Notes to Accounts of IZMO Ltd.

Mar 31, 2018

1. BACKGROUND:

IZMO LIMITED (“the Company”) was incorporated on 08th September, 1995. The Company is engaged in interactive marketing solutions. The company offers hi-tech automotive e-retailing solutions.

2A. Recent Accounting Pronouncements

“Introduction of new Ind AS Standard/Amendments to Ind AS Standards

Through a Notification dated 28th March 2018, the Ministry of Corporate Affairs has indicated 1st April 2018 as the effective date for the implementation of Ind AS 115- Revenue from Contracts with Customers. In addition, limited amendments have been made to some other Ind AS standards ( Ind AS’s 2, 12, 21, 28 and 40 )

The company is in the process of assessing the impact of the introduction of Ind AS 115- Revenue from Contracts with Customers and the limited amendments to the other Ind AS Standards. The impact, if any, will be disclosed in the financial statements for the period ended 30th June 2018/year ended 31st March 2019. “

3.1 Transition to Ind AS:

These are the Company’s first financial statements prepared in accordance with Ind AS notified under the Companies (Indian Accounting Standards) Rules, 2015. The adoption of Ind AS was carried out in accordance with Ind AS 101 - ‘First-time Adoption of Indian Accounting Standards’ using transition date as April 1, 2016.

Ind AS 101 requires that all Ind AS be consistently and retrospectively applied for fiscal years presented. The Company has prepared Opening Balance Sheet on the transition date and subsequent financials based on the accounting policies set out in Note-2.

In preparing these financials, the Company has availed following exemptions in the transition from previous GAAP to Ind AS in accordance with Ind AS 101.

Optional Exemptions:

a) Deemed Cost:

Property, plant and equipment and intangible assets were carried in the balance sheet prepared under previous GAAP as at March 31, 2016. The Company has elected to regard such carrying amount as deemed cost at the date of transition i.e. April 01, 2016.

Under previous GAAP, investment in subsidiaries, joint venture and associate were stated at cost and provisions made to recognise the decline, other than temporary. Under Ind AS, the Company has elected to regard such carrying amount as at March 31, 2016 as deemed cost at the date of transition.

b) Share-based payment:

The Company is allowed to apply Ind AS 102, Share-Based Payment, to equity instruments that remain unvested as of transition date. The Company has elected to avail itself of this exemption and apply the requirements of Ind AS 102 to all such grants under the ESOP 2013 Plan. Accordingly, these options have been measured at fair value.

The excess of stock compensation expense measured using fair value over the cost recognized under previous GAAP has been adjusted in ‘ESOP Outstanding Account’, with the corresponding impact taken to the retained earnings as on the transition date.

c) Designation of previously recognized financial instruments

Under Ind AS 109, at initial recognition of a financial asset, an entity may make an irrevocable election to present subsequent changes in the fair value of an investment in an equity instrument in other comprehensive income. Ind AS 101 allows such designation of previously recognized financial assets, as ‘fair value through other comprehensive income’ on the basis of the facts and circumstances that existed at the date of transition to Ind AS.

Accordingly, the Company has designated its investments in certain equity instruments at fair value through other comprehensive income on the basis of the facts and circumstances that existed at the date of transition to Ind AS.

3.2 The following statement provides first-time Ind AS adoption reconciliation that quantifies the significant differences arising on account of transition from previous GAAP to Ind AS

Notes:

A. Under previous GAAP, there was no requirement to present investment property as a distinct line item and the same was included under property, plant and equipment as at March 31,2016 and non current investments as at March 31,2017 and measured at cost. Under Ind AS, investment property is required to be presented as a distinct item under the head non current assets -investment property.

B. Under previous GAAP, non current Investments were recognized at cost. Where applicable, provision was made to recognize a decline, other than temporary, in valuation of such Investments. Under Ind AS, financial assets in equity instruments (other than investments in subsidiaries, associate and joint ventures) are to be recognized at fair value through other comprehensive income.

C. Under previous GAAP, rental deposits were recognised at amount paid to lessors. Under Ind AS, lease deposits are carried at amortised cost over the period of deposits.

D. Under previous GAAP, allowance for trade receivables and dues from subsidaries were recognized based on the incurred loss method. Under Ind AS, loss allowance are based on probable loss assessment as estimated by the management.

E. Under previous GAAP, actuarial gains and losses on measurement of employees defined benefit plans were recognized in the statement of profit and loss. Under Ind AS, the same are recognized under other comprehensive income. Suitable reclassifications have been done.

F. Under previous GAAP, deferred tax was accounted based on timing differences impacting the Statement of Profit and Loss for the period. Under Ind AS, Deferred tax is recognised for temporary differences between tax and book bases of the relevant assets and liabilities.

4. DISCLOSURES AS PER IND AS 19 “EMPLOYEE BENEFITS”:

(a) Defined Contribution Plan:

Contribution to defined contribution plan are recognized as expense for the year are as under:

(b) Defined Benefit Plan:

The employees’ gratuity fund scheme and leave encashment are defined benefit plans. The Present value of obligation is determined based on actuarial valuation using the projected unit credit method.

The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market.

(c) Sensitivity Analysis:

Significant Actuarial Assumptions for the determination of the defined benefit obligation are discount rate, expected salary increase and employee turnover. The sensitivity analysis below, has been determined based on possible effect of changes of an assumption occurring at end of the reporting period , while holding all other assumptions constant.

These plans typically expose the Company to actuarial risks such as: investment risk, interest risk, longevity risk and salary risk.

Investment risk: The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds.

Interest risk: A decrease in the bond interest rate will increase the plan liability; however, this will be partially offset by an increase in the return on the plan assets.

Longevity risk: The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan’s liability.

Salary risk: The present value of the defined plan liability is calculated by reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plan’s liability,

5. SEGMENT REPORTING:

Primary Segments

Based on the guiding principles in Indian Accounting Standard on “Segment Reporting” issued by the Institute of Chartered Accountants of India, classification by geographic segment are the primary reportable segments, comprising of:

Segmental Capital Employed:

Assets and Liabilities contracted have not been identified to any of the reportable segments, as the assets are used interchangeably between segments and it is not practicable to reasonably allocate the liabilities to individual segments. Accordingly no disclosure relating to segments assets and liabilities are made.

6. OPERATING LEASE (Ind AS 17):

The Company has various operating leases for office facilities which is renewable on a periodic basis, and cancelable at its option. Rental expenses for operating leases included in the financial statements for the year are Rs. 95,59,854/- (Previous Year Rs. 87,78,139/-).

7. Financial risk management objectives and policies:

The entity’s principal financial liabilities comprise borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the entity’s operations to support its operations. The entity’s principal financial assets include trade and other receivables, rental and bank deposits and cash and cash equivalents that are derived directly from its operations.

The entity is exposed to market risk/credit and liquidity risks. The entity’s senior management oversee the management of these risks. The board reviews their activities. No significant derivative activities have been undertaken so far.

Market Risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risks: interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk include deposits, FVTOCI investments and derivative financial instruments.

The sensitivity analysis in the following sections relate to the positions as at March 31, 2018. March 31, 2017 and April 1, 2016:

The analysis exclude the impact of movements in market variables on: the carrying values of gratuity and other post-retirement obligations; provisions; and the non-financial assets and liabilities of foreign operations.

The following assumption has been made in calculating sensitivity analysis.

The sensitivity of the relevant profit or loss item is the effect of the assumed changes in respective market risks. This is based on the financial assets and financial liabilities held at March 31, 2018, March 31, 2017 and April 1, 2016 including the effect of hedge accounting.

i. Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The company’s exposure to the risk of changes in foreign exchange rates relates primarily to the some of the vendor payments and customer receivables.

