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Notes to Accounts of Allsec Technologies Ltd.

Mar 31, 2014

1. The Company has not recognised deferred tax assets arising primarily on account of carried forward tax losses and unabsorbed depreciation, as subsequent realization of such amounts is not virtually certain.

2. Diminution in the value of investments and other receivables from subsidiaries

(a) Allsectech Manila inc, Philippines the financial statements as at March 31, 2014 include investments of Rs. 1,020 lakhs (March 31, 2013 : Rs. 1,020 lakhs) in the equity share capital of its wholly owned subsidiary Allsectech Manila Inc., philippines and investment in preference share capital of Rs. 1566 lakhs (shown as advances towards preference share capital as at March 31,2013 : Rs.1,443 lakhs) in such subsidiary.

the subsidiary''s accumulated losses have fully eroded its net worth as at March 31,2014. Management has undertaken several initiatives to improve its income from operations and establish profitable operations. Management has also entered into arrangements such as subleasing of excess capacity to earn alternative sources of income. Based on these action plans, the management is confident that the subsidiary will be able to earn sufficient profit which will enable the parent Company to recoup the value of investments in the subsidiary. Based on the above, management is of the view that no provision is required to be made to the carrying value of such investments.

(b) Allsectech inc, USA

the financial statements as at March 31, 2014 include investments of Rs. 1,214 lakhs in its wholly owned subsidiary Allsectech Inc., uSA and receivable balance (net) of Rs.84 lakhs from such subsidiary. the subsidiary''s accumulated losses have fully eroded its net worth as at March 31, 2014.

Management has undertaken several initiatives to restructure the operations of its subsidiary and establish profitable operations. the management believes that the synergy of the consolidated operations of parent and subsidiary increases the operational efficiency of the group. Considering that the investment in subsidiary is long term in nature and steps have been taken by the management for turnaround of the subsidiary, diminution in value is considered as temporary and management is of the view that no provision is required to be made to the carrying value of such investments and other receivables.

(c) Oentigral inc, USA

the financial statements as at March 31, 2014 include investments of Rs 35 lakhs in its subsidiary Centigral Inc.uSA and advances of Rs.239 lakhs due from such subsidiary. the accumulated losses of Rs.320 lakhs as on March 31, 2014 have substantially eroded the net worth of the subsidiary. Considering the accumulated losses, the management has recorded provision for permanent dimunition in the value of investments in and advances due from this subsidiary as on March 31, 2014 in the Financial statements.

3. Gratuity benefit plans

the Company has a defined benefit gratuity plan. Every employee who has completed four years and eight months or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service subject to a maximum of Rupees ten Lakhs. the scheme is funded with an insurance Company in the form of a qualifying insurance policy.

the following tables summarizes the components of net benefit/ expense recognised in the statement of profit and loss account and the funded status and amounts recognised in the balance sheet for gratuity:

The fund is administered by Life Insurance Corporation of India. The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled.

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. The Company does not currently have any estimates of the contribution to be paid to the plan during the next year. Accordingly, the same has not been disclosed.

4. Employee stock option plans

The Company has one stock option plan that provides for the granting of stock options to employees including Directors of the Company (not being promoter Directors and Executive Directors, holding more than 10% of the equity shares of the Company). the option plans are summarized below: Employee Stock Option Scheme (ESOS), 2010

the shareholders at the Annual General Meeting held on August 4, 2010, approved an employee Stock option Scheme 2010 (ESoS 2010) which provides for an issue of 600,000 options (each option convertible into 1 share) to the employees. Consequently, the compensation committee had granted 390,000 options on August 4, 2010 and 100,000 options on August 2, 2012 at an exercise price of Rs. 45.05/- per share & Rs. 41.25/- per share.

the Company has adopted the (employee Stock option Scheme and employee Stock purchase Scheme) Guidelines, 1999 issued by Securities and exchange Board of India and has recorded a compensation expense using the intrinsic value method as set out in those guidelines. the summary of the movements in options are given below:

Pro-forma Disclosures for ESOS 2010

In accordance with SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, had the compensation cost for ESoS 2010 been recognized based on the fair value at the date of grant in accordance with binomial method, the amounts of the Company''s net profit/ loss and earnings per share would have been as follows:

The fair value of options was estimated at the date of grant using the binomial method with the following assumptions:

The expected volatility was determined based on historical volatility data; historical volatility includes early years of the Company''s life; the Company expects the volatility of its share price to reduce as it matures.

