Mascon Global

1.  Share capital
 
 Preferential issue:
 
 The Company has issued 8,450,000 equity shares on conversion of equal
 number of warrants issued during March 2006 at Rs.19 per share
 (including premium) during the financial year, raising an amount of Rs.
 1,445 lakhs.
 
 The Company has issued 12,700,000 equity shares on a preferential basis
 at Rs. 19 per share (including premium) during the financial year,
 raising an amount of Rs. 2,413 lakhs.
 
 The Company has issued 43,500,000 (previous year 75,000,000) share
 warrants on preferential basis at Rs. 19 each (including premium)
 during December 2007/January 2008 with an option of converting into
 equal number of equity shares of the company within 18 months. The
 Company received upfront payment of 10% amounting to Rs. 827 lakhs
 (previous year Rs. 1425 lakhs), which is shown under Current
 Liabilities.
 
 The preferential issue proceeds of Rs. 4967 lakhs (including the
 opening balance of Rs. 282 lakhs as on April 1, 2007) have been
 utilized towards payment of bank dues of Rs. 639 lakhs, other capital
 expenditure of Rs. 2221 lakhs and reduction in the current liabilities
 of Rs. 2107 lakhs.
 
 GDR Issue:
 
 The company has raised Rs. 3,239 lakhs (USD 8 million) during June 2007
 & March 2008 by issue of Global Depositary Receipts (GDR), priced at
 USD 2 per GDR; each GDR comprising of four equity shares of the
 Company, fully paid-up with a face value of Rs. 10/- per share.
 Consequently the Company has allotted 4,000,000 GDRs.
 
 In addition, the Company has also issued 16,500,000 GDRs priced at USD
 2 per GDR amounting to Rs. 13,294 lakhs (USD 53 million); during June
 2007 & March 2008 towards payment of part of the cost of acquisition of
 the Companies. Consequently, the Company has allotted 66,000,000 equity
 shares on swap basis.
 
 The GDR proceeds have been utilized towards advance to its WOS
 amounting to Rs. 2,865 lakhs, reduction in current liabilities of Rs.
 252 lakhs and issue and other expenses of Rs. 122 lakhs.
 
 2.  Reserves & Surplus
 
 The Company has issued 100 lakhs share warrants at Rs 19 per share
 (including premium), during March 2006/April 2006 with the option of
 conversion in to equity shares of the Company. The Company had received
 Rs. 1900 lakhs being 10% upfront payment. In view of non-exercising of
 the conversion option by payment of the balance amount within the
 stipulated period, the Company had forfeited to the extent of 8.72
 million share warrants and the amount received towards upfront payment
 of Rs. 1,656.9 Lakhs has been transferred to Capital Reserves during
 the year.
 
 3.  Secured loans
 
 Working capital facilities obtained from ICICI Bank Limited is secured
 by a first charge on the current assets, a collateral security of the
 fixed assets and a personal guarantee by Chairman.
 
 Term loan obtained from ICICI Bank Limited is secured by a first charge
 on the fixed assets and a charge on the current assets, collateral
 security of equity shares of the Company held by third parties,
 immovable property held by third parties and personal guarantee by the
 Chairman and a third party.
 
 Term loan obtained from Oriental Bank of Commerce Limited is secured by
 a second charge on the assets of the Company, collateral security of
 Equity Shares held by third party and a personal guarantee by Chairman.
 
 Term Loan availed from the State Bank of India is secured by a third
 charge on the assets of the Company, collateral security of immovable
 property and equity shares of the Company held by Chairman of the
 company and personal guarantee by the Chairman.
 
 Loans obtained from banks / finance companies for the purpose of
 acquiring assets on hire purchase are secured by assets acquired.
 
 4.  Unsecured Loans
 
 During the year the company has issued 2% Foreign Currency Convertible
 Bonds (FCCBs) for USD 50 million (Rs.  19,635 lakhs) (Previous Year
 NIL) for a period of five years as per the Reserve Bank of India (RBI)
 guidelines and are due on December 28, 2012 with the option for
 conversion into 21,505,434 global depositary receipts (GDRs) each
 representing 4 shares of Rs. 10 each or 86,021,736 Equity Shares of the
 Company.
 
 5.  Investment
 
 During the year, the company has restructured its investments in its
 WOS at USA. Emerging Software Consulting Inc., USA, and Mascon Global
 Consulting Inc., merged with MGL Americas Inc., USA. There were further
 investments made in WOS - MGL Americas Inc., USA during the year Rs.
 8,743 lakhs (Previous year Rs. 786 Lakhs) and in Mascon Global (Europe)
 Limited Rs.2, 426 lakhs (Previous year Nil).
 
