Home  »  Company  »  Sasken Technologies  »  Quotes  »  Notes to Account
Enter the first few characters of Company and click 'Go'

Notes to Accounts of Sasken Technologies Ltd.

Mar 31, 2016

1. Investments in Subsidiaries and Joint Ventures

(a) Connect M Technology Solutions Pvt. Ltd. (“Connect M”)

Sasken has a 46.29% (March 31, 2015, 46.29%) interest in a joint venture company called Connect M Technology Solutions Pvt. Ltd. (“Connect M”), 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, 2016, the Company has invested Rs.1,796.24 lakhs (March 31, 2015 Rs.1,796.24 lakhs) in Connec M. Connect M 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 Connect M as at March 31, 2016 amounting to Rs.1,796.24 lakhs ( March 31, 2015 Rs.1,796.24 lakhs).

(b) TACO Sasken Automotive Electronics Limited (“TSAE”) (Formerly known as TACO Sasken Automotive Electronics Private Limited)

Sasken has a 50% interest in a joint venture company called TACO Sasken Automotive Electronics Limited (formerly known as TACO Sasken Automotive Electronics Private Limited) (“TSAE”) in Pune. 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 (March 31, 2015 Rs.767.84 lakhs).

(c) The Company has evaluated its investment in Sasken Finland Oy for the purpose of determination of potential diminution in value of investment and based on such evaluation and determination, the Company has recognized a provision for diminution in the value of investment for the year ended March 31, 2016 amounting to Rs.Nil (March 31, 2015 Rs.3,360.14 lakhs).

(d) The Board of Directors at their meeting held on September 14, 2015 considered the amalgamation of Sasken Network Engineering Ltd., (SNEL) a wholly - owned subsidiary of the Company with Sasken Communication Technologies Ltd. The proposed merger shall be effected through a Scheme of Amalgamation under the provisions of Section 391 to 394 and other applicable provisions of the Companies Act, 1956 or any other amendment or modifications made thereto. The Scheme has been approved by the Board subject to requisite approvals from the relevant regulatory authorities and sanction of the Hon''ble High Court of Karnataka. The Appointed Date of the Scheme will be April 1, 2015 and no issue of fresh capital or any other security is contemplated as SNEL is a wholly - owned subsidiary of the Company. The Hon''ble High Court of Karnataka, based on the application filed on March 30, 2016 passed orders on April 1, 2016 dispensing with the meetings of the equity shareholders and unsecured creditors for approving the Scheme of Amalgamation. SNEL is now permitted to file a petition within two weeks of receipt of certified copy of the order for which necessary application has been made.

2. Capital and other commitments

(a) Estimated amount of contracts remaining to be executed on capital account (net of advances) amounted to Rs.94.91 lakhs (As at March 31, 2015 Rs.28.21 lakhs).

(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 details of outstanding foreign exchange forward contracts entered by the Company and outstanding as on the Balance Sheet date are as under:

* The Company is contesting the demands and based on expert advice, the management believes that its position will likely be upheld in the various appellate authorities / courts. The management believes that the ultimate outcome of these proceeding will not be adverse and such demands have been disclosed as contingent liabilities.

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, 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.

Notes:

a) Assumptions relating to future salary increases, attrition, etc. have been considered based on relevant economic factors such as inflation, market growth, etc.

b) The Company expects to contribute Rs.400 lakhs (March 31, 2015 Rs.150 lakhs) to gratuity, Rs.9 lakhs (March 31, 2015 Rs.9 lakhs) to pension and Rs.750 lakhs (March 31, 2015 Rs.750 lakhs) to provident fund in the subsequent year.

c) The overall return on assets is determined based on prevailing market price.

3. Provision for tax expenses

The provision for taxation includes tax liabilities in India on the Company''s global income as reduced by exempt incomes and any tax liabilities arising overseas on income sourced from those countries. Sasken''s operations are conducted through Software Technology Parks (‘STPs'') and Special Economic Zones (‘SEZs''). Income from SEZs is fully tax exempt for the first 5 years, 50% exempt for the next 5 years and 50% exempt for another 5 years subject to fulfilling certain conditions.

4. Employee Stock Option Plans (Equity Settled)

Sasken ESOP 2006

On February 25, 2006, the shareholders of the Company approved Stock Option Plan (ESOP - 2006) in accordance with the Guidelines issued by the Securities and Exchange Board of India (SEBI) for Employees Stock Option Plans. The Plan covers all employees of the Company including foreign branches, employees of the subsidiaries and Directors other than the promoter directors / employees. The Plan provides for the issue of 35,75,000 shares of Rs.10 each duly adjusted for any bonus, splits, etc. Compensation Committee of the Board administers the scheme. The terms of each issuance would be determined by the Compensation Committee. The Options vest subject to continuation of employment.

