1.1 Turnover is stated net of Sales-tax, Cess, Surcharge, Service tax
and Sales Returns.
1.2 (a) Contingent Liabilities (to the extent of which not provided
(Amount in Rs.)
Particulars Current Year Previous Year
Money for which the company is
i) Performance Guarantees
(STPI - customs duty) 499,836 499,836
ii) Claims against the company,
not acknowledged as debts :
a) Claims by vendors, etc 1,383,300 1,270,937
b) There are certain claims
made against the Company by former
employees, which are a subject
matter of arbitration proceedings.
In the view of the management of
the Company these claims
are not tenable. No provision has
been made for such claims
pending completion of legal
proceedings as the amount of claims
are currently not ascertainable. Not Quantified Not Quantified
c ) Contingent liability in respect
of claim in respect of Service Tax
on software sales made by the
company, the amount of which
is not quantified. Not Quantified Not Quantified
iii) Other money for which the
company is contingently liable:
Service Tax not
charged on rental income and
interest thereon for FY 2008-09,
for 2010-11 and 2011-12 based on
a judgement by Honourable Delhi
High Court. 3,391,333 1,985,472
1.3 (b) Commitments (to the extent of
which not provided for)
i) Unexpired Letters of Credit 1,265,914 1,634,016
ii) Warranty Costs on Software Sale* Not Quantified Not Quantified
* The company does not envisage any liability on account of a back to
back arrangement with the suppliers for any such claims.
1.4 During the financial year 1999-2000, the company had acquired
100,000 equity shares of Singapore Dollars 1 each in Midrange Software
Pte. Limited (formerly Logix Microsystems (S) Pte. Ltd.,) Singapore.
The remittance towards the same has not been made pending requisite
1.5 During the year under review, the Company has made an additional
investment of Rs. 682.34 Lakhs (USD 15,20,000) in the form of equity in
its subsidiary Logix Americas Inc., which is the holding company for the
US subsidiaries. The share allotment against this as also portion of
previous investments same is pending as at the Balance Sheet and reflected as ''Share Application Money
pending allotment''. The investment in Logix Americas Inc., has in-turn been invested by way of equity and
Homestar Systems Inc., Homestar LLC, Izmo CRM, IzmoMedia and LML Internet Solutions Inc., subsidiaries of
Logix Americas Inc.
1.6 The balances in the share refund account and the related bank
account was pending reconciliation. The unreconciled difference amounts
to Rs.5.12 lakhs.
1.7 In accordance with Section 205C of Companies Act, 1956, Share
Warrant Application money, pending allotment and due for refund
amounting to Rs.3.30 lakhs remaining unpaid since 29th September 2007
will be transferred to Investor Education and Protection Fund after the
completion of 7 years from the date of payment falling due.
The above amounts do not include Gratuity and Leave encashment benefits
as the provisions for these are determined for the Company as a whole
and therefore separate amounts for the Directors are not available.
Directors remuneration for the current year includes a sum of Rs.31.96
Lakhs paid to the managing director in accordance with the limits
approved by the shareholders at the AGM held on 29 th September 2010
but in excess of the limits prescribed under the Companies Act. The
similar excess remuneration for the previous periods (from FY 2007-08
onwards) amounts to Rs. 117.46 lacs. The Company had applied for the
requisite approval from the Central Government which had not been
granted, but the management is confident of obtaining the approval and
is in the process of filing revised application for the same. Pending
outcome of the same, these amounts continue to be considered as an
1.8 The Company''s Singapore subsidiary, Midrange Software Pte. Ltd,
carries an accumulated provision of SGD 216,000 (Previous year: SGD
162,000), in their books towards director''s remuneration payable in
respect of services rendered by Mr. Sanjay Soni. As per the
understanding, the same would be paid to M/s. Logix Microsystems Ltd,
the holding Company in accordance with Sec 314 (1) (ii) of the
1.9 Current Value of subsidiaries investment
Investment in Midrange Software Pte Ltd,
The Company has invested an amount of SGD 1,904,915 in Midrange
Software Pte Ltd, Singapore. Midrange has incurred losses during recent
years and has an accumulated loss of SGD 104,318. However, based on the
management''s perception of the growth prospects and the performance of
Midrange, in the opinion of the management there is no permanent
diminution in value of the investment.
