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Notes to Accounts of OnMobile Global Ltd.

Mar 31, 2016

A) Aggregate Number of shares allotted as fully paid up pursuant to contracts without payment being received in cash, bonus shares and buyback of shares for the period of five years immediately preceding the Balance Sheet date:

a) (i) During the year ended March 31, 2012, the Company made a bonus issue of 58,954,543 shares in the ratio of 1 : 1 to the shareholders by capitalization of Securities Premium account. (ii) During the year the Company has issued 102,540 bonus equity shares (Previous year: 361,805 bonus equity shares) on exercise of eligible options.

b) (i) During the year ended March 31, 2012 after obtaining approval of the shareholders and completion of the formalities prescribed for buy-back of equity shares u/s. 77A of the Companies Act, 1956, the Company bought back 2,936,000 Equity Shares of Rs,10 each by utilizing the Securities Premium Account. Capital Redemption Reserve has been created out of Security Premium Account for Rs, 29.36 Million being the nominal value of equity shares bought back in terms of Sec.77AA of the Companies Act, 1956. (ii) During the year ended March 31, 2013, the Company completed the above referred buy-back of equity shares and bought back 1,064,000 Equity Shares of Rs, 10 each by utilizing the Securities Premium Account. Capital Redemption Reserve has been created out of Security Premium Account forRs, 10.64 Million being the nominal value of equity shares bought back in terms of Sec.77AA of the Companies Act, 1956.

c) During the year ended March 31, 2015 after obtaining approval of the shareholders and completion of the formalities prescribed for buy-back of equity shares u/s 68 of the Companies Act, 2013, the Company bought back 5,800,000 Equity Shares for Rs, 442.79 Million by utilizing the Securities Premium Account. Capital Redemption Reserve has been created out of Security Premium Account for Rs, 58.00 Million being the nominal value of equity shares bought back in terms of Sec.68 of the Companies Act, 2013.

d) The Company had made a public announcement on February 11, 2016 for buy back of maximum 5,600,000 equity shares of Rs,10 each for an amount not exceedingRs, 700 Million. As on March 31, 2016, the buyback of 1,532,594 equity shares for Rs, 176.37 Million was finalized and executed by utilizing the Securities Premium Account. Capital Redemption Reserve has been created out of Security Premium Account for Rs, 15.33 Million being the nominal value of equity shares bought back in terms of Sec.68 of the Companies Act, 2013.

e) Total number of Options outstanding under various employee stock option plans, that are convertible into equity shares, as on March 31, 2016 are 5,579,391 (at March 31, 2015: 6,134,802) (Refer Note 28)

f) Rights and restrictions attached to equity shares:

The Company has only one class of equity shares with voting rights (one vote per share). The dividend proposed by the Board of Directors is subject to approval of the shareholders in the Annual General Meeting. In the event of liquidation of the Company the equity share hold- ers are entitled to receive only the residual assets of the Company. The distribution of dividend is in proportion to the number of equity shares held by the shareholders.

1. Share application money represents amounts received from the employees against employee stock options, pending allotment.

2. A. Contingent liabilities

a The Company has been named as one of the 3 defendants in a civil dispute for injunction pending adjudication. However in the opinion of the management no liability would arise in this regard.

b Disputed Service taxRs, 5.52 Million (Previous year: Rs, 5.52 Million) and disputed Income TaxRs, 146.31 Million (Previous year: Rs, 271.03 Million)

c Bank Guarantees given for loans availed by subsidiary (On Mobile Live Inc) Rs, 800 Million (Previous year: Rs, 800 Million). The outstanding against the same as on March 31, 2016 Rs, 195.59 Million (Previous year: Rs, 461.38 Million).

B. Capital Commitments

Estimated amount of contracts (net of advances) remaining to be executed on capital account and not provided for is Rs, 15.32 Million (Previous year: Rs, 5.70 Million).

