Mar 31, 2015
1. COMPANY OVERVIEW
Blue Star Infotech Limited (''Blue Star'' ''BSIL'' or the ''Company'') along
with its wholly owned direct and controlled subsidiaries (the ''Group'')
is an Information technology and software services organisation. The
company provides technology, consultancy and outsourcing services.
As of 31 March 2015, Blue Star Limited and other promoters owned 51.78%
of the Company''s equity share capital and have the ability to control
its operating and financial policies. The Company''s registered office
is in Mumbai and it has three subsidiaries, one company under common
management and control and three step-down subsidiaries across the
globe.
2. share capital
The Company has only one class of shares referred as equity shares
having a face value of Rs. 10/- each. Each shareholder is entitled to
one vote per share.
The Company declares and pays dividends in Indian rupees. All dividends
proposed by the Board of Directors is subject to the approval of the
shareholders at the ensuing Annual General Meeting.
During the year ended 31 March 2015, the amount of dividend recognized
as distributable to equity shareholders was Rs. 4/- per share. The
total dividend appropriation for the year ended 31 March 2015 amounted
to (Rs. in Lakhs) 522.40 (Previous year (Rs. in Lakhs) 486) including
corporate dividend tax of (Rs. in Lakhs) 90.40 (Previous year (Rs. in
Lakhs) 70.60).
In the event of liquidation of the Company, the holders of equity
shares will be entitled to receive any of the remaining assets of the
Company. The distribution will be in proportion to the number of equity
shares held by the shareholders.
3. shareholders holding more than 5% shares
As at 31 march 2015, Blue Star limited holds 28.69% (30,98,025 shares)
of the companyÂs shares (29.83% (30,98,025 shares) as of 31 march 2014)
and mr. ashok mohan advani holds 7.36% (795,165 shares) of the
companyÂs shares (7.66% (7,95,165 shares) as of 31 march 2014).
4. Stock Option Plan
1. The Company has implemented Employee Stock Option Plans for the key
employees of the Company and its subsidiaries through the Blue Star
Infotech Limited - Key Employee Stock Option Trust (the ''Trust'') formed
for the purpose. All the options issued by the company are equity share
based options which have to be settled in equity shares only. The
shares to be allotted to employees under the Blue Star Infotech Limited
- Key Employee Stock Option Scheme (the ''ESOP scheme'') were purchased
by the trust from the open market and acquired through fresh issue of
shares by the Company.
Post 16 February 2013, as per SEBI mandate, the Company is required to
issue fresh shares to the Trust for a consideration to meet its
obligations under the ESOP scheme. Pursuant to the ESOP scheme, the
Board at its meeting held on 23 July 2014 approved issue of 4,15,000
shares to the Trust for subsequent issue to eligible employees under
the ESOP scheme.
5. Notes:
a) The shareholders, in the Annual General Meeting held on 22 July 2011
had approved the grant of 10,00,000 employee stock options in
accordance with the ESoP Scheme, equivalent to 10% of the issued and
paid up share capital of the company as at 31 march 2011.
b) By virtue of a postal ballot, the shareholders accorded their
approval, the result of which was declared on 12 December 2013 for the
additional grant of 5,00,000 employee stock options in accordance with
the ESoP Scheme, equivalent to 4.81% of the issued and paid up share
capital of the company as at 31 march 2013.
c) the compensation committee granted 5,15,000 options on 31 august
2012 at Rs. 60 per share, 170,000 options on 29 march 2013 at Rs. 57
per share, 4,67,000 options on 29 may 2013 at Rs. 52 per share, 95,000
options on 18 December 2013 at Rs. 83 per share and 2,71,000 options on
18th December 2014 at Rs.188 per share to key managerial employees of
the company and its subsidiaries (including an executive director of
the company). the grant price is based on the closing market price
prevailing on the date prior to the date of grant, on the stock
exchange recording highest volume.
d) There is one employee (Ml Sunil Bhatia - chief Executive Officer and
managing Director) in the Group who has been granted options (9,82,000)
which exceeds 5% of the Issued capital.
e) There is a potential dilution by 8,10,912 options/shares in future,
which is representative of shares required by the trust to meet the
obligation towards options to be exercised in future. The options/
shares to the extent not held by the trust and to be exercised in
future will be allotted by the company to the Trust at the option grant
price.
f) In the event of any further rights or bonus issue of equity shares
after vesting but prior to exercise of the options, the company/ Trust
shall consider the grant of an appropriate number of additional
options, at such price as may be determined by the compensation
committee.
g) The company accounts for ''Employee Share Based Payments'' using the
intrinsic value method. The intrinsic value of the stock options issued
by the company to its employees for services rendered by them is
measured as the amount by which the quoted market price of the
company''s share as on the date of grant exceeds the exercise price of
the stock option. considering that the stock options have been issued
with an exercise price that equals the quoted share price on the
previous day, there is no compensation cost recognised in the financial
statements using the intrinsic value method.
k) For purposes of the proforma disclosures, the fair value of each
option grant was estimated as at 31 March 2015 using the Black Scholes
option valuation model with the following assumptions:
* dividend yield of 2.01%;
* risk free interest rate of 7.61 to 7.65%;
* expected volatility of 54.97% based on historical volatility; and
* expected option life of 2.00 years.
