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Accounting Policies of Sasken Communication Technologies Ltd. Company

Mar 31, 2013

1. Description of Business

Sasken Communication Technologies Limited ("Sasken / the Company") is an embedded communications solutions company that helps businesses across the communication value chain accelerate product development life cycles. Sasken offers a unique combination of research and development consultancy, wireless software products, software services and works with Network OEMs, Semiconductor Vendors, Terminal Device OEMs and Operators across the world.

Sasken has its headquarters in Bangalore, India with offices in Germany, Sweden, United Kingdom (UK), United States of America (USA) and South Korea.

2. Basis for Preparation

The abridged financial statements have been prepared in accordance with the requirements of Rule 7A of the Companies (Central Government''s) General Rules and Forms, 1956 and Clause 32 of the Listing Agreement. These abridged financial statements have been prepared on the basis of the complete set of financial statements for the year ended March 31, 2013. The notes number in the brackets "[ ]" are as they appear in the complete set of financial statements.

The complete set of financial statements have been prepared to comply in all material respects with the notified Accounting Standards by Companies Accounting Standards Rules, 2006 and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared under the historical cost convention on an accrual basis, except in case of assets for which impairment is made and revaluation is carried out. The accounting policies have been consistently applied by the Company and are consistent with those used during the previous year.

Note:- Complete Balance Sheet, Statement of Profit and Loss, other statements and notes thereto prepared as per the requirements of revised Schedule VI to the Companies Act, 1956 are available at the Company''s website www.sasken.com.

3. Investments in Joint Ventures

(a) Sasken has a 46.29% (March 31, 2012, 46.29%) interest in a joint venture company called ConnectM Technology Solutions Pvt. Ltd. ("ConnectM"), incorporated in India, which focuses on end - to - end cycle development & sustenance to the Transportation, Industrial, Utilities and Enterprise markets enabled by Machine - to - Machine (M2M) communications. As at March 31, 2013, the Company has invested Rs.1,796.24 lakhs (March 31, 2012 Rs.1,796.24 lakhs) in ConnectM. ConnectM has incurred losses since the date of incorporation. The Company has evaluated its investment in the Joint Venture for the purpose of determination of potential diminution in value, and based on such evaluation and determination, the Company has recognized a provision for diminution in the value of investment in ConnectM as at March 31, 2013 amounting to Rs.1,550.00 lakhs ( March 31, 2012 Rs.1,550.00 lakhs) [Note 26 (a) of main financial statements].

(b) The Company has 50% interest in a joint venture company called TACO Sasken Automotive Electronics Limited ("TSAE"). The shareholders of TSAE have resolved that the company be wound up voluntarily. Requisite documents have been filed with the Registrar of Companies. Considering the closure of operations of TSAE, the Company has made full provision for diminution in the value of investments in TSAE amounting to Rs.767.84 lakhs as on March 31, 2013 (March 31, 2012 Rs.767.84 lakhs) [Note 26 (b) of main financial statements].

4. Commitments and Contingencies

(a) Estimated amount of contracts remaining to be executed on capital account (net of advances) amounted to Rs.106.12 lakhs (As at March 31, 2012 Rs.49.68 lakhs) [Note 27 (a) of main financial statements].

(b) The Company enters into foreign exchange forward contracts and option contracts to hedge its net foreign currency receivables position including its future receivables. As per the current policy of the Company, the Company takes foreign exchange forward contracts for currencies primarily denominated in the US Dollar and Euro. The Company currently does not have a foreign currency hedge in respect of its investment in subsidiaries outside India.

The Company has also taken European style option contracts whereby it has option to sell USD 3.89 lakhs (as at March 31, 2012 USD 41.87 lakhs) at an average strike price of Rs.55, with maturity dates upto June 2013 and Euro 3.77 lakhs (as at March 31,2012 Euro 11.28 lakhs) at an average strike price ranging between Rs.71 -172, with maturity dates upto November 2013 [Note 27 (b) of main financial statements].

(c) The Company has operating leases for office premises that are (a) renewable on a periodic basis and are cancellable by giving a notice period ranging from 1 month to 6 months and (b) renewable on a periodic basis and are non - cancellable for specified periods


Mar 31, 2012

1. Description of Business

Sasken Communication Technologies Limited ("Sasken" or "the Company") is an embedded communications solutions company that helps businesses across the communication value chain accelerate product development life cycles. Sasken offers a unique combination of research and development consultancy, wireless software products, software services and works with Network OEMs, Semiconductor Vendors, Terminal Device OEMs and Operators across the world.

