Aftek

1. Contingent Liabilities in respect of:
 
 Particulars
 
 Corporate Guarantee given to Bank 
 for finance provided to Digihome Solutions 
 Private Limited against which loan
 outstanding is (Rs.000) 24,342 
 {previous year (rs.000) 14,986}                  60,000        30,000
 
 Disputed Income Tax matter in appeal 
 (relating to Income Tax case for Assessment 
 year 2005-06 pending before Deputy
 Commissioner of Income Tax)                           -           331
 
 Disputed Service Tax Liability 
 on fees and charges paid for
 Borrowings in the form of 
 Foreign Currency Convertible
 Bonds and External Commercial Borrowings          4,667             -
 
 Total                                            64,667        30,331
 
 Note: Aftek Employees Welfare Trust (Unregistered) was created for the
 benefit of employees including executive directors. The purpose of the
 trust inter alia is to purchase/invest in the shares or other
 securities of Aftek Limited for the benefit of employees. As per the
 conditions of the trust deed, the Company has provided an interest free
 loan aggregating to (Rs.000) 43,171 {Previous year (Rs.000) 44,111}
 (maximum balance outstanding at any time during the year (Rs.000)
 44,111 {Previous year (Rs.000) 45,896} and the same has been used for
 the purchase of equity shares of Aftek Limited.. These shares may be
 allocated to the employees or the amount of profit earned on the sale
 of these shares may be distributed amongst the employees.
 
 2.  Staff Benefits cost in accordance with Accounting Standard 15
 (Revised)
 
 (i) Defined Contribution Plan: The amount of contribution to provident
 fund recognized as expenses during the year is (Rs.000) 9,033{Previous
 Year (Rs.000) 8,873}
 
 (ii) The Company had been recognizing, accruing and accounting the
 Retirement Benefits as per the erstwhile Accounting standard-15 on
 Retirement Benefits till March 31, 2007.
 
 The Institute of Chartered Accountants of India (ICAI) had revised
 AS-15 on Employees Benefits and had made it mandatory from the
 accounting period commencing on or after December 7, 2006 accordingly
 the company has decided for adoption of revised AS-15 w.e.f April 1,
 2007.
 
 In accordance with the transitional provisions of revised AS-15, the
 incremental liability at the beginning of the current financial year
 amounting to (Rs.000) 2,051 [net of tax of (Rs.000) 1,056] in respect
 of gratuity has been adjusted against General Reserve.
 
 The Company has adopted Accounting Standard 15 (Revised), Employee
 Benefits from April 01, 2007 and this being the first year of
 adoption, the Company has not given disclosure for the following for
 previous four annual financial years :
 
 1.  the present value of the defined benefit obligation, the fair value
 of plan assets and the surplus or deficit in the plan ; and
 
 2.  the experience adjustments arising on plan liabilities and plan
 assets.
 
 3.  Micro, Small and Medium Enterprises
 
 The Company has not received any intimation from the suppliers
 regarding status under the Micro, Small and Medium Enterprises
 Development Act, 2006 (the Act) and hence disclosure regarding
 following has not been provided.:
 
 a) Amount due and outstanding to suppliers as at the end of the
 accounting year.
 
 b) Interest paid during the year.
 
 c) Interest payable at the end of the accounting year.
 
 d) Interest accrued and unpaid at the end of the accounting year
 
 The Company is making efforts to get the confirmations from the
 suppliers as regards their status under the act. Management believes
 the figure for disclosure will not be very significant.
 
 4.  The Company had raised US$ 34.5 millions through an issue of 3000
 numbers of 1% Foreign Currency Convertible Bonds Due 2010 of US$ 10,000
 each (FCCB) in June 2005 followed by 450 numbers of additional FCCB
 in July 2005 on account of exercise of green shoe option of 15%. These
 FCCB are listed at Luxembourg Stock Exchange. The FCCB bear interest @
 1% per annum with redemption at 128.25% of their principal amount. At
 the option of the Bondholders FCCB are convertible into Shares/Global
 Depository Receipts (GDR) within a period of 5 years from the date of
 the original issue i.e. June 24, 2005 at the revised conversion price
 of Rs 75.20 per share effective from June 25 2006 (initial conversion
 price being Rs. 94/- per share) pursuant to the provisions of the Trust
 Deed executed in respect of the FCCB. At the year end 880 FCCB were
 outstanding, if converted into GDR/Equity shares at the reset
 Conversion Price of Rs 75.20 per share, would result into issuance of
 additional 5,099,202 numbers of equity shares of Rs 02 each.
 
 5.  Segment Information
 
 Primary Segment Information
 
 The Company is in business of sale of software services which is viewed
 by the management as a single primary segment, i.e.  business segment.
 
 6.  The Company has outstanding interest free deposits of (Rs.000)
 138,139 as at March 31, 2008. These deposits were given prior to 2003
 to companys various business associates for business development. The
 company is confident of recovering these dues and no provision is
 considered necessary at this stage.
 
 7.  As at March 31, 2008, the Company has investments of (Rs.000)
 1,002,092 in shares of Arexara Information Technologies Gmbh (Arexara
 Gmbh), its wholly owned subsidiary, and also has outstanding loans
 receivable balance of (Rs.000) 292,853. Although the net worth of
 Arexera Gmbh is fully eroded; as at the year end, it has Intellectual
 Property Rights (IPR) and holds 24.75% stake of Seekport AG, a company
 listed on Frankfurt Stock Exchange. In accordance with the latest
 available (September 26, 2008) quote from the Frankfurt Stock Exchange,
 the scrip of Seekport AG was traded at Euro 2.05 per share. Subsequent
 to the year end, as a part of the business reorganization, the Company
 has initiated the process of transferring its assets from Arexera Gmbh
 to Arexara Information Technologies AG (Arexara AG) and has accordingly
 filed for the voluntary liquidation of Arexera Gmbh.  In the opinion of
 the management, there is no permanent diminution in value of investment
 in shares of Arexara Gmbh and the loans given to it are good and fully
 recoverable and therefore presently, no provision is considered
 necessary.
 
