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Notes to Accounts of Glodyne Technoserve Ltd.

Mar 31, 2013

1) COMPANY OVERVIEW:

Glodyne Technoserve Limited ('the Company") is engaged in Technology Infrastructure Management Services and Application Software Services including providing turnkey solutions for large scale technology projects, technology maintenance and management in India and Overseas. The Company has head quarters at Mumbai, India.

2) SHARE CAPITAL

a. Term/rights attached to shares

(i) The company has only one class of equity shares having a par value of Rs. 6/- per share. Each holder of equity shares is entitled to one vote per share. The company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the Company, the holder of Equity Shares will be entitled to receive the remaining shares of the company, after distribution of all Preferential amounts. The distribution will be in proportion to the number of Equity Shares held by the Shareholders.

(ii) The authorised capital of the company also comprises 85,00,000 number of preference shares of Rs. 6/- each. However the company has not issued the same for subscription.

b. Shares reserved for issue under options:

The company has stock option scheme for its employees and employees of its subsidiary companies. As on 31st March, 2013 number of options were outstanding 18,71,409 (22,79,293 shares). Each option gets converted in to 1 equity share. For further details refer to note no 39.

c. During the year, the Company has granted NIL (6,80,220) options. The Company follows intrinsic value method to account for Employee compensation costs in respect of grant of options. The employee compensation cost equals to the difference between the market price of the shares covered under the options as on the day before the date of grant and the exercise price. During the year, 6,80,220 options which were granted in the pervious year have been cancelled.

3) Money received against issued of Share Warrants

During F.Y. 2011-12, the Company had issued 15,00,000 convertible warrants at Rs. 400/- per warrant. Each warrant carried a right to subscribe to one Equity share of the company at a premium of Rs. 394/- at any time within a period of 18 months from the date of allotment of these warrants. As at the end of previous financial year, the company had received Rs. 15 crores towards 25% of total value of the warrants issued. During the current financial year, the Company has forfeited the said amount due to non-payment of balance amount by the Warrant Holder and the same has been credited to Capital Reserve.

4) OPERATING LEASES:

A. Operating Lease - Expenses

a) The Company has various operating leases for office facilities, equipments and residential premises for employees, which are renewable on a periodic basis and cancelable at its option. Rental expense for operating leases included in the income statements for the year is Rs. 6,841.11 Lakhs (Rs. 7,758.38 Lakhs) and the same are debited to Rental expense and Equipment Lease Rentals.

b) Under these lease agreements, refundable interest free security deposits have been given by the Company (excluding certain Equipment Lease Rental Agreements where no such deposits have been given).

c) These agreements (excluding certain Equipment Lease Rental Agreements) provide for:

* Increase in rental during the tenure of lease agreement

* Contain renewal clause

* Contain clause for restriction on sub-leasing

d) No asset has been acquired on Finance Lease.

B. Operating Leases - Income

a) The Company has operating lease for equipments to a subsidiary. All such leases are renewable on a periodic basis and cancelable at its option. Rental income for operating leases included in the income statements for the year is Rs. 1,020.19 Lakhs (Rs. 1,248.07 Lakhs).

b) No asset has been given on Finance Lease.

5) RELATED PARTY TRANSACTIONS:

As per AS-18 on "Related Party Disclosures", disclosures of transactions with related parties as defined therein are given below:

List of related parties and Relationship:

a) Subsidiary Companies-Country of Incorporation

i. Glodyne People power Limited - India

ii. Smaarftech Technologies Private Limited - India

iii. Glodyne Technoserve Inc. - U.S.A.

iv. Compulink USA Inc. - USA

v. Compulink Europe Limited - U.K.

vi. Compulink Software Pte Limited - Singapore

vii. Glodyne Technoserve (East) Inc.-U.S.A. (Subsidiary of Glodyne Technoserve Inc.-U.S.A )

viii. Front Office Technologies Inc.-U.S.A. (Subsidiary of Glodyne Technoserve Inc.-U.S.A.)

ix. Decision One Corporation (Subsidiary of Glodyne Technoserve Inc.-U.S.A.)

