(Rs.) 
                                           31.3.2011      31.3.2010
 
 1.  Contingent Liabilities 
     not provided for
 
 (I) Disputed Income Tax demands as 
 explained below : (Inclusive of
 Interest Charged)                       456,972,314   1,294,841,611
 
 (a) The above amount represents demands raised by the Income Tax
 Officer at the initial assessment level for the Financial Years
 2005-2006 and 2006-2007 with respect deductions sought under section
 10A of the Income-Tax Act for new undertakings established by the
 Company. The Company has filed appeals to the Commissioner of Income
 Tax (Appeals) against the aforementioned demands.
 
 (b) The above does not include demands for earlier years relating to
 section 10A of the Income Tax, Act where the Company has received
 favorable orders from
 
 Income Tax Appellate Tribunal Mumbai. The Department has made an appeal
 for these years to the High Court of Mumbai which is yet to be
 admitted.
 
 The Supreme Court by its order of September 9, 2010 over ruled the
 order of the High Court of Karnataka which had held that irrespective
 of the nature of payment, in the absence of a lower withholding order,
 income-tax had to be withheld on all payments made to overseas parties.
 Further the Supreme Court remanded the cases back to the High Court of
 Karnataka for a fresh review and to examine whether payments made to
 overseas parties for purchase of software was in the nature of
 Royalty and if so whether tax had to be withheld on the same.
 
 Based on the above Supreme Court order the following demands are not
 considered as contingent liability:
 
 i. Rs.15.79 crores as tax which had not been deducted by the Company on
 payments made to overseas parties for purchase of software for the
 Financial Years 1999- 2000,2000-2001 and 2001-2002. However, for these
 years one of the principal suppliers of software to the Company has
 paid Rs.8.79 crores out of the above demand.
 
 i. Rs.77.38 crores of tax demand for the Financial Years 1996-97,
 1997-98, 1998-1999 and 1999-2000 on account of disallowances of
 payments made for purchase of software on which tax had not been
 deducted at source. This demand is directly linked to outcome of the
 issue discussed in point (i) above
 
 The Service Tax Department has raised a demand by classifying
 Information Technology Consulting Services rendered by the Company to
 its domestic clients as Manpower Recruitment or Supply Agency
 Services. The latter service classification brings service rendered by
 the Company to its domestic clients within the ambit of Service Tax.
 The Company has contested this re- classification of services and has
 filed an appeal before the Appellate Authorities. One of the clients
 has indemnified the Company for any demands that may arise on account
 of service tax liability up to an amount of Rs.2.37 Crores.
 
 (V) (a) The Company has given corporate guarantee to IBM Ltd on behalf
 of Sonata Information Technology Limited fora value of Rs.5 Crores.
 
 (b) The Company has provided an indemnity of US$ 0.5 million to
 Standard Chartered Bank, India to cover working capital limits provided
 by Standard Chartered Bank, Dubai to Sonata Software FZ LLC, Dubai.
 
 2. Income from Services includes gain on account of exchange
 fluctuation of Rs.1,350,965 for the current year ended 31st March, 2011
 (Previous year loss Rs. 40,692,853)
 
 3.  The working capital facility of the company are secured by
 hypothecation of inventories, book debts, moveable assets and
 receivables both present and future.
 
 4.  NOTE ON AS 30 ADOPTION :
 
 Accounting Standard 30, (AS 30) Financial Instruments: Recognition and
 Measurement was issued by the Institute of Chartered Accountants of
 India (ICAI) in December 2007. AS 30 becomes recommendatory in respect
 of accounting periods commencing on or after April 1 2009 and mandatory
 in respect of accounting periods commencing on or after April 1 2011.
 ICAI has announced that the earlier adoption of AS 30 is encouraged.
 From the accounting year 2008-09, the Company has early adopted
 Accounting Standard 30 (AS 30) Financial Instruments: Recognition and
 Measurement.
 
 From the year 2008-09 the Company applied the recognition and
 measurement principles as set out in AS 30 in accounting derivatives.
 Changes in fair values of derivative financial instruments designated
 as effective cash flow hedges were recognized directly into Hedging
 Reserve in the Balance Sheet under Reserves and Surplus and
 reclassified into Profit and Loss account upon the occurrence of the
 forecasted hedged transaction.
 
 As at 31st March 2011, the Company recognized Rs. 307.13 Lacs (Previous
 year Rs.1871.21 Lacs) into Hedging Reserve due to changes in fair
 value of the effective cash flow hedges.
 
 5. Related Party Transactions :
 
 a) The list of related parties and nature of their relationship is
 disclosed in the annexure
 
 Other Related Parties :
 
 Sonata Information Technology limited (SITL) is a company incorporated
 in India. SITL is a wholly owned subsidiary of SSL and both the
 Companies have three common directors. Amounts included in the
 financial statements of the Company are in relation to administrative
 services, normal business transactions with SITL, as given below :
 
 6. Employee Benefits :
 
 (b) Providend Fund : The Guidance issued by the Accounting standard
 Board (ASB) on implementing AS-15, Employee benefits (revised 2005)
 states that provident funds set up by employers which requires interest
 short fall to be met by the employer, needs to be treated as defined
 benefit plan. Pending the issuance of the Guidance Note from the
 Actuarial Society of India, the Companys actuary has expressed his
 inability to reliably measure the future obligation arising due to
 interest shortfall (i.e. government interest to be paid on provident
 fund scheme exceeds rate of interest earned on investment) hence
 information not furnished.
 
