Notes to Accounts of Net 4 India Ltd.

Mar 31, 2015

1. Corporate Information

Net 4 India Limited (the company) is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares are listed on BSE & NSE stock exchanges in India. The Company is India's leading Data Centre, Cloud Hosting and Network services provider. Net4 focuses on providing services to businesses (small, medium and large) and its offerings include Data Centre & Cloud Solutions Enterprise Internet Services, VoIP Solutions, and Enterprise Messaging & Hosting Solutions and Domain name registration. The company caters to both domestic and international markets.

Net4 has the distinction of being the first Internet services company in the World to be ISO 27001 certified, for Information Security standards adopted at its Data Centers. It is also ISO 9001:2000 certified, a Microsoft Gold Partner and an ICANN & .IN accredited Domain Name Registrar.

2. All amounts in the financial statements are presented in Rupees lakhs except share data.

3. Previous year's figures have been regrouped, rearranged and reclassified, wherever necessary to confirm to current year's classification.

4. Deferred Tax

Provision for deferred tax for the year ended March 31, 2015 has been made in accordance with the provisions of Accounting Standard 22 on Accounting for Taxes on Income, issued by The Institute of Chartered Accountants of India. The deferred tax charge of Rs. (727.50/-) (Previous year - Rs. 1312.00/-), for the current year has been recognized in the Profit & Loss Account and comprises of the following:

5. Provision for Doubtful Debts and Advances

Periodically the company evaluates all customer dues to the company for collectability. The need for provisions is assessed based on various factors including collectability of specific dues, risk perceptions of the industry in which the customer operates, and general economic factors, which could affect the customer's ability to settle. As at March 31, 2015, the company has provided Rs. 1315.58 lacks/- and Rs. NIL/- lacs on account of provision for doubtful debts and doubtful advances respectively.

The company has written off Rs.1,378.50 lacks (P.Y. Rs. 11,504.09 lacks) as bad debts during the year.

6. Segment Information

The company's operations predominantly relate to providing IP Communications sales and services. There is thus only one reportable business segment encompassing a comprehensive range of services, including software development, packaged software integration, collocation, web hosting, web development, web mailing solutions, internet telephony and sales and integration of related networking equipment.

Secondary segmental reporting is performed on the basis of the geographical location of customers.

7. Term Deposits aggregating to Rs. 756.95/- lacs (P.Y.Rs. 756.95/- lacs) have been pledged with Bank as a security towards facilities availed from Bank.

8. Sundry Creditors, to the extent to which they could be identified as small scale and ancillary undertakings on the basis of information available with the Company, do not include amounts greater than Rs. One Lakh outstanding for more than thirty days.

9. Leases

The Company's leasing arrangements are in respect of operating leases for premises (residential, office, stores etc). These leasing arrangements which are not non cancellable range between 11 months and 3

years generally, or longer, and are usually renewable by mutual consent on mutually agreeable terms. The aggregate lease rentals payable are shown as Lease Rentals under Note '23'.

10. Employee Benefits

Defined Benefit Plans

In accordance with Accounting Standard 15 (AS 15)-"Employee Benefits (Revised 2005) , an actuarial valuation has been carried out in respect of gratuity and compensated absences. The discount rate assumed is 9%. The retirement age has been considered at 62 years and mortality table is as per IALM (2006-08) ULTIMATE.

11. Related Party Disclosures as required by Accounting Standard-18:

List of Related Parties and Relationships

i) Holding Companies

None

ii) Subsidiaries of the Company

Domestic

Net 4 Communications Limited Pipetel Communications Private Limited

Net 4 Network Services Limited Overseas Net 4 HK Limited

iii) Entity having Significant Influence

IFCI Factor Limited.

Jiwan Financial Holdings Ltd Net4 Barter Private Limited

iv) Key Management Personnel and relatives of such personnel

Directorsasjit Sawhney*

Amarjit S. Sawhney*

Surya S Chadha

Relative of Director Pawanjot Kaur Sawhney Suzane S Pai

* Details of remuneration paid to directors are given in note 30 above.

v) Entity where relative of Key Management Personnel exercises significant influence

Sterling Capital Pvt Ltd

12. Contingent Liabilities (to the extent not provided for)

2014-15 2013-14

(a) Claims against the company not 2.56 2.56 acknowledged as debts

(b) Guarantees

Outstanding guarantees and counter guarantees to 0.68 1.50 various banks, in respect of the guarantees given by those banks in favor of various government authorities and others NIL 6,102.89

Guarantees to banks against credit facilities extended to subsidiary

(c) Others

Disputed Income tax 285.53 265.61 demand for A/Y 09-10, including interest, though appeal filed*

Disputed Income tax 30.28 40.28 demand for A/Y 08-09, including interest, though appeal filed*

Disputed Income tax demand for A/Y 10-11, including interest, through 723.67 723.67 appeal filed*

Disputed Income tax demand for A/Y 11-12, 271.43 271.43 including interest, through appeal filed

* Based on past experience, there is a highly fair chance of liability being quashed.

13. It is not possible to furnish details of the quantities, due to heterogeneity of the items involved. Also, the Company is primarily engaged in the provision of services related to internet, which cannot be expressed in any generic unit. Hence, it is not possible to give the quantitative details of sales and certain information as required under revised Schedule VI to the Companies Act, 2013.

