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Notes to Accounts of Mastek Ltd.

Mar 31, 2016

32. Employee Stock Option Scheme

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

i. 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. "

ii. 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.

iii. 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.

iv. 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.

1. 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 often years. Accordingly, a sum ofRs, 2,436.59 (Previous year Rs, 2,694.26) 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, 2,835.05 (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-

OS, the second appellate authority (the Income Tax Appellate Tribunal) has allowed these issues in favour of the company and the income tax authorities have filed an appeal with the Honourable High Court. For the assessment years 2008-09 to 2010-11, the first appellate authority (the Commissioner of Income tax (Appeals)) has allowed most of these issues in favour of the company and the income tax authorities have filed an appeal with the second appellate authority (the Income Tax Appellate Tribunal). For the assessment years 2011-12 the matter is pending before the first appellate authority (the Commissioner of Income tax (Appeals)).

Considering the facts, materiality and favorable order of the second appellate authority for assessment years 2006-07 and 2007-08 and the first appellate authority for 2008-09 to 2010-11, the management believes that the final outcome of majority of the above disputes for the remaining years should be in favour of the Company and there should not be any material impact on the financial statements.

2. 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 highly probable forecast transactions. The Company does not enter into any derivative instruments for trading or speculative purposes. The counter party is generally a bank. These contracts are for a period between one day and two years. The company has no unheeded exposure in respect of receivables or payables denominated in foreign currency.

3. Related Party Disclosures

A. Enterprises where control exists Mastek (UK) Limited

IndigoBlue Consulting Limited (w.e.f May 1, 2015)

Digility Inc. (w.e.f Nov 17, 2015)

Mastek Asia Pacific Pte Ltd. (up to Oct 31, 2015)*

Majesco USA (up to March 31, 2015)

Majesco UK Limited (up to March 31, 2015)

Majesco Software and Solutions India Private Limited (up to March 31, 2015) Majesco Sdn. Bhd. (up to March 31, 2015)

Majesco (Thailand) Co. Ltd. (up to March 31, 2015)

Majesco Software and Solutions Inc. (up to March 31, 2015)

Majesco Canada Limited (up to March 31, 2015)

4. Related Party Disclosures (contd.)

"Majesco Limited (up to March 31, 2015)

* Sold during the year Demerged

B. Joint Venture - Legal Practice Technologies Limited (from May 14, 2014 to March 17, 2016)

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

Key Management Personnel (KMP): Sudhakar Ram

Jamshed Jussawalla (from June 1, 2015)

Hiren Shah (from April 1, 2015)

Vinay Rajadhyaksha (up to August 13, 2014)

Stefan Van Overtveldt (up to April 30, 2014)

Kalpana Jaishankar (up to March 31, 2015)

Enterprise where KMP has control: Cashless Technologies India Private Limited (w.e.f. February 2, 2016)

Radhakrishnan Sundar and Farid Kazani who were KMP until last year have moved to Majesco Limited post the demerger described in note 44 and therefore are no longer KMP in Mastek Limited in the current year.

Disclosure of transactions between the Company and related parties and the status of outstanding balances as on March 31, 2016, including names of the related parties comprising more than 10% of the total transactions / balances of the same type, are given below:

c The Company has entered into transactions with the following related parties:

5 . 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.

6. 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.

7. 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, to the Company.

8. Acquisition of Majesco Limited (Formerly - Minefields Computers Limited), India

During the previous year, the Company had purchased 10,000 equity shares (including 6 equity shares purchased jointly with other shareholders) of face value of Rs, 10/- each of Majesco Limited for a total consideration of Rs, 1. Further, the Company had subscribed to 40,000 additional equity shares of Majesco Limited of Rs, 10/- each for a total consideration of Rs, 4. Thus the total shareholding of the Company in Majesco Limited at March 31, 2015 amounted to 50,000 equity shares of Rs, 10/- each for a total consideration of Rs, 5 [Refer note 12(b)]. Pursuant to the Scheme of Arrangement Majesco Limited is no longer a subsidiary of the Company (Refer note 44).

