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Notes to Accounts of Cyient Ltd.

Mar 31, 2017

1. Corporate Information

(Refer to Note 1A of the standalone financial statements)

Cyient Limited (‘Cyient’ or ‘the Company’) is engaged in providing global technology services and solutions specialising in geospatial, engineering design and IT solutions. The Company is a public limited company incorporated in India and has its headquarters and development facilities in India and serves a global customer base through its subsidiaries in the United States of America (USA), United Kingdom (UK), Germany, Japan, Australia, Singapore and India. Cyient’s range of services include digitisation of drawings and maps, photogrammetry, computer aided design/engineering (CAD/ CAE), design and modelling, repair development engineering, reverse engineering application software development, software products development, consulting, analytics and implementation. Cyient specialises in software services and solutions for the manufacturing, utilities, telecommunications, transportation & logistics, local government and financial services markets.

The Company’s shares are listed on the Bombay Stock Exchange and National Stock Exchange of India.

2. Related Party Transactions

(Refer to Note 23 of the standalone financial statements)

The list of related parties of the Company is given below:

3. Segment information

(Refer to Note 29 of the standalone financial statements)

Segment information has been presented in the Consolidated Financial Statements by in accordance with Ind AS 108 notified under the Companies (Indian Accounting Standards) Rules, 2015.

4. Amalgmation of Infotech Geospatial (India) Private Limited:

(Refer to Note 25 of the standalone financial statements)

The Company amalgamated with itself Infotech Geospatial (India) Private Limited, a wholly owned subsidiary, w.e.f. April 01, 2015 (“Appointed Date”) pursuant to Scheme of Amalgamation approved by the Hon’ble High Court of Judicature, Andhra Pradesh & Telangana vide its order dated March 02, 2016 and filed with Registrar of Companies on March 31, 2016. Consequently, all the Assets, Liabilities and Reserves stand transferred and vested in the Company retrospectively from April 01, 2015.

As Infotech Geospatial (India) Private Limited was a wholly owned subsidiary of the Company, no additional shares were issued to effect the amalgamation.

Notes:

(a) The Company has disputed various demands raised by Income Tax authorities for the assessment years 1997-98 to 2014-15, which are pending at various stages of appeals. The aggregate amount of disputed tax not provided for is Rs.189 (March 31, 2016 - Rs.156, April 01, 2015 - Rs.138). The Company is confident that these appeals will be decided in its favour.

(b) The Company has disputed various demands raised by the Sales Tax authorities for the financial years 2004-05 to 2009-10 and 2012 - 13. The Company has filed appeals, which are pending with the appropriate authorities. The aggregate amount of disputed tax not provided for is Rs.20 (March 31, 2016 - Rs.20, April 01, 2015 - Rs.20). The Company is confident that these appeals will be decided in its favour. The above does not include show cause notices received by the Company.

(c) The Company has disputed various demands raised by the Service Tax authorities for the financial years 2006-07 to 2015-16 (March 31, 2016-2006-07 to 2013-14) (April 01, 2015-2006-07 to 2012-13). The Company has filed appeals, which are pending with the appropriate authorities. The aggregate amount of disputed tax not provided for is Rs.141 (March 31, 2016 - Rs.140, April 01, 2015 - Rs.172). The Company is confident that these appeals will be decided in its favour. The above does not include show cause notices received by the Company.

(d) During the financial year 2014 - 15, the Company received an order from Provident Fund (PF) authorities regarding PF payment on certain allowances given by the Company to its employees for the years 2010-11 to 2012-13. The Company appealed against the order and is pending before Provident Fund Appellate Tribunal. The Company paid Rs.5 (March 31, 2016 - Rs.5, April 1, 2015 - Rs.5) under protest, being 20% of the total demand of Rs.26 (March 31, 2016 - Rs.26, April 1, 2015 - Rs.26).

(e) During the previous year, the Government of India notified an amendment to the Payment of Bonus Act, 1961 whereby the applicable slabs as well as coverage limit was enhanced. The said amendment was made effective April 1, 2014. The Company has contested the retrospective applicability of the amendment for the financial year 201415 in the High Court of Judicature at Hyderabad for the states of Telangana and Andhra Pradesh. The aggregate amount of liability pertaining to the financial year 2014-15, not provided for, is Rs.92 (March 31, 2016 - Rs.92, April 01, 2015- Rs.NIL).

(f) Corporate guarantee given to subsidiary’s bankers to obtain line of credit Rs.6,488 (March 31, 2016 - Rs.5,797, April 01, 2015 - Rs.1,505).

(g) During the financial year 2014 - 15, the Company acquired 74% of the share capital of Cyient DLM Private Limited (formerly Rangsons Electronics Private Limited) on February 4, 2015. According to conditions stipulated in the Investment Agreement, the Company has an option to acquire the balance 26% of the share capital, on or before seven years from the date of the acquisition. These balance shares are currently placed in an Escrow account with a registered escrow agent as the custodian.

(C) The Company has certain outstanding export obligations/commitments as at March 31, 2017, March 31, 2016 and April 1, 2015 and is confident of meeting these obligations/commitments within the stipulated period of time or obtain extensions as required.

5. Cash and Bank Balances

(Refer to Note 10 of the standalone financial statements)

5A. Cash and cash equivalents

5B. Other bank balances

5C. In accordance with the MCA notification GSR 308 (E) dated March 30, 2017, details of Specified Bank Notes (SBN) and Other Denomination notes (ODN) held and transacted during the period form November 8, 2016 to December 30, 2016, is given below:

(Refer to Note 31 of the standalone financial statements)

6. Employee benefits expense

(Refer to Note 18 of the standalone financial statements)

7. Exceptional item:

(Refer to Note 28 of the standalone financial statements)

a) The Company granted Restricted Stock Units (RSU) to eligible employees on March 31, 2017 on the occasion of its silver jubilee anniversary celebrations. Exceptional item for the year ended March 31, 2017 relates to stock expense aggregating Rs.201 towards these RSUs which shall vest with the employees in March, 2018

b) During the previous year the Company had made a provision towards bonus payable for the period of April to December 2015 of Rs.72 consequent to the amendment to the Payment of Bonus Act, 1965 (i.e the Payment of Bonus (Amendment) Act, 2015). The liability for the year 2014 - 15 has been disclosed as contingent liability.

