1.0 Contingent Liabilities
 
 Sr. Particulars                               FY 2010-11   FY 2009-10
 No.
 
 1.  Outstanding Bank Guarantees in routine 
     course of business                        32,297,391    8,839,799
 
 2.  Income tax matters not acknowledged as 
     debt (Refer 2.8 (a) below)                14,398,014   11,698,438
 
 3.  VAT matters not acknowledged as debt 
     (Refer 2.8 (b) below)                     27,673,199          Nil
 
 4.  Service tax matters not acknowledged 
     as debt                                          Nil   49,927,768
 
 
 a) Income Tax Cases
 
 These relate to the cases of erstwhile KPIT Cummins Infosystems
 (Bangalore) Private Limited (KPIT Bangalore) which has been merged with
 the Company effective April 1, 2007
 
 AY 2006-07
 
 The Company has filed an appeal with the Commissioner of Income Tax
 (Appeals) - I, Bengaluru against an Order dated December 26, 2008
 passed by the Asst. Commissioner of Income Tax Circle 11(5), Bengaluru.
 The total demand raised is Rs. 5,903,204/- vide this order, which is
 adjusted against refund for subsequent year, i.e. A.Y. 2007-08.
 
 AY 2007-08
 
 The Company has filed an appeal with Commissioner of Income Tax
 (Appeals) - I, Bengaluru pursuant to an Order dated December 21, 2009
 passed by the Asst Commissioner of Income Tax Circle 11 (5), Bengaluru.
 The demand raised on KPIT Bangalore vide this order is Rs. 5,795,234/-.
 KPIT Bangalore has made a payment of Rs. 2,354,124/- towards this
 demand during the year ended March 31, 2010.
 
 This relates to the cases of erstwhile KPIT Cummins Global Business
 Solutions Ltd. which has been merged with the Company effective March
 1, 2011 (Refer Note No. 4.2 below).  AY 2007-08
 
 An appeal relating to income tax dues amounting to Rs. 2,699,576 has
 been filed before Commissioner of Income Tax (Appeals)-1 , Pune.
 
 The Company and its advisers believe that the above matters would be
 decided in favour by higher appellate authorities.
 
 b) VAT Matters
 
 FY 2005-06 to FY 2008-09
 
 During the current financial year, the Company has filed an appeal with
 the Joint Commissioner of Commercial Taxes - (Appeals)-2 against the
 order received from the Asst. Commissioner of Commercial Taxes dated
 December 28, 2010. The demand raised vide this order is Rs.
 18,261,484/-. The Company has paid Rs. 9,130,742/- towards this demand,
 and has obtained stay for the balance amount against Bank Guarantee.
 
 FY 2009-10
 
 During the current financial year, the Company has filed a writ
 petition in Karnataka High Court against the notice received u/s 39(1)
 of KVAT Act, 2003 from Deputy Commissioner of Commercial Taxes dated
 February 23, 2011. The demand raised vide this notice is Rs.
 9,411,715/-.
 
 The Company and its advisers believe that the above matters would be
 decided in favour by higher appellate authorities.
 
 2.11 Stock Option Plans
 
 1.  Employee Stock Option Scheme (ESOS) – 1998 (through Employee
 Welfare Trust)
 
 The ESOS was approved by the Board of Directors of the Company on
 November 23, 1998 and thereafter by the shareholders on November 30,
 1998 and is for issue of 18,000 Options representing 1,800,000 equity
 shares of the Company. A compensation committee comprising of
 independent directors of the Company administers the ESOS Plan. All
 options have been granted at a pre-determined rate of Rs. 5 per share.
 
 2.  Employee Stock Option Plan – 2004
 
 The Board of Directors and the shareholders of the Company approved the
 Employees Stock Option Plan for grant of 5,163,800 options convertible
 into 5,163,800 equity shares, at their meeting in August 2001 and in
 September 2001, respectively. Pursuant to this approval, the Company
 instituted ESOP 2004, Plan in July, 2004. The compensation committee of
 the Company administers this Plan. The Options have been granted to
 employees of the Company and its subsidiaries at an exercise price that
 is not less than the fair market value.
 
 3.  Employee Stock Option Plan – 2006
 
 The Board of Directors and the shareholders of the Company approved
 another Employees Stock Option Plan for grant of 5,000,000 options
 convertible into 5,000,000 equity shares, at their meeting in July 2006
 and in August 2006, respectively. Pursuant to this approval, the
 Company instituted ESOP 2006, Plan in October, 2006. The compensation
 committee of the Company administers this Plan. The Options have been
 granted to employees of the Company and its subsidiaries at an exercise
 price that is not less than the fair market value.
 
 Personnel expenditure includes Rs. 374,984/- (Previous Year: Rs.
 16,684,594/-) being the amortization of intrinsic value for the year
 ending March 31, 2011.
 
