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Notes to Accounts of Cigniti Technologies Ltd.

Mar 31, 2017

1. GRATUITY BENEFIT PLAN

Under the gratuity plan, every employee who has completed at least five years of service gets a gratuity on departure @ 15 days of last drawn salary for each completed year of service. The scheme is funded with insurance company in the form of qualifying insurance policy

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

The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled. There has been significant change in expected rate of return on assets due to change in the market scenario.

2. EMPLOYEE STOCK OPTION

The company provides share-based payment schemes to its employees. During the year ended

March 31, 2017, an employee stock option plan (ESOP) was in existence. The relevant details of the scheme and the grant are as below.

i) Employees covered under Employees Stock Option Plans are granted an option to purchase shares of the Company at the face value of shares, subject to requirements of vesting conditions. Upon vesting, the employees can acquire one equity share for every option. The minimum vesting period shall be for 1 year and the maximum vesting period shall be of 5 years from the date of grant.

ii) The remuneration committee of the board evaluates the performance and other criteria of employees and approves the grant of options. These options vest with employees over a specified period subject to fulfillment of certain conditions. Upon vesting, employees are eligible to apply and secure allotment of Company’s shares at a price determined on the date of grant of options.

iii) The Company measures the cost of ESOP using the intrinsic value method. The stock compensation cost is computed based on the market price as of grant date and amortized on a straight-line basis over the total vesting period.

3. CAPITAL AND OTHER COMMITMENTS

a) Estimated amount of contracts remaining to be executed on capital account and not provided for during the year is Nil (March 31, 2016: Nil).

b) For commitments relating to lease arrangements, please refer note 30.

4. OPERATING LEASES

The Company has entered into commercial lease agreements for use of office premises. These leases have an average life of between 11 months to five years with renewal option included in the contracts and with escalation clause. There are no restrictions placed upon the company by entering into these leases.

Lease payments made under cancellable operating leases amounting to Rs. 3,91,29,969/- (March 31, 2016: Rs. 2,30,12,679/-) have been recognized as an expense in the statement of profit or loss.

Lease payments made under non-cancellable operating leases amounting to Rs. 3,85,62,756/- (March 31, 2016: Rs. 4,43,68,977/-) have been recognized as an expense in the statement of profit or loss.

5. DISCLOSURE ON SPECIFIED BANK NOTES (SBNs)

During the year, the Company had specified bank notes or other denomination note as defined in the MCA notification G.S.R. 308(E) dated March 31, 2017 on the details of Specified Bank Notes (SBN) held and transacted during the period from November 8, 2016 to December 30, 2016, the denomination wise SBNs and other notes as per the notification is given below:

*For the purposes of this clause, the term ‘Specified Bank Notes'' shall have the same meaning provided in the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O. 3407(E), dated the November 8, 2016.

6. CORPORATE SOCIAL RESPONSIBILITY

(a) Gross amount required to be spent by the Company during the year Rs. 40, 68,722/-.

(b) Amount spent during the year under Corporate Social Responsibility expenditure Rs. 31, 03,780/-(March 31, 2016: Rs. 18, 44,890/-).

7. CONTINGENT LIABILITY

There is no contingent liability as at March 31, 2017 (March 31, 2016: Rs. Nil)

8. SEGMENT REPORTING

The Company is primarily engaged in the business of providing software testing services. As such there is no separate reportable segment as defined by Accounting Standard 17 "Segment Reporting".

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

Based on the information available with the Company there are no suppliers who are registered as micro, small or medium enterprises under "The Micro, Small and Medium Enterprises Development Act 2006" as at March 31, 2017 and March 31, 2016.

10. Previous year figures have been regrouped/reclassified, where necessary, to conform to the current year’s classification.


