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Notes to Accounts of Cambridge Technology Enterprises Ltd.

Mar 31, 2015

1. Group overview

Cambridge Technology Enterprises Limited, "the Company", its subsidiary (collectively referred to as "the Group") are primarily global technology services and outsourcing Group dedicated to serving the midsize market enterprises and the midsize units of Global 2000 enterprises across the spectrum of business industries. The Group is recognised as a thought leader and innovator of comprehensive Service Oriented Architecture (SOA)-based enterprise transformation and integration solutions and services.

2. Subsidiaries considered for consolidation

The subsidiary considered in the preparation of these consolidated financial statements are:

NOTE: Cambridge Technology Inc. is a subsidiary of Cambridge Technology Enterprises w.e.f 9th December, 2014.

3. The Company has written-off the trade receivables amounting to Rs.21,48,81,750/- during the previous year 2012-13, due from erstwhile wholly owned step down subsidiary Cambridge Technology Enterprises Inc. The company has made an application to RBI through the authorized dealer for the approval of the same.

4. The Company has written-off the trade receivables amounting to Rs.4,46,389/- during the current year 2014-15.

5. M/s. Cambridge Technology India Private Limited which is a 100% subsidiary of CTE has got merged in CTE with effective from 1st April 2012 under the method Amalgamation by Merger as per the Honorable Karnataka High Court Order dated 7th August, 2014. All the Assets and liabilities of M/s. Cambridge Technology India Private Limited has taken into books of accounts of CTE on 1st April 2014 at book values. There is no allotment of equity shares of CTE to M/s. Cambridge Technology India Private Limited share holders since it is a 100% subsidiary to CTE.

6. As per the Amalgamation order the Cambridge Technology India Private Limited merged with Cambridge Technology Enterprises Limited with effect from 1st April 2012. Due to this necessary adjustments in opening balances and closing balances of Cambridge Technology India Private Limited are considered in the financials of Cambridge Technology enterprises Limited for the year ending 31st March, 2015.

7. The Cambridge Technology Enterprises Limited income is including the Cambridge Technology India Private Limited income as per the court order. Necessary TDS credits and income of Cambridge Technology India Private Limited are included in Cambridge Technology Enterprises Limited for the year ending 31st March, 2015.

8. The Company CTE has sold its assets for an amount of Rs. 12,75,308/- and it has incurred a loss of Rs. 95,038/-.

9. Details of Deposits

Deposit amount consists of Rental Deposit of Cyber Pearl building for Hyderabad Office premises, Chandrasagar Enterprises for Bangalore Branch, Regus Chennai Office Centre Pvt Ltd for Chennai Office Premises and Regus Suburbs Centre Pvt Ltd for Mumbai Office Premises. Fixed Deposits in Axis Bank and SBH and others.

29. Employee Stock Option Scheme

The Group has three stock option plans that are currently operational.

CTEL ESOP 2006

The 2006 Plan was approved by the board of directors on April 13, 2006 and by the shareholders on April 21, 2006, under which scheme 1,236,542 options were granted till date of 31st March, 2015.

Changes in number of options outstanding were as follows:

* Options were lapsed for those who had left the company or didn''t exercise their options during the vesting period of their options

CTEL ESOP SCHEME2008

The 2008 Plan was approved by the board of directors on March 20, 2008 and by the shareholders through postal ballot results of which was declared on March 5, 2008, under which scheme 1,500,000 options were granted till date of 31st March, 2015.

Changes in the number of options outstanding:

CTEL ESOP SCHEME 2011

The 2011 Plan was approved by the board of directors on December 10, 2010 and by the shareholders through postal ballot results of which was declared on January 24, 2011, under which scheme 644,000 options were granted till date of 31st March, 2015.

Changes in the number of options outstanding:

* Options were lapsed for those who had left the company or didn''t exercise their options during the vesting period of their options.

Pro forma Disclosure

In accordance with SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, had the compensation cost for associate stock option plans been recognized based on the fair value at the date of grant in accordance with Black Scholes'' model, the pro forma amounts of the Group''s net profit and earnings per share would have been as follows:

The key assumptions used in Black-Scholes'' model for calculating fair value are: risk-free interest rate ranging from 6.73% to 7.85% (2012 - 6.73% to 7.85%), expected life: 3 years to 4 years (2012 - 3 years to 4 years), expected volatility of shares 63.77% to 72.66% (2012 - 63.77% to 72.66%), dividend yield 0% (2012 - 0%). The range variables detailed herein represent the highs and the lows of the assumptions during the pendency of the grant dates.

