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Notes to Accounts of Zensar Technologies Ltd.

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.