1. finance
2. personal finance
3. financial planning
4. retirement and pension

Notice to the Shareholders
Notice of Annual General Meeting
Notice is hereby given that the 18th Annual General Meeting of
the Members of the Company will be held on Wednesday, 1 July
2009 at 2.30 p.m. at Bhaskara Auditorium, BM Birla Museum,
Adarsh Nagar, Hyderabad - 500 063 to transact the following
business:
Act, 1956, consent of the Company be and is hereby
accorded to appoint Prof. J. Ramachandran as a Director of
the Company liable to retire by rotation.”
9.
To consider and if thought fit to pass with or with out modification(s),
the following resolution as a Special Resolution.
Ordinary Business:
1.
To receive, consider and adopt the Report of the Board of
Directors, Profit and Loss Account for the financial year
ended on 31 March 2009 and the Balance Sheet as at that
date and the report of Auditors' thereon.
2.
To declare dividend on Equity Shares.
3.
To appoint a Director in place of Mr. B.V.R Mohan Reddy,
who retires by rotation and being eligible, offers himself
for re-appointment.
4.
To appoint a Director in place of Mrs. B. Sucharitha, who
retires by rotation and being eligible, offers herself for
re-appointment.
5.
To appoint a Director in place of Mr. M.M. Murugappan,
who retires by rotation and being eligible, offers himself
for re-appointment.
6.
To consider and if thought fit to pass with or without modification(s),
the following resolution as an Ordinary Resolution.
“RESOLVED THAT subject to the provisions of Section
225 and other applicable provisions, if any, of the Companies
Act, 1956, M/s. Deloitte Haskins & Sells, Chartered
Accountants, be and are hereby appointed as Auditors of
the Company to hold office from the conclusion of this
Annual General Meeting upto the conclusion of the next
Annual General Meeting in place of the retiring Auditors,
M/s. Price Waterhouse, Chartered Accountants, to audit the
accounts of the Company for the financial year 2009-10 at
a remuneration to be fixed by the Board of Directors on
the recommendation of the Audit Committe of Directors.”
Special Business:
7.
To consider and if thought fit to pass with or with out modification(s),
the following resolution as an Ordinary Resolution.
“RESOLVED THAT pursuant to the provisions of Section
257 and other applicable provisions, if any, of the Companies
Act, 1956, consent of the Company be and is hereby
accorded to appoint Mr. William Henry as a Director of the
Company liable to retire by rotation.”
8.
To consider and if thought fit to pass with or with out modification(s),
the following resolution as an Ordinary Resolution.
“RESOLVED THAT pursuant to the provisions of Section
257 and other applicable provisions, if any, of the Companies
“RESOLVED THAT pursuant to the provisions of Sections
198, 269, 309, 310 and other applicable provisions, if any,
of the Companies Act, 1956, read with Schedule XIII (as
amended from time to time) to the said Act, consent of the
Company be and is hereby accorded for the re-appointment
of Mr. B.V.R. Mohan Reddy as Chairman and Managing
Director of the Company for a period of 5 years, with effect
from 12 April 2009 at a remuneration as detailed below:
I.
Salary
Salary shall not be less than Rs. 250,000 (Rupees Two
lakhs Fifty thousand only) per month. The Salary may
progressively go up based on his performance and
industry trends, subject however that in no case, the
Salary shall exceed Rs. 500,000 ( Rupees Five lakhs only)
per month subject to the confirmation of the Board
of Directors based on the recommendation of the
Compensation Committee of Directors.
II.
Commission
A Percentage of net profits of the company as
commission payable shall be determined by the
Compensation Committee / Board of Directors of
the company, subject to the total remuneration (i.e.
salary, perquisites, commission and Allowances) in any
one financial year shall not exceed the limits prescribed
from time to time under section 198, 309 and other
applicable provisions of the Companies Act, 1956 read
with Schedule XIII to the said Act, as may for the time
being, be in force and any amendments thereto.
III. Perquisites
Perquisites as follows will be paid and / or provided in
addition to salary. Perquisites shall be valued in terms
of actual expenditure incurred by the Company.
However, in cases where the actual amount of
expenditure cannot be ascertained with reasonable
accuracy the perquisites shall be valued as per Income
Tax Rules:
a)
Medical Reimbursement
Reimbursement of medical expenses actually
incurred for self and family as per the rules of
the Company.
13
Notice to the Shareholders
b)
Leave Travel Concession / allowance
VI. Minimum Remuneration
In the event of loss or inadequacy of profits, in any
financial year during the currency of tenure of service,
the payment of salary, commission, perquisites and
other allowances shall be governed under Section II
of part II of Schedule XIII to the Companies Act,
1956, including any statutory modifications or reenactment thereof, as may, for the time being, be in
force.
For self and family, once in a year in accordance
with the rules of the Company.
c)
Club Fees
Fees of Club payable as per the rules of the
Company.
d)
Provident Fund, Pension Fund & Superannuation Fund
Company's Contribution to Provident Fund,
Pension Fund & Superannuation Fund as per the
rules of the Company.
e)
Gratuity
Gratuity is payable as per the rules of the
Company.
f)
Car
Use of fully maintained Company's car with
chauffeur with fuel reimbursement.
g)
Telephone
Reimbursement of residential telephone/mobile
bills at actuals. Use of telephones/mobiles for
official purpose shall not be considered as
perquisite.
IV. Other Benefits
On full pay and allowances as per the rules of the
Company, but not more than one month's leave for
every 11 months of service.
V.
10. To consider and if thought fit to pass with or without modification(s),
the following resolution as a Special Resolution.
“RESOLVED THAT pursuant to the provisions of Sections
198, 269, 309, 310 and other applicable provisions of the
Companies Act, 1956, read with Schedule XIII (as amended
from time to time) to the said Act, consent of the Company
be and is hereby accorded for the re-appointment of
Mrs. B. Sucharitha as Whole Time Director of the Company
for a period of 5 years, with effect from 12 April 2009 at a
remuneration as detailed below:
I.
Salary
Salary shall not be less than Rs. 150,000 (Rupees One
lakh Fifty Thousand only) per month. The Salary may
progressively go up subject to her performance and
industry trends, subject however that in no case, the
salary shall exceed Rs. 250,000 ( Rupees Two lakhs Fifty
Thousand only) per month subject to the confirmation
of the Board of Directors based on the
recommendation of the Compensation Committee of
Directors.
Overall Remuneration
II. Perquisites
That the total remuneration (i.e., salary, perquisites,
commission and Allowances) in any one financial year
shall not exceed the limits prescribed from time to
time under Sections 198, 309 and other applicable
provisions of the Companies Act, 1956 read with
Schedule XIII to the said Act, as may for the time
being, be in force and any amendments thereto. In
case of any doubt / discrepancy / clarification that
may arise with respect to payment of remuneration
the same shall be determined and decided by the Board
of Directors on the recommendation of
Compensation Committee of Directors. Further,
within the overall remuneration, the individual
components may be changed as desired by Mr. B.V.R.
Mohan Reddy and accepted by the Compensation
Committee of Directors.
14
VII. Six months' notice shall be required, on either side for
termination of service.”
Perquisites as follows will be paid and / or provided in
addition to salary. Perquisites shall be valued in terms
of actual expenditure incurred by the Company.
However, in cases where the actual amount of
expenditure cannot be ascertained with reasonable
accuracy the perquisites shall be valued as per Income
Tax Rules:
a)
Medical Reimbursement
Reimbursement of medical expenses actually
incurred for self and family as per the rules of
the Company.
b)
Leave Travel Concession/allowance
For self and family, once in a year in accordance
with the rules of the Company.
Notice to the Shareholders
c)
Club Fees
the limits prescribed from time to time under Sections
198, 309 and other applicable provisions of the
Companies Act, 1956 read with Schedule XIII to the
said Act, as may for the time being, be in force and any
amendments thereto. In case of any doubt /
discrepancy / clarification that may arise with respect
to payment of remuneration the same shall be
determined and decided by the Board of Directors on
the recommendation of Compensation Committee of
Directors. Further, within the overall remuneration, the
individual components may be changed as desired by
Mrs. B. Sucharitha and accepted by the Compensation
Committee of Directors.
Fees of Club payable as per the rules of the
Company.
d)
Provident Fund, Pension Fund & Superannuation Fund
Company's Contribution to Provident Fund,
Pension Fund & Superannuation Fund as per the
rules of the Company.
e)
Gratuity
Gratuity is payable as per the rules of the
Company.
f)
Car
Use of fully maintained Company's car with
chauffeur with fuel reimbursement.
g)
Telephone
Reimbursement of residential telephone/mobile
bills at actuals. Use of telephones/mobiles for
official purpose shall not be considered as
perquisite.
III. Other Benefits
V.
Minimum Remuneration
In the event of loss or inadequacy of profits, in any
financial year during the currency of tenure of service,
the payment of salary, commission, perquisites and
other allowances shall be governed under Section II
of part II of Schedule XIII to the Companies Act,
1956, including any statutory modifications or reenactment thereof, as may, for the time being, be in
force.
VI. Six months' notice shall be required, on either side for
termination of service.”
On full pay and allowances as per the rules of the
Company, but not more than one month's leave for
every 11 months of service.
By Order of the Board
IV. Overall Remuneration
That the total remuneration (i.e., salary, perquisites and
commission) in any one financial year shall not exceed
Place : Hyderabad
Date : April 25, 2009
Sudheendhra Putty
Company Secretary
15
Notice to the Shareholders
Notes
1.
A member entitled to attend and vote at the Annual General
Meeting (AGM) is entitled to appoint a proxy to attend and
vote on a poll on behalf of him and the proxy need not be
a member. The enclosed proxy form should be deposited
at the Registered Office of the Company not less than 48
hours before the commencement of the AGM.
2.
The Register of Members and the Share Transfer Registers
of the Company will remain closed from 24 June 2009 to
1 July 2009 (both days inclusive) in connection with the
AGM and for the purpose of dividend.
3.
Dividend at the rate of Rs. 1.50 per share (30%) for the
year ended 31 March 2009 as recommended by the Board,
if declared at the AGM will be payable to those members
whose names appear on the Company's Register of
Members as at the close of business hours on 23 June 2009.
4.
5.
6.
7.
8.
An Explanatory Statement pursuant to Section 173(2) of
the Companies Act, 1956, is annexed hereto. The relevant
details as required by Clause 49 of the Listing Agreements
entered into with the Stock Exchanges, of persons seeking
re-appointment as Directors under Item Nos. 3,4,5,7 and 8
above are also annexed.
Members/Proxies are requested to bring their copies of
Annual Report to the AGM and the attendance slip duly
filled in for attending the AGM. Copies of Annual Report
will not be provided at the AGM.
The Certificate from the Auditors of the Company certifying
that the Company's Stock option Schemes are being
implemented in accordance with the SEBI (Employees Stock
Option Scheme and Employees Stock Purchase Scheme)
Guidelines, 1999, as amended, and in accordance with the
resolution of the members passed at the general meeting
will be available for inspection by the members at the AGM.
Members desirous of obtaining any information concerning
the accounts and operations of the Company are requested
to send their queries to the Registered Office of the
Company at least seven days before the date of the AGM,
so that the information required by them may be made
available.
Members holding shares in physical form may write to the
Company/Company's share transfer agents for any change
in their address and bank mandates; members having shares
in electronic form may inform the same to their depository
participants immediately so as to enable the Company to
dispatch dividend warrants at their correct addresses.
16
9.
Members are requested to send all communication relating
to shares to the Company's Share Transfer Agents (Physical
and Electronic) at the following address:
Karvy Computershare Private Limited
Unit: Infotech Enterprises Limited
Plot No. 17 to 24, Vithalrao Nagar,
Madhapur, Hyderabad-500 081.
10. Members are requested to opt for ECS (Electronic Clearing
Service) for receipt of dividend. Members may please update
their bank account details with their Depository Participants
for receiving the dividend in a hassle free manner. Opting
for ECS is cost effective and also saves time.
Explanatory Statement pursuant to
Section 173(2) of the Companies
Act, 1956
Item No. 7:
Appointment of Mr. William Henry as a Director on the
Board of the Company
Mr. William Henry was appointed as Additional Director of the
Company with effect from 23 July 2008, pursuant to provisions
of Section 260 of the Companies Act, 1956.
Under Section 257 of the Companies Act 1956, a notice in writing
has been received from a member signifying his intention to
propose Mr. William Henry, as a Director of the Company along
with a deposit of Rs. 500/- as required under the aforesaid Section.
Except Mr. William Henry, none of the other Directors of the
Company is in any way concerned or interested in the resolution.
Your Directors recommend the resolution for your approval.
Item No. 8:
Appointment of Prof. J. Ramachandran as a Director on
the Board of the Company
Prof. J. Ramachandran was appointed as Additional Director of
the Company with effect from 17 November 2008, pursuant to
provisions Section 260 of the Companies Act, 1956.
Under Section 257 of the Companies Act 1956, a notice in writing
has been received from a member signifying his intention to
propose Prof. Ramachandran, as a Director of the Company along
with a deposit of Rs. 500/- as required under the aforesaid Section.
Except Prof. Ramachandran, none of the other Directors of the
Company is in any way concerned or interested in the resolution.
Your Directors recommend the resolution for your approval.
Notice to the Shareholders
Item No. 9:
Re-appointment of Mr. B.V.R. Mohan Reddy as Chairman
and Managing Director and revision of his remuneration.
Mr. B.V.R. Mohan Reddy has been re-appointed the Chairman &
Managing Director of the Company with effect from 12 April
2009 for a period of five years by the Board of Directors of the
company upon the recommendation of the Compensation
Committee of Directors and subject to the approval of the
Members of the Company. The said appointment and
remuneration are within the stipulations of Sections 198, 269,
309 and 310 of the Act and Schedule XIII thereto. Members of
the Company are requested to pass the above resolution as a special
resolution.
Chartered Accountants as statutory auditors of the Company for
the financial year 2009-10 in place of M/s. Price Waterhouse.
The Company has received special notice of a resolution from a
Member of the Company, in terms of the applicable provisions
of the Act, signifying his intention to propose the appointment
of DHS as the statutory auditors of the Company from the
conclusion of this AGM till the conclusion of the next AGM of
the Company.
DHS has expressed its willingness to act as statutory auditors of
the Company, if appointed, and have further confirmed that the
said appointment would be in conformity with the provisions of
Section 224(1B) of the Act.
Your Directors recommend the resolution for your approval.
The Members’ approval is being sought for the appointment of
DHS as the statutory auditors and to authorise the Board of
Directors, on the recommendation of the Audit Committee, to
determine the remuneration payable to them.
Item No. 10:
None of the Directors is concerned or interested in this resolution.
Re-appointment of Mrs. B. Sucharitha as Whole Time
Director and revision of her remuneration.
Your Directors recomend the resolution for your approval.
Except Mr. B.V.R. Mohan Reddy and Mrs. B. Sucharitha, none of
the other Directors of the Company is in any way concerned or
interested in the resolution.
Mrs. B. Sucharitha has been re-appointed the Whole Time Director
of the Company with effect from 12 April 2009 for a period of
five years by the Board of Directors of the company upon the
recommendation of the Compensation Committee of Directors
and subject to the approval of the Members of the Company.
The said appointment and remuneration are within the stipulations
of Sections 198, 269, 309 and 310 of the Act and Schedule XIII
thereto. Members of the Company are requested to pass the above
resolution as a special resolution.
Except Mrs. B. Sucharitha and Mr. B.V.R. Mohan Reddy, none of
the other Directors of the Company is in any way concerned or
interested in the resolution.
Your Directors recommend the resolution for your approval.
Note on appointment of M/s. Deloitte Haskins & Sells,
Chartered Accountants, as Statutory Auditors of the
Company (Item No. 6)
Since 2001-02, the Company’s accounts are being audited by
M/s. Price Waterhouse, Chartered Accountants. The Audit
Committee felt that it would be appropriate to change the statutory
auditors as a fairly long period had elapsed since their first
appointment.
Based on the recommendation of the Audit Committee, the Board
of Directors, has at its meeting held on 25 April 2009 recomended
the appointment of M/s. Deloitte, Haskins & Sells (DHS),
By Order of the Board
Place : Hyderabad
Date : April 25, 2009
Sudheendhra Putty
Company Secretary
BRIEF PROFILE OF DIRECTORS SEEKING REELECTION
Item No.3
Mr. B.V.R. Mohan Reddy is the founder and Chairman &
Managing Director of Infotech Enterprises Limited since 1991
and is acknowledged as the pioneer of CAD/CAM in India. An
entrepreneur and technologist, Mr. Mohan Reddy started his first
venture in 1982 to bring high-end computing technology to India.
Mr. Mohan Reddy has around thirty years of Engineering and
Management experience.
The success of Infotech is a testament to his vision to build a
customer focused organization delivering high quality solutions.
Mr. Mohan Reddy serves as an executive council member of
NASSCOM. He led the engineering ser vices forum of
NASSCOM and in 2006 contributed to releasing the NASSCOMBAH study on global engineering services opportunity for Indian
companies. Besides, he is actively involved with the Confederation
of Indian Industry (CII) and has been the Chairman of the CII-
17
Notice to the Shareholders
Southern Region. He is also on the governing bodies of some
important Institutions.
registered office of the Company.
A distinguished academic, being a Graduate in Mechanical
Engineering and holding two Master's degrees from IIT, Kanpur
and University of Michigan, Ann Arbor, Mr. Mohan Reddy
believes education is an enabler for societal development and is
involved in several initiatives like adoption of schools and midday meal programmes.
Item No. 4
Mr. William Henry has held various positions in the top level
management in a high flying career spanning almost two decades.
As Chief Operating Officer at iSoft plc, he stabilized the business
through decisive leadership, thereby bringing in an operational
turnaround to iSoft plc. He has served as CEO of Star Technology
Services, an Internet Service Provider, bringing about an
organizational transition in making it a Managed Service Provider
capable of delivering integrated solutions tailored to customers'
specific needs. As the Vice President, People Soft Global Services
he has led the Global Marketing & Strategy Activities. He has
served as Group VP and Managing Director, Bell Core/
Telchordia Technologies, been instrumental in transforming a
declining technical organization into a high growth, global
consulting practice. He has also worked as Director, Sprint Long
Distance and held position as Practice Manager at Computer
Sciences Corporation.
Mrs. B. Sucharitha, Whole Time Director on the board of Infotech
Enterprises Limited since 1992, oversees the accounting and
administrative functions of the Company.
Mr. Henry holds a BA in Quantitative Economics & Decision
Science, University of California at San Diego and an M.B.A.
from The Wharton School, University of Pennsylvania.
She is a postgraduate in Chemistry and excelled throughout her
educational career.
The names of Companies and the Committees in which,
Mr. Henry is a director / member are available at the registered
office of the Company.
He was conferred an honorary degree of Doctor of Philosophy
by Jawaharlal Nehru Technological University for his contribution
to industry and society. Besides, he has also won many accolades
and awards.
The names of Companies and the Committees in which,
Mr. B.V.R. Mohan Reddy is a director / member are available at
the registered office of the Company.
The names of Companies and the Committees in which,
Mrs. B. Sucharitha is a director / member are available at the
registered office of the Company.
Item No. 5
Mr. M.M. Murugappan is Chairman of Carborundum Universal
Ltd. (Ceramics manufacturers for industrial applications) and has
been a member of the Group Supervisory Board for Technology
and Research, Murugappa Group since 1999.
He held various portfolios in the Murugappa Group between
1985 and 1991, including responsibility for the Electronics
Division, Strategy & Business Development, Consolidation of
Acquisitions, Operations and later Divestment. Thereafter, from
1992-1999, he served as a Director in Parry's Confectionery Ltd.,
manufacturers of sugar confectionery.
As a trustee of the Murugappa Group's AMM Foundation, he is
actively involved in the development of various citizenship
activities, particularly in education and health care.
Mr. Murugappan holds a Master of Science Degree in Chemical
Engineering from the University of Michigan, USA and is a
member of the American and Indian Institutes of Chemical
Engineers and the Plastics and Rubber Institute.
The names of Companies and the Committees in which,
Mr. M.M. Murugappan is a director / member are available at the
18
Item No. 7
Item No. 8
Prof. J. Ramachandran is BOC Chair Professor of Business Policy
at the Indian Institute of Management (IIM), Bangalore. Prior to
joining the faculty at IIM, Bangalore, Professor Ramachandran
was Vice President (Management Services) at Reliance Industries
Limited, one of India's largest private sector firms.
Prof. Ramachandran has been the Harry Reynolds Visiting
International Professor at the Wharton School of the University
of Pennsylvania; and a Visiting Professor at INSEAD,
Fontainebleau, France and the Carlson School of Management,
University of Minnesota, USA.
A former member of the Board of Governors of the IIM,
Bangalore, Prof. Ramachandran serves on the board of select
companies. He has also served as a consultant to various
multinational and Indian companies.
A qualified Chartered and Cost Accountant, Professor
Ramachandran obtained his doctorate from the IIM, Ahmedabad.
A winner of a number of awards for case research and teaching
Professor Ramachandran has a growing interest in the area of
cultural Industries.
The names of Companies and the Committees in which,
Prof. Ramachandran is a director / member are available at the
registered office of the Company.
Directors’ Report
Directors’ Report
Dear Members,
APPROPRIATIONS
Your Directors have pleasure in presenting the 18th Directors’
Report on the business and operations of your Company for the
financial year ended March 31, 2009.
Dividend
FINANCIAL HIGHLIGHTS ON STANDALONE BASIS
(Amount in Rs. Million)
Particulars
2008-09
2007-08
Total Income
Operating Profit (PBIDT)
Interest
Depreciation
Profit before Tax
Current Tax
Fringe Benefit Tax
Deferred Tax
Profit after Tax
Basic Earnings per share (Rs.)
Diluted Earnings per share (Rs.)
Dividend recommended (Rs./Share)
Dividend recommended (%)
Paid up Equity Share Capital
Reserves
5,438.11
1,123.30
35.14
426.64
661.52
110.00
17.00
(174.10)
708.62
13.30
13.28
1.50
30
276.15
6,622.86
4,540.86
1,091.91
28.70
343.03
720.18
94.30
15.29
25.02
585.57
11.54
11.39
1.20
24
260.64
5,014.96
RESULTS OF OPERATIONS:
The financial year 2008-09 was significant for the company in
terms of growth. The Company has further strengthened its
leadership position in the fields of both Engineering Design
Services and Geospatial Solutions and is very well poised to
become a global powerhouse.
Following are the results of operations for the financial year (FY)
2008-09:
Your Directors have recommended a final dividend of Rs. 1.50
per share (30 %) on par value of Rs. 5 per share. The total dividend
including dividend tax amount is Rs. 96.92 million as against
Rs. 73.74 million for the previous year. Dividend (including
dividend tax) as a percentage of profit after tax is 13.68% as
compared to 12.59% in the previous year.
Transfer to Reserves
Your Directors have proposed to transfer Rs. 47.50 million to
Contingency Reserve and Rs. 550 million to the General Reserve
retaining Rs. 80.51 million in the Profit and Loss Account.
