Financial Technologies

1. During the previous year, the Company had soid part of its
 investment in its unlisted group company to certain investors. The
 Share Purchase agreements included covenants as regards to compensation
 / exit by the said investors in the envisaged time frame. The said time
 frame which expired during the year has been extended in one case and
 in others, the Company is in dialogue for alternatives including
 extension of time frame. Subsequent to the Balance Sheet date, part of
 the said shares have been sold by one of the investors to other
 investors on similar terms. The Company has also received enquiries
 from other potential investors for investments in the said group
 company on better terms.
 
 2.  Capital work-in-progress (Refer Schedule 3) includes amount
 aggregating Rs 474,596,833/- (Previous year Rs 386,005,711) towards
 purchase of agricultural lands for, interalia setting up of a Research
 and Development and other related centers. The Company proposes to
 apply for permission from the concerned government department towards
 such purchases and towards change of the status of the lands from
 agricultural to non agricultural for industrial use. The entire amount
 would be capitalised on receipt of necessary permissions.
 
 3.  During the previous year, the Company had allotted 1,662,811 equity
 shares of Rs 21- each fully paid (based on seven GDRs representing one
 equity share) consequent to the issue of 11,639,677 Global
 Depository.receipts (GDRs) aggregating USD 115 million equivalent to
 Rs 4,522,725,000/-.
 
 Each option entitles the holder to exercise the right to apply for and
 seek allotment of one equity share of Rs 2/- each. The intrinsic value
 of each option is nil, since the options are granted at the market
 price of the shares existing on the date of grant. The options have
 vesting periods as stated above in accordance with the vesting schedule
 as per the said plan and have an exercise period of three to twelve
 months (Previous year three to fifteen months) from the respective
 vesting dates
 
 During the year Company, due to adverse stock market conditions and
 vis-a-vis Companys share price, on request of option holders,
 cancelled options granted under ESOP 2006 scheme.
 
 (b)The Company has followed the intrinsic value-based method of
 accounting for stock option. Had the compensation cost of the Companys
 stock based compensation plan been determined using the fair value
 approach, the Companys net profit for the year would have been higher
 (in view of options cancelled and previous amortisation written back)
 by Rs 181,460,227/- (Previous year lower by Rs 187,308,704/-) and
 earnings per share as reported would be higher as indicated below:
 
 4.  Segment Reporting
 
 The Company has presented segmental information in its consolidated
 financial statements, which are presented in the same annual report.
 Accordingly, in terms of the provisions of Accounting Standard (AS-17)
 Segment Reporting, no disclosures related to segments are presented
 in its stand-alone financial statements.
 
 5.  Related Party information:
 
 I. Names of related parties and nature of relationship: (i) Entities
 where control exists (Subsidiaries, including step down subsidiaries)
 
 1.  TickerPlant Ltd. (TickerPlant) (Formerly known as TickerPlant
 Infovending Ltd.)
 
 2.  IBS Forex Ltd. (IBS)
 
 3.  atom technologies Ltd. (atom)
 
 4.  Riskraft Consulting Ltd. (Riskraft)
 
 5.  National Spot Exchange Ltd. (NSEL)
 
 6.  National Bulk Handling Corporation Ltd. (NBHC)
 
 7.  Financial Technologies Middle East - DMCC (FTME)
 
 8.  Global Board of Trade Ltd. (GBOT)
 
 9.  Singapore Mercantile Exchange Pte Ltd. (SMX)
 
 10.  Knowledge Assets Pvf. Ltd. (KAPL)
 
 11.  FT Group Investments Pvt. Ltd. (FTGIPL)
 
 12.  Financial Technologies Communications Ltd. (FTCL)
 
 13.  Global Payment Networks Ltd. (GPNL)
 
 14.  FT Knowledge Management Company Ltd. (FTKMCL)
 
 15.  Indian Bullion Market Association Ltd. (subsidiary of NSEL)
 
 16.  Trans-Global Credit & Finance Ltd. (TGCFL)
 
 17.  Singapore Mercantile Exchange Clearing Corporation PTE Ltd.
      (Subsidiary of SMX) (SMX-CCL)
 
 18.  Financial Technologies Middle East FZ-LLC
 
 19.  Capricorn Fin-Tech (Pvt). Ltd. (Subsidiary of FTME)
 
 20.  Bourse Africa Ltd. (Subsidiary of FTGIPL) (w.e.f. 15lh October
      2008)
 
 21.  Boursa India Ltd. (w.e.f. 16 February 2009)
 
 22.  ICX Platform (Pty) Ltd. (w.e.f 7 April 2008)
 
 23.  Credit Market Services Ltd. (CMSL) (w.e.f. 23,d May 2008)
 
 24.  Takshashila Academia of Economic Research Ltd. (TAER) (w.e.f 9lh
      June 2008) (Takshashila)
 
 25.  Apian Finance & Investments Ltd. (w.e.f. 25,h April 2008)
 
 26.  Grameen Pragati Foundation (Subsidiary of atom) (w.e.f, 25,h July
      2008) (up to 2nd February 2009)
 
 27.  Bahrain Financial Exchange BSC (c) (BFX) (Subsidiary of FTME)
      (w.e.f, 18,n September 2008)
 
 (ii) Associate Companies:
 