The Company issues options convertible into equity shares of Rs.10 each. The options issued till March 31, 2008 carry a vesting period of one to four years, options issued thereafter carry a vesting period one to three years except options issued on April 21, 2008 which carries a vesting period of one year. All the options granted have an exercise period of two years from the date of vesting except options issued on April 21, 2008 which have an exercise period of three months from the date of vesting.

5. Operating leases

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 by the lease arrangements. There are no sub leases.

6. Dues to micro and small enterprises

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, the disclosure in respect of the amounts payable to such enterprises as at March 31, 2016 has been made in the financial statements based on information received and available with the Company. Further in view of the Management, the impact of interest, if any, that may be payable in accordance with the provisions of the Act is not expected to be material. The Company has not received any claim for interest from any supplier as at the balance sheet date.

7. Exceptional Items Previous year

The Company had received a favourable arbitration award of Rs.26,752.99 lakhs for royalty and interest income in respect of Software product license granted to a non - Indian licensee, who had purportedly claimed non - usage of the licensed IPR after initial acceptance, which was successfully contested by the Company, and the same was recognized as exceptional revenue. In relation to the above, a provision towards employee payments amounting to Rs.1,500.00 lakhs was recorded as an exceptional item

The Company had evaluated its investment in Sasken Finland Oy and Sasken Communication Technologies Mexico S. A. de C. V. for the purpose of determination of potential diminution in value of investment and based on such evaluation and determination, the Company had recognized further provision for diminution in the value of investment for the year ended March 31, 2015 amounting to Rs.3,360.14 lakhs and Rs.176.75 lakhs respectively and disclosed the same as an exceptional item.

Current year

The Company had another arbitration proceeding with one of its customer and both parties had preferred certain claims. In March 2016, the two parties entered into a settlement agreement whereby both parties mutually agreed to stop the arbitration proceedings and the Company received a consideration of USD 45 million (equivalent to Rs.29,812.50 lakhs) for assignment of its rights in the independently owned IPR and foreground information, which has been recognized as an exceptional item. Further, in relation to the above, a provision towards employee payments amounting to Rs.2,100.00 lakhs and managerial remuneration amounting to Rs.784.38 lakhs has also been recorded as an exceptional item.

During the current year, the Company has evaluated certain long term investments for the purpose of determination of potential diminution in value of investments and based on such evaluation and determination, a provision for diminution in the value of investment as at March 31, 2016 amounting to Rs.3,594.85 lakhs has been recorded as an exceptional item.

8. Comparatives

Previous year figures have been re - grouped / re - arranged, wherever necessary to conform to the current year''s presentation.


Mar 31, 2015

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 and employs over 2,000 people, operating from state - of - the - art centers in Bengaluru, Pune, Chennai & Hyderabad (India), Kaustinen and Tampere (Finland), Beijing (China), Tokyo (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. Basis for Preparation

The abridged financial statements have been prepared in accordance with the requirements of sub - Section (1) of Section 136 of the Companies Act, 2013 and Rule 10 of Companies (Accounts) Rules, 2014. These abridged financial statements have been prepared on the basis of the complete set of financial statements for the year ended March 31,2015. 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 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, other than those disclosed.

Note: - Complete Balance Sheet, Statement of Profit and Loss, other statements and notes thereto prepared as per the requirements of Schedule III to the Companies Act, 2013 are available at the Company's website www.sasken.com.

3. Investments in Subsidiaries and Joint Ventures

(a) Sasken has a 46.29% (March 31, 2014, 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, 2015, the Company has invested Rs. 1,796.24 lakhs ( March 31,2014 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 recognised a provision for diminution in the value of investment in ConnectM as at March 31,2015 amounting to Rs. 1,796.24 lakhs (March 31,2014 Rs. 1,796.24 lakhs). [Note 25 (a) of main financial statements].

(b) Sasken has a 50% interest in a joint venture company called TACO Sasken Automotive Electronics Limited (formerly known as TACO Sasken Automotive Electronics Private Limited) ("TSAE") in Pune. 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 31,2015 (March 31,2014 Rs. 767.84 lakhs). [Note 25 (b) of main financial statements].

(c) The Company has evaluated its investment in Sasken Finland Oy and Sasken Communication Technologies Mexico S. A. de C. V for the purpose of determination of potential diminution in value of investment and based on such evaluation and determination, the Company has recognized a further provision for diminution in the value of investment for the year ended March 31, 2015 amounting to Rs. 3,360.14 lakhs (March 31,2014 Nil) and Rs. 176.75 lakhs (March 31,2014 Nil) respectively. [Note 25 (c) of main financial statements].

