Report of Foreign Issuer (6-k)

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, 2017

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, 2017

INDEX

*Part I* Financial Information

Item 1. Financial Statements
a) Unaudited Condensed Consolidated Interim Statement of Financial Position	4
b) Unaudited Condensed Consolidated Interim Statement of Income	6
c) Unaudited Condensed Consolidated Interim Statement of Comprehensive Income	7
d) Unaudited Condensed Consolidated Interim Statement of Changes in Equity	8
e) Unaudited Condensed Consolidated Interim Statement of Cash Flows	9
f) Notes to the Unaudited Condensed Consolidated Interim Financial Statements	11

Item 2. Information on the Company	28

Item 3. Management’s Discussion and Analysis of Financial Condition and Results of Operations	35

Item 4. Quantitative and Qualitative Disclosure About Market Risk	49

Item 5. Controls and Procedures	50

*Part II* Other Information

Item 1. Legal Proceedings	50

Item 1A. Risk Factors	51

Item 2 Unregistered Sale of Equity Securities and Use of Proceeds	51

Item 3. Defaults Upon Senior Securities	51

Item 4. Mine Safety Disclosures	51

Item 5. Other Information	51

Item 6. Exhibits	51

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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-port s ” 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, 2017 for cable transfers in Indian rupees as published by the Reserve Bank of India (RBI), which was ₹65.36 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, 2017 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, 2017, filed with the Securities and Exchange Commission (the “SEC”) on June 16, 2017.

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:

•

our expectations as to future revenue, margins, expenses and capital requirements;

•

our exposure to market risks, including the effect of foreign currency exchange rates and interest rates on our financial results;

•

the effect of the international economic slowdown on our business;

•

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.

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Sify Technologies Limited

Unaudited Condensed Consolidated Interim Statement of Financial Position

(In thousands of Rupees, except share data and as otherwise stated)

			As at						As at September 30, 2017
	Note		September 30, 2017 ₹			March 31, 2017 * ₹			Convenience translation into US$ (In thousands)

ASSETS
Property, plant and equipment		4		6,563,699			6,622,081			100,424
Intangible assets		5		556,159			559,102			8,509
Lease prepayments		7		1,236,444			1,017,623			18,917
Other assets				1,172,248			1,121,872			17,935
Other investments				99,743			74,653			1,526
Total non-current assets				9,628,293			9,395,331			147,311

Inventories				1,111,077			1,181,987			16,999
Trade and other receivables, net		8		9,050,519			8,781,692			138,472
Prepayments for current assets				294,922			290,779			4,512
Restricted cash		6		291,591			262,907			4,461
Cash and cash equivalents		6		2,097,895			1,621,358			32,098
Total current assets				12,846,004			12,138,723			196,542
Total assets				22,474,297			21,534,054			343,853

EQUITY AND LIABILITIES
Equity
Share capital				1,516,875			1,516,875			23,208
Share premium				18,680,731			18,680,731			285,813
Share based payment reserve				311,368			305,539			4,764
Other components of equity				32,644			26,798			499
Accumulated deficit				(12,097,451	)		(12,265,524	)		(185,090	)
Equity attributable to equity holders of the Company				8,444,167			8,264,419			129,194

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Sify Technologies Limited

Unaudited Condensed Consolidated Interim Statement of Financial Position

(In thousands of Rupees, except share data and as otherwise stated)

			As at				As at September 30, 2017
	Note		September 30, 2017 Rs.		March 31, 2017* Rs.		Convenience translation into US$ (In thousands)

Liabilities
Finance lease obligations, other than current instalments				142,552		185,736		2,181
Borrowings				1,588,342		881,834		24,301
Employee benefits		9		134,708		127,298		2,061
Other liabilities				739,524		636,566		11,315
Total non-current liabilities				2,605,126		1,831,434		39,858

Finance lease obligations current instalments				152,054		333,483		2,326
Borrowings				1,948,321		2,529,244		29,809
Bank overdraft		6		2,077,644		991,161		31,788
Trade and other payables				6,196,117		6,367,607		94,800
Deferred income				1,050,868		1,216,706		16,078
Total current liabilities				11,425,004		11,438,201		174,801

Total liabilities				14,030,130		13,269,635		214,659

Total equity and liabilities				22,474,297		21,534,054		343,853

The accompanying notes form an integral part of these unaudited condensed consolidated interim financial statements

* Derived from the audited consolidated financial statements

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Sify Technologies Limited

Unaudited Condensed Consolidated Interim Statement of Income

(In thousands of Rupees, except share data and as otherwise stated)

			Quarter ended September 30,						Quarter ended September 30, 2017			Half year ended September 30,						Half year ended September 30, 2017
	Note		2017 Rs.			2016 Rs.			Convenience translation into US$ (In thousands)			2017 Rs.			2016 Rs.			Convenience translation into US$ (In thousands)
Revenue		10		4,839,905			4,391,862			74,050			9,395,388			8,561,820			143,748
Cost of goods sold and services rendered		11		(3,066,241	)		(2,787,413	)		(46,913	)		(5,872,785	)		(5,453,433	)		(89,853	)
Other income				84,500			36,327			1,293			112,413			61,691			1,720
Selling, general and administrative expense		12		(1,057,234	)		(969,996	)		(16,175	)		(2,106,889	)		(1,852,094	)		(32,235	)
Depreciation and amortization		4&5		(524,524	)		(431,965	)		(8,025	)		(985,136	)		(872,753	)		(15,072	)
Profit from operating activities				276,406			238,815			4,230			542,991			445,231			8,308
Finance income		13		43,336			16,246			663			63,754			85,405			975
Finance expenses		13		(117,110	)		(98,413	)		(1,792	)		(229,885	)		(248,963	)		(3,517	)
Net finance expense				(73,774	)		(82,167	)		(1,129	)		(166,131	)		(163,558	)		(2,542	)

Profit before tax				202,632			156,648			3,101			376,860			281,673			5,766
Income tax (expense)/ benefit				-			-			-			(90	)		-			(1	)
Profit for the period				202,632			156,648			3,101			376,770			281,673			5,765
Basic earnings per share		14		1.35			1.11			0.02			2.51			2.00			0.04
Diluted earnings per share		14		1.35			1.11			0.02			2.51			2.00			0.04

The accompanying notes form an integral part of these unaudited condensed consolidated interim financial statements

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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, 2017		Half year ended September 30					Half year ended September 30, 2017
	Note		2017 Rs.		2016 Rs.			Convenience translation into US$ (In thousands)		2017 Rs.		2016 Rs.			Convenience translation into US$ (In thousands)

Profit for the period				202,632		156,648			3,101		376,770		281,673			5,765

Other comprehensive income/(loss)
Items that will not be reclassified to profit or loss
Remeasurement of defined benefit plans		9		5,403		(2,985	)		83		3,716		(3,173	)		57
Items that will be reclassified to profit or loss
Foreign currency translation differences of foreign operations				2,533		(3,944	)		39		2,130		544			33
Other comprehensive income/(loss) for the period				7,936		(6,929	)		122		5,846		(2,629	)		90

Total comprehensive income for the period				210,568		149,719			3,223		382,616		279,044			5,855

The accompanying notes form an integral part of these unaudited condensed consolidated interim financial statements

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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, 2017

Particulars	Share capital		Share premium		Share based payment reserve		Other components of equity		Accumulated deficit			Total			Non- controlling interest		Total Equity
Balance at April 1, 2017		1,516,875		18,680,731		305,539		26,798		(12,265,524	)		8,264,419			-		8,264,419

Total comprehensive income/ (loss) for the period		-		-		-		5,846		376,770			382,616			-		382,616

Share based payments		-		-		5,829		-		-			5,829			-		5,829

Transactions with owners, recorded directly in equity
Dividends paid (including corporate dividend tax) (₹ 1.2 per share)		-		-		-		-		(208,697	)		(208,697	)		-		(208,697	)

Balance as at September 30, 2017		1, 516,875		18, 680,731		311,368		32,644		(12,097,451	)		8,444,167			-		8,444,167

For the half year ended September 30, 2016

Particulars	Share capital		Share premium		Share based payment reserve		Other components of equity			Accumulated deficit			Total			Non- controlling interest		Total Equity
Balance at April 1, 2016		1,423,125		18,474,481		287,901		51,495			(12,736,171	)		7,500,831			-		7,500,831

Total comprehensive income/ (loss) for the period		-		-		-		(2,629	)		281,673			279,044			-		279,044

Share based payments		-		-		4,879		-			-			4,879			-		4,879

Transactions with owners, recorded directly in equity
Dividends paid (including corporate dividend tax) (₹ 1 per share)		-		-		-		-			(169,742	)		(169,742	)		-		(169,742	)

Balance as at September 30, 2016		1,423,125		18,474,481		292,780		48,866			(12,624,240	)		7,615,012			-		7,615,012

The accompanying notes form an integral part of these unaudited condensed consolidated interim financial statements.