5. Leases

Finance leases

Vehicles include cars obtained on finance lease. The lease terms range between 3 and 5 years. There is no escalation clause in the lease agreement. there are no restrictions imposed by lease arrangements. There are no subleases.

Operating leases

office premises in India are obtained under operating lease. Lease rentals incurred during the year of Rs. 790 (previous year Rs. 1,011) have been charged as an expense in the statement of profit and loss account. The lease terms vary between 3 and 9 years. There are no restrictions imposed by lease arrangements. There are no subleases. The future lease rentals payable are as follows:

6. Segment information

the Company''s operations predominantly relate to It enabled services and accordingly this is the only primary reportable segment. The Company has considered geographical segment as the secondary segment, based on the location of the customers invoiced.

Fixed assets used in the Company''s business have not been identified to any of the reportable segments, as the fixed assets and services are used interchangeably between segments. The Company believes that it is currently not practicable to provide segment disclosures relating to assets, liabilities and capital expenditure since a meaningful segregation of the available data is onerous.

* Represents conversion of loan given to Allsectech Manilla Inc. amounting to Rs. 1,443 (USD 26.57) into preference share capital.

** The Company has provided for impairment in the value of Investment in and advances due from the subsidiary as on March 31, 2014. Also refer Note 19 above.

7. Compliance with Section 269 of the Companies Act:

the Company had made an application to the Ministry of Corporate Affairs (MCA) in January 2014 seeking approval for the re-appointment of the whole time directors under the section 269 of the Companies Act 1956 and also for the remuneration to be paid to them for the period from April 1, 2013 to March 31, 2016. the application for reappointment was accepted by MCA vide communication dated January 10, 2014, restricting the remuneration to directors to Rs. 84 per annum per director. the Company has paid an amount of Rs. 36 in excess of the remuneration approved by MCA. Management has filed an application for condonation with the Ministry of Corporate Affairs in February 2014 seeking waiver of excess remuneration paid during the period April - December 2013. Pending receipt of such waiver, the excess remuneration paid, amounting to Rs. 36 has been disclosed as ''Advances recoverable from directors''.

8. Contingencies and commitments

Particulars March 31, 2014 March 31, 2013

Commitments

Capital contracts yet to be executed 4 1

contingent liabilities

Claims against the Company not acknowledged 109 109 as debts*

''Represents demand received from the Tamil Nadu Electricity Board in January 2008 relating to reclassification disputes on the tariff category applicable to the Company in two of its delivery centers with retrospective effect from 2005. The Company has obtained an interim stay order from the Hon''ble High Court of Madras against this claim. The Company considers the claim to be erroneous and as not payable under the specified tariff category applicable to ITES units. The company has pending assessments with local tax authorities for FY 2004-FY 2007. However as these assessments are expected to have an impact only on the carried forward losses and unabsorbed depreciation that can be carried forward by the company and not give rise to a cash outflow, no amounts have been disclosed as contingent liability.

9. Derivative instruments and unhedged foreign currency exposure

The Company had used derivative financial instruments in the form of forward exchange contracts to hedge its risks associated with foreign currency fluctuations during the year. Accounting policy for forward exchange contracts is given in Note 2.1 (r) above.

10. Details of dues to micro and small enterprises as defined under MSMED Act, 2006

There is no overdue amount payable to Micro, Small and Medium Enterprises as defined under The Micro, Small and Medium enterprises Development Act, 2006. Further, the Company has not paid any interest to any Micro, Small and Medium Enterprises during the current and previous year.


Mar 31, 2013

1. Corporate Information

Allsec Technologies Limited (''Allsec'' or the ''Company'') is a public Company domiciled in India and incorporated on August 24, 1998 as a limited Company under the Companies Act, 1956 and is listed on the National Stock Exchange of India (''NSE'') and Bombay Stock Exchange Limited (''BSE''). The Company is engaged in the business of providing IT enabled services for customers located in India and outside India. The services provided by the Company include data verification, processing of orders received through telephone calls, telemarketing, monitoring quality of calls of other call centers, customer services and HR and payroll processing. The Company has delivery centers at Chennai, Bengaluru, Mumbai, Delhi and Trichy.