(d) The Company has subscribed to 2,94,56,521 shares of Common Stock, USD 0.01 par value of Sasken Inc. at a price of USD 0.23 per share and paid the aggregate amount of USD 67,74,999.83 by the conversion of the existing debt owed by Sasken Inc. [Note 25(d) of main financial statements].

4. Capital and other commitments [Note 26 of main financial statements]

(a) Estimated amount of contracts remaining to be executed on capital account (net of advances) amounted to Rs. 28.21 lakhs (As at March 31,2014 Rs. 15.83 lakhs).

(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.

5. Contingent Liabilities [Note 27 of main financial statements]

Amount in Rs. lakhs As at As at Particulars March 31, March 31, 2015 2014

Bank Guarantees 8.96 10.56

Income taxes* (matters pertaining to 3,534.60 6,381.29 disputes on tax holiday benefits, transfer

pricing and disallowance of certain expenses claimed by the Company)

Indirect taxes* (includes matters 5,048.23 5,048.23 pertaining to disputes on VAT / sales tax and service tax)

* The Company is contesting the demands and based on expert advice, the management believes that its position will likely be upheld in the various appellate authorities /courts. The management believes that the ultimate outcome of this proceeding will not be adverse and such demands have been disclosed as contingent liabilities.

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, 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.

6. 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, the disclosure in respect of the amounts payable to such enterprises has been made in the financial statements based on information received and available with the Company. [Note 6 of main financial statements].

7. Based on the Special Resolution passed by the Company on November 8, 2013, the Company allotted on preferential basis 12,00,000 convertible warrants, on November 18, 2013, to Ms. Ira Bhaduri in her capacity as Trustee of Lahiri Family Trust, of which Mr.Anjan Lahiri, former Whole Time Director and CEO of the Company, is the Managing Trustee. The allottee was entitled to one equity share of Rs. 10 each of the Company for each such warrant at a price of Rs. 120.25 each and 25% of the price amounting to Rs. 360.75 lakhs was received as application money. The allottee exercised 10,40,000 options and paid Rs. 937.95 lakhs towards the balance 75% of the application money and as the proposed allotment /conversion was not to be proceeded with, this amount of Rs. 937.95 lakhs has been refunded and the stock exchanges have been informed about the non - conversion /allotment.

The Company had sought informal guidance from Securities and Exchange Board of India ("SEBI") on whether the 25% should be forfeited or can be refunded and if so, the procedural formalities in connection with that. SEBI vide its letter dated February 23, 2015 expressed its inability to issue any guidance in the matter. The Company was advised that since SEBI has not expressed any opinion despite having placed all the relevant facts and materials, the Company could proceed to effect the refund in its entirety. Accordingly the Board at its meeting held on April 13, 2015 approved refund of the application amount and the interest accrued and the whole amount was paid on April 14, 2015. [Note 33 of main financial statements].

8. During the earlier years, the Company had recognized royalty income of USD 1.67 million (Rs. 880.52 lakhs) in respect of Software Product License granted to a non - Indian licensee, who had purportedly claimed non - usage of the licensed IPR after initial acceptance, which was being contested by the Company. On June 27, 2014, an award was passed in the Company's favour, as per which the non - India licensee was directed to pay USD 31.70 million within 30 days, towards royalties and interest on unpaid royalties and the non - India licensee was also directed to continue to provide royalty reports and pay the contracted royalties on an ongoing basis.

During the year, the Company received a sum of USD 45.31 million towards royalties upto December 2014 and interest on royalties. Of the above, USD 1.67 million was adjusted towards outstanding trade receivables and the balance amount of USD 43.64 million (equivalent to Rs. 26,752.99 lakhs) was recognized as exceptional revenue. Further, in relation to the above, a provision towards employee payments amounting to Rs. 1,500.00 lakhs was recorded as an exceptional item. During the year ended March 31,2015, another arbitration proceeding has been initiated between the Party and the Company and both the parties have preferred certain claims, the amount of which is unascertainable, at present. [Note 41 of main financial statements].

9. During the year, the Company has reassessed the useful life of computers. Accordingly, the written down value of computers as at April 01,2014, is depreciated on a prospective basis over the remaining estimated useful life. This change in accounting estimate has resulted in increase in depreciation expense for the year ended March 31,2015 by Rs. 68.29 lakhs. Further, in case of computers whose useful life on such reassessment had expired as of April 01, 2014, net book value of assets of Rs. 35.89 lakhs (net of deferred tax of Rs. 18.48 lakhs) is adjusted against the surplus in the Statement of Profit and Loss as of April 01, 2014. [Note 40 of main financial statements].

