Home  »  Company  »  IZMO  »  Quotes  »  Notes to Account
Enter the first few characters of Company and click 'Go'

Notes to Accounts of IZMO Ltd.

Mar 31, 2015

1. Turnover is stated net of Sales-tax, Cess, Surcharge, Service tax and Sales Returns.

2. (a) Contingent Liabilities (to the extent of which not provided for)

(Amount in Rs.)

Particulars Current Year Previous Year

Money for which the company is contingently liable:

Performance Guarantees (STPI - customs duty) 50,000 50,000

(b) Commitments (to the extent of which not provided for)

i) Unexpired Letters of Credit 0 0

Warranty Costs on Software Sale* Not Quantified Not Quantified

* The company does not envisage any liability on account of a back to back arrangement with the suppliers for any such claims.

3. During the financial year 2013-14, the Company received the allotment of 50,000 equity shares on 15th= April 2013 from its subsidiary Logix Americas Inc., which is the holding company for the US subsidiaries against Share Application Money pending allotment as on that date. The investment in Logix Americas Inc., has in-turn been invested by way of equity and loans in Homestar Systems Inc., Homestar LLC, the step-down subsidiaries of Logix Americas Inc.

4. The balances in the share refund account and the related bank account was pending reconciliation. The unreconciled difference amounts to Rs.5.12 lakhs.

5. In accordance with Section 125(2)(h) of Companies Act, 2013, Share Warrant Application money, pending allotment and due for refund amounting to Rs.3.30 lakhs remaining unpaid since 31st March 2010 will be transferred to Investor Education and Protection Fund after the completion of 7 years from the date of payment falling due.

The above amounts do not include Gratuity and Leave encashment benefits as the provisions for these are determined for the Company as a whole and therefore separate amounts for the Directors are not available.

Directors remuneration for the current year is sum of Rs.60.00 Lakhs paid to the managing director in accordance with the limits approved by the shareholders at theAGM held on 30th September 2013. but in excess of the limits prescribed under the Companies Act. The Company had obtained the requisite approval from the Central Government.

Managerial remuneration (relating to FY 2010-11 to 2012-13),in excess of the approval by the central government, as informed by the management, the same is being repaid by the Managing director in over a period of two years and will be repaid before March, 2017.

6. List of Related Parties

a) Enterprises Controlled by the Company

Midrange Software Pte. Ltd., Singapore Wholly Owned Subsidiary (formerlyLogix Microsystems (S) Pte. Ltd., Singapore)

Izmo Inc., USA Wholly Owned Subsidiary

Izmo Europe BVBA Wholly Owned Subsidiary

Carazoo Online Solutions Pvt Ltd. 49% ofEquity Shares held by Izmo Ltd

b) Key Management Personnel

Mr. Sanjay Soni Mr. Tej Soni

c) Enterprises in which Key Management personnel/their relatives have a significant influence

Aries Gases Private Limited Deep Heritage

Deep Oxygen Private Limited, India

Deep Investment Advisory Bangalore Private Limited

Si2 Microsystems Pvt Ltd., India

D'gipro Design Automation & Marketing Pvt Ltd.,

Carazoo Online Solutions Pvt Ltd.

7. Under the Micro, Small and Medium Enterprises Development Act, 2006, which came into force on October 2, 2006, the company is required to make certain disclosure relating to Micro, Small and Medium Enterprises. The company is in the process of compiling and assimilating the relevant information from its suppliers about their coverage under the Act. Since the relevant information is not readily available, no disclosure have been made in the Accounts.

8. Segment Reporting Primary Segments

Based on the guiding principles in Accounting Standard on "Segment Reporting" issued by the Institute of Chartered Accountants of India, classification by geographic segment are the primary reportable segments, comprising of: i. Export ii. Domestic.

Segmental Capital Employed: Assets and Liabilities contracted have not been identified to any of the reportable segments, as the assets are used interchangeably between segments and it is not practicable to reasonably allocate the liabilities to individual segments. Accordingly no disclosure relating to segments assets and liabilities are made.

9. Defined Benefit Plans

a. Gratuity

b. Leave Encashment

The disclosure as per the revised AS-15 are as follows:

c. The discount rate is based on the market yield available on Government bonds at the accounting date with a term that matches the liabilities.

d. The estimates of future salary increase considered in the actuarial valuation takes into account factors like inflation, seniority, promotion and other relevant factors.

e. The employees are assumed to retire at the age of 60 years.

f. The mortality rate considered are as per the published rates in the IALM (2006-08) mortality tables.

