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Notes to Accounts of Elnet Technologies Ltd.

Mar 31, 2018

Notes to Standalone Financial Statements for the year ended March 31, 2018

1 Corporate Information

Elnet Technologies Limited (ETL) was incorporated in August 1990 as a Public Limited Company which is situated in the IT corridor, Rajiv Gandhi Salai, Taramani, Chennai. ETL’s core competence is to develop and manage Software Technology Park. ETL has pioneered the concept of Software Technology Park in India and also providing infrastructure to Information Technology and Information technology enabled services industry companies.

2 Basis of preparation of financial statements Statement of compliance

These financial statements are prepared in accordance with Indian Accounting Standards (Ind AS), the provisions of the Companies Act, 2013 (‘the Act’) (to the extent notified) and guidelines issued by the Securities and Exchange Board of India (SEBI). The Ind AS are prescribed under Section 133 of the Act read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016.

Basis of preparation and presentation

For all periods up to and including the year ended March 31, 2017, the Company prepared its financial statements in accordance with accounting standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Indian GAAP).

The financial statements for the year ended March 31, 2018 are the first financial statements the Company has prepared in accordance with Ind AS with the date of transition as April 1, 2016. Refer to note 38 for information on how the Company adopted Ind AS.

The financial statements have been prepared on a historical cost basis, except for the following assets and liabilities which have been measured at fair value or revalued amount:

a) Derivative financial instruments

b) Certain financial assets and liabilities measured at fair value (refer accounting policy regarding financial instruments)

Use of estimates

The preparation of financial statements in conformity with Generally Accepted Accounting Principles (GAAP) requires management to make judgments, estimates and assumptions that affect the application of accounting policies and reported amounts of assets, liabilities, income and expenses and the disclosure of contingent liabilities on the date of the financial statements. Actual results could differ from those estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Any revision to accounting estimates is recognised prospectively in current and future periods.

Functional and presentation currency

“These financial statements are presented in Indian Rupees (INR), which is the Company’s functional currency. All financial information presented in INR has been rounded to the nearest lakhs (up to two decimals).

The financial statements are approved for issue by the Company’s Board of Directors on May 25, 2018.”

2A Critical accounting estimates and management judgments

The management believes that the estimates used in the preparation of financial statements are prudent and reasonable.

Information about significant areas of estimation, uncertainty and critical judgements used in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements is included in the following notes:

Property, Plant and Equipment (PPE)

The residual values and estimated useful life of PPE are assessed by the technical team at each reporting date by taking into account the nature of asset, the estimated usage of the asset, the operating condition of the asset, past history of replacement and maintenance support. Upon review, the management accepts the assigned useful life and residual value for computation of depreciation/amortisation. Also, management judgement is exercised for classifying the asset as investment properties or vice versa.

Current tax

Calculations of income taxes for the current period are done based on applicable tax laws and management’s judgement by evaluating positions taken in tax returns and interpretations of relevant provisions of law.

Deferred Tax Assets

Significant management judgement is exercised by reviewing the deferred tax assets at each reporting date to determine the amount of deferred tax assets that can be retained / recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.

Fair value

Management uses valuation techniques in measuring the fair value of financial instruments where active market quotes are not available. In applying the valuation techniques, management makes maximum use of market inputs and uses estimates and assumptions that are, as far as possible, consistent with observable data that market participants would use in pricing the instrument. Where applicable data is not observable, management uses its best estimate about the assumptions that market participants would make. These estimates may vary from the actual prices that would be achieved in an arm’s length transaction at the reporting date.

Impairment of Trade Receivables

The impairment for trade receivables is done based on assumptions about risk of default and expected loss rates. The assumptions, selection of inputs for calculation of impairment are based on management judgement considering the past history, market conditions and forward looking estimates at the end of each reporting date.

Impairment of Non-financial assets (Property, Plant and Equipment)

Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at arm’s length, for similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a DCF model. The cash flows are derived from the budgets. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes. These estimates are most relevant to goodwill and other intangibles with indefinite useful lives recognised by the Company.

Defined Benefit Plans and Other long term benefits

The cost of the defined benefit plan and other long term benefits, and the present value of such obligation are determined by the independent actuarial valuer. An actuarial valuation involves making various assumptions that may differ from actual developments in future. Management believes that the assumptions used by the actuary in determination of the discount rate, future salary increases, mortality rates and attrition rates are reasonable. Due to the complexities involved in the valuation and its long term nature, this obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.

2B Recent accounting pronouncements Standards issued but not yet effective

“Recent Indian Accounting Standards (Ind AS) Ministry of Corporate Affairs (“MCA”) through Companies (Indian Accounting Standards) Amendment Rules, 2018 notified the following new and amendments to Ind ASs which the company has not applied as they are effective for annual periods beginning on or after April 1, 2018:

Ind AS 115 Revenue from Contracts with Customers

Ind AS 21 The Effect of Changes in Foreign Exchange Rates

Ind AS 115 - Revenue from Contracts with Customers

Ind AS 115 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. Ind AS 115 will supersede the current revenue recognition standard Ind AS 18 - Revenue, Ind AS 11 - Construction Contracts when it becomes effective. The core principle of Ind AS 115 is that an entity should recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Specifically, the standard introduces a 5-step approach to revenue recognition:

Step 1: Identify the contract(s) with a customer

Step 2: Identify the performance obligation in contract

Step 3: Determine the transaction price

Step 4: Allocate the transaction price to the performance obligations in the contract

Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation

Under Ind AS 115, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e. when ‘control’ of the goods or services underlying the particular performance obligation is transferred to the customer. The Company has completed its evaluation of the possible impact of Ind AS 115 and will adopt the standard with all related amendments to all contracts with customers retrospectively with the cumulative effect of initially applying the standard recognised at the date of initial application. Under this transition method, cumulative effect of initially applying Ind AS 115 is recognised as an adjustment to the opening balance of retained earnings of the annual reporting period. The standard is applied retrospectively only to contracts that are not completed contracts at the date of initial application. The Company does not expect the impact of the adoption of the new standard to be material on its retained earnings and to its net income on an ongoing basis.

Ind AS 21 - The Effect of Changes in Foreign Exchange Rates The amendment clarifies on the accounting of transactions that include the receipt or payment of advance consideration in a foreign currency. The appendix explains that the date of the transaction, for the purpose of determining the exchange rate, is the date of initial recognition of the non-monetary prepayment asset or deferred income liability. If there are multiple payments or receipts in advance, a date of transaction is established for each payment or receipt. The company does not expect the impact of the adoption of this standard to be material on its retained earnings and to its net income on an ongoing basis.

Note:

The board of directors of the subsidiary company at their meeting held on 28th August, 2017 made a declaration of solvency and approved the proposal for voluntary winding up of the affairs of the subsidiary company. The Members of the subsidiary have approved the voluntary winding up process by a special resolution passed on 01st September, 2017. The Liquidator has made the application for dissolution before the Honorable National Company Law tribunal, Chennai Bench under the provisions of Insolvency and bankruptcy code, 2016 read with rules thereon. Pursuant to the same, Elnet software city limited ceased to be a subsidiary of the company with effect from 01st September, 2017.

(c) Rights, preferences and restrictions in respect of equity shares issued by the Company

1. The company has only one class of equity shares having a par value of Rs.10 each. Each holder of Equity shares is entitled to one vote per share rank pari-passu in all respects including voting rights and entitlement to dividend.

2. The board of directors at its meeting held on 25th May, 2018 has recommended for the dividend of INR 1.50 per equity share held (Previous year INR 1.40 per equity share held) at 15 % (previous year 14%) on Equity shares.The recommeded dividend is subject to the approval of shareholders of the Company in the ensuing 27th Annual General Meeting of the company.

