Online
Digital Globalsoft
BSE: 500121 | NSE: DIGITALEQP | ISIN: INE124A01010 | Computers - Software
- Directors Report
- Chairman's Speech
- Auditors Report
- Notes To Accounts
- Accounting Policy
- Finished Products
- Raw Materials
| Notes to Accounts | Year End : Mar '06 |
ANNUAL REPORT 2005-2006
NOTES ON ACCOUNTS
SIGNIFICANT ACCOUNTING POLICIES:
1. Nature of Operations:
Hewlett-Packard GlobalSoft Limited ('the Company') is engaged in the
business of Software Development Services and licensing of software
products. The company was incorporated in the year 1988 in Bangalore,
India. The Company also operates branch offices in United Kingdom (UK),
Germany, Switzerland, Japan, Hong kong, Singapore and the United States of
America (USA).
2. Basis of Accounting and preparation of Financial Statements:
The Financial Statements are prepared under the historical cost convention,
in accordance with the Indian Generally Accepted Accounting Principles
(GAAP) and the provisions of the Companies Act, 1956. All Income and
Expenditure, having a material bearing on the Financial Statements, are
recognized on accrual basis.
3. Fixed Assets:
(a) Fixed assets are stated at cost (or revalued amounts, as the case may
be), less accumulated depreciation and impairment losses, if any. Cost
comprises the purchase price and any attributable cost of bringing the
asset to its working condition for its intended use.
(b) Fixed Assets acquired on Finance Lease on or after April 01 , 2001, are
capitalised at the fair value arrived at by computing the present value of
minimum lease payments, based on the interest rate implicit in the lease
agreement.
(c) Capital work-in-progress comprises cost of fixed assets that are not
put to use as at the Balance Sheet date and advances paid towards
acquisition of fixed assets.
(d) Depreciation is provided from the month of capitalisation on a
straight-line method (SLM), based on the management's estimate of useful
lives for the various fixed assets, as given below:
i. Buildings 40 years
ii. Lease hold improvements Lower of Lease period ors yrs
iii. Furniture & Fixtures 5 years
iv. Computer equipment:
* Desktop/Server/Workstation
and other Computer Equipment 3 years
* Laptops 2 years
v. Plant & Machinery 5 years
vi. Office Equipment 5 years
vii. Electrical Fittings 5 years
viii. Vehicles 5 years
ix. Leased Vehicles Lease period
x. Intangible assets
(Computer software) 3 years
The depreciation rates used are higher than the rates prescribed under
schedule XIV of the Companies Act, 1956.
(e) Individual assets costing less than Rs.5,000/- are depreciated in full,
in the year of purchase.
4. Revenue:
(a) Revenue from Software Development:
(1) Cost Plus Mark-Up:
Revenue in respect of cost plus mark up agreements is recognised based on
the total costs incurred on accrual basis towards software development
services provided to those respective customers and marked up with the
agreed margin as per the terms of agreement.
(2) Time and Material:
Revenue from Software Development on a time-and-material basis is
recognised based on software developed and billed to customers as per the
terms of specific contracts. In the case of fixed price contracts, revenue
is recognised based on the milestones achieved as specified in the
contracts.
(b) Revenue from Sale of Licences for software products is recognized on
shipment of licences and fulfillment of acceptance terms. Revenue from
software product related maintenance services is recognised over the period
of such services.
(c) Interest on deployment of surplus funds is recognised based on interest
rates, using the time-proportion method.
(d) Rental Income from Lease of property is recognised on accrual basis,
based on the terms and conditions, agreed with the lessee.
5. Expenditure:
Expenses are accounted on accrual basis and provisions are made for all
known losses and liabilities. Cost of software purchased for use in
software development and services and having a useful life of less than one
year is charged to revenue at the time of acquisition.
6. Foreign Currency Transactions:
(a) Initial Recognition:
Foreign currency transactions are recorded in the reporting currency, by
applying to the foreign currency amount the exchange rate between the
reporting currency and the foreign currency approximately at the date of
the transaction.
(b) Conversion:
Foreign currency monetary items are reported using the closing rate. Non-
monetary items which are carried in terms of historical cost denominated in
a foreign currency are reported using the exchange rate at the date of the
transaction.
