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Blue Star Infotech
BSE: 532346|NSE: BLUESTINFO|ISIN: INE504B01011|SECTOR: Computers - Software
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Notes to Accounts Year End : Mar '11
1.  Estimated amount of contracts remaining to be executed on capital
 account and not provided for (net of advances) is (Rs. 000) 2,948
 {Previous year (Rs. 000)Nil}.
 
 2.  Contingent Liability not provided in respect of:
 
 Demand(s) raised by the Income Tax authorities for prior financial
 year(s) during the year aggregating (Rs. 000) 319,641 {Previous year
 (Rs. 000) 35,082/-} against which the Company has filed appeal(s) with
 the Commissioner of Income-tax (Appeals). The appeal(s) filed with the
 Appellate Tribunal (India) towards income tax demands amounting to (
 Rs. 000) 6,584/- {Previous year ( Rs. 000) 8,584/-}.
 
 The Company is advised that it would get a favourable verdict and no
 demand would be eventually sustained in any of the above matters.
 Accordingly, no provision is made in the books in respect of these
 contingent liabilities.
 
 3.  Guarantees given on behalf of the Company by banks (Rs. 000) 6,799
 (Previous Year (Rs. 000) 6,084) and by others (Rs. 000) Nil (Previous
 Year (Rs. 000) 81,500).
 
 4.  a) Blue Star Infotech (UK) Ltd. (BSIUK), the 100 % subsidiary of
 the Company has earned profits during the year ended March 31, 2011 and
 also has a positive net worth, as at the year-end.
 
 b) Blue Star Infotech America Inc., the 100 % subsidiary of the Company
 has incurred a loss during the year ended March 31, 2011 and has a
 negative net worth, as at the year-end.The management believes that the
 business loss and negative net worth to be a temporary phenomenon
 arising mainly due to a temporary reduction in turnover consequent to
 transient adverse market conditions. Hence, no impairment of the
 investment in the subsidiary is deemed necessary in the books of
 accounts.
 
 5. Notes:
 
 a) The compensation committee at its meeting held on October 25, 2005
 pursuant to ESOP Scheme 2003 decided to grant 382,000 equity shares to
 senior employees of the Company at the closing market price of Rs. 117
 as at October 31, 2005 on the National Stock Exchange with 10,000
 equity shares vesting on October 31, 2006 and rest of the equity shares
 vesting on October 31, 2008. The offer price was revised to Rs. 72 per
 share (the closing market price on June 19, 2006 on the National Stock
 Exchange) for 323,000 equity shares vide approval of the members at the
 Annual General Meeting held on August 29, 2006.
 
 b) There is one employee who has been granted options equal to or
 exceeding 1% of the Issued Capital.
 
 c) The diluted Earnings Per Share and Earnings Per Share are the same,
 as the shares covered under vested options are already issued and
 allotted and are held by the Trust.
 
 d) In the event of any further rights or bonus issue of equity shares
 after vesting but prior to exercise of the options, the Company / Trust
 shall consider the grant of an appropriate number of additional
 options, at such price as may be determined by the Compensation
 Committee.
 
 e) The Company accounts for Employee Share Based Payments using the
 intrinsic value method. The intrinsic value of the stock options issued
 by the Company to its employees for services rendered by them is
 measured as the amount by which the quoted market price of the
 Companys share as on the date of grant exceeds the exercise price of
 the stock option. Considering that the stock options have been issued
 with an exercise price that equals the quoted share price on the
 previous day, there is no compensation cost recorded in the financial
 statements using the intrinsic value method.
 
 6.b) Computation of net profit in accordance with Section 349 of the
 Companies Act, 1956 and calculation of commission payable to the
 directors
 
 The members of the Company at the 12th AGM of the Company held on July
 30, 2009 consented to increase commission up to 3% of the Net Profits,
 subject to approval of the Central Government. Central Government has
 vide its letter date July 15, 2010 approved payment of commission up to
 3% of net profits in accordance with section 198 of the Companies Act,
 1956 for a period of 5 (five) financial years starting from 2009-2010.
 
 7.  Loans and Advances include amount due from a director – (Rs. 000)
 Nil {Previous Year – (Rs. 000) Nil}, Maximum balance outstanding from
 a director during the year – (Rs. 000)150 {Previous Year – (Rs. 000)
 150}
 
 9.  Micro, Small and Medium Enterprises
 
 There are no Micro, Small and Medium Enterprises, to whom the Company
 owes dues, which are outstanding for more than 45 days as at March 31,
 2011. This information as required to be disclosed under the Micro,
 Small and Medium Enterprises Development Act, 2006 has been determined
 to the extent such parties have been identified on the basis of
 information available with the Company and has been relied upon by the
 statutory auditors of the Company.
 
