Notes to Accounts of Sankhya Infotech Ltd.

Mar 31, 2018

Note No 1 - Company Information

Sankhya is a leading software products and services company serving the rapidly growing niche markets of Training, Education, Modeling and Simulation. The company has developed several Software products targeted in the area of Education, Training and Learning and owns 100% of the "Intellectual Property" in them. The company''s services include software services around the products, development of Simulation software for specific customer needs, courseware, besides providing consulting support to customers. The company has established operations in France and UAE. The company has diverse clients from across several continents, and is a well-established name in the field of Education, Training & Simulation.

Sankhya''s vision is to ensure the success of global organizations by providing them with intelligent learning platforms and content to enable them to continuously re-skill and enhance the effectiveness of their employees, adapting to the changing world.

Our mission is to enhance the organizational effectiveness of mission critical enterprises by providing continuous experiential training and enriching the competency of people in core functions!!

Note 2(d): The Board of the company has approved the allotment of 18,51,852 shares of Rs.10 face value at a premium of Rs.39.07 per share to promoters and non promoters. upfront amount of Rs.381.17 lakhs is kept as share warrant money by the company and shall issue share warrant fully convertible into equity shares upon the receipt of the entire amount within the specified period of 18 months.

As per IND AS 19 "Employee Benefits ", the disclosures of Employee Benefits as defined in the Accounting Standard are given below:

Defined Contribution Plans:

PROVIDENT FUND

The provident fund is operated by the Regional Provident Fund Commissioner. Under the scheme, the Company is required to contribute a specified percentage of payroll cost to the retirement benefit schemes to fund the benefits. These funds are recognized by the Income tax authorities. The Company has recognized the following amounts in the Profit and Loss Account for the year:

Gratuity is payable to employees as per Payment of Gratuity Act. Leave encashment is payable to eligible employees who have earned leaves, during the employment and/or on separation as per the company''s policy. The company has funded the Gratuity liability with Group Gratuity Scheme of Life Insurance Corporation of india Ltd.

3. Segment Information as per Accounting Standard IND AS - 108 - The Company has identified two types of reporting segments at standalone level viz., Business Segment and Geographical Segments. Business Segments identified as Defense & Non-Defense and Geographical segments identified as Domestic and Overseas. Segments have been identified and reported taking into account nature of products and services the differing risks, returns and the internal business reporting systems. Accounting policies adopted for segment reporting are in line with Accounting Policy of the company and are in accordance with the IND AS - 108.

Capital employed as also assets and liabilities of the company are not capable of being stated separately segment-wise since all the assets and liabilities are held under composite undertaking for both the geographic segments.

4. Overseas Transactions

Overseas banking operations of the company for all the customers in France and customer contracts of UAE signed prior to 2006 are operated at BNP Paribas Toulouse and are administered by Mr. Christian Rey, and supported by Mr. Sebastian Vigreux, Administrative Accountant.

5. Corporate Social Responsibility (CSR) as per Companies Act, 2013

The provisions of Section 135 of the Companies Act, 2013 relating to CSR is not applicable to the company. Accordingly, there is no expenditure under CSR.

6. Regrouping & Rounding off

The previous year''s figures have been reclassified and regrouped, wherever necessary to confirm the Current Year classification and to confirm to the relevant laws. Paisa has been rounded off to the nearest rupee.

As per our report of even date

(iv) Financial Risk Management

(a) Interest Rate Risk Management

The company is exposed to interest rate risk because company borrows funds at both fixed and floating interest rates. The risk is managed by the company by maintaining an appropriate mix between fixed and floating rate borrowings.

The company''s exposures to interest rates on financial assets and financial liabilities are detailed in the liquidity risk management section of this note.

Interest Rate Sensitivity Analysis

The sensitivity analysis below have been determined based on the exposure to interest rates at the end of the reporting period. For floating rate liabilities, the analysis is prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year. A 50 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management''s assessment of the reasonably possible change in interest rates.

(b) Liquidity Risk Management

Ultimate responsibility for liquidity risk management rests with the board of directors, which has established an appropriate liquidity risk management framework for the management of the company''s short-term, medium-term and long-term funding and liquidity management requirements. The company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

Liquidity and Interest Risk Tables

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

The tables include both interest and principal cash flows. To the extent that interest flows are floating rate, the undiscounted amount is derived from interest rate curves at the end of the reporting period.