14. Note T to '41'form an integral part of the Balance Sheet and Profit and Loss Account.

a. Term Loan SBI was taken in FY 2011-12 and carries interest @ 2.9% SBI Base Rate p.a. The loan is repayable in 62 monthly installments. Term Loan is secured by hypothecation of entire fixed assets of the company. It is also secured against property situated at Site No. 12 and S. Nos. 33, 33/4A, 33/4B, 33/4C, 33/3B1, 33/6B, 34 and 34.7, KCG College Road, Karapakkam, Chennai. Further, the loan has been secured by personal guarantee of the directors. During the year comapny has defaulted in repayment from September 2013.

b. Vehicle loan from ICICI Bank is secured by hypothecation of vehicles. The loan is repayable in monthly installments and carries interest @ 10%-12% p.a.

c. Unsecured Loan from Banks and Financial Institutions carries interest @ 7% to 19% p.a.and is repayable in monthly installments. Deposits from public carry interest @ 11% to 12.5 % and are repayable on maturity. Inter Corporate deposits from carry interest @ 15% to 17% and are repayable on maturity.During the year company has defaulted in repayment from September 2013.

D. Cash Credit from State Bank of India is secured by hypothecation of entire curent assets and fixed assets of the company. It is also secured against residential property of situated at Brighton, East Sussex, London and B-4/39, Safdarjung Enclave New Delhi, Land and Building at D 25, Sector 3, Noida, Agricultural Land in Gurgaon. Further, the loan has been secured by personal guarantee of the directors. The cash credit is repayable on demand and carries interest @ 2.75% SB! Base rate p.a. During the year comoanv has defaulted in reoavment from Seotember 2013.

e. Cash Credit from State Bank of Travancore is secured by hypothecation of entire curent assets of the company and Fixed Deposit of 25% of sanctioned facilities.The loan has been guaranteed by corporate guarantee of Net 4 Communications Ltd and personal guarantee of the directors. The cash credit is repayable on demand and carries interest @ 2.75% SBT Base rate p.a. During the year company has defaulted in repayment from September 2013.

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Mar 31, 2014

1. Corporate Information

Net 4 India Limited (the company) is a public company domiciled in India and incorporated under the provisions of the Com- panies Act, 1956. Its shares are listed on BSE & NSE stock exchanges in India. The Company is India''s leading Data Centre, Cloud Hosting and Network services provider. Net4 focuses on providing services to businesses (small, medium and large) and its offerings include Data Centre & Cloud Solutions Enterprise Internet Services, VoIP Solutions, and Enterprise Messag- ing & Hosting Solutions and Domain name registration. The company caters to both domestic and international markets. Net4 has the distinction of being the first Internet services company in the World to be IS0 27001 certified, for Information Security standards adopted at its Data Centers. It is also ISO 9001:2000 certified, a Microsoft Gold Partner and an ICANN & .IN accredited Domain Name Registrar.

2 a. Term Loan SBI was taken in FY 2011-12 and carries interest @ 2.9% SBI Base Rate p.a. The loan is repayable in 62 monthly installments. Term Loan is secured by hypothecation of entire fixed assets of the company. It is also secured against property situ- ated at Site No. 12 and S. Nos. 33, 33/4A, 33/4B, 33/4C, 33/3B1, 33/6B, 34 and 34.7, KCG College Road, Karapakkam, Chennai. Further, the loan has been secured by personal guarantee of the directors. During the year comapny has defaulted in repayment from September 2013.

b. Vehicle loan from ICICI Bank is secured by hypothecation of vehicles. The loan is repayable in monthly installments and carries interest @ 10%-12% p.a.

c. Unsecured Loan from Banks and Financial Institutions carries interest @ 7% to 19% p.a. and is repayable in monthly installments. Deposits from public carry interest @ 11% to 12.5 % and are repayable on maturity. Inter Corporate deposits from carry interest @ 15% to 17% and are repayable on maturity. During the year company has defaulted in repayment from September 2013.

3 a. Cash Credit from State Bank of India is secured by hypothecation of entire curent assets and fixed assets of the company. It is also secured against residential property of situated at Brighton, East Sussex, London and B-4/39, Safdarjung Enclave New Delhi, Land and Building at D 25, Sector 3, Noida, Agricultural Land in Gurgaon. Further, the loan has been secured by personal guarantee of the directors. The cash credit is repayable on demand and carries interest @ 2.75% SBI Base rate p.a. During the year company has defaulted in repayment from September 2013.

b. Cash Credit from State Bank of Travancore is secured by hypothecation of entire curent assets of the company and Fixed Deposit of 25% of sanctioned facilities. The loan has been guaranteed by corporate guarantee of Net 4 Communications Ltd and personal guarantee of the directors. The cash credit is repayable on demand and carries interest @ 2.75% SBT Base rate p.a. During the year company has defaulted in repayment from September 2013.

4. All amounts in the financial statements are presented in Rupees lakhs.

5. Previous year''s figures have been regrouped, rearranged and reclassified, wherever necessary to confirm to current year''s classification.

