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Notes to Accounts of CORE Education & Technologies Ltd.

Mar 31, 2015

1. SEGMENT REPORTING:

The Company provides software development and related IT and Infrastructure services. The company has identified six business segments viz. Assessment, Governance, Learning, Teaching, Consulting & Advance Technology The accounting policies adopted for segment reporting are in line with the accounting policy of the company with following additional policies for segment reporting.

(a) Revenue and expenses have been identified as allocable to a particular segment on the basis of relationship to operating activities of the segment, Revenue and expenses which relate to enterprises as a whole and are not allocable to a particular segment on reasonable basis have been disclosed as "Unallocated Corporate Expenses".

(b) Segment assets and segment liabilities represent assets and liabilities in respective segments. Investments, tax related assets and other assets and liabilities that cannot be allocated to a segment on reasonable basis have been disclosed as "Unallocated Corporate Assets" or "Unallocated Corporate Liabilities" as the case may be.

2. EMPLOYEE STOCK OPTION SCHEME:

During the year 2007, the company had introduced CORE Employee Stock Option Scheme - 2007 in accordance with the Securities and Exchange Board of India (Employee Stock Option and Employee Stock Purchase Scheme) Guidelines, 1999. The eligibility and number of options to be granted to an employee is determined on the basis of his/her experience, seniority, designation /job title, and their performance and as approved by the Board/Remuneration and Compensation Committee.

3. REMITTANCES IN FOREIGN CURRENCY ON ACCOUNT OF DIVIDEND

The company has paid dividend in respect of shares held by Non-Residents on repatriation basis. This inter-alia includes portfolio investment and direct investment, where the amount is also credited to Non-Resident External Account (NRE A/c). The exact amount of dividend remitted in foreign currency cannot be ascertained. The total amount remittable in this respect is Nil:

4. COMMITMENTS

a) Estimated amount of contracts remaining to be executed on capital account and not provided for ' NIL /- (PY ' 500,747/-).

5. FINANCIAL AND DERIVATIVE INSTRUMENTS

a) Derivative contracts entered into by the Company and outstanding as on 31st March, 2015 For Hedging Currency & Interest Rate Risks:-

For Nominal amounts of derivative contracts entered into by the Company and outstanding as on 31st March, 2015 amount to ' NIL (PY ' NIL-)

b) Details of foreign currency exposures that are not hedged by a derivative instrument or otherwise:

Foreign currency exposure (other than foreign operation) that are not hedged as on 31st March, 2015 amount to ' 7,498,685,617/- (PY ' 6,733,939,592/-) on account of:

6. OTHER NOTES

a) Exceptional Items represents : - Investment w/off :

As per the companies estimates on valuation for the investments made in various subsidiaries there was an indication that the investment has to be impaired. Hence the company has made provision as per AS -13 for diminution in the value of Investments totaling to ' 4,052,948,378 as on 31st March 2015.

Receivables w/off

During the year, customers have raised quality issues relating to assessment and intervention segment of the products. A management committee was formed to analyses and suggest the future course of action. Customers in this segment would, generally make additional improvements on the products sold to them and further sell the upgraded/final product to their customers. During negotiations, these customers have alleged that due to defective products supplied by CORE, they have lost their contracts with reputed clients and have claimed compensation. To avoid the legal claims and disputes in future and to have continuity in overseas operations, the committee has decided to write off the receivables of ' 1,730,436,995 and settle with customers.

IPR Impairment:

During the year, management has reviewed the carrying value of it's IPR in view of the adoption of Common Core States Standard Initiative(CCSSI) in the United States of America (USA) where these assets were substantially used. The CCSSI is an education initiative in the USA that seeks to establish consistent education standards across the states as well as ensure that students graduating from high school are prepared to either two or four year college programs or enter the workforce. Prior to the CCSSI, each state had its own education standards and Company had the required resources and capability to deliver the solutions. However with the change in regulations and requirements, company has been investing in upgrading to the CCSSI to deliver the solutions consistently and as per requirement. With the CCSSI now in place, all the old products of the company that were aligned to the erstwhile State Standards have become partially redundant. Whilst the erstwhile State Standards will run parallel with the CCSSI for a few years, thus making the old products still commercially relevant, the company has, out of abundant caution, and with a conservative view, decided to fully write down these products. Management has made provision for impairment of ' 3,287,844,535 towards the carrying cost of such IPRs which has been treated as exceptional item. The IPRs aligned to CCSI are carried at cost.