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

During the previous year, the Company sold its entire holding of 3,500,000 equity shares of Majesco Canada Limited, Canada ("MCAN") (a wholly owned subsidiary) to Majesco, USA 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 made in earlier year. The Gain had been included under the heading "exceptional items" in the Statement of Profit and Loss (Refer note 29).

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

During the previous year, the Company had 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). The investment in Majesco, USA is transferred pursuant to a Scheme of Arrangement (Refer note 44).

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

During the previous year, the Company sold its entire holding of 11,262,000 equity shares of Majesco Sdn. Bhd., Malaysia ("MSC") (a wholly owned subsidiary) 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 had been included under the heading "exceptional items" in the Statement of Profit and Loss (Refer note 29).

12. 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 Majesco Limited (Formerly known as Minefields Computers Limited) ("Majesco India"), 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 was April 1, 2014 and the appointed date for the offshore insurance operations business transfer was November 1, 2014. The Company 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. The Scheme has also been approved by the Hon''ble High Court of Bombay and Hon''ble High Court of Gujarat and on filing with the Registrar of Companies (ROC) the said scheme became effective from June 1,2015. As specified in the Scheme, Mastek shareholders have been issued one equity share in Majesco India for every share held in Mastek, while retaining their existing Mastek share. Majesco India shares were listed on August 19, 2015 on the BSE and NSE, being exchanges where Mastek is currently listed.

As the Company’s Board had approved the demerger scheme of the Insurance Products and Services business (the "Transferred Undertaking") of the Company and an announcement thereof had been made, the Company in the previous financial year, had 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 has resulted in transfer of the assets, liabilities, Employee stock options outstanding account and Hedging reserve account relevant to the Transferred Undertaking including the Company’s investment in Majesco, USA to Majesco India, the ultimate holding company of the Transferred Undertaking and has accordingly been given effect to in these Financials Statements. As prescribed in the Scheme, the book value of the above net assets aggregating to Rs, 24,401.43 have been debited to: Capital reserve Rs, 106.07, to General Reserve Rs, 2,415.67 and to Surplus in Profit and Loss AccountRs, 21,879.69, (Refer note 4).

13. Sale of Investment in Mastek Asia Pacific Pte. Limited, Singapore ("MAP")

During the year, the Company sold its entire holding of 2,850,000 equity shares of MAP (a wholly owned subsidiary) to Majesco Sdn Bhd, Malaysia for a total consideration of Rs, 180.49. This sale resulted in a gain of Rs, 4.95 after considering the provision for other than temporary decline in value made in earlier years. The Gain has been included under the heading "exceptional items" in the Statement of Profit and Loss (Refer note 29).

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


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.


Jun 30, 2012

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.

2 Contingent liabilities

As at As at June 30, 2012 June 30, 2011

Claims against the Company not acknowledged as debts — 105.78

Guarantees

(a) Corporate performance guarantees given by the Company on behalf of the following subsidiaries

(a) MajescoMastek Canada Ltd 4,842.69 2,411.84

(b) Mastek MSC Thailand Co Ltd 508.99 229.34

(c) Mastek (UK) Limited 16,318.46 42,828.87

(b) Corporate guarantees given by the Company on behalf of the following subsidiaries

(a) MajescoMastek for its term loan — 1,341.00

(b) MajescoMastek for its Line of Credit for Working Capital from Bank 653.81 447.00

The Company does not expect any outflows in respect of the above contingent liabilities.

3 Employee Stock Option Scheme

(a) Plan II

The Company established a new scheme in 2002 for granting 700,000 stock options to employees and 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 Employees Stock Purchase Guidelines issued in 1999 by SEBI. There is a minimum period of twelve months for the first vesting from the date of the grant of options. The options are exercisable within two years of their vesting. As per the SEBI guidelines issued in 1999, and as amended from time to time, the excess of the market price of the underlying equity shares as of the date of the grant of the option 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.

