Home  »  Company  »  Oracle Financial Ser  »  Quotes  »  Notes to Account
Enter the first few characters of Company and click 'Go'

Notes to Accounts of Oracle Financial Services Software Ltd.

Mar 31, 2015

Note 1: Corporate information

Oracle Financial Services Software Limited (the ''Company'') was incorporated in India with limited liability on September 27, 1989. The Company is a subsidiary of Oracle Global (Mauritius) Limited holding 74.52% (March 31, 2014 - 74.93%) ownership interest in the Company as at March 31, 2015.

The Company is principally engaged in the business of providing information technology solutions to the financial services industry worldwide. The Company has a suite of banking products, which caters to the needs of corporate, retail, investment banking, treasury operations and data warehousing.

Note 2: Capital commitments and contingent liabilities

(Amounts in Rs. million)

Particulars March 31, 2015 March 31, 2014

(a) Capital commitments

Contracts remaining to be executed on capital account not provided for (net of 177.24 169.83 advances).

(b) Contingent liabilities Nil Nil

Note 22: Share based compensation / payments a) Employee Stock Purchase Scheme ("ESPS")

The Company has adopted the ESPS administered through a Trust (''the Trust'') to provide equity based incentives to key employees of the Company. As per the scheme, the Trust can purchase shares of the Company from market using the proceeds of loans obtained from the Company. Such shares are allocated by the Trust to nominated employees at an exercise price, which approximates the fair value on the date of the grant. The shares vest in the employees over a period of five years and the employees can purchase the shares from the Trust over a period of ten years based on continued employment, until which, the Trust holds the shares for the benefit of the employees. The employees are entitled to receive dividends, bonus, etc., that may be declared by the Company from time to time for the entire portion of shares held by the Trust on behalf of the employees.

On the acceptance of the offer, the selected employee undertakes to purchase the shares from the Trust within ten years from the date of acceptance of the offer. In case an employee resigns from employment, the rights relating to vested shares, which are eligible for exercise, may be purchased by the employee by payment of the exercise price whereas, the balance shares are forfeited in favor of the Trust. The Trustees have the right of recourse against the employees for any amounts that may remain unpaid on the shares accepted by them. As of the balance sheet date, the Trust has repaid the entire loan obtained from the Company on receipt of payments from employees against shares exercised.

In accordance with the Guidance Note on Accounting for Employee Share Based Payments issued by ICAI, the excess of market price of the underlying equity shares on the date of grant of the stock options over the exercise price of the options is to be recognized in the books of account and amortized over the vesting period. However, no compensation cost has been recorded as the scheme terms are fixed and the exercise price equals the market price of the underlying stock on the grant date.

b) Employee Stock Option Plan ("ESOP")

Pursuant to ESOP scheme approved by the shareholders of the Company on August 14, 2001, the Board of Directors, on March 4, 2002 approved the Employees Stock Option Scheme ("Scheme 2002") for issue of 4,753,600 options to the employees and directors of the Company and its subsidiaries. According to the Scheme 2002, the Company has granted 4,548,920 options prior to the IPO and 619,000 options at various dates after IPO (including the grants of options out of options forfeited earlier). On August 25, 2010, the Board of Directors approved the Employees Stock Option Plan 2010 Scheme ("Scheme 2010") for issue of 618,000 options to the employees and directors of the Company and its subsidiaries. According to the Scheme 2010, the Company has granted 638,000 options (including the grants of options out of options forfeited earlier).

Pursuant to ESOP scheme approved by the shareholders of the Company in their meeting held on August 18, 2011, the Board of Directors approved the Employees Stock Option Plan 2011 Scheme ("Scheme 2011"). Accordingly, the Company has granted 1,950,500 options under the Scheme 2011. Nomination and Remuneration Committee in their meeting held on August 7, 2014 approved Oracle Financial Services Software Limited Stock Plan 2014 ("OFSS Stock Plan 2014") and during the year 2014-15, the Company granted 58,370 Stock Options and 147,889 Restricted Stock Units (RSUs) under OFSS Stock Plan 2014. The issuance terms of RSUs are the same as for Stock Options, employees may elect to receive 1 RSU in lieu of 4 awarded Stock Options at their respective exercise price.

As per the Scheme 2002, Scheme 2010 and Scheme 2011, each of 20% of the total options granted will vest on completion of 12, 24, 36, 48 and 60 months from the date of grant and is subject to continued employment of the employee or directorship of the director with the Company or its subsidiaries. Options have exercise period of 10 years from the date of grant. The employee pays the exercise price upon exercise of option.

In respect of the Stock Options and RSUs granted in the Financial year 2014-15 under OFSS Stock Plan 2014, each of 25% of the total Stock Options / RSUs will vest on completion of 12, 24, 36 and 48 months from the date of grant and is subject to continued employment of the employee of the Company or its subsidiaries. Options have exercise period of 10 years from the date of grant. The employee pays the exercise price upon exercise of option.

The estimates of future salary increase, considered in actuarial valuation, take account of inflation, seniority, promotions and other relevant factors such as supply and demand in the employment market.

The Company evaluates these assumptions annually based on its long-term plans of growth and industry standards. The discount rates are based on current market yields on government bonds consistent with the currency and estimated term of the post employment benefits obligations. Plan assets are administered by the LIC and invested in lower risk assets, primarily debt securities. The expected rate of return on plan assets is based on the expected average long term rate of return on investments of the fund during the terms of the obligation.

The Company''s contribution to the fund for the year ending March 31, 2016 is expected to be Rs. 72.48 million (March 31, 2015 - Rs. 63.31 million).

