Covance Softsol Ltd. के अकाउंट के लिये नोट

l. Provisions, contingent liabilities and contingent assets

Provisions are recognized only when there is a present obligation, as a result of past events, and when a
reliable estimate of the amount of obligation can be made at the reporting date. These estimates are reviewed
at each reporting date and adjusted to reflect the current best estimates. Provisions are discounted to their
present values, where the time value of money is material.

Contingent liability is disclosed for:

• Possible obligations which will be confirmed only by future events not wholly within the control of the
Company or

• Present obligations arising from past events where it is not probable that an outflow of resources will be
required to settle the obligation or a reliable estimate of the amount of the obligation cannot be made.

Contingent assets are neither recognized nor disclosed. However, when realization of income is virtually
certain, related asset is recognized.

m. Earnings per share

Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to equity
shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding
during the period. The weighted average number of equity shares outstanding during the period is adjusted
for events including a rights issue.

For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to
equity shareholders and the weighted average number of shares outstanding during the period are adjusted
for the effects of all dilutive potential equity shares.

n. Cash Flow statement

Cash flows are reported using the indirect method, whereby net profit before tax is adjusted for the effects of
transactions of a non-cash nature and any deferrals or accruals of past or future cash receipts or payments.

4. Estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting
date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year, are described below. The Company based its assumptions and
estimates on parameters available when the financial statements were prepared. Existing circumstances and
assumptions about future developments, however, may change due to market changes or circumstances
arising that are beyond the control of the Company.

Recognition of deferred tax assets: The extent to which deferred tax assets can be recognized is based on
an assessment of the probability of the Company’s future taxable income against which the deferred tax
assets can be utilized. In addition, significant judgement is required in assessing the impact of any legal or
economic limits or uncertainties in various tax jurisdictions.

Evaluation of indicators for impairment of assets: The evaluation of applicability of indicators of
impairment of assets requires assessment of several external and internal factors which could result in
deterioration of recoverable amount of the assets.

Recoverability of advances/receivables: At each balance sheet date, based on historical default rates
observed over expected life, the management assesses the expected credit loss on outstanding receivables
and advances.

Useful lives of depreciable/amortisable assets: Management reviews its estimate of the useful lives of
depreciable/amortisable assets at each reporting date, based on the expected utility of the assets. Uncertainties
in these estimates relate to technical and economic obsolescence that may change the utility of certain
software, IT equipment and other plant and equipment.

Defined benefit obligation (DBO): Management’s estimate of the DBO is based on a number of critical
underlying assumptions such as standard rates of inflation, discount rate and anticipation of future salary
increases. Variation in these assumptions may significantly impact the DBO amount and the annual defined
benefit expenses.

Fair value measurements: Management applies valuation techniques to determine the fair value of financial
instruments (where active market quotes are not available) and non-financial assets. This involves developing
estimates and assumptions consistent with how market participants would price the instrument. Management
uses the best information available. Estimated fair values may vary from the actual prices that would be
achieved in an arm’s length transaction at the reporting date.

Provisions: At each balance sheet date basis the management judgment, changes in facts and legal aspects,
the Company assesses the requirement of provisions against the outstanding warranties and guarantees.
However, the actual future outcome may be different from this judgement.

iv. Rights, preferences and restrictions attached to equity shares

The Company has only one class of equity shares having a par value of ''10 per share. Each holder of equity shares
is entitled to one vote per share. The Company declares and pays dividend in Indian rupees. The dividend proposed
by the Board of Directors, if any, is subject to the approval of the shareholders in the ensuing general meeting.

24. Fair value measurements

(i) Fair value hierarchy

Financial assets and financial liabilities measured at fair value in the statement of financial position are grouped into
three levels of a fair value hierarchy. The three levels are defined based on the observability of significant inputs to
the measurement, as follows:

Level 1: Quoted prices (unadjusted) in active markets for financial instruments.

