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Notes to Accounts of Mastek Ltd.

Mar 31, 2015

1. General information

Mastek Limited (the ''Company'') is a public limited company domiciled in India and is listed on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). The Company is a provider of vertically-focused enterprise technology solutions and platforms in Insurance (Life, Pensions and General), Government / Public Sector and Financial Services Sectors. Following the Company''s decision to demerge its Insurance Products and Services business through a court scheme (Refer note 44), that business has been treated as a discontinuing operation in these financial statements from the proposed appointment date of April 1, 2014.

The Company''s offering portfolio includes business and technology services comprising IT Consulting, Application Development, Systems Integration, Application Management Outsourcing, Testing, Data Warehousing and Business Intelligence, Application Security, CRM services and Legacy Modernisation. The Company operates through its offshore software development centres at Mumbai, Pune, Chennai and Mahape and through its subsidiaries / branch in U.S., Canada, U.K. and Asia-Pacific.

2. Contingent liabilities

As at As at March 31, 2015 March 31, 2014

Corporate performance guarantees given by the Company on behalf ofthe following subsidiaries:

(a) Majesco Canada Limited (Formerly - MajescoMastek Canada Limited) 7,354.88 7,837.96

(b) Majesco (Thailand) Co. Ltd. [Formerly -Mastek MSC (Thailand) Co. Ltd.] 1,562.50 1,497.88

(c) Mastek (UK) Limited 8,386.12 9,047.71 Corporate guarantees given by the Company on behalfofthe following subsidiary:

(a) Majesco, USA foritstermloan 1,875.00 - Standby letter of credit given by the Company on behalf of following subsidiary:

(a) Majesco, USA for its Line of credit for working capital loan from Bank 918.75 -

Claims against Company not acknowledged as debts

(a) Sales tax matter 173.77 -

(i) The Company does not expect any cash outflows or any reimbursements in respect of the above contingent liabilities.

(ii) It is not practicable for the Company to estimate the timing of cash outflows, if any, in respect of the above, pending occurrence of the default event or resolution of respective proceedings.

3. Employee Stock Option Scheme

(a) Nature and extent of employee share-based payment plans that existed during the year:

i. Plan III

The Company passed special resolutions at its Annual General Meeting held on September 20, 2004 approving the allocation of 700,000 stock options to the eligible employees of the Company and its subsidiaries.

The Company subsequently established a new scheme in 2004 for granting 700,000 stock options to the employees referred to above, each option representing one equity share of the Company. The exercise price is as governed by the guidelines issued by SEBI. The scheme is governed by the Employee Stock Option Scheme and Employee Stock Purchase Guidelines issued in 1999 by SEBI and as amended from time to time. The first vesting of the stock options shall happen only on completion of one year from the date of grant and the options are exercisable within two years from the date of vesting. As per the SEBI guidelines, the excess of market price of the underlying equity shares as of the date of the grant of the options over the exercise price of the option is to be recognized and amortized on a straight line basis over the vesting period. No options have been granted under the scheme at below market price and consequently, there is no compensation cost in the current year. In April, 2006 the Company issued Bonus Shares in the ratio of 1:1 and the number of unvested and unexercised options and the price of the said options have been adjusted accordingly.

ii. Plan IV

The Shareholders of the Company through Postal Ballot on August 9, 2007 approved the allocation of 1,000,000 stock options to the eligible employees of the Company and its subsidiaries.

The Company subsequently established a new scheme in 2007 for granting 1,000,000 stock options to the employees referred to above, each option representing one equity share of the Company. The exercise price is as governed by the guidelines issued by SEBI. The scheme is governed by the Employee Stock Option Scheme and Employee Stock Purchase Guidelines issued in 1999 by SEBI and as amended from time to time. The first vesting of the stock options shall happen only on completion of one year from the date of grant and the options are exercisable within two years from the date of vesting. During the year ended June 30, 2011, the Company has extended the vesting period from two years to seven years. As per the SEBI guidelines, the excess of market price of the underlying equity shares as of the date of the grant of the options over the exercise price of the option is to be recognized and amortized on a straight line basis over the vesting period. No options have been granted under the scheme at below market price and consequently, there is no compensation cost in the current year.

iii. Plan V

The Company introduced a new scheme in 2008 for granting 1,500,000 stock options to the employees, each option representing one equity share of the Company. The exercise price as may be determined by the Nomination & Remuneration Committee ("Committee") and such price may be the face value of the share from time to time or may be the Market Price or any price as may be decided by the Committee and will be governed by the guidelines issued by SEBI. The scheme is governed by the Employee Stock Option Scheme and Employee Stock Purchase Guidelines issued in 1999 by SEBI and as amended from time to time. The first vesting ofthe stock options shall happen only on completion of one year from the date of grant and the options are exercisable within seven years from the date of vesting. As per the SEBI guidelines, the excess of market price of the underlying equity shares as of the date of the grant of the options over the exercise price of the option is to be recognized and amortized on a straight line basis over the vesting period. During the financial year ended June 31,2011, 50,000 options were granted at price less then the market price. There is no compensation cost in the current year, as the cost of discounted options has been charged off in earlier years.

