Notes to Accounts of Agnite Education Ltd.

Sep 30, 2011

1. Post Composite Scheme of Arrangement

Pursuant to the Composite Scheme of Arrangement (the Scheme) under sections 391 to 394 of the Companies Act, 1956, as approved by the Honourable High Court of Judicature at Madras vide its Order dated 12th October 2007, the Company had demerged and transferred its Marine related business to Teledata Marine Solutions Ltd (TMSL) and its Technology related business to Teledata Technology Solutions Limited (TTSL) and merged Sirius Shipping Company Limited (SSCL) with TMSL, effective from the appointed dated i.e. 1st November, 2006. In view of the order dated 12th October 2007, the operations from the appointed date of demerger till the balance sheet date have resulted in payable to Teledata Marine Solutions Ltd (TMSL) and Teledata Technology Solutions Ltd (TTSL) of Rs.148.97 Crore and Rs.11.00 Crore respectively.

2. Secured Loans :

i. The Credit facilities from Bank are secured primarily by current assets of the Company and further secured by the fixed assets of the Company.

ii. The Company has offered all its fixed assets other than assets acquired on Hire Purchase for collateral in respect of the terms loans, working capital limits, Corporate guarantees given and non funded limits availed by the Company including those funded and non funded liabilities demerged to resulting Companies. The Credit facilities of the Company including fund based and non fund based limits are further secured by personal guarantees of a Director and a third party, Corporate guarantees of three Body corporates, collateral of shares pledged of director/Body corporates, certain land and buildings belonging to Directors/Body Corporates/third party.

iii. The Banks have taken legal action to recover the dues from the Company as per the terms of sanction, as the accounts with the Bank having become Non Performing Assets and over due beyond the time given by the bank. However the Company having the ability to carry on its e-Learning projects and being quite confident of its marketing have given a compromise proposal, for repayment to banks keeping in view of the future market value of the collateral securities offered by the Company and future earning potential of its e-Learning Products.

3. Unsecured Loans

Unsecured loan from Director and Body Corporates of Rs.185.57 Crores are interest free, as explained by the management

4. Deposits in Bank Account :

Deposits in bank accounts as on the date of Balance Sheet are under lien to Banks as margin for Bank Guarantee, Letter of Credit and Overdraft of the Company as per the Scheme.

5. Contingent Liabilities: (Rs. Crore) Particulars 2010-11 2009-10 (18 Months) i. Bank Guarantee given in the ordinary course of business (gross) 2.13 3.78

ii. Advance Capital Commitments net of advance 5.27 13.02

iii.Corporate Guarantee given to Bank against loan taken by whollyowned 205.45 189.54 subsidiary Baytech Inc B.V.I.

iv. Corporate Guarantees given in favour of the vendors/banks of - 14.86 Esys Technologies Pte. Ltd, Singapore

v. Corporate Guarantees given in favour of the banks 231.76 284.76

vi. Claims against the Company not acknowledged as debt * 1.00 20.04

The Income Tax Authorities have re-opened Company's income tax assessments, for the Assessment years 1998-99, 1999-2000, 2000-2001,2003-2004 ,2004-2005 , 2006-2007 and 2007-2008. The Authorities have raised demands aggregating to Rs.99.97 Lakhs on various matters including the tax holiday benefits availed in respect of profits arising from the Export oriented activity of the Company against which Rs.0.08 Crore was paid till date, under protest.

The Management contends that the Company has sufficient grounds to defend its position and has filed necessary appeals against such demands . If the claim of the Income Tax authorities prevail the Company would be required to make a minimum incremental tax provision aggregating to Rs.99.97 Lakhs. The Company is contesting the demand and the Management, including its tax advisers, believes that its position will likely be upheld in the appellate process as it has already won its case for the assessment year 2003-04. The Company is of the opinion that the tax provision for operations during the year is sufficient and the contention of the department is not tenable.

6. The Company has received communication from the Service tax department, with regard to the liability of service tax, which is being followed up by the company to confirm the liability on the subject.

7. The company's e-Learning project is in progress, the cost of which amounting to Rs.7.44 Crores is classified under fixed assets under the asset side of the Balance sheet.

8. As reflected in the 26AS summary for the Assessment year 2010-2011, the sum of Rs.3.64 Crores classified as refund of Assessment year 2007-08, which was taken to foreign fluctuation income during the Financial Year 2009-2010, now during this period is being shown as prior period adjustment - fluctuation, giving credit to the advances.

