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Notes to Accounts of Cambridge Technology Enterprises Ltd.

Mar 31, 2018

1 Company overview

Cambridge Technology Enterprises Limited (CTE), “the Company” is a public limited company incorporated in India having its resgistered office at Hyderabad, Telangana, India. 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, Telangana, India.

2 Use of estimates and critical accounting judgements:

In preparation of the financial statements, the Company makes judgements, estimates and assumptions about the carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and the associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and the underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and future periods affected.

Significant judgements and estimates relating to the carrying values of assets and liabilities include useful lives of property, plant and equipment and intangible assets, impairment of property, plant and equipment, intangible assets and investments, provision for employee benefits and other provisions, recoverability of deferred tax assets, commitments and contingencies.

3.1.1. Fixed Deposits include Deposits against Bank Guarantees - Rs. 11131.70 thousands (2017 - Rs. 10083.60 thousands; 2016 - Rs. 12523.82 thousands), Deposits against borrowings - Rs. 17915.92 thousands (2017 - Nil; 2016 - Nil), Deposits with Customs Dept. - Rs. 184.43 thousands (2017 - Rs. 168.74 thousands; 2016 - Rs. 147.64 thousands) and Deposits against forward contracts - Rs. 3186.59 thousands (2017 - Nil; 2016 - Rs. Nil)

4.1. Fixed Deposits include Deposits against Bank Guarantees - Rs. 3648.50 thousands (2017 - Rs. 2800 thousands; 2016 - Rs. Nil), Deposits against borrowings - Rs. Nil (2017 - Rs. 9000 thousands; 2016 - Nil) and Deposits against forward contracts - Rs. Nil (2017 - Rs. 3000 thousands; 2016 - Rs. 1100 thousands)

(A) Terms/Rights attached to equity sharesThe Company has only one class of equity shares having a face value of 10 /-each. Each holder of equity share 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 equity shareholders will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

Note: During the year 2016-17, the Hon’ble High Court of Judicature at Hyderabad has approved the Scheme of Reduction of Capital.

Accordingly, accumulated losses and unamortised goodwill as on 31st March, 2016 is adjusted against balance of Securities premium Account.

Nature and purpose of other reserves

(i) Capital reserve

This reserve was created at the time of buy back of shares. The reserve is utilised in accordance with the provisions of the Act.

(ii) Securities premium reserve

Securities Premium Reserve is used to record the premium on issue of shares. The reserve is utilised in accordance with the provisions of the Act.

(iii) Share options outstanding reserve

This Reserve relates to stock options granted by the Company to employees under the CTEL ESOP Schemes. This Reserve is transferred to securities premium or retained earnings on exercise or cancellation of vested options.

(iv) Retained earnings

This Reserve represents the cumulative profits of the Company and effects of remeasurement of defined benefit obligations. This Reserve can be utilized in accordance with the provisions of the Companies Act, 2013.

Term loans from banks represents Foreign currency term loan from Kotak Mahindra Bank Limited. Foreign currency term loan is secured by way of first and exclusive charge on all existing and future current and movable fixed assets of the Company, second charge on constant OD/PCFC/BG - KMBL TD(s) of Rs. 250 Lac, personal guarantee of Mr Dharani Raghuram Swaroop and corporate guarantee of M/s CTE Employees Foundation. The loan carries a rate of interest of 6% p.a. as at the balance sheet date.The loan is repayable is 15 equated monthly instalments of 9204 USD.

Unsecured term loan from banks represents loan from Kotak Mahindra Bank and carries rate of interest of 16%. The loan is repayable is 14 equated monthly instalments of Rs. 1.57 thousands.

Loans from others represents two loans from Bajaj Finance. Loan I carries a rate of interest 18.75% p.a and is repayable in 3 equated monthly instalments of Rs. 1.94 thousands. Loan II carries a rate of interest 17.5% p.a and is repayable in 24 equated monthly instalments of Rs. 1.15 thousands.

5.1 Working capital loan from bank represents Over Draft from Kotak Mahindra Bank Limited, secured by way of first and exclusive charge on all existing and future current and movable fixed assets of the Company, second charge on constant OD/PCFC/BG -KMBL TD(s) of Rs. 250 Lac, personal guarantee of Mr Dharani Raghuram Swaroop and corporate guarantee of M/s CTE Employees Foundation. The loan carries a rate of interest of MCLR 6M 1.8% p.a.

The provisions of Section 135 of the Companies Act, 2013 relating to Corporate Social Responsilibility were not applicable for the year ended 31st March, 2017.