3. In the event of liquidation, shareholders will be entitled to receive the remaining assets of the company after distribution of all preferential amounts. The distribution will be proportionate to the number of equity shares held by the shareholder.

The general reserve is used from time to time to transfer profits from retained earnings for appropriation purposes. As the general reserve is created by a transfer from one component of equity to another and is not an item of other comprehensive income, items included in the general reseve will not be reclassified subsequently to Statement of Profit or Loss.

Dues to Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis of information collected by the management represents the principal amount payable to these enterprises. There are no interest due and outstanding as at the reporting date.

3 Commitments and contingent liabilities Contingent Liabilities

Claims against the Company not acknowledged as debt

(i) Income Tax demand

There is a dispute with regard to the treatment of income of the company by the Income Tax Department as “Income from House Property”, whereas in the opinion of the Company, the income should be treated as “Income from Business”, which has been confirmed by the Income Tax Appellate Tribunal (ITAT).

In respect of Assessment Years 1996-97,1998-99, 2000-01 & 2001-02, the Madras High Court has decided the case in favour of the Company. The Department has filed a special leave petition with the Supreme Court. In the event the Supreme Court reverses the order of the High Court of Madras, there will be a tax liability of Rs.100.58 Lakhs.

In the opinion of the management, the company has a strong case to defend based on the decisions of the ITAT, High Courts and judicial precedence.

(ii) Lease Rent

In respect of claim made by Electronics Corporation of Tamilnadu Limited (ELCOT) during the year 2009-10 for a sum of Rs.956 Lakhs towards difference in the computation of Lease Rent for the period from 14.02.1991 to 14.01.1999, the Company prima-facie has reasons that the claim is not tenable and hence, no provision is considered necessary.

During the year, ELCOT demanded interest on delayed payment of Lease Rent amounting to Rs.1,071 Lakhs for the period May 18, 2000 uptil August 8, 2017. The management based on it’s assessment and legal advice obtained is confident of the outcome of the matters in it’s favour.

4 Operating Segments

The company is engaged in the business of ‘Developing and maintaining integrated software technology parks’ and therefore, has only one reportable segment in accordance with Ind AS 108 ‘Operating Segments’. The Company’s revenue is generated only within India and all operating assets are also located only in India. Accordingly, no disclosure relating to geographical location is applicable.

5 Operating lease arrangements

(i) The company as a lessee

The Company has an operating lease arrangement for a period of 90 years. The company does not have an option to purchase the leased land at the expiry of the lease period

(ii) The company as a lessor

Operating leases relate to the properties owned by the company with lease terms of between 1 to 10 years, with an option to extend for further period.. All operating lease contracts contain market review clauses in the event that the lessee exercises its option to renew. The lessee does not have an option to purchase the property at the expiry of the lease period. The future minimum lease payments are as follows:

6 Financial Instruments Capital management

The Company’s capital management objective is to maximise the total shareholder return by optimising cost of capital through flexible capital structure that supports growth. Further, the Company ensures optimal credit risk profile to maintain/enhance credit rating.

For the purposes of the Company’s capital management, capital includes issued capital, share premium and all other equity reserves attributable to the equity holders.

The following table summarises the capital of the Company:

Fair Value Measurments

The following table shows the carrying amounts and fair values of financial assets and financial liabilities including their levels in fair value hierarchy.

Financial risk management objectives

The Company’s activities expose it to a variety of financial risks, credit risks, liquidity risks and market risks.

The Company’s board of directors has overall responsibility for the establishment and oversight of the risk management framework.

The Risk management policies are established to identify and analyse the risks faced by the company, to set appropriate risk limits and controls and to monitor risks and adhere to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and company’s activities. The company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control enviornment in which all employees understand their roles and obligations.

Market risk

Market risk is the risk of any loss in future earnings, in realizable fair values or in future cash flows that may result from a change in the price of a financial instrument. The Company’s activities do not have any exposure to such risks.

Foreign currency risk management & Sensitivity Analysis

The Company’s operations do not involve transactions denominated in foreign currencies; consequently, exposure to exchange rate fluctuations does not arise. Accordingly, the Company does not have any exposure to such risks.

There are no hedged or unhedged foreign currency exposure outstanding as at March 31, 2018, March 31, 2017 and April 1, 2016.

Interest rate risk management & Sensitivity Analysis

The Company has only interest free short term borrowings and accordingly is not exposed to interest rate risk.

Credit risk management

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company is not subject to major credit risk as the majority of its trade receivables are covered by means of interest free security deposit taken at the inception of the agreement.

Exposure to credit risk

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure is the total of the carrying amount of balances with banks, short term deposits with banks, trade receivables, margin money and other financial assets excluding equity investments.

(a) Trade Receivables

Trade receivables are consisting of a large number of customers. The Company has credit evaluation policy for each customer and, based on the evaluation, credit limit of each customer is defined. Wherever the Company assesses the credit risk as high, the exposure is backed by security deposits taken at the time of entering into agreement with the customers.

The Company does not have higher concentration of credit risks to a single customer. As per simplified approach, the Company makes provision of expected credit losses on trade receivables using a provision matrix to mitigate the risk of default in payments and makes appropriate provision at each reporting date wherever outstanding is for longer period and involves higher risk.

(b) Investments, Cash and Cash Equivalents and Bank Deposits

Credit Risk on cash and cash equivalents, deposits with the banks/financial institutions is generally low as the said deposits have been made with the banks/financial institutions, who have been assigned high credit rating by international and domestic rating agencies.

Investments of surplus funds are made only with approved Financial Institutions/Counterparty. Investments primarily include investment in units of quoted Mutual Funds,etc. These Mutual Funds and Counterparties have low credit risk.

Liquidity risk management

Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company invests its surplus funds in bank fixed deposit and mutual funds, which carry minimal mark to market risks. The Company also constantly monitors funding options available in the debt and capital markets with a view to maintaining financial flexibility.

Liquidity tables

The following tables detail the Company’s remaining contractual maturity for its non-derivative financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay.

7 Retirement benefit plans Defined contribution plans

The total expense recognised in profit or loss of Rs. 7.23 lakhs (for the year ended March 31, 2017: Rs. 9.71 lakhs) represents contribution paid to these plans by the Company at rates specified in the rules of the plan.

Defined benefit plans

In respect of Gratuity plan and Compensated absences plan, the most recent actuarial valuation of the plan assets and the present value of the defined benefit obligation were carried out as on March 31, 2018. The present value of the defined benefit obligation, and the related current service cost and past service cost, were measured using the projected unit cost method. The following table sets forth the status of the Gratuity Plan & Compensated absences plan of the Company and the amount recognised in the Balance Sheet and Statement of Profit and Loss. The Company provides the gratuity benefit through annual contributions to insurer managed funds.

These plan typically expose the Company to actuarial risks such as: investment risk, interest rate risk, demographic risk and salary risk.

In respect of the plan in India, the most recent actuarial valuation of the plan assets and the present value of the defined benefit obligation were carried out as at March 31, 2018 by Mr. S. Krishnan, Fellow of the Institute of Actuaries of India. The present value of the defined benefit obligation, and the related current service cost and past service cost, were measured using the projected unit credit method.

No other post-retirement benefits are provided to these employees.

(a) Gratuity

Gratuity is payable as per Payment of Gratuity Act, 1972. In terms of the same, gratuity is computed by multiplying last drawn salary (basic salary including dearness Allowance if any) by completed years of continuous service with part thereof in excess of six months and again by 15/26. The Act provides for a vesting period of 5 years for withdrawal and retirement and a monetary ceiling on gratuity payable to an employee on separation, as may be prescribed under the Payment of Gratuity Act, 1972, from time to time. However, in cases where an enterprise has more favourable terms in this regard the same has been adopted.