Notes:

1. Remuneration includes salary, bonus and perquisites. The bonus is included on payment basis. As the liabilities for gratuity and compensated absence are provided on an actuarial basis for the Company as a whole, the amounts pertaining to individual KMP are not included above. During the year 37,000 options under the OFSS Stock Plan 2014 (March 31, 2014 - 141,000 options under the Scheme 2011) were granted to KMP.

2. Loan given to subsidiaries represents loan to Oracle Financial Services Software America, Inc. amounting to Rs. 625.06 million (interest LIBOR 50 basis points) as at March 31, 2015 (March 31, 2014 - Rs. 599.90 million) and ISP Internet Mauritius Company amounting to Rs. 59.37 million (interest LIBOR 50 basis points) as at March 31, 2015 (March 31, 2014 - Rs. 56.98 million). No additional loans have been given during the year. The amount shown above is towards the revaluation impact of the outstanding loans.

3. During the year ended March 31, 2011, the Company had signed a settlement agreement with Oracle (OFSS) BPO Services Limited whereby the outstanding amount is being repaid in 10 equal annual installments. No additional loan has been given during the year. The amount shown above is towards repayment of the existing loan.

Note 3: Segment information

Business segments are defined as a distinguishable component of an enterprise that is engaged in providing a group of related products or services and that is subject to differing risks and returns and about which separate financial information is available. This information is reviewed and evaluated regularly by the management in deciding how to allocate resources and in assessing the performance.

The Company is organized by business segment and geographically. For management purposes the Company is primarily organized on a worldwide basis into two business segments:

a) Product licenses and related activities (''Products'') and

b) IT solutions and consulting services (''Services'').

The business segments are the basis on which the Company reports its primary operational information to management. Product licenses and related activities segment deals with various banking software products. The related activities include enhancements, implementation and maintenance activities.

IT solutions and consulting services segment offers services spanning the entire lifecycle of applications used by financial service institutions. The division''s portfolio includes Consulting, Application, Support and Technology Services that help institutions improve efficiency, optimize costs, meet risk and compliance mandates and implement IT solutions finely attuned to their business needs.

Segment revenue and expense:

Revenue is generated through licensing of software products as well as by providing software solutions to the customers including consulting services. The expenses which are not directly attributable to a business segment are classified as unallocable expenses.

Segment assets and liabilities:

Segment assets include all operating assets used by a segment and consist principally of debtors, net of allowances, unbilled revenue, deposits for premises and fixed assets. Segment liabilities primarily includes deferred revenues, advance from customer, accrued employee cost and other current liabilities. While most of such assets and liabilities can be directly attributed to individual segments, the carrying amount of certain assets and liabilities used jointly by two or more segments is allocated to the segment on a reasonable basis. Assets and liabilities that cannot be allocated between the segments are shown as part of unallocable assets and liabilities.

Note 4

The expenditure on research and development activities recognized as expense in the statement of profit and loss is Rs. 3,027.49 million (previous year - Rs. 2,727.71 million).

Note 5 : Litigations

The Company has some litigations, the outcomes of which are considered probable, and in respect of which the Company has made aggregate provisions of Rs. 806.30 million.

Note 6:

Previous year''s figures have been reclassified, where necessary to conform with current year''s presentation.


Mar 31, 2014

Note 1: Corporate information

Oracle Financial Services Software Limited (the "Company") was incorporated in India with limited liability on September 27, 1989. The Company is a subsidiary of Oracle Global (Mauritius) Limited holding 74.93% (March 31, 2013 – 80.27%) ownership interest in the Company as at March 31, 2014.

The Company is principally engaged in the business of providing information technology solutions to the financial services industry worldwide. The Company has a suite of banking products, which caters to the needs of corporate, retail, investment banking, treasury operations and data warehousing.

Note 2: Share capital

(a) The Company has only one class of equity shares having a par value of Rs. 5 per share. Each holder of equity shares is entitled to one vote per share.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

(b) Details of shareholders holding more than 5% equity shares in the Company

(d) Refer note 23 (b) for details of shares reserved for issue under the employee stock option (ESOP) plan of the Company.

(e) Share application money pending allotment for the year ended March 31, 2014 represents the money received from employees of the Company towards exercise of 1,000 options at the exercise price of Rs. 2,050.00 under Employee Stock Option Plan 2010 Scheme ("Scheme 2010") and 800 options at the exercise price of Rs. 1,929.95 under Employee Stock Option Plan 2011 Scheme ("Scheme 2011"). Each option will entitle one equity share of Rs. 5 each of the Company at a premium of Rs. 2,045.00 under the Scheme 2010 and Rs. 1,924.95 under the Scheme 2011.

Operating lease

The Company has taken certain office premises and residential premises for employees under operating lease, which expire at various dates through year 2025. Some of the lease agreements have a price escalation clause. Gross rental expenses for the year ended March 31, 2014 aggregated to Rs. 379.24 million (March 31, 2013 - Rs. 297.86 million). The minimum rental payments to be made in future in respect of these leases are as follows:

Note 22: Derivative instruments and unhedged foreign currency exposure

The Company enters into forward foreign exchange contracts where the counter party is a bank. The Company purchases forward foreign exchange contracts to mitigate the risks of change in foreign exchange rate on receivables denominated in certain foreign currencies. The Company considers the risk of non-performance by the counter party as non-material. As at March 31, 2014 the Company has following outstanding derivative instrument:

Note 3: Share based compensation / payments a) Employee Stock Purchase Scheme ("ESPS")

The Company has adopted the ESPS administered through a Trust ("the Trust") to provide equity based incentives to key employees of the Company. As per the scheme, the Trust can purchase shares of the Company from market using the proceeds of loans obtained from the Company. Such shares are allocated by the Trust to nominated employees at an exercise price, which approximates the fair value on the date of the grant. The shares vest in the employees over a period of five years and the employees can purchase the shares from the Trust over a period of ten years based on continued employment, until which, the Trust holds the shares for the benefit of the employees. The employees are entitled to receive dividends, bonus, etc., that may be declared by the Company from time to time for the entire portion of shares held by the Trust on behalf of the employees.

