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Notes to Accounts of SQS India BFSI Ltd.

Mar 31, 2015

A Terms/rights attached to equity shares

The company has only one class of equity shares having a par value of Rs.10 per share. Each holder of equity share is entitled to one vote per share. The company declares and pays dividend in Indian rupees. The dividend proposed by Board of Directors is subject to approval of the shareholders in the ensuing Annual General Meeting.

B Aggregate number of bonus shares issued, shares issued for consideration other than cash and shares bought back during the period of five years immediately preceding the reporting date - Nil

As per records of the company, including its register of shareholders/members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownership of shares.

C Shares reserved for issue under options

For details of shares reserved for issue under the employee stock option (ESOP) plan of the company, please refer Note 25.

D For the year 2014-15, the Board of Directors have recommended final dividend of Rs. 20 per share (in addition to interim dividend of Rs 4 per share already distributed),which is subject to the approval of the share holders. During the previous year 2013-14, the company had declared final divided of Rs.4 per share (in addition to interim dividend of Rs.5 per share).

E Share application money of Rs.1,777,850 (Share capital of Rs.155,000 and share premium of Rs.1,622,850) represents funds received from employee in March 2015 towards options exercised (15,500 shares to be alloted) during the period. Pending board approval and statutory filings, funds received during the period has been disclosed as share application money pending allotment.

The company also has a cash credit facility with bank which is secured by hypothecation of certain fixed assets and book debts of the company both present and future. There is no outstanding amount due on this account, as at the end of the year. The interest rate on Term Loan ranges from 12.00% to 13.75% during the year and repayment term is about 6.5 Years

The company provides share based payment schemes to its employees. During the year ended March 31, 2015 an employee stock option plan (ESOP) was in existence. The relevant details of the scheme and the grant are as below.

On April 29, 2011 the Board of Directors approved the equity settled ESOP scheme 2011 (Scheme 2011) for issue of stock options to the key employees and directors of the company setting aside 10,05,100 options under this scheme. According to the scheme 2011, the employees selected by the remuneration committee from time to time will be entitled to options, subject to satisfaction of the prescribed vesting conditions, viz., continuing employment of 3 years. The contractual life (comprising vesting period and exercise period) of options granted is 8 years. The other relevant terms of the grant are as below:

The weighted average remaining contractual life for the stock options outstanding as at March 31,2015 is 4.95 Years (March 31,2014: 5.46 Years). The range of exercise price for options outstanding at the end of the year is Rs.38.05 to Rs.114.70 (March 31,2014 Rs.38.05 to Rs.114.70)

The weighted average fair value of stock options granted during the year - No Options has been granted during the year (March 31, 2014: NIL). The black scholes valuation model has been used for computing weighted average fair value considering the following inputs:

The expected life of the stock is based on historical data and current expectations and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility over a period similar to the life of options is indicative of future trends, which may also not necessarily be the actual outcome.

Note 2: Operating lease: Company as lessee

The company has entered into commercial leases on certain buildings. These leases have an average life of between three and five years with no renewal option included in the contracts. There are no restrictions placed upon the company by entering into these leases.

Future minimum rentals payable under non-cancellable operating lease are as follows:

March 31,2015 March 31, 2014

Particulars Rs. Rs.

Estimated amount of contracts remaining to be executed on capital account and not Nil 626,186 provided for (Net of advance)

Service tax related matters 7,218,676 7,218,676

Income tax related matters 57,202,781 57,202,781

Counter guarantees issued to the bank for the bank guarantee obtained 10,645,670 31,800,731

The Service Tax Authorities had made a demand for Rs.3,609,338 along with interest and penalty for an equivalent amount, towards tax leviable for certain services rendered by the Company during the period July 2003 to Dec 2005. Management contends that the Company has sufficient grounds to defend its position and is filing an appeal before Customs, Excise and Service tax appellate Tribunal, furnishing the necessary explanations / responses to support its position. Consequently, no provision has been made for the same in these financial statements.

Contingent liabilities include demand from the Indian tax authorities for payment of additional tax of Rs.57,202,781 for the fiscal year 2006-07 & 2008-09. The tax demand is mainly on account of disallowance of a portion of the deduction claimed by the company under Section 10A of the Income tax Act. The matter for fiscal 2006-07 & 2008-09 is pending before CIT (Appeals). Management believes that its position will likely be upheld in the CIT (Appeals) process.