Mar 31, 2016

1. BORROWINGS

From HDFC Bank: (By Cigniti Technologies Limited)

i. Term Loan Sanction by the bank on December 06, 2014 of Rs, 200 Lakhs repayable in 60 monthly equal installments of Rs, 4,60,197/- @13.5% interest. Outstanding balance as on March 31, 2016 is Rs, Nil (Previous Year Rs, 1,95,26,966/-)

ii. WCTL Sanction by the Bank on December 06, 2014 of Rs, 300 Lakhs repayable in 36 monthly equal installments of Rs, 10,18,059/- @13.5% interest. Outstanding balance as on March 31, 2016 is Rs, Nil (Previous Year Rs, 2,86,31,229/-)

iii. Cash Credit limit sanctioned by the bank is Rs, 2,00,00,000/- Outstanding balance as on March 31, 2016 is Rs, 2,20,20,940/- (Previous Year Rs, 1,80,97,382/-)

The above loans are secured by the following:

a) PRIMARY SECURITY: Hypothecation of Book Debts and Fixed Assets of the Company

b) COLLATERAL SECURITY: Immovable Property situated at Flat No. 303, 3rd Floor, Subramanyam Estates, 6-3-662/16, Jaffar Ali Bagh, Somajiguda, Hyderabad - 500 082 and Immovable Property situated at Unit No.1, 1/a, 6-3-456/C/F1 & 6-3-456/C/F2, 1st Floor, MGR Estates, in Sy No.145 and 146 in Dwarakapuri Colony, Punjagutta, Hyderabad-500 082

c) GUARANTORS: Sri C.V. Subramanyam, Sri P. Sudhakar, Sri. C. Srikanth and Smt. C. Rajeshwari.

2. The Company is engaged in the testing services. The production and sale of such services cannot be expressed in any generic unit. Hence, it is not possible to give the quantitative details of sales.

3. EMPLOYEE STOCK OPTION

i) Employees covered under Employees Stock Option Plans are granted an option to purchase shares of the Company at the face value of shares, subject to requirements of vesting conditions. Upon vesting, the employees can acquire one equity share for every option. The minimum vesting period shall be for 1 year and the maximum vesting period shall be of 5 years from the date of grant.

ii) The stock compensation cost is computed based on the market price as of grant date and amortized on a straight line basis over the total vesting period. The total stock option cost outstanding is Rs, 72,58,43,303/-(Previous Year Rs, 53,38,96,960/-) and deferred employee compensation expense is Rs, 39,41,50,074/- (Previous Year Rs, 23,65,81,058/-) for the year ended March 31, 2016, the Company has recorded stock compensation expense of Rs, 34,17,51,726/- (Previous Year Rs, 29,73,15,902/-).

4. RELATED PARTY TRANSACTION (a) Related Parties

S No. Particulars Nature of Relationship

1 Cigniti Inc., USA 100% Wholly Owned Subsidiary

2 Cigniti Software Services Pvt. Ltd. 100% Wholly Owned Subsidiary

3 Gallop Solutions Inc., USA 100% Wholly Owned Subsidiary

4 Gallop Solutions Pvt. Ltd. 100% Wholly Owned Subsidiary

5 Cigniti Technologies (UK) Limited, UK 100% Wholly Owned Subsidiary

6 Cigniti Technologies (Australia) Pty Ltd, AUS 100% Wholly Owned Subsidiary

7 Cigniti Technologies Inc., USA 100% Wholly Owned Subsidiary

8 Cigniti Technologies (Canada) Inc., Canada 100% Wholly Owned Subsidiary

9 Mr. C. V. Subramanyam Chairman and Managing Director

10 Mr. Sudhakar Pennam Director

11 Mr. C. Srikanth Whole-time Director

12 Mr. K. Ch. Subba Rao Director

13 Mr. Mani Subramanian Director

14 Mr. K. Nageswara Rao Director

15 Mrs. K. Krishna Priya Woman Director

5. CORPORATE SOCIAL RESPONSIBILITY

Amount spent by the Company towards CSR: for the Current Year Rs, 31,03,780/- For the Previous Year Rs, 18,44,890/-.

