Tejas Networks Limited

The Secretary National Stock Exchange of India Ltd Exchange Plaza, C/1, Block G, Bandra Kurla Complex, Bandra (East) Mumbai – 400 051 NSESymbol: TEJASNET

The Secretary BSE Limited P J Towers, Dalal Street, Fort, Mumbai – 400 001 BSE Scrip Code: 540595

July 27, 2020

Dear Sir/Madam,

Re: Outcome of Board Meeting

This is with reference to our letter dated July 10, 2020 informing about the Board Meeting scheduled on July 27, 2020.

The Board of Directors of Tejas Networks Limited ('the Company') at their meeting held on Tuesday, July 27, 2020 through video-conferencing has inter alia considered and approved the following:

Financial Results

Pursuant to Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, the unaudited financial results (standalone and consolidated) as per IND-AS for the quarter ended June 30, 2020 together with the Limited review report of the Statutory Auditors for the said period is enclosed as Annexure - A.

Other matters

1. The Nomination and Remuneration Committee and the Board of Directors in its meeting held today, have approved the grant of 12,000 Restricted Stock Units at face value of Rs. 10/- each under Tejas Restricted Stock Unit Plan 2017 to the employees of the Company with the effective date of grant as of July 27, 2020.
1. Allotment of 7,893 Equity Shares of the Company pursuant to exercise of the Stock Options/ Restricted Stock Units by eligible employees of the Company under respective Stock Options Plans/ Tejas Restricted Stock Unit Plan 2017.

We also enclose:

a) Copy of the press release issued with respect of said financial results as Annexure- B.
b) Extracts of the unaudited financial results under IND-AS (Standalone and Consolidated) for the quarter ended June 30, 2020 being published in the newspapers as Annexure - C.

Please note that the Conference Call details to discuss the Company's performance on Tuesday, July 27, 2020 at 7.00 P.M (IST) has already been intimated to Stock Exchanges vide our letter dated July 20, 2020.

The above information is also being made available on the website of the Company at www.tejasnetworks.com.

Kindly take the above information on record and acknowledge.

Thanking you,

Yours sincerely

For Tejas Networks Limited

N R Ravikrishnan General Counsel, Chief Compliance Officer & Company Secretary

Encl: as above

Review Report

To The Board of Directors Tejas Networks Limited, 5^th Floor, J P Software Park, Plot No 25, Sy. No 13, 14, 17, 18, Konnapana Agrahara Village, Begur Hobli, Bengaluru - 560 100

We have reviewed the unaudited standalone financial results of Tejas Networks Limited $\mathbf{1}$ . (the "Company") for the quarter ended June 30, 2020 which are included in the accompanying 'Statement of Standalone Unaudited Financial Results for the quarter ended June 30, 2020' and the notes thereon (together referred to as the "Standalone" Statement"). The Standalone Statement has been prepared by the Company pursuant to Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended (the "Listing Regulations, 2015"), which has been initialled by us for identification purposes.
This Standalone Statement, which is the responsibility of the Company's Management and $\overline{2}$ . approved by the Board of Directors, has been prepared in accordance with the recognition and measurement principles laid down in Indian Accounting Standard 34 "Interim Financial Reporting" ("Ind AS 34"), prescribed under Section 133 of the Companies Act, 2013, and other accounting principles generally accepted in India. Our responsibility is to express a conclusion on the Standalone Statement based on our review.
We conducted our review of the Standalone Statement in accordance with the Standard on 3. Review Engagements (SRE) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity", issued by the Institute of Chartered Accountants of India. This Standard requires that we plan and perform the review to obtain moderate assurance as to whether the Standalone Statement is free of material misstatement. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Based on our review conducted as stated in paragraph 3 above, nothing has come to our $\mathbf{4}$ attention that causes us to believe that the Standalone Statement has not been prepared in all material respects in accordance with the recognition and measurement principles laid down in the aforesaid Indian Accounting Standard and other accounting principles generally accepted in India and has not disclosed the information required to be disclosed in terms of Regulation 33 of the Listing Regulations, 2015 including the manner in which it is to be disclosed, or that it contains any material misstatement.

Price Waterhouse Chartered Accountants LLP, 5th Floor, Tower 'D', The Millenia, 1 & 2 Murphy Road, Ulsoor Bangalore - 560 008 T:+91 (80) 4079 5000, F:+91 (80) 4079 5222

.......................................

Registered office and Head office: Sucheta Bhawan, 11A Vishnu Digambar Marg, New Delhi 110 002

Price Waterhouse (a Partnership Firm) converted into Price Waterhouse Chartered Accountants LLP (a Limited Liability Partnership with LLP identity no: LLPIN AAC-5001) with effect from July 25, 2014. Post its conversion to Price Waterhouse Chartered Accountants LLP, its ICAI registration number is 012754N/N500016 (ICAI registration
number before conversion was 012754N)

We draw attention to Note 9 to the Standalone Statement which explains the uncertainties $5.$ and the management's assessment of the financial impact due to the lock-downs and other restrictions and conditions related to the COVID-19 pandemic situation, for which a definitive assessment of the impact in the subsequent period is highly dependent upon the circumstances as they evolve. Our opinion is not modified in respect of this matter.

For Price Waterhouse Chartered Accountants LLP Firm Registration Number: 012754N/N500016 Chartered Accountants

Milanau

Pradip Kanakia Partner Membership Number: 039985
UDIN: 200399851444CK7636

Place: Bengaluru Date: July 27, 2020

Figure University Dr. Schware Park, Plus 1.11.11.12 and 18,

Konnapana Agrahara Village, Begur Hobli, Bengaluru 560 100, Karnataka, India.

