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Notes to Accounts of Kavveri Telecom Products Ltd.

Mar 31, 2014

The Company has only one class of shares referred to as equity shares having a par value of Rs.10/-. Each holder of equity shares is entitled to one vote per share held. -

Paid-up capital includes 4,935,000 shares issued as consideration as per the Scheme of amalgamation with erstwhile Megasonic Telecoms Private Limtied in the year 2003-04. -

The Company declares and pays dividend in Indian rupees.. The Board of Directors have not proposed any dividend during the year. Dividend declared if any, if proposed by the share holders, is payable to the share holders in proportion to their shareholding.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the company. The distribution will be in proportion to the number of equity shares held by the shareholders.

Stock Option Plan (2008)

In the''financial year 2008-09, the company instituted the 2008 Plan. The shareholders and Board of Directors approved the plan in April 2008 which provides for the issue of 5,00,000 equity shares to the employees. The compensation committee administers the 2008 Plan. Options were issued to employees at an exercise price at par value of the share, .

Vesting of employee stock options granted occurs in tranches as under;

a) Term Loan Account with State Bank of. India is secured by first charge on the entire present and future fixed assets of the company and equitable mortgage of the land and building at Suragajakkanahalli, Anekal Taluk where the factory is located and further secured by the securities offered in respect of Cash Credit facilities as referred to in Column No. 2.6.

Terms of Repayment: Repayable in 38 monthly instalments from the date of the Loan (February 2010) alongwith interest of 13.15% p.a.

b) Vehicle loan from the respective banks are secured by the respective vehicles against which the loans are granted. ''

(i) Vehicle Loan from Axis Bank is repayable in 36 monthly instalments commencing from October 2011 with an interest rate of 10%

(ii) Vehicle Loan from Axis Bank is repayable in 60 monthly instalments commencing.from April 2012 with an interest rate of 11.34%

(iii) Vehicle Loan from Axis Bank is repayable in 36 monthly instalments commencing from August 2012 with an interest rate of 9.71%

(iv) Vehicle Loan from Axis Bank is repayable in 36 monthly instalments commencing from July 2012 with an interest rate of 10.88% * .

(v) Vehicle Loan from Axis Bank is repayable in 36 monthly instalments commencing from July 2012 with an interest rate of 10.89%

(vi) Vehicle Loan from Axis Bank is repayable in 36 monthly instalments commencing from July 2012 with an interest rate of 10.89%

1. There are no amounts due for payment to the Investor Education and Protection Fund under Section 205 C of the Companies Act, 1956 as at the year end. .

2. The Group of share holders of the Company has accepted to forgive the didived declared by the Company for the financial year 2011-2012 amounting to R: 1,02,70,603/-..The Company did not deposited the same outstanding dividend into separate Bank account.

2.19 CONTINGENT LIABILITIES AND COMMITMENTS (to the extent not provided for)

Particulars As at 31.3.2014 As at 31.3.2013

Claims against the Company not acknowledged as debts '' - 8,080,428 8,080,428

Statutory claims under appeals/disputes:

(a) Income tax matters 1,037,912,510 407,895,506

(b) Excise Matters (Refer Note (v) below) - 547,167,022 542,426,022

(c) Sales Tax matter 55,512,266 - 4,437,266

Guarantees by Bank 7,991,851 7,991,851

Corporate Guarantee 614,087,997 734,100,865 .

(i) M/s. Mahanagar Telephone Nigam Ltd and M/s Bharat Sanchar Nigam Ltd. had invoked bank guarantees totaling to Rs. 4,41,000 and Rs.7,55,081 respectively against which the company has filed cases against such invoking of bank guarantees and is advised that the matter will be resolved in favour of the company in respect of the said amount and hence no provision is made in the books of account.

(ii) In the Matter of dispute with M/s Bharat Sanchar Nigam Limited (BSNL), the Honourable High Court of Karnataka at Bangalore have referred the matter to the arbitrator to be appointed by M/s BSNL, against invoking of Bank guarantee of a sum of Rs.22,70,000.

(iii) There are claims against one of the Company''s properties located at Bangalore, which is presently owned by the Company.