The Guidance Note issued by the Institute of Chartered Accountants of India requires the disclosure of pro forma net results and EPS both basic & diluted, had the Company adopted the fair value method. Had the Company accounted the option under fair value method, amortizing the stock compensation expense thereon over the vesting period, the reported Profit for the year ended March 31, 2016 would have been lower by Rs, 55.92 Million (Previous year Rs, 22.99 Million) and Basic and di- luted EPS would have been revised to Rs, 0.01 (Previous year Rs, 0.61) and Rs, 0.01 (Previous year Rs, 0.60) respectively as compared to Rs, 0.52 (Previous year Rs, 0.81) and Rs, 0.51 (Previous year Rs, 0.80) without such impact. Basic and Diluted Earnings Per Share (EPS) have been restated for all the corresponding period to give effect of the Bonus shares, in accordance with Accounting Standard (AS) 20 "Earnings Per Share".

The fair value of stock based award to employees is calculated through the use of option pricing models, requiring subjective assumptions which greatly affect the calculated values. The said fair value of the options have been calculated using Black- Scholes option pricing model, considering the expected weighted average term of the options to be 4.4 years (Previous year 4.4 years), a 2% (Previous year 3%) expected dividend yield on the underlying equity shares, weighted average volatility in the share price of 58.38% (Previous year 53.61%) and a risk free rate of 7.90% p.a. (Previous year 7.81% p.a.). The Company''s calculations are based on a single option valuation approach, and forfeitures are recognized as they occur. The expected volatility is based on historical volatility of the share price after eliminating the abnormal price fluctuations.

3. Transactions with related parties:

I List of Related parties and relationship:

Sl No. Relationship Related parties

(i) Subsidiaries On Mobile Singapore Pte. Ltd.

PT. On Mobile Indonesia .

Vox Mobili S.A. (subsidiary of On Mobile S.A. till July 11, 2014) On Mobile SA. On Mobile Europe B.V.

On Mobile Services Corporations De Telefonia S.A. DE C.V. Servicios De Telefonia On Mobile, SA DE CV On Mobile USA LLC. On Mobile Global S A

On Mobile Brasil Sistemas De Valor Agregado Para Communicators Movies'' Ltda OnMoible Global for Telecommunication Services On Mobile Senegal SARL

On Mobile De Venezuela C.A. (subsidiary of On Mobile USA LLC) On Mobile Latam holdings SL (subsidiary of On Mobile USA LLC) On Mobile Mali SARL On Mobile Bangladesh Private Limited On Mobile Kenya Telecom Limited On Mobile Costa Rica OBCR, SA On Mobile Ghana Telecom Limited On Mobile Madagascar Telecom Limited On Mobile Nigeria Telecom Limited On Mobile Zambia Telecom Limited On Mobile Telecom Sierra Leone Limited On Mobile Tanzania Telecom Limited On Mobile Global Spain S.L.U On Mobile Uruguay S.A On Mobile Uganda Limited On Mobile Rwanda Telecom Limited On Mobile Global Italy S.R.L. On Mobile Telecom Limited

On Mobile Turkey Telekomunikasyon Sistemleri Limited Sirketi On Mobile Telecom Burkina Faso, SARL

On Mobile Portugal SGPS, Unipessoal LDA (Zona Franca Da Madeira) On Mobile Live Inc (subsidiary of On Mobile USA LLC) Fonestarz Media Group Limited (subsidiary of On Mobile Live Inc) 2dayUK Limited (subsidiary of On Mobile Live Inc) Fonestarz Media (licensing) Limited (subsidiary of On Mobile Live Inc) Daius Limited (subsidiary of On Mobile Live Inc) Fonestarz Limited (subsidiary of On Mobile Live Inc)

Fonestarz Media (Australia) PTY Limited (subsidiary of On Mobile Live Inc) Fonestarz Media Limited (subsidiary of On Mobile Live Inc) On Mobile Global Czech Republic s.r.o.

Sl No. Relationship Related parties

On Mobile Global Limited Colombia S.A.S.

On Mobile Global Solutions Canada Limited

On Mobile Global South Africa (PTY) Limited

(ii) Other related parties with whom the Company had transactions

Key Management Personnel Rajiv Pancholy

Francois Charles Sirois

Chandramouli Janakiraman

(iii) Associate Mobile Voice Konnect Private Limited

(iv) Enterprises owned or Significantly influenced by key management On Mobile Systems Inc., USA personnel/Directors or their relatives

4. The Company had made an application to the Central Government for compounding of one of the contracts for a party covered under Section 297 of the Companies Act, 1956, which expired during an earlier year. The total transaction for which compounding application had been fled amounted to Rs, 3.01 Million. The approval from Central Government is awaited.