8. Expenditure for Corporate social responsibility

(Refer to Note 20 of the standalone financial statements)

The Company contributes towards Corporate Social Responsibility (CSR) activities through its trust, Cyient Foundation. As per Section 135 of the Companies Act, 2013, CSR committee has been formed by the Company. The areas for CSR activities are promoting education, adoption of schools, medical and other social projects. Expenses incurred on CSR activities through its Cyient Foundation and contributions towards other charitable institutions are charged to the Statement of Profit and Loss under ‘Other expenses’ Rs.62 (2015-16 Rs.48)

9. Disposal of Investment in Infotech Enterprises Information Technology Services Private Limited

(Refer to Note 17 of the standalone financial statements)

During the previous year, the Company disinvested its 100% stake in Infotech Enterprises Information Technology Services Private Limited, India, and its wholly-owned subsidiary, Infotech Enterprises Information Technology Services GmbH, Germany. An amount of Rs.98, being excess of sale consideration over the investment, was recognised as gain on disposal of subsidiary, in ‘other income’

10 (A). Transition to Ind AS

(Refer to Note 2A of the standalone financial statements)

The Company’s financial statements for the year ended March 31, 2017 are prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015. The adoption of Ind AS was carried out in accordance with Ind AS 101, First-time adoption of Indian Accounting Standards, using April 01, 2015 as the transition date. Ind AS 101 requires that all Ind AS standards and interpretations that are effective for the year ended March 31, 2017, be applied consistently and retrospectively for all financials years presented.

All applicable Ind AS have been applied consistently and retrospectively wherever required. The resulting difference between the carrying amounts of the assets and liabilities in the financial statements under Ind AS and previous GAAP as at the transition date have been recognised directly in equity at the transition date.

In preparing these financial statements, the Company has availed itself of certain exceptions and exemptions in accordance with Ind-AS 101, as explained below

a. Exceptions from full retrospective application:

i. Estimates exception: Upon an assessment of the estimates made under Previous GAAP, the Company has concluded that there was no necessity to revise such estimates under Ind AS.

b. Exemptions from retrospective application:

i. Business combination: As per Ind AS 101, the Company is allowed to elect not to apply Ind AS 103 retrospectively to the past business combinations that occurred before the date of transition to Ind AS (April 01, 2015). The Company has elected to avail this exemption and the amounts reported under Previous GAAP for the past business combinations that occurred before the date of transition to Ind AS had been carried forward as opening balances under Ind AS, subject to recognition and derecognition criteria of Financial assets and Liabilities under Ind AS 109 as at the date of transition.

ii. Share-based payment: The Company has availed exemption available under Ind AS 101 on application of Ind AS 102 “Share Based Payment”, to equity instruments that vested before the date of transition to Ind AS. Accordingly, fair value has been done only for unvested options as at April 01,2015.

iii. Investment in subsidiaries, joint ventures and associates: The Company has elected to continue with the carrying value of all its investments in subsidiaries, joint venture and associate recognised as at April 01, 2015 measured as per the previous GAAP and use that carrying value as its deemed cost as at the transition date.

10 (B) First-time Ind AS adoption reconciliations:

(Refer to Note 2B of the standalone financial statements)

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

iv. There were no material adjustments between the cash flows prepared under Ind AS and those reported under previous

GAAP.

v. Notes to the reconciliations

a) Under previous GAAP, a liability is recognised in the period to which the dividend relates, even though the dividend may be approved by the shareholders subsequent to the reporting date. Under Ind AS, liability for dividend is recognised in the period in which the obligation to pay is established, ie, when declared by the members in a General Meeting. The effects of this change is an increase in total equity as at March 31, 2016 of Rs.NIL (Rs.677 as at April 01, 2015), but does not affect profit before tax and total profit for the year ended March 31, 2016.

b) Under previous GAAP, actuarial gains and losses were recognised in the statement of profit and loss. Under Ind AS, the actuarial gains and losses that form part of remeasurement of the net defined benefit liability / asset which is recognised in other comprehensive income. Consequently, the tax effect of the same has also been recognised in other comprehensive income. The actuarial gain for the year ended March 31, 2016 were Rs.7 and the tax effect thereon Rs.2. This change does not effect total equity as at March 31, 2016 and April 01, 2015, but there is an increase in profit before tax of Rs.7 and in total profit of Rs.5 for the year ended March 31, 2016.