iv. Plan VI

The Company introduced a new scheme in 2010 for granting 2,000,000 stock options to the employees, each option representing one equity share of the Company. The exercise price as may be determined by the Committee and such price may be the face value of the share from time to time or may be the Market Price or any price as may be decided by the Committee and will be governed by the guidelines issued by SEBI. The scheme is governed by the Employee Stock Option Scheme and Employee Stock Purchase Guidelines issued in 1999 by SEBI and as amended from time to time. The first vesting of the stock options shall happen only on completion of one year from the date of grant and the options are exercisable within seven years from the date of vesting. As per the SEBI guidelines, the excess of market price of the underlying equity shares as of the date of the grant of the options over the exercise price of the option is to be recognized and amortized on a straight line basis over the vesting period. During the year ended March 31, 2015, 256,957 options have been granted under the scheme at below market price. Consequently, the amortised compensation cost for the exercisable options is Rs. 96.06, out of which Rs. 82.67 have been charged to the subsidiaries based on the employees where they are employed and balance of Rs. 13.39 have been charged to the statement of profit and loss during the current year.

v. Plan VII

The Company introduced a new scheme in 2013 for granting 2,500,000 stock options to its employees, employees of its subsidiaries and its Independent Directors, each option giving a right to apply for one equity share of the Company on its vesting. The exercise price as may be determined by the Committee and such price may be the face value of the share from time to time or may be the Market Price or any price as may be decided by the Committee and will be governed by the guidelines issued by SEBI. The scheme is governed by the Employee Stock Option Scheme and Employee Stock Purchase Guidelines issued in 1999 by SEBI and as amended from time to time. The first vesting of the stock options shall happen only on completion of one year from the date of grant and the options are exercisable within seven years from the date of vesting. As per the SEBI guidelines, the excess of market price of the underlying equity shares as of the date of the grant of the options over the exercise price of the option is to be recognized and amortized on a straight line basis over the vesting period. During the year ended March 31, 2015, 46,373 options have been granted under the scheme at below market price. Consequently, the amortised compensation cost for the exercisable options is Rs. 35.69. The entire cost have been charged to the subsidiaries based on the employees where they are employed and Rs. Nil have been charged to the statement of profit and loss during the current year.

(b) The Company has adopted the intrinsic value method as permitted by the SEBI Guidance Note on Accounting for Employee Share Based Payment issued by the Institute of Chartered Accountants of India for measuring the cost of stock options granted.

The Company''s net profit and earnings per share would have been as under, had the compensation cost for employees stock options been recognised based on the fair value at the date of grant in accordance with Black Scholes model.

4. Income Taxes

(a) In accordance with the Indian Income Tax Act, the Company has calculated its tax liability after considering Minimum Alternate Tax (MAT). Payments under MAT can be carried forward and set off against future tax liability for a period of ten years. Accordingly, a sum of Rs. 2,694.26 (Previous year Rs. 3,100.53) has been carried forward and shown under''Long-term loans and advances'' (Refer note 13).

(b) The Company had received tax demands aggregating to Rs. 2,835.05 (including interest of Rs. 853.09) primarily on account of transfer pricing issues for the assessment years 2006-07 to 2011-12. For the assessment year 2006-07 and assessment year 2007-08, the second appellate authority (the Income Tax Appellate Tribunal) has allowed these issues in favour of the company and the income tax authorities have hied an appeal with the Honourable High Court. For the assessment years 2008-09 and assessment year 2009-10, the first appellate authority (the Commissioner of Income tax (Appeals)) has allowed most of these issues in favour of the company. For the assessment years 2010-11 and 2011-12 the matter is pending before the first appellate authority (the Commissioner of Income tax (Appeals)).

Considering the facts, materiality and favourable order of the second appellate authority for assessment years 2006-07 and 2007-08 and the first appellate authority for 2008-09 and 2009-10, the management believes that the final outcome of majority of the above disputes for the remaining years should be in favour ofthe Company and there should not be any material impact on the financial statements.

5. Related Party Disclosures

A. Enterprises where control exists

Subsidiaries / step down subsidiaries - wholly owned, except as indicated: Majesco (Formerly - MajescoMastek), USA (83.50% held by the Company); Mastek UK Ltd., UK; Mastek Asia Pacific Pte. Ltd., Singapore; Majesco Sdn. Bhd., Malaysia (Formerly - Mastek MSC Sdn. Bhd.); Majesco Canada Limited, Canada (Formerly - MajescoMastek Canada Limited); Majesco (Thailand) Co. Ltd., Thailand (Formerly - Mastek MSC (Thailand) Co. Ltd.); Majesco Software and Solutions Inc., USA (Formerly - MajescoMastek Insurance Software and Solutions Inc.), Vector Insurance Services LLC, USA (Merged with Majesco USA w.e.f March 5, 2015), Minefields Computers Limited, India (99.99% held by the Company) and Majesco Software and Solutions India Private Limited, India.