6. Operating lease obligations
a. The Company has taken office/residential premises under cancellable
operating lease agreements that are renewable at the option of both the
lessor and lessee. An amount of (Rs. in Lakhs) 426.06 (Previous year
(Rs. in lakhs) 429.57) is recognised as lease expenses in the Statement
of profit and loss for the year ended 31 March 2015. the future
guaranteed lease payments under non-cancellable portion of cancellable
leases are:
i) less than one year - (Rs. in Lakhs) 12.25 (Previous year (Rs. in
Lakhs) Nil)
ii) later than one year but not later than 5 years - (Rs. in Lakhs) NIL
(Previous year (Rs. in Lakhs) NIL)
b. The Company has leased out office premises and furniture under
non-cancellable operating lease agreements that are renewable at the
option of both the lessor and lessee. An amount of ('' in Lakhs) 488.77
(Previous year (Rs. in Lakhs) 488.76) is recognised as lease income in
the Statement of profit and loss for the year ended 31 March 2015. The
future guaranteed lease payments under non-cancellable leases are:
i) less than one year - (Rs. in Lakhs) Nil (Previous year (Rs. in
Lakhs) 539.04)
ii) later than one year but not later than 5 years - (Rs. in Lakhs) Nil
(Previous year (Rs. in Lakhs) Nil).
7. Contingent liabilities and commitments (to the extent not provided
for)
i) Contingent liability not provided in respect of:
* Demand(s) raised by the Income Tax authorities for prior financial
year(s) aggregating (Rs. in Lakhs) 441.85 (Previous year (Rs. in lakhs)
441.85) against which the company has filed appeal(s) with the
commissioner of Income Tax (Appeals).
* Appeal(s) filed with the Income Tax Appellate Tribunal towards
income-tax demands amounting to (Rs. in lakhs) 246.80 (Previous year
(Rs. in lakhs) 702.85).
* Application(s) filed with the Deputy Commissioner of Income Tax
towards income-tax demands amounting to (Rs. in lakhs) 276.83 (Previous
year (Rs. in lakhs) 276.83).
the company is advised that it would get a favourable verdict and no
demand would be eventually
sustained in any of the above matters. accordingly, no provision is
made in the books in respect of these
contingent liabilities.
ii) Guarantees given on behalf of the company by banks
* Towards contract performance obligations (Rs. in lakhs) 46.51
(Previous year (Rs. in lakhs) 66.84).
* Towards Letter of Credit facilities on behalf of its subsidiary, Blue
Star Infotech America, Inc. (Rs. in lakhs) 938.85 (Previous year (Rs.
in lakhs) 898.58).
iii) Guarantee given by company on behalf of its subsidiary, Blue Star
Infotech america, Inc. (Rs. In lakhs) 360.91 (Previous year (Rs. in
lakhs) 601.00).
8. Dividend remitted in foreign currency:
There are no dividends remitted in foreign currency during the current
and previous year.
9. Related party transactions
i) Blue Star Infotech (UK) Limited (BSIUK), the 100 % subsidiary of the
Company has earned profits during the year ended 31 March 2015 and also
has a positive net worth, as at the year-end.
ii) Blue Star Infotech America, Inc. (BSIA), the 100 % subsidiary of
the company has earned profits during the year ended 31 march 2015 and
also has a positive net worth as at the year-end.
iii) Blue Star Infotech (Singapore) Pte limited (BSISGPL), the 100 %
subsidiary of the company has earned profits during the year ended 31
march 2015 and also has a positive net worth, as at the year-end.
iv) Blue Star Infotech Business Intelligence and analytics Private
limited (BSIBIA) (Formerly known as Activecubes Solutions India Private
limited), in which the company exercises complete managerial and
administrative control and of which 48.97% of the equity is held by the
company, is acquired on 1 august 2013 has earned profits during the
year ended 31 march 2015 and also has a positive net worth.
related party disclosures:
Related party transactions are transfer of resources or obligations
between related parties, regardless of whether a price is charged.
Parties are considered to be related, if one party has the ability,
directly or indirectly, to control the other party or exercise
significant influence over the other party in making financial or
operating decisions. Parties are considered to be related if they are
subject to common control or common significant influence.
Names of related parties and description of relationship
Subsidiaries and related interests
(a) Blue Star Infotech America, Inc., uSA (100% subsidiary)
(b) Blue Star Infotech (uK) limited, uK (100% subsidiary)
(c) Blue Star Infotech (Singapore) Pte. limited, Singapore (100%
subsidiary)
(d) Blue Star Infostack Solutions Pte. limited (100% subsidiary of Blue
Star Infotech (Singapore) Pte. limited)
(e) Blue Star Infostack (Malaysia) Sdn. Bhd. (100% subsidiary of Blue
Star Infotech (Singapore) Pte. limited)
(f) Blue7 Solutions LLc, uSA (100% subsidiary of Blue Star Infotech
America, Inc., uSA)
(g) Blue Star Infotech Business Intelligence and Analytics Private
limited (formerly known as Activecubes Solutions India Private limited)
(48.97% of shareholding) (with effect from 1 August 2013) - with
complete managerial and administrative control.
Associate
Blue Star limited (Holding 28.69% of the equity share capital of the
company)
Promoters
Mr. Suneel M. Advani, chairman and managing Director Mr. Ashok M.
Advani, vice-chairman
Entities in which one or more directors are common
(a) talwar thakore and Associates
(b) Modern family doctor Pvt. ltd.
Key Managerial Personnel & relatives
Mr. Sunil Bhatia, chief executive officer and Managing director Mr. vir
Advani, relative of Promoters
Mr. Aloke Ghosh, chief financial officer and company Secretary
(effective 2 June 2014)
Mr. v. Sudarshan, chief financial officer and company Secretary (till
31 May 2014)
10. Micro, Small and Medium Enterprises
There are no Micro, Small and Medium Enterprises, to whom the Company
owes dues, which are outstanding for more than 45 days as at 31 March
2015. This information as required to be disclosed under the Micro,
Small and medium Enterprises Development Act, 2006 has been determined
to the extent such parties have been identified on the basis of
information available with the company and has been relied upon by the
statutory auditors of the company.