Amount spent by the Company towards CSR for the year Rs, 31,03,780/- included in the General Expenses of Rs, 63,01,364/36. SEGMENT REPORTING

Segment Reporting is not applicable as the Company is engaged only in Software Testing Services.

6. INTRA BRANCH TRANSACTION

Intra Branch Transaction have been eliminated while preparing the Financial Statement.

7. DUES TO MICRO & SMALL ENTERPRISES

There are overdue principle amounts and interest thereon payable to Micro Enterprises and Small Enterprises, as on March 31, 2016.

8. CONFIRMATION OF CLOSING BALANCES

Closing Balances of Debtors, Creditors, Loans and Advances are subject confirmations.

9. Previous year''s figures have been regrouped wherever necessary.

10. The figures have been rounded off to the nearest rupee.


Mar 31, 2015

NOTE 1

The Company is engaged in the testing services. The production and sale of such services cannot be expressed in any generic unit. Hence, it is not possible to give the quantitative details of sales and the information as required under Schedule III to the Companies Act, 2013.

NOTE 2 EMPLOYEE STOCK OPTION

i) Employees covered under Employees Stock Option Plans are granted an option to purchase shares of the Company at the face value of shares, subject to requirements of vesting conditions. Upon vesting, the employees can acquire one equity share for every option. The minimum vesting period shall be for 1 year and the maximum vesting period shall be of 5 years from the date of grant.

ii) The stock compensation cost is computed based on the market price as of grant date and amortized on a straight line basis over the total vesting period. The total stock option cost outstanding is Rs. 53,38,96,960/- and Deferred employee compensation expense is Rs. 23,65,81,058/- for the year ended March 31, 2015, the Company has recorded stock compensation expense of Rs. 29,73,15,902/- (2014: NIL).

iii) The compensation committee of the board evaluates the performance and other criteria of employees and approves the grant of options. These options vest with employees over a specified period subject to fulfllment of certain conditions. Upon vesting, employees are eligible to apply and secure allotment of Company's shares at a price determined on the date of grant of options. The particulars of options granted under various plans are tabulated below.

NOTE 3 CORPORATE SOCIAL RESPONSIBILITY:

Amount spent by the company towards CSR: Rs. 18,44,890/-.

NOTE 4 SEGMENT REPORTING

Segment Reporting is not applicable to the Company is engaged only in Testing Services.

NOTE 5 INTRA BRANCH TRANSACTION

Intra Branch transactions have been eliminated while preparing the financial statements.

NOTE 6 DUES TO MICRO & SMALL ENTERPRISES

There are overdue principle amounts and interest thereon payable to Micro Enterprises and Small Enterprises, as at March 31, 2015.

NOTE 7 CONFIRMATION OF CLOSING BALANCES

Closing Balances of Debtors, Creditors, Loans and Advances are subject confirmations.

NOTE 8 Previous year's figures have been regrouped wherever necessary.

NOTE 9 The figures have been rounded of to the nearest rupee.


Mar 31, 2014

1. CORPORATE INFORATION

M/s Cigniti technologies Limited, a listed company on the regional stock Exchanges since February 2004 onwards, was incorporated on September 03, 1998 in the name and style as Chakkilam Infotech Private Limited. Subsequently the name of the company was changed into Chakkilam Inflotech Limited in January 2000. The initial focus of the company was on generic IT Services and healthcare related services and products.

In 2008, Chakkilam Infotech Limited shifted focus and repositioned itself as a pure play independent testing services company. The strategic shift helped the company focus its energies in building delivery capability and building IP in a niche area which was growing faster than generic IT Services. The company offered software Testing Services to US, European and Asian clients in areas such as Functional Testing, Test Automation, Performance Testing, Mobile Application Testing and Compatibility Testing. The Strategic shift in focus was vindicated with the higher growth rates the company was able to show in the next few years.