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Mar 31, 2016

As per Accounting Standard 15 "Employee Benefits", the disclosures of Employee Benefits as defined in the Accounting Standard are given below:

Defined Contribution Plans:

PROVIDENT FUND

The provident fund is operated by the Regional Provident Fund Commissioner. Under the scheme, the Company is required to contribute a specified percentage of payroll cost to the retirement benefit schemes to fund the benefits. These funds are recognized by the Income tax authorities. The Company has recognized the following amounts in the Profit and Loss Account for the year:

1. Research and Development - The Company has in - House Research & Development Center involved in developmental activities for new products in the fields of Simulation and Training. Details of Capital & Revenue Expenditure Incurred are as details below

2. Segment Information as per Accounting Standard (AS)-17

The Company has identified two types of reporting segments at standalone level viz., Business Segment and Geographical Segments. Business Segments identified as Defense & Non-Defense and Geographical segments identified as Domestic and Overseas. Segments have been identified and reported taking into account nature of products and services the differing risks, returns and the internal business reporting systems. Accounting policies adopted for segment reporting are in line with Accounting Policy of the company and are in accordance with the AS-17.

3. Related Party Disclosure as per Accounting Standard (AS-18):

Name of the related parties and description of relationships:

Subsidiaries

i) Sankhya SARL, France | ii) Sankhya US Corporation

iii) Mahasena Info Technologies (India) Pvt. Limited

Key Management Personnel

i) Mr. N. Sridhar - Chairman & Managing Director (CMD)

ii) Mr. N. Srinivas - Vice Chairman (VC)

Relatives of Key Management Personnel

i) Mr. N. Ramakrishna Rao - Father of CMD

ii) Mrs. N. Gayatri - Wife of CMD

iii) Mrs. Indira Ramani -Wife of VC

iv) Mrs. N. Parvata Vardhani - Mother of CMD

4. Overseas Transactions

Overseas banking operations of the company for all the customers in France and customer contracts of UAE signed prior to 2006 are operated at BNP Paribas Toulouse and are administered by Mr. Christian REY, and Supported by Mr. Sebastian VIGREUX, Administrative Accountant.

5. Unclaimed Dividend

The Company has an amount of Rs.2.48 Lacs representing unclaimed Dividend pertaining to FY 2007-08 as on 1.4.2015, which has been transferred to Investor Education Protection Fund.

6. Corporate Social Responsibility (CSR) as per New Companies Act, 2013 - The provisions of Section 135 of the Companies Act, 2013 relating to CSR is not applicable to the company. Accordingly, there is no expenditure under CSR.

7. Regrouping & Rounding off

The previous year''s figures have been reclassified and regrouped, wherever necessary to confirm the Current Year classification and to confirm to the relevant laws. Paisa has been rounded off to the nearest rupee.

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Mar 31, 2015

Note No 1 – Company Information

Sankhya is a leading software products and services company serving the rapidly growing niche markets of Training, Education, Modeling and Simulation. The company has developed several Software products targeted in the area of Education, Training and Learning and owns 100% of the "Intellectual Property" in them. The company's services include software services around the products, development of Simulation software for specific customer needs, courseware, besides providing consulting support to customers. The company has established operations in France and UAE. The company has diverse clients from across several continents, and is a well-established name in the field of education and training.

2. Research and Development - The Company has in – House Research & Development Center involved in developmental activities for new products in the fields of Simulation and Training. Details of Capital & Revenue Expenditure incurred are as detailed below.

3. Segment Information as per Accounting Standard (AS)-17

The Company has identified two types of reporting segments at standalone level viz., Business Segment and Geographical Segments. Business Segments identified as Software Services & Software Products and Geographical segments identified as Domestic and Overseas. Segments have been identified and reported taking into account nature of products and services the differing risks, returns and the internal business reporting systems. Accounting policies adopted for segment reporting are in line with Accounting Policy of the company and are in accordance with the AS-17.

