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Notes to Accounts of eClerx Services Ltd.

Mar 31, 2016

1. CORPORATE INFORMATION

eClerx Services Limited (''the Company'') is engaged in providing Knowledge Process Outsourcing (KPO) services to global companies. Established in 2000, the Company provides data management, analytics solutions and process outsourcing services to a host of global clients through a network of multiple locations in India, and is headquartered in Mumbai. The Company is listed on the BSE Limited and National Stock Exchange of India.

2. BASIS OF PREPARATION

The financial statements of the Company have been prepared in accordance with the generally accepted accounting principles in India (Indian GAAP). The Company has prepared these financial statements to comply in all material respects with the accounting standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules 2014. The financial statements have been prepared on an accrual basis and under the historical cost convention, except derivative financial instruments which have been measured at fair value.

The accounting policies adopted in the preparation of financial statements are consistent with those of previous year.

3. EMPLOYEES STOCK OPTION PLAN (ESOP)

ESOP2008 scheme:

The Company instituted ESOP 2008 scheme under which 1,000,000 stock options have been a [Located for grant to the employees The scheme was approved by the shareholders by way of postal ballot, the result of which was declared on May 19, 2008. The Scheme was subsequently amended to increase the number of options to 1,600,000 stock options vide resolution passed at Ninth Annua I Genera I Meeting held on August 26, 2009. Pursuant to bonus issue by the Company on July 29, 201 0, the number of options available under the scheme accordingly increased to 2,4-00,000 pursuant to relevant SEBI regulations. During the year the Nomination and Remuneration Committee approved that no further options will be granted under ESOP 2008 plan, however active options thereunder would continue to vest as per the respective terms

4. RELATED PARTY & KEY MANAGEMENT PERSONNEL INFORMATION

A. RELATED PARTIES & KEY MANAGEMENT PERSONNEL Name of related party and related party relationship

(a) Where control exists:

1. eClerx Limited (wholly owned subsidiary)

2. eClerx LLC (wholly owned subsidiary)

3. eClerx Investments Limited (wholly owned subsidiary)

4. eClerx Private Limited (wholly owned subsidiary)

5. Agilyst Inc (100% subsidiary of eClerx Investments Limited)

6. Agilyst Consulting Private Limited (100% subsidiary of Agilyst Inc.)

7. eClerx Investments (UK) Limited (wholly owned subsidiary)

8. CLX Europe S.P.A. (100% subsidiary of eClerx Investments (UK) Limited)

9. Sintetik S.R.L. (100% subsidiary of CLX Europe S.P.A.)

10. CLX Europe Media Solution GmbH (100% subsidiary of CLX Europe S.P.A.)

11. CLX Europe Media Solution Limited (100% subsidiary of CLX Europe Media Solutions GmbH)

12. CLX Thai Company Limited (49% holding of CLX Europe S.P.A.)

(b) Related party under Accounting Standard 18 – Related Party Transactions and as per Companies Act, 2013 with whom transactions have taken place during the year

(I) Enterprises where Key Managerial Person and / or relative of such personnel have significant influence:

1. Duncan Stratton & Company Limited

(II) Key Management Personnel:

1. V.K. Mundhra (Chairman)

2. PD Mundhra (Executive Director)

3. Anjan Malik (Director)

4. Rohitash Gupta (Chief Financial Officer)

5. Gaurav Tongia (Company Secretary)

5. DISCLOSURE PURSUANTTO LISTING REGULATIONS

There are no Loans and advances in nature of Loans outstanding from subsidiary for the year ended March 31, 2016

6. EARNINGS PERSHARE

The basic earnings per equity share are computed by dividing the net profit attributabLe to the equity sharehoLders for the year by the weighted average number of equity shares outstanding during the reporting period. The number of shares used in computing diluted earnings per share comprises the weighted average number of shares considered for deriving basic earnings per share, and aLso the weighted average number of equity shares, which may be issued on the conversion of aLL dilutive potential shares, unless the results would be antidilutive

7. EMPLOYEE BENEFIT PLANS

The Company makes annual contribution to the Employee''s Group Gratuity Assurance Scheme of the Life Insurance Corporation of India (LIC). The Scheme provides for Lump sum payment to vested employees at retirement, death while in employment or on termination of employment based on completed year of service or part thereof in excess of six months. Vesting occurs on completion of five years of service

The following table sets out the status of the gratuity plan for the year ended March 31, 2016as required under AS 15 (Revised) as notified under the Companies Act, 2013 under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules 2014-.

8. The Company has deferred the recognition of cumulative Minimum Alternative Tax (MAT) credit of Rs.177.30 million as at March 31, 2016 (P.Y. Rs 326.39 million), which could be available for set off against future tax liability under the provisions of the Income Tax Act, 1961 on account of uncertainty around the time frame within which income tax will be payable under the normal provisions against which the MAT credit can be utilised.

