Bartronics India

1.  Contingent Liabilities
 
 a) Claims against the Company not acknowledged as debts:
 
 Letter of Credit and guarantees issued:
 
 Rs. in lacs
 
 Particulars                               As at          As at
                                      31.03.2009     31.03.2008
 
 Letters of Credit                     4,277.10         737.72
 
 Counter Guarantees given to 
 Bankers towards :
 
 — Bank Guarantees issued                298.85          82.21
 
 b) Disputed Income Tax liability for which the Company preferred appeal
 aggregates to Rs. 8.51 Lacs (31.03.2008: Rs. Nil)
 
 2.  Estimated amount of contracts remaining to be executed on capital
 account and not provided for: Rs.80,000 Lacs (31st March 2008: Rs. Nil)
 
 3.  Share Capital
 
 a) During the year, USD 75 Lacs worth of FCCB have been converted into
 2,282,332 equity shares of Rs.  10 each aggregating to Rs.228.24 Lacs
 at a premium of Rs. 130 per share aggregating to Rs.2,967.04 Lacs.
 
 b) During the year, vested options were exercised and the Company
 allotted 160,000 equity shares in ESOS -2007 of Rs. 10 aggregating to
 Rs. 16.00 Lacs each at a premium of Rs.122.70 per share aggregating to
 Rs. 196.32 Lacs.
 
 b) As stated in Significant Accounting Policies No. 14 of Schedule 19,
 the Company charges the premium payable on redemption of Foreign
 Currency Convertible Bonds to the securities premium account over the
 life of the bond. Had the Company provided the full liability of
 premium payable on redemption of bonds in terms of the provisions of
 Accounting Standard 29 Provisions, Contingent Liabilities & Contingent
 Assets in Securities Premium Account in the year of issue, the
 additional liability would have been Rs. 8,989.49 Lacs.
 
 4.  Secured Loans
 
 I.  Term Loans
 
 a) Term loans availed from banks are secured by:
 
 Equitable mortgage of the Companys immovable property at Raj Bollaram
 Village.
 
 First pari passu charge on all Plant & Machinery, present and future
 and pari passu second charge on all the current assets both present and
 future.
 
 The personal guarantees of certain directors.
 
 b) Amounts repayable within twelve months in respect of long term
 loans: Rs.2,610.38 Lacs (31st March 2008: Rs.Nil)
 
 II.  Working Capital Loans
 
 a) Working Capital loans availed from banks are secured by:
 
 • First pari passu charge on all the moveable properties both present
 and future including without its limitation its stock in trade,
 receivables, investments, deposits and other movables.
 
 • First pari passu charge on all the current assets and pari passu
 second charge on all the moveable fixed assets of the Company.
 
 • The personal guarantees of certain directors.
 
 b) Amounts repayable within twelve months in respect of working capital
 loans: Rs.l 1,832.06 Lacs (31st March, 2008: Rs.3,989.66 Lacs)
 
 III.  Vehicle loans
 
 a) Vehicle loans from banks and others are secured by hypothecation of
 vehicles acquired out of the said loans.
 
 b) Amounts repayable within twelve months in respect of vehicle loans:
 Rs. 5.92 Lacs (31st March, 2008: Rs 3.65 Lacs).
 
 5.  Unsecured Loans
 
 Foreign Currency Convertible Borrowings:
 
 The Company raised USS 25 Million (FCCB-I) on 09.06.2007 and US$ 50
 Million CFCCB-II) on 04.01.2008 through the issue of zero coupon
 Foreign Currency Convertible Bonds. Bond holders have an option to
 convert each bond of US$ 100000 into shares of Rs. 10/- each at the
 conversion price of Rs.140/- in respect of the FCCB-I and at the
 conversion price of Rs.290/- in respect of FCCB-II. The bonds are
 redeemable with a yield to maturity of 7.25% in case of FCCB-I and
 6.65% in case of FCCB-II. During the year 2,282,332 (31.03.2008:
 3,446,046) shares were allotted out of the FCCB-I consequent to
 conversion of 75 bonds (31.03.2008: 115 bonds) aggregating to US$ 7.5
 Million (31.03.2008 US.5 Millions). The balance bonds unless
 converted will be redeemed on 3rd June 2012 in respect of FCCB-I and on
 4th February, 2013 in respect of FCCB-II
 
