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o | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
o | SHELL COMPANY PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
(Translation at Registrant’s name into English)
(Jurisdiction of incorporation or organization)
4, Rajiv Gandhi Salai
Taramani, Chennai 600 113 India
(91) 44-2254-0770, Fax (91) 44 -2254 0771
(Address of principal executive office)
Tidel Park, 2nd Floor, 4, Rajiv Gandhi Salai, Taramani, Chennai 600113 India
(Name,Telephone,Email and/or Facsimile number and Address of Company Contact Person)
Title of each class | Name of each Exchange on which registered | |
American Depository Shares, each represented by one Equity Share, par value Rs.10 per share | Nasdaq Global Market |
Title of each class | Name of each Exchange on which registered | |
None | Not Applicable |
Large accelerated filero | Accelerated filerþ | Non-accelerated filero |
US GAAPo | International Financial Reporting Standards as | Othero | ||
issued by the International Accounting Standard Boardþ |
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Exhibit 8.1 | ||||||||
Exhibit 12.1 | ||||||||
Exhibit 12.2 | ||||||||
Exhibit 13.1 | ||||||||
Exhibit 13.2 | ||||||||
Exhibit 15.1 | ||||||||
Exhibit 15.2 | ||||||||
Exhibit 15.3 |
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Consolidated Statement of Income
Year ended March 31, | ||||||||||||||||||||||||
2011 | ||||||||||||||||||||||||
Convenience | ||||||||||||||||||||||||
translation into | ||||||||||||||||||||||||
US$ in | ||||||||||||||||||||||||
thousands, | ||||||||||||||||||||||||
(In thousands of Rupees, | except share and | |||||||||||||||||||||||
except share data and as | 2011 | 2010 | 2009 | 2008 | 2007 | per share data | ||||||||||||||||||
otherwise stated) | Rs | Rs | Rs | Rs | Rs | (See Note1) | ||||||||||||||||||
Revenue | 6,886,629 | 6,710,188 | 6,162,161 | 6,006,215 | 5,447,347 | 154,236 | ||||||||||||||||||
Cost of goods sold and services rendered | (4,209,430 | ) | (4,096,538 | ) | (3,613,349 | ) | (3,419,122 | ) | 2,939,329 | (94,276 | ) | |||||||||||||
Other income | 72,693 | 131,789 | 89,105 | 46,152 | 66,320 | 1,628 | ||||||||||||||||||
Selling, general and administrative expenses | (2,441,799 | ) | (2,482,415 | ) | (2,813,425 | ) | (2,434,715 | ) | (2,094,971 | ) | (54,688 | ) | ||||||||||||
Depreciation and amortization | (685,836 | ) | (656,797 | ) | (498,872 | ) | (394,337 | ) | (463,780 | ) | (15,360 | ) | ||||||||||||
Impairment loss on intangibles including goodwill | (1,857 | ) | (47,269 | ) | (15,200 | ) | — | — | (42 | ) | ||||||||||||||
Income from legal settlement | — | 561,120 | — | — | — | — | ||||||||||||||||||
Profit / (loss) from operating activities | (379,600 | ) | 120,078 | (689,580 | ) | (195,807 | ) | 15,587 | (8,502 | ) | ||||||||||||||
Finance income | 45,698 | 27,994 | 122,565 | 161,783 | 154,192 | 1,023 | ||||||||||||||||||
Finance expenses | (258,622 | ) | (293,873 | ) | (251,660 | ) | (57,682 | ) | (25,550 | ) | (5,792 | ) | ||||||||||||
Net finance income /(expense) | (212,924 | ) | (265,879 | ) | (129,095 | ) | 104,101 | 128,642 | (4,769 | ) | ||||||||||||||
Share of profit of equity accounted investee (net of income tax) | 73,032 | 91,135 | 64,091 | 181,127 | 61,030 | 1,636 | ||||||||||||||||||
Profit / (loss) before tax | (519,492 | ) | (54,666 | ) | (754,584 | ) | 89,421 | 205,259 | (11,635 | ) | ||||||||||||||
Income tax (expense) / benefit | — | 81,479 | (97,049 | ) | (63,975 | ) | 66,113 | — | ||||||||||||||||
Profit / (loss) for the year | (519,492 | ) | 26,813 | (851,633 | ) | 25,446 | 271,372 | (11,635 | ) | |||||||||||||||
Attributable to: | ||||||||||||||||||||||||
Equity holders of the Company | (519,492 | ) | 17,027 | (900,574 | ) | (4,696 | ) | 240,841 | (11,635 | ) | ||||||||||||||
Non-controlling interest | — | 9,786 | 48,941 | 30,142 | 30,531 | — | ||||||||||||||||||
(519,492 | ) | 26,813 | (851,633 | ) | 25,446 | 271,372 | (11,635 | ) | ||||||||||||||||
Earnings / (loss) per share | ||||||||||||||||||||||||
Basic earnings /(loss) per share | (8.20 | ) | 0.33 | (20.77 | ) | (0.11 | ) | 5.64 | (0.18 | ) | ||||||||||||||
Diluted earnings/(loss) per share | (8.20 | ) | 0.33 | (20.77 | ) | (0.11 | ) | 5.63 | (0.18 | ) |
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(Rupees in thousands, exceptshare
and per share data)
Convenience | ||||||||||||||||||||||||
translation | ||||||||||||||||||||||||
into US$ in | ||||||||||||||||||||||||
thousands, | ||||||||||||||||||||||||
except share | ||||||||||||||||||||||||
and per share | ||||||||||||||||||||||||
data | ||||||||||||||||||||||||
(Rupees in thousands, except | March 31, | (see note 2) | ||||||||||||||||||||||
share and per share data) | 2011 | 2010 | 2009 | 2008 | 2007 | 2011 | ||||||||||||||||||
Rs | Rs | Rs | Rs | Rs | ||||||||||||||||||||
Balance Sheet data: | ||||||||||||||||||||||||
Cash and cash equivalents including restricted cash | 543,097 | 878,698 | 1,710,798 | 1,507,327 | 3,071,157 | 12,163 | ||||||||||||||||||
Net current assets | (36,354 | ) | (46,814 | ) | (175,993 | ) | 1,294,199 | 2,435,290 | 814 | |||||||||||||||
Total assets | 9,238,371 | 9,345,824 | 9,145,555 | 7,710,760 | 7,321,891 | 206,906 | ||||||||||||||||||
Total equity attributable to equity shareholders of the Company | 4,665,792 | 4,171,092 | 3,851,693 | 4,694,984 | 4,538,906 | 104,497 | ||||||||||||||||||
Cash Flow Data | ||||||||||||||||||||||||
Net cash provided by (used in): | ||||||||||||||||||||||||
Operating activities | 225,359 | 759,802 | (371,556 | ) | (839,869 | ) | 116,262 | 5,047 | ||||||||||||||||
Investing activities | (730,650 | ) | (896,683 | ) | (1,174,156 | ) | (756,300 | ) | (708,316 | ) | (16,364 | ) | ||||||||||||
Financing activities | 551,700 | (354,486 | ) | 968,797 | (585,200 | ) | 847,939 | (12,356 | ) |
Notes | ||
1. | The convenience translation to U.S. Dollars was performed at the reference rate in the City of Mumbai for cable transfers as published by Reserve Bank of India on March 31, 2011 of Rs.44.65 per $1.00, which should not be construed as a representation that those Indian rupee or U.S. dollar amounts could have been, or could be, converted into U.S. dollars or Indian rupees, as the case may be, at this rate or at all. | |
2. | Reference to shares and per share amounts refer to our equity shares. Our outstanding equity shares include equity shares held by a depository underlying our ADSs. Effective September 24, 2002, one ADS represented one equity share. |
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High | Low | |||||||
Month | Rs. | Rs. | ||||||
September 2011 | 49.67 | 45.90 | ||||||
August 2011 | 46.13 | 44.05 | ||||||
July 2011 | 44.69 | 43.95 | ||||||
June 2011 | 45.10 | 44.61 | ||||||
May 2011 | 45.38 | 44.30 | ||||||
April 2011 | 44.68 | 44.04 | ||||||
Period | ||||||||||||||||
Fiscal Year Ended | end | Average | High | Low | ||||||||||||
March 31 | Rs. | Rs. | Rs. | Rs. | ||||||||||||
2011 | 44.65 | 45.58 | 47.57 | 44.03 | ||||||||||||
2010 | 45.14 | 47.36 | 50.53 | 44.94 | ||||||||||||
2009 | 50.95 | 45.91 | 52.06 | 39.89 | ||||||||||||
2008 | 40.02 | 40.13 | 43.05 | 38.48 | ||||||||||||
2007 | 43.10 | 45.12 | 46.83 | 42.78 |
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• | continue to develop and upgrade our technology; | ||
• | maintain and develop strategic relationships with business partners; | ||
• | offer compelling online services and content; |
• | the range of corporate network/data services provided by us and the usage thereof by our customers; | ||
• | the number of subscribers to our ISP services and the prevailing prices charged. | ||
• | advertising revenue generated by our online portal services. |
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• | the timing and nature of any agreements we enter into with strategic partners of our corporate network/data services division; | ||
• | services, products or pricing policies introduced by our competitors; | ||
• | capital expenditure and other costs relating to our operations; | ||
• | the timing and nature of our marketing efforts; | ||
• | our ability to successfully integrate operations and technologies from any acquisitions, joint ventures or other business combinations or investments; | ||
• | the introduction of alternative technologies; and | ||
• | technical difficulties or system failures affecting the telecommunication infrastructure in India, the Internet generally or the operation of our websites. |
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• | Such projects may be subject to a higher risk of reduction in scope or termination than other contracts due to political and economic factors such as changes in government, pending elections or the reduction in, or absence of, adequate funding; | ||
• | Terms and conditions of government contracts tend to be more onerous than other contracts and may include, among other things, extensive rights of audit, more punitive service level penalties and other restrictive covenants. Also, the terms of such contracts are often subject to change due to political and economic factors; | ||
• | Government contracts are often subject to more extensive scrutiny and publicity than other contracts. Any negative publicity related to such contracts, regardless of the accuracy of such publicity, may adversely affect our business or reputation; | ||
• | Participation in government contracts could subject us to stricter regulatory requirements, which may increase our cost of compliance; and | ||
• | Such projects may involve multiple parties in the delivery of services and require greater project management efforts on our part. Any failure in this regard may adversely impact our performance. |
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• | In addition, we operate in jurisdictions in which local business practices may be inconsistent with international regulatory requirements, including anti-corruption and anti-bribery regulations prescribed under the U.S. Foreign Corrupt Practices Act (“FCPA”), which, among other things, prohibits giving or offering to give anything of value with the intent to influence the awarding of government contracts. Although we believe that we have adequate policies and enforcement mechanisms to ensure legal and regulatory compliance with the FCPA, and other similar regulations, it is possible that some of our employees, subcontractors, agents or partners may violate any such legal and regulatory requirements, which may expose us to criminal or civil enforcement actions, including penalties. If we fail to comply with legal and regulatory requirements, our business and reputation may be harmed. |
• | altering our Articles of Association; | ||
• | issuing additional shares of capital stock, except for pro rata issuances to existing shareholders; | ||
• | commencing any new line of business; and | ||
• | commencing a liquidation. |
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• | perception of the level of political and economic stability in India; | ||
• | actual or anticipated variations in our quarterly operating results; | ||
• | announcement of technological innovations; | ||
• | conditions or trends in the corporate network/data services, Internet and electronic commerce industries; | ||
• | the competitive and pricing environment for corporate network/data services and Internet access services in India and the related cost and availability of bandwidth; | ||
• | the perceived attractiveness of investment in Indian companies; | ||
• | acquisitions and alliances by us or others in the industry; | ||
• | changes in estimates of our performance or recommendations by financial analysts; | ||
• | market conditions in the industry and the economy as a whole; | ||
• | introduction of new services by us or our competitors; | ||
• | changes in the market valuations of other Internet service companies; | ||
• | announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments; | ||
• | our failure to integrate successfully our operations with those of any acquired companies; |
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• | additions or departures of key personnel; and | ||
• | other events or factors, many of which are beyond our control. |
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• | our ability to attract and retain advertisers at profitable rates in light of intense competition; | ||
• | our ability to generate and continue to grow a large community of users with demographics attractive to advertisers; | ||
• | advertisers’ acceptance of the Internet as an effective and sustainable medium; | ||
• | the effectiveness of our advertising delivery, tracking and reporting systems; and | ||
• | our ability to adapt, including technologically, to new forms of Internet advertising |
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• | inconsistent quality of service; | ||
• | the need to deal with multiple and frequently incompatible vendors; | ||
• | inadequate legal infrastructure relating to electronic commerce in India; | ||
• | a lack of security of commercial data, such as credit card numbers; and | ||
• | very few Indian companies accepting credit card numbers over the Internet. |
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• | All Internet service providers shall provide adequate information to subscribers regarding Internet/broadband services being offered and marketed by them. | ||
• | All Internet service providers shall provide information regarding contention ratios or the number of users competing for the same bandwidth, adopted by them to provide Internet/broadband service in their tariff plans submitted to TRAI, manual of practice, call centers and on their websites | ||
• | All Internet service providers shall quarterly publish contention ratio for different Internet/broadband services on their website to facilitate subscribers to take informed decision. | ||
• | All Internet service providers must use the contention ratios better than specified ratios for different services to ensure sufficient bandwidth for providing good quality of service to their subscribers. |
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• | Corporate Network/Data Services. We offer end-to-end network services, hosting, application and security services that provide our corporate customers with comprehensive Internet and private network access. Our services enable our corporate customers to offer a full range of business-to-business and electronic commerce related services. We provide NLD (National Long Distance) and ILD (International Long Distance) services through our network. We carry voice traffic, both national and international, using the IP back-bone and deliver voice traffic to Direct Inter-connect Operators. We also provide managed infrastructure services and managed security services in all aspects of infrastructure services, network security and hosting, with digital certificates based authentication service and VPN solutions. We have launched system integration service during the year 2009-10. We are the first service provider in India to be ISO 9001:2000 certified in network operations, data center operations and customer relationship management. | |
• | Internet Access Services. We offer public Internet access to consumers through a retail chain of e-ports (formerlyiway)cybercafés. We also have agreements with certain cable television operators through which we offer Internet access through cable. As of March 31, 2011, we had approximately 10 million retail Internet access subscribers. | |
• | Online Portal Services. We operate online portals, such aswww.sify.com,www.samachar.com andwww.sifymax.in, that function as principal entry points and gateway for accessing the Internet by providing useful web-related services and links. We also offer related content sites specifically tailored to Indian interests worldwide. | |
• | Others.We facilitate web based learning for various organizations by digitizing and uploading content to facilitate the same. We also provide remote infrastructure management services such as Data center management, Network management, Security management and Desktop management to support the clients from offshore command centers, on a 24 x 7 basis. |
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• | End-to-end network solutions for business customers.We provide our business customers with a comprehensive range of Internet, connectivity, security and consulting, hosting and managed service solutions complemented by a broad base of web-based business applications. Our corporate services range from dedicated Internet access, virtual private networks, security, web implementation, electronic commerce solutions and web hosting. Our end-to-end solutions enable our corporate customers to address their networking and data communication needs efficiently without having to assemble products and services from different value-added resellers, Internet service providers and information technology firms. | ||
• | National private Internet protocol network backbone and Wireless delivery on the last mile. We operate a large national Internet protocol data network in India. As of March 31, 2011, we owned and operated 662 points of presence serving more than 625 towns and cities across India. Our network provides the platform to deliver Internet access and the backbone to provide a full range of corporate network/data services to consumers. A significant portion of our last mile delivery for corporates, and almost the entire e-port cybercafé network and hi—speed / broadband delivery to homes, is on the wireless mode, thereby enabling us to implement and deliver superior services compared to the wire line medium. | ||
• | Internet content and electronic commerce websites customized for the Indian market. We view the Indian market as a series of specific market segments with unique cultural and topical interests, rather than an extension of a homogeneous, worldwide Internet market. We have assembled a team of India-based employees familiar with the local culture, language and business environments in our markets to develop Internet content and electronic commerce websites tailored for the Indian market. We regularly incorporate new and original third-party content suited to our local and regional audiences to enhance our customers’ online experience and to attract new users both within India and abroad. As a result of our local market knowledge, we are able to place contents in our websites which will attract more users to our websites and to create brand awareness for our SifyOnlineaccess service. | ||
• | Managed Infrastructure services and Managed Security Services. We have customer engagements in all aspects of infrastructure services, networks security and hosting, with digital certificates based authentication service. We have experience in providing information assurance and compliance certification in accordance with frameworks such as Committee of Sponsoring Organizations of the Treadway Commission (COSO) / Control Objectives for Information and related Technology (COBIT). We believe that our managed infrastructure and security services utilise our experience and skill sets to provide constant value to our customers, better service levels and reduced costs. We constantly look at ways to efficiently manage customer assets remotely thus providing focused superior service at lower cost. |
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• | Invest in the continued enhancement and expansion of our network infrastructure to support customer growth, enter into new markets and accommodate increased customer usage.We intend to continue to increase the capacity and geographic reach of our network in order to support subscriber growth, enter new markets and accommodate increased customer usage. We are committed to using proven technologies and equipment and to providing superior network performance. Our network is based on Internet Protocol, or IP, and we are the first Indian service provider to have made our network Multi Protocol Label Switching (MPLS) compliant. As of March 31, 2011, we have acquired adequate capacity of bandwidth lines, all from major telecommunications companies, which ensures that there is an assured supply of bandwidth service being provided to Sify’s customers without any disruptions. We have also leased intercity links from multiple suppliers including BSNL, Bharti, and Power Grid corporation, such that each one of our nodes is accessible from at least two other nodes, if not by two long distance operators. We believe that as the size and capacity of our network infrastructure grows, its structure and national coverage will create economies of scale. Being vendor neutral, we are able to procure bandwidth in a cost effective manner. Over the past five years we have designed and built four data centers in Mumbai, Chennai, Bangalore and Airoli. We intend to invest in additional data centers, and are currently building a data center at Noida near New Delhi. | ||