6. Provision for Doubtful Debts

Periodically the company evaluates all customer dues to the company for collectability. The need for provisions is assessed based on various factors including collectability of specific dues, risk perceptions of the industry in which the customer oper- ates, and general economic factors, which could affect the customer''s ability to settle. As at March 31, 2014, the company has provided Rs. 495.39 lacs/- and Rs. 1550.00/- lacs on account of provision for doubtful debts and doubtful advances respec- tively.

The company has written off Rs.11,540.09 lacs (PY Rs. 6.15 lacs) as bad debts during the year.

7. Segment Information

The company''s operations predominantly relate to providing IP Communications sales and services. There is thus only one reportable business segment encompassing a comprehensive range of services, including software development, packaged software integration, collocation, web hosting, web development, web mailing solutions, internet telephony and sales and inte- gration of related networking equipment.

8. Term Deposits aggregating to Rs. 756.95/- lacs (P.Y. Rs. 815.67/- lacs) have been pledged with Bank as a security towards facilities availed from Bank

9. Sundry Creditors, to the extent to which they could be identified as small scale and ancillary undertakings on the basis of infor- mation available with the Company, do not include amounts greater than Rs. One Lakh outstanding for more than thirty days.

10. Leases

The Company''s leasing arrangements are in respect of operating leases for premises (residential, office, stores etc). These leasing arrangements which are not non cancellable range between 11 months and 3 years generally, or longer, and are usually renewable by mutual consent on mutually agreeable terms. The aggregate lease rentals payable are shown as Lease Rentals under Note ''23''.

11. Borrowing Costs

The amount of borrowing costs capitalized during the year is Rs 16.40/- lacs /- (P.Y. 161.00/- lacs)

12. Employee Benefits

Defined Benefit Plans

In accordance with Accounting Standard 15 (AS 15)-"Employee Benefits (Revised 2005)", an actuarial valuation has been carried out in respect of gratuity and compensated absences. The discount rate assumed is 9%. The retirement age has been considered at 62 years and mortality table is as per IALM (2006-08) ULTIMATE.

13. Related Party Disclosures as required by Accounting Standard-18:

List of Related Parties and Relationships

i) Holding Companies

Nil

ii) Subsidiaries of the Company

Domestic

Net 4 Communications Ltd

Pipetel Communications Private Limited

Net 4 Network Services Limited

Overseas

Net4 HK limited

iii) Entity having Significant Influence

IFCI Factor Limited.

Jiwan Financial Holdings Ltd

Net4 Barter Private Limited

iv) Key Management Personnel and relatives of such personnel

Executive Directors

Jasjit Sawhney*

Amarjit S. Sawhney*

Non Executive Directors

Desi Subri Valli (Resigned on 09.01.2013)

Relative of Director

Pawanjot Kaur Sawhney

Suzane S Pai

* Details of remuneration paid to directors are given in note 30 above.

v) Entity where relative of Key Management Personnel exercises significant influence

Sterling Capital Pvt Ltd

14. Contingent Liabilities (to the extent not provided for)

2013-14 2012-13

(a) Claims against the company not acknowledged as debts 2.56 2.56

(b) Guarantees

* Outstanding guarantees and counter guarantees to various banks, in respect of 1.50 16.44 the guarantees given by those banks in favor of various government authorities and others

* Guarantees to banks against credit facilities extended to subsidiary 6,102.89 6,102.89

(c) Others

* Disputed Income tax demand for A/Y 09-10, including interest, though appeal 265 61 265 61 filed*

* Disputed Income tax demand for A/Y 08-09, including interest, though appeal filed* 40.28 40.28

* Disputed Income tax demand for A/Y 10-11, including interest, through appeal filed* 723.67 773.67

* Disputed Income tax demand for A/Y 11-12, including interest, through appeal filed 271.43

* Based on past experience, there is a highly fair chance of liability being quashed.

15. It is not possible to furnish details of the quantities, due to heterogeneity of the items involved. Also, the Company is pri- marily engaged in the provision of services related to internet, which cannot be expressed in any generic unit. Hence, it is not possible to give the quantitative details of sales and certain information as required under revised Schedule VI to the Compa- nies Act, 1956.

16. Note ''1'' to ''41'' form an integral part of the Balance Sheet and Profit and Loss Account.

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Mar 31, 2013

1. Corporate Information

Net 4 India Limited (the company) is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares are listed on BSE & NSE stock exchanges in India. The Company is India''s leading Data Centre, Cloud Hosting and Network services provider. Net4 focuses on providing services to businesses (small, medium and large) and its offerings include Data Centre & Cloud Solutions Enterprise Internet Services, VoIP Solutions, and Enterprise Messaging & Hosting Solutions and Domain name registration. The company caters to both domestic and international markets.

Net4 has the distinction of being the first Internet services company in the World to be ISO 27001 certified, for Information Security standards adopted at its Data Centers. It is also ISO 9001:2000 certified, a Microsoft Gold Partner and an ICANN & .IN accredited Domain Name Registrar.

2. All amounts in the financial statements are presented in Rupees lakhs.

3. Previous year''s figures have been regrouped, rearranged and reclassified, wherever necessary to confirm to current year''s classification.