B. Other related parties with whom the Company had transactions during the year

Key Management Personnel: Sudhakar Ram

Radhakrishnan Sundar

Vinay Rajadhyaksha (up to August 13, 2014)

Stefan Van Overtveldt (up to April 30, 2014)

Farid Kazani

Kalpana Jaishankar (up to March 31, 2015)

6. Segment reporting

The Company has presented data relating to its segments in its consolidated financial statements which are presented in the same annual report as Mastek Limited. In terms of provisions of Accounting Standard (AS) 17 - ''Segment Reporting'', no disclosures related to segments are therefore presented in these stand-alone financial statements.

7. Micro, Small and Medium Enterprises

Disclosure of payable to vendors as defined under the "Micro, Small and Medium Enterprise Development Act, 2006" is based on the information available with the Company regarding the status of registration of such vendors under the said Act, as per the intimation received from them on requests made by the company. There are no overdue principal amounts / interest payable amounts for delayed payments to such vendors at the Balance Sheet date. There are no delays in payment made to such suppliers during the year or for any earlier years and accordingly there is no interest paid or outstanding interest in this regard in respect of payments made during the year or on balance brought forward from previous year.

8. Acquisition of Minefields Computers Limited, India

During the year, the Company purchased 10,000 equity shares (including 6 equity shares purchased jointly with other shareholders) of face value of Rs. 10/- each of Minefields Computers Limited ("Minefields) for a total consideration of Rs. 1. Further, the Company has subscribed to 40,000 additional equity shares of Minefields of Rs. 10/- each for a total consideration of Rs. 4. Thus the total shareholding of the Company in Minefields at March 31, 2015 amounts to 50,000 equity shares of Rs. 10/- each for a total consideration of Rs. 5 [Refer note 11(b)].

9. Other than temporary decline in the value of Investment in Majesco Canada Limited, Canada During the previous year ended March 31, 2014 based on the review of the operations and the expected cash flow of its wholly owned subsidiary, Majesco Canada Limited (Formerly - MajescoMastek Canada Limited), Canada ("MCAN"), the Management of the Company had determined and accounted an other than temporary decline in the carrying value of this investment amounting to Rs. 1,555.01 [Refer note 11(b)].

10. Sale of Investment in Majesco Canada Limited, Canada (formerly MajescoMastek Canada Limited, Canada)

During the year, the Company sold its entire holding of 3,500,000 equity shares of Majesco Canada Limited, Canada ("MCAN") (a wholly owned subsidiary before this sale) to Majesco, USA (a wholly owned subsidiary) for a total consideration of Rs. 439.47. This sale resulted in a gain of Rs. 439.47, as the carrying value of MCAN in the books of Mastek was reduced to nil, considering the provision for other than temporary decline in value of Rs. 1,555 made in earlier year (Refer note 40). The Gain has been included under the heading "exceptional items" in the Statement of Profit and Loss (Refer note 28).

11. Purchase of Investment in Majesco, USA (formerly MajescoMastek, USA)

During the year, the Company purchased 24,765,750 equity shares of Majesco, USA from Mastek (UK) Limited for a total consideration of Rs. 3,024.79 (USD 4,953 K). Subsequent to purchase, Mastek Limited holds 83.5% of Majesco and the balance 16.5% is held by Mastek (UK) Limited.

12. Sale of Investment in Majesco Sdn. Bhd., Malaysia (formerly Mastek MSC Sdn. Bhd., Malaysia)

During the year, the Company sold its entire holding of 11,262,000 equity shares of Majesco Sdn. Bhd., Malaysia ("MSC") (a wholly owned subsidiary before this sale) to Majesco, USA (a wholly owned subsidiary) for a total consideration of Rs. 2,042.94. This sale resulted in a gain of Rs. 599.52 to the Company which has been included under the heading "exceptional items" in the Statement of Profit and Loss (Refer note 28).

13. Pursuant to the Scheme of Arrangement (the " Scheme") under Sections 391 to 394 read with Sections 100 to 103 and other applicable provisions of the Companies Act, 1956 and other applicable provisions of the Companies Act, 2013, the Board of Directors of Mastek Limited (the "Company" or "Mastek"), in its meeting held on September 15, 2014, had approved the demerger of the Insurance Products and Services business of the Company, into a new wholly owned subsidiary, Minefields Computers Limited ("Minefields"), to be renamed as Majesco Limited ("Majesco India"), to be followed by transfer by Majesco India of the offshore insurance operations business in India to Majesco Software and Solutions India Private Limited ("MSSIPL"), a wholly owned subsidiary of Majesco Software and Solutions Inc., USA ("MSSUS"). The Appointed date of the Scheme will be April 1, 2014 or any other date as decided by the Board of Directors and the appointed date for the offshore insurance operations business transfer will be November 1, 2014 or any other date as decided by the Board of Directors - both these dates will be subject to the approval of the Hon''ble High Court of Bombay and Hon''ble High Court of Gujarat. On approval of the Scheme by the respective High Courts, Mastek shareholders will get one equity share of Majesco India for every share held in Mastek, over and above their existing Mastek shares. Majesco India is proposed to be listed on the BSE and NSE, being exchanges where Mastek is currently listed. Under the proposed restructuring, Mastek will continue with the Solutions business. The company has obtained the necessary approval for the scheme under Clause 24 (f) of the Listing Agreements with BSE and NSE from SEBI on December 9, 2014 and is in the process ofobtaining requisite approval from the respective High Courts.