5. During the year ended March 31, 2016, the Argentina Government devalued its currency Argentine Peso (ARS) and the Egyptian Government devalued its currency Egyptian pound (EGP) respectively. The exceptional item of loss during the year ended March 31, 2016 amounting to Rs, 2.46 Million represents gain of Rs, 27.89 Million on restatement of the amounts payable in ARS to the Company''s subsidiary in Argentina and loss of Rs, 30.35 Million on restatement of the amounts receivable in EGP from the Company''s subsidiary in Egypt.

6. The Company has working capital lines and Buyers credit facility from banks. Security details of which are as follows:

-Buyers credit facility is secured by first pari-passu charge on moable fixed assets and second pari-passu charge on current assets.

-Working capital lines is secured by first pari-passu charge on present and future stocks and book debts.

7. Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification/ disclosures.


Mar 31, 2015

1. SHARE CAPITAL

A) Aggregate Number of shares allotted as fully paid up pursuant to contracts without payment being received in cash, bonus shares and buyback of shares for the period of five years immediately preceeding the Balance Sheet date:

a) During the year ended March 31, 2010, 75,862 Equity Shares have been issued to the promoters and employees of Telisma, S.A. France as a part of Purchase consideration for its acquisition.

b) During the year ended March 31, 2012, the company made a bonus issue of 58,954,543 shares in the ratio of 1 : 1 to the shareholders by capitalisation of Securities Premium account.

During the year the Company has issued 361,805 bonus equity shares (Previous year: 79,488 bonus equity shares) on exercise of eligible options.

c) During the year ended March 31, 2012 after obtaining approval of the shareholders and completion of the formalities prescribed for buy- back of equity shares u/s. 77A of the Companies Act, 1956, the Company bought back 2,936,000 Equity Shares of Rs. 10 each by utilising the Securities Premium Account. Capital Redemption Reserve has been created out of Security Premium Account for Rs. 29.36 Million being the nominal value of equity shares bought back in terms of Sec.77AA of the Companies Act, 1956.

During the year ended March 31, 2013, the Company completed the above referred buy-back of equity shares and bought back 1,064,000 Equity Shares of Rs. 10 each by utilising the Securities Premium Account. Capital Redemption Reserve has been created out of Security Premium Account for Rs. 10.64 Million being the nominal value of equity shares bought back in terms of Sec.77AA of the Companies Act, 1956.

d) During the current year ended March 31, 2015 after obtaining approval of the shareholders and completion of the formalities prescribed for buy-back of equity shares u/s 68 of the Companies Act, 2013, the Company bought back 5,800,000 Equity Shares of Rs. 10 each by utilising the Securities Premium Account. Capital Redemption Reserve has been created out of Security Premium Account for Rs. 58.00 Million being the nominal value of equity shares bought back in terms of Sec.68 of the Companies Act, 2013.

B) Total number of Options outstanding under various employee stock option plans, that are convertible into equity shares, as on March 31, 2015 are 6,134,802 (at March 31, 2014: 3,851,149) (Refer Note 30)

C) Rights and restrictions attached to equity shares:

The Company has only one class of equity shares with voting rights (one vote per share). The dividend proposed by the Board of Directors is subject to approval of the shareholders in the Annual General Meeting. In the event of liquidation of the Company the equity shareholders are entitled to receive only the residual assets of the Company. The distribution of dividend is in proportion to the number of equity shares held by the shareholders.

2. Opening share application money represented unencashed refund instruments issued to the investors which has been remitted during the year to the Investor Education and Protection Fund as per the provisions of the Companies Act. Closing balance of share application money represents amounts received from the employees against employee stock options, pending allotment.

3. A. Contingent liabilities

a The Company has been named as one of the 3 defendants in a civil dispute for injunction pending adjudication. However in the opinion of the management no liability would arise in this regard.

b Disputed Service tax Rs. 5.52 Million (Previous year: Rs. 17.55 Million) and disputed Income Tax Rs. 271.03 Million (Previous year: Rs. 67.82 Million)

B. Capital commitments

a Bank Guarantees given for loans availed by Subsidiary Company, On-Mobile Live Inc Rs. 461.38 Million (Previous year: Rs. 708.83 Million)

b Estimated amount of contracts (net of advances) remaining to be executed on capital account and not provided for is Rs. 5.70 Million (Previous year: Rs. 61.97 Million).

