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Notes to Accounts of Hexaware Technologies Ltd.

Dec 31, 2016

1. Shares allotted as fully paid up by way of bonus shares during five years preceding the year end

The Company allotted 145,545,781 equity shares as fully paid up bonus shares by utilization of Securities premium account on 2nd March, 2011 pursuant to shareholder’s resolution passed in Extra Ordinary General Meeting held on 15th February, 2011.

2. Rights, preferences and restrictions attached to equity shares

The Company has one class of equity shares having a par value of Rs. 2 each. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all liabilities, in proportion to their shareholding.

3. Shares reserved for issue under options

The Company has granted employee stock options under ESOP 2002, 2007 and 2008 schemes and restricted stock units (RSUs) under the ESOP 2008 and 2015 scheme. Each option / RSU entitles the holder to one equity share of Rs. 2 each. 9,264,407 (9,844,513) options / RSUs were outstanding as on 31st December, 2016. (Refer Note no. 26)

4. The Board of Directors, at its meeting held on 7th February, 2017 has declared 50% of interim dividend of Re. 1/- per equity share. Further during the year, the Company has also paid interim dividends aggregating Rs. 4.50/- per share (225%).

5. The Board of Directors, at its meeting held on 25th October, 2016, approved a buyback proposal to which shareholders accorded their consent on 22nd December 2016, for purchase by the Company of up to 5,694,835 shares of Rs. 2 each (representing 1.9% of total issued equity shares) from the shareholders of the Company on a proportionate basis by way of a tender offer route at a price of Rs. 240 per equity share for an aggregate amount not exceeding Rs. 1,366.76 Million in accordance with the provisions of the Companies Act, 2013 and SEBI (Buy Back of Securities) Regulations, 1998. The Buyback offer opens on 2nd February, 2017 and closes on 15th February, 2017.

6. Estimated amount of contracts remaining to be executed on capital account and not provided for (Net of advances) Rs. 40.63 million (Previous year Rs. 974.98 million)

7. Contingent Liabilities in respect of

8. Claims not acknowledged as debt Rs. 28.14 million (Previous Year Rs. 28.14 million), being a claim from landlord of a premise occupied by the Company in an earlier year. The Company is confident of successfully contesting the aforesaid matter and does not expect any outflow on this count.

9. Claims for taxes on income

Income taxes of Rs. 9.59 million (Previous year Rs. 9.74 million) in respect of assessments completed in earlier year, arising from certain disallowances by the Income tax authorities. The Company has appealed against the Orders and based on merits, expects favourable outcome. Hence, no provision is considered necessary.

10. The Provision for current income tax is aggregate of the balance tax for three months ended 31st March, 2016 based on the returned income for the tax year ended 31st March, 2016 and the provision based on the taxable income for the remaining nine months up to 31st December, 2016, the actual tax liability, for which, will be determined on the basis of the results for the tax year ending 31st March, 2017.

11. Derivative Instruments

12. Forward exchange contracts to Sell US Dollar 141.82 million, Euro 4.20 million and GBP 4.20 million are outstanding as of 31st December, 2016 (Previous Year US Dollar 156.94 million, Euro 5.60 million and GBP 4.20 million).

Fair value net gain on the derivative instruments identified as cash flow hedges is Rs. 358.12 million as at 31st December, 2016 (Previous Year Rs. 20.85 million ).

Net gain of Rs. 322.77 million recognized in Hedging Reserve as at 31st December 2016 is expected to be recycled to Statement of Profit and Loss over two years.

13. As at the balance sheet date the Company has net receivable foreign currency exposure that are not hedged by a derivative instrument or otherwise amounting to Rs. 2,237.21 million (Previous Year Rs. 2,575.57 million)

14. Share Based Compensation (ESOP)

15. The Remuneration and Compensation Committee (''Committee’) of the Company administers the stock options plans viz. ESOP 2002, 2007, 2008 and 2015 plan. Under the plans, the employees of the Company as well as its subsidiaries are granted options / Restricted Stock Options (RSU) entitling them to one equity share of Rs. 2/- each for each option granted. Exercise price is the market price of the shares of the Company at the grant date or the price determined by the Committee. The Options / RSU’s vest over a period of 1 to 4 years from the date of grant on the basis of service period and/or performance achievement. The maximum time available to exercise upon vesting is 6 years.

16. The Company has followed the Intrinsic Value-based method of accounting for grants made before April 1, 2015. For the grants made after 1st April, 2015, the Company has recognized compensation cost using fair value method. Had the compensation costs for the grants made before 1st April, 2015 been recognized using fair value method, the income would have been higher by NIL (Previous year higher Rs.7.51 million) and earnings per share (EPS) as reported would be as indicated below:

17. The Company takes on lease office space and accommodation for its employees under various operating leases. The lease rentals towards operating lease agreements recognized in the Statement of Profit and Loss for the year is Rs. 188.69 million (Previous Year Rs. 134.97 million).

The future minimum lease payments and payment profile of the non-cancellable operating leases are as follows:

18. Employee benefit plans

19. Provident Fund and Superannuation Fund

Both the employees and the Company make monthly contributions to the Provident Fund Plan equal to a specified percentage of the covered employee’s salary. In respect of the Company’s employees enrolled with the Hexaware Technologies Limited Employees Provided Fund Trust (the ''Trust’), the Company pays a part of the contributions to the Trust. The remaining portion of Company’s contribution in respect of such employees and entire contribution in respect of other employees is contributed to the Government administered employee Provident and Pension Fund.

The interest rate payable by the Trust to the beneficiaries every year is being notified by the Government. The Company has an obligation to make good the short fall, if any, between the return from the investments of the trust and the notified interest rate. The actuary has accordingly provided a valuation and based on the fund position and assumptions mentioned below, there is no shortfall as at 31st December 2016.

