Notes to Accounts of Everonn Education Ltd.

Mar 31, 2015

1. CORPORATE INFORMATION

Everonn Education Limited (the 'Company') is a pioneer in using technological breakthroughs to make quality education a reality even in the most remote parts of the country. Everonn's passion for enabling cutting-edge education delivery has seen us grow dramatically in the past two decades. The company is a public listed company and is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE)

2. SHARE CAPITAL

a) Rights, preferences and restrictions attached to shares

Equity Shares: The Company has one class of equity shares having a par value of Rs.10 per share. Each Shareholder is eligible for one vote per share held. The equity shareholders are eligible to receive in the remaining assets of the company after distribution of all preferential amounts, in proportion to their shareholding.

b) During the year the company had issued 10,91,303 equity shares of Rs. 10 each at the rate Rs.39.69 on account of conversion of Optionally Convertible Debenture of Rs. 4,33,14 ('000) as per the terms of Debenture Agreement

3. EMPLOYEE BENEFITS EXPENSE

The disclosure under Accounting Standard 15 "Employee Benefits" notified in the notified under Section 133 of the Companies 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014, are given below

Defined benefit Plan

The Employees fund scheme managed by SBI Life Insurance Co. Limited is a defined benefit Plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Method.

4. CONTINGENT LIABILITIES AND COMMITMENTS TO BE UPDATED

Rs. in '000

Particulars As at As at March 31 March 31, 2015 2014

a) Claims against the company not acknowledged as debt

Income Tax Matters 9,78,339 10,84,200

Service Tax Matters - 11,155

b) Bank Guarantees 5,75,108 5,76,837

c) Corporate Guarantee issued by parent on behalf of Subsidiary Companies Rs. 46,46,700 ('000) (PY Rs. 26,59,500 ('000)) against which the loan outstanding is Rs. 18,70,078 ('000) and (PY Rs. 17,05,591 ('000)respectively

d) Corporate Guarantee issued by parent to banks for Secured loans to third party Rs. 3,20,000 ('000) (PY Rs. 4,20,000 ('000)) against which the loan outstanding is Rs. 1,83,050 ('000) and (PY Rs. 3,13,118 ('000)) respectively

In respect of items above, future cash outflows in respect of contingent liabilities is determinable only on receipt of judgments pending at various forum/ settlement of matter. The management believes that, based on

legal advice or internal assessment, the outcome of these contingencies will be favorable and the loss is not probable. Accordingly no provisions have been made for the same.

e) A Civil suit has been filed by The ICFAI Academy for permanent injunction for creating third party rights, or disposing the assets, both tangible and intangible, in the plaintiff's campuses and control offices from the academic year 2011 onwards. ICFAI has also claimed damages of Rs.5,000('000) along with interest at the rate of 18% p.a and the Company is contesting the case and the said suit is still pending in the Hon'ble Madras High Court.

f) A Civil suit has been filed by Prometric BV towards damages amounting to Rs. 15,000('000) (PY Rs. 15,000('000)) and the Company is contesting the case.

g) A civil suit has been filed by M/s PAE for recovery of outstanding Rs. 2498 ('000) (PY Nil) which is being contested

h) HPFS has initiated winding up proceeding against the Company for the alleged nonpayment of lease charges. Since the claim made by HPFS is disputed by the Company the said Winding up proceeding is not maintainable. The Company is contesting the said Petition.

i) Estimated amount of contracts remaining to be executed on capital account and not provided for is Rs. Nil (PY (Rs. Nil))

j) Counter guarantee from third parties have not been taken for the corporate guarantee given on behalf of them.

k) The company has received notices from certain parties alleging defaults in respect of services/payments due to them by the company. The management is discussing with its legal team for evaluating the financial impact of these claims. Any adjustments/disclosures, if required, would be made, upon the claims being settled.

5. DIMUNITION IN VALUE OF INVESTMENT

The company has an investment of Rs 247.48 Crores in its subsidiaries and Rs. 7.07 in other associates and has also extended loans and advances of Rs. 150.40 Crores to these subsidiaries/associates as of March, 31,2015. The proposals which were submitted by the consultants for the consideration of management to realign its core investments and recognize and eliminate those investments which have not yielded any return till date has not been very encouraging and prima facie, these proposals appears to be against the investor and stake holders' interest, as it is expected to result in further net worth erosion at least in the beginning. The company at present has approached one of the leading consultants to advise regarding the future business opportunities which these entities can exploit gainfully or whether the operation of these entities need to be scaled down/revamped/wound of all its subsidiaries. The management has decided to recognize the exact quantum in the diminution in the value of investments upon receipt of final proposal which is expected to be submitted shortly by the consultants. The company at present is confident of arriving at a final conclusion in this matter. As already stated elsewhere, the balance available in BRR which has been approved by Honorable Madras High Court allows a small flexibility to the company and a window to capture appropriately the diminution in the value of investments.

6. OPERATING LEASES

The company has entered into operating lease arrangement for its office facilities and equipment. These Leases are for a period ranging from 1 to 5 years with an option to the company for renewing at the end of the initial term. Equipment rental/ Rental for operating leases is added in Profit and Loss account for the year Rs. 2,212 ('000) (March 31 2014 Rs. 3,124 ('000))

The Future minimum lease payments under non-cancellable operating leases are as follows

7. RELATED PARTY DISCLOSURE List of Related Parties

Name Nature of relationship

1. Everonn Educational Resources Solutions Subsidiary Companies Limited (Direct and indirect holding)

2. Toppers Tutorial Private Limited

3. Everonn Infrastructure Limited "

4. Everonn Business Education Limited "

5. Everonn Technical Education India " Limited

6. Everonn Medical Education Limited "

7. Everonn School Limited "

8. Edifications India Limited "

9. Everonn Sport Management Limited "

10. Everonn knowledge & Education Corridor " Limited

11. Everonn Skilling India Limited "

12. Everonn Skill Products Development " Limited

13. Everonn Skill Development Limited "

14. AEG Skill Update Private Limited "

15. Everonn Dassani Literate Limited "

16. Varkey Group Limited Enterprise over which some of the directors 17. SKIL Infrastructure Limited exercise significant influence

18. Gems Education (Asia) 1 Limited "

19. The Concorde Residential Schools " (Kerala) Private Limited

20. Premier Educational Establishments " Private Ltd 21. Gems Education India Private Limited "

22. Zanskar Properties private Limited "

23. VG School Developments Private Ltd "

24. Dream Solutions Private Ltd "

25. Mr. A Srinivasan* Key Managerial Personnel

26. Mr. N P MathiLingan "

27. Mr. Ganapathy Puranik* "

28. Mr. CN. Radhakrishnan "

29. Mr. Sandeep Maniyar "

*resigned during the year

8. SEGMENT REPORTING

The Company is engaged in the business of providing education and training and related sale of equipment's. There being only one 'business segment' and 'geographical segment' the segment information is not provided

9. DUES TO MICRO AND SMALL ENTERPRISES

The company has circulated a letter to all creditors to ascertain the applicability of MSMED Act on the transaction which the company had with them. Provision for interest if any under the Act will be made upon receipt of their responses and after examining the validity of their claim.