(iv) Margin Money deposits with the bank amounting to Rs. 61,30,562(Rs. 60,57,542) has been given as margin money for the guarantees issued i

by the bankers. ''

(v) (A)Customs, Excise an Service Tax Appellate Tribunal, South Zone, Bangalore, however had stayed the aforesaid demand subject to payment of Rs.2 Crores (B) Deposit paid against Order in Original No, 94/2012 dt. 31.12.2012 under Protest.of Rs.26,77,854/- (C).Rs.127523/- deposit against CESTAT Appeal No.E/2210/2012 Stay/Misc/ROM.E/MISC/26402/2013 dt.13.06.2013. (D) Rs.257088/- Cenvat deposit against O/O nO;42/2013 dt:21.02.2013 stay order no.119/2013 dt:25.06.2013. (E).Rs.500000/- Cenvat deposit against OIO No.37/2011 dt:31.03.2011 passed by the Additional Commissioner of Central Excise and CESTAT Miscellaneous Order No.26586/2013 dt: 16.07.2013

(vi) There are claims against one of the Company''s in sales tax (A) Ref Assignment order no.14188330 dt: 12/8/2011 against order received from assistant commissioner of commercial taxes (Audit)4.2,DVO-4 bangalore. Dispute it is assessed under CST Act''56 by rejecting the concessional rate of tax claimed in the return of turnovers and levied tax at the rate of 12.5% in the absence of declarations such as Form C and also levied the penalty and interest of Rs.4,97,46,550/-. (B) Ref Assignment order no.13687538 dt: 08/12/2011 and case order

no.212049893 dt: 29/03/2014 against order received from Deputy commissioner of commercial taxes (Audit)4.7,DVO-4 bangalore. It is assessed by rejecting the concessional rate of tax claimed in the return of turnovers and assessed to tax , the direct export not covered by bill of lading, sales return not covered by the relevant documents at the rate of 4% in the absence of declarations such as Form C and along with-levied the penalty and interest of Rs.13,29,696/-.

2.30 AMALGAMATION

Amalgamation with Megasonic Telecoms Private Limited: - The Company got amalgamated with erstwhile Megasonic Telecoms Private limited in the year 2003-04 and as per the scheme of amalgamation 4,935,000 equity shares were issued as consideration.

2.31 CAPITAL RESERVES

The Capital Reserve of Rs. 73,25,779/- represents the excess of net fair value of assets over the purchase consideration in terms of scheme of amalgamation taken place during the year 2003-04, which was duly approved by the Hon''ble High Courts of Karnataka and Bombay.

2.32 INVESTMENTS

Pursuant to the Scheme of Amalgamation as referred to in Note-2.30 above, Eaicom India Private Limited (EIPL, erstwhile 100% subsidiary company of Megasonic Telecoms Private Limited has become a wholly owned subsidiary of the Company.

The Company incorporated a 100% subsidiary in the name of KAVVERI TECHNOLOGIES INC at Canada during the financial year 2005-06 with an initial investment of 292,000 CAD Dollars. Additional investment of CAD 2,015,000/-was made during the year 2007-08 in the aforesaid subsidiary by partial conversion of the loan granted to the subsidiary.

The Company has-incorporated a 100% subsidiary in the name of Kaweri Telecom Espana at Spain during the current financial year 2011-12 with one million and three thousand Euros as cost of investment.

The present value of the obligation is determined based on actuarial valuation using the-projected unit credit method, which recognises each period of service as giving rise to additional unit of employees benefit entitlement and measures each unit separately to build up the final obligation.

The obligation for Compensated absence is recognised in the same manner as gratuity. The Company has not funded the Gratuity and Compensated absence liability.

LIST OF RELATED Direct Indirect Other Associates/ PARTIES Subsidiaries Subsidiaries Key Management Other related Personnel party

SMR Telecom aicom India DCI Digital Private Communications Holdings

Mr.C.Shivakumar Reddy Limited Inc Private Limited -

Kayveri Spotwave Wireless Technologies Inc. Ltd Ms.C.Uma Reddy

Kaweri Telecom Kavveri Realty S

Ms. R .H Kasturi Infrastructure Inc. Ltd

Kavveri Telecom Trackcom Systems

Products UK Limited International Inc

Kaweri Telecom Til-Tek Antennae

Espana Inc.

Rymsa De Mexico

. Kavveri Technologies Quality Communications

Americas Inc Systems

New England Communication Systems

As the future liability of Gratuity and leave encashment is provided on an actuarial basis for the Company as a whole, the amount pertaining to the Directors is not ascertainable and therefore not included in above.

2.43 SEGMENT RESULTS

The company''s predominant risks and returns are from the segment of "Wireless sub-systems Products" represented by Antenna, Duplexer, RF Products and RF accessories, which constitute the major revenue of the company for the reporting period. Since this being a single business segment,the segment information as per Accounting Standard 17, "Segment Reporting", is not disclosed.

The aforesaid expenses have been debited under various heads of expenses account in the Statement of Profit and Loss.

(Auditors have relied on the certificate of the management regarding the apportionment of the expenses incurred in connection with the Company''s Research and Development Activity)

(The management has ascertained the Warranty liability that will accrue in the future periods as on 31st March 2014 and has reversed such excess liability, if any, to the Profit and Loss Account as at the year end. The auditors have relied on the certificate of the management in this regard.)