6. Exceptional Items: Exceptional Items represent goodwill amortised during the year 2015-16 and reversed during the year 1617 account of Scheme of Capital Reduction. (Refer Note 16 (ii))

7. Reconciliation of tax expenses and the accounting profit multiplied by tax rate

8. Employee benefits

(i) Leave obligations

The leave obligation covers the Company’s liability for earned leave which is unfunded.

(ii) Defined contribution plans

The Company has defined contribution plans namely Provident fund. Contributions are made to provident fund at the rate of 12% of basic salary as per regulations. The contributions are made to registered provident fund administered by the Government. The obligation of the Company is limited to the amount contributed and it has no further contractual nor any constructive obligation. The expense recognised during the year towards defined contributions plan is as follows:

(ii) Post- employment obligations

a) Gratuity

The Company provides for gratuity for employees as per the Payment of Gratuity Act, 1972. The amount of gratuity payable on retirement/termination is the employees last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number of years of service. The Company operates post retirement gratuity plan with HDFC Life Insurance. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation.

The following table sets out the amounts recognised in the financial statements in respect of gratuity plan

Fair value of plan assets — 100% with HDFC Life New Group Unit Linked Plan

Expected contributions to post- employment benefit plans of gratuity for the year ending 31 March 2019 are Rs. 118.64 Lakhs.

iv) Significant estimates and sensitivity Analysis

The sensitivity of the defined benefit obligation to changes in key assumptions is:

The above sensitivity analysis is based on a change in each assumption while holding all other assumptions constant. In practice, this is unlikely to occur and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions, the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied as when calculating the defined benefit liability recognised in the balance sheet.

v) Risk exposure

Through its defined benefit plans, the Company is exposed to a number of risks, the most significant of which are detailed below:

Interest rate risk:

The defined benefit obligation calculated uses a discount rate based on government bonds. If bond yields fall, the defined benefit obligation will tend to increase.

Salary inflation risk:

Higher than expected increases in salary will increase the defined benefit obligation.

Demographic risk:

This is the risk of variability of results due to unsystematic nature of decrements that include mortality, withdrawal, disability and retirement. The effect of these decrements on the defined benefit obligation is not straight forward and depends upon the combination of salary increase, discount rate and vesting criteria. It is important not to overstate withdrawals because in the financial analysis the retirement benefit of a short career employee typically costs less per year as compared to a long service employee.

9. Financial instruments and risk management Fair values

a) The fair value of financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

b) The fair value of trade receivables, trade payables and other current financial assets and liabilities is considered to be equal to the carrying amounts of these items due to their short term nature. Where such items are non-current in nature, the same has been classified as Level 3 and fair value determined using discounted cash flow basis. Similarly, unquoted equity instruments where most recent information to measure fair value is insufficient, or if there is a wide range of possible fair value measurements, cost has been considered as the best estimate of fair value.

c) The fair value of forward foreign exchange contracts is calculated as the present value determined using forward exchange rates, currency basis spreads between the respective currencies and interest rate curves.

Set out below, is a comparision by class of the carrying amounts and fair value of the Company’s financial instruments, other than those with carrying amounts that are reasonable approximation of fair values:

*Fair value of instruments is classified in various fair value hierarchies based on the following three levels:

Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices.

Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques, which maximise the use of observable market data and rely as little as possible on entity specific estimates. If significant inputs required to fair value an instruments are observable, the instrument is included in Level 2.

Level 3: If one or more of the significant inputs are not based on observable market data, the instruments is included in level 3.

There has been no change in the valuation methodology for Level 3 inputs during the year. The Company has not classified any material financial instruments under Level 3 of the fair value hierarchy. There were no transfers between Level 1 and Level 2 during the year.

Management uses its best judgement in estimating the fair value of its financial instruments. However, there are inherent limitations in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates presented above are not necessarily indicative of the amounts that the Company could have realized or paid in sale transactions as of respective dates. As such, the fair value of financial instruments subsequent to the reporting dates may be different from the amounts reported at each reporting date.

10. Financial risk management

The Company is exposed to market risk (fluctuation in foreign currency exchange rates, price and interest rate), liquidity risk and credit risk, which may adversely impact the fair value of its financial instruments. The Company assesses the unpredictability of the financial environment and seeks to mitigate potential adverse effects on the financial performance of the Company.

(A) Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises of currency risk, interest rate risk and price risk. Financial instruments affected by market risk include loans and borrowings, trade receivables and trade payables involving foreign currency exposure. The sensitivity analyses in the following sections relate to the position as at March 31, 2018 and March 31, 2017.The analysis exclude the impact of movements in market variables on the carrying values of financial assets and liabilties .The sensitivity of the relevant profit or loss item is the effect of the assumed changes in respective market risks. This is based on the financial assets and financial liabilities held at 31 March, 2018 and 31 March, 2017.

