UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE TO
(RULE 14d-100)
TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR 13(e)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
SATYAM COMPUTER SERVICES LIMITED
(Name of Subject Company (Issuer))
VENTURBAY CONSULTANTS PRIVATE LIMITED
and
TECH MAHINDRA LIMITED
(Names of Filing Persons (Offeror))
Common Shares, par value Rs. 2.0 per share
American Depositary Shares, each representing two Common Shares1
(Title of Class of Securities)
CUSIP Number for Common Shares: Y7530Q141;
CUSIP Number for American Depositary Shares: 804098101
(CUSIP Number of Class of Securities)
Milind Kulkarni
Vice President Finance
Tech Mahindra, Ltd.
Sharada Centre, Off Karve Road
Erandwane
Pune, 411 004, India
+91 20 6601 8100
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications on Behalf of Filing Persons)
Copies to:
Gina K. Gunning, Esq.
Peter E. Izanec, Esq.
Jones Day
901 Lakeside Avenue,
Cleveland, Ohio 44114
216-586-3939
1 |
Only Common Shares may be tendered directly in the Offer |
CALCULATION OF FILING FEE
Transaction Valuation* |
Amount of Filing Fee** | |
$251,013,172.91 | $14,006.00 |
* | Estimated for purposes of calculating the amount of the filing fee only. The amount assumes the purchase of a total of 199,079,413 shares of the outstanding Common Stock, par value Rs. 2 per share, at a price per share of Rs. 58 in cash. The exchange rate used to convert the transaction value in Rupees to U.S. dollars for purposes of calculating the filing fee is US$1.00 = Rs. 46. |
** | The amount of the filing fee equals $55.80 per $1 million of the transaction value and is estimated in accordance with Rule 0-11 under the Securities Exchange Act of 1934, as amended. |
¨ | Check the box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
Amount Previously Paid: N/A |
Filing Party: N/A | |
Form or Registration No.: N/A |
Date Filed: N/A |
¨ | Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer. |
Check the appropriate boxes below to designate any transactions to which the statement relates:
x | third-party tender offer subject to Rule 14d-1. |
¨ | issuer tender offer subject to Rule 13e-4. |
¨ | going-private transaction subject to Rule 13e-3. |
¨ | amendment to Schedule 13D under Rule 13d-2. |
Check the following box if the filing is a final amendment reporting the results of the tender offer: ¨
If applicable, check the appropriate box(es) below to designate the appropriate rule provision(s) relied upon:
¨ | Rule 13e-4 (i) (Cross-Border Issuer Tender Offer). |
x | Rule 14d-1(d) (Cross-Border Third-Party Tender Offer). |
SCHEDULE TO
This Tender Offer Statement on Schedule TO (Schedule TO) is being filed by Venturbay Consultants Private Limited, a private limited company organized under the laws of India (Venturbay), and Tech Mahindra Limited, a public limited company organized under the laws of India (Tech Mahindra and together with Venturbay, the Purchaser), pursuant to Rule 14d-1(d) under the Securities Exchange Act of 1934, as amended (the Exchange Act), in connection with its open public offer to purchase for cash up to 199,079,413 shares of Common Stock, par value Rupees 2 per share (Shares) of Satyam Computer Services Limited, a public limited company organized under the laws of India (the Company), on the terms and subject to the conditions set forth in this Schedule TO and in the Letter of Offer, dated June 5, 2009 (the Letter of Offer), the related Form of Acceptance-cum-Acknowledgement and the ADS Letter of Transmittal, copies of which are attached hereto as Exhibits (a)(l)(A), (a)(l)(B) and (a)(1)(C), respectively (which, together with any supplements or amendments thereto, collectively constitute the Offer). The Letter of Offer was first mailed to holders of Shares on June 8, 2009.
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The information in the Offer, including all schedules and annexes thereto, is hereby expressly incorporated herein by reference with respect to Items 1-11 of this Schedule TO, and as set forth below.
Item 1. | Summary Term Sheet. |
The information set forth in the Letter of Offer in the section titled Summary Term Sheet is incorporated herein by reference.
Item 2. | Subject Company Information. |
(a) The name of the issuer is Satyam Computer Services Limited. The address of the Companys principal executive offices is Satyam Infocity, Unit 12, Plot No. 35/36, Hi-tech City layout, Survey No. 64, Madhapur, Hyderabad 500 081, Andhra Pradesh, India. The Companys telephone number is +(91) 40 3063 6363.
(b) The title of the subject securities is Common Stock, par value Rupees 2 per share. As of May 5, 2009, the total number of Shares outstanding immediately after the Preferential Allotment (as defined in the Letter of Offer) was 976,722,347. As of May 5, 2009, the total number of American Depositary Shares, each representing two Shares, outstanding was 49,313,887. The information set forth in the Letter of Offer in the section titled Background of the Target Company is incorporated herein by reference.
(c) The information set forth in the Letter of Offer in the section titled Offer Price and Financial Arrangements is incorporated herein by reference.
Item 3. | Identity and Background of Filing Person. |
(a) The name of the filing persons are Venturbay Consultants Private Limited and Tech Mahindra Limited. The address of both Venturbays and Tech Mahindras principal executive offices is Sharada Centre, Off Karve Road, Erandwane, Pune, 411 004, India. The Purchasers telephone number is +(91) 20 6601 8100. The information set forth in Annexure A attached hereto is incorporated herein by reference.
(b) The information set forth in the Letter of Offer in the section titled Background of the Acquirer and PAC is incorporated herein by reference.
(c) The information set forth in Annexure A attached hereto and in the Letter of Offer in the section titled Background of the Acquirer and PAC is incorporated herein by reference.
Item 4. | Terms of the Transaction. |
(a)(1)(i) (xii) The information set forth in the Letter of Offer on the cover page and in the sections titled Summary Term Sheet, Details of the Offer, Offer Price and Financial Arrangements, Terms and Conditions of the Offer, and Procedure for Acceptance and Settlement is incorporated herein by reference. No subsequent offering period will be available after the expiration of the Offer.
(a)(2)(i-vii) Not applicable.
Item 5. Past Contacts, Transactions, Negotiations and Agreements.
(a) Not applicable.
(b) The information set forth in the Letter of Offer in the section titled Details of the Offer is incorporated herein by reference. The Purchaser has appointed Mr. Vineet Nayyar, Mr. C.P. Gurnani, Mr. Sanjay Kalra, and Mr. Ulhas N. Yargop to the board of directors of the Company.
3
Item 6. Purposes of the Transaction and Plans or Proposals.
(a) The information set forth in the Letter of Offer in the sections titled Summary Term Sheet, Details of the Offer, Background of the Acquirer and PAC, Background of the Target Company, and Offer Price and Financial Arrangements is incorporated herein by reference.
(c)(1-7) The information set forth in the Letter of Offer in the sections titled Details of the Offer, Option to the Acquirer in Terms of Regulation 21(2), and Background of the Target Company is incorporated herein by reference.
Item 7. Source and Amount of Funds or Other Consideration.
(a) The information set forth in Annexure B attached hereto and in the Letter of Offer in the sections titled Summary Term Sheet and Offer Price and Financial Arrangements is incorporated herein by reference.
(b) The information set forth in Annexure B attached hereto and in the Letter of Offer in the sections titled Summary Term Sheet and Offer Price and Financial Arrangements is incorporated herein by reference.
(d) The information set forth in the Letter of Offer in the sections titled Summary Term Sheet and Offer Price and Financial Arrangements, as well as the supplemental information set forth in Annexure B attached hereto, are incorporated herein by reference.
Item 8. Interest in Securities of the Subject Company.
(a) The information set forth in the Letter of Offer in the sections titled Summary Term Sheet, Details of the Offer, and Background of the Acquirer and PAC is incorporated herein by reference.
(b) The information set forth in the Letter of Offer in the sections titled Summary Term Sheet, Details of the Offer, and Background of the Acquirer and PAC is incorporated herein by reference.
Item 9. Persons/Assets, Retained, Employed, Compensated or Used.
(a) No persons or classes of persons are directly or indirectly employed, retained or to be compensated to make solicitations or recommendations in connection with the Offer.
Item 10. Financial Statements.
(a) The information set forth in Annexures C and D attached hereto and in the Letter of Offer in the sections titled Background of the Acquirer and PAC and Summary of Significant Differences Between U.S. GAAP and Indian GAAP is incorporated herein by reference.
(b) Not applicable.
Item 11. Additional Information.
(a)(1) Not applicable.
(a)(2) The information set forth in the Letter of Offer in the sections titled Summary Term Sheet, Details of the Offer, Background of the Target Company, Terms and Conditions of the Offer, and Procedure for Acceptance and Settlement is incorporated herein by reference.
(a)(3) The information set forth in the Letter of Offer in the section titled Terms and Conditions of the Offer is incorporated herein by reference.
(a)(4) The ADSs are currently margin securities under the regulations of the Board of Governors of the Federal Reserve System, which regulations have the effect, among other things, of allowing brokers to extend credit on the
4
collateral of the ADSs for the purpose of buying, carrying or trading in securities (Purpose Loans). Depending upon factors, such as the number of record holders of Shares and the number and market value of publicly held Shares, following the purchase of Shares underlying the ADSs pursuant to the Offer, the ADSs might no longer constitute margin securities for purposes of the Federal Reserve Board of Governors margin regulations, and, therefore, could no longer be used as collateral for Purpose Loans made by brokers. In addition, if registration of the ADSs under the Exchange Act were terminated, the ADSs would no longer constitute margin securities.
(a)(5) None.
(b) The information set forth in the Letter of Offer, the related Form of Acceptance-cum-Acknowledgement and ADS Letter of Transmittal, copies of which are filed as Exhibits (a)(l)(A), (a)(l)(B) and (a)(1)(C) hereto, respectively, is incorporated herein by reference.
Item 12. Exhibits.
(a)(1)(A) |
Letter of Offer, dated June 5, 2009 | |
(a)(1)(B) |
Form of Acceptance-cum-Acknowledgement | |
(a)(1)(C) |
ADS Letter of Transmittal | |
(a)(1)(D) |
Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees | |
(a)(1)(E) |
Form of Letter to Clients for Use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees | |
(a)(2)-(5) |
Not applicable | |
(b)(1) |
Subscription Cum Option Agreement among Tech Mahindra Limited and Venturbay Consultants Private Limited and Tata Capital Limited, dated April 16, 2009 (filed as Exhibit 99.5 to the Purchasers Amendment No. 1 to Schedule 13D filed on June 8, 2009 and incorporated herein by reference). | |
(b)(2) |
Subscription Cum Option Agreement among Tech Mahindra Limited and Venturbay Consultants Private Limited and Infrastructure Development Finance Company Limited, dated April 16, 2009 (filed as Exhibit 99.6 to the Purchasers Amendment No. 1 to Schedule 13D filed on June 8, 2009 and incorporated herein by reference). | |
(c) |
Not applicable | |
(d)(1) |
Share Subscription Agreement, dated April 13, 2009, by and among the Company, Venturbay and Tech Mahindra (filed as Exhibit 99.1 to the Purchasers Schedule 13D filed on May 15, 2009) | |
(d)(2) |
Public Announcement to the Shareholders of the Company, issued by Kotak Mahindra Capital Company Limited, for and on behalf of Venturbay and Tech Mahindra, dated April 22, 2009 (filed as Exhibit 99.1 to the Purchasers Schedule TO filed on April 22, 2009 and incorporated herein by reference) | |
(d)(3) |
Standstill Agreement, dated March 24, 2009, by and between Venturbay and the Company (filed as Exhibit 99.3 to the Purchasers Schedule 13D filed on May 15, 2009) | |
(d)(4) |
Standstill Agreement, dated March 24, 2009, by and between Tech Mahindra and the Company (filed as Exhibit 99.4 to the Purchasers Schedule 13D filed on May 15, 2009) | |
(g) |
Not applicable | |
(h) |
Not applicable |
Item 13. Information Required by Schedule 13E-3
Not Applicable.
5
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.
Date: June 8, 2009 | VENTURBAY CONSULTANTS PRIVATE LIMITED | |||||
By: | /S/ MILIND KULKARNI | |||||
Milind Kulkarni Director |
TECH MAHINDRA LIMITED | ||||||
By: | /S/ MILIND KULKARNI | |||||
Milind Kulkarni Vice President Finance |
6
EXHIBIT INDEX
(a)(1)(A) |
Letter of Offer, dated June 5, 2009 | |
(a)(1)(B) |
Form of Acceptance-cum-Acknowledgement | |
(a)(1)(C) |
ADS Letter of Transmittal | |
(a)(1)(D) |
Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees | |
(a)(1)(E) |
Form of Letter to Clients for Use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees | |
(a)(2)-(5) |
Not applicable | |
(b)(1) |
Subscription Cum Option Agreement among Tech Mahindra Limited and Venturbay Consultants Private Limited and Tata Capital Limited, dated April 16, 2009 (filed as Exhibit 99.5 to the Purchasers Amendment No. 1 to Schedule 13D filed on June 8, 2009 and incorporated herein by reference). | |
(b)(2) |
Subscription Cum Option Agreement among Tech Mahindra Limited and Venturbay Consultants Private Limited and Infrastructure Development Finance Company Limited, dated April 16, 2009 (filed as Exhibit 99.6 to the Purchasers Amendment No. 1 to Schedule 13D filed on June 8, 2009 and incorporated herein by reference). | |
(c) |
Not applicable | |
(d)(1) |
Share Subscription Agreement, dated April 13, 2009, by and among the Company, Venturbay and Tech Mahindra (filed as Exhibit 99.1 to the Purchasers Schedule 13D filed on May 15, 2009) | |
(d)(2) |
Public Announcement to the Shareholders of the Company, issued by Kotak Mahindra Capital Company Limited, for and on behalf of Venturbay and Tech Mahindra, dated April 22, 2009 (filed as Exhibit 99.1 to the Purchasers Schedule TO filed on April 22, 2009 and incorporated herein by reference) | |
(d)(3) |
Standstill Agreement, dated March 24, 2009, by and between Venturbay and the Company (filed as Exhibit 99.3 to the Purchasers Schedule 13D filed on May 15, 2009) | |
(d)(4) |
Standstill Agreement, dated March 24, 2009, by and between Tech Mahindra and the Company (filed as Exhibit 99.4 to the Purchasers Schedule 13D filed on May 15, 2009) | |
(g) |
Not applicable | |
(h) |
Not applicable |
7
ANNEXURE A
CERTAIN INFORMATION REGARDING THE PERSONS CONTROLLING VENTURBAY CONSULTANTS PRIVATE LIMITED AND TECH MAHINDRA LIMITED
I. Venturbay Consultants Private Limited
Directors
NAME |
PRINCIPAL OCCUPATION |
PRINCIPAL BUSINESS |
BUSINESS ADDRESS | |||
Mr. Vineet Nayyar |
Vice Chairman, Managing Director & Chief Executive Officer, Tech Mahindra Limited |
IT Services | Sharda Centre, Off Karve Road, Erandwane, Pune, 411 004, India | |||
Mr. Atanu Sarkar |
Vice President & Chief Legal Officer, Tech Mahindra Limited |
IT Services | Sharda Centre, Off Karve Road, Erandwane, Pune, 411 004, India | |||
Mr. Milind Kulkarni |
Vice President Finance, Tech Mahindra Limited |
IT Services | Sharda Centre, Off Karve Road, Erandwane, Pune, 411 004, India | |||
Mr. Paul Ringham |
Commercial Director, British Telecom plc. | IT Services | Sharda Centre, Off Karve Road, Erandwane, Pune, 411 004, India | |||
Mr. Sonjoy Anand |
Chief Financial Officer, Tech Mahindra Limited | IT Services | Sharda Centre, Off Karve Road, Erandwane, Pune, 411 004, India | |||
Mr. Ulhas N. Yargop |
President - IT Sector, Mahindra & Mahindra Limited | Automobile and Tractor Manufacturing | Gateway Building, Apollo Bunder, Mumbai, 400 001, India |
Venturbay does not have any executive officers.
Other than for Mr. Ringham (British national), each of the directors listed above is a citizen of India.
The filing of this Statement on Schedule TO shall not be construed as an admission that any of such individuals is, for the purposes of Section 13(d) or 13(g) of the Exchange Act, the beneficial owner of any securities covered by this statement on Schedule TO.
8
II. Tech Mahindra Limited
Directors
NAME |
PRINCIPAL OCCUPATION |
PRINCIPAL BUSINESS |
BUSINESS ADDRESS | |||
Mr. Anand G. Mahindra |
Non-Executive Chairman, Tech Mahindra Limited and Vice Chairman and Managing Director of Mahindra & Mahindra Limited | Automobile and Tractor Manufacturing | Gateway Building, Apollo Bunder, Mumbai, 400 001, India | |||
Mr. Vineet Nayyar |
Vice Chairman, Managing Director & Chief Executive Officer, Tech Mahindra Limited | IT Services | Sharda Centre, Off Karve Road, Erandwane, Pune, 411 004, India | |||
Hon. Akash Paul |
Director, Caparo Group, UK | Manufacturing | Caparo House, 103 Baker Street, London W1U 6LN | |||
Mr. Arun Seth |
Chairman, BT India Private Limited | Telecom Services | 1st Floor, Tower B, DLF Centre Court, Phas V, DLF City, Golf Course Sector Road, Gurgaon 122002 | |||
Mr. Bharat N. Doshi |
Executive Director, Mahindra & Mahindra Limited | Automobile and Tractor Manufacturing | Gateway Building, Apollo Bunder, Mumbai, 400 001, India | |||
Mr. B. H. Wani |
Consultant solicitor | Solicitor | B-20 Alice Court, Mogul Lane, Mahim, Mumbai 16, India | |||
Mr. Clive Goodwin |
Director International Development, BT Wholesale Markets | Telecommunications | 1 City Place, Gatwick, West Sussex RH6 0PA | |||
Mr. M. Damodaran |
Chief Representative and Advisor, India - ING Groep Amsterdam | Financial Services | Mezzanine Floor, Pragati Bhawan, Jai Singh Road, New Delhi 100 001, India | |||
Mr. Anupam Pradip Puri |
Advisor, Corsair Capital | Financial Services | 717 Fifth Avenue, New York, New York 10022, United States of America | |||
Mr. Al-Noor Ramji |
CEO / CIO, British Telecommunications Plc. |
Telecommunications | BT Centre, 81 Newgate Street, London EC1A 7AJ, United Kingdom |
9
NAME |
PRINCIPAL OCCUPATION |
PRINCIPAL BUSINESS |
BUSINESS ADDRESS | |||
Mr. Paul Ringham |
Commercial Director, British Telecommunications Plc. |
Telecommunications | BT Centre, 81 Newgate Street, London, EC1A 7AJ, United Kingdom | |||
Mr. Ulhas N. Yargop |
President - IT Sector, Mahindra & Mahindra Limited | Automobile and Tractor Manufacturing | Gateway Building, Apollo Bunder, Mumbai, 400 001, India | |||
Mr. Paul Zuckerman |
Executive Chairman Zuckerman & Associates Limited | Consulting Services | 105 Grosvenor Road, London, SW1V 3LG, United Kingdom | |||
Dr. Raj Reddy |
Professor, Carnegie Mellon University | Education | 5000 Forbes Ave Pittsburgh, PA 15213, United States of America | |||
Mr. Ravindra Kulkarni |
Senior Partner, Khaitan & Co. |
Solicitor | Meher Chambers R K Marg, Ballard Estate Mumbai 400 001, India |
Other than Mr. Ramji (British national), Mr. Puri (United States citizen), Mr. Goodwin (British national), Mr. Ringham (British national), Mr. Zuckerman (British national), and Dr. Raj Reddy (United States citizen) each of the directors listed above is a citizen of India.
Executive Officers
NAME |
POSITION | |
Vineet Nayyar |
Vice Chairman, Managing Director & Chief Executive Officer | |
Sanjay Kalra |
President | |
L. Ravichandran |
Executive Vice President and Chief Operating Officer | |
Rakesh Soni |
Executive Vice President and Chief Operating Officer | |
C.P. Gurnani |
President, International Operations | |
Sujit Baksi |
President, Corporate Affairs | |
Sonjoy Anand |
Chief Financial Officer | |
Atul Kunwar |
Chief Business Development Officer |
The principal occupation of each of the executive officers listed above is serving as an employee of Tech Mahindra Limited in their respective capacity listed above. Each of the executive officers listed above is a citizen of India and the principal business address of each such individual is c/o Tech Mahindra Limited, Sharda Centre, Off Karve Road, Erandwane, Pune, 411 004, India, telephone +91 20 6601 8100.
The filing of this Statement on Schedule TO shall not be construed as an admission that any of such individuals is, for the purposes of Section 13(d) or 13(g) of the Exchange Act the beneficial owner of any securities covered by this statement on Schedule TO.
10
ANNEXURE B
The source of funds used to acquire Shares by Venturbay (including the funds anticipated to be used to acquire Shares in the Offer) was from internal resources, optionally convertible domestic debt, equity by Tech Mahindra in Venturbay and debt extended by Tech Mahindra to Venturbay. The total consideration used to purchase the Shares in the issuance of Shares by the Company to Venturbay (the Initial Allotment) was Rs. 17,56,03,30,966 (approximately US$351 million based on an exchange rate of Rs. 50 to US$1). In connection with Venturbays anticipated acquisition of Shares in the Initial Allotment and Offer, (1) Tech Mahindra has infused funds in Venturbay by using cash on hand, which includes funds that Tech Mahindra previously had available to it for general corporate purposes such as capital expenditures and working capital needs, and (2) Venturbay raised capital through the issuance of optionally convertible debentures (as described in more detail in the next sentence). In connection with its acquisition of the Shares, Venturbay has issued optionally convertible debentures to various institutional investors for an aggregate consideration of Rs. 550 Crores (approximately US$110 million based on the above-stated exchange rate) in the aggregate, at an effective interest rate of approximately 15%, which indebtedness matures over a period of three years or may be converted into equity at the end of three years. It is anticipated that this indebtedness will be paid from proceeds from operations and/or future capital raising transactions.
Separately, Tech Mahindra has borrowed Rs. 1450 Crores (approximately US$290 million based on the above-stated exchange rate) from various banks, mutual funds, institutions & non banking financial institutions at an effective interest rate of approximately 10%, which indebtedness matures over a period of one to five years. This indebtedness has been incurred in connection with Tech Mahindras anticipated need for increased working capital & capital expenditures in the coming years. It is anticipated that this indebtedness also will be paid from proceeds from operations and/or future capital raising transactions.
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ANNEXURE C
TECH MAHINDRA LIMITED
Rs. in Million | ||||||||
Consolidated Balance Sheet as at |
Schedule | March 31, 2009 |
March 31, 2008 | |||||
I. |
SOURCES OF FUNDS: |
|||||||
SHAREHOLDERS FUNDS: |
||||||||
Share Capital |
I | 1,217 | 1,214 | |||||
Share Application Money |
1 | | ||||||
Reserves and Surplus |
II | 18,214 | 11,358 | |||||
19,432 | 12,572 | |||||||
MINORITY INTEREST |
112 | 111 | ||||||
LOAN FUND: |
III | |||||||
Unsecured Loan |
| 300 | ||||||
| 300 | |||||||
19,544 | 12,983 | |||||||
II. |
APPLICATION OF FUNDS: |
|||||||
FIXED ASSETS: |
IV | |||||||
Gross Block |
9,079 | 7,457 | ||||||
Less: Accumulated Depreciation |
4,100 | 3,101 | ||||||
Net Block |
4,979 | 4,356 | ||||||
Capital Work-in-Progress, including Capital Advances |
1,541 | 1,640 | ||||||
6,520 | 5,996 | |||||||
INVESTMENTS: |
V | 4,346 | 633 | |||||
DEFERRED TAX ASSET (Net): |
196 | 60 | ||||||
(refer Note 17 to schedule XIII) |
||||||||
CURRENT ASSETS, LOANS AND ADVANCES: |
||||||||
Inventory |
13 | 17 | ||||||
Sundry Debtors |
VI | 9,022 | 10,965 | |||||
Cash and Bank Balances |
VI | 5,382 | 976 | |||||
Loans and Advances |
VI | 2,953 | 3,604 | |||||
17,370 | 15,562 | |||||||
Less: CURRENT LIABILITIES AND PROVISIONS: |
||||||||
Current Liabilities |
VII | 6,738 | 6,505 | |||||
Provisions |
VIII | 2,150 | 2,763 | |||||
8,888 | 9,268 | |||||||
Net Current Assets |
8,482 | 6,294 | ||||||
19,544 | 12,983 | |||||||
SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS: |
XIII |
12
As per our attached report of even date
For Deloitte Haskins & Sells | For Tech Mahindra Limited | |||||
Chartered Accountants | ||||||
Mr. Anand G. Mahindra | Mr. Vineet Nayyar | |||||
Chairman | Vice Chairman, Managing Director & CEO | |||||
Hemant M Joshi | ||||||
Partner | ||||||
Hyderabad, Dated: April 27, 2009 | ||||||
Hon. Akash Paul | Mr. Bharat Doshi | Mr. Anupam Puri | ||||
Director | Director | Director | ||||
Mr. Arun Seth | Mr. M. Damodaran | Mr. B.H. Wani | ||||
Director | Director | Director | ||||
Mr. Clive Goodwin | Mr. Ravidra Kulkarni | Mr. Paul Zuckerman | ||||
Director | Director | Director | ||||
Dr. Raj Reddy | Mr. Ulhas N. Yargop | |||||
Director | Director | |||||
Mr. Vikrant Gandhe | ||||||
Asst. Company Secretary | ||||||
Hyderabad, Dated : April 27, 2009 |
13
TECH MAHINDRA LIMITED
Schedules forming part of the Consolidated Balance Sheet
Rs. in Million | ||||
As at March 31, 2009 |
As at March 31, 2008 | |||
Schedule I | ||||
SHARE CAPITAL: |
||||
Authorised: |
||||
175,000,000 (previous year 175,000,000) Equity Shares of Rs. 10.00 each. |
1,750 | 1,750 | ||
1,750 | 1,750 | |||
Issued, Subscribed and Paid-up: |
||||
121,733,634 (previous year 121,362,869) Equity Shares of Rs.10.00 each fully paid-up. |
1,217 | 1,214 | ||
1,217 | 1,214 | |||
Notes:
1 | Out of the above 9,931,638 (previous year 9,931,638) Equity Share of Rs. 10 each fully paid-up are held by Mahindra BT Investment Company (Mauritius) Limited, a subsidiary of Mahindra and Mahindra Ltd and 53,776,252 (previous year 53,776,252) equity shares of Rs. 10 each are held by Mahindra & Mahindra Ltd., the ultimate holding company. |
2 | The above includes 51,000,100 and 25,000,000 Equity Shares originally of Rs. 2 each issued as fully paid-up bonus shares by capitalisation of balance of Profit and Loss Account and General Reserve, respectively. |
3 | The company had consolidated 5 equity shares of face value Rs. 2 each into 1 equity share of face value Rs. 10 each |
4 | The above includes 90,148,459 Equity Shares of Rs. 10 each allotted as fully paid-up bonus shares by way of capitalisation of Profit and Loss Account. |
5 | Refer note 15 of schedule XIII for stock options. |
Schedule II | |||||||
RESERVES AND SURPLUS: | |||||||
General Reserve: |
|||||||
As per last Balance Sheet |
2,714 | 1,014 | |||||
Add: Transfer from Profit and Loss Account |
1,000 | 1,700 | |||||
Less: Transfered on Amalgamation |
1,013 | | |||||
(refer note of 6 (a) schedule XIII) |
|||||||
2,701 | 2,714 | ||||||
Securities Premium: |
|||||||
As per last Balance Sheet |
2,303 | 2,293 | |||||
Add : Received during the year |
27 | 10 | |||||
2,330 | 2,303 | ||||||
Currency Translation Reserve |
|||||||
As per last Balance Sheet |
28 | 21 | |||||
Add: Transfered on Amalgamation |
5 | | |||||
Addition during the period |
77 | 7 | |||||
105 | 28 | ||||||
Profit / (Loss) on cash flow hedges (refer Note 1 (l) of schedule XIII) |
(936 | ) | 851 | ||||
Balance in Profit and Loss Account |
14,036 | 5,462 | |||||
Less: Transfered on Amalgamation |
22 | | |||||
14,014 | 5,462 | ||||||
18,214 | 11,358 | ||||||
14
TECH MAHINDRA LIMITED
Schedules forming part of the Consolidated Balance Sheet(Continued)
Rs. in Million | ||||||
As at March 31, 2009 |
As at March 31, 2008 | |||||
Schedule III |
||||||
LOAN FUNDS: |
||||||
Unsecured Loan: |
||||||
Overdraft from bank |
| 300 | ||||
| 300 | |||||
Schedule V | ||||||
INVESTMENTS | ||||||
Long Term (Unquoted-at cost) | ||||||
Trade: | ||||||
In Subsidiary Companies |
||||||
50,000 Equity shares (previous year 50,000) of Tech Mahindra Foundation of Rs. 10 each fully paid up |
1 | 1 | ||||
In Other Companies |
||||||
1,603,380 E1 Preference shares (previous year Nil) of Servista Limited of GBP 0.002 each fully paid up (refer note 23 of schedule XIII) |
54 | | ||||
896,620 E2 Preference shares (previous year Nil) of Servista Limited of GBP 0.002 each fully paid up (refer note 23 of schedule XIII) |
30 | | ||||
4,232,622 Ordinary shares (previous year Nil) of Servista Limited of GBP 0.002 each fully paid up (refer note 23 of schedule XIII) |
1 | | ||||
85 | | |||||
Current Investments (Unquoted) | ||||||
Non Trade: | ||||||
Nil (previous year 3,071.62) units of Rs. Nil (previous year Rs. 1,000.60) each of DSP Merrill Lynch Liquidity Plus Institutional Plan-daily dividend |
| 3 | ||||
Nil (previous year 50,544.74) units of Rs. Nil (previous year Rs. 1,001.59) each of DSPML Liquidity Plus Institutional Plan-weekly dividend |
| 51 | ||||
49,678,303.91 (previous year Nil) units of Rs. 10.22 (previous year Rs. Nil) each of ICICI Prudential Flexible Income Plan-Daily Dividend |
508 | | ||||
2,643,536.00 (previous year Nil) units of Rs. 10.00 (previous year Rs. Nil) each of ICICI Prudential Floating Rate Plan D-Daily Dividend |
26 | | ||||
76,159,600.72 (previous year Nil) units of Rs. 10.01 (previous year Rs. Nil) each of Birla Sunlife Short Term Fund-Institutional Daily Dividend |
762 | | ||||
18,811,010.00 (previous year Nil) units of Rs. 10.00 (previous year Rs. Nil) each of Birla Sun Life FTP-INSTL-Series AN Growth |
188 | | ||||
44,627,133.83 (previous year Nil) units of Rs. 17.10 (previous year Rs. Nil) each of Reliance Medium Term fund-Daily Dividend Plan |
763 | | ||||
5,096,226.00 (previous year Nil) units of Rs. 10.01 (previous year Rs. Nil) each of Birla Sun Life Savings Fund Instl-Weekly Dividend-Reinvestment |
51 | | ||||
3,294,976.00 (previous year Nil) units of Rs. 17.10 (previous year Rs. Nil) each of Reliance Medium Term Fund-Daily Dividend Plan-Reinvestment |
56 | |
15
TECH MAHINDRA LIMITED
Schedules forming part of the Consolidated Balance Sheet(Continued)
Rs. in Million | ||||||
As at March 31, 2009 |
As at March 31, 2008 | |||||
Nil (previous year 1,122,894.45) units of Rs. Nil (previous year Rs.10.56) each of ICICI Prudential Flexible Income Plan-dividend weekly |
| 12 | ||||
Nil (previous year 18,811,010.00) units of Rs. Nil (previous year Rs. 10.00) each of Birla Sun Life FTP-INSTL-Series AN Growth |
| 188 | ||||
Nil (previous year 1,179,151.03) units of Rs. Nil (previous year Rs.10.03) each of HSBC Liquid Plus Institutional Plus-weekly dividend |
| 12 | ||||
Nil (previous year 15,647,449.00) units of Rs. Nil (previous year Rs. 10.00) each of Kotak Flexi Debt Scheme-Daily dividend |
| 157 | ||||
60,215,296.62 (previous year Nil) units of Rs. 10.08 (previous year Rs. Nil) each of Kotak Floater Long Term-Daily dividend |
607 | |||||
4,019,271.00 (previous year Nil) units of Rs. 10.08 (previous year Rs. Nil) each of Kotak Floater Long Term-Weekly Dividend |
40 | | ||||
Nil (previous year 15,500,000.00) units of Rs. Nil (previous year Rs. 10.00) each of Standard Chartered Fixed Maturity Plan |
| 155 | ||||
Nil (previous year 2,752,230) units of Rs. Nil (previous year Rs. 10.02) each of Birla Sunlife Liquid Plus Fund |
| 27 | ||||
25,122,427.67 (previous year Nil) units of Rs. 10.00 (previous year Rs. Nil) each of IDFC Money Manager Fund-TP-Super Instl Plan C-Daily dividend |
251 | | ||||
10,088,314.24 (previous year Nil) units of Rs. 10.00 (previous year Rs. Nil) each of Fidelity Ultra Short Term Debt Fund |
101 | | ||||
65,400,536.26 (previous year Nil) units of Rs. 10.03 (previous year Rs. Nil) each of HDFC Cash Mgt Fund-Treasury Advantage Plan-wholesale-Daily Dividend |
656 | | ||||
25,036,693.47 (previous year Nil) units of Rs. 10.04 (previous year Rs. Nil) each of Tata Floater Fund |
251 | | ||||
Nil (previous year 2,750,662.00) units of Rs. Nil (previous year Rs. 10.03) each of Kotak Mutual Fund-Flexi debt scheme |
| 27 | ||||
4,260 | 632 | |||||
4,346 | 633 | |||||
Schedule VI | ||||||
CURRENT ASSETS, LOANS AND ADVANCES: | ||||||
Current Assets: | ||||||
(a) Sundry Debtors *: |
||||||
(Unsecured) |
||||||
Debts outstanding for a period exceeding six months: |
||||||
: considered good ** |
229 | 1,153 | ||||
: considered doubtful |
85 | 92 | ||||
314 | 1,245 | |||||
Other debts, considered good *** |
8,793 | 9,813 | ||||
considered doubtful |
| 2 | ||||
9,107 | 11,060 | |||||
Less: Provision |
85 | 95 | ||||
9,022 | 10,965 | |||||
16
TECH MAHINDRA LIMITED
Schedules forming part of the Consolidated Balance Sheet(Continued)
Rs. in Million | ||||||
As at March 31, 2009 |
As at March 31, 2008 | |||||
1. * Debtors include on account of unbilled revenue aggregating to Rs. 719 Million (previous year Rs. 3,189 Million) |
||||||
2. ** Net of advances aggregating to Rs. 88 Million (previous year Rs. 98 Million) pending adjustments with invoices |
||||||
3. *** Net of advances aggregating to Rs. 1,994 Million (previous year Rs. 169 Million) pending adjustments with invoices |
||||||
(b) Cash and Bank Balances: |
||||||
Balance with scheduled banks: |
||||||
(i) In Current Accounts |
4,504 | 493 | ||||
(ii) In Fixed Deposit Accounts |
129 | 37 | ||||
Balance with other banks: |
||||||
(i) In Current Accounts |
749 | 446 | ||||
(refer note 21 of schedule XIII) |
||||||
5,382 | 976 | |||||
(c) Loans and Advances: |
||||||
(Unsecured, Considered good unless otherwise stated) |
||||||
Advances recoverable in cash or in kind or for value to be received considered good |
1,271 | 2,121 | ||||
considered doubtful |
21 | 10 | ||||
1,292 | 2,131 | |||||
Less: Provision |
21 | 10 | ||||
1,271 | 2,121 | |||||
MAT Credit Entitlement |
281 | | ||||
Balance with Excise and Customs |
602 | | ||||
Fair value of foreign exchange forward and option contracts |
| 1,036 | ||||
(refer Note 1 (l) (b) of schedule XIII) |
||||||
Advance Taxes (net of provisions) |
795 | 447 | ||||
Advance FBT (net of provisions) |
4 | | ||||
2,953 | 3,604 | |||||
Schedule VII | ||||||
CURRENT LIABILITIES: | ||||||
(a) Sundry Creditors |
4,692 | 5,119 | ||||
(b) Fair values of foreign exchange forward and currency option contracts |
1,179 | | ||||
(c) Other Liabilities |
722 | 1,385 | ||||
(d) Advance from Customers |
144 | | ||||
(e) Unclaimed Dividend |
1 | 1 | ||||
6,738 | 6,505 | |||||
Schedule VIII | ||||||
PROVISIONS: | ||||||
Provision for tax (net of advance taxes) |
856 | 795 | ||||
Provision for Fringe Benefit Tax (net of advance taxes) |
| 6 | ||||
Proposed Dividend |
| 668 | ||||
Provision for Dividend tax |
| 113 | ||||
Provision for Gratuity (refer note 10 schedule XIII) |
665 | 491 | ||||
Provision for Leave Encashment |
629 | 690 | ||||
2,150 | 2,763 | |||||
17
TECH MAHINDRA LIMITED
Rs. in Million excluding earning per share | ||||||||
Consolidated Profit and loss account for the |
Schedule | Year Ended March 31, 2009 |
Year Ended March 31, 2008 |
|||||
INCOME | ||||||||
Income from operations |
44,647 | 37,661 | ||||||
Other Income (net) |
IX | (378 | ) | 1,044 | ||||
Total Income |
44,269 | 38,705 | ||||||
EXPENDITURE: |
||||||||
Personnel |
X | 18,556 | 15,599 | |||||
Operating and Other Expenses |
XI | 13,266 | 13,805 | |||||
Depreciation /Amortisation |
1,097 | 796 | ||||||
Interest |
XII | 25 | 62 | |||||
32,944 | 30,262 | |||||||
PROFIT BEFORE TAX , MINORITY INTEREST AND EXCEPTIONAL ITEM |
11,325 | 8,443 | ||||||
Provision for Tax |
||||||||
Current tax [net of MAT credit of Rs. 281 Million |
1,225 | 689 | ||||||
(previous year Rs. Nil Million)] |
||||||||
Deferred tax |
(127 | ) | (15 | ) | ||||
Fringe benefit tax |
81 | 74 | ||||||
PROFIT AFTER TAX AND BEFORE MINORITY INTEREST AND EXCEPTIONAL ITEM |
10,146 | 7,695 | ||||||
Exceptional Item (refer note 8 of schedule XIII) |
| 4,401 | ||||||
Minority Interest share in (profit)/loss |
(1 | ) | 5 | |||||
NET PROFIT FOR THE YEAR |
10,145 | 3,299 | ||||||
Balance brought forward from previous year |
5,462 | 4,644 | ||||||
Balance available for appropriation |
15,607 | 7,943 | ||||||
Final Dividend (refer note 14 of schedule XIII) |
1 | 668 | ||||||
Interim Dividend |
487 | | ||||||
Dividend Tax (refer note 14 of schedule XIII) |
83 | 113 | ||||||
Transfer to General Reserve |
1,000 | 1,700 | ||||||
Balance Carried to Balance Sheet |
14,036 | 5,462 | ||||||
Earning Per Share (refer note 20 of schedule XIII) |
||||||||
Before exceptional item (in Rs.) |
||||||||
Basic |
83.41 | 63.49 | ||||||
Diluted |
78.82 | 58.91 | ||||||
After exceptional item (in Rs.) |
||||||||
Basic |
83.41 | 27.20 | ||||||
Diluted |
78.82 | 25.24 | ||||||
SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS |
XIII |
18
As per our attached report of even date | ||||||
For Deloitte Haskins & Sells | For Tech Mahindra Limited | |||||
Chartered Accountants | ||||||
Hemant M Joshi | Mr. Anand G. Mahindra | Mr. Vineet Nayyar | ||||
Partner | Chairman | Vice Chairman, Managing Director & CEO | ||||
Hyderabad, Dated: April 27, 2009 | ||||||
Hon. Akash Paul | Mr. Bharat Doshi |
Mr. Anupam Puri | ||||
Director | Director |
Director | ||||
Mr. Arun Seth | Mr. M. Damodaran |
Mr. B.H. Wani | ||||
Director | Director |
Director | ||||
Mr. Clive Goodwin | Mr. Ravidra Kulkarni |
Mr. Paul Zuckerman | ||||
Director | Director |
Director | ||||
Dr. Raj Reddy | Mr. Ulhas N. Yargop | |||||
Director | Director | |||||
Mr. Vikrant Gandhe | ||||||
Asst. Company Secretary | ||||||
Hyderabad, Dated : April 27, 2009 |
19
TECH MAHINDRA LIMITED
Schedules forming part of the Consolidated Profit and Loss Account
Rs. in Million | |||||||
Year Ended March 31, 2009 |
Year Ended March 31, 2008 | ||||||
Schedule IX | |||||||
OTHER INCOME | |||||||
Interest on: |
|||||||
Deposits with banks |
49 | 43 | |||||
[Tax deducted at source Rs. 4 Million] |
|||||||
(previous year Rs. 4 Million) |
|||||||
Others [Tax deducted at source Rs. 0 Million] |
10 | 3 | |||||
(previous year Rs. 1 Million) |
59 | 46 | |||||
Dividend received on current investments (non-trade) |
85 | 70 | |||||
Profit on sale of current investments (non-trade) (net) |
| 43 | |||||
Exchange (losses) / gains (net) |
(719 | ) | 767 | ||||
Sundry balances written back (net) |
119 | 89 | |||||
Rent Income |
24 | | |||||
[Tax deducted at source Rs. 5 Million] |
|||||||
(previous year Rs. 0 Million) |
|||||||
Miscellaneous income |
54 | 29 | |||||
[Tax deducted at source Rs. 0 Million] |
|||||||
(previous year Rs. 1 Million) |
|||||||
(378 | ) | 1,044 | |||||
Schedule X | |||||||
PERSONNEL | |||||||
Salaries and Bonus |
16,475 | 13,672 | |||||
Contribution to provident and other funds |
1,303 | 1,100 | |||||
Staff welfare |
778 | 827 | |||||
18,556 | 15,599 | ||||||
20
TECH MAHINDRA LIMITED
Schedules forming part of the Consolidated Profit and Loss Account(Continued)
Rs. in Million | ||||||
Year Ended March 31, 2009 |
Year Ended March 31, 2008 | |||||
Schedule XI |
||||||
OPERATING AND OTHER EXPENSES |
||||||
Power & Fuel |
369 | 330 | ||||
Rent |
842 | 790 | ||||
Rates and taxes |
107 | 40 | ||||
