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Notes to Accounts of NIIT Technologies Ltd.

Mar 31, 2016

1. Details of exceptional Items charged to the Statement of Profit and Loss

During the year ended March 31 2016, in a Subsidiary of the Company, settlement was agreed with a customer on termination of an ongoing service agreement ("agreement") under dispute as at March 31, 2015, in respect of which the Company was providing service to Subsidiary. As per terms of the Settlement, the Subsidiary has paid Settlement amount to the customer upon receipt of which the customer has released the bank guarantee of Rs. 142,590,000 and corporate guarantee of Rs. 926,835,000 issued by the Company and also released the Company and the Subsidiary from further obligations under the agreement. Consequent to the Settlement, the Subsidiary has charged back to the Company an amount of Rs. 402,866,231, being portion of the net resultant loss on the contract as considered attributable to the services provided by the Company in the Previous Years. Also, the Company has written off unbilled revenue carried forward, which is no longer recoverable and written back provision for expenses for completion of services on the agreement, which is no longer required to be carried forward. Consequent to the above, in line with AS-29 and AS-4, the Company had recognized the resultant impact of the above in the financial statements for the year ended March 31, 2015 and disclosed the same as an exceptional item in the Statement of Profit and Loss, comprising the following:

2. Current Income Tax

(i) The Company determines taxes on income in accordance with the applicable provisions of Income Tax Act, 1961 ("Act"). The Company also claims deductions under sections 10AA and 80 IAB in respect of its Unit and Developer Operations, respectively, in Special Economic Zone (SEZ). The payments under Minimum Alternate Tax (MAT) can be carried forward and can be set off against future tax liability. Accordingly, a sum of Rs. 519,823,908 (Previous Year Rs. 202,198,421) has been shown under "Loans and Advances" (Refer Note 15). Further, during the year, the Company has created MAT credit of Rs. 317,625,487 (Previous Year Rs. 141,924,532).

(ii) In addition to Indian Operations, the Company has accounted for the tax liability/reliefs in respect of its branches having operations in the United States of America (USA) and Ireland in accordance with the tax legislations applicable in the respective jurisdiction.

(iii) The current tax expense includes charge of Rs. 8,802,236/- (Previous Year credit of Rs. 28,273,097) and charge of Rs. 23,482,084 (Previous Year charge of Rs. 100,660,319) relating to earlier year adjustments of India and the USA branch operations, respectively.

3. Leases

The Company has significant operating leases for premises. These lease arrangements range for a period between 11 months and 3 years, which include both cancellable. Most of the leases are renewable for further period on mutually agreeable terms.

4. Derivative financial instruments:

The Company is exposed to foreign currency fluctuations on foreign currency assets / liabilities, forecasted cash flows denominated in foreign currency. The use of derivatives to hedge foreign currency forecasted cash flows is governed by the Company''s strategy, which provide principles on the use of such forward contracts consistent with the Company''s Risk Management Policy. The counter parties in these derivative instruments are banks and the Company considers the risks of non-performance by the counterparty as non-material. The forward foreign exchange contracts mature between 1 to 12 months and the forecasted transactions are expected to occur during the same period. The Company does not use forward contracts for speculative purposes.

5. Working capital limits of Rs. 3,000,000,000 (Previous Year Rs. 3,000,000,000) are secured by a first charge on the book debts of the Company and by a second charge on movable assets of the Company. The Company has not utilized the fund based limit as at the year-end (Previous Year Rs. Nil).

6. Employee stock option plan

The Company established NIIT Technologies Stock Option Plan 2005 (ESOP 2005) in the year 2005-06 and the same was approved at the Annual General Meeting of the Company on 18th May 2005. The plan was set up so as to offer and grant for the benefit of employees of the Company and its subsidiaries, who are eligible under Securities Exchange Board of India (SEBI) Guidelines (excluding promoters), options of the Company in aggregate up to 3,850,000 options under ESOP 2005, in one or more Tranches, and on such terms and conditions as may be fixed or determined by the Board in accordance with the provisions of law or guidelines issued by the relevant authorities in this regard. As per the plan each option is exercisable for one equity share of face value of Rs 10 each fully paid up on payment to the company for such shares at a price to be determined in accordance with ESOP 2005. SEBI has issued the SEBI (Share Based Employee Benefits) Regulations, 2014 which is applicable to the above ESOP 2005.

7. Previous Year figures have been regrouped / recast wherever considered necessary to conform to current year''s classification


Mar 31, 2014

(All amount in Rs.'' unless otherwise stated)

As At As At March 31''2014 March 31''2013 1. Contingent liabilities

Claims against the company not acknowledged as debts Income tax matters 299''325''686 299''325''686

Claims made by customers - pending under arbitration 3''230''000 3''230''000

b) Defined Benefit Plans

Disclosure in respect of defined benefit plans in accordance with Accounting Standard 15 (Revised) "Employee Benefits"

(1) Provident Fund:

The Company makes contribution to the "NUT Technologies Limited Employees Provident Fund Trust" ("the Trust")'' which is exempted under section 17 of Employees'' Provident Fund Act'' 1952. The conditions for grant of exemptions stipulate that the employer shall make good the deficiency'' if any'' in the interest rate declared by the Trust vis-a-vis statutory rate. As per guidance note on Accounting Standard-15'' Employee Benefits (Revised 2005) issued by the Accounting Standard Board (ASB)'' provident funds set up by employers'' which requires interest shortfall to be met by the employer'' needs to be treated as defined benefit plan. The Trust includes employees of the Company as well as of other subsidiaries in accordance with the approval vide letter No. S-35015/9/2008-SS-ll dated March 20'' 2009'' granted by the Employees'' Provident Fund Organization. In view of the same'' it is a multi- employer defined benefit plan. The Company made defined contribution to Regional Provident Fund Commissioner (RPFC) from 1st October 2005 till 29th February 2009 in respect of Provident Fund. The Company has transferred these contributions along with the interest from RPFC to NUT Technologies Limited Employees'' Provident Fund Trust. The Company does not have any further obligation in this respect.

