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Financial Technologies (India) Ltd. Notes to Accounts, Financial Technologies (India) Ltd. Company
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Notes to Accounts of Financial Technologies (India) Ltd.

Mar 31, 2015

1. OPERATING LEASE

(a) The Company has entered into various cancellable and non-cancellable operating lease agreements as a lessee for various premises ranging from 6 months to 60 months and may be renewed for further period based on mutual agreement of the parties. The lease rentals recognised as an expense in the statement of profit and loss during the year are included in Note 27 under the head 'Rent including lease rental'.

(b) The Company has entered into various cancellable and non-cancellable operating lease agreements as a lessor for various premises ranging from 2 months to 60 months and may be renewed for further period based on mutual agreement of the parties. The lease rentals recognised as income in the statement of profit and loss during the year are included in Note 22 under the head 'Rental income from operating leases'.

2. DISCLOSURES REQUIRED UNDER SECTION 22 OF THE MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006:

(a) An amount of Rs. 14.01 lacs (Previous Year Rs. 4.94 lacs) and Rs. NIL (Previous Year Rs. Nil) was due and outstanding to suppliers as at the end of the accounting year on account of Principal and Interest respectively. (Refer Note 9)

(b) No interest paid during the year.

(c) No interest is due and payable at the end of the year.

(d) No amount of interest accrued and unpaid at the end of the accounting year.

The above information regarding Micro and Small Enterprises has been determined to the extent replies to the Company's communication have been received from vendors/suppliers regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006. This has been relied upon by the auditors.

3. REVENUE EXPENDITURE INCURRED DURING THE YEAR ON RESEARCH AND DEVELOPMENT

The aggregate amount of revenue expenditure incurred during the year on Research and Development as per allocation made by the management and shown in the respective heads of the account is Rs. 1,071.79 lacs (Previous Year Rs. 948.96 lacs). This has been relied upon by the auditors.

4. RELATED PARTY DISCLOSURE:

I. Names of related parties and nature of relationship:

(i) Entities where control exists (Subsidiaries, including step down subsidiaries)

1 TickerPlant Ltd. (TickerPlant)

2 IBS Forex Ltd. (IBS)

3 atom Technologies Ltd. (atom)

4 Riskraft Consulting Ltd. (Riskraft)

5 National Spot Exchange Ltd. (NSEL)

6 Western Ghats Agro Growers Company Limited (WGAGL) (Subsidiary of NSEL)

7 Farmer Agricultural Integrated Development Alliance Ltd. (FAIDA) (Subsidiary of NSEL)

8 National Bulk Handling Corporation Ltd. (NBHC) (Refer Note 48) (Subsidiary up to April 25, 2014)

9 FT Group Investments Pvt. Ltd. (FTGIPL)

10 Financial Technologies Middle East- DMCC (FTME) (Subsidiary of FTGIPL)

11 Bourse Africa Limited (BAL) [(formerly known as Global Board of Trade Ltd.] (Subsidiary of FTGIPL)

12 Bourse Africa Clear Limited (BACL) (formerly known as GBOT Clear Limited) (Subsidiary of BAL)

13 Knowledge Assets Pvt. Ltd. (KAPL)

14 Financial Technologies Communications Ltd. (FTCL)

15 Global Payment Networks Ltd. (GPNL)

16 FT Knowledge Management Company Ltd. (FTKMCL)

17 Indian Bullion Market Association Ltd. (IBMA) (Subsidiary of NSEL)

18 Trans-Global Credit & Finance Ltd. (TGCFL) (Subsidiary up to August 19, 2014)

19 Capricorn Fin-Tech (Pvt). Ltd. (Subsidiary of FTME)

20 Bourse Africa (Botswana) Limited (BABL) (formerly known as Bourse Africa Ltd.) (Subsidiary of FTGIPL)

21 Boursa India Ltd. (BIL) (Subsidiary up to August 19, 2014)

22 ICX Platform (Pty) Ltd. (ICX)

23 Credit Market Services Ltd. (CMSL)

24 Takshashila Academia of Economic Research Ltd. (TAER) (Subsidiary Up to September 15, 2014)

25 Apian Finance and Investments Ltd. (APIAN)

26 Bahrain Financial Exchange BSC (c) (BFX) (Subsidiary of FTGIPL)

27 BFX Clearing & Depository Corporation BSC(c) (Subsidiary of BFX)

28 Financial Technologies Singapore Pte Ltd. (FTSPL)

29 Singapore Mercantile Exchange PTE Ltd. (SMX) (Subsidiary of FTSPL) (upto February 3, 2014) (Refer Note 50)

30 Singapore Mercantile Exchange Clearing Corporation PTE Ltd. (SMX-CCL) (Subsidiary of SMX) (up to February 3, 2014) (Refer Note 50)

31 FT Projects Ltd. (FTPL)

32 Financial Technologies Projects Pvt. Ltd. (FTPPL) (under liquidation)

33 ICX Africa Ltd. (Subsidiary of BAL) (Liquidated w.e.f. May 19, 2014)

34 Bourse Exchange Nigeria Ltd. (Subsidiary of BAL) (Subsidiary up to January 19, 2015)

35 Bourse Africa (Kenya) Ltd. (Subsidiary of BAL) (Liquidated w.e.f. May 7, 2014)

36 Bourse Uganda Ltd. (Subsidiary of BAL) (Liquidated w.e.f. June 10, 2014)

37 Bourse Zambia Ltd. (Subsidiary of BAL) (Liquidated w.e.f. January 24, 2014)

38 Bourse Tanzania Ltd. (Subsidiary of BAL) (Liquidated w.e.f. May 28, 2014)

39 Bourse South Africa Limited (Subsidiary of BAL) (Under Liquidation)

(ii) Associate Companies:

1 Multi Commodity Exchange of India Ltd. (MCX) (up to December 25, 2013, Refer Note 45)

2 MCX-SX Clearing Corporation Ltd. (MCXSX-CCL) (up to March 18, 2014, Refer Note 46)

3 Indian Energy Exchange Ltd. (IEX) (Refer Note 47) (up to May 13, 2014)

4 SME Exchange of India Ltd. (SME) (under liquidation)

(iii) Jointly Controlled Entity:

Dubai Gold and Commodities Exchange (DGCX)

(iv) Key Management Personnel (KMP)

1 Mr. Jignesh Shah* : Chairman and Managing director (up to November 20, 2014)

2 Mr. Dewang Neralla : Whole time director (up to November 20, 2014)

3 Mr. Manjay Shah* : Whole time director (up to November 20, 2014)

4 Mr. Prashant Desai : Whole time director (w.e.f. November 7, 2014)

Managing director & CEO (w.e.f. November 21, 2014)

5 Mr. Rajendra Mehta : Whole time director (w.e.f. November 21, 2014)

6 Mr. Jigish Sonagra : Whole time director (w.e.f. November 21, 2014)

7 Mr. Devendra Agrawal : Chief Financial Offcer (w.e.f. November 5, 2014)

8 Mr. Hariraj Chouhan : Company secretary (w.e.f. November 5, 2014) * Mr. Jignesh Shah and Mr. Manjay Shah are brothers.

5. SEGMENT REPORTING:

The Company has identified Business segments as its primary segment and Geographical segments as its secondary segment taking into account the nature of services, differing risks and returns, the organizational structure and the internal reporting system of the Company.

Revenues and direct expenses in relation to segments are categorized based on items that are individually identifiable to that segment or those which can be reasonably allocated to the segment. All other expenses which are not attributable or allocable to segments have been disclosed as unallowable expenses.

Notes:

1. Due to diversified nature of business, significant portion of assets are interchangeably used between segments and the Management believes that its segregation will not be meaningful.

2. The reportable segments are described as follows :

a) STP Technologies/solutions segment represents straight through processing solutions and includes an integrated mix of various products, projects and services incidental thereto.

b) The businesses, which are not reportable segments during the year, have been grouped under the "Others" segment. This mainly represents trading activities, process management services, risk consultancy activities, shared business support services and IT infrastructure sharing.

6. STOCK BASED COMPENSATION

a) During the financial year 2011-12, Remuneration and Compensation Committee of the Company had granted 900,000 Stock Options each under the Employee Stock Option Scheme – 2009 & 2010 totaling to 1,800,000 options at a price of Rs. 770/- to the eligible employees / Directors of the Company in terms of SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 as amended from time to time and as approved by the Shareholders at the Annual General Meetings of the Company held on September 25, 2009 & September 29, 2010 respectively.

During the financial year 2012-13, Remuneration and Compensation Committee of the Company at their meeting held on March 05, 2013 has considered and approved the grant from reissue of lapsed / cancelled options of 1,86,630 Stock Options under the Employee Stock Option Schemes of which 74,350 options are granted under scheme-2009 and 1,12,280 options under scheme-2010 at a price of Rs. 807.70 to the eligible employees / Directors of the Company in terms of SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 as amended from time to time.

Each option entitles the holder to exercise the right to apply for and seek allotment of one equity share of Rs. 2/- each. The Intrinsic value of each option was nil, since the options were granted at the market price of the equity shares on the date of grant. The options shall vest in three installments of 20%, 30% and 50% at the end of 1st year, 2nd year and 3rd year respectively from the date of the grant and were to be exercised within three months from vesting of options or as may be determined by the Remuneration and Compensation Committee. During the year, Remuneration and Compensation Committee of the Company has approved the modification of exercise period of 3 months from date of vest to three years from the date of vest (hereinafter referred as Modification 1). As approved by the Shareholders at the Annual General Meetings of the Company held on September 23, 2014, the Remuneration and Compensation Committee of the Company at their meeting held on October 01, 2014 has approved the modification of exercise price from Rs. 770.00 to Rs. 167.00 for grant dated March 14, 2012 and from Rs. 807.70 to Rs. 167.00 for grant dated March 05, 2013 (hereinafter referred as Modification 2). The tenure of the Schemes is for maximum period of five years from the date of grant of options.

b) The Company is following the intrinsic value-based method of accounting for stock option and accordingly has recognised Rs. 574.00 as expenses on employee stock option (ESOP) schemes in the Statement of Profit & Loss.

Had the compensation cost of the Company's stock based compensation plans been determined as per fair value approach using Black & Scholes model :

(a) the incremental cost, in addition to the amount based on the grant date fair value of the stock options, for the year due to: (i) Modification 1 would have been Rs. 2,671.73 lacs.

(ii) Modification 2 would have been Rs. 774.54 lacs.

(b) the Company's net proft for the year would have been lower by Rs. 3,168.74 lacs (Previous Year net loss would have been higher by Rs. 303.33 lacs).

7. EMPLOYEE BENEFIT PLANS:

Defined contribution plans: The Company makes Provident Fund and Employee State Insurance Scheme contributions which are defined contributions plans, for qualifying employees. Under the schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company has recognised following amounts as contributions in the statement of profit and loss as part of contribution to provident fund and other funds in Note 24 Employee benefits expenses.

Contribution to PF : Rs. 287.72 lacs (Previous Year Rs. 285.01 lacs)

Contribution to ESIC : Rs. 1.91 lacs (Previous Year Rs. 3.29 lacs)

Post employment defined benefit plans:

Gratuity Plan (Included as part of contribution to provident fund and other funds in Note 24 Employee benefits expense): The Company makes annual contributions to the Employee's Group Gratuity Assurance Scheme administered by the Life Insurance Corporation of India ('LIC'), a funded defined benefit plan for qualifying employees. The scheme provides for lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to fifteen days salary payable for each completed year of service or part thereof in excess of six months. Vesting occurs on completion of five years of service.