Sasken has its headquarters in Bangalore, India with offices in Germany, Sweden, United Kingdom (UK), United States of America (USA) and South Korea.

2. Basis for Preparation

The abridged financial statements have been prepared in accordance with the requirements of Rule 7A of the Companies (Central Government's) General Rules and Forms, 1956 and Clause 32 of the Listing Agreement. These abridged financial statements have been prepared on the basis of the complete set of financial statements for the year ended March 31, 2012. The notes number in the brackets "[ ]" are as they appear in the complete set of financial statements.

The complete set of financial statements have been prepared to comply in all material respects with the notified Accounting Standards by Companies Accounting Standards Rules, 2006 and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared under the historical cost convention on an accrual basis, except in case of assets for which impairment is made and revaluation is carried out. The accounting policies have been consistently applied by the Company and are consistent with those used during the previous year, other than those disclosed.

During the year ended March 31, 2012, the revised Schedule VI notified under the Companies Act 1956, has become applicable to the Company, for preparation and presentation of financial statements. The adoption of revised Schedule VI does not impact the recognition and measurement principles followed for preparation of financial statements. However it has significant impact on presentation and disclosure of financial statements. The Company has also reclassified the previous year figures in accordance with the requirements applicable in the current year.

3. Change in Accounting Policy

Till the year ended March 31, 2011, the Company, in accordance with pre-revised Schedule VI requirement, was recognizing dividend declared by subsidiary companies after the reporting date in the current year's statement of profit and loss, if such dividend pertained to the period ending on or before the reporting date. The revised Schedule VI, applicable for financial years commencing on or after April 1, 2011, does not contain this requirement. Hence to comply with AS 9 Revenue Recognition, the Company has changed its accounting policy for recognition of dividend as income only when the right to receive the same is established as at the reporting date. There is no impact on financial statements on change of this accounting policy.

4. Investments in Subsidiaries and Joint Ventures

(a) As at March 31, 2012, the Company has invested Rs1,796.24 lakhs (March 31, 2011 Rs1,355.44 lakhs) for its 46.29% (March 31, 2011 45.77%) equity share in Connect M Technology Solutions Pvt. Ltd. ("Connect M"). The Company evaluated its investment in the Joint Venture for the purpose of determination of potential diminution in value, and based on such evaluation and determination as on March 31,2012 the Company has recognized a provision for diminution in the value of investment in Connect M as at March 31, 2012 amounting to Rs1,550.00 lakhs (March 31, 2011 RsNil) shown as exceptional item in the Profit and Loss Account [Note 26 (a) in the Notes to accounts of main financial statements],

(b) The Company has 50% interest in a joint venture company called TACO Sasken Automotive Electronics Limited ("TSAE"). The shareholders of TSAE have resolved that the company be wound up voluntarily. Requisite documents have been filed with the Registrar of Companies. Considering the closure of operations of TSAE, the Company has made full provision for diminution in the value of investments in TSAE amounting to Rs767.84 lakhs as on March 31, 2012 (March 31, 2011 Rs767.84 lakhs) [Note 26 (b) in the Notes to accounts of main financial statements],

5. Commitments and Contingencies

(a) Estimated amount of contracts remaining to be executed on capital account (net of advances) amounted to Rs49.68 lakhs (As at March 31, 2011 Rs316.43 lakhs) [Note 28 (a) in the Notes to accounts of main financial statements],

(b) The Company enters into foreign exchange forward contracts and option contracts to hedge its net foreign currency receivables position including its future receivables. As per the current policy of the Company, the Company takes foreign exchange forward contracts for currencies primarily denominated in the US Dollar and Euro. The Company currently does not have a foreign currency hedge in respect of its investment in subsidiaries outside India.

The Company has also taken European style option contracts whereby it has option to sell USD 41.87 lakhs (USD 121.15 lakhs as at March 31, 2011) at an average strike price ranging between Rs49 and Rs52, with maturity dates up to January 2013 and Euros 11.28 lakhs (Nil as at March 31, 2011) at an average strike price ranging between Rs65 and Rs68, with maturity dates up to December 2012 [Note 28 (b) in the Notes to accounts of main financial statements].

(c) The Company has operating leases for office premises that are (a) renewable on a periodic basis and are cancellable by giving a notice period ranging from 1 month to 6 months and (b) renewable on a periodic basis and are non-cancellable for specified periods under arrangements. Rent escalation clauses vary from contract to contract, ranging from 0% to 15%. There are no restrictions imposed on operating leases. There are no subleases [Note 42 in the Notes to accounts of main financial statements].