Sensitivity Analysis

“Sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated. Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognised in the balance sheet. There was no change in the methods of assumptions used in preparing the sensitivity analysis from prior years.”

As the Company does not have any plan assets, the movement of present value of defined benefit obligation and fair value of plan assets has not been presented.

Sensitivity Analysis

Sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated. Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation liability recognised in the balance sheet.

There was no change in the methods of assumptions used in preparing the sensitivity analysis from prior years.

8 First-time adoption of Ind AS Transition to Ind AS

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

“The accounting policies set out in Note 3 have been applied in preparing the financial statements for the year ended March 31, 2018, the comparative information presented in these financial statements for the year ended March 31, 2017 and in the preparation of an opening Ind AS balance sheet at April 1, 2016 (The company’s date of transition).

In preparing its opening Ind AS balance sheet, the company has adjusted the amounts reported previously in financial statements prepared in accordance with the accounting standards generally applicable to the Company (as amended from time to time) and other relevant provisions of the Act (previous GAAP or Indian GAAP).

An explanation of how the transition from previous GAAP to Ind AS has affected The company’s financial position, financial performance and cash flows is set out in the following tables and notes.

A. Exemptions and exceptions availed

Set out below are the applicable Ind AS 101 optional exemptions and mandatory exceptions applied in the transition from previous GAAP to Ind AS.

A.1 Ind AS optional exemptions

A.1.1 Deemed cost for PPE and Intangibles

Ind AS 101 permits a first-time adopter to elect to fair value a class of property, plant and equipment or to continue with the carrying value for all of its PPE as recognised in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition after making necessary adjustments for de-commissioning liabilities.

Accordingly, the company has elected to continue the property, plant and equipment at their previous GAAP values.

A.1.2. Designation of previously recognised financial instruments

Ind AS 101 allows an entity to designate investments in equity instruments at FVTOCI or FVTPL on the basis of the facts and circumstances at the date of transition to Ind AS. The company has elected to apply this exemption for its investment in equity investments.

A.1.3. Leases

Appendix C to Ind AS 17 requires an entity to assess whether a contract or arrangement contains a lease. In accordance with Ind AS 17, this assessment should be carried out at the inception of the contract or arrangement. Ind AS 101 provides an option to make this assessment on the basis of facts and circumstances existing at the date of transition to Ind AS, except where the effect is expected to be not material. The company has elected to apply this exemption for such contracts/ arrangements.

A.2 Ind AS mandatory exceptions

A.2.1 Estimates

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

Ind AS estimates as at April 1, 2016 are consistent with the estimates as at the same date made in conformity with previous GAAP. The company made estimates for impairment of financial assets based on expected credit loss model in accordance with Ind AS at the date of transition as these were not required under previous GAAP.

B. Notes to first-time adoption

B.1 Fair valuation of security deposits

As per Ind AS 109, the company is required to fair value long term monetary assets and liabilities for the possible impact of discounting for time value of money. Accordingly, the Company has considered the impact of discounting for time value of money in its Ind AS financial statements.

B.2 Recognition of lease income/ payments

As per Ind AS 17, the Company is required straight line the lease rents only if the escalation is not in the nature of compensation for increase in cost inflation index. Accordingly, the Company has considered the impact of each of the agreements and accounted in its Ind AS financial statements.

B.3 Fair valuation of financial assets and liabilities

Under Ind AS, financial assets and liabilities are to be valued at amortised cost or fair valued through profit and loss (FVTPL) or fair valued through other comprehensive income (FVTOCI) based on the Company’s business objectives and the cash flow characteristics of the underlying financial assets and liabilities. The Company has remeasured the financial assets and liabilities as on the date of transition and the consequential impact has been given in the opening retained earnings.

B.4 Proposed dividends

Under Ind AS, liability to pay dividends arises only when the share holders approves the dividends recommended by the board of directors. Till such approval the proposed dividends does not meet the recognition criteria of a liability. The Company has accordingly, reversed the provisions for proposed dividends and the related taxes. Only a disclosure as required by Ind AS has been made

B.5 Remeasurement of post-employment benefit obligations

Under Ind AS, remeasurements i.e. actuarial gains and losses and the return on plan assets, excluding amounts included in the net interest expense on the net defined benefit liability are recognised in other comprehensive income instead of profit or loss. Under the previous GAAP, these remeasurements were forming part of the profit or loss for the year. Adjustments have been made for such re-classifications. However, this does not have any impact on equity/ profits for the year

9 Key reconciliation required as per Ind AS 101 on transition to Ind AS

(i) Investments

a) Investments in mutual funds have been fair valued through Statement of Profit & Loss (FVTPL) in accordance with Ind AS 109. the consequential impact on remeasurement has been given in the opening retained earnings.

b) Investment in equity shares in others has been fair valued through Other Comprehensive Income (FVTOCI)

(ii) Land Lease Deposit

Lease deposit made with ELCOT has been fair valued for the possible impact of discounting for time value of money and recognised at amortised cost as at the date of transition 1st April, 2016 as per Ind AS 109. Notional interest income on lease deposit is accounted to recoup the deposit to the actual amount and the difference between the actual lease deposit and its fair value is accounted for as notional rent expense on straight line basis over the lease term of 90 years.

(iii) Cancellable and Non cancellable Compensation Deposits

As per Ind AS 109, the company has fair valued long term monetary security deposits for the possible impact of discounting for time value of money and recognised at amortised cost at inception. Notional interest expense on security deposit is accounted to recoup the deposit to the actual amount.

(iv) Defined benefit liabilities

Both under Indian GAAP and Ind AS, the Company recognized costs related to its post-employment defined benefit plan on an actuarial basis. Under Indian GAAP, the entire cost, including actuarial gains and losses, are charged to Statement of Profit and Loss. Under Ind AS, re-measurements comprising of actuarial gains and losses are recognized immediately in the balance sheet with a corresponding debit or credit to retained earnings through OCI.

(v) Proposed Dividend

Liability to pay dividends arises only when the share holders approves the dividends recommended by the board of directors. Till such approval the proposed dividends does not meet the recognition criteria of a liability. The Company has accordingly, reversed the provisions for proposed dividends and the related taxes. Only a disclosure as required by Ind AS has been made.


Mar 31, 2017

1. Segment wise reporting as per standard AS 17 is not applicable to the company as the company collects only compensation from its tenants.

2. DISCLOSURE ON SPECIFIED BANK NOTES (SBNS)

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

*For the purpose of this clause, the term “Specified Bank Notes” shall have the same meaning prescribed in the notification of the Government of India in the Ministry of Finance, Department of Economic Affairs number S.O.1407(E),dated November 8, 2016.

Basic & diluted earnings per share (EPS ) computed in accordance with AS-20 - Earnings per Share

3. Deferred Tax Liability /Asset

As per the Accounting Standard “AS 22”, the Company is required to make a provision for “deferred tax liability/ asset”. During the year an amount of Rs. 32.21 Lakhs has been recognized for deferred tax asset.

The balance deferred tax liability (net) outstanding as on 31.03.2017 is Rs. 62.63 Lakhs the details of which are as follows:

4. DIMUNITION IN INVESTMENT IN SUBSIDIARY COMPANY ELNET SOFTWARE CITY LTD

The Company''s investment in its subsidiary, Elnet Software City Limited is Rs.10 lakhs. Considering the erosion of net worth and the intention of the management to wind-up its subsidiary, it is considered that the diminution in carrying value of the investment in the subsidiary is other than temporary in nature. Consequently, the Company has made a provision for diminution, for an amount of '' 441,981 and disclosed the same under exceptional item in the statement of Profit and Loss.

