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Accounting Policies of Sasken Communication Technologies Ltd. Company

Mar 31, 2016

1. Description of Business

Sasken Communication Technologies Limited (“Sasken” or “the Company”) is a leader in providing Engineering R&D and Productized IT services to global Tier-1 customers in the Communications & Devices, Retail, Insurance and Independent Software space. Sasken''s deep domain knowledge and comprehensive suite of services have helped global leaders in verticals such as Semiconductors, Consumer Electronics, Smart Devices, Automotive Electronics, Enterprises and Network Equipment maintain market leadership. In the Retail, Insurance and Independent Software Vendor verticals, Sasken enables customers to rapidly re-architect their suite of IT Application and Infrastructure.

Established in 1989, Sasken has its headquarter in Bengaluru, operating from state-of-the-art centers in Bengaluru, Pune, Chennai & Hyderabad (India), Kaustinen and Tampere (Finland), Beijing (China), Kanagawa (Japan), Greater London (UK), California, Massachusetts, New Jersey and Texas (USA), Bochum (Germany) and Seoul (South Korea). The equity shares of Sasken have been listed on the National Stock Exchange of India Ltd., and BSE Ltd., since its initial public offering in 2005.

2. Significant Accounting Policies

(a) Basis for preparation of financial statements

The financial statements have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP) and complies in all material respects with the Accounting Standards notified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014. The financial statements have been prepared under the historical cost convention on an accrual basis, except in case of certain financial instruments which are measured at fair values and 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.

The presentation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Although these estimates are based on management''s best knowledge of current events and actions the Company may undertake in future, actual outcomes ultimately may differ from the estimates.

(b) Fixed Assets (including intangible assets)

Fixed assets including intangible assets are stated at cost, less accumulated depreciation less impairment, if any. Cost comprises the purchase price and any attributable cost of bringing the asset to its working condition for its intended use. Borrowing costs relating to acquisition of fixed assets, which necessarily take substantial period of time to get ready for intended use, are also included to the extent they relate to the period till such assets are ready to be put to use. Cost of fixed assets not ready for their intended use before balance sheet date are disclosed under capital work in progress.

(c) Depreciation / Amortization

Based on an independent assessment, the management has estimated the useful lives of the following classes of assets, which are lower than or equal to those indicated in Schedule II. Depreciation is provided on Straight Line Method (SLM), over the estimated useful life of the asset, as follows:

Leasehold improvements at least premises are depreciated on SLM, over the estimated useful life (not exceeding 10 years) or the lease period, whichever is lower.

Assets with unit value of Rs.5,000 or less are depreciated entirely in the period of acquisition.

Intangible assets are amortized over the estimated useful life, on a straight line basis, as follows:

1. Computer Software -

(a) Computer Software used for development of software / rendering software services - over the life of the project / product - 1 year to 5 years.

(b) Generic Computer Software - over 1 year.

(c) Product Software for administration purposes - 3 years.

2. Technical know-how - over a period of 3 years.

(d) Research and Development

Research costs are expensed as incurred. Development expenditure incurred on an individual project is carried forward when its future recoverability can reasonably be regarded as assured. Equipment or facilities that are acquired or constructed for research and development activities, which have alternative future uses are capitalized as tangible assets. Depreciation on such assets, during the research phase, is charged to expense as research and development costs.

(e) Capitalization and Amortization of Software Products

Costs incurred during the research phase are expensed off as period costs. Costs incurred towards development of computer software products meant for sale, lease or otherwise marketed, are capitalized subsequent to establishing the technological feasibility provided future economic benefit is probable and the Company has an intention and ability to complete and use or sell software and costs can be measured reliably. The costs are expensed as period costs, if the technological feasibility is not established. Capitalization ceases when the product is ready for general release to customers. Capitalized software product costs are amortized on a straight line method over the remaining estimated economic life of the product. The unamortized cost of capitalized software products is carried at cost, less accumulated amortization less impairment, if any.

(f) Operating Leases

Leases where the lesser effectively retains substantially all the risks and benefits of ownership over the leased term are classified as operating lease. Operating lease payments are recognized as expense in the Statement of Profit and Loss on a straight-line basis over the lease term.

(g) Impairment of assets

(i) The carrying amounts of assets are reviewed at each balance sheet date to assess if there is any indication of impairment based on internal / external factors. An impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the asset''s net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and risks specific to the asset.

(ii) After impairment, depreciation is provided on the revised carrying amount of the assets over its remaining useful life.