Corporate Identity Number: L72900KA2000PLC026980

Tel: +91 80 4179 4600; Fax: +91

Statement of Standalone Unaudited Financial Results for the quarter ended June 30, 2020

					(Rs. in crore except per share data)
		Quarter ended	Quarter ended	Quarter ended	Year ended
	Particulars	June 30, 2020	March 31, 2020	June 30, 2019	March 31, 2020
		Unaudited	Refer Note 10	Unaudited	Audited

	Revenue from operations	78.73	54.56	160.56	386.20
Ш	Other Income	4.32	13.59	7.05	33.71
Ш	Total income $(I + II)$	83.05	68.15	167.61	419.91
IV	EXPENSES
	Cost of materials consumed (a)	35.18	31.56	93.82	203.58
	Employee benefit expense (b)	24.93	33.15	24.90	103.22
	Finance costs (c)	0.91	1.03	3.41	7.57
	Depreciation and amortization expense ${d}$	13.78	20.89	17.59	77.05
	Impairment of non-current assets (e)		69.87		69.87
	Allowance for expected credit loss (Refer Note - 8) (f,	4.02	17.34	0.86	18.81
	$\left( q\right)$ Other expenses	14.11	21.05	16.90	77.42
	Total expenses (IV)	92.93	194.89	157.48	557.52
v	Profit/(Loss) before tax (III - IV)	(9.88)	(126.74)	10.13	(137.61)
٧I	Income tax expense
	(1) Current tax			2.20
	(2) Deferred tax expense			2.16	98.55
	Total tax expense	۰.		4.36	98.55
VII.	Profit/(Loss) after tax (V - VI)	(9.88)	(126.74)	5.77	(236.16)
VIII	Other comprehensive income/(loss)
	Items that will not be reclassified to profit or loss
	Remeasurements of the defined benefit obligation	(0.05)	(1.29)	(0.05)
					(1.07)
	Income tax relating to above Total comprehensive income/(loss) for the period (VII +			0.01
IX	VIII)	(9.93)	(128.03)	5.73	(237.23)
X	Earnings/(Loss) per equity share
	Equity shares of par value Rs. 10 each
	Basic (1)	(1.07)	(13.75)	0.63	(25.66)
	Diluted (2)	(1.07)	(13.75)	0.60	(25.66)

Tejas Networks Limited Registered and Corporate Office: J.P. Software Park, Plot No. 25, Sy. No. 13, 14, 17 and 18, Konnapana Agrahara Village, Begur Hobli, Bengaluru 560 100, Karnataka, India. Corporate Identity Number: L72900KA2000PLC026980 Tel: +91 80 4179 4600; Fax: +91 80 2852 0201 E-mail: [email protected]; Website: www.tejasnetworks.com

Notes

$\mathbf{1}$ These financial results have been prepared in accordance with Companies (Indian Accounting Standard) Rules, 2015 (as amended) ['Ind AS'] prescribed under section 133 of the Companies Act, 2013 read with relevant rules, issued thereunder, and other recognised accounting practices and policies and in terms of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (as amended) ['Listing Regulations'].
$\mathfrak{D}$ The Company's operations comprise of only one segment viz. Networking equipment.
$\mathcal{R}$ In July, 2017, the Income Tax Department (Department) initiated proceedings under Section 132 of the Income tax Act, 1961 (IT Act) and in March 2018, also sent a show cause notice to the company under Section 276(C) of the IT Act. The Company and its officials fully co-operated with the Department. During FY 2018-19, the Company and certain officers of the Company had received Summons under various sections of the IT Act from the Special Court for Economic Offences, to which the Company has responded. Post the ongoing proceedings initiated by the Department, during FY 2019-20, certain other agencies sent notices as part of their preliminary inquiries, which were duly responded by the Company and its officials. The Company is of the view that the outcome of these summons/notices will not have any material impact on the Company's financial results. During FY 2019-20, the Company has received notices of demand from the Department for additional tax payable amounting to Rs. 25.62 crore for AY 2017-18 (after adjusting the brought forward losses) under Section 156 of the IT Act after making additions of various items to income as per assessment orders issued under Section 143(3) read with Section 153A of the IT Act. The Department has also issued show cause notices for initiating penalty proceedings under Section 274 read with Section 270A/ 271(1)(c)/ 271AAB(1A) of the IT Act and the Company has filed a stay application against the penalty proceedings. The Company has also received a demand order for AY 2018-19 for additional tax payable amounting to Rs. 0.48 crore. The Company believes that there are several computational errors in the aforesaid demand orders and therefore the Company has filed an application for rectification of errors in the aforesaid notices, including non-consideration of brought forward losses in AY 2012-13 assessment, u/s 154 of the IT Act. The Company has also challenged the orders passed by the Assessing Officer (AO) and filed an appeal with the Commissioner of Income Tax (Appeals) for the aforesaid assessment years. The Company is of the view that the outcome of these proceedings/summons/demands will not have any material adverse impact on the Company's financial results.
$\overline{4}$ On July 4, 2018, the Company had received an Order from the Customs Excise and Service Tax Appellate Tribunal (CESTAT) with respect to applicability of excise duty on the software used as part of the Multiplexer products during FY from 2002-03 to 2009-10. The aforesaid CESTAT Order dealt with an earlier Order received during the FY 2010-11 with associated demand of Rs. 11.87 crore and various show cause notices on a similar matter received in earlier financial years leading to an additional demand of Rs. 24.88 crore i.e. a total demand of Rs. 36.75 crore. The aforesaid CESTAT Order was a culmination of the various appeals filed by both the Company and the Department of Central Excise in respect of both the earlier order and the show cause notices mentioned above that were heard by the Commissioner of Central Excise and CESTAT.

According to the aforesaid CESTAT Order, the value of software is to be included for the purpose of arriving at the assessable value for calculating the excise duty liability on the product. Accordingly, CESTAT had remanded the matter back to the adjudicating authority in June 2018 for quantifying the differential duty liability, interest and penalties.