b) Key Management Personnel ("KMP")

i. Mr. Annand Sarnaaik - Chairman & Managing Director

ii. Mrs. Divvyani A. Sarnaaik - Executive Director

iii. Mr. Shantanu Rooj - Director (part of the year)

c) Relatives of KMP

i. Mr. Nikhil Sarnaik-Brother of Mr. Annand Sarnaaik

ii. Dr. Archana Sangamnerkar-Sister of Mr. Annand Sarnaaik

iii. Dr. Nitin Sangamnerkar-Brother-in-law of Mr. Annand Sarnaaik

iv. Mr. N. G. Anil Kumar-Brother of Mrs. Divvyani A. Sarnaaik

v. Mr. N. Lalith Kumar-Brother of Mrs. Divvyani A. Sarnaaik

vi. Mr. Rajith Kumar - Brother of Mrs. Divvyani A. Sarnaaik

vii. Mrs. Kavita Rooj -Wife of Mr. Shantanu Rooj who was director for a part of the year.

d) Enterprise over which certain KMP exercise significant influence

i. Growdyne Techzone Services Limited

ii. Glodyne Global Private Limited

iii. Glodyne Power Limited

iv. Paradyne Info services Private Limited

v. Sarvalabh Global Foundation

6) Trade receivables and Loans and Advances are unsecured but considered good except otherwise stated, for which the company holds no security other than personal security of respective parties.

7) In the opinion of the Board, Current assets, loans and advances are realizable at a value, which is at least equal to the amount at which these are stated in the ordinary course of business and provision made for all known and determined liabilities are adequate and not in excess of the amount stated.

8) Due to defaults in re-payment of certain bank borrowings / interest thereon and restructuring of borrowings in certain cases have given rise to differences between the amount of debt and interest as charged by the concerned banks and amounts as calculated / estimated by the Company and consequently recorded by it in its books of account. The company is in process of reconciliation of such amounts.

9) During the financial year as the Company has not entered into Derivative transactions and hence the disclosures regarding the same have not been made.

10) Segment information:

As per Accounting Standard 17 on "Segment Reporting", the Company has reported segment information on consolidated basis including business conducted through its Subsidiaries.

11) Employee Stock Options

(a) During the financial year, the Company has granted Nil (680,220) Stock Options to its employees and employees of its subsidiary companies. In accordance with the Employee Stock Option Scheme and Employee Stock Purchase Scheme Guidelines, 1999 issued by the Securities and Exchange Board of India ("SEBI"), the Company has elected to use the "Intrinsic Value method" to account for the compensation cost of Stock Options to employees. For the year ended 31st March 2013, the Company has been advised that there is no accounting impact in the books of account in respect of such options. Had the Company adopted "Fair Value Method" for calculating the Compensation cost, the total accounting impact for the year would have been Rs. 875.35 Lakhs (Rs. 841.41 Lakhs) profits after tax lower by Rs. 875.35 Lakhs (Rs. 841.41 Lakhs) and basic and diluted earnings per share would have been lower by Rs. 1.94 (Rs. 1.86) and Rs. 1.94 (Rs. 1.76) respectively.

12) Contingent Liabilities and commitments not provided for:

(Rs. in Lakhs)

particulars 2012-2013 2011-2012

a) Unexpired Letters of Credit - 1,730.62

b) Guarantees issued by Bankers 622.12 1,556.47 against Company's Counter Guarantee

c) Capital Commitments in respect - 304.00 of Capital-work-in-Progress (net of advances paid)

d) Guarantees given by the 54,017.62 49,625.20 company in respect of the loans taken by a subsidiaries

e) Claims against the company 84.54 84.54 not acknowledged debts

f) Payment obligation under 832.98 832.98 Share Purchase Agreement (SPA) in respect of acquisition of Comat Technologies Private Limited

g) Income Tax Demands being 445.3 61.28 contested by the Company

TOTAL 56,002.56 54,195.09

13) The Company has encountered pressure on its liquidity to pay to its Lenders / Vendors due to declining realization of debtors, advances coupled with delay / cost overruns in execution / delay in Regulatory approvals in certain projects. The Company has also defaulted on its loan repayment and interest servicing obligations in respect of certain borrowings and non-payment of certain statutory dues. The Company has also received legal notices from the some of the lenders /vendors for such defaults in repayment. The Company has rescheduled certain loan / Lease obligations with the concurrence of its lenders and is taking measures to shorten the recovery / conversion cycle in respect of its receivables / advances. In the opinion and based on the risk assessment conducted by the Management of the Company, this is a temporary phase and there is no doubt / uncertainty regarding Company's ability to continue as a Going Concern. Hence the said assumption has been followed for preparing the financials for the current financial year. The appropriateness of assumption of going concern is dependent upon the Company's ability to raise requisite finance / generate cash flows in future to meet its obligations, including financial support to its subsidiaries.

14) Previous Year's figures have been re-grouped, re-arranged to conform to the current year's classification. Figures in the brackets represent previous year comparatives.

 
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