2.46 OPERATING LEASE OBLIGATIONS ,

The company has taken office, other facilities under cancelable and non-cancelable operating leases, which are renewable on a periodic basis.

2.47 in the opinion of Board of Directors, all current assets, loans and advances, investments have atleast the value as stated in the Balance Sheet, if realized in the ordinary course of business.

2.48 IMPAIRMENT OF ASSETS

Pursuant to Accounting Standard AS-28- Impairment of assets issued by the Companies Accounting Standards Rules, 2006, the Company assessed its fixed assets for impairment as at 31st March 2014 and concluded that there has been no significant impaired fixed asset that needs to be recognized in the books of account.

2.49 DERIVATIVE INSTRUMENTS AND UNHEDGED FOREIGN CURRENCY EXPOSURE

a. Particulars of unhegded foreign currency exposure as at the reporting date.

2.50 Confirmation of balances in respect of debtors and creditors has not been obtained ih a few cases.

2.51 The Provision for income tax has been calculated taking into consideration investments in Capital expenditure made under Research and . -

development eligible for a weighted deduction of 200% under section 35(2AB) of the Income Tax Act 1961. .

2.52 The Company has defaulted in repayment of cash credit and term loan which were availed from Bank. The Bank has issued notice U/s. 13(2) of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 to recover an amount of Rs. 96.85 crores which includes outstanding interest towards cash credit and term loan availed by the Company.

2.53 The Company has not appointed the Company secretary ( Compliance Officer) in the financial year 2013-2014.

1. On June 03, 2011, Karnataka Industrial Areas Development Board ("KIADB") alloted land to the company on a lease cum sale basis until June 2021, to be sold to the company at the end of lease period upon fulfillment of certain conditions. The Lease has been registered in favour of the Company. The Company is confident of fulfilling the conditions.

Accordinglythe initial and subsequent lease payments in this regard have been capitalised as Leasehold Land.


Mar 31, 2013

1.1 AMALGAMATION

Amalgamation with Megasonic Telecoms Private Limited: - The Company got amalgamated with erstwhile Megasonic Telecoms Private Limited in the year 2003-04 and as per the scheme of amalgamation 4,935,000 equity shares were issued as consideration.

1.2 CAPITAL RESERVES

The Capital Reserve of Rs. 73,25,779/- represents the excess of net fair value of assets over the purchase consideration in terms of scheme of amalgamation taken place during the year 2003-04, which was duly approved by the Hon''ble High Courts of Karnataka and Bombay.

1.3 INVESTMENTS

Pursuant to the Scheme of Amalgamation as referred to in Note 2.30 above, Eaicom India Private Limited (EIPL, erstwhile 100% subsidiary company of Megasonic Telecoms Private Limited has become a wholly owned subsidiary of the Company.

The Company incorporated a 100% subsidiary in the name of KAWERI TECHNOLOGIES INC at Canada during the financial year 2005-06 with an initial investment of 292,000 CAD Dollars. Additional investment of CAD 2,015,000/-was made during the year 2007-08 in the aforesaid subsidiary by partial conversion of the loan granted to the subsidiary.

The Company incorporated a 100% subsidiary in the name of KAWERI TELECOM PRODUCTS UK Limited at UK during the financial year 2009-10 with no initial cost of investment.

The Company has incorporated a 100% subsidiary in the name of Kaweri Telecom Espana at Spain during the current financial year 2011-12 with one million and three thousand Euros as cost of investment.

The Company incorporated a 100% subsidiary in the name of KAWERI TECHNOLOGIES ASIA PTE LTD at Singapore during the financial year 2012-13 with an investment of US$1/-.

1.4 EMPLOYEE BENEFITS

The details required under !S 15 - Employee Benefits is as follow

The present value of the obligation is determined based on actuarial valuation using the projected unit credit method, which recognises each period of service as giving rise to additional unit of employees benefit entitlement and measures each unit separately to build up the final obligation. The obligation for Compensated absence is recognised in the same manner as gratuity. The Company has not funded the Gratuity and Compensated absence liability.


Mar 31, 2012

The previous year figures have been regrouped / reclassified, wherever necessary to conform to the current year presentation.

The Company has only one class of shares referred to as equity shares having a par value of Rs.10/-. Each holder of equity shares is entitled to one vote per share held.

Paid-up capital includes 4,935,000 shares issued as consideration as per the Scheme of amalgamation with erstwhile Megasonic Telecoms Private Limtied in the year 2003-04.

The Company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing annual general meeting.

The Board of Directors in their meeting held on 30th May 2012, proposed a final dividend of Rs. 4 per share. The proposal is subject to the approval of the shareholders at the Annual General Meeting to be held. The total dividend appropriation for the year ended 31st March 2012, amounted to Rs. 93,555,672 including Corporate dividend Tax of Rs. 13,058,632.