The adjudicating authority vide its order dated October 31, 2019 passed an order quantifying the differential duty liability and penalty amounting to Rs. 42.92 crore (which includes the demand of Rs. 36.75 crore by CESTAT as mentioned above) and ordering recovery of appropriate interest. Additionally, the adjudicating authority has also imposed penalty on certain officers of the Company amounting to Rs. 0.90 crore. The total demand, in respect of this matter, as per the Order of the adjudicating authority, aggregates to Rs. 43.82 crore.

The Company had earlier filed a Miscellaneous Application with CESTAT on August 19, 2018 challenging the aforementioned CESTAT Order passed in July 2018. Pursuant to the quantification order of the adjudicating authority in October 2019 as stated above, the Miscellaneous Application has been withdrawn by the Company as the Company has filed a fresh appeal dated February 6, 2020 before the CESTAT against the order of the adjudicating authority dated October 31, 2019. The Company had also filed a Civil Application on September 24, 2018 under section 35L of the Central Excise Act, 1944 along with a stay application before the Hon'ble Supreme Court of India against the aforesaid CESTAT order passed in June 2018. The same continues to remain pending for final hearing.

The Company had, in previous years, also received show cause notices, from the Department of Central Excise in respect of FY 2010-11 to 2013-14 on a similar matter amounting to Rs. 3.01 crore which are not part of the orders discussed above and for which the company had provided its response. Based on Management's assessment, supported by an external legal opinion, Management has concluded that the Company has a strong case to defend its position in the above matters and accordingly, no provision has been made in these financial results.

a) The Company has, at various grant dates issued Restricted Stock Units (RSUs) to its employees at face value of the Company's share, which were approved by the Nomination and Remuneration Committee and the Board of Directors. For the quarter ended June 30, 2020, an amount of Rs. 1.70 crore (June 30, 2019: Rs. 2.96 crore) has been recorded as employee share expenses based on accounting as per Ind AS 102, 'Share-based payments'. The RSUs granted and outstanding as at June 30, 2020, aggregates to 14,48,392 (June 30, 2019; 16,50,552).

b) The Company has, at various grant dates in the earlier years issued stock options under different Employee Stock Option Plans to its employees at different exercise prices. For the quarter ended June 30, 2020, an amount of Rs. 0.04 crore (June 30, 2019: Rs. 0.20 crore) has been recorded as employee share expenses based on accounting as per Ind AS 102, 'Share-based payments',

The Company has from time to time in the normal course of business entered into factoring agreements on a non-recourse basis with bankers/factoring institution for some of the trade receivables. As at June 30, 2020 the trade receivables do not include receivables amounting to Rs. 8.74 crore (June 30, 2019: Rs. 21.17 crore) which have been derecognised in accordance with Ind AS 109, 'Financial Instruments', pursuant to such factoring arrangements entered in the current quarter.

Tejas Networks Limited

Registered and Corporate Office: J.P. Software Park, Plot No. 25, Sy. No. 13, 14, 17 and 18, Konnapana Agrahara Village, Begur Hobli, Bengaluru 560 100, Kamataka, India. Corporate Identity Number: L72900KA2000PLC026980

Tel: +91 80 4179 4600; Fax: +91 80 2852 0201

E-mail: [email protected]; Website: www.tejasnetworks.com

$\overline{7}$ The Company and its overseas subsidiary has filed a claim against a vendor for recovery of outstanding amount (net), which comprises amount payable by the Company and amount receivable by the Company's overseas subsidiary. The Company has also received a counter claim from the said vendor. Based on management assessment, the counter claim is not tenable as it is not backed by reliable supporting documentation. There has been no business with this vendor for more than 3 years. The matter is sub-judice and is under mediation. The Company believes that the outcome of this litigation will have no material adverse impact on this statement of financial results.
$\mathsf{R}$ Expected credit loss represents an allowance for life-time expected loss on the carrying value of trade receivables, which has been recognised in accordance with the simplified approach as permitted by Ind AS 109, 'Financial Instruments'.

9 Impact of COVID-19 Pandemic

Place: Bengaluru

Date: July 27, 2020

The spread of COVID-19 has severely impacted businesses around the globe. In many countries, including India, there has been disruption to regular business operations due to lock-downs, disruptions in transportation, supply chain, travel restrictions, quarantines, social distancing and other measures.

The Company is in the business of providing optical and data transmission equipment to telecom service providers. Since telecom networks have been identified as an essential service, the Company has been able to provide continual customer and technical support to its customers in India and worldwide, so that their network uptime remains high. During the quarter, the Company encountered delays in fulfilling certain customer orders in hand and delays in collection of trade receivables. While in the near-term COVID 19 related uncertainties may impact financial performance, the management believes that the demand for the company's products will gradually increase in line with higher investments that telecom operators are making to address the demand for fiber-based home broadband connections and to upgrade their network capacities, to cater to higher data traffic arising from increasing trend of work-from-home, learn-from-home and other data-intensive services. The Company has made an assessment of its liquidity position for the next one year and of the recoverability and carrying values of its assets comprising Property, Plant and Equipment, Intangible assets, Trade receivables, Inventory, and Investments as at the quarter ended June 30, 2020, and has concluded that there are no material adjustments required in these standalone financial results. Management believes that it has taken into account all the possible impact of known events arising from COVID 19 pandemic in the preparation of the standalone financial results. However, the impact assessment of COVID 19 is a continuing process given the uncertainties associated with its nature and duration. The actual results of the events arising from the pandemic may be different from that estimated by the management. The company will continue to monitor any material changes to future economic conditions.

The figures for the quarter ended March 31, 2020 are the balancing figures between the audited figures in respect of the full financial year and the published unaudited $10$ year to date figures up to the third quarter of the respective financial year which were subjected to review by the statutory auditors.
11 Previous period's figures have been regrouped/reclassified where necessary, to conform with the current period's presentation for the purpose of comparability.
The above statement of standalone financial results was reviewed and recommended by the Audit Committee of the Board and subsequently approved by the Board of $12$ Directors at their respective meetings held on July 27, 2020 respectively.

