-
|
|
|
|
403,025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transactions
with owners, recorded directly in equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued on exercise of ESOP
|
|
|
289
|
|
|
|
1,888
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,177
|
|
|
|
-
|
|
|
|
2,177
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends paid (including corporate dividend tax) (₹ 1.2 per
share)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(223,601
|
)
|
|
|
(223,601
|
)
|
|
|
-
|
|
|
|
(223,601
|
)
|
Transferred from share based payment reserve
|
|
|
-
|
|
|
|
474
|
|
|
|
(474
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Share-based payment transactions
|
|
|
-
|
|
|
|
|
|
|
|
14,822
|
|
|
|
-
|
|
|
|
-
|
|
|
|
14,822
|
|
|
|
|
|
|
|
14,822
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as at September
30, 2019
|
|
|
1,804,547
|
|
|
|
19,354,446
|
|
|
|
320,428
|
|
|
|
50,470
|
|
|
|
(10,554,640
|
)
|
|
|
10,975,251
|
|
|
|
-
|
|
|
|
10,975,251
|
|
For year ended March 31, 2019
Particulars
|
|
Share
capital
|
|
|
Share
premium
|
|
|
Share
based
payment
reserve
|
|
|
Other
components
of
equity
|
|
|
Retained
earnings
/
(accumulated
deficit)
|
|
|
Total
|
|
|
Non-
controlling
interest
|
|
|
Total
equity
|
|
Balance at April 1, 2018
|
|
|
1,518,413
|
|
|
|
18,694,030
|
|
|
|
309,695
|
|
|
|
33,635
|
|
|
|
(11,550,820
|
)
|
|
|
9,004,953
|
|
|
|
-
|
|
|
|
9,004,953
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in accounting policy on adoption of IFRS 15
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(38,215
|
)
|
|
|
(38,215
|
)
|
|
|
|
|
|
|
(38,215
|
)
|
Total
comprehensive income for the year
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
20,978
|
|
|
|
1,068,703
|
|
|
|
1,089,681
|
|
|
|
-
|
|
|
|
1,089,681
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transactions with owners, recorded directly in
equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Call money received
|
|
|
281,250
|
|
|
|
618,750
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
900,000
|
|
|
|
-
|
|
|
|
900,000
|
|
Shares issued on exercise of ESOP
|
|
|
4,595
|
|
|
|
30,854
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
35,449
|
|
|
|
-
|
|
|
|
35,449
|
|
Dividends paid (incl dividend distribution tax)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(217,875
|
)
|
|
|
(217,875
|
)
|
|
|
-
|
|
|
|
(217,875
|
)
|
Transferred from share based payment reserve
|
|
|
-
|
|
|
|
8,450
|
|
|
|
(8,450
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Share-based payment transactions
|
|
|
-
|
|
|
|
-
|
|
|
|
4,835
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,835
|
|
|
|
-
|
|
|
|
4,835
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2019
|
|
|
1,804,258
|
|
|
|
19,352,084
|
|
|
|
306,080
|
|
|
|
54,613
|
|
|
|
(10,738,207
|
)
|
|
|
10,778,828
|
|
|
|
-
|
|
|
|
10,778,828
|
|
The accompanying notes form an integral part
of these unaudited condensed consolidated interim financial statements.
Sify Technologies Limited
Unaudited Condensed Consolidated Interim Statement
of Cash Flows
(In thousands of Rupees, except share data and
as otherwise stated)
|
|
Half year ended September 30
|
|
|
September 30,
2019
|
|
|
|
2019
₹
|
|
|
2018
₹
|
|
|
Convenience
translation
into US$
(In thousands)
|
|
Cash flows from / (used in) operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the period
|
|
|
407,168
|
|
|
|
453,713
|
|
|
|
5760
|
|
Adjustments for:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
1,033,636
|
|
|
|
770,588
|
|
|
|
14,623
|
|
Gain on sale of property, plant and equipment
|
|
|
(4,632
|
)
|
|
|
(2,070
|
)
|
|
|
(66
|
)
|
Provision for doubtful receivables and advances
|
|
|
175,000
|
|
|
|
280,000
|
|
|
|
2,476
|
|
Stock compensation expense
|
|
|
14,822
|
|
|
|
2,283
|
|
|
|
210
|
|
Net finance expense / (income)
|
|
|
324,239
|
|
|
|
309,164
|
|
|
|
4,587
|
|
Unrealized (gain)/ loss on account of exchange differences
|
|
|
(5,529
|
)
|
|
|
86,600
|
|
|
|
(78
|
)
|
Amortisation of leasehold prepayments
|
|
|
-
|
|
|
|
11,062
|
|
|
|
-
|
|
Income tax expense
|
|
|
193,085
|
|
|
|
(4
|
)
|
|
|
2,732
|
|
|
|
|
21,37,789
|
|
|
|
1,911,336
|
|
|
|
30,244
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in trade and other receivables
|
|
|
(10,34,352
|
)
|
|
|
(1,539,448
|
)
|
|
|
(14,633
|
)
|
Change in inventories
|
|
|
431,471
|
|
|
|
(959,537
|
)
|
|
|
6,104
|
|
Change in contract assets
|
|
|
(5,298
|
)
|
|
|
(174,818
|
)
|
|
|
(75
|
)
|
Change in contract costs
|
|
|
1,619
|
|
|
|
(14,593
|
)
|
|
|
23
|
|
Change in contract liabilities
|
|
|
367,623
|
|
|
|
507,212
|
|
|
|
5,201
|
|
Change in other assets
|
|
|
(413,172
|
)
|
|
|
(267,478
|
)
|
|
|
(5,845
|
)
|
Change in trade and other payables
|
|
|
(131,092
|
)
|
|
|
1,461,495
|
|
|
|
(1,855
|
)
|
Change in employee benefits
|
|
|
21,800
|
|
|
|
13,734
|
|
|
|
308
|
|
Cash from operating activities
|
|
|
1,376,388
|
|
|
|
937,903
|
|
|
|
19,472
|
|
Income taxes (paid)/refund received
|
|
|
618,883
|
|
|
|
(374,646
|
)
|
|
|
8,756
|
|
Net cash from operating activities
|
|
|
1,995,271
|
|
|
|
563,257
|
|
|
|
28,228
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from / (used in) investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of property, plant and equipment
|
|
|
(2,178,735
|
)
|
|
|
(1,482,133
|
)
|
|
|
(30,823
|
)
|
Expenditure on intangible assets
|
|
|
(211,210
|
)
|
|
|
(116,959
|
)
|
|
|
(2,988
|
)
|
Proceeds from sale of property, plant and equipment
|
|
|
4,131
|
|
|
|
2,370
|
|
|
|
58
|
|
Finance income received
|
|
|
155,854
|
|
|
|
16,149
|
|
|
|
2,205
|
|
Net cash used in investing activities
|
|
|
(2,229,960
|
)
|
|
|
(1,580,573
|
)
|
|
|
(31,548
|
)
|
Sify Technologies Limited
Unaudited Condensed Consolidated
Interim Statement of Cash Flows
(In thousands of Rupees, except share
data and as otherwise stated)
|
|
Half year ended September 30
|
|
|
September
30, 2019
|
|
|
|
2019
₹
|
|
|
2018
₹
|
|
|
Convenience
translation
into US$
(In thousands)
|
|
Cash flows from / (used in) financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from issue of shares (including share premium)
|
|
|
2,183
|
|
|
|
19,189
|
|
|
|
31
|
|
Proceeds from / (repayment of) borrowings, net
|
|
|
769,829
|
|
|
|
549,340
|
|
|
|
10,891
|
|
Finance expenses paid
|
|
|
(421,712
|
)
|
|
|
(329,644
|
)
|
|
|
(5,966
|
)
|
Repayment of lease liabilities
|
|
|
(198,067
|
)
|
|
|
-
|
|
|
|
(2,802
|
)
|
Repayment of finance lease liabilities
|
|
|
-
|
|
|
|
(43,413
|
)
|
|
|
-
|
|
Payment of dividends (including corporate dividend tax)
|
|
|
(223,607
|
)
|
|
|
(217,875
|
)
|
|
|
(3,163
|
)
|
Net cash used in financing activities
|
|
|
(71,374
|
)
|
|
|
(22,403
|
)
|
|
|
(1,009
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Increase in cash and cash equivalents
|
|
|
(306,063
|
)
|
|
|
(1,039,719
|
)
|
|
|
(4,329
|
)
|
Cash and cash equivalents at April 1
|
|
|
694,771
|
|
|
|
166,584
|
|
|
|
9,829
|
|
Effect of exchange fluctuations on cash held
|
|
|
(101
|
)
|
|
|
7,700
|
|
|
|
(1
|
)
|
Cash and cash equivalents at period end
|
|
|
388,607
|
|
|
|
(865,435
|
)
|
|
|
5,499
|
|
Supplementary information
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions to property plant and equipment represented by finance lease obligations
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
The accompanying notes
form an integral part of these unaudited condensed consolidated interim financial statements
SIFY TECHNOLOGIES LIMITED
UNAUDITED CONDENSED CONSOLIDATED INTERIM
FINANCIAL STATEMENTS
(In thousands of Rupees, except share,
per share data and as stated otherwise)
Sify Technologies Limited, (“Sify”
or the “Company”) formerly known as Sify Limited, is a leading ICT solutions and services provider headquartered in
Chennai, India. These Unaudited Condensed Consolidated Interim Financial Statements as at and for the quarter and half year ended
September 30, 2019 comprise the Company and its subsidiaries (Sify Technologies (Singapore) Pte Limited, Sify Technologies North
America Corporation, Sify Data and Managed Services Limited and Sify Infinit Spaces Limited (together referred to as the “Group”
and individually as “Group entities”). The Group offers converged ICT solutions comprising telecom-centric services,
Data Center-centric IT services which includes Data Center services, cloud and managed services, applications integration services
and technology integration services. Sify is listed on the NASDAQ Capital Market in the United States.
|
a.
|
Statement of compliance
|
The Unaudited Condensed Consolidated Interim
Financial Statements of the Group have been prepared in accordance with International Financial Reporting Standard (IFRS), IAS
34 Interim Financial Reporting. They do not include all of the information required for full annual financial statements, and
should be read in conjunction with the consolidated financial statements of the Group as at and for the year ended March 31, 2019.
These Unaudited Condensed Consolidated Interim
Financial Statements have been approved for issue by the Board of Directors on October 18, 2019.
|
b.
|
Functional and presentation currency
|
Items included in the financial statements
of each Group entity are measured using the currency of the primary economic environment in which the entity operates (the “functional
currency”). Indian rupee is the functional currency of Sify and its Indian Subsidiary. US dollar is the functional currency
of Sify’s foreign subsidiaries located in the US and Singapore.
The Unaudited Condensed Consolidated Interim
Financial Statements are presented in Indian Rupees which is the Group’s presentation currency. All financial information
presented in Indian Rupees has been rounded up to the nearest thousand except where otherwise indicated.
Convenience translation: Solely for the convenience
of the reader, the financial statements as of and for the quarter and half year ended September 30, 2019 have been translated into
United States dollars (neither the presentation currency nor the functional currency of the Group) based on the reference rate
in the City of Mumbai on September 30, 2019, for wire transfers in Indian rupees as published by the Reserve Bank of India which
was ₹ 70.69 per $1.00. No representation is made that the Indian rupee amounts have been, could have been or could be converted
into United States dollar at such a rate or at any other rate on September 30, 2019 or at any other date.
The preparation of these Unaudited Condensed
Consolidated Interim Financial Statements in conformity with IFRS requires management to make judgements, estimates and assumptions
that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses during
the period. Accounting estimates could change from period to period. Actual results may differ from these estimates. Estimates
and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period of
change and future periods, if the change affects both and, if material, their effects are disclosed in the notes to the financial
statements.
|
3.
|
Significant accounting policies
|
The accounting policies applied by the Group
in these Unaudited Condensed Consolidated Interim Financial Statements are the same as those applied by the Group in its consolidated
financial statements as at and for the year ended March 31, 2019 except for the below change in accounting policy on adoption of
IFRS 16 Leases.
Changes in accounting policies
The Group as a lessee
The Group’s lease asset classes primarily
consist of leases for land and buildings. The group assesses whether a contract contains a lease, at inception of a contract. A
contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time
in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the group
assesses whether: (1) the contract involves the use of an identified asset (2) the group has substantially all of the economic
benefits from use of the asset through the period of the lease and (3) the group has the right to direct the use of the asset.
At the date of commencement of the lease, the
Group recognizes a right-of-use asset (“ROU”) and a corresponding lease liability for all lease arrangements in which
it is a lessee, except for leases with a term of twelve months or less (short-term leases) and low value leases. For these short-term
and low value leases, the Group recognizes the lease payments as an operating expense on a straight-line basis over the term of
the lease.
Certain lease arrangements includes the options
to extend or terminate the lease before the end of the lease term. ROU assets and lease liabilities includes these options when
it is reasonably certain that they will be exercised.
The right-of-use assets are initially recognized
at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement
date of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated
depreciation and impairment losses.
Right-of-use assets are depreciated from the
commencement date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset. Right of
use assets are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may
not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost
to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are
largely independent of those from other assets.
The lease liability is initially measured at
amortized cost at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit
in the lease or, if not readily determinable, using the incremental borrowing rates in the country of domicile of the leases. Lease
liabilities are remeasured with a corresponding adjustment to the related right of use asset if the group changes its assessment
if whether it will exercise an extension or a termination option.
Lease liability and ROU asset have been separately
presented in the Balance Sheet and lease payments have been classified as financing cash flows.
The Group as a lessor
Leases for which the group is a lessor is classified
as a finance or operating lease. Whenever the terms of the lease transfer substantially all the risks and rewards of ownership
to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases.
When the Group is an intermediate lessor, it
accounts for its interests in the head lease and the sub-lease separately. The sublease is classified as a finance or operating
lease by reference to the right-of-use asset arising from the head lease.
For operating leases, rental income is recognized
on a straight line basis over the term of the relevant lease.
Transition
Effective April 1, 2019, the Group adopted IFRS 16 “Leases” and applied the standard to all
lease contracts existing on April 1, 2019 using the modified retrospective method. Consequently, the group recorded the lease liability
at the present value of the lease payments discounted at the incremental borrowing rate and the right of use asset at an amount
equal to the lease liability adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognised
in the balance sheet immediately before the date of Initial application. Comparatives as at and for the year ended March 31, 2019
have not been retrospectively adjusted and therefore will continue to be reported under the accounting policies included as part
of our Annual Report for year ended March 31, 2019
On transition, the adoption of the new standard
resulted in recognition of “Right of Use” asset of ₹4,113,541, and a lease liability of ₹1,801,068. The
effect of this adoption is insignificant on the operating profit, net profit for the period and earnings per share. IFRS 16 will
result in an increase in cash inflows from operating activities and an increase in cash outflows from financing activities on
account of lease payments.
The following is the summary of practical expedients
elected on initial application:
|
1.
|
Applied a single discount rate to a portfolio of leases of similar assets in similar economic environment
with a similar end date
|
|
2.
|
Applied the exemption not to recognize right-of-use assets and liabilities for leases with less
than 12 months of lease term on the date of initial application
|
|
3.
|
Excluded the initial direct costs from the measurement of the right-of-use asset at the date of
initial application.
|
|
4.
|
Applied the practical expedient to grandfather the assessment of which transactions are leases.
Accordingly, IFRS 16 is applied only to contracts that were previously identified as leases under IAS 17.
|
Basis of consolidation
The financial statements of the Group companies
are consolidated on a line-by-line basis. Intra-Group balances and transactions, and any unrealized income and expenses arising
from intra-Group transactions, are eliminated. These financial statements are prepared by applying uniform accounting policies
in use at the Group.
Subsidiaries are consolidated from the date
control commences until the date control ceases. Control exists when the parent has power over the entity, is exposed, or has rights
to variable returns from its involvement with the entity and has the ability to affect those returns by using its power over the
entity. Power is demonstrated through existing rights that give the ability to direct relevant activities, those which significantly
affect the entity's returns.
|
a.
|
Recent accounting pronouncements
|
(i) Standards
and interpretations issued but not yet effective
Amendment in IFRS 3 - Business Combinations
In October 2018, the IASB issued amendments
to IFRS 3 “Business Combinations” aimed at providing guidance to an entity that determines whether it has acquired
a business or a group of assets.” The amendments clarify that to be considered a business, an acquired set of activities
and assets must include, at a minimum, an input and a substantive process that together significantly contribute to the ability
to create outputs;
|
o
|
Narrowed the definitions of a business and of outputs by focusing on goods and services provided
to customers and by removing the reference to an ability to reduce costs;
|
|
o
|
Added guidance and illustrative examples to help entities assess whether a substantive process
has been acquired;
|
|
o
|
Removed the assessment of whether market participants are capable of replacing any missing inputs
or processes and continuing to produce outputs;
|
|
o
|
Added an optional concentration test that permits a simplified assessment of whether an acquired
set of activities and assets is not a business.
|
The amendments are effective for business combinations
for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after 1 January
2020. The Group is currently evaluating the impact of these amendments on its consolidated financial statements.
|
4.
