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Notes to Accounts of Zensar Technologies Ltd.

Mar 31, 2017

(i) Capital work-in progress:

Capital work-in progress mainly comprises improvements to leasehold premises.

(ii) Contractual obligations:

Refer note 30 (a) for disclosure of contractual commitments for the acquisition of property, plant and equipment.

(iii) Leased assets

Data Processing Equipments leased assets represents assets where the Company is a lessee under finance lease.

The Lease term in respect of assets acquired under finance leases generally expire with in four years. Under the term of leases, the company has the option to acquire the leased assets for 15% of their agreed value on expiry of leases.

(i) Impairment tests for good will- Refernote33

(ii) Research and development expenditure - Aggregate amount of research and development expenditure recognized as an expense during the year is Rs. 98.95 lakhs (March 31,2016: Nil).

(iii) Intangible assets under development - These include development of internally generated software to effectively manage IT operations.

(i) No amounts are receivable from directors or other officers of the company either severally or jointly with any other person.

(ii) Amounts receivable from firms or private companies in which any director is a partner, a director or a member Rs.26.26 lakhs (March 31,2016 - Rs.25.75 lakhs) (refer note 28)

Deferred income tax liabilities have not been recognized on temporary differences associated with investments in subsidiaries as it is probable that the temporary differences will not reverse in the forseeable future.

In assessing the realizability of deferred income tax assets, management considers whether some portion or all of the deferred income tax assets will not be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which the temporary differences become deductible. Management considers the scheduled reversals of deferred income tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based on the level of historical taxable income and projections for future taxable income over the periods in which the deferred income tax assets are deductible, management believes that the company will realize the benefits of those deductible differences. The amount of the deferred income tax assets considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carry forward period are reduced.

(ii) 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 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, except in case of Interim Dividend.

In the event of liquidation of the Company, the holder of equity shares will be entitled to receive any of the 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.

The board of directors in their meeting on January 24, 2017 declared an interim dividend of Rs. 5.00 per equity share. The total dividend appropriation for the year ended March 31,2017 amounted to Rs. 2,610.27 lakhs including corporate dividend tax of Rs. 368.73 lakhs.

*On October 9, 2015, Marina Holdco (FPI) Ltd acquired 1,03,01,294 equity shares of the Company from Electra Partners Mauritius Limited.

(iv) Aggregate number of bonus shares issued for consideration other than cash and shares bought back during the period of five years immediately preceeding March 31,2017 - Nil

(v) For details of shares reserved for Issue under the Employee Stock Option Plans (ESOP) of the Company, refer note 31.

1 Nature and purpose of each reserve within equity:

(i) Capital redemption reserve:

The reserve has been created out of general reserve, being the nominal value of shares bought back. The reserve is utilized in accordance with the provisions of the Companies Act, 2013.

(ii) Share based payment reserve:

The share options outstanding account is used to record the value of equity-settled share based payment transactions with employees. The amounts recorded in share options outstanding account are transferred to share capital and share premium upon exercise of stock options by employees.

(iii) Retained earnings:

Retained earnings comprises of the Company’s undistributed earnings after taxes.

(iv) Securities premium reserve:

Securities premium reserve is used to record premium on issue of shares. The reserve is utilized in accordance with the provisions of the Companies Act, 2013.

(v) Cash flow hedging reserve:

The Company uses hedging instruments as part of its management of foreign currency risk associated with its highly probable forecast sales. For hedging foreign currency risk the Company uses forward contracts which are designated as cash flow hedges. To the extent this hedge is effective, the change in fair value of the hedging instrument is recognized in the cash flow hedging reserve. Amounts recognized in the hedging reserve are reclassified to profit and loss when the hedged item affects profit and loss.

(vi) Foreign currency translation reserve:

Exchange differences arising on translation of the foreign operations are recognized in other comprehensive income as described in accounting policy and accumulated in a separate reserve within equity. The cumulative amount is reclassified to profit and loss when the net investment is disposed of.

(vii) Special economic zone re-investment reserve:

The Special Economic Zone Re-investment Reserve has been created out of profit of eligible SEZ units in terms of provision of Section 10 AA(1)(ii) of the Income Tax Act,1961. The reserve can only be utilized by the Company for acquiring new plant and machinery for the purpose of its business in terms of the section 10AA(2) of the Income Tax Act, 1961.

Non Current borrowings

Nature of security: Hypothecation of assets underlying the leases.

Current borrowings

Nature of security: Against hypothecation of assets at Kharadi campus

* The Company has compiled this information based on the current information in its possession. As at 31st March 2017, no supplier has intimated the Company about its status as a Micro or Small Enterprise or its registration with the appropriate authority under the Micro, Small and Medium Enterprises Development Act, 2006.

(i) Information about individual provisions Disputed statutory matters:

(a) Provision for disputed statutory liabilities comprises matters under litigation with Sales-Tax and Customs & Service Tax authorities.

(b) The amount of provisions made by the Company is based on the estimates made by the Management considering the facts and circumstances of each case. To the extent the Company is confident that it has a strong case, that portion is disclosed under contingent liabilities.

(c) The timing and the amount of cash flows that will arise from these matters will be determined by the Appellate Authorities only on settlement of these cases.

For other matters:

It mainly include provisions for rent related litigations with previous landlords. The timing and the amount of cash flows that will arise from these matters will be determined by the Appellate Authorities only on settlement of these cases.

(i) Defined benefit plans:

a Gratuity - The company provides for gratuity for employees in accordance with the gratuity scheme of the Company. All employees in continuous service for a period of 5 years are eligible for gratuity. The Gratuity plan provides for a lump sum payment to eligible employees, at retirement, death, incapacitation or termination of employment based on the last drawn basic salary per month computed proportionately for 15 days salary multiplied for the number of years of service. The gratuity fund is managed by the Life Insurance Corporation of India (LIC).

The net liability disclosed above relates to funded plans. The company has no legal obligation to settle the deficit in the funded plans with an immediate contribution or additional on off contribution. The Company intends to contribute in line with the recommendations of the fund administrator and the actuary.

ac As at April 1, 2015, March 31, 2016 and March 31, 2017, plan assets were fully invested in insurer managed funds.

ad Through its defined benefit plans, the group is exposed to number of risks, the most significant of which are detailed below:

Asset Volatility: The Plan liabilities are calculated using a discount rate set with reference to bond yields. If plan assets underperform, this yield will create a deficit. The plan asset investments are in fixed income securities with high grades. These are subject to interest rate risk.

Changes in bond yield: A decrease in bond yields will increase plan liabilities, although this will be partially offset by an increase in the value of the plans'' bond holdings.

The group ensures that the investment positions are managed within an asset-liability matching (ALM) framework that has been developed to achieve long-term investments that are in line with the obligations under the employee benefit plans. Within the framework, the group''s ALM objective is to match assets to the pension obligations by investing in long-term fixed interest securities with maturities that match the benefit payments as they fall due and in the appropriate currency.

The group actively monitors how the duration and the expected yield of the investments are matching the expected cash outflows arising from the employee benefit obligations. The group has not changed the process used to manage its risks from previous periods,

ae The Company expects to contribute Rs. 1,936.42 lakhs to the defined benefit plan during the next annual reporting period.

The expected benefits are based on the same assumptions used to measure the Company’s benefit obligations as of March 31st,2017.

b Provident fund : The company makes contribution towards provident fund which is administered by the trustees. The contributions to the trust managed by the Company is accounted for as a defined benefit plan as the Company is liable for any shortfall in the fund assets based on the government specified minimum rates of return as provided under Para 60 of the Employees Provident Fund Scheme, 1972. Company has obtained an actuarial valuation of the liability according to which there is no deficiency as at the Balance Sheet. The liability therefore is restricted to monthly contributions. The details of fund and plan assets are given below:

be As at March 31, 2017, March 31,2016 and April 1, 2015, the plan assets have been primarily invested in securities of Central Government of India, State Government and Bonds.

* Discount rate is based on the prevailing market yields of Indian Government securities as at the balance sheet date for the estimated term of the obligations.

** The overall expected rate of return on assets is based on the expectation of the average long term rate of return expected on investments of the Fund during the estimated term of the obligations.

*** The estimates of future salary increases considered in actuarial valuation takes into account inflation, seniority, promotion and other relevant factors, such as demand and supply in the employment market.

The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated.

(ii) Defined contribution plans:

The Company has recognized the following amounts in the Statement of Profit and Loss:

2 Income tax expense

This note provides an analysis of Company''s income tax expense, shows amounts that are recognized directly in equity and how the tax expense is affected by non- assessable and non-deductible items. It also explains significant estimates made in relation to Company''s tax positions

- The company has benefited from certain tax incentives that the Government of India has provided to the export of software for the units registered under the Special Economic Zones Act 2005 (SEZ). SEZ units which began the provision of services on or after April 1, 2005 are eligible for a deduction of 100 percent of profits or gains derived from the export of services for the first five years from the financial year in which the unit commencement the provision of services and 50 percent of such profits or gains for further five years. Up to 50% of such profits or gains is also available for a further five year subject to certain of a Special Economic Zone Re-investment Reserve out of the profit of the eligible SEZ units and utilization of such reserve for acquiring new plant and machinery for the purpose of its business as per the provisions of the Income Tax Act, 1961.

Deferred tax asset was not recognized due to absence of reasonable certainty of taxable capital profits to utilize this deferred tax asset. The losses can be carried forward for a period of 8 years as per local tax regulations.