During the year, the Company had entered into a share subscription agreement (''SSA'') dated August 23, 2012 with the shareholders of Centigral Inc, USA (''Centigral''). Centigral is engaged in the business of providing management consultancy services in health care and business analytics. As per the terms of SSA, the Company has acquired 80% of the paid up capital of Centigral on September 11, 2012.

As at the year end, the Company has four subsidiaries, Allsectech Inc., uSA, Allsectech Manila Inc., philippines, Retreat Capital Management Inc., uSA and Centigral Inc., uSA.

2. Basis of preparation

The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAp). The Company has prepared these financial statements to comply in all material respects with the accounting standards notified under the Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1 956. The financial statement have been prepared on an accrual basis and under the historical cost convention, except in case of assets for which provision for impairment is made and revaluation is carried out, if applicable.

The accounting policies adopted in the preparation of financial statements are consistent with those of previous year.

3. The Company has not recognised deferred tax assets arising primarily on account of carried forward tax losses and unabsorbed depreciation, as subsequent realization of such amounts is not virtually certain.

4. (a) Diminution in the value of investments and recoverability of loans made to a subsidiary in Philippines

The financial statements as at March 31, 2013 include investments of Rs. 1,020 lakhs (March 31, 2012 : Rs. 1,020 lakhs) in its wholly owned subsidiary Allsectech Manila Inc., Philippines and advances towards investment in preference share capital of Rs.1,443 lakhs (shown as advance recoverable as at March 31, 2012: Rs. 1,225) in such subsidiary. The subsidiary''s accumulated losses have fully eroded its net worth as at March 31, 2013. Management has undertaken several initiatives to improve its income from operations and establish profitable operations. Allsectech Manila Inc has made profits during the past two quarters on account of expansion of customer base and improved capacity utilisation and expects that such additional efforts initiated by the management would result in significant increase in the revenue and sustained profitability. Based on the above and considering the business plans for the future, management is of the view that no provision is required to be made to the carrying value of such investments and advances.

Also, the Company has via its Board Meeting dated February 05, 2013 decided to convert the loan given to Allsectech Manila Inc. amounting to Rs. 1,443 lakhs (USD 26.57 lakhs) in to preference share capital subject to approval from the relevant regulatory authorities in Manila, philippines. pending receipt of such approvals, the same has been disclosed as advance towards investment in preference share capital.

(b) Diminution in the value of investments in a subsidiary in US

The financial statements as at March 31, 2013 include investments of Rs. 595 lakhs in its wholly owned subsidiary Allsectech Inc., USA and receivable balance (net) of Rs.595 lakhs from such subsidiary. The subsidiary''s accumulated losses have fully eroded its net worth as at March 31, 2013. Management has undertaken several initiatives to improve its income from operations and establish profitable operations. The recovery of the value of such investment in the subsidiary is dependent upon the ability of the subsidiary to establish successful operations in the future and achieve sustained profitability. Based on the above and considering the business plans for the future, management is of the view that no provision is required to be made to the carrying value of such investments and advances.

5. Gratuity benefit plans

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service subject to a maximum of Rupees one million. The scheme is funded with an insurance Company in the form of a qualifying insurance policy.

The following tables summarizes the components of net benefit/ expense recognised in the statement of profit and loss account and the funded status and amounts recognised in the balance sheet for gratuity:

The fund is administered by Life Insurance Corporation of India. The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled.

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

The Company does not currently have any estimates of the contribution to be paid to the plan during the next year. Accordingly, the same has not been disclosed.

6. Employee stock option plans

The Company has two stock option plans that provide for the granting of stock options to employees including Directors of the Company (not being promoter Directors and Executive Directors, holding more than 10% of the equity shares of the Company). The option plans are summarized below:

7. CONTINGENCIES AND COMMITMENTS

Particulars March 31, 2013 March 31, 2012

Commitments

Capital contracts yet to be executed 1 99

Contingent liabilities

Claims against the Company not acknowledged 9 109 as debts *

* Represents demand received from the Tamil Nadu Electricity Board in January 2008 relating to reclassification disputes on the tariff category applicable to the Company in two of its delivery centers with retrospective effect from 2005. The Company has obtained an interim stay order from the Hon''ble High Court of Madras against this claim. The Company considers the claim to be erroneous and as not payable under the specified tariff category applicable to ITeS units.

8. DETAILS OF DUES TO MICRO AND SMALL ENTERPRISES AS DEFINED UNDER MSMED ACT, 2006

There is no overdue amount payable to Micro, Small and Medium Enterprises as defined under The Micro, Small and Medium Enterprises Development Act, 2006. Further, the Company has not paid any interest to any Micro, Small and Medium Enterprises during the current and previous year.