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Sify Technologies Limited

Unaudited Condensed Consolidated Interim Statement of Cash Flows

(In thousands of Rupees, except share data and as otherwise stated)

(0.50)

	Half year ended September 30						September 30, 2017
	2017 Rs.			2016 Rs.			Convenience translation into US$ (In thousands)
Cash flows from / (used in) operating activities
Profit for the period		376,770			281,673			5,765
Adjustments for:
Depreciation and amortization		985,136			872,753			15,072
Gain on sale of property, plant and equipment		(941	)		(240	)		(14	)
Provision for doubtful receivables and advances		100,000			84,570			1,530
Stock compensation expense		5,829			4,879			89
Net finance expense / (income)		166,131			163,558			2,542
Unrealized (gain)/ loss on account of exchange differences		3,966			(8,679	)		61
Amortisation of Leasehold Prepayments		10,208			7,747			156
Income tax expense		90			-			1
		1,647,189			1,406,261			25,202

Change in trade and other receivables		(131,373	)		(714,829	)		(2,009	)
Change in inventories		70,910			(244,287	)		1,085
Change in other assets		(283,548	)		(118,602	)		(4,338	)
Change in trade and other payables		(52,135	)		198,688			(798	)
Change in employee benefits		23,460			16,743			359
Change in deferred revenue		(61,514	)		222,179			(941	)
		1,212,989			766,153			18,560
Income taxes (paid)/refund received		(215,851	)		140,312			(3,303	)
Net cash from operating activities		997,138			906,465			15,257

Cash flows from / (used in) investing activities
Acquisition of property, plant and equipment		(965,191	)		(608,477	)		(14,767	)
Expenditure on intangible assets		(60,161	)		(28,486	)		(921	)
Proceeds from sale of property, plant and equipment		1,041			1,269			16
Investments in corporate debt securities		(25,090	)		-			(384	)
Finance income received		59,118			90,754			904
Net cash used in investing activities		(990,283	)		(544,940	)		(15,152	)

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Sify Technologies Limited (0.07) (0.50)

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, 2017
	2017 Rs			2016 Rs			Convenience translation into US$ (In thousands)
Cash flows from / (used in) financing activities
Proceeds from / (repayment of) borrowings, net		82,176			522,988			1,257
Finance expenses paid		(231,449	)		(231,900	)		(3,541	)
Repayment of finance lease liabilities		(229,038	)		(352,789	)		(3,504	)
Payment of dividends (including corporate dividend tax)		(208,697	)		(169,741	)		(3,193	)
Net cash used in financing activities		(587,008	)		(231,442	)		(8,981	)

Net Increase in cash and cash equivalents		(580,153	)		130,083			(8,876	)
Cash and cash equivalents at April 1		893,104			1,016,113			13,664
Effect of exchange fluctuations on cash held		(1,109	)		(1,981	)		(17	)
Cash and cash equivalents at period end		311,842			1,144,215			4,771
Supplementary information
Additions to property plant and equipment represented by finance lease obligations		4,426			160,443			68

The accompanying notes form an integral part of these unaudited condensed consolidated interim financial statements

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SIFY TECHNOLOGIES LIMITED

UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(In thousands of Rupees, except share, per share data and as stated otherwise)

Reporting entity

Sify Technologies Limited, (‘Sify’ or ‘the Company’) formerly known as Sify Limited, is a leading internet 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, 2017 comprise the Company and its subsidiaries (Sify Technologies (Singapore) Pte Limited, Sify Technologies North America Corporation and Sify Data and Managed Services Limited (together referred to as the ‘Group’ and individually as ‘Group entities’). The Group is primarily involved in providing services, such as Telecom services, Data Center Services, Cloud and Managed services, Technology Integration services and Applications Integration services. Sify is listed on the NASDAQ Capital Market in the United States.

Basis of preparation

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, 2017.

These Unaudited Condensed Consolidated Interim Financial Statements have been approved for issue by the Board of Directors on October 24, 2017.

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, 2017 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, 2017, for cable transfers in Indian rupees as published by the Reserve Bank of India which was ₹ 65.36 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, 2017 or at any other date.

Use of estimates

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.

In preparing the Unaudited Condensed Consolidated Interim Financial Statements, the significant judgements made by management in applying the Group’s accounting policies and key sources of estimating uncertainties were the same as that were applied to the consolidated financial statements as at and for the year ended March 31, 2017.

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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, 2017.

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.

Recent accounting pronouncements

(i)

Standards early adopted by the Group

IFRS 9 Financial Instruments:

In July 2014, the International Accounting Standards Board issued the final version of IFRS 9, Financial Instruments. The standard reduces the complexity of the current rules on financial instruments as mandated in IAS 39. IFRS 9 has fewer classification and measurement categories as compared to IAS 39 and has eliminated the categories of held to maturity, available for sale and loans and receivables. Further it eliminates the rule-based requirement of segregating embedded derivatives and tainting rules pertaining to held to maturity investments. For an investment in an equity instrument which is not held for trading, IFRS 9 permits an irrevocable election, on initial recognition, on an individual share-by-share basis, to present all fair value changes from the investment in other comprehensive income. No amount recognized in other comprehensive income would ever be reclassified to profit or loss. It requires the entity, which chooses to measure a liability at fair value, to present the portion of the fair value change attributable to the entity’s own credit risk in the other comprehensive income.

IFRS 9 replaces the ‘incurred loss model’ in IAS 39 with an ‘expected credit loss’ model. The measurement uses a dual measurement approach, under which the loss allowance is measured as either 12 month expected credit losses or lifetime expected credit losses. The standard also introduces new Presentation and disclosure requirements.

The effective date for adoption of IFRS 9 is annual periods beginning on or after January 1, 2018, though early adoption is permitted. Effective April 1, 2015, the Group has elected to early adopt IFRS 9.

(ii)

Standards and interpretations issued but not yet effective

IFRS 15 Revenue from Contracts with Customers: In May 2014, the International Accounting Standards Board (IASB) issued IFRS 15, Revenue from Contracts with Customers. The core principle of the new standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Further the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts with customers. The standard permits the use of either the retrospective or cumulative effect transition method. The effective date for adoption of IFRS 15 is annual periods beginning on or after January 1, 2018, though early adoption is permitted.

The Group is evaluating the impact of IFRS 15 on the consolidated financial statements including the transition method to be adopted and the related disclosures.

IFRS 16 Leases : IFRS 16 on lease was issued on January 13, 2016 and is effective from the year January 1, 2019, though early adoption is permitted for companies applying IFRS 15 Revenue from Contracts with Customers. The standard replaces all existing lease accounting requirements and represents a significant change in accounting and reporting of leases, with more assets and liabilities to be reported on the Statement of Financial Position and a different recognition of lease costs.

The Group is currently evaluating the impact of the standard on the consolidated financial statements.

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IFRIC 22 Foreign currency transactions and advance consideration : IFRIC 22 was issued on December 8, 2016 which clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency. The effective date for adoption of IFRIC 22 is annual reporting periods beginning on or after January 1, 2018, though early adoption is permitted. The Group is currently evaluating the impact of the same on the consolidated financial statements.

IFRIC 23 Uncertainty over income tax treatments : IFRIC 23 was issued on June 7, 2017 to clarify the accounting for uncertainties in income taxes. The effective date for adoption of IFRIC 23 is annual reporting periods beginning on or after January 1, 2019, though early adoption is permitted. The Group is currently evaluating the impact of the same on the consolidated financial statements.

(iii)

New Standards, interpretations and amendments adopted by the group

Amendments to IAS 7 Statement of Cash Flows: The amendments require entities to provide disclosures about changes in their liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes (such as foreign exchange gains or losses). On initial application of the amendment, entities are not required to provide comparative information for preceding periods. The adoption of amendment did not have any material effect on the condensed consolidated interim financial statements. The Group is not required to provide additional disclosures in its condensed consolidated interim financial statements, but will disclose additional information in its annual consolidated financial statements for the year ended March 31, 2018.