10. Related party transactions

Key Management Personnel

Stefan Hetges Whole-time Director and Chief Executive Officer

D.R.R Swaroop Whole-time Director

V Ramana Reddy Chief Financial Officer and Company Secretary

Enterprises over which Control exists

Cambridge Technology Inc. Wholly owned subsidiary w.e.f December 2014 Smart Shift Technologies Inc. Associate company (common Director)

Enterprises over which significant influence exercised by key management personnel/close family member of key management personnel D.S. UnicsInfotech limited D.R.R. Swaroop is a Director in the Company SmartShift Technologies Inc. Stefan Hetges is a Director in the Company

11. Leases Operating Lease

The Company hires office premises under operating lease agreement that is renewable on a periodic basis at the option of both the lessor and the lessee. Rental expense under those leases was Rs.17, 658,188/-(Previous year Rs. 19,218,457/-).

Finance Leases

The Company is not having any finance lease agreements as at March 31, 2015.

12. Segment reporting

As required by the Accounting Standard - 17, ''Segment reporting'', the Company is mainly engaged in the area of software development and related services. Hence segment reporting is not applicable to the Company and to the nature of business.

13. Managerial Remuneration

The key management personnel comprise our directors and statutory officers. Particulars of remuneration and other benefits provided to key management personnel during the year ended March 31, 2015 and 2014 are as follows:

*Remuneration is net of accrual towards Gratuity, a defined benefit plan and provident fund which is managed for the Company as a whole. Contributions to defined benefit plan and provident fund and other perquisites and allowances have been included in Schedule 18 and 20.

NOTE: Balance Outstanding as per 31st March,2015 is nil because Cambridge Technology India Pvt Ltd got merged with Cambridge Technology EnterprisesLimited with effect from 1.04.2014.

14. Retirement benefits to employees

Defined contribution plan

During year ended March 31, 2014, the Group contributed Rs. 5,164,472/- to provident fund (Previous Year Rs.38, 19,331/-was contributed to provident fund).

Defined benefit plan - gratuity and privilege leave.

The amounts recognized in the balance sheet as at March 31, 2015 are as follows:

The estimates of future salary increase, considered in actuarial valuation, take account of inflation, seniority, promotions and other relevant factors such as supply and demand in the employment market. The Company evaluates these assumptions annually based on its long term plans of growth and industry standards.

15. Contingent Liabilities:

i) The company is having the following disputed liabilities with the Service Tax Dept. and Income Tax Dept.

Nature of Assessment year Demand in Rs Status liability

Service Tax 2007-08 to 2009-10 3,25,76,183 Pending before Service Tax Tribunal and received stay order dated 30th October 2013 against recovery by Tax the Service dept.

Income Tax 2010-11 7,38,54,455 ITAT Appeal Filed

16. Payables to micro enterprises and small enterprises

There were no overdue principal amounts (and interest thereon) payable to micro enterprises and small enterprises, as at March 31, 2015.

17. Quantitative details

The Company is engaged in the development and maintenance of computer software. The production and sale of such software cannot be expressed in any generic unit. Hence, it is not practicable to give the quantitative details of sales and certain other information as required under paragraphs 3, 4A, 4C and 4D of Part II of Schedule VI to the Companies Act, 1956.

18. Prior year comparatives.

Previous years'' figures have been regrouped and reclassified wherever necessary to confirm to current year''s classification.


Mar 31, 2014

1. Company overview

Cambridge Technology Enterprises Limited, "the Company" is an information technology services provider dedicated to serving the midsize market enterprises and the midsize units of Global 2000 enterprises across the spectrum of business industries. The Company was incorporated on January 28, 1999 in Hyderabad, Andhra Pradesh, India.

2. The Company has written-off the trade receivables amounting to Rs.21,48,81,750/- during the previous year 2012-13, due from erstwhile wholly owned step down subsidiary Cambridge Technology Enterprises Inc. The company has made an application to RBI through the authorized dealer for the approval of the same.

3. The Company has made a petition on 18th July, 2013 with the High Court for the merger of its wholly owned subsidiary Cambridge Technology India Private Limited. The decision of high Court is awaited in this matter.

4. Details of Deposits

Deposit amount consists of Rental Deposit of Cyber Spazio building, Fixed Deposits in Axis Bank and SBH and others.

5. Employee Stock Option Scheme

The Group has three stock option plans that are currently operational.

CTEL ESOP 2006

The 2006 Plan was approved by the board of directors on April 13, 2006 and by the shareholders on April 21, 2006, under which scheme 1,236,542 options were granted till date of 31st March, 2014.

Changes in number of options outstanding were as follows:

* Options were lapsed for those who had left the company or didn''t exercise their options during the vesting period of their options

CTEL ESOP SCHEME 2008

The 2008 Plan was approved by the board of directors on March 20, 2008 and by the shareholders through postal ballot results of which was declared on March 5, 2008, under which scheme 1,500,000 options were granted till date of 31st March, 2014.

