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Notes to Accounts of Onward Technologies Ltd.

Mar 31, 2015

A. Terms/rights attached to equity shares

Company has only one class of equity shares having a par value of Rs. 10 per share. Each holder of equity shares is entitled to one vote per share.

1,186,600 (942,750) equity shares are outstanding under ESOP 2009 scheme as at balance sheet date; each share being fully paid equity share of Rs. 10 each.

B. Share Application Money

Currently Company is in balance towards share application money of Rs. 290,000 which have received on 27.03.2015, 31.03.2015 in anticipation to issue 29,000 shares @ Rs. 10 per share under ESOP 2009 scheme. The shares have been allotted on 08.05.2015.

2. In the opinion of the management and to the best of their knowledge, the current assets, loans and advances, shown in the balance sheet have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated therein.

3. Trade receivables and trade payables are subject to confirmation and reconciliation.

4. Contingent liabilities not provided for

Year ended March 31 (Rs.) Particular 2015 2014

Counter guarantees given by the Company against the bank guarantees 175,840 153,308 issued by Company s bankers

Fixed deposits shown under the head cash and bank balances include deposits pledged with the banks as margins to secure letters of credit and 175,840 153,308 guarantees issued by banks

Net amount - -

Corporate guarantees given by the Company for the loans taken by subsidiaries 101,459,730 129,629,611

Disputed income tax demand 48,482,500 48,482,500

Capital commitments (net of advance) - 4,280,600

Total 149,942,230 182,392,711

5. a) The principal amount of working capital term loan repayable within a year is Rs. 3,350,665 (Rs. 2,974,446). b) The principal amount of term loan repayable within a year is Rs. 28,959,688 (Rs. 29,666,942).

i. Compensated leave

Para 132 of Accounting Standard 15 (revised 2005) does not require any specific disclosures except where expense resulting from compensated absence is of such size, nature or incidence that its disclosure is relevant under Accounting Standard # 5 or Accounting Standard # 18. In the opinion of the management, the expense resulting from compensated absence is not significant and hence no disclosures are prepared under various paragraphs of Accounting Standard 15 (revised 2005).

ii. Gratuity is administered through group gratuity scheme with Life Insurance Corporation of India.

iii. Salary escalation rate

Future salary increases considered in actuarial valuation take into account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

iv. Expected rate of return on plan assets

This is based on actuaries' expectation of the average long-term rate of return expected on investments of the fund during the estimated term of the obligations.

v. Discount rate

The discount rate is based on the prevailing market yields of Indian government securities as at the balance sheet date for the estimated term of the obligations.

5. Information about business segments

As permitted by paragraph 4 of Accounting Standard-17 (AS - 17), 'Segment Reporting', if a single financial report contains both consolidated financial statements and the separate financial statements of the parent, segment information need be presented only on the basis of the consolidated financial statements. Thus, disclosures required by AS - 17 are given in consolidated financial statements.

6. Related party disclosures

(a) List of related parties and relationships

A. Holding Company Onward Network Technologies Private Limited

B. Subsidiary Companies

Onward Technologies GmbH, Germany Onward Technologies, Inc., USA Onward eServices Limited

Onward Properties Private Limited (erstwhile Shantmurli Holdings Private Limited)

C. Enterprise over which key management personnel exercise significant influence

Desai Finwealth Investments and Securities Private Limited Onward Software Technologies Private Limited

D. Key management personnel and relatives

Chairman and Managing Director Harish Mehta

Director Shaila Mehta*

Additional Director Prachi Mehta

Chief operating officer and related to Directors Jigar Mehta Related to Director Arun Meghani

* Shaila Mehta passed away on 20.2.2014

7. a) Onward Technologies employee stock option plan 2009

The Company instituted the 2009 plan for all eligible employees in pursuance of a special resolution approved by the shareholders at the extraordinary general meeting held on August 31, 2009. Scheme covers grant of options to specified permanent employees of the Company as well as its subsidiaries.

Pursuant to scheme, the Company has granted options each to eligible employees at an exercise price of Rs. 10 per equity share of Rs. 10 each.

Under the term of scheme, the vesting period shall commence on the expiry of one year from the date of grant of the options to the employees and it will be spread equally over 4 years. And 25% of the options will vest in the employees at the end of first year, 25% at the end of second year, 25% at the end of third year and balance 25% at the end of fourth year from the grant date.

b) Stock options issued during the year have been accounted as per the accounting guidelines issued by SEBI in the year 1999. Accordingly, an amount of Rs. 8,406,448 (Rs. 11,213,635) representing the current year charge has been debited to statement of profit and loss during the year under both plan.