Investment in Logix Americas Inc.
The Company has invested an amount of USD 32,848,100 in its subsidiary
Logix Americas Inc., which is the holding company for the operating
companies i.e., Homestar, Izmo CRM and IzmoMedia, the subsidiaries of
Logix Americas Inc. The management had obtained an independent
valuation of its operating enterprises in the US. Based on the same and
further based on the management''s view on the prospects
in the region, the management does not envisage any decline in the
value of the investments and consider it appropriate to have the
carrying value at par in respect of its investments in Logix America
Inc as well.
Investment in Izmo Europe BVBA Belgium
The Company has invested an amount of EURO 1,359,093 in
its subsidiary Izmo Europe BVBA Belgium till 31st March 2012. Izmo
Europe BVBA has incurred losses during the recent years and has an
accumulated loss of EURO 1,403,738. However, based on the management''s
perception of the growth prospects and the performance of Izmo Europe,
in the opinion of the management there is no permanent diminution in
value of the investment.
1.10 List of Related Parties
a Enterprises Controlled by the Company
Midrange Software Pte Ltd, Singapore Wholly Owned Subsidiary
(formerly Logix Microsystems (S) Pte. Ltd. Singapore)
Logix Americas Inc., USA Wholly Owned Subsidiary
Izmo Europe BVBA Wholly Owned Subsidiary
Homestar Systems Inc. USA 98% held by M/s. Logix Americas Inc., USA
Homestar LLC., USA Wholly Owned Subsidiary of M/s. Homestar Systems
Izmo Media, USA Wholly Owned Subsidiary of M/s. Homestar Systems Inc.,
Izmo CRM, USA Wholly Owned Subsidiary of M/s. Homestar Systems Inc.,
LML Internet Solutions USA Subsidiary of M/s. Logix Americas Inc. USA
Carazoo Online Solutions Pvt Ltd. Subsidiary of M/s. LML Internet
b Key Management Personnel Mr. Sanjay Soni Mr. Tej Soni
c Enterprises in which Key Management personnel/their relatives have a
significant influence Aries Gases Private Limited Deep Engineers &
Consultants Deep Heritage
Deep Oxygen Private Limited
Deep Investment Advisory Bangalore Private Limited Digipro Systems
Digipro Design Automation & Marketing Private Limited Si2 Microsystems
Private Limited SL Business Center
24.22 Under the Micro, Small and Medium Enterprises Development Act,
2006, which came into force on October 2, 2006, the company is required
to make certain disclosure relating to Micro, Small and Medium
Enterprises. The company is in the process to compiling and assimilating
the relevant information from its suppliers about their coverage under
the Act. Since the relevant information is not readily available, no
disclosure have been made in the Accounts.
1.11 During the current financial year, the global recession continued
to impact businesses across geographies. In addition to this, US auto
industry in particular, experienced a severe downturn resulting in
bankruptcy and closure of several automobile dealers who happened to be
the clients of Homestar Systems Inc. In this backdrop, the Company was
approached by its subsidiary Homestar Systems Inc to offer a special
rebate considering the exceptional circumstances observed in the US
automobile industry due to the recessionary trend. Consequent to
commercial negotiations, it has been accepted mutually to offer an
overall rebate of Rs. 399.41 Lakhs (USD 788,721). This is non recurring
and largely exceptional in nature and accordingly, reflected as such.
as appearing in the statement of Profit and Loss is after netting off
Rs.21.53 lakhs ,written off subsequent to the completion of Tax
Assessment for FY 2006-07 and as per the Assessment order issued by the
1.12 Segment Reporting
Based on the guiding principles in Accounting Standard on Segment
Reporting issued by the Institute of Chartered Accountants of India,
classification by geographic segment are the primary reportable
segments, comprising of:
1.13 Provision for Taxation:
Provision for current tax has been made considering the taxes on book
profits as under section 115JB.