(iii) A previously recognized impairment loss is increased or reversed depending on changes in circumstances. However the carrying value after reversal is not increased beyond the carrying value that would have prevailed by charging usual depreciation if there was no impairment.

(h) Investments

Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long-term investments. Current investments are carried at lower of cost and net realizable value determined on an individual investment basis. Long-term investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary in the value of the investments. On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the Statement of Profit and Loss.

(i) Work-in-Progress

Costs related to milestones that have not been completed until the balance sheet date are reported as work in progress. Work in progress is carried at cost or net realizable value whichever is lower. Cost includes all expenses directly identifiable to a project and other costs directly attributable to the project. Net Realizable value is the estimated revenue expected in the ordinary course of business on completion of the milestone less expected costs and margin on completion of milestone.

(j) Revenue Recognition

The Company derives its revenues from software services, product and technology licensing and installation and commissioning services.

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company, the revenue can be reliably measured and the collection is probable. In all cases revenue is recognized only when no further vendor obligations remain up to the stage of revenue recognized and collection is probable. The following specific recognition criteria must also be met before revenue is recognized.

Licensing revenue is recognized when the product or technology is delivered and accepted.

Revenue from time and material service contracts is recognized as the services are provided. Revenue from fixed price service contracts and customized products or technology developments is recognized based on the proportionate completion method, determined based on the achievement and acceptance of the milestone, provided collection is probable. Revenue from maintenance contracts is recognized ratably over the term of the maintenance arrangement.

Revenue from royalty is recognized on an accrual basis based on customer confirmation of shipment volumes, provided collection is probable.

Revenue related to post contract customer support is recognized ratably over the support period.

Dividend income is recognized when the right to receive dividend is established as at the reporting date.

Interest income is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable.

The Company recognizes legal award revenue when the litigation reaches finality, and the Company has assurance of collecting those awards or the Company has collected litigation awards from the other litigating party or parties.

The Company collects service tax and value added taxes (VAT) on behalf of the government and, therefore, it is not an economic benefit flowing to the Company. Hence, it is excluded from revenue.

(k) Foreign Currency Translations

(i) Foreign Currency transactions and balances Initial Recognition

Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate, between the reporting currency and foreign currency approximately at the date of the transaction.

Conversion

Foreign currency monetary items are reported using the exchange rate prevailing at the balance sheet date. Non-monetary items, which are carried in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of the transaction.

Exchange Differences

Exchange differences arising on the settlement of monetary items or on reporting such monetary items of Company at rates different from those at which they were initially recorded during the year, or reported in previous financial statements, are recognized as income or as expenses in the year in which they arise.

Forward exchange contracts not intended for trading or speculation purposes covered by notified AS 11.

The premium or discount arising at the inception of forward exchange contracts is amortized as expense or income over the life of the contract. Exchange differences on such contracts are recognized in the Statement of Profit and Loss in the year in which the exchange rates change. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognized as income or as expense for the year.

Options and Forward exchange contracts not intended for trading or speculation purposes, classified as derivative instruments (Cash flow hedge).

The Company has adopted the principles of Accounting Standard (‘AS'') 30, Financial Instruments: Recognition and Measurement to the extent that the adoption does not conflict with notified accounting standards and other applicable pronouncements. Accordingly, such derivative instruments, which qualify for hedge accounting are fair valued at balance sheet date and the effective portion of the resultant loss / (gain) is debited / credited to the hedging reserve and the ineffective portion is recognized in the Statement of Profit and Loss.

Changes in the fair value of derivative instruments that do not qualify for hedge accounting are recognized in the Statement of Profit and Loss as they arise.

Hedge Accounting is discontinued when the hedging instrument expires or is sold, or terminated, or exercised, or no longer qualifies for hedge accounting. Any cumulative gain or loss on the hedging instrument recognized in hedge reserve is transferred to Statement of Profit and Loss when the forecasted transaction occurs or when a hedged transaction is no longer expected to occur.

ii. Translation of Integral and Non-integral foreign operations:

The financial statements of an integral foreign operation are translated as if the transactions of the foreign operation have been those of the Company itself.

In translating the financial statements of a non-integral foreign operation for incorporation in financial statements, the assets and liabilities, both monetary and non-monetary, of the non-integral foreign operation are translated at the rate prevailing at the balance sheet date; income and expense items of the non-integral foreign operation are translated at exchange rates at the dates of the transactions; and all resulting exchange differences are accumulated in a foreign currency translation reserve until the disposal of the net investment.