 2.12 Advances recoverable in cash or in kind or for value to be
 received is net of provision for doubtful advances of Rs. 4,000,000/-
 (Previous year Rs. 11,800,000/-).
 
 2.13 Debtors include on account of unbilled revenue aggregating to Rs.
 34,889,441/- (Previous year Rs. 35,849,669/-).
 
 2.14 Quantitative details: The Company is engaged in software
 development and IT enabled services for various clients based in
 different geographies. The production and sale of such software cannot
 be expressed in any generic unit. Therefore it is not possible to give
 the quantitative details of sales and certain information as required
 under paragraphs 3, 4C and 4D of part II of schedule VI to the
 Companies Act, 1956.
 
 3.1 (ii) Cash Flow hedges
 
 A) In accordance with its risk management policy and business plan the
 Company has hedged its cash flows. The Company enters into Derivative
 contracts to offset the foreign currency risk arising from the amounts
 denominated in currencies other than the Indian rupee. The counter
 party to the Companys foreign currency contracts is generally a bank.
 These contracts are entered into to hedge the foreign currency risks of
 firm commitments and highly probable forecast transactions. The
 Management has assessed the effectiveness of its hedging contracts
 outstanding as on March 31, 2011 as required by AS-30 and accordingly
 the MTM loss of X 136,241,095/-(Previous year X 226,688,046) is
 recognized in the Hedging Reserve. Further the assessment of
 effectiveness as performed by the management of the Company is also
 confirmed by an independent expert.
 
 3.4 Segment Information:
 
 Where a financial report contains both consolidated financial
 statements and separate financial statements of the parent, segment
 information needs to be presented only in case of consolidated
 financial statements. Accordingly, segment information has been
 provided only in the consolidated financial statements.
 
 3.6 Lease Transactions:
 
 Finance lease:
 
 The Company has taken Vehicles under Finance Lease for a period ranging
 from 3 to 4 years. Upon payment of all sums due towards the agreement,
 the Company has the option of acquiring the Vehicles. During the lease
 period, the Company can neither sell, assign, sublet, pledge, mortgage,
 charge, encumber or part with possession of the assets, nor create or
 allow to create any lien on the Vehicles taken on Lease.
 
 3.9 Provisions
 
 The details of provision and movement in each class of provision are as
 follows -
 
 1) Provision for Variable Pay
 
 The annual salary of eligible employees comprise of a performance based
 payment, for which provision is made in the books.  Such amount is paid
 to employees on the basis of employees performance and additional
 criteria as decided by the management.
 
 4.  Other Disclosures and Explanatory Notes
 
 4.1 The Board has approved a transfer of Rs. 10,000,000/- towards KPIT
 Cummins Infosystems Limited Community Foundation Reserve. This Reserve
 would be utilized for various community benefit schemes as may be
 approved by the Management.
 
 The Board has approved a transfer of Rs. 100,000,000 towards KPIT
 Cummins Technology Fund. This fund would be utilized to drive high end
 innovative technology initiatives for promoting green growth and energy
 conservation, which will successively benefit the Company.
 
 The Board has approved a transfer of Rs. 100,000,000 towards KPIT
 Employees Welfare Fund. This Fund would be utilized to promote welfare
 of its employees in various forms such as Medical, Education, Housing,
 Holiday homes, Recreation facilities, Activities related to Sports,
 Music Research, Artistic Pursuits etc.
 
 4.2 The Honble High Court of Bombay approved the Scheme of
 Amalgamation of KPIT Infosystems Central Europe Sp. z.o.o., Poland
 (‘KPIT Poland) and KPIT Cummins Global Business Solutions Limited
 (‘KPIT GBS) with the Company on January 28, 2011. The Scheme of
 Amalgamation became effective on March 1, 2011 being the date when the
 certified copies of the High Court order sanctioning the scheme was
 filed with the Registrar of Companies, Maharashtra Pune.
 
 - KPIT Cummins Global Business Solutions Limited (KPIT GBS) was
 engaged in BPO activity. Consolidation of the operations of KPIT GBS
 with the Company was aimed at improving operational efficiencies.
 
 - KPIT Infosystems Central Europe Sp. Z.o.o., Poland (KPIT Poland)
 was engaged as near shore centre of excellence for European Market to
 facilitate the customer work. The major customer since has merged with
 another company, an already existing customer of KPIT and was serviced
 and supported from India. Remaining operations were not commercially
 viable to run as a Company
 
 - In line with Clause 1.8 of the Scheme, the appointed date of merger
 of KPIT Poland and KPIT GBS with the Company is April 1, 2010.
 