9. CSR EXPENDITURE

Gross amount required to be spent : Rs. 51.31 (P.Y. 46.34) million Amount spent during Financial Year: Rs. 51.68 (P.Y. 46.37) million

10. DUESTO MICRO AND SMALL ENTERPRISES

Based on the information available with the Company, there are no dues payable to micro and small enterprises as defined in The Micro Sma 11 & Medium Enterprises Development Act, 2006

11. CONTINGENT LIABILITIES

(Rupees in million)

As at March 31, 2016 As at March 31, 2015

Guarantees given by the Company on behalf of various subsidiaries against credit card facilities (refer note a) 4.44 4.25

Income Tax demands (refer note b) 30.50 30.46

Indirect Tax demands 7.76 7.76

Notes:

(a) The guarantee is for usage of Amex cards by subsidiaries of the Company. Amex cards are issued to employees of foreign subsidiaries which are used by them to incur expenses on travel, business promotionand other office expenses

These guarantees have been given in the normal course of the Company''s operations and are not expected to result in any loss to the Company on the basis of the beneficiaries fulfilling their ordinary commercial obligations

(b) The Company has received favorable orders from ITAT against the demand raised by the Assessing Officers amounting to Rs 13.20 million for Financial Years 2004-05 and 2006-07. The department has preferred appeal to High Court for Financial Years 2004-05 and 2006-07 and filed Special Leave Petition with Supreme Court for Financial Years 2006-07 and 2007-08. The Company has received demand amounting to Rs. 0.09 million for Financial Year 2008-09 against which the Company has received favorable order from Commissioner of Income Tax (Appeals). The Company has received demand amounting to Rs 1 7.17 million for Financial Year 201 0-11 against which Company has filed appeals with Commissioner of Income Tax (Appeals)

(c) Service Tax refund claims for the period October 2009 till March 2012 to the extent rejected by Commissioner of Central Excise [Appeals) for Rs.83.12 million is pending in appeal before CESTAT.

The amounts represent best possible estimates arrived at on the basis of available information. The uncertainties and possible reimbursements are dependent on the outcome of the different legal processes which have been invoked by the Company or the claimants as the case may be and therefore cannot be predicted accurately. The Company engages reputed professional advisors to protect its interest and has been advised that it has strong legal positions against each of such disputes. Hence no provision has been made in the financial statements for these disputes

12. EXCEPTIONAL ITEMS

The Company, through its subsidiary eClerx Investment Ltd, acquired Agilyst Inc. in May 2012. One of the major clients of Agilyst Inc. decided to move its service agreement from Agilyst Inc. to the Company for better physical and IT infrastructure and stronger financial position, with effect from October 22, 2015. The Company had hence reviewed the carrying value of investment in Agilyst Inc. made through its subsidiary eClerx Investments Ltd and made a provision for diminution in value of Rs 259.14 million in the standalone financials in the year ended March 31, 2016.

13. SCHEME OF AMALGAMATION

The Board of Directors of eClerx Services Limited at their meeting held on September 11, 2015 have approved the Scheme of Amalgamation between Agilyst Consulting Private Limited, step down subsidiary and eClerx Services Limited and their respective shareholders (the "Scheme") which provides for the amalgamation of Agilyst Consulting Private Limited a step down subsidiary, with eClerx Services Limited (''the Company'') under sections 391 to 394 and other applicable provisions, if any, of Companies Act, 1956 and the other relevant provisions of Companies Act, 2013. The Appointed date of the Scheme is April 1, 2015.

The Company has received the Observation letter from BSE Ltd. and the National Stock Exchange of India Limited conveying their no-objection in filing the Scheme with the Hon''ble High Court of Bombay (''High Court''). The Scheme of Amalgamation was filed by Agilyst Consulting Private Limited with the Hon''ble High Court. The High Court vide its order dated April 1, 2016, has dispensed with the requirement for filing a separate Company Summons for Direction and Company Scheme Petition under Section 391-394 of the Companies Act, 1956 for eClerx Services Limited and therefore there was no requirement for holding meetings of shareholders or creditors of the Company in this regard.

The Scheme is pending before the Hon''ble Court for approval and would be effective only once the order is received from Hon''ble High Court of Bombay and filed with the Registrar of Companies. Thereafter, the Scheme will be given effect to in the books of accounts of the Company.

14. The Company has a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under sections 92-92F of the Income Tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company appoints independent consultants for conducting a Transfer Pricing Study to determine whether the transactions with associate enterprises are undertaken, during the financial year, on an "arm''s length basis". Adjustments, if any, arising from the transfer pricing study in the respective jurisdictions shall be accounted for as and when the study is completed for the current financial year. However the management is of the opinion that its international transactions are at arms'' length so that the aforesaid legislation will not have any impact on the financial statements.

15. Previous year figures have been regrouped/reclassified wherever necessary to conform with the current year''s presentation.


Mar 31, 2015

A) Terms / rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs 10 per share. Each holder of equity shares Is entitled to one vote per equity share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

Subject to the provisions of Companies Act 2013 as to preferential payments, the assets of the Company shall, on its winding-up be applied in satisfaction of its liabilities pari-passu and, subject to such application, shall, unless the articles otherwise provide, will be distributed among the members according to their rights and interests in the Company,

b) Aggregate number of bonus shares issued, shares issued for consideration other than cash The Company has issued 9,538,674 (RY, 9,538,674) equity shares as fully paid up bonus shares by capitalising free reserves during the period of five years immediately preceding the balance sheet date. The company has bought back 37,623 shares (37623) during the period of 5 years immediately preceding the balance sheet date.

2. SHARE APPLICATION MONEY PENDING ALLOTMENT

Amounts received for 9,000 shares with an exercise price of Rs. 111.47 and 1,000 shares with an exercise price of Rs. 343.33 under ESOP Plan 2008 is pending for allotment.

3. SEGMENT REPORTING

The Company''s primary segment are based on the nature of services provided which is data analytics and process outsourcing services.