For and on behalf of the Board of Directors

Sanjay Nayak CEO and Managing Director (DIN: 01049871)

Review Report

To The Board of Directors Tejas Networks Limited, 5^th Floor, J P Software Park, Plot No 25, Sy. No 13, 14, 17, 18, Konnapana Agrahara Village, Begur Hobli, Bengaluru - 560 100

We have reviewed the unaudited consolidated financial results of Tejas Networks Limited $1.$ (the "Parent") and its subsidiaries (the parent and its subsidiaries hereinafter referred to as the "Group"), [(refer Note 1 on the Statement)] for the quarter ended June 30, 2020 which are included in the accompanying 'Statement of Consolidated Unaudited Financial Results for the quarter ended June 30, 2020' together with notes thereon (the "Consolidated Statement"). The Consolidated Statement is being submitted by the Parent pursuant to the requirement of Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended (the "Listing Regulations"), which has been initialled by us for identification purposes.
This Consolidated Statement, which is the responsibility of the Parent's Management and $\mathbf{2}$ . has been approved by the Parent's Board of Directors, has been prepared in accordance with the recognition and measurement principles laid down in Indian Accounting Standard 34 "Interim Financial Reporting" ("Ind AS 34"), prescribed under Section 133 of the Companies Act, 2013, and other accounting principles generally accepted in India. Our responsibility is to express a conclusion on the Consolidated Statement based on our review.
We conducted our review of the Consolidated Statement in accordance with the Standard on $3:$ Review Engagements (SRE) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity", issued by the Institute of Chartered Accountants of India. This Standard requires that we plan and perform the review to obtain moderate assurance as to whether the Consolidated Statement is free of material misstatement. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

We also performed procedures in accordance with the circular issued by the SEBI under Regulation 33 (8) of the SEBI Listing Regulations, 2015, as amended, to the extent applicable.

Price Waterhouse Chartered Accountants LLP, 5th Floor, Tower 'D', The Millenia, 1 & 2 Murphy Road, Ulsoor Bangalore - 560 008 T:+91 (80) 4079 5000, F:+91 (80) 4079 5222

Registered office and Head office: Sucheta Bhawan, 11A Vishnu Digambar Marg, New Delhi 110 002

Price Waterhouse (a Partnership Firm) converted into Price Waterhouse Chartered Accountants LLP (a Limited Liability Partnership with LLP identity no: LLPIN AAC-5001)
with effect from July 25, 2014. Post its conversion to number before conversion was 012754N)

The Statement includes the results of the following entities:

Tejas Communication Pte. Limited, Singapore Tejas Communication (Nigeria) Limited

Based on our review conducted and procedures performed as stated in paragraph 3 above, 5. nothing has come to our attention that causes us to believe that the accompanying Statement has not been prepared in all material respects in accordance with the recognition and measurement principles laid down in the aforesaid Indian Accounting Standard and other accounting principles generally accepted in India and has not disclosed the information required to be disclosed in terms of Regulation 33 of the Listing Regulations, including the manner in which it is to be disclosed, or that it contains any material misstatement.
We draw attention to Note 11 to the Consolidated Statement which explains the uncertainties 6. and the management's assessment of the financial impact due to the lock-downs and other restrictions and conditions related to COVID-19 pandemic situation, for which a definitive assessment of the impact in the subsequent period is highly dependent upon circumstances as they evolve. Our opinion is not modified in respect of this matter.

For Price Waterhouse Chartered Accountants LLP Firm Registration Number: 012754N/N500016 Chartered Accountants

Milanar

Pradip Kanakia Partner Membership Number: 039985 UDIN: 20039985AAAACL3984

Place: Bengaluru Date: July 27, 2020

Tejas Networks Limited

Registered and Corporate Office: J.P. Software Park, Plot No. 25, Sy. No. 13, 14, 17 and 18, Konnapana Agrahara Village, Begur Hobli, Bengaluru 560 100, Karnataka, India. Corporate Identity Number: L72900KA2000PLC026980 Tel: +91 80 4179 4600; Fax: +91 80 2852 0201

E-mail: [email protected]; Website: www.tejasnetworks.com

Statement of Consolidated Unaudited Financial Results for the quarter ended June 30, 2020

					(Ks. In crore except per share data)
		Quarter ended	Quarter ended	Quarter ended	Year ended
	Particulars	June 30, 2020	March 31, 2020	June 30, 2019	March 31, 2020
		Unaudited	Refer Note 12	Unaudited	Audited
	Revenue from operations	80.11	54.57	161.89	390.54
11	Other Income	4.34	13.52	7.05	33.65
Ш	Total income (I + II)	84.45	68.09	168.94	424.19
IV	EXPENSES
	(a) Cost of materials consumed	35.18	31.56	93.82	203.58
	(b) Employee benefit expense	26.87	35.66	26.46	110.52
	Finance costs (c)	0.94	1:07	3.44	7.72
	Depreciation and amortization expense (d)	13.78	20.89	17.59	77.05
	Impairment of non-current assets (e)		69.87		69.87
	Allowance for expected credit loss (Refer Note - 10) (f)	4.02	17.41	0.86	20.03
	Other expenses $\left( a\right)$	13.42	18.16	16.56	73.99
	Total Expenses (IV)	94.21	194.62	158.73	562.76
v	Profit/(Loss) before tax (III - IV)	(9.76)	(126.53)	10.21	(138.57)
VI	Income tax expense
	(1) Current tax			2.20
	(2) Deferred tax expense	×		2.16	98.55
	Total tax expense	$\overline{\phantom{a}}$		4.36	98.55
VII VIII.	Profit/(Loss) after tax (V - VI) Other comprehensive income/(loss)	(9.76)	(126.53)	5.85	(237.12)
	Items that will not be reclassified to profit or loss
	Remeasurements of the defined benefit
	obligation	(0.05)	(1.29)	(0.05)	(1.07)
	Income tax relating to above	- 1		0.01	Ξ
	Items that will be reclassified to profit or loss Exchange differences on translation of foreign
	operations*	0.00	0.24	(0.03)	0.64
$\mathbf{I}$	Total comprehensive income/(loss) for the period	(9.81)	(127.58)	5.78	(237.55)
	$(VII + VIII)$
x.	Earnings/(Loss) per equity share
	Equity shares of par value Rs. 10 each
	Basic (1)	(1.06)	(13.73)	0.64	(25.76)
	(2) Diluted	(1.06)	(13.73)	0.61	(25.76)