Communication expenses |
805 | 825 | ||||
Traveling expenses (refer note 9 of schedule XIII) |
3,442 | 5,062 | ||||
Recruitment expenses |
74 | 84 | ||||
Training |
128 | 168 | ||||
Hire charges |
146 | 191 | ||||
Sub-contracting costs (net) |
4,338 | 3,751 | ||||
Transition cost (net) |
353 | 381 | ||||
Professional and Legal fees |
515 | 397 | ||||
Repairs and maintenance: |
||||||
Buildings (including leased premises) |
35 | 29 | ||||
Machinery |
99 | 63 | ||||
Others |
99 | 111 | ||||
233 | 203 | |||||
Insurance |
190 | 126 | ||||
Software and hardware expenses |
927 | 751 | ||||
Advertising, marketing and selling expenses |
27 | 37 | ||||
Commission on income from services |
122 | 169 | ||||
Loss on sale of fixed assets (net) |
12 | 4 | ||||
Loss on sale of current investments (net) |
64 | | ||||
Excess of cost over fair value of current investments |
1 | | ||||
Provision for doubtful debts (net) |
17 | 26 | ||||
Provision for doubtful advances |
11 | 4 | ||||
Advances / bad debts written off |
24 | 26 | ||||
Donations |
90 | 76 | ||||
Consumption of components |
2 | | ||||
Miscellaneous expenses |
427 | 364 | ||||
13,266 | 13,805 | |||||
Schedule XII |
||||||
INTEREST |
||||||
Cash credit / Overdraft |
4 | 62 | ||||
Others |
21 | | ||||
25 | 62 | |||||
21
TECH MAHINDRA LIMITED
Schedules forming part of the Consolidated Balance Sheet
Schedule IV
FIXED ASSETS
Rs in Million | ||||||||||||||||||||
GROSS BLOCK | DEPRECIATION/AMORTISATION | NET BLOCK | ||||||||||||||||||
Description of Assets |
Cost as at April 01, 2008 |
Additions during the year |
Deductions during the year |
Cost as at March 31, 2009 |
As at April 1, 2008 |
For the year |
Deductions during the year |
Cost as at March 31, 2009 |
As at March 31, 2009 |
As at March 31, 2008 | ||||||||||
Goodwill on consolidation* |
0 | 0 | | 0 | | | | | 0 | 1,030 | ||||||||||
Leased Assets: |
||||||||||||||||||||
Vehicles |
48 | | 42 | 6 | 37 | 4 | 36 | 5 | 1 | 11 | ||||||||||
(refer Note 12 of schedule XIII) |
||||||||||||||||||||
Tangible Fixed Assets: |
||||||||||||||||||||
Freehold Land |
174 | | | 174 | | | | | 174 | 174 | ||||||||||
Leasehold Land |
431 | 5 | | 436 | 6 | 9 | | 15 | 421 | 425 | ||||||||||
Leasehold Improvements |
281 | 81 | 5 | 357 | 60 | 117 | 5 | 172 | 185 | 221 | ||||||||||
Office Building / Premises |
1,598 | 1,398 | | 2,996 | 684 | 164 | | 848 | 2,148 | 914 | ||||||||||
Computers |
1,835 | 328 | 20 | 2,143 | 1,127 | 433 | 20 | 1,540 | 603 | 708 | ||||||||||
Plant and Machinery |
1,139 | 666 | 6 | 1,799 | 600 | 217 | 5 | 812 | 987 | 539 | ||||||||||
Furniture and Fixtures |
798 | 281 | 34 | 1,045 | 543 | 132 | 29 | 646 | 399 | 255 | ||||||||||
Vehicles |
47 | 3 | 3 | 47 | 30 | 10 | 3 | 37 | 10 | 17 | ||||||||||
Intangible Assets: |
||||||||||||||||||||
Intellectual property rights |
76 | | 76 | 14 | 11 | | 25 | 51 | 62 | |||||||||||
Total |
6,427 | 2,762 | 110 | 9,079 | 3,101 | 1,097 | 98 | 4,100 | 4,979 | 4,356 | ||||||||||
Previous year |
6,245 | 1,317 | 105 | 7,457 | 2,403 | 796 | 98 | 3,101 | ||||||||||||
Capital Work-in-Progress (include capital advances** Rs. 146 million (previous year Rs. 16 Million)# |
1,541 | 1,640 | ||||||||||||||||||
Total |
6,520 | 5,996 | ||||||||||||||||||
Note: 1) | Fixed Assets include certain leased vehicles aggregating to Rs. 0 Million (previous year Rs.14 Million) (at cost) on which vendors have a lien. |
#2) | Includes capital advance of Rs. 243 Million (previous year Rs. 254 Million) paid towards purchase of leasehold land and building constructed on it and inclusive of plant and machinery (Property) under an auction through Debt Recovery Tribunal (DRT), New Delhi. The owner of the property has filed an appeal before The Honble Debt Recovery Appallate Tribunal (DRAT) against the auction. DRAT vide its order dated October 9, 2007, has directed that the auction can proceed but the confirmation of the sale shall be subject to further orders by DRAT. |
*3) | Goodwill reduced on amalgamation of iPolicy Networks Limited and Tech Mahindra (R&D) Services Limited |
**4) | Net of provision for doubtful advances Rs. 5 Million (previous year Rs. 5 Million) |
22
TECH MAHINDRA LIMITED
Consolidated Cash flow for the year ended March 31, 2009
Rs. in Million | |||||||||||
Particulars |
March 31 2009 |
March 31 2008 |
|||||||||
A |
Cash flow from operating activities | ||||||||||
Net profit before taxation and exceptional item | 11,325 | 8,443 | |||||||||
Less: | |||||||||||
Exceptional item | | (4,401 | ) | ||||||||
11,325 | 4,042 | ||||||||||
Adjustments for | |||||||||||
Depreciation / Amortisation | 1,097 | 796 | |||||||||
Loss on sale of Fixed Assets, (net) | 12 | 4 | |||||||||
Interest expense | 25 | 62 | |||||||||
Decrease in fair value of current investment | 1 | | |||||||||
Exchange loss/(gain) (net) | 353 | (251 | ) | ||||||||
Currency translation adjustment | 77 | 7 | |||||||||
Dividend from current investments | (85 | ) | (70 | ) | |||||||
Interest income | (59 | ) | (46 | ) | |||||||
(Profit)/Loss on sale of current investments | 64 | (43 | ) | ||||||||
1,485 | 459 | ||||||||||
Operating profit before working capital changes | 12,810 | 4,501 | |||||||||
Adjustments for: | |||||||||||
Trade and other receivables | 2,293 | (3,589 | ) | ||||||||
Trade and other payables | (976 | ) | 2,033 | ||||||||
1,317 | (1,556 | ) | |||||||||
Cash generated from operations before tax | 14,127 | 2,945 | |||||||||
Income taxes paid | (1,902 | ) | (999 | ) | |||||||
(1,902 | ) | (999 | ) | ||||||||
Net cash from / (used in) operating activities | 12,225 | 1,946 | |||||||||
B |
Cash flow from investing activities |
||||||||||
Additional consideration on acquisition of subsidiary | | 98 | |||||||||
Purchase of Fixed Assets | (2,513 | ) | (2,394 | ) | |||||||
Purchase of current investments | (12,824 | ) | (5,021 | ) | |||||||
Sale of current investments | 9,131 | 5,410 | |||||||||
Acquisitions / Investments | (85 | ) | |||||||||
(refer note 7 and 23 of schedule XIII) | |||||||||||
Sale of Fixed Assets | 2 | 3 | |||||||||
Interest received | 66 | 48 | |||||||||
Dividend received on current investments | 85 | 61 | |||||||||
Net cash from /(used in) investing activities | (6,138 | ) | (1,795 | ) | |||||||
C |
Cash flow from financing activities |
||||||||||
Proceeds from issue of shares (including Securities Premium) | 31 | 11 | |||||||||
Payment of principal on car lease | | (14 | ) | ||||||||
Share application money | 1 | | |||||||||
Dividend (including dividend tax paid) | (1,352 | ) | | ||||||||
Proceeds/(repayment) from/of borrowing | (300 | ) | 167 | ||||||||
Interest paid | (25 | ) | (62 | ) | |||||||
Net cash from / (used in) financing activities | (1,645 | ) | 102 | ||||||||
Net increase/(decrease) in cash and cash equivalents (A+B+C) | 4,442 | 253 | |||||||||
Cash and cash equivalents at the beginning of the year | 927 | 674 | |||||||||
Cash and cash equivalents at the end of the year | 5,369 | 927 | |||||||||
23
Notes:
1 |
Components of cash and cash equivalents include cash, bank balances in current and deposit accounts as disclosed under Schedule VI (b) of the accounts. | |||||||
2 |
Purchase of fixed assets are stated inclusive of movements of capital work in progress between the commencement and end of the period and are considered as part of investing activity. | |||||||
March 31, 2009 | March 31, 2008 | |||||||
3 |
Cash and cash equivalents include: | |||||||
Cash and Bank Balances | 5,382 | 976 | ||||||
Unrealised (gain)/loss on foreign currency | ||||||||
Cash and cash equivalents | (13 | ) | (49 | ) | ||||
Total Cash and Cash equivalents | 5,369 | 927 | ||||||
4 |
Cash and cash equivalents include equity share application money of Rs. 1 Million (previous year Rs. Nil Million) and unclaimed dividend of Rs. 1 Million (previous year Rs. 1 Million) |
As per our attached report of even date | ||||||
For Deloitte Haskins & Sells | For Tech Mahindra Limited | |||||
Chartered Accountants | ||||||
Mr. Anand G. Mahindra | Mr. Vineet Nayyar | |||||
Chairman | Vice Chairman, Managing Director & CEO | |||||
Hemant M. Joshi | ||||||
Partner | ||||||
Hyderabad, Dated: April 27, 2009 | ||||||
Hon. Akash Paul | Mr. Bharat Doshi |
Mr. Anupam Puri | ||||
Director | Director |
Director | ||||
Mr. Arun Seth | Mr. M. Damodaran |
Mr. B.H. Wani | ||||
Director | Director |
Director | ||||
Mr. Clive Goodwin | Mr. Ravidra Kulkarni |
Mr. Paul Zuckerman | ||||
Director | Director |
Director | ||||
Dr. Raj Reddy | Mr. Ulhas N. Yargop | |||||
Director | Director | |||||
Mr.Vikrant Gandhe | ||||||
Asst.Company Secretary | ||||||
Hyderabad, Dated: April 27, 2009 |
24
Tech Mahindra Limited
Schedule XIII
Schedules forming part of the Consolidated Balance Sheet and Profit and Loss Account
SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS FORMING PART OF CONSOLIDATED ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2009
1. | Significant accounting policies: |
(a) | Basis for preparation of accounts: |
The accompanying Consolidated Financial Statements of Tech Mahindra Limited (TML) (the holding company) and its subsidiaries are prepared in accordance with the generally accepted accounting principles applicable in India (Indian GAAP), the provisions of the Companies Act, 1956 and the Accounting Standards to the extent possible in the same format as that adopted by the holding company for its separate financial statements.
The financial statements of the subsidiaries used in the consolidation are drawn up to the same reporting date as that of the holding company namely March 31, 2009.
(b) | Principles of consolidation: |
The financial statements of the holding company and its subsidiaries have been consolidated on a line by line basis by adding together the book value of like items of assets, liabilities, income, expenses, after eliminating intragroup transactions and any unrealized gain or losses on the balances remaining within the group in accordance with the Accounting Standard21 on Consolidated Financial Statements (AS 21).
The financial statements of the holding company and its subsidiaries have been consolidated using uniform accounting policies for like transaction and other events in similar circumstances.
The excess of cost of investments in the subsidiary company/s over the share of the equity of the subsidiary company/s at the date on which the investment in the subsidiary company/s is made is recognized as Goodwill on Consolidation and is grouped with Fixed Assets in the Consolidated Financial Statements.
Alternatively, where the share of equity in the subsidiary company/s as on the date of investment is in excess of cost of the investment, it is recognized as Capital Reserve and grouped with Reserves and Surplus, in the Consolidated Financial Statements.
Minority interest in the net assets of the consolidated subsidiaries consists of the amount of equity attributable to the minority shareholders at the dates on which investments are made in the subsidiary company/s and further movements in their share in the equity, subsequent to the dates of investments. Minority interest also includes share application money received from minority shareholders. The losses in subsidiary/s attributable to the minority shareholder are recognized to the extent of their interest in the equity of the subsidiary/s.
(c) | Use of Estimates: |
The preparation of Consolidated Financial Statements, in conformity with the generally accepted accounting principles, requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of financial statements and the reported amounts of revenues and expenses during the reported year. Differences between the actual results and estimates are recognised in the year in which the results are known/ materialised.
25
(d) | Fixed Assets including intangible assets |
Fixed assets are stated at cost less accumulated depreciation. Costs comprise purchase price and attributable costs, if any.
(e) | Leases: |
Assets taken on lease by TML are accounted for as fixed assets in accordance with Accounting Standard 19 on Leases, (AS 19).
(i) | Finance lease |
Assets taken on finance lease are accounted for as fixed assets at fair value. Lease payments are apportioned between finance charge and reduction of outstanding liability.
(ii) | Operating lease |
Assets taken on lease under which all risks and rewards of ownership are effectively retained by the lessor are classified as operating lease. Lease payments under operating leases are recognised as expenses on accrual basis in accordance with the respective lease agreements.
(f) | Depreciation / Amortisation of fixed assets: |
(i) | Depreciation for all fixed assets including for assets taken on lease is computed using the straight-line method based on estimated useful lives. Depreciation is charged on a pro-rata basis for assets purchased or sold during the year. Management's estimate of the useful life of fixed assets is as follows: |
Buildings |
15 years | |
Computers |
3-4 years | |
Plant and machinery |
3-5 years | |
Furniture and fixtures |
5 years | |
Vehicles |
3-5 years |
(ii) | Leasehold land is amortised over the period of lease. |
(iii) | Leasehold improvements are amortised over the period of lease or period of occupancy which ever is less. |
(iv) | Intellectual property rights are amortised over a period of seven years. |
(v) | Assets costing upto Rs. 5,000 are fully depreciated in the year of purchase. |
(g) | Impairment of Assets: |
At the end of each year, the company determines whether a provision should be made for impairment loss on fixed assets by considering the indications that an impairment loss may have occurred in accordance with Accounting Standard 28 on Impairment of Assets. Where the recoverable amount of any fixed asset is lower than its carrying amount, a provision for impairment loss on fixed assets is made for the difference. Recoverable amount is the higher of an assets net selling price and value in use. In assessing value in use, the estimated future cash flows expected from the continuing use of the asset and from its disposal are discounted to their present value using a pre-tax discount rate that reflects the current market assessments of time value of money and the risks specific to the asset.
Reversal of impairment loss if any is recognised immediately as income in the Profit and Loss Account.
(h) | Investments: |
Long-term investments are carried at cost. Provision is made to recognise a decline other than temporary in the carrying amount of long term investments.
26
Current investments are carried at lower of cost and fair value.
(i) | Inventories : |
Components and parts:
Components and parts are valued at lower of cost and net realizable value. Cost is determined on First In First Out basis.
Work in progress:
An ongoing work to develop computer software is recognized only when a significant portion of the deliverable work is completed, and is valued at the lower of cost and estimated net realizable value. The cost of work in progress is arrived at after considering all direct costs including the depreciation cost on all capital goods that are deployed directly or indirectly for the development of any modules and indirect costs as have been specifically incurred for the development of the various modules.
Finished Goods:
Valued at the lower of the cost or net realisable value. Cost is determined on First-In-First Out basis.
(j) | Revenue recognition: |
Revenue from software services and business process outsourcing services include revenue earned from services rendered on time and material basis, time bound fixed price engagements and system integration projects.
The related revenue is recognized as and when services are rendered. Income from services performed by TML pending receipt of purchase orders from customers, which are invoiced subsequently on receipt thereof, are recognized as unbilled revenue.
Foreign currency unbilled revenue is recognised at month end foreign currency closing rate. On receipt of purchase orders, the amounts are billed to the customer & the revenue is booked at the exchange rate prevailing on the transaction date.
The Companies also perform time bound fixed price engagements, under which revenue is recognized using the proportionate completion method of accounting, unless work completed cannot be reasonably estimated. Provision for estimated losses, if any on uncompleted contracts are recorded in the year in which such losses become probable based on the current contract estimates.
Revenue of sale of software and hardware products is recognised at the point of dispatch to the customer.
Dividend income is recognized when the Companys right to receive dividend is established. Interest income is recognized on time proportion basis.
(k) | Expenditure: |
The cost of software purchased for use in software development and services is charged to cost of revenues in the year of acquisition
(l) | (a) Foreign currency transactions: |
Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of transaction. Monetary items are translated at the year end rates. The exchange difference between the rate prevailing on the date of transaction and on the date of settlement as also on translation of monetary items at the end of the year is recognised as income or expense, as the case may be.
Any premium or discount arising at the inception of the forward exchange contract is recognized as income or expense over the life of the contract, except in the case where the contract is designated as a cash flow hedge.
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(b) | Derivative instruments and hedge accounting: |
The Company uses foreign currency forward contracts / options to hedge its risks associated with foreign currency fluctuations relating to certain forecasted transactions. Effective 01st April 2007 the Company designates these as cash flow hedges applying the recognition and measurement principles set out in the Accounting Standard 30 Financial Instruments: Recognition and Measurements (AS-30).
The use of foreign currency forward contracts/options is governed by the Companys policies approved by the board of directors, which provide written principles on the use of such financial derivatives consistent with the Companys risk management strategy. The counter party to the Companys foreign currency forward contracts is generally a bank. The Company does not use derivative financial instruments for speculative purposes.
Foreign currency forward contract/option derivative 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 recognized directly in reserves and the ineffective portion is recognized immediately in profit and loss account.
Changes in the fair value of derivative financial instruments that do not qualify for hedge accounting are recognized 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. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognized in reserves is transferred to profit and loss account.
(m) | Translation and Accounting of Financial Statement of Foreign subsidiaries: |
In respect of foreign subsidiaries, the company has classified all of them as Non-Integral Foreign Operations in terms of AS 11.
The financial statements of the foreign subsidiaries for the purpose of consolidation are translated to Indian Rupees as follows:
a. | All incomes and expenses are translated at the average rate of exchange prevailing during the year. |
b. | Assets and liabilities are translated at the closing rate as on the Balance sheet date. |
c. | The resulting exchange differences are accumulated in currency translation reserve which is shown under Reserves & Surplus. |
(n) | Employee Retirement Benefits: |
a) | Gratuity: |
The Company provides for gratuity, a defined retirement benefit plan covering eligible employees. The Gratuity plan provides for a lump sum payment to employees at retirement, death, incapacitation or termination of the employment based on the respective employees salary and the tenure of the employment. Liabilities with regard to a Gratuity plan are determined based on the actuarial valuation carried out by an independent actuary as of the Balance Sheet date for TML and its Indian subsidiaries.
Actuarial gains and losses are recognised in full in the Profit and Loss account for the year in which they occur.
b) | Provident fund: |
The eligible employees of TML and its Indian subsidiaries are entitled to receive the benefits of Provident fund, a defined contribution plan, in which both employees and the Company make monthly
28
contributions at a specified percentage of the covered employees salary (currently at 12% of the basic salary). The contributions as specified under the law are paid to the Regional Provident Fund Commissioner by the Company.
c) | Compensated absences: |
The Company provides for the encashment of leave subject to certain rules. The employees are entitled to accumulate leave subject to certain limits, for future encashment or availment. The liability is provided based on the number of days of unavailed leave at balance sheet date on the basis of an independent actuarial valuation for TML and its Indian subsidiaries. Whereas provision for encashment of unavailed leave on retirement is made on actual basis for Tech Mahindra (Americas) Inc. (TMA), Tech Mahindra GmbH (TMGMBH), CanvasM Technologies Limited (CTL) and Tech Mahindra (Singapore) Pte. Ltd. (TMSL), TML does not expect the difference on account of varying methods to be material.
Actuarial gains and losses are recognised in full in the Profit and Loss account for the year in which they occur.
The company also offers a short term benefit in the form of encashment of unavailed accumulated leave above certain limit for all of its employees and same is being provided for in the books at actual cost.
(o) | Borrowing costs: |
Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use or sale. All other borrowing costs are charged to revenue.
(p) | Taxation: |
Tax expense comprises of current tax, deferred tax and fringe benefit tax. Current tax is measured at the amount expected to be paid to/recovered from the tax authorities, based on estimated tax liability computed after taking credit for allowances and exemption in accordance with the local tax laws existing in the respective countries.
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 tax after the tax holiday year. Accordingly, it 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. Deferred tax assets and liabilities are recognised for future tax consequences attributable to timing differences between taxable income and accounting income that are capable of reversal in one or more subsequent years and are measured using relevant enacted tax rates. The carrying amount of deferred tax assets at each Balance Sheet date is reduced to the extent that it is no longer reasonably certain that sufficient future taxable income will be available against which the deferred tax asset can be realized.
Fringe benefit tax is recognized in accordance with the relevant provisions of the Income-tax Act, 1961 and the Guidance Note on Fringe Benefits Tax issued by the ICAI.
Tax on distributed profits payable in accordance with the provisions of the Income-tax Act, 1961 is disclosed in accordance with the Guidance Note on Accounting for Corporate Dividend Tax issued by the ICAI.
29
(q) | Contingent Liabilities: |
These, if any, are disclosed in the notes on accounts. Provision is made in the accounts if it becomes probable that any outflow of resources embodying economic benefits will be required to settle the obligation arising out of past events.
Notes on Accounts:
2. | (a) The consolidated financial statements present the consolidated accounts of TML, which consists of the Accounts of the holding company and of the following subsidiaries; |
Name of the Subsidiary company |
Country of incorporation |
Extent of Holding (%) as on March 31, 2009 |
|||
Tech Mahindra (Americas) Inc. [TMA] |
United States of America | 100 | % | ||
Tech Mahindra GmbH (TMGMBH) |
Germany | 100 | % | ||
Tech Mahindra (Singapore) Pte. Ltd. (TMSL) |
Singapore | 100 | % | ||
Tech Mahindra (Thailand) Limited (TMTL) |
Thailand | 100 | % | ||
PT Tech Mahindra Indonesia (TMI) |
Indonesia | 100 | % | ||
CanvasM Technologies Limited (CTL) and its following subsidiary: a) CanvasM Technologies Inc. (CMI) |
India United States of America |
80.10 80.10 |
% % | ||
Tech Mahindra (Malaysia) SDN. BHD (TMM) |
Malaysia | 100 | % | ||
Tech Mahindra (Beijing) IT Services Limited (TMB) |
China | 100 | % | ||
Venturbay Consultants Private Limited (VCPL) |
India | 100 | % |
(b) | TML has an investment in a subsidiary company viz. Tech Mahindra Foundation (TMF). TMF has been incorporated primarily for charitable purposes, where in the profits will be applied for promoting its objects. Accordingly, the accounts of TMF are not consolidated in these financial statements, since TML will not derive any economic benefits from its investments in TMF. |
3. | The estimated amount of contracts remaining to be executed on capital account, (net of capital advances) and not provided for as at March 31, 2009 for TML Rs. 986 Million (previous year: Rs. 1,378 Million). |
4. | Contingent liabilities: |
(i) | TML has received demand notices from Income Tax Authorities resulting in a contingent liability of Rs. 263 Million (previous year Rs. 158 Million). This is mainly on account of disallowance of software maintenance activity, deduction under section 80HHE amounting to Rs. 38 Million, further sum of Rs. 209 Million relating to deduction under Section 10A, mainly in relation to adjustment of expenditure in foreign currency being excluded only from Export turnover and not from Total turnover, the company has already won the appeal before the Mumbai tribunal. The department intends to pursue the matter before High court & Rs. 16 Million relating to Fringe Benefit Tax. The Company has appealed before Appellate Authorities and is hopeful of succeeding in the same. |
(ii) | Bank Guarantees outstanding for TML and its subsidiary TMSL are Rs. 967 Million and Rs. 7 Million respectively (previous year: Rs. 180 Million and Rs. 6 Million respectively). |
(iii) | Claims from Statutory Authorities for TML is Rs. 2 Million (Provident Fund) (previous year: Rs. 2 Million). Based on letter received from Service Tax Authority for erstwhile TMR&D is Rs. 7 Million (previous year: Rs. 7 Million) towards service tax on marketing fees for the financial year 2006-2007. The above amount is paid by the Company Under Protest. The company is awaiting demand notice and would be filling an appeal against the same. |
(iv) | Claim against TML not acknowledged as debts amounting to Rs. 130 Million (previous year: Rs. Nil). |
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(v) | Based on the demand letter of Rs. 6 Million (previous year: Rs. Nil) received from the office of the assistant development commissioner of NSEZ for rent arrears on account of revision of rent of the SEZ premises the company has paid an amount of Rs. 3 Million (previous year: Rs. Nil) Under Protest. |
5. |
TML acquired Tech Mahindra (R&D services) Limited (TMRDL) on November 28, 2005. The terms of purchase provided for payment of contingent consideration to all the selling shareholders, payable over three years i.e. up to March 31st 2008 and calculated based on achievement of specific targets. The consideration so payable would be accounted in the books of account in the year of achieving the milestones under the agreement. The total contingent consideration is payable in cash and cannot exceed Rs. 641 Million. Accordingly, total earn out payment of Rs. 155 Million had been provided as additional cost of acquisition till March 31, 2008 |
6. | (a) Tech Mahindra (R & D services) Limited and iPolicy Networks Limitedwholly owned subsidiaries of TML have been amalgamated with the company with effect from April 1, 2008 in terms of the scheme of amalgamation (scheme) sanctioned by the Honorable High Court of judicature at Mumbai, Delhi & Karnataka vide their approvals dated March 28, 2008, April 4, 2008 & April 3, 2008 respectively. |
Tech Mahindra (R & D services) Limited provides technology solutions to leading Telecom Equipment Manufacturers in the areas of Research and Development (R & D), Product, Engineering and Life Cycle Support. iPolicy Networks Limited develops nextgeneration, carrier-grade integrated network security solutions for enterprise and service providers.
The mergers would result in operational synergies; enhance financial strength and rationalization of costs. Accordingly the above stated subsidiaries stand dissolved without winding up and all assets and liabilities have been transferred to and vested with the company with effect from April 1, 2008, the appointed date. As the above stated subsidiaries were wholly owned by the company, no shares were exchanged to effect the amalgamation. The amalgamation was accounted as per the pooling of interest method as prescribed in Accounting Standard 14. All the assets and liabilities have been taken over at their respective book values as at the date of amalgamation.
In accordance with the Scheme of amalgamation approved by the Honorable High Courts, the excess of liabilities over the assets have been charged to general reserves. Accordingly the share capital and reserves of the company were adjusted against general reserves of TML.
Had the treatment based on Accounting Statement 14 on Accounting for Amalgamation followed, securities premium, capital reserves and profit and loss account (on amalgamation) would have been higher by Rs. 252 Million, Rs. 1 Million and Rs. 517 Million respectively and general reserves would have been lower by Rs. 769 million.
(b) The Board of Tech Mahindra (R&D Services) Inc. (TMRDS), a subsidiary of TML had approved the plan and agreement for amalgamation with its fellow subsidiary Tech Mahindra Americas Inc. (TMA) effective July 01, 2008. The amalgamation has been duly authorized in compliance with the jurisdictional laws. According to these authorizations, TMRDS ceased to exist on and after July 1, 2008.
7. | During the year ended March 31, 2009, the Company has made investment of Rs. 0.08 Million in Venturbay Consultants Private Limited. As a result, VCPL has become a wholly owned subsidiary of the Company with effect from the date of this investment. |
8. | During the previous year ended March 31, 2008, TML has entered in to an agreement with a customer under which it will have exclusivity for 90 days in negotiating an engagement. |
As per the terms of the agreement TML has made an exclusivity payment of Rs. 4,401 Million to the customer which is unconditional, irrevocable and non refundable. Accordingly, this payment was disclosed as an exceptional item in the previous years Profit and Loss account.
9. | The Inland Revenue Authorities of United Kingdom (UK) carried out Employer Compliance Review in 2004-05. In the course of the review, they demanded from the Company Rs. 324 million for the period 2001 to 2005 claiming that the dispensation on employee allowances was not used properly. They also withdrew |
31
dispensation benefit from the year 2005-06. Based on communication from the authorities and expert opinion, the Company had provided tax liability without any dispensation benefit. The Company represented against both these decisions. Post completion of review the revised dispensation was restored with retrospective effect from year 2005-06. The demand for earlier period was also settled favorably. During the year, the excess of provision over liability, determined by the Inland Revenue, amounting to Rs. 673 million has been written back to Expenses. |
10. | Details of employee benefits as required by the Accounting Standard 15 (Revised) Employee Benefits are as under: |
a) | Defined Contribution Plan |
Amount recognized as an expense in the Profit and Loss Account in respect of defined contribution plan is Rs. 511 Million (previous year: Rs. 429 Million).
b) | Defined Benefit Plan |
The defined benefit plan comprises of gratuity. The gratuity plan is not funded.
Changes in the present value of defined obligation representing reconciliation of opening and closing balances thereof and fair value of Trust Fund Receivable (erstwhile TMRDL) showing amount recognized in the Balance Sheet:
Rs. in Million | ||||||
Particulars |
March 31, 2009 | March 31, 2008 | ||||
Projected benefit obligation, beginning of the year |
491 | 288 | ||||
Service cost |
120 | 160 | ||||
Interest cost |
34 | 32 | ||||
Actuarial (gain)/loss |
40 | 30 | ||||
Benefits paid |
(20 | ) | (19 | ) | ||
Projected benefit obligation, end of the year* |
665 | 491 | ||||
* | This includes the trust fund balance of Rs. 31 Million which was created to fund the gratuity liability of the erstwhile TMRDL. After amalgamation of TMRDL with the Company, the balance in Trust Fund can be utilized only for the payment of obligation arising for gratuity payable to employees of erstwhile TMRDL. The composition of the Trust Balance as on March 31, 2009 is as follows: |
Rs. in Million | ||
Particulars |
March 31, 2009 | |
Government of India Securities/ Gilt Mutual Funds |
9 | |
State Government Securities / Gilt Mutual Funds |
6 | |
Public Sector Unit Bonds |
14 | |
Private Sector Bonds / Equity Mutual Funds |
0 | |
Mutual Funds |
0 | |
Bank Balance |
2 | |
Total |
31 | |
32
Components of employer expenses recognized in the statement of profit and loss for the year ended March 31, 2009:
Rs. in Million | ||||
Particulars |
March 31, 2009 | March 31, 2008 | ||
Net gratuity cost |
||||
Service cost |
120 | 155 | ||
Interest cost |
34 | 28 | ||
Actuarial loss / (gain) |
40 | 24 | ||
Net gratuity cost |
194 | 207 | ||
Principal Actuarial Assumptions |
March 31, 2009 |
March 31, 2008 | |||
Discount Rate |
7.60% | 7.75 | % | ||
Rate of increase in compensation levels of covered employees |
4.00 % for the 1st Year 7.00 % for the next two years 8.25% thereafter |
8.00 | % |
| The discount rate is based on the prevailing market yields of Indian Government Bonds as at the balance sheet date for the estimated terms of the obligations. |
| Salary escalation rates: The estimates of future salary increases considered takes into account the inflation, seniority, promotion and other relevant factors. |
11. | Payment to Auditors: |
Rs. In Million | ||||
Particulars |
March 31, 2009 | March 31, 2008 | ||
1. Audit Fees |
5 | 4 | ||
2. As advisor or in any other capacity in respect of taxation matters etc. |
1 | | ||
3. For other services |
3 | 3 | ||
4. Reimbursement of out of pocket expenses |
0 | 0 | ||
Total |
9 | 7 | ||
12. | Assets acquired / given on Lease: |
(a) | Finance Lease: |
TML has acquired vehicles on lease, the fair value of which aggregates to Rs. 6. Million (previous year: Rs. 50 Million). As per Accounting Standard 19 (AS-19) on Leases, the Company has capitalized the said vehicles at their fair values as the leases are in the nature of finance leases as defined in AS-19. Lease payments are apportioned between finance charge and outstanding liabilities. The details of lease rentals payable in future are as follows:
Rs. in Million | ||||
Particulars |
Not later than 1 year |
Later than 1 year not later than 5 years | ||
Minimum Lease rentals payable (previous year: Rs. 4 Million and Rs. 0 Million respectively) |
0 | | ||
Present value of Lease rentals payable (previous year: |
0 | |
33
b) | Operating Lease: |
The assets taken on Operating Lease are as detailed below:
i. | TML has taken vehicles on operating lease for a period of three to five years. The lease rentals recognised in the Profit and Loss Account for the year is Rs. 13 Million (previous year: Rs. 8 Million). |
The future lease payments of operating lease are as follows:
Rs. in Million | ||||
Particulars |
Not later than 1 year |
Later than 1 year not later than 5 years | ||
Minimum Lease rentals payable (Previous year: Rs. 11 Million and Rs. 18 Million respectively) |
15 | 19 |
ii. | Tech Mahindra (Americas) Inc. (TMA) has taken office space on operating lease. The lease rentals recognized in the Profit and Loss Account for the year is Rs. 14 Million (previous year: Rs. 9 Million). The future lease payments of operating lease are as follows: |
Rs. in Million | ||||
Particulars |
Not later than 1 year |
Later than 1 year not later than 5 years | ||
Minimum Lease rentals payable (previous year: Rs. 9 Million and Rs. 11 respectively) |
11 | 4 |
Previous year numbers have been regrouped since Tech Mahindra (Americas) Inc. & Tech Mahindra (R & D) Inc. have amalgamated on July 1, 2008.
iii. | CanvasM Technologies Ltd. is a lessee under various operating leases. Rental expense for operating leases for the year ended March 31, 2009 is Rs. 3 Million (previous year: Rs. 3 Million). There is no non-cancelable lease as on March 31, 2009. |
13. | As per the requirements of Accounting Standard 17 on Segment Reporting (AS 17), the primary segment of the Company is business segment by category of customers in the Telecom Service Providers (TSP), Telecom Equipment Manufacturer (TEM), Business Process Outsourcing (BPO) and other sectors and the secondary segment is the geographical segment by location of its customers. |
34
The Accounting principles consistently used in the preparation of the financial statements are also applied to record income and expenditure in the individual segments. There are no inter-segment transactions during the year.
A. | PRIMARY SEGMENTS |
FOR THE YEAR ENDED MARCH 31, 2009
Rs. in Million | |||||||||||
Particulars |
TELECOM SERVICE PROVIDER |
TELECOM EQUIPMENT MANUFACTURER |
BUSINESS PROCESS OUTSOURCING |
OTHERS | TOTAL | ||||||
Revenues |
38,750 | 2,409 | 2,502 | 986 | 44,647 | ||||||
Less: Direct Expenses |
22,703 | 1,758 | 1,221 | 696 | 26,378 | ||||||
Segmental Operating Results |
16,047 | 651 | 1,281 | 290 | 18,269 | ||||||
Less: Unallocable Expenses |
|||||||||||
Depreciation |
1,097 | ||||||||||
Interest |
25 | ||||||||||
Other Unallocable Expenses (net) |
5,444 | ||||||||||
Total Unallocable Expenses |
6,566 | ||||||||||
Operating Income |
11,703 | ||||||||||
Add: Other Income (net) |
(378 | ) | |||||||||
Net Profit before tax |
11,325 | ||||||||||
Less: Provision for Taxation |
|||||||||||
Current Tax ( net of MAT credit) |
1,225 | ||||||||||
Deferred Tax |
(127 | ) | |||||||||
Fringe Benefit Tax |
81 | ||||||||||
Net Profit after tax |
10,146 | ||||||||||
Minority Interest |
(1 | ) | |||||||||
Net Profit for the year |
10,145 | ||||||||||
Segregation of assets, liabilities, depreciation and other non-cash expenses into various primary segments has not been done as the assets are used interchangeably between segments and TML is of the view that it is not practical to reasonably allocate liabilities and other non-cash expenses to individual segments and an adhoc allocation will not be meaningful.