There are certain claims made against the Company by an in vaster company, which are a subject matter of arbitration proceedings. In the view of the Management of the Company such claims are frivolous and are not tenable. No provision has been made for such claims pending completion of legal proceedings as the amount of claims are currently not ascertainable [Note 29 in the Notes to accounts of main financial statements],

6. Other Notes

(a) The Company had approached the High Court of Karnataka, Bangalore to create a Business Restructuring Reserve to be carved out from Securities Premium Account in terms of a Scheme under Section 391 / 394 of the Companies Act, 1956 whereby the Business Restructuring Expenses (as covered under the Scheme) will be adjusted against the said Reserve. Pursuant to the Scheme and as approved by the High Court of Karnataka, Bangalore vide its order dated March 31, 2010, a sum of Rs14,578.08 lakhs, was transferred from the Securities Premium Account and credited to Business Restructuring Reserve Account during the year ended March 31, 2010.

Further during the year ended March 31, 2010, impairment loss on capitalized software amounting to Rs1,519.70 lakhs, which was charged to Profit & Loss Account in the prior years, being considered as a Restructuring Expense incurred after the Appointed Date, i.e., April 1, 2008, was adjusted against the Business Restructuring Reserve Account.

During the year ended March 31, 2011, the Company had evaluated its investment in subsidiaries and joint ventures for the purpose of determination of potential diminution in value. Based on such evaluation and considering the underlying factors including downturn in the business of Sasken Finland and the decrease in related activities / businesses, the Company had identified and recognized a provision for diminution in the value of investment in Sasken Communication Technologies By amounting to Rs13,058.38 lakhs. The diminution in value of such investments being considered as a restructuring expense incurred after the Appointed Date, i.e., April 1, 2008, had been adjusted against the Business Restructuring Reserve Account in accordance with the Scheme.

(b) Buy-back of Equity Shares

In terms of decision of the Board of Directors dated October 21, 2010 and in accordance with the provisions of the Companies Act, 1956 and the Securities and Exchange Board of India (Buy-back of Securities) Regulations, 1998, the Company offered to buy- back its equity shares of face value of Rs10 each, up to a maximum amount of Rs3,454 lakhs at a maximum price of Rs260 per share from open market. The Company commenced the buy-back on December 2, 2010 and closed the same on May 26, 2011 and has bought back 21,62,000 equity shares at an average price of Rs159.26 per share (excluding brokerage and other taxes), utilizing a sum of Rs3,443.25 lakhs. On account of buy-back of shares, the Company has created Capital Redemption Reserve towards the face value by way of appropriation against General Reserve. The amount paid towards buy-back of shares, in excess of the face value, has been appropriated out of Securities Premium Account. In terms of the provisions of Section 77A of the Companies Act, 1956 and SEBI (Buy Back of Securities) Regulations 1998, all the shares bought back have been extinguished [Note 3 in the Notes to accounts of main financial statements].

(c) On March 29, 2010, the Company allotted 3,00,000 convertible warrants to Mr. Rajiv C. Mody, Chairman and Managing Director and one of the Promoters of the Company, on a preferential basis on such terms and conditions as contained in the Special Resolution passed by the Company through Postal Ballot on March 15, 2010. The warrants expire at the end of 18 months from the date of issue. The al lot tee was entitled for one equity share of Rs10 each of the Company for each such warrant at a price of Rs176 each. As per the terms of allotment, 25% of the application money was paid, and recorded as share application and on payment of the remaining 75% of consideration, proportionate number of shares were to be allotted. Mr. Rajiv C. Mody has decided not to seek conversion of the above warrants into equity shares and he does not propose to pay the balance amount of Rs396.00 lakhs. The amount of Rs 132.00 lakhs paid by him representing the initial amount paid on allotment of such warrants was forfeited during the year and the amount has been credited to Capital Reserve Account [Note 4 in the Notes to accounts of main financial statements].

(d) The Ministry of Micro, Small and Medium Enterprises has issued an office memorandum dated August 26,2008 which recommends that the Micro and Small Enterprises should mention in their correspondence with its customers the Entrepreneurs Memorandum Number as allocated after filing of the Memorandum in accordance with the Micro, Small and Medium Enterprises Development Act, 2006 ('the Act'). Accordingly, amounts payable to such enterprises as at March 31, 2012 is RsNil (As at March 31, 2011 RsNil) based on information received and available with the Company. [Note 7 in the Notes to accounts of main financial statements].