Property, plant and equipment

The following table presents the changes in property, plant and equipment during the half year ended September 30, 2017

(Rupees in Thousands)

	Cost								Accumulated depreciation								Carrying
Particulars	As at April 01, 2017		Additions		Disposals		As at September 30, 2017		As at April 1, 2017		Depreciation for the period		Deletions		As at September 30, 2017		amount as at September 30, 2017
Building		2,301,987		-		-		2,301,987		557,439		41,092		-		598,531		1,703,456
Plant and machinery		11,585,120		357,189		8,300		11,934,009		7,864,346		712,840		8,266		8,568,920		3,365,089
Computer equipments		1,162,259		159,706		4,665		1,317,300		834,398		85,482		4,631		915,249		402,051
Office equipment		496,015		31,832		163		527,684		281,432		29,526		163		310,795		216,889
Furniture and fittings		1,093,544		32,318		314		1,125,548		753,209		51,892		314		804,787		320,761
Vehicles		9,656		-		-		9,656		3,656		1,200		-		4,856		4,800
Total		16,648,581		581,045		13,442		17,216,184		10,294,480		922,032		13,374		11,203,138		6,013,046
Add: Construction in progress																		550,653
Total		16,648,581		581,045		13,442		17,216,184		10,294,480		922,032		13,374		11,203,138		6,563,699

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The following table presents the changes in property, plant and equipment during the year ended March 31, 2017

(Rupees in Thousands)

	Cost								Accumulated depreciation								Carrying
Particulars	As at April 01, 2016		Additions		Disposals		As at March 31, 2017		As at April 1, 2016		Depreciation for the year		Deletions		As at March 31, 2017		amount as at March 31, 2017
Building		2,301,987		-		-		2,301,987		475,256		82,183		-		557,439		1,744,548
Plant and machinery		10,137,059		1,464,523		16,462		11,585,120		6,610,485		1,269,064		15,203		7,864,346		3,720,774
Computer equipments		951,508		217,549		6,798		1,162,259		702,371		138,736		6,709		834,398		327,861
Office equipment		386,702		110,001		688		496,015		228,987		53,127		682		281,432		214,583
Furniture and fittings		1,028,880		68,328		3,664		1,093,544		661,001		95,872		3,664		753,209		340,335
Vehicles		2,456		7,200		-		9,656		2,456		1,200		-		3,656		6,000
Total		14,808,592		1,867,601		27,612		16,648,581		8,680,556		1,640,182		26,258		10,294,480		6,354,101
Add: Construction in progress																		267,980
Total		14,808,592		1,867,601		27,612		16,648,581		8,680,556		1,640,182		26,258		10,294,480		6,622,081

Leased assets

The Group’s leased assets include certain buildings, plant and machinery acquired under finance leases. As at September 30, 2017 the net carrying amount of buildings and plant and machinery acquired under finance leases is ₹ 177,863 (March 31, 2017: ₹ 183,022) and ₹ 444,907 (March 31, 2017: ₹ 718,162) respectively. During the half year ended September 30, 2017, the Group acquired leased assets of ₹ 4,426 (March 31, 2017 : ₹ 168,715).

In case prepayments are made towards buildings accounted for as finance leases, such prepayments are capitalized as ‘Leasehold Buildings’ (included in buildings) on the commencement of the lease term under the head ‘Property, plant and equipment’ and depreciated in accordance with the depreciation policy for similar owned assets.

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

Intangible assets comprise the following:

	September 30, 2017		March 31, 2017
Goodwill		14,595		14,595
Other intangible assets		541,564		544,507
		556,159		559,102

(i) Goodwill

The following table presents the changes in goodwill during the half year/year ended

	September 30, 2017		March 31, 2017
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, 2017 and March 31, 2017 has been allocated to the Applications Integration Services segment.

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(ii)

Other intangibles

The following table presents the changes in intangible assets during the half year ended September 30, 2017 and year ended March 31, 2017.

	Bandwidth Capacity		Software		License fees		Total
(A) Cost
Balance as at April 1, 2016		6,42,391		6,19,848		73,000		1,335,239
Acquisitions during the year		-		72,050		-		72,050
Disposals during the year		-		-		-		-
Balance as at March 31, 2017		642,391		691,898		73,000		1,407,289
Acquisitions during the period		-		60,161		-		60,161
Disposals during the period		-		-		-		-
Balance as at September 30, 2017		642,391		752,059		73,000		1,467,450

(B) Amortization
Balance as at April 1, 2016		1,90,998		5,27,484		25,706		744,188
Amortization for the year		56,396		59,548		2,650		118,594
Impairment loss on intangibles		-		-		-		-
Balance as at March 31, 2017		247,394		587,032		28,356		862,782
Amortization for the period		28,198		33,581		1,325		63,104
Impairment loss on intangibles		-		-		-		-
Balance as at September 30, 2017		275,592		620,613		29,681		925,886

(C) Carrying amounts
As at March 31, 2017		394,997		104,866		44,644		544,507
As at September 30, 2017		366,799		131,446		43,319		541,564

Intangible assets that were fully impaired/amortised were removed from the block.

Cash and cash equivalents

Cash and cash equivalents as at September 30, 2017 amounted to ₹ 2,097,895 (March 31, 2017: ₹ 1,621,358). This excludes cash-restricted of ₹ 291,591 (March 31, 2017: ₹ 262,907), representing deposits held under lien against working capital facilities availed and bank guarantees given by the Group towards future performance obligations.

(a)

Restricted cash

	September 30, 2017			March 31, 2017			September 30, 2016			March 31, 2016
Non current
Against future performance obligation		-			-			-			-
Current
Bank deposits held under lien against borrowings / guarantees from banks / Government authorities		291,591			262,907			291,778			345,328
Total restricted cash		291,591			262,907			291,778			345,328
(b) Non restricted cash
Current
Cash and bank balances		2,097,895			1,621,358			1,550,463			1,390,552

Total cash (a+b)		2,389,486			1,884,265			1,842,241			1,735,880
Bank overdraft used for cash management purposes		(2,077,644	)		(991,161	)		(698,026	)		(719,767	)
Less: Non current restricted cash		-			-			-			-
Cash and cash equivalents for the statement of cash flows		311,842			893,104			1,144,215			1,016,113

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Lease prepayments

	September 30, 2017		March 31, 2017
Towards land and buildings*		1,236,444		1,017,623
		1,236,444		1,017,623

* Includes ₹ 1,209,906 (March 31, 2017: ₹ 988,599) paid for acquiring leasehold rights of land for construction of Data centers. The prepayment towards land is amortized over the period of the lease on a straight line basis. In respect of buildings under operating lease, prepayments are amortized over the lease term on a straight line basis.

Trade and other receivables

Trade and other receivables comprise:

	September 30, 2017		March 31, 2017
(i) Trade receivables, net		7,007,422		6,950,563
(ii) Other receivables including deposits		2,041,512		1,820,501
(iii) Construction contract related accruals		1,585		10,628
		9,050,519		8,781,692

Trade receivables consist of:

	September 30, 2017			March 31, 2017
Other trade receivables		7,228,238			7,184,753
		7,228,238			7,184,753
Less: Allowance for doubtful receivables		(220,816	)		(234,190	)
Balance at the end of half year/year		7,007,422			6,950,563

The activity in the allowance for doubtful accounts receivable is given below:

	September 30, 2017			March 31, 2017
Balance at the beginning of the period		234,190			209,065
Add : Additional provision, net		100,000			383,534
Less : Bad debts written off		(113,374	)		(358,409	)
Balance at the end of half year/year		220,816			234,190

Financial assets included in other receivables		101,168			101,098

Employee benefits

	September 30, 2017		March 31, 2017
Gratuity payable		93,531		89,114
Compensated absences		41,177		38,184
		134,708		127,298

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Gratuity cost

The components of gratuity cost recognized in the income statement for the quarter and half year ended September 30, 2017 and 2016 consists of the following:

	Quarter ended September 30, 2017			Quarter ended September 30, 2016			Half year ended September 30, 2017			Half year ended September 30, 2016

Service cost		5,187			4,270			10,420			8,467
Interest cost		1,879			1,718			3,707			3,387
Interest income		(354	)		(666	)		(699	)		(1,313	)
Net gratuity costs recognized in statement of income		6,712			5,322			13,428			10,541

Details of employee benefit obligation and plan asset are as follows:

	September 30, 2017			March 31, 2017
Present value of projected benefit obligation at the end of half year/ year		116,997			109,826
Funded status of the plans		(23,466	)		(20,712	)
Recognized (asset) / liability		93,531			89,114

The following table set out the status of the gratuity plan:

Change in defined benefit obligation	S eptember 30, 2017			March 31, 2017
Projected benefit obligation at the beginning of half year/ year		109,826			91,801
Service cost		10,420			19,154
Interest cost		3,707			6,880
Remeasurements - Actuarial (gain) / loss		(4,446	)		2,250
Benefits paid		(2,510	)		(10,259	)
Projected benefit obligation at the end of half year/ year		116,997			109,826

Change in plan assets	September 30, 2017			March 31, 2017
Fair value of plan assets at the beginning of the period		20,712			35,589
Interest income		699			2,667
Remeasurements – return on plan assets excluding amounts included in interest income		(730	)		(14,785	)
Employer contributions		5,295			7,500
Benefits paid		(2,510	)		(10,259	)
Fair value of plan assets at the end of the period		23,466			20,712

Actuarial Assumptions at reporting date :

	As at September 30, 2017	As at March 31, 2017
Discount rate	6.65% P.a	6.85% 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	4.38 years	4.39 years

The Group assesses these assumptions with the projected long-term plans of growth and prevalent industry standards.