As the Company''s Board has approved the demerger scheme of the Insurance Products and Services business (the "Transferred Undertaking") of the Company and an announcement of the same has been made, the Company has treated the Transferred Undertaking as a discontinuing operation with effect from the proposed appointed date of the scheme i.e April 1, 2014. The demerger will result in transfer of the assets and liabilities and Indian and global operations relevant to the Transferred Undertaking and the Company''s investment in Majesco, USA to Minefields Computers Limited (to be renamed as Majesco Limited), the ultimate holding company of the Transferred Undertaking. The Transferred Undertaking predominately relates to the Insurance business vertical, reported under the secondary segment reporting by the Company in its consolidated financial statements. The existing shareholders of Mastek will be the shareholders of both the businesses post the demerger, through their shareholdings in two separate listed companies viz. Mastek Limited and Majesco Limited, subject to court and regulatory approvals.

14. Previous year figures have been regrouped or reclassified wherever necessary.


Mar 31, 2014

1. Provisions and Contingent Liabilities

Provisions are recognised when the Company has a present obligation as a result of past events, for which it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount can be made. A disclosure for a contingent liability is made where there is a possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the Company or a present obligation that arises from the past events where it is either not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount cannot be made. Provisions are reviewed regularly and are adjusted where necessary to reflect the current best estimates of the obligation. Where the Company expects a provision to be reimbursed, the reimbursement is recognized as a separate asset, only when such reimbursement is virtually certain.

2. Cash and Cash Equivalents

Cash and cash equivalents include cash in hand, demand deposits with banks and other short term highly liquid investments with original maturities of three months or less.

(b) Rights, preferences and restrictions attached to shares

The Company has one class of equity shares having a par value of Rs. 5/- per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

Shares bought back during the year ended March 31, 2014 :

At the meeting of the Board of Directors of the Company held on January 08, 2014, the Board had given consent for the buy back of Company''s fully paid up equity shares of Rs. 5/- each from existing shareholders and beneficial owners in accordance with the relevant provisions of Companies Act, 1956 and Securities and Exchange Board of India (Buy Back of Securities) Regulations, 1988 for an amount not exceeding Rs. 5,450 and for a price not exceeding Rs. 250/- per equity share. The number of shares to be bought back shall be subject to a minimum of 950,000 Equity Shares and a maximum of 3,200,000 Equity Shares.

Since the commencement of the buy back until the closure date (March 25, 2014), the Company had bought back 2,484,007 equity shares at an average price of Rs. 218.08 per equity share. Consequently a sum of Rs. 5,417.09 had been utilised from General Reserve in respect of the buy back. Out of the amount utilised from General Reserve, an amount of Rs. 124.20 had been appropriated to the Capital redemption reserve account and the paid up share capital had been reduced by the same amount. The company had fully extinguished the shares bought back during the above mentioned period.

Shares bought back during the period ended March 31, 2013 :

At the meeting of the Board of Directors of the Company held on November 05, 2012, the Board had given consent for the buy back of Company''s fully paid up equity shares of Rs. 5/- each from existing shareholders and beneficial owners in accordance with the relevant provisions of Companies Act, 1956 and Securities and Exchange Board of India (Buy Back of Securities) Regulations, 1988 for an amount not exceeding Rs. 3,600 and for a price not exceeding Rs. 175/- per equity share. The number of shares to be bought back shall be subject to a minimum of 825,000 Equity Shares and a maximum of 3,200,000 Equity Shares.

Since the commencement of the buy back until the closure date (February 5, 2013), the Company had bought back 2,388,000 equity shares at an average price of Rs. 150.39 per equity share. Consequently a sum of Rs. 331.09 had been utilised from Securities Premium Account and a sum of Rs. 3,260.32 from General Reserve in respect of the buy back. Out of the amount utilised from General Reserve, an amount of Rs. 119.40 had been appropriated to the Capital redemption reserve account and the paid up share capital had been reduced by the same amount. The company had fully extinguished the shares bought back during the above mentioned period.

3. Employee Stock Option Scheme

(a) Nature and extent of employee share-based payment plans that existed during the year :

i. Plan III

The Company passed special resolutions at its Annual General Meeting held on September 20, 2004 approving the allocation of 700,000 stock options to the eligible employees of the Company and its subsidiaries.

The Company subsequently established a new scheme in 2004 for granting 700,000 stock options to the employees referred to above, each option representing one equity share of the Company. The exercise price is as governed by the guidelines issued by SEBI. The scheme is governed by the Employee Stock Option Scheme and Employee Stock Purchase Guidelines issued in 1999 by SEBI and as amended from time to time. The first vesting of the stock options shall happen only on completion of one year from the date of grant and the options are exercisable within two years from the date of vesting. As per the SEBI guidelines, the excess of market price of the underlying equity shares as of the date of the grant of the options over the exercise price of the option is to be recognized and amortized on a straight line basis over the vesting period. No options have been granted under the scheme at below market price and consequently, there is no compensation cost in the current year. In April, 2006 the Company issued Bonus Shares in the ratio of 1:1 and the number of unvested and unexercised options and the price of the said options have been adjusted accordingly.

ii. Plan IV

The Shareholders of the Company through Postal Ballot on August 9, 2007 approved the allocation of 1,000,000 stock options to the eligible employees of the Company and its subsidiaries.

