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Notes to Accounts of MPS Ltd.

Mar 31, 2022

1. Investment property comprises land and building for basement, ground floor, first floor, eighth floor and parking areas situated in Bengaluru. The title deeds for land and building for basement, ground floor and first floor are in the name of Brigade Marketing Company Private Limited, erstwhile Company that was merged with Macmillan India Limited (now MPS Limited) in 2001 under section 391 to 394 of the Companies Act, 1956 in terms of the approval of the Honorable High Court at Karnataka. The title deeds for land and building for remaining areas are in the name of the Company.

2. The Company has obtained an independent valuation for the fair value of its investment property based on the market value approach. The valuer has relied on the prevalent real estate rates and realisable price of similar property in the same vicinity.

5(a) Impairment testing of goodwill

For the purposes of impairment testing, goodwill is allocated to the Cash Generating Units (CGU) which represents the lowest level at which the goodwill is monitored for internal management purposes, which is not higher than the Company''s operating reportable segments.

For the purpose of the impairment testing, goodwill is allocated to the Cash Generating Units (CGU) which represents the recoverable amount of the above CGU based on its value in use. The value in use of CGU is determined to be higher than the carrying amount post the sensitivity analysis towards change in the key assumptions including the cash flow projections consequent to the change in the estimated future economic conditions arising from the possible effects due to COVID-19. No probable scenario was identified where the CGU recoverable amount would fall below their carrying amount.

Value in use was determined by discounting the future cash flows generated from the continuing use of the CGU. The calculation was based on the following key assumptions:

i. The anticipated annual revenue growth and margin included in the cash flow projections are based on past experience, actual operating results and the 5 year business plan in all periods presented.

ii. The terminal growth rate 1% to 2% for the year ended 31 March 2022 (31 March 2021: 1% to 2%) representing management view on the future long-term growth rate.

iii. Discount rate of 14.5% to 19% for the year ended 31 March 2022 (31 March 2021: 15.5% to 19%) was applied in determining the recoverable amount of the CGUs. The discount rate was estimated based on past experience and historical industry average weighted-average cost of capital.

iv. The estimate of recoverable amount is particularly sensitive towards pretax discount rate and terminal growth rate, There will be no impairment even if the weighted average cost of capital is increased by 1% and the terminal growth rate is decreased by 1%. Management is not currently aware of any other reasonably possible changes to key assumptions that would cause a unit''s carrying amount to exceed its recoverable amount.

The values assigned to the key assumptions represent the management''s assessment of future trends in the industry and based on both internal and external sources.

(iii) Rights, preferences and restrictions attached to equity shares

The Company has only one class of equity shares having a par value of INR 10 per share. Each holder of equity shares is entitled to one vote per share. The equity share holders are entitled to receive dividend as declared from time to time. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive the remaining assets of the Company, after distribution of all preferential amount, if any. The distribution will be in proportion to number of equity shares held by the shareholders.

(vii) Aggregate number of bonus shares issued, shares issued for consideration other than cash during the period of five years immediately preceding the reporting date:

There are no bonus shares issued during the period of five years immediately preceding the reporting date.

(viii) The Board of Directors, at its meeting held on 27 Octobar 2021, approved Buyback of fully paid-up equity shares of face value of INR 10 each from the eligible equity shareholders through the tender offer process, at a price not exceeding INR 900 per equity share, for an aggregate amount not exceeding INR 8500 Lacs, payable in cash. The Company has bought back 9,44,444 fully paid up equity shares on 07 February 2022 and extinguished the equity shares bought back on 11 February 2022. The Company has utilised its Securities Premium of INR 10,442.74 Lacs and General Reserve of INR 21.28 lacs for the buyback of its equity shares. Total transaction cost including tax of INR 2,058.47 Lacs incurred towards buyback was offset from Securities Premium and General Reserve. In accordance with Section 69 of the Companies Act 2013, the Company has created Capital Redemption Reserve of INR 94.44 Lacs equal to the nominal value of the shares bought back as an appropriation from the General Reserve.

The Board of Directors, at its meeting held on 11 August 2020, approved Buyback of fully paid-up equity shares of face value of INR 10 each from the eligible equity shareholders through the tender offer process, at a price not exceeding INR 600 per equity share, for an aggregate amount not exceeding INR 3,400 Lacs, payable in cash. The Company has bought back 5,66,666 fully paid up equity shares on 7 October 2020 and extinguished the equity shares bought back on 12 October 2020. The Company has utilised its Securities Premium of INR 4,157.57 Lacs for the buyback of its equity shares. Total transaction cost including tax of INR 814.24 Lacs incurred towards buyback was offset from Securities Premium. In accordance with Section 69 of the Companies Act 2013, the Company has created Capital Redemption Reserve of INR 56.67 Lacs equal to the nominal value of the shares bought back as an appropriation from the General Reserve.

(B) Defined benefit plans

Gratuity

In accordance with Ind AS 19 "Employee Benefitsâ, an actuarial valuation has been carried out in respect of gratuity. The discount rate assumed is 6.41% p.a. (31 March 2021: 6.26% p.a.) which is determined by reference to market yield at the Balance Sheet date on Government bonds.

The retirement age has been considered at 58 to 65 years (31 March 2021: 58 to 65 years) and mortality table is as per IALM (2006-08) (31 March 2021: IALM (2006-08)).

The estimates of future salary increases, considered in actuarial valuation is 6% p.a. (31 March 2021: 6% p.a.), taking into account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

The plans assets are maintained with Life Insurance Corporation of India in respect of gratuity scheme for employees of the Company. The expected rate of return on plan assets is 6.41% p.a. (31 March 2021: 6.26% p.a.).

32 Leases

(i) In adopting Ind AS 116, the Company has applied the below practical expedients:

The Company has applied a single discount rate to a portfolio of leases with reasonably similar characteristics The Company has treated the leases with remaining lease term of less than 12 months as if they were "short term leases" The Company has not applied the requirements of Ind AS 116 for leases of low value assets

(ii) The Company has discounted lease payments using the applicable incremental borrowing rate which is 4.5% to 9.5% for measuring the lease liability.

(a) Fair valuation of financial assets and liabilities with short term maturities is considered as approximate to respective carrying amount due to the short term maturity of these instruments.

(b) Fair value of non-current financial assets has not been disclosed as there is no significant differences between carrying value and fair value.

(c) Derivatives are carried at fair value at each reporting date. The fair values of the derivative financial instruments has been determined using valuation techniques with market observable inputs. The models incorporate various inputs including the credit quality of counter-parties and foreign exchange forward rates.

(d) The fair value of the mutual funds are based on net assets value of the funds as at reporting date.

(e) The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The fair-value of the financial-instruments factor the uncertainties arising out of COVID-19, where applicable.

* Refer note 2.19 for Level of hierarchy

34 Financial risk management

Risk management framework

The Company''s activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. i Market risk

Market risk includes foreign exchange risk, pricing risk and interest risk that may affect the Company''s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the returns.

Currency risk

The Company is exposed to currency risk to the extent that there is a mismatch between the currencies in which revenue and expense are denominated and the functional currency of the Company. The currencies in which the Company is exposed to risk are USD, EUR, GBP and Others. The Company takes adequate foreign exchange forward covers as per the guidelines approved by the Board to mitigate currency risk.

Forward covers

The Company takes adequate foreign exchange forward covers to mitigate the risk of changes in exchange rates on foreign currency exposures. The counterparty for these contracts is bank. These forward covers are value based on quoted prices for similar assets and liabilities in active markets or input that are directly or indirectly observable in the marketplace.

Pricing risk:

Pricing pressure is a constant risk due to increased competition. The Company strives to mitigate this risk with existing customers by a trade-off for volumes. Thereon, it is the Company''s endeavour to reduce the impact by taking advantage of economies of scale and increasing productivity, as well increasing automation within these processes.

Interest rate risk

The Company is not exposed to interest rate risk.

Expanding the customer base is mitigating this risk. Within the current customers, the Company is looking to deepen the partnership by supporting publishers in new areas of outsourcing.

Expected credit loss for trade receivables:

Trade receivables of INR 4,871.29 Lacs as at 31 March 2022 (31 March 2021 : INR 5,729.92 Lacs) forms a significant part of the financial assets carried at amortised cost, which is valued considering provision for allowance using expected credit loss method. In addition to the historical pattern of credit loss, we have considered the likelihood of increased credit risk and consequential default considering emerging situations due to COVID-19. This assessment is not based on any mathematical model but an assessment considering the nature of segment, impact immediately seen in the demand outlook of these segments and the financial strength of the customers in respect of whom amounts are receivable.

The Company based on internal assessment which is driven by the historical experience/ current facts available in relation to default and delays in collection thereof, the credit risk for trade receivables is considered low. The Company estimates its allowance for trade receivable using lifetime expected credit loss.

Expected credit loss on financial assets other than trade receivables:

With regard to other financial assets with contractual cash flows other than trade receivables, management believes these to be high quality assets with negligible credit risk. The management believes that the parties from which these financial assets are recoverable, have strong capacity to meet the obligations and where the risk of default is negligible and accordingly no material provision for excepted credit loss has been provided on these financial assets. Break up of financial assets other than trade receivables have been disclosed on balance sheet.

Investments

The Company limits its exposure to credit risk by investing in liquid securities and short term bonds and only with counterparties that have a good credit rating. The Company invests as per the guidelines approved by the Board to mitigate this risk.

iii Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company''s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company''s reputation.

The Company''s treasury department is responsible for managing the short term and long term liquidity requirements. Liquidity situation is reviewed regularly by the management.

The Company is equity financed which is evident from the capital structure. Further, the Company has always been a net cash company with cash and bank balances along with investment which is predominantly investment in fixed deposits with bank, liquid and short term mutual funds.

36 Segment information

Operating Segments

The CEO and Whole Time Director of the Company has been identified as the Chief Operating Decision Maker (CODM) as defined by Ind AS 108, Operating Segments. Operating Segments have been defined and presented based on the regular review by the CODM to assess the performance of each segment and to make decision about allocation of resources. Accordingly, the Company has determined reportable segment by nature of its product and service, accordingly following are the reportable segments:

(a) Content solutions: Content solutions mean creating and developing content for print and digital delivery. It includes content authoring/development, content production, content transformation, fulfillment and customer support services.