Consequent to the Actuarial Society of India issuing a guidance note on the valuation of provident fund liability'' the Trust has obtained an actuarial valuation of the provident fund liability as at balance sheet date and as per the valuation report'' there is surplus as on March 31'' 2014. The Actuary has provided details for the disclosure requirement of the Accounting Standard 15 (Revised 2005) on "Employee Benefits" for the Trust as a whole. However'' participant entities wise break-up of these disclosures is not available and accordingly'' the disclosures for provident fund liability as required by Accounting Standard 15 "Employee Benefits" (Revised 2005) have been made in these financial statements'' basis actuarial report for the trust as a whole.

The Company contributed Rs. 114''929''607 (Previous year Rs. 92''150''568) during the year to the Trust'' which has been charged to Statement of Profit and Loss.

(vi) Investment details of plan assets :

The Plan assets are maintained with Life Insurance Corporation Gratuity Scheme. The details of investment maintained by Life Insurance Corporation are not available with the Company and have not been disclosed.

2. Related party transactions as per Accounting Standard 18:

A Related party relationship where control exists: Subsidiaries

1 NUT GIS Ltd'' India

2 NIIT Smart Serve Ltd'' India

3 NUT Technologies Services Limited'' India

4 NUT Technologies Ltd'' United Kingdom

5 NUT Technologies BV'' Netherlands (Held by NUT Tech'' UK)

6 NUT Technologies NV'' Belgium (Held by NIIT Tech BV'' Netherlands)

7 NUT Technologies Pte Limited'' Singapore

8 NUT Technologies Ltd'' Thailand (Held by NIIT Tech'' Singapore)

9 NUT Technologies Pty Ltd'' Australia ( Held by NIIT Tech'' Singapore)

10 NIIT Technologies K.K.'' Japan (Held by NIIT Tech'' USA)

11 NUT Technologies GmbH'' Germany

12 NUT Technologies AG'' Switzerland (Held by NIIT Tech GmbH'' Germany)

13 NUT Technologies Inc'' USA

14 NUT Insurance Technologies Limited'' United Kingdom (Held by NIIT Tech'' UK)

15 NUT Airline Technologies GmbH'' Germany

16 NUT Technologies FZ LLC'' Dubai

17 NUT Technologies Limited'' Canada

18 NUT Technologies S.A.'' Spain (Held by NIIT Tech'' UK)

19 NUT Media Technologies LLC (Held by NUT Technologies Inc'' USA)

20 NUT Technologies Philippines Inc

21 NUT Technologies Brazil Ltd w.e.f. from October 17'' 2013 (Held by NIIT Tech'' UK).

B Other related parties with whom the company has transacted:

a) Parties of whom the company is an associate and its subsidiaries:

NUT Limited'' India (Through its subsidiary'' Scan tech Evaluation Services Ltd'' India)

NUT USA Inc.'' USA

Evolve Services Limited

NUT Institute of Finance Banking and Insurance Training Ltd

b) Key Managerial Personnel

Rajendra S Pawar

Vijay KThadani

Arvind Thakur

c) Parties in which the Key Managerial Personnel of the Company are interested:

Naya Bazar Novelties Pvt Ltd

NIIT Institute of Information Technology

NIIT University

Notes :

1 Figures in parenthesis represent previous year''s figure.

2 Transactions in purchase of Fixed Assets for the year with

NIIT Limited Rs. NIL (Previous year Rs. 1''158''173/-)

NIIT GIS Limited Rs. 710''089/-(Previous year Rs 1''403''675/-)

NIIT Smart Serve Limited Rs. NIL(Previous year Rs.2''769''855/-)

3 Includes transactions in Rendering of Services for the year mainly with

NUT Technologies Inc USA Rs.6''694''276''948/- (Previous year Rs. 5''439''289''539/-) NUT Technologies Ltd'' UK Rs 2''294''560''274/-(Previous year Rs. 2''095''175''317/-) NUT Limited Rs 19''774''176/- (Previous year Rs. 23''871''370/-) * includes revenue from revision in rates based on an independent transfer pricing study.

4 Includes transactions in Receiving of Services for the year mainly with:

NIIT Limited Rs NIL- (Previous year Rs2''967''058/-)

NIIT Smart Serve Limited Rs. NIL-(Previous year Rs 5''429''206/-)

NIIT GIS Ltd Rs 1''780''380/-(Previous year Rs. 3''094''398/-)

Evolve Services Limited Rs 1''322''152/-(Previous year Rs. 1''962''476/-)

NIIT University Rs 3''057''160/-(Previous year Rs.4''542''150/-)

5 Includes transactions in recovery of expenses by the company for the year mainly with

NIIT GIS Ltd Rs 13''472''045-(Previous year 43''440''900/-)

NIIT Smart Serve Limited Rs 986''389/-(Previous year Rs 1''180''852/-)

NIIT Technologies Ltd'' UK Rs.32''765''229/-(Previous year Rs 35''086''927/-)

NIIT Technologies Inc USA Rs 47''010''272/-(Previous year Rs. 36''258''752/-)

6 Includes transactions in recovery of expenses from the company for the year mainly with: NIIT Smart Serve Limited Rs 17''191''199/-(Previous year Rs. 20''179''144/-)

NIIT Limited Rs NIL-(Previous year Rs. 15''013''276/-)

NIIT USA Inc Rs 17''537''283/- (Previous year Rs. 6''450''271/-)

NIIT Technologies Inc Rs.20''591''303/-(Previous year Rs. 23''809''228/-)

7 Includes transactions in donation made for the year mainly with:

NIIT Institute of Information Technology Rs 50''000''000/- (Previous year Rs. 50''000''000/-)

8 Includes transactions in Investments made for the year mainly with:

NIIT Technologies'' Philippines Inc Rs. NIL-(Previous year Rs.38''867''570/-)

9 Transactions in loans received for the year with:

NIIT Smart Serve Limited Rs.200''000''000/-(Previous year Rs NIL/-)

10 Remuneration of:

Mr. R S Pawar- Rs.23''951''044/- (Previous year Rs.19''032''897/-) Mr. Arvind Thakur- Rs.28''693''980/-(Previous year Rs..24''836''212/-) Mr. Vijay KThadani Rs.900''000/- (Previous year Rs.900''000/-)

