CRANES SOFTWARE INTERNATIONAL LIMITED
ANNUAL REPORT 2009-2010
NOTES ON ACCOUNTS
SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO ACCOUNTS.
1.1. SIGNIFICANT ACCOUNTING POLICIES:
1.1.1. Basis of Preparation of financial statements
The financial statements are prepared and presented in accordance with the
Indian Generally Accepted Accounting Principles ('GAAP') under the
historical cost convention on the accrual basis. GAAP comprises mandatory
accounting standards issued by the Institute of Chartered Accountants of
India (ICAI), Companies (Accounting Standards) Rules, 2006 and guidelines
issued by the Securities and Exchange Board of India.
1.1.2. Use of Estimates
The preparation of financial statements in conformity with GAAP requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, the disclosures of contingent assets and
liabilities on the date of the financial statements and reported amounts of
revenue and expenses during the period reported. Actual results could
differ from those estimates. Any revision to accounting estimates is
recognized prospectively in current & future periods.
1.1.3. Revenue Recognition
i. Revenue from sale of products is recognized, in accordance with the
sales contract, on delivery of goods to the Customer. Revenue from product
sales are shown net of taxes.
ii. Revenue on Software Development services comprises revenue priced on a
time and material and fixed-price contracts. Revenue priced on a time and
material contracts are recognized as related services are performed.
Revenue from fixed-price, fixed time-frame contracts is recognized in
accordance with the percentage of completion method.
iii. Revenue from Technical Service, Training, support and other services
is recognized as the related services are performed over the duration of
the contract/course.
iv. Dividend is recognized when the right to receive the dividend is
established at the balance sheet date.
1.1.4. Cash flow statement
Cash flows are reported using the indirect method, whereby net profits
before tax is adjusted for the effects of transactions of a non-cash nature
and the changes during the period in inventories and operating receivables
and payables. The cash flows from regular revenue generating, investing and
financing activities of the Company are shown separately.
1.1.5. Fixed Assets and Capital Work-in-progress
i. Fixed Assets are stated at historical cost less accumulated
depreciation. Cost includes all expenses incurred to bring the assets to
its present location and condition. During the year exchange differences on
translation of foreign currency loans obtained to purchase fixed assets
from countries outside India are recognized in Profit and Loss a/c.
ii. Interest on borrowed money allocated to and utilized for fixed assets,
pertaining to the period up to the date the fixed asset is ready for its
intended use, is capitalized.
iii. Advances paid towards the acquisition of fixed assets outstanding as
of each balance sheet date and the cost of fixed assets not ready for its
intended use before such date are disclosed under Capital Work-in-progress.
1.1.6. Intangible Assets
i. All intangible assets are stated at cost less accumulated amortization.
ii. The cost of acquired intangible assets is the consideration paid for
acquisition and other incidental costs incurred to bring the intangible
asset for its intended use.
iii. Internally generated intangible assets are valued at cost which were
incurred during the development phase of intangibles which comprises of
expenditure on materials and services used or consumed, salaries and other
employment related cost of personnel engaged in development of intangible
asset, other direct expenditures and overheads that are necessary for the
generation of the intangible asset and that can be allocated on a
reasonable basis.
iv. Interest on borrowed money allocated to and utilized for intangible
assets, pertaining to the period up to the date the intangible asset is
ready for its intended use, is capitalized in accordance with Accounting
Standard-16.
v. Amount paid towards the acquisition of intangible assets, which is not
put to use as at reporting date and the cost of intangible assets not ready
for its intended use before such date is disclosed under Capital Work-in-
progress.
1.1.7. Research and Development
i. The Company in association with the Centre for Sponsored Schemes and
Projects of Indian Institute of Science, Bangalore has set up a designing
and testing laboratory. The Indian Institute of Science and the Company
will jointly own the Intellectual Property rights and patents for
technologies and products developed by the laboratory.
ii. The Company, also in association with Indian Institute of Science, and
Society for Innovation and Development has entered into Collaborative
Research Programme called 'Cranes -I I Sc' Research Programme. The Parties
shall be joint owners of any Intellectual Property Rights and Inventions
that may be realized through this programme.
iii. Research cost relating to the above are charged to Profit and Loss
account and the expenditure incurred relating to the Development phase are
treated as advances in Capital Work in progress and will be capitalized
when the intangible asset is ready for use as per the criteria laid down by
the AS-26.