9. Transfer Pricing

The company derives a significant portion of its revenue (Rs.1656.90 lakhs) from services, rendered to its subsidiary M/s.Izmo Inc., USA. The revenue in this regard is recognized on the basis of a services agreement with the subsidiary or Purchase Orders raised by the subsidiary.

The Company has carried out aTransfer pricing study during the previous year based on which the Company's management is of the opinion that these international transactions are at arm's length and believes that the transfer pricing legislation will not have any impact on the Financial statements for the year ended March 2015, particularly on their amount of tax expense and that of the provision for taxation.

10. The Company has filed appeals before Appellate Tribunal against the Income tax assessment orders passed with transfer pricing adjustments for the AY2009-10 & AY 2010-11, and cases are pending for disposal, as on Balance sheet date.

11. The Company has booked two forward contracts for a total amount of US $ 5,00,000/- with HDFC Bank Ltd, during the year.

12. Balances of Sundry Debtors, Loans & Advances are subject to reconciliation and confirmation.

13. All figures have been rounded-off to the nearest Rupee. Previous Year's figures have been re-grouped/reclassified wherever necessary to conform to the current year presentation.


Mar 31, 2014

1.1 (a)Contingent Liabilities (to the extent of which not provided for) (Amount in Rs.) Particulars Current Year Previous Year

Money for which the company is contingently liable:

i)Performance Guarantees 50,000 13,70,000 (STPI - customs duty)

ii)Claims against the company, not acknowledged as debts :

a)Claims by vendors, etc - -

b)There are certain claims made against the Company by former employees, which are a subject matter of arbitration proceedings. In the view of the management of the Company these claims are not tenable. No provision has been made for such claims pending completion of legal proceedings as the amount of claims are currently not ascertainable. Not Not Quantified Quantified c)Contingent liability in respect of claim in respect of Service Tax on software sales made by the company, the amount Not Not of which is not quantified. Quantified Quantified

1.2 During the financial year 1999-2000, the company had acquired 100,000 equity shares of Singapore Dollars 1 each in Midrange Software Pte. Limited (formerly Logix Microsystems (S) Pte. Ltd.,) Singapore. The remittance towards the same has not been made pending requisite approval.

1.3 During the financial year 2013-14, the Company received the allotment of 50,000 equity shares on 15th April 2013 from its subsidiary Logix Americas Inc., which is the holding company for the US subsidiaries against Share Application Money pending allotment as on that date. The investment in Logix Americas Inc., has in-turn been invested by way of equity and loans in Homestar Systems Inc., Homestar LLC, the step- down subsidiaries of Logix Americas Inc.

1.4 The balances in the share refund account and the related bank account was pending reconciliation. The unreconciled difference amounts to Rs.5.12 lakhs.

1.5 In accordance with Section 205C of Companies Act, 1956, Share Warrant Application money, pending allotment and due for refund amounting to Rs.3.30 lakhs remaining unpaid since 29th September 2007 will be transferred to Investor Education and Protection Fund after the completion of 7 years from the date of payment falling due.

The above amounts do not include Gratuity and Leave encashment benefits as the provisions for these are determined for the Company as a whole and therefore separate amounts for the Directors are not available.

Directors remuneration for the current year includes a sum of Rs.31.96 Lakhs paid to the managing director in accordance with the limits approved by the shareholders at the AGM held on 29th September 2010 but in excess of the limits prescribed under the Companies Act. The similar excess remuneration for the previous periods (from FY 2007-08 onwards) amounts to Rs. 181.38 lakhs . The Company had applied for the requisite approval from the Central Government which had not been granted, but the management is confident of obtaining the approval and is in the process of filing revised application for the same.

Pending outcome of the same, these amounts continue to be considered as an expense.

1.6 The Company''s Singapore subsidiary , Midrange Software Pte Ltd carries an accumulated provision of SGD 270,000 (Previous year: SGD 270,000), in their books towards director''s remuneration payable in respect of services rendered by Mr. Sanjay Soni. As per the understanding, the same would be paid to M/s. Logix Microsystems Ltd, the holding Company in accordance with Sec 314 (1) (ii) of the Companies Act.

1.7 Lease-Operating Lease

The Company is obligated under cancelable lease for the office space that is renewable on a periodic basis at the option of both the lessor and lessee. Rental expenses under cancelable operating leases for the year ended 31 March 2014 are as follows.