(c) Exchange Differences:
Exchange differences arising on the settlement or conversion of monetary
items are recognised as income or as expenses in the year in which they
arise except those arising on liabilities pertaining to fixed assets, which
has been adjusted to the cost of fixed assets.
(d) Foreign branches:
The financial statements of an integral foreign operation are translated as
if the transactions of the foreign operation have been those of the Company
itself.
7. Retirement Benefits to employees:
(a) Gratuity:
In accordance with the Indian Law, the Company provides for gratuity, a
defined benefit plan covering all employees. The Company covers employees
for this benefit under the Group Gratuity Scheme, which is currently with
Life Insurance Corporation (LIC) of India, and the provision required and
the payment is determined as per actuarial valuation carried at the end of
the year.
(b) Leave Encashment:
The Company makes a provision in its books for encashment of unavailed
accumulated privilege leave lying to the credit of employees, subject to a
maximum period of leave, based on actuarial valuation conducted by an
independent actuary as at the end of the year.
(c) Provident Fund:
The Company has established a Provident Fund Trust to which contributions
towards provident fund are made each month. The contributions towards the
family pension fund are remitted to the Regional Provident Fund.
Contributions towards Provident Fund and Pension Fund are charged to the
Profit and Loss Account on an accrual basis. The trust guarantees a
specified rate of return on such contributions of employee and employer on
a yearly basis. The Company will meet the shortfall in the return, if any,
and the same is charged to Profit and Loss Account on an accrual basis.
(d) Superannuation Fund:
The Company established a Superannuation Scheme administered by Life
Insurance Corporation (LIC) of India. As per the Scheme, for employees
claiming the benefit, the Company makes monthly contributions, which are
charged to the Profit and Loss Account on an accrual basis.
8. Income Tax:
(a) Tax expense comprises of current, deferred and fringe benefit tax.
Current income tax and fringe benefit tax is measured at the amount
expected to be paid to the tax authorities in accordance with the Indian
Income tax Act 1961.
(b) Deferred tax asset or liability is recognised for timing differences
between the profit as per financial statements and the profit offered for
income taxes, based on tax rates that have been enacted or substantively
enacted at the Balance Sheet date. Deferred tax in respect of timing
differences which reverse after the tax holiday period are recognised in
the year in which the timing differences originate. Deferred tax assets are
recognised only if there is reasonable certainty that sufficient future
taxable income will be available, against which they can be realized. The
carrying amount of deferred tax assets is reviewed at each Balance Sheet
date and reduced to the extent that it is no longer probable that
sufficient taxable profit will be available to allow all or part of the
deferred tax asset to be utilised.
9. Impairment of Assets:
a) The carrying amounts of assets are reviewed at each balance sheet date
if there is any indication of impairment based on internal/external
factors. An impairment loss is recognised wherever the carrying amount of
an asset exceeds its recoverable amount. The recoverable amount is the
greater of the assets net selling price and value in use. In assessing
value in use, the estimated future cash flows are discounted to their
present value at the weighted average cost of capital.
b) After impairment, depreciation is provided on the revised carrying
amount of the assets over its remaining useful life.
10. Provisions:
A provision is recognised when an enterprise has a present obligation as a
result of past event; it is probable that an outflow of resources will be
required to settle the obligation, in respect of which a reliable estimate
can be made. Provisions are not discounted to its present value and are
determined based on best estimate required to settle the obligation at the
balance sheet date. These are reviewed at each balance sheet date and
adjusted to reflect the current best estimates.
11. Leases:
(a) Finance Lease payments are apportioned between finance charges and
reduction of the lease liability, so as to achieve a constant rate of
interest on the remaining balance of the liability. Finance charges are
recognised as an expense in the Profit and Loss account.
(b) Operating Lease payments/income is recognised in the Profit and Loss
account on a straight-line basis over the lease term.
12. Earnings Per Share:
Earnings per share is calculated on Profit after tax as disclosed in the
Profit and Loss account. Basic Earnings per share is computed using the
weighted average number of shares outstanding during the period. Diluted
earnings per share is computed using the weighted average number of shares
considered for deriving basic earnings per share and also the weighted
average number of equity shares that could have been issued on the
conversion of all dilutive potential equity shares.