|
Property, plant and equipment
|
The following
table presents the changes in property, plant and equipment during the half year ended September 30, 2019
(Rupees
in Thousands)
|
|
Cost
|
|
|
Accumulated
depreciation
|
|
|
|
|
Particulars
|
|
As
at April
1, 2019
|
|
|
Adjustment
on adoption
of Ind AS
116
|
|
|
Additions
|
|
|
Disposals
|
|
|
As
at Sep
30, 2019
|
|
|
As
at April
1, 2019
|
|
|
Adjustment
on adoption
of Ind AS
116
|
|
|
Depreciation
for the year
|
|
|
Deletions
|
|
|
As
at Sep 30,
2019
|
|
|
Carrying
amount as at
Sep
30, 2019
|
|
Building
|
|
|
2,437,687
|
|
|
|
291,146
|
|
|
|
58,874
|
|
|
|
-
|
|
|
|
2,205,415
|
|
|
|
723,160
|
|
|
|
128,759
|
|
|
|
40,413
|
|
|
|
-
|
|
|
|
634,814
|
|
|
|
1,570,601
|
|
Plant and machinery
|
|
|
13,944,419
|
|
|
|
2,538,826
|
|
|
|
814,787
|
|
|
|
50,596
|
|
|
|
12,169,784
|
|
|
|
9,817,005
|
|
|
|
2,244,694
|
|
|
|
446,132
|
|
|
|
50,596
|
|
|
|
7,967,847
|
|
|
|
4,201,937
|
|
Computer equipments
|
|
|
1,517,322
|
|
|
|
|
|
|
|
37,486
|
|
|
|
2,646
|
|
|
|
1,552,162
|
|
|
|
1,185,171
|
|
|
|
|
|
|
|
89,607
|
|
|
|
2,646
|
|
|
|
1,272,132
|
|
|
|
280,030
|
|
Office equipment
|
|
|
684,295
|
|
|
|
|
|
|
|
91,065
|
|
|
|
6
|
|
|
|
775,354
|
|
|
|
424,921
|
|
|
|
|
|
|
|
51,690
|
|
|
|
6
|
|
|
|
476,605
|
|
|
|
298,749
|
|
Furniture and fittings
|
|
|
1,388,063
|
|
|
|
|
|
|
|
95,821
|
|
|
|
-
|
|
|
|
1,483,884
|
|
|
|
983,366
|
|
|
|
|
|
|
|
73,836
|
|
|
|
-
|
|
|
|
1,057,202
|
|
|
|
426,682
|
|
Vehicles
|
|
|
9,656
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,656
|
|
|
|
8,456
|
|
|
|
|
|
|
|
1,200
|
|
|
|
-
|
|
|
|
9,656
|
|
|
|
0
|
|
Total
|
|
|
19,981,442
|
|
|
|
2,829,972
|
|
|
|
1,098,033
|
|
|
|
53,248
|
|
|
|
18,196,255
|
|
|
|
13,142,079
|
|
|
|
2,373,453
|
|
|
|
702,878
|
|
|
|
53,248
|
|
|
|
11,418,256
|
|
|
|
6,777,999
|
|
Add: Construction in progress
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,247,021
|
|
Total
|
|
|
19,981,442
|
|
|
|
2,829,972
|
|
|
|
1,098,033
|
|
|
|
53,248
|
|
|
|
18,196,255
|
|
|
|
13,142,079
|
|
|
|
2,373,453
|
|
|
|
702,878
|
|
|
|
53,248
|
|
|
|
11,418,256
|
|
|
|
10,025,020
|
|
The following
table presents the changes in property, plant and equipment during the year ended March 31, 2019
(Rupees
in Thousands)
|
|
Cost
|
|
|
Accumulated depreciation
|
|
|
|
|
Particulars
|
|
As at
April 1,
2018
|
|
|
Additions
|
|
|
Disposals
|
|
|
As at March 31,
2019
|
|
|
As at
April 1,
2018
|
|
|
Depreciation
for
the year
|
|
|
Deletions
|
|
|
As at
March 31,
2019
|
|
|
Carrying
amount as
at March
31, 2019
|
|
Building
|
|
|
2,301,987
|
|
|
|
135,700
|
|
|
|
-
|
|
|
|
2,437,687
|
|
|
|
639,622
|
|
|
|
83,538
|
|
|
|
-
|
|
|
|
723,160
|
|
|
|
1,714,527
|
|
Plant and machinery
|
|
|
12,293,776
|
|
|
|
1,723,910
|
|
|
|
73,267
|
|
|
|
13,944,419
|
|
|
|
9,017,370
|
|
|
|
872,318
|
|
|
|
72,683
|
|
|
|
9,817,005
|
|
|
|
4,127,414
|
|
Computer equipment
|
|
|
1,407,816
|
|
|
|
120,371
|
|
|
|
10,865
|
|
|
|
1,517,322
|
|
|
|
1,006,370
|
|
|
|
189,606
|
|
|
|
10,805
|
|
|
|
1,185,171
|
|
|
|
332,151
|
|
Office equipment
|
|
|
601,793
|
|
|
|
82,636
|
|
|
|
134
|
|
|
|
684,295
|
|
|
|
346,024
|
|
|
|
79,031
|
|
|
|
134
|
|
|
|
424,921
|
|
|
|
259,374
|
|
Furniture and fittings
|
|
|
1,250,834
|
|
|
|
146,401
|
|
|
|
9,172
|
|
|
|
1,388,063
|
|
|
|
864,935
|
|
|
|
127,603
|
|
|
|
9,172
|
|
|
|
983,366
|
|
|
|
404,697
|
|
Vehicles
|
|
|
9,656
|
|
|
|
-
|
|
|
|
-
|
|
|
|
9,656
|
|
|
|
6,056
|
|
|
|
2,400
|
|
|
|
-
|
|
|
|
8,456
|
|
|
|
1,200
|
|
Total
|
|
|
17,865,862
|
|
|
|
2,209,018
|
|
|
|
93,438
|
|
|
|
19,981,442
|
|
|
|
11,880,377
|
|
|
|
1,354,496
|
|
|
|
92,794
|
|
|
|
13,142,079
|
|
|
|
6,839,363
|
|
Add: Construction in progress
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,796,649
|
|
Total
|
|
|
17,865,862
|
|
|
|
2,209,018
|
|
|
|
93,438
|
|
|
|
19,981,442
|
|
|
|
11,880,377
|
|
|
|
1,354,496
|
|
|
|
92,794
|
|
|
|
13,142,079
|
|
|
|
8,636,012
|
|
Leased assets
As at September 30, 2019 the opening net carrying
amount of buildings and plant and machinery acquired under finance leases as per IAS 17 ₹ 162,387 and ₹ 294,133 respectively
had been regrouped to Right of Use assets on account of implementation of IFRS 16 - Leases.
Construction in progress
Amounts paid towards acquisition of property,
plant and equipment outstanding at each balance sheet date and the cost of property, plant and equipment that are not ready to
be put into use are disclosed under construction-in-progress.
Intangible assets comprise the following:
|
|
September 30, 2019
|
|
|
March 31, 2019
|
|
Goodwill
|
|
|
14,595
|
|
|
|
14,595
|
|
Other intangible assets
|
|
|
664,497
|
|
|
|
561,924
|
|
|
|
|
679,092
|
|
|
|
576,519
|
|
(i) Goodwill
The following table presents the changes
in goodwill during the half year/year ended
|
|
September 30, 2019
|
|
|
March 31, 2019
|
|
Balance at the beginning of the period
|
|
|
14,595
|
|
|
|
14,595
|
|
Net carrying amount of goodwill
|
|
|
14,595
|
|
|
|
14,595
|
|
The amount of goodwill as at September 30,
2019 and March 31, 2019 has been allocated to the Applications Integration Services segment.
(ii) Other intangibles
The following table presents the
changes in intangible assets during the half year ended September 30, 2019 and year ended March 31, 2019.
|
|
Bandwidth
Capacity
|
|
|
Software
|
|
|
License fees
|
|
|
Total
|
|
(A) Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as at April 1, 2018
|
|
|
642,391
|
|
|
|
855,403
|
|
|
|
73,000
|
|
|
|
1,570,794
|
|
Acquisitions during the year
|
|
|
41,943
|
|
|
|
131,481
|
|
|
|
-
|
|
|
|
173,424
|
|
Disposals during the year
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Balance as at March 31, 2019
|
|
|
684,334
|
|
|
|
986,884
|
|
|
|
73,000
|
|
|
|
1,744,218
|
|
Acquisitions during the period
|
|
|
52,054
|
|
|
|
159,155
|
|
|
|
-
|
|
|
|
211,209
|
|
Disposals during the period
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Balance as at September 30, 2019
|
|
|
736,388
|
|
|
|
11,46,039
|
|
|
|
73,000
|
|
|
|
1,955,427
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(B) Amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as at April 1, 2018
|
|
|
304,289
|
|
|
|
667,582
|
|
|
|
31,006
|
|
|
|
1,002,877
|
|
Amortization for the year
|
|
|
63,055
|
|
|
|
113,837
|
|
|
|
2,525
|
|
|
|
179,417
|
|
Impairment loss on intangibles
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Balance as at March 31, 2019
|
|
|
367,344
|
|
|
|
781,419
|
|
|
|
33,531
|
|
|
|
1,182,294
|
|
Amortization for the period
|
|
|
33,626
|
|
|
|
73,685
|
|
|
|
1,325
|
|
|
|
108,636
|
|
Impairment loss on intangibles
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Balance as at September 30, 2019
|
|
|
400,970
|
|
|
|
855,104
|
|
|
|
34,856
|
|
|
|
1,290,930
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(C) Carrying amounts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As at March 31, 2019
|
|
|
316,990
|
|
|
|
205,465
|
|
|
|
39,469
|
|
|
|
561,924
|
|
As at September 30, 2019
|
|
|
335,418
|
|
|
|
290,934
|
|
|
|
38,144
|
|
|
|
664,497
|
|
Intangible assets that were fully impaired/amortised
were removed from the block.
|
6.
|
Cash and cash equivalents
|
Cash and cash equivalents as at September 30,
2019 amounted to ₹ 1,034,433 (March 31, 2019: ₹ 1,934,918). This excludes cash-restricted of ₹ 340,213 (March
31, 2019: ₹ 313,057), representing deposits held under lien against working capital facilities availed and bank guarantees
given by the Group towards future performance obligations.
(a) Restricted cash
Non current
|
|
September
30, 2019
|
|
|
March 31, 2019
|
|
|
September 30,
2018
|
|
|
March 31,
2018
|
|
Against future performance obligation
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Current
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank deposits held under lien against borrowings / guarantees from banks / Government authorities
|
|
|
340,213
|
|
|
|
313,057
|
|
|
|
269,062
|
|
|
|
296,275
|
|
Total restricted cash
|
|
|
340,213
|
|
|
|
313,057
|
|
|
|
269,062
|
|
|
|
296,275
|
|
(b) Non restricted cash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and bank balances
|
|
|
1,034,433
|
|
|
|
1,934,918
|
|
|
|
1,196,687
|
|
|
|
1,991,846
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cash (a+b)
|
|
|
1,374,646
|
|
|
|
2,247,975
|
|
|
|
1,465,749
|
|
|
|
2,288,121
|
|
Bank overdraft used for cash management purposes
|
|
|
(986,039
|
)
|
|
|
(1,553,203
|
)
|
|
|
(2,331,184
|
)
|
|
|
(2,121,537
|
)
|
Less: Non current restricted cash
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Cash and cash equivalents for the statement of cash flows
|
|
|
(388,607
|
)
|
|
|
694,772
|
|
|
|
(865,435
|
)
|
|
|
166,584
|
|
|
|
September 30, 2019
|
|
|
March 31, 2019
|
|
Towards land and buildings*
|
|
|
-
|
|
|
|
1,322,748
|
|
|
|
|
-
|
|
|
|
1,322,748
|
|
* Opening carrying value of Lease prepayments
as at April 1, 2019: ₹ 1,322,748 paid for acquiring leasehold
rights of land for construction of Data Centers has been regrouped to Right of Use assets.
Following are the changes in the carrying value
of Right of use assets for the six months ended September 30, 2019:
|
|
Category of ROU asset
|
|
Particulars
|
|
Land
|
|
|
Building
|
|
|
P&M
|
|
|
IRU
|
|
|
Total
|
|
Balance as of April 1, 2019
|
|
|
1,409,557
|
|
|
|
1,748,560
|
|
|
|
294,133
|
|
|
|
617,545
|
|
|
|
4,069,795
|
|
Additions
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Deletions
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Depreciation
|
|
|
(8,878
|
)
|
|
|
(129,896
|
)
|
|
|
(40,822
|
)
|
|
|
(42,778
|
)
|
|
|
(222,374
|
)
|
Translation difference
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Balance as of September 30, 2019
|
|
|
1,400,679
|
|
|
|
1,618,664
|
|
|
|
253,311
|
|
|
|
574,767
|
|
|
|
3,847,421
|
|
Following is the breakup of Current and Non-current
lease liabilities as on September 30, 2019
Particulars
|
|
Amount
|
|
Current Liabilities
|
|
|
317,133
|
|
Non-Current Liabilities
|
|
|
1,364,966
|
|
Following is the movement in lease liabilities
during the six months ended September 30, 2019:
Particulars
|
|
Amount
|
|
Balance as of April 1, 2019
|
|
|
1,801,068
|
|
Additions
|
|
|
-
|
|
Finance cost accrued during the period
|
|
|
79,064
|
|
Deletions
|
|
|
-
|
|
Payment of lease liabilities
|
|
|
(198,033
|
)
|
Translation difference
|
|
|
-
|
|
Balance as of September 30, 2019
|
|
|
1,682,099
|
|
The weighted average incremental borrowing
rate applied to lease liabilities as at April 1, 2019 is 9.5%
The table below provides details regarding
the contractual maturities of lease liabilities on undiscounted basis as of September 30, 2019
Particulars
|
|
Amount
|
|
Less than one year
|
|
|
286,694
|
|
One to five years
|
|
|
817,717
|
|
More than five years
|
|
|
2,245,511
|
|
Total
|
|
|
3,349,922
|
|
Rental expenses recorded on short-term leases
amounts to 112,931.
|
8A.
|
Trade and other receivables
|
Trade and other receivables comprise:
|
|
September 30, 2019
|
|
|
March 31, 2019
|
|
(i) Trade receivables, net
|
|
|
10,664,506
|
|
|
|
10,003,960
|
|
(ii) Other receivables including deposits
|
|
|
2,032,886
|
|
|
|
2,623,480
|
|
(iii) Construction contract related accruals
|
|
|
-
|
|
|
|
-
|
|
|
|
|
12,697,392
|
|
|
|
12,627,440
|
|
Trade receivables consist of:
|
|
September 30, 2019
|
|
|
March 31, 2019
|
|
Other trade receivables
|
|
|
11,095,428
|
|
|
|
10,276,431
|
|
|
|
|
11,095,428
|
|
|
|
10,276,431
|
|
Less: Allowance for doubtful receivables
|
|
|
(430,922
|
)
|
|
|
(272,471
|
)
|
Balance at the end of half year/year
|
|
|
10,664,506
|
|
|
|
10,003,960
|
|
The activity in the allowance for doubtful
accounts receivable is given below:
|
|
September 30, 2019
|
|
|
March 31, 2019
|
|
Balance at the beginning of the period
|
|
|
272,471
|
|
|
|
209,217
|
|
Add : Additional provision, net
|
|
|
175,000
|
|
|
|
536,290
|
|
Less : Bad debts written off
|
|
|
(16,549
|
)
|
|
|
(473,036
|
)
|
Balance at the end of half year/year
|
|
|
430,922
|
|
|
|
272,471
|
|
|
|
|
|
|
|
|
|
|
Financial assets included in other receivables
|
|
|
51,712
|
|
|
|
69,513
|
|
The following table provides information about
receivables, contract assets and contract liabilities from the contracts with the customers
Particulars
|
|
September 2019
|
|
|
March 2019
|
|
Trade Receivables
|
|
|
|
|
|
|
10,664,506
|
|
|
|
|
|
|
|
10,003,960
|
|
Contract Assets – Unbilled Revenue
|
|
|
|
|
|
|
38,932
|
|
|
|
|
|
|
|
33,634
|
|
Contract liabilities – Deferred Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current contract liabilities
|
|
|
1,848,951
|
|
|
|
|
|
|
|
1,333,802
|
|
|
|
|
|
Non current contract liabilities
|
|
|
831,111
|
|
|
|
|
|
|
|
1,022,385
|
|
|
|
|
|
Total Contract liabilities – Deferred Income
|
|
|
|
|
|
|
2,680,062
|
|
|
|
|
|
|
|
2,356,187
|
|
The following table provides the movement in
contract assets (unbilled revenue) for the period ended September 30, 2019
Particulars
|
|
Rs.
|
|
Balance as of April 1, 2019
|
|
|
33,634
|
|
Add: Revenue recognized during the period
|
|
|
52,287
|
|
Less: Invoiced during the period
|
|
|
47,571
|
|
Add: Translation gain or (loss)
|
|
|
582
|
|
Balance as of September 30, 2019
|
|
|
38,932
|
|
The following table provides the movement in
contract liabilities (Deferred Income) for the period ended September 30, 2019
Particulars
|
|
Rs.
|
|
Balance as of April 1, 2019
|
|
|
2,376,865
|
|
Less: Revenue recognized during the period
|
|
|
(7,056,282
|
)
|
Add: Invoiced during the period but revenue not recognised
|
|
|
7,356,199
|
|
Add: Translation gain or (loss)
|
|
|
2,336
|
|
Balance as of September 30, 2019
|
|
|
2,679,118
|
|
|
8C.
|
Contract Cost and Amortisation
|
Costs to fulfil customer contracts are deferred
and amortized over the contract period. For the period ended September 30, 2019 the Group has capitalised Rs.77,334 and amortised
Rs.78,953 There was no impairment loss in relation to the capitalised cost.
Incremental costs of obtaining a contract are
recognised as assets and amortized over the contract period. The Group recognises incremental cost of obtaining a contract as an
expense when incurred if the amortisation period of the asset that the entity otherwise would have recognised is one year or less.
|
|
September 30, 2019
|
|
|
March 31, 2019
|
|
Gratuity payable
|
|
|
146,674
|
|
|
|
119,610
|
|
Compensated absences
|
|
|
55,947
|
|
|
|
51,201
|
|
|
|
|
202,621
|
|
|
|
170,811
|
|
Gratuity cost
The components of gratuity cost recognized
in the income statement for the quarter and half year ended September 30, 2019 and 2018 consists of the following:
|
|
Quarter ended
September 30, 2019
|
|
|
Quarter ended
September 30, 2018
|
|
|
Half year ended
September 30, 2019
|
|
|
Half year ended
September 30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service cost
|
|
|
6,371
|
|
|
|
5,264
|
|
|
|
12,962
|
|
|
|
11,370
|
|
Interest cost
|
|
|
2,519
|
|
|
|
2,400
|
|
|
|
4,968
|
|
|
|
4,732
|
|
Interest income
|
|
|
(444
|
)
|
|
|
(595
|
)
|
|
|
(876
|
)
|
|
|
(1,173
|
)
|
Net gratuity costs recognized in statement of income
|
|
|
8,446
|
|
|
|
7,069
|
|
|
|
17,054
|
|
|
|
14,929
|
|
Details of employee benefit obligation and
plan asset are as follows:
|
|
September 30, 2019
|
|
|
March 31, 2019
|
|
Present value of projected benefit obligation at the end of half year/ year
|
|
|
165,572
|
|
|
|
145,108
|
|
Funded status of the plans
|
|
|
(18,898
|
)
|
|
|
(25,498
|
)
|
Recognized (asset) / liability
|
|
|
146,674
|
|
|
|
119,610
|
|
The following
table set out the status of the gratuity plan:
Change in defined benefit obligation
|
|
September 30, 2019
|
|
|
March 31, 2019
|
|
Projected benefit obligation at the beginning of half year/ year
|
|
|
145,108
|
|
|
|
131,687
|
|
Service cost
|
|
|
12,962
|
|
|
|
25,936
|
|
Interest cost
|
|
|
4,968
|
|
|
|
9,606
|
|
Remeasurements - Actuarial (gain) / loss
|
|
|
9,016
|
|
|
|
(5,267
|
)
|
Benefits paid
|
|
|
(6,482
|
)
|
|
|
(16,854
|
)
|
Projected benefit obligation at the end of half year/ year
|
|
|
165,572
|
|
|
|
145,108
|
|
Change in plan assets
|
|
September 30, 2019
|
|
|
March 31, 2019
|
|
Fair value of plan assets at the beginning of the period
|
|
|
25,498
|
|
|
|
32,567
|
|
Interest income
|
|
|
846
|
|
|
|
2,381
|
|
Remeasurements – return on plan assets excluding amounts included in interest income
|
|
|
(995
|
)
|
|
|
(2,596
|
)
|
Employer contributions
|
|
|
31
|
|
|
|
10,000
|
|
Benefits paid
|
|
|
(6,482
|
)
|
|
|
(16,854
|
)
|
Fair value of plan assets at the end of the period
|
|
|
18,898
|
|
|
|
25,498
|
|
Actuarial Assumptions at reporting date:
|
|
As at
September 30, 2019
|
|
As at
March 31, 2019
|
Discount rate
|
|
6.45% P.a
|
|
6.95% P.a
|
Long-term rate of compensation increase
|
|
7.00% P.a
|
|
7.00% P.a
|
Expected long term rate of return on plan assets
|
|
7.00% P.a
|
|
7.00% P.a
|
Average future
working life time
|
|
4.37
years
|
|
4.37
years
|
The Group assesses these assumptions with the
projected long-term plans of growth and prevalent industry standards.