The Company subsequently established a new scheme in 2007 for granting 1,000,000 stock options to the employees referred to above, each option representing one equity share of the Company. The exercise price is as governed by the guidelines issued by SEBI. The scheme is governed by the Employee Stock Option Scheme and Employee Stock Purchase Guidelines issued in 1999 by SEBI and as amended from time to time. The first vesting of the stock options shall happen only on completion of one year from the date of grant and the options are exercisable within two years from the date of vesting. During the year ended June 30, 2011, the Company has extended the vesting period from two years to seven years. As per the SEBI guidelines, the excess of market price of the underlying equity shares as of the date of the grant of the options over the exercise price of the option is to be recognized and amortized on a straight line basis over the vesting period. No options have been granted under the scheme at below market price and consequently, there is no compensation cost in the current year.

iii. Plan V

The Company introduced a new scheme in 2008 for granting 1,500,000 stock options to the employees, each option representing one equity share of the Company. The exercise price as may be determined by the Nomination & Remuneration Committee ("Committee") and such price may be the face value of the share from time to time or may be the Market Price or any price as may be decided by the Committee and will be governed by the guidelines issued by SEBI. The scheme is governed by the Employee Stock Option Scheme and Employee Stock Purchase Guidelines issued in 1999 by SEBI and as amended from time to time. The first vesting of the stock options shall happen only on completion of one year from the date of grant and the options are exercisable within seven years from the date of vesting. As per the SEBI guidelines, the excess of market price of the underlying equity shares as of the date of the grant of the options over the exercise price of the option is to be recognized and amortized on a straight line basis over the vesting period. During the financial year ended June 31,2011, 50,000 options were granted at price less then the market price. There is no compensation cost in the current year.

iv. Plan VI

The Company introduced a new scheme in 2010 for granting 2,000,000 stock options to the employees, each option representing one equity share of the Company. The exercise price as may be determined by the Committee and such price may be the face value of the share from time to time or may be the Market Price or any price as may be decided by the Committee and will be governed by the guidelines issued by SEBI. The scheme is governed by the Employee Stock Option Scheme and Employee Stock Purchase Guidelines issued in 1999 by SEBI and as amended from time to time. The first vesting of the stock options shall happen only on completion of one year from the date of grant and the options are exercisable within seven years from the date of vesting. As per the SEBI guidelines, the excess of market price of the underlying equity shares as of the date of the grant of the options over the exercise price of the option is to be recognized and amortized on a straight line basis over the vesting period. No options have been granted under the scheme at below market price and consequently, there is no compensation cost in the current year.

v. Plan VII

The Company introduced a new scheme in 2013 for granting 2,500,000 stock options to its employees, employees of its subsidiaries and its Independent Directors, each option giving a right to apply for one equity share of the Company on its vesting. The exercise price as may be determined by the Committee and such price may be the face value of the share from time to time or may be the Market Price or any price as may be decided by the Committee and will be governed by the guidelines issued by SEBI. The scheme is governed by the Employee Stock Option Scheme and Employee Stock Purchase Guidelines issued in 1999 by SEBI and as amended from time to time. The first vesting of the stock options shall happen only on completion of one year from the date of grant and the options are exercisable within seven years from the date of vesting. As per the SEBI guidelines, the excess of market price of the underlying equity shares as of the date of the grant of the options over the exercise price of the option is to be recognized and amortized on a straight line basis over the vesting period. No options have been granted under the scheme during the year.

(b) The Company has adopted the intrinsic value method as permitted by the SEBI Guidance Note on Accounting for Employee Share Based Payment issued by the Institute of Chartered Accountants of India for measuring the cost of stock options granted.

The Company''s net profit and earnings per share would have been as under, had the compensation cost for employees stock options been recognised based on the fair value at the date of grant in accordance with Black Scholes model.

(d) For stock options outstanding at the end of the year, the range of exercise prices and weighted average remaining contractual life (Vesting period exercise period)

The risk free interest rates are determined based on the zero-coupon yield curve for government securities. The volatility is determined based on annualized standard deviation of stock price on NSE over the time to maturity of the option. The expected dividend yield is based on the average dividend yields for preceding seven years.

(f) Effect of share-based payment plan on the Balance Sheet and Statement of Profit and Loss :

4. Income Taxes

(a) In accordance with the Indian Income Tax Act, the Company has calculated its tax liability after considering Minimum Alternate Tax (MAT). Payments under MAT can be carried forward and set off against future tax liability for a period of ten years. Accordingly, a sum of Rs. 3,100.53 (Previous yearRs. 3,001.75) has been carried forward and shown under "Long-term loans and advances''. (Refer Note 14).

(b) The Company had received tax demands aggregating to Rs. 2,385.72 (including interest of Rs. 784.55 ) primarily on account of transfer pricing issues for the assessment years 2006-07 to 2010-11. For the assessment year 2006 -07 and assessment year 2007-08, the second appellate authority (the Income Tax Appellate Tribunal) has allowed these issues in favour of the Company and for assessment year 2006-07, the income tax authorities have filed an appeal with the Honourable High Court. For the assessment years 2008-09, 2009-10 and 2010-11, the matter is pending before the first appellate authority (the Commissioner of Income tax (Appeals)).