Dividend, if approved, is payable to the shareholders in proportion to their shareholding.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the company. The distribution will be in proportion to the number of equity shares held by the shareholders.

Stock Option Plan (2008)

In the financial year 2008-09, the company instituted the 2008 Plan. The shareholders and Board of Directors approved the plan in April 2008 which provides for the issue of 5,00,000 equity shares to the employees. The compensation committee administers the 2008 Plan. Options were issued to employees at an exercise price at par value of the share.

a) Term Loan Account with State Bank of India is secured by first charge on the entire present and future fixed assets of the company and equitable mortgage of the land and building at Suragajakkanahalli, Anekal Taluk where the factory is located and further secured by the securities offered in respect of Cash Credit facilities as referred to in Column No. 2.6.

Terms of Repayment: Repayable in 38 monthly instalments from the date of the Loan (February 2010) along with interest of 13.15% p.a.

b) Vehicle loan from the respective banks are secured by the respective vehicles against which the loans are granted

(I) Vehicle Loan from Tata Capital Limited is repayable in 36 monthly instalments commencing from November 2010 with an interest rate of 9.50% p.a.

(ii) Vehicle Loan from HDFC Bank is repayable in 36 monthly instalments commencing from June 2010 with an interest rate of 8.5%

(iii) Vehicle Loan from Axis Bank is repayable in 36 monthly instalments commencing from June 2009 with an interest rate of 11%

(iv) Vehicle Loan from HDFC Bank is repayable in 36 monthly instalments commencing from October 2011 with an interest rate of 10%

(v) Vehicle Loan from Axis Bank is repayable in 60 monthly instalments commencing from April 2012 with an interest rate of 11.34%

a) Cash Credit facility with State Bank of India is secured by first charge on the entire present and future current assets of the company and collaterally secured by pledge of 5 Lakhs shares of the company owned by two directors and 29,200 shares of M/s Kavveri Technologies Inc. being the 100% stake held by M/s Kavveri Telecom Products Ltd and equitable mortgage of the residential building owned by a Directors and their family members)

b) Corporate loan is secured by pledge of 7,00,000 shares of the Company held by two directors of the Company

1.1 CONTINGENT LIABILITIES AND COMMITMENTS (to the extent not provided for)

As at 31.03.2012 As at 31.03.2011 Particulars (in Rs.) (in Rs.)

Claims against the Company not acknowledged as debts 8,080,428 31,033,073

Statutory claims under appeals/disputes:

a) Income tax matters 51,413,876 2,229,133

b) Excise Matters (Refer Note (V) below) 503,582,590 488,049,175

c) Sales Tax matter 6,322,513 6,322,513

Guarantees by Bank 6,798,570 9,682,133

Corporate Guarantee 814,950,191 474,540,855

(I) M/s. Mahanagar Telephone Nigam Ltd and M/s Bharat Sanchar Nigam Ltd. had invoked bank guarantees totaling to Rs. 4,41,000 and Rs.7,55,081 respectively against which the company has filed cases against such invoking of bank guarantees and is advised that the matter will be resolved in favour of the company in respect of the said amount and hence no provision is made in the books of account.

(ii) In the Matter of dispute with M/s Bharat Sanchar Nigam Limited (BSNL), the Honourable High Court of Karnataka at Bangalore have referred the matter to the arbitrator to be appointed by M/s BSNL, against invoking of Bank guarantee of a sum of Rs.22,70,000.

(iii) There are claims against one of the Company's properties located at Bangalore, which is presently owned by the Company.

(iv) Margin Money deposits with the bank amounting to Rs. 5,22,98,272 (Rs. 1,43,93,385) has been given as margin money for the guarantees issued by the bankers.

(v) Customs, Excise and Service Tax Appellate Tribunal, South Zone, Bangalore, however had stayed the aforesaid demand subject to payment of Rs. 2 Crores within six weeks from 07.03.2012 and Rs 15 Lakhs within a period of six weeks from 31.01.2012

1.2 AMALGAMATION

Amalgamation with Megasonic Telecoms Private Limited: - The Company got amalgamated with erstwhile Megasonic Telecoms Private Limited in the year 2003-04 and as per the scheme of amalgamation 4,935,000 equity shares were issued as consideration.

1.3 CAPITAL RESERVES

The Capital Reserve of Rs. 73,25,779/- represents the excess of net fair value of assets over the purchase consideration in terms of scheme of amalgamation taken place during the year 2003-04, which was duly approved by the Hon'ble High Courts of Karnataka and Bombay.

1.4 INVESTMENTS

Pursuant to the Scheme of Amalgamation as referred to in Note 2.30 above, Eaicom India Private Limited (EIPL, erstwhile 100% subsidiary company of Megasonic Telecoms Private Limited has become a wholly owned subsidiary of the Company.