4. Deferred Tax

Provision for deferred tax for the year ended March 31, 2013 has been made in accordance with the provisions of Accounting Standard 22 on Accounting for Taxes on Income, issued by The Institute of Chartered Accountants of India. The deferred tax charge of Rs. 125.07/- (Previous year - Rs. 124.39/-), for the current year has been recognized in the Profit & Loss Account and comprises of the following:

The computation of net profits in accordance with Section 309(5) read with section 349 of the Companies Act, 1956, has not been given as the company does not envisage any payment of commission to directors.

5. Provision for Doubtful Debts

Periodically the company evaluates all customer dues to the company for collectability. The need for provisions is assessed based on various factors including collectability of specific dues, risk perceptions of the industry in which the customer operates, and general economic factors, which could affect the customer''s ability to settle. As at March 31, 2013, the company has not provided any provision for any doubtful debts as the company is confident of collecting all amounts due.

The company has written off Rs.6.15/- (P.Y. Rs. 1.40/-) as bad debts during the year.

6. Segment Information

The company''s operations predominantly relate to providing IP Communications sales and services. There is thus only one reportable business segment encompassing a comprehensive range of services, including software development, packaged software integration, collocation, web hosting, web development, web mailing solutions, internet telephony and sales and integration of related networking equipment.

Secondary segmental reporting is performed on the basis of the geographical'' location of customers.

7. Term Deposits aggregating to Rs 815.67/- (P.Y.Rs. 732.72/-) have been pledged with Bank as a security towards facilities availed from Bank. .

8. Sundry Creditors, to the extent to which they could be identified as small scale and ancillary undertakings on the basis of information available with the Company, do not include amounts greater than Rs. One Lakh outstanding for more than thirty days.

9. Leases

The Company''s leasing arrangements are In respect of operating leases for premises (residential, office, stores etc). These leasing arrangements which are not non cancellable range between 11 months and 3 years generally, or longer, and are usually renewable by mutual consent on mutually agreeable terms. The aggregate lease rentals payable are shown as Lease Rentals under Note ''23''. .

10. Borrowing Costs .

The amount of borrowing costs capitalized during the year is Rs. 161.00 /- (P.Y. 58.74/-)

11. Employee Benefits

Defined Benefit Plans

In accordance with Accounting Standard 15 (AS 15)-"Employee Benefits (Revised 2005)", an actuarial valuation has been carried out in respect of gratuity and compensated absences. The discount rate assumed is 8%. The retirement age has been considered at 62 years and mortality table is as per LICI (1994-96).

12. Contingent Liabilities (to the extent not provided for)

2012-13 2011-12

(a) Claims against the company not 2.56 2.56 acknowledged as debts

(b) Guarantees

Outstanding guarantees and counter guarantees to various 16.44 206.96 banks, in respect of the guarantees given by those banks in favor of various government authorities and others

Guarantees to banks against credit 6,102.89 6,832 facilities extended to subsidiary

(c) Others

* Disputed Income tax demand for 265.61 265.61

A/Y . 09-10, including interest, though appeal filed* 40.28 40.28

Disputed Income tax demand for A/Y 08-09, including interest, though appeal filed*

Disputed Income tax demand for 67 ~ A/Y 10-11, including interest, through appeal filed* .

* Based on past experience, there is a highly fair chance of liability being quashed.

13. It is not possible to furnish details of the quantities, due to heterogeneity of the items involved. Also, the Company is primarily engaged in the provision of services related to internet, which cannot be expressed in any generic unit. Hence, it is not possible to give the quantitative details of sales and certain information as required under revised Schedule VI to the Companies Act, 1956. ''

14 Note T to ''42'' form an integral part of the Balance Sheet and Profit and Loss Account.

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Mar 31, 2012

1.Corporate Information

Net 4 India Limited (the company) is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. Its shares are listed on BSE & NSE stock exchanges in India. The Company is India''s leading Data Centre, Cloud Hosting and Network services provider. Net4 focuses on providing services to businesses (small, medium and large) and its offerings include Data Centre & Cloud Solutions Enterprise Internet Services, VoIP Solutions, and Enterprise Messaging & Hosting Solutions and Domain name registration. The company caters to both domestic and international markets. Net4 has the distinction of being the first Internet services company in the World to be IS0 27001 certified, for Information Security standards adopted at its Data Centers. It is also ISO 9001:2000 certified, a Microsoft Gold Partner and an ICANN & .IN accredited Domain Name Registrar.

a. Term Loan SBI was taken in FY 2011-12 and carries interest @ 5% SBI Base Rate p.a. The loan is repayable in 60 monthly installments. Term Loan is secured by hypothecation of entire curent assets and fixed assets of the company, It is also secured against residential properties of situated at Brighton, East Sussex, Londaon and B-4/39, Safdarjung Enclavew New Delhi, Land and Building at D 25, Sector 3, Noida, Agricultural Land in Gurgaon Further, the loan has been secured by personal guarantee of the directors.

b. Vehicle loan fom Kotak Mahindra and ICICI Bank is secured by hypothecation of vehicles. The loan is repayable in monthly installments and carries interest @ 10%-12% p.a.