Certain employees of the Company are entitled to benefits under the superannuation plan, a defined contribution plan. The Company makes quarterly voluntary contributions under the superannuation plan to LIC based on a specified percentage of each covered employees salary and recognizes such contributions as an expense when incurred and has no further obligation to the plan beyond such contributions.

During the year, the Company has recognized expenses towards contributions to provident fund and other funds and superannuation funds of Rs. 280.85 million (Previous year Rs. 261.42 million) and Rs. 5.04 million (Previous year Rs. 6.03 million) respectively.

20. Gratuity Plan

The Company makes annual contribution 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 based on completed years of service or part thereof in excess of six months. Vesting occurs on completion of five years of service.

21. Remittance in Foreign currency on account of dividend

The Company has paid dividend in respect of shares held by non - residents on repatriation basis. This inter-alia includes portfolio investment and direct investment, where the amount is also credited to non- resident external account (NRE A/c). The exact amount of dividend remitted in foreign currency cannot be ascertained. The total amount remittable in foreign currency in this respect is given herein below:

22. An amount of '' 2.48 million towards principal and Rs. Nil towards interest was outstanding to Micro and Small Enterprises as on 31st December 2016. There were no amounts of interest paid or payable during the year. This information has been determined to the extent such parties have been identified on the basis of information available with the Company.

23. Segments

As per Accounting Standard 17 on "Segment Reporting", segment information has been provided under the notes to the Consolidated Financial Statements.

24. Corporate Social Responsibility

25. Gross Amount required to be spent by the Company during the year is Rs. 80.38 million (Previous year Rs. 74.47 million)

26. Amount spent during the year on :

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


Dec 31, 2015

Notes:

a) Land - Leasehold includes Rs, 90.00 million and Rs, 7.40 million (Previous year Rs, 6.49 million) being lease premium and accumulated amortization respectively in respect of leasehold land allotted to the Company at Nagpur for which final lease agreement is being executed.

b) Plant and machinery includes Computer systems.

c) During the year, pursuant to application of Schedule II of the Companies Act, 2013, the useful lives of the fixed assets have been evaluated and revised where required based on such evaluation. Expert advice has been obtained in respect of assets where the useful lives are different from stipulations of the Schedule II. The impact of the revision is not material.

1 Estimated amount of contracts remaining to be executed on capital account and not provided for (Net of advances) Rs, 974.98 million (Previous year Rs, 1,867.43 million)

2 Contingent Liabilities in respect of

a) Claims not acknowledged as debt Rs, 28.14 million (Previous Year Rs, 28.14 million), being a claim from landlord of a premise occupied by the Company in an earlier year. The Company is confident of successfully contesting the aforesaid matter and does not expect any outflow on this count.

b) Claims for taxes on income:

i. Where Company is in appeal

Income tax demands of Rs, 9.74 million (Previous year Rs, 8.99 million) have been raised in respect of assessments completed, arising from certain disallowances by the Income tax authorities. The Company has appealed against the Orders and based on merits, expects favorable outcome. Hence no provision against such demand is considered necessary.

ii. Others:

In an earlier year, the CIT (A) had passed an order in favor of the Company against demand of Rs, 23.79 million raised by the Assessing officer for AY 2008-09, which had arisen mainly due to disallowance of foreign exchange loss as business expenses. Against this, the Income Tax Department has filed an appeal with Income Tax Appellate Tribunal and the matter is in process.

3 The Provision for current income tax is aggregate of the balance tax for three months ended 31st March, 2015 based on the returned income for the tax year ended 31st March, 2015 and the provision based on the taxable income for the remaining nine months up to 31st December, 2015, the actual tax liability, for which, will be determined on the basis of the results for the tax year ending 31st March, 2016.

4 Derivative Instruments

a) Forward exchange contracts to Sell US Dollar 156.94 million, Euro 5.60 million and GBP 4.20 million are outstanding as of 31st December, 2015 (Previous Year US Dollar 183.86 million and Euro 2.74 million)

Fair value net gain on the derivative instruments identified as cash flow hedges is Rs, 20.85 million as at 31st December, 2015 (Previous Year net loss of Rs, 76.73 million).

Net gain of Rs, 15.96 million recognized in Hedging Reserve as at 31st December 2015 is expected to be recycled to Statement of Profit and Loss over two years.

b) As at the balance sheet date the Company has net receivable foreign currency exposure that are not hedged by a derivative instrument or otherwise amounting to Rs, 2,575.57 million (Previous Year Rs, 1,710.77 million)

5 Share Based Compensation (ESOP)

a) The Remuneration and Compensation Committee (Committee'') of the Company administers the stock options plans viz. ESOP 2002, 2007, 2008 and 2015 plan. Under the plan, the employees of the Company as well as its subsidiaries are granted options/ Restricted Stock Options (RSU) entitling them to one equity share of Rs, 2/- each for each option granted. Exercise price is the market price of the shares of the Company at the grant date or the price determined by the Committee. The Options / RSU''s vest over a period of 1 to 4 years from the date of grant on the basis of service period and/or performance achievement. The maximum time available to exercise upon vesting is 6 years.

6 Related party disclosures

Name of the Related Parties Country

Ultimate Holding company and its Subsidiaries

Baring Private Equity Asia GP V. LP ( ultimate holding company) (control exists) Cayman Island

The Baring Asia Private Equity Fund V, LP Cayman Island

Baring Private Equity Asia V Mauritius Holding (4) Limited Mauritius

Holding Company (control exists)

HT Global IT Solutions Holdings Limited Mauritius

Subsidiaries

Hex aware Technologies Inc. United States of America

Hex aware Technologies UK Ltd. United Kingdom

Hex aware Technologies Asia Pacific Pte. Ltd. Singapore

Hex aware Technologies GmbH. Germany

Hex aware Technologies Canada Ltd. Canada

FocusFrame Europe BV(1) & (2) Netherland

Hex aware Technologies, Mexico S. De. R.L. De. C.V. Mexico

Risk Technology International Limited India

Hex aware Technologies DO Brazil Ltd, Brazil(3) Brazil

Guangzhou Hex aware Information Technologies Company Limited(4) China

Hex aware Technologies LLC(5) Russia

Key Management Personnel (KMP)