On the acceptance of the offer, the selected employee undertakes to purchase the shares from the Trust within ten years from the date of acceptance of the offer. In case an employee resigns from employment, the rights relating to vested shares, which are eligible for exercise, may be purchased by the employee by payment of the exercise price whereas, the balance shares are forfeited in favor of the Trust. The Trustees have the right of recourse against the employees for any amounts that may remain unpaid on the shares accepted by them. As of the balance sheet date, the Trust has repaid the entire loan obtained from the Company on receipt of payments from employees against shares exercised.

The Securities and Exchange Board of India (''SEBI'') has issued the Employee Stock Option Scheme and Stock Purchase Guidelines, 1999 (''SEBI guidelines''), which are applicable to stock purchase schemes for employees of all Indian listed companies. In accordance with these guidelines, the excess of market price of the underlying equity shares on the date of grant of the stock options over the exercise price of the options is to be recognized in the books of account and amortized over the vesting period. However, no compensation cost has been recorded as the scheme terms are fixed and the exercise price equals the market price of the underlying stock on the grant date.

In addition to 166,142 unallocated shares of the Company as stated above, the unaudited balance sheet of the Trust as at March 31, 2014 mainly consists of bank balance of Rs. 249.29 million and surplus in income & expenditure account of Rs. 248.57 million. There are no other material assets, liabilities or contingent liabilities of the Trust as on that date as per the unaudited financial statements. According to the provisions of the Trust Deed, the Trust is constituted as an irrevocable trust and in no event shall the funds and assets (including the unallocated shares) of the Trust revert to the Company. The Company has obtained a legal opinion which states that the Company has no right to the assets and funds of the Trust. In view of this position, the Company has not consolidated the financial statements of the Trust in the standalone financial statements of the Company.

b) Employee Stock Option Plan ("ESOP")

Pursuant to ESOP scheme approved by the shareholders of the Company on August 14, 2001, the Board of Directors, on March 4, 2002 approved the Employees Stock Option Scheme ("Scheme 2002") for issue of 4,753,600 options to the employees and directors of the Company and its subsidiaries. According to the Scheme 2002, the Company has granted 4,548,920 options prior to the IPO and 619,000 options at various dates after IPO (including the grants of options out of options forfeited earlier).

On August 25, 2010, the Board of Directors approved the Employees Stock Option Plan 2010 Scheme ("Scheme 2010") for issue of 618,000 options to the employees and directors of the Company and its subsidiaries. According to the Scheme 2010, the Company has granted 638,000 options (including the grants of options out of options forfeited earlier).

Pursuant to ESOP scheme approved by the shareholders of the Company in their meeting held on August 18, 2011, the Board of Directors approved the Employees Stock Option Plan 2011 Scheme ("Scheme 2011") for issue of 5,100,000 options to the employees and directors of the Company and its subsidiaries. According to the Scheme 2011, the Company has granted 1,935,500 options till March 31, 2014.

As per the above schemes, each of 20% of the total options granted will vest to the eligible employees and directors on completion of 12, 24, 36, 48 and 60 months from the date of grant and is subject to continued employment of the employee or directorship of the director with the Company or its subsidiaries. Options have exercise period of 10 years from the date of grant. The employee pays the exercise price upon exercise of option.

The weighted average share price for the year over which stock options were exercised was Rs. 2,857 (March 31, 2013 - Rs. 2,859).

The estimates of future salary increase, considered in actuarial valuation, take account of inflation, seniority, promotions and other relevant factors such as supply and demand in the employment market.

The Company evaluates these assumptions annually based on its long-term plans of growth and industry standards. The discount rates are based on current market yields on government bonds consistent with the currency and estimated term of the post employment benefits obligations. Plan assets are administered by the LIC and invested in lower risk assets, primarily debt securities. The expected rate of return on plan assets is based on the expected average long term rate of return on investments of the fund during the terms of the obligation.

The Company''s contribution to the fund for the year ending March 31, 2015 is expected to be Rs. 63.31 million.

Note 4: Tax expenses

Current tax charge for the year ended March 31, 2013 includes prior year net reversal of Rs. 295.37 million.

Note 5: Segment information

Business segments are defined as a distinguishable component of an enterprise that is engaged in providing a group of related products or services and that is subject to differing risks and returns and about which separate financial information is available. This information is reviewed and evaluated regularly by the management in deciding how to allocate resources and in assessing the performance.

The Company is organized by business segment and geographically. For management purposes the Company is primarily organized on a worldwide basis into two business segments:

a) Product licenses and related activities ("Products") and

b) IT solutions and consulting services ("Services").

The business segments are the basis on which the Company reports its primary operational information to management. Product licenses and related activities segment deals with various banking software products. The related activities include enhancements, implementation and maintenance activities.

IT solutions and consulting services segment offers services spanning the entire lifecycle of applications used by financial service institutions. The division''s portfolio includes Consulting, Application, Support and Technology Services that help institutions improve efficiency, optimize costs, meet risk and compliance mandates and implement IT solutions finely attuned to their business needs.

