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Notes to Accounts of Cambridge Technology Enterprises Ltd.

Mar 31, 2016

Note 1. Rights attached to Equity shares:

The company has only one class of shares referred to as equity shares having a par value of Rs.10/ -. Each holder of equity shares is entitled to one vote per share. The company declares and pays dividends in Indian Rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

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

Note.2. There are no transactions with Micro and Small enterprises, hence disclosures are not given as required under MSMED Act, 2006.

Note 3. Downstream investments made by Cambridge Technology Investments Pte Ltd, a 100% subsidiary of the Company in Singapore are in a start up stage and expected to yield results in the future. These investments are permanent in nature and hence temporary diminution, if any, in their value has not been provided for.

* 5,93,000 shares have been allotted at face value of SGD 1 on 05/04/2016.

Note 4. During the year, the Company has calculated Deferred Tax Asset on Income tax losses available for set off. Note 12: Long Term Loans and Advances

Note 5. Deposits with Statutory Authorities of Rs. 25 Lakhs (Previous year Rs.25 Lakhs) represents amount paid to Service Tax Authorities under protest.

Note 6. During the year, the company has transferred unclaimed dividend of Rs.83,286/- (Previous Year Rs. Nil) to Investor Education and Protection Fund on expiry of 7 Years.

The company has only one reportable segment viz., Income Technology Services. Hence, separate disclosures on segmental reporting as per AS-17 issued by ICAI is not made.

Note 7. Employee Stock Option Scheme

The Company has four 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, and further amended by the Shareholders on September 7, 2015 under which 1,236,542 options were granted up to 31st March, 2016.

Note: For Stock Options exercised during the year 2015-16, the weighted average share price is Rs. 82.35/-.

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, and further amended by the Shareholders on September 7, 2015. 15,00,000 options granted under this scheme up to 31st March, 2016.

Note: For Stock Options exercised during the year 2015-16, the weighted average share price is Rs. 79.22/-. 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 and further amended by the Shareholders on September 7, 2015. 8,82,100 options were granted under this scheme up to 31st March, 2016.

Note:

1. For Stock Options exercised during the year 2015-16, the weighted average share price is Rs. 54.42/- and for Stock Options exercised during the year 2014 - 15, the weighted average share price is Rs. 14.70/-.

2. For Stock Options outstanding as on 31.03.2016, the remaining contractual life is approximately 7 years & 3 Months.

ESOS - 2015

The Employee Stock Option Scheme - 2015 was approved by the Board of Directors on 29th April, 2015 and by the shareholders through postal ballot results of which was declared on June 1, 2015. 2,18,500 options were granted under this scheme up to 31st March,2016.

Note: For Stock Options outstanding as on 31.03.2016, the remaining contractual life is approximately 8 years.

Note 8.

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

Note 9.

ln order to present a true and factual financial position of the Company, the Board of Directors of the Company approved the draft Scheme of Reduction of Capital on 18.11.2015 to utilize the balance lying in the Securities Premium Account amounting to INR 2252 cr of the Company to write off the entire Goodwill amounting to INR 9.77 cr and the balance against the accumulated losses to the extent of INR 12.75 cr of the Company. The Company has obtained member''s approval for the same through EGM dated 06.04.2016 and is in the process of obtaining Hon''ble High Court''s approval .The reduction in capital will result in reflecting the actual Net worth of the Company

Note 10.

Previous year''s figures are regrouped/rearranged wherever considered necessary to conform to the current year figures.


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.


Mar 31, 2012

1. Group overview

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

2. Impairment of Intangible Asset- Reusable Components

During the financial year, the company has accounted impairment loss of Rs.44, 523,396 (FY 2011- Nil) on reusable components after testing the recoverable value of recorded cost. This is due to shift in the business focus and the change in Industry trend, the reusable components developed earlier have become almost obsolete and now find use only in a small segment of Company's business. In view of this, the Techno-Commercial assessment done by technical team opined that it is unlikely that these components would generate any substantial revenues in the future. After reviewing the assessment of the Technical team, management decided that it is financially prudent to write-off the entire residual carrying value as on 31-Mar-2012.

3. Goodwill on Consolidation

a. During October 2010, the Group acquired all the outstanding equity shares of smartshift GmbH, Mannaheim, Germany, which is mainly in the business of ERP data migration and coding, for a consideration of Rs. 49,850,494 (inclusive of acquisition costs). The group has recorded goodwill of Rs. 50,911,098 representing the difference between the initial cash consideration and the book value of negative net assets as at the date of acquisition Rs. 1,060,604.

b. During October 2010, the Group acquired all the outstanding equity shares of VoxHolding Inc., Cambridge, United States of America, which is mainly in the business of enabling cloud computing services, for a consideration of Rs. 44,114,446 (inclusive of acquisition costs). The group has recorded goodwill of Rs. 50,911,098 representing the difference between the initial cash consideration and the book value of negative net assets as at the date of acquisition Rs. 1,645,244.

c. During April 2007, the Group acquired all the outstanding equity shares of Comcreation Inc. and its Indian subsidiary Comcreation Technologies Private Limited for a consideration of Rs. 91,905,758 (inclusive of acquisition costs).The group has recorded goodwill of Rs. 76,111,034 representing the difference between the initial cash consideration and the book value of net assets as at the date of acquisition Rs. 15,794,724. Due to non achievement of certain revenue and performance targets, the company waived off Rs. 9,320,000 from the consideration balance due as on. Hence, the same is adjusted to the goodwill on consolidation.