1.1.8. Depreciation and Amortization
i. Depreciation has been provided on Straight Line method at the rates
prescribed under Schedule XIV of the Companies Act, 1956. In respect of
assets purchased / sold during the year, depreciation is charged on a pro-
rata basis.
ii. The Management estimates the useful life of Customized
software/commercial rights procured for specific application as 3 years and
accordingly amortizes over their estimated useful life on a straight line
basis.
iii. Depreciation on individual low cost assets (costing less than
Rs.5,000) is provided for in full in the year of purchase irrespective of
date of installation.
iv. Other Intangible assets are amortized over their respective individual
estimated useful life on a straight-line basis, commencing from the date
the asset is available to the Company for its use.
v. After recognition of impairment loss, the depreciation charge for the
asset is on the revalued amount prospectively over the remaining useful
life of the asset.
1.1.9. Impairment of Assets
The Company assesses at each balance sheet date using internal and external
sources, whether there is any indication that an asset (both tangible and
intangible) may be impaired more than of a temporary nature. If any such
indications exist, the Company estimates the recoverable amount of the
asset. If such recoverable amount of the asset or the recoverable amount of
the cash generating unit to which the asset belongs to is less than its
carrying amount, the carrying amount is reduced to its recoverable amount.
The reduction is treated as an impairment loss and is recognized in the
profit and loss account. If at the balance sheet date there is an
indication that a previously assessed impairment loss no longer exists, the
recoverable amount is reassessed and the asset is reflected at the
recoverable amount subject to a maximum of depreciated historical cost.
In the current year, in view of various reasons already covered elsewhere
in this Report, it has not been possible to conduct this detailed review
1.1.10.Inventories
Inventories of the Company comprises of Third Party software products. Such
software products are valued at cost or net realizable value, whichever is
lower. The cost formula used is weighted average basis. Net realizable
value is the estimated selling price in ordinary course of business, less
estimated cost of completion and estimated cost necessary to make the sale.
The cost of inventories is net of VAT credit.
1.1.11.Investments
Investments are either classified as current or long-term based on the
management's intention at the time of purchase.
i. Long term investments are stated at cost less provision for diminution
in the value of such investments. Diminution in value is provided for where
the management is of the opinion that the diminution is of permanent
nature.
ii. Current investments are carried at the lower of cost or fair value. Any
reduction in carrying amount and any reversals of such reduction are
charged or credited to the profit & loss account.
iii. Investments in Foreign Subsidiaries have been reflected at the
exchange rates prevailing at the date of transactions.
1.1.12. Effect of Exchange Fluctuation on foreign currency transactions
i. Foreign currency transactions are recorded at the exchange rate
prevailing on the date of the transaction.
ii. Exchange differences are recorded when the amount actually received on
sales or actually paid when the expenditure is incurred, is converted into
Indian Rupees.
iii. Exchange differences arising on foreign currency transactions are
recognized as income or expense in the period in which they arise.
iv. Period-end balances of monetary foreign currency assets and liabilities
are translated at the closing rate. The resulting exchange difference is
recognized in the profit and loss account.
v. Non - Monetary assets & liabilities are translated at the rate
prevailing on the date of transaction.
vi. Foreign currency translation differences relating to liabilities
incurred for acquiring fixed assets are recognized in Profit and Loss a/c.
1.1.13.Employees' Retirement Benefits
i) Post-employment benefit plans:
Contributions to defined contribution retirement benefit schemes are
recognized as an expense when employees have rendered services entitling
them to contributions.
For defined benefit schemes, the cost of providing benefits is determined
using the Projected Unit Credit Method, with actuarial valuations being
carried out at each balance sheet date. Actuarial gains and losses are
recognised in full in the profit and loss account for the period in which
they occur. Past service cost is recognised immediately to the extent that
the benefits are already vested, and otherwise is amortized on a straight-
line basis over the average period until the benefits become vested. The
retirement benefit obligation recognised in the balance sheet represents
the present value of the defined benefit obligation as adjusted for
unrecognised past service cost, and as reduced by the fair value of scheme
assets. Any asset resulting from this calculation is limited to the present
value of available refunds and reductions in future contributions to the
scheme.
ii) Short-term employee benefits
The undiscounted amount of short-term employee benefits expected to be paid
in exchange for the services rendered by employees is recognised during the
period when the employee renders the service. These benefits include
compensated absences such as paid annual leave, overseas social security
contributions and performance incentives.
iii) Long-term employee benefits
Compensated absences which are not expected to occur within twelve months
after the end of the period in which the employee renders the related
services are recognized as a liability at the present value of the defined
benefit obligation at the balance sheet date.