8. Fair Value Measurement ( Ind AS 113):

The Financial Instruments of the Company are initially recorded at fair value and subsequently measured at amortized cost based on the nature and timing of the cash flows.

The Company has not classified any Financial Asset or Liabilities as measured at Fair value through Profit and Loss (FVTPL) or measured at Fair Value through Other Comprehensive Income (FVTOCI).

The Fair Value of the above financial assets and liabilities are measured at amortized cost which is considered to be approximate to their fair values.

9. Employee Stock-Option Scheme

The Company has issued ESOP scheme under which Stock Options (ESOP), have been granted to employees. The scheme provides for equity / cash settled grants to employees whereby the employees will get equity shares by exercising options as vested at the exercise price specified in the grant. The options granted till March 31, 2018 have a vesting period of maximum 3 years from the date of grant. Total expenses arising from share-based payment transactions recongnised in profit or loss as part of employee benefit expense were as follows:

The above amounts do not include Gratuity and Leave encashment benefits as the provisions for these are determined for the Company as a whole and therefore separate amounts for the Directors are not available.

Managerial remuneration for the current year includes a sum of Rs.60.00 Lakhs paid to the managing director in accordance with the limits approved by the shareholders at the AGM held on 10th September 2016.

10. Under the Micro, Small and Medium Enterprises Development Act, 2006, which came into force on October 2,2006, the company is required to make certain disclosure relating to Micro, Small and Small and Medium Enterprises. The company is in the process of compiling and assimilating the relevant information from its suppliers about their coverage under the Act. Since the relevant information is not readily available, no disclosure have been made in the Accounts.

11. Transfer Pricing

The company derives a significant portion of its revenue Rs.2109.17 lakhs from services, rendered to its subsidiary M/s.Izmo Inc., USA. The revenue in this regard is recognized on the basis of a services agreement with the subsidiary or Purchase Orders raised by the subsidiary.

The Company has carried out a Transfer pricing study during the previous year based on which the Company’s management is of the opinion that these international transactions are at arm’s length and believes that the transfer pricing legislation will not have any impact on the Financial statements for the year ended March 2018, particularly on their amount of tax expense and that of the provision for taxation.

12 The Company has filed appeals before CIT (A) against the Income tax assessment orders passed with transfer pricing adjustments for the AY 2014-15 and also filed its appeal before the Honourable High Court Of Karnataka against order of the ITAT for the AY 2009-10 which are pending disposal as on Balance sheet date.

13 Balances of Sundry Debtors, Loans & Advances are subject to reconciliation and confirmation.

14 All figures have been rounded-off to the nearest Rupee. Previous Year’s figures have been re-grouped/reclassified wherever necessary to conform to the current year presentation.

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Mar 31, 2016

1. The balances in the share refund account and the related bank account was pending reconciliation. The unreconciled difference amounts to Rs.5.12 lakhs.

2. In accordance with Section 125(2)(h) of Companies Act, 2013, Share Warrant Application money, pending allotment and due for refund amounting to Rs.3.30 lakhs remaining unpaid since 31st March 2010 will be transferred to Investor Education and Protection Fund after the completion of 7 years from the date of payment falling due.

The above amounts do not include Gratuity and Leave encashment benefits as the provisions for these are determined for the Company as a whole and therefore separate amounts for the Directors are not available. Directors remuneration for the current year is sum of Rs.60.00 Lakhs paid to the managing director in accordance with the limits approved by the shareholders at the AGM held on 30th September 2013, but in excess of the limits prescribed under the Companies Act.

The Company had obtained the requisite approval from the Central Government.

Managerial remuneration (relating to FY 2010-11 to 2012-13),in excess of the approval by the central government, as informed by the management, the same is being repaid by the Managing director in over a period of two years and will be repaid before March, 2017.

3. : List of Related Parties

a)Enterprises Controlled by the Company

Midrange Software Pte Ltd, Singapore Wholly Owned Subsidiary (formerly Logix Microsystems (S) Pte. Ltd. Singapore)

Izmo Inc., USA Wholly Owned Subsidiary

Izmo Europe BVBA Wholly Owned Subsidiary

Izmo France SARL Subsidiary of our Wholly Owned Subsidiary

(Midrange Software Pte. Ltd)

Carazoo Online Solutions Pvt Ltd. 49% of Equity Shares held by Izmo Ltd

b)Key Management Personnel Mr. Sanjay Soni

Mr. Tej Soni

c)Enterprises in which Key Management personnel/their relatives have a significant influence

Aries Gases Private Limited Deep Heritage

Deep Oxygen Private Limited, India

Deep Investment Advisory Bangalore Private Limited

Si2 Microsystems Pvt Ltd., India

D''Gipro Design Automation & Marketing Pvt Ltd.,

Carazoo Online Solutions Pvt Ltd.

4. : Under the Micro, Small and Medium Enterprises Development Act, 2006, which came into force on October 2,2006, the company is required to make certain disclosure relating to Micro, Small and Medium Enterprises. The company is in the process of compiling and assimilating the relevant information from its suppliers about their coverage under the Act. Since the relevant information is not readily available, no disclosure have been made in the Accounts.

5. Transfer Pricing

The company derives a significant portion of its revenue (Rs.1755.33 lakhs) from services, rendered to its subsidiary M/s.Izmo Inc., USA. The revenue in this regard is recognized on the basis of a services agreement with the subsidiary or Purchase Orders raised by the subsidiary.

The Company has carried out a Transfer pricing study during the previous year based on which the Company''s management is of the opinion that these international transactions are at arm''s length and believes that the transfer pricing legislation will not have any impact on the Financial statements for the year ended March 2016, particularly on their amount of tax expense and that of the provision for taxation.

6. The Company has filed appeals before Appellate Tribunal against the Income tax assessment orders passed with transfer pricing adjustments for the AY 2011-12 and cases are pending for disposal, as on Balance sheet date.

7. The Company has booked two forward contracts for a total amount of US $ 5,00,000/- with HDFC Bank Ltd, during the FY 2014-15 and both the forward contracts were cancelled during the FY 2015-16.

8.Balances of Sundry Debtors, Loans & Advances are subject to reconciliation and confirmation.

9. All figures have been rounded-off to the nearest Rupee. Previous Year''s figures have been re-grouped/reclassified wherever necessary to conform to the current year presentation.

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Mar 31, 2015

1. Turnover is stated net of Sales-tax, Cess, Surcharge, Service tax and Sales Returns.

2. (a) Contingent Liabilities (to the extent of which not provided for)

(Amount in Rs.)

Particulars Current Year Previous Year

Money for which the company is contingently liable:

Performance Guarantees (STPI - customs duty) 50,000 50,000

(b) Commitments (to the extent of which not provided for)

i) Unexpired Letters of Credit 0 0

Warranty Costs on Software Sale* Not Quantified Not Quantified

* The company does not envisage any liability on account of a back to back arrangement with the suppliers for any such claims.

3. During the financial year 2013-14, the Company received the allotment of 50,000 equity shares on 15th= April 2013 from its subsidiary Logix Americas Inc., which is the holding company for the US subsidiaries against Share Application Money pending allotment as on that date. The investment in Logix Americas Inc., has in-turn been invested by way of equity and loans in Homestar Systems Inc., Homestar LLC, the step-down subsidiaries of Logix Americas Inc.

4. The balances in the share refund account and the related bank account was pending reconciliation. The unreconciled difference amounts to Rs.5.12 lakhs.

5. In accordance with Section 125(2)(h) of Companies Act, 2013, Share Warrant Application money, pending allotment and due for refund amounting to Rs.3.30 lakhs remaining unpaid since 31st March 2010 will be transferred to Investor Education and Protection Fund after the completion of 7 years from the date of payment falling due.