*Amount below the rounding off norm adopted by the Company for the quarter ended June 30, 2020

NOR WGALOR

Tejas Networks Limited Registered and Corporate Office: J.P. Software Park, Plot No. 25, Sy. No. 13, 14, 17 and 18, Konnapana Agrahara Village, Begur Hobli, Bengaluru 560 100, Karnataka, India. Corporate Identity Number: L72900KA2000PLC026980 Tel: +91 80 4179 4600; Fax: +91 80 2852 0201 E-mail: [email protected]; Website: www.tejasnetworks.com

Notes

$\mathbf{1}$ The Statement of consolidated financial results includes the results of Tejas Networks Limited ('the Company' or 'the Holding Company') and the following subsidiary/ step down subsidiary (collectively referred as 'the Group' hereinunder):
Tejas Communication Pte. Limited, Singapore
Tejas Communication (Nigeria) Limited
These consolidated financial results of the Group have been prepared in accordance with Companies (Indian Accounting Standard) Rules, 2015 (as amended) ['Ind $\overline{2}$ AS'] prescribed under section 133 of the Companies Act, 2013 read with relevant rules, issued thereunder, and other recognised accounting practices and policies and in terms of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (as amended) ['Listing Regulations'].
3 The Group's operations comprise of only one segment viz. Networking equipment. $\overline{4}$

Summary of key standalone financial results of the Company is as follows:				(Rs. in crore)
Particulars	Quarter ended	Quarter ended	Quarter ended	Year ended
	June 30, 2020	March 31, 2020	June 30, 2019	March 31, 2020
Revenues from operations	78.73	54.56	160.56	386.20
Profit/(Loss) before tax	(9.88)	(126.74)	10.13	(137.61)
Profit/(Loss) after tax	(9.88)	(126.74)	5.77	(236.16)
$M_{\rm{max}}$ . The state $\alpha$ is the state $\alpha$ $\cdots$

Note: The standalone financials results of the Company for the above mentioned periods are available in the investors section in www.tejasnetworks.com and also with the stock exchanges where it is listed. The information above has been extracted from the published standalone financial results.

In July, 2017, the Income Tax Department (Department) initiated proceedings under Section 132 of the Income tax Act, 1961 (IT Act) and in March 2018, also sent a show cause notice to the company under Section 276(C) of the IT Act. The Company and its officials fully co-operated with the Department. During FY 2018-19, the Company and certain officers of the Company had received Summons under various sections of the IT Act from the Special Court for Economic Offences, to which the Company has responded. Post the ongoing proceedings initiated by the Department, during FY 2019-20, certain other agencies sent notices as part of their preliminary inquiries, which were duly responded by the Company and its officials. The Company is of the view that the outcome of these summons/notices will not have any material impact on the Company's financial results. During FY 2019-20, the Company has received notices of demand from the Department for additional tax payable amounting to Rs. 25.62 crore for AY 2017-18 (after adjusting the brought forward losses) under Section 156 of the IT Act after making additions of various items to income as per assessment orders issued under Section 143(3) read with Section 153A of the IT Act. The Department has also issued show cause notices for initiating penalty proceedings under Section 274 read with Section 270A/ 271(1)(c)/ 271AAB(1A) of the IT Act and the Company has filed a stay application against the penalty proceedings. The Company has also received a demand order for AY 2018-19 for additional tax payable amounting to Rs. 0.48 crore. The Company believes that there are several computational errors in the aforesaid demand orders and therefore the Company has filed an application for rectification of errors in the aforesaid notices, including non-consideration of brought forward losses in AY 2012-13 assessment, u/s 154 of the IT Act. The Company has also challenged the orders passed by the Assessing Officer (AO) and filed an appeal with the Commissioner of Income Tax (Appeals) for the aforesaid assessment years. The Company is of the view that the outcome of these proceedings/ summons/ demands will not have any material adverse impact on the Company's financial results
$\mathsf{G}$ On July 4, 2018, the Company had received an Order from the Customs Excise and Service Tax Appellate Tribunal (CESTAT) with respect to applicability of excise duty on the software used as part of the Multiplexer products during FY from 2002-03 to 2009-10. The aforesaid CESTAT Order dealt with an earlier Order received during the FY 2010-11 with associated demand of Rs. 11.87 crore and various show cause notices on a similar matter received in earlier financial years leading to an additional demand of Rs. 24.88 crore i.e. a total demand of Rs. 36.75 crore. The aforesaid CESTAT Order was a culmination of the various appeals filed by both the Company and the Department of Central Excise in respect of both the earlier order and the show cause notices mentioned above that were heard by the Commissioner of Central Excise and CESTAT.

WOR 'GAI C

Tejas Networks Limited Registered and Corporate Office: J.P. Software Park, Plot No. 25, Sy. No. 13, 14, 17 and 18, Konnapana Agrahara Village, Begur Hobli, Bengaluru 560 100, Karnataka, India. Corporate Identity Number: L72900KA2000PLC026980 Tel: +91 80 4179 4600: Fax: +91 80 2852 0201 E-mail: [email protected]; Website: www.tejasnetworks.com

$\overline{7}$ a) The Company has, at various grant dates issued Restricted Stock Units (RSUs) to its employees at face value of the Company's share, which were approved by the Nomination and Remuneration Committee and the Board of Directors. For the quarter ended June 30, 2020, an amount of Rs. 1.70 crore (June 30, 2019: Rs. 2.96 crore) has been recorded as employee share expenses based on accounting as per Ind AS 102, 'Share-based payments'. The RSUs granted and outstanding as at June 30, 2020, aggregates to 14,48,392 (June 30, 2019: 16,50,552).