10. TRANSACTIONS WITH ASSOCIATED ENTERPRISES

The company has transactions with "Associated Enterprises" which are subject to Transfer Pricing regulations in India. The Management of the Company is of the opinion that such transactions with the associate enterprises are at arm's length. Consequently, this will not have any impact on the financial statements, particularly on account of tax expenses and that of provision for taxation.

11. BALANCE CONFIRMATION

Confirmations of Balance from Sundry Debtors, Deposit accounts, Loans and Advances, certain Banks and Sundry Creditors have not been obtained. Accounts of certain sundry debtors, loans and advances, deposits and creditors are being reviewed as an ongoing process. As there is an inordinate delay in receipt of confirmations from Government Contracts adjustments, if any will be made on completion of review/ reconciliation/ identification of doubtful debts/advances.

12. IMPAIRMENT OF ASSETS

As explained under the head Business Reconstruction Reserve under the Note No. 2.56 the company had utilized the BRR reserve by wring off the balance appearing in Capital work in progress as well as certain long outstanding non recoverable advances and receivables. In respect other assets the company is confident that once restructuring exercise is fully completed, it will have clearer picture with regard to exact quantum of impairment that need to be recognized. The company is of the view that these will be appropriately dealt during the next financial year, after taking into account the available balance in BRR and the write back if any that may arise due to the successful negotiations with the creditors in respect of the outstanding of the company.

13. INCOME TAX

During the year, the Company reviewed the position with regard to the income tax assessments till date and has taken certain decisions to mitigate the tax outflow especially by filing revised returns/computations in respect of all the pending assessments. The company received assessment order for AY 2006-07 to 2012- 13 which is also being contested. The various appeals filed by the company against the demands raised by the Income tax department were heard subsequent to close of the accounting year and based on the favorable judgements rendered in other cases of similar natures; the management is of the view that there is no need to recognize any additional tax provision. The company has been advised that there are reasonable chances of obtaining favorable orders reducing the quantum of demand to a great extent (as against any additional outgo on account of new demands) in case the judicial precedents are followed fully in deciding these appeals, which will re-inforce the stand taken by the company.

No provision is made in this regard, as the Company has been advised that the stand of the Company will be accepted in appeal. Any additional tax provision arising out of the tax demands (inclusive of interest and penalty) will be made upon reaching the finality in respect of the assessments.

14. EXCEPTIONAL ITEMS

The break up is as under

15. Due to erosion in the net worth, the company's is unable to expand in confident manner its various operations and also arrest the continued losses sustained by it. The company's business plans that are evaluated by the bankers have re-in forced the belief of the company that its future lies in successfully exploiting its strength in running schools across the country to take care of increasing demand. With the funds raised from the bankers, the company has judiciously allocated its resources so that its operations across the group especially the operating companies are carried out in smooth manner without creating any bottle necks. In other words the company continues to use the funds raised for all common purposes so that the returns that expected flow in near future will be adequate to defray all the possible liabilities of the company.

The promoters of the company, who are one of the world leaders in education and running schools of repute, all over the world, have brought in major changes in the operation of the entire group's activities, the emphasis now being focused on establishing and running of high quality schools across the country. Accordingly, the management of the company has now decided to shed all unviable businesses which were started earlier by the old management and has now decided to have a leaner structure without carrying on the multiple subsidiary companies. The management is fully aware that any abrupt closure of these subsidiaries without evaluating the risks attached in relation thereto will further cripple the inflow of the bank finances which are necessary for the running the operations of the company. At the same time, the company has also consulted best legal minds who have advised the management to take recourse to certain legal proceedings to ensure that the interest of the company is fully secured, in recouping its dues, which the management is of the view, has not been properly safeguarded in the past. A new team of officials have been brought in, almost at the beginning of the current calendar year who are constantly pursuing various alternatives to ensure that some of the assets which are held by the subsidiaries (whether in the form of loans/advances or any interest in immovable properties - whether directly or otherwise) properly realigned in the company's books so that the company's net worth is fully protected.

The company's financial position has been constantly reviewed by the lenders who have been monitoring closely all the activities and with their cooperation the management is of the view that it will wipe out all the legacy issues and embark on a new direction. The management is of the view that despite the losses which are already forming part of the holding company as well as in the books of certain inoperative subsidiaries, the company is and will remain as a going concern and on this basis the financials / assets / liabilities are stated in the books of accounts. The Company is also taking various steps to reduce costs and improve efficiencies to make its operations profitable and accordingly the financial statements have been prepared on the basis that the Company is a going concern.

16. In respect of advances given to various parties and Debts due from government agencies and others, in view of legal advices and other opinion received no provision is considered necessary at this juncture, as the company at present is hopeful of recovering major portion of outstanding dues.

17. BUSINESS RESTRUCTURING RESERVE

The Hon 'ble High Court of Madras permitted the Company to reduce the Securities Premium Account to an amount not exceeding Rs. 150 Crores to be transferred to a separate reserve styled as "Business Restructuring Reserve"(BRR). The resolution passed by the Share Holders and approved by the Court permitted the BRR should be utilized for setting off against diminution in the value of investments, and consequent impairment of goodwill and accumulated losses, unrealized debtors and loans and advances etc.,

The Company has given effect to this order of the Hon 'ble High Court by carving out of the Share Premium Account, a sum of Rs. 150 Crore to BRR.