• | Increase penetration in our existing markets by expanding awareness of the “Sify” brand name to capitalize on our first mover advantage in India.We intend to capitalize on our first-to-market advantage in India to establish national service and a brand name in advance of other private competitors. As of March 31, 2011, we had approximately 0.3 million retail Internet subscribers and 1,860 operative cybercafés, of which 6 were owned by us and 1,854 were franchised. Approximately 99% of thesee-portsare on broadband, which provides the user with significantly faster access speeds. Our marketing strategy includes print and radio advertising, direct mailing campaigns targeting personal computer owners and operating “cybercafés.” We are also actively promoting our broadband services to homes through cable television operators. As of March 31, 2011, we have more than 1,685 cable television operators across 203 cities in India. We believe that increased focus by GOI on delivery of broadband services, availability of broadband content, reduced cost of personal computers coupled with increased purchasing capacity of the middle class in India will drive this business forward in the future. We are also continuously working on better alternative technologies to overcome the last mile challenges and to offer superior connectivity to homes. | ||
• | Expand our services with new technologies to enable our customers to use the Internet more effectively.We continually seek to expand the breadth of our service offerings with new technologies. We have previously introduced a number of other services, including VoIP, video conferencing, e-mail designed for regional Indian dialects, a user customized portal site and micro-payments. | ||
• | Provide more value added services by leveraging on the rapid growth of wireless Internet and mobile services in India and strengthen our Internet portal with more content tailored to Indian interests worldwide.Our portalswww.sify.comandwww.samachar.com, function as initial gateways to the Internet, the user’s starting point for web browsing and other Internet services, for our consumer Internet service provider subscribers and cybercafé users. We believe that our portals are media rich and user friendly, and the portals are interactive websites offering hyperlinks to a wide variety of websites and services, including our own websites. Our websites cater to a variety of Indian interests within and outside of India. To achieve our goal of developing the premier Internet portal focused on the Indian market, we intend to continue to expand and improve the quality ofwww.sify.com, and are developing additional content oriented towards topical and cultural interests of Indians worldwide. | ||
• | Expand our customer distribution channels through strategic alliances to take advantage of the sales and marketing capabilities of our strategic partners.We intend to continue to expand our customer acquisition channels, for both our consumer Internet access and corporate network/data services. We have arrangements with leading personal computer manufacturers to bundle our SifyOnlineInternet access service with the sale of their personal computers in India. | ||
• | Pursue selective strategic investments, alliances and acquisitions to expand our customer base, increase utilization of our network and add new technologies to our service mix.We believe that our growth can be supplemented by selective acquisitions of complementary businesses. We may seek to expand our market presence in our corporate network business through the acquisition of web hosting, data center, web implementation and/or systems integration companies serving India, the United States or other markets. We will also consider acquisitions of Internet service providers that have a significant or growing customer base in our current or targeted markets. | ||
• | Expand into international markets for providing managed network services.Our network and application level support can be provided remotely with a minimum of on-site presence. We are seeking to provide these services to international markets. The tools utilized to provide these services were developed in-house on Linux/open source platforms, and we plan to upgrade these tools in the future to meet customer requirements. We expect our expertise in network management, to enable us to perform these services to international customers at lower costs. We also intend to provide managed security solutions, including monitoring and vulnerability assessment, in addition to managed firewall and intrusion detection services. |
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• | Superior end-user performance and customer support.We believe that we provide a high level of customer service, network performance and technical support to maximize customer satisfaction. A significant number of our employees are engaged in our customer service or technical support departments, which operate 24-hours-a-day, seven-days-a-week. Our network engineers continually monitor network traffic and congestion points to deliver high quality consistent network performance. Our backend processes are ISO 9001:2000 compliant for network operations, data center operations and customer care. Our strategy of providing superior network performance and customer service is designed to result in significant customer growth from referrals and industry recognition. |
• | SiteConnect (TM) which offers site-to-site managed MPLS-enabled IPVPN solutions for securely connecting regional and large branch offices within India to the corporate Intranet. | ||
• | GlobalSite Connect, an international site-to-site managed MPLS-enabled IPVPN solution, is used for securely connecting international branch offices to the corporate offices. It provides connectivity anywhere in the world through Sify’s alliances and partnerships with global overseas service providers such as Global Crossing (GC), Asia Net.Com (ANC), and PCCW Global to name a few. | ||
• | ExpressConnect, which offers a premium range of high-performance Internet bandwidth solutions for connecting regional offices, branch offices and remote locations to the corporate network. These solutions complement our SiteConnect range of MPLS enabled IPVPN solutions, provide high-speed bandwidth in those situations where basic connectivity and cost are the top concerns. | ||
• | RoamConnect, is our national and international remote access VPN, which is used for securely connecting employees, while they are traveling, to the corporate intranet. RoamConnect features “single number access” to SifyNet from anywhere in the country and provides access from anywhere in the world through Sify’s alliances with overseas service providers such as Verizon, IPASS and Fiberlink. | ||
• | PartnerConnect is our remote access VPN offering, for providing secure and restricted dial-up access to business partners such as dealers, distributors and suppliers to the corporate extranet. |
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• | The finance channel of Sifyhttp://sify.com/finance/ covers the entire spectrum of equity markets, business news, insurance, mutual funds, loans, SME news and a host of paid and free financial services. | ||
• | The sports channelhttp://sify.com/sports/ covers the entire gamut of Indian and international sports with special focus on cricket. | ||
• | We also host WWE updates as a standalone servicehttp://wwe.sify.com/ for users. | ||
• | The food channelwww.bawarchi.com focuses on Indian recipes and cooking and is especially popular among non-resident Indians (NRIs) audiences with over 90% of its content being user generated | ||
• | Our NRI news portal,www.samachar.com, focuses on Indian news and allows NRIs to stay connected to India by aggregating news from across all popular newspapers and other news portals. This portal provides a range of news in English and five Indian languages. Apart from Samachar we have another India targeted news channelhttp://sify.com/news/ which offers national and international general, political and offbeat news. |
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• | The online shopping mallhttp://shopping.sify.com/, stocks products from India’s leading brands and products. We believe that it offers competitive prices and a secure and convenient method of payment. Users can buy using their credit or debit card, pay cash on delivery or send a check. | ||
• | Movies channel on Sifyhttp://sify.com/movies/ is one of the key channels which offer updates from Bollywood/ Hollywood and all regional film industries. The content includes movie reviews, industry news, video galleries, photo galleries, downloads (photos) etc. | ||
• | Games channel of Sifyhttp://games.sify.com/ offers multiple scoring non scoring games. Games include cricketing games, racing games, football specific games etc. |
• | Internet access services, | ||
• | IP/ MPLS Virtual private networks, | ||
• | Internet based Voice services |
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• | Larger production and technical staff; | ||
• | Greater name recognition and larger marketing budgets and resources; and | ||
• | Substantially greater financial, technical and other resources. |
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• | make recommendations on (i) the need and timing for the introduction of new service providers, (ii) the terms and conditions of licenses granted to service providers, (iii) the revocation of licenses for non-compliance, (iv) measures to facilitate competition and promote efficiency in the operation of telecommunications services so as to facilitate growth in such services, (v) technological improvements in the services provided by service providers, (vi) the type of equipment to be used by service providers, (vii) measures for the development of telecommunications technology and the telecommunications industry and (viii) the efficient management of the available spectrum; | ||
• | discharge the following functions: (i) ensure compliance of the terms and conditions of licenses, (ii) fix the terms and conditions of interconnectivity between service providers, (iii) ensure technical compatibility and effective interconnection between service providers, (iv) regulate revenue sharing arrangements between service providers, (v) establish standards of quality of service, (vi) establish time periods for providing local and long distance telecommunications circuits between service providers, (vii) maintain and keep for public inspection a register of interconnect agreements and (viii) ensure effective compliance of universal service obligations; | ||
• | levy fees and other charges at such rates and in respect of such services as may be determined by regulation; and | ||
• | perform such other functions as may be entrusted to it by the Government of India or as may be necessary to carry out the provisions of the Telecom Regulatory Authority of India Act. |
• | to call on service providers to furnish information relating to their operations; | ||
• | to appoint persons to make official inquiries; | ||
• | to inspect the books of service providers; and | ||
• | to issue directives to service providers to ensure their proper functioning. |
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Fiscal | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
% | % | % | ||||||||||
Revenues | 100 | 100 | 100 | |||||||||
Cost of goods sold and services rendered | 61.12 | 61.05 | 58.64 | |||||||||
Other income/(expense) | 1.06 | 1.96 | 1.44 | |||||||||
Selling, general and administrative expenses | 35.46 | 36.99 | 45.65 | |||||||||
Depreciation and amortization expenses | 9.96 | 9.79 | 8.34 | |||||||||
Impairment loss on intangibles including goodwill | 0.03 | 0.70 | 0.25 | |||||||||
Income from legal settlement | — | 8.36 | — | |||||||||
Profit /(loss) from operating activities | (5.51 | ) | 1.79 | (11.19 | ) | |||||||
Finance income | 0.66 | 0.42 | 1.99 | |||||||||
Finance expenses | (3.76 | ) | (4.38 | ) | (4.08 | ) | ||||||
Net finance income/(Loss) | (3.10 | ) | (3.96 | ) | (2.09 | ) | ||||||
Share of profit of equity accounted investee | 1.06 | 1.36 | 1.04 | |||||||||
Profit before tax | (7.54 | ) | (0.81 | ) | (12.24 | ) | ||||||
Income tax (expense)/ benefit | — | 1.21 | (1.57 | ) | ||||||||
Net profit/(loss) for the year | (7.54 | ) | 0.40 | (13.81 | ) |
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• | Cash flows were projected based on a 5 year business plan. Cash flows were arrived at as an excess of revenue over the related costs for the same period after giving due effect to non-cash charges and finance charges, if applicable, together with changes in working capital. | |
• | Management believes that this forecast period is justified due to the long term nature of the travel business. | |
• | The projected revenue growth included in the cash flow projections was 10% during the projected period. Management believes that this growth percentage was reasonable and is in line with the average trend of the industry. | |
• | The projected increase in cost was 5% for call center cost and 10% for administrative costs. | |
• | A pre-tax discount rate of 22.26% was applied in determining the recoverable amount of the cash generating unit. The discount rate was estimated based on an industry average weighted average cost of capital. | |
• | In view of the expected long term market conditions, a terminal year end growth rate of 2% is estimated. |
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2011 | 2010 | 2009 | 2011 | ||||||||||||||
Rs. In ‘000 | Rs. in ‘000 | Rs. in ‘000 | US $ in ‘000 | ||||||||||||||
Profit / (loss) before tax | (519,492 | ) | 26,813 | (851,633 | ) | (11,635 | ) | ||||||||||
Other adjustments for non-cash items | 1,000,310 | 952,486 | 856,486 | 22,404 | |||||||||||||
Income taxes paid | (42,440 | ) | (164,455 | ) | (108,560 | ) | (951 | ) | |||||||||
Net decrease (increase) in working capital | (213,019 | ) | (55,042 | ) | (258,173 | ) | (4,771 | ) | |||||||||
Net cash from / (used in) operating activities | 225,359 | 759,802 | (371,556 | ) | 5,047 | ||||||||||||
Net cash from / (used in) investing activities | (730,650 | ) | (896,683 | ) | (1,174,156 | ) | (16,363 | ) | |||||||||
Net cash from / (used in) financing activities | 551,700 | (354,486 | ) | 968,797 | 12,356 | ||||||||||||
Effect of exchange rate changes on cash and cash equivalents | (627 | ) | (2,934 | ) | 945 | (14 | ) | ||||||||||
Net increase / (decrease) in cash and cash equivalents | 46,409 | (491,367 | ) | (576,920 | ) | 1,039 |
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Payments due by period (Rs 000s) | ||||||||||||||||||||
Less | More than 5 | |||||||||||||||||||
Contractual Obligations | Total | than 1 year | 1-3 years | 3-5 years | years | |||||||||||||||
Long Term Debt Obligations | 262,609 | — | 230,205 | 32,404 | — | |||||||||||||||
Short Term Borrowings | 1,035,803 | 1,035,803 | — | — | — | |||||||||||||||
Finance Lease Obligations | 188,253 | 60,507 | 110,986 | 16,760 | — | |||||||||||||||
Non-cancellable Operating Lease obligations | 1,884,544 | 105,693 | 220,433 | 368,541 | 1,189,877 | |||||||||||||||
Europe India Gateway Obligations | 65,813 | 65,813 | — | — | — | |||||||||||||||
Purchase Obligations | 521,562 | 521,562 | — | — | — | |||||||||||||||
Total | 3,958,584 | 1,789,378 | 561,624 | 417,705 | 1,189,877 | |||||||||||||||
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• | IFRS 10, “Consolidated financial statements”. | ||
• | IFRS 11, “Joint arrangements”. | ||
• | IFRS 12, “Disclosure of interests in other entities”. | ||
• | IAS 27 (Revised 2011), “Consolidated and separate financial statements”, which has been amended for the issuance of IFRS 10 but retains the current guidance on separate financial statements. | ||
• | IAS 28 (Revised 2011), “Investments in associates”, which has been amended for conforming changes on the basis of the issuance of IFRS 10 and IFRS 11. |
• | requires recognition of changes in the net defined benefit liability/(asset), including immediate recognition of defined benefit cost, disaggregation of defined benefit cost into components, recognition of re-measurements in other comprehensive income, plan amendments, curtailments and settlements. | ||
• | introduced enhanced disclosures about defined benefit plans. | ||
• | modified accounting for termination benefits, including distinguishing benefits provided in exchange for services from benefits provided in exchange for the termination of employment, and it affected the recognition and measurement of termination benefits. | ||
• | provided clarification regarding various issues, including the classification of employee benefits, current estimates of mortality rates, tax and administration costs and risk-sharing and conditional indexation features. | ||
• | incorporated, without change, the IFRS Interpretations Committee’s requirements set forth inIFRIC 14 “IAS 19—The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction”. |
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• | Corporate network/data services, which provides Internet, connectivity, security and consulting, hosting, voice and managed service solutions; | ||
• | Internet access services, from homes and through cybercafés (e-ports); | ||
• | Online portal services and content offerings; and | ||
• | Other services such as development of e-learning software |
• | the amount of revenue can be measured reliably; | ||
• | it is probable that the economic benefits will flow to the seller; | ||
• | the stage of completion at the balance sheet date can be measured reliably; and | ||
• | the costs incurred, or to be incurred, in respect of the transaction can be measured reliably. |
(i) | Corporate network/data services |
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• | conducting a market survey and deciding on the best location for the cybercafé or cable head end; | ||
• | installing the broadband receiver equipment on the roof top of the cybercafé or the cable head end and connecting it to one of Sify’s broadcasting towers; | ||
• | obtaining the regulatory approvals for clearance of the site for wireless transmission at the allotted frequency range; | ||
• | installing the wiring from the receiver unit to the individual PCs in the cybercafé or the transmitting equipment in the cable head end; | ||
• | assisting in obtaining facilities, including computers and interiors for the cybercafés; and | ||
• | providing the operations manual with instructions and guidelines for running the cybercafé or distributing Internet access through cable network. |
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Item 6.Directors, Senior Management and Employees |
Name | Age | Designation | ||||
Raju Vegesna | 51 | Chairman, CEO and Managing Director | ||||
Ananda Raju Vegesna | 51 | Executive Director | ||||
C B Mouli (1) | 64 | Director, Chairman & Financial Expert of Audit Committee | ||||
S K Rao (1) (2) (3) | 67 | Director | ||||
T H Chowdary (2) (3) | 79 | Director & Chairman of Compensation & Nominating Committees | ||||
P S Raju (2) | 57 | Director | ||||
S R Sukumara (1) (2) (3) | 66 | Director | ||||
M P Vijay Kumar | 41 | Chief Financial Officer | ||||
C V S Suri | 51 | Chief Operating Officer | ||||
Pijush Kanti Das (4) | 57 | President - Corporate Affairs | ||||
Natesh Mani | 51 | President - Consumer Infrastructure Business | ||||
Baskar R Sayyaparaju | 44 | President - International Business | ||||
Venkata Rao Mallineni | 43 | Head- Software Services | ||||
Pranesh Babu | 45 | Chief Technology Officer | ||||
C R Rao | 51 | Vice President - Head HR & Administration |
(1) | Member of the Audit Committee. | |
(2) | Member of the Compensation Committee. | |
(3) | Member of the Nominating Committee. | |
(4) | Resigned as of May 27, 2011. |
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Summary Compensation Table | ||||||||
(Rs. Million) | ||||||||
Name | Salary(1) | Bonus | ||||||
C V S Suri | 1.07 | — | ||||||
Bhaskar R Sayyaparaju | 6.35 | — | ||||||
M P Vijay Kumar | 7.09 | — | ||||||
P J Nath | 6.34 | — | ||||||
Natesh Mani | 5.10 | — | ||||||
Pijush Kanti Das | 2.28 | 1.05 | ||||||
Venkat Rao Mallineni | 3.74 | — | ||||||
Pranesh Babu K | 4.06 | 0.65 | ||||||
C R Rao | 3.32 | 0.49 | ||||||
David Appasamy | 0.36 | 0.03 | ||||||
Ajith K N | 0.30 | 0.02 |
(1) | Includes provident fund contributions. |
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Rs. in | ||||
Name | million | |||
C V S Suri | 0.08 | |||
Bhaskar R Sayyaparaju | 0.30 | |||
M P Vijay Kumar | 0.33 | |||
P J Nath | 0.30 | |||
Natesh Mani | 0.26 | |||
Pijush Kanti Das | 0.07 | |||
Venkat Rao Mallineni | 0.18 | |||
Pranesh Babu K | 0.16 | |||
C R Rao | 0.18 | |||
David Appasamy | 0.01 | |||
Ajith K N | 0.05 |
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• | at least two-thirds of our directors shall be subject to re-election by our shareholders; and | ||
• | at least one-third of our directors who are subject to re-election shall be up for re-election at each annual meeting of our shareholders. |
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Equity Shares | ||||||||
Beneficially Owned | ||||||||
Beneficial Owner | Number | Percent | ||||||
Raju Vegesna *(1) | 154,011,051 | 86.30 | % | |||||
T. H. Chowdary | — | — | ||||||
C B Mouli | — | — | ||||||
P S Raju | — | — | ||||||
S K Rao | — | — | ||||||
S R Sukumara | — | — | ||||||
C V S Suri | — | — |
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Item 7.Major Shareholders and Related Party Transactions |
Equity Shares | ||||||||
Beneficially owned | ||||||||