 - This amalgamation is considered in the books of account as per
 Accounting Standard (AS) 14 Accounting for Amalgamation” under pooling
 of interest method.
 
 - In line with Clause 4 of the Scheme, with effect from the Appointed
 Date, the whole of the undertaking of KPIT Poland and KPIT GBS
 comprising of all properties and assets, debts, liabilities, contingent
 liabilities etc. be transferred to the Company. In line with Clause
 11.1 of the Scheme, all assets and liabilities (including reserves) be
 recorded by the Company at the respective book values with effect from
 the Appointed Date.
 
 - In line with Clause 11.3 of the Scheme, investments in share of KPIT
 Poland shall be adjusted against share capital of KPIT Poland.  In line
 with Clause 11.4 of the Scheme, investments in share of KPIT GBS shall
 be adjusted against share capital of KPIT GBS and difference if any
 shall be adjusted against Securities Premium of the Company.
 
 - There are no shares and consideration exchanged with either of the
 Transferor companies as both the companies were wholly owned
 subsidiaries of the Company.
 
 4.3 Warhol Limited (Warhol) (an affiliate of Chrys Capital V LLC) is a
 Mauritius based, Foreign Institutional Investor. Warhol was issued
 77,58,621 equity shares on preferential basis for an aggregate
 consideration of X 11,250 lakhs, in terms of the Special Resolution
 passed by the shareholders of the Company in the Extra-Ordinary General
 Meeting held on February 8, 2011. The Equity shares of face value of X
 2/- each were issued at a premium of X 143/- for cash. The proceeds of
 the issue will be utilized for bona fide business purposes and for
 funding the growth and operations of the Company and/or its
 subsidiaries, to meet the working capital and capital expenditure
 requirements of the Company/subsidiaries and for investment in
 subsidiaries and joint ventures. The shares were allotted to Warhol on
 February 17, 2011. Warhol currently holds approximately 8.83% of the
 paid up share capital of the Company.
 
 There has been no utilization of the proceeds till March 31, 2011. The
 unutilized balance of X 11,250 lakhs is lying in deposits with Banks.
 
 4.4 The Company has been granted permission to set up SEZ in Pune on
 December 2, 2010.
 
 4.5 a) During the year, the Company had taken over substantial part of
 the Supply Chain Management Business of 7 Hills Global Consulting
 
 Private Limited and Seven Hills Business Solutions Limited vide its
 business transfer agreement dated October 9, 2010 which has resulted in
 Goodwill of Rs. 11,625,000/- Goodwill on acquisition is being amortized
 over a period of three years.
 
 The business transfer agreement also involves payment of contingent
 consideration which is based on the achievement of the performance
 targets set forth in the agreement over the performance period ending
 on December 31, 2011. As per the agreement, the total consideration
 including the initial consideration shall not exceed an amount of Rs.
 50,000,000/-
 
 b) During the year, the Company has taken over business assets of
 Nilson Technology vide its asset transfer agreement dated February 14,
 2011 which has resulted in goodwill of Rs. 25,000,000/-. Goodwill on
 acquisition is being amortized over a period of three years.
 
 The goodwill of Rs. 25,000,000 represents the fixed consideration. The
 asset transfer agreement also involves payment of contingent
 consideration i.e. Earn Out Payment not exceeding Rs. 46,500,000/-. The
 payment of contingent consideration is based on the achievement of the
 performance targets set forth in the agreement over the performance
 period which commences on January 1, 2011 and ending on December 31,
 2013.
 
 4.6 Subsidiaries/Joint Venture
 
 The Company entered into 50:50 Joint-Venture agreement with Bharat
 Forge Limited during the current year. Pursuant to the joint venture
 agreement, a joint venture company in the name of Impact Automotive
 Solutions Private Limited has been incorporated. Capital raised by both
 the partners in this Joint Venture is Rs. 60,100,000/-
 
 4.7 Increase in Authorized Equity Share Capital:
 
 The Company increased its Authorized Equity Share Capital from Rs. 30
 crores to Rs. 75 crores vide resolution passed by Postal Ballot dated
 January 14, 2011.
 
 4.8 Final Dividend
 
 The Company allotted 280,705 equity shares against exercise of options
 by the employees, after March 31, 2010 and before the Book closure for
 the Annual General Meeting held for FY 2009-10.The Company paid
 dividend of Rs. 199,215/- on these shares and tax on dividend of X
 33,087/- as approved by the shareholders at the Annual General Meeting
 held on July 16, 2010
 
 Figures for the current year are not comparable with that of the
 previous year due to merger of KPIT Infosystems Central Europe Sp.
 Z.o.o., Poland and KPIT Cummins Global Business Solutions Limited with
 the Company.
 
 The Previous years figures have been regrouped/rearranged, wherever
 necessary, to conform to the current years classification.