Out of the balance of Rs. 150.00 Crores under head BRR, during the year company has utilized a sum of Rs. 65.66 Crores, in accordance with the permission granted by the Honorable High Court of madras. The reaming balances will be utilized for the purposed approved by court in the current financial year.

18. PREVIOUS YEAR FIGURES

Previous years' figures have been regrouped / reclassified wherever necessary to conform to the current year presentation.

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Mar 31, 2014

1 CORPORATE INFORMATION

Everonn Education Limited (the ''Company'') is a pioneer in using technological breakthroughs to make quality education a reality even in the most remote parts of the country. Everonn''s passion for enabling cutting-edge education delivery has seen us grow dramatically in the past two decades. The company is a public listed company and is listed on the Bombay Stock Exchange Limited (BSE) and the National Stock Exchange of India Limited (NSE)

2.0 CONTINGENT LIABILITIES AND COMMITMENTS TO BE UPDATED

Rs. in ''000 As at As at March 31, 2014 March 31, 2013

a) Claims against the company not acknowledged as debt Income Tax Matters 10,84,200 4,13,174

Service Tax Matters 11,155 94,269

b) Corporate Guarantee issued on behalf of Subsidiary Companies 19,17,300 17,38,172

c) Corporate Guarantee issued to banks for secured loans to third Party 3,13,118 6,80,029

d) Bank Guarantees 5,76,837 7,84,952

e) In respect of items above, future cash outflows in respect of contingent liabilities is determinable only on receipt of judgments pending at various forum/ settlement of matter. The management believes that, based on legal advice or internal assessment, the outcome of these contingencies will be favorable and the loss is not probable. Accordingly no provisions have been made for the same.

f) A Civil suit has been filed by Prometric BV towards damages amounting to Rs. 15,000(''000) (PY Rs. Nil)

g) Estimated amount of contracts remaining to be executed on capital account and not provided for is Rs. Nil (PY (Rs. Nil))

h) Counter guarantee from third parties have not been taken for the corporate guarantee given on behalf of them.

i) The company has received notices from certain parties alleging defaults in respect of services/payments due to them by the company. The management is discussing with its legal team for evaluating the financial impact of these claims. Any adjustments/disclosures, if required, would be made, upon the claims being settled.

2.1 DIMUNITION IN VALUE OF INVESTMENT

The company has an investment of Rs 247.58 Crores in its subsidiaries and in other associates and has also extended loans and advances of Rs. 141.09 Crores to these subsidiaries/associates as of March, 31, 2014. The management is in the process of making judicious evaluation of businesses carried on by each of the entities in their respective sphere of operations. The company is at present contemplating to appoint consultants to advise regarding the future business opportunities which these entities can exploit gainfully or whether the operation of these entities need to be scaled down/revamped/wound up. The company is carefully monitoring the losses if any that may arise is to be kept at bare minimum on account of this proposed restructuring. Pending the finalization of the above proposals which are in the embryonic stage the company has not recognized in its accounts any diminution in the value of its investments.

2.2 OPERATING LEASES

The company has entered into operating lease arrangement for its office facilities and equipment. These Leases are for a period ranging from 1 to 5 years with an option to the company for renewing at the end of the initial term. Equipment rental/ Rental for operating leases is added in Profit and Loss account for the year Rs.3,124 (''000) (March 31 2013 Rs. 5,97,893 (''000))

The Lease arrangements for the above non-cancellable leases do not provide for any escalation and the same has been factored in the future minimum lease rentals as disclosed above.

During the year the company has approached/represented and renegotiated some of its arrangements with the leasing companies and was successful in revising the terms of the certain arrangements in the best possible mannerthe same has been given effect to, in these financials. With regards to other parties the company is pursuing vigorously and resolution of these arrangements are likely to occur within the next six months. Pending renegotiations, the company has not recognized a sum of Rs. 2,28,600(''000) of lease charges during the current financial year.

The company has taken over the Axis bank liability of Acorn Commodity Exchange Private limited, towards leasing arrangement in view of the corporate guarantees given to them in respect of Uttar Pradesh project. This amount is now reflected as a loan and the company is now paying interest. The Company is legally proceeding against the entity for the recovery of the sum due to it together with interest. In view of the above the lease rentals are not accrued in the books.

The DRT passed an interim order directing that the proceeds from Haryana project should be shared between Standard Chartered bank and the company at the ratio of 55:45 on account of corporate guarantee given towards the leasing arrangements entered into between the company and Spaarkon Trading Pvt Ltd. In view of the above the lease rentals are not accrued in the books.

Nevertheless, at the end of project, the Company is obliged to transfer all the assets to the Haryana and Uttar Pradesh State Authorities as the project is on BOOT Model. This event is likely to occur in FY 2014-15 when these assets will be transferred on as is where basis without any recourse to the Compensation.

3. AEG Skill Update Private Limited Subsidiary Company with 51% of Holding

4. Everonn Dassani Literate Limited Subsidiary Company with 60% of Holding

5. Varkey Group Limited Promoter Group Company

6. SKIL Infrastructure Limited Promoter Group Company

7. Gems Education (Asia) 1 Limited Promoter Group Company

8. The Concorde Residential Schools (Kerala) Private Limited Promoter Group Company

9. Premier Educational Establishments Private Ltd Promoter Group Company

10. Gems Education India Private Limited Promoter Group Company

11. Zanskar Properties Private Limited Promoter Group Company

12. Vg school developments Private Ltd Promoter Group Company

13. Dream Solutions Private Ltd Promoter Group Company

14. A Srinivasan Key Managerial Personnel

15. N P Mathi Lingan Key Managerial Personnel

16. Ganapathy Puranik Key Managerial Personnel

17. SEGMENT REPORTING

The Company is engaged in the business of providing education and training and related sale of equipment''s. There being only one ''business segment'' and ''geographical segment'' the segment information is not provided

18 DUES TO MICRO AND SMALL ENTERPRISES

The company has circulated a letter to all creditors to ascertain the applicability of MSMED Act on the transaction which the company had with them. Provision for interest if any under the Act will be made upon receipt of their responses and after examining the validity of their claim.

