MindTree

1.  Contingent liabilities and commitments
 
 a) Guarantees given by Companys bankers as at March 31, 2009
 are Rs. 30,902,359 (previous year- Rs. 43,317,454).
 
 b) Estimated amount of contracts remaining to be executed on
 capital account and not provided for as at March 31, 2009isRs.
 78,979,164 (previousyear-Rs. 160,583,022).
 
 c) On September 19, 2007, the Company received a notice from the
 Honorable High court of Karnataka to appear before the Honorable
 court in respect of assessment of income for A.Y 2001-02. The
 Assessing Officer (AO) has held that interest receipts are not
 eligible for deduction under section 10B of the Act even though
 they are business income and disallowed the same and raised a
 demand of Rs. 616,530. Further AO also mentioned that losses
 from export earnings cannot be set off against other income.
 The AO also rejected the claim of carry forward of business loss
 and unabsorbed depreciation. The order of the AO was not upheld
 by Income Tax Appellate Tribunal (ITAT) and the AO preferred an
 appeal with the Honorable High Court of Karnataka against the
 order of the ITAT. Management believes that the position taken
 by it on the matter is tenable and hence, no adjustment has been
 made to the financial statements for year end March 31, 2009.
 
 d) On January 2, 2008, MindTree has received an assessment order
 for A.Y 2005-06 from the AO with a demand amounting to Rs.
 6,479,880 on account of certain disallowances / adjustments made
 by income tax department. A significant portion of this amount
 arises from manner of adjustment of brought forward losses in
 arriving at the taxable profits of the Company.  Management
 believes that the position taken by it on the matter is tenable
 and hence, no adjustment has been made to the financial
 statements for the year ended March 31, 2009. The Company has
 filed an appeal against the demand received. The Income-tax
 department has adjusted the amount of demand against the refund
 due for A.Y 2006-07.
 
 e) On January 5, 2009, MindTree has received an assessment order
 for A.Y 2006-07 from the Assistant Commissioner of Income-tax
 (ACIT) with a demand amounting to Rs. 51,446,560 on account of
 certain disallowances / adjustments made by income tax
 department.  A significant portion of this amount arises from
 manner of adjustment of brought forward losses in arriving at
 the taxable profits of the Company. Management believes that the
 position taken by it on the matter is tenable and hence, no
 adjustment has been made to the financial statements for the
 year ended March 31, 2009. The Company has filed an appeal
 against the demand received.
 
 2.  Quantitative detai Is
 
 The Company is engaged in the software development services.
 Such services are not capable of being expressed in any generic
 unit and hence, it is not possible to give the quantitative
 details required under paragraphs 3 and 4C of Part 11 of the
 Schedule VI to the Companies Act, 1956.
 
 3.  Dues to micro, small and medium enterprises
 
 The management has initiated the process of identifying
 enterprises which have provided goods and services to the
 Company and which qualify under the definition of micro and
 small enterprises, as defined under Micro, Small and Medium
 Enterprises Development Act, 2006. Accordingly, the disclosure
 in respect of the amounts payable to such enterprises as at
 March 31, 2009 has been made in the financials statements based
 on information received and available with the Company.  The
 Company has not received any claim for interest from any
 supplier under the said Act. In view of the management, the
 impact of interest, if any, that may be payable in accordance
 with the provisions of the aforesaid Act is not expected to be
 material.
 
 4.  Segmental reporting
 
 The Companys operations predominantly relate to providing IT
 services in two primary business segments viz. IT Services and
 R&D Services.  The Company considers the business segment as the
 primary segment and geographical segment based on the location
 of customers as the secondary segment.
 
 The accounting principles consistently used in the preparation
 of the financial statements are also consistently applied to
 record income and expenditure in individual segments.Income and
 direct expenses in relation to segments are categorised based on
 items that are individually identifiable to that segment, while
 the remainder of costs are apportioned on an appropriate basis.
 Certain expenses are not specifically allocable to individual
 segments as the underlying services are used interchangeably.
 The Company therefore believes that it is not practical to
 provide segment disclosures relating to such expenses and
 accordingly such expenses are separately disclosed as
 unallocable and directly charged against total income.
 
 The assets of the Company are used interchangeably between
 segments, and the management believes that it is currently not
 practical to provide segment disclosures relating to total
 assets and liabilities since a meaningful segregation is not
 possible.
 
 5.  Lease transactions
 
 All assets leased on a finance lease basis on or after April
 1, 2001 are capitalized in the books of the Company with a
 corresponding liability recognising future liability on these
 leases. The Company has acquired certain vehicles on finance
 lease. The legal title to these vehicles under finance lease
 vests in the lessors.
 
 6.  Derivatives
 
 Forward and option contracts
 
 As at March 31, 2009, the Company has outstanding forward
 contracts amounting to USD 34.5 million (previous year USD 44.4
 million) and CHF 0.05 million (previous year CHF 22 million),
 option contracts amounting to USD 5 million (previous year USD
 1.5 million), forward strips and leverage option contracts
 amounting to USD 130 million (previous year USD 139 million).
 These derivative instruments have been entered to hedge highly
 probable forecast sales.
 
 In accordance with the principles of AS 30, those derivative
 instruments which qualify for cash flow hedge accounting have
 been fair valued at balance sheet date and the resultant
 exchange loss of Rs. 84,627,323 (previous year Rs. Nil) has been
 debited to hedge reserve. Other derivative instruments that do
 not qualify for hedge accounting have been fair valued at
 balance sheet date and resultant exchange loss of Rs.
 1,432,554,634 (previous year Rs. Nil) has been recognized in the
 profit and loss account for the year.
 
 Currency and interest rate swaps
 
 As at March 31, 2009, the Company had entered into currency and
 interest swap arrangements to the extent of Rs. 15.67 million
 (previous year Rs. 736.55 million)
 
 7.  Change in accounting policy
 
 Effective April 1, 2008, the Company has adopted the principles
 of AS 30 for forward exchange contracts and other derivatives
 that are not covered by AS 11 and that relate to a firm
 commitment or a highly probable forecast transaction. In the
 previous year, the Company has accounted for such contracts in
 accordance with the guidance in the Announcement of ICAI dated
 March 29, 2008. Had the Company accounted for these contracts in
 accordance with the aforesaid ICAI Announcement, exchange loss
 would have increased by Rs.  84,627,323 and profit for the year
 would have been lower by the same amount.
 
 8.  Prior period comparatives
 
 Previous years figures have been regrouped/reclassified
 wherever necessary, to conform to current years classification.