9. Previous year figures

previous year figures have been regrouped / reclassified, wherever necessary, to conform to current year''s classification.


Mar 31, 2012

1. Corporate information

Allsec Technologies Limited ('Allsec' or the 'Company') was incorporated on August 24, 1998 as a limited company under the Companies Act, 1956 and is listed on the National Stock Exchange of India ('NSE') and Bombay Stock Exchange Limited ('BSE'). The Company is engaged in the business of providing IT enabled services for customers located in India and outside India. The services provided by the Company include data verification, processing of orders received through telephone calls, telemarketing, monitoring quality of calls of other call centers, customer services and HR and payroll processing. The Company has delivery centers at Chennai, Bengaluru, Mumbai, Delhi, Trichy, Hyderabad and Pune.

As at year end, the Company has three subsidiaries, Allsectech Inc., USA, Allsectech Manila Inc., Philippines and Retreat Capital Management Inc., USA.

2. Basis of preparation

The financial statements of the company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The company has prepared these financial statements to comply in all material respects with the accounting standards notified under the Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared on an accrual basis and under the historical cost convention, except in case of assets for which provision for impairment is made and revaluation is carried out, if applicable.

The accounting policies adopted in the preparation of financial statements are consistent with those of previous year.

(a) Terms/rights attached to equity shares

The company has only one class of equity shares having a par value of Rs.10/- per share. Each holder of equity shares is entitled to one vote per share. The Company has not declared any dividend during the current year as well as the previous year.

In the event of liquidation of the company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts, if any. The distribution will be in proportion to the number of equity shares held by the shareholders.

(b) Details of shareholders holding more than 5% shares in the company Equity shares of Rs.10/- each fully paid

As per records of the company, including its register of shareholders/members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownerships of shares.

(c) Shares reserved for issue under options

For details of shares reserved for issue under the employee stock option (ESOP) plan of the company, please refer note 22.

2. The Company has not recognised deferred tax assets arising primarily on account of carried forward tax losses and unabsorbed depreciation, as subsequent realisation of such amounts is not virtually certain.

3. Diminution in the value of investments and recoverability of loans made to a subsidiary in Philippines

The financial statements include investments in the wholly owned subsidiary Allsectech Manila Inc., Philippines, of Rs. 1,020 lakhs (March 31, 2011: 1,020 lakhs) and advances recoverable of Rs. 1,225 lakhs (March 31, 2011: 984). Allsectech Manila Inc. has been incurring losses and as of March 31, 2012, the aggregate losses of Rs. 1,701 lakhs have eroded its entire equity. Management is of the view that the income from operations of Allsectech Manila Inc. have been lower than the anticipated levels primarily on account of loss of customers and under utilization of capacity. Allsectech Manila Inc. has undertaken various initiatives in expanding the customer base and expects that such additional efforts initiated by the management would result in significant increase in revenues and achieve sustained profitability. Based on the above and considering the business plans for the future, management is of the view that no provision is required to be made to the carrying value of such investments and advances.

4. Gratuity benefit plans

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service subject to a maximum of Rupees one million. The scheme is funded with an insurance company in the form of a qualifying insurance policy.

The following tables summarise the components of net benefit expense recognised in the statement of profit and loss account and the funded status and amounts recognised in the balance sheet for gratuity.

The fund is administered by Life Insurance Corporation of India. The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled.

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

The Company does not currently have any estimates of the contribution to be paid to the plan during the next year. Accordingly, the same has not been disclosed.

5. Employee stock option plans

The Company has two stock option plans that provide for the granting of stock options to employees including Directors of the Company (not being promoter Directors and Executive Directors, holding more than 10% of the equity shares of the Company). The option plans are summarized below:

Employee Stock Option Scheme (ESOS), 2006

The shareholders at the Annual General Meeting held on July 10, 2006, had approved an Employee Stock Option Scheme 2006 (ESOS 2006) which provides for an issue of 600,000 options (each option convertible into 1 share) to the employees. Consequently, the compensation committee had granted the 350,000 options on January 25, 2007 at an exercise price of Rs. 289.75 per share.