11 Includes transactions in other income for the year mainly with

NIIT GIS Limited Rs 5''915''028/- (Previous year Rs 5''598''036/-)

NIIT Smart Serve Ltd Rs NIL/- (Previous year Rs.3''287''273/-)

NIIT Technologies Ltd'' UK Rs 7''832''777/-(Previous year Rs 9''444''220/-)

NIIT Technologies Inc USA Rs.9''300''472/- (Previous year Rs 6''706''988/-)

NIIT Technologies Ltd'' Thailand Rs. NIL/-(Previous year Rs.20''652''850/-)

NIIT Insurance Technologies Ltd'' UK Rs.9''676''339/-(Previous year Rs.9''748''860/-)

12 Includes transactions in other expenses for the year mainly with

Naya Bazaar Novelties P Ltd Rs.494''742/-/-(Previous year Rs 758''077/-)

13 Includes transactions in Dividend received for the year mainly with:

NIIT GIS Limited Rs 13''884''000/-(Previous year Rs 71''200''000/-)

NIIT Technologies Limited UK Rs 183''780''000/- (Previous year Rs Nil/-)

NIIT Technologies'' Inc. 131''670''000/-(Previous year Rs NIL/-)

14 Transactions in Interest Paid for the year with

NIIT Smart Serve Limited Rs.5''853''971/-(Previous year Rs NIL/-)

3. The dominant source of risk and returns of the enterprise is considered to be the business in which it operates viz - software solutions. Being a single business segment Company'' no primary segment information is being provided. The secondary segment information as per Accounting Standard 17 "Segment Reporting" in relation to the geographies is as follows:

4. Current Income Tax

(i) The Company determines taxes on income in accordance with the applicable provisions of Income Tax Act'' 1961 ("Act"). The Company also claims deductions under sections 10AA and 80 IAB in respect of its Unit and Developer Operations'' respectively'' in Special Economic Zone (SEZ). The payments under Minimum Alternate Tax (MAT) can be carried forward and can be set off against future tax liability. Accordingly'' a sum of Rs. 60''273''889/-(Previous Year Rs. 140''172''651) has been shown under "Other Current Assets" (Refer Note 21). Further'' during the year the Company has utilized MAT of Rs.79''898''762/-(Previous Year 85''952''249/-).

(ii) In addition to Indian Operations'' the Company has accounted for the tax liability/reliefs in respect of its branch having operations in the United States of America (USA) in accordance with the tax legislations applicable in the USA.

(iii) The current tax expense includes credit of Rs. 9''872''186/- (Previous Year charge of Rs. 9''652''893/-) relating to earlier year adjustments.

5. Derivative financial instruments:

The Company is exposed to foreign currency fluctuations on foreign currency assets / liabilities'' forecasted cash flows denominated in foreign currency. The use of derivatives to hedge foreign currency forecasted cash flows is governed by the Company''s strategy'' which provide principles on the use of such forward contracts and currency options consistent with the Company''s Risk Management Policy. The counter parties in these derivative instruments are banks and the Company considers the risks of non-performance by the counterparty as non-material. The forward foreign exchange/ option contracts mature between 1 to 12 months and the forecasted transactions are expected to occur during the same period. The Company does not use forward contracts and currency options for speculative purposes.

At March 31'' 2014 the estimated net amount of existing gain that is expected to be reclassified into the revenue statement within the next twelve months is Rs. 123''776''872/-(Previous Year Rs. 115''403''814/-).

6. Working capital limits of Rs. 3''000''000''000 (Previous Year Rs. 1''700''000''000) are secured by a first charge on the book debts of the Company and by a second charge on movable assets of the Company. The Company has not utilized the fund based limit as at the year-end (Previous Year Rs. Nil).

7. Employee stock option plan

The Company established NUT Technologies Stock Option Plan 2005 (ESOP 2005) in the year 2005-06 and the same was approved at the Annual General Meeting of the Company on 18th May 2005. The plan was set up so as to offer and grant for the benefit of employees of the Company and its subsidiaries'' who are eligible under Securities Exchange Board of India (SEBI) Guidelines (excluding promoters)'' options of the Company in aggregate up to 3''850''000 options under ESOP 2005'' in one or more Tranches'' and on such terms and conditions as may be fixed or determined by the Board in accordance with the provisions of law or guidelines issued by the relevant authorities in this regard. As per the plan each option is exercisable for one equity share of face value of Rs 10 each fully paid up on payment to the company for such shares at a price to be determined in accordance with ESOP 2005. SEBI has issued the Employee''s Stock Option scheme and Employee Stock Purchase Scheme Guideline'' 1999 which is applicable to the above ESOP 2005.

During the year'' the Compensations / Remuneration Committee at its meetings held on May 17'' 2013 has approved issue of 42''000 Options (Grant XVIII)'' on July 16'' 2013 has approved an issue of 33''000Options (Grant XIX)'' on July 16'' 2013 has approved issue of 15''000 options (Grant-XX)'' on September 2'' 2013 has approved an issue of 100''000 options (Grant XXI)'' on September 2'' 2013 has approved an issue of 35''000 options (Grant XXII)'' on October 15''2013 has approved an issue of 21''000 options (Grant XXIII) and on January 14'' 2014 has approved issue of 15''000 options (Grant XXIV) out of the options under ESOP 2005'' to Managerial Personnel of the Company / Subsidiaries.