 8.  Vide agreement dated July 24, 2005, and further to the agreement
 dated December 29, 2007; the Company has transferred certain technology
 rights to Digihome Solutions Private Limited (DSPL), for a
 consideration of (Rs.000) 60,000, payable by allotment of 70,834
 shares in DSPL at par value of Rs.10 each and 988,194 new shares in
 DSPL at a premium of Rs.50 per share. The Company could only discharge
 part obligation and for which it received consideration of (Rs.000)
 17,063 by allotment of 291,327 shares of DSPL. Consequent to the
 allotment of shares on January 10, 2008, DSPL became a subsidiary of
 the company. Further, during the year, the Company also rendered
 software services to DSPL at a consideration of (Rs.000) 85,708, which
 was to be received by allotment of 1,428,472 equity shares of Rs.10
 each in DSPL at a premium of Rs.50 per share. Pending allotment, these
 are shown as advance against equity.
 
 Prior to January 10, 2008, under the agreement dated December 29, 2007
 the Company had transactions for sale of rights and services with DSPL,
 a private company in which some of the directors held interest,
 Further, the Company had aalso given loan to DSPL and the outstanding
 balance as at the year end amounted to Rs. (000) 8,700. In both the
 instances, the management is of the view,that when the original
 agreements were executed, section 297 or section 295 of the Act were
 not applicable.
 
 9.  During the year ended March 31, 2007; scheme of arrangement
 between Elven Microcircuits Private Limited (EMPL), C2silicon Software
 Solutions Private Limited(C2silicon) and the Company:
 
 The Honble Bombay Court and The Honble Karnatka High Court have
 sanctioned a scheme of amalgamation of EMPL and C2silicon with the
 Company under Section 391 to 394 of the Companies Act, 1956 (The
 Scheme). Consequently, in terms the scheme:
 
 (i) Entire business of EMPL and C2silicon including asset sand
 liabilities, as a going concern, shall stand transferred to and vested
 in the Company with effect from April 1, 2006 being the appointed date.
 
 (ii) As at March 31, 2007, 6,150,000 ordinary shares of Rs. 2 each of
 the Company where required to be issued to the shareholders of EMPL in
 the proportion of 123 equity shares in the Company for every 100 equity
 shares of Rs 2 each held in EMPL. Pending allotment, an amount of
 (Rs000) 12,300 representing the face value of the shares to be issued,
 has been included in the Share Capital Suspense account as at March 31,
 2007 (Schedule A-1).
 
 (iii) The Amalgamation in the nature of merger has been accounted for
 under the purchase method as prescribed by Accounting Standard 14,
 Accounting for Amalgamation issued by the Institute of Chartered
 Accountants of India.  As provided in the Scheme and in terms of the
 Court Orders: i.  (Rs.000) 29,099 being the excess of amount of the
 fair value (as determined by the management) of the net assets of EMPL
 and C2silicon over the consideration, has been credited to the General
 Reserve Account of the Company as adjustment on amalgamation.
 
 These accounting treatments to the general reserve account of the
 Company was prescribed in the Scheme, had the Sheme not prescribed
 these treatments, the amount of (Rs.000) 29,099 would has been
 credited to Capital reserve account.
 
 10.  During the year ended March 31, 2007; the Company had forfeited
 (Rs000) 47,869 against issue of 3,969,200 numbers of partly paid
 warrants issued to Promoters Group on preferential basis at a price of
 Rs.120.60 per warrant and the said amount has been transferred to
 Capital Reserve.
 
 11.  The Company had issued 1,333,100 Global Depository Receipt (GDR)
 on February 07, 2003 at a price of USD 11.25, per GDR with each GDR
 representing 3 equity shares of Rs.10. These GDR are listed on
 Luxembourg Stock Exchange.  Pursuant to Special Resolution passed at
 the Annual General Meeting held on December 29, 2003, equity shares of
 Rs.10 each were sub-divided into smaller denomination of Rs.2 each for
 which Company had fixed January 29, 2004 as the Record Date.
 Corresponding increase was made to the number of GDR from one to five
 in order to maintain the GDR to Equity proportion of 1: 3.
 
 Further, pursuant to the Special Resolution passed at the Annual
 General Meeting held on December 28, 2004, bonus shares in the
 proportion of one equity share for every two equity shares held on the
 record date of January 28, 2005 were allotted on January 31, 2005
 resulting in increase in the number of GDR.
 
 400,000 numbers of GDR representing 1,200,000 equity shares were
 outstanding as at March 31, 2008. As stated above, 880 numbers of 1%
 Foreign Currency Convertible Bonds Due 2010 was outstanding as on
 March, 31, 2008. In the event these FCCB are converted into GDR, it
 would result into issuance of 1,699,734 numbers of GDR representing
 5,099,202 numbers of equity shares.
 
 12.  The financial statements of the Company for the year ended March
 31, 2007 were audited and reported by another firm of Chartered
 Accountants; vide their unqualified report dated November 27, 2007. The
 balances as at March 31, 2007 as per such audited financial statements,
 have been regrouped or rearranged wherever necessary to make them
 comparable with the current years figure. Figures are rounded off to
 nearest thousands.