(v) Changes in tax rate - The applicable Indian statutory tax rate for the financial year 2016-17 and financial year 2015-16 is 34.61%

(i) Fair value hierarchy:

This section explains the judgments and estimates made in determining the fair values of the financial instruments that are

(a) recognized and measured at fair value, and

(b) measured at amortized cost and for which fair values are disclosed in the financial statements.

To provide an indication about the reliability of the inputs used in determining fair value, the company has classified its financial instruments into three levels prescribed under the accounting standard. An explanation of each level follows underneath the table.

Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes listed equity instruments and mutual funds that have quoted price. The fair value of all equity instruments (including bonds) which are traded in the stock exchange is valued using the closing price as at the reporting period.

Level 2: Fair value of financial instruments that are not traded in an active market (for example, traded bonds, over the counter derivatives) is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument as observable, the instrument is included in level 2.

Level 3: If one or more of the significant inputs is not based on observable data, the instrument is included in level 3. This is the case for unlisted equity securities, contingent consideration and indemnification assets.

(ii) Valuation technique used to determine fair value

The following methods and assumptions were used to estimate the fair value of the level 2 financial instruments included in the above tables:

Derivative instruments: The Company enters into foreign currency forward contracts with banks with investment grade credit ratings. These are valued using the forward pricing valuation technique, using present value calculations. The models incorporate various inputs including the credit quality of counterparties and foreign exchange spot and forward rates. As at March 31, 2017, the changes in counterparty credit risk had no material effect on the hedge effectiveness assessment for derivatives designated in hedge relationships.

(iii) As per Ind AS 107 "Financial lnstrument: Disclosure", fair value disclosures are not required when the carrying amounts reasonably approximate the fair value. Accordingly fair value disclosures have not been made for the following financial instruments:-

1. Trade receivables

2. Cash and cash equivalent

3. Other bank balances

4. Security deposits

5. Unbilled revenue

6. Receivable from subsidiaries for reimbursement of expenses

7. Interest accrued on deposits

8. Borrowings

9. Trade payables

10. Capital creditors

11. Unpaid dividends

12. Employee dues

13. Directors'' commission

14. Payable to related parties

15. Book overdrafts

16. Other payables

3 Financial risk management

The Company''s activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Company''s primary focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance. The primary market risk to the Company is foreign exchange risk. The Company uses derivative financial instruments - foreign currency forward contracts to mitigate foreign exchange related risk exposures. The Company''s exposure to credit risk, excluding receivables from related parties, is influenced mainly by the individual characteristic of each customer and the concentration of risk from the top few customers. The demographics of the customer including the default risk of the industry and country in which the customer operates also has an influence on credit risk assessment.

(a) Market Risk

(i) Foreign currency risk

The Company operates internationally and a major portion of the business is transacted in several currencies and consequently the Company is exposed to foreign exchange risk through its sales and services in the United States, South Africa, United Kingdom and elsewhere, and purchases from overseas suppliers in various foreign currencies. The exchange rate between the rupee and foreign currencies has changed substantially in recent years and may fluctuate substantially in the future. Consequently, the results of the Company’s operations are affected positively/adversely as the rupee appreciates/ depreciates against these currencies. The Company evaluates exchange rate exposure arising from these transactions and enters into foreign exchange forward contracts to mitigate the risk of changes in exchange rates on foreign currency exposures. The Company follows established risk management policies, to hedge forecasted cash flows denominated in foreign currency. The Company has designated certain derivative instruments as cash flow hedges to mitigate the foreign exchange exposure of forecasted highly probable cash flows.

ad Sensitivity

"For the year ended March 31,2017 and March 31,2016, every percentage point appreciation/depreciation in the exchange rate, it may affect the Company''s incremental operating margins respectively.

- INR/USD by approximately 0.48% and 0.47%,

- INR/ZAR by approximately 0.06% and 0.03%,

- INR/GBP by approximately 0.07% and 0.08%

Sensitivity analysis is computed based on the changes in the income and expenses in foreign currency upon conversion into reporting currency, due to every percentage point appreciation/depreciation in the exchange rates.

ae Derivative financial instruments

The Company holds derivative financial instruments such as foreign exchange forward contracts to mitigate the risk of changes in exchange rates on foreign currency exposures. The counterparty for these contracts is generally a bank. These derivative financial instruments are valued based on quoted prices for similar assets and liabilities in active markets or inputs that are directly or indirectly observable in the marketplace.

The foreign exchange forward contracts mature within twelve months. The table below analyzes the derivative financial instruments into relevant maturity groupings based on the remaining period as of the balance sheet date:

During the year ended March 31, 2017, the Company has designated certain foreign exchange forward contracts as cash flow hedges to mitigate the risk of foreign exchange exposure on highly probable forecast sale transactions. The related hedge transactions for balance in cash flow hedging reserve are expected to occur and reclassified to the statement of profit or loss within 3 months.

Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness assessments to ensure that an economic relationship exists between the hedged item and hedging instrument, including whether the hedging instrument is expected to offset changes in cash flows of hedged items.

If the hedge ratio for risk management purposes is no longer optimal but the risk management objective remains unchanged and the hedge continues to qualify for hedge accounting, the hedge relationship will be rebalanced by adjusting either the volume of the hedging instrument or the volume of the hedged item so that the hedge ratio aligns with the ratio used for risk management purposes. Any hedge ineffectiveness is calculated and accounted for in profit or loss at the time of the hedge relationship rebalancing.

(b) Credit risk

Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss. The maximum exposure to the credit risk at the reporting date is primarily from trade receivables amounting to Rs.59,631.25 lakhs and Rs. 52,522.29 lakhs as of March 31,2017 and March 31,2016, respectively and unbilled revenue amounting to Rs. 17,481.06 lakhs and Rs. 16,879.51 lakhs as of March 31,2017 and March 31,2016, respectively. Trade receivables and unbilled revenue are typically unsecured and are derived from revenue earned from customers located in the United States, South Africa, United Kingdom and elsewhere. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. On account of adoption of IND AS 109, the Company uses expected credit loss model to assess impairment loss or gain. The company uses a matrix to compute the expected credit loss allowance for trade receivables and unbilled revenue. The provision matrix takes into account available external and internal credit risk factors and company''s historical experience for customers.

bb The allowance for life time expected credit loss on customer balances for the year ended March 31,2017 and March 31,2016 was Rs. 2574.46 lakhs and Rs. 2482.40 lakhs, respectively. The increase of allowance for life time expected credit losses on customer balances for the year ended March 31,2017 was Rs. 142.56 lakhs and Rs. 1020.87 lakhs in March 31,2016.

be Credit risk on cash and cash equivalents is limited as the Company generally invests in deposits with banks and financial institutions with high credit ratings assigned by international and domestic credit rating agencies. Investments primarily include investment in liquid mutual fund units.

(c) Liquidity risk

Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at a reasonable price. The Company’s corporate treasury department is responsible for liquidity and funding as well as settlement management. In addition, processes and policies related to such risks are overseen by senior management. Management monitors the Company’s net liquidity position through rolling forecasts on the basis of expected cash flows. As of March 31, 2017, cash and cash equivalents are held with major banks and financial institutions.

ca The table below provides details regarding the remaining contractual maturities of significant financial liabilities at the reporting date. The amounts include estimated interest payments and exclude the impact of netting agreements, if any.

4 Capital management

(a) Risk management

The Company''s capital comprises equity share capital, share premium, retained earnings and other equity attributable to equity holders.

The Company''s objectives when managing capital are to

- safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders, and

- maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the group may adjust the amount of dividends paid to shareholders, return capital to shareholders or issue new shares.

The Company monitors capital using gearing ratio, which is net debt divided by total capital plus net debt. Net debt comprises of long term and short term borrowings less cash and bank balances. Equity includes equity share capital and reserves that are managed as capital.

As Company''s cash and bank balances are higher than net debt, hence the ratio is not applicable.

No changes were made in the objectives, policies or processes for managing capital of the Company during the current and previous year.

(iv) Entities controlled or jointly controlled by the key management personnel of the company:

None

(v) Post employment benefit plans:

Zensar PF Trust Zensar Gratuity trust Zensar Superannuation Trust

(vi) Entities having Significant influence over the company:

Swallow Associates LLP Marina Holdco (PPI) Ltd

* The provision of Rs. 149.61 lakhs (March 31,2016 : Rs. 154.77 lakhs) has been made against the reimbursement of expenses incurred for ZATL& Shanghai ** The provision of Rs. 1,391.02 lakhs. (March 31,2016: Rs1,417.28 lakhs) has been made against the above loan and interest outstanding.

*** A provision of Rs. 132.53 lakhs (March 31,2016:134.90 lakhs) has been made on Intercompany receivables against the software services rendered.

**** Total remuneration does not include compensation related to stock option plan.

The Company has taken on lease certain facilities and equipment under operating lease arrangements that expire over the next five years. Rental expense incurred by the Company under operating lease agreements totalled approximately Rs. 3,667.41 lakhs (March 31,2016 Rs. 3,312.96 lakhs)

(c) Finance lease: Company as lessee

The Company has finance lease for Data processing equipments. The Company''s obligations under finance leases are secured by the lessor’s title to the leased assets. Future minimum lease payments under finance leases with the present value of the net minimum lease payments are, as follows:

5 Share based payments

(a) Employee Stock Option Plan, 2002 (2002 ESOP) and Employee Stock Option Plan, 2006 (2006 ESOP)

Under the 2002 ESOP and 2006 ESOP schemes, participants are granted options which vest equally over a period of 5 years from the date of grant. Participation in the plan is at the discretion of the Nomination and Remuneration Committee (NRC) and no individual has a contractual right to participate in the plan or to receive any guaranteed benefits.