8. a) Term loans including working capital term loans and foreign currency term loans sanctioned by Kotak Mahindra Bank Limited are secured by exclusive charge on all existing and future current assets and movable fixed assets of the Company and personal guarantee of Mr. Harish Mehta and Mr. Jigar Mehta along with corporate guarantee of Onward Network Technologies Private Limited. Further secured by extension of equitable mortgage over the properties situated at Sterling Centre, Worli, Mumbai and E-Space, Nagar Road, Pune (both the properties are owned by Onward Network Technologies Private Limited). The existing term loans which were converted to foreign currency term loans during the year carried interest rate of LIBOR plus 6%. Term loans taken during the financial year 2013-14 carries floating interest rate of 12% to 14.50% p.a. and for 2014-15 it is 12% p.a.

b) Term loans obtained from Kotak Mahindra Prime Limited for purchase of vehicles are secured by hypothecation of vehicles and repayable in equal monthly instalments.

c) Loans from Onward Network Technologies Private Limited for which the Company has unconditional right to defer the repayment along with interest carry interest rate of 12.25% p.a.

d) Loan from Onward Properties Private Limited (erstwhile Shantmurli Holdings Private Limited) is interest free and the Company has unconditional right to defer the repayment along with interest.

e) There are no defaults in repayment of term loans during the year.

9. The Company has not yet appointed key managerial personnel - Company Secretary and Chief Financial Officer as required under provisions of section 203 read with Companies (Appointment and remuneration of Managerial person) Rules, 2014; however, all secretarial compliances are done by an independent Company Secretary firm.

10. Depreciation for current financial year is calculated as per provisions of Companies Act, 2013 and Company opted to take the impact of the new provision to retained earnings vide the MCA notification dated 29.08.2014.

11. All assets and liabilities have been classified as current or non-current as per the operating cycle criteria set out in the Schedule III of Companies Act, 2013. Previous year's figures have been regrouped/reclassified wherever necessary to correspond with the current year's classification/disclosure.

12. Figures are rounded off to the nearest rupee and figures in bracket pertain to the previous year.


Mar 31, 2014

1. In the opinion of the management and to the best of their knowledge, the current assets, loans and advances, shown in the balance sheet have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated therein.

2. Trade receivables and trade payables are subject to confirmation and reconciliation.

3. Contingent liabilities not provided for:

Year ended March 31 (Rs. )

Particular 2014 2013

Counter guarantees given by the Company against the bank guarantees issued by Company''s bankers

Fixed deposits shown under the head cash and bank balances include deposits pledged with the banks as margins to secure letters of credit and 153,308 612,124 guarantees issued by banks

- Net amount - 113,401

Corporate guarantees given by the Company for the loans taken by

subsidiaries 129,629,611 111,105,272

Disputed income tax demand 48,482,500 48,482,500

Disputed sales tax demand - 698,463

Capital commitments (net of advance) 4,280,600 864,934

Total 182,392,711 161,264,570

4. a) The principal amount of working capital term loan repayable within a year is Rs. 2,974,446 (Rs. 1,858,397). b) The principal amount of term loan repayable within a year is Rs. 29,666,942 (Rs. 16,826,961).

vi. Compensated leave:

Para 132 of Accounting Standard 15 (revised 2005) does not require any specific disclosures except where expense resulting from compensated absence is of such size, nature or incidence that its disclosure is relevant under Accounting Standard # 5 or Accounting Standard # 18. In the opinion of the management the expense resulting from compensated absence is not significant and hence no disclosures are prepared under various paragraphs of Accounting Standard 15 (revised 2005).

ix. Gratuity is administered through group gratuity scheme with Life Insurance Corporation of India.

x. Salary escalation rate:

Future salary increases considered in actuarial valuation take into account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

xi. Expected rate of return on plan assets:

This is based on actuaries'' expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligations.

xii. Discount rate:

The discount rate is based on the prevailing market yields of Indian government securities as at the balance sheet date for the estimated term of the obligations.

5. Information about business segments

As permitted by paragraph 4 of Accounting Standard-17 (AS -17), ''Segment Reporting'', if a single financial report contains both consolidated financial statements and the separate financial statements of the parent, segment information need be presented only on the basis of the consolidated financial statements. Thus, disclosures required by AS -17 are given in consolidated financial statements.

6. a) Onward Technologies employee stock option plan 2009

The Company instituted the 2009 plan for all eligible employees in pursuance of a special resolution approved by the shareholders at the extraordinary general meeting held on August 31, 2009. Scheme covers grant of options to specified permanent employees of the Company as well as its subsidiaries.

Pursuant to scheme, the Company has granted options each to eligible employees at an exercise price of Rs. 10 per equity share of Rs. 10 each.

Under the term of scheme, the vesting period shall commence on the expiry of one year from the date of grant of the options to the employees and it will be spread equally over 4 years. And 25% of the options will vest in the employees at the end of first year, 25% at the end of second year, 25% at the end of third year and balance 25% at the end of fourth year from the grant date.

b) Stock options issued during the year have been accounted as per the accounting guidelines issued by SEBI in the year 1999. Accordingly, an amount of Rs. 11,213,635 (Rs. 6,718,071) representing the current year charge has been debited to statement of profit and loss during the year under both plan.

