Hexaware Technologies

1) Estimated amount of contracts remaining to be executed on capital
 account and not provided for (Net of advances) Rs 680.38 Million
 (Previous Rs 1032.31 Million).
 
 2) Contingent Liabilities in respect of
 
 a) Claims not acknowledged as debt to Rs. 44.41 Million (Previous year
 Rs 42.62 Million).
 
 b) Income tax disputed in appeal and pending decision Rs. 6.48 Million
 (Previous Year Rs. 12.73 Million), Company is hopeful of getting a
 favourable decision
 
 c) Guarantee given by the Company to a bank on behalf of the Company’s
 wholly-owned subsidiary Rs 285 Million (Previous Year Rs 45 Million)
 
 3) a) The Provision for current income tax is aggregate of the balance
 tax for three months ended March 31, 2008 based on the returned income
 for the year ended March 31, 2008 and the provision based on the
 taxable income for the remaining nine months up to December 31, 2008,
 the actual tax liability, for which, will be determined on the basis of
 the results for the year ending March 31, 2009.
 
 b) Net deferred tax asset has not been recognised considering the
 requirement of AS 22 relating to reasonable/ virtual certainty.
 
 c) Considering the future profitability and taxable positions in the
 subsequent years, the Company has recognised the ‘MAT Credit
 entitlement’ as an asset by crediting the profit and loss account for
 an equivalent amount and disclosed under ‘ Loans and Advances’
 (Schedule 5) in accordance with the Guidance Note on “Accounting for
 credit available in respect of Minimum Alternate Ta x under the Income
 Ta x Act, 1961” issued by Institute of Chartered Accountants of India
 on 23rd March, 2006.
 
 4) Segments:
 
 The Company has presented data relating to its segments based on 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) Employee benefit plans:
 
 i) Defined contribution plans viz Provident Fund and Superannuation
 Fund
 
 Eligible employees receive benefits from a Provident Fund Trust which
 is a defined contribution plan. Both the employees and the Company make
 monthly contributions to the Provident Fund Plan equal to a specified
 percentage of the covered employee’s salary. The Company pays a part of
 the contributions to Hexaware Technologies Limited Employees Provided
 Fund Trust (the ‘Trust’). The remaining portion of Company’s
 contribution is contributed to the Government administered Employees
 Pension Fund. The interest rate payable by the Trust to the
 beneficiaries every year is being notified by the government. The
 Company has an obligation to make good the short fall, if any, between
 the return from the investments of the trust and the notified interest
 rate.
 
 The Guidance on Implementing AS 15, Employee benefits (revised 2005)
 issued by Accounting Standards Board (ASB) states that benefit plans
 involving employer established provident funds, which require interest
 shortfalls to be recompensed are to be considered as defined benefit
 plans. Pending the issuance of the guidance note from the Actuarial
 Society of India, the Company’s actuary has expressed an inability to
 reliably measure provident fund liabilities. Accordingly, the Company
 is unable to exhibit the related information.
 
 Certain employees of the Company are entitled to benefits under
 superannuation, a defined contribution plan.  The Company makes
 quarterly voluntary contributions under the superannuation plan to LIC
 based on a specified percentage of each covered employees salary and
 recognised such contributions as an expense when incurred and have no
 further obligation to the plan beyond their contributions
 
 Amounts recognized as expenses towards contributions to provident fund
 and other funds, superannuation funds by the Company are Rs 101.30
 Million (Previous year Rs. 99.29 Million) and Rs 2.45 Million (Previous
 year Rs. 1.80 Million) respectively for the year ended December 31,
 2008.
 
 6) The Company has investments in equity shares of subsidiary company
 viz Risk Technology International Limited aggregating Rs. 8.50 Million
 and has given loan which is outstanding as at year end for an amount
 aggregating Rs 39.60 Million. The said company continues to suffer
 losses and has negative net worth at the year end. Considering that
 this is only the second year of operations of the said company and its
 business plan showing growth in operations and profitability and
 continued financial support of the Company, in the opinion of the
 management, no provision is considered necessary on account of
 investments/loans at this stage.
 
 7) Derivative Instruments:
 
 a) The Company has following outstanding derivatives instruments:
 
 (i) Forward exchange contracts to Sell US Dollar 148 Million, Sell Euro
 5.60 Million and Sell GBP 2.65 Million (Previous Year US Dollar 489
 Million, Euro 30.50 Million and GBP 40 Million) are outstanding as of
 December 31, 2008.
 
 (ii) Currency Options outstanding as at Balance Sheet date Sell US
 Dollar 17 Million (Previous year Sell Euro/ USD 65 Million, Buy USD/CHF
 33 Million, Sell USD/CHF 3 Million, Buy/Sell USD/JPY 34 Million)
 
 (iii) Fair value (net loss) of the derivative instruments identified as
 cash flow hedges is Rs. 1364.83 Million as at December 31, 2008
 including Rs 1234.05 Million recognized as effective portion of Hedging
 Reserve as at December 31, 2008 which is expected to be reclassified to
 the profit and loss account over two years.
 
 (iv) The Company, during the year, based on the announcement of the
 ICAI (Accounting for derivatives), has accounted for derivative forward
 exchange contracts at fair values considering the principles of
 recognition and measurement stated in AS-30 ‘Financial Instruments:
 Recognition and Measurement. Consequent upon such change, the profit
 after tax for the year ended December 31, 2008 is lower by Rs 25.50
 million and reserves and surplus are lower by Rs 1370.23 Million.
 
 b) As of the balance sheet date the Company has the net receivable
 foreign currency exposure that are not hedged by a derivative
 instrument or otherwise amounting to Rs 366.74 Million (Previous year
 Rs.356.31 Million)
 
 8) The Company’s subsidiary, FocusFrame Inc. USA, has, subsequent to
 year end merged with another wholly owned subsidiary viz. Hexaware
 Technologies Inc., such merger being expected to provide synergies in
 operations and result in improved profitability of the merged entity.
 
 9) The figure 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 preceding year are included as an integral part of
 the current year financial statement and are to be read in relation to
 the amounts and other disclosures relating to the current year.