5. ADDITIONAL INFORMATION TO FINANCIAL STATEMENTS

Wind Mill

During the financial year, the Company sold 12,82,363 units to Tamilnadu Electricity Board. (2016 : 7,45,176 units).

6. DISCLOSURES REQUIRED UNDER SECTION 22 OF THE MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006:

(a) The principal amount remaining unpaid as at 31 March 2017 in respect of enterprises covered under the “Micro, Small and Medium Enterprises Development Act, 2006” (MSMDA) is Rs.24,559 (previous year: Rs. Nil). There was no interest amount payable based on the provisions under Section 16 of the MSMDA.

(b) The amount of interest due and payable for the period of delay in making payment (which have been paid but beyond the appointed day during the year) but without adding the interest specified under this Act is Rs. Nil (previous year: Rs. Nil).

(c) The list of undertakings covered under MSMDA was determined by the Company on the basis of information available with the Company and has been relied upon by the auditors.

7. Current Liabilities

(i) The company continues to hold the amount of Rs.1,46,503/- (2016: Rs.1,46,503/-) on account of Interest payable on FD made out of disputed dividend for the years 200001 and 2001-02.

(ii) There are no amounts due to the Central Government on account of Investor Education and Protection Fund as on 31.03.2017. The balance amount lying under the Unpaid Dividend Account 2009-2010 declared on 21.07.2010 for the year 200910 falls due on 24.08.2017.

8. Statement of Profit and Loss

Electricity Expenses have been reduced to the extent of Rs.86,67,030 /- (2016: Rs.50,46,017/-) for sale of electricity generated from windmill. There is no impact on the statement of Profit and Loss.

9. Estimated amount of liability on capital contracts as on 31.03.2017 not provided for is Rs. Nil. (Previous year Rs. Nil).

10. Contingent Liabilities in respect of:

Claims against the Company not acknowledged as debt

(i) Income Tax demand

There is a dispute with regard to the treatment of income of the company by the Income Tax Department as “Income from House Property”, whereas in the opinion of the Company, the income should be treated as “Income from Business”, which has been confirmed by the Income Tax Appellate Tribunal.

In respect of Assessment Years 1996-97,1998-99, 2000-01 & 2001-02, the Madras High Court has decided the case in favour of the Company. The Department has filed a special leave petition with the Supreme Court. In the event the Supreme Court reverses the order of the High Court of Madras, there will be a contingent liability of Rs.100.58 Lakhs.

In respect of Assessment Years 2003-04, the Income Tax Department had preferred an appeal before the High Court of Madras against the orders issued by the Income Tax Appellate Tribunal which was passed in favour of the company. In the event there is a reversal of the order, there will be a contingent liability of Rs.389.22 Lakhs.

In respect of Assessment Years 2007-08 and 2009-10, the case is pending with the Commissioner of Income Tax -Appeals. The contingent liability in this regard amounts to Rs.11.78 Lakhs.

(ii) Service Tax:

The company had received show cause notice from the Office of the Commissioner of Service Tax on the applicability of service tax on Electricity charges reimbursed from the occupants including generation from Generator for the period April 2006

- March 2012. As per legal opinion, the company has been advised that, it is not liable for service tax on this issue. The company had obtained an interim stay from the High Court of Madras against the show cause notice which was modified by the High Court. The company filed a fresh Writ Petition for stay and an order was received in September 2014 directing the company to represent before the Service tax department and the same has been complied. In view of this, there is a contingent liability of Rs.282.64 Lakhs.

(iii) Lease Rent :

In respect of claim made by ELCOT during the year 2009-10 for a sum of Rs.9.56 crores towards difference in the computation of Lease Rent for the period from 14.02.1991 to 14.01.1999, the Company prima-facie has reasons that the claim is not tenable and hence, no provision is considered necessary.

Previous year’s figures have been re-grouped / re-classified wherever necessary to correspond with the current year’s classification / disclosure.


Mar 31, 2016

1. EXPLANATORY STATEMENT

1.1 Retirement benefits to employees

(i) Defend Contribution Plan

Provident fund

In respect of defined contributions schemes, contributions to Provident Fund and Family Pension they are charged to the statement of Profit and Loss as incurred.

(ii) Defend benefit plan

gratuity

The Company provides for gratuity, a defend benefit retirement plan (the "Gratuity Plan") covering eligible employees. The Gratuity Plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee''s salary and the tenure of employment. Vesting occurs upon completion of fve years of service. Liabilities with regard to the Gratuity Plan are determined by actuarial valuation as of the balance sheet date, based upon which, the company contributes all the ascertained liabilities to the Elnet Technologies Ltd Employees'' Gratuity Fund Trust (the "Trust"). Trustees administer contributions by means of a group gratuity policy with Life Insurance Corporation of India.

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

iii leave encashment

The employees of the Company are entitled to compensated absence. The employees can carry forward a portion of the unutilized accrued compensated absence and utilize it in future periods or receive cash compensation at retirement or termination of employment for the unutilized accrued compensated absence for a maximum of 180 days. The Company records an obligation for compensated absences in the period in which the employee renders the services that increase this entitlement. The Company measures the expected cost of compensated absence as the additional amount that the Company expects to pay as a result of the unused entitlement that has accumulated at the balance sheet date based on actuarial valuations which is non funded.

Basic & diluted earnings per share (EPS ) computed in accordance with AS-20 - Earnings per Share

2. Deferred Tax liability /Asset

As per the Accounting Standard "AS 22", the Company is required to make a provision for "deferred tax liability/ asset". During the year an amount of Rs, 68,75,275/- has been recognized for deferred tax asset.

3. ADDITIONAL INFORMATION TO FINANCIAL STATEMENTS

3.1 Wind Mill

During the financial year, the Company sold 7,45,176 units to Tamilnadu Electricity Board. (2015 : 9,14,071 units).

4. Disclosures required under section 22 of the Micro, small and Medium Enterprises Development Act, 2006:

i) There were no dues to Small Scale Industrial undertakings to whom the Company owes any sum which is outstanding for more than 30 days.

ii) There were no dues either principal or interest remaining unpaid to any suppliers under The Micro, Small and Medium Enterprises Development Act, 2006, which came into force with effect from 02.10.2006 as at the end of the accounting year. Similarly, no payments have been made to the suppliers beyond the appointed day.

5. current liabilities

(i) The company continues to hold the amount of Rs, 1,46,503/- (2015: Rs, 1,46,503/-) on account of Interest payable on FD made out of disputed dividend for the years 2000- 01 and 2001-02.

(ii) There are no amounts due to the Central Government on account of Investor Education and Protection Fund as on 31.3.2016. The balance amount lying under the Unpaid Dividend Account 2008–2009 declared on 07.07.2009 for the year 2008- 09 falls due on 08.08.2016.

6. Statement of Profit and Loss

Electricity Expenses have been reduced to the extent of Rs, 47,31,868/- (2015 : Rs, 50,38,648/-) for sale of electricity generated from windmill. There is no impact on the statement of Profit and Loss.

7. Estimated amount of liability on capital contracts as on 31.03.2016 not provided for is Rs, Nil . (Previous year Rs, Nil ).

8. claim by Department of Telecommunications:

The Department of Telecommunications (DoT) fled a claim against the company for Rs, 20,82,233/- before the Sole Arbitrator in the matter of payment towards license fees and interest thereon. The Arbitrator''s award was made in June 2005 according to which a sum of Rs, 5,48,288 and interest there on was payable by the company to DoT. The company accepted the award and decided to effect the payment after waiting for the appeal period. However, DoT had fled an appeal in the High Court of Delhi against the Arbitrator''s award which has since been dismissed by the Honourable High Court of Delhi by an order dated 21 Dec 2015 thereby reinstating the order passed by the Honourable Arbitral Tribunal. Accordingly, in line with said award, the company has affected the payment along with interest of 6% p.a. up to date on 31 Mar 16 in discharge of its obligation.