Remeasurement of defined benefit plans recognised
in other comprehensive income
The amount gains and losses on remeasurement
of defined benefit plans recognized directly in other comprehensive income for the half year ended September 30, 2019 and 2018
are as follows:
|
|
Half year ended
September 30, 2019
|
|
|
Half year ended
September 30, 2018
|
|
Gain or (loss) on remeasurement of defined benefit plans
|
|
|
10,011
|
|
|
|
10,208
|
|
|
|
|
10,011
|
|
|
|
10,208
|
|
Historical information
|
|
Half year ended
September 30, 2019
|
|
|
Half year ended
September 30, 2018
|
|
Experience adjustment on plan liabilities - (loss)/gain
|
|
|
5,198
|
|
|
|
4,840
|
|
Impact of change in assumptions on plan liabilities - (loss)/gain
|
|
|
3,821
|
|
|
|
6,332
|
|
Experience adjustment on plan assets - (loss)/gain
|
|
|
(995
|
)
|
|
|
(964
|
)
|
Demographic assumptions
|
|
|
(3
|
)
|
|
|
-
|
|
|
|
|
10,011
|
|
|
|
10,208
|
|
|
|
Quarter ended
|
|
|
Half year ended
|
|
|
|
September 30,
2019
|
|
|
September 30,
2018
|
|
|
September 30,
2019
|
|
|
September 30,
2018
|
|
Rendering of services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service revenue
|
|
|
5,108,530
|
|
|
|
3,926,466
|
|
|
|
9,877,415
|
|
|
|
7,869,155
|
|
Installation service revenue
|
|
|
112,778
|
|
|
|
793,905
|
|
|
|
360,631
|
|
|
|
1,299,915
|
|
|
|
|
5,221,308
|
|
|
|
4,720,371
|
|
|
|
10,238,046
|
|
|
|
9,169,070
|
|
Sale of products
|
|
|
585,766
|
|
|
|
788,979
|
|
|
|
1,086,726
|
|
|
|
1,023,078
|
|
Total
|
|
|
5,807,074
|
|
|
|
5,509,350
|
|
|
|
11,324,772
|
|
|
|
10,192,148
|
|
Note :1. Revenue disaggregation as per business
segment and geography has been included in segment information (See Note 15).
Note :2 Performance obligations and remaining
performance obligations
The Group has applied the practical expedient
provided in the standard and accordingly not disclosed the remaining performance obligation relating to the contract where the
performance obligation is part of a contract that has an original expected duration of one year or less and has also not disclosed
the remaining performance obligation related disclosures for contracts where the revenue recognized corresponds directly with the
value to the customer of the entity's performance completed to date.
The following table provides revenue expected
to be recognised in the future related to performance obligation that are unsatisfied (or partially satisfied) at the reporting
date.
To be recognised
|
|
Rs.
|
|
Within one year
|
|
|
358,098
|
|
One to three years
|
|
|
170,605
|
|
Three years or more
|
|
|
49,369
|
|
|
11.
|
Cost of goods sold and services rendered
|
Cost of goods sold and services rendered information
is presented before any depreciation or amortization that is direct and attributable to revenue sources. The Group’s asset
base deployed in the business is not easily split into a component that is directly attributable to a business and a component
that is common / indirect to all the businesses. Since a gross profit number without depreciation and amortization does not necessarily
meet the objective of such a disclosure, the Group has not disclosed gross profit numbers but disclosed all expenses, direct and
indirect, in a homogenous group leading directly from revenue to operating income.
|
|
Quarter ended
|
|
|
Half year ended
|
|
|
|
September 30,
2019
|
|
|
September 30,
2018
|
|
|
September 30,
2019
|
|
|
September 30,
2018
|
|
Salaries and wages
|
|
|
750,081
|
|
|
|
679,988
|
|
|
|
1,442,757
|
|
|
|
1,313,388
|
|
Contribution to provident fund and other funds
|
|
|
41,804
|
|
|
|
39,400
|
|
|
|
79,829
|
|
|
|
75,165
|
|
Staff welfare expenses
|
|
|
6,342
|
|
|
|
5,153
|
|
|
|
16,292
|
|
|
|
13,995
|
|
Employee Stock compensation expense
|
|
|
14,467
|
|
|
|
634
|
|
|
|
14,822
|
|
|
|
2,283
|
|
|
|
|
812,694
|
|
|
|
725,175
|
|
|
|
1,553,700
|
|
|
|
1,404,831
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to Cost of goods sold and services rendered
|
|
|
396,242
|
|
|
|
346,500
|
|
|
|
765,270
|
|
|
|
643,340
|
|
Attributable to selling, general and administrative expenses
|
|
|
416,452
|
|
|
|
378,675
|
|
|
|
788,430
|
|
|
|
761,491
|
|
|
13.
|
Financial income and expense
|
|
|
Quarter ended
|
|
|
Half year ended
|
|
|
|
September 30,
2019
|
|
|
September 30,
2018
|
|
|
September 30,
2019
|
|
|
September 30,
2018
|
|
Interest income on bank deposits
|
|
|
7,717
|
|
|
|
6,510
|
|
|
|
15,071
|
|
|
|
9,157
|
|
Others
|
|
|
4,082
|
|
|
|
2,596
|
|
|
|
153,366
|
|
|
|
13,790
|
|
Finance income
|
|
|
11,799
|
|
|
|
9,106
|
|
|
|
168,437
|
|
|
|
22,947
|
|
Interest expense on financial lease liabilities
|
|
|
(61,530
|
)
|
|
|
(4,805
|
)
|
|
|
(89,668
|
)
|
|
|
(8,577
|
)
|
Bank charges
|
|
|
(30,635
|
)
|
|
|
(26,164
|
)
|
|
|
(56,120
|
)
|
|
|
(52,548
|
)
|
Other interest
|
|
|
(180,436
|
)
|
|
|
(1,53,756
|
)
|
|
|
(346,887
|
)
|
|
|
(270,986
|
)
|
Finance expense
|
|
|
(272,601
|
)
|
|
|
(184,725
|
)
|
|
|
(492,676
|
)
|
|
|
(332,111
|
)
|
Net finance expense recognised in profit or loss
|
|
|
(260,802
|
)
|
|
|
(175,619
|
)
|
|
|
(324,239
|
)
|
|
|
(309,164
|
)
|
The calculation of basic earnings per share
for the quarter and half year ended September 30, 2019 is based on the earnings attributable to ordinary shareholders:
|
|
Quarter ended
|
|
|
Half year ended
|
|
|
|
September 30,
2019
|
|
|
September 30,
2018
|
|
|
September 30,
2019
|
|
|
September 30,
2018
|
|
Net profit – as reported
|
|
|
190,971
|
|
|
|
252,654
|
|
|
|
407,168
|
|
|
|
453,713
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares – Basic
|
|
|
179,157,005
|
|
|
|
150,561,839
|
|
|
|
179,150,710
|
|
|
|
150,561,839
|
|
Basic earnings per share
|
|
|
1.07
|
|
|
|
1.68
|
|
|
|
2.27
|
|
|
|
3.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares – Diluted
|
|
|
180,354,675
|
|
|
|
152,582,469
|
|
|
|
180,672,756
|
|
|
|
152,582,469
|
|
Diluted earnings per share
|
|
|
1.06
|
|
|
|
1.66
|
|
|
|
2.25
|
|
|
|
2.97
|
|
|
Note 1:
|
During the year ended
March 31, 2011, 125,000,000 ordinary shares were issued to the existing promoter group on a private placement basis. As at September
30, 2019, these shares were partly paid up to the extent of ₹ 7.75 (March 31, 2018 : ₹ 7.75) per share.
|
The operating segments
of the Company are as follows:
Telecom centric
services: Domestic data, international data, wholesale voice, Hubbing and network managed services;
Data Center centric IT services
Data Center services: Co-location
services ;
Cloud and managed services:
IT infra services, IT transformation services, remote and onsite infrastructure management services and delivery platforms;
Technology integration
services: Data Center build, network integration, information security, end user computing and collaborative tools
and solutions;
Applications integration services:
Application development and maintenance, application testing, mobility solutions, eLearning, portals, tools, process and automation.
The Chief Operating
Decision Maker (“CODM”), i.e., the Board of Directors and the senior management, evaluate the Group’s performance
and allocate resources to various strategic business units that are identified based on the products and services that they offer
and on the basis of the market served. The measure of profit / loss reviewed by the CODM is “Earnings/loss before interest,
taxes, depreciation and amortization” also referred to as “segment operating income / loss”. Revenue in relation
to segments is categorized based on items that are individually identifiable to that segment.
Bandwidth costs, which form a significant part
of the total expenses, are allocated to Network Services. Manpower costs of Technology resources rendering services to support
Infrastructure operations, Managed services and Application services, are allocated to specific operating segments. The Group
believes that the resulting allocations are reasonable.
Certain expenses, such as depreciation, technology
infrastructure and administrative overheads, which form a significant component of total expenses, are not allocable to specific
segments as the underlying services are used interchangeably. Management believes that it is not practical to provide segment disclosure
of these expenses and, accordingly, they are separately disclosed as “unallocated” and adjusted only against the total
income of the Group.
A significant part of the fixed assets used in
the Group’s business are not identifiable to any of the reportable segments and can be used interchangeably between segments.
As a result, the measures of segment assets and liabilities are not regularly reviewed by the CODM and hence disclosures relating
to segment assets and liabilities have not been provided.
The Group’s operating segment information
for the quarter ended September 30, 2019 and 2018 and half year ended September 30, 2019 and 2018, are presented below:
Quarter ended September 30, 2019
|
|
|
|
|
Data center-centric IT services
|
|
|
|
|
|
|
Telecom-
centric
Services
(A)
|
|
|
Data
center
Services
(i)
|
|
|
Cloud and
Managed
Services
(ii)
|
|
|
Technology
Integration
Services
(iii)
|
|
|
Applications
Integration
Services
(iv)
|
|
|
Total
(B)=
(i)+(ii)+(iii)+(iv)
|
|
|
Total
(C) =
(A) + (B)
|
|
Segment revenue
|
|
|
3,113,658
|
|
|
|
927,095
|
|
|
|
457,747
|
|
|
|
757,778
|
|
|
|
550,821
|
|
|
|
2,693,441
|
|
|
|
5,807,099
|
|
Allocated segment expenses
|
|
|
(2,327,043
|
)
|
|
|
(489,317
|
)
|
|
|
(380,605
|
)
|
|
|
(718,027
|
)
|
|
|
(480,710
|
)
|
|
|
(2,068,659
|
)
|
|
|
(4,395,702
|
)
|
Segment operating income
|
|
|
786,615
|
|
|
|
437,778
|
|
|
|
77,142
|
|
|
|
39,751
|
|
|
|
70,111
|
|
|
|
624,782
|
|
|
|
1,411,397
|
|
Unallocated expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(358,703
|
)
|
Depreciation and amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(527,430
|
)
|
Other income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,397
|
|
Finance income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,799
|
|
Finance expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(272,600
|
)
|
Profit before tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
279,859
|
|
Income tax (expense)/benefit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(88,887
|
)
|
Profit for the period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
190,971
|
|
Half year ended September 30, 2019
|
|
|
|
|
Data center-centric IT services
|
|
|
|
|
|
|
Telecom-
centric
Services
(A)
|
|
|
Data
center
Services
(i)
|
|
|
Cloud and
Managed
Services
(ii)
|
|
|
Technology
Integration
Services
(iii)
|
|
|
Applications
Integration
Services
(iv)
|
|
|
Total
(B)=
(i)+(ii)+(iii)+(iv)
|
|
|
Total
(C) =
(A) + (B)
|
|
Segment revenue
|
|
|
6,327,331
|
|
|
|
1,745,582
|
|
|
|
767,489
|
|
|
|
1,597,372
|
|
|
|
887,026
|
|
|
|
4,997,469
|
|
|
|
11,324,800
|
|
Allocated segment expenses
|
|
|
(4,787,790
|
)
|
|
|
(977,351
|
)
|
|
|
(696409
|
)
|
|
|
(1,484,077
|
)
|
|
|
(822,386
|
)
|
|
|
(3,980,223
|
)
|
|
|
(8,768,013
|
)
|
Segment operating income
|
|
|
1,539,541
|
|
|
|
768,231
|
|
|
|
71080
|
|
|
|
113,295
|
|
|
|
64,640
|
|
|
|
1,017,246
|
|
|
|
2,556,787
|
|
Unallocated expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(642,304
|
)
|
Depreciation and amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,033,636
|
)
|
Other income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43,645
|
|
Finance income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
168,437
|
|
Finance expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(492,676
|
)
|
Profit before tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
600,253
|
|
Income tax (expense)/benefit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(193,085
|
)
|
Profit for the period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
407,168
|
|
Quarter ended September 30, 2018
|
|
|
|
|
Data center-centric IT services
|
|
|
|
|
|
|
Telecom-
centric
Services
(A)
|
|
|
Data
center
Services
(i)
|
|
|
Cloud and
Managed
Services
(ii)
|
|
|
Technology
Integration
Services
(iii)
|
|
|
Applications
Integration
Services
(iv)
|
|
|
Total
(B)=
(i)+(ii)+(iii)+(iv)
|
|
|
Total
(C) =
(A) + (B)
|
|
Segment revenue
|
|
|
2,695,159
|
|
|
|
785,501
|
|
|
|
351,342
|
|
|
|
1,112,376
|
|
|
|
564,972
|
|
|
|
2,814,191
|
|
|
|
5,509,350
|
|
Allocated segment expenses
|
|
|
(2,174,797
|
)
|
|
|
(485,223
|
)
|
|
|
(291,826
|
)
|
|
|
(994,157
|
)
|
|
|
(497,219
|
)
|
|
|
(2,268,425
|
)
|
|
|
(4,443,222
|
)
|
Segment operating income
|
|
|
520,362
|
|
|
|
300,278
|
|
|
|
59,516
|
|
|
|
118,219
|
|
|
|
67,753
|
|
|
|
545,766
|
|
|
|
1,066,128
|
|
Unallocated expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(320,694
|
)
|
Depreciation and amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(383,679
|
)
|
Other income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
66,514
|
|
Finance income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,106
|
|
Finance expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(184,725
|
)
|
Profit before tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
252,650
|
|
Income tax (expense)/benefit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4
|
|
Profit for the period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
252,654
|
|
Half year ended September 30, 2018
|
|
|
|
|
Data center-centric IT services
|
|
|
|
|
|
|
Telecom-
centric
Services
(A)
|
|
|
Data
center
Services
(i)
|
|
|
Cloud and
Managed
Services
(ii)
|
|
|
Technology
Integration
Services
(iii)
|
|
|
Applications
Integration
Services
(iv)
|
|
|
Total
(B)=
(i)+(ii)+(iii)+(iv)
|
|
|
Total
(C) =
(A) + (B)
|
|
Segment revenue
|
|
|
5,547,493
|
|
|
|
1,509,733
|
|
|
|
673,859
|
|
|
|
1,544,152
|
|
|
|
916,911
|
|
|
|
4,644,655
|
|
|
|
10,192,148
|
|
Allocated segment expenses
|
|
|
(4,204,263
|
)
|
|
|
(936,873
|
)
|
|
|
(553,022
|
)
|
|
|
(1,439,796
|
)
|
|
|
(976,530
|
)
|
|
|
(3,906,221
|
)
|
|
|
(8,110,484
|
)
|
Segment operating income
|
|
|
1,343,230
|
|
|
|
572,860
|
|
|
|
120,837
|
|
|
|
104,356
|
|
|
|
(59,619
|
)
|
|
|
738,434
|
|
|
|
2,081,664
|
|
Unallocated expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(648,440
|
)
|
Depreciation and amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(770,588
|
)
|
Other income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,237
|
|
Finance income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,947
|
|
Finance expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(332,111
|
)
|
Profit before tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
453,709
|
|
Income tax (expense)/benefit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4
|
|
Profit for the period
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
453,713
|
|
Contracts
pending to be executed on capital account as at September 30, 2019 amounting to ₹ 4,980,904 (March 31, 2019 :₹ 3,157,693).
|
a)
|
Proceedings before Department of Telecommunications
|
|
·
|
On October 12, 2009 (as later clarified by the DoT), the Department of Telecommunications (‘DOT’)
raised a demand on Sify Technologies for ₹ 14,000 after correcting the arithmetical error in the assessment letter.
|
|
·
|
On February 26, 2010 DOT raised a demand on Sify Communications (erstwhile subsidiary merged with
Sify Technologies Limited) for ₹ 26,000.
|
The above demands were made by
the DoT on the premise that all amounts of income (whether direct or indirect) including certain items like other income, interest
on deposits, gain on foreign exchange fluctuation, profit on sale of assets & provision written back, that have not got anything
to do with telecom operations of the Company or arise in connection with the Telecom business of the Company, are to be considered
as income for the purpose of calculation of the license fee. The Company has replied suitably on the above demand notice.
On a related matter, the service
providers had approached TDSAT (the ‘Tribunal’) on what items of income are liable for calculation of license fee and
what all items of income on which license fees are not liable to be paid. The Tribunal by its order dated April 23, 2015 held that
revenue from sale of scrap, treasury income etc are to be included as part of AGR. The Tribunal has also passed an order asking
DOT to levy at most nominal amount as token penalty with interest if permissible at the lower rates. The Company had approached
Honourable High Court of Madras (Court) in 2013 by filing a writ petition prohibiting Department of Telecommunications (DOT) from
levying license fee on non-licensed activities. An interim order was passed by the Court restraining DOT from recovering license
fee in respect of non- telecom activities for the writ petition filed in 2013. Also, the Group has received notices for earlier
years from DoT claiming Licence fee on the total Income (including income from Non-Licensed activities). The Group has replied
to these notices stating that licence fees are not payable on income from non-licensed activities. The Group believes that it has
adequate legal defences against these notices and that the ultimate outcome of these actions may not have a material adverse effect
on the Group's financial position and result of operations.
On October
24, 2019, the Supreme Court of India upheld the DOT’s broader definition of adjusted gross revenue, or AGR, on which the
DOT levies its revenue sharing fees. Under the DOT’s definition, AGR now includes revenue from non-core telecom operations
such as rent, dividend and interest income, and foreign exchange gains. As described above, Sify has previously challenged
the DOT’s definition of AGR, and the High Court issued an interim order restraining the DOT from levying fees on revenues
associated with non-licensed activities. This matter is still pending before the High Court, and Sify believes that the exclusion
of revenues from non-licensed activities and different lines of business from AGR differs from revenue items addressed by the Supreme
Court. Although Sify does not believe that the Supreme Court’s decision should have an impact on the ongoing proceedings
in the High Court, there can be no assurance that this will be the case or that the High Court’s decision will not be unfavorable
to Sify resulting in higher DOT revenue sharing fees.
|
b)
|
(ii) The present licence for ISP under Unified License issued by DOT on June 2, 2014 provides for
payment of Licence fee on pure internet services. However, the Group through Internet Service Providers Association of India (ISPAI)
challenged the said clause before TDSAT and has not made payment in this regard. TDSAT passed a stay order on DOT from charging
the Licence fee on pure internet services. The group has appropriately accounted for any adverse effect that may arise in this
regard in the books of account.
|
|
c)
|
The Company is party to additional legal actions arising
in the ordinary course of business. Based on the available information as at March 31, 2019, the Company believes that it has
adequate legal defenses for these actions and that the ultimate outcome of these actions will not have a material adverse effect.