4. Related Party Disclosure as per Accounting Standard (AS-18) : Name of the related parties and description of relationships :

Subsidiaries

i) Sankhya SARL, France

ii) Sankhya US Corporation

iii) Mahasena Info Technologies (India) Pvt. Limited

Joint Venture

Harvest Holding Partners LLC, Dubai

Key Management Personnel

i) Mr. N. Sridhar – Chairman & Managing Director (CMD)

ii) Mr. N. Srinivas – Vice Chairman (VC)

Relatives of Key Management Personnel

i) M r. N. Ramakrishna Rao - Father of CMD

ii) Mrs. N. Gayatri - Wife of CMD

iii) Mrs. Indira Ramani - Wife of VC

iv) Mrs. N. Parvata Vardhani - Mother of CMD

5. Overseas Transactions

Overseas banking operations of the company for all the customers in France and customer contracts of UAE signed prior to 2006 are operated at BNP Paribas Toulouse and are administered by

Mr. Christian REY, and Supported by

Mr. Sebastian VIGREUX, Administrative Accountant.

6. Unclaimed Dividend

The Company has an amount of Rs.2.48 Lacs representing unclaimed Dividend. The details are as mentioned below:

7. Pursuant to an alignment with the requirement of the Companies Act, 2013, the Company has charged off the depreciation on account of revaluation as an expense to the profit and loss account. Accordingly, the profit for the year ended 31st March 2015 is lower by Rs.11.08 Lac.

8. Corporate Social Responsibility (CSR) as per New Companies Act, 2013 – The provisions of Section 135 of the Companies Act, 2013 relating to CSR is not applicable to the company. Accordingly, there is no expenditure under CSR.

9. Regrouping & Rounding off

The previous year's figures have been reclassified and regrouped, wherever necessary to confirm the Current Year classification and to confirm to the relevant laws. Paisa has been rounded off to the nearest rupee.

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Mar 31, 2014

1 Company Information

Sankhya is a leading software products and services company serving the rapidly growing niche markets of Training, Education, Modeling and Simulation. The company has developed several Software products targeted in the area of Education, Training and Learning and owns 100% of the "Intellectual Property" in them. The company''s services include software services around the products, development of Simulation software for specific customer needs, courseware, besides providing consulting support to customers. The company has established operations in France and UAE. The company has diverse clients from across several continents, and is a well-established name in the field of education and training.

2. Contingent liability not provided for in respect of :

(a) Claims not acknowledged as debts :

(i) Income Tax 90.39 100.43

(ii) Others 11.80 Nil

3. Research and Development

Capital Expenditure incurred on research and development is depreciated over the estimated life of related assets and the revenue expenditure is expensed as incurred.

4. Balances appearing under Unsecured Loans and Loans and advances are in the process of reconciliation.

5. Segment Information as per Accounting Standard (AS)-17

The Company has identified two types of reporting segments at standalone level viz., Business Segment and Geographical Segments. Business Segments identified as Software Services & Software Products and Geographical segments identified as Domestic and Overseas. Segments have been identified and reported taking into account nature of products and services the differing risks, returns and the internal business reporting systems. Accounting policies adopted for segment reporting are in line with Accounting Policy of the company and are in accordance with the AS-17.

6. Related Party Disclosure as per Accounting Standard (AS-18): Name of the related parties and description of relationships:

Subsidiaries

i) Sankhya SARL, France

ii) Sankhya US Corporation

iii) Mahasena Info Technologies (India) Pvt. Limited Joint Venture

Harvest Holding Partners LLC, Dubai Key Management Personnel

i) Mr. N. Sridhar - Chairman & Managing Director (CMD)

ii) Mr. N. Srinivas - Vice Chairman (VC)

Relatives of Key Management Personnel

i) Mr. N. Ramakrishna Rao - Father of CMD

ii) Mrs. N. Gayatri - Wife of CMD

iii) Mrs. Indira Ramani - Wife of VC

iv) Mrs. Parvatavardhani - Mother of CMD

7. Gratuity Provision of Rs.3 Lac for the year ended 31.3.2014 is made on Provisional Valuation Certificate obtained from the LIC Gratuity Fund Account. Independent Actuarial valuation certificate not obtained.