c. Unsecured Loan from Banks and Financial Institutions carries interest @ 7% to 19% p.a.and is repayable in monthly installments. Deposits from public carry interest @ 11% to 12.5 % and are repayable on maturity. Inter Corporate deposits from carry interest @ 15% to 17% and are repayable on maturity

a.Cash Credit from State Bank of India is secured by hypothecation of entire curent assets and fixed assets of the company. It is also secured against residential properties of situated at Brighton, East Sussex, Londaon and B-4/39, Safdarjung Enclavew New Delhi, Land and Building at D 25, Sector 3, Noida, Agricultural Land in Gurgaon Further, the loan has been secured by personal guarantee of the directors. The cash credit is repayable on demand and carries interest @ 4% SBI Base rate p.a.

b.Cash Credit from State Bank of Travancore is secured by margin money and hypothecation of entire curent assets of the company and Fixed Deposit of 25% of sanctioned facilities.The loan has been guaranteed by corporate guarantee of Net 4 Communications Ltd and personal guarantee of the directors. The cash credit is repayable on demand and carries interest @ 4.5% SBT Base rate p.a.

2. All amounts in the financial statements are presented in Rupees lakhs.

3. Previous year''s figures have been regrouped, rearranged and reclassified, wherever necessary to confirm to current year''s classification.

4. Deferred Tax

Provision for deferred tax for the year ended March 31, 2012 has been made in accordance with the provisions of Accounting Standard 22 on Accounting for Taxes on Income, issued by The Institute of Chartered Accountants of India. The deferred tax charge of Rs. 124.39/- (Previous year - Rs. 77/-), for the current year has been recognized in the Profit & Loss Account and comprises of the following:

5. Provision for Doubtful Debts

Periodically the company evaluates all customer dues to the company for collectability. The need for provisions is assessed based on various factors including collectability of specific dues, risk perceptions of the industry in which the customer operates, and general economic factors, which could affect the customer''s ability to settle. As at March 31, 2012, the company has not provided for any doubtful debts as the company is confident of collecting all amounts due nor written off any amount as bad debts during the year.

The company has written off Rs. 1.40/- (P.Y. Rs. 24.32/-) as bad debts during the year.

6. Segment Information

The company''s operations predominantly relate to providing IP Communications sales and services. There is thus only one reportable business segment encompassing a comprehensive range of services, including software development, packaged software integration, collocation, web hosting, web development, web mailing solutions, internet telephony and sales and integration of related networking equipment.

Secondary segmental reporting is performed on the basis of the geographical location of customers.

7. Term Deposits aggregating to Rs.732.72/- (P.Y.Rs. 185.72/-) have been pledged with Bank as a security towards facilities availed from Bank.

8. Sundry Creditors, to the extent to which they could be identified as small scale and ancillary undertakings on the basis of information available with the Company, do not include amounts greater than Rs. One Lakh outstanding for more than thirty days.

9. Leases

The Company''s leasing arrangements are in respect of operating leases for premises (residential, office, stores etc). These leasing arrangements which are not non cancellable range between 11 months and 3 years generally, or longer, and are usually renewable by mutual consent on mutually agreeable terms. The aggregate lease rentals payable are shown as Lease Rentals under Note ''23''.

The Company also has leased facilities under non – cancellable operating leases for equipments for a period of 3 years. The future lease payments in respect of these leases are as follows:

10. Borrowing Costs

The amount of borrowing costs capitalized during the year is Rs. 58.74.

11. Employee Benefits

Defined Benefit Plans

In accordance with Accounting Standard 15 (AS 15)-"Employee Benefits (Revised 2005)", an actuarial valuation has been carried out in respect of gratuity and compensated absences. The discount rate assumed is 8%. The retirement age has been considered at 58 years and mortality table is as per LICI (1994-96).

12. Related Party Disclosures as required by Accounting Standard-18:

List of Related Parties and Relationships:

i) Holding Companies:

Nil

ii) Subsidiaries of the Company:

Domestic

Net 4 Communications Ltd

Pipetel Communications Private Limited

Net 4 Network Services Limited

Overseas

Net 4 HK Limited

iii) Entity having Significant Influence:

Trak Online Net India Pvt Ltd.

Jiwan Financial Holdings Ltd

iv) Key Management Personnel and relatives of such personnel:

Executive Directors

Jasjit Sawhney*

Amarjit S. Sawhney*

Non Executive Directors

Desi Subri Valli

Relative of Director

Pawanjot Kaur Sawhney

Suzane S Pai

* Details of remuneration paid to directors are given in Note 30 above.

The Company does not have any outstanding dilutive potential equity shares. Consequently, the basic and diluted earnings per share of the company remain the same.

13. Contingent Liabilities

2011-12 2010-11

(a) Claims against the company not acknowledged as debts 2.56 2.56

(b) Guarantees

¦ Outstanding guarantees and counter guarantees to 206.96 10.60 various banks, in respect of the guarantees given by those banks in favour of various government authorities and others 6,832 4,112

¦ Guarantees to banks against credit facilities extended to subsidiary

¦ Gurantees to Banks against credit facilities extended - 1,000 to associates

(c) Others 265.61 -

¦ Disputed Income tax demand for A/Y 09-10, including interest, though appeal filed*

¦ Disputed Income tax demand for A/Y 08-09, including 40.28 40.28 interest, though appeal filed*

* Based on past experience, there is a highly fair chance of liability being quashed.

