Company overview

IKYA HUMAN CAPITAL SOLUTIONS LIMITED (‘the Company’) is a Company incorporated under the provisions of the Companies Act, 1956 (‘the Act’) on 19 September 2007 originally as a ‘Private Limited Company’ and subsequently converted into a ‘Limited Company’ on 2 July 2013. The Company has its registered office in Bangalore, India. The Company is engaged in the business of executive search, contingency recruitment, training services and temporary staffing services. The Company changed its name to IKYA HUMAN CAPITAL SOLUTIONS LIMITED effective from 2 July 2013. With effect from 14 May 2013, Thomas Cook (India) Limited ('TCIL') has become the parent company and Fairfax Financial Holdings Limited has become the ultimate holding company of the Company.

1Significant accounting policies

The accounting policies set out below have been applied consistently to the periods brsented in these financial statements.

1.1Basis of brparation of financial statements

These financial statements have been brpared in accordance with the Indian Generally Accepted Accounting Principles (‘GAAP’) under the historical cost convention on the accrual basis. GAAP comprises mandatory accounting standards referred to in sub-section (3C) of Section 211 of the Act read with the general circular 15/2013 dated 13 September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013, other pronouncements of the Institute of Chartered Accountants of India (“ICAI”) and the relevant provisions of the Companies Act 1956, to the extent applicable. The financial statements are brsented in Indian rupees and rounded off to nearest rupee.

1.2Use of estimates

The brparation of financial statements in accordance with generally accepted accounting principles in India requires management to make judgment, estimates and assumptions that affect the application of accounting policies and reported amounts of assets, liabilities, income and expenses and the disclosure of contingent liabilities on the date of the financial statements. The estimates and assumption used in the accompanying financial statement are based upon management’s evaluation of the relevant facts and circumstances as of the date of the financial statements.Actual results could differ from those estimates.Actual results could differ from those estimates and underlying assumptions are reviewed on an ongoing basis. Any revision to accounting estimates is recognized prospectively in current and future periods.

1.3Current and non - current classification

All assets and liabilities are classified into current and non - current.

Assets

An asset is classified as current when it satisfies any of the following criteria:

a)It is expected to be realised in, or is intended for sale or consumption in, the Company’s normal operating cycle;

b)It is held primarily for the purpose of being traded;

c)It is expected to be realised within 12 months after the reporting date; or

d)It is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting date.

Current assets include the current portion of non - current financial assets.

All other assets are classified as non - current.

Liabilities

A liability is classified as current when it satisfies any of the following criteria:

a)It is expected to be settled in the Company’s normal operating cycle;

b)It is held primarily for the purpose of being traded;

c)It is expected to be settled within 12 months after the reporting date; or

d)The Company does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

Current liabilities include the current portion of non - current financial liabilities.

All other assets are classified as non - current.

Operating cycle

Operating cycle is the time between the acquisition of assets for processing and their realizations in cash or cash equivalents.

1.4Revenue recognition

The Company generates revenue from rendering of temporary staffing services, executive search, recruitment, and training services. Revenues are recognised on accrual basis and are reported netof taxes.

Revenues related to temporary staffing services are negotiated and invoiced on a monthly basis. Salary and incidental expenses of temporary associates along with service charge are billed in accordance with the agreed terms. Temporary staffing service revenues are recognised as the related services are performed.

Revenue related to recruitment services are recognised at the time the candidate begins full time employment.

Revenues related to executive search and trainings are recognised upon rendering of the service.

Government grants related to subsidy received in cash or in kind are recognised as income when the obligation associated with the grant is performed and right to receive money is established and reflected as receivables or payable in the balance sheet.

1.5Fixed assets, intangible assets

Fixed assets are stated at the cost of acquisition or construction less accumulated debrciation up to the date of the balance sheet.Direct costs related to acquisition / installations are capitalised until assets are ready for use. Borrowing costs directly attributable to acquisition or construction of those fixed assets which necessarily take a substantial period of time to get ready for their intended use are capitalised.

Acquired intangible assets wherein identifiability, control and future economic benefits are established are capitalised. Intangible assets are stated at the consideration paid less accumulated amortization.

1.6Interest income

Interest income is recognised using the time-proportion method, based on underlying interest rates.

1.7Debrciation

Debrciation is provided on straight-line method. The rates of debrciation brscribed in Schedule XIV to the Companies Act, 1956 are considered as minimum rates. If the management’s estimate of useful life of a fixed asset at the time of acquisition of the fixed asset or of the remaining useful life on a subsequent review is shorter than that envisaged in the aforesaid schedule, debrciation is provided at a higher rate based on management’s estimate of useful life/remaining useful life. Pursuant to this policy, debrciation has been provided on various categories of fixed assets based on estimated useful life as mentioned below which is higher than the corresponding rates brscribed in Schedule XIV.

Debrciation is provided on a proportionate basis for all assets purchased and sold during the period. Individual assets costing Rs 5,000 or less are debrciated at the rate of 100%.

Leasehold improvements are amortised over the lease term or estimated useful life, whichever is lower. Assets acquired on finance leases are debrciated over the lease term or the useful life, whichever is shorter.

1.8Impairment of assets

The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. For an asset that does not generate largely independent cash flows, the recoverable amount is determined for the cash generating unit to which asset belongs. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the statement of profit and loss.