B. | SECONDARY SEGMENTS: |
Sector |
Rs. in Million | |
Europe |
29,827 | |
USA |
11,329 | |
Rest of world |
3,491 | |
Total |
44,647 | |
35
Revenues from secondary segments are as under Segregation of assets into secondary segments has not been done as the assets are used interchangeably between segments. Consequently the carrying amounts of assets by location of assets are not given.
A. | PRIMARY SEGMENTS |
FOR THE YEAR ENDED MARCH 31, 2008
Rs. in Million | |||||||||||
Particulars |
TELECOM SERVICE PROVIDER |
TELECOM EQUIPMENT MANUFACTURER |
BUSINESS PROCESS OUTSOURCING |
OTHERS | TOTAL | ||||||
Revenues |
33,612 | 1,937 | 1,296 | 816 | 37,661 | ||||||
Less: Direct Expenses |
20,792 | 1,655 | 807 | 600 | 23,854 | ||||||
Segmental Operating Results |
12,820 | 282 | 489 | 216 | 13,807 | ||||||
Less: Unallocable Expenses |
|||||||||||
Depreciation |
796 | ||||||||||
Interest |
62 | ||||||||||
Other Unallocable Expenses (net) |
5,550 | ||||||||||
Total Unallocable Expenses |
6,408 | ||||||||||
Operating Income |
7,399 | ||||||||||
Add: Other Income (net) |
1,044 | ||||||||||
Net Profit before tax |
8,443 | ||||||||||
Less: Provision for Taxation |
|||||||||||
Current Tax |
689 | ||||||||||
Deferred Tax |
(15 | ) | |||||||||
Fringe Benefit Tax |
74 | ||||||||||
Net Profit before Minority Interest |
7,695 | ||||||||||
Exceptional item |
(4401 | ) | |||||||||
Minority Interest |
5 | ||||||||||
Net Profit for the year |
3,299 | ||||||||||
Segregation of assets, liabilities, depreciation and other non-cash expenses into various primary segments has not been done as the assets are used interchangeably between segments and TML is of the view that it is not practical to reasonably allocate liabilities and other non-cash expenses to individual segments and an adhoc allocation will not be meaningful.
B. | SECONDARY SEGMENTS: |
Revenues from secondary segments are as under
Sector |
Rs. in Million | |
Europe |
27,733 | |
USA |
7,300 | |
Rest of world |
2,628 | |
Total |
37,661 | |
Segregation of assets into secondary segments has not been done as the assets are used interchangeably between segments. Consequently the carrying amounts of assets by location of assets are not given.
36
14. | In respect of equity shares issued pursuant to Employee Stock Option Scheme, the Company paid dividend of Rs. 1 Million for the year 2007-08 and tax on dividend of Rs. 0 Million as approved by the shareholders at the Annual General Meeting held on July 22, 2008. |
15. | A) TML has instituted Employee Stock Option Plan 2000 (ESOP) for its employees and Directors. For this purpose it had created a trust viz. MBT ESOP trust. In terms of the said Plan, the trust has Granted options to the employees and directors in form of warrant which vest at the rate of 33.33% on each successive anniversary of the grant date. The options can be exercised over a period of 5 years from the date of grant. Each warrant carries with it the right to purchase one equity share of the Company at the exercise price determined by the trust on the basis of fair value of the equity shares at the time of grant. |
The details of the options are as under:
Particulars |
March 31, 2009 | March 31, 2008 | ||
Options outstanding at the beginning of the year |
350,090 | 489,120 | ||
Options granted during the year |
| | ||
Options lapsed during the year |
| 6,620 | ||
Options cancelled during the year |
660 | 20,480 | ||
Options exercised during the year |
96,070 | 111,930 | ||
Options outstanding at the end of the year |
253,360 | 350,090 |
Out of the options outstanding at the end of year, 253,360 (previous year: 244,390) (Net of exercised & lapsed) options have vested, which have not been exercised.
B) TML has instituted Employee Stock Option Plan 2004 (ESOP 2004) for its employees. In terms of the said Plan, the Compensation Committee has granted options to employees of the Company. The options are divided into upfront options and Performance options. The Upfront Options are divided into three sets which will entitle holders to subscribe to option shares at the end of First year, Second year and Third year. The vesting of the Performance Options will be decided by the Compensation Committee based on the performance of employees.
Particulars |
March 31, 2009 | March 31, 2008 | ||
Options outstanding at the beginning of the year |
5,677,701 | 5,677,701 | ||
Options granted during the year |
| |||
Options lapsed during the year |
| |||
Options cancelled during the year |
| |||
Options exercised during the year |
| |||
Options outstanding at the end of the year |
5,677,701 | 5,677,701 |
Out of the options outstanding at the end of the year, there are 4,996,377 (previous year: 2,271,081) (Net of exercised & lapsed) vested options which have not been exercised.
C) TML has instituted Employee Stock Option Plan 2006 (ESOP 2006) for its employees and directors and its subsidiary companies. In terms of the said plan, the compensation committee has granted options to the employees of the Company. The vesting of the options is 10% , 15%, 20%, 25%, and 30 % of total options granted after 12, 24, 36, 48 and 60 months, respectively from the date of grant. The maximum exercise period is 7 years from the date of grant.
37
The details of the options are as under:
Particulars |
March 31, 2009 | March 31, 2008 | ||
Options outstanding at the beginning of the year |
4,193,028 | 4,493,116 | ||
Options granted during the year |
252,500 | 72,000 | ||
Options lapsed during the year |
| | ||
Options cancelled during the year |
433,965 | 337,850 | ||
Options exercised during the year |
274,695 | 34,238 | ||
Options outstanding at the end of the year |
3,736,868 | 4,193,028 |
Out of the options outstanding at the end of the year, 1,188,133 (previous year: 680,543) (net of exercised & lapsed) options have vested which have not been exercised.
D) The Company uses the intrinsic value-based method of accounting for stock options granted after April 1, 2005. Had the compensation cost for the Companys stock based compensation plan been determined in the manner consistent with the fair value approach, the Companys net income would be lower by Rs. 4 Million (previous year lower by Rs. 32 Million) and earnings per share as reported would be lower as indicated below:
Rs. in Million except earning per share | ||||||
Year ended March 31, 2009 |
Year ended March 31, 2008 |
|||||
Net profit after tax and before exceptional items |
10,146 | 7,695 | ||||
Less: Exceptional items |
| (4,401 | ) | |||
Minority interest |
(1 | ) | 5 | |||
Net Profit for the year |
10,145 | 3,299 | ||||
Less: Total stock-based employee compensation expense determined under fair value base method. |
4 | 32 | ||||
Adjusted net profit |
10,141 | 3,267 | ||||
Basic earnings per share (in Rs.) |
||||||
As reported |
83.41 | 27.20 | ||||
Adjusted |
83.37 | 26.93 | ||||
Diluted earnings per share (in Rs.) |
||||||
As reported |
78.82 | 25.24 | ||||
Adjusted |
78.79 | 24.99 |
The fair value of each warrant is estimated on the date of grant based on the following assumptions:
Dividend yield (%) |
6.48 | 6.60 | ||
Expected life |
5 Years | 5 years | ||
Risk free interest rate (%) |
5.99 | 7.83 | ||
Volatility (%) |
58.70 | 55.28 |
38
16. | As required under Accounting Standard 18 Related Party Disclosures (AS 18), following are details of transactions during the year with the related parties of the Company as defined in AS 18: |
(a) | List of Related Parties and Relationships |
Name of Related Party |
Relation | |
Mahindra & Mahindra Ltd. |
Holding Company | |
British Telecommunications, plc. |
Promoter holding more than 20% stake | |
Mahindra BT Investment Company (Mauritius) Ltd. |
Promoter group company | |
Tech Mahindra Foundation** |
100% Subsidiary company | |
Mahindra Engg & Chem Products Limited. |
Fellow Subsidiary Company | |
Mahindra Engineering Services Ltd |
Fellow Subsidiary Company | |
Bristlecone India Ltd. |
Fellow Subsidiary Company | |
Mahindra World City (Jaipur) Ltd |
Fellow Subsidiary Company | |
Mahindra Intertrade Ltd |
Fellow Subsidiary Company | |
Mahindra SAR transmissions P ltd |
Fellow Subsidiary Company | |
Mahindra Renault Pvt Ltd |
Fellow Subsidiary Company | |
Mahindra Navistar Automotives Ltd |
Fellow Subsidiary Company | |
Mahindra Ugine Steel co ltd |
Fellow Subsidiary Company | |
Mahindra Logistic Ltd |
Fellow Subsidiary Company | |
Mahindra Navistar Engines Pvt Ltd |
Fellow Subsidiary Company | |
Mahindra Automotive Ltd |
Fellow Subsidiary Company | |
Mr. Vineet Nayyar Vice Chairman, Managing Director and Chief Executive Officer |
Key Management Personnel |
** | Section 25 Company not considered for consolidation |
39
(b) |
Related Party Transactions for year ended 31st March 2009 |
Rs. in Million | ||||||||||
Transactions |
Promoter Companies |
Subsidiary Companies |
Fellow subsidiary Companies |
Key Management Personnel |
||||||
Reimbursement of Expenses (Net)-Paid/(Receipt) |
(164 [(93)] |
)
|
[] |
[] |
[] |
| ||||
Income from Services & Management Fees |
25,961 [24,060] |
|
[] |
11 [3] |
[] |
| ||||
Paid for Services Received |
10 [71] |
|
[] |
63 [] |
[] |
| ||||
Transition Cost |
[233] |
|
[] |
[] |
[] |
| ||||
Sub-contracting cost |
[] |
|
[] |
42 [8] |
[] |
| ||||
Dividend Paid |
964 [] |
|
[] |
[] |
12 [] |
| ||||
Salary, Perquisites and Commission |
[] |
|
[] |
[] |
23 [24] |
| ||||
Donation |
[] |
|
85 [76] |
[] |
[] |
| ||||
Stock options |
[] |
|
[] |
[] |
[] |
*
| ||||
Rent Paid/Payable |
63 [18] |
|
[] |
[] |
[] |
| ||||
Purchase of Fixed Asset |
4 [17] |
|
[] |
1 [] |
[] |
| ||||
Advance Given |
[] |
|
[] |
[57] |
[] |
| ||||
Payment for Exclusivity |
[4,401] |
|
[] |
[] |
[] |
| ||||
Debit / (Credit) balances (Net) (inclusive of unbilled) outstanding as on March 31, 2009 |
3,892 [6,904] |
|
[] |
49 [57] |
[] |
|
Figures in brackets [ ]are for previous year ended 31st March 2008.
* | Options exercised during the year for NIL (previous year NIL) equity shares and options granted and Outstanding as at year end are 1,892,567 (previous year: 1,892,567) |
40
Out of the above items transactions with Promoter companies, Subsidiary Companies, Fellow Subsidiary Companies and Key Management Personnel in the excess of 10% of the total related party transactions are as under:
Rs. in Million | ||||||||
Transactions |
For the Year ended March 31, 2009 |
For the Year ended March 31, 2008 |
||||||
Reimbursement of Expenses (net)Paid/(Receipt) |
||||||||
Promoter Company |
||||||||
British Telecommunications Plc. |
(173 | ) | (109 | ) | ||||
Income from Services |
||||||||
Promoter Company |
||||||||
British Telecommunications Plc. |
25,885 | 24,024 | ||||||
Paid for Services Received |
||||||||
Promoter Companies |
||||||||
Mahindra & Mahindra Ltd. |
8 | 71 | ||||||
Fellow Subsidiary Company |
||||||||
Mahindra Logistic Limited |
63 | | ||||||
Transition Cost |
||||||||
Promoter Company |
||||||||
British Telecommunications Plc. |
| 233 | ||||||
Dividend Paid |
||||||||
Promoter Companies |
||||||||
Mahindra & Mahindra Ltd. |
511 | | ||||||
British Telecommunications Plc. |
358 | | ||||||
859 | ||||||||
Donation |
||||||||
Subsidiary Company |
||||||||
Tech Mahindra Foundation. |
85 | 76 | ||||||
Advance Given |
||||||||
Fellow Subsidiary Company |
||||||||
Mahindra World City (Jaipur) Ltd. |
| 57 | ||||||
Purchase of Fixed Assets |
||||||||
Promoter Company |
||||||||
British Telecommunications Plc. |
4 | 16 | ||||||
Fellow Subsidiary Company |
||||||||
Mahindra Navistar Automotives Ltd. |
1 | | ||||||
Payment for Exclusivity |
||||||||
Promoter Company |
||||||||
British Telecommunications Plc. |
| 4,401 | ||||||
Salary, Perquisites and Commission |
||||||||
Key Management Personnel |
||||||||
Mr. Vineet Nayyar |
23 | 24 | ||||||
Subcontracting Cost |
||||||||
Fellow Subsidiary Company |
||||||||
BRISTLECONE I LTD. |
42 | 8 | ||||||
Rent Paid/Payable |
||||||||
Promoter Company |
||||||||
British Telecommunications Plc. |
63 | 18 |
41
17. | The tax effect of significant timing differences that has resulted in deferred tax assets and liabilities are given below: |
Rs. in Million | |||||
Deferred Tax |
March 31, 2009 | March 31, 2008 | |||
a) Deferred tax liability: |
|||||
Depreciation |
| (2 | ) | ||
b) Deferred tax asset: |
|||||
Gratuity, Leave Encashment etc. |
109 | 24 | |||
Doubtful Debts/Others |
12 | 6 | |||
Preliminary Expenses |
0 | | |||
Carry forward of Net operating losses of a subsidiary |
41 | 32 | |||
Depreciation |
34 | | |||
Total Deferred Tax Asset (Net) |
196 | 60 | |||
18. | Exchange gain/(loss)(net) accounted during the year: |
a) | The Company enters into foreign Exchange Forward Contracts and Currency Option Contracts to offset the foreign currency risk arising from the amounts denominated in currencies other than the Indian rupee. The counter party to the Companys foreign currency Forward Contracts and Currency Option Contracts is generally a bank. These contracts are entered into to hedge the foreign currency risks of certain forecasted transactions. Forward Exchange Contracts and Currency Option Contracts in UK Pound exposure are split into two legs, which are GBP to USD and USD to INR. |
b) | The following are the outstanding GBP:USD Currency Exchange Contracts entered into by the company which have been designated as Cash Flow Hedges as on March 31, 2009: |
Type of cover |
Amount outstanding at year end in Foreign currency |
Fair Value Gain / (Loss) (Rs. in Million) | ||
Forward |
GBP 70 (previous year: GBP 36) |
340 (previous year: 26) | ||
Option |
GBP 178 (previous year: GBP 292) |
5,025 (previous year: 920) |
c) | The following are the outstanding USD:INR Currency Exchange Contracts entered into by the company which have been designated as Cash Flow Hedges as on March 31, 2009: |
Type of cover |
Amount outstanding at year end in Foreign currency |
Fair Value Gain / (Loss) (Rs. in Million) | ||
Forward |
USD 250 (previous year USD 318) |
(1370) (previous year: [(141)] | ||
Option |
USD 368 (previous year USD 539) |
(4931) (previous year: 46) |
42
The movement in hedging reserve during the year ended march 31, 2008 for derivatives designated as Cash Flow Hedges is as follows:
Rs. In Millions | |||||
Particulars |
Year ended March 31, 2009 |
Year ended March 31, 2008 | |||
Balance at the beginning of the year |
851 | | |||
Gain/(Losses) transferred to income statement on occurrence of forecasted hedge transaction |
(130 | ) | | ||
Changes in the fair value of effective portion of outstanding cash flow derivative |
(1657 | ) | 851 | ||
Net derivative gain/(losses) related to discontinued cash flow hedge |
| | |||
Balance at the end of the year |
(936 | ) | 851 | ||
d) | In addition to the above cash flow hedges, the Company has outstanding Foreign Exchange Forward Contracts and Currency Options Contracts aggregating to Rs. 3,818 Million (previous year: Rs. 4,783 Million) whose fair value showed a loss of Rs. 243 Million (previous year: Gain Rs. 184 Million). Although these contracts are hedges from economic perspective, these are accounted as derivative instruments at fair value with changes in fair value recorded in the Profit and Loss account since the forecasted transactions have occurred. |
e) | The year end foreign currency exposures that have not been specifically hedged by a derivative instrument or otherwise are given below: |
Amounts receivable in foreign currency on account of the following:
Particulars |
Rs. in Million |
Foreign currency in Million | ||||
Year ended March 31, |
Year ended March 31, | |||||
Debtors |
5,515 (previous year: 5,457) | AUD 1 CAD 3 EUR 5 GBP 42 MYR 2 NZD 5 PHP 24 SGD 3 THB 3 USD 34 CHF 0 |
AUD 3 CAD 2 EUR 3 GBP 43 MYR NZD 2 PHP 27 SGD THB USD 49 CHF | |||
Loans and advances |
161 (previous year: 16 ) |
AUD 0 CAD 0 CNY EUR 0 GBP 2 NZD 0 SGD 0 TWD 0 USD 0 |
AUD 0 CAD 0 CNY 0 EUR 0 GBP NZD 0 SGD 0 TWD 0 USD 0 |
43
Particulars |
Rs. in Million |
Foreign currency in Million | ||||
Year ended March 31, |
Year ended March 31, | |||||
Cash/Bank balances (Net) |
4,274 (previous year: 270) |
AUD 0 CAD 0 EGP 0 EUR 1 GBP 54 NZD 1 PHP 65 TWD 18 USD 3 |
AUD 1 CAD 0 EGP EUR 0 GBP NZD 1 PHP 13 TWD 15 USD 4 |
Amounts payable in foreign currency on account of the following:
Particulars |
Rs. in Million |
Foreign currency in Million | ||||
Year ended March 31, |
Year ended March 31, | |||||
Creditors (Net) |
195 (previous year: 351) |
AUD 0 NZD 0 EUR 0 GBP 0 MYR PHP 0 SGD 1 THB 0 USD 3 |
AUD 0 CNY 0 EUR 0 GBP 4 MYR PHP 0 SGD 0 THB 0 USD | |||
Other current liabilities (Net) |
826 (previous year: 733) |
AUD 0 CAD 0 CHF 0 EUR 0 GBP 9 NZD 0 PHP 3 THB 0 USD 3 |
AUD CAD CHF EUR GBP 9 NZD PHP THB USD |
44
19. | During the year ended March 31, 2007 the public issue of TMLs Equity Shares consisting of a fresh issue of 3,186,480 Equity Shares by TML and an offer for sale of 9,559,520 Equity Shares, by certain existing Shareholders of TML was made pursuant to a prospectus dated August 11, 2006. The Equity shares were issued for cash at a price of Rs. 365 per Equity Share (including a securities premium of Rs. 355 per Equity Share). The statement of proceeds from the public issue and utilisation thereof is as under: |
Particulars |
No of shares | Price | Rs. in Million | |||
Proceeds received after payment to selling shareholders |
3,186,480 | 365 | 1,163 | |||
Less: Expenses (Net) relating to the issue after recovery from the selling shareholders: |
||||||
Professional fees |
35 | |||||
Advertising Expenses |
8 | |||||
Rates and Taxes |
1 | |||||
Miscellaneous expenses |
1 | |||||
Printing and Stationery |
4 | |||||
Traveling expenses |
3 | |||||
Net Proceeds |
1,111 | |||||
Used for the capitalisation work for Hinjewadi |
1,111 | |||||
Total |
1,111 | |||||
20. | Earning Per Share is calculated as follows |
Rs. in Million except earnings per share | |||||
Particulars |
Year ended March 31, 2009 |
Year ended March 31, 2008 | |||
Net Profit after tax and before exceptional item |
10,146 | 7,695 | |||
Less: Exceptional item |
| 4,401 | |||
Profit after tax and exceptional item |
10,146 | 3,294 | |||
Less: Minority Interest |
(1 | ) | 5 | ||
Net Profit attributable to Shareholders |
10,145 | 3,299 | |||
Equity Shares outstanding as at the year end (in Nos.) |
121,733,634 | 121,362,869 | |||
Weighted average Equity Shares outstanding as at the year end (in Nos) |
121,631,914 | 121,292,103 | |||
Weighted average number of Equity Shares used as denominator for calculating Basic Earnings Per Share |
121,631,914 | 121,292,103 | |||
Add: Diluted number of Shares |
|||||
ESOP outstanding at the end of the Year |
7,077,324 | 9,427,640 | |||
Weighted average number of Equity Shares used as denominator for calculating Diluted Earnings Per Share |
128,709,238 | 130,719,743 | |||
Nominal Value per Equity Share (in Rs.) |
10.00 | 10.00 | |||
Earning Per Share |
|||||
Before exceptional item |
|||||
Earnings Per Share (Basic) (in Rs.) |
83.41 | 63.49 | |||
Earnings Per Share (Diluted) (in Rs.) |
78.82 | 58.91 | |||
After exceptional item |
|||||
Earnings Per Share (Basic) (in Rs.) |
83.41 | 27.20 | |||
Earnings Per Share (Diluted) (in Rs.) |
78.82 | 25.24 |
45
21. | Details of cash and bank balances as on balance sheet date :- |
(A) | Balances with scheduled banks |
Rs. in Million | |||||
As at | |||||
March 31, 2009 | March 31, 2008 | ||||
In Current accounts |
|||||
ABN Amro Bank |
0 | ||||
ABN Amro Bank, EEFC account in USD |
0 | ||||
Citibank |
0 | ||||
Citibank, EEFC account in USD |
0 | ||||
HDFC Bank |
1 | 3 | |||
HDFC Bank-EEFC account in USD |
0 | 2 | |||
HSBC Bank |
74 | 47 | |||
HSBC Bank, USA |
| 1 | |||
HSBC Bank-EEFC account in GBP |
4 | (0 | ) | ||
HSBC Bank-EEFC account in USD |
275 | 19 | |||
IDBI Bank |
345 | 129 | |||
IDBI Bank-EEFC account in USD |
14 | 90 | |||
IDBI Bank-Unclaimed dividend accounts |
1 | 1 | |||
Kotak Mahindra Bank |
1 | 1 | |||
Punjab National Bank |
50 | 0 | |||
State Bank of India |
| 0 | |||
State Bank of India, EEFC account in USD |
| 1 | |||
State Bank of India, UK in GBP |
3,715 | 198 | |||
State Bank of India, UK in USD |
24 | 1 | |||
4,504 | 493 | ||||
46
(B) | Balances with non scheduled banks |
Rs. in Million | ||||
As at | ||||
March 31, 2009 | March 31, 2008 | |||
In Current accounts |
||||
Bank of Italy, Italy |
4 | 1 | ||
Chase Common wealth of Australia, Australia |
| 18 | ||
Citibank, Italy |
| 4 | ||
Dresdner Bank AG, Germany |
12 | 40 | ||
HSBC Bank, Australia |
16 | 19 | ||
HSBC Bank, Belgium |
2 | 3 | ||
HSBC Bank, Canada |
16 | 8 | ||
HSBC Bank, China account in CNY |
0 | 0 | ||
HSBC Bank, China account in USD |
0 | 1 | ||
HSBC Bank, Egypt |
1 | | ||
HSBC Bank, Germany |
13 | 0 | ||
HSBC Bank, Indonesia account in IDR |
14 | 1 | ||
HSBC Bank, Indonesia account in USD |
15 | 9 | ||
HSBC Bank, Malaysia account in MYR |
1 | 0 | ||
HSBC Bank, Malaysia account in USD |
0 | 1 | ||
HSBC Bank, New Zealand |
33 | 16 | ||
HSBC Bank, Singapore |
21 | 4 | ||
HSBC Bank, Taiwan account in TWD |
27 | 19 | ||
HSBC Bank, Taiwan account in USD |
2 | 1 | ||
HSBC Bank, Thailand |
1 | 6 | ||
HSBC Bank, United Kingdom account in Euros |
48 | 12 | ||
HSBC Bank, United Kingdom account in GBP-I |
201 | 69 | ||
HSBC Bank, United Kingdom account in GBP-II |
27 | | ||
HSBC Bank, United Kingdom account in USD |
24 | | ||
HSBC Bank, USA |
202 | 138 | ||
HSBC Bank, Philipines account in PHP |
68 | 13 | ||
HSBC Bank, Philipines account in USD |
0 | 2 | ||
J P Chase, USA |
0 | 60 | ||
Standard Chartered Bank, Singapore |
1 | 1 | ||
749 | 446 | |||
(C) | Balances In Deposit accounts |
Rs. in Million | ||||
As at | ||||
March 31, 2009 | March 31, 2008 | |||
Dresdner Bank AG, Germany |
| 2 | ||
HDFC Bank |
0 | 1 | ||
HSBC Bank |
85 | | ||
HSBC Bank, Germany |
27 | | ||
ICICI Bank |
| 10 | ||
IDBI Bank |
16 | 11 | ||
Kotak Mahindra Bank |
1 | 3 | ||
State Bank of India |
| 10 | ||
129 | 37 | |||
Total ( A + B + C ) |
5,382 | 976 |
47
22. | The company has exercised the option given vide notification number G.S.R. 225 (E) dated March 31, 2009 issued by the Ministry of Corporate Affairs, Government of India on provisions of Accounting Standard 11. One of the subsidiaries of the Company, CanvasM India Ltd. has capitalized the loss aggregating to Rs. 2.71 million arisen on translation of long term foreign currency monetary liabilities relating to acquisition of fixed assets, out of which Rs. 0.49 million has been amortized during the year and the unamortized balance as at March 31, 2009 is Rs. 2.22 million. |
23. | During the year ended March 31, 2009 the Company has made investment of Rs. 85 Million resulting into 17.28% of the holding in Servista Limited a leading European system integrator. With this investment the Company has become Servistas exclusive delivery arm for three years and will assist Servista in securing more large scale European IT off shoring business. |
24. |
a) The Board of Directors of Satyam Computer Services Limited on 13th April 2009 selected Venturbay Consultants Private Limited, a wholly owned subsidiary of the Company as the highest bidder to acquire a controlling stake in Satyam Computer Services Limited, subject to the approval of the Honble Company Law Board (CLB). CLB has since granted its approval on 16th April 2009. Venturbay has deposited a sum of Rs. 29,107 million in escrow to cover the cost of 31% preferential issue by Satyam and a 20% open offer. |
b) The Company has made investment of Rs. 112 Million in Mahindra Logisoft Business Solutions Limited (MLBSL) on April 11, 2009, as a result of MLBSL has become a wholly owned subsidiary of the Company from that date.
25. | Figures pertaining to the subsidiary companies have been reclassified wherever necessary to bring them in line with the group financial statements |
26. | Previous year figures have been regrouped wherever necessary, to conform to the current years Classification. |
Signatures to Schedules I to XIII
For Tech Mahindra Limited
Mr. Anand G Mahindra |
Mr. Vineet NayyarVice-Chairman, | |
Chairman |
Managing Director & CEO | |
Hon. Akash Paul |
Mr. Arun Seth | |
Director |
Director | |
Mr. Anupam Puri |
Mr. B. H. Wani | |
Director |
Director | |
Mr. Bharat Doshi |
Mr. M. Damodaran | |
Director |
Director | |
Mr. Clive Goodwin |
Dr. Raj Reddy | |
Director |
Director | |
Mr. Paul Zuckerman |
Mr. Ulhas N. Yargop | |
Director |
Director | |
Mr. Ravindra Kulkarni |
Mr. Vikrant Gandhe | |
Director |
Asst. Company Secretary | |
Hyderabad, Dated: April 27, 2009 |
48
TECH MAHINDRA LIMITED
Consolidated Balance Sheet as at |
Schedule | Rs. in Million | ||||||
March 31, 2008 | March 31, 2007 | |||||||
I. |
SOURCES OF FUNDS: | |||||||
SHAREHOLDERS FUNDS: |
||||||||
Share Capital |
I | 1,214 | 1,212 | |||||
Share Application Money |
0 | 1 | ||||||
Reserves and Surplus |
II | 11,358 | 7,972 | |||||
12,572 | 9,185 | |||||||
MINORITY INTEREST |
111 | 116 | ||||||
LOAN FUNDS: |
III | |||||||
Secured Loan |
| 100 | ||||||
Unsecured Loan |
300 | 33 | ||||||
411 | 249 | |||||||
12,983 | 9,434 | |||||||
II. |
APPLICATION OF FUNDS: |
|||||||
FIXED ASSETS: |
IV | |||||||
Gross Block |
7,457 | 6,245 | ||||||
Less: Depreciation |
3,101 | 2,403 | ||||||
Net Block |
4,356 | 3,842 | ||||||
Capital Work-in-Progress, including Advances |
1,640 | 579 | ||||||
5,996 | 4,421 | |||||||
INVESTMENTS: |
V | 633 | 979 | |||||
DEFERRED TAX ASSET (NET): |
60 | 74 | ||||||
(Refer Note 14 (a) to Schedule XIII) |
||||||||
CURRENT ASSETS, LOANS AND ADVANCES: |
VI | |||||||
Inventory |
17 | 11 | ||||||
Sundry Debtors |
10,965 | 8,216 | ||||||
Cash and Bank Balances |
976 | 631 | ||||||
Loans and Advances |
3,604 | 1,537 | ||||||
15,562 | 10,395 | |||||||
Less: CURRENT LIABILITIES AND PROVISIONS: |
||||||||
Liabilities |
VII | 6,505 | 4,899 | |||||
Provisions |
VIII | 2,763 | 1,536 | |||||
9,268 | 6,435 | |||||||
Net Current Assets |
6,294 | 3,960 | ||||||
12,983 | 9,434 | |||||||
SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS: |
XIII |
As per our attached report of even date
|
||||
For Deloitte Haskins & Sells |
For Tech Mahindra Limited |
|||
Chartered Accountants | ||||
Mr. Anand G. Mahindra | Mr. Vineet Nayyar | |||
Chairman | Vice Chairman, | |||
Hemant M Joshi | Managing Director & CEO | |||
Partner | ||||
Pune, Dated: May 19, 2008 | ||||
Hon. Akash Paul | Mr. Al-Noor Ramji | |||
Director | Director | |||
Mr. Anupam Puri | Mr. Arun Seth | |||
Director | Director | |||
Mr. Bharat Doshi | Mr. Clive Goodwin | |||
Director | Director | |||
Mr. Paul Zuckerman | Dr. Raj Reddy | |||
Director | Director | |||
Mr. Ulhas N. Yargop | Mr. Vikrant Gandhe | |||
Director | Asst. Company Secretary | |||
Boston; Dated: May 19th, 2008 |
49
TECH MAHINDRA LIMITED
Schedules forming part of the Balance Sheet |
Rs. in Million | ||||
As at March 31, 2008 |
As at March 31, 2007 | |||
Schedule I |
||||
SHARE CAPITAL: |
||||
Authorised: |
||||
175,000,000 (previous year 175,000,000) Equity Shares of Rs. 10/- |
1,750 | 1,750 | ||
(previous year Rs. 10/-) each. |
||||
1,750 | 1,750 | |||
Issued subscribed and paid up: |
||||
121,362,869 (previous year 121,216,701) Equity Shares of Rs. 10/- |
1,214 | 1,212 | ||
(previous year Rs. 10/-) each fully paid-up |
| |||
1,214 | 1,212 | |||
Notes:
1 | Out of the above 9,931,638 (previous year 9,931,638) Equity Share of Rs. 10/- (previous year Rs. 10 paid-up) each fully paid-up are held by Mahindra BT Investment Company ( Mauritius) Limited, a subsidiary of Mahindra and Mahindra Ltd and 53,776,252 (previous year 53,776,252) equity shares of Rs. 10/- each (previous year Rs. 10 each) are held by Mahindra & Mahindra Ltd., the ultimate holding company. |
2 | The above includes 51,000,100 and 25,000,000 Equity Shares originally of Rs. 2/- each issued as fully paid-up bonus shares by capitalisation of balance of Profit and Loss Account and General Reserve, respectively. |
3 | The above includes 90,148,459 Equity Shares of Rs. 10/- each allotted as fully paid-up bonus shares by way of capitalisation of Profit and Loss Account (Refer note 5 of schedule XIII). |
4 | The above includes 5 Equity Shares of Rs. 2/- each consolidated into 1 Equity Share of Rs. 10/- each (Refer note 5 of schedule XIII) |
5 | Refer note 12 of schedule XIII for stock options. |
50
TECH MAHINDRA LIMITED
Schedules forming part of the Balance Sheet(Continued)
Rs. in Million | ||||||
As at March 31, 2008 |
As at March 31, 2007 | |||||
Schedule II |
||||||
RESERVES AND SURPLUS: |
||||||
General Reserve: |
||||||
As per last Balance Sheet |
1,014 | 949 | ||||
Add: Transfer from Profit and Loss Account |
1,700 | 65 | ||||
2,714 | 1,014 | |||||
Securities Premium: |
||||||
As per last Balance Sheet |
2,293 | 283 | ||||
Add: Received during the year |
10 | 2,010 | ||||
2,303 | 2,293 | |||||
Currency Translation Reserve |
||||||
As per last Balance Sheet |
21 | 17 | ||||
Addition during the year |
7 | 4 | ||||
28 | 21 | |||||
Capital Reserve |
| 0 | ||||
Profit / (Loss) on cash flow hedges (Refer Note 1 l (III) of schedule XIII) |
851 | | ||||
Balance in Profit and Loss Account |
5,462 | 5,546 | ||||
Less: Capitalised on issue of Bonus Shares (Refer note 5 of schedule XIII) |
| 902 | ||||
5,462 | 4,644 | |||||
11,358 | 7,972 | |||||
Schedule III |
||||||
LOAN FUNDS: |
||||||
Secured Loan: |
||||||
Cash Credit from bank |
| 100 | ||||
(Refer note 1 and 2 below) |
||||||
| 100 | |||||
Note:
1 | Loan from bank is secured by way of hypothecation of current assets including book debts |
2 | Net of current account balance of Rs. Nil (previous year Rs. 112 Million) as per sweep facility with the bank |
Unsecured Loan: |
||||||
Overdraft from bank |
300 | 33 | ||||
300 | 33 | |||||
51
TECH MAHINDRA LIMITED
Schedules forming part of the Balance Sheet(Continued)
Rs. in Million | ||||||
As at March 31, 2008 |
As at March 31, 2007 | |||||
Schedule V |
||||||
INVESTMENTS |
||||||
Long Term (Unquoted - at cost) |
||||||
Trade: |
||||||
In Subsidiary Companies: |
||||||
50,000 Equity shares (previous year 50,000) of Tech Mahindra Foundation of Rs. 10/- each fully paid up |
1 | 1 | ||||
1 | 1 | |||||
Current Investments (Unquoted - at lower of cost or fair value) |
||||||
Non Trade: |
||||||
3,071,620 (previous year 5,244.32) units of Rs. 1,000.60 (previous year Rs. 1,000.38) each of DSP Merrill Lynch Liquidity Plus Institutional Plan-daily dividend |
3 | 5 | ||||
50,544,739 (previous year Nil) units of Rs. 1,001.59 (previous year Rs. Nil) each of DSPML Liquidity Plus Institutional Plan-weekly dividend |
51 | | ||||
Nil (previous year 200,000.00) units of Rs. Nil (previous year Rs. 1,000.00) each of DSP Merrill Lynch - Fixed Term Plan series 3A growth |
| 200 | ||||
Nil (previous year 4,600,000.00) units of Rs. Nil (previous year Rs. 10.00 each) TATA Fixed Horizon Fund Series III |
| 46 | ||||
Nil (previous year 15,000,000.00) units of Rs. Nil (previous year Rs. 10.00) each of Birla Mutual Fund - FTP-Quarterly-Series 8 -Dividend- Payout |
| 150 | ||||
Nil (previous year 11,533,845.61) units of Rs. Nil (previous year Rs. 10.02) each of Birla Mutual Fund - Cash Plus-Institutional.Prem.Weekly Dividend-Reinvestment [(Cost previous year Rs. 115.60 million)] |
| 116 | ||||
Nil (previous year 5,000,000.00) units of Rs. Nil (previous year Rs. 10.00) each of HSBC Mutual Fund - Fixed Maturity Plan |
| 50 | ||||
Nil (previous year 10,233,630.44) units of Rs. Nil (previous year Rs. 10.00) each of J M Mutual Fund- FMP Series IV Quarterly Dividend Plan |
| 102 | ||||
Nil (previous year 5,000,000.00) units of Rs. Nil (previous year Rs. 10.00) each of Kotak FMP Series 25 Growth |
| 50 | ||||
Nil (previous year 5,402,783.71) units of Rs. Nil (previous year Rs. 10.44) each of Reliance Mutual Fund- Short Term fund-Dividend Plan |
| 56 | ||||
Nil (previous year 5,000,000.00) units of Rs. Nil (previous year of Rs. 9.99) each of Reliance Fixed Tenor Fund Growth Plan [Cost Rs. Nil (previous year Rs. 50 Million)] |
| 50 | ||||
Nil (previous year 5,084,276.05) units of Rs. Nil (previous year Rs. 10.00) each of Chola FMP series-6 Quarterly plan-3 -Dividend |
| 51 | ||||
Nil (previous year 5,000,000.00) units of Rs. Nil (previous year Rs. 9.98) each of Grindlays - FMP-16 month Plan A-Growth [Cost Rs. Nil (previous year Rs. 50 Million)] |
| 50 | ||||
1,122,894.45 units (previous year Nil) units of Rs. 10.56 each of ICICI Prudential Flexible Income Plan-dividend weekly |
12 | | ||||
18,811,010 (previous year Nil) units of Rs. 10 each of Birla Sun Life FTP - INSTL - Series AN Growth |
188 | | ||||
1,179,151.034 units (previous year Nil units) of Rs. 10.03 each of HSBC Liquid Plus Institutional Plus-weekly dividend |
12 | |
52
TECH MAHINDRA LIMITED
Schedules forming part of the Balance Sheet(Continued)
Rs. in Million | ||||||
As at March 31, 2008 |
As at March 31, 2007 | |||||
15,647,449 units (Previous year Nil units) of Rs. 10 each (Previous year Rs. Nil each) of Kotak Flexi Debt Scheme - Daily Dividend |
157 | | ||||
15,500,000 (previous year Nil) units of Rs. 10 each (previous year Rs. Nil) of Standard Chartered Fixed Maturity Plan |
155 | | ||||
2,752,230 (previous year Nil) units of Rs. 10.02 each (previous year Rs. NIL) of Birla Sunlife Liquid Plus Fund |
27 | | ||||
2,750,662 (Previous Year Nil) units of Rs. 10.03 each (previous year Rs. Nil) of Kotak Mutual Fund - Flexi debt scheme |
27 | | ||||
Nil (previous year 5,235,028.52) units of Rs. Nil (previous year Rs. 10.00) each of ABN AMRO Mutual Fund - FTP Series 4 Quarterly Plan Dividend on Maturity |
| 52 | ||||
632 | 978 | |||||
633 | 979 | |||||
Note:
1. | The above non trade investments made during previous year are out of proceeds of public issue (Refer note 25 of schedule XIII) |
2. | Refer note 30 of schedule XIII for details of investment purchase and sold during the year |
53
TECH MAHINDRA LIMITED
Schedules forming part of the Balance Sheet(Continued)
Rs. in Million | ||||||
As at March 31, 2008 |
As at March 31, 2007 | |||||
Schedule VI |
||||||
CURRENT ASSETS, LOANS AND ADVANCES: |
||||||
Current Assets: |
||||||
(a) Inventory |
||||||
Finished Goods (Software product) |
17 | 11 | ||||
(b) Sundry Debtors *: |
||||||
(Unsecured) |
||||||
Debts outstanding for a period exceeding six months: |
||||||
: considered good ** |
1,153 | 502 | ||||
: considered doubtful |
92 | 69 | ||||
1,245 | 571 | |||||
Other debts, considered good *** |
9,813 | 7,714 | ||||
considered doubtful |
2 | 0 | ||||
11,060 | 8,285 | |||||
Less: Provision |
95 | 69 | ||||
10,965 | 8,216 | |||||
1. * Debtors include on account of unbilled revenue aggregating to Rs. 3,130 Million (previous year Rs. 1,898 Million) | ||||||
2. ** Net of advances aggregating to Rs. 98 Million (Previous year Rs. 179 Million) pending adjustments with invoices | ||||||
3. *** Net of advances aggregating to Rs. 169 Million (Previous year Rs. 1,609 Million) pending adjustments with invoices | ||||||
(c) Cash and Bank Balances: |
||||||
Cash in hand |
||||||
Balance with scheduled banks |
||||||
(i) In Current Accounts |
822 | 237 | ||||
(ii) In Fixed Deposit Accounts |
37 | 343 | ||||
Balance with other banks: |
||||||
(i) In Current Accounts |
117 | 51 | ||||
976 | 631 | |||||
(d) Loans and Advances: |
||||||
(Unsecured, considered good unless otherwise stated) |
||||||
Bills of Exchange (considered doubtful) |
| 5 | ||||
Less: Provision |
| 5 | ||||
| | |||||
Advances recoverable in cash or in kind or for value to be received |
1,158 | |||||
considered good |
2,121 | |||||
considered doubtful |
10 | 6 | ||||
2,131 | 1,164 | |||||
Less : Provision |
10 | 6 | ||||
2,121 | 1,158 | |||||
Fair value of foreign exchange forward and option contracts |
1,036 | 151 | ||||
(Refer Note 1I (III) of schedule XIII) |
||||||
Advance Taxes (Net of provisions) |
447 | 228 | ||||
3,604 | 1,537 | |||||
15,562 | 10,395 | |||||
54
TECH MAHINDRA LIMITED
Schedules forming part of the Balance Sheet(Continued)
Rs. in Million | ||||
As at March 31, 2008 |
As at March 31, 2007 | |||
Schedule VII |
||||
CURRENT LIABILITIES: |
||||
(a) Sundry Creditors: |
||||
Total outstanding dues to Micro, Medium and Small enterprises |
| | ||
Total outstanding dues of Creditors other than Micro, Medium and Small enterprises |
5,119 | 4,135 | ||
(b) Other Liabilities: |
1,385 | 763 | ||
(c) Unclaimed Dividend: |
1 | 1 | ||
6,505 | 4,899 | |||
Schedule VIII |
||||
PROVISIONS: |
||||
Provision for taxation (net of advance taxes) |
795 | 837 | ||
Provision for Fringe benefit tax (net of advance taxes) |
6 | 10 | ||
Proposed Dividend |
668 | | ||
Provision for Dividend tax |
113 | | ||
Provision for Gratuity (Refer note 9 of Schedule XIII) |
491 | 288 | ||
