Mar 31, 2014
1. Corporate Information
(Refer to Note No. 1 of the standalone financial statements)
Infotech Enterprises Limited (''Infotech'' or ''the Company'') is engaged in providing global technology services and solutions specialising in geospatial, engineering design and IT solutions. The Company has its headquarters and development facilities in India and serves a global customer base through its subsidiaries in United States of America (USA), United Kingdom (UK), Germany, Japan and India. Infotech''s range of services include digitisation of drawings and maps, photogrammetry, computer aided design/engineering (CAD/CAE), design and modelling, repair development engineering, reverse engineering application software development, software products development, consulting and implementation. Infotech specialises in software services and solutions for the manufacturing, utilities, telecommunications, transportation & logistics, local government and financial services markets.
Notes and references included in the abridged financial statements are extracted from the standalone financial statements.
2. Related Party Transactions
(Refer to Note No.30 of the standalone financial statements)
Note: The Board of Directors on December 07, 2012 approved the increase in remuneration payable to the Chief Operating Officer effective April 01, 2012 to not exceed Rs.12,000,000 per annum for the first year and the remuneration may progressively go up with a contingent 25% hike thereon each year for the next five years, as per industry trends and practices and an additional variable salary of 30% to 50% of his cost to Company based on his key performance indicators agreed at the beginning of the financial year. The members of the Company approved the increase by passing a special resolution on January 14, 2013. Pending Central Government approval, no payment was made for the increase in remuneration. The remuneration paid during the year is based on the existing approval from the Central Government vide its approval dated October 27, 2010.
As at March 31, 2014, the Company did not receive the said approval from the Central Government. Consequently, the provision made earlier for the increased remuneration of Rs. 7,440,000 has been reversed in the financial statements as at March 31, 2014.
3. Earnings Per Share (EPS)
4. Segment Information
(Refer to Note No.29 of the standalone financial statements)
Segment information has been presented in the Consolidated Financial Statements as permitted by Accounting Standard (AS 17) on Segment Reporting as notified under the Companies (Accounting Standards) Rules, 2006.
5. Associate Stock Option Plans
(Refer to Note No. 36 of the standalone financial statements)
Infotech Employee Stock Offer Scheme 1999 (ESOP Plan)
In 1998-99, the Company set up ESOP plan and allotted 80,900 equity shares of Rs. 10 each at a premium of Rs. 100 per share to the Infotech ESOP trust. The trust on recommendation of management and upon receipt of full payment upfront transfers the equity shares in the name of the selected employees. The Company modified the ESOP Plan and adjusted the number of options and exercise price on account of bonus issue and stock split cum bonus issue during 2002-03, 2006-07 and 2010-11 respectively.
Associate Stock Option Plans (ASOP Plan)
The company currently has three ASOP plans - ASOP 2002, ASOP 2004 and ASOP 2008. Under each of these schemes, options will be issued to employees at an exercise price which shall not be less than the market price on the date of the grant. These options vest over a period ranging from one to three years from the date of grant, starting with 10% at the end of the first year, 15% at the end of one and half years, 20% after two years, 25% at the end of two and half years and 30% at the end of the third year.
Mar 31, 2011
1. Description of Business
(Refer to Note No. 1 of Schedule 15 of the annual standalone financial statements)
The Company is engaged in providing global technology services and solutions specialising in geospatial, engineering design and IT solutions. Infotech Enterprises Limited (hereinafter referred to as 'Infotech') has its headquarters and development facilities in India and serves a global customer base through its subsidiaries in United States of America (USA), United Kingdom (UK), Germany, Japan and India. The Company's range of services include digitisation of drawings and maps, photogrammetry, computer aided design/engineering (CAD/CAE), design and modelling, repair development engineering, reverse engineering application software development, software products development, consulting and implementation. Infotech specialises in software services and solutions for the manufacturing, utilities, telecommunications, transportation & logistics, local government and financial services markets.
Mar 31, 2010
1. Basis for Preparation of Financial Statements
The Financial Statements are prepared under the historical cost convention on an accrual basis of accounting in accordance with the generally accepted accounting principles ("GAAP"), Accounting standards notified under Section 211(3C) and other relevant provisions of the Companies Act, 1956 and in conformity with guide lines issued by Securities and Exchange Board of India (SEBI) from time to time.
2. Use of Estimates
The preparation of financial statements in conformity with the GAAP requires management to make estimates that affect the reported amounts of assets and liabilities and disclosure relating to contingent liabilities as at the date of the financial statements and the reported amounts of income and expenditure during the reported year. Examples include provisions for doubtful debts, employee benefits, provision for income taxes, the useful lives of depreciable assets and provisions for impairment.
Accounting estimates could change from period to period. Appropriate changes in estimates are made as the management becomes aware of changes in circumstances surrounding the estimates. The effects of changes in accounting estimates are reflected in the financial statements in the period in which changes are made and, if material, their effects are disclosed in the notes to the financial statements.