- The exercise price is determined based on the market price, being the closing price of the share on the stock exchange with higher trading volume on the day preceeding the day of the grant of options. The scheme allows the NRC to set the exercise price at a premium or discount not exceeding 20% on the market price.

- The options remain exercisable for 10 years from the date of vesting and lapse if they remain unexercised during this period.

- Options granted carry no dividend or voting rights. When exercisable, each option is convertible into one equity share.

(b) Employee Performance Award Unit Plan, 2016 (EPAU 2016)

Vesting under EPAU 2016 is dependent upon achievement of certain performance targets over a period of time as stated in the agreement.

The exercise price is Rs. 10 per unit and all vested units need to be exercised no later than two and half months from the end of calendar year in which vesting happens.

(d) Fair value of options granted

The fair value of the options at the grant date is determined using Black Scholes Model which takes into account the exercise price, the term of the option, the share price at grant date, expected price volatility of the underlying share, the expected dividend yield and the risk free rate for the term of the option.

* The scheme allows for a maximum and minimum vesting of 68 % and 40 % on the first vesting date - March 31,2018 and a maximum and minimum cumulative vesting of 170% and 100% at the final vesting date- March 31,2021 depending upon the achievement of specified financial parameters. The expected life considered for valuation is based on management''s estimate of the timing and quantum of achievement of the financial parameters between the two specified vesting dates.

** The expected price volatility is based on the historic volatility (based on remaining life of the options), adjusted for any expected changes to future volatility due to publicly available information.

(e) Expense arising from share-based payment transactions:

Total expenses arising from share-based payment transactions recognized in Statement of Profit and Loss as part of employee benefits expense were Rs. 199.33 lakhs (March 31,2016 Rs. 189.82 lakhs)

6 Impairment

Goodwill is tested for impairment on an annual basis. For the purpose of impairment testing, goodwill acquire is allocated to a Cash Generating Unit (CGU) representing the lowest level within the Company at which goodwill is monitored for internal management purposes, and which is not higher than the Company’s operating segment. As at March 31, 2017, March 31, 2016 and April 1,2015 the goodwill was allocated entirely to the Digital and e-commerce cash generating unit which is part of the Application management services segment.

Please refer to note no. 33 of Consolidated Financial Statements.

7 First time adoption of Ind AS

Transition to Ind AS

These are the Company''s first financial statements prepared in accordance with Ind AS.

The accounting policies set out in Note 2 have been applied in preparing the financial statements for the year ended March 31,2017, the comparative information presented in these financial statements for the year ended March 31,2016 and in the preparation of an opening Ind AS balance sheet at April 1, 2015. In preparing its opening Ind AS balance sheet, the Company has adjusted the amounts reported previously in financial statements prepared in accordance with the accounting standards notified under Companies (Accounting Standards) Rules, 2006 (as amended) and other relevant provisions of the Act (previous GAAP or Indian GAAP). In its transition from previous GAAP to Ind AS, the Company has also availed certain optional exemptions and mandatory exceptions in accordance with Ind AS 101. An explanation of how this transition has affected the company''s financial performance and cash flows is set out in the following tables and notes,

(a) Exemptions from full retrospective application:

aa Business Combinations

Ind AS 101 provides the option to apply Ind AS 103 prospectively from the transition date or from a specific date prior to the transition date. This provides relief from full retrospective application that would require restatement of all business combinations prior to the transition date.

The Company has elected to apply Ind AS 103 retrospectively to business combinations occurring after October 1, 2010. The Company has elected to use the relief from the application of Ind AS 103 to business combinations that have occurred prior to this date and have not restated those business combinations,

ab Share based payment transactions

The Company has elected to apply the exemption available under Ind AS 101 regarding application of Ind AS 102, “Share Based Payment”, to equity instruments that had vested before the transition date,

ac Deemed cost

Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognised in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition after making necessary adjustments for decommissioning liabilities. This exemption can also be used for intangible assets covered by Ind AS 38 Intangible Assets.

Accordingly, the Company has elected to measure all of its property, plant and equipment and intangible assets at their previous GAAP carrying value,

ad Cumulativetranslation differences

Ind AS 101 permits cumulative translation gains and losses to be reset to zero at the transition date. This provides relief from determining cumulative currency translation differences in accordance with Ind AS 21 from the date a foreign operation was formed or acquired.

The Company elected to reset all cumulative translation gains and losses to zero by transferring it to opening retained earnings at its transition date,

ae Investments in subsidiaries

Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its investments in subsidiaries as recognized in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition.

Accordingly, the Company has elected to measure all of its investments in subsidiaries at their previous GAAP carrying value.

The other exemptions either do not apply or are not relevant for the Company.

(b) Mandatory exceptions ba Hedge Accounting

Hedge accounting can only be applied prospectively from the transition date to transactions that satisfy the hedge accounting criteria in Ind AS 109, at that date. Hedging relationships cannot be designated retrospectively, and the supporting documentation cannot be created retrospectively. As a result, only hedging relationships that satisfied the hedge accounting criteria as of April 1,2015 are reflected as hedges in the Company''s results under Ind AS.

The Company had designated some hedging relationships as cash flow hedges under the previous GAAP. On date of transition to Ind AS, the entity had assessed that all the designated hedging relationship qualifies for hedge accounting as per Ind AS 109. Consequently, the Company continues to apply hedge accounting on and after the date of transition to Ind AS.

bb Estimates

An entity''s estimate on the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error.

Ind AS estimates as at April 1, 2015 are consistent with the estimates as at the same date made in conformity with previous GAAP. The Company made estimates for following items in accordance with Ind AS at the date of transition as these were not required under previous GAAP:

- Investment in mutual funds carried at FVPL;

- Impairment of financial assets based on expected credit loss model;

- Fair valuation of financial assets and liabilities excluding derivatives;

- Fair valuation of assets and liabilities arising in business combinations,

be De-recognition of financial assets and liabilities

Ind AS 101 requires a first-time adopter to apply the de-recognition provisions of Ind AS 109 prospectively for transactions occurring on or after the date of transition to Ind AS. However, Ind AS 101 allows a first-time adopter to apply the de-recognition requirements under Ind AS 109, retrospectively from a date of the entity''s choosing, provided that the information needed to apply Ind AS 109 to financial assets and financial liabilities derecognized as a result of past transactions was obtained at the time of initially accounting for those transactions.

The Company has elected to apply the de-recognition provisions of Ind AS 109 prospectively from the date of transition to Ind AS.

bd Classification and measurement of financial assets

As required under Ind AS 101, the Company has classified and measured the financial assets on the basis of the facts and circumstances existing at the date of transition to Ind AS.

(c) Reconciliations between previous GAAP and Ind AS

The following reconciliations provide a quantification of the effect of significant differences arising from the transition from Previous GAAP to Ind AS in accordance with Ind AS 101:

-equity as at April 1,2015;

- equity as at March 31,2016;

- total comprehensive income for the year ended March 31,2016; and

- explanation of material adjustments to cash flow statements

In the reconciliations mentioned above, certain reclassifications have been made to Previous GAAP financial information to align with the Ind AS presentation.

cf Notes to first time adoption

Note 8 - Fair valuation of investments

Under the previous GAAP, investments in equity instruments and mutual funds were classified as long-term investments or current investments based on the intended holding period and realisability. Long-term investments were carried at cost less provision for other than temporary decline in the value of such investments. Current investments were carried at lower of cost and fair value. Under Ind AS, these investments are required to be measured at fair value. The resulting fair value changes of these investments (other than equity instruments designated as at FVOCI) have been recognized in retained earnings as at the date of transition and subsequently in the profit or loss for the year ended March 31,2016. This increased the retained earnings by Rs. 628.79 lakhs as at March 31,2016 (April 1,2015 - Rs. 184.67 lakhs).

Consequent to the above, the total equity as at March 31,2016 increased by Rs. 628.79 lakhs (April 1, 2015 - Rs. 184.67 lakhs) and profit for the year ended March 31,2016 increased by Rs. 444.12 lakhs.

Note 9 - Foreign currency translation reserve

The Company elected to reset the balance appearing in the foreign currency translation reserve to zero as at April 1,2015. Accordingly, translation reserve balance under previous GAAP of Rs. 983.41 lakhs has been transferred to retained earnings. There is no impact on total equity as a result of this adjustment.

Note 10 - Proposed dividend

Under the previous GAAP, dividends proposed by the board of directors after the balance sheet date but before the approval of the financial statements were considered as adjusting events. Accordingly, provision for proposed dividend was recognized as a liability. Under Ind AS, such dividends are recognized when the same is approved by the shareholders in the general meeting. Accordingly, the liability for proposed dividend (including dividend distribution tax thereon) of Rs. Nil as at March 31, 2016 (April 1, 2015 Rs. 3,457.08 lakhs) included under provisions has been reversed with corresponding adjustment to retained earnings. Consequently, the total equity increased by an equivalent amount.