19 The company has transactions with "Associated Enterprises" which are subject to Transfer Pricing regulations in India. The Management of the Company is of the opinion that such transactions with the associate enterprises are at arm''s length. Consequently, this will not have any impact on the financial statements, particularly on account of tax expenses and that of provision for taxation.

20. BALANCE CONFIRMATION

Confirmations of Balance from Sundry Debtors, Deposit accounts, Loans and Advances and Sundry Creditors have not been obtained. Accounts of certain sundry debtors, loans and advances, deposits and creditors are being reviewed as an ongoing process. As there is g the inordinate delay in receipt of confirmations from Government Contracts adjustments, if any will be made on completion of review/reconciliation/ identification of doubtful debts/advances.

21. IMPAIRMENT OF ASSETS

The company has initiated the process of review of impairment of assets in the respect of the tangible, intangible and other current assets including Capital Work in Progress carried in the Books, their results in such impairment is awaited, The financial implication if any on the above will be provided appropriately at later stage taking into account the future operational plans and cash flows as prepared by the management.

22. INCOME TAX

The company has received various demand notices of income tax and interest thereon in respect of Assessment Years 2006-07 to 2011-12. During the year, the Company reviewed the position with regard to the income tax assessments till date and has taken certain decisions to mitigate the tax outflow especially by filing revised returns/computations in respect of all the pending assessments. Although the department has not accepted the revised computation for the Assessment year 2011-12, the company is hopeful that since the revised computation is in line with the revised returns of other years, the demand will ultimately get reduced and will reflect the income disclosed in the revised statement. The company has filed an appeal against the order of assessment and is hopeful of obtaining substantial relief. The company is also pursuing other remedies (rectification application, waiver application etc.,) as permitted under the law to ensure that the tax liability is reduced as per law.

The company received a fresh assessment order for AY 2007-08 which is also being contested. No provision is made in this regard, as the Company has been advised that the stand of the Company will be accepted in appeal.

Any additional tax provision arising out of the tax demands (inclusive of interest and penalty) will be made upon reaching the finality in respect of the assessments.

23. SERVICE TAX

Against the delay in remittance of service tax, the Department has issued a show cause notice for levying penalty which is being contested before the settlement commission. By way of abundant caution, the company has at present, recognized a contingent liability of Rs. 1.05 Cr which is not provided for.

24. VAT

Assessment proceedings against the company under the Karnataka VAT Act were successfully completed at the appellate level and the company got substantial relief. The matter has since been remanded to the Assessing Officer for passing the consequential order.

i. The company initially had an operating lease arrangement with Reliance capital in respect of certain assets and the overduestowardsthe lease rentals resulted in legal proceedings against the company. The Company later concluded a revised arrangement with Reliance Capital under which the operating lease arrangement was substituted by a mortgage loan with EMIs being paid over a period of 8 years up to 2022. This mortgage loan together with existing mortgage loan aggregate to Rs. 342,238 (''000) and is secured by the title deeds of third floor of the property at Perungudi, Chennai.

The revised terms a necessitated a recognition of a onetime charge of Rs. 16.54 Cr.

ii. The company initially had an option to acquire two floors additionally in the office premises at Perungudi, Chennai. Accordingly, the company made a deposit of Rs. 5,00,000 (''000) towards the acquisition of three floors with the land lord. However, due to financial constraints, the company acquired only the third floor and surrendered the option to acquire the other two floors along with the deposit of Rs. 33,333 (''000) which is now reflected as an exceptional item as the negotiations were concluded during the current financial year.

2.55 Due to huge losses incurred from the financial year 2012-13 onwards, and continuing defaults /delays by customers in settling their dues andtheprevailing uncertain economic environment, the company had very little financial resources available to it to carry on its operations. Further, the dues from the Company''s customers are not backed by any tangible security/assets, the Company''s recovery efforts have to be very measured.,since the delays are attributable to the liquidity constraints of the customers

The consequent financial crunch faced by the company resulted inthecompanyhaving overdue amounts payable to creditors and certain lendersand other business support service providers. The bankers, agreed to restructure the loansandprovide fresh credit limitsprovided the company executes a satisfactory documentation as also achieves certain operating profits / financial ratios. As part of this approach and due to persistent, cash crunch, the company opted to pool all the resources of its various wholly owned subsidiaries as the business segment of all the companies are common and operate in the same field of providing ''education services'' and are structured as specific entities for the purpose of serving a specific customer segment in the same field -- educational services. These common funds were utilized to tide over temporary liquidity issues and kept the companies and subsidiaries remain as a going concern.

Debts across the group companies, namely, the Company and its wholly owned subsidiaries, were adjusted with a view to comply with the various covenants (including the maintaining of stipulated financial ratios) set out by the bankers for grant of further infusion of working capital limits and other loans. so that the company could continue its future business plans by focusing on key thrust areas. The Company is in negotiations with the, creditors and Bankers and is working on various solutions with them to ensure settlement of their dues. The Company is also taking various steps to reduce costs and improve efficiencies to make its operations profitable and accordingly the financial statements have been prepared on the basis that the Company is a going concern.

It is expected that with the initiation of the above steps the company will have adequate cash flowstofulfill, in aphased manner, its debt obligations.

25 In respect of advances given to various parties, Capital work in progress and Debts due from government agencies and others, in view of legal advices and other opinion receivedno provision is considered necessary at this juncture, as the company at present is hopeful of recovering major portion of outstanding dues.

26. BUSINESS RESTRUCTURING RESERVE

The Hon ''ble High Court of Madras permitted the Company to reduce the Securities Premium Account to an amount not exceeding Rs. 150 Crores to be transferred to a separate reserve styled as "Business Restructuring Reserve"(BRR). The resolution passed by the Share Holders and approved by the Court permitted the BRR should be utilized for setting off against diminution in the value of investments, and consequent impairment of goodwill and accumulated losses, unrealized debtors and loans and advances etc.,

The Company has given effect to this order of the Hon ''ble High Court by carving out of the Share Premium Account, a sum of Rs. 150 Crore to BRR. However, the Company is identifying the exact quantum of amounts to be set off against BRR, which process is expected to be completed at the time half yearly limited review results for the Current Financial Year 2014-15.

27. PREVIOUS YEAR FIGURES

Previous years figures have been regrouped / reclassified wherever necessary to conform to the current year presentation.