 1.  Multi Commodity Exchange of India Ltd. (MCX)
 
 2.  MCX-SX Clearing Corporation Ltd. (MCX-SXCCL) (w.e.f, 7,h November
     2008)
 
 3.  Indian Energy Exchange Ltd. (IEX)
 
 4.  ACE Group (Audit Control and Expertise Global Ltd.) (w.e.f 9,h
     April 2008)
 
 5.  MCX Stock Exchange Ltd. (w.e.f 8th September 2008) (MCX-SX)
 
 (iv)Key Management Personnel
 
 1.  Mr. Jignesh Shah : Chairman and Managing Director
 
 2.  Mr Dewang Neralla : Wholetime Director
 
 (v) Relative of the Key Management Personnel where transactions have
 taken place
 
 Mr Manjay Shah Director - Business Development
 
 (vi)Entity over which key management personnel is able to exercise
 significant influence.
 
 La-fin Financial Services Private Ltd. (La-fin).
 
 6.  The Company, as part of its core business strategy promotes and
 invests in new Exchange, Technology and Ecosystem ventures that
 utilise its technological capabilities and domain expertise towards
 creating world class enterprises. The investment in each such venture
 is assessed for its risks and is limited to a pre-determined level and
 will generate returns after the ventures start ramping-up operations in
 2 to 4 years time frame. The Company, as part of its non-linear
 business model, will continue to unlock value by broadening the
 investor base of its ventures.  During the year, the Company sold
 partial investment held in a group company. The resultant profit of Rs
 2,067,280,550/- (Previous year Rs 11,163,893,110) (net of directly
 attributable brokerage expenses of Rs 98,331,750/- (Previous Year Rs
 484,605,972)) is grouped under Profit on sale of Investments in Other
 Income (Schedule 12) which was hitherto disclosed as Project
 Divestment Income based on nature of income.
 
 7.  The Company has adopted the option offered by the notification of
 the Companies (Accounting Standards) Amendment Rules 2006 which amended
 Accounting Standard 11 The Effects of Changes in Foreign Exchange
 Rates.
 
 Pursuant to the aforesaid notification, exchange differences relating
 to long term monetary items have been accounted for as described in
 Accounting policy of Schedule 15-1.
 
 Accordingly foreign exchange loss (net) of (1) Rs 230,886,837/- has
 been added to the cost of the fixed assets / capital work-in-progress
 and (2) Rs 516,543,586/- has been debited to the Foreign Currency
 Monetary Item Translation Difference Account (unamortised balance at
 the year end is Rs 352,608,206/-). Conseguent to this, profit for the
 year is higher by Rs 614,017,329/- (net of tax of Rs 217,990,740) and
 General Reserve is lower by Rs 177,905,897/- (net of tax of Rs
 70,607,130)
 
 8.  (a) The holders of Zero Coupon Convertible Bonds due 2011 (ZCCBs)
 have an option to convert the ZCCBs into equity shares at any time
 on and after 30 January 2007 upto the close of business on 14
 December 2011, at an initial conversion price of Rs 2362.68 per equity
 share at a fixed exchange rate on conversion of Rs 44.6738 to USD 1,
 subject to certain adjustments as per the terms of the issue. Under
 certain conditions, the Company, on or after 20 December 2007 but not
 less than seven business days prior to 21s December 2011, has an
 option to mandatorily convert the ZCCBs into equity shares, in whole,
 but not in part. Further, under certain circumstances, the Company has
 the option to redeem the ZCCBs during the tenure at their Early
 Redemption Amount subject to RBI regulations. Unless previously
 converted or redeemed or purchased and cancelled, the Company will
 redeem them at 147.14 percent of their principal amount on 21
 December2011 (b) During the year, the Company repurchased 9,500 ZCCBs
 of face value of USD 1,000 each as per Reserve Bank of India Circulars.
 The resultant gain (net of commission) on such repurchase of Rs
 115,340,252/- is included in Schedule -12 Other Income. Consequent
 upon such repurchase, 9,500 ZCCBs stand cancelled. As at Balance sheet
 date 90,500 ZCCBs having face value of USD 1,000 each are outstanding
 and disclosed in the Balance Sheet, as restated, as Unsecured Loan.
 