Company has received a show cause notice from SEBI in March 2015 for certain delay in filing of information in 2010. Company is seeking condonation for the delay and does not expect any significant financial impact there from.

Note 29: Disclosure as per Accounting Standard - 18 on ‘Related Party Disclosures'' a Related Parties

i) Holding Company

SQS Software Quality Systems AG, Germany

ii) Subsidiaries

SQS BFSI Pte.Ltd., Singapore SQS BFSI Inc, USA

Thinksoft Global Services (Europe) GmbH, Germany SQS BFSI UK Ltd., UK SQS BFSI FZE., UAE

iii) Key Management Personnel (KMP)

For Financial Year 2014-15

Dr. Martin Muller - Managing Director

For Financial Year 2013-14

Mr. A V Asvini Kumar - Managing Director *

Ms.Vanaja Arvind - Executive Director *

Mr.Mohan Parvatikar - Whole time Director **

iv) Relatives of Key Management Personnel ( Relatives of KMP) For Financial Year 2014-15

None

For Financial Year 2013-14

Ms. Aarti Arvind Ms. A K Latha Mr. A K Krishn

Mr. Chalapathi Rao Peddineni Mr. C V Rajan

v) Fellow Subsidiaries

SQS India Infosystems Private Limited, India SQS Egypt S.A.E, Egypt

SQS Software Quality Systems Ges.mbH, Austria SQS Group Limited, UK

SQS software Quality Systems (Ireland) Limited, Ireland

SQS Software Quality Systems (Schweiz) AG, Zurich, Switzerland

SQS USA Inc., USA

Note 3: Dues to Micro,Small and Medium enterprises

On the basis of the information and records available with the management, there are no outstanding dues to the Micro and Small enterprises.

Note 4: Previous year figures

Previous year figures have been regrouped / reclassified so as to conform to the current year''s groupings.


Mar 31, 2014

I Background:

Thinksoft Global Services Limited ("Thinksoft" or "the Company"), incorporated on June 8, 1998 as a private limited company was converted into a public limited company with effect from 19th August 2008.The Company made its Initial Public Offering (IPO) of its Equity Shares on September 24, 2009 (issue open date) and shares under IPO were allotted on October 14, 2009.The Company''s shares are listed in National Stock Exchange and Bombay Stock Exchange with effect from October 26, 2009.

The Company is an India based software service provider primarily delivering software validation and verification services to the banking and financial services industry worldwide. The Company has invested in five wholly owned subsidiaries in Singapore, USA, Germany, UK and UAE for market development and service delivery in the respective regions.

In terms of the Share Purchase Agreement dated November 8, 2013 (the "SPA") executed amongst SQS Software Quality Systems AG and Mr. A. V. Asvini Kumar, Ms. Vanaja Arvind, Mr. Mohan Parvatikar, Ms. A.K. Latha, Mr. A.K. Krishna, Ms. Aarti Arvind and Mr. Rajan C.V. (the "Sellers"), the Sellers had sold 2,644,612 equity shares (the "Acquisition Shares") of the Company constituting 25.76% of the paid up equity share capital of the Company to SQS Software Quality Systems AG at a per share price of Rs. 260/- (the "Acquisition").

In February 2014, SQS Software Quality Systems AG, launched a tender offer for equity shares of the Company constituting at least 26% of the paid up equity share capital of the Company, held by the public shareholders of the Company in accordance with the terms of the SEBI (SAST) Regulations (the "Open Offer"). The aggregate shareholding of SQS after the completion of the Open Offer and the Acquisition was less than 51% of the paid equity Share Capital of the Company. In accordance with the SPA, the Sellers (other than Mr. Rajan C.V.) have sold their balance equity shares in the Company to make up for the shortfall, resulting in SQS acquiring a 53.35% controlling interest in the company by April 2014.

The Company has become a subsidiary Company of SQS Software Quality Systems AG

ii Basis of preparation of financial statements:

The financial statements of the company have been prepared and presented under historical cost convention on the accrual basis of accounting as a going concern and materially comply with the Companies (Accounting Standards) Rules, 2006 issued by the Central Government and the relevant provisions of the Companies Act to the extent applicable. The accounting policies applied by the Company are consistent with those used in the previous year.

iii The Financial Statements include figures pertaining to Head office and Branches/Places of Business located at Madras Export Processing Zone - Chennai, United Kingdom, Australia, Belgium, Hong Kong, Cyprus and Malaysia.