SHARE CAPITAL
Your company has made the following allotments during the year:
1)
Allotment of 2,724,000 equity shares of Rs. 5 each at a
premium of Rs. 355 each to GA Global Investments Limited,
Cyprus upon conversion of an equal number of
compulsorily convertible preference shares.
2)
Allotment of 377,797 equity shares of Rs. 5 each to the
associates of the Company and its subsidiaries upon exercise
of an equal number of stock options granted to them
pursuant to the Stock Option Schemes of the Company.
In view of the above allotments, the outstanding shares of the
company during the year has increased from 52,127,999 equity
shares of Rs. 5 each to 55,229,796 equity shares of Rs. 5 each.
SIGNIFICANT EVENTS
1)
Completed over 7 million hours of work in Aerospace
domain with a team of over 1800 engineers during the year.
2)
Entered the Hitech industry vertical. The Company's wholly
owned subsidiary in the US, Infotech Enterprises America
Inc., acquired Time To Market Inc. and the Company
acquired TTM (India) Private Limited in this connection.
3)
Signed an MoU with Dassault Aviation, a France based
aviation company which is a major player in civil and military
aviation industry. The MoU aims to jointly collaborate and
perform activities related to Ministry of Defence,
Government of India's proposed Medium Multi-role
Combat Aircraft (MMRCA) offset programme.
4)
Signed a new multi-year contract with Bombardier
Transportation to continue to provide engineering, electronic
design, technical publications, and IT related services to its
divisions worldwide
5)
Forged a Strategic Engineering Partnership with ALTEN, a
leader in Engineering Consulting in Europe, to provide
BUSINESS PERFORMANCE
Revenues
The total income of the Company for the FY 2008-09 comprises
total sales of Rs. 5,665.72 million as against Rs. 4,351.87 million
in FY 2007-08 and other income of (Rs. 227.61 million) for the
current year as against Rs. 188.99 million in the previous year.
Total sales grew by 30.19% over the last FY.
The European geography contributed 38.00 % and North
American geography contributed 45.90 % of the total sales.
Profits
Profit before Tax (PBT) stood at Rs. 661.52 million as against Rs.
720.18 million. Profit after Tax (PAT) stood at Rs. 708.62 million
as against Rs. 585.57 million.
19
Directors’ Report
advanced technology solutions and global engineering
delivery.
6)
7)
Inaugurated a new facility at Noida and occupied the fourlevel facility with a built-up area of 45,000 sft having 650
seats and engaging up to 1,000 associates. With this, the
Company has its own facilities at Hyderabad, Bangalore and
Noida.
Acquired a 10% stake in Tele Atlas Kalyani (India) Limited,
Pune. This has given a tremendous potential for India map
data products and is a strategic investment for the Company.
In addition, it creates greater synergy with our largest GIS
customer.
SEGMENT WISE PERFORMANCE
Utilities, Telecom & Government (UTG)
Your Company, through the UTG segment offers solutions to its
clients in the Utilities, Telecom, Government and Commercial
Geospatial industries worldwide. The service offerings under this
segment comprise software solutions involving consultancy,
development and implementation services and data services which
include geospatial data conversion, data accumulation, digital
photogrammetry and mapping services. In addition, the segment
also provides maintenance and support services for geospatial
data and applications.
Your Company has a strong presence in Europe with services
being provided to large telecom operators as well as utility
companies. In the USA, the Company offers Photogrammetry
services to Local Counties.
Driven by strong traction from the existing customers, this
segment generated revenues of Rs. 2,441.10 million as against
previous year's Rs. 1,861.10 million, a growth rate of 31.20%. This
segment contributed 43.10% to the total operating revenues. 3,911
associates are assigned to this segment as on 31 March 2009.
Engineering, Manufacturing & Industrial Products (EMI)
The EMI segment vertical offers solutions to clients in aerospace,
automotive, locomotives, industrial and commercial products. The
services offered include engineering design, embedded software,
IT solutions, manufacturing support and technical publications.
The net profit for the year was GBP 0.73 million (Rs. 52.5 million)
as against GBP 0.61 million (Rs. 49.1 million) in the previous
year.
Infotech Enterprises America, Inc. (IEAI)
IEAI reported revenues of US$ 73.77 million (Rs. 3,399.7million)
as against previous year's US$ 53.02 million (Rs. 2,133.7 million),
representing growth of 39.14%. The net profit for the year was
US$ 3.86 million (Rs. 173.3 million) as against US$ 2.13 million
(Rs. 85.9 million) in the previous year.
Infotech Enterprises GmbH (IEG)
IEG reported revenues of Euro 29.07 million (Rs. 1,893.5 million)
as against previous year's Euro 27.33 million (Rs. 1,557.3 million),
representing a growth of 6.37%. The net profit for the year was
Euro 1.02 million (Rs. 66.9 million as against Euro 1.60 million
(Rs. 92.2 million) in the previous year.
Infotech Geospatial (India) Limited (IGIL)
IGIL was acquired by the Company during FY 2007-08. This
company reported revenues of Rs. 78.3 million as against previous
year’s Rs. 15.5 million. It reported a net loss of Rs. 0.80 million as
against a net loss of Rs. 8.5 million in the previous year.
TTM (India) Private Limited (TTM)
The acquisition of TTM enabled the Company make its foray
into the Hitech segment and is effective 1 October 2008. It
reported revenues of Rs. 23.1 million for the 6 month period
ended 31 March 2009. The net loss for the period was Rs. 8.6
million.
During the year, the Company had initiated the process for
amalgamation of TTM under the provisions of the Companies
Act, 1956.
A Petition has been filed with the Hon'ble High Court of Andhra
Pradesh seeking sanction of the Scheme of Amalgamation of
TTM (India) Private Limited with the Company, under sections
391 and 394 of the Companies Act, 1956.
Infotech Enterprises Japan KK (IEJ)
This segment generated revenues of Rs. 3,224.60 million as against
last year's revenues of Rs. 2,491.56 million, a growth rate of
29.42%. This segment contributed 56.90% of the total operating
revenues. 2,772 associates are assigned to this segment as on 31
March 2009.
Your Company has incorporated a wholly owned subsidiary in
Japan, Infotech Enterprises Japan KK during the year to expand
its operations in the East Asian region. The commercial operations
will commence during the year 2009-10.
SUBSIDIARIES
Infotech Enterprises Engineering Services Private Limited
(IEESPL)
Infotech Enterprises Europe Limited (IEEL)
IEEL reported revenues of GBP 14.10 million (Rs.1,091.9million)
as against previous year’s GBP 11.24 million (Rs.908.3 million).
20
During the FY 2008-09, your Company incorporated a wholly
owned subsidiary at Hyderabad, India. The commercial operations
will commence during the year 2009-10.
Directors’ Report
GROWTH
Both our segments continue to be robust in growth. Going
forward, it is expected to continue to deliver significant growth
on the back of increased order intake and high visibility of
business in both segments.
By inducting some key leaders into the Company in the areas of
Sales and Marketing, Practice Management and Operations, your
Company is ready for sustained growth rates.
PARTICULARS PURSUANT TO SECTION 212 OF THE
COMPANIES ACT, 1956
Pursuant to the provisions of Section 212 of the Companies
Act, 1956, documents in respect of the various Subsidiaries viz.,
Board's Report, Auditor's Report, Balance Sheet and Profit and
Loss Account are required to be attached to the Balance sheet of
the Company. As permitted by the Companies Act, 1956, an
application was made to the Government of India seeking
exemption from publishing the above documents. The
Government of India, Ministry of Corporate Affairs, vide letter
No. 47/16/2009-CL-III, dated 24 April 2009, has granted
exemption from the provisions of Section 212(1) of the
Companies Act, 1956. Accordingly, the annual report does not
contain the financial statements and other reports of the
Subsidiaries of the Company. However, the Company will make
available the audited annual accounts and related detailed
information of the subsidiaries to the investors upon request at
any point of time and in accordance with the applicable law. These
documents are also available for inspection at the Registered
Office of the Company during business hours.
FIXED DEPOSITS
Your Company has not accepted any deposits and as such, no
amount of principal or interest was outstanding as on 31 March
2009.
DIRECTORS
Appointments
During the year 2008-09, Mr. William Henry and Prof. J.
Ramachandran were appointed as Additional Directors by the
Board at their meetings held on 23 July 2008 and 23 October
2008 respectively.
The offices of Mr. William Henry and Prof. Ramachandran as
Additional Directors of the Company will expire at the ensuing
Annual General Meeting. The Company has received notice from
two members in accordance with the provisions of section 257
of the Companies Act, 1956, proposing their candidacy as
Directors.
Pursuant to Article 56 of the Articles of Association of your
Company and Section 256 of the Companies Act, 1956, Mr. B.V.R
Mohan Reddy, Mrs. B. Sucharitha and Mr. M.M. Murugappan
retire by rotation at the ensuing Annual General Meeting and
being eligible, offer themselves for re-appointment.
None of the Directors of the Company are disqualified under
the provisions of the Companies Act, 1956 or under the Listing
Agreement entered with the Stock Exchanges.
Pursuant to the provisions of Clause 49 of the Listing Agreement,
brief particulars of the retiring directors are provided as an
annexure to the Notice convening the Annual General Meeting.
Additional Information
Mr. David Carter was appointed as Alternate Director to Mr.
Paul Adams, on 23 October 2008 as per section 313 of the
Companies Act, 1956.
The revised remuneration of Mr. Krishna Bodanapu, Sr. Vice
President and son of Mr. B.V.R. Mohan Reddy, Chairman and
Managing Director and Mrs. B. Sucharitha, Whole-Time Director
of the Company, as approved by the members at the 17th Annual
General Meeting held on 23 July 2008 has been approved by the
Government of India, Ministry of Corporate Affairs, as required
under section 314(1B) of the Companies Act, 1956.
AUDITORS
M/s Price Waterhouse, Chartered Accountants, have been the
statutory auditors of the Company since 2001-02. The Board
has recommended a change in the statutory auditors of the
Company and proposed that M/s Deloitte Haskins & Sells (DHS),
Chartered Accountants, be appointed as statutory auditors of
the Company for the financial year 2009-10.
The Company has received special notice of a resolution from a
member of the Company, signifying his intention to propose the
appointment of DHS as the statutory auditors of the Company
for the FY 2009-10. The notice convening the 18th AGM contains
the said resolution.
The Board places on record its appreciation of the services
rendered by M/s Price Waterhouse since the financial year 200102.
EMPLOYEE STOCK OPTION PLANS
During the year, the Company had the following Schemes in
operation for granting stock options to the Associates of the
Company and its Wholly Owned Subsidiaries, in accordance with
the Securities Exchange Board of India (Employee Stock Option
Scheme and Employee Stock Purchase Scheme) Guidelines, 1999.
Infotech Associate Stock Option Plan - 2001
Infotech Associate Stock Option Plan - 2002
Infotech Associate Stock Option Plan - 2004
21
Directors’ Report
Disclosures pursuant to Para 12 of the Securities Exchange Board
of India (Employee Stock Option Scheme and Employee Stock
Purchase Scheme) Guidelines, 1999 are set out as Annexure - A
to this report.
4)
CONSERVATION OF ENERGY, RESEARCH AND
DEVELOPMENT, TECHNOLOGY ABSORPTION,
FOREIGN EXCHANGE EARNINGS AND OUTGO
Pursuant to the provisions of Clause 49 of the Listing Agreement
and Section 292A of the Companies Act, 1956, a report on
Corporate Governance figures as a part of the Annual Report.
As required under Clause 49 of the Listing Agrement, the
Auditors’ Certificate regarding compliance of conditions of
corporate governance is enclosed as Annexure-E.
The particulars as prescribed pursuant to Section 217(1)(e) of
the Companies Act, 1956, read with Companies (Disclosure of
particulars in the report of Board of Directors) Rules, 1988, as
amended from time to time, are set out as Annexure-B to this
Report.
PARTICULARS OF EMPLOYEES
The particulars of employees as required under the provisions
of Section 217(2A) of the Companies Act, 1956 read with the
Companies (Particulars of Employees) Rules, 1975, are set out as
Annexure-C to this Report.
MANAGEMENT DISCUSSION & ANALYSIS
Pursuant to the provisions of Clause 49 of the Listing Agreement,
a report on Management Discussion & Analysis is set out as
Annexure -D to this Report.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 217(2AA) of the Companies Act, 1956 the
Directors confirm that:
1)
in the preparation of the Annual Accounts, the applicable
accounting standards have been followed along with proper
explanation relating to material departures;
2)
they have selected such accounting policies and applied them
consistently and made judgments and estimates that are
reasonable and prudent so as to give a true and fair view of
the state of affairs of the Company at the end of the financial
year and of the profit of the Company for that period;
3)
they have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance
with the provisions of this Act for safeguarding the assets
of the Company and for preventing and detecting fraud and
other irregularities;
22
they have prepared the Annual Accounts on a going concern
basis.
CORPORATE GOVERNANCE
Your Company will continue to implement and adhere in letter
and spirit to the policies of good corporate governance.
CEO's DECLARATION
Pursuant to the provisions of Clause 49(I)(D)(ii) of the Listing
Agreement, a declaration by the Chairman and Managing Director
of the Company stating that all the members of the Board and
the Senior Management Personnel of the Company have affirmed
compliance with the Code of Conduct of the Company, is set
out as Annexure - F to this Report.
ACKNOWLEDGMENTS
Your Directors wish to place on record their gratitude to the
Company's shareholders, customers, vendors, bankers and all other
stakeholders for their continued support to the Company's growth
initiatives. Your Directors also wish to place on record, their
appreciation of the contribution made by associates at all levels,
who, through their competence, sincerity, hard work, solidarity
and dedicated support, have enabled your Company to make rapid
strides in its business initiatives. Your Directors also thank the
Central and State Governments and their various agencies,
particularly, the Ministry of Communication & Information
Technology, Software Technology Parks of India, SEZ
Authorities, Departments of Customs and Central Excise, Ministry
of Corporate Affairs, Reserve Bank of India, APIIC, and other
governmental agencies for extending their support during the year
and look forward to their continued support.
For and on behalf of the Board
Place : Hyderabad
Date : April 25, 2009
B.V.R. Mohan Reddy
Chairman and Managing Director
Directors’ Report
Annexure-A
Details of Stock Options pursuant to SEBI guidelines
Infotech Associate Stock Option Plans (Infotech ASOPs)
Sl. No. Description
1.
Options granted during the year
2.
Pricing formula
3.
Options vested
4.
ASOP 2001
ASOP 2002
ASOP 2004
Nil
117,300
346,475
Market price as defined in SEBI
(ESOS&ESPS) Guidelines, 1999
Nil
4,125
1,342,790
Options exercised
13,500
12,000
352,297
5.
Total no. of shares arising as a result of exercise of options
13,500
12,000
352,297
6.
Options lapsed
Nil
6,600
80,800
7.
Variation of terms of options
Nil
Nil
Nil
8.
Money realized by exercise of Options (INR)
567,000
504,000
30,505,345
9.
Total no of options in force
Nil
114,825
1,585,643
10.
Employee wise details of options granted to
Anand Parameswaran
Nil
Nil
20,000
ii)
Any other employee who received a grant in any one year of
options amounting to 5% or more of options granted during the year.
Nil
Nil
Nil
iii)
Identified employees who were granted option, during any one year,
equal to or exceeding 1% of the issued capital
(excluding outstanding warrants and conversions)
of the company at the time of grant.
Nil
Nil
Nil
i)
11.
Senior Managerial Personnel:
Diluted EPS as per Accounting Standard 20 (INR)
13.28
23
Directors’ Report
12. i)
Method of calculation of employee
compensation cost
:
The Company has calculated the employee compensationon
cost using the intrinsic value of the stock options
ii)
Difference between the employee compensation cost :
so computed at (i) above and the employee
compensation cost that shall have been recognized
if it had used the fair value of the options
Rs. 62.05 Million (increase)
iii)
The Impact of this difference on profits and on
EPS of the Company
Profit After Tax (PAT)
Less: Additional employee
compensation cost based on
fair value
Rs. 708.62 million
Adjusted PAT
Rs. 646.57 million
Adjusted EPS
Rs. 12.14
iv)
:
Rs. 62.05 million
Weighted average exercise price and fair value of Stock Options granted:
Stock Options granted on
27/04/01
24/10/02
23/06/03
28/04/04
20/10/04
19/05/05
19/10/05
19/01/06
18/10/06
17/01/07
17/12/07
19/02/08
13/06/08
Weighted average
exercise price (in Rs.)
Weighted average
Fair value (in Rs.)
36.00
133.00
108.00
124.00
142.00
125.25
131.57
114.25
231.00
355.00
294.00
238.00
250.00
53.76
85.71
67.26
65.99
84.87
148.87
189.76
260.77
106.44
148.65
118.72
99.62
108.13
Closing market price at NSE
on the date of grant (in Rs.)
36.00
133.00
108.00
124.00
142.00
281.60
394.55
513.75
231.00
341.20
293.45
241.20
251.15
v)
Description of the method and significant
assumptions used during the year to estimate the
fair value of the options, including the
following weighted average information
vi)
The main assumptions used in the Binomial Lattice option-pricing model during the year were as follows:
Risk free interest rate
Expected life of options from the date(s) of grant
Expected volatility
Dividend yield
: The Binomial Lattice option pricing model was developed for
estimating fair value of traded options that have no vesting
restrictions and are fully transferable. Since option pricing
models require use of substantive assumptions, changes therein
can materially affect fair value of options. The option pricing
models do not necessarily provide a reliable measure of fair
value of options.
:
:
:
:
2.04%
3.50 years
45.90%
0.55
On behalf of the Board of Directors
Place : Hyderabad
Date : April 25, 2009
24
B.V.R. Mohan Reddy
Chairman and Managing Director
Directors’ Report
Annexure-B
Annexure to the Directors’ Report
PARTICULARS PURSUANT TO COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF
DIRECTORS) RULES, 1988
1.
Conservation of Energy
b)
All the R&D work done by your Company is aimed at
one of the following objectives:
The operations of the Company are not energy intensive.
However, adequate measures have been taken to conserve
and reduce the energy consumption by using energy
efficient hardware and other equipment. Air-conditioners
are used only when required and air-conditioned areas
have been treated with heat resistant material like sun
control film to reduce heat absorption. We believe that
energy saved is energy produced.
2.
i) Build solutions that compete with the best known names
in the industry.
ii) Improve operational efficiencies and maximize
profitability of a project.
iii) Win new business from key customers and also offer
new services into the markets worldwide.
Research and Development
Your Company has a modern R&D facility with a state
of-the-art Technology Center working on various R&D
projects.
a)
Benefits derived as a result of the above R&D initiatives
(Rs. in million)
Particulars
FY 2008-09 FY 2007-08
Currently the R&D team is working in the following areas:
Revenue Expenditure
2.02
2.30
i)
Capital Expenditure
Nil
0.36
Total R&D Expenditure
2.02
2.66
0.04%
0.06%
Updating services with advances in Technologies: The
telecom sector is now switching over to enhanced
data conversion technologies like 3G technologies
from the earlier prevalent Frame Technology.
Keeping this is mind we are building the competencies
required for migration and customization to the newer
system by extensive R&D into these aspects.
ii)
Production Automation: Our teams are developing
newer algorithms and programs for automating the
repetitive manual tasks in Telco and Utility map
digitization. Currently underway is a Trench placement
logic that will be used for number of Telco projects
that we are executing.
iii)
Increasing compatibility of the existing tools: A small
core team works on synchronizing the automation
logic with the newer and latest GIS platforms. This
enables us to deploy the latest versions of the
platforms into digitization, increasing business benefit
to Infotech and the customer.
iv)
v)
As part of adhering to Standard protocols we are
developing applications used mainly in the Utilities
Sector called Super visory Control and Data
Acquisition (SCADA) systems which enables real time
transfer of data from the remote terminals to the
host system.
Developing Data model: Infotech is working on
developing a generic Utility data model based
especially for the Indian utility customers. The model
is not tied to any platform and can be adapted to
most of the popular technology platforms available
in the market today. This gives the customer the
freedom to combine the best of technology and best
of data modeling.
R&D Expenditure as
percentage of Total Revenue
3.
Technology Absorption, Adaptation and Innovation
Your Company continues to use state-of-the-art technology
for improving the productivity and quality of its products
and services. To create adequate infrastructure, your
Company continues to invest in the latest hardware and
software.
4.
Foreign Exchange Earnings and Outgo
Most of your Company's earnings are from the export of
Computer Software and Services. During the year, export
earnings accounted for 97% of the total income. In order
to promote product sales and services, your Company
participated in various exhibitions and carried product
promotion activities.
(Rs. in million)
Particulars
FY 2008-09 FY 2007-08
Foreign Exchange Earning
5,625.96
4,239.66
Foreign Exchange Outgo
1,176.04
897.87
On behalf of the Board of Directors
Place : Hyderabad
Date : April 25, 2009
B.V.R. Mohan Reddy
Chairman and Managing Director
25
26
Designation
Vice President APAC Sales
Chief Technology
Officer
President Global HR &
Corporate Affairs
Sr. Vice President Strategy & Head Hitech
Vice-President &
Practice Head Rail
Sr. Vice President IT Delivery
Vice-President &
Practice Head HCM
Sr. Vice President
& Head Engineering
Chief Operating
Officer - UTG
Chairman &
Managing Director
Sr. Vice President F&A
Name and Age of the
Employee
Ajay Desai
45 years
K. Ashok Kumar
56 years
B. Ashok Reddy
51 years
Bhanu Cherukuri
41 years
Bhanu Mohta
56 years
G. Devendra Rao
51 years
V. Jagan Mohan
55 years
Krishna Bodanapu
33 years
S.A. Lakshminarayanan
54 years
B.V.R. Mohan Reddy
58 years
S. Nataraja
58 years
B. Com.,
F.C.A.
B.E., M.Tech.,
MSE
B.E.
B.S. (Elec.);
M.B.A.
M. Tech.
M.Sc., Ph.D.
B.E. (Hons.)
B.E., PGDM
(IIM-B)
PGDM, L.L.B.
M. Tech.
B.Sc., M.B.A.
16.03.01
28.08.91
01.12.95
01.08.03
23.07.01
01.10.94
17.07.07
14.06.07
24.06.99
25.06.01
09.04.07
35
35
32
9
23
25
34
19
25
30
22
Qualification(s) Date of Experience
Joining in years
Voltas Ltd.,
Chief Manager - HR
Flextronics Software
Permanent
Systems Ltd.,
Employee
Head - Strategic
Business Development
Keane India Ltd.,
Group General
Manager
OMC Computers Ltd., Permanent
General Manager
Employee
Wipro Peripherals Ltd.,
General Manager (R&D)
IEEL, UK,
Sales Manager
OMC Computers Ltd., Permanent
Vice President
Employee
OMC Computers Ltd., As per
Managing Director
Shareholders'
Resolution
Voltas Ltd.,
DGM- Finance &
Commercial
3,616,310
2,782,068
3,078,194
3,530,873
2,488,736
2,866,465
4,767,887
13,243,406
2,649,586
Permanent
Employee
As per
Shareholders'
Resolution
Permanent
Employee
Permanent
Employee
As per
Shareholders'
Resolution
Permanent
Employee
Satyam Computer
Services Ltd.,
Vice President
4,898,172
Permanent
Employee
Riverbed Technology
India Pvt. Ltd.,
Country Manager
Nature of
Employment
3,628,719
Gross
Previous
Remuneration Employment
(Rs.)
