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Notes to Accounts of Lycos Internet Ltd.

Mar 31, 2015

1. Quantitative Details

The Company is engaged in providing digital marketing services, development of Computer Software and services. The production and sale of such digital marketing services and software development services cannot be expressed in any generic unit. Hence, it is not possible to give the quantitative details of sales and certain information as required under Paragraphs 5 (viii)(c) of general instructions for preparation of the Statement of Profit and Loss as per Schedule III to the companies Act,2013.

2. Related Party Transactions

During the financial year 2014-15 the Company has entered into some transactions, which can be deemed as related party transactions. All these matters have been approved by the Board and the Govt. of India, wherever necessary.

(a) Related Parties

S. Particulars Nature of Relationship No

1 M.Suresh Kumar Reddy Chairman and Managing Director

2 Vijay Kancharla Director

3 Yreach Media Private Limited, India 99% Owned Subsidiary

4 Frontier Data Management Inc. USA Wholly Owned Subsidiary

5 International Expressions Inc. USA Wholly Owned Subsidiary

6 Online Media Solutions Limited, Israel Wholly Owned Subsidiary

7 Ybrant Media Acquisition Inc. USA Wholly Owned Subsidiary

8 Dyomo Corporation, USA Wholly Owned Subsidiary

9 Max Interactive Pty, Ltd., Australia Wholly Owned Subsidiary

10 DreamAd, Argentina Wholly Owned Subsidiary

11 DreamAd, Chile Wholly Owned Subsidiary

12 Get Media Mexico Sociedad Anonima De Wholly Owned Subsidiary Capital Variable, Mexico

13 DreamAd, Panama Wholly Owned Subsidiary

14 DreamAd, Uruguay Wholly Owned Subsidiary

15 Ybrant Digital Servicos De Wholly Owned Subsidiary Publiciade Ltda, Brasil

16 Ybrant Digital (Brasil) Ltd., Wholly Owned Subsidiary Singapore

17 LGS Global FZE, UAE Wholly Owned Subsidiary

18 Lycos Inc. Stepdown Subsidiary

19 Ybrant Employees welfare Trust Directors acting as Trustees

20 LGSL Foundation Trust Directors acting as Trustees

3. Operating Lease

The company has taken for its office premises on lease under operating lease agreement that is renewable on a periodic basis at the option of the both the lessor and the lessee. Rental expenses under those leases were Rs.3,88,11,587/- and for the previous year Rs.3,92,88,628/-

In case of Foreign exchange fluctuation profit / loss as per AS 11 the Branch and head office is having integral transactions and hence profit / loss debited to P & L a/c. The receivables have been considered at the actual rate at which the amount is realized and accordingly Gain from Foreign Exchange fluctuation and Integral transactions of Rs. 9,70,13,182/- (net) has been reflected in Profit and Loss Account for theYear.(Previous year Rs. 3,00,19,651).

4.Intra branch Transactions

The Intra Branch transactions have been eliminated while preparing the financial statements.

5. Dues to Micro & Small Enterprises

There are no overdue principle amounts and interest thereon payable to Micro Enterprises and Small Enterprises, as at 31-03-2015.

6. Confirmation of Closing Balances

Closing Balances ofthe Debtors, Creditors & Loans and Advances are subject to Confirmations

7. Segment Reporting:

The Company is mainly engaged in the area of providing Software Development Services and Digital Marketing and related services.

The company publishes standalone financial statements along with the consolidated financial statements in the annual report. In accordance with the AS-17, Segment Reporting, the company has disclosed the Segment information in the consolidated financial statements.

8. Contingent Liabilities & Guarantees

(i) Unsecured loans from Related Parties:

Particu|ars Name of the Bank / Party

Corporate Guarantee for Daum Global Holdings Corp, Acquiring Lycos Inc (USD Republic of Korea 4 Mn)

Corporate Guarantee for ICICI Bank Limited, New Foreign Currency Term York Branch, USA(i) Loan (FCTL) (USD 10Mn)

Bank Guarantees for Axis Bank, S.R.Nagar Branch, Tender Participation & Hyderabad, Telangana, India (ii) Performance Guarantees

Bank Guarantees for ICICI Bank, Jubilee Hills Branch, Performance Guarantees Hyderabad, Telangana, India

Inland Letter of Credit for Axis Bank, S.R.Nagar Branch, purchase of Software Hyderabad, Telangana, India products.

