Megasoft

1 Secured loans / borrowings
 
 (i) The term loan and working capital loan facilities from Axis Bank
 are secured by a first charge on entire current assets and fixed assets
 (except companys land and building at Kundanbagh, Begumpet, Hyderabad,
 and assets acquired under hire purchase scheme), present and future, of
 the Company. Additionally, secured by a second charge on companys land
 and building situate at Kundanbagh, Begumpet, Hyderabad. Term loan
 repayable within one year is Rs 20,000 (Previous year - Rs 20,000).
 
 (ii) The foreign currency loan of US$ 2 million from Axis Bank,
 Singapore to Megasoft Consultants, Inc., USA, (MCI), wholly owned
 subsidiary, is secured by a first charge on the assets of MCI.
 Additionally, the (holding) company has given a corporate guarantee for
 the loan.
 
 (iii) The foreign currency loan of US$ 25 million from Axis Bank, Dubai
 to Boston Communications Group, Inc., USA, (BCGI), wholly owned
 subsidiary, is secured by a first charge on the assets of BCGI and
 companys land and building situate at Kundanbagh, Begumpet, Hyderabad.
 Additionally, the (holding) company has given a corporate guarantee and
 pledged the share certificates issued by BCGI with the Bank for the
 said loan.
 
 (iv) The demand loan facility from Tamilnad Mercantible Bank is secured
 by a first charge on companys immovable property at Vizag. Term loan
 repayable within one year is Rs 300,000 (Previous year - Nil).
 
 (v) Vehicles are hypothecated to the Banks / Financial Institutions as
 security for the amounts borrowed by the Company.  Amount repayable
 within one year is Rs 3,052 (Previous year - Rs 3,318).
 
 2 Unsecured loans
 
 The company issued 8,000 1.5% Foreign Currency Convertible Bonds
 (FCCB) of USD 1,000 each on preferential basis on 16 September 2005
 pursuant to the approval of the shareholders of the Company at the
 Extra-ordinary General Meeting held on 26 August 2005 aggregating to
 USD 8 million. FCCB are convertible on or before 17 September 2008 at
 an initial conversion price of Rs 115 per equity share. FCCB have been
 listed on Luxembourg Stock Exchange on 22 September 2005. FCCB
 aggregating to USD 6 million have been converted into equity shares
 during the previous financial years. FCCB aggregating to USD 2 million
 due for redemption on 17 September 2008 is being negotiated for
 extension of time for a period of up to one year with the lendor with
 revised terms, subject to statutory approvals.
 
 3 Segmental Information
 
 The Groups operations are focussed on IT Services and Telecom
 services. Accordingly, these business divisions comprise the primary
 basis for the segmental information set out in these financial
 statements. Secondary segmental reporting is reported on the basis of
 the geographical location of customers. Geographical revenues are
 segregated based on the location of the customer who is invoiced or in
 relation to which the revenue is otherwise recognised.
 
 Fixed assets used in the Companys business or liabilities contracted
 have not been identified to any of the reportable segments, as they are
 used interchangeably between segments consequent to the amalgamation of
 VisualSoft and realignment of business divisions. Accordingly, no
 disclosure relating to total segment assets and liabilities have been
 made.
 
 4 Employees Stock Option Plans
 
 The company has five stock option plans that provide for the granting
 of stock options to employees / directors of the company and its
 subsidiaries (not being promoter directors of the company). The
 objectives of these plans include attracting and retaining the best
 personnel, providing for additional performance incentives and
 promoting the success of the company by providing employees the
 opportunity to acquire equity shares. Remuneration / Compensation
 Committee administers all these stock options under various plans. The
 stock option plans are summarised below:
 
 (i) Employees Stock Option Plan 2001
 
 The shareholders of the company in the Annual General Meeting (AGM)
 held on 26 July 2001 approved an Employees Stock Option Plan
 (ESOP-2001) for issue of 1,065,050 equity shares of Rs 10 each to the
 employees including directors of the company.
 
 At the AGM held on 18 June 2004, the Plan was closed and the company
 decided not to offer any more options under this Plan consequent to the
 amendments to the SEBI (Employee Stock Option Scheme and Employee Stock
 Purchase Scheme) Guidelines, 1999, on 30 June 2003.
 
 (iii) Associates Stock Option Plan 2004
 
 The shareholders of the company in the AGM held on 18 June 2004
 approved an Associate Stock Option Plan (ASOP-2004). The ASOP-2004
 provides for issue of 755,000 equity shares of Rs 10 each to the
 employees including directors at the market price of the shares on the
 date of grant.
 
 At the AGM held on 22 June 2006, the exercise price of the options to
 be granted was amended to enable issue of options / shares at such
 discounts to the Market Price as on the date of the grant of the
 options subject to the exercise price not being less than the face
 value of shares.
 
 (iv) Employees Stock Option Plan (VisualSoft) 2007
 
 In terms of the scheme of amalgamation duly approved by the High
 Courts, the shareholders of the company in the AGM held on 27 June 2007
 approved an Employees Stock Option Plan (ESOP-Visualsoft).
 
 (v) Employees Stock Option Plan 2007
 
 The shareholders of the company through a postal ballot process, postal
 ballot notice dated 26 April 2007, results declared on 8 June 2007,
 approved an Employees Stock Option Plan (ESOP-2007). The ESOP-2007
 provides for issue of 2,700,000 options (underlying equity shares of Rs
 10 each) to the employees / Directors of both the company and its
 subsidiaries, at such discounts to the Market Price as on the date of
 the grant of the options subject to the exercise price not being less
 than the face value of equity shares.
 
 5 Corporate Guarantees
 
 (i) The foreign currency loan of US$ 2 million from Axis Bank,
 Singapore to Megasoft Consultants, Inc., USA, (MCI), wholly owned
 subsidiary, is secured by a first charge on the assets of MCI.
 Additionally, the (holding) company has given a corporate guarantee for
 the loan.
 
 (ii) The foreign currency loan of US$ 25 million from Axis Bank, Dubai
 to Boston Communications Group, Inc., USA, (BCGI), wholly owned
 subsidiary, is secured by a first charge on the assets of BCGI and
 companys land and building situate at Kundanbagh, Begumpet, Hyderabad.
 Additionally, the (holding) company has given a corporate guarantee and
 pledged the share certificates issued by BCGI with the Bank for the
 said loan.
 
 6 Previous year comparatives
 
 Previous years figures have been regrouped, reclassified / rearranged
 wherever necessary to conform to current year’s presentation.
 Consolidated financial results for the previous financial year include
 the business performance of bcgi and its subsidiaries w.e.f. 30 August
 2007. Hence, the consolidated financial results for the current
 financial year are not comparable with the results of the previous
 financial year.
 
 7 Cash flows
 
 Cash flows are reported using the indirect method, whereby profit
 before tax is adjusted for the effects of transactions of a non- cash
 nature and any deferrals or accruals of past or future cash receipts or
 payments. The cash flows from regular revenue generating, financing and
 investing activities of the Group are segregated. Cash flows in foreign
 currencies are accounted at average monthly exchange rates that
 approximate the actual rates of exchange prevailing at the dates of the
 transactions.