d. During July 2007, the Company acquired all the outstanding shares of Reilly & Associates Inc., Michigan, United States of America for a initial cash consideration of Rs. 87,171,373 (inclusive of acquisition costs). The group has recorded goodwill of Rs. 95,938,450 representing the difference between the initial cash consideration and the book value of negative net assets as at the date of acquisition of Rs. 8,767,077. Due to non achievement of certain revenue and performance targets, the company waived off Rs. 1,617,030 from the consideration balance due as on. Hence, the same is adjusted to the goodwill on consolidation.

e. The goodwill on consolidation will be restated based on the future payment of earn outs based on the performance criteria specified in the respective agreements.

4. Impairment of Goodwill :

For the purpose of impairment testing, goodwill is allocated to the subsidiary which represents the lowest level within the Group at which the goodwill is monitored for internal management purpose.

During the financial year, the Group has recognised impairment loss on goodwill on consolidation of Rs.458,104,045(FY2011 – Nil) due to significant changes with an adverse effect have taken place during the period in the technological, market and economic environment in which the entity operates and impacted it's of the financial position and financial performance of subsidiaries.

The balance of the goodwill on consolidation of Rs.260,960,675(FY2011 – Rs.719,364,720) is related to focused technology and the recoverable amount is determined based on the cash flow projections derived from future financial budgets. The key assumptions used in the calculations are as follows:- (a) Sales growth rate of 10% year to year for three years. (b) Discount rate of 10%.

Based on the recoverable amount determined, goodwill on consolidation related to the focused technology is not impaired for the current financial year.

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, 2012.

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 624,000 options were granted till date of 31st March, 2012.

6. Related party transactions

Key Management Personnel

Stefan Hetges Whole-Time Director and Chief Executive Officer

(w.e.f 15 November 2010)

D.R.R Swaroop Whole-Time Director

Samir Bhatia Whole-Time Director and Chief Financial Officer (w.e.f 14 February 2011)

Arjun Chopra Whole-Time Director (w.e.f 19 April 2010 up to 15 November 2010)

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

D.S. Unics Infotech Pvt Ltd D.R.R. Swaroop is a Director in the Company

7. Leases

Operating Leases

The Group leases offices under operating lease agreements that are renewable on a periodic basis at the option of both the lessor and the lessee. Rental expenses under those leases were Rs.15,265,012/- (Previous year Rs. 17,804,908/-)

8. Segment reporting

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

9. Retirement benefits to employees

Defined contribution plan

During year ended March 31, 2012, the Group contributed Rs.3,773,406/- to provident fund.

Defined benefit plan – gratuity and privilege leave

10. Contingencies & Guarantees

During the 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).

11. Prior year comparatives

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


Mar 31, 2010

1.1 Details of Investments

1.2 Employee Stock Option Scheme

The Company has two 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 987,542 options were granted till date of 31st March, 2010.

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, which provides for 1,500,000 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 Groups 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 7.21% to 7.73 % (2009 – 7.57% to 7.61%), expected life: 2.5 years to 4 years (2009 – 2.5 years to 4.5 years), expected volatility of shares 63.77% to 72.66% (2009 – 63.77% to 72.66%), dividend yield 0% (2009 – 0%). The range variables detailed herein represent the highs and the lows of the assumptions during the pendency of the grant dates.

1.3 Related party transactions

Key Management Personnel

Bhaskar Panigrahi Chairman and Chief Executive Officer

Cambridge Technology Ent erprises Inc (‘CTI) Wholly owned subsidiary

CTE Global Solutions Pvt. Ltd. Wholly owned subsidiary w.e.f. February, 2008 till

(Formerly known as Comcrea tion Technologies Private Limited (CTPL) ) October, 2009

Cambridge Technology India Pvt. Ltd. (CTIPL) Wholly owned subsidiary w.e.f. October, 2008 (Formerly known as Qsoft System and Solutions Private Limited (Qsoft)

Comcreation Inc (CCI) Wholly owned subsidiary of Cambridge Reilly & Associates Inc (Reilly) Technology Enterprises Inc, w.e.f 2007-08. * CellExchange Inc (CX)** -J

* refer note 3.1 for details

** CellExchange Inc was a company under Common control till December 31, 2007.

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

1.4 Leases

Operating Lease

The Company has taken leased 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.10, 046,237 / (Previous year Rs.10, 623,730).

Finance Leases

1.5 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. The Companys total exports are to United States of America.

*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 14 and 15.

1.6 Retirement benefits to employees

Defined contribution plan

During year ended March 31, 2010, the Company contributed Rs.459, 747/- to provident fund (Previous Year Rs.244, 640/- was contributed to provident fund).

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.

1.7 Misc. Income

Misc Income includes 2.33 Crores on account of cancellation of option of exercising preferential warrants and balance of 3.5 Lacs towards on account of gain on sale of investment.

1.8 Supplementary Information

(i) Commitments and contingencies

Contingent consideration payable as at March 31, 2010 in respect of acquired subsidiary Companies Rs. 27,580,450/-

1.9 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, 2010.

1.10 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.

1.11 Prior year comparatives.

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

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