Note 11 - Remeasurements of post-employment benefit obligations

Under Ind AS, remeasurements i.e. actuarial gains and losses and the return on plan assets, excluding amounts included in the net interest expense on the net defined benefit liability are recognized in other comprehensive income instead of profit or loss. Under the previous GAAP, these remeasurements were forming part of the profit or loss for the year. As a result of this change, the profit for the year ended March 31,2016 increased by Rs. 222.69 lakhs. There is no impact on the total equity as at March 31,2016.

Note 12 - Employee stock option expense

i. Under the previous GAAP, the cost of equity-settled employee share-based plan was recognized using the intrinsic value method. Under Ind AS, the cost of equity settled share-based plan is recognized based on the fair value of the options as at the grant date. Consequently, the amount recognized in share option outstanding account increased by Rs. 837.02 lakhs as at March 31,2016 (April 1,2015- Rs. 442.24 lakhs). There is increase in total equity by Rs.222.35 lakhs as at March 31,2016 due to recharge from the subsidiaries. The profit for the year ended March 31, 2016 decreased by Rs. 172.42 lakhs.

ii. Under the previous GAAP, the employee stock compensation expense incurred with respect to the options granted to employees of subsidiary companies to be settled by the parent company by granting its own equity instruments was retained in the books of the parent. Under Ind AS 102, such costs, excludes cases where these are re-charged from the subsidiaries.

Note 13 - Security deposits

Under the previous GAAP, interest free lease security deposits (that are refundable in cash on completion of the lease term) were recorded at their transaction value. Under Ind AS, all financial assets are required to be recognized at fair value. Accordingly, the group has fair valued these security deposits under Ind AS. Difference between the fair value and transaction value of the security deposit has been recognized as prepaid rent. Consequent to this change, the amount of security deposits decreased by Rs. 446.59 lakhs as at March 31, 2016 (April 1, 2015- Rs. 566.36 lakhs). The prepaid rent increased by Rs. 423.85 lakhs as at March 31, 2016 (April 1,2015 - Rs. 566.36 lakhs). There was no impact on total equity as at April 1, 2015. The profit for the year and total equity as at March 31, 2016 decreased by Rs. 22.74 lakhs due to amortization of the prepaid rent of Rs. 142.51 lakhs which is partially off-set by the notional interest income of Rs. 119.77 lakhs recognized on security deposits.

Note 14 - Deferred tax

Indian GAAP requires deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind AS 12 requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. The application of Ind AS 12 approach has resulted in recognition of deferred tax on new temporary differences which was not required under Indian GAAP. In addition, the various transitional adjustments lead to temporary differences. Deferred tax adjustments are recognized in correlation to the underlying transaction either in retained earnings or a separate component of equity. Consequently the net deferred tax asset as at March 31, 2016 increased by Rs. 103.67 lakhs (April 1, 2015- Rs. 228.32 lakhs), the profit and total comprehensive income for the year ended March 31,2016 increased by Rs. 38.74 lakhs and decreased by Rs. 163.40 lakhs respectively.

Note 15 - Employee benefits

Under the previous GAAP, the rate used to discount post-employment benefit obligations of the Company, including its foreign branches, was determined by reference to market yields at the end of the reporting period on government bonds/securities. Ind AS 19, Employee Benefits requires the discounting of such obligations in respect for foreign branches using the rate determined by reference to market yields at the end of the reporting period on high quality corporate bonds, unless the foreign branches are domiciled in countries where there is no deep market in such bonds. Consequently, the discounting of liability of foreign branches using corporate bond rates has resulted in an increase in liability as at March 31, 2016 by Rs. 68.03 lakhs (April 1, 2015 - increase by Rs. 52.36 lakhs) and decrease in profit for the year then ended by Rs.15.67 lakhs.

Note 16 - Goodwill amortization

Under the previous GAAP, goodwill arising on business combinations was capitalized on balance sheet and amortized over its expected useful life. Under Ind AS 103, Business Combinations, the amortization of goodwill is prohibited, and goodwill is held at cost with impairment reviews carried out annually or at other times if there are indications that the carrying value is not recoverable.

The goodwill amortization charge recognized under previous GAAP has therefore been reversed, resulting in an increase in profit for the year ended March 31,2016 by Rs. 255.27 lakhs (April 1,2015 - Rs. 158.59 lakhs).

Note 17 - Business combinations

Under Ind AS, all the assets and liabilities arising from a business combination are identified and recorded at fair value. Under previous GAAP, assets and liabilities arising from a business combination were recognized at their carrying values in the books of the acquiree.

Note 18: Retained earnings

Retained earnings as at April 1,2015 has been adjusted consequent to the above Ind AS transition adjustments.

Note 19: Other comprehensive income

Under Ind AS, all items of income and expense recognized in a period should be included in profit or loss for the period, unless a standard requires or permits otherwise. Items of income and expense that are not recognized in profit or loss but are shown in the statement of profit and loss as other comprehensive income include remeasurements of defined benefit plans, foreign exchange differences arising on translation of foreign operations and effective portion of gains and losses on cash flow hedging instruments. The concept of other comprehensive income did not exist under previous GAAP.

20 Impact of change in election of exemptions on transition to Ind AS

The Company had initially elected to apply Ind AS 103- Business Combinations from the date of transition i.e. April 1,2015. However, during the quarter ended March 31, 2017, the Company has elected to apply this standard to all business combinations completed after October 1,2010. This represents a change in election of exemptions under Ind AS 101. The impact of this change on the figures for year ended March 31,2017 is not material.

21 Segment reporting

Where a financial report contains both consolidated financial statements and separate financial statements of the parent, segment information needs to be presented only in case of consolidated financial statements. Accordingly, segment information has been provided only in the consolidated financial statements.

22 Business Combination

(a) Business combination occurring after the end of the reporting period but before the financial statements are approved for issue:

aa Summary of acquisition:

The Company entered into a Business Undertaking Transfer Agreement for the purchase of business of Keystone Logic Solutions Private Limited, for a purchase consideration of Rs. 5,181 lakhs (excluding contingent consideration). The payment of purchase consideration and acquisition of related control occurred subsequent to March 31,2017. ab The transaction was consummated on April 1, 2017 and as at the date of the issue of financial statements the accounting for business combination is incomplete. As a result other disclosures required under Ind AS 103- Business Combination have not been made.

(b) Business combination occurring in the previous reporting periods but impacting the financial statements of current period:

ba Professional Access (PA) : On August 14, 2014, the Company entered into a Business Undertaking Transfer Agreement (BTA) for the purchase of business from Professional Access Software Development Private Limited, an Oracle Platinum partner. There were no adjustments to the carrying amount of goodwill during the current year and consequently the goodwill as at the beginning and the end of the year remains Rs. 1,276.29 lakhs, bb Other disclosures mandated under paragraph B67 of Ind AS 103- Business Combination are not relevant for this transaction and hence have not been made.

23 Disclosure on Specified Bank Notes (SBNs)

During the year, the company had Specified Bank Notes (SBNs) or other denomination notes as defined in the MCA notification, G.S.R. 308 (E), dated March 31, 2017. The details of SBNs held and transacted during the period from November 8, 2016 to December 30, 2016, the denomination-wise SBNs and other notes as per the notification are as follows:

# Specified Bank Notes (SBNs) mean the bank notes of denominations of the existing series of the value of five hundred rupees and one thousand rupees as defined under the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs no. S.0.3407(E), dated November 08,2016.


Mar 31, 2015

1. General Information

Zensar Technologies Limited (the "Company") along with its wholly owned and controlled subsidiaries Zensar Technologies Inc., Zensar Technologies (UK) Limited, Zensar Technologies (Singapore) Pte. Limited, Zensar Technologies (Shanghai) Company Limited, PSI Holding Group Inc., Zensar Technologies IM Inc.(formerly known as Akibia, Inc.), Zensar Technologies IM B.V.(formerly known as Akibia B.V.), Aquila Technology Corp., Zensar (Africa) Holdings Pty Limited and Zensar (South Africa) Pty Limited and Professional Access Limited (effective from August 14, 2014) is engaged in providing a complete range of IT Services and Solutions. The Company''s industry expertise spans across Manufacturing, Retail, Media, Banking, Insurance, Healthcare and Utilities. The Company is public limited company and is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).

2. Terms/Rights attached to Equity Shares

The Company has only one class of equity shares having a par value of H 10 per share. 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 holder of equity shares will be entitled to receive any of the remaining assets of the Company, after distribution of all preferential amounts. However, no such preferential amounts exist currently. The distribution will be in proportion to the number of equity shares held by the shareholders.

The board of directors in their meeting on January 19, 2015 declared an interim dividend of Rs. 4.50 per equity share. The board of directors in their meeting on April 28 2015, proposed the final dividend of Rs. 6.50 per equity share. The total dividend appropriation for the year ended March 31,2015 amounted to Rs. 5800.48 lakhs including corporate dividend tax of Rs. 940.73 lakhs.

3.Contingent Liabilities 2015 2014

(a) Income Tax:

Matters decided in favour of the Company 990. 94 648.16 by appellate authorities, where the Income Tax Department is in further appeal. Matters on which the Company 635.19 511.67 is in appeal

(b) Sales Tax / Value Added Tax:

Claims against the Company regarding sales 253.03 79.78 tax against which the Company has preferred appeals.

Claims against the Company regarding service 14.73 14.73 tax against which the Company has preferred appeal.