The Company has adopted the (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 issued by Securities and Exchange Board of India, and has recorded a compensation expense using the intrinsic value method as set out in those guidelines. The summary of the movements in options is given below:

6. Leases

Finance leases

Vehicles include cars obtained on finance lease. The lease terms range between 3 and 5 years. There is no escalation clause in the lease agreement. There are no restrictions imposed by lease arrangements. There are no subleases.

Operating leases

Office premises in India are obtained under operating lease. Lease rentals incurred during the year of Rs. 1,231 (previous year Rs. 1,132) have been charged as an expense in the statement of profit and loss account. The lease terms vary between 3 and 9 years. There are no restrictions imposed by lease arrangements. There are no subleases. The future lease rentals payable are as follows:

7. Segment information

The Company's operations predominantly relate to IT enabled services and accordingly this is the only primary reportable segment. The Company has considered geographical segment as the secondary segment, based on the location of the customers invoiced.

Fixed assets used in the Company's business have not been identified to any of the reportable segments, as the fixed assets and services are used interchangeably between segments. The Company believes that it is currently not practicable to provide segment disclosures relating to assets and capital expenditure since a meaningful segregation of the available data is onerous.

8. Related party disclosures

1. Names of related parties Relationship Name of the party

Subsidiaries Allsectech Inc., USA

Allsectech Manila Inc., Philippines

Retreat Capital Management Inc., USA

Key management personnel Whole time directors:

A. Saravanan R. Jagadish

9. Contingencies and commitments

Particulars March 31, 2012 March 31, 2011

Commitments Capital contracts yet to be executed 99 432

Contingent liabilities

Claims against the Company not acknowledged as debts* 109 109

* Represents demand received from the Tamil Nadu Electricity Board in January 2008 relating to reclassification disputes on the tariff category applicable to the Company in two of its delivery centers with retrospective effect from 2005. The Company has obtained an interim stay order from the Hon'ble High Court of Madras against this claim. The Company considers the claim to be erroneous and as not payable under the specified tariff category applicable to ITES units.

10. Derivative instruments and unhedged foreign currency exposure

The Company had used derivative financial instruments in the form of forward exchange contracts to hedge its risks associated with foreign currency fluctuations during the year. Accounting policy for forward exchange contracts is given in note 2.1 (r) above.

11. Details of dues to micro and small enterprises as defined under MSMED Act, 2006

There is no overdue amount payable to Micro, Small and Medium Enterprises as defined under The Micro, Small and Medium Enterprises Development Act, 2006. Further, the Company has not paid any interest to any Micro, Small and Medium Enterprises during the current and previous year.

12. Previous year figures

Till the year ended March 31, 2011, the Company was using pre-revised Schedule VI to the Companies Act 1956, for preparation and presentation of its financial statements. During the year ended March 31, 2012, the revised Schedule VI notified under the Companies Act 1956, has become applicable to the Company, for preparation and presentation of its financial statements. The adoption of revised Schedule VI has a significant impact on presentation and disclosures made in the financial statements. The company has also reclassified the previous year figures in accordance with the requirements applicable in the current year.


Mar 31, 2011

1.1 Background

Allsec Technologies Limited ('Allsec' or the 'Company') was incorporated on August 24, 1998 as a limited company under the Companies Act, 1956 and is listed on the National Stock Exchange of India ('NSE') and Bombay Stock Exchange Limited ('BSE'). The Company is engaged in the business of providing IT enabled services for customers located in India and outside India. The services provided by the Company include data verification, processing of orders received through telephone calls, telemarketing, monitoring quality of calls of other call centers, customer services and HR and payroll processing. The Company has delivery centers at Chennai, Bengaluru, Mumbai, Delhi, Trichy, Hyderabad, Pune and Kolkata.

During the year, the Company had entered into a Share Purchase Agreement ('SPA') dated January 31, 2011 with the shareholders of Retreat Capital Management Inc., USA, ("Retreat"). Retreat is engaged in the business of providing loss mitigation, portfolio management and management consulting services for mortgage lenders, servicers, asset managers and investors. Under the terms of the SPA, the Company shall acquire the entire outstanding equity capital of Retreat for a consideration to be determined in accordance with the terms of the SPA. On February 15, 2011, the Company paid a consideration of Rs. 99,393 (USD 2 million) towards 66% of the outstanding equity capital of Retreat, with the balance equity to be acquired in future at a consideration to be determined based on certain specified parameters as determined in accordance with the terms of the SPA.