4. Deferred Payment liability includes Rs. 24.52 Million (BRL 1.27 Million) (previous year: Rs. 33.47 Million (BRL 1.27 Million) payable to a customer in Brazil towards deploying value added services on an exclusive basis in the region.

5. Finance Lease:

The lease transactions of the Company represent lease of electronic equipments on a non-cancellable basis.

6. Transactions with related parties:

List of Related parties and relationship:

Sl No. Relationship Related parties

(i) Subsidiaries On-Mobile Singapore Pte. Ltd.

PT. On-Mobile Indonesia .

Vox Mobili S.A. (subsidiary of On-Mobile S.A. till July 11, 2014)

On-Mobile SA.

Phonetize Solutions Private Limited (liquidated)

On-Mobile Europe B.V.

On-Mobile Servicios Corporativos De Telefonia S.A. DE C.V.

Servicios De Telefonia On-Mobile,SA DE CV

On-Mobile USA LLC.

On-Mobile Global S A

On-Mobile Brasil Sistemas De Valor Agregado Para Comunicacoes Moveis Ltda

On-Mobile Global for Telecommunication Services

On-Mobile Senegal SARL

On-Mobile De Venezuela C.A. (subsidiary of On-Mobile USA LLC)

On-Mobile Latam holdings Ltd (subsidiary of On-Mobile USA LLC wef June 18, 2014)

On-Mobile Mali SARL

On-Mobile Bangladesh Private Limited

On-Mobile Kenya Telecom Limited

On-Mobile Costa Rica OBCR, SA

On-Mobile Ghana Telecom Limited

On-Mobile Madagascar Telecom Limited

On-Mobile Nigeria Telecom Limited

On-Mobile Zambia Telecom Limited

On-Mobile Telecom (SL) Limited

On-Mobile Tanzania Telecom Limited

On-Mobile Global Spain S.A

On-Mobile Uruguay S.A

On-Mobile Uganda Telecom Limited

On-Mobile Rwanda Telecom Limited

On-Mobile Global Italy S.R.L.

On-Mobile Telecom Limited

On-Mobile Turkey Telekomunikasyon Sistemleri Limited Sirketi

On-Mobile Telecom Burkina Faso, SARL

On-Mobile Portugal SGPS

On-Mobile Live Inc

Fonestarz Media Group Limited

2dayUK Limited

Fonestarz Media (licensing) Limited Daius Limited Fonestarz Limited

Fonestarz Media (Australia) PTY Limited

Fonestarz Media Limited

On-Mobile Global Czech Republic s.r.o.

On-Mobile Global Limited Columbia S.A.S.

On-Mobile Global South Africa (PTY) Ltd

On-Mobile Global Solutions Canada Limited

(ii)Other related parties with whom the Company had transactions

Key Management Personnel Rajiv Pancholy

François-Charles Sirois

Chandramouli Janakiraman

(iii) Associate Mobile Voice Konnect Private Limited

(iv)Enterprises owned or On-Mobile Systems Inc., USA significantly influenced by key management personnel/ Directors or their relatives

7. a. The Company has 'international transactions with associated enterprises' which are subject to Transfer Pricing regulations in India. These regulations, inter alia, require the maintenance of prescribed documents and information for the basis of establishing arm's length price including furnishing a report from an Accountant within the due date of filing the return of income. The Company has undertaken necessary steps to comply with the regulations. The Management is of the opinion that the international transactions are at arm's length, and hence the aforesaid legislation will not have any material impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.

8. The Company prepares consolidated financial statements, hence as per Accounting Standard 17 on Segment Reporting, segment information has not been provided in the standalone financial statements.

9. The Company had made an application to the Central Government for compounding of one of the contracts for a party covered under Section 297 of the Companies Act, 1956, which expired during an earlier year. The total transaction for which compounding application had been filed amounted to Rs. 3.01 Million. The approval from Central Government is awaited.