NOTES ON ACCOUNTS:
(All figures are in Rupees thousand except for share data or as
specifically mentioned in the financial statements):
1. Capital Reserve represents:
a) Incentive available against captive consumption Rs.423 (2005-Rs. 423)
b) Non-Compete Fees Rs.50,000 (2005-Rs.50,000)
2. Capital Commitment (net of advances) not provided for as at March 31,
2006: Rs.21 1,158 (2005-Rs.240,797)
3. Contingent Liabilities in respect of:
a) Guarantees given by Company's bankers Rs.12,208 (2005-Rs.20,369)
including given towards disputed statutory dues Rs. Nil (2005-Rs.11,200)
b) Others (see note (i) below) Rs.249,831 (2005 - Rs.228,503)
Notes:
i) Includes Rs.22,436 (2005 - Rs.22,436), towards demands from Sales Tax
and Rs.227,395 (2005-Rs.206,06) including penal interest towards demands
from Income tax authorities, which are disputed by the Company. At this
stage, it is not considered necessary to make any provision in the books of
account.
4. Assets Held for Sale:
The Company has discontinued the usage of building at New Delhi. The
property was let out on lease to erstwhile Company Computer India Pvt. Ltd.
(which got merged with Hewlett Packard Co) till Dec 2003. Since January
2006 the property was lying vacant and the Company does not intend to use
the property. Consequent to this the Company has decided to sell the
property.
Accordingly, the Company has obtained valuation report with regard to the
expected realizable value of the property. Based on such valuation report,
it is expected that the property will realize at least the carrying value
of the year end.
Consequently no impairment loss has been recognised in the books as at year
end.
5. The Company is engaged in the business of software development/services
and licensing of software products and related services. The production and
sale of such software and related services cannot be expressed in only
generic unit. Hence, it is not possible to give the quantitative details of
sales and the information as required under paragraphs 3, 4C and 4D of part
II to Schedule VI to the Companies Act, 1956.
2006 2005
6. Imports on CIF basis:
a) Capital Goods 229,856 141,533
7. a) Expenditure in Foreign
Currency (on accrual basis):
Overseas Travel 488,748 452,604
Professional & Consultancy Charges 520,356 324,140
Other Overseas Business Expenses, etc. 2,014,095 1,889,700
8. Earnings in Foreign Exchange:
From Sale of Services & Products 10,106,999 8,072,490
From Interest on Deposit 178 9
9. Auditors' Remuneration:
Audit Fees 600 600
Tax Audit Fees 200 200
Certification, etc. 150 310
Reimbursement of Out-of-pocket
expenses (including service tax) 160 168
1,110 1,278
10. a) Directors' Remuneration
(excluding provision for leave
encashment and gratuity):
Salary and Allowances 20,735 50,645
Contribution to Provident and Other Funds 1,926 1,711
Perquisites (including those which are
exempt/partially exempt as per
Income Tax Rules) 491 1,076
23,152 53,432
b) Computation of Net Profit in
accordance with Section 349 of
the Companies Act, 1956,
Profit Before Taxation 1,157,985 1,2152,046
Add:
(i) Directors' Remuneration 23,152 53,432
(ii) Depreciation as per Accounts 561,234 453,899
(iii) Provision for Doubtful Debts
(net of reversal of provision for
earlier years) (8,939) 6,749
1,733,432 1,766,126
Less:
(i) Depreciation as per Section
350 of the Companies Act, 1956(@) 561,234 453,899
Net profit as per Section 349 of
the Companies Act, 1956 1,172,198 1,312,227
(@) The Company depreciates fixed assets based on estimated useful lives
that are lower than those implicit in Schedule XIV of the Companies Act,
1956.
11. The provision for taxation for the current year is after considering
write back of provision of Rs. Nil (2005 - Rs.4,500) in respect to earlier
periods.
12. Segment reporting:
The Company's operations relate to providing Software Development/Services,
including Contact Centre Services ('Services') and licensing of Software
products and related services ('Products') to customers operating globally.
Since the company is predominantly engaged in providing software services,
Services' comprises the primary segment. Secondary segmental reporting is
performed on the basis of the geographical location of customers.
