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Notes to Accounts of Spacenet Enterprises India Ltd.

Mar 31, 2015

1. Rights, preferences and restrictions attached to equity shares:

The Company has only one class of equity shares having par value of Rs10 each. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing general meeting.

2. Capital commitments and contingent liabilities

Particulars As at As at 31 March 2015 31 March 2014

Capital Commitments .......................... Nil Nil

Contingent liabilities

i. Disputed Service Tax liability for which the

Group has preferred an appeal...... 233,501,239 223,636,132

ii. Disputed Income Tax liability for which the

Group has preferred an appeal ..... 8,418,723 19,434,355

3. Deferred tax

In view of carry forward of losses under tax laws in the current year, the Group is unable to demonstrate virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax asset can be realised, which is as required under AS 22 'Accounting for taxes on income'. Accordingly, no deferred tax asset has been recognised as at the year-end.

4. Earnings Per Share

The computation of earnings per share is set out below:

5. Related Party Disclosures

A) Entities where control exists None

B) Key Managerial Personnel (KMP)

i. P. Srinivasu - Executive Director

ii. D.V.S.S.Lakshminarayana - Whole time Director

C) Enterprises where principal shareholders/management personnel have control or significant influence (Significant interest entities)(SIE)

i. Green Fire Agri Commodities Limited, India (formerly Northgate Technologies Limited)

Particulars of related party transactions

6. Segment information

The Company is in the business of providing Advertisement services. The Company does not make any distinction amongst the services rendered accordingly there is only one business segment. The information on geographical segments is given below:

7. Operating Lease

The Group leases offices, residential facilities and vehicles under operating lease agreements that are renewable on a periodic basis at the option of both the lessor and the lessee. Rental expense under those leases was Rs 6,167,937 (previous year Rs 6,942,849).

8. Auditors' remuneration (included in professional fees, excluding service tax):

9. Employee benefits - Gratuity

The following table sets set out the status of the gratuity plan as required under Accounting standard (AS) 15 "Employee Benefits” prescribed by Companies (Accounting Standards) Rules, 2006, ('the Rules'):

Discount rate: The discount rate is based on the gross redemption yield on medium to long term risk free investments.

Salary escalation: The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors such as supply and demand factors in the employment market.

Attrition rate: The attrition rate is the expected employee turnover for the future periods, adjusted to the current economic environment.

10. During the current year, Social Media India Limited (SMIL), a step-down subsidiary of the Company, received an order from the Assistant Commissioner of Income Tax consequent to the order of Commissioner of Income Tax (A) IV, Hyderabad passed under Section 154 of Income Tax Act, 1961 towards adjustment of deposits given, certain Transfer Pricing adjustment and cost of acquisition in computation of capital gains demanding an amount (tax demanded along with interest) of Rs 16,788,429 for financial year 2008-09.

SMIL has preferred an appeal against the said orders with the Income Tax Appellant Tribunal, Hyderabad for the financial year 2008-09. The Income Tax Appellant Tribunal, Hyderabad has been pronounced its order in favour of the company on majority issues and directed some issues for fresh examination by the Assessing Officer.

11. Disclosure under Section 22 of the Micro, Small and Medium enterprises Development Act, 2006 (MSMED)

Based on the information available with the Company, no creditors have been identified as "supplier” within the meaning of "Micro, Small and Medium Enterprises Development (MSMED) Act, 2006”.

12. Previous year figures

Previous year figures have been regrouped / reclassified wherever necessary, to correspond with the current year classification/ disclosure.


Mar 31, 2014

1. Share capital

i. Rights, preferences and restrictions attached to equity shares:

The Company has only one class of equity shares having par value of Rs. 10 each. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing 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 equity shareholders.

2. Contingent liabilities:

Contingent liabilities Nil Nil

3. Deferred tax

In view of carry forward of losses under tax laws in the current year, the Company is unable to demonstrate virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax asset can be realised, which is as required under AS 22 'Accounting for taxes on income'. Accordingly, no deferred tax asset has been recognised as at the year-end.

4. Leases

The Company leases office facilities under cancellable and non-cancellable operating lease agreements. The Company intends to renew such leases in the normal course of its business. Total rental expense under cancellable operating leases was Rs. 2,959,671 (Previous year: Rs. 2,284,128) and under non-cancellable portion was Rs. Nil (Previous year: Rs. Nil), which has been disclosed as lease rent.

5. Segment information

The Company is primarily engaged in providing Information Technology Enabled Services to its step down subsidiary, Globe7 Pte Limited, Singapore which constitute one business segment and online advertising services as another business segment. Primary reportable segment information based on business segment is given below and secondary reportable segment information based on geographic segment is also given. Hence, the requirement for separate disclosure as required under AS 17 - 'Segment Reporting' is not applicable.

6. Related parties

A) Entities which exercises control over the Company

None

B) Entities over which the Company exercises control Subsidiaries

i. Northgate Investments Pte Limited

ii. Adgog UK Limited ( formerly Globe7 UK Limited )

Step-down subsidiaries

i. Globe7 Pte Limited

ii. Social Media India Limited

iii. Globe7 HK Limited

C) Key Managerial Personnel

i. Venkata S. Meenavalli - Director

ii. P. Srinivasu - Executive Director

7. Employee benefits - Gratuity

The following table sets set out the status of the gratuity plan as required under Accounting standard (AS) 15 "Employee Benefits" prescribed by Companies (Accounting Standards) Rules, 2006, ('the Rules'):

Discount rate: The discount rate is based on the gross redemption yield on medium to long term risk free investments.

Salary escalation: The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors such as supply and demand factors in the employment market.

Attrition rate: The attrition rate is the expected employee turnover for the future periods, adjusted to the current economic environment.

8. Amounts payable to micro, small and medium enterprises

Based on the information available with the Company, no creditors have been identified as "supplier" within the meaning of "Micro, Small and Medium Enterprises Development (MSMED) Act, 2006".

9. Transfer pricing

The Company has established a comprehensive system of maintenance of information and documents as required by the transfer pricing legislation under sections 92-92F of the Income-tax Act Since the law required existence of such information and documentation to be contemporaneous in nature, the Company is in the process of updating the documentation for the international transactions entered into with the associated enterprise during the financial year and expects such records to be in existence latest by 30 November 2014, as required by law. The Management is of the opinion that its international transactions are at arm's length so that the aforesaid legislation will not have any impact on the financial statements, particularly on the amount of tax expenses and that of provision for taxation.

10. Previous year figures

Previous year figures have been regrouped / reclassified wherever necessary, to confirm to current year classification.


Mar 31, 2013

Background and overview

Northgate Com Tech Limited ("the Company") was incorporated as Northgate Com Tech Private Limited on 28 May 2010. The name of the Company was subsequently changed to Northgate Com Tech Limited on 15 June 2011, which is primarily engaged in providing web development, web maintenance and support services to its step down subsidiary, Globe7 Pte Limited, Singapore and online advertising services.

Entity Country of incorporation Subsidiaries

Northgate Investments Pte Limited A company organized under the laws of Singapore

Globe7 UK Limited A company organized under the laws of United Kingdom

Step-down subsidiaries

Globe7 Pte Limited A company organized under the laws of Singapore

Social Media India Limited A company organized under the laws of India

Globe7 HK Limited * A company organized under the laws of Hong Kong

* Filed petition for winding up on 21 March 2012.

i. Rights, preferences and restrictions attached to equity shares:

The Company has only one class of equity shares having par value of Rs.10 each. Each shareholder is eligible for one vote per share held. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing 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 equity shareholders.

 
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