Shareholder | Number | Percent | ||||||
Infinity Capital Ventures, LP, 11601 Wilshire Boulevard, Suite 1900, Los Angeles, CA 90025 | 13,902,860 | 7.79 | ||||||
Vegesna Family Trust, LP, 11601 Wilshire Boulevard, Suite 1900, Los Angeles, CA, 90025 | 578,191 | 0.32 | ||||||
Infinity Satcom Universal Private Limited, Visakhapatnam | 14,530,000 | 8.14 | ||||||
Ramanand Core Investment Company Private Limited, Visakhapatnam | 125,000,000 | 70.05 |
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2008-09 | 2009-10 | 2010-11 | ||||||||||||||||||||||
Name of the shareholder | No. of shares | % | No. of shares | % | No. of shares | % | ||||||||||||||||||
Infinity Capital Ventures, LP, USA | 17,902,860 | 41.81 | 13,902,860 | 26.06 | 13,902,860 | 7.80 | ||||||||||||||||||
Vegesna Family Trust, USA | 578,191 | 1.35 | 578,191 | 1.08 | 578,191 | 0.38 | ||||||||||||||||||
Infinity Satcom Universal Private Limited | — | — | 14,530,000 | 27.24 | 14,530,000 | 8.15 | ||||||||||||||||||
Ramanand Core Investment Company Private Limited | — | — | — | — | 125,000,000 | 70.09 |
• | altering our Articles of Association; | ||
• | issuing additional shares of capital stock, except forpro rataissuances to existing shareholders; | ||
• | commencing any new line of business; and | ||
• | commencing a liquidation. |
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Item 8.Financial Information |
(a) | The Group and certain of its officers and directors are named as defendants in a securities class action lawsuit filed in the United States District Court for the Southern District of New York. This action, which is captioned In re Satyam Infoway Ltd. Initial Public Offering Securities Litigation, also names several of the underwriters involved in the Sify’s initial public offering of American Depositary Shares as defendants. This class action is brought on behalf of a purported class of purchasers of the Sify’s ADSs from the time of the Sify’s Initial Public Offering (“IPO”) in October 1999 through December 2000. The central allegation in this action is that the underwriters in the Sify’s IPO solicited and received undisclosed commissions from, and entered into undisclosed arrangements with, certain investors who purchased the Sify’s ADSs in the IPO and the aftermarket. The complaint also alleges that Sify violated the United States Federal Securities laws by failing to disclose in the IPO prospectus that the underwriters had engaged in these allegedly undisclosed arrangements. More than 300 issuers have been named in similar lawsuits. |
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In July 2002, an omnibus motion to dismiss all complaints against issuers and individual defendants affiliated with issuers was filed by the entire group of issuer defendants in these similar actions. In October 2002, the cases against the Sify’s executive officers who were named as defendants in this action were dismissed without prejudice. In February 2003, the court in this action issued its decision on defendants’ omnibus motion to dismiss. This decision denied the motion to dismiss the Section 11 claim as to Sify and virtually all of the other issuer defendants. The decision also denied the motion to dismiss the Section 10(b) claim as to numerous issuer defendants, including Sify. On June 26, 2003, the plaintiffs in the consolidated IPO class action lawsuits currently pending against the Sify and over 300 other issuers who went public between 1998 and 2000, announced a proposed settlement with Sify and the other issuer defendants. The proposed settlement provided that the insurers of all settling issuers would guarantee that the plaintiffs recover $1 billion from non-settling defendants, including the investment banks who acted as underwriters in those offerings. In the event that the plaintiffs did not recover $1 billion, the insurers for the settling issuers would make up the difference. This proposed settlement was terminated on June 25, 2007, following the ruling by the United States Court of Appeals for the Second Circuit on December 5, 2006, reversing the District Court’s granting of class certification. | |||
On August 14, 2007, the plaintiffs filed Amended Master Allegations. On September 27, 2007, the Plaintiffs filed a Motion for Class Certification. Defendants filed a Motion to Dismiss the focus cases on November 9, 2007. On March 26, 2008, the Court ruled on the Motion to Dismiss, holding that the plaintiffs had adequately pleaded their Section 10(b) claims against the Issuer Defendants and the Underwriter Defendants in the focus cases. As to the Section 11 claim, the Court dismissed the claims brought by those plaintiffs who sold their securities for a price in excess of the initial offering price, on the grounds that they could not show cognizable damages, and by those who purchased outside the previously certified class period, on the grounds that those claims were time barred. This ruling, while not binding on the Sify’s case, provides guidance to all of the parties involved in this litigation. On October 2, 2008, plaintiffs requested that the class certification motion in the focus cases be withdrawn without prejudice. On October 10, 2008, the Court signed an order granting that request. On April 2, 2009, the parties lodged with the Court a motion for preliminary approval of a proposed settlement between all parties, including Sify and its former officers and directors. The proposed settlement provides the plaintiffs with $586 million in recoveries from all defendants. Under the proposed settlement, the Issuer Defendants collectively would be responsible for $100 million, which would be paid by the Issuers’ insurers, on behalf of the Issuer Defendants and their officers and directors. | |||
Accordingly, any direct financial impact of the proposed settlement is expected to be borne by the Sify’s insurers. On June 12, 2009, the Federal District Court granted preliminary approval of the proposed settlement. On October 6, 2009, the District Court issued an order granting final approval of the settlement. Subsequent to the final approval of Settlement agreement by the District court, there are several notices of appeal filed. Most were filed by the same parties that objected to the settlement in front of the District Court. These will likely be consolidated into a single appeal and briefing schedule will be provided shortly. Any direct financial impact of the preliminary approved settlement is expected to be borne by the Sify’s insurers. Sify believes, the maximum exposure under this settlement is approximately USD 338,983, an amount which it believes is fully recoverable from the it’s insurers. | |||
b) | Proceedings before Department of Telecommunications |
(i) | License fees |
• | On October 12, 2009 (as later clarified by the DoT), the Department of Telecommunications (‘DOT’) raised a demand on the Company for INR 14 million after correcting the arithmetical error in the Assessment letter. | ||
• | On February 26, 2010 DOT raised a demand on Sify Communications (erstwhile subsidiary merged with this Company) for INR 26 million. |
The above demands were made by the DoT on the premise that all amounts of income (whether direct or indirect) including certain items like other income, interest on deposits, gain on foreign exchange fluctuation, profit on sale of assets & provision written back, that have not got anything to do with telecom operations of the Company or arise in connection with the Telecom business of the Company, are to be considered as income for the purpose of calculation of the license fee. | |||
The Company has responded to the above demand notices stating that the above demands are not tenable as the demands were not in accordance with the Telecom Disputes Settlement & Appellate Tribunal (‘TDSAT’) Order, in which Order the TDSAT has clarified in its order that the items of income which are liable for license fee and items of income on which license fees are not liable to be paid. The TDSAT Order however has been challenged and is presently pending before the Supreme Court. Till such time the Supreme Court pronounces its final verdict on this case, the TDSAT Order continues to be in force and the Company currently continues to pay the license fee in accordance with the TDSAT Order. The Company believes that it has adequate legal defenses for these demands and the ultimate outcome of these actions will not have a material adverse effect on the Company. |
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(ii) | In November 2009, the Company received a demand notice pertaining to the allocation of spectrum in the 3.3-3.4 GHz frequency, from DoT, demanding INR 345 million (US $7.68 million) towards spectrum charges payable from the date of issue of allocation letter for 170 Base Stations. As per the notice, in case no payment is received within 15 days from the date of issue of the notice, then it would be presumed that the Company is no longer interested for the frequency assignments in 3.3-3.4 GHz band. | ||
Whilst the Company received allotment letter for Spectrum in 3.3 GHz band (3303.5/3353.5 MHz) (Total 12 MHz) the Company had neither started any operations in this frequency band nor had applied for any Operating License from DOT/ Wireless Planning Commission (WPC). Sify believes that the obligation to make payment will arise only after obtaining the operating license from DOT/WPC. It also believes that it has adequate legal defence for these demands, as the Company has not yet obtained any operative license, hence such demand is not tenable. Nevertheless, the Company has as a commitment to hold and use the spectrum in the above band has paid INR 11.56 million towards 40 Base Stations and has surrendered the remaining 130 Base Stations. The Company believes that the ultimate outcome of these actions will not have a material adverse effect. |
c) | The Group is party to additional legal actions arising in the ordinary course of business. Based on the available information, as at March 31, 2011, Sify believes that it has adequate legal defences for these actions and that the ultimate outcome of these actions will not have a material adverse effect. However in the event of adverse judgement in all these cases, the maximum financial exposure would be Rs 9,051 (March 31, 2010: Rs 9,051). |
Item 9.The Offer and Listing |
High | Low | |||||||
Fiscal year ended | $ | $ | ||||||
March 31, 2011 | 3.89 | 1.18 | ||||||
March 31, 2010 | 1.76 | 1.59 | ||||||
March 31, 2009 | 5.30 | 0.42 | ||||||
March 31, 2008 | 10.47 | 4.00 | ||||||
March 31, 2007 | 14.78 | 7.43 |
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High | Low | |||||||
Fiscal year ended March 31, 2010 | $ | $ | ||||||
First Quarter | 1.74 | 1.66 | ||||||
Second Quarter | 2.26 | 2.17 | ||||||
Third Quarter | 1.75 | 1.70 | ||||||
Fourth Quarter | 1.76 | 1.59 |
High | Low | |||||||
Fiscal year ended March 31, 2011 | $ | $ | ||||||
First Quarter | 1.91 | 1.30 | ||||||
Second Quarter | 3.22 | 1.18 | ||||||
Third Quarter | 3.05 | 1.66 | ||||||
Fourth Quarter | 3.89 | 2.12 |
High | Low | |||||||
Month | Rs. | Rs. | ||||||
September 2011 | 5.05 | 3.99 | ||||||
August 2011 | 5.67 | 4.00 | ||||||
July 2011 | 6.42 | 3.99 | ||||||
June 2011 | 5.98 | 3.86 | ||||||
May 2011 | 8.04 | 4.23 | ||||||
April 2011 | 8.54 | 3.61 |
Item 10.Additional Information |
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1. | To develop and provide Internet service, Internet Telephony, Infrastructure based services, Virtual Private Network and other related data, voice and video services, wide area communication network, value added services on the network, lease or other transfers of network, software, peripherals and related products, and to provide marketing services. | |
2. | To provide security products for corporate, carry on the business of consulting, software and hardware, integrated platform(s) for the e-commerce solutions, applications, information technology, security and all other kinds of technology solutions or services, and to acquire, maintain, operate, manage and undertake technology and infrastructure for this purpose. | |
3 | To develop, service & sell/lease data based through direct or electronic media, to develop a wide area communication network of sell / lease the network or provide value added services on the network to develop, service, buy / sell computers, software, peripherals and related products to provide marketing services rising direct as well as electronic media; |
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4 | To undertake the designing and development of systems and applications software either for its own use or for sale in India or for export outside India and to design and develop such systems and application software for or on behalf of manufacturers, owners and users of computer systems and digital / electronic equipment’s in India or elsewhere in the world; | |
5 | To set up and run electronic data processing centres and to carry on the business of data processing, word processing, software consultancy, system studies, management consultancy, techno-economic feasibility studies of projects, design and development of management information systems, share / debenture issues management and / or registration and share/debenture transfer agency; | |
6. | To undertake and execute feasibility studies for Computerisation, setting up of all kind of computer systems and digital/electronic equipment’s and the selection, acquisition and installation thereof whether for the Company or its customers or other users; | |
7 | To conduct, sponsor or otherwise participate in training programmes, courses, seminar conferences in respect of any of the objects of the Company and for spreading or imparting the knowledge and use of computers and computer programming languages including the publication of books, journals, bulletins, study / course materials, circulars and news-letters; and to undertake the business as agents, stockist, distributors, franchise holders or otherwise for trading or dealing in computer systems, peripherals, accessories, parts and computer consumables, continuous and non-continuous stationery, ribbons and other allied products and things and standard software packages. | |
8 | To conduct e-commerce for sale of all kinds of products and services through direct or electronic media as well as on and off line e-commerce including travel related services, buying and selling of products and services / merchandise, software, data information etc., in India and abroad. |
(a) | no director of the Company can vote on a proposal, arrangement or contract in which he is materially interested; | ||
(b) | the directors of the Company cannot vote on a proposal in the absence of an independent quorum for compensation to themselves or their body; | ||
(c) | each of our directors is entitled to receive a sitting fee not exceeding Rs.20,000 for every meeting of the Board of Directors and each meeting of a Committee of the Board of Directors, as well as all traveling and out-of-pocket expenses incurred in attending such meetings; | ||
(d) | the directors are empowered to borrow moneys through board meetings up to the prescribed limit and beyond that with the approval of the shareholders through a General Meeting; | ||
(e) | retirement of directors are determined by rotation and not based on age limit; and | ||
(f) | no director is required to hold any qualification shares. |
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• | the rate of dividend to be declared may not exceed 10% of its paid up capital or the average of the rate at which dividends were declared by the Company in the prior five years, whichever is less; | ||
• | the total amount to be drawn from the accumulated profits earned in the previous years and transferred to the reserves may not exceed an amount equivalent to 10% of its paid up capital and free reserves, and the amount so drawn is to be used first to set off the losses incurred in the fiscal year before any dividends in respect of preference or equity shares are declared; and | ||
• | the balance of reserves after withdrawals shall not fall below 15% of its paid up capital. |
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• | amendments of the memorandum of association to alter the objects of the Company and to change the registered office of the Company under section 146 of the Indian Companies Act; | ||
• | the issuance of shares with differential rights with respect to voting, dividend or other provisions of the Indian Companies Act; | ||
• | the sale of the whole or substantially the whole of an undertaking or facilities of the Company; | ||
• | providing loans, extending guarantees or providing a security in excess of the limits allowed under Section 372A of the Indian Companies Act; | ||
• | varying the rights of the holders of any class of shares or debentures; | ||
• | the election of a director by minority shareholders; and | ||
• | the buyback of shares. |
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• | Adopted of audited financials for the year ended March 31, 2011 as per Indian GAAP. | ||
• | Reappointment of Dr S K Rao as director. | ||
• | Appointment of M/s ASA & Associates as statutory auditors in the place of M/s CKS Associates. |
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• | the ADSs must be offered at a price determined by the lead manager of such offering; | ||
• | all equity holders may participate; | ||
• | the issuer must obtain special shareholder approval; and | ||
• | the proceeds must be repatriated to India within one month of the closure of the issue. |
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• | 75% or more of its gross income for the taxable year is passive income; or | ||
• | on a quarterly average for the taxable year by value (or, if it is not a publicly traded corporation and so elects, by adjusted basis) 50% or more of its assets produce or are held for the production of passive income. |
• | pay an interest charge together with tax calculated at maximum ordinary income rates on “excess distributions” (as that term is defined in relevant provisions of the U.S. tax laws), and on any gain on a sale or other disposition of equity shares or ADSs; | ||
• | if a “qualified electing fund” election is made (as that term is defined in relevant provisions of the U.S. tax laws), include in their taxable income their pro rata share of undistributed amounts of our income; or | ||
• | if the equity shares are “marketable” (as that term is defined in relevant provisions of the U.S. tax laws), and a mark-to-market election is made, mark-to-market the equity shares each taxable year and recognize ordinary gain and, to the extent of prior ordinary gain, ordinary loss for the increase or decrease in market value for such taxable year. |
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Item 11.Quantitative and Qualitative Disclosures About Market Risk |
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Item 12.Description of Securities Other Than Equity Securities |
(i) | a fee not in excess of US $5.00 per 100 ADSs is charged for each issuance of ADS upon deposit of Shares, excluding certain issuances described below; | ||
(ii) | a fee not in excess of US $5.00 per 100 ADSs is charged for each surrender of ADSs, property and cash in exchange for the underlying deposited securities; | ||
(iii) | a fee not in excess of US $2.00 per 100 ADSs for each distribution of cash dividend or other cash distribution pursuant to the deposit agreement; | ||
(iv) | a fee not in excess of US $2.00 per 100 ADSs for the distribution of ADSs pursuant to stock dividends or other free distributions or an exercise of rights; and | ||
(v) | a fee not in excess of $5.00 per 100 ADSs for depositary services. |
Fee | Amount in $USD | |||
Financial Audit Fees | 23,469.59 | |||
US Legal Counsel Fees | 151,543.92 | |||
Internet, telephone and mail charges | 855.45 | |||
Printing and mailing | 34,706.63 | |||
Processing Fees | 6,692.02 | |||
Processing Fees for Annual General Meeting | 25.00 | |||
Text Conversion charges | 450.00 | |||
Total amount received | 217,742.61 | |||
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Item 13.Defaults, Dividend Arrearages and Delinquencies |
Item 14.Material Modifications to the Rights of Security Holders and Use of Proceeds |
Item 15.Controls and procedures |
1) | Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with International Financial Reporting Standards, as issued by the International Accounting Standards Board. Our internal control over financial reporting includes those policies and procedures that: |
• | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets. | ||
• | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with applicable accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and | ||
• | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. |
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2) | Management assessed the effectiveness of our internal control over financial reporting as of March 31, 2011. In conducting its assessment of internal control over financial reporting, management based its evaluation on the framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on our assessment, management has concluded that our internal control over financial reporting was effective as of March 31, 2011. | |