Corporate Guarantee Lakshmi Vilas Bank.D No 8-3-248/1/7/7 given for the loan taken & 8,Nagarjuna Hills Main Road, by Tesla Projects Private Panjagutta HyderabadTelangana,, Limited. India (iii)

Disputed Service tax Appeal made to Central Excise & Liability for the period Service Tax Appellate Tribunal, May 2008 to Bangalore September 2011

Disputed Income Tax Appeal Made to CIT(Appeals)ITAT, Liability from A.Y.2006 Hyderabad -07 to A.Y 2010-11

Disputed Sales Tax Appeal made to Sales Tax liability for the A.Y.2010-11 Appellate Tribunal, Hyderabad (iv)

SE Investments Loan SE Investments Mumbai (v)

Particu|ars Year Ended Year Ended 31st March, 2015 31st March, Rupees 2014 Rupees

Corporate Guarantee for 25,03,60,000 24,04,00,000 Acquiring Lycos Inc (USD 4 Mn)

Corporate Guarantee for NIL 60,10,00,000 Foreign Currency Term Loan (FCTL) (USD 10Mn)

Bank Guarantees for NIL 90,00,000 Tender Participation & Performance Guarantees

Bank Guarantees for 27,72,278 NIL Performance Guarantees

Inland Letter of Credit for NIL 3,10,00,000 purchase of Software products.

Corporate Guarantee NIL 1,90,00,000 given for the loan taken by Tesla Projects Private Limited.

Disputed Service tax 14,60,05,131 14,60,05,131 Liability for the period May 2008 to September 2011

Disputed Income Tax 20,13,55,044 3,87,72,490 Liability from A.Y.2006 -07 to A.Y 2010-11

Disputed Sales Tax NIL 4,12,35,944 liability for the A.Y.2010-11

SE Investments Loan 1,01,23,233 NIL

* Assumption: 1 USD = Rs.62.59 (Closing rate as on 31st March 2015)

(I) The Loan taken by the Ybrant Media Acquisition Inc. USA (Wholly owned subsidiary) to which corporate guarantee was given by the company, has been closed during the year under consideration. However the NOC was yet to be received from ICICI Bank.

(II) The BG is closed and there was no liability as on 31st March,2015. NOC yet to be received from bank.

(III) This BG was closed & there was no liability as on 31st March,2015 The bank has given NOC and necessary filings are yet to be done.

(IV) The Appeal made to Sales Tax Appellate Tribunal has been disposed off during the year and there was no liability as on 31st March, 2015.

(V) The loan facility from SE Investments limited is secured by pledge of shares of held by the promoters and the personal guarantee of the promoterdirectors. Principal loan amount was repaid. The penalty & delay charges are yet to be paid . Negotiations are in process to reduce and settle the account.

9. Depreciation on Fixed Assets

(A) In accordance with provisions of Schedule II of Companies Act 2013, in case of fixed assets which have completed the useful life as at 31st march 2014,the carrying value as on 1.04.2014 amounting to Rs.3,31,27,074/- has been recognized in the Retained earnings as a transitional provision. Further in case of assets acquired prior to 1st April, 2014,whose useful life exists, the carrying value of assets is depreciated over the remaining useful life as specified in the companies Act, 2013 effective1st April, 2014

(B) Consequent to the implementation of the provisions of the Schedule II of the Companies Act, 2013, the depreciation and amortization expenses for the year increased by Rs.5,84,41,466.

(C) During the year the company has made adjustments relating to Intangible assets worth Rs.67,68,72,873/- which were totally amortized up to 31st March 2014.The same has been removed from the gross block and accumulated depreciation accordingly in the current financial year 2014-15.

(D) The useful life of the lease hold building is complete and the asset is no longer useful. Hence the value of the same for Rs.31,69,690/-has been transferred is to Retained earnings.

10. The Term loan from SBI of Rs.400 Lakhs was repaid during the year. However the necessary filings are yet to be made with ROC.

11. The filing of satisfaction charge with ROC, for the Term Loan taken from ICICI bank amounting to Rs.3000 Lakhs was not done, due to non-receipt of NOC from the Bank.

12. The filing of satisfaction charge with ROC, for the Loan taken from SBI Global Factors Ltd amounting to Rs.1750 Lakhs was not done, due to non-receipt of NOC from the Bank.

13. During the financial year 2014 - 15 the Company has repaid Rs. 19.21Crores of debt. In the process there were a few delays / defaults in repayments of dues to banks and financial institutions. Such amounts with respect to interest payment were Rs. 15.79 Crores and in respect of principal repayment amounting to Rs10.23 Crores. Interest payments were related to interests on working capital and term loans. Principal repayments were related to term to term loan instalments. The primary cause of such occurrences was due to international group operations and difficulties in moving the cash flows to India.