(b) 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.

(c) 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 previous 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.

(d) 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. The options granted during the financial year ended June 30, 2012 and June 30, 2011 have been granted at an exercise price which is equal to the market price of the underlying equity shares except for Nil Options (Previous Year 50,000 options), which had been granted at a price less than the market price. Consequently, the amortised compensation cost of Rs. 35.00 (Previous Year Rs. 88.50) in respect of options granted in earlier periods has been charged to the Statement of Profit and Loss during the current year.

(e) 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 year.

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. Accordingly, a sum of Rs. 2,679.11 (Previous year Rs. 2,263.90) has been carried forward and shown under 'Long-term loans and advances'. (Refer note 14).

(b) Provision for income tax for the year is the aggregate of the provision for the nine months ended March 31, 2012 and the three months ended June 30, 2012. However, the ultimate tax liability for the financial year 2011-12 will be determined on the basis of the profit for the year April 1, 2011 to March 31, 2012 and the profit for the year April 01, 2012 to March 31, 2013.

(c) The Company had received tax demands aggregating to Rs. 2,272.48 (including interest of Rs. 760.27 ) primarily on account of transfer pricing issues for the assessment years 2006-07, 2007-08 and 2008-09. For the assessment year 2006-07, the second appellate authority (the Income tax Appellate Tribunal) has allowed these issues in favour of the company and for the assessment years 2007-08 and 2008-09, 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 upholding the position of the Company for the assessment year 2006-07, 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 Related Party Disclosures

A. Enterprises where control exists

Subsidiaries - wholly owned, except as indicated: MajescoMastek USA (70% held by the Company) ; Mastek UK Ltd., UK; Mastek GmbH, Germany; Mastek Asia Pacific Pte. Ltd., Singapore; Mastek MSC Sdn. Bhd., Malaysia; MajescoMastek Canada Ltd, Keystone Solutions Private Limited, India; Mastek MSC Thailand Co Ltd., Thailand; System Task Group International Ltd., USA, and Vector Insurance Services LLC, USA (90% held by the Company) .

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

Key Management Personnel: Sudhakar Ram (Chairman & Managing Director)

R Sundar (Executive Director)

Disclosure of transactions between the Company and related parties and the status of outstanding balances as on June 30, 2012

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 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.

9 Reduction of capital of Mastek Gmbh

Pursuant to management decision to discontinue business operation in Germany, the share capital of Mastek GmbH (wholly owned subsidiary) has been reduced by Rs. 261.42 (Euro 515,000) during the year ended June 30, 2011 to align with business requirements.

10 Sale of investment in Majescomastek, USA

During the year ended June 30, 2011, the Company sold 55,035,000 equity shares of MajescoMastek, USA (a wholly owned subsidiary before this sale) to Mastek UK Ltd (also a wholly owned subsidiary) for a total consideration of Rs. 4,914.54. After the sale, Mastek Ltd holds 70% of MajescoMastek and the balance 30% is held by Mastek UK Ltd.

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 has 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, 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 Previous year figures

The financial statements for the year ended June 30, 2011 had been prepared as per the then applicable, pre-revised Schedule VI to the Companies Act, 1956. Consequent to the notification of Revised Schedule VI under the Companies Act, 1956, the financial statements for the year ended June 30, 2012 are prepared as per Revised Schedule VI. Accordingly, the previous year figures have also been reclassified to conform to this year's classification. The adoption of Revised Schedule VI for previous year figures has not impacted recognition and measurement principles followed for preparation of financial statements.

The accompanying notes are an integral part of these financial statements.