However, in the event of adverse judgment in all these cases, the maximum financial exposure would be ₹ 91,628 (March 31,
2019: ₹ 91,628)
|
|
d)
|
The Company has received an order passed under section 7A of the Employees Provident Fund &
Miscellaneous Provisions Act, 1952 from Employees Provident Fund Organization (EPFO) claiming provident fund contribution aggregating
to ₹ 6,432 on special allowances paid to employees. The company has filed a writ petition before High court of Madras and
obtained the stay of demand. In Feb 2019, the Supreme Court held, in a similar case, that Special allowances paid by the employer
to its employee will be included in the scope of basic wages and subject to provident fund contribution. However, the Supreme Court
has not fixed the effective date of order.
|
The
following is a summary of significant transactions with related parties during the half year ended
September 30, 2019 and September 30, 2018:
Transactions
|
|
Half year ended
September 30, 2019
|
|
|
Half year ended
September 30, 2018
|
|
Consultancy services received
|
|
|
150
|
|
|
|
150
|
|
Lease rentals paid (See notes below)
|
|
|
3,734
|
|
|
|
2,268
|
|
Dividend paid
|
|
|
155,400
|
|
|
|
151,114
|
|
Security Deposits paid
|
|
|
3,000
|
|
|
|
-
|
|
Amount of outstanding balances
|
|
|
|
|
|
|
|
|
Advance lease rentals and refundable deposits made (See note below)
|
|
|
5,600
|
|
|
|
2,558
|
|
Outstanding balances [(Payables)/receivables]
|
|
|
820
|
|
|
|
3,163
|
|
Notes:
|
·
|
During the year 2011 -12, the Company
had entered into a lease agreement with M/s Raju Vegesna Infotech and Industries Private Limited, the holding Company, to lease
the premises owned by it for a period of three years effective February 1, 2012 on a rent of ₹ 75 (Rupees Seventy Five Thousand
Only) per month. Subsequently, the Company entered into an amendment agreement with effect from April 1, 2013, providing for automatic
renewal for a further period of two blocks of 3 years with an escalation of 15% on the last paid rent after the end of every three
years.
|
|
·
|
During the year 2011 - 12, the Company
had also entered into a lease agreement with M/s Raju Vegesna Developers Private Limited, a Company in which Mr. Ananda Raju Vegesna,
Executive Director of the Company and Mr. Raju Vegesna, Chairman and Managing director of the Company exercise significant influence,
to lease the premises owned by it for a period of three years effective February 1, 2012 on a rent of ₹ 30 (Rupees Thirty
Thousand Only) per month. The agreement provides for the automatic renewal for further period of two blocks of 3 years with an
escalation of 15% on the last paid rent after the end of every three years.
|
|
·
|
During the year 2010-11, the Company had entered into a lease agreement with Ms. Radhika Vegesna,
daughter of Mr. Ananda Raju Vegesna, Executive Director of the company, to lease the premises owned by her for a period of three
years effective June 1, 2010 on a rent of ₹294 (Rupees Two
Ninety Four Thousand Only) per month and payment of refundable security deposit of ₹2,558.
This arrangement will automatically be renewed for a further period of two blocks of three years with all the terms remaining unchanged.
During the current year, lease agreement got renewed for a period of three years effective June 1, 2019 on a rent of ₹556
(Rupees Five hundred and fifty six Thousand Only) per month and payment of refundable security deposit of ₹5,560.
|
|
19.
|
Financial Instruments
|
Financial instruments by category:
The carrying value and fair value of financial
instruments by each category as at September 30, 2019 were as follows:
Particulars
|
|
Note
|
|
Financial
assets/
liabilities
at
amortised
costs
|
|
|
Financial
assets /
liabilities at
FVTPL
|
|
|
Financial
assets /
liabilities
at
FVTOCI
|
|
|
Total
carrying
value
|
|
|
Total fair
value
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
6
|
|
|
1,374,646
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,374,646
|
|
|
|
1,374,646
|
|
Other assets
|
|
|
|
|
318,725
|
|
|
|
-
|
|
|
|
-
|
|
|
|
318,725
|
|
|
|
318,725
|
|
Trade receivables
|
|
8
|
|
|
10,664,506
|
|
|
|
-
|
|
|
|
-
|
|
|
|
10,664,506
|
|
|
|
10,664,506
|
|
Other receivables
|
|
|
|
|
54,707
|
|
|
|
-
|
|
|
|
-
|
|
|
|
54,707
|
|
|
|
54,707
|
|
Other investments
|
|
|
|
|
198,918
|
|
|
|
-
|
|
|
|
1,710
|
|
|
|
200,628
|
|
|
|
200,628
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank overdraft
|
|
6
|
|
|
986,039
|
|
|
|
-
|
|
|
|
-
|
|
|
|
986,039
|
|
|
|
986,039
|
|
Finance lease liabilities
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Lease liabilities
|
|
7
|
|
|
16,82,099
|
|
|
|
-
|
|
|
|
-
|
|
|
|
16,82,099
|
|
|
|
16,82,099
|
|
Other liabilities
|
|
|
|
|
32,453
|
|
|
|
-
|
|
|
|
-
|
|
|
|
32,453
|
|
|
|
32,453
|
|
Borrowings from banks
|
|
|
|
|
5,067,249
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,966,831
|
|
|
|
4,966,831
|
|
Borrowings from others
|
|
|
|
|
2,359,042
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,441,199
|
|
|
|
2,441,199
|
|
Trade and other payables
|
|
|
|
|
7,520,829
|
|
|
|
-
|
|
|
|
-
|
|
|
|
7,520,829
|
|
|
|
7,520,829
|
|
Derivative financial liabilities
|
|
|
|
|
-
|
|
|
|
(3,452
|
)
|
|
|
-
|
|
|
|
(3,452
|
)
|
|
|
(3,452
|
)
|
The carrying value and fair value of financial
instruments by each category as at March 31, 2019 were as follows:
Particulars
|
|
Note
|
|
Financial
assets/
liabilities
at
amortised
costs
|
|
|
Financial
assets /
liabilities at
FVTPL
|
|
|
Financial
assets /
liabilities
at
FVTOCI
|
|
|
Total
carrying
value
|
|
|
Total fair
value
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
6
|
|
|
2,247,975
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,247,975
|
|
|
|
2,247,975
|
|
Other assets
|
|
|
|
|
347,189
|
|
|
|
-
|
|
|
|
-
|
|
|
|
347,189
|
|
|
|
347,189
|
|
Trade receivables
|
|
8
|
|
|
10,003,960
|
|
|
|
-
|
|
|
|
-
|
|
|
|
10,003,960
|
|
|
|
10,003,960
|
|
Other receivables
|
|
|
|
|
69,513
|
|
|
|
-
|
|
|
|
-
|
|
|
|
69,513
|
|
|
|
69,513
|
|
Other investments
|
|
|
|
|
192,929
|
|
|
|
-
|
|
|
|
1,710
|
|
|
|
194,639
|
|
|
|
194,639
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bank overdraft
|
|
6
|
|
|
1,553,203
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,553,203
|
|
|
|
1,553,203
|
|
Finance lease liabilities
|
|
|
|
|
96,879
|
|
|
|
-
|
|
|
|
-
|
|
|
|
96,879
|
|
|
|
96,879
|
|
Other liabilities
|
|
|
|
|
172,423
|
|
|
|
-
|
|
|
|
-
|
|
|
|
172,423
|
|
|
|
172,423
|
|
Borrowings from banks
|
|
|
|
|
4,217,112
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,217,112
|
|
|
|
4,217,112
|
|
Borrowings from others
|
|
|
|
|
2,441,199
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,441,199
|
|
|
|
2,441,199
|
|
Trade and other payables
|
|
|
|
|
7,442,360
|
|
|
|
-
|
|
|
|
-
|
|
|
|
7,442,360
|
|
|
|
7,442,360
|
|
Derivative financial liabilities
|
|
|
|
|
-
|
|
|
|
5,066
|
|
|
|
-
|
|
|
|
5,066
|
|
|
|
5,066
|
|
Fair value measurements:
The details
of assets and liabilities that are measured on fair value on recurring basis are given below:
|
|
Fair value as at September 30, 2019
|
|
|
Fair value as at March 31, 2019
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial assets
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial liabilities – loss on outstanding forward/options contracts
|
|
|
-
|
|
|
|
-
|
|
|
|
(3,784
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
4,585
|
|
Derivative financial liabilities - loss on outstanding cross currency swaps
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Derivative financial liabilities - loss on outstanding interest rate swaps
|
|
|
-
|
|
|
|
-
|
|
|
|
333
|
|
|
|
-
|
|
|
|
-
|
|
|
|
481
|
|
|
·
|
Level 1 – unadjusted quoted prices in active markets for identical assets and 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 – unobservable inputs for the asset or liability
|
|
o
|
Loss on cross currency swaps are valued using present value of cash flows from the swap contract
estimated using swap rates calculated from respective countries’ yield curves.
|
|
20.
|
Financial Risk Management
|
The Group has exposure to the following
risks from its use of financial instruments:
The Board of Directors has overall responsibility
for the establishment and oversight of the Group’s risk management framework. The Board of Directors have established a risk
management policy to identify and analyze the risks faced by the Group, to set appropriate risk limits and controls, and to monitor
risks and adherence to limits. Risk management systems are reviewed periodically to reflect changes in market conditions and the
Group’s activities. The Group Audit Committee oversees how management monitors compliance with the Group’s risk management
policies and procedures, and reviews the risk management framework. The Group Audit Committee is assisted in its oversight role
by Internal Audit. Internal Audit undertakes reviews of risk management controls and procedures, the results of which are reported
to the Audit Committee.
Credit risk: Credit risk is the
risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations
and arises principally from the Group’s trade receivables, treasury operations and other activities that are in the nature
of leases.
Trade and other receivables
The Group’s exposure to credit risk
is influenced mainly by the individual characteristics of each customer. Management considers that the demographics of the Group’s
customer base, including the default risk of the industry and country in which customers operate, has less of an influence on credit
risk. The Group is not exposed to concentration of credit risk to any one single customer since the services are provided to and
products are sold to customers who are spread over a vast spectrum. Credit risk is managed through credit approvals, establishing
credit limits and continuously monitoring the credit worthiness of the customers to which the Company grants credit terms in the
normal course of the business.
Cash and cash equivalents and other
investments
In the area of treasury operations, the
Group is presently exposed to counter-party risks relating to short term and medium term deposits placed with public-sector banks,
and also to investments made in mutual funds.
Guarantees
The Group’s policy is to provide
financial guarantees only to subsidiaries.
The Chief Financial Officer is responsible
for monitoring the counterparty credit risk, and has been vested with the authority to seek Board’s approval to hedge such
risks in case of need.
Liquidity risks: Liquidity risk
is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that
are settled by delivering cash or another financial asset. The Group’s approach to managing liquidity is to ensure, as far
as possible, that it will always have sufficient liquidity to meet its liabilities when due, under normal and stressed conditions,
without incurring unacceptable losses or risking damage to the Group’s reputation. Typically the Group ensures that it has
sufficient cash on demand to meet expected operational expenses, servicing of financial obligations. In addition, the Group has
concluded arrangements with well reputed Banks, and has unused lines of credit that could be drawn upon should there be a need.
The Company is also in the process of negotiating additional facilities with Banks for funding its requirements.
Market risk: Market risk is the
risk of loss of future earnings or fair values or future cash flows that may result from a change in the price of a financial instrument.
The value of a financial instrument may change as a result of changes in the interest rates, foreign exchange rates and other market
changes that affect market risk sensitive instruments. Market risk is attributable to all market risk sensitive financial instruments
including foreign currency receivables and payables. The Group is exposed to market risk primarily related to foreign exchange
rate risk (currency risk), interest rate risk and the market value of its investments. Thus the Group’s exposure to market
risk is a function of investing and borrowing activities and revenue generating and operating activities in foreign currencies.
Currency risk: The Group’s
exposure in USD, Euro and other foreign currency denominated transactions gives rise to Exchange Rate fluctuation risk. Group’s
policy in this regard incorporates:
|
·
|
Forecasting inflows and outflows denominated in US$ for a twelve-month period
|
|
·
|
Estimating the net-exposure in foreign currency, in terms of timing and amount
|
|
·
|
Determining the extent to which exposure should be protected through one or more risk-mitigating
instruments to maintain the permissible limits of uncovered exposures.
|
|
·
|
Carrying out a variance analysis between estimate and actual on an ongoing basis, and taking stop-loss
action when the adverse movements breaches the 5% barrier of deviation, subject to review by Audit Committee.
|
|
21.
|
Issue of shares on a private placement basis to the existing
promoter group
|
On
August 4, 2010, the Board of Directors of the company approved the issuance, in a private placement, of up to an aggregate of 125,000,000
of the company’s equity shares, par value Rs.10 per share (“Equity shares”) at a discount compared to market
value of, for an aggregate purchase price of ₹ 4,000,000, to a group of investors affiliated with the company’s promoter
group, including entities affiliated with Mr Raju Vegesna, the company’s Chief Executive Officer and Managing Director and
Mr Ananda Raju Vegesna, Executive Director and brother of Mr Raju Vegesna (the “Offering”). The company’s shareholders
approved the terms of the Offering at the Company’s Annual General Meeting held on September 27, 2010.
On
October 22 2010, the company entered into a Subscription Agreement with Mr Ananda Raju Vegesna, acting as representative (the “Representative”)
of the purchasers in connection with the Offering. In pursuance of the Agreement, the company issued and allotted 125,000,000 equity
shares to M/s Raju Vegesna Infotech and Industries Private Limited (“RVIIPL”), a promoter group company. In accordance
with Indian law, the purchase price is to be paid at such time as determined by Board of Directors of the company.
On
August 14, 2011, the company received a letter from RVIIPL expressing its intention to transfer the above partly paid shares to
its wholly owned subsidiary M/s Ramanand Core Investment Company Private limited (“RCICPL”). The company, on August
26, 2011, registered such transfer of partly paid shares in the name of RCICPL.
On
September 7, 2011, the parties entered into an amendment to the Subscription Agreement (the “Amendment”) extending
the validity of the agreement period to September 26, 2013. This Amendment provides the Board of Directors of the Company
with additional time to call upon the purchasers to pay the balance money, in accordance with the terms of the Subscription Agreement.
As
of September 30, 2019, entities affiliated with our CEO, Chairman and Managing Director, Raju Vegesna, beneficially owned approximately
85.98% of our outstanding equity shares.
The following are the entities that comprise
the Group as at September 30, 2019 and March 31, 2019:
Particulars
|
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Country
of incorporation
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% of Ownership interest
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Significant subsidiaries
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September 30, 2019
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March 31, 2019
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Sify Technologies (Singapore) Pte. Ltd
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Singapore
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100
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100
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Sify Technologies North America Corporation
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USA
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100
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100
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Sify Data and Managed Services Limited
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India
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100
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100
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Sify Infinit Spaces Limited
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India
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100
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100
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Item 2.
Information on the Company
Sify Business Model
Drawing from the Company’s vision
statement, we endeavour to provide the entire eco-system of ICT services. In doing so, we have to accede to the demands of both
the traditional Telecom and IT services markets.
The first few years of growth of the IT
and Telecom industries were driven primarily in garnering maximum market share and an enviable roster of blue chip clients. With
changing dynamics and demands of the market, the two industries have to find a middle ground to retain and expand the market. It
was the time of convergence and the perfect fertile ground for our services.
Until 2012, our primary strategy was to
invest in infrastructure and being ready before the market cycle demanded our services. Once we attained critical mass, we shifted
focus to packaging our products and practices as tangible offerings to the market.
In Sify 3.0, we have restructured our business
segments of 5 distinct lines of business in two broad categories,
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1)
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Telecom centric services
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2)
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Data Center centric IT services
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Telecom Centric Services
Having invested heavily in building among
India’s best last mile network services, it was time to scale the utilization through cross alignment with traditional telecom
players who were looking to expand our markets to Tier II and Tier III cities and towns and also to IT players who wished to leverage
the cost benefits of relocating to Tier II towns.
We do this by leveraging our state-of-the
art last mile wireless connectivity and the dense spread of network. Enterprise customers who seek to utilise the network have
the choice of being connected to the Data Center, of their choice or any one of our Data Centers. Today, this multi-mode, multi-mesh
network connects 45 of India’s Data Centers; a fact that endorses the quality of our offering and our network presence
Our network, reaches over 1,650 cities
and towns with more than 3000 Points of Presence and 110,000 links, thus making us the largest MPLS network in India.
Data Center centric IT Services
Right from our first Data Center at Vashi,
Mumbai in 2000, we have invested in the top of the line technologies across all our networks with every new data center taking
the game forward. The Sify SDA (Sify Data Center Architecture) 4.0 is an IP that has found acceptance in the several Data Centers
that we have built for our customers.
These DCs also offer a multitude of Value
Added services over the traditional notion of basic collocation and Opex driven storage solutions. With approximately 0.2 million
square feet coverage today including the new Data Centers, we are among the largest to offer Data Center space in the market
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b)
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Cloud and Managed services
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The last few years saw the emergence of
Cloud or virtual storage as a tangible product offering. Several emerging enterprises saw the benefits of buying-space-as-you-go
as against investing in Capex loaded infrastructure. The advent of this business was the quality of high class networks and promise
to remotely store your data immaterial of where it was connected from and plugging into it when the enterprises chose to. This
eliminated the need for cumbersome server monitoring and the associated cost of ownership.
In order to offer the best-of-breed services,
we chose to tie up with the leaders in the business like Hp and VMware. Our hosting services are also SAP Gold certified giving
the much needed SLAs (Service Level Agreements) to our customers about the level of our offerings.
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c)
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Technology Integration services
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The nearly two decades spent maturing into
India’s premier ICT player has led to building an enviable knowledge bank of integrating, monitoring, maintaining and upgrading
every facet of service as demanded by a quickly converging market.
Sify offers turnkey solutions to clients
who are new to both technology and technology refreshes. We do this by leveraging our homegrown expertise in design, implementation
and maintenance to deliver end-to-end managed IT services across datacenter, network and security.
As described, this business takes the knowledge
developed from building Network architecture, Unified Communication and Unified Access, Collaborative tools, Data Center build,
Virtualization, LAN and WAN Architecture and End Point Security and offers them as a complete solution package to customers.
This business is also responsible for Sify
bringing in some of the biggest deals of the year, for grounds-up technology refresh for some of India’s biggest private
and Government clients.
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d)
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Applications Integration services
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As with every industry major who chose
to offer IT and Managed services, Applications were also demanded by several of our clients. While we chose not to be a core Software
player, we do enable the integration of multiple technologies and platforms and the cross breeding of existing ones.