The Company incorporated a 100% subsidiary in the name of KAVVERI TECHNOLOGIES INC at Canada during the financial year 2005-06 with an initial investment of 292,000 CAD Dollars. Additional investment of CAD 2,015,000/-was made during the year 2007-08 in the aforesaid subsidiary by partial conversion of the loan granted to the subsidiary.

The Company incorporated a 100% subsidiary in the name of KAVVERI TELECOM PRODUCTS UK Limited at UK during the financial year 2009-10 with no initial cost of investment.

The Company has incorporated a 100% subsidiary in the name of Kavveri Telecom Espana at Spain during the current financial year 2011-12 with one million and three thousand Euros as cost of investment.

1.5 EMPLOYEE BENEFITS

The details required under AS 15 - Employee Benefits is as follow

The present value of the obligation is determined based on actuarial valuation using the projected unit credit method, which recognises each period of service as giving rise to additional unit of employees benefit entitlement and measures each unit separately to build up the final obligation.

The obligation for Compensated absence is recognised in the same manner as gratuity. The Company has not funded the Gratuity and Compensated absence liability.

As the future liability of Gratuity and leave encashment is provided on an actuarial basis for the Company as a whole, the amount pertaining to the Directors is not ascertainable and therefore not included in above.

1.6 SEGMENT RESULTS

The company's predominant risks and returns are from the segment of "Wireless sub-systems Products" represented by Antenna, Duplexer, RF Products and RF accessories, which constitute the major revenue of the company for the reporting period. Since this being a single business segment, the segment information as per Accounting Standard 17, "Segment Reporting", is not disclosed.

The aforesaid expenses have been debited under various heads of expenses account in the Statement of Profit and Loss. (Auditors have relied on the certificate of the management regarding the apportionment of the expenses incurred in connection with the Company's Research and Development Activity)

(The management has ascertained the Warranty liability that will accrue in the future periods as on 31st March 2012 and has reversed such excess liability, if any, to the Profit and Loss Account as at the year end. The auditors have relied on the certificate of the management in this regard.)

1.7 OPERATING LEASE OBLIGATIONS

The company has taken office, other facilities under cancelable and non-cancelable operating leases, which are renewable on a periodic basis.

1.8 In the opinion of Board of Directors, all current assets, loans and advances, Investments have atleast the value as stated in the Balance Sheet, if realized in the ordinary course of business.

1.9 IMPAIRMENT OF ASSETS

Pursuant to Accounting Standard AS-28- Impairment of assets issued by the Companies Accounting Standards Rules, 2006, the Company assessed its fixed assets for impairment as at 31st March 2012 and concluded that there has been no significant impaired fixed asset that needs to be recognized in the books of account.

1.10 DERIVATIVE INSTRUMENTS AND UNHEDGED FOREIGN CURRENCY EXPOSURE

Foreign currency exposure that are not hedged by derivative or forward contracts as on 31st March 2012 amounts to Rs.121,87,38,421 ( Rs. 21,59,80,902)

1.11 Confirmation of balances in respect of debtors and creditors has not been obtained in a few cases.

1.12 Expenses incurred in connection with QIP include a sum of Rs.330,900 paid to Statutory Auditors, over and above the fees disclosed under note No. 2.28

1.13 The Provision for income tax has been calculated taking into consideration investments in Capital expenditure made under Research and development eligible for a weighted deduction of 200% under section 35(2AB) of the Income Tax Act 1961.


Mar 31, 2011

1. a. Amalgamation with Megasonic Telecoms Private

Limited: - The Company got amalgamated with erstwhile Megasonic Telecoms Private Limited in the year 2003-04 and as per the scheme of amalgamation 4,935,000 equity shares were issued as consideration.

b. Paid up capital includes 8,180 Equity shares of Ks. 10 each fully paid up allotted to the employees during the year on account of the ESOP Scheme.

2. The Capital Reserve of Rs. 73,25,779/- represents the excess of net fair value of assets over the purchase consideration in terms of scheme of amalgamation taken place during the year 2003-04, which was duly approved by the Hon'ble High Courts of Karnataka and Bombay.

3. Secured Loans:

a. Corporate Loan and Term Loan (I & II) from State Bank of India: Secured by first charge on the present and future assets of the Company

b. Term Loan III from State Bank of India:

Secured by equitable mortgage of land and building where the factory building is located and by first charge on the fixed assets purchased out of the term loan.

c. Working Capital Facilities (Cash Credit Account from State Bank of India: Secured against the first charge on the entire and future current as sets,all stocks/debtors and other current assets of the company.

d. All the above loans are collaterally secured by pledge of 500,00 shares of Kaweri Telecom Products Limited owned by promoters and also by pledge of 29,200 shares of Kaweri Technologies Inc. (Canada being the 100% stake held by the Kaweri Telecom Products Ltd. and by properties owned by Directors and their family members

e. The letter of credit facilities and bank guarantee facilities are secured against the first charge on the entire present and future current assets of the company.

f. The Car Loans are secured by hypothecation of the relevant vehicles.

g. All the secured loans excepting Car loans have been personally guaranteed by two directors.