14. The figures of pervious year have been regrouped wherever necessary.

15. The figures have been rounded off to the nearest rupee.


Mar 31, 2014

Long Term Borrowing

Notes:

Note No. 4(a): Term Loan of Rs. 400 lakhs from State Bank of India are secured by current assets, Fixed Assets, Pledge of Promoters shares immovable properties and personal guarantee of Promoter Directors. During the year CC limit from SBI was converted into WDCL hence the same is included in the Long term borrowings.

Note No. 4(b): Term Loan of Rs. 450 lakhs from Canara Bank are secured by current assets, Fixed Assets, Pledge of Promoters shares and personal guarantee of Promoter Directors

Short Term Borowings

Notes:

Note No 8(a): Working Capital of Rs 4500 lakhs and Bank Guarantee LC of Rs 400 Lakhs and Rs 200 lakhs Loan Equivalent Risk (LER) from Axis Bank Ltd are secured by charge on current assets, Fixed Assets, Pledge of promoters, immovable properties shares and personal Guarantee of Promoter Directors.

Note No 8(b):Working Capital of Rs 3000 Lakhs, and Bank Guarantee of Rs 1000 lakhs from State Bank of India are secured by Current Assets, Fixed Assets, Pledge of Promoters shares, Immovable property and personal guarantee of Promoter Directors

Note No 8(c):Working Capital of Rs 3500 lakhs and Bank Guarantee of Rs 1000 Lakhs from Canara Bank are secured by charge on Current Assets, Fixed Assets, Pledge of promoters shares, immovable property and personal guarantee of Promoter Directors.

Quantitative Details:

The Company is engaged in the development of Computer Software and services. The production and sale of such software and services cannot be expressed in any generic unit. Hence, it is not possible to give the quantitative details of sales and the Information as required under Paragraphs 3 and 4C of Part II of Schedule VI to the Companies Act, 1956.

Disclosure on Related Party Transactions:

During the financial year 2013-14 the Company has entered into some transactions, which can be deemed as related party transactions. All these matters have been approved by the Board and the Govt. of India, wherever necessary.

Operating Lease:

The company has taken its office premises on lease under operating lease agreement that is renewable on a periodic basis at the option of the both the lessor and the lessee. Rental expenses under those leases were Rs. 39,288,628/- and for the previous year Rs. 58,821,733/-.

* In case of Foreign exchange fluctuation profit / loss as per AS 11 the Branch and head office is having integral transactions and hence profit / loss debited to P & L a/c. The receivables have been considered at the actual rate at which the amount is realized and accordingly Gain from Foreign Exchange fluctuation and Integral transactions of Rs. 30,019,651/- (net) has been reflected in Profit and Loss Account for the Year.

Segment Reporting:

The Company is mainly engaged in the area of providing Software Development Services and Digital Marketing and related services. The company publishes standalone financial statements along with the consolidated financial statements in the annual report. In accordance with the AS-17, Segment Reporting, the company has disclosed the Segment information in the consolidated financial statements.

Intra branch Transactions:

The Intra Branch transactions have been eliminated while preparing the financial statements.

Dues to Micro & Small Enterprises:

There are no overdue principle amounts and interest thereon payable to Micro Enterprises and Small Enterprises, as at 31-03-2014.

Confirmation of Closing Balances:

Closing Balances of Debtors, Creditors, Loans and Advances are subject to confirmations.

Contingent Liabilities & Guarantees:

Particulars Name of the Bank / Party

Corporate Guarantee for Acquiring Daum Global Holdings Corp, Republic Lycos Inc (USD 4 Mn) of Korea

Corporate Guarantee for Foreign ICICI Bank Limited, New York Branch, Currency Term Loan(FCTL) (USD 10Mn) USA

Bank Guarantees for Tender Partic- Axis Bank, S.R.Nagar Branch, ipation & Performance Guarantees Hyderabad, Andhra Pradesh, India

Inland Letter of Credit for Axis Bank, S.R.Nagar Branch, purchase of Software products Hyderabad, Andhra Pradesh, India

Foreign Letter of Credit for Canara Bank, Prime Corporate Branch, Purchase of Software Products Secunderabad, Andhra Pradesh, India (USD 0.9 Mn)

Corporate Guarantee given for the Lakshmi Vilas Bank. D No loan taken by Tesla Projects 8-3-248/1/7/7 & 8, Anjani Cement Private Limited Centre Nagarjuna Hills Main Road, Panjagutta Hyderabad Andhra Pradesh, India