Under previous GAAP, compensated absences of the foreign branches of the Company were discounted considering the Company’s discount rate, whereas Ind AS requires to consider the discount rate specific to the foreign branches for the valuation of the compensated absences liability. The effect of this change is a increase in total equity as at March 31, 2016 of Rs.6 (Rs.10 as at April 01, 2015) and increase in profit before tax as well as total profit for the year ended March 31, 2016 of Rs.6.

c) Under previous GAAP, the cost of equity-settled employee share-based payments was recognised using the intrinsic value method. Under Ind AS, the cost of equity-settled employee share-based payments is recognised based on the fair value of the options as on the grant date and has been recharged to subsidiaries relating to options granted to associates employed by them. The effect of this change is an increase in total equity as at March 31, 2016 of Rs.7 (Rs.3 as at April 01, 2015) and decrease in profit before tax as well as total profit for the year ended March 31, 2016 of Rs.7.

d) Under previous GAAP, cash flow hedge reserve was recognised as a part of reserves & surplus. Under Ind AS, the effective portion of a cash flow hedge is recognised in other comprehensive income, net of the relevant tax effects. The consequent impact of income tax is a decrease in total equity as at March 31, 2016 of Rs.47 (Rs.159 as at April 01, 2015). However, there is no impact on profit before tax and total profit for the year ended March 31, 2016

e) Under the previous GAAP, the land leases classified as operating leases were presented as a part of property, plant and equipment as leasehold land. Under Ind AS, such leases of land classified as operating leases are presented as a part of other assets (current and non-current) and amortised over the lease term. With this change, there is no impact on total equity as at March 31, 2016 and April 01, 2015, profit before tax and total profit for the year ended March 31, 2016. However, there is reclassification of depreciation expense to other expenses for the year ended March 31, 2016 of Rs.4. Also, property, plant and equipment (PPE) has reduced by Rs.109 as at March 31, 2016 (Rs.113 as at April 01, 2015) and corresponding increase in other current assets Rs.4 as at March 31, 2016 (Rs.4 as at April 01, 2015) and other non-current assets Rs.105 as at March 31, 2016 (Rs.109 as at April 01, 2015).

f) Under previous GAAP, minimum alternate tax (MAT) credit was disclosed as a part of loans and advances. Under Ind AS, the same was regrouped under deferred tax assets, net. With this change, there is no impact on total equity as at March 31, 2016 and April 01, 2015, profit before tax and total profit for the year ended March 31, 2016. However, there is reclassification from income tax assets, net to deferred tax assets, net of Rs.32 as at March 31, 2016 (Rs.2 as at April 01, 2015).

g) Under previous GAAP, there was no concept of other comprehensive income. Under Ind AS, specified items of income, expense, gains, or losses are required to be presented in other comprehensive income.

h) Under previous GAAP, current investments were measured at lower of cost or fair value. Under Ind AS, these financial assets are measured at fair value and classified as FVTPL. This change does not effect total equity as at March 31, 2016 and April 01, 2015, profit before tax as well as total profit for the year ended March 31, 2016.

i) Under previous GAAP, deferred tax was computed under the profit and loss approach, whereas under Ind AS, deferred tax was computed under the balance sheet approach.


Mar 31, 2016

Not available


Mar 31, 2014

Note (i)

a. The Company has disputed various demands (including draft notice of demand) raised by Income Tax authorities for the assessment years 1997-98 to 2009-10. The orders are pending at various stages of appeals. The aggregate amount of disputed tax not provided for is Rs. 204,461,783 (March 31, 2013 - Rs. 404,555,682). The Company is confident that these appeals will be decided in its favour, based on professional advice.

b. The Company has disputed various demands raised by the Sales Tax authorities for the financial years 2004-05 to 2009-10. The Company has filed appeals, which are pending with the appropriate authorities. The aggregate amount of disputed tax not provided for is Rs. 20,096,061 (March 31, 2013 - Rs. 20,096,061). The Company is confident that these appeals will be decided in its favour, based on professional advice.

The above does not include show cause notices received by the Company.

c. The Company has disputed various demands raised by the Service Tax authorities for the financial years 2006-07 to 2012-13. The Company has filed appeals, which are pending with the appropriate authorities. The aggregate amount of disputed tax not provided for is Rs. 172,263,324 (March 31, 2013 - Rs. 207,375,480). The Company is confident that these appeals will be decided in its favour, based on professional advice. The above does not include show cause notices received by the Company.

Note (ii)

Corporate guarantee given to subsidiary''s bankers to obtain line of credit Rs. 1,043,841,250 (March 31, 2013 – Rs. 443,662,000). The amount outstanding against such guarantee is Rs. Nil (March 31, 2013 - Rs. 397,774)

Note: (i) Balance with banks include deposits amounting to Rs. 54,176,286 (March 31, 2013 – Rs. 238,749,999) and margin monies amounting to Rs. 630,250 (March 31, 2013 – Rs. 630,250) which have an original maturity of more than 12 months.

Balance with banks include margin monies amounting to Rs. 630,250 (March 31, 2013 – Rs. 276,250) which have a maturity of more than 12 months from the Balance Sheet Date.

(ii) Includes deposits placed in lien for credit facilities availed by a wholly owned subsidiary, Infotech Geospatial (India) Private Limited aggregating Rs. 18,531,010 (March 31, 2013 - Rs. 17,026,561) and margin monies amounting Rs. 601,250 (March 31, 2013 - Rs. 601,250).

2. The Board of Directors has recommended the change of name of the Company from Infotech Enterprises Limited to Cyient Limited, which is subject to shareholder approval and other regulatory clearances.

3. Regrouping/Reclassification

(Refer to note No. 40 of the standalone financial statements)

Previous year''s figures have been regrouped/reclassified wherever necessary to correspond with the current year''s classification/disclosures.


Mar 31, 2013

1. Corporate Information

(Refer to Note No. 1 of the annual standalone financial statements)

Infotech Enterprises Limited (''Infotech'' or ''the Company'') is engaged in providing global technology services and solutions specialising in geospatial, engineering design and IT solutions. The Company has its headquarters and development facilities in India and serves a global customer base through its subsidiaries in United States of America (USA), United Kingdom (UK), Germany, Japan and India. Infotech''s range of services include digitisation of drawings and maps, photogrammetry, computer aided design/engineering (CAD/CAE), design and modelling, repair development engineering, reverse engineering application software development, software products development, consulting and implementation. Infotech specialises in software services and solutions for the manufacturing, utilities, telecommunications, transportation & logistics, local government and financial services markets.