9. contingent liabilities in respect of:

claims against the company not acknowledged as debt

(i) Income Tax demand

There is a dispute with regard to the treatment of income of the company by the Income Tax Department as "Income from House Property", whereas in the opinion of the Company, the income should be treated as "Income from Business", which has been confirmed by the Income Tax Appellate Tribunal.

In respect of Assessment Years 1996-97,1998-99, 2000-01 & 2001-02, the Madras High Court has decided the case in favour of the Company. The Department has fled a special leave petition with the Supreme Court. In the event the Supreme Court reverses the order of the High Court of Madras, there will be a contingent liability of Rs, 100.58 Lakhs.

In respect of Assessment Years 2003-04, the Income Tax Department had preferred an appeal before the High Court of Madras against the orders issued by the Income Tax Appellate Tribunal which was passed in favour of the company. In the event there is a reversal of the order, there will be a contingent liability of Rs, 389.22 Lakhs.

In respect of Assessment Years 2007-08 and 2009-10, the case is pending with the Commissioner of Income Tax –Appeals. The contingent liability in this regard amounts to Rs, 11.78 Lakhs.

(ii) service Tax:

The company had received show cause notice from the Office of the Commissioner of Service Tax on the applicability of service tax on Electricity charges reimbursed from the occupants including generation from Generator for the period April 2006 – March 2012. As per legal opinion, the company has been advised that, it is not liable for service tax on this issue. The company had obtained an interim stay from the High Court of Madras against the show cause notice which was modified by the High Court. The company fled a fresh Writ Petition for stay and an order was received in September 2014 directing the company to represent before the Service tax department and the same has been complied. In view of this, there is a contingent liability of Rs, 282.64 Lakhs.

(iii) lease Rent :

The Company had received a communication from ELCOT claiming a sum of Rs, 9.56 crores towards difference in the computation of Lease Rent for the period from 14.02.1991 to 14.01.1999. The Company prima-facie has a strong reason that the claim is not tenable and is evaluating various options, including legal recourse. Pending any such actions no provision has been made.


Mar 31, 2014

Not Available


Mar 31, 2013

1. GENERAL INFORMATION

Elnet Technologies Limited (ETL) was incorporated in August 1990 as a Public Limited Company which is situated in the IT corridor, Rajiv Gandhi Salai, Taramani, Chennai. ETL''s core competence is to develop and manage Software Technology Park. ETL has pioneered the concept of Software Technology Park in India and also providing infrastructure to IT and ITES.

2. EXPLANATORY STATEMENT

2.1 Retirement benefits to employees

(i) Defined Contribution Plan Provident fund

In respect of defined contributions schemes, contributions to Provident Fund and Family Pension they are charged to the statement of Profit and Loss as incurred.

(ii) Defined benefit plan Gratuity

The Company provides for gratuity, a defined benefit retirement plan (the "Gratuity Plan") covering eligible employees. The Gratuity Plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee''s salary and the tenure of employment. Vesting occurs upon completion of five years of service. Liabilities with regard to the Gratuity Plan are determined by actuarial valuation as of the balance sheet date, based upon which, the company contributes all the ascertained liabilities to the Elnet Technologies Ltd Employees'' Gratuity Fund Trust (the "Trust"). Trustees administer contributions by means of a group gratuity policy with Life Insurance Corporation of India.

iii Leave encashment

The employees of the Company are entitled to compensated absence. The employees can carry forward a portion of the unutilized accrued compensated absence and utilize it in future periods or receive cash compensation at retirement or termination of employment for the unutilized accrued compensated absence for a maximum of 180 days. The Company records an obligation for compensated absences in the period in which the employee renders the services that increase this entitlement. The Company measures the expected cost of compensated absence as the additional amount that the Company expects to pay as a result of the unused entitlement that has accumulated at the balance sheet date based on actual valuations.

2.2 Segment wise reporting as per standard AS 17 is not applicable to the company

2.3 Accounting for leases

During the year 1995-96, the Company has completed the construction of its IT Park at Taramani, Chennai and leased out the entire completed portion of the premises. The disclosure required for operating leases under AS 19 is given below:

2.4 Deferred Tax Liability /Asset

As per the Accounting Standard "AS 22" issued by the Institute of Chartered Accountants of India (ICAI), the Company is required to make a provision for "deferred tax liability/ asset". During the year an amount of Rs. 16,87,353/-has been recognized for deferred tax asset.

3. ADDITIONAL INFORMATION TO FINANCIAL STATEMENTS

3.1 Wind Mill

During the financial year the Company sold 13,15,030 units to Tamilnadu Electricity Board. (2012 : 10,98,647 units).

3.2 Disclosures required under Section 22 of the Micro, Small and Medium Enterprises Development Act, 2006:

i) There were no dues to Small Scale Industrial undertakings to whom the Company owes any sum which is outstanding for more than 30 days.

ii) There were no dues either principal or interest remaining unpaid to any suppliers under The Micro, Small and Medium Enterprises Development Act, 2006, which came into force with effect from 02.10.2006 as at the end of the accounting year. Similarly, no payments have been made to the suppliers beyond the appointed day without adding interest, no interest is accrued and remaining unpaid during the year.

3.3 Current Liabilities

i. The company continues to hold the amount of Rs. 1,46,503/- (2012: Rs. 1,46,503/-) on account of Interest payable on FD made out of disputed dividend for the years 2000-01 and 2001-02.

ii. There are no amounts due to the Central Government on account of Investor Education and Protection Fund as on 31.3.2013. The balance amount lying under the Unpaid Dividend Account 2005-2006 declared on 06-05-2006 for the year 2005-06 falls due on 05.05.2013.

3.4 Statement of Profit and Loss

Electricity Expenses have been reduced to the extent of Rs. 72,32,665/- (2012 : Rs. 43,94,588/-) for sale of electricity generated from windmill. There is no impact on the statement of Profit and Loss.

3.5 Estimated amount of liability on capital contracts as on 31.03.2013 not provided for is Rs. 7,50,000. (Previous year Rs. 45,19,886/-)

3.6 Contingent Liabilities in respect of:

Claims against the Company not acknowledged as debt

(i) Claim by Department of Telecommunications

The Department of Telecommunications (DoT) filed a claim against the company for Rs. 20,82,233/- before the Sole Arbitrator in the matter of payment towards license fees and interest thereon. The Arbitrator''s award was made in June 2005 according to which a sum of Rs. 5,48,288 and interest there on is payable by the company to DoT. The company accepted the award and decided to effect the payment after waiting for the appeal period. However DoT has filed an appeal in the High Court of Delhi against the Arbitrator''s award. The Company accordingly recognized the total liability at Rs. 10,70,659/-as at 31.3.2013. The difference in claim amounting to Rs. 10,01,574/- is shown under "claims against the Company not acknowledged as debt".

(ii) Income Tax demand

There is a dispute with regard to the treatment of income of the company by the Income Tax Department as "Income from House Property", whereas in the opinion of the Company, the income should be treated as "Income from Business", which has been confirmed by the Income Tax Appellate Tribunal.

In respect of assessment years 1996-97, 1998-99, 2000-01, 2001-02 and 2003-04, the Income Tax Department has preferred appeal before the High Court of Madras against the orders issued Income Tax Appellate Tribunal. The High Court of Madras has ruled the case in favour of the Company. However, it is not known whether the department has preferred a special Leave petition before the Supreme Court. In the event the Supreme Court reverses the Order of the High Court of Madras, there will be a contingent liability of Rs. 415.56 lakhs.