(i) Foreign currency exchange rate risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company’s exposure to the risk of changes in foreign exchange rates relates primarily to the trade/other payables, trade/other receivables and derivative assets/liabilities. The risks primarily relate to fluctuations in US Dollars against the functional currencies of the Company. The Company’s exposure to foreign currency changes for all other currencies is not material. The Company evaluates the impact of foreign exchange rate fluctuations by assessing its exposure to exchange rate risks.

The following tables demonstrate the sensitivity to a reasonably possible change in US dollar exchange rates, with all other variables held constant. The impact on the Company’s profit before tax is due to changes in the fair value of monetary assets and liabilities.

(ii) Sensitivity

The sensitivity of profit or loss to changes in the exchange rates arises mainly from foreign currency denominated financial instruments and from foreign forward exchange contracts:

The movement in the pre-tax effect is a result of a change in the fair value of monetary assets and liabilities denominated in US Dollars where the functional currency of the entity is a currency other than US Dollars.

(iii) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of change in market interest rates. The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s debt obligations with floating interest rates. As the Company has certain debt obligations with floating interest rates, exposure to the risk of changes in market interest rates are dependent of changes in market interest rates. Management monitors the movement in interest rate and, wherever possible, reacts to material movements in such rates by restructuring its financing arrangement.As the Company has no significant interest bearing assets, the income and operating cash flows are substantially independent of changes in market interest rates.

Interest rate sensitivity

The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings affected. With all other variables held constant, the Company’s profit before tax is affected through the impact on floating rate borrowings, as follows:

The assumed increase/decrease in interest rate for sensitivity analysis is based on the currently observable market environment

(B) Credit Risk

Financial assets of the Company include trade receivables, loans to wholly owned subsidiaries, employee advances, security deposits held with government authorities and others and bank deposits which represents Company’s maximum exposure to the credit risk.

With respect to credit exposure from customers, the Company has a procedure in place aiming to minimise collection losses. Credit Control team assesses the credit quality of the customers, their financial position, past experience in payments and other relevant factors.

The carrying amount of trade receivables, loans, advances, deposits, cash and bank balances, bank deposits and interest receivable on deposits represents company’s maximum exposure to the credit risk. No other financial asset carry a significant exposure with respect to the credit risk. Bank deposits and cash balances are placed with reputable banks and deposits are with reputable government, public bodies and others. The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the factors that may influence the credit risk of its customer base, including default risk associate with the industry and country in which customers operate. Credit quality of a customer is assessed based on an extensive credit rating scorecard and individual credit limits are defined in accordance with this assessment. With respect to other financial assets viz., loans & advances, deposits with government and banks, the credit risk is insignificant since the loans & advances are given to its wholly owned subsidiary and employees only and deposits are held with government bodies and reputable banks. The credit quality of the financial assets is satisfactory, taking into account the allowance for credit losses.

Credit risk on trade receivables and other financial assets is evaluated as follows:

(iii) Significant estimates and judgements Impairment of financial assets:

The impairment provisions for financial assets disclosed above are based on assumptions about risk of default and expected loss rates. The company uses judgement in making these assumptions and selecting the inputs to the impairment calculation, based on the company’s past history, existing market conditions as well as forward looking estimates at the end of each reporting period.

(C) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding to meet obligations when due and to close out market positions. Company’s treasury maintains flexibility in funding by maintaining availability under deposits in banks.

Management monitors cash and cash equivalents on the basis of expected cash flows.

(i) Financing arrangements: The company had access to the following undrawn borrowing facilities at the end of the reporting period

(ii) Maturities of Financial liabilities

Contractual maturities of financial liabilities as at :

(iii) Management expects finance cost to be incurred for the year ending 31 March 2019 is Rs.7.92 Lakhs.

11. Capital management

Capital management and Gearing Ratio

For the purpose of the Company’s capital management, capital includes issued equity capital, share premium and all other equity reserves attributable to the equity holders. The primary objective of the company’s capital management is to maximise the shareholder value.

The Company manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the financial covenants. The Company monitors capital using a gearing ratio, which is debt divided by total capital. The Company includes within debt, interest bearing loans and borrowings.

In order to achieve this overall objective, the Company’s capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting the financial covenants would permit the bank to immediately call loans and borrowings.