11. Derivative instruments:
the company has entered into the following derivative contracts:
(a) Forward contracts and options contracts [being derivative
instruments], which are not intended for trading or speculative
purposes, but for hedging purposes, to establish the amount of
reporting currency required or available at the settlement date of
certain payables and receivables.
there are outstanding foreign exchange Forward contracts and Foreign
exchange options contracts entered into by the company as at 31 march
2015 of US $ 5,150,000 (Previous year US $ Nil).
12. staff benefits cost in accordance with Accounting standard 15 -
employee Benefits (Revised 2005)
a) Defined contribution plans: the amount recognised as an expense
during the year is (Rs. in Lakhs) 255.67 (Previous year (Rs. in lakhs)
181.75).
13. Segment information
The Company publishes standalone financial statements along with the
consolidated financial statements in the annual report. In accordance
with Accounting Standard 17, Segment Reporting, the Company has
disclosed the segment information in the consolidated financial
statements.
14. During the year 2013-14, the company had availed an overdraft
facility of Rs. 500 Lakhs for working capital purposes from a scheduled
bank. the drawdown amount against this limit as at 31 March 2015 is Nil
(Previous year (Rs. in lakhs) nil).
the working capital borrowings are secured by exclusive hypothecation
of all existing and future current assets and movable fixed assets of
the company. currently, the rate of interest is 12.25% p.a.
15. the previous year''s figures have been recast / regrouped /
rearranged, wherever considered necessary.
Mar 31, 2013
COMPANY OVERVIEW
Blue Star Infotech Limited (''Blue Star'', ''BSIL'' or the ''Company'') along
with its wholly owned, direct and controlled subsidiaries, Blue Star
Infotech America,Inc., Blue Star Infotech (UK) Limited and Blue Star
Infotech (Singapore) Pte. Limited is an Information technology and
software services organisation. The Company provides technology,
consultancy and outsourcing services.
1.1 Related party transactions
i) Blue Star Infotech (UK) Limited (BSIUK), the 100 % subsidiary of the
Company has earned profts during the year ended 31 March 2013 and also
has a positive net worth, as at the year-end.
ii) Blue Star Infotech America, Inc. (BSIA), the 100 % subsidiary of
the Company has incurred a loss during the year ended 31 March 2013 but
has a positive net worth as at the year-end. The management believes
that the business loss is a temporary phenomenon arising mainly due to
reduced margins in turnover consequent to transient adverse market
conditions. Hence, no impairment of the investment in the subsidiary is
currently deemed necessary in the books of account.
iii) Blue Star Infotech (Singapore) Pte Limited (BSISG), the 100 %
subsidiary of the Company has earned profts during the year ended 31
March 2013 and also has a positive net worth, as at the year-end.
Related party disclosures:
Related party transactions are transfer of resources or obligations
between related parties, regardless of whether a price is charged.
Parties are considered to be related, if one party has the ability,
directly or indirectly, to control the other party or exercise
signifcant infuence over the other party in making fnancial or
operating decisions. Parties are considered to be related if they are
subject to common control or common signifcant infuence.
1.2 Micro, Small and Medium Enterprises
There are no Micro, Small and Medium Enterprises, to whom the Company
owes dues, which are outstanding for more than 45 days as at 31 March
2013. This information as required to be disclosed under the Micro,
Small and Medium Enterprises Development Act, 2006 has been determined
to the extent such parties have been identifed on the basis of
information available with the Company and has been relied upon by the
statutory auditors of the Company.
1.3 Derivative instruments:
The Company has entered into the following derivative instruments:
(a) Forward Exchange Contracts and Foreign Exchange Options Contracts
(being derivative instruments), which are not intended for trading or
speculative purposes, but for hedging purposes, to establish the amount
of reporting currency required or available at the settlement date of
certain payables and receivables.
There are outstanding Forward Exchange Contracts and Foreign Exchange
Options Contracts entered into by the Company as at 31 March 2013 of
USD 19,00,000 (Previous year USD 1,18,00,000).
(b) The year end foreign currency exposures that have not been hedged
by a derivative instrument or otherwise are given below:
Amounts receivable (net of payables) in foreign currency on account of
the following:
1.4 Staf benefts cost in accordance with Accounting Standard 15
(Revised 2005)
a) Defned contribution plans: The amount recognised as an expense
during the year is (Rs. in Lakhs) 200.76 (Previous year (Rs. in Lakhs)
288.42)
1.5 Earnings Per Share (EPS)
The amount considered in ascertaining the Company''s earnings per share
constitute the net proft after tax and exceptional item (and includes
post tax effect of any extraordinary items). The number of shares used
in computing basic earnings per share is the weighted average number of
shares outstanding during the year. The number of shares used in
computing diluted earnings per share comprise the weighted average
number of shares considered for deriving basic earnings per share and
also the weighted average number of shares which could have been issued
on conversion of all dilutive potential shares.
1.6 The company considers its entire business / geographical
operations as a single segment. There are no separate reportable
segments as per Accounting Standard 17, Segment Reporting prescribed by
the Central Government, in accordance with Companies (Accounting
Standards) Rules, 2006.
1.7 The previous year''s fgures have been recast / regrouped /
rearranged, wherever considered necessary.