Considering the facts and favourable order of the second appellate authority for assessment year 2006-07 and assessment year 2007-08, the management believes that the final outcome of the above disputes for the remaining years should be in favour of the Company and there should not be any material impact on financial statements.

5. Derivative Financial Instruments

The Company, in accordance with its risk management policies and procedures, enters into foreign currency forward contracts to hedge against foreign currency exposures relating to higly probable forecast transaction. The Company does not enter into any derivative instrument for trading or speculative purposes. The counter party is generally a bank. These contracts are for a period between one day and four years.

6. Related Party Disclosures

A. Enterprises where control exists

Subsidiaries / step down subsidiaries - wholly owned, except as indicated: MajescoMastek, USA (70% held by the Company); Mastek (UK) Ltd., UK; Mastek Asia Pacific Pte. Ltd., Singapore; Mastek MSC Sdn. Bhd., Malaysia; MajescoMastek Canada Ltd., Canada; Mastek MSC (Thailand) Co Ltd., Thailand; MajescoMastek Insurance Software and Solutions Inc., USA (Formerly "System Task Group International Ltd.") and Vector Insurance Services LLC, USA (90% held by the MajescoMastek, USA).

B. Other related parties with whom the Company had transactions during the year Key Management Personnel: Sudhakar Ram Radhakrishnan Sundar Vinay Rajadhyaksha Stefan Van Overtveldt Farid Kazani Kalpana Jaishankar

Disclosure of transactions between the Company and related parties and the status of outstanding balances as on March 31, 2014, including names of the related parties comprising more then 10% of the total transactions / balances of the same type :

7. Segment reporting

The Company has presented data relating to its segments in its consolidated financial statements which are presented in the same annual report as Mastek Limited. In terms of provisions of Accounting Standard (AS) 17 - "Segment Reporting'', no disclosures related to segments are therefore presented in these stand-alone financial statements.

8. Micro, Small and Medium Enterprises

Disclosure of payable to vendors as defined under the "Micro, Small and Medium Enterprise Development Act, 2006" is based on the information available with the Company regarding the status of registration of such vendors under the said Act, as per the intimation received from them on requests made by the Company. There are no overdue principal amounts / interest payable amounts for delayed payments to such vendors at the Balance Sheet date. There are no delays in payment made to such suppliers during the year or for any earlier years and accordingly there is no interest paid or outstanding interest in this regard in respect of payments made during the year or brought forward from previous period.

9. Other disclosures

a. The Company is engaged in the development of computer software and other software related services. Considering the nature of business, certain details required under the revised schedule VI are not applicable.

10. Reduction of capital of Mastek Gmbh and subsequent closure

Pursuant to management decision to discontinue business operation in Germany during the period ended March 31, 2013 the share capital of Mastek GmbH (wholly owned subsidiary) has been reduced by Rs. 9.23 (Euro 13,500) to align with business requirements and the subsidiary is fully closed down. During the period ended March 31, 2013, the Company received Rs. 2.98 as liquidation proceeds and the resulting loss ofRs. 0.48 on closure has been charged to the Statement of Profit and Loss.

11. Reduction of capital of Mastek Asia Pacific Pte Ltd., Singapore

During the period ended March 31, 2013, the Company had reduced its investment in its wholly owned subsidiary Mastek Asia Pacific Pte Ltd, Singapore by Rs. 168.24. The remittance of proceeds had resulted in an exchange gain ofRs. 188.73 and a partial write back of provision for other than temporary decline in value of investment of Rs. 118.96, both of which had been credited in the Statement of Profit and Loss.

12. Exceptional Item - Other than temporary decline in the value of investment in a Subsidiary

Based on the review of the operations and the expected cash flow of its wholly owned subsidiary, MajescoMastek Canada Ltd., Canada ("MCAN"), the Management of the Company has determined and accounted an other than temporary decline in the carrying value of this investment amounting to Rs. 1,555.01. (Refer note 12).

13. During the previous period, the company had changed its accounts closing date from June 30 to March 31. Accordingly, the figures for the previous period are for the nine month period from July 1, 2012 to March 31, 2013 and are therefore not comparable with those of the current year.

14. Previous period figures have been regrouped and reclassified wherever necessary.


Mar 31, 2013

1 Company Information :

Mastek Limited (the ''Company'') is a public limited company domiciled in India and is listed on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). The Company is a provider of vertically-focused enterprise technology solutions and platforms in Insurance (Life, Pensions and General), Government / Public Sector and Financial Services sectors.

The Company''s offering portfolio includes business and technology services comprising IT Consulting, Application Development, Systems Integration, Application Management Outsourcing, Testing, Data Warehousing and Business Intelligence, Application Security, CRM services and Legacy Modernisation. The Company has operations through its subsidiaries / branch in U.S., Canada, U.K., India and Asia-Pacific and has its offshore software development centers in India at Mumbai, Pune, Chennai and Mahape.