Segment revenue and expense:

Revenue is generated through licensing of software products as well as by providing software solutions to the customers including consulting services. The expenses which are not directly attributable to a business segment are classified as unallocable expenses.

Segment assets and liabilities:

Segment assets include all operating assets used by a segment and consist principally of debtors, net of allowances, unbilled revenue, deposits for premises and fixed assets. Segment liabilities primarily includes deferred revenues, advance from customer, accrued employee cost and other current liabilities. While most of such assets and liabilities can be directly attributed to individual segments, the carrying amount of certain assets and liabilities used jointly by two or more segments is allocated to the segment on a reasonable basis. Assets and liabilities that cannot be allocated between the segments are shown as part of unallocable assets and liabilities.

Geographical segments

The following table shows the distribution of the Company''s sales by geographical market :

Note 9: Investments in wholly owned subsidiaries

As at March 31, 2014, the Company has total investment of Rs. 192.12 million in ISP Internet Mauritius Company (''ISP'') which is the holding company of Oracle (OFSS) BPO Services Inc., US and Oracle (OFSS) BPO Services Limited, India, entities operating in business of Business Process Outsourcing (BPO). Further, the Company has an outstanding loan of Rs. 56.98 million from ISP and Rs. 140.00 million from Oracle (OFSS) BPO Services Limited as at March 31, 2014. On a consolidated basis, ISP and its subsidiaries (''ISP Group'') have accumulated losses amounting to Rs. 152.65 million as at March 31, 2014. However ISP Group has posted a profit of Rs. 33.20 million for the year ended March 31, 2014. Based on the assessment of the estimated future cash flows from the operations of the Group and the results of the current year, the management of the Company believes that Rs. 120.00 million recorded as diminution in value of investment in earlier year is appropriate and no further diminution in value is considered necessary as at March 31, 2014.

Note 10:

Previous year''s figures have been reclassified, where necessary to conform with current year''s presentation.


Mar 31, 2013

Note 1: Corporate information

Oracle Financial Services Software Limited (the "Company") was incorporated in India with limited liability on September 27, 1989. The Company is a subsidiary of Oracle Global (Mauritius) Limited holding 80.27% (March 31, 2012 - 80.36%) ownership interest in the Company as at March 31, 2013.

The Company is principally engaged in the business of providing information technology solutions to the financial services industry worldwide. The Company has a suite of banking products, which caters to the needs of corporate, retail, investment banking, treasury operations and data warehousing.

Note 2: Share based compensation/payments

a) Employee Stock Purchase Scheme (''ESPS'')

The Company has adopted the ESPS administered through a Trust ("the Trust") to provide equity based incentives to key employees of the Company. As per the scheme, the Trust can purchase shares of the Company from market using the proceeds of loans obtained from the Company. Such shares are allocated by the Trust to nominated employees at an exercise price, which approximates the fair value on the date of the grant. The shares vest in the employees over a period of five years and the employees can purchase the shares from the Trust over a period of ten years based on continued employment, until which, the Trust holds the shares for the benefit of the employees. The employees are entitled to receive dividends, bonus, etc., that may be declared by the Company from time to time for the entire portion of shares held by the Trust on behalf of the employees.

On the acceptance of the offer, the selected employee undertakes to purchase the shares from the Trust within ten years from the date of acceptance of the offer. In case an employee resigns from employment, the rights relating to vested shares, which are eligible for exercise, may be purchased by the employee by payment of the exercise price whereas, the balance shares are forfeited in favor of the Trust. The Trustees have the right of recourse against the employees for any amounts that may remain unpaid on the shares accepted by them. As of the balance sheet date, the Trust has repaid the entire loan obtained from the Company on receipt of payments from employees against shares exercised.

The Securities and Exchange Board of India (''SEBI'') has issued the Employee Stock Option Scheme and Stock Purchase Guidelines, 1999 (''SEBI guidelines''), which are applicable to stock purchase schemes for employees of all Indian listed companies. In accordance with these guidelines, the excess of market price of the underlying equity shares on the date of grant of the stock options over the exercise price of the options is to be recognized in the books of account and amortized over the vesting period. However, no compensation cost has been recorded as the scheme terms are fixed and the exercise price equals the market price of the underlying stock on the grant date.

b) Employee Stock Option Plan (''ESOP'')

Pursuant to ESOP scheme approved by the shareholders of the Company on August 14, 2001, the Board of Directors, on March 4, 2002 approved the Employees Stock Option Scheme ("Scheme 2002") for issue of 4,753,600 options to the employees and directors of the Company and its subsidiaries. According to the Scheme 2002, the Company has granted 4,548,920 options prior to the IPO and 619,000 options at various dates after IPO (including the grants of options out of options forfeited earlier).

On August 25, 2010, the Board of Directors approved the Employees Stock Option Plan 2010 Scheme ("Scheme 2010") for issue of 618,000 options to the employees and directors of the Company and its subsidiaries. According to the Scheme 2010, the Company has granted 638,000 options (including the grants of options out of options forfeited earlier).

Pursuant to ESOP scheme approved by the shareholders of the Company in their meeting held on August 18, 2011, the Board of Directors approved the Employees Stock Option Plan 2011 Scheme ("Scheme 2011") for issue of 5,100,000 options to the employees and directors of the Company and its subsidiaries. According to the Scheme 2011, the Company has granted 1,285,500 options till March 31, 2013.