The Company''s secondary segments are the geographic distribution of activities. Revenue and receivables are specified by location of customers while the other geographic information is specified by location of the assets. The following tables present revenue and asset information regarding the Company''s geographical segments:

4. EMPLOYEES STOCK OPTION PLAN (ESOP)

ESOP 2008 scheme:

The Company instituted ESOP 2008 scheme under which 1,000,000 stock options have been allocated for grant to the employees. The scheme was approved by the shareholders by way of postal ballot, the result of which was declared on May 19, 2008. The Scheme was subsequently amended to increase the number of options to 1,600,000 stock options vide resolution passed at Ninth Annual General Meeting held on August 26, 2009. Pursuant to bonus issue by the Company on July 29, 2010, the number of options available under the scheme accordingly increased to 2,400,000 pursuant to relevant SEBI regulations.

The weighted average remaining contractual life for the stock options outstanding as at March 31, 2015 is 1.54 years (March 31, 2014: 2.61 years). The average vesting period is 2.83 years and exercise period is 3 years. The range of exercise prices for options outstanding at the end of the year was Rs. 111.47 to Rs. 690.26 (March 31, 2014: Rs. 111.47 to Rs. 690.26).

ESOP 2011 scheme:

The Company instituted ESOP 2011 scheme under which 1,600,000 stock options have been allocated for grant to the employees. The scheme was approved by the shareholders at the Eleventh Annual General Meeting held on August 24, 201 1. The Scheme was subsequently amended to increase the number of options to 2,600,000 stock options vide resolution passed at Thirteenth Annual General Meeting held on August 22, 2013.

5. RELATED PARTY & KEY MANAGEMENT PERSONNEL INFORMATION A. RELATED PARTIES & KEY MANAGEMENT PERSONNEL

Name of related party and related party relationship

(a) Where control exists:

1. eClerx Limited (wholly owned subsidiary)

2. eClerx LLC (wholly owned subsidiary)

3. eClerx Investments Limited (wholly owned subsidiary)

4. eClerx Private Limited (wholly owned subsidiary)

5. Agilyst Inc.(100% subsidiary of eClerx Investments Limited)

6. Agilyst Consulting Private Limited (100% subsidiary of Agilyst Inc.)

7. eClerx Investments (U.K.) Limited (wholly owned subsidiary)

(b) Related party under Accounting Standard 18 - Related Party Transactions and as per Companies Act, 2013 with whom transactions have taken place during the year

(I) Enterprises where Key Managerial Person and / or relative of such personnel have significant influence:

1. Duncan Stratton & Company Limited

(II) Key Management Personnel:

1. V.K, Mundhra (Chairman)

2. PD Mundhra (Executive Director)

3. Anjan Malik (Director)

4. Rohitash Gupta (Chief Financial Officer)

5. Gaurav Tongia (Company Secretary)

6. DISCLOSURE PURSUANT TO CLAUSE 32 OF LISTING AGREEMENT

There are no loans and advances in nature of loans outstanding from subsidiary for the year ended March 31, 2015.

7. EARNINGS PER SHARE

The basic earnings per equity share are computed by dividing the net profit attributable to the equity shareholders for the year by the weighted average number of equity shares outstanding during the reporting period. The number of shares used in computing diluted earnings per share comprises the weighted average number of shares considered for deriving basic earnings per share, and also the weighted average number of equity shares, which may be issued on the conversion of all dilutive potential shares, unless the results would be anti dilutive.

8. EMPLOYEE BENEFIT PLANS

The Company makes annual contribution to the Employee''s Group Gratuity Assurance Scheme of the Life Insurance Corporation of India (LIC). The Scheme provides for lump sum payment to vested employees at retirement, death while in employment or on termination of employment based on completed year of service or part thereof in excess of six months. Vesting occurs on completion of five years of service.

The following table sets out the status of the gratuity plan for the year ended March 31, 2015 as required under AS 15 (Revised) as notified under the Companies Act, 2013 under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules 2014.

9. The Company has deferred the recognition of cumulative Minimum Alternative Tax (MAT) credit of Rs,326,39 million as at March 31, 2015 (P.Y. Rs 266.23 million), which could be available for set off against future tax liability under the provisions of the Income Tax Act, 1961 on account of uncertainty around the time frame within which income tax will be payable under the normal provisions against which the MAT credit can be utilised.

10. CSR EXPENDITURE

Gross amount required to be spent : Rs. 46.34 Million Amount spent during Financial Year: Rs. 46.37 Million

11. CONTINGENT LIABILITIES (Rupees in million) As at As at March 31,2015 March 31,2014

Guarantees given by the Company on behalf of various subsidiaries against credit facilities (see note (a)) 4.25 2.60

Income Tax demands (see note (b)) 30.46 13.29

Indirect Tax demands 7.76 7.44

Notes:

(a) These guarantees have been given in the normal course of the Company''s operations and are not expected to result in any loss to the Company on the basis of the beneficiaries fulfilling their ordinary commercial obligations.

(b) The Company has received favorable orders from ITAT against the demand raised by the Assessing Officers amounting to Rs. 13.29 million for Financial Year 2004-05 and 2006-07. The department has preferred appeal to High Court for Financial Year 2004-05 and 2006-07 and filed Special Leave Petition with Supreme Court for Financial Year 2006-07. The Company has received demand amounting to Rs. 17.17 millions for Financial Year 2010-11 against which Company has filed appeal with Commissioner of Income Tax (Appeals)

(c) Service Tax refund claims filed by the Company from October 2009 till March 2012 for Rs. 241.51 million out of which Rs.83.12 million was rejected by the Commissioner of Central Excise (Appeals). The Company has filed an appeal with CESTAT. Also out of service tax refund claims filed by the Company and assessed by the department from April 2012 to Sept 2013 for Rs.185.15 million, claims for Rs. 115.21 million was rejected by the service tax department. The Company has filed an appeal for Rs. 32 millions with Commissioner of Central Excise/Service Tax (Appeals) and for Rs. 83.21 millions the company is in process of filling an appeal with the designated appellate authority.