10. During the year, the Company has completed the divestiture of Voxmobili SA, a step-down subsidiary of the Company. The Company had signed the Share Purchase Agreement (SPA) with Synchronoss Technologies France, a leading player in synchronization technology products, in May 2014. With the closure of this deal, the Company realised an amount of USD 26 Million, subject to escrows and other conditions customarily contracted as part of such deal.

11. During the previous year ended March 31, 2014, the Company had recognised provision for diminution in value of Investment in its subsidiary On-Mobile Europe B.V. which has underlying investment in On-Mobile S.A., of Rs. 559.48 Million, which was included under exceptional items in the Statement of Profit and Loss.

12. Previous year's figures have been regrouped/reclassified wherever necessary to correspond with the current year's classification/ disclosures.


Mar 31, 2014

1. Share application money represents unencashed refund instruments issued to the investors. This does not include any amount, due and outstanding, to be credited to the Investor Education and Protection Fund as per the provisions of the Companies Act.

2. Contingent liabilities and Commitments

a The Company has been named as one of the 3 defendants in a civil dispute for injunction pending adjudication. However in the opinion of the management no liability would arise in this regard.

b Disputed Value Added Tax Rs. Nil (Previous year: Rs 59.08 Million), Disputed Service tax Rs. 17.55 Million (Previous year: Rs. 14.18 Million) and disputed Income Tax Rs.67.82 Million (Previous year: Rs.111.74 Million )

c Bank Guarantees given for loans availed by subsidiaries Rs 708.83 Million (Previous year: Rs.170.29 Million)

d Estimated amount of contracts (net of advances) remaining to be executed on capital account and not provided for is Rs. 61.97 Million (Previous year: Rs. 123.35 Million).

3. Loans to Subsidiaries

The Company has given loan to its subsidiaries the details of which are given below and which in the opinion of the Management is realisable in full.

4. Deferred Payment liability includes Rs. 33.47 Million (BRL 1.27 Million) (previous year: Rs. 34.35 Million (BRL 1.27 Million)) payable to a customer in Brazil towards deploying value added services on an exclusive basis in the region and Rs. Nil (previous year: Rs. 354.68 Million (Euro 5.1 Million)) Payable to a customer in Europe towards deploying value added services on an exclusive basis.

5. Accounting For Taxes On Income

b. The Company has ''international transactions with associated enterprises'' which are subject to Transfer Pricing regulations in India. These regulations, inter alia, require the maintenance of prescribed documents and information for the basis of establishing arm''s length price including furnishing a report from an Accountant within the due date of filing the return of income.

The Company has undertaken necessary steps to comply with the regulations. The Management is of the opinion that the international transactions are at arm''s length, and hence the aforesaid legislation will not have any material impact on the financial statements, particularly on the amount of tax expense and that of provision for taxation.

6. The Company prepares consolidated financial statements, hence as per Accounting Standard 17 on Segment Reporting, segment information has not been provided in the standalone financial statements.

7. As part of the Company''s periodic review of its transfer pricing policy as also the substantial growth in its international operations, the Company has adopted a revised global transfer pricing policy with effect from April, 1 2012 and has cross charged expenses to its subsidiaries based on an allocation model. The same has been included as reimbursement of expenses under other operating revenue during the year. The cross charge of expenses are given below:

8. The Company had made an application to the Central Government for compounding of one of the contracts for a party covered under Section 297 of the Companies Act, 1956, which expired during an earlier year. The total transaction for which compounding application had been filed amounted to Rs 3.01 Million. The approval from Central Government is awaited.

9. Subsequent to the Balance Sheet date, the Company has executed a binding Share Purchase Agreement (SPA) with Synchronoss Technologies Inc., a Company headquartered in New jersey and a leading player in synchronization technology products, for divestment of Voxmobili SA, a step-down subsidiary of the Company. The proposed deal will be subject to and contingent upon certain events, including applicable regulatory and shareholders'' approvals. Upon the consummation of the deal, the Company will realise an amount of USD 26 Million, subject to escrows and other conditions customarily contracted as a part of such a deal.

10. During the year, the Company has recognised provision for diminution in value of Investment in its subsidiary OnMobile Europe B.V. which has underlying investment in OnMobile S.A., of Rs. 559.48 Million, which is included under exceptional items in the Statement of Profit and Loss.