As per the above schemes, each of 20% of the total options granted will vest to the eligible employees and directors on completion of 12, 24, 36, 48 and 60 months from the date of grant and is subject to continued employment of the employee or directorship of the director with the Company or its subsidiaries. Options have exercise period of 10 years from the date of grant. The employee pays the exercise price upon exercise of option.

Note 3: Tax expenses

Current tax charge for the year ended March 31, 2013 includes prior year net reversal of Rs. 295.37 million.

Note 4: Segment information

Business segments are defined as a distinguishable component of an enterprise that is engaged in providing a group of related products or services and that is subject to differing risks and returns and about which separate financial information is available. This information is reviewed and evaluated regularly by the management in deciding how to allocate resources and in assessing the performance.

The Company is organized by business segment and geographically. For management purposes the Company is primarily organized on a worldwide basis into two business segments:

a) Product licenses and related activities (''Products'') and

b) IT solutions and consulting services (''Services'').

The business segments are the basis on which the Company reports its primary operational information to management. Product licenses and related activities segment deals with various banking software products. The related activities include enhancements, implementation and maintenance activities.

IT solutions and consulting services segment offers services spanning the entire lifecycle of applications used by financial service institutions. The division''s portfolio includes Consulting, Application, Support and Technology Services that help institutions improve efficiency, optimize costs, meet risk and compliance mandates and implement IT solutions finely attuned to their business needs.

Segment revenue and expense:

Revenue is generated through licensing of software products as well as by providing software solutions to the customers including consulting services. The expenses which are not directly attributable to a business segment are classified as unallocable expenses.

Segment assets and liabilities:

Segment assets include all operating assets used by a segment and consist principally of trade receivables net of allowances, unbilled revenues, deposits for premises and fixed assets. Segment liabilities primarily include deferred revenues, advance from customers, accrued employee costs and other current liabilities. While most of such assets and liabilities can be directly attributed to individual segments, the carrying amount of certain assets and liabilities used jointly by two segments is allocated to the segment on a reasonable basis. Assets and liabilities that cannot be allocated between the segments are shown as part of unallocable assets and liabilities.

Geographical segments:

The following table shows the distribution of the Company''s sales by geographical market:

Note 5: Investments in wholly owned subsidiaries

(a) As at March 31, 2013, the Company has total investment of Rs. 6,291.74 million in Oracle Financial Services Software America, Inc. (''OAI''). Further, the Company has loan outstanding of Rs. 542.74 million to OAI. OAI is the holding company for US operations and has acquired Companies in earlier years. On a consolidated basis, OAI along with subsidiaries (''OAI Group'') has accumulated losses of Rs. 349.51 million as at March 31, 2013. The OAI Group has posted a profit of Rs. 171.15 million for the year ended March 31, 2013. Based on the assessment of the estimated future cash flows from the US operations and the results of the current year, the management of the Company believes that no provision is required towards diminution in the value of investment in OAI as at March 31, 2013.

(b) As at March 31, 2013, the Company has total investment of Rs. 192.12 million in ISP Internet Mauritius Company (''ISP'') which is the holding company of Oracle (OFSS) BPO Services Inc., US and Oracle (OFSS) BPO Services Limited, India, entities operating in business of Business Process Outsourcing (BPO). Further, the Company has an outstanding loan of Rs. 51.55 million from ISP and Rs. 170.00 million from Oracle (OFSS) BPO Services Limited as at March 31, 2013. On a consolidated basis, ISP and its subsidiaries (''ISP Group'') have accumulated losses amounting to Rs. 185.85 million as at March 31, 2013. However ISP Group has posted a profit of Rs. 40.23 million for the year ended March 31, 2013. Accordingly, the Company believes that Rs. 120.00 million recorded as diminution in value of investment in earlier year is appropriate and no further diminution in value is considered necessary as at March 31, 2013.

Note 6:

Previous year''s figures have been reclassified, where necessary to conform with current year''s presentation.


Mar 31, 2012

Note 1: Corporate information

Oracle Financial Services Software Limited (the "Company") was incorporated in India with limited liability on September 27, 1989. The Company is a subsidiary of Oracle Global (Mauritius) Limited holding 80.36% (March 31, 2011 — 80.44%) ownership interest in the Company as at March 31, 2012.

The Company is principally engaged in the business of providing information technology solutions to the financial services industry worldwide. The Company has a suite of banking products, which caters to the needs of corporate, retail, investment banking, treasury operations and data warehousing.

(a) The Company has only one class of equity shares having a par value of Rs 5 per share. Each holder of equity shares is entitled to one vote per share.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

(b) Details of shareholders holding more than 5% equity shares in the Company

(d) Refer note 24 (b) for details of shares reserved for issue under the employee stock option (ESOP) plan of the Company.

(e) Share application money pending allotment represents the money received from employees of the Company towards exercise of 500 options at the exercise price of Rs 1,290.85 under Employee Stock Option Scheme 2002 ("Scheme 2002") and 289 options at the exercise price of Rs 2,050.00 under Employee Stock Option Plan 2010 Scheme ("Scheme 2010") (March 31, 2011 - 600 options at the exercise price of Rs 1,290.85 under Scheme 2002). Each option will entitle one equity share of Rs 5 each of the Company at a premium of Rs 1,285.85 under Scheme 2002 and Rs 2,045.00 under Scheme 2010 (March 31, 2011 - Rs 1,285.85 per options under Scheme 2002).

(a) During the year ended March 31, 2012, the Company has received dividend of Rs 1,833.30 and Rs 1,275.00 from its wholly owned subsidiaries Oracle Financial Services Software B.V. and Oracle Financial Services Software Pte. Ltd. respectively. Considering the amount of dividend received, the same has been disclosed as an exceptional item.