4. Investments:

a. Pursuant to the Scheme of Amalgamation as referred to in Note I above, Eaicom India Private Limited (EIPL, erstwhile 100% subsidiary company of Megasonic Telecoms Private Limited has become a wholly owned subsidiary of the Company.

b. The Company incorporated a 100% subsidiary in the name of KAWERI TECHNOLOGIES INC at Canada during the financial year 2005-06 with an initial investment of 292 Thousand CAD Dollars.Additional investment of CAD 2,015,000/-was made during the year 2007-08 in the aforesaid subsidiary by partial conversion of the loan granted to the subsidiary.

c. The Company incorporated a 100% subsidiary in the name of KAWERI TELECOM PRODUCTS UK Limited at UK during the financial year 2009-10 with no initial cost of investment.

5. (a) Contingent Liabilities not provided for-

(In Rs.)

Particulars 2011 2010

i Estimated amount of Contracts remaining to be executed on Capital Account. NIL 4,48,50,000

ii Claims against the Company not acknowledged as a debt 3,10,33,073 2,45,40,216

iii On account of Excise Matters 48,80,49,175 29,89,60,660

iv On account of Sales tax 63,22,513 63,22,513

v Guarantees issued by bankers on behalf 96,82,133 4,79,34,939

vi Corporate guarantee given on behalf of a subsidiary Company 47,45,40,855 11,70,79,188

(i) M/s. MahanagarTelephone Nigam Ltd and M/s Bharat Sanchar Nigam Ltd. had invoked bank guarantees totaling to Rs. 4,41,000 and Rs.7,55,081 respectively against which the company has filed cases against such invoking of bank guarantees and is advised that the matter will be resolved in favour of the company in respect of the said amount and hence no provision is made in the books of account

(ii) In the Matter of dispute with M/s Bharat Sanchar Nigam Limited (BSNL), the Honourable High Court of Karnataka at Bangalore have referred the matter to the arbitrator to be appointed by M/s BSNL,against invoking of Bankguarantee of a sum of Rs.22,70,000.

6 (b) There is a claim against one of the Company's properties located at Bangalore which is presently owned by the Company.

7. Margin Money deposits with the bank amounting to Rs. 1,43,93,385(Rs. 4,24,58,504) has been given as margin money for the guarantees issued By the bankers.

8. (a) Information regarding Capacity, Stock, Production and Sale

a) Licensed Capacity Not Applicable.

b) Installed Capacity * Company has an installed capacity of 200000 nos. of Microwave components.

Since the company has manufactured components, systems during the year, quantification of capacity is not feasible. (*As certified by the Management, relied upon as it is by the Auditors. Being Technical in Nature)

(f) Details of Raw Material Consumed during the year:

(As individual items of consumption of raw materials do not contribute more than 10% of total consumption details of consumption of other raw materials have not been furnished)

9. Expenditure incurred in Foreign Currency on foreign travel is Rs.7,73,645 (14,23,218)

10. Segment Results:

The company's predominant risks and returns are from the segment of "Wireless sub-systems" represented by Antenna, Duplexer, RF Products and RF accessories, which constitute the major revenue of the company for the reporting period. Since this being a single business segment, the segment information as per Accounting Standard 17,"Segment Reporting", is not disclosed.

11. In the opinion of Board of Directors, all current assets, loans and advances, Investments have atleast the value as stated in the Balance Sheet, if realized in the ordinary course of business.

12. Pursuant to Accounting Standard AS-28- Impairment of assets issued by the Companies Accounting Standards Rules, 2006, the Company assessed its fixed assets for impairment as at 31 st March 2011 and concluded that there has been no significant impaired fixed asset that needs to be recognized in the books of account.

13.The employees' Gratuity Fund Scheme is a defined benefit Plan.The present value of the obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for Leave encashment is recognized in the same manner as gratuity.

The following table sets out the Gratuity Plan and compensated absences as required under AS 15. Reconciliation of opening and closing balances of the Present Value of the defined benefit obligation.

14. Foreign currency exposure that are not hedged by derivative or forward contracts as on 31 st March 2011 amounts to 21,59,80,902( Rs.26,95,73,011)

15. Confirmation of balances in respect of debtors and creditors has not been obtained in a few cases.

16. Unclaimed Dividend:

The unclaimed dividend of Rs. 10,49,755 represents those relating to the years 2004 to 2010 and the number of years of these unclaimed dividends has not exceeded 7 years.

