| Textual Information(1) |
1. The standalone financial results for the quarter and nine months ended December 31, 2025 have been extracted from the unaudited standalone financial statements prepared in accordance with the Indian Accounting Standards (Ind-AS) 34 ‘Interim Financial Reporting’ as prescribed under Section 133 of the Companies Act, 2013 read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and relevant amendment rules issued thereafter. These standalone financial results have been reviewed and recommended by the Audit Committee and thereafter approved by the Board of Directors at their respective meetings held on February 13, 2026. 2. Other income for the quarter and nine months includes interest income on fixed deposits and loans to related parties, sundry balances written back, gain on disposal of property, plant and equipment, foreign exchange gain (net) and miscellaneous income. 3. During the quarter ended December 31, 2025 upon exercise of stock options under Employee Stock Option Scheme 2018, the Company has allotted in aggregate 1,360 (One thousand Three Hundred and Sixty) equity shares to its eligible employees. 4. As required under Ind AS 115 Revenue from Contracts with Customers'', unbilled revenue is accounted on estimate basis in respect of contracts where the contractual right to consideration is based on completion of contractual milestones as confirmed by the technical team and subsequently billed to customers based on their acceptance. 5. The segment information, pursuant to the requirement of Ind AS 108 Operating Segments, is given as a part of the consolidated financial results. 6. During the quarter ended December 31, 2025, the Company has allotted 3,77,08,165 fully paid-up equity shares of face value of Rs.10 each, at an issue price of Rs. 17 per share to the eligible applicants under the rights issue, as decided by the Rights Issue Committee of the Board. These Rights Issue Equity Shares shall rank pari passu with the existing equity shares. Pursuant to the said allotment, the paid-up equity share capital of the Company has increased from INR 169.69 crores to INR 207.39 crores comprising 20,73,94,907 fully paid-up equity shares of Rs. 10 each. 7. On November 21, 2025, the Government of India notified four Labour Codes, effective immediately, replacing the existing 29 labour laws. In accordance with Ind AS 19 - Employee benefits, changes to employee benefit plans arising from legislative amendments are treated as plan amendments, requiring immediate recognition of past service cost in the Statement of Profit and Loss. This approach is consistent with the guidance issued by the Institute of Chartered Accountants of India. Considering the materiality of the impact, its regulatory driven and non-recurring nature, the Company has presented the additional impact amounting INR 2.40 crores under 'exceptional item' in the Standalone Financial Results for the quarter and nine months ended December 31, 2025. The Company will continue to monitor further developments including the finalization of the central and state rules under the New Labour Codes, which are yet to be notified and shall evaluate and give effect to any consequential accounting adjustments, if any arising therefrom in future periods, as and when required. 8. Post the sale of product business carve-out from the Company in 2021, the new management had appointed various consultants and advisers to evaluate all long outstanding matters. Thereafter, based on the recommendations of new management, in September 2022, the Board had set up a Legacy Committee as a Sub - Committee of the Audit Committee, to evaluate and address all long outstanding matters occurred during the tenure of erstwhile Borad of directors / management. In the absence of sufficient supporting documents, the Company tried reaching across its former directors/Key Managerial Personnel (KMP). Due to unavailability of information, the necessary provision is recognized in the financial statements. These inter-company issues, their current status and its accounting impact is explained below: A. The Company has an outstanding liability payable towards purchase of Intellectual Property Rights (IPR), since 2012 to its foreign branch in Dubai/3i Infotech (Middle East) FZ LLC amounting to INR 1,06,638.84 Lakhs. The liability towards purchase of IPR was not settled by the Company within the time limit prescribed under FEMA Regulations and the Company had approached Reserve Bank of India (RBI) in 2013 through authorized dealer to extend the timeline for repayment of the aforesaid liability till March 31, 2017. Not being able to settle the liability even by 2017, the Company had thereafter made an application to the Reserve Bank of India (RBI), through its authorized dealer vide letter dated March 05, 2019 and subsequently on October 23, 2020, for set – off of the liability/ payables to foreign branch in Dubai/ 3i Infotech (Middle East) FZ LLC of INR 1,06,638.84 Lakhs against its trade receivables then due from 3i Infotech Inc, 3i Saudi Arabia and 3i Africa of INR 39,233.00 Lakhs, INR 11,347.00 Lakhs and INR 3,046.00 Lakhs respectively. The Company has not received the RBI approval till reporting date. B. The Company is carrying certain long outstanding receivables from various foreign subsidiaries (including shown above) amounting to INR 43,970.12 Lakhs as at December 31, 2025. Considering the current market scenario and low operations in many of the subsidiaries, and even though the Company has