(b) A customer had filed a lawsuit against the Company and one of its subsidiaries, claiming damages of upwards of Rs 5,784.19. In respect of this claim, the Company had provided Rs 122.07 in the year ended March 31, 2011. During the year ended March 31, 2012, the Company has settled the said customer dispute for full release of all alleged claims and accordingly has accounted the balance settlement amount, net of insurance claim and disclosed the same as an exceptional item.

Operating lease

The Company has taken certain office premises and residential premises for employees under operating lease, which expire at various dates through year 2025. Some of the lease agreements have a price escalation clause. Gross rental expenses for the year ended March 31, 2012 aggregated to Rs 397.92 (March 31, 2011 - Rs 589.70). The minimum rental payments to be made in future in respect of these leases are as follows:

Note 2: Derivative instruments and un-hedged foreign currency exposure

The Company enters into forward foreign exchange contracts where the counter party is a bank. The Company purchases forward foreign exchange contracts to mitigate the risks of change in foreign exchange rate on receivables denominated in certain foreign currencies. The Company considers the risk of non-performance by the counter party as non-material. As at March 31, 2012 the Company has following outstanding derivative instrument:

Note 3: Share based compensation/payments

a) Employee Stock Purchase Scheme ('ESPS')

The Company has adopted the ESPS administered through a Trust ("the Trust") to provide equity based incentives to key employees of the Company. As per the scheme, the Trust can purchase shares of the Company from market using the proceeds of loans obtained from the Company. Such shares are allocated by the Trust to nominated employees at an exercise price, which approximates the fair value on the date of the grant. The shares vest in the employees over a period of five years and the employees can purchase the shares from the Trust over a period of ten years based on continued employment, until which, the Trust holds the shares for the benefit of the employees. The employees are entitled to receive dividends, bonus, etc., that may be declared by the Company from time to time for the entire portion of shares held by the Trust on behalf of the employees.

On the acceptance of the offer, the selected employee undertakes to purchase the shares from the Trust within ten years from the date of acceptance of the offer. In case an employee resigns from employment, the rights relating to vested shares, which are eligible for exercise, may be purchased by the employee by payment of the exercise price whereas, the balance shares are forfeited in favor of the Trust. The Trustees have the right of recourse against the employees for any amounts that may remain unpaid on the shares accepted by them. As of the Balance Sheet date, the Trust has repaid the entire loan obtained from the Company on receipt of payments from employees against shares exercised.

The Securities and Exchange Board of India ('SEBI’) has issued the Employee Stock Option Scheme and Stock Purchase Guidelines, 1999 ('SEBI guidelines’), which are applicable to stock purchase schemes for employees of all Indian listed companies. In accordance with these guidelines, the excess of market price of the underlying equity shares on the date of grant of the stock options over the exercise price of the options is to be recognized in the books of account and amortized over the vesting period. However, no compensation cost has been recorded as the scheme terms are fixed and the exercise price equals the market price of the underlying stock on the grant date.

b) Employee Stock Option Plan ('ESOP')

Pursuant to ESOP scheme approved by the shareholders of the Company on August 14, 2001, the Board of Directors, on March 4, 2002 approved the Employees Stock Option Scheme ("Scheme 2002") for issue of 4,753,600 options to the employees and directors of the Company and its subsidiaries. According to the Scheme 2002, the Company has granted 4,548,920 options prior to the IPO and 619.000 options at various dates after IPO (including the grants of options out of options forfeited earlier).

On August 25, 2010, the Board of Directors approved the Employees Stock Option Plan 2010 Scheme ("Scheme 2010") for issue of 618.000 options to the employees and directors of the Company and its subsidiaries. According to the Scheme 2010, the Company has granted 638,000 options (including the grants of options out of options forfeited earlier).

Pursuant to ESOP scheme approved by the shareholders of the Company in their meeting held on August 18, 2011, the Board of Directors approved the Employees Stock Option Plan 2011 Scheme ("Scheme 2011") for issue of 5,100,000 options to the employees and directors of the Company and its subsidiaries. According to the Scheme 2011, the Company has granted 640,500 options till March 31, 2012.

As per the above schemes, each of 20% of the total options granted will vest to the eligible employees and directors on completion of 12, 24, 36, 48 and 60 months from the date of grant and is subject to continued employment of the employee or directorship of the director with the Company or its subsidiaries. Options have exercise period of 10 years from the date of grant. The employee pays the exercise price upon exercise of option.

The expected volatility was determined based on historical volatility data; historical volatility includes early years of the Company’s life; the Company expects the volatility of its share price to reduce as it matures.

The estimates of future salary increase, considered in actuarial valuation, take account of inflation, seniority, promotions and other relevant factors such as supply and demand in the employment market.

The Company evaluates these assumptions annually based on its long-term plans of growth and industry standards. The discount rates are based on current market yields on government bonds consistent with the currency and estimated term of the post employment benefits obligations. Plan assets are administered by the LIC and invested in lower risk assets, primarily debt securities. The Company’s contribution to the fund for the year ending March 31, 2013 is expected to be Rs 75.00.

Note 4: Segment information

Business segments are defined as a distinguishable component of an enterprise that is engaged in providing a group of related products or services and that is subject to differing risks and returns and about which separate financial information is available. This information is reviewed and evaluated regularly by the management in deciding how to allocate resources and in assessing the performance.

The Company is organized by business segment and geographically. For management purposes the Company is primarily organized on a worldwide basis into two business segments:

a) Product licenses and related activities ("Products") and

b) IT solutions and consulting services ("Services").