Where there is a change in the classification of a foreign operation the translation procedures applicable to the revised classification are applied from the date of change in the classification.

On the disposal of a non-integral foreign operation, the cumulative amount of the exchange differences which have been deferred and which relate to that operation are recognized as income or as expenses in the same period in which the gain or loss on disposal is recognized.

(l) Retirement and other Employee Benefits

(i) Gratuity

The Company provides for gratuity, a defined benefit plan covering all eligible employees. The plan provides a lump sum payment to eligible employees at retirement or on termination of employment based on the salary of the respective employee and the years of employment with the Company.

The Company contributes to a gratuity fund maintained by an insurance company. The amount of contribution is determined based upon actuarial valuations as at the year end. Such contributions are charged off to the Statement of Profit and Loss. Provision is made for the shortfall between the actuarial valuation carried out as at balance sheet date as per Projected Unit Credit Method and the funded balance with the insurance company.

(ii) Provident Fund

Employees other than the employees at foreign branches are eligible to receive Provident Fund benefits through a defined benefit plan in which both employee and employer make monthly contributions to the plan. The Company has established a Provident Fund Trust to which contributions towards provident fund are made each month. The Provident Fund Trust guarantees a specified rate of return on such contributions on a periodical basis. The Company will meet the shortfall in the return, if any, which is provided for based on actuarial valuation carried out, as at the balance sheet date. Contributions towards Provident Fund are charged to the Statement of Profit and Loss on an accrual basis.

(iii) Pension

In case of Germany branch, pension contributions are made as per the local laws and regulations. The Company provides for these pension benefits, a defined benefit plan, covering all eligible employees. The plan provides for various pension benefits to eligible employees at retirement or on termination of employment based on earnings of the respective employee and the years of employment with the Company. The Company contributes to a reinsured support fund maintained by an external agency. The contributions made by the employer are charged to the Statement of Profit and Loss on accrual basis. Provision is made for the shortfall between the actuarial valuation carried out as at the year end, as per the projected unit credit method and the funded balance.

For other overseas branches, social security contributions are made as per the respective local laws and regulations. The same is charged to the Statement of Profit and Loss on an accrual basis. There are no obligations beyond the respective entity''s contributions.

(iv) Compensated absences

Short-term compensated absences are provided based on estimates. Long-term compensated absences are provided for based on actuarial valuation, done as per projected unit credit method, as at balance sheet date. The Company presents the compensated absences as a current liability in the Balance Sheet wherever it does not have an unconditional right to defer its settlement beyond 12 months after the reporting date.

(v) Other employee benefits

The Company operates other long term benefit plan covering all eligible employees. The plan provide for lump sum payments at the end of agreed tenure. The cost of providing benefit under this plan is determined by the actuarial valuation, done as per projected unit credit method as at each balance sheet date.

(vi) Superannuation

The Company contributes to a superannuation scheme, a defined contribution plan maintained by an insurance company. Such contributions are charged to the Statement of Profit and Loss on an accrual basis. The Company has no other obligations beyond its monthly contributions.

(vii) Actuarial gains / losses

The actuarial gains / losses on the employee benefits are immediately recognized in the Statement of Profit and Loss and are not deferred.

(m) Income Taxes

Tax expense comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Indian Income Tax Act, 1961 and tax laws applicable to the overseas branches under the respective jurisdictions. Deferred income taxes reflect the impact of current year timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years.

Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the balance sheet date. Deferred tax assets and deferred tax liabilities across various countries of operation are not set off against each other as the Company does not have a legal right to do so. Deferred tax liabilities are recognized for all taxable timing differences. In the situations where the company is entitled to a tax holiday under the Income-tax Act, 1961 enacted in India or tax laws prevailing in the respective tax jurisdictions where it operates, no deferred tax (asset or liability) is recognized in respect of timing differences which reverse during the tax holiday period, to the extent the company''s gross total income is subject to the deduction during the tax holiday period. Deferred tax in respect of timing differences which reverse after the tax holiday period is recognized in the year in which the timing differences originate. All Deferred tax assets are recognized only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. If the Company has carry forward of unabsorbed depreciation and tax losses, deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits.

The carrying amount of deferred tax assets are reviewed at each balance sheet date. The Company writes-down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realized. Any such write -down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available.

Unrecognized deferred tax assets of earlier years are re-assessed and recognized to the extent that it has become reasonably certain or virtually certain, as the case may be that future taxable income will be available against which such deferred tax assets can be realized.