17. The Provision for income tax has been calculated taking into consideration investments in Capital expenditure made under Research and development eligible for a weighted deduction of 200% under section 35(2AB) of the Income Tax Act 1961.

18. The figures as on 31st March 2011 have been regrouped/reclassified, wherever necessary, to conform with the current period classification.


Mar 31, 2010

I. Amalgamation with Megasonic Telecoms Private Limited:

The Company got amalgamated with erstwhile Megasonic Telecoms Private Limited in the year 2003- 04 and as per the scheme of amalgamation 4,935,000 equity shares were issued as consideration.

All the members of the erstwhile Megasonic Telecoms Private Limited were allotted as per the scheme of arrangement except to the extent of 2,37,350 equity shares, which could not be allotted in the absence of allotment details till the accounts for the year ended 31 st March 2009. The consideration in respect of the unallotted shares to the extent of 2,37,350 shares were shown under "Share Capital Suspense" and the corresponding premium under "Securities Premium suspense", pending allotment in the earlier year accounts. However, the company has allotted such shares as stated above, to the respective members, after ascertaining the details during the year and as such, suspense account balances have been transferred to the Share Capital account and Securities Premium account respectively.

2 The Capital Reserve of Rs. 73,25,779/- represents the excess of net fair value of assets over the purchase consideration in terms of scheme of amalgamation taken place during the year 2003-04, which was duly approved by the Honble High Courts ofKarnatakaand Bombay.

3. Secured Loans:

a) Term Loan and Corporate loan are secured by present future fixed assets of the company

b) Working Capital facilities are secured against the first charge on the entire and future current assets of the company.

c) The above loans are further collaterally secured by properties owned by relatives of directors and by pledge of 5 lakh shares of Kaweri Telecom Products Ltd owned by the promoter directors and by pledge of 29,200 shares of Kaveri Technologies Inc. (Canada) being the 100% stake held by the Kaweri Telecom Products Ltd.

c) Cash credit account is secured by all stock/debtors and other current assets of the Company.

d) The letter of credit facilities and bank guarantee facilities are secured against the first charge on the entire present and future current assets of the company.

e) The Car Loans are secured by hypothecation of the relevant vehicles.

f) All the secured loans excepting Car loans have been personally guaranteed by two directors.

4. Investments

a) Pursuant to the Scheme of Amalgamation as referred to in Note I above, Eaicom India Private Limited (EIPL), erstwhile 100% subsidiary company of Megasonic Telecoms Private Limited has become a wholly owned subsidiary of the Company.

b) The Company incorporated a 100% subsidiary in the name of KAWERI TECHNOLOGIES INC at Canada during the financial year 2005-06 with an initial investment of 292 Thousand CAD Dollars. Additional investment of CAD 2,015,000/-was made during the year 2007-08 in the aforesaid subsidiary by partial conversion of the loan granted to the subsidiary.

c) The Company incorporated a 100% subsidiary in the name of KAWERI TELECOM PRODUCTS UK Limited at UK during the financial year 2009-10 with no initial cost of investment.

5. The figures as on 31st March 2009 have been regrouped/reclassified, wherever necessary, to conform with the current Period classification.

6. Contingent Liabilities not provided for -

Particulars 2010 2009

Estimated amount of Contracts remaining to be executed on Capital Account. 4,48,50,000 NIL

Claims against the Company not acknowledged as a debt 245,40,216 32,32,200

On account of Excise Matters 29,89,60,660 Nil

On account of Sales tax 63,22,513 Nil

Guarantees issued by bankers on behalf 47,934,939 4,49,09,466

Note: The M/s. Mahanagar Telephone Nigam Ltd and M/s Bharat Sanchar Nigam Ltd. had invoked bank guarantees totaling to Rs. 32.32 lakhs (32.32 Lakhs) against which the company has obtained stay order in the High court of Karnataka. The Company is advised that the matter will be resolved in favor of the company in respect of the said amount and hence no provision is made in the books of accounts.

Supplementary Statutory information

7. Information regarding Capacity, Stock, Production and Sale

a) Licensed Capacity Not Applicable.

b) Installed Capacity* Company has an installed capacity of 200000 nos. of Microwave components.

Since the company has manufactured components, systems during the year, quantification of capacity is not feasible.

8. Segment Results

The companys predominant risks and returns are from the segment of "Telecommunication Accessories" represented by Antenna, Duplexer, RF Products and RF accessories, which constitute the major revenue of the company for the reporting period. Since this being a single business segment, the segment information as per Accounting Standard 17, "Segment Reporting", is not disclosed.

9. In the opinion of Board of Directors, all current assets, loans and advances have atleast the value as stated in the Balance Sheet, if realized in the ordinary course of business.