In October 2011, Chakkilam Infotech Limited acquired a US based testing services and consulting company called Cigniti Inc. and rebranded itself as Cigniti Technologies Limited. With consolidated revenue run rate of $22 Million for the last quarter, Cigniti Technologies Limited emerged as India''s largest pure play independent testing services company. With aggressive organic growth plans that will be augumented in three years, the Company will emerge as the world''s leading independent testing services company.

Over the last few years, Cigniti has built world class delivery capability for testing software. Investments have been made in attracting the brightest testing talent, building test infrastructure and test labs and building IP in the form of software testing frameworks, tools and utilities that help clients speed up their testing. Cigniti has invested in building India''s first Robotics Testing Lab and other test infrastructures like Mobile Testing Lab. The Company also invested in building its brand name by participating in industry events and taking on speaker opportunities in testing events.

During the year the company has acquired 100% of shares in a US based software testing services company called Gallop Solutions Inc. based in Irving, Texas, USA and Gallop Solutions Pvt. Ltd, India. The company paid a combined acquisition price for both the entities of US $ 5.5 Million. 100% ownership of Gallop Solutions Private Limited India was acquired by paying a consideration of Rs. 11,000,000 in cash. The company is acquired 100% stake in Gallop Solutions Inc, USA for a total consideration of US $ 5.3 Million, of which US $ 3.3 Million was be paid in cash and the balance i.e., US$ 2 million aggregating to a sum of Rs. 11.16 Crores was settled by issue of 754,211 equity shares to the shareholders of Gallop Solutions Inc. USA at an issue price of Rs. 148 each (conversion price of dollars in to INR considered as on 29th May, 2013).

At Present the company is listed on Bombay Stock Exchange, Bangalore Stock Exchange and Madras Stock Exchange with the paid up Capital of Rs. 22.92 Crores. The Company''s Registered Office is Suite No. 106 & 107, 6-3-456/C, MGR Estates, 1st Floor, Dwarakapuri Colony, Punjagutta, Hyderabad – 500082.

1. Medium Term Loan Sanction by APSFC on 19th January, 2011 of Rs. 100 Lakhs repayable in 55 monthly installments. 54 Installments @ Rs. 1.80 lakhs each and 55th installment @ Rs. 2.80 lakhs with 14% interest. Period of loan 5 Years including moratorium of 6 months.

2. PRIMARY SECURITY: The above term loan secured by ways Equitable Mortgage of free hold interest in commercial Space bearing municipal No. 6-3-456/C/F1& 6-3-456/C/F2, part of First Floor Nos. 106 & 107, and measuring 4450 sft at MGR Estate, Dwarakapuri Colony, Panjagutta, Hyderabad together with undivided share of land and measuring 95 sq yds out of 2900 sa yds in the Sy. No. 145 and Hypothecation of Plant & Machinery / equipments existing and all other future acquisitions of fixed assets in nature.

3. COLLATERAL SECURITY: The above term loan is secured by way of Extension of equitable Mortgage of plots bearing Nos. 56 & 63 and measuring 976 sq yds and 986 sq yds respectively covered by Sy. Nos. 57 Part, 58 Part on Black Diamond Enclave Layout at Bachpally (V), Pragathinagar, Gram Panchayat, Qutbullapur (M), Ranga Reddy District, belonging to Smt Chakkilam Rajeswari and Sri Chakkilam Venkat Subramanyam.

4. The collateral Security holders shall guarantee the Corporation''s Medium Term Loan in their individual capacity as co-obligants.

28. The Company is engaged in the development of Computer Software and services. The production and sale of such software and services cannot be expressed in any generic unit. Hence, it is not possible to give the quantitative details of sales and the information as required under Paragraphs 3 and 4C of Part II of Schedule VI to the Companies Act, 1956.

29. RELATED PARTY TRANSACTION

During the financial year 2013-14 the Company has entered into some transaction, which can be deemed as related transactions. All these matters have been approved by the Board, wherever necessary.

34. SEGMENT REPORTING

Segment Reporting is not applicable to the Company

35. INTRA BRANCH TRANSACTION

Intra Branch transactions have been eliminated while preparing the financial statements.