 Diminution:
 
 In the opinion of the management, considering the long-term involvement
 of the company and the business plans of the wholly owned subsidiaries,
 the diminution in the value of investments, if any, are considered as
 temporary, at this stage.
 
 6.  Accounts receivables
 
 The company under an arbitration proceedings in respect of dues from an
 overseas debtor, has to receive Rs. 1,447.1 lakhs (USD 3.3 million) and
 Rs. 3,878.8 lakhs (USD 8.9 million) to be waived, and has received Rs.
 964.3 lakhs (USD 2.2 million) during the year. The company is also
 hopeful of getting the balance dues in full, and hence no provision is
 considered necessary.
 
 7.  Accounts payable
 
 Accounts payable include dues to one of the wholly owned subsidiaries
 Rs. Nil (previous year Rs. 0.6 lakhs) The Company did not have any dues
 to micro small and medium enterprises during the year under report.
 
 8.  Miscellaneous expenditure Development expenditure
 
 Development expenditure consists of the following:
 
 - Expenditure on Life Science division, amounting to Rs. 296.5 lakhs
 (previous year Rs. 296.5 lakhs). Accordingly Rs. 59.2 lakhs (previous
 year Rs. Nil) is being written off over a period of 5 years, from the
 current year.
 
 - Development expenditure on Center of Excellence amounting to Rs.
 1,411 lakhs (previous year Rs. 765.3 lakhs), which will be amortized
 over a period of 5 years, from the date when the asset is ready for
 use/sale.
 
 - Expenditure on Oracle financial package, amounting to Rs.160 lakhs
 (previous year Rs. 67.5 lakhs), which will be amortized over a period
 of 5 years, from the date when the asset is ready for use/sale.
 
 Deferred revenue expenditure - Finance charges
 
 Upfront fee paid to ICICI Bank Limited amounting to Rs. 250 lakhs is
 being amortised over a period of 4 years from 2005-06. Accordingly Rs.
 62.5 lakhs (previous year Rs. 62.5 lakhs) has been written off during
 the year.
 
 9.  Directors remuneration
 
 The remuneration paid to Mr. K.Chandra Executive Chairman & CEO of the
 Company included in salary and allowance amounting to Rs. 2,040,000
 (previous year Rs. 2,040,000). Acturial Valuation for gratuity and
 leave encashment is Rs 82,000 & Rs 48,000 respectively.
 
 The revised remmuneration approved by the shareholders is not
 effectuated on account of pending approval from Company law Board
 (CLB).
 
 Sitting fees paid to Directors during the year Rs. 730,000 (previous
 year Rs. 245,000)
 
 10.  Provisions for Taxation
 
 The Company is a 100% Export Oriented Unit (EOU) registered with the
 Software Technology Parks of India (STPI) and avail the tax exemptions
 available to it under section 10A of the Income Tax Act 1961, to the
 extent applicable.  The provision for Current Tax (based on Minimum
 Alternate Tax) and Fringe Benefits Tax, for the year, has been made as
 per the provisions of Income Tax Act, 1961.
 
 Income tax Department has raised demands of Rs. 97.4 lakhs for
 Assessment Years 2002-03, due to certain disallowances, which are
 disputed by the company on Appeals. The Company has been advised of a
 fair chance of the appeal being allowed by the appellate authorities
 and hence no provision for the same has been made in the financial
 statements for the year.
 
 11.  Contingent Liabilities not provided for 
 
                                                  (Rupees in thousands)
                                           March 31, 2008 March 31, 2007
 
 Bank Guarantees to Government Authorities         2,301          1,801
 
 Guarantee given to a Bank on behalf of a 
 Company                                          65,000         65,000
 
 Estimated amount of contracts remaining 
 to be executed on capital account                   186            174
 
 Current liabilities taken over by debtor        275,011        370,700
 
 Bills discounted with a Finance Company, 
 outstanding as on 31.3.2008 *                   152,619
 
 * Personally guaranteed by the Chairman
 
 12.  Quantitative information as per the Act
 
 The Company is engaged in the development of computer software. The
 production and sale of such software cannot be expressed in generic
 unit. Hence, it is not possible to give quantitative details of sales
 and the information as required under paragraph 3, 4C and 4D of Part II
 of Schedule VI of the Companies Act, 1956.
 
 13.  Previous year figures have been regrouped and reclassified,
 wherever necessary, to facilitate comparison to the current years
 figures.
 
 14.  Figures have been rounded off to the nearest thousands.