Level 2: The fair value of financial instruments that are not traded in an active market is determined using
valuation techniques which maximise the use of observable market data rely as little as possible on entity specific
estimates.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included
in level 3.

The Company does not have any financial instrument measured at fair value on recurring basis under Level 2
catergory. There are no transfers between levels during the year. The Company’s policy is to recognise transfers into
and transfers out of fair value hierarchy levels as at the end of the reporting period.

(iii) Valuation technique used to determine fair value

Investment in equity units of venture capital fund are valued based on valuation principles, techniques and
methodology adopted by such venture capital fund. Investment in equity share of subsidiary are valued based on
valuation techniques, including discounted cash flow method, adopted by the Company.

(iv) Financial instruments by category

for instruments carried at amortised cost, carrying value represents the best estimate of fair value.

25. Financial instruments risk management

“The Company’s principal financial liabilities comprises of trade and other payables. The Company’s
principal financial assets include trade and other receivables, cash and cash equivalents and other bank
balances that derive directly from its operations. The Company also holds FVTOCI and FVTPL investments.

The Company is exposed to credit risk, market risk and liquidity risk. The Company’s Board of Directors
oversees the management of these risks. The Company’s Board of Directors are supported by the senior
management that advises on financial risks and the appropriate financial risk governance framework for
the Company. The senior management provides assurance to the Company’s Board of Directors 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. “

A. Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument
fails to meet its contractual obligations, and arises principally from the Company’s receivables from customers.
Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the
creditworthiness of customers to which the Company grants credit terms in the normal course of business. The

Company establishes an allowance for credit losses and impairment that represents its estimate of expected
losses in respect of trade and other receivables.

Trade and other receivables

The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer.
The demographics of the customer, including the default risk of the industry and country in which the
customer operates, also has an influence on credit risk assessment. Credit risk is managed through credit
approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which
the Company grants credit terms in the normal course of business.

Financial assets that are neither past due nor impaired

None of the Company’s cash equivalents, including fixed deposits, were either past due or impaired as at 31st
March’2026.

Financial assets that are past due but not impaired

The Company’s credit period for customers generally ranges from 30 - 60 days. The aging of trade receivables
that are not due and past due but not impaired is given below:

Other than trade receivables, the Company has no significant class of financial assets that is past due but not
impaired.

On account of adoption of Ind AS 109, the Company uses Expected Credit Loss (ECL) model for assessing the
impairment loss. For this purpose, the Company uses a provision matrix to compute the expected credit loss
amount for trade receivables. The provision matrix takes into account external and internal credit risk factors
and historical data of credit losses from various customers. The management believes that there is no change in
allowance for credit losses during the year ended 31 March 2026 and 31 March 2025.

B. Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the
availability of funding through an adequate amount of committed credit facilities to meet obligations when
due. Management monitors rolling forecasts of the Company’s liquidity position and cash and cash equivalents
on the basis of expected cash flows. The Company takes into account the liquidity of the market in which the
entity operates. In addition, the Company’s liquidity management policy involves projecting cash flows and
considering the level of liquid assets necessary to meet obligations, monitoring balance sheet liquidity ratios
against internal and external regulatory requirements and maintaining debt financing plans.

The Company’s principal sources of liquidity are the cash flows generated from operations. Further the
Company has no long term borrowings and working capital facilities which the management believes are not
required considering its present scale of operations.

Maturities of financial liabilities

The tables below analyses the Company’s financial liabilities following into different maturity groupings
based on their contractual maturities for all non-derivative financial liabilities. The amounts disclosed in the
table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances
as the impact of discounting is insignificant.

C. Market risk

‘Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from adverse
changes in market rates and prices (such as foreign currency exchange rates) or in the price of market risk-
sensitive instruments as a result of such adverse changes in market rates and prices. Market risk is attributable
to all market risk-sensitive financial instruments, all foreign currency receivables and payables and all short¬
term and long-term debt. The Company is exposed to market risk primarily related to foreign exchange rate
risk. Thus, the Company’s exposure to market risk is a function of revenue generating and operating activities
in foreign currencies.