The accounting principles and policies used in the preparation of the
Financial Statements, as set out in the note on significant accounting
policies, are also consistently applied to record revenue and expenditure,
and assets and liabilities in individual segments.
(A) Primary-Business Segments:
The Company is predominantly engaged in providing software development and
contact center services. With the change in its operating model from an
Independent Service Provider to that of a Contract Service Provider the
company has entered into a cost plus arrangement with its parent company,
Hewlett Packard Company, USA. The cost plus arrangement has resulted in
reduction of the exposure to trade customers thereby considerably
mitigating the business risk of the company.
Accordingly providing software development services forms the company's
only primary segment. Hence, no separate disclosure of primary segment
information is necessary as the financial statements provide the
information relevant to the primary segment.
(B) Secondary-Geographical Segments:
Secondary segment reporting based on the location of the Company's
customers is as detailed below.
in Rs. '000
2006
USA Europe Rest of Total
the world
Segment Revenue 9,140,571 42,048 1,112,191 10,294,811
Unallocated Income 166,054
Total Income 10,460,865
Segment Assets 961,505 67,144 219,744 1,248,393
Unallocated Assets 6,675,182
Total Assets 7,923,575
2005
USA Europe Rest of Total
the world
Segment Revenue 5,015,574 1,896,046 1,228,660 8,140,280
Unallocated Income 98,863
Total Income 8,239,143
Segment Assets 571,860 273,013 442,491 1,287,364
Unallocated Assets 5,742,770
Total Assets 7,030,134
Note:
Revenue and Assets not allocable directly to any geographical segment, have
been classified as Unallocated.
13. Related party transactions:
The Company entered into transactions with related parties, during the
year. Those transactions for the year ended March 31, 2006 and 2005 along
with related balances as at that date, are presented below:
in Rs. '000
Ultimate Holding company Fellow subsidiaries
Transactions 2006 2005 2006 2005
Revenue-Sales &
Services#:
Compaq Computer
Corporation - - - 1,014,382
Hewlett-Packard
Company USA 8,901,674 3,704,351 - -
Others - - 1,070,669 2,983,967
Rental & Other
Income:
Hewlett Packard
(India) Software
Operations
Private Limited - - 13,355 10,573
Global E-Busi-
ness Operations
Private Limited - - 3,944 5,244
Interest on
Inter Company
Deposit:
Global E-Busi-
ness Operations
Private Limited - - 10,310 -
Hewlett Packard
(India) Software
Operations
Private Limited - - 35,096 -
Hardware
Maintenance
Expenses:
Hewlett Packard
India Sales
Private Limited - - 1,547 20,961
Hewlett Packard
Singapore
(Sales) Pte Ltd. - - 1,827 21
Hewlett Packard
Asia Pacific Ltd. - - 52 57
Managerial
Remuneration - - - -
Retainers &
Consultancy
Expenses:
Hewlett Packard
(India) Software
Operations
Private Limited - - 274,969 171,698
Other Expenses:
Hewlett-Packard
Company USA - 2,034 - -
Hewlett Packard
India Sales
Private Limited - - 29,888 14,294
Hewlett Packard
(India) Software
Operations
Private Limited - - 11,318 2,950
Global E-Busi-
ness Operations
Private Limited - - 14,195 -
Others - - 60 -
Reimbursements
of Expenses
Received:
Hewlett Packard
(India) Software
Operations
Private Limited - - 29,484 26,737
Global E-Busi-
ness Operations
Private Limited - - 4,749 4,962
Hewlett Packard
India Sales
Private Limited - - 3,152 -
Acquisition of
Fixed Assets:
Hewlett Packard
Singapore