The above amounts do not include Gratuity and Leave encashment benefits as the provisions for these are determined for the Company as a whole and therefore separate amounts for the Directors are not available.

Directors remuneration for the current year is sum of Rs.60.00 Lakhs paid to the managing director in accordance with the limits approved by the shareholders at theAGM held on 30th September 2013. but in excess of the limits prescribed under the Companies Act. The Company had obtained the requisite approval from the Central Government.

Managerial remuneration (relating to FY 2010-11 to 2012-13),in excess of the approval by the central government, as informed by the management, the same is being repaid by the Managing director in over a period of two years and will be repaid before March, 2017.

6. List of Related Parties

a) Enterprises Controlled by the Company

Midrange Software Pte. Ltd., Singapore Wholly Owned Subsidiary (formerlyLogix Microsystems (S) Pte. Ltd., Singapore)

Izmo Inc., USA Wholly Owned Subsidiary

Izmo Europe BVBA Wholly Owned Subsidiary

Carazoo Online Solutions Pvt Ltd. 49% ofEquity Shares held by Izmo Ltd

b) Key Management Personnel

Mr. Sanjay Soni Mr. Tej Soni

c) Enterprises in which Key Management personnel/their relatives have a significant influence

Aries Gases Private Limited Deep Heritage

Deep Oxygen Private Limited, India

Deep Investment Advisory Bangalore Private Limited

Si2 Microsystems Pvt Ltd., India

D'gipro Design Automation & Marketing Pvt Ltd.,

Carazoo Online Solutions Pvt Ltd.

7. Under the Micro, Small and Medium Enterprises Development Act, 2006, which came into force on October 2, 2006, the company is required to make certain disclosure relating to Micro, Small and Medium Enterprises. The company is in the process of compiling and assimilating the relevant information from its suppliers about their coverage under the Act. Since the relevant information is not readily available, no disclosure have been made in the Accounts.

8. Segment Reporting Primary Segments

Based on the guiding principles in Accounting Standard on "Segment Reporting" issued by the Institute of Chartered Accountants of India, classification by geographic segment are the primary reportable segments, comprising of: i. Export ii. Domestic.

Segmental Capital Employed: Assets and Liabilities contracted have not been identified to any of the reportable segments, as the assets are used interchangeably between segments and it is not practicable to reasonably allocate the liabilities to individual segments. Accordingly no disclosure relating to segments assets and liabilities are made.

9. Defined Benefit Plans

a. Gratuity

b. Leave Encashment

The disclosure as per the revised AS-15 are as follows:

c. The discount rate is based on the market yield available on Government bonds at the accounting date with a term that matches the liabilities.

d. The estimates of future salary increase considered in the actuarial valuation takes into account factors like inflation, seniority, promotion and other relevant factors.

e. The employees are assumed to retire at the age of 60 years.

f. The mortality rate considered are as per the published rates in the IALM (2006-08) mortality tables.

9. Transfer Pricing

The company derives a significant portion of its revenue (Rs.1656.90 lakhs) from services, rendered to its subsidiary M/s.Izmo Inc., USA. The revenue in this regard is recognized on the basis of a services agreement with the subsidiary or Purchase Orders raised by the subsidiary.

The Company has carried out aTransfer pricing study during the previous year based on which the Company's management is of the opinion that these international transactions are at arm's length and believes that the transfer pricing legislation will not have any impact on the Financial statements for the year ended March 2015, particularly on their amount of tax expense and that of the provision for taxation.

10. The Company has filed appeals before Appellate Tribunal against the Income tax assessment orders passed with transfer pricing adjustments for the AY2009-10 & AY 2010-11, and cases are pending for disposal, as on Balance sheet date.

11. The Company has booked two forward contracts for a total amount of US $ 5,00,000/- with HDFC Bank Ltd, during the year.

12. Balances of Sundry Debtors, Loans & Advances are subject to reconciliation and confirmation.

13. All figures have been rounded-off to the nearest Rupee. Previous Year's figures have been re-grouped/reclassified wherever necessary to conform to the current year presentation.

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Mar 31, 2014

1.1 (a)Contingent Liabilities (to the extent of which not provided for) (Amount in Rs.) Particulars Current Year Previous Year

Money for which the company is contingently liable:

i)Performance Guarantees 50,000 13,70,000 (STPI - customs duty)

ii)Claims against the company, not acknowledged as debts :

a)Claims by vendors, etc - -

b)There are certain claims made against the Company by former employees, which are a subject matter of arbitration proceedings. In the view of the management of the Company these claims are not tenable. No provision has been made for such claims pending completion of legal proceedings as the amount of claims are currently not ascertainable. Not Not Quantified Quantified c)Contingent liability in respect of claim in respect of Service Tax on software sales made by the company, the amount Not Not of which is not quantified. Quantified Quantified

1.2 During the financial year 1999-2000, the company had acquired 100,000 equity shares of Singapore Dollars 1 each in Midrange Software Pte. Limited (formerly Logix Microsystems (S) Pte. Ltd.,) Singapore. The remittance towards the same has not been made pending requisite approval.

1.3 During the financial year 2013-14, the Company received the allotment of 50,000 equity shares on 15th April 2013 from its subsidiary Logix Americas Inc., which is the holding company for the US subsidiaries against Share Application Money pending allotment as on that date. The investment in Logix Americas Inc., has in-turn been invested by way of equity and loans in Homestar Systems Inc., Homestar LLC, the step- down subsidiaries of Logix Americas Inc.

1.4 The balances in the share refund account and the related bank account was pending reconciliation. The unreconciled difference amounts to Rs.5.12 lakhs.

1.5 In accordance with Section 205C of Companies Act, 1956, Share Warrant Application money, pending allotment and due for refund amounting to Rs.3.30 lakhs remaining unpaid since 29th September 2007 will be transferred to Investor Education and Protection Fund after the completion of 7 years from the date of payment falling due.

The above amounts do not include Gratuity and Leave encashment benefits as the provisions for these are determined for the Company as a whole and therefore separate amounts for the Directors are not available.

Directors remuneration for the current year includes a sum of Rs.31.96 Lakhs paid to the managing director in accordance with the limits approved by the shareholders at the AGM held on 29th September 2010 but in excess of the limits prescribed under the Companies Act. The similar excess remuneration for the previous periods (from FY 2007-08 onwards) amounts to Rs. 181.38 lakhs . The Company had applied for the requisite approval from the Central Government which had not been granted, but the management is confident of obtaining the approval and is in the process of filing revised application for the same.

Pending outcome of the same, these amounts continue to be considered as an expense.

1.6 The Company''s Singapore subsidiary , Midrange Software Pte Ltd carries an accumulated provision of SGD 270,000 (Previous year: SGD 270,000), in their books towards director''s remuneration payable in respect of services rendered by Mr. Sanjay Soni. As per the understanding, the same would be paid to M/s. Logix Microsystems Ltd, the holding Company in accordance with Sec 314 (1) (ii) of the Companies Act.

1.7 Lease-Operating Lease

The Company is obligated under cancelable lease for the office space that is renewable on a periodic basis at the option of both the lessor and lessee. Rental expenses under cancelable operating leases for the year ended 31 March 2014 are as follows.

1. 8 Current Value of subsidiaries investment:

Investment in Midrange Software Pte Ltd,

The Company has invested an amount of SGD 1,904,915 in Midrange Software Pte Ltd, Singapore. Midrange has incurred losses during recent years and has an accumulated loss of SGD 1,24,027. However, based on the management''s perception of the growth prospects and the performance of Midrange, in the opinion of the management there is no permanent diminution in value of the investment.

Investment in Logix Americas Inc.