Jun 30, 2011

1. CONTINGENT LIABILITIES AND COMMITMENTS

(Rs. in Lakhs)

As at As at June 30, 2011 June 30, 2010

(i) Counter guarantees outstanding in respect of guarantees given by banks on behalf of the Company 175.25 103.19

(ii) Corporate performance guarantees given by the Company:

- on behalf of subsidiary, MajescoMastek Canada Ltd. 2,411.84 967.53

- on behalf of subsidiary, Mastek MSC (Thailand) Co. Ltd. 229.34 153.49

- on behalf of subsidiary, Mastek (UK) Limited 42,828.87 36,462.26

(iii) Corporate guarantees given:

- on behalf of subsidiary, MajescoMastek for its term loan 1,341.00 4,180.05

- on behalf of subsidiary, MajescoMastek for its Line of Credit for Working Capital from Bank 447.00 –

(iv) Claims against the Company not acknowledged as debts* 2,309.06 105.78

(v) estimated amount of contracts remaining to be executed on capital account not provided for 196.95 1,813.15

* Claims against the Company not acknowledged as debts include:

a) a demand from the Indian tax authorities for payment of additional tax of Rs. 1,115.03 Lakhs, including interest of Rs. 379.47 Lakhs upon completion of their tax review for financial year ended March 31, 2006.

b) a demand from the Indian tax authorities for payment of additional tax of Rs. 1,088.25 Lakhs, including interest of Rs. 370.73 Lakhs upon completion of their tax review for financial year ended March 31, 2007. A substantial portion of both the tax demands pertains to the adjustment to total income carried out on account of transfer pricing. the matter in respect of 2006 is pending before the Income tax Appellate tribunal, Ahmedabad and in respect of 2007 before the Commissioner of Income-tax (Appeals), Ahmedabad. Against the additional tax demand of Rs. 1,115.03 Lakhs for the year 2006, the Income-tax department has adjusted Rs. 628.1 7 Lakhs in respect of Income tax Refunds due to the Company.

The Company has treated such adjustment as payment under protest and has accordingly refected this adjustment under Loans and advances. the Company is contesting the demands and the management believes that its position will likely be upheld in the appellate process and accordingly the same will not have a material adverse effect on the Company's financial position and the result of its operations. As a result, no provision has been made in the financial statements for the tax demands raised.

2. FORWARD CONTRACTS

Forward Contracts outstanding as on June 30, 2011 amounting to Rs. 21,113.84 Lakhs (previous year Rs. 28,034.66 Lakhs). Gain/(loss) of foreign exchange forward contracts are included under the head exchange gain/loss (net). Forward contracts amounting to Rs. Nil (previous year Rs. 3,830.93Lakhs) are backed by receivables.

3. EMPLOYEE STOCK OPTIONS

Plan II

The Company established a new scheme in 2002 for granting 700,000 stock options to employees and 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 employees stock purchase guidelines issued in 1999 by SEBI. There is a minimum period of twelve months for the first vesting from the date of the grant of options. the options are exercisable within two years of their vesting. As per the SEBI guidelines issued in 1999, and as amended from time to time, the excess of the market price of the underlying equity shares as of the date of the grant of the option over the exercise price of the option is to be recognized and amortized on a straight line basis over the vesting period. the options granted during the year have been granted at an exercise price which is equal to the market price of the underlying equity shares. 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.

In accordance with the guidelines, the Company has passed the necessary special resolutions in January 2002 to approve the scheme and to extend the plan to the employees of its subsidiaries.

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. the options granted during the year have been granted at an exercise price which is equal to the market price of the underlying equity shares. 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.

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 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. the options granted during the year have been granted at an exercise price which is equal to the market price of the underlying equity shares. Consequently, there is no compensation cost in the current year.

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. the options granted during the financial year ended June 30,

2011 and June 30, 2010 have been granted at an exercise price which is equal to the market price of the underlying equity shares except for 50,000 options (previous year 25,000 options), which had been granted at a price less than the market price. Consequently, compensation cost of Rs. 88.50 Lakhs (previous year Rs. 57.00 Lakhs) has been charged to the Profit and Loss account during the current year.