11. Previous year''s figures have been regrouped/reclassified wherever necessary to correspond with the current year''s classification/ disclosures.


Mar 31, 2013

1. Share application money represents unencashed refund instruments issued to the investors. This does not include any amount, due and outstanding, to be credited to the Investor Education and Protection Fund as per the provisions of the Companies Act, 1956.

2. Contingent liabilities and Commitments:

a. The Company has been named as one of the 3 defendants in a civil dispute for injunction pending adjudication. However in the opinion of the management no liability would arise in this regard.

b. A suit against the Company has been filed by one party for infringement of its patents and the matter is pending adjudication. However in the opinion of the management, no liability would arise in this regard.

c. Disputed Value Added Tax Rs. 59.08 Million (Previous year: Rs 299.32 Million ) and disputed Income Tax Rs.111.74 Million (Previous year: Rs.57.70 Million).

d. Claims against the Company not acknowledged as debts is Rs. Nil (Previous year: Rs 67.16 Million ).

e. Bank Guarantees given for loans availed by subsidiaries Rs 170.29 Million (Previous year: Rs.177.63 Million).

f. Estimated amount of contracts (net of advances) remaining to be executed on capital account and not provided for is Rs. 123.35 Million (Previous year: Rs. 149.90 Million).

g. Pending amount for buyback of equity shares Nil (Previous year Rs. 54.78 Million)

3. Divestment in Ver se Innovation Pvt Ltd.:

During the year the Company sold its balance stake in Ver se Innovation Private Limited for a consideration of Rs. 55 Million (Sale during previous year Rs.500 Million).

4. Loans to Subsidiaries:

The Company has given loan to its subsidiaries the details of which are given below and which in the opinion of the Management is realisable in full.

5. Deferred Payment liability includes Rs. 34.35 Million (BRL1.27 Million) (previous year: Rs. 36.37 Million (BRL 1.27 Million)) payable to a customer in Brazil towards deploying value added services on an exclusive basis in the region and Rs. 354.68 Million (Euro 5.1 Million) (Previous year: Nil) Payable to a customer in Europe towards deploying value added services on an exclusive basis.

6. The Company had circulated request to all suppliers to confirm their status under the Micro, Small and Medium Enterprises Development Act, 2006 and the Company has received confirmations from some of the suppliers and the amounts unpaid as at the year end together with interest paid / payable under this Act is follows:

7. The Company prepares consolidated financial statements, hence as per Accounting Standard 17 on Segment Reporting, segment information has not been provided in the standalone financial statements.

8. As part of the Company''s periodic review of its transfer pricing policy as also the substantial growth in its international operations, the Company has adopted a revised global transfer pricing policy with effect from April 1, 2012 and has cross charged expenses to its subsidiaries based on an allocation model. The same has been included as reimbursement of expenses in other income during the year (Refer Note 18). The cross charge of expenses are given below:

9. The Company had made an application to the Central Government for compounding of one of the contracts for a party covered under Section 297 of the Companies Act, 1956, which expired during the previous year. The total transaction entered into during the year, for which compounding application has been filed amounted to Rs. 0.48 Million (Previous year: Rs 2.53 Million). The approval from Central Government is awaited.

10. Previous year''s figures have been regrouped/reclassif ied wherever necessary to correspond with the current year''s classification/ disclosures.


Mar 31, 2012

A) During the year ended March 31, 2008,

- the Company made a bonus issue in the ratio of 12 :1 to the shareholders by capitalisation of Capital Redemption Reserve an Securities Premium account.

- 567,749 Equity shares were issued to erstwhile shareholders of ITfinity Solutions Private Limited at the time of amalgamation (inclusive of 524,076 bonus shares).

- 423,722 Equity Shares have been issued to the promoters and employees of Vox Mobili, S.A. France as a part of Purchase consideration for its acquisition [inclusive of 391,126 bonus shares].

b) During the year ended March 31,2010, 75,862 Equity Shares have been issued to the promoters and employees of Telisma, S.A. France as a part of Purchase consideration for its acquisition

c) During the year ended March 31, 2012, the Company made a bonus issue in the ratio of 1 :1 to the shareholders by capitalisation of Securities Premium account.

d) During the year after obtaining approval of the shareholders and completion of the formalities prescribed for buy-back of equity shares u/s. 77A of the Companies Act, 1956, the Company has bought back 2,936,000 Equity Shares of Rs.10 each by utilising the Securities Premium Account. Capital Redemption Reserve has been created out of Security Premium Account for Rs. 29.36 Million being the nominal value of equity shares bought back in terms of Sec.77AA of the Companies Act, 1956.