Provision for Leave Encashment (Refer note 9 of Schedule XIII) |
690 | 401 | ||
2,763 | 1,536 | |||
55
TECH MAHINDRA LIMITED
Schedule | Rs. in Million except earnings per share |
|||||||
Consolidated Profit and loss account for the |
Year Ended March 31, |
|||||||
2008 | 2007 | |||||||
INCOME |
||||||||
Income from operations |
37,661 | 29,290 | ||||||
Other Income |
IX | 1,044 | 60 | |||||
Total Income |
38,705 | 29,350 | ||||||
EXPENDITURE: |
||||||||
Personnel |
X | 15,599 | 11,134 | |||||
Operating and Other Expenses |
XI | 13,805 | 10,773 | |||||
Depreciation |
IV | 796 | 515 | |||||
Interest |
XII | 62 | 61 | |||||
30,262 | 22,483 | |||||||
PROFIT BEFORE TAXATION |
8,443 | 6,867 | ||||||
Provision for Taxation |
||||||||
Current tax |
(689 | ) | (648 | ) | ||||
Deferred tax |
15 | (36 | ) | |||||
Fringe benefit tax |
(74 | ) | (56 | ) | ||||
PROFIT AFTER TAXATION AND BEFORE MINORITY INTEREST AND EXCEPTIONAL ITEM |
7,695 | 6,127 | ||||||
Exceptional item |
4,401 | 5,250 | ||||||
(Refer note 8 of schedule XIII) |
||||||||
Minority Interest Share in (Profit)/Loss |
5 | (1 | ) | |||||
NET PROFIT FOR THE YEAR |
3,299 | 876 | ||||||
Excess Provision for income-tax in respect of earlier year written back |
| 339 | ||||||
(Refer note 14 (b) of Schedule XIII) |
||||||||
Balance brought forward from previous year |
4,644 | 4,699 | ||||||
Balance available for appropriation |
7,943 | 5,914 | ||||||
Interim Dividend-I |
| (90 | ) | |||||
Interim Dividend-II |
| (176 | ) | |||||
Final Dividend |
(668 | ) | | |||||
Dividend Tax |
(113 | ) | (37 | ) | ||||
Transfer to General Reserve |
(1,700 | ) | (65 | ) | ||||
Balance Carried to Balance Sheet |
5,462 | 5,546 | ||||||
Earning Per Share (Refer note 17 of Schedule XIII) |
||||||||
Before exceptional item (in Rs.) |
||||||||
Basic |
63.49 | 56.18 | ||||||
Diluted |
58.91 | 49.56 | ||||||
After exceptional item (in Rs.) |
||||||||
Basic |
27.20 | 10.56 | ||||||
Diluted |
25.24 | 9.32 | ||||||
SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS |
XIII |
As per our attached report of even date | ||||
For Deloitte Haskins & Sells |
For Tech Mahindra Limited |
|||
Chartered Accountants | ||||
Mr. Anand G. Mahindra | Mr. Vineet Nayyar | |||
Hemant M Joshi | Chairman | Vice Chairman, | ||
Partner | Managing Director & CEO | |||
Pune, Dated: May 19, 2008 | ||||
Hon. Akash Paul | Mr. Al-Noor Ramji | |||
Director | Director | |||
Mr. Anupam Puri | Mr. Arun Seth | |||
Director | Director | |||
Mr. Bharat Doshi | Mr. Clive Goodwin | |||
Director | Director | |||
Mr. Paul Zuckerman | Dr. Raj Reddy | |||
Director | Director | |||
Mr. Ulhas N. Yargop | Mr. Vikrant Gandhe | |||
Director | Asst. Company Secretary | |||
Boston; Dated: May 19, 2008 |
56
TECH MAHINDRA LIMITED
Schedules forming part of the Consolidated Profit and Loss Account
Year Ended March 31, |
|||||||
2008 | 2007 | ||||||
Schedule IX |
|||||||
OTHER INCOME |
|||||||
Interest on: |
|||||||
Deposits with banks |
43 | 49 | |||||
[Tax deducted at source Rs. 4 Million] |
|||||||
[(previous year Rs.19 Million)] |
|||||||
Income tax refund (refer note 14 (b) of schedule XIII) |
| 37 | |||||
Others [Tax deducted at source Rs. 1 Million] |
3 | 2 | |||||
(previous period Rs. Nil)] |
46 | 88 | |||||
Dividend received on current investments (non-trade) |
70 | 66 | |||||
Profit on sale of current investments (non-trade) (net) |
43 | 14 | |||||
Exchange fluctuations (Net) |
767 | (114 | ) | ||||
Sundry balances written back |
89 | | |||||
Miscellaneous income |
29 | 6 | |||||
1,044 | 60 | ||||||
Schedule X |
|||||||
PERSONNEL |
|||||||
Salaries, wages and bonus |
13,672 | 9,924 | |||||
Contribution to provident and other funds |
1,100 | 696 | |||||
Staff welfare |
827 | 514 | |||||
15,599 | 11,134 | ||||||
57
TECH MAHINDRA LIMITED
Schedules forming part of the Consolidated Profit and Loss Account(Continued)
Year Ended March 31, | ||||||
2008 | 2007 | |||||
Schedule XI |
||||||
OPERATING AND OTHER EXPENSES |
||||||
Power |
330 | 208 | ||||
Rent |
790 | 417 | ||||
Rates and taxes |
40 | 24 | ||||
Communication expenses |
825 | 542 | ||||
Travelling expenses |
5,062 | 3,559 | ||||
[Net of recoveries Rs. 55 Million (previous period Rs. 189 Million)] |
||||||
Recruitment expenses |
84 | 121 | ||||
Hire charges |
191 | 181 | ||||
Sub-contracting costs |
3,899 | 2,793 | ||||
Repairs and maintenance: |
||||||
Buildings (including leased premises) |
29 | 20 | ||||
Machinery |
63 | 46 | ||||
Others |
111 | 61 | ||||
203 | 127 | |||||
Insurance |
126 | 98 | ||||
Professional and Legal fees |
397 | 495 | ||||
Software packages |
751 | 1,388 | ||||
Project Transition Cost |
233 | | ||||
Training |
168 | 126 | ||||
Advertising, marketing and selling expenses |
37 | 31 | ||||
Commission on income from service |
169 | 221 | ||||
Loss on sale of fixed assets (net) |
4 | 2 | ||||
Excess of cost over fair value of current investments |
| 0 | ||||
Provision for doubtful debts |
26 | 39 | ||||
Provision for doubtful advance |
4 | 3 | ||||
Advances / bad debts written off |
26 | 9 | ||||
Donations |
76 | 59 | ||||
Miscellaneous expenses |
364 | 330 | ||||
13,805 | 10,773 | |||||
Schedule XII |
||||||
INTEREST |
||||||
Interest On |
||||||
Cash Credit / Over draft |
62 | 61 | ||||
62 | 61 | |||||
58
TECH MAHINDRA LIMITED
Schedules forming part of the Consolidated Balance Sheet
Schedule IV
FIXED ASSETS
Rs. in Million | ||||||||||||||||||||
GROSS BLOCK | DEPRECIATION | NET BLOCK | ||||||||||||||||||
Description of Assets |
Cost as at April 01, 2007 |
Additions during the Year |
Deductions during the Year |
Cost as at March 31, 2008 |
Up to March 31, 2007 |
For the Year |
Deductions during the Year |
Up to March 31, 2008 |
As at March 31, 2008 |
As at March 31, 2007 | ||||||||||
Goodwill on consolidation |
1,009 | 21 | 1,030 | 1,030 | 1,009 | |||||||||||||||
Leased Assets: |
||||||||||||||||||||
Vehicles |
67 | | 17 | 50 | 38 | 13 | 12 | 39 | 11 | 29 | ||||||||||
(Refer Note 10 of Schedule XIII) |
||||||||||||||||||||
Other Assets: |
||||||||||||||||||||
Freehold Land |
174 | 0 | | 174 | | | | | 174 | 174 | ||||||||||
Leasehold Land |
221 | 210 | | 431 | 1 | 5 | | 6 | 425 | 220 | ||||||||||
Leasehold Improvements |
83 | 195 | | 278 | 6 | 54 | | 60 | 218 | 77 | ||||||||||
Office Building / Premises |
1,598 | | | 1,598 | 578 | 107 | | 685 | 913 | 1,020 | ||||||||||
Computers |
1,414 | 500 | 80 | 1,834 | 849 | 356 | 79 | 1,126 | 708 | 565 | ||||||||||
Plant and Machinery |
879 | 262 | 2 | 1,139 | 461 | 141 | 2 | 600 | 539 | 418 | ||||||||||
Furniture and Fixtures |
682 | 126 | 5 | 803 | 449 | 98 | 4 | 543 | 260 | 233 | ||||||||||
Vehicles |
42 | 3 | 1 | 44 | 18 | 11 | 1 | 28 | 16 | 24 | ||||||||||
Intangible Assets: |
||||||||||||||||||||
Intellectual property rights |
76 | | | 76 | 3 | 11 | | 14 | 62 | 73 | ||||||||||
(Refer Note 19 of Schedule XIII) |
||||||||||||||||||||
Total |
6,245 | 1,317 | 105 | 7,457 | 2,403 | 796 | 98 | 3,101 | 4,356 | 3,842 | ||||||||||
Previous year |
4,580 | 1,687 | 22 | 6,245 | 1,880 | 540 | 17 | 2,403 | ||||||||||||
Capital Work-in-Progress (include capital advances Rs 1,686 Million) (previous year Rs 544 Million) |
1,640 | 579 | ||||||||||||||||||
Total | 5,996 | 4,421 | ||||||||||||||||||
Note: 1) | Fixed Assets include certain leased vehicles aggregating to Rs. 14 Million (previous year Rs. 38 Million) (at cost) on which vendors have a lien. |
59
TECH MAHINDRA LIMITED
Consolidated Cash flow for the year ended March 31, 2008
Rs in Million | |||||||||||
Cash flow statement for the year ended |
March 31, 2008 |
March 31, 2007 |
|||||||||
A | Cash flow from operating activities: | ||||||||||
Net profit before taxation and exceptional item |
8,443 | 6,867 | |||||||||
Less: |
|||||||||||
Exceptional Item |
(4,401 | ) | (5,250 | ) | |||||||
4,042 | 1,617 | ||||||||||
Adjustments for: |
|||||||||||
Depreciation |
796 | 515 | |||||||||
Loss on sale of Fixed Assets, (net) |
4 | 2 | |||||||||
Interest expense |
62 | 61 | |||||||||
Decrease in fair value of current investment |
| 0 | |||||||||
Exchange loss/(gain) (net) |
(251 | ) | 63 | ||||||||
Currency translation adjustment |
7 | 5 | |||||||||
Exchange (gain) /Loss on mark to market on Hedges |
| ||||||||||
Dividend from current investments |
(70 | ) | (66 | ) | |||||||
Interest income |
(46 | ) | (88 | ) | |||||||
Profit on sale of current investments |
(43 | ) | (14 | ) | |||||||
459 | 478 | ||||||||||
Operating profit before working capital changes |
4,501 | 2,095 | |||||||||
Adjustments for: |
|||||||||||
Trade and other receivables |
(3,589 | ) | (4,716 | ) | |||||||
Trade and other payables |
2,033 | 3,282 | |||||||||
(1,556 | ) | (1,434 | ) | ||||||||
Cash generated from operations before tax |
2,945 | 661 | |||||||||
Income taxes paid |
(999 | ) | (324 | ) | |||||||
(999 | ) | (324 | ) | ||||||||
Net cash from / (used in) operating activities |
1,945 | 337 | |||||||||
B | Cash flow from investing activities: | ||||||||||
Additional consideration on acquisition of subsidiary |
98 | | |||||||||
Purchase of Fixed Assets |
(2,394 | ) | (1,941 | ) | |||||||
Acquisition of business (net of cash) |
| 10 | |||||||||
Purchase of current investments |
(5,021 | ) | (6,147 | ) | |||||||
Sale of current investments |
5,410 | 6,687 | |||||||||
Sale of Fixed Assets |
3 | 3 | |||||||||
Interest received |
48 | 80 | |||||||||
Dividend on current investments received |
61 | 66 | |||||||||
Net cash from /(used in) investing activities |
(1,795 | ) | (1,242 | ) | |||||||
C | Cash flow from financing activities: | ||||||||||
Proceeds from issue of shares (including Securities Premium) |
11 | 951 | |||||||||
Issue of equity shares |
| 1,163 | |||||||||
Share application money |
| ||||||||||
Dividend (including dividend tax paid) |
| (1,347 | ) | ||||||||
Payment of Principal on Car Lease |
(14 | ) | | ||||||||
Proceeds from borrowing |
167 | 133 | |||||||||
Interest paid |
(62 | ) | (61 | ) | |||||||
Net cash from / (used in) financing activities |
102 | 839 | |||||||||
Net decrease in cash and cash equivalents (A+B+C) |
253 | (66 | ) | ||||||||
Cash and cash equivalents at the beginning of the period |
674 | 740 | |||||||||
Cash and cash equivalents at the end of the period |
927 | 674 | |||||||||
60
Notes:
1 | Components of cash and cash equivalents include cash, bank balances in current and deposit accounts as disclosed under Schedule VI (b) of the accounts. |
2 | Purchase of fixed assets are stated inclusive of movements of capital work in progress between the commencement and end of the year and are considered as part of investing activity. |
March 31, 2008 |
March 31, 2007 | ||||||
3 | Cash and cash equivalents include: |
||||||
Cash and Bank Balances |
976 | 631 | |||||
Unrealised (gain)/loss on foreign currency |
|||||||
Cash and cash equivalents |
(49 | ) | 43 | ||||
Total Cash and Cash equivalents |
927 | 674 | |||||
4 | Cash and cash equivalents include equity share application money of Rs. 0 Million (previous period Rs. 1 million) and unclaimed dividend of Rs. 1 million (previous period Rs. 1 million) |
As per our attached report of even date |
||||
For Deloitte Haskins & Sells |
For Tech Mahindra Limited |
|||
Chartered Accountants | ||||
Mr. Anand G. Mahindra | Mr. Vineet Nayyar | |||
Chairman | Vice Chairman, | |||
Hemant M. Joshi | Managing Director & CEO | |||
Partner | ||||
Pune, Dated: May 19, 2008 | ||||
Hon. Akash Paul | Mr. Al-Noor Ramji | |||
Director | Director | |||
Mr. Anupam Puri | Mr. Arun Seth | |||
Director | Director | |||
Mr. Bharat Doshi | Mr. Clive Goodwin | |||
Director | Director | |||
Mr. Paul Zuckerman | Dr. Raj Reddy | |||
Director | Director | |||
Mr. Ulhas N. Yargop | Mr. Vikrant Gandhe | |||
Director | Asst. Company Secretary | |||
Boston; Dated: May 19, 2008 |
61
Tech Mahindra Limited
Schedule XIII
Schedules forming part of the Consolidated Balance Sheet and Profit and Loss Account
SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS FORMING PART OF CONSOLIDATED ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2008
1. | Significant accounting policies: |
(a) | Basis for preparation of accounts: |
The accompanying Consolidated Financial Statements of Tech Mahindra Limited (TML) (the holding company) and its subsidiaries are prepared under the historical cost convention in accordance with the generally accepted accounting principles applicable in India (Indian GAAP), the provisions of the Companies Act, 1956 and the Accounting Standards to the extent possible in the same format as that adopted by the holding company for its separate financial statements.
The financial statements of the subsidiaries used in the consolidation are drawn up to the same reporting date as that of the holding company namely March 31, 2008.
(b) | Principles of consolidation: |
The financial statements of the holding company and its subsidiaries have been consolidated on a line by line basis by adding together the book value of like items of assets, liabilities, income, expenses, after eliminating intragroup transactions and any unrealized gain or losses on the balances remaining within the group in accordance with the Accounting Standard21 on Consolidated Financial Statements (AS 21).
The financial statements of the holding company and its subsidiaries have been consolidated using uniform accounting policies for like transaction and other events in similar circumstances.
The excess of cost of investments in the subsidiary company/s over the share of the equity of the subsidiary companys at the date on which the investment in the subsidiary companys is made is recognized as Goodwill on Consolidation and is grouped with Fixed Assets in the Consolidated Financial Statements.
Alternatively, where the share of equity in the subsidiary company/s as on the date of investment is in excess of cost of the investment, it is recognized as Capital Reserve and grouped with Reserves and Surplus, in the Consolidated Financial Statements.
Minority interest in the net assets of the consolidated subsidiaries consists of the amount of equity attributable to the minority shareholders at the dates on which investments are made in the subsidiary companys and further movements in their share in the equity, subsequent to the dates of investments. Minority interest also includes share application money received from minority shareholders. The losses in subsidiarys attributable to the minority shareholder are recognized to the extent of their interest in the equity of the subsidiarys.
(c) | Use of Estimates: |
The preparation of Consolidated Financial Statements, in conformity with the generally accepted accounting principles, requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of financial statements and the reported amounts of revenues and expenses during the reported year. Differences between the actual results and estimates are recognised in the year in which the results are known/ materialised.
(d) | Fixed Assets |
Fixed assets are stated at cost less depreciation. Costs comprise purchase price and attributable costs, if any.
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(e) | Leases: |
Assets taken on lease by TML are accounted for as fixed assets in accordance with Accounting Standard 19 on Leases, (AS 19).
(i) | Finance lease |
Assets taken on finance lease are accounted for as fixed assets at fair value. Lease payments are apportioned between finance charge and reduction of outstanding liability.
(ii) | Operating lease |
Assets taken on lease under which all risks and rewards of ownership are effectively retained by the lessor are classified as operating lease. Lease payments under operating leases are recognised as expenses on accrual basis in accordance with the respective lease agreements.
(f) | Depreciation/Amortisation of fixed assets: |
(i) | Depreciation for all fixed assets including for assets taken on lease is computed using the straight-line method based on estimated useful lives. Depreciation is charged on a pro-rata basis for assets purchased or sold during the year. Managements estimate of the useful life of fixed assets is as follows: |
Buildings | 15 years | |
Computers | 3-4 years | |
Plant and machinery | 3-5 years | |
Furniture and fixtures | 5 years | |
Vehicles | 3-5 years |
(ii) | Leasehold land is amortised over the period of lease. |
(iii) | Leasehold improvements are amortised over the period of lease. |
(iv) | Intellectual property rights are amortised over a period of seven years. |
(g) | Impairment of Assets: |
At the end of the year, each company determines whether a provision should be made for impairment loss on fixed assets by considering the indications that an impairment loss may have occurred in accordance with Accounting Standard 28 on Impairment of Assets. Where the recoverable amount of any fixed asset is lower than its carrying amount, a provision for impairment loss on fixed assets is made for the difference. Recoverable amount is the higher of an assets net selling price and value in use. In assessing value in use, the estimated future cash flows expected from the continuing use of the asset and from its disposal are discounted to their present value using a pre-tax discount rate that reflects the current market assessments of time value of money and the risks specific to the asset.
Reversal of impairment loss if any, is recognised immediately as income in the Profit and Loss Account.
(h) | Investments: |
Current investments are carried at lower of cost and fair value. Long-term investments are carried at cost. Provision is made to recognise a decline other than temporary in the carrying amount of long term investments.
(i) | Inventories: |
Valued at the lower of the cost and net realisable value. Cost is determined on First-In-First-Out basis.
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(j) | Revenue recognition: |
Revenue from software services and business process outsourcing services include revenue earned from services performed on time and material basis, time bound fixed price engagements and system integration projects.
The related revenue is recognized as and when services are performed. Income from services performed by TML pending receipt of purchase orders from customers, which are invoiced subsequently on receipt thereof, are recognized as unbilled revenue.
The Companies also perform time bound fixed price engagements, under which revenue is recognized using the proportionate completion method of accounting, unless work completed cannot be reasonably estimated. Provision for estimated losses, if any on uncompleted contracts are recorded in the year in which such losses become probable based on the current contract estimates. In respect of iPolicy Networks Limited revenue of sale of software and hardware products are recognised at the point of dispatch to the customer.
Unbilled revenue is recognised at month closing rate. On receipt of POs, the amounts are billed to the customer & the revenue is booked at the prevailing rate.
Dividend income is recognized when the Companys right to receive dividend is established. Interest income is recognized on time proportion basis.
(k) | Expenditure: |
The cost of software purchased for use in software development and services is charged to cost of revenues in the year of acquisition
(l) | i) Foreign currency transactions: |
Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of transaction. Monetary items are translated at the year -end rates. The exchange difference between the rate prevailing on the date of transaction and on the date of settlement as also on translation of monetary items at the end of the year is recognised as income or expense, as the case may be.
Any premium or discount arising at the inception of the forward exchange contract is recognized as income or expense over the life of the contract, except in the case where the contract is designated as a cash flow hedge.
ii) | Derivative instruments and hedge accounting; |
The Company uses foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations relating to certain firm commitments and forecasted transactions. The Company designates these as cash flow hedges applying the recognition and measurements principles set out in the Accounting Standard 30 Financial Instruments: Recognition and Measurements (AS-30).
The use of foreign currency forward contracts is governed by the Companys policies approved by the board of directors, which provide written principles on the use of such financial derivatives consistent with the Companys risk management strategy. The Company does not use derivative financial instruments for speculative purposes.
Foreign currency forward contract derivative 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 recognized directly in reserves and the ineffective portion is recognized immediately in profit and loss account.
Changes in the fair value of derivative financial instruments that do not qualify for hedge accounting are recognized in the profit and loss account as they arise.
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Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognized in reserves is transferred to profit and loss account.
iii) | Accounting for Exchange gain/(loss): |
The Company enters into foreign exchange forward contracts to off set the foreign currency risk arising from the amounts denominated in currencies other than the Indian Rupee. The counter party to the Companys foreign currency forward contracts is generally a bank.
Pending the issue of an accounting standard under Indian GAAP to cover forward exchange contracts entered into to hedge foreign currency risk of a firm commitment or highly probable forecast transactions, the exchange differences arising on such contracts up to 31st March, 2007 were recognized in the statement of profit or loss in the reporting year.
Effective 1st April, 2007, the Company has designated the outstanding forward exchange contracts as cash flow hedges. Changes in the fair value of effective forward exchange contract are recognized directly in reserves and the ineffective portion is recognized immediately in profit and loss account.
Consequent to this change in accounting for such contracts, the profit for the year ended March 31, 2008 is lower by Rs. 851 Million and Reserves and Surplus are higher by Rs 851 Million.
(m) | Translation and Accounting of Financial Statement of Foreign subsidiaries: |
The financial statements are translated to Indian Rupees in accordance with the guidance issued by the ICAI in the background material to AS 21 as follows:
a. | All incomes and expenses are translated at the moving average rate of exchange prevailing during the year. |
b. | Assets and liabilities are translated at the closing rate on the Balance sheet date. |
c. | Share Capital is translated at historical rate. |
d. | The resulting exchange differences are accumulated in currency translation reserve. |
(n) | Employee Retirement Benefits: |
a) | Gratuity: |
The Company provides for gratuity, a defined retirement benefit plan covering eligible employees. The Gratuity plan provides for a lump sum payment to employees at retirement, death, incapacitation or termination of the employment based on the respective employees salary and the tenure of the employment. Liabilities with regard to a Gratuity plan are determined based on the actuarial valuation carried out by an independent actuary as of the Balance Sheet date for TML and its Indian subsidiaries.
In respect of a subsidiary, viz., Tech Mahindra (R&D Services) Limited where the gratuity liability is funded, liability towards gratuity is provided for shortfall, if any, between accrued liabilities as determined on actuarial valuation and fund balance. (Refer to note 9 below).
b) | Provident fund: |
The eligible employees of TML and its Indian subsidiaries are entitled to receive the benefits of Provident fund, a defined contribution plan, in which both employees and the Company make monthly contributions at a specified percentage of the covered employees salary (currently at 12% of the basic salary). The contributions as specified under the law are paid to the Regional Provident Fund Commissioner by the Company.
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c) | Compensated absences: |
The Company provides for the encashment of leave subject to certain rules. The employees are entitled to accumulate leave subject to certain limits, for future encashment or availment. The liability is provided based on the number of days of unavailed leave at balance sheet date on the basis of an independent actuarial valuation for TML and its Indian subsidiaries. Whereas provision for encashment of unavailed leave on retirement is made on actual basis for Tech Mahindra (Americas) Inc.(TMA), Tech Mahindra GmbH(TMGMBH) and Tech Mahindra (Singapore) Pte. Ltd.(TMSL), TML does not expect the difference on account of varying methods to be material. (Refer note 9 below).
Actuarial gains and losses are recognised in full in the Profit and Loss account for the year in which they occur.
(o) | Borrowing costs: |
Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use or sale. All other borrowing costs are charged to revenue.
(p) | Taxation: |
Tax expense comprises of current tax, deferred tax and fringe benefit tax. Current tax is measured at the amount expected to be paid to/recovered from the tax authorities, based on estimated tax liability computed after taking credit for allowances and exemption in accordance with the local tax laws existing in the respective countries.
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 tax after the tax holiday year. Accordingly, it 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. Deferred tax assets and liabilities are recognised for future tax consequences attributable to timing differences between taxable income and accounting income that are capable of reversal in one or more subsequent years and are measured using relevant enacted tax rates. The carrying amount of deferred tax assets at each Balance Sheet date is reduced to the extent that it is no longer reasonably certain that sufficient future taxable income will be available against which the deferred tax asset can be realized.
Fringe benefit tax is recognized in accordance with the relevant provisions of the Income-tax Act, 1961 and the Guidance Note on Fringe Benefits Tax issued by the ICAI.
Tax on distributed profits payable in accordance with the provisions of the Income-tax Act, 1961 is disclosed in accordance with the Guidance Note on Accounting for Corporate Dividend Tax issued by the ICAI.
(q) | Contingent Liabilities: |
These, if any, are disclosed in the notes on accounts. Provision is made in the accounts if it becomes probable that any outflow of resources embodying economic benefits will be required to settle the obligation arising out of past events.
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Notes on Accounts:
2. | a) The consolidated financial statements present the consolidated accounts of TML, which consists of the accounts of the holding company and of the following subsidiaries: |
Name of the Subsidiary company |
Country of incorporation | Extent of Holding (%) as on March 31, 2008 | ||
Tech Mahindra (Americas) Inc. | United States of America | 100% | ||
Tech Mahindra GmbH | Germany | 100% | ||
Tech Mahindra (Singapore) Pte. Ltd. | Singapore | 100% | ||
Tech Mahindra (Thailand) Limited | Thailand | 100% | ||
Tech Mahindra (R & D Services) Limited (TMRDL) and its following subsidiary: |
India | 100% | ||
a) Tech Mahindra (R & D Services) Inc. |
United States of America | 100% | ||
PT Tech Mahindra Indonesia | Indonesia | 100% | ||
CanvasM Technologies Limited and its following subsidiary (CANVAS) a) CanvasM Technologies Inc. |
India United States of America |
80.10% 80.10% | ||
iPolicy Networks Limited. | India | 100% | ||
Tech Mahindra (Malaysia) SDN. BHD | Malaysia | 100% | ||
Tech Mahindra (Beijing) IT Services Limited | China | 100% |
b) | TML has an investment in a subsidiary company viz. Tech Mahindra Foundation (TMF). TMF has been incorporated primarily for charitable purposes, where in the profits will be applied for promoting its objects. Accordingly, the accounts of TMF are not consolidated in these financial statements, since TML will not derive any economic benefits from its investments in TMF. |
3. | The estimated amount of contracts remaining to be executed on capital account, (net of capital advances) and not provided for as at March 31, 2008 for TML Rs. 1378 Million (previous year: Rs. 1,291 Million). |
4. | Contingent liabilities: |
(i) | TML and its subsidiary TMRDL has received notices from Income Tax authorities resulting in a contingent liability of Rs. 158 Million and Rs. 1 Million (previous year Rs. 100 Million and 1 million respectively). TML demand is on account of disallowance of software maintenance activity and deduction u/s 80HHE amounting to Rs. 37 Million and a further sum of Rs. 121 Million relating to Section 10A. The Company has appealed before Appellate authorities and is hopeful of succeeding in the same. |
(ii) | TML has received demand notice from Sales Tax Authority for Rs. 1 Million (previous year Nil) towards purchases made from unregistered dealers for the financial year 2000-01. The company has filed appeal against the same. |
(iii) | Bank Guarantees outstanding for TML and its subsidiaries TMRDL and Tech Mahindra (Singapore) Pte. Ltd. (TMSL) are Rs. 160 Million, Rs. 20 Million and Rs. 6 Million respectively (previous year: Rs. 224 Million, Rs. 20 Million and Rs Nil respectively) |
(iv) | Claims from Statutory Authorities for TMRDL is Rs. 2 Million (Provident Fund) (previous year: Rs. 2 Million) and Rs. 7 Million (Service Tax) (previous year Nil). |
5. | During the previous year, pursuant to the resolution passed by the shareholders at the Extra ordinary General Meeting held on June 01, 2006, TML consolidated its share capital from 112,685,573 equity shares of Rs. 2/- each into 22,537,114 equity shares of Rs. 10/- each. |
Further, during the previous year TML has issued 90,148,459 Equity Shares of Rs. 10/- each as bonus shares at the rate of 4 shares for each share held as at June 01, 2006, aggregating to Rs. 902 Million by way of capitalization from the balance of Profit and Loss account.
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6. | TML acquired Tech Mahindra (R&D services) Limited on November 28, 2005. The terms of purchase provides for payment of contingent consideration to all the selling shareholders, payable over three years and calculated based on achievement of specific targets. The contingent consideration is payable in cash and cannot exceed Rs. 641 Million. |
The consideration so payable would be accounted in the books of account in the year of achieving the milestones under the agreement. Accordingly Rs. 16 Million (previous year Rs. 101 Million) has been accounted for during the year as additional cost of acquisition, in accordance with the terms of agreement and Rs. 5 Million has been accounted as additional consideration due to revision in management estimates made in the previous year. The total earn out payment amounts to Rs. 154 Million.
Further, the goodwill arising on additional 1,600 shares of TMRDL acquired during the year aggregating to Rs. 0.06 Million has also been added to the goodwill.
7. | During the previous year, TML has acquired entire shareholding of iPolicy Networks Limited (iPolicy) (formerly known as iPolicy Networks Private Limited) vide Share Purchase Agreement dated January 18, 2007 for a consideration of Rs. 29 Million. As a result iPolicy has become wholly owned subsidiary of the company with effect from the date of acquisition. The company has made additional investment of Rs. 381 Million (previous year Rs. 120 Million) after the acquisition. |
During the previous year, the excess of the above cost to TML over its share of the equity in iPolicy at the date on which investment is made aggregating to Rs. 41 Million has been added to the goodwill on consolidation under Fixed Assets.
During the year the company has paid an additional amount of Rs 0.03 Million due to revision in the acquisition cost computation. The above additional cost of Rs. 0.03 Million, being the excess of cost to TML over its share of the equity in iPolicy has been added to the goodwill on consolidation under Fixed Assets.
8. | During the year, TML has entered in to an agreement with a customer under which it will have exclusivity for 90 days in negotiating an engagement. |
As per the terms of the agreement TML has made an exclusivity payment of Rs. 4,401 million to the customer which is unconditional, irrevocable and non refundable. Accordingly, this payment has been disclosed as an exceptional item in the Profit and Loss account.
The project will be executed with a consortium partner who will bear part of the exclusivity payment. The payment from consortium partner will be accounted when it is contractually firmed up.
During the previous year, TML had entered into Global Sourcing Agreement relating to the development of a global sourcing model for strategic outsourcing services, with a customer for a term of five years.
As per the terms of agreement, TML had made an upfront payment of Rs. 5,250 Million to the customer, which is unconditional, irrevocable and non-refundable. Accordingly, this payment had been disclosed as an exceptional item in the previous year Profit and Loss account.
9. | The revised Accounting Standard 15 on Employee Benefits, (AS 15) has been adopted by the company with effect from April 1, 2006. |
(i) | The disclosure as required under AS 15 regarding the Employees Retirement Benefits Plan for gratuity is as follows: |
a) | TML, iPolicy and CanvasM: |
Rs. in Million | ||||||
Particulars |
March 31, 2008 | March 31, 2007 | ||||
Projected benefit obligation, beginning of the year |
276 | 191 | ||||
Service cost |
155 | 103 | ||||
Interest cost |
28 | 16 | ||||
Actuarial (gain)/loss |
24 | (21 | ) | |||
Benefits paid |
(15 | ) | (14 | ) | ||
Projected benefit obligation, end of the year |
468 | 275 | ||||
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The gratuity plan is not funded and the liability is provided for in the books of account.
Rs. in Million | |||||
Particulars |
March 31, 2008 | March 31, 2007 | |||
Net periodic gratuity cost |
|||||
Service cost |
155 | 103 | |||
Interest cost |
28 | 16 | |||
Amortisation of actuarial (gain)/loss |
24 | (21 | ) | ||
Net periodic gratuity cost |
207 | 98 | |||
b) Assumptions: |
||||||
Discount rate |
7.75 | % | 8.00 | % | ||
Rate of increase in compensation levels of covered employees |
8.00 | % | 7.75 | % |
c) | TMRDL: |
Rs. In Million | ||||||
Particulars |
March 31, 2008 | March 31, 2007 | ||||
Projected benefit obligation, beginning of the year |
41 | 29 | ||||
Service cost |
7 | 6 | ||||
Interest cost |
4 | 3 | ||||
Actuarial loss |
6 | 5 | ||||
Benefits paid |
(4 | ) | (2 | ) | ||
Projected benefit obligation, end of the year |
54 | 41 | ||||
Defined Benefit obligation liability as at the balance sheet is wholly funded by the company |
||||||
Change in Plan Assets |
||||||
Fair Value of Assets beginning of the year |
28 | 29 | ||||
Contributions by Employer |
3 | |||||
Expected Return on Assets |
3 | 3 | ||||
Actuarial Gain (Loss) |
1 | (2 | ) | |||
Benefits Paid |
(4 | ) | (2 | ) | ||
Projected Fair Value of Assets, end of the year |
31 | 28 | ||||
Gratuity Cost for the year |
||||||
Service Cost |
7 | 6 | ||||
Interest Cost |
4 | 3 | ||||
Expected Return on Assets |
(3 | ) | (3 | ) | ||
Amortisation of Actuarial Gain /(Loss) |
4 | 7 | ||||
Net Periodic Gratuity Cost |
13 | 13 |
d) Assumptions: |
||||||
Discount rate |
7.75 | % | 8.00 | % | ||
Rate of increase in compensation levels of covered employees |
7.75 | % | 7.50 | % |
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ii) | The disclosure as required under AS 15 regarding the Employees Retirement Benefits Plan for leave encashment is as follows: |
a) | Disclosure: |
Rs. In Million | ||||||
Particulars |
March 31, 2008 | March 31, 2007 | ||||
Projected benefit obligation, beginning of the year |
313 | 232 | ||||
Service cost |
91 | 74 | ||||
Interest cost |
27 | 18 | ||||
Actuarial loss |
164 | 30 | ||||
Past service cost (vested) |
9 | 0 | ||||
Benefits paid |
(65 | ) | (41 | ) | ||
Projected benefit obligation, end of the year |
539 | 313 | ||||
The leave encashment liability is not funded and is provided for in the books of account.