(b) Going Concern:

The Company's finances continued to be under stress which is evident from decrease in sales revenue, increase in overdue trade receivables and payables, salary arrears and arrears of statutory dues, over dues (interest and repayment of borrowings) of banks, financial institutions and finance lease obligations. To mitigate the financial stress, the company has taken various steps including cost cutting exercise and opted for Corporate Debt Restructuring (CDR) plan which has been admitted and is subject to final approval from its lenders. Also, during the year a promoter company has infused ' 51,20,80,907 as an advance under the aforesaid restructuring Plan. The management is confident of approval of the restructuring package of the loans under CDR, improve the operating margins and collection from trade receivables. Despite there being possible material uncertainty in this regard, management is confident of meeting its financial obligations. and hence, these financial statements have been prepared on the basis of going concern assumption.

(c) Haryana ICT

The company had entered into a contract with the State of Haryana on 25.03.2011 to install and maintain computer labs in 2,622 schools under the ICT program. The project was completed as per the contract and the maintenance part of the contract was in operation since last couple of years. Due to various reasons, chief among them being non-receipt of payments from the State Government, the company had partially ceased to service the contract during the year. In spite of on-going negotiations taking place between the company and the State Governments to revive the project, the company received a termination order from the State on 23.04.2014 and forfeiture of bank guarantee of ' 29,50,00,000. The company filed a Special Leave Petition with the Supreme Court on 28.04.2014 and in response to which the Supreme Court granted a stay on the termination Order and forfeiture of bank guarantee for a period of 3 weeks. The stay is currently in operation. The company believes that it has strong case in this matter. Pending outcome of the legal proceedings, no adjustment has been made to the carrying value as at 31st March, 2015 of receivables of ' 74,83,19,014 and of the fixed assets of ' 100,21,44,968 at this stage, for this project.

(d) Trade receivable overdue for more than six months period includes ' 4,655,855,013 dues from customers in assessment segment. Based on the discussion with the customers, management is confident of recovering the dues. The customers have confirmed the year end balances and therefore no provision for doubtful debts is considered necessary at this stage. Out of the total Debtors of ' 4,801,085,391 debtors of ' 1,898,559,608 are receivable from the subsidiaries

(e) Company had purchased computer equipments for ICT projects on financial lease and has taken term loan from Hewlett Packard Financial Services (India) Private Limited (HPFS). During the year, a restructuring agreement has been entered into and a repayment schedule has been restructured for both finance lease and the loan as a consolidated amount. In the absence of breakup of future repayments of lease and loan, the disclosures pertaining to finance lease obligations has not been made.

(f) In the opinion of the Board of Directors, other current assets have a value on realization in the ordinary course of the company's business, which is at least to the amount at which they are stated in the balance sheet.

(g) Advances, Trade payables and few trade receivable balances are subject to confirmation and reconciliation, if any

(h) These accounts of Core Education & Technologies Ltd. include accounts of its two overseas branches.

(i) Application to RBI has been made for overseas debtors outstanding for a period of more than 1 year but the approval from RBI is pending.

(j) The FCCB redemption date was 7th May 2015 but the company has still not redeemed the FCCB

(k) Share Application money of Core Education INC is still not converted into equity shares for more than 1 year. The Company is in the process of making application to RBI for the approval of the same

(l) Previous year's figures have been regrouped / reclassified wherever necessary to correspond with the current year's classification / disclosure.