The amounts represent best possible estimates arrived at on the basis of available information. The uncertainties and possible reimbursements are dependent on the outcome of the different legal processes which have been invoked by the Company or the claimants as the case may be and therefore cannot be predicted accurately. The Company engages reputed professional advisors to protect its interest and has been advised that it has strong legal positions against each of such disputes. Hence no provision has been made in the financial statements for these disputes.

12. SUBSEQUENT EVENTS

The Company acquired the entire shareholding of CLX Europe S.PA a joint stock Company based in Italy through its overseas subsidiary eClerx Investments (UK) Limited effective April 21, 2015 for a consideration not exceeding Euro 25 million. The transaction is funded from the Company''s internal accruals.

13. The Company has a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under sections 92-92F of the Income Tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company appoints independent consultants for conducting a Transfer Pricing Study to determine whether the transactions with associate enterprises are undertaken, during the financial year, on an "arms length basis". Adjustments, if any, arising from the transfer pricing study in the respective jurisdictions shall be accounted for as and when the study is completed for the current financial year. However the management is of the opinion that its international transactions are at arms'' length so that the aforesaid legislation will not have any impact on the financial statements.

14. Previous year figures have been regrouped/reclassified wherever necessary to conform with the current year''s presentation. The figures of the previous year were audited by a firm of Chartered Accountants other than S. R. Batliboi & Associates LLP


Mar 31, 2014

1. INVESTMENTS

The Company acquired the entire shareholding of Agilyst Inc (''Agilyst''), a closely held US based Company through its overseas subsidiary eClerx Investments Limited (EIL) effective May 4, 2012. The consideration towards the acquisition consists of an upfront payment of US$15.75 million and a variable earn out, based on Agilyst''s future performance till September 30, 2013. During the year under review, the Company paid final tranche towards acquisition amounting to US$3.8 million taking the total cost of acquisition to US$19.55 million.

2. RELATED PARTY INFORMATION

As per Accounting Standard 18-Related Party Transactions, as notified under the Companies Act, 1956 read with the General Circular 15/2013 dated September 13, 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013, the Company''s related parties and transactions with them are enumerated below:

A. Related Parties

(a) Where control exists:

1. eClerx Limited (wholly owned subsidiary)

2. eClerx LLC (wholly owned subsidiary)

3. eClerx Investments Limited (wholly owned subsidiary)

4. eClerx Private Limited (wholly owned subsidiary)

5. Agilyst Inc (100% subsidiary of eClerx Investments Limited)

6. Agilyst Consulting Private Limited (100% subsidiary of Agilyst Inc.)

(b) Enterprises where Key Managerial Person and / or relative of such personnel have significant influence:

1. Duncan Stratton & Company Limited

(c) Key Management Personnel:

1. V.K Mundhra (Chairman)

2. PD Mundhra (Executive Director)

3. Anjan Malik (Director)

3. EMPLOYEE BENEFIT PLANS

The Company makes annual contribution to the Employee''s Group Gratuity Assurance Scheme of the Life Insurance Corporation of India (LIC). The Scheme provides for lump sum payment to vested employees at retirement, death while in employment or on termination of employment based on completed year of service or part thereof in excess of six months. Vesting occurs on completion of five years of service.

The following table sets out the status of the gratuity plan for the year ended March 31, 2014 as required under AS 15 (Revised) as notified under the Companies Act, 1956 read with the General Circular 15/2013 dated September 13, 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013

4. The Company has deferred the recognition of cumulative Minimum Alternate Tax (MAT) credit of Rs.266.23 million as at March 31, 2014 (RY Rs. 245.50 million), which could be available for set off against future tax liability under the provisions of the Income Tax Act, 1961 on account of uncertainty around the time frame within which income tax will be payable under the normal provisions against which the MAT credit can be utilised.

5. DUES TO MICRO, SMALL AND MEDIUM ENTERPRISES

Based on the information available with the Company, there are no dues payable to micro, small and medium enterprises as defined in The Micro, Small & Medium Enterprises Development Act, 2006.

6. CONTINGENT LIABILITIES

(Rupees in million)

As at As at March 31, 2014 March 31, 2013

Guarantees given by the Company on behalf of various I subsidiaries against credit facilities (refer note (a)) 2.6 2.6

Income Tax demands (refer note (b)) 13.29 13.29

Indirect Tax demands 7.44 7.44

Notes:

a) These guarantees have been given in the normal course of the Company''s operations and are not expected to result in any loss to the Company on the basis of the beneficiaries fulfilling their ordinary commercial obligations.

b) The company has received favorable orders from Commissioner of Income Tax (Appeals) against the demand raised by the Assessing officers amounting to Rs. 13.29 million for Financial Year 2004-05 and Financial Year 2006-07. The department has preferred appeal to High Court for Financial Year 2007-08 and filed Special Leave Petition with Supreme Court for Financial Year 2006-07.

c) Service Tax refund claims filed by the company from October 2009 till March 2012 for Rs. 241.51 million was rejected by the Jurisdictional Service Tax authorities. Company has preferred appeal to the Commissioner of Central Excise(Appeals).