(d ) Claim in respect of rented premises. 211.94 200.27

(e) Claims against the Company not 62.28 62.28 acknowledged as debts.

(f) Issuance of Stand by Letter of credit by the Company''s bankers in respect of term loan taken by the wholly owned subsidiary. The loan taken by the () subsidiary is secured by way of hypothecation of the current and movable assets and mortgage of immovable assets of the Company.

4. Dues to Micro, Small and Medium enterprises

The Company has compiled this information based on the current information in its possession. As at 31st March 2015, no supplier has intimated the Company about its status as a Micro or Small Enterprise or its registration with the appropriate authority under the Micro, Small and Medium Enterprises Development Act, 2006.

5. Research & Development

The Department of Scientific and Industrial Research had accorded the recognition as In-House R&D unit to the Company. The Company has incurred revenue expenditure amounting to Rs. 0.41 lakhs (Previous year : Rs. 2.09 lakhs) on development activities during the year.

6. Segment Information

Where a financial report contains both consolidated financial statements and separate financial statements of the parent, segment information needs to be presented only in case of consolidated financial statements. Accordingly, segment information has been provided only in the consolidated financial statements.

7 . The Company vide a Board resolution dated October 22, 2013 had resolved to liquidate its subsidiary company in Japan, Zensar Advanced Technologies Limited (ZATL), with effect from March 31,2014. Accordingly, the subsidiary had ceased its operations effective March, 31 2014 and has during the year completed the liquidation as per the laws of Japan. The outstanding receivable amounts from ZATL and the company''s investment in ZATL have been fully provided for. The Company has filed an application with RBI and is awaiting it''s approval for writing off the investments from the books of account.

8. Business Acquisition

"On August 14, 2014, the Company entered into a Business Undertaking Transfer Agreement for the purchase of business from Professional Access Software Development Private Limited, an Oracle Platinum partner. The financial statements for the year ended March 31,2015 include the results of this acquired business for the period August 14, 2014 to March 31,2015 (Income from Operations of Rs. 8987.12 lakhs and Profit before taxation of Rs. 3445.81lakhs) and are therefore not comparable with the figures of the previous year.

9. Previous Year Figures

Previous Year Figures have been reclassified to conform to this year''s classification.


Mar 31, 2014

1. Related Party Disclosures

List of Related Parties (as identified and certified by the Management) (i) Parties where control exists

a. Subsidiaries:

Zensar Technologies, Inc., USA

Zensar Technologies (UK) Limited

Zensar Technologies (Singapore) Pte. Limited

Zensar Advanced Technologies Limited (under liquidation)

Zensar Technologies (Shanghai) Company Limited

PSI Holding Group Inc.

Zensar Technologies IM Inc.(formerly known as Akibia, Inc.)

Zensar Technologies IM BV (formerly known as Akibia, BV)

Aquila Technology Corp.

Zensar (Africa) Holdings Pty Limited (w.e.f. October 14, 2013)

Zensar (South Africa) Pty Limited (w.e.f. October 18, 2013)

b. Parties having control (directly or indirectly):

Chattrapati Investments Limited

Pedriano Investments Limited

Summit Securities Limited

Electra Partners Mauritius Limited

Instant Holdings Limited

Swallow Associates LLP

(ii) Key Management Personnel

Dr. Ganesh Natarajan

Mr. S. Balasubramaniam

Mr. Sanjay Marathe

Ms. Prameela Kalive

Mr. Yogesh Patgaonkar

Mr. Ajay Bhandari

Mr. Krishna Ramaswami

Mr. Harish Gala (from April 1, 2013)

Mr. Deepanjan Banerjee (from April 1, 2013)

Mr. Sanjay Rawa

Mr. Mohan Hastak (from April 1, 2013)

Mr. P Krishnakumar (from April 1, 2013)

Mr. Hiren Kulkarni (upto October 19, 2012)

(Rs. in lakhs)

2014 2013

2. Contingent Liabilities

(a) Income Tax:

Matters decided in favour of the Company by appellate authorities, where the Income Tax Department is in further appeal. 648.16 637.73

Matters on which the Company is in appeal 511.67 321.67

(b) Sales Tax / Value Added Tax:

Claims against the Company regarding sales tax against which the Company has preferred appeals. 79.78 157.35

(c ) Claims against the Company regarding service tax against which the Company has preferred appeal. 14.73 14.73

(d ) Claim in respect of rented premises. 200.27 188.61

(e) Claims against the Company not acknowledged as debts. 62.28 62.28

(f) Issuance of Stand by Letter of credit by the Company''s bankers in respect of term loan taken by the wholly owned subsidiary. The loan taken by the subsidiary is secured by way of hypothecation of the current and movable assets and mortgage of immovable assets of the Company. 14380.80 19544.40

(g) Customs Duty:

From 1969 to 1979, customs duty has been provided on the basis of provisional assessments, which are not admitted by the Customs Authorities. Pending settlement of the foregoing, a deposit of Rs. 6.79 lakhs (Previous year: Rs. 6.79 lakhs) has been made and bonds aggregating to Rs. 54.43 lakhs (Previous year: Rs. 54.43 lakhs) guaranteed by the General Insurance Corporation of India have been executed. From 16th August 1988 to 31st March 1993, pursuant to changes in the Customs Valuation Rules, the Customs Authorities have cleared the Company''s consignments on provisional basis on execution of bonds aggregating Rs. 1618.45 lakhs (Previous year: Rs. 1618.45 lakhs), representing the entire value of the import consignments. Adjustments, if any, on this account, would be made as and when the assessments are finalised. The Company has been legally advised that the liability on this account is not expected to exceed Rs. 31.00 lakhs (Previous year: Rs. 31.00 lakhs), which has been provided for.

3. Dues to Micro, Small and Medium enterprises

The Company has compiled this information based on the current information in its possession. As at 31st March 2014, no supplier has intimated the Company about its status as a Micro or Small Enterprise or its registration with the appropriate authority under the Micro, Small and Medium Enterprises Development Act, 2006.

4. Expenditure on Research and Development

The Department of Scientific and Industrial Research had accorded the recognition as In-House R&D unit to the Company. The Company has incurred revenue expenditure amounting to Rs. 2.09 lakhs (Previous year : Rs. 8.52 lakhs) on development activities during the year.

5. Lease Obligations

(A) Operating leases

The Company has taken on lease certain facilities and equipment under operating lease arrangements that expire over the next five years. Rental expense incurred by the Company under operating lease agreements totalled approximately Rs. 3461.63 lakhs (Previous yearRs.3020.10 lakhs) Total minimum lease payments in respect of non-cancellable operating leases

6. Segment Information

Where a financial report contains both consolidated financial statements and separate financial statements of the parent, segment information needs to be presented only in case of consolidated financial statements. Accordingly, segment information has been provided only in the consolidated financial statements.

7 The Company vide a Board resolution dated October 22, 2013 has resolved to liquidate its subsidiary company in Japan, Zensar Advanced Technologies Limited, with effect from March 31, 2014. Accordingly, the subsidiary has ceased its operations effective March, 31 2014 and is in the process of completing the liquidation formalities. The impact on account of this closure on the operations of the Company is not material.

8. Previous Year Figures

Previous Year Figures have been reclassified to conform to this year''s classification.

9. General Information

Zensar Technologies Limited (the "Company") along with its wholly owned and controlled subsidiaries Zensar

Technologies Inc., Zensar Technologies (UK) Limited, Zensar Technologies (Singapore) Pte. Limited, Zensar Advanced Technologies Limited, Zensar Technologies (Shanghai) Company Limited, PSI Holding Group Inc., Zensar Technologies IM Inc.(formerly known as Akibia, Inc.), Zensar Technologies IM B.V.(formerly known as Akibia B.V.), Aquila Technology Corp., Zensar (Africa) Holdings Pty Limited and Zensar (South Africa) Pty Limited is engaged in providing a complete range of IT Services and Solutions. The Company''s industry expertise spans across Manufacturing, Retail, Media, Banking, Insurance, Healthcare and Utilities. The Company is public limited company and is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).


Mar 31, 2013

1. General Information

Zensar Technologies Limited (the "Company") along with its wholly owned and controlled subsidiaries Zensar Technologies Inc.,Zensar Technologies (UK) Limited, Zensar Technologies (Singapore) Pte. Limited, Zensar Advanced Technologies Limited, Zensar Technologies (Shanghai) Company Limited, PSI Holding Group Inc., Zensar Technologies IM Inc. (formerly known as Akibia, Inc.), Akibia B. V. and Aquila Technology Corp. is engaged in providing a complete range of IT Services and Solutions. The Company''s industry expertise spans across Manufacturing, Retail, Media, Banking, Insurance, Healthcare and Utilities.

2. Employee Stock Option Schemes

Currently the Company has instituted two Employees Stock Option Plans. The Compensation Committee of the Board approves the grant of options. Options vest with employees over specified time periods subject to fulfilment of certain conditions.

3. Related Party Disclosures

List of Related Parties (as identified and certified by the Management)

(i) Parties where control exists

a. Wholly owned subsidiaries:

Zensar Technologies, Inc., USA

Zensar Technologies (UK) Limited

Zensar Technologies (Singapore) Pte. Limited

Zensar Advanced Technologies Limited

Zensar Technologies (Shanghai) Company Limited

PSI Holding Group Inc.

Zensar Technologies IM Inc.(formerly known as Akibia, Inc.)