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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, 2017 and 2016 are as follows:

	Half year ended September 30, 2017		Half year ended September 30, 2016
Gain or (loss) on Remeasurement of defined benefit plans		3,716		(3,173	)
		3,716		(3,173	)

Historical information

	Half year ended September 30, 2017			Half year ended September 30, 2016
Experience adjustment on plan liabilities - (loss)/gain		(1,098	)		(163	)
Impact of change in assumptions on plan liabilities - (loss)/gain		5,544			(3,010	)
Experience adjustment on plan assets - (loss)/gain		(730	)		-
		3,716			(3,173	)

10.

Revenue

	Quarter ended				Half year ended
	September 30, 2017		September 30, 2016		September 30, 2017		September 30, 2016
Rendering of services
Service revenue		3,488,563		3,304,741		6,808,495		6,617,747
Installation service revenue		1,212,772		877,009		2,008,855		1,394,467
		4,701,335		4,181,750		8,817,350		8,012,214
Sale of products		138,570		210,112		578,038		549,606
Total		4,839,905		4,391,862		9,395,388		8,561,820

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.

12.

Personnel expenses

	Quarter ended				Half year ended
	September 30, 2017		September 30, 2016		September 30, 2017		September 30, 2016
Salaries and wages		638,704		509,187		1,192,689		952,700
Contribution to provident fund and other funds		34,233		31,485		67,334		56,933
Staff welfare expenses		5,160		7,483		11,653		15,651
Employee Stock compensation expense		3,481		3,585		5,829		4,879
		681,578		551,740		1,277,505		1,030,163

Attributable to Cost of goods sold and services rendered		281,939		233,287		529,480		439,409
Attributable to selling, general and administrative expenses		399,639		318,453		748,025		590,754

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13.

Financial income and expense

	Quarter ended						Half year ended
	September 30, 2017			September 30, 2016			September 30, 2017			September 30, 2016
Interest income on bank deposits		6,266			7,260			12,065			14,463
Others		37,070			8,986			51,689			70,942
Finance income		43,336			16,246			63,754			85,405
Interest expense on financial lease liabilities		8,158			23,416			21,449			49,783
Bank charges		19,185			19,237			39,247			42,137
Other interest		89,767			55,760			169,189			157,043
Finance expense		117,110			98,413			229,885			248,963
Net finance expense recognised in profit or loss		(73,774	)		(82,167	)		(166,131	)		(163,558	)

14.

Earnings per share

The calculation of basic earnings per share for the quarter and half year ended September 30, 2017 is based on the earnings attributable to ordinary shareholders:

	Quarter ended				Half year ended
	September 30, 2017		September 30, 2016		September 30, 2017		September 30, 2016
Net profit – as reported		202,632		156,648		376,770		281,673

Weighted average number of shares – Basic		150,405,787		141,030,787		150,405,787		141,030,787
Basic earnings per share		1.35		1.11		2.51		2.00

Weighted average number of shares – Diluted		150,416,502		141,030,787		150,405,787		141,030,787
Diluted earnings per share		1.35		1.11		2.51		2.00

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, 2017, these shares were partly paid up to the extent of ₹ 7.75 (March 31, 2017 : ₹ 7.75) per share.

15.

Segment reporting

The operating segments of the Company are as follows:

Telecom services: Domestic data, international data, wholesale voice and network managed services;

Data Center and IT Services

Data Centre 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.

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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, 2017 and 2016 and half year ended September 30, 2017 and 2016, are presented below:

Quarter ended September 30, 2017

				Data Center and IT services
				Data			Cloud and			Technology			Applications
	Telecom			center			Managed			Integration			Integration			Total			Total
	Services			Services			Services			Services			Services			(B)=			(C) =
	(A)			(i)			(ii)			(iii)			(iv)			(i)+(ii)+(iii)+(iv)			(A) + (B)
Segment revenue		2,580,468			576,675			198,182			735,297			749,283			2,259,437			4,839,905
Allocated segment expenses		(1,906,360	)		(400,236	)		(250,826	)		(596,331	)		(686,643	)		(1,934,036	)		(3,840,396	)
Segment operating income		674,108			176,439			(52,644	)		138,966			62,640			325,401			999,509
Unallocated expenses:
Selling, general and administrative expenses																				(283,079	)
Depreciation and amortization																				(524,524	)
Other income																				84,500
Finance income																				43,336
Finance expenses																				(117,110	)
Profit before tax																				202,632
Income tax (expense)/benefit																				-
Profit for the period																				202,632

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Half year ended September 30, 2017

				Data Center and IT services
				Data			Cloud and			Technology			Applications
	Telecom			center			Managed			Integration			Integration			Total			Total
	Services			Services			Services			Services			Services			(B)=			(C) =
	(A)			(i)			(ii)			(iii)			(iv)			(i)+(ii)+(iii)+(iv)			(A) + (B)
Segment revenue		4,988,859			1,135,646			462,863			1,559,153			1,248,867			4,406,529			9,395,388
Allocated segment expenses		(3,777,828	)		(827,009	)		(489,298	)		(1,237,370	)		(1,063,498	)		(3,617,175	)		(7,395,003	)
Segment operating income		1,211,031			308,637			(26,435	)		321,783			185,369			789,354			2,000,385
Unallocated expenses:
Selling, general and administrative expenses																				(584,671	)
Depreciation and amortization																				(985,136	)
Other income																				112,413
Finance income																				63,754
Finance expenses																				(229,885	)
Profit before tax																				376,860
Income tax (expense)/benefit																				(90	)
Profit for the period																				376,770

Quarter ended September 30, 2016

				Data Center and IT services
				Data			Cloud and			Technology			Applications
	Telecom			center			Managed			Integration			Integration			Total			Total
	Services			Services			Services			Services			Services			(B)=			(C) =
	(A)			(i)			(ii)			(iii)			(iv)			(i)+(ii)+(iii)+(iv)			(A) + (B)
Segment revenue		2,570,767			489,771			229,141			397,076			705,107			1,821,095			4,391,862
Allocated segment expenses		(1,996,870	)		(399,427	)		(215,081	)		(331,546	)		(587,914	)		(1,533,968	)		(3,530,838	)
Segment operating income		573,897			90,344			14,060			65,530			117,193			287,127			861,024
Unallocated expenses:
Selling, general and administrative expenses																				(226,709	)
Depreciation and amortization																				(431,965	)
Other income																				36,465
Finance income																				16,246
Finance expenses																				(98,413	)
Profit before tax																				156,648
Income tax (expense)/benefit																				-
Profit for the period																				156,648

Half year ended September 30, 2016

				Data Center and IT services
				Data			Cloud and			Technology			Applications
	Telecom			center			Managed			Integration			Integration			Total			Total
	Services			Services			Services			Services			Services			(B)=			(C) =
	(A)			(i)			(ii)			(iii)			(iv)			(i)+(ii)+(iii)+(iv)			(A) + (B)
Segment revenue		5,105,843			931,238			471,357			949,705			1,103,677			3,455,977			8,561,820
Allocated segment expenses		(3,981,321	)		(733,537	)		(382,458	)		(796,567	)		(925,803	)		(2,838,365	)		(6,819,686	)
Segment operating income		1,124,522			197,701			88,899			153,138			177,874			617,612			1,742,134
Unallocated expenses:
Selling, general and administrative expenses																				(485,603	)
Depreciation and amortization																				(872,753	)
Other income																				61,453
Finance income																				85,405
Finance expenses																				(248,963	)
Profit before tax																				281,673
Income tax (expense)/benefit																				-
Profit for the period																				281,673

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16.