No changes were made in the objectives, policies or processes for managing capital during the years ended 31 March, 2018 and 31 March, 2017.

12. Commitments

Estimated amount of contracts remaining to be executed on capital account and not provided for - Nil

* Post employment benefits are acturially determined on overall basis and hence not seperately provided. Details of outstanding balances as at the year end where related party relationship existed:

Details of outstanding balances as at the year end where related party relationship existed:

13. Segment information

The Company’s CEO, Whole time Director and Chief Financial Officer examine the Company’s performance from a service and product perspective and has identified two reportable segments:

1. Software development services

2. Software Licenses

They primarily use a measure of profit before tax to assess the performance of the operating segments.

Segment revenue and expenses:

The Company has an established basis of allocating joint expenses to the segments, which is reasonable, and followed consistently. All other segment revenue and expenses are attributable to the segments. Certain Expenses/Income are not specifically allocable to specific segments and accordingly these expenses are disclosed as unallocated corporate expenses or income and adjusted only against the total income of the company.Segment result includes the respective other income. Segment assets and liabilities:

Segment assets include all operating assets used by a segment and consist principally of operating cash, debtors and fixed assets, net of allowances and provisions that are reported as direct offsets in the balance sheet. While most assets can be directly attributed to individual segments, the carrying amount of certain assets used jointly by two or more segments is allocated to the segments on a reasonable basis. In such cases, the entire revenue and expenses of these assets including depreciation are also allocated to the same segments. Assets which are not allocable to the segments have been disclosed as ‘unallocated corporate assets’. Segment liabilities include all operating liabilities and consist principally of creditors and accrued liabilities. Segment assets and liabilities do not include deferred income taxes. The loans and other borrowings that are not specifically allocable to the various segments are disclosed as ‘unallocated corporate liabilities’.

Information about revenue

Revenue from external customers - Sale of Services - Rs. 36275.97 thousands

The Group has made external sales to the following customers meeting the criteria of 10% or more of the entity revenue Customer 1 - Rs. 3,22,716.27 thousands

Revenue from external customers - Sale of Products - Rs. 2,67,740.91 thousands

The Group has made external sales to the following customers meeting the criteria of 10% or more of the entity revenue Customer 1 - Rs. 2,20,267.76 thousands

The weighted average remaining contractual life for the share options outstanding as at March 31, 2018 was 6 years (March 31, 2017 : 7 years).

(C) Fair Valuation:

The fair value of option have been done by an independent firm of Chartered Accountants on the date of grant using the Black-Scholes Model.

The key assumptions in the Black-Scholes Model for calculating fair value as on the date of grant:

(a) For CTEL Employee Stock Opton Scheme - 2008

(b) For CTEL ESOP Scheme 2011_

(c) For ESOS 2015_

*Expected volatility on the Company’s stock price on Bombay Stock Exchange based on the data commensurate with the expected life of the options up to the date of grant.

(D) Details of the liabilities arising from the Share based payments were as follows:

Details of the liabilities arising from the Share based payments were as follows:

14. First-time adoption of Ind AS Transition to Ind AS

These are the Company’s first financial statements prepared in accordance with Ind AS.

The accounting policies set out in Note 2 have been applied in preparing the financial statements for the year ended 31 March, 2018, the comparative information presented in these financial statements for the year ended 31 March 2017 and in the preparation of an opening Ind AS balance sheet at 01 April 2016 (date of transition). In preparing its opening Ind AS balance sheet, the Company has adjusted the amounts reported previously in financial statements prepared in accordance with the accounting standards notified under Companies (Accounting standards) Rules, 2006 (as amended) and other relevant provisions of the Act(previous GAAP or Indian GAAP). An explanation on how the transition from previous GAAP to Ind AS has effected the Company’s financial position, financial performance and cash flows is set out in the following tables and notes.

Exemptions and Exceptions availed

Set out below are the applicable Ind AS 101 optional exemptions and mandatory exceptions applied in the transition from previous GAAP to Ind AS.

A. Ind AS optional exemptions

(i) Deemed cost

Ind AS 101 permits a first time adopter to elect to continue with the carrying value for all of its Property, plant & equipment as recognised in the Financial Statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition, after making necessary adjustments for decommissioning liabilities. This exemption can also be used for Intangible assets covered by Ind AS 38. Accordingly, the Company has elected to measure all of its Property, plant & equipment and Intangible assets at their previous GAAP carrying value.

(ii) Impairment of financial assets

The Company has applied the exception related to impairment of financial assets given in Ind AS 101. It has used reasonable and supportable information that is available without undue cost or effort to determine the credit risk at the date that financial assets were initially recognised and compared that to the credit risk as at 01 April, 2016.