(a) Rights, preferences and restrictions attached to shares

The Company has one class of equity shares having a par value of Rs. 5 per share. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

At the meeting of the Board of Directors of the Company held on November 05, 2012, the Board has given consent for the buy back of Company''s fully paid up equity shares of Rs. 5 each from existing shareholders and beneficial owners in accordance with the relevant provisions of the Companies Act, 1956 and Securities and Exchange Board of India (Buy-Back of Securities) Regulations, 1998 for an amount not exceeding Rs. 3,600 lakhs and for a price not exceeding Rs. 175 per equity share. The number of shares to be bought back shall be subject to a minimum of 825,000 Equity Shares and a maximum of 3,200,000 Equity Shares.

Since the commencement of the buy back until the closure date (February 5, 2013), the Company has bought back 2,388,000 equity shares at an average price of Rs. 150.39 per equity share. Consequently a sum of Rs. 331.09 lakhs has been utilized from Securities Premium Account and a sum of Rs. 3,260.32 lakhs from General Reserve in respect of the buy back. Out of the amount utilized from General Reserve, an amount of Rs. 119.40 lakhs has been appropriated to the Capital redemption reserve account and the paid up share capital has been reduced by the same amount. The company has fully extinguished the shares bought back during the above mentioned period.

2 Employee Stock option Scheme

(a) Nature and extent of employee share-based payment plans that existed during the period :

i. plan III

The Company passed special resolutions at its Annual General Meeting held on September 20, 2004 approving the allocation of 700,000 stock options to the eligible employees of the Company and its subsidiaries.

The Company subsequently established a new scheme in 2004 for granting 700,000 stock options to the employees referred to above, each option representing one equity share of the Company. The exercise price is as governed by the guidelines issued by SEBI. The scheme is governed by the Employee Stock Option Scheme and Employee Stock Purchase Guidelines issued in 1999 by SEBI and as amended from time to time. The first vesting of the stock options shall happen only on completion of one year from the date of grant and the options are exercisable within two years from the date of vesting. As per the SEBI guidelines, the excess of market price of the underlying equity shares as of the date of the grant of the options over the exercise price of the option is to be recognized and amortized on a straight line basis over the vesting period. No options have been granted under the scheme at below market price and consequently, there is no compensation cost in the current period. In April, 2006 the Company issued Bonus Shares in the ratio of 1:1 and the number of unvested and unexercised options and the price of the said options have been adjusted accordingly.

ii. plan IV

The Shareholders of the Company through Postal Ballot on August 9, 2007 approved the allocation of 1,000,000 stock options to the eligible employees of the Company and its subsidiaries.

The Company subsequently established a new scheme in 2007 for granting 1,000,000 stock options to the employees referred to above, each option representing one equity share of the Company. The exercise price is as governed by the guidelines issued by SEBI. The scheme is governed by the Employee Stock Option Scheme and Employee Stock Purchase Guidelines issued in 1999 by SEBI and as amended from time to time. The first vesting of the stock options shall happen only on completion of one year from the date of grant and the options are exercisable within two years from the date of vesting. During the year ended June 30, 2011, the Company has extended the vesting period from two years to seven years. As per the SEBI guidelines, the excess of market price of the underlying equity shares as of the date of the grant of the options over the exercise price of the option is to be recognized and amortized on a straight line basis over the vesting period. No options have been granted under the scheme at below market price and consequently, there is no compensation cost in the current period.

iii. plan V

The Company introduced a new scheme in 2008 for granting 1,500,000 stock options to the employees, each option representing one equity share of the Company. The exercise price as may be determined by the Compensation Committee and such price may be the face value of the share from time to time or may be the Market Price or any price as may be decided by the Committee and will be governed by the guidelines issued by SEBI. The scheme is governed by the Employee Stock Option Scheme and Employee Stock Purchase Guidelines issued in 1999 by SEBI and as amended from time to time. The first vesting of the stock options shall happen only on completion of one year from the date of grant and the options are exercisable within seven years from the date of vesting. As per the SEBI guidelines, the excess of market price of the underlying equity shares as of the date of the grant of the options over the exercise price of the option is to be recognized and amortized on a straight line basis over the vesting period. During the financial year ended June 30, 2011, 50,000 options were granted at price less than the market price. Consequently, the amortized compensation cost of Rs. Nil (Previous Year Rs. 35.00) in respect of options granted in earlier periods has been charged to the Statement of Profit and Loss during the current period.

iv. plan VI

The Company introduced a new scheme in 2010 for granting 2,000,000 stock options to the employees, each option representing one equity share of the Company. The exercise price as may be determined by the Compensation Committee and such price may be the face value of the share from time to time or may be the Market Price or any price as may be decided by the Committee and will be governed by the guidelines issued by SEBI. The scheme is governed by the Employee Stock Option Scheme and Employee Stock Purchase Guidelines issued in 1999 by SEBI and as amended from time to time. The first vesting of the stock options shall happen only on completion of one year from the date of grant and the options are exercisable within seven years from the date of vesting. As per the SEBI guidelines, the excess of market price of the underlying equity shares as of the date of the grant of the options over the exercise price of the option is to be recognized and amortized on a straight line basis over the vesting period. No options have been granted under the scheme at below market price and consequently, there is no compensation cost in the current period.