 FCCB-I PRICE RESET: Pursuant to the terms and conditions of FCCB-I, the
 FCCB-I Bonds conversion price has been reset on 04-Dec-2008 from Rs.140
 to Rs.l 12
 
 6.1 Exchange Difference in respect of forward exchange contracts to be
 recognized in the profit and loss account in subsequent accounting
 period amounts to Rs. 0.29 Lacs (31st March 2008:Rs.Nil)
 
 6.1.2 Key Management Personnel
 
 Mr. Sudhir Rao - Managing Director
 
 Mr. T Venkateswara Rao - Whole Time Director
 
 Mr. S. T. Prasad - Whole Time Director
 
 7.  Employees Stock Option Scheme (ESOP)
 
 7.1 The shareholders of the Company at their Extra Ordinary General
 Meeting (EGM) held on 29th January,
 2007 approved 800,000 stock options under Employees Stock Option
 Scheme, representing 800,000 equity shares of Rs. 10/- each to the
 employees and directors of the Company. The Compensation Committee of
 the Board of Directors of the Company at its meeting held on 29th
 January, 2007, granted 800,000 stock options at an exercise price of
 Rs. 10 per option. Subsequently the shareholders at their EGM held on
 25th February, 2008 approved to amend the ESOS 2007 to vary the vesting
 schedule so as to enable 100% vesting of the options granted at the end
 on the first year from the date of grant of the options.
 
 The Company has not created employee stock compensation expenses
 account in the previous years.  Accordingly Rs. 981.60 Lacs being the
 employee compensation expenses towards ESOS 2007 and Rs.  451.65 Lacs
 being the IBT and interest thereon relating to previous year has been
 accounted as expenditure under Prior period expenditure in the current
 year
 
 8.2 The Shareholders of the Company at their EGM held on 25th
 February, 2008 approved the Employees Stock Option Scheme 2008, ESOS
 2008 for granting 6,00,000 options to employees including directors of
 the Subsidiary Companies and 350,000 options to employees including
 directors of the Company.  The compensation committee at their meeting
 held on 25.02.2008 granted 5,49,805 options to employees including
 directors of the Subsidiary Companies and 34,236 options to employees
 including directors of the Company. Subsequently the shareholders at
 their Annual General Meeting held on 29.09.2008 approved to amend the
 ESOS 2008 to vary the vesting schedule so as to enable subsidiary
 Company employees stock options to vest in a maximum period of 4 years
 from the date of grant.
 
 All the option holders to whom stock options were granted under ESOS
 2008 have requested the Company to terminate the entire stock options
 granted to them in terms of clause 1.4 of the ESOS-
 
 2008 vide letter dated 3rd January 2009. The Board of Directors, in
 their meeting held on 29th [anuarv,
 
 2009 has terminated the entire stock options granted to them.
 Accordingly, the Company has not accounted for employee stock option
 expenses of Rs. 1,587.31 Lacs during the year.
 
 8.3 Method used for accounting for share based payment plan:
 
 The Company has used the intrinsic value method to account for the
 compensation cost of stock option to employees of the Company.
 Intrinsic value is the amount by which the quoted market price of the
 underlying share exceeds the exercise price of the option.
 
 9.  Segment Reporting
 
 9.1 The activities of the Company relate to only one business segment
 i.e. the business of providing Automatic Identification & Data Capture
 (AIDC) solutions.
 
 10.  Disclosures as required under Accounting Standard AS-15
 
 10.1 The Accounting Standard- 15 on Employee benefits prescribed by
 the Central Government has been adopted by the Company from 1 st April,
 2008. In accordance with the transitional provisions specified in the
 said Accounting Standard Rs. 6.19 Lacs (net of deferred tax of Rs. 3.19
 Lacs) has been adjusted against the opening Profit & Loss Account as at
 1 st April, 2008. Further, the liability for the year determined as per
 the Standard, has been accounted for in the financial statements. The
 effect on the profit for the year consequent to the implementation of
 the provisions of the Standard is not material.
 
 11.  Income tax
 
 Current tax represents income tax payable on the book profits computed
 under section 115JB of the Income Tax Act, 1961.
 
 12.  Disclosure in respect of Operating Leases
 
 The Companys leasing arrangements are in respect of operating leases
 for premises (office, stores, godowns, etc). General descriptions of
 the leasing arrangements are:
 
 (i) All the agreements are cancellable in nature and range between 11
 months to 3 years.
 
 (ii) Under all the agreements, refundable interest free deposits have
 been given.
 
