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You can view the entire text of Notes to accounts of the company for the latest year

BSE: 500304ISIN: INE161A01038INDUSTRY: IT Training Services

BSE   ` 87.80   Open: 89.70   Today's Range 87.20
89.70
-0.35 ( -0.40 %) Prev Close: 88.15 52 Week Range 60.80
116.90
Year End :2018-03 

Notes:-

(i) NIIT Antilles NV, a wholly owned subsidiary of the Company was dissolved and liquidated vide order dated November 23, 2017 issued by Registry Affairs Director of the Curacao Chamber of Commerce and Industry. Consequent to the said liquidation, all assets and liabilities of NIIT Antilles NV, including investments in its three wholly owned subsidiaries (NIIT GC Limited, Mauritius, NIIT Malaysia Sdn Bhd and NIIT West Africa Limited), have been vested/transferred in the Company, subject to applicable regulatory compliances.

These wholly owned subsidiaries of NIIT Antilles NV, have become direct wholly owned overseas subsidiaries of the Company. The same has also been reported to Reserve Bank of India (RBI) through authorised dealer, which has been duly noted by RBI. The investment in these subsidiaries has been recorded at fair value which is carried out by an independent valuer.

(ii) 900,000 Optionally Convertible Debentures (OCDs) of Rs. 1,000 each fully paid at a coupon rate of 0.5% p.a. for a period of 5 years from the date of allotment. The Company had the right to convert such OCDs into equity shares at the expiry of third year from the date of allotment. These are fair valued as at the yearend through profit and loss. The said OCDs have been converted into equity share for Rs. 500 Million at fair value of Rs. 618.64 Million and Rs. 300 million into loan and balance amount of Rs. 100 million has been repaid during the year.

(iii) 22,000,000 Optionally Convertible Debentures (OCDs) of Rs. 10 each fully paid at a coupon rate of 0.5% p.a. for a period of 5 years from the date of allotment wherein the Company had the right to convert such OCDs into equity shares at the expiry of 18 months from the date of allotment. These are fair valued as at the yearend through profit and loss. The said OCDs amounting to Rs. 220 million have been converted into equity at fair value of Rs. 211.10 Million. During the year, the Company has further invested in the equity of NIIT Yuva Jyoti Limited amounting to Rs. 60 million.

(iv) During the previous year, the Company had purchased 10% of the equity capital of NIIT Yuva Jyoti Limited (NYJL) from NSDC for a consideration of Rs. 28.51 million. Consequently, NYJL had become a wholly owned subsidiary of the Company.

(v) During the year, the Company has performed impairment testing for its investments in subsidiary companies. As a result of this, provision for diminution in value of Investment in equity of NYJL for the amount of Rs. 193.59 million is created.

c) Terms/ rights attached to equity shares

The company has only one class of equity shares having par value of Rs. 2 per share. Each holder of equity shares is entitled to one vote per share. The company declares and pays dividends in Indian Rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

d) Shares reserved for issue under options

Information relating to Employee Stock Option Plan, including details of options issued, granted, exercised and lapsed during the financial year and options outstanding at the end of the reporting period, is set out in Note 35.

e) Details of Shareholders holding more than 5% shares in the Company

Footnotes :

(i) Capital reserve represents the reserve created on amalgamation.

(ii) Securities premium reserve is used to record the premium on issue of shares. The reserve is utilised in accordance with the provisions of the Act.

(iii) General Reserve represents requirement to transfer specific sums to a General Reserve as per the local laws of the jurisdiction.

(iv) The Company uses hedging instruments as part of its management of foreign currency risk associated with its highly probable forecasted transactions, i.e., revenue, as described in Note 24. The Company uses Foreign Currency Forward Contracts which are designated as Cash Flow Hedges for hedging foreign currency risk. To the extent these hedges are effective; the change in fair value of the hedging instrument is recognized in the Cash Flow Hedging Reserve. Amount recognized in the Cash Flow Hedging Reserve is reclassified to profit or loss when the hedged item effects profit and loss, i.e., Revenue.

a. Details of Security given against loans

(i) The Company availed foreign currency loan of USD 9.05 Million equivalent to Rs. 600 Million which is fully hedged by converting it from the floating rate in Libor with spread of 215 bps into fixed rate Rupee loan through a currency swap at a spot reference (USD INR) exchange rate of USD 1 = INR 66.30, through full maturity of the loan. The said loan is secured by way of whole of the Company's tangible and intangible, moveable fixed assets, both present and future, land and building of the Company at Sector-34, Gurgaon and first exclusive charge on certain immovable properties. The rate of interest on fully neCgeC equivalent loan amount is fixed at 10.25% p.a. for the tenure of the loan. The necessary formalities to create the security has been completed, as per the terms of the agreement.

