1 Company Overview and Significant Accounting Policies

A. Corporate Information

International Travel House Limited (‘the Company’) commenced its operations in 1981 and is engaged in the business of providing travel related services to corporate travellers in India and abroad. The Company is a public limited company incorporated, domiciled and listed in India. The Company has its registered office at ‘Travel House’ T-2, Community Centre, Sheikh Sarai, Phase I, New Delhi 110017, India.

The financial statements were approved for issue by the Board of Directors on 17th April, 2018.

B. Basis of Preparation of Financial Statements

i) Statement of Compliance

These financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under section 133 of the Companies Act, 2013 and the relevant presentation requirements of the Companies Act, 2013.

ii) Basis of Preparation

The financial statements are prepared in accordance with the historical cost convention except for certain items which are measured at fair values, as explained in the accounting policies.

Fair Value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and / or disclosure purposes in these financial statements is determined on such a basis except for share based payment transactions that are within the scope of Ind AS 102 - Share-based Payment.

The financial statements are presented in Indian Rupee, which is also the Company’s functional currency.

A summary of significant accounting policies is set out below.

iii) Operating Cycle

All assets and liabilities have been classified as current or non-current as per the Company’s normal operating cycle and other criteria set out in Schedule III to the Companies Act, 2013 and Ind AS 1 - Presentation of Financial Statements based on the nature of services and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents.

Rights, preferences and restriction attached to the Equity Shares

A) The Equity Shares of the Company, having par value of ' 10.00 per share, rank pari passu in all respects including voting rights and entitlement to dividend.

B) There were no bonus issue or buy back of equity shares during the period of five years immediately preceding the reporting date.

B Fair Value Hierarchy

Fair value of the financial instruments is classified in various fair value hierarchies based on the following three levels:

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or 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)

The fair value of financial instruments that are not traded in an active market is determined using market approach and valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. If significant inputs required to fair value an instrument are observable, the instrument is included in Level 2.

Level 3 - Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).

(ii) Corporate Social Responsibility (‘CSR’)

CSR Committee has been formed by the Company and the CSR Policy has been approved by the Board which has been uploaded on the Company’s website. The Company has contributed Rs. 44.40 lacs to the ITC Education Trust (Mar’17 - Rs. 49.15 lacs to the ITC Rural Development Trust), in accordance with Section 135 read with Schedule VII to the Companies Act, 2013 to discharge its Social Responsibility. (Refer note 29)

(iii) Contingent Liabilities & Commitments:

a) Contingent Liabilities

i. Service tax demand of Rs. 23.62 lacs (Mar’17 - Rs. 23.62 lacs) issued by Commissioner of Service Tax for the years from July, 2003 to March, 2009 for which Company has filed an appeal with Tribunal (Service Tax) and also deposited cumulative amount of Rs. 14.70 lacs (Mar’17 - Rs. 14.70 lacs) under protest.

ii. Guarantee outstanding Rs. 100.00 lacs (Mar’17 - Rs. 100.00 lacs).

b) Commitments:

Capital commitments Rs. 76.10 lacs (Mar’17 - Rs. 21.44 lacs).

(iv) Trade Receivables include an amount of Rs. 46.70 lacs (Mar’17 - Rs. 46.70 lacs) representing recoverable from certain customers on account of Value Added Tax. Management is confident that the same is recoverable either through the process of law or from the said customers.

(v) Micro, Small and Medium scale business entities:

There are no Micro, Small and Medium enterprises, to whom the Company owes dues, which are outstanding for more than 45 days during the year and also as at 31st March, 2018. This information, as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006, has been determined to the extent such parties have been identified on the basis of information available with the Company.

(vi) The Gross transaction value of sale of services rendered during the Current Financial Year is Rs. 89,669.53 lacs (Mar’17 - Rs. 88,356.62 lacs).

(vii) Information in respect of Options granted under ITC Employee Stock Option Scheme:

The eligible employees of the Company, including employees deputed from ITC Limited (ITC) have been granted stock options by ITC under the ITC Employee Stock Option Scheme (ITC ESOS). These options vest over a period of three years from the date of grant and are exercisable within a period of five years from the date of vesting. Each Option entitles the holder thereof to apply for and be allotted ten Ordinary Shares of ITC Limited of Rs. 1.00 each upon payment of the exercise price.

These Options have been granted at the ‘market price’ within the meaning of Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014. The fair value of the options granted is determined by ITC Limited using the Black Scholes Option Pricing model, for all Optionees covered under the ITC ESOS as a whole.

* The weighted average exercise price of the options granted to all Optionees under ITC ESOS is computed by ITC as a whole. @ Includes 9,830 (Mar’17- 26,435) options granted to the Key Management Personnel of the Company. Since such options are not tradeable, no perquisite or benefit is immediately conferred upon an employee by such grant.