Mar 31, 2012
All amounts in the financial statements are presented in Indian Rupees
Lakhs (Rs in Lakhs) and two decimal places thereafter, except for per
share data or as otherwise stated. One Lakh is one tenth of a million.
The Company has only one class of shares referred as equity shares
having a face value of Rs 10/- each. Each shareholder is entitled to one
vote per share.
The Company declares and pay dividends in Indian rupees. All dividends
proposed by the Board of Directors is subject to the approval of the
shareholders at the ensuing Annual General Meeting.
During the year ended 31 March 2012, the amount of dividend recognized
as distributions to equity shareholders was Rs 2 per share. The total
dividend appropriation for the year ended 31 March 2012 amounted to Rs
241.40 lakhs (Previous year Rs 348.67 lakhs) including corporate
dividend tax of Rs 33.70 lakhs (Previous year Rs 48.67 lakhs).
In the event of liquidation of the Company, the holders of equity
shares will be entitled to receive any of the remaining assets of the
Company. The distribution will be in proportion to the number of equity
shares held by the shareholders.
Shareholders holding more than 5% Shares
As at 31 March 2012, Blue Star Limited holds 29.83% of the company's
shares. (30.98% as of 31 March 2011) and Mr. Ashok Mohan Advani (SEBI
stipulated Permanent Account Number based holding) holds 7.69% of the
Company's shares (7.99% as of 31 March 2011).
Stock option plan
1. The Company has implemented Employee Stock Option Plans for the key
employees of the Company and its subsidiaries through the Blue Star
Infotech Limited - Key Employee Stock Option Trust (the 'Trust') formed
for the purpose. All the options issued by the Company are equity share
based options which have to be settled in equity shares only. The
shares to be allotted to employees under the Blue Star Infotech Limited
- Key Employee Stock Option Scheme are purchased by the trust from the
open market. Based on the details provided by the Trust, the position
of the Key Employee Stock Option Plans of the Company as at 31 March
2012 is as under:
Notes:
a) The compensation committee at its meeting held on 25 October 2005
pursuant to ESOP Scheme 2003 decided to grant 3,82,000 equity shares to
senior employees of the Company at the closing market price of Rs 117 as
at 31 October 2005 on the National Stock Exchange with 10,000 equity
shares vesting on 31 October 2006 and rest of the equity shares vesting
on 31 October 2008. The offer price was revised to Rs 72 per share (the
closing market price on 19 June 2006 on the National Stock Exchange)
for 3,23,000 equity shares vide approval of the members at the Annual
General Meeting held on 29 August 2006.
b) There is one employee who had been granted options equal to or
exceeding 1% of the Issued Capital.
c) The diluted Earnings Per Share and Earnings Per Share are the same,
as the shares covered under vested options are already issued and
allotted and are held by the Trust.
d) In the event of any further rights or bonus issue of equity shares
after vesting but prior to exercise of the options, the Company/ Trust
shall consider the grant of an appropriate number of additional
options, at such price as may be determined by the Compensation
Committee.
e) The Company accounts for 'Employee Share Based Payments' using the
intrinsic value method. The intrinsic value of the stock options issued
by the Company to its employees for services rendered by them is
measured as the amount by which the quoted market price of the
Company's share as on the date of grant exceeds the exercise price of
the stock option. Considering that the stock options have been issued
with an exercise price that equals the quoted share price on the
previous day, there is no compensation cost recorded in the financial
statements using the intrinsic value method.
2.1 Operating lease obligations
a. The Company has taken office/residential premises under cancellable
operating lease agreements that are renewable at the option of both the
lessor and lessee. An amount of (Rs in Lakhs) 416.92 (Previous year (Rs
in Lakhs) 349.59) is recognised as lease expenses in the Statement of
profit and loss for the year ended 31 March 2012. The future guaranteed
lease payments under non-cancellable portion of cancellable leases are:
i) less than one year - (Rs in Lakhs) NIL (Previous year (Rs in Lakhs)
155.74)
ii) later than one year but not later than 5 years - (Rs in Lakhs) NIL
(Previous year (Rs in Lakhs) 9.8)
b. The Company has leased out office premises and furniture under
non-cancellable operating lease agreements that are renewable at the
option of both the lessor and lessee. An amount of (Rs in Lakhs) 369.91
(Previous year (Rs in Lakhs) 437.75) is recognised as lease income in
the Statement of Profit and Loss for the year ended 31 March 2012. The
future guaranteed lease payments under non-cancellable leases are:
i) less than one year - (Rs in Lakhs) NIL (Previous year (Rs in Lakhs)
392.40)
ii) later than one year but not later than 5 years - (Rs in Lakhs) NIL
(Previous year (Rs in Lakhs) 1.87)
2.2 Contingent liabilities and commitments (to the extent not provided
for)
i) Contingent liability not provided in respect of:
- Demand(s) raised by the Income Tax authorities for prior financial
year(s) during the year aggregating (Rs in lakhs) Nil (Previous year (Rs
in Lakhs) 3,196.41) against which the Company has filed appeal(s) with
the Commissioner of Income-tax (Appeals).
- Appeal(s) filed with the Appellate Tribunal (India) towards
income-tax demands amounting to (Rs in Lakhs) 175.50 (Previous year (Rs
in Lakhs) 65.84).
The Company is advised that it would get a favourable verdict and no
demand would be eventually sustained in any of the above matters.