This way, the clients can slowly transition
the maturity cycle with their existing application before switching over to newer ones. That said on our services, some of our
home grown applications, like Forum and iTest have found favour with a large number of our clientele.
We are looking to strengthen our bouquet
of offerings in the years to come.
Strategy
Our vision statement is explicit on our
strategy.
We are building a world in which our
converged ICT eco-system and our bring-it-on attitude will be the competitive advantage to our customers.
To build a converged ICT eco-system calls
for a multidisciplinary approach. While maintaining the tempo of investment in infrastructure, we will, in parallel, strengthen
our current offerings of services. The description below provides an explanation on this approach.
•
Cover more of the country with our network, increase the bandwidth support and drive more customer usage. Our network
is based on Internet Protocol, or IP, and we are the first Indian service provider to have made our network Multi-Protocol Label
Switching (MPLS) compliant. We are also the first IPv6 ready network having laid it down as early as 2000. In the fiscal year 2013-14,
we implemented the proprietary CloudCover to connect Data Centers across India with a multi-mode, multi-mesh network. This builds
redundancy at multiple levels across the network. This network connects 45 of India’s Data Centers including 6 of our own.
To ensure undisrupted high quality service and to achieve cost efficiencies, we have invested in an undersea cable consortium.
The capacity went live during the Q1 of 2012-13. We have also leased intercity links from multiple suppliers including BSNL, Bharti,
TATA, Railtel and Power Grid Corporation, such that each one of our nodes is accessible from at least two other nodes, if not by
two long distance operators. We believe that as the size and capacity of our network infrastructure grows, its structure and national
coverage will create economies of scale. Being vendor neutral, we are able to procure bandwidth in a cost effective manner.
•
Increase penetration in our existing markets by expanding awareness of the “Sify” brand name to capitalize on
our first mover advantage in India. Over time, Sify as a brand has expanded its offerings from the retail broadband segment
to the enterprise buyer in India. But as with every brand’s birth, our first offerings gave us the identity as India’s
most aggressive internet player. We built on those strengths and with time, have built a complete ecosystem of enterprise offerings.
•
Create pull with newer more efficient technology and hence draw more customers into the Sify fold. In order to transition
to being an enterprise player, we began by expanding our bouquet of services in line with market demand. A nascent retail broadband
gave rise to data storage and hence our first Data Center was born; at Vashi Mumbai in 2000. As a brand, we have consciously aligned
with the best-of-breed technology and benchmarks. Hence, right from our first Data Center, all our subsequent ones were also concurrently
maintainable. Our managed services bouquet has been a mix of home grown applications and offerings through tie ups with industry
leaders like Hp, VMware, Akamai, SAP etc.
•
Expand the bouquet of services and cater to an audience that does not mind paying a premium and hence realise better margins.
As competition heats up in the IT and Telecom sector, there will be a squeeze on our margins for the traditional offerings.
Hence it is imperative to create a segment of premium paying customers who see value in the differential on their services. We
will also continuously expand our service offerings and expand into a broader geographical domain. We actively spread to Tier II
and III cities much before we had customers there. This helped us to demonstrate a robust working model of our services in geographically
challenged places as and when the demand arose.
•
Expand our customer distribution channels through strategic alliances to take advantage of the sales and marketing capabilities
of our strategic partners. Each of our business delivers a certain level of legitimacy when aligned with the industry leaders.
Most MNCs see this as a comfort factor and a reassurance of global standards that they have enjoyed. So, whether it is Telecom
business aligning with international carriers, our DC business being concurrently maintainable and assured by the best of the global
standards, our Managed services having tied up with leaders like HP, VMware, SAP, Hitachi etc. or Applications Integration services
or our content delivery assurance with Akamai under our technology integration services ambit, the assurance is the same; global
standards, local deliverance. On the delivery front, this doubles our marketing strength while allowing for a cross selling of
products and services to both the partner’s audiences.
•
Pursue selective strategic investments, alliances and acquisitions to expand our customer base, increase utilization of
our network and add new technologies to our service mix. India's financial nerve center, Mumbai has long been a focus of our
expansion plans given the concentration of enterprise players. That, along with a stable administration and power supply, well
developed suburbs, and a native market was responsible for us launching our 6th DC at Rabale, near Navi Mumbai. All along, we have
invested ahead of the demand curve across all our services. That said, the focus has also been to add value by partnering with
the best of breed technology companies. Towards that, our hosting services are now SAP certified giving us the incentive/fillip
to pitch it to discerning enterprise customers. Content delivery for enterprise customers was underlined with our partnership with
the world leaders, Akamai. We will continue to pursue opportunities to grow both organically and inorganically, in our endeavor
to spread into newer geographies.
•
Expand into international markets for providing managed network services. We are now at a crucial phase in our growth.
Over the years, we have built a substantial knowledge house of services and they are ready to be delivered to clients beyond India’s
borders. We are actively pursuing an agenda of tying up with international IT majors and taking these strengths to customer worldwide,
starting with North America. Our in-house IP services like eLearning are already being offered to multiple geographies in the
US and Europe.
Service Offerings
Telecom Service .
These primarily consist of network service which addresses the domestic connectivity needs of Indian enterprises and international
inward and outward connectivity needs of international enterprises. We do this by leveraging our national Tier 1 IPv6 network infrastructure.
The services include a comprehensive range of Internet protocol based Virtual Private Network, offerings, including intranets,
extranets and remote access applications to both small and large corporate customers. There is a strong focus on industry verticals
such as IT/ITES (IT enabled services), banking and financial services industry (BFSI), Government, manufacturing, pharmaceutical
and FMCG. We were one of the first service providers in India to provide MPLS-enabled IPVPN’s on our entire network. We have
entered into a strategic partnership with leading Telcos for providing last mile connectivity to customers. Our entire network
is MPLS enabled with built in redundancy with world class design and service standards. We have built a stack of managed services
for our network customers, like managed WLAN, managed DDoS and security solutions. We have built a carrier neutral internet exchange
in India in partnership with Amsterdam Internet Exchange.
Our
cable landing station and our investment in a submarine cable consortium are our other assets that we extend to our International
partners for their international inward and outward connectivity needs. Our cable landing station currently lands 2 major submarine
cables; namely Gulf Bridge International (GBI) and the Middle Eastern and North African cable (MENA).
Our
connectivity clients can pick from a range of services; namely the following.
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·
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SecureConnect (TM) is our comprehensive offering of secure, reliable and
scalable IPVPN solutions that meet both mission- critical data networking and converged voice, video and data connectivity needs.
It offers a variety of intranet and extranet configurations for connecting offices, remote sites, traveling employees and business
partners, whether in India or abroad. Our platform of services includes:
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SiteConnect (TM) which offers site-to-site managed MPLS-enabled IPVPN solutions
for securely connecting regional and large branch offices within India to the corporate Intranet.
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GlobalSite Connect (TM) , an international site-to-site managed MPLS-enabled IPVPN
solution, is used for securely connecting international branch offices to the corporate offices. It provides connectivity anywhere
in the world through Sify’s alliances and partnerships with global overseas service providers such as Level 3, KDDI, and
PCCW Global to name a few.
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ExpressConnect (TM) , which offers a premium range of high-performance Internet
bandwidth solutions for connecting regional offices, branch offices and remote locations to the corporate network. These solutions
complement our SiteConnect range of MPLS enabled IPVPN solutions, provide high-speed bandwidth in those situations where basic
connectivity and cost are the top concerns.
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RoamConnect (TM) is our national and international remote access VPN, which is
used for securely connecting employees, while they are traveling, to the corporate intranet. Roam Connect features “single
number access” to SifyNet from anywhere in the country and provides access from anywhere in the world through Sify’s
alliances with overseas service providers.
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PartnerConnect (TM) is our remote access VPN offering, for providing secure and
restricted dial-up access to business partners such as dealers, distributors and suppliers to the corporate extranet.
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CleanConnect(TM) which provides managed and secured internet connectivity to customers.
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Managed DDoS which offers protection from DDoS attack to corporate customers.
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Managed WLAN provides managed Wi-Fi solutions offering connect devices to the network of the customer
and the internet at customer locations.
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Data
Center services . We operate 7 Data Centers of which four are located in Mumbai (Bombay), one each at Noida (Uttar Pradesh),
Chennai (Madras) and Bengaluru, which are designed to act as reliable, secure and scalable facilities to host mission-critical
applications. We offer co-location services which allow customers to bring in their own rack-mountable servers and house them in
shared racks or hire complete racks, and even rent ‘secure cages’ at the hosting facility as per their application
requirements. We also offer a wide variety of managed hosting services, such as storage, back-up and restoration, performance monitoring
and reporting hardware and software procurement and configuration and network configuration.
Cloud
and managed services. Our on-demand hosting (cloud) services offers end-customers with the best in class solutions to
enterprises. We have joined the global program of two world majors and offer their suite of on-demand cloud services giving them
the option to “rent” software licenses on a monthly “pay as you go” basis. This model is aimed at helping
Indian companies, both large and small, to safely tap computing capacity inside and outside their firewalls to help ensure quality
of service for any application they want to run..
Our
remote and onsite infrastructure Management services provides continuous proactive management and support of customer operating
systems, applications and database layers through deploying specialized monitoring tools and infrastructure experts to ensure that
our customers’ infrastructure is performing optimally.
Our
innovative SLA driven utility-based On-Demand storage service manages the complete lifecycle of enterprise information, from its
inception to its final disposal. The fully managed, utility based, On-Demand, scalable storage platform is powered by global major
in Data Systems. Sify's On-Demand storage service reduces the complexities of deploying and managing multiple storage tiers, and
lowers operational costs by automating management with flexible need based pricing.
Technology
Integration services: Our myriad mix of solutions gives us the scope to band and extend any or all of these services
in multiple formats and scales for client who wish to rest their entire infrastructure with us. Clients get the benefit of our
accumulated knowledge base and technical expertise across all points of the ICT spectrum. In terms of cost, these translate into
better cost efficiencies. In terms of monitoring, the client interacts with a singular service provider saving them both implementation
and documentation efforts.
Our
suite of conferencing tools consist of audio and video solutions; most differentiating among being that the video solution in partnership
with a world leader, does not require a room conferencing solution thereby arming the modern enterprise with real time data straight
from the markets.
Applications
Integration services: Our range of web-applications include sales force automation, supply chain management, intranet and extranets,
workflow engine and knowledge management systems.
Our
Applications Integration services operates two of India’s biggest online portals, www.sify.com and www.samachar.com,
that function as principal entry points and gateway for accessing the Internet by providing useful web-related services and links.
We also offer related content sites specifically tailored to Indian interests worldwide.
Sify.com
provides a gateway to the Internet by offering communication and search tools such as email, chat, travel, online portfolio management
and channels for personal finance, astrology, lifestyle, shopping, movies, sports and news.
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The finance channel of Sify http://sify.com/finance/ covers the entire spectrum
of equity markets, business news, insurance, mutual funds, loans, SME news and a host of paid and free financial services.
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The sports channel http://sify.com/sports/ covers the entire gamut of Indian
and international sports with special focus on cricket.
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The food channel www.bawarchi.com focuses on Indian recipes and cooking and is especially
popular among non-resident Indians (NRIs) audiences with over 90% of its content being user generated
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Our NRI news portal, www.samachar.com focuses on Indian news and allows NRIs
to stay connected to India by aggregating news from across all popular newspapers and other news portals. This portal provides
a range of news in English and five Indian languages. Apart from Samachar we have another India targeted news channel http://sify.com/news
which offers national and international general, political and offbeat news.
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Movies channel on Sify http://sify.com/movies is one of the key channels which
offer updates from Bollywood/ Hollywood and all regional film industries. The content includes movie reviews, industry news, video
galleries, photo galleries, downloads (photos) etc.
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Games channel of Sify http://games.sify.com offers multiple scoring and non scoring
games. Games include cricketing games, racing games, football specific games.
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We
offer value-added services to organizations such as website design, development, content management, Online assessment tools, search
engine optimization, including domain name management, secure socket layer (SSL) certificate for websites, digital certification
services and server space in required operating system and database. We provide state of the art messaging and collaboration services
and solutions such as e-mail servers, LAN mail solutions, anti-spam appliances, bulk mail services, instant messaging, and also
offer solutions and services to enable data & access security over the Internet. We also provide infrastructure-based services
on demand, including on-line testing engine and network management. On-line testing services include test management software,
required servers and proctored examination facilities at Sify’s franchisee points. On-line exam engine offered allows a secure
and flexible way of conducting examinations involving a wide range of question patterns.
Corporate Customers
Our base of corporate customers spread
across information technology enabled services (ITES), banking financial services and Insurance (BFSI), publishing, retail, pharmaceuticals
and manufacturing. The reorganisation of our business has helped us expand our customer base to over 10,000+ customers to date.
This is not inclusive of customers who have brought piece-meal services from us. A good number of these customers have matured
from our initial set of offerings like Network and Data center services. With the launch of our cable landing station, we are able
to cater to international carriers as well as domestic voice and data players. Our alliance with world leaders across our other
services is giving us the opportunity to extend our services to customers of our alliance partners.
The Company does not currently anticipate
that it will serve markets in, or have any contacts with, Sudan, Iran or Syria, or any other countries which are designated as
state sponsors of terrorism by the U.S. Department of State. As of the date of this Report, the Company has not provided into Iran,
Sudan, or Syria, or any other countries which are designated as state sponsors of terrorism by the U.S. Department of State directly
or indirectly, any products, equipment, software, technology, information or support, and has no agreements, arrangements, or other
contacts with the governments of those countries or entities they control.
Customer Service and Technical Support
The implementation of the single UAN for
all enterprise customers across India has centralised all customer enquiries to one point, thus enabling us to pour resources and
efforts into a single minded endeavour. We support both telephonic and email interactions from our clients and support for enterprise
services is 24x7.
Sales and Marketing
From a business standpoint, we have 5 different
lines of business. But on the sales front, the entire team is trained to upsell and cross sell across the entire bandwidth of services.
We believe this is essential and imperative given the space for bundling of our services. The 471 person sales team caters to the
demand of enterprises and the growing SMB market.
Technology and Network Infrastructure
Geographic coverage: Our network
today reaches more than 1,650 towns and cities and between them have more than 110,000 links. This network is completely owned
giving us complete control on the technology, traffic and speed over them. These points of presence, or primary nodes, reside at
the core of a larger Internet protocol network with a star and meshed topology architecture thereby building in redundancy at every
point and translating into minimum or no downtime for customers.
Today we offer the following services to
our enterprise and consumer customers using our network.
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Internet access services,
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IP/ MPLS virtual private networks,
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Internet based voice services
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Layer 1/Layer 2 networks
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Data center/Cloud Interconnections
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Each point of presence contains data communications
equipment housed in a secure facility owned, leased or operated on an infrastructure co-location basis by our Company. The last
mile connecting to the customer can be a leased line, ISDN or point-to-multipoint radio link which we have licensed from the Wireless
Planning Commission. We also use certain frequency radios, which do not require an operating license, in some locations. Our larger
corporate customers access the point of presence directly through leased lines or wireless links.
Network Architecture : We ensure
network reliability through several methods and have invested in proven technologies. We use routers to route traffic between nodes
interconnected using a high speed interface. Most of our applications and network verification servers are manufactured by IBM,
Sun and Hewlett-Packard.
The primary nodes on the backbone network
are connected by multiple high-speed fiber optic lines that we lease from long distance operators. The secondary nodes are connected
by lower speed leased lines. A number of nodes are accessible from at least two other nodes, if not, by two long distance operators,
allowing us to reroute traffic in the event of failure on one route. We reduce our exposure to failures on the local loop by usually
locating our points of presence within range of service providers switching equipment and purchasing connectivity from multiple
providers. To further maximize our network uptime, we are almost completely connected on fiber optic cables to the switching points
of our service providers from our POPs.
In addition to a fundamental emphasis on
reliability and security, our network design philosophy has focused on compatibility, interoperability, scalability and quality
of service. We use Internet protocol with Multi Protocol Label Switching, or MPLS, to transmit data, thus ensuring that our network
is completely interoperable with other networks and systems and that we may port any application onto our network. The modular
design of our network is fully scalable, allowing us to expand without changing the network design or architecture.
Network Operations Center: We maintain
a network operation center located in Chennai (Madras) and a backup facility in Mumbai (Bombay). The Chennai facility houses our
central network servers as well as our network staff who monitors network traffic, service quality and equipment at all our points
of presence to ensure a reliable Internet service. These operation centers are staffed 24-hours-a-day, seven-days-a-week. We have
backup power generators and software and hardware systems designed to prevent network downtime in the event of system failures.
In the future, we may add additional facilities to supplement or add redundancy to our current network monitoring capability.
Data Center Infrastructure. We operate
seven Internet Data Centers, four in Mumbai, one each at Chennai and Bangalore and the latest one at Noida near Delhi. We offer
managed hosting, security and infrastructure management services from these facilities. These data centers are completely integrated
with our IP / MPLS network which provides seamless connectivity for our customers from their premise to their applications hosted
in the Data Centers. The Data Centers conform to the concurrently maintainable standards to cater to the security consideration
of our customer servers. We intend to invest in additional Data Centers, and are currently building a world class data center at
Hyderabad.
Competition
Given our wide spread of services, our
competition is also long and varied. As the markets in India for corporate network/data services, Internet access services and
online content develop and expand, we will continue to see the entry of newer competitors and those with deeper pockets.
Individually, we will see competition intensify
from established players like Reliance, TATA Communications and Bharti for telecom services, Ctrl S, Reliance and Net Magic for
Data Centers, proprietary leaders like IBM and localized players like Ramco for Cloud services, traditional software majors like
Infosys, HP, Wipro and TCS for Applications Integration services and large entities like Reliance and TCS for our Technology Integration
services.
Item 3. Management’s Discussion
and Analysis of Financial Condition and Results of Operations.
The following discussion of the financial
condition and results of operations of our Company should be read in conjunction with the Unaudited Condensed Consolidated Interim
Financial Statements and the related condensed notes included elsewhere in this report and the audited financial statements and
the related notes contained in our Annual Report on Form 20-F for the fiscal year ended March 31, 2019. This discussion contains
forward-looking statements that involve risks and uncertainties. For additional information regarding these risks and uncertainties,
please see the section in our Annual report captioned “Risk Factors.”
Overview
Sify is among the largest integrated ICT
solutions and services companies in India, offering end-to-end solutions with a comprehensive range of products delivered over
a common data network infrastructure reaching more than 1650 cities and towns in India. This telecom network today connects 49
client Data Centers across India, including Sify’s own 7 Data Centers across the cities of Chennai, Mumbai, Delhi and Bengaluru.
Sify is ISO 9001:2008 certified for enterprise
sales, provisioning, support and customer relationship management of ICT solutions and services including VPN, network, voice,
Data Center hosting, integration services, security services and managed services. Sify has been certified in SSAE16 - SOC2 Type
II for Cloud Infrastructure. Sify has licenses to operate NLD (National Long Distance) and ILD (International Long Distance) services
and offers VoIP backhaul for international carriers. With the Sify cable landing station and partnerships with submarine cable
companies globally, Sify is present in almost all the spheres of the ICT eco system.