Complete Balance Sheet, Statement of Profit and Loss, other statements and notes thereto prepared as per the requirements of Schedule VI to the Companies Act, 1956 are available at the Company''s website at link http://www.infotech-enterprises.com/corporate/investors

2. Segment Information

(Refer to Note No. 31 of the annual standalone financial statements)

Segment information has been presented in the Consolidated Financial Statements as permitted by Accounting Standard (AS 17) on Segment Reporting as notified under the Companies (Accounting Standards) Rules, 2006.

3. Associate Stock Option Plans

(Refer to Note No. 38 of the annual standalone financial statements)

Infotech Employee Stock Offer Scheme 1999 (ESOP Plan)

In 1998-99, the Company set up ESOP plan and allotted 80,900 equity shares of Rs. 10 each at a premium of Rs. 100 per share to the Infotech ESOP trust. The trust on recommendation of management and upon receipt of full consideration transfers the equity shares in the name of the selected employees. The Company modified the ESOP Plan and adjusted the number of options and exercise price on account of bonus issue and stock split cum bonus issue during 2002-03, 2006-07 and 2010-11 respectively.

Associate Stock Option Plans (ASOP Plan)

The company has four ASOP plans - ASOP 2001, ASOP 2002, ASOP 2004 and ASOP 2008. Under each of these schemes, options will be issued to employees at an exercise price which shall not be less than the market price on the date of the grant. These options vest over a period ranging from one to three years from the date of grant, starting with 10% at the end of the first year, 15% at the end of one and half years, 20% after two years, 25% at the end of two and half years and 30% at the end of the third year.

4. Contingent Liabilities and Commitments

(Refer to Note No. 23 of the annual standalone financial statements)

Contingent liabilities (Amount in Rs.)

As at As at Particuiars March 31, 2013 March 31, 2012

Claims against the Company not acknowledged as debt (Refer Note (i) below) 632,027,223 593,743,144

Guarantees (Refer Note (ii) below) 443,662,000 426,680,000

Notes:

i. a. The Company has disputed various demands (including draft notice of demand) raised by Income Tax authorities for the assessment years 1997-98 to 2009-10. The orders are pending at various stages of appeals. The aggregate amount of disputed tax not provided for is Rs. 404,555,682 (March 31, 2012 - Rs. 409,671,422). The Company is confident that these appeals will be decided in its favour, based on professional advice.

b. The Company has disputed various demands raised by the Sales Tax authorities for the financial years 2004-05 to 2009-10. The Company has filed appeals, which are pending with the appropriate authorities. The aggregate amount of disputed tax not provided for is Rs. 20,096,061 (March 31, 2012 - Rs. 20,096,061). The Company is confident that these appeals will be decided in its favour, based on professional advice. The above does not include show cause notices received by the Company.

c. The Company has disputed various demands raised by the Service Tax authorities for the financial years 2006-07 to 2011-12. The Company has filed appeals, which are pending with the appropriate authorities. The aggregate amount of disputed tax not provided for is Rs. 207,375,480 (March 31, 2012 - Rs. 163,975,661). The Company is confident that these appeals will be decided in its favour, based on professional advice. The above does not include show cause notices received by the Company.

ii. Corporate guarantee given to subsidiary''s bankers to obtain line of credit Rs. 443,662,000 (March 31, 2012 - Rs. 426,680,000). The amount outstanding against such guarantee is Rs. 397,774 (March 31, 2012 - Rs. 3,759,677).

5. Amalgamation:

(Refer to Note No. 29 of the annual standalone financial statements)

During the year ended March 31, 2011, TTM Institute of Information Technology Private Limited, a wholly owned subsidiary of Infotech Enterprises Limited ("the Company") was amalgamated with the Company w.e.f. April 1, 2011 pursuant to Scheme of Amalgamation approved by the Honourable High Court of Judicature, Andhra Pradesh vide its order dated March 21, 2011 and filed with the Registrar of Companies on May 12, 2011. Consequently all the Assets, Liabilities and Reserves stand taken over by the Company retrospectively from April 1, 2011 and accounted under "Pooling of Interest" method as per the Accounting Standard-14 "Accounting for Amalgamation". As TTM Institute of Information Technology Private Limited was a wholly owned subsidiary of the Company, no additional shares were issued to effect the Amalgamation.

6. Regrouping/Reclassification

(Refer to note No. 41 of the annual standalone financial statements)

Previous year''s figures have been regrouped/reclassified wherever necessary to correspond with the current year''s classification/ disclosures.


Mar 31, 2012

1. Contingent Liabilities and Commitments

(Refer to Note No. 24 of the annual standalone financial statements)

1.1 Contingent liabilities (Amount in Rs.)

As at As at Particulars March 31, 2011 March 31,2011

Claims against the Company not acknowledged as debt (Refer Note (i) below) 593,743,144 338,007,858

Guarantees (Refer Note (ii) below) 426,680,000 141,184,000

Other money for which the Company is contingently liable (Refer Note (iii) below) 20,000,000 10,000,000

(i) a. The Company has disputed various demands raised by Income Tax authorities for the assessment years 1997-98 to 2008-09. The orders are pending at various stages of appeals. The aggregate amount of disputed tax not provided for is Rs. 409,671,422 (March 31, 2011 - Rs. 178,022,384). The Company is confident that these appeals will be decided in its favour, based on professional advice.

b. The Company has disputed various demands raised by the Sales Tax authorities for the financial years 2004-05 to 2009-10. The Company has filed appeals, which are pending with the appropriate authorities. The aggregate amount of disputed tax not provided for is Rs. 20,096,061 (March 31, 2011 - Rs. 20,221,861). The Company is confident that these appeals will be decided in its favour, based on professional advice.