1. 8 Current Value of subsidiaries investment:

Investment in Midrange Software Pte Ltd,

The Company has invested an amount of SGD 1,904,915 in Midrange Software Pte Ltd, Singapore. Midrange has incurred losses during recent years and has an accumulated loss of SGD 1,24,027. However, based on the management''s perception of the growth prospects and the performance of Midrange, in the opinion of the management there is no permanent diminution in value of the investment.

Investment in Logix Americas Inc.

The Company has invested an amount of USD 32,848,100 in its subsidiary Logix Americas Inc till 31st March 2014. which is the holding company of Homestar Systems Inc. The management had obtained an independent valuation of its operating enterprises in the US. Based on the same and further based on the management''s view on the prospects in the region, the management does not envisage any decline in the value of the investments and consider it appropriate to have the carrying value at par in respect of its investments in Logix America Inc as well.

Investment in Izmo Europe BVBA Belgium

The Company has invested an amount of EURO 1,359,093 in its subsidiary Izmo Europe BVBA Belgium till 31st March 2014. Izmo Europe BVBA has incurred losses during the recent years and has an accumulated loss of EURO 1,621,588. However, based on the management''s perception of the growth prospects and the performance of Izmo Europe, in the opinion of the management there is no permanent diminution in value of the investment.

1.9 List of Related Parties

a) Enterprises Controlled by the Company

Midrange Software Pte Ltd, Singapore

(formerly Logix Microsystems (S) Pte. Ltd. Singapore

Logix Americas Inc., USA

Izmo Europe BVBA

Homestar Systems Inc. USA

Homestar LLC., USA

Carazoo Online Solutions Pvt Ltd.

b) Key Management Personnel

Mr. Sanjay Soni Mr. Tej Soni

Wholly Owned Subsidiary

Wholly Owned Subsidiary

Wholly Owned Subsidiary

98% held by M/s. Logix Americas Inc., USA

Wholly Owned Subsidiary of M/s. Homestar Systems Inc., USA

Subsidiary of M/s. Logix Microsystems Ltd ( 49% of Equity Shares)

c) Enterprises in which Key Management personnel/their relatives have a significant influence

Aries Gases Private Limited Deep Heritage

Deep Oxygen Private Limited, India

Deep Investment Advisory Bangalore Private Limited

Si2 Microsystems Pvt Ltd., India

D''gipro Systems Private Limited

D''gipro Design Automation & Marketing Pvt Ltd.,

Deep Engineers & Consultants

SL Business Center

Carazoo Online Solutions Pvt Ltd.

1.10 Under the Micro, Small and Medium Enterprises Development Act, 2006, which came into force on October 2,2006, the company is required to make certain disclosure relating to Micro, Small and Medium Enterprises. The company is in the process of compiling and assimilating the relevant information from its suppliers about their coverage under the Act. Since the relevant information is not readily available, no disclosure have been made in the Accounts.

1.11 During the previous financial year, the global recession continued to impact businesses across geographies. In addition to this, US auto industry in particular, experienced a severe downturn resulting in bankruptcy and closure of several automobile dealers who happened to be the clients of Homestar Systems Inc. In this backdrop, the Company was approached by its subsidiary Homestar Systems Inc to offer a special rebate considering the exceptional circumstances observed in the US automobile industry due to the recessionary trend. Consequent to commercial negotiations, it has been accepted mutually to offer an overall rebate of Rs. 389.97 Lakhs (USD 714,228). This is non recurring and largely exceptional in nature and accordingly, reflected as such.

In terms of the Guidance note on accounting for credit available in respect of Minimum Alternative Tax (MAT) under the Income Tax Act 1961, issued by the ICAI, the excess of MAT over normal current tax payable has been recognized as an asset by way of credit to the profit & loss account as MAT credit entitlement.

1.12 Segment Reporting Primary Segments

Based on the guiding principles in Accounting Standard on "Segment Reporting" issued by the Institute of Chartered Accountants of India, classification by geographic segment are the primary reportable segments, comprising of: i) Export ii) Domestic

Segmental Capital Employed: Assets and Liabilities contracted have not been identified to any of the reportable segments, as the assets are used interchangeably between segments and it is not practicable to reasonably allocate the liabilities to individual segments. Accordingly no disclosure relating to segments assets and liabilities are made.

1.13 Defined Benefit Plans

a. Gratuity

b. Leave Encashment

The disclosure as per the revised AS-15 are as follows:

f) The discount rate is based on the market yield available on Government bonds at the accounting date with a term that matches the liabilities

g) The estimates of future salary increase considered in the actuarial valuation takes into account factors like inflation, seniority, promotion and other relevant factors.

h) The employees are assumed to retire at the age of 60 years

I) The mortality rate considered are as per the published rates in the IALM (2006-08) mortality tables.