14. It is not possible to furnish details of the quantities, due to heterogeneity of the items involved. Also, the Company is primarily engaged in the provision of services related to internet, which cannot be expressed in any generic unit. Hence, it is not possible to give the quantitative details of sales and certain information as required under revised Schedule VI to the Companies Act, 1956.

15. Note ''1'' to ''42'' form an integral part of the Balance Sheet and Profit and Loss Account.

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Mar 31, 2011

(i) All amounts in the financial statements are presented in Rupees thousands, except for share data and as otherwise stated.

(ii) Previous year's figures have been regrouped, rearranged and reclassified, wherever necessary to conform to current year's classification.

(iii) Provision for Doubtful Debts

Periodically the company evaluates all customer dues to the company for collectability. The need for provisions is assessed based on various factors including collectability of specific dues, risk perceptions of the industry in which the customer operates, and general economic factors, which could affect the customer's ability to settle. As at March 31, 2011, the company has provided for doubtful debts of Rs. Nil (as at March 31, 2010 Rs. Nil/-) on dues from customers. The company continues pursuing the parties for recovery of the dues, in part or full.

The company has written off Rs. 2,432/- (P.Y. Rs. 1,130/-) as bad debts during the year.

(iv) The company's operations predominantly relate to providing IP Communications sales and services. There is thus only one reportable business segment encompassing a comprehensive range of services, including software development, packaged software integration, colocation, web hosting, web development, web mailing solutions, internet telephony and sales and integration of related networking equipment.

Secondary segmental reporting is performed on the basis of the geographical location of customers.

(v) Term Deposits aggregating to Rs.18572/- (P.Y.Rs. 20,977/-) have been pledged with Bank as a security towards non-fund based facilities availed from Bank.

(vi) Payments made to Non Residents on account of Dividend

The Company has paid dividend in respect of shares held by Non–residents by way of credit to their Non-Resident External Account (NRE A/c) or NRO A/c or otherwise by way of remittance in foreign currency.

(vii) Dividend paid for the year 09-10 is in excess of the provision made on account of 916,818 shares allotted to M/s Granite Hill India Opportunity Fund on 3rd July 2010.

(viii) The Company accounts for the liability for compensated absences payable in future and long service awards based on an independent actuarial valuation using the projected unit credit method as at the year end. Actuarial gains and losses are recognized immediately in the Profit & Loss Account.

(ix) Capital work in progress including the advances to vendors is Rs 20,202.

(x) Sundry Creditors, to the extent to which they could be identified as small scale and ancillary undertakings on the basis of information available with the Company, do not include amounts greater than Rs. One Lakh outstanding for more than thirty days.

(xi) The Company's leasing arrangements are in respect of operating leases for premises (residential, office, stores etc). These leasing arrangements which are not non cancellable range between 11 months and 3 years generally, or longer, and are usually renewable by mutual consent on mutually agreeable terms. The aggregate lease rentals payable are shown as Lease Rentals under Schedule 'O'.

(xii) Related Party Disclosures as required by Accounting Standard-18: List of Related Parties and Relationships:

i) Holding Companies: Nil

ii) Subsidiaries of the Company: Domestic

Net 4 Communications Ltd Overseas Net 4 Singapore Pte Limited

iii) Entity having Significant Influence:

Trak Online Net India Pvt Ltd.

Jiwan Financial Holdings Ltd

iv) Key Management Personnel and relatives of such personnel: Executive Directors

Jasjit Sawhney

Amarjit S. Sawhney

Non Executive Directors

Desi S. Valli

Relative of Director

Pawanjot Kaur Sawhney

Suzane S Pai

v) Entity where relative of Key Management Personnel exercises significant influence: Sterling Capital Pvt Ltd

(xiii) Contingent Liabilities

Outstanding guarantees and counter guarantees to various banks, in respect of the guarantees given by those banks in favour of various government authorities and others amounting to Rs. 1060/- (Previous year-Rs. 658/-).

Guarantees to Banks against credit facilities extended to subsidiary amount to Rs. 411,200/- (Previous year – Rs. 358,300/-)

Guarantees to Banks against credit facilities extended to associates amount to Rs. 100,000/- Claims against the company, not acknowledged as debts amount to Rs. 256/- (Previous year-Rs. 256/-)

Disputed Income Tax Demand for AY 08-09 of Rs. 4,028/-, including interest (Previous year- Nil), though appeal filed. However based on past experience, there is a highly fair chance of liability being quashed.

(xiv) Estimated amount of unexecuted capital contracts (net of advance) - Nil (Previous year-Rs. 13,045).

(xv) It is not possible to furnish details of the quantities, due to heterogeneity of the items involved. Also, the Company is primarily engaged in the provision of services related to internet, which cannot be expressed in any generic unit. Hence, it is not possible to give the quantitative details of sales and certain information as required under paragraph 3, 4C and 4D of part II of Schedule VI to the Companies Act, 1956.

(xvi)Schedule 'A' to 'S' form an integral part of the Balance Sheet and Profit and Loss Account.

