i) Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive),
as a result of a past event, it is probable that an outflow of economic benefits will be required
to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to
settle the present obligation at the end of the reporting period, considering the risks and
uncertainties surrounding the obligation.
When some or all of the economic benefits required to settle a provision are expected to be
recovered from a third party, the receivable is recognised as an asset, if it is virtually certain
that reimbursement will be received and the amount of the receivable can be measured
reliably.
Provisions for onerous contracts are recognised when the expected benefits to be derived
by the Group from a contract are lower than the unavoidable costs of meeting the future
obligations under the contract. Provisions for onerous contracts are measured at the present
value of lower of the expected net cost of fulfilling the contract and the expected cost of
terminating the contract.
j) Revenue (Ind-AS 115)
The Group earns revenue primarily from providing IT services, IT Enabled Services,
consulting and business solutions. The Group offers a consulting-led, cognitive powered,
integrated portfolio of IT and IT Enabled, business solutions.
Revenues from customer contracts are considered for recognition and measurement when
the contract has been approved by the parties to the contract, the parties to contract are
committed to perform their respective obligations under the contract, and the contract is
legally enforceable. Revenue is recognised as and when services are performed to customers
in an amount that reflects the consideration the Group expects to receive (the "Transaction
Price"). Revenue towards satisfaction of the performance obligation is measured at the
amount of the Transaction Price (net of variable consideration on account of discounts and
allowances) allocated to that performance obligation. To recognize revenues, the Group
applies the following five step approach:
(1) identify the contract with a customer,
(2) identify the performance obligations in the contract,
(3) determine the Transaction Price,
(4) allocate the Transaction Price to the performance obligations in the contract, and
(5) recognize revenues when a performance obligation is satisfied. When there is
uncertainty as to collectability, revenue recognition is postponed until such uncertainty is
resolved.
At contract inception, the Group assesses its promise to render services to a customer to
identify separate performance obligations. The Group applies judgement to determine
whether each service promised to a customer is capable of being distinct, and are distinct in
the context of the contract, if not, the promised services are combined and accounted as a
single performance obligation. The Group allocates the Transaction Price to separately
identifiable performance obligations based on their relative stand-alone selling price or
residual method. Stand-alone selling prices are determined based on expected cost-plus
margin approach in estimating the stand-alone selling price.
For performance obligations where control is transferred over time, revenues are recognised
by measuring progress towards completion of the performance obligation. The selection of
the method to measure progress towards completion requires judgment and is based on the
nature of the promised services to be provided. The method for recognizing revenues and
costs depends on the nature of the services rendered:
A. Time and Materials Contracts
Revenues and costs relating to time and materials contracts are recognised as the related
services are rendered.
B. Fixed-price Contracts
i) Fixed-price Development Contracts
Revenues from fixed-price development contracts, where the performance obligations are
satisfied over time, are recognised using the "percentage-of-completion" method. The
performance obligations are satisfied as and when the services are rendered since the
customer generally obtains control of the work as it progresses. Percentage of completion is
determined based on project costs incurred to date as a percentage of total estimated project
costs required to complete the project. The cost expended (or input) method has been used
to measure progress towards completion as there is a direct relationship between input and
productivity. If the Group is not able to reasonably measure the progress of completion,
revenue is recognised only to the extent of costs incurred for which recoverability is
probable. When total cost estimates exceed revenues in an arrangement, the estimated
losses are recognised in the statement of profit and loss in the period in which such losses
become probable based on the current contract estimates as an onerous contract provision.
A contract asset is a right to consideration that is conditional upon factors other than the
passage of time. Contract assets primarily relate to unbilled amounts on fixed-price
development contracts and are classified as non-financial asset as the contractual right to
consideration is dependent on completion of contractual milestones.
A contract liability is an entity's obligation to transfer goods or services to a customer for
which the entity has received consideration (or the amount is due) from the customer.
ii) Maintenance Contracts
Revenues related to fixed-price maintenance contracts are recognised on a straight-line
basis when services are performed through an indefinite number of repetitive acts over a
specified period or ratably using percentage of completion method when the pattern of
benefits from the services rendered to the customers and the cost to fulfil the contract is not
even through the period of contract because the services are generally discrete in nature and
not repetitive. Revenue for contracts in which the invoicing is representative of the value
being delivered is recognised based on our right to invoice. If our invoicing is not consistent
with value delivered, revenues are recognised as the service is performed using the
percentage of completion method. In certain projects, a fixed quantum of service or output
units is agreed at a fixed-price for a fixed term. In such contracts, revenue is recognised with
respect to the actual output achieved till date as a percentage of total contractual output.