The Company is of the opinion that the computation of net profit under section 349 of the Companies Act, 1956 is not required to be made as no commission is paid / payable.

9. a. Provision for Taxation:

The Company is eligible for Tax Benefit under section 10B of Income Tax Act, 1961, accordingly the provision for tax has been computed considering the deduction allowable under above said section.

The Company follows territorial basis of taxation and provision has been done in respect of the foreign branches as per law of those countries. The Company is availing tax exemption under Section 10B of Income Tax Act, 1961 in respect of its export turnover from India. The period of 18 months relate to Assessment Year 2011-12 and 2012-13 and the company adhered to the provision of Income Tax Act, 1961 for computation of Tax Liability.

E Quantitative Details

The Company is engaged in development and maintenance of computer software. The production and sale of such software cannot be expressed in any generic unit. Hence it

10. The Company operates non-integral branches in United Arab Emirates and United States of America whose turnovers are Rs.8.00 Crore (Previous Year. Rs.59.00 Crore) and Rs. 25.31 Crore (Previous Year. Rs.Nil) respectively and profits Rs.1.75 Crore (Previous Year. Rs 2.87 Crore) and loss of Rs.1.55 Crore (Previous Year loss of Rs 0.42 Crore) have been audited by branch auditors.

11. Employee Benefits

The Company has adopted Accounting Standard 15, Employee Benefits (revised 2005), issued by the Institute of Chartered Accountants of India [the 'revised AS 15'].

12. Foreign exchange gain / (loss) on account of reinstatement of Debtors, Creditors and Advances during the period, has not been recognised in the books of accounts, resulting in non-adoption of AS 11 (Revised) "The effect of Foreign Exchange Fluctuations" issued by ICAI.

13. Accounting for Leases Operating Lease :

Rentals are expensed with reference to lease terms and other considerations.

14. As per Accounting Standard 18, issued by the Institute of Chartered Accountants of India, the disclosures of transactions with the related parties as defined in the Accounting Standard are given below:

15. Investments /Advance to subsidiaries & Associates

a. The Company has advanced to its wholly owned subsidiary Baytech Inc BVI of Rs 186.13 Crore towards repayment of loans taken for acquisition of eSys Technologies Pte Limited. The company has initiated legal proceedings for the breach of terms of share purchase agreement against Vikas Goel and eSys Technologies Pte Ltd, Singapore and presently matter is subjuidice. Considering the above , the Company has not consolidated results of SPV. The Company is confident of recovering its Investment.

The Company is yet to receive share certificates for equity shares in respect of its investment of Rs 110.33 Crore (USD 25 Million) in its name, which currently has been held fully by Baytech Inc. BVI its wholly owned Subsidiary. In the opinion of the management the same are held by Baytech Inc as nominee share holders towards beneficial holding of company in respect of which necessary declaration has been taken from Baytech Inc. BVI.

b. The Company has pledged its investments in Baytech Inc and Rainforest Trading Private limited as collateral security and has given guarantee for loan taken by Baytech Inc. BVI of Rs 205.39 Crore (P.Y Rs.189.54 Crore) ie USD 41.98 Million (P.Y USD 41.98 Million) for acquisition of 38.86% stake in Rainforest Trading Limited. The company has not considered the accounts of susbisidary company during the current period because of the ongoing litigation.

c. The Company's Investment in share application of Insoft Systems Pte Ltd, Singapore of Rs.8.24 Crore are still pending allotment and approvals from authorities concerned.

d. Pursuant to the Composite Scheme of Arrangement sanctioned by Honourable High Court of Madras , Vide its order dated 12th October 2007, Agnite Education Limited was entitled to 2,40,000 Equity Shares of Rs.2 each against its holding of 1,20,000 Equity Share of Sirius shipping Company Limited of Rs.10 each ( ie. 2 shares of Rs.2 each for every one share of Rs 10 held). The Shares are yet to be allotted to the company in view of the litigation which is pending before Honourable Company Law Board , Southern Region Branch, Chennai.

16. As of the balance sheet date, the Company has net foreign currency exposure (other than overseas branches) that are not hedged by a derivative instrument or otherwise amounting to Rs.659.64 Crore (Previous Year Rs.654.10 Crore) in respect of payables and Rs.1584.49 Crore (Previous Year. Rs.1577.45 Crore) in respect of receivables.