1.1.14.Income Tax/ Deferred Tax
i. Current tax is calculated in accordance with the relevant tax
regulations.
ii. Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to timing differences that result between the
profit offered for income taxes and the profit as per the financial
statements. Deferred tax in respect of timing difference which originate
during the tax holiday period but reverse after the tax holiday period is
recognized in the year in which the timing difference originate. For this
purpose the timing difference which originates first is considered to
reverse first. Deferred tax assets and liabilities are measured using the
tax rates and tax laws that have been enacted or substantively enacted by
the balance sheet date. The effect on deferred tax assets and liabilities
of a change in tax rates is recognized in the profit and loss account in
the year of charge. Deferred tax assets on timing differences are
recognized only if there is a reasonable certainty that sufficient future
taxable income will be available against which such deferred tax assets can
be realized. Deferred tax assets are reassessed for the appropriateness of
their respective carrying values at each balance sheet dates.
iii. Minimum alternative tax (MAT) paid in accordance to the tax laws,
which gives rise to future economic benefits in the form of adjustment of
future income tax liability, is considered as an asset if there is
convincing evidence that the Company will pay normal income tax after the
tax holiday period. Accordingly, MAT is recognized as an asset in the
balance sheet when it is probable that the future economic benefit
associated with it will flow to the Company and the asset can be measured
reliably.
iv. Advance taxes and provisions for current income taxes are presented in
the balance sheet after offsetting advance taxes paid and income tax
provisions arising in the same tax jurisdiction.
v. The Company offsets deferred tax assets and deferred tax liabilities
relating to taxes on income levied by the same governing taxation laws.
1.1.16.Provisions and Contingent Liabilities
The Company creates a provision when there is a present obligation as a
result of an obligating event that probably requires an outflow of
resources and a reliable estimate can be made of the amount of the
obligation. A disclosure for a contingent liability is made when there is a
possible obligation or a present obligation that may, but probably will
not, require an outflow of resources. Where there is a possible obligation
or a present obligation in respect of which the likelihood of outflow of
resources is remote, no provision or disclosure is made.
1.1.17.Earnings per Share
i. Basic Earnings per share is calculated by dividing the net earning
available to the Equity Shareholders by the weighted average number of
Equity Shares outstanding during the year.
ii. Diluted Earnings per share is calculated by dividing the net earnings
available to existing and potential Equity Shareholders by aggregate of the
weighted average number of Equity Shares considered for deriving basic
earnings per share and also the weighted average number of equity shares
that could have been issued on the conversion of all dilutive potential
equity shares (FCCB). Dilutive potential equity shares are deemed converted
as of the beginning of the period, unless issued at a later date.
1.1.18. Leases
i. Lease arrangements where substantial risk and rewards incidental to
ownership vests with the lessor, such leases are recognized as operating
leases.
ii. Lease payments under operating lease are recognized as an expense in
the profit and loss account.
1.1.19. Derivative Instruments and Hedge Accounting
The Company uses foreign currency forward contracts and currency options to
hedge its risks associated with foreign currency fluctuations relating to
certain firm commitments and forecasted transactions. The Company
designates these hedging instruments as cash flow hedges applying the
recognition and measurement principles set out in the Accounting Standard
30 'Financial Instruments: Recognition and Measurement' (AS-30).
The use of hedging instruments is governed by the Company's policies
approved by the board of directors, which provide written principles on the
use of such financial derivatives consistent with the Company's risk
management strategy.
Hedging instruments are initially measured at fair value, and are
remeasured at subsequent reporting dates. Changes in the fair value of
these derivatives that are designated and effective as hedges of future
cash flows are recognised directly in shareholders' funds and the
ineffective portion is recognised immediately in the profit and loss
account.
Changes in the fair value of derivative financial instruments that do not
qualify for hedge accounting are recognised in the profit and loss account
as they arise.
Hedge accounting is discontinued when the hedging instrument expires or is
sold, terminated, or exercised, or no longer qualifies for hedge
accounting. At that time for forecasted transactions, any cumulative gain
or loss on the hedging instrument recognised in shareholders' funds is
retained there until the forecasted transaction occurs. If a hedged
transaction is no longer expected to occur, the net cumulative gain or loss
recognised in shareholders' funds is transferred to the profit and loss
account for the period.
