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Notes to Accounts of Datamatics Global Services Ltd.

Mar 31, 2015

1 COMPANY OVERVIEW

Datamatics Global Services Limited (DGSL) was incorporated on November 3, 1987 as Interface Software Resources Private Limited. The name of the Company was changed to Datamatics Technologies Private Limited on December 18, 1992 . On December 27, 1999, the Company converted itself from a Private Limited Company into a Public Limited Company and the name of the Company was changed to Datamatics Technologies Limited on January 13, 2000. The name of the Company was changed from "Datamatics Technologies Limited" to "Datamatics Global Services Limited" (DGSL) with effect from January 17, 2009.

Datamatics, a trusted partner to several Fortune 500 Companies is a global provider of Information Technology (IT) and Business Process Outsourcing (BPO) and Consulting services. The Company provides business aligned next-generation solutions to a wide range of industry verticals that help enterprises across the world overcome their business challenges and achieve operational efficiencies. These solutions leverage innovations in technology, knowledge of business processes, and domain expertise to provide clients a competitive edge.

a) Rights, preferences and restrictions attached to shares

Equity Shares: The Company has one class of equity shares having a par value ofRs. 5 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding. The Board of Directors, in their meeting held on May 27, 2015 proposed a Final Dividend of' 0.65 per equity share. The proposal is subject to the approval of shareholders at the Annual General Meeting to be held on August 28, 2015. The total dividend appropriation for the year ended March 31,2015 amounted to Rs. 58,949,337 and corporate dividend tax ofRs. 8,032,881.

2 Contingent Liability and Commitments:

Provision is made in the accounts if it becomes probable that an outflow of resources embodying economic benefits will be required to settle the obligation.

Contingent Liabilities to the extent not provided for:

March 31, 2015 March 31, 2015

(a) Claims against the Company not acknowledged as debt:

(i) Income Taxmatters - 493,418

(ii) Sales Tax matters 5,074,525 5,074,525

(b) Details of guarantees and sureties outstanding as at:

(i) Guarantees given by Banks to Embassy Centre Premises Co-operative 425,930 425,930

Society Ltd.

(ii) Guarantees given by Banks to the Assistant Commissioner of Central 421,875 800,875

Excise and Customs department

(iii) Guarantees given by Banks to UNFCCC, BONN, Germany for Euro - 6,118,000 84,398.70

(iv) Guarantees given by Banks to Directorate of Information Technology 630,000 2,720,000

(v) Guarantees given by Banks to Chief Accounts Officer, Aurangabad 1,052,000 1,052,000

Municipal Corporation.

(vi) Guarantees given by Banks to Navi Mumbai Municipal Corporation - 330,000

(vii) Guarantees given by Banks to The Tender Manager, NICSI 500,000 500,000

(viii) Guarantees given by Banks to Senior Accounts Officer, Electricity - 785,840

Department Puducherry

(ix) Guarantees given by Banks to The Municipal Commissioner Greater - 2,103,379 Mumbai

(x) Corporate guarantees provided to Banks against credit facilities extended 191,750,000 262,752,500 to Subsidiaries

(xi) Guarantees given by Banks to United Nations 250,000 -

(c) Capital and other commitments:

(i) Estimated amount of contracts on capital account remaining to be executed - - and not provided for (net of advances)

3 The Company in accordance with its risk management policies and procedures, enters into foreign currency forward contracts to manage its exposure in foreign exchange rates. The counter party is generally a bank. The foreign exchange forward contracts mature within a period of one month and two years.

The table below analyzes the derivative financial instruments into relevant maturity groupings based on the remaining period as of the Balance Sheet date:

Net profit / (loss) on derivative instruments ofRs. 72,200,467 (P.Y. Rs. (5,365,654)) recognised in Hedging reserve as of March 31, 2015, is expected to be reclassified to the statement of profit and loss by March 31,2017. The foreign currency exposures that are not hedged by a derivative instrument or otherwise is Rs. Nil (P.Y. Rs. 703,495,380).

The Company has applied the principles of Cash Flow Hedge Accounting as per Accounting Standard (AS) - 30, Financial Instrument: Recognition and Measurement, along with limited revision to other accounting standards, issued by The Institute of Chartered Accountants of India. AS-30, along with limited revision to the other accounting standards, have not currently been notified by the National Advisory Council for Accounting Standard (NACAS) pursuant to the Companies(AS) rules, 2006 as persection 211(3C)ofthe Companies Act, 1956.