Rs. In Million | ||||
Particulars |
March 31, 2008 | March 31, 2007 | ||
Net periodic leave encashment cost |
||||
Service cost |
91 | 74 | ||
Interest cost |
27 | 18 | ||
Amortisation of actuarial loss |
164 | 30 | ||
Past service cost (vested) |
9 | | ||
Net periodic leave encashment cost |
291 | 122 | ||
b) Assumptions: |
||||||
Discount rate |
7.75 | % | 8.00 | % | ||
Rate of increase in compensation levels of covered employees for TML |
8.00 | % | 7.75 | % |
c) | The Company has in addition to above accounted for short term leave encashment and provident fund contribution amounting to Rs. 77 Million (previous year Rs. 89 Million) |
10. | Assets acquired/given on Lease: |
i) | Finance Lease: |
TML has acquired vehicles on lease, the fair value of which aggregates to Rs. 50 Million (previous year Rs. 67 Million). As per Accounting Standard 19 (AS-19) on Leases, the Company has capitalized the said vehicles at their fair values as the leases are in the nature of finance leases as defined in AS-19. Lease payments are apportioned between finance charge and deduction of outstanding liabilities. The details of lease rentals payable in future are as follows:
Rs. in Million | ||||
Not later than 1 year | Later than 1 year not later than 5 years | |||
Minimum Lease rentals payable (previous year Rs. 13 Million and Rs. 4 Million respectively) |
4 | 0 | ||
Present value of Lease rentals payable (previous year Rs. 12 Million and Rs. 4 Million respectively) |
4 | 0 |
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ii) | Operating Lease: |
A) | The assets taken on Operating Lease are as detailed below: |
i) | TML has taken vehicles on operating lease for a period of three to four years. The lease rentals recognised in the Profit and Loss Account for the year is Rs. 8 Million (previous year Rs. 1 Million). |
The future lease payments of operating lease are as follows:
Rs. in Million | ||||
Not later than 1 year | Later than 1 year not later than 5 years | |||
Minimum Lease rentals payable (Previous year Rs. 1 Million and Rs. 3 Million respectively) |
11 | 18 |
ii) | TMRDL has taken on lease various residential/commercial premises for cancelable period of 1 year to 3 years. These agreements are normally renewed on expiry. |
Lease rentals recognized in the statement of profit and loss account in respect of the above operating lease is Rs. 11 Million (previous year Rs. 12 Million).
iii) | Tech Mahindra (R&D) Inc. USA has taken office space, equipment and vehicles on operating lease. The lease rentals recognised in the Profit and Loss account for the year is Rs. 4 Million (previous year Rs. 4 Million). The future lease payments of operating lease are as follows |
Rs. in Million | ||||||||||||
Not later than 1 year | Later than 1 year not later than 5 years |
|||||||||||
Office space |
Vehicles | Office space |
Vehicles | |||||||||
Minimum Lease rentals payable |
8 | 0 | 11 | 0 | ||||||||
[8 | ] | [1 | ] | [20 | ] | [1 | ] |
Figures in bracket [ ] indicate previous year figures
iv) | Tech Mahindra (Americas) Inc. (TMA) has taken office space on operating lease. The lease rentals recognized in the Profit and Loss Account for the year is Rs. 5 Million (previous year Rs. 3 Million). The future lease payments of operating lease are as follows: |
Rs. in Million | ||||
Particulars |
Not later than 1 year |
Later than 1 year not later than 5 years | ||
Minimum Lease rentals payable (previous year Rs. 4 Million and Nil respectively) |
1 | |
v) | Tech Mahindra (Thailand) limited (TMTL) has taken office premises on operating lease. The lease rentals recognized in the Profit and Loss Account for the period is Rs. 1 Million (previous year Rs 1 Million). The future lease payments of operating lease are as follows: |
Rs. in Million | ||||
Particulars |
Not later than 1 year | Later than 1 year not later than 5 years | ||
Minimum Lease rentals payable (previous year Rs. 1 Million and Rs. 3 Million) |
1 | 0 |
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vi) | Tech Mahindra GmbH has taken office space on operating lease. The future lease payments of operating lease are as follows: |
Rs. in Million | ||||
Particulars |
Not later than 1 year |
Later than 1 year not later than 5 years | ||
Minimum Lease rentals payable |
3 | |
vii) | Tech Mahindra Singapore has taken office space on operating lease. The lease rentals recognized in the Profit and Loss Account for the year is Rs. 8 Million (previous year Rs. 7 Million). The future lease payments of operating lease are as follows: |
Rs. in Million | ||||
Particulars |
Not later than 1 year |
Later than 1 year not later than 5 years | ||
Minimum Lease rentals payable (Previous year Rs. 7 Million and 6 respectively) |
7 | 2 |
vii) | The CanvasM is a lessee under various operating leases. Rental expense for operating leases for the year ended March 31, 2008 Rs. 3 Million (previous year Rs. 1 Million). The company has not executed any non-cancelable operating leases |
B) | The assets given on Operating Lease are as detailed below |
The | assets given by the TMRDL on Operating Lease are as detailed below: |
Rs. in Million | |||||||||
Description of Asset |
Gross Carrying amount March 31, 2008 |
Accumulated Depreciation April 1, 2007 |
Depreciation for the year |
||||||
BuildingBlock C in Hosur Road, Bangalore. |
50 | 14 | 3 | ||||||
[50 | ] | [11 | ] | [3 | ] |
(Figures | in brackets [ ]are for the previous year) |
The above operating lease is for a cancelable period of 3 years which is renewal by mutual consent.
There is no contingent rent.
11. | With the focus on customers in the Telecom Service Providers (TSP) and TEM segments of the telecom vertical, TML has reorganised its management structure to cater to its business segments. Consequently TML is of the view that as per the requirements of Accounting Standard 17 on Segment Reporting (AS 17), the primary segment of TML is business segment by category of customers in the TSP, TEM, Business process outsourcing (BPO) and other sectors and the secondary segment is the geographical segment by location of its customers. |
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The Accounting principles consistently used in the preparation of the financial statements are also applied to record income and expenditure in the individual segments. There are no inter-segment transactions during the year.
A. | PRIMARY SEGMENTS |
FOR THE YEAR ENDED MARCH 31, 2008
(Rs. in Million) | |||||||||||
Particulars |
TELECOM SERVICE PROVIDER |
TELECOM EQUIPMENT MANUFACTURER |
BUSINESS PROCESS OUTSOURCING |
OTHERS | TOTAL | ||||||
Revenues |
33,612 | 1,937 | 1,296 | 816 | 37,661 | ||||||
Less: Direct Expenses |
20,792 | 1,655 | 807 | 600 | 23,854 | ||||||
Segmental Operating Results |
12,820 | 282 | 489 | 216 | 13,807 | ||||||
Less: Unallocable Expenses |
|||||||||||
Depreciation |
796 | ||||||||||
Interest |
62 | ||||||||||
Other Unallocable Expenses |
5,550 | ||||||||||
Total Unallocable Expenses |
6,408 | ||||||||||
Operating Income |
7,399 | ||||||||||
Add: Other Income |
1,044 | ||||||||||
Net Profit before tax & exceptional item |
8,443 | ||||||||||
Less: Provision for Taxation |
|||||||||||
Current Tax |
(689 | ) | |||||||||
Deferred Tax |
15 | ||||||||||
Fringe Benefit Tax |
(74 | ) | |||||||||
Net Profit after tax & before Minority Interest and exceptional item |
7,695 | ||||||||||
Exceptional item |
4,401 | ||||||||||
Minority Interest |
5 | ||||||||||
Net Profit for the year |
3,299 | ||||||||||
Segregation of assets, liabilities, depreciation and other non-cash expenses into various primary segments has not been done as the assets are used interchangeably between segments and TML is of the view that it is not practical to reasonably allocate liabilities and other non-cash expenses to individual segments and an adhoc allocation will not be meaningful.
B. | SECONDARY SEGMENTS: |
Revenues from secondary segments are as under
Sector |
Rs. in Million | |
Europe |
27,733 | |
USA |
7,300 | |
Asia Pacific |
2,268 | |
Total |
37,661 | |
Segregation of assets into secondary segments has not been done as the assets are used interchangeably between segments. Consequently the carrying amounts of assets by location of assets are not given.
73
A. | PRIMARY SEGMENTS |
FOR THE YEAR ENDED MARCH 31, 2007
(Rs. in Million) | ||||||||||||
Particulars |
TELECOM SERVICE PROVIDER |
TELECOM EQUIPMENT MANUFACTURER |
BUSINESS PROCESS OUTSOURCING |
OTHERS | TOTAL | |||||||
Revenues |
26,664 | 1,832 | 141 | 653 | 29,290 | |||||||
Less: Direct Expenses |
15,707 | 1,190 | 156 | 483 | 17,536 | |||||||
Segmental Operating Income |
10,957 | 642 | (15 | ) | 170 | 11,754 | ||||||
Less: Unallocable Expenses |
||||||||||||
Depreciation |
515 | |||||||||||
Interest |
61 | |||||||||||
Other Unallocable Expenses |
4,371 | |||||||||||
Total Unallocable Expenses |
4,947 | |||||||||||
Operating Income |
6,807 | |||||||||||
Add: Other Income |
60 | |||||||||||
Net Profit before tax |
6,867 | |||||||||||
Less: Provision for Taxation |
||||||||||||
Current Tax |
(648 | ) | ||||||||||
Deferred Tax |
(36 | ) | ||||||||||
Fringe Benefit Tax |
(56 | ) | ||||||||||
Net Profit before Minority Interest and exceptional item |
6,127 | |||||||||||
Exceptional item |
5,250 | |||||||||||
Minority Interest |
1 | |||||||||||
Net Profit for the year |
876 | |||||||||||
Excess provision for income-tax in respect of earlier years written back (Refer note 14 (b) below) |
339 | |||||||||||
Net profit |
1,215 | |||||||||||
Segregation of assets, liabilities, depreciation and other non-cash expenses into various primary segments has not been done as the assets are used interchangeably between segments and TML is of the view that it is not practical to reasonably allocate liabilities and other non-cash expenses to individual segments and an adhoc allocation will not be meaningful.
B. | SECONDARY SEGMENTS: |
Revenues from secondary segments are as under
Sector |
Rs. in Million. | |
Europe |
21,237 | |
USA |
5,370 | |
Asia Pacific |
2,683 | |
Total |
29,290 | |
Segregation of assets into secondary segments has not been done as the assets are used interchangeably between segments. Consequently the carrying amounts of assets by location of assets are not given.
74
12. | A) TML has instituted Employee Stock Option Plan 2000 (ESOP) for its employees and Directors. For this purpose it had created a trust viz. MBT ESOP trust. In terms of the said Plan, the trust has Granted options to the employees and directors in form of warrant which vest at the rate of 33.33% on each successive anniversary of the grant date. The options can be exercised over a period of 5 years from the date of grant. Each warrant carries with it the right to purchase one equity share of the Company at the exercise price determined by the trust on the basis of fair value of the equity shares at the time of grant. |
The details of the options are as under:
Particulars |
March 31, 2008 | March 31, 2007 | ||
Options outstanding at the beginning of the year |
489,120 | 1,220,000 | ||
Options granted during the year |
| |||
Options lapsed during the year |
6,620 | 18,480 | ||
Options cancelled during the year |
20,480 | 37,860 | ||
Options exercised during the year |
111,930 | 674,540 | ||
Options outstanding at the end of the year |
350,090 | 489,120 |
Out of the options outstanding at the end of year, 244,390 (previous year 100,420) (Net of exercised & lapsed) options have vested, which have not been exercised.
B) TML has instituted Employee Stock Option Plan 2004 (ESOP 2004) for its employees. In terms of the said Plan, the Compensation Committee has granted options to employees of the Company. The options are divided into Upfront options and Performance options. The Upfront Options are divided into three sets which will entitle holders to subscribe to option shares at the end of First year, Second year and Third year. The vesting of the Performance Options will be decided by the Compensation Committee based on the performance of employees.
Particulars |
March 31, 2008 | March 31, 2007 | ||
Options outstanding at the beginning of the year |
5,677,701 | 10,219,860 | ||
Options granted during the year |
| |||
Options lapsed during the year |
| |||
Options cancelled during the year |
| |||
Options exercised during the year |
4,542,159 | |||
Options outstanding at the end of the year |
5,677,701 | 5,677,701 |
Out of the options outstanding at the end of the year, there are 2,271,081 (previous year Nil) (Net of exercised & lapsed) vested options which have not been exercised.
C) TML has instituted Employee Stock Option Plan 2006 (ESOP 2006) for its employees and directors and its subsidiary companies. In terms of the said plan, the compensation committee has granted options to the employees of the Company. The vesting of the options is 10%, 15%, 20%, 25%, and 30 % of total options granted after 12, 24, 36, 48 and 60 months, respectively from the date of grant. The maximum exercise period is 7 years from the date of grant.
75
The details of the options are as under:
Particulars |
March 31, 2008 |
March 31, 2007 | |||
Options outstanding at the beginning of the year |
4,493,116 | 4,612,380 | |||
Options granted during the year |
72,000 | 656,625 | |||
Options lapsed during the year |
| | |||
Options cancelled during the year |
337,850 | 402,890 | |||
Options exercised during the year |
34,238 | 372,999 | |||
Options outstanding at the end of the year |
4,193,028 | 4,493,116 | |||
Weighted average share price of the above options on the date of the exercise |
Rs. 83 | Rs. 83 |
Out of the options outstanding at the end of the year, 680,543 (previous year 56,456) (net of exercised & lapsed) options have vested which have not been exercised.
D) The Company uses the intrinsic value-based method of accounting for stock options granted after April 1, 2005. Had the compensation cost for the Companys stock based compensation plan been determined in the manner consistent with the fair value approach, the Companys net income would be lower by Rs. 32 Million (previous year Rs. 10 Million) and earnings per share as reported would be lower as indicated below:
Rs In Million except earning per share | ||||||||
Year Ended March 31, 2008 |
Year ended March 31, 2007 |
|||||||
Net profit after Tax and before exceptional item |
7,695 | 6,127 | ||||||
Less: |
Exceptional item |
(4,401 | ) | (5,250 | ) | |||
: |
Minority Interest |
5 | (1 | ) | ||||
Net profit for the year |
3,299 | 876 | ||||||
Add: |
Excess provision for income-tax in respect of earlier year written back | | 339 | |||||
Net Profit |
3,299 | 1,215 | ||||||
Less: |
Total stock-based employee compensation expense determined under fair value base method. | 32 | 10 | |||||
Adjusted net profit |
3,267 | 1,205 | ||||||
Basic earnings per share (in Rs.) |
||||||||
As reported |
27.20 | 10.56 | ||||||
Adjusted |
26.93 | 10.47 | ||||||
Diluted earnings per share (in Rs.) |
||||||||
As reported |
25.24 | 9.32 | ||||||
Adjusted |
24.99 | 9.23 |
The fair value of each warrant is estimated on the date of grant based on the following assumptions:
Dividend yield (%) |
6.60 | 6.89 | ||
Expected life |
5 years | 5 years | ||
Risk free interest rate (%) |
7.83 | 7.72 | ||
Volatility (%) |
55.28 | 62.69 |
76
13. | As required under Accounting Standard 18 Related Party Disclosures (AS 18), following are details of transactions during the year with the related parties of the Company as defined in AS 18: |
(a) | List of Related Parties and Relationships |
Name of Related Party |
Relation | |
Mahindra & Mahindra Ltd. |
Holding Company | |
British Telecommunications, plc. |
Promoter holding more than 20% stake | |
Tech Mahindra Foundation |
100% Subsidiary company | |
Mahindra Engineering and Chemical Products Ltd. |
Fellow Subsidiary Company | |
Mahindra Engineering Design and Development Company Ltd. |
Fellow Subsidiary Company | |
Bristlecone India Ltd. |
Fellow Subsidiary Company | |
Mahindra World City (Jaipur) Ltd |
Fellow Subsidiary Company | |
Mr. Vineet Nayyar Vice Chairman, Managing Director and Chief Executive Officer |
Key Management Personnel |
(b) Related Party Transactions for year ended 31st March, 2008
(Rs. in Million) | ||||||||
Transactions |
Promoter Companies |
Subsidiary Companies |
Fellow subsidiary Companies |
Key Management Personnel | ||||
Reimbursement of Expenses (Net)-Paid/(Receipt) |
(92) [(348)] |
[] |
|
| ||||
Income from Services & Management Fees |
24,060 [19,001] |
[] |
3 [3] |
| ||||
Paid for Services Received |
71 [(24)] |
[] |
|
| ||||
Project Transition Cost |
233 [] |
[] |
[] |
[] | ||||
Sub-contracting cost |
[] |
[] |
8 [21] |
[] | ||||
Dividend Paid |
[1,143] |
[] |
[] |
[1] | ||||
Salary and Perquisites |
[] |
[] |
[] |
24 [24] | ||||
Donation |
[] |
76 [56] |
[] |
[] | ||||
Stock options |
[] [] |
[] |
[] [] |
[]* [] | ||||
Purchase of Fixed Asset |
17 [9] |
[] |
[] |
[] | ||||
Advance Given |
[] |
[] |
57 [] |
[] | ||||
Exclusivity Payment/ [Upfront Payment] |
4,401 [5,250] |
[] |
[] |
[] | ||||
Debit / (Credit) balances (Net) (inclusive of unbilled) outstanding as on March 31, 2008 |
6,904 [5,349] |
[] |
57 [1] |
[] |
77
Figures in brackets [ ]are for previous year ended 31st March, 2007.
* | Options exercised during the year are for Nil (previous year 1,514,053) equity shares and options granted and outstanding as at year end are 1,892,567 (previous year 1,892,567). |
Out of the above items transactions with Promoter companies, Subsidiary Companies, Fellow subsidiary Companies and Key Management Personnel in the excess of 10% of the total related party transactions are as under:
(Rs. in Million) | ||||||
Transactions |
For the Year ended March 31, 2008 |
For the Year ended March 31, 2007 |
||||
Reimbursement of Expenses (net)Paid/(Receipt) |
||||||
Promoter Companies |
||||||
British Telecommunications Plc. |
(109 | ) | (359 | ) | ||
Income from Services |
||||||
Promoter Companies |
||||||
British Telecommunications Plc. |
24,024 | 18,982 | ||||
Paid for Services Received |
||||||
Promoter Companies |
||||||
Mahindra & Mahindra Ltd. |
71 | 24 | ||||
Project Transition Cost |
||||||
Promoter Companies |
||||||
British Telecommunications Plc. |
233 | | ||||
Dividend Paid |
||||||
Promoter Companies |
||||||
Mahindra & Mahindra Ltd. |
| 634 | ||||
British Telecommunications Plc. |
| 474 | ||||
Donation |
||||||
Tech Mahindra Foundation. |
76 | 56 | ||||
Advance Given |
||||||
Fellow Subsidiary Company |
||||||
Mahindra World City (Jaipur) Ltd |
57 | | ||||
Purchase of Fixed Assets |
||||||
Promoter Companies |
||||||
Mahindra & Mahindra Ltd. |
| 9 | ||||
British Telecommunications Plc |
16 | | ||||
Exclusivity Payment/ Upfront Payment |
||||||
Promoter Companies |
||||||
British Telecommunications plc. |
4,401 | 5,250 | ||||
Salary and Perquisites |
||||||
Key Management Personnel |
||||||
Mr. Vineet Nayyar |
24 | 24 | ||||
Subcontracting Cost |
||||||
Fellow Subsidiary Company |
||||||
BRISTLECONE I LTD. |
8 | |
78
There have been no transactions with the following companies during the year
First Choice Wheels Ltd ( Earlier known as Automartindia Ltd) |
Fellow Subsidiary | |
Bristlecone Ltd |
Fellow Subsidiary | |
Bristlecone Inc. |
Fellow Subsidiary | |
Mahindra Consulting Engineers Ltd. |
Fellow Subsidiary | |
Mahindra-BT Investment Company (Mauritius) Ltd. |
Holding company | |
Bristlecone GmbH |
Fellow Subsidiary | |
Bristlecone Singapore Pte. Ltd. |
Fellow Subsidiary | |
Mahindra (China) Tractor Company Ltd. |
Fellow Subsidiary | |
Mahindra Europe s.r.l. |
Fellow Subsidiary | |
Mahindra Gujarat Tractor Ltd. |
Fellow Subsidiary | |
Mahindra Holdings & Finance Ltd. |
Fellow Subsidiary | |
Mahindra Holidays & Resorts India Ltd. |
Fellow Subsidiary | |
Mahindra Holidays & Resorts (USA) Inc. |
Fellow Subsidiary | |
Mahindra Insurance Brokers Ltd. |
Fellow Subsidiary | |
Mahindra Intertrade Ltd. |
Fellow Subsidiary | |
Bristlecone UK Ltd. |
Fellow Subsidiary | |
Mahindra International Ltd. |
Fellow Subsidiary | |
Mahindra Logisoft Business Solutions Ltd. |
Fellow Subsidiary | |
Mahindra Middleeast Electrical Steel Service Centre (FZE) |
Fellow Subsidiary | |
Mahindra & Mahindra Financial Services Ltd. |
Fellow Subsidiary | |
Mahindra & Mahindra South Africa (Pty) Ltd. |
Fellow Subsidiary | |
Mahindra Overseas Investment Company (Mauritius) Ltd. |
Fellow Subsidiary | |
Mahindra Renault Pvt. Ltd. |
Fellow Subsidiary | |
Mahindra Steel Service Centre Ltd. |
Fellow Subsidiary | |
Mahindra Shubhlabh Services Ltd. |
Fellow Subsidiary | |
Mahindra SAR Transmission Pvt Ltd. |
Fellow Subsidiary | |
Mahindra USA Inc. |
Fellow Subsidiary | |
Mahindra Ugine Steel Company Ltd. |
Fellow Subsidiary | |
NBS International Ltd. |
Fellow Subsidiary | |
Stokes Group Ltd |
Fellow Subsidiary | |
Jensand Ltd |
Fellow Subsidiary | |
Stokes Forgings Dudley Ltd |
Fellow Subsidiary | |
Stokes Forgings Ltd |
Fellow Subsidiary | |
Plexion Technologies (UK) Ltd |
Fellow Subsidiary | |
Plexion Technologies GmbH |
Fellow Subsidiary | |
Plexion Technologies Incorporated |
Fellow Subsidiary | |
Mahindra Forgings International Ltd. |
Fellow Subsidiary | |
Mahindra Forgings Global Ltd |
Fellow Subsidiary | |
Gesenkschmiede Schneider GmbH |
Fellow Subsidiary | |
Falkenroth Umformtechnik GmbH |
Fellow Subsidiary | |
Jeco-Jellinghaus GmbH |
Fellow Subsidiary | |
Mahindra Forgings Europe AG |
Fellow Subsidiary | |
Mahindra Hinoday Industries Ltd |
Fellow Subsidiary | |
Schöneweiss & Co. GmbH |
Fellow Subsidiary | |
Mahindra Life Space Developers Ltd |
Fellow Subsidiary | |
Mahindra Infrastructure Developers Ltd |
Fellow Subsidiary | |
Mahindra Integrated Township Ltd |
Fellow Subsidiary | |
Mahindra World City Developers Ltd |
Fellow Subsidiary | |
Mahindra World City (Maharashtra) Ltd |
Fellow Subsidiary | |
MHR Hotel Management GmbH |
Fellow Subsidiary |
79
Bristlecone (Malaysia) SDN. BHD |
Fellow Subsidiary | |
Mahindra Automotive Ltd |
Fellow Subsidiary | |
Mahindra Castings Private Ltd |
Fellow Subsidiary | |
Mahindra Forgings Ltd. |
Fellow Subsidiary | |
Mahindra Hotels and Residences India Ltd |
Fellow Subsidiary | |
Mahindra Holdings Ltd |
Fellow Subsidiary | |
Mahindra Logistics Ltd |
Fellow Subsidiary | |
Mahindra Rural Housing Finance Ltd |
Fellow Subsidiary | |
Mahindra Retail Private Ltd |
Fellow Subsidiary | |
Mahindra Technology Park Ltd. |
Fellow Subsidiary | |
Punjab Tractors Ltd. |
Fellow Subsidiary | |
Mahindra Residential Developers Ltd |
Fellow Subsidiary | |
Mahindra Aerospace Pvt Ltd |
Fellow Subsidiary | |
Heritage Bird (M) Sdn Bhd |
Fellow Subsidiary | |
Mahindra First Choice Services Ltd |
Fellow Subsidiary | |
Mahindra Graphic Research Design srl |
Fellow Subsidiary | |
Mahindra Navistar Engines Private Ltd |
Fellow Subsidiary |
14. | a.)The tax effect of significant timing differences that has resulted in deferred tax assets and liabilities are given below: |
Deferred Tax |
March 31, 2008 | March 31, 2007 | ||||
Rs. in Million | Rs. in Million | |||||
a) Deferred tax liability: |
||||||
Depreciation |
(2 | ) | (1 | ) | ||
b) Deferred tax asset: |
||||||
Gratuity, Leave Encashment etc. |
24 | 10 | ||||
Doubtful Debts/Others |
6 | 4 | ||||
Carry forward of Net operating losses of a subsidiary |
32 | 61 | ||||
Total Deferred Tax Asset (Net) |
60 | 74 | ||||
b.) | Consequent to completion of Income-tax assessments by the tax authorities in the United Kingdom for the financial years 2001-02, 2002-03 and 2003-04 TML has received tax refunds aggregating to Rs. 321 Million (including interest aggregating to Rs. 37 Million) in previous year. Accordingly, in previous year the excess provision for Income-tax relating to the aforesaid years has been written back to the Profit and Loss Account and the interest received is disclosed under Other Income. |
15. | Exchange gain/(loss)(net) accounted during the year: |
a) | The Company enters into foreign Exchange Forward Contracts and Currency Option Contracts to offset the foreign currency risk arising from the amounts denominated in currencies other than the Indian rupee. The counter party to the Companys foreign currency forward contracts and Currency Option Contracts is generally a bank. These contracts are entered into to hedge the foreign currency risks of firm commitments. Forward Exchange Contracts and Currency Option Contracts in UK Pound exposure are split into two legs, which are GBP to USD and USD to INR. |
80
b) | The following are the outstanding GBP:USD Currency Exchange Contracts entered into by the company which have been designated as Cash Flow Hedges as on 31st March, 2008: |
Type of cover |
Amount outstanding at year end in Foreign currency (in Million) |
Fair Value Gain/(Loss) (Rs. in Million) |
Amount outstanding at year end (Rs. In Million) |
Exposure to Buy/Sell | ||||
Forward |
GBP 36 (previous |
26 (previous |
2,865 (previous |
Sell | ||||
Option |
GBP 292 (previous |
920 (previous |
23,217 (previous |
Sell |
c) | The following are the outstanding USD:INR Currency Exchange Contracts entered into by the company which have been designated as Cash Flow Hedges as on 31st March, 2008: |
Type of cover |
Amount outstanding at year end in Foreign currency (in Million) |
Fair Value Gain/(Loss) (Rs. in Million) |
Amount outstanding at year end (Rs. In Million) |
Exposure to Buy/Sell | ||||
Forward |
USD 318 (previous |
(141) (previous |
12,738 (previous |
Sell | ||||
Option |
USD 539 (previous |
46 (previous |
21,625 (previous |
Sell |
The movement in hedging reserve during period ended March 31st 2008 for derivatives designated as Cash Flow Hedges is as follows:
Particulars |
Year ended March 31st 2008 |
Year ended March 31st 2007 | ||
Balance at the beginning of the year |
| | ||
Gain/(Losses) transferred to income statement on occurrence of forecasted hedge transaction |
| | ||
Changes in the fair value of effective portion of outstanding cash flow derivative |
851 | | ||
Net derivative gain/(losses) related to discounted cash flow hedge |
| | ||
Balance at the end of the year |
851 | | ||
d) | In addition to the above cash flow hedges, the Company has few outstanding foreign exchange forward contracts and currency options contracts aggregating to Rs. 10,662 Million (previous year Rs. 21,149 Million) whose fair value showed a gain of Rs. 170 Million (previous year Rs. 151 Million), which do not qualify for hedge accounting and accordingly these are accounted as derivative instruments at fair value with changes in fair value recorded in the Profit and Loss account. |
81
e) | The year end foreign currency exposures that have not been specifically hedged by a derivative instrument or otherwise are given below: |
Amounts receivable in foreign currency on account of the following : |
Particulars |
Rs. in Million | Foreign currency in Million | ||||||||
Current year | Previous year | |||||||||
Debtors |
3,227 (previous year 883) |
GBP | 34 | GBP | | |||||
AUD | 3 | AUD | 0 | |||||||
CAD | 2 | CAD | 0 | |||||||
EUR | 3 | EUR | 1 | |||||||
NZD | 3 | NZD | 0 | |||||||
USD | | USD | 18 | |||||||
PHP | 27 | PHP | | |||||||
Loans and advances |
16 (previous year 12) |
AUD | 0 | AUD | 0 | |||||
USD | 0 | USD | 0 | |||||||
CAD | 0 | CAD | | |||||||
EUR | 0 | EUR | 0 | |||||||
NZD | 0 | NZD | | |||||||
SGD | 0 | SGD | | |||||||
TWD | 0 | TWD | 0 | |||||||
CNY | 0 | CNY | | |||||||
Cash/Bank balances (Net) |
270 (previous year 99) |
USD | 4 | USD | 0 | |||||
AUD | 1 | AUD | 0 | |||||||
NZD | 1 | NZD | 0 | |||||||
TWD | 15 | TWD | 39 | |||||||
PHP | 13 | PHP | | |||||||
CAD | 0 | CAD | | |||||||
EURO | 0 | EURO | 0 |
Amounts payable in foreign currency on account of the following: |
Particulars |
Rs. in Million | Foreign currency in Million | ||||||||
Current year | Previous year | |||||||||
Creditors (Net) |
351 (previous year 188) |
EUR | 0 | EUR | 0 | |||||
GBP | 4 | GBP | 1 | |||||||
SGD | 0 | SGD | | |||||||
THB | 0 | THB | | |||||||
USD | | USD | 2 | |||||||
MYR | | MYR | | |||||||
PHP | 0 | PHP | | |||||||
CNY | 0 | CNY | | |||||||
AUD | 0 | AUD | 0 | |||||||
Other current liabilities (Net) |
733 (previous year 566) |
GBP | 9 | GBP | 7 |
82
f) | Exchange gain/(loss)(net) accounted during the year: |
Rs. in Million | |||||
Particulars |
March 31, 2008 | March 31, 2007 | |||
Others |
767 | (114 | ) |
16. | During the previous year the public issue of TMLs Equity Shares consisting of a fresh issue of 3,186,480 Equity Shares by TML and an offer for sale of 9,559,520 Equity Shares, by certain existing Shareholders of TML was made pursuant to a prospectus dated August 11, 2006. The Equity shares were issued for cash at a price of Rs. 365 per Equity Share (including a securities premium of Rs. 355 per Equity Share). |
The statement of proceeds from the public issue and utilisation thereof is as under:
Particulars |
No of shares |
Price | Rs. In Million | |||
Proceeds received after payment to selling shareholders |
3,186,480 | 365 | 1,163 | |||
Less: Expenses (Net) relating to the issue after recovery from the selling shareholders: |
||||||
Professional fees |
35 | |||||
Advertising Expenses |
8 | |||||
Rates and Taxes |
1 | |||||
Miscellaneous expenses |
1 | |||||
Printing and Stationery |
4 | |||||
Traveling expenses |
3 | |||||
Net Proceeds |
1,111 | |||||
Deployment up to March 31, 2008 |
||||||
Used for the capitalisation work for Hinjewadi |
1,111 | |||||
Total |
1,111 | |||||
83
17. | Earning Per Share is calculated as follows: |
Rs. In million except EPS and Shares | ||||||
Particulars |
Year ended March 31, 2008 |
Year ended March 31, 2007 |
||||
Net Profit after tax and before exceptional item |
7,695 | 6,127 | ||||
Less: Exceptional Item |
(4,401 | ) | (5,250 | ) | ||
Profit after tax and exceptional item |
3,294 | 877 | ||||
Less: Minority Interest |
5 | 1 | ||||
Add: Excess provision for tax in respect of earlier years written back |
| 339 | ||||
Net Profit attributable to Shareholders |
3,299 | 1,215 | ||||
Equity Shares outstanding as at the year end (in Nos.) |
121,362,869 | 121,216,701 | ||||
Weighted average Equity Shares outstanding as at the year end (in Nos) |
121,292,103 | 115,071,417 | ||||
Weighted average number of Equity Shares used as denominator for calculating Basic Earnings Per Share |
121,292,103 | 115,071,417 | ||||
Add: Diluted number of Shares |
||||||
ESOP outstanding at the end of the period |
9,427,640 | 15,381,480 | ||||
Weighted average number of Equity Shares used as denominator for calculating Diluted Earnings Per Share |
130,719,743 | 130,452,897 | ||||
Nominal Value per Equity Share (in Rs.) |
10.00 | 10.00 | ||||
Before exceptional item |
||||||
Earnings Per Share (Basic) (in Rs.) |
63.49 | 56.18 | ||||
Earnings Per Share (Diluted) (in Rs.) |
58.91 | 49.56 | ||||
After exceptional item |
||||||
Earnings Per Share (Basic) (in Rs.) |
27.20 | 10.56 | ||||
Earnings Per Share (Diluted) (in Rs.) |
25.24 | 9.32 |
84
18. | Details of Investments purchased and sold during the year by the TML & its subsidiaries |
TYPE OF FUND |
31-Mar-08 | |||
Units | Cost Rs. in Million | |||
ICICI PRUDENTIAL MUTUAL FUND: 28 ICICI Prudentials Flexible Income Plan |
14,229,879 | 150 | ||
ABN AMRO MUTUAL FUND: ABN AMRO Flexible Short Term Plan Ser. B Qtly DivReinvested ABN AMRO Money Plus Institutional Weekly Dividend ABN Amro Flexi Debt FundRegular Weekly Dividend |
5,235,029 20,717,076 15,078,001 |
52 207 151 | ||
BIRLA SUNLIFE MUTUAL FUND: Birla Sun Life Liquid PlusInstitutional Daily DividendReinvestment Birla Sun Life Liquid PlusInstitutionalWeekly DividendReinvested Birla Sun Life Liquid PlusInstlWeekly DividendReinvestment |
39,972,818 4,712,065 |
400 47 208 | ||
DBS CHOLA MUTUAL FUND: DBS Chola FMPSeries 7 (Quarterly Plan4)Dividend |
5,085,445 | 51 | ||
DSP MERRILL LYNCH MUTUAL FUND: DSP Merrill Lynch Liquid Plus Institutional PlanDaily Dividend |
399,780 | 400 | ||
GRINDLAYS MUTUAL FUND: Grindlays Cash FundInstitutional Plan BDaily Dividend Grindlays Floating Rate FundLT Institutional Plan BWeekly Dividend |
5,173,225 5,476,371 |
55 55 | ||
HSBC MUTUAL FUND: HSBC Liquid PlusInstitutional PlusWeekly Dividend |
5,406,969 | 54 | ||
JM MUTUAL FUND: JM Fixed Maturity fundSeries VQuarterly Plan 4Institutional Dividend Plan JM Fixed Maturity FundSeries VQuarterly Plan 4Institutional Dividend Plan JM Money Manager FundSuper Plus PlanWeekly Dividend |
10,370,469 10,569,489 10,682,893 |
104 106 107 | ||
KOTAK MUTUAL FUND: Kotak Flexi Debt SchemeQuarterly Dividend Kotak Flexi Debt Scheme Daily Dividend Kotak Liquid (Institutional Premium)Daily Divided |
5,354,364 44,860,484 4,470,643 |
55 450 55 | ||
RELIANCE MUTUAL FUND: Reliance Liquid Plus FundInstitutional Tenor Fund Plan AGrowth Plan |
49,941 | 50 |
19. | During the previous year one of the subsidiaries viz., iPolicy, entered into an Intellectual Property Asset Purchase Agreement (the agreement) with iPolicy Networks Inc., on January 23, 2007. Pursuant to the above agreement along with ancillary agreements, the said subsidiary has acquired certain Copyright, Patent, Inventions and Trademark etc. as specified in the agreements (collectively referred as Intellectual Property Rights) for Rs. 76 Million. The consideration payable has been deposited in an Escrow Account with a bank pursuant to the Escrow Agreement dated January 22, 2007 and the amount will be released to iPolicy Networks Inc., on satisfaction of certain conditions/ clarifications, as stipulated in the agreement. |
20. | Previous year figures have been regrouped wherever necessary, to conform to the current periods classification. |
85
Signatures to Schedules I to XIII
For Tech Mahindra Limited |
Mr. Anand G MahindraChairman |
Mr. Vineet NayyarVice-Chairman, Managing Director & CEO |
Hon. Akash PaulDirector |
Mr. Al-Noor RamjiDirector |
Mr. Anupam PuriDirector |
Mr. Arun SethDirector |
Mr. Bharat DoshiDirector |
Mr. Clive GoodwinDirector |
Mr. Paul ZuckermanDirector |
Dr. Raj ReddyDirector |
Mr. Ulhas N. YargopDirector |
Mr. Vikrant GandheAsst. Company Secretary
Boston; Dated :19th May 2008 |
86
ANNUAL REPORT 2006 2007
CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2007
Schedule | As at March 31, 2007 |
Rs. in Million As at March 31, 2006 | ||||||
I. |
SOURCES OF FUNDS: | |||||||
SHAREHOLDERS FUNDS: |
||||||||
Capital |
I | 1,212.17 | 208.00 | |||||
Share Application Money |
1.42 | | ||||||
Reserves and Surplus |
II | 7,971.32 | 5,946.27 | |||||
9,184.91 | 6,154.27 | |||||||
MINORITY INTEREST |
115.83 | 0.36 | ||||||
LOAN FUNDS: |
III | |||||||
Secured Loan |
100.10 | | ||||||
Unsecured Loan |
70.05 | | ||||||
170.15 | | |||||||
9,470.89 | 6,154.63 | |||||||
II. |
APPLICATION OF FUNDS: | |||||||
FIXED ASSETS: |
IV | |||||||
Gross Block |
6,244.54 | 4,579.63 | ||||||
Less: Depreciation/Amortisation |
2,402.94 | 1,879.76 | ||||||
Net Block |
3,841.60 | 2,699.87 | ||||||
Capital Work-in-Progress, including Advances |
579.27 | 198.28 | ||||||
4,420.87 | 2,898.15 | |||||||
INVESTMENTS: |
V | 979.07 | 1,504.83 | |||||
DEFERRED TAX ASSET (NET): |
74.27 | 111.68 | ||||||
CURRENT ASSETS, LOANS AND ADVANCES: |
VI | |||||||
Inventory |
10.67 | | ||||||
Sundry Debtors |
8,215.71 | 4,377.34 | ||||||
Cash and Bank Balances |
668.33 | 759.69 | ||||||
Loans and Advances |
1,556.61 | 539.36 | ||||||
10,451.32 | 5,676.39 | |||||||
Less: CURRENT LIABILITIES AND PROVISIONS: |
||||||||
Liabilities |
VII | 4,919.14 | 1,835.92 | |||||
Provisions |
VIII | 1,535.50 | 2,200.50 | |||||
6,454.64 | 4,036.42 | |||||||
Net Current Assets |
3,996.68 | 1,639.97 | ||||||
9,470.89 | 6,154.63 | |||||||
SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS: |
XIII |
As per our attached report of even date
For Deloitte Haskins & Sells | For Tech Mahindra Limited | |||||
Chartered Accountants | ||||||
Anand G. Mahindra | Vineet Nayyar | |||||
Chairman | Vice Chairman, Managing Director & CEO | |||||
A. B. Jani | Al-Noor Ramji | Anupam Puri | Bharat Doshi | |||
Partner | Director | Director | Director | |||
Clive Goodwin | Paul Zuckerman | Dr. Raj Reddy | ||||
Director | Director | Director | ||||
Ulhas N. Yargop | ||||||
Director | ||||||
Vikrant Gandhe | ||||||
Mumbai, Dated: 15th May, 2007 | Boston; Dated: 7th May 2007 | Asst. Company Secretary |
87
ANNUAL REPORT 2006 2007
CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2007
Schedule | Year Ended March 31, 2007 |
Rs. in Million Year Ended March 31, 2006 |
||||||
INCOME: |
IX | 29,367.30 | 12,766.79 | |||||
EXPENDITURE: |
||||||||
Personnel |
X | 11,092.51 | 5,623.72 | |||||
Operating and Other Expenses |
XI | 10,831.67 | 4,124.24 | |||||
Depreciation/Amortisation |
515.49 | 397.48 | ||||||
Interest |
XII | 61.17 | | |||||
22,500.84 | 10,145.44 | |||||||
PROFIT BEFORE TAXATION |
6,866.46 | 2,621.35 | ||||||
Provision for Taxation: |
||||||||
Current tax |
(648.39 | ) | (207.68 | ) | ||||
Deferred tax |
(35.59 | ) | (24.53 | ) | ||||
Fringe benefit tax |
(56.29 | ) | (35.39 | ) | ||||
PROFIT BEFORE MINORITY INTEREST AND EXCEPTIONAL ITEMS |
6,126.19 | 2,353.75 | ||||||
Exceptional Item |
5,249.38 | | ||||||
(Refer to note 8 of Schedule XIII) |
||||||||
Minority Interest-Share in Profit |
(0.88 | ) | (0.04 | ) | ||||
NET PROFIT FOR THE YEAR |
875.93 | 2,353.71 | ||||||
Excess Provision of Income Tax in respect of earlier years |
||||||||
(Refer to note 15 of Schedule XIII) |
339.50 | | ||||||
Balance brought forward from previous year |
4,699.10 | 3,760.46 | ||||||
Balance available for appropriation |
5,914.53 | 6,114.17 | ||||||
Interim DividendI |
(90.15 | ) | (30.61 | ) | ||||
Interim DividendII |
(176.00 | ) | (31.15 | ) | ||||
Interim DividendIII |
| (62.37 | ) | |||||
Interim DividendIV |
| (499.19 | ) | |||||
Final Dividend |
| (415.99 | ) | |||||
Dividend Tax |
(37.33 | ) | (145.76 | ) | ||||
Transfer to General Reserve |
(65.23 | ) | (230.00 | ) | ||||
Balance Carried to Balance Sheet |
5,545.82 | 4,699.10 | ||||||
Earning Per Share (Refer to note 18 of Schedule XIII) |
||||||||
Before exceptional item (in Rs.) |
||||||||
Basic |
56.18 | 22.77 | ||||||
Diluted |
49.56 | 18.72 | ||||||
After exceptional item (in Rs.) |
||||||||
Basic |
10.56 | 22.77 | ||||||
Diluted |
9.32 | 18.72 | ||||||
SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS |
XIII |
As per our attached report of even date
For Deloitte Haskins & Sells | For Tech Mahindra Limited | |||||
Chartered Accountants | ||||||
Anand G.Mahindra | Vineet Nayyar | |||||
Chairman | Vice Chairman, Managing Director & CEO | |||||
A. B. Jani | Al-Noor Ramji | Anupam Puri | Bharat Doshi | |||
Partner | Director | Director | Director | |||
Clive Goodwin | Paul Zuckerman | Dr. Raj Reddy | ||||
Director | Director | Director | ||||
Ulhas N. Yargop | ||||||
Director | ||||||
Vikrant Gandhe | ||||||
Mumbai, Dated: 15th May, 2007 | Boston; Dated: 7th May 2007 | Asst. Company Secretary |
88
ANNUAL REPORT 2006 2007
CONSOLIDATED CASH FLOW FOR THE YEAR ENDED MARCH 31, 2007
Rs. in Million | |||||||||||
Particulars |
As at March 31, 2007 |
As at March 31, 2006 |
|||||||||
A |
Cash Flow from operating activities | ||||||||||
Net Profit before taxation and exceptional item |
6,866.46 | 2,621.35 | |||||||||
Less: |
|||||||||||
Exceptional Item |
5,249.38 | | |||||||||
1,617.08 | 2,621.35 | ||||||||||
Adjustments for: |
|||||||||||
Depreciation |
515.49 | 397.48 | |||||||||
Loss on sale of Fixed Assets |
2.19 | 4.41 | |||||||||
Interest Expense |
61.17 | | |||||||||
Decrease in fair value of Current Investment |
0.06 | 0.27 | |||||||||
Exchange gain (net) |
62.45 | (21.09 | ) | ||||||||
Currency translation adjustment |
4.45 | (10.10 | ) | ||||||||
Dividend from Current Investments |
(65.78 | ) | (52.95 | ) | |||||||
Interest Income |
(87.52 | ) | (67.14 | ) | |||||||
Profit on Sale of Investments |
(14.66 | ) | (14.63 | ) | |||||||
477.85 | 236.25 | ||||||||||
Operating profit before working capital changes |
2,094.93 | 2,857.60 | |||||||||
Adjustments for: |
|||||||||||
Trade and other receivables |
(4,716.56 | ) | (2,038.53 | ) | |||||||
Trade and other payables |
3,282.27 | 543.14 | |||||||||
(1,434.29 | ) | (1,495.39 | ) | ||||||||
Cash generated from operations |
660.64 | 1,362.21 | |||||||||
Income Taxes paid |
(323.95 | ) | (36.00 | ) | |||||||
(323.95 | ) | (36.00 | ) | ||||||||
Net cash from operating activities |
336.69 | 1,326.21 | |||||||||
B |
Cash flow from investing activities | ||||||||||
Purchase of Fixed Assets |
(1,940.36 | ) | (395.05 | ) | |||||||
Purchase of Investments |
(6,146.61 | ) | (2,510.74 | ) | |||||||
Investment in Subsidiary |
| (0.50 | ) | ||||||||
Acquisition of Business (net off Cash) |
10.29 | (1,602.14 | ) | ||||||||
Sale of Investments |
6,686.97 | 2,515.22 | |||||||||
Sale of Fixed Assets |
2.60 | 6.12 | |||||||||
Interest received |
79.53 | 68.83 | |||||||||
Dividend received |
65.78 | 52.95 | |||||||||
Net cash used in investing activities |
(1,241.80 | ) | (1,865.31 | ) |
89
ANNUAL REPORT 2006 2007
CONSOLIDATED CASH FLOW FOR THE YEAR ENDED MARCH 31, 2007 (Contd.)