17. Balances in sundry debtors, loans and advances and other current assets are subject to confirmation. The company had initiated the process of obtaining of confirmations during the period and partially obtained confirmations from third parties for the balances at the end of the period.

18. The Company has marketing agreement with marketing agents in various countries through whom products are sold. The Company has initiated legal action against its debtors for recovery of debts, wherever necessary.

19. The National Stock Exchange of India had suspended the trading in the shares of the Company with effect from 09th September 2009 due to non compliances. The Company is taking necessary steps to ensure compliances.

20. The Loan accounts of the Company with State Bank of India, Overseas Branch, Chennai and balances with other banks have been classified as Non Performing Assets (NPA) during the year 2009 and the Company is taking steps to regularise all the accounts. As the banks have stopped charging interest on the loan accounts, being classified as Non Performing Assets (NPA), the Company inturn has not provided for the same.

21 .In the opinion of the management the plantation is subsisting as on the date of balance sheet and is of the value stated and no impairment is deemed necessary. The valuation of the plantation being technical matter the auditors have relied on the representation of the management.

22. Segment Reporting

As per Accounting Standard 17 - "Segment Reporting" segment information has been provided in the Notes to accounts of Consolidated Financial Statements.

23. The management is currently in the process of identifying enterprises which have provided goods and services to the company and which qualify under the definition of Medium and Small Enterprises as defined under Micro, Small and Medium Enterprises Development Act, 2006. Accordingly, the disclosure in respect of the amounts payable to such medium and small enterprises as at 30th September, 2011 has not been made in the financial statements.

24. The previous year figures have been reworked, regrouped, rearranged and reclassified wherever necessary.

25. The previous year figures are not comparable, as the current period of audit is for 18 months ended 30th September 2011.

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Mar 31, 2010

1 Post Composite Scheme of Arrangement

Pursuant to the Composite Scheme of Arrangement (the Scheme) under sections 391 to 394 of the Companies Act, 1956, as approved by the Honourable High Court of Judicature at Madras vide its Order dated 12th October 2007, the Company had demerged and transferred its Marine related business to Teledata Marine Solutions Ltd (TMSL) and its Technology related business to Teledata Technology Solutions Limited (TTSL) and merged Sirius Shipping Company Limited (SSCL) with TMSL, effective from the appointed dated i.e. 1st November, 2006. In view of the order dated 12th October 2007, the operations from the appointed date of demerger till the balance sheet date have resulted in payable to Teledata Marine Solutions Ltd (TMSL) and Teledata Technology Solutions Ltd (TTSL) of Rs.148.15 Crore and Rs.10.53 Crore respectively.

2 Secured Loans :

i. The Credit facilities from Bank are secured primarily by current assets of the Company and further secured by the fixed assets of the Company.

ii. The Company has offered all its fixed assets other than assets acquired on Hire Purchase for collateral in respect of the terms loans, working capital limits, Corporate guarantees given and non funded limits availed by the Company including those funded and non funded liabilities demerged to resulting Companies. The Credit facilities of the Company including fund based and non fund based limits are further secured by personal guarantees of a Director and a third party, Corporate guarantees of three Body corporates, collateral of shares pledged of director/Body corporates, certain land and buildings belonging to Directors/Body Corporates/third party.

iii. Bank Overdraft is further secured by banks lien against the Fixed Deposits.

3 Deposits in Bank Account :

Deposits in bank accounts as on the date of Balance Sheet are under lien to Banks as margin for Bank Guarantee, Letter of Credit and Overdraft of the Company as per the Scheme.

4.Contingent Liabilities: (Rs. Crore)

Particulars 2009-10 2008-09

i. Bank Guarantee given in the ordinary course of business (gross) 3.78 6.99

ii. Advance Capital Commitments net of advance 13.02 17.46

iii. Corporate Guarantee given to bank against loan taken by wholly owned 189.54 213.93 subsidiary Baytech Inc B.V.I.

iv. Corporate Guarantees given in favour of the vendors/banks of Esys 14.86 16.72 Technologies Pte. Ltd, Singapore

v. Corporate Guarantees given in favour of the banks 284.76 284.76

vi Claims against the Company not acknowledged as debt * 20.04 6.88

* The Income Tax Authorities have re-opened Companys income tax assessments, for the Assessment years 1998-99, 1999- 2000, 2000-2001,2003-2004 ,2004-2005 , 2006-2007 and 2007-2008. The Authorities have raised demands aggregating to Rs. 20.04 Crore on various matters including the tax holiday benefits availed in respect of profits arising from the Export oriented activity of the Company against which Rs.0.08 Crore was paid till date, under protest.