3) | Our independent registered public accounting firm, ASA & Associates, has audited the consolidated financial statements included in this Annual Report on Form 20-F, and as part of their audit, has issued their report, included herein, on the effectiveness of our internal control over financial reporting as of March 31, 2011. |
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Sify Technologies Limited
Independent Registered Public Accounting Firm
Chennai, India
October 12, 2011
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• | introduced specific policies to ensure that all transactions relating to purchase of products for onward sales in the System Integration business are subject to a fact specific accounting evaluation to enforce operating effectiveness. | ||
• | augmented the IFRS expertise in our accounting team by imparting specific training to evaluate the trading transactions from a “Gross Versus Net” reporting. | ||
• | performed an accounting evaluation of all the transactions of purchase of products for onward sales in the System Integration business and noted that the accounting controls surrounding appropriateness of the “Gross versus Net” reporting are operating effectively. |
Item 16A.Audit Committee financial expert |
Item 16 B.Code of Ethics |
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Item 16C. | Principal Accountant Fees and Services |
Fiscal year ended | ||||||||
Type of Service | march 31,2011 | march 31,2010 | ||||||
(a) Audit Fees | Rs.2.00 million | Rs.12.45 million | ||||||
(b) Audit Related Fees | Nil | Nil | ||||||
(c) Tax Fees | Nil | Nil | ||||||
(d) All Other Fees | Nil | Nil |
Item 16D. | Exemptions from the Listing Standards for Audit Committees |
Item 16E. | Purchase of Equity Securities by the Issuer and Affiliated Purchasers |
Item 16F: Change in Registrant’s Certifying Accountant |
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Item 16G. Corporate Governance |
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Item 17. | Financial Statements |
Item 18. | Financial Statements |
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Sify Technologies Limited
Independent Registered Public Accounting Firm
Chennai, India
October 12, 2011
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November 30, 2010
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As at March 31, | ||||||||||||||||
2011 Convenience | ||||||||||||||||
translation into | ||||||||||||||||
As at March 31, | US$ thousands | |||||||||||||||
(In thousands of Rupees, except share data and as | 2011 | 2010 | (Unaudited) | |||||||||||||
otherwise stated) | Note | Rs | Rs | Note 2(c) | ||||||||||||
Assets | ||||||||||||||||
Property, plant and equipment | 5 | 3,760,473 | 3,452,022 | 84,221 | ||||||||||||
Intangible assets | 6 | 104,626 | 129,524 | 2,344 | ||||||||||||
Investment in equity accounted investee | 7 | 702,363 | 633,469 | 15,730 | ||||||||||||
Lease prepayments | 9 | 63,068 | 273,911 | 1,412 | ||||||||||||
Other assets | 10 | 672,843 | 554,358 | 15,069 | ||||||||||||
Other investments | 15 | 160 | — | 4 | ||||||||||||
Deferred tax assets | 11 | — | — | — | ||||||||||||
Total non-current assets | 5,303,533 | 5,043,284 | 118,780 | |||||||||||||
Inventories | 12 | 15,637 | 21,488 | 350 | ||||||||||||
Trade and other receivables, net | 13 | 3,185,913 | 3,195,012 | 71,353 | ||||||||||||
Prepayments for current assets | 14 | 190,191 | 191,318 | 4,260 | ||||||||||||
Restricted cash | 8 | 84,538 | 360,909 | 1,893 | ||||||||||||
Cash and cash equivalents | 8 | 458,559 | 517,789 | 10,270 | ||||||||||||
Total current assets | 3,934,838 | 4,286,516 | 88,126 | |||||||||||||
Total assets | 9,238,371 | 9,329,800 | 206,906 | |||||||||||||
Equity | 16 | |||||||||||||||
Share capital | 858,832 | 546,332 | 19,235 | |||||||||||||
Share premium | 17,216,121 | 16,528,621 | 385,579 | |||||||||||||
Share based payment reserve | 190,325 | 180,124 | 4,263 | |||||||||||||
Other components of equity | 7,365 | 3,374 | 165 | |||||||||||||
Accumulated deficit | (13,606,851 | ) | (13,087,359 | ) | (304,745 | ) | ||||||||||
Total equity attributable to equity holders of the Company | 4,665,792 | 4,171,092 | 104,497 | |||||||||||||
Non-controlling interest | — | — | — | |||||||||||||
Total equity | 4,665,792 | 4,171,092 | 104,497 | |||||||||||||
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As at March 31, | ||||||||||||||||
2011 | ||||||||||||||||
Convenience | ||||||||||||||||
translation into | ||||||||||||||||
As at March 31, | US$ thousands | |||||||||||||||
(In thousands of Rupees, except share data and as | 2011 | 2010 | (Unaudited) | |||||||||||||
otherwise stated) | Note | Rs | Rs | Note 2(c) | ||||||||||||
Liabilities | ||||||||||||||||
Finance lease obligations, other than current installments | 17 | 127,746 | 155,347 | 2,861 | ||||||||||||
Borrowings | 20 | 262,608 | 449,424 | 5,881 | ||||||||||||
Employee benefits | 18 | 47,788 | 54,807 | 1,070 | ||||||||||||
Other liabilities | 19 | 163,245 | 165,800 | 3,657 | ||||||||||||
Total non-current liabilities | 601,387 | 825,378 | 13,469 | |||||||||||||
Finance lease obligations, current installments | 17 | 60,507 | 45,970 | 1,355 | ||||||||||||
Borrowings | 20 | 1,035,802 | 952,846 | 23,198 | ||||||||||||
Bank overdraft | 8 | 678,901 | 1,060,284 | 15,205 | ||||||||||||
Trade and other payables | 21 | 1,783,388 | 1,855,664 | 39,941 | ||||||||||||
Deferred income | 22 | 412,594 | 418,566 | 9,241 | ||||||||||||
Total current liabilities | 3,971,192 | 4,333,330 | 88,940 | |||||||||||||
Total liabilities | 4,572,579 | 5,158,708 | 102,409 | |||||||||||||
Total equity and liabilities | 9,238,371 | 9,329,800 | 206,906 | |||||||||||||
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Consolidated Statement of Income
Year ended March 31, | ||||||||||||||||||||
2011 | ||||||||||||||||||||
Convenience | ||||||||||||||||||||
translation into | ||||||||||||||||||||
Year ended March 31, | US$ thousands | |||||||||||||||||||
(In thousands of Rupees, except share data and as | 2011 | 2010 | 2009 | (Unaudited) | ||||||||||||||||
otherwise stated) | Note | Rs | Rs | Rs | Note2(c) | |||||||||||||||
Revenue | ||||||||||||||||||||
- Rendering of services | 6,283,569 | 5,657,140 | 5,519,140 | 140,729 | ||||||||||||||||
- Sale of products | 603,060 | 1,053,048 | 643,021 | 13,507 | ||||||||||||||||
Total | 23 | 6,886,629 | 6,710,188 | 6,162,161 | 154,236 | |||||||||||||||
Cost of goods sold and services rendered | ||||||||||||||||||||
- Rendering of services | (3,655,994 | ) | (3,157,472 | ) | (3,033,798 | ) | (81,881 | ) | ||||||||||||
- Sale of products | (553,436 | ) | (939,066 | ) | (579,551 | ) | (12,395 | ) | ||||||||||||
Total | 25 | (4,209,430 | ) | (4,096,538 | ) | (3,613,349 | ) | (94,276 | ) | |||||||||||
Other income | 26 | 72,693 | 131,789 | 89,105 | 1,628 | |||||||||||||||
Selling, general and administrative expenses | 28 | (2,441,799 | ) | (2,482,415 | ) | (2,813,425 | ) | (54,688 | ) | |||||||||||
Depreciation and amortization | 5 & 6 | (685,836 | ) | (656,797 | ) | (498,872 | ) | (15,360 | ) | |||||||||||
Impairment loss on intangibles including goodwill | 6 | (1,857 | ) | (47,269 | ) | (15,200 | ) | (42 | ) | |||||||||||
Income from legal settlement | 27 | — | 561,120 | — | — | |||||||||||||||
Profit / (loss) from operating activities | (379,600 | ) | 120,078 | (689,580 | ) | (8,502 | ) | |||||||||||||
Finance income | 31 | 45,698 | 27,994 | 122,565 | 1,023 | |||||||||||||||
Finance expenses | 31 | (258,622 | ) | (293,873 | ) | (251,660 | ) | (5,792 | ) | |||||||||||
Net finance income / (expense) | 31 | (212,924 | ) | (265,879 | ) | (129,095 | ) | (4,769 | ) | |||||||||||
Share of profit of equity accounted investee | 7 | 73,032 | 91,135 | 64,091 | 1,636 | |||||||||||||||
Profit / (loss) before tax | (519,492 | ) | (54,666 | ) | (754,584 | ) | (11,635 | ) | ||||||||||||
Income tax (expense) / benefit | 11 | — | 81,479 | (97,049 | ) | — | ||||||||||||||
Profit / (loss) for the year | (519,492 | ) | 26,813 | (851,633 | ) | (11,635 | ) | |||||||||||||
Attributable to: | ||||||||||||||||||||
Equity holders of the Company | (519,492 | ) | 17,027 | (900,574 | ) | (11,635 | ) | |||||||||||||
Non-controlling interest | — | 9,786 | 48,941 | — | ||||||||||||||||
(519,492 | ) | 26,813 | (851,633 | ) | (11,635 | ) | ||||||||||||||
Earnings / (loss) per share | 32 | |||||||||||||||||||
Basic earnings /(loss) per share | (8.20 | ) | 0.33 | (20.77 | ) | (0.18 | ) | |||||||||||||
Diluted earnings/(loss) per share | (8.20 | ) | 0.33 | (20.77 | ) | (0.18 | ) |
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2011 | ||||||||||||||||||||
Convenience | ||||||||||||||||||||
translation | ||||||||||||||||||||
into US$ | ||||||||||||||||||||
Year ended March 31, | thousands | |||||||||||||||||||
(In thousands of Rupees, except share data and as | 2011 | 2010 | 2009 | Note 2(c) | ||||||||||||||||
otherwise stated) | Note | Rs | Rs | Rs | (Unaudited) | |||||||||||||||
Profit / (loss) for the year | (519,492 | ) | 26,813 | (851,633 | ) | (11,635 | ) | |||||||||||||
Other comprehensive income | ||||||||||||||||||||
Foreign currency translation differences for foreign operations | (229 | ) | 1,682 | (1,256 | ) | (5 | ) | |||||||||||||
Defined benefit plan actuarial gains / (losses) | 8,358 | 5,508 | (4,346 | ) | 187 | |||||||||||||||
Change in fair value of available for sale investments, transferred to profit or loss | — | 6,441 | — | — | ||||||||||||||||
Change in fair value of available for sale investments | — | — | (5,361 | ) | — | |||||||||||||||
Share of gains and (losses) from equity accounted investees (net of taxes) | (4,138 | ) | (566 | ) | 296 | (93 | ) | |||||||||||||
Other comprehensive income for the year, net of income tax | 3,991 | 13,065 | (10,667 | ) | 89 | |||||||||||||||
Total comprehensive income for the year | 16 | (515,501 | ) | 39,878 | (862,300 | ) | (11,546 | ) | ||||||||||||
Attributable to: | ||||||||||||||||||||
Equity holders of the Company | (515,501 | ) | 30,092 | (911,241 | ) | (11,546 | ) | |||||||||||||
Non-controlling interest | — | 9,786 | 48,941 | — | ||||||||||||||||
Total comprehensive income/(expense) for the year | (515,501 | ) | 39,878 | (862,300 | ) | (11,546 | ) | |||||||||||||
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Consolidated Statement of Changes in Equity
(In thousands of Rupees, except share data and as otherwise stated)
Share | Retained | |||||||||||||||||||||||||||||||
based | Other | earnings / | Non- | |||||||||||||||||||||||||||||
Share | Share | payment | components | (accumulated | controlling | |||||||||||||||||||||||||||
Particulars | capital | premium | reserve | of equity | deficit) | Total | interest | Total equity | ||||||||||||||||||||||||
Balance at April 1, 2010 | 546,332 | 16,528,621 | 180,124 | 3,374 | (13,087,359 | ) | 4,171,092 | — | 4,171,092 | |||||||||||||||||||||||
Total comprehensive income for the year | — | — | — | 3,991 | (519,492 | ) | (515,501 | ) | — | (515,501 | ) | |||||||||||||||||||||
Transactions with owners, recorded directly in equity | ||||||||||||||||||||||||||||||||
Issue of share capital | 312,500 | 687,500 | — | — | — | 1,000,000 | — | 1,000,000 | ||||||||||||||||||||||||
Share-based payment transactions | — | — | 10,201 | — | — | 10,201 | — | 10,201 | ||||||||||||||||||||||||
Balance at March 31, 2011 | 858,832 | 17,216,121 | 190,325 | 7,365 | (13,606,851 | ) | 4,665,792 | — | 4,665,792 |
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Consolidated Statement of Changes in Equity
(In thousands of Rupees, except share data and as otherwise stated)
Share | Retained | |||||||||||||||||||||||||||||||
based | Other | earnings / | Non- | |||||||||||||||||||||||||||||
Share | Share | payment | components | (accumulated | controlling | |||||||||||||||||||||||||||
Particulars | capital | premium | reserve | of equity | deficit) | Total | interest | Total equity | ||||||||||||||||||||||||
Balance at April 1, 2009 | 441,018 | 16,375,217 | 149,535 | (9,691 | ) | (13,104,386 | ) | 3,851,693 | 248,848 | 4,100,541 | ||||||||||||||||||||||
Total comprehensive income for the year | — | — | — | 13,065 | 17,027 | 30,092 | 9,786 | 39,878 | ||||||||||||||||||||||||
Transactions with owners, recorded directly in equity | ||||||||||||||||||||||||||||||||
Issue of share capital | 105,300 | 737,537 | — | — | — | 842,837 | — | 842,837 | ||||||||||||||||||||||||
Share options exercised | 14 | 70 | 84 | — | 84 | |||||||||||||||||||||||||||
Share-based payment transactions | — | — | 30,589 | — | — | 30,589 | — | 30,589 | ||||||||||||||||||||||||
Changes in ownership interests in subsidiaries that do not result in a loss of control | ||||||||||||||||||||||||||||||||
Acquisition of non-controlling interest | — | (584,203 | ) | — | — | — | (584,203 | ) | (258,634 | ) | (842,837 | ) | ||||||||||||||||||||
Balance at March 31, 2010 | 546,332 | 16,528,621 | 180,124 | 3,374 | (13,087,359 | ) | 4,171,092 | — | 4,171,092 |
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Consolidated Statement of Changes in Equity
(In thousands of Rupees, except share data and as otherwise stated)
Share | Retained | |||||||||||||||||||||||||||||||
based | Other | earnings / | Non- | |||||||||||||||||||||||||||||
Share | Share | payment | components | (accumulated | controlling | |||||||||||||||||||||||||||
Particulars | capital | premium | reserve | of equity | deficit) | Total | interest | Total equity | ||||||||||||||||||||||||
Balance at April 1, 2008 | 441,018 | 16,368,647 | 149,398 | 976 | (12,265,055 | ) | 4,694,984 | 199,907 | 4,894,891 | |||||||||||||||||||||||
Total comprehensive income for the year | — | — | — | (10,667 | ) | (900,574 | ) | (911,241 | ) | 48,941 | (862,300 | ) | ||||||||||||||||||||
Transactions with owners, recorded directly in equity | ||||||||||||||||||||||||||||||||
Share-based payment transactions | — | — | 61,380 | — | — | 61,380 | — | 61,380 | ||||||||||||||||||||||||
Stock options lapsed | — | — | (61,243 | ) | — | 61,243 | — | — | — | |||||||||||||||||||||||
Others | — | 6,570 | — | — | — | 6,570 | — | 6,570 | ||||||||||||||||||||||||
Balance at March 31, 2009 | 441,018 | 16,375,217 | 149,535 | (9,691 | ) | (13,104,386 | ) | 3,851,693 | 248,848 | 4,100,541 |
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Consolidated Statements of Cash Flows
2011 | ||||||||||||||||
Convenience | ||||||||||||||||
translation | ||||||||||||||||
into US$ | ||||||||||||||||
Year ended March 31, | thousands | |||||||||||||||
(In thousands of Rupees, except share data and as | 2011 | 2010 | 2009 | (Unaudited) | ||||||||||||
otherwise stated) | Rs | Rs | Rs | Note 2(c) | ||||||||||||
Profit/(loss) for the year | (519,492 | ) | 26,813 | (851,633 | ) | (11,635 | ) | |||||||||
Adjustments for: | ||||||||||||||||
Depreciation and amortization | 685,836 | 656,797 | 498,872 | 15,360 | ||||||||||||
Impairment loss on intangibles including goodwill | 1,857 | 47,269 | 15,200 | 42 | ||||||||||||
Share of profit of equity accounted investee | (73,032 | ) | (91,135 | ) | (64,091 | ) | (1,636 | ) | ||||||||
(Gain) / loss on sale of property, plant and equipment | (594 | ) | (2,414 | ) | (828 | ) | (13 | ) | ||||||||
Provision for doubtful receivables | 161,922 | 121,987 | 84,346 | 3,626 | ||||||||||||
Provision for finance lease receivables | — | — | 6,929 | — | ||||||||||||
Realized loss on sale of investments | — | 373 | — | — | ||||||||||||
Stock compensation expense | 10,201 | 30,589 | 61,380 | 229 | ||||||||||||
Net finance (income) / expense | 212,924 | 265,879 | 129,095 | 4,769 | ||||||||||||
Income tax expense/(benefit) | — | (81,479 | ) | 97,049 | — | |||||||||||
Unrealized (gain)/ loss on account of exchange differences | 1,196 | 703 | 455 | 27 | ||||||||||||
Amortization of leasehold prepayments | — | 3,917 | 8,403 | — | ||||||||||||
Provision for infrastructure costs | — | — | 10,000 | — | ||||||||||||
480,818 | 979,299 | (4,823 | ) | 10,853 | ||||||||||||
Change in trade and other receivables | (153,560 | ) | (585,805 | ) | (314,349 | ) | (3,439 | ) | ||||||||
Change in inventories | 5,851 | 17,600 | (1,337 | ) | 131 | |||||||||||
Change in other assets | (34,082 | ) | (64,112 | ) | 224,625 | (763 | ) | |||||||||
Change in trade and other payables | (26,597 | ) | 517,497 | (171,261 | ) | (596 | ) | |||||||||
Change in employee benefits | 1,341 | (3,984 | ) | 17,704 | 30 | |||||||||||
Change in deferred income | (5,972 | ) | 63,762 | (13,555 | ) | (134 | ) | |||||||||
267,799 | 924,257 | (262,996 | ) | 5,998 | ||||||||||||
Income taxes paid | (42,440 | ) | (164,455 | ) | (108,560 | ) | (951 | ) | ||||||||
Net cash from / (used in) operating activities | 225,359 | 759,802 | (371,556 | ) | 5,047 | |||||||||||
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2011 | ||||||||||||||||
Convenience | ||||||||||||||||
translation into | ||||||||||||||||
Year ended March 31, | US$ thousands | |||||||||||||||
(In thousands of Rupees, except share data and as | 2011 | 2010 | 2009 | (Unaudited) | ||||||||||||
otherwise stated) | Rs | Rs | Rs | Note 2(c) | ||||||||||||
Cash flows from / (used in) investing activities | ||||||||||||||||
Acquisition of property, plant and equipment | (674,558 | ) | (759,435 | ) | (1,170,905 | ) | (15,107 | ) | ||||||||
Expenditure on intangible assets | (120,710 | ) | (220,299 | ) | (165,247 | ) | (2,703 | ) | ||||||||
Proceeds from sale of property, plant and equipment | 3,109 | 5,979 | 2,393 | 69 | ||||||||||||
Net investment in leases | — | — | 5,111 | — | ||||||||||||
Payment towards purchase of unquoted equity shares | (160 | ) | — | — | (4 | ) | ||||||||||
Finance income received | 61,669 | 57,130 | 154,492 | 1,381 | ||||||||||||
Short term investments (net) | — | 19,942 | — | — | ||||||||||||
Net cash from / (used in) investing activities | (730,650 | ) | (896,683 | ) | (1,174,156 | ) | (16,364 | ) | ||||||||
Cash flows from / (used in) financing activities | ||||||||||||||||
Proceeds from issue of share capital (including share premium) | 1,000,000 | 84 | — | 22,396 | ||||||||||||
Proceeds from / (repayment) of borrowings (net) | (103,860 | ) | 8,409 | 1,227,733 | (2,326 | ) | ||||||||||
Finance expenses paid | (293,265 | ) | (318,723 | ) | (249,908 | ) | (6,568 | ) | ||||||||
Repayment of finance lease liabilities | (51,175 | ) | (44,256 | ) | (9,028 | ) | (1,146 | ) | ||||||||
Net cash from / (used in) financing activities | 551,700 | (354,486 | ) | 968,797 | 12,356 | |||||||||||
Net increase / (decrease) in cash and cash equivalents | 46,409 | (491,367 | ) | (576,920 | ) | 1,039 | ||||||||||
Cash and cash equivalents at April 1 | (181,586 | ) | 312,715 | 888,690 | (4,067 | ) | ||||||||||
Effect of exchange fluctuations on cash held | (627 | ) | (2,934 | ) | 945 | (14 | ) | |||||||||
Cash and cash equivalents at March 31 | (135,804 | ) | (181,586 | ) | 312,715 | (3,042 | ) | |||||||||
Refer note 3 (c) and note 8 for the composition of cash and cash equivalents. | ||||||||||||||||
Supplementary information | ||||||||||||||||
Additions to property, plant and equipment represented by finance lease obligations | 38,111 | 99,950 | 158,962 | 854 |
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• | Available for sale financial assets are measured at fair value |
• | Derivative financial instruments are measured at fair value |
• | Financial instruments at fair value through profit or loss are measured at fair value. |
• | The defined benefit asset is recognised as the net total of the plan assets, plus unrecognized past service cost and unrecognized actuarial losses, less unrecognized actuarial gains and the present value of the defined benefit obligation. |
• | In relation to lease prepayments, the initial fair value of the security deposit, is estimated as the present value of the refundable amount, discounted using the market interest rates for similar instruments. The difference between the initial fair value and the refundable amount of the deposit is recognized as a lease prepayment. |
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• | Measurement of the recoverable amounts of cash-generating units containing goodwill (Note 6) |
• | Useful lives of property, plant and equipment (Note 3 e and Note 5) |
• | Useful lives of intangible assets (Note 3 f and Note 6) |
• | Lease classification (Note 3 g, 9, 17 and 33) |
• | Utilization of tax losses (Note 11) |
• | Measurement of defined employee benefit obligations (Note 18) |
• | Measurement of share-based payments (Note 30 and Note 37) |
• | Valuation of financial instruments (Note 3 c, 4, 38 and 39) |
• | Provisions and contingencies (Note 3 m and 35) |
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Estimate of useful life | ||||
in years | ||||
Buildings | 28 | |||
Plant and machinery comprising computers, servers etc. | 3 – 5 | * | ||
Plant and machinery comprising other items | 8 | * | ||
Furniture and fittings | 5 | |||
Office equipment | 5 | |||
Motor vehicles | 3 – 5 | |||
* | Revised during the year ended March 31, 2008. Also refer note 5. |
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Estimate of useful life in | ||||
years | ||||
Software | Not exceeding 3 years | |||
Technical know-how | 5 years | |||
License fees | 20 years | |||
Portals and web development cost | 5 years | |||
Customer related intangibles | 5 years | |||