Rs. in Million | |||||||||||
Particulars |
As at March 31, 2007 |
As at March 31, 2006 |
|||||||||
C | Cash flow from financing activities | ||||||||||
Proceeds from issue of Shares |
|||||||||||
(including Securities Premium) |
949.75 | 134.28 | |||||||||
Issue of equity shares (Refer to note 17 of Schedule XIII) |
1,163.07 | | |||||||||
Share Application Money |
1.42 | | |||||||||
Dividend (including Dividend Tax paid) |
(1,347.02 | ) | (141.54 | ) | |||||||
Proceeds from Borrowing |
170.15 | | |||||||||
Interest Paid |
(61.17 | ) | | ||||||||
Net cash from/(used in) financing activities |
876.20 | (7.26 | ) | ||||||||
Net decrease in cash and cash equivalents (A+B+C) |
(28.91 | ) | (546.36 | ) | |||||||
Cash and cash equivalents at the beginning of the year |
740.35 | 1,286.71 | |||||||||
Cash and cash equivalents at the end of the year |
711.44 | 740.35 | |||||||||
Notes:
1 | Components of cash and cash equivalents include cash, bank balances in current and deposit accounts as disclosed under Schedule VI (b) of the accounts. |
2 | Purchase of fixed assets are stated inclusive of movements of capital work in progress between the commencement and end of the period and are considered as part of investing activity. |
March 31, 2007 |
March 31, 2006 |
||||||
3 | Cash and cash equivalents include : |
||||||
Cash and Bank Balances |
668.33 | 759.69 | |||||
Unrealised (Gain)/Loss on foreign currency |
|||||||
Cash and cash equivalents |
43.11 | (19.34 | ) | ||||
Total Cash and Cash equivalents |
711.44 | 740.35 | |||||
4 | Cash and cash equivalents include equity share application money of Rs. 1.42 Million (previous year: Nil) and unclaimed dividend of Rs. 1.02 Million (previous year: Rs. 0.04 Million) |
As per our attached report of even date
For Deloitte Haskins & Sells | For Tech Mahindra Limited | |||||
Chartered Accountants | ||||||
Anand G.Mahindra | Vineet Nayyar | |||||
Chairman | Vice Chairman, Managing Director & CEO | |||||
A. B. Jani | Al-Noor Ramji | Anupam Puri | Bharat Doshi | |||
Partner | Director | Director | Director | |||
Clive Goodwin | Paul Zuckerman | Dr. Raj Reddy | ||||
Director | Director | Director | ||||
Ulhas N. Yargop | ||||||
Director | ||||||
Vikrant Gandhe | ||||||
Mumbai, Dated : 15th May, 2007 | Boston; Dated : 7th May 2007 | Asst. Company Secretary |
90
ANNUAL REPORT 2006 2007
Schedules forming part of the Consolidated Balance Sheet
Rs. in Million | ||||
As at March 31, 2007 |
As at March 31, 2006 | |||
Schedule I |
||||
SHARE CAPITAL: |
||||
Authorised: |
||||
175,000,000 (previous year: 150,000,000) Equity Shares of Rs. 10/- (previous year: Rs. 2/-) each |
1,750.00 | 300.00 | ||
1,750.00 | 300.00 | |||
Issued and Subscribed: |
||||
121,216,701 (previous year: 112,440,523) Equity Shares of Rs. 10/- (previous year: Rs. 2/-) each fully paid-up |
1,212.17 | 224.88 | ||
Paid up : |
||||
121,216,701 (previous year 102,508,885) Equity Shares of Rs. 10/- (previous year: Rs. 2/-) each fully paid-up |
1,212.17 | 205.02 | ||
Nil (previous year: 9,931,638) Equity Shares of Rs. 2/- each Rs. 0.30 paid-up |
| 2.98 | ||
1,212.17 | 208.00 | |||
Notes:
1 | Out of the above 9,931,638 (previous year: 9,931,638) Equity Share of Rs. 10/- (previous year: Rs. 2/-; Rs. 0.30 paid-up) each fully paid-up are held by Mahindra BT Investment Company (Mauritius) Limited, a subsidiary of Mahindra and Mahindra Ltd. and 53,776,252 (previous year: 57,600,060) equity shares of Rs. 10/- each (previous year Rs. 2/- each) are held by Mahindra & Mahindra Ltd., the ultimate holding company. |
2 | The above includes 51,000,100 and 25,000,000 Equity Shares of Tech Mahindra Limited (TML) originally of Rs. 2/- each issued as fully paid-up bonus shares by capitalisation of balance of Profit and Loss Account and General Reserve, respectively. |
3 | During the year, 90,148,459 Equity Shares of Rs. 10/- each of TML are allotted as fully paid-up bonus shares by way of capitalisation of Profit and Loss Account (Refer to note 5 of Schedule XIII). |
4 | During the year, 5 Equity Shares of Rs. 2/- each of TML have been consolidated into 1 Equity Share of Rs. 10/- each (Refer to note 5 of Schedule XIII). |
5 | Refer to note 12 of Schedule XIII for share options. |
91
ANNUAL REPORT 2006 2007
Schedules forming part of the Consolidated Balance Sheet
Rs. in Million | |||||||
As at March 31, 2007 |
As at March 31, 2006 |
||||||
Schedule II |
|||||||
RESERVES AND SURPLUS: |
|||||||
General Reserve: |
|||||||
As per last Balance Sheet |
948.43 | 718.43 | |||||
Add: Transfer from Profit and Loss Account |
65.23 | 230.00 | |||||
1,013.66 | 948.43 | ||||||
Securities Premium: |
|||||||
As per last Balance Sheet |
282.50 | 152.77 | |||||
Add: Received during the year |
2,010.13 | 129.73 | |||||
2,292.63 | 282.50 | ||||||
Currency Translation Reserve: |
|||||||
As per last Balance Sheet |
16.22 | 26.32 | |||||
Addition during the period |
4.45 | (10.10 | ) | ||||
20.67 | 16.22 | ||||||
Capital Reserve |
0.02 | 0.02 | |||||
Balance in Profit and Loss Account |
5,545.82 | 4,699.10 | |||||
Less: Capitalised on issue of bonus shares |
|||||||
(Refer to note 5 of Schedule XIII) |
901.48 | | |||||
4,644.34 | 4,699.10 | ||||||
7,971.32 | 5,946.27 | ||||||
Schedule III |
|||||||
LOAN FUND: |
|||||||
Secured Loan: |
|||||||
Loans and Advances from Bank |
|||||||
Cash Credit from bank |
100.10 | | |||||
(Refer to note 1 and 2 below) |
|||||||
100.10 | | ||||||
Notes : |
|||||||
1 Loan from bank is Secured by way of hypothecation of current assets including book debts |
|||||||
2 Net of current account balance of Rs. 112.23 Million as per swip facility with the bank |
|||||||
Unsecured Loan: |
|||||||
Other Loans and Advances |
|||||||
Overdraft from banks |
70.05 | | |||||
70.05 | | ||||||
92
ANNUAL REPORT 2006 2007
Schedules forming part of the Consolidated Balance Sheet
Schedule IV
FIXED ASSETS:
Rs. in Million | ||||||||||||||||||||||||
GROSS BLOCK | DEPRECIATION/AMORTISATION | NET BLOCK | ||||||||||||||||||||||
Description of Assets |
Cost as at April 01, 2006 |
Additions | Deduct- ions during the year |
Cost as at March 31, 2007 |
Upto March 31, 2006 |
on acqui- sition * |
For the year |
Dedu- ctions during the year |
Upto March 31, 2007 |
As at March 31, 2007 |
As at March 31, 2006 | |||||||||||||
on acqui- sition* |
during the year |
|||||||||||||||||||||||
Goodwill on Consolidation |
866.83 | | 142.09 | | 1,008.92 | | | | | | 1,008.92 | 866.83 | ||||||||||||
Leased Assets: |
||||||||||||||||||||||||
Vehicles |
74.35 | | | 7.40 | 66.95 | 27.29 | | 14.98 | 3.97 | 38.30 | 28.65 | 47.06 | ||||||||||||
(Refer to note 10 of Schedule XIII) |
||||||||||||||||||||||||
Other Assets: |
||||||||||||||||||||||||
Freehold Land |
91.37 | | 82.16 | | 173.53 | | | | | | 173.53 | 91.37 | ||||||||||||
Leasehold Land |
| | 220.64 | | 220.64 | | | 1.14 | | 1.14 | 219.50 | | ||||||||||||
Leasehold improvement |
| | 83.52 | | 83.52 | | | 6.00 | | 6.00 | 77.52 | | ||||||||||||
Office Building/Premises |
1,593.52 | 3.59 | 0.49 | | 1,597.60 | 468.54 | 2.46 | 106.28 | | 577.28 | 1,020.32 | 1,124.98 | ||||||||||||
Computers |
889.92 | 47.89 | 479.87 | 2.88 | 1,414.80 | 637.42 | 14.23 | 200.45 | 2.88 | 849.22 | 565.58 | 252.50 | ||||||||||||
Plant and Machinery |
528.44 | 7.71 | 352.66 | 10.26 | 878.55 | 380.02 | 4.20 | 85.68 | 8.94 | 460.96 | 417.59 | 148.42 | ||||||||||||
Furniture and Fixtures |
505.91 | 4.64 | 172.14 | 0.38 | 682.31 | 355.85 | 4.02 | 89.38 | 0.33 | 448.92 | 233.39 | 150.06 | ||||||||||||
Vehicles |
29.29 | 0.67 | 12.85 | 1.23 | 41.58 | 10.64 | 0.13 | 8.86 | 1.23 | 18.40 | 23.18 | 18.65 | ||||||||||||
Intangible Assets: |
||||||||||||||||||||||||
Intellectual property rights** |
| | 76.14 | | 76.14 | | | 2.72 | | 2.72 | 73.42 | | ||||||||||||
Total |
4,579.63 | 64.50 | 1,622.56 | 22.15 | 6,244.54 | 1,879.76 | 25.04 | 515.49 | 17.35 | 2,402.94 | 3,841.60 | 2,699.87 | ||||||||||||
Previous year |
2,866.69 | 625.21 | 1,122.71 | 34.98 | 4,579.63 | 1,156.49 | 348.68 | 397.48 | 22.89 | 1,879.76 | | | ||||||||||||
Capital Work in Progress |
579.27 | 198.28 | ||||||||||||||||||||||
4,420.87 | 2,898.15 | |||||||||||||||||||||||
Note: 1) | Fixed Assets include certain leased vehicles aggregating to Rs. 37.72 Million (previous year: Rs. 44.70 Million) on which vendors have a lien. |
2) | * Refer to note 7 of Schedule XIII relating to Subsidiaries acquired during the year. |
3) | ** Pending registration in the name of the Company (Refer to note 20 of Schedule XIII). |
4) | Additions to Fixed Assets includes reduction of Rs. 0.08 Million on account of fluctuation in foreign exchange rate. |
93
ANNUAL REPORT 2006 2007
Schedules forming part of the Consolidated Balance Sheet
Rs. in Million | ||||||
As at March 31, 2007 |
As at March 31, 2006 | |||||
Schedule V |
||||||
INVESTMENTS: |
||||||
Long Term (Unquotedat cost) |
||||||
Trade: |
||||||
In Subsidiary Companies: |
||||||
50,000 Equity shares of Tech Mahindra Foundation of Rs. 10/- each fully paid up (Refer to note 2 of Schedule XIII) |
0.50 | 0.50 | ||||
Current Investments (Unquotedat lower of cost and fair value) |
||||||
Non Trade: |
||||||
Nil (previous year: 92,347.61 ) units of Rs. 1,000.58 each of Franklin Templeton Mutual Fund Weekly Dividend Institutional Plan [Cost Rs. Nil (previous year: Rs. 92.44 Million)] |
| 92.40 | ||||
5,244.32 (previous year: 38,867.53) units of Rs. 1,000.20 each of DSP Merrill LynchLiquidity Fund |
5.22 | 38.88 | ||||
Nil (previous year: 100,407.99) units of Rs. 1,000.00 each of DSP Merrill LynchFixed Term Plan Series B |
| 100.41 | ||||
200,000.00 (previous year: 200,000.00) units of Rs. 1,000.00 each of DSP Merrill LynchFixed Term Plan |
200.00 | 200.00 | ||||
Nil (previous year: 4,748,969.47) units of Rs. 10.53 each of Prudential ICICI Mutual Fund-Quarterly FMP Plan A |
| 50.00 | ||||
Nil (previous year: 11,665,474.85) units of Rs. 10.00 each of Prudential ICICI Mutual Fund Liquid Plan Super Institutional Weekly Dividend |
| 116.67 | ||||
Nil (previous year: 5,000,000.00) units of Rs. 10.00 each Birla Mutual FundFixed Term Growth Plan |
| 50.00 | ||||
11,533,845.61 (previous year: 3,071,767.96) units of Rs. 10.02 (previous year: Rs. 10.02) each of Birla Mutual FundCash Plus-Instl. Prem. Weekly Dividend Reinvestment [Cost Rs. 115.65 Million (previous year: Rs. 30.81 Million)] |
115.60 | 30.78 | ||||
15,000,000.00 (previous year: Nil) units of Rs. 10.07 each of Birla Mutual FundFTPQuarterlySeries 8DividendPayout |
150.00 | |
94
ANNUAL REPORT 2006 2007
Schedules forming part of the Consolidated Balance Sheet
Rs. in Million | ||||||
As at March 31, 2007 |
As at March 31, 2006 | |||||
Schedule V (Contd.) |
||||||
Nil (previous year: 5,029,509.92) units of Rs. 10.00 each of HSBC Mutual FundFixed Term Series Institutional Growth Plan |
| 50.30 | ||||
5,000,000.00 (previous year: 5,000,000.00) units of Rs. 10.00 each (previous year: Rs. 10.00 each of HSBC Mutul FundFixed Maturity Plan |
50.00 | 50.00 | ||||
Nil (previous year: 6,952,192.63) units of Rs. 10.03 each of J M Mutual FundHigh Liquidity Super Institutional Plan |
| 69.75 | ||||
10,233,630.44 (previous year: Nil) units of Rs.10.00 each of J M Mutual FundFMP Series IV Quarterly Dividend Plan |
102.34 | | ||||
5,000,000.00 (previous year: 5,000,000.00) units of Rs. 10.00 (previous year: Rs. 10.00) each of Kotak Mutual FundFMP Growth |
50.00 | 50.00 | ||||
Nil (previous year: 5,214,307.74) units of Rs. 10.03 each of Kotak Mutual FundLiquid Institutional Weekly Dividend |
| 52.29 | ||||
Nil (previous year: 4,098,246.52) units of Rs. 10.03 each of Kotak Mutual FundLiquid Institutional Weekly Dividend |
| 41.10 | ||||
Nil (previous year: 6,265,066.85) units of Rs. 10.00 each of Principal Mutual FundLiquid Institutional Weekly Dividend [Cost Rs. 62.70 Million] |
| 62.67 | ||||
5,402,783.71 (previous year: Nil) of Rs. 10.44 each of Reliance Mutual FundShort Term Fund Retail PlanDividend Plan |
56.39 | | ||||
Nil (previous year: 5,000,000.00) units of Rs. 10.00 each of Reliance Mutual FundFMP |
| 50.00 | ||||
5,000,000.00 (previous year: 5,000,000.00) units of Rs. 9.99 each of Reliance Fixed Tenor Fund Growth Plan [Cost Rs. 50.00 Million (previous year: Rs. 50.00 Million)] |
49.93 | 49.93 | ||||
5,084,276.05 units of Rs.10.00 each of Chola FMP Series-6 Quarterly Plan3Dividend |
50.84 | |
95
ANNUAL REPORT 2006 2007
Schedules forming part of the Consolidated Balance Sheet
Rs. in Million | ||||||
As at March 31, 2007 |
As at March 31, 2006 | |||||
Schedule V (Contd.) |
||||||
Nil (previous year: 5,000,000.00) units of Rs. 10.00 each of Chola Fund Liquid Institutional PlusDividend Option |
| 50.00 | ||||
5,000,000.00 (previous year: 5,000,000.00) units of Rs. 9.98 each of GrindlaysFMP16 month [Cost Rs. 50.00 Million (previous year: Rs. 50.00 Million)] |
49.90 | 49.90 | ||||
4,600,000.00 (previous year: 4,600,000.00) units of Rs. 10.00 each of Tata Fixed Horizon Fund Series III |
46.00 | 46.00 | ||||
Nil (previous year: 90,695.00) units of Rs. 1,135.75 each of TATA Mutual FundLiquid Weekly Dividend |
| 103.00 | ||||
Nil (previous year: 5,000,000.00) units of Rs. 10.00 each of Sundaram Mutual FundFMP |
| 50.00 | ||||
5,235,028.52 (previous year: Nil) units of Rs. 10.00 each of ABN AMRO Mutual FlundFTP Series 4 Quarterly Plan Dividend on Maturity |
52.35 | | ||||
Nil (previous year: 5,024,693.83) units of Rs. 10.00 each of ABN AMRO Mutual FundFMP |
| 50.25 | ||||
978.57 | 1,504.33 | |||||
979.07 | 1,504.83 | |||||
Note:
1. | The above includes investments made during the period out of proceeds of public issue (Refer to note 17 of schedule XIII) |
96
ANNUAL REPORT 2006 2007
Schedules forming part of the Consolidated Balance Sheet
Rs. in Million | ||||||
As at March 31, 2007 |
As at March 31, 2006 | |||||
Schedule VI |
||||||
CURRENT ASSETS, LOANS AND ADVANCES: |
||||||
Current Assets: |
||||||
(a) InventoryFinished Goods (Software product) |
10.67 | | ||||
(b) Sundry Debtors *: |
||||||
(Unsecured) |
||||||
Debts outstanding for a period exceeding six months: |
||||||
considered good** |
501.96 | 145.10 | ||||
considered doubtful |
68.94 | 29.23 | ||||
570.90 | 174.33 | |||||
Other debts, considered good*** |
7,713.75 | 4,232.24 | ||||
considered doubtful |
0.22 | 0.40 | ||||
8,284.87 | 4,406.97 | |||||
| | |||||
Less: Provision |
69.16 | 29.63 | ||||
8,215.71 | 4,377.34 | |||||
1. * Debtors include on account of unbilled revenue aggregating to Rs. 1,898.10 Million (previous year: Rs. 437.87 Million) | ||||||
2. ** Net of advances aggregating to Rs. 179.16 Million (previous year: Rs. 63.19 Millions) pending adjustments with invoices | ||||||
3. *** Net of advances aggregating to Rs. 1,609.46 Million (previous year: Rs. 29.22 Million) pending adjustments with invoices |
(c) | Cash and Bank Balances: |
|||||||
Cash in hand |
0.47 | | ||||||
Balance with Scheduled banks: |
||||||||
(i) In Current accounts |
273.62 | 261.96 | ||||||
(ii) In Fixed Deposit accounts |
343.36 | 359.94 | ||||||
Balance with other banks: |
||||||||
(i) In Current accounts |
50.88 | 137.79 | ||||||
668.33 | 759.69 | |||||||
(d) | Loans and Advances: |
|||||||
(Unsecured) |
||||||||
Bills of Exchange (considered doubtful) |
5.00 | 5.00 | ||||||
Less: Provision |
5.00 | 5.00 | ||||||
Advances recoverable in cash or in kind or for |
| | ||||||
value to be received |
||||||||
considered good |
1,329.15 | 440.66 | ||||||
considered doubtful |
6.63 | 3.76 | ||||||
1,335.78 | 444.42 | |||||||
Less: Provision |
6.63 | 3.76 | ||||||
1,329.15 | 440.66 | |||||||
Advance Tax (Net of provisions) |
227.46 | 98.70 | ||||||
1,556.61 | 539.36 | |||||||
10,451.32 | 5,676.39 | |||||||
97
ANNUAL REPORT 2006 2007
Schedules forming part of the Consolidated Balance Sheet
Rs. in Million | ||||
As at March 31, 2007 |
As at March 31, 2006 | |||
Schedule VII |
||||
CURRENT LIABILITIES: |
||||
Sundry Creditors: |
||||
Total outstanding dues to Small Scale |
| | ||
Industrial Undertakings |
||||
Total outstanding dues of Creditors other than Small Scale Industrial Undertakings* |
4,919.14 | 1,835.92 | ||
4,919.14 | 1,835.92 | |||
* | includes progress billing (unearned revenue) aggregating to Rs. 29.39 Million. |
Schedule VIII |
||||
PROVISIONS: |
||||
Provision for taxation (net of payments) |
837.03 | 678.60 | ||
Provision for Fringe benefit tax (net of payments) |
9.75 | | ||
Proposed Dividends |
| 915.19 | ||
Provision for Dividend tax |
| 128.36 | ||
Provision for Gratuity |
287.54 | 195.81 | ||
Provision for Leave Encashment |
401.18 | 282.54 | ||
1,535.50 | 2,200.50 | |||
98
ANNUAL REPORT 2006 2007
Schedules forming part of the Consolidated Profit and Loss Account
Rs. in Million | |||||||
Year Ended March 31, 2007 |
Year ended March 31, 2006 | ||||||
Schedule IX | |||||||
INCOME: | |||||||
Income from Services (net) |
29,290.36 | 12,398.57 | |||||
[Tax deducted at source Rs. 23.91 Million |
|||||||
(previous year: Rs. 6.47 Million)] |
|||||||
Management Fees (net) |
| 28.09 | |||||
29,290.36 | 12,426.66 | ||||||
Interest on: |
|||||||
Deposits with Banks |
49.01 | 65.88 | |||||
[Tax deducted at source Rs. 19.00 Million |
|||||||
(previous year: Rs. 9.65 Million)] |
|||||||
Income tax refund (Refer to note 15 of Schedule XIII) |
36.79 | | |||||
Others |
1.72 | 1.26 | |||||
87.52 | 67.14 | ||||||
Dividend received on current investments (non-trade) |
65.78 | 52.95 | |||||
Exchange fluctuation (net) |
(107.89 | ) | 152.26 | ||||
Profit on sale of current investments (net) |
14.66 | 14.63 | |||||
Excess provisions for earlier years/sundry credit balances written back |
| 31.58 | |||||
Provision for doubtful debts written back |
10.97 | 4.55 | |||||
Insurance claim received |
| 0.18 | |||||
Miscellaneous Income |
5.90 | 16.84 | |||||
29,367.30 | 12,766.79 | ||||||
Schedule X | |||||||
PERSONNEL: | |||||||
Salaries, wages and bonus |
10,030.49 | 4,956.35 | |||||
Contribution to provident and other funds |
588.88 | 337.34 | |||||
Staff welfare |
473.14 | 330.03 | |||||
11,092.51 | 5,623.72 | ||||||
99
ANNUAL REPORT 2006 2007
Schedules forming part of the Consolidated Profit and Loss Account
Rs. in Million | ||||||
Year Ended March 31, 2007 |
Year Ended March 31, 2006 | |||||
Schedule XI | ||||||
OPERATING AND OTHER EXPENSES: | ||||||
Power |
208.21 | 81.87 | ||||
Rent |
417.48 | 143.47 | ||||
Rates and taxes (Refer to note 17 of Schedule XIII) |
23.89 | 9.47 | ||||
Communication expenses |
542.00 | 283.21 | ||||
Travelling expenses (Refer to note 17 of Schedule XIII) |
3,494.24 | 1,816.18 | ||||
Recruitment expenses |
120.69 | 71.97 | ||||
Hire charges [includes car lease rentals Rs. 2.68 Million |
221.41 | 108.58 | ||||
(previous year: Rs. 4.10 Million)] |
||||||
Sub-contracting costs |
2,792.81 | 763.79 | ||||
Repairs and Maintenance : |
||||||
Buildings (including leased premises) |
19.71 | 14.41 | ||||
Machinery |
46.33 | 35.83 | ||||
Others |
57.99 | 35.51 | ||||
124.03 | 85.75 | |||||
Insurance |
91.28 | 34.87 | ||||
Professional fees (Refer to note 17 of Schedule XIII) |
487.36 | 112.95 | ||||
Software packages |
1,388.07 | 141.62 | ||||
Training |
126.00 | 91.26 | ||||
Advertising, Marketing and Selling expenses |
||||||
(Refer to note 17 of Schedule XIII) |
30.50 | 5.21 | ||||
Commission on Services income |
220.87 | 39.82 | ||||
Loss on sale of fixed assets |
2.19 | 4.41 | ||||
[Net of write back of leased liability aggregating to |
||||||
Rs. Nil (previous year: Rs. 1.56 Million)] |
||||||
Excess of cost over fair value of current investments |
0.06 | 0.27 | ||||
Advances/debts written off |
8.97 | 0.37 | ||||
Provision for doubtful debts |
50.41 | 16.66 | ||||
Provision for doubtful advances |
2.87 | | ||||
Loss on exchange fluctuation (net) |
6.45 | | ||||
Donations |
58.50 | 154.86 | ||||
Miscellaneous expenses * |
||||||
(Refer to note 17 of Schedule XIII) |
413.38 | 157.65 | ||||
10,831.67 | 4,124.24 | |||||
* includes Printing and stationery expenses, hospitality expenses, conveyance, etc. |
||||||
Schedule XII | ||||||
INTEREST: | ||||||
Interest On |
||||||
Term Loan |
18.00 | | ||||
Cash Credit |
43.17 | | ||||
61.17 | | |||||
100
ANNUAL REPORT 2006 2007
Schedules forming part of the Consolidated Balance Sheet and Profit and Loss Account
Schedule XIII
SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS FORMING PART OF CONSOLIDATED ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2007
1. | Significant accounting policies: |
(a) | Basis for preparation of accounts: |
The accompanying Consolidated Financial Statements of Tech Mahindra Limited (TML) (the holding company) and its subsidiaries are prepared under the historical cost convention in accordance with the generally accepted accounting principles applicable in India (Indian GAAP), the provisions of the Companies Act, 1956 and the Accounting Standards issued by The Institute of Chartered Accountants of India (ICAI) to the extent possible in the same format as that adopted by the holding company for its separate financial statements.
The financial statements of the subsidiaries used in the consolidation are drawn upto the same reporting date as that of the holding company namely March 31, 2007.
(b) | Principles of consolidation: |
The financial statements of the holding company and its subsidiaries have been consolidated on a line by line basis by adding together the book value of like items of assets, liabilities, income, expenses, after eliminating intragroup transactions and any unrealized gain or losses on the balances remaining within the group in accordance with the Accounting Standard21 (AS 21) on Consolidated Financial Statements issued by the ICAI.
The financial statements of the holding company and its subsidiaries have been consolidated using uniform accounting policies for like transaction and other events in similar circumstances.
The excess of cost of investments in the subsidiary company/s over the share of the equity of the subsidiary company/s at the date on which the investment in the subsidiary company/s is made is recognized as Goodwill on Consolidation and is grouped with Fixed Assets in the Consolidated Financial Statements.
Alternatively, where the share of equity in the subsidiary company/s as on the date of investment is in excess of cost of the investment, it is recognized as Capital Reserve and grouped with Reserves and Surplus, in the Consolidated Financial Statements.
Minority interest in the net assets of the consolidated subsidiaries consists of the amount of equity attributable to the minority shareholders at the dates on which investments are made in the subsidiary company/s and further movements in their share in the equity, subsequent to the dates of investments. Minority interest also includes share application money received from minority shareholders. The losses in subsidiary/s attributable to the minority shareholder are recognized to the extent of there interest in the equity of the subsidiary/s.
(c) | Use of estimates: |
The preparation of Consolidated Financial Statements, in conformity with the generally accepted accounting principles, requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of financial statements and the reported amounts of revenues and expenses during the reported period. Differences between the actual results and estimates are recognised in the period in which the results are known/ materialised.
101
ANNUAL REPORT 2006 2007
(d) | Fixed assets/intangibles: |
Fixed assets are stated at cost less depreciation. Costs comprise of purchase price and attributable costs, if any.
(e) | Leases: |
Assets taken on lease by TML on or after April 1, 2001 are accounted for as Fixed Assets in accordance with Accounting Standard 19 on Leases, (AS 19) issued by The ICAI.
(i) | Finance lease |
Assets taken on finance lease are accounted for as fixed assets at fair value. Lease payments are apportioned between finance charge and reduction of outstanding liability.
(ii) | Operating lease |
Assets taken on lease under which all risks and rewards of ownership are effectively retained by the lessor are classified as operating lease. Lease payments under operating leases are recognised as expenses on accrual basis in accordance with the respective lease agreements.
(f) | Depreciation/Amortisation of fixed assets: |
(i) | Depreciation for all fixed assets including for assets taken on lease is computed using the straight-line method based on estimated useful lives. Depreciation is charged on a pro-rata basis for assets purchased or sold during the period. Managements estimate of the useful life of fixed assets is as follows: |
Buildings | 15 years | |
Computers | 3-5 years | |
Plant and machinery | 3-5 years | |
Furniture and fixtures | 5 years | |
Vehicles | 5 years |
(ii) | Leasehold land is amortised over the period of lease on pro-rata basis. |
(iii) | Leasehold improvements are amortised over the primary period of lease. |
(iv) | Intellectual property rights are amortised over a period of seven years. |
(g) | Impairment of assets: |
At the end of the year, each company determines whether a provision should be made for impairment loss on fixed assets by considering the indications that an impairment loss may have occurred in accordance with Accounting Standard 28 on Impairment of Assets (AS 28) issued by the ICAI. Where the recoverable amount of any fixed asset is lower than its carrying amount, a provision for impairment loss on fixed assets is made for the difference.
(h) | Investments: |
Current investments are carried at lower of cost and fair value. Long-term investments are carried at cost. Provision is made to recognise a decline other than temporary in the carrying amount of long term investments.
(i) | Inventories: |
Finished Goods (Software Product)
Valued at the lower of the cost and net realisable value. Cost is determined on First InFirst-Out basis.
102
ANNUAL REPORT 2006 2007
(j) | Revenue recognition: |
Revenue from software services and business process outsourcing services include revenue earned from services performed on time and material basis, time bound fixed price engagements and system integration projects.
The related revenue is recognized as and when services are performed. Income from services performed by TML pending receipt of purchase orders from customers, which are invoiced subsequently on receipt thereof, are recognized as unbilled revenue.
The Companies also performs time bound fixed price engagements, under which revenue is recognized using the proportionate completion method of accounting, unless work completed cannot be reasonably estimated. Provision for estimated losses, if any, on uncompleted contracts are recorded in the period in which such losses become probable based on the current contract estimates.
Dividend income is recognized when the Company s right to receive dividend is established. Interest income is recognized on time proportion basis.
(k) | Foreign currency transactions: |
Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of transaction. Monetary items are translated at the year end rates. The exchange difference between the rate prevailing on the date of transaction and on the date of settlement as also on translation of monetary items at the end of the year, is recognised as income or expense, as the case may be, except where they relate to fixed assets where they are adjusted to the cost of fixed assets.
Any premium or discount arising at the inception of the forward exchange contract is recognized as income or expense over the life of the contract. Exchange difference accounted on a forward exchange contract entered into to hedge the foreign currency risk of a firm commitment, is the difference between the foreign currency amount of the contract translated at the exchange rate at the reporting/settlement date and the said amount translated at the later date of inception of the contract/last reporting date and is recognized as income or expense in the reporting period.
(l) | Translation and accounting of financial statement of foreign subsidiaries: |
The financial statements are translated to Indian Rupees in accordance with the guidance issued by the ICAI in the background material to AS 21 as follows:
a. | All income and expenses are translated at the average rate of exchange prevailing during the year. |
b. | Assets and liabilities are translated at the closing rate on the Balance Sheet date. |
c. | Share capital is translated at historical rate. |
d. | The resulting exchange differences are accumulated in currency translation reserve. |
(m) | Retirement benefits: |
Provision is made for gratuity (where applicable) and encashment of unavailed leave on retirement on the basis of actuarial valuation, except for two subsidiaries, viz., Tech Mahindra (Americas) Inc. and Tech Mahindra GmbH wherein provision for encashment of unavailed leave on retirement is made on actual basis. TML does not expect the difference on account of varying methods to be material. (Refer to note 9 below).
In respect of a subsidiary, viz., Tech Mahindra (R&D Services) Limited where the gratuity liability is funded, liability towards gratuity is provided for shortfall, if any, between accrued liabilities is determined on actuarial valuation and fund balance. (Refer to note 9 below).
103
ANNUAL REPORT 2006 2007
(n) | Borrowing costs: |
Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use or sale. All other borrowing costs are charged to revenue.
(o) | Income taxes: |
Tax expense comprises of current tax, deferred tax and fringe benefit tax. Current tax is measured at the amount expected to be paid to/recovered from the tax authorities, using the applicable tax rates. Deferred tax assets and liabilities are recognised for future tax consequences attributable to timing differences between taxable income and accounting income that are capable of reversal in one or more subsequent years and are measured using relevant enacted tax rates. The carrying amount of deferred tax assets at each Balance Sheet date is reduced to the extent that it is no longer reasonably certain that sufficient future taxable income will be available against which the deferred tax asset can be realized. Fringe benefit tax is recognized in accordance with the relevant provisions of the Income-tax Act, 1961 and the Guidance Note on Fringe Benefits Tax issued by the ICAI. Tax on distributed profits payable in accordance with the provisions of the Income-tax Act, 1961 is disclosed in accordance with the Guidance Note on Accounting for Corporate Dividend Tax issued by the ICAI.
(p) | Contingent liabilities: |
These, if any, are disclosed in the notes and accounts. Provision is made in the accounts if it becomes probable that any outflow of resources embodying economic benefits will be required to settle the obligation.