(ii) The Company availed foreign currency loan of USD 16.05 Million equivalent to Rs. 1,000 Million, which is fully hedged by converting it from the floating rate in Libor with spread of 175 bps into fixed rate Rupee loan through a currency swap at a spot reference (USD INR) exchange rate of USD 1 = INR 62.30, through full maturity of the loan. The said loan is secured by way of whole of the Company's tangible and intangible, moveable fixed assets, both present and future, land and building of the Company at Sector-32 and Sector-34, Gurgaon. The rate of interest on fully hedged equivalent loan amount is fixed at 10.25% p.a. for the tenure of the loan. The necessary formalities to create the security has been completed, as per the terms of the agreement. During the year the company has repaid foreign currency term loan amounting to USD 3.21 Million equivalent to Rs. 200 Million (USD 12.84 Million equivalent to Rs. 800 Million is outstanding as at March 31, 2018).

Exceptional items as above comprise, items of income/(expenditure), arising from ordinary activities of the Company of such size, nature or incidence that their separate disclosure is considered appropriate to better explain the performance for the year

(i) Pursuant to liquidation of NIIT Antilles NV, Rs. 92.72 Million (net of expenses) has been recognised as exceptional income on account of reversal of provision for diminution in value of investment.

(ii) During the previous year, the Company had collected Rs. 29.70 Million towards loans, debts and other balances recoverable from its wholly owned subsidiary, Mindchampion Learning Systems Limited for which provision was recognised as an exceptional item in the earlier years was written back. Further the Company had written back provision amounting to Rs. 9.65 Million for doubtful debts and advances recoverable, for which provision was recognised as exceptional items in earlier years.

(iii) During the year, the Company has provided for Rs 5.03 Million on account of litigation in Indirect taxes.

(iv) During the year, the Company has evaluated the valuation of its investment in NIIT Yuva Jyoti Limited and has accordingly made a provision for diminution in value of investment amounting to Rs. 193.59 Million.

(v) During the year, the Company has provided for Rs 19.65 Million on account of deduction from the security in one of the Government projects, which is strongly contested by the Company and is under discussion for resolution.

23 Fair value measurements

(i) Fair value hierarchy

To provide indication about the reliability of the inputs used in determining fair value, the Company has classified its financial instruments into the three levels prescribed under the accounting standard explained below:

Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes listed equity instruments, traded bonds and mutual funds that have quoted price. The fair value of all equity instruments (including bonds) which are traded in the stock exchanges is valued using the closing price as at the reporting period. The mutual funds are valued using the closing net asset value. Level 2: The fair value of financial instruments that are not traded in an active market (for example foreign exchange forward contracts) is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities, contingent consideration and indemnification asset included in level 3.

The Company's policy is to recognize transfers into and transfers out of fair value hierarchy levels at the end of reporting period.

(ii) Valuation technique used to determine fair value

Specific valuation techniques used to value financial instruments include:

- The use of quoted market prices for similar instruments.

- The fair value of forward foreign exchange contracts is determined using Mark to Market Valuation by the respective bank at the balance sheet date.

- The fair value of the remaining financial instruments is determined using discounted cash flow analysis.

As of March 31, 2018, March 31, 2017 and April 1, 2016, the fair value of cash and bank balances, trade receivables, other current financial assets and liabilities, borrowings, trade payables approximate their carrying amount largely due to the nature of these instruments.

For other financial assets and liabilities that are measured at amortised cost, the carrying amounts approximate the fair value.

24 Financial risk management

The Company's principal financial liabilities, other than derivatives, comprise loans and borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the Company's operations and to provide guarantees to support its operations. The Company's principal financial assets include loans, trade and other receivables, and cash and short-term deposits that derive directly from its operations.