Accordingly, no provision is made in the books in respect of these
contingent liabilities.
ii) Guarantees given on behalf of the Company by banks (Rs in Lakhs)
71.09 (Previous Year (Rs in Lakhs) 67.99).
iii) Guarantees given by Company on behalf of its subsidiary, Blue Star
Infotech (UK) Limited (Rs in Lakhs) 27.18 (Previous year (Rs in Lakhs)
NIL).
2.3 Related party transactions
i) Blue Star Infotech (UK) Limited (BSIUK), the 100 % subsidiary of the
Company has earned profits during the year ended 31 March 2012 and also
has a positive net worth, as at the year-end.
ii) Blue Star Infotech America Inc., the 100 % subsidiary of the
Company has incurred a loss during the year ended 31 March 2012 but has
a positive net worth as at the year-end. The management believes that
the business loss is a temporary phenomenon arising mainly due to a
temporary reduction in turnover consequent to transient adverse market
conditions. Hence, no impairment of the investment in the subsidiary is
currently deemed necessary in the books of account.
Related Party Disclosures:
Related party transactions are transfer of resources or obligations
between related parties, regardless of whether a price is charged.
Parties are considered to be related, if one party has the ability,
directly or indirectly, to control the other party or exercise
significant influence over the other party in making financial or
operating decisions. Parties are considered to be related if they are
subject to common control or common significant influence.
2.4 Micro, small and medium enterprises
There are no Micro, Small and Medium Enterprises, to whom the Company
owes dues, which are outstanding for more than 45 days as at March 31,
2012. This information as required to be disclosed under the Micro,
Small and Medium Enterprises Development Act, 2006 has been determined
to the extent such parties have been identified on the basis of
information available with the Company and has been relied upon by the
statutory auditors of the Company.
2.5 Derivative Instruments
The Company has entered into the following derivative instruments:
(a) Forward Exchange Contracts and Foreign Exchange Options Contracts
[being derivative instruments], which are not intended for trading or
speculative purposes, but for hedging purposes, to establish the amount
of reporting currency required or available at the settlement date of
certain payables and receivables.
There are outstanding Forward Exchange Contracts and Foreign Exchange
Options Contracts entered into by the Company as at March 31, 2012 of
US Dollar $ 1,18,00,000 and GbP ã Nil Cross Currency-Rupees {Previous
year US Dollar $ 1,11,50,000 and GBP ã 80,000}
c) During the year, the Company has reversed provisions made towards
incentive and sales commission relating to employees amounting to (Rs in
Lakhs) Nil {Previous year (Rs in Lakhs) 235.00}.
d) During the year, the Company has revised its Privilege leave salary
policy wherein the maximum number of encashable Privilege leave is
reduced from 120 days to 55 days. As a consequence, there is reversal
of leave salary provision by (Rs In Lakhs) 119.67 {Previous year (Rs in
Lakhs) Nil}.
2.6 Exceptional Item (FY 2010-11)
Notice(s) demanding differential stamp duty of (Rs Lakhs) 46.99 and
penalty of (Rs Lakhs) 33.98 was received during the year 2007-08,
pursuant to disallowance of stamp duty concession availed by the
Company in the year 2005. As per the Information Technology (IT)
Policy issued by the Government of Maharashtra in the year 2003, 75%
stamp duty concession was granted on purchase of property for
establishing a new unit related to Information Technology in recognized
private IT Parks. This matter was disputed by stamp duty authorities
before the Honourable High Court, Bombay. No hearing was scheduled in
the aforesaid matter by the Honourable High Court, Bombay for over
three years. As a matter of commercial prudence, the Board of Directors
decided to withdraw the petition(s) from the Honourable High Court,
Bombay and pay the differential stamp duty and penalty without getting
into the merits of the matter. Accordingly, in the year 2010-11 a total
sum of (Rs lakhs) 111.37 was paid including (Rs Lakhs) 64.18 as penalty
which has been disclosed as an exceptional item in the Statement of
Profit and Loss.
2.7 Earnings Per Share (EPS)
The amount considered in ascertaining the Company's earnings per share
constitute the net profit after tax and exceptional item (and includes
post tax effect of any extraordinary items). The number of shares used
in computing basic earnings per share is the weighted average number of
shares outstanding during the year. The number of shares used in
computing diluted earnings per share comprise the weighted average
number of shares considered for deriving basic earnings per share and
also the weighted average number of shares which could have been issued
on conversion of all dilutive potential shares.
2.8 The Ministry of Corporate Affairs, Government of India vide its
General Circular No. 2/2011 (51/12/2007-CL-III) dated 08 February 2011
read with General Circular No. 3/2011 dated 21 February 2011 issued
under section 212(8) of the Companies Act, 1956 has granted general
exemption to companies from attaching the Balance Sheet and Statement
of Profit and Loss of their subsidiaries under section 212(1) of the
Companies Act, 1956 and clarified that this exemption is applicable for
financial statements prepared on or after 31 March 2011.
2.9 The previous year's figures have been recast/regrouped/rearranged,
wherever considered necessary in accordance with Revised Schedule VI
forming part of the Companies Act, 1956 and effective for financial
year commencing on or after 01 April, 2011.
Mar 31, 2011
1. Estimated amount of contracts remaining to be executed on capital
account and not provided for (net of advances) is (Rs. 000) 2,948
{Previous year (Rs. 000)Nil}.
2. Contingent Liability not provided in respect of:
Demand(s) raised by the Income Tax authorities for prior financial
year(s) during the year aggregating (Rs. 000) 319,641 {Previous year
(Rs. 000) 35,082/-} against which the Company has filed appeal(s) with
the Commissioner of Income-tax (Appeals). The appeal(s) filed with the
Appellate Tribunal (India) towards income tax demands amounting to (
Rs. 000) 6,584/- {Previous year ( Rs. 000) 8,584/-}.