The expected rate of return on plan assets is based on expectation of the average long term rate of return expected to prevail over the estimated term of the obligation on the type of the investments assumed to be held by LIC, since the fund is managed by LIC.

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

The Company expects to contribute Rs. 334.11 lacs (Previous Year Rs. 330.56 lacs) to the plan assets in the immediate next year.

42 JOINT VENTURE DISCLOSURE:

a Jointly Controlled Entity ('JCE') of the Company :

Name of the Entity : Dubai Gold and Commodities Exchange DMCC ('DGCX')

Country of Incorporation : United Arab Emirates

% Holding : 12.95% (Previous Year up to July 30, 2013 18.58%, w.e.f. July 31, 2013 12.95%)

b The Company's share of interest in the assets, liabilities, income, expenses, contingent liabilities and capital and other commitments with respect to JCE as at and for the year ended March 31, 2015 based on unaudited financial statements of JCE:

8. AMOUNTS REMITTED IN FOREIGN CURRENCY DURING THE YEAR ON ACCOUNT OF DIVIDEND:

The Company has paid dividend, during the year, in respect of shares held by non-resident shareholders including Foreign Institutional Investors and GDR custodian. The total amount remitted as stated below represents amount paid into Indian bank as per mandate/direction given by the non-resident shareholders. Consequently, the exact amount of dividend remitted in foreign currency cannot be ascertained.

9. With effect from January 1, 2014, the Company has revised the estimated useful life of certain fixed assets as stated in Note 2(F). As a result, the depreciation expense and loss before tax for the previous year were both higher by Rs. 556.07 lacs.

10. During the Previous Year, the Company had received an order dated December 17, 2013 passed by the Forward Markets Commission (FMC) holding the Company not a ft and proper person to continue to be a shareholder of 2% or more of the paid up equity capital of Multi-Commodity Exchange of India Ltd. (MCX). Further, FMC has issued revised norms regarding Shareholding, Ownership, Net worth, Fit and Proper Criteria, etc. on May 6, 2014 and has, inter alia, provided that no person shall, directly or indirectly, acquire or hold equity shares of a commodity exchange unless he is ft and proper person and in the event of any person ceasing to be a 'ft and proper person' or being declared so by the Commission, such person shall forthwith divest his shareholding.

The Company has challenged the Order dated December 17, 2013 passed by the Forward Markets Commission (FMC) holding the Company not a ft and proper person to continue to be a shareholder of Multi-Commodity Exchange of India Ltd (MCX) by way of a Writ Petition before the Hon'ble Bombay High Court. On February 28, 2014, prayer for ad-interim relief was rejected by Hon'ble High Court but was pleased to admit the said Writ Petition. On November 17, 2014, the Hon'ble Bombay High Court rejected Notice of Motion fled by the Company due to change in circumstances for seeking stay on the FMC order. The Company fled SLP on November 27, 2014 before Hon'ble Supreme Court against order dated February 28, 2014 and November 17, 2014. On February 6, 2015 the Company withdrew the SLP. The Writ Petition is pending for hearing before the Hon'ble Bombay High Court. Without prejudice to legal rights available within the law, the Company has divested its stake in MCX during the year and consequent profit of Rs. 85,262.70 lacs (Net of attributable expenses of Rs. 2,722.02 lacs) is grouped under 'Net gain on sale of Current Investments in Exceptional items (Refer Note 28). The Company's shareholding in MCX has become 'NIL'.

11. During the Previous Year, SEBI has passed an Order on March 19, 2014 declaring the Company not a 'Fit and Proper' person and directed the Company to divest the equity shares or any instrument that provides for rights over the equity shares held by the Company in MCX-SX, MCX-SX Clearing Corporation Limited (MCX-SX CCL), Delhi Stock Exchange Ltd (DSE), the Vadodara Stock Exchange Limited (VSE) and National Stock Exchange of India Limited (NSEIL). The Company had fled an appeal in the Security Appellate Tribunal (SAT) against the said order which was rejected by SAT. The Company has fled Civil Appeal before Hon'ble Supreme Court challenging the SEBI Order and SAT Order. The Hon'ble Supreme Court admitted the Civil Appeal and Civil Appeal is pending for hearing. Without prejudice to the legal rights and remedies available under the law, the Company entered into Share and Warrant Purchase Agreements (SWPA)/ Warrant Purchase Agreements (WPA) with certain investors for sale of its 100% stake in MCX Stock Exchange Ltd (MCX-SX) and resultant profit of Rs. 1,282.46 lacs (net of attributable expense of Rs. 1,665.66 lacs) is grouped under 'Net gain on sale of Current Investments in Exceptional items (Refer Note 28). The Company's shareholding in MCX-SX has become 'NIL'. In meanwhile, the Company has fled an appeal before the SAT against the Securities and Exchange Board of India (SEBI) order for rejecting Company's request for extension for divestment in recognized stock exchanges. The said appeal is pending before SAT for hearing. The investment in the aforesaid entities are continued to be classified as current investment at the lower of cost and fair value. MCX-SX CCL is not considered as an associate company from the date of order i.e. March 19, 2014. According to the Management's view, on the basis of the information available including latest financial statements/ results and/or latest transactions carried out, the fair value of above investments exceeds the cost of the investments. In case of investments where the book value is less than the investment amount, the Company has made appropriate provision for the same.

12. As per the Regulatory requirement under Central Electricity Regulatory Commission (Power Market) (CERC) Regulations 2010, the Company had to reduce its holding in an associate company viz. Indian Energy Exchange Limited (IEX) to 25%. Accordingly, during the Previous Year, the Company had divested part of its investments aggregating 1,364,787 equity shares of Rs. 10 each in IEX. The resulting profit of Rs. 6,989.14 lacs (net of directly attributable expenses of Rs. 164.05 lacs) is regrouped under 'Net gain on sale of Current Investments' in Exceptional items (Refer Note 28).

Subsequently, during the year , the Company received communication from IEX vide its letter dated May 19, 2014 informing that CERC vide their order dated May 13, 2014 stated that the Company cannot be considered as ft and proper person to hold the shares in power exchanges in view of FMC Order & SEBI Order and inter alia directed IEX a) to ensure that the Company divests its entire shareholding from IEX by September 30, 2014, b) pending divestment of shares, the voting rights of the Company shall stand extinguished and any corporate benefit in lieu of such shareholding shall be kept in abeyance or withheld by the exchange and c) IEX shall ensure that no nominee of the Company is represented in the Board of IEX. The above directions of CERC were binding with immediate effect. The Company had challenged the said CERC Order before Appellate Tribunal for Electricity. The Appellate Tribunal has dismissed the appeal fled by the Company on February 4, 2015. On April 17, 2015 the Ld. Central Commission passed an order in Suo-Motu Petition No. SM/341/2013 inter alia directing the Company to complete divestment of its shareholding in IEX by May 9, 2015. The Company fled Civil Appeal before Hon'ble Supreme Court challenging the CERC Order, Appellate Tribunal Order and Order dated April 17, 2015 which is pending for hearing. On May 8, 2015, the Hon'ble Supreme Court has issued notice in both the matters. Further, on May 19, 2015, Appellate Tribunal has granted time till June 18, 2015 for completing the divestment in IEX based on the application filled by the Company. IEX is not considered as an associate company from the date of order i.e. May 13, 2014.

Without prejudice to the legal rights and remedies available under the law, during financial year, the Company has entered into Share Purchase Agreement (SPA) with certain Investors for sale of entire 25.64% equity stake on a fully diluted basis in Indian Energy Exchange Ltd (IEX). The said transaction is subject to fulfillment of certain condition precedents. Post completion of the above said transaction, the Company's shareholding in IEX will become 'NIL".

13. During the Previous Year, the Company along with other shareholders entered into a share purchase agreement for sale of 100% equity shares of National Bulk Handling Corporation Limited (NBHC) to IVF Trustee Company Limited, which sale transaction was completed during the year and the resultant profit of Rs. 12,252.34 lacs (net of attributable expense of Rs. 2,491.80 lacs) is grouped under 'Net gain on sale of Current Investments in Exceptional items (Refer Note 28).

14 The Company received letter from Financial Services Commission (FSC) in May, 2014 informing that FSC does not consider the Company as ft & proper, pursuant to Section 23(3) of the Financial Services Act, 2007 of Mauritius and directed the Company to dispose of its shareholding in Bourse Africa Limited, Mauritius ("BAL"). During the year, the Board of FT Group Investments Pvt, Ltd. Mauritius., ("FTGIPL"), a wholly owned subsidiary of the Company has entered into Share Purchase Agreement (SPA) for sale of 100% of its stake in Bourse Africa Limited, Mauritius (together with its wholly owned subsidiary Bourse Africa Clear Ltd.) to Continental Africa Holdings Limited (CAHL), Mauritius subject to certain conditions precedents including regulatory approvals. The shareholders of FTIL with 99.975% majority approved the said transaction on February 20, 2015.

15 During the previous year, Financial Technologies Singapore Pte. Ltd (FTSPL), a wholly-owned subsidiary of the Company, sold 100% of FTSPL's equity ownership in its wholly owned subsidiaries, Singapore Mercantile Exchange Pte. Ltd. (SMX) and Singapore Mercantile Exchange Clearing Corporation Pte. Ltd. (SMXCC) to ICE Singapore Holdings Pte. Ltd, an entity owned by Intercontinental Exchange Group, Inc. (ICE).

16 As at March 31, 2015, the Company's investment in certain subsidiaries and a jointly controlled entity aggregating Rs. 84,069.44 lacs (Previous Year Rs. 12,590.95 lacs) and loans and advances / recoverables from these entities aggregating Rs.3,321.18 lacs (Previous Year Rs. 90,758.89 lacs) (excluding NSEL and its subsidiaries) which presently have accumulated losses, [share of aggregate losses till March 31, 2015 Rs. 106,979.33 lacs (Previous year Rs. 112,881.99 lacs)].

During the year, FTGIPL a wholly owned subsidiary of the Company has carried out capital reduction of USD 35.0 million out of its accumulated losses and reduced its stated capital. Consequently the Company's investment in the subsidiary is reduced by Rs. 20,999.05 lacs which is shown in Exceptional items (Refer Note 28). On a conservative basis the Company has made an additional provision of Rs. 65,726.76 lacs (Previous Year Rs. 6,944.45 lacs) towards provision for other than temporary diminution in the value of long term investments including provision (write down) in value of investments of Rs. Nil (Previous Year Rs. 15.00 lacs) in respect of investments reclassified during the previous year from long-term (non-current) to current investments, and Rs. 159.57 lacs (Previous Year Rs. 15,150.00 lacs) towards doubtful loans and advances. Accordingly, total provision of Rs. 74,393.47 lacs (Previous Year Rs. 8,681.71 lacs) for other than temporary diminution in the value of long term investments excluding NSEL and provision of Rs. 178.57 lacs (Previous Year Rs. 15,150.00 lacs) for doubtful loans and advances excluding NSEL as at the year ended on March 31, 2015 is considered to be adequate for these investments and loans and advances / receivables.

17 In view of the developments in respect of its subsidiary NSEL, during the Previous year, on conservative basis, then the Company had made a provision towards diminution other than temporary in value of long term investments of Rs. 4,499.99 lacs for its investment in NSEL. In order to meet the working capital requirements of NSEL, the Company has subscribed to the right issue made by NSEL to the extent of Rs. 1,500.00 lacs. On conservative basis, the Company has made a provision towards diminution other than temporary in value of long term investments of the same (Refer Note No. 28).