The above does not include show cause notices received by the Company.

c. The Company has disputed various demands raised by the Service Tax authorities for the financial years 2006-07 to 2009- 10. The Company has filed appeals, which are pending with the appropriate authorities. The aggregate amount of disputed tax not provided for is Rs. 163,975,661 (March 31, 2011 - Rs. 139,763,613). The Company is confident that these appeals will be decided in its favour, based on professional advice.

The above does not include show cause notices received by the Company.

(ii) Corporate guarantee given to subsidiary’ bankers to obtain line of credit Rs. 426,680,000 (March 31, 2011 - Rs. 141,184,000)

(iii) a. The Company has offered a Fixed Deposit of Rs. 14,081,214 with Oriental Bank of Commerce as lien for the overdraft facility of Rs. 10,000,000 (March 31, 2011- Rs. 10,000,000) availed by its wholly owned subsidiary, Infotech Geospatial (India) Limited.

b. The Company has offered a Fixed Deposit of Rs. 15,648,109 with Corporation Bank as lien for the Cash Credit Facility of Rs. 10,000,000 (March 31, 2011- Rs. Nil) availed by its wholly owned subsidiary, Infotech Geospatial (India) Limited.

2. Amalgamation:

(Refer to Note No. 30 of the annual standalone financial statements)

During the previous year, TTM Institute of Information Technology Private Limited, a wholly owned subsidiary of Infotech Enterprise Limited ("the Company") was amalgamated with the Company w.e.f. April 1, 2011 pursuant to Scheme of Amalgamation approved by the Honourable High Court of Judicature, Andhra Pradesh vide its order dated March 21, 2011 and filed with Registrar of Companies on May 12, 2011. Consequently all the Assets, Liabilities and Reserves stand taken over by the Company retrospectively from April 1, 2011 and accounted under "Pooling of Interest" method as per the Accounting Standard-14 "Accounting for Amalgamations". As TTM Institute of Information Technology Private Limited was a wholly owned subsidiary of the Company, no additional shares were issued to effect the Amalgamation.

Note:

(i) Balances with banks include deposits amounting to Rs. 88,417,869 (March 31, 2011 - Rs. 200,469,258) and margin monies amounting to Rs. 379,000 (March 31, 2011 - Rs. 379,000) which have an original maturity of more than 12 months. Balances with banks include deposits amounting to Rs. Nil (March 31, 2011- Rs. 3,095,569) and margin monies amounting to Rs. 379,000 (March 31, 2011- Rs. 379,000) which have a maturity of more than 12 months from the Balance Sheet Date

3. Regrouping/Reclassification

The Revised Schedule VI has become effective from April 1, 2011 for the preparation of financial statements. This has significantly impacted the disclosure and presentation made in the financial statements. The abridged financial statements are prepared based on the financial statements prepared as per the revised schedule VI. Previous year’ figures have been regrouped / reclassified wherever necessary to correspond with the current year’ classification / disclosure.


Mar 31, 2011

Related Party Transactions

(Refer to Note No. 12 of Schedule 15 of the annual standalone financial statements.)

List of related parties on which the Company is able to exercise the control.

a) Subsidiaries

Name of the Subsidiary Companies

Infotech Enterprises Europe Limited, UK. (IEEL)

Infotech Enterprises Benelux B.V Netherlands - A subsidiary of IEEL

Mapcentric Consulting Limited, UK - A subsidiary of IEEL

Dataview Solutions Limited, UK - A subsidiary of IEEL

Infotech Enterprises America Inc., USA (IEAI)

Infotech Software Solutions Canada Inc., Canada - A subsidiary of IEAI

Infotech Enterprises Electronic Design services Inc., - A subsidiary of IEAI

Daxcon Engineering Services Inc., USA - A subsidiary of IEAI *

Wellsco Inc., USA - A Subsidiary of IEAI (w.e.f. August 9, 2010)

Infotech Enterprises GmbH, Germany (IEG)

Infotech Enterprises AB, Sweden - A subsidiary of IEG (w.e.f April 8, 2010)

Infotech Geospatial (India) Limited, India

TTM Institute of Information Technology Private Limited, India

Infotech Enterprises Japan KK, Japan

Infotech Enterprises Information Technology Services Private Limited, India

*Merged with IEAI w.e.f 1st January, 2011

b) Associate

Name of the Associate Company

Infotech Aerospace Services Inc. , Puerto Rico, USA

c) Joint Venture

Name of the Joint Venture Company

Infotech HAL Limited, India

d) Key Management Personnel

Name Designation

B.V.R. Mohan Reddy Chairman and Managing Director

B. Sucharitha Whole Time Director

S.A. Lakshminarayanan Chief Operating Officer - N&CE

K. Ashok Kumar Chief Technology Officer

Sundar Viswanathan Chief Financial Officer (w.e.f. April 5, 2010)

Bhanu Cherukuri Chief Strategy Officer

A. Ramaswami Chief Information Officer (w.e.f. October 21, 2010)



e) Relative of Chairman & Managing Director and Whole Time Director

Name of Relative Designation

Krishna Bodanapu President - Engineering B. Ashok Reddy President - Global Human Resources & Corporate Affairs

5. Quantitative details

(Refer to Note No. 17 of Schedule 15 of the annual standalone financial statements)

The Company is engaged in the development of Computer Software and Services. The production and sale of such software and services 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 to the Companies Act, 1956.

6. Segmental Information

(Refer to Note No.11 of Schedule 15 of the annual standalone financial statements)

Segment information has been presented in the Consolidated Financial Statements as permitted by Accounting Standard (AS 17) on Segment Reporting as notified under the Companies (Accounting Standards) Rules, 2006.