The Company is advised that it would get a favourable verdict and no
demand would be eventually sustained in any of the above matters.
Accordingly, no provision is made in the books in respect of these
contingent liabilities.
3. Guarantees given on behalf of the Company by banks (Rs. 000) 6,799
(Previous Year (Rs. 000) 6,084) and by others (Rs. 000) Nil (Previous
Year (Rs. 000) 81,500).
4. a) Blue Star Infotech (UK) Ltd. (BSIUK), the 100 % subsidiary of
the Company has earned profits during the year ended March 31, 2011 and
also has a positive net worth, as at the year-end.
b) Blue Star Infotech America Inc., the 100 % subsidiary of the Company
has incurred a loss during the year ended March 31, 2011 and has a
negative net worth, as at the year-end.The management believes that the
business loss and negative net worth to be a temporary phenomenon
arising mainly due to a temporary reduction in turnover consequent to
transient adverse market conditions. Hence, no impairment of the
investment in the subsidiary is deemed necessary in the books of
accounts.
5. Notes:
a) The compensation committee at its meeting held on October 25, 2005
pursuant to ESOP Scheme 2003 decided to grant 382,000 equity shares to
senior employees of the Company at the closing market price of Rs. 117
as at October 31, 2005 on the National Stock Exchange with 10,000
equity shares vesting on October 31, 2006 and rest of the equity shares
vesting on October 31, 2008. The offer price was revised to Rs. 72 per
share (the closing market price on June 19, 2006 on the National Stock
Exchange) for 323,000 equity shares vide approval of the members at the
Annual General Meeting held on August 29, 2006.
b) There is one employee who has been granted options equal to or
exceeding 1% of the Issued Capital.
c) The diluted Earnings Per Share and Earnings Per Share are the same,
as the shares covered under vested options are already issued and
allotted and are held by the Trust.
d) In the event of any further rights or bonus issue of equity shares
after vesting but prior to exercise of the options, the Company / Trust
shall consider the grant of an appropriate number of additional
options, at such price as may be determined by the Compensation
Committee.
e) The Company accounts for Employee Share Based Payments using the
intrinsic value method. The intrinsic value of the stock options issued
by the Company to its employees for services rendered by them is
measured as the amount by which the quoted market price of the
Companys share as on the date of grant exceeds the exercise price of
the stock option. Considering that the stock options have been issued
with an exercise price that equals the quoted share price on the
previous day, there is no compensation cost recorded in the financial
statements using the intrinsic value method.
6.b) Computation of net profit in accordance with Section 349 of the
Companies Act, 1956 and calculation of commission payable to the
directors
The members of the Company at the 12th AGM of the Company held on July
30, 2009 consented to increase commission up to 3% of the Net Profits,
subject to approval of the Central Government. Central Government has
vide its letter date July 15, 2010 approved payment of commission up to
3% of net profits in accordance with section 198 of the Companies Act,
1956 for a period of 5 (five) financial years starting from 2009-2010.
7. Loans and Advances include amount due from a director à (Rs. 000)
Nil {Previous Year à (Rs. 000) Nil}, Maximum balance outstanding from
a director during the year à (Rs. 000)150 {Previous Year à (Rs. 000)
150}
9. Micro, Small and Medium Enterprises
There are no Micro, Small and Medium Enterprises, to whom the Company
owes dues, which are outstanding for more than 45 days as at March 31,
2011. This information as required to be disclosed under the Micro,
Small and Medium Enterprises Development Act, 2006 has been determined
to the extent such parties have been identified on the basis of
information available with the Company and has been relied upon by the
statutory auditors of the Company.
10. Exceptional Item (Stamp duty Liability)
Notice(s) demanding differential stamp duty of (Rs. 000) 4,699 and
penalty of (Rs. 000) 3,398 was received during the year 2007-08,
pursuant to disallowance of stamp duty concession availed by the
Company in the year 2005. As per the Information Technology (IT)
Policy issued by the Government of Maharashtra in the year 2003, 75%
stamp duty concession was granted on purchase of property for
establishing a new unit related to Information Technology in recognized
private IT Parks. Accordingly, the Company was legally advised that it
is entitled to this duty concession. Consequently, the Company filed
writ petitions before the Honourable High Court, Bombay. Pursuant to
interim stay orders of the Honourable High Court, Bombay, the Company
deposited a sum of (Rs. 000) 4,699 and provided bank guarantees for a
sum of (Rs. 000) 3,020 to the Honourable High Court, Bombay, subject
to further orders and outcome of appeal proceedings. No hearing was
scheduled in the matter by the Honourable High Court, Bombay for over
three years. As a matter of commercial prudence, the Board of Directors
decided to withdraw the petition(s) from the Honourable High Court,
Bombay and pay the differential stamp duty and penalty without getting
into the merits of the matter. Accordingly, a total sum of (Rs. 000)
11,137 was paid including (Rs. 000) 6,418 as penalty which has been
disclosed as an exceptional item in the Profit and Loss Account.
11. Derivative Instruments
The Company has entered into the following derivative instruments:
a) Forward Exchange Contracts and Foreign Exchange Options Contracts
[being derivative instruments], which are not intended for trading or
speculative purposes, but for hedging purposes, to establish the amount
of reporting currency required or available at the settlement date of
certain payables and receivables.