Akibia, B.V.

Aquila Technology Corp.

b. Parties having control (directly or indirectly):

Chattrapati Investments Limited Pedriano Investments Limited Summit Securities Limited Electra Partners Mauritius Limited Instant Holdings Limited Swallow Associates LLP

(ii) Key Management Personnel

Dr. Ganesh Natarajan Mr. S. Balasubramaniam Mr. Sanjay Marathe Ms. Prameela Kalive

Mr. Hiren Kulkarni (upto 19th October,2012)

Mr. Ajay Bhandari Mr. Krishna Ramaswami Mr. Yogesh Patgaonkar Mr. Sanjay Rawa

Mr. Gopalji Mehrotra (upto 31st July,2011)

A. Disputed Statutory matters mainly include:

(a) Provision for disputed statutory liabilities comprises matters under litigation with Sales-Tax, Customs Duty and ESI authorities.

(b) The amount of provisions made by the Company is based on the estimates made by the Management considering the facts and circumstances of each case.

To the extent the Company is confident that it has a strong case, that portion is disclosed under contigent liabilities.

(c) The timing and the amount of cash flows that will arise from these matters will be determined by the Appellate Authorities only on settlement of these cases.

B. Provisions for Other Obligations mainly include provisions for rent related litigations with previous landlords. The timing and the amount of cash flows that will arise from these matters will be determined by the Appellate Authorities only on settlement of these cases.

4.Contingent Liabilities

2013 2012 (Rs. in lakhs) (Rs. in lakhs)

(a) Income Tax:

Matters decided in favour of the Company by appellate authorities, where 637.73 637.73 the Income Tax Department is in further appeal.

Matters on which the Company is in appeal 321.67 773.84

(b) Sales Tax / Value Added Tax:

Claims against the Company regarding sales tax against which the - - Company has preferred appeals.

(c) Claims against the Company regarding service tax against which the Company has preferred appeal. 14.73 23.63

(d) Claim in respect of rented premises. 188.61 176.94

(e) Claims against the Company not acknowledged as debts. 62.28 62.28

(f) Issuance of Stand by Letter of credit by the Company''s bankers in respect of term loan taken by the wholly owned subsidiary. The loan taken by the subsidiary is secured by way of hypothecation of the Current and movable 19544.40 24422.40 assets and mortgage of immovable assets of the Company.

(g) Customs Duty:

From 1969 to 1979, customs duty has been provided on the basis of provisional assessments, which are not admitted by the Customs Authorities. Pending settlement of the foregoing, a deposit of Rs. 6.79 lakhs (Previous year: Rs. 6.79 lakhs) has been made and bonds aggregating to Rs. 54.43 lakhs (Previous year: Rs. 54.43 lakhs) guaranteed by the General Insurance Corporation of India have been executed. From 16th August 1988 to 31st March 1993, pursuant to changes in the Customs Valuation Rules, the Customs Authorities have cleared the Company''s consignments on provisional basis on execution of bonds aggregating Rs. 1618.45 lakhs (Previous year: Rs. 1618.45 lakhs), representing the entire value of the import consignments. Adjustments, if any, on this account, would be made as and when the assessments are finalised. The Company has been legally advised that the liability on this account is not expected to exceed Rs. 31.00 lakhs (Previous year: Rs. 31.00 lakhs), which has been provided for.

5. Dues to Micro, Small and Medium enterprises

The Company has compiled this information based on the current information in its possession. As at 31st March 2013, no supplier has intimated the Company about its status as a Micro or Small Enterprise or its registration with the appropriate authority under the Micro, Small and Medium Enterprises Development Act, 2006.

6. Expenditure on Research and Development

The Department of Scientific and Industrial Research had accorded the recognition as In-House R&D unit to the Company. The Company has incurred capital expenditure amounting to Rs.94.76 lakhs (Previous year: Rs. 90.74 lakhs) and revenue expenditure amounting to Rs. 8.52 lakhs (Previous year : Rs. 0.26 lakhs) on development activities during the year.

7. Lease Obligations

(A) Operating leases

The Company has leased certain facilities and equipment under operating lease agreements that expire over the next five years. Rental expense incurred by the Company under operating lease agreements totaled approximately Rs. 3020.10 lakhs (Previous year Rs. 2407.29 lakhs)

Total minimum lease payments in respect of non-cancellable operating leases

8. Previous Year Figures

Previous Year Figures have been reclassified to conform to this year''s classification.


Mar 31, 2012

Company overview

Zensar Technologies Limited (the "Company") along with its wholly owned and controlled subsidiaries Zensar Technologies Inc., Zensar Technologies (UK) Limited, Zensar Technologies (Singapore) Pte. Limited, Zensar Advanced Technologies Limited, Zensar Technologies (Shanghai) Company Limited, PSI Holding Group Inc., Akibia Inc.,Akibia B.V.and Aquila Technology Corp. is engaged i n providing a complete range of IT Services and Solutions. The Company's industry expertise spans across Manufacturing, Retail, Media, Banking, Insurance, Healthcare and Utilities.

A. Disputed Statutory matters mainly include:

(a) Provision for disputed statutory liabilities comprises matters under litigation with Sales-Tax, Customs Duty and ESI authorities.

(b) The amount of provisions made by the Company is based on the estimates made by the Management considering the facts and circumstances of each case.

To the extent the Company is confident that it has a strong case, that portion is disclosed under contingent liabilities.

(c) The timing and the amount of cash flows that will arise from these matters will be determined by the Appellate Authorities only on settlement of these cases.

B. Provisions for Other Obligations mainly include provisions for rent related litigations with previous landlords. The timing and the amount of cash flows that will arise from these matters will be determined by the Appellate Authorities only on settlement of these cases.

2011-2012 2010-2011

(Rs. in lakhs) (Rs.in lakhs)

1. Contingent Liabilities

(a) Income Tax:

Matters decided in favour of the Company by appellate authorities,

where the income Tax Department is in further appeal. 637.73 637.73

Matter son which the Company is in appeal 773.84 33.94

(b) Sales Tax/Value Added Tax:

Claims against the Company regarding sales tax against which the

Company has preferred appeals. 20.80 20.80

(c) Claims against the Company regarding service tax against which

the Company has preferred appeal. 23.63 -

(d) Claim in respect of rented premises. 176.94 165.27

(e) Claims against the Company not acknowledged as debts. 62.28 36.33

(f) Guarantee given by the Company / issuance of Stand by Letter of credit by the Company's bankers in respect of term loan and working capital limits taken by the wholly owned subsidiary. The loans and working capital limits taken by the subsidiary were secured by a pari passu charge against the immovable fixed assets of the Company's intuited at Kharadi. - 2969.69

(g) Issuance of Stand by Letter of credit by the Company's bankers in respect of term loan taken by the wholly owned subsidiary. The loan taken by the subsidiary is secured by way of hypothecation of the current and movable assets and mortgage of immovable assets of the Company. 24422.40 21403.20

(h) Customs Duty:

From 1969 to 1979, customs duty has been provided on the basis of provisional assessments, which are not admitted by the Customs Authorities. Pending settlement of the foregoing, a deposit of Rs. 6.79 lakhs (Previous year: Rs. 6.79 lakhs) has been made and bonds aggregating to Rs. 54.43 lakhs (Previous year: Rs. 54.43 lakhs) guaranteed by the General Insurance Corporation of India have been executed. From 16th August 1988 to 31st March 1993, pursuant to changes in the Customs Valuation Rules, the Customs Authorities have cleared the Company's consignments on provisional basis on execution of bonds aggregating Rs. 1618.45 lakhs (Previous year: Rs. 1618.45 lakhs), representing the entire value ofthe import consignments. Adjustments, if any, on this account, would be made as and when the assessments are finalized. The Company has been legally advised that the liability on this account is not expected to exceed Rs. 31.00 lakhs (Previous year: Rs. 31.00 lakhs), which has been provided for.

2. Dues to Micro, Small and Medium enterprises

The Company has compiled this information based on the current information in its possession. As at 31st March 2012, no supplier has intimated the Company about its status as a Micro or Small Enterprise or its registration with the appropriate authority under the Micro, Small and Medium Enterprises Development Act, 2006.

3. Expenditure on Research and Development

The Department of Scientific and Industrial Research had accorded the recognition as In-House R&D unit to the Company in the previous year. The Company has incurred capital expenditure amounting to Rs. 90.74 lakhs (Previous year: Rs. 105.83 lakhs) and revenue expenditure amounting to Rs. 0.26 lakhs (Previous year: Rs. 5.61 lakhs) on development activities during the year.

4. Acquisition of subsidiaries in the United States of America

During the previous year, the Company, through its wholly owned subsidiary, Zensar Technologies, Inc. acquired 100% equity interest in PSI Holding Group, Inc. ("PSI") vide agreement dated November 20, 2010, for a consideration of Rs. 30541 lakhs (including acquisition charges). As a result, PSI and its wholly owned subsidiaries namely (i) Akibia, Inc. (ii) Aquila Technology Corp; and (iii) Akibia B.V. have become step-down subsidiaries ofthe Company with effect from January 1,2011

5. Reclassification

The financial statements for the year ended March 31,2011 had been prepared as per the then applicable, pre-revised Schedule VI to the Companies Act, 1956. Consequent to the notification of Revised Schedule VI under the Companies Act, 1956, the financial statements for the year ended March 31, 2012 are prepared as per Revised Schedule VI. Accordingly, the previous year figures have also been reclassified to conform to this year's classification. The adoption of Revised Schedule VI for previous year figures does not impact recognition and measurement principles followed for preparation of financial statements.