4 In the opinion of the Company, the Current Assets, Loans and Advances are approximately of the value stated, if realized in the ordinary course of business. The provision for all known Liabilities and for Depreciation is adequate and not in excess of the amount reasonably necessary.

5 The Company has received confirmations from few Trade receivables, Other receivables and for majority of loans and advances. Remaining Trade receivables, Other receivables, Trade payables and loans and advances are subject to confirmation and reconciliation, and consequent impact if any will be adjusted as and when determined.

Note:

Provision towards liability for Leave Encashment made on the basis of actuarial valuation as per Accounting Standard 15 (Revised). Actuarial value liability is Rs. 24,804,099 (P.Y. Rs. 21,679,738) based upon following assumptions:

6 The Management Information System of the Company identifies and operates in a single primary business segment. In the opinion of the management these activities are governed by the same set of risk and returns as perAS-17 dealing with segmental reporting. All the assets of the Company are located in India and hence secondary segmental reporting is on the basis of the geographical location of customers.

Performance of Business Segment is as follows:

Fixed assets in India used in the Company's business or liabilities contracted in India cannot be identified to any geographical segment as the fixed assets and services are used interchangeably between geographical segments and a meaningful segregation is not possible.

7 Related party disclosures:

(i) As per Accounting Standard 18, as notified by the rules the disclosures of Related Parties and transactions during the year as deemed in the Accounting Standard are given below:

(A) Subsidiary Companies Datamatics Global Services Inc.

Datamatics Global Services GmbH Datamatics Technologies UK Ltd.

Datamatics Software Services Ltd.

Datamatics Global Technologies Ltd.

Datamatics Global Technologies AG Datamatics Infotech Ltd.

Datamatics Global Services Pty. Ltd.

Datamatics Global Technologies GmbH (Stepdown Subsidiary)

Datamatics Global Holding Corp. (Stepdown Subsidiary) (Dissolved w.e.fMarch 23, 2015)

Cignex Datamatics Corporation (Stepdown Subsidiary)

Cignex Datamatics Technologies Ltd. (Stepdown Subsidiary)

Datamatics Vista Info Systems Ltd. (Stepdown Subsidiary)

Cybercom Datamatics Information Solutions Ltd.

Cignex Datamatics Inc. (USA) (Stepdown Subsidiary)

Cignex Datamatics Inc. (Michigan) (Stepdown Subsidiary) (Incorporated on December 30, 2014)

Cignex Datamatics Pte. Ltd. (Stepdown Subsidiary)

Cignex Datamatics GmbH (Stepdown Subsidiary) (Incorporated on April 4, 2014)

Cignex Technologies Ltd. (Stepdown Subsidiary) (Dissolved w.e.f July 30, 2013)

Datamatics Global Solutions GmbH (Stepdown Subsidiary)

Lumina Datamatics Ltd. (Formerly known as Lexicon Publishing Services Pvt. Ltd.)

Datamatics Global Services FZ-LLC

Lumina Datamatics Inc. (Formerly known as Premedia Global Inc.) (Stepdown Subsidiary)

Lumina Datamatics GmbH (Formerly known as Datamatics eRetail & Publishing GmbH) (Stepdown Subsidiary)

(B) Key Managerial Personnel

Dr. Lalit S. Kanodia Mr. Rahul L. Kanodia Mr. VidurV. Bhogilal Mr.Sameer L. Kanodia Ms. Divya Kumat

(C) Relatives of Key Managerial Personnel and Enterprise owned by Key Managerial Personnel

Mrs. Asha L. Kanodia

Mrs. Priyadarshini R. Kanodia

Datamatics Staffing Services Ltd.

Datamatics Employees Welfare Trust Datamatics Financial Services Ltd.

Amon Technologies Pvt. Ltd.

Anemone Management Consultancy Pvt. Ltd.

Datascan Services

(D) Holding Company

Delta Infosolutions Pvt. Ltd.

8 The Company's significant leasing arrangements are mainly in respect of residential and office premises. The aggregate lease rentals payable on these leasing arrangements are charged as rent under "Other Expenses" in Note 25. These leasing arrangements are for a period not exceeding five years and are in most cases renewable by mutual consent, on mutually agreeable terms.

Future lease rentals payable in respect of residential and office premises:

9 The Company has Outstanding Working Capital Loan / Advance of Rs. 257,720,363 (P.Y. Rs. 195,043,438) to its subsidiary Datamatics Software Services Limited at a interest rate of 8% p.a. as on March 31, 2015.