The company has an expanding base of managed
services customers, both in India and overseas, and is India’s first enterprise managed services provider to launch a Security
Operations Center (SOC) to deliver managed security services. Sify develops applications and offers services to improve business
efficiencies of its current and prospective client bases. Sify also offers services in the specialized domains of eLearning, both
in India and globally. The business also operates two of the most popular Internet portals in India, Sify.com and Samachar.com.
Telecom services
These
primarily consist of network service which addresses the domestic connectivity needs of Indian enterprises and international inward
and outward connectivity needs of international enterprises. We do this by leveraging our national Tier 1 IPv6 network infrastructure.
The services include a comprehensive range of Internet protocol based Virtual Private Network, offerings, including intranets,
extranets and remote access applications to both small and large corporate customers. There is a strong focus on industry verticals
such as IT/ITES (IT enabled services), banking and financial services industry (BFSI), Government, manufacturing, pharmaceutical
and FMCG. We were one of the first service providers in India to provide MPLS-enabled IPVPN’s on our entire network. We have
entered into a strategic partnership with leading Telcos for providing last mile connectivity to customers. Our entire network
is MPLS enabled with built in redundancy with world class design and service standards. We have built a stack of managed services
for our network customers, like managed WLAN, managed DDoS and security solutions. We have built a carrier neutral internet exchange
in India in partnership with Amsterdam Internet Exchange.
Our cable landing station
and our investment in submarine cable consortium are our other assets that we extend to our International partners for their international
inward and outward connectivity needs. Our cable landing station currently lands 2 major submarine cables; namely Gulf Bridge International
(GBI) and the Middle Eastern and North African cable (MENA).
Data Center services
We operate 7 Data Centers
of which four are located in Mumbai (Bombay) and one each at Noida (UP), Chennai (Madras) and Bengaluru, which are designed to
act as reliable, secure and scalable facilities to host mission-critical applications. We offer co-location services which allow
customers to bring in their own rack-mountable servers and house them in shared racks or hire complete racks, and even rent ‘secure
cages’ at the hosting facility as per their application requirements. We also offer a wide variety of managed hosting services,
such as storage, back-up and restoration, performance monitoring and reporting hardware and software procurement and configuration
and network configuration.
Cloud and managed services
Our
on-demand hosting (cloud) services offers end-customers with the best in class solutions to enterprises. We have joined the global
program of two world majors and offer their suite of on-demand cloud services giving them the option to “rent” software
licenses on a monthly “pay as you go” basis. This model is aimed at helping Indian companies, both large and small,
to safely tap computing capacity inside and outside their firewalls to help ensure quality of service for any application they
want to run.
Our
remote and onsite infrastructure managed services provides continuous proactive management and support of customer operating systems,
applications and database layers through deploying specialized monitoring tools and infrastructure experts to ensure that our customers’
infrastructure is performing optimally.
Our innovative SLA driven
utility-based On-Demand storage service manages the complete lifecycle of enterprise information, from its inception to its final
disposal. The fully managed, utility based, On-Demand, scalable storage platform is powered by global major in Data Systems. Sify's
On-Demand storage service reduces the complexities of deploying and managing multiple storage tiers, and lowers operational costs
by automating management with flexible need based pricing.
Technology Integration services
Our
mix of solutions give us the scope to band and extend any or all of these services in multiple formats and scales for client who
wish to rest their entire infrastructure with us. Clients get the benefit of our accumulated knowledge base and technical expertise
across all points of the ICT spectrum. In terms of cost, these translate into better cost efficiencies. In terms of monitoring,
the client need to interact with a singular service provider saving them both implementation and documentation efforts.
Applications Integration services
Our
range of web-applications includes sales force automation, supply chain management, intranet and extranets, workflow engine and
knowledge management systems and from practices of Industry standard applications like SAP, Oracle and Microsoft.
Our
applications integration services operates two of India’s biggest online portals, www.sify.com and www.samachar.com,
that function as principal entry points and gateway for accessing the Internet by providing useful web-related services and links.
We also offer related content sites specifically tailored to Indian interests worldwide and launched the services on mobile applications.
Sify.com
provides a gateway to the Internet by offering communication and search tools such as email, chat, travel, online portfolio management
and channels for personal finance, astrology, lifestyle, shopping, movies, sports and news.
We offer value-added
services to organizations such as website design, development, content management, Online assessment tools, search engine optimization,
including domain name management, secure socket layer (SSL) certificate for websites, and server space in required operating system
and database. We provide state of the art messaging and collaboration services and solutions such as e-mail servers, LAN mail solutions,
anti-spam appliances, bulk mail services, instant messaging, and also offer solutions and services to enable data and access security
over the Internet. We also provide infrastructure-based services on demand, including on-line testing engine and network management,
Digital certification services, On-line testing services include test management software, required servers and proctored examination
facilities at Sify’s franchisee points. On-line exam engine offered allows a secure and flexible way of conducting examinations
involving a wide range of question patterns.
Revenue
Telecom services
These
primarily include revenue from connectivity services, NLD/ILD services and to a lesser extent, revenues from the installation of
the connectivity link. In certain cases, these elements are sold as a package consisting of all or some of the elements. We sell
hardware and software purchased from third party vendors to our high value corporate clients. Our connectivity services include
IPVPN services, Internet connectivity and last mile connectivity (predominantly through wireless). We provide these services for
a fixed period of time at a fixed rate regardless of usage, with the rate for the services determined based on the type of service
and capacity provided, scope of the engagement and the Service Level Agreement, or SLA. We provide NLD (National Long Distance)
and ILD (International Long Distance) services and carry voice traffic for Inter-connect Operators. Revenue is recognized based
upon metered call units of voice traffic terminated on our network. The Company offers retail voice services in partnership with
Skype Communications, S.a.r.l. This service comprises sale of voice credits and subscriptions.
Data Center services
Revenue from Data Center
services include revenue from co-location of space, racks, caged racks and on usage of power from large contracts. The contracts
are mainly fixed rate for a period of time based on the space or the racks used and usage revenue is based on consumption of power
on large contracts.
Cloud and managed services
Revenue from Cloud and managed services
are primarily from Cloud and on demand storage, domestic managed services and international managed services. Contracts from Cloud
and on demand storage are primarily fixed and for a period of time. Revenues from domestic and international managed services are
comprised of value added services, operations and maintenance of projects and from remote infrastructure management. Contracts
from this segment are fixed and could also be based on Time and Material (T&M).
Technology integration services (TIS)
Revenue from TIS are comprised of DC build
services, network integration and security services. Contracts under TIS are based on completion of projects and could also be
based on T&M.
Applications integration services
Revenue from applications integration services
are comprised of Online Assessment, Web development, supply chain solutions, content management, digital certification services
and from practices on industry standard applications like SAP, Oracle and Microsoft. Contracts are primarily fixed in nature for
a period of time and also could be based on T&M.
Expenses
Cost of goods sold
and services rendered
Telecom services
Cost of goods sold and
services rendered for the corporate network/data services division consists of telecommunications costs necessary to provide services
and cost of goods in respect of communication hardware and security services sold, commission paid to franchisees and cable television
operators, the cost of voice termination for voice and VoIP services and other direct costs. Telecommunications costs include the
costs of international bandwidth procured from TELCOs and are required for access to the Internet, providing leased lines to our
points of presence, the costs of using third-party networks pursuant to service agreements, leased line costs and costs towards
spectrum fees payable to the Wireless Planning Commission or WPC for provision of spectrum to enable connectivity to be provided
on the wireless mode for the last mile. Other costs include cost incurred towards our Annual Maintenance Contract (AMC) and the
cost of installation in connectivity business. In addition, the Government of India levies an annual license fee of 8% of the adjusted
gross revenue generated from IP-VPN services and voice services under the Unified license.
Data Center
services
Cost
of goods sold and services rendered for the Data Center services consists of cost of electrical power consumed, cost of rental
servers offered to customers and cost of licences used to provide services.
Cloud and managed
services
Cost
of goods sold and services rendered for the Cloud and managed services consists of cost of licences in providing services, cost
of billable resources in case of international managed services, third party professionals engaged in providing services, associate
costs of the delivery teams and cost of operations of DC build BOT projects.
Technology
integration services
Cost
of goods sold and services rendered consists of cost of hardware and software supplied for DC build projects, cost of security
hardware and software supplied and cost of hardware and software procured for System integration projects .
Applications
integration services
Cost
of goods sold and services rendered consists of professionals charges payable to domain specialists and subject matter experts,
cost of billable associates of e-learning business, cost of digital certificates and platform usage, cost of operating in third
party facility for online assessment including invigilator costs and cost of procuring and managing content for the websites and
other direct costs for the revenue streams.
Selling, general and administrative
expenses
Selling, general and
administrative expenses consists of salaries and commissions for sales and marketing personnel, salaries and related costs for
executive, financial and administrative personnel, sales, marketing, advertising and other brand building costs, travel costs,
and occupancy and overhead costs.
Depreciation and amortization
We depreciate our tangible assets on a
straight-line basis over the useful life of assets, ranging from three to eight years and, in the case of buildings, 28 years.
Undersea cable capacity is amortised over a period of 12 years and other intangible assets with finite lives are amortised over
three to five years.
Impairment
The carrying amounts of the Group’s
non-financial assets, other than inventories and deferred tax assets are reviewed at each reporting date to determine whether there
is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. For goodwill,
the recoverable amount is estimated each year at December 31.
The recoverable amount of an asset or cash-generating
unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future
cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the
time value of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested individually
are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent
of the cash inflows of other assets or group of assets (the “cash-generating unit”). The goodwill acquired in a business
combination, for the purpose of impairment testing, is allocated to cash-generating units that are expected to benefit from the
synergies of the combination. Corporate assets for the purpose of impairment testing are allocated to the cash generating units
on a reasonable and consistent basis.
An impairment loss is recognized if the
carrying amount of an asset or its cash-generating unit exceeds its estimated recoverable amount. Impairment losses are recognized
in profit or loss. Impairment losses recognized in respect of cash-generating units are allocated first to reduce the carrying
amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit or group of
units on a pro rata basis.
Inventories
Inventories comprising traded hardware
and software are measured at the lower of cost (determined using first-in first-out principle) and net realizable value. Net realizable
value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.
Deferred tax
Deferred tax is recognized using the balance
sheet method, providing for temporary differences between the carrying amount of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes. Deferred tax is not recognized for the following temporary differences: the
initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting
nor taxable profit or loss, and differences relating to investments in subsidiaries and associates to the extent that it is probable
that they will not reverse in the foreseeable future. In addition, deferred tax is not recognized for taxable temporary differences
arising on the initial recognition of goodwill, as the same is not deductible for tax purposes. Deferred tax is measured at the
tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted
or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable
right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same
taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their
tax assets and liabilities will be realized simultaneously. Deferred Tax assets in respect of deductible temporary differences
are recognised only to the extent of deferred tax liabilities on taxable temporary differences. MAT credit entitlement has been
recognised as a deferred Tax asset.
Deferred tax arising on investments in
subsidiaries and associates is recognized except where the Group is able to control the reversal of the temporary difference and
it is probable that the temporary difference will not reverse in the foreseeable future. Deferred taxation arising on the temporary
differences arising out of undistributed earnings of the equity method accounted investee is recorded based on the management's
intention. If the intention is to realize the undistributed earnings through sale, deferred tax is measured at the capital gains
tax rates that are expected to be applied to temporary differences when they reverse. However, when the intention is to realize
the undistributed earnings through dividend, the Group’s share of the income and expenses of the equity method accounted
investee is recorded in the statement of income, after considering any taxes on dividend payable by the equity method accounted
investee and no deferred tax is set up in the Group's books as the tax liability is not with the group.
Results of Operations
The following table sets forth certain financial
information as a percentage of revenues:
|
|
Quarter ended
September
|
|
|
Half year ended
September
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
|
|
%
|
|
|
%
|
|
|
%
|
|
|
%
|
|
Revenues
|
|
|
100
|
|
|
|
100
|
|
|
|
100
|
|
|
|
100
|
|
Cost of goods sold and services rendered
|
|
|
62
|
|
|
|
63
|
|
|
|
63
|
|
|
|
62
|
|
Other income/(expense)
|
|
|
0
|
|
|
|
1
|
|
|
|
0
|
|
|
|
1
|
|
Selling, general and administrative expenses
|
|
|
20
|
|
|
|
24
|
|
|
|
20
|
|
|
|
24
|
|
Depreciation and amortization expenses
|
|
|
9
|
|
|
|
7
|
|
|
|
9
|
|
|
|
8
|
|
Profit from operating activities
|
|
|
9
|
|
|
|
8
|
|
|
|
8
|
|
|
|
7
|
|
Finance income
|
|
|
0
|
|
|
|
0
|
|
|
|
1
|
|
|
|
0
|
|
Finance expenses
|
|
|
5
|
|
|
|
3
|
|
|
|
4
|
|
|
|
3
|
|
Net finance income/(expense)
|
|
|
(5
|
)
|
|
|
(3
|
)
|
|
|
(3
|
)
|
|
|
(3
|
)
|
Income tax benefit / (expense)
|
|
|
(2
|
)
|
|
|
0
|
|
|
|
(2
|
)
|
|
|
0
|
|
Net profit for the year
|
|
|
3
|
|
|
|
5
|
|
|
|
4
|
|
|
|
4
|
|
Results of quarter ended September 30,
2019 compared to quarter ended September 30, 2018
The growth in our revenues in fiscal
2019 from fiscal 2018 is given below:
|
|
|
|
|
|
|
|
|
|
|
(Rupees in million)
|
|
|
|
Quarter ended
September 30,
2019
|
|
|
Quarter ended
September 30,
2018
|
|
|
Change
|
|
|
% Change
|
|
Revenues
|
|
|
5,807
|
|
|
|
5,509
|
|
|
|
298
|
|
|
|
5
|
%
|
We have achieved a revenue of ₹ 5,807
Million ($82 Million), an increase of ₹ 298 Million ($4 Million) over the same quarter previous year. The increase is primarily
contributed by revenue from Telecom services, Data Center Services, and Cloud and managed services
The revenue by operating segments is as
follows:
|
|
|
|
|
(Rupees in million)
|
|
|
|
|
|
|
Revenue
|
|
|
Percentage of revenue
|
|
|
|
|
|
|
Quarter ended
September
2019
|
|
|
Quarter ended
September
2018
|
|
|
Quarter ended
September
2019
|
|
|
Quarter ended
September
2018
|
|
|
Growth
|
|
Telecom Services
|
|
|
3,114
|
|
|
|
2,695
|
|
|
|
54
|
%
|
|
|
49
|
%
|
|
|
16
|
%
|
Data Center Services
|
|
|
927
|
|
|
|
786
|
|
|
|
16
|
%
|
|
|
14
|
%
|
|
|
18
|
%
|
Cloud and Managed Services
|
|
|
458
|
|
|
|
351
|
|
|
|
8
|
%
|
|
|
6
|
%
|
|
|
30
|
%
|
Technology Integration Services
|
|
|
757
|
|
|
|
1,112
|
|
|
|
13
|
%
|
|
|
20
|
%
|
|
|
-32
|
%
|
Applications Integration Services
|
|
|
551
|
|
|
|
565
|
|
|
|
9
|
%
|
|
|
11
|
%
|
|
|
-3
|
%
|
Total
|
|
|
5,807
|
|
|
|
5,509
|
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
5
|
%
|
Revenue from telecom service increased
by ₹419 million ($5.93 million) primarily due to (i) increase in revenue of ₹291 million ($4.12 million) from connectivity
services, contributed by a net increase in number of links with existing and new customer engagements and (ii) increase in revenue
of ₹128 million ($1.81 million) in voice services, which is attributable to increase in revenue from ILD & hubbing business
by ₹147 million ($2.07 million) due to volume increase, and this increase is offset by a decrease in revenue of ₹19
million ($0.26 million) from retail voice business.
Revenue from Data Center services has increased
by ₹ 141 Million ($2.00Million) on account of new contracts and higher capacity utilisation by existing customers.
Revenue from Cloud and managed services
has increased by ₹107 Million ($1.51 Million) due to increase in revenue of ₹22 Million ($0.32 Million) from Cloud
services, contributed by new customer engagements and infrastructure managed services by ₹10 Million ($0.14 Million) due
to customer churn and increase in revenue from domestic managed services by ₹75 Million ($1.05 Million).
Revenue from technology integration services
has decreased by ₹ 355 Million ($5.02 Million). This is on account of closure of large projects in systems integration and
security services executed last year.
Revenue from applications integration services
has decreased by ₹ 14 Million ($0.20 Million), represented by (i) an increase in revenue from online examination by ₹
183 Million ($2.59 Million), (ii) an increase in revenue from eLearninig services by ₹ 26 Million ($0.37 Million), (iii)
an increase in revenue from Forum business by ₹ 9 Million ($0.12 Million). These increases in revenue are offset by a decrease
(i) in revenue from Web Services by ₹17 Million ($0.24 Million), (ii) in revenue from sale of licenses by ₹ 29 Million
($0.41 Million), and (iii) in revenue from digital certification services by ₹186 Million ($2.63 Million).
Other income
The change in other income is as follows:
|
|
(Rupees in million)
|
|
|
Quarter ended
September
30,
2019
|
|
|
Quarter ended
September
30,
2018
|
|
|
Change
|
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income
|
|
|
15
|
|
|
|
67
|
|
|
|
(52
|
)
|
|
|
(78
|
)%
|
Other income has decreased by ₹ 52
million ($0.74 Million). The decrease is primarily on account of decrease in rental income by ₹ 21 million ($0.61 Million)
and decrease in other miscellaneous income during the period by ₹ 34 million ($0.49 Million) compared to the same period
in the previous year.
Cost of goods sold and services rendered
(COGS)
Our cost of goods sold and services rendered
is set forth in the following table:
|
|
(Rupees in million)
|
|
|
Quarter
ended
September
30, 2019
|
|
|
Quarter
ended
September
30, 2018
|
|
|
Change
|
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Telecom services
|
|
|
1,994
|
|
|
|
1,739
|
|
|
|
255
|
|
|
|
15
|
%
|
Data Center Services
|
|
|
390
|
|
|
|
356
|
|
|
|
34
|
|
|
|
10
|
%
|
Cloud and Managed Services
|
|
|
209
|
|
|
|
137
|
|
|
|
72
|
|
|
|
53
|
%
|
Technology Integration Services
|
|
|
619
|
|
|
|
962
|
|
|
|
(343
|
)
|
|
|
-36
|
%
|
Applications Integration Services
|
|
|
365
|
|
|
|
270
|
|
|
|
95
|
|
|
|
35
|
%
|
Total
|
|
|
3,577
|
|
|
|
3,464
|
|
|
|
113
|
|
|
|
3
|
%
|
The cost of goods sold increased by 3%
on overall basis, the movement in COGS is explained in detail below:
|
|
(Rupees in million)
|
|
|
Quarter
Ended
September
30, 2019
|
|
|
Quarter
Ended
September
30, 2018
|
|
|
Change
|
|
|
% Change
|
|
Network Costs
|
|
|
1,584
|
|
|
|
1,359
|
|
|
|
225
|
|
|
|
17
|
%
|
Revenue share
|
|
|
176
|
|
|
|
159
|
|
|
|
17
|
|
|
|
10
|
%
|
Cost of Hardware / Software
|
|
|
785
|
|
|
|
1,081
|
|
|
|
-296
|
|
|
|
-27
|
%
|
Power costs
|
|
|
374
|
|
|
|
349
|
|
|
|
25
|
|
|
|
7
|
%
|
Direct Resources costs
|
|
|
396
|
|
|
|
347
|
|
|
|
49
|
|
|
|
14
|
%
|
Other direct costs
|
|
|
262
|
|
|
|
169
|
|
|
|
93
|
|
|
|
54
|
%
|
Total
|
|
|
3,577
|
|
|
|
3,464
|
|
|
|
113
|
|
|
|
3
|
%
|
Network cost comprises cost of bandwidth
leased out from TELCOS, Inter connect charges and IP termination costs payable to carriers. Bandwidth cost increased by ₹51
Million ($0.73 Million) due to capacity increase and increase in links, and IP termination costs increased by ₹174 Million
($2.46 Million) on account of increase in minutes.