Mar 31, 2010

1. Description of Business

Sasken Communication Technologies Limited ("Sasken" or "the Company") is a provider of telecommunication software services and solutions to network equipment manufacturers, mobile terminal vendors and semiconductor companies around the world. Sasken delivers end-to-end solutions that enable richer content delivery on next generation networks.

Sasken has its headquarters in Bangalore, India with offices in Pune, Chennai, Hyderabad, China, Germany, Japan, Sweden, United Kingdom (UK), United States of America (USA) and South Korea.

2. Basis for Preparation

The abridged financial statements have been prepared in accordance with the requirements of Rule 7A of the Companies (Central Governments) General Rules and Forms, 1956 and Clause 32 of the Listing Agreement. These abridged financial statements have been prepared on the basis of the complete set of financial statements for the year ended March 31, 2010. The notes number in the brackets "[ ]" are as they appear in the complete set of financial statements.

The complete set of financial statements have been prepared to comply in all material respects with the notified Accounting Standards by Companies Accounting Standards Rules, 2006 and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared under the historical cost convention on an accrual basis, except in case of assets for which impairment is made and revaluation is carried out. The accounting policies have been consistently applied by the Company and are consistent with those used during the previous year, other than those disclosed.

3. Investments in Subsidiaries and Joint Ventures

(a) As at March 31, 2010, the Company has invested Rs.902.44 lakhs for its 49.87% equity share in ConnectM Technology Solutions Pvt. Ltd. ("ConnectM"). ConnectM has incurred losses since the date of incorporation and the 49.87% share of cumulative loss incurred as of March 31, 2010 is Rs.800.35 lakhs. The Company believes that ConnectM is currently in the initial stages of business development and these losses are initial start up losses and hence considers the diminution in value of investment as temporary [Note 3 (a) in the Notes to accounts of main financial statements].

(b) As at March 31, 2010, the Company and Tata AutoComp Systems Limited ("TACO") each hold 50% of the equity in Taco Sasken Automotive Electronics Limited ("TSAE"). The Board of Directors of TSAE has, at the meeting held on January 09, 2009, decided to close down the operations of the company. Accordingly the financial statements of TSAE have not been prepared under the going concern assumption and all assets have been stated at realizable values and all liabilities have been considered at their estimated settlement value. Considering the closure of operations of TSAE, the Company has made a provision of Rs.756.39 lakhs as at March 31, 2010 towards diminution in the value of its investments in TSAE [Note 3 (b) in the Notes to accounts of main financial statements].

(c) As at March 31, 2010, the Company has total investment of Rs.542.86 lakhs in Sasken Communication Technologies (Shanghai) Co. Ltd. (Sasken China), its wholly owned subsidiary. Sasken China has made a loss of Rs.149.31 lakhs for the year ended March 31, 2010 and has accumulated losses of Rs.524.66 lakhs as at the Balance Sheet date. The Company has provided for diminution of its investment in Sasken China of Rs. 144.88 lakhs in earlier periods. Considering that the subsidiary is still in investment phase, the Company is of the view that no additional provision for diminution is required [Note 3 (c) in the Notes to accounts of main financial statements].

4. Capital Commitments and Contingencies

(a) Estimated amount of contracts remaining to be executed on capital account (net of advances) amounted to Rs.71.76 lakhs (As at March 31, 2009 Rs. 124.38 lakhs) [Note 4 (b) in the Notes to accounts of main financial statements].

(b) Contingent Liabilities

Contingent liabilities towards income taxes and indirect taxes not provided for amount to Rs.1,552.70 lakhs (March 31, 2009 Rs.974.60 lakhs) and Rs.1,188.93 lakhs (As at March 31, 2009 Rs.833.57 lakhs) respectively.

There are certain claims made against the Company by an investee company, which are a subject matter of arbitration proceedings. In the view of the management of the Company such claims are frivolous and are not tenable. No provision has been made for such claims pending completion of legal proceedings as the amount of claims are currently not ascertainable [Note 4 (c) in the Notes to accounts of main financial statements].

(c) The Company has operating leases for office premises that are (a) renewable on a periodic basis and are cancellable by giving a notice period ranging from 1 month to 6 months and (b) renewable on a periodic basis and are non-cancellable for specified periods under arrangements. Rent escalation clauses vary from contract to contract, ranging from 0% to 15%. There are no restrictions imposed on operating leases. There are no subleases [Note 11 in the Notes to accounts of main financial statements].

 
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