$\mathsf{R}$ The Company has from time to time in the normal course of business entered into factoring agreements on a non-recourse basis with bankers/factoring institution for some of the trade receivables. As at June 30, 2020 the trade receivables do not include receivables amounting to Rs. 8.74 crore (June 30, 2019: Rs. 21.17 crore) which have been derecognised in accordance with Ind AS 109, 'Financial Instruments', pursuant to such factoring arrangements entered in the current quarter.
$\mathsf{Q}$ The Company and its overseas subsidiary has filed a claim against a vendor for recovery of outstanding amount (net), which comprises amount payable by the Company and amount receivable by the Company's overseas subsidiary. The Company has also received a counter claim from the said vendor. Based on management assessment, the counter claim is not tenable as it is not backed by reliable supporting documentation. There has been no business with this vendor for more than 3 years. The matter is sub-judice and is under mediation. The Company believes that the outcome of this litigation will have no material adverse impact on this statement of financial results.
$10$ Expected credit loss represents an allowance for life-time expected loss on the carrying value of trade receivables, which has been recognised in accordance with the simplified approach as permitted by Ind AS 109, 'Financial Instruments'.

Impact of COVID-19 Pandemic $11$

The Company is in the business of providing optical and data transmission equipment to telecom service providers. Since telecom networks have been identified as an essential service, the Company has been able to provide continual customer and technical support to its customers in India and worldwide, so that their network uptime remains high. During the quarter, the Company encountered delays in fulfilling certain customer orders in hand and delays in collection of trade receivables. While in the near-term COVID 19 related uncertainties may impact financial performance, the management believes that the demand for the company's products will gradually increase in line with higher investments that telecom operators are making to address the demand for fiber-based home broadband connections and to upgrade their network capacities, to cater to higher data traffic arising from increasing trend of work-from-home, learn-from-home and other data-intensive services. The Company has made an assessment of its liquidity position for the next one year and of the recoverability and carrying values of its assets comprising Property, Plant and Equipment, Intangible assets, Trade receivables, Inventory, and Investments as at the quarter ended June 30, 2020, and has concluded that there are no material adjustments required in these consolidated financial results. Management believes that it has taken into account all the possible impact of known events arising from COVID 19 pandemic in the preparation of the consolidated financial results. However, the impact assessment of COVID 19 is a continuing process given the uncertainties associated with its nature and duration. The actual results of the events arising from the pandemic may be different from that estimated by the management. The company will continue to monitor any material changes to future economic conditions.

The figures for the quarter ended March 31, 2020 are the balancing figures between the audited figures in respect of the full financial year and the published unaudited year to date figures up to the third quarter of the respective financial year which were subjected to review by the statutory auditors.
13 Previous period's figures have been regrouped/reclassified where necessary, to conform with the current period's presentation for the purpose of comparability.
14 The above statement of consolidated financial results was reviewed and recommended by the Audit Committee of the Board and subsequently approved by the Board of Directors at their respective meetings held on July 27, 2020 respectively.

For and on behalf of the Board of Directors

Sanjay Nayak CEO and Managing Director (DIN: 01049871)

Place: Bengaluru Date: July 27, 2020

Tejas Networks announces consolidated results for quarter ended June 30, 2020 Q1 revenue was Rs. 77.4 crore; Net loss was Rs. 9.8 crore

Bengaluru, June 27, 2020: Tejas Networks [BSE: 540595, NSE: TEJASNET] today reported its financial results for the first quarter ended June 30, 2020. Tejas Networks designs, develops, manufactures and sells high-performance optical and data networking products, which are used to build high-speed communication networks.

For Q1 2021, our consolidated revenues (net of pass-through component sale) were Rs. 77.4 crore which was a YoY decline of 50.6% resulting in a loss after tax of Rs. 9.8 crore, as compared to a profit after tax of Rs. 5.9 crore for corresponding previous period.

Mr. Sanjay Nayak, Managing Director and CEO of Tejas Networks said, "Our revenues during the quarter were impacted due to COVID-19 lockdowns affecting our ability to fulfill customer orders. During the quarter, we saw strong new order intake of Rs. 188 crore, taking our total order book to Rs. 593 crores, which is the highest we had seen in the last 8 quarters. In addition, we secured wins from multiple Tier-1 operators for our GPON-based home-broadband products. As a leading pure-play telecom product company from India, we are well positioned to capitalize on the opportunities opening up due to Government of India's focus to create "Atmanirbhar Bharat".

Export revenues showed robust YoY growth of 52% during the quarter. In addition, we won over million dollar deals each, from 3 different international customers in Asia, Africa and Mid-east. We are seeing new opportunities coming our way, as our global customers look to de-risk and diversify their supply chain investments in the evolving geo-political environment."

Post-COVID, with more people working remotely and many video services being accessed from homes. there has been a significant increase in data traffic on telecom networks, which is driving demand for high-bandwidth broadband connections. Telecom operators are increasing their capex to address fiber-to-the-home broadband requirements and to augment the capacity of their optical networksboth of which are being addressed by Company's products.

"Our strong order book position even during the pandemic, is a clear testimony to the resilience of our business. We are more relevant to our customers today than in the past." said Mr. Sanjay Nayak, Managing Director and CEO of Tejas Networks.

Mr. Venkatesh Gadiyar, CFO said, "We continue to be a debt-free Company and our cash and cash equivalents, including investment in liquid mutual funds and deposits with financial institutions, stood at Rs. 272 crore. We managed our working capital well, despite seeing certain payment delays from customers due to COVID-19 situation. While the uncertainty due to economic impact of COVID-19 remains, financially we are well positioned to invest in growth opportunities in front of us."