1. Share application money represents unencashed refund instruments issued to the investors. This does not include any amount, due and outstanding, to be credited to the Investor Education and Protection Fund as per the provisions of the Companies Act, 1956.

2. Contingent liabilities and Commitments

a. The Company has been named as one of the 20 defendants in a civil dispute for injunction pending adjudication. However in the opinion of the management no liability would arise in this regard.

b. The Company has been named as one of the 3 defendants in a civil dispute for injunction pending adjudication. However in the opinion of the management no liability would arise in this regard.

c. A suit against the Company has been filed by one party for infringement of its patents and the matter is pending adjudication. However in the opinion of the management, no liability would arise in this regard.

d Disputed Value Added Tax Rs. 299.32 Million (Previous year: Rs 692.8 Million ) and disputed Income Tax Rs.57.7 Million (Previous year: Rs.55.31 Million)

e. Claims against the Company not acknowledged as debts is Rs. 67.16 Million (Previous year: Rs 61.68 Million).

f. Bank Guarantees given for loans availed by subsidiaries Rs 177.63 Million (Previous year: Rs.2.27 Million)

g. Estimated amount of contracts (net of advances) remaining to be executed on capital account and not provided for is Rs. 149.90 Million (Previous year: Rs. 101.72 Million).

h. Pending amount for buyback of equity shares Rs. 54.78 Million (Previous year: Nil).

3. Issue of Bonus Shares

During the year, on April 21, 2011, the shareholders of the Company have approved through Postal ballot process, the issue of one equity share of face value of Rs 101- each as bonus share for every one share held by the equity shareholders of the Company whose name appear in the register of members as on the record date, by capitalisation of Securities premium account and also shareholders have approved for increase of authorised share capital from Rs 750 Million to Rs.1,500 Million. Basic and Diluted Earnings Per Share (EPS) have been restated for the corresponding year to give effect of the said issue of Bonus shares, in accordance with Accounting Standard (AS) 20 "Earnings Per Share".

4. Divestment in Ver se Innovation Pvt Ltd

During the year the Company sold 228,668 Equity Shares in Ver se Innovation Private Limited for a consideration of Rs. 485 Million (Net of expenses).

5. Loans to wholly owned Subsidiaries.

The Company has given loan to its wholly owned subsidiaries the details of which are given below and which in the opinion of the Management is realisable in full.

6. Deferred Payment liability includes:

1. Nil (previous year: Rs. 139.44 Million (Euro 2.21 Million)) payable to Telefonica International, S.A.U, Spain towards accrual of liability relating to acquisition of market development and deployment rights.

2. Nil (previous year: Rs. 282.12 Million (Euro 4.46 Million)) payable to a customer in Europe towards deploying value added services on an exclusive basis in the region.

3. Rs. 36.37 Million (BRL 1.27 Million) (previous year: Rs. 35.09 Million (BRL 1.27 Million)) payable to a customer in Brazil towards deploying value added services on an exclusive basis in the region.

4. Nil (previous year: Rs. 0.5 Million) being balance consideration payable relating to acquisition of Intellectual Property Rights.

7. Employee Benefits:

I. Defined Contribution Plans

During the year the Company has recognized the following amount in the Statement of Profit and Loss:

II. Defined Benefit Plans Gratuity

In accordance with Accounting Standard 15 (Revised 2005) - "Employee Benefits", actuarial valuation as on March 31, 2012 was done in respect of the aforesaid defined benefit plan of Gratuity based on the following assumptions:

The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market.

8. Operating lease:

a. The Company is obligated under non-cancellable operating lease for office space and vehicles provided to employees.

b. The Company has sub let office space under cancellable operating lease for the part of the year.