Foreign exchange risk

‘The Company’s foreign exchange risk arises from its foreign currency revenues (primarily in US$). Foreign
exchange risk arises from future commercial transactions and recognised assets and liabilities denominated
in a currency that is not the company’s functional currency. A significant portion of the Company’s revenues
are in US$. As a result, if the value of the Indian rupee appreciates relative to US$, the Company’s revenues
measured in Indian rupees may decrease.

26. Capital risk management

The Company’s objective when managing capital is to safeguard the Company’s ability to continue as a going
concern in order to provide returns for shareholders and benefits for stakeholders and to maintain an optimal
capital structure to reduce the cost of capital. Hence, the Company may adjust any dividend payments, return
capital to shareholders or issue new shares. Total capital is the equity as shown in the statement of financial
position. Currently the Company does not have any long term borrowings and working capital facilities.

27. Additional Regulatory Information:

I. There are no immovable properties included in Property Plant and Equipment, whose title deeds are not
held in the name of the Company.

II. The Company has not revalued its Property, Plant and Equipment (including Right of use assets) and
intangible assets during the year ended March 31, 2026.

III. The Company does not have any Benami property, where any proceeding has been initiated or pending
against the Company for holding any Benami property under the Benami Transactions (Prohibition) Act,
1988 and rules made thereunder.

IV. The Company has not been declared wilful defaulter by any bank or financial institution or government or
any government authority, as per the available information.

V. The Company does not have any transaction which is not recorded in the books of accounts that has been
surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961.

VI. The Company has not traded or invested in cryptocurrency transactions during the financial year and there
is no balance as at year end.

VII. Audit Trail:

The Company has used accounting software and certain other related software for maintaining its books
of account which has a feature of recording audit trail (edit log) facility at application level and the same
has operated throughout the year for all relevant transactions recorded in the software, except that:

a. At accounting software, there are certain privileged / administrative access rights for which audit trail
feature isn’t enabled at application level.

b. audit trail feature is not enabled at the database level in so far as it relates to accounting and other
related software.

Further no instance of audit trail feature being tampered with was noted in respect of these software

30. Deferred tax assets have been recognised only to the extent of deferred tax liabilities i.e deferred tax assets
have been recognized only to the extent that it is probable that the underlying tax loss or deductible temporary
difference will be utilized against future taxable income of the Company.

31 . Previous year figures have been regrouped or rearranged where ever required to correspond with the current
year’s classification and disclosure requirements.

iv. Rights, preferences and restrictions attached to equity shares

The Company has only one class of equity shares having a par value of ''10 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors, if any, is subject to the approval of the shareholders in the ensuing general meeting.

(a) Gratuity

The Company provides its employees with benefits under a defined benefit plan, referred to as the “Gratuity Plan”. The Gratuity Plan entitles an employee, who has rendered at least five years of continuous service, to receive 15 days salary for each year of completed service (service of six months and above is rounded off as one year) at the time of retirement/ exit, restricted to a sum of ''20 laks in accordance with Payment of Gratuity Act, 1972.

24. Fair value measurements

(i) Fair value hierarchy

Financial assets and financial liabilities measured at fair value in the statement of financial position are grouped into three levels of a fair value hierarchy. The three levels are defined based on the observability of significant inputs to the measurement, as follows:

Level 1: Quoted prices (unadjusted) in active markets for financial instruments.

Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximise the use of observable market data rely as little as possible on entity specific estimates.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

The Company does not have any financial instrument measured at fair value on recurring basis under Level 2 catergory. There are no transfers between levels during the year. The Company’s policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period.

(iii) Valuation technique used to determine fair value

Investment in equity units of venture capital fund are valued based on valuation principles, techniques and methodology adopted by such venture capital fund. Investment in equity share of subsidiary are valued based on valuation techniques, including discounted cash flow method, adopted by the Company.