2. |
(a) | The consolidated financial statements present the consolidated accounts of TML, which consists of the accounts of the holding company and of the following subsidiaries. |
Name of the Subsidiary company |
Country of incorporation | Extent of Holding (%) as on March 31, 2007 |
|||
Tech Mahindra (Americas) Inc. |
United States of America | 100 | % | ||
Tech Mahindra GmbH |
Germany | 100 | % | ||
Tech Mahindra (Singapore) Pte. Limited |
Singapore | 100 | % | ||
Tech Mahindra (Thailand) Limited |
Thailand | 100 | % | ||
Tech Mahindra (R&D Services) Limited |
|||||
(TMRDL) and its following subsidiaries: |
India | 99.98 | % | ||
a) Tech Mahindra (R&D Services) Inc. |
United States of America | 99.98 | % | ||
b) Tech Mahindra (R&D Services) Pte. Limited |
Singapore | 99.98 | % |
(b) | The following subsidiaries are incorporated during the year: |
Name of the Subsidiary company |
Country of incorporation | Extent of Holding (%) as on March 31, 2007 |
|||
PT Tech Mahindra Indonesia |
Indonesia | 100 | % | ||
CanvasM Technologies Limited |
India | 80.10 | % | ||
a) CanvasM Technologies Inc. |
United States of America | 80.10 | % |
(c) | The following subsidiary is acquired during the year: |
Name of the Subsidiary company |
Country of incorporation | Extent of Holding (%) as on March 31, 2007 |
|||
iPolicy Networks Limited (iPolicy) |
India | 100 | % |
104
ANNUAL REPORT 2006 2007
(d) | TML has an investment in a subsidiary company viz. Tech Mahindra Foundation (TMF). TMF has been incorporated primarily for charitable purposes, where in the profits will be applied for promoting its objects. Accordingly, the accounts of TMF are not consolidated in these financial statements, since TML will not derive any economic benefits from its investments in TMF. |
3. | The estimated amount of contracts remaining to be executed on capital account, and not provided for as at March 31, 2007 for TML Rs. 1,291.50 Million (previous year: Rs. 421.61 Million), and Rs. Nil (previous year: Rs. 0.69 Million) for TMRDL. |
4. | Contingent liabilities: |
(i) | TML and its subsidiary TMRDL has received notices from Income Tax authorities resulting in a contingent liability of Rs. 99.84 Million and Rs. 0.55 Million respectively (previous year: Rs. 42.66 Million and Rs. 0.55 Million respectively). TML demand is on account of disallowance of software maintenance activity and deduction u/ s 80HHE amounting to Rs. 27.57 Million and a further sum of Rs. 72.27 Million relating to Section 10A. The Company has appealed before Appellate authorities and is hopeful of succeeding in the same. |
(ii) | Bank Guarantees outstanding for TML and its subsidiary TMRDL and Tech Mahindra (Singapore) Pte. Ltd. (TMSL) are Rs. 223.91 Million, Rs. 20.00 Million and Rs. Nil respectively (previous year: Rs. 90.74 Million, Rs. 20.00 Million and Rs. 3.82 Million respectively) |
(iii) | Claims from Statutory Authorities for TMRDL is Rs. 1.58 Million (Provident Fund) (previous year: Rs. 1.58 Million) |
5. | During the year, pursuant to the resolution passed by the shareholders at the Extra ordinary General Meeting held on June 01, 2006, TML consolidated its share capital from 112,685,573 equity shares of Rs. 2/- each into 22,537,114 equity shares of Rs. 10/- each. |
Further, during the year TML has issued 90,148,459 Equity Shares of Rs. 10/- each as bonus shares at the rate of 4 shares for each share held as at June 01, 2006, aggregating to Rs. 901.48 Million by way of capitalization from the balance of Profit and Loss account. |
6. | TML acquired Tech Mahindra (R&D Services) Limited (TMRDL) on November 28, 2005. The terms of purchase provides for payment of contingent consideration to all the selling shareholders, payable over three years and calculated based on achievement of specific targets. The contingent consideration is payable in cash and cannot exceed Rs. 640.78 Million. The consideration so payable would be accounted in the books of account in the year of achieving the milestones under the Agreement. Accordingly Rs. 101.15 Million (previous year: Rs. 32.83 Million) has been accounted for during the year as additional cost of acquisition, in accordance with the terms of agreement. |
The above additional cost of Rs. 101.15 Million, being the excess of cost to TML over its share of the equity in TMRDL has been added to the goodwill on consolidation under fixed assets.
Further, the goodwill arising on additional shares of TMRDL acquired during the year aggregating to Rs. 0.13 Million has also been added to the goodwill.
7. | The Company has acquired entire shareholding of iPolicy Networks Limited (iPolicy) (formerly known as iPolicy Networks Private Limited) vide Share Purchase Agreement dated January 22, 2007 for a consideration of Rs. 29.35 Million. As a result iPolicy has become wholly owned subsidiary of the company with effect from the date of acquisition. The company has made additional investment of Rs. 120.37 Million after the acquisition. |
The excess of the above cost to TML over its share of the equity in iPolicy at the date on which investment is made aggregating to Rs. 40.81 Million has been added to the goodwill on consolidation under Fixed Assets.
105
ANNUAL REPORT 2006 2007
8. | During the year, TML has entered into Global Sourcing Agreement relating to the development of a global sourcing model for strategic outsourcing services, with a customer for a term of five years. |
As per the terms of the agreement, TML has made an upfront payment of Rs. 5,249.38 Million to the customer which is unconditional, irrevocable and non-refundable. Accordingly, this payment has been disclosed as exceptional item in the Profit and Loss account.
9. | The revised Accounting Standard 15 on Employee Benefits, (AS 15) issued by the ICAI has been adopted by the company with effect from April 1, 2006. |
(i) | The disclosure as required under AS 15 regarding the Employees Retirement Benefits Plan for gratuity is as follows: |
(a) | TML and iPolicy: |
Particulars |
Rs. in Million | ||
Projected benefit obligation, beginning of the year |
190.47 | ||
Service cost |
102.94 | ||
Interest cost |
16.35 | ||
Actuarial gain |
(20.86 | ) | |
Benefits paid |
(14.28 | ) | |
Projected benefit obligation, end of the year |
274.62 | ||
The gratuity plan is not funded and the liability is provided for in the books of account.
Net periodic gratuity cost |
Rs. in Million | ||
Service cost |
102.94 | ||
Interest cost |
16.35 | ||
Amortisation of actuarial gain |
(20.86 | ) | |
Net periodic gratuity cost |
98.43 | ||
(b) | TMRDL: |
Particulars |
Rs. in Million | ||
Projected benefit obligation, beginning of the year |
29.40 | ||
Service cost |
6.17 | ||
Interest cost |
2.52 | ||
Actuarial loss |
4.88 | ||
Benefits paid |
(2.47 | ) | |
Projected benefit obligation, end of the year |
40.50 | ||
Defined Benefit obligation liability as at the Balance Sheet is wholly funded by the company |
Change in Plan Assets |
|||
Fair Value of Assets beginning of the year |
29.55 | ||
Expected return on Assets |
2.60 | ||
Actuarial gain (loss) |
(2.10 | ) | |
Benefits paid |
(2.47 | ) | |
Projected Fair Value of Assets, end of the year |
27.58 | ||
Gratuity cost for the year |
|||
Service cost |
6.17 | ||
Interest cost |
2.52 | ||
Expected return on Assets |
(2.60 | ) | |
Amortisation of actuarial loss (gain) |
6.98 | ||
Net Periodic Gratuity Cost |
13.07 | ||
106
ANNUAL REPORT 2006 2007
(c) | Assumptions: |
Discount rate |
8.00 | % | |
Rate of increase in compensation levels of covered employees |
7.50 | % |
(ii) | The disclosure as required under AS 15 regarding the Employees Retirement Benefits Plan for leave encashment is as follows: |
(a) | Disclosure: |
Particulars |
Rs. in Million | ||
Projected benefit obligation, beginning of the year |
231.66 | ||
Service cost |
73.58 | ||
Interest cost |
18.06 | ||
Actuarial loss |
30.22 | ||
Benefits paid |
(40.89 | ) | |
Projected benefit obligation, end of the year |
312.63 | ||
The leave encashment liability is not funded and is provided for in the books of account.
Net periodic leave encashment cost |
Rs. in Million | |
Service cost |
73.58 | |
Interest cost |
18.06 | |
Amortisation of actuarial loss |
30.22 | |
Net periodic leave encashment cost |
121.86 | |
(b) | Assumptions: | ||||
Discount rate | 8.00 | % | |||
Rate of increase in compensation levels of covered employees for TML | 7.75 | % |
(c) | In addition to above short term leave encashment and provident fund contribution amounting to Rs. 88.55 Million (previous year: Rs. 32.06 Million) has been provided for. |
10. | Assets acquired/given on Lease on or after April 1, 2001: |
Finance | Lease: |
TML has acquired vehicles on lease, the fair value of which aggregates to Rs. 66.95 Million. As per Accounting Standard 19 (AS-19) on Leases, issued by the ICAI the Company has capitalized the said vehicles at their fair values as the leases are in the nature of finance leases as defined in AS-19. Lease payments are apportioned between finance charge and deduction of outstanding liabilities. The details of lease rentals payable in future are as follows:
Rs. in Million | ||||
Not later than 1 year |
Later than 1 year not later than 5 years | |||
Minimum Lease rentals payable (previous year Rs. 19.15 Million and Rs. 19.30 Million respectively) |
12.98 | 4.41 | ||
Present value of Lease rentals payable (previous year Rs. 17.37 Million and Rs. 15.47 Million respectively) |
11.77 | 3.62 |
107
ANNUAL REPORT 2006 2007
Operating Lease:
(a) | The assets taken on Operating Lease are as detailed below: |
i) | TML has taken vehicles on operating lease for a period of three to four years. The lease rentals recognised in the Profit and Loss Account for the year are Rs. 0.43 Million (previous year: Rs. Nil). |
The future lease payments of operating lease are as follows: |
Rs. in Million | ||||
Not later than 1 year |
Later than 1 year not later than 5 years | |||
Minimum Lease rentals payable (Previous year |
1.29 | 2.97 |
ii) | Tech Mahindra (Americas) Inc.(TMA) has taken office space on operating lease. The lease rentals recognized in the Profit and Loss account for the year are Rs. 3.34 Million. The future lease payments of operating lease are as follows: |
Rs. in Million | ||||
Not later than 1 year |
Later than 1 year not later than 5 years | |||
Minimum Lease rentals payable (previous year |
3.65 | |
In June 2005 TMA entered into a sublease agreement which expires in September 2007. Future minimum rent income under this sublease for the year ended March 31, 2007 is Rs. 2.34 Million |
iii) | Tech Mahindra ( Thailand) Limited ( TMTL) has taken office premises on operating lease. The lease rentals recognized in the Profit and Loss account for the year are Rs. 0.93 Million. The future lease payments of operating lease are as follows: |
Rs. in Million | ||||
Not later than 1 year |
Later than 1 year not later than 5 years | |||
Minimum Lease rentals payable (previous year |
1.49 | 2.99 |
iv) | Tech Mahindra GmbH has taken office premises on operating lease. The lease rentals recognized in the Profit and Loss account for the year are Rs. 3.37 Million. The future lease payments of operating lease are as follows: |
Rs. in Million | ||||
Not later than 1 year |
Later than 1 year not later than 5 years | |||
Minimum Lease rentals payable (previous year |
1.05 | |
(b) | The assets given on Operating Lease are as detailed below: |
i) | The assets given by TMRDL on Operating Lease are as detailed below: |
Rs. in Million | ||||||||
Description of Asset |
Gross Carrying amount 31-03-2007 |
Accumulated Depreciation 01-04-2006 |
Depreciation for the year |
Acc. Impairment loss | ||||
Building Block C in Hosur Road, Bangalore. |
50.17 | 10.81 | 3.34 | |
108
ANNUAL REPORT 2006 2007
ii) | Contingent rent recognized in the Profit and Loss account is Rs. Nil. |
iii) | TMRDL has various operating leases, mainly for office buildings, that are renewable on a periodic basis. Gross rental expenses for the year ended on March 31, 2007 are Rs. 11.32 Million. |
The non-cancellable lease rental payable for these leases is as under:
For the year ending on: |
Rs. in Million | |
March 31, 2008 |
2.36 | |
March 31, 2009 |
2.41 | |
March 31, 2010 |
1.10 | |
5.87 |
11. | TML has recently strengthened its presence in the Telecom Equipment Manufacturers (TEM) segment directly, and also through its recently acquired subsidiaries. With the focus on customers in the Telecom Service Providers (TSP) and TEM segments of the telecom vertical, TML has reorganised its management structure to cater to its business segments. Consequently TML is of the view that as per the requirements of Accounting Standard 17 on Segment Reporting (AS 17), issued by the ICAI, the primary segment of TML is business segment by category of customers in the TSP, TEM, Business process outsourcing (BPO) and other sectors and the secondary segment is the geographical segment by location of its customers. |
The disclosures as required by AS 17 for the previous year have been rearranged on a consolidated basis to conform to the classification done for the current year.
The Accounting principles consistently used in the preparation of the financial statements are also applied to record income and expenditure in the individual segments. There are no inter-segment transactions during the year.
FOR THE YEAR ENDED MARCH 31, 2007
(A) | PRIMARY SEGMENTS: |
Rs. in Million | |||||||||||
Particulars |
TELECOM SERVICE PROVIDER |
TELECOM EQUIPMENT MANUFACTURER |
BUSINESS PROCESS OUTSOURCING |
OTHERS | TOTAL | ||||||
Revenues |
26,664.01 | 1,832.39 | 140.65 | 653.31 | 29,290.36 | ||||||
Less: Direct Expenses |
15,707.07 | 1,189.83 | 155.60 | 483.19 | 17,535.69 | ||||||
Segmental Operating Income |
10,956.94 | 642.56 | (14.95 | ) | 170.12 | 11,754.67 | |||||
Less: Unallocable expenses |
|||||||||||
Depreciation |
515.49 | ||||||||||
Interest |
61.17 | ||||||||||
Other unallocable expenses |
4,388.49 | ||||||||||
Total unallocable expenses |
4,965.15 | ||||||||||
Operating Income |
6,789.52 | ||||||||||
Add: Other income |
76.94 | ||||||||||
Net profit before tax |
6,866.46 | ||||||||||
Less: Provision for taxation |
|||||||||||
Current tax |
648.39 | ||||||||||
Deferred tax |
35.59 | ||||||||||
Fringe benefit tax |
56.29 | ||||||||||
Net profit before minority interest and exceptional item |
6,126.19 | ||||||||||
Exceptional item (Refer to note8) |
5,249.38 | ||||||||||
Minority interest |
0.88 | ||||||||||
Net profit for the year |
875.93 | ||||||||||
Excess provision for income tax in respect of earlier years written back (Refer to note 15 below) |
339.50 | ||||||||||
Net profit |
1,215.43 | ||||||||||
109
ANNUAL REPORT 2006 2007
Segregation of assets, liabilities, depreciation and other non-cash expenses into various primary segments has not been done as the assets are used interchangeably between segments and TML is of the view that it is not practical to reasonably allocate liabilities and other non-cash expenses to individual segments and an adhoc allocation will not be meaningful.
(B) | SECONDARY SEGMENTS: |
Revenues from secondary segments are as under:
Sector |
Rs. in Million | |
Europe |
21,237.76 | |
USA |
5,369.80 | |
Asia Pacific |
2,682.80 | |
29,290.36 | ||
Segregation of assets into secondary segments has not been done as the assets are used interchangeably between segments. Consequently the carrying amounts of assets by location of assets are not given.
FOR THE YEAR ENDED MARCH 31, 2006
(A) | PRIMARY SEGMENTS: |
Rs. in Million | ||||||||
Particulars |
TELECOM SERVICE PROVIDER |
TELECOM EQUIPMENT MANUFACTURER |
OTHERS | TOTAL | ||||
Revenues |
11,322.34 | 719.18 | 385.14 | 12,426.66 | ||||
Less: Direct expenses |
6,659.82 | 462.42 | 274.23 | 7,396.47 | ||||
Segmental Operating Income |
4,662.52 | 256.76 | 110.91 | 5,030.19 | ||||
Less: Unallocable expenses |
||||||||
Depreciation |
397.48 | |||||||
Other unallocable expenses |
2,351.49 | |||||||
Total unallocable expenses |
2,748.97 | |||||||
Operating income |
2,281.22 | |||||||
Add: Other income |
340.13 | |||||||
Net profit before tax |
2,621.35 | |||||||
Less: Provision for taxation |
||||||||
Current tax |
207.68 | |||||||
Deferred tax |
24.53 | |||||||
Fringe benefit tax |
35.39 | |||||||
Net profit before minority interest |
2,353.75 | |||||||
Minority interest |
0.04 | |||||||
Net profit for the year |
2,353.71 | |||||||
Segregation of assets, liabilities, depreciation and other non-cash expenses into various primary segments has not been done as the assets are used interchangeably between segments and TML is of the view that it is not practical to reasonably allocate liabilities and other non-cash expenses to individual segments and an adhoc allocation will not be meaningful.
110
ANNUAL REPORT 2006 2007
(B) | SECONDARY SEGMENTS: |
Revenues from secondary segments are as under:
Sector |
Rs. in Million | |
Europe | 9,532.24 | |
USA | 2,226.41 | |
Asia Pacific | 668.01 | |
12,426.66 | ||
Segregation of assets into secondary segments has not been done as the assets are used interchangeably between segments. Consequently the carrying amounts of assets by location of assets are not given.
12. (A) | TML has instituted Employee Stock Option Plan 2000 (ESOP) for its employees and directors. For this purpose it had created a trust viz, MBT ESOP trust. In terms of the said Plan, the trust has granted options to the employees and directors in form of warrant which vest at the rate of 33.33% on each successive anniversary of the grant date. The options can be exercised over a period of 5 years from the date of grant. Each warrant carries with it the right to purchase one equity share of TML at the exercise price determined by the trust on the basis of fair value of the equity shares at the time of grant. |
The details of the options are as under:
March 31, 2007 |
March 31, 2006 | |||
Options outstanding at the beginning of the year |
1,220,000 | 2,229,740 | ||
Options granted during the year |
| 345,000 | ||
Options lapsed during the year |
18,480 | 313,340 | ||
Options cancelled during the year |
37,860 | 259,090 | ||
Options exercised during the year |
674,540 | 782,310 | ||
Options outstanding at the end of the year ** |
489,120 | 1,220,000 |
** | Out of the options outstanding at the end of the year, 100,420 (previous year 504,300) options have vested, which have not been exercised. |
(B) | TML has instituted Employee Stock Option Plan 2004 (ESOP 2004) for its employees. In terms of the said Plan, the Compensation Committee has granted options to employees of TML. The options are divided into Upfront options and Performance options. The Upfront Options are divided into three sets which will entitle holders to subscribe to option shares at the end of First year, Second year and Third year. The vesting of the Performance Options will be decided by the Compensation Committee based on the performance of employees. |
The details of the options are as under: |
March 31, 2007 |
March 31, 2006 | |||
Options outstanding at the beginning of the year |
10,219,860 | 10,219,860 | ||
Options granted during the year |
| | ||
Options lapsed during the year |
| | ||
Options cancelled during the year |
| | ||
Options exercised during the year |
4,542,159 | | ||
Options outstanding at the end of the year ** |
5,677,701 | 10,219,860 |
111
ANNUAL REPORT 2006 2007
** | Options granted and outstanding at the end of the year are 5,677,701 (previous year 10,219,860). Nil (previous year 2,271,078) options have vested as at the end of the year. |
(C) | TML has instituted Employee Stock Option Plan 2006 (ESOP 2006) for the employees and directors of TML and its subsidiary companies. In terms of the said Plan, the Compensation Committee has granted options to the employees of TML. The vesting of the options is 10%, 15%, 20%, 25% and 30% of total options granted after 12, 24, 36, 48 and 60 months, respectively from the date of grant. The maximum exercise period is 7 years from the date of grant. |
The details of the options are as under:
March 31, 2007 |
March 31, 2006 | |||
Options outstanding at the beginning of the year |
4,612,380 | | ||
Options granted during the year |
656,625 | 4,633,680 | ||
Options lapsed during the year |
| | ||
Options cancelled during the year |
402,890 | 21,300 | ||
Options exercised during the year |
372,999 | | ||
Options outstanding at the end of the year |
4,493,116 | 4,612,380 | ||
Weighted average share price of the above options on the date of the exercise |
Rs. 83 | Rs. 83 |
Out of the options outstanding at the end of the year 56,456 options have vested and has not been exercised.
(D) | TML uses the intrinsic value-based method of accounting for stock options granted after April 1, 2005. Had the compensation cost for TMLs stock based compensation plan been determined in the manner consistent with the fair value approach, TMLs consolidated net income would be lower by Rs. 7.35 Million (previous year: Rs. 0.03 Million) and earnings per share as reported would be lower as indicated below: |
Rs. in Million | ||||
March 2007 | March 2006 | |||
Net profit |
||||
Net Profit after Tax and before exceptional items |
6,126.19 | 2,353.75 | ||
Less : Exceptional items |
5,249.38 | | ||
: Minority Interest |
0.88 | 0.04 | ||
Net Profit for the year |
875.93 | 2,353.71 | ||
Add: Excess provision for income tax in respect of earlier years written back |
339.50 | | ||
Net Profit |
1,215.43 | 2,353.71 | ||
Less: Total stock-based employee compensation expense determined under fair value base method. |
7.35 | 0.03 | ||
Adjusted Net Profit |
1,208.08 | 2,353.68 | ||
Basic earnings per share (in Rs.) |
||||
As reported |
10.56 | 22.77 | ||
Adjusted |
10.50 | 22.77 | ||
Diluted earnings per share (in Rs.) |
||||
As reported |
9.32 | 18.72 | ||
Adjusted |
9.26 | 18.72 | ||
The fair value of each warrant is estimated on the date of grant based on the following assumptions: |
||||
Dividend yield (%) |
6.89 | 6.89 | ||
Expected life |
5 years | 5 years | ||
Risk free interest rate (%) |
7.72 | 7.12 | ||
Volatility (%) |
62.69 | |
112
ANNUAL REPORT 2006 2007
13. | As required under Accounting Standard 18 (AS18), following are details of transactions during the year with the related parties of the Companies as defined in AS18: |
(a) | List of Related Parties and Relationships |
Name of Related Party |
Relation | |
Mahindra & Mahindra Limited British Telecommunications, plc. Mahindra BT Investment Company (Mauritius) Limited |
Holding Company Promoter holding more than 20% stake Promoter group company | |
Tech Mahindra Foundation |
Subsidiary Company | |
Mahindra Engineering and Chemical Products Limited Mahindra Engineering Design and Development Company Limited Bristlecone India Limited |
Fellow Subsidiary Company
Fellow Subsidiary Company
Fellow Subsidiary Company | |
Mr. Vineet Nayyar Vice Chairman, Managing Director and Chief Executive Officer |
Key Management Personnel |
(b) | Related Party Transactions |
Rs. in Million | ||||||||||||
Transactions |
Promoter Companies |
Subsidiary Company |
Fellow Subsidiary Companies |
Key Management Personnel |
||||||||
Expenses reimbursed: Paid/ (Received) |
(347.99 | ) | | | | |||||||
[(83.40 | )] | [ | ] | [25.50 | ] | [ | ] | |||||
Income from Services & Management Fees |
19,001.00 | | 2.98 | | ||||||||
[8,545.28 | ] | [ | ] | [3.73 | ] | [ | ] | |||||
Services received |
(24.33 | ) | | | | |||||||
[ | ] | [ | ] | [ | ] | [ | ] | |||||
Sub-contracting cost |
| | 21.19 | | ||||||||
[ | ] | [ | ] | [ | ] | [ | ] | |||||
Payment for Upfront Discount |
5,249.38 | | | | ||||||||
[ | ] | [ | ] | [ | ] | [ | ] | |||||
Dividend Paid |
1,143.30 | | | 0.80 | ||||||||
[122.60 | ] | [ | ] | [ | ] | [ | ] | |||||
Investment |
| | | | ||||||||
[ | ] | [0.50 | ] | [ | ] | [ | ] | |||||
Purchase of Fixed Asset |
8.72 | | | | ||||||||
[ | ] | [ | ] | [ | ] | [ | ] | |||||
Stock Options |
| | | | * | |||||||
[ | ] | [ | ] | [ | ] | [ | ] | |||||
Donation |
| 55.66 | | | ||||||||
[ | ] | [150.00 | ] | [ | ] | [ | ] | |||||
Salary and Perquisites |
| | | 24.36 | ||||||||
[ | ] | [ | ] | [ | ] | [17.10 | ] | |||||
Debit/(Credit) balances (Net) outstanding as on March 31, 2007 |
5,349.08 | | 0.70 | | ||||||||
[3,031.74 | ] | [ | ] | [(5.28 | )] | [ | ] |
113
ANNUAL REPORT 2006 2007
(Figures in brackets [ ]are for the previous period/year)
* | Options exercised during the year are for 1,514,053 equity shares and options granted and outstanding as at year end are 1,892,567. |
Out of the above items transactions with Promoter companies and Key Management Personnel in the excess of 10% of the total related party transactions are as under:
Rs. in Million | ||||||
Transactions |
For the year ended March 31, 2007 |
For the year ended March 31, 2006 |
||||
Expenses reimbursed |
||||||
Promoter Companies |
||||||
British Telecommunications, plc. |
(358.71 | ) | (87.29 | ) | ||
Income from Services |
||||||
Promoter Companies |
||||||
British Telecommunications, plc. |
18,981.93 | 8,529.07 | ||||
Paid for Services received |
||||||
Promoter Companies |
||||||
Mahindra & Mahindra Limited |
24.33 | | ||||
Payment for Upfront Discount |
||||||
Promoter Companies |
||||||
British Telecommunications, plc. |
5,249.38 | | ||||
Dividend Paid |
||||||
Promoter Companies |
||||||
Mahindra & Mahindra Limited |
633.62 | 69.12 | ||||
British Telecommunications plc. |
473.72 | 52.14 | ||||
Purchase of Fixed Assets |
||||||
Promoter Companies |
||||||
Mahindra & Mahindra Limited |
8.72 | | ||||
Donation |
||||||
Tech Mahindra Foundation |
55.66 | 150.00 | ||||
Salary and Perquisites |
||||||
Key Management Personnel |
||||||
Mr. Vineet Nayyar |
24.36 | 17.10 |
Other related parties of the Company are as under:
| Automartindia Limited |
| Bristlecone Limited |
| Bristlecone Inc. |
| Mahindra Acres Consulting Engineers Limited |
| Mahindra Ashtech Limited |
| Bristlecone GmbH |
| Bristlecone Singapore Pte. Limited |
| Mahindra (China) Tractor Company Limited |
114
ANNUAL REPORT 2006 2007
| Mahindra Europe s.r.l. |
| Mahindra Gujarat Tractor Limited |
| Mahindra Holdings & Finance Limited |
| Mahindra Holidays & Resorts India Limited |
| Mahindra Holidays & Resorts (USA) Inc. |
| Mahindra Insurance Brokers Limited |
| Mahindra Intertrade Limited |
| Bristlecone UK Limited |
| Mahindra International Limited |
| Mahindra Logisoft Business Solutions Limited |
| Mahindra Middleeast Electrical Steel Service Centre (FZE) |
| Mahindra & Mahindra Financial Services Limited |
| Mahindra & Mahindra South Africa (Pty) Limited |
| Mahindra Overseas Investment Company (Mauritius) Limited |
| Mahindra Renault Pvt. Limited |
| Mahindra Steel Service Centre Limited |
| Mahindra Shubhlabh Services Limited |
| Mahindra SAR Transmission Pvt Limited |
| Mahindra USA Inc. |
| Mahindra Ugine Steel Company Limited |
| NBS International Limited |
| Stokes Group Limited |
| Jensand Limited |
| Stokes Forgings Dudley Limited |
| Stokes Forgings Limited |
| Plexion Technologies (India) Private Limited |
| Plexion Technologies (UK) Limited |
| Plexion Technologies GmbH |
| Plexion Technologies Inc. |
| Mahindra Forgings Overseas Limited |
| Mahindra Forgings International Limited |
| Mahindra Forgings Mauritus Limited |
| Mahindra Forgings Global Limited |
| Gesenkschmiede Schneider GmbH |
| Falkenroth Umformtechnik GmbH |
115
ANNUAL REPORT 2006 2007
| Falkenroth Grundstucksgesellschaft GmbH |
| Jeco-Jellinghaus GmbH |
| Jeco Holding AG |
| DGP Hinoday Industries Limited |
| Schöneweiss & Co. GmbH |
| Fried. Hunninghaus GmbH & Co. KG |
| Fried Hunninghaus GmbH |
| Mahindra Stokes Holdings Company Limited |
| Mahindra Gesco Developers Limited |
| Mahindra Infrastructure Developers Limited |
| Mahindra World City (Jaipur) Limited |
| Mahindra Integrated Township Limited |
| Mahindra World City Developers Limited |
| Mahindra World City Developers (Maharashtra) Limited |
There have been no transactions with the aforesaid companies during the period.
14. | The tax effect of significant timing differences that has resulted in deferred tax assets and liabilities are given below: |
Deferred Tax
Rs. in Million | ||||||||
March 31, 2007 | March 31, 2006 | |||||||
(a) |
Deferred tax liability: | |||||||
Depreciation | (1.40 | ) | (1.44 | ) | ||||
(b) |
Deferred tax asset: | |||||||
Gratuity, leave encashment etc. | 10.60 | 5.77 | ||||||
Doubtful debts | 4.23 | 0.54 | ||||||
Carry forward of Net operating losses of a subsidiary | 60.84 | 106.81 | ||||||
Total deferred tax asset (net) | 74.27 | 111.68 | ||||||
Tech Mahindra (Americas) Inc. has net operating losses aggregating to Rs. 66.19 Million which are available to be carried forward. As stated in the audited financials of Tech Mahindra (Americas) Inc., expects to be able to utilize the entire deferred tax benefit on the said losses.