The Company accounted the above options using the intrinsic value method and thus, the difference between the fair value of the underlying shares in the year of grant and the options exercise value was charged to the statement of profit and Loss. Accordingly, the compensation charge there on in the current year Nil (Previous year Rs. 0.04 Million) as the differences completely charged off to the Statement of Profit and Loss.

The guidance note issued by the Institute of Chartered Accountants of India requires the disclosure of pro forma net results and EPS both basic & diluted, had the Company adopted the fair value method. Had the Company accounted the option under fair value method, amortising the stock compensation expense thereon over the vesting period, the reported profit for the year ended March 31, 2012 would have been lower by Rs.157.22 Million (Previous year Rs.95.65 Million) and Basic and diluted EPS would have been revised to Rs. 3.0/- (Previous year Rs. 7.0/-) and Rs.2.9/- (Previous year Rs 6.8/-) respectively as compared to Rs.4.3/- (Previous year Rs 7.8/-) and Rs.4.2/-(Previous year Rs 7.6/-) without such impact. Basic and Diluted Earnings Per Share (EPS) have been restated for all the corresponding period to give effect of the said issue of Bonus shares, in accordance with Accounting Standard (AS) 20 "Earnings Per Share" notified under Section 211 (3C) of the Companies Act, 1956.

The fair value of stock based awards to employees is calculated through the use of option pricing models, requiring subjective assumptions which greatly affect the calculated values. The said fair value of the options have been calculated using Black-Scholes option pricing model, considering the expected weighted average term of the options to be 4.3 years (Previous year 3.9 years), a 2% (Previous year Nil %) expected dividend yield on the underlying equity shares, weighted average volatility in the share price of 51.58 % (Previous year range of 53.17%) and a risk free rate of 8.50 % p.a. (Previous year 8.25% p.a.). The Company's calculations are based on a single option valuation approach, and forfeitures are recognized as they occur. The expected volatility is based on historical volatility of the share price during the year after eliminating the abnormal price fluctuations.

As per the provisions of SEBI (ESOS) Guidelines, 1999, the Shareholders, vide their resolution dated December 2, 2011 through postal ballot process, approved the repricing of options grated but not exercised. Consequently the Board of Directors vide their circular resolution dated December 21, 2011 re-priced the unexercised options at Rs. 63.78 each.

The incremental fair value of stock based award consequent to re-pricing of exercise price of stock options to employees is calculated through the use of option pricing models as on the date of re-pricing, requiring subjective assumptions which greatly affect the calculated values. The said fair value of the options have been calculated using Black-Scholes option pricing model, considering the expected weighted average term of the options to be 4.3 years, a "2%" expected dividend yield on the underlying equity shares, weighted average volatility in the share price of 51.95% and a risk free rate of 8.50% p.a. The Company's calculations are based on a single option valuation approach, and forfeitures are recognized as they occur. The expected volatility is based on historical volatility of the share price during the year after eliminating the abnormal price fluctuations.

9. Accounting For Taxes On Income

a. During the year, the Company has provided for Minimum Alternative Tax (MAT) under section 115JB of the Income tax Act, 1961 since the tax liability as per regular provisions of the Act is lower. Correspondingly, the Company has also claimed credit of Rs.6.85 Million (Previous year Rs.92.72 Million) under section 115JAA of the said Act, which is disclosed as 'MAT credit entitlement' in the Statement of Profit and Loss.

b. In accordance with the Accounting Standard 22 - "Accounting for Taxes on Income", the Company has reversed the deferred tax liability to the extent of Rs.5.46 Million for the current year, which has been credited to the Statement of Profit and Loss. Details of Deferred Tax Asset and Liabilities are:

10. The Company prepares consolidated financial statements, hence as per Accounting Standard 17 on Segment Reporting, segment information has not been provided in the standalone financial statements.

11. The company has made an application to the Central Government for compounding of one of the contracts for a party covered under Section 297 of The Companies Act, 1956 which expired during the year. The total transaction entered into during the year for which compounding application has been filed is amounting to Rs. 2.53 Million.

12. The Revised Schedule VI has become effective from 1 April, 2011 for the preparation of financial statements. This has significantly impacted the disclosure and presentation made in the financial statements. Previous year's figures have been regrouped I reclassified wherever necessary to correspond with the current year's classification I disclosure.

 
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