As at year end, the Company has three subsidiaries, Allsectech Inc., USA, Allsectech Manila Inc., Philippines and Retreat Capital Management Inc., USA.

1.2 Receivables from Academic Funding Foundation and K2 Financials

As at March 31, 2011, the Company has receivables of Rs. 59.71 million (including interest on overdue balances of Rs. 48.77 million) from Academic Funding Foundation and K2 Financials which are substantially overdue. These customers have, in a communication to the Company, confirmed the dues to the Company along with the interest on such dues. Based on the foregoing, management believes that these balances are fully recoverable.

1.3 Stock option plans

The Company has two stock option plans that provide for the granting of stock options to employees including Directors of the Company (not being promoter Directors and Executive Directors, holding more than 10% of the equity shares of the Company). The option plans are summarized below:

Employee Stock Option Scheme (ESOS), 2006

The shareholders at the Annual General Meeting held on July 10, 2006, had approved an Employee Stock Option Scheme 2006 (ESOS 2006) which provides for an issue of 600,000 options (each option convertible

Employee Stock Option Scheme (ESOS), 2010

The shareholders at the Annual General Meeting held on August 4, 2010, had approved an Employee Stock Option Scheme 2010 (ESOS 2010) which provides for an issue of 600,000 options (each option convertible into 1 share) to the employees. Consequently, the compensation committee had granted the 390,000 options on August 4, 2010 at an exercise price of Rs. 45.05/- per share.

The expected volatility was determined based on historical volatility data; historical volatility includes early years of the Company's life; the Company expects the volatility of its share price to reduce as it matures.

1.4 Secured loans

1. The Company has an overdraft facility with a bank, which is secured by a pari passu charge on the entire receivables and fixed assets of the Company.

2. Hire purchase loans are secured by hypothecation of the respective assets acquired.

1.5 There is no overdue amount payable to Micro, Small and Medium Enterprises as defined under The Micro, Small and Medium Enterprises Development Act, 2006. Further, the Company has not paid any interest to any Micro, Small and Medium Enterprises during the current and previous year.

1.6 On account of the nature of the business of the Company, supplementary information for the profit and loss account as required to be disclosed under clause 3 (i) to (iii) except 3 (ii) (c) and clause 4 C of Part II to Schedule VI of the Act are not applicable and hence no disclosures have been made in this regard.

Fixed assets used in the Company's business have not been identified to any of the reportable segments, as the fixed assets and services are used interchangeably between segments. The Company believes that it is currently not practicable to provide segment disclosures relating to assets and capital expenditure since a meaningful segregation of the available data is onerous.

1.7 Related party transactions

1.Names of related parties

Relationship Name of the party

Subsidiaries Allsectech Inc., USA

Allsectech Manila Inc., Philippines

Retreat Capital Management Inc., USA (wef. January 31, 2011)

Key management personnel Whole time directors:

A. Saravanan R. Jagadish

The Company has extended guarantees aggregating to Rs.22,107 (USD 495,000) (previous year - Rs.14,589 (USD 325,000)) on behalf of its subsidiary Allsectech Inc., USA.

1.8 Gratuity benefit plans

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service subject to a maximum of Rupees one million. The scheme is funded with an insurance company in the form of a qualifying insurance policy.

Assumptions

The fund is administered by Life Insurance Corporation of India. The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled.

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

The Company does not currently have any estimates of the contribution to be paid to the plan during the next year. Accordingly, the same has not been disclosed.

1.9 Contingencies and commitments

* Represents demand received from the Tamil Nadu Electricity Board in January 2008 relating to reclassification disputes on the tariff category applicable to the Company in two of its delivery centers with retrospective effect from 2005. The Company has obtained an interim stay order from the Hon'ble High Court of Madras against this claim. The Company considers the claim to be erroneous and as not payable under the specified tariff category applicable to ITES units.

1.10 Foreign currency exposures

The Company had used derivative financial instruments in the form of forward exchange contracts to hedge its risks associated with foreign currency fluctuations during the year. Accounting policy for forward exchange contracts is given in note 18.2 (n) above.

1.11 The Company has not recognised net deferred tax assets arising primarily on account of carried forward tax losses and unabsorbed depreciation, as subsequent realisation of such amounts is not virtually certain.

1.12 Previous year comparatives

Previous year figures have been reclassified / regrouped wherever necessary to conform to current year's classification.