2.1 NOTES ON ACCOUNTS
2.1.1 Contingent liabilities not provided for and Capital commitments -
(Rupees in Million)
Particulars Current Year Previous Year
a. Contingent liabilities not provided for
I. Outstanding guarantees
and counter guarantees 105.73 2,449.91
II. Bill discounting - 535.71
b. Claims against the Company not acknowledged as
debts on Tax matters in dispute under appeal 447.66 490.82
c. Estimated amount of contracts remaining to
be executed on capital account not provided for. - 13.29
Counter Guarantee to the extent of Rs 2,344.43 mn given on behalf of a
party for their borrowings from a Scheduled Bank to meet requirements of
business that were in exploratory stage to be ultimately integrated with
the Company were encashed by the lender during the year. Concomittant
amount is regarded as Recoverable from the Party and included under the
Head 'Advances Recoverable in Cash or Kind or for Value to be Received'.
Action to recover the sums from the Party have been initiated.
2.1.2 Undisputed Statutory Dues (Rupees in Million)
Name of the Statute Nature of dues Total Liability as at
31st March, 2010
Employee's Provident Provident Fund 26.53
Fund & Miscellaneous
Provisions Act
Commercial Taxes Act Professional Tax 0.57
Employee State
Insurance Act ESI 0.02
Income Tax Act TDS 45.30
Service Tax Act Service Tax 27.42
Commercial Taxes Act Sales Tax/Value Added Tax 1.65
Income Tax Act Self Assessment Tax 60.79
Income Tax Act Dividend Distribution
Tax 27.39
Wealth Tax Act Wealth Tax 0.08
2.1.3 Claims against the Company provided for and Sub Judice
(Rupees in Million)
Sl. Name of Institution Liability Amount In which Current
No. as on 31st of Claim Forum
March, 2010 Status
A UNDER SECTION 434 OF
COMPANIES ACT
1. The Math Works Inc., 149.48 138.66 High Court, Negotiated
Karnataka Settlement
reached; case
closed.
2. Canara Bank 286.06 261.71 High Court, Case dismissed
Karnataka
Total 435.54 400.37
B UNDER SECTION 138 OF
NEGOTIABLE INSTRUMENTS
ACT
1. Canara Bank 286.06 160.00 Metropoliton Out of court
Court, settlement
Bangalore being worked
on.
2. State Bank of Mysore 248.43 250.00 Metropoliton
Court,
Bangalore
Total 534.49 410.00
2.1.4 Managerial Remuneration:
The aggregate managerial remuneration under Section 198 of the Companies
Act, 1959 to the Directors including Managing Director is :
(Rupees in Million)
Particulars Current Year Previous Year
Managing Director
- Basic Salary 1.20 1.20
- House Rent Allowance 0.48 0.48
- Special Allowance 0.56 1.22
- Contribution to Provident Fund 0.14 0.14
- Commission - 1.10
Total Remuneration (a) 2.38 4.14
Whole-time Directors:
- Basic Salary 2.40 2.40
- House Rent Allowance 0.96 0.96
- Special Allowance 1.17 0.29
- Contribution to Provident Fund 0.29 0.29
- Commission - 2.20
Total Remuneration (b) 4.82 8.29
Total Managerial Remuneration (a + b) 7.20 12.43
Computation of Net Profit in accordance with Section 349 of the Companies
Act, 1956 and Calculation of Commission payable to Non - whole time
Directors as per Section 309(4) of the Companies Act, 1956.
(Rupees. in Million)
Particulars Current Year
Profit before taxation (2,959.85)
Add:
Directors remuneration 7.20
Provision for commission payable to Directors -
Loss on sale of fixed assets (net) as per
Sec. 350 of the Companies Act 1956 -
Add: Depreciation as per
profit and loss account 759.03
Less:
Profit on sale of Mutual Fund -
Profit on sale of interest in subsidiary -
Depreciation as per Sec. 350
of the Companies Act 1956 759.03
Net profit as per Sec 349 of
the Companies Act, 1956 (2,952,65)
Maximum Commission allowed to non-whole-time
directors as per Sec 309 of the Companies Act,
1956: @ 1% of Net profit u/s 359 of the
Companies Act 1956. -
Commission to Non Whole time Directors provided
for (Previous year 4.20) -
Commission to Whole time Directors
provided for (Previous year 3.30) -
2.1.5. Activities in foreign currency (Rupees in Million)
Particulars Current Year Previous Year
Earnings in Foreign Currency -
FOB value of exports 135.59 3,028.63
Expenditure incurred in Foreign Currency 186.11 1,052.64
Capital Goods (valued on CIF basis) 50.69 553.57
Trading Goods (valued on CIF basis) 34.56 241.25
Travelling, Boarding & Lodging Expenses 17.18 10.45
Marketing Expenses 0.34 117.65
Legal/Professional/Consultancy Expenses 5.95 3.22
Dividend - 0.96
Interest 76.45 80.83
Others 0.94 44.71
2.1.6. Security for borrowings:
i) Working Capital and Term Loans: Bank finances are secured by
hypothecation of stocks of software, book debts, document of title to goods
and collaterally secured by properties; personally guaranteed by Whole time
Directors and also have additional collateral security by way of pledge of
promoters share for part amount.