The assumptions used by the independent valuer for determination of fair value as per the Black & Scholes model is as follows:

a) Market price considered is the latest available closing price'' prior to the date of the Grant

b) Exercise price is the price payable by the employees for exercising the option

c) As the life of the option is greater than one year there is considerable difficulty in estimating the amount and time of future dividend payouts with certainty'' hence future dividend payout have not been incorporated in the valuation analysis

d) Volatility - Variance in the stock price is considered as 10% (for Grant I) '' 51.13% (for Grant III) '' 65.62% (for Grant IV)'' 66.12% (for Grant V Tranche I)'' 64.75% (for Grant V Tranche II)'' 62.07% (for Grant VI Trache l); 62.04% (for Grant VI Trache II)'' 51.67% (for Grant VII Trache I)'' 58.87% (for Grant VII Tranche II)'' 49.48% (for Grant VIII Tranche I) 58.73% (for Grant VIII Tranche II) 45.34% (Grant IX Tranche I) 56.27% (Grant IX Tranche II) 44.57% (Grant X Tranche I) 55.37% (Grant X Tranche II) 57.50% (Grant X Tranche III) 42.28% (Grant XI Tranche I) 55.46% (Grant XI Tranche II) 42.39% (Grant XII Tranche I) 48.54% (Grant XII Tranche II) 55.11% (Grant XII Tranche III) 39.5% (Grant XIII Tranche I) 46.78% (Grant XIII Tranche II) 36.38% (Grant XIV Tranche I) 43.54% (Grant XIVTranche II) 36.72% (Grant XVTranche I) 45.16% (Grant XVTranche II) 36.72% (Grant XVI Tranche I) 42.86% (Grant XVI Tranche II) 52.55% (Grant XVI Tranche III) and 36.43% (Grant XVII Tranche Part I) 38.26% (Grant XVII Tranche II) 36.35% (Grant XVIII Tranche I) 35.37% (Grant XVIII Tranche II) 41.16% (Grant XVIII Tranche III) 35.35% (Grant XIX Tranche I) 34.72% (Grant XIX Tranche II) 39.47% (Grant XIX Tranche III) 35.35% (Grant XX Tranche I) 34.72% (Grant XX Tranche II) 34.72% (Grant XXI Tranche I) 34.13% (Grant XXI Tranche II) 39.11% (Grant XXI Tranche III) 44.99% (Grant XXI Tranche IV) 49.78% (Grant XXI Tranche V) 34.72% (Grant XXII Tranche 1)34.13% (Grant XXII Tranche 11)39.11% (Grant XXII Tranche III) 44.99% (Grant XXII Tranche IV) 49.78% (Grant XXII Tranche V) 34.65% (Grant XXIII Tranche I) 34.26% (Grant XXIII Tranche II) 34.27% (Grant XXIV Tranche I) 34.34% (Grant XXIV Tranche II) is based on historical volatility in the share price movement of the company and four other comparable companies.

e) Average life of the options is considered to be 2.5 Years for Grant I'' Grant III'' Grant IV'' Grant VTranche I'' Grant VII Tranche I'' Grant VIII Tranche I'' Grant IXTranche I'' Grant XTranche I'' Grant XI Tranche I'' Grant XII Tranche I'' Grant XIII Tranche I'' Grant XIV Tranche I'' Grant XV Tranche I'' Grant XVI Tranche I'' Grant XVII Tranche L Grant XVIII Tranche I'' Grant XIX Tranche I Grant XX Tranche I Grant XXI Tranche I Grant XXII Tranche I Grant XXIII Tranche I Grant XXIV Tranche I 3.5 years for Grant V Tranche II'' Grant VII Tranche II'' Grant VIII Tranche II'' Grant IXTranche II'' Grant XTranche II'' Grant XI Tranche II'' Grant XII Tranche II'' Grant XIII Tranche II'' Grant XIV Tranche II'' Grant XV Tranche II'' Grant XVI Tranche II Grant XVII Tranche II'' Grant XVIII Tranche II'' Grant XIXTranche II Grant XXTranche II Grant XXI Tranche II Grant XXII Tranche II Grant XXII Tranche II Grant XXII Tranche II Grant XXIV Tranche II 2.75 Years for Grant VI Tranche I'' 3.75 Years for Grant VI Tranche II'' 4.5 Years for Grant X Tranche III and Grant XII Tranche III Grant XVI Tranche III Grant XVIII Tranche III'' Grant XIX Tranche III'' Grant XXI Tranche III'' Grant XXII Tranche III'' 5.5 Years for Grant XXI Tranche IV Grant XXII Tranche IV and 6.5 Years for Grant XXI Tranche V Grant XXII Tranche V

f) Risk less interest rate has been assumed at 7% (Grant I)'' 7.93 % (Grant III)'' 9.24% (Grant IV)'' 6.83% (Grant V Tranche 1)7.01% (Grant VTranche II) 6.72% (Grant VI Tranche 1)7.01% (Grant VI Tranche II) 7.31% (Grant VII Tranche I) 7.61% (Grant VII Tranche II) 8.11% (Grant VIII Tranche I) 8.07% (Grant VIII Tranche II) 8.4% Grant IXTranche I'' 8.33% Grant IXTranche II'' 8.41% Grant X Tranche I'' 8.34% Grant X Tranche II'' 8.29% Grant X Tranche III 8.14% Grant XI Tranche I'' 8.15% Grant XI Tranche II'' 8.6% Grant XII Tranche I'' 8.65% Grant XI Tranche II'' 8.7% Grant XII Tranche III 8.2% Grant XIII Tranche I and 8.17% Grant XIII Tranche II 8.27% Grant XIV Tranche I 8.33% Grant XIV Tranche II 8.10% Grant XV Tranche I 8.15% Grant XV Tranche II 8.10% Grant XVI Tranche I 8.15% Grant XVI Tranche II 8.21% Grant XVI Tranche III'' 7.74% Grant XVII Tranche I 7.76% Grant XVII Tranche II'' 7.17% Grant XVIII Tranche I'' 7.20% Grant Grant XVIII Tranche II'' 7.23% Grant XVIII Tranche III 8.67% Grant XIXTranche I'' 8.49% Grant XIXTranche II'' 8.37% Grant XIXTranche III'' 8.67% Grant XXTranche I'' 8.49% Grant XXTranche II'' 9.27% Grant XXI Tranche I'' 9% Grant XXI Tranche II'' 8.82% Grant XXI Tranche III'' 8.71% Grant XXI Tranche IV 8.66% Grant XXI Tranche V Grant XXII Tranche I'' 9% Grant XXII Tranche II'' 8.82% Grant XXII Tranche III'' 8.71% Grant XXII Tranche IV 8.66% Grant XXII Tranche V 8.63% Grant XXIII Tranche 8.64% Grant XXIII Tranche II'' Grant XXIVTranche I and Grant XXIVTranche II based on long term government bonds of ten year residual maturity.

For impact on Basic and Diluted earning Per Share'' had fair value of the option been used for determining Employee Stock Option Plan expense'' refer note no. 38 Earnings Per Share.