Head of Finance &
Accounts
Overall Management
and as directed by
the Board from time
to time
Head of Delivery
Head of Vertical
Practice & Delivery
Head of HCM
Head of Delivery
Rail Engineering
Services and
Marketing
Strategic Business
Development, M&A
and Head of
Vertical
Global Head of
HR & Corporate
Affairs
Head of IT, IIS and
Technology
Marketing of
Engineering Services
-globally
Nature of Duties
Information as per section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, as amended, and
forming part of the Directors' Report for the year ended 31 March 2009
Annexure-C
Directors’ Report
s
Designation
Vice President
- HS
General Manager Avionics
President - SBI
Vice President CQG
Vice President Networking &
Systems
Vice President &
Practice Head MEI
Sr. Vice-President CoE Operations
Sr. Vice-President PWC
Vice President GTS
Practice Head Utilities
Associate Vice President-HCM
Name and Age of the
Employee
Pandey Pradip Kumar
47 years
G.B. Pon Manivannan
47 years
Rajeev Lal*
60 years
N.G. Raju
59 years
B.L.V. Rao
44 years
U.R.P. Sudhakar
55 years
M. Sunil Kumar
44 years
Sujit Pant*
63 years
U. Srinivas
46 years
N.V.S. Vidyalankar
42 years
Vinay Golla
41 years
M.S.
M.E.
M. Tech.
B.E., M.S.
B.E., MEP(IIMK)
M.Sc.
B.E.
M. Tech.
B.Sc. Engg.
(Electronics)
B.E.
M. Tech.
10.03.08
05.06.07
02.09.93
03.08.06
02.01.92
21.11.05
21.03.03
12.05.97
25.03.99
22.10.07
08.10.01
14
18
23
38
21
28
26
36
39
26
20
Qualification(s) Date of Experience
Joining in years
3,335,042
3,121,953
2,876,007
2,990,526
2,758,532
2,755,975
2,752,168
2,522,855
5,898,370
2,640,204
2,461,813
Permanent
Employee
Permanent
Employee
Permanent
Employee
Permanent
Employee
Permanent
Employee
Nature of
Employment
Permanent
Employee
Permanent
Employee
DELL - R&D;
Senior Mechanical
Engineering Manager
GE Energy-HTC,
Senior Software
Manager
Permanent
Employee
Permanent
Employee
OMC Computers Ltd., Permanent
Marketing Services
Employee
Manager
HAL,
Executive Director
Suri Computers
Pvt. Ltd.,
Jr. Manager-CAD
I-Maritime
Permanent
Consultancy Pvt. Ltd., Employee
Sr. Marine Consultant
Divine India Ltd.,
Head - Networking &
Systems
Directorate General
of Quality, Medak,
Principal Scientific
Officer
Boodai Computer
Systems,
Group Manager
Trianz Consulting,
Director, Embedded
Practice
GTRE, Bangalore;
Scientist
Gross
Previous
Remuneration Employment
(Rs.)
Marketing - HCM
Practice Head Utilities
Delivery of
Technical Solutions
Head of Delivery
CoE Operations UTG
Practice Head - MEI
Head of
Networking &
Systems
Head of Quality
Overall Management
and Head of Vertical
Head of Delivery Avionics Practice
Head of Delivery HS
Nature of Duties
Information as per section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, as amended, and
forming part of the Directors' Report for the year ended 31 March 2009 (Contd...)
Directors’ Report
27
28
Practice Head Automotive
Vikas Khitha**
43 years
Place : Hyderabad
Date : April 25, 2009
B.V.R. Mohan Reddy
Chairman and Managing Director
On behalf of the Board of Directors
Other standard terms of employment as applicable to the employees of the Company as per rules of the Company from time to time are also applicable to the above
employees.
Practice HeadAutomotive
Engineering
Head of Delivery
Head of Delivery PWC
Head of Delivery
and Head of Vertical
Head of Delivery Operations
4.
Permanent
Employee
Permanent
Employee
Permanent
Employee
Permanent
Employee
Permanent
Employee
Except Mr. B. Ashok Reddy and Mr. Krishna Bodanapu, none of the above employees is a relative of any Director of the Company.
Motor Exchange,
Lyon, France
Director - In charge
Bharat Earth
Movers Ltd.,
Manager - R&D
Lear Automotive
India Pvt. Ltd.,
Director-Engineering
Satyam Computer
Services Ltd.,
Asst. Vice President
Cognizant
Technologies
Sr. Manager
3.
1,050,288
901,381
2,609,126
1,153,643
2,415,894
Nature of Duties
Particulars regarding the employees drawing salary in excess of that drawn by Managing Director or Whole-time Director and holding, either by himself or along
with spouse and dependent children, not less than two percent of the equity shares of the Company - Not Applicable.
21
22
23
26
14
Nature of
Employment
2.
17.12.07
15.09.99
07.05.08
17.08.06
26.05.08
Gross
Previous
Remuneration Employment
(Rs.)
Remuneration includes basic salary, allowances, commission, superannuation, gratuity and taxable value of perquisites as per Income Tax Rules.
B. Tech.
MS., M.E.
DIBM
B.E., M. Tech
(IIT)
M.Sc. (Tech.)
Qualification(s) Date of Experience
Joining in years
1.
Note:
*** Since transfered to subsidiary, outside India.
Since resigned.
Sr. Vice President SBI (Engg.)
V. Rajendra***
46 years
**
Vice President PWC
Girish V. Kulkarni
48 years
On retainership basis.
President - ITG
Chandra Sangubhotla**
51 years
*
Vice President Operations
Designation
Anand Parameswaran
35 years
Part of the Year
Name and Age of the
Employee
Information as per section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, as amended, and
forming part of the Directors' Report for the year ended 31 March 2009 (Contd...)
Directors’ Report
Directors’ Report
Management Discussion and Analysis Report
MANAGEMENT DISCUSSION AND ANALYSIS OF
FINANCIAL RESULTS FOR THE YEAR ENDED
MARCH 31, 2009
DISCLAIMER
Some of the statements contained in this report may be forwardlooking in nature and may involve risks and uncertainties. Actual
results, performances or achievements could differ materially from
those expressed or implied in such forward-looking statements.
Factors that could cause or contribute to such differences include
those described under the heading "Risk Management" such as
management of growth, market acceptance of Company's
products and services, risks associated with new product versions,
dependence on third party relationships and the activities of
competitors. Readers are cautioned not to place undue reliance
on these forward looking statements. The following discussion
and analysis should be read in conjunction with our financial
statements included herein and the notes thereto.
Annexure-D
offerings have been launched in both the aerospace and railway
segment and these have been already accepted by major customers.
The Company also sees an opportunity in providing electronic
design services to the automobile sector and is constantly working
to build the required expertise for the same. This segment is
fragmented to a large extent and hence it has been challenging to
start the service offerings. The Company identified an opportunity
to enter this market with new service offerings of chip designing
and embedded works. Taking forward this opportunity the
company has started a new vertical named Hi-tech. We are
expecting the results of this endeavour in the near future.
Optimizing cost structures has been one of the rationales of
outsourcing to Indian IT companies. Infotech has created
streamlined procedures and processes so as to provide competitive
cost benefits to its customer's business operations. This has
resulted in key relationships turning into strategic partnerships,
which provide continued visibility to the business.
INDUSTRY STRUCTURE AND DEVELOPMENTS
Threats:
Both Utilities, Telecom & Government (UTG) and Engineering,
Manufacturing and Industrial Products (EMI) segments have
gained extreme prominence over the last 5 years and offshore
outsourcing has shown a significant ramp up. As in IT services,
engineering services outsourcing has also seen an increase in the
customer base and with the intrinsic advantages in India viz.,
human resources and industry experience, it is expected to
continue as a dominant force in the foreseeable future.
The following are the risks, which the management believes form
a part of the Company's business and tries to address the same
through Corporate Actions:
While the speed on IT services and Engineering services is
expected to be similar in the global scenario, NASSCOM indicates
that the growth in Engineering services would be faster paced
than IT services in the future.
OPPORTUNITIES AND THREATS
Presented below is the management's assessment of some key
potential opportunities and threats associated with the business.
While the management is looking to leverage such opportunities
in an effective manner to optimize business advantages, it is also
focused to create effective mitigates for all potential threats that
could impact the business operators.
1.
2.
3.
4.
5.
6.
7.
Financial Risks
Business Portfolio Risks
Internal Process Risks.
Legal and Statutory Risks
Political Risks
Competition Risks
Macro-economic Risks
The various threats faced by the Company have been provided
in detail in the Risk Management Report. This is available
elsewhere in this Annual Report.
Our clients are primarily located in the US and Europe; the global
financial meltdown which is hitting North America and Europe
may affect our business as well. The industry in which we are
operating as well may see some damage due to recession.
A detailed Risk Management Report is available elsewhere in this
Annual Report.
Restrictions on the immigration policy may affect our ability to
provide services onsite.
Opportunities:
OVERVIEW
The company engages itself into certain niche areas such as UTG
and EMI which enables the company to stand out as a leading
player in these areas. The company has engaged itself into various
new service offerings in both the segments and foresees huge
opportunities in these areas. In the UTG segment, apart from
the traditional services, the company has been offering Piping
and Instrumentation Design (P & ID) services and hence
attracting global customers. In the EMI space, new service
The financial statements have been prepared in compliance with
the requirements of the Companies Act, 1956 and Generally
Accepted Accounting Principles (GAAP) in India. The
management of the Company accepts responsibility for the
integrity and objectivity of the financial statements as well as for
the various estimates used therein. The financial statements have
been prepared on a prudent and reasonable basis to reflect in a
true and fair manner the state of affairs of the Company.
29
Directors’ Report
A.
FINANCIAL ANALYSIS
1.1 Share Capital
Particulars
Year ended March 31, 2009
Nos. Rs.(Million)
52,127,999
260.64
3,101,797
15.51
55,229,796
276.15
Year ended March 31, 2008
Nos. Rs.(Million)
46,153,592
230.77
5,974,107
29.87
52,127,999
260.64
Balance at the beginning of the fiscal
Share issued during the year
Balance equity shares at the end of the year
2,724,000 Compulsorily Convertible Preference Shares of
Rs. 360 each fully paid-up
–
–
2,724,000
980.64
During the year, the compulsorily convertible preference shares have been converted into an equal number of equity shares.
1.2 Reserves and Surplus
During the year, the company's reserves and surplus increased from Rs. 5,014.97 million to Rs. 6,622.86 million, which includes
Rs. 996.71 million on account of Securities Premium Account arising upon conversion of convertible cumulative preference
shares and the issue of ASOP shares.
Contingency Reserve:
The Company is contesting the Income Tax Appellate Tribunal's (ITAT) order for the denial of certain export benefits under the
Income Tax Act, 1961 on the grounds of the date of establishment of the Export Oriented Unit. The petition contesting the ITAT's
Order has been admitted by the Hon'ble High Court of Andhra Pradesh and the case has not yet come up for hearing during the year.
Further, the company is contesting certain other disallowances made by the Deputy Commissioner of Income-tax for the
assessment years 2002-03 to 2005-06. These matters have been taken up with the appropriate authorities and the company is
hopeful of a favorable resolution. As a matter of abundant precaution, the company has set aside an amount of Rs. 161,000,000
as at March 31, 2009 as a Contingency reserve to meet any future eventuality.
(In Rs. million)
As of
As of
March 31, 2009 March 31, 2008
Other Loans (Term Loan / Packing Credit)
186.67
380.54
The company has fully repaid all secured term loans and the amount outstanding as secured loans as on March 31, 2009,
represents packing credit from various banks.
1.4 Deferred Tax Assets
Tax expenses for a year comprises Current Tax and Deferred Tax. Deferred tax is recognized in respect of all timing differences
that have originated but not reversed as at the balance sheet date, where transactions or events that result in an obligation to pay
more tax or a right to pay less tax in future have occurred at the balance sheet date.
During the year, the company had recorded deferred tax asset of Rs. 178.91 million as compared to asset of Rs. 4.80 million in
the previous year representing timing differences arising out of fixed assets, employee benefits and others.
2.1 Fixed Assets
(In Rs. million)
Particulars
As of
As of
March 31, 2009 March 31, 2008
Growth %
Original Cost
Land
88.44
24.97
254.19
Building
1,018.36
873.10
16.64
Lease Hold Improvments
1.35
0.00
100.00
Computers & Software
1,882.92
1,702.73
10.58
Plant & Machinery
441.21
345.71
27.62
Office Equipment
77.54
57.42
35.04
Furniture and Fixtures
211.78
204.70
3.46
Electrical Installations
225.00
167.86
34.04
Vehicles
11.47
16.00
-28.31
Total - Gross Block
3,958.07
3,392.49
16.67
Less: Accumulated Depreciation
1,866.40
1,525.17
22.37
Net Block
2,091.67
1,867.32
12.01
Add: Capital Work in Progress
584.20
311.28
87.68
Net fixed Assets
2,675.87
2,178.60
22.83
Depreciation as % of Total revenues
7.85
7.55
Accumulated Depreciation as a % of gross block
47.15
44.96
1.3 Loan Funds
Particulars
30
Directors’ Report
During the year, the Company has purchased assets worth Rs. 656.65 million and disposed off assets worth Rs. 91.07 million.
The depreciation amount increased from Rs. 343.03 million to Rs. 426.64 million, an increase of 24.49% on account additional
asset base and higher additions to Buildings, Computers, Software, Plant and Machinery and Furniture and Fittings, to cater to
the current customer requirements.
2.2 Investments
Particulars
Investment in Subsidiaries
Infotech Enterprises America Inc., USA
Infotech Enterprises Europe Ltd, UK
Infotech Enterprises GmbH, Germany
Infotech Geospatial (India) Limited, India
TTM India Private Limited, India
TTM Institute of Information Technology Private Limited, India
Infotech Enterprises KK, Japan
Infotech Enterprises Engineering Services Private Limited, India
Investments In Associate Company & Joint Venture
Infotech Aerospace Services Inc., USA
Infotech HAL Limited, India
Others
Kalyani Net Ventures Limited, India
Citicorp Finance (India) Limited (100 Redeemable Non-Convertible
Debentures Series - 194 of Rs. 1,000,000 each fully paid up)
Investment in Mutual Funds
Total Investments
As of March 31, 2009
519.83
303.75
70.76
29.60
40.74
0.10
4.79
0.10
11.17
20.00
(In Rs. million)
As of March 31, 2008
969.67
285.51
303.75
70.76
29.60
–
–
–
–
689.62
31.17
11.17
–
11.17
–
26.07
0.00
0.00
26.07
100.00
1,886.19
1,026.91
1,986.19
2,686.98
During the year, Rs. 234.32 million was invested in Infotech Enterprises America, Inc. The Company has invested
Rs. 45.73 million in Subsidiaries and an amount of Rs. 20 million in the joint venture with HAL. The redeemable non convertible
debentures with Citicorp Finance (India) Limited have been redeemed. The investment in short term mutual funds have been
liquidated and placed in short term deposits with banks.
2.3 Sundry Debtors
The Sundry Debtors as on March 31, 2009 stands at Rs. 1,540.46 million (net of provision for bad and doubtful debts) compared
to Rs. 1261.63 million on March 31, 2008. Sundry Debtors provision under doubtful debts increased marginally to Rs. 34.16
million as against Rs. 32.92 million in previous year. Apart from the debtors provided for in the year under review, all debtors are
considered good.
2.4 Cash and Bank Balances
(In Rs. million)
Particulars
As of
As of
March 31, 2009 March 31, 2008
Cash balances
8.02
0.78
Balance with Schedule Banks
-on current accounts
488.15
226.71
-on Deposit accounts
2,068.38
606.02
Balances with Non-scheduled Banks
163.23
40.58
Unclaimed Dividend Account
1.38
1.26
Total cash and cash equivalents
2,729.16
875.35
The bank balances in India include both Indian Rupee and Foreign currency accounts. The deposit amounts mentioned above
include short-term deposits and margin money on account of bank guarantees etc.
31
Directors’ Report
2.5 Loans and Advances
(In Rs. million)
As of
As of
March 31, 2009 March 31, 2008
Unsecured - Advances recoverable in cash or in kind or for value to be received
129.44
122.58
- Loan to Subsidiaries
12.44
–
- Advance Income Tax (net of provision)
231.96
153.47
- Deposits
52.23
62.75
Interest accrued on Deposits
38.52
8.75
Considered Doubtful
16.91
0.74
481.50
348.29
Less: Provision for Doubtful Loans and Advances
16.91
0.74
Total
464.59
347.55
Advances are primarily towards amounts paid in advance for value and services to be received in future. Advance Income tax
represents payments made towards tax liability.
Particulars
2.6 Current Liabilities
Particulars
As of
March 31, 2009
599.47
20.57
1.38
593.76
1,215.18
Sundry Creditors
Advances from Customers
Unclaimed Dividends
Other Liabilities
Total
(In Rs. million)
As of
March 31, 2008
354.62
31.69
1.26
48.61
436.18
Sundry Creditors represent the amount payable to vendors for supply of goods and services and amounts accrued for various
operational expenses. The amount of creditors increased from Rs. 354.62 million to Rs. 599.47 million. This is attributed to
capital expenditure committed during the year towards construction of new facilities in Hyderabad, Vizag, Noida and Bangalore.
Other liabilities have increased mainly due to provision towards unrealised loss on foreign exchange option contracts of Rs.
514.79 million.
2.7 Provisions
The Board of Directors have recommended a final dividend of Rs.1.50 per share (30%) on par value of Rs. 5 per equity share.
The total dividend outflow including dividend tax amount is Rs. 96.92 million
Provision for Employee Benefits have increased to Rs. 218.11 million from Rs. 204.95 million as of March 31, 2009.
RESULTS OF OPERATIONS
3.1 Total Income
Particulars
Year ended March 31
(In Rs. million)
Growth
Income from Export sales
Income from Domestic sales
Total Sales
Other Income
2009
5,510.25
155.47
5,665.72
(227.61)
%
101.33%
2.86%
104.19%
(4.19%)
2008
4,231.65
120.22
4,351.87
188.99
%
93.19%
2.65%
95.84%
4.16%
%
30.22%
29.32%
30.19%
(220.43%)
Total Income
5,438.11
100.00%
4,540.86
100.00%
19.76%
Total Sales:
The Company’s total sales increased by 30.19% from Rs. 4,351.87 million to Rs. 5,665.72 million. The increase in revenues is
contributed by increase in export revenue from Rs. 4,231.65 million to Rs. 5,510.25 millions. Export revenues grew significantly
driven by increased business traction in the subsidiaries and addition of new customers.
32
Directors’ Report
Other Income
Other income during the year significantly dropped as compared to the previous year on account of exchange rate fluctuation
and provision for Mark-to-Market loss on forward contracts. We gained in other areas such as interest on deposits and dividend
from subsidiaries and associate companies.
Segment wise Performance
Particulars
Year ended March 31
(In Rs. million)
Growth
2009
%
2008
%
%
Utilities, Telecom & Government (UTG)
Engineering, Manufacturing and
Industrial Products (EMI)
(-) Inter vertical Revenues
2,441.05
43.08
1,861.10
42.77
31.16
3,244.98
(20.31)
57.27
(0.35)
2,512.48
(21.71)
57.73
(0.50)
29.15
(6.45)
Total Sales
5,665.72
100.00
4,351.87
100.00
30.19
UTG vertical represented a 31.16% growth year-on-year as compared to 29.15% growth in EMI vertical, on account of substantial
increase in UTG customers especially in APAC .
Year 2008-09
Year 2007-08
3.2 Geographical Mix
Particulars
(In Rs. million)
Growth
Year ended March 31
North America
Europe
Others (Including domestic sales)
Total Sales
2009
%
2008
%
%
2,601.50
2,153.51
910.71
5,665.72
45.92
38.01
16.07
100.00
1,855.14
1,857.02
639.71
4,351.87
42.63
42.67
14.70
100.00
40.23
15.97
42.37
30.19
Increased business traction in the APAC region together with the European and North American regions has contributed to the
significant increase in the total sales.
Year 2008-09
Year 2007-08
33
Directors’ Report
3.3 Customer Concentration
2009
34.57%
39.36%
2008
37.04%
41.51%
2009
2008
Offshore
69.50%
67.65%
Onsite
30.50%
32.35%
100.00%
100.00%
Top 5 Customers
Top 10 Customers
3.4 Offshore / Onsite Revenue Mix
Total
3.5 Expenditure
(In Rs. million)
Particulars
Year ended March 31
Personnel Expenses
Travel expenses
Operating and Administrative Expenses
2009
% of
Total
Income
2008
% of
Total
Income
Growth
%
2,725.56
50.12
2,109.35
46.45
29.21
542.24
9.97
477.53
10.52
13.55
1,047.01
19.25
862.06
18.98
21.45
During the year, the personnel costs of the Company increased by 29.21% as the employee base increased apart from revision
of salaries of the existing associates as well as increase in the provision for employee retirement benefits like Gratuity and Leave
Encashment. The number of associates employed during the year has increased by 5.47% over the previous year. The increase
in other costs was on account of increase in business volumes.
Year 2008-09
34
Year 2007-08
Directors’ Report
3.6 Profitability
(In Rs. million)
Particulars
Earnings before interest, tax and
depreciation (EBITDA)
Financial Expenses
Depreciation
Profit Before Tax
Current Tax
Fringe Benefit Tax
Deferred tax
Profit for the Year
Year ended March 31
2009
% of
Total
Income
2008
% of
Total
Income
Growth
%
1,123.29
35.14
426.64
661.51
110.00
17.00
(174.10)
708.61
20.66
0.65
7.85
12.16
2.02
0.31
(3.20)
13.03
1,091.92
28.70
343.03
720.19
94.30
15.29
25.02
585.57
24.05
0.63
7.55
15.86
2.08
0.34
0.55
12.90
2.87
22.44
24.37
(8.15)
16.65
11.18
(795.84)
21.01
3.7.1 Earnings before Interest, Tax, Depreciation and Amortization (EBITDA)
The Company registered a 2.87% growth in EBITDA. While EBITDA increased to Rs. 1,123.29 million as against Rs. 1,091.92
million, PAT increased to Rs. 708.61 millions as against Rs. 585.57 million in previous year.
3.7.2 Financial Expenses
Financial Expenses increased due to servicing of the term loan interest and the completion of the construction at Hyderabad
and Bangalore.
3.7.3 Depreciation
Depreciation expenditure was higher by 24.37% due to gross additions during the year amounting to Rs. 656.65 million.
3.7.4 Provision for Taxation
The provision for current taxation for FY 2008-09 is Rs. 110.00 million, higher by 16.65% as compared to previous year's Rs.
94.30 million. The Company has provided a deferred tax asset of Rs. 174.10 million as against a deferred tax liability of Rs.
25.02 million in the last year. The Company paid fringe benefit tax to an extent of Rs.17.00 million as against Rs. 15.29 million
in previous year. The net provision for taxation for FY 2008-09 is Rs. (47.10) million.