 (iii) Some of the agreements provide for increase in rent.
 
 (iv) Some of the agreements provide for early termination by either
 party with a notice period which varies from 15 days to 3 months.
 
 (v) Some of the agreements contain a provision for its renewal by
 mutual consent on mutually agreeable terms.
 
 (vi) Lease payments recognised in the statement of profit and loss for
 the year: Rs. 90.03 Lacs (2007-08 : Rs. 55.84 Lacs).
 
 13.  There is no supplier covered under the Micro, Small & Medium
 Enterprises Development Act, 2006 (the Act).  This information and that
 given in Schedule 11- Current Liabilities and Provisions has been
 determined based on the details regarding the status of the supplier
 obtained by the Company. This has been relied upon by the auditors.
 
 14.  Previous years figures have been regrouped/
 rearranged/reclassified wherever necessary to conform to current years
 presentation.
 
 b) As stated in Significant Accounting Policies No. 14 of Schedule 19,
 the Company charges the premium payable on redemption of Foreign
 Currency Convertible Bonds to the securities premium account over the
 life of the bond. Had the Company provided the full liability of
 premium payable on redemption of bonds in terms of the provisions of
 Accounting Standard 29 Provisions, Contingent Liabilities & Contingent
 Assets in Securities Premium Account in the year of issue, the
 additional liability would have been Rs. 8,989.49 Lacs.
 
 15.  Secured Loans
 
 I.  Term Loans
 
 a) Term loans availed from banks are secured by:
 
 • Equitable mortgage of the Companys immovable property at Raj
 Bollaram Village.
 
 • First pari passu charge on all Plant & Machinery, present and future
 and pari passu second charge on all the current assets both present and
 future.
 
 • The personal guarantees of certain directors.
 
 b) Amounts repayable within twelve months in respect of long term
 loans: Rs.2,610.38 Lacs (31st March 2008: Rs. Nil)
 
 II.  Working Capital Loans
 
 a) Working Capital loans availed from banks are secured by:
 
 • First pari passu charge on all the moveable properties both present
 and future including without its limitation its stock in trade,
 receivables, investments, deposits and other movables.
 
 • First pari passu charge on all the current assets and pari passu
 second charge on all the moveable fixed assets of the Company.
 
 • The personal guarantees of certain directors.
 
 b) Amounts repayable within twelve months in respect of working capital
 loans: Rs.l 1,832.06 Lacs (31st March, 2008: Rs.3,989.66 Lacs
 
 III.  Vehicle loans
 
 a) Vehicle loans from banks and others are secured by hypothecation of
 vehicles acquired out of the said loans.
 
 b) Amounts repayable within twelve months in respect of vehicle loans:
 Rs. 5.92 Lacs (31st March, 2008: Rs 3.65 Lacs).
 
 16.  Unsecured Loans
 
 Foreign Currency Convertible Borrowings:
 
 The Company raised US$ 25 Million (FCCB-I) on 09.06.2007 and US$ 50
 Million (FCCB-II) on 04.01.2008 through the issue of zero coupon
 Foreign Currency Convertible Bonds. Bond holders have an option to
 convert each bond of US$ 100000 into shares of Rs. 10/- each at the
 conversion price of Rs.140/- in respect of the FCCB-I and at the
 conversion price of Rs.290/- in respect of FCCB-II. The bonds are
 redeemable with a yield to maturity of 7.25% in case of FCCB-I and
 6.65% in case of FCCB-II. During the year 2,282,332 (31.03.2008:
 3,446,046) shares were allotted out of the FCCB-I consequent to
 conversion of 75 bonds (31.03.2008: 115 bonds) aggregating to US$ 7.5
 Million (31.03.2008 US.5 Millions). The balance bonds unless
 converted will be redeemed on 3rd June 2012 in respect of FCCB-I and on
 4th February, 2013 in respect of FCCB-II
 
 FCCB-I PRICE RESET: Pursuant to the terms and conditions of FCCB-I, the
 FCCB-I Bonds conversion price has been reset on 04-Dec-2008 from Rs.
 140 to Rs. 112.
 