The Management contends that the Company has sufficient grounds to defend its position and has filed necessary appeals against such demands . If the claim of the Income Tax authorities prevail the Company would be required to make a minimum incremental tax provision aggregating to Rs.20.04 Crore. The Company is contesting the demand and the Management, including its tax advisers, believes that its position will likely be upheld in the appellate process as it has already won its case for the assessment year 2003-04. The Company is of the opinion that the tax provision for operations during the year is sufficient and the contention of the department is not tenable.

5 a. Provision for Taxation:

The Company is eligible for Tax Benefit under section 10B of Income Tax Act, 1961, accordingly the provision for tax has been computed considering the deduction allowable under above said section.

The Company follows territorial basis of taxation and provision has been done in respect of the foreign branches as per law of those countries. The Company is availing tax exemption under Section 10B of Income Tax Act, 1961 in respect of its export turnover from India . The Company has provided Tax on domestic turnover as per its computation on domestic tax income or Minimum Alternative Tax (MAT) under section 115JB whichever is higher.

F. Quantitative Details

The Company is engaged in development and maintenance of computer software. The production and sale of such software cannot be expressed in any generic unit. Hence it is not feasible to give the quantitative details of sale and other information as required under Part II of Schedule VI of the Companies Act, 1956.

6 The Company operates non-integral branches in United Arab Emirates and United States of America whose turnovers are Rs.59.00 Crore (Previous Year. Rs.109.26 Crore) and Rs. Nil (Previous Year. Rs.32.73 Crore) respectively and profits Rs.2.87 Crore (Previous Year. Rs 17.00 Crore) and loss of Rs.0.42 Crore (Previous Year loss of Rs 0.34 Crore) have been audited by branch auditors.

7 Employee Benefits

The Company has not adopted Accounting Standard 15, Employee Benefits (revised 2005), issued by the Institute of Chartered Accountants of India [the revised AS 15]. The valuation of employee benefits have been done on actual basis as against the actuarial valuation on projected unit cost basis.

8 Foreign exchange gain of Rs.63.02 Crores on account of reinstatement of Debtors, Creditors and Advances during the year, has not been recognised in the books of accounts, resulting in non-adoption of AS 11 (Revised) "The effect of Foreign Exchange Fluctuations" issued by ICAI.

9 Accounting for Leases Operating Lease :

Rentals are expensed with reference to lease terms and other considerations.

10 As per Accounting Standard 18, issued by the Institute of Chartered Accountants of India, the disclosures of transactions with the related parties as defined in the Accounting Standard are given below:

List of related parties with whom transactions have taken place and relationships:

(As certified by the management)

Subsidiary Companies

Sl Name of the Related Party Nature of Relationship

1 Insoft Systems Pte Ltd., Singapore Wholly Owned Subsidiary w.e.f 30.08.2004

2 I-Max Networks Limited, UK Subsidiary of Insoft Systems Pte. Ltd. holding 80% up to 31.03.2009

3 FXA World Plc London Investment of Insoft Systems Pte. Ltd. holding 30% w.e.f 01.04.2009

4 Teledata Education Management System Wholly Owned Subsidiary w.e.f 27.06.2006 Limited

5 Baytech Inc. BVI Wholly Owned Subsidiary w.e.f 23.01.2007

6 Rainforest Trading Ltd (SPV) Subsidiary (held 51% jointly with Baytech Inc.)

7 Esys Technologies Pte Ltd, Singapore Wholly Owned Subsidiary of Rainforest Trading Ltd.

8 Net Eng Tel Co. Ltd., Thailand Subsidiary holding 80%

9 Kryptos Networks Pvt Ltd Subsidiary holding 80%

10 Teledata Education & Research Foundation Wholly Owned Subsidiary Limited

11 Teledata Channel for Instant Payment Wholly Owned Subsidiary Systems Limited

12 PT Teledata Energy Services Ltd Indonesia Subsidiary holding 90%

Associate Companies:

Sl Name of the Related Party Nature of Relationship

1 Teledata Marine Solutions Ltd

2 Teledata Technology Solutions Limited

3 Complete Agro Biotech Solutions Pvt. Ltd. Enterprise with Common Key management

4 Rose Securities Pvt Ltd personnel

5 Silver Harvest Investment and Trading Pvt Ltd

Key Management Personnel (KMP) with Nature of Relationship

Sl Name of the Related Party Nature of Relationship

1 Gp.Capt. K. Balasubramanian IAF (Retd.) Chairman

2 K. Padmanabhan Managing Director

3 Gayathri Padmanabhan Relative of KMP

11 Investments /Advance to subsidiaries & Associates

a. During the year 2008-09, the Company divested 3% stake in Rainforest Trading Limited (SPV), whereas, the divestment did not materialize and as on date, the Company holds directly (12.14%) and through its wholly owned subsidiary Baytech Inc. BVI (38.86%), aggregating 51% equity interest in Rainforest Trading Limited (Special Purpose Vehicle (SPV)) holding eSys Technologies Pte. Limited. The Company has advanced to its wholly owned subsidiary Baytech Inc BVI of Rs 186.13 Crore towards repayment of loans taken for acquisition of eSys Technologies Pte Limited. The company has initiated legal proceedings for the breach of terms of share purchase agreement against Vikas Goel , The Managing Director of eSys Technologies Pte Ltd and eSys Technologies Pte Ltd, Singapore and presently matter is subjuidice. Considering the above , the Company has not consolidated results of SPV.

The Company is yet to receive share certificates for equity shares in respect of its investment of Rs 110.33 Crore (USD 25 Million) in its name, which currently has been held fully by Baytech Inc. BVI its wholly owned Subsidiary. In the opinion of the management the same are held by Baytech Inc as nominee share holders towards beneficial holding of company in respect of which necessary declaration has been taken from Baytech Inc. BVI.

b. The Company has pledged its investments in Baytech Inc and Rainforest Trading Private limited as collateral security and has given guarantee for loan taken by Baytech Inc. BVI of Rs 189.54 Crore (P.Y Rs.213.93 Crore) ie USD 41.98 Million (P.Y USD 41.98 Million) for acquisition of 38.86% stake in Rainforest Trading Limited. The company has not considered the accounts of susbisidary company during the current year because of the ongoing litigation.

c. The Companys Investment in share application of Insoft Systems Pte Ltd, Singapore of Rs.8.24 Crore are still pending allotment and approvals from authorities concerned. During the year,Insoft Systems Pte ltd has wirtten off its investment in Imax Networks , London because of Non performance and consequently, the Companys investment in Insoft Systems Pte Ltd is written off by Rs.4.02 Crores.

d. Pursuant to the Composite Scheme of Arrangement sanctioned by Honourable High Court of Madras , Vide its order dated 12th October 2007, Teledata Informatics Ltd was entitled to 2,40,000 Equity Shares of Rs.2 each against its holding of 1,20,000 Equity Share of Sirius shipping Company Limited of Rs.10 each ( ie. 2 shares of Rs.2 each for every one share of Rs 10 held). The Shares are yet to be allotted to the company in view of the litigation which is pending before Honourable Company Law Board , Southern Region Branch, Chennai.

12 In pursuance of the announcement dated 29th March, 2008 of the Institute of Chartered Accountants of India on Accounting for Derivatives, the Company has valued its derivative contracts by marking them to market. The Company does not have any Forward Contract Outstanding as on 31st March 2010. All the Derivative Contracts entered in to by the Company have been settled before 31st March 2010 and the provision in respect of those Contracts of Rs.20.55 Crore has been credited to the Profit & Loss A/c. The Company does not hold or issue derivative financial instruments for trading or speculative purposes and all the derivative entered into by the Company are to mitigate or offset the risks that arise from their normal business activities only. The Company intends to go for adoption of AS - 30 on Financial Instruments: Recognition and Measurement from 1st April 2011 since it will take some time on account of associated complexities and documentation requirements.

13 As of the balance sheet date, the Company has net foreign currency exposure (other than overseas branches) that are not hedged by a derivative instrument or otherwise amounting to Rs.654.10 (Previous Year Rs.320.68 Crore) in respect of payables and Rs 1577.45 Crore (Previous Year. Rs.1236.59 Crore) in respect of receivables.