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Mar 31, 2013

1 CORPORATE INFORMATION

Everonn Education Limited (the ''Company'') is a pioneer in using technological breakthroughs to make quality education a reality even in the most remote parts of the country. Everonn''s passion for enabling cutting-edge education delivery has seen us grow dramatically in the past two decades. The company is a public listed company and is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE)

2.1 DIMUNITION IN VALUE OF INVESTMENT

The company has an investment of Rs. 25,46,600(''000) in its wholly and partially owned subsidiaries and in others has also extended loans and advance of Rs. 18,81,871 (''000) to these subsidiaries as on March, 31,2013.Thenetworth of these subsidiaries have declined. These investments are for long term and strategic nature, and the management is confident of turning around/recovering the near future. Hence it is decided not to make any provision for diminution in the value of these investments.

2.2 OPERATING LEASES

The company has entered into operating lease arrangement for its office facilities and equipments. These Leases are for a period ranging from 1 to 5 years with an option to the company for renewing at the end of the initial term. Equipment rental/ Rental for operating leases is added in Profit and Loss account for the year Rs. 5,97,893(''000) (March 31 2012 Rs. 4,18,705 (''000))

2.3 SEGMENT REPORTING

The Company is engaged in the business of providing education and training and related sale of equipment''s. There being only one ''business segment'' and ''geographical segment'' the segment information is not provided

2.4 DUES TO MICRO AND SMALL ENTERPRISES

During the year under review, the company has not identified Micro, Small and Medium Enterprises, as defined in the Micro, Small and Medium Enterprises Development Act, 2006, and the resultant interest provision are not ascertainable

2.5 The company has transactions with "Associated Enterprises" which are subject to Transfer Pricing regulations in India. The Management of the Company is of the opinion that such transactions with the associate enterprise4s are at arms length. Consequently, this will not have nay impact on the financial statements, particularly on account of tax expenses and that of provision for taxation.

2.6 BALANCE CONFIRMATION

Confirmations of Balance from Sundry Debtors, Deposit accounts, Loans and Advances and Sundry Creditors have not been obtained. Accounts of certain sundry debtors, loans and advances, deposits and creditors are being reviewed as on a going process. As there is g the inordinate delay in receipt of confirmations from Government Contracts adjustments, if any will be made on completion of review/reconciliation/ identification of doubtful debts/advances.

2.7 IMPAIRMENT OF ASSETS

The company has initiated the process of review of impairment of assets in the respect of the tangible, intangible and other current assets their results in such impairment is awaited, The financial implication if any on the above will be provide appropriately at later stage taking into account thefuture operational plans and cash flows as prepared by the management.

2.8 The company has received various demand notices of income tax and interest thereon in respect of Assessment Years 2007-08 to 2010-11. The matter pertains to various additions made by the department. The company has disputed the issue and has filed appeal against the above demand by the tax authorities including the stay of demand. The management is of the view that the appropriate adjustments/provisions will be made on the final outcome of these matters and hence no provision has been made for the taxes, penalties, and interests for non/delayed payments of these dues as these amounts are not determined.

2.9 The company has filed a petition with the honorable high court of Chennai for approval of Business Restructuring Reserve up to Rs. 150 Cores, pursuant to the approval by the shareholders in their Extraordinary General Meeting dated 29th June 2012.

2.10 PREVIOUS YEAR FIGURES

Previous years figures have been regrouped/re-classified wherever necessary to conform to the current year presentation.

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Mar 31, 2012

1 CORPORATE INFORMATION

Everonn Education Limited (the 'Company') is a pioneer in using technological breakthroughs to make quality education a reality even in the most remote parts of the country. Everonn's passion for enabling cutting-edge education delivery has seen us grow dramatically in the past two decades. The company is a public listed company and is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE)

a) Rights, preferences and restrictions attached to shares

Equity Shares: The Company has one class of equity shares having a par value of Rs.10 per share. Each Share holder is eligible for one vote per share held.The equity shareholders are eligible to receive in the remaining assets of the company after distribution of all preferential amounts, in proportion to their shareholding.

b) 68,54,748, equity shares were issued as bonus shares by capitalization of securities premium account on 31/05/2006

c) During the year 6,00,000 partly paid share warrants of Rs.430.45/- an amount equivalent to 25% of the issue price amounting to Rs.6,45,68,000 were forfeited on 10th February 12 due to non exercise of option by the warrant holders.

NATURE OF SECURITY

a) Working Capital Loans from State bank of India amounting to Rs.5,55,785(in '000) (March 31 2011 :Rs.2,11,672(in '000)) are Secured by Hypothecation of entire current assets, excluding specifically charged assets, on pari-passu basis. Land & Building admeasuring approx. 5886 sq.ft at Ooty S.No:1049/3 belonging to Mr.P.Kishore, and Personal guarantee of Mr.P.Kishore

b) Working Capital Loans from Standard Chartered Bank amountingto Rs.1,99,575(in '000) (March 31 2011:Rs.1,48,096(in '000)) are Secured by 1. Paripassu first charge on the entire current assets of the Company, Present and future 2. Rs.5,000(in '000)/- Cash deposit under lien.

c) Working Capital Loans from IDBI Bank amounting to Rs.8,536 (in'000) (March 31 2011:Rs.86,596(in '000))are secured by Paripassu first charge on the entire current assets of the Company.

d) Working Capital Loans from Axis Bank Limited repayable amounting to Rs.1,80,672 (in'000) (March 31 2011: Rs.1,40,375 (in '000))are secured by Paripassu first charge on the entire current assets of the Company

e) Working Capital Loans from Yes Bank Limited repayable amounting to Rs.79,977 (in'000) (March 31 2011:Rs.Nil)are secured by Paripassu first charge on the entire current assets of the Company.

f) Working capital loan from ICICI bank Ltd amounting to Rs.6,56,001 (in'000) (March 31 2011; Rs.Nil) are secured by Paripassu first charge on the entire current assets of the Company.

g) Loan from Related Party is from four wholly owned subsidiaries carrying an interest rate of 10% and is repayable on demand.

b. Unfunded Leave encashment Rs.3, 781 (000) (March 31 2011: 3,781(000)

Leave encashment has been provided based on management computation and not on actuarial valuation as provided under Accounting Standard 15 however for the current year the provision for leave encashment has not been estimated and provided.