During the period Rs. 10''199''414/- (March 31'' 2013 Rs. 7''104''123) expenses accounted based on intrinsic value of the option as all other options were issued at market price only.

8. Previous year figures have been regrouped/recast wherever considered necessary to conform to current year''s classification.


Mar 31, 2012

1 General Information

NIIT Technologies Ltd ("the Company") is a leading IT solutions organisation, engaged in Application Development & Maintenance, Managed Services, Cloud Computing and Business Process Outsourcing to organisations in the Financial Services, Insurance, Travel, Transportation & Logistics, Manufacturing & Distribution and Government sectors. The Company delivers services around the world directly and through its network of subsidiaries. The Company is listed on Bombay Stock Exchange and the National Stock Exchange.

a) Right, preference and restrictions attached to shares Equity Shares: The Company has one class of equity shares having a par value of Rs.10 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 shareholders in the ensuing Anuual Gerneral Meeting, except in case of interim dividend. In the event of liquidaiton, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

b) Shares allotted as fully paid up pursuant to contract without payment being received in cash (during 5 years immediately preceeding March 31, 2012. 1,042,311 equity shares were issued in the last 5 years under Employee Stock Option Plan as consideration for services rendered by employees (Refer Note 43).

a) Defined Benefit Plans

Disclosure in respect of defined benefit plans in accordance with Accounting Standard 15 (Revised) "Employee Benefits"

(i) Provident Fund:

In respect of Company's obligation towards guaranteed returns on Provident Fund Contributions made to the "NIIT Technologies Limited Employees Provident Fund Trust" established by the Company, the Company's obligation has been actuarially determined. As per actuary's report the interest earnings and cumulative surplus of Trust are less than the statutory requirement and accordingly the additional liability of employer on account of interest shortfall are provided for in the books.

The Company made defined contribution to Regional Provident Fund Commissioner (RPFC) from 1st October 2005 till 29th February 2009 in respect of Provident Fund. The Company has transferred these contributions along with the interest from RPFC to NIIT Technologies Limited Employees' Provident Fund Trust. The Company does not have any further obligation in this respect.

2 Related party transactions as per Accounting Standard 18:

A Related party relationship where control exists:

Subsidiaries

1 NIIT GIS Ltd, India

2 NIIT SmartServe Ltd, India

3 NIIT Technologies Services Limited, India

4 NIIT Technologies Ltd, United Kingdom

5 NIIT Technologies BV, Netherlands ( Held by NIIT Tech, UK)

6 NIIT Technologies NV, Belgium ( Held by NIIT Tech BV, Netherlands)

7 NIIT Technologies Pte Limited, Singapore

8 NIIT Technologies Ltd, Thailand ( Held by NIIT Tech, Singapore)

9 NIIT Technologies Pty Ltd, Australia ( Held by NIIT Tech, Singapore)

10 NIIT Technologies K.K., Japan ( Held by NIIT Tech, USA)

11 NIIT Technologies GmbH, Germany

12 NIIT Technologies AG, Switzerland ( Held by NIIT Tech GmbH, Germany)

13 NIIT Technologies AG, Austria ( Held by NIIT Tech, Switzerland)

14 NIIT Technologies Inc, USA

15 NIIT Insurance Technologies Limited, United Kingdom ( Held by NIIT Tech, UK)

16 NIIT Airline Technologies GmbH, Germany

17 NIIT Technologies FZ LLC, Dubai

18 NIIT Technologies Limited, Canada

19 NIIT Healthcare Technologies Inc., USA ( Held by NIIT Tech Inc, USA)

20 Proyecta Systems de Informacion S.A ( Held by NIIT Tech, UK) w.e.f. August 12, 2011

21 NIIT Media Technologies LLC (Held by NIIT Technologies Inc, USA) w.e.f. May 26, 2011

B Other related parties with whom the company has transacted:

a) Parties of whom the company is an associate and its subsidiaries:

NIIT Limited, India (Through its subsidiary, Scantech Evaluation Services Ltd, India)

NIIT USA Inc., USA Evolve Services Limited

NIIT Institute of Finance Banking and Insurance Training Limited

b) Key Managerial Personnel

Rajendra S Pawar Vijay K Thadani Arvind Thakur

c) Parties in which the Key Managerial Personnel of the Company are interested:

Naya Bazar Novelties Pvt Ltd.

NIIT Institute of Information Technology

Indian School of Business

Notes :

1 Figures in parenthesis represent previous year's figure.

2 Transactions in purchase of Fixed Assets for the year with;

NIIT Technologies Services Ltd.Rs.Nil (Previous year Rs.2,303,480/-)

3 Includes transactions in Rendering of Services for the year mainly with;

* NIIT Technologies Inc USA Rs. 4,516,892,871/- (Previous year Rs. 3,494,578,912/-)

* NIIT Technologies Ltd, UK Rs 1,217,745,852/- (Previous year Rs. 809,605,592/-)

NIIT Limited Rs 9,787,688/- (Previous year Rs. 9,344,949/)

* includes revenue from revision in rates based on an independent transfer pricing study.

4 Includes transactions in Receiving of Services for the year mainly with;

NIIT Limited Rs 4,144,258/- (Previous year Rs.29,883,835/-)

NIIT Technologies Pte Ltd. Singapore Rs. Nil (Previous year Rs. 10,712,040/-)

NIIT GIS Ltd Rs 3,905,355/-(Previous year Rs. 3,902,515/-)

Evolve Services Limited Rs 2,754,012/-(Previous year Rs. 1,009,200/-)

5 Includes transactions in recovery of expenses by the company for the year mainly with; NIIT GIS Ltd Rs 32,299,715/-(Previous year 23,309,498/-)

NIIT SmartServe Limited Rs.3,079,247/-(Previous year Rs 1,837,302/-)

NIIT Technologies Ltd, UK Rs.65,696,764/- (Previous year Rs13,142,723/-)

NIIT Limited Rs Nil (Previous year Rs. 5,237,124/-)

NIIT Technologies Inc USA Rs.30,792,791/- (Previous year Rs. 22,957,637/-)

6 Includes transactions in recovery of expenses from the company for the year mainly with; NIIT SmartServe Limited Rs 19,933,290/- (Previous year Rs. 19,607,321/-)

