BACKGROUND OF THE COMPANY
 
 Smartlink Network Systems Limited (Company) was incorporated on 31st
 March, 1993. The Company is in the business of developing,
 manufacturing, marketing, distributing and servicing of networking
 products.
 
 1.  Leasehold land / premises include:
 
 (i) Plots of land of the aggregate gross value of Rs. 14,036,535-
 (previous year Rs. 14,036,538/-), taken on lease from the Goa
 Industrial Development Corporation (GIDC) for an initial period of
 thirty years with an option to extend the lease to ninety/ ninety-five
 years.
 
 (ii) Land and premises of the aggregate gross value of Rs. 1,686,000/-
 (previous year Rs.1,686,000/-), taken on lease from Maharashtra
 Industrial Development Corporation (MIDC) for an initial period often
 years with an option to extend the lease to ninety-five years.
 
 Title deeds in respect of the above are in the names of GIDC and MIDC
 respectively.
 
 2.  Goodwill represents the difference between the net assets of
 erstwhile Virtual Computers Private Limited taken over pursuant to
 scheme of amalgamation and the cost of shares held by the Company in
 the erstwhile Virtual Computers Private Limited.
 
 3.  Buildings comprises of a building given on operating lease for a
 period of 12 months.
 
 NOTE 24: CONTINGENT LIABILITIES AND COMMITMENTS
                                                   as at        as at
 Contingent liabilities in respect of              31 st        31 st
                                              March 2012   March 2012         
 
 a.  Show cause notices received from 
 customs authorities relating to
 imports                                         709,043  242,015,325 
 made in earlier years. The Company has
 filed replies to these notices.
 
 b.  Disputed demands of custom duty 
 pending before the Customs,                   2,414,221    2,414,221 
 Excise and Service Tax Appellate 
 Tribunal (CESTAT)
 
 c.  Disputed penalty demands of 
 Custom Authorities with respect to (b)
 above,                                        2,412,221    2,412,221 
 pending before theCustoms, Excise and
 Service Tax Appellate Tribunal (CESTAT)
 
 d.  Disputed demand of excise duty in 
 connection with valuation of
 products                                     38,715,672   38,715,672 
 manufactured by the Company pending
 before CESTAT
 
 e.  Disputed penalty demands of Excise 
 Authorities with regard to (d)
 above,                                       39,517,713   39,517,713 
 pending before theCESTAT
 
 f.  Custom duty paid under protest
 The raw material / trading material / 
 software imported by the Company
 are subjected                                 4,487,728    4,487,728 
 to different rates of customs duty
 based on classification under 
 respective Tariff Head.
 
 The Customs department has objected 
 to the classifications adopted by
 the Company for certain items and has 
 demanded additional duty for the
 same.
 
 The Company has paid such differential 
 duty under protest, which is
 included under Long term loans and advances 
 in Note 12, pending
 resolution of the dispute.
 
 g.  Disputed demand of Income-tax for 
 Assessment Year 2008-09 pending
 before                                       40,297,980         - 
 Commissioner of Income-taxax 
 (Appeals), Panaji.
 
 h.  SEBI had filed a criminal case, 
 in the Metropolitan Magistrate
 court, in June, 2006 under Section 
 77A(4) r/w Section 621 for alleged
 contravention of provisions of the 
 Companies Act, 1956 for failing to
 complete the process of buy back of 
 shares as provided under the said
 section. The Company had filed an 
 application in the Hon''ble High Court
 of Bombay and the Hon''ble High Court 
 has passed Orders staying the
 proceedings in the Metropolitan 
 Magistrate court. The stay is
 continuing.
 
 The Company does not expect any liability 
 on this account at this stage.
 
 Capital commitments
 
 Estimated amount of contracts remaining 
 to be executed on capital
 account                                      14,246,950      231,960
 and not provided for
 
 VIII.  The company has made contribution of Rs. 1,500,000/- for the FY
 2012-13.
 
 IX.  The plan assets are managed by the Gratuity trust formed by the
 Company. The management of funds is entrusted with Life Insurance
 Corporation of India. The details of investments made by them are not
 available.
 
 B The disclosure as required under AS-15 regarding the Company''s
 defined contribution plans is as follows: i) Contribution to provident
 fund Rs. 4,062,473/- (previous year Rs. 3,224,639/-).
 