18. During the previous year, to protect the interest of the large number of small clients of the trading members of the NSEL who had to receive money from its defaulting members, NSEL had requested the Company to give a bridge loan, which request was accepted by the Company's Board of Directors as a goodwill gesture without admitting any liability on behalf of NSEL and a onetime bridge loan amounting to Rs. 17,939.81 lacs was given which NSEL will have to repay to the Company from the receipt of the amounts from defaulting members after paying to all the investors. The ongoing recovery process by NSEL from its defaulting members seems long drawn process as major amounts are in litigation. In view of the current status of recovery in NSEL, possibility of recovery of the said loan amount from NSEL seems very remote and difficult. Hence the Company has written off the said bridge loan of Rs. 17,939.81 lacs, without prejudice to its right to recover the loan and interest amount from NSEL in future, for which the provision was made during the Previous Year (Refer Note No. 28).

Further during the previous year, the Company had provided corporate guarantee of Rs. 22,500.00 lacs on behalf of NSEL for availing banking facility in relation to procurement of cotton on behalf of National Agricultural Cooperative Marketing Federation of India Ltd. (NAFED). In view of the developments at NSEL, the bank recalled the credit facility granted to NSEL and invoked the guarantee to the extent of outstanding balance of Rs. 3,143.25 lacs including interest thereon and debited the said amount from the Company's bank account and, accordingly, the Company has debited the same to NSEL's account as loan. Recovery of the said loan amount is dependent on the recovery by NSEL from NAFED. On conservative basis the Company had made provision of the said amount during the previous year.

Further, during the year, an additional loan of Rs. 1,098.76 lacs (Previous Year Rs. 350.00 Lacs) has been provided to NSEL for its working capital. On conservative basis, the Company has made provision of additional loan given Rs. 1,098.76 lacs (Previous Year Rs. 350.00 lacs).

19. During the year the Company has raised invoices / debit notes for income from rent, interest and reimbursement of expenses. In view of the developments at NSEL, the Company is unable to assess the ultimate collection with reasonable certainty, and on a prudent basis, the Company, to the extent of uncertainty involved, during the year the Company derecognised interest income of Rs. 1,761.29 lacs (Previous Year Rs. 1,003.22 lacs) and rent income Rs. 24.00 lacs (Previous Year Rs. 164.63 lacs). The additional amount receivable from NSEL towards taxes as applicable and reimbursement of expenses is Rs. 22.26 lacs (Previous Year Rs. 131.68 lacs) for which, on conservative basis, the Company has made further provision of Rs. 22.26 lacs (Previous Year Rs. 131.68 lacs) during the year ended March 31, 2015

20. The Company has received Draft Order of amalgamation of National Spot Exchange Limited (NSEL) with the Company under Section 396 (1) of the Companies Act, 1956 from Ministry of Corporate Affairs (MCA) on October 21, 2014. The Company has fled a Writ Petition before the Hon'ble Bombay High Court, interalia challenging the draft Order issued by the Ministry of Corporate Affairs, dated October 21, 2014, for proposed forced amalgamation of National Spot Exchange Limited with the Company. The Hon'ble High Court, Bombay, granted status quo in the said matter till February 4, 2015. On February 4, 2015, the Hon'ble High Court passed order inter alia stating that:

a) the Company and other parties mentioned in the Order may fle their objections within 30 days and within 4 weeks thereafter Central Govt. may pass appropriate order after giving brief hearing to all the interested parties.

b) it is further clarified that if any adverse order is passed by the Central Govt, then same shall not be notified for a period of two weeks after the order is communicated to the Company

c) the Central Govt may give brief hearing to the parties mentioned in Section 396 of the Companies Act 1956.

d) in view of the above, the order of the status quo passed by the Hon'ble High Court on November 27, 2014 is vacated.

e) notice of Motion by the Union of India and others is accordingly disposed off

f) liberty is given to the parties to apply for a fxed date of hearing.

As per the above Order, the Company fled its objection with MCA. In meanwhile, MCA has fled Chamber Summons in March 2015 seeking extension of time granted to the Central Government for considering 19,000 suggestions and objections received and to pass order thereto and to complete the procedure as contemplated u/s 396 of the Companies Act, 1956 till July 31, 2015. The Hon'ble Bombay High Court has allowed said Chamber Summons fled by MCA.

21. The Union of India, Ministry of Corporate Affairs ("MCA"), has fled the Company Petition under Sections 397 and 398 read with Sections 388B, 388C, 401, 402, 403, 406 and 408 of the Companies Act, 1956 (the "Act") before the Principal Bench of the Company Law Board at New Delhi (the "CLB"). The Petition has been fled inter alia seeking removal and supersession of the Board of Directors of FTIL. The Company appeared before CLB protesting the action initiated by MCA. The matter is pending before CLB for consideration. No notice has yet been issued in the matter.

22. a) During the Previous Year, Writ Petitions (WP), Public Interest Litigation (PIL), Civil Suits have been fled against the Company in relation to NSEL event, wherein the Company has been made a party in the Civil Suits and the W P. In the said proceedings certain reliefs have been claimed against the Company, inter alia, on the ground that the Company is the holding company of NSEL. These matters are pending before the Hon'ble Bombay High Court for adjudication. The Company has denied all the claims and contentions in its reply. There is no privity of contract between the Company and the Petitioners. Based on legal advice, the management is of the view that the parties who have fled the W P, PIL and Civil Suits would not be able to sustain any claim against the Company. The matter is pending for hearing before the Hon'ble Bombay High Court.

b) First Information Report (FIR) has been registered against various parties, including the Company, with the Economic Offences Wing of the Mumbai Police (EOW) and Central Bureau of Investigation (CBI) in connection with the NSEL event. After investigation, EOW has fled charge-sheet on January 06, 2014, June 04, 2014 and August 04, 2014. It is pertinent to note that the Company has not been named in the said charge-sheets. EOW investigation is in progress.

23. During the year, the Company received letter from the Registrar of Companies, Chennai (ROC), Ministry of Corporate Affairs ("MCA") regarding a notice for inspection under section 209A of the Companies Act, 1956 ("Companies Act") and technical scrutiny of the Company's balance sheet FY12-13 and explanation sought under section 234(1) of Companies Act. The inspection conducted by Dy. ROC and Company submitted requested information to MCA. After inspection, RoC issued show cause notices to the Company stating that the Company contravened certain compliance stipulated under the Indian Companies Act, 1956. The Company has replied to the said show cause notices from RoC.

59 An FIR has been registered with the M.I.D.C Police station, District: Mumbai against the Company and others on the basis of complaint fled by one Mr. Ketan Shah on the basis of a report dated April 21, 2014 of PricewaterhouseCoopers Private Limited (PwC), uploaded by Multi Commodity Exchange of India Ltd (MCX) on the website of BSE Ltd on May 26, 2014, purported to be a "Special Audit Report" on MCX at the direction of Forward Market Commission. The matter is under investigation by the police.

The Company believes that the said FIR is misguided and misconceived based on information in PwC Report as the report is not an audit report since PwC being Private Ltd Company is not an audit firm but provides advisory services. The alleged report was prepared by PwC based on a limited one-sided information without verifying the authenticity of the data, without following the procedure in accordance with generally accepted auditing standards or attestation standards and without taking any responsibility towards any person who acts in reliance of the contents of the Report. The Company is exploring appropriate legal options regarding the said FIR.

24. On February 28, 2015, the Chief Investigating Officer of the SIT, Economic Offences Wing, CB, CID, Mumbai ("EOW") issued a letter directing FTIL, inter alia, and "not to dispose of, alienate, encumber, part with possession of, or create any third party right, title, and/or interest in, to, upon or in respect of any of assets of FTIL, its subsidiaries, and its step down subsidiaries except for the payment of statutory dues, amounts for the preservation, maintenance and protection of their assets and wages and salaries under intimation to the Investigating agency and in the case of immovable properties, without the orders of the trial Court". The Company is seeking legal advice on the aforesaid letter from EOW.

25. The Company has a total MAT credit entitlement of Rs. 19,270.02 lacs as at March 31, 2015 including recognition of Rs. 10,081.20 lacs during the year ended March 31, 2015. The management of the Company is confident that the Company will be able to utilize unexpired MAT entitlement in future projected years.

26. As per Section 135 of the Companies Act 2013, a Corporate Social Responsibility (CSR) Committee has been formed by the Company. The earmarked funds were transferred to a separate bank account and the same shall be utilized on activities which are specified in Schedule VII of the Companies Act, 2013.

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


Mar 31, 2014

GENERAL INFORMATION

The Financial Technologies group is among the global leaders in offering technology IP (Intellectual Property) and domain expertise to create and trade on next-generation financial markets, that are transparent, efficient and liquid, across all asset classes including equities, commodities, currencies and bonds among others. The group is pioneer in end to end Straight Through Processing (STP) solution that support high density transactions. It has developed proprietary technology platform benchmarked against global standard which give it a decisive edge in driving mass disruptive innovation at the speed and cost of execution unmatched in the financial market industry.

1. CONTINGENT LIABILITIES AND COMMITMENTS (TO THE EXTENT NOT PROVIDED

(Rs. lacs) Current Previous Year Year 1 Contingent liabilities: (a) Claims against the Company not acknowledged as debt (i) Income tax demands against which the Company is in appeal [including adjustable 6,860.06 5,352.61 against Securities Premium account Rs. 4,971.06 lacs (Previous Year Rs. 3,869.18 lacs)]. 6,860.06 5,352.61

(ii) MVAT, Service tax and Excise dues contested by the Company. 481.94 551.56

(iii) Refer Note 55 for pending writ petitions, public interest litigations, civil suits and First Information Report.

(b) Guarantees

(i) Guarantees given to third parties by the Company on behalf of its subsidiary companies. 225.45 70,021.16

(ii) Letters of comfort issued to banks in respect of credit facilities availed by subsidiary companies 200.00 400.00 Future cash outflows in respect of the above matters are determinable only on receipt of judgments / decisions pending at various forums /authorities.

2. Capital and other commitments

(i) Estimated amount of contracts to be executed on capital account and not provided for. 4.67 1,152.77

(ii) for commitments relating to lease (Refer Note 29) and for commitments relating to derivatives (Refer Note 32)

(iii) The Company has provided letters commiting continuing financial support to its subsidiaries viz. Bourse Africa Limited, Bourse Africa Clear Limited, Bahrain Financial Exchange BSC, FT Group Investment Pvt. Ltd, Knowledge Assets Private Limited and Bourse Africa (Botswana) Limited to meet their day to day obligations / loan obligations / commitments, to the extent these entities may be unableto meet their obligations.

2. DISCLOSURES REQUIRED UNDER SECTION 22 OF THE MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006:

(a) An amount of Rs. 4.94 lacs (Previous Year Rs. 13.47 lacs) and Rs. NIL (Previous Year Rs. Nil) was due and outstanding to suppliers as at the end of the accounting year on account of Principal and Interest respectively. (Refer Note 9)

(b) No interest paid during the year.

(c) No interest is due and payable at the end of the year.

(d) No amount of interest accrued and unpaid at the end of the accounting year.

The above information regarding Micro and Small Enterprises has been determined to the extent replies to the Company''s communication have been received from vendors/suppliers regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006. This has been relied upon by the auditors.

3. With effect from 1st January, 2014, the Company has revised the estimated useful life of certain fixed assets as stated in Note 2(F). As a result, the depreciation expense and loss before tax for the year, are both higher by Rs. 556.07 lacs.