Any residual service unutilized by the customer is recognised as revenue on completion of
the term.
C. Others
• Any change in scope or price is considered as a contract modification. The Group
accounts for modifications to existing contracts by assessing whether the services added
are distinct and whether the pricing is at the standalone selling price. Services added
that are not distinct are accounted for on a cumulative catch-up basis, while those that
are distinct are accounted for prospectively, either as a separate contract if the additional
services are priced at the stand-alone selling price, or as a termination of the existing
contract and creation of a new contract if not priced at the stand-alone selling price.
• The Group accounts for variable considerations like, volume discounts, rebates and
pricing incentives to customers and penalties as reduction of revenue on a systematic
and rational basis over the period of the contract. The Group estimates an amount of
such variable consideration using expected value method or the single most likely
amount in a range of possible consideration depending on which method better predicts
the amount of consideration to which the Group may be entitled and when it is probable
that a significant reversal of cumulative revenue recognised will not occur when the
uncertainty associated with the variable consideration is resolved.
• Estimates of the Transaction Price and total costs or efforts are continuously monitored
over the term of the contract and are recognised in net profit in the period when these
estimates change or when the estimates are revised. Revenues and the estimated total
costs or efforts are subject to revision as the contract progresses.
• Incremental costs that relate directly to a contract and incurred in securing a contract
with a customer are recognised as an asset when the Group expects to recover these
costs.
• The Group recognizes contract fulfilment cost as an asset if those costs specifically relate
to a contract or to an anticipated contract, the costs generate or enhance resources that
will be used in satisfying performance obligations in future; and the costs are expected
to be recovered.
• Costs to obtain contract relating to upfront payments to customers are amortized to
revenue and other costs to obtain contract and costs to fulfill contract are amortized to
cost of sales over the respective contract life on a systematic basis consistent with the
percentage of services rendered to customer to which the asset relates.
• The Group assesses the timing of the delivery of services to the customer as compared
to the timing of payments to determine whether a significant financing component
exists. As a practical expedient, the Group does not assess the existence of a significant
financing component when the difference between payment and transfer of deliverables
is twelve months or less. If the difference in timing arises for reasons other than the
provision of finance to either the customer or us, no financing component is deemed to
exist.
• Unbilled receivables are classified as a financial asset where the right to consideration
is unconditional and only the passage of time is required before the payment is due.
All of the Group's revenue is associated with contracts with customers that represent
obligations to provide consulting services for enterprise resource planning ("ERP")
implementations. Contracts containing multiple performance obligations classify those
performance obligations into separate units of accounting either as standalone or
combined units of accounting. For those performance obligations treated as a
standalone unit of accounting, revenue is generally recognized based on the method
appropriate for each standalone unit. For those performance obligations treated as a
combined unit of accounting, revenue is generally recognized as the performance
obligations are satisfied, which generally occurs when contract achievements have been
transferred to the customer.
The Group's contracts with customers generally state the terms of the sale, including the
rates and fees of each service purchased. Accounts receivable from the Group's customers
are invoiced weekly and generally due approximately 30 days from the date its customers
receive the invoice. The Group's contracts include stated rates charged per hour of service
provided based on approved time sheets from clients.
The Group does not include sales and other taxes in its transaction price and thus does not
recognize these amounts as revenue.
Remaining Performance Obligations (RPO)
The Group applies the practical expedient in Ind AS 115 and does not disclose RPO for
contracts with original expected duration of one year or less, or where the right to
consideration corresponds directly with the value of performance completed. All contracts
are Statement of Work (SOW) based with terms <12 months, hence the expedient is applied.
k) Income Tax (Ind-AS 12)
Income tax comprises current and deferred tax. Income tax expense is recognised in the
statement of profit and loss except to the extent it relates to a business combination, or items
directly recognised in equity or in other comprehensive income.