15. | Consequent to completion of Income-tax assessments by the tax authorities in the United Kingdom for the financial years 2001-02, 2002-03 and 2003-04 TML has received tax refunds aggregating to Rs. 320.74 Million (including interest aggregating to Rs. 36.79 Million). Accordingly, the excess provision for Income-tax relating to the aforesaid years has been written back to the Profit and Loss Account and the interest received is disclosed under Other Income. |
16. | Exchange gain/(loss)(net) accounted during the year: |
(a) | TML and its subsidiary TMRDL enters into foreign exchange forward contracts to offset the foreign currency risk arising from the amounts denominated in currencies other than the Indian rupee. The counter party to the Companys foreign currency forward contracts is generally a bank. These contracts are entered into to hedge the foreign currency risks of firm commitments. |
116
ANNUAL REPORT 2006 2007
(b) | The following are the outstanding Forward Exchange Contracts entered into by TML and its subsidiary TMRDL as on March 31, 2007: |
Currency |
Amount outstanding at year end in Foreign currency in Million |
Amount outstanding at year end in Rs. in Million |
Exposure to Buy/Sell | |||
UK PoundGBP |
115.25 | 9,820.45 | Sell | |||
US DollarUSD |
23.14 | 1,021.40 | Sell |
(c) | The year end foreign currency exposures that have not been specifically hedged by a derivative instrument or otherwise are given below: |
Amounts receivable in foreign currency on account of the following:
March 31, 2007 | March 31, 2007 | |||
Rs. in Million | Foreign currency in Million | |||
Debtors |
882.91 | Aud 0.07 | ||
Cad 0.02 | ||||
Eur 1.28 | ||||
Nzd 0.19 | ||||
Usd 17.89 | ||||
Loans and advances |
11.86 | Aud 0.02 | ||
Eur 0.01 | ||||
Twd 0.02 | ||||
Usd 0.25 | ||||
Cash/Bank balances (Net) |
99.41 | Usd 0.42 | ||
Aud 0.48 | ||||
Nzd 0.37 | ||||
Twd 39.16 | ||||
Eur 0.02 |
Amounts payable in foreign currency on account of the following:
March 31, 2007 | March 31, 2007 | |||
Rs. in Million | Foreign currency in Million | |||
Creditors (Net) |
188.40 | Aud 0.05 | ||
Eur 0.02 | ||||
Gbp 1.32 | ||||
Usd 1.68 | ||||
Other current liabilities (Net) |
565.63 | Gbp 6.64 |
(d) | The amount of exchange difference in respect of forward exchange contracts to be recognized in the Profit and Loss account for subsequent accounting period aggregates to Rs. 143.33 Million (Gain) [(previous year: Rs. 51.40 Million) (Gain)] |
(e) | Exchange gain/(loss)(net) accounted during the year: |
Rs. in Million | ||||||
Particulars |
March 31, 2007 | March 31, 2006 | ||||
Income from services |
(44.82 | ) | (68.51 | ) | ||
Others |
(108.77 | ) | 148.03 |
117
ANNUAL REPORT 2006 2007
17. | The public issue of TMLs Equity Shares consisting of a fresh issue of 3,186,480 Equity Shares by TML and an offer for sale of 9,559,520 Equity Shares, by certain existing Shareholders of TML was made pursuant to a prospectus dated August 11, 2006. The equity shares were issued for cash at a price of Rs. 365 per Equity Share (including a share (securities) premium of Rs. 355 per Equity Share). |
The statement of proceeds from the public issue and utilisation thereof is as under:
Rs. in Million | ||||||
Particulars |
No of shares | Price | Amount | |||
Proceeds received after payment to selling shareholders |
3,186,480 | 365 | 1,163.07 | |||
Less : Expenses (Net) relating to the issue after recovery from the selling shareholders: |
||||||
Professional fees |
35.46 | |||||
Advertising expenses |
7.92 | |||||
Rates and taxes |
0.85 | |||||
Miscellaneous expenses |
1.07 | |||||
Printing and stationery |
3.76 | |||||
Traveling expenses |
2.89 | |||||
Net Proceeds |
1,111.12 | |||||
Deployment up to March 31, 2007 |
||||||
Used for the capitailsation work for Hinjewadi |
281.39 | |||||
Held under current investments in mutual fund units |
727.35 | |||||
Held under bank fixed deposits pending utilization |
102.38 | |||||
1,111.12 | ||||||
18. | Earning Per Share is calculated as follows: |
Rs. in Million | ||||
Particulars |
Year ended March 31, 2007 |
Year ended March 31, 2006 | ||
Net Profit after tax and before exceptional item |
6,126.19 | 2,353.75 | ||
Less: Exceptional item |
5,249.38 | | ||
Profit after tax and exceptional item |
876.81 | 2,353.75 | ||
Less: Minority Interest |
0.88 | 0.04 | ||
Add: Excess provision for tax in respect of earlier years written back |
339.50 | | ||
Net Profit attributable to shareholders |
1,215.43 | 2,353.71 | ||
Equity Shares outstanding as at the year end (in Nos.) |
121,216,701 | 103,998,631 | ||
Weighted average Equity shares outstanding as at the year end (in Nos) |
115,071,417 | 103,368,153 | ||
Consolidation of five Shares of Rs. 2/- each into one Share of |
| 20,673,631 | ||
Bonus Shares allotted during the year ended March 31, 2006* |
| 82,694,522 | ||
Weighted average number of Equity Shares used as denominator for calculating Basic Earnings Per Share |
115,071,417 | 103,368,153 | ||
Add: Diluted number of Shares |
||||
ESOP outstanding at the end of the year |
15,381,480 | 16,171,568 | ||
Shares issued pending subscription |
| 6,152,173 | ||
Weighted average number of Equity Shares used as denominator for calculating Diluted Earnings Per Share |
130,452,897 | 125,691,894 | ||
Nominal Value per Equity Share (in Rs.) |
10.00 | 10.00 |
118
ANNUAL REPORT 2006 2007
18. | Earning Per Share is calculated as follows: (Contd.) |
Rs. in Million | ||||
Year ended March 31, 2007 |
Year ended March 31, 2006 | |||
Before exceptional item |
||||
Earnings Per Share (Basic) (in Rs.) |
56.18 | 22.77 | ||
Earnings Per Share (Diluted) (in Rs.) |
49.56 | 18.72 | ||
After exceptional item |
||||
Earnings Per Share (Basic) (in Rs.) |
10.56 | 22.77 | ||
Earnings Per Share (Diluted) (in Rs.) |
9.32 | 18.72 |
* | In accordance with Accounting Standard20 Earnings Per Share (AS 20) issued by the ICAI the weighted average number of equity shares (the denominator) used for calculation of earnings per equity share for the period ended March 31, 2006, is after considering consolidation of five shares of Rs. 2/- each into one share of Rs. 10/- each and bonus shares, which was approved by the members at the Extra-ordinary General Meeting held on June 1, 2006. |
19. | Details of Investments Purchased and Sold during the year by TML: |
Particulars |
March 31, 2007 Units |
March 31, 2007 Cost | ||
Rs. in Million | ||||
ABN AMRO MUTUAL FUND |
||||
ABN AMRO FTP Series 3 Qtr Div. |
20,000,000.00 | 200.00 | ||
ABN Fixed Term Qtr Plan Dividend |
10,232,838.06 | 102.33 | ||
BIRLA SUNLIFE MUTUAL FUND |
||||
Birla Cash Plus Institutional Premium (Weekly Dividend) |
23,934,181.45 | 239.98 | ||
CHOLA MUTUAL FUND |
||||
Chola FMP Series 3 Qtrly Plan III Dividend |
15,245,002.40 | 152.45 | ||
DEUTSCHE MUTUAL FUND |
||||
Deutsche Mutual Fund |
24,908,089.15 | 250.00 | ||
DSP MERRILL LYNCH MUTUAL FUND |
||||
Liquid Institutional Plan Weekly Dividend |
99,925.03 | 100.00 | ||
GRINDLAYS MUTUAL FUND |
||||
Grindlays Cash Fund -Institutional Weekly Dividend |
4,854,604.59 | 50.00 | ||
HDFC MUTUAL FUND |
||||
HDFC Cash Management Fund Weekly Dividend |
51,724,347.07 | 550.00 | ||
HSBC MUTUAL FUND |
||||
HSBC Cash Fund Institutional Monthly Dividend |
29,919,286.11 | 301.91 | ||
HSBC Short Term Institutional Dividend |
24,867,703.82 | 250.00 | ||
ING VYSYA MUTUAL FUND |
||||
ING Vysya Mutual Fund |
13,377,807.11 | 150.00 | ||
JM MUTUAL FUND |
||||
JM Fixed Maturity FundIII Qtr Plan Dividend |
10,000,000.00 | 100.00 | ||
KOTAK MUTUAL FUND |
||||
Kotak FMP 6M Series 1Dividend |
5,000,000.00 | 50.00 | ||
Liquid (Institutional Premium) Weekly Dividend |
34,860,612.17 | 350.00 | ||
Liquidity Manager PlusWeekly Dividend |
99,911.15 | 100.00 |
119
ANNUAL REPORT 2006 2007
March 31, 2007 Units |
March 31, 2007 Cost | |||
Rs. in Million | ||||
PRINCIPAL MUTUAL FUNDS |
||||
Liquid OptionInstitutional Plan Weekly Dividend Reinvestment |
9,997,300.73 | 100.00 | ||
PRUDENTIAL ICICI MUTUAL FUND |
||||
FMP 3 Months Plan C Retail Dividend |
5,000,000.00 | 50.00 | ||
Institutional Liquid Plan Super Institutional Weekly Dividend |
35,047,829.57 | 350.71 | ||
RELIANCE MUTUAL FUND |
||||
Reliance Fixed Horizon MonthlyDividend |
5,000,000.00 | 50.00 | ||
Reliance Liquidity fundWeekly Dividend |
4,997,351.40 | 50.00 | ||
Reliance Short Term fundDividend Plan |
14,343,498.09 | 149.71 | ||
SBI MUTUAL FUND |
||||
SBI Magnum Institutional Income Savings Weekly Dividend |
18,926,847.82 | 200.00 | ||
STANDARD CHARTERED MUTUAL FUND |
||||
Standard Chartered Fixed Maturity 5th Plan Growth |
5,000,000.00 | 50.00 | ||
Standard Chartered Liquidity Manager Plus Daily Dividend |
50,829.42 | 50.83 | ||
TATA MUTUAL FUND |
||||
Tata Liquid Super High Investment Fund Weekly Dividend |
174,172.10 | 200.00 |
20. | One of the subsidiaries viz., iPolicy, entered into an Intellectual Property Asset Purchase Agreement (the agreement) with iPolicy Networks Inc., on January 23, 2007. Pursuant to the above agreement along with ancillary agreements, the said subsidiary has acquired certain Copyright, Patent, Inventions and Trademark etc. as specified in the agreements (collectively referred as Intellectual Property Rights) for Rs. 76.14 Million. The consideration payable has been deposited in an Escrow Account with a bank pursuant to the Escrow Agreement dated January 22, 2007 and the amount will be released to iPolicy Networks Inc., on satisfaction of certain conditions/clarifications, as stipulated in the agreement. |
21. | Previous year figures have been regrouped wherever necessary, to conform to the current periods classification. |
Signatures to Schedules I to XIII
As per our attached report of even date | ||||||
For Deloitte Haskins & Sells | For Tech Mahindra Limited | |||||
Chartered Accountants | ||||||
Anand G.Mahindra | Vineet Nayyar | |||||
Chairman | Vice Chairman, Managing Director & CEO | |||||
A. B. Jani | Al-Noor Ramji | Anupam Puri | Bharat Doshi | |||
Partner | Director | Director | Director | |||
Clive Goodwin | Paul Zuckerman | Dr. Raj Reddy | ||||
Director | Director | Director | ||||
Ulhas N. Yargop | ||||||
Director | ||||||
Vikrant Gandhe | ||||||
Mumbai, Dated: 15th May, 2007 | Boston; Dated: 7th May 2007 | Asst. Company Secretary |
120
ANNEXURE D
VENTURBAY CONSULTANTS PRIVATE LIMITED
Cash flow statement for the year ended |
March 31, 2009 Rs. |
March 31, 2008 Rs. |
||||||
Particulars |
||||||||
A Cash flow from operating activities |
||||||||
Net profit/(loss) before taxation and exceptional item |
(31,979 | ) | (8,538 | ) | ||||
Adjustments for Preliminary Expenses written off |
26,479 | 4,414 | ||||||
26,479 | 4,414 | |||||||
Operating profit before working capital changes |
(5,500 | ) | (4,124 | ) | ||||
Adjustments for: |
||||||||
Trade and other payables |
2,595 | 1,124 | ||||||
2,595 | 1,124 | |||||||
Cash generated from operations before tax |
(2,905 | ) | (3,000 | ) | ||||
Income taxes paid |
| | ||||||
| | |||||||
Net cash from / (used in) operating activities |
(2,905 | ) | (3,000 | ) | ||||
B Cash flow from investing activities |
||||||||
Dividend received on current investments |
| | ||||||
Net cash from /(used in) investing activities |
| | ||||||
C Cash flow from financing activities |
||||||||
Proceeds from issue of shares (including Securities Premium) |
| | ||||||
Share application money |
| | ||||||
Interest paid |
| | ||||||
Net cash from / (used in) financing activities |
| | ||||||
Net increase/(decrease) in cash and cash equivalents (A+B+C) |
(2,905 | ) | (3,000 | ) | ||||
Cash and cash equivalents at the beginning of the period |
51,427 | 54,427 | ||||||
Cash and cash equivalents at the end of the period |
48,522 | 51,427 | ||||||
Notes:
1 | Components of cash and cash equivalents include cash, bank balances in current and deposit accounts as disclosed under Schedule 2 of the accounts. |
March 31, 2009 | March 31, 2008 | |||||
2 | Cash and cash equivalents include: |
|||||
Cash and Bank Balances |
48,522 | 51,427 | ||||
Total Cash and Cash equivalents |
48,522 | 51,427 | ||||
As per our attached report of even date |
||||
For Deloitte Haskins & Sells |
For Venturbay Consultants Private Limited | |||
Chartered Accountants |
||||
Milind Kulkarni | Atanu Sarkar | |||
Hemant M. Joshi |
Director | Director | ||
Partner |
Place: Pune | Place: Pune | ||
Dated: April 24, 2009 |
Date: April 24, 2009 | Date: April 24, 2009 |
121
VENTURBAY CONSULTANTS PRIVATE LIMITED
Balance Sheet as at |
Schedule | March 31, 2009 Rs. |
March 31, 2008 Rs. | |||
SOURCES OF FUNDS: |
||||||
SHARE HOLDERS FUNDS: |
||||||
Capital |
1 | 110,000 | 110,000 | |||
110,000 | 110,000 | |||||
APPLICATION OF FUNDS: |
||||||
CURRENT ASSETS, LOANS & ADVANCES: |
2 | |||||
Cash in hand |
| 51,427 | ||||
Bank balances |
48,522 | | ||||
48,522 | 51,427 | |||||
LESS: CURRENT LIABILITIES AND PROVISIONS: |
||||||
Current liabilities |
3 | 7,047 | 4,452 | |||
Provisions |
| | ||||
Net Current assets |
41,475 | 46,975 | ||||
MISCELLANEOUS EXPENDITURE |
||||||
(To the extent not written off or adjusted) |
||||||
Preliminary expenses |
5 | | 26,479 | |||
Debit balance in profit and loss account |
4 | 68,525 | 36,546 | |||
110,000 | 110,000 | |||||
SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS: |
7 |
As per our attached report of even date | ||||
For Deloitte Haskins & Sells |
For Venturbay Consultants Private Limited | |||
Chartered Accountants |
||||
Milind Kulkarni | Atanu Sarkar | |||
Hemant M. Joshi |
Director | Director | ||
Partner |
Place: Pune | Place: Pune | ||
Dated: April 24, 2009 |
Date: April 24, 2009 | Date: April 24, 2009 |
122
VENTURBAY CONSULTANTS PRIVATE LIMITED
Profit and Loss account for the year ended |
Schedule | March 31, 2009 Rs. |
March 31, 2008 Rs. | |||
INCOME: |
| | ||||
| | |||||
EXPENDITURE: |
||||||
Preliminary expenses written off |
5 | 26,479 | 4,414 | |||
Administrative and other expenses |
6 | 5,500 | 4,124 | |||
31,979 | 8,538 | |||||
LOSS/ (PROFIT) BEFORE TAXATION |
31,979 | 8,538 | ||||
Provision for tax |
| | ||||
LOSS/ (PROFIT) FOR THE YEAR |
31,979 | 8,538 | ||||
Balance brought forward from previous year |
36,546 | 28,008 | ||||
Balance carried to Balance sheet |
68,525 | 36,546 | ||||
Earning/Loss per share (refer note no. 9 of the schedule 7) |
||||||
Loss Per Share |
||||||
- Basic |
2.91 | 0.78 | ||||
- Diluted |
2.91 | 0.78 | ||||
SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS: |
7 |
As per our attached report of even date | ||||
For Deloitte Haskins & Sells |
For Venturbay Consultants Private Limited | |||
Chartered Accountants |
||||
Milind Kulkarni | Atanu Sarkar | |||
Hemant M. Joshi |
Director | Director | ||
Partner |
Place: Pune | Place: Pune | ||
Dated: April 24, 2009 |
Date: April 24, 2009 | Date: April 24, 2009 |
123
VENTURBAY CONSULTANTS PRIVATE LIMITED
Schedules forming part of the Balance Sheet
Year ended March 31, 2009 Rs. |
Year ended March 31, 2008 Rs. | |||
SCHEDULE 1 |
||||
SHARE CAPITAL: |
||||
Authorised: |
||||
Authorised share capital was increased from 10,000 Equity shares of Rs. 10/- each to 350,000 Equity shares of Rs. 10/- each at an Extraordinary General Meeting held on March 12, 2009. |
35,000,000 | 1,000,000 | ||
35,000,000 | 1,000,000 | |||
Issued and subscribed: |
||||
11,000 equity shares ( Previous year: Nil) of Rs. 10/- each fully paid up are held by Tech Mahindra Limited. |
110,000 | 110,000 | ||
Paid up: |
||||
11,000 equity shares ( Previous year: Nil) of Rs. 10/- each fully paid up are held by Tech Mahindra Limited. |
||||
110,000 | 110,000 | |||
SCHEDULE 2 |
||||
CURRENT ASSETS , LOANS & ADVANCES |
||||
Cash and bank balances: |
||||
Cash in hand |
| 51,427 | ||
Bank balances with scheduled banks: |
||||
-In current account |
48,522 | | ||
48,522 | 51,427 | |||
SCHEDULE 3 |
||||
CURRENT LIABILITIES AND PROVISIONS |
||||
Total Outstanding dues to Micro Enterprises & Small Enterprises |
| | ||
Total outstanding dues to Creditors other than Micro Enterprises & Small Enterprises |
7,047 | 4,452 | ||
7,047 | 4,452 | |||
SCHEDULE 4 |
||||
PROFIT AND LOSS ACCOUNT: |
||||
Debit balance in Profit and loss account |
68,525 | 36,546 | ||
68,525 | 36,546 | |||
SCHEDULE 5 |
||||
MISCELLANEOUS EXPENDITURE |
||||
(To the extent not written off or adjusted) |
||||
Preliminary expenses |
26,479 | 30,893 | ||
Less: Written off |
26,479 | 4,414 | ||
| 26,479 | |||
124
Schedules forming part of the Profit and Loss Account |
||||
Year ended March 31, 2009 Rs. |
Year ended March 31, 2008 Rs. | |||
SCHEDULE 6 |
||||
Administrative and other expenses |
||||
Audit fees |
1,500 | 1,124 | ||
ROC fees |
4,000 | 1,000 | ||
Miscellaneous expenses |
| 2,000 | ||
5,500 | 4,124 | |||
125
VENTURBAY CONSULTANTS PRIVATE LIMITED
Schedule No. 7
Schedules forming part of the Balance Sheet and Profit and Loss Account
SIGNIFICANT ACCOUNTING POLICIES AND NOTES FORMING PART OF ACCOUNTS FOR THE YEAR ENDED ON MARCH 31, 2009
1. | Significant Accounting Policies: |
(a) | Basis for preparation of accounts: |
The accounts have been prepared to comply in all material aspects with applicable accounting principles in India, the Accounting Standards and the relevant provisions of the Companies Act, 1956.
(b) | Fixed Assets including intangible assets: |
Fixed assets are stated at cost less accumulated depreciation. Costs comprise of purchase price and attributable costs, if any.
(c) | Depreciation / amortisation on fixed assets: |
i) | The Company computes depreciation for all fixed assets including for assets taken on lease using the straight-line method based on estimated useful lives. Depreciation is charged on a pro-rata basis for assets purchased or sold during the year. Managements estimate of the useful life of fixed assets is as follows: |
Buildings |
15 years | |
Computers |
3 years | |
Plant and machinery |
3-5 years | |
Furniture and fixtures |
5 years | |
Vehicles |
3-5 years |
ii) | Leasehold land is amortised over the period of lease. |
iii) | Leasehold improvements are amortised over the period of lease or expected period of occupancy whichever is less. |
iv) | Intellectual property rights are amortised over a period of seven years. |
v) | Assets costing upto Rs. 5000 are fully depreciated in the year of purchase. |
(d) | Investments: |
Long term investments are carried at cost. Provision is made to recognise a decline other than temporary in the carrying amount of long term investment.
Current investments are carried at lower of cost and fair value.
(e) | Impairment of Assets: |
At the end of each year, the company determines whether a provision should be made for impairment loss on assets by considering the indications that an impairment loss may have occurred in accordance with Accounting Standard 28 on Impairment of Assets. Where the recoverable amount of any asset is lower than its carrying amount, a provision for impairment loss on assets is made for the difference. Recoverable amount is the higher of an assets net selling price and value in use. In assessing value in use, the estimated future cash flows expected from the continuing use of the asset and from its disposal are discounted to their present value using a pre-tax discount rate that reflects the current market assessments of time value of money and the risks specific to the asset.
126
Reversal of impairment loss if any, is recognised immediately as income in the Profit and Loss Account
(f) | Revenue Recognition: |
Revenue from software services and business process outsourcing services include revenue earned from services performed on time and material basis, time bound fixed price engagements and system integration projects. The related revenue is recognized as and when services are rendered
(g) | Expenditure: |
The cost of software purchased for use in software development and services is charged to cost of revenues in the year of acquisition.
NOTES ON ACCOUNTS:
In the notes below The Company refers to Venturbay Consultants Private Limited
2. | Balance of Preliminary expenses amounting to Rs. 26,479 have been written off during the year. |
3. | During the year Tech Mahindra Limited has made investment of Rs. 81,428 in equity shares of the company. As a result the company became wholly owned subsidiary of Tech Mahindra Limited, Pune with effect from this date of investment. |
4. | The Company did not have any employee on payroll during the year and therefore the disclosure required under Accounting Standard 15 on employees benefits, (AS-15) is not applicable for this financial year. |
5. | Payment to Auditors: |
Amount in Rs. | ||||
Particulars |
March 31, 2009 | March 31, 2008 | ||
Audit fees |
1,500 | 1,100 | ||
As advisor or in any other capacity |
Nil | Nil | ||
In any manner for certification etc. |
Nil | Nil | ||
Total |
1,500 | 1,100 | ||
6. | The company has exercised the option given vide notification number G.S.R. 225 (E) dated March 31, 2009 issued by the Ministry of Corporate Affairs, Government of India on provisions of Accounting Standard 11, however this does not have any impact on the financial statements, as the Company does not have any long term foreign currency monetary items. |
7. | During the year the company did not have any income hence the disclosure of information as required under Accounting Standard 17 on Segmental reporting (AS 17) is not required. |
127
8. | As required under Accounting Standard 18 Related Party Disclosures (AS 18), following are details of transactions during the year with the related parties of the Company as defined in AS 18: |
(a) | List of Related Parties and Relationships |
Name of Related Party |
Relation | |
Tech Mahindra Limited |
Holding Company | |
Tech Mahindra (Americas) Inc, USA |
Subsidiary of parent company | |
Tech Mahindra GmbH |
Subsidiary of parent company | |
Tech Mahindra (Singapore) Pte Ltd. |
Subsidiary of parent company | |
Tech Mahindra (Thailand) Ltd. |
Subsidiary of parent company | |
PT Tech Mahindra Indonesia |
Subsidiary of parent company | |
CanvasM Technologies Ltd. |
Subsidiary of parent company | |
CanvasM (Americas) Inc. |
Subsidiary of parent company | |
Tech Mahindra (Malaysia) SDN. BHD |
Subsidiary of parent company | |
Tech Mahindra (Beijing) IT Services Ltd. |
Subsidiary of parent company | |
Tech Mahindra Foundation |
Subsidiary of parent company |
b) | Related party transactions for the year ended March 31, 2009. |
Particulars |
March 31, 2009 | March 31, 2008 | ||
Investments by holding company |
Rs. 81,428 | Rs. Nil |
9. | Earning per share is calculated as follows: |
Particulars |
March 31, 2009 | March 31, 2008 | ||||
Profit / (Loss) after taxation (Rs.) |
(31,979 | ) | (8,538 | ) | ||
Equity Shares outstanding as at the year end (in nos.) |
11,000 | 11,000 | ||||
Weighted average Equity Shares outstanding as at the year end (in nos.) |
11,000 | 11,000 | ||||
Weighted average number of Equity Shares used as denominator for calculating Basic Earnings Per Share |
11,000 | 11,000 | ||||
Add: Diluted number of Shares |
| | ||||
Number of Equity Shares used as denominator for calculating Diluted Earnings Per Share |
11,000 | 11,000 | ||||
Nominal Value per Equity Share (Rs.) |
10 | 10 | ||||
Earning/(Loss) Per Share |
||||||
Earning/(Loss) Per Share (Basic) (Rs.) |
(2.91 | ) | (0.78 | ) | ||
Earning/(Loss) Per Share (Diluted) (Rs.) |
(2.91 | ) | (0.78 | ) |
10. | Based on the information available with the company, no creditors have been identified as supplier within the meaning of Micro enterprises & small enterprises development (MSMED) Act, 2006. |
11. | The Board of Directors of Satyam Computer Services Limited on April 13, 2009 selected the company as the highest bidder to acquire a controlling stake in Satyam Computer Services Limited, subject to the approval of the Honorable Company Law Board (CLB). CLB has since granted its approval on April 16, 2009. The company has deposited a sum of Rs. 29,107 Million in escrow to cover the cost of 31% preferential issue by Satyam and a 20% open offer. |
128
12. | The disclosures pursuant to Part I and Part II of Schedule VI of the Companies Act, 1956 have been made to the extent applicable to the company. |
13. | Previous year figures have not been audited by the present auditors. |
14. | Previous Year figures as applicable have been regrouped / reclassified wherever necessary. |
For Venturbay Consultants Private Limited
Milind Kulkarni |
Atanu Sarkar | |
Place: Pune |
Place: Pune | |
Date: April 24, 2009 |
Date: April 24, 2009 |
129
VENTURBAY CONSULTANTS PRIVATE LIMITED
Regd.Office: 638-K, Abhyuday Nagar, Nachane Road, Ratnagiri-415639.
NOTICE
Notice is hereby given that the Forth Annual General Meeting of Venturbay Consultants Private Limited, will be held on Tuesday the 30th September 2008 at 11.00 A.M. at the Registered office of the Company at 638-K, Abhyuday Nagar, Nachane Road, Ratnagiri-415639 to transact the following business: -
ORDINARY BUSINESS:
1. |
To receive, consider and adopt the audited Balance Sheet as at 31st March 2008 and Profit and Loss Account for the year ended as on that date and the reports of the Auditors and Directors thereon. |
2. | To appoint auditors of the Company and to fix their remuneration. |
NOTES:
1. | A member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote instead of himself and the proxy need not to be a member. |
2. | Proxies to be effective should be lodged with the company at its registered office not less than 48 hours before the commencement of the meeting. |
BY ORDER OF THE BOARD OF DIRECTORS | ||||
FOR VENTURBAY CONSULTANTS PRIVATE LIMITED | ||||
Place: Pune | ||||
Date: 31-08-2008 | DATTATRAYA NAPHADE | SUREKHA D. NAPHADE | ||
DIRECTOR | DIRECTOR |
130
VENTURBAY CONSULTANTS PRIVATE LIMITED
Regd.Office: 638-K, Abhyuday Nagar, Nachane Road, Ratnagiri-415639.
DIRECTORS REPORT
To,
The Members,
M/S Venturbay Consultants Private Limited
Pune
Yours Directors are presenting the Forth Annual Report and audited accounts of your company for the year ended on 31st March 2008.
1-FINANCIAL RESULTS:
Particulars |
Current Year (31.03.2008) |
Previous year (31.03.2007) | ||
Total Income |
0.00 | 0.00 | ||
Total Expenses |
8538.00 | 16976.00 | ||
Loss before tax |
8538.00 | 16976.00 | ||
Provision for tax |
0.00 | 0.00 |
Your directors are taking continuous efforts for making your company a Profit making company.
2-DIVIDEND:
As the company has sustained loss for financial year 2007-2008 your Directors do not recommend any dividend for the year.
3-DIRECTORS:
All the directors of the company are permanent directors not liable to retire by rotation.
4-FIXED DEPOSITS:
The Company has not accepted any Fixed Deposits from the public within the meaning of section 58A of the Companies Act, 1956.
5. DISCLOSURE OF INFORMATION:
As required by the Companies Act, 1956 (Disclosure of particulars in the report of the Board of Directors) Rules, 1988, the following information is given:
CONSERVATION OF ENERGY: NIL
RESEARCH & DEVELOPMENT: NIL
TECHNOLOGY, ABSORPTION, ADOPTION & INNOVATION: NIL
6. PARTICULARS OF EMPLOYEES:
No employee of the company was in receipt of salary exceeding the amount specified in Section 217(2A) of the Companies Act, 1956 during the year under review.
131
7. DIRECTORS RESPONSIBILITY STATEMENT:
Pursuant to the provisions of section 217 (2AA) of the Companies Act, 1956 the Directors state that;
a) | In the preparation of the annual accounts for the year ended March 31, 2008, the applicable accounting standards had been followed along with proper explanation relating to material departures; |
b) | Yours directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as at March 31, 2008 and of the loss for that period; |
c) | Your directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities and |
d) | The directors had prepared the annual accounts for the year ended March 31, 2008 on a going concern basis. |
8. FIXED DEPOSITS:
The Company has not accepted any fixed deposits from Public during the year under report.
9. AUDITORS:
M/S Manoj V. Sakhare, Chartered Accountants. Pune, retires as Auditors of the company at the conclusion of the ensuing Annual General Meetings and have expressed their eligibility and willingness to act as the Auditors of the company till the conclusion the next Annual General meeting the, so Directors request you to re-appoint them as Auditor of the company and fix their remuneration.
BY ORDER OF THE BOARD OF DIRECTORS | ||||
FOR VENTURBAY CONSULTANTS PRIVATE LIMITED | ||||
Place: Pune | ||||
Date: 31-08-2008 | DATTATRAYA NAPHADE | SUREKHA D. NAPHADE | ||
DIRECTOR | DIRECTOR |
132
AUDITORS REPORT TO THE MEMBERS OF
VENTURBAY CONSULTANTS PRIVATE LTD.
The Members of VENTURBAY CONSULTANTS PRIVATE LTD.
1. | I have audited the attached Balance Sheet of VENTURBAY CONSULTANTS PRIVATE LTD., as at 31st March 2008 and also the Profit and Loss Account for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. My responsibility is to express an opinion on these financial statements based on my audit. |
2. | I conducted my audit in accordance with auditing standards generally accepted in India. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion. |
3. | As required by the Companies (Auditors Report) Order, 2003, issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, I state that the said order is at present not applicable to the Company. |
4. | Further to my comments in the Annexure referred to above, I report that: - |
(i) | I have obtained all the information and explanations which to the best of my knowledge and belief, were necessary for the purposes of my audit; |
(ii) | In my opinion, proper Books of Account as required by Law have been kept by the Company so far as appears from my examination of those Books of the Company; |
(iii) | The Balance Sheet and Profit and Loss Account dealt with by this report are in agreement with the Books of Account; |
(iv) | In my Opinion, the Balance Sheet & Profit and Loss Account dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956; |
(v) | On the basis of written representations received from the directors as on 31st March, 2008; and taken on record by the Board of Directors, I report that none of the directors is disqualified as on 31st March, 2008 from being appointed as a director in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956; |
(vi) | In my opinion and to the best of my information and according to the explanations given to me, the said accounts, read together with the notes thereon, give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: - |
(a) | in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2008; |
(b) | in the case of the Profit and Loss Account, of the Loss for the year ended on that date. |
|
For M. V. SAKHARE & CO. | |||
Chartered Accountants | ||||
Place: Pune | M. V. Sakhare | |||
Date: 31/08/2008 | Proprietor | |||
Member Ship No. 47787 |
133
VENTUREBAY CONSULTANTS PRIVATE LIMITED
ABHYUDAY NAGAR, NACHANE ROAD, RATNAGIRI 415639
BALANCE SHEET AS ON 31ST MARCH 2008.
SCHEDULE | 31/03/2007 (RS.) |
31/03/2008 (RS.) | ||||
SOURCES OF FUNDS: |
||||||
SHARE HOLDERS FUND: |
||||||
CAPITAL |
1 | 110000.00 | 110000.00 | |||
TOTAL | 110000.00 | 110000.00 | ||||
APPLICATION OF FUNDS: |
||||||
CURRENT ASSETS, LOANS & ADVANCES |
2 | |||||
CASH IN HAND |
54427.00 | 51427.00 | ||||
BANK BALANCES |
0.00 | 0.00 | ||||
54427.00 | 51427.00 | |||||
LESS: CURRENT LIABILITIES AND PROVISIONS |
||||||
AUDIT FEES |
3 | 3328.00 | 4452.00 | |||
PROFESSIONAL FEES PAYABLE |
0.00 | |||||
NET CURRENT ASSETS |
51099.00 | 46975.00 | ||||
PROFIT & LOSS A/C |
4 | 28008.00 | 36546.00 | |||
MISCELLANEOUS EXPENDITURE |
5 | 30893.00 | 26479.00 | |||
P & L A/C DEBIT BAL. |
||||||
TOTAL | 110000.00 | 110000.00 | ||||
Notes forming part of the Accounts | 7 |
As per my Report of even Date |
|
|
| |||
M. V. SAKHARE & CO. | ||||||
CHARTERED ACCOUNTANTS |
||||||
M. V. SAKHARE | DIRECTOR | DIRECTOR | ||||
(PROPRIETOR) |
PUNE: 31/08/2008
134
VENTUREBAY CONSULTANTS PRIVATE LIMITED
ABHYUDAY NAGAR, NACHANE ROAD, RATNAGIRI 415639
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH 2008.
SCHEDULE | 31/03/2007 (RS.) |
31/03/2008 (RS.) | ||||
INCOME |
||||||
| | |||||
TOTAL | 0.00 | 0.00 | ||||
EXPENDITURE: |
||||||
PRELIMINARY EXPENSES W/OFF |
5 | 4414.00 | 4414.00 | |||
ADMINISTRATIVE & OTHER EXPENSES |
6 | 12562.00 | 4124.00 | |||
TOTAL | 16976.00 | 8538.00 | ||||
LOSS BEFORE TAXATION: |
16976.00 | 8538.00 | ||||
PROVISIONS FOR TAXATION |
0.00 | 0.00 | ||||
LOSS FOR THE YEAR |
16976.00 | 8538.00 | ||||
LOSS AS PER LAST YEARS ACCOUNT |
11032.00 | 28008.00 | ||||
TOTAL | 28008.00 | 36546.00 | ||||
Notes forming part of the Accounts | 7 |
As per my Report of even Date |
|
|
| |||
M. V. SAKHARE & CO. | ||||||
CHARTERED ACCOUNTANTS |
||||||
M. V. SAKHARE | DIRECTOR | DIRECTOR | ||||
(PROPRIETOR) |
PUNE: 31/08/2008
135
VENTUREBAY CONSULTANTS PRIVATE LIMITED
ABHYUDAY NAGAR, NACHANE ROAD, RATNAGIRI 415639
SCHEDULE 1 TO 7 ANNEXED TO AND FORMING PART OF
THE BALANCE SHEET AND PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31/03/2008.
31/03/2007 (RS.) |
31/03/2008 (RS.) | |||
SCHEDULE 1 |
||||
SHARE CAPITAL: |
||||
AUTHORISED: |
||||
100000 EQUITY SHARES OF RS. 10/- EACH |
1000000.00 | 1000000.00 | ||
1000000.00 | 1000000.00 | |||
ISSUED, SUBSCRIBED & PAID UP 11000 EQUITY SHARES |
110000.00 | 110000.00 | ||
110000.00 | 110000.00 | |||
SCHEDULE 2 |
||||
CURRENT ASSETS, LOANS & ADVANCES |
||||
CASH AND BANK BALANCES: |
||||
CASH IN HAND |
54427.00 | 51427.00 | ||
BANK BALANCE WITH SCHEDULED BANK |
0.00 | 0.00 | ||
54427.00 | 51427.00 | |||
SCHEDULE 3 |
||||
CURRENT LIABILITIES AND PROVISIONS |
||||
AUDIT FEES PAYABLE |
3328.00 | 4452.00 | ||
3328.00 | 4452.00 | |||
SCHEDULE 4 |
||||
PROFIT AND LOSS ACCOUNT |
||||
BALANCE TRF. FROM ANNEXED PROFIT AND LOSS ACCOUNT |
28008.00 | 36546.00 | ||
28008.00 | 36546.00 | |||
136
VENTUREBAY CONSULTANTS PRIVATE LIMITED
ABHYUDAY NAGAR, NACHANE ROAD, RATNAGIRI 415639
SCHEDULE 1 TO 7 ANNEXED TO AND FORMING PART OF
THE BALANCE SHEET AND PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31/03/2008.
31/03/2007 (RS.) |
31/03/2008 (RS.) | |||
SCHEDULE 5 |
||||
MISCELLANEOUS EXPENDITURE (TO THE EXTENT NOT WRITTEN OFF OR ADJUSTED) |
||||
PRELIMINARY EXPENSES: |
35307.00 | 30893.00 | ||
LESS: 1/10TH WRITTEN OFF |
4414.00 | 4414.00 | ||
30893.00 | 26479.00 | |||
SCHEDULE 6 |
||||
ADMINISTRATIVE & OTHER EXPENSES AUDIT FEES |
1124.00 | 1124.00 | ||
PROFESSIONAL FEES |
8600.00 | 1000.00 | ||
MISC. EXPENSES |
2838.00 | 2000.00 | ||
12562.00 | 4124.00 | |||
137
SCHEDULE NO. 7
NOTES FORMING PART OF ACCOUNTS
SIGNIFICANT ACCOUNTING POLICIES AND NOTES FORMING PART OF
ACCOUNTS FOR THE YEAR ENDED ON 31ST MARCH 2008
1. | SIGNIFICANT ACCOUNTING POLICIES: |
a) | General: The Financial Statements are prepared on the basis of historical cost convention and confirm to the business. |
b) | Fixed Assets: Tangible assets are shown at cost less depreciation. |
c) | Depreciation: Depreciation is provided as per the provisions of the section 205 (2) (b) and rates and basis specified in schedule XIV of the Companies Act, 1956 on Diminishing Balance Method. |
d) | Inventories: Raw materials and consumable stores are valued at cost price or Market price whichever is lower. |
e) | Revenue Recognition: Sale of goods and Job work charges are accounted on accrual basis. |
f) | Expenses: Expenses are generally accounted on accrual basis. |
2. | In the opinion of Directors, Current Assets, and Advances have value on realization in the ordinary course of business at least equal to the amount at which they are stated in the Balance Sheet. |
3. | Considering the value of various item of raw materials required for the business it is not practicable for the Company to maintain day to day quantitative details of raw materials purchased, consumed and stock. Therefore information in this regard could not be furnished. |
4. | Preliminary expenses are written off over a period of ten years. |
5. | Contingent liabilities not provided in the books is Nil. |
6. | Previous Year figures have been regrouped / reclassified wherever necessary. |
138
BALANCE SHEET ABSTRACT AND COMPANYS GENERAL BUSINESS PROFILE
PARTICULARS REQUIRED AS PER NOTIFICATION NO. GSR NO.388 (E) [F. NO.3/24/94-
CL/V(A)] DATED 15.05.1995 ISSUED BY THE DEPARTMENT OF COMPANY AFFAIRS,
MINISTRY OF LAW JUSTICIE AND COMPANY AFFAIRS
I. | REGISTRATION DETAILS: | |||
Registration No. |
U 72200 PN 2004 PTC 019520 | |||
State Code |
11 | |||
Balance Sheet Date |
31st March 2008 | |||
II. | CAPITAL RAISED DURING THE PERIOD: | (Amt. in Thousand) | ||
Public Issue |
NIL | |||
Right Issue |
NIL | |||
Bonus Issue |
NIL | |||
Private Placement / Promoters |
NIL | |||
III. | POSITION OF MOBILISATION & DEPLOYMENT OF FUND: | |||
Total Liabilities |
110 | |||
Total Assets |
110 | |||
SOURCES OF FUNDS: | ||||
Paid up Capital |
110 | |||
Reserve & Surplus |
-37 | |||
Secured Loans |
000 | |||
Unsecured Loans |
000 | |||
APPLICATION OF FUNDS: | ||||
Net Fixed Assets |
000 | |||
Investments |
000 | |||
Net Current Assets |
47 | |||
Miscellaneous Expenses |
26 | |||
IV. | PERFORMANCE OF THE COMPANY: | |||
Turnover |
00 | |||
Total Expenses |
09 | |||
Profit Before Tax |
-9 | |||
Profit After Tax |
-9 | |||
Earning per share (Annualised) |
Rs. 0.00 | |||
Dividend Rate (Purposed) |
NIL | |||
V. | GENERAL NAMES OF THREE PRINCIPAL PRODUCTS / SERVICES OF THE COMPANY (NOT APPLICABLE) | |||
FOR & ON BEHALF OF THE BOARD OF DIRECTORS |
||||
FOR M/S VENTURBAY CONSULTANTS PVT. LTD. |
DIRECTOR | DIRECTOR |
139
VENTURBAY CONSULTANTS PRIVATE LIMITED
ABHYUDAY NAGAR, NACHANE ROAD, RATNAGIRI 415639
BALANCE SHEET AS ON 31ST MARCH 2007.
SCHEDULE | 31/03/2006 (RS.) |
31/03/2007 (RS.) | ||||
SOURCES OF FUNDS: |
||||||
SHARE HOLDERS FUND: |
||||||
CAPITAL |
1 | 110000.00 | 110000.00 | |||
TOTAL | 110000.00 | 110000.00 | ||||
APPLICATION OF FUNDS: |
||||||
CURRENT ASSETS, LOANS & ADVANCES |
2 | |||||
CASH IN HAND |
65865.00 | 54427.00 | ||||
BANK BALANCES |
0.00 | 0.00 | ||||
65865.00 | 54427.00 | |||||
LESS: CURRENT LIABILITIES AND PROVISIONS |
||||||
AUDIT FEES |
3 | 2204.00 | 3328.00 | |||
NET CURRENT ASSETS |
63661.00 | 51099.00 | ||||
PROFIT & LOSS A/C |
4 | 11032.00 | 28008.00 | |||
MISCELLANEOUS EXPENDITURE (TO THE EXTENT NOT WRITTEN OFF OR ADJUSTED)PRELIMINARY EXPENSES |
5 | 35307.00 | 30893.00 | |||
P & L A/C DEBIT BAL |
||||||
TOTAL | 110000.00 | 110000.00 | ||||
Notes forming part of the Accounts |
7 |
As per my Report of even Date |
|
|
| |||
M. V. SAKHARE & CO. | ||||||
CHARTERED ACCOUNTANTS |
||||||
M. V. SAKHARE | DIRECTOR | DIRECTOR | ||||
(PROPRIETOR) |
PUNE: 31/08/2007
140
VENTURBAY CONSULTANTS PRIVATE LIMITED
ABHYUDAY NAGAR, NACHANE ROAD, RATNAGIRI 415639
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH 2007.
SCHEDULE | 31/03/2006 (RS.) |
31/03/2007 (RS.) | ||||
INCOME |
||||||
| | |||||
TOTAL | 0.00 | 0.00 | ||||
EXPENDITURE: |
||||||
PRELIMINARY EXPENSES W/OFF |
5 | 4414.00 | 4414.00 | |||
ADMINISTRATIVE & OTHER EXPENSES |
6 | 1102.00 | 12562.00 | |||
TOTAL | 5516.00 | 16976.00 | ||||
LOSS BEFORE TAXATION: |
5516.00 | 16979.00 | ||||
PROVISIONS FOR TAXATION |
0.00 | 0.00 | ||||
LOSS FOR THE YEAR |
5516.00 | 16976.00 | ||||
LOSS AS PER LAST YEARS ACCOUNT |
5516.00 | 11032.00 | ||||
TOTAL | 11032.00 | 28008.00 | ||||
Notes forming part of the Accounts | 7 |
As per my Report of even Date |
|
|
| |||
M. V. SAKHARE & CO. | ||||||
CHARTERED ACCOUNTANTS |
||||||
M. V. SAKHARE | DIRECTOR | DIRECTOR | ||||
(PROPRIETOR) |
PUNE: 31/08/2007
141
VENTURBAY CONSULTANTS PRIVATE LIMITED
ABHYUDAY NAGAR, NACHANE ROAD, RATNAGIRI 415639
SCHEDULE 1 TO 7 ANNEXED TO AND FORMING PART OF
THE BALANCE SHEET AND PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31/03/2007.
31/03/2006 (RS.) |
31/03/2007 (RS.) | |||
SCHEDULE 1 |
||||
SHARE CAPITAL: |
||||
AUTHORISED: |
||||
100000 EQUITY SHARES OF RS. 10/- EACH |
1000000.00 | 1000000.00 | ||
1000000.00 | 1000000.00 | |||
ISSUED, SUBSCRIBED & PAID UP |
||||
11000 EQUITY SHARES OF RS. 10/- EACH |
110000.00 | 110000.00 | ||
110000.00 | 110000.00 | |||
SCHEDULE 2 |
||||
CURRENT ASSETS, LOANS & ADVANCES |
||||
CASH AND BANK BALANCES: |
||||
CASH IN HAND |
65865.00 | 62427.00 | ||
BANK BALANCE WITH SCHEDULED BANK |
0.00 | 0.00 | ||
65865.00 | 62427.00 | |||
SCHEDULES 3 |
||||
CURRENT LIABILITIES AND PROVISIONS |
||||
AUDIT FEES PAYABLE |
2204.00 | 3328.00 | ||
2204.00 | 3328.00 | |||
SCHEDULE 4 |
||||
PROFIT AND LOSS ACCOUNT |
||||
BALANCE TRF. FROM ANNEXED PROFIT AND LOSS ACCOUNT |
11032.00 | 28008.00 | ||
11032.00 | 28008.00 | |||
142
VENTURBAY CONSULTANTS PRIVATE LIMITED
ABHYUDAY NAGAR, NACHANE ROAD, RATNAGIRI 415639
SCHEDULE 1 TO 7 ANNEXED TO AND FORMING PART OF
THE BALANCE SHEET AND PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31/03/2007.
31/03/2006 (RS.) |
31/03/2007 (RS.) | |||
SCHEDULE 5 |
||||
MISCELLANEOUS EXPENDITURE (TO THE EXTENT NOT WRITTEN OFF OR ADJUSTED) |
||||
PRELIMINARY EXPENSES: |
39721.00 | 35307.00 | ||
LESS: 1/10TH WRITTEN OFF |
4414.00 | 4414.00 | ||
35307.00 | 30893.00 | |||
SCHEDULE 6 |
||||
ADMINISTRATIVE & OTHER EXPENSES |
||||
AUDIT FEES |
1102.00 | 1124.00 | ||
PROFESSIONAL FEES |
0.00 | 8600.00 | ||
MISC. EXPENSES |
0.00 | 2838.00 | ||
1102.00 | 12562.00 | |||
143
Name of the Company |
Mar-09 | Mar-08 | Mar-07 | |||
Book value per share * |
||||||
(Face value of Rs 10) |
||||||
Tech Mahindra Limited (Consolidated nos) |
159.63 | 103.59 | 75.77 | |||
Venturbay Consultants Pvt Ltd |
3.77 | 4.27 | 4.64 | |||
Earnings ratio ** |
||||||
Tech Mahindra Limited |
453.00 | 136.18 | 112.25 |
* | Net worth / Number of shares outstanding |
** | Profit before tax, minority interest and exceptional items/ Interest cost |
Earnings ratio is not applicable to Venturbay since finance cost (as per the definitions mentioned in Paragraph 503 (d)) is Nil for last three years
144