ii) Vehicle Loans: Finance for purchase of vehicles are secured by
hypothecation of respective vehicles.
iii) There are other borrowings, some of which are personally guaranteed by
whole time Directors.
2.1.7. Debtors and Creditors; Loans and Advances:
Periodically, the Company evaluates all Debtors and Creditors balances.
However, some of these are subject to confirmation. All Current Assets,
Loans and advances, have at least the value as stated in the Balance Sheet
if realized in the ordinary course of the Business.
2.1.7.1.Debtors include, dues from Subsidiary Companies as under:
(Rupees in Million)
Particulars Current Year Previous Year
Caravel Info Systems Pvt. Ltd., 1.01 1.01
Cranes Software International Pte. Ltd., 1.47 0.94
Cranes Software UK Ltd (earlier known
as Systat software UK Ltd) - 15.24
Dunn Solutions Group Inc., 13.71 12.34
Esqube Communication Solutions Pvt Ltd 0.03 0.03
Engineering Technology Associates Inc., USA 6.13 6.13
Proland Software Pvt Ltd 0.31 0.31
Systat SoftwareGmbh, Germany 23.57 14.39
Systat Software Inc, USA 391.62 352.25
TOTAL 437.85 402.64
2.1.7.2. Loans & advance includes, dues from Companies under the same
Management, as under (Disclosure required by Clause 32 of the Listing
Agreement):
(Rupees in Million)
Particulars A B C D
Cranes Software International
Pte Ltd-Singapore 26.12 26.12 51.12 51.12
Cranes Software Inc
(Earlier known as NISA Software Inc) 277.27 277.27 39.36 179.58
Tilak Auto Tech Pvt. Ltd 22.13 22.13 19.82 19.82
Systat Software GmbH 702.30 709.40 0.58 0.58
Systat Software Inc USA 579.31 579.31 682.90 682.90
Proland Software Pvt Ltd 13.66 13.66 3.94 15.22
Esqube Communication Solution 23.90 23.90 24.69 24.69
Caravel Info System Pvt Ltd 8.45 8.45 8.68 16.84
Systat Software Asia Pacific Limited 8.99 8.99 9.38 9.38
Total 1,662.13 1,669.23 840.47 1,000.13
A = Current Year
B = Maximum amount outstanding during the current year
C = Previous Year
D = Maximum amount outstanding during the previous year
2.1.8. Current Investments (quoted) - In Money Market Mutual funds
(Rupees in million)
Particulars No. of Face Current Previous
Units value year year
(Rs.)
ING Vysya Liquid Fund Institutional -
Daily Dividend Reinvestment - - - 0.35
ING Vysya Floating Rate Fund - Daily Dividend - - - 0.00
Aggregate Fair value of unquoted investments - - - 0.33
Aggregate cost of unquoted investment - - - 0.33
2.1.9. Dues to Small-scale industrial undertakings:
i. As at March 31, 2009 and March 31, 2010, the Company has no outstanding
dues exceeding Rs. 1 Lakh for more than 30 days to Small Scale Industrial
undertaking as ascertained and certified by the Management.
ii. There are no micro and small enterprises, to whom the Company owes
dues, for more than 45 days as at 31st march, 2010. This information as
required to be disclosed under the Micro Small & 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.