The amounts represent best possible estimates arrived at on the basis of available information. The uncertainties and possible reimbursements are dependent on the outcome of the different legal processes which have been invoked by the Company or the claimants as the case may be and therefore cannot be predicted accurately. The Company engages reputed professional advisors to protect its interest and has been advised that it has strong legal positions against each of such disputes. Hence no provision has been made in the financial statements for these disputes.

7. The Company has a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under sections 92-92F of the Income Tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company appoints independent consultants for conducting a Transfer Pricing Study to determine whether the transactions with associate enterprises are undertaken, during the financial year, on an "arms length basis". Adjustments, if any, arising from the transfer pricing study in the respective jurisdictions shall be accounted for as and when the study is completed for the current financial year. However the management is of the opinion that its international transactions are at arms'' length so that the aforesaid legislation will not have any impact on the financial statements.

8. Previous year figures have been regrouped, wherever necessary to conform with the current year''s presentation.


Mar 31, 2013

1. a) Basis of preparation

The financial statements have been prepared and presented under the historical cost convention on the accrual basis of accounting and comply with the Accounting Standards (AS) as notified under the Companies Act, 1956 (the Act) and comply in all material aspects with AS prescribed by the Central Government, in accordance with Company (AS) Rules, 2006.

b) Use of estimates

The preparation of the financial statements in conformity with generally accepted accounting principles (''GAAP'') in India requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements. Management believes that the estimates made in the preparation of financial statements are prudent and reasonable. Actual future period''s results could differ from those estimates. Any revision to accounting estimates is recognized prospectively in current and future periods.

2. Investments

During the year under review, the Company has acquired the entire shareholding of Agilyst Inc (''Agilyst''), a closely held US based Company, through its overseas subsidiary eClerx Investments Ltd effective May 4, 2012. The consideration towards the acquisition consist of an upfront payment of US$15.75 million and a variable earn out, which would range between US$ 0 to US$ 13 million, based on Agilyst''s future performance till September 30, 2013.

3. Segment Reporting

The Company operates under a single primary segment i.e. data analytics and process outsourcing services.

4. Deferred Tax Balances

The components of deferred tax assets arising on account of timing differences between taxable income and accounting income are as follows:

5. Operating Leases

The Company has various operating leases for office facilities and residential premises for employees which include leases that are renewable on a yearly basis, cancellable at its option and other long term leases.

6. Employees Stock Option Plan (ESOP) ESOP 2005 scheme:

The Company instituted ESOP 2005 scheme under which 750,000 stock options have been allocated for grant to the employees. The scheme was approved by our shareholders at the Extra Ordinary General Meeting held on November 16, 2005.

ESOP 2008 scheme:

The Company instituted ESOP 2008 scheme under which 1,000,000 stock options have been allocated for grant to the employees. The scheme was approved by the shareholders by way of postal ballot, the result of which was declared on May 19, 2008. The Scheme was subsequently amended to increase the number of options to 1,600,000 stock options vide resolution passed at Ninth Annual General Meeting held on August 26, 2009. Pursuant to bonus issue by the Company on July 29, 2010, the number of options available under the scheme accordingly increased to 2,400,000 pursuant to relevant SEBI regulations.

ESOP 2011 scheme:

The Company instituted ESOP 2011 scheme under which 1,600,000 stock options have been allocated for grant to the employees. The scheme was approved by the shareholders at the Eleventh Annual General Meeting held on August 24, 2011.

Proforma accounting for stock options granted

The Company applies the intrinsic value-based method of accounting for determining compensation cost for its stock- based compensation plan. Had the compensation cost been determined using the fair value approach, the Company''s net income and basic and diluted earnings per share (EPS) as reported would have been as per the proforma amounts as indicated herein below:

7. Related Party Information

As per Accounting Standard 18 - Related Party Transactions, as notified under the Companies Act, 1956, the Company''s related parties and transactions with them are enumerated below:

A. Related Parties

(a) Where control exists:

1. eClerx Limited (wholly owned subsidiary)

2. eClerx LLC (wholly owned subsidiary)

3. eClerx Investments Limited (wholly owned subsidiary)

4. eClerx Private Limited (wholly owned subsidiary)

5. Agilyst Inc (100% subsidiary of eClerx Investments Limited)

6. Agilyst Consulting Private Limited (100% subsidiary of Agilyst Inc.)

(b) Enterprises where Key Managerial Person and / or relative of such personnel have significant influence:

1. Duncan Stratton & Company Limited

(c) Key Management Personnel:

1. V.K. Mundhra (Chairman)

2. P. D. Mundhra (Executive Director)

3. Anjan Malik (Director)

8. Earnings Per Share

The basic earnings per equity share are computed by dividing the net profit attributable to the equity shareholders for the year by the weighted average number of equity shares outstanding during the reporting period. The number of shares used in computing diluted earnings per share comprises the weighted average number of shares considered for deriving basic earnings per share, and also the weighted average number of equity shares, which may be issued on the conversion of all dilutive potential shares, unless the results would be anti dilutive.

9. Employee Benefit Plans

The Company makes annual contribution to the Employee''s Group Gratuity Assurance Scheme of the Life Insurance Corporation of India (LIC). The Scheme provides for lump sum payment to vested employees at retirement, death while in employment or on termination of employment based on completed year of service or part thereof in excess of six months. Vesting occurs on completion of five years of service.

10. Forward contracts and options in foreign currencies

The Company is exposed to foreign currency fluctuations on assets / liabilities denominated in foreign currency. The use of forward contracts to hedge foreign currency risk is governed by the Company''s strategy, which provides principles on the use of such forward contracts and currency options consistent with the Company''s Foreign Exchange Risk Management Policy. The counter- parties in these instruments are banks and the Company considers the risks of non- performance by the counterparty as non-material. The Company does not use forward contracts and currency options for speculative purposes.