NIIT Limited Rs 10,205,340/- (Previous year Rs. 10,864,678/-)

NIIT USA Inc Rs 12,314,489/- (Previous year Rs.14,927,705/-)

NIIT Technologies Inc Rs.9,740,332/- (Previous year Rs. 41,244,953/-)

7 Includes transactions in donation made for the year mainly with;

NIIT Institute of Information Technology Rs 50,000,000/- (Previous year Rs. 50,000,000/-)

8 Includes transactions in sale of goods made for the year mainly with;

NIIT Technologies Services Ltd.Rs.Nil (Previous year Rs.532,485/-)

9 Includes transactions in Investments made for the year mainly with;

NIIT Technologies Services Ltd.Rs.Nil (Previous year Rs.61)

NIIT Technologies, Dubai.Rs.49,534,171/-(Previous year Rs.Nil)

10 Transactions in loans given received back for the year with;

NIIT Institute of Information Technology Rs 250,000,000/-(Previous year Rs. Nil)

11 Transactions in interest received for in the year with;

NIIT Institute of Information Technology Rs 10,027,396/-(Previous year Rs. 30,000,000/-)

12 Remuneration of:

Mr. R S Pawar - Rs.14,662,086/- (Previous year Rs.15,058,821/-)

Mr. Arvind Thakur - Rs.27,351,953/-(Previous year Rs.34,226,233/-)

Mr. Vijay K Thadani - Rs.800,000/- (Previous year Rs.820,000/-)

13 Includes transactions in other income for the year mainly with;

NIIT GIS Limited Rs 5,104,175/-(Previous year Rs.4,853,490/-)

NIIT SmartServe Ltd Rs 2,929,555/-(Previous year Rs.2,582,965/-)

NIIT Technologies Ltd, UK Rs 6,922,551/-(Previous year Rs.3,646,491/-)

NIIT Technologies Inc USA Rs.6,442,289/-(Previous year Rs.3,943,482/-)

NIIT Limited Rs. 300,000/- ( Previous year Rs. 4,500,000/-)

14 Includes transactions in other expenses for the year mainly with;

Naya Bazaar Novelties P Ltd Rs.535,063/-(Previous year Rs.687,657/-)

3 The dominant source of risk and returns of the enterprise is considered to be the business in which it operates viz - software solutions. Being a single business segment Company, no primary segment information is being provided. The secondary segment information as per Accounting Standard 17 "Segment Reporting" in relation to the geographies is as follows:

4 Income Tax

a) Current Income Tax

(i) The Company pays taxes on income under the Indian Income Tax Regulations and under the US tax regulations in respect of its India & US operations respectively.

(ii) As regard Indian Income Tax, the Company avails deduction under the provisions of Section 10AA of the Income Tax Act, 1961 available to units in SEZ. The current tax charge for the year includes charge in respect of Indian Income Tax of Rs 301,873,873/- after adjusting relief in relation to income taxes payable in United States to the extent of Rs.44,191,350/-. It further includes credit of Rs. 156,035/- relating to earlier years recognised on filing of tax returns. The company has utilised mat credit during the year of Rs.111,225,502/- after considering additon of Rs. 7,982,958 related to earlier years.

(iii) The current tax charge includes tax payable under the US income tax regulation of Rs. 59,083,849/- (Previous Year Rs. 58,881,110/-).

5 Derivative financial instruments:

The Company is exposed to foreign currency fluctuations on foreign currency assets / liabilities, forecasted cash flows denominated in foreign currency. The use of derivatives to hedge foreign currency forecasted cash flows is governed by the Company's strategy, which provide principles on the use of such forward contracts and currency options consistent with the Company's Risk Management Policy. The counter parties in these derivative instruments are banks and the Company considers the risks of non-performance by the counterparty as non-material. The forward foreign exchange/option contracts mature between 1 to 12 months and the forecasted transactions are expected to occur during the same period. The Company does not use forward contracts and currency options for speculative purposes.

At March 31, 2012 the estimated net amount of existing loss that is expected to be reclassified into the revenue statement within the next twelve months is Rs. 95,829,994/-(Previous Year gain Rs. 25,447,462/-).

6 Working capital limits of Rs. 1,800,000,000 (Previous Year Rs. 1,250,000,000) are secured by a first charge on the book debts of the Company and by a second charge on movable assets of the Company. The Company has not utilised the fund based limit as at the year-end (Previous Year Rs. Nil).

7 Employe stock option plan

The Company established NIIT Technologies Stock Option Plan 2005 (ESOP 2005) in the year 2005-06 and the same was approved by Shareholders of the Company on May 18 2005. The plan was set up so as to offer and grant for the benefit of employees of the company and its subsidiaries, who are eligible under Securities Exchange Board of India (SEBI) Guidelines (excluding promoters), options of the company in aggregate up to 3,850,000 options under ESOP 2005, in one or more Tranches, and on such terms and conditions as may be fixed or determined by the Board in accordance with the provisions of law or guidelines issued by the relevant authorities in this regard. As per the plan each option is exercisable for one equity share of face value of Rs 10 each fully paid up on payment to the company for such shares at a price to be determined in accordance with ESOP 2005. SEBI has issued the Employee's Stock Option scheme and Employee Stock Purchase Scheme Guideline, 1999 which is applicable to the above ESOP 2005.

During the year, the Compensations / Remuneration Committee at its meetings held on May 6, 2011 has approved issue of 15,000 Options (Grant IX), on June 9, 2011 has approved an issue of 50,000Options (Grant X), on July 19, 2011 has approved issue of 36,000 options (Grant-XI), on October 17,2011 has approved issue of 40,000 options (Grant XII) and on January 17, 2012 has approved issue of 20,250 options (Grant XIII) out of the option under ESOP 2005, to Managerial Personnel of the Company / Subsidiaries.