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

4. EMPLOYEE BENEFIT PLANS

a) Defned contribution plans

The Company makes contribution towards provident fund and superannuation fund to a defned contribution employee benefit plan for qualifying employees. the provident fund plan is operated by the Regional provident Fund Commissioner and the superannuation fund is maintained by making contribution to Life Insurance Corporation of India. under the schemes, the Company is required to contribute a specified percentage of payroll cost to the employee benefit schemes to fund the benefits.

The Company recognized Rs. 831.98 Lakhs (previous year Rs. 694.52 Lakhs) for provident fund contribution and Rs. 31.68 Lakhs (previous year Rs. 30.16 Lakhs) for superannuation contribution in the Profit and Loss account. the contributions payable to these plans by the Company are at rates specified in the rules of the schemes. In addition UK branch contributed Rs. 3.00 Lakhs (previous year Rs. 10.74 Lakhs) towards other funds as per the requirements of the local laws.

b) Defined benefit plans

The Company makes annual contributions to the Mastek Limited employees group gratuity Assurance scheme administered by Life Insurance Corporation of India. the scheme provides benefit to the members upon retirement on or after normal retirement date or upon death whilst in service or upon retirement owing to ill-health or incapacitation equivalent to 15 days of salary for each completed year of service. Further the scheme also provides benefit on death of a member whilst in service before normal retirement date equivalent to 15 days of salary for each completed year of service up to the date of death and the sum assured under the term assurance effected in respect of the member.

The Company also provides for leave encashment payable to employees. Leave encashment vest to the employees at time of retirement, death while in employment or on termination of employment equivalent to salary payable for number of days of accumulated leave balance.

c) The following table sets out the status of gratuity and the amounts recognized in the Company’s financial statements as at June 30, 2011 and June 30, 2010.

d) Leave encashment charged during the year amount to Rs. 174.12 Lakhs (previous year Rs. 230.29 Lakhs).

5. INCOME TAXES

The Company follows Accounting standard 22 ‘Accounting for taxes on income’.

a) The Company’s operations were eligible for signifcant tax incentives up to 31st March, 2011 under the Indian taxation laws. these incentives presently include an exemption from payment of Indian corporate taxes for a period of ten consecutive years of operations of software development facilities designated as software technology park or in special economic Zone. the management estimates the provision for current taxes and deferred taxes after considering such tax benefits and the expected results of the future operations of the Company.

b) Pursuant to the changes in the Indian Income tax Act, the Company has calculated its tax liability after considering minimum Alternate tax (MAT). the MAT liability can be carried forward and set off against future tax liability. Accordingly, a sum of Rs. 2,263.90 Lakhs (previous year Rs. 2,438.90 Lakhs) has been carried forward and shown under ‘Loans and Advances’.

c) Provision for income tax for the year is the aggregate of the provision for the nine months ended march 31, 2011 and provision on the profits, if any for the three months ended June 30, 2011. However, the ultimate tax liability for the financial year 2011-12 will be determined on the basis of the profit for the year April 1, 2011 to march 31, 2012.

6. RELATED PARTY DISCLOSURES

Subsidiaries: MajescoMastek USA; Mastek UK Ltd., UK; Mastek GmbH, Germany; Mastek Asia Pacific Pte. Ltd., Singapore; Mastek MSC Sdn. Bhd., Malaysia; MajescoMastek Canada Ltd., keystone solutions private Limited, India; Mastek MSC Thailand Co Ltd., Thailand; system task group International Ltd., USA; Vector Insurance Services LLC, USA (90% held by the Company) and Carretek LLC, USA (closed with effect from 27th September, 2010). these Companies constitute entities under the control of the Company.

key management personnel: Sudhakar Ram (Chairman & managing Director)

R Sundar (executive Director)

7. SEGMENTS

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 presented in these stand alone financial statements.