Mr. R Srikrishna - Executive Director and CEO (KMP from 28th July 2014)

Mr. R. V. Ramanan - Executive Director and President Global Delivery (upto 15th September 2014)

Mr. P. R. Chandrasekar - Vice Chairman and CEO (KMP upto 27th July 2014)

Others

Ms. Kala Ramanan - Relative of KMP (upto 15th September 2014)

Notes:

1. Subsidiary of Hex aware Technologies Inc.

2. Closed on 31st March 2015.

3. Subsidiary of Hex aware Technologies UK Ltd

4. Subsidiary formed and received the Business License to do business on 21st May, 2015.

5. Subsidiary formed on 14th October 2015.

7 Employee benefit plans

i) Provident Fund and Superannuation Fund

Both the employees and the Company make monthly contributions to the Provident Fund Plan equal to a specified percentage of the covered employee''s salary. In respect of the Company''s employees enrolled with the Hex aware Technologies Limited Employees Provided Fund Trust (the ''Trust''), the Company pays a part of the contributions to the Trust. The remaining portion of Company''s contribution in respect of such employees and entire contribution in respect of other employees is contributed to the Government administered employee Provident and Pension Fund.

The interest rate payable by the Trust to the beneficiaries every year is being notified by the Government. The Company has an obligation to make good the short fall, if any, between the return from the investments of the trust and the notified interest rate. The actuary has accordingly provided a valuation and based on the fund position and assumptions mentioned below, there is no shortfall as at 31st December 2015.

Certain employees of the Company are entitled to benefits under the superannuation plan, a defined contribution plan. The Company makes quarterly voluntary contributions under the superannuation plan to LIC based on a specified percentage of each covered employees salary and recognizes such contributions as an expense when incurred and has no further obligation to the plan beyond such contributions.

During the year the Company has recognized expenses towards contributions to provident fund and other funds and superannuation funds of Rs, 261.42 million (Previous year Rs, 241.48 million) and Rs, 6.03 million (Previous year Rs, 9.70 million) respectively.

ii) Gratuity Plan

The Company makes annual contribution 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 based on completed years of service or part thereof in excess of six months. Vesting occurs on completion of five years of service.

The following table sets out the status of the gratuity plan for:

# Since the investments are held in the form of deposit with the LIC, these are not volatile, the market value of assets is the cost value of assets and has been accordingly considered for the above disclosures.

“The Company is expected to contribute Rs, 77.00 million to gratuity funds for the year ending 31st December, 2016 (Rs, 77.00 million for year ended 31st December 2015).”

* The estimates of future salary increases considered in actuarial valuation takes into account the inflation, seniority, promotions and other relevant factors.

** 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.

8 "Provision others" represents provisions towards expenditure relating to employee benefit obligations on contract acquisition, the outflow for which is expected in the next year.

9 There are no dues to Micro and small enterprises under Micro, Small and Medium Enterprises Development Act, 2006 ("MSMED Act") as at the year end, other disclosure as per MSMED Act not required to be disclosed.

10 Segments

As per Accounting Standard 17 on "Segment Reporting", segment information has been provided under the notes to the Consolidated Financial Statements.

11 Corporate Social Responsibility

a) Gross Amount required to be spent by the Company during the year is Rs, 74.47 million.

b) Amount spent during the year on:

12 Previous year’s figures have been regrouped/reclassified wherever necessary to correspond with the current years classification / disclosure.


Dec 31, 2014

1. A Background

Hexaware Technologies Limited ("Hexaware" or the "Company") is a public limited company domiciled in India and incorporated under the provisions of the Companies Act, 1956. The Company is engaged in information technology consulting, software development and business process management. Hexaware provides multiple service offerings to its clients across various industries comprising travel, transportation, hospitality, logistics, banking, financial services, insurance, healthcare, manufacturing and services. The various service offerings comprise application development and management, enterprise package solutions, infrastructure management, business intelligence and analytics, business process, quality assurance and independent testing.

2. Shares allotted as fully paid-up by way of bonus shares during five years preceding the year end

The Company allotted 145,545,781 equity shares as fully paid-up bonus shares by utilisation of Securities premium account on March 2, 2011 pursuant to shareholder''s resolution passed in Extra Ordinary General Meeting held on 15th February, 2011.

3. Rights, preferences and restrictions attached to equity shares

The Company has one class of equity shares having a par value of Rs. 2 each. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all liabilities, in proportion to their shareholding.

4. Shares reserved for issue under options

The Company has granted employee stock options under ESOP 2002, 2007 and 2008. Each option entitles the holder to one equity share of Rs. 2 each. 1,576,500 (2,840,525) options were outstanding as on 31st December, 2014. (Refer Note No. 26)

5. Share application money pending allotment

Share application money pending allotment is Rs. 0.45 million (Rs. 0.86 million) as at 31st December, 2014 which pertains to 36,000 (44,000) shares. The Company has sufficient authorised capital to cover the allotment of these shares.

i. The Board of Directors, at its meeting held on 10th February, 2015 has recommended interim dividend of Rs. 2.50/- per equity share.

6. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs. 1,867.43 million (Previous year Rs. 222.33 million).

7. Contingent Liabilities in respect of

a) Claims not acknowledged as debt Rs. 28.14 million (Previous year Rs. 28.14 million).

b) Claims for taxes on income:

i. Where Company is in appeal

Income tax demands of Rs. 8.99 million (Previous year Rs. 112.38 million) have been raised in respect of assessments completed, arising from certain disallowances by the Income tax authorities. The Company has appealed against the orders and based on merits, expects favourable outcome. Hence no provision against such demand is considered necessary.

ii. Others

In an earlier year, the CIT (A) had passed an order in favour of the Company against demand of Rs. 23.79 million raised by the Assessing officer for AY 2008-09, which had arisen mainly due to disallowance of foreign exchange loss as business expenses. Against this, the Income Tax Department has filed an appeal with Income Tax Appellate Tribunal and the matter is in process.