The Company has invested an amount of USD 32,848,100 in its subsidiary Logix Americas Inc till 31st March 2014. which is the holding company of Homestar Systems Inc. The management had obtained an independent valuation of its operating enterprises in the US. Based on the same and further based on the management''s view on the prospects in the region, the management does not envisage any decline in the value of the investments and consider it appropriate to have the carrying value at par in respect of its investments in Logix America Inc as well.

Investment in Izmo Europe BVBA Belgium

The Company has invested an amount of EURO 1,359,093 in its subsidiary Izmo Europe BVBA Belgium till 31st March 2014. Izmo Europe BVBA has incurred losses during the recent years and has an accumulated loss of EURO 1,621,588. However, based on the management''s perception of the growth prospects and the performance of Izmo Europe, in the opinion of the management there is no permanent diminution in value of the investment.

1.9 List of Related Parties

a) Enterprises Controlled by the Company

Midrange Software Pte Ltd, Singapore

(formerly Logix Microsystems (S) Pte. Ltd. Singapore

Logix Americas Inc., USA

Izmo Europe BVBA

Homestar Systems Inc. USA

Homestar LLC., USA

Carazoo Online Solutions Pvt Ltd.

b) Key Management Personnel

Mr. Sanjay Soni Mr. Tej Soni

Wholly Owned Subsidiary

Wholly Owned Subsidiary

Wholly Owned Subsidiary

98% held by M/s. Logix Americas Inc., USA

Wholly Owned Subsidiary of M/s. Homestar Systems Inc., USA

Subsidiary of M/s. Logix Microsystems Ltd ( 49% of Equity Shares)

c) Enterprises in which Key Management personnel/their relatives have a significant influence

Aries Gases Private Limited Deep Heritage

Deep Oxygen Private Limited, India

Deep Investment Advisory Bangalore Private Limited

Si2 Microsystems Pvt Ltd., India

D''gipro Systems Private Limited

D''gipro Design Automation & Marketing Pvt Ltd.,

Deep Engineers & Consultants

SL Business Center

Carazoo Online Solutions Pvt Ltd.

1.10 Under the Micro, Small and Medium Enterprises Development Act, 2006, which came into force on October 2,2006, the company is required to make certain disclosure relating to Micro, Small and Medium Enterprises. The company is in the process of compiling and assimilating the relevant information from its suppliers about their coverage under the Act. Since the relevant information is not readily available, no disclosure have been made in the Accounts.

1.11 During the previous financial year, the global recession continued to impact businesses across geographies. In addition to this, US auto industry in particular, experienced a severe downturn resulting in bankruptcy and closure of several automobile dealers who happened to be the clients of Homestar Systems Inc. In this backdrop, the Company was approached by its subsidiary Homestar Systems Inc to offer a special rebate considering the exceptional circumstances observed in the US automobile industry due to the recessionary trend. Consequent to commercial negotiations, it has been accepted mutually to offer an overall rebate of Rs. 389.97 Lakhs (USD 714,228). This is non recurring and largely exceptional in nature and accordingly, reflected as such.

In terms of the Guidance note on accounting for credit available in respect of Minimum Alternative Tax (MAT) under the Income Tax Act 1961, issued by the ICAI, the excess of MAT over normal current tax payable has been recognized as an asset by way of credit to the profit & loss account as MAT credit entitlement.

1.12 Segment Reporting Primary Segments

Based on the guiding principles in Accounting Standard on "Segment Reporting" issued by the Institute of Chartered Accountants of India, classification by geographic segment are the primary reportable segments, comprising of: i) Export ii) Domestic

Segmental Capital Employed: Assets and Liabilities contracted have not been identified to any of the reportable segments, as the assets are used interchangeably between segments and it is not practicable to reasonably allocate the liabilities to individual segments. Accordingly no disclosure relating to segments assets and liabilities are made.

1.13 Defined Benefit Plans

a. Gratuity

b. Leave Encashment

The disclosure as per the revised AS-15 are as follows:

f) The discount rate is based on the market yield available on Government bonds at the accounting date with a term that matches the liabilities

g) The estimates of future salary increase considered in the actuarial valuation takes into account factors like inflation, seniority, promotion and other relevant factors.

h) The employees are assumed to retire at the age of 60 years

I) The mortality rate considered are as per the published rates in the IALM (2006-08) mortality tables.

1.14 Transfer Pricing

The company derives a significant portion of its revenue (Rs.1,425.56 lakhs) from services, rendered to its subsidiary M/s.Homestar Systems Inc & M/s Midrange Software Pte Ltd., Singapore. The revenue in this regard is recognized on the basis of a services agreement with the subsidiary or Purchase Orders raised by the subsidiary.

The Company has carried out a Transfer pricing study during the previous year based on which the Company''s management is of the opinion that these international transactions are at arm''s length and believes that the transfer pricing legislation will not have any impact on the Financial statements for the year ended March 2014, particularly on their amount of tax expense and that of the provision for taxation.

1.15 Balances of Sundry Debtors, Loans & Advances are subject to reconciliation and confirmation.

1.16 All figures have been rounded-off to the nearest Rupee. Previous Year''s figures have been re-grouped/reclassified wherever necessary to conform to the current year presentation.

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Mar 31, 2013

1.1 Turnover is stated net of Sales-tax, Cess, Surcharge, Service tax and Sales Returns.

1.2 (a) Contingent Liabilities (to the extent of which not provided for) (Amount in Rs.)

Particulars Current Year Previous Year

Money for which the company is contingently liable:

i) Performance Guarantees (STPI - customs duty) 70,000 499,836

ii) "Claims against the company, not acknowledged as debts :

a) Claims by vendors, etc - 1,383,300

b) There are certain claims made against the Company by former employees, which are a subject matter of arbitration proceedings. In the view of the management of the Company these claims are not tenable. No provision has been made for such claims pending completion of legal proceedings as the amount of claims are currently not ascertainable not Quantified Not Quantified

c) Contingent liability in respect of claim in respect of Service Tax on software sales made by the company, the amount of which is not quantified. Not Quantified Not Quantified

iii) Other money for which the company is contingently liable:

Service Tax not charged on rental income and interest thereon for FY 2008-09, 2009-10 and partly for FY 2010-11 based on a judgment by Honourable Delhi High Court - 3,391,333

* The company does not envisage any liability on account of a back to back arrangement with the suppliers for any such claims.

1.3 During the financial year 1999-2000, the company had acquired 100,000 equity shares of Singapore Dollars 1 each in Midrange Software Pte. Limited (formerly Logix Microsystems (S) Pte. Ltd.,) Singapore. The remittance towards the same has not been made pending requisite approval.

1.4 During the financial year 2011-12, die Company has made an additional investment of Rs. 682.34 Lakhs (USD 15,20,000) in the form of equity in its subsidiary Logix Americas Inc., which is the holding company for the US subsidiaries. The share allotment against this as also portion of previous investments same is pending as at the Balance Sheet and reflected as ''Share Application Money

* pending allotment''. The investment in Logix Americas Inc., has in turn been invested bv way ot equity and loans in Homestar Systems Inc., I Ioniestar LLC, Izmo CRM and IzmoMedia, the step-down subsidiaries ot Logix Americas Inc.

1.5 The balances in the share refund account and the related bank account was pending reconciliation. The unreconciled difference amounts to Rs.5.12 lakhs.

1.6 In accordance with Section 205C of Companies Act, 1956, Share Warrant Application money, pending allotment and due to refund amounting to Rs.3.30 lakhs remaining unpaid since 29th September 2007 will be transferred to Investor Education and Protection Fund after the completion of 7 years from the date of payment tailing due.