8. 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.

9. DIRECTORS’ REMUNERATION

(a) Provision for gratuity and leave encashment benefit which is based on actuarial valuation carried out on an overall basis for the Company, has been excluded from the above remuneration.

(b) Also refer Note 20 of schedule 16.

10. ADDITIONAL INFORMATION PURSUANT TO THE PROVISIONS OF PART II OF SCHEDULE VI OF THE COMPANIES ACT, 1956.

(i) the Company is engaged in the development of computer software and other software related services. Considering the nature of business, certain details required under part II of schedule VI are not applicable.

11. ACQUISITION OF KEYSTONE BUSINESS

The Board of Directors of the Company at its meeting held on may 9, 2009 had approved the acquisition of business activities pertaining to “Keystone Solutions Private Limited” (‘Keystone’). Consequent to this, the Company had entered into a business transfer agreement dated June 8, 2009 and addendum to agreement dated August 1, 2009 with keystone to purchase the entire business on a slump sale basis as a going concern for a total consideration of Rs. 2,036 Lakhs with effect from August 31, 2009.

On acquisition, the Company has recorded net assets of Rs. 1,905.68 Lakhs and the balance of Rs. 130.32 Lakhs is shown as goodwill (to be amortized over a period of 3 years).

12. SALE OF INVESTMENT IN MAJESCOMASTEK, USA

During the year, the Company sold 55,035,000 equity shares of MajescoMastek, USA (a wholly owned subsidiary before this sale) to Mastek UK Ltd. (also a wholly owned subsidiary) for a total consideration of Rs. 4,914.54 Lakhs. After the sale, Mastek Ltd holds 70% of MajescoMastek and the balance 30% is held by Mastek UK Ltd.

Profit of Rs. 279.12 Lakhs arising from the transaction has been shown as ‘Other Income’ in the current year Profit and Loss account.

13. REDUCTION OF CAPITAL OF MASTEK GmbH

Pursuant to management decision to discontinue business operation in Germany, the share capital of Mastek gmbH (wholly owned subsidiary) has been reduced by Rs. 261.42 Lakhs (euro 515,000) during the year to align with business requirements. Hence, the Investment of Mastek Ltd in Mastek gmbH stands reduced from Rs. 274.11 lakhs to Rs. 12.69 lakhs.

14. MERGER OF KEYSTONE SOLUTIONS LTD WITH MASTEK LTD.

the scheme of Amalgamation of keystone solutions private Limited (a wholly owned step down subsidiary) with the Company with appointed date as July 1, 2011 has been approved by the Boards of Directors of the respective Companies. under the scheme, all assets and liabilities of keystone will be transferred to and vested in the Company with effect from the appointed date. since the entire share capital of keystone is currently held by a wholly owned subsidiary of the Company, upon the scheme becoming effective, no shares will be issued by the Company as consideration in accordance with the scheme of amalgamation. the scheme is pending approval of the Jurisdictional High Court under sections 391 to 394 of the Companies Act, 1956.

15. Excess managerial remuneration paid during the year to the Chairman & managing Director and an executive Director of the Company, aggregating Rs. 63.36 Lakhs and Rs. 22.40 Lakhs respectively, over the permissible limits as prescribed under schedule XIII to the Companies Act, is subject to the approval of shareholders and Central government of India. the Company intends to apply to the Central government in this regard.

In the event that the Central government approval is not received for the amounts mentioned above, these amounts will have to be refunded by such Directors. Had the Company paid managerial remuneration to these Directors as per the limits prescribed under schedule XIII to the Companies Act, the loss for the year would have been lower by Rs. 85.76 Lakhs.

16. As per the annual practice to meet the requirement of tax legislation, the Company carried out a transfer pricing study for the year ended march 31, 2011 and has aligned its transfer prices for inter-Company transactions with the bench-marks obtained in the study. Accordingly, the additional revenue accruing to the Company pertaining to the previous period April to June 2011 amounting to Rs. 111.86 Lakhs has been recorded in the current financial year.

