Blue Star Infotech Limited ('Blue Star' 'BSIL' or the 'Company') along with its wholly owned direct and controlled subsidiaries (the 'Group') is an Information technology and software services organisation. The company provides technology, consultancy and outsourcing services.

As of 31 March 2015, Blue Star Limited and other promoters owned 51.78% of the Company's equity share capital and have the ability to control its operating and financial policies. The Company's registered office is in Mumbai and it has three subsidiaries, one company under common management and control and three step-down subsidiaries across the globe.

2. share capital

The Company has only one class of shares referred as equity shares having a face value of Rs. 10/- each. Each shareholder is entitled to one vote per share.

The Company declares and pays dividends in Indian rupees. All dividends proposed by the Board of Directors is subject to the approval of the shareholders at the ensuing Annual General Meeting.

During the year ended 31 March 2015, the amount of dividend recognized as distributable to equity shareholders was Rs. 4/- per share. The total dividend appropriation for the year ended 31 March 2015 amounted to (Rs. in Lakhs) 522.40 (Previous year (Rs. in Lakhs) 486) including corporate dividend tax of (Rs. in Lakhs) 90.40 (Previous year (Rs. in Lakhs) 70.60).

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the Company. The distribution will be in proportion to the number of equity shares held by the shareholders.

3. shareholders holding more than 5% shares

As at 31 march 2015, Blue Star limited holds 28.69% (30,98,025 shares) of the company's shares (29.83% (30,98,025 shares) as of 31 march 2014) and mr. ashok mohan advani holds 7.36% (795,165 shares) of the company's shares (7.66% (7,95,165 shares) as of 31 march 2014).

4. Stock Option Plan

1. The Company has implemented Employee Stock Option Plans for the key employees of the Company and its subsidiaries through the Blue Star Infotech Limited - Key Employee Stock Option Trust (the 'Trust') formed for the purpose. All the options issued by the company are equity share based options which have to be settled in equity shares only. The shares to be allotted to employees under the Blue Star Infotech Limited - Key Employee Stock Option Scheme (the 'ESOP scheme') were purchased by the trust from the open market and acquired through fresh issue of shares by the Company.

Post 16 February 2013, as per SEBI mandate, the Company is required to issue fresh shares to the Trust for a consideration to meet its obligations under the ESOP scheme. Pursuant to the ESOP scheme, the Board at its meeting held on 23 July 2014 approved issue of 4,15,000 shares to the Trust for subsequent issue to eligible employees under the ESOP scheme.

5. Notes:

a) The shareholders, in the Annual General Meeting held on 22 July 2011 had approved the grant of 10,00,000 employee stock options in accordance with the ESoP Scheme, equivalent to 10% of the issued and paid up share capital of the company as at 31 march 2011.

b) By virtue of a postal ballot, the shareholders accorded their approval, the result of which was declared on 12 December 2013 for the additional grant of 5,00,000 employee stock options in accordance with the ESoP Scheme, equivalent to 4.81% of the issued and paid up share capital of the company as at 31 march 2013.

c) the compensation committee granted 5,15,000 options on 31 august 2012 at Rs. 60 per share, 170,000 options on 29 march 2013 at Rs. 57 per share, 4,67,000 options on 29 may 2013 at Rs. 52 per share, 95,000 options on 18 December 2013 at Rs. 83 per share and 2,71,000 options on 18th December 2014 at Rs.188 per share to key managerial employees of the company and its subsidiaries (including an executive director of the company). the grant price is based on the closing market price prevailing on the date prior to the date of grant, on the stock exchange recording highest volume.

d) There is one employee (Ml Sunil Bhatia - chief Executive Officer and managing Director) in the Group who has been granted options (9,82,000) which exceeds 5% of the Issued capital.

e) There is a potential dilution by 8,10,912 options/shares in future, which is representative of shares required by the trust to meet the obligation towards options to be exercised in future. The options/ shares to the extent not held by the trust and to be exercised in future will be allotted by the company to the Trust at the option grant price.