2.1.10. Quantitative Details:
The Quantitative details of sales and certain information as required under
paragraphs 3,4C and 4D of Part II of Schedule VI to the Companies Act, 1956
are as follows:
Current year (In Numbers)
Item Description Opening Stock Receipts Issues Balance as on
April 1, 2009 March 31, 2010
Matlab Media CD Kits 2 - 2 -
Dongles 11 - 11 -
Matlab 62 - 62 -
Simulink 43 - 43 -
Toolboxes 338 - 338 -
DSP Starter kits 234 573 710 97
Calculators - TI 158 1,172 1,240 90
BWD 6,987 - 601 6,386
Dspace - - - -
Maple Soft 20 - 20 -
Previous Year (In Numbers)
Item Description Opening Stock Receipts Issues Balance as on
April 1, 2008 March 31, 2009
Matlab Media CD Kits 0 526 524 2
Dongles 17 50 56 11
Matlab 89 451 478 62
Simulink 42 247 246 43
Toolboxes 505 711 878 338
DSP Starter kits 15 1224 1005 234
Calculators - TI 77 2506 2425 158
BWD 5399 3017 1429 6987
Dspace 0 27 27 0
Maple Soft 0 32 12 20
The Company is in the business of software development and trading hence
information on Licensed and installed capacity is not applicable
2.1.11. Repairs and Maintenance includes (Rupees in Million)
Particulars Current Year Previous Year
(i) Building 1.82 1.19
(ii) Machinery 0.04 0.30
(iii) Others 0.62 1.62
Total 2.47 3.11
2.1.12. Details of Auditors remuneration
Statutory Audit 0.48 0.45
Out of Pocket Expenses 0.04 0.05
Other services - 0.81
Total 0.52 1.31
2.1.13. Dividends remitted in foreign currencies (Rupees in Million)
Number of No of Equity Gross Amount of
Particulars Non-Resident Shares Held Dividend
Equity (Rs in Million)
Shareholders 2009-10 2008-09
Dividend for
2008-09 Paid
in 2009-10 - - - 0.96
(Previous (Previous
Year - 1) Year- 800200)
2.1.14. Reconciliation of basic and diluted shares used in computing
earnings per share
(Rupees in Million)
Particulars Current Year Previous Year
Net Profit for the period attributable
to equity shareholders (A) (1,940.79) 1,154.54
Adjustment for interest on Foreign Currency
convertible Bonds(FCCB) net of Taxes (B) 50.00 69.02
Net Profit for the period attributable to
equity shareholders (after adjustment for
diluted earnings) (A+B) (1,890.79) 1,223.56
Number of shares considered as basic weighted
average shares outstanding (C) 117.77 117.77
Add: Effect of dilutive issues of shares (D) 19.24 19.24
Number of shares considered as weighted average
shares and potential shares outstanding (C+D) 137.01 137.01
Basic Earnings per share (A/C) (Rs) (16.48) 9.80
Diluted Earnings per share (A+B)/(C+D) (Rs) (13.80) 8.93
Nominal Value per share (Rs) 2.00 2.00
2.1.15.Deferred Tax Liability:
Deferred taxes at the year end are
attributable to the following:
Deferred Tax Asset:
Provision for Retirement Benefits (0.42) 2.07
Deferred Revenue Expenditure - 4.58
Carried forward Business Loss (675.18) -
Carried forward Depreciation Loss (163.55) -
Others (55.31) -
(A) Total (894.46) 6.65
Deferred Tax Liabilities Difference
between Book and Tax Depreciation 386.73 516.16
Deferred Revenue Expenditure - -
(B) Total 386.73 516.16
Deferred Tax Liability (Net) (A-B) (507.73) 509.51
2.1.16. Gratuity: Current Year
(i) Change in Benefit Obligations:
Projected Benefit Obligation, beginning
of the year (April 1, 2009) 15.40
Service Cost 3.88
Interest Cost 1.23
Actuarial (gain)/loss on obligations (6.60)
Benefit paid (6.97)
Projected Benefit Obligation,
at the end of the year 6.94
(ii) Change in Plan Assets:
Fair value of Plan Assets, beginning
of the year (April 1,2009) 18.44
Expected return on Plan Assets 1.48
Employer's contributions
Benefit paid (6.97)
Actuarial (gain)/loss on Plan Assets 2.65
Fair value of Plan Assets,
at the end of the year 15.60
Excess of (obligation over plan assets)/
plan assets over obligation 9.25
(Accrued Liability)/Prepaid Benefit 9.25
(iii) Net Gratuity and other cost for
the year ended March 31, 2010
Service Cost 3.88
Interest on Defined Benefit Obligation 1.23
Expected return on Plan Assets (1.48)
Net Actuarial (gain)/loss recognized in the year (9.25)
Net Gratuity and other cost (5.62)
Actual Return on Plan Assets 4.13
(iv) Category of Assets as at March 31, 2010
Insurer Managed Funds 15.60
Total 15.60
v) Assumptions used in accounting
for the Gratuity Plan
Discount Rate 8%
Salary escalation rate 4%
Expected rate of return on Plan Assets 8%
2.1.17. Obligations towards long term, non-cancellable operating leases:
The Company has taken various offices, vehicles, computers, furniture and
equipment under cancellable operating leases. These lease agreements are
normally renewed on expiry.