a net payable position with respect to the receivables and payables balances of its subsidiaries, the Company recognized a loss allowance amounting to INR 33,569.50 Lakhs till December 31, 2025 on a conservative and prudent basis. The net balance outstanding from subsidiaries (net off provisions) is INR 10,400.62 Lakhs as at December 31, 2025. C. The Company had made investments in Equity and Redeemable Convertible Preference Shares of 3i Infotech Holdings Private Limited in Mauritius between 2006-07 to 2011-12. The Company has recognized a provision for diminution in value of investments of INR 89,169.65 Lakhs till December 31, 2025. The net outstanding balance of investment in this subsidiary is INR 86,179.02 Lakhs. The Company had not been able to meet its obligation of payment of INR 1,06,638.84 Lakhs to its foreign branch in Dubai/3i Infotech (Middle East) FZ LLC, consequently leading to a cascading effect of 3i Infotech FZLLC not being able to payback amount due to 3i Infotech Inc. and 3i Infotech Holdings Pvt Ltd in Mauritius. Further, it has had a cascading effect of 3i Infotech Inc. not being able to redeem the preference shares issued by it to 3i Infotech Holdings Pvt Ltd. In view of the non-realization of the preference shares in 3i Infotech Inc and the loan to 3i Infotech (Middle East) FZLLC, 3i Infotech Holdings Pvt Ltd has not been able to redeem the preference shares of 3i Infotech Limited. Thus, effectively non-payment of the obligation of INR 1,06,638.84 Lakhs by the Company to its foreign branch in Dubai/3i Infotech (Middle East) FZ LLC has led to the non-realization of the preference shares invested in by the Company. There is no major change in the quantum of investments/receivables and payables from/to these subsidiaries since 2012. It has always been the intention to settle the receivables and payables on a net basis, subject to the legal and the regulatory approvals. The Company has made impairment provisions against receivables and investments on a prudent and conservative basis in view of the delay in obtaining the legal and regulatory approvals. As and when such approvals are received in future, the estimate of the recoverable amounts will be suitably revised. Further, in its board meeting held on January 31, 2024, the Board of the Company decided to initiate Forensic Audit with respect to the aforesaid legacy matters and the Board of the Company has engaged external consultants, who has submitted the final report, which has been reviewed, approved, and accepted by the Board in their meeting held on January 29, 2025. As per the findings and observations in the final report, there are no further implications or adverse financial impact on the Company. 9. In September 2022, the Board had constituted a Legacy Committee under the Audit Committee of the Board to examine historical non-compliances and transactions which lack clarity. One of the transactions pertaining to the historical transaction was divestment of 100% stake in eMudhra Consumer Services Limited (formerly known as 3i Infotech Consumer Services Limited) via a Share Purchase Agreement dated December 30, 2010 and the redemption of the preference shares issued by eMudhra on June 16, 2008. Based on the initial internal review of the transaction, subsequently, at the Board Meeting held on January 31, 2024, the Board approved the initiation of a forensic audit in respect of the legacy matters by M/s. Shridhar and Associate (Chartered Accountant). The forensic audit report was concluded and accepted by the Board on January 29, 2025. Post the audit, Company also engaged M/s. Crawford Bayley & Co. as legal consultants to assess the legal remedies based on the findings of the forensic auditors. Thereafter, the Company constituted a High Power Committee (HPC) comprising of Dr. Justice Satish Chandra (Former Judge of Allahabad High Court), Mr. B. N. Sahoo (Former Executive Director of SEBI), and Dr. Reeta Vasishta (Former Law Secretary, Ministry of Law and Justice), to examine both the forensic audit report and the legal opinion. The HPC submitted its recommendations on November 5, 2025. The HPC concluded that Mr. V. Srinivasan (then MD & CEO of 3i Infotech) and Mr. Ravi Jagannathan (then MD of 3i Consumer) had prima facie committed multiple criminal offences under the Indian Penal Code (IPC). The company has filed a complaint with the Additional Commissioner of Police, Economic Offences Wing, Navi Mumbai Police Commissionerate on February 3, 2026, which is presently under investigation. Also, a complaint on similar grounds has been filed with SEBI on February 12, 2026. 10. Material accounting policies in preparation of these standalone financial results are consistent with those followed in the annual audited financial statements for the year ended March 31, 2025. 11. The Statutory Auditors of the Company have conducted a limited review of the standalone financial results for the quarter and nine months ended December 31, 2025 pursuant to the requirements of Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 and have expressed unmodified conclusion in their review report. 12. Figures for the previous periods have been regrouped / rearranged / reclassified wherever necessary to make them comparable with those of current period. 13. The results for the quarter ended December 31, 2025 are available on BSE Limited’s website (www.bseindia.com), National Stock Exchange of India Limited’s website (www.nseindia.com) and on the Company’s website (www.3i-infotech.com). |