10 EMPLOYEE STOCK OPTION SCHEME:

The Datamatics Employees Welfare Trust (Trust) had purchased 1,753,261 shares of Company for granting stock options to the employees. The purchases are financed by loans from the Company. Amount recoverable from Trust (unsecured) as on March 31, 2015 is Rs. 62,687,467 (P.Y. Rs. 63,286,830).

a) Key Employee Stock Option Plan, 2006

Under the Key Employee Stock Option Plan, 2006, 116,000 options were granted at exercise price ofRs. 5 per option and the third vesting period falls during the current F.Y. 2014-15. During the year no options have been vested and exercised. Upon vesting and exercise of the stock options, equity shares will be granted to the employees from the shares held by the Trust. During the F.Y. 2012-13 6,440 shares have been vested and exercised and 70,000 stock options have lapsed.

b) Key Employee Stock Option Plan, 2007

Under the Key Employee Stock Option Plan, 2007, 300,000 options were granted at exercise price ofRs. 5 per option and the third vesting period falls during current F.Y. 2014-15. During the year 25,900 options have been vested and exercised. Upon vesting and exercise of the stock options, equity shares will be granted to the employees from the shares held by the Trust. During the year 103,240 stock options have lapsed.

During the year, an amount ofRs. 679,154 (P.Y. Rs. 1,901,093) has been expensed out considering the proportionate vesting period, which has been included in Salaries, Wages, Bonus & Allowances and the balance has been disclosed under Reserves and Surplus as reduction from Employee Stock Option Outstanding.

11 DURING THE YEAR:

(i) The Step-down Subsidiary Company Datamatics Global Holding Corp "DGHC" had filed on February 24,2015 for liquidation proceedings before the Registrar of Corporate Affairs, British Virgin Islands. "DGHC" was subsequently dissolved and the name has been struck off by the Certificate of Registrar of Corporate Affairs dated March 23, 2015.

(ii) Datamatics Global Technologies AG, Zug, Switzerland has applied forvoluntary liquidation and winding up proceedings.

12 The Company has Rs. 323,408,544 (P.Y. Rs. 197,108,961) as outstanding Loans and Advances (Refer note no. 43 below) and Rs. 995,976,964 (P.Y. Rs. 995,121,964) as investment in five of it's wholly owned Subsidiaries at the year end. The net worth of these subsidiaries has declined. The Company has assured Financial Support. These investments are for long term and are of strategic nature. As the management is confident of turning around the subsidiaries in the near future provision for dimuniton in the value, if at all required, is not made.

13 In terms of Section 22 of the Micro, Small and Medium Enterprises Development Act 2006, the outstanding to these enterprises are required to be disclosed. However, these enterprises are required to be registered under the Act. In the absence of the information about registration of the enterprises under the above Act, the required information could not be furnished.

14 As per Companies (Accounting Standards) Rules 2006 issued by the Central Government, in consultation with National Advisory Committee on Accounting Standards ('NACAS') and the relevant provisions of the Companies Act, 1956, to the extent applicable, the carrying value ofthe asset has been reviewed for impairment ofassets and there is no impairment ofassets.

15 During the year, pursuant to the notification of Schedule II to the Companies Act, 2013, with effect from April 1, 2014, the Company revised the estimated useful life of relevant assets to align the useful life with those specified in Schedule II. Pursuant to the transitional provisions prescribed in Schedule II to the Companies Act, 2013, the Company has fully depreciated the carrying value of the assets, net of residual value, where the remaining useful life of the asset was determined to be Nil as on April 1, 2014, and adjusted an amount of Rs. 27,400,180 (net of deferred tax asset of Rs. 9,269,148) against the opening balance in the Statement of Profit and Loss under Reserves and Surplus. Consequent to the change in the useful life of the assets, the depreciation expense in the Statement of Profit and Loss for the year is higher by Rs. 26,619,663 and profit before tax for the year is lower by the like amount.

16 PRIOR PERIOD COMPARATIVE:

Previous year figures have been appropriately regrouped / reclassified and rearranged wherever necessary to confirm to the current year's presentation.