1.14 Transfer Pricing

The company derives a significant portion of its revenue (Rs.1,425.56 lakhs) from services, rendered to its subsidiary M/s.Homestar Systems Inc & M/s Midrange Software Pte Ltd., Singapore. The revenue in this regard is recognized on the basis of a services agreement with the subsidiary or Purchase Orders raised by the subsidiary.

The Company has carried out a Transfer pricing study during the previous year based on which the Company''s management is of the opinion that these international transactions are at arm''s length and believes that the transfer pricing legislation will not have any impact on the Financial statements for the year ended March 2014, particularly on their amount of tax expense and that of the provision for taxation.

1.15 Balances of Sundry Debtors, Loans & Advances are subject to reconciliation and confirmation.

1.16 All figures have been rounded-off to the nearest Rupee. Previous Year''s figures have been re-grouped/reclassified wherever necessary to conform to the current year presentation.


Mar 31, 2013

1.1 Turnover is stated net of Sales-tax, Cess, Surcharge, Service tax and Sales Returns.

1.2 (a) Contingent Liabilities (to the extent of which not provided for) (Amount in Rs.)

Particulars Current Year Previous Year

Money for which the company is contingently liable:

i) Performance Guarantees (STPI - customs duty) 70,000 499,836

ii) "Claims against the company, not acknowledged as debts :

a) Claims by vendors, etc - 1,383,300

b) There are certain claims made against the Company by former employees, which are a subject matter of arbitration proceedings. In the view of the management of the Company these claims are not tenable. No provision has been made for such claims pending completion of legal proceedings as the amount of claims are currently not ascertainable not Quantified Not Quantified

c) Contingent liability in respect of claim in respect of Service Tax on software sales made by the company, the amount of which is not quantified. Not Quantified Not Quantified

iii) Other money for which the company is contingently liable:

Service Tax not charged on rental income and interest thereon for FY 2008-09, 2009-10 and partly for FY 2010-11 based on a judgment by Honourable Delhi High Court - 3,391,333

* The company does not envisage any liability on account of a back to back arrangement with the suppliers for any such claims.

1.3 During the financial year 1999-2000, the company had acquired 100,000 equity shares of Singapore Dollars 1 each in Midrange Software Pte. Limited (formerly Logix Microsystems (S) Pte. Ltd.,) Singapore. The remittance towards the same has not been made pending requisite approval.

1.4 During the financial year 2011-12, die Company has made an additional investment of Rs. 682.34 Lakhs (USD 15,20,000) in the form of equity in its subsidiary Logix Americas Inc., which is the holding company for the US subsidiaries. The share allotment against this as also portion of previous investments same is pending as at the Balance Sheet and reflected as ''Share Application Money

* pending allotment''. The investment in Logix Americas Inc., has in turn been invested bv way ot equity and loans in Homestar Systems Inc., I Ioniestar LLC, Izmo CRM and IzmoMedia, the step-down subsidiaries ot Logix Americas Inc.

1.5 The balances in the share refund account and the related bank account was pending reconciliation. The unreconciled difference amounts to Rs.5.12 lakhs.

1.6 In accordance with Section 205C of Companies Act, 1956, Share Warrant Application money, pending allotment and due to refund amounting to Rs.3.30 lakhs remaining unpaid since 29th September 2007 will be transferred to Investor Education and Protection Fund after the completion of 7 years from the date of payment tailing due.

The above amounts do not include Gratuity and Leave encashment benefits as the provisions for these are determined for the Company as a whole, and therefore separate amounts for the Directors are not available.

b) Directors remuneration tor the current year includes a sum of Rs.31.96 Lakhs paid to the managing director in accordance with the limits approved by the shareholders at the AGM held on 29th September 2010 but in excess of the limits prescribed under the Companies Act. The similar excess remuneration for the previous periods (from FY 2007-08 onwards) amounts to Rs. 149.42 lacs. The Company had applied for the requisite approval trom the Central Government which had not been granted, but the management is confident of obtaining the approval and is in the process of filing revised application for the same. Pending outcome of the same, these amounts continue to be considered as an expense.

1.7 The Company''s Singapore subsidiary , Midrange Software Pte Ltd carries an accumulated provision of SGD 270,000 (Previous year: SGD 216,000), in their books towards director''s remuneration payable in respect of services rendered by Mr. Sanjay Soni. As per the understanding, the same would be paid to M/s. Logix Microsystems Ltd, the holding Company in accordance with Sec 314 (1) (ii) of the Companies Act.