8. The Provision for current income tax is aggregate of the balance tax for three months ended March 31, 2014 based on the returned income for the year ended March 31,2014 and the provision based on the taxable income for the remaining nine months up to 31st December, 2014, the actual tax liability, for which, will be determined on the basis of the results for the year ending March 31,2015.

9. Derivative Instruments

a) Forward exchange contracts to Sell US Dollar 183.86 million and Euro 2.74 million (Previous year US Dollar 162.56 million and Euro 9.33 million) are outstanding as of 31st December, 2014.

Fair value net loss of the derivative instruments identified as cash flow hedges is Rs. 76.73 million (Previous year Rs. 40.86 million ) as at 31st December, 2014.

Net loss of Rs. 253.01 million recognized in Hedging Reserve as at 31st December, 2014 is expected to be recycled to Statement of Profit and Loss over two years.

b) As at the balance sheet date the Company has net receivable foreign currency exposure that are not hedged by a derivative instrument or otherwise amounting to Rs. 1,710.77 million (Previous year Rs. 74.45 million)

10. Share Based Compensation (ESOP)

a) The Remuneration and Compensation Committee (''Committee'') of the Company administers the stock options plans viz. ESOP 2002, 2007 and 2008 plan. Under the plan, the employees of the Company as well as its subsidiaries are granted options entitling them to one equity share of Rs. 2/- each for each option granted. Exercise price is the market price of the shares of the Company at the grant date or the price determined by the Committee. The options vest in four equal instalments or as determined by the Committee. The term of the option is seven years from the grant date. The closing dates, being dates after which no further options shall be granted, for ESOP 2007 and 2008 are September 10, 2014 and June 29, 2015 respectively.

11. The Company takes on lease office space and accommodation for its employees under various operating leases. The lease rentals towards operating lease agreements recognised in the Statement of Profit and Loss for the year is Rs. 124.78 million (Previous year Rs. 86.03 million).

12. Employee benefit plans

i) Provident Fund and Superannuation Fund

Both the employees and the Company make monthly contributions to the Provident Fund Plan equal to a specified percentage of the covered employee''s salary. In respect of the Company''s employees enrolled with the Hexaware Technologies Limited Employees Provided Fund Trust (the ''Trust''), the Company pays a part of the contributions to the Trust. The remaining portion of Company''s contribution in respect of such employees and entire contribution in respect of other employees is contributed to the Government administered employee Provident and Pension Fund.

The interest rate payable by the Trust to the beneficiaries every year is being notified by the government. The Company has an obligation to make good the short fall, if any, between the return from the investments of the trust and the notified interest rate. The actuary has accordingly provided a valuation and based on the assumptions mentioned below, there is no shortfall as at 31st December, 2014.

Certain employees of the Company are entitled to benefits under the superannuation plan, a defined contribution plan. The Company makes quarterly voluntary contributions under the superannuation plan to LIC based on a specified percentage of each covered employees salary and recognises such contributions as an expense when incurred and has no further obligation to the plan beyond such contributions.

During the year the Company has recognised expenses towards contributions to provident fund and other funds and superannuation funds of Rs. 241.48 million (Previous year Rs. 189.85 million) and Rs. 9.70 million (Previous year Rs. 6.56 million) respectively.

ii) Gratuity Plan

The Company makes annual contribution 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 based on completed years of service or part thereof in excess of six months. Vesting occurs on completion of five years of service.

13. Caliber Point Business Solutions Limited (CP) (amalgamating company), a wholly owned subsidiary, engaged in Business Process Management services, has been amalgamated with the Company. The Scheme of Amalgamation (''the Scheme'') was sanctioned by the Honourable High Court of Judicature at Bombay vide its Order dated October 10, 2014, the appointed date of merger being 1st April, 2013.

In accordance with the said Scheme and as per the approval of the Honourable High Court:

a) The assets, liabilities, rights and obligations of the erstwhile CP have been transferred to and vested with the Company with effect from 1st April, 2013;

b) All assets and liabilities including reserves have been recorded at their respective book values, after eliminating inter-company balances, in accordance with ''Pooling of interest'' method of accounting as per Accounting Standard 14 as notified under Section 211 (3C) of the Companies Act, 1956.

c) The share capital of CP of Rs. 117.80 million has been adjusted against the investment in the books of the Company of Rs. 158.92 million and the resultant difference of Rs. 41.12 million has been debited to the General Reserve.

d) The Statement of Profit and Loss for the year ended 31st December, 2014 includes result of CP for the year.

14. There are no dues to micro and small enterprises under MSMED Act, 2006 as at the year end.

15. Segments

As per Accounting Standard 17 on "Segment Reporting", segment information has been provided under the notes to the Consolidated Financial Statements.

16. Previous years figures have been regrouped/reclassified wherever necessary to correspond with the current years classification/ disclosure. In view of the amalgamation of wholly owned subsidiary (Refer Note No. 35), figures for the current year are not strictly comparable with that of the previous year.


Dec 31, 2013

1. Background

Hexaware Technologies Limited ("Hexaware" or the "Company")is a public limited company domiciled in India and incorporated under the provisions of the Companies Act 1956, applicable in India. The Company is engaged in information technology consulting, software development and business process management. Hexaware provides multiple service offerings to its clients across various industries comprising travel, transportation, hospitality, logistics, banking, financial services, insurance, healthcare, manufacturing and services. The various service offerings comprise application development and management, enterprise package solutions, infrastructure management, business intelligence and analytics, business process, quality assurance and independent testing.

