Datamatics Global Services Ltd. - Quarterly/Annual Result Disclosures and Notes dated 31 Mar 2021

1. The audited consolidated financial results and the audited standalone financial results of the Company for the quarter and year ended March 31, 2021 have been reviewed by the Audit Committee of the Board and approved by the Board of Directors at its meeting held on May 26, 2021.



2. The audited standalone financial results have been prepared in accordance with Indian Accounting Standards (Ind AS), the provisions of the Companies Act, 2013 (the Act), as applicable and guidelines issued by the Securities and Exchange Board of India (SEBI).



3. The Company has an investment in the standalone financial statements of Rs. 646.52 million in two of its wholly owned subsidiaries and has also extended advances of Rs. 0.05 million to these subsidiaries as on March 31, 2021. The net worth of these subsidiaries as on March 31, 2021 is Rs. 509.11 million which is lower than the amount of investment. The investment is for long term and of strategic nature. As the management is confident of turning around these subsidiaries in the near future and hence, no provision for diminution in the value of investment and advances has been considered necessary by the management.



4. (a) Consolidated - The Group and its joint venture entity have assessed the possible effects that may result from the COVID-19 pandemic on the carrying amounts of receivables, unbilled revenues, goodwill, intangibles, investments and other assets / liabilities. Based on the current indicators of economic conditions, the Group and its joint venture entity expects to recover the carrying amount of all its assets. The actual impact of the COVID-19 pandemic may be different from that estimated as at the date of approval of these consolidated financial results and the Group and its joint venture entity will continue to closely monitor any material changes to the economic conditions in the future.

(b) Standalone - The company has assessed the possible effects that may result from the COVID-19 pandemic on the carrying amounts of receivables, unbilled revenues, goodwill, intangibles, investments and other assets / liabilities. Based on the current indicators of economic conditions, the company expects to recover the carrying amount of all its assets. The actual impact of the COVID-19 pandemic may be different from that estimated as at the date of approval of these standalone financial results and the company will continue to closely monitor any material changes to the economic conditions in the future.



5.The Company, vide Board Meeting dated November 13, 2019, had approved the amalgamation of Datamatics Digital Limited (formerly known as Techjini Solutions Private Limited) (“DDL”), a wholly owned subsidiary of the Company, with Datamatics Global Services Limited (DGSL) through a Scheme of Arrangement u/s 230-232 of the Companies Act, 2013 (“Scheme”) with an Appointed Date of June 01, 2019. Since DDL is a wholly owned subsidiary of the Company, no further shares would be required to be issued by the Company since the entire share capital of DDL is held by the Company.

The Company and DDL have complied with all the requisite filings are per directions of the National Company Law Tribunal, Mumbai Bench (“NCLT”). The NCLT has passed the order of DGSL-DDL merger vide order no. CP (CAA) 970/30-232/MB/2020 dated November 06, 2020. Hence owing to the fact that DDL was merged with DGSL w.e.f. June 01, 2019, the accounting effect of the merger was given in the standalone books of accounts of DGSL in the previous quarter. Consequently all relevant previous year / quarter figures pertaining to standalone financial statements have also been restated.



6.The date of implementation of the Code on Wages, 2019 and the Code on Social Security 2020 is yet to be notified by the Government. The Ministry of Labour and Employment has released draft rules for the Code on Social Security 2020 on november 13, 2020, and has invited suggestions from stakeholders which are under active consideration by the Ministry. The Group will assess the impact of these Codes and give effect in the financial results when the Rules / Schemes thereunder are notified.



7. The Group has entered into a stock redemption agreement to dispose off the entire stake in one of the subsidiaries "Cignex Datamatics Inc" (Cignex). As a result, w.e.f. January 01, 2021, Group's control over Cignex and its subsidiaries has shifted and they have ceased to be a subsidiary and step down subsidiaries.



8. Exceptional Item



(a) Consolidated -

1. Exchange gains of Rs. 315.96 million, arising from buy back of equity capital and redemption of preference capital held in overseas subsidiaries.

2. Profit on divestment of Rs. 36.50 million, of Cignex Datamatics Corporation BVI.

3. Impairment charges of Rs. 365.89 million, created on goodwill, investment and other assets of some subsidiaries, based on management’s assessment of changes in market conditions

4. During the previous year, On April 20, 2020, Duo Consulting Inc. ("Duo"), a subsidiary of Cignex Datamatics Inc. (Cignex USA), entered into a sale and assignment agreement (“Asset Purchase Agreement”) with a third party. Under the terms of the agreement, Duo has agreed to sell contracts and computer system, assign its employees along with customer contracts, and business IT systems. Consequently, the Management of the Holding Company, in its annual assessment for goodwill impairment, has impaired the goodwill associated with Duo amounting to Rs. 157.72 million in the consolidated financial results.



(b) Standalone -

1.Exchange gain of Rs. 121.54 million, arising from redemption of preference share capital held in its overseas subsidiary.

2. Realized gain of Rs. 306.39 million, on fair value of financial assets relating to redemption of preference capital held in its overseas subsidiaries.

3. Impairment charge of Rs. 99.24 million, created on the goodwill of an acquired business segment, based on management’s assessment of changes in market conditions.



9. The figures for quarter ended March 31, 2021 and March 31, 2020 are balancing figures between the audited figures of the full financial year and the reviewed year-to-date figures up to the third quarter of the relevant financial year.



10. Previous quarter / year figures have been appropriately regrouped, recasted and reclassified wherever necessary to conform to the current year presentations.