17. The previous year’s figures have been regrouped/ reclassified, wherever necessary.


Jun 30, 2010

1. CONTINGENT LIABILITIES AND COMMITMENTS

(Rs. in Lakhs)

As at As at

June 30, 2010 June 30, 2009

(i) Counter guarantees outstanding in respect of guarantees

given by banks on behalf of the Company 103.19 157.18

(ii) Corporate guarantees given

— on behalf of subsidiary, Majesco Mastek 4,180.05 6,946.23

— on behalf of subsidiary, Majesco

Mastek Enterprises Solutions Canada Co. Ltd 967.53 —

— on behalf of subsidiary, Mastek MSC Thailand Co Ltd 153.49 —

— on behalf of subsidiary, Mastek (UK) Limited 36,462.26 32,256.67

(iii) Claim against the Company not acknowledged as debts 105.78 105.78

(iv) Estimated amount of contracts remaining to be executed

on capital account not provided for 1,813.15 2,153.19

2. BUYBACK OF SHARES

The Board of Directors at their Meeting held on October 11, 2007 had announced buy back of its fully paid equity shares 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, 1998 at a price not exceeding Rs. 750 per share. The Company opted to buy back shares from open market through stock exchange route and the total offer size aggregates to Rs. 65 crores representing 25% of the Company s paid up capital and free reserves as on June 30, 2007.

During current year, the Company had bought back Nil (Previous year 176,863) equity shares of Rs. 5/- each at an average price of Nil (Previous year Rs. 374.45) per share and extinguished Nil (Previous year 744,381) equity shares of Rs. 5/- each. The difference between the nominal value and amount spent for buy back, amounting to Nil (Previous year Rs. 653.42 Lakhs) which has been appropriated from General Reserve to the tune of Nil (Previous year Rs. 653.42 Lakhs). The Company has transferred Rs. Nil (Previous year Rs. 8.85 Lakhs) from General Reserve to Capital Redemption Reserve which represented the nominal value of shares bought back during the year.

d) Description of significant lease agreements:

— The Company has given refundable interest free security deposit under the lease agreements.

— All agreements contain provision for renewal at the option of either parties.

— All agreements provide for restriction on sub lease.

3. FORWARD CONTRACTS

Forward Contracts outstanding as on June 30, 2010 amount to Rs. 7,250.52 Lakhs (Previous year Rs. 958.10 Lakhs). Gain / (loss) of foreign exchange forward contracts are included under the head Exchange loss (net). Forward contracts amounting to Rs. 3,830.93 Lakhs (Previous year Rs. 958.10 Lakhs) are backed by receivables.

4. EMPLOYEE STOCK OPTIONS

Plan II

The Company established a new scheme in 2002 for granting 700,000 stock options to employees and 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 Employees Stock Purchase Guidelines issued in 1999 by SEBI. There is a minimum period of twelve months for the first vesting from the date of the grant of options. The options are exercisable within two years of their vesting. As per the SEBI guidelines issued in 1999, and as amended from time to time, the excess of the market price of the underlying equity shares as of the date of the grant of the option over the exercise price of the option is to be recognized and amortized on a straight line basis over the vesting period. The options granted during the year have been granted at an exercise price which is equal to the market price of the underlying equity shares. 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.

In accordance with the Guidelines, the Company has passed the necessary special resolutions in January 2002 to approve the scheme and to extend the plan to the employees of its subsidiaries.

Plan II

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. The options granted during the year have been granted at an exercise price which is equal to the market price of the underlying equity shares. 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.

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 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. The options granted during the year have been granted at an exercise price which is equal to the market price of the underlying equity shares. Consequently, there is no compensation cost in the current year.