11. The Company has deferred the recognition of cumulative Minimum Alternative Tax (MAT) credit of Rs.287.37 million as at March 31, 2013 (P.Y. Rs. 209.18 million), which could be available for set off against future tax liability under the provisions of the Income Tax Act, 1961 on account of uncertainty around the time frame within which income tax will be payable under the normal provisions against which the MAT credit can be utilised.

12. Dues to Micro, Small and Medium Enterprises

Based on the information available with the Company, there are no dues payable to micro, small and medium enterprises as defined in The Micro, Small & Medium Enterprises Development Act, 2006.

13. Contingent Liabilities

Guarantees have been given by the Company on behalf of various subsidiaries against credit facilities amounting to Rs. 2.6 million (Previous Year Rs. 2.6 million).These guarantees have been given in the normal course of the Company''s operations and are not expected to result in any loss to the Company on the basis of the beneficiaries fulfilling their ordinary commercial obligations.

The Company has received the following Income Tax demand notices amounting to Rs. 13.20 million (Previous Year Rs.13.20 million).

The Company has also received demand notices from Service tax department amounting to Rs. 7.44 million (Previous Year Nil).The Company has filed responses against each of the notices with the department.

The amounts represent best possible estimates arrived at on the basis of available information. The uncertainties and possible reimbursements are dependent on the outcome of the different legal processes which have been invoked by the Company or the claimants as the case may be and therefore cannot be predicted accurately. The Company engages reputed professional advisors to protect its interest and has been advised that it has strong legal positions against such disputes. Hence no provision has been made in the financial statements for these demands.

*The Company does not have information as to the extent to which remittances, if any, in foreign currencies on account of dividends have been made by/on behalf of non-resident shareholders. The particulars given are for dividends declared and paid to non-resident shareholders for the year 2010-11 and 2011-12.

14. The Company has a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under sections 92-92F of the Income Tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the company appoints independent consultants for conducting a Transfer Pricing Study to determine whether the transactions with associate enterprises are undertaken, during the financial year, on an "arms length basis". Adjustments, if any, arising from the transfer pricing study in the respective jurisdictions shall be accounted for as and when the study is completed for the current financial year. However the management is of the opinion that its international transactions are at arms'' length so that the aforesaid legislation will not have any impact on the financial statements.

15. Previous year figures have been regrouped, wherever necessary to conform with the current year''s presentation.


Mar 31, 2012

1. a) Basis of Preparation

The financial statements have been prepared and presented under the historical cost convention on the accrual basis of accounting and comply with the Accounting Standards (AS) as notified under the Companies Act, 1956 (the Act) and comply in all material aspects with AS prescribed by the Central Government, in accordance with Company (AS) Rules, 2006.

b) Use of estimates

The preparation of the financial statements in conformity with generally accepted accounting principles ('GAAP') in India requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities on the date of the financial statements. Management believes that the estimates made in the preparation of financial statements are prudent and reasonable. Actual future period's results could differ from those estimates. Any revision to accounting estimates is recognized prospectively in current and future periods.

a) Terms / rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs.10 per share. Each holder of equity shares is entitled to one vote per equity share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

c) The Company has issued 26,107,869 shares (P.Y. 26,107,869) by way of bonus shares by capitalising free reserves during the period of five years immediately preceeding the reporting date.

d) Details of Shareholders holding more than 5% of Shares in the Company

The company has received the above applications from employees by virtue of ESOP granted to these employees under the respective ESOP schemes. The company has sufficient authorised capital to cover the share capital amount resulting from allotment of shares out of such share application money.

2. INVESTMENTS

a) Pursuant to a Share Purchase Agreement ('SPA') dated July 24,2007, the Company, through its subsidiary, eClerx Investments Limited (EIL), acquired 99.4% of Igentica Travel Solutions Limited (ITS) for GBP 1,428,441. ITS was wound up on March 29, 2011 and the provision for diminution in value of investment in EIL has been made for Rs. 126.77 millions, based on the revised net worth of EIL as at March 31,2011.

b) Subsequent to the balance sheet date, the Company has acquired the entire shareholding of Agilyst Inc ('Agilyst'), a closely held US based Company, through its overseas subsidiary eClerx Investments Ltd effective May 4, 2012. The consideration towards the acquisition will consist of an upfront payment of US$15.75 million and a variable earn out, which would range between US$ 0 to US$ 13 million, based on Agilyst's future performance till September 30, 2014. The transaction will be funded from Group's internal resources including unutilised IPO proceeds.

3. SEGMENT REPORTING

The Company operates under a single primary segment i.e. data analytics and process outsourcing services.

4. DEFERRED TAX BALANCES

The components of deferred tax assets arising on account of timing differences between taxable income and accounting income

5. OPERATING LEASES

The Company has various operating leases for office facilities and residential premises for employees which include leases that are renewable on a yearly basis, cancellable at its option and other long term leases.

6. EMPLOYEES STOCK OPTION PLAN (ESOP)

ESOP 2005 scheme:

The Company instituted ESOP 2005 scheme under which 750,000 stock options have been allocated for grant to the employees. The scheme was approved by our shareholders at the Extra Ordinary General Meeting held on November 16,2005.