A. Shares allotted as fully paid up by way of bonus shares during five years preceding the period end

The Company allotted 145,545,781 equity shares as fully paid up bonus shares by utilisation of Securities premium account on 2nd March, 2011 pursuant to shareholder''s resolution passed in Extra Ordinary General Meeting held on 15th February, 2011.

B. Rights, preferences and restrictions attached to equity shares

The Company has one class of equity shares having a par value of Rs. 2 each. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

C. Shares reserved for issue under options

The Company has granted employee stock options under ESOP 2002,2007 and 2008 scheme. Each option entitles the holder to one equity share of Rs. 2 each. 2,840,525 (6,452,576) options were outstanding as on 31 st December 2013. (Refer Note No. 24)

D. Share application money pending allotment

Share application money received pending allotment isRs.0.86 million (Rs.0.38 million) as at 31st December, 2013.44,000 (30,193) shares are being allotted subsequent to the year end. The Company has sufficient authorised capital to cover the allotment of these shares.

E. The Board of Directors, at its meeting held on 7th February, 2014 has declared an interim dividend of Rs. 7.50/- and recommended final dividend of Rs. 1.00/- per equity share.

2. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) Rs. 222.33 million (Previous year Rs. 158.83 million)

3. Contingent Liabilities in respect of

a) Claims not acknowledged as debt to Rs. 28.14 million (Previous Year Rs. 28.14 million).

b) Claims for taxes on income:

i. Where Company is in appeal

ncome tax demands of Rs.112.38 million have been raised in respect of assessments completed during the year, arising from off-setting tax losses against income of exempt units. The Company has appealed against the orders and based on merits, expects favorable outcome. Hence no provision against such demand is considered necessary.

ii. Others:

During the previous year, the CIT (A) had passed an order in favor of the Company against demand of Rs.23.79 million raised by the Assessing officer for AY 2008-09, which had arisen mainly due to disallowance of foreign exchange loss as business expenses. Against this, the income tax department has filed an appeal with ITAT during the year and the matter is in process.

4. Share Based Compensation (ESOP)

a) 67,500 (257,164) Options is the balance outstanding as at 31st December, 2013 and 2012 respectively under Hexaware Technologies Limited - Employee Stock Option (''ESOP - 2002'') (''the Plan'') at an exercise price being the market price on the date of grant of Options or average closing price on the primary stock exchanges, whichever is higher in accordance with SEBI guidelines in force at the time of the grant or such price that may be determined by the Remuneration and Compensation Committee (''Committee''). Each Option entitles the holder to exercise the right to apply for and seek allotment of one equity share of Rs. 71- each and the term of option is seven years from the date of grant. The Options shall vest in four egua installments or as determined at the discretion of the Committee. The particulars of options granted and lapsed under the Scheme are tabulated below under (d).

b) In 2007 the shareholders of the Company approved the ESOP Scheme 2007 (''ESOP - 2007'') under which such number of equity shares and or other instruments or securities could be granted not exceeding five percent of the issued equity shares of the Company as on the date of such grant. 2,735,525 (6,080,233) Options is the balance outstanding as at 31 st December, 2013 and 2012 respectively at an exercise price being the market price on the date of grant of Options or average closing price on the primary stock exchanges, whichever is higher in accordance with SEBI guidelines in force at the time of the grant or such price that may be determined by the Committee. Each option entitles the holder to exercise the right to apply for and seek allotment of one equity share of Rs. 71- each and the term of option is seven years from the date of grant. The options shall vest in four equal installments or as determined at the discretion of the Committee. No options shall be granted under the scheme after 10th September, 2014 (closing date). The particulars of options granted and lapsed under the Scheme are tabulated below under (d).

c) In 2008, the shareholders of the Company approved the ESOP Scheme 2008 (''ESOP - 20080 under which such number of eguity shares and/ or other instruments or securities could be granted not exceeding two percent of the issued eguity shares of the Company as on the date of such grant. 37,500 (115,179) Options is the balance outstanding as at 31 st December, 2013 and 2012 respectively at an exercise price being the market price on the date of grant of Options or average closing price on the primary stock exchanges, whichever is higher in accordance with SEBI guidelines in force at the time of the grant or such price that may be determined by the Committee. Each option entitles the holder to exercise the right to apply for and seek allotment of one eguity share ofRs. 71- each and the term of option is seven years from the date of grant. The options shall vest in four egual instalments or as determined at the discretion of the Committee. No options shall be granted under the scheme after 23rd October, 2015 (Closing date). The particulars of options granted and lapsed under the Scheme are tabulated below under (d).

5. The Provision for current income tax is aggregate of the balance tax for three months ended March 31,2013 based on the returned income for the year ended March 31,2013 and the provision based on the taxable income for the remaining nine months up to December 31,2013, the actual tax liability, for which, will be determined on the basis of the results for the year ending March 31,2014.

6. Employee benefit plans

i) Provident Fund and Superannuation Fund:

Both the employees and the Company make monthly contributions to the Provident Fund Plan equal to a specified percentage of the covered employee''s salary. The Company pays a part of the contributions to Hexaware Technologies Limited Employees Provided Fund Trust (the'' Trust'').The remaining portion of Company''s contribution is contributed to the Government administered employee Pension Fund. The interest rate payable by the Trust to the beneficiaries every year is being notified by the government. The Company has an obligation to make good the shortfall, if any, between the return from the investments of the trust and the notified interest rate. The actuary has accordingly provided a valuation and based on the assumptions mentioned below, there is no shortfall as at 31st December 2013.

Certain employees of the Company are entitled to benefits under superannuation, a defined contribution plan. The Company makes quarterly voluntary contributions under the superannuation plan to LIC based on a specified percentage of each covered employees salary and recognised such contributions as an expense when incurred and has no further obligation to the plan beyond their contributions.