EMPLOYEE STOCK OPTION PLAN (ESOP)

During the financial year 2006-07, the Holding Company established Employee Stock Option Scheme, 2006 under which 2,57,053 equity shares have been allotted for Rs.10 each at par to Everonn Employee Welfare Trust, a trust specifically formed for this purpose with an option vesting period of 8 years. As per the scheme, the Compensation Committee grants options to the employees deemed eligible for this purpose. The options are granted at par and the shares granted vest over a period of 1 to 3 years and can be exercised over a maximum period of 3 years from the date of vesting.

1.1 CONTINGENT LIABILITIES AND COMMITMENTS

a) Claims against the company not acknowledged as debt

Income Tax Matters 2,13,046 -

Service Tax Matters 9,400 -

Sales Tax matters - 7,400

b) Corporate Guarantee issued on behalf of Subsidiary Companies 3,67,600 4,16,000

c) Corporate Guarantee issued to banks for secured loans to third Party 22,74,571 10,11,200

d) LC Issued by Banks 16,87,759 -

e) In respect of items above, future cash outflows in respect of contingent liabilities is determinable only on receipt of judgments pending at various forum/ settlement of matter. The management believes that, based on legal advice or internal assessment, the outcome of these contingencies will be favorable and the loss is not probable. Accordingly no provisions have been made for the same.

f) A Civil suit has been filed by The ICFAI Academy for permanent injunction for creating third party rights, or disposing the assets, both tangible and intangible, in the plaintiff's campuses and control offices from the academic year 2011 onwards. The plaintiff has claimed damages of Rs.5,000('000) along with interest at the rate of 18% p.a. and the main injunction is still pending in the High court.

g) Estimated amount of contracts remaining to be executed on capital account and not provided for is Rs.Nil (PY (Rs.Nil))

h) Counter guarantee from third parties have not been taken for the corporate guarantee given to them.

1.2 DIMUNITION IN VALUE OF INVESTMENT

Few subsidiaries of company have incurred losses and their Networth is partially eroded. Having regard to the long term association of these companies and their revival plans, these investments are considered good and hence no provision is made.

1.3 OPERATING LEASES

The company has entered into operating lease arrangement for its office facilities and equipments. These Leases are for a period ranging from 1 to 5 years with an option to the company for renewing at the end of the initial term. Equipment rental/ Rental for operating leases is added in Profit and Loss account for the year Rs.4,18,705('000) (March 31 2011 Rs.3,51,056/- ('000))

1.4 SEGMENT REPORTING

The Company is engaged in the business of providing education and training and related sale of equipments. There being only one 'business segment' and 'geographical segment' the segment information is not provided.

1.5 DUES TO MICRO AND SMALL ENTERPRISES

During the year under review, the company has not identified Micro, Small and Medium Enterprises, as defined in the Micro, Small and Medium Enterprises Development Act, 2006, and the resultant interest provision are not ascertainable.

1.6 BALANCE CONFIRMATION

Confirmations of Balance from Sundry Debtors, Deposit accounts, Loans and Advances, Certain Creditors have not been obtained. Accounts of certain sundry debtors, loans and advances, deposits and creditors are under review and reconciliation. Adjustments, if any will be made on completion of review/reconciliation/ identification of doubtful debts/advances.

1.7 IMPAIRMENT OF ASSETS

The Company has initiated the process of review of impairment of assets in the respect of the tangible, intangible and other current assets their results in such impairment is awaited, The financial implication if any on the above will be provide appropriately at later stage.

1.8

The Company has been subjected to survey by Income Tax Department during the year. The amount of demand from the Income Tax Department for the preceding years are before appellate authority. Further notices were issued by the assessing officer for reassessment of earlier years. The assessment proceedings are in various stages and are yet to be completed. The company is confident the matter shall be decided later and financial implications on above cannot be ascertained as on date, Hence no provision is made for such matters in the books.

1.9

The Company has filed a petition with the honorable high court of Chennai for approval of business restructuring reserve up to Rs.150 Crores, pursuant to the approval by the shareholders in their extraordinary general meeting dated 29th June 2012.

1.10 PREVIOUS YEAR FIGURES

The Financial statements for the year ended March, 31 2011 had been prepared as per the then applicable, Pre-revised Schedule VI to the companies act 1956.Consequent to the notification of Revised Schedule VI under the Companies Act 1956, the financial statements for the year ended 31 March 2012 are prepared as per Revised Schedule VI. Accordingly, the previous year figures have also been reclassified to conform to this year's classification. The adoption of Revised Schedule VI for previous year figures does not impact recognition and measurement of principles followed for preparation of financial statements.

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Mar 31, 2011

1. Issue of Warrants

During the year, the Company has allotted 6,00,000 convertible equity warrants on 11th August, 2010 to Promoters/Persons forming Promoter Group, entitling each holder to obtain allotment of one equity share against each such warrant at a price of Rs.430.45/-. As per the terms of issue of equity warrant, an amount equivalent to 25% of the issue price aggregating to Rs.64,568 ('000) was received and is retained under share warrants.

As per the terms of issue, the holder of equity warrants will have an option to apply for and be allotted one equity share of the Company per equity warrant at any time after the allotment of equity warrant but on or before the expiry of 18 months from the date of allotment of equity warrant, in one or more tranches.

2. Preferential Issue of Shares

During the year, the Company has issued 39,11,500 equity shares of Rs.10/- each at a premium of Rs.510.87/- on preferential basis to M/s. SKIL Infrastructure Limited on 9th December 2010. Post issue of shares, M/s. SKIL Infrastructure Limited is categorised as Co- promoter.

3. Contingent liability

Rs. in' 000

Particulars Year Ended Year Ended 31.3.2011 31.3.2010

Bank Guarantee issued by banks 3,74,849 4,24,966

Corporate Guarantee issued on behalf of Subsidiary Companies 4,16,000 –

Corporate Guarantee issued to banks for secured loans to third party 10,11,200 5,91,200

Bills Discounted – 1,89,896

LC Issued by Banks – 1,72,215

Taxes, Duties and others 7,400 –

4. Operating leases

The Company has entered into operating lease arrangement for its Office facilities and equipments. These leases are for a period

ranging from 1 to 5 years with an option to the Company for renewing at the end of the initial term. Equipment Rental / Rental for operating leases is added in Profit and Loss Account for the year Rs.3,51,076/- (000) (PY Rs.1,91,898/- (000))

The lease agreements for the above non- cancelable leases do not provide for any escalation and the same has been factored in the future minimum rentals as disclosed above.