Mar 31, 2014

I) Option on Unissued Share Capital

a. 4,500,000 Equity Shares are reserved for allotment of equity shares under Core Employee Stock Option Scheme 2007. Out of this, 532,002 (PY 532,002) equity shares have been issued and allotted to the employees against exercise of Options under Core ESOS 2007.

b. 7,500,000 Equity Shares are reserved for allotment of equity shares under Core Employee Stock Option Scheme 2009. Out of this, 1,010,634 (PY 1,010,634) equity shares have been issued and allotted to the employees against exercise of Options under Core ESOS 2009.

c. Refer Note 3.4 for option vested on share capital in respect of foreign currency convertible bonds.

ii) Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs. 2/- per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend, if any, proposed by the Board of Directors is subject to the approval of shareholders in the ensuing Annual General Meeting.

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

1 Term Loans comprising of:

(a) Rs. 458242,136 (PY. Rs. 490,973,717 ) is secured by way of an exclusive charge on the project assets and project receivables.

(b) Rs. 79,305,158 (PY. Rs. 85,436,786 ) is secured by an exclusive charge on the assets to be created under the Gujarat school project.

(c) Rs. 264,704,800 (PY. Rs. 264,704,800) is secured by first exclusive charge on its property at Mahape, Navi Mumbai (CORE Knowledge Centre), measuring 38,300 square feet.

(d) Rs. 282,000,000 (PY. Rs. 329,000,000 ) is secured by equitable mortgage over its properties located at units No. 1 and 1A, 2nd and 5th Floor, Plot No. 797, United Infotech Park Building, Trans Thane Creek Industrial Area, Savli Village, Opposite Millennium Business Park, Mahape, Navi Mumbai.

(e) Rs. 1,201,996,000 (PY. Rs. 1,087,786,000 ) is secured by a first pari passu charge and mortgage over its properties located at Office Nos. 1 to 7, 10th Floor, Lotus Nilkamal Business Park, New Link Road, Andheri, Mumbai, a first pari passu charge over all movable assets of and project receivables from the ICT project at Haryana and the non-interest bearing escrow account maintained by Standard Chartered Bank, Delhi branch.

(f) Rs. 1,813,637 (PY. Rs. 4,915,516 ) is secured by hypothecation of respective vehicles.

(g) Finance lease obligations are secured against lease assets.

(h) Rs. 1,184,444,348 (PY. Rs.1,300,000,000) secured against pledge of shares.

(i) Rs. 315,789,472 (PY.Rs. 378,947,368) secured against Gujarat ICT receivables.

2 In the year the Company had issued foreign currency convertible bonds of USD 75 million which matures on 7th May, 2015. The intial conversion price of the said bonds was fixed at 10% premium over the reference share price of Rs. 247.09 calculated in accordance with the applicable rule and regualtions governing the issue, issued by the Reserves Bank of India and the SEBI in this regards and, which works out to Rs. 271.80 the fix exchange rate for the issue was USD 1 = 44.43.

During the year 2010-11 to 2012-13 FCCB of USD 26.07 million were converted into 4,995,987 equity shares at the conversion price of Rs. 271.80 comprising face value of Rs. 2/- and premium of Rs. 269.80 for each equity share as on 31st March, 2014 USD 48,937 million bonds are outstanding for conversion.

3 Working Capital Loan and other short term loan are Secured by hypothecation of entire stocks, book debts and other current assets of the Company (present and future); further secured by equitable mortgage on the immovable properties of the company situated at Unit No.: 1 to 8, Sector III, Building No.: 4, Millennium Business Park, Navi Mumbai and Unit No. 1, 4th floor, United Infotech Park, TTC Industrial Area, Navi Mumbai; and further secured by immovable properties of the Company situated at a) 10th floor, Lotus Neelkamal Business park, Near Fun Republic, Off Andheri Link Road, Andheri (W). b) Unit No. 1, 1st Flr, United Infotech Park, (CKC), Plot No. R-797, Navi Mumbai c) Unit No. 1, 3rd Flr, United Infotech Park, (CKC), Plot No. R-797, Navi Mumbai, d) Land admeasuring 50 acres situated at Hyderabad.