The amounts recognized as expenses towards contributions to provident fund and other funds, superannuation funds by the Company are Rs. 189.85 million (Previous year Rs. 177.21 million) and Rs. 6.56 million (Previous year Rs. 7.95 million) respectively for the year ended 31st December, 2013.

ii) Gratuity Plan

The Company makes annual contribution to the Employee''s Group Gratuity Assurance Scheme, administered by the Life Insurance Corporation of ndia (HC), 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 based on completed year of service or part thereof in excess of six months. Vesting occurs on completion of five years of service.

Asset allocations

Since the investments are held in the form of deposit with LIC, these are not volatile, the market value of assets is the cost value of assets and has been accordingly considered for the above disclosures.

7. The Company takes on lease office space and accommodation for its employees under various operating leases. The lease rentals towards non-cancellable agreement recognised in the statement of Profit and Loss for the year is Rs. 55.32 million (Previous Year Rs. 33.83 million).

Non-cancellable rentals income recognised in the statement of profit and loss on account of leasing of premises is Rs. 2.16 million (Previous year Rs. 18.52 million).

8. Derivative Instruments

(a) Forward exchange contracts to Sell US Dollar 162.56 million and Sell Euro 9.33 million (Previous Year US Dollar 200.98 million and Sell Euro 13.96 million) are outstanding as of 31st December, 2013.

Fair value net loss of the derivative instruments identified as cash flow hedges is Rs. 40.86 million (Previous Year of Rs. 218.03 million) as at 31st December, 2013.

Net loss of Rs. 1,176.45 million recognized in Hedging Reserve as of 31st December 2013 is expected to be classified to Statement of Profit and loss over two years.

b) As of the balance sheet date the Company has the net receivable foreign currency exposure that are not hedged by a derivative instrument or otherwise amounting to Rs. 74.45 million (Previous Year Rs. 417.85 million).

9. There are no dues to micro and small enterprises under MSMED Act, 2006 as at the year end.

10. Segments

The Company has presented data relating to its segments based on 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 these stand-alone financial statements.

11. Previous year’s figures have been regrouped / reclassified wherever necessary to correspond with the current years classification / disclosure.


Dec 31, 2012

1. Background

Hexaware Technologies Limited ("Hexaware or the Company") is a public limited company domiciled in India and incorporated under the provisions of the Companies Act, 1956. The Company is engaged in information technology consulting, software development and business process outsourcing. Hexaware provides multiple service offerings to its clients across various industries comprising travel, transportation, hospitality, logistics, banking, financial services, insurance, healthcare,manufacturing and services. The various service offerings comprise application development and management, enterprise package solutions, infrastructure management, business intelligence and analytics, business process, quality assurance and independent testing.

A. Shares alloted as fully paid up by way of bonus shares during five years preceding the year end

The Company alloted 145,545,781 equity shares as fully paid up bonus shares by utilisation of Securities premium account on 2nd March, 2011 pursuant to shareholder''s resolution passed in Extra Ordinary General Meeting held on 15th February, 2011

B. Rights, preferences and restrictions attached to equity shares

The Company has one class of equity shares having a par value ofRs. 2 each. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

C. Shares reserved for issue under options

The Company has granted employee stock options under ESOP 2002, 2007 and 2008 scheme. Each option entitles the holder to one equity share of Rs. 2 each. 6,452,576 options were outstanding as on 31st December 2012 (Refer note no. 26) H. Share application money As at 31 December 2012, the Company has received an amount ofRs. 0.38 million on exercise of ESOP''s by employees in respect of 30,193 equity

shares at a premium ofRs. 10.45 per share. Shares are being allotted subsequent to the year end. The Company has sufficient authorised capital to cover the allotment of these shares.

D. The Board of Directors, at its meeting held on 11th February, 2013 has recommended a final dividend ofRs. 1.20/- per equity share.

2. Estimated amount of contracts remaining to be executed on capital account and not provided for (Net of advances) Rs. 158.83 million (Previous year Rs. 264.17 million)

3. Contingent Liabilities in respect of Claims not acknowledged as debt toRs. 28.14 million (Previous YearRs. 28.14 million).

4. Share Based Compensation (ESOP)

a) 257,164 (555,280) Options is the balance outstanding as at 31st December 2012 and 2011 respectively under Hexaware Technologies Limited - Employee Stock Option (''ESOP - 2002'') at an exercise price being the market price on the date of grant of Options or average closing price on the primary stock exchanges, whichever is higher in accordance with SEBI guidelines in force at the time of the grant or such price that may be determined by the Remuneration and Compensation Committee (''Committee''). Each Option entitles the holder to exercise the right to apply for and seek allotment of one equity share ofRs. 2/- each and the term of option is seven years from the date of grant. The Options shall vest in four equal instalments or as determined at the discretion of the Committee. The particulars of options granted and lapsed under the Scheme are tabulated below under (d).

b) In 2007 the shareholders of the Company approved the ESOP Scheme 2007 (''ESOP - 2007'') under which such number of equity shares and or other instruments or securities could be granted not exceeding five percent of the issued equity shares of the Company as on the date of such grant. 6,080,233 (9,166,324) Options is the balance outstanding as at 31st December 2012 and 2011 respectively at an exercise price being the market price on the date of grant of Options or average closing price on the primary stock exchanges, whichever is higher in accordance with SEBI guidelines in force at the time of the grant or such price that may be determined by the Remuneration and Compensation Committee (''Committee''). Each option entitles the holder to exercise the right to apply for and seek allotment of one equity share ofRs. 2/- each and the term of option is seven years from the date of grant. The options shall vest in four equal instalments or as determined at the discretion of the Committee. No options shall be granted under the scheme after 10thSeptember 2014 (closing date). The particulars of options granted and lapsed under the Scheme are tabulated below under (d).

c) In 2008, the shareholders of the Company approved the ESOP Scheme 2008 (''ESOP - 2008'') under which such number of equity shares and/ or other instruments or securities could be granted not exceeding two percent of the issued equity shares of the Company as on the date of such grant. 115,179 (178,680) Options is the balance outstanding as at 31st December 2012 and 2011 respectively at an exercise price being the market price on the date of grant of Options or average closing price on the primary stock exchanges, whichever is higher in accordance with SEBI guidelines in force at the time of the grant or such price that may be determined by the Remuneration and Compensation Committee (''Committee''). Each option entitles the holder to exercise the right to apply for and seek allotment of one equity share ofRs. 2/- each and the term of option is seven years from the date of grant. The options shall vest in four equal instalments or as determined at the discretion of the Committee. No options shall be granted under the scheme after 23rd October 2015 (Closing date). The particulars of options granted and lapsed under the Scheme are tabulated below under (d).