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• | conducting a market survey and deciding on the best location for the cybercafé or cable head end; | ||
• | installing the broadband receiver equipment on the roof top of the cybercafé or the cable head end and connecting it to one of Sify’s broadcasting towers; | ||
• | obtaining the regulatory approvals for clearance of the site for wireless transmission at the allotted frequency range; | ||
• | installing the wiring from the receiver unit to the individual PCs in the cybercafé or the transmitting equipment in the cable head end; | ||
• | assisting in obtaining facilities, including computers and interiors for the cybercafés; and | ||
• | providing the operations manual with instructions and guidelines for running the cybercafé or distributing Internet access through cable network. |
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• | IFRS 10, “Consolidated financial statements”. |
• | IFRS 11, “Joint arrangements”. |
• | IFRS 12, “Disclosure of interests in other entities”. |
• | IAS 27 (Revised 2011), “Consolidated and separate financial statements”, which has been amended for the issuance of IFRS 10 but retains the current guidance on separate financial statements. |
• | IAS 28 (Revised 2011), “Investments in associates”, which has been amended for conforming changes on the basis of the issuance of IFRS 10 and IFRS 11. |
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• | requires recognition of changes in the net defined benefit liability/(asset), including immediate recognition of defined benefit cost, disaggregation of defined benefit cost into components, recognition of re-measurements in other comprehensive income, plan amendments, curtailments and settlements. |
• | introduced enhanced disclosures about defined benefit plans. |
• | modified accounting for termination benefits, including distinguishing benefits provided in exchange for services from benefits provided in exchange for the termination of employment, and it affected the recognition and measurement of termination benefits. |
• | provided clarification regarding various issues, including the classification of employee benefits, current estimates of mortality rates, tax and administration costs and risk-sharing and conditional indexation features. |
• | incorporated, without change, the IFRS Interpretations Committee’s requirements set forth inIFRIC 14 “IAS 19—The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction”. |
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Cost | Accumulated depreciation | Carrying amount | ||||||||||||||||||||||||||||||||||
As at | As at | As at | As at | as at | ||||||||||||||||||||||||||||||||
April 01, | March 31, | April 1, | Depreciation | March 31, | March 31, | |||||||||||||||||||||||||||||||
Particulars | 2010 | Additions | Disposals | 2011 | 2010 | for the year | Deletions | 2011 | 2011 | |||||||||||||||||||||||||||
Building | 777,419 | — | — | 777,419 | 177,072 | 27,754 | — | 204,826 | 572,593 | |||||||||||||||||||||||||||
Plant and machinery | 5,302,696 | 199,591 | 68,928 | 5,433,359 | 2,929,688 | 474,168 | 68,246 | 3,335,610 | 2,097,749 | |||||||||||||||||||||||||||
Computer equipments | 517,904 | 46,736 | 864 | 563,776 | 429,631 | 49,854 | 780 | 478,705 | 85,071 | |||||||||||||||||||||||||||
Office equipment | 228,418 | 6,214 | 507 | 234,125 | 107,252 | 23,181 | 501 | 129,932 | 104,193 | |||||||||||||||||||||||||||
Furniture and fittings | 706,148 | 15,731 | 8,520 | 713,359 | 445,437 | 64,442 | 6,777 | 503,102 | 210,257 | |||||||||||||||||||||||||||
Vehicles | 6,191 | — | 3,262 | 2,929 | 6,191 | — | 3,262 | 2,929 | — | |||||||||||||||||||||||||||
Total | 7,538,776 | 268,272 | 82,081 | 7,724,967 | 4,095,271 | 639,399 | 79,566 | 4,655,104 | 3,069,863 | |||||||||||||||||||||||||||
Add: Construction in progress | 690,610 | |||||||||||||||||||||||||||||||||||
Total | 7,538,776 | 268,272 | 82,081 | 7,724,967 | 4,095,271 | 639,399 | 79,566 | 4,655,104 | 3,760,473 | |||||||||||||||||||||||||||
Cost | Accumulated depreciation | Carrying amount | ||||||||||||||||||||||||||||||||||
As at | As at | As at | As at | as at | ||||||||||||||||||||||||||||||||
April 01, | March 31, | April 1, | Depreciation | March 31, | March 31, | |||||||||||||||||||||||||||||||
Particulars | 2009 | Additions | Disposals | 2010 | 2009 | for the year | Deletions | 2010 | 2010 | |||||||||||||||||||||||||||
Building | 769,663 | 7,756 | — | 777,419 | 148,401 | 28,671 | — | 177,072 | 600,347 | |||||||||||||||||||||||||||
Plant and machinery | 4,733,122 | 827,043 | 257,469 | 5,302,696 | 2,765,920 | 420,314 | 256,546 | 2,929,688 | 2,373,008 | |||||||||||||||||||||||||||
Computer equipments | 497,223 | 26,462 | 5,781 | 517,904 | 367,972 | 66,709 | 5,050 | 429,631 | 88,273 | |||||||||||||||||||||||||||
Office equipment | 162,132 | 68,106 | 1,820 | 228,418 | 96,955 | 12,070 | 1,773 | 107,252 | 121,166 | |||||||||||||||||||||||||||
Furniture and fittings | 628,279 | 101,188 | 23,319 | 706,148 | 389,771 | 77,608 | 21,942 | 445,437 | 260,711 | |||||||||||||||||||||||||||
Vehicles | 8,269 | — | 2,078 | 6,191 | 6,420 | 1,360 | 1,589 | 6,191 | — | |||||||||||||||||||||||||||
Total | 6,798,688 | 1,030,555 | 290,467 | 7,538,776 | 3,775,439 | 606,732 | 286,900 | 4,095,271 | 3,443,505 | |||||||||||||||||||||||||||
Add: Construction in progress | 8,517 | |||||||||||||||||||||||||||||||||||
Total | 6,798,688 | 1,030,555 | 290,467 | 7,538,776 | 3,775,439 | 606,732 | 286,900 | 4,095,271 | 3,452,022 | |||||||||||||||||||||||||||
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Carrying | ||||||||||||||||||||||||||||||||||||
Cost | Accumulated depreciation | amount | ||||||||||||||||||||||||||||||||||
As at | As at | As at | As at | as at | ||||||||||||||||||||||||||||||||
April 01, | March 31, | April 1, | Depreciation | March 31, | March 31, | |||||||||||||||||||||||||||||||
Particulars | 2008 | Additions | Disposals | 2009 | 2008 | for the year | Deletions | 2009 | 2009 | |||||||||||||||||||||||||||
Building | 769,663 | — | — | 769,663 | 120,924 | 27,477 | — | 148,401 | 621,262 | |||||||||||||||||||||||||||
Plant and machinery | 3,683,632 | 1,097,317 | 47,827 | 4,733,122 | 2,526,445 | 286,805 | 47,330 | 2,765,920 | 1,967,202 | |||||||||||||||||||||||||||
Computer equipments | 438,597 | 58,824 | 198 | 497,223 | 297,049 | 71,001 | 78 | 367,972 | 129,251 | |||||||||||||||||||||||||||
Office equipment | 116,691 | 47,090 | 1,649 | 162,132 | 83,928 | 14,673 | 1,646 | 96,955 | 65,177 | |||||||||||||||||||||||||||
Furniture and fittings | 422,939 | 208,486 | 3,146 | 628,279 | 339,750 | 52,720 | 2,699 | 389,771 | 238,508 | |||||||||||||||||||||||||||
Vehicles | 9,174 | — | 905 | 8,269 | 3,846 | 2,981 | 407 | 6,420 | 1,849 | |||||||||||||||||||||||||||
Total | 5,440,696 | 1,411,717 | 53,725 | 6,798,688 | 3,371,942 | 455,657 | 52,160 | 3,775,439 | 3,023,249 | |||||||||||||||||||||||||||
Add: Construction in progress | 237,665 | |||||||||||||||||||||||||||||||||||
Total | 5,440,696 | 1,411,717 | 53,725 | 6,798,688 | 3,371,942 | 455,657 | 52,160 | 3,775,439 | 3,260,914 | |||||||||||||||||||||||||||
2008 | 2009 | 2010 | 2011 | |||||||||||||
Decrease / (increase) in depreciation expense | 110,315 | 98,650 | 61,498 | (17,674 | ) |
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March 31, 2011 | March 31, 2010 | |||||||
Goodwill | 14,595 | 14,595 | ||||||
Other intangible assets | 90,031 | 114,929 | ||||||
104,626 | 129,524 | |||||||
March 31, 2011 | March 31, 2010 | |||||||
Balance at the beginning of the year | 14,595 | 40,461 | ||||||
Effect of movement in exchange rates | — | (2,482 | ) | |||||
Impairment loss recognised during the year | — | (23,384 | ) | |||||
Net carrying amount of goodwill | 14,595 | 14,595 | ||||||
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Technical | Portals | Customer | ||||||||||||||||||||||
know- | and web | related | License | |||||||||||||||||||||
how | content | intangibles | Software | fees | Total | |||||||||||||||||||
(A) Cost | ||||||||||||||||||||||||
Balance as at March 31, 2008 | 82,753 | 52,730 | 199,554 | 271,116 | 50,000 | 656,153 | ||||||||||||||||||
Acquisitions during the year | — | — | 1,016 | 48,099 | — | 49,115 | ||||||||||||||||||
Balance as at March 31, 2009 | 82,753 | 52,730 | 200,570 | 319,215 | 50,000 | 705,268 | ||||||||||||||||||
Acquisitions during the year | — | — | — | 51,468 | — | 51,468 | ||||||||||||||||||
Disposals during the year | — | 52,730 | — | — | — | 52,730 | ||||||||||||||||||
Balance as at March 31, 2010 | 82,753 | — | 200,570 | 370,683 | 50,000 | 704,006 | ||||||||||||||||||
Acquisitions during the year | — | — | — | 23,397 | — | 23,397 | ||||||||||||||||||
Disposals during the year | — | — | — | — | — | — | ||||||||||||||||||
Balance as at March 31, 2011 | 82,753 | — | 200,570 | 394,080 | 50,000 | 727,403 | ||||||||||||||||||
(B) Amortization | ||||||||||||||||||||||||
Balance as at April 1, 2008 | 82,753 | 52,730 | 149,926 | 235,827 | 3406 | 524,642 | ||||||||||||||||||
Amortization for the year | — | — | 19,921 | 20,794 | 2,500 | 43,215 | ||||||||||||||||||
Balance as at March 31, 2009 | 82,753 | 52,730 | 169,847 | 256,621 | 5,906 | 567,857 | ||||||||||||||||||
Amortization for the year | — | — | 6,144 | 41,421 | 2,500 | 50,065 | ||||||||||||||||||
Impairment loss on intangibles | — | — | 22,148 | 1,737 | — | 23,885 | ||||||||||||||||||
Disposals during the year | — | 52,730 | — | — | — | 52,730 | ||||||||||||||||||
Balance as at March 31, 2010 | 82,753 | — | 198,139 | 299,779 | 8,406 | 589,077 | ||||||||||||||||||
Amortization for the year | — | — | 837 | 43,101 | 2,500 | 46,438 | ||||||||||||||||||
Impairment loss on intangibles | — | — | 1,594 | 263 | — | 1,857 | ||||||||||||||||||
Balance as at March 31,2011 | 82573 | — | 200,570 | 343,143 | 10,906 | 637,372 | ||||||||||||||||||
(C) Carrying amounts | ||||||||||||||||||||||||
As at March 31, 2009 | — | — | 30,723 | 62,594 | 44,094 | 137,411 | ||||||||||||||||||
As at March 31, 2010 | — | — | 2,431 | 70,904 | 41,594 | 114,929 | ||||||||||||||||||
As at March 31, 2011 | — | — | — | 50,937 | 39,094 | 90,031 |
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Balance sheet | March 31, 2011 | March 31, 2010 | ||||||
Total assets | 4,546,919 | 3,974,094 | ||||||
Total liabilities | 2,193,943 | 1,851,919 | ||||||
Shareholders’ equity | 2,352,976 | 2,122,175 | ||||||
Total Liabilities and shareholders’ equity | 4,546,919 | 3,974,094 | ||||||
For the year ended | ||||||||||||
Statement of operations | March 31, 2011 | March 31, 2010 | March 31, 2009 | |||||||||
Revenues | 1,818,283 | 1,612,545 | 1,413,643 | |||||||||
Net profit | 241,840 | 307,543 | 216,917 | |||||||||
March 31, 2011 | March 31, 2010 | March 31, 2009 | ||||||||||
(a) Restricted cash | ||||||||||||
Non current | ||||||||||||
Against future performance obligation | — | — | 1,000 | |||||||||
Current | ||||||||||||
Bank deposits held under lien against borrowings / guarantees from banks | 84,538 | 360,909 | 1,329,756 | |||||||||
Total restricted cash | 84,538 | 360,909 | 1,329,756 | |||||||||
(b) Non restricted cash | ||||||||||||
Current | ||||||||||||
Cash and bank balances | 458,559 | 517,789 | 380,042 | |||||||||
Total cash (a+b) | 543,097 | 878,698 | 1,710,798 | |||||||||
Bank overdraft used for cash management purposes | (678,901 | ) | (1,060,284 | ) | (1,397,083 | ) | ||||||
Less: Non current restricted cash | — | — | (1,000 | ) | ||||||||
Cash and cash equivalents for the statement of cash flows | (135,804 | ) | (181,586 | ) | 312,715 | |||||||
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March 31, 2011 | March 31, 2010 | |||||||
Towards buildings* | 63,068 | 273,911 | ||||||
63,068 | 273,911 | |||||||
* | Includes Rs. Nil (March 31, 2010: Rs 189,903) paid to VALS Developers Private Limited. Also refer note 37. |
March 31, 2011 | March 31, 2010 | |||||||
Non current | ||||||||
Other deposits (see notes below) | 672,843 | 554,358 | ||||||
672,843 | 554,358 | |||||||
Current | ||||||||
Net investment in leases | — | — | ||||||
— | — | |||||||
Financial assets included in other assets | 212,969 | 249,744 | ||||||
(a) | Includes Rs. Nil (March 31 2010: Rs.32,098) paid to VALS Developers Private Limited. Also refer note 37. | |
(b) | Includes Rs. 459,872 (March 31 2010: Rs. 304,614) paid to Emirates Integrated Telecommunications Company PJSC in relation to supply of capacity from the Europe India Gateway and borrowing cost capitalized thereon. |
Assets / (liabilities) | ||||||||
Recognised deferred tax assets / (liabilities) | March 31, 2011 | March 31, 2010 | ||||||
Deferred tax assets | ||||||||
Carry forward capital losses | 90,892 | 82,869 | ||||||
90,892 | 82,869 | |||||||
Deferred tax liabilities | ||||||||
Property, plant and equipment | — | (76 | ) | |||||
Intangible assets | (83 | ) | (189 | ) | ||||
Investment in equity accounted investees | (90,809 | ) | (82604 | ) | ||||
(90,892 | ) | (82,869 | ) | |||||
Net deferred tax asset recognized in balance sheet | — | — | ||||||
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Balance | Recognised | Balance | Recognised | Balance | ||||||||||||||||||||||||
as at | in | Recognised | as at | in | Recognised | as at | ||||||||||||||||||||||
April 1, | income | in | March 31, | income | in | March 31, | ||||||||||||||||||||||
2009 | statement | Equity | 2010 | statement | Equity | 2011 | ||||||||||||||||||||||
Property, plant and equipment | 1,796 | (1872 | ) | — | (76 | ) | 76 | — | — | |||||||||||||||||||
Intangible assets | 2,212 | (2401 | ) | — | (189 | ) | 106 | — | (83 | ) | ||||||||||||||||||
Allowance for doubtful trade and other receivables | 4,516 | (4,516 | ) | — | — | — | — | — | ||||||||||||||||||||
Tax loss carry forwards | 67,735 | 14,371 | 763 | 82,869 | 8,875 | (852 | ) | 90,892 | ||||||||||||||||||||
Investment in equity accounted investees | (67,735 | ) | (14,106 | ) | (763 | ) | (82,604 | ) | (9,057 | ) | 852 | (90,809 | ) | |||||||||||||||
8,524 | (8,524 | ) | — | — | — | — | — | |||||||||||||||||||||
As at March 31, 2011 | As at March 31, 2010 | |||||||
Deductible temporary differences | 157,928 | 172,136 | ||||||
Unrecognized tax losses | 3,084,218 | 3,360,093 | ||||||
3,242,146 | 3,532,229 |
March 31, 2011 | March 31, 2010 | March 31, 2009 | ||||||||||
Current tax expense / (benefit) | ||||||||||||
Current period | — | (90,003 | ) | 90,003 | ||||||||
— | (90,003 | ) | 90,003 | |||||||||
Deferred tax expense | ||||||||||||
Origination and reversal of temporary differences | 8,875 | 22,895 | 17,862 | |||||||||
Recognition of previously unrecognized tax losses | (8,875 | ) | (14,371 | ) | (10,854 | ) | ||||||
Reversal of previously recognized tax losses | — | — | 38 | |||||||||
— | 8,524 | 38 | ||||||||||
Total income tax expense / (benefit) | — | (81,479 | ) | 97,049 | ||||||||
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March 31,2011 | March 31,2010 | March 31,2009 | ||||||||||
Actuarial (gains) or losses | — | — | — | |||||||||
Tax effect of changes in the fair value of other investments | — | — | — | |||||||||
Tax effect on share of profit of associate recognised in OCI | — | — | — | |||||||||
Tax effect on foreign currency translation differences | — | — | — | |||||||||
Income tax benefit / (expense) recognized directly in equity | — | — | — | |||||||||
Year ended | Year ended | Year ended | ||||||||||
March 31, 2011 | March 31, 2010 | March 31, 2009 | ||||||||||
Profit / (loss) before income taxes | (519,492 | ) | (54,666 | ) | (754,584 | ) | ||||||
Enacted tax rates in India | 33.22 | % | 33.99 | % | 33.99 | % | ||||||
Computed expected tax expense / (benefit) | (172,575 | ) | (18,581 | ) | (256,483 | ) | ||||||
Effect of: | ||||||||||||
Share based payment expense not deductible for tax purposes | 2,697 | 8,188 | 16,149 | |||||||||
Unrecognized deferred tax assets on losses incurred during the year (net of temporary differences, if any) | 194,140 | 41,370 | 359,669 | |||||||||
Unrecognized deferred tax asset on temporary differences | — | — | — | |||||||||
Share of profit of equity accounted investee taxed at a lower rate | (9,217 | ) | (12,203 | ) | (8,582 | ) | ||||||
Recognition of previously unrecognized tax losses | (15,045 | ) | (18,774 | ) | (13,203 | ) | ||||||
Reversal of tax expense consequent to merger (Refer note 40) | — | (81,479 | ) | — | ||||||||
Others | — | — | (501 | ) | ||||||||
— | (81,479 | ) | 97,049 | |||||||||
March 31, 2011 | March 31, 2010 | |||||||
Communication hardware | 2,824 | 19,826 | ||||||
Application software | 12,813 | 1,662 | ||||||
15,637 | 21,488 | |||||||
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March 31, 2011 | March 31, 2010 | |||||||
(i) Trade receivables, net | 1,839,966 | 1,912,348 | ||||||
(ii) Other receivables including deposits | 1,251,690 | 1,196,450 | ||||||
(iii) Construction contract in progress | 94,257 | 86,214 | ||||||
3,185,913 | 3,195,012 | |||||||
(i) | Trade receivables as of March 31, 2011 and March 31, 2010 are stated net of allowance for doubtful receivables. The Group maintains an allowance for doubtful receivables based on its age and collectability. Trade receivables are not collateralized except to the extent of refundable deposits received from cybercafé franchisees and from cable television operators. The Group’s exposure to credit and currency risks and impairment losses related to trade and other receivables, excluding construction work in progress is disclosed in note 39. Trade receivables consist of: |
March 31, 2011 | March 31, 2010 | |||||||
Trade receivables from related parties | — | — | ||||||
Other trade receivables | 2,055,974 | 2,083,054 | ||||||
2,055,974 | 2,083,054 | |||||||
Less: Allowance for doubtful receivables | (216,008 | ) | (170,706 | ) | ||||
Balance at the end of the year | 1,839,966 | 1,912,348 | ||||||
For the year ended | ||||||||
March 31, 2011 | March 31, 2010 | |||||||
Balance at the beginning of the year | 170,706 | 116,295 | ||||||
Add: Additional provision, net | 161,922 | 121,987 | ||||||
Less: Bad debts written off | (116,620 | ) | (67,576 | ) | ||||
Balance at the end of the year | 216,008 | 170,706 | ||||||
(ii) | Other receivables comprises of the following items: |
March 31, 2011 | March 31, 2010 | |||||||
Advances and other deposits (Refer Note (a) and (c) below) | 684,016 | 657,609 | ||||||
Withholding taxes (Refer Note (b) below) | 560,456 | 530,146 | ||||||
Employee advances | 7,218 | 8,695 | ||||||
1,251,690 | 1,196,450 | |||||||
Financial assets included in other receivables | 354,115 | 322,833 | ||||||
a) | Advances and other deposits primarily comprises of receivables in the form of custom duty credit entitlement, service tax and other advances given in the ordinary course of business. |
b) | Includes withholding taxes recoverable from the Department of Income-tax for which the Company has filed tax returns for refund. The Company expects to realize such refund of withholding taxes within the next 12 months. |
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March 31, 2011 | March 31, 2010 | |||||||
Prepayments for purchase of bandwidth | 71,256 | 79,402 | ||||||
Prepayments related to insurance | 7,026 | 17,680 | ||||||
Prepayments-others | 106,845 | 57,245 | ||||||
Lease prepayments | 5,064 | 36,991 | ||||||
190,191 | 191,318 | |||||||
March 31, 2011 | March 31, 2010 | |||||||
Investment in equity shares of Vashi Railway Station Commercial Complex Limited | 150 | — | ||||||
Investment in equity shares of Sify Empower India Foundation | 10 | — | ||||||
160 | — | |||||||
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Year ended March 31, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Issued as at April 01 | 53,351,498 | 42,820,082 | 55,637,082 | |||||||||
Issued for cash* | 125,000,000 | — | — | |||||||||
Issued for consideration other than cash | — | 10,530,000 | — | |||||||||
Exercise of share options | — | 1,416 | — | |||||||||
Shares forfeited** | — | — | (12,817,000 | ) | ||||||||
Issued as at March 31 | 178,351,498 | 53,351,498 | 42,820,082 | |||||||||
* | Paid up Rs.2.50 per share | |
** | Paid up Re.1/- per share |
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March 31, 2011 | March 31, 2010 | |||||||||||||||||||||||
Present | Present | |||||||||||||||||||||||
Future | value | Future | value | |||||||||||||||||||||
minimum | minimum | minimum | minimum | |||||||||||||||||||||
lease | lease | lease | lease | |||||||||||||||||||||
payments | Interest | payments | payments | Interest | payments | |||||||||||||||||||
Less than one year | 77,975 | (17,468 | ) | 60,507 | 65,148 | (19,178 | ) | 45,970 | ||||||||||||||||
Between one and five years | 144,357 | (16,611 | ) | 127,746 | 182,206 | (26,859 | ) | 155,347 | ||||||||||||||||
Total | 222,332 | (34,079 | ) | 188,253 | 247,354 | (46,037 | ) | 201,317 | ||||||||||||||||
March 31, 2011 | March 31, 2010 | |||||||
Gratuity payable | 19,116 | 16,753 | ||||||
Compensated absences | 28,672 | 38,054 | ||||||
47,788 | 54,807 | |||||||
March 31, 2011 | March 31, 2010 | March 31, 2009 | ||||||||||
Service cost | 22,275 | 14,498 | 12,067 | |||||||||
Interest cost | 3,786 | 4,501 | 3,038 | |||||||||
Expected return on plan asset | (2,875 | ) | (2,963 | ) | (1,672 | ) | ||||||
23,186 | 16,036 | 13,433 | ||||||||||
March 31, 2011 | March 31, 2010 | |||||||
Present value of projected benefit obligation at the end of the year | 59,571 | 51,046 | ||||||
Funded status of the plans | 40,455 | 34,293 | ||||||