The management has decided to wind up the operations of German Subsidiary and also the place of business in Cyprus. The management expects to realize at least the book values for the net assets carried in respect of these businesses.

Note 1: Disclosure as per Accounting Standard - 18 on ''Related Party Disclosures''

a Related Parties

i) Holding Company

SQS Software Quality Systems AG

ii) Subsidiaries

Thinksoft Global Services Pte Ltd, Singapore

Thinksoft Global Services Inc, USA

Thinksoft Global Services (Europe) GmbH, Germany

Thinksoft Global Services UK Ltd, UK

Thinksoft Global Services FZE, UAE

iii) Key Management Personnel (KMP)

Mr. A V Asvini Kumar - Managing Director *

Ms.Vanaja Arvind - Executive Director *

Mr.Mohan Parvatikar - Whole time Director **

iv) Relatives of Key Management Personnel ( Relatives of KMP)

Ms. Aarti Arvind

Ms. A K Latha

Mr. A K Krishna

Mr. Chalapathi Rao Peddineni

Mr. C V Rajan

Note 2: Previous year figures

Previous year figures have been regrouped / reclassified so as to conform to the current year''s groupings.


Mar 31, 2013

Note 1

i. Background :

Thinksoft Global Services Limited ("Thinksoft" or "the Company"), incorporated on June 8, 1998 as a private limited company was converted into a public limited company with effect from 19th August 2008.The Company made its Initial Public Offering (IPO) of its Equity Shares on 24th September 2009 (issue open date) and shares under IPO were allotted on 14th October 2009.The Company''s shares are listed in National Stock Exchange and Bombay Stock Exchange with effect from 26th October 2009.

The Company is an India based software service provider primarily delivering software validation and verification services to the banking and financial services industry worldwide. The Company has invested in five wholly owned subsidiaries in Singapore, USA, Germany, UK and UAE for market development and service delivery in the respective regions.

ii. Basis of preparation of financial statements:

The financial statements of the company have been prepared and presented under historical cost convention on the accrual basis of accounting as a going concern and materially comply with the Companies (Accounting Standards) Rules, 2006 issued by the Central Government and the relevant provisions of the Companies Act, 1956, to the extent applicable. The accounting policies applied by the Company are consistent with those used in the previous year.

iii. The Financial Statements include figures pertaining to Head office and Branches/Places of Business located at Madras Export Processing Zone - Chennai, United Kingdom, Australia, Belgium, Hong Kong, Cyprus and Malaysia.

Note 2: Disclosure as per Accounting Standard - 18 on ''Related Party Disclosures'' a. Related Parties

i. Subsidiaries

Thinksoft Global Services Pte Ltd, Singapore

Thinksoft Global Services Inc, USA

Thinksoft Global Services (Europe) GmbH, Germany

Thinksoft Global Services UK Ltd, UK

Thinksoft Global Services FZE, UAE

ii. Key Management Personnel (KMP)

Mr. A V Asvini Kumar - Managing Director Ms. Vanaja Arvind - Executive Director

Mr. Mohan Parvatikar - Whole time Director

iii. Relatives of Key Management Personnel ( Relatives of KMP)

Ms. Aarti Arvind

Ms. A K Latha

Mr. A K Krishna

Mr. Chalapathi Rao Peddineni

Mr. C V Rajan

Ms. Lalitha Devi

Note 3: Previous year figures

Previous year figures have been regrouped / reclassified so as to conform to the current year''s groupings.


Mar 31, 2012

I. Background

Thinksoft Global Services Limited ("Thinksoft" or "the Company") was incorporated on June 8, 1998 under the Companies Act, 1956 as a private limited company. The Company has been converted into a public limited company with effect from 19th August 2008. The Company had made an Initial Public Offering (IPO) on 24th September 2009 (issue open date) as approved by the members in the Extra Ordinary General Meeting held on 17th September 2008. The Shares under IPO were allotted on 14th October 2009 and the Company shares have been listed in National Stock exchange and Bombay Stock exchange on 26th October 2009.

The Company is an India based software service provider primarily delivering software validation and verification services to the banking and financial services industry worldwide. The Company has invested in five wholly owned subsidaries in Singapore, USA, Germany, UK and UAE for market development in the respective regions.