 10.  Exceptional Item (Stamp duty Liability)
 
 Notice(s) demanding differential stamp duty of (Rs. 000) 4,699 and
 penalty of (Rs. 000) 3,398 was received during the year 2007-08,
 pursuant to disallowance of stamp duty concession availed by the
 Company in the year 2005.  As per the Information Technology (IT)
 Policy issued by the Government of Maharashtra in the year 2003, 75%
 stamp duty concession was granted on purchase of property for
 establishing a new unit related to Information Technology in recognized
 private IT Parks. Accordingly, the Company was legally advised that it
 is entitled to this duty concession. Consequently, the Company filed
 writ petitions before the Honourable High Court, Bombay.  Pursuant to
 interim stay orders of the Honourable High Court, Bombay, the Company
 deposited a sum of (Rs. 000) 4,699 and provided bank guarantees for a
 sum of (Rs. 000) 3,020 to the Honourable High Court, Bombay, subject
 to further orders and outcome of appeal proceedings. No hearing was
 scheduled in the matter by the Honourable High Court, Bombay for over
 three years. As a matter of commercial prudence, the Board of Directors
 decided to withdraw the petition(s) from the Honourable High Court,
 Bombay and pay the differential stamp duty and penalty without getting
 into the merits of the matter. Accordingly, a total sum of (Rs. 000)
 11,137 was paid including (Rs. 000) 6,418 as penalty which has been
 disclosed as an exceptional item in the Profit and Loss Account.
 
 11.  Derivative Instruments
 
 The Company has entered into the following derivative instruments:
 
 a) Forward Exchange Contracts and Foreign Exchange Options Contracts
 [being derivative instruments], which are not intended for trading or
 speculative purposes, but for hedging purposes, to establish the amount
 of reporting currency required or available at the settlement date of
 certain payables and receivables.
 
 There are outstanding Forward Exchange Contracts and Foreign Exchange
 Options Contracts entered into by the Company as at March 31, 2011 of
 US Dollar $ 11,150,000 and GBP £ 80,000 Cross Currency- Rupees
 (Previous year US Dollar $ 12,467,724 and GBP £ 180,000)
 
 12. Related Party Disclosures:
 
 Related party transactions are transfer of resources or obligations
 between related parties, regardless of whether a price is charged.
 Parties are considered to be related, if one party has the ability,
 directly or indirectly, to control the other party or exercise
 significant influence over the other party in making financial or
 operating decisions.  Parties are considered to be related if they are
 subject to common control or common significant influence.
 
 Note: Figures in Italics are of the previous year
 
 Names of related parties and description of relationship
 
 Subsidiaries : (a) Blue Star Infotech America, Inc., USA (100%
                    subsidiary)
 
                (b) Blue Star Infotech (UK) Limited, UK 
                    (100% subsidiary)
 
 Associates   : Blue Star Limited (Holding 31% of the 
                equity share capital of the Company)
 
 Promoters    : Mr. Suneel M Advani, Chairman and Managing Director
 
                Mr. Ashok M Advani, Vice Chairman
 
 13. Staff benefits cost in accordance with Accounting Standard 15
 (Revised 2005)
 
 a) Defined Contribution Plans: The amount recognised as an expense
 during the year is (Rs. 000) 22,316 (Previous Year (Rs. 000) 21,578)
 
 c) During the year the company has reversed provisions made towards
 incentive and sales commission relating to employees amounting to (Rs.
 000) 23,500 {Previous year (Rs. 000) Nil}.
 
 15. Operating Lease
 
 a) The Company has taken office/residential premises under cancellable
 operating lease agreements that are renewable at the option of both the
 lessor and lessee. An amount of (Rs. 000) 34,959 (Previous year (Rs.
 000) 29,559) is recognised as lease expenses in the Profit and Loss
 Account for the year ended March 31, 2011.  The future guaranteed lease
 payments under non-cancellable portion of cancellable leases are:
 
 i) less than one year – (Rs. 000) 15,574 (Previous year (Rs. 000)
 Nil)
 
 ii) later than one year but not later than 5 years – (Rs. 000) 980 Nil
 (Previous year (Rs. 000) Nil)
 
 b) The Company has leased out office premises and furniture under
 non-cancellable operating lease agreements that are renewable at the
 option of both the lessor and lessee. An amount of (Rs. 000) 43,775
 (Previous year (Rs. 000) 34,830) is recognised as lease income in the
 Profit and Loss Account for the year ended March 31, 2011. The future
 guaranteed lease payments under non-cancellable leases are:
 
 i) less than one year (Rs. 000) 39,240 (Previous year (Rs. 000)
 39,240)
 
 ii) later than one year but not later than 5 years - (Rs. 000) 187
 (Previous year (Rs. 000) 34,746)
 
 16. Earnings Per Share (EPS)
 
 The amount considered in ascertaining the Companys earnings per share
 constitute the net profit after tax and exceptional item (and includes
 post tax effect of any extraordinary items). The number of shares used
 in computing basic earnings per share is the weighted average number of
 shares outstanding during the year. The number of shares used in
 computing diluted earnings per share comprise the weighted average
 number of shares considered for deriving basic earnings per share and
 also the weighted average number of shares which could have been issued
 on conversion of all dilutive potential shares.
 
 17. Additional information pursuant to the provisions of Part II of
 Schedule VI to the Companies Act, 1956
 
 i) The Company is engaged in the development of computer software.
 Considering the nature of business, certain details required under Part
 II of Schedule VI to the Companies Act, 1956 are not applicable.
 
 18.  The Ministry of Corporate Affairs, Government of India vide its
 General Circular No. 2/2011 No. 51/12/2007-CL-III dated February 08,
 2011 read with General Circular No. 3/2011 dated February 21, 2011
 issued under section 212(8) of the Companies Act, 1956 has granted
 general exemption to companies from attaching the Balance Sheet and
 Profit and Loss Account of their subsidiaries under section 212(1) of
 the Companies Act, 1956 and clarified that this exemption is applicable
 for accounts prepared on or after March 31, 2011.
 
 19.  The previous years figures have been regrouped / rearranged
 wherever considered necessary.
Source : Dion Global Solutions Limited
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