(b) eLearning solutions: offering custom technology-enabled learning services which included Web-based tutorials, Simulation- and Game-based learning, Augmented and Virtual Reality, Learning Nuggets and Motion Graphics, Learning Consulting to corporates, government agencies, universities etc.

(c) Platform solutions: Platform solutions means developing and implanting various software and technology services programs.

36 Segment information

The Company has aggregated its operating segment into Content, eLearning and Platform operating reportable segment, which is consistent with aggregation criteria defined under Ind AS 108 i.e. similar economic characteristics, similar nature of the production process, similar type or class of customer for their products and services and similar method used to distribute their product or provide their services.

Accordingly, operating segment i.e. books, journals, customer fulfillment and others are aggregated into content operating segment and technology and software related services aggregated into platform operating segment. The CODM has evaluated the segment wise allocation for the business of the new acquisition of HighWire Company into existing segment of Platform Solutions.

The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.

Common allocable costs are allocated to each segment according to the relative contribution of each segment to the

total common costs

(ii) Assets and liabilities used in the Company''s business are not identified to any of the reportable segments, as these are used interchangeably between segments and the management believes that it is not practicable to provide segment disclosures relating to total assets and liabilities.

(d) Geographical informations:

The geographical information analysis the Company''s revenue and non-current assets by the holding Company''s country of domicile (i.e. India) and other countries. In presenting the geographical information segment revenue has been based on the geographical location of customers and segment assets which have been based on the geographical location of the assets.

38	Contingent liabilities to the extent not provided for:
(i)	Claims against Company, disputed by the Company, not acknowledged as debt:	INR in Lacs
	As at	As at
	31 March 2022	31 March 2021
	(a) Income tax 318.29	651.67
	(b) Service tax 43.14	43.14

The above amounts are based on the notice of demand / Assessment Orders / claims by the relevant authorities / parties and the Company is contesting these claims. Outflows, if any, arising out of these claims would depend on the outcome of the decisions of the appellate authorities and the Company''s rights for future appeals before the judiciary. The management believes that the ultimate outcome of these proceedings will not have a material adverse effect on the Company''s financial position and results of operations.

(ii) The Supreme Court on 28 February 2019 had provided its judgment regarding inclusion of other allowances such as travel allowances, special allowances, etc., within the expression ''basic wages'' for the purpose of computation of contribution of provident fund under the Employees'' Provident Fund and Miscellaneous Provisions Act, 1952 (''EPF Act''). There are interpretive challenges on the application of the Supreme Court Judgment including the period from which judgment would apply, consequential implications on resigned employees, etc. Further, various stakeholders had also filed representations with PF authorities in this respect. All these factors raises significant uncertainty regarding the implementation of the Supreme Court Judgment. Owing to the aforesaid uncertainty and pending clarification from regulatory authorities in this regard, the Company had recognized provision for the PF contribution on the basis of above mentioned order with effect from the order date. Further, the management believes that impact of aforementioned uncertainties on the financial statements of the Company should not be material.

39 Commitments as at year end

Estimated amount of contracts remaining to be executed on capital account (net of advances) INR NIL Lacs (31 March 2021: INR 62.21 Lacs).

40 Corporate Social Responsibility (CSR) Expense

As required by Section 135 of the Companies Act 2013, a Corporate Social Responsibility (CSR) committee has been formed by the Company. The areas for CSR activities include imparting primary education to under privileged girls, computer education to underprivileged children and building intellect and instill higher values of life through education and any other area the Board may find appropriate. Gross amount required to be spent by the Company during the year was INR 157 Lacs (for the year ended 31 March 2021; INR 163 Lacs).

The goodwill of INR 3,423.26 Lacs comprises value of acquired workforce and expected synergies arising from the acquisition. Goodwill is deductible for income tax purposes at USA.

The company incurred acquisition related cost of INR 64.61 Lacs on legal fees and due diligence costs in previous financial year. These cost have been included in legal and professional fees under the head "other expensesâ. The measurment period of goodwill had been closed on 30 June 2021.

If the acquisition had occurred on 1 April 2020, management estimates that total revenue for the Company would have been higher by INR 2,393.88 Lacs and the profit after taxes would have been higher by INR 159.66 Lacs. The pro-forma amounts are not necessarily indicative of the results that would have occurred if the acquisition had occurred on date indicated or that may result in the future.

42 The Board recommended a final dividend of INR 30 (face value of INR 10 per share ) per equity share. This payment is subject to the approval of shareholders in the Annual General Meeting (AGM) of the Company to be held on June 27, 2022.

Further, there has been no delay in transferring amounts and shares, required to be transferred, to the Investor Education and Protection Fund by the Group.

44 The Company publishes this financial statement along with the consolidated financial statements. In accordance with Ind AS 108, Operating Segments, the Company has disclosed the segment information in the consolidated financial statements.

(vi) Transaction price allocated to the remaining performance obligations

The Company applies the practical expedient in paragraph 121 of Ind AS 115 and does not disclose information about remaining performance obligations that have original expected durations of one year or less.

(vii) The Company has evaluated the impact of COVID - 19 resulting from (i) the possibility of constraints to render services which may require revision of estimations of costs to complete the contract because of additional efforts (ii) onerous obligations (iii) penalties relating to breaches of service level agreements and (iv) termination or deferment of contracts by customers. The Company has concluded that the impact of COVID - 19 is not material based on such evaluation. Due to the nature of the pandemic, the Company will continue to monitor developments to identify significant uncertainties relating to revenue in future periods.

51 Other statutory information

(i) The Company do not have any Benami property, where any proceeding has been initiated or pending against the Company for holding any Benami property.

(ii) The Company do not have any charges or satisfaction which is yet to be registered with ROC beyond the statutory period

(iii) The Company have not traded or invested in Crypto currency or Virtual Currency during the period/year.

(iv) The Company have not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding that the Intermediary shall:

(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or

(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries

(v) The Company have not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Company shall:

(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or

(b) provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries,

(vi) The Company have not any such transaction which is not recorded in the books of accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961.

Mar 31, 2019

Notes forming part of Financial Statements

Rs in Lacs, except share and per share data, unless otherwise stated

35 Corporate Social Responsibility (CSR) Expense

As required by Section 135 of the Companies Act 2013, a Corporate Social Responsibility (CSR) committee has been formed by the Company. The areas for CSR activities include imparting primary education to under privileged girls, computer education to underprivileged children and building intellect and instill higher values of life through education and any other area the Board may find appropriate. Gross amount required to be spent by the Company during the year was Rs 196.94 Lacs (for the year ended 31 March 2018; Rs 191.79 Lacs).

Amount spent by the company on its CSR activities are as follows:

Purpose	31 March 2019	Year ended 31 March 2018
Promotion of education and skills	152.68	140.46
Health care	43.68	51.33
Total	196.36	191.79

36 Business Combination:

The Company during the year ended 31 March 2017, had given purchase consideration of Rs 428.16 Lacs in cash to acquire certain assets including application platform business from Digital River, Inc. a company based in USA vide asset purchase agreement dated 3 February 2017 which qualifies for business combination accounting. The customary condition for consummation of the said acquisition has been completed subsequent to year ended 31 March 2017, i.e. with effect from 1 April 2017. The acquisition of THINK Subscription strengthens the Company''s platform capabilities to include subscription management and fulfillment solutions.

Following assets and liabilities have been recorded on fair value through business combination accounting by the Company : Rs in lacs

Particulars	Note	As at 1 April 2017
Property, plant and equipment	3.1	62.69
Other intangible assets	4	453.01
Trade receivables		168.91
Advance from customers		(306.72)
Net assets		377.89
Purchase consideration		428.16
Goodwill on acquisition	4	50.27

The goodwill of Rs 50.27 Lacs comprises value of acquired workforce and expected synergies arising from the acquisition. Goodwill is deductible for income tax purposes.

The company incurred acquisition related cost of Rs 5.37 Lacs on legal fees and due diligence costs. These cost have been included in legal and professional fees under the head "other expenses".

37 There has been no delay in transferring amounts and shares, required to be transferred, to the Investor Education and Protection Fund by the Company. a, unless otherwise stated

38 Details of provisions

The Company has made provision for pending litigation matter based on its assessment of the amount it estimates to incur to meet such obligation, details of which are given below: .

Provision for service tax matter	As at 31 March 2019	As at 31 March 2018
As at commencement of the year	154.28	149.46
Additions	4.82	4.82
Utilisation	-	-
As at end of the year	159.10	154.28
Out of the above following amount are expected to be incurred within year	159.10	154.28

39 During the Financial Year 2017-18 the Board of Directors of the Company had approved the Scheme of Amalgamation involving Amalgamation of ADI BPO Services Limited (post demerger of its ''Infrastructure Management Business Undertaking'' into ADI Media Private Limited) into the Company.

During the Financial Year 2018-19, the Board of Directors of the Company, based on a communication from ADI BPO Services Limited that the Board of ADI BPO Services Limited had decided to withdraw the proposed Scheme of demerger of "Infrastructure Management Business Undertaking" of ADI BPO Services Limited into ADI Media Private Limited and pursuant to Clause 38 (c) and proviso 39.2 of Clause 39 of the Scheme of Amalgamation declared the said Scheme to be null and void. Pursuant to Clause 40, the Company has taken steps for withdrawal of the Scheme with National Company Law Tribunal (NCLT), Chennai and withdrawal of such Scheme has been approved by NCLT, Chennai on 01 February 2019.

40 The Company publishes this financial statement along with the consolidated financial statements. In accordance with Ind AS 108, Operating Segments, the Company has disclosed the segment information in the consolidated financial statements.

41 Disclosure pursuant to section 186(4) of the Companies Act, 2013 in respect of unsecured loans to subsidiary companies (refer note 32): Rs in lacs

MPS Interactive Systems Limited	Purpose/Term of loan	Year ended 31 March 2019
Outstanding as at the beginning of year	General business
Given during the year	purpose for a tenure of 5 years	2,300.00
Repaid during the year		-
Maximum balance outstanding		2,300.00
Outstanding as at the end of year		2,300.00

42 Revenue from contracts with customers (i) Revenue from contracts with customers

Revenues for the year ended 31 March 2019 and 31 March 2018 are as follows:

Particulars	As at 31 March 2019	As at 31 March 2018
Content solutions	18,439.18	17,751.76
Platform solutions	3,957.07	4,08244
	22,396.25	21,834.20

(ii) Disaggregation of revenue from contracts with customers

In the following table, revenue is disaggregated by primary geographical market and major products/service lines.