Unsecured other short-term loan of Rs. 850,000,000 (Previous year Rs. 850,000,000) is secured by the shares of the Company held by promoters.

4 Micro and Small Entities

The particulars required to be disclosed under the Micro, Small and Medium Enterprises Act, 2006 (MSMED Act) in respect of principal amount remaining unpaid to any supplier as at the end of the year, amount due to the suppliers beyond the appointed day during the year, amount of interest if any, accrued and remaining unpaid as at the end of the year etc. could not be disclosed for want of information whether sundry creditors include dues payable to any such undertakings. The Company has initiated the exercise of identifying the status of the suppliers as required under MSMED Act where supplier confirmations are awaited.

Disclosure in respect of significant related party transaction during the year.

1 Purchase/Subscription of Investments includes Rs. 9,459,070 (Previous Year -Rs. 7,882,066,028) in CORE Education and Consulting Solutions Pte Ltd., Rs. 12,405,760 (Previous Year Rs. 401,594,155) CORE Project FZE, Rs. 45,350,800 (Previous Year Rs. 1,670,337,345 in CORE Information Technology Solutions Inc. USA.

2 Rs. 2,057,092,049 (Previous Year Nil) received from CORE Education Consulting Solution Inc towards Share Application Money.

3 Loan repaid Rs. 26,383,941 (Previous Year Rs. 251,292,194) of CORE UK Limited, Rs. 299,1 19,757 loan given (Previous Year Rs. 434,684,213 of CORE Education and Consulting Solutions Inc., Loan given of Rs. 32,613,156 (Previous Year Nil) to CORE Education Technologies Inc., Loan repaid Rs. 71,541,443 (Previous Year Nil) from CORE Education Technologies Inc., Loan repaid Rs. 157,157,259 (Previous year Nil) and loan taken Rs. Nil (Previous Year Rs. 9,698,400) of Wisdom Global Export Pte Ltd., Loan given Rs. 124,054,672 (Previous Year Nil) to Core Education Infratech Ltd. and repaid includes Rs. Nil (Previous year Rs. 28,568), Loan taken Rs. 83,132,959 (Previous Year Nil) from Aarman Software Pvt. Ltd., Loan taken Rs. 244,642,500 (Previous Year Rs. 31,462,944) from Core Infrapower Limited, Loan taken Rs. 246,203,700 (Previous Year Rs. 600,059,480) from Wisdom Global Enterprises Limited.

4 Income from Operations includes export of software developed of Rs. 1,181,327,493 (previous year Rs. 2,526,878,406) to Core Education & Consulting Solution Inc. USA.

5 Interest Income represents income from Core Education & Consulting Solution Inc. USA Rs. Nil (Previous year Rs. 463,788,189).

6 In Payment to Key Management Personnel includes Rs. 5,000,004 to Mr. Nikhil Morsawala ( Previous Year Rs. 5,000,004), Rs. 4,078,887 to Ms Maya Sinha (Previous Year Rs. 15,000,000), Rs. 1,955,556 to Prof. Arun Nigavekar ( Previous Year Rs. 3,480,000) and Rs. 4,800,000 to Mr Naresh Sharma (Previous Year Rs. 4,800,000).

7 Rent paid to Relatives of Key Managerial person Mrs. Neelam Mansotra amounts to Rs. 3,600,000 (Previous year Rs. 3,600,000).

8 Advance taken from Promotor Contribution Rs. 991,631,540.

CONTINGENT LIABILITIES:

(Amount in Rs.) For the year ended For the year ended 31st March, 2014 31st March, 2013

Guarantees:

Bank Guarantees 546,816,815 1,428,618,390

Corporate Guarantee given on behalf of Core Education & Consulting Inc. USA & Core 5,643,039,710 5,106,855,261 Education & Consulting Inc. U K a wholly owned subsidiary Company

Total 6,189,856,525 6,535,473,651

Based on the award, the Company started work on these projects. The company was unable to achieve financial closure for these projects. As a result, the projects were left incomplete and consequently the contracts were terminated by the respective State Governments. Since implementation had already commenced and was in progress, the Company had already incurred a expenditure of Rs. 614,598,31 1 for this partial implementation. On the termination of the contract, the Company had to write off the expenditure incurred on these projects. Also, the bank guarantees of Rs. 131,376,081 given for these projects has been invoked by the respective State Governments which has been charged off as project expenses written off.