 (c) Basis used to determine expected rate of return on assets
 
 The expected return on planned assets is based on market expectation at
 the beginning of the period for returns over the entire life of the
 related obligation. The Gratuity Scheme is invested in Group Gratuity
 Scheme with HDFC Standard Life Insurance Company Limited. The expected
 return on assets assumption is taken based on current market yield.
 
 (d) The estimates of future salary increases, considered in actuarial
 valuation, take account of inflation, seniority promotion and other
 relevant factors, such as supply and demand in the employment market.
 
 (f) Estimated Contribution for the next year on account of gratuity is
 Rs.11,145,118(Nil).
 
 (g) Contribution/Provisions to superannuation, Pension and other funds
 stated under defined contribution plan is Rs.35,230,035(Rs.31,196,203)
 
 7. There are no Micro, Small and Medium Enterprises, as defined in the
 Micro, Small, Medium Enterprises Development Act, 2006 to whom the
 company owes dues on account of principal amount together with interest
 and accordingly no additional disclosures have been made.
 
 The above information regarding Micro, Small and Medium Enterprises has
 been determined to the extent; such parties have been identified on the
 basis of information available with the company. This has been relied
 upon by the auditors.
 
 8. Operating Leases
 
 The Company has various operating leases for office facilities and
 residential premises for employees that are renewable on a yearly
 basis, and cancellable at its option. Rental expenses for operating
 leases included in the Income statements for the year is Rs. 88,731,842
 (Rs. 70,428,748).
 
 9. Previous years figures are shown in brackets and have been
 regrouped, wherever necessary to conform to current years
 classification.
 
 LIST OF RELATED PARTIES AND NATURE OF RELATIONSHIP
 
 I.  KEY MANAGERIAL PERSONS AND OTHER DIRECTORS AS ON 31.03.2011
 
 1.  B Ramaswamy, Managing Director & President
 
 2.  P Srikar Reddy, Executive Vice President & Chief Operation Officer
 
 3.  M D Dalai, Executive Vice Chairmar
 
 4.  Pradip P Shah, Chairmar
 
 5.  S B Ghia, Director
 
 6.  Viren Raheja, Director
 
 7.  S N Talwar, Director
 
 8.  B K Syngal, Director
 
 II.  OTHERS AS ON 31.03.2011
 
                List of related parties      Nature of Relationship
 
 S B Ghia       Bhupati Investments & 
                Finance Pvt. Ltd.            Significant Influence
                                             (through VIPL),
 Director                                    Spouse Mrs.R S Ghia as 
                                             Chairperson and
                                             brothers wife 
                                             Mrs.V D Ghia 
                                             as Director
 
                Chika Pvt. Ltd.              Son Mr.N S Ghia as 
                                             Chairman
 
                Viraj Investments 
                Pvt. Ltd. (VIPL)             Son as Chairman and 
                                             Spouse, Brothers wife 
                                             are Directors
 
 M D Dalai      Daltreya Investment & 
                Finance Pvt. Ltd.            Spouse & sister are
                                             Directors
 Executive 
 Vice Chairman
 
 Viren Raheja   Rajan B Raheja               Father
 
 Director       Suman R Raheja               Mother
 
                Akshay R Raheja              Brother
 
                Excelsior Construction 
                Pvt. Ltd.                    100% shareholding by 
                                             Mr.Rajan B Raheja &
                                             his family
 
                Gstaad Investments & 
                Finance Pvt. Ltd.            100% shareholding by 
                                             Mr.Rajan B Raheja &
                                             his family
 
                Trophy Investments & 
                Finance Pvt. Ltd.            100% shareholding by 
                                             Mr.Rajan B Raheja &
                                             his family
 
 B Ramaswamy    Sonata Information 
                Technology Ltd.              Director
 
 Managing 
 Director & 
 President      TUI InfoTec GmbH, Germany    Member of Supervisory Board
 
                Sonata Software FZ LLC, 
                Dubai                        Director
 
 P Srikar 
 Reddy          Sonata Information 
                Technology Ltd.              Director
 
 Executive 
 Vice 
 President 
 & CEO
 
                TUI InfoTec GmbH, Germany    Managing Director
 
                Sonata Software FZ LLC, 
                Dubai                        Director
 
 Subsidiaries   Sonata Information 
                Technology Ltd.              Wholly owned
                                             subsidiary of Sonata
 
                Sonata Software FZ LLC, 
                Dubai                        Wholly owned subsidiary of
                                             Sonata
 
                Sonata Software North 
                America Inc., USA            Wholly owned subsidiary of
                                             Sonata
 
                Sonata Software GmbH, 
                Germany                      Wholly owned subsidiary of 
                                             Sonata
 
                Sonata Europe Ltd, UK        Wholly owned subsidiary of 
                                             Sonata
 
                TUI InfoTec GmbH, Germany    Subsidiary of Sonata
 
 Note : Above disclosures have been made by the Directors pursuant to
 the legal opinion from M/s Kanga & Co, Solicitors.