The business segments are the basis on which the Company reports its primary operational information to management. Product licenses and related activities segment deals with various banking software products. The related activities include enhancements, implementation and maintenance activities.

Segment revenue and expense:

Revenue is generated through licensing of software products as well as by providing software solutions to the customers including consulting services. The expenses which are not directly attributable to a business segment are classified as unallowable expenses.

Segment assets and liabilities:

Segment assets include all operating assets used by a segment and consist principally of debtors, net of allowances, unbilled revenue, deposits for premises and fixed assets. Segment liabilities primarily includes deferred revenues, advance from customer, accrued employee cost and other current liabilities. While most of such assets and liabilities can be directly attributed to individual segments, the carrying amount of certain assets and liabilities used jointly by two or more segments is allocated to the segment on a reasonable basis. Assets and liabilities that cannot be allocated between the segments are shown as part of unallowable assets and liabilities.

Note:

1. Remuneration includes salary, bonus and perquisites. The bonus is included on payment basis. As the liabilities for gratuity and compensated absence are provided on an actuarial basis for the Company as a whole, the amounts pertaining to individual KMP are not included above. During the year 30,000 options under the Scheme 2011 (March 31, 2011 - 60,000 options under the Scheme 2002 and 10,600 options under the Scheme 2010) were granted to KMP.

2. Loan given to subsidiaries represents loan to Oracle Financial Services Software America, Inc. amounting to Rs 511.22 (interest LIBOR 50 basis points) as at March 31, 2012 (March 31, 2011 - Rs 446.14) and ISP Internet Mauritius Company amounting to Rs 48.56 (interest LIBOR 50 basis points) as at March 31, 2012 (March 31, 2011 - Rs 42.38). No additional loans have been given during the year. The amount shown above is towards the revaluation impact of the outstanding loans.

3. During the year ended March 31, 2011, the Company had signed a settlement agreement with Oracle (OFSS) BPO Services Limited while repaying Rs 200.00 along with an interest waiver on the same. Further to this, the outstanding amount as on March 31, 2011 will be repaid in 10 equal annual installments.

Note 5: Investments in wholly owned subsidiaries

(a) As at March 31, 2012, the Company has total investment of Rs 6,291.74 in Oracle Financial Services Software America, Inc. ('OAI'). Further, the Company has loan outstanding of Rs 511.22 to OAI. OAI is the holding company for US operations and has acquired companies in earlier years. On a consolidated basis, OAI along with subsidiaries ("OAI Group") has accumulated losses of Rs 520.66 as at March 31, 2012. The OAI Group has posted a profit of Rs 464.16 for the year ended March 31, 2012. Based on the assessment of the estimated future cash flows from the US operations and the results of the current year, the management of the Company believes that no provision is required towards diminution in the value of investment in OAI as at March 31, 2012.

(b) As at March 31, 2012, the Company has total investment of Rs 192.12 in ISP Internet Mauritius Company ('ISP') which is the holding company of Oracle (OFSS) BPO Services Inc., US and Oracle (OFSS) BPO Services Limited, India, entities operating in business of Business Process Outsourcing (BPO). Further, the Company has an outstanding loan of Rs 48.56 from ISP and Rs 200.00 from Oracle (OFSS) BPO Services Limited as at March 31, 2012. On a consolidated basis, ISP and its subsidiaries ("ISP Group") have accumulated losses amounting to Rs 226.08 as at March 31, 2012. However ISP Group has posted a profit of Rs 47.73 for the year ended March 31, 2012. Accordingly, the Company believes that Rs 120.00 recorded as diminution in value of investment in earlier year is appropriate and no further diminution in value is considered necessary as at the balance sheet date.

Note 6:

Till the year ended March 31, 2011, the Company was using pre-revised Schedule VI to the Companies Act 1956, for preparation and presentation of its financial statements. During the year ended 31 March 2012, the revised Schedule VI notified under the Companies Act 1956, has become applicable to the Company. The Company has reclassified previous year figures to conform to this year’s classification.


Mar 31, 2010

1. Background and nature of operations

Oracle Financial Services Software Limited ("the Company") was incorporated in India with limited liability on September 27, 1989- Oracle Financial Services Software Limited is a subsidiary of Oracle Global (Mauritius) Limited holding 80.47% ownership interest in the Company as at March 31, 2010.

The Company is principally engaged in the business of providing information technology solutions to the financial services industry worldwide. Oracle Financial Services Software Limited has a suite of banking products, which caters to the needs of corporate, retail, investment banking, treasury operations and data warehousing.

2. Commitments and contingent liabilities

a. Capital commitments

Contracts remaining to be executed on capital account and not provided for (net of advances) aggregates to Rs. 1,957,451 (includes capital commitment through issuance of letter of intents of Rs. 979,350 (March 31, 2009-Rs. 260,505) as at March 31, 2010 (March 31, 2009-Rs. 1,419,990).

b. Contingent liabilities

Disputed liability in respect of Income-tax demands as at March 31, 2010 Rs. Nil (March 31, 2009-Rs. 285,638).

3. Share-based compensation/payments

a. Employee Stock Purchase Scheme (ESPS)

The Company has adopted the ESPS administered through a Trust ("the Trust") to provide equity based incentives to key employees of the Company. The Trust purchases shares of the Company from market using the proceeds of loans obtained from the Company. Such shares are offered by the Trust to employees at an exercise price, which approximates the fair value on the date of the grant. The employees can purchase the shares in a phased manner over a period of five years based on continued employment, until which, the Trust holds the shares for the benefit of the employee. The employee will be entitled to receive dividends, bonus, etc., that may be declared by the Company from time to time for the entire portion of shares held by the Trust on behalf of the employees.