Recognised (asset) / liability | 19,116 | 16,753 | ||||||
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Change in defined benefit obligation | March 31, 2011 | March 31, 2010 | March 31, 2009 | |||||||||
Projected benefit obligation at the beginning of the year | 51,046 | 43,389 | 27,332 | |||||||||
Service cost | 22,275 | 14,498 | 12,067 | |||||||||
Interest cost | 3,786 | 4,501 | 3,038 | |||||||||
Actuarial (gain) / loss | (8,358 | ) | (5,957 | ) | 3,662 | |||||||
Benefits paid | (9,178 | ) | (5,385 | ) | (2,710 | ) | ||||||
Projected benefit obligation at the end of the year | 59,571 | 51,046 | 43,389 | |||||||||
Change in plan assets | March 31, 2011 | March 31, 2010 | March 31, 2009 | |||||||||
Fair value of plan assets at the beginning of the year | 34,293 | 28,307 | 18,740 | |||||||||
Expected return on plan assets | 2,875 | 2,965 | 1,672 | |||||||||
Actuarial gain / (loss) | — | (449 | ) | (684 | ) | |||||||
Employer contributions | 12,465 | 8,855 | 11,290 | |||||||||
Benefits paid | (9,178 | ) | (5,385 | ) | (2,711 | ) | ||||||
Fair value of plan assets at the end of the year | 40,455 | 34,293 | 28,307 | |||||||||
Actual return on plan assets | 2,875 | 2,513 | 988 |
Actuarial assumptions at end of the year: |
The principal actuarial assumptions as on March 31, 2011, 2010 and 2009 were as follows: |
March 31, 2011 | March 31, 2010 | March 31, 2009 | ||||||||||
Discount rate | 8.00% P.a | 8.15% P.a | 7.95% P.a | |||||||||
Long-term rate of compensation increase | 8.00% P.a | 8.00% P.a | 8.00% P.a | |||||||||
Expected long term rate of return on plan assets | 8.00% P.a | 8.00% P.a | 8.00% P.a | |||||||||
Average future working life time | 8.60 years | 11.06 years | 10.99 years |
March 31, 2011 | March 31, 2010 | |||||||
Experience adjustment on plan liabilities | 8,064 | (4,818 | ) | |||||
Experience adjustment on plan assets | — | (450 | ) | |||||
Contributions: The Group expects to contribute Rs.15,000 (March 31 2010: Rs12,000) to its gratuity fund during the year ending March 31, 2012. |
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Plan assets:The Gratuity plan’s weighted-average asset allocation at March 31, 2011 and March 31, 2010, by asset category is as follows: |
March 31, 2011 | March 31, 2010 | |||||||
Funds managed by insurers | 100 | % | 100 | % |
March 31, 2011 | March 31, 2010 | March 31, 2009 | ||||||||||
Actuarial gain / (loss) | 8,358 | 5,508 | (4,346 | ) | ||||||||
8,358 | 5,508 | (4,346 | ) | |||||||||
March 31, 2011 | March 31, 2010 | |||||||
Franchisee deposits and other liabilities | 163,245 | 165,800 | ||||||
163,245 | 165,800 | |||||||
March 31, 2011 | March 31, 2010 | |||||||
Current | ||||||||
Term bank loans (Refer note 1 below) | 216,000 | 216,000 | ||||||
Other working capital facilities (Refer note 2 below) | 679,542 | 697,165 | ||||||
Borrowings from others (Refer note 3 below) | 140,260 | 39,681 | ||||||
1,035,802 | 952,846 | |||||||
Non current | ||||||||
Term bank loans (Refer note 1 below) | 113,880 | 325,940 | ||||||
Borrowings from others (Refer note 3 below) | 148,728 | 123,484 | ||||||
262,608 | 449,424 | |||||||
1. | Term bank loans bear interest ranging from 9.50% to 13.50% p.a. The term loans are secured by way of pari-passu first charge over the unencumbered movable fixed assets acquired out of such term loans availed by the Company. Further these loans are collaterally secured by way of equitable mortgage over the office premises and also by way of pari passu second charge on the entire current assets of the Company. |
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2. | Working capital facilities include Letter of credit discounted, buyer’s credit and foreign currency demand loan. These are secured by pari-passu charge on current assets of the Company and moveable assets of the company, both present and future. Foreign currency demand loan bear an interest of Libor +550 bps. Other working capital borrowings bear interest ranging from 11% to 14% p.a. Such facilities are renewable every year. | |
3. | Borrowings from others are secured against relevant assets and software. However, the Company is in the process of obtaining no objection certificate from the bank with whom such relevant assets and software are hypothecated. |
March 31, 2011 | March 31, 2010 | |||||||
Trade payables | 814,777 | 989,020 | ||||||
Advance from customers | 86,073 | 37,047 | ||||||
Accrued expenses | 808,399 | 686,452 | ||||||
Other payables | 74,139 | 143,145 | ||||||
1,783,388 | 1,855,664 | |||||||
Financial liabilities included in trade and other payables | 1,725,907 | 1,798,764 | ||||||
March 31, 2011 | March 31, 2010 | |||||||
Corporate network/data services | 339,549 | 328,309 | ||||||
Internet access services | 28,966 | 24,941 | ||||||
Other services | 44,079 | 65,316 | ||||||
412,594 | 418,566 | |||||||
Year ended | ||||||||||||
March 31, 2011 | March 31, 2010 | March 31, 2009 | ||||||||||
Rendering of services | ||||||||||||
Service revenue* | 5,460,236 | 5,356,852 | 5,253,535 | |||||||||
Initial franchise fee | 10,992 | 11,369 | 30,489 | |||||||||
Installation service revenue | 812,341 | 288,919 | 235,116 | |||||||||
6,283,569 | 5,657,140 | 5,519,140 | ||||||||||
Sale of products | 603,060 | 1,053,048 | 643,021 | |||||||||
6,886,629 | 6,710,188 | 6,162,161 | ||||||||||
* | Including revenue arising from construction contracts (refer note 24) |
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Year ended | ||||||||||||
March 31, 2011 | March 31, 2010 | March 31, 2009 | ||||||||||
Contract revenue recognised for the year ended March 31, 2011 | 268,064 | 86,214 | — | |||||||||
Aggregate amounts of costs incurred and recognized profits (less recognised losses) upto the reporting date for contracts in progress | 109,570 | 86,124 | — | |||||||||
Advances received for contracts in progress | 27,860 | 16,441 | — | |||||||||
Gross amount due from customers for contract work presented as an asset | 231,090 | 86,214 | — |
Year ended | ||||||||||||
March 31, 2011 | March 31, 2010 | March 31, 2009 | ||||||||||
Duty credit entitlement | 38,006 | 82,486 | 79,278 | |||||||||
Others | 34,687 | 49,303 | 9,827 | |||||||||
72,693 | 131,789 | 89,105 | ||||||||||
Year ended | ||||||||||||
March 31, 2011 | March 31, 2010 | March 31, 2009 | ||||||||||
Personnel expenses | 561,385 | 745,067 | 987,585 | |||||||||
Marketing and promotion expenses | 394,057 | 482,554 | 608,318 | |||||||||
Administrative and other expenses* | 1,486,357 | 1,238,770 | 1,217,522 | |||||||||
2,441,799 | 2,466,391 | 2,813,425 | ||||||||||
* | Includes foreign exchange gain / (loss) of Rs.12,941, Rs.9,397 and Rs.21,320 for the years ended March 31, 2011, 2010 and 2009 respectively. |
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Year ended | ||||||||||||
March 31, 2011 | March 31, 2010 | March 31, 2009 | ||||||||||
Salaries and wages | 1,211,183 | 1,269,638 | 1,532,378 | |||||||||
Contribution to provident fund and other funds | 77,164 | 77,197 | 70,354 | |||||||||
Staff welfare expenses | 22,296 | 27,499 | 38,225 | |||||||||
Employee stock compensation expense | 10,201 | 30,589 | 61,380 | |||||||||
1,320,844 | 1,404,923 | 1,702,337 | ||||||||||
Attributable to cost of goods sold and services rendered | 759,459 | 659,856 | 714,752 | |||||||||
Attributable to selling, general and administration expenses | 561,385 | 745,067 | 987,585 |
One sixth of the options: | At the end of one year from the date of the grant | |
Five sixth of the options: | At the end of each quarter during the second and third year from the date of the grant in eight equal installments. |
Weighted average exercise | ||||||||||||||||||||||||
No. of options granted, exercised and | Number of options | price in Rs. | ||||||||||||||||||||||
forfeited | 2011 | 2010 | 2009 | 2011 | 2010 | 2009 | ||||||||||||||||||
Outstanding at the beginning of the year | — | — | 326,093 | — | — | 328.84 | ||||||||||||||||||
Granted during the year | — | — | — | — | — | — | ||||||||||||||||||
Forfeited during the year | — | — | (29,167 | ) | — | — | 449.16 | |||||||||||||||||
Expired during the year | — | — | (296,926 | ) | — | — | 317.02 | |||||||||||||||||
Exercised during the year | — | — | — | — | — | — | ||||||||||||||||||
Replaced during the year (Refer to notes below) | — | — | — | — | — | — | ||||||||||||||||||
Outstanding at the end of the year | — | — | — | — | — | — | ||||||||||||||||||
Vested and exercisable at the end of the year | — | — | — | — | — | — | ||||||||||||||||||
Weighted average grant date fair value of grants during the year | — | — | — | — | — | — | ||||||||||||||||||
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One sixth of the option quantity: | At the end of one year from the date of the grant. | |
Five sixth of the option quantity: | At the end of each quarter during the second, third and fourth year from the date of the grant in twelve equal installments. |
Weighted | Weighted | Weighted | ||||||||||||||||||||||
average | average | average | ||||||||||||||||||||||
exercise | Number | exercise | Number | exercise | ||||||||||||||||||||
Number | price in | of | price in | of | price in | |||||||||||||||||||
No. of options granted, exercised | of options | Rs. | options | Rs. | options | Rs. | ||||||||||||||||||
and forfeited | 2011 | 2011 | 2010 | 2010 | 2009 | 2009 | ||||||||||||||||||
Outstanding at the beginning of the year | 1,078,800 | 149.21 | 1,211,900 | 152.51 | 1,200,400 | 157.35 | ||||||||||||||||||
Granted during the year | 6,000 | 74.41 | 50,000 | 89.34 | 142,500 | 117.46 | ||||||||||||||||||
Replaced (Refer to notes below) | — | — | — | — | — | — | ||||||||||||||||||
Replacement options granted (Refer to notes below) | — | — | — | — | — | — | ||||||||||||||||||
Forfeited during the year | (81,801 | ) | 152.37 | (93,616 | ) | 153.58 | (131,000 | ) | 158.77 | |||||||||||||||
Expired during the year | (161,799 | ) | 158.52 | (88,068 | ) | 158.01 | — | — | ||||||||||||||||
Exercised during the year | — | — | (1,416 | ) | 59.02 | — | — | |||||||||||||||||
Outstanding at the end of the year | 841,200 | 146.58 | 1,078,800 | 149.21 | 1,211,900 | 152.51 | ||||||||||||||||||
Vested and Exercisable at the end of the year | 566,908 | 151.36 | 437,210 | 155.55 | 185,167 | 157.35 | ||||||||||||||||||
Weighted average grant date fair value of grants during the year | — | — | — | — | — | 71.82 | ||||||||||||||||||
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Year ended | Year ended | Year ended | ||||
March 31, | March 31, | March 31, | ||||
No. of options granted, exercised and forfeited | 2011 | 2010 | 2009 | |||
Weighted average share price | 82.68 | 99.26 | 130.41 | |||
Weighted average exercise price | 74.41 | 89.34 | 117.46 | |||
Expected volatility | 110.5% – 124.7% | 115.8% – 136.7% | 53.5% – 120.0% | |||
Option life | 3 – 4.5 years | 3 – 4.5 years | 3 – 4.5 years | |||
Expected dividends | — | — | — | |||
Risk-free interest rate | 2.61% | 2.43% – 2.69% | 1.64% – 3.45% |
Weighted | ||||||||||||||||||||||||
Number | Weighted | average | Number | Weighted | ||||||||||||||||||||
Range of | outstanding at | average | remaining | exercisable at | average | |||||||||||||||||||
exercise price | March 31, | exercise price | contractual | March 31, | exercise price | |||||||||||||||||||
in Rs. | 2011 | in Rs. | life | 2011 | in Rs. | |||||||||||||||||||
ASOP 2007 | 51.51-188.32 | 841,200 | 146.58 | 1.00 | 566,908 | 151.36 | ||||||||||||||||||
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Assumptions | Pre modification | Post modification | ||
Current market price | 174.83 | 174.83 | ||
Exercise price | 308.34 – 578.38 | 157.35 | ||
Expected term | 3 – 4.5 years | 3 – 4.5 years | ||
Volatility | 53.83% – 77.82% | 53.01% – 77.82% | ||
Dividend yield | 0% | 0% | ||
Discount rate | 2.5% | 2.5% |
Year ended | ||||||||||||
March 31, 2011 | March 31, 2010 | March 31, 2009 | ||||||||||
Interest income on bank deposits | 21,360 | 19,489 | 116,495 | |||||||||
Interest income from leases | — | — | 435 | |||||||||
Others | 24,338 | 8,505 | 5,635 | |||||||||
Finance income | 45,698 | 27,994 | 122,565 | |||||||||
Interest expense on lease obligations | 20,117 | 16,476 | 2,243 | |||||||||
Bank charges (including letter of credit, bill discounting and buyer’s credit charges) | 96,721 | 100,241 | 86,216 | |||||||||
Interest expense on borrowings | 141,784 | 177,156 | 163,201 | |||||||||
Finance expense | (258,622 | ) | (293,873 | ) | (251,660 | ) | ||||||
Net finance income / (expense) recognised in profit or loss | (212,924 | ) | (265,879 | ) | (129,095 | ) | ||||||
Year ended | ||||||||||||
March 31, 2011 | March 31, 2010 | March 31, 2009 | ||||||||||
Net profit / (loss) — as reported | (519,492 | ) | 17,027 | (900,574 | ) | |||||||
Weighted average number of shares — basic | 63,317,251 | 50,840,358 | 43,350,320 | |||||||||
Basic earnings / (loss) per share | (8.20 | ) | 0.33 | (20.77 | ) | |||||||
Weighted average number of shares — diluted | 63,317,251 | 50,853,293 | 43,350,320 | |||||||||
Diluted earnings / (loss) per share | (8.20 | ) | 0.33 | (20.77 | ) | |||||||
Year ended March 31, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Issued fully paid ordinary shares at April 01 | 53,351,498 | 42,820,082 | 42,820,082 | |||||||||
Effect of shares issued on exercise of stock options | — | 166 | — | |||||||||
Effect of partly paid shares (Note 1) | 9,965,753 | — | 530,238 | |||||||||
Effect of shares issued consequent to amalgamation of Sify Communications Limited | — | 8,020,110 | — | |||||||||
Weighted average number of equity shares and equivalent shares outstanding | 63,317,251 | 50,840,358 | 43,350,320 | |||||||||
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Year ended March 31, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Weighted average number of ordinary shares (basic) | 63,317,251 | 50,840,358 | 43,350,320 | |||||||||
Effect of stock options | — | 12,935 | — | |||||||||
Weighted average number of equity shares outstanding (diluted) | 63,317,251 | 50,853,293 | 43,350,320 | |||||||||
Note 1: | During the year, 125,000,000 ordinary shares were issued to the existing promoter group on a private placement basis. As of March 31, 2011, these shares were partly paid up to the extent of Rs 2.50 per share. Refer note 16 to the consolidated financial statements. |
Less | More than 5 | |||||||||||||||
Lease obligations | Total | than 1 year | 1-5 years | years | ||||||||||||
Non-cancellable operating lease obligations | 1,884,543 | 105,693 | 588,973 | 1,189,877 |
Less | More than 5 | |||||||||||||||
Lease obligations | Total | than 1 year | 1-5 years | years | ||||||||||||
Non-cancellable operating lease obligations | 1,608,509 | 119,871 | 407,890 | 1,080,748 | ||||||||||||
Non-cancellable obligations towards proposed lease * | 2,423,554 | 22,850 | 520,808 | 1,879,896 |
* | For details on proposed lease, refer Note 37 on related parties. |
• | Corporate network/data services, which provides Internet, connectivity, security and consulting, hosting and managed service solutions; | |
• | Internet access services, from homes and through cybercafés, | |
• | Online portal services and content offerings; and | |
• | Other services, such as development of e-learning software. |
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Corporate | ||||||||||||||||||||||||
network / | Internet | Online | Consumer | |||||||||||||||||||||
data | access | portal | one | Other | ||||||||||||||||||||
services | services | services | (Sub-total) | services | Total | |||||||||||||||||||
A | B | A+B | �� | |||||||||||||||||||||
Segment revenue | 5,671,909 | 403,925 | 122,441 | 526,366 | 688,354 | 6,886,629 | ||||||||||||||||||
Allocated segment expenses | (4,026,865 | ) | (539,404 | ) | (100,059 | ) | (639,463 | ) | (536,176 | ) | (5,202,504 | ) | ||||||||||||
Impairment loss on intangibles | — | — | (1,857 | ) | (1,857 | ) | — | (1,857 | ) | |||||||||||||||
Segment operating income / (loss) | 1,645,044 | (135,479 | ) | 20,525 | (114,954 | ) | 152,178 | 1,682,268 | ||||||||||||||||
Unallocated expenses: | ||||||||||||||||||||||||
Cost of goods sold | (525,024 | ) | ||||||||||||||||||||||
Selling, general and administrative expenses | (980,354 | ) | ||||||||||||||||||||||
Depreciation and amortization | (685,836 | ) | ||||||||||||||||||||||
Other income / (expense), net | 72,693 | |||||||||||||||||||||||
Finance income | 45,698 | |||||||||||||||||||||||
Finance expenses | (201,969 | ) | ||||||||||||||||||||||
Share of profit of equity accounted investee | 73,032 | |||||||||||||||||||||||
Profit / (loss) before tax | (519,492 | ) | ||||||||||||||||||||||
Income tax (expense) / benefit | — | |||||||||||||||||||||||
Profit / (loss) for the year | (519,492 | ) | ||||||||||||||||||||||
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Corporate | ||||||||||||||||||||||||
network / | Internet | Online | Consumer | |||||||||||||||||||||
data | access | portal | one | Other | ||||||||||||||||||||
services | services | services | (Sub-total) | services | Total | |||||||||||||||||||
A | B | A+B | ||||||||||||||||||||||
Segment revenue | 5,335,268 | 713,929 | 130,842 | 844,771 | 530,149 | 6,710,188 | ||||||||||||||||||
Allocated segment expenses | (3,929,727 | ) | (757,431 | ) | (140,966 | ) | (898,397 | ) | (406,063 | ) | (5,234,187 | ) | ||||||||||||
Impairment loss on intangibles including goodwill | — | — | (47,269 | ) | (47,269 | ) | — | (47,269 | ) | |||||||||||||||
Segment operating income / (loss) | 1,405,541 | (43,502 | ) | (57,393 | ) | (100,895 | ) | 124,086 | 1,428,732 | |||||||||||||||
Unallocated expenses: | ||||||||||||||||||||||||
Cost of goods sold | (477,807 | ) | ||||||||||||||||||||||
Selling, general and administrative expenses | (936,842 | ) | ||||||||||||||||||||||
Depreciation and amortization | (656,797 | ) | ||||||||||||||||||||||
Other income / (expense), net | 131,789 | |||||||||||||||||||||||
Income from legal settlement | 561,120 | |||||||||||||||||||||||
Finance income | 27,994 | |||||||||||||||||||||||
Finance expenses | (223,990 | ) | ||||||||||||||||||||||
Share of profit of equity accounted investee | 91,135 | |||||||||||||||||||||||
Profit / (loss) before tax | (54,666 | ) | ||||||||||||||||||||||
Income tax (expense) / benefit | 81,479 | |||||||||||||||||||||||
Profit / (loss) for the year | 26,813 | |||||||||||||||||||||||
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Corporate | ||||||||||||||||||||||||
network / | Internet | Online | Consumer | |||||||||||||||||||||
data | access | portal | one | Other | ||||||||||||||||||||
services | services | services | (Sub-total) | services | Total | |||||||||||||||||||
A | B | A+B | ||||||||||||||||||||||
Segment revenue | 4,305,235 | 1,128,182 | 177,324 | 1,305,506 | 551,420 | 6,162,161 | ||||||||||||||||||
Allocated segment expenses | (2,842,889 | ) | (1,295,332 | ) | (220,967 | ) | (1,516,299 | ) | (473,008 | ) | (4,832,196 | ) | ||||||||||||
Impairment loss on goodwill | — | — | (15,200 | ) | (15,200 | ) | — | (15,200 | ) | |||||||||||||||
Segment operating income / (loss) | 1,462,346 | (167,150 | ) | (58,843 | ) | (225,993 | ) | 78,412 | 1,314,765 | |||||||||||||||
Unallocated expenses: | ||||||||||||||||||||||||
Cost of goods sold | (484,478 | ) | ||||||||||||||||||||||
Selling, general and administrative expenses | (1,130,221 | ) | ||||||||||||||||||||||
Depreciation and amortization | (498,872 | ) | ||||||||||||||||||||||
Other income / (expense), net | 89,105 | |||||||||||||||||||||||
Finance income | 122,565 | |||||||||||||||||||||||
Finance expenses | (231,539 | ) | ||||||||||||||||||||||
Share of profit of equity accounted investee | 64,091 | |||||||||||||||||||||||
Profit / (loss) before tax | (754,584 | ) | ||||||||||||||||||||||
Income tax (expense) / benefit | (97,049 | ) | ||||||||||||||||||||||
Profit / (loss) for the year | (851,633 | ) | ||||||||||||||||||||||
Selling, general | ||||||||||||||||
and | ||||||||||||||||
administrative | ||||||||||||||||
Cost of goods sold | expenses | Finance expenses | Total | |||||||||||||
Year ended March 31, 2011 | ||||||||||||||||
Allocated segment expenses | 3,684,406 | 1,461,445 | 56,653 | 5,202,504 | ||||||||||||
Unallocated segment expenses | 525,024 | 980,354 | 201,969 | |||||||||||||
Total as per income statement | 4,209,430 | 2,441,799 | 258,622 | |||||||||||||
Year ended March 31, 2010 | ||||||||||||||||
Allocated segment expenses | 3,618,731 | 1,545,573 | 69,883 | 5,234,187 | ||||||||||||
Unallocated segment expenses | 477,807 | 936,842 | 223,990 | |||||||||||||
Total as per income statement | 4,096,538 | 2,482,415 | 293,873 | |||||||||||||
Year ended March 31, 2009 | ||||||||||||||||
Allocated segment expenses | 3,128,871 | 1,683,204 | 20,121 | 4,832,196 | ||||||||||||
Unallocated segment expenses | 484,478 | 1,130,221 | 231,539 | |||||||||||||
Total as per income statement | 3,613,349 | 2,813,425 | 251,660 |
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Rest of the | ||||||||||||
Description | India | world | Total | |||||||||
Revenues | ||||||||||||
Year ended March 31, 2011 | 4,495,801 | 2,390,828 | 6,886,629 | |||||||||
Year ended March 31, 2010 | 4,950,352 | 1,759,836 | 6,710,188 | |||||||||
Year ended March 31, 2009 | 5,071,137 | 1,091,024 | 6,162,161 |