The Company has also taken on non-cancellable operating leases certain
offices, the future minimum lease payments in respect of which, as at the
close of the year are as follows:-
(Rupees In Million)
Lease obligation Current Year Previous Year
Due not later than one year - 13.45
Due later than one year but
not later than five years - -
Due after five years - -
Total - 13.45
These lease agreements provide for an option to the Company to renew the
lease period at the end of the non-cancellable period.
The rental expenses in respect of operating leases recognized in the profit
and loss account are Rs.23.36 Million for the year ended March 31, 2010.
(Previous year Rs.90.47 Million)
2.1.18 Foreign currency convertible Bonds:
The Company issued and allotted on March 17, 2006 Foreign Currency
Convertible Bonds (Considered as non-Monetary liability) for Euro 42
Million (Equivalent for Rs. 2,270.10 Million) bearing an interest at 2.5%
per annum payable half yearly. The bonds are convertible at any time on and
after April 27, 2006 and till close of business on March 11, 2011 and were
convertible into shares or GDRs at an initial conversion price of Rs.
143.293 per share with a fixed rate of exchange on conversion of Euro 1.00
= Rs. 52.6828. The outstanding bonds are redeemable at a premium of 12.833%
on 18th March 2011. Further, based on the relevant clause of the issue
document, conversion price has now been refixed at Rs.115. During the year
ended 31 March 2009 there has been no conversion of the Bonds into Shares.
If the outstanding bonds as on March 31, 2009 are converted into equity
shares or GDRs, then the share capital of the Company will increase by
19,240,675 shares.
Proportionate Premium payable on redemption of FCCB Rs. 60 Million
(Previous Year Rs.60 Million) has been transferred to FCCB Redemption
Reserve during the year out of share premium account. In the event that the
conversion option is exercised by the holders of FCCB in the future, the
amount of premium charged to the share premium account will be suitably
adjusted in the respective years.
Owing to liquidity related challenges, it was not possible to make payment
of interest on these FCCBs due in September, 2009 and March, 2010,
amounting to a total of Rs. 50 mn. Provision for these amounts are made in
the Balance Sheet as on 31st March, 2010.
2.1.19. Research & Development:
Research & Development expenditure recognized as expenses during the year
amounted to Rs. Nil. (Previous year Rs.3.71 Million)
2.1.20. Related Party Disclosures as ascertained by the Management
Current Year (Rupees in Million)
Particulars Subsidiaries Key Management Total Related
Personnel Parties
Purchases of Goods/software 15.08 - 15.08
Sales of Goods/Software 19.23 - 19.23
Purchase of Fixed Assets - - -
Sale of Fixed Assets - - -
Investment in Subsidiary - - -
Rendering of Services 9.86 - 9.86
Receiving of Services 50.69 - 50.69
Loans/advances/equity
contributions given 81.06 - 81.06
Loans/advances/equity
contributions taken 776.96 - 776.96
Directors Remuneration - 7.20 7.20
Commission to Directors - - -
Balance as on 31.03.10
receivable 2,073.86 - 2,073.86
Balance as on 31.03.10
payable 33.44 3.30 36.74
Previous Year (Rupees in Million)
Particulars Subsidiaries Key Management Total Related
Personnel Parties
Purchases of Goods/software 27.45 - 27.45
Sales of Goods/Software 87.30 - 87.30
Purchase of Fixed Assets - - -
Sale if Fixed Assets 0.03 - 0.03
Investment in Subsidiary - - -
Rendering of Services 147.68 - 147.68
Receiving of Services 115.86 - 115.86
Loans/advances/equity
contributions given 188.94 - 188.94
Loans/advances/equity
contributions taken 60.45 - 60.45
Directors Remuneration - 9.13 9.13
Commission to Directors - 3.30 3.30
Balance as on 31.03.09
receivable 1,225.64 - 1,225.64
Balance as on 31.03.09
payable 80.09 4.75 84.84
Note:
Names of related parties and description of relationship
Holding Company Nil
Subsidiaries: 1. Systat Software Inc., USA
2. Systat Software Asia Pacific Limited
3. Cranes Software International Pte. Ltd, Singapore
4. Systat Software GmbH, Germany
5. Cranes Software Inc (Earlier known as NISA Software
Inc., USA)
6. Analytix Systems Private Ltd
7. Tilak Autotech Private Ltd
8. Caravel Info Systems Pvt. Ltd.,
9. Proland Software Pvt. Ltd.,
10. Esqube Communication Solutions Pvt. Ltd.,
Step Down 1. Cranes Software UK Ltd.(Earleir known as Systat
Subsidiaries: Software UK Ltd)