There are outstanding Forward Exchange Contracts and Foreign Exchange
Options Contracts entered into by the Company as at March 31, 2011 of
US Dollar $ 11,150,000 and GBP ã 80,000 Cross Currency- Rupees
(Previous year US Dollar $ 12,467,724 and GBP ã 180,000)
12. Related Party Disclosures:
Related party transactions are transfer of resources or obligations
between related parties, regardless of whether a price is charged.
Parties are considered to be related, if one party has the ability,
directly or indirectly, to control the other party or exercise
significant influence over the other party in making financial or
operating decisions. Parties are considered to be related if they are
subject to common control or common significant influence.
Note: Figures in Italics are of the previous year
Names of related parties and description of relationship
Subsidiaries : (a) Blue Star Infotech America, Inc., USA (100%
subsidiary)
(b) Blue Star Infotech (UK) Limited, UK
(100% subsidiary)
Associates : Blue Star Limited (Holding 31% of the
equity share capital of the Company)
Promoters : Mr. Suneel M Advani, Chairman and Managing Director
Mr. Ashok M Advani, Vice Chairman
13. Staff benefits cost in accordance with Accounting Standard 15
(Revised 2005)
a) Defined Contribution Plans: The amount recognised as an expense
during the year is (Rs. 000) 22,316 (Previous Year (Rs. 000) 21,578)
c) During the year the company has reversed provisions made towards
incentive and sales commission relating to employees amounting to (Rs.
000) 23,500 {Previous year (Rs. 000) Nil}.
15. Operating Lease
a) The Company has taken office/residential premises under cancellable
operating lease agreements that are renewable at the option of both the
lessor and lessee. An amount of (Rs. 000) 34,959 (Previous year (Rs.
000) 29,559) is recognised as lease expenses in the Profit and Loss
Account for the year ended March 31, 2011. The future guaranteed lease
payments under non-cancellable portion of cancellable leases are:
i) less than one year à (Rs. 000) 15,574 (Previous year (Rs. 000)
Nil)
ii) later than one year but not later than 5 years à (Rs. 000) 980 Nil
(Previous year (Rs. 000) Nil)
b) The Company has leased out office premises and furniture under
non-cancellable operating lease agreements that are renewable at the
option of both the lessor and lessee. An amount of (Rs. 000) 43,775
(Previous year (Rs. 000) 34,830) is recognised as lease income in the
Profit and Loss Account for the year ended March 31, 2011. The future
guaranteed lease payments under non-cancellable leases are:
i) less than one year (Rs. 000) 39,240 (Previous year (Rs. 000)
39,240)
ii) later than one year but not later than 5 years - (Rs. 000) 187
(Previous year (Rs. 000) 34,746)
16. Earnings Per Share (EPS)
The amount considered in ascertaining the Companys earnings per share
constitute the net profit after tax and exceptional item (and includes
post tax effect of any extraordinary items). The number of shares used
in computing basic earnings per share is the weighted average number of
shares outstanding during the year. The number of shares used in
computing diluted earnings per share comprise the weighted average
number of shares considered for deriving basic earnings per share and
also the weighted average number of shares which could have been issued
on conversion of all dilutive potential shares.
17. Additional information pursuant to the provisions of Part II of
Schedule VI to the Companies Act, 1956
i) The Company is engaged in the development of computer software.
Considering the nature of business, certain details required under Part
II of Schedule VI to the Companies Act, 1956 are not applicable.
18. The Ministry of Corporate Affairs, Government of India vide its
General Circular No. 2/2011 No. 51/12/2007-CL-III dated February 08,
2011 read with General Circular No. 3/2011 dated February 21, 2011
issued under section 212(8) of the Companies Act, 1956 has granted
general exemption to companies from attaching the Balance Sheet and
Profit and Loss Account of their subsidiaries under section 212(1) of
the Companies Act, 1956 and clarified that this exemption is applicable
for accounts prepared on or after March 31, 2011.
19. The previous years figures have been regrouped / rearranged
wherever considered necessary.
Mar 31, 2010
1.Estimated amount of contracts remaining to be executed on capital
account and not provided for (net of advances) is Nil {Previous year
(Rs.OOO)312}.
2.Contingent liability not provided for in respect of:
a)Income-tax demands against which the Company is in appeal:
As at As at
March 31,2010 March 31,2009
Rs.000 Rs.000
i) With Income-tax Appellate Tribunal 8,584 15,526
ii) Commissioner of income-tax (Appeals) 35,082 15,256
Total 43,666 15,256
b)Notice(s)demanding differential stamp duty of (Rs.OOO)4,699 and
penalty of (Rs.OOO)3,398 was received during the year 2007-08,pursuant
to disallowance of stamp duty concession availed by the Company in the
year 2005.As per the Information Technology (IT)Policy issued by the
Government of Maharashtra in the year 2003,75%stamp duty concession was
granted on purchase of property for establishing a new unit related to
Information Technology in recognized private IT Parks.Accordingly,the
Company has been legally advised that it is entitled to this duty
concession.Consequently,the Company filed writ petitions before the
Honourable High Court,Bombay.Pursuant to interim stay orders of the
Honourable High Court,Bombay,the Company deposited a sum of
(Rs.OOO)4,699 and provided bank guarantees for a sum of (Rs.OOO)3,020
to the Honourable High Court,Bombay,subject to further orders and
outcome of appeal proceedings.No hearing has been scheduled in the
matter by the Honourable High Court,Bombay as of date.
c)The Company has received a notice of demand under Karnataka Value
Added Tax,2003 (KVAT)on 28 April 2010 for (Rs.OOO)6,276 (including
Interest of (Rs.OOO)2,266 and penalty of (Rs.OOO)669)relating to the
financial year 2005-06.Upon enquiry,the Company is informed that it is
required to pay KVAT on certain services at 4%,wherein no tax has been
paid earlier.Further,the authorities have contended that the sale of
certain software licenses should be taxed at 12.5%instead of 4%charged
by the Company.The Company does not agree with the contentions of the
KVAT authorities and will appeal against this order within the
prescribed time limit shortly. The Company is advised that it would
get a favourable verdict and no demand would be eventually sustained in
any of the above matters.Accordingly,no provision is made in the books
in respect of these contingent liabilities.