3 Income Taxes

(a) In accordance with the Indian Income Tax Act, the Company has calculated its tax liability after considering Minimum Alternate Tax (MAT). Payments under MAT can be carried forward and set off against future tax liability for a period of ten years. Accordingly, a sum of Rs. 3,001.75 (Previous year Rs. 2,679.11) has been carried forward and shown under ''Long-term loans and advances''. (Refer note 14).

(b) The Company had received tax demands aggregating to Rs. 2,319.22 (including interest of Rs. 771.37 ) primarily on account of transfer pricing issues for the assessment years 2006-07 to 2009-10. For the assessment year 2006-07 and assessment year 2007-08, the second appellate authority (the Income tax Appellate Tribunal) has allowed these issues in favour of the Company and against assessment year 2006-07, the income tax authorities have filed an appeal with the Honourable High Court. For the assessment years 2008-09 and 2009-10, the matter is pending before the first appellate authority (the Commissioner of Income tax (Appeals)).

Considering the facts and favourable order of the second appellate authority for assessment year 2006-07 and assessment year 2007-08, the management believes that the final outcome of the above disputes for the remaining years should be in favour of the Company and there should not be any material impact on financial statements.

4 Derivative Financial Instruments

The Company, in accordance with its risk management policies and procedures, enters into foreign currency forward contracts to manage its exposure in foreign currency. The counter party is generally a bank. These contracts are for a period between one day and four years.

5 Related party Disclosures

A. Enterprises where control exists

Subsidiaries / step down subsidiaries - wholly owned, except as indicated: MajescoMastek, USA (70% held by the Company); Mastek UK Ltd., UK; Mastek Asia Pacific Pte. Ltd., Singapore; Mastek GmBH,Germany*; Mastek MSC Sdn. Bhd., Malaysia; MajescoMastek Canada Ltd., Canada; Mastek MSC (Thailand) Co. Ltd., Thailand; MajescoMastek Insurance Software and Solutions Inc., USA (Formerly "Systems Task Group International Ltd.") and Vector Insurance Services LLC, USA (90% held by MajescoMastek, USA).

*- Closed down with effect from March 31, 2013.

B. Other related parties with whom the Company had transactions during the period Key Management Personnel: Sudhakar Ram

Ashank Desai Radhakrishnan Sundar Vinay Rajadhyaksha Stefan Van Overtveldt Farid Kazani Kalpana Jaishankar

6 Segment reporting

The Company has presented data relating to its segments in its consolidated financial statements which are presented in the same annual report as Mastek Limited. In terms of provisions of Accounting Standard (AS) 17 - ''Segment Reporting'', no disclosures related to segments are therefore presented in these stand-alone financial statements.

7 Micro, Small and Medium Enterprises

There are no dues to micro, small and medium enterprises which are outstanding at the Balance Sheet date. The information regarding micro, small and medium enterprises has been determined on the basis of the information available with the Company. This has been relied on by the auditors.

8 Other disclosures

a. The Company is engaged in the development of computer software and other software related services. Considering the nature of business, certain details required under the revised schedule VI are not applicable.

b. Value of Imports on C.I.F basis

9 Reduction of capital of Mastek Gmbh and subsequent closure

Pursuant to management decision to discontinue business operation in Germany, the share capital of Mastek GmbH (wholly owned subsidiary) has been reduced by Rs. 9.23 (Euro 13,500) to align with business requirements. Subsequently as on March 31, 2013 the subsidiary is fully closed down. The Company received Rs. 2.98 as liquidation proceeds and the resulting loss of Rs. 0.48 on closure has been charged to the Statement of Profit and Loss.

10 Reduction of capital of Mastek Asia Pacific Pte Ltd., Singapore

During the period ended March 31, 2013, the Company has reduced its investment in its wholly owned subsidiary Mastek Asia Pacific Pte Ltd, Singapore by Rs. 168.24. The remittance of proceeds has resulted in an exchange gain of Rs. 188.73 and a partial write back of provision for dimunition in the value of investment of Rs. 118.96, both of which have been credited in the Statement of Profit and Loss.

11 Acquisition of Keystone''s business and merger of Keystone Solutions Ltd with Mastek Ltd

During the year ended June 30, 2012, the Scheme of Amalgamation ("the Scheme") of Keystone Solutions Private Limited (a wholly owned step down subsidiary) with the Company had been sanctioned by the High Court of Mumbai with effective date from July 1, 2011, vide its order dated December 2, 2011. In accordance with the Scheme and the Accounting Standard (AS) 14, ''Accounting for Amalgamations'', the Company has followed the "pooling of interest" method in accounting for the amalgamation. The difference between the value of the net identified assets acquired and the consideration amounted to Rs. 106.05 which has been credited to ''Capital Reserve'' (Refer note 4).

12 During the period, the Company has changed its accounts closing date from June 30 to March 31. Accordingly, the figures for the current period are for the nine month period from July 1, 2012 to March 31, 2013 and are therefore not comparable with those of the previous year.

13 Previous year figures have been regrouped and reclassified wherever necessary.

 
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