1.8 Current Value of subsidiaries investment

Investment in Midrange Software Pte. Ltd.,

The Company has invested an amount of SGD 1,904,915 in Midrange Software Pvt Ltd, Singapore. Midrange has incurred losses during recent years and has an accumulated loss of SGD 29,604. However, based on the management''s perception of the growth prospects and the performance of Midrange, in the opinion of the management there is no permanent diminution in value of the investment.

Investment in Logix Americas Inc.

The Company has invested an amount of USD 32,848,100 in its subsidiary Logix Americas Inc till 31st March 2013. which is the holding company for the operating companies i.e.Homestar, Izmo CRM and IzmoMedia, the subsidiaries of Logix Americas

Inc. The management had obtained an independent valuation of is operating enterprises in the US. Based on the same and further based on the management''s view on the prospects in the region, the management does not envisage any decline in the value of the investments and consider it appropriate to have the carrying value at par in respect of its investments in Logix America Inc as well. Investment in Izmo Europe BVBA Belgium The Company has invested an amount of ELTRO 1,359,093 in its subsidiary Izmo Europe IVBA Belgium till 31st March 2013. Izmo Europe BVBA has incurred losses during the recent years and has an accumulated loss of EURO 1,597,646. However, based on the management''s perception of the growth prospects and the performance of Izmo Europe, in the opinion of the management there is no permanent diminution in value of the investment.

1.9 List of Related Parties

a) Enterprises Controlled by the Company

Midrange Software Pte Ltd, Singapore '' Wholly Owned Subsidiary

(formerly Logix Microsystems (S) Pte. Ltd. Singapore)

Logix Americas Inc., LISA Wholly Owned Subsidiary

Izmo Europe BVBA Wholly Owned Subsidiary

Homestar Systems Inc. LISA 98% held by M/s. Logix Americas Inc., USA

Homestar LLC., LISA Wholly Owned Subsidiary of M/s. Homestar Systems Inc., LISA

Carazoo Online Solutions Pvt Ltd. Subsidiary of M/s. Logix Microsystems Ltd ( 49% of Equity Shares)

h ) Key Management Personnel Mr. Sanjav Soni Mr. Tej Soni

c) Enterprises in which Key Management personnel/their relatives have a significant influence Aries Gases Private Limited Deep Heritage

Deep Oxygen Private Limited, India " » Deep Investment Advisory Bangalore Private Limited Si2 Microsystems Pvt Ltd., India Digipro Systems Private Limited

Digipro Design Automation & Marketing Pvt Ltd., *

Deep Engineers & Consultants SL Business Center Carazoo Online Solutions Pvt Ltd.

1.10 During the current financial year, the global recession continued to impact businesses across geographies. In addition to this, US auto industry in particular, experienced a severe downturn resulting in bankruptcy and closure of several automobile dealers who happened to be the clients of Homestar Systems Inc. In this backdrop, the Company was approached by its subsidiary Homestar Systems Inc to offer a special rebate considering the exceptional circumstances observed in the US automobile industry due to the recessionary trend. Consequent to commercial negotiations, it has been accepted mutually to offer an overall rebate of Rs. 389.97 Lakhs (USD 714,228). This is non recurring and largely exceptional in nature and accordingly, reflected as such.

"In terms of the Guidance note on accounting for credit available in respect of Minimum Alternative Tax(MAT) under the Income Tax Act 1961, issued by the ICAI, the excess of MAT over normal current tax payable has been recognized as an asset by way of credit to the profit & loss account as MAT credit entitlement. The MAT credit charge ot Rs.15.36 lakhs as appearing in the statement of Profit and Loss is after netting off Rs.21.53 lakhs, written off subsequent to the completion of Tax Assessment for FY 2006-07 and as per the Assessment order issued by the Tax Authorities.

1.11 Segment Reporting Primary Segments

Based on the guiding principles in Accounting Standard on "Segment Reporting" issued by the Institute of Chartered Accountants of India, classification by geographic segment are the primary reportable segments, comprising of:

Segmental Capital Employed: Assets and Liabilities contracted have not been identified to any of the reportable segments, as the assets are used interchangeably between segments and it is not practicable to reasonably allocate the liabilities to individual segments. Accordingly no disclosure relating to segments assets and liabilities are made. 24

1.12 Defined Benefit Plans

a. Gratuity

b. Leave Encashment

The disclosure as per the revised AS-15 are as follows:

(b) The fair value of the plan assets is NIL since employee benefits plans are wholly unfunded as on March 31,2013

(f) The discount rate is based on the market yield available on Government bonds at the accounting date with a term that matches the liabilities.