The above amounts do not include Gratuity and Leave encashment benefits as the provisions for these are determined for the Company as a whole, and therefore separate amounts for the Directors are not available.

b) Directors remuneration tor the current year includes a sum of Rs.31.96 Lakhs paid to the managing director in accordance with the limits approved by the shareholders at the AGM held on 29th September 2010 but in excess of the limits prescribed under the Companies Act. The similar excess remuneration for the previous periods (from FY 2007-08 onwards) amounts to Rs. 149.42 lacs. The Company had applied for the requisite approval trom the Central Government which had not been granted, but the management is confident of obtaining the approval and is in the process of filing revised application for the same. Pending outcome of the same, these amounts continue to be considered as an expense.

1.7 The Company''s Singapore subsidiary , Midrange Software Pte Ltd carries an accumulated provision of SGD 270,000 (Previous year: SGD 216,000), in their books towards director''s remuneration payable in respect of services rendered by Mr. Sanjay Soni. As per the understanding, the same would be paid to M/s. Logix Microsystems Ltd, the holding Company in accordance with Sec 314 (1) (ii) of the Companies Act.

1.8 Current Value of subsidiaries investment

Investment in Midrange Software Pte. Ltd.,

The Company has invested an amount of SGD 1,904,915 in Midrange Software Pvt Ltd, Singapore. Midrange has incurred losses during recent years and has an accumulated loss of SGD 29,604. However, based on the management''s perception of the growth prospects and the performance of Midrange, in the opinion of the management there is no permanent diminution in value of the investment.

Investment in Logix Americas Inc.

The Company has invested an amount of USD 32,848,100 in its subsidiary Logix Americas Inc till 31st March 2013. which is the holding company for the operating companies i.e.Homestar, Izmo CRM and IzmoMedia, the subsidiaries of Logix Americas

Inc. The management had obtained an independent valuation of is operating enterprises in the US. Based on the same and further based on the management''s view on the prospects in the region, the management does not envisage any decline in the value of the investments and consider it appropriate to have the carrying value at par in respect of its investments in Logix America Inc as well. Investment in Izmo Europe BVBA Belgium The Company has invested an amount of ELTRO 1,359,093 in its subsidiary Izmo Europe IVBA Belgium till 31st March 2013. Izmo Europe BVBA has incurred losses during the recent years and has an accumulated loss of EURO 1,597,646. However, based on the management''s perception of the growth prospects and the performance of Izmo Europe, in the opinion of the management there is no permanent diminution in value of the investment.

1.9 List of Related Parties

a) Enterprises Controlled by the Company

Midrange Software Pte Ltd, Singapore '' Wholly Owned Subsidiary

(formerly Logix Microsystems (S) Pte. Ltd. Singapore)

Logix Americas Inc., LISA Wholly Owned Subsidiary

Izmo Europe BVBA Wholly Owned Subsidiary

Homestar Systems Inc. LISA 98% held by M/s. Logix Americas Inc., USA

Homestar LLC., LISA Wholly Owned Subsidiary of M/s. Homestar Systems Inc., LISA

Carazoo Online Solutions Pvt Ltd. Subsidiary of M/s. Logix Microsystems Ltd ( 49% of Equity Shares)

h ) Key Management Personnel Mr. Sanjav Soni Mr. Tej Soni

c) Enterprises in which Key Management personnel/their relatives have a significant influence Aries Gases Private Limited Deep Heritage

Deep Oxygen Private Limited, India " » Deep Investment Advisory Bangalore Private Limited Si2 Microsystems Pvt Ltd., India Digipro Systems Private Limited

Digipro Design Automation & Marketing Pvt Ltd., *

Deep Engineers & Consultants SL Business Center Carazoo Online Solutions Pvt Ltd.

1.10 During the current financial year, the global recession continued to impact businesses across geographies. In addition to this, US auto industry in particular, experienced a severe downturn resulting in bankruptcy and closure of several automobile dealers who happened to be the clients of Homestar Systems Inc. In this backdrop, the Company was approached by its subsidiary Homestar Systems Inc to offer a special rebate considering the exceptional circumstances observed in the US automobile industry due to the recessionary trend. Consequent to commercial negotiations, it has been accepted mutually to offer an overall rebate of Rs. 389.97 Lakhs (USD 714,228). This is non recurring and largely exceptional in nature and accordingly, reflected as such.

"In terms of the Guidance note on accounting for credit available in respect of Minimum Alternative Tax(MAT) under the Income Tax Act 1961, issued by the ICAI, the excess of MAT over normal current tax payable has been recognized as an asset by way of credit to the profit & loss account as MAT credit entitlement. The MAT credit charge ot Rs.15.36 lakhs as appearing in the statement of Profit and Loss is after netting off Rs.21.53 lakhs, written off subsequent to the completion of Tax Assessment for FY 2006-07 and as per the Assessment order issued by the Tax Authorities.

1.11 Segment Reporting Primary Segments

Based on the guiding principles in Accounting Standard on "Segment Reporting" issued by the Institute of Chartered Accountants of India, classification by geographic segment are the primary reportable segments, comprising of:

Segmental Capital Employed: Assets and Liabilities contracted have not been identified to any of the reportable segments, as the assets are used interchangeably between segments and it is not practicable to reasonably allocate the liabilities to individual segments. Accordingly no disclosure relating to segments assets and liabilities are made. 24

1.12 Defined Benefit Plans

a. Gratuity

b. Leave Encashment

The disclosure as per the revised AS-15 are as follows:

(b) The fair value of the plan assets is NIL since employee benefits plans are wholly unfunded as on March 31,2013

(f) The discount rate is based on the market yield available on Government bonds at the accounting date with a term that matches the liabilities.

(g) The estimates of future salary increase considered in the actuarial valuation takes into account factors like inflation, seniority, promotion and other relevant factors.

(h) the employees are assumed to retire at the age of 60 years

(i) The mortality rate considered are as per the published rates in the LIC (1994-96) mortality tables.

1.13 Transfer Pricing

The company derives a significant portion of its revenue (Rs. 1450.03 lakhs) from services, rendered to its subsidiary M/s. Homestar LLC,USA, M/s.Homestar Systems Inc &M/s Midrange Software Pte Ltd., Singapore. The revenue in this regard is recognized on the basis of a services agreement with the subsidiary or Purchase Orders raised by the subsidiary.

The Company has carried out a Transfer pricing study during the previous year based on which the Company''s management is of the opinion that these international transactions are at arm''s length and believes that the transfer pricing legislation will not have any impact on the Financial statements for the year ended March 2013, particularly on their amount of tax expense and that of the provision for taxation.

1.14 Balances of Sundry Debtors, Loans & Advances are subject to reconciliation and confirmation.

1.15 Reversal of interest receivable as doubtful : This includes ICD related receivable of Rs.230.04 lacs which is secured against pledge of shares, which as at the Balance Sheet date had a market value of Rs. 29.94 lacs which was lower than the outstanding balance. The management is of the view that interest is no longer receivable accordingly provision towards possible non-recovery has been made in respect of the same.

1.16 All figures have been rounded-off to the nearest Rupee. Previous Year''s figures have been re-grouped/reclassified wherever necessary to conform to the current year presentation.

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Mar 31, 2012

1.1 Turnover is stated net of Sales-tax, Cess, Surcharge, Service tax and Sales Returns.

1.2 (a) Contingent Liabilities (to the extent of which not provided for) (Amount in Rs.)