7. a) Term loans including working capital term loans sanctioned by Kotak Mahindra Bank Limited are secured by exclusive charge on all existing and future current assets and movable fixed assets of the Company and personal guarantee of Mr. Harish Mehta & Mr. Jigar Mehta along with Corporate Guarantee of Onward Network Technologies Private Limited. Further secured by extension of equitable mortgage over the properties situated at Sterling Centre, Worli, Mumbai and E-Space, Nagar Road, Pune (both the properties are owned by Onward Network Technologies Private Limited). Term loans taken during the financial year 2012-13 & 2013-14 carries floating interest rate of 12% to 14.50% p.a.

b) Term loans obtained from Kotak Mahindra Prime Limited for purchase of vehicles are secured by hypothecation of vehicles and repayable in equal monthly installments.

c) Loans from Onward Network Technologies Private Limited for which the Company has unconditional right to defer the repayment along with interest carry interest rate of 12.25% p.a. & other ICD @12% p.a.

d) Loan from Onward Properties Private Limited (erstwhile Shantmurli Holdings Private Limited) is interest free and the Company has unconditional right to defer the repayment along with interest.

8. The Company has not yet appointed a full time Company Secretary; however, all compliances are done by an independent Company Secretary firm.

9. Based on the current experience, the Company has decided to recognise the bond money receivable from ex-employees on receipt basis. As at 31st March, 2014 bond money receivable from resigned employees amounts to Rs. 8,859,544 pertaining to the previous years and recognised on accrual basis. The management is confident of recovering the said amount in the ordinary course of business.

10. All assets and liabilities have been classified as current or non-current as per the operating cycle criteria set out in the Revised Schedule VI. Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosure.

11. Figures are rounded off to the nearest rupee and figures in bracket pertain to the previous year.


Mar 31, 2013

1. In the opinion of the board and to the best of their knowledge, the current assets, loans and advances, shown in the balance sheet have a value on realization in the ordinary course of business at least equal to the amount at which they are stated therein.

2. Trade receivables and trade payables are subject to confirmation and reconciliation.

3. Contingent liabilities not provided for:

Year ended March 31 ( Rs. )

Particular

Particular 2013 2012

Counter guarantees given by the Company against the bank guarantees 725,525 719,500 issued by Company''s bankers

Fixed deposits shown under the head cash and bank balances include

deposits pledged with the banks as margins to secure letters of credit and 612,124 719,500 guarantees issued by banks

Net amount 113,401 -

Corporate guarantees given by the Company for the loans taken by subsidiaries 111,105,272 52,660,050

Disputed income tax demand 48,482,500 112,953,247

Disputed sales tax demand 6,98,463 1,307,274

Disputed profession tax demand - 579,128*

Capital commitments (net of advance) 864,934

Total 161,264,570 167,499,699

*Out of Rs. 579,128, Rs. 150,000/- were paid under protest

4. a) The principal amount of working capital term loan repayable within a year is Rs. 1,858,397 (Rs. 10,704,157).

b) The principal amount of term loan repayable within a year is Rs. 16,826,961 (Rs. 8,237,315).

i. Compensated leave:

Para 132 of Accounting Standard 15 (revised 2005) does not require any specific disclosures except where expense resulting from compensated absence is of such size, nature or incidence that its disclosure is relevant under Accounting Standard # 5 or Accounting Standard # 18. In the opinion of the management the expense resulting from compensated absence is not significant and hence no disclosures are prepared under various paragraphs of Accounting Standard 15 (revised 2005).

ii. Gratuity is administered through group gratuity scheme with Life Insurance Corporation of India.

iii. Salary escalation rate:

Future salary increases considered in actuarial valuation take into account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

iv. Expected rate of return on plan assets:

This is based on actuaries'' expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligations.

v. Discount rate:

The discount rate is based on the prevailing market yields of Indian government securities as at the balance sheet date for the estimated term of the obligations.

5. Information about business segments

As permitted by paragraph 4 of Accounting Standard-17 (AS - 17), ''Segment Reporting'', if a single financial report contains both consolidated financial statements and the separate financial statements of the parent, segment information need be presented only on the basis of the consolidated financial statements. Thus, disclosures required by AS - 17 are given in consolidated financial statements.

** Erstwhile Shantmurli Holdings Private Limited

* During the financial year 2011-12, Company has received Central Government''s approval for Rs. 8,400,000 per annum towards remuneration payable to Mr. Harish Mehta for the period of 3 years effective from April 1, 2011 to March 31, 2014. Salary and allowances amounting to Rs. 8,094,980 (Rs. 8,112,500) include rent free accommodation.