Mar 31, 2011

(Rs. in Lakhs)

2011 2010

1. Contingent Liabilities

(a) Income Tax:

Matters decided in favour of the Company by appellate authorities, where the Income Tax Department is in further appeal. 637.73 337.65

Matters on which the Company is in appeal 33.94 206.12

(b) Sales Tax / Value Added Tax:

Claims against the Company regarding sales tax against which the Company has preferred appeals. 20.80 53.52

(c) Claim in respect of rented premises. 165.27 153.61

(d) Claims against the Company not acknowledged as debts. 36.33 70.00

(e) Guarantee given by the Company / issuance of Stand by Letter of credit 2969.69 5209.69 by the Companys bankers in respect of term loan and working capital limits taken by the subsidiary.

The loans and working capital limits taken by the subsidiary are secured by a pari passu charge against the immovable fixed assets of the Company situated at Kharadi.

(f) Issuance of Stand by Letter of credit by the Companys bankers in respect 21403.20 - of term loan taken by the wholly owned subsidiary.

The Company is in the process to create security by way of hypothecation of the current and moveable assets and mortgage of immovable assets of the Company.

(g) Customs Duty:

From 1969 to 1979, customs duty has been provided on the basis of provisional assessments, which are not admitted by the Customs Authorities. Pending settlement of the foregoing, a deposit of Rs. 6.79 lakhs (Previous year: Rs. 6.79 lakhs) has been made and bonds aggregating to Rs. 54.43 lakhs (Previous year: Rs. 54.43 lakhs) guaranteed by the General Insurance Corporation of India have been executed. From 16th August 1988 to 31st March 1993, pursuant to changes in the Customs Valuation Rules, the Customs Authorities have cleared the Companys consignments on provisional basis on execution of bonds aggregating Rs. 1618.45 lakhs (Previous year: Rs. 1618.45 lakhs), representing the entire value of the import consignments. Adjustments, if any, on this account, would be made as and when the assessments are finalised. The Company has been legally advised that the liability on this account is not expected to exceed Rs. 31.00 lakhs (Previous year: Rs. 31.00 lakhs), which has been provided for.

2. Employee Stock Option Schemes

Currently the Company has instituted two Employees Stock Option Plans. The Compensation Committee of the Board approves the grant of options. Options vest with employees over specified time periods subject to fulfilment of certain conditions.

3. During the previous year, pursuant to the shareholders approval for buy back of equity shares on proportionate basis through the tender offer route, the Company bought back 2,424,000 equity shares for an aggregate amount of Rs. 3999.60 lakhs, by utilizing Share Premium account and General Reserve to the extent of Rs. 2980.68 lakhs and Rs. 776.52 lakhs respectively.

Capital Redemption Reserve was created out of general reserve for Rs. 242.40 lakhs, being the nominal value of shares bought back in terms of section 77AA of the Companies Act, 1956.

4. Acquisition of subsidiaries in the United States of America

During the year, the Company, through its wholly owned subsidiary, Zensar Technologies, Inc. acquired 100% equity interest in PSI Holding Group, Inc. ("PSI") vide agreement dated November 20, 2010, for a consideration of Rs. 30541 lakhs (including acquisition charges). As a result, PSI and its wholly owned subsidiaries namely (i) Akibia, Inc. (ii) Aquila Technology Corp; and (iii) Akibia B.V. have become step-down subsidiaries of the Company with effect from January 1, 2011.

5. During the year, the shareholders approved the issue of Bonus Shares in the proportion of one new equity share for every existing equity share, at the Annual General Meeting held on July 13, 2010. Accordingly, a sum of Rs. 2158.98 lakhs has been transferred to the Share Capital Account on allotment of fully paid bonus shares to the holders of the equity shares on the record date of July 22, 2010 by utilisation of General Reserve. Consequently, the earnings per share have been adjusted for the previous year.

6. Related Party Disclosures

List of Related Parties (as identified and certified by the Management)

(i) Parties where control exists

a. Wholly owned subsidiaries:

Zensar Technologies, Inc., USA

Zensar Technologies (UK) Limited

Zensar Technologies (Singapore) Pte. Limited

Zensar Technologies GmbH, Germany (Voluntarily liquidated during the year)

Zensar Advanced Technologies Limited

Zensar Technologies (Shanghai) Co. Limited (Incorporated on April 29, 2010)

PSI Holding Group Inc. (With effect from January 1, 2011)

Akibia, Inc. (With effect from January 1, 2011)

Akibia, B.V. (With effect from January 1, 2011)

Aquila Technology Corp. (With effect from January 1, 2011)

b. Other subsidiaries/Entities under joint control

Zensar Technologies (Shenzen) Limited (Under liquidation)

c. Parties having control (directly or indirectly):

RPG Industries Pvt. Limited

Blue Niles Holdings Limited

Pedriano Investments Limited

RPG Cellular Investments & Holdings Private Limited

Idea Tracom Private Limited

Summit Securities Limited

Electra Partners Mauritius Limited

(ii) Key Management Personnel

Dr. Ganesh Natarajan

Mr. S. Balasubramaniam

Mr. Gopalaji Mehrotra (With effect from 1st April 2010)

Mr. Sanjay Marathe

Ms. Prameela Kalive

Mr. Hiren Kulkarni

Mr. Ajay Bhandari

Mr. Krishna Ramswami

Mr. V. Balasubramanian (up to 31st March 2010)

7. (B) As of the Balance Sheet date, the Companys net foreign currency exposure that is not hedged by derivative instruments or otherwise is Rs. 11078 lakhs (Previous Year: Rs. 7834 lakhs)

8. Managerial Remuneration

a) Managing Directors remuneration:

Notes:

1. As the liability for gratuity and compensated absence is provided on an actuarial basis for the Company as a whole, the amounts pertaining to the Managing Director are not ascertainable and therefore not included above.

2. The Board of Directors, at their meeting held on 17th January, 2011, re-appointed Dr. Ganesh Natarajan as Vice chairman and Managing Director of the Company up to 31st January, 2015 with effect from 1st March, 2011. This reappointment is subject to the approval of the shareholders in the ensuing Annual General Meeting.

A. Disputed Statutory matters mainly include:

(a) Provision for disputed statutory liabilities comprises matters under litigation with Sales- Tax, Customs Duty and ESI authorities.

(b) The amount of provisions made by the Company is based on the estimates made by the Management considering the facts and circumstances of each case.

To the extent the Company is confident that it has a strong case, that portion is disclosed under contingent liabilities.

(c) The timing and the amount of cash flows that will arise from these matters will be determined by the Appellate Authorities only on settlement of these cases.

B. Provisions for Other Obligations mainly include provisions for rent related litigations with previous landlords. The timing and the amount of cash flows that will arise from these matters will be determined by the Appellate Authorities only on settlement of these cases.

9. Dues to Micro, Small and Medium enterprises

The Company has compiled this information based on the current information in its possession. As at 31st March 2011, no supplier has intimated the Company about its status as a Micro or Small Enterprise or its registration with the appropriate authority under the Micro, Small and Medium Enterprises Development Act, 2006.

10. Deferred Tax

A) During the year, the Company has recognised Deferred Tax Asset amounting to Rs. 1002.31 lakhs pursuant to the expiry of tax holiday under Section 10A of the Income Tax Act.

11. Disclosures in accordance with Revised AS- 15 on "Employee Benefits":

(A) Defined Contribution Plans

In terms of the guidance on implementing Revised AS 15, notified under section 211(3C) of the Act, the Provident Fund set up by the Company is treated as a Defined Benefit Plan since the Company is obligated to meet interest shortfall, if any. However, as at year end no shortfall remains unprovided for. As advised by an independent actuary, it is not practical or feasible to actuarially value the liability considering the rate of interest as notified by the Government can vary annually. Further the pattern of investments for investible funds is as prescribed by the Government. Accordingly the other related disclosures as required by the Revised AS 15 have not been made.

(B) Defined Benefit Plans- Gratuity

(v) As at 31st March, 2011 and 31st March, 2010, the plan assets have been primarily invested in insurer managed funds.

(vi) The overall expected rate of return on assets is based on the expectation of the average long term rate of return expected on investments of the Fund during the estimated term of the obligations.

12. Expenditure on Research and Development

During the year, the Department of Scientific and Industrial Research has accorded the recognition as In-House R&D unit to the Company. The Company has incurred capital expenditure amounting to Rs. 105.83 lakhs (Previous year: Rs. 89.54 lakhs) and revenue expenditure amounting to Rs. 8.51 lakhs (Previous year: Rs. Nil) on development activities during the year.

13. Lease Obligations Operating leases

The Company has leased certain facilities and equipment under operating lease agreements that expire over the next five years. Rental expense incurred by the Company

14. Other Information

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 sales and the information as required under Paragraphs 3 and 4C of Part II of Schedule VI of the Companies Act, 1956 of India.

15. Reclassification

Prior year comparatives have been reclassified to conform with current years presentation, where applicable.

Signatures to Schedules 1 to 14 forming part of the Balance Sheet as at 31st March 2011 and the Profit and Loss Account and Cash Flow Statement for the year ended 31st March 2011.