(iii) Investments in subsidiaries

Under previous GAAP, investment in subsidiaries, joint ventures and associates were stated at cost and provisions made to recognise the decline, other than temporary. Under Ind AS, the Company has considered their previous GAAP carrying amount as their deemed cost.

(iv) Share based payment transactions

Under previous GAAP, the cost of options granted under the CTE Employee Stock Option Scheme (CTE ESOS) [equity - settled] was recognised using the intrinsic value method. Under Ind AS, the cost of options granted under CTE ESOS is recognised based on the fair value of the options as on the grant date. In terms of the exemptions, the fair value of unvested options as at the date of transition have been accounted for as part of reserves.

B. Ind AS mandatory exceptions

(i) Estimates

An entity’s estimates in accordance with Ind ASs at the date of transition to Ind AS shall be consistent with the estimates made for the same date in accordance with previous GAAP(after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error.

Ind AS estimates as at 1 April, 2016 are consistent with the estimates as at the same date made in conformity with previous GAAP. The Company made estimates for following items in accordance with Ind AS at the date of transition as these were not required under previous GAAP:-Investment in equity instruments carried at amortised cost-Impairment of financial asset based on expected credit loss model.

(ii) Classification and measurement of Financial Assets

Ind AS 101 requires an entity to assess classification and measurement of financial assets on the basis of the facts and circumstances that exist at the date of transition to Ind AS.

C. Reconciliation between previous GAAP and Ind AS ( as at 31 March 2017 and 1 April 2016)

Ind AS 101 requires an entity to reconcile equity, total comprehensive income and cash flows for prior periods.

D. Notes to first-time adoption:

1) Fair valuation of forward contracts:

Under previous GAAP, the premium or discount arising at the inception of a forward exchange contract should be amortised as expense or income over the life of the contract. Any profit or loss arising on cancellation or renewal of such a forward exchange contract should be recognised as income or as expense for the period.Under Ind AS 109, such forward contracts have to be carried at fair value through profit and loss. The profit for the year ended 31 March 2017 has increased by Rs. 5,767.49 thousands on account of fair value gain.

2) Deferred tax

Previous GAAP requires deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind AS 12 requires entities to account for deferred taxes using the Balance Sheet approach, which focuses on differences between the carrying amount of an asset or liability in the Balance Sheet and its tax base. It requires recognition of tax consequences of differences between the carrying amounts of assets and liabilities and their tax base. As a result, Deferred tax asset has been increased by Rs. 13,653.30 thousands as at 1 April 2016 and Rs. 29,724.30 thousands as at 31 March 2017 with a corresponding increase in retained earnings and net profit respectively.

3) Remeasurements of post-employment benefit obligations

Under Ind AS, remeasurements i.e. Actuarial gains and losses and the return on plan assets , excluding amounts included in the net interest expense on the net defined benefit liability are recognised in other comprehensive income instead of profit or loss. Under the previous GAAP, these remeasurements were forming part of the profit or loss for the year. There is no impact on the total equity as at 31 March 2017.

4) Share based payments

Under the previous GAAP, expenditure relating to Employee stock option was valued as per Intrinsic value method. Under Ind AS, expenses are to be accounted as per Fair value method. Accordingly, expenditure of Rs. 4035.35 thousands was accounted during the year ended 31 March 2017 with a corresponding increase in net profit.

5) Expected credit loss on trade receivables

As per Ind AS 109, expected credit loss is calculated for trade receivables using the lifetime cycle approach. Accordingly, an amount of Rs. 472.50 thousands and Rs. 14.50 thousands is provided as on 1 April 2016 and 31 March 2017 respectively with a corresponding impact on retained earnings and net profit respectively.

6) Other comprehensive income

Under Ind AS, all items of income and expense recognized in a period should be included in the profit or loss for the period, unless a standard requires or permits otherwise. Items of income and expense that are not recognised in profit or loss but are shown in the statement of profit or loss as ‘other comprehensive income’ includes remeasurements of defined benefit plans. The concept of ‘other comprehensive income’ did not exist under previous GAAP.

7) Other equity

Retained earnings as at April 1 2016 has been adjusted consequent to the above Ind AS transition adjustments on the date of transition.

8) Cash flow from financing activities

Other bank balances (disclosed under Note 10) are not considered as part of cash and cash equivalents under Ind AS and the movement of other bank balances amounting to 22532.24 thousands is the variance in net increase/ decrease in cash and cash equivalents as at 31 March 2017.


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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