 17.  Related Party Disclosures
 
 17.1 Related Parties and Nature of Relationship
 
 17.1.2 Key Management Personnel
 
 Mr. Sudhir Rao - Managing Director
 
 Mr. T Venkateswara Rao - Whole Time Director
 
 Mr. S. T. Prasad - Whole Time Director
 
 18.  Employees Stock Option Scheme (ESOP)
 
 18.1 The shareholders of the Company at their Extra Ordinary General
 Meeting (EGM) held on 29th January, 2007 approved 800,000 stock options
 under Employees Stock Option Scheme, representing 800,000 equity shares
 of Rs. 10/- each to the employees and directors of the Company The
 Compensation Committee of the Board of Directors of the Company at its
 meeting held on 29th January, 2007, granted 800,000 stock options at an
 exercise price of Rs. 10 per option. Subsequently the shareholders at
 their EGM held on 25th February, 2008 approved to amend the ESOS 2007
 to vary the vesting schedule so as to enable 100% vesting of the
 options granted at the end on the first year from the date of grant of
 the options.
 
 The Company has not created employee stock compensation expenses
 account in the previous years.  Accordingly Rs. 981.60 Lacs being the
 employee compensation expenses towards ESOS 2007 and Rs.  451.65 Lacs
 being the FBT and interest thereon relating to previous year has been
 accounted as expenditure under Prior period expenditure in the current
 year.
 
 18.2 The Shareholders of the Company at their EGM held on 25th
 February, 2008 approved the Employees Stock Option Scheme 2008, ESOS
 2008 for granting 6,00,000 options to employees including directors of
 the Subsidiary Companies and 350,000 options to employees including
 directors of the Company. The compensation committee at their meeting
 held on 25.02.2008 granted 5,49,805 options to employees including
 directors of the Subsidiary Companies and 34,236 options to employees
 including directors of the Company. Subsequently the shareholders at
 their Annual General Meeting held on 29.09.2008 approved to amend the
 ESOS 2008 to vary the vesting schedule so as to enable subsidiary
 Company employees stock options to vest in a maximum period of 4 years
 from the date of grant.
 
 All the option holders to whom stock options were granted under ESOS
 2008 have requested the Company to terminate the entire stock options
 granted to them in terms of clause 1.4 of the ESOS-2008 vide letter
 
 19.  Segment Reporting
 
 19.1 The activities of the Company relate to only one business segment
 i.e. the business of providing Automatic Identification & Data Capture
 (AIDC) solutions.
 
 20.  Disclosures as required under Accounting Standard AS-15
 
 20.1 The Accounting Standard- 15 on Employee benefits prescribed by
 the Central Government has been adopted by the Company from 1st April,
 2008. In accordance with the transitional provisions specified in the
 said Accounting Standard Rs. 6.19 Lacs (net of deferred tax of Rs. 3.19
 Lacs) has been adjusted against the opening Profit & Loss Account as at
 1st April, 2008. Further, the liability for the year determined as per
 the Standard, has been accounted for in the financial statements. The
 effect on the profit for the year consequent to the implementation of
 the provisions of the Standard in not material.
 
 20.2.1 Actuarial Assumptions
 
 Discount Rate: 8% Attrition Rate 10% Salary Escalation Rate: 10%
 Subsidiary companies do not have any long tetm defined benefit plans.
 
 21.  Income tax
 
 Current tax in respect of parent company represents income tax payable
 on the book profits computed under section 115JB of the Income Tax Act,
 1961.
 
 22.  Foreign Currency Translation
 
 Foreign subsidiaries being integral operations, the foreign currency
 translation loss of Rs.5,280.81 Lacs arising on consolidation is
 recognized as Foreign Currency Translation loss and charged to the
 profit and loss account.
 
 23.  Disclosure in respect of Operating Leases
 
 The Companys leasing arrangements are in respect of operating leases
 for premises (office, stores, godowns, etc). General descriptions of
 the leasing arrangements are:
 
 (i) All the agreements are cancellable in nature and range between 11
 months to 3 years.
 
 (ii) Under all the agreements, refundable interest free deposits have
 been given
 
 (iii) Some of the agreements provide for increase in rent.
 
 (iv) Some of the agreements provide for early termination by either
 party with a notice period which varies
 from 15 days to 3 months.  (v) Some of the agreements contain a
 provision for its renewal by mutual consent on mutually agreeable
 terms.  (vi) Lease payments recognised in the statement of profit and
 loss for the year: Rs. 90.03 Lacs (2007 08: Rs. 55.84 Lacs)
 
 24.  Previous years figures have been regrouped/
 rearranged/reclassified wherever necessary to conform to current years
 presentation.