(iii) Service Tax

The company received show cause notice in 2009-10 from the Office of the Commissioner of Service Tax on the applicability of service tax on Electricity charges reimbursed from the occupants including generation from Generator. As per legal opinion, the company has been advised that, it is not liable for service tax on this issue. The company has obtained an interim stay from the High Court of Madras on 28.08.2009 against the show cause notice. The above stay was modified by the High Court on 04.07.2012 based on a Supreme Court decision. As per the order, 50% of the arrears prior to 30th September 2011 to be paid and for the balance 50%, to furnish a solvent surety to the Department. The company has filed an application on 4th February 2013 for extension of stay. In view of this, there is a contingent liability of Rs. 282.64 lacs.

(iv) Lease Rent

The Company received a communication from ELCOT claiming a sum of Rs. 9.56 crores towards difference in the computation of Lease Rent for the period from 14.02.1991 to 14.01.1999. The Company prima-facie has a strong reason that the claim is not tenable and is evaluating various options, including legal recourse. Pending any such actions no provision has been made.

Previous year''s figures have been re-grouped / re-classified wherever necessary to correspond with the current year''s classification / disclosure.


Mar 31, 2012

1. disclosures under accounting standards

1.1 Retirement benefits to employees

(i) Defined Contribution Plan Provident fund

Eligible employees receive benefits from a provident fund, which is a defined contribution plan. Aggregate contributions along with interest thereon are paid at retirement, death, incapacitation or termination of employment. Both the employee and the Company make monthly contributions to the Employee's Provident Fund scheme administer by Government of India equal to a specified percentage of the covered employee's salary.

The Company recognized Rs 5,44,911/= (2011 : Rs 4,99,151/-)for provident fund contribution in the statement of profit & loss. Further an additional contribution of Rs1,87,103/- (2011 : Rs 2,51,675/-) has been made to the Trust to meet the shortfall in managing the trust, being the "excess of expenditure over income". The Company has registered with the Regional Provident Fund Organisation with effect from March 2012.

(ii) Defined benefit plan Gratuity

The Company provides for gratuity, a defined benefit retirement plan (the "Gratuity Plan") covering eligible employees. The Gratuity Plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee's salary and the tenure of employment. Vesting occurs upon completion of five years of service. Liabilities with regard to the Gratuity Plan are determined by actuarial valuation as of the balance sheet date, based upon which, the company contributes all the ascertained liabilities to the Elnet Technologies Ltd Employees' Gratuity Fund Trust (the "Trust"). Trustees administer contributions by means of a group gratuity policy with Life Insurance Corporation of India.

Investment details of plan assets :

Deposited with Life Insurance Corporation of India (Group gratuity policy).

iii Leave encashment

The employees of the Company are entitled to compensated absence. The employees can carry forward a portion of the unutilized accrued compensated absence and utilize it in future periods or receive cash compensation at retirement or termination of employment for the unutilized accrued compensated absence for a maximum of 180 days. The Company records an obligation for compensated absences in the period in which the employee renders the services that increase this entitlement. The Company measures the expected cost of compensated absence as the additional amount that the Company expects to pay as a result of the unused entitlement that has accumulated at the balance sheet date based on actual valuations.

1.2 ACCOUNTING FOR LEASES

During the year 1995-96, the Company has completed the construction of its IT Park at Taramani, Chennai and leased out the entire completed portion of the premises. The disclosure required for operating leases under AS 19 is given below:

1.3 Deferred Tax Liability /Asset

As per the Accounting Standard "AS 22" issued by the Institute of Chartered Accountants of India (ICAI), the Company is required to make a provision for "deferred tax liability/ asset". During the year an amount of Rs15,83,577/-has been recognized for deferred tax asset.

2. ADDITIONAL INFORMATION TO FINANCIAL STATEMENTS

2.1 Secured Loans

The Company closed its secured loan on 8th March 2012. The Company filed Form 17 in respect of Satisfaction of Charges with the Registrar of Companies through the Ministry of Company Affairs portal and got the same approved.

2.2 Wind Mill

During the financial year the Company sold 10,98,647 units to Tamilnadu Electricity Board. (2011 : 13,11,299 units).

2.3 Disclosures required under Section 22 of the Micro, Small and Medium Enterprises Development Act, 2006:

i) There were no dues to Small Scale Industrial undertakings to whom the Company owes any sum which is outstanding for more than 30 days.

ii) There were no dues either principal or interest remaining unpaid to any suppliers under The Micro, Small and Medium Enterprises Development Act, 2006, which came into force with effect from 02.10.2006 as at the end of the accounting year. Similarly, no payments have been made to the suppliers beyond the appointed day without adding interest, no interest is accrued and remaining unpaid during the year.

2.6 Current Liabilities

(i) The company continues to hold the amount of Rs1,46,503/- (2011 : Rs 1,46,503/-) on account of Interest payable on FD made out of disputed dividend for the years 2000-01 and 2001-02.

(ii) There are no amounts due to the Central Government on account of Investor Education and Protection Fund as on 31.3.2012. The balance amount lying under the Unpaid Dividend Account 2004-2005 declared on 7.5.2005 for the year 2004-05 falls due on 6.5.2012.

(iii) Provision for taxation has been netted off against advance tax paid and tax deducted at source.

2.7 Statement of Profit and Loss

Electricity Expenses have been reduced to the extent of Rs 43,94,588/- (2011 : Rs 48,64,920/) from sale of electricity generated from windmill. There is no impact on the Statement of Profit and Loss.

2.8 Estimated amount of liability on capital contracts as on 31.03.2012 not provided for is Rs 45,19,886/- (2011 : Rs 28,48,967/-)

2.9 Contingent Liabilities in respect of:

Claims against the Company not acknowledged as debts.

(i) Claim by Department of Telecommunications

The Department of Telecommunications (DoT) filed a claim against the company for Rs 20,82,233/- (2011 : Rs 20,82,233/-)before the Sole Arbitrator in the matter of payment towards license fees and interest thereon. The Arbitrator's award was made in June 2005 according to which a sum of Rs5,48,288 and interest there on is payable by the company to DoT. The company accepted the award and decided to effect the payment after waiting for the appeal period. However DoT has filed an appeal in the High Court of Delhi against the Arbitrator's award. The Company accordingly recognized the total liability at Rs10,37,762/-as at 31.3.2012. The difference in claim amounting to Rs 10,44,471/- is shown under "claims against the Company not acknowledged as debts".

(ii) Income Tax demand

There is a dispute with regard to the treatment of income of the company by the Income Tax Department as "Income from House Property", whereas in the opinion of the Company, the income should be treated as "Income from Business", which has been confirmed by the Income Tax Appellate Tribunal.

In respect of assessment years 1996-97, 1998-99, 2000-01, 2001-02 and 2003-04, the Income Tax Department has preferred appeal before the High Court of Madras against the orders issued Income Tax Appellate Tribunal. In the event the High Court reverses the Order of the Income Tax Appellate Tribunal, there will be a contingent liability of Rs 415.56 lakhs (2011 : Rs 264.23 lakhs).

(iii) Service Tax:

The company received show cause notice in 2009-10 from the Office of the Commissioner of Service Tax on the applicability of service tax on Electricity charges reimbursed from the occupants including generation from Generator. As per legal opinion, the company has been advised that, it is not liable for service tax on this issue. The company has obtained an interim stay from the High Court of Madras on 28.08.2009 against the show cause notice. In view of this, there is a contingent liability of Rs 2,13,34,807/- (2011 : Rs 1,69,52,681/-).