25. Financial instruments risk management

“The Company’s principal financial liabilities comprises of trade and other payables. The Company’s principal financial assets include trade and other receivables, cash and cash equivalents and other bank balances that derive directly from its operations. The Company also holds FVTOCI and FVTPL investments.

The Company is exposed to credit risk, market risk and liquidity risk. The Company’s Board of Directors oversees the management of these risks. The Company’s Board of Directors are supported by the senior management that advises on financial risks and the appropriate financial risk governance framework for the Company. The senior management provides assurance to the Company’s Board of Directors 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.

A. Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivables from customers. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. The Company establishes an allowance for credit losses and impairment that represents its estimate of expected losses in respect of trade and other receivables.

Trade and other receivables

The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the customer, including the default risk of the industry and country in which the customer operates, also has an influence on credit risk assessment. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business.

Financial assets that are neither past due nor impaired

None of the Company’s cash equivalents, including fixed deposits, were either past due or impaired as at 31 March 2025.

(All amounts in '' lakhs, Notes to the standalone financial statements for the year ended 31 March 2025)

Other than trade receivables, the Company has no significant class of financial assets that is past due but not impaired.

On account of adoption of Ind AS 109, the Company uses Expected Credit Loss (ECL) model for assessing the impairment loss. For this purpose, the Company uses a provision matrix to compute the expected credit loss amount for trade receivables. The provision matrix takes into account external and internal credit risk factors and historical data of credit losses from various customers. The management believes that there is no change in allowance for credit losses during the year ended 31 March 2024 and 31 March 2024.

B. Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations Management monitors rolling forecasts of the Company’s liquidity position and cash and cash equivalents on the basis of expected cash flows. The Company takes into account the liquidity of the market in which the entity operates. In addition, the Company’s liquidity management policy involves projecting cash flows and considering the level of liquid assets necessary to meet obligations, monitoring balance sheet liquidity ratios against internal and external regulatory requirements and maintaining debt financing plans.

The Company’s principal sources of liquidity are the cash flows generated from operations. Further the Company has no long term borrowings and working capital facilities which the management believes are not required considering its present scale of operations.

Maturities of financial liabilities

The tables below analyses the Company’s financial liabilities following into different maturity groupings based on their contractual maturities for all non-derivative financial liabilities. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is insignificant.

C. Market risk

Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from adverse changes in market rates and prices (such as foreign currency exchange rates) or in the price of market risk-sensitive instruments as a result of such adverse changes in market rates and prices. Market risk is attributable to all market risk-sensitive financial instruments, all foreign currency receivables and payables and all shortterm and long-term debt. The Company is exposed to market risk primarily related to foreign exchange rate risk. Thus, the Company’s exposure to market risk is a function of revenue generating and operating activities in foreign currencies.

Foreign exchange risk

“The Company’s foreign exchange risk arises from its foreign currency revenues (primarily in US$). Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the company’s functional currency. A significant portion of the Company’s revenues are in US$. As a result, if the value of the Indian rupee appreciates relative to US$, the Company’s revenues measured in Indian rupees may decrease.

26. Capital risk management

The Company’s objective when managing capital is to safeguard the Company’s ability to continue as a going concern in order to provide returns for shareholders and benefits for stakeholders and to maintain an optimal capital structure to reduce the cost of capital. Hence, the Company may adjust any dividend payments, return capital to shareholders or issue new shares. Total capital is the equity as shown in the statement of financial position. Currently the Company does not have any long term borrowings and working capital facilities.

27. Composite Scheme of Arrangement

(A) The Board of Directors of Covance Softsol Limited (“the Company”), in its meeting held on 14th August 2023, approved a Composite Scheme of Arrangement (“Scheme”) under Sections 230 to 232 and other applicable provisions of the Companies Act, 2013, between Softsol India Limited (“Transferor Company” or “Softsol”) and Covance Softsol Limited (“Transferee Company” or “Covance”), a wholly owned subsidiary of the Transferor Company, and their respective shareholders and creditors.