4. During the year, the Company has received an order dated 17th December, 2013 passed by the Forward Markets Commission (FMC) holding the Company not a fit and proper person to continue to be a shareholder of 2% or more of the paid up equity capital of Multi-Commodity Exchange of India Ltd. (MCX). The Company holds 26% in MCX. The FMC Order has been challenged by way of a Writ Petition before the Hon''ble Bombay High Court. On 28th February, 2014, Hon''ble High Court was pleased to admit the said Writ Petition and kept for hearing expeditiously. FMC Order has not attained finality.

Without prejudice to legal rights available within the law, the Company has initiated process of divestment of shares of MCX. The Company is endeavor to complete the same as quickly as possible subject to approval of regulatory authority.

Further, FMC has issued revised norms regarding Shareholding, Ownership, Net worth, Fit and Proper Criteria, etc. on 6th May, 2014 and has, inter alia, provided that no person shall, directly or indirectly, acquire or hold equity shares of a commodity exchange unless he is fit and proper person and in the event of any person ceasing to be a ''fit and proper person'' or being declared so by the Commission, such person shall forthwith divest his shareholding. Further, pending divestment of shares, the voting rights of such person shall stand extinguished and any corporate benefit in lieu of such holding shall be kept in abeyance/withheld by Exchange. Accordingly, MCX proposed by way of postal ballot, to alter the Articles of Association to include the new articles 26A, 26B, & 26C on FMC Guidelines/Directions/Norms etc. to be binding on MCX, Restrictions on shareholding and Divestment of shareholding respectively by way of special resolution.

In view of the aforesaid process of divestment and with effect from 26th December, 2013 the Company neither having significant influence over MCX nor any Board representative in MCX, the entire investment of the Company in MCX has been reclassified as current investment in other company from long term (non-current) investment in an associate company. The above said action by MCX is without prejudice to the Company''s legal rights and remedies available under the law.

5. The Company holds 27,165,000 Equity Shares of Rs. 1/- each and 562,460,000 Warrants of Rs. 1/- each in MCX Stock Exchange Limited (MCX-SX).

During the year, the Company has received show cause notice from the SEBI dated 20th December, 2013 solely based on FMC Order under Securities Contracts (Regulation) Act, 1956, SEBI Act, 1992 and Securities Contracts (Regulation) (Stock Exchange and Clearing Corporations) Regulations, 2012, advising the Company to show cause as to why directions should not be issued for divestment of shares and transferable warrants held by the Company and any company/entity controlled by the Company, either directly or indirectly, in MCX-SX, MCX-SX Clearing Corporation Limited (MCX-SX CCL), Delhi Stock Exchange Ltd (DSE), the Vadodara Stock Exchange Limited (VSE) and National Stock Exchange of India Limited (NSEIL). The Company vide its letter dated 21st December, 2013 replied to SEBI stating that FMC Order is subject matter of challenge before the Hon''ble Bombay High Court; therefore, the Company requested SEBI not to take any precipitate action until the writ petition filed by the Company is dealt with by the Hon''ble High Court. SEBI has passed an Order on 19th March, 2014 declaring the Company not a ''Fit and Proper'' person and directed the Company to divest the equity shares or any instrument that provides for rights over the equity shares held by the Company in MCX-SX, MCX-SX CCL, DSE, VSE and NSEIL within 90 days from the date of order. The Company has filed an appeal in the Security Appellate Tribunal against the said order. Pending proceedings, investment in the aforesaid entities are reclassified as current investment at the lower of cost and fair value from long term investments. MCX-SX CCL is not considered as an associate company from the date of order i.e. 19th March, 2014. According to the Management''s view, on the basis of the information available including latest financial statements/ results and/or latest transactions carried out, the fair value of above investments exceeds the cost of the investments. In case of investment in one company where the book value is less than the investment amount, the Company has made appropriate provision for the same.

6. As per the Regulatory requirement under Central Electricity Regulatory Commission (Power Market) (CERC) Regulations 2010, the Company had to reduce its holding in an associate company viz. Indian Energy Exchange Limited (IEX) to 25%, accordingly, the Company has divested part of its investments aggregating 1,364,787 equity shares of Rs. 10 each in IEX at a price of Rs. 534.12 per equity share. The resulting profit of Rs. 6,989.14 lacs (net of directly attributable expenses of Rs. 164.05 lacs) is grouped under ''Net gain on sale of Investments'' in Other Income (Refer Note 22).

The Company received communication from IEX vide its letter dated 19th May, 2014 informing that CERC vide their order dated 13th May, 2014 stated that the Company cannot be considered as fit and proper person to hold the shares in power exchanges and inter alia directed IEX a) to ensure that the Company divests its entire shareholding from IEX by 30th September, 2014, b) pending divestment of shares, the voting rights of the Company shall stand extinguished and any corporate benefit in lieu of such shareholding shall be kept in abeyance or withheld by the exchange and c) IEX shall ensure that no nominee of the Company is represented in the Board of IEX. The above directions of CERC are binding with immediate effect. The Company is contemplating challenging the order in line with FMC & SEBI Order. In view of the above, the investments in IEX have been reclassified as current investments from long term (non-current) investments.

7. The Company received letter from Financial Services Commission (FSC) in May, 2014 informing that FSC does not consider the Company as fit & proper, pursuant to Section 23(3) of the Financial Services Act, 2007 of Mauritius and directed the Company to dispose of its shareholding in Bourse Africa Limited, Mauritius on or before 31st August, 2014.

8. During the year, Financial Technologies Singapore Pte. Ltd (FTSPL), a wholly-owned subsidiary of the Company, sold 100% of FTSPL''s equity ownership in its wholly owned subsidiaries, Singapore Mercantile Exchange Pte. Ltd. (SMX) and Singapore Mercantile Exchange Clearing Corporation Pte. Ltd. (SMXCC), which had accumulated losses of USD 77.40 million as on 31st January, 2014 (Rs. 48,357.04 lacs), to ICE Singapore Holdings Pte. Ltd, an entity owned by Intercontinental Exchange Group, Inc. (ICE) for an amount of USD 150 million.

9. During the year, the Company along with other shareholders entered into a share purchase agreement for sale of 100% equity shares of National Bulk Handling Corporation Limited (NBHC) to IVF Trustee Company Limited, for consideration of Rs. 24,174.00 lacs, subject to certain conditions. The sale transaction was completed in April, 2014. Accordingly, the investments in NBHC have been reclassified as current investments from long-term (non-current) investments.

10. As at 31st March, 2014, the Company''s investment in certain subsidiaries and a jointly controlled entity aggregating Rs. 12,590.95 lacs (Previous Year Rs. 12,215.95 lacs) and loans and advances / recoverables from these entities aggregating Rs. 90,758.89 lacs (Previous Year Rs. 38,732.65 lacs) (excluding NSEL and its subsidiaries, and FTSPL and its subsidiaries) which presently have accumulated losses, [share of aggregate losses till 31st March, 2014 Rs. 112,881.99 lacs (Previous year Rs. 59,610.67 lacs)].

In view of the NSEL event, FMC declared the Company not a fit and proper person to hold shares in MCX, consequently, various other regulatory authorities also given direction to dispose of the Company''s stake in the respective exchanges. Further the license of the exchange venture situated in Botswana, which had not yet commenced its operation, got cancelled. Considering these events and current scenario (though Company ideally would like to retain the investment to fetch its right price and not to sell in distress), the Company on a conservative basis has made an additional provision of Rs. 6,944.45 lacs (Previous Year Nil) towards provision for other than temporary diminution in the value of investments including provision (write down) in value of investments of Rs. 15.00 lacs (Previous Year Nil) in respect of investments reclassified during the year from long-term (non-current) to current investments, and Rs. 15,150.00 lacs (Previous Year Nil) towards doubtful loans and advances. Accordingly, total provision of Rs. 8,681.71 lacs (Previous Year Rs. 1,737.26 lacs) for other than temporary diminution in the value of investments and provision of Rs. 15,150.00 lacs (Previous Year Nil) for doubtful loans and advances as at the year ended on 31st March, 2014 is considered to be adequate for these investments and loans and advances / receivables.

11. In view of the developments in respect of its subsidiary NSEL, during the year ended 31st March, 2014, on conservative basis, the Company has made a provision towards diminution other than temporary in value of long term investments of Rs. 4,499.99 lacs for its investment in NSEL.

12. During the previous year ended 31st March, 2013, the Company had earned Income of Rs. 3,452.00 lacs from NSEL, which constituted 5.25% of the standalone total income of the Company. This included aggregate amount of Rs. 2,927.60 lacs being variable component.

The above variable component comprises:

(a) revenue of Rs. 2,841.46 lacs towards software maintenance and support services derived on the basis of the underlying revenue recognized by NSEL on account of "transaction fees, delivery charges, warehouse receipt transfer charges for trading, settlement and delivery activities" for the year ended 31st March, 2013, pursuant to agreements/contracts; and

(b) revenue of Rs. 86.14 lacs towards business support services derived on the basis of the underlying gross profits earned on the merchandising activities by NSEL for the year ended 31st March, 2013.

As on 31st March, 2013, total amount receivable from NSEL was Rs. 2,489.27 lacs, which has been realised subsequently during the current financial year and as on date, there is no amount outstanding against the same.

The above income was recognized as per the contractual terms on accrual basis and there was no uncertainty with respect to realisability of the aforesaid amount as on 31st March, 2013 or on the date on which the Financial Statements were approved by the Board and, hence, the same was accounted as income.

As of date, there have been no claims by NSEL nor has any dispute been raised in connection with the amounts paid to the Company for the Services provided by the Company during the financial year 2012-13. In view of the above, no provision was considered necessary by the Company as on 31st March, 2013 and as on 31st March, 2014 for the above said Income from NSEL.

13. During the year, the Company had raised invoices aggregating Rs. 1,542.53 lacs for various services including software maintenance and support services for the Company''s flagship products, DOME, CnS, ODIN charges ("Services"), business support services and rent income, out of which Rs. 1,176.76 lacs is the variable fees derived from certain components (transaction fees, delivery charges, warehouse receipt transfer charges for trading, settlement and delivery activities) of revenue / gross profits of NSEL.

Further, during the year, the Company had accounted interest income of Rs. 1,114.69 lacs.

In view of the developments at NSEL, the Company is unable to assess the ultimate collection with reasonable certainty, and on a prudent basis, the Company, to the extent of uncertainty involved, derecognised the revenue on above said services of Rs. 1,542.53 lacs and interest income of Rs. 1,003.22 lacs (net of tax deducted at source).

The amount receivable from NSEL towards reimbursement of expenses of Rs. 109.97 lacs and taxes on above said services of Rs. 21.71 lacs as on 31st March, 2014, aggregating Rs. 131.68 lacs for which, on conservative basis, the Company has made full provision of Rs. 131.68 lacs during the year ended 31st March, 2014. Similarly, the Company has derecognised rent income of Rs. 23.03 lacs receivable from subsidiary of NSEL and made provision of Rs. 3.79 lacs for doubtful loans and advances receivable from the said subsidiary of NSEL.

14. During the year, the Company had provided additional corporate guarantee of Rs. 22,500.00 lacs in May, 2013 on behalf of NSEL for availing banking facility in relation to procurement of cotton on behalf of National Agricultural Cooperative Marketing Federation of India Ltd. (NAFED). In view of the developments at NSEL, the bank recalled the credit facility granted to NSEL and invoked the guarantee on 19th September, 2013 to the extent of outstanding balance of Rs. 3,143.25 lacs including interest thereon and debited the said amount from the Company''s bank account and, accordingly, the Company has debited the same to NSEL''s account as loan.