(Sales) Pte Ltd. - - 199,105 2,293
Hewlett Packard
India Sales
Private Limited - - 19,962 87,402
Hewlett Packard
Asia Pacific Ltd. - - 6,522 49,024
Hewlett Packard
(India) Software
Operations
Private Limited - - 407 -
Global E-Busi-
ness Operations
Private Limited - - 518 69
Sale of Fixed
Assets:
Hewlett Packard
India Sales
Private Limited - - - 529
Hewlett Packard
(India) Software
Operations
Private Limited - - 34,271 -
Global E-Busi-
ness Operations
Private Limited - - 603 -
Trade
Receivables:
Hewlett-Packard
Company USA 871.201 367,015 - -
Compaq Computer
Corporation - - - 69,936
Hewlett Packard
(India) Software
Operations
Private Limited - - 79,526 323,765
Global E-Busi-
ness Operations
Private Limited - - 4,126 264,274
Inter-Corporate
Loan Given*:
Hewlett Packard
(India) Software
Operations
Private Limited - - 500,000 500,000
Global E-Busi-
ness Operations
Private Limited - - 570,000 -
Current Assets
Transfers In:
Global E-Busi-
ness Operations
Private Limited - - 668 -
Hewlett Packard
India Sales
Private Limited - - 4,117 -
Hewlett Packard
(India) Software
Operations
Private Limited - - 876 -
Current Assets
Transfers Out:
Hewlett Packard
India Sales
Private Limited - - 289 -
Other
Receivables:
Hewlett Packard
(India) Software
Operations
Private Limited - - 32,492 14,399
Others - - 246 -
Advance from
Customers:
Hewlett-Packard
Company USA - 9,885 - -
Accounts
Payables:
Hewlett-Packard
Company USA 2,613 12,469 - -
Hewlett-Packard
India Sales
Private Limited - - 3,754 7,159
Hewlett
Packard GMBH - - - 5,060
Hewlett Packard
(India) Software
Operations
Private Limited - - 62,861 42,372
Hewlett Packard
Singapore
(Sales) Pte Ltd. - - 6,538 1,387
Hewlett Packard
Asia Pacific Ltd. - - 466 -
Others - - 60 9,943
Key Managerial Total
Personnel @
Transactions 2006 2005 2006 2005
Revenue-Sales &
Services#:
Compaq Computer
Corporation - - - 1,014,382
Hewlett-Packard
Company USA - - 8,901,674 3,704,351
Others - - 1,070,669 2,983,967
Rental & Other
Income:
Hewlett Packard
(India) Software
Operations
Private Limited - - 13,355 10,573
Global E-Busi-
ness Operations
Private Limited - - 3,944 5,244
Interest on
Inter Company
Deposit:
Global E-Busi-
ness Operations
Private Limited - - 10,310 -
Hewlett Packard
(India) Software
Operations
Private Limited - - 35,096 -
Hardware
Maintenance
Expenses:
Hewlett Packard
India Sales
Private Limited - - 1,547 20,961
Hewlett Packard
Singapore
(Sales) Pte Ltd. - - 1,827 21
Hewlett Packard
Asia Pacific Ltd. - - 52 57
Managerial
Remuneration 23,152 53,432 23,152 53,432
Retainers &
Consultancy
Expenses:
Hewlett Packard
(India) Software
Operations
Private Limited - - 274,969 171,698
Other Expenses:
Hewlett-Packard
Company USA - - - 2,034
Hewlett Packard
India Sales
Private Limited - - 29,888 14,294
Hewlett Packard
(India) Software
Operations
Private Limited - - 11,318 2,950
Global E-Busi-
ness Operations
Private Limited - - 14,195 -
Others - - 60 -
Reimbursements
of Expenses
Received:
Hewlett Packard
(India) Software
Operations
Private Limited - - 29,484 26,737
Global E-Busi-
ness Operations
Private Limited - - 4,749 4,962
Hewlett Packard
India Sales
Private Limited - - 3,152 -
Acquisition of
Fixed Assets:
Hewlett Packard
Singapore
(Sales) Pte Ltd. - - 199,105 2,293
Hewlett Packard
India Sales
Private Limited - - 19,962 87,402
Hewlett Packard
Asia Pacific Ltd. - - 6,522 49,024
Hewlett Packard
(India) Software
Operations
Private Limited - - 407 -
Global E-Busi-
ness Operations
Private Limited - - 518 69
Sale of Fixed
Assets:
Hewlett Packard