Changes in the number of options outstanding:

CTEL ESOP SCHEME 2011

The 2011 Plan was approved by the board of directors on December 10, 2010 and by the shareholders through postal ballot results of which was declared on January 24, 2011, under which scheme 644,000 options were granted till date of 31st March, 2014.

Changes in the number of options outstanding:

* Options were lapsed for those who had left the company or didn''t exercise their options during the vesting period of their options

Pro forma Disclosure

In accordance with SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, had the compensation cost for associate stock option plans been recognized based on the fair value at the date of grant in accordance with Black Scholes'' model, the pro forma amounts of the Group''s net profit and earnings per share would have been as follows:

The key assumptions used in Black-Scholes'' model for calculating fair value are: risk-free interest rate ranging from 6.73% to 7.85% (2012 - 6.73% to 7.85%), expected life: 3 years to 4 years (2012 - 3 years to 4 years), expected volatility of shares 63.77% to 72.66% (2012 - 63.77% to 72.66%), dividend yield 0% (2012 - 0%). The range variables detailed herein represent the highs and the lows of the assumptions during the pendency of the grant dates.

Enterprises over which Control exists

Cambridge Technology India Private Limited (''CTIPL'')Wholly owned subsidiary w.e.f October 2008

Enterprises over which significant influence exercised by key management personnel/close family member of key management personnel

D.S. Unics Infotech limited - D.R.R. Swaroop is a Director in the Company

SmartShift Technologies Inc. - Stefan Hetges is a Director in the Company

(Formerly known as Cambridge Technology Enterprises Inc.)

6. Leases

Operating Lease

The Company hires office premises under operating lease agreement that is renewable on a periodic basis at the option of the both the lessor and the lessee. Rental expense under those leases was Rs.19,218,457/ - (Previous year Rs. 11,883,622/-).

Finance Leases

The Company is not having any finance lease agreements as at March 31, 2014.

7. Segment reporting

As required by the Accounting Standard - 17, ''Segment reporting'', the Company is mainlyengaged in the area of software development and related services. Hence segment reporting is not applicable to the Company and to the nature of business.

8. Managerial Remuneration

The key management personnel comprise our directors and statutory officers. Particulars of remuneration and other benefits provided to key management personnel during the year ended March 31, 2014 and 2013are as follows:

*Remuneration is net of accrual towards Gratuity, a defined benefit plan and provident fund which is managed for the Company as a whole. Contributions to defined benefit plan and provident fund and other perquisites and allowances have been included in Schedule 19 and 21.

9. Retirement benefits to employees

Defined contribution plan

During year ended March 31, 2014, the Company contributed Rs. 2,528,264/- to provident fund (Previous Year Rs. 28,71,447/- was contributed to provident fund).

Defined benefit plan - gratuity and privilege leave

The amounts recognized in the balance sheet as at March 31, 2014 are as follows:

The estimates of future salary increase, considered in actuarial valuation, take account of inflation, seniority, promotions and other relevant factors such as supply and demand in the employment market. The Company evaluates these assumptions annually based on its long term plans of growth and industry standards.

10. Supplementary Information

i) The Company is having contingent service tax liability for an amount ofRs.3,25,76,183/- which is pending before Service Tax AppellateTribunal, South Zonal Bench, Bangalore and in this connection company has received stay order dated 30th October 2013 against recovery by the Service Tax department.

ii) For the A.Y 2009-10 disputed tax liability of Rs. 38,36,711/- is pending before honorable ITAT.

11. Payables to micro enterprises and small enterprises

There were no overdue principal amounts (and interest thereon) payable to micro enterprises and small enterprises, as at March 31, 2014.

12. Quantitative details

The Company is engaged in the development and maintenance of computer software. The production and sale of such software cannot be expressed in any generic unit. Hence, it is not practicable to give the quantitative details of sales and certain other information as required under paragraphs 3, 4A, 4C and 4D of Part II of Schedule VI to the Companies Act, 1956.

13. Prior year comparatives.

Previous years'' figures have been regrouped and reclassified wherever necessary to confirm to current


Mar 31, 2013

1. During the year under review the debt holders in the Company''s wholly owned subsidiary smartShiftgroup Limited (formerly known as Cambridge Technology Enterprises- Mauritius Limited) have converted their debt to the extent of $ 4,137,930 into equivalent number of equity shares. With this conversion the Company''s equity holding has come down to 29.68% from 100%.

2. The Company sold the residual stake of 29.68% for a consideration of US$25,000 for which the company has submitted information to the authorized dealer to ratify the same. This transaction has resulted into a loss of Rs.27,28,98,671 during the year as the carrying value of the investment was Rs.27,42,60,626. The valuation of smartShiftgroup Limited as on the date of transaction was negative Rs. 21.11 crores which was carried out by an independent expert.