# Remuneration paid for the period April 1, 2012 to March 31, 2013 was approved by the shareholders in the Annual General Meeting held on July 27, 2012. Consequently Company had applied to the Central Government for approval, which is pending as on date.

** Erstwhile Shantmurli Holdings Private Limited

6. a) Onward Technologies employee stock option plan 2009

The Company instituted the 2009 plan for all eligible employees in pursuance of a special resolution approved by the shareholders at the extraordinary general meeting held on August 31, 2009. Scheme covers grant of options to specified permanent employees of the Company as well as its subsidiaries.

Pursuant to scheme, the Company has granted options each to eligible employees at an exercise price of Rs. 10 per equity share of Rs. 10 each.

Under the term of scheme, the vesting period shall commence on the expiry of one year from the date of grant of the options to the employees and it will be spread equally over 4 years. 25% of the options will vest in the employees at the end of first year, 25% at the end of second year, 25% at the end of third year and balance 25% at the end of fourth year from the grant date.

The employee stock options granted shall be capable of being exercised within a period of one year from the date of vesting the options, they would be exercisable by the option holder and the shares arising on exercise of such options shall not be subject to any lock-in period. Further, in the case of termination of employment, all non-vested options would stand cancelled. Options that have vested but have not been exercised can be exercised within the time prescribed as mentioned above, failing which they would stand cancelled. The movement in the stock options during the year was as per the table given below:

b) Stock options issued during the year have been accounted as per the accounting guidelines issued by SEBI in the year 1999. Accordingly, an amount of Rs. 6,718,071 (Rs. 1,854,358) representing the current year charge has been debited to statement of profit and loss during the year under both plan.

7. a. Cash credits and term loans including working capital term loans sanctioned by Kotak Mahindra Bank Limited are secured by exclusive charge on all existing and future current assets and movable fixed assets of the Company and personal guarantee of Mr. Harish Mehta & Mr. Jigar Mehta. Further secured by extension of equitable mortgage over the properties situated at Sterling Centre, Worli, Mumbai and E-Space, Nagar Road, Pune (both the properties are owned by Onward Network Technologies Private Limited). Term loans taken during the financial year 2011-12 & 2012-13 carries floating interest rate of 12% to 14.50% p.a.

b. Term loans obtained from Kotak Mahindra Prime Limited for purchase of vehicles are secured by hypothecation of vehicles and repayable in equal monthly installments.

c. Loans from Onward Network Technologies Private Limited for which the Company has unconditional right to defer the repayment along with interest carry interest rate of 12.25% p.a. respectively.

d. Loan from Onward Properties Private Limited (erstwhile Shantmurli Holdings Private Limited) is interest free and the Company has unconditional right to defer the repayment along with interest.

8. 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. All assets and liabilities have been classified as current or non-current as per the operating cycle criteria set out in the Revised Schedule VI. Previous year''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosure.

9. The Company has not yet appointed a full time Company Secretary; however, all compliances are done by an independent Company Secretary firm.

10. Figures are rounded off to the nearest rupee.

11. Figures in bracket pertain to the previous year.


Mar 31, 2012

Terms/rights attached to equity shares

Company has only one class of equity shares having a par value of Rs 10 per share. Each holder of equity shares is entitled to one vote per share.

1,434,950 (960,200) equity shares are outstanding under ESOP 2009 scheme as at balance sheet date; each share being fully paid equity share of Rs 10 each.

A) Term loans including working capital term loans sanctioned by Kotak Mahindra Bank Limited are secured by exclusive charge on all existing and future current assets and movable fixed assets of the Company and personal guarantee of Mr. Harish Mehta & Mr. Jigar Mehta. Further secured by extension of equitable mortgage over the properties situated at Sterling Centre, Worli, Mumbai and E-Space, Nagar Road, Pune (both the properties are owned by Onward Network Technologies Private Limited). Term loans taken during the financial year 2010-11 & 2011-12 carries floating interest rate of 12% to 14.50% p.a.

B) Term loans obtained from ICICI Bank & Kotak Mahindra Prime Limited for purchase of vehicles are secured by hypothecation of vehicles and repayable in equal monthly installments.

C) Loans from Desai Finwealth Investment & Securities Private Limited and Onward Network Technologies Private Limited for which the Company has unconditional right to defer the repayment along with interest @ 1% & 12.25% p.a. respectively.

D) Loan from Shantmurli Holdings Private Limited is interest free and the Company has unconditional right to defer the repayment along with interest.

A) Cash credits and term loans including working capital term loans sanctioned by Kotak Mahindra Bank Limited are secured by exclusive charge on all existing and future current assets and movable fixed assets of the Company and personal guarantee of Mr. Harish Mehta & Mr. Jigar Mehta. Further secured by extension of equitable mortgage over the properties situated at Sterling Centre, Worli, Mumbai and E-Space, Nagar Road, Pune (both the properties are owned by Onward Network Technologies Private Limited). Term loans taken during the financial year 2010-11 & 2011-12 carries floating interest rate of 12% to 14.50% p.a.