Receivables w/off

During the year, customers have raised quality issues relating to assessment and intervention segment of the products. A management committee was formed to analyise and suggest the future course of action. Customers in this segment would, generally make additional improvements on the products sold to them and further sell the upgraded/final product to their customers. During negotiations, these customers have alleged that due to defective products supplied by CORE, they have lost their contracts with reputed clients and have claimed compensation. To avoid the legal claims and disputes in future and to have continuity in overseas operations, the committee has decided to write off the receivables of Rs. 1,769,918,589 and settle with customers.

IPR Impairment

During the year, management has reviewed the carrying value of it''s IPR in view of the adoption of Common Core States Standard Initiative(CCSSI) in the United States of America (USA) where these assets were substantially used. The CCSSI is an education initiative in the USA that seeks to establish consistent education standards across the states as well as ensure that students graduating from high school are prepared to either two or four year college programs or enter the workforce. Prior to the CCSSI, each state had its own education standards and Company had the required resources and capability to deliver the solutions. However with the change in regulations and requirements, company has been investing in upgrading to the CCSSI to deliver the solutions consistently and as per requirement. With the CCSSI now in place, all the old products of the company that were aligned to the erstwhile State Standards have become partially redundant. Whilst the erstwhile State Standards will run parallel with the CCSSI for a few years, thus making the old products still commercially relevant, the company has, out of abundant caution, and with a conservative view, decided to fully write down these products. Management has made provision for impairment of Rs. 129,15,27,671 towards the carrying cost of such IPRs which has been treated as exceptional item. The IPRs aligned to CCSI are carried at cost.

(b) Going Concern

"The Company''s finances continued to be under stress which is evident from decrease in sales revenue, increase in overdue trade receivables and payables, salary arrears and arrears of statutory dues, over dues (interest and repayment of borrowings) of banks, financial institutions and finance lease obligations. To mitigate the financial stress, the company has taken various steps including cost cutting exercise and opted for Corporate Debt Restructuring (CDR) plan which has been admitted and is subject to final approval from its lenders. Also, during the year a promoter company has infused Rs. 512,080,907 as an advance under the aforesaid restructuring Plan. The management is confident of approval of the restructuring package of the loans under CDR, improve the operating margins and collection from trade receivables. Despite there being possible material uncertainty in this regard, management is confident of meeting its financial obligations. and hence, these financial statements have been prepared on the basis of going concern assumption.

(c) Haryana ICT

"The Company had entered into a contract with the State of Haryana on 25.03.2011 to install and maintain computer labs in 2,622 schools under the ICT program. The project was completed as per the contract and the maintenance part of the contract was in operation since last couple of years. Due to various reasons, chief among them being non-receipt of payments from the State Government, the Company had partially ceased to service the contract during the year. In spite of on-going negotiations taking place between the company and the State Governments to revive the project, the Company received a termination order from the State on 23.04.2014 and forfeiture of bank guarantee of Rs. 295,000,000. The Company filed a Special Leave Petition with the Supreme Court on 28.04.2014 and in response to which the Supreme Court granted a stay on the termination Order and forfeiture of bank guarantee for a period of 3 weeks. The stay is currently in operation. The company believes that it has strong case in this matter. Pending outcome of the legal proceedings, no adjustment has been made to the carrying value as at 31st March, 2014 of receivables of Rs. 748,319,014 and of the fixed assets of Rs. 1,002,144,968 at this stage, for this project.