3.8
Liquidity
The growth of the Company is largely financed by internal cash generations through operations. As of March 31, 2009 the
company had cash and cash equivalents of Rs. 2,729.16 million, an increase of 211.78% as compared to the previous year
Rs. 875.35 million.
The Company's policy is to maintain sufficient cash to fund the ongoing capex requirements, operational expenses and other
strategic initiatives for the next year and to maintain business continuity in case of any exigencies.
35
Directors’ Report
Annexure-E
Auditors' Certificate regarding compliance of conditions of Corporate
Governance
To the Members of
Infotech Enteprises Limited
Hyderabad
We have examined the compliance of conditions of Corporate
Governance by Infotech Enterprises Limited, for the year ended
March 31, 2009, as stipulated in Clause 49 of the Listing
Agreement(s) of the said Company with stock exchange(s) in India.
The compliance of conditions of Corporate Governance is the
responsibility of the Company's management. Our examination
was carried out in accordance with the Guidance Note on
Certification of Corporate Governance (as stipulated in Clause
49 of the Listing Agreement), issued by the Institute of Chartered
Accountants of India and was limited to procedures and
implementation thereof, adopted by the Company for ensuring
the compliance of the conditions of Corporate Governance. It
is neither an audit nor an expression of opinion on the financial
statements of the Company.
In our opinion and to the best of our information and according
to the explanations given to us, we certify that the Company has
complied with the conditions of Corporate Governance as
stipulated in the above mentioned Listing Agreement(s).
We state that such compliance is neither an assurance as to the
future viability of the Company nor the efficiency or effectiveness
with which the management has conducted the affairs of the
Company.
Varadarajan N.K.
Partner
Membership No. F 90196
Place : Hyderabad
Date : April 25, 2009
for and on behalf of
Price Waterhouse
Chartered Accountants
Annexure-F
CEO's Declaration
I, B.V.R. Mohan Reddy, Chairman and Managing Director do hereby declare that pursuant to the provisions of Clause 49(I) (D) (ii) of the
Listing Agreement, all the members of the Board and the Senior Management Personnel of the Company have furnished their affirmation
of compliance with the Code of Conduct of the Company.
Place : Hyderabad
Date : April 22, 2009
36
B.V.R. Mohan Reddy
Chairman and Managing Director
Report on Corporate Governance
Report on Corporate Governance
1.
Company's Philosophy
c)
The Company believes that corporate governance is the
application of best management practices, compliance of law in
true letter and spirit and adherence to ethical standards for the
effective management and distribution of wealth and discharge
of social responsibility for the sustainable development of all
stakeholders. Through its processes and independence of
functioning, the Board of Directors of the Company provides
effective leadership to the Company and its management for
achieving sustained prosperity for all the stakeholders.
Board
Committee
Chair- Mem- Chair- Memman ber
man ber
Mr. B.V.R. Mohan Reddy
01
04
Nil
01
Mrs. B. Sucharitha
Nil
Nil
Nil
Nil
Mr. M.M. Murugappan
05
01
03
01
Prof. P.N. Thirunarayana Nil
01
Nil
01
Mr. Ranjan Chak
Nil
Nil
Nil
Nil
Mr. George William Fink Nil
Nil
Nil
Nil
Mr. Paul Roger Adams
Nil
Nil
Nil
Nil
Mr. G.V. Prasad
Nil
08
01
02
Mr. William Grabe
Nil
01
Nil
01
Mr. Sunish Sharma
Nil
01
Nil
01
Mr. William Henry
Nil
Nil
Nil
Nil
Prof. J. Ramachandran
06
01
04
03
Mr. David Carter
Nil
Nil
Nil
Nil
Name of the Director
The cornerstone of the Company's philosophy on corporate
governance is accountability to stakeholders, transparency in
operations and fairness to all stakeholders. The Company
endeavours to maximize long-term value and stakeholders' wealth.
2.
Board of Directors
The Company has an Executive Chairman. The Chairman
and Managing Director manages the day-to-day affairs of
the Company.
The Board comprises a judicious mix of executive, nonexecutive and independent directors drawn from a crosssection of industrialists, professionals, academics and key
stakeholders.
a)
b)
Composition and category of directors as on March 31, 2009
Category
No. of Directors
Promoter Directors
2
Non-Executive
Non-Independent Directors
2
Non-Executive
Independent Directors
5
Total
9
Attendance of each director at the Board meetings held during
the year 2008-09 and at the last Annual General Meeting
Name of the Director
Meetings Meetings Last
held attended AGM
Mr. B.V.R. Mohan Reddy
04
04
Yes
Mrs. B. Sucharitha
04
04
Yes
Mr. M.M. Murugappan
04
03
Yes
Prof. P.N. Thirunarayana1
03
03
Yes
Mr. Ranjan Chak
04
04
Yes
Mr. George William Fink2
01
–
No
Mr. Paul Roger Adams
04
–
No
Mr. G.V. Prasad
04
02
No
Mr. William Grabe
04
01
No
Mr. Sunish Sharma3
02
02
No
Mr. William Henry4
03
01
No
Prof. J.Ramachandran5
01
01
No
Mr. David Carter6
02
–
No
1
2
3
4
5
6
Resigned as Director w.e.f. 23 October 2008
Resigned as Director w.e.f. 10 June 2008
Vacated office as Alternate Director to Mr. Grabe w.e.f 23 October 2008
Appointed as Additional director w.e.f 23 July 2008
Appointed as Additional director w.e.f 17 November 2008
Appointed as Alternate Director to Mr. Paul Adams on 23 October 2008
Number of other Boards / Board Committees in which
the Directors are either Member or Chairman:
d)
Number of Board Meetings held and dates on which
they were held during the year 2008-09
Quarter
No. of
Dates on
Meetings
which held
Apr 08 to Jun 08
Jul 08 to Sep 08
Oct 08 to Dec 08
Jan 09 to Mar 09
Total
3.
1
1
1
1
4
21 Apr 08 at 10.00 hrs
23 Jul 08 at 9.30 hrs
23 Oct 08 at 10.30 hrs
15 Jan 09 at 10.00 hrs
Board Procedure
The calendar of meetings of the Board of Directors is
determined well in advance of the commencement of the
financial year. Notices of the Meetings of the Board are
issued by the Company Secretary on the advice and guidance
of the Chairman & Managing Director. The agenda and
detailed notes on agenda for meetings of the Board and
Committees are circulated well in advance.
Elaborate and meticulous deliberations take place at the
meetings of the Board; all relevant information is put up to
the Board and comprehensive presentations are made to it
to facilitate considered and informed decision making. Heads
of the business verticals, geo-heads and heads of subsidiaries
also attend the meetings of the Board as invitees to provide
a better perspective on the operations.
Information as required in Annexure IA to Clause 49 of
the Listing Agreement has been placed before the Board
for its consideration and deliberations. The time gap between
two meetings of the Board did not exceed four months.
During the year 2008-09, the Company voluntarily adopted
and implemented the Secretarial Standards on Meetings of the
Board of Directors and Minutes (SS-1 and SS-5 respectively)
issued by the Institute of Company Secretaries of India (ICSI).
37
Report on Corporate Governance
4.
Audit Committee
The Audit Committee was constituted in terms of Section
292A of the Companies Act, 1956 and as per the provisions
of Clause 49 of the Listing Agreement. The Company
Secretary acts as Secretary of the Committee.
i)
The Chairman of the Audit Committee had attended
the last AGM and had addressed the queries of the
shareholders.
5.
Compensation Committee
i)
Brief description of terms of reference:
This Committee has a mandate to evaluate
compensation and benefits for Executive Directors and
to frame policies and procedures for Associate Stock
Option Plans as approved by the shareholders. This
Committee also acts as Nominations and Remuneration
Committee of the Company.
The terms of reference of the Audit Committee is in
conformity with the provisions of Sub-clause II of
Clause 49 of the Listing Agreements entered with The
Bombay Stock Exchange Limited and The National
Stock Exchange of India Limited, which, inter alia,
includes the following:
Oversight of the company's financial reporting
process.
Recommending appointment and removal of
external auditors and fixing of their fees.
Reviewing with management the quarterly, halfyearly and annual financial results / statements
with special emphasis on accounting policies and
practices, compliances with accounting standards
and other legal requirements concerning financial
statements.
ii)
Reviewing the adequacy of the Audit and
compliance functioning including their policies,
procedures, techniques and other regulatory
requirements.
Reviewing the adequacy of internal control
systems and significant audit findings.
Discussion with external auditors regarding nature
and scope of audit.
1. Mr. M.M. Murugappan
– Chairman
2. Prof P.N. Thirunarayana – Member
(Resigned as Member w.e.f. 23 October 2008)
3. Mr. Paul Roger Adams
– Member
4. Prof. J. Ramachandran
– Member
(Appointed as Member w.e.f 17 November 2008)
iii)
Composition, name of Chairman and Members
The Compensation Committee comprises the
following Directors
Mr. M.M. Murugappan
–
Chairman
Mr. B.V.R. Mohan Reddy
–
Member
Mr. Ranjan Chak
–
Member
Mr. B. Ashok Reddy, President (Global HR & CA) is a
special invitee to all the meetings of the Compensation
Committee.
iii)
Meetings and Attendance during the year 2008-09
Name of the
Member
iv)
No. of
Meetings
held
No. of
Meetings
attended
Mr. M.M. Murugappan
2
2
Mr. B.V.R. Mohan Reddy
2
2
Mr. Ranjan Chak
2
1
Remuneration Policy:
The remuneration policy of the company is 'rewards
for results and recognition for efforts'.
v)
Details of remuneration to the directors:
(Rupees)
Particulars
B.V.R. Mohan Reddy B. Sucharitha
NonChairman and
Whole Time Executive
Managing Director
Director
Directors
Meetings and attendance during the year 2008-09
Name of the
Member
Mr. M.M. Murugappan
Prof. P.N. Thirunarayana
Mr. Paul Roger Adams
Prof. J. Ramachandran
38
ii)
Composition, name of Chairman and Members
The Audit Committee comprises the following
Directors
Brief description of terms of reference
No. of
Meetings
held
No. of
Meetings
attended
04
03
04
01
04
03
01
Salary
3,022,584
Commission
9,364,174
1,822,584
–
– 2,400,000
PF Contribution
360,000
216,000
–
Superannuation
375,000
225,000
–
Gratuity
144,232
86,538
–
Total
13,243,406
2,327,538 2,400,000
Report on Corporate Governance
Mr. B.V.R. Mohan Reddy, Chairman & Managing Director and Mrs. B. Sucharitha, Whole Time Director were re-appointed for
a period of 5 years with effect from April 12, 2009, subject to approval of the members in the ensuing Annual General Meeting.
The Notice convening the 18th Annual General Meeting contains resolutions regarding the said re-appointments and revision of
the remuneration. Further, as required under the provisions of Section 302 of the Companies Act, 1956, the required information
in this regard has been sent to the members of the Company.
The Non-Executive Directors are eligible for commission not exceeding an aggregate of 1% of the net profits of the Company
for all such Directors and not exceeding Rs. 300,000 per director, per annum as approved by the shareholders in the Annual
General Meeting held on July 19, 2006. Accordingly, Rs. 2,400,000 has been provided towards commission payable to nonexecutive directors. No sitting fee is paid to the directors.
vi)
Directors' Shareholdings:
Mr. B.V.R. Mohan Reddy, Chairman and Managing Director, holds 7,287,360 equity shares and Mrs. B. Sucharitha, Whole Time
Director, holds 3,270,600 equity shares in the Company.
Mr. M.M. Murugappan, Prof. P.N. Thirunarayana* and Mr. Ranjan Chak hold 10, 500 equity shares each in the Company pursuant
to exercise of the stock options. These options have been issued and are subject to the terms and conditions of the ASOP Schemes
in the Company. No other non-executive directors hold any shares, convertible instruments or stock options in the Company.
* Director up to 23 October 2008
6.
Shareholders/Investors Grievance Committee
i)
Terms of reference
The Committee was constituted to specifically look into the redressal of shareholder and investor complaints like transfer of
shares, non-receipt of balance sheet and non-receipt of declared dividend.
ii)
Composition, name of Chairman and Members
The Committee comprises the following directors:
Mr. Ranjan Chak
Mr. B.V.R. Mohan Reddy
Mrs. B. Sucharitha
Mr. Paul Roger Adams
–
–
–
–
Chairman
Member
Member
Member
iii)
Name and Designation of Compliance Officer
Mr. Sudheendhra Putty – Company Secretary
iv)
No. of Shareholders Complaints received during the year 2008-09
During the year 2008-09, in total 89 complaints/letters were received from the investors and all were disposed of during the year.
Details of shareholders’ complaints during the year 2008-09
Sl.No. Nature of Complaint/Request
1
2
3
4
5
6
7
Received
Disposed
Pending
Change/Correction of Address
Non Receipt of Dividend Warrants
Request for ECS Facility
Change/Correction of Bank Mandate
Correspondence /query related to NSDL
Non receipt of Securities
Others
26
16
1
4
3
3
36
26
16
1
4
3
3
36
–
–
–
–
–
–
–
Total
89
89
–
v)
No. of complaints not solved to the satisfaction of shareholders
There were no complaints that were not resolved to the satisfaction of shareholders.
vi)
No. of pending share transfers
All shares which were received for transfer during the year were transferred and no transfer was pending.
39
Report on Corporate Governance
7.
General Body Meetings
i) Details of last three Annual General Meetings held
The information about the last three annual general meetings is as follows:
AGMs
ii)
Venue
Bhaskara Auditorium,
BM Birla Museum, Adarsh Nagar,
Hyderabad - 500 063
14:00 hrs on July 23, 2008
2
16th AGM
-do-
15:30 hrs on July 18, 2007
0
15th AGM
-do-
15:30 hrs on July 19, 2006
4
Special Resolutions passed through postal ballot system
during the last year and person who conducted the
postal ballot exercise.
of same to the Chairman of the Company.
Insertion of Article 13A in the Articles of
Association of the Company
Insertion of Articles 88 to 112 in the Articles of
Association of the Company
8.
Whether any special resolution proposed to be
conducted through postal ballot.
Presently, no special resolution is proposed to be
conducted through postal ballot system.
Procedure for postal ballot.
40
Appointment of Scrutineer.
Approval of Notice U/S 192A of the Companies
Act, 1956
Approval of Calendar of Events.
Filing of Calendar of Events and Board
Resolution with Registrar of Companies.
Dispatch of Notice to members.
Releasing advertisement intimating the
completion of dispatch of notice and last date
for receipt of completed postal ballot.
Intimation to Stock Exchanges wherever the
securities of the company are listed about the
dispatch of notice to members.
Last date for receipt of completed postal ballot.
Preparation of Scrutineer's report and submission
Declaration of result and intimation of same to
Stock Exchanges.
Filing of requisite forms with Registrar of
Companies.
Drawing up of minutes.
Disclosures
No penalties have been imposed on the company by the
stock exchanges where the company's shares are listed or by
SEBI or any other statutory authority on any matter.
9.
Means of Communication
Financial Results of the company (Quarterly, Halfyearly and Annual) results are normally be published in
Economic Times, Business Standard, or Financial
Express in English and Andhra Bhoomi or Andhra
Prabha Regional Language Dailies (Telugu).
Apart from the financial results, all official press releases
of the Company and presentations made to the
institutional investors and analysts if any, are being
placed on the Company's website www.infotechenterprises.com and also through Corpfiling.
The company also releases all price sensitive
information simultaneously to NSE/BSE and Press.
The following is the broad outline for conducting postal
ballot:
There are no materially significant related party transactions
of the Company which have potential conflict with the
interests of the company at large.
Mr. S. Chidambaram, Practising Company Secretary,
was appointed as Scrutineer for the Postal Ballot.
iv)
Number of Special
Resolutions passed
17th AGM
During the year 2008-09, two Special Resolutions were
passed under Section 31 of the Companies Act, 1956
by postal ballot for :
iii)
Time & Date
10. The Management Discussion and Analysis Report forms part
of the Annual Report.
11. Compliance of Insider Trading Norms
The Company has adopted the code of internal procedures
and conduct for listed companies notified by the Securities
Exchange Board of India (SEBI) prohibiting insider trading.
Report on Corporate Governance
12. General Shareholder Information
Date, Time and Venue of AGM
:
Wednesday, 1 July 2009 at 2.30 p.m. at Bhaskara Auditorium,
BM Birla Museum, Adarsh Nagar, Hyderabad - 500 063
Financial Year
:
April 1 to March 31
Date of Book Closure
:
24 June 2009 to 1 July 2009 (both days inclusive)
Dividend Payment Date
:
Within 30 days from the date of AGM
Listing on Stock Exchanges
:
1.
The Bombay Stock Exchange Ltd.,
P J Towers, Dalal Street, Fort, Mumbai - 400 001.
2.
The National Stock Exchange of India Ltd.,
Exchange Plaza, Bandra Kurla Complex,
Bandra (E), Mumbai- 400 051.
Stock Code/CIN
The Bombay Stock Exchange Ltd
The National Stock Exchange of India Ltd
:
:
532175 / INFOTECENT
INFOTECENT / EQ
Corporate Identification Number (CIN)
:
L72200AP1991PLC013134
Market Price data: High / Low during each month in the Financial Year 2008-09 and Performance in comparison to broad based
indices such as BSE Sensex, Crisil Index, etc.
The information on market price of the Company's stock and its comparison with NSE Nifty and BSE Sensex is given below:
Infotech Share price on NSE and BSE and in comparison with NSE Nifty & BSE Sensex
Month &
Year
NSE (in Rs.)
High
Low
NIFTY
High
Low
BSE (in Rs.)
High
Low
SENSEX
High
Low
Apr 08
313.00
243.00
5,230.75
4,628.75
315.00
245.10
17,480.74
15,297.96
May 08
278.80
246.00
5,298.85
4,801.90
290.00
247.30
17,735.70
16,196.02
Jun 08
265.00
213.15
4,908.80
4,021.70
263.50
205.55
16,632.72
13,405.54
Jul 08
244.50
171.85
4,539.45
3,790.20
240.00
171.15
15,130.09
12,514.02
Aug 08
229.50
200.00
4,649.85
4,201.85
232.10
200.00
15,579.78
14,002.43
Sep 08
244.00
185.05
4,558.00
3,715.05
241.00
186.20
15,107.01
12,153.55
Oct 08
215.00
133.90
4,000.50
2,252.75
222.90
131.05
13,203.86
7,697.39
Nov 08
152.50
92.75
3,240.55
2,502.90
150.00
95.15
10,945.41
8,316.39
Dec 08
118.00
93.30
3,110.45
2,570.70
116.95
93.00
10,188.54
8,467.43
Jan 09
114.00
80.10
3,147.20
2,661.65
113.00
80.00
10,469.72
8,631.60
Feb 09
104.90
77.10
2,969.75
2,677.55
99.90
79.95
9,724.87
8,619.22
Mar 09
95.75
68.80
3,123.35
2,539.45
91.50
68.05
10,127.09
8,047.17
41
Report on Corporate Governance
Registrar and Transfer Agents
Share Transfer System
:
Karvy Computershare Private Limited
Unit: Infotech Enterprises Limited
Plot No. 17 to 24, Vithalrao Nagar,
Madhapur, Hyderabad - 500 081.
Tel : +91-40-23420818 & 23420828
Fax : +91-40-23420814
Email : [email protected] / [email protected]
Web : www.karvy.com
Shares lodged for physical transfer would be registered within a period of 8 days as against service standard of 15 days, if the
documents are complete in all respects. The shares duly transferred would be dispatched to the shareholders concerned within
a week from the date of approval of transfers by the Share Transfer Committee. For this purpose, the Share Transfer Committee
meets as often as required. Adequate care is taken to ensure that no transfers are pending for more than a fortnight. As the
Company's shares are currently traded in dematerialized form the transfers are processed and approved in the electronic form by
NSDL / CDSL through their depository participants.
Karvy Computershare Private Limited is the Common Share Transfer Agent for both Physical and dematerialised mode.
Distribution of Shareholding
The Distribution of shareholding of the Company as on 31 March 2009 is as follows:
Sl.
No.
Category
From
To
Percentage of
Shareholders
Number of
Equity Shares
Percentage of
Shareholding
1
1
5,000
9,926
97.87%
3,268,217
5.92%
2
5,001
10,000
88
0.87%
621,164
1.13%
3
10,001
20,000
37
0.36%
543,538
0.98%
4
20,001
30,000
17
0.17%
419,197
0.76%
5
30,001
40,000
12
0.12%
423,109
0.77%
6
40,001
50,000
6
0.06%
262,049
0.47%
7
50,001
100,000
17
0.17%
1,255,497
2.27%
8
100,001
Above
39
0.38%
48,437,025
87.70%
10,142
100.00%
55,229,796
100.00%
Total
Number of
Shareholders
Dematerialization of shares and liquidity
The Company's shares are being traded in the National Stock Exchange of India Limited (NSE) and The Bombay Stock
Exchange Limited (BSE) under ISIN- INE136B01020.
As per SEBI guidelines on investors' protection, the Company's shares are to be traded only in dematerialized mode. Accordingly,
the Company has entered into agreements with National Securities Depository Limited (NSDL) and Central Depository Services
(India) Limited (CDSL) to establish electronic connectivity for scrip-less trading. As at 31 March 2009, 96.19% of the outstanding
equity shares of the company are in electronic form.
The Company obtains a Secretarial Audit Report from Mr. S. Chidambaram, Practising Company Secretary every quarter to
reconcile the total admitted capital with the NSDL and CDSL and the total issued capital. The Secretarial Audit Report confirms
that the total issued/paid up capital is in agreement with the total number of shares in physical form and the total number of
dematerialized shares held with NSDL and CDSL. The Secretarial Audit Report is placed before the Board for its information
and forwarded to both NSE and BSE.
42
Report on Corporate Governance
The Company also obtains a Certificate of Compliance from Mr. S. Chidambaram, Practising Company Secretary at half-yearly
intervals certifying that the transfer requests complete in all respects have been processed and share certificates with transfer
endorsements have been issued by the Company within the stipulated period. The Certificate of Compliance is forwarded to
both NSE and BSE.
Outstanding GDRs/ADRs/Warrants or any other convertible instruments, conversion date and likely impact on equity
The Company has not issued any GDRs / ADRs / Warrants / convertible debentures during the year 2008-09
During the year 2008-09, the Company allotted 2,724,000 equity shares of Rs. 5/- each, at a premium of Rs. 355/- each to GA
Global Investments, in pursuance of the exercise of their option to convert the compulsorily convertible preference shares
(CCPS) into an equal number of equity shares. The exercise and the consequent allotment are in conformity with the terms of
issue of the CCPS.
As such, there are no preference shares in the Company post the above conversion.