Disputed Service Tax Liability for Appeal made to Central Excise & the period May 2008 to September Service Tax Appellate Tribunal, 2011 Bangalore

Disputed Income Tax Liability for Appeal made to CIT(Appeals), the A.Y 2009-10 Hyderabad

Disputed Sales Tax Liability for Appeal made to Sales Tax Appellate the A.Y 2010-11 Tribunal, Hyderabad



Particulars Year Ended Year Ended March 31, 2014 31 March, 2013

Corporate Guarantee for Acquiring 24,04,00,000 21,75,60,000 Lycos Inc (USD 4 Mn)

Corporate Guarantee for Foreign 60,10,00,000 54,39,00,000 Currency Term Loan(FCTL) (USD 10Mn)

Bank Guarantees for Tender Partic- 90,00,000 90,00,000 ipation & Performance Guarantees

Inland Letter of Credit for 310,00,000 3,10,00,000 purchase of Software products

Foreign Letter of Credit for NIL 4,89,51,000 Purchase of Software Products (USD 0.9 Mn)

Corporate Guarantee given for the 1,90,00,000 1,90,00,000 loan taken by Tesla Projects Private Limited

Disputed Service Tax Liability for 14,60,05,131 NIL the period May 2008 to September 2011

Disputed Income Tax Liability for 3,87,72,490 3,87,72,490 the A.Y 2009-10

Disputed Sales Tax Liability for 4,12,35,944 4,12,35,944 the A.Y 2010-11

* Assumption: 1 USD = Rs.60.10 (Closing rate as on 31st March 2014)

* During the year under consideration, the company has valued its Intangible assets and has recognized impairment loss on the following Intangible Assets during the Financial Year 2013-14:

i. Goodwill arised on Merger in the year 2011-12 for Rs. 9,72,99,911 with an accumulated depreciation of Rs. 1,94,59,982 at the beginning of the year, has been valued and an Impairment Loss of Rs. 7,78,39,929 has been recognized in the books of the company during the financial year.

ii. Computer Products/Rights acquired during the year''s 2010-11 & 2011-12 having Gross Block of Rs. 33,68,09,464 with an accumulated depreciation of Rs. 5,45,01,850 on 1st April, 2013 has been valued and an Impairment Loss of Rs. 28,23,07,614 is recognized in the books of accounts.

iii. Other Intangible Assets acquired in the year 2009-10, having Gross Block of Rs. 18,14,45,503 and Accumulated Depreciation of Rs. 5,92,61,552 as on 01st April, 2013 has been valued and the Impairment Loss of Rs. 12,21,83,951 is recognized in the Books of the Company.

* The figures of previous year have been regrouped wherever necessary.

* The figures have been rounded off to the nearest rupee.


Mar 31, 2013

Company Overview:

Ybrant Digital Limited, offers digital marketing solutions to businesses, agencies and online publishers worldwide. Ybrant Digital connects Advertisers with their Audience across any form of Digital Media, using its massive local presence to deliver appropriate messages to the right audience, through the most relevant Digital channels. Ybrant Digital has a global presence, with offices in over 24 countries.

Ybrant Digital Limited is also a Global Information Technology Implementation and Outsourcing Services Provider with an exceptional track record of providing high quality, on-budget, and on-time solutions to demanding clients. Our business knowledge in key verticals helps us provide solutions that arc customized to address the specific needs while focusing on maximizing value of Information Technology investments such that clients can achieve their business objectives. We believe in fostering long-term relationships, and partner with our clients in their success. Ybrant Provides End-to-end Enterprise Solution Offerings and Specializing in ERP Solutions, Microsoft and Open Source Systems development.

Basis of Preparation:

The financial statements have been prepared to comply in all material respects with the accounting standards notified by Companies Accounting Standards Rules, 2006 and the relevant provisions of the Companies Act, 1956 (''the Act"). The financial statements have been prepared under historical cost convention on an accrual basis in accordance with accounting principles generally accepted in India. The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year:

Use of Estimates:

The preparation of financial statements is in conformity with generally accepted accounting principles require the management to make estimates and assumptions mat affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the result of operations during the reporting period. Although these estimates are based upon management''s best knowledge of current events and actions, actual results could differ from these estimates. Significant estimates used by the management in the preparation of these financial statements include estimates of the economic useful lives of fixed assets and provisions for bad and doubtful debts. Any revision to accounting estimates is recognized prospectively.

Foreign Currency Outflows:

Foreign Exchange outflows as reported by the Company to Government of India and as certified by Management.