Particulars Current Year Previous Year

Money for which the company is contingently liable:

i) Performance Guarantees (STPI - customs duty) 499,836 499,836

ii) Claims against the company, not acknowledged as debts :

a) Claims by vendors, etc 1,383,300 1,270,937

b) There are certain claims made against the Company by former employees, which are a subject matter of arbitration proceedings. In the view of the management of the Company these claims are not tenable. No provision has been made for such claims pending completion of legal proceedings as the amount of claims are currently not ascertainable. Not Quantified Not Quantified

c ) Contingent liability in respect of claim in respect of Service Tax on software sales made by the company, the amount of which is not quantified. Not Quantified Not Quantified

iii) Other money for which the company is contingently liable: Service Tax not charged on rental income and interest thereon for FY 2008-09, 2009-10, partly for 2010-11 and 2011-12 based on a judgement by Honourable Delhi High Court. 3,391,333 1,985,472

1.3 (b) Commitments (to the extent of which not provided for)

i) Unexpired Letters of Credit 1,265,914 1,634,016

ii) Warranty Costs on Software Sale* Not Quantified Not Quantified



* The company does not envisage any liability on account of a back to back arrangement with the suppliers for any such claims.

1.4 During the financial year 1999-2000, the company had acquired 100,000 equity shares of Singapore Dollars 1 each in Midrange Software Pte. Limited (formerly Logix Microsystems (S) Pte. Ltd.,) Singapore. The remittance towards the same has not been made pending requisite approval.

1.5 During the year under review, the Company has made an additional investment of Rs. 682.34 Lakhs (USD 15,20,000) in the form of equity in its subsidiary Logix Americas Inc., which is the holding company for the US subsidiaries. The share allotment against this as also portion of previous investments same is pending as at the Balance Sheet and reflected as 'Share Application Money pending allotment'. The investment in Logix Americas Inc., has in-turn been invested by way of equity and loans in Homestar Systems Inc., Homestar LLC, Izmo CRM, IzmoMedia and LML Internet Solutions Inc., subsidiaries of Logix Americas Inc.

1.6 The balances in the share refund account and the related bank account was pending reconciliation. The unreconciled difference amounts to Rs.5.12 lakhs.

1.7 In accordance with Section 205C of Companies Act, 1956, Share Warrant Application money, pending allotment and due for refund amounting to Rs.3.30 lakhs remaining unpaid since 29th September 2007 will be transferred to Investor Education and Protection Fund after the completion of 7 years from the date of payment falling due.

The above amounts do not include Gratuity and Leave encashment benefits as the provisions for these are determined for the Company as a whole and therefore separate amounts for the Directors are not available.

Directors remuneration for the current year includes a sum of Rs.31.96 Lakhs paid to the managing director in accordance with the limits approved by the shareholders at the AGM held on 29 th September 2010 but in excess of the limits prescribed under the Companies Act. The similar excess remuneration for the previous periods (from FY 2007-08 onwards) amounts to Rs. 117.46 lacs. The Company had applied for the requisite approval from the Central Government which had not been granted, but the management is confident of obtaining the approval and is in the process of filing revised application for the same. Pending outcome of the same, these amounts continue to be considered as an expense.

1.8 The Company's Singapore subsidiary, Midrange Software Pte. Ltd, carries an accumulated provision of SGD 216,000 (Previous year: SGD 162,000), in their books towards director's remuneration payable in respect of services rendered by Mr. Sanjay Soni. As per the understanding, the same would be paid to M/s. Logix Microsystems Ltd, the holding Company in accordance with Sec 314 (1) (ii) of the Companies Act.

1.9 Current Value of subsidiaries investment

Investment in Midrange Software Pte Ltd,

The Company has invested an amount of SGD 1,904,915 in Midrange Software Pte Ltd, Singapore. Midrange has incurred losses during recent years and has an accumulated loss of SGD 104,318. However, based on the management's perception of the growth prospects and the performance of Midrange, in the opinion of the management there is no permanent diminution in value of the investment.

Investment in Logix Americas Inc.

The Company has invested an amount of USD 32,848,100 in its subsidiary Logix Americas Inc., which is the holding company for the operating companies i.e., Homestar, Izmo CRM and IzmoMedia, the subsidiaries of Logix Americas Inc. The management had obtained an independent valuation of its operating enterprises in the US. Based on the same and further based on the management's view on the prospects

in the region, the management does not envisage any decline in the value of the investments and consider it appropriate to have the carrying value at par in respect of its investments in Logix America Inc as well.

Investment in Izmo Europe BVBA Belgium

The Company has invested an amount of EURO 1,359,093 in

its subsidiary Izmo Europe BVBA Belgium till 31st March 2012. Izmo Europe BVBA has incurred losses during the recent years and has an accumulated loss of EURO 1,403,738. However, based on the management's perception of the growth prospects and the performance of Izmo Europe, in the opinion of the management there is no permanent diminution in value of the investment.

1.10 List of Related Parties

a Enterprises Controlled by the Company

Midrange Software Pte Ltd, Singapore Wholly Owned Subsidiary

(formerly Logix Microsystems (S) Pte. Ltd. Singapore)

Logix Americas Inc., USA Wholly Owned Subsidiary

Izmo Europe BVBA Wholly Owned Subsidiary

Homestar Systems Inc. USA 98% held by M/s. Logix Americas Inc., USA

Homestar LLC., USA Wholly Owned Subsidiary of M/s. Homestar Systems Inc., USA

Izmo Media, USA Wholly Owned Subsidiary of M/s. Homestar Systems Inc., USA

Izmo CRM, USA Wholly Owned Subsidiary of M/s. Homestar Systems Inc., USA

LML Internet Solutions USA Subsidiary of M/s. Logix Americas Inc. USA

Carazoo Online Solutions Pvt Ltd. Subsidiary of M/s. LML Internet Solutions USA

b Key Management Personnel Mr. Sanjay Soni Mr. Tej Soni

c Enterprises in which Key Management personnel/their relatives have a significant influence Aries Gases Private Limited Deep Engineers & Consultants Deep Heritage

Deep Oxygen Private Limited

Deep Investment Advisory Bangalore Private Limited Digipro Systems Private Limited

Digipro Design Automation & Marketing Private Limited Si2 Microsystems Private Limited SL Business Center

24.22 Under the Micro, Small and Medium Enterprises Development Act, 2006, which came into force on October 2, 2006, the company is required to make certain disclosure relating to Micro, Small and Medium Enterprises. The company is in the process to compiling and assimilating the relevant information from its suppliers about their coverage under the Act. Since the relevant information is not readily available, no disclosure have been made in the Accounts.

1.11 During the current financial year, the global recession continued to impact businesses across geographies. In addition to this, US auto industry in particular, experienced a severe downturn resulting in bankruptcy and closure of several automobile dealers who happened to be the clients of Homestar Systems Inc. In this backdrop, the Company was approached by its subsidiary Homestar Systems Inc to offer a special rebate considering the exceptional circumstances observed in the US automobile industry due to the recessionary trend. Consequent to commercial negotiations, it has been accepted mutually to offer an overall rebate of Rs. 399.41 Lakhs (USD 788,721). This is non recurring and largely exceptional in nature and accordingly, reflected as such.

as appearing in the statement of Profit and Loss is after netting off Rs.21.53 lakhs ,written off subsequent to the completion of Tax Assessment for FY 2006-07 and as per the Assessment order issued by the Tax Authorities.

1.12 Segment Reporting

Primary Segments

Based on the guiding principles in Accounting Standard on "Segment Reporting" issued by the Institute of Chartered Accountants of India, classification by geographic segment are the primary reportable segments, comprising of:

i) Export

ii) Domestic

1.13 Provision for Taxation:

Provision for current tax has been made considering the taxes on book profits as under section 115JB.

In terms of the Guidance note on accounting for credit available in respect of Minimum Alternative Tax(MAT) under the Income Tax Act 1961, issued by the ICAI, the excess of MAT over normal current tax payable has been recognized as an asset by way of credit to the profit & loss account as MAT credit entitlement. The MAT credit charge of Rs.13.02 lakhs

* Domestic segment sales for the current year includes Rs. 95 lakhs from discontinuing operations. And Export segment sales for the current year includes Rs.47.61 lakhs from discontinuing operations.