10. Market value of Quoted Investments

As at March 31,2015 the aggregate market values of quoted investments is Rs. 8,916.88 lakhs (March 31,2014 Rs. 4,966.26 lakhs).

11. Comparatives [Note 43 of main financial statements]

Previous year figures have been re - grouped / re - arranged, wherever necessary to conform to the current year's presentation.


Mar 31, 2013

1. Other Notes

(a) Buy - back of Equity Shares

As per the approval of the shareholders of the Company on April 23, 2012 through postal ballot, by a special resolution, in accordance with the provisions of the Companies Act, 1956 and the Securities and Exchange Board of India (Buy Back of Securities) Regulations, 1998 (as amended), the Company offered to buy - back its equity shares of face value of 710/- each, upto a maximum amount of Rs.8,648 lakhs at a maximum price of 7180/- per share from open market. After completion of regulatory formalities the Company commenced the buy - back on May 21, 2012. The Company has, during the year ended March 31, 2013, bought back 51,41,975 equity shares at an average price of 7125.07 per share, utilizing a sum of 76,431.00 lakhs (excluding brokerage etc). On account of buy - back of shares, the Company has created Capital Redemption Reserve of Rs.514.19 lakhs towards the face value of 51,41,975 shares of 710/- each 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 (as amended), the Company has extinguished 50,52,325 shares as on March 31, 2013, and the remaining 89,650 shares on April 06, 2013. Subsequent to the year - end, another 1,35,903 shares were bought back, at an average price of 7143.96 utilizing a sum of 7195.65 lakhs (excluding brokerage and other applicable taxes), before closure of the buy - back scheme by efflux of time. The Company has extinguished 92,928 shares as of April 18, 2013 and submitted the application for extinguishment for the remaining 42,975 shares.

During prior years, 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 (as amended), the Company offered to buy - back its equity shares of face value of 710/- each, upto a maximum amount of 73,454 lakhs at a maximum price of 7260/- per share from open market. The buy - back was commenced by the Company on December 2, 2010 and was closed on May 26, 2011. The Company had bought back 21,62,000 equity shares at an average price of 7159.26 per share (excluding brokerage and other taxes), utilizing a sum of 73,443.25 lakhs [Note 3 of main financial statements].

(b) 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, 2013 is Rs.Nil lakhs (As at March 31, 2012 Rs.Nil lakhs) based on information received and available with the Company [Note 7 of main financial statements].

2. Included in the revenue for the year ended March 31, 2013 is an item of royalty income of Rs.880.52 lakhs in respect of Software Product License granted to a non - Indian Licensee, who has purportedly claimed non - usage of the licensed IPR after initial acceptance, which is being contested by the Company. Based on legal advice, the management is reasonably confident of collecting the dues from the customer for which necessary steps are being taken and hence no further adjustments are considered necessary at this stage [Note 41 of main financial statements].

3. Comparatives

[Note 43 of main financial statements]

Previous year figures have been re - grouped / re - arranged, wherever necessary to conform to the current year''s presentation.


Mar 31, 2012

1 Provision for Diminution in Value of Investments Rs282.48 lakhs (As at March 31, 2011 X282.48 lakhs).

2 Provision for Diminution in Value of Investments Rs13,058.38 lakhs (As at March 31, 2011 Rs13,058.38 lakhs).

3 Provision for Diminution in Value of Investments Rs767.84 lakhs (As at March 31, 2011 Rs767.84 lakhs).

4 Provision for Diminution in Value of Investments Rs1,550.00 lakhs (As at March 31, 2011 RsNil).

5 There is no specific repayment schedule for loan granted to subsidiaries.

6. Market Value of Quoted Investments

As at March 31,2012 the aggregate market value of quoted investments is Rs14,452.73 lakhs (As at March 31,2011: Rs13,821.69 lakhs).

7. Provision for taxation

The provision for taxation includes tax liabilities in India on the Company's global income as reduced by exempt incomes and any tax liabilities arising overseas on income sourced from those countries. Sasken's operations are conducted through Software Technology Parks ('STPs) and Special Economic Zones ('SEZs'). Income from STPs were tax exempt for the earlier of 10 years commencing from the fiscal year in which the unit commences software development or March 31,2011. Income from SEZs is fully tax exempt for the first 5 years, 50% exempt for the next 5 years and 50% exempt for another 5 years subject to fulfilling certain conditions [Note 36 in the Notes to accounts of main financial statements].

8. Comparatives

[Note 43 in the Notes to accounts of main financial statements]

Previous year figures have been re-grouped / re-arranged, wherever necessary to conform to the current year's presentation.


Mar 31, 2011

(a) Contingent Liabilities

Contingent liabilities towards income taxes and indirect taxes not provided for amount to Rs2,234.05 lakhs (March 31, 2010 f 1,552.70 lakhs) and Rs2,216.86 lakhs (As at March 31, 2010 Rs1,188.93 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].