In accordance with Ind AS 102, the Company has recognized an amount of Rs. 126.06 lacs (Mar’17 - Rs. 226.72 lacs) (refer note no. 27) by way of share based payments. Such charge has been recognised as employee benefits expense with corresponding credit to Payables. Out of the above, Rs. 67.36 lacs (Mar’17 - Rs. 154.07 lacs) is attributable to key management personnel [Mr J J Ghadiali Rs. Nil (Mar’17 - Rs. 60.73 lacs); Mr S Sequeira Rs. 53.08 Lacs (Mar’17 - Rs. 45.29 lacs); Mr S Datta ' Nil (Mar’17 - Rs. 30.10 lacs) and Ms J Aggarwal Rs. 14.28 lacs (Mar’17 - Rs. 17.95 lacs)].

(viii) Segment Reporting

Operating segments are to be reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker (CODM). The CODM, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Corporate Management Committee.

The CODM reviews are conducted for Travel Related Services which encompasses all operations of the Company and as such the figures appearing in the financials relate to a single segment only.

There are no revenues in excess of 10% derived from any single customer.

(ix) Standards issued but not yet effective

Ministry of Corporate Affairs (MCA) has issued the Companies (Indian Accounting Standards) (Amendment) Rules, 2018 on 28th March, 2018 notifying Ind AS 115, ‘Revenue from Contracts with Customers’ and amending Ind AS 21 ‘The Effects of Changes in Foreign Exchange Rates’; Ind AS 12 ‘Income Taxes’ and consequent amendments in other relevant Indian Accounting Standards. The same are applicable for financial statements pertaining to annual periods beginning on or after 1st April, 2018. The Company expects that there will be no material impact on the financial statements resulting from the implementation of these standards.

2 (a) Defined Benefit Plans / Long Term Compensated Absences Description of Plans

The Company makes contributions to defined benefit plans and defined contribution plans for qualifying employees. Some of these are administered through duly constituted and approved Trusts, which operate in accordance with the Trust Deed, Rules and applicable legislations. These Trusts are governed by Trustees, who provides strategic guidance for management of investments and liabilities of such trusts and periodically review the performance of the Trusts.

Gratuity benefits are funded and leave encashment & medical benefits are unfunded in nature. The defined benefit pension plans are based on employees pensionable remuneration and length of service. Under the Provident Fund and Gratuity, the employees are entitled to receive lump sum benefits upon retirement. Under Pension Schemes, the employees are entitled to post-retirement pension benefits and in certain pension plans, the employees can also opt to receive a part of pension as a lump sum.

The liabilities arising in the defined benefit schemes and other benefits are determined in accordance with the advice of independent, professionally qualified actuaries, using the projected unit credit method. Additional funding requirements are based on actuarial measurement.

Risk Management

The defined benefit plans expose the Company to actuarial deficit arising out of investment risk, interest rate risk, salary cost inflation risk. These plans are not exposed to any unusual, entity specific or scheme specific risks but there are general risks.

Investment risks: This may arise from volatility in asset values and losses arising due to impairment of assets.

Interest Rate Risk: The Schemes’ accounting liabilities are calculated using a discount rate set with reference to the Government security yields. A decrease in yields will increase the funds’ liabilities and vice-versa.

Salary Cost Inflation Risk: The Schemes accounting liabilities are calculated with reference to the future salaries of participants under the Plan. Increase in salary due to adverse inflationary pressures might lead to higher liabilities.

The Trustees monitor funding and investments positions and have mandated a diversified investment strategy in line with the statutory requirements. The investment strategy with respect to asset mix ensures that investment volatility risk is appropriately managed. Robust risk mitigation systems ensure that investments do not pose significant risk of impairment. Periodic audits are conducted to ensure adequacy of internal controls. The Company’s defined benefit pension plans has been closed to new entrants. Future pension obligation of an employee is secured by purchasing annuities thereby de-risking the Plans from future payment obligations.

* In the absence of detailed information regarding plan assets which is funded with Insurance Companies, the composition of each major category of plan assets, the percentage or amount for each category to the fair value of plan assets has not been disclosed.

The fair value of Government Securities, Corporate Bonds, Mutual Funds are determined based on quoted market prices in active markets. The employee benefit plans do not hold any securities issued by the Company.

IX Basis used to determine the Expected Rate of Return on Plan Assets

The expected rate of return on plan assets is based on the current portfolio of assets, investment strategy and market scenario. In order to protect the capital and optimize returns within acceptable risk parameters, the plan assets are well diversified.