10. Pursuant to Accounting Standard AS-28- Impairment of assets issued by the Institute of Chartered Accountants of India, the Company assessed its fixed assets for impairment as at 31st March 2010 and concluded that there has been no significant impaired fixed asset that needs to be recognized in the books of account.

11. The employees Gratuity Fund Scheme is a defined benefit Plan. The present value of the obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognizes each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for Leave encashment is recognized in the same manner as gratuity.

The following table sets out the Gratuity Plan as required under AS 15. Reconciliation of opening and closing balances of the Present Value of the defined benefit obligation.

12. Micro, Small and Medium Enterprises under the Micro, Small and Medium Enterprises Development Act, 2006 have been determined based on the information available with the Company and the required disclosures are given below:

i. Principal amount remaining unpaid as on 31 th M arch 2010 Rs. -

ii. Interest due thereon as on 3 Ith M arch 2010 Rs. -

iii Interest Paid by the company in terms of Section 16 of Micro, Small and Medium Enterprises Development Act, 2006 along with the amount of the payment made to the supplier beyond the appointed day during the year ended Rs. -

iv Interest due and payable for the period of delay in making payment (which have been paid but beyond the appointed day during the quarter) but without adding the interest specified under Micro, Small and Medium Enterprises Development Act, 2006. Rs. -

v. Interest accrued and remaining unpaid as at the year ended Rs. -

vi. Further interest remaining due and payable even in the succeeding years until such date when the interest dues as above are actually paid to the Small Enterprise. Rs. -

13. Foreign currency exposure that are not hedged by derivative or forward contracts as on 31 st march 2010 amounts to Rs.269,573,011 (Rs. 20,656,421)

14. Confirmation of balances in respect of debtors and creditors has not been obtained in all the cases. Cases wherein the same has been received the balances were duly reconciled.

15. The amount of borrowing cost capitalized as fixed asset as per the requirements of AS 16 during the year Rs. Nil(Previous year Rs. 1,205,890/-)

16. Unclaimed Dividend:

The unclaimed dividend of Rs 1,095,189 represents those relating to the years 2003 to 2009 and since the number of years of these unclaimed dividends has not exceeded 7 years as at the end of this year no amounts have been transferred to Investors protection fund during the year.

17. Dividend has been provided on 10,068,980 shares, which includes 8,180 shares which have been allotted to the eligible employees under the Kaweri ESOS 2008 Scheme, subsequent to the date of the balance sheet, but before the adoption of accounts.

18. The Provision for income tax has been calculated taking into consideration investments in Capital expenditure made under Research and development eligible for a weighted deduction of 150% under section 35(2AB) of the Income Tax Act 1961.


Jun 30, 2000

1. Debtors , Creditors , Loans & Advances are subject to adjustment / reconciliation and the balances are unconfirmed.

2. In the opinion of the Management, Rs.181.33 lakhs of debtors and Rs.11.14 lakhs of advances outstanding for more than one year are considered recoverable. Hence no provision is made .

3. Contingent Liabilities not provided for :

Current Year Previous Year

On account of Bank Guarantee Rs.57,40,870/- Rs.90,20,451/-

On account of Letter of Credit Rs.50,71,831/- Rs. 6,63,818/-

On account of Sales Tax Rs. 3,13,479/- Nil

( Claims against the Company not recognised as debts )

4. In the absence of records / information , it is not possible to identify dues outstanding to Small Scale Industries.

5. License and Installed Capacities :

Licensed Capacity : N.A.

Installed Capacity

Company has installed capacity of 20000 nos. of Microwave components. Since the company has manufactured components, systems during the year, quantification of capacity is not feasible.

6 Acual production System

5156 nos ( Systems means DPG , BSS , Model I & II, HDSL) Components 5952 nos (Components includes Duplexers, power combiners, Hybrid tranformers, Yagi Antennas , Tunable Band Pass Filters and others)

7 Research & Development

Revenue expenses towards Research and Development of Rs. 3.50 lakhs ( Previous year 2.411akhs ) has been charged to Profit & Loss account under various heads of accounts.

Capital expenditure of Rs. 10.88 lakhs ( Previous year Rs .31.04 lakhs ) has been shown under fixed assets.

8 Expenditure in Foreign Currency

a) Raw Materials : Rs.1,50,64,911/-

b) Capital Goods : Rs. 6,63,790/-

c) Foreign Travel : Rs. 4,87,415/-

9. The company has provided Rs.77000/- as provision for taxation U/s 115JA of the Income Tax Act, 1961.

10. Information as per Part IV of Schedule to Companys Act ,1956 is enclosed herewith.

11. Previous Years figures have been recast /regrouped wherever necessary .

12. Current Periods figures relates to 15 months and they are not comparable with previous year figures which relates to 12 months .

 
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