Mar 31, 2010

1. (a) Pursuant to the Scheme of Amalgamation of the Companys wholly owned Subsidiaries, erstwhile Zensar OBT Technologies Limited (ZOBT) and Zensar Transformation Services Limited (ZTSL) (i.e. the transferor companies), have amalgamated with the Company. The Scheme of amalgamation was sanctioned by the Honble High Court of Judicature at Bombay vide its order dated April 9, 2010. The "Appointed Date" of the Scheme is April 1"!, 2009. In accordance with the said Scheme and as per the approval of the Honble High Court of Judicature at Bombay, net assets of Rs. 1419.68 lakhs of the transferor Companies have been transferred to and vested in the Company with effect from 1; April, 2009. The Scheme has, accordingly, been given effect to in these accounts.

(b) The amalgamation has been accounted for under the "pooling of interests" method as prescribed by Accounting Standard (AS-14) issued by the Institute of Chartered Accountants of India. In accordance with the scheme, the difference of Rs. 337.25 lakhs between the amount recorded as share capital issued and the amount of share capital of the transferor company has been adjusted in the General Reserve.

(c) In view of the aforesaid amalgamation with effect from l1 April, 2009, the figures for the currentyear are not comparable to those of the previous Financial Year. 2010 2009 2. Estimated amount of contracts remaining to be executed on capital account and not provided for [net of advances Rs.38.86 lakhs (Previous year: Rs. 67.65 lakhs)] 691.04 650.84

3. Contingent Liabilities (a) Income Tax: Matters decided in favour of the Company by appellate authorities, where the Income Tax Department is in furtherappeal. 337.65 337.65 Matterson which the Company is in appeal 206.12 716.44 (b) Sales Tax/Value Added Tax: Claims against the Company regarding sales tax against which the Company has preferred appeals. 53.52 77.49 (c) Claim in respect of rented premises. 153.61 141.94 (d) ClaimsagainsttheCompany not acknowledged as debts. 70.00 61.85 (e) Guarantees given by the Company in respect of loans and working capital limits taken by the subsidiaries. 5209.69 8411.63

The loans and working capital limits taken by the subsidiaries are secured by a pari passu charge against the immovable fixed assets of the Company situated at Kharadi.

(f) Customs Duty:

From 1969 to 1979, customs duty has been provided on the basis of provisional assessments, which are not admitted by the Customs Authorities. Pending settlement of the foregoing, a deposit of Rs. 6.79 lakhs (Previous year: Rs. 6.79 lakhs) has been made and bonds aggregating to Rs. 54.43 lakhs (Previous year: Rs. 54.43 lakhs) guaranteed by the General Insurance Corporation of India have been executed. From 16 August 1988 to 31a March 1993, pursuant to changes in the Customs Valuation Rules, the Customs Authorities have cleared the Companys consignments on provisional basis on execution of bonds aggregating Rs. 1618.45 lakhs (Previous year: Rs. 1618.45 lakhs), representing the entire value of the import consignments. Adjustments, if any, on this account, would be made as and when the assessments are finalised. The Company has been legally advised that the liability on this account is not expected to exceed Rs. 31.00 lakhs (Previous year: Rs. 31.00 lakhs), which has been provided for.

4. During the previous year, the Company adopted Accounting Standard (AS) 30 "Financial Instruments: Recognition and Measurement" issued by the Institute of Chartered Accountants of India, along with the consequent limited revisions to other accounting standards, except so far as they are in conflict with other mandatory accounting standards and other regulatory requirements.

Consequently, exchange gain aggregating Rs. 326.58 Lakhs (Previous year.- exchange loss Rs. 66.17 lakhs), in respect of forward exchange contracts which qualify for hedge accounting, has been recognised directly in the Hedging Reserve Account, to be recognised in the Profit and Loss Account when the underlying transactions occur.

5. Employee Stock Option Schemes

Currently the Company has instituted two Employees Stock Option Plans. The Compensation Committee of the Board approves the grant of options. Options vest with employees over specified time periods subject to fulfilment of certain conditions.

6. Pursuant to the shareholders approval for buy back of equity shares on proportionate basis through the tender offer route, the Company has bought back 2,424,000 equity shares for an aggregate amount of Rs. 3,999.60 lakhs, by utilizing Share Premium account and General Reserve to the extent of Rs. 2,980.68 lakhs and Rs. 776.52 lakhs respectively.

Capital Redemption Reserve has been created out of genera! reserve for Rs. 242.40 lakhs, being the nominal value of shares bought back in terms of section 77AA of the Companies Act, 1956.

7. Related Party Disclosures

List of Related Parties (as identified and certified by the Management)

(i) Parties where control exists

a. Wholly owned subsidiaries:

ZensarTechnologies, Inc., USA ZensarTechnologies(UK) Limited ZensarTechnologies (Singapore) Pte. Limited ZensarTechnologies GmbH, Germany (under Liquidation)

Zensar Advanced Technologies Limited ZensarTransformation Services Limited (merged with ZensarTechnologies Limited w.e.f lsl April, 2009) Zensar OBT Technologies Limited (merged with ZensarTechnologies Limited w.e.f r April, 2009)

Zensar OBT Technologies Inc., USA (merged with ZensarTechnologies Inc., USAw.e.f31": March, 2009) ZensarThoughtDigital LLC (merged with ZensarTechnologies Inc., USA w.e.f 31" March, 2009)

b. Other subsidiaries/Entities under joint control

ZensarTechnologies (Shenzhen) Limited

c. Parties having control (directly or indirectly):

RPG Industries Pvt. Limited

Blue Niles Holdings Limited

Pedriano Investments Limited

RPG Cellular Investments & Holdings Private Limited

Universal Industrial Fund Limited

Summit Securities Limited

Electra Partners Mauritius Limited

(ii) Key Management Personnel

Dr. Ganesh Natarajan

Mr. S. Balasubramaniam

Mr. V. Balasubramanian

Mr. ParmodBhalla (upto30th November, 2008)

Mr. Sanjay Marathe

Ms. Prameela Kalive

Mr. Hiren Kulkarni

Mr. Ajay Bhandari

Mr. Krishna Ramaswami

Notes:

(i) As the liability for gratuity and compensated absence is provided on an actuarial basis for the Company as a whole, the amounts pertaining to the Managing Director is not ascertainable and therefore not included above.

(ii) Computation of net profit and commission payable to the Directors as per Section 349 of the Act has not been given as no commission is payable to Directorsduringtheyearended 31st March 2010.

A. Disputed Statutory matters mainly include:

(a) Provision for disputed statutory liabilities comprises matters under litigation with Sales-Tax, Customs Duty and ESI authorities.

(b) The amount of provision made by the Company is based on the estimate made by the Management considering the facts and circumstances of each case.

To the extent the Company is confident that they have a strong case that portion is disclosed under contingent liabilities.

(c) The timing and the amount of cash flows that will arise from these matters will be determined by the Appellate Authorities only on settlement of these cases.

B. Provisions for Other Obligations mainly include provision for rent related litigations with previous landlords. The timing and the amount of cash flows that will arise from these matters will be determined by the Appellate Authorities only on settlement of these cases.

8. Dues to Micro, Small and Medium enterprises

The Company has compiled this information based on the current information in its possession. As at 31st March 2010, no supplier has intimated the Company about its status as a Micro or Small Enterprise or its registration with the appropriate authority under the Micro, Small and Medium Enterprises Development Act, 2006

9. Disclosures in accordance with Revised AS-15 on "Employee Benefits":

In terms of the guidance on implementing Revised AS 15, notified under section 211(3C) of the Act, the Provident Fund set up by the Company is treated as a Defined Benefit Plan since the Company is obligated to meet interest shortfall, if any. However, as at year end no shortfall remains unprovided for. As advised by an independent actuary, it is not practical or feasible to actuarially value the liability considering the rate of interest as notified by the

Government can vary annually. Further the pattern of investments for investible funds is as prescribed by the Government. Accordingly the other related disclosures as required by the Revised AS 15 have not been made.

(vi) The overall expected rate of return on assets is based on the expectation of the average long term rate of return expected on investments of the Fund during the estimated term of the obligations.

The estimates of future salary increases considered in actuarial valuation takes into account inflation, seniority, promotion and other relevantfactors.

10. Expenditure on Research and Development

During the year, the Department of Scientific and Industria Research has accorded the recognition as In-House R&D unit to the Company. The Company has incurred capital expenditure amounting to Rs. 89.54 lakhs (Previous year: Rs. 78.34 lakhs) on development activities during the year.

11. Other Information

(a) 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 sales and the information as required under Paragraphs 3 and 4C of Part II of Schedule VI of the Companies Act, 1956of India.

(b) Additional information pursuant to Part IV of Schedule VI to the Companies Act, 1956 is set out in the Annexure.

12. Reclassification

Prior year comparatives have been reclassified to conform with currentyears presentation, where applicable.

Signatures to Schedules 1 to 14 forming part of the Balance Sheet as at 31st March 2010 and the Profit and Loss Account for the year ended 31st March 2010.

Notes :

1 The above Cash Flow Statement has been prepared under the "Indirect Method" set out in Accounting Standard (AS)-3 on Cash Flow Statements.

2 Prior year comparatives have been reclassified to conform with current years presentation, where applicable. Notes as per Schedule 14 and other schedules form an integral part of the Cash Flow Statement.

This is the Cash Flow Statement referred to in our report of even date.

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