	Year ended 31 March 2019			Year ended 31 March 2018
Revenue by geographical markets	Content Solutions	Platform Solutions	Total	Content solutions	Platform solutions	Total
India (country of domicile)	21.71	58.02	79.73	10.82	5.63	16.45
Europe	9,786.58	1,889.61	11,676.19	8,732.14	1,671.71	10,403.85
USA	8,320.07	1,845.31	10,165.38	8,703.48	2,20791	10,911.39
Rest of the World	310.82	164.13	474.95	305.32	197.19	502.51
Total	18,439.18	3,957.07	22,396.25	17,751.76	4,082.44	21,834.20

Refer note 30 (ii) on Financial risk management for information on revenue from top customers.

(iii) Contract balances

The following table provides information about receivables, contract assets and contract liabilities from contracts with customers Rs in lacs

	As at 31 March 2019
Receivables, which are included in Trade and other receivables'' (refer note 10)	3,782.30
Unbilled revenue (refer note 7(ii) )	85.63
Contract assets (refer note 9(ii) )	2,140.68
Contract liabilities (refer note 16)	475.52

Trade receivables are non-interest bearing and are generally on terms of 0 to 60 days.

Changes in Contract assets and Contract Liabilities are as follows: Rs in lacs

	Year ended 31 March 2019	Year ended 31 March 2019
	Contract Assets	Contract Liabilities
Balance as on the date of transition (1 April 2018)	1,527.12	392.97
Revenue recognised that was included in the unearned balance at	-	(372.58)
the beginning of the year
Increases due to cash received, excluding amounts recognised as revenue during the year	~	455.13
Transfers from contract assets recognised at the beginning of the period to receivables	(1,430.69)	-
Increases as a result of changes in the measure of progress	2,044.25	-
Balance at the end of the year	2,140.68	475.52

(iv) The amount of revenue recognised in 31 March 2019 from performance obligations satisfied (or partially satisfied) in previous periods, mainly due to the changes in the transaction price is Rs 46.45 Lacs.

(v) Reconciliation of revenue recognized with the contracted price is as follows:

Year ended 31 March 2018 Contracted price 22,443.50 21,905.30

Reductions towards variable consideration components (47.25) (71.10)

Revenue recognised 22,396.25 21,834.20

The reduction towards variable consideration comprises of volume discounts, bulk discount and price discount, etc.

(vi) Transaction price allocated to the remaining performance obligations

As per our report of even date attached
For B S R & Co. LLP	For and on behalf of the Board of Directors of MPS Limited
Chartered Accountants
ICAI Firm Registration Number:	101248W/W-100022
Shashank Agarwal	Rahul Arora	Vijay Sood
Partner	Managing Director	Director
Membership Number: 095109	DIN: 05353333	DIN: 01473455
	Sunit Malhotra
	Chief Financial Officer & Company Secretary
Place: Gurugram	Place: Gurugram
Date : 17 May 2019	Date : 17 May 2019

Mar 31, 2018

30 FINANCIAL RISK MANAGEMENT (contd...) iii Liquidity risk

The Company''s treasury department is responsible for managing the short term and long term liquidity requirements. Liquidity situation is reviewed regularly by the management.

32 RELATED PARTY TRANSACTIONS

The related parties as per the terms of Ind AS-24,"Related Party Disclosures", (specified under section 133 of the Companies Act, 2013, read with Rule 7 of Companies (Accounts) Rules, 2015) are disclosed below:-

A Names of related parties and description of relationship:

1 Holding Company ADI BPO Services Limited

2 Subsidiary Company MPS North America LLC

MAG AB, Sweden (refer note 3 below)

3 Downstream Subsidiary Company Magplus Inc,USA (merged with its holding company w.e.f 10 August 2017)

4 Company Under Common ControlADI Media Private Limited

5 Key management personnel (KMP) Mr. Nishith Arora, Non-Executive Chairman w.e.f 15 May 2017

(Executive Chairman and Whole time Director till 14 May 2017)

Mr. Rahul Arora, Chief Executive Officer and Whole Time Director

Ms. Yamini Tandon, Non- Executive Director

Mr. D E Udwadia, Non-Executive Director

Mr. Ashish Dalal, Non-Executive Director (till 9 March 2018)

Mr. Vijay Sood, Non-Executive Director

Mr. Sunit Malhotra, CFO & Company Secretary (Company Secretary w.e.f 23 October 2017) and Director of holding company till 15 January 2018

Mr. Hitesh Jain, Company Secretary till 12 September 2017

Ms. Gagan Sahni Tyagi, Director of holding company

Ms. Pooja Singh (appointed as Director of holding company w.e.f 15

January 2018)

6 Firm in which KMP is a partner M/s Udwadia & Co.

Notes:

1 No amount has been written off/written back during the year in respect of dues from/to related parties.

2 Company has taken one rent free premises at Noida location w.e.f. 1 June 2014 and one rented premises at Gurugram location w.e.f 1 September 2017.

3 The Board of Directors of the Company at their meeting held on 25 January 2017 approved for liquidation of MAG AB, Sweden, a subsidiary company. MAG AB, vide approval of its shareholders at their meeting held on 16 February 2017, has filed for voluntary liquidation procedure in February 2017. MAG AB, was liquidated in December 2017 and ceased to be a subsidiary of the Company. Residual fund of MAG AB has been disbursed to the Company in extinguishment of 100 percent shareholding of the Company in MAG AB. The difference between the net assets and investment value amounting to INR 220.55 lacs has been considered as gain on disposal of investment and presented under the head "other income".

The above amounts are based on the notice of demand/Assessment Orders/claims by the relevant authorities /parties and the Company is contesting these claims. Outflows, if any, arising out of these claims would depend on the outcome of the decisions of the appellate authorities and the Company''s rights for future appeals before the judiciary. The management believes that the ultimate outcome of these proceedings will not have a material adverse effect on the Company''s financial position and results of operations.

34 COMMITMENTS AS AT YEAR END

a) Estimated amount of contracts remaining to be executed on capital account (net of advances) INR 38.72 Lacs

(31 March 2017: INR 68.42 Lacs; 1 April 2016: INR 25.73 Lacs).

b) Leases:

(i) The Company has entered into cancellable and non-cancellable operating leases for office premises. The aggregate lease rentals payable are charged as expenses. Rental payments under such leases are INR 410.09 Lacs (31 March 2017: INR 413.19 Lacs) has been included under rent expense in note 24.

(ii) The Company has operating lease arrangements in respect of vehicles which are cancellable, range between

1 years to 5 years. The aggregate lease rentals payable are charged as expenses. Rental payments under such leases are INR 21.59 Lacs (31 March 2017: INR 23.31 Lacs) has been included under rent expense in note 24.

(iii) The Company has significant operating lease arrangements which are non-cancellable for a period up to

3 years. The leases have varying terms, escalation clauses and renewal rights. On renewal, the terms of the leases are renegotiated.

35 CORPORATE SOCIAL RESPONSIBILITY (CSR) EXPENSE

As required by Section 135 of the Companies Act 2013, a Corporate Social Responsibility (CSR) committee has been formed by the Company. The areas for CSR activities include imparting primary education to under privileged girls, computer education to underprivileged children and building intellect and instill higher values of life through education and any other area the Board may find appropriate. Gross amount required to be spent by the Company during the year was INR 191.79 Lacs (for the year ended 31 March 2017; INR 170.53 Lacs).

36 BUSINESS COMBINATION:

The Company during the year ended 31 March 2017, had given an purchase consideration of INR 428.16 Lacs in cash to acquire certain assets including application platform business from Digital River, Inc. a company based in USA vide asset purchase agreement dated 3 February 2017 which qualifies for business combination accounting. The customary condition for consummation of the said acquisition has been completed subsequent to year ended 31 March 2017, i.e. with effect from 1 April 2017. The acquisition of THINK Subscription strengthens the Company''s platform capabilities to include subscription management and fulfillment solutions.

Following assets and liabilities have been recorded on fair value through business combination accounting by the Company :

The goodwill of INR 50.27 Lacs comprises value of acquired workforce and expected synergies arising from the acquisition. Goodwill is deductible for income tax purposes.

The company incurred acquisition related cost of INR 5.37 Lacs on legal fees and due diligence costs. These cost have been included in legal and professional fees under the head ""other expenses"".

38 There has been no delay in transferring amounts and shares, required to be transferred, to the Investor Education and Protection Fund by the Company.

40 The Board of Directors of the Company have approved the scheme of amalgamation involving amalgamation of ADI BPO Services Limited (post demerger of its ''Infrastructure Management Business Undertaking'' into ADI Media Private Limited) into the Company. The scheme has been filed with the stock exchanges for their approval. The Company will file the scheme with NCLT for further process once approved.

41 Subsequent to year end, the Company has entered into definitive agreements on 24 April 2018 for the acquisition of the enterprise e-Learning business of Tata Interactive Systems in India (a division of Tata Industries Limited, a company incorporated in India having its registered office in Mumbai) and its branches in USA, UK, Canada and UAE and for the entire paid up equity share capital held by Tata Industries Limited in its wholly owned subsidiaries, Tata Interactive Systems AG, Switzerland and Tata Interactive Systems GmbH, Germany. The Company is confident that the transactions will close in the near future on fulfillment of mutually agreed closing conditions.

42 The Company publishes this financial statement along with the consolidated financial statements. In accordance with Ind AS 108, Operating Segments, the Company has disclosed the segment information in the consolidated financial statements.

43 DISCLOSURE AS PER PARA A OF SCHEDULE V OF THE LISTING REGULATIONS

There are no loans and advances in the nature of loans given to subsidiaries, associates, firms/companies in which directors are interested.