17 Figures are rounded off to the nearest of rupee.


Mar 31, 2014

1 Company Overview

Datamatics Global Services Ltd. (DGSL) was incorporated on November 3, 1987 as Interface Software Resources Pvt. Ltd. The name of the Company was changed to Datamatics Technologies Pvt. Ltd. on December 18, 1992 . On December 27, 1999, the Company converted itself from a Pvt. Ltd. Company into a Public Ltd. Company and the name of the Company was changed to Datamatics Technologies Ltd. on January 13, 2000. The name of the Company was changed from "Datamatics Technologies Ltd." to "Datamatics Global Services Ltd." (DGSL) with effect from January 17, 2009.

Datamatics, a trusted partner to several Fortune 500 Companies is a global provider of Information Technology (IT) and Business Process Outsourcing (BPO) and Consulting services. The Company provides business aligned next-generation solutions to a wide range of industry verticals that help enterprises across the world overcome their business challenges and achieve operational efficiencies. These solutions leverage innovations in technology, knowledge of business processes, and domain expertise to provide clients a competitive edge.

2 Contingent Liability and Commitments:

Provision is made in the accounts if it becomes probable that an outflow of resources embodying economic benefits will be required to settle the obligation.

Contingent Liabilities to the extent not provided for:

March 31, 2014 March 31,2013

(a) Claims against the Company not acknowledged as debt:

(i) Income Tax matters 493,418 18,562,821

(ii) Sales Tax matters 5,074,525 5,074,525

(b) Details of guarantees and sureties outstanding as at:

(i) Guarantees given by Banks to Embassy Centre Premises Co-operative 425,930 425,930 Society Ltd.

(ii) Guarantees given by Banks to the Assistant Commissioner of Central 800,875 849,875 Excise and Customs department

(iii) Guarantees given by Banks to UNFCCC, BONN, Germany for Euro 6,118,000 6,118,000 84,398.70

(iv) Guarantees given by Banks to Directorate of Information Technology 2,720,000 2,000,000

(v) Guarantees given by Banks to Mahanagar Gas Ltd. - 348,725

(vi) Guarantees given by Banks to Agility Logistics Pvt. Ltd. - 500,000

(vii) Guarantees given by Banks to Chief Accounts Officer, Aurangabad 1,052,000 1,052,000 Muncipal Corporation.

(viii) Guarantees given by Banks to Webel Mediatronics Ltd. - 615,302

(ix) Guarantees given by Banks to Navi Mumbai Muncipal Corporation 330,000 -

(x) Guarantees given by Banks to The Tender Manager, NICSI 500,000 -

(xi) Guarantees given by Banks to Senior Accounts Officer, Electricity 785,840 - Department Puducherry

(xii) Guarantees given by Banks to The Muncipal Commissioner Greater 2,103,379 - Mumbai

(xiii) Corporate guarantees provided to Banks against credit facilities extended 262,752,500 319,420,000 to Subsidiaries

3 The Company in accordance with its risk management policies and procedures, enters into foreign currency forward contracts to manage its exposure in foreign exchange rates. The counter party is generally a bank. The foreign exchange forward contracts mature within a period of one month and two years.

Net profit / (loss) on derivative instruments of Rs. (5,365,654) (P.Y. Rs. 4,903,578) recognised in Hedging reserve as of March 31, 2014, is expected to be reclassified to the statement of profit and loss by March 31, 2016. The foreign currency exposures that are not hedged by a derivative instrument or otherwise is Rs. 703,495,380 (P.Y. Rs. 102,067,083).

The Company has applied the principles of Cash Flow Hedge Accounting as per Accounting Standard (AS) - 30, Financial Instrument: Recognition and Measurement, along with limited revision to other accounting standards, issued by The Institute of Chartered Accountants of India. AS-30, along with limited revision to the other accounting standards, have not currently been notified by the National Advisory Council for Accounting Standard (NACAS) pursuant to the Companies(AS) rules, 2006 as per section 211(3C) of the Companies Act, 1956.

4 In the opinion of the Company, the Current Assets, Loans and Advances are approximately of the value stated, if realized in the ordinary course of business. The provision for all known Liabilities and for Depreciation is adequate and not in excess of the amount reasonably necessary.

5 The Company has received confirmations from few Trade receivables, Other receivables and for majority of loans and advances. Remaining Trade receivables, Other receivables, Trade payables and loans and advances are subject to confirmation and reconciliation, and consequent impact if any will be adjusted as and when determined.

6 The Management Information System of the Company identifies and operates in a single primary business segment. In the opinion of the management these activities are governed by the same set of risk and returns as per AS-17 dealing with segmental reporting. All the assets of the Company are located in India and hence secondary segmental reporting is on the basis of the geographical location of customers.