Minimum Alternative Tax (MAT) credit is recognized as an asset only when and to the extent there is convincing evidence that the company will pay normal income tax during the specified period. In the year in which the MAT credit becomes eligible to be recognized as an asset in accordance with the recommendations contained in Guidance Note issued by the Institute of Chartered Accountants of India on Accounting for Credit Available in respect of MAT under the Income-tax Act, 1961, the said asset is created by way of a credit to the Statement of Profit and Loss and shown as MAT Credit Entitlement. The Company reviews the same at each balance sheet date and writes down the carrying amount of MAT Credit Entitlement to the extent there is no longer convincing evidence to the effect that Company will pay normal Income Tax during the specified period.

(n) Stock Compensation Expense

Measurement and disclosure of the employee share-based payment plans is done in accordance with SEBI (Share based employee benefits) Regulations 2014 and the Guidance Note on Accounting for Employee Share-based Payments, issued by the Institute of Chartered Accountants of India. The Company accounts for stock compensation expense based on the fair value of the options granted, determined on the date of grant. Compensation expense is amortized over the vesting period of the option on a straight-line basis. The accounting value of the options outstanding net of the Deferred Compensation Expense is reflected as Employee Stock Options Outstanding.

(o) Segment Reporting

The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.

Identification of segments:

The Company is focused in the embedded communication space. The risks and returns of the Company are predominantly determined by the nature of the solution offered to its customers, which may be in the form of products or services. The primary reporting segments are Software Services and Software Products.

The geographical segment information is disclosed based on the location of the customers.

Allocation of common costs:

Common allocable costs are allocated to the segments according to the relative contribution of each segment to the total common costs.

Unallocated items:

The Unallocated items includes general corporate income and expense items, which are not allocated to any business segment.

(p) Earnings per share

Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the year are adjusted for events of bonus issue; bonus element in a rights issue to existing shareholders; share split; and reverse share split (consolidation of shares).

For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.

(q) Provisions and contingencies

A provision is recognized when an enterprise has a present obligation as a result of past event; it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to their present value and are determined based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.

Provisions for onerous contracts, i.e. contracts where the expected unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it, are recognized when it is probable that an outflow of resources embodying economic benefits will be required to settle a present obligation as a result of an obligating event, based on a best estimate of such obligation.

Where no reliable estimate can be made, a disclosure is made as contingent liability. A disclosure for a contingent liability is also made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. A contingent asset is neither recognized nor disclosed in the financial statement.

(r) Warranty

Provision for warranty related costs are recognized when the license is provided or service provided. Provision is based on historical experience. The estimate of such warranty related costs is revised periodically.

(s) Cash and cash equivalents

Cash and cash equivalents in the cash flow statement comprise of cash at bank and in hand and short term investments with an original maturity value of three months or less. The cash flow statement is prepared under the indirect method.

For details of shares reserved for issue under Employee Stock Option Plan (ESOP) of the Company (Refer Note 35).

The Company has only one class of share referred to as equity shares having par value of Rs.10 each. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian Rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting. 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. For the year ended March 31, 2016, the Board of Directors have declared an interim dividend of Rs.7 per equity share of Rs.10 each and special dividend of Rs.25 per equity share of Rs.10 each (March 31, 2015 dividend declared was Rs.27 per equity share including a final dividend of Rs.4.50 per equity share, interim dividend of Rs.2.50 per equity share and special dividend of Rs.20 per equity share).

The Company has issued 11,97,825 shares (As at March 31, 2015: 16,73,700) during the period of five years immediately preceding the reporting date on exercise of options granted under the Employee Stock Option Plan (ESOP), wherein part consideration was received in form of employee services. In terms of decision of the Board of Directors dated April 23, 2015 and in accordance with the provisions of Companies Act, 2013 and the Securities and Exchange Board of India (Buy-back of Securities) Regulations,1998 and with the approval of shareholders by Postal Ballot on June 25, 2015, the Company had offered to buy-back up to 41,57,000 fully paid up equity shares of Rs.10 each, at a price of Rs.260 per share for an aggregate amount of up to Rs.10,808.20 lakhs from the existing shareholders of the Company under Tender Offer mechanism. The offer size represented 19.48% of the aggregate paid up capital of the Company as at March 31, 2015. The Offer was opened on August 10, 2015 and closed on August 24, 2015. During the year the Company had purchased 36,56,560 shares and completed the payment and extinguishment of said shares by September 04, 2015.


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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