If at the balance sheet date there is an indication that if a brviously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount. An impairment loss is reversed only to the extent that the carrying amount of asset does not exceed the net book value that would have been determined, if no impairment loss had been recognised.

1.9Investments

Long term investments are valued at cost less any other than temporary diminution in value, determined on the specific identification basis.

1.10Employee benefits

Gratuity and compensated absences which are defined benefits schemes are accrued based on actuarial valuation at the balance sheet date, carried out by an independent actuary.

Contributions payable to the recognised provident fund, which is a defined a contribution schemes, are charged to the statement of profit and loss.

1.11Leases

Leases under which the Company assumes substantially all the risks and rewards of ownership are classified as finance leases.Assets acquired under finance lease are capitalised at the fair value of the asset or brsent value of the minimum lease payments at the inception of the lease, whichever is lower. Lease payments are apportioned between finance charges and outstanding liability. The finance charge is allocated to periods during the lease term at a constant periodic rate of interest on the remaining balance of the liability.

Leases under which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Lease payments are charged to the statement of profit and loss on a straight line basis over the lease term.

1.12Foreign exchange transactions

Foreign exchange transactions are recorded at the rates of exchange brvailing on the dates of the respective transactions. Exchange differences arising on foreign exchange transactions settled during the period are recognised in the statement of profit and loss of the period.

Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date are translated at the exchange rates on that date; the resultant exchange differences are recognised in the statement of profit and loss.

1.13Provisions and contingent liabilities

The Company creates a provision when there is a brsent obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation.A disclosure for a contingent liability is made when there is a possible obligation or a brsent obligation that may, but probably will not, require an outflow of resources. When there is a possible obligation or a brsent obligation in respect of which the likelihood of outflow is remote, no provision or disclosure is made.

Provision for onerous contracts, i.e., contracts where the expected unavoidable cost of meeting the obligations under the contract exceed the economic benefit expected to be received under it, are recognised when it is probable that an outflow of resources embodying economic benefit will be required to settle a brsent obligation as a result of an obligation event, based on a reliable estimate of such obligation.

1.14Earnings per share

In determining the earning per share, the net profit after tax is divided by the weighted average number of shares outstanding during the year. The number of shares used in computing diluted earnings per share comprises the weighted average number of shares considered for deriving basic earnings per share and also the weighted average number of equity shares that could have been issued on the conversion of all dilutive potential equity shares. Dilutive potential equity shares are deemed converted as of the beginning of the period unless issued at a later date.In computing dilutive earning per share, only potential equity shares that are dilutive i.e. which reduces earnings per share or increases loss per share are included.

1.15Taxation

The current charge for income taxes is calculated in accordance with the relevant tax regulations applicable to the Company.

Deferred tax assets and liabilities are recognised for the future tax consequences attributable to timing differences that result between the profit offered for income taxes and the profit as per the financial statements of the Company. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date.The effect on deferred tax assets and liabilities of a change in tax rates is recognised in the period of change. Deferred tax assets on the timing differences are recognised only if there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. However, deferred tax assets on the timing differences when unabsorbed debrciation and losses carried forward exist, are recognised only to the extent that there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. Deferred tax assets are reassessed for the appropriateness of their respective carrying values at each balance sheet date. The Company offsets, on a year on year basis, the current tax assets and liabilities, where it has a legally enforceable right and where it intends to settle such assets and liabilities on a net basis.

In accordance with the provisions of Section 115JAA of the Income-tax Act, 1961, the Company is allowed to avail credit equal to the excess of Minimum Alternate Tax (MAT) over normal income tax for the assessment year for which MAT is paid. MAT credit so determined can be carried forward for set-off for ten succeeding assessment years from the year in which such credit becomes allowable. MAT credit can be set-off only in the year in which the Company is liable to pay tax as per the normal provisions of the Income-tax Act, 1961 and such tax is in excess of MAT for that year. Accordingly, MAT credit entitlement is recognized only to the extent there is convincing evidence that the Company will pay normal tax during the specified period.

1.16Cash flow statement

Cash flow statement is reported using indirect method, whereby net profits 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. The cash flows arising from operating, investing and financing activities of the Company are segregated.

1.17Employee stock options

The Company applies the intrinsic value-based method of accounting brscribed by Accounting Research Committee of the Institute of Chartered Accountants of India, Accounting for employee share based payments, to account for its fixed plan stock options. Under this method, compensation expense is recorded on the date of grant only if the current market price of the underlying stock exceeds the exercise price. The options vest on a graded basis.

1.2Employee benefits

Gratuity and compensated absences which are defined benefits schemes are accrued based on actuarial valuation at the balance sheet date, carried out by an independent actuary.

Contributions payable to the recognised provident fund, which is a defined a contribution schemes, are charged to the statement of profit and loss.

EMPLOYEES

The list of employees whose remuneration is Rs. 5,00,000 or more per month (or Rs. 60,00,000 or more per annum) the information pursuant to Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended from time to time has been furnished in annexure No 1.

Annexure 1

Particulars of Employees forming part of the Directors' Report for the period ended December 31, 2013 pursuant to Section 217(2A) of the Companies Act, 1956 and the Companies (Particulars of Employees) Rules, 1975

A.Employee employed throughout the period- April 01, 2013 to December 31, 2013.

B. Employee employed for part of the period-April 01, 2013 to December 31, 2013.