7 Related party disclosures:

(i) As per Accounting Standard 18, as notified by the rules the disclosures of Related Parties and transactions during the year as deemed in the Accounting Standard are given below:

(A) Subsidiary Companies

Datamatics Global Services Inc.

Datamatics Global Services GmbH

Datamatics Technologies UK Ltd.

Datamatics Software Services Ltd.

Datamatics Global Technologies Ltd.

Datamatics Global Technologies AG

Datamatics Infotech Ltd.

Datamatics Global Services Pty. Ltd.

Datamatics Global Technologies GmbH (Stepdown Subsidiary)

Datamatics Global Holding Corp. (Stepdown Subsidiary)

Cignex Datamatics Corp. (Stepdown Subsidiary)

Cignex Datamatics Technologies Ltd.

(Stepdown Subsidiary)

Datamatics Vista Info Systems Ltd.

(Stepdown Subsidiary)

Cybercom Datamatics Information Solutions Ltd.

Cignex Datamatics Inc. (Stepdown Subsidiary)

Cignex Datamatics Pte. Ltd. (Stepdown Subsidiary)

Cignex Technologies Ltd. (Stepdown Subsidiary) (Dissolved w.e.f 30th July, 2013)

Datamatics Global Solutions GmbH (Stepdown Subsidiary)

Lexicon Publishing Services Pvt. Ltd.

Datamatics Global Services FZ-LLC

Premedia Global Inc. (Stepdown Subsidiary)

Datamatics eRetail & Publishing GmbH (Stepdown Subsidiary)

(B) Key Managerial Personnel

Dr. L. S. Kanodia Mr. Rahul L. Kanodia Mr. Vidur V. Bhogilal Mr. Sameer L. Kanodia

(C) Relatives of Key Managerial Personnel and Enterprise owned by Key Managerial Personnel

Mrs. Asha Kanodia

Mrs. Priyadarshini Kanodia

Datamatics Staffing Services Ltd.

Datamatics Employees Welfare Trust

Datamatics Financial Services Ltd.

Amon Technologies Pvt. Ltd.

Anemone Management Consultancy Pvt. Ltd.

Datascan Services

(D) Holding Company

Delta Infosolutions Pvt. Ltd.

8 The Company''s significant leasing arrangements are mainly in respect of residential and office premises. The aggregate lease rentals payable on these leasing arrangements are charged as rent under "Other Expenses" in Note 25. These leasing arrangements are for a period not exceeding five years and are in most cases renewable by mutual consent, on mutually agreeable terms.

9 The Company has Outstanding Working Capital Loan/Advance of Rs. 195,043,438 (P.Y. Rs. 207,185,628) to its subsidiary Datamatics Software Services Limited at a interest rate of 8% p.a. as on March 31,2014.

10 Employee Stock Option Scheme:

The Datamatics Employees Welfare Trust (Trust) had purchased 1,753,261 shares of Company for granting stock options to the employees. The purchases are financed by loans from the Company. Amount recoverable from Trust (unsecured) as on March 31,2014 is Rs. 63,286,830 (P.Y. Rs. 64,952,691).

a) Key Employee Stock Option Plan, 2006

Under the Key Employee Stock Option Plan, 2006, 116,000 options were granted at exercise price of Rs. 5 per option and the second vesting period falls during the current F.Y. 2013-14. During the year no options have been vested and exercised. Upon vesting and exercise of the stock options, equity shares will be granted to the employees from the shares held by the Trust. During the F.Y. 2012-13 6,440 shares have been vested and exercised and 70,000 stock options have lapsed.

b) Key Employee Stock Option Plan, 2007

Under the Key Employee Stock Option Plan, 2007, 300,000 options were granted at exercise price of Rs. 5 per option and the second vesting period falls during current F.Y. 2013-14. During the year no options have been vested and exercised. Upon vesting and exercise of the stock options, equity shares will be granted to the employees from the shares held by the Trust. During the F.Y. 2012-13 20,960 shares have been vested and exercised and 68,000 stock options have lapsed.

During the year, an amount of Rs. 1,901,093 (P.Y. Rs. 1,999,080) has been expensed out considering the proportionate vesting period, which has been included in Salaries, Wages, Bonus & Allowances and the balance has been disclosed under Reserves and Surplus as reduction from Employee Stock Option Outstanding.