7. Stock Option Plans

(Refer to Note No.2 of Schedule 15 of the annual standalone financial statements)

Infotech Employee Stock Offer Scheme 1999 (ESOP Plan)

In 1998-99, the Company set up ESOP plan and allotted 80,900 equity shares of Rs 10 each at a premium of ` 100 per share to the Infotech ESOP trust. The trust on recommendation of management and upon receipt of full consideration transfers the equity shares in the name of the selected employees. The Company modified the ESOP Plan and adjusted the number of options and exercise price on account of bonus issue and stock split cum bonus issue during 2002-03 and 2006-07 respectively.

As this scheme is established prior to the SEBI Guidelines on the stock options, there is no cost relating to the grant of options under this scheme.

Associate Stock Option Plans (ASOP Plan)

The company currently has three ASOP plans - ASOP 2002, ASOP 2004 and ASOP 2008. Under each of these schemes, options will be issued to employees at an exercise price which shall not be less than the market price on the date of the grant. These options vest over a period ranging from one to three years from the date of grant, starting with 10% at the end of the first year, 15% at the end of one and half years, 20% after two years, 25% at the end of two and half years and 30% at the end of the third year.

8. Contingent Liabilities and Commitments

(Refer to Note No. 18 of Schedule 15 of the annual standalone financial statements.)

a. Estimated amount of contracts remaining to be executed on capital accounts not provided for, net of advances Rs 140,645,654 (31.03.2010 - Rs 45,325,045).

b. The Company has outstanding counter guarantees of Rs 78,030,894 as on March 31, 2011, to banks, in respect of guarantees given by the said banks in favour of various agencies (31.03.2010 - Rs 70,043,183).

c. Corporate guarantee given to subsidiary's bankers to obtain line of credit Rs 141,184,000 (31.03.2010 - Rs 376,842,480)

d. The Company has disputed various demands raised by Income Tax authorities for the assessment years 1997-98 to 2007-08. The orders are pending at various stages of appeals. The aggregate amount of disputed tax not provided for is Rs 178,022,384 (31.03.2010 - Rs 161,954,153). The Company is confident that these appeals will be decided in its favour, based on professional advice.

e. The Company has disputed various demands raised by the Sales Tax authorities for the financial years 2004-05 to 2009-10. The Company has filed appeals, which are pending with the appropriate authorities. The aggregate amount of disputed tax not provided for is Rs 20,221,861 (31.03.2010 - Rs 16,344,575). The Company is confident that these appeals will be decided in its favour, based on professional advice.

f. The Company has disputed various demands raised by the Service Tax authorities for the financial years 2005-06 to 2009-10. The Company has filed appeals, which are pending with the appropriate authorities. The aggregate amount of disputed tax not provided for is Rs 139,763,613 (31.03.2010 - Rs Nil). The Company is confident that these appeals will be decided in its favour, based on professional advice.

g. The company has offered the Fixed Deposits of Rs 13,130,423 with Oriental Bank of Commerce as lien for the overdraft facility of Rs 10,000,000 availed by its subsidiary, Infotech Geospatial (India) Limited.

2. Regrouping/Reclassification

The figures for previous year have been regrouped /reclassified wherever necessary, to conform to the current year figures.


Mar 31, 2010

1. Description of Business

Infotech Enterprises Limited (Infotech or the Company) is a global technology services and solutions Company specialising in geospatial, engineering design and IT solutions. Its range of services include digitizsation of drawings and maps, photogrammetry, computer aided design/engineering (CAD/CAE), design and modelling, repair development engineering, reverse engineering application software development, software products development, consulting and implementation. The Company specializes in software services and solutions for the manufacturing, utilities, telecommunications, transportation & logistics, local government and financial services markets. The Company has its headquarters in Hyderabad, India and development facilities in India at Hyderabad, Bangalore, Noida, Kakinada and overseas branches at Australia, Canada, Dubai, New Zealand, Norway, Malaysia and Singapore, and serves a global customer base through its subsidiaries in India, United States of America (USA), United Kingdom (UK), Japan and Germany.

2. Associate Stock Option Plans

Scheme established prior to SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines 1999, (SEBI guidelines on Stock Options)

Infotech Employee Stock Offer Scheme 1999 (ESOP Plan)

In 1998-99, the Company set up Infotech Employee Stock Offer Scheme (ESOP Plan) and allotted 80,900 equity shares of Rs.10 each at a premium of Rs.100 per share to the "Infotech ESOP Trust" ("Trust"). The Trust, on the recommendation of the management and upon the receipt of full payment upfront transfers the equity shares in the name of selected employees. The Company modified the ESOP Plan and adjusted the number of options and exercise price on account of bonus issue and stock split cum bonus issue during 2002-03 and 2006-07 respectively. These equity shares are under lock-in period (i.e., the date of transfer of the shares from the Trust to the employee) and it differs from offer to offer. When the employee leaves the Company before the expiry of the lock-in- period the options allocated to such employee stands transferred to Trust at a predetermined price. Hence, the lock-in-period has been considered as vesting period.

However, the Trust and the Company have a discretionary power to waive the restriction on selling such stock to the Trust.

As this scheme is established prior to the SEBI Guidelines on the stock options, there is no cost relating to the grant of options under this scheme.

Scheme established after SEBI Guidelines on Stock Options

Securities Exchange Board of India (SEBI) issued the Employee Stock Option Scheme and Employee Stock Purchase Scheme Guidelines 1999, which is applicable for all Stock Option Schemes established after June 19, 1999.

Associate Stock Option Plan - 2001 (ASOP 2001)

The Company instituted ASOP 2001 in April 2001 and earmarked 225,000 equity shares of Rs.10 each for issue to the employees under ASOP. The Company modified ASOP 2001 and adjusted the number of options and exercise price on account of bonus issue and stock split cum bonus issue during 2002-03 and 2006-07 respectively.

