| 1 NATURE OF OPERATIONS:
Te Company is in the business of offering concrete solutions in
Communication and Collaboration, financial products and services,
providing content delivery platforms for mobile services and in
electronic computing. Te Company continuously upgrades existing
products and develops new products to keep ahead of the curve.
PRESENTATION OF FINANCIAL STATEMENTS
A revised schedule VI format is introduced and made mandatory for
preparation of financial statements beginning from April 2011. Te
revised schedule VI has classified the Assets and Liabilities into
Current and Non-current based on the Company's normal operating cycle
and other criteria set out in the Schedule VI to the Companies Act,
1956. Te Company has ascertained its operating cycle as 12 months for
the purpose of current and non-current classification of assets and
liabilities, based on the nature of products and the time between the
acquisition of assets for processing and their realisation in cash and
cash equivalents.
2 Sales Returns and Purchase Returns:-
In April 2011, the Company developed a new version of one of their
product with additional features to keep up with the latest changes in
technology. However, the revised version developed certain problems
with all the customers. Te Company continued its efforts to solve the
problems and to provide improved services to the customers. In the
meanwhile the Company restored the earlier version of the product
temporarily so that the business loss to the customers was minimized.
There was constant verbal and written communications with the customers,
with Company offering the customers solutions and revised versions of
the product. However, in spite of all its efforts the Company was unable
to offer a permanent solution to the problems faced by the customers.
Finally, in July 2013, the Company agreed to reverse all sales made to
the customers of the said product from April 2011 to avoid further
legal action from the customers. This has been booked as Sales Returns
in the respective years in which the sales had taken place. An
appropriate part thereof was reversed in the recanted accounts for the
financial year ended 30th June, 2012 and the balance impact of the said
sales returns on the financials for July 2012 to June 2013 is of
Rs. 15,924.48 lac. This has resulted in reducing the profit of the
Company to the extent of Rs. 15,924.48 lac.
This has given a very big set back to the Company so far as the
recoveries are concerned. Due to this action the Company had started
negotiations with the parties from whom these licenses were purchased.
During this negotiation the Company has taken help of the clause
mentioned in the agreement entered in to by the Company with the
vendors. Ultimately the vendors have agreed for write off of the amount
payable to them.
Considering this, against aggregate write off of sundry debtors for the
said product of Rs.45,340.87 lac (both the financials years ended 30th
June 2012 and 30th June 2013) the Company has written back creditors
for the supply of the software used in manufacture of the aforesaid
product, amounting to Rs.43,700.54 lac in the financial year ended 30th
June 2013.`
3 Provision for Bad and Doubtful Debts:-
During the current year in accordance with the revised policy, the
Company has made a provision of bad and doubtful debts of Rs.40,374.64.
However, no provision has been made for the amount of Rs.36,745.50 lac,
shown as Trade Receivable which is due over 2 years from Company's
wholly owned subsidiary GTSL in respect of supplies made to them by the
Company, which GTSL in turn had supplied to its end customers, since
the Company is in the process factorisation of the said dues.
4 Interest on overdue debtors
Te company had a policy of charging interest on its overdue debtors.
However, on account of economic slowdown along with subsequent reversals
of sales, the company has decided to write back the interest income
amounting to Rs.233.83 lac thereby reducing the profit to that extent.
5 Te financial charges include amounts aggregating to Rs.3,528.16 lac
demanded by Barclays Bank and Standard Chartered Bank towards interest
and loss on hedging contracts on a conservative basis although the same
are disputed by the Company. However, the Company has made
counterclaims against both the above Banks for excess charges/profit on
hedging contracts aggregating to Rs.9,300 lac. Te Company has also
disputed amounts claimed by ICICI and HDFC Bank against the Hedging
contracts. Te Company is in process of filling a counter claim against
these Banks also.
6 On-going Product Development WIP amounting to Rs.1,447.95 lac
represents amounts incurred on development of new products which either
are in the process of development or are awaiting their launch, as per
the past practice. Te same consists of four such products which are
almost ready for launch. Management reviews on the balance sheet date
the costs incurred on various project to consider recoverability of the
amou8nts spent over the estimated life of the product. On 30th June,
2012 an amount of Rs.300 lac was written of based on such review. Paucity
of funds and manpower has resulted in slow progress in finishing of the
respective product during the year. Te management, however, believes
that all the above products are going to have tremendous potential
value in the coming years. Hence, the costs incurred on these products
have been carried forward and will be capitalised in the year of their
launch.
7 During the year the Company's foreign subsidiaries GTSL and GHL have
incurred losses. Tis has resulted in depletion in Company's investment
in the said subsidiaries. However considering the potential in the
business of both the subsidiaries the management does not consider it
necessary to provide for any depletion in the value of its investments
in the said subsidiaries.
8 Te Company has investments in its wholly owned subsidiary,
Chandamama India Limited to the tune of Rs.2,306.58 lac. Te net worth of
this subsidiary is negative / less than 25% of investment in that
subsidiary as on 30th June, 2013. Te Company has not made any provision
against diminution in value of investment in shares of the aforesaid
subsidiary. Te management is confident of fetching the value of
investment based on the assets owned by the Company - both physical and
non-physical. Te Company is in the process of producing two animation
flm series, enhancing its subscription base and selling content on new
media which will ultimately generate profits in the coming year.