ESOP 2008 scheme:

The Company instituted ESOP 2008 scheme under which 1,000,000 stock options have been allocated for grant to the employees. The scheme was approved by the shareholders by way of postal ballot, the result of which was declared on May 19, 2008. The Scheme was subsequently amended to increase the number of options to 1,600,000 stock options vide resolution passed at Ninth Annual General Meeting held on August 26, 2009. Pursuant to bonus issue by the Company on July 29, 2010, the number of options available under the scheme accordingly increased to 2,400,000 pursuant to relevant SEBI regulations.

Proforma accounting for stock options granted

The Company applies the intrinsic value-based method of accounting for determining compensation cost for its stock-based compensation plan. Had the compensation cost been determined using the fair value approach, the Company's net income and basic and diluted earnings per share (EPS) as reported would have been as per the proforma amounts as indicated herein below:

7. RELATED PARTY INFORMATION

As per Accounting Standard 18 - Related Party Transactions, as notified under the Companies Act, 1956, the Company's related parties and transactions with them are enumerated below:

A. Related Parties

(a) Where control exists:

1. eClerx Limited (wholly owned subsidiary)

2. eClerx LLC (wholly owned subsidiary)

3. eClerx Investments Limited (wholly owned subsidiary)

4. eClerx Private Limited (wholly owned subsidiary)

5. Igentica Travel Solutions Limited *(99.4% held by eClerx Investments Limited) * Igentica Travel Solutions Limited has been wound up on March 29, 2011

(b) Enterprises where Key Managerial Person and / or relative of such personnel have significant influence: 1. Duncan Stratton & Company Limited

(c) Key Management Personnel:

1. V.K. Mundhra (Chairman)

2. PD Mundhra (Executive Director)

3. Anjan Malik (Director)

B. Details Of Related Party Transactions

The Company has identified the following related party transactions in accordance with the requirement under AS 18, as notified under the Companies Act, 1956:

8. DISCLOSURE PURSUANTTO CLAUSE 32 OF LISTING AGREEMENT

Amount of loans and advances in nature of loans outstanding from subsidiary for the year ended March 31,2012:

9. EARNINGS PER SHARE

The basic earnings per equity share are computed by dividing the net profit attributable to the equity shareholders for the year by the weighted average number of equity shares outstanding during the reporting period. The number of shares used in computing diluted earnings per share comprises the weighted average number of shares considered for deriving basic earnings per share, and also the weighted average number of equity shares, which may be issued on the conversion of all dilutive potential shares, unless the results would be anti dilutive.

10. EMPLOYEE BENEFIT PLANS

The Company makes annual contribution to the Employee's Group Gratuity Assurance Scheme of the Life Insurance Corporation of India (LIC).The Scheme provides for lump sum payment to vested employees at retirement, death while in employment or on termination of employment based on completed year of service or part thereof in excess of six months. Vesting occurs on completion of five years of service.

The following table sets out the status of the gratuity plan for the year ended March 31, 2012 as required under AS 15 (Revised) as notified under the Companies Act, 1956

11. FORWARD CONTRACTS AND OPTIONS IN FOREIGN CURRENCIES

The Company is exposed to foreign currency fluctuations on assets / liabilities denominated in foreign currency. The use of forward contracts to hedge foreign currency risk is governed by the Company's strategy, which provides principles on the use of such forward contracts and currency options consistent with the Company's Foreign Exchange Risk Management Policy. The counter- parties in these instruments are banks and the Company considers the risks of non-performance by the counterparty as non- material. The Company does not use forward contracts and currency options for speculative purposes.

As on the balance sheet date, the Company's net foreign currency exposure that is not hedged is Rs. 625.76 million (P.Y. 615.28 million).

12. The Company has deferred the recognition of cumulative Minimum Alternative Tax (MAT) credit of Rs. 209.18 million as at March 31, 2012 (P.Y. Rs. 168.69 million), which could be available for set off against future tax liability under the provisions of the Income Tax Act, 1961 on account of uncertainty around the time frame within which income tax will be payable under the normal provisions against which the MAT credit can be utilised.

13. DUES TO MICRO, SMALL AND MEDIUM ENTERPRISES

Based on the information available with the Company, there are no dues payable to micro, small and medium enterprises as defined in The Micro, Small & Medium Enterprises Development Act, 2006.

14. CONTINGENT LIABILITIES

Guarantees have been given by the Company on behalf of various subsidiaries against credit facilities amounting to Rs. 2.6 million (Previous Year Rs. 2.6 million).These guarantees have been given in the normal course of the Company's operations and are not expected to result in any loss to the Company on the basis of the beneficiaries fulfilling their ordinary commercial obligations.

The Company has received the following Income Tax demand notices amounting to Rs. 13.20 million (Previous Year Rs. 29.13 million).

(Rupees in million)

Financial Year Demand Amount Status

2004-05 9.67 Appeal filed with Commissioner of Income Tax (Appeals)

2006-07 3.53 Appeal filed with Commissioner of Income Tax (Appeals)

The amounts represent best possible estimates arrived at on the basis of available information. The uncertainties and possible reimbursements are dependent on the outcome of the different legal processes which have been invoked by the Company or the claimants as the case may be and therefore cannot be predicted accurately. The Company engages reputed professional advisors to protect its interest and has been advised that it has strong legal positions against such disputes. Hence no provision has been made in the financial statements for these Income Tax demands.

*The Company does not have information as to the extent to which remittances, if any, in foreign currencies on account of dividends have been made by/on behalf of non-resident shareholders. The particulars given are for dividends declared and paid to non-resident shareholders for the year 2009-10 and 2010-11.