44 FIRST-TIME ADOPTION OF IND AS Transition to Ind AS

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

The significant accounting policies set out in note 2 have been applied in preparing the financial statements for the year ended 31 March 2018, the comparative information presented in these financial statements for the year ended 31 March 2017 and in the preparation of an opening Ind AS balance sheet at 1 April 2016 (the Company''s date of transition). In preparing its opening Ind AS balance sheet, the Company has adjusted the amounts reported previously in financial statements prepared in accordance with the accounting standards notified under Companies (Accounting Standards) Rules, 2006 (as amended) and other relevant provisions of the Act (previous GAAP or Indian GAAP). An explanation of how the transition from previous GAAP to Ind AS has affected the Company''s financial position, financial performance and cash flows is set out in the following tables and notes.

(A) Exemptions and exceptions availed

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

Ind AS optional exemptions

1 Business combinations

Ind AS 101 provides the option to apply Ind AS 103 "Business Combinations" prospectively from the

44 FIRST-TIME ADOPTION OF IND AS (contd...)

transition date or from a specific date prior to the transition date. This provides relief from full retrospective application that would require restatement of all business combinations prior to the transition date. The Company elected to apply Ind AS 103 prospectively to business combinations occurring after its transition date.

2 Deemed cost

Ind AS 101 permits a first-time adopter to elect to continue with the carrying value for all of its property, plant and equipment as recognized in the financial statements as at the date of transition to Ind AS, measured as per the previous GAAP and use that as its deemed cost as at the date of transition. This exemption can also be used for intangible assets and investment property covered by Ind AS 38 Intangible Assets and Ind AS 40 Investment Property respectively . Accordingly, the Company has elected to measure all of its property, plant and equipment, investment property and intangible assets at their previous GAAP carrying value.

3 Investments in subsidiaries

Ind AS 101 permits the first time adopter to measure investment in subsidiaries in accordance with Ind AS 27 at one of the following:

a) cost determined in accordance with Ind AS 27 or

b) Deemed cost:

(i) fair value at date of transition

(ii) previous GAAP carrying amount at that date.

The Company has elected to consider previous GAAP carrying amount of its investments in subsidiaries on the date of transition to Ind AS as its deemed cost for the purpose of determining cost in accordance with principles of Ind AS 27-"Separate financial statements"

Ind AS mandatory exceptions

1 Estimates

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

Ind AS estimates as at 1 April 2016 are consistent with the estimates as at the same date made in conformity with previous GAAP. The Company made estimates for following items in accordance with Ind AS at the date of transition as these were not required under previous GAAP:

- Impairment of financial assets based on expected credit Loss model.

- Determination of the discounted value for financial instruments carried at amortized cost.

- Fair valuation of financial instruments carried at fair value through profit and loss.

2 Classification and measurement of financial assets

Ind AS 101 requires an entity to assess classification of financial assets on the basis of the facts and circumstances existing as on the date of transition. Further, the standard permits measurement of financial assets accounted at amortized cost based on facts and circumstances existing at the date of transition if retrospective application is impracticable.

Accordingly, the Company has determined the classification of financial assets based on facts and circumstances that exist on the date of transition. Measurement of the financial assets accounted at amortized cost has been done retrospectively except where the same is impracticable.

i) Others include adjustments resulting from classification of actuarial gain/(loss) to OCI, etc.

44 (E) Other than effect of certain reclassifications due to difference in presentation, there was no other material effect of cash flow from operating, financing, investing activities for all periods presented.

44 (F) Notes to the Reconciliations

1 Security deposits

Under the previous GAAP, interest free lease security deposits (that are refundable in cash on completion of the lease term) are recorded at their transaction value. Under Ind AS, all financial assets are required to be recognized at fair value. Accordingly, the company has fair valued these security deposits under Ind AS. Difference between the fair value and transaction value of the security deposit has been recognized as prepaid rent. Consequent to this change, the amount of security deposits decreased by INR 62.40 Lacs as at 31 March 2017 (1 April 2016 INR 29.29 Lacs). The prepaid rent increased by INR 58.61 Lacs as at 31 March 2017 (1 April2016 INR 26.41 Lacs). Total equity decreased by INR 3.79 Lacs as on 31 March 2017 (1 April 2016 INR 2.88 Lacs). The profit for the year and total equity as at 31 March 2017 decreased by INR 0.91 Lacs due to amortisation of the prepaid rent of INR 10.18 Lacs which is partially off-set by the notional interest income of INR 9.27 Lacs recognized on security deposits.

2 Current Investments

Under the previous GAAP, Current investments were carried at lower of cost and fair value. Under Ind AS, these investments are required to be measured at fair value. The resulting fair value changes of these investments have been recognized in retained earnings as at the date of transition and subsequently in the profit or loss for the year ended 31 March 2017. Accordingly, total equity has been increased by INR 5.39 Lacs as at 31 March 2017 (1 April 2016 INR 12.21 Lacs) and profit for the year ended

31 March 2017 decreased by INR 6.82 Lacs.

3 Trade Receivables

As per Ind AS 109, the company is required to apply expected credit loss model for recognising the allowance for doubtful debts. As a result, the allowance for doubtful debts increased/(decreased) by INR 5.67 Lacs as at 31 March 2017 (1 April 2016 (INR 13.43 Lacs)). Consequently, the total equity as at

31 March 2017 increased/(decreased) by (INR 5.67 Lacs) (1 April 2016 INR 13.43) and profit for the year ended 31 March 2017 decreased by INR 19.10 Lacs.

4 Derivative Instruments - Foreign Exchange Forward Contracts

Under Previous GAAP, unrealized net loss on foreign exchange forward contracts, if any, as at each

44 FIRST-TIME ADOPTION OF IND AS (contd...)

Balance Sheet date was provided for. Under Ind AS, foreign exchange forward contracts are mark-to-market as at Balance Sheet date and unrealised net gain or loss is recognized in profit and loss statement.

Unrealized mark-to-market gain of INR 87.07 Lacs on forward contracts are recognized as at 1 April 2016. This amount was realised during the year ended 31 March 2017.

5 Deferred Tax

Under previous GAAP requires deferred tax accounting using the income statement approach, which focuses on differences between taxable profits and accounting profits for the period. Ind AS 12 requires entities to account for deferred taxes using the balance sheet approach, which focuses on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. The application of Ind AS 12 approach has resulted in recognition of deferred tax on new temporary differences which was not required under Indian GAAP. Also deferred tax have been recognized on the adjustment made on transition to Ind AS.

Consequent to the above, the total equity is increased/(decreased) by INR 1.40 Lacs as at 31 March 2017 (1 April 2016: (INR 38.02 Lacs)) and profit for the year ended 31 March 2017 increased by INR 39.42 Lacs.

6 Re-measurements of post-employment benefit obligations

Under Ind AS, re-measurements i.e. actuarial gains and losses and the return on plan assets on the net defined benefit obligation are recognized in other comprehensive income instead of profit or loss. Under the previous GAAP, these re-measurements were forming part of the profit or loss for the year. As a result of this change, the profit before tax for the year ended 31 March 2017 increased by INR 58.76 Lacs. There is no impact on the total equity as at 1 April 2016 and 31 March 2017.

Mar 31, 2017

1: COMPANY OVERVIEW

MPS Limited (âthe Companyâ) is engaged in the business of providing publishing solutions viz., type setting and data digitization services for overseas publishers and supports international publishers through every stage of the author-to-reader publishing process and provides a digital - first strategy for publishers across content production, enhancement and transformation, delivery and customer support. This digital focus spans across STM / academic, higher education, trade and directory markets.

The Company offers a diverse geographic spread with production facilities registered under the Software Technology Park of India (STPI) scheme in Chennai, Noida, Gurgaon and Bengaluru. The Company also operates with other production facilities in Dehradun and editorial and marketing offices in United States. The Companyâs multi location presence helps it in executing various customer requirements efficiently.

Note 2.1 The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

Note 2.2 There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

Note 3 EMPLOYEE BENEFIT PLANS

1.a. Defined contribution plans

The Company makes contributions to Provident Fund, 401 (k) plan, Superannuation Fund and Employee State Insurance (ESI) Scheme for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised Rs.450.80 Lacs (Previous year Rs.427.12 Lacs) for Provident Fund contributions, Rs.8.20 Lacs (Previous year Rs.3.30 Lacs) for 401 (k) plan, Rs.6.30 Lacs (Previous year Rs.6.30 Lacs.) for Superannuation Fund contributions and Rs.92.92 Lacs (Previous year Rs.82.62 Lacs) for ESI in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the Schemes.

1.b. Defined benefit plans

The Company offers the following employee benefit scheme to its employees:

i. Gratuity

The following table sets out the funded status of the defined benefit schemes and the amount recognised in the financial statements:

Note 4 SEGMENT INFORMATION

The Company operates in one business segment of providing publishing solutions viz., typesetting and data digitization services and is considered to constitute a single segment in the context of primary segment reporting as prescribed by Accounting Standard 17 - âSegment Reportingâ specified in Rule 7 of Companies (Accounts) Rules, 2014 and Companies (Accounting Standards) Amendment Rules, 2016.

Note 5 RELATED PARTY TRANSACTIONS

In the normal course of business, the Company enters into transactions at armâs length with affiliated companies, its ultimate holding company and key management personnel. The names of related parties of the Company, as required to be disclosed under Accounting Standard 18 âRelated Party Disclosuresâ is as follows:

Note 6 As required by Section 135 of the Companies Act 2013, a Corporate Social Responsibility (CSR) committee has been formed by the Company. The areas for CSR activities include imparting primary education to under privileged girls, computer education to underprivileged children and building intellect and instill higher values of life through education and any other area the Board may find appropriate. Gross amount required to be spent by the Company during the year was Rs.70.53 Lacs.

Note 7 The Company during the year ended 31 March 2017, has given an advance of Rs.428 Lacs to acquire group of assets including application platform business from Digital River, Inc. a company based in USA vide asset purchase agreement dated 3 February 2017. The customary condition for consummation of the said acquisition has been completed subsequent to year ended 31 March 2017, i.e. with effect from 1 April 2017.

Note 8 DISCLOSURE AS PER PARA A OF SCHEDULE V OF THE Listing Regulations

There are no loans and advances in the nature of loans given to subsidiaries, associates, firms / companies in which directors are interested.