Mar 31, 2010

1.1 Background

Allsec Technologies Limited (Allsec or the Company) was incorporated on August 24, 1998 as a limited company under the Companies Act, 1956 and is listed on the National Stock Exchange of India (NSE) and Bombay Stock Exchange Limited (BSE). The Company is engaged in the business of providing IT enabled services for customers located in India and outside India. The services provided by the Company include data verification, processing of orders received through telephone calls, telemarketing, monitoring quality of calls of other call centers, customer services and HR and payroll processing. The Company has delivery centers at Chennai, Bengaluru, Mumbai, Delhi, Trichy, Hyderabad, Pune and Kolkata.

The Company has two subsidiaries, Allsectech Inc., USA and Allsectech Manila Inc., Philippines.

1.2 Receivables from Academic Funding Foundation and K2 Financials

As at March 31, 2010, the Company has receivables of Rs. 154.03 million (including interest on overdue balances of Rs. 53.38 million) from Academic Funding Foundation and K2 Financials which are substantially overdue. Subsequent to the balance sheet date, the company has received funds aggregating to Rs. 92.79 million from these customers. These customers have, in a communication to the Company, confirmed the dues to the Company along with the interest on such dues. Based on the foregoing, management believes that these balances are fully recoverable.

1.3 During the previous year, the Company had filed a legal suit for recovery of outstanding dues aggregating to Rs. 53.63 million from a customer in the USA. Based on estimates, Management had provided for amounts aggregating to Rs. 14.83 million towards settlement of such dispute prior to filing legal suit. During the current year, the Company has received a favorable judgment and received amounts aggregating to Rs. 79.59 million in settlement of the outstanding balances and costs incurred towards legal suit. Accordingly, the Company has reversed the provisions made and adjusted the amounts received towards outstanding dues and certain legal costs. Amounts received in excess of the above adjustments, which is in the nature of reimbursement of legal costs incurred and expensed in earlier years, have been credited under the head "Miscellaneous income" in the current year aggregating to Rs. 25.96 million.

1.4 Stock option plans

The Company has two stock option plans that provide for the granting of stock options to employees including Directors of the Company (not being promoter Directors and Executive Directors, holding more than 10% of the equity shares of the Company). The option plans are summarized below:

1.5 Secured loans

1. The Company has an overdraft facility with a bank, which is secured by a pari passu charge on the entire receivables and fixed assets of the Company.

2. Hire purchase loans are secured by hypothecation of the respective assets acquired.

1.6 There is no overdue amount payable to Micro, Small and Medium Enterprises as defined under The Micro, Small and Medium Enterprises Development Act, 2006. Further, the Company has not paid any interest to any Micro, Small and Medium Enterprises during the current and previous year.

1.7 On account of the nature of the business of the Company, supplementary information for the profit and loss account as required to be disclosed under clause 3 (i) to (iii) except 3 (ii) (c) and clause 4 C of Part II to Schedule VI of the Act are not applicable and hence no disclosures have been made in this regard.

1.8 Related party transactions

1. Names of related parties Relationship Name of the party

Subsidiaries Allsectech Inc., USA

Allsectech Manila Inc., Philippines

B2K Corp Inc., USA (upto October 20, 2008)

Key management personnel Whole time directors:

A. Saravanan R. Jagadish

1.9 Gratuity benefit plans

The Company has a defined benefit gratuity plan. Every employee who has completed five years or more of service gets a gratuity on departure at 15 days salary (last drawn salary) for each completed year of service subject to a maximum of Rupees one million. The scheme is funded with an insurance company in the form of a qualifying insurance policy.

The following tables summarise the components of net benefit expense recognised in the profit and loss account and the funded status and amounts recognised in the balance sheet for gratuity.

1.10 Foreign currency exposures

The Company had used derivative financial instruments in the form of forward exchange contracts to hedge its risks associated with foreign currency fluctuations during the year. Accounting policy for forward exchange contracts is given in note 18.2 (n) above. There are no open forward contracts at the end of current and previous years.

1.11 The Company has not recognised net deferred tax assets arising primarily on account of carried forward tax losses and unabsorbed depreciation, as subsequent realisation of such amounts is not virtually certain.

1.12 Previous year comparatives

In view of the acquisition of business from i2i effective August 1, 2008 in the previous year, the figures for the year ended March 31, 2010 are not strictly comparable with that of the previous year. Further, previous year figures have been reclassified / regrouped wherever necessary to conform to current years classification.

 
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