3. The Company written off the trade receivables, amounting to Rs.21,48,81,750 due from erstwhile wholly owned step down subsidiary Cambridge Technology Enterprises Inc. The company has made an application to RBI through the authorized dealer for the approval of the same.

4. The Company has made a petition with the High Court for the merger of its wholly owned subsidiary Cambridge Technology India Private Limited. The decision of high Court is awaited in this matter.

5. The Company has consolidated the Profit & Loss statements of erstwhile subsidiary companies for the period from 1st April, 2012 to 26th March, 2013 i.e., till the date on which the subsidiary smartShiftgroup Limited (formerly known as Cambridge Technology Enterprises - Mauritius Limited) and resulting step down subsidiaries - Cambridge Technology Enterprises Inc., smartShift GmbH and VoxHoldings Inc were sold.

6. Details of Deposits

Deposit amount consists of Rental Deposit of Cyber Spazio building, Fixed Deposits in Axis Bank and SBH and others.

7. Employee Stock Option Scheme

The Group has three stock option plans that are currently operational.

CTEL ESOP 2006

The 2006 Plan was approved by the board of directors on April 13, 2006 and by the shareholders on April 21, 2006, under which scheme 1,236,542 options were granted till date of 31st March, 2013.

8. Related party transactions

Key Management Personnel

Stefan Hetges Whole-time Director and Chief Executive Officer

D.R.R Swaroop Whole-time Director

Enterprises over which Control exists

Cambridge Technology Enterprises Wholly owned subsidiary w.e.f 13 August 2010

- Mauritius Limited (''CTEM'')

Cambridge Technology Enterprises Inc (''CTE Inc'') Wholly owned subsidiary of CTEM w.e.f 1 October 2010

smart Shift, GmbH - Germany Wholly owned subsidiary of CTEM w.e.f 1st Oct, 2010.

Vox Holding Inc. - USA Wholly owned subsidiary of CTEM w.e.f 1st Oct,2010

Cambridge Technology India Private Wholly owned subsidiary w.e.f October 2008

Limited (''CTIPL'')

ComcreationInc Wholly owned subsidiary of CTE Inc, w.e.f 2007-08, got

Reilly & Associates Inc merged with CTE Inc. w.e.f 24th June 2010.

CellExchangeInc

Note : Control over above subsidiaries has been ceased from 26th March, 2013 due to sale of Smartshift group Limited which is a wholly owned subsidiary of M/s. Cambridge Technology Enterprises Limited to Smartshift Group Inc.

Enterprises over which significant influence exercised by key management personnel/close family member of key management personnel

9. Leases

Operating Lease

The Company leases office premises under operating lease agreement that is renewable on a periodic basis at the option of the both the lessor and the lessee. Rental expense under those leases was Rs.11,883,622/- (Previous year Rs. 9,148,802/-).

10. Segment reporting

As required by the Accounting Standard - 17, ''Segment reporting'', the Company is mainlyengaged in the area of software development and related services. Hence segment reporting is not applicable to the Company and to the nature of business.

11. Retirement benefits to employees

Defined contribution plan

During year ended March 31, 2013, the Company contributed Rs. 2,871,447/- to provident fund (Previous Year Rs. 2,537,905/- was contributed to provident fund).

Defined benefit plan - gratuity and privilege leave

12. Supplementary Information

Contingencies & Guarantees

i) Previous year, the company has given corporate guarantee as against Senior Secured Convertible Debt Notes, Convertible Debt Notes and Redeemable Bonds issued by the subsidiary M/s. Cambridge Technology Enterprises Mauritius Limited to the extent of Rs.647.43 Millions (USD 14.50 Millions). As of 31st March 2013, this corporate guarantee was extinguished since smartShiftgroup Limited no longer remain the wholly owned subsidiary which was sold on 27th March, 2013.

ii) The Company is having contingent service tax liability for an amount of Rs.3,25,76,183/- which is pending before Service Tax AppellateTribunal, South Zonal Bench, Bangalore.

13. Payables to micro enterprises and small enterprises

There were no overdue principal amounts (and interest thereon) payable to micro enterprises and small enterprises, as at March 31, 2013.

14. Quantitative details

The Company is engaged in the development and maintenance of computer software. The production and sale of such software cannot be expressed in any generic unit. Hence, it is not practicable to give the quantitative details of sales and certain other information as required under paragraphs 3, 4A, 4C and 4D of Part II of Schedule VI to the Companies Act, 1956.

15. Prior year comparatives.

Previous years'' figures have been regrouped and reclassified wherever necessary to confirm to current year''s classification.

16. Company overview

Cambridge Technology Enterprises Limited, "the Company" is an information technology services provider dedicated to serving the midsize market enterprises and the midsize units of Global 2000 enterprises across the spectrum of business industries. The Company was incorporated on January 28, 1999 in Hyderabad, Andhra Pradesh, India.

 
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