Note 9 PREVIOUS YEARâS FIGURES

Previous yearâs figures have been regrouped / reclassified wherever necessary to correspond with the current yearâs classification / disclosure.

Mar 31, 2016

1. Disclosure required under section 22 of the Micro, Small & Medium Enterprises Development Act, 2006:

The information required to be disclosed under the Micro, Small and Medium enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company. There are no over dues to parties on account of principal amount and / or interest and accordingly, no additional disclosures are required.

2. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

3. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

4. During the previous year 2014-15, pursuant to the transition provisions prescribed in Schedule II to the Companies Act, 2013, the Company had fully depreciated the carrying value of assets (determined after considering the change in the method of depreciation from WDV to SLM), net of residual value, where the remaining useful life of the asset was determined to be nil as on 01 April 2014, and had adjusted an amount of '' 168.91 lacs (net of deferred tax of '' 85.83 lacs) against the opening Surplus balance in the Statement of Profit and Loss under Reserves and Surplus.

Note 5. EMPLOYEE BENEFIT PLANS

1.a. Defined contribution plans

The Company makes contributions to Provident Fund , Superannuation Fund and Employee State Insurance (ESI) Scheme for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised '' 399.52 Lacs (Previous year '' 367.44 Lacs.) for Provident Fund contributions, '' 6.30 Lacs (Previous year '' 6.30 Lacs.) for Superannuation Fund contributions and '' 82.62 Lacs (Previous year '' 70.40 Lacs) for ESI in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the Schemes.

Note 6. SEGMENT INFORMATION

The Company operates in one business segment of providing publishing solutions viz., typesetting and data digitization services and is considered to constitute a single segment in the context of primary segment reporting as prescribed by Accounting Standard 17 - "Segment Reporting".

Note 7. DISCLOSURE AS PER CLAUSE 32 OF THE LISTING AGREEMENTS WITH THE STOCK EXCHANGES

There are no Loans and advances in the nature of loans given to subsidiaries / companies in which directors are interested.

Note 8. PREVIOUS YEAR''S FIGURES

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

Mar 31, 2015

1.CORPORATE INFORMATION

Background

MPS Limited ("the Company") is engaged in the business of providing publishing solutions viz., type setting and data digitization services for overseas publishers and supports international publishers through every stage of the author -to- reader publishing process and provides a digital-first strategy for publishers across content production, enhancement and transformation, delivery and customer support. This digital focus spans across STM/academic, higher education, trade and directory markets.

The Company offers a diverse geographic spread with production facilities registered under the Software Technology Park of India (STPI) scheme in Chennai, New Delhi, Gurgaon and Bengaluru. The Company also operates with other production facilities in Dehradun, Noida and editorial and marketing offices in United States and United Kingdom.

The Company has a wholly owned subsidiary namely MPS North America LLC (MPS NA LLC) as a Limited Liability Company under the laws of the State of Florida in the United States of America.

2. SHARE CAPITAL

(ii) Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs.10 / per share. Each holder of equity shares is entitled to one vote per share. In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the Company, after distribution of all preferential amount. The distribution will be in proportion to number of equity shares held by the shareholders.

3. ADDITIONAL INFORMATION TO THE FINANCIAL STATEMENTS INRinLacs

Note Particulars As at 31- As at 31 mar-2015 -Mar -2014

25.1 Contingent liabilities and commitments (to the extent not provided for)

(i) Contingent liabilities

Claims against the Company not acknowledged as debts

(a) Income tax 599.55 853.58

(b) Service tax 564.98 675.56

(c) Employee state insurance(ESI) and Provident fund (PF) vendor payments) 6.59 6.56

(d) Other claims 196.40 256.00

The above amounts are based on the notice of demand / Assessment Orders / claims by the relevant authorities / parties and the Company is contesting these claims. Outflows, if any, arising out of these claims would depend on the outcome of the decisions of the appellate authorities and the Company's rights for future appeals before the judiciary.

INRinLacs

Commitments As at 31- As at 31 mar-2015 -Mar -2014

(ii) Estimated amount of contracts remaining to be executed on capital account and not provided for Tangible assets 22.34 57.52

22.34 57.52

4. Disclosure required under section 22 of the Micro, Small & Medium Enterprises Development Act, 2006:

The information required to be disclosed under the Micro, Small and Medium enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the Company. There are no over dues to parties on account of principal amount and / or interest and accordingly, no additional disclosures are required. No reimbursements are expected.

5. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

6. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

7.Change in Accounting Policy

a. During the year, the Company changed its accounting policy of providing depreciation on fixed assets effective April 01,2014. Depreciation is now provided on Straight Line basis for all assets which was hitherto providing on Written Down Value basis for some assets and Straight Line basis for others.

The depreciation expense in the Statement of Profit and Loss for the year is higher by '93.65 lacs consequent to the above change in the method of depreciation.

b. Pursuant to the transition provisions prescribed in Schedule II to the Companies Act, 2013, the Company has fully depreciated the carrying value of assets (determined after considering the change in the method of depreciation from WDV to SLM), net of residual value, where the remaining useful life of the asset was determined to be nil as on April 1, 2014, and has adjusted an amount of Rs.168.91 lacs (net of deferred tax of Rs.85.83 lacs) against the opening Surplus balance in the Statement of Profit and Loss under Reserves and Surplus.

8. EMPLOYEE BENEFIT PLANS

a. Defined contribution plans

The Company makes contributions to Provident Fund , Superannuation Fund and Employee State Insurance (ESI) Scheme for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised INR 367.44 Lacs (Previous year INR 329.19 Lacs.) for Provident Fund contributions , INR 6.30 Lacs (Previous year INR 6.30 Lacs.) for Superannuation Fund Contributions and INR 70.40 Lacs (Previous year INR 61.94 Lacs) for ESI in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

9. SEGMENT INFORMATION

The Company operates in one business segment of providing publishing solutions viz., typesetting and data digitization services and is considered to constitute a single segment in the context of primary segment reporting as prescribed by Accounting Standard 17 - "Segment Reporting".

10. RELATED PARTY TRANSACTIONS

In the normal course of business, the Company enters into transactions at arm's length with affiliated companies, its ultimate holding company and key management personnel. The names of related parties of the Company, as required to be disclosed under Accounting Standard 18 "Related Party Disclosures" is as follows:

a. Details of related parties:

Description of relationship Names of related Parties

(i) Holding Company ADI BPO Services Limited

(ii) Subsidiary Company MPS North America LLC

M. Nishith Arora, Chief Executive Officer

(iii) Key Management Mr. Rahul Arora, Director Personnel (KMP) Ms. Yamini Tandon, Director (w.e.f 11-Aug-2014)

Ms. Yamini Tandon, Vice President-Service Delivery ( w.e.f 17-Feb- (IV) Relatives of KMP 2014 till 10-Aug-2014)

(i) Rs. 48.56 Lacs paid as remuneration during the financial year 2014-15 to Mr. Rahul Arora, Whole Time Director. The Company had earlier filed an application on November 8, 2013 before the Central Government (Ministry of Corporate Affairs) , since Mr. Rahul Arora was not a resident in India for a continuous period of 12 months immediately preceding the date of his appointment as a Whole Time Director of the Company. Pursuant to the provisions of Section 196 and 197 read with Clause (e), Part I, Schedule V of the Companies Act 2013, the Company, in continuation, has applied afresh vide its application in Form MR 2 filed on March 11,2015, and the application is currently pending.

(ii) Rs.18.49 Lacs paid to Ms. Yamini Tandon, appointed as Whole Time Director of the Company for a period of 5 years with effect from August 11,2014. The Company, pursuant to the provisions of Section 196 and 197 read with Clause (e), Part I, Schedule V of the Companies Act 2013, has applied to Central Government (Ministry of Corporate Affairs) vide its application in Form MR 2 filed on November 6, 2014 since Ms. Yamini Tandon was not a resident in India for a continuous period of 12 months immediately preceding the date of her appointment as a Whole Time Director and the application is currently pending.

11. DISCLOSURE AS PER CLAUSE 32 OF THE LISTING AGREEMENTS WITH THE STOCK EXCHANGES

There are no Loans and advances in the nature of loans given to subsidiaries / companies in which directors are interested.

12. PREVIOUS YEAR'S FIGURES

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

Mar 31, 2014

1. CORPORATE INFORMATION

1.1 Background

MPS Limited ("the Company") is engaged in the business of providing publishing solutions viz., type setting and data digitization services for overseas publishers and supports international publishers through every stage of the author-to-reader publishing process and provides a digital-first strategy for publishers across content production, enhancement and transformation, delivery and customer support. This digital focus spans across STM/academic, higher education, trade and directory markets.

The Company ofers a diverse geographic spread with production facilities registered under the Software Technology Park of India (STPI) scheme in Chennai, New Delhi, Gurgaon and Bengaluru. The Company also operates with other production facilities in Dehradun, Noida and editorial and marketing ofces in United States and United Kingdom.

During the year, the Company has incorporated a wholly owned subsidiary namely MPS North America LLC (MPS NA LLC) on 29 May 2013, as a Limited Liability Company under the laws of the State of Florida in the United States of America.

1. CORPORATE INFORMATION

1.1 Background

MPS Limited ("the Company") is engaged in the business of providing publishing solutions viz., type setting and data digitization services for overseas publishers and supports international publishers through every stage of the author-to-reader publishing process and provides a digital-first strategy for publishers across content production, enhancement and transformation, delivery and customer support. This digital focus spans across STM/academic, higher education, trade and directory markets.

The Company ofers a diverse geographic spread with production facilities registered under the Software Technology Park of India (STPI) scheme in Chennai, New Delhi, Gurgaon and Bengaluru. The Company also operates with other production facilities in Dehradun, Noida and editorial and marketing ofces in United States and United Kingdom.

During the year, the Company has incorporated a wholly owned subsidiary namely MPS North America LLC (MPS NA LLC) on 29 May 2013, as a Limited Liability Company under the laws of the State of Florida in the United States of America.