f) In the event of any further rights or bonus issue of equity shares after vesting but prior to exercise of the options, the company/ Trust shall consider the grant of an appropriate number of additional options, at such price as may be determined by the compensation committee.

g) The company accounts for 'Employee Share Based Payments' using the intrinsic value method. The intrinsic value of the stock options issued by the company to its employees for services rendered by them is measured as the amount by which the quoted market price of the company's share as on the date of grant exceeds the exercise price of the stock option. considering that the stock options have been issued with an exercise price that equals the quoted share price on the previous day, there is no compensation cost recognised in the financial statements using the intrinsic value method.

k) For purposes of the proforma disclosures, the fair value of each option grant was estimated as at 31 March 2015 using the Black Scholes option valuation model with the following assumptions:

* dividend yield of 2.01%;

* risk free interest rate of 7.61 to 7.65%;

* expected volatility of 54.97% based on historical volatility; and

* expected option life of 2.00 years.

6. Operating lease obligations

a. The Company has taken office/residential premises under cancellable operating lease agreements that are renewable at the option of both the lessor and lessee. An amount of (Rs. in Lakhs) 426.06 (Previous year (Rs. in lakhs) 429.57) is recognised as lease expenses in the Statement of profit and loss for the year ended 31 March 2015. the future guaranteed lease payments under non-cancellable portion of cancellable leases are:

i) less than one year - (Rs. in Lakhs) 12.25 (Previous year (Rs. in Lakhs) Nil)

ii) later than one year but not later than 5 years - (Rs. in Lakhs) NIL (Previous year (Rs. in Lakhs) NIL)

b. The Company has leased out office premises and furniture under non-cancellable operating lease agreements that are renewable at the option of both the lessor and lessee. An amount of (' in Lakhs) 488.77 (Previous year (Rs. in Lakhs) 488.76) is recognised as lease income in the Statement of profit and loss for the year ended 31 March 2015. The future guaranteed lease payments under non-cancellable leases are:

i) less than one year - (Rs. in Lakhs) Nil (Previous year (Rs. in Lakhs) 539.04)

ii) later than one year but not later than 5 years - (Rs. in Lakhs) Nil (Previous year (Rs. in Lakhs) Nil).

7. Contingent liabilities and commitments (to the extent not provided for)

i) Contingent liability not provided in respect of:

* Demand(s) raised by the Income Tax authorities for prior financial year(s) aggregating (Rs. in Lakhs) 441.85 (Previous year (Rs. in lakhs) 441.85) against which the company has filed appeal(s) with the commissioner of Income Tax (Appeals).

* Appeal(s) filed with the Income Tax Appellate Tribunal towards income-tax demands amounting to (Rs. in lakhs) 246.80 (Previous year (Rs. in lakhs) 702.85).

* Application(s) filed with the Deputy Commissioner of Income Tax towards income-tax demands amounting to (Rs. in lakhs) 276.83 (Previous year (Rs. in lakhs) 276.83).

the company is advised that it would get a favourable verdict and no demand would be eventually

sustained in any of the above matters. accordingly, no provision is made in the books in respect of these

contingent liabilities.

ii) Guarantees given on behalf of the company by banks

* Towards contract performance obligations (Rs. in lakhs) 46.51 (Previous year (Rs. in lakhs) 66.84).

* Towards Letter of Credit facilities on behalf of its subsidiary, Blue Star Infotech America, Inc. (Rs. in lakhs) 938.85 (Previous year (Rs. in lakhs) 898.58).

iii) Guarantee given by company on behalf of its subsidiary, Blue Star Infotech america, Inc. (Rs. In lakhs) 360.91 (Previous year (Rs. in lakhs) 601.00).

8. Dividend remitted in foreign currency:

There are no dividends remitted in foreign currency during the current and previous year.