(g) The estimates of future salary increase considered in the actuarial valuation takes into account factors like inflation, seniority, promotion and other relevant factors.

(h) the employees are assumed to retire at the age of 60 years

(i) The mortality rate considered are as per the published rates in the LIC (1994-96) mortality tables.

1.13 Transfer Pricing

The company derives a significant portion of its revenue (Rs. 1450.03 lakhs) from services, rendered to its subsidiary M/s. Homestar LLC,USA, M/s.Homestar Systems Inc &M/s Midrange Software Pte Ltd., Singapore. The revenue in this regard is recognized on the basis of a services agreement with the subsidiary or Purchase Orders raised by the subsidiary.

The Company has carried out a Transfer pricing study during the previous year based on which the Company''s management is of the opinion that these international transactions are at arm''s length and believes that the transfer pricing legislation will not have any impact on the Financial statements for the year ended March 2013, particularly on their amount of tax expense and that of the provision for taxation.

1.14 Balances of Sundry Debtors, Loans & Advances are subject to reconciliation and confirmation.

1.15 Reversal of interest receivable as doubtful : This includes ICD related receivable of Rs.230.04 lacs which is secured against pledge of shares, which as at the Balance Sheet date had a market value of Rs. 29.94 lacs which was lower than the outstanding balance. The management is of the view that interest is no longer receivable accordingly provision towards possible non-recovery has been made in respect of the same.

1.16 All figures have been rounded-off to the nearest Rupee. Previous Year''s figures have been re-grouped/reclassified wherever necessary to conform to the current year presentation.


Mar 31, 2012

1.1 Turnover is stated net of Sales-tax, Cess, Surcharge, Service tax and Sales Returns.

1.2 (a) Contingent Liabilities (to the extent of which not provided for) (Amount in Rs.)

Particulars Current Year Previous Year

Money for which the company is contingently liable:

i) Performance Guarantees (STPI - customs duty) 499,836 499,836

ii) Claims against the company, not acknowledged as debts :

a) Claims by vendors, etc 1,383,300 1,270,937

b) There are certain claims made against the Company by former employees, which are a subject matter of arbitration proceedings. In the view of the management of the Company these claims are not tenable. No provision has been made for such claims pending completion of legal proceedings as the amount of claims are currently not ascertainable. Not Quantified Not Quantified

c ) Contingent liability in respect of claim in respect of Service Tax on software sales made by the company, the amount of which is not quantified. Not Quantified Not Quantified

iii) Other money for which the company is contingently liable: Service Tax not charged on rental income and interest thereon for FY 2008-09, 2009-10, partly for 2010-11 and 2011-12 based on a judgement by Honourable Delhi High Court. 3,391,333 1,985,472

1.3 (b) Commitments (to the extent of which not provided for)

i) Unexpired Letters of Credit 1,265,914 1,634,016

ii) Warranty Costs on Software Sale* Not Quantified Not Quantified



* The company does not envisage any liability on account of a back to back arrangement with the suppliers for any such claims.

1.4 During the financial year 1999-2000, the company had acquired 100,000 equity shares of Singapore Dollars 1 each in Midrange Software Pte. Limited (formerly Logix Microsystems (S) Pte. Ltd.,) Singapore. The remittance towards the same has not been made pending requisite approval.

1.5 During the year under review, the Company has made an additional investment of Rs. 682.34 Lakhs (USD 15,20,000) in the form of equity in its subsidiary Logix Americas Inc., which is the holding company for the US subsidiaries. The share allotment against this as also portion of previous investments same is pending as at the Balance Sheet and reflected as 'Share Application Money pending allotment'. The investment in Logix Americas Inc., has in-turn been invested by way of equity and loans in Homestar Systems Inc., Homestar LLC, Izmo CRM, IzmoMedia and LML Internet Solutions Inc., subsidiaries of Logix Americas Inc.

1.6 The balances in the share refund account and the related bank account was pending reconciliation. The unreconciled difference amounts to Rs.5.12 lakhs.

1.7 In accordance with Section 205C of Companies Act, 1956, Share Warrant Application money, pending allotment and due for refund amounting to Rs.3.30 lakhs remaining unpaid since 29th September 2007 will be transferred to Investor Education and Protection Fund after the completion of 7 years from the date of payment falling due.

The above amounts do not include Gratuity and Leave encashment benefits as the provisions for these are determined for the Company as a whole and therefore separate amounts for the Directors are not available.