The Company is exposed to market risk, credit risk and liquidity risk. The Company's senior management oversees the management of these risks. The Company's senior management is supported by a financial risk committee that advises on financial risks and the appropriate financial risk governance framework for the Company. The finance committee provides assurance to the Company's senior management that the Company's financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the Company's policies and risk objectives. All derivative activities for risk management purposes are carried out by specialist teams that have the appropriate skills, experience and supervision. It is the Company's policy that no trading in derivatives for speculative purposes may be undertaken. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below:

(A) Credit risk

Credit risk refers to the risk of default on its obligation by the counter parity resulting in a financial loss. The maximum exposure to the credit risk at the reporting date is primarily from trade receivables amounting to Rs. 1,012.73 Million as of March 31, 2018 (March 31, 2017 - Rs. 852.27 Million and April 1, 2016 - Rs 1124.90 Million) and unbilled revenue amounting to Rs. 85.08 Million as of March 31, 2018 (March 31, 2017 - Rs. 83.25 Million and April 1, 2016 - Rs. 72.23 Million). Trade receivables and unbilled revenue are typically unsecured and are derived from revenue earned through individual subsidiaries, government customers and other corporate customers. The Company has used the expected credit loss model to assess the impairment loss or gain on trade receivables and unbilled revenue, and has provided it wherever appropriate. The following table gives the movement in allowance for expected credit loss for the year ended March 31, 2018:

(B) Liquidity risk

The Company's principal sources of liquidity are cash and cash equivalents and the cash flow that is generated from operations. The Company has outstanding borrowings as term loans and working capital limits from banks. The borrowings are secured by a first charge on the book debts and movable & immovable assets of the Company . However, the Company believes that the working capital is sufficient to meet its current requirements. Accordingly, no liquidity risk is perceived.

(i) Maturities of financial liabilities

The table below provides details regarding the contractual maturities of significant financial liabilities:

(C) Market risk

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

(i) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company's interest rate risk arises primarily from the foreign currency term loan carrying at floating rate of interest. These obligations exposes the Company to cash flow interest rate risk. The Company has mitigated the interest rate risk on foreign currency term loan by converting it from floating rate to fixed rate through currency swap. Hence, there is no significant challenge of interest rate risk.

(ii) Foreign currency risk

The company operates internationally and is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the USD, GBP EUR. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the company's functional currency. The Company evaluates its exchange rate exposure arising from these transactions and enters into foreign exchange forward contracts to hedge forecasted cash flows denominated in foreign currency and mitigate such exposure.

25 Capital management

The primary objective of the management of the Company's capital structure is to maintain an efficient mix of debt and equity in order to achieve a low cost of capital, while taking into account the desirability of retaining financial flexibility to pursue business opportunities and adequate access to liquidity to mitigate the effect of unforeseen events on cash flows. To maximise the shareholder value the management also monitors the return on equity.

The Board of directors regularly review the Company's capital structure in light of the economic conditions, business strategies and future commitments.

For the purpose of the Company's capital management, capital includes issued share capital, securities premium and all other reserves. Debt includes, foreign currency term loan and other borrowings.

During the financial year, no significant changes were made in the objectives, policies or processes relating to the management of the Company's capital structure.

26 Employee Benefits A) Defined Contribution Plans

The Company makes contribution towards Provident Fund (other than NIIT Limited and certain other domestic subsidiaries), Superannuation Fund and Pension Scheme to the defined contribution plans for eligible employees.

The Company has charged the following costs in Contribution to Provident and Other Funds in the Statement of Profit and Loss:-

vii) Investment details of Plan Assets:-

The plan assets are maintained with Life Insurance Corporation of India Gratuity Scheme. The details of investment maintained by Life Insurance Corporation are not available with the Company and have not been disclosed.

The expected return on plan assets is determined considering several applicable factors mainly the compensation of plan assets held, assessed risk of asset management, historical result of the return on plan assets.

Sensitivity analysis

The sensitivity of the defined benefit obligation to changes in the weighted principal assumptions is:

The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognised in the balance sheet.

Risk exposure

Through its defined benefit plans, the group is exposed to a number of risks, the most significant of which are market volatility, changes in inflation, changes in interest rates, rising longevity, changing economic environment, regulatory changes etc.

The Company ensures that the investment positions are managed within an asset-liability matching framework that has been developed to achieve investments which are in line with the obligations under the employee benefit plans. Within this framework, the Company's asset-liability matching objective is to match assets to the obligations by investing in securities to match the benefit payments as they fall due.

The Company actively monitors how the duration and the expected yield of the investments are matching the expected cash outflows arising from employee benefit obligations. The Company has not changed the processes used to manage its risks from previous periods. Investments are well diversified, such that failure of any single investment should not have a material impact on the overall level of assets.