9. Related party transactions

i) Blue Star Infotech (UK) Limited (BSIUK), the 100 % subsidiary of the Company has earned profits during the year ended 31 March 2015 and also has a positive net worth, as at the year-end.

ii) Blue Star Infotech America, Inc. (BSIA), the 100 % subsidiary of the company has earned profits during the year ended 31 march 2015 and also has a positive net worth as at the year-end.

iii) Blue Star Infotech (Singapore) Pte limited (BSISGPL), the 100 % subsidiary of the company has earned profits during the year ended 31 march 2015 and also has a positive net worth, as at the year-end.

iv) Blue Star Infotech Business Intelligence and analytics Private limited (BSIBIA) (Formerly known as Activecubes Solutions India Private limited), in which the company exercises complete managerial and administrative control and of which 48.97% of the equity is held by the company, is acquired on 1 august 2013 has earned profits during the year ended 31 march 2015 and also has a positive net worth.

related party disclosures:

Related party transactions are transfer of resources or obligations between related parties, regardless of whether a price is charged. Parties are considered to be related, if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial or operating decisions. Parties are considered to be related if they are subject to common control or common significant influence.

Names of related parties and description of relationship

Subsidiaries and related interests

(a) Blue Star Infotech America, Inc., uSA (100% subsidiary)

(b) Blue Star Infotech (uK) limited, uK (100% subsidiary)

(c) Blue Star Infotech (Singapore) Pte. limited, Singapore (100% subsidiary)

(d) Blue Star Infostack Solutions Pte. limited (100% subsidiary of Blue Star Infotech (Singapore) Pte. limited)

(e) Blue Star Infostack (Malaysia) Sdn. Bhd. (100% subsidiary of Blue Star Infotech (Singapore) Pte. limited)

(f) Blue7 Solutions LLc, uSA (100% subsidiary of Blue Star Infotech America, Inc., uSA)

(g) Blue Star Infotech Business Intelligence and Analytics Private limited (formerly known as Activecubes Solutions India Private limited) (48.97% of shareholding) (with effect from 1 August 2013) - with complete managerial and administrative control.

Associate

Blue Star limited (Holding 28.69% of the equity share capital of the company)

Promoters

Mr. Suneel M. Advani, chairman and managing Director Mr. Ashok M. Advani, vice-chairman

Entities in which one or more directors are common

(a) talwar thakore and Associates

(b) Modern family doctor Pvt. ltd.

Key Managerial Personnel & relatives

Mr. Sunil Bhatia, chief executive officer and Managing director Mr. vir Advani, relative of Promoters

Mr. Aloke Ghosh, chief financial officer and company Secretary (effective 2 June 2014)

Mr. v. Sudarshan, chief financial officer and company Secretary (till 31 May 2014)

10. Micro, Small and Medium Enterprises

There are no Micro, Small and Medium Enterprises, to whom the Company owes dues, which are outstanding for more than 45 days as at 31 March 2015. This information as required to be disclosed under the Micro, Small and medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis of information available with the company and has been relied upon by the statutory auditors of the company.

11. Derivative instruments:

the company has entered into the following derivative contracts:

(a) Forward contracts and options contracts [being derivative instruments], which are not intended for trading or speculative purposes, but for hedging purposes, to establish the amount of reporting currency required or available at the settlement date of certain payables and receivables.

there are outstanding foreign exchange Forward contracts and Foreign exchange options contracts entered into by the company as at 31 march 2015 of US $ 5,150,000 (Previous year US $ Nil).

12. staff benefits cost in accordance with Accounting standard 15 - employee Benefits (Revised 2005)

a) Defined contribution plans: the amount recognised as an expense during the year is (Rs. in Lakhs) 255.67 (Previous year (Rs. in lakhs) 181.75).

13. Segment information

The Company publishes standalone financial statements along with the consolidated financial statements in the annual report. In accordance with Accounting Standard 17, Segment Reporting, the Company has disclosed the segment information in the consolidated financial statements.

14. During the year 2013-14, the company had availed an overdraft facility of Rs. 500 Lakhs for working capital purposes from a scheduled bank. the drawdown amount against this limit as at 31 March 2015 is Nil (Previous year (Rs. in lakhs) nil).

the working capital borrowings are secured by exclusive hypothecation of all existing and future current assets and movable fixed assets of the company. currently, the rate of interest is 12.25% p.a.

15. the previous year's figures have been recast / regrouped / rearranged, wherever considered necessary.