Revenue share cost comprises of revenue
share payable to DOT on ILD, NLD and other services. Increase in revenue share is on account of increase in revenue from licensed
services.
The decrease in cost of hardware and software
expenses is on account of closure of large projects in systems integration and security services executed last year
Power costs comprises of electricity cost
incurred in our data center. Increase in the cost is on account of increase in power utilisation by customers.
Direct resources costs are comprised of
(i) the cost of resources deployed on the network infrastructure delivery (iii) resources involved in delivery of application services
(ii) cost of billable resources associated with the eLearning and infrastructure managed services. These resource costs have increased
by ₹49 Million ($0.70 Million) on account of new recruitments.
Other direct costs are comprised of link
implementation and maintenance charges for the telecom services, onetime costs for data center services for on boarding new customers,
platform costs for Cloud storage, direct cost of application services, digital certificate platform costs, content costs, delivery
costs of application services, subject matter experts for international business. The increase in other direct costs are due to
(i) increase in platform costs for Cloud storage by ₹62 Million ($0.88 Million), (ii) increase in execution of online examination
project by ₹57 Million ($0.78 Million), (iii) marginal increase in other direct costs of the Data Center of ₹ 10 Million
($0.14 Million) and the above increase was partially offset by a decrease in maintenance charges of Telecom Services by ₹
36 Million ($0.51 Million)
We are continuously seeking cost efficiencies
and process optimization to maximize the return.
Selling, General and Administrative
expenses
Selling, general and administrative expenses
of the Company are set forth as follows:
|
|
(Rupees in million)
|
|
|
Quarter ended
September 30,
2019
|
|
|
Quarter ended
September 30,
2018
|
|
|
Change
|
|
|
Change (%)
|
|
Operating Expenses
|
|
|
275
|
|
|
|
270
|
|
|
|
5
|
|
|
|
2
|
%
|
Selling & Marketing Expenses
|
|
|
29
|
|
|
|
34
|
|
|
|
-5
|
|
|
|
-14
|
%
|
Associate Expenses
|
|
|
512
|
|
|
|
494
|
|
|
|
18
|
|
|
|
4
|
%
|
Other Indirect Expenses
|
|
|
239
|
|
|
|
265
|
|
|
|
-26
|
|
|
|
-10
|
%
|
Provision for doubtful debts and advances
|
|
|
115
|
|
|
|
210
|
|
|
|
-95
|
|
|
|
-45
|
%
|
Forex (gain) / loss
|
|
|
8
|
|
|
|
26
|
|
|
|
-18
|
|
|
|
-68
|
%
|
Total
|
|
|
1,178
|
|
|
|
1,299
|
|
|
|
-121
|
|
|
|
-9
|
%
|
Operating costs includes rental, repairs
and maintenance charges of our network operating centers, base stations and other co-location sites including the rent and maintenance
for our Data Centers. Operating costs increased marginally by ₹5 million on account of increase in repairs and maintenance
and network operating cost.
Selling and Marketing costs consist of,
selling commission payable to sales partners, discounts payable to customers, incentive to salesmen and marketing and promotion
costs. Selling & Marketing cost have decreased on account of reduction in advertisement costs and decrease in channel partner
commission.
Associate expenses, consists of the annual
cost of the employees who are part of the Sales and marketing function, Business development, General management and support services.
Associate expenses marginally increased by ₹18 million during the quarter compared to previous quarter.
Other Indirect expense consist of cost
of facilities, electricity charges incurred on facilities, travel cost, Legal charges, professional charges, communication and
others. The reduction in Indirect Expenses is due to cost optimisation.
Provision for Doubtful debts consists of
the charge on account of the provisions created during the year against doubtful debtors. The decrease in Provision for Doubtful
debts are on account of prudent provisioning of debtors.
Forex(gain)/Loss incurred is ₹8 million,
which is due to the forex rate fluctuation compared to the previous quarter.
Depreciation and amortization
Depreciation and amortization is set forth
in the table below:
|
|
(Rupees in million)
|
|
|
Quarter ended
September 30,
2019
|
|
|
Quarter ended
September 30,
2018
|
|
|
Change
|
|
|
% Change
|
|
Depreciation and amortization
|
|
|
527
|
|
|
|
384
|
|
|
|
143
|
|
|
|
37
|
%
|
As a percentage of carrying value
|
|
|
4
|
%
|
|
|
5
|
%
|
|
|
|
|
|
|
|
|
There increase in the depreciation due
to implementation of IFRS 16 Leases.
Profit from operating activities
|
|
(Rupees in million)
|
|
|
Quarter ended
September 30,
2019
|
|
|
Quarter ended
September 30,
2018
|
|
|
Change
|
|
|
% Change
|
|
Operating profit
|
|
|
541
|
|
|
|
428
|
|
|
|
113
|
|
|
|
26
|
%
|
As a percentage of revenue
|
|
|
9
|
%
|
|
|
8
|
%
|
|
|
|
|
|
|
|
|
Operating profit as a % has increased over
the previous year same quarter due to higher utilisation of assets and mix of revenue.
Finance income/expense
|
|
(Rupees in million)
|
|
|
Quarter ended
September 30,
2019
|
|
|
Quarter ended
September 30,
2018
|
|
|
Change
|
|
|
% Change
|
|
Finance Income
|
|
|
12
|
|
|
|
9
|
|
|
|
3
|
|
|
|
33
|
%
|
Finance expense
|
|
|
(273
|
)
|
|
|
(185
|
)
|
|
|
88
|
|
|
|
48
|
%
|
Net finance expense
|
|
|
(261
|
)
|
|
|
(176
|
)
|
|
|
85
|
|
|
|
48
|
%
|
The increase in finance income is due to
increase in Interest income from bank deposits. The increase in finance expenses is primarily on account of implementation of IFRS
16 Leases ₹57 Million ($0.80 Million) and partially on account of increase in borrowings demanded by increase in business
operations, resulting in increased finance expenses.
Net Profit
|
|
(Rupees in million)
|
|
|
Quarter ended
September 30,
2019
|
|
|
Quarter ended
September 30,
2018
|
|
|
Change
|
|
|
% Change
|
|
Net Profit
|
|
|
191
|
|
|
|
253
|
|
|
|
(62
|
)
|
|
|
25
|
%
|
As a percentage of revenue
|
|
|
3
|
%
|
|
|
5
|
%
|
|
|
|
|
|
|
|
|
Net profit as a % of revenue has decreased
over the previous year same quarter due to tax expenses of ₹ 89 Million ($1.26 Million) (previous period - Nil due to set-off
of carried forward losses till 2018-19).
Results
of half year ended September 30, 2019 compared to half year ended September 30, 2018
Revenues
The growth in our revenues in fiscal 2019
from fiscal 2018 is given below
|
|
(Rupees in million)
|
|
|
Half year ended
September 30,
2019
|
|
|
Half year ended
September 30,
2018
|
|
|
Change
|
|
|
% Change
|
|
Revenues
|
|
|
11,325
|
|
|
|
10,192
|
|
|
|
1,133
|
|
|
|
11
|
%
|
We have achieved a revenue of ₹ 11,325
Million ($160.22 Million), an increase of ₹ 1,133 Million ($16.02 Million) over same period previous year. The increase is
primarily contributed by revenue from Telecom services, Data Center Services, and Cloud and managed services
The revenue by operating segments is
as follows:
|
|
|
|
|
(Rupees in million)
|
|
|
|
|
|
|
Revenue
|
|
|
Percentage of revenue
|
|
|
|
|
|
|
Half year
ended September
30, 2019
|
|
|
Half year
ended September
30, 2018
|
|
|
Half year
ended September
30, 2019
|
|
|
Half year
ended September
30, 2018
|
|
|
Growth
|
|
Telecom Services
|
|
|
6,327
|
|
|
|
5,547
|
|
|
|
56
|
%
|
|
|
54
|
%
|
|
|
14
|
%
|
Data Center Services
|
|
|
1,746
|
|
|
|
1,510
|
|
|
|
15
|
%
|
|
|
15
|
%
|
|
|
16
|
%
|
Cloud and Managed Services
|
|
|
768
|
|
|
|
674
|
|
|
|
7
|
%
|
|
|
7
|
%
|
|
|
14
|
%
|
Technology Integration Services
|
|
|
1,597
|
|
|
|
1,544
|
|
|
|
14
|
%
|
|
|
15
|
%
|
|
|
3
|
%
|
Applications Integration Services
|
|
|
887
|
|
|
|
917
|
|
|
|
8
|
%
|
|
|
9
|
%
|
|
|
-3
|
%
|
Total
|
|
|
11,325
|
|
|
|
10,192
|
|
|
|
100
|
%
|
|
|
100
|
%
|
|
|
11
|
%
|
Revenue from telecom services has increased
by ₹780 million ($11.03 million) primarily due to increase in revenue of ₹525 million ($7.43 million) from connectivity
services, contributed to by a net increase in number of links with existing and new customer engagements and increase in revenue
of ₹255 million ($3.60 million) in voice services, which is attributable to increase in revenue from ILD & hubbing business
by ₹285 million ($4.03 million) due to volume increase, and this increase is offset by a decrease in revenue of ₹30
million ($0.42 million) from retail voice business.
Revenue from Data Center services has increased
by ₹ 236 Million ($3.34 Million) on account of new customer contracts and higher capacity utilisation by customers.
Revenue from Cloud and managed services
has increased by ₹94 Million ($1.33 Million) due to increase in domestic managed services by ₹170 Million ($2.41 Million)
and is partially offset by decrease in revenue from Cloud services ₹67 Million ($0.95 Million) due to reduction in new customer
engagements and decrease in revenue from infrastructure managed services by ₹9 Million ($0.13 Million) due to customer churn.
Revenue from technology integration services
has increased marginally by ₹ 53 Million ($0.75 Million). This is on account of one time projects in systems integration
and security services.
Revenue from applications integration services
has decreased by ₹ 30 Million ($0.42 Million), represented by (i) an increase in revenue from online examination by ₹
209 Million ($2.96 Million), (ii) an increase in revenue from eLearninig services by ₹ 38 Million ($0.53 Million), (iii)
an increase in revenue from Forum business by ₹ 5 Million ($0.07 Million). These increases in revenue are offset by a (i)decrease
in revenue from Web Services by ₹25 Million ($0.35 Million), (ii) decrease in revenue from sale of licenses by ₹ 43
Million ($0.61 Million), (iii) decrease in revenue from digital certification services by ₹210 Million ($2.97 Million) and
(iv) decrease in revenue from Content services by ₹4 Million ($0.05 Million).
Other income
The change in other income is as follows:
|
|
(Rupees in million)
|
|
|
Half year
ended
September
30, 2019
|
|
|
Half year
ended
September
30, 2018
|
|
|
Change
|
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income
|
|
|
44
|
|
|
|
100
|
|
|
|
(56
|
)
|
|
|
56
|
%
|
Other income has decreased by ₹ 56
million ($0.79 Million). The decrease is primarily on account of decrease in rental income by ₹ 43 million ($0.61 Million)
and decrease in other miscellaneous income during the period by ₹ 13 million ($0.18 Million) compared to the same period
in the previous year.
Cost of goods sold and services rendered
(COGS)
Our cost of goods sold and services rendered
is set forth in the following table:
|
|
(Rupees in million)
|
|
|
Half year
ended
September
30, 2019
|
|
|
Half year
ended
September
30, 2018
|
|
|
Change
|
|
|
% Change
|
|
Telecom services
|
|
|
4,073
|
|
|
|
3,384
|
|
|
|
689
|
|
|
|
20
|
%
|
Data Center Services
|
|
|
778
|
|
|
|
695
|
|
|
|
83
|
|
|
|
12
|
%
|
Cloud and Managed Services
|
|
|
383
|
|
|
|
248
|
|
|
|
135
|
|
|
|
54
|
%
|
Technology Integration Services
|
|
|
1,327
|
|
|
|
1,312
|
|
|
|
15
|
|
|
|
1
|
%
|
Applications Integration Services
|
|
|
610
|
|
|
|
642
|
|
|
|
(32
|
)
|
|
|
-5
|
%
|
Total
|
|
|
7,171
|
|
|
|
6,281
|
|
|
|
890
|
|
|
|
14
|
%
|
The cost of goods sold has increased by
14% on overall basis; the movement in COGS is explained in detail below:
|
|
(Rupees in million)
|
|
|
Half year
ended
September
30, 2019
|
|
|
Half year
ended
September
30, 2018
|
|
|
Change
|
|
|
% Change
|
|
Network Costs
|
|
|
3,301
|
|
|
|
2,629
|
|
|
|
672
|
|
|
|
26
|
%
|
Revenue share
|
|
|
342
|
|
|
|
315
|
|
|
|
27
|
|
|
|
9
|
%
|
Cost of Hardware / Software
|
|
|
1,504
|
|
|
|
1,542
|
|
|
|
(38
|
)
|
|
|
-2
|
%
|
Power costs
|
|
|
740
|
|
|
|
691
|
|
|
|
49
|
|
|
|
7
|
%
|
Direct Resources costs
|
|
|
765
|
|
|
|
643
|
|
|
|
122
|
|
|
|
19
|
%
|
Other direct costs
|
|
|
519
|
|
|
|
461
|
|
|
|
58
|
|
|
|
13
|
%
|
Total
|
|
|
7,171
|
|
|
|
6,281
|
|
|
|
890
|
|
|
|
14
|
%
|
Network costs are comprised of the cost
of bandwidth leased out from TELCOS, Inter connect charges and IP termination costs payable to carriers. Bandwidth costs increased
by ₹ 295 Million ($4.17 Million) due to capacity upgradation and newer links; Inter Connect charges and IP termination costs
increased by ₹ 377 Million ($1.20 Million) on account of increase in minutes.
Revenue share costs are comprised of revenue
share payable to DOT on ILD, NLD and other services. The increase in revenue share is on account of increase in revenue from licensed
services.
The decrease in cost of hardware and software
expenses is on account of closure of large projects in systems integration and security services executed last year.
Power costs are comprised of electricity
costs incurred in our Data center. Increase in the cost is on account of increase in utilisation by customers.
Direct resources costs comprises of (i)
the cost of resources deployed on the Network Infrastructure Delivery and resources involved in delivery of application services
and (ii) cost of billable resources associated with the eLearning and Infrastructure Managed services. These resource costs have
increased by ₹122 Million ($ 1.72 Million) compared to previous period on account of new recruitments.
Other direct costs, comprises of link implementation
and maintenance charges for the telecom services, onetime costs for Data Center services for on boarding new customers, platform
costs for Cloud storage, direct costs of application services, digital certificate platform costs, content cost, delivery costs
of application services, subject matter experts for international business. The increase in other direct costs are due to (i) increase
in platform costs for Cloud storage by ₹130 Million ($1.84 Million) and (ii) increase in other direct costs of the Data Center
by ₹27 Million ($0.38 Million) and the above increase was partially offset by a (i) decrease in maintenance charges of Telecom
Services by ₹95 Million ($1.34 Million) and (ii) marginal decrease in execution of online examination project by ₹5
Million ($0.07 Million),
We seek to continue in the path of achieving
cost efficiencies and process optimization to maximize the return.
Selling, General and Administrative
expenses
Selling, General and Administrative expenses
of the Company are set forth as follows:
|
|
(Rupees in million)
|
|
|
Half year
ended
September
30, 2019
|
|
|
Half year
ended
September
30, 2018
|
|
|
Change
|
|
|
Change (%)
|
|
Operating Expenses
|
|
|
546
|
|
|
|
525
|
|
|
|
21
|
|
|
|
4
|
%
|
Selling & Marketing Expenses
|
|
|
68
|
|
|
|
95
|
|
|
|
(27
|
)
|
|
|
-29
|
%
|
Associate Expenses
|
|
|
982
|
|
|
|
989
|
|
|
|
(7
|
)
|
|
|
-1
|
%
|
Other Indirect Expenses
|
|
|
448
|
|
|
|
509
|
|
|
|
(61
|
)
|
|
|
-12
|
%
|
Provision for doubtful debts and advances
|
|
|
175
|
|
|
|
280
|
|
|
|
(105
|
)
|
|
|
-38
|
%
|
Forex (gain) / loss
|
|
|
20
|
|
|
|
79
|
|
|
|
(59
|
)
|
|
|
-74
|
%
|
Total
|
|
|
2,239
|
|
|
|
2,477
|
|
|
|
(238
|
)
|
|
|
-10
|
%
|
Operating costs include rental, repairs
and maintenance charges of our network operating centers, base stations and other co-location sites including the rent and maintenance
for our Data Centers. Operating costs increased by ₹21 million primarily on account of an increase in repairs and maintenance
and network operating cost.
Selling and marketing costs consist of
selling commission payable to sales partners, discounts payable to customers, incentives to salesmen and marketing and promotion
costs. Selling & marketing costs have decreased on account of cost optimisation in advertisement and marketing costs.
Associate expenses consist of the annual
cost of the employees who are part of the sales and marketing function, business development, general management and support services.
Associate expenses remained flat compared to previous half year due to churn in the number of associates.
Other indirect expenses consist of cost
of facilities, electricity charges incurred on facilities, travel cost, legal charges , professional charges, communication and
others. There have been a reduction in other indirect costs by ₹61 million due to cost optimisation.
Provision for doubtful debts consists of
the charge on account of the provisions created during the period against doubtful debtors. The decrease in provision for doubtful
debts is on account of prudent provisioning of debtors.
Forex(gain)/ loss incurred is ₹20
million, which is due to the forex rate fluctuation compared to the previous quarter.
Depreciation and amortization
Depreciation and amortization is set forth
in the table below:
|
|
(Rupees in million)
|
|
|
Half year
ended
September
30, 2019
|
|
|
Half year
ended
September
30, 2018
|
|
|
Change
|
|
|
% Change
|
|
Depreciation and amortization
|
|
|
1034
|
|
|
|
771
|
|
|
|
263
|
|
|
|
34
|
%
|
As a percentage of carrying value
|
|
|
7
|
%
|
|
|
10
|
%
|
|
|
|
|
|
|
|
|
The increase in depreciation is primarily
on account of implementation of IFRS 16 Leases to the extent of ₹222 Million ($3.14 Million) and partially due to capitalisation
of other fixed assets during the period.
Profit from operating activities
|
|
(Rupees in million)
|
|
|
Half year
ended
September
30, 2019
|
|
|
Half year
ended
September
30, 2018
|
|
|
Change
|
|
|
% Change
|
|
Operating profit
|
|
|
924
|
|
|
|
763
|
|
|
|
161
|
|
|
|
21
|
%
|
As a percentage of revenue
|
|
|
8
|
%
|
|
|
7
|
%
|
|
|
|
|
|
|
|
|
Operating profit as a % has increased over
the previous year same period due to higher utilisation of assets and mix of revenue.