5. Employee Stock Option Scheme (ESOP)

During the financial year 2006-07, the Company has established Employee Stock Option Scheme, 2006 under which 2,57,053 equity shares have been allotted for Rs.10/- each at par to Everonn Employee Welfare Trust, a trust specifically formed for this purpose with an option vesting period of 8 years. As per the scheme, the Compensation Committee grants options to the employees deemed eligible for this purpose. The options are granted at par and the shares granted vest over a period of 1 to 3 years and can be exercised over a maximum period of 8 years from the date of vesting.

* The money realised by exercise of options by the employees has been transferred to the Everonn Employees Welfare Trust as shares given to the employees were transferred from the Trust.

Notes:

1. Represents issue of Convertible equity warrants to

a. Mr. P.Kishore Rs.53,806 (000) (Previous Year Nil)

b. Mrs. Susha John Rs.10,762 (000) (Previous Year Nil)

2. Includes remuneration to

a. Mr. P.Kishore Rs.10,012 (000) (Previous Year Rs.5,959 (000))

b. Mrs. Susha John Rs.7,442 (000) (Previous Year Rs.4,274 (000))

3. Includes investment made in

a. Everonn Infrastructure Limited Rs.15,000 (000) (Previous Year Nil)

b. Toppers Tutorial Private Limited Rs.65,000 (000) (Previous Year Rs.65,000 (000))

c. Everonn Educational Resources Solutions Limited Rs.Nil (000) (Previous Year Rs.40,000(000))

d. Everonn Skill Development Limited Rs.30,000 (000) (Previous Year Rs.30,500 (000)) (During the year 100% shares transferred to M/s. Edifications India Limited (100% Subsidiary Company of the Company)

e. Everonn Business Education Limited Rs.2,20,000 (000) (Previous Year Rs.500 (000))

f. Everonn School Limited Rs.60,500 (000) (Previous Year Nil)

g. Everonn Medical Education Limited Rs.500 (000) (Previous Year Nil)

h. Everonn Technical Education India Limited Rs.500 (000) (Previous Year Nil)

i. Everonn Sport Management Limited Rs.500 (000) (Previous Year Nil)

j. Edifications India Limited Rs.2,10,500 (000) (Previous Year Nil)

k. Everonn Dassani Literate Limited Rs.300 (000) (Previous Year Nil)

l. Everonn Knowledge & Education Corridor Limited Rs.500 (000) (Previous Year Nil)

6. Acquisitions/Subscriptions

During the year, the Company has subscribed 52,000 equity shares for a total consideration of Rs.65,000 (000) in its wholly owned subsidiary in Toppers Tutorial Private Limited.

During the year, the Company has subscribed 15,00,000 equity shares for a total consideration of Rs.15,000 (000) in its wholly owned subsidiary in Everonn Infrastructure Limited.

During the year, the Company has subscribed 20,00,000 equity shares for a total consideration of Rs.30,000 (000) in its wholly owned subsidiary in Everonn Skill Development Limited.

During the year, the Company has subscribed 22,00,000 equity shares for a total consideration of Rs.2,20,000 (000) in its wholly owned subsidiary in Everonn Business Education Limited.

During the year, the Company has subscribed 24,50,000 equity shares for a total consideration of Rs.60,500 (000) in its wholly owned subsidiary in Everonn School Limited.

During the year, the Company has subscribed 50,000 equity shares for a total consideration of Rs.500 (000) in its wholly owned subsidiary in Everonn Medical Education Limited.

During the year, the Company has subscribed 50,000 equity shares for a total consideration of Rs.500 (000) in its wholly owned subsidiary in Everonn Technical Education India Limited.

During the year, the Company has subscribed 50,000 equity shares for a total consideration of Rs.500 (000) in its wholly owned subsidiary in Everonn Sport Management Limited.

During the year, the Company has subscribed 60,50,000 equity shares for a total consideration of Rs.2,10,500 (000) in its wholly owned subsidiary in Edifications India Limited.

During the year, the Company has subscribed 50,000 equity shares for a total consideration of Rs.500 (000) in its wholly owned subsidiary in Everonn Knowledge & Education Corridor Limited.

During the year, the Company has subscribed to 60% stake (30,000 equity shares) in Everonn Dassani Literate Limited for a total consideration of Rs.300 (000).

7. Circulation of Confirmation of balances from Debtors and Creditors have been made during the year but in few cases the same is yet to be received from customers/ parties.

8. Disclosures under Micro, Small and Medium Enterprises Development Act, 2006 There are no dues to Micro, Small and Medium Enterprises, as defined in the Micro, Small and Medium Enterprises Development Act, 2006 which are identified by the Company based on enquiries with the parties and information available with the Company and are relied upon by the auditors.

9. The Company is engaged in the business of providing education and training and related sale of equipments. There being only one “business segment” and “geographical segment” the segment information is not provided.

10. The Company has entered into an agreement for purchase of 130,000 sq.ft. of office space at Plot Nos. 96-99, Perungudi Industrial Estate, Chennai 600 096 for a consideration of Rs.55.00 Crores payable after 36 months together with interest @ HDFC base PLR plus additional 3%.

The Company has purchased III floor measuring 43,000 sq.ft. for a consideration of Rs.1,91,200 (000). The Company has advanced Rs.48,811 (000) against acquisition of balance two floors.

11. During the year, the Company has charged interest on advances given to subsidiaries at 10% per annum.

12. Secured Loans

i. The Debentures are secured by way of a first pari-passu charge on certain moveable assets.

ii. Cash Credit facility availed from banks is secured by Hypothecation of entire current assets, excluding specifically charged assets, on pari pasu basis with the lending banks, First charge on the company's entire fixed assets excluding assets specifically charged. The Loan is also secured by immovable properties of third parties and personal Property of the Managing Director. The Loan is further secured by the Personal Guarantee of the Managing Director and Corporate guarantee of M/s. Tourism Resorts (Private) Limited.

iii. Bank Overdraft is secured against Project Receivables.

iv. Loans against Deposits are secured by related deposits against which loans are raised.

v. Term Loans from various banks are secured by exclusive first charge on the equipments and other fixed assets(Including Intangible assets) created out of the respective loans.Term Loan from state Bank of India is secured by First charge on the company's entire fixed assets excluding assets specifically charged and hypothecation of receivable relating to the projects to be financed and further secured by immovable properties of third parties and personal Property of the Managing

Director and also by the Personal Guarantee of the Managing Director and Corporate guarantee of M/s. Tourism Resorts Private Limited.