*Pertains to alleged dues towards provident fund payable by vendors of the Company. The Company does not expect any reimbursements in respect of the above.

b) The Company had received Show Cause Notices under section 263 of the Income Tax Act, 1961, issued by the Commissioner of Income Tax (CIT) for the Assessment years 1999-00 to 2005-06, who later issued Orders directing the Assessing Officer for re-assessment on certain items. The orders passed by the CIT u/s 263 for AY 1999-00 to AY 2005-06 have been challenged by the Company in the Income Tax Appellate Tribunal ('the Tribunal'). The Tribunal has since passed order for AY 1999-00 wherein the Tribunal has decided the issue of assumption of jurisdiction against the Company. On merits, the Tribunal has allowed some of the issues and dismissed others which were referred back to the assessing officer for fresh examination. The Company has filed an appeal before the Hon'ble High Court of Delhi against the aforesaid order of the Tribunal which is pending for disposal. At this stage there is no ascertained/quantified demands. Based on legal opinion, the Company has fair chances of obtaining adequate relief before the Hon'ble High Court.

It is not practical for the Company to estimate the timings of cash outflows, if any, in respect of the above pending resolution of the respective proceedings. Management does not foresee any financial implication based on advice of legal counsel.

c) Guarantees

i. Guarantees issued by bankers outstanding at the end of the year Rs. 1.10 Million (March 31, 2017 - Rs. 1.10 Million and April 1, 2016 - Rs. 1.12 Million).

ii. Corporate Guarantee to National Skill Development Corporation to secure loan of Rs. 85.50 Million (March 31, 2017 - Rs. 90 Million and April 1, 2016 - Rs. 142.64 Million) availed by NIIT Yuva Jyoti Limited, a subsidiary of the Company.

iii. Corporate Guarantee to National Skill Development Corporation to secure them in the event of default on the part of NIIT Yuva Jyoti Limited in making payment towards outstanding royalty amount of Rs. 66.27 Million (March 31, 2017 - Rs. 136.49 Million and April 1, 2016 - Nil).

iv. Corporate Guarantee issued to banks for availing working capital limits on behalf of Mindchampion Learning Systems Limited Rs. 450 Million (March 31, 2017 - Rs. 450 Million and April 1, 2016 - Nil) [Amount Outstanding at year end Nil (March 31, 2017 - Nil and April 1, 2016 - Nil)].

d) Other Monies for which the Company is contingently liable

Standby Letter of Credit is Nil [March 31, 2017 Rs. 486.44 Million (USD 7.5 Million) and April 1, 2016 Rs. 496.31 Million (USD 7.5 Million)] for working capital limits in favour of NIIT (USA) Inc., USA, a subsidiary of the Company, by earmarking working capital facility of NIIT Limited.

28 Capital and Other Commitments

(a) Estimated amount of contracts remaining to be executed on capital account (net of advances) not provided for Rs. 209.68 Million (March 31, 2017 - Rs. 287.22 Million and April 1, 2016 - Rs. 508.72 Million).

(b) For commitments related to lease arrangements, refer Note 33.

(c) The Company has issued a letter of support to provide need based financial support to its subsidiaries Mindchampion Learning Systems Limited, NIIT Yuva Jyoti Limited, NIIT GC Limited and NIIT Learning Solutions (Canada) Limited.

30 Related Party Transactions :

A. Related party relationship where control exists:

Subsidiaries

1 Mindchampion Learning Systems Limited

2 NIIT Institute of Finance Banking and Insurance Training Limited

3 NIIT Yuva Jyoti Limited

4 NIIT Institute of Process Excellence Limited

5 NIIT USA Inc., USA

6 NIIT Limited, UK

7 NIIT Malaysia Sdn. Bhd, Malaysia

8 NIIT West Africa Limited

9 NIIT GC Limited, Mauritius

10 NIIT (Ireland) Limited

11 NIIT Learning Solutions (Canada) Limited

12 Eagle International Institute Inc. USA (w.e.f. January 3, 2018)

13 Eagle Training Spain, S.L.U. (subsidiary of entity at serial no. 12)

14 NIIT Antilles NV, Netherlands Antilles (liquidated w.e.f. November 23, 2017)

15 PT NIIT Indonesia, Indonesia (under liquidation)

16 NIIT China (Shanghai) Limited, Shanghai

1 7 NIIT Wuxi Service Outsourcing Training School, China (Memorandum of Understanding was executed to sell on April 1, 2017)