2. Dunn Solutions Group Inc.
3. Engineering Technology Associates Inc with its
Subsidiary, Engineering Technology Associates
(Shanghai) Inc., China
4. Cubeware GmbH and its Subsidiaries in Austria and
Switzerland
Key Management Mr. Asif Khader
Personnel Mr. Mukkaram Jan
Mr. Mueed Khader
Relatives of Key
Management
Personnel Nil
Other Related Orca Infotech Private Limited
Parties: K&J Holdings Private Limited
K &J Telecom Private Limited
Jansons Land & Property Development Pvt Ltd
SPSS South Asia Private Limited
Keysoft Solutions Private Limited
Spice Capital Fund Private Limited
Sea Equity Private Limited
In respect of the above parties, there is no provision for doubtful debts
as at the financial year and no amount has been written off/written back
during the year in respect of debts due from/to them.
2.1.21. Segment Reporting:
The Company has identified geographic segments as its primary segment and
Business segments as its secondary segment.
Primary Segments:- a) Exports and b) Domestic
Secondary Segments:- a) Proprietary Products and Services and
b) Product Alliances
Primary Segment Information - Geographical Segment
(Rupees. in Million)
Sl. Particulars Current Year Previous Year
No. Export Domestic Total Export Domestic Total
1. Segment
Revenue: 135.59 151.20 286.79 3028.63 552.72 3581.35
2. Segment
Results (1118.46) (1247.22) (2365.68) 1303.23 98.09 1401.32
Other Income 301.88 185.31
Operating
Profit (2335.49) 1586.63
Interest
Expenses 624.36 282.09
Profit
before Tax (2959.85) 1304.54
Tax expenses (1019.96) 150.00
Profit
after tax (1939.89) 1156.49
Adjustments
relating to
earlier years 0.90 (1.90)
Net Profit (1940.79) 1154.54
3. Segment
Assets 6814.48 7598.55 14413.03 11429.55 2016.98 13446.53
Total Assets 14413.03 14940.59
Segment
Liabilities 657.55 733.20 1390.75 64.88 11.45 76.33
Total
Liabilities 1390.75 553.48
Capital
Employed
(Segment
Assets -
Segment
Liabilities) 6156.75 6865.53 13022.28 11364.67 2005.53 13370.20
4. Capital
Expenditure 1.30 1.45 2.74 552.08 97.43 649.51
5. Depreciation 358.87 400.16 759.03 606.35 107.00 714.04
Secondary Segment Information - Business Segment
(Rupees in Million)
Sl. Particulars Current Year Previous Year
No. Proprietary Product Proprietary Product
products and Alliances products and Alliances
services services
1. Segment Revenue 232.32 54.47 3063.17 518.18
2. Segment Result (1,916.44) (449.24) 1331.26 70.06
3. Segment Assets 11,676.00 2,737.03 12,505.28 941.25
4. Capital 2.22 0.52 506.62 142.89
Expenditure
2.1.22 Payment of Dividend declared in Members' meeting held on 29th
September, 2009:
At the meeting of the Members of the Company held on 29th September, 2009,
it was resolved that Dividend on Ordinary Shares at the rate of Rs 0.20 per
share will be distributed to Members in the rolls as on the Record Date,
23rd September, 2009. Owing to the liquidity position of the Company, it
has not been possible to make this payment. Liability of this amount
continues to exist as on 31st March, 2010.
2.1.23. Previous year's figures have been regrouped and reclassified
wherever necessary
As per our report of even date For and on behalf of the Board
For S.Janardhan & Associates
Chartered Accountants FRN: 005310S
Balakrishna S. Bhat Asif Khader Mukkaram Jan
Partner Managing Director Director
Membership No. 202976
Mueed Khader
Director
Bangalore
September 30, 2010
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