8. Provision for Income Tax for Tax demand raised by Income Tax Department:

The income tax department has raised demand for the Assessment Year 2008-09 and 2009-10 amounting to Rs.234.37 Lakh. The company''s request for payment of the amount in installments has been agreed and the company has paid an amount of Rs.66 lacs till 31.3.2014. However, the company has provided only 143.48 lacs in the books Rs.90.89 lacs has not been provided. The company would make suitable provisions for the FY 14.

9. Overseas Transactions

Overseas banking operations of the company for all the customers in France and customer contracts of UAE signed prior to 2006 are operated at BNP Paribas Toulouse and are administered by Mr. Christian REY, and supported by Mr. Sebastian VIGREUX, Administrative Accountant.

10. Write off

The Company has made a total write off of Rs.218.58 Lakh of the invoices raised on M/s Kingfisher Airlines (previous year 277.09 Lakh)

11. Regrouping & Rounding off

The previous year''s figures have been reclassified and regrouped, wherever necessary to confirm the Current Year classification and to confirm to the relevant laws. Paisa has been rounded off to the nearest rupee.

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Mar 31, 2013

1. Investments

Investments in wholly owned subsidiary are at cost. No fresh Investments are made during the financial year 2012-13.

2. Foreign Travel

The foreign travel includes Director''s travel amounting to Rs. 5, 60, 728/–

3. Micro, Small and Medium Enterprise.

There are no Micro, Small and Medium Enterprise, to whom the Company owes dues, which are outstanding at the Balance Sheet date, computed on unit wise basis.

4. Research and development

Capital Expenditure incurred on research and development is depreciated over the estimated life of related assets and the revenue expenditure is expensed as incurred.

The company has in – House Research & Development Centre involved in developmental activities for new products in the fields of Simulation and Training. Details of Capital & Revenue Expenditure incurred are as detailed below.

5. Write off

The Company has made a total write off of Rs. of the invoices raised on The Institute of Chartered Accountants of India amounting to Rs 277.09 Lakhs.

6. Balance Confirmation

Balances as appearing under Unsecured Loans, Sundry Debtors, Loans and advances are as per the confirmations received from the respective heads of account holders.

7. Unclaimed Dividend

The Company has an amount of Rs.5.52Lakhs representing unclaimed Dividend

8. Segment Reporting

The company''s operations relate to providing IT services, delivered to customers globally operating in transportation segment. Income and expenses which are direct in nature in relation to segments is categorized based on items that are identifiable individually to that segment, rest are categorized in relation to the associated turnover of the segment.

Expenses such as Depreciation and Interest, which form a significant component of total expenses, are not specifically allocable to specific segment as the underlying services are used interchange

9. Segment Information:

The Company has identified two reporting segments at standalone level viz., Software Services & Software Products. Segments have been identified and reported taking into account nature of products and services the differing risks, returns and the internal business reporting systems. Accounting policies adopted for segment reporting are in line with Accounting Policy of the company and are in accordance with the AS-17.

10. Regrouping & Rounding off

The previous year''s figures have been reclassified and regrouped, wherever necessary to confirm the Current Year classification and to confirm to the relevant laws. Paise have been rounded off to the nearest rupee.

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Mar 31, 2012

1 Investments

Investments in wholly owned subsidiary are at cost. During the current financial year "NIL" investments. Warrant Application Money :

During the current year company the company has received the remaining share application money amounting to Rs. 5,61,77,417 from promoters and Non promoters and 27,45,200 shares have been allotted thereof.

2 Foreign Travel

The foreign travel includes Director''s travel amounting to Rs.1.41 Lakhs.

3. Differed Taxes:

We recorded deferred tax liability of Rs. 50.03 lacs as at March 31, 2012.

We assess the likelihood that our deferred tax assets will be recovered from future taxable income. We believe it is more likely than not that we will realize the benefits of these deductible differences.

4. Contingent Liabilities not provided for in respect of Bank Guarantee given to various customers amounts to Rs. 5.53 lacs for the FY 2011-12

5. Loans

a) Secured Loan

During the current year the company has taken a working capital loan from bank of Rs. 20 cr. And a term loan of Rs. 4.5 cr on the following terms (The utilised amount by 31st March 2012 for the term loan is Rupees 123.68 lakhs only).