India Sales
Private Limited - - - 529
Hewlett Packard
(India) Software
Operations
Private Limited - - 34.271 -
Global E-Busi-
ness Operations
Private Limited - - 603 -
Trade
Receivables:
Hewlett-Packard
Company USA - - 871,201 367,015
Compaq Computer
Corporation - - - 69,936
Hewlett Packard
(India) Software
Operations
Private Limited - - 79,526 323,765
Global E-Busi-
ness Operations
Private Limited - - 4,126 264,274
Inter-Corporate
Loan Given*:
Hewlett Packard
(India) Software
Operations
Private Limited - - 500,000 500,000
Global E-Busi-
ness Operations
Private Limited - - 570,000 -
Current Assets
Transfers In:
Global E-Busi-
ness Operations
Private Limited - - 668 -
Hewlett Packard
India Sales
Private Limited - - 41,117 -
Hewlett Packard
(India) Software
Operations
Private Limited - - 876 -
Current Assets
Transfers Out:
Hewlett Packard
India Sales
Private Limited - - 289 -
Other
Receivables:
Hewlett Packard
(India) Software
Operations
Private Limited - - 32,492 14,399
Others - - 246 -
Advance from
Customers:
Hewlett-Packard
Company USA - - - 9,885
Accounts
Payables:
Hewlett-Packard
Company USA - - 2,613 12,469
Hewlett-Packard
India Sales
Private Limited - - 3,754 7,159
Hewlett
Packard GMBH - - - 5,060
Hewlett Packard
(India) Software
Operations
Private Limited - - 62,861 42,372
Hewlett Packard
Singapore
(Sales) Pte Ltd. - - 6,538 1,387
Hewlett Packard
Asia Pacific Ltd. - - 466 -
Others - 15,860 60 25,804
Ultimate holding company- Hewlett-Packard Company, USA
Fellow subsidiaries - Compaq Computer (Australia) Pty. Ltd. Australia
Compaq Computer EMEA, Munich, Compaq Computer Corporation, USA, Compaq
Computer GMBH, Germany, Compaq Computer Asia Pacific Pte Ltd., Singapore,
Compaq Computer Asia Pte Ltd., Singapore Compaq Computer Corporation
(Malaysia) Malaysia Compaq Canada Corporation Canada, Compaq Computers
International B.V, Netherlands, Compaq Computers Taiwan Ltd., Hewlett
Packard India Pvt. Ltd., Hewlet Packard India Sales Pvt. Ltd., Hewlett-
Packard (India) Software Operations Pvt. Ltd., Hewlett-Packard (Canada)
Co., Hewlett-Packard GMBH, PT Compaq Computer Indonesia, Hewlett Packard
Taiwan Ltd., Hewlett-Packard Italiana SRL Hewlett-Packard Japan Ltd.,
Hewlett-Packard (Thailand) Ltd., Compaq Computer Slovakia s.r.o, Hewlett-
Packard UK., Hewlett-Packard France SaS Hewlett-Packard Nederland B V,
Hewlett Packard Company, USA, Hewlett Packard Polska, Spoi.z.o.o Hewlett-
Packard Sales (Malaysia) Sdn Bhd, Hewlett-Packard Singapore (Sales) Pte
Ltd, Hewlett-Packard Asia Pacific Ltd., Hewlett-Packard Asia Pacific Ltd,
Hong Kong, Global E-Business Operations Private Limited, Compaq Computer,
France, Compaq Computer AB Sweden, Hewlett-Packard GMBH, Compaq Computer
Corporation (Thailand) Ltd., Thailand, Compaq Computers Ltd., Hong Kong,
Hewlett-Packard KK, Hewlett-Packard Turkey, Hewlett-Packard Sweden,
Hewlett-Packard Solution, Hewlett-Packard, Indonesia, Hewlett-Packard
Espanola SL, Barcelona. Hewlett Packard EMEA GMBH Hewlett-Packard
International Trade, Switzerland; Hewlett-Packard Hellas LLC, Maroussi;
Hewlett Packard Ges.m.b.H, Austria; Hewlett-Packard Romania, Bucharest;
Hewlett Packard China Software Solutions, China; Hewlett Packard Egypt
Limited, Egypt; Hewlett Packard Middle East FZ-LLC, UAE Hewlett Packard
Ltd., United Kingdom; Hewlett Packard International SARL, Switzerland;
Compaq Computer FZE, UAE; Compaq Computer, KK, Japan; Compaq Computer BV,
Netherlands; Hewlett Packard HK SAR Ltd., Hong Kong; Compaq Computer Ltd.,
UK.