In terms of the Guidance note on accounting for credit available in
respect of Minimum Alternative Tax(MAT) under the Income Tax Act 1961,
issued by the ICAI, the excess of MAT over normal current tax payable
has been recognized as an asset by way of credit to the profit & loss
account as MAT credit entitlement. The MAT credit charge of Rs.13.02
* Domestic segment sales for the current year includes Rs. 95 lakhs
from discontinuing operations. And Export segment sales for the current
year includes Rs.47.61 lakhs from discontinuing operations.
Segmental Capital Employed: Assets and Liabilities contracted have not
been identified to any of the reportable segments, as the assets are
used interchangeably between segments and it is not practicable to
reasonably allocate the liabilities to individual segments. Accordingly
no disclosure relating to segments assets and liabilities are made.
1.14 Discontinuing Operations
During the year, pursuant to the scheme of arrangement approved by the
shareholders through Postal Ballot on 30th January, 2012, the Company
has proposed to dispose/hive off the Carazoo domestic division business
of the company into Subsidiary Company with effect from 17th April,
2012. The results of the discontinuing business during the year were
1.15 Defined Benefit Plans
b. Leave Encashment
The disclosure as per the revised AS-15 are as follows: a) Change in
defined benefit obligation
1.16 Employees Stock Options (ESOP)
a. Employees Stock Options (ESOP) 2006:
The vesting period for the ESOP 2006 scheme ended during FY 10-11. The
provision created under this scheme was written back during the year to
the extent of expired options remaining un-exercised by the employees.
The write back amounts to Rs.238.83 lakhs which is disclosed as an
exceptional item in the Statement of Profit and Loss for the year.
b. Employees Stock Options (ESOP) 2007, 2009 and 2010 No options have
been granted under various ESOP schemes approved by the members in AGM.
All these ESOP schemes stand withdrawn.
c Employees Stock Options (ESOP) 2011:
The company during the year FY 2010-11, had introduced ESOP 2011 scheme
and had taken the approval of its members at the AGM held on 29th
September 2011 for 500,000 shares. No options have been granted under
this scheme to any of the employees till date.
f) The discount rate is based on the market yield available on
Government bonds at the accounting date with a term that matches the
g) The estimates of future salary increase considered in the actuarial
valuation takes into account factors like inflation, seniority,
promotion and other relevant factors.
h) the employees are assumed to retire at the age of 60 years.
i) The mortality rate considered are as per the published rates in the
LIC (1994-96) mortality tables.
1.17 The company during the year made a purchase of goods of Rs.167.03
lakhs from Si2 Microsystems Pvt Ltd. and made sales of goods of
Rs.168.70 lakhs to Digipro Design Automation & Marketing Pvt Ltd. These
transactions attract provisions of Section 297 of the Companies Act,
1956, and requires prior approval of Central Government. The company is
in the process of making an application for condonation of delay and
obtaining necessary government approval for the same.
1.18 Transfer Pricing
The company derives a significant portion of its revenue (Rs.1,368.93
lakhs) from services, rendered to its subsidiary M/s. Homestar LLC,
USA, M/s.Homestar Systems Inc & M/s Midrange Software Pte Ltd.,
Singapore. The revenue in this regard is recognized on the basis of a
services agreement with the subsidiary or Purchase Orders raised by the
The Company has carried out a Transfer pricing study during the
previous year based on which the Company''s management is of the opinion
that these international transactions are at arm''s length and believes
that the transfer pricing legislation will not have any impact on the
Financial statements for the year ended March 2012, particularly on
their amount of tax expense and that of the provision for taxation.
1.19 Balances of Sundry Debtors, Loans & Advances are subject to
reconciliation and confirmation.
1.20 All figures have been rounded-off to the nearest Rupee. Previous
Year''s figures have been re-grouped/reclassified wherever necessary to
conform to the current year presentation.