11 During the year, Company has invested:

(i) USD 9,300,000 in 9,300,000 fully paid Series III Convertible Non-Cumulative Redeemable 8% Preference Shares of USD 1 each of Datamatics Global Technologies Ltd., a Company incorporated in Mauritius.

(ii) AED 50,000 in 50 fully paid equity shares of AED 1,000 each of Datamatics Global Services FZ-LLC, a Company incorporated in Dubai.

(iii) Rs. 577,600,000 in 10,000,000 fully paid equity shares of Rs. 10 each of Datamatics eRetail and Publishing Limited. The Company has acquired controlling interest in Lexicon Publishing Services Private Limited (now known as Lumina Datamatics Limited ("LD")) on September 5, 2013. Thereafter, the Hon''ble High Court, Madras has passed an order sanctioning the Scheme of Arrangement/Amalgamation ["Scheme"] of Premedia Global Private Limited (wholly owned subsidiary of LD) and Datamatics eRetail and Publishing Limited (wholly owned subsidiary of the Company) with and into LD on March 17, 2014. The Appointed Date for the said Scheme was January 1, 2014 and the Effective Date was March 31,2014. Pursuant to the sanctioned Scheme, the Company holds 73.12% of equity share capital in LD.

12 Portfolio Management services are provided by the Portfolio Manager - Reliance Capital Asset Management Ltd (RCAML) registered with SEBI vide registration No.INP000000423 and Trust Investment Advisors Pvt. Ltd. (TIAPL) registered with SEBI vide registration No. INP000001843. The Portfolio Manager is engaged in investing funds in accordance with SEBI (Portfolio Managers) Regulations, 1993 of its client - Datamatics Global Services Ltd. in securities and providing portfolio management services.

RCAML and TIAPL have been appointed as the Portfolio Manager for managing the investments of its funds on a discretionary basis to avail of investment advisory and portfolio management services for the purpose of investment to be made in securities. RCAML also holds the Power of Attorney to hold investments in its name for investments made on behalf of Company. Investments made by RCAML under the Portfolio Management Services are made in a pool account and therefore are not held in the name of the Company.

13 The Company has Rs. 197,108,961 (PY. Rs. 208,204,849) as outstanding Loans and Advances (Refer note no. 44 below) and Rs. 995,121,964 (PY. Rs. 997,376,964) as investment in four of it''s 100% Subsidiaries at the year end. The net worth of these subsidiaries has declined. The Company has assured financial support. These investments are for long term and are of strategic nature. As the management is confident of turning around the subsidiaries in the near future provision for dimuniton in the value, if at all required, is not made.

14 In terms of Section 22 of the Micro, Small and Medium Enterprises Development Act 2006, the outstanding to these enterprises are required to be disclosed. However, these enterprises are required to be registered under the Act. In the absence of the information about registration of the enterprises under the above Act, the required information could not be furnished.

15 As per Companies (Accounting Standards) Rules 2006 issued by the Central Government, in consultation with National Advisory Committee on Accounting Standards (''NACAS'') and the relevant provisions of the Companies Act, 1956, to the extent applicable, the carrying value of the asset has been reviewed for impairment of assets and there is no impairment of assets.

16 Prior period comparative:

Previous year figures have been appropriately regrouped/reclassified and rearranged wherever necessary to confirm to the current year''s presentation.

17 Figures are rounded off to the nearest of rupee.


Mar 31, 2013

1 Company Overview:

Datamatics Global Services Ltd. (DGSL) was incorporated on November 3, 1987 as Interface Software Resources Pvt. Ltd. The name of the Company was changed to Datamatics Technologies Pvt. Ltd. on December 18, 1992. On December 27, 1999, the Company converted itself from a Pvt. Ltd. Company into a Public Ltd. Company and the name of the Company was changed to Datamatics Technologies Ltd. on January 13, 2000. The name of the Company was changed from "Datamatics Technologies Ltd." to "Datamatics Global Services Ltd." (DGSL) with effect from January 17, 2009.

Datamatics, a trusted partner to several Fortune 500 Companies is a global provider of Information Technology (IT) and Knowledge Process Outsourcing (KPO) and Consulting services. The Company provides business aligned next- generation solutions to a wide range of industry verticals that help enterprises across the world overcome their business challenges and achieve operational effi ciencies. These solutions leverage innovations in technology, knowledge of business processes, and domain expertise to provide clients a competitive edge.