a) | During the previous years, the Group had received assessment orders from the Income-tax Department of India for various financial years disallowing certain expenditure like bandwidth charges and foreign currency payments for non-deduction of withholding taxes. The Company appealed against those order before Commissioner of Income Tax (Appeals) (CIT(A)) and received favourable orders. The department has filed appeals before Income Tax Appellate Tribunal (ITAT) disputing CIT(A) orders. The group believes that the appeal by the department is not sustainable and consequently no loss contingency is necessary as at March 31, 2011. Income tax claims against the company as at March 31, 2011 amounted to Rs. 84,981 (March 31, 2010: Nil) | |
b) | Contingencies due to certain service tax claims as at March 31, 2011 amounted to Rs 243,610 (March 31, 2010: Rs. 33,280). | |
c) | Additionally, the Group is also involved as a party to lawsuits, claims and proceedings, which arise in the ordinary course of business. The Group does not foresee any material contingency out of the pending issues. | |
d) | The Group during the year ended March 31, 2009 entered into a contract with Emirates Integrated Telecom for the construction and supply of capacity from the Europe India Gateway. As per the contract with Emirates, the Group is required to pay its share of decommissioning costs if any that may arise in the future. No provision has been made by the Group for such decommissioning costs as the amount of provision cannot be measured reliably as at March 31, 2011. | |
d) | In respect of contingencies arising on legal proceedings, refer Note 36. |
(b) | The Group and certain of its officers and directors are named as defendants in a securities class action lawsuit filed in the United States District Court for the Southern District of New York. This action, which is captioned In re Satyam Infoway Ltd. Initial Public Offering Securities Litigation, also names several of the underwriters involved in the Sify’s initial public offering of American Depositary Shares as defendants. This class action is brought on behalf of a purported class of purchasers of the Sify’s ADSs from the time of the Sify’s Initial Public Offering (“IPO”) in October 1999 through December 2000. The central allegation in this action is that the underwriters in the Sify’s IPO solicited and received undisclosed commissions from, and entered into undisclosed arrangements with, certain investors who purchased the Sify’s ADSs in the IPO and the aftermarket. The complaint also alleges that Sify violated the United States Federal Securities laws by failing to disclose in the IPO prospectus that the underwriters had engaged in these allegedly undisclosed arrangements. More than 300 issuers have been named in similar lawsuits. | |
In July 2002, an omnibus motion to dismiss all complaints against issuers and individual defendants affiliated with issuers was filed by the entire group of issuer defendants in these similar actions. In October 2002, the cases against the Sify’s executive officers who were named as defendants in this action were dismissed without prejudice. In February 2003, the court in this action issued its decision on defendants’ omnibus motion to dismiss. This decision denied the motion to dismiss the Section 11 claim as to Sify and virtually all of the other issuer defendants. The decision also denied the motion to dismiss the Section 10(b) claim as to numerous issuer defendants, including Sify. On June 26, 2003, the plaintiffs in the consolidated IPO class action lawsuits currently pending against the Sify and over 300 other issuers who went public between 1998 and 2000, announced a proposed settlement with Sify and the other issuer defendants. The proposed settlement provided that the insurers of all settling issuers would guarantee that the plaintiffs recover $1 billion from non-settling defendants, including the investment banks who acted as underwriters in those offerings. In the event that the plaintiffs did not recover $1 billion, the insurers for the settling issuers would make up the difference. This proposed settlement was terminated on June 25, 2007, following the ruling by the United States Court of Appeals for the Second Circuit on December 5, 2006, reversing the District Court’s granting of class certification. |
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On August 14, 2007, the plaintiffs filed Amended Master Allegations. On September 27, 2007, the Plaintiffs filed a Motion for Class Certification. Defendants filed a Motion to Dismiss the focus cases on November 9, 2007. On March 26, 2008, the Court ruled on the Motion to Dismiss, holding that the plaintiffs had adequately pleaded their Section 10(b) claims against the Issuer Defendants and the Underwriter Defendants in the focus cases. As to the Section 11 claim, the Court dismissed the claims brought by those plaintiffs who sold their securities for a price in excess of the initial offering price, on the grounds that they could not show cognizable damages, and by those who purchased outside the previously certified class period, on the grounds that those claims were time barred. This ruling, while not binding on the Sify’s case, provides guidance to all of the parties involved in this litigation. On October 2, 2008, plaintiffs requested that the class certification motion in the focus cases be withdrawn without prejudice. On October 10, 2008, the Court signed an order granting that request. On April 2, 2009, the parties lodged with the Court a motion for preliminary approval of a proposed settlement between all parties, including Sify and its former officers and directors. The proposed settlement provides the plaintiffs with $586 million in recoveries from all defendants. Under the proposed settlement, the Issuer Defendants collectively would be responsible for $100 million, which would be paid by the Issuers’ insurers, on behalf of the Issuer Defendants and their officers and directors. | ||
Accordingly, any direct financial impact of the proposed settlement is expected to be borne by the Sify’s insurers. On June 12, 2009, the Federal District Court granted preliminary approval of the proposed settlement. On October 6, 2009, the District Court issued an order granting final approval of the settlement. Subsequent to the final approval of Settlement agreement by the District court, there are several notices of appeal filed. Most were filed by the same parties that objected to the settlement in front of the District Court. These will likely be consolidated into a single appeal and briefing schedule will be provided shortly. Any direct financial impact of the preliminary approved settlement is expected to be borne by the Sify’s insurers. Sify believes, the maximum exposure under this settlement is approximately USD 338,983, an amount which it believes is fully recoverable from the it’s insurers. | ||
b) | Proceedings before Department of Telecommunications |
(ii) | License fees |
• | On October 12, 2009 (as later clarified by the DoT), the Department of Telecommunications (‘DOT’) raised a demand on the Company for INR 14 million after correcting the arithmetical error in the Assessment letter. | ||
• | On February 26, 2010 DOT raised a demand on Sify Communications (erstwhile subsidiary merged with this Company) for INR 26 million. |
The above demands were made by the DoT on the premise that all amounts of income (whether direct or indirect) including certain items like other income, interest on deposits, gain on foreign exchange fluctuation, profit on sale of assets & provision written back, that have not got anything to do with telecom operations of the Company or arise in connection with the Telecom business of the Company, are to be considered as income for the purpose of calculation of the license fee. | ||
The Company has responded to the above demand notices stating that the above demands are not tenable as the demands were not in accordance with the Telecom Disputes Settlement & Appellate Tribunal (‘TDSAT’) Order, in which Order the TDSAT has clarified in its order that the items of income which are liable for license fee and items of income on which license fees are not liable to be paid. The TDSAT Order however has been challenged and is presently pending before the Supreme Court. Till such time the Supreme Court pronounces its final verdict on this case, the TDSAT Order continues to be in force and the Company currently continues to pay the license fee in accordance with the TDSAT Order. The Company believes that it has adequate legal defenses for these demands and the ultimate outcome of these actions will not have a material adverse effect on the Company. | ||
(ii) In November 2009, the Company received a demand notice pertaining to the allocation of spectrum in the 3.3-3.4 GHz frequency, from DoT, demanding INR 345 million (US $7.68 million) towards spectrum charges payable from the date of issue of allocation letter for 170 Base Stations. As per the notice, in case no payment is received within 15 days from the date of issue of the notice, then it would be presumed that the Company is no longer interested for the frequency assignments in 3.3-3.4 GHz band. |
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Whilst the Company received allotment letter for Spectrum in 3.3 GHz band (3303.5/3353.5 MHz) (Total 12 MHz) the Company had neither started any operations in this frequency band nor had applied for any Operating License from DOT/ Wireless Planning Commission (WPC). Sify believes that the obligation to make payment will arise only after obtaining the operating license from DOT/WPC. It also believes that it has adequate legal defences for these demands, as the Company has not yet obtained any operative license, hence such demand is not tenable. Nevertheless, the Company has as a commitment to hold and use the spectrum in the above band has paid INR 11.56 million towards 40 Base Stations and has surrendered the remaining 130 Base Stations. The Company believes that the ultimate outcome of these actions will not have a material adverse effect. | ||
c) | The Group is party to additional legal actions arising in the ordinary course of business. Based on the available information, as at March 31, 2011, Sify believes that it has adequate legal defences for these actions and that the ultimate outcome of these actions will not have a material adverse effect. However in the event of adverse judgement in all these cases, the maximum financial exposure would be Rs 9,051 (March 31, 2010: Rs 9,051). |
Country | % of Ownership interest | |||||||||||
of | March 31, | March 31, | ||||||||||
Particulars | incorporation | 2011 | 2010 | |||||||||
Holding Company | ||||||||||||
Raju Vegesna Infotech & Industries Private Limited (Refer note 16 and note 42) | — | — | ||||||||||
Subsidiaries | ||||||||||||
Sify International Inc. | USA | 100 | 100 | |||||||||
Sify Software Limited (Formerly Sify Networks Private Limited) | India | 100 | 100 | |||||||||
Sify Technologies (Singapore) Pte. Limited (Incorporated on December 7, 2009) | Singapore | 100 | 100 | |||||||||
Associates | ||||||||||||
MF Global-Sify Securities India Private Limited | India | 29.85 | 29.85 | |||||||||
Others (Entities in which the Key Management Personnel have controlling interest / significant influence and relatives of Key Management Personnel) | ||||||||||||
Radhika Vegesna | India | — | — | |||||||||
Server Engines LLC | USA | — | — | |||||||||
Server Engines India Private Limited | India | — | — | |||||||||
VALS Developers Private Limited | India | — | — | |||||||||
Infinity Satcom Universal Private Limited | India | — | — |
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Key | ||||||||||||||||
Holding | Management | |||||||||||||||
Transactions | Company | Associates | Others | Personnel*** | ||||||||||||
Consultancy services received | — | — | — | 240 | ||||||||||||
Sitting fees paid | — | — | — | 1,200 | ||||||||||||
Salaries and other short term benefits | — | — | — | 40,328 | ||||||||||||
Contributions to defined contribution plans | — | — | — | 1,913 | ||||||||||||
Share based payment transactions | — | — | — | 4,226 | ||||||||||||
Issue of shares on private placement basis** | 1,000,000 | — | — | — | ||||||||||||
Advance lease rentals and refundable deposits refunded | — | — | 282,825 | — | ||||||||||||
Refundable lease deposit paid**** | — | — | 2,558 | — | ||||||||||||
Lease rentals paid**** | — | — | 2,558 | — | ||||||||||||
Amount of outstanding balances | ||||||||||||||||
Debtors | — | — | — | — | ||||||||||||
Advance lease rentals and refundable deposits made**** | — | — | 2,558 | — |
Key | ||||||||||||
Management | ||||||||||||
Transactions | Associates | Others | Personnel*** | |||||||||
Consultancy services received | — | — | 240 | |||||||||
Sitting fees paid | — | — | 1,240 | |||||||||
Salaries and other short term benefits | — | — | 52,441 | |||||||||
Contributions to defined contribution plans | — | — | 2,427 | |||||||||
Share based payment transactions | — | — | 9,486 | |||||||||
Issuance of shares on amalgamation of erstwhile Sify Communications limited with Sify Technologies limited | — | 842,837 | — | |||||||||
Amount of outstanding balances | ||||||||||||
Debtors | — | — | — | |||||||||
Advance lease rentals and refundable deposits made* | — | 282,825 | — |
Key | ||||||||||||
management | ||||||||||||
Transactions | Associates | Others | personnel*** | |||||||||
Sale of goods / services | 6,600 | 734 | — | |||||||||
Advance lease rentals and refundable deposits made* | — | 282,825 | — | |||||||||
Consultancy services received | — | — | 240 | |||||||||
Sitting fees paid | — | — | 1,220 | |||||||||
Salaries and other short term benefits | — | — | 50,672 | |||||||||
Contributions to defined contribution plans | — | — | 2,389 | |||||||||
Share based payments | — | — | 33,579 | |||||||||
Amount of outstanding balances | ||||||||||||
Debtors | 524 | 174 | — | |||||||||
Advance lease rentals and refundable deposits made* | — | 282,825 | — |
* | Represents deposits made to VALS Developers Private Limited (“VALS”).VALS was owned and controlled by Raju Vegesna Infotech & Industries Private Limited, in which Mr. Raju Vegesna, our principal share holder and Chief Executive Officer, was holding 94.66% equity in his personal capacity. During the year ended March 31, 2009, Sify entered into an agreement for Sub Lease with VALS Developers Private Limited to take on lease on long term basis the proposed building which is in the process of being constructed. The lease agreement, when final and executed, was expected to have an initial non-cancellable term of 5 years, with a further option for Sify to renew or cancel the lease for the incremental five year terms. In terms of this Agreement for Sub Lease, Sify has paid a security deposit of Rs.125,700 and advance rental of Rs.157,125 to VALS. As per the terms of the |
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Sub Lease, the security deposit will be refunded at the end of lease term and the advance rental would be adjusted over a period of 15 months from the commencement of the lease. On October 30, 2010,with the consent of VALS, the Board of Directors have cancelled the Agreement for Sub lease and has decided to acquire the building along with land directly through acquisition of Pace Info Com Park Private Limited (PACE), an unrelated third party, which is the owner of the land and building for total consideration of Rs.1,140,000. The above deposits would be adjusted against the consideration payable for acquiring the shares of PACE. To give effect to the above, the company has entered into an amendment Agreement with all concerned parties and VALS has assigned its rights and obligations to the company and the company paid Rs.400,000 as part consideration for the above purchase. Subsequently on May 24, 2011 and on June 9, 2011, the company has paid a further sum of Rs.50,000 each as part consideration for the above purchase. On September 28, 2011, the company has paid a further sum of Rs.127,000 as per terms of MoU and are in the process of acquiring the shares of PACE through Hermit Projects Private Limited. | ||
** | Also refer note 16 in relation to transactions relating to issue of equity shares on private placement basis to Raju Vegesna Infotech & Industries Private Limited. | |
*** | Some of the key management personnel of the Group are also covered under the Group’s gratuity plan along with other employees of the Group. Proportionate amounts of gratuity accrued under the gratuity plan have not been separately computed or included in the above disclosure. | |
**** | The company has entered into a lease agreement with Ms Radhika Vegesna, Daughter of Mr. Ananda Raju Vegesna, Executive Director of the company, to lease the premises owned by her for a period of three years effective June 1, 2010 on a rent of Rs.256 per month and payment of refundable security deposit of Rs.2,558. This arrangement will be automatically renewed for a further period of two blocks of three years with all the terms remaining unchanged. |
Financial | ||||||||||||||||||||||||||||
assets / | ||||||||||||||||||||||||||||
liabilities | ||||||||||||||||||||||||||||
at fair | ||||||||||||||||||||||||||||
value | ||||||||||||||||||||||||||||
through | Other | Total | ||||||||||||||||||||||||||
Loans and | profit and | Available | financial | carrying | Total fair | |||||||||||||||||||||||
Particulars | Note | receivables | loss | for sale | liabilities | value | value | |||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||
Cash and cash equivalents | 8 | 543,097 | — | — | — | 543,097 | 543,097 | |||||||||||||||||||||
Other assets | 10 | 212,969 | — | — | — | 212,969 | 212,969 | |||||||||||||||||||||
Trade receivables | 13 | 1,839,966 | — | — | — | 1,839,966 | 1,839,966 | |||||||||||||||||||||
Other receivables | 13 | 354,115 | — | — | — | 354,115 | 354,115 | |||||||||||||||||||||
Other investments | 15 | — | — | 160 | — | 160 | 160 | |||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||
Bank overdraft | 8 | — | — | — | 678,091 | 678,091 | 678,091 | |||||||||||||||||||||
Finance lease liabilities | 17 | — | — | — | 188,253 | 188,253 | 188,253 | |||||||||||||||||||||
Other liabilities | 19 | — | — | — | 163,245 | 163,245 | 163,245 | |||||||||||||||||||||
Borrowings from banks | 20 | — | — | — | 1,009,422 | 1,009,422 | 1,009,422 | |||||||||||||||||||||
Borrowings from others | 20 | — | — | — | 288,988 | 288,988 | 288,988 | |||||||||||||||||||||
Trade and other payables | 21 | — | — | — | 1,725,907 | 1,725,907 | 1,725,907 |
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Financial | ||||||||||||||||||||||||||||
assets / | ||||||||||||||||||||||||||||
liabilities | ||||||||||||||||||||||||||||
at fair | ||||||||||||||||||||||||||||
value | ||||||||||||||||||||||||||||
through | Other | Total | ||||||||||||||||||||||||||
Loans and | profit and | Available | financial | carrying | Total fair | |||||||||||||||||||||||
Particulars | Note | receivables | loss | for sale | liabilities | value | value | |||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||
Cash and cash equivalents | 8 | 878,698 | — | — | — | 878,698 | 878,698 | |||||||||||||||||||||
Other assets | 10 | 249,744 | — | — | — | 249,744 | 249,744 | |||||||||||||||||||||
Trade receivables | 13 | 1,912,348 | — | — | — | 1,912,348 | 1,912,348 | |||||||||||||||||||||
Other receivables | 13 | 315,835 | — | — | — | 315,835 | 315,835 | |||||||||||||||||||||
Derivative financial instruments | 13 | — | 6,998 | — | — | 6,998 | 6,998 | |||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||
Bank overdraft | 8 | — | — | — | 1,060,284 | 1,060,284 | 1,060,284 | |||||||||||||||||||||
Finance lease liabilities | 17 | — | — | — | 201,317 | 201,317 | 201,317 | |||||||||||||||||||||
Other liabilities | 19 | — | — | — | 165,800 | 165,800 | 165,800 | |||||||||||||||||||||
Borrowings from banks | 20 | — | — | — | 1,239,105 | 1,239,105 | 1,239,105 | |||||||||||||||||||||
Borrowings from others | 20 | — | — | — | 163,165 | 163,165 | 163,165 | |||||||||||||||||||||
Trade and other payables | 21 | — | — | — | 1,798,764 | 1,798,764 | 1,798,764 |
March 31, 2011 | March 31, 2010 | |||||||
Cash and cash equivalents | 543,097 | 878,698 | ||||||
Other assets | 212,969 | 249,744 | ||||||
Trade receivables | 1,839,966 | 1,912,348 | ||||||
Other receivables | 354,115 | 315,835 | ||||||
2,950,147 | 3,356,625 | |||||||
As of | ||||||||
March 31, 2011 | March 31, 2010 | |||||||
Forward contracts | ||||||||
In U.S. Dollars (Sell) | — | — | ||||||
In U.S Dollars (Buy) | — | — | ||||||
Option contracts | ||||||||
In U.S Dollars (Sell) | — | 67,710 | ||||||
In U.S Dollars (Buy) | — | — |
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As of | ||||||||
March 31, 2011 | March 31, 2010 | |||||||
Sell: | ||||||||
Not later than one month | — | 33,855 | ||||||
Later than one month and not later than three months | — | 33,855 | ||||||
Later than three months and not later than six months | — | — | ||||||
Later than six months and not later than one year | — | — | ||||||
— | 67,710 | |||||||
As of | ||||||||
March 31, 2011 | March 31, 2010 | |||||||
Buy: | ||||||||
Not later than one month | — | — | ||||||
Later than one month and not later than three months | — | — | ||||||
Later than three months and not later than six months | — | — | ||||||
Later than six months and not later than one year | — | — | ||||||