Further, during the year, to protect the interest of the large number of small investors who have to receive money from its defaulting members, NSEL had requested the Company to give a bridge loan, which request was accepted by the Company''s Board of Directors as a goodwill gesture without admitting any liability on behalf of NSEL and a onetime bridge loan amounting to Rs. 17,939.81 lacs was given which NSEL will have to repay to the Company from the receipt of the amounts from defaulting members after paying to all the investors.

Further, during the year, an additional loan of Rs. 350.00 Lacs was also been provided to NSEL for its working capital.

Recovery of the aforesaid loans of Rs. 21,433.06 lacs as on 31st March, 2014 is dependent on the recovery by NSEL from its defaulting members and NAFED. On conservative basis, the Company has made full provision for loans and advances of Rs. 21,433.06 lacs during the year ended on 31st March, 2014.

15. a) During the year, Writ Petitions (WP), Public Interest Litigation (PIL), Civil Suits have been filed against the Company in relation to NSEL event, wherein the Company has been made a party in the Civil Suits and the WP In the said proceedings certain reliefs have been claimed against the Company, inter alia, on the ground that the Company is the holding company of NSEL. These matters are pending before the Hon''ble Bombay High Court for adjudication. The next hearing is on 12th June, 2014 and for WP hearing is on 27th June, 2014. The Company has denied all the claims and contentions in its reply. There is no privity of contract between the Company and the Petitioners. Based on legal advice, the management is of the view that the parties who have filed the WP PIL and Civil Suits would not be able to sustain any claim against the Company.

b) First Information Report (FIR) has been registered against various parties, including the Company, with the Economic Offences Wing of the Mumbai Police (EOW) in connection with the NSEL event. After investigation, EOW has filed charge-sheet on 06th January, 2014, and it is pertinent to note that the Company has not been named in the said charge-sheet.

16. During the year, the Company received letter from the Registrar of Companies, Chennai (ROC), Ministry of Corporate Affairs ("MCA") regarding a notice for inspection under section 209A of the Companies Act, 1956 ("Companies Act") and technical scrutiny of the Company''s balance sheet FY12-13 and explanation sought under section 234(1) of Companies Act. The inspection conducted by Dy. ROC and Company submitted requested information to MCA. After inspection, RoC issued show cause notices to the Company stating that the Company contravened certain compliance stipulated under the Indian Companies Act, 1956. The Company has replied to the said show cause notices from RoC.

17. A preliminary enquiry has been registered in Central Bureau of Investigation (CBI), Economic Offences Wing, Mumbai in respect of the allegations relating to granting of permission for MCX-SX and providing renewal of recognition as stock exchange resulting in pecuniary gain to MCX-SX. The Company has provided all the necessary information.

18. The Company has received letter from Directorate of Enforcement under Foreign Exchange Management Act, 1999 requesting the Company to furnish certain information in connection with certain investigations and the same is furnished.

19. MCX on 29th April, 2014 uploaded on BSE website Executive Summary with the modification on selective basis (''Executive Summary'') of Special Audit Report carried out by PricewaterhouseCoopers Private Limited (PwC) with a disclaimer. The Company replied to Executive Summary in detail on 5th May, 2014 and the same was uploaded on BSE website. Subsequently, on 26th May, 2014, MCX disseminated on BSE website Special Audit Report without annexures, exhibits of the said report with a disclaimer that document is yet to be independently verified by MCX, MCX neither agrees nor disagrees with the contents thereof and does not have any opinion on the same, it further recommends that no person should consider and/or rely on the contents of the document at this stage for undertaking any trade (buy or sell) in the securities of MCX, it further states that it does not in any manner warrant, certify or endorse the correctness, accuracy, adequacy or completeness of the contents of the document (report) and it should not for any reason be deemed or construed to mean that the observations (of the report) have been verified / confirmed by MCX. The Company reiterated that views of the Company were not taken into account before finalising the report despite several written requests to MCX.

It may also be noted that the Special Audit Report contains several disclaimers including a statement that the procedures performed under the Special Audit did not constitute an audit or examination or a review in accordance with generally accepted auditing standards or attestation standards.

20. Previous year''s figures have been regrouped/reclassified whenever necessary to correspond with the current year''s classification/disclosure.


Mar 31, 2013

1. GENERAL INFORMATION

The Financial Technologies group is among the global leaders in offering technology IP (Intellectual Property) and domain expertise to create and trade on next-generation financial markets, that are transparent, efficient and liquid, across all asset classes including equities, commodities, currencies and bonds among others. The group is pioneer in end to end Straight Through Processing (STP) solution that support high density transactions. It has developed proprietary technology platform benchmarked against global standard which give it a decisive edge in driving mass disruptive innovation at the speed and cost of execution unmatched in the financial market industry.

The Financial Technologies group operates one of the world''s largest network of 9 exchanges connecting fast-growing economies of Africa, Middle East, India and South East Asia. The group also has five ecosystem ventures to address upstream and downstream opportunities around exchanges, including clearing, depository, information vending, and payment gateway among others.

2. DISCLOSURES UNDER THE MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006:

(a) An amount of Rs. 13.47 lacs (As at March 31, 2012 Rs. 3.53 lacs) and Rs. NIL (Previous Year Rs. Nil) was due and outstanding to suppliers as end of the accounting year on account of Principal and Interest respectively. (Refer Note 9)

(b) No interest was paid during the year.

(c) No interest is payable at the end of the year under Micro, Small and Medium Enterprises Development Act, 2006.

(d) No amount of interest was accrued and unpaid at the end of the accounting year.

The above information regarding Micro and Small Enterprises has been determined to the extent replies to the Company''s communication have been received from vendors/suppliers regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006. This has been relied upon by the auditors.

3. SEGMENT REPORTING

The Company has presented segmental information in its consolidated financial statements, which are presented in the same annual report. Accordingly, in terms of the provisions of Accounting Standard (AS 17) "Segment Reporting", no disclosures related to segments are presented in its stand-alone financial statements.

4. REVENUE EXPENDITURE INCURRED DURING THE YEAR ON RESEARCH AND DEVELOPMENT

The aggregate amount of revenue expenditure incurred during the year on Research and Development and shown in the respective heads of the account is Rs. 1,310.10 lacs (Previous Year Rs. 1,289.82 lacs).

5. As at March 31, 2013, the Company''s investments in certain subsidiaries and a joint venture company aggregating Rs. 49,090.30 lacs (Previous Year Rs. 48,045.31 lacs) and debts and other recoverable aggregating Rs. 49,003.84 lacs (Previous Year Rs. 26,403.73 lacs), which presently have accumulated losses, [share of aggregate losses till March 31, 2013 Rs. 87,082.53 lacs (Previous year Rs. 46,207.56 lacs)] but are expected to be recovered, and have their values unlocked in the near future, since these companies are already at various stages of executing their business plans and operations, with expected profitability. Accordingly, a provision for other than temporary diminution in the value of investments of Rs. 1,737.26 lacs (Previous Year Rs. 1,737.26 lacs) as at the year end March 31, 2013 is considered to be adequate. During the previous year an amount of Rs. 7,163.00 lacs was adjusted against the loss on sale/reduction/redemption in shares in subsidiary companies (net) (Refer Note 27).

6. The Company, as a part of its core business strategy, promotes and invests in new ventures that utilise its technological capabilities and domain expertise towards creating world class enterprises. The investment in each such venture is assessed for its risks and is limited to a pre-determined level and will generate returns after the ventures start ramping-up operations in varied time frame depending upon the line of business. The Company, as part of its non-linear business model, will endeavor to unlock value by broadening the investor base of its ventures.

During the previous year, in terms of the compliance of FMC Equity Structure Guidelines dated July 29, 2009, the Company offered under "offer for sale", in initial public offer of equity by Multi Commodity Exchange of India Limited (MCX), part of its investments aggregating 2,643,916 equity shares of Rs. 10/- each of MCX at a price of Rs. 1,032 per equity share of Rs. 10/- each. The resultant profit of Rs. 24,982.12 lacs (net of directly attributable expenses of Rs. 2,091.58 lacs) is grouped under ‘Profit on sale of Investments'' in Other Income (Refer Note 22). Subsequent to disinvestments, the Company is holding 26% in the equity share capital of MCX.

7. During the previous year, two of the Company''s subsidiaries reduced their share capital by Rs. 13,403.94 lacs against their accumulated losses, as sanctioned by the Hon''ble High Court of Judicature at Bombay. Accordingly, net resultant loss of Rs. 7,921.54 lacs (net of provision for other than temporary diminution) was charged to the statement of profit and loss and shown under "Loss on sale/redemption/reduction in shares in subsidiary companies (net)".

8. The Company holds 27,165,000 Equity Shares of Rs. 1/- each in MCX Stock Exchange Limited (MCX-SX). As per the approval received from SEBI to MCX-SX, the Company''s equity holding alongwith MCX shall not exceed 5% of the total paid up equity capital of MCX-SX. Considering the time available to adhere to the direction of SEBI as communicated by MCX-SX, the Company has classified such investments under Current Investments at this point of time till both the entities together reduce the percentage of holding to 5% in MCX-SX. The Company intends to hold the remaining shares of MCX-SX after bringing down the shareholding in MCX-SX to 5% put together with MCX, on a long term basis and accordingly the said Investments will be reclassified under Non-Current Investments.

9. RELATED PARTY DISCLOSURE:

I. Names of related parties and nature of relationship:

(i) Entities where control exists (Subsidiaries, including step down subsidiaries)

1. TickerPlant Ltd. (TickerPlant)

2. IBS Forex Ltd. (IBS)

3. atom Technologies Ltd. (atom)

4. Riskraft Consulting Ltd. (Riskraft)

5. National Spot Exchange Ltd. (NSEL)

6. Western Ghats Agro Growers Company Limited (subsidiary of NSEL) (w.e.f. September 5, 2012) (WGAGL)

7. Farmer Agricultural Integrated Development Alliance Ltd. (subsidiary of NSEL) (w.e.f. August 1, 2012) (FAIDA)

8. National Bulk Handling Corporation Ltd. (NBHC)

9. FT Group Investments Pvt. Ltd. (FTGIPL)

10. Financial Technologies Middle East- DMCC (FTME) (Subsidiary of FTGIPL w.e.f. March 25, 2012; formerly direct subsidiary of the Company)

11. Global Board of Trade Ltd. (GBOT) (Subsidiary of FTGIPL w.e.f. March 19, 2012; formerly direct subsidiary of the Company)

12. GBOT Clear Limited (GBOT CL) (subsidiary of GBOT) (w.e.f. February 14, 2013)

13. Knowledge Assets Pvt. Ltd. (KAPL)

14. Financial Technologies Communications Ltd. (FTCL)

15. Global Payment Networks Ltd. (GPNL)

16. FT Knowledge Management Company Ltd. (FTKMCL)

17. Indian Bullion Market Association Ltd. (Subsidiary of NSEL)

18. Trans-Global Credit & Finance Ltd. (TGCFL)

19. Capricorn Fin-Tech (Pvt). Ltd. (Subsidiary of FTME)

20. Bourse Africa Ltd. (BAL) (Subsidiary of FTGIPL)

21. Boursa India Ltd. (BIL)

22. ICX Platform (Pty) Ltd. (ICX)

23. Credit Market Services Ltd. (CMSL)

24. Takshashila Academia of Economic Research Ltd. (TAER)

25. Apian Finance and Investments Ltd. (Apian)

26. Bahrain Financial Exchange BSC (c) (BFX) (Subsidiary of FTGIPL)

27. Financial Technologies Singapore Pte Ltd. (FTSPL)

28. Singapore Mercantile Exchange PTE Ltd. (SMX) (Subsidiary of FTSPL)

29. Singapore Mercantile Exchange Clearing Corporation PTE Ltd. (SMX-CCL) (Subsidiary of SMX)

30. BFX Clearing & Depository Corporation BSC(c) (Subsidiary of BFX)

31. FT Projects Ltd.

32. Financial Technologies Projects Pvt. Ltd.

33. ICX Africa Ltd. (subsidiary of BAL) (w.e.f. July 26, 2011)

34. Bourse Exchange Nigeria Ltd. (Subsidiary of BAL)

35. Bourse Africa (Kenya) Ltd. (Subsidiary of BAL)

36. Bourse Uganda Ltd. (Subsidiary of BAL)

37. Bourse Zambia Ltd. (Subsidiary of BAL)

38. Bourse Tanzania Ltd. (Subsidiary of BAL)

39. Bourse South Africa Limited (Subsidiary of BAL) (w.e.f. October 19, 2012)

(ii) Associate Companies:

1. Multi Commodity Exchange of India Ltd. (MCX)

2. MCX Stock Exchange Clearing Corporation Ltd. (MCX-SX CCL)

3. Indian Energy Exchange Ltd. (IEX)

4. SME Exchange of India Ltd. (SME) (w.e.f. Sept. 26, 2011)

(iii) Joint Venture Companies:

1. Dubai Gold and Commodities Exchange (DGCX)

(iv) Key Management Personnel

1. Mr. Jignesh Shah : Chairman and Managing director

2. Mr. Dewang Neralla : Whole time director

3. Mr. Manjay Shah* : Whole time director *Appointed as wholetime director w,e.f. April 01, 2012

(v) Relative of the Key Management Personnel where transactions have taken place

Mr. Manjay Shah

(vi) Entity over which Key management personnel is able to exercise significant influence

La-fin Financial Services Pvt. Ltd. (La-fin)

10. STOCK BASED COMPENSATION

(a) During the financial year 2011-12, Remuneration and Compensation Committee ("Committee") of the Company had granted 900,000 Stock Options ("Options") each under the Employee Stock Option Scheme – 2009 & 2010 totalling to 1,800,000 options at a price of Rs. 770/- to the eligible employees/Directors of the Company ("Employees") in terms of SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 as amended from time to time and as approved by the Shareholders at the Annual General Meetings of the Compnay held on 25th September 2009 & 29th September 2010 respectively.

During the year under review, Remuneration and Compensation Committee ("Committee") of the Company at their meeting held on March 05, 2013 has considered and approved the grant from reissue of lapsed/cancelled options of 186,630 Stock Options ("Options") under the Employee Stock Option Schemes ("scheme") of which 74,350 options are granted under scheme-2009 and 112,280 options under scheme-2010 at a price of Rs. 807.70 to the eligible employees/Directors of the Company ("Employees") in terms of SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 as amended from time to time.

11. EMPLOYEE BENEFIT PLANS:

Defined contribution plans: Amounts recognised as expenses towards contributions to provident fund, employee state insurance corporation and other funds by the Company are Rs. 294.33 lacs (Previous Year Rs. 265.30 lacs). Contribution to PF: Rs. 290.52 Lacs (Previous Year Rs. 261.62 Lacs) Contribution to ESIC: Rs. 3.81 Lacs (Previous Year Rs. 3.68 Lacs)

Post employment defined benefit plans:

Gratuity Plan: The Company makes annual contributions to the Employee''s Group Gratuity Assurance Scheme administered by the Life Insurance Corporation of India (‘LIC''), a funded defined benefit plan for qualifying employees. The scheme provides for lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to fifteen days salary payable for each 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 as required under AS -15 (Revised):

12. JOINT VENTURE DISCLOSURE:

(a) Jointly Controlled Entity (''JCE'') of the Company:

Name of the Entity : Dubai Gold and Commodities Exchange DMCC (‘DGCX'')

Country of Incorporation : United Arab Emirates

% Holding : 18.58% (Previous Year 18.58%)

(b) Company''s share of interest in the assets, liabilities, income, expenses,contingent liabilities and commitments with respect to JCE as at and for the year ended March 31, 2013:

The amounts are translated at the year end rate for assets and liabilities and average rate for income and expenses for DGCX.

13. REMITTANCE IN FOREIGN CURRENCY ON ACCOUNT OF DIVIDEND

The Company has paid dividend, during the year, in respect of shares held by non-resident shareholders including Foreign Institutional Investors and GDR custodian. The total amount remitted as stated below represents amount paid into Indian bank as per mandate/direction given by the non resident shareholders. Consequently, the exact amount of dividend remitted in foreign currency cannot be ascertained.

14. As per Regulatory requirement under Central Electricity Regulatory commission (Power Market) Regulations 2010, the Company needs to reduce its holding in an associate company viz. Indian Energy Exchange Limited (IEX) to 25% on or before 20th January 2014 and accordingly holding in excess of 25% of the share capital of IEX i.e. 8.49% is shown under current investment.

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


Mar 31, 2012

1. GENERAL INFORMATION:

The Financial Technologies group is among the global leaders in offering technology IP (Intellectual Property) and domain expertise to create and trade on next-generation financial markets, that are transparent, efficient and liquid, across all asset classes including equities, commodities, currencies and bonds among others. The group is pioneer in end to end Straight Through Processing (STP) solution that support high density transactions. It has developed proprietary technology platform benchmarked against global standard which give it a decisive edge in driving mass disruptive innovation at the speed and cost of execution unmatched in the financial market industry

The Financial Technologies group operates one of the world's largest network of 9 exchanges connecting fast-growing economies of Africa, Middle East, India and South East Asia. The group also has five ecosystem ventures to address upstream and downstream opportunities around exchanges, including clearing, depository, information vending, and payment gateway among others.

(Rs. lacs)

2. CONTINGENT LIABILITIES AND COMMITMENTS (TO THE EXTENT NOT PROVIDED FOR) Current Year Previous Year

A) Contingent liabilities:

1. Taxes in dispute:

(a) Income tax demands against which the Company is in appeal (including adjustable 2,663.06 2,348.54 against Securities Premium accounts 1,941.03 lacs (Previous Year Rs. 1,941.03 lacs).

(b) MVAT, Service tax and excise dues contested by the Company. The Company is 515.17 475.09 nopefulofpositiveoutcome. 3. Guarantees given to third parties by the Company on behalf of its subsidiary companies. 66,657.97 75,377.25

4. In an earlier year, the Company adopted the option offered by the notification of the Companies (Accounting Standards) Amendment Rules 2006 which amended Accounting Standard 11 The Effects of Changes in Foreign Exchange Rates for the period upto31 March, 2011 .During the year, Ministry of Corporate Affairs, Government of India, has issued notification dated 29th December, 2011 amending the aforesaid rules in 'espect of the exchange differences (effective from 1 April, 2011) on reporting of long term foreign currency monetary items, by allowing the treatment described in accounting policy I of Note No. 2 over the life of the long term monetary item which hitherto was permitted uptc 31 March,2011.

Pursuant to the aforesaid notifications, (1) cumulative foreign exchange loss (net) of Rs. 3,267.22 lacs (Previous Year Rs. 519.00 lacs) has been adjusted to the cost of the fixed assets/capital work-in-progress and (2) Rs.9,863.35 lacs has been debited (Previous Year credit of Rs. 268.62 lacs) to the Foreign Currency Monetary I tern Translation Difference Account during the year [una mortised balance at the year end is Rs. 4,224.67 lacs (PreviousYearW Nil)].

Exchange difference loss (net) included in capital work-in progress Rs. Nil (Previous YearW 52.04 lacs) and Fixed Assets Rs. 2,748.22 lacs (Previous Year Rs.466.96 lacs) during the year pursuant to amended Accounting Standard 11 "The Effects of changes in Foreign Exchange Rates".

5. Exceptional item for the year ended 31st March, 2011, represents the amount paid by the Company to the Purchaser under the price reset clause consisting of Rs. 1 7,968.75 lacs towards price resetandRS.2,947.75 acs towards interest in accordance with the Agreement of sale for invest men ts of 71,875,000 equity shares of Rs. 1 each for an aggregate consideration ofRs. 25,156.25 lacs in an earlier year. Consequently, the tax provision of Rs. 7,109.52 lacs was also written back."

6. SEGMENT REPORTING

The Company has presented segmental information in its consolidated financial statements, which are presented in the same annual report. Accordingly, in terms of the provisions of Accounting Standard (AS 1 7)"Segment Reporting", no disclosures related to segments are presented in its stand-alone financial statements.

7. REVENUE EXPENDITURE INCURRED DURINGTHEYEAR ON RESEARCH AND DEVELOPMENT

The aggregate amount of revenue expenditure incurred during the year on Research and Development and shown in the respective heads of theaccountisW 1,289.82 lacs(PreviousYearW 1,087.04lacs).

8. ZERO COUPON CONVERTIBLE BONDS ('ZCCBS')

A) During the year ended 31st March, 201 2, the Company has repaid Zero Coupon Convertible Bonds aggregating USD 1 33.16 million (including premium on redemption, net of with holding tax thereon), equivalent to Rs.70,51 9.11 lacs as at the date of repayment.

9. As at 31 March, 2012, the Company s investments in certain subsidiaries and a joint venture com pa ny aggregating^Rs. 48,045.31 lacs (Previous Year Rs. 95,753.12 lacs) and debts and other recoverable aggregating Rs. 26,403.73 lacs (Previous Year RS. 9,178.51 lacs), which presently have accumulated osses, [share of aggregate losses til 31st March, 2012 Rs. 46,207.56 lacs (Previous year Rs. 36,26745 lacs)] but a re expected to be recovered, and have their values unlocked in the near future, since these companies are already at various stages of executing their business plans and operations, with expected profitability. Accordingly^ provision for other than temporary diminution in the value of investments ofRs. 1,73 7.26 lacs (Previous YearRS. 8,900.26 lacs) as at the year end 31st Ma rch,2012 is considered to be adequate. During the year an amount of Rs. 7,163.00 lacs has been adjusted against the" Loss on sale/ redemption / reduction in shares in subsidiary companies (net)". (Refer note 27)

10. The Company, as a part of its core business strategy, promotes and invests in new ventures that utilise its technological capabilities and domain expertise towards creating world class enterprises.The investment in each such venture is assessed for its risks and is limited to a ore-determined level and will generate returns after the ventures start ramping-up operations in varied time frame depending upon the ineof business.The Company, as part of its non-linear business model, will endeavor to unlock value by broadening the investor base of its ventures.

During the year, in terms of the compliance of FMC Equity Structure Guidelines dated 29th July, 2009, the Company offered under'offer for sale", in intial public offer of equity by Multi Commodities Exchange of India Limited (MCX), part of its investments aggregating 2,643,916 equity shares of Rs. 10/-each ofMCXata price of Rs. 1,032 per equity share of Rs. 10/-each.The resultant profit of Rs. 24,982.1 2 lacs (net of directly attributable expenses of Rs. 2,091.58 lacs) is grouped under'Profit on sale of Investments'in Other Income (Refer Note 22). Subsequent to disinvestments, the Company is holding 26% in the equity share capital of MCX.

During the previous year, the Company sold partial investment held in another group com pany.The resultant profit of Rs. 1,91 2.96 lacs (net of directly attributable brokerage expenses of Rs. 47.35 lacs) is grouped under'Profit on sale of Investments'in Other Income (Refer Note 22).