18 Wuxi NIIT Information Technology Consulting Limited, China (agreement to sell entered on March 31, 2018)

19 Su Zhou NIIT Information Technology Consulting Limited, China (subsidiary of entity at serial no. 18)

20 Changzhou NIIT Information Technology Consulting Limited (subsidiary of entity at serial no. 18)

21 Zhangjiagang NIIT Information Services Limited, China

22 Qingdao NIIT Information Technology Company Limited, China (closed w.e.f. January 31, 2018)

23 Chengmai NIIT Information Technology Company Limited, China

24 Chongqing An Dao Education Consulting Limited, China

25 Chongqing NIIT Education Consulting Limited, China

26 NIIT (NingXia) Education Technology Company Limited, China (incorporated w.e.f. May 19, 2017)

27 Dafeng NIIT information technology Co., Limited, China (closed w.e.f. October 25, 2017)

28 Guizhou NIIT information technology consulting Co., Limited, China

29 NIIT (Guizhou) Education Technology Co., Limited, China

B. Other related parties with whom the Company has transacted:

a) Associate (Parties in which Company has substantial interest)

1 NIIT Technologies Limited

2 NIIT GIS Limited

3 NIIT Smart Serve Limited

b) Key Managerial Personnel

1 Rajendra S Pawar (Chairman)

2 Vijay K Thadani (Vice-Chairman & Managing Director)

3 P Rajendran (Joint Managing Director)

4 Rahul Keshav Patwardhan (Chief Executive Officer upto July 31, 2017)

5 Sapnesh Kumar Lalla (Chief Executive Officer w.e.f. August 1, 2017)

6 Rohit Kumar Gupta (Chief Financial Officer upto February 28, 2017)

7 Amit Roy (Chief Financial Officer w.e.f. March 1, 2017 )

c) Relatives of Key Managerial Personnel

1 Renuka Thadani (Wife of Vijay K Thadani)

2 Veena Oberoi (Sister of Vijay K Thadani)

d) Parties in which the Key Managerial P

Personnel of the Company are interested

1 NIIT Institute of Information Technology

2 Naya Bazaar Novelties Private Limited

3 NIIT Foundation (formerly known as NIIT Education Society)

4 Pace Industries Private Limited

5 NIIT Network Services Limited

6 NIIT University

D. Terms and conditions

Transactions relating to dividends, subscriptions for new equity shares were on the same terms and conditions that applied to other shareholders.

Transactions with related parties during the year were based on terms that would be available to third parties. All other transactions were made on normal commercial terms and conditions and at market rates.

All outstanding balances are unsecured and are repayable in cash.

32 The Board of Directors of the Company has, in its meeting held on March 24, 2017, approved the amalgamation of PIPL Management Consultancy and Investment Private Limited ("PMPL") and Global Consultancy and Investment Private Limited ("GCPL") with NIIT Limited ("the Company or NIIT") by way of and in accordance with a scheme of amalgamation as per the provisions of Sections 230 to 232 and any other applicable provisions of the Companies Act, 2013 (hereinafter referred to as the "Scheme"). PMPL and GCPL hold 15.23% & 15.56% equity shares of NIIT Limited respectively and form part of promoter/ promoter group of NIIT Ltd.

From the effective date, pursuant to the Scheme, the entire shareholding of PMPL and GCPL in the Company shall stand cancelled and the equivalent shares of the Company shall be re-issued to the shareholders of PMPL and GCPL as on the record date to be fixed for the purpose.

Pursuant to the proposed amalgamation of PMPL and GCPL with the Company, there will be no change in the promoter's shareholding in the Company. All cost and charges arising out of this proposed scheme of amalgamation shall be borne by the promoter/ promoter group.

The aforesaid Scheme is subject to various regulatory and other approvals and sanction by National Company Law Tribunal, New Delhi Bench and accordingly, not reflected in these financial statements.

33 Segment Information

The Company is engaged in providing Education & Training Services in a single segment. Based on "Management Approach", as defined in Ind AS 108 - Segment Reporting, the Chief Operating Decision Maker (CODM) evaluates the performance and allocates resources based on the analysis of performance of the Company as a whole. Its operations are, therefore, considered to constitute a single segment in the context of Ind AS 108 - Segment Reporting.

As per Ind AS 108 - Operating Segments, where the financial report contains both the consolidated financial statements of a parent as well as the parent's separate financial statements, segment information is required only in the consolidated financial statements, Accordingly, no segment information is disclosed in these standalone financial statements of the Company.

* Includes payment in respect of premises for office and employee accommodation ** Includes payment in respect of computers, printers and other equipment’s.

35 Share based payments Employee option plan

During the year 2005-06, the Company had established NIIT Employee Stock Option Plan 2005 "ESOP 2005" and the same was approved at the General Meeting of the Company held on May 18, 2005. The plan was set up so as to offer and grant, for the benefit of employees (excluding promoters) of the Company, who are eligible under "Securities and Exchange Board of India (SEBI) (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999", options of the Company in one or more tranches, and on such terms and conditions as may be fixed or determined by the Board, in accordance with the provisions of law or guidelines issued by the relevant authorities in this regard.