Associate Stock Option Plan - 2002 (ASOP 2002)

The Company instituted ASOP 2002 in October 2002 and earmarked 575,000 equity shares of Rs.10 each for issue to the employees under ASOP. The Company modified ASOP 2002 and adjusted the number of options and exercise price on account of stock split cum bonus issue during 2006-07. Under ASOP 2002, options will be issued to employees at an exercise price, which shall not be less than the market price on the date of grant. These options vest over a period ranging from one to three years from the date of grant, starting with 10% at the end of first year, 15% at the end of one and half years, 20% after two years, 25% at the end of two and half years and 30% at the end of third year.

Associate Stock Option Plan - 2004 (ASOP 2004)

The Company instituted ASOP 2004 in October 2004 and earmarked 1,150,000 equity shares of Rs.10 each for issue to the employees under ASOP. The Company modified ASOP 2004 and adjusted the number of options and exercise price on account of stock split cum bonus issue during 2006-07. Under ASOP 2004, options will be issued to employees at an exercise price, which shall not be less than the market price on the date of grant. These options vest over a period ranging from one to three years from the date of grant, starting with 10% at the end of first year, 15% at the end of one and half years, 20% after two years, 25% at the end of two and half years and 30% at the end of third year. As the options were granted to the employees at the market price on the date of grant there is no cost relating to grant of options during the year.

Out of the total outstanding options, 112,880 options pertain to options granted to the associates of subsidiary companies.

During the year 2006-07, the Company completed two corporate actions, viz., (i) Sub-Division of Rs.10 shares into 2 shares of Rs.5 each and (ii) Issue of Bonus shares of Rs.5/- each in the ratio of 1:2. All original grants that remained un-exercised have been suitably adjusted so as to have the effect of above corporate actions.

Associate Stock Option Plan - 2008 (ASOP 2008)

The Company instituted ASOP 2008 vide the resolution passed by the members of the Company at their meeting held on 23 July 2008, Company has got the in principles from the stock exchanges and there are no grants under this Plan.

Proforma EPS

In accordance with Securities Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, had the compensation cost for Stock Option plans been recognised based on the fair value at the date of grant in accordance with Binomial Lattice model, the pro forma amounts of the Companys net profit and earnings per share would have been as follows:

3. The Company had issued 2,724,000 Compulsorily Convertible Preference Shares ("CCPS") with a face value of Rs. 360 on July 6, 2007 to M/s. GA Global Investments Limited ("GA" or "the Allottee"). The terms and conditions of the issue of these CCPS including the right to convert the CCPS into Equity Shares are subject to the provisions of the Agreement entered into between the Allottee and the Company, dated June 28, 2007, the guidelines issued by SEBI, RBI etc., and the Special Resolution passed in the Extraordinary General Meeting of members of the Company held on June 23, 2007. The CCPS were to be converted into equal number of equity shares within a period of 18 months from the date of allotment at the option of the Allottee and if no option is exercised, the same shall be automatically converted into equity shares at the end of 18 months.

GA Global investments have exercised the option to convert the CCPS and in pursuance of this exercise the Company has allotted 2,724,000 equity shares of Rs.5/- each, at a premium of Rs. 355 each on December 9, 2008. As such, there are no preference shares in the Company post the above conversion.

The Company has entered into certain foreign currency option contracts that mature over the next 7 months in respect of which a provision towards unrealised loss of Rs. 63,964,134 (31.03.2009 Rs. 514,793,735) on a mark to market basis has been recorded in the accounts. These losses are not realised losses and have a potential to reverse or increase over the maturity period.

The Company has also entered into certain foreign currency forward contracts that mature over the next 9 months in respect of which an unrealised gain of Rs. 90,481,526 (31.03.2009 Rs. Nil) has been recorded in the accounts. These gains are not realised gains and have a potential to reverse or decrease over the maturity period.

The foreign exchange forward and option contracts held by the Company to hedge its risk to foreign currency exposures as at March 31, 2010 included:

- Foreign currency forward contracts of USD 8,000,000 (31.03.2009: USD 6,000,000).

- Foreign currency forward contracts of GBP 5,040,000 (31.03.2009: GBP Nil).

- Foreign currency forward contracts of EURO 9,450,000 (31.3.2009: EURO Nil)

- Foreign currency option contracts to sell a maximum of USD 13,000,000 (31.03.2009: USD 44,500,000).

Amalgamation :

TTM (India) Private Limited, a wholly owned subsidiary of Infotech Enterprise Limited ("the Company") has been amalgamated with the Company w.e.f. April 1, 2009 pursuant to Scheme of Amalgamation approved by the Honourable High Court of Judicature, Andhra Pradesh vide its order dated July 27, 2009 and filed with Registrar of Companies on September 29, 2009. Consequently all the Assets, Liabilities and Reserves stand taken over by the Company retrospectively from April 1, 2009 and accounted under "Pooling of Interest" method as per the Accounting Standard-14 "Accounting for Amalgamations". As TTM (India) Private Limited was a wholly owned subsidiary of the Company, no additional shares were issued to effect the Amalgamation.