(d) Trade receivable overdue for more than six months period includes Rs. 1,379,392,375 dues from customers in assessment segment. Based on the discussion with the customers, management is confident of recovering the dues. The customers have confirmed the year end balances and therefore no provision is considered necessary at this stage.

(e) Company had purchased computer equipments for ICT projects on financial lease and has taken term loan from Hewlett Packard Financial Services (India) Private Limited (HPFS). During the year, a restructuring agreement has been entered into and a repayment schedule has been restructured for both finance lease and the loan as a consolidated amount. In the absence of breakup of future repayments of lease and loan, the disclosures pertaining to finance lease obligations has not been made.

(f) In the opinion of the Board of Directors, other current assets have a value on realisation in the ordinary course of the company''s business, which is at least to the amount at which they are stated in the balance sheet.

(g) Advances, Trade payables and few trade receivable balances are subject to confirmation and reconciliation, if any.

(h) These accounts of Core Education & Technologies Ltd. include accounts of its two overseas branches.

(i) Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification/disclosure.


Mar 31, 2013

1 - EMPLoYEE STocK oPTion ScHEME :

During the year 2007, the Company had introduced CORE Employee Stock Option Scheme – 2007 in accordance with the Securities and Exchange Board of India (Employee Stock Option and Employee Stock Purchase Scheme) Guidelines, 1999. The eligibility and number of options to be granted to an employee is determined on the basis of his/her experience, seniority, designation/job title, and their performance and as approved by the Board/Remuneration and Compensation Committee.

2 - rEMiTTAncES in ForEiGn cUrrEncY on AccoUnT oF DiviDEnD

The Company has paid dividend in respect of shares held by Non-Residents on repatriation basis. This inter-alia includes portfolio investment and direct investment, where the amount is also credited to Non-Resident External Account (NRE A/c). The exact amount of dividend remitted in foreign currency cannot be ascertained. The total amount remitable in this respect is given herein below:

3 - coMMiTMEnTS

a) Estimated amount of contracts remaining to be executed on capital account and not provided for Rs. 878,315,655 (P.Y. Rs. 90,941,865).

4 - conTinGEnT LiABiLiTiES:

(Amount In Rs.)

Particulars As at As at 31st March, 2013 31st March, 2012

Guarantees:

Bank Guarantees 1,428,618,390 570,612,151

Corporate Guarantee given on behalf of Core Education & Consulting Inc. USA, a wholly owned 4,182,237,159 1,304,490,750

subsidiary Company

Total 5,610,855,549 1,875,102,901

b) The income tax assessment of the company have been completed up to Assessment year 2010-11. The disputed demand outstanding up to the said Assessment year is Rs. 33,30,924. Based on the decisions of the appellate authorities and the interpretations of other relevant provisions, the company has been advised that the demand is likely to be either quashed or substantially reduced and accordingly no provision has been made.

5 - oTHEr noTES

(a) In the opinion of the Board of Directors, other current assets have a value on realization in the ordinary course of the Company''s business, which is at least to the amount at which they are stated in the Balance Sheet.

(b) All advances, receivables and payables are subject to confirmation and reconciliation, if any.

(c) These accounts of Core Education & Technologies Ltd. include accounts of its two overseas branches.

(d) During the year, company restructured it''s investments in wholly owned subsidiaries. The investment comprising of 10,00,000 common shares and 12,19,63,300 preferred stock of Core Education & Consulting Solutions, Inc., USA and 10,00,000 common shares and 97,58,732 preferred stock of Core Education & Consulting Solutions (UK) Ltd., UK were transferred to wholly owned subsidiary Core Education & Consulting Solution Pte Ltd., Singapore. In lieu of transfer the Core Eductation & Consulting Solution Pte Ltd, Singapore has issued 25,88,394 common shares and 13,74,40,765 preferred stock to the company, which have been stated at fair value based on the valuation report dated 5th March, 2012 of M/s. P. Murali & Co.

(d) Previous year''s figures have been regrouped/reclassified wherever necessary to correspond with the current year''s classification/disclosure.

 
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