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. The options granted during the year have been granted at an exercise price which is equal to the market price of the underlying equity shares except for 25,000 options, which have been granted at a price less than the market price. Consequently, compensation cost of Rs 57.00 Lakhs (Previous Year Rs. Nil) has been charged to the Profit and Loss account during the current year.

7. RETIREMENT BENEFIT PLANS

a) Defined contribution plans

The Company makes contribution towards provident fund and superannuation fund to a defined contribution retirement benefit plan for qualifying employees. The provident fund plan is operated by the Regional Provident Fund Commissioner and the superannuation fund is maintained by making contribution to Life Insurance Corporation of India. Under the schemes, the Company is required to contribute a specified percentage of payroll cost to the retirement benefit schemes to fund the benefits.

The Company recognized Rs. 694.53 Lakhs (Previous year Rs. 715.61 Lakhs) for provident fund contribution and Rs. 30.16 Lakhs (Previous year Rs. 29.18 Lakhs) for superannuation contribution in the Profit and Loss account. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

b) Defined benefit plans

The Company provided for liabilities towards gratuity and leave encashment payable to the employees. Gratuity vests to the employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days salary payable for each completed year of service or part thereof in excess of six months. Vesting occurs upon completion of five years of service. Leave encashment vest to the employees at the time of retirement, death while in employment or on termination of employment equivalent to salary payable for number of days of accumulated leave balance.

d) Leave encashment charged during the year amount to Rs. 230.29 Lakhs (Previous year Rs. 923.38 Lakhs).

8. INCOME TAXES

The Company follows Accounting Standard 22 Accounting for taxes on income .

a) The Company s operations are eligible for significant tax incentives under the Indian taxation laws. These incentives presently include an exemption from payment of Indian corporate taxes for a period of ten consecutive years of operations of software development facilities designated as Software Technology Park or in Special Economic Zone. The management estimates the provision for current taxes and deferred taxes after considering such tax benefits and the expected results of the future operations of the Company.

b) Pursuant to the changes in the Indian Income Tax Act, the Company has calculated its tax liability after considering Minimum Alternate Tax (MAT). The MAT liability can be carry forward and set off against future tax liability. Accordingly, a sum of Rs. 289.38 Lakhs (Previous year Rs. 947.08 Lakhs) has been carried forward and shown under Loans and Advances .

9. RELATED PARTY DISCLOSURES

The Company has entered into transactions with the following related parties:

Subsidiaries: MajescoMastek USA; Mastek UK Ltd., UK; Mastek GmbH, Germany; Mastek Asia Pacific Pte. Ltd., Singapore; Mastek MSC Sdn. Bhd., Malaysia; Mastek Outsourcing Services Private Limited (closed down w.e.f August 21,2009), Majesco Mastek Canada Ltd, Canada; Keystone Solutions Private Limited, Mastek MSC Thailand Co Ltd, Thailand; System Task Group International Ltd., USA; and Carretek LLC, USA. These companies constitute entities under the control of the Company.

10. SEGMENTS

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 presented in its stand-alone financial statements.

12. MICRO, SMALL AND MEDIUM ENTERPRISES

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

13. ACQUISITION OF KEYSTONE BUSINESS

The Board of Directors of the Company at its meeting held on May 9, 2009 approved the acquisition of business activities pertaining to Keystone Solutions Private Limited ( Keystone ). Consequent to this, the Company has entered into a business transfer agreement dated June 8, 2009 and addendum to agreement dated August 1, 2009 with Keystone to purchase the entire business on a slump sale basis as a going concern for a total consideration of Rs. 2,036 Lakhs with effect from August 31, 2009.

On acquisition, the Company has recorded net assets of Rs.1,905.68 Lakhs and the balance of Rs 130.32 Lakhs is shown as Goodwill (to be amortized over a period of 3 years).

Accordingly, figures for the current year are not comparable with figures of the previous year.

14. The previous years figures have been regrouped and reclassified, wherever necessary.

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