Foreign Currency Inflows:

Foreign Exchange inflows as reported by the Company to Government of India and as certified by Management.

In case of Foreign exchange fluctuation profit / loss as per AS 11 the Branch and head office is having integral transactions and hence profit / loss debited to P & l.a/c. The receivables have been considered at the actual rate at which the amount is realized and accordingly Gain from Foreign Exchange fluctuation and Integral transactions of Rs.8,73,48,776 /-(net) has been reflected in Profit and J-oss Account for the Year.

1.Segment Reporting:

The Company is mainly engaged in the area ofproviding Software Development Services and Digital Marketing and related services.

The company publishes standalone financial statements along with the consolidated financial statements in the annual report. In accordance with the AS-17, Segment Reporting, the company has disclosed the Segment information in the consolidated financial statements.

2. Intra branch Transactions:

The Intra Branch transactions have been eliminated while preparing the financial statements.

3. Dues to Micro & Small Enterprises:

There are no overdue principle amounts and interest thereon payable to Micro Enterprises and Small Enterprises, as at 31-03-2013.

4. Confirmation of Closing Balances:

Closing Balances of Debtors, Creditors, lx>ans and Advances are subject to confirmations.

5. Bad Debts written off: during the financial year 2012-13, the Company has written off an amount of Rs.59.93 Crores as bad debts

6. The figures of previous year have been regrouped wherever necessary.

7. The figures have been rounded off to the nearest rupee.


Mar 31, 2010

1 Particulars of Employees in accordance with Sub section (2A) of Section 217 of the Companies Act, 1956 read with Companies(Particulars of Employees) Rule 1975 as amended, forms part of this report.

2. The Company is engaged in the development of Computer Software and services. The production and sale of such software and services cannot be expressed in any generic unit. Hence, it is not possible to give the quantitative details of sales and the information as required under Paragraphs 3 and 4C of Part II of Schedule VI to the Companies Act, 1956.

3. The Company has debited the amount of Rs. 1,22,63,600/- towards the one fifth Goodwill written off for the year 2009-10 being the goodwill arised on merger of Lanco Global Systems Inc.

4. All Investments are unquoted Equity Shares. Investment include additional investment of Rs 50.17 Crores in Global IT Inc an 100% subsidiary of LGS Global Limited

5. In case of Foreign exchange fluctuation profit / loss as per AS 11 the Branch and head office is having integral transactions and hence profit / loss debited to P & L a/c.The receivables have been considered at the actual rate at which the amount is realized and accordingly Loss from Foreign Exchange fluctuation and Integral transactions of Rs.37,685,320/- (net) has been reflected in Profit and Loss Account for the Year.

6. The Intra Branch transactions have been eliminated while preparing the financial statements.

7. There are no dues to SSI Units outstanding for more than 30 days.

8. Balances relating to debtors/creditors are subject to Confirmations.

9. In accordance with Accounting Standard 22 (AS 22) issued by the ICAI, the Company has accounted for deferred income tax during the year. The deferred income tax provision for the current year amounts to Rs. 24,95,479/- towards deferred income tax liability. (Previous year Rs11,43,613/- towards deferred income tax Liability.).

10. Tech orbit Inc, Global It Inc and LGS Global FZE are wholly owned subsidiaries of LGS Global Limited. During the current year there are no operations in LGS Global FZE.

11. The Term Loan Amounting to Rs.500 Lacs, Working Capital of Rs 4500 lakhs and Bank Guarantee of Rs 400 Lakhs from Axis Bank Ltd are secured by charge on current assets, Fixed Assets, Pledge of promoters shares and personal Guarantee of Promoter Directors. The Factoring facility of Rs 1750 lakhs from SBI Global Factors Ltd is secured by the hypothecation of Book Debts present and future on all the approved debtors as mentioned in the sanction letter and Personal guarantee of Directors and Corporate guarantee from their company.Working Capital of Rs 3000 Lakhs, Term Loan of Rs. 400 lakhs and Bank Guarantee of Rs 1000 lakhs from State Bank of India are secured by current assets, Fixed Assets, Pledge of Promoters shares and personal guarantee of Promoter Directors.

12. Contingent liability of Rs 27,00,000/- as on 31st March 2010 towards Bank Guarantee given to different parties for Tender participation

13. Dividend as recommended by the Board of Directors is provided for in the accounts pending shareholders/ lending institutions approval. The provision for current dividend tax is provided in the accounts

14. Previous years figures have been regrouped wherever necessary.

15. The figures have been rounded off to the nearest rupee.

 
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