As per the plan, each option is exercisable for one equity share of face value of Rs. 2/- each (Rs. 10/- each pre bonus and split) fully paid up on payment to the Company, at a price to be determined in accordance with ESOP 2005. ESOP information is given for the number of shares after sub-division and Bonus issue.

The weighted average exercise price per share option at the date of exercise of options exercised during the year ended March 31,2018 was Rs. 53.09 (March 31, 2017 - Rs. 48.20)

No options expired during the periods covered in the above tables.

36 Business combinations

(a) Summary of acquisition

During the previous year, the Company had acquired the business from Perceptron Learning Solutions Private Limited ('Perceptron'). The strategic acquisition is expected to bring complementary technology platforms and capabilities to the Company.

The Acquisition was made for an aggregate consideration of Rs. 24.85 Million. Out of the total consideration, an amount of Rs. 14.85 Million was paid upfront during the previous year and Rs. 10 Million is payable based on achievement of performance based milestones. The purchase price nas been allocated between the fair values of assets & liabilities based on an independent valuation report as a result of which a goodwill of Rs. 18.35 Million was recognised.

(b) Significant judgements

(i) Contingent consideration

The Company is confident that the acquisition will achieve the performance based milestones and the entire contingent consideration would be paid to the seller.

(ii) Acquired receivables

No adjustments have been made to acquire trade receivables.

(iii) Assumed payables

No adjustments have been made to assume trade payables.

37 First-time adoption of Ind AS Transition to Ind AS

These are the Company's first financial statements prepared in accordance with Ind AS.

The accounting policies set out in note 2 have been applied in preparing the financial statements for the year ended March 31, 2018, the comparative information presented in these financial statements for the year ended March 31, 2017 and in the preparation of an opening Ind AS balance sheet at April 1, 2016 (The company's date of transition).

In preparing its opening Ind AS balance sheet, The company has adjusted the amounts reported previously in financial statements prepared in accordance with the accounting standards notified under Companies (Accounting Standards) Rules, 2006 (as amended) and other relevant provisions of the Act (previous GAAP or Indian GAAP).

An explanation of how the transition from previous GAAP to Ind AS has affected the company's financial position, financial performance and cash flows is set out in the following tables and notes.

A. Exemptions and exceptions availed

Set out below are the applicable Ind AS 101 optional exemptions and mandatory exceptions applied in the transition from previous GAAP to Ind AS.

A.1 Ind AS optional exemptions A.1.1 Deemed cost

Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognised in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition after making necessary adjustments. This exemption has also been used for intangible assets covered by Ind AS 38 Intangible Assets and investment property covered by Ind AS 40 Investment Properties.

Accordingly, The company has elected to measure all of its property, plant and equipment, intangible assets and investment property at their previous GAAP carrying value.

A. 1.2 Leases

Appendix C to Ind AS 17 requires an entity to assess whether a contract or arrangement contains a lease. In accordance with Ind AS 17, this assessment should be carried out at the inception of the contract or arrangement.

Ind AS 101 provides an option to make this assessment on the basis of facts and circumstances existing at the date of transition to Ind AS, except where the effect is expected to be not material. The company has elected to apply this exemption for such contracts/arrangements.

A 1.3 Investments in subsidiaries, joint ventures and associates

As per Ind AS 27, the Company has an option to value its investments in subsidiaries, joint ventures and associates either at Previous GAAP Value or Fair value as deemed cost. The Company has opted for fair value option for one of its subsidiary (with corresponding impact to opening retained earnings as on transition date) and Previous GAAP values for rest of the subsidiaries as per exemptions available on transition.

A 1.4 Business Combinations

The Company has availed the option to not apply Ind AS 103, retrospectively to business combinations that occurred prior to the transition date.

A 1.5 Share based payment transactions

The Company has availed the option to apply Ind AS 102 Share-based payment to equity instruments that vested before date of transition to Ind AS.

A 1.6 Fair value measurement of financial assets or liabilities at initial recognition

Ind AS 109 requires to initially recognize financial assets and liabilities at fair value and if the fair value differs from transaction price, the difference is recognized as gain or loss. The Company has elected to apply these requirements of initial recognition prospectively to transactions entered on or after the date of transition.

A.2 Ind AS mandatory exceptions A.2.1 Estimates

An entity's estimates in accordance with Ind AS at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (afer adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error. Ind AS estimates as at April 1, 2016 are consistent with the estimates as at the same date made in conformity with previous GAAP The company made estimates for following items in accordance with Ind AS at the date of transition as these were not required under previous GAAP:

- Impairment of financial assets based on expected credit loss model.