Segmental Capital Employed: Assets and Liabilities contracted have not been identified to any of the reportable segments, as the assets are used interchangeably between segments and it is not practicable to reasonably allocate the liabilities to individual segments. Accordingly no disclosure relating to segments assets and liabilities are made.

1.14 Discontinuing Operations

During the year, pursuant to the scheme of arrangement approved by the shareholders through Postal Ballot on 30th January, 2012, the Company has proposed to dispose/hive off the Carazoo domestic division business of the company into Subsidiary Company with effect from 17th April, 2012. The results of the discontinuing business during the year were as under;

1.15 Defined Benefit Plans

a. Gratuity

b. Leave Encashment

The disclosure as per the revised AS-15 are as follows: a) Change in defined benefit obligation

1.16 Employees Stock Options (ESOP)

a. Employees Stock Options (ESOP) 2006:

The vesting period for the ESOP 2006 scheme ended during FY 10-11. The provision created under this scheme was written back during the year to the extent of expired options remaining un-exercised by the employees. The write back amounts to Rs.238.83 lakhs which is disclosed as an exceptional item in the Statement of Profit and Loss for the year.

b. Employees Stock Options (ESOP) 2007, 2009 and 2010 No options have been granted under various ESOP schemes approved by the members in AGM. All these ESOP schemes stand withdrawn.

c Employees Stock Options (ESOP) 2011:

The company during the year FY 2010-11, had introduced ESOP 2011 scheme and had taken the approval of its members at the AGM held on 29th September 2011 for 500,000 shares. No options have been granted under this scheme to any of the employees till date.

f) The discount rate is based on the market yield available on Government bonds at the accounting date with a term that matches the liabilities.

g) The estimates of future salary increase considered in the actuarial valuation takes into account factors like inflation, seniority, promotion and other relevant factors.

h) the employees are assumed to retire at the age of 60 years.

i) The mortality rate considered are as per the published rates in the LIC (1994-96) mortality tables.

1.17 The company during the year made a purchase of goods of Rs.167.03 lakhs from Si2 Microsystems Pvt Ltd. and made sales of goods of Rs.168.70 lakhs to Digipro Design Automation & Marketing Pvt Ltd. These transactions attract provisions of Section 297 of the Companies Act, 1956, and requires prior approval of Central Government. The company is in the process of making an application for condonation of delay and obtaining necessary government approval for the same.

1.18 Transfer Pricing

The company derives a significant portion of its revenue (Rs.1,368.93 lakhs) from services, rendered to its subsidiary M/s. Homestar LLC, USA, M/s.Homestar Systems Inc & M/s Midrange Software Pte Ltd., Singapore. The revenue in this regard is recognized on the basis of a services agreement with the subsidiary or Purchase Orders raised by the subsidiary.

The Company has carried out a Transfer pricing study during the previous year based on which the Company's management is of the opinion that these international transactions are at arm's length and believes that the transfer pricing legislation will not have any impact on the Financial statements for the year ended March 2012, particularly on their amount of tax expense and that of the provision for taxation.

1.19 Balances of Sundry Debtors, Loans & Advances are subject to reconciliation and confirmation.

1.20 All figures have been rounded-off to the nearest Rupee. Previous Year's figures have been re-grouped/reclassified wherever necessary to conform to the current year presentation.

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Mar 31, 2010

1 Turnover is stated net of Sales-tax, Cess, Surcharge and Sales Returns.

2 Contingent Liabilities (Amount in Rs.)

Particulars Current Year Previous Year

Money for which the company is contingently liable:

l) Duty on Capital Goods (in STPI Units) 100,000 100,000

ii) Performance Guarantees 499,836 353,216

iii) Claims against the company, not acknowledged as debts 2,717,857 2,189,641

iv) Unexpired Letters of Credit 1,908,902 1,427,995

v) Warranty Costs on Software Sale* Not Quantified Not Quantified

* The company does not envisage anv liability on account of a back to back arrangement with the suppliers for any such claims.

3 During the financial year 1999-2000, the company had acquired 100,000 equity shares of Singapore Dollars 1 each in Midrange Software Pte. Limited (formerly Logix Microsystems (S) Pte. Ltd.,) Singapore. The remittance towards the same has not been made pending requisite approval.

4 a) During the year under review, the Company has made an

additional investment of Rs. 2516.87 Lakhs (USD 53,15,100) in the form of equity in its subsidiary Logix Americas Inc., which is the holding company for the US subsidiaries. Out of this investment, for Rs. 2445.90 Lakhs (USD 51,73,100), shares are yet to be allotted. The investment in Logix Americas Inc., has in-turn been invested by way of equity and loans in Homestar Systems Inc., Homestar LLC, Izmo CRM and Izmo Media, the subsidiaries of Logix Americas Inc.

b) In Logix Americas Inc, the outstanding shares of the corporation were reverse split 1 to 0.10 as of January 26,2010 and me number of outstanding shares reduced from 1,000,000 to 100,000.

c) In addition to the above, the Company has invested in the equity of Izmo Europe BVBA, Belgium of Rs.299.01 Lakhs (€ 440,318) during the year. The share allotment against the same is pending as at the Balance Sheet date Consequent to the decrease in the value of current investments, the company has provided for loss arising on the diminution (Marked to Market) amounting to Rs. 108.35 lakhs (Previous year Rs. 325.67 Lakhs) as at the year end & for a profit of Rs. 35.61 Lakhs arising on Investments in Mutual Funds restated at cost or market value whichever is lower (Previous year excess provision against loss of Mutual fund investments was made).

The Investments in Mutual Funds includes investment under Portfolio Management Scheme. On account of the quantum of transactions, the scrip / unit wise details as required to be disclosed as per Note (1) of Schedule VI has not been furnished.

5 The balances in the share refund account and the related bank account was pending reconciliation. As such, a sum of Rs. 21.35 thousand representing the confirmed balance has been transferred to the Investor Education & Protection Fund account. The Balance of Rs. 4.90 Lakhs is in the process of reconciliation.

The above amounts do not include Gratuity and Leave encashment benefits as the provisions for these are determined for the Company as a whole and therefore separate amounts for the Directors are not available.

Computation of net profits in accordance with relevant provisions of the Companies Act, 1956 has not been disclosed as no Commission as a percentage of profits is payable to the Directors.

b) Directors remuneration includes a sum of Rs. 40 Lakhs paid to the managing director in accordance with the limits approved by the shareholders at the AGM held on 28th September 2007 but in excess of the limits prescribed under the Companies Act. The company has initiated the process of obtaining the requisite approval from the Central Government and is confident of receiving uhe necessary approval and hence has treated the same as an expense during the year.

6 The Companys Singapore subsidiary, Midrange Software Pte Ltd has made a provision of SGD 108,000 in their books towards directors remuneration payable in respect of services rendered by Mr. Sanjay Soni. As per the understanding the same would be paid to M/s. Logix Microsystems Ltd, the holding Company in accordance with Sec 314 (1) (ii) of the Companies Act.

7 The value of the fixed assets includes a sum of Rs 31.21 Lakhs (Previous YearRs.53.55 I^akhs) representing assets acquired on hire purchase towards which liability is outstanding is a sum of Rs.7.94 Lakhs (previous year Rs.25.99 Lakhs).

8 Service Tax on Rent

The Company had not charged and provided for service tax on Rent on the basis of Honorable High Court of Delhi Judgement in respect of charging service tax on the rentals of the Commercial properties to extent of Rs 20.09 lacs. The company is in the process of taking expert opinion with regard to liabilities if any this matter. Accordingly suitable adjustment would be effected in the books of accounts.