(iv) The Company received a communication from ELCOT claiming a sum of Rs 9.56 crores towards difference in the computation of Lease Rent for the period from 14.02.1991 to 14.01.1999. The Company prima-facie has a strong reason that the claim is not tenable and is evaluating various options, including legal recourse. Pending any such actions no provision has been made.

(v) Other pending items under dispute - Nil (2011 : Nil)

4. The Revised Schedule VI has become effective from 1st April, 2011 for the preparation of financial statements. Previous year's figures have been regrouped / reclassified wherever necessary to correspond with the current year's classification / disclosure.


Mar 31, 2011

1. Secured Loans

a. Mortgage Loan

Primary Security

Assignment of rent receivables from all the present and future lessees of building situated at TS No.140, Block no. 2 & 9 , Rajiv Gandhi Salai, Taramani, Chennai 600 113.

Collateral Security

Registered mortgage of commercial property belonging to the company situated at TS No.140, Block 2 & 9, Rajiv Gandhi Salai, Taramani, Chennai -600 113 admeasuring land area of 3.16 acres with super built up area of 2.50 lacs sq.ft of ground floor + 7 floors.

First charge on other fixed assets of the company (including Windmill property)

2. Deferred Tax Liability /Asset

As per the Accounting Standard "AS 22" issued by the Institute of Chartered Accountants of India (ICAI), the Company is required to make a provision for "deferred tax liability/ asset". During the year an amount of Rs. 21,72,454/-has been recognized for deferred tax asset.

5. CURRENT LIABILITIES

(A)The company continues to hold the amount of Rs.1,46,503/- on account of Interest payable on FD made out of disputed dividend for the years 2000-01 and 2001-02 .

(B) There are no amounts due to the Central Government on account of Investor Education and Protection Fund as on 31.3.2011. The balance amount lying under the Unpaid Dividend Account 2003-2004 declared on 29.09.2004 for the year 2003- 04 falls due on 28.09.2011.

(C) Provision for Taxation (Income Tax payable) has been netted off against Tax Deducted at source & Advance Tax paid.

6. PROFIT & LOSS ACCOUNT

A) Electricity Expenses have been reduced to the extent of Rs.48,64,920/- (previous year Rs.50,30,154/-)from sale of electricity generated from windmill. There is no impact on the Profit & Loss Account.

B) Retirement benefits to employees

(1) Defined Contribution Plan

Provident fund

Eligible employees receive benefits from a provident fund, which is a defined contribution plan. Aggregate contributions along with interest thereon are paid at retirement, death, incapacitation or termination of employment. Both the employee and the Company make monthly contributions to the Employees Provident Fund scheme administer by Government of India equal to a specified percentage of the covered employees salary.

The Company recognized Rs. 4,99,151/= for provident fund contribution in the P&L account. Further an additional contribution of Rs.2,51,675/- has to be paid to the Trust to meet the shortfall in managing the trust, being the "excess of expenditure over income".

(ii) Defined benefit plan

1) Gratuity

The Company provides for gratuity, a defined benefit retirement plan (the "Gratuity Plan") covering eligible employees. The Gratuity Plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employees salary and the tenure of employment. Vesting occurs upon completion of five years of service. Liabilities with regard to the Gratuity Plan are determined by actuarial valuation as of the balance sheet date, based upon which, the company contributes all the ascertained liabilities to the Elnet Technologies Ltd Employees Gratuity Fund Trust (the "Trust"). Trustees administer contributions by means of a group gratuity policy with Life Insurance Corporation of India.

e) Investment details of plan assets: Deposited with Life Insurance Corporation of India (Group gratuity policy).

(2) Leave encashment

The employees of the Company are entitled to compensated absence. The employees can carry forward a portion of the unutilized accrued compensated absence and utilize it in future periods or receive cash compensation at retirement or termination of employment for the unutilized accrued compensated absence for a maximum of 180 days. The Company records an obligation for compensated absences in the period in which the employee renders the services that increase this entitlement. The Company measures the expected cost of compensated absence as the additional amount that the Company expects to pay as a result of the unused entitlement that has accumulated at the balance sheet date based on actual valuations.

9. a) There were no dues to Small Scale Industrial undertakings to whom the Company owes any sum which is outstanding for more than 30 days.

b) Outstanding dues to Micro, Small and Medium Enterprises

There are no Micro and Small Enterprises to whom the Company owes dues, which are outstanding for more than forty five days as at 31st March 2011. The identification of Micro and Small Enterprises and the information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act,2006 has been determined on the basis of vendor information available with the company.

The disclosure pursuant to the said Act is as under: Rs.

i. Principle amount and the interest thereon -

ii. Interest paid (along with payment made to suppliers) - beyond the appointed day during the year

iii. Interest due and payable for delay in making the payment -

iv. Interest accrued and remaining unpaid at the end of the year -

v. Further interest remaining due and payable in succeeding years -

10. Segment wise reporting as per standard AS 17 is not applicable to the company

11. Estimated amount of liability on capital contracts as on 31.03.2011 not provided for is Rs.28,48,967/-(Previous year Rs. 1,17,485/-)

12. Contingent Liabilities in respect of:

a) Claims against the Company not acknowledged as debts

(i) Claim by Department of Telecommunication

The Department of Telecommunication (DoT) filed a claim against the company for Rs.20,82,233/- before the Sole Arbitrator in the matter of payment towards license fees and interest thereon. The Arbitrators award was made in June 2005 according to which a sum of Rs.5,48,288 and interest there on is payable by the company to DoT. The company has accepted the award and had decided to effect the payment after waiting for the appeal period provided DoT does not prefer an appeal against the said award. However it is learnt that DoT has preferred an appeal in Delhi High Court against the Arbitrators award. The Company has accordingly recognized the total liability at Rs. 10,04,865/- (License fee of Rs.5 lacs and interest there on Rs.5,04,865/- up to 31.03.2011) and has provided a sum of Rs.32,897 being interest since the amount of Rs 9,71,968 had already been provided in the previous years. The difference in claim amounting to Rs.10, 77,366/- is shown under "claims against the company not acknowledged as debts".

(ii) Income Tax demand

The following is the status of the Income Tax matters which are pending for various assessment years. In all cases, the company has been admitting the income from its operations under the head "Income from Business". The Income Tax Department has however, assessed it under the head "Income from Other Sources". In respect of the assessment years, 1995-96,1996-97,1998-99, 2000-01, 2001-02 and 2003-04 the company has disputed this in the Appellate Forums before the Commissioner of Income Tax and thereafter before the Income Tax Appellate Tribunal. The matter has been decided in favour of the Company.

However, the Income Tax Department has disputed the same before the Honble High Court of Madras Juridicature for the Assessment years 1995-96, 1996-97,1998-99, 2000-01, 2001-02 and 2003-04. In the event of the decision not being in favour of the company, the tax initially demanded will be Rs.264.23

lacs along with penal interest till the date of passing the order which is not quantifiable at this point of time.

Considering that the orders of the higher authorities have been in favor of the company, the company has not provided any liability towards income tax demanded.

The Income Tax assessments are completed up to the AY 2007-2008. The necessary adjustments have been made to net off the advance tax paid and TDS receivable against the provision made for those years in respect of assessments were completed. The provision for Taxation and TDS & Advance are duly net off in the accounts.

(iii) Contingent liability not provided for:

During the year, the company has received a show cause notice from the Service Tax department on the applicability of service tax on Electricity charges reimbursed from the occupants including generation from Genset. The company based on a legal opinion, is opined that it shall not be liable for Service Tax on this issue. The company has obtained an interim order from the Madras High Court against the operation of the show cause notice issued by the Office of the Commissioner of Service Tax. This liability is contingent in nature and of materialization shall lead to outflow of Rs. 1,69,52,681/-.