XI Sensitivity Analysis

The sensitivity analysis below has been determined based on reasonably possible change of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant. These sensitivities show the hypothetical impact of a change in each of the listed assumptions in isolation. While each of these sensitivities holds all other assumptions constant, in practice such assumptions rarely change in isolation and the asset value changes may offset the impact to some extent. For presenting the sensitivities, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the Defined Benefit Obligation presented above. There was no change in the methods and assumptions used in the preparation of sensitivity analysis from previous year.

3 Financial risk management objectives and policies

The Company has a system-based approach to business risk management. The financial risk management process enables the early identification, evaluation and effective management of key financial risks including market risk, credit risk and liquidity risk that may arise as a consequence of its business activities as well as investing and financing activities. Backed by strong internal control systems, the current Risk Management Framework rests on policies and procedures issued by appropriate authorities, process of regular reviews / audits to set appropriate risk limits and controls, monitoring of such risks and compliance confirmation for the same.

A. Market Risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprise three types of risk - interest rate risk, foreign currency risk and price risk. Treasury activities, focussed on managing investments in debt instruments, are centralised and administered under a set of approved policies and procedures guided by the tenets of liquidity, safety and returns. The Company has in place appropriate risk management policies to limit the impact of these risks on its financial performance. The Company ensures optimisation of cash through fund planning and robust cash management practices.

. i. Interest Rate Risk

Fixed deposits are held with highly rated banks and companies and have a short tenure and are not subject to interest rate volatility. Since majority of the financial assets of the Company are either non-interest bearing or fixed interest bearing instruments, the Company’s net exposure to interest risk is negligible.

ii. Foreign currency risk

The Indian Rupee is the Company’s most significant currency. As a consequence, the Company’s results are presented in Indian Rupee. The Company has limited foreign currency exposure which are mainly on account of Money Changing Business activity undertaken by the Company.

iii. Price risk

The Company’s quoted debt mutual funds are susceptible to market price risk that arise mainly from changes in interest rate which may impact the return and value of such investments securities. The Company manages the price risk through diversification and by placing limits on individual and total instruments. The Company invests in mutual funds of leading fund houses. The Company’s Board of Directors has approved an investment policy for the Company. However, given the relatively short tenure of underlying portfolio of the mutual fund schemes in which the Company has invested, such price risk is not significant.

B. Credit Risk

Credit risk is the risk that counter party will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its investing activities, including deposits with banks. Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis.

i. Trade receivables

Customer credit risk is managed subject to the Company’s established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on an extensive credit rating score card and individual credit limits are defined in accordance with this assessment. Concentrations of credit risk is limited as the Company’s customer base is large and diverse. All overdue customer balances are evaluated taking into account the age of the dues, specific credit circumstances, the track record of the counterparty etc. Expected credit losses are measured at an amount equal to the 12 month expected credit losses or at an amount equal to the life time expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition.

ii. Financial instruments and cash deposits

Credit risk from balances with banks and financial institutions is managed by the Company’s treasury department in accordance with the Company’s policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty. The Board has approved a policy for investment of surplus funds. Investment in debt mutual funds are made only with approved mutual funds and credit risk in such funds are limited because the underlying investments are diversified and the Company’s investment framework considers the credit quality of the underlying investments made by the fund house. There are limits for any exposure to financial institutions.

C. Liquidity Risk

Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations as they become due. The Company manages its liquidity risk by ensuring that it will always have sufficient liquidity to meet its liabilities when due. Investments are made with a range of maturities, generally matching the projected cash flows and spreading the same across wide range of counterparties. Considering the dynamic nature of the underlying businesses, the Company also maintains adequate committed credit lines with the banks.

The Company’s treasury function reviews the liquidity position on an ongoing basis.

The Company’s current assets aggregate to Rs. 16,949.39 lacs (Mar’17 - Rs. 16,609.67 lacs) including Current Investments, Cash and Cash Equivalents and Other Bank Balances of Rs. 3,911.12 lacs (Mar’17 - Rs. 4,963.97 lacs) against an aggregate Current liability of Rs. 4,032.78 lacs (Mar’17 - Rs. 4,599.59 lacs). There are no non-current financial liabilities on the reporting date. Further, the Company has no borrowings. In such circumstances, liquidity risk or risk that the Company may not be able settle or meet its obligations as they become due does not exist.

D. Capital management

The Company’s financial strategy aims to provide adequate capital to its businesses to grow and invest whilst ensuring sustained stakeholder value and ensuring continuance as a going concern. The Company funds its operations through internal accruals.

The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants.

4. Figures for the previous periods are re-arranged, wherever necessary, to conform to the figures of the current period.