Note 2 Additional information to the financial statements

As at As at 31-Mar-2014 31-Mar-2013 Note Particulars INR in Lacs INR in Lacs

2.1 Contingent liabilities and commitments (to the extent not provided for)

(i) Contingent liabilities

Claims against the Company not acknowledged as debts

(a) Income Tax

Relating to transfer pricing adjustments and disallowance of export 853.58 766.27 commission and other deductions

(b) Service Tax

Penalty and interest for delayed payments, disallowance of input credit 675.56 520.29 and demand on overseas commission

(c) Employee State Insurance (ESI) and Provident Fund (PF) vendor payments 6.56 6.56

(d) VAT - 6.52

(e) Other Claims 256.00 -

The above amounts are based on the notice of demand/Assessment Orders/claims by the relevant authorities/parties and the Company is contesting these claims. Outflows, if any, arising out of these claims would depend on the outcome of the decisions of the appellate authorities and the Company''s rights for future appeals before the judiciary No reimbursements are expected.

2.3 There are no micro and small enterprises, to whom the Company owes dues, which are outstanding for more than 45 days during the year and also as at 31-Mar-2014 (PY - INR Nil). This information has been identified on the basis of information available with the Company. This has been relied upon by the auditors

2.4 Employee benefit plans

2.4.1.a Defined contribution plans

The Company makes contributions to Provident Fund, Superannuation Fund and Employee State Insurance (ESI) Scheme for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised INR 329.19 Lacs (Previous year INR 276.62 Lacs.) for Provident Fund contributions, INR 6.30 Lacs (Previous year INR 6.00 Lacs.) for Superannuation Fund Contributions and INR 61.94 Lacs (Previous year INR 66.81 Lacs) for ESI in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

2.4.2.b Defined benefit plans

The Company offers the following employee benefit schemes to its employees: i. Gratuity (included as part of contribution to provident and other funds in note 24, employees benefit expenses)

The following table sets out the funded status of the defined benefit schemes and the amount recognised in the financial statements:

2.5 Segment information

The Company operates in one business segment of providing publishing solutions viz., typesetting and data digitization services and is considered to constitute a single segment in the context of primary segment reporting as prescribed by Accounting Standard 17 - "Segment Reporting".

3.c The remuneration to Key Management Personnel includes Rs. 48.98 Lacs paid as remuneration to Mr Rahul Arora, Whole Time Director effective from August 12, 2013. An application was made to the Central Government pursuant to Section 269, 310 read with Part A of Schedule XIII since Mr. Rahul Arora was not a resident in India for a continuous period of 12 months immediately preceding the date of his appointment as a Whole Time Director. The Central Government has taken on record the aforesaid application and has informed vide their letter dated January 9, 2014 that the matter will be further examined on receipt of the shareholders'' approval. Accordingly, the above is subject to approval of the shareholders and the Central Government

4 Disclosure as per Clause 32 of the Listing Agreements with the Stock Exchanges

There are no Loans and advances in the nature of loans given to subsidiaries/companies in which directors are interested.

5 Previous Year''s figures

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

Mar 31, 2013

1. CORPORATE INFORMATION

1.1 Background

MPS Limited, (the Company) is engaged in the business of providing publishing solutions viz., typesetting and data digitization services for overseas publishers. The Company has a 100% Export Oriented Unit in Bengaluru, and units registered under the Software Technology Park of India (STPI) scheme that are located in Chennai, Delhi, Gurgaon and Dehradun. The Company also operates through its branch in United States of America. The Company provides Publishing services relating to typesetting of books and journals, composing of Yellow Page Advertisements and catalogues, data coding, conversion, indexing, editing, copy editing, editorial services, software development, maintenance and support to global publishers.

On 11-October-2011, ADI BPO Services Limited entered into a Share Purchase Agreement with HM Publishers Holdings Limited, the erstwhile Holding Company and purchased its entire shareholding in the Company, comprising 10,339,980 equity shares representing 61.46% of the issued, subscribed and paid up equity capital of the Company. As at 31-March-2013, ADI BPO Services Limited, the holding company held 12,616,996 equity shares representing 75% of the issued, subscribed and paid up equity capital of the Company.

2.1 Employee benefit plans

2.1.a Defined contribution plans

The Company makes contributions to Provident Fund, Superannuation Fund and Employee State Insurance (ESI) Scheme for qualifying employees. Under the Schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The Company recognised INR 276.62 Lacs (15 months period ended 31 March, 2012 INR 379.44 Lacs.) for Provident Fund contributions, INR 6.00 Lacs (15 months period ended 31 March, 2012 INR 7.76 Lacs.) for Superannuation Fund Contributions and INR 66.81 Lacs (15 months period ended 31 March, 2012 INR 102.46 Lacs) for ESI in the Statement of Profit and Loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

2.1.b Defined benefit plans

The Company offers the following employee benefit schemes to its employees:

i. Gratuity

The following table sets out the funded status of the defined benefit schemes and the amount recognised in the financial statements:

3.1 Segment information

The Company operates in one business segment of providing publishing solutions viz., typesetting and data digitization services and is considered to constitute a single segment in the context of primary segment reporting as prescribed by Accounting Standard 17 -''''Segment Reporting".

The Company''s operations are managed on a worldwide basis from India and they operate in four principal geographical areas viz., India, Europe, United States of America and Rest of the World. The secondary segment is identified to these geographical locations. Details of secondary segment by geographical locations are given below:

4 Subsequent to the year end, the Company has entered into a Membership Interest Purchase Agreement on May 10, 2013 with M/s Element LLC ("Element") and its members, for acquiring 100% ownership of Element , a Limited Liability Company located in Florida, USA for an aggregate consideration of approximately INR 1000 lacs. The proposed transaction is subject to fulfillment of certain terms and conditions as per the said Agreement.

5 Previous Year''s figures

The Board of Directors of the Company, at their meeting held on 15-November-2011, approved the change in the Company''s financial year from December to March. Accordingly, the financial statements for the previous period of 15 months are from 1-January-2011 to 31-March-2012. Hence, the figures for the current financial year of 12 months are not comparable with those of previous period.

As stated above since the Company''s financial statements for the previous period were prepared for the 15 month period from 1-January-2011 to 31-March-2012 and the Revised Schedule VI became effective from 1 April, 2011, the financial statements for the current year have been prepared under Revised Schedule VI for the first time. This has significantly impacted the disclosure and presentation made in the financial statements. Previous period''s figures have been regrouped / reclassified wherever necessary to correspond with the current year''s classification / disclosure.

Mar 31, 2012

I. BACKGROUND

i. MPS Limited, (the Company) is engaged in the business of providing publishing solutions viz., typesetting and data digitization services for overseas publishers. The Company has a 100% Export Oriented Unit in Bengaluru, and units registered under the Software Technology Park of India (STPI) scheme that are located in Chennai, Delhi and Gurgaon. The Company also operates through its branches in United States of America and United Kingdom. The Company provides Publishing services relating to typesetting of books and journals, composing of Yellow Page Advertisements and catalogues, data coding, conversion, indexing, editing, copy editing, editorial services, software development, maintenance and support to global publishers.

ii. On 11-October-2011, HM Publishers Holdings Limited, the erstwhile holding Company, entered into a Share Purchase Agreement (SPA) with ADI BPO Services Limited (known as ADI BPO Services Private Limited upto 8-May-2012), a domestic Company, to sell its entire shareholding in the Company, comprising 10,339,980 equity shares representing 61.46% of the issued, subscribed and paid up equity capital of the Company. Following this agreement, the execution of the stake sale was concluded as an open-market block deal transaction on the National Stock Exchange and in terms of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 and subsequent amendments thereto, open offer proceedings were initiated by ADI BPO Services Limited with a Public Announcement on 14-October- 2011 which were completed on 6-January-2012. Subsequent to the closure of the open offer proceedings, ADI BPO Services Limited has become the Holding Company with 76.27% shareholding.

iii. Consequent to the Scheme of amalgamation of the wholly owned subsidiaries of the Company, MPS Technologies Limited and MPS Content Services Inc., USA and its wholly owned subsidiary MPS Content Services India Private Limited, with the Company, with an appointed date of 31-December-2010, sanctioned by the Honourable High Court of Madras vide its order dated 29- June-2011, all the assets, liabilities and reserves as on 31-December-2010 of the said erstwhile subsidiaries (Transferor Companies) were recorded in the books of the Company at the respective values appearing in the books of the Transferor Companies without revaluation. The excess of the value of Investment in the books of the Company over the value of share capital and reserves of the Transferor Companies of Rs1,326.58 Lacs was adjusted against the reserves of the Company in accordance with the Scheme of Amalgamation. Accordingly an amount of Rs500 Lacs was adjusted against the General Reserves and the balance of Rs826.58 lacs against the surplus in Profit and Loss Account as on 31-December-2010.

The Profit and Loss Account for the 15 months ended 31-March-2012 accordingly includes the operations of the erstwhile subsidiaries while the same are not included in the Previous Year and hence are not comparable.

The Board of Directors of the Company, at their meeting held on 15-November-2011, approved the change in the Company's financial year from December to March. Accordingly, the financial statements are presented for the period from 1-January- 2011 to 31-March-2012. Hence, the figures for the current financial period are not comparable with those of the previous year. Previous year figures have been regrouped/reclassified wherever necessary to conform to current period's classification.

1. Issued, Subscribed and Paid-up Share Capital

Of the 1,68,22,668, equity shares (PY - 1,68,22,668 shares), 1,68,19,852 shares (PY - 1,68,19,852 shares) were allotted as fully paid up pursuant to contracts without payments being received in cash which includes 1,63,52,636 shares (PY - 1,63,52,636 shares) issued as Bonus Shares.

Of the above, 1,28,31,496 shares (PY - 1,03,39,980 shares) are held by ADI BPO Services Limited (PY - H M Publishers Holdings Ltd, United Kingdom), the Holding Company.

2. Secured Loan

(a) Working Capital Demand Loan / Cash credits availed by erstwhile subsidiary amounting to RsNil (PY - Rs371.66 Lacs) are secured by a guarantee given by HM Publishers Holdings Limited.

(b) Working Capital Demand Loan / Cash credits availed amounting to RsNil (PY - Rs600 lacs) are secured by inventories and book debts of the Company.

3. There are no micro and small enterprises, to whom the Company owes dues , which are outstanding for more than 45 days during the year and also as at 31-March-2012 (PY - RsNil). This information and that given in "Current Liabilities" in Schedule 10 has been identified on the basis of information available with the Company. This has been relied upon by the auditors.