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Mar 31, 2010

(i) All amounts in the financial statements are presented in Rupees thousands, except for share data and as otherwise stated.

(ii) Previous years fgures have been regrouped, rearranged and reclassifed, wherever necessary to con- form to current years classifcation.

(iii) Deferred Tax

Provision for deferred tax for the year ended March 31, 2010 has been made in accordance with the provi- sions of Accounting Standard 22 on Accounting for Taxes on Income, issued by The Institute of Chartered Accountants of India. The deferred tax charge of Rs. 7,268/- (Previous year - Rs. 2,271/-), for the current year has been recognized in the Profit & Loss Account and comprises of the following:

The computation of net Profits in accordance with Section 309(5) read with section 349 of the Com- panies Act, 1956, has not been given as the company does not envisage any payment of commission to directors.

(ix) Capital expenditure incurred for “in house” research & development include addition to Computers and Networking Equipment of Rs 91,895.

(x) Provision for Doubtful Debts

Periodically the company evaluates all customer dues to the company for collectability. The need for provisions is assessed based on various factors including collectability of specifc dues, risk perceptions of the industry in which the customer operates, and general economic factors, which could affect the customers ability to settle. As at March 31, 2010, the company has provided for doubtful debts of Rs. Nil (as at March 31, 2009 Rs. Nil/-) on dues from customers. The company continues pursuing the parties for recovery of the dues, in part or full.

The company has written off Rs. 1,130/- (P.Y. Rs. 157/-) as bad debts during the year.

(xi) The companys operations predominantly relate to providing IP Communications sales and services. There is thus only one reportable business segment encompassing a comprehensive range of ser- vices, including software development, packaged software integration, colocation, web hosting, web development, web mailing solutions, internet telephony and sales and integration of related network- ing equipment.

Secondary segmental reporting is performed on the basis of the geographical location of custom- ers.

(xii) Term Deposits aggregating to Rs. 20,977/- (P.Y.Rs. 20,174/-) have been pledged with Bank as a security towards non-fund based facilities availed from Bank.

(xiii) Remittance in Foreign Currency on account of Dividend

The Company has paid dividend in respect of shares held by Non–residents by way of credit to their Non- Resident External Account (NRE A/c) or NRO A/c or otherwise by way of remittance in foreign currency.

(xiv) The Company is taking steps to ascertain the actuarial Gratuity liability and necessary adjustments from the calculations done presently will be made on determination thereof. Meanwhile, the Company has established a Gratuity Fund, called the “Net 4 India Ltd Employees Gratuity Fund”, under an irrevocable Trust for making provisions of gratuity benefts to the employees of the Company.

(xv) Capital work in progress comprises of advances to vendors of Rs 13,308

(xvi) Sundry Creditors, to the extent to which they could be identifed as small scale and ancillary undertakings on the basis of information available with the Company, do not include amounts greater than Rs. One Lakh outstanding for more than thirty days.

(xvii) The Companys leasing arrangements are in respect of operating leases for premises (residential, offce, stores etc). These leasing arrangements which are not non cancellable range between 11 months and 3 years generally, or longer, and are usually renewable by mutual consent on mutually agreeable terms. The aggregate lease rentals payable are shown as Rent under Schedule ‘O.

The Company also has leased facilities under non – cancellable operating leases for equipments for a period of 4 to 5 years. The future lease payments in respect of these leases are as follows:

(xviii) Related Party Disclosures as required by Accounting Standard-18: List of Related Parties and Relationships

i) Holding Companies

Nil

ii) Subsidiaries of the Company

Domestic

Net 4 Communications Ltd

Overseas

Net 4 Singapore Pte Limited

iii) Entity having Signifcant Infuence

Trak Online Net India Pvt Ltd.

Jiwan Financial Holdings Ltd

iv) Key Management Personnel and relatives of such personnel

Executive Directors

Jasjit Sawhney Amarjit

S. Sawhney Non Executive

Directors Desi S. Valli

Relative of Director

Pawanjot Kaur Sawhney

Suzane S

The Company does not have any outstanding dilutive potential equity shares. Consequently, the basic and diluted earnings per share of the company remain the same.

(xx) Contingent Liabilities

Outstanding guarantees and counter guarantees to various banks, in respect of the guarantees given by those banks in favour of various government authorities and others amounting to Rs. 658/- (Previous year-Rs. 2,772/-).

Guarantees to Banks against credit facilities extended to subsidiary amount to Rs. 358,300/- (Previous year – Rs. 358,300/-)

Guarantees to Banks against credit facilities extended to associates amount to Rs. 100,000/- Claims against the company, not acknowledged as debts amount to Rs. 256/- (Previous year- Rs. 256/-)

(xxi) Estimated amount of unexecuted capital contracts (net of advance) - Rs. 13,045 (Previous year-Rs. Nil).

(xxii) It is not possible to furnish details of the quantities, due to heterogeneity of the items involved. Also, the Company is primarily engaged in the provision of services related to internet, which cannot be expressed in any generic unit. Hence, it is not possible to give the quantitative details of sales and certain information as required under paragraph 3, 4C and 4D of part II of Schedule VI to the Companies Act, 1956.