A. Defined Contribution Plans

i. Provident Fund:

The Company makes Provident Fund Contribution to defined contribution retirement benefit plans for qualifying employees. Under the Scheme, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. These contributions are made to the Fund administered and managed by the Government of India. The Companys monthly contributions are charged to the Profit and Loss Account in the period they are incurred. Total expenditure recognised during the year aggregated to Rs. 120,009,039. (2008-09 Rs.102,206,821).

ii. Superannuation Fund

The qualifying employees receive benefit under Superannuation scheme which is a defined contribution wherein the Company contributes 15% of the annual salary of the covered employee. These contributions are made to a fund administrated by LIC of India. The Companys monthly contributions are charged to profit and loss account in the period they are incurred. Total expense recognised during the year aggregated to Rs. 33,153,439. (2008-09 Rs.31,374,105)

B. Defined Gratuity Plans

i. Gratuity:

In accordance with the payment of Gratuity under Payment of Gratuity Act, 1972 of India, the Company provides for gratuity, a defined retirement benefit plan (the Gratuity Plan) covering eligible employees. Liabilities with regard to such Gratuity Plan is determined by an independent actuarial valuation and is charged to the Profit and Loss Account in the period determined. The Gratuity Plan is administered by Companys own Trust which has subscribed to "Group Gratuity Scheme" of Life Insurance Corporation of India.

ii. Provision for Unutilised Leave:

The accrual for unutilised leave is determined for the entire available leave balance standing to the credit of the employees at period-end. The value of such Leave balance eligible for carry forward, is determined by an independent actuarial valuation and charged to Profit and Loss Account in the period determined.

4.Segmental Information

Management evaluates the company’s performance and allocates resources based on an analysis of various performance indicators by business verticals and geographical segmentation of customers.

The Company classifies its operations into two vertically oriented business segments: Utilities, Telecom, Government (UTG) and Engineering, Manufacturing, Industrial Products (EMI). Both businesses cater to the specific requirements of customers in their respective user segments.

Geographic segments of the Company are North America, Europe and Rest of the world.

The Company has identified business segments as its primary segment and geographic segments as its secondary segment.

I. Utilities, Telecom, Government (UTG)

UTG vertical services customers in industries such as power, gas, telecom, transportation and local government. The Company service offerings to the UTG vertical include data conversion, data maintenance, photogrammetry and IT services.

II. Engineering, Manufacturing, Industrial Products (EMI)

EMI vertical services customers in industries such as aerospace, automotive, off-highway transportation and industrial and commercial products, engineering design, embedded software, IT Solutions, manufacturing support, technical publications and other strategic customers.

Revenue in relation to these verticals is categorised based on items that are individually identifiable to that vertical.

Fixed assets used in the Company are not identified to any of the reportable segments and management believes that it is currently not practicable to provide segment disclosures relating to total assets and liabilities since a meaningful segregation of the available data is onerous.

5. Contingent Liabilities and Commitments

a. Estimated amount of contracts remaining to be executed on capital accounts not provided for, net of advances Rs. 45,325,045 (31.03.2009 - Rs. 81,465,424).

b. The Company has outstanding counter guarantees of Rs. 70,043,183 as on March 31, 2010, to banks, in respect of guarantees given by the said banks in favour of various agencies (31.03.2009 - Rs. 76,160,447).

c. Corporate guarantee given to subsidiarys bankers to obtain line of credit Rs. 376,842,480 (31.03.2009 - Rs. 334,902,600)

d. The Company has disputed various demands raised by Income Tax authorities for the assessment years 1997-98 to 2006-07. The orders are pending at various stages of appeals. The aggregate amount of disputed tax not provided for is Rs. 161,954,153 (31.03.2009 Rs.166,143,227). The Company is confident that these appeals will be decided in its favour, based on professional advice.

e. The Company has disputed various demands raised by the sales tax authorities for the financial years 2004-05 to 2009-10. The Company has filed appeals, which are pending with the appropriate authorities. The aggregate amount of disputed tax not provided for is Rs.16,344,575 (31.03.2009: Rs. Nil). The Company is confident that these appeals will be decided in its favour, based on professional advice.

6. Contingency Reserve

The Company is contesting the Income Tax Appellate Tribunals (ITAT) order for the denial of certain export benefits under the Income Tax Act, 1961 on the grounds of the date of establishment of the Export Oriented Unit. The petition contesting the ITATs Order has been admitted by the Honourable High Court of Judicature, Andhra Pradesh and the case has not yet come up for hearing during the year.

Further, the Company is contesting certain other disallowances made by the Deputy Commissioner of Income-tax for the assessment years 2002-03 to 2006-07. The matters have been taken up with the appropriate authorities and the Company is hopeful of the favourable resolution, based on professional advice. As a matter of abundant precaution, the Company has set aside an amount of Rs. 161,000,000 (31.03.2009 Rs. 161,000,000) as Contingency Reserve to meet any future eventuality.

7. Research and Development Expenses

Revenue expenditure pertaining to Research and Development charged to Profit and Loss Account Rs. 12,631,002 (2008-09 - Rs. 2,021,504). Capital expenditure on Research and Development Rs. NIL (31.03.2009 - Rs. NIL) is shown in the respective fixed assets.

8. Except for the dues to micro enterprises and small enterprises, as disclosed in Schedule 10 Liabilities, the Company has not received any memorandum (as required to be filed by the suppliers with the notified authority under the MSMED Act, 2006) claiming their status as micro or small enterprises. In respect of the dues disclosed, there are no principal amounts overdue and no interest has been claimed based on the information available with the Company.

9. During the year, Company entered into an agreement with the Government of Karnataka, represented by the Commissioner Survey Settlement and Land Records to under take the Urban Property Ownership Records project. The project would operate on a PPP model i.e. Public Private Partnership. Company undertakes to build, develop, construct, commission, operate and maintain the IT solutions for the Urban Property Ownership Records project for a period of 6 years and 270 days. The investment made in the project till March 31, 2010 is Rs. 26,833,543 towards hardware/software and other operating costs. As the project in progress as at the year end the amount invested is included with in Capital Work in Progress.

10. Other Income for the year includes Rs.450,829,601 towards reversal of provision for MTM losses on derivative contracts, Rs.187,073,883 towards loss on settlement of derivative contracts and Rs.90,481,526 towards restatement gain on derivative contracts taken during the year.

11. Regrouping/Reclassification

The figures for previous year have been regrouped/reclassified wherever necessary, to conform to the current year figures.

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