9 Segment Reporting:
Te primary reporting of the Company has been disclosed on the basis of
business segment. Te Company has only one business segment which is
software product sale and related consultancy services. Accordingly,
the amounts appearing in these financial statements relate to this
primary segment. Further the Company sells and provides services mainly
outside India and also within India. Thus disclosures under secondary
segment reporting are as follows:
10 Contingent Liability (not provided for) exist in respect of:
Rs. in lac
Sr. For the period
ended For the period
ended
Particulars
No. 30 June 2013 30 June 2012*
a) Outstanding bank guarantees 21.71 96.06
b) Letter of Credit given by
bank on behalf of the Company - 1,731.74
c) Times Internet disputed
payment towards minimum
guarantee fees Details given 223.15
below
d) Income tax Demand in respect
of an earlier year(s) under
dispute
1. Appeal pending with CIT
Appeals VIII for Ay 2009-10 4.73 -
Total 26.44 2,050.95
11 Share Capital:
Employees have exercised 186,498 (P.y. Nil) stock options during the
year ended 30th June, 2013 which has resulted in an increase in Equity
Share Capital of Rs.3.73 lac (P.y. Nil).
12 Foreign Currency Convertible Bonds (FCCB):
In January 2008, the Company raised Rs.49,962.50 lac equivalent to US$
125 million on the issue of Zero Coupon Convertible Bonds, due on 18th
January, 2013 to overseas investors vide RBI approval no.
FED.CO.EBCD/3013/03.02.766/2077-08 dated 5th December, 2007. As per the
approval the funds could be utilised only for overseas acquisitions and
investments in joint ventures / wholly owned subsidiaries and for any
other use as may be permitted under applicable laws or regulations from
time to time.
Till date the Company has not been able to discharge this liability. Te
foreign currency convertible bond (FCCB) holders have fled a winding up
petition against the Company for defaulting on the dues. Te London
branch of Citi Bank is a trustee in this case where it has approached
the Court in London to recover its dues from the Company on behalf of
Bond Holders.
In the meanwhile the Company has made provision for interest on the
said bonds at 9% amounting to Rs.2,890.11/- lac ,in accordance with the
agreement with Bond Holders from the date of maturity till the Balance
Sheet date.
13 Related Party Disclosures: a. List of Related Parties
Related Parties with whom transactions have taken place during the
year:
Key Managerial Personnel (KMP):
Mr.Pankaj Kumar
Mr.KiranKulkarni
Mr.PrashantMulekar
Enterprise over which Key Management Personnel exercise signifcant
infuence:
None
14 Subsidiary Companies / Acquisition of Companies:
During the year the Company invested Rs.22.32 lac (P.y. Rs.348.82 lac)
towards 40,000 (P.y. 7,80,000) shares of US$ 1 each in Geodesic
Holdings Limited, Mauritius.
Te Share Application as at the end of the period30th June 2013 for
Geodesic Technology Solutions Limited, Hong Kong (GTSL) is Rs.2,450.55
lac.
During the period the Company has granted a loan of Rs.72.28lac to GTSL,
Hong Kong. Te closing balance of loan Rs.7,856.98 lac (P.y. Rs.7,388.21
lac) net of foreign exchange rate fluctuation, is shown under "Long Term
Loans and Advances" in Note 15 forming part of the financial statements.
During the year, the Company was allotted 586,660 convertible
preference shares of Rs.10 each in Chandamama India Limited for an amount
of Rs.352 lac (P.y. Rs. Nil). During the period the Company advanced
Rs.94.48 lac to Chandamama India Limited which is shown under "Long Term
Loans and Advances" in Note 15 forming part of financial statements.
Also, the Company has in the current year received advance from
Chandamama India Limited amounting to Rs.372.35 Lac as advance for
purchase of tablets which is shown under other current liabilities.
During the year Company has advanced Rs.13.58 lac (P.y. Rs. 83.37 lac) to
Filmorbit.Com India Private Limited which is shown under "Long Term
Loans and Advances" in Note 15 forming part of fnancial statements.
During the period the Company invested additional funds at par in the
following Indian subsidiaries and associates:
a) ITM Digital Private Limited (IDPL) was incorporated as a subsidiary
in Fy 2009-10, but thereafter Zee Entertainment Limited invested 60% in
the Company, after which it ceased to be a subsidiary of the Company.
Te investment of Rs.40 lac made in the company has been purchased by Zee
Entertainment Limited in the month of May 2011. Te investment as at end
of period is Rs.99,990 (P.y. Rs.99,990).
b) Geodesic Gridpoint Energy Private Limited (GGEPL) with an investment
of Rs.583.22 lac (P.y.Rs. Nil).During the period the Company advanced
Rs.16.85 lac (P.y. Rs.143.58 lac) to Geodesic Gridpoint Energy Private
Limited which is shown under "Long Term Loans and Advances" in Note 15
forming part of financial statements.
15 Disclosure for operating leases:
a. Non-cancellable lease:
Te Company's significant leasing agreements are in respect of operating
leases for official premises and guest house. These leasing arrangements
are non-cancellable for a period of three years and are usually
renewable by mutual consent on mutually agreeable terms.
16 Based on the information available with the Company, none of the
vendors fall under the definition of micro, small and medium scale
enterprises. This information is not verifiable by the auditors.
17 Figures of the previous year have been regrouped/ rearranged
wherever necessary to correspond with the figures of the current period
on account of revised schedule VI format. Amounts and other disclosures
for the preceding year are included as an integral part of the current
period financial statements and are to be read in relation to the
amounts and other disclosures relating to the current period.
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