a) Current Income Tax
Current income tax assets and liabilities for the current and prior periods are measured at
the amount expected to be recovered from or paid to the taxation authorities based on the
taxable income for the period. Current income tax (including Minimum Alternate Tax
(MAT)) is measured at the amount expected to be paid to the tax authorities in accordance
with the Income-Tax Act, 1961 enacted in India. The tax rates and tax laws used to compute
the current tax amounts are those that are enacted or substantively enacted as at the
reporting date and applicable for the period. Current income tax payable by overseas
branches of the Group is computed in accordance with the tax laws applicable in the
jurisdiction in which the respective branch operates. The taxes paid are generally available
for set off against the Indian income tax liability of the Group's worldwide income. While
determining the tax provisions, the Group assesses whether each uncertain tax position is
to be considered separately or together with one or more uncertain tax positions depending
upon the nature and circumstances of each uncertain tax position. The Group offsets current
tax assets and current tax liabilities, where it has a legally enforceable right to set off the
recognised amounts and where it intends either to settle on a net basis, or to realise the asset
and liability simultaneously.
b) Deferred Income Tax
Deferred income tax is recognised using the balance sheet approach. Deferred income tax
assets and liabilities are recognised for deductible and taxable temporary differences arising
between the tax base of assets and liabilities and their carrying amount in these consolidated
financial statements, except when the deferred income tax arises from the initial recognition
of goodwill or an asset or liability in a transaction that is not a business combination and
affects neither accounting nor taxable profits or loss at the time of the transaction.
Deferred income tax assets are recognised to the extent it is probable that taxable profit will
be available against which the deductible temporary differences and the carry forward of
unused tax credits and unused tax losses can be utilized.
Deferred income tax liabilities are recognised for all taxable temporary differences except
in respect of taxable temporary differences that is expected to reverse within the tax holiday
period, taxable temporary differences associated with investments in subsidiaries,
associates and foreign branches where the timing of the reversal of the temporary difference
can be controlled and it is probable that the temporary difference will not reverse in the
foreseeable future.
The carrying amount of deferred income tax assets is reviewed at each reporting date and
reduced to the extent that it is no longer probable that sufficient taxable profit will be
available to allow all or part of the deferred income tax asset to be utilized.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to
apply in the period when the asset is realized or the liability is settled, based on tax rates
(and tax laws) that have been enacted or substantively enacted at the reporting date.
The Group offsets deferred income tax assets and liabilities, where it has a legally
enforceable right to offset current tax assets against current tax liabilities, and they relate to
taxes levied by the same taxation authority on either the same taxable entity, or on different
taxable entities where there is a right and an intention to settle the current tax liabilities and
assets on a net basis or their tax assets and liabilities will be realized simultaneously.
Basic earnings per share is computed using the weighted average number of equity shares
outstanding during the period adjusted for treasury shares held. Diluted EPS is computed
using the weighted average number of equity and dilutive equity equivalent shares
outstanding during the period, except where the results would be anti-dilutive.
There are no dilutive potential ordinary shares or anti-dilutive instruments outstanding as
at March 31, 2025 (previous year: Nil). EPS is presented for continuing operations only, as
there are no discontinued operations.
m) Segment Reporting (Ind-AS 108)
The Chief Operating Decision Maker (CODM), being the Board of Directors, reviews the
Group's operations as two reportable segments: IT Services and IT Enabled Services (ITES).
This is based on the nature of services, risks, returns, and internal organization/reporting
structure. The CODM reviews segment revenue, results, assets, and liabilities for resource
allocation and performance assessment.
The assets of the Group are used interchangeably between segments, and hence segment
assets and liabilities are not separately disclosed as it is not practical; however, the CODM
reviews total assets and liabilities at a consolidated level.
The Revenue and direct cost (including the payroll cost of all the employees and consultants
which can be attributed to the revenue), excepting the un-allocable costs like personnel cost
for the supporting services, depreciation, operating expenditure, interest income on
deposits, provision for contingencies and income tax, are directly attributed to the
respective segments.
The Group reports its financial statements for the geographies of India and USA, and also
for the IT and ITES segments.
n) Related Party Transactions
During the current financial year, the Group has entered some transactions, which can be
deemed as related party transactions. All these matters have been approved by the Board
and the Govt. of India, wherever necessary. All transactions are at arm's length, with terms
equivalent to those with unrelated parties (e.g., credit period: 30-60 days; no interest or
security except where noted).
Long-lived assets, such as property and equipment and other assets are reviewed for
impairment whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. The recoverability of assets to be held and used
is measured by a comparison of the carrying amount of an asset to estimated undiscounted
future cash flows expected to be generated by the asset. If the carrying amount of an asset
exceeds its estimated future cash flows, an impairment charge is recognized by the amount
by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be
disposed of are reported at the lower of the carrying amount or fair value less costs to sell,
and depreciation ceases. No impairment was recognized during the year.