Capital commitments

Contracts pending to be executed on capital account as at September 30, 2017 amounting to ₹ 988,457 (March 31, 2017 :₹ 1,044,509).

Operating leases: The Group leases office buildings and other equipments under operating lease arrangements that are renewable on a periodic basis at the option of both the lessor and the lessee. The schedule of future minimum rental payments in respect of operating leases is set out below:

Non-cancellable operating lease obligations			Less than				More than
	Total		1 Year		1-5 years		5 years
As at September 30, 2017		1,047,039		112,358		484,695		449,986
As at March 31, 2017		1,102,328		111,469		477,441		513,418

17.

Legal proceedings

Proceedings before Department of Telecommunications

(i)

License fees

On October 12, 2009 [as later clarified by the Department of Telecommunications (‘DOT’)], 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 Ltd (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 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 defenses 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.

(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 company through Internet Service Providers Association of India (ISPAI) challenged the said clause before TDSAT. 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.

(b)

The Company is party to additional legal actions arising in the ordinary course of business. Based on the available information as at September 30, 2017, 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 ₹ 89,629 (March 31, 2017: ₹ 37,429).

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18.

Related parties

The following is a summary of significant transactions with related parties during the half year ended September 30, 2017 and September 30, 2016:

Transactions	Half year ended September 30, 2017			Half year ended September 30, 2016
Consultancy services received		120			120
Lease rentals paid (Refer notes below)		2,880			2,665
Dividend paid		143,280			116,511
Amount of outstanding balances
Advance lease rentals and refundable deposits made (Refer note below)		2,558			2,558
Outstanding balances [(Payables)/receivables]		(125	)		(413	)

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 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, Chief Executive Officer 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. Subsequently, the Company entered into an amendment agreement with effect from April 1, 2013, providing 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 Anand 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 Lakhs Ninety Four Thousand Only ) per month and payment of refundable security deposit of ₹ 2,558 (Rupees Twenty Five Lakhs and Fifty Eight Thousand only). This arrangement will automatically be renewed for a further period of two blocks of three years with all the terms remaining unchanged.

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19.

Financial Instruments

Financial instruments by category:

The carrying value and fair value of financial instruments by each category as at September 30, 2017 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		2,389,486		-		-		2,389,486		2,389,486
Other assets			290,905		-		-		290,905		290,905
Trade receivables	8		7,007,422		-		-		7,007,422		7,007,422
Other receivables			101,168		-		-		101,168		101,168
Other investments			98,033		-		1,710		99,743		99,743
Liabilities
Bank overdraft	6		2,077,644		-		-		2,077,644		2,077,644
Finance lease liabilities			294,606		-		-		294,606		294,606
Other liabilities			200,314		-		-		200,314		200,314
Borrowings from banks			2,582,481		-		-		2,582,481		2,582,481
Borrowings from others			954,183		-		-		954,183		954,183
Trade and other payables			5,460,629		-		-		5,460,629		5,460,629
Derivative financial liabilities			-		11,374		-		11,374		11,374

The carrying value and fair value of financial instruments by each category as at March 31, 2017 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		1,884,265		-		-		1,884,265		1,884,265
Other assets				213,424		-		-		213,424		213,424
Trade receivables		8		6,950,563		-		-		6,950,563		6,950,563
Other receivables				101,098		-		-		101,098		101,098
Other investments				72,943		-		1,710		74,653		74,653
Liabilities
Bank overdraft		6		991,161		-		-		991,161		991,161
Finance lease liabilities				519,219		-		-		519,219		519,219
Other liabilities				201,679		-		-		201,679		201,679
Borrowings from banks				2,567,076		-		-		2,567,076		2,567,076
Borrowings from others				844,002		-		-		844,002		844,002
Trade and other payables				5,648,740		-		-		5,648,740		5,648,740
Derivative financial liabilities				-		36,160		-		36,160		36,160

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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, 2017								Fair value as at March 31, 2017
	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		-		(3,576	)		-			-		(18,079	)		-
Derivative financial liabilities - loss on outstanding cross currency swaps		-		-			-			-		-			(7,987	)
Derivative financial liabilities - loss on outstanding interest rate swaps		-		-			(7,798	)		-		-			(10,094	)

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

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:

Credit risk

Liquidity risk

Market risk

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.

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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 upto 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 at September 30, 2017, these shares were partly paid to the extent of ₹ 7.75 per share. Until the full purchase price is paid by the purchasers, the company retains a lien on the equity shares purchased in connection with the Offering. As at September 30, 2017, entities affiliated with our CEO, Chairman and Managing Director, Raju Vegesna, beneficially owned approximately 86.29% of our outstanding equity shares, which includes the 125,000,000 shares (partly paid with proportionate voting rights) issued in connection with the above Offering.

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22.

Group entities

The following are the entities that comprise the Group as at September 30, 2017 and March 31, 2017:

Particulars	Country	% of Ownership interest
Significant subsidiaries	of incorporation	September 30, 2017		March 31, 2017
Sify Technologies (Singapore) Pte. Ltd	Singapore		100		100
Sify Technologies North America Corporation	USA		100		100
Sify Data and Managed Services Limited	India		100		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 into 5 distinct lines of business namely:

Telecom 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 Centre, of their choice or any one of our Tier III Data Centres. Today, this multi-mode, multi-mesh network connects 45 of India’s Data Centres; a fact that endorses the quality of our offering and our network presence

Our network, reaches over 1,550 cities and towns with more than 2900 Points of Presence and 90,000 links, thus making us the largest MPLS network in India.

Data Centre services

Right from our first Data Centre at Vashi, Mumbai in 2000, we have invested in the top of the line technologies across all our networks with every new data centre taking the game forward. The Sify SDA (Sify Data Centre Architecture) 4.0 is an IP that has found acceptance in the several Data Centres 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

Cloud and Managed services

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.

Technology Integration services

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.

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As described, this business takes the knowledge developed from building Network architecture, Unified Communication and Unified Access, Collaborative tools, Data Centre 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.

Applications Integration services

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 Centres 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 Centres including 6 of our own. To ensure undisrupted high quality service and to achieve cost efficiencies, we have invested in a under sea 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 Centre 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 Centre, all our subsequent ones were also Tier III compliant. 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.

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• 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 Tier III certified 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 centre, 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 Tier III 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.

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:

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.

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.

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.

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.

CleanConnect ^(TM) which provides managed and secured internet connectivity to customers.

Managed DDoS which offers protection from DDoS attack to corporate customers.

Managed WLAN provides Managed Wi-Fi solutions offering connect devices to the network of the customer and the internet at customer locations.

Data Centre Services . We operate 6 Tier III Data Centres of which three 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.

The sports channel http://sify.com/sports/ covers the entire gamut of Indian and international sports with special focus on cricket.

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

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.

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.

Games channel of Sify http://games.sify.com offers multiple scoring and non scoring games. Games include cricketing games, racing games, football specific games.

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 6,500 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 centre 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 Enterprises services is 24x7.

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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 390 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 1,550 towns and cities and between them have more than 90,000 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.

Internet access services,

IP/ MPLS Virtual private networks,

Internet based Voice services

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 Centre: We maintain a network operation centre 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 centres 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 Centre Infrastructure. We operate six tier III Internet Data Centres, three 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 centres 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 Centres. The Data Centres conform to the tier III standards to cater to the security consideration of our customer servers. We intend to invest in additional Data Centres, and are currently building a world class data centre at Rabale in Mumbai.

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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 Centres, 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.

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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, 2017. 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 1550 cities and towns in India. This telecom network today connects 45 client Data Centers across India, including Sify’s own 6 Tier III 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 Centre services

We operate 6 Tier III Data Centers of which three 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.

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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.

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.

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.

Revenues

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. During the year 2017, the company introduced a new service offering in the retail voice market in partnership with Skype Communications, S.a.r.l. The company realized revenue from sale of voice credits and subscription of Skype.

Data Center services

Revenue from Data Centre 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.

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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 manage services, comprises 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 Service (TIS)

Revenues from TIS comprises of DC build services 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 comprises of Online Assessment, Web development, supply chain solutions, content management, Digital certification Services and from practices on Industry standard applicantions like SAP, Oracle and Mircrosoft. 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 Centre Services

Cost of goods sold and services rendered for the Data Centre 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.

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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 groups 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 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.