2 Capital and other commitments:

Estimated amount of contracts on capital account remaining to be executed and not provided (net of advances) for Rs. 6,626,297 (P.Y. Rs. 106,199,180).

3 The Company in accordance with its risk management policies and procedures, enters into foreign currency forward contracts to manage its exposure in foreign exchange rates. The counter party is generally a bank. These contracts are for a period between one month and two years.

The following are outstanding foreign exchange forward contracts, which have been designated as Cash Flow Hedges, as at:

Net profi t / (loss) on derivative instruments of Rs. 4,903,578 (P.Y. Rs. (20,821,979)) recognised in Hedging reserve as of March 31, 2013, is expected to be reclassifi ed to the statement of profi t and loss by March 31, 2015. The foreign currency exposures that are not hedged by a derivative instrument or otherwise is Rs. 102,067,083 (P.Y. Rs. 252,186,237).

The Company has applied the principles of Cash Flow Hedge Accounting as per Accounting Standard (AS) - 30, Financial Instrument: Recognition and Measurement, along with limited revision to other accounting standards, issued by the Institute of Chartered Accountants of India. AS-30, along with limited revision to the other accounting standards, have not currently been notifi ed by the National Advisory Council for Accounting Standard (NACAS) pursuant to the Companies(AS) rules, 2006 as per section 211(3C) of the Companies Act, 1956.

4 In the opinion of the Company, the Current Assets, Loans and Advances are approximately of the value stated, if realized in the ordinary course of business. The provision for all known Liabilities and for Depreciation is adequate and not in excess of the amount reasonably necessary.

5 The Company has received confi rmations from few Trade receivables, Other receivables and for majority of loans and advances. Remaining Trade receivables, Other receivables, Trade payables and loans and advances are subject to confi rmation and reconciliation if any.

6 The Management information system of the Company identifi es and operates in a single primary business segment. In the opinion of the management these activities are governed by the same set of risk and returns as per AS17 dealing with segmental reporting. All the assets of the Company are located in India and hence secondary segmental reporting is on the basis of the geographical location of customers.

7 Related Party Disclosures:

(i) As per Accounting Standard 18, as notifi ed by the rules the disclosures of Related Parties and transactions during the year as deemed in the Accounting Standard are given below:

(A) Subsidiary Companies

Datamatics Global Services Inc.

Datamatics Global Services GmbH

Datamatics Technologies UK Ltd.

Datamatics Software Services Ltd.

Datamatics Global Technologies Ltd.

Datamatics Global Technologies AG

Datamatics Infotech Ltd.

Datamatics Global Services Pty. Ltd.

Datamatics Global Technologies GmbH

(Stepdown Subsidiary)

Datamatics Global Holding Corp. (Stepdown

Subsidiary)

Cignex Global Holding Corp. (Stepdown

Subsidiary)

Cignex Datamatics Technologies Pvt. Ltd.

(Stepdown Subsidiary)

Datamatics Vista Info Systems Pvt. Ltd.

(Stepdown Subsidiary)

Cybercom Datamatics Information Solutions

Ltd. (w.e.f. 27th August, 2012)

Cignex Datamatics Inc. (Stepdown Subsidiary)

Cignex Technologies Ltd. (Stepdown

Subsidiary)

Cignex Datamatics Pte. Ltd. (Stepdown

Subsidiary)

Datamatics Global Services Gmbh d.o.o.

(Stepdown Subsidiary)

(B) Associate Companies and Joint Ventures Datamatics Financial Services Ltd. Cybercom Datamatics Information Solutions Ltd. (upto 26th August, 2012)

Amon Technologies Pvt. Ltd.

Anemone Management Consultancy Pvt. Ltd.

Datascan Services

(C) Key Managerial Personnel Dr. L. S. Kanodia

Mr. Rahul L. Kanodia Mr. Vidur V. Bhogilal Mr. Sameer Kanodia

(D) Relatives of Key Managerial Personnel and Enterprise owned by Key Managerial Personnel Mrs. Asha Kanodia

Mrs. Priyadarshini Kanodia Datamatics Staffi ng Services Pvt. Ltd. Datamatics Employee Welfare Trust

(E) Holding Company

Delta Infosolutions Pvt. Ltd.

8 The Company''s signifi cant leasing arrangements are mainly in respect of residential and offi ce premises. The aggregate lease rentals payable on these leasing arrangements are charged as rent under "Other Expenses" in Note 24. These leasing arrangements are for a period not exceeding fi ve years and are in most cases renewable by mutual consent, on mutually agreeable terms.