B) Term loans obtained from ICICI Bank & Kotak Mahindra Prime Limited for purchase of vehicles are secured by hypothecation of vehicles and repayable in equal monthly installments.

1. In the opinion of the board and to the best of their knowledge, the current assets, loans and advances, shown in the balance sheet have a value on realization in the ordinary course of business at least equal to the amount at which they are stated therein.

2. Trade receivables and trade payables are subject to confirmation and reconciliation.

3. Other commitments:

Liabilities on account of forward contracts entered during the year and are outstanding as at March 31, 2012 against forecasted transactions amounting to Rs 162,208,250 ($ 325,000).

4. Contingent liabilities not provided for:

Year ended March 31 (Rs)

Particular 2012 2011

Counter guarantees given by the Company against the bank guarantees issued by Company s bankers 719,500 3,474,500

Fixed deposits shown under the head cash and bank balances include

deposits pledged with the banks as margins to secure letters of credit and 719,500 2,921,500

guarantees issued by banks Net amount - 553,000

Corporate guarantees given by the Company for the loans taken by subsidiaries 52,660,050 48,832,878

Disputed income tax demand 112,953,247 64,470,747

Disputed sales tax demand 1,307,274 1,307,274

Disputed profession tax demand 579,128* 579,128

Total 167,499,699 66,910,149

* Out of Rs 579,128, Rs 150, 000 were paid under protest.

5. a) The principal amount of working capital term loan repayable within a year is Rs 10,704,157 (Rs 8,671,432).

b) The principal amount of term loan repayable within a year is Rs 8,237,315 (Rs Nil).

vi. Compensated leave:

Para 132 of Accounting Standard 15 (revised 2005) does not require any specific disclosures except where expense resulting from compensated absence is of such size, nature or incidence that its disclosure is relevant under Accounting Standard # 5 or Accounting Standard # 18. In the opinion of the management the expense resulting from compensated absence is not significant and hence no disclosures are prepared under various paragraphs of Accounting Standard 15 (revised 2005).

ix. Gratuity is administered through group gratuity scheme with Life Insurance Corporation of India.

x. Salary escalation rate:

Future salary increases considered in actuarial valuation take into account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

xi. Expected rate of return on plan assets:

This is based on actuaries expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligations.

xii. Discount rate:

The discount rate is based on the prevailing market yields of Indian government securities as at the balance sheet date for the estimated term of the obligations.

6. Information about business segments

As permitted by paragraph 4 of Accounting Standard-17 (AS - 17), 'Segment Reporting', if a single financial report contains both consolidated financial statements and the separate financial statements of the parent, segment information need be presented only on the basis of the consolidated financial statements. Thus, disclosures required by AS - 17 are given in consolidated financial statements.

* During the financial year 2011-12, Company has received Central Government's approval for Rs 8,400,000 per annum towards remuneration payable to Mr. Harish Mehta for the period of 3 years effective from April 1, 2011 to March 31, 2014. Salary and allowances amounting to Rs 8,112,500 include rent free accommodation.

7. a) Onward Technologies employee stock option plan 2009

The Company instituted the 2009 plan for all eligible employees in pursuance of a special resolution approved by the shareholders at the extraordinary general meeting held on August 31, 2009. Scheme covers grant of options to specified permanent employees of the Company as well as its subsidiaries.

Pursuant to scheme, the Company has granted options each to eligible employees at an exercise price of Rs 10 per equity share of Rs 10 each.

Under the term of scheme, the vesting period shall commence on the expiry of one year from the date of grant of the options to the employees and it will be spread equally over 4 years. And 25% of the options will vest in the employees at the end of first year, 25% at the end of second year, 25% at the end of third year and balance 25% at the end of fourth year from the grant date.

The employee stock options granted shall be capable of being exercised within a period of one year from the date of vesting the options, they would be exercisable by the option holder and the shares arising on exercise of such options shall not be subject to any lock-in period. Further, in the case of termination of employment, all non-vested options would stand cancelled. Options that have vested but have not been exercised can be exercised within the time prescribed as mentioned above, failing which they would stand cancelled. The movement in the stock options during the year was as per the table given below:

b) Stock options issued during the year have been accounted as per the accounting guidelines issued by SEBI in the year 1999. Accordingly, an amount of Rs 1,854,358 (Rs 4,134,766) representing the current year charge has been debited to statement of profit and loss during the year under both plan.

8. The Company has not yet appointed a full time Company Secretary; however, all compliances are done by an independent Company Secretary firm.