11. During the year, two of the Company's subsidiaries reduced their share capital by Rs. 13,403.94 lacs against their accumulated losses, as sanctioned by the Hon'ble High Court of Judicature at Bombay. Accordingly, net resultant loss of Rs. 7,921.54 lacs (net of provision held for other than temporary diminution) is charged to the statement of profit and loss and shown under'Losson sale/redemption/reduction in shares in subsidiary companies (net)". (Refer note 27)

12. Consequent to capital reduction and issue of warrants to the Company against its holding of equity shares of face value of 5,624.60 lacs in MCX Stock Exchange Limited (MCX-SX), in compliance with a Court sanctioned scheme in March, 2010, the Company, based on independent legal / tax counsel's opinion continues with its stand of no tax liability arising consequent to the same and therefore no tax liability has been determined or recognized in thefinancial statements.

The Company has investments in equity shares and warrants of MCX-SX aggregating to Rs. 5,896.25 lacs. During the year, MCX-SX has started generating revenue from its existing segment i.e. Currency Derivatives. MCX-SX is awaiting the remaining segment approval i.e. of interest rate derivatives, equity, futures and options on equity and wholesale debt segments from SEBI. Hence, these investments are, in the opinion of the management, considered to be good and valuable, and not due for any of provisioning.

13. RELATED PARTY DISCLOSURE:

I. Names of related parties and nature of relationship:

i) Entities where control exists (Subsidiaries, including step down subsidiaries)

1. TickerPlant Ltd. (TickerPlant)

2. BS Forex Ltd. (IBS)

3. atomTechnologiesLtd.(atom)

4. RiskraftConsulting Ltd. (Riskraft)

5. National Spot Exchange Ltd. (NSEL)

6. National Bulk Handling Corporation Ltd.(NBHC)

7. FTGroup Investments Pvt. Ltd. (FTGIPL)

8. Financial Technologies Middle East-DMCC(FTME) (Subsidiary of FTGIPL w.e.f. 25th March, 201 2; formerly subsidiary of the Company)

9. Global Boa rdofTrade Ltd. (GBOT) (Subsidiary of FTGIPL w.e.f. 19 March, 2012; formerly subsidiary of the Company)

10. Knowledge Assets Pvt. Ltd. (KAPL)

11. FinancialTechnologiesCommunications Ltd.(FTCL)

12. Global Payment Networks Ltd. (GPNL)

13. FT Knowledge Management Company Ltd. (FTKMCL)

14. Indian Bullion Market Association Ltd.(Subsidiaryof NSEL)

15. Trans-GlobalCredit&FinanceLtd. (TGCFL)

16. Capricorn Fin-Tech (Pvt). Ltd.(Subsidiaryof FTME)

17. BourseAfrica Ltd. (BAL) (Subsidiary of FTGIPL)

18. Boursalndia Ltd.(BIL)

19. ICX Platform (Pty) Ltd. (ICX)

20. Credit Market Services Ltd. (CMSL)

21. Takshashila Academia of Economic Research Ltd.(TAER)(Takshashila)

22. Apian Finance and Investments Ltd. (Apian)

23. Bahrain Financial Exchange BSC(c)(BFX) (Subsidiaryof FTGIPL)

24. Financial Technologies SingaporePte Ltd. (FTSPL)

25. Si ngapore Mercantile Exchange PTE Ltd. (SMX) (Subsidiary of FTSPL)

26. Singapore Mercantile ExchangeClearing Corporation PTE Ltd. (SMX-CCL) (Subsidiary of SMX)

27. BFXCIearing&DepositoryCorporation BSC© (Subsidiaryof BFX)

28. FT Projects Ltd. (w.e.f. 18 May,2010)

29. FinancialTechnologies Projects Pvt. Ltd. (w.e.f 23rd April,2010)

30. CX Africa Ltd. (subsidiaryof BAL) (w.e.f 26 July,2011J

31. Bourse Exchange Nigeria Ltd. (Subsidiary of BAL)

32. BourseAfrica (Kenya) Ltd.(Subsidiaryof BAL)

33. BourseUganda Ltd. (Subsidiary of BAL)

34. BourseZambia Ltd.(Subsidiaryof BAL)

35. BourseTanzania Ltd. (Subsidiary of BAL)

ii) AssociateCompanies:

1. Multi Commodity Exchange of India Ltd. (MCX)

2. MCX-StockExchangeClearingCorporation Ltd.(MCX-SXCCL)

3. Indian EnergyExchangeLtd.(IEX)

4. SMEExchangeof India Ltd.(SME)(w.e.f 26 Sept.,2011)

iii) JointVentureCompanies:

1. Dubai Gold and Commodities Exchange (DGCX)- Jointly control led in which Company ho Ids 18.60% Share Capita I.

iv) Key Management Personne

1. Mr.JigneshShah : Chairman and Managing director

2. Mr.Dewang Neralla : Wholetimedirector

v) Relative ofthe Key Management Personnel where transactions have taken place

Mr. ManjayShah : Director-Business Development*

* Non-board member

vi) Entity over which key management personnel is able to exercise significant influence _a-fin Financial Services Pvt. Ltd. (La-fin)

14. STOCK BASED COMPENSATION:

a) Du ring the year, Remuneration and Compensation Committee ( Committee ) or the Company at their meeting held on 14 March, 2012 nas considered and approved the grant of 900,000 Stock Options ("Options") each under the Employee Stock Option Scheme-2009 & 2010 totalling to 1,800,000 options at a price of Rs. 770/- to the eligible employees / Directors of the Company and its Subsidiaries ("Employees") in terms of SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 as amended from time to time and as approved by the Shareholders at the Annual General Meetings of the Company held on 25 September, 2009 & 29 th September,2010 respectively.

15. EMPLOYEE BENEFIT PLANS:

Defined contribution plans: Amounts recognised as expenses towards contributions to provident fund, employee state insurance cor po ration and other funds by the Company are W 265.30 lacs (Previous Year Rs. 281.61 lacs).

Post employment defined benefit plans:

Gratuity Plan: The Company makes annual contributions to the Employee's Group Gratuity Assurance Scheme administered by the Life nsurance Corporation of India ('LIC'),a funded defined benefit plan for qualifying employees.The scheme provides for lumpsum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to fifteen days salary oayablefor each completed year of serviceor part thereof in excess of six months.Vesting occurs on completion of five years of service.

16. JOINT VENTURE DISCLOSURE:

a. Jointly Controlled Entity ('JCE') of the Company :

Name of the Entity : Dubai Gold and Commodities Exchange DMCC ('DGCX')

Country of Incorporation : United Arab Emirates

% Holding : 18.60% (Previous Year 18.60%)

b. Company's share of interest in the assets, liabilities, income and expenses and contingent liabilities and commitments with 'espect to JCE on the basis of unaudited financial statements of the JCE as at and for the year ended 31st March, 2012:

17. REMITTANCE IN FOREIGN CURRENCYON ACCOUNTOF DIVIDEND:

The Company has paid dividend, during the year, in respect of shares held by non-resident shareholders including Foreign Institutiona nvestors and GDR custodian. The total amount remitted as stated below represents amount paid into Indian bank as per mandate / direction given by the non resident shareholders. Consequently, the exact amount of dividend remitted in foreign currency cannot be ascertained.

18. The Revised Schedule VI has become effective from 1 April, 2011 for the preparation of financial statements. This has significantly impacted the disclosure and presentation made in the financial statements. Previous year's figures have been regrouped / reclassified wherever necessary to correspond with the current year's classification /disclosure.


Mar 31, 2010

1. Contingent liabilities not provided for in respect of:

Curent Year Previous Year

(a) Guarantees given to third parties by the Company on behalf of its subsidiary 280,936,640 1,290,535,600 companies

(b) Income tax demands against which the Company is in appeal (including adjustable 260,382,1 58 253,569,185 against Securities Premium account Rs. 194,103,143/- (Previous year Rs. 194,103,143/-)

(c) Service tax and excise dues contested by the Company. The Company is hopeful of 15,306,962 8,303,968 positive outcome

2. During the year, a portion of the investments in equity shares of MCX Stock Exchange Limited (MCX-SX) held by the Company was cancelled pursuant to a Court approved Composite Scheme of Reduction cum Arrangement (the Scheme) between MCX-SX and its equity shareholders u/ss. 100-104 read with ss. 391-394 of the Companies Act, which was sanctioned by the Bombay High Court on 12th March, 2010 and registered with ROC on 19th March, 2010. The said reduction was done to comply with regulatory requirements applicable to MCX-SX viz., Securities Contracts (Regulation) (Manner of Increasing and Maintaining Public Shareholding in Recognized Stock Exchanges) Regulations, 2006 (MIMPS) restricting the holding of the Company, its associate and another party to 5% each in MCX-SX.

In terms of the Scheme, in as much as it relates to the Company:

1) Pursuant to the reduction, 562,460,000 equity shares of Re 1/- each (cost Rs. 562,460,000/-) held by the Company in MCX-SX were cancelled on 19,h March, 2010 for a consideration payable by MCX-SX to the Company aggregating Rs. 562,460,000/- (bemg the paid up value thereof). Accordingly, the pre-reduction holding by the Company of 589,625,000 equity shares of Re. 1/- each (total cost of investment Rs. 589,625,000/-), constituting 33.89% shareholding in MCX-SX, is reduced by 562,460,000 shares and as at 31th March, 2010, the Company holds 27,165,000 equity shares in MCX-SX at cost, constituting 5% interest in MCX-SX (as required as per MIMPS Regulation). In terms of the Scheme, the consideration receivable was adjusted against the non refundable interest free deposit to be paid by the Company towards warrants as stated herein below. Accordingly, no profit or loss is recognized on the reduction.

3) The Company was allotted 562,460,000 warrants by MCX-SX on 22"d March, 2010 against the aforementioned interest free deposit payable by the Company of Rs. 562,460,000/- pursuant to the arrangement (Refer Schedule 4). Each warrant entitles the holder to subscribe to one equity share of Re. 1/- each of MCX-SX at any time after six months from the date of issue of warrants. Upon exercise of this option, the proportionate deposit will be adjusted against the money payable in respect of equity shares to be issued and no further amount will be payable by the warrant holder for the equity shares against the exercise of warrants. The warrants are also freely transferable by endorsement and delivery. The warrants do not carry any voting or dividend rights. The Company cannot increase, at any point of time, their shareholding beyond permissible limits under MIMPS Regulations.

The Company has been advised by independent legal/tax counsels that there is no tax liability on such reduction and arrangement in terms of the sanctioned Scheme. On this basis, no tax liability has been determined or recognized in accounts.

4. Capital Work in Progress (Refer Schedule 3) includes amount aggregating Rs. 498,833,045/- (Previous year Rs. 474,596,833/-) towards purchase of agricultural lands. The original intention of the Company was, interalia, setting up of a Research and Development and other related centers. However, considering the time involved in completion of regulatory formalities / approvals to convert to the status of non-agricultural land, the Company has signed a memorandum of understanding to sell off the said land. As per terms of the said memorandum of understanding the Company has received Rs. 200,000,000/- as advance till balance sheet date which is included in Sundry Creditors (Refer Schedule 9). Pending such sale as at the balance sheet date the unused land continues to form part of Capital Work in Progress at lower of book value and net realizable value (Refer Schedule 3).

5. During the financial year 2007-08, the Company had allotted 1,662,811 equity shares of Rs. 21- each fully paid (based on seven GDRs representing one equity share) consequent to the issue of 11,639,677 Global Depository receipts (GDRs) aggregating USD 115 million equivalent to Rs. 4,522,725,000/-.

