27. Commitments and contingencies
Capital commitments: As at March 31, 2020 and March 31, 2021 the Company had committed to spend approximately ₹ 14,011 and ₹ 7,490
respectively, under agreements to purchase/ construct property and equipment. These amounts are net of capital advances paid in respect of these
purchases.
Guarantees: As at March 31, 2020 and March 31, 2021, performance and financial guarantees provided by banks on behalf of the Company to
the Indian Government, customers and certain other agencies amount to approximately ₹ 18,655 and ₹ 17,128 respectively, as part of the bank line
of credit.
Contingencies and lawsuits: The Company is subject to legal proceedings resulting from tax assessment orders/ penalty notices issued under the
Income Tax Act, 1961, which have arisen in the ordinary course of its business. Some of the claims involve complex issues and it is not possible
to make a reasonable estimate of the expected financial effect, if any, that will result from ultimate resolution of such proceedings. However, the
resolution of these legal proceedings is not likely to have a material and adverse effect on the results of operations or the financial position of the
Company.
The Company’s assessments are complete for the years up to March 31, 2016. The Company has received demands on multiple tax issues. These
claims are primarily arising out of denial of deduction under section 10A of the Income Tax Act, 1961 in respect of profit earned by the Company’s
undertaking in Software Technology Park at Bengaluru, the appeals filed against the said demand before the Appellate authorities have been
allowed in favor of the Company by the second appellate authority for the years up to March 31, 2008 which has been contested by the Income
tax authorities before the Supreme Court of India. Other claims relate to disallowance of tax benefits on profits earned from Software Technology
Park and Special Economic Zone units, capitalization of research & development expenses, transfer pricing adjustments on intercompany / inter
unit transactions and other issues.
Income tax claims against the Company amounting to ₹ 77,873 and ₹ 80,032 are not acknowledged as debt as at March 31, 2020 and 2021,
respectively. These matters are pending before various Appellate Authorities and the management expects its position will likely be upheld on
ultimate resolution and will not have a material adverse effect on the Company’s financial position and results of operations.
The contingent liability in respect of disputed demands for excise duty, custom duty, sales tax and other matters amounting to ₹ 8,033 and ₹ 11,413
as of March 31, 2020 and 2021, respectively. However, the resolution of these disputed demands is not likely to have a material and adverse effect
on the results of operations or the financial position of the Company.
The Hon’ble Supreme Court of India, through a ruling in February 2019, provided interpretation on the components of Salary on which the
Company and its employees are to contribute towards Provident Fund under the Employee’s Provident Fund Act. Based on the current evaluation,
the Company believes it is not probable that certain components of Salary paid by the Company will be subject to contribution towards Provident
Fund due to the Supreme Court order. The Company will continue to monitor and evaluate its position based on future events and developments.
28. Segment information
The Company is organized into the following operating segments: IT Services, IT Products and India State Run Enterprise segment (“ISRE”).
IT Services: As announced on November 12, 2020, in order to broad base our growth, effective January 1, 2021, the Company re-organized IT
Services segment to four Strategic Market Units (“SMUs”) - Americas 1, Americas 2, Europe and Asia Pacific Middle East Africa (“APMEA”).
Americas 1 and Americas 2 are primarily organized by industry sector, while Europe and APMEA are organized by countries.
Americas 1 includes Healthcare and Medical Devices, Consumer Goods and Lifesciences, Retail, Transportation and Services, Communications,
Media and Information services, Technology Products and Platforms, in the United States of America and entire business of Latin America
(“LATAM"). Americas 2 includes Banking, Financial Services and Insurance, Manufacturing, Hi-tech, Energy and Utilities industry sectors in
the United States of America and entire business of Canada. Europe consist of United Kingdom and Ireland, Switzerland, Germany, Benelux,
Nordics and Southern Europe. APMEA consist of Australia and New Zealand, India, Middle East, South East Asia, Japan and Africa.
The corresponding information for the three months and year ended March 31, 2020 has been re-stated to give effect to the above changes.
Revenue from each customer is attributed to respective SMUs based on the location of the customers primary buying center of the services. With
respect to certain strategic global customers, while the revenue is generated from multiple countries based on customer’s buying centers, the total
revenue related to these strategic global customers have been attributed to a single SMU based on the geographical location of key decision makers.
Prior to this change, IT services segment was organized by seven industry vertical, Banking, Financial Services and Insurance (“BFSI”), Health
Business unit (“Health BU”), Consumer Business unit (“CBU”), Energy, Natural Resources & Utilities (“ENU”), Manufacturing (“MFG”),
Technology (“TECH”) and Communications (“COMM”).
Key service offerings to customers include software application development and maintenance, research and development services for hardware
and software design, business application services, analytics, consulting, infrastructure outsourcing services and business process services.
IT Products: The Company is a value-added reseller of security, packaged and SaaS software for leading international brands. In certain total
outsourcing contracts of the IT Services segment, the Company delivers hardware, software products and other related deliverables. Revenue
relating to these items is reported as revenue from the sale of IT Products.