5. The Provision for current income tax is aggregate of the balance tax for three months ended 31st March 2012 based on the returned income for the year ended 31st March 2012 and the provision based on the taxable income for the remaining nine months up to 31st December 2012, the actual tax liability for which will be determined on the basis of the results for the year ending 31st March 2013.

6. Employee benefit plans

i) Provident Fund and Superannuation Fund

Both the employees and the Company make monthly contributions to the Provident Fund Plan equal to a specified percentage of the covered employee''s salary. The Company pays a part of the contributions to Hexaware Technologies Limited Employees Provided Fund Trust (the Trust''). The remaining portion of Company''s contribution is contributed to the Government administered employee Pension Fund. The interest rate payable by the Trust to the beneficiaries every year is being notified by the government. The Company has an obligation to make good the short fall, if any, between the return from the investments of the trust and the notified interest rate.The actuary has accordingly provided a valuation and based on the assumptions mentioned below, there is no shortfall as at 31st December 2012.

Certain employees of the Company are entitled to benefits under superannuation, a defined contribution plan. The Company makes quarterly voluntary contributions under the superannuation plan to LIC based on a specified percentage of each covered employees salary and recognises such contributions as an expense when incurred and have no further obligation to the plan beyond their contributions.

Amounts recognized as expenses towards contributions to provident fund and other funds, superannuation funds by the Company are Rs. 177.21 million (Previous yearRs. 161.95 million) andRs. 7.95 million(Previous yearRs. 4.65 million) respectively for the year ended 31st December 2012.

ii) Gratuity Plan

The Company makes annual contribution to the Employee''s Group Gratuity Assurance Scheme, administered by the Life Insurance Corporation of ndia (''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 based on completed year of service or part thereof in excess of six months. Vesting occurs on completion of five years of service.

*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 estimates of future salary increases, considered in actuarial valuation, takes into account the inflation, seniority, promotions and other relevant factors.

Asset allocations

Since the investments are held in the form of deposit with LIC, these are not volatile, the market value of assets is the cost value of assets and has been accordingly considered for the above disclosures.

7. The Company takes on lease office space and accommodation for its employees under various operating leases. The lease rentals recognised in the Profit and Loss Account under various non-cancellable operating leases isRs. 33.83 million (Previous YearRs. 41.98 million).

8. Derivative Instruments

a) The Company has following outstanding derivatives instruments:

(i) Forward exchange contracts to Sell USD 200.98 million and Sell Euro 13.96 million (Previous Year Sell USD 159.88 million and Sell Euro 9.39 million and Buy Euro 0.43 million).

(ii) Fair value (net loss) of the derivative instruments identified as cash flow hedges is Rs. 218.03 million (Previous Year ofRs. 798.55 million).

(iii) Net loss ofRs. 697.62 million recognized in Hedging Reserve is expected to be classified to Profit and loss Account over two years.

b) As of the balance sheet date, the Company has the net receivable foreign currency exposures that are not hedged by a derivative instrument or otherwise amounting toRs. 417.85 million (Previous Year payableRs. 58.03 million)

9. ''Provision Others'' includes provisions towards expenditure relating to fixed assets and employee benefit obligations on contract acquisition, the outflow for which is expected in the next year.

10. Remittance in Foreign currency on account of dividend

The Company has paid dividend in respect of shares held by non - residents on repatriation basis. This inter-alia includes portfolio investment and direct Investment, where the amount is also credited to non- resident external Account (NRE account). The exact amount of dividend remitted in foreign currency cannot be ascertained. The total amount remittable in foreign currency in this respect is given herein below:

11. There are no dues to micro and small enterprises under MSMED Act, 2006 as at year end.

12. Segments

The Company has presented data relating to its segments based on 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 these stand-alone financial statements.

13. The Company has prepared the financial statements following Revised Schedule VI for the first time during the year. This has significantly impacted the disclosure and presentation made in the financial statements. Previous years figures have been regrouped / reclassified wherever necessary to correspond with the current years classification / disclosure.


Dec 31, 2009

1. Description of Business

The Company is engaged in the business of providing software.application, development, maintenance, re-engineering, consultancy, business process outsourcing services and software testing.

2. Contingent Liabilities

(Rupees in Millions)

Particulars As at 31 -12-2009 As at 31 -12-2008

A Claims against the Company not acknowledged as Debts 49.95 44.41

Income tax disputed in appeal and pending decision, Company is hopeful B 30.62 26.37 of getting a favourable decision

3.Estimated amount of contracts remaining to be executed on capital account not provided for (Net of Advances) Rs. 154.87 Million (Previous year Rs. 722.52 Million).

4. Income Taxes

a) Current income tax expense comprises of taxes on income from operations in India and foreign jurisdictions. In respect of certain entities in the group, where the income tax year is different from the accounting year, provision for current tax is made on the basis of income for the respective accounting year, which will be adjusted considering the total assessable income for the tax year.Tax expense relating to overseas operation is determined in accordance with the tax laws applicable in countries where such operations are domiciled.

b) Considering the expected future profitability and taxable positions in the subsequent years, the Company has recognized the MAT Credit entitlement as an asset by crediting the Profit and Loss Account for an amount aggregating Rs. 155.30 Million (Previous Year Rs.14.40 Million) and disclosed underLoans and advances.