On the acceptance of the offer, the selected employee shall undertake to pay within ten years from the date of acceptance of the offer the cost of the shares incurred by the Trust including repayment of the loan relatable thereto. The repayment of the loan by the Trust to the Company would be dependent on employee repaying the amount to the Trust. In case the employee resigns from employment, the rights relating to shares, which are eligible for exercise, may be purchased by payment of the exercise price whereas, the balance shares shall be forfeited in favor of the Trust. The Trustees have the right of recourse against the employee for any amounts that may remain unpaid on the shares accepted by the employee. The shares that an employee is eligible to exercise during the initial five-year period merely go to determine the amount and scheduling of the loan to be repaid on exercise by the employee. The Trust shall repay the loan obtained from the Company on receipt of payments from employees against shares exercised or otherwise.

The Securities and Exchange Board of India (SEBI) has issued the Employee Stock Option Scheme and Stock Purchase Guidelines, 1999 (SEBI guidelines), which are applicable to stock purchase schemes for employees of all listed Companies. In accordance with these guidelines, the excess of market price of the underlying equity shares on the date of grant of the stock options over the exercise price of the options is to be recognized in the books of account and amortized over the vesting period. However, no compensation cost has been recorded as the scheme terms are fixed and the exercise price equals the market price of the underlying stock on the grant date.

b. Employee Stock Option Plan (ESOP)

Pursuant Co ESOP scheme approved by the shareholders of the Company held on August 14, 2001, the Board of Directors, on March 4, 2002 approved the Employees Stock Option Scheme (the Scheme) for issue of 4,753,600 options to the employees and directors of the Company and its subsidiaries. According to the Scheme, the Company has granted 4,548,920 options prior to the IPO and 559,000 options at various dates after IPO. As per the scheme, each of 20% of the total options granted will vest to the eligible employees and directors on completion of 12, 24, 36, 48 and 60 months and is subject to continued employment of the employee or director with the company or its subsidiaries. Options have exercise period of 10 years. The employee pays the exercise price upon exercise of option.

8. Segment information

Business segments are defined as a distinguishable component of an enterprise that is engaged in providing a group of related products or services and that is subject to differing risks and returns and about which separate financial information is available. This information is reviewed and evaluated regularly by the management in deciding how to allocate resources and in assessing the performance.

The Company is organized by business segment and geographically. For management purposes the Company is primarily organized on a worldwide basis into two business segments:

a. Product licenses and related activities (Products) and

b. IT solutions and consulting services (Services).

The business segments are the basis on which the Company reports its primary operational information to management. Product licenses and related activities segment deals with various banking software products. The related activities include enhancements, implementation and maintenance activities.

Segment revenue and expense:

Revenue is generated through licensing of software products as well as by providing software solutions to the customers including consulting services. The expenses which are not directly attributable to a business segment are classified as unallocated corporate expenses and shown under corporate in the segment disclosure above.

Segment assets and liabilities:

Segment assets include all operating assets used by a segment and consist principally of debtors, net of allowances, unbilled revenue, deposits for premises and fixed assets. Segment liabilities primarily includes deferred revenues, finance lease obligation, advance from customer, accrued employee cost and other current liabilities. While most of such assets and liabilities can be directly attributed to individual segments, the carrying amount of certain assets and liabilities used jointly by two or more segments is allocated to the segment on a reasonable basis. Assets and liabilities that cannot be allocated between the segments are shown as part of corporate assets and liabilities.

4. Investments in wholly owned subsidiaries

a. As at March 31, 2010, the Company has total investment of Rs. 6,291,743 in Oracle Financial Services Software America, Inc. (OAI). Further, the Company has loan outstanding of Rs. 450,910 toOAI. OAI is the holding company for US operations and has acquired Companies in earlier years. On a consolidated basis, OAI along with subsidiaries (OAI Group) has accumulated losses of Rs. 1,434,248 as at March 31, 2010. The OAI Group has posted a profit of Rs. 222,562 for the year ended March 31, 2010. Based on the assessment of the estimated future cash flows from the US operations and the results of the current year, the management of the Company believes that no provision is required towards diminution in the value of investment in OAI as at March 31,2010.

b. As at March 31, 2010, the Company has total investment of Rs. 192,115 in ISP Internet Mauritius Company (ISP) which is the holding company of i-flex Processing Services Inc, US and Oracle (OFSS) BPO Services Limited, India, entities operating in business of Business Process Outsourcing (BPO). The Company has further granted a loan of Rs. 42,832 to ISP and Rs. 500,000 to Oracle (OFSS) BPO Services Limited. On a consolidated basis, ISP and its subsidiaries (ISP Group) have accumulated losses amounting to Rs. 30,230 as at March 31, 2010. However ISP Group has posted a profit of Rs. 134,077 for the year ended March 31, 2010. Accordingly, the Company believes that Rs. 120,000 recorded as diminution in value of investment in previous year is appropriate and no further diminution in value is considered necessary as at the balance sheet date.

5. Selling and marketing expenses of product segment for the current year include reversal of referral fee provisions amounting to Rs. 184,476 based on a settlement agreement entered with a distributor.

6. The Company has settled a dispute with a party for Rs. 468,900 for full release of all alleged claims and has disclosed the same as an exceptional item in the financial results for the year ended March 31, 2009.

7. Prior year amounts have been reclassified, where necessary to conform with current years presentation.

Find IFSC