Amount in Rs lakhs

As at As at March 31, 2011 March 31, 2010

Bank Guarantees 274.03 287.35

Corporate Guarantee on behalf of subsidiaries 10,777.68 10,333.98

(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 12 in the Notes to accounts of main financial statements].

2. 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 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, has been transferred from the Securities Premium Account and credited to Business Restructuring Reserve Account. Further, during the year ended March 31, 2010, impairment loss on capitalized software amounting to Rs1,519.70 lakhs, being considered as a Restructuring Expense incurred after the Appointed Date, was adjusted against the Restructuring Reserve Account.

During the year, the Company has 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 has identified and recognized a provision for diminution in the value of investment in Sasken Communication Technologies Oy 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, has been adjusted against the Business Restructuring Reserve Account in accordance with the Scheme. Had the Scheme not prescribed the aforesaid treatment, the balances would be as under :

(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 Rs 10/- each, upto a maximum amount of Rs3,454 lakhs at a maximum price of Rs 260/- per share from open market. After completion of regulatory formalities the Company commenced the buy-back on December 2, 2010. The Company has bought back 14,32,633 equity shares at an average price of Rs158.22 per share, utilizing a sum of Rs2,266.70 lakhs for the year ended March 31, 2011. The amount paid towards buy-back of shares, in excess of the face value, has been appropriated out of Securities Premium account. On account of buy-back of shares, the Company has created Capital Redemption Reserve of Rs143.26 lakhs towards the face value of 14,32,633 shares of Rs10/- each by way of appropriation against General Reserve.

In terms of the provisions of Section 77A of the Companies Act, 1956 and SEBI (Buy Back of Securities) Regulations, 1998, the Company has extinguished the 14,32,633 shares as on March 31, 2011.

During the buy-back period, employees have exercised 35,650 options which are pending allotment on account of buy-back of shares in line with the requirements of provisions of the Companies Act, 1956 and the Securities and Exchange Board of India (Buy Back of Securities) Regulations, 1998 [Note 4(i) in the Notes to accounts of main financial statements].

(c) The Company enters into foreign exchange forward contracts and option contracts to hedge its net foreign currency receivables position including its future receivables.

Effective April 1, 2010, the Company has adopted the principles of AS 30 Financial Instruments: Recognition and Measurement for forward exchange contracts that are not covered by AS 11 The effects of changes in foreign exchange rates and that relate to a firm commitment or a highly probable forecast transaction. In the previous year, the Company had accounted for such contracts in accordance with the guidance in the Announcement of Institute of Chartered Accountants of India (the ICAI) dated March 29, 2008. Had the Company accounted for these contracts in accordance with the aforesaid ICAI Announcement, Mark to Market net gain of Rs79.90 lakhs would not have been recognized in the Profit and Loss Account, consequently the profits for the year would have been lower to that extent and hedging reserve would have decreased by Rs143.98 lakhs [Note 4(d) in the Notes to accounts of main financial statements].

(d) 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 warrant expires at the end of 18 months from the date of issue. The allottee shall be 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 has been paid, which has been recorded as share application and on payment of the remaining 75% of consideration, proportionate number of shares will be allotted [Note 4(k) in the Notes to accounts of main financial statements].

(e) Based on the information available with the Company, there are no suppliers who are registered as micro, small or medium enterprises under The Micro, Small and Medium Enterprises Development Act, 2006 as at March 31, 2011 [Note 4(l) in the Notes to accounts of main financial statements].

(f) Final dividend for previous year represents dividend on shares issued post Balance Sheet date (i.e. March 31, 2010) and before the record date for Annual General Meeting [Note 4(n) in the Notes to accounts of main financial statements].

3. Market Value of Quoted Investments

As at March 31, 2011 the aggregate market values of quoted investments is Rs13,821.69 lakhs (previous year Rs14,883.11 lakhs).

4. Provision for taxation

[Note 6 in the Notes to accounts of main financial statements]

The Company is registered under the Software Technology Park Scheme and Special Economic Zone Scheme and is claiming tax benefits under Section 10A and Section 10AA of the Income Tax Act, 1961.

Tax benefits under Section 10A have not been extended beyond March 31, 2011 and accordingly deferred tax assets, where applicable, have now been recognized.

Income Tax charge includes overseas income taxes of Rs217.80 lakhs (previous year Rs349.01 lakhs).

The components of deferred tax asset are as follows:

5. The Company is engaged in the development of computer software. The production and sale of such software cannot be expressed in any generic unit. Hence, it is not possible to give the quantitative details of revenue and the information as required under paragraphs 3, 4C and 4D of part II of Schedule VI to the Companies Act, 1956.