The assumptions used by the independent valuer for determination of fair value as per the Black & Scholes model is as follows:

a) Market price considered is the latest available closing price, prior to the date of the Grant

b) Exercise price is the price payable by the employees for exercising the option

c) As the life of the option is greater than one year there is considerable difficulty in estimating the amount and time of future dividend payouts with certainty, hence future dividend payout have not been incorporated in the valuation analysis

d) Volatility - Variance in the stock price is considered as 10% (for Grant I) , 51.13% ( for Grant III) , 65.62% (for Grant iV), 66.12% (for Grant V Tranche I), 64.75% ( for Grant V Tranche II), 62.07% (for Grant VI Trache I), 62.04% (for Grant VI Trache II), 51.67% (for Grant VII Trache I), 58.87% (for Grant VII Tranche II), 49.48% (for Grant VIII Tranche I), 58.73% (for Grant VIII Tranche II), 45.34% (Grant IX Tranche I), 56.27% (Grant IX Tranche II), 44.57% (Grant X Tranche I), 55.37% (Grant X Tranche II), 57.50% (Grant X Tranche III), 42.28% (Grant XI Tranche I), 55.46% (Grant XI Tranche II), 42.39% (Grant XII Tranche I), 48.54% (Grant XII Tranche II), 55.11% (Grant XII Tranche III), 39.5% (Grant XIII Tranche I) and 46.78% (Grant XIII Tranche II) is based on historical volatility in the share price movement of the company and four other comparable companies.

e) Average life of the options is considered to be 2.5 Years for Grant I, Grant III, Grant IV, Grant V Tranche I, Grant VII Tranche I and Grant VIII Tranche I, Grant IX Tranche I, Grant X Tranche I, Grant XI Tranche I, Grant XII Tranche I, Grant XIII Tranche I, 3.5 years for Grant V Tranche II, Grant VII Tranche II and Grant VIII Tranche

II, Grant IX Tranche II, Grant X Tranche II, Grant XI Tranche II, Grant XII Tranche II, Grant XIII Tranche II 2.75 Years for Grant VI Tranche I, 3.75 Years for Grant VI Tranche II, 4.5 Years for Grant X Tranche III and Grant XII Tranche III.

f) Risk less interest rate has been assumed at 7% (Grant I), 7.93 % (Grant III), 9.24% (Grant IV), 6.83% (Grant V Tranche I), 7.01% (Grant V Tranche II), 6.72% (Grant VI Tranche I), 7.01% (Grant VI Tranche II), 7.31% (Grant VII Tranche I), 7.61% (Grant VII Tranche II), 8.11% (Grant VIII Tranche I), 8.07% (Grant VIII Tranche II), 8.4%

(Grant IX Tranche I), 8.33% (Grant IX Tranche II), 8.41% (Grant X Tranche I), 8.34% (Grant X Tranche II), 8.29% (Grant X Tranche III), 8.14% (Grant XI Tranche I), 8.15% (Grant XI Tranche II), 8.6% (Grant XII Tranche I), 8.65% (Grant XII Tranche II), 8.7% (Grant XII Tranche III), 8.2% (Grant XIII Tranche I) and 8.17% (Grant XIII Tranche II) based on long term government bonds of ten year residual maturity.

For impact on Basic and Diluted earning Per Share, had fair value of the option been used for determining Employee Stock Option Plan expense, refer note no 37 Earnings Per Share.

During the period Rs. 6,885,023/- expenses accounted based on intrinsic value of the option as all other options were issued at market price only.

8 The financial statements for the year ended March 31, 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 March 31, 2012 are prepared as per revised Schedule VI. Accordingly, the previous year figures have also been reclassified to confirm to this year's classification. The adoption of revised Schedule VI for previous year's figure does no impact recognition and measurement principles followed for preparation of financial statements except for accounting for dividend on investments in subsidiaries. (Refer note 2.2)


Mar 31, 2010

1. CONTINGENT LIABILITIES: -

a) Guarantees issued by bankers outstanding at the end of accounting year Rs. 304,883,062/- (Previous Year Rs. 55,230,786/-)

b) Guarantees to banks against lines of credit sanctioned to wholly owned overseas subsidiaries Rs. 795,815,380/-(Previous Year Rs. 846,672,600/-).

c) Guarantees on behalf of wholly owned overseas subsidiaries Rs. 516,907,350/- (Previous Year Rs. 579,132,300/-).

d) Claims against the Company not acknowledged as debts Rs. 6,230,000/- (Previous Year Rs. 57,091,400/-).

e) Income Tax demand of Rs. 37,332,318/- (Previous Year Rs. Nil). Against this, the Company has deposited a sum of Rs. 20,000,000/- under protest. (Previous Year Rs. Nil).

2. Estimated amount of contracts remaining to be executed on capital account (net of advances) not provided for Rs. 286,310,956/- (Previous Year Rs. 361,573,980/-).

3. Micro and Small scale business entities :

There are no micro and small scale enterprises, to which the Company owes dues, as at 31" March 2010. This information as required to be disclosed under the Micro, Small and Medium enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the

4. a) Working capital limits of Rs. 10,000 Lacs (Previous Year Rs. 10,000 Lacs) are secured by a first charge on the book debts of the Company and by a second charge on movable assets of the Company. The Company has not utilized the fund based limit as at the year-end (Previous Year Rs. Nil).

b) Vehicle loans from banks are secured by way of hypothecation of the vehicles financed.

5. Interest received are gross of tax deducted at source of Rs. 4,288,919/- (Previous Year Rs. 4,724,316/-).

6. Expenses during the year are net of recoveries towards common services from domestic subsidiaries amounting to Rs. 20,809,846/- (Previous Year Rs. 11,223,404/-).

7. The Companys domestic subsidiary NUT GIS Limited has declared dividend of which Rs. 44,496,885/- (Previous Year Rs. 305,378,026/-) is receivable by the Company in respect of which dividend distribution tax would be paid by the subsidiary. In terms of provisions of sub-section 1Aof section 115O of the Income Tax Act, 1961 dividend distribution tax is payable by the Company on the amount being excess of dividend proposed by the Company over the dividend receivable by the Company from its subsidiary.

8. The profit on sale of investments includes Rs. Nil (Previous Year Rs. 153 Lacs) on sale of units of mutual funds held as investment for a period of more than 12 months.