As on date, we have filed for 349 patents and have been granted 116 patents.

About Tejas Networks Limited

Tejas Networks designs, develops and sells high-performance and cost-competitive networking products to telecommunications service providers, internet service providers, utilities, defence and government entities in over 75 countries. Tejas products utilize programmable, software-defined hardware architecture with a common software code-base that delivers seamless upgrades of new features and technology standards. Tejas Networks is ranked among top-10 suppliers in the global optical aggregation segment and has filed 349 patents.

For more information, visit Tejas Networks at http://www.tejasnetworks.com or contact Investor Relations: [email protected] Attn: Mr. Santosh Kesavan: [email protected] Phone: +91 80 41794600

SAFE HARBOUR

Certain statements in this release concerning our future growth prospects are forward-looking statements, which involve a number of risks, and uncertainties that could cause actual results to differ materially from those in such forward-looking statements due to risks or uncertainties associated with our expectations with respect to, but not limited to, our ability to successfully implement our strategy and our growth and expansion plans, technological changes, our exposure to market risks, general economic and political conditions in India which have an impact on our business activities or investments, changes in the laws and regulations that apply to the industry in which the Company operates. The Company does not undertake to update any forward-looking statements that may be made from time to time by or on behalf of the Company.

Tejas Networks Limited and subsidiaries Consolidated Balance Sheet as at

	(in Rs. crore, except share data)
	June 30,	March 31,
ASSETS	2020	2020
Non-current assets
Property, plant and equipment	28.71	30.55
Right-of-use assets	19.97	21.29
Intangible assets	31.10	26.81
Intangible assets under development	31.64	26.99
Financial assets
Trade receivables	80.93	80.28
Loans	5.33	5.61
Other financial assets	1.41	1.11
Income tax asset (net) шı	49.22	47.80
Deferred Tax Asset	41.70	41.70
Other non-current assets	6.76	6.97
Total non - current assets	296.77	289.11
Current assets
Inventories	238.21	251.99
Financial assets
Investments	88.32	50.97
Trade receivables	355.56	375.63
Cash and cash equivalents	56.57	66.48
Bank deposits with maturity of more than 3 months but less than 12 months	9.45	64.15
Balance held as margin money	22.02	12.56
Loans	0.75	1.17
Other financial assets	99.34	91.59
Other current assets	40.13	37.50
Total current assets	910.35	952.04
Total assets	1,207.12	1,241.15
EQUITY AND LIABILITIES
Equity
Equity share capital	95.61	95.48
Other equity	977.40	985.46
Total equity	1,073.01	1,080.94
Liabilities
Non-current liabilities
Financial liabilities
Lease Liabilities	20.81	21.91
Provisions	0.55	0.59
Total non - current liabilities	21.36	22.50
Current liabilities
Financial liabilities
Trade payables
Total outstanding dues of micro enterprises and small enterprises	10.62	10.96
Total outstanding dues of creditors other than micro enterprises and small enterprises	49.65	63.81
Lease liabilities	5.66	5.97
Other financial liabilities	33.14	42.27
Provisions	7.98	7.44
Other current liabilities	5.70	7.26
Total current liabilities	112.75	137.71
Total equity and liabilities	1,207.12	1,241.15

Tejas Networks Limited and subsidiaries

$\overline{\mathcal{L}}$

Consolidated Statements of Comprehensive Income for

	(in Rs. crore, except share data)
	Quarter ended Jun 30, 2020	Quarter ended Mar 31, 2020	Quarter ended	Year ended Jun 30, 2019 March 31, 2020
Revenue from operations	80.11	54.57	161.89	390.54
Other Income	4.34	13.52	7.05	33.65
Total Income	84.45	68.09	168.94	424.19
Expenses
Cost of materials consumed	35.18	31.56	93.82	203.58
Employee benefit expense	26.87	35.66	26.46	110.52
Finance costs	0.94	1.07	3.44	7.72
Depreciation and amortization expense	13.78	20.89	17.59	77.05
Impairment of non-current assets		69.87		69.87
Allowance for expected credit loss	4.02	17.41	0.86	20.03
Other expenses	13.42	18.16	16.56	73.99
Total Expenses	94.21	194.62	158.73	562.76
Profit before tax	(9.76)	(126.53)	10.21	(138.57)
Current tax			2.20
Deferred tax expense			2.16	98.55
Profit after tax	(9.76)	(126.53)	5.85	(237.12)
Other comprehensive income	(0.05)	(1.05)	(0.07)	(0.43)
Items that will not be reclassified to profit or loss
Remeasurements of the defined benefit obligation	(0.05)	(1.29)	(0.04)	(1.07)
Items that will be reclassified to profit or loss
Exchange differences on translation of foreign operations		0.24	(0.03)	0.64
Total comprehensive income for the period	(9.81)	(127.58)	5.78	(237.55)
Earnings per equity share of Rs. 10 each
Basic (Rs.)	(1.06)	(13.73)	0.64	(25.76)
Diluted (Rs.)	(1.06)	(13.73)	0.61	(25.76)
Weighted average equity shares used in computing earnings per equity share
Basic	9,22,59,867	9,21,75,744	9,18,42,866	9,20,38,454
Diluted	9,22,59,867	9,21,75,744	9,53,29,314	9,20,38,454

$\sim$ 18.