The Scheme, inter-alia, provides for the following:

1. Transfer and vesting of the IT Consulting Services Business Undertaking (“Demerged Undertaking”) from the Transferor Company to the Transferee Company;

2. Reduction and cancellation of the entire share capital of the Transferee Company held by the Transferor Company;

3. Issuance and allotment of equity shares by the Transferee Company to the shareholders of the Transferor Company in consideration for the transfer of the Demerged Undertaking.

The Hon’ble National Company Law Tribunal (NCLT), [Hyderabad Bench], sanctioned the Scheme on 12th September 2024, which became effective on 25th September 2024, being the date on which the certified copy of the NCLT Order was filed with the respective Registrar of Companies.

Pursuant to the Scheme becoming effective:

• The Demerged Undertaking of Softsol India Limited stands transferred to and vested in Covance Softsol Limited with effect from April 1, 2023, being the Appointed Date as defined in the Scheme.

• All transactions pertaining to the Demerged Undertaking from the Appointed Date to the Effective Date were carried out by Softsol on behalf of Covance.

• In accordance with the Scheme, Covance issued and allotted equity shares to the shareholders of Softsol in the agreed share exchange ratio and cancelled the equity shares earlier held by Softsol.

(B) Basis of Carve-Out Financials with respect to Demerged Undertaking till Effective Date

The financial information related to the Demerged Undertaking has been prepared in accordance with the Guidance Note on ‘Combined and Carve-out Financial Statements’ (“Guidance Note”) issued by the Institute of Chartered Accountants of India (“ICAI”), which lays down the overall framework for the preparation and presentation of carve-out financial information. In preparing the said carve-out financial statements, the principles set out in the

Guidance Note and the accounting treatment as per the Scheme have been applied as follows:

i. The directly identifiable assets, liabilities, income, and expenditure of the Demerged Undertaking are based

on the books of accounts and underlying accounting records maintained by the Company.

ii. Other common assets including current investments in mutual funds, liabilities, income, and expenditure

that are not directly attributable have been allocated other reasonable bases as approved by the Board.

(C) Issuance and Allotment of Equity Shares by Covance Softsol Limited

Pursuant to the Scheme, Covance Softsol Limited has issued and allotted equity shares to the shareholders of Softsol India Limited whose names appeared in the register of members of Softsol as on the Record Date, i.e., October 11, 2024. One equity share of ''10/- each in Covance has been issued and allotted as fully paid up for every one equity share of '' 10/- each held in Softsol India Limited.

28. Additional Regulatory Information:

I. There are no immovable properties included in Property Plant and Equipment, whose title deeds are not held in the name of the Company.

II. The Company has not revalued its Property, Plant and Equipment (including Right of use assets) and intangible assets during the year ended March 31, 2025.

III. The Company does not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property under the Benami Transactions (Prohibition) Act, 1988 and rules made thereunder.

IV. The Company has not been declared wilful defaulter by any bank or financial institution or government or any government authority, as per the available information.

V. The Company does not have any transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961.

VI. The Company has not traded or invested in cryptocurrency transactions during the financial year and there is no balance as at year end.

VII. Audit Trail:

The Company has used accounting software and certain other related software for maintaining its books of account which has a feature of recording audit trail (edit log) facility at application level and the same has operated throughout the year for all relevant transactions recorded in the software, except that:

a. At accounting software, there are certain privileged / administrative access rights for which audit trail feature isn’t enabled at application level.

b. audit trail feature is not enabled at the database level in so far as it relates to accounting and other related software.

Further no instance of audit trail feature being tampered with was noted in respect of these software

31. Deferred tax assets have been recognised only to the extent of deferred tax liabilities i.e deferred tax assets have been recognized only to the extent that it is probable that the underlying tax loss or deductible temporary difference will be utilized against future taxable income of the Company.

32. Where ever required figures have been regrouped.