Goodwill is tested annually for impairment at the CGU level (IT Services and ITES).
Goodwill Impairment Testing
Goodwill is tested for impairment annually or more frequently if indicators exist. The
impairment test involves comparing the carrying amount of cash-generating units (CGUs)
containing goodwill with their recoverable amounts, determined using a value-in-use
model based on discounted cash flow projections. No impairment loss was recognized in
the current year (previous year: Nil), as the recoverable amounts exceeded the carrying
amounts.
Sensitivity Analysis
The following table illustrates the impact of changes in key assumptions on the impairment
test. A 1% increase in the discount rate or a 1% decrease in the long-term growth rate would
not result in impairment, as headroom remains sufficient.
p) Disclosures under Micro, Small and Medium Enterprises Development Act, 2006
(MSMED Act)
The Company has identified Micro, Small and Medium Enterprises (MSME) vendors based
on confirmations received and information available with the Company. The details of
dues to such enterprises as required under Section 22 of the Micro, Small and Medium
Enterprises Development Act, 2006 are as follows:
The above disclosures are based on the consolidated financial statements and ageing
analysis of trade payables. There are no disputed dues or outstanding interest under the
MSMED Act as at the reporting dates. The Company has no dues to MSME vendors
beyond the statutory period, and no interest has been accrued or paid during the year.
q) Previous Year Figures
Previous year figures have been regrouped /reclassified wherever necessary to suit the
current year's layout.
r) Basis of Preparation and Consolidation - Disclosure on Unaudited Subsidiary Financial
Statements
The consolidated financial statements of CES Limited (the "Parent Company" or
"Company") and its subsidiaries (collectively referred to as the "Group") have been
prepared in accordance with Indian Accounting Standards (Ind AS) notified under Section
133 of the Companies Act, 2013, read with the Companies (Indian Accounting Standards)
Rules, 2015, as amended, and other relevant provisions of the Act.
These consolidated financial statements include the financial information of the following
subsidiaries:
• CES USA Inc. (USA)
• CES Information Technologies Private Limited (India)
• CES Global IT Solutions Private Limited (India)
• CES Technology Services Private Limited (India)
• Other step-down subsidiaries (e.g., CES Global LLC, CES Enterprise LLC, etc., via CES
USA Inc.)
The financial statements of all subsidiaries, except as disclosed below, have been audited
by their respective independent auditors. The consolidation has been carried out based on
the audited financial statements of these entities, adjusted where necessary to align with
the Group's accounting policies.
Specific Disclosure on CES USA Inc.:
• The financial statements of CES USA Inc., a wholly-owned subsidiary incorporated in
the USA, as at and for the year ended March 31, 2025, included in these consolidated
financial statements, have not been audited or reviewed by independent auditors. These
statements are based on management accounts prepared in accordance with US
Generally Accepted Accounting Principles (US GAAP) and have been adjusted to
comply with Ind AS for consolidation purposes.
• CES USA Inc. contributed approximately 40.61% of the Group's consolidated revenue
and 24.90% of the Group's consolidated net assets as at March 31, 2025.
• The unaudited financial information of CES USA Inc. is subject to potential adjustments
upon completion of the audit/review by independent accountants. Any material
adjustments arising from such audit/review could impact the consolidated financial
statements of the Group. The management does not anticipate any significant changes
based on preliminary assessments, but the final audited figures may differ.
• This disclosure is made in accordance with Ind AS 110, Consolidated Financial Statements,
to ensure transparency regarding the basis of preparation. The Company will update
the consolidated financial statements, if required, upon receipt of the audited financial
statements of CES USA Inc.
The Board of Directors and management believe that the unaudited financial information
provides a reasonable basis for consolidation, and appropriate procedures have been
undertaken to verify the accuracy and completeness of the data provided by CES USA Inc.
SIGNATURE TO NOTES 1 to 24
As per our report of even date for and on behalf of the Board of Directors of
For NG Rao & Associates, CES LIMITED
Chartered Accountants
Firm Registration No. 009399S
Kiran Parsa Mohana Rao Kancharla Rama Krishna S
Partner Director Director
Membership No. 220629 DIN: 00004288 DIN: 01825682
Place: Hyderabad Srinivas Kucherlapati Suraj Kumar Garg
Date: 30th May 2025 Chief Financial Officer Company Secretary
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