 NOTE 28: SEGMENT INFORMATION
 
 (A) Segment information for primary reporting (by business segment)
 
 The Company has its operations in developing, manufacturing, marketing,
 distributing and servicing networking products. These networking
 products are sold to distributors, Original Equipment Manufacturers
 (OEM''s) and System Integrators (SI). The primary reporting segment for
 the Company, therefore, is the business segment, viz., networking
 products.
 
 (B) Segment information for secondary segment reporting (by
 geographical segments)
 
 The secondary reporting segment for the Company is the geographical
 segment based on location of customers, which is as follows:
 
 i) Domestic
 
 ii) Export
 
 NOTE 29: LEASE TRANSACTIONS
 
 Operating leases
 
 The Company has taken premises / vehicles on cancellable operating
 lease basis. The tenure of the agreement ranges from 33 / 60 months.
 There are no renewal or purchase options and escalation clauses in
 these agreements.
 
 The lease rentals for the year charged to revenue are Rs. 645,740/-
 (previous year Rs. 1,138,304/-)
 
 NOTE 33: DISCONTINUING OPERATIONS
 
 The Board of Directors of the Company at its meeting held on 31st
 March, 2011 approved the sale of the Structured cabling business
 comprising of manufacture, sale and marketing of structured cabling
 products carried under the brand name DIGILINK, hereinafter referred
 to as (Digilink Business), to Schneider Electric India Private
 Limited (Schneider). The Digilink Business together with its
 respective assets and liabilities, was transferred to Schneider on a
 ''slump sale'' basis as a going concern, for a cash consideration of Rs.
 5,030,000,000/- to be adjusted for any net working capital changes as
 on the closing date.
 
 In this connection, the Company had signed the Business Transfer
 Agreement dated 31st March, 2011 and had obtained the shareholders
 approval through postal ballot on 11th May, 2011. The consideration was
 received on 13th May, 2011 , the Closing date. The balance
 consideration on account of net working capital adjustments was
 received during the quarter ending 30th September, 2011. The profit on
 account of the above transaction is disclosed as an exceptional item.
 
 Accordingly, the ''DIGILINK'' business is considered as a ''discontinued
 operation'' in terms of Accounting Standard 24 on ''Discontinued
 Operations'' (AS 24).
 
 Other than the above, the Company has not remitted any amount in
 foreign currencies on account of dividends during the year and does not
 have information as to the extent to which remittances, if any, in
 foreign currencies on account of dividend have been made by
 non-resident shareholders.
 
 i.  The Company had instituted Employee Stock Option Plan (ESOP) for
 its employees in the year 2000. To administer the ESOP the Company had
 created a Trust viz. D-Link (India) Limited ESOP Trust (the Trust) in
 September 2000. The said Trust was allotted 6,50,000 Equity Shares of
 Rs. 2/- each. In terms of the said ESOP, the Trust had granted options
 to the employees in the form of Equity Shares which vest at the rate of
 25% on each successive anniversary of the grant date. The Trust had
 been renamed as Smartlink Network Systems Limited ESOP Trust. The
 accounting of ESOP''s granted by the Trust to the employees of the
 Company was done in accordance with The SEBI (ESOS and ESPS)
 Guidelines, 1999. These Guidelines were amended in July 2004 for all
 accounting periods commencing after 30th June, 2003. The amendment
 required the Company to prepare its accounts as if the ESOS/ESPS scheme
 was administered by itself (rather than by the Trust). The Company had
 accordingly considered all the options granted by the Trust on or after
 1st April 2004. The difference between the Market price of the share
 (intrinsic value) and the exercise price of the option, on the date of
 grant, had been amortised over the vesting period. The annual
 amortization was included under Employee benefit expenses and the
 cumulative charge disclosed in the Balance sheet under Employee stock
 options outstanding There are no further options outstanding to be
 granted.
 
 j.  Excise duty collected from customers against sales has been
 disclosed as a deduction from turnover. The excise duty related to the
 difference between the opening and closing stock of finished goods is
 disclosed separately in the profit and loss account as Excise Duty.
 
 k.  Remuneration to an Executive chairman aggregating to Rs.
 3,761,250/- initially paid which is in excess of limits specified in
 Schedue XIII of the Companies Act, 1956 is being recovered from the
 said Director and is accordingly disclosed in Note 17 Short Term Loans
 and Advances. The said amount is recovered subsequent to the year end.
 
 l. Previous year''s figures have been regrouped, wherever necessary, to
 correspond with those of the current year.