@ Key Management Personnel - Mr. Sam Mittal, Managing Director
* The details of the ICD are as below: The loan is repayable on 15th March
2010 or earlier at the written request of either the Company or Hewlett-
Packard (India) Software Operations Private Limited.
The Interest on the said loan is:
Name of the Entity Amount Date of Rate of Interest
Maturity & Basis Points
Hewlett Packard (India) 500,000,000 15th March 2010 6% plus 100 basis
Software Operations points
Private Limited
Global E-Business 300,000,000 24th September 6% plus 100 basis
Operations Private 2010 points
Limited
Global E-Business 270,000,000 24th September 6% plus 100 basis
Operations Private 2010 points
Limited
6% p.a. plus 100 basis points over the prevailing bank rate published on
the Reserve Bank of India website.
14. Maximum Bank balances held in Current accounts with Non-scheduled banks
at anytime during the year.
2006 2005
Fleet Bank, USA 223,984 102,032
Citibank, Hong Kong (USD Account) 11,677 14,254
Citibank, Hong Kong (HKD Account) 2,985 2,440
Bank Credit Suisse, Geneva 10,225 2,040
Deustche Bank, London 9,419 8,574
Citibank, Tokyo 7,293 1,756
Citibank, Frankfurt 4,898 3,837
Tokyo Mitsubishi Bank 75 80
Citibank, Singapore 8,924 1,841
15. Leases:
(a) Assets acquired on Finance Lease on or after April 1, 2001 have been
accounted as per Accounting Standard 19 issued by the Institute of
Chartered Accountants of India. Minimum Lease payments under this Lease as
at March 31, 2006 and their present value is as below:
Minimum Lease Payments 2006 2005
Not Laterthan one year 2,793 21,695
Laterthan one year and not later than five years 600 43,457
Total Minimum Lease payments 3,393 65,152
Less: Amount representing future interest 211 9,986
Present Value of Minimum Lease payments 3,182 55,166
(b) Lease rentals on vehicles acquired by the Company under Finance Lease,
prior to April 1, 2001 have been charged to the Profit and Loss account.
The total lease rental expenses charged to the Profit and Loss account
during the year was Rs.Nil (2005-Rs.210). Future lease rentals payable for
these vehicles amount to Rs.Nil (2005-Rs. Nil).
(c) The Company has given on sublease a portion of the leased Surya Park
facility on cancelable operating lease along with leasehold improvements
and other assets. Rental income and reimbursements received towards such
leases, recognized in profit and loss account for the year is Rs.17,299
(2005-Rs.15,817) and Rs.37,385 (2005-Rs 31,699), respectively.
(d) The Company has also taken Office, residential facilities and printers
under cancelable operating leases. The total rental expense under
cancellable operating leases during the year was Rs.127,621 (2005-
Rs.97,485).
16. Effective April 1, 2004, the Company adopted the Accounting Standard
(AS-29) on Provisions, Contingent Liabilities and Contingent Assets. The
following table provides disclosures in accordance with AS-29:
Provision towards Customer Claims 2006 2005
Balance as at April 1, 2005 21,272 16,050
Additions during the year - 5,969
Amounts used/paid during the year - 825
Amounts reversed during the year 12,326 -
Foreign Exchange Fluctuation (202) 78
Closing Balance 8,744 21,272
17. The movement in 'Provision for doubtful debts' account is as follows:
2006 2005
Opening Balance 11,706 5,072
Add: Amount provided (net of reversals) (5,440) 7,676
Less: Amount written off 3,499 927
Less: Foreign Exchange Fluctuation 130 115
Closing Balance 2,897 11,706
18. Earnings per Share:
Earnings per share is calculated as per Accounting Standard 20 issued by
the Institute of Chartered Accountants of India. The net profit considered
for calculation of basic and diluted earnings per share is Rs.1,001,098
(2005 Rs.1,102,470). The reconciliation of number of shares used in
computing basic and diluted earnings per share is as below:
2006 2005
Weighted Average number of equity shares
used in the calculation of basic
earnings per share 33,921,407 33,921,407
Weighted average number of dilutive options - -
Weighted average number of equity
shares considered in the calculation of
diluted earnings per share 33,921,407 33,921,407
19. Deferred tax balance comprises the timing differences between the
profit as per financial statements and the profit offered for income taxes
and is made up of:
2006 2005
Depreciation on fixed assets and amortisation
of capitalised software costs 23,120 10,842
Expenditure debited to profit and loss account
in current/past year but allowed for tax
purpose in subsequent years net of claims
allowable in the current year on payment basis 1,812 1,812
Deferred tax asset/(liability) 24,932 12,654
20. The Company has the following share-based schemes:
a) Employee Stock Purchase Plan:
The employees are entitled to purchase shares of Hewlett-Packard Company
USA (the parent company), at a discount of 15% based on the closing market
price of the parent Company's shares in New York Stock Exchange on the
purchase date. The shares are offered to the employees on a periodical
basis subject to maximum participation limits.