Address for Correspondence and contact persons for investors queries
Investors' correspondence may be addressed to Mr. Sudheendhra Putty, Company Secretary & Compliance Officer and any
queries relating to the financial statements of the Company may be addressed to Mr. S. Nataraja, Senior Vice-President (Finance
& Accounts) at the Registered Office of the Company at 4th Floor, A-Wing, Plot No.11, Software Units Layout, Infocity,
Madhapur, Hyderabad - 500 081 Tel:+91-40-23124004/23124006 Fax: +91-40-66624368, Email : [email protected] /
[email protected]
Besides, investors may also make correspondence with the Share Transfer Agents, whose particulars are furnished as under:
Karvy Computershare Private Limited
Unit: Infotech Enterprises Limited
Plot No. 17 to 24, Vithalrao Nagar,
Madhapur, Hyderabad-500 081
Contact Person: Mr. M.S.Madhusudhan
Tel: +91-40-23420818 - Fax: +91-40-23420814
Email: [email protected]/[email protected], Web: www.karvy.com
13. Due dates for Transfer of Unclaimed Dividends to Investor Education and Protection Fund (IEPF)
Financial Year
Date of Declaration of Dividend
(Date of Annual General Meeting)
Due date to Transfer to IEPF
2001-2002
July 22, 2002
August 29, 2009
2002-2003
July 23, 2003
August 30, 2010
2003-2004
July 27, 2004
September 3, 2011
2004-2005
July 21, 2005
August 27, 2012
2005-2006
July 19, 2006
August 25, 2013
2006-2007
July 18, 2007
August 24, 2014
2007-2008
July 23, 2008
August 30, 2015
During the FY 2008-09, the company has transferred the un-paid dividend amount pertaining to the FY 2000-01 to the IEPF
and also filed the forms concerned with the Ministry of Corporate Affairs.
The Company has complied with all the mandatory provisions of Clause 49 of the Listing Agreement.
43
Risk Management
Risk Management
“Every day, you'll have opportunities to take chances and to work outside
your safety net. Sure, it's a lot easier to stay in your comfort zone, but sometimes
you have to take risks. When the risks pay off, that's when you reap the
biggest rewards.”
– Donald Trump
The management cautions readers that the risks outlined below
are not exhaustive and are for information purposes only. This
report also contains statements which are forward looking in
nature and investors are requested to exercise their own judgment
in assessing various risks associated with the Company and to
refer to the discussions of risks in the Company's earlier Annual
reports.
The global economic outlook has changed significantly. The subprime crisis in the financial services sector and globally escalating
food prices are triggering a chain reaction. This poses challenges
while at the same time, opening up newer opportunities.
necessary directions. The risk report has been submitted to the
management and the findings are currently being addressed.
The findings/recommendations of the risk auditors are put up
to the Board of Directors each quarter for its review and guidance.
The risks identified by the management which form part of
Infotech's business are
1.
2.
3.
4.
5.
6.
7.
Financial Risks
Business Portfolio Risks
Internal Process Risks
Legal and Statutory Risks
Political Risks
Competition Risks
Macro Economic Risks
RISK FRAME WORK OF THE COMPANY.
The Company uses foreign exchange forward contracts and
options to hedge its exposure to movements in foreign exchange
rates. The use of these foreign exchange forward contracts and
options reduces the risk or cost to the Company and the Company
does not use the foreign exchange forward contracts or options
for trading or speculation purposes. Wage pressures in India may
prevent us from sustaining our competitive advantage and may
reduce our profit margins.
1. Financial Risks
2. Business
Portfolio Risks
We have a risk management team to support our business
initiatives in these changing times. Vertical heads are responsible
for the identification of risk and for isolating the risk-reward
option in the business vertical concerned.
3. Internal Process Risks
4. Legal & Statutory risks
5. Political Risks
6. Competition Risk
7. Macro Economic Risks
We have classified our business into 2 major segments:
1.
UTG (Utilities, Telecom and Government).
2.
EMI (Engineering, Manufacturing and Industrial
Products).
Each of these segment heads has set-in frame works within which
the risk and rewards are operated. Risks involved in each project
are identified by the respective Project Managers and informed
accordingly to the Senior Managers at the review meetings held
every month. The same is evaluated and brought to the notice
of the Chairman and to the Board of Directors. The Board of
Directors is responsible for addressing the risk levels with Audit
Committee providing the overall directions on the risk
management policies to be followed by the Company. The Board
of Directors is also responsible for putting in place required
checks and balances whereas the Executive Management handles
the implementation of risk mitigation measures. Proactive risk
management is facilitated by formal reporting and control
mechanisms, which ensure timely availability of information.
During the year under review, M/s. Grant Thornton was
appointed to audit the risk mitigation procedures and provide
44
1.
Financial risks
Foreign currency rate fluctuations
Liquidity
Leverage
1.1 Foreign currency rate fluctuations
The Company derives a significant portion of its
revenues in Foreign Currencies. Principal currencies
dealt with by the Company include US Dollar,
Australian Dollar, Euro and British Pound. The
Company is also exposed to deriving revenue from 25
different countries. A large proportion of its expenses
are in Indian rupees therefore the operating profits
are subject to foreign currency rate fluctuations. While
the depreciation of the Indian rupee would have a
favourable bottom-line impact, an appreciation would
affect the Company's profitability adversely. Such
volatility would also affect the assets located at various
locations worldwide in terms of their carrying value.
Risk Management
1.2 Liquidity
It is essential for every Company that apart from having
a good fixed assets base, it shall also have a high level
of liquidity so as to enable itself to re-align to any
dynamic business changes. Therefore, as a strategy, the
Company always believes in having a liquid Balance
Sheet. The cash flow of the Company is largely
dependent on the credit terms extended to clients and
the effective recovery of the same from them. Delays
in recovery have a direct impact on the liquidity position
of the Company. As on 31st March, 2009, the following
is the liquidity position of the Company:
Ratio
Days of sales receivable
Cash and Cash Equivalents
as % of assets
Cash and Cash Equivalents
as % of revenue
2009
2008
97
31.68%
106
11.90%
50.19%
19.28%
The Company also has a policy to settle its payables
well within stipulated time frames. Further, the nature
of business is such that significant investments may
have to be made in sales & marketing, training &
research and development activities. All these factors
call for considerable liquidity.
1.3 Leverage
The Company is having debts to an extent of Rs.186.67
million as against Rs. 380.54 millions for the previous
year. All the secured term loans were repaid fully during
the year and the outstanding amount reflects only the
Packing credit.
2.
Business portfolio risks
A business is subject to the risks involved with respect to
the service lines being offered by it, the geographies in which
it operates, clients on which it is highly dependent, etc. The
Company is also subject to these kinds of risks and therefore
has steps in place to prevent undue concentration in one
service, vertical, client or geography. The following are the
risks addressed to:
Vertical domain concentration
Service concentration
Client concentration
Geographical concentration
2.1 Vertical domain concentration
Vertical domains relate to the industry in which the
clients operate. The Company has a client base, which
operates in Utilities (comprising Transportation and
Power), Telecom, Aerospace, Railways, Automobile,
Technical Publications, etc.
During the previous year, most of the Company's
revenues were derived from EMI. The Company
mitigated this risk to a certain extent by bagging new
contracts in the areas of Aerospace, Railways and from
Government agencies.
Excessive dependence on any one or few verticals may
lead to risks aligned due to downturn in that industry.
Therefore, the Company has its risks divided between
the various verticals so as to insulate itself in the long
run from downturn in any particular vertical.
During the year, the Company had its revenues
distributed in the ratio of 43:57 among the UTG and
EMI Verticals respectively. The Company has taken a
new initiative and started the Hi-Tech vertical. This
vertical deals with chip designing and embedded work.
The results of this initiative are expected to be seen in
the near future.
2.2 Service concentration
The Company has an array of service offerings across
its Business Verticals-UTG and EMI, namely, Geospatial Data Services, Geo-spatial Technical Services,
Engineering Design Services, etc. The Company has
carefully crafted its service offerings which are focused
and specialized to provide expert solution in its chosen
horizontals and verticals. These service offerings are
purely client based and there can be a possibility that
the clients may not require the same in the future.
The Company mitigates such risk by identifying the
services needed by the clients by closely working with
the client group.
2.3 Client concentration
This risk emanates primarily from excessive exposure
to a few large clients and any fluctuation in revenue
streams emanating from these clients will potentially
impact the profitability adversely and increase credit
risk.
During the year under review, the Company had added
9 new clients as against 15 customers last year and
further reduced the concentration from its top 10
clients (details provided in Management Discussion &
Analysis Report). This is mostly on account of traction
in smaller existing clients and new clients. Contributions
from top clients are generally higher among the
companies in the growth phase and hence the
management believes that the dependence on a few
clients would further reduce in the coming years.
45
Risk Management
2.4 Geographical concentration
Concentration of revenue in a particular geography is
subject to risks arising due to economic conditions,
trade policies, work culture and political situation of
that particular geography. However, no limitations can
be set to particular geographies since each market has
distinct characteristics of future growth prospects.
During the year, the Company witnessed a substantial
change in the geographic mix with decrease in the
contributions from the European geography. The ratio
was 43:43:14 for North America, Europe and Other
countries (including domestic sales) last year; the ratio
moved to 46:38:16. The Company continues to focus
in the Asia Pacific region and believes the geographic
concentration risk to come down further. The
Company set foot in Japan to enter the East Asian
Markets. The results of this geographical expansion
will be realised in the coming years.
Additional details with regard to geographical
concentration have been provided in the Management
Discussion and Analysis report.
3.
Internal process risks
Internal control systems
Project execution
Human resource management
Technological obsolescence
Disaster prevention and recovery
Growth through Acquisitions
3.1 Internal control systems
The Company has internally developed certain
Standard Operating Procedures which specify the
procedures to be followed for performing a particular
operation. This ensures that appropriate information
reaches the management so as to facilitate proper
monitoring. Adherence to these is in turn ensured
through internal audit procedures and quality and
security checks conducted from time to time. Changes
are made to these to facilitate easy understanding of
the procedures and provide flexibility in operations.
The following are some of the initiatives taken by the
Company to ensure internal control:
46
Internal audit team is set up which looks into
proper functioning of all the systems and
procedures in place
Security Audit is conducted each quarter to ensure
confidentiality and integrity
A Committee headed by the Chairman &
Managing Director of the Company approves any
change in policy matters
3.2 Project execution
Mitigation of risk involved in each project is important
as this leads to the profitability of the Company.
Reducing uncertainty in delivery, completing the project
within the budgeted cost and time are the major
elements of this risk. While the uncertainty in delivery
is solved through proper guidance to the project leaders,
the risk relating to completion within the budgeted cost
has been attended through implementation of Project
Systems module in ‘iBridge-SAP’ during 2007-08.
iBridge-SAP has been effective and is carrying the
project execution very efficiently. It reports the
profitability of each project at various levels of
completion.
3.3 Human Resource Management
Human Resources function has turned out to be a key
function in every company in the current scenario.
People are considered to be the key resource for growth
of a Company. The Company has always believed in
providing a favorable work environment to its
associates (employee's are designated as associates)
along with a balanced compensation package. In this
pursuit, the Company conducts an annual review
amongst its employees on various subjects. This ensures
innovation and creativity towards the work and helps
the Company retain talent over the years.
During the year, the attrition rate of the Company
stood at 10.42 % as compared to previous year's
15.11%. The fall in attrition represents the interest of
the associates towards their work and focus of the
Human Resources Department to provide maximum
satisfaction. The associates are categorized on the basis
of performance into CAT-A, CAT-B and CAT-C.
3.4 Technological obsolescence
With the extremely fast changing pace of Information
Technology, it is important for every company to keep
itself upgraded with the latest technology solutions.
This results in old technologies becoming redundant
and hence needs to be written off. The cost of acquiring
technology also includes the cost of installation and
re-training.
The following table gives depreciation expense and
software expense as a proportion of revenues for the
last two years.
Risk Management
Ratio
FY 2009
FY 2008
Depreciation / Average
Gross Block
11.61%
11.38%
Depreciation/Total Revenue
7.85%
7.55%
appropriate. As a matter of policy, the Company does
not enter into contracts, which have open-ended legal
obligations. To date, the company has no material
litigation in relation to contractual obligations pending
against it in any court in India or abroad.
4.2 Statutory compliance
The Company's amortization strategy reflects the
requirements of the various categories of systems.
Depreciation during the year was lower compared to
previous year as some of the assets were fully written off.
The Company has a Compliance Officer to advise the
Company on compliance issues with respect to the laws
of various jurisdictions in which the company has its
business activities and to ensure that the company is
not in violation of the laws of any jurisdiction where
the company has operations. The Compliance Officer,
who is also the Company Secretary, reports from time
to time on the compliance or otherwise of the laws to
the Board of Directors. Generally, the company takes
appropriate business decisions after ascertaining from
the compliance officer and, if necessary, from
independent legal counsel, that the business operation
of the Company is not in contravention of any law in
the jurisdiction in which it is undertaken. Legal
compliance issues are an important factor in assessing
all new business proposals.
3.5 Disaster prevention and recovery
The Company adheres to various standards to ensure
that the information is secured and is not prone to
controllable disasters. Adherence to ISO 9001:2000 and
SEI CMMi Level 5 quality standards has ensured that
the company has a disaster prevention and recovery
system in place. Adherence to BS 7799 standards
ensures global security of information. The company
has a disaster recovery plan for each of its work
locations as well as for each technology category.
Possible risks for each category have been identified
and action plans have been put in place to cope with
any contingencies. These plans are reviewed and
updated periodically to make sure that they are in sync
with changes in technology and risks.
5.
New competitors may enter into the markets the Company
operates in or current competitors could decide to focus
more on these markets, and thereby intensify the highly
competitive conditions that already exist. Such developments
would enable these new and existing competitors to offer
similar services at reduced prices. This could harm the
Company's business and results of operations. The
management keeps track of the market movements and acts
accordingly to mitigate this risk.
3.6 Growth through Acquisitions
The Company has grown both organically and inorganically in the past few years. Acquisitions are done
for a variety of reasons i.e. to enter in new markets,
expand services offerings, acquiring new technology
& domain skills, cost synergies, etc. It also entails risk
for the company's future growth and profitability, if
the synergy expected from the acquisition does not
materialize for any external or internal reasons. To
ensure preparedness for such growth, Executive
Management internally outlines strategic objectives,
evaluation guidelines, and tentative implementation
mechanisms for any such possibility.
6.
Legal and Statutory Risks
Contractual Liabilities
Statutory Compliance
4.1 Contractual liabilities
The management has clearly charted out a review and
documentation process for contracts. This process
focuses on evaluating the legal risks involved in a
contract, on ascertaining the legal responsibilities of
the Company under the applicable law of the contract,
on restricting its liabilities under the contract and
covering risks. The management reviews this on a
continuous basis and takes corrective action, as
Political risks
Recognizing that India's education system, its world-class
professionals, and its low cost structure give it an intrinsic
comparative advantage in software exports, successive
governments have accorded a special status to this industry.
Task Forces comprising politicians, bureaucrats and
industrialists have recommended policy measures to give a
fillip to the Indian IT industry. On the whole, the
Government's favourable disposition towards the IT industry
- and specifically towards software exports - is highly
encouraging. Given the consensus among all leading political
parties on the importance of the software industry, it is likely
to remain a focus area for governmental policy in the years
to come.
During 2008-09, the Company made a strategic
acquisition to enter the Hitech markets by buying out
TTM Inc, in the US and TTM (India) Pvt. Ltd.
4.
Competition Risks
7.
Macro Economic Factors
Changes in the global economic environment are bound to
have an impact on the progress of every company's growth.
The Company has succeeded in fighting through the tough
economic conditions last year. The management has invested
significant time in meeting the clients to provide the insights
and various advantages along with the assurance, which is
important to build a global delivery model.
47
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Standalone Financial Statements - Indian GAAP
Standalone Financial Statements
Indian GAAP
49
Auditors' Report - Standalone Financial Statements - Indian GAAP
Auditors' Report
Auditors’ Report to the Members of Infotech Enterprises
Limited
1.
2.
3.
4.
We have audited the attached Balance Sheet of Infotech
Enterprises Limited, as at 31 March 2009, and the related
Profit and Loss Account and Cash Flow Statement for the
year ended on that date annexed thereto, which we have
signed under reference to this report. These financial
statements are the responsibility of the company's
management. Our responsibility is to express an opinion
on these financial statements based on our audit.
We conducted our audit in accordance with the auditing
standards generally accepted in India. Those Standards
require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and
significant estimates made by management, as well as
evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for our
opinion.
As required by the Companies (Auditor's Report) Order,
2003, as amended by the Companies (Auditor's Report)
(Amendment) Order, 2004 (together the 'Order'), issued
by the Central Government of India in terms of subsection (4A) of Section 227 of 'The Companies Act, 1956'
of India (the 'Act') and on the basis of such checks of the
books and records of the company as we considered
appropriate and according to the information and
explanations given to us, we give in the Annexure a
statement on the matters specified in paragraphs 4 and 5
of the said Order.
(b) In our opinion, proper books of account as required
by law have been kept by the company so far as
appears from our examination of those books;
(c) The Balance Sheet, Profit and Loss Account and
Cash Flow Statement dealt with by this report are in
agreement with the books of account;
(d) In our opinion, the Balance Sheet, Profit and Loss
Account and Cash Flow Statement dealt with by this
report comply with the accounting standards referred
to in sub-section (3C) of Section 211 of the Act;
(e) On the basis of written representations received from
the directors, as on 31 March 2009 and taken on
record by the Board of Directors, none of the
directors is disqualified as on 31 March 2009 from
being appointed as a director in terms of clause (g)
of sub-section (1) of Section 274 of the Act;
(f)
In our opinion and to the best of our information
and according to the explanations given to us, the
said financial statements together with the notes
thereon and attached thereto give in the prescribed
manner the information required by the Act and give
a true and fair view in conformity with the accounting
principles generally accepted in India:
(i)
in the case of the Balance Sheet, of the state of
affairs of the company as at 31 March 2009;
(ii) in the case of the Profit and Loss Account, of
the profit for the year ended on that date; and
(iii) in the case of the Cash Flow Statement, of the
cash flows for the year ended on that date.
N.K. Varadarajan
Partner
Membership No: F- 90196
Further to our comments in the Annexure referred to in
paragraph 3 above, we report that:
(a)
50
We have obtained all the information and
explanations, which to the best of our knowledge
and belief were necessary for the purposes of our
audit;
Place : Hyderabad
Date : April 25, 2009
for and on behalf of
Price Waterhouse
Chartered Accountants
Auditors' Report - Standalone Financial Statements - Indian GAAP
Annexure to the Auditors' Report
[Referred to in paragraph 3 of the Auditors' Report of even
date to the members of Infotech Enterprises Limited on
the financial statements for the year ended 31 March 2009]
1.
(a)
of special nature for which suitable alternative sources do
not exist for obtaining comparative quotations, there is an
adequate internal control system commensurate with the
size of the company and the nature of its business for the
purchase of fixed assets and for the sale of services except
certain general information system controls which need to
be strengthened. Further, on the basis of our examination
of the books and records of the company, and according to
the information and explanations given to us, we have neither
come across nor have been informed of any continuing
failure to correct major weaknesses in the aforesaid internal
control system.
The company is maintaining proper records showing
full particulars including quantitative details and
situation of fixed assets.
(b) The fixed assets are physically verified by the
management according to a phased programme
designed to cover all the items over a period of three
years, which in our opinion, is reasonable having regard
to the size of the company and the nature of its assets.
Pursuant to the programme, a portion of the fixed
assets has been physically verified by the management
during the year and no material discrepancies between
the book records and the physical inventory have been
noticed.
5.
(c) In our opinion and according to the information and
explanations given to us, a substantial part of fixed
assets has not been disposed of by the company during
the year.
2.
The Company does not have any inventory and accordingly
clause (ii) of paragraph 4 of the Order is applicable to the
Company for the current year.
3.
(a)
The company has granted unsecured loan, to a
subsidiary company covered in the register maintained
under Section 301 of the Act. The maximum amount
involved during the year and the year-end balance of
such loan aggregates to Rs. 12 Million.
(b) In our opinion, the rate of interest and other terms
and conditions of such loans are not prima facie
prejudicial to the interest of the company.
(e) The company has not taken any loans, secured or
unsecured, from companies, firms or other parties
covered in the register maintained under Section 301
of the Act and accordingly, clauses (iii) (f) and (iii) (g)
of paragraph 4 of the Order are not applicable to the
Company for the current year.
4.
In our opinion and according to the information and
explanations given to us, having regard to the explanation
that certain items purchased, services received/rendered are
In our opinion and according to the information and
explanations given to us, the particulars of contracts
or arrangements referred to in Section 301 of the Act
have been entered in the register required to be
maintained under that section.
(b) In respect of transactions with subsidiaries, the
management has informed us that these transactions
dealt are of a special nature and therefore comparable
prices are not available. In our opinion and according
to the information and explanations given to us, there
are no other transactions made in pursuance of such
contracts or arrangements exceeding the value of
Rupees five lakhs in respect of any party during the
year.
6.
The company has not accepted any deposits from the public
within the meaning of Sections 58A and 58AA of the Act
and the rules framed there under.
7.
In our opinion, the company has an internal audit system
commensurate with its size and nature of its business.
8.
The Central Government of India has not prescribed the
maintenance of cost records under clause (d) of sub-section
(1) of Section 209 of the Act for any of the products of the
company.
9.
(a)
(c) The aforesaid loan, was not due for repayment and
there is no stipulated date for payment of interest.
(d) In respect of the aforesaid loans, there is no overdue
amount more than Rupees One Lakh.
(a)
According to the information and explanations given
to us and the records of the company examined by us,
in our opinion, the company is generally regular in
depositing the undisputed statutory dues including
provident fund, investor education and protection fund,
employees' state insurance, income-tax, sales-tax, wealth
tax, service tax, customs duty, excise duty, cess and
other material statutory dues as applicable with the
appropriate authorities. The extent of the arrears of
works contract tax outstanding as at 31 March 2009,
for a period of more than six months from the date
they became payable, amounted to Rs. 0.44 lakhs.
51
Auditors' Report - Standalone Financial Statements - Indian GAAP
(b) According to the information and explanations given
to us and the records of the company examined by us,
there are no dues of income-tax, sales tax, wealth tax,
service tax, customs duty, excise duty and cess which
have not been deposited on account of any dispute.
17. On the basis of an overall examination of the balance sheet
of the company, in our opinion and according to the
information and explanations given to us, there are no funds
raised on a short-term basis which have been used for longterm investment.
10. The company has no accumulated losses as at 31 March
2009 and it has not incurred any cash losses in the financial
year ended on that date or in the immediately preceding
financial year.
18. The company has not made any preferential allotment of
shares to parties and companies covered in the register
maintained under Section 301 of the Act during the year.
11. According to the records of the company examined by us
and the information and explanation given to us, the
company has not defaulted in repayment of dues to any
financial institution or bank or debenture holders as at the
balance sheet date.
12. The company has not granted any loans and advances on
the basis of security by way of pledge of shares, debentures
and other securities.
13. The provisions of any special statute applicable to chit fund
/nidhi/mutual benefit fund/societies are not applicable to
the company.
19. The company has not issued any funds by issue of debentures
and accordingly, clause (xix) of paragraph 4 of the Order is
not applicable to the Company for the current year.
20. The Company has not raised any money by public issue
during the year.