14 Balances in sundry debtors, loans and advances and other current assets are subject to confirmation. The company had initiated the process of obtaining of confirmations during the year and partially obtained confirmations from third parties for the balances at the end of the year.

15 During the year the customers have invoked Inland Bank Guarantee (BG) amounting to Rs 2.21 Crores for non performance of terms and conditions of Contract with customer.

16 The Company has made arrangements with certain Overseas Creditors for necessary collections of receivable from certain Overseas Customers. The Company has during the year called off the said arrangement since there was no improvement .

17 The Company has marketing agreement with marketing agents in various countries through whom products are sold. In the absence of any sales returns over the past years the revenue is recognised on sale of products to marketing agencies irrespective of confirmation by the marketing agents for the sale of products to ultimate customers. The information in respect of the products lying unsold with the marketing agencies at the end of the year is not available.

18 The National Stock Exchange of India has suspended the trading in the shares of the Company with effect from 09th September 2009 due to non compliances. The Company is taking necessary steps to ensure compliances in future.

19 The Loan accounts of the Company with State Bank of India, Overseas Branch, Chennai have been classified as Non Performing Assets (NPA) during the year and the Company is taking steps to regularise all the accounts.

20 In the opinion of the management the plantation is subsisting as on the date of balance sheet and is of the value stated and no impairment is deemed necessary. The valuation of the plantation being technical matter the auditors have relied on the representation of the management.

21 Segment Reporting

As per Accounting Standard 17 - "Segment Reporting" segment information has been provided in the Notes to accounts of Consolidated Financial Statements.

22 The management is currently in the process of identifying enterprises which have provided goods and services to the company and which qualify under the definition of Medium and Small Enterprises as defined under Micro, Small and Medium Enterprises Development Act, 2006. Accordingly, the disclosure in respect of the amounts payable to such medium and small enterprises as at 31st March, 2010 has not been made in the financial statements.

23 The previous year figures have been reworked, regrouped, rearranged and reclassified wherever necessary.

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Mar 31, 2009

Post Composite Scheme of Arrangement

1 Pursuant to the Composite Scheme of Arrangement (the Scheme) under sections 391 to 394 of the Companies Act, 1956, as approved by the Honourable High Court of Judicature at Madras vide its Order dated 12th October 2007, the Company had demerged and transferred its Marine related business to Teledata Marine Solutions Ltd (TMSL) and its Technology related business to Teledata Technology Solutions Limited (TTSL) and merged Sirius Shipping Company Limited (SSCL) with TMSL, effective from the appointed dated i.e. 1st November, 2006. In view of the order dated 12th October 2007, the operations from the appointed date of demerger till the balance sheet date have resulted in payable to Teledata Marine Solutions Ltd (TMSL) and Teledata Technology Solutions Ltd (TTSL) ofRs.l39.76CroreandRs.ll.l4Crorerespectively.

2 Secured Loans:

i. The Credit facilities from Bank are secured primarily by current assets of the Company and further secured by the fixed assets of the Company.

ii. The Company has offered all its fixed assets other than assets acquired on Hire Purchase for collateral in respect of the term loans, working capital limits, Corporate guarantees given and non funded limits availed by the Company including those funded and non funded liabilities demerged to resulting Companies. The Credit facilities of the Company including fund based and non fund based limits are further secured by personal guarantees of a Director and a third party, Corporate guarantees of three Body corporates, collateral of shares pledged of director/Body corporates, certain land and buildings belonging to Directors/Body Corporates/third party. "

iii. BankOverdraft is secured by banks lien against the Fixed Deposits.

3 Deposits in Bank Account:

Deposits in bank accounts as on the date of Balance Sheet are under lien to Banks as margin for Bank Guarantee, Letter of Credit and Overdraft of the Company as per the Scheme.