6. Comparatives

[Note 14 in the Notes to accounts of main financial statements]

Previous Year figures have been re-grouped / re-arranged, wherever necessary to conform to the current years presentation.


Mar 31, 2010

1. 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 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 Rs. 14,578.08 lakhs, has been transferred from the Securities Premium Account and credited to Business Restructuring Reserve Account. Further, impairment loss on capitalized software amounting to Rs. 1,519.70 lakhs, which was charged to Profit and Loss Account in the previous year, being considered as a Restructuring Expense incurred after the Appointed Date, i.e., April 1, 2008, has been adjusted against Restructuring Reserve Account, with corresponding credit in the Profit and Loss Account Balance [Note 4 (a) in the Notes to accounts of main financial statements].

Had the Scheme not prescribed the aforesaid treatment, the balances would be as under:

(b) Buy-Back of Equity Shares

In terms of decision of the Board of Directors dated April 18, 2008 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 Rs.10 each, upto a maximum amount of Rs.4,000 lakhs at a maximum price of Rs.260 per share from open market. The Company commenced the buy-back on September 15, 2008. During the previous year, the Company has bought back 1,449,742 equity shares at an average price of Rs. 106.80 per share, utilizing a sum of Rs.1,548.37 lakhs. The amount paid towards buy-back of shares, in excess of the face value, has been appropriated out of General Reserve.

In terms of the provisions of Section 77A of the Companies Act, 1956 and SEBI (Buy Back of Securities) Regulations, 1998, the Company has extinguished the above mentioned 1,449,742 shares as on March 31, 2009 and has created Capital Redemption Reserve of Rs.144.97 lakhs towards the face value of 1,449,742 shares of Rs. 10 each by way of appropriation against General Reserve, in previous year [Note 4 (j) in the Notes to accounts of main financial statements].

(c) Pursuant to The Institute of Chartered Accountants of Indias (ICAI) Announcement dated March 29, 2008 on "Accounting for Derivatives", the Company has, based on the principles of prudence enunciated in Accounting Standard-1 on "Disclosure of Accounting Policies", recognized mark to market losses on derivative contracts outstanding,(including forward contracts for highly probable collections), to the extent the losses are not offset by the fair value gain on the underlying hedge items. For the purpose of arriving at the net losses, on foreign currency derivative contracts, the Company has considered foreign currency derivative contracts as one portfolio. During the year ended March 31, 2010 there was a mark to market gain of Rs.799.23 lakhs, which has not been recognized in line with the ICAI announcement. In the previous year there was a mark to market loss of Rs.1,239.30 lakhs which was recognized in the Profit and Loss Account [Note 4 (I) in the Notes to accounts of main financial statements].

(d) On March 29, 2010, the Company allotted 300,000 convertible warrants to Mr. Rajiv C. Mody, Chaiman 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 warrant expires at the end of 18 months from the date of issue. The allottee shall be entitled for one equity share of Rs.10 each of the Company for each such warrant at a price of Rs. 176 each. As per the terms of allotment, 25% of the application money has been paid, which has been recorded as share application and on payment of the remaining 75% of consideration, proportionate number of shares will be allotted [Note 4 (m) in the Notes to accounts of main financial statements].

(e) Based on the information available with the Company, there are no suppliers who are registered as micro, small or medium enterprises under The Micro, Small and Medium Enterprises Development Act, 2006 as at March 31, 2010 [Note 4 (n) in the Notes to accounts of main financial statements].

(f) The Board of Directors has recommended a final dividend of Rs.4 per share which is subject to the approval of the members at the forthcoming Annual General Meeting. While making provision for the proposed dividend, regard has been had to Regulatory Practices requiring payment of full dividend on all shares that exist on the Record Date; and, with a view to ensuring the foregoing de-facto position to fall in line with the Companys Articles of Association, Article 162 of the Articles of Association is proposed to be amended, so that the pro-ration rule will have to yield to any regulatory requirement precluding pro-ration [Note 4(p) in the Notes to accounts of main financial statements].

2. Related Party Disclosures

[Note 8 (a), 8(b), 8(c) and 8(d) in the Notes to accounts of main financial statements]

3. Market Value of Quoted Investments

As at March 31, 2010 and 2009, the aggregate market values of quoted investments are Rs. 14,883.11 lakhs and Rs.1,514.63 lakhs respectively.

4. Provision for Taxation

The Company is registered under the Software Technology Park Scheme and Special Economic Zone Scheme and is claiming tax benefits under Section 10A and Section 10AA of the Income Tax Act, 1961. Pending clarity on extension of the tax holiday period beyond March 31, 2011, the Company is not able to reliably estimate the future income against which deferred tax assets will be realized. Accordingly, as a matter of prudence, deferred tax asset has not been recognized.