9. DETAILS RELATING TO OPENING STOCK, PURCHASES, REVENUE AND CLOSING STOCK

a) The Company is engaged, inter-alia, in the production and development of computer software. The production and sale of such software cannot be expressed in generic unit. Hence, it is not possible to give quantitative details as required under paragraph 3 and 4C of Part II of Schedule VI of the Companies Act, 1956.

10. RELATED PARTY TRANSACTIONS AS PER ACCOUNTING STANDARD 18:

A. Related party relationship where control exists:

Subsidiaries

1. NIITGIS Ltd, India

2. NIITSmartServe Ltd, India

3. NUT Technologies Ltd, United Kingdom

4. NUT Technologies BV, Netherlands

5. NUT Technologies NV, Belgium

6. NIITTechnologies Pte Limited, Singapore

7. NIITTechnologies Ltd, Thailand

8. NIITTechnologies Pty Ltd, Australia

9. NIITTechnologies Co Ltd, Japan

10. NIITTechnologies GmbH, Germany

11. NUT Technologies AG, Switzerland

12. NIITTechnologies AG, Austria

13. NIITTechnologies Inc, USA

14. Room Solutions Limited, United Kingdom

15. Softech GmbH, Germany

16. NIITTechnologies FZ LLC, Dubai

17. NIITTechnologies Limited, Canada

B. Other related parties with whom the company has transacted:

a) Parties of whom the company is an associate and its subsidiaries:

- NUT Limited, India (Through its subsidiary, Scantech Evaluation Services Ltd, India)

- NUT Middle East LLC Bahrain - NIITUSAInc.USA

- Evolve Services Limited, India.

b) Key Managerial Personnel

- Rajendra S Pawar

- Vijay K Thadani

- ArvindThakur

c) Parties in which the Key Managerial Personnel of the company are interested:

- Naya Bazar Novelties Pvt. Ltd., India

- NUT Institute of Information Technology, India

d) Joint Venture:

- Adecco NIITTechnologies Private Limited, India (also refer note 18(b) below)

11. During the year the Company has granted unsecured loan of Rs.2,500 Lacs(Previous Year Nil) to NUT Institute of Information Technology, a society registered under Society Registration Act, 1860 (referred to as Borrower). The Borrower has set up a University named as "NUT University" (NU) as a private University at Neemrana, District Alwar, Rajasthan in accordance with the Guidelines for the Establishment of Private University by a separate Act issued by Government of Rajasthan. The rate of interest of loan is 12% pa. and the loan is repayable within one year.

12. Employee Benefits

b) Disclosure in respect of defined benefit plans in accordance with Accounting Standard 15 (Revised) "Employee Benefits" ¦ Provident Fund:

In respect of Companys obligation towards guaranteed returns on Provident Fund Contributions made to the "NUT Technologies Limited Employees Provident Fund Trust" established by the Company, the Companys obligation has been actuarially determined. As per actuarys report the interest earnings and cumulative surplus of Trust are more than the statutory requirement and accordingly there is no additional liability of employer on account of interest shortfall.

13. a) The Company has 50% ownership interest in Adecco NUT Technologies Private Limited, a company incorporated in India, where rest is owned by Adecco Holding Europe BV, Netherlands.

14. Income Tax

a) Current Income Tax -

(i) The Company pays taxes on income under the Indian Income Tax Regulations and under the US tax regulations in respect of its India & US operations respectively.

(ii) As regard Indian Income Tax, the Company avails deduction under the provisions of Section 10B of the Income Tax Act, 1961 available to export oriented unit registered with Software Technology Parks of India. The current tax charge for the year includes charge in respect of Indian Income Tax of Rs 1,479 Lacs after adjusting relief in relation to income taxes payable in United States to the extent of Rs.163 Lacs. It further includes Rs. 284 lacs relating to Financial Year 2008-09 recognized in filing of tax return. The current tax under Indian Income tax relates to Minimum Alternate Tax (MAT) as per the provisions of Section 115JB, part of which amounting to Rs. 1,269 Lacs (Previous Year Rs. 106 Lacs), is expected to be recovered in future years and the same has been recognized as MAT credit entitlement in these accounts.

(iii) The current tax charge includes tax payable under the US income tax regulation of Rs. 477 Lacs (Previous Year Rs. 420 Lacs).

15. LEASES

All operating leases entered into by the Company are cancelable on giving a notice of 1 to 3 months. Aggregate expenditure in respect of operating lease amounts to Rs. 154,396,194/-(Previous year Rs. 181,023,298/-).

16. EMPLOYEE STOCK OPTION PLAN:

(i) The Company established NUT Technologies Stock Option Plan 2005 (ESOP 2005) in the year 2005-06 and the same was approved at the Annual General Meeting of the Company on 29th July 2004. The plan was set up so as to offer and grant for the benefit of employees of the company and its subsidiaries, who are eligible under Securities Exchange Board of India (SEBI) Guidelines (excluding promoters), options of the company in aggregate up to 3,850,000 options under ESOP 2005, in one or more tranches, and on such terms and conditions as may be fixed or determined by the Board in accordance with the provisions of law or guidelines issued by the relevant authorities in this regard. As per the plan each option is exercisable for one equity share of face value of Rs 10 each fully paid up on payment to the company for such shares at a price to be determined in accordance with ESOP 2005. SEBI has issued the Employees Stock Option scheme and Employee Stock Purchase Scheme Guideline, 1999 which is applicable to the above ESOP 2005.

17. Derivative Financial Instruments:

The Company is exposed to foreign currency fluctuations on foreign currency assets / liabilities, forecasted cash flows denominated in foreign currency. The use of derivatives to hedge foreign currency forecasted cash flows is governed by the Companys strategy, which provide principles on the use of such forward contracts and currency options consistent with the Companys Risk Management Policy. The counter parties in these derivative instruments are banks and the Company considers the risks of non-performance by the counterparty as non-material. The forward foreign exchange/option contracts mature between 1 to 17 months and the forecasted transactions are expected to occur during the same period. The Company does not use forward contracts and currency options for speculative purposes.

18. The Company has accounted for unclaimed employee related reimbursement in respect of earlier years, aggregating to Rs. 23,188,834 based on maximum possible liability payable by the Company in this respect.

19. Previous year figures have been regrouped / recast wherever necessary to conform to current years classification. Signature to the Schedules 1to-18above

 
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