3.Guarantees given on behalf of the Company by banks (Rs.OOO)6,084
(Previous Year (Rs.OOO)10,563)and by others (Rs.OOO)81,500 (Previous
Year (Rs.OOO)81,500).
4.The Honourable High Court,Bombay approved a scheme of Amalgamation
between Ashok Sunil &Company Private Limited (Ashok Sunil)with Blue
Star Infotech Limited (BSIL)by its order dated May 2,2008.The Scheme
became effective from July 7,2008,the date on which the certified
copies of the order of the Honourable High Court,Bombay sanctioning the
Scheme was filed with the Registrar of Companies,Mumbai,Maharashtra.
Consequent to the Scheme becoming effective,717,918 fully paid-up
equity shares (face value of Rs.10 each)of the Company previously held
by Ashok Sunil were extinguished.A similar number of shares were issued
and allotted to the shareholders of Ashok Sunil by the Company,on the
scheme becoming effective.Post amalgamation, the share capital of BSIL
remains unchanged.Further,there is no change in the Promoter and Public
shareholding of the Company.In accordance with the Court order,the
excess of net asset value of Ashok Sunil transferred to the Company
over face value of shares issued by BSIL shall be credited to General
Reserve Account of BSIL.Consequently, the free reserves of the Company
increased by (Rs.OOO)1,125 during the year 2008-09.All the cost
arising out of or incurred in carrying out and implementing the Scheme
and matters incidental thereto,are borne by the Promoters.
5.a)Blue Star Infotech (UK)Ltd.(BSI-UK),the 100 %subsidiary of the
Company has earned profits during the year ended March 31,2010 and also
has a positive net worth,as at the year-end.The Company reduced its
investment in the subsidiary from GBP560,000 to GBP300,000 during the
year as the BSI-UK did not require these funds considering its current
and expected scale of operations.As a consequence,the paid-up Capital
of the subsidiary was reduced from GBP560,000 to GBP300,000.
b)Blue Star Infotech America Inc.,the 100%subsidiary of the Company
hasearned profits during the year ended March 31,2010 and also has a
positive net worth,as at the year-end.
6.Loans and Advances include amount due from a director -(Rs.OOO)Nil
{Previous Year -(Rs.000)Nil},Maximum balance outstanding from a
director during the year -(RsIOOO)150 {Previous Year -(Rs.000)750}
7.Micro,Small and Medium Enterprises
There are no Micro,Small and Medium Enterprises,to whom the Company
owes dues,which are outstanding for more than 45 days as at March
31,2010.This information as required to be disclosed under the
Micro,Small and Medium Enterprises Development Act,2006 has been
determined to the extent such parties have been identified on the basis
of information available with the Company and has been relied upon by
the statutory auditors of the Company.
8.Derivative Instruments
The Company has entered into the following derivative instruments:
(a)Forward Exchange Contracts and Foreign Exchange Options Contracts
[being derivative instruments ],which are not intended for trading or
speculative purposes,but for hedging purposes,to establish the amount
of reporting currency required or available at the settlement date of
certain payables and receivables. There are outstanding Forward
Exchange Contracts and Foreign Exchange Options Contracts entered into
by the Company as at March 31,2010 of US Dollar $12,467,724 and GBP ã
180,000,Cross Currency -Rupees (Previous year US Dollar $19,900,000 and
GBP ã 50,000)
9.Related Party Disclosures:
Related party transactions are transfer of resources or obligations
between related parties,regardless of whether a price is
charged.Parties are considered to be related,if one party hasthe
ability,directly or indirectly,to control the other party or exercise
significant influence over the other party in making financial or
operating decisions. Parties are considered to be related if they are
subject to common control or common significant influence.
Names of related parties and description of relationship
Subsidiaries
(a)Blue Star Infotech America,Inc.,USA (100%subsidiary)
(b)Blue Star Infotech (UK)Limited,UK (100%subsidiary)
Associates
Blue Star Limited (Holding 31%of the equity share capital of the
Company)
Company in which promoters`have significant influence
Blue Star Design Engineering Limited
Company in which one or more directors are common
Reva Electric Car Co.(Pvt.)Ltd.
Promoters
Mr.Suneel M Advani,Chairman and Managing Director
Mr.Ashok M Advani,Vice Chairman
Key Management Personnel
Mr.Suneel M Advani,Chairman and Managing Director
10.Staff benefits cost in accordance with Accounting Standard 15
(Revised 2005)
a)Defined Contribution Plans:The amount recognised as an expense during
the year is (RsOOO)21,578 (Previous Year (Rs000) 21,152:
11.The Ministry of Corporate Affairs,Government of India vide its Order
No.47/234/2010-CL-III dated April 05,2010 issued under section 212(8)of
the Companies Act,1956 has exempted the Company from attaching the
Balance Sheet and Profit and Loss Account of its Subsidiaries under
section 212(1)of the Companies Act,1956.
12.The previous years figures have been regrouped /rearranged wherever
considered necessary.
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