36. DUES TO MICRO & SMALL ENTERPRISES

There are overdue principle amounts and interest thereon payable to Micro Enterprises and Small Enterprises, as at 31st March, 2014

37. CONFIRMATION OF CLOSING BALANCES

Closing Balances of Debtors, Creditors, Loans and Advances are subject confirmations.

38. Previous year''s figures have been regrouped wherever necessary.

39. The figures have been rounded off to the nearest rupee.


Mar 31, 2013

1. CORPORATE INFORMATION:

M/s. Cigniti Technologies Limited, a listed company on the Regional Stock Exchanges since February 2004 onwards, was incorporated on September 03, 1998 in the name and style as Chakkilam Infotech Private Limited. Subsequently the name of the company was changed into Chakkilam Infotech Limited in January 2000. The initial focus of the company was on generic IT services and healthcare related services and products.

In 2008, Chakkilam Infotech Limited shifted focus and repositioned itself as a pure play independent testing services company. The strategic shift helped the company focus its energies in building delivery capability and building IP in a nice area which was growing faster than generic IT services. The Company offered Software Testing services to US, European and Asia Pacific clients in areas such as Functional Testing, Test Automation, Performance Testing, Mobile Application Testing and Compatibility Testing. The strategic shift in focus was vindicated with the higher growth rates the company was able to show in the next few years.

In October 2011, Chakkilam Infotech Limited acquired a US based testing services and consulting company called Cigniti Inc. and rebranded itself as Cigniti Technologies Limited. With consolidated revenue run rate of $22 Million for the last quarter, Cigniti Technologies Limited emerged as India''s largest pure play independent testing services company. The company has aggressive organic growth plans which will be augmented with inorganic growth and hopes that within three years it will emerge as the world''s leading independent testing services company.

Over the last few years, Cigniti has built world class delivery capability for testing software. Investments have been made in attracting the brightest testing talent, building test infrastructure and test labs and building IP in the form of software testing frameworks, tools and utilities that help clients speed up their testing. Cigniti has invested in building India''s first Robotics Testing lab and other test infrastructures like Mobile Testing Lab and Cloud Based Performance Testing Lab. Cigniti has also invested in building its brand name by participating in industry events and taking on speaker opportunities in testing events.

At present the company is listed on Bombay Stock Exchange, Bangalore Stock Exchange and Madras Stock Exchange with the paid up capital of Rs.18.84 Crores. The company''s Registered office is Suite No. 106&107, 6-3-456/c, MGR Estates, Dwarakapuri Colony, Panjagutta, Hyderabad - 500082.

2. The Company is engaged in the development of Computer Software and services. The production and sale of such software and services cannot be expressed in any generic unit. Hence, it is not possible to give the quantitative details of sales and the information as required under Paragraphs 3 and 4C of Part II of Schedule VI to the Companies Act, 1956.

3. RELATED PARTY TRANSACTION

During the financial year 2012-13 the Company has entered into some transaction, which can be deemed as related transactions. All these matters have been approved by the Board, wherever necessary.

4. SEGMENT REPORTING:

Segment Reporting is not applicable to the Company

5. INTRA BRANCH TRANSACTION:

Intra Branch transactions have been eliminated while preparing the financial statements.

6. DUES TO MICRO & SMALL ENTERPRISES:

There are overdue principle amounts and interest thereon payable to Micro Enterprises and Small Enterprises, as at 31-03-2013

7. CONFIRMATION OF CLOSING BALANCES:

Closing Balances of Debtors, Creditors, Loans and Advances are subject confirmations.