9 The Company has Outstanding Working Capital Loan / Advance of Euro Nil (P.Y. Euro 100,000) given to its subsidiary Datamatics Global Services GmbH at a interest rate of 1% p.a. above the LIBOR rate; and of Rs. 207,185,628 (P.Y. Rs. 173,989,288) to its subsidiary Datamatics Software Services Limited at a interest rate of 8% p.a. as on March 31, 2013.

10 Employee Stock Option Scheme:

The Datamatics Employee Welfare Trust (Trust) had purchased 1,753,261 shares of Company for granting stock options to the employees. The purchases are fi nanced by loans from the Company. Amount recoverable from Trust (unsecured) as on March 31, 2013 is Rs. 64,952,691 (P.Y. Rs. 69,347,270).

a) Key Employee Stock Option Plan, 2006

Under the Key Employee Stock Option Plan, 2006, 116,000 options were granted at exercise price of Rs. 5 per option and the fi rst vesting period falls during the current F.Y. 2012-13. During the year 6,440 shares have been vested and exercised. Upon vesting and exercise of the stock options, equity shares have been granted to the employees from the shares held by the Trust. During the year 70,000 stock options have lapsed.

b) Key Employee Stock Option Plan, 2007

Under the Key Employee Stock Option Plan, 2007, 300,000 options were granted at exercise price of Rs. 5 per option and the fi rst vesting period falls during current FY. 2012-13. During the year 20,960 shares have been vested and exercised. Upon vesting and exercise of the stock options, equity shares have been granted to the employees from the shares held by the Trust. During the year 68,000 stock options have lapsed.

During the year, an amount of Rs. 1,999,080 (PY. Rs. 2,630,415) has been expensed out considering the proportionate vesting period, which has been included in Salaries, Wages, Bonus & Allowances and the balance has been disclosed under Reserves and Surplus as reduction from Employee Stock Option Outstanding.

11 During the year, Company has invested:

(i) EUR 1,000,000 in 1,000,000 fully paid equity shares of Datamatics Global Services GmbH, incorporated in Germany. (ii) Rs. 3,738,000 in 8,400 fully paid equity shares of Cybercom Datamatics Information Solutions Limited.

12 Portfolio Management services are provided by the Portfolio Manager - Reliance Capital Asset Management Ltd. (RCAML) registered with SEBI vide registration No.INP000000423 and Trust Investment Advisors Pvt. Ltd. (TIAPL) registered with SEBI vide registration No. INP000001843. The portfolio Manager is engaged in investing funds in accordance with SEBI (Portfolio Managers) Regulations, 1993 of its client - Datamatics Global Services Ltd. in securities and providing portfolio management services.

RCAML and TIAPL have been appointed as the Portfolio Manager for managing the investments of its funds on a discretionary basis to avail of investment advisory and portfolio management services for the purpose of investment to be made in securities. RCAML also holds the Power of Attorney to hold investments in its name for investments made on behalf of Company. Investments made by RCAML under the Portfolio Management Services are made in a pool account and therefore are not held in the name of the Company.

13 The Company has Rs. 208,204,849 (PY. Rs. 196,919,433) as outstanding Loans and Advances (Refer note 44 below) and Rs. 997,376,964 (PY Rs. 928,338,219) as investment in fi ve of it''s 100% Subsidiaries at the year end. The net worth of these subsidiaries has declined. The Company has assured Financial Support. These investments are for long term and are of strategic nature. As the management is confi dent of turning around the subsidiaries in the near future provision for dimuniton in the value, if at all required, is not made.

14 In terms of Section 22 of the Micro, Small and Medium Enterprises Development Act 2006, the outstanding to these enterprises are required to be disclosed. However, these enterprises are required to be registered under the Act. In the absence of the information about registration of the enterprises under the above Act, the required information could not be furnished.

15 As per Companies (Accounting Standards) Rules 2006 issued by the Central Government, in consultation with National Advisory Committee on Accounting Standards (‘NACAS'') and the relevant provisions of the Companies Act, 1956, to the extent applicable, the carrying value of the asset has been reviewed for impairment of assets and there is no impairment of assets.

16 Prior period comparative:

Previous year fi gures have been appropriately reclassifi ed / recast to confi rm to the current year''s presentation.

17 Figures are rounded off to the nearest of rupee.

 
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