5. Share Based Compensation (ESOP)

(I) In respect of holding Company:

a) 18,538 (23,095) warrants under Employee Stock Option Scheme - 1999 (ESOP 1999) of Rs. 0.06 each is the balance outstanding as at December 31, 2009 and 2008 respectively. Each block of 3 warrants, granted at Rs. 0.18 entitles the holder to get one equity share of Rs. 21- each at a price of Rs. 9/- per share within a period often years commencing from February 1,2001 (exercise period) in accordance with the said Scheme. The particulars of warrants granted and lapsed under the Scheme are tabulated below under (e).

b) 1,103,924 (2,265,342) Options is the balance outstanding as at December 31, 2009 and 2008 respectively under Hexaware Technologies Limited - Employee Stock Option (ESOP - 2002) (the Plan) at an exercise price being the market price on the date of grant of Options or average closing price on the primary stock exchanges, whichever is higher or such price that may be determined by the Remuneration and Compensation Committee (Committee). Each Option entitles the holder to exercise the right to apply for and seek al lotment of one equity share of Rs. 21- each.The Options shall vest in four equal instalments or as determined at the discretion of the Committee.The particulars of options granted and lapsed under the Scheme are tabulated below under (e)

c) In 2007 the shareholders of the Company approved the ESOP Scheme 2007 (ESOP - 2007) under which such number of equity shares and or other instruments or securities could be granted not exceeding five percent of the issued equity shares of the Company as on the date of such grant.

6. Related Parties:

Names of related parties and description of relationship:

Key Management Personnel

Mr. Atul K. Nishar - Executive Chairman

Mr. P. R. Chandrasekar -Vice Chairman and Chief Executive Officer

Dr. (Mrs.) Alka A. Nishar - Director

Mr. Sunil Surya -Whole Time Director (Hexaware Technologies UK Ltd.)

MrYogendra Shah -Whole Time Director (Hexaware Technologies Asia Pacific Pte Ltd.)

Mr. R.U. Srinivas - President and Executive Director (Caliber Point Business Solutions Ltd.)

Mr. Vaughn Paladin -WholeTime Director (FocusFrame Inc.) (upto February 1,2009)

Mr. Surinder Chawla - Whole Time Director (FocusFrame Inc.) (upto February 1,2009)

Mr. AlbertVissar -Whole Time Director (FocusFrame Europe BV) (upto October 25,2009)

Others (entities in which key management personnel have control and / or significant influence)

Hexaware Technologies Employee Stock Option Trust

Ms. Priyanka Atul Nishar - Relative of key management personnel

7. Employee benefit plans:

(i) Defined contribution plans viz. Provident Fund, Superannuation Fund and other similar funds.

a) In respect of holding company and its subsidiary Company in India:

Eligible employees receive benefits from a Provident Fund Trust which is a defined contribution plan. Both the employees and the Company make monthly contributions to the Provident Fund Plan equal to a specified percentage of the covered employees salary. The holding Company pays a part of the contributions to Hexaware Technologies Limited Employees Provided Fund Trust (the Trust). The remaining portion by the holding Company and entire contribution by its subsidiary Companies is contributed to the Government administered Employees Pension Fund. The interest rate payable by theTrust to the beneficiaries every year is being notified by the government. The Company has an obligation to make good the short fall, if any, between the return from the investments of the trust and the notified interest rate.

The Guidance on Implementing AS 15, Employee benefits (revised 2005) issued by Accounting Standards Board (ASB) states that benefit plans involving employer established provident funds, which require interest shortfalls to be recompensed are to be considered as defined benefit plans. Pending the issuance of the guidance note from the Actuarial Society of India, the Companys actuary has expressed an inability to reliably measure provident fund liabilities. Accordingly, the Company is unable to exhibit the related information.

Certain employees of the holding Company and its subsidiary Company in India are entitled to benefits under superannuation, a defined contribution plan.The Company makes quarterly voluntary contributions under the superannuation plan to LIC based on a specified percentage of each covered employees salary and recognised such contributions as an expense when incurred and have no further obligation to the plan beyond their contributions.

The amounts recognised as expense towards contributions to provident fund, other funds and superannuation fund Rs. 104.38 Million (Previous Year Rs I 12.80 Million) and Rs 6.24 Million (Previous year Rs. 3.92 Million) respectively during the year ended December 31,2009.

b) The Company contributed Rs. 235.86 Million (Previous year Rs. 218.40 Million ) towards various other defined contributions plans of subsidiaries located outside India during year ended December 31,2009 as per laws of the respective country.

ii) Defined benefit plans:

In respect of holding Company and its subsidiaries in India:

Gratuity Plan: The Company makes annual contribution 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 based on completed year of service or part thereof in excess of six months.Vesting occurs on completion of five years of service.

8. Derivative Instruments:

a) The Company has following outstanding derivatives instruments:

(i) Forward exchange contracts to Sell US Dollar 137.11 Million, Sell Euro 16.935 Million, Sell JPY 366.80 (Previous Year Sell US Dollar 151 Million, Sell Euro 5.60 Million, Sell GBP 2.65 Million and Sell JPY 419.20 Million) are outstanding as of December 31,2009.

(ii) There are no Currency Options outstanding as of December 31, 2009. (Previous year Sell US Dollar 17 Million)

(iii) Fair value (net loss) of the derivative instruments identified as cash flow hedges is Rs.451.07 Million (Previous Year Rs. 1,364.83 Million) as at December 31,2009 including Rs.405.40 Million (Previous Year 1,234.05 Million) recognized as effective portion of Hedging Reserve as at December 31, 2009 which is expected to be reclassified to the profit and loss account over three years.

9. The Ministry of Company Affairs, Government of India vide its Order No. 47/709/2009-CL-lll dated January 12, 2010 issued under section 212(8) of the Companies Act, 1956, has exempted the Company from attaching the Balance Sheet and Profit and Loss Account of all subsidiaries under Section 212(1) of the Companies Act, 1956.

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

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