9. 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. All assets and liabilities have been classified as current or non-current as per the operating cycle criteria set out in the Revised Schedule VI. Previous year's figures have been regrouped / reclassified wherever necessary to correspond with the current year's classification / disclosure.

10. Figures are rounded off to the nearest rupee.

11. Figures in bracket pertain to the previous year.


Mar 31, 2011

1. In the opinion of the board and to the best of their knowledge, the current assets, loans and advances, shown in the balance sheet have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated therein.

2. Debtors and Creditors are subject to confirmation.

10. Additional Information Pursuant to the Provisions of Paragraphs 3, 4C and 4D of Part II of Schedule VI to the Companies Act, 1956:

(A) Information in respect of capacity and class of goods manufactured:

The Company, being primarily engaged in rendering of services, the details in respect of licensed capacity, installed capacity and production / consumption of raw materials etc. are not given.

f) Compensated Leave:

Para 132 of AS15 (revised 2005) does not require any specific disclosures except where expense resulting from compensated absence is of such size, nature or incidence that its disclosure is relevant under Accounting Standard No. 5 or Accounting Standard No. 18. In the opinion of the management the expense resulting from compensated absence is not significant and hence no disclosures are prepared under various paragraphs of AS 15 (revised 2005).

i) Gratuity is administered through group gratuity scheme with Life Insurance Corporation of India.

j) Salary Escalation Rate:

Future salary increases considered in actuarial valuation take into account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

k) Expected rate of return on plan assets:

This is based on actuaries expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligations.

l) Discount Rate:

The discount rate is based on the prevailing market yields of Indian government securities as at the balance sheet date for the estimated term of the obligations.

3. Information about Business Segments

As permitted by paragraph 4 of Accounting Standard-17 (AS - 17), Segment Reporting, if a single fniancial report contains both consolidated financial statements and the separate financial statements of the parent, segment information need be presented only on the basis of the consolidated financial statements. Thus, disclosures required by AS - 17 are given in consolidated financial statements.

4. Related Party Disclosures

(a) List of related parties and relationships:

Relation Parties

A. Subsidiaries Onward Technologies GmbH, Germany

Shantmurli Holdings Pvt. Ltd. Onward Technologies, Inc., USA Onward eServices Ltd.

B. Enterprise over which key management Onward Network Technologies Pvt. Ltd. personnel exercise significant influence Desai Finwealth Investments & Securities Pvt. Ltd.

Onward Software Technologies Pvt. Ltd.

C. Key Management Personnel and Relatives Chairman & Managing Director Harish Mehta Director Shaila Mehta Related to Directors Jigar Mehta Related to Director Arun Meghani

5 a. Onward Technologies employee stock option plan 2001

The Company instituted the 2001 plan for all eligible employees in pursuance of a special resolution approved by the shareholders at the extraordinary general meeting held on January 15, 2001. Scheme covers grant of options to specifed permanent employees of the Company as well as its subsidiaries.

Pursuant to scheme, the Company has granted options each to eligible employees at an exercise price of Rs. 10 per equity share of Rs. 10 each.

Under the term of scheme, 25% of the options will vest in the employees at the end of frst year, 25% at the end of second year, 25% at the end of third year and balance 25% at the end of fourth year from the grant date.

b. Onward Technologies employee stock option plan 2009

The Company instituted the 2009 plan for all eligible employees in pursuance of a special resolution approved by the shareholders at the extraordinary general meeting held on August 31, 2009. Scheme covers grant of options to specifed permanent employees of the Company as well as its subsidiaries.

Pursuant to scheme, the Company has granted options each to eligible employees at an exercise price of Rs. 10 per equity share of Rs. 10 each.

Under the term of scheme, 25% of the options will vest in the employees at the end of frst year, 25% at the end of second year, 25% at the end of third year and balance 25% at the end of fourth year from the grant date.

c) Stock options issued during the year have been accounted as per the accounting guidelines issued by SEBI in the year 1999. Accordingly, an amount of Rs. 4,134,766 (P. Y. Rs. (-) 6,827,879) representing the current year charge has been debited to proft & loss account during the year under both plan.

6. During the fnancial year 2009-10, the Company had written off as bad debts certain receivables for offshore work done for Rs. 575.04 Lac for its US based customers who were affected by the downturn in the US economy and the Global economic meltdown.

7. The Company has not yet appointed a Company Secretary, however, all compliances are done by an independent Company Secretary frm.

8. Previous years fgures have been regrouped /recast wherever necessary.

9. Figures are rounded off to the nearest rupee.

10. Figures in bracket pertain to the previous year.


Mar 31, 2010

1. In the opinion of the board and to the best of their knowledge, the current assets, loans and advances, shown in the balance sheet have a value on realisation in the ordinary course of business at least equal to the amount at which they are stated therein.

2. Debtors and Creditors are subject to confirmation.

3. Contingent Liabilities not provided for:

Year Ended March 31 (Rs.)