A.2.2 Hedge Accounting

Hedge accounting can only be applied prospectively from the transition date to transactions that satisfy the hedge accounting criteria in Ind AS 109, at that date. Hedging relationships cannot be designated retrospectively, and the supporting documentation cannot be created retrospectively. AS a result, only hedging relationships that satisfied the hedge accounting criteria as of April 1, 2016 are reflected as hedges in the Company's results under Ind AS.

The Company had designated various hedging relationships as cash flow hedges under the previous GAAP On date of transition to Ind AS, the entity had assessed that all the designated hedging relationship qualifies for hedge accounting as per Ind AS 109. Consequently, the Company continues to apply hedge accounting on and after the date of transition to Ind AS.

A.2.3 Classification and measurement of financial assets

Ind AS 101 requires an entity to assess classification and measurement of financial assets on the basis of the facts and circumstances that exist at the date of transition to Ind AS.

C. Notes to first-time adoption:

a. Remeasurement of post-employment benefit obligations

Under Ind AS, Remeasurement i.e. actuarial gains and losses and the return on plan assets, excluding amounts included in the net interest expense on the net defined benefit liability are recognised in Other Comprehensive Income instead of statement of profit or loss. Under the previous GAAP these Remeasurement were forming part of the statement of profit or loss for the year. As a result of this change, the profit for the year ended March 31, 2017 has been increased by Rs. 8.48 Million and the same has been recognised in Other Comprehensive Income. There is no impact on the other equity as at March 31, 2017.

b. Fair valuation of investments

Under Previous GAAP investments in equity instruments and OCDs were classified as long-term investments, based on its intended holding period. These long-term investments were carried at cost less provision, other than temporary decline in the value of such investments. Under Ind AS, investments in equity instruments are required to be measured at cost or fair value based on policy choices adopted by the Company. However, investments in OCDs are required to be necessarily measured at fair value. As a result the investment in the equity instrument of one of the subsidiaries, NIIT Yuva Jyoti Limited has reduced by Rs 86.19 Million and Investments in the OCDs in Mindchampion Learning Systems Limited has increased by Rs 120.30 Million as at April 1, 2016. This has resulted in the increase in other equity by Rs 34.11 Million as at April 1, 2016. During the year ended March 31, 2017 Investments in OCDs in Mindchampion Learning Systems Limited has increased by Rs. 14.49 Million and Investments in OCDs in NIIT Yuva Jyoti Limited has reduced by Rs. 26 Million. This has resulted in the reduction in the profit and loss for the year ended March 31, 2017 by Rs. 11.51 Million.

c. Recognition of property, plant and equipment

Under Ind AS based on principles of substance over form the Company has recognised Land and Building under property, plant and equipment despite the fact that as per the agreement the title of the same would be transferred upon making final payment to the seller. Hence the Company has recognised land and building amounting to Rs. 690.61 Million and Rs 419.61 Million (net of accumulated depreciation) respectively under property, plant and equipment as at April 1, 2016. The Company has also recognised other financial liability (other payables) amounting to Rs 280.02 Million as at March 31, 2017 (April 1, 2016 - Rs. 460.48 Million) and derecognised other non-current asset (capital advances) amounting to Rs 835.66 Million as at March 31, 2017 (April 1, 2016 - Rs 655.19 Million) as a result of this change. This has reduced other equity by Rs 5.46 Million as at April 1, 2016 on account of accumulated depreciation on building till that date. Further the depreciation amounting to Rs 7.32 Million has been charged to the statement of profit and loss during the year ended on March 31, 2017.

Further under previous GAAP Investment property was part of property, plant and equipment, however as per Ind AS this requires a separate disclosure. Accordingly amount of Rs 0.56 Million has reclassified from property, plant and equipment to investment property as at April 1, 2016.

d. Interest accretion on deferred payment liabilities

Under previous GAAP long term liabilities were recognised at transaction value. Under Ind AS, these financial liabilities are required to be recognised initially at their fair value and subsequently at amortised cost. As a result, these financial liabilities have decreased by Rs. 1.64 Million as at March 31, 2017 (April 1, 2016 - Rs. 5.06 Million). The profit for the year ended March 31, 2017 decreased by Rs. 4.84 Million due to interest accretion on deferred payment liabilities.

Consequently Goodwill have been initially reduced by Rs 1.42 Million and respective amortization have been reversed by Rs. 2.30 Million during the year ended March 31, 2017. (Net impact on Goodwill is Rs. 0.88 Million).