((Secured by first charge on Export bills and further secured by Equitable Mortgage of the immovable assets belonging to the company, commercial land belong to promoter and pledge of share belonging to promoter Director. (The above loans are further secured by personal guarantee of Promoter Director and Guarantor))

b) Un Secured Loans:

The company has repaid an amount of Rs.14,61,85,153/- As unsecured loan during the current year.

6. Micro, Small and Medium Enterprise.

There are no Micro, Small and Medium Enterprise, to whom the Company owes dues, which are outstanding at the Balance Sheet date, computed on unit wise basis.

7. Segment Reporting

The company''s operations relate to providing IT services, delivered to customers globally operating in transportation segment. Income and expenses which are direct in nature in relation to segments is categorized based on items that are identifiable individually to that segment, rest are categorized in relation to the associated turnover of the segment.

Expenses such as Depreciation and Interest, which form a significant component of total expenses, are not specifically allocable to specific segment as the underlying services are used interchangeably.

8. Write off

The Company has not made any provision for Bad and Doubtful Debt in respect of the invoices raised on The Institute of Chartered Accountants of India amounting to Rs 276.49 Lakhs. The company referred the same for Arbitration.

9. Balance Confirmation

Balances as appearing under Unsecured Loan, creditors, Sundry Debtors, Capital Work In process, Unbilled Revenues, Loans and advances are as per the confirmations received from the respective heads of account holders.

10. Income Tax

The Company has MAT payable of Rs. 30.85 Lakhs

11. Regrouping & Rounding off

The previous year''s figures have been reclassified and regrouped, wherever necessary to confirm the Current Year classification and to confirm to the relevant laws. Paisa has been rounded off to the nearest rupee.

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Mar 31, 2010

1. Fixed Assets

2. Investments

Investments in wholly owned subsidiary are at cost

3. Contingent Liabilities not provided for in respect of

The Income Tax appeal for the Financial Year 2001-02 to 2005-06 is won by the Company. The Assessing officer has passed Consequential orders with the following demand.

4. Overseas Cost

a) Secured Loans:

An amount of Rs.1201.84 lakhs is outstanding in Working Capital Loan availed from State Bank of India, Commercial Branch, Secunderabad as at the end of March 31, 2010.

b) Unsecured Loans:

The Company has taken loans from seven persons and the amount outstanding at the end of the year is Rs.817.09 lakhs.

5. Remuneration to Statutory Auditors (incl. Service Tax)

6. Related Party Disclosures

7. Micro, Small and Medium Enterprise.

There are no Micro, Small and Medium Enterprise, to whom the Company owes dues, which are outstanding at the Balance Sheet date, computed on unit wise basis.

8. EOUs Exemptions

The Companys operations are carried through 100% Export Oriented Unit ("EOU"). Income from EOUs are exempt for the earlier of 10 years commencing from the fiscal year in which the Software development commenced by the Unit. Exemptions if any applicable are applied with the relevant rules of the Income Tax, 1961 and other laws. Hence, the company has not provided any deferred tax liability as per AS 22 issued by the Institute of Chartered Accountants of India.

9. Segment Reporting

The companys operations relate to providing IT services, delivered to customers globally operating in transportation segment.

Income and expenses which are direct in nature in relation to segments is categorized based on items that are identifiable individually to that segment, rest are categorized in relation to the associated turnover of the segment.

Expenses such as Depreciation and Interest, which form a significant component of total expenses, are not specifically allocable to specific segment as the underlying services are used interchangeably.

10. The Company has not made any provision for Bad and Doubtful Debt in respect of the invoices raised on "The Institute of Chartered Accountants of India" amount to Rs.2,76,49,733/-. The Company referred the same for Arbitration for canceling the contract.

11. Balance Confirmation

Balances as appearing under Unsecured Loan creditors, Sundry Debtors, Capital Work In process, Work in process, Loans and advances are subject to Confirmation and / or reconciliation if any.

12. Income Tax

The Company has Income Tax Payable amounting to Rs.225.68 lakhs.

13. Unclaimed Dividend

The Company has an amount of Rs.5.57 lakhs representing unclaimed Dividend.

14. Regrouping & Rounding off

The previous years figures have been reclassified and regrouped, wherever necessary to confirm the Current Year classification and to confirm to the relevant laws. Paise have been rounded off to the nearest rupee. Schedules 1 to 12 form an integral part of the accounts.