3. Revenue Recognition
Revenue recognition depends on the arrangements with the customers which are either on "Time and material" or on a "Time bound fixed-price" basis.
Revenue from software services performed on a "time and material" basis is recognised as and when services are performed.
The Company also performs work under "Time bound fixed-price" arrangements, under which customers are billed, based on completion of specified milestones and/ or on the basis of man-days/man hours spent as per terms of the contracts. Revenue from such arrangements is recognised over the life of the contract using the percentage of completion method. The cumulative impact of any revision in estimates of the percentage of work completed is reflected in the year in which the change becomes known. Provision for estimated losses on such engagements is made in the year in which such loss becomes probable and can be reasonably estimated.
Amounts received or billed in advance of services performed are recorded as unearned revenue. Unbilled revenue, disclosed under loans and advances, represents amounts recognised based on services performed in advance of billings in accordance with contract terms.
Income from interest is stated at gross and recognised on a time proportion basis taking into account the amount outstanding and rate applicable in the transaction.
Dividend income is recognised when the Companys right to receive dividend is established.
Revenues from the sale of equipment are recognised upon delivery, which is when title passes to the customer.
Revenues from fixed-price maintenance contracts are recognised pro-rata over the period of the contract in which the services are rendered.
Reimbursement of expenditure is recognised under revenue along with recognition of sale of service to which it relates.
4. Fixed assets, intangible assets and capital work-in- progress
Fixed Assets are stated at actual cost, less accumulated depreciation and impairment, if any. The actual cost capitalised comprises material cost, inward freight, installation cost, duties and taxes and other incidental expenses incurred to acquire/construct/install the assets.
The cost and the accumulated depreciation for fixed assets sold, retired or otherwise disposed off are removed from the stated values and the resulting gains and losses are included in the profit and loss account.
Capital work-in-progress comprises outstanding advances paid to acquire fixed assets, and the cost of fixed assets that are not yet ready for their intended use at the reporting date.
Intangible assets are recorded at the consideration paid for acquisition of such assets and are carried at cost less accumulated amortisation and impairment, if any.
5. Depreciation and amortisation
Depreciation on fixed assets is provided on the straight- line method over their estimated useful lives at the rates which are higher than the rates prescribed under Schedule XIV of the Companies Act, 1956. Individual assets acquired for less than Rs. 5,000 are fully depreciated in the year of acquisition.
The estimated useful lives are as follows:
Estimated Useful Lives
Building 28 years
Computers and Software 3 years
Plant and Machinery 10 years
Office Equipment 10 years
Furniture and Fixtures 10 years
Electrical Installation 10 years
Vehicles 5 years
Leasehold Improvements Shorter of lease period or
estimated useful lives
Costs of software purchased for use in the projects are depreciated over the estimated useful life or over the period of the project whichever is lower.
Investments are either classified as current or long-term based on Managements intention at the time of purchase. Current investments comprising investments in mutual funds are carried at the lower of cost and fair value. Cost for overseas investments comprises the Indian rupee value of the consideration paid for the investment translated at the exchange rate prevalent at the date of investment. Provision is made to recognise any reduction in the carrying value and any reversal of such reduction is credited to profit and loss account.
Long-term investments are carried at cost, and provision is made to recognise any decline, other than temporary, in the value of such investment.
7. Research and development
Revenue expenditure incurred on research and development is expensed as incurred. Assets used for research and development activities are included in fixed assets.
8. Foreign currency transactions
Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of transaction and exchange differences arising from foreign currency transactions are recognised in the profit and loss account. Monetary assets and liabilities denominated in foreign currency are translated at the rates of exchange at the balance sheet date and resultant gain or loss is recognised in the profit and loss account. Non-monetary assets and liabilities are translated at the rate prevailing on the date of transaction.
The operations of foreign branches of the company are of integral in nature and the financial statements of these branches are translated using the same principles and procedures of head office.
The company uses foreign exchange forward contracts to hedge its exposure to movements in foreign exchange rates. The use of these foreign exchange forward contracts reduces the risk or cost to the company and the company does not use those for trading or speculation purposes.
In case of forward exchange contract or any other financial instruments that is in substance a forward exchange contract to hedge the foreign currency risk, the premium or discount arising at the inception of the contract is amortized as expense or income over the life of the contract. Exchange differences on such forward exchange contract are recognised in the statement of profit and loss in the reporting period in which the exchange rates change.
Gain/Loss on settlement of transaction arising on cancellation or renewal of such a forward exchange contract is recognised as income or as expense for the period.
All other derivative exchange contract are valued on a mark to market basis and any gain or loss on mark to market changes on settlement is recognised in the profit and loss account.
9. Retirement benefits
Contributions in respect of Employees Provident Fund and Pension Fund are made to a fund administered and managed by the Government of India and are charged as incurred on accrual basis.