8. Previous year''s figures have been regrouped wherever necessary,

9. The figures have been rounded off to the nearest rupee.


Mar 31, 2012

1. Corporate Loan Sanction by APSFC on 20th December, 2007 of Rs. 100 Lakhs repayable in 50 monthly installments of Rs.2 lakhs each with 15% interest. Period of loan 5 Years including moratorium of 11 months

2. Working Capital Term Loan Sanction by APSFC on 26th October, 2009 of Rs. 120 Lakhs repayable in 43 monthly installments. 42 Installments @Rs.2.80 lakhs each and 43 rd installment @ Rs.2,40 lakh s with 14% interest. P eriod of loan 4 Years including moratorium of 6 months

3. Medium Term Loan Sanction by APSFC on 19th January, 2011 of Rs. 100 Lakhs repayable in 55 monthly installments. 54 Installments @Rs.1.80 lakhs each and 55th in stallment @ Rs.2.80 lakhs with 14% interest. Period of loan 5 Years including moratorium of 6 months

4. PRIMARY SECURITY: The above all Term loans secured by ways Equitable Mortgage of free hold interest in commercial Space bearing municipal No. 6-3-456/C/F1& 6-3-456/C/F2, part of First Floor Nos. 106 & 107, admeasuring 4450 sft at MGR Estate, Dwarakapuri Colony, Panjagutta, Hyderabad together with undivided share of land admeasuring 95 sq yds out of 2900 sayds in the Sy. No. 145 and Hypothecation of Plant & Machinery / equipments existing and all other future acquisitions of fixed assets in nature

5. COLLATERAL SECURITY: The above all Term loans are secured by way of Extension of equitable Mortgage of plots bearing Nos. 56 & 63 a measuring 976 sq yds and 986 sq yds respectively covered by Sy. Nos. 57 Part, 58 P art on Black Diamond Enclave Layout at Bachpally (V) , Pragathinagar, Gram Panchayat, Qutbullapur (M), Ranga Reddy Di strict, belonging to Smt Chakkilam Raje swari and Sri Chakkilam Venkat Subramanyam.

6. The collateral Security holders shall guarantee the Corporation Medium Term Loan in their individual capacity as co-obligants

7. During the year the company has acquired a Foreign Company called Cigniti INC for a consideration of 57,00,000 Equity Shares of Rs.10/- each with premium of Rs.29/- per share towards 100% stake on preferential basis (SWAP).

8. During the year the company has acquired an Indian Company called Cigniti Software Services Private Limited for a consideration of 1,00,000 Equity Shares of Rs.10/- each with premium of Rs.29/- per share towards 100% stake on preferential bas is (SWAP).

9. The Company is engaged in the development of Computer Software and services. The production and sale of such software and services cannot be expressed in any generic unit. Hence, it is not possible to give the quantitative details of sales and the information as required under Paragraphs 3 and 4C of Part II of Schedule VI t o the Companies Act, 1956.

10. There are no dues to SSI Units outstanding for more than 30 days.

11. No confirmations were obtained from debtors/creditors as to the balances receivable from/payable to them as at year end.

12. Previous years figures have been regrouped wherever necessary.

13. The figures have been rounded off to the nearest rupee.


Mar 31, 2010

1 Particulars of Employees in accordance with Sub-section (2A) of Section 217 of the Companies Act , 1956 read with Companies (Particulars of Employees) Rule 1975.

2 The Company is engaged in the development of Computer Software and services. The production and sale of such software and services cannot be expressed in any generic unit. Hence, it is not possible to give the quantitative details of sales and the information as required under Paragraphs 3 and 4C of Part II of Schedule VI to the Companies Act, 1956.

3 There are no dues to SSI Units outstanding for more than 30 days.

4 No confirmations were obtained from debtors/creditors as to the balances receivable from/payable to them as at year end.

5 In accordance with Accounting Standard 22 (AS 22) issued by the ICAI, the Company has accounted for deferred income tax during the year. The deferred income tax provision for the current year amounts to Rs.4,07,716 towards deferred income tax Liability. (Previous year Rs.697,932/- towards deferred income tax Liability).

6 The term loans are secured against the personal guarantee of the directors.

7 Previous years figures have been regrouped wherever necessary.

8 The figures have been rounded off to the nearest rupee.

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