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Results of Operations

The following table sets forth certain financial information as a percentage of revenues:

	Quarter ended September						Half year ended September
	2017			2016			2017			2016
	%			%			%			%
Revenues		100			100			100			100
Cost of goods sold and services rendered		63			63			63			64
Other income/(expense)		2			1			1			1
Selling, general and administrative expenses		22			22			22			22
Depreciation and amortization expenses		11			10			10			10
Profit from operating activities		6			6			6			5
Finance income		1			-			1			1
Finance expenses		2			2			2			3
Net finance income/(expense)		(1	)		(2	)		(2	)		(2	)
Net profit for the year		4			4			4			3

Results of quarter ended September 30, 2017 compared to quarter ended September 30, 2016

The growth in our revenues in fiscal 2017 from fiscal 2016 is given below:

	(Rupees in million)
	Quarter ended September 30, 2017		Quarter ended September 30, 2016		Change		% Change
Revenues		4,840		4,392		448		10	%

We have achieved a Revenue of ₹ 4,840 Million ($ 74 Million), an increase of ₹ 448 Million ($ 7 Million) over the same quarter previous year. The increase is primarily contributed by revenue from Technology Integration Services, supported by growth in Applications Integration services and Data Centre services.

The revenue by operating segments is as follows:

	(Rupees in million)
	Revenue				Percentage of revenue
	Quarter ended September 2017		Quarter ended September 2016		Quarter ended September 2017			Quarter ended September 2016			Growth
Telecom Services		2,581		2,571		53	%		59	%		0	%
Data Centre Services		577		490		12	%		11	%		18	%
Cloud and Managed Services		198		229		4	%		5	%		-14	%
Technology Integration Services		735		397		15	%		9	%		85	%
Applications Integration Services		749		705		16	%		16	%		6	%
Total		4,840		4,392		100	%		100	%		10	%

Revenue from Telecom Service increased by ₹10 million ($0.15 million) primarily due to increase in revenue of ₹149 million ($2.28 million) from Connectivity Services, contributed by net increase in number of links with existing and new customer engagements. The increase is offset by decrease in revenue of ₹139 million ($2.13 million) in Voice Services, which is attributable to decrease in revenue from ILD & hubbing business by ₹135 million ($2.06 million) due to volume decrease & lesser realisation, VOIP services by ₹3.81 million ($0.06 million) and Voice Retail services by ₹1 million ($0.02 million).

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Revenue from Data Centre services has increased by ₹ 87 Million ($1.3 Million) on account of higher capacity utilisation by customers.

Revenue from Cloud and Managed Services has decreased by ₹31 Million ($0.47 Million) due to decrease in revenue from Infrastructure managed services by ₹18 Million ($0.27 Million) due to customer churn and decrease in revenue from domestic managed services by ₹13 Million ($0.20 Million).

Revenue from Technology Integration services has increased by ₹ 338 Million ($5.2 Million). This is on account of increase in projects in Systems Integration and Security services.

Revenue from Applications Integration Services has increased by ₹ 44 Million ($0.67 Million), The revenue increase is primarily contributed by (i) increase in application services by ₹ 99 Million ($ 1.51 Million) due to execution of a large online examination project (ii) increase in revenue from sale of licenses by ₹ 15 Million ($ 0.23 Million) and (iii) increase in revenue from Forum business by ₹ 7 Million ($ 0.11 Million). The increase in revenue is partially offset by decrease in revenue from (i) E Learning services by ₹8 Million ($0.12 Million), (ii) Revenue from Portal business ₹ 3 Million ($0.05 Million), (iii) revenue from Digital Certification services by ₹ 53 Million ($ 0.81 Million) and (iv) revenue from web services by ₹ 13 Million ($ 0.20 Million).

Other income

The change in other income is as follows:

(Rupees in million)

	Quarter ended September 30, 2017		Quarter ended September 30, 2016		Change		% Change

Other Income		85		36		49		136	%

Increase in other income is on account of ₹ 49 million ($0.75 Million) towards reimbursements of investor related expense to our ADS programs received during current quarter.

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, 2017		Quarter ended September 30, 2016		Change			% Change
Telecom services		1,576		1,642		(66	)		-4	%
Data Centre Services		284		249		35			14	%
Cloud and Managed Services		105		119		(14	)		-12	%
Technology Integration Services		522		277		245			88	%
Applications Integration Services		579		500		79			16	%
Total		3,066		2,787		279			10	%

The cost of goods sold increased by 10% on overall basis, the movement in COGS is explained in detail below:

(Rupees in million)

	Quarter ended September 30, 2017		Quarter ended September 30, 2016		Change			% Change

Network Costs		1,225		1,318		(93	)		-7	%
Revenue share		149		134		15			11	%
Cost of Hardware / Software		604		354		250			71	%
Power costs		271		233		38			16	%
Direct Resources costs		282		234		48			21	%
Other direct costs		535		514		21			4	%
Total		3,066		2,787		279			10	%

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Network cost comprises cost of Bandwidth leased out from TELCOS, Inter connect charges and IP termination costs payable to carriers. Bandwidth cost decreased by ₹17 Million ($ 0.26 Million) due to capacity conversions into IRU, Inter Connect charges and IP termination costs decreased by ₹76 Million ($ 1.16 Million) on account of reduction in minutes and rates.

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 increase in Cost of Hardware and Software expenses incurred is on account of higher number of System integration projects and related hardware / software projects executed during the quarter.

Power costs comprises of electricity cost incurred in our data center. Increase in the cost is on account of increase in power utilisation.

Direct resources costs comprises 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 e Learning and Infrastructure Managed services. These Resource costs has increased by ₹48 Million ($ 0.73 Million) 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 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 is due to increase in (i) ₹44 Million ($ 0.67 Million) on account of increase in number of online assessment services conducted during the period and increase in other direct costs of data center by ₹5 Million ($ 0.07 Million) on account of new customer on boarding, the above increase was partially offset by decrease in link implementation and maintenance charges for the Telecom services by ₹12 Million ($ 0.18 Million), decrease in platform costs for Cloud storage by ₹15 Million ($ 0.23 Million) and decrease in content costs of Portals business by ₹1 Million ($ 0.01 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, 2017		Quarter ended September 30, 2016			Change			Change (%)
Operating Expenses		237		263			(26	)		-10	%
Selling & Marketing Expenses		56		35			21			60	%
Associate Expenses		507		383			124			32	%
Other Indirect Expenses		197		273			(76	)		-28	%
Provision for doubtful debts and advances		60		44			16			36	%
Forex (gain) / loss		-		(29	)		29			-100	%
Total		1,057		969			88			9	%

Operating expenses have decreased by 10%, which was on account of one time operating expenses made in the corresponding quarter of previous year. Excluding the one time charge, operating expenses remained flat during the quarter compared to previous quarter.

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 increased on account of increase in advertisement costs and increase in channel partner commission.

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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 increased due to increase in number of associates recruited during the period and also on account of pay revision.

Other Indirect expense consist of cost of facilities, electricity charges incurred on facilities, travel cost, Legal charges, professional charges, communication and others.

Provision for Doubtful debts consists of the charge on account of the provisions created during the year against doubtful debtors. The marginal increase in Provision for Doubtful debts are on account of prudent provisioning of debtors.

Depreciation and amortization

Depreciation and amortization is set forth in the table below:

(Rupees in million)

	Quarter ended September 30, 2017			Quarter ended September 30, 2016			Change		% Change
Depreciation and amortization		524			432			92		21	%
As a percentage of carrying value		7	%		6	%

As the business is continuing to expand, the amount of depreciation is increasing on account of constructing and deploying new facilities by the Company. Increase in depreciation is on account of expansion activities undertaken at data center at Rabale and field assets deployment for large projects during the period.

Profit from operating activities

(Rupees in million)

	Quarter ended September 30, 2017			Quarter ended September 30, 2016			Change		% Change
Operating profit		276			239			37		15	%
As a percentage of revenue		6	%		6	%

Operating profit as a percentage of revenue has remained flat. Though the revenue has increased over the corresponding quarter of previous year, we have also incurred certain operating costs specific to expansion which has offset this increase in revenue thereby Operating profit as a percentage over revenue remained flat over the corresponding quarter of previous year.

Finance income/expense

(Rupees in million)

	Quarter ended September 30, 2017			Quarter ended September 30, 2016			Change			% Change
Finance Income		43			16			27			169	%
Finance expense		(117	)		(98	)		(19	)		19	%
Net finance expense		(74	)		(82	)		8			-10	%

The increase in finance income is majorly due to interest on income tax refund amounting to ₹ 33 million ($ 0.5 million) received during current period partly offset by decrease in interest income on fixed deposits with banks. The increase in finance expenses is on account of ₹ 9 million ($ 0.13 million) towards exchange differences considered as interest expense. Further, there has been increase in borrowings demanded by increase in business operations, resulting in increased finance expenses.