b) Employee Stock Incentive Plan:
Selected employees are granted stock options of the parent company based
upon performance, criticality to HP business and long-term potential for HP
The options are cashless and generally vest rateably over a period of 4
years, with an exercise period of ten years from the grant date and the
grant price being the average of the high and low market prices of the
parent Company's shares in the New York Stock Exchange, as on the grant
date.
The Institute of Chartered Accountants of India has issued a Guidance Note
on Accounting for Employee Share-based Payments, which is applicable to
employee share based payment plans, the grant date in respect of which
falls on or after April 1, 2005. The management is of the opinion that the
schemes detailed above are managed and administered by the parent company
for its own benefit and do not have any settlement obligations on the
Company. Further the aforesaid schemes pertain to shares of the parent
company and the impact of compensation benefits in respect of such schemes
is assessed and accounted for in the books of the parent company.
Accordingly, the Company is of the opinion that there is no further
accounting treatment/disclosure required under the said Guidance Note.
21. The Small Scale Industrial (SSI) Undertakings to whom amounts are
outstanding for more than 30 days are:
1. Vidyut Engineering:
The details of SSI dues have been furnished to the extent such parties have
been identified by the Company based on information available.
22. Unhedged Foreign Exchange exposure:
Particulars of Unhedged foreign Currency Exposure as at the Balance Sheet
date.
Particulars Currency* Amount in Amount in INR
Foreign Currency
Bank Balances USD 63,440 2,829,441
JPY 8,917 3,387
SGD 80 2,207
CHF 22 768
HKD 118 680
TWD 45 55
Bank Balances Total 72,622 2,836,538
Import Creditors EUR (44) (2,337)
CAD (5) (183)
Import Creditors Total (49) (2,520)
Export Debtors USD 22,468 997,961
Export Debtors Total 22,468 997,961
Loans and Advances USD 4,376 197,438
GBP 4 277
EUR 2 86
HKD 7 40
Loans and Advances Total 4,389 197,841
Other Current EUR (399) (21,591)
Liabilities
AUD (43) (1,383)
GBP (15) (1,177)
MYR (56) (674)
THB (111) (128)
AED (4) (51)
SAR (3) (35)
NZD (1) (27)
OMR (1) (7)
Other Current
Liabilities Total (633) (25,073)
Currency* Description Currency Description
USD US Dollar JPY Japanese Yen
SGD Singapore Dollar CHF Swiss Franc
HKD HongKong Dollar TWD Taiwanese Dollar
EUR Euro CAD Canadian Dollar
GBP Great British Pound AUD Australian Dollar
MYR Malaysian Ringitt THB Thailand Baht
AED Arab Emirates Dirham SAR Suadi Arabian Riyal
NZD New Zealand Dollar OMR Omani Riyal
23. Previous year's figures have been rearranged/regrouped wherever
necessary.
S.R.Latliboi & Company
Chartered Accountants
per Sunil Bhumralkar
Partner
Membership No.: 35141
For and on behalf of the Board
Som Mittal Thomas T Thoppil
Managing Director Director
P Padmaja Ganesh Murthy
Company Secretary (Alternate Director to Marjorie Thomas)
Place: Bangalore
Date : June 14, 2006
|
|
 | |
| Source : Religare Technova | |
| |