9 Current Value of subsidiaries investment Investment in Midrange Software Pte Ltd, The Company has invested an amount of SGD 1,904,915 in Midrange Software Pte Ltd, Singapore. Midrange has incurred losses during recent years and has an accumulated loss of SGD 141,634. However, based on the managements perception of the growth prospects and the performance of Midrange during FY 2009-10, in the opinion of the management there is no permanent diminution in value of the investment.

Investment in Logix Americas Inc.

The Company has invested an amount of USD 24,674,100 in its subsidiary Logix Americas Inc. which in turn holds 98% of the equity in Homestar Systems Inc, which is the

10 List of Related Parties

a Enterprises Controlled by the Company

Midrange Software Pte Ltd, Singapore Wholly Owned Subsidiary

(formerly Logix Microsystems (S) Pte. Ltd. Singapore)

Logix Americas Inc., USA Wholly Owned Subsidiary

Izmo Europe BVBA Wholly Owned Subsidiary

Homestar Systems Inc. USA 98% held by M/s. Logix Americas Inc., USA

Homestar LLC, USA Wholly Owned Subsidiary of M/s. Homestar Systems Inc., USA

Izmo Media, USA Wholly Owned Subsidiary of M/s. Homestar Systems Inc.,USA

Izmo CRM, USA Wholly Owned Subsidiary of M/s. Homestar Systems Inc., USA

b Key Management Personnel

Mr. Sanjay Soni

Mr. Tej Soni

c Enterprises in which Key Management personnel/their relatives have a significant influence

Deep Heritage

Deep Oxygen Private Limited, India

Si2 Microsystems Ltd., India

Digipro Design Automation & Marketing Pvt Ltd.,

Deep Engineers & Consultants

SL Business Center

holding company for the operating companies i.e. Homestar Systems Inc., Homestar LLC, Izmo CRM and IzmoMedia, the subsidiaries of Logix Americas Inc. The management has obtained an independent valuation of is operating enterprises in the US. Based on the same and further based on the managements view on the prospects in the region, the management does not envisage any decline in the value of the investments and consider it appropriate to have the carrying value at par in respect of its investments in Logix Americas Inc as well.

Investment in Izmo Europe BVBA Belgium

The Company has invested an amount of EURO 1,208,093 in its subsidiary Izmo Europe BVBA Belgium in 2009.

11 The other advances includes Rs.100.11 lakhs (Previous year Rs. 42.10 lakhs) towards the balances receivable against the short term investments as at March 31, 2010

12 Under the Micro, Small and Medium Enterprises

Development Act, 2006, which came into force on ( )ctober 2, 2006, the company is required to make certain disclosure relating to Micro, Small and Medium Enterprises. The company is in the process to compiling and assimilating the 28 Segment Reporting Primary Segments Based on the guiding principles in Accounting Standard on 25 The current financial year experienced US and global recession and the effect is still continuing. In addition to this, US auto industry experienced a severe downturn resulting in bankruptcy/ closure of several automobile dealers who happened to be the clients of Homestar LLC and Homestar Systems Inc. The subsidiaries have established the fact to the satisfaction of the company that due to the above factors they have had revenue reversals / cancellation of contracts amounting to Rs 3.25 Crores during the financial year. As per the terms of the agreement between parent company and the Homestar LLC / Homestar Systems Inc, it has been agreed the loss arising due to factors mentioned above will be borne by the parent company.

13 Provision Taxation:

Provision for current tax has been made considering the taxes on book profits ami income trom short term capital gains and the exemption that the company is eligible for in respect of profits from its STPI operations.

"Segment Reporting" issued by the Institute of Chartered Accountants of India, classification by business segment are the primary reportable segments, comprising of:

In accordance with the SEBI Guidelines the Company has adopted the intrinsic value method for the purpose of accounting share based compensation cost. Under the intrinsic value method, the difference between the market price of the shares on the grant date (or as near thereto) and exercise price is considered as intrinsic value of options and amortized on die straight-line basis over the vesting period as employee share based compensation cost. All options have been issued on the grant date was in the range of Rs.20/- to Rs.30/- per share.

The market price of the share on the grant date was below the exercise price and hence the intrinsic value of the options granted under ESOP 2004 was nil. During the year no options have been exercised.

Vesting Conditions:

Continuation in services of the Company and such other conditions as may be prescribed by the Company.

(b) Employees Stock Options (ESOP) 2006:

During the year 2006-07, the Company introduced ESOP- 2006, an employee stock option scheme for grant of equity shares of Rs.10/- each which was approved at the AGM of the Company held on 27th September 2006. The scheme was implemented during 2007-08 after receipt of the requisite statutory approvals. Accordingly options for 264,500 shares of Rs.10/- each were granted to eligible employees. The options would vest over a period of 3 years from the date of grant i.e. Sept 2006 as under:

In accordance with the SEBI Guidelines the Company has adopted the intrinsic value method for the purpose of accounting share based compensation cost. Under the intrinsic value method, the difference between the market price of the shares on the grant date (or as near thereto) and exercise price is considered as intrinsic value of options and amortized on the straight-line basis over the vesting period as employee share based compensation cost. Options under this program have been granted to employees at an exercise price of Rs 100 per option.

(c) Employees Stock Options (ESOP) 2007:

The Company during the year 2006-07 had introduced ESOP 2007 scheme and taken the approval of its members at the AGM held on 28th September 2007 for 200,000 shares. No options have been granted under this scheme to any of the employees till date.

d) Employees Stock Options (ESOP) 2009:

The Company during the year 2008-09 had introduced ESOP 2009 scheme and taken the approval of its members at the AGM held on 29th September 2009 for 400,000 shares. No options have been granted under this scheme to any of the employees till date.

14 Defined Benefit Plans

a. Gratuity

b. Leave Encashment

The disclosure as per the revised AS-15 are as follows: (a) Change in defined benefit obligation

(f) The discount rate is based on the market yield available on Government bonds at the accounting date with a term that matches the liabilities.

g) The estimates of future salary increase considered in the actuarial valuation takes into account factors like inflation, seniority, promotion and other relevant factors.

h) the employees are assumed to retire at the age of 60 years.

i) The mortality rate considered are as per the published rates in the LIC (1994-96) mortality tables.

15 During the year 2008-09, the Company through its subsidiary Homestar Systems Inc has acquired a 51 % stake in AOA Izmo LLC, a California based company. This required prior permission under the Foreign Exchange Management Act, which has been obtained after the Balance Sheet date. The company is at present, in the process of obtaining the requisite consent from the stock exchanges which would be prerequisite for issuing the necessary allotment of equity shares. Pending this, the effect of the same on the financials has not been considered as at 31st March 09. It is essentially a Stock Swap deal involving an issue of 125,000 equity shares of Logix Microsystems Ltd and a cash payment equivalent to Rs 60 Lakhs.

16 Transfer Pricing

The company derives a significant portion of its revenue (Rs.2269.62 lakhs) from services, rendered to its subsidiary M/s. Homestar LLC, USA, M/s.Homestar Systems Inc & M/s Midrange Software Pte Ltd., Singapore. The revenue in this regard is recognized on the basis of a services agreement with the subsidiary.

The Company has carried out a Transfer pricing study during the year based on which the Companys management is of the opinion that these international transactions are at arms length and believes that the transfer pricing legislation will not have any impact on the Financial statements for the year ended March 31, 2010, particularly on their amount of tax expense and that of the provision for taxation.

17 Balances of Sundry Debtors, Loans & Advances are subject to reconciliation and confirmation.

18 All figures have been rounded-off to the nearest Rupee. Previous Years figures have been re-grouped/reclassified wherever necessary.