6. Stock based compensation:

Each option entitles the holder to exercise the right to apply for and seek allotment of one equity share of Rs. II- each. The intrinsic value of each option is nil, since the options are granted at the market price of the shares existing on the date of grant. The options have vesting periods as stated above in accordance with the vesting schedule as per the said plan and have an exercise period of three to twenty four months (previous year three to twelve months) from the respective vesting dates.

During the previous year, Company, due to adverse stock market conditions and vis-a-vis Companys share price, on request of option holders, cancelled options granted under ESOP 2006 scheme.

The particulars of the options granted, lapsed and cancelled under aforementioned two schemes are as follows:

Lapsed options available for grant/re-issuance are: 20,685 (Previous year 20,685).

b. The Company has followed the intrinsic value-based method of accounting for stock option. Had the compensation cost of the Companys stock based compensation plan been determined using the fair value approach, the Companys net profit for the year would have been lower by Rs. 30,833,206/- (Previous year higher by Rs. 181,460,227/-) and earnings per share as reported would be higher as indicated below:

(v) To allow for the effects of early exercise, it is assumed that the employees would exercise the options after vesting date. (vi) Expected volatility is based on the historical volatility of the share prices over the period that is commensurate with the expected term of the option.

7. The tax effect of timing differences that have resulted in deferred tax assets / liabilities are given below:

8. The Company has entered into operating lease agreements for various premises ranging from 7 months to 36 months. The lease rentals recognized in the profit and loss account during the year and the future minimum lease payments under non cancellable operating lease are as follows:

9. The Company is engaged in development of computer software. The additional information pursuant to the provisions of paragraphs 3, AC, 4D of Part II of Schedule VI to the Companies Act, 1956 is as under (to the extent applicable)

10. Segment Reporting

The Company has presented segmental information in its consolidated financial statements, which are presented in the same annual report. Accordingly, in terms of the provisions of Accounting Standard (AS 17) "Segment Reporting", no disclosures related to segments are presented in its stand-alone financial statements.

11. Related Party information:

I. Names of related parties and nature of relationship:

(i)Entities where control exists (Subsidiaries, including step down subsidiaries)

1) Tickerplant Ltd. (Tickerplant)

2) IBS Forex Ltd. (IBS)

3) atom Technologies Ltd. (atom)

4) Riskraft Consulting Ltd. (Riskraft)

5) National Spot Exchange Limited (NSEL)

6) National Bulk Handling Corporation Ltd. (NBHC)

7) Financial Technologies Middle East- DMCC (FT ME)

8) Global Board of Trade Ltd. (GBOT)

9) Singapore Mercantile Exchange Pte Ltd. (SMX)

10) Knowledge Assets Pvt. Ltd. (KAPL)

11) FT Group Investments Pvt. Ltd. (FTGIPL)

12) Financial Technologies Communications Ltd. (FTCL)

13) Global Payment Networks Ltd. (GPNL)

14) FT Knowledge Management Company Ltd. (FTKMCL)

15) Indian Bullion Market Association Ltd. (subsidiary of NSEL)

16) Trans-Global Credit & Finance Ltd. (TGCFL)

17) Singapore Mercantile Exchange Clearing Corporation Pte Ltd. (Subsidiary of SMX) (SMX-CCL)

18) Financial Technologies Middle East FZ-LLC. (Subsidiary of FTME) (Deregistered/liquidated on 25th November, 2009 w.e.f. 28th February, 2009)

19) Capricorn Fin-Tech (Pvt). Ltd. (Subsidiary of FTME)

20) Bourse Africa Limited (Subsidiary of FTGIPL) (w.e.f. 15,h October, 2008)

21) Boursa India Ltd. (w.e.f. 16th February, 2009)

22) ICX Platform (Pty) Limited (w.e.f 7,h April, 2008)

23) Credit Market Services Ltd. (CMSL) (w.e.f. 23rd May, 2008)

24) Takshashila Academia of Economic Research Ltd. (TAER) (w.e.f 9,h June, 2008) (Takshashila)

25) Apian Finance and Investments Limited (w.e.f. 25,h April, 2008)

26) Grameen Pragati Foundation (Subsidiary of atom) (w.e.f. 25,h July, 2008) (up to 2"d February, 2009)

27) Bahrain Financial Exchange BSC (c) (BFX) (Subsidiary of FTME) (w.e.f. 18,h September, 2008)

28) Financial Technologies Singapore Pte Ltd. (w.e.f. 1 5,hApril, 2009)

29) BFX Clearing & Depository Corporation BSC(c) (Subsidiary of BFX) (w.e.f. 29,h March, 2010)

(ii) Associate Companies:

1) Multi Commodity Exchange of India Limited (MCX)

2) MCX-SX Clearing Corporation Ltd. (MCX-SX-CCL) (w.e.f. 7,h November, 2008)

3) Indian Energy Exchange Ltd. (IEX)

4) ACE Group (Audit Control and Expertise Global Ltd.)

5) MCX Stock Exchange Limited (w.e.f 8th September, 2008 to 18th March, 2010) (MCX-SX)

(iii) Joint Venture Companies:

1) Dubai Gold and Commodities Exchange (DGCX) - Jointly controlled in which Company holds 18.60% Share Capital

(iv) Key Management Personnel

1) Mr. JigneshShah : Chairman and Managing director

2) Mr. Dewang Neralla : Whole-time director

(v) Relative of the Key Management Personnel where transactions have taken place

Mr. Manjay Shah : Director-Business Development

(vi) Entity over which key management personnel is able to exercise significant influence.

La-fin Financial Services Private Limited (La-fin)

II. Transactions with subsidiaries, associates and joint venture entities:

14. The Company, as part of its core business strategy promotes and invests in new Exchange, Technology and Ecosystem ventures that utilize its technological capabilities and domain expertise towards creating world class enterprises. The investment in each such venture is assessed for its risks and is limited to a pre-determmed level and will generate returns after the ventures start rampmg-up operations in 2 to 4 years time frame. The Company, as part of its non-linear business model, will continue to unlock value by broadening the investor base of its ventures.

During the year, the Company sold partial investment held in a group company. The resultant profit of Rs. 2,368,281,250/- (Previous year 2,067,280,550/-) (net of directly attributable brokerage expenses of Rs. 75,468,750 (Previous Year Rs. 98,331,750/-)) is grouped under Profit on sale of Investments in Other Income (Schedule 12).

15. In the previous year, the Company adopted the option offered by the notification of the Companies (Accounting Standards) Amendment Rules 2006 which amended Accounting Standard 11 "The Effects of Changes in Foreign Exchange Rates".

Pursuant to the aforesaid notification, exchange differences relating to long term monetary items have been accounted for as described in Accounting policy I of Schedule 15-1.

Accordingly, cumulative foreign exchange loss (net) of (1) Rs. 69,383,630/- (Previous year Rs. 230,886,837/-) has been adjusted to the cost of the fixed assets / capital work-in-progress and (2) Rs. 364,301,775/- has been credited (Previous year debited Rs. 516,543,586/-) to the Foreign Currency Monetary Item Translation Difference Account (unamortized balance at the year end is credit Rs. 52,086,836 (Previous year debit Rs. 352,608,206/-)).

16. (a) The holders of Zero Coupon Convertible Bonds due 2011 (ZCCBs) have an option to convert the ZCCBs into equity shares at any time on and after 30,h January, 2007 up to the close of business on 14,h December, 2011, at an initial conversion price of Rs. 2362.68 per equity share at a fixed exchange rate on conversion of Rs. 44.6738 to USD 1, subject to certain adjustments as per the terms of the issue. Under certain conditions, the Company, on or after 20,h December, 2007 but not less than seven business days prior to 21s* December, 2011, has an option to mandatorily convert the ZCCBs into equity shares, in whole, but not in part. Further, under certain circumstances, the Company has the option to redeem the ZCCBs during their tenure at their Early Redemption Amount subject to RBI regulations. Unless previously converted or redeemed or purchased and cancelled, the Company will redeem them at 147.14 percent of their principal amount on 2f* December, 2011.

(b) During the previous year, the Company repurchased 9,500 ZCCBs of face value of USD 1,000 each as per Reserve Bank of India Circulars. The resultant gain (net of commission) on such repurchase of Rs. 115,340,252/- was included in Schedule-12 Other Income. Consequent upon such repurchase, 9,500 ZCCBs stood cancelled. As at balance sheet date 90,500 ZCCBs having face value of USD 1,000 each outstanding have been disclosed in the Balance Sheet, as restated, as Unsecured Loan.

(c ) The movement in provision for redemption premium payable on redemption of ZCCBs in accordance with Accounting Standard (AS-29) Provisions, Contingent Liabilities and Contingent Assets is as follows:

17. Employee benefit plans:

Defined contribution plans: Amounts recognized as expenses towards contributions to provident fund, employee state insurance corporation and other funds by the Company are Rs. 34,048,682/- (Previous Year Rs. 28,605,518/-).

Post employment defined benefit plans:

Gratuity Plan: The Company makes annual contributions to the Employees Group Gratuity Assurance Scheme administered by the Life Insurance Corporation of India (lIC), a funded defined benefit plan for qualifying employees. The scheme provides for lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to fifteen days salary payable for each completed year of service or part thereof in excess of six months. Vesting occurs on completion of five years of service.

18. Loansand advances in the natureof loans(as required by dause32of the listingagreementwiththestockexchanges)

19. Earnings Per Share is calculated as follows:

20. Joint Venture Disclosure:

21. The year end foreign currency exposures that have not been hedged by a derivative instrument or otherwise are given below

22. Remittance in foreign currency on account of dividend:

The Company has paid dividend, during the year, in respect of shares held by non-resident shareholders including Foreign Institutional Investors and GDR custodian. The total amount remitted as stated below represents amount paid into Indian bank as per mandate/direction given by the non resident shareholders. Consequently, the exact amount of dividend remitted in foreign currency cannot be ascertained.

23. The aggregate amount of revenue expenditure incurred during the year on Research and Development and shown in the respective heads of the account is Rs. 105,532,436 (Previous year Rs. 120,741,352/-).

24. The Company has investments aggregating Rs. 9,238,186,235/- (Previous Year Rs. 4,385,674,551/-) in certain subsidiary companies and a joint venture company and loans and advances / debtors aggregating Rs. 286,620,649/- (previous year Rs. Nil) due from some of these entities. These entities have continuing losses (share of aggregate losses as at 31* March, 2010; Rs. 2,519,229,714/-, (Previous Year Rs. 1,210,751,139/-) including on account of expensing out start up costs and costs relating to research and development activities) against which a provision for other than temporary diminution of Rs. 569,026,000/- was made during the previous year.

These investments are held as long term strategic investments. These entities are at various stages of executing their business plans / commencing operations which is expected to result into profitability On an evaluation of the business plans for these entities, the said provision is considered adequate and no provision is considered necessary towards loans and advances and debts due. The Company expects that the value in these investments will be unlocked at appropriate times as mentioned in Note 14 above.

25. During the previous year, the Company proposed to divest part of its investments aggregating 3,600,000 equity shares of MCX at a price at which MCX proposed to make a public issue. MCX had also filed its Draft Red Herring Prospectus with Securities and Exchange Board of India in the earlier year. However, due to unfavorable conditions the issue has been postponed to a later date. The investments in 3,600,000 equity shares continue to be disclosed by the Company under Current Investment based on intention of holding.

26. Figures for the previous accounting year have been regrouped / rearranged wherever necessary to correspond with the figures of the current year and are disclosed in brackets. Amounts and other disclosures for the preceding year are included as an integral part of the current year financial statements and are to be read in relation to the amounts and other disclosures relating to the current year

 
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