(xxiii) Schedule A to S form an integral part of the Balance Sheet and Profit and Loss Account.

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Mar 31, 2009

(i) All amounts in the financial statements are presented in Rupees thousands, except for share data and as otherwise stated.

(ii) Previous year’s figures have been regrouped, rearranged and reclassified, wherever necessary to conform to current year’s classification.

(iii) Provision for Doubtful Debts

Periodically the company evaluates all customer dues to the company for collectability. The need for provisions is assessed based on various factors including collectability of specific dues, risk perceptions of the industry in which the customer operates, and general economic factors, which could affect the customer’s ability to settle. As at March 31, 2009, the company has provided for doubtful debts of Rs. Nil (as at March 31, 2008 Rs. Nil/-) on dues from customers. The company continues pursuing the parties for recovery of the dues, in part or full.

The company has written off Rs. 157/- (P.Y. Rs. 864/-) as bad debts during the year.

(iv) The company’s operations predominantly relate to providing IP Communications sales and services.

There is thus only one reportable business segment encompassing a comprehensive range of services, including software development, packaged software integration, colocation, web hosting, web development, web mailing solutions, internet telephony and sales and integration of related networking equipment.

Secondary segmental reporting is performed on the basis of the geographical location of customers.

(v) Term Deposits aggregating to Rs. 20,174/- (P.Y.Rs. 15,637/-) have been pledged with Bank as a security towards non-fund based facilities availed from Bank.

(vi) Remittance in Foreign Currency on account of Dividend

The Company has paid dividend in respect of shares held by Non–residents by way of credit to their Non- Resident External Account (NRE A/c) or NRO A/c or otherwise by way of remittance in foreign currency.

(vii) The Company is taking steps to ascertain the actuarial Gratuity liability and necessary adjustments from the calculations done presently will be made on determination thereof. Meanwhile, the Company has established a Gratuity Fund, called the “Net 4 India Ltd Employees Gratuity Fund”, under an irrevocable Trust for making provisions of gratuity benefits to the employees of the Company.

(viii) Sundry Creditors, to the extent to which they could be identified as small scale and ancillary undertakings on the basis of information available with the Company, do not include amounts greater than Rs. One Lakh outstanding for more than thirty days.

(ix) The Company’s leasing arrangements are in respect of operating leases for premises (residential, office, stores etc). These leasing arrangements which are not non cancellable range between 11 months and 3 years generally, or longer, and are usually renewable by mutual consent on mutually agreeable terms. The aggregate lease rentals payable are shown as Rent under Schedule ‘O’.

(x) Related Party Disclosures as required by Accounting Standard-18:

List of Related Parties and Relationships i) Holding Companies: Nil

ii) Subsidiaries of the Company: Domestic

Net 4 Communications Ltd Overseas Net 4 Singapore Pte Limited

iii) Entity having Significant Influence: Trak Online Net India Pvt Ltd. Jiwan Financial Holdings Ltd.

iv) Key Management Personnel and relatives of such personnel: Executive Directors Jasjit Sawhney Amarjit S. Sawhney Non Executive Directors Desi S. Valli

Relative of Director Pawanjot Kaur Sawhney

iv) Entity where relative of Key Management Personnel exercises significant influence Sterling Capital Pvt Ltd

(xi) Contingent Liabilities

Outstanding guarantees and counter guarantees to various banks, in respect of the guarantees given by those banks in favour of various government authorities and others amounting to Rs. 2,772/- (Previous year-Rs. 21,151/-) given by the Bankers in favor of various parties. Guarantees to Banks against credit facilities extended to subsidiary amount to Rs. 358,300/- (Previous year - Rs. 274,600/-) Claims against the company, not acknowledged as debts amount to Rs. 256/- (Previous year-Rs. Rs. 261/-)

(xii) Estimated amount of unexecuted capital contracts (net of advance) - Rs. Nil (Previous year-Rs. Nil).

(xiii) It is not possible to furnish details of the quantities, due to heterogeneity of the items involved. Also, the Company is primarily engaged in the provision of services related to internet, which cannot be expressed in any generic unit. Hence, it is not possible to give the quantitative details of sales and certain information as required under paragraph 3, 4C and 4D of part II of Schedule VI to the Companies Act, 1956.

(xiv) Schedule A to S form an integral part of the Balance Sheet and Profit and Loss Account.

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Mar 31, 2000

1. In the opinion of the board. Current Assets, loans 8c Advances are approximately of the value stated, if realised in the ordinary course of business. The provision for all known Liabilities are adequate and not in excess of the amount considered reasonably necessary. There are no contingent Liabilities man those stated, and also no personal expenses have been charged to revenue.

2. Previous year figures have been re-grouped and/or rearranged wherever necessary to make them comparable with those of Current Year.

3. None of the Employee was in receipt of remuneration as required under Section 217 (2A) of the Companies Act, 1956.

4. Expenditure/Earning in foreign currency/remittances in foreign currency during the year under review was NIL.

5. Other additional information pursaunt to paragraphs 4C and D of part-II Schedule-VI of the Companies Act, 1956 are not applicable.

6. Schedule A to P form an integral part of the Balance Sheet and Profit & Loss Account.