Income Tax charge includes overseas income taxes and withholding taxes of Rs.349.01 lakhs (previous year Rs.1,206.97 lakhs).

Income Tax charge for the year includes Rs.Nil (Rs.88.84 lakhs for the year March 31, 2009) pertaining to earlier years. [Note 6 in the Notes to accounts of main financial statements].

5. The Company is engaged in the development of computer software. The production and sale of such software cannot be expressed in any generic unit. Hence, it is not possible to give the quantitative details of revenue and the information as required under paragraphs 3, 4C and 4D of part II of Schedule VI to the Companies Act, 1956.

6. Comparatives

[Note 13 in the Notes to accounts of main financial statements]

Previous year figures have been re-grouped / re-arranged, wherever necessary to conform to the current year presentation.


Mar 31, 2003

1. Quantitative Details

b) The Company is engaged in the business of development of computer software. The production and sale of such software cannot be

expressed in any generic unit and hence, the quantitative details of such sale and the information required under paragraphs 3, and 4C of Part II of Schedule VI of the Companies Act, 1956, are not furnished.

2. Other notes

a) Research & Development expenses include Rs.206,572 (Previous year Rs.4,969,238) towards depreciation on assets used for Research & Development.

c) Estimated amount of contracts remaining to be executed on capital account (net of advances) amounted to Rs.2,867,829 (As at March 31, 2002 – Rs.51,051,920)

d) Contingent Liabilities not provided for, in respect of Letter of Credit and Bank Guarantees outstanding amount to Rs.13,017,550 (As at March 31, 2002 – Rs.7,168,875). Other contingent liabilities not provided for amount to Rs.7,645,865 (As at March 31, 2002 – Rs.3,156,844). There are certain claims made against the Company which, in the view of the management of the Company are not tenable and amounts are currently not ascertainable.

e) Realised and unrealised net exchange gain / (loss) on transactions relating to revenues, amounting to Rs.(1,273,203) (Previous year – Rs.14,666,677) are included under Revenues. Realised and unrealised net exchange gains / losses arising from other transactions are classified as Other Income / Administrative and General expenses, as appropriate.

f) Amounts due from Officers of the Company:

The Company provides interest free loan to its employees for various purposes. These loans are recoverable over a period ranging from 1 to 24 months. Officers of the Company avail loans under the same terms as applicable to other employees.

Maximum amount outstanding at any time during the year Rs.31,657 (As at March 31, 2002 Rs.135,448).

g) A Provision of Rs.57,831,480 was made during the year ended March 31, 2002 based on the Managements review of revenues recognized in an earlier year. Of this a sum of Rs.47,533,050 has been reversed in March 31, 2003 as the same is considered as no longer required, as a result of changes in conditions prevailing as of the previous year. During the year ended March 31, 2003, additional provision of Rs.17,176,580/- has been made as a matter of prudence towards potential impairment of certain receivables.

h) During the year ended March 31, 2003, the Company entered into an agreement to license its protocol stack to one of its customer for a sum of Rs.27,900,000. Simultaneously, the Company entered into an agreement to purchase software at a value of Rs.27,900,000. The Company considers this transaction to be an exchange of software products to enable testing of products at both the Companys and customers locations. For financial reporting purpose, the Company has netted off the two transactions in its books of account. The Company has also applied to the Reserve Bank of India to approve the set off of the cash flows in this transaction.

i) During the year ended March 31, 2002, the Company vacated some of the leased premises. Management determined that the leasehold improvements installed at these premises will not be used and hence, has accelerated depreciation during the year March 31, 2002 in respect of these assets. Such accelerated depreciation included in Depreciation for the year ended March 31, 2002 is Rs.18,529,533.

j) Miscellaneous expenses for the year ended March 31, 2002 include Rs.13,500,000 towards provision for anticipated losses for commitments given by the Company towards a joint venture. The Company has paid this amount in the current year.

k) Bank balances as at March 31, 2003 include cheques on hand amounting to Rs.10,222,890 (As at March 31, 2002 Rs.Nil).

l) Bank balance includes remittances in transit amounting to Rs.14,539,912 (As at March 31, 2002 Rs.Nil) and Packing Credit is net of remittances in transit amounting to Rs.45,858,059.

m) As at March 31, 2003 unutilized monies arising out of the rights issue amounting to Rs.154,276,473 is lying in the current account of the Companys bank.

n) As at March 31, 2003, foreign exchange difference arising on account of foreign exchange forward contracts entered into by the company to be recognized in the subsequent financial period amounts to Rs.2,842,949.