The Company has a cash credit facility with Lakshmi Vilas Bank, Chennai, which is secured by hypothecation of fixed assets, book debts of the Company both present and future and also by personal guarantee of two Directors of the Company.

ii. Basis of preparation of financial statements

The financial statements of the company have been prepared and presented under historical cost convention on the accrual basis of accounting as a going concern and materially comply with the Companies (Accounting Standards) Rules, 2006 issued by the Central Government, in consultation with National Advisory Committee on Accounting Standards and the relevant provisions of the Companies Act, 1956, to the extent applicable. The accounting policies applied by the Company are consistent with those used in the previous year.

iii. This Balance Sheet and Profit & Loss account include figures pertaining to Head office and Branches/Places of Business located at Madras Export Processing Zone, Chennai, United Kingdom, Australia, Belgium, Hong Kong, Velankani Technology Park, Bengaluru, India,Cyprus and Malaysia.

Note : 1 Employee stock option plans

The company provides share based payment schemes to its employees. During the year ended March 31, 2012 an employee stock option plan (ESOP) was in existence. The relevant details of the scheme and the grant are as below.

The weighted average remaining contractual life for the stock options outstanding as at March 31, 2012 is 3.96 years (March 31, 2011: Not applicable since no option outstanding). The range of exercise price for options outstanding at the end of the year was Rs.38.05 (March 31, 2011 Not applicabble since no option outstanding)

The expected life of the stock is based on historical data and current expectations and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the histiorical volatility over a period similar to the life of options is indicative of future trends, which may also not necessarily be the actual outcome.

Note : 2 Operating lease: Company as lessee

The company has entered into commercial leases on certain buildings. These leases have an average life of between three and five years with no renewal option included in the contracts. There are no restrictions placed upon the company by entering into these leases.

The Service Tax Authorities had made a demand for Rs 3,609,338 along with interest and penalty for an equivalent amount, towards tax leviable for certain services rendered by the Company during the period July 2003 to Dec 2005. Management contends that the Company has sufficient grounds to defend its position and is filing an appeal before Customs, Excise and Service tax appellate Tribunal, furnishing the necessary explanations / responses to support its position. Consequently, no provision has been made for the same in these financial statements.

Contingent liabilities include demand from the Indian tax authorities for payment of additional tax of Rs.51,238,609/= for the fiscal year 2005-06 & 2008-09. The tax demand is mainly on account of disallowance of a portion of the deduction claimed by the company under Section 10A of the Income tax Act. The matter for fiscal 2005-06 & 2008-09 is pending before CIT (Appeals). Management believes that its position will likely be upheld in the CIT (Appeals) process.

Company has however made provision amouting Rs.23,100,000 in the books of account during the year in respect of other financial years considering the issues under dispute.

Note : 3 Disclosure as per Accounting Standard - 18 on 'Related Party Disclosures'

a. Subsidiaries

Thinksoft Global Services Pte Ltd, Singapore

Thinksoft Global Services Inc, USA

Thinksoft Global Services (Europe) GmbH, Germany

Thinksoft Global Services FZE, UAE

Thinksoft Global Services UK Ltd, UK

b. Related Parties

i. Key Management Personnel (KMP)

Mr. A V Asvini Kumar - Managing Director

Ms. Vanaja Arvind - Executive Director

Mr. Mohan Parvatikar - Wholetime Director

ii. Relatives of Key Management Personnel (Relatives of KMP):

Ms. Aarti Arvind

Ms. A K Latha

Mr. A K Krishna

Ms. Lalitha Devi

Mr. Chalapathi Rao Peddineni

Mr. C V Rajan

Other transactions

During the year ended 31 March 2012, the company had proposed final dividend of Rs. 3 per share, which is yet to be approved by the share holders in the ensuing Annual General Meeting.

Note 4 Previous year figures

Till the year ended March 31, 2011, the company was using pre-revised Schedule VI to the Companies Act, 1956, for preparation and presentation of financial statements. During the year ended March 31, 2012, the revised schedule VI notified under the Companies Act 1956, has become applicable to the company. The company has reclassified previous year figures to confirm to this year's classification. The adoption of revised Schedule VI does not impact recognition and measurement principles followed for preparation of financial statements. However it significantly impacts presentation and disclosure made in the financial statements, particularly presentation of Balance sheet.

 
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