21. During the course of our examination of the books and
records of the company, carried out in accordance with the
generally accepted auditing practices in India, and according
to the information and explanations given to us, we have
neither come across any instance of fraud on or by the
company, noticed or reported during the year, nor have we
been informed of such case by the management.
14. In our opinion, the company is not a dealer or trader in
shares, securities, debentures and other investments.
15. The company has given guarantee in relation to credit limit
available to a wholly owned subsidiary and the same is not
considered prejudicial to the interest of the Company.
16. The company has not obtained any term loans.
52
N.K. Varadarajan
Partner
Membership No: F- 90196
Place : Hyderabad
Date : April 25, 2009
for and on behalf of
Price Waterhouse
Chartered Accountants
Standalone Financial Statements - Indian GAAP
Balance Sheet
(Amount in Rupees)
Schedule
Reference
I.
Sources of Funds :
1. Shareholders' Funds
(a) Capital
(b) Reserves and Surplus
2. Loan Funds
(a) Secured Loans
1
2
As at
March 31, 2009
276,148,980
6,622,862,103
3
6,899,011,083
As at
March 31, 2008
1,241,279,995
5,014,965,724
6,256,245,719
186,667,529
380,541,558
7,085,678,612
6,636,787,277
II. Application of Funds :
1.
Fixed Assets
(a) Gross Block
(b) Less: Depreciation
4
(c) Net Block
(d) Capital Work in Progress
2.
3.
4.
Investments
Deferred Tax Asset (net)
Current Assets, Loans and Advances
5
6
(a)
Sundry Debtors
3,958,079,416
1,866,396,041
3,392,500,000
1,525,168,306
2,091,683,375
584,197,664
1,867,331,694
311,275,155
2,675,881,039
2,178,606,849
2,686,980,198
4,804,711
1,026,905,341
178,907,804
7
1,540,457,519
1,261,627,211
(b) Cash and Bank Balances
8
2,729,155,278
875,352,784
(c) Loans and Advances
9
464,585,967
347,551,362
4,734,198,764
2,484,531,357
1,215,177,128
436,179,158
315,037,208
281,956,680
1,530,214,336
718,135,838
Less: Current Liabilities and Provisions
(a)
Liabilities
(b) Provisions
10
11
Net Current Assets
Notes to Accounts
3,203,984,428
1,766,395,519
7,085,678,612
6,636,787,277
16
The Schedules referred to above and Statement on Significant Accounting Policies form an integral part of the Balance Sheet.
This is the Balance Sheet referred to in our report of even date.
N.K. Varadarajan
Partner
For and on behalf of
Price Waterhouse
Chartered Accountants
Place : Hyderabad
Date : April 25, 2009
For and on behalf of the Board of Directors
B.V.R. Mohan Reddy
Chairman and Managing Director
B. Sucharitha
Whole-time Director
S. Nataraja
Senior Vice President
Finance and Accounts
Sudheendhra Putty
Company Secretary
Place : Hyderabad
Date : April 25, 2009
53
Standalone Financial Statements - Indian GAAP
Profit and Loss Account
Schedule
Reference
Income
Services
- Exports
- Domestic
Other Income
TOTAL INCOME
Expenditure
Personnel Expenses
Operating and Administration Expenses
Depreciation
Financial Expenses
For the year ended
March 31, 2009
12
13
14
15
TOTAL EXPENDITURE
Profit Before Taxation
Provision for Taxation
- Current
- Fringe Benefit
- Deferred
Profit After Taxation
Add: Balance brought forward from previous year
Amount Available for Appropriation
Appropriations :
Proposed Dividend - Preference @ Nil (2008: 3.31%)
- Equity @ 30% (2008: 24 %)
Tax on distributed profits
Residual Dividend and Dividend Tax paid (including Preference Dividend)
Transfer to Contingency Reserve
Transfer to General Reserve
(Amount in Rupees)
For the year ended
March 31, 2008
5,510,248,882
155,470,902
(227,608,268)
5,438,111,516
4,231,646,970
120,223,640
188,986,316
4,540,856,926
2,725,334,424
1,589,485,109
426,636,097
35,137,309
2,109,348,212
1,339,589,296
343,032,736
28,701,584
4,776,592,939
661,518,577
3,820,671,828
720,185,098
110,000,000
17,000,000
(174,103,093)
708,621,670
66,818,045
775,439,715
94,300,000
15,292,238
25,021,735
585,571,125
71,427,015
656,998,140
–
82,844,694
14,079,456
508,501
47,500,000
550,000,000
3,268,800
62,553,600
11,186,518
10,936,029
–
502,235,148
Balance carried to Balance Sheet
80,507,064
66,818,045
Earnings Per Share
(Equity Shares, Par Value of Rs. 5 Each)
- Basic
13.30
11.54
- Diluted
13.28
11.39
Number of Shares used in computing Earnings per Share
- Basic
53,262,303
50,405,040
- Diluted
53,368,636
51,054,513
Notes to Accounts
16
The Schedules referred to above and Statement on Significant Accounting Policies form an integral part of the Profit and Loss Account.
This is the Profit and Loss Account referred to
in our report of even date.
N.K. Varadarajan
Partner
For and on behalf of
Price Waterhouse
Chartered Accountants
Place : Hyderabad
Date : April 25, 2009
54
For and on behalf of the Board of Directors
B.V.R. Mohan Reddy
Chairman and Managing Director
B. Sucharitha
Whole-time Director
S. Nataraja
Senior Vice President
Finance and Accounts
Sudheendhra Putty
Company Secretary
Place : Hyderabad
Date : April 25, 2009
Standalone Financial Statements - Indian GAAP
Schedule annexed to and forming part of the Balance Sheet
(Amount in Rupees)
As at
March 31, 2008
As at
March 31, 2009
1.
CAPITAL
Authorised :
73,872,000 Equity Shares of Rs. 5 each
(2008 : 73,872,000 Equity Shares of Rs. 5 each)
2,724,000 Compulsorily Convertible
Preference Shares of Rs. 360 each
(2008: 2,724,000 Compulsorily Convertible
Preference Shares of Rs. 360 each)
Issued and Subscribed :
55,229,796 Equity Shares of Rs. 5 each fully paid-up
(2008-52,127,999 Equity Shares of Rs. 5 each fully paid-up)
Compulsorily Convertible Preference Shares of
Rs. 360 each ( 2008: 2,724,000 Compulsorily Convertible
Preference Shares of Rs. 360 each)
369,360,000
369,360,000
980,640,000
980,640,000
1,350,000,000
1,350,000,000
276,148,980
260,639,995
–
980,640,000
276,148,980
1,241,279,995
Out of the above:
(156,000* Equity Shares were allotted for a consideration other
than cash pursuant to the Scheme of Amalgamation with
M/s Cartographic Sciences Limited.)
(811,710* Equity Shares were allotted for a consideration other
than cash pursuant to the acquisition of 100% equity in
M/s. Infotech Enterprises Europe Limited [formerly known as
M/s. Dataview Solutions Limited.])
(34,921,157* Equity Shares were allotted by way of Bonus shares
by capitalising General Reserve/Share Premium account.)
(2,927,234* (2008 - 2,549,437) Equity Shares were allotted to
employees of the company pursuant to the Associate Stock
Option Plans.)
55
Standalone Financial Statements - Indian GAAP
Schedules annexed to and forming part of the Balance Sheet
(Amount in Rupees)
As at
March 31, 2008
As at
March 31, 2009
2.
RESERVES AND SURPLUS
Share Premium Account
As at the commencement of the year
Add: Received on account of further issue of Equity Shares
2,604,647,678
996,707,360
590,396,193
3,601,355,038 2,014,251,485
2,604,647,678
General Reserve
As at the commencement of the year
Add: Transferred from Profit and Loss Account
2,230,000,001
550,000,000
2,780,000,001
1,727,764,853
502,235,148
2,230,000,001
Contingency Reserve
Add : Transferred from Profit and Loss Account
(Refer Note 6 of Schedule 16)
Balance in Profit and Loss Account
3.
113,500,000
113,500,000
47,500,000
161,000,000
–
113,500,000
80,507,064
66,818,045
6,622,862,103
5,014,965,724
–
280,022,539
186,667,529
100,000,000
–
519,019
186,667,529
380,541,558
SECURED LOANS
Rupee Term Loans from Banks
Packing Credit from Banks
Other Loans
56
Leasehold Improvements
Computers and Software
Plant and Machinery
Office Equipment
Furniture and Fixtures
(Including Interior Work)
Electrical Installations
Vehicles
3.
4.
5.
6.
7.
8.
9.
4,073,851
91,074,745
9,341,953
118,804
67,864,922
407,184
3,029,238
10,312,644
–
–
–
–
–
–
43,225,804
–
1,203,379,284
93,935,926
19,769,566
129,285,119
24,023,610
11,548,997
1,525,168,306
1,183,475,214
7,771,720
1,018,361,782
1,353,884
1,882,918,908
441,212,063
77,538,743
211,780,048
225,002,154
11,468,509
3,958,079,416
3,392,500,000
As at
April 1, 2008
80,671,605
Deletions
Cost as at
during the year March 31, 2009
Includes Rs. 17,783,965 (2008: Rs.17,783,965) in respect of which deed of conveyance is pending
1,361,549,666
656,654,161
3,392,500,000
2,035,024,185
4,807,781
57,260,740
74,945,182
20,525,199
98,527,802
190,502,247
1,353,884
145,262,326
16,002,681
167,860,218
204,699,788
57,420,728
345,713,499
1,702,729,305
–
873,099,456
–
63,469,000
Additions
during the year
GROSS BLOCK
** Includes Rs. 355,286,344 (2008: 236,489,467) Building constructed on leasehold land.
*
10. Capital Work–in–Progress
March 31, 2008
Buildings**
7,771,720
– Leasehold
2.
17,202,605
Cost as at
April 1, 2008
– Freehold*
1. Land
TANGIBLE ASSETS
DESCRIPTION
4 . FIXED ASSETS
–
–
343,032,736
426,636,097
2,087,489
19,966,534
19,758,843
6,414,579
37,826,290
306,724,156
85,579
33,772,627
For the
year
–
–
–
–
1,339,644
85,408,362
7,601,717
102,204
65,524,812
130,285
1,736,700
10,312,644
Deletions
DEPRECIATION
Schedule annexed to and forming part of the Balance Sheet
1,525,168,306
1,866,396,041
6,034,769
43,887,940
83,519,150
26,053,860
130,025,516
1,499,790,796
85,579
76,998,431
–
–
As at
March 31, 2009
–
311,275,155
584,197,664
1,867,331,694
4,453,684
143,836,608
75,414,669
37,651,162
251,777,573
499,350,021
–
829,873,652
7,771,720
17,202,605
1,867,331,694
2,091,683,375
5,433,740
181,114,214
128,260,898
51,484,883
311,186,547
383,128,112
1,268,305
941,363,351
7,771,720
80,671,605
As at
As at
March 31, 2009 March 31, 2008
NET BLOCK
(Amount in Rupees)
Standalone Financial Statements - Indian GAAP
57
Standalone Financial Statements - Indian GAAP
Schedules annexed to and forming part of the Balance Sheet
(Amount in Rupees)
5.
As at
March 31, 2009
As at
March 31, 2008
11,172,000
11,172,000
519,828,272
285,505,000
303,747,950
303,747,950
Infotech Enterprises GmbH, Germany
2 Shares of Euro 12,800 each fully paid up, 1 Share of Euro 30,700 each
fully paid up and 1 Share of Euro 50,000 each fully paid up
70,762,244
70,762,244
Infotech Geospatial (India) Limited
2,960,000 shares of Rs. 10 each fully paid up
29,600,000
29,600,000
Infotech Enterprises Japan KK
900 Shares of JPY 10,000 each fully paid up
4,787,622
–
40,742,353
–
TTM Institute of Information Technology Private Limited
10,000 Shares of Rs.10 each fully paid up
100,000
–
Infotech Enterprises Engineering Services Private Limited
9,990 Shares of Rs.10 each fully paid up
99,900
–
Investment in Joint Venture
Infotech HAL Limited
2,000,000 Shares of Rs.10 each fully paid up
20,000,000
–
Others
Kalyani Net Ventures Limited
781,582 Shares of Rs. 10 each fully paid up
26,065,000
–
–
100,000,000
–
1,886,193,004
1,026,905,341
2,686,980,198
INVESTMENTS
I) Long Term
Trade - Unquoted - At Cost
Investment in Associate Company
(Valued at Cost)
Infotech Aerospace Services Inc., USA
490 Shares of $0.01 par value fully paid up
Investment in Subsidiaries
(Valued at Cost)
Infotech Enterprises America Inc., USA
500 Shares without par value
Infotech Enterprises Europe Ltd, UK
185,000,000 Ordinary Shares of 1 pence each fully paid up
TTM (India) Private Limited
193,600 Shares of Rs.10 each fully paid up
Non-trade-Quoted-At the lower of cost and fair value
Citicorp Finance (India) Limited
100 Redeemable Non-Convertible Debentures Series - 194 of
Rs. 1,000,000 each fully paid up
II) Current
Non-trade-unquoted-at the lower of cost and fair value
Investment in Mutual Funds
58
Standalone Financial Statements - Indian GAAP
Schedules annexed to and forming part of the Balance Sheet
As at
March 31, 2009
6.
7.
DEFERRED TAX ASSET (Net)
Fixed Assets
Employee Benefits
Provision for derivative losses
Others
SUNDRY DEBTORS (Unsecured)
Considered good *
(a) Over six months old
(b) Other debts
Considered doubtful - Over six months old
37,081,634
1,503,375,885
Less: Provision for doubtful debts
(Amount in Rupees)
As at
March 31, 2008
(85,413,204)
72,026,200
174,978,391
17,316,417
(83,108,151)
76,512,668
–
11,400,194
178,907,804
4,804,711
1,540,457,519
34,155,190
1,574,612,709
34,155,190
1,540,457,519
13,512,462
1,248,114,749
1,261,627,211
32,919,168
1,294,546,379
32,919,168
1,261,627,211
*Debtors includes due from Subsidiaries
Rs. 866,851,983 (2008 - Rs. 582,495,961) and Unbilled
Revenue of Rs. 175,481,312 (2008 - Rs. 243,908,736).
8.
CASH AND BANK BALANCES
Cash on hand
Balances with Scheduled Banks
- On Current Accounts
- On Deposit Accounts
Balances on Current Accounts with Non-Scheduled Banks*
Unclaimed Dividend Accounts
8,019,188
784,192
488,149,944
2,068,382,378
226,711,483
606,016,414
2,556,532,322
163,226,729
1,377,039
832,727,897
40,579,302
1,261,393
2,729,155,278
875,352,784
129,440,023
12,438,375
231,958,508
52,227,275
38,521,786
16,909,545
481,495,512
16,909,545
122,585,535
–
153,470,941
62,747,825
8,747,061
739,790
348,291,152
739,790
464,585,967
347,551,362
*Refer Note 13 of Schedule 16
9.
LOANS AND ADVANCES
(Considered good unless otherwise stated)
Unsecured
- Advances recoverable in cash or in kind or
for value to be received*
- Loan to Subsidiaries
- Advance Tax (net of provision)
- Deposits
Interest accrued on deposits
Considered doubtful deposits / advances
Less : Provision for doubtful Loans and Advances
*Includes dues from Subsidiaries Rs. 22,772,737 (2008 - Rs.215,664)
59
Standalone Financial Statements - Indian GAAP
Schedules annexed to and forming part of the Balance Sheet
As at
March 31, 2009
10. LIABILITIES
Sundry Creditors
- Dues to small scale industrial undertakings
- Dues to others *
Advances from Customers
Investor Education and Protection Fund
- Unclaimed Dividends
Other Liabilities
(Amount in Rupees)
As at
March 31, 2008
–
599,465,670
20,567,071
–
354,618,472
31,690,378
1,377,039
593,767,348
1,261,393
48,608,915
1,215,177,128
436,179,158
96,924,150
218,113,058
77,008,918
204,947,762
315,037,208
281,956,680
* Includes dues to Subsidiaries
Rs.75,832,434 (2008 - Rs. 31,025,229)
11. PROVISIONS
Proposed Dividend including tax thereon
Provision for Employee Benefits
60
Standalone Financial Statements - Indian GAAP
Schedules annexed to and forming part of the Profit and Loss Account
For the year ended
March 31, 2009
12. OTHER INCOME
Interest on Loans and Deposits - Gross
{Tax Deducted at Source Rs. 21,740,242 (2008 - Rs. 5,811,967)}
Dividend Income from Current Investments
Dividend Income from Associates
Dividend Income from Subsidiaries
{Tax Deducted at Source Rs. 7,730,198 (2008 -Rs. Nil)}
Profit on Sale of Current Investments (net)
Provisions no longer required written back
Gain / (Loss) on Exchange Fluctuations (net)
Miscellaneous Income
13. PERSONNEL EXPENSES
Salaries and Bonus
Contribution to Provident and Other Funds
Staff Welfare Expenses
14. OPERATING AND ADMINISTRATION EXPENSES
Rent
Rates and Taxes
Insurance
Travelling and Conveyance
Communication
Printing and Stationery
Power and Fuel
Marketing Expenses
Advertisement
Repairs and Maintenance
- Buildings
- Machinery
- Others
Professional Charges
Provision for Doubtful Debts and Advances/Deposits
(Profit)/Loss on sale of Fixed Assets
Auditors' Remuneration
Recruitment Expenses
Training and Development
Purchase of Computer Software
Managerial Remuneration
- Salaries
- Contribution to Provident and Other Funds
- Commission
Miscellaneous Expenses
15. FINANCIAL EXPENSES
Interest on Term Loans
Interest on Packing Credit
Interest on Other Loans
Bank and Other Finance Charges
(Amount in Rupees)
For the year ended
March 31, 2008
141,539,631
42,073,006
54,796,756
11,123,000
104,593,603
95,505,848
8,012,480
–
8,320,661
10,470,809
(569,212,350)
10,759,622
(227,608,268)
(6,223,475)
6,112,945
30,357,209
13,148,303
188,986,316
2,402,611,881
192,074,760
130,647,783
1,834,583,221
162,175,372
112,589,619
2,725,334,424
2,109,348,212
47,270,695
7,031,371
4,787,548
542,241,169
72,224,999
20,475,151
93,793,245
16,358,322
2,609,392
97,332,936
15,697,205
4,571,900
477,528,880
48,241,284
20,186,148
84,319,197
17,634,724
1,118,295
4,967,530
172,599,386
24,550,526
384,002,762
17,436,022
1,095,877
3,068,169
26,733,567
20,157,112
39,659,660
3,072,571
138,720,686
29,403,467
239,394,425
6,720,435
(3,688,133)
3,083,452
17,945,790
25,547,704
50,270,792
4,800,000
1,406,770
11,764,174
70,451,662
4,800,000
1,157,868
11,481,861
45,047,809
1,589,485,109
1,339,589,296
16,181,100
13,575,490
34,986
5,345,733
16,670,678
8,078,044
73,631
3,879,231
35,137,309
28,701,584
61
Standalone Financial Statements - Indian GAAP
Schedule 16 - Notes to Accounts
1.
Description of Business
Infotech Enterprises Limited ('Infotech' or 'the Company')
is a global technology services and solutions company
specializing in geospatial, engineering design and IT
solutions. Its range of services include digitization of
drawings and maps, photogrammetry, computer aided
design/engineering (CAD/CAE), design and modelling,
repair development engineering, reverse engineering
application software development, software products
development, consulting and implementation. The
Company specializes in software services and solutions
for the manufacturing, utilities, telecommunications,
transportation & logistics, local government and financial
services markets. The Company has its headquarters in
India Hyderabad and development facilities in India at
Hyderabad, Bangalore, Noida, Kakinada and overseas
branches at Australia, Canada, Dubai, New Zealand,
Norway, Japan and Singapore, and serves a global customer
base through its subsidiaries in India, United States of
America (USA), United Kingdom (UK), Japan and
Germany.
2.
Associate Stock Option Plans
Scheme established prior to SEBI (Employee Stock
Option Scheme and Employee Stock Purchase Scheme)
Guidelines 1999, (SEBI guidelines on Stock Options)
Infotech Employee Stock Offer Scheme 1999 (ESOP
Plan)
In 1998-99, the Company set up Infotech Employee Stock
Offer Scheme (ESOP Plan) and allotted 80,900 equity shares
of Rs.10 each at a premium of Rs.100 per share to the
"Infotech ESOP Trust" ("Trust"). The Trust, on the
recommendation of the management and upon the receipt
of full payment upfront transfers the equity shares in the
name of selected employees. The Company modified ESOP
Plan and adjusted the number of options and exercise price
on account of bonus issue and stock split cum bonus issue
during 2002-03 and 2006-07 respectively. These equity shares
are under lock-in period (i.e., the date of transfer of the
shares from the Trust to the employee) and it differs from
offer to offer. Where the employee leaves the Company
before the expiry of the lock-in-period the options allocated
to such employee stands transferred to Trust at a
predetermined price. Hence, the lock-in-period has been
considered as vesting period. However, the Trust and the
Company have a discretionary power to waive the restriction
on selling such stock to the Trust.
As this scheme is established prior to the SEBI Guidelines
on the stock options, thus there is no cost relating to the
grant of options under this scheme.
62
Scheme established after SEBI Guidelines on Stock
Options
Securities Exchange Board of India (SEBI) issued the
Employee Stock Option Scheme and Employee Stock
Purchase Scheme Guidelines 1999, which is applicable for
all Stock Option Schemes established after June 19, 1999.
Associate Stock Option Plan - 2001 (ASOP 2001)
The Company instituted ASOP 2001 in April 2001 and
earmarked 225,000 equity shares of Rs.10 each for issue to
the employees under ASOP. The Company modified ASOP
2001 and adjusted the number of options and exercise price
on account of bonus issue and stock split cum bonus issue
during 2002-03 and 2006-07 respectively. Under ASOP 2001,
options will be issued to employees at an exercise price,
which shall not be less than the market price on the date
of grant. These options vest over a period ranging from
one to three years from the date of grant, starting with
10% at the end of first year, 15% at the end of one and
half years, 20% after two years, 25% at the end of two and
half years and 30% at the end of third year. As the options
were granted to the employees at the market price on the
date of grant there is no cost relating to grant of options.
Changes in number of
options outstanding
were as follows:
2009
2008
13,500
13,500
Granted
–
–
Forfeited
–
–
Exercised
13,500
–
–
13,500
Options outstanding at
the beginning of year
Options outstanding
at the end of year
Associate Stock Option Plan - 2002 (ASOP 2002)
The Company instituted ASOP 2002 in October 2002
and earmarked 575,000 equity shares of Rs.10 each for
issue to the employees under ASOP. The Company
modified ASOP 2002 and adjusted the number of options
and exercise price on account of stock split cum bonus
issue during 2006-07. Under ASOP 2002, options will be
issued to employees at an exercise price, which shall not
be less than the market price on the date of grant. These
options vest over a period ranging from one to three years
from the date of grant, starting with 10% at the end of
first year, 15% at the end of one and half years, 20% after
two years, 25% at the end of two and half years and 30%
at the end of third year.
Standalone Financial Statements - Indian GAAP
Proforma EPS
As the options were granted to the employees at the market
price on the date of grant there is no cost relating to
grant of options during the year.