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Net Profit

(Rupees in million)

	Quarter ended September 30, 2017			Quarter ended September 30, 2016			Change		% Change
Net Profit		203			157			46		29	%
As a percentage of revenue		4	%		4	%

Net profit as a percentage of revenue has remained flat. Though the revenue has increased over the corresponding quarter of previous year, we have also incurred certain operating costs specific to expansion which has offset this increase in revenue thereby Net profit as a percentage over revenue remained flat over the corresponding quarter of the previous year.

Results of half year ended September 30, 2017 compared to half year ended September 30, 2016

Revenues

The growth in our revenues in fiscal 2017 from fiscal 2016 is given below

(Rupees in million)

Half year
ended
September 30,
2017

Half year

Ended
September 30,
2016

Change

% Change

Revenues

9,395

8,562

833

We have achieved a Revenue of ₹ 9,395 Million ($143.74 Million), an increase of ₹ 833 Million ($12.75 Million) over same period previous year. The increase is primarily contributed by Technology Integration Services, supported by growth in Applications Integration services and Data Centre services.

The revenue by operating segments is as follows:

(Rupees in million)

	Revenue				Percentage of revenue
	Half year ended September 30, 2017		Half year ended September 30, 2016		Half year ended September 30, 2017			Half year ended September 30, 2016			Growth
Telecom Services		4,989		5,106		53	%		60	%		-2	%
Data Centre Services		1,136		931		12	%		11	%		22	%
Cloud and Managed Services		463		471		5	%		6	%		-2	%
Technology Integration Services		1,559		950		17	%		11	%		64	%
Applications Integration Services		1,248		1,104		13	%		13	%		13	%
Total		9,395		8,562		100	%		100	%		10	%

Revenue from Telecom Service is decreased by ₹117 million ($1.79 million) primarily due to decrease in revenue of ₹380 million ($5.81 million) in Voice Services, which is attributable to decrease in revenue from ILD & Hubbing business by ₹418 million ($6.39 million) due to volume decrease and lesser realisations, VOIP services decreased by ₹7 million ($0.11 million) and this decrease was partially offset by the increase in revenue of ₹263 million ($4.02 million) from Connectivity Services, contributed by net increase in number of links with existing and new customer engagements and (ii) Voice Retail services by ₹45 million ($0.69 million).

Revenue from Data Centre services has increased by ₹ 205 Million ($3.14 Million) on account of higher capacity utilisation by customers.

Revenue from Cloud and Managed Services has decreased by ₹8 Million ($0.12 Million) due to decrease in revenue from Infrastructure managed services by ₹56 Million ($0.86 Million) due to customer churn and the above decrease was offset by the increase in revenue from domestic Managed services by ₹48 Million ($0.73 Million).

Revenue from Technology Integration services has increased by ₹ 609 Million ($9.32 Million). This is on account of increase in projects in Systems Integration and Security services.

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Revenue from Applications Integration Services has increased by ₹ 144 Million ($2.2Million), The revenue increase is primarily contributed by (i) increase in application services by ₹ 109 Million ($ 1.67 Million) due to execution of a large online examination project (ii) increase in Forum business by ₹ 4 Million ($ 0.06 Million) , (iii) increase in revenue from sale of licenses by ₹ 82 Million ($ 1.25 Million), (iv) increase in revenue from Digital Certification services by ₹ 12 Million ($ 0.18 Million) the above increase in revenue was partially offset by decrease in revenue from (i) E Learning services by ₹30 Million ($0.46 Million), (ii) Revenue from Portal business by ₹ 5 Million ($0.08 Million) and (iii) Revenue from web services by ₹ 28 Million ($0.43 Million).

Other income

The change in other income is as follows:

(Rupees in million)

	Half year ended September 30, 2017		Half year ended September 30, 2016		Change		% Change

Other Income		112		62		50		81	%

Increase in other income is on account of ₹ 49 million ($0.75 Million) towards reimbursements of investor related expense to our ADS programs received during the period.

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, 2017		Half year ended September 30, 2016		Change			% Change
Telecom services		3,124		3,276		(152	)		-5	%
Data Centre Services		581		501		80			16	%
Cloud and Managed Services		231		198		33			17	%
Technology Integration Services		1,088		716		372			52	%
Applications Integration Services		849		762		87			11	%
Total		5,873		5,453		420			8	%

The cost of goods sold has increased by 8% on overall basis, the movement in COGS is explained in detail below:

(Rupees in million)

	Half year ended September 30, 2017		Half year ended September 30, 2016		Change			% Change

Network Costs		2,450		2,708		(258	)		-10	%
Revenue share		279		256		23			9	%
Cost of Hardware / Software		1,256		871		385			44	%
Power costs		555		476		79			17	%
Direct Resources costs		529		440		89			20	%
Other direct costs		804		702		102			15	%
Total		5,873		5,453		420			8	%

Network cost comprises of cost of Bandwidth leased out from TELCOS, Inter connect charges and IP termination costs payable to carriers. Bandwidth cost increased by ₹ 98 Million ($1.49 Million) due to capacity upgradation and newer links, Inter Connect charges and IP termination costs decreased by ₹ 356 Million ($ 5.45 Million) on account of reduction in minutes and rates.

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.

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The increase in Cost of Hardware and Software expenses incurred is on account of higher number of System integration projects and related hardware / software projects executed during the period.

Power costs comprises of electricity cost incurred in our data center. Increase in the cost is on account of increase in utilisation.

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 e Learning and Infrastructure Managed services. These resource costs has increased by ₹89 Million ($ 1.36 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 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 is due to increase in (i) ₹ 38 Million ($0.58 Million) in Cloud & Managed services due to higher usage, (ii) ₹30 Million ($ 0.46 Million) on account of increase in number of online assessment services conducted during the period, (iii) ₹28 Million ($ 0.43 Million) on account of increase in costs of Link implementation and maintenance charges in Telecom Services and (iv) increase in other direct costs of data center by ₹6 Million ($ 0.09 Million) on account of new customer on boarding.

We are continuously 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, 2017		Half year ended September 30, 2016			Change			Change (%)
Operating Expenses		479		478			1			0	%
Selling & Marketing Expenses		86		61			25			41	%
Associate Expenses		951		720			231			32	%
Other Indirect Expenses		491		525			(34	)		-6	%
Provision for doubtful debts and advances		100		84			16			19	%
Forex (gain) / loss		-		(16	)		16			-100	%
Total		2,107		1,852			255			14	%

Operating expenses consists of Tower maintenance, Operating and maintenance costs of Data Centers. Operating expenses remained flat compared to corresponding period of previous year.

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 has increased on account of increase in advertisement and marketing costs.

Other Indirect expense consist of , cost of Facilities , electricity charges incurred on facilities, travel cost , Legal charges , professional charges, communication and others. Increase in other indirect costs is on account of one time higher statutory levy incurred during the same period previous year.

Provision for Doubtful debts consists of the charge on account of the provisions created during the period against doubtful debtors. The marginal increase in Provision for Doubtful debts is on account of prudent provisioning of debtors.

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Depreciation and amortization

Depreciation and amortization is set forth in the table below:

(Rupees in million)

	Half year ended September 30, 2017			Half year ended September 30, 2016			Change		% Change
Depreciation and amortization		985			873			112		13	%
As a percentage of carrying value		14	%		13	%

As the business is continuing to expand, the amount of depreciation is increasing on account of constructing and deploying new facilities by the Company. Increase in depreciation is on account of expansion activities undertaken at data center at Rabale during 2017 and field assets deployment for large projects.

Profit from operating activities

(Rupees in million)

	Half year ended September 30, 2017			Half year ended September 30, 2016			Change		% Change
Operating profit		543			445			98		22	%
As a percentage of revenue		6	%		5	%

Operating profit as a percentage of revenue has remained flat. Though the revenue has increased over the corresponding period of previous year, we have also incurred certain operating costs specific to expansion which has offset this increase in revenue thereby Operating profit as a percentage over revenue remained flat over the corresponding period of previous year.

Finance income/expense

(Rupees in million)

	Half year ended September 30, 2017			Half year ended September 30, 2016			Change			% Change
Finance Income		64			85			(21	)		-25	%
Finance expense		(230	)		(249	)		19			-8	%
Net finance expense		(166	)		(164	)		(2	)		1	%

The decrease in finance income is majorly due to interest on income tax refund amounting to ₹ 71 million ($ 1.08 million) received during previous period compared to ₹ 44 million ($ 0.67 million) received during current period, partly offset by decrease in interest income on fixed deposits with banks. The decrease in finance expenses is majorly on account of reduction in amount of exchange differences considered as interest expense by ₹ 15 million ($ 0.22 million) compared to previous period.