Further other intangible assets have been reduced by Rs. 4.05 Million as at March 31, 2017 (Rs. 7.57 Mn as at April 01, 2016) and the profit has increased by Rs. 3.51 Million during the year ended March 31, 2017 on account of reversal of amortization and other equity has reduced by Rs. 2.52 Million as at April 1, 2016.

e. Share based payments

Under the previous GAAP the cost of equity settled employee share-based plan was recognized using intrinsic value method. Under Ind AS, the cost of equity settled share-based plan is recognized based on fair value of the options as at grant date. Therefore, the amount recognised in share option outstanding account (under other equity) as on March 31, 2017 increased by Rs. 20.46 Million (April 1, 2016 - Rs. 37.33 Million). Consequently, profit before tax for the year ended March 31, 2017 has decreased by Rs. 10.76 Million. Also, an amount of Rs. 22.63 Million (April 1, 2016 -Rs. 12.92 Million) was recognized as recoverable from subsidiaries on account of Employee stock option expense.

f. Provision recognised on trade receivables as per Expected Credit Loss

As per Ind AS, the Company is required to apply expected credit loss model for recognising the allowance for doubtful debts. As a result, the allowance for doubtful debts increased by Rs. 45.17 Million as at March 31, 2017 (April 1, 2016 - Rs. 80.95 Million) with consequential decrease in other equity. The profit for the year ended March 31, 2017 increased by Rs. 35.79 Million due to reversal of allowance for doubtful debts under expected credit loss model.

g. (i) Deferred Revenue

Under previous GAAP, revenue is recognised once the risk and rewards is transferred in a transaction and reliable estimation can be made for its ultimate collectability. However under Ind AS, revenue recognition criteria is applied separately to each components of a single transaction in order to reflect the substance of the transaction considering the perspective of the customer. Accordingly, there has been change in the timing of revenue recognition. Consequent to this change, the amount of deferred revenue increased by Rs. 208.08 Million as at March 31, 2017 (April 1, 2016 Rs. 203.10 Million). The revenue from operations for the year ended March 31, 2017 decreased by Rs. 5.02 Million.

As a result of such adjustment in revenue, its corresponding cost has been deferred. Consequently, the amount of prepaid expense increased by Rs. 43.36 Million as at March 31, 2017 (April 1, 2016 Rs. 38.62 Million). The Professional & Technical Outsourcing Expenses for the year ended March 31, 2017 decreased by Rs. 16.30 Million.

(ii) Revenue & reimbursement of expenses on net basis

Under Previous GAAP the Company recognized the reimbursement of expenses under the head revenue from operations, with the corresponding expenses in the statement of profit and loss. However, under Ind AS, the Company is recognizing the reimbursement of expenses net of corresponding revenue. As a result of this change there is decrease in revenue from operations Rs.11.52 Million for the year ended March 31, 2017. This has alsc resulted in the reclassification of trade receivables to other financial assets amounting to Rs 102.10 Million as at March 31, 2017.

(iii) Revenue net of trade discount and rebate

Under Previous GAAP the Company recognized the trade discount and rebate under the head other expenses in the statement of profit and loss. However, under Ind AS, the trade discount and rebate is adjusted with the revenue. As the result of this change the revenue and other expense is decreased by Rs. 13.09 Million for the year ended March 31, 2017.

h. Deferred tax asset

The Company has carried out a review of recoverability of Deferred Tax Asset ('DTA') recognised in the previous GAAP financial statements as on March 31, 2016. Based on above, considering future business plans of the Company and other circumstances which were existing as on that date, the management has determined the DTA would not have been recognised under Ind AS 12 . Accordingly, the opening balance of DTA amounting to Rs. 103.77 Million has been reversed in the other equity as on April 1, 2016.

i. Change in fair value of forward contracts designated as cash flow hedges

Under Ind AS, changes in the fair value of derivative hedging instruments designated and effective as a cash flow hedge are recognized through other comprehensive income. j. Retained earnings

Retained earnings as at March 31, 2017 and April 1, 2016 has been adjusted consequent to the above Ind AS transition adjustments.

38 The comparative financial information of the Company for the year ended March 31, 2017 and the transition date opening balance sheet as at April 01, 2016 included in these Ind AS financial statements, are based on the previously issued financial statements prepared in accordance with accounting principles generally accepted in India and were audited by a firm other than S.R. Batliboi & Associates LLP as adjusted for the differences in the accounting principles adopted by the Company on transition to the Ind AS.

Signatures to Notes '1' to '38' above of these Financial Statements.