Contributions under the superannuation plan are made to a fund administered and managed by the Life Insurance Corporation of India and are charged as incurred on accrual basis.
The employees of the Company are entitled to compensated absence. The employees can carry-forward a portion of the unutilised accrued compensated absence and utilise it in future periods or receive cash compensation at retirement or termination of employment for the unutilised accrued compensated absence. The Company records an obligation for compensated absences in the period in which the employee renders the services that increase this entitlement. The Company measures the expected cost of compensated absence based on actuarial valuation made by an independent actuary as at the balance sheet date on projected unit credit method.
The Company also provides for other retirement benefits in the form of gratuity based on actuarial valuation made by an independent actuary as at the balance sheet date based on projected unit credit method.
10. Income taxes
Income taxes are accrued in the same period that the related revenue and expense arise. The Company operates as Export Oriented Unit ("EOU") and enjoys tax exemptions u/s 10A of Income Tax Act, 1961. A provision is made for income tax annually, based on tax liability computed, after considering tax allowances and exemptions. Tax expense for a year comprises of current tax and deferred tax.
Current income tax expense comprises taxes on income from operations in India and in foreign jurisdictions. Income tax payable in India is determined in accordance with the provisions of the Income Tax Act, 1961. Tax expense relating to foreign operations is determined in accordance with tax laws applicable in countries where such operations are domiciled.
Deferred tax assets and liabilities are recognised for the future tax consequences attributable to timing differences that result between the profit offered for income taxes and the profit as per the financial statements by each entity in the Company.
Deferred taxes are recognised in respect of timing differences which originate during the tax holiday period but reverse after the tax holiday period.
The tax effect is calculated on the accumulated timing differences at the end of an accounting period based on enacted or substantively enacted regulations. Deferred tax assets, other than those relating to unabsorbed depreciation and carry forward business loss, are recognised only if there is reasonable certainty that they will be realized and are reviewed for the appropriateness of their respective carrying values at each reporting date.
MAT paid in accordance with the tax laws, which gives rise to future economic benefits in the form of tax credit against future income tax liability, is recognised as an asset in the balance sheet.
11. Operating Lease
Lease rentals in respect of assets taken under operating leases are charged to profit and loss account on a straight line basis over the lease term
12. Warranty cost
The Company accrues the estimated cost of warranties at the time when the revenue is recognised. The accruals are based on the Companys historical experience of rework hours and service delivery costs.
13. Earnings per share (EPS)
The earnings considered in ascertaining the Companys EPS comprises the net profit after tax and includes the post tax effect of any extra ordinary items. The number of shares used in computing Basic EPS is the weighted average number of shares outstanding during the year. The number of shares used in computing Diluted EPS comprises of weighted average shares considered for deriving Basic EPS, and also the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. Dilutive potential equity shares are deemed converted as of the beginning of the year, unless they have been issued at a later date. The diluted potential equity shares have been adjusted for the proceeds receivable had the shares been actually issued at fair value (i.e., average market value of the outstanding shares). The number of shares and potentially dilutive shares are adjusted for share splits/ reverse share splits and bonus shares, as appropriate.
14. Employee Stock Options
Stock options granted to the associates of the company and its subsidiaries under various Stock Option Schemes established after June 19, 1999 are evaluated as per the accounting treatment prescribed under SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines 1999 issued by Securities Exchange Board of India.
The exercise price is the market price as defined in the SEBI Guidelines from time to time. i.e. market price equals the latest available closing price, prior to the date of the meeting of the Board of Directors in which options are granted/shares are issued, on the stock exchange on which the shares of the company are listed. If the shares are listed on more than one stock exchange, then the stock exchange where there is highest trading volume on the said date is considered. This methods results in following of Intrinsic Value method under which no deferred employee compensation is charged to profit and loss account.
15. Impairment of assets
At each balance sheet date, the management reviews the carrying amounts of its assets to determine whether there is any indication that those assets were impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of impairment loss. Recoverable amount is the higher of an assets net selling price and value in use. In assessing value in use, the estimated future cash flows expected from the continuing use of the asset and from its disposal are discounted to their present value using a pre-tax discount rate that reflects the current market assessment of time value of money and the risk specific to the asset.
Reversal of impairment loss is recognised immediately as income in the profit and loss account.
16. Provisions and contingencies
The company creates a provision if there is a present obligation as a result of past events, the settlement of which results in an outflow economic benefits and a reliable estimate can be made of the amount of obligation. Provisions are determined by the best estimate of the outflow of economic benefits required to settle the obligation at the reporting date. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that probably will not require an outflow of resources or where a reliable estimate of the obligations cannot be made.
17. Cash and cash equivalents
The Company considers all highly liquid financial instruments, which are readily convertible into cash and have original maturities of three months or less from the date of purchase, to be cash equivalents.