3. Managerial Remuneration

b) The remuneration paid to one of the Whole-time Directors of the Company, for the year ended March 31, 2003 exceeds the limits prescribed under Schedule XIII to the Companies Act, 1956 by Rs.2,952,400. The Company is in the process of obtaining the approval of the Central Government as required under Schedule XIII read with Section 269 and 309 of the Companies Act, 1956. Hence, the excess managerial remuneration of Rs.2,952,400 for the year ended March 31, 2003 is subject to the approval of the Central Government.

c) Computation of net profits Under Section 198 read with Section 349 and Section 350 of the Companies Act, 1956 for the year ended March 31, 2003.

4. Provision for Taxation

A significant portion of the Companys income is non-taxable as the Company claims deduction under section 10A of the Income Tax Act, 1961. No deferred tax asset has been recognised, as it is not virtually certain that such deferred tax asset will be realised.

Overseas income taxes (comprising of withholding taxes and overseas branch income taxes) amount to Rs.26,849,830 (net of refund of Rs.15,028,916) and Rs.28,137,104 (net of reversals of Rs.11,379,875) for the years ended March 31, 2003 and 2002 respectively.

5. Employee Stock Option Plan

The Company has two employee stock option schemes, SAS Stock Option Plan, 1997 and Sasken ESOP-2000. The details of options granted, options vested and shares issued against the exercised options are explained herein.

b) Sasken ESOP 2000

During the year ended March 31, 2001 the Company had announced a Stock Option Plan in accordance with the SEBI Guidelines for Employees Stock Option Plans. This stock option plan called ESOP-2000, was approved by the shareholders at the Extra Ordinary General Meeting of the Company held on September 22, 2000. The plan covers all employees of the Company including foreign branches, employees of the subsidiaries and holding Company including its part time / full time Directors other than the promoter directors. The Plan provides for the issue of 60 lakh shares (including the shares issued / to be issued under the FCDs as per the SAS Stock Option Plan, 1997 and the shares to be issued consequent to the exercise of the options granted under the current Plan) of Rs.5 each duly adjusted for any bonus, splits, etc. A Compensation Committee comprising of three independent directors on the Board administers the scheme.

Under ESOP-2000, stock options were granted to all employees based on the period of service with the Company, performance and potential. However, the intended response to the scheme was poor as the market value of the shares, since the grant of the stock options, has had a negative impact due to the global recession and the conditions prevailing in the capital markets. In view of this, the Company, after considering other alternatives, decided to cancel the stock options remaining unexercised as at December 31, 2002. The Compensation Committee and the Shareholders approved the cancellation of the stock options remaining unexercised w.e.f December 31, 2002.

Note: * The number of employees who were granted options, include some employees who were granted options, more than once. As such, the effective number of employees who were granted options is 1146 (**Net number of employees whose options lapsed is correspondingly 500).

Consequent to the cancellation of the stock options issued under ESOP 2000, the Company has written back the compensation cost amounting to Rs.71,462,150, recognized by it in the prior years.

The accounting value and the unamortized value of the options as at March 31, 2002 was Rs.122,637,150 and Rs.51,032,444 respectively.

6. Related Party Disclosures

a) Silicon Automation Systems, Inc (SAS Inc.) is a Company incorporated in the State of California. Both the Companies have three common directors.

During the year ended March 31, 2002, the Company imported capital goods and consumables amounting to Rs.772,702.

Amounts receivable from SAS Inc. towards advances given is Rs.Nil (As at March 31, 2002 Rs.3,450,467)

b) Silicon Automation Systems Kabushiki Kaisha (SAS Japan) a 100% owned subsidiary Company incorporated in Japan was liquidated during the year ended March 31, 2002 and converted to a Branch Office and assets of Rs.1,700,367 were transferred to the Company.

c) Remuneration paid to Key Managerial Personnel:

7. Segment Reporting

Sasken has three divisions, each focusing on different market segments Networks, Semiconductors and Terminal Devices.

The Networks division offers products and services to network equipment manufacturers and test and measurement companies. This business division focuses on software services and solutions for convergent networks in wireless, datacom and enterprise networks.

The Terminal Devices division provides software solutions to terminal equipment manufacturers including a complete suite of next generation wireless protocol stacks multimedia codecs and applications, such as MMS client, Multimedia Player and 3G 324M Videophone.

The Semiconductors division provides solutions and services to semiconductor companies, built both around Sasken IP as well as customer specific P.

During the current year the Company discontinued the operations of Internet Access Solutions division. The Internet Access Solutions division focused on developing Internet based products, applications and system software. It also provided turnkey product design services to companies engaged in designing next generation telecom equipment.

8. Previous year Figures have been Re-grouped / Re-arranged, wherever necessary

Find IFSC