Directors remuneration for the current year includes a sum of Rs.31.96 Lakhs paid to the managing director in accordance with the limits approved by the shareholders at the AGM held on 29 th September 2010 but in excess of the limits prescribed under the Companies Act. The similar excess remuneration for the previous periods (from FY 2007-08 onwards) amounts to Rs. 117.46 lacs. The Company had applied for the requisite approval from the Central Government which had not been granted, but the management is confident of obtaining the approval and is in the process of filing revised application for the same. Pending outcome of the same, these amounts continue to be considered as an expense.

1.8 The Company's Singapore subsidiary, Midrange Software Pte. Ltd, carries an accumulated provision of SGD 216,000 (Previous year: SGD 162,000), in their books towards director's remuneration payable in respect of services rendered by Mr. Sanjay Soni. As per the understanding, the same would be paid to M/s. Logix Microsystems Ltd, the holding Company in accordance with Sec 314 (1) (ii) of the Companies Act.

1.9 Current Value of subsidiaries investment

Investment in Midrange Software Pte Ltd,

The Company has invested an amount of SGD 1,904,915 in Midrange Software Pte Ltd, Singapore. Midrange has incurred losses during recent years and has an accumulated loss of SGD 104,318. However, based on the management's perception of the growth prospects and the performance of Midrange, in the opinion of the management there is no permanent diminution in value of the investment.

Investment in Logix Americas Inc.

The Company has invested an amount of USD 32,848,100 in its subsidiary Logix Americas Inc., which is the holding company for the operating companies i.e., Homestar, Izmo CRM and IzmoMedia, the subsidiaries of Logix Americas Inc. The management had obtained an independent valuation of its operating enterprises in the US. Based on the same and further based on the management's view on the prospects

in the region, the management does not envisage any decline in the value of the investments and consider it appropriate to have the carrying value at par in respect of its investments in Logix America Inc as well.

Investment in Izmo Europe BVBA Belgium

The Company has invested an amount of EURO 1,359,093 in

its subsidiary Izmo Europe BVBA Belgium till 31st March 2012. Izmo Europe BVBA has incurred losses during the recent years and has an accumulated loss of EURO 1,403,738. However, based on the management's perception of the growth prospects and the performance of Izmo Europe, in the opinion of the management there is no permanent diminution in value of the investment.

1.10 List of Related Parties

a Enterprises Controlled by the Company

Midrange Software Pte Ltd, Singapore Wholly Owned Subsidiary

(formerly Logix Microsystems (S) Pte. Ltd. Singapore)

Logix Americas Inc., USA Wholly Owned Subsidiary

Izmo Europe BVBA Wholly Owned Subsidiary

Homestar Systems Inc. USA 98% held by M/s. Logix Americas Inc., USA

Homestar LLC., USA Wholly Owned Subsidiary of M/s. Homestar Systems Inc., USA

Izmo Media, USA Wholly Owned Subsidiary of M/s. Homestar Systems Inc., USA

Izmo CRM, USA Wholly Owned Subsidiary of M/s. Homestar Systems Inc., USA

LML Internet Solutions USA Subsidiary of M/s. Logix Americas Inc. USA

Carazoo Online Solutions Pvt Ltd. Subsidiary of M/s. LML Internet Solutions USA

b Key Management Personnel Mr. Sanjay Soni Mr. Tej Soni

c Enterprises in which Key Management personnel/their relatives have a significant influence Aries Gases Private Limited Deep Engineers & Consultants Deep Heritage

Deep Oxygen Private Limited

Deep Investment Advisory Bangalore Private Limited Digipro Systems Private Limited

Digipro Design Automation & Marketing Private Limited Si2 Microsystems Private Limited SL Business Center

24.22 Under the Micro, Small and Medium Enterprises Development Act, 2006, which came into force on October 2, 2006, the company is required to make certain disclosure relating to Micro, Small and Medium Enterprises. The company is in the process to compiling and assimilating the relevant information from its suppliers about their coverage under the Act. Since the relevant information is not readily available, no disclosure have been made in the Accounts.

1.11 During the current financial year, the global recession continued to impact businesses across geographies. In addition to this, US auto industry in particular, experienced a severe downturn resulting in bankruptcy and closure of several automobile dealers who happened to be the clients of Homestar Systems Inc. In this backdrop, the Company was approached by its subsidiary Homestar Systems Inc to offer a special rebate considering the exceptional circumstances observed in the US automobile industry due to the recessionary trend. Consequent to commercial negotiations, it has been accepted mutually to offer an overall rebate of Rs. 399.41 Lakhs (USD 788,721). This is non recurring and largely exceptional in nature and accordingly, reflected as such.

as appearing in the statement of Profit and Loss is after netting off Rs.21.53 lakhs ,written off subsequent to the completion of Tax Assessment for FY 2006-07 and as per the Assessment order issued by the Tax Authorities.