Finance income/expense
|
|
(Rupees in million)
|
|
|
Half year
ended
September
30, 2019
|
|
|
Half year
ended
September
30, 2018
|
|
|
Change
|
|
|
% Change
|
|
Finance Income
|
|
|
168
|
|
|
|
23
|
|
|
|
145
|
|
|
|
630
|
%
|
Finance expense
|
|
|
(493
|
)
|
|
|
(332
|
)
|
|
|
(161
|
)
|
|
|
48
|
%
|
Net finance expense
|
|
|
(324
|
)
|
|
|
(309
|
)
|
|
|
(15
|
)
|
|
|
5
|
%
|
The increase in finance income is majorly
due to receipt of interest on income tax refund during the period ₹
146 million ($ 2.06 million) whereas previous year interest on income tax refund was only to the extent of ₹
8 million ($ 0.11 million), Interest income from bank deposits remained flat in comparison with previous period . The increase
in finance expenses is majorly on account of implementation of IFRS 16 Leases by ₹79 Million ($1.12 Million) and on account
of increase in borrowings demanded by increase in business operations, resulting in increased finance expenses.
Net Profit
|
|
(Rupees in million)
|
|
|
Half year
ended
September
30, 2019
|
|
|
Half year
ended
September
30, 2018
|
|
|
Change
|
|
|
% Change
|
|
Net Profit
|
|
|
407
|
|
|
|
454
|
|
|
|
(47
|
)
|
|
|
10
|
%
|
As a percentage of revenue
|
|
|
4
|
%
|
|
|
4
|
%
|
|
|
|
|
|
|
|
|
Net profit as a % of revenue has decreased
over the previous year same period due to tax expenses of ₹ 193 Million ($2.73 Million) (previous period - Nil due to set-off
of carried forward losses till 2018-19).
Liquidity and Capital Resources
We have financed our operations largely
through cash generated from operations, equity issuance and bank borrowings. Our liquidity requirements are for meeting working
capital needs and capital expenditure required to upgrade and maintain our existing infrastructure.
The following table summarises our cash
flows for periods presented:
|
|
Half year
Ended
September
30, 2019
|
|
|
Half year
ended
September
30, 2018
|
|
|
Half year
Ended
September
30, 2019
|
|
|
|
₹ In million
|
|
|
₹ in million
|
|
|
US $ in million
|
|
Net cash from / (used in) operating activities
|
|
|
1,995
|
|
|
|
563
|
|
|
|
28
|
|
Net cash from / (used in) investing activities
|
|
|
(2,230
|
)
|
|
|
(1581
|
)
|
|
|
(32
|
)
|
Net cash from / (used in) financing activities
|
|
|
(71
|
)
|
|
|
(22
|
)
|
|
|
(1
|
)
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
0
|
|
|
|
8
|
|
|
|
0
|
|
Net increase / (decrease) in cash and cash equivalents
|
|
|
(306
|
)
|
|
|
(1040
|
)
|
|
|
(4
|
)
|
As at September 30, 2019 and 2018 we had
working capital of ₹ 755 million and ₹ 2,031 million which includes cash and cash equivalents of ₹ 389 million
and ₹ 865 million (negative) respectively. Our working capital net of cash and cash equivalents is ₹ 366 million and
₹ 2,896 million as at September 30, 2019 and 2018. We believe that cash from operations, existing lines of credit and capital
availability from our promotor group, we have sufficient resources to meet our liquidity requirements.
Our short term borrowings to finance working
capital requirements are primarily financed by cash credit facilities with banks. Borrowings for capital expenditures are financed
through capital leases and long term loans. We have foreign currency demand loans which carry lower interest rates compared to
Indian Rupee loans, but are subject to exchange fluctuations, due to which there could be an adverse impact on cash outflows.
On October 22, 2010, the company entered
into a subscription agreement with Mr. Ananda Raju Vegesna, acting as representative (the “Representative”) of the
purchasers in connection with the offering. Pursuant to the terms of this subscription agreement, the company issued and allotted
125,000,000 equity shares to an entity affiliated and controlled by Mr. Raju Vegesna, our CEO, Chairman and Managing Director.
In accordance with Indian law, the purchase price is to be paid at such time as determined by Board of Directors of the company.
During the fiscal year 2019, the Company has received an aggregate of ₹900 million in connection with this private placement,
resulting in an aggregate of ₹ 4,000 million received till date. During the fiscal year 2019, all 125,000,000 shares were
fully paid.
We have borrowings of ₹ 8,412 million
as of September 30, 2019 out of which ₹ 4,890 million will be repaid within a period of 12 months. Interest outflow on existing
borrowings for next year is expected to be ₹ 511 million. We have a utilized working capital facility of ₹ 2,636 million
out of limit of ₹ 2,750 million as on September 30, 2019. We have an unutilized funded limit of ₹ 114 as on September
30, 2019.
Our ongoing working capital requirements
are significantly affected by the profitability of our operations and we continue to periodically evaluate existing and new sources
of liquidity and financing. We are taking steps to improve the cash position to meet our currently known requirements at least
over the next twelve months. In light of the highly dynamic nature of our business, however, we cannot assure you that our capital
requirements and sources will not change significantly in the future.
Cash and cash equivalents:
Cash and cash equivalents comprise of ₹
901 million, ₹ 1,066 million, in bank accounts and ₹ 473 million, ₹ 400 million in the form of bank deposits
as of September 30, 2019 and 2018, respectively, out of which cash deposits in the form of margin money is restricted for use by
us amounting to ₹ 340 million and ₹ 269 million respectively. Balances in foreign currency amount to ₹165 million,
₹245 million as of September 30, 2019 and 2018, respectively.
Net cash generated from operating activities for the half year ended September 30, 2019 was ₹1,995
million ($28.23 million), ₹1,432 million ($ 20.26 million) lower than previous period. This is mainly attributable to cash
utilisation during the period, an increase in trade and other receivables of ₹ 1034 million ($ 14.63 million), increase in
tax expenses ₹193 million ($ 2.73 million), and an increase in contract assets by ₹5 million ($ 0.07 million) The
above utilisation is partially offset by a decrease in employee benefits by ₹ 22 million ($ 0.31 million), an increase in
trade and other payables by ₹ 131 million ($ 1.85 million), an increase in contract liabilities by ₹ 368 million ($
5.20 million) and decrease in inventories of ₹431 million ($ 6.10 million), decrease in deferred contract costs by ₹2
million ($ 0.03 million),.
Net cash generated from
operating activities for the half year ended September 30, 2018 was ₹563 million ($7.76 million), ₹ 434 million ($
5.98 million) lower than previous period. This is mainly attributable to cash utilisation during the period, an increase in trade
and other receivables of ₹ 1539 million ($ 21 million), an increase in inventories of ₹960 million ($ 13.23 million),
increase in other assets by ₹ 267 million ($ 3.69 million), and an increase in contract assets and deferred contract costs
by ₹175 million ($ 2.41 million) and ₹15 million ($ 0.20 million) respectively. The above utilisation is partially
offset by a decrease in employee benefits by ₹ 13 million ($ 0.19 million), an increase in trade and other payables by ₹
1,461 million ($ 20.15 million), and an increase in contract liabilities by ₹ 507 million ($ 6.99 million).
Net cash used in investing
activities for the half year ended September 30, 2019 was ₹2,230 million ($31.55 million), primarily on account of additional
expenditures on property, plant and equipment amounting to ₹ 2,179 million ($ 30.83 million), additional expenditures on
intangibles amounting to ₹211 million ($ 2.99 million). The decrease was partly offset by increase in receipt of finance
income by ₹140 million ($ 1.98 million) primarily on account of receipt of interest on Income tax refund and increase in
proceeds from the sale of property, plant and equipment by ₹2 million ($ 0.03 million).
Net cash used in investing
activities for the half year ended September 30, 2018 was ₹1581 million ($21.79 million), primarily on account of additional
expenditures on property, plant and equipment amounting to ₹ 1,482 million ($ 20.43 million), additional expenditures on
intangibles amounting to ₹117 million ($ 1.61 million), and a decrease in receipt of finance income by ₹16 million
($ 0.22 million). The decrease was partly offset by ₹2 million ($ 0.33 million) proceeds from the sale of property, plant
and equipment.
Net cash used in financing
activities for the half year ended September 30, 2019 was ₹71 million ($1.01 million), This was mainly attributable to proceeds
from borrowings by ₹769 million ($10.89 million), proceeds from issue of shares (ESOP) by ₹2 million ($ 0.03 million).
The above increase was offset by higher finance expenses by ₹422 million ($ 5.97 million), dividends of ₹224 million
($ 3.27 million) paid during the period, and repayment of lease liabilities by ₹198 million ($ 2.80 million) on account of
implementation of IFRS 16 Leases.
Net cash used in financing
activities for the half year ended September 30, 2018 was ₹22 million ($0.31 million), This was mainly attributable to proceeds
from borrowings by ₹549 million ($7.57 million), proceeds from issue of shares (ESOP) by ₹19 million ($ 0.26 million).
The above increase was offset by higher finance expenses by ₹329 million ($ 4.54 million), dividends of ₹218 million
($ 3 million) paid during the period, and repayment of finance lease liabilities by ₹43 million ($ 0.60 million).
Tax Matters
(a) Income tax matters
The statutory corporate income tax rate
in India was 30% during fiscal year 2019 and was subject to a 12% surcharge where the taxable total income exceeds ₹ 10 crore
(7% where the taxable total income is less than ₹ 10 crores but greater than ₹ 1 crore), 4% health and education cess
resulting in an effective tax rate of 34.94%. During Sep 2019, Tax Laws amendment ordinance was passed reducing the corporate tax
rates to 22% (excluding surcharge & cess) at the option of corporates & removing Minimum Alternate Tax (MAT - Tax on book
profits) for such companies. Nevertheless, corporates will have to forego certain exemptions / deductions such as tax holiday,
additional depreciation, deduction for R&D expenditure, etc. if the option of reduced corporate tax rate is exercised. Moreover,
since MAT is also not applicable, such companies will have to forego the existing MAT Credit in their books. The amendment also
reduced surcharge to 10% from 12% if this option is exercised. Option of lower tax regime exercised once cannot be withdrawn later.
Further, the Ordinance also provided that even if lower tax rate is not adopted, rate of Minimum Alternate Tax (MAT) was reduced
to 15% from the existing rate of 18.5%. We cannot assure you that the current income tax rate will remain unchanged in the future.
We also cannot assure you that the surcharge will be in effect for a limited period of time or that additional surcharges will
not be levied by the Government of India.
Up to fiscal 2013, the domestic companies
were liable to pay a dividend distribution tax at the rate of 16.22% inclusive of applicable surcharge and education cess. The
Finance Act, 2013 has increased the surcharge on the dividend distribution tax from 5% to 10% which resulted in increase in the
effective rate of the dividend distribution tax to 16.995% as against 16.22% effective April 1, 2013. Any distributions of additional
ADSs or equity shares to resident or non-resident holders will not be subject to Indian tax. The Finance Act, 2014 made an amendment
in section 115-O, which requires grossing up of the dividend amount distributed for computing DDT. As a result the effective rate
of DDT increased from 16.995% to 19.994% inclusive of surcharge and cess. This was effective from October 1, 2014. Further as a
result of increase in rate of surcharge in the Finance Act, 2015, the effective rate of DDT has increased to 20.3576% from 19.994%.
However for fiscal year 2019 the Government has proposed to replace existing 3 per cent education cess with a 4 per cent 'Health
and Education Cess' resulting in effective tax rate of 20.555%. Further, the Government of India, through Finance Act, 2016, has
introduced a tax on dividends accrued to non-corporate resident investors in excess of ₹ 1 million per annum at the
rate of 10% (plus applicable surcharge and education cess). This is in addition to a dividend distribution tax payable by us.
If the effective rate of a dividend distribution tax increases or new forms of taxes on distribution of profits is introduced,
the dividend amount receivable by our shareholders after taxes may decrease. Any distributions of additional ADSs or equity shares
to resident or non-resident holders will not be subject to Indian tax.
Provisions of the Income Tax Act have been
amended effective April 1, 2016 for determination of place of effective management (POEM) of a Company. Accordingly, Section 6(3)
was amended to provide that a Company is said to be resident in India in any financial year if it is an Indian Company or its POEM
in that year is in India. POEM has been defined to mean a place where key management and commercial decisions that are necessary
for the conduct of the business of an entity as a whole are, in substance, made.
(b) Goods and Services Tax (GST)
Government of India rolled out Goods and
Service Tax (GST) effective from 1st July 2017. GST has subsumed several central, state and local tax laws such as excise duty,
service tax, value added tax, central sales tax, entry tax, etc. The GST law prescribes compliance and procedures which are more
comprehensive than prior tax laws.
Off-Balance Sheet Arrangement
We have not entered into any off balance
sheet arrangement other than contractual obligations such as operating lease arrangements disclosed below as defined by SEC final
rule 67 (FR-67) “Disclosures in Management’s Discussion and Analysis” about off balance sheet arrangements and
aggregate contractual obligations.
Contractual obligations
Set forth below are our contractual obligations
as at September 30, 2019:
Payments due by period (₹ 000s)
|
Contractual obligations
|
|
Total
|
|
|
Less
than 1 year
|
|
|
1-3 years
|
|
|
3-5 years
|
|
|
More than 5
years
|
|
Long term debt obligations
|
|
|
5,690,524
|
|
|
|
2,175,958
|
|
|
|
2,925,830
|
|
|
|
588,737
|
|
|
|
-
|
|
Short term borrowings
|
|
|
3,040,065
|
|
|
|
3,040,065
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Lease Liabilities
|
|
|
3,210,178
|
|
|
|
274,142
|
|
|
|
416,935
|
|
|
|
357,631
|
|
|
|
2,161,469
|
|
Purchase obligations
|
|
|
4,980,904
|
|
|
|
4,980,904
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Item 4. Quantitative And Qualitative
Disclosures About Market Risk
General
Market risk is the risk
of loss of future earnings, to fair values or to future cash flows that may result from a change in the price of a financial instrument.
The value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates, commodity
prices, equity prices and other market changes that affect market risk sensitive instruments. Market risk is attributable to all
market risk sensitive financial instruments including investments, foreign currency receivables, payables and debt. Our exposure
to market risk is a function of our investment and borrowing activities and our revenue generating activities in foreign currency.
The objective of market risk management is to avoid excessive exposure of our earnings and equity to loss.
Please see Note 36 to the financial statements
included in our Annual Report on Form 20-F for the year ended March 31, 2019.
Risk Management Procedures
We manage market risk
through a corporate treasury department, which evaluates and exercises independent control over the entire process of market risk
management. Our corporate treasury department recommends risk management objectives and policies which are approved by senior management
and our Audit Committee. The activities of this department include management of cash resources, implementing hedging strategies
for foreign currency exposures, borrowing strategies, and ensuring compliance with market risk limits and policies on a daily basis.
Recent Accounting Pronouncements
(i)
Standards and interpretations issued but not yet effective
Amendment in IFRS 3 - Business Combinations
In October 2018, the IASB issued amendments
to IFRS 3 “Business Combinations” aimed at providing guidance to an entity that determines whether it has acquired
a business or a group of assets.” The amendments clarify that to be considered a business, an acquired set of activities
and assets must include, at a minimum, an input and a substantive process that together significantly contribute to the ability
to create outputs;
|
o
|
Narrowed the definitions of a business and of outputs by focusing on goods and services provided
to customers and by removing the reference to an ability to reduce costs;
|
|
o
|
Added guidance and illustrative examples to help entities assess whether a substantive process
has been acquired;
|
|
o
|
Removed the assessment of whether market participants are capable of replacing any missing inputs
or processes and continuing to produce outputs;
|
|
o
|
Added an optional concentration test that permits a simplified assessment of whether an acquired
set of activities and assets is not a business.
|
The amendments are effective for business
combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after
1 January 2020. The Group is currently evaluating the impact of these amendments on its consolidated financial statements.
Critical accounting policies
The accounting policies applied by the
Group in these Unaudited Condensed Consolidated Interim Financial Statements are the same as those applied by the Group in its
Consolidated Financial Statements as at and for the year ended March 31 2018 except for the changes mentioned in note 3 of the
consolidated Interim Financial Statements.
Item 5. Controls and Procedures
Disclosure Controls and Procedures
As at September 30, 2019, our management,
with the participation of our chief executive officer and chief financial officer, has carried out an evaluation of the effectiveness
of our disclosure controls and procedures. The term “disclosure controls and procedures” means controls and other procedures
that are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is
recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the Securities and Exchange
Commission. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information
required to be disclosed by us in our reports that we file or submit under the Securities Exchange Act of 1934, as amended, is
accumulated and communicated to management, including our chief executive officer and chief financial officer, as appropriate to
allow timely decisions regarding our required disclosure. In designing and evaluating our disclosure controls and procedures, management
recognizes that any controls and procedures, no matter how well conceived and operated, can only provide reasonable assurance that
the objectives of the disclosure controls and procedures are met.
Based on their evaluation, our Chief Executive
Officer and Chief Financial Officer have concluded that, as of September 30, 2019, our disclosure controls and procedures were
effective to provide reasonable assurance that the information required to be disclosed in filings and submissions under the Exchange
Act is recorded, processed, summarized, and reported within the time periods specified by the SEC's rules and forms, and that material
information related to us is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial
Officer, as appropriate to allow timely decisions about required disclosure.
Changes in internal control over financial
reporting
During the half year ended September 30,
2019, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely
to materially affect, our internal control over financial reporting.
Part II. Other
Information
Item 1. Legal Proceedings
The company is subject to legal proceedings
and claims, which have arisen in the ordinary course of its business. These legal actions, when ultimately concluded and determined,
will not, in the opinion of management, have a material effect on the results of operations or the financial position of the Company.
See Note 17 of notes to Unaudited Condensed
Consolidated Interim Financial Statements in Part I above and Note 33 of the financial statements included in our Annual Report
on Form 20-F for the year ended March 31, 2019.
Item 1A. Risk Factors
For information regarding factors that
could affect the Company’s results of operations, financial condition and liquidity, see the risk factors discussion set
forth in Item 1A of our Annual Report on Form 20-F for the fiscal year ended March 31, 2019 and the information under “Forward-Looking
Statements” included in this Report. There have been no material changes to our Risk Factors from those disclosed in our
Annual Report on Form 20-F for the fiscal year ended March 31, 2019.
Item 2. Unregistered Sale of Equity
Securities and Use of Proceeds
None.
Items 3. Defaults upon Senior Securities
None.
Item 4. Mine safety Disclosure
Not applicable.
Item 5. Other Information
None.
Item 6. Exhibits
None.
Signatures
Pursuant to the requirements
of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Date: October 19, 2019
|
SIFY TECHNOLOGIES LIMITED
|
|
|
|
By:
|
/s/ MP Vijay Kumar
|
|
|
Name:
|
MP Vijay Kumar
|
|
|
Title:
|
Chief Financial Officer
|
Sify Technologies (NASDAQ:SIFY)
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