4 Contingent Liabilities: (Rs. Crore)



Particulars 2008-09 2007-08

i. Bank Guarantee given in the ordinary course of business (gross) 6.99 337.58

(Net of Guarantee relating to TMSL standing in the name of the Company pending effect of demerger to be effected in Bank records included in 2007-08)

ii. Advance Capital Commitments net of advance 17.46 19.45

iii. Corporate Guarantee given to Bank against loan taken by 213.93 247.62 wholly owned subsidiary Baytech Inc B.V.I.

iv. Corporate Guarantees given in favour of the vendors/banks of 16.72 36.30 Esys Technologies Pte. Ltd, Singapore

v. Corporate Guarantees given in favour of the banks 284.76 537.40

vi ciaims against the Company not acknowledged as debt 6.88 8.89

* The Income Tax Authorities have re-opened Companys income tax assessments, for the Assessment years 1998- 99, 1999-2000, 2000-2001,2003-2004 ,2004-2005 and 2006-2007. The Authorities have raised demands aggregating to Rs. 6.88 Crore on various matters including the tax holiday benefits availed in respect of profits arising from the Export oriented activity of the Company against which Rs.0.08 Crore was paid till date, under protest.

The Management contends that the Company has sufficient grounds to defend its position and has filed necessary appeals against such demands . If the claim of the IncomeTax authorities prevail the Company would be required to make a minimum incremental tax provision aggregating to Rs.6.88 Crore. The Company is contesting the demand and the Management, including its tax advisers, believes that its position kely be upheld in the appellate

process as it has already won its case for the assessment year 2003-04. No tax expense has been accrued in the financial statements for the tax demand raised. The Company is of the opinion that the tax provision for operations during the year is sufficient and the contention of the department is not tenable.

5 a. Provision for Taxation:

The Company is eligible for Tax Benefit under section 10B of Income Tax Act, 1961, accordingly the provision for tax has been computed considering the deduction allowable under above said section.

The Company follows territorial basis of taxation and provision has been done in respect of the foreign branches as per law of those countries. The Company is availing tax exemption under Section 10B of Income Tax Act, 1961 in respect of its export turnover from India . The Company has provided Tax on domestic turnover as per its computation on domestic tax incomeor Minimum Alternative Tax(MAT) under section 115JB whichever is higher.

6. Quantitative Details

The Company is engaged in development and maintenance of computer software. The production and sale of such software cannot be expressed in any generic unit. Hence it is not feasible to give the quantitative details of sale and other information as required under Part II of Schedule VI of the Companies Act, 1956.

7.The Company operates non-integral branches in United Arab Emirates and United States of America whose turnovers are Rs.109.26 Crore (Previous Year. Rs.196.03 Crore) and Rs.32.73 Crore (Previous Year. Rs.114.34 Crore) respectively and profits Rs. 17.00 Crore (Previous Year. Rs 54.58 Crore) and loss of Rs.0.34 Crore (Previous Year profit of Rs 1.55 Crore) have been audited by branch auditors.

8 Employee Benefits

The Company has not adopted Accounting Standard 15, Employee Benefits (revised 2005), issued by the Institute of Chartered Accountants of India [the revised AS 15]. The valuation of employee benefits have been done on actual basis as against the actuarial valuation on projected unit cost basis.

9 The Company has complied with Schedule VI of Companies Act, 1956 virtureof which , foreign exchange gain of Rs.200.13 Crores on account of reinstatement of Debtors, Creditors and Advances during the year, has not been recognised in the books of accounts, resulting in non-adoption of AS 11 (Revised) "The effect of Foreign Exchange Fluctuations" issued by ICAI.

10 Accounting for Leases Operating Lease :

Rentals are expensed with reference to lease terms and other considerations

11 As per Accounting Standard 18, issued by the Institute of Chartered Accountants of India, the disclosures of transactions with the related parties as defined in the Accounting Standard are given below:

List of related parties with whom transactions have taken place and relationships:

(As certified by the management)

15 TheCompany holds directly (12.14%) and through its wholly owned subsidiary Baytech Inc. BVI (35.86%), aggregating 48% equity interest in Rainforest Trading Limited (Special Purpose Vehicle (SPV)) holding eSys Technologies Pte. Limited . The Company has advanced to its wholly owned subsidiary Baytech Inc BVI of Rs 186.13 Crore towards repayment of loans taken for acquisition of eSys Technologies Pte Limited. The company has during the year divested its 3% stake of Rainforest Trading Limited for USD 6 million. The above transfer is subjectto approval of State Bankof India, Singapore.