Net Profit

(Rupees in million)

	Half year ended September 30, 2017			Half year ended September 30, 2016			Change		% Change
Net Profit		377			282			95		34	%
As a percentage of revenue		4	%		3	%

Net profit as a percentage of revenue has remained flat. Though the revenue has increased over the corresponding period of previous year, we have also incurred certain operating costs specific to expansion which has offset this increase in revenue thereby Net profit as a percentage over revenue remained flat over the corresponding period of the previous year.

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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, 2017			Half year ended September 30, 2016			Half year ended September 30, 2017
	₹ In million			₹ in million			US $ in million
Net cash from / (used in) operating activities		997			906			15
Net cash from / (used in) investing activities		(990	)		(545	)		(15	)
Net cash from / (used in) financing activities		(587	)		(231	)		(9	)
Effect of exchange rate changes on cash and cash equivalents		(1	)		(2	)		-
Net increase / (decrease) in cash and cash equivalents		(580	)		130			(9	)

As at September 30, 2017 and 2016 we had working capital of ₹ 1,421 million and ₹ 948 million which includes cash and cash equivalents of ₹ 312 million and ₹ 1,144 million respectively. Our working capital net of cash and cash equivalents is ₹ 1,109 million and ₹ 196 million (negative) as at September 30, 2017 and 2016. We believe that cash from operations, existing lines of credit and capital availability from 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 and cross currency swap for our term loan in Indian Rupee, 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 2017 and 2014, the Company has received an aggregate of ₹ 300 million each year, in connection with this private placement, resulting in an aggregate of ₹ 3,100 million received till date. Although all 125,000,000 shares are deemed issued and outstanding, the unpaid portion of the equity shares issued pursuant to the subscription agreement do not have any voting rights and are not entitled to dividends, if declared. As of the date of this Report, Mr. Vegesna has paid for 77.50% of the shares of the subscription . The balance of the proceeds from the allotment of the equity shares to our promoter group, of ₹ 900 million, will take place in tranches as per the amended subscription agreement and the Board of Directors assessment from time to time of the Company’s capital requirements, with respect to both timing and amount.

We have borrowings of ₹ 5,909 million as of September 30, 2017 out of which ₹ 4,178 million will be repaid within a period of 12 months. Interest outflow on existing borrowings for next year is expected to be ₹ 403 million. We have utilized working capital facility of ₹ 2,500 million out of limit of ₹ 2,500 million as on September 30, 2017. We have unutilized funded limit of Nil as on September 30, 2017.

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 ₹ 1,935 million, ₹ 1,259 million, in bank accounts and ₹ 455 million, ₹ 582 million in the form of bank deposits as of September 30, 2017 and 2016, respectively, out of which cash deposits in the form of margin money is restricted for use by us amounting to ₹ 292 million and ₹ 292 million respectively. Balances in foreign currency amount to ₹261 million, ₹462 million as of September 30, 2017 and 2016, respectively.

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Net cash generated from operating activities for the half year ended September 30, 2017 was ₹997 million ($ 15.25 million), ₹ 91 million ($ 1.39 million) higher than previous period. This is mainly attributable to cash generated during the period, decrease in inventories of ₹ 71 million ($ 1.09 million) and increase in employee benefits of ₹23 million ($ 0.35 million). The increase is partially offset by increase in trade and other receivables and other assets of ₹ 131 million ($ 2 million) and ₹ 284 million ($ 4.35 million) respectively, decrease in trade and other payables and deferred revenue of ₹ 52 million ($ 0.80 million) and ₹ 62 million ($ 0.95 million) respectively and income tax paid amounting to ₹ 216 million ($ 3.3 million).

Net cash generated from operating activities for the half year ended September 30, 2016 was ₹906 million ($ 13.6 million), ₹ 531 million ($ 8 million) lower than previous period. This is mainly attributable to increase in trade and other receivables of ₹715 million ($ 10.7 million), and increase in inventories of ₹244 million ($ 3.7 million). The increase is partially offset by increase in trade and other payables of ₹ 198 million ($ 2.9 million).

Net cash used in investing activities for the half year ended September 30, 2017 was ₹990 million ($ 15.15 million) primarily on account of additional expenditure on property, plant and equipment amounting to ₹ 965 million ($ 14.76 million). Also, expenditure on intangibles and corporate debt securities amounted to ₹61 million ($ 0.93 million) and ₹25 million ($ 0.38 million) respectively. The increase was partly offset by increase in finance income by ₹59 million ($0.90 million).

Net cash used in investing activities for the half year ended September 30, 2016 was ₹545 million ($ 8.18 million) primarily on account of additional expenditure on property, plant and equipment amounting to ₹ 608 million ($ 9.12 million). Also, expenditure on intangibles amounted to ₹28 million ($ 0.43 million). The increase was partly offset by increase in finance income by ₹91 million ($1.36 million).

Net cash used in financing activities for half year ended September 30, 2017 was ₹587 million ($ 8.98 million). The increase is mainly due to repayment of lease liabilities of ₹229 million ($ 3.5 million), also finance expenses amounting to ₹231 million ($ 3.53 million) and dividend of ₹209 million ($ 3.2 million) was paid during the period. The increase is partly offset by increase in borrowing by ₹82 million ($ 1.25 million).

Net cash used in financing activities for half year ended September 30, 2016 was ₹231 million ($ 3.47 million). The increase is mainly due to repayment of lease liabilities of ₹353 million ($ 5.2 million), also finance expenses amounting to ₹232 million ($ 3.5 million) and dividend of ₹170 million ($ 2.5 million) was paid during the period. The increase is partly offset by increase in borrowing by ₹523 million ($ 7.8 million).

Tax Matters

(a) Income tax matters

The statutory corporate income tax rate and the surcharge thereon are subject to change in line with the changes announced in the Union Budget each year. For fiscal year 2017, the corporate income tax rate is 30%, subject to a surcharge of 12% where the taxable total income exceeds ₹ 10 crores and education cess of 2 % and 1% secondary and higher education cess, resulting in an effective tax rate of 34.61%. 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. Until April 1, 2002, dividends declared, distributed or paid by an Indian corporation were subject to a dividend tax of 10.2%, including the applicable surcharge for fiscal 2002, of the total amount of the dividend declared, distributed or paid. This tax is not paid by shareholders nor is it a withholding requirement, but rather it is a direct tax payable by the corporation before distribution of a dividend. Effective April 1, 2002, Indian companies were no longer to be taxed on declared dividends. The Finance Act, 2003 proposed that after April 1, 2003, dividend income will be exempt from tax for shareholders and those domestic companies will be liable to pay a dividend distribution tax at the rate of 12.5% plus a surcharge and education cess at the time of the distribution. The Finance Act 2014 has increased the rate of dividend distribution tax to 15% plus applicable surcharge and education cess resulting in an effective rate of 20.358%.

Provisions of the Income Tax Act have been amended effective April 1, 2017 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.

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(b) Goods and Services Tax (GST)

Effective July 2017, Service tax and Sales tax have been replaced by Goods and Services Tax in India.

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, 2017:

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		2,742,997		1,028,228		1,508,927		205,842		-
Short term borrowings		3,129,262		3,129,262		-		-		-
Finance lease obligations		331,645		173,802		145,410		12,433		-
Non-cancellable operating lease obligations		1,047,039		112,358		484,695		449,986		-
Purchase obligations		988,457		988,457		-		-		-

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, 2017.

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)

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The Group is evaluating the impact of IFRS 15 on the consolidated financial statements including the transition method to be adopted and the related disclosures.

(ii)

IFRS 16 Leases : IFRS 16 on lease was issued on January 13, 2016 and is effective from the year January 1, 2019, though early adoption is permitted for companies applying IFRS 15 Revenue from Contracts with Customers . The standard replaces all existing lease accounting requirements and represents a significant change in accounting and reporting of leases, with more assets and liabilities to be reported on the Statement of Financial Position and a different recognition of lease costs.

The Group is currently evaluating the impact of the standard on the 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 2017.

Item 5. Controls and Procedures

Disclosure Controls and Procedures

As at September 30, 2017, 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, 2017, 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, 2017, 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, 2017.

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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, 2017 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, 2017.

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.

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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: November 13, 2017