$\mathcal{A}$

Supplementary Information

Particulars	Quarter ended Jun 30, 2020	Quarter ended Quarter ended Mar 31, 2020		Year ended Jun 30, 2019 March 31, 2020
Revenue from operations	80.11	54.57	161.89	390.54
Less: Sale of Components	2.74	1.89	5.28	10.75
Revenue (net of component sales)	77.37	52.68	156.61	379.79
Year on Year decline	$-50.6%$

Teias Networks Limited

E-mail: [email protected]; Website: www.tejasnetworks.com Extract of Consolidated Unaudited Results for quarter ended June 30, 2020

				(Rs. in crore except per share data)
SI.	Particulars	Quarter ended	Year ended	Quarter ended
No.		June 30, 2020	March 31, 2020	June 30, 2019
	Total Income from operations*	80.11	390.54	161.89
	Net Profit/(Loss) before tax	(9.76)	(138.57)	10.21
	Net Profit/(Loss) after tax	(9.76)	(237.12)	5.85
4	Total Comprehensive Income/(Loss) for the period (Comprising Profit/(Loss) for the period after tax and Other Comprehensive Income/(Loss) after tax)	(9.81)	(237.55)	5.78
5	Equity Share Capital (Face value of Rs. 10/- each)	95.61	95.48	95.18
6	Reserves (excluding Revaluation Reserve) as shown in the Audited Balance Sheet of the previous year	$\overline{\phantom{a}}$	985.46
	Earnings/(Loss) per Share (of Rs. 10/- each) (i) Basic Rs. (ii) Diluted Rs.	(1.06) (1.06)	(25.76) (25.76)	0.64 0.61

Notes

Key Standalone Financial Information of the company is given below: $\mathbf{1}$

Particulars	Quarter ended	Year ended	Quarter ended
	June 30, 2020	March 31, 2020	June 30, 2019
Total Income from operations*	78.73	386.20	160.56
Net Profit/(Loss) before tax	(9.88)	(137.61)	10.13
Net Profit/(Loss) after tax	(9.88)	(236.16)	5.77

The above is an extract of the detailed format of quarterly financial results filed with the Stock Exchanges under Regulation 33 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (as amended). The full format of the Quarterly financial results are available on the website of the Stock Exchange(s) and the Company (www.tejasnetworks.com).
In July, 2017, the Income Tax Department (Department) initiated proceedings under Section 132 of the Income tax Act, 1961 (IT Act) and in March 2018, also 3 sent a show cause notice to the company under Section 276(C) of the IT Act. The Company and its officials fully co-operated with the Department. During FY 2018-19, the Company and certain officers of the Company had received Summons under various sections of the IT Act from the Special Court for Economic Offences, to which the Company has responded. Post the ongoing proceedings initiated by the Department, during FY 2019-20, certain other agencies sent notices as part of their preliminary inquiries, which were duly responded by the Company and its officials. The Company is of the view that the outcome of these summons/notices will not have any material impact on the Company's financial results. During FY 2019-20, the Company has received notices of demand from the Department for additional tax payable amounting to Rs. 25.62 crore for AY 2017-18 (after adjusting the brought forward losses) under Section 156 of the IT Act after making additions of various items to income as per assessment orders issued under Section 143(3) read with Section 153A of the IT Act. The Department has also issued show cause notices for initiating penalty proceedings under Section 274 read with Section 270A/ 271(1)(c)/ 271AAB(1A) of the IT Act and the Company has filed a stay application against the penalty proceedings. The Company has also received a demand order for AY 2018-19 for additional tax payable amounting to Rs. 0.48 crore. The Company believes that there are several computational errors in the aforesaid demand orders and therefore the Company has filed an application for rectification of errors in the aforesaid notices, including non-consideration of brought forward losses in AY 2012-13 assessment, u/s 154 of the IT Act. The Company has also challenged the orders passed by the Assessing Officer (AO) and filed an appeal with the Commissioner of Income Tax (Appeals) for the aforesaid assessment years. The Company is of the view that the outcome of these proceedings/ summons/ demands will not have any material adverse impact on the Company's financial results.

On July 4, 2018, the Company had received an Order from the Customs Excise and Service Tax Appellate Tribunal (CESTAT) with respect to applicability of excise duty on the software used as part of the Multiplexer products during FY from 2002-03 to 2009-10. The aforesaid CESTAT Order dealt with an earlier Order received during the FY 2010-11 with associated demand of Rs. 11.87 crore and various show cause notices on a similar matter received in earlier financial years leading to an additional demand of Rs. 24.88 crore i.e. a total demand of Rs. 36.75 crore. The aforesaid CESTAT Order was a culmination of the various appeals filed by both the Company and the Department of Central Excise in respect of both the earlier order and the show cause notices mentioned above that were heard by the Commissioner of Central Excise and CESTAT.

The Company is in the business of providing optical and data transmission equipment to telecom service providers. Since telecom networks have been identified as an essential service, the Company has been able to provide continual customer and technical support to its customers in India and worldwide, so that their network uptime remains high. During the quarter, the Company encountered delays in fulfilling certain customer orders in hand and delays in collection of trade receivables. While in the near-term COVID 19 related uncertainties may impact financial performance, the management believes that the demand for the company's products will gradually increase in line with higher investments that telecom operators are making to address the demand for fiber-based home broadband connections and to upgrade their network capacities, to cater to higher data traffic arising from increasing trend of work-fromhome, learn-from-home and other data-intensive services. The Company has made an assessment of its liquidity position for the next one year and of the recoverability and carrying values of its assets comprising Property, Plant and Equipment, Intangible assets, Trade receivables, Inventory, and Investments as at the quarter ended June 30, 2020, and has concluded that there are no material adjustments required in these consolidated financial results. Management believes that it has taken into account all the possible impact of known events arising from COVID 19 pandemic in the preparation of the consolidated financial results. However, the impact assessment of COVID 19 is a continuing process given the uncertainties associated with its nature and duration. The actual results of the events arising from the pandemic may be different from that estimated by the management. The company will continue to monitor any material changes to future economic conditions.

* excludes other income.

Place: Bengaluru Date: July 27, 2020 For and on behalf of the Board of Directors

Sanjay Nayak CEO and Managing Director (DIN: 01049871)

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Tejas Networks Limited Interim / Quarterly Report 2020

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