a. The Company is yet to receive share certificates for equity shares in respect of its investment of Rs 110.33 Crore (USD 25 Million) in its name, which currently has been held fully by Baytech Inc. BVI its wholly owned Subsidiary. In the opinion of the management the same are held by Baytech Inc as nominee share holders towards beneficial holding of company in respect of which necessary declaration has been taken from Baytech Inc. BVI.

b. The Company has pledged its investments in Baytech Inc and Rainforest Trading Private limited as collateral security and has given guarantee for loan taken by Baytech Inc. BVI of Rs 213.93 Crore (P.Y Rs.247.62 Crore) ie USD41.98 Million (P.YUSD 54 Million) for acquisition of 38.86% stake in Rainforest Trading Limited.

c. The Companys Investment in share application of Insoft Systems Pte Ltd, Singapore of Rs. 12.26 Crore are still pending allotment and approvals from authorities concerned.

d. Pursuant to the Composite Scheme of Arrangement sanctioned by Honourable High Court of Madras , Vide its order dated 12th October 2007, Teledata Informatics Ltd was entitled to 2,40,000 Equity Shares of Rs.2 each against its holding of 1,20,000 Equity Share of Sirius shipping Company Limited of Rs. 10 each (ie 2 shares of Rs 2 each for every one share of Rs 10 held). The Shares are yet to be allotted to the company in view of the litigation which is pending before Honourable Company Law Board , Southern Region Branch, Chennai.

e. The Company is not in possession of the Share certificates in respect of its investments in PTTeledata Energy services Indonesia of Rs 1.22 Crores.

In pursuance of the announcement dated 29th March, 2008 of the Institute of Chartered Accountants of India on Accounting for Derivatives, the Company has valued its derivative contracts by marking them to market. The gain arose out of the same during the year amounting to Rs. 7.72 Crore is recognised by the Company in profit and loss account in absence of adoption of Accounting Standard - 30 on Financial Instruments: Recognition and Measurement for the financial year. The Company does not hold or issue derivative financial instruments for trading or speculative purposes and all the derivative entered into by the Company are to mitigate or offset the risks that arise from their normal business activities only. The Company intends to go for adoption of AS - 30 on Financial Instruments: Recognition and Measurement from 1st April 2011 since it will take some time on account of associated complexities and documentation requirements.

As of the balance sheet date, the Company has net foreign currency exposure (other than overseas branches) that are not hedged by a derivative instrument or otherwise amounting to Rs.320.68 (Previous Year. Rs.Nil ) in respect of payables and Rs 1236.59 Crore (Previous Year. Rs.550.17 Crore) in respect of receivables.

12 Balances in sundry debtors, loans and advances and other current assets are subject to confirmation. The company had initiated the process of obtaining of confirmations during the year and partially obtained confirmations from third parties for the balances at the end of the year.

13 During the year the customers have invoked Bank guarantees (BGs) amounting to Rs 374.35 Crores for non performance of terms and conditions of BGs out of which Rs 76.72 Crore pertains to sales of TMSL (erstwhile Marine division of TDIL).

14 The Company has made arrangements with certain Overseas Creditors for necessary collections of receivable from certain Overseas Customers. The Company has allowed necessary discounts in the process

15 The Company has marketing agreement with marketing agents in various countries through whom products are sold. In the absence of any sales returns over the past years the revenue is recognised on sale of products to marketing agencies irrespective of confirmation by the marketing agents for the sale of products to ultimate customers. The information in respect of the products lying unsold with the marketing agencies at the end of the year is not available.

16 In the opinion of the management the plantation is subsisting as on the date of balance sheet and is of the value stated and no impairment is deemed necessary. The valuation of the plantation being technical matter the auditors have relied on the representation of the management.

17 Loss on sale of investments Rs.1.62 crores is on account of sale of shares of Kryptos Networks Pvt Ltd( a subsidiary of the company during the year)

18 Segment Reporting

As per Accounting Standard 17 - "Segment Reporting" segment information has been provided in the Notes to accounts of Consolidated Financial Statements

19 The management is currently in the process of identifying enterprises which have provided goods and services to the company and which qualify under the definition of Medium and Small Enterprises as defined under Micro, Small and Medium Enterprises Development Act, 2006. Accordingly, the disclosure in respect of the amounts payable to such medium and small enterprises as at 31st March, 2009 has not been made in the financial statements.

20 The previous year figures have been reworked, regrouped, rearranged and reclassified wherever necessary.