Changes in number of
options outstanding
were as follows:
2009
2008
16,125
46,025
Granted
117,300
–
Forfeited
(6,600)
(22,350)
Exercised
(12,000)
(7,550)
Options outstanding
at the end of year
114,825
16,125
Options outstanding at
the beginning of the year
In accordance with Securities Exchange Board of India
(Employee Stock Option Scheme and Employee Stock
Purchase Scheme) Guidelines, 1999, had the compensation
cost for Stock Option plans been recognized based on the
fair value at the date of grant in accordance with Binomial
Lattice model, the proforma amounts of the company's net
profit and earnings per share would have been as follows:
Particulars
2009
2008
A. Profit After Tax
- As reported
708,621,670 585,571,125
- Proforma
646,569,529 515,414,956
B. Earnings Per Share
Basic
- Number of shares
53,262,303 50,405,040
- EPS as reported (Rs.)
13.30
11.54
- Proforma EPS (Rs.)
12.14
10.15
Diluted
- Number of shares
53,368,636 51,054,513
- EPS as reported (Rs.)
13.28
11.39
- Proforma EPS (Rs.)
12.12
10.02
The following assumptions were used for calculation of
fair value of grants: (based on Binomial Lattice model)
Associate Stock Option Plan - 2004 (ASOP 2004)
The Company has instituted ASOP 2004 in October 2004
and earmarked 1,150,000 equity shares of Rs.10 each for
issue to the employees under ASOP. The Company
modified ASOP 2004 and adjusted the number of options
and exercise price on account of stock split cum bonus
issue during 2006-07. Under ASOP 2004, options will be
issued to employees at an exercise price, which shall not
be less than the market price on the date of grant. These
options vest over a period ranging from one to three
years from the date of grant, starting with 10% at the end
of first year, 15% at the end of one and half years, 20%
after two years, 25% at the end of two and half years and
30% at the end of third year.
As the options were granted to the employees at the market
price on the date of grant there is no cost relating to
grant of options during the year.
Changes in number of
options outstanding
were as follows:
2009
2008
1,672,265
2,157,354
Granted
346,475
45,000
Forfeited
(80,800)
(147,229)
Exercised
(352,297)
(382,860)
Options outstanding
at the end of year
1,585,643
1,672,265
Options outstanding at
the beginning of the year
During the year an amount of Rs. 21,914,617 (2008- Rs.
26,964,935) being the Fringe Benefit Tax recovered on
exercise of ASOPs by the associates and the same was
paid to appropriate authorities.
Year ended March 31
Dividend yield (%)
Expected volatility (%)
Risk-free interest (%)
Expected term (in years)
3.
0.55
45.90
2.04
3.50
0.79
64.53
6.94
3.63
The Company had issued 2,724,000 Compulsorily
Convertible Preference Shares ("CCPS") with a face value
of Rs. 360 on July 6, 2007 to M/s. GA Global Investments
Limited ("GA" or "the Allottee"). The terms and conditions
of the issue of these CCPS including the right to convert
the CCPS into Equity Shares are subject to the provisions
of the Agreement entered into between the Allottee and
the Company, dated June 28, 2007, the guidelines issued by
SEBI, RBI etc., and the Special Resolution passed in the
Extraordinary General Meeting of members of the
Company held on June 23, 2007. The CCPS were to be
converted into equal number of equity shares within a period
of 18 months from the date of allotment at the option of
the Allottee and if no option is exercised, the same shall be
automatically converted into equity shares at the end of 18
months.
GA Global investments have exercised the option to convert
the CCPS and in pursuance of this exercise the company
has allotted 2,724,000 equity shares of Rs.5/- each, at a
premium of Rs. 355 each on December 9, 2008. As such,
there are no preference shares in the company post the
above conversion.
63
Standalone Financial Statements - Indian GAAP
4.
Details of monies utilized out of preferential issue of shares
(Amount in Rupees)
Particulars
March 31, 2009
March 31, 2008
980,640,000
980,640,000
1,590,219,720
1,590,219,720
419,911,200
419,911,200
2,990,770,920
2,990,770,920
662,833,608
555,239,719
5,750,000
5,750,000
234,323,272
–
40,742,353
–
100,000
–
26,065,000
–
242,522,539
–
Total amount utilised
1,212,336,772
560,989,719
Net Balance
1,778,434,148
2,429,781,201
Dividend Received on Investments
152,069,716
89,021,591
Interest Received on Investments (Net)
147,009,818
31,833,799
(37,388,510)
(8,585,473)
2,040,125,172
2,542,051,118
2,040,125,172
555,858,114
Investments in Mutual Funds
–
1,886,193,004
Investments in Debentures
–
100,000,000
2,040,125,172
2,542,051,118
2,724,000 Compulsorily Convertible Preference Shares (CCPS)
of Rs. 360 Each to GA Global Investments Limited, Cyprus
4,417,277 Equity Shares of Rs. 5 each at premium of Rs. 355 per
share to GA Global Investments Limited, Cyprus
1,166,420 Equity Shares of Rs. 5 each at a premium of Rs. 355 per
share to Carrier International Mauritius Limited, Mauritius
Total amount received on preferential issue of shares
Amounts utilised out of the above:
Purchase of Fixed Assets
Payment of fee for increasing Authorised Capital
Investment in wholly-owned subsidiary in Infotech
Enterprises America, Inc
Investment in wholly-owned subsidiary TTM (India) Private Limited
Investment in wholly-owned subsidiary TTM Institute of
Information Technology Private Limited
Investment in 10% stake in Kalyani Net Ventures Limited
Repayment of outstanding Term Loan with Tamilnad
Mercantile Bank Limited
Interest accrued but not received, included above
Total Balance
Net balance, represented byShort-Term Deposits with various banks
Total Balance
5.
The Company has entered into certain foreign exchange option contracts that mature over the next 19 months in respect of which
a provision towards unrealised loss of Rs. 514,793,735 on a market to market basis has been recorded in the accounts. These losses
are not realised losses and have a potential to reverse or increase over the maturity period.
The foreign exchange forward and option contracts held by the company to hedge its risk to foreign currency exposures as at
March 31, 2009 included:
-
Foreign currency forward contracts of USD 6,000,000
-
Foreign currency option contracts to sell a maximum of USD 44,500,000
64
Standalone Financial Statements - Indian GAAP
6.
Contingency Reserve
The Company is contesting the Income Tax Appellate Tribunal's (ITAT) order for the denial of certain export benefits under
the Income Tax Act, 1961 on the grounds of the date of establishment of the Export Oriented Unit. The petition contesting
the ITAT's Order has been admitted by the Honourable High Court of Andhra Pradesh and the case has not yet come up for
hearing during the year.
Further, the Company is contesting certain other disallowances made by the Deputy Commissioner of Income-tax for the
assessment years 2002-03 to 2005-06. The matters have been taken up with the appropriate authorities and the Company is
hopeful of the favourable resolution, based on professional advice. As a matter of abundant precaution, the Company has set
aside an amount of Rs. 161,000,000 (2008: Rs. 113,500,000) as Contingency Reserve to meet any future eventuality.
7.
8.
Secured Loans
a.
Rupee Term Loan which was secured by a first charge of land situated at Software Units Layout, Madhapur including
superstructures thereon and other assets was repaid in full during the year 2008-09.
b.
Packing Credit is secured by hypothecation of current assets. During the year, Infotech has obtained a Foreign Currency
Packing Credit amounting to USD 4,201,031 which is secured by a pari-passu charge of current assets along with another
bank. An amount of USD 2,500,000 has been repaid out of the above amount.
c.
Vehicles acquired under Hire Purchase Finance are hypothecated to the hire vendors as security for the amounts financed.
This loan was repaid during the year 2008-09.
Segmental Information
Management evaluates the companies' performance and allocates resources based on an analysis of various performance indicators
by business verticals and geographical segmentation of customers.
The company classifies its operations into two vertically oriented business segments: Utilities, Telecom Government (or UTG)
(erstwhile GSD) and Engineering, Manufacturing, Industrial Products (or EMI). Both businesses cater to the specific requirements
of customers in their respective user segments.
I.
Utilities, Telecom, Government (UTG)
UTG vertical services customers in industries such as power, gas, telecom, transportation and local government. The
company service offerings to the UTG vertical include data conversion, data maintenance, photogrammetry and IT services.
II. Engineering, Manufacturing, Industrial Products (EMI)
EMI vertical services customers in industries such as aerospace, automotive, off-highway transportation and industrial and
commercial products, engineering design, embedded software, IT Solutions, manufacturing support, technical publications
and other strategic customers.
Revenue in relation to these verticals is categorized based on items that are individually identifiable to that vertical.
Fixed assets used in the company are not identified to any of the reportable segments and management believes that it is currently
not practicable to provide segment disclosures relating to total assets and liabilities since a meaningful segregation of the available
data is onerous.
65
Standalone Financial Statements - Indian GAAP
The segment disclosures for the previous year have been reclassified to conform to the current year's presentation.
(Amount in Rupees)
Business Segments
UTG
EMI
Total
(Segments)
Total
(Company)
2,441,051,377
3,224,668,407
5,665,719,784
–
20,308,359
20,308,359
2,441,051,377
3,244,976,766
5,686,028,143
5,665,719,784
752,593,590
916,688,563
1,669,282,153
1,669,282,153
For the year 2009
External Revenues
Inter- Segment Revenues
Total Revenue
Segmental Operating Income
Un-allocable Expenses
(780,155,308)
Other Income
(227,608,268)
Profit Before Taxation
661,518,577
Income Tax (including Deferred Tax)
47,103,093
708,621,670
Profit After Tax
(Amount in Rupees)
Business Segments
UTG
EMI
Total
(Segments)
Total
(Company)
1,861,099,847
2,490,770,763
4,351,870,610
–
21,645,030
21,645,030
1,861,099,847
2,512,415,793
4,373,515,640
4,351,870,610
561,052,267
590,068,864
1,151,121,131
1,151,121,131
For the year 2008
External Revenues
Inter- Segment Revenues
Total Revenue
Segmental Operating Income
Un-allocable Expenses
(619,922,349)
Other Income
188,986,316
Profit Before Taxation
720,185,098
Income Tax (including Deferred Tax)
134,613,973
Profit After Tax
585,571,125
Geographic Segments
Revenue attributable to location of customers is as follows:
Geographic Location
2009
2008
Rs.
Rs.
North America
2,601,611,620
1,855,144,430
Europe
2,153,509,968
1,857,023,426
910,598,196
639,702,754
5,665,719,784
4,351,870,610
Rest of World
Total
66
Standalone Financial Statements - Indian GAAP
9.
Related Party Transactions
List of related parties on which the company is able to exercise the control.
a)
Subsidiaries:
Name of the Subsidiary Companies
Infotech Enterprises Europe Limited, UK.
Infotech Enterprises Benelux B.V Netherlands - A subsidiary of IEEL
Mapcentric Consulting Ltd - A subsidiary of IEEL
Dataview Solutions Ltd - A subsidiary of IEEL
Infotech Enterprises America Inc., USA
Infotech Software Solutions Canada Inc - A subsidiary of IEAI
Time to Market Inc - A subsidiary of IEAI w.e.f. October 1, 2008
Infotech Enterprises GmbH, Germany
Infotech Geospatial (India) Limited
TTM (India) Private Limited - w.e.f. October 1, 2008
TTM Institute of Information Technology Private Limited - w.e.f. October 1, 2008
Infotech Enterprises Japan KK- w.e.f. December 22, 2008
Infotech Enterprises Engineering Services Private Limited - w.e.f. October 15, 2008
b)
Associate
Name of the Associate Company
Infotech Aerospace Services Inc., Puerto Rico, USA
b)
Joint Venture
Name of the Joint Venture Company
Infotech HAL Limited - w.e.f. August 23, 2007
d)
e)
Key Management Personnel:
Name of Director
Designation
Mr. B V R Mohan Reddy
Chairman and Managing Director
Mrs. B Sucharitha
Whole Time Director
Relative of Chairman & Managing Director and Whole-Time Director
Mr. Krishna Bodanapu
Sr. Vice President - Engineering
Mr. B. Ashok Reddy
President - Global Human Resources & Corporate Affairs
67
Standalone Financial Statements - Indian GAAP
The transactions with the related parties are summarized below:
(Amount in Rupees)
Nature of Transactions
Transactions with Subsidiary Companies:
Revenue/Receivables
Infotech Enterprises Europe Limited, UK
Infotech Enterprises America Inc., USA
Infotech Enterprises GmbH, Germany
Others
Purchases of Fixed Assets/Payable
Infotech Enterprises America Inc., USA
Infotech Enterprises GmbH, Germany
Infotech Geospatial (India) Limited
Consultancy Charges/Payable
Infotech Enterprises America Inc., USA
Infotech Enterprises GmbH, Germany
Infotech Enterprises Europe Limited, UK
Infotech Geospatial (India) Limited
Reimbursement of Expenses
Infotech Enterprises Europe Limited, UK
Infotech Enterprises America Inc., USA
Infotech Enterprises GmbH, Germany
Infotech Geospatial (India) Limited
Salary Recharge to Subsidiaries
Infotech Geospatial (India) Limited
Investments
Infotech Enterprises Europe Limited, UK
Infotech Enterprises America Inc., USA
Infotech Enterprises GmbH, Germany
Infotech Geospatial (India) Limited
TTM (India) Private Limited
TTM Institute of Information
Technology Private Limited
Infotech Enterprises Japan KK
Infotech Enterprises Engineering
Services Private Limited
Expenditure incurred by Subsidiary on
behalf of Infotech (Marketing Expenses)
Infotech Enterprises Europe Limited, UK
Infotech Enterprises America Inc., USA
Transactions for the year ended
Balance as on March 31
2009
2008
2009
2008
715,868,197
1,399,271,063
986,282,796
62,841,666
454,274,551
807,482,786
868,194,256
2,289,835
306,259,328
377,154,197
148,575,001
34,863,457
98,180,865
321,068,168
160,616,532
2,630,396
322,125
109,968
–
3,453,764
–
1,950,443
–
–
–
–
–
1,950,443
76,067,991
56,725,451
38,345,801
24,592,964
92,720,705
27,243,017
23,660,563
8,209,500
9,554,222
8,487,142
14,045,677
12,402,107
7,427,464
6,177,100
2,997,499
7,279,363
10,958,338
25,231,751
13,846,523
–
1,658,282
23,012,981
11,026,756
784,220
1,810,172
11,064,358
17,228,195
–
618,649
8,277,715
545,615
784,220
10,202,668
5,122,078
8,369,859
5,122,078
–
234,323,272
–
–
40,742,353
–
–
–
29,600,000
–
303,747,950
519,828,272
70,762,244
29,600,000
40,742,353
303,747,950
285,505,000
70,762,244
29,600,000
–
100,000
4,787,622
–
–
100,000
4,787,622
–
–
99,900
–
99,900
–
1,178,018
62,543
555,451
1,102,226
1,178,018
62,543
555,451
1,102,226
(Contd.)
68
Standalone Financial Statements - Indian GAAP
Corporate Guarantee given to subsidiary's
bankers (Overseas)
Infotech Enterprises Europe Limited, UK
Infotech Enterprises America Inc., USA
Corporate Guarantee given to subsidiary's
bankers (Domestic)
Infotech Geospatial (India) Limited
Loan given / Outstanding Loan given
to subsidiary
Infotech Geospatial (India) Limited
Loan Recovered / Outstanding Loan given
to subsidiary
Dividend from subsidiary / Receivable
Infotech Enterprises Europe Limited, UK
Infotech Enterprises America Inc., USA
Infotech Enterprises GmbH, Germany
Interest from subsidiary / Receivable
Infotech Geospatial (India) Limited
Transactions with Associate Company:
Investments
Dividend from associate / Receivable
Transactions with Joint Venture:
Investments
Rent Received / Receivable
Transactions with key managerial personnel:
Remuneration to Managing Director/Payable*
Remuneration to Whole Time Director/Payable
Rent/Payable to Whole Time Director
Transaction with Relative of Chairman &
Managing Director and Whole Time Director:
Mr. B. Ashok Reddy
Mr. Krishna Bodanapu
–
–
139,895,000
127,248,000
178,325,000
116,577,600
139,895,000
127,248,000
40,000,000
–
40,000,000
–
12,000,000
–
12,000,000
–
–
10,679,217
–
–
40,094,776
26,712,700
37,786,128
–
–
–
–
–
–
–
–
–
566,815
–
566,815
–
–
11,123,000
–
8,012,480
11,172,000
–
11,172,000
–
20,000,000
3,472,875
–
–
20,000,000
586,552
–
–
13,243,406
2,327,538
608,400
13,405,528
2,234,201
1,610,560
9,364,174
–
75,200
6,390,996
–
150,396
3,616,310
2,866,465
3,339,745
2,001,964
–
–
42,219
90,640
* Refer Note 17 for details of remuneration paid to Directors.
10. Employee Benefits:
The Employee Benefit Schemes are as under:
A.
Defined Contribution Plans
i.
Provident Fund:
Eligible employees of the Company receive benefit under the Provident Fund which is a defined contribution where in both
the employee and the Company make monthly contributions equal to a specified percentage of the covered employees' salary.
These contributions are made to the Fund administered and managed by the Government of India. The Company's monthly
contributions are charged to the Profit and Loss Account in the period they are incurred. Total expenditure incurred during
the year Rs. 102,206,821.
69
Standalone Financial Statements - Indian GAAP
ii.
Superannuation Fund
Certain eligible employees receive benefit under Superannuation scheme which is a defined contribution wherein the company
contributes 15% of the annual salary of the covered employee. These contributions are made to a fund administrated by
LIC of India. The Company's monthly contributions are charged to profit and loss account in the period they are incurred.
Total Expenditure incurred during the year Rs. 31,374,105.
B.
Defined Gratuity Plans
i.
Gratuity:
In accordance with the payment of Gratuity under 'Payment of Gratuity Act, 1972' of India, the Company provides for
gratuity, a defined retirement benefit plan (the 'Gratuity Plan') covering eligible employees. Liabilities with regard to such
Gratuity Plan are determined by an independent actuarial valuation and are charged to the Profit and Loss Account in the
period determined. The Gratuity Plan is administered by Company's own Trust which has subscribed to "Group Gratuity
Scheme" of Life Insurance Corporation of India.
The following table sets out the Defined Benefit Plans - as per Actuarial Valuation as at March 31, 2009 and recognised in
the financial statements in respect of Employee Benefit Schemes:
(Amount in Rupees)
Particulars
March 31, 2009
March 31, 2008
135,683,950
101,055,185
Current Service Cost
30,857,306
26,689,179
Interest cost
13,079,403
9,982,915
(30,947,292)
3,872,528
Benefits Paid
(6,097,426)
(5,915,857)
Projected benefit obligation at the end of the year
142,575,941
135,683,950
(142,575,941)
(135,683,950)
3,799,634
2,358,746
(138,776,307)
(133,325,204)
Current Service cost
30,857,306
26,689,179
Interest Cost
13,079,403
9,982,915
(166,331)
(546,643)
(30,947,292)
3,872,528
12,823,086
39,997,979
Discount Rate (%)
7.25%
8.00%
Expected return on plan assets
8.00%
8.00%
7.50% - 10.00%
7.50% - 12.00%
Projected benefit obligation at the beginning of the year
Actuarial (Gain) / Loss
Amounts recognised in the balance sheet
Projected benefit obligation at the end of the year
Fair value of plan assets at the end of the year
Liability recognised in the Balance Sheet
Cost of Employee Benefits for the year
Expected return on plan assets
Net actuarial (Gain) / Loss recognised in the year
Net Cost recognised in the Profit and Loss Account
Assumptions
Long term rate of compensation increase (%)
70
Standalone Financial Statements - Indian GAAP
ii.
Provision for Unutilised Leave:
The accrual for unutilized leave is determined for the entire available leave balance standing to the credit of the employees
at period-end. The value of such Leave balance eligible for carry forward, is determined by an independent actuarial
valuation and charged to Profit and Loss Account in the period determined.
11. Lease payments made under cancellable operating leases of Rs. 47,270,695 (2008 - Rs. 97,332,936) have been recognised as an
expense in the Profit and Loss Account. The Company has not entered into any non-cancellable operating leases during the year.
12. i.
Details of Investments in Mutual Funds: -
Particulars
2009
Face
Value Units Amount
(Rs.)
in Rs.
Units
2008
Amount
in Rs.
Reliance Liquid Plus Fund - Institutional OptionDaily Dividend Plan
1,000
–
–
31,633
31,667,665
DSP Merrill Lynch Liquid Plus - Institutional Plan Daily Dividend
1,000
–
–
53,542
53,562,535
AIG India Liquid Fund Retail Daily Dividend
1,000
–
–
350,094
350,367,248
Templeton Floating Rate Income Fund - Long Term
Plan Retail Option- Dividend Reinvestment
10
–
–
44,549,179
469,998,393
HDFC FMP-90D-February 2008 VII(2)-Wholesale Plan Dividend
10
–
–
5,000,947
50,009,470
HDFC Arbitrage Fund - Retail Plan - Monthly Dividend
10
–
–
5,178,636
51,788,107
HSBC Liquid Plus Fund - Institutional Plus- Daily Dividend
10
–
–
5,298,863
53,055,413
SBI Short Horizon Liquid Plus-Institutional Plan-Daily Dividend
10
–
–
12,295,738
123,018,860
Reliance Short Term Fund Retail Plan - Dividend Plan
10
–
–
19,865,761
209,910,800
ICICI Prudential Flexible Income Plan - Dividend Daily -Reinvest Dividend
10
–
–
19,913,271
210,552,973
HDFC Cash Management Fund - Savings Plus Plan Retail-Daily Dividend
10
–
–
22,897,888
229,700,162
Templeton India Money Market Account Regular Account Dividend Reinvestment
1
–
–
52,561,378
52,561,378
Total
1,886,193,004
71
Standalone Financial Statements - Indian GAAP
ii.
Details of Units of Mutual Funds purchased and sold during the year: Face Purchased during the year
Particulars
Value
Units
Amount
(Rs.)
in Rs.
Templeton Floating Rate Income Fund - Long Term Plan Retail Option-Dividend Reinvestment
10
902,902
Templeton India Money Market Account - Regular
Account -Dividend Reinvestment
1
1,157,615
DSP Merrill Lynch Liquid Plus-Institutional Plan-Daily Dividend
1,000
1,199
Sold during the year
Units
Amount
in Rs.