15. The company has a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under sections 92-92F of the Income Tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the company appoints independent consultants for conducting a Transfer Pricing Study to determine whether the transactions with associate enterprises are undertaken, during the financial year, on an "arms length basis". Adjustments, if any, arising from the transfer pricing study in the respective jurisdictions shall be accounted for as and when the study is completed for the current financial year. However the management is of the opinion that its international transactions are at arms' length so that the aforesaid legislation will not have any impact on the financial statements.

16. Previous year figures have been regrouped, wherever necessary to conform with the current year's presentation.


Mar 31, 2010

1. Investments

The Company entered into a share purchase transaction on January 28, 2010 with shareholders of eClerx Private Limited, Singapore to acquire the entire share capital of that Company for a consideration of Singapore $ 1.

The Company instituted ESOP 2008 scheme under which 1,000,000 stock options have been allocated for grant to the employees. The scheme was approved by the shareholders by way of postal ballot, the result of which was declared on May 19, 2008.

2. Related Party Information

As per Accounting Standard 18 - Related Party Transactions, as notified under the Companies Act, 1956, the Companys related parties and transactions with them are enumerated below:

A. Related Parties

(a) Where control exists:

1. eClerx Limited, United Kingdom (wholly owned subsidiary)

2. eClerx LLC, United States of America (wholly owned subsidiary)

3. eClerx Investments Limited, British Virgin Island (wholly owned subsidiary)

4. eClerx Private Limited, Singapore (wholly owned subsidiary) (w. e. f. January 28, 2010)

5. Igentica Travel Solutions Limited (99.4% held by eClerx Investments Limited, BVI)

6. * Igentica Limited (100% held by Igentica Travel Solutions Limited)

7. * Electrobug Technologies Limited (100% held by Igentica Travel Solutions Limited)

8. * E-Bug Pricing Intelligence Limited (100% held by Electrobug Technologies Limited) * These companies have been wound up on March 17, 2009

(b) Enterprises where Key Managerial Person and/or relative of such personnel have significant influence:

1. Duncan Stratton & Company Limited

2. Inner Challenges Private Limited

(c) Key Management Personnel:

1. V.K Mundhra (Chairman)

2. P. D. Mundhra (Executive Director)

3. Anjan Malik (Director)

B. Details of Related Party Transactions

The Company has identified the following related party transactions in accordance with the requirement under AS 18, as notified under the Companies Act, 1956:

The above does not include gratuity and leave encashment benefits as the provisions for these are determined for the Company as a whole and therefore separate amounts for the director are not available.

3. Forward contracts and options in foreign currencies

The Company, in accordance with its risk management policies and procedures, enters into foreign currency forward contracts and currency option contracts to manage its exposure in foreign exchange rates. The counter party is generally a bank.

4. Secured Loans

The Company has been sanctioned working capital facilities and short term loan to the tune of Rs. 250 million from Citi Bank. The amount outstanding on account of pre-shipment export finance loan as on March 31, 2010 is Nil (P.Y. Nil). The loan is secured by way of charge on movable assets, book debts, outstanding monies, receivables, claims, bills, investments, rights to or in movable properties/movable assets forming part of current assets both present and future.

5. Dues to Small scale, micro and medium enterprises

Based on the information available with the Company, there are no dues payable to micro, small and medium enterprises as defined in The Micro, Small and Medium Enterprises Development Act, 2006.

6. Contingent Liabilities

Guarantees have been given by the Company on behalf of various subsidiaries against credit facilities amounting to Rs. 2.6 million (P.Y. Rs. NIL).These guarantees have been given in the normal course of the Companys operations and are not expected to result in any loss to the Company on the basis of the beneficiaries fulfilling their ordinary commercial obligations.

The Company has received the following Income Tax demand notices amounting to Rs 29.13 million (P.Y. Rs. 11.52 million).

(Rupees in million)

Financial Year Demand Amount Status 2004-05 1.59 Appeal filed by Company with Commissioner of Income Tax

2005-06 11.52 Appeal filed by Income Tax Department with Income Tax Appellate Tribunal

2006-07 16.02 Appeal filed by Company with Commissioner of Income Tax

The amounts represent best possible estimates arrived at on the basis of available information. The uncertainties and possible reimbursements are dependent on the outcome of the different legal processes which have been invoked by the Company or the claimants as the case may be and therefore cannot be predicted accurately. The Company engages reputed professional advisors to protect its interest and has been advised that it has strong legal positions against such disputes. Hence no provision has been made in the financial statements for these Income Tax demands.

*The Company does not have information as to the extent to which remittances, if any, in foreign currencies on account of dividends have been made by/on behalf of non-resident shareholders. The particulars given are for dividends declared and paid to non-resident shareholders for the year 2007-08, 2008-09 and 2009-10.

7. Quantitative details

The Company is in the business of providing Knowledge Process Outsourcing services. Such services are not capable of being expressed in generic unit and hence, it is not possible to give the quantitative details required under paragraphs 3, 4C and 4D of Part II of Schedule VI to the Companies Act, 1956.

8. The Company has a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under sections 92-92F of the Income Tax Act, 1961. Since the law requires existence of such information and documentation to be contemporaneous in nature, the Company appoints independent consultants for conducting a Transfer Pricing Study to determine whether the transactions with associate enterprises are undertaken, during the financial year, on an "arms length basis". Adjustments, if any, arising from the transfer pricing study in the respective jurisdictions shall be accounted for as and when the study is completed for the current financial year. However the management is of the opinion that its international transactions are at arms length so that the aforesaid legislation will not have any impact on the financial statements.

9. Previous year figures have been regrouped, wherever necessary to conform with the current years presentation.

 
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