 9. Employee benefit plans:
 
 Defined contribution plans: Amounts recognised as expenses towards
 contributions to provident fund, employee state insurance corporation
 and other funds by the Company are Rs 28,605,518/- (Previous Year Rs
 18,202,357/-).  Post employment defined benefit plans:
 
 Gratuity Plan: The Company makes annual contributions to the Employees
 Group Gratuity Assurance Scheme administered by the Life Insurance
 Corporation of India (LIC), a funded defined benefit plan for
 qualifying employees. The scheme provides for lump sum payment to
 vested employees at retirement, death while in employment or on
 termination of employment of an amount equivalent to fifteen days
 salary payable for each completed year of service or part thereof in
 excess of six months. Vesting occurs on completion of five years of
 service.
 
 *on account of change in gratuity plan to employees whereby there is no
 cap on the maximum liability, unlike in previous year, on account
 of change in policy during the year.
 
 Expected rate of return on plan assets is based on expectation of the
 average long term rate of return expected to prevail over the estimated
 term of the obligation on the type of the investments assumed to be
 held by LIC, since the fund is managed by LIC.
 
 The estimates of future salary increases, considered in actuarial
 valuation, take account of inflation, seniority, promotions and other
 relevant factors, such as supply and demand in the employment market.
 
 10. Joint Venture Disclosure:
 
 a. Jointly Controlled Entities (JCEs) by the Company:
 
 Name of the Entity : Dubai Gold and Commodities Exchange DMCC (DGCX)
 
 Country of Incorporation : United Arab Emirates
 
 % Holding : 18.60% (Previous year 19%)
 
 b. Companys share of interest in the assets, liabilities, income and
 expenses with respect to JCE (each without elimination of the effects
 of transactions between the Company and the JCE) on the basis of
 unaudited financial statements of the JCE as at and for the year ended
 31 March 2009:
 
 The amounts are translated at the year end rate for assets and
 liabilities and average rate for income and expenses for DGCX,
 
 11.  The aggregate amount of revenue expenditure incurred during the
 year on Research and Development and shown in the respective heads of
 the account is Rs 120,741,352/- (Previous year Rs 70,974,838/-).
 
 12.  The Company has investments aggregating Rs 4,326,274,551/- in
 certain subsidiary companies as at 31s March 2009, These entities are
 at various stages of executing their business plans and yet to break
 even (share of aggregate losses to date Rs 1,210,751,139/- including on
 account of expensing out costs relating to research and development
 activities. On an evaluation of the business plans for these entities,
 a provision for other than temporary diminution of Rs 509,625,934/- has
 been made which is considered adequate. The Company expects investments
 in these entities will be unlocked in at appropriate times as mentioned
 in Note 14 above.
 
 13.  As at 31st March 2009, the Company holds 49% stake in MCX-Stock
 Exchange (MCX-SX). (Refer Schedule 4) However, considering the
 managements intention coupled with regulatory requirement as per the
 Securities Contracts (Regulation) (Manner of Increasing and Maintaining
 Public Shareholding in Recognised Stock Exchanges) Regulations, 2006,
 the Company would reduce substantially Its stake so as not to exceed
 the limits prescribed in the said regulation within a period of 1 year
 from the date of its recognition granted to MCX-SX by SEBI. However,
 the same has been considered as long term investments as required under
 Accounting Standard-13, Accounting for Investments, in view of the same
 not being readily realisable
 
 14.  On completion of assessments under section 153A(a) of Income Tax
 Act subsequent to year end and considering tax positions taken and
 appeals filed by the Company, the Company has written back excess
 provisions in respect of current taxes in previous years of Rs
 57,638,7.12/- and has provided for deferred tax liabilities in respect
 of timing differences as appropriate.
 
 15.  During the previous year, the Company proposed to divest part of
 its investments aggregating 3,600,000 equity shares of MCX at a price
 at which MCX proposed to make a public issue. MCX had also filed its
 Draft Red Herring Prospectus with Securities and Exchange Board of
 India in the previous year. However, due to unfavorable conditions the
 issue has been postponed to a later date. The investments in 3,600,000
 equity shares continue to be disclosed by the Company under current
 investment based on intention of holding
 
 16.  Figures for the previous accounting year have been regrouped /
 rearranged wherever necessary to correspond with the figures of the
 current year and are disclosed in brackets. Amounts and other
 disclosures for the preceeding year are included as an integral part of
 the current year financial statements and are to be read in relation to
 the amounts and other disclosures relating to the current year.