9,605,388 45,452,081 487,753,687
1,157,615 53,718,993
53,718,993
1,199,622
54,784,550
54,741
ICICI Prudential Flexible Income Plan Daily Dividend - Reinvestment
10
5,437,201
57,490,248 25,350,473 268,043,221
Reliance Short Term Fund - Retail Plan- Dividend Plan
10
–
– 19,865,761 209,913,553
Reliance Liquid Plus Fund - Institutional Option Daily Dividend Plan
1,000
730
731,128
32,363
32,400,218
HDFC Cash Management Fund - Savings Plus Plan Retail- Daily Dividend
10
609,705
HDFC Arbitrage Fund - Retail Plan -Monthly Dividend
10
–
–
5,178,636
51,889,350
HSBC Liquid Plus Fund - Institutional Plus Daily Dividend - UCCC-MFHSBC0028
10
209,727
2,099,908
5,508,590
55,161,918
SBI Short Horizon Liquid Plus-Institutional Plan Daily Dividend
10
491,293
4,915,383 12,787,031 127,934,244
AIG India Liquid Fund - Retail - Daily Dividend
1,000
1,999
2,000,807
–
HDFC FMP-90D-February 2008 VII (2)Wholesale Plan Dividend
10
–
HDFC Cash Management Fund-Savings Plus
Plan-Wholesale -Daily Dividend
10
10,543,643
Reliance Liquid Plus Fund-Institutional
Option-Daily Dividend Plan
1,000
6,116,259 23,507,593 235,816,422
352,093 352,368,056
5,000,947
51,024,662
105,768,560 10,543,643 105,768,560
214,007
214,249,890
50,000,000
214,007 214,249,894
Reliance Monthly Interval Fund- Series I Institutional Dividend Plan
10
4,996,153
Principal Floating Rate Fund FMP -Institutional OptionDividend Reinvestment Daily
10
22,010,358
Reliance Monthly Interval Fund- Series II Institutional Dividend Plan
10
3,237,949
Reliance Monthly Interval Fund- Series II Institutional Dividend Plan
10
16,414,484
Templeton India Ultra Short Bond Fund Retail Plan Daily Dividend Reinvestment
10
5,423,621
HDFC FMP 90D August 2008 (IX)(2) Wholesale Plan Dividend
10
10,576,856
105,768,560 10,576,856 105,768,560
Kotak Monthly Interval Plan Series 2- Dividend
10
18,744,020
187,440,197 18,744,020 187,440,197
49,999,001
220,374,308 22,010,358 220,374,309
32,400,218
3,237,949
32,406,370
164,249,894 16,414,484 164,281,081
54,333,294
Reliance Liquid Plus Fund -Institutional Option-Daily
Dividend Plan
1,000
32,479
32,515,500
Reliance Liquid Plus Fund- Inst. Option-Daily Dividend Plan
1,000
214,911
215,154,980
72
4,996,153
5,423,621
32,479
54,333,294
32,515,500
214,911 215,154,979
Standalone Financial Statements - Indian GAAP
13. Balances at the year-end and Maximum balances held during the year with Non Schedule Banks are as follows:(Amount in Rupees)
Balances at the year-end
Particulars
Maximum Balance
during the year
2009
2008
2009
2008
ABN Amro Bank, NV, Dubai
3,493,135
233,085
6,775,716
1,377,415
ABN Amro Bank, NV, Singapore
4,911,713
2,291,606
8,881,630
9,352,789
ASB Bank, New Zealand
1,776,249
2,946,949
3,151,188
8,330,191
144,651,533
31,863,173
174,011,096
56,049,359
Hong Kong and Shanghai Banking Corporation, Canada
5,290,805
3,244,489
18,810,591
3,566,336
ABN Amro Bank, London Branch
3,103,294
–
9,854,751
–
163,226,729
40,579,302
Commonwealth Bank of Australia
Total
14. Earnings per Share (EPS)
Particulars
Profit After Tax (Rs.)
Basic:
Number of shares outstanding
Weighted average shares outstanding
Earnings Per Share (Rs.)
Diluted:
Effect of dilutive issue of stock options
Total shares outstanding (including dilution)
Earnings Per Share (Rs.)
Year ended March 31
2009
2008
708,621,670
585,571,125
55,229,796
53,262,303
13.30
52,127,999
50,405,040
11.54
106,333
53,368,636
13.28
649,473
51,054,513
11.39
15. Contingent Liabilities and Commitments
a.
Estimated amount of contracts remaining to be executed on capital accounts not provided for, net of advances Rs.
81,465,424 (2008 - Rs. 613,459,407).
b.
The Company has outstanding counter guarantees of Rs. 76,160,447 as on March 31, 2009, to banks, in respect of guarantees
given by the said banks in favour of various agencies (2008 - Rs. 70,916,242).
c.
Corporate guarantee given to subsidiary's bankers to obtain line of credit Rs. 334,902,600 (2008 - Rs. 267,143,000)
d.
The company has disputed various demands raised by Income Tax authorities for the assessment years 1997-98 to 2005-06.
The orders are pending at various stages of appeals. The aggregate amount of disputed tax not provided for is Rs.
166,143,227. The company is confident that these appeals will be decided in its favour, based on professional advice.
16. Quantitative details
The Company is engaged in the development of Computer Software and Services. The production and sale of such software and
services cannot be expressed in any generic unit. Hence, it is not possible to give the quantitative details of sales and the
information as required under Paragraphs 3 and 4C of Part II of Schedule VI to the Companies Act, 1956.
73
Standalone Financial Statements - Indian GAAP
17. Managerial Remuneration
a.
Managerial remuneration provided to Chairman and Managing Director, Whole-time director and Non-executive Directors:
(Amount in Rupees)
Particulars
b.
2009
2008
Managing Director
13,243,406
13,405,528
Whole-time Director
2,327,538
2,234,201
Commission to Non-executive Directors:
Mr. M.M. Murugappan
300,000
300,000
Prof. P.N.Thirunarayana
150,000
300,000
Mr. Ranjan Chak
300,000
300,000
Mr. Paul Adams
300,000
300,000
Mr. George Fink
75,000
300,000
Mr. G.V.Prasad
300,000
300,000
Mr. William Henry
225,000
–
Prof. J. Ramachandran
150,000
–
Mr. William Grabe
300,000
–
Mr. Sunish Sharma
150,000
–
Mr. David Carter
150,000
–
Computation of net profit in accordance with Section 349 of the Companies Act, 1956 and commission payable to Chairman
and Managing Director, Executive Director and Non-executive Directors:
(Amount in Rupees)
Particulars
Net Profit before taxation as per Profit and Loss Account
Add:
Depreciation as per Profit and Loss Account
Remuneration to directors
Provision for doubtful debts and advances
(Profit)/Loss on Sale of Fixed Assets
Loss/(Profit) on sale of Current Investments
Wealth Tax
Less:
Depreciation as per Section 350 of The Companies Act, 1956*
Dividend income from current investments
Profit on sale of Fixed Assets
Net profit in accordance with Section 349 of the Companies Act, 1956
Commission payable to the Managing Director restricted to
@ 1.5% of net profit as per Section 309 restricted to
Commission payable to Non Executive Directors
2009
2008
661,518,577
720,185,098
426,636,097
17,970,944
17,436,022
1,095,877
(8,320,661)
65,087
343,032,736
17,439,729
6,720,435
(3,688,133)
6,233,475
76,363
426,636,097
54,796,756
1,095,877
633,873,213
343,032,736
95,505,848
(3,688,133)
655,139,252
9,364,174
24,00,000
9,681,861
1,800,000
*Company follows depreciation rates higher than the Companies Act prescribes rates, depreciation under Section 350 of
Companies Act will only be lower and accordingly the same has been considered for managerial remuneration purpose.
18. Remuneration to the Auditors
Particulars
Audit (including US GAAP)
Other Services
Out of Pocket Expenses
74
(Amount in Rupees)
2009
2008
3,037,080
2,700,000
22,472
340,000
8,617
43,452
Standalone Financial Statements - Indian GAAP
19. a.
(Amount in Rupees)
2009
2008
142,159,893
308,430,668
6,942,825
40,963,880
CIF Value of Imports
Particulars
Capital Goods
Consumable Spares and Stores / Software
(Amount in Rupees)
2009
2008
5,510,248,882 4,231,646,970
104,593,603
–
11,123,000
8,012,480
b.
Earnings in Foreign Currency (on accrual basis)
Particulars
Income from services
Dividend income from Subsidiaries
Dividend income from Associate Company
c.
Expenditure in Foreign Currency (on payment basis)
(Amount in Rupees)
Particulars
Expenditure
a. Travel
b. Professional Services
c. Others
II. Expenditure incurred at overseas branches
III. Equity Dividend
Number of Shareholders
Number of Equity Shares
2009
2008
411,109,223
175,981,379
114,462,038
462,837,980
11,645,471
32
9,704,559
349,369,933
169,009,387
63,471,903
300,132,833
15,884,084
29
14,119,182
I.
20. Research and Development Expenses
Revenue expenditure pertaining to Research and Development charged to Profit and Loss Account Rs. 2,021,504
(2008 - Rs. 2,300,236). Capital expenditure on Research and Development Rs. NIL (2008 - Rs. 355,946) is shown in the respective
fixed assets.
21. The Company is in the process of identifying parties that may be covered under the Micro, Small and Medium Enterprises
Development Act, 2006. However the company believes that any payment owed to such entities, if any, will not be significant.
22. Regrouping/Reclassification
The figures for previous year have been regrouped/reclassified wherever necessary, to conform to the current year figures.
For and on behalf of the Board of Directors
N.K. Varadarajan
Partner
For and on behalf of
Price Waterhouse
Chartered Accountants
Place : Hyderabad
Date : April 25, 2009
B.V.R. Mohan Reddy
Chairman and Managing Director
B. Sucharitha
Whole-time Director
S. Nataraja
Senior Vice President
Finance and Accounts
Sudheendhra Putty
Company Secretary
Place : Hyderabad
Date : April 25, 2009
75
Standalone Financial Statements - Indian GAAP
Statement on Significant Accounting Policies
1.
Basis for Preparation of Financial Statements
5.
Depreciation on fixed assets is computed on the straightline method over their estimated useful lives at the rates
which are higher than the rates prescribed under Schedule
XIV of the Companies Act, 1956. Individual assets
acquired for less than Rs. 5,000 are fully depreciated in
the year of acquisition.
The Financial Statements are prepared to comply in all
material aspects with all the applicable accounting principles
in India, the applicable accounting standards notified under
section 211 (3C) of the Companies Act, 1956 and the
relevant provisions of the Companies Act, 1956.
2.
Use of Estimates
The estimated useful lives are as follows:
The preparation of the financial statements in conformity
with the GAAP requires that the management makes
estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent
liabilities as at the date of the financial statements, and the
reported amount of revenues and expenses during the
reported year. Actual results could differ from those
estimates.
3.
Building
Computers and Software
Plant and Machinery
Office Equipment
Furniture and Fixtures
Electrical Installation
Vehicles
Leasehold Improvements
Revenue Recognition
Revenue from software services consists primarily of
revenue earned from services performed on a "time and
material" basis. The related revenue is recognized as and
when services are performed.
The Company also performs engagements on "time bound
fixed-price" engagements, under which customers are billed,
based on completion of specified milestones and/or on
the basis of man-days/man hours spent as per terms of
the contracts. However revenue in respect of these
engagements is recognized using the percentage of
completion method. The cumulative impact of any revision
in estimates of the percentage of work completed is
reflected in the year in which the change becomes known.
Provision for estimated losses on such engagements is
made in the year in which such loss becomes probable
and can be reasonably estimated.
Amounts received or billed in advance of services
performed are recorded as unearned revenue. Unbilled
revenue, included in debtors, represents amounts
recognized based on services performed in advance of
billings in accordance with contract terms.
4.
6.
Investments
Investments are classified into current investments and
long-term investments. Current investments are carried at
the lower of the cost and fair value. Provision is made to
recognize any reduction in the carrying value and any
reversal of such reduction is credited to profit and loss
account.
Long-term investments are carried at cost, and provision
is made to recognize any decline, other than temporary, in
the value of such investment.
Income from interest is recognized in the year in which it
is accrued and stated at gross. Dividend income is recognised
when the Company's right to receive dividend is established.
7.
Sundry Debtors
Sundry Debtors represents amounts receivable for
professional services rendered by the Company. Debts,
which are outstanding for more than 15 months, are
considered as bad/doubtful and 100% of such debts are
written off or provided for in the accounts in the year in
which they become bad/doubtful. However, specific debts
which are recoverable in the opinion of management and
are outstanding for over 15 months need not be written
off or provided in the accounts.
Fixed Assets are stated at actual cost less accumulated
depreciation. The actual cost capitalized comprises material
cost, inward freight, installation cost, duties and taxes and
other incidental expenses incurred to acquire/construct/
install the assets.
The cost and the accumulated depreciation for fixed assets
sold, retired or otherwise disposed off are removed from
the stated values and the resulting gains and losses are
included in the profit and loss account.
76
Estimated Useful Lives
28 years
3 years
10 years
10 years
10 years
10 years
5 years
Shorter of lease period or
estimated useful lives
Costs of software purchased for use in the projects are
depreciated over the estimated useful life or over the period
of the project whichever is lower.
Fixed Assets
Advances paid towards the acquisition of fixed assets
outstanding at each balance sheet date and the cost of
fixed assets not put to use before such date are disclosed
as Capital work in progress.
Depreciation
Specific debts, which are irrecoverable or doubtful in the
opinion of the management, are written off/provided
irrespective of their periodicity.
8.
Research and Development
Revenue expenditure incurred on research and development
is expensed as incurred. Assets used for research and
development activities are included in fixed assets.
Standalone Financial Statements - Indian GAAP
Statement on Significant Accounting Policies
9.
Foreign Currency Transactions
Transactions in foreign currencies are recorded at the
exchange rates prevailing on the date of transaction and
exchange differences arising from foreign currency
transactions are recognized in the profit and loss account.
Monetary assets and liabilities denominated in foreign
currency are translated at the rates of exchange at the
balance sheet date and resultant gain or loss is recognized
in the profit and loss account. Non-monetary assets and
liabilities are translated at the rate prevailing on the date
of transaction.
The operations of foreign branches of the company are
of integral in nature and the financial statements of these
branches are translated using the same principles and
procedures of head office.
In case of forward exchange contract or any other financial
instruments that is in substance a forward exchange
contract to hedge the foreign currency risk, the premium
or discount arising at the inception of the contract is
amortized as expense or income over the life of the
contract. Exchange differences on such forward exchange
contract are recognized in the statement of profit and loss
in the reporting period in which the exchange rates change.
Gain/Loss on settlement of transaction arising on
cancellation or renewal of such a forward exchange
contract is recognized as income or as expense for the
period.
All other derivative exchange contract are valued on a
mark to market basis and any gain or loss on mark to
market changes on settlement is recognized in the profit
and loss account.
10. Retirement Benefits
Contributions in respect of Employees Provident Fund
and Pension Fund are made to fund administered and
managed by the Government of India and are charged as
incurred on accrual basis. Contributions under the
superannuation plan are made to the fund administered
and managed by the Life Insurance Corporation of India
and are charged as incurred on accrual basis. The Company
also provides for other retirement benefits in the form of
gratuity and leave encashment based on actuarial valuation
made by an independent actuary as at the balance sheet
date based on projected unit credit method.
11. Taxes on Income
Tax expense for a year comprises of current tax and
deferred tax. Provision for current tax is made based on
the applicable tax rates and tax laws with respect to that
year. Deferred tax assets and liabilities are measured using
the tax rates and tax laws that have been enacted or
substantively enacted by the balance sheet date. The effect
of deferred tax assets and liabilities of a change in tax
rates is recognized in the profit and loss account in the
year of change. Deferred tax assets and liabilities are
recognized for the future tax consequences attributable to
differences between financial statements carrying amounts
of existing assets and liabilities and their respective tax
bases and operating loss carry forwards.
12. Earnings Per Share (EPS)
The earnings considered in ascertaining the Company's
EPS comprises the net profit after tax and includes the
post tax effect of any extra ordinary items. The number
of shares used in computing Basic EPS is the weighted
average number of shares outstanding during the year.
The number of shares used in computing Diluted EPS
comprises of weighted average shares considered for
deriving Basic EPS, and also the weighted average number
of equity shares which could have been issued on the
conversion of all dilutive potential equity shares. Dilutive
potential equity shares are deemed converted as of the
beginning of the year, unless they have been issued at a
later date. The diluted potential equity shares have been
adjusted for the proceeds receivable had the shares been
actually issued at fair value (i.e., average market value of
the outstanding shares). The number of shares and
potentially dilutive shares are adjusted for share splits/
reverse share splits and bonus shares, as appropriate.
13. Employee Stock Options
Stock options granted to the employees under the Stock
Option Schemes established after June 19, 1999 are
evaluated as per the accounting treatment prescribed by
Employee Stock Option Scheme and Employee Stock
Purchase Scheme Guidelines 1999 issued by Securities
Exchange Board of India. Accordingly the excess of
market value of stock options as on the date of grant
over the exercise price of the options is recognized as
deferred employee compensation and is charged to profit
and loss account on straight line method over the vesting
period of the options. The unamortized portion of the
cost is shown under Reserves and Surplus.
14. Impairment of Assets
All the assets other than inventory, investments and
deferred taxes are reviewed for impairment wherever events
or changes in the circumstances indicated that the carrying
amount may not be recoverable. Assets whose carrying
value exceeds their recoverable amounts are written down
to the recoverable amount.
15. Provisions and Contingencies
The company creates a provision when there is present
obligation as a result of past events that probably requires
an outflow of resources and a reliable estimate can be
made of the amount of obligation. A disclosure for a
contingent liability is made when there is a possible
obligation or a present obligation that probably will not
require an outflow of resources or where a reliable estimate
of the obligations cannot be made.
77
Standalone Financial Statements - Indian GAAP
Cash Flow Statement
(Amount in Rupees)
For the year ended
March 31, 2009 March 31, 2008
A.
B.
C.
D.
CASH FLOW FROM OPERATING ACTIVITIES
Profit Before Tax
Adjustment for :
Depreciation
Financial Expenses
(Profit)/Loss on Sale of Fixed Assets
Interest on Loans and Deposits
Dividend Income from Current Investments
Dividend Income from Subsidiary Companies
Dividend Income from Associates Company
Loss/(Profit) on Sale of Current Investments
Cash generated before working capital changes
Working Capital changes:
(Increase) / Decrease in Sundry Debtors
(Increase) / Decrease in Loans and Advances
Increase / (Decrease) in Current Liabilities and Provisions
Income Taxes Paid
Fringe Benefit Tax Paid
Exchange Differences on Translation of Foreign Currency Cash and Cash Equivalents
NET CASH GENERATED BY OPERATING ACTIVITIES
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of Fixed Assets and Change in Capital Work in Progress
Long term Investments in Subsidiaries
Long term Investments in Joint Venture company
Purchase of Long term Investment
Proceeds from long term Investments
Proceeds from Sale of Fixed Assets
Purchase of Current Investments
Proceeds from Sale of Current Investments
Proceeds from long term matured deposits
Longterm deposits placed with banks
Interest on loans and deposits
Dividend Income from Subsidiary Companies
Dividend Income from Associates Company
NET CASH GENERATED FROM INVESTING ACTIVITIES
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from Issue of Share Capital
Proceeds from Secured Loans
Repayment of Secured Loans
Financial Expenses Paid
Dividends Paid
NET CASH USED IN FINANCING ACTIVITIES
EXCHANGE DIFFERENCES ON TRANSLATION OF CASH AND CASH EQUIVALENTS
NET INCREASE IN CASH AND CASH EQUIVALENTS DURING THE YEAR
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR
Supplementary Information:
Cash and Bank Balances
Less: Long Term Deposits with Scheduled Banks considered as Investment
Less: Balance in unclaimed dividend accounts
Balance considered for cash Flow Statement
This is the Cash Flow Statement referred to in
our report of even date.
661,518,577
720,185,098
426,636,097
35,137,309
1,095,877
(141,539,631)
(54,796,756)
(104,593,603)
(11,123,000)
(8,320,661)
804,014,209
343,032,736
28,701,584
(3,688,133)
(42,073,006)
(95,505,848)
–
(8,012,480)
6,223,475
948,863,426
(278,830,308)
(8,772,313)
792,163,265
(188,487,567)
(17,000,000)
(31,761,071)
1,071,326,214
(359,395,955)
(48,787,088)
111,344,222
(108,991,866)
(15,292,238)
(6,448,894)
521,291,607
(929,576,671)
(280,053,147)
(20,000,000)
(26,065,000)
100,000,000
4,570,508
–
1,949,310,421
14,919,312
(25,257,206)
111,764,906
104,593,603
11,123,000
1,015,329,726
(1,384,344,395)
(29,600,000)
–
(100,000,000)
6,422,340
(1,931,000,000)
134,089,369
13,449,209
(14,919,312)
34,679,525
–
8,012,480
(3,263,210,784)
31,576,345
86,667,529
(280,541,558)
(35,137,309)
(77,633,064)
(275,068,057)
31,761,071
1,843,348,954
859,172,079
2,702,521,033
3,024,762,020
248,772,539
(19,970,020)
(28,701,584)
(71,683,493)
3,153,179,462
6,448,894
417,709,179
441,462,900
859,172,079
2,729,155,278
25,257,206
1,377,039
2,702,521,033
875,352,784
14,919,312
1,261,393
859,172,079
For and on behalf of the Board of Directors
N.K. Varadarajan
Partner
B.V.R. Mohan Reddy
Chairman and Managing Director
B. Sucharitha
Whole-time Director
For and on behalf of
Price Waterhouse
Chartered Accountants
S. Nataraja
Senior Vice President
Finance and Accounts
Sudheendhra Putty
Company Secretary
Place : Hyderabad
Date : April 25, 2009
Place : Hyderabad
Date : April 25, 2009
78
Standalone Financial Statements - Indian GAAP
Balance Sheet Abstract and Company's General Business Profile
I.
Registration Details
Registration No:
Balance Sheet Date
3
1
1
3
1
3
4
-
0
3
-
2
Date
II.
Month
State Code :
0
0
0
1
9
Year
Capital raised during the year (Amounts in Rs. Thousands)
Public Issue
N
I
L
Right Issue
Sub-division
N
I
L
Private Placement
Bonus Issue
N
I
L
Stock Options
1
N
I
L
3
6
2
0
1
8
8
9
III. Position of Mobilisation and deployment of funds (Amount in Rs. Thousands)
Total Liabilities
7
0
8
5
6
7
9
Total Assets
7
0
8
5
6
7
9
Paid-up Capital
2
7
6
1
4
9
Reserves & Surplus
6
6
2
2
8
6
2
Secured Loans
1
8
6
6
6
8
Unsecured Loans
N
I
L
9
0
5
N
I
L
Sources of Funds
Application of Funds
Net Fixed Assets
2
6
7
5
8
8
1
Investments
Net Current Assets
3
2
0
3
9
8
4
Misc. Expenditure
1
7
8
9
0
8
Deferred Tax Assets
IV.
0
2
6
Performance of Company (Amount in Rs. Thousands)
Turnover
5
Profit/Loss before Tax
4
3
8
1
1
2
Total Expenditure
6
6
1
5
1
9
1
3
.
3
0
Earnings per share in Rs.
(Basic)
V.
1
4
7
7
6
5
9
3
Profit / Loss after tax
7
0
8
6
2
2
Dividend
(Pro-rata)
3
0
.
0
0 %
Generic Names of three principal products/ Services of the Company (As per monetary terms)
Item Code No. (ITC Code) :
8
5
2
3
.
8
0
2
Product Description :
S O F T W A R E
0
S
E R V
I
C E
S
79
k
lan
ag
is p
h
T
80
all
on
i
t
en
int
s
i
e
ft b
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