Particular 2010 2009

Counter guarantees given by the Company for the guarantees issued by 2,289,750 10,732,394 Company s bankers

Fixed deposits shown under the head cash and bank balances include deposits pledged with the banks as margi ns to secure letters of credit and (350,425) (1,687,305) guarantees issued by banks

Net amount 1,939,325 9,045,089

Disputed income tax / sales tax demand 80,325,421 42,875,435

Total 82,264,746 51,920,524

( * ) In previous year an amount of Rs.3,120,910 includes leave travel allowance of Rs.337,500, which was paid for earlier years.

Remuneration paid for the period Jan 1, 2009 to March 31, 2010 is approved by shareholders in the Annual General Meeting held on August 31, 2009, however it is subject to approval of Central Government, which is pending as on date.

4. Amount Due to Small, Medium and Micro enterprises:

5. Additional Information Pursuant to the Provisions of Paragraphs 3, 4C and 4D of Part II of Schedule VI to the Companies Act, 1956:

(A) Information in respect of capacity and class of goods manufactured:

The Company, being primarily engaged in rendering of services, the details in respect of licensed capacity, installed capacity and production / consumption of raw materials etc. are not given.

6. The principal amount of term loan payable within a year is Rs.125.00 Lac (P. Y. Rs.125.00 Lac).

7. Disclosure in pursuance of Accounting Standard - 15 (Revised 2005) on "Employee Benefits"

1. Defined Contribution Plans

2. Defined Benefit Plans / Compensated absences - as per Actuarial Valuation on March 31, 2010.

f) Compensated Leave:

Para 132 of AS15 (revised 2005) does not require any specific disclosures except where expense resulting from compensated absence is of such size, nature or incidence that its disclosure is relevant under Accounting Standard No. 5 or Accounting Standard No. 18. In the opinion of the management the expense resulting from compensated absence is not significant and hence no disclosures are prepared under various paragraphs of AS 15 (revised 2005).

i) Gratuity is administered through group gratuity scheme with Life Insurance Corporation of India.

j) Salary Escalation Rate:

Future salary increases considered in actuarial valuation take into account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

k) Expected rate of return on plan assets:

This is based on actuaries expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligations.

l) Discount Rate:

The discount rate is based on the prevailing market yields of Indian government securities as at the balance sheet date for the estimated term of the obligations.

8. Information about Business Segments

As permitted by paragraph 4 of Accounting Standard-17 (AS - 17), Segment Reporting, if a single financial report contains both consolidated financial statements and the separate financial statements of the parent, segment information need be presented only on the basis of the consolidated financial statements. Thus, disclosures required by AS - 17 are given in consolidated financial statements.

9. Related Party Disclosures

* Remuneration paid for the period April 1, 2009 to March 31, 2010 is approved by shareholders in the Annual General Meeting held on August 31, 2009, however it is subject to approval of Central Government, which is pending as on date.

Note: Previous year figures have been shown in brackets.

(*) The above amount includes Rs. 491.62 Lac due to Onward Technologies, Inc., USA towards Capital Software purchase.

Note: Previous year figures have been shown in brackets.

10. I) Disclosure for Income from Operating Lease:

11. Earnings per Share

12 a. Onward Technologies employee stock option plan 2001

The Company instituted the 2001 plan for all eligible employees in pursuance of a special resolution approved by the shareholders at the extraordinary general meeting held on January 15, 2001. Scheme covers grant of options to specified permanent employees of the Company as well as its subsidiaries.

Pursuant to scheme, the Company has granted options each to eligible employees at an exercise price of Rs 10 per equity share of Rs 10 each.

Under the term of scheme, 25% of the options will vest in the employees at the end of first year, 25% at the end of second year, 25% at the end of third year and balance 25% at end of fourth year from the grant date.

The employee stock options granted shall be capable of being exercised within a period of four years from the date of first vesting the options, they would be exercisable by the option holder and the shares arising on exercise of such options shall not be subject to any lock-in period. Further, in the case of termination of employment, all non-vested options would stand cancelled. Options that have vested but have not been exercised can be exercised within the time prescribed as mentioned above, failing which they would stand cancelled. The movement in the stock options during the year was as per the table given below:

b. Onward Technologies employee stock option plan 2009

The Company instituted the 2009 plan for all eligible employees in pursuance of a special resolution approved by the shareholders at the extraordinary general meeting held on August 31, 2009. Scheme covers grant of options to specified permanent employees of the Company as well as its subsidiaries.

Pursuant to scheme, the Company has granted options each to eligible employees at an exercise price of Rs 10 per equity share of Rs 10 each.

Under the term of scheme, 25% of the options will vest in the employees at the end of first year, 25% at the end of second year, 25% at the end of third year and balance 25% at end of fourth year from the grant date.