The above amounts are based on the notice of demand / Assessment Orders by the relevant authorities and the Company is contesting these claims with the respective authorities. Outflows, if any, arising out of these claims would depend on the outcome of the decisions of the appellate authorities and the Company's rights for future appeals before the judiciary. No reimbursements are expected.

(b) The Company has received orders from service tax authorities disallowing input credit of service tax aggregating to Rs687.59 Lacs for the period June 2006 to December 2010. The Company has filed/is in the process of filing appeals against such orders. Based on legal opinion, the Company is of the view that the disallowance is not sustainable.

The Company has filed appeals against the service tax demand of Rs72 Lacs on overseas commission for the period from 18-April-2006 to 31-December-2006. The Company has been advised that in the event of the demand being upheld by the Appellate Authority, the Company being an exporter of services, is eligible to avail the tax as input credit.

Notes :

(i) The discount rate is based on the prevailing market yields of Indian Government securities as at the Balance Sheet date for the estimated term of the obligations.

(ii) The estimate of future salary increases considered, takes into account the inflation , seniority, promotion, increments and other relevant factors.

(iii) The entire Plan Assets are managed by the Life Insurance Corporation of India (LIC). The details with respect to the composition of investments in the fair value of Plan Assets have not been disclosed in the absence of the necessary information.

(iv) The details of experience adjustments arising on account of plan assets and liabilities for the years 2007 to 2010 as required by Accounting Standard (AS) - 15 (Revised) "Employee Benefits" are not available in valuation report.

(v) The Company's best estimate, as soon as it can reasonably be determined of contributions expected to be paid to the plan during the annual period beginning after the balance sheet date RsNil.(PY - Rs89 Lacs)

The above disclosure excludes the figures of the overseas branch, as it is governed by the laws prevailing in the United States of America.

4. Segment Reporting:

The company operates in one business segment of providing publishing solutions viz., typesetting and data digitization services and is considered to constitute a single segment in the context of primary segment reporting as prescribed by Accounting Standard 17 - "Segment Reporting.

Notes

1. Related party relationships are as identified by the Company on the basis of information available and relied upon by the auditors.

2. No amount has been written back during the year in respect of dues to related parties.

5. Leases

The company has entered into cancellable and non-cancellable operating leases for office premises. Lease rentals recognized in respect of such operating leases in the statement of Profit and Loss Account is Rs1,044.55 Lacs ( PY - Rs780.17 Lacs)

Dec 31, 2010

A. Background

MPS Limited, (the Company) is engaged in the business of providing typesetting and data digitization services for overseas publishers. The Company has a 100% Export Oriented Unit in Bengaluru, and units registered under the Software Technology Park of India (STPI) scheme that are located in Chennai, Delhi and Gurgaon. In March, 2009, the Company had set up a Unit at Noida which is located in a Special Economic Zone notified area. The Company also operates through its branches in United States of America and United Kingdom. The Company provides Publishing Services relating to typesetting of books and journals, composing of Yellow Page Advertisements and catalogues, data coding, conversion, indexing, editing, copy editing and editorial services to global publishers.

MPS Limited had two direct subsidiaries MPS Technologies Limited and MPS Content Services Inc. USA (formerly ICC Macmillan Inc. USA) MPS Content Services India Private Limited (formerly ICC India Private Limited) was a subsidiary of MPS Content Services Inc. USA.

The Board of Directors of the Company, at its meeting held on 10th January 2011, approved a Scheme of Amalgamation pursuant to Sections 391 to 394 of the Companies Act, 1956 and Oregon Business Corporation Act, USA involving the Amalgamation of the wholly owned subsidiaries of the Company, MPS Technologies Ltd. and MPS Content Services Inc. USA and its wholly owned subsidiary MPS Content Services India Private Limited with the parent company, MPS Limited (the Company), with effect from 31 December 2010, (Appointed Date'). This Scheme has been sanctioned by the Honourable High Court of Madras vide its order dated 15th June 2011.

On an application made by the Company, the Registrar of Companies (ROC) vide its letter dated 6th June 2011 has granted extension of time for holding the Annual General Meeting for a period of three months upto 30th September, 2011.

Consequent to the sanction of the above scheme:

1. All the assets, liabilities and reserves of MPS Technologies Limited, MPS Content Services Inc. USA and its subsidiary MPS Content Services India Private Limited (Transferor Companies) have been recorded in the books of the Company at the respective values appearing in the books of the Transferor Companies without revaluation.

2. The excess of the value of Investment in the books of the parent company over the value of share capital and reserves of the erstwhile subsidiaries of Rs. 1326.58 Lacs has to be adjusted against the reserves of the Transferee Company in accordance with the Scheme of Amalgamation. Accordingly an amount of Rs. 500 Lacs has been adjusted against the General Reserves and the balance has been adjusted against the surplus in Profit and Loss Account.

3. Contingent Liability: (a) Disputed Demands

Name of the Statute Nature of Dues Rs. In Lacs

Income Tax Act, 1961 Income Tax 5.21 (PY - 5.21) demands of erstwhile subsidiaries

Income Tax Act, 1961 IncomeTax 529.81 (PY - Nil) demands

Income Tax Act, 1961 IncomeTax 73.70 (PY - Nil) demands

Income Tax Act, 1961 IncomeTax 1.56 (PY -1.56) demands of erstwhile subsidiaries

Section 66A of Finance Act Service Tax 227.77 (PY - 227.77) demands

Section 66A of Finance Act Service Tax 99.99 (PY - Nil) demands

Section 66A of Finance Act Service Tax 39.54 (PY - Nil) demands

Section 66A of Finance Act Service Tax 5.29 (PY - Nil) demands

Section 66A of Finance Act Service Tax 9.66 (PY-Nil) demands

Name of the Period Forum where dispute is pending Statute

Income Tax Act, Asst Year 2005-06 Income Tax Appellate Tribunal, 1961 Chennai

Income Tax Act, Asst Year 2007-08 Deputy Commissioner of Income 1961 Tax, Chennai

Income Tax Act, Asst Year 2007-08 Deputy Commissioner of Income 1961 Tax, Chennai Income Tax Act, Asst Year 2007-08 Commissioner of Income Tax 1961 (Appeals), Chennai

Section 66A of July 2003 to Customs and Excise Service Finance Act Dec 2006 Tax Appellate Tribunal, Bengaluru

Section 66A of Oct 2007 to Customs and Excise Service Finance Act Sept 2008 Tax Appellate Tribunal, Bengaluru

Section 66A of Jan 2007 to Commissioner of Service Tax, Finance Act Sep 2007 Bengaluru

Section 66A of Aug 2007 to Commissioner of Service Tax, Finance Act Sept 2007 Bengaluru

Section 66A of Oct 2007 to Commissioner of Service Tax, Finance Act Dec 2007 Bengaluru

(b) No provision has been considered for Service Tax amounting to Rs.227.77 Lacs on overseas commission paid for the period from 1 July, 2003 to 31 December, 2006, as the demands raised by the Authorities for this period is being contested by the Company. The Service Tax for the period from January, 2007 to December, 2010 together with interest amounting to Rs.291.85 Lacs and has been fully remitted. Interest on delayed remittance of Service Tax Rs.52.36 Lacs has been provided for.

(c) As on 31 December, 2010, the Company has appealed against the disallowance of Service Tax claim of Rs.190.54 Lacs. Subsequent to the year end, the company has appealed against disallowance of Rs. 7.99 Lacs. In the opinion of the management, the disallowance is not sustainable.

4. Subsequent to the year end, the Beverly facility of MPS Content Services Inc., erstwhile subsidiary of the Company, has been closed down and the company has incurred an amount of Rs. 48.76 Lacs (equivalent of USD 107,294) towards severance pay to employees and termination costs for early vacation of the premises.

5. Employee Benefits:

The entire Plan Assets are managed by the Life Insurance Corporation of India (LIC). The details with respect to the composition of investments in the fair value of Plan Assets have not been disclosed in the absence of the necessary information.

The above disclosure excludes the figures of the overseas branch, as it is governed by the laws prevailing in the United States of America.

6. Segment Reporting:

Business Segment

The Company operates in one business segment, the business of typesetting and data digitization services for overseas publishers. All assets, liabilities, revenue and expenses are related to this segment.

Notes:

1. Geographical Segments

The Company's operations are managed on a worldwide basis from India, although, they operate in four principal geographical areas of the world, namely India, Europe, United States of America and Rest of the world and the revenues are segregated based on the geographical location of the customer.

2. Segmental Assets includes all operating assets used by respective segment and consists principally of operating cash, debtors, inventories and fixed assets net of allowances and provisions. Segmental Liabilities include all operating liabilities and consist primarily of creditors and accrued liabilities. Segment assets and liabilities do not include income tax assets and liabilities.

7. Related Party Disclosure

Information relating to related party transactions (As identified by the management and relied upon by the Auditors)

1. Parties where control exists;

1.1. Ultimate Holding Company : Georg Von Holtzbrinck GmbH & Co K.G.

1.2. Holding Company : H M Publishers Holdings Ltd.

1.3. Subsidiary Companies* : MPS Technologies Ltd. MPS Content Services Inc. USA MPS Content Service India Pvt. Ltd.

"Until 31st December 2010 (Refer Note I of Schedule 19)

2. Group Companies / Entities with whom the Company had transactions during the year:

Macmillan Publishers Limited, UK Macmillan Iberia SAU

Macmillan Academic Publishing Inc. Macmillan Education, SA

Macmillan Publishers China Limited Ediciones Castillo Group Macmillan, Mexico

Macmillan Publishers Australia Proprietary Limited Gill & Macmillan Publishers (Ireland)

Macmillan Hellas (Greece) Macmillan Publishers Holdings LLC

Holtzbrinck Publishers Holdings Limited Macmillan Education Limited

Nature America Inc. Macmillan Publishers India Limited

Kingfisher Publications Limited Bookworxs GmbH

HGV Hanseatische Gasellschaft Euroscript GmbH

Macmillan Poland

8. No provision has been made for Minimum Alternate Tax (MAT), as the Company has obtained legal opinion to the effect that the income accrued or arising at a unit in the SEZ, does not fall within the ambit of Section 115JB of the Income Tax Act, 1961.