1.12 Segment Reporting

Primary Segments

Based on the guiding principles in Accounting Standard on "Segment Reporting" issued by the Institute of Chartered Accountants of India, classification by geographic segment are the primary reportable segments, comprising of:

i) Export

ii) Domestic

1.13 Provision for Taxation:

Provision for current tax has been made considering the taxes on book profits as under section 115JB.

In terms of the Guidance note on accounting for credit available in respect of Minimum Alternative Tax(MAT) under the Income Tax Act 1961, issued by the ICAI, the excess of MAT over normal current tax payable has been recognized as an asset by way of credit to the profit & loss account as MAT credit entitlement. The MAT credit charge of Rs.13.02 lakhs

* Domestic segment sales for the current year includes Rs. 95 lakhs from discontinuing operations. And Export segment sales for the current year includes Rs.47.61 lakhs from discontinuing operations.

Segmental Capital Employed: Assets and Liabilities contracted have not been identified to any of the reportable segments, as the assets are used interchangeably between segments and it is not practicable to reasonably allocate the liabilities to individual segments. Accordingly no disclosure relating to segments assets and liabilities are made.

1.14 Discontinuing Operations

During the year, pursuant to the scheme of arrangement approved by the shareholders through Postal Ballot on 30th January, 2012, the Company has proposed to dispose/hive off the Carazoo domestic division business of the company into Subsidiary Company with effect from 17th April, 2012. The results of the discontinuing business during the year were as under;

1.15 Defined Benefit Plans

a. Gratuity

b. Leave Encashment

The disclosure as per the revised AS-15 are as follows: a) Change in defined benefit obligation

1.16 Employees Stock Options (ESOP)

a. Employees Stock Options (ESOP) 2006:

The vesting period for the ESOP 2006 scheme ended during FY 10-11. The provision created under this scheme was written back during the year to the extent of expired options remaining un-exercised by the employees. The write back amounts to Rs.238.83 lakhs which is disclosed as an exceptional item in the Statement of Profit and Loss for the year.

b. Employees Stock Options (ESOP) 2007, 2009 and 2010 No options have been granted under various ESOP schemes approved by the members in AGM. All these ESOP schemes stand withdrawn.

c Employees Stock Options (ESOP) 2011:

The company during the year FY 2010-11, had introduced ESOP 2011 scheme and had taken the approval of its members at the AGM held on 29th September 2011 for 500,000 shares. No options have been granted under this scheme to any of the employees till date.

f) The discount rate is based on the market yield available on Government bonds at the accounting date with a term that matches the liabilities.

g) The estimates of future salary increase considered in the actuarial valuation takes into account factors like inflation, seniority, promotion and other relevant factors.

h) the employees are assumed to retire at the age of 60 years.

i) The mortality rate considered are as per the published rates in the LIC (1994-96) mortality tables.

1.17 The company during the year made a purchase of goods of Rs.167.03 lakhs from Si2 Microsystems Pvt Ltd. and made sales of goods of Rs.168.70 lakhs to Digipro Design Automation & Marketing Pvt Ltd. These transactions attract provisions of Section 297 of the Companies Act, 1956, and requires prior approval of Central Government. The company is in the process of making an application for condonation of delay and obtaining necessary government approval for the same.

1.18 Transfer Pricing

The company derives a significant portion of its revenue (Rs.1,368.93 lakhs) from services, rendered to its subsidiary M/s. Homestar LLC, USA, M/s.Homestar Systems Inc & M/s Midrange Software Pte Ltd., Singapore. The revenue in this regard is recognized on the basis of a services agreement with the subsidiary or Purchase Orders raised by the subsidiary.

The Company has carried out a Transfer pricing study during the previous year based on which the Company's management is of the opinion that these international transactions are at arm's length and believes that the transfer pricing legislation will not have any impact on the Financial statements for the year ended March 2012, particularly on their amount of tax expense and that of the provision for taxation.

1.19 Balances of Sundry Debtors, Loans & Advances are subject to reconciliation and confirmation.

1.20 All figures have been rounded-off to the nearest Rupee. Previous Year's figures have been re-grouped/reclassified wherever necessary to conform to the current year presentation.

 
Subscribe now to get personal finance updates in your inbox!