(iv) During the year as well as in the previous year the company has received a persistent communication from ELCOT claiming a sum of Rs.9.56 crores towards difference in the computation of Lease Rent for the period from 14.02.1991 to 14.01.1999. The Company prima-facie has strong reason that the claim is not tenable and is evaluating various options,including legal recourse. Pending any such actions no provision has been made.

(v) Other pending items under dispute - NIL (P.Y. - NIL)

13. Previous years figures have been regrouped wherever required to conform to current year Figures which has no impact on the Pofit and Loss Account.


Mar 31, 2010

1. Secured Loans

a. Mortgage Loan

Primary Security

Assignment of rent receivables from all the present and future lessees of building situated at TS 140, Block 2 & 9 , Rajiv Gandhi Salai, Taramani, Chennai 600 113.

Collateral Security

Registered mortgage of commercial property belonging to the company situated at TS 140, Block 2 & 9, Rajiv Gandhi Salai, Taramani, Chennai -600 113 admeasuring land area of 3.16 acres with super built up area of 2.50 lacs sq.ft of ground floor + 7 floors.

First charge on other fixed assets of the company (including Windmill property).

2. Deferred Tax Liability / Asset

As per the Accounting Standard "AS 22" issued by the Institute of Chartered Accountants of India (ICAI), the Company is required to make a provision for "deferred tax liability / Asset". During the year an amount of Rs.21,57,719/- has been recognised for deferred tax asset.

3. CURRENT LIABILITIES

(A) The company continues to hold the amount of Rs.1,46,503/- on account of Interest payable on FD made out of disputed dividend for the years 2000-01 and 2001-02.

(B) There are no amounts due to the Central Government on account of Investor

Education and Protection Fund as on 31.3.2010. (The balance amount lying under the Unpaid Dividend Account 2002-03 declared on 30.9.2003 for the year 2002-2003 falls due on 29.09.2010.

(C) In the earlier years the Service Tax collected from the occupants have been grouped under Income and the service tax payments have been grouped under the Administrative Expenses in Profit and Loss Account. During the year both the service tax collected and paid have been grouped under Current liabilities after availing the input credit for the year and there is no impact on the Profit and Loss account.

4. PROFIT & LOSS ACCOUNT

(A) Other income from operations includes an amount of Rs.50,30,154/- (previous year Rs.47,08,464/-) from sale of electricity generated from windmill.

(B) Retirement benefits to employees

(i) Defined Contribution Plan

Provident fund

Eligible employees receive benefits from a provident fund, which is a defined contribution plan. Aggregate contributions along with interest thereon are paid at retirement, death, incapacitation or termination of employment. Both the employee and the Company make monthly contributions to the Employees Provident Fund scheme administer by Government of India equal to a specified percentage of the covered employees salary.

The Company recognized Rs.4,80,696/- for provident fund contribution in the profit and loss account. Further an additional contribution of Rs.1,03,838/- has been made to the Trust to meet the shortfall in managing the trust, being the "excess of expenditure over income".

(ii) Defined benefit plan

1) Gratuity

The Company provides for gratuity, a defined benefit retirement plan (the "Gratuity Plan") covering eligible employees. The Gratuity Plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employees salary and the tenure of employment. Vesting occurs upon completion of five years of service. Liabilities with regard to the Gratuity Plan are determined by actuarial valuation as of the balance sheet date, based upon which, the company contributes all the ascertained liabilities to the Elnet Technologies Ltd Employees Gratuity Fund Trust (the "Trust"). Trustees administer contributions by means of a group gratuity policy with Life Insurance Corporation of India.

The following table set out the status of the gratuity plan as required under AS 15

5. a) There were no dues to Small Scale Industrial undertakings to whom the Company owes any sum which is outstanding for more than 30 days.

b) Outstanding dues to Micro , Small and Medium Enterprises

There are no Micro and Small Enterprises to whom the Company owes dues, which are outstanding for more than forty five days as at 31st March 2010. The identification of Micro and Small Enterprises and the information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined on the basis of vendor information available with the company.

6. Segment wise reporting as per standard AS 17 is not applicable to the company

7. Estimated amount of liability on capital contracts as on 31.03.2010 not provided for is Rs.1,17,485/-(Previous year Rs. 8,32,165/-)

8. Contingent Liabilities in respect of:

a) Claims against the Company not acknowledged as debts

(i) Claim by Department of Telecommunication

The Department of Telecommunication (DoT) filed a claim against the company for Rs.20,82,233/- before the Sole Arbitrator in the matter of payment towards license fees and interest thereon. The Arbitrators award was made in June 2005 according to which a sum of Rs.5,48,288 and interest there on is payable by the company to DoT The company has accepted the award and had decided to effect the payment after waiting for the appeal period provided DoT does not prefer an appeal against the said award. However it is learnt that DoT has preferred an appeal in Delhi High Court against the Arbitrators award. The Company has accordingly recognized the total liability at Rs.9,71,970/-(License fee of Rs.5 lacs and interest there on Rs.4,71,970/- upto 31.03.2010) and had provided a sum of Rs.32,897/- being interest since the amount of Rs.9,39,071/- had already been provided in the previous years. The difference in claim amounting to Rs. 11,10,263/- is shown under "claims against the company not acknowledged as debts".

(ii) Income Tax demand

The following is the status of the Income Tax matters which are pending for various assessment years. In all cases, the company has been admitting the income from its operations under the head "Income from Business". The Income Tax Department has however, assessed it under the head "Income from House Property" / "Income from Other Sources". In respect of the assessment years, 1995-96, 1998-99, 2000-01, 2001-02 and 2003-04 the company has disputed this in the Appellate Forums before the Commissioner of Income Tax and thereafter before the Income Tax Appellate Tribunal. The matter has been decided in favour of the Company.

However, the Income Tax Department has disputed the same before the Honble High Court of Madras Juridicature for the Assessment years 1995-1996,1997-1998, 1998-1999, 2000-01, 2001-02 and 2003-04 and in respect of Assessment year 2007-08 is pending before the Commissioner of Income Tax (Appeals). In the event of the decision not being in favour of the company, the tax initially demanded will be Rs.264.23 lacs along with penal interest till the date of passing the order which is not quantifiable at this point of time.

Considering that the orders of the higher authorities have been in favor of the company, the company has not provided any liability towards income tax demanded.

The Income Tax assessments are completed up to the AY 2007-2008 barring the AY 2006-07.

Since the assessment for the assessment years 2005-06 and 2007-08 is over u/s. 143 (3) rws147 and u/s 143(3) of the Income Tax Act, 1961, respectively, the necessary adjustments have been made to net off the advance tax paid and TDS receivable against the provision made for these years.

(iii) Contingent liability not provided for:

During the year, the company has received a show cause notice from the Service Tax department on the applicability of service tax on Electricity charges reimbursed from the occupants including generation from genset. The company based on a legal opinion, is opined that it shall not be liable for Service Tax on this issue. The company has obtained an interim order from the Madras High Court against the operation of the show cause notice issued by the Office of the Commissioner of Service Tax. This liability is contingent in nature and of materialization shall lead to outflow of Rs. 1,21,40,756/-

(iv) During the year the company has received a communication from ELCOT claiming a sum of Rs.9.56 crores towards difference in the computation of Lease Rent for the period from 14.02.1991 to 14.01.1999. The Company prima-facie has strong reason that the claim is not tenable and is evaluating various options, including legal recourse.

Pending any such actions no provision has been made.

(v) Other pending items under dispute - NIL (P.Y - NIL)

9. Previous years figures have been regrouped wherever required to conform to current year figures.

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