The Company has remitted dividend in foreign currencies equal to INR 11,36,570 to one Non- resident shareholder.Dividends remitted to Non-resident shareholders in INR to their bank accounts maintained in India are not included in the above table.

13. Previous Years figures have been regrouped to conform to the classifications for the current year.

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Mar 31, 2010

1. Forfeiture of Warrants

During the year ended Mar. 31, 2009, the company had allotted 1062634 convertible equity warrants to Non-Promoters and Promoter/Person from Promoter group, entitling each holder to obtain allotment of one equity share against each such warrant at a price of Rs. 720.04. As per the terms of issue of equity warrants an amount equivalent to 10% of the issue price aggregating to Rs. 76514 (‘000) was received and is retained under share warrants. The holder of the said equity warrants have had an option to apply for and be allotted one equity share of the company per equity warrant at the time after the allotment but on or before the expiry of 18 months from the date of allotment, in one or more tranches. Further in case the investors do not opt for conversion of the warrants, the upfront amount so paid stands forfeited by the Company and all the rights attached to the warrants lapse automatically.

None of the warrant holders exercised the option to convert any of the aforesaid warrants till the last date of conversion within 18 months from their respective entitlements. Accordingly, during the financial year under review, the Company forfeited the amount of Rs. 76514 (‘000) paid on the warrants due to non exercise of the option by the warrant holders. This amount has been credited to Capital Reserve Account.

2. Contingent liability

Rs. in’ 000

Particulars Year Ended Year Ended 31.3.2010 31.3.2009

Bank guarantee issued by banks 424,966 319,210

LC Issued by Banks 172,215 --

Corporate Guarantee issued 591,200 -- to banks for secured loans to third party Bills discounted 189,896 --

3. Operating leases

The Company has entered into operating lease arrangement for its Office facilities and equipments. These leases are for a period ranging from 1 to 5 years with an option to the company for renewing at the end of the initial term. Equipment Rental / Rental for operating leases is added in Profit and Loss Account for the year Rs. 191,898/- (’000’s ) (PY Rs. 65,272/- (’000’s ))

4. Employee Stock Option Scheme (ESOP)

During 2006-07, the company established Employee Stock Option Scheme 2006 under which 2,57,053 equity shares have been allotted at Rs,10 each at par to Everonn Employee Welfare Trust, a trust specifically formed for this purpose with an option vesting period of 8 years. As per the scheme, the compensation committee grants options to the employees deemed eligible for this purpose. The options are granted at par and the shares granted vest over a period of 1 to 3 years and can be exercised over maximum period of 8 years from the date of vesting

5. Estimated value of contract remaining to be executed on capital account and not provided for is Rs. Nil (previous year Rs. 140,000 (‘000).

6. Circulation of Confirmation of balances from Debtors and Creditors has been made during the year but in few cases the same is yet to be received from customers / parties

7. Employee Benefits

The disclosures required under Accounting Standard 15 “Employee Benefits” notified in the Companies ( Accounting Standards) Rules 2006, are given below:-

8. Disclosures under Micro Small and Medium Enterprises Development Act 2006

The dues to Micro, Small and Medium Enterprises, as defined in the Micro, Small and Medium Enterprises Development Act, 2006, are identified by the company based on enquiries with the parties and information available with the company are relied upon by the auditors.

9. The company is engaged in the business of providing education and training and related sale of equipments. There being only one “business segment” and “geographical segment” the segment information is not provided.

10. The company has entered into an agreement for purchase of 130000 Sqft of office space at 96-99, Industrial Estate, Perungudi, Chennai-600 096, for a consideration of Rs. 55.00 Cr payable after 36 months together with interest thereon.

The company has so for advanced Rs. 110000 (000) against the above purchase/acquisition.

The Company has purchased III Floor measuring 43,000 Sqft.,for a consideration of Rs.191200(’000). The Company has advanced Rs.48811(’000) against acquisition of Balance two floors.

11. During the year the company has charged interest on advances given to subsidiaries in the current year at 10% per annum

12. Secured Loans

i. During the year the company has issued following debentures

200000 14% Secured Non - Convertible Debentures of Rs.100 each Rs. 20000 (000) (PY Nil)

1000000 4% Secured Non - Convertible Debentures of Rs.100 each Rs. 100000 (000) (PY Nil)

218000 6% Secured Non - Convertible Debentures of Rs.100 each Rs. 21800 (000) (PY Nil)

The above debentures are secured by way of a first pari passu charge on certain movable assets.

ii. Cash Credit facility availed from banks is secured by Hypothecation of entire current assets, excluding specifically charged assets, on pari pasu basis with the lending banks, First charge on the company’s entire fixed assets excluding assets specifically charged. The Loan is also secured by immovable properties of third parties, and personal Property of the Managing Director. The Loan is further secured by the Personal Guarantee of the Managing Director and Corporate guarantee of Tourism Resorts private Limited.

iii. Bank Overdraft is secured against Project Receivables.

iv. Loan against Deposits are secured by related deposits against which loans are raised.

v. Term Loans from various banks are secured by exclusive first charge on the equipments and other fixed assets(Including Intangible assets) created out of the respective loans.Term Loan from state Bank of India is secured by First charge on the company’s entire fixed assets excluding assets specifically charged and hypothecation of receivable relating to the projects to be financed and further secured by immovable properties of third parties, and personal Property of the Managing Director, and also by the Personal Guarantee of the Managing Director and Corporate guarantee of Tourism Resorts private Limited.

13. Profit on sale of assets includes (Rs. Nil) (Previous year Rs.3300 (000) being profit on sale of assets on account of sale and lease back transaction entered by the company during the year.

14. Previous Years figures have been regrouped to conform to the classifications for the current year.