Current tax is determined in respect of taxable income for the Calendar year ended 31st December, 2010. The ultimate current Tax liability will be determined on the basis of taxable income for the Financial year 1st April, 2010 to 31st March, 2011.

9. Pursuant to the announcement by the Institute of Chartered Accountants of India (ICAI) in respect of 'Accounting for Derivatives' though the Company has opted not to follow the recognition and measurement principles relating to derivatives as specified in Accounting Standard - 30, 'Financial Instruments, Recognition and Measurement', keeping in view the principle of prudence as enunciated in AS 1. Disclosure of Accounting Policies, the entity has not considered, by way of prudence, the net gains in respect of all outstanding derivative contracts at the balance sheet date.

The value of forward contracts entered into hedge the foreign currency risk of firm commitments/highly probable transactions as at 31st December, 2010 is USD 10,100,000, Euro 450,000 and GBP 2,000,000 (Previous year - USD 11,500,000 & Euro 2,575,000).

The remeasurement of the fair value as at the balance sheet date has resulted in mark to market net gains of Rs.174.99 Lacs (Previous year - net gain of Rs. 217.07 Lacs) relating to undesignated forward contracts. The gains have not been recognised in the Profit and Loss account as a matter of prudence.

10. The financial statements of 2010 includes the operating results of the erstwhile subsidiaries consequent to Amalgamation, which do not form part of the operating results of previous year. Hence the figures for the current year are not comparable with those of the previous year. Previous year figures have been regrouped / reclassified wherever necessary to conform to current year's presentation.

Dec 31, 2009

Background

MPS Limited, formerly known as Macmillan India Limited (the Company) is engaged in the business of providing typesetting and data digitization services for overseas publishers. The Company has a 100% Export Oriented Unit in Bengaluru, and units registered under the Software Technology Park of India (STPI) scheme that are located in Chennai, Delhi and Gurgaon. In March, 2009, the Company has set up an Unit at Noida which is located in a Special Economic Zone notified area. The Company also operates through its branches in United States of America and United Kingdom. The Company provides Publishing services relating to typesetting of books and journals, composing of Yellow Page Ads and catalogues, data coding, conversion, indexing, editing, copy editing and editorial services to global publishers.

MPS Limited has two direct subsidiaries MPS Technologies Limited and MPS Content Services Inc, USA (formerly ICC Macmillan Inc, USA). MPS Content Services India Private Limited (formerly ICC India Private Limited) is a subsidiary of MPS Content Services Inc, USA.

With effect from 25th June 2009, the Company has changed its name to "MPS Limited" and the necessary statutory approvals have been obtained for change of name.

The Indian Subsidiary ICC India Private Ltd has changed its name to MPS Content Services India Pvt. Ltd. and Foreign Subsidiary in USA had changed its name from ICC Macmillan Inc to MPS Content Services Inc.

MPS Mobile Inc, a subsidiary of MPS Content Service Inc (formerly ICC Macmillan Inc, USA) which was formed during the year was dissolved on 28th December 2009 since the company did not commence business.

2. In the year 2006 MPS Limited acquired MPS Content Services Inc, USA and its subsidiary MPS Content Services India Private Limited for a consideration of Rs. 1,562.74 lacs. In accordance with the terms of the Share Purchase agreement an amount of Rs. 24.22 lacs (equivalent USD 50,000) was retained in the books of MPS Content Services Inc from the consideration payable to the individual promoters as security for any breach of warranties or for any claim against MPS Limited (the purchaser) relating to the labour dispute and the transfer pricing assessments. During the year the final settlement was made to the promoters after reducing an amount of Rs. 9.79 lacs (equivalent of USD 21,002) towards claims relating to the labour dispute of MPS Content Services India Private Limited and an amount of Rs. 0.88 lacs (equivalent of USD 1 887) towards advances taken by one of the promoters. Accordingly, this amount of Rs. 9.79 lacs is reduced from the carrying value of investments.

3. Contingent Liability

a. Disputed Demands:

Name of Nature of Rupees Period Forum where dispute the Statute Dues (in lacs) is pending

Income Tax Act, Income Tax 5.21 Asst Year 2003-04 Income Tax Appellate 1961 Demands (PY - Nil) of Subsi- diary Tribunal Chennai

Income Tax Act, Income Tax 24.36 Asst Year 2005-06 Commissioner of Income Tax 1961 Demands (PY - 24.36) (Appeals), Chennai

Income Tax Act, Income Tax 147.28 Asst Year 2006-07 Commissioner of Income Tax 1961 Demands (PY - Nil) (Appeals), Chennai

Section 66A of Service Tax demands 227.77 July, 2003 to Customs and Excise Service Tax Finance Act (Refer note b) (PY - 227.77) Dec,2006 Appellate Tribunal, Bengaluru

b. No provision has been considered for service tax amounting to Rs. 227.77 lacs on overseas commission paid for the period from 1st July, 2003 to 31st December, 2006, as the demands raised by the Authorities for this period is being contested by the company. The service tax for the period from January 2007 to December 2008 together with interest amounts to Rs. 281.15 lacs out of which Rs. 154.46 lacs has been remitted. However, interest on delayed remittance of service tax Rs. 62.70 lacs has been provided for.

4. There are no amounts due to Micro, Small and Medium Enterprises as identified by the management and relied upon by the auditors.

5. The net worth of MPS Content Services Inc., USA, a subsidiary, has been eroded and its subsidiary MPS Content Services India Private Limited has not carried on operations during 2009 since its principal infrastructure (namely production activities, fixed assets, employees etc) has been transferred to the Company. However, the Company (MPS) has committed to extend continued financial and operational support to MPS Content Services Inc, USA and to MPS Content Services India Private Limited for the foreseeable future. Accordingly both the subsidiaries are considered as going concerns and the investments Rs. 3,320.47 lacs, receivables Rs. 257.28 lacs and advances Rs. 649.14 lacs relating to MPS Content Services Inc, USA are considered good and recoverable.

6. The Board of Directors of the Company at their meeting held on December 21, 2009 have approved the proposal for the Company to acquire the shares of MPS Content Services India Private Limited from MPS Content Services Inc, USA, whereby MPS Content Services India Private Limited will become a subsidiary of MPS Limited and cease to be a subsidiary of MPS Content Services Inc, USA.

7. In the meeting held on 25th February 2009, the remuneration of the Managing Director has been revised effective from 1st February, 2009. The revision has been approved by shareholders at the Annual General Meeting held on 23rd June 2009. An application seeking Central Governments approval has been filed to comply with provisions of Section 309 read with Schedule XIII of the Companies Act, 1956. The approval of the Central Government is awaited.

8. Segment Reporting

Based on a reconsideration of nature of risks, rewards and other relevant factors, the Exports of Information Processing and E-Business which were hitherto considered as individual reportable segments have been combined in to a single reportable segment namely Publishing Services. Consequently, the figures for the previous year has been recasted to make it comparable with the current year.

9. Related Party Disclosure

Information relating to related party transactions (As identified by the management and relied upon by auditors)

1. Parties where control exists

1.1 Ultimate Holding Company Georg Von Holtzbrinck Gmbh & Co K.G.

1.2 Holding Company H M Publishers Holdings Ltd

2. Subsidiary Companies: MPS Technologies Ltd

MPS Content Services Inc., USA

MPS Content Services India Private Limited

MPS Mobile Inc., (dissolved w.e.f. 28.12.2009)

3. Fellow Subsidiaries with whom the company had transactions during the year

Macmillan Publishers Holdings LLC Ediciones Castillo Grupo Macmillan, HGV Hanseatische Gasellschaft Mexico

Macmillan Academic Inc Gill & Macmillan Publishers Bookworxs Gmbh

Macmillan Publishers Australia Macmillan Publishers China Ltd Holtzbrinck-USA Proprietary Limited

Macmillan Greece Macmillan Publishers Limited Macmillan Publish- ers India Limited

Macmillan Iberia SAU Macmillan Education Limited Frank Brothers & Co (Publishers) Limited

Macmillan SA Kingfisher Publica- tions Limited

4. Key Management personnel Mr. Rajiv K Seth, Managing Director

10. Pursuant to the announcement by the Institute of Chartered Accountants of India (ICAI) in respect of Accounting for Derivatives though the Company has opted not to follow the recognition and measurement principles relating to derivatives as specified in Accounting Standard-30, Financial Instruments, Recognition and Measurement, issued by the ICAI for the year ended 31s t December 2009, keeping in view the principle of prudence as enunciated in AS 1, Disclosure of Accounting Policies, the entity has not considered by way of prudence, the net gains in respect of all outstanding derivative contracts at the balance sheet date.

The value of forward contracts entered into to hedge the foreign currency risk of firm commitments/highly probable transactions as at 31st December 2009 is USD 11,500,000 and Euro 2,575,000 (Previous year USD 1,200,000, Euro 1,500,000 and GBP 600,000).

The remeasurement of the fair value as at the balance sheet date has resulted in mark to market net gains of Rs. 217.07 lacs (Previous year mark to market losses of Rs. 262.10 lacs) relating to undesignated forward contracts. The gains have not been recognised in the profit and loss account as a matter of prudence.

11. Current tax is determined in respect of taxable income for the calendar year ended December 31, 2009. The ultimate current tax liability will be determined on the basis of taxable income for the year April 01, 2009 to March 31, 2010.

Pursuant to amendment in Finance Act, 2009, Fringe Benefit Tax has been abolished with effect from April 1, 2009 and hence no provision is considered for the period April 1, 2009 to December 31, 2009.

12. The Company will initiate a review of the transactions with overseas associates to ascertain compliance with transfer pricing requirements under the Income Tax Act, 1961 during the year ending March 31, 2010. Therefore, adjustments, if any, arising out of such study, have not been made in the attached financial statements.

13. The financial statements of 2008 included the operating results of the Publishing Business upto 12th May 2008 which do not form part of the operating results for the current year consequent to the demerger. Hence the figures for the current year are not comparable with those of the previous year. Previous year figures have been regrouped/ reclassified wherever necessary to conform to the current year classification.

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