The employee stock options granted shall be capable of being exercised within a period of four years from the date of first vesting the options, they would be exercisable by the option holder and the shares arising on exercise of such options shall not be subject to any lock-in period. Further, in the case of termination of employment, all non-vested options would stand cancelled. Options that have vested but have not been exercised can be exercised within the time prescribed as mentioned above, failing which they would stand cancelled. The movement in the stock options during the year was as per the table given below:

c) Stock options issued during the year have been as per the accounting guidelines issued by SEBI in the year 1999 and as further amended in year 2004. Further during the year, 2001 Scheme has been partly lapsed and Company has scraped 2005 Scheme. Accordingly, an amount of Rs. 6,827,879 (P.Y.Rs. (-) 2,373,807) reversed during the year been credited to Profit & Loss Account

13. During the said financial year the Company has written off as bad debts certain receivables for offshore work done for Rs. 575.04 Lac for its US based customers who were affected by the downturn in the US economy and the Global economic meltdown. In addition to delay in payment and the inability of the customer to confirm the balance forced the Company to write-off these receivables. Looking at the general economic scenario, the efforts, time and money which would be required to pursue this outstanding and the very negligible chances of recovering the same at the earliest, the Company decided against taking any further action in this matter.

14. Scheme of arrangement / compromise between Onward Technologies Limited (hereinafter refer as "OTL") and Onward eServices Limited (hereinafter refer as "OEL") as approved by the Honorable High Court of Mumbai:

During the financial year 2008-09, as a part of arrangement / compromise, the Company pursuant to provisions of Section 391 & 394 of the Companies Act, 1956, offered a scheme of arrangement / compromise to respective Members of OTL and OEL and for reconstruction and reduction of capital of OEL and specified creditor of OEL viz OTL and further convened meetings of shareholders of OTL on June 9, 2008 pursuant to an order of the Honorable High Court of Judicature at Mumbai.

Pursuant to the above meeting the Company had obtained necessary sanction of the scheme from the Honorable High Court of Mumbai vide its Order dated April 16, 2009. Even though, the appointed date was April 1, 2007, the effect of the above scheme has been given in the books of accounts for the year ending March 31, 2009 and comparative figures of the previous year has not been adjusted to that extent.

The scheme of arrangement as sanctioned by the Honorable High Court of Mumbai provides for the following accounting treatment in the books of accounts:

- The outstanding loan of Rs.106,897,410 (Rupees Ten Crore Sixty Eight Lac Ninety Seven Thousand Four Hundred Ten Only) obtained by OEL from OTL, was converted into equity share capital of OEL.

- The debit balance of profit and loss account amounting to Rs.156,888,820, irrecoverable debtors Rs.19,001,570, loss/reduction in value of sundry advances Rs.99,908,873 and reduction in the value of inventories Rs.18,198,147 of OEL aggregating Rs.293,997,410 (Rupees Twenty Nine Crore Thirty Nine Lac Ninety Seven Thousand Four Hundred Ten Only) were reduced against the reduction in share capital of OEL.

- Consequent to such reduction in share capital, the diminution in the value of investments of OTL in the share capital of OEL was reduced / adjusted against the securities premium account of OTL. Thus the securities premium account of OTL was reduced by Rs.293,997,410 (Rupees Twenty Nine Crore Thirty Nine Lac Ninety Seven Thousand Four Hundred Ten Only) and the loan given to OEL and investments in share capital of OEL will reduce to the extent of Rs.293,997,410 (Rupees Twenty Nine Crore Thirty Nine Lac Ninety Seven Thousand Four Hundred Ten Only).

Since the loan outstanding as on March 31, 2008 given by OTL to OEL was converted in to equity and thereafter reduced pursuant to High Court order with retrospective effect from April 1, 2007, interest charged by OTL to OEL amounting to Rs.6,782,667 in the financial year 2007-08 has been adjusted in the previous year.

15. The sales & other income as shown in the profit and loss accounts includes the value of sales reversal of Rs. Nil (P. Y. Rs.80,313,553) towards on going pilots conducted at the behest of one of Companys major offshore customer. These pilots were in the nature of software and engineering designs to demonstrate feasibility of ideas, modifications to suit the changed specifications of the said customer. The Company has been representing to the said customers that these assignments though individually small, collectively aggregated to large sums and therefore the invoices raised by the Company were legitimate dues. However, while such negotiations were on the economic meltdown happened and the customers did not agree to the Companys contention. In light of these unforeseen developments, and keeping in mind the current relationship and the future prospects from the customer, the Company decided to reverse the sales.

16. The Company has not yet appointed a Company Secretary, however, all compliances are done by an independent Company Secretary firm.

17. Previous years figures have been regrouped / recast wherever necessary except figures affected by scheme of compromise/arrangement.

18. Figures are rounded off to the nearest rupee.

19. Figures in bracket pertain to the previous year.

 
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