— | — | |||||||
Year ended | ||||||||||||
March 31, 2011 | March 31, 2010 | March 31, 2009 | ||||||||||
Loans and receivables | ||||||||||||
Interest income on bank deposits | 21,360 | 19,489 | 116,495 | |||||||||
Interest income from leases | — | — | 435 | |||||||||
Interest income from other loans and receivables | 3,871 | 8,505 | 5,635 | |||||||||
Impairment loss of trade receivables | (161,922 | ) | (121,987 | ) | (84,346 | ) | ||||||
Impairment loss on finance lease receivables | — | — | (6,929 | ) | ||||||||
Financial assets at fair value through profit or loss | ||||||||||||
Net change in fair value of derivative financial instruments | — | 6,998 | 2,997 | |||||||||
Other financial liabilities | ||||||||||||
Interest expenses on lease obligations | (20,117 | ) | (16,476 | ) | (2,243 | ) | ||||||
Interest expenses on borrowings from banks, others and overdrafts | (161,897 | ) | (177,156 | ) | (163,201 | ) |
Year ended | ||||||||||||
March 31, 2011 | March 31, 2010 | March 31, 2009 | ||||||||||
Net change in fair value of available-for-sale financial assets | — | — | (5,361 | ) |
• | Credit risk | |
• | Liquidity risk | |
• | Market risk |
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March 31, 2011 | March 31, 2010 | |||||||
Cash and cash equivalents | 543,097 | 878,698 | ||||||
Other assets | 212,969 | 249,744 | ||||||
Trade receivables | 1,839,966 | 1,912,348 | ||||||
Other receivables | 354,115 | 315,835 | ||||||
Derivative financial instruments | — | 6,998 | ||||||
Other investments | 160 | — | ||||||
2,950,307 | 3,363,623 |
Period (in days) | March 31, 2011 | March 31, 2010 | ||||||
Past due 181 - 270 days | 143,919 | 160,979 | ||||||
Past due 271 - 365 days | 50,796 | 29,346 | ||||||
More than 365 days | 97,596 | 114,932 | ||||||
292,311 | 305,257 | |||||||
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March 31, 2011 | March 31, 2010 | |||||||
Security deposits received for internet access services | 7,432 | 16,236 | ||||||
Carrying | Contractual | |||||||||||||||||||
amount | cash flows | 0-12 months | 1-3 years | 3-5 years | ||||||||||||||||
Non-derivative financial liabilities | ||||||||||||||||||||
Bank overdrafts | 678,901 | 678,901 | 678,901 | — | — | |||||||||||||||
Finance lease liabilities | 188,253 | 247,354 | 65,148 | 123,922 | 58,284 | |||||||||||||||
Other liabilities | 163,245 | 163,245 | 163,245 | — | — | |||||||||||||||
Borrowing from banks | 1,009,422 | 1,044,455 | 930,067 | 114,388 | — | |||||||||||||||
Borrowings from others | 288,988 | 368,794 | 175,730 | 158,431 | 34,633 | |||||||||||||||
Trade and other payables | 1,725,907 | 1,725,907 | 1,725,907 | — | — | |||||||||||||||
4,054,716 | 4,228,656 | 3,738,998 | 396,741 | 92,917 | ||||||||||||||||
Carrying | Contractual | |||||||||||||||||||
amount | cash flows | 0-12 months | 1-3 years | 3-5 years | ||||||||||||||||
Non-derivative financial liabilities | ||||||||||||||||||||
Bank overdrafts | 1,060,284 | 1,060,284 | 1,060,284 | — | — | |||||||||||||||
Finance lease liabilities | 201,317 | 247,354 | 65,148 | 123,922 | 58,284 | |||||||||||||||
Other liabilities | 165,800 | 165,800 | 165,800 | — | — | |||||||||||||||
Borrowing from banks | 1,239,105 | 1,333,922 | 972,962 | 360,960 | — | |||||||||||||||
Borrowings from others | 163,165 | 207,828 | 57,041 | 91,247 | 59,540 | |||||||||||||||
Trade and other payables | 1,798,764 | 1,798,764 | 1,798,764 | — | — | |||||||||||||||
4,628,435 | 4,813,952 | 4,119,999 | 576,129 | 117,824 | ||||||||||||||||
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• | Forecasting inflows and outflows denominated in US$ for a twelve-month period | |
• | Estimating the net-exposure in foreign currency, in terms of timing and amount | |
• | Determining the extent to which exposure should be protected through one or more risk-mitigating instruments to maintain the permissible limits of uncovered exposures. | |
• | Carrying out a variance analysis between estimate and actual on an ongoing basis, and taking stop-loss action when the adverse movements breaches the 5% barrier of deviation, subject to review by Audit Committee. |
All amounts in respective currencies as mentioned (in thousands) | ||||||||||||||||||||||||||||||||||||
USD | CAD | CHF | Euro | GBP | DHS | HKD | AED | SGD | ||||||||||||||||||||||||||||
Cash and cash equivalents | 495 | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Trade receivables | 9,700 | 4 | 522 | 20 | 116 | 1 | — | 1 | 2 | |||||||||||||||||||||||||||
Trade payables | (5,688 | ) | — | (18 | ) | (301 | ) | (1 | ) | (32 | ) | (10 | ) | (25 | ) | (83 | ) | |||||||||||||||||||
Gross balance sheet exposure | 4,507 | 4 | 504 | (281 | ) | 115 | (31 | ) | (10 | ) | (24 | ) | (81 | ) | ||||||||||||||||||||||
Forward exchange / option contracts | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
Net exposure | — | — | — | — | — | — | — | — | — |
All amounts in respective currencies as mentioned (in thousands) | ||||||||||||||||||||||||||||
USD | CAD | CHF | Euro | GBP | DHS | HKD | ||||||||||||||||||||||
Cash and cash equivalents | 1,198 | — | — | — | — | — | — | |||||||||||||||||||||
Trade receivables | 8,869 | 168 | 209 | 32 | 96 | 1 | — | |||||||||||||||||||||
Trade payables | (4,764 | ) | — | — | (31 | ) | (12 | ) | — | (11 | ) | |||||||||||||||||
Gross balance sheet exposure | 5,303 | 168 | 209 | 1 | 84 | 1 | (11 | ) | ||||||||||||||||||||
Forward exchange / option contracts | (1,500 | ) | — | — | — | — | — | — | ||||||||||||||||||||
Net exposure | 3,803 | 168 | 209 | 1 | 84 | 1 | (11 | ) |
Other | ||||||||
comprehensive | ||||||||
income | Profit or loss | |||||||
March 31, 2011 | — | (21,063 | ) | |||||
March 31, 2010 | — | (19,367 | ) |
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Carrying amount | ||||||||
March 31, 2011 | March 31, 2010 | |||||||
Fixed rate instruments | ||||||||
Financial assets | ||||||||
- Fixed deposits with banks | 84,765 | 531,192 | ||||||
Financial liabilities | ||||||||
- Borrowings from banks | 529,437 | 697,165 | ||||||
- Borrowings from others | 288,988 | 163,165 | ||||||
Variable rate instruments | ||||||||
Financial liabilities | ||||||||
- Borrowings from banks | 326,000 | 541,940 | ||||||
- Bank overdrafts | 678,901 | 1,060,284 |
Equity | Profit or loss | |||||||
March 31, 2011 | — | (10,049 | ) | |||||
March 31, 2010 | — | (16,022 | ) |
• | As a consequence of the merger, the Company was eligible under the Indian Income-tax laws to consolidate the Income-tax returns of Sify and Sify Communications Limited retrospectively from April 1, 2008. Accordingly, the taxable income reported by Sify Communications Limited for the period subsequent to April 1, 2008 has been off-set against the previously fully reserved business losses of the Company. This resulted in the reversal of income tax liabilities aggregating to Rs.90,003 and a write off of deferred tax assets of Rs.8,524 during the year ended March 31, 2010. |
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• | Consequent to the approval of the merger by the Honorable High Court on June 26, 2009, the Company was obliged to issue 10,530,000 shares which the Company has duly issued on July 16, 2009, and accordingly, the fair value of shares to be issued as at June 26, 2009 has been considered as the consideration for the acquisition of the non-controlling interest. The difference between the fair value of the consideration paid and the face value of equity shares issued is recorded as share premium and the difference between the fair value of the consideration paid and the carrying amount of non-controlling interests is recorded as an adjustment in equity and is included as part of share premium. |
i. | to provide extension of time for listing the shares in the Indian stock exchanges | |
ii. | to grant a special permission to issue shares on rights basis to the existing shareholders |
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162 | ||||
163 | ||||
164 | ||||
165 | ||||
166 | ||||
167 | ||||
168 |
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Independent Registered Public Accounting Firm
October 11, 2011
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As at March 31, | ||||||||||||
Note | 2011 | 2010 | ||||||||||
ASSETS | ||||||||||||
Cash and bank balance | 11 | 281,486 | 148,213 | |||||||||
Cash-restricted | 12 | 2,959,063 | 2,489,847 | |||||||||
Interest bearing deposits with bank | 13 | 93,362 | 295,659 | |||||||||
Receivable from broker-dealers and clearing organizations | 9 | 18,580 | 65,884 | |||||||||
Receivable from customers (net of provision of Rs. 60,600 and Rs. 22,300 respectively) | 8 | 447,770 | 437,207 | |||||||||
Available-for-sale securities: | ||||||||||||
Marketable, at market value | 14 | 40,776 | 877 | |||||||||
Not readily marketable (at estimated fair value) | 14 | 92,868 | 11,447 | |||||||||
Deposits with clearing organizations | 173,783 | 110,969 | ||||||||||
Interest accrued but not due | 67,124 | 71,443 | ||||||||||
Other assets | 10 | 245,800 | 220,282 | |||||||||
Intangible assets: | ||||||||||||
Computer software | 5.1 | 19,271 | 28,424 | |||||||||
Memberships in exchanges | 5.2 | 5,733 | 5,782 | |||||||||
Property, plant and equipment | 6 | 21,827 | 70,159 | |||||||||
Deferred tax asset (Net) | 7 | 79,476 | 17,901 | |||||||||
Total assets | 4,546,919 | 3,974,094 | ||||||||||
EQUITY | ||||||||||||
Capital and reserves attributable to the Equity holders | ||||||||||||
Ordinary shares | 15 | 518,942 | 518,942 | |||||||||
Additional paid in capital | 28,968 | 28,968 | ||||||||||
Retained earnings | 1,806,071 | 1,564,231 | ||||||||||
Currency translations | (232 | ) | 953 | |||||||||
Fair value adjustments | (774 | ) | 9,081 | |||||||||
Total Equity | 2,352,975 | 2,122,175 | ||||||||||
LIABILITIES | ||||||||||||
Payable to broker dealers and clearing organizations | 9 | 264,504 | 139,965 | |||||||||
Payable to customers | 1,272,571 | 1,177,517 | ||||||||||
Borrowings | 17 | 53,000 | 3,508 | |||||||||
Accounts payable, accrued expenses, and other liabilities | 19 | 505,605 | 394,327 | |||||||||
Employee benefit obligation | 18 | 98,264 | 136,602 | |||||||||
Total Liabilities | 2,193,944 | 1,851,919 | ||||||||||
Total liabilities and Equity | 4,546,919 | 3,974,094 | ||||||||||
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Years ended March 31, | ||||||||||||||||
Note | 2011 | 2,010 | 2009 | |||||||||||||
Income | ||||||||||||||||
Commissions | 1,391,162 | 1,201,594 | 914,969 | |||||||||||||
Depository and clearing fees | 33,919 | 35,488 | 34,456 | |||||||||||||
Interest on fixed deposits with banks | 198,412 | 238,491 | 325,547 | |||||||||||||
Other Income | 23 | 194,790 | 136,972 | 138,671 | ||||||||||||
Total Income | 1,818,283 | 1,612,545 | 1,413,643 | |||||||||||||
Expenses | ||||||||||||||||
Employee compensation and benefits | 21 | 794,535 | 607,775 | 515,234 | ||||||||||||
Exchange expenses and clearance fees | 220,153 | 165,769 | 130,904 | |||||||||||||
Brokerage to other broker-dealers | 136,470 | 152,002 | 95,859 | |||||||||||||
Communications and data processing | 30,100 | 28,168 | 27,585 | |||||||||||||
Bank Interest and guarantee commission | 1,751 | 7,616 | 28,883 | |||||||||||||
Depreciation and amortization | 67,692 | 37,398 | 38,348 | |||||||||||||
Occupancy | 75,728 | 75,210 | 69,933 | |||||||||||||
Write back of provision | — | (57,500 | ) | — | ||||||||||||
Provision for receivable from customers | 22 | 38,300 | — | 2,925 | ||||||||||||
Advertisement and business promotion | 60,339 | 45,593 | 34,987 | |||||||||||||
Other expenses | 20 | 85,628 | 82,111 | 125,693 | ||||||||||||
Total Expenses | 1,510,696 | 1,144,142 | 1,070,351 | |||||||||||||
Profit before income tax | 307,587 | 468,403 | 343,292 | |||||||||||||
Income tax expense | 24 | 65,747 | 160,860 | 126,375 | ||||||||||||
Profit for the year attributable to the Equity holders | 241,840 | 307,543 | 216,917 | |||||||||||||
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Years ended March 31, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Net income for the year | 241,840 | 307,543 | 216,917 | |||||||||
Other comprehensive income | ||||||||||||
Available for sale financial assets | ||||||||||||
- Net change in fair value | (9,855 | ) | 1,527 | (10,473 | ) | |||||||
Foreign currency translation differences | ||||||||||||
Currency translation differences | (1,185 | ) | (5,657 | ) | 9257 | |||||||
(11,040 | ) | (4,130 | ) | (1,216 | ) | |||||||
Total comprehensive income for the year | 230,800 | 303,413 | 215,701 |
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Additional | ||||||||||||||||||||||||||||||||
Number of ordinary | Par | paid -in | Retained | Currency | Fair Value | Total | ||||||||||||||||||||||||||
shares | value | Share Capital | capital | earnings | transalation | adjustment | Equity | |||||||||||||||||||||||||
Balance at April 1, 2008 | 51,894,182 | 10 | 518,942 | 28,968 | 1,039,771 | (2,647 | ) | 18,027 | 1,603,061 | |||||||||||||||||||||||
Currency translation differences | 9,257 | 9,257 | ||||||||||||||||||||||||||||||
Fair value gains, net of tax on available-for-sale financial assets | (10,473 | ) | (10,473 | ) | ||||||||||||||||||||||||||||
Net income directly recognised in equity | 9,257 | (10,473 | ) | (1,216 | ) | |||||||||||||||||||||||||||
Profit for the year | 216,917 | 216,917 | ||||||||||||||||||||||||||||||
Total recognised income and expense for the year | 216,917 | 9,257 | (10,473 | ) | 215,701 | |||||||||||||||||||||||||||
Balance at March 31, 2009 | 51,894,182 | 10 | 518,942 | 28,968 | 1,256,688 | 6,610 | 7,554 | 1,818,762 | ||||||||||||||||||||||||
Currency translation differences | (5,657 | ) | (5,657 | ) | ||||||||||||||||||||||||||||
Fair value gains, net of tax on available-for-sale financial assets | 1,527 | 1,527 | ||||||||||||||||||||||||||||||
Net income directly recognised in equity | — | (5,657 | ) | 1,527 | (4,130 | ) | ||||||||||||||||||||||||||
Profit for the year | 307,543 | 307,543 | ||||||||||||||||||||||||||||||
Total recognised income and expense for the year | 307,543 | (5,657 | ) | 1,527 | 303,413 | |||||||||||||||||||||||||||
Balance at March 31, 2010 | 51,894,182 | 10 | 518,942 | 28,968 | 1,564,231 | 953 | 9,081 | 2,122,175 | ||||||||||||||||||||||||
Currency translation differences | (1,185 | ) | (1,185 | ) | ||||||||||||||||||||||||||||
Fair value gains, net of tax on available-for-sale financial assets | (9,855 | ) | (9,855 | ) | ||||||||||||||||||||||||||||
Net income directly recognised in equity | — | (1,185 | ) | (9,855 | ) | (11,040 | ) | |||||||||||||||||||||||||
Profit for the year | 241,840 | 241,840 | ||||||||||||||||||||||||||||||
Total recognised income and expense for the year | 241,840 | (1,185 | ) | (9,855 | ) | 230,800 | ||||||||||||||||||||||||||
Balance at March 31, 2011 | 51,894,182 | 10 | 518,942 | 28,968 | 1,806,071 | (232 | ) | (774 | ) | 2,352,975 | ||||||||||||||||||||||
* | Retain earning includes reserves amounting to Rs. 1,023 on amalgamation of subsidiary company- MF Global Capital India Private Limited ,with the company. |
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Year ended March 31, | ||||||||||||||||
Note | 2011 | 2010 | 2009 | |||||||||||||
Cash flows from operating activities | ||||||||||||||||
Profit before income tax | 307,587 | 468,403 | 343,292 | |||||||||||||
Adjustments for | ||||||||||||||||
Depreciation and amortization | 67,692 | 37,398 | 38,348 | |||||||||||||
Profit on sale of Available-for-sale securities | (23,603 | ) | — | (6,724 | ) | |||||||||||
Provision on receivable from customers | 8 | 38,300 | (57,700 | ) | 2,925 | |||||||||||
Interest on fixed deposits with banks | (198,412 | ) | (238,491 | ) | (325,547 | ) | ||||||||||
Stock appreciation rights | — | — | — | |||||||||||||
Loss on Sale of Property Plant & Equipment | 6 | — | 13 | |||||||||||||
Interest Income | (16,278 | ) | (5,566 | ) | (5,174 | ) | ||||||||||
Dividend Income | (1,616 | ) | (283 | ) | (167 | ) | ||||||||||
Others | (9,582 | ) | 3,963 | (2,617 | ) | |||||||||||
Movements in working capital | ||||||||||||||||
Cash-restricted | 12 | (469,216 | ) | (141,985 | ) | 3,066,861 | ||||||||||
Interest bearing deposits with banks | 202,297 | (188,164 | ) | (90,995 | ) | |||||||||||
Deposits with clearing organizations | (62,814 | ) | 9,896 | 30,650 | ||||||||||||
Receivable from broker-dealers and clearing organizations | 9 | 47,304 | (23,656 | ) | 312,213 | |||||||||||
Receivable from customers | 8 | (48,863 | ) | (207,514 | ) | 755,753 | ||||||||||
Interest accrued but not due | — | — | ||||||||||||||
Other assets | 10 | 19,051 | (3,856 | ) | 5,237 | |||||||||||
Payable to broker dealers and clearing organizations | 9 | 124,539 | (87,821 | ) | (2,756,446 | ) | ||||||||||
Payable to customers | 95,053 | 192,442 | (1,509,559 | ) | ||||||||||||
Accounts payable, accrued expenses, and other liabilities | 19 | 111,278 | 42,369 | (330,331 | ) | |||||||||||
Stock appreciation rights | 16 | (38,338 | ) | 88,907 | 23,973 | |||||||||||
Cash provided by operations | 144,379 | (111,645 | ) | (448,308 | ) | |||||||||||
Interest received | 16,278 | 5,566 | 5,174 | |||||||||||||
Interest received on fixed deposits placed | 202,731 | 269,218 | 457,503 | |||||||||||||
Income taxes paid | (171,891 | ) | (149,524 | ) | (151,697 | ) | ||||||||||
Net cash provided by/(used in) by operating activities | 191,497 | 13,615 | (137,328 | ) | ||||||||||||
Cash flows from investing activities | ||||||||||||||||
Purchase of Available for Sale Securities: Marketable, At Market Value | (39,899 | ) | (877 | ) | 168,004 | |||||||||||
Available for Sale Securities: Not readily marketable (at estimated fair value) | (57,818 | ) | — | — | ||||||||||||
Dividend Income | 1,616 | 283 | 167 | |||||||||||||
Expenditure on furniture and equipment | (4,760 | ) | (14,288 | ) | (35,695 | ) | ||||||||||
Expenditure on Computer Software | (5,671 | ) | (25,342 | ) | (12,118 | ) | ||||||||||
Sale of furniture and equipment | — | — | 2,278 | |||||||||||||
Net cash (used in) / provided in investing activities | (106,532 | ) | (40,224 | ) | 122,636 | |||||||||||
Cash flows from financing activities | ||||||||||||||||
Proceeds from loan from associate company | 841,500 | 383,700 | 270,000 | |||||||||||||
Repayment of loan to associate company | (788,500 | ) | (383,700 | ) | (270,000 | ) | ||||||||||
(Repaymnet of) / Proceeds from borrowings | (3,508 | ) | (1,137 | ) | (100,414 | ) | ||||||||||
Net cash provided by / (used in) financing activities | 49,492 | (1,137 | ) | (100,414 | ) | |||||||||||
Effect of foreign exchange fluctuation on Cash and Bank balances | (1,184 | ) | (5,657 | ) | 9,257 | |||||||||||
Net increase / (decrease) in cash and bank balance | 133,273 | (33,403 | ) | (105,849 | ) | |||||||||||
Cash and bank balance at beginning of the period | 148,213 | 181,616 | 287,465 | |||||||||||||
Cash and bank balance at end of the period | 281,486 | 148,213 | 181,616 | |||||||||||||
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1. | General information |
MF Global Sify Securities India Private Limited and its consolidated subsidiaries (hereinafter referred to as “MF” or “the group”) are engaged as a stock and commodity broker for foreign institutional investors (‘FIIs’), mutual funds, domestic financial institutions and retail investors. The group also acts as a depository participant and provides depository services to FIIs, mutual funds, domestic financial institutions and retail investors. |
MF Global Sify Securities India Private Limited (“MF Global Sify”) was incorporated on December 29, 1999 in India as a private limited company under the Companies Act, 1956. The address of its registered office is 2nd Floor, C block, Modern Centre, 101 K. K. Marg, Jacob Circle, Mahalaxmi, Mumbai — 400 011. MF Global Sify has one wholly owned subsidiary, MF Global Commodities India Private Limited, incorporated in India. MF Global Commodities India Private Limited has one wholly owned subsidiary, MF Global Middle East DMCC incorporated in Dubai. |
MF Global Overseas Limited (”MFG”) (formerly Man Financial Holdings Limited ), a company incorporated in the United Kingdom holds 70.15% of MF Global Sify and Sify Technologies Limited (“Sify”) holds the balance, 29.85% of MF Global Sify’s equity shares. The ultimate holding company of MF Global Sify is MF Global Holdings Limited (a company incorporated in the state of Delaware, USA and listed on the New York Stock Exchange). |
These consolidated financial statements have been approved for issue by the Board of Directors on October 11, 2011. |
2. | Summary of significant accounting policies |
2.1. | Basis of preparation |
These consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”). They have been prepared under the historical cost convention, on accrual basis as modified for certain financial instruments which are measured at fair value. |
The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. |
The preparation of financial statements in accordance with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise judgement in the process of applying the group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 4. | ||
2.1.1. | Standards, amendments and interpretations effective as at 31 March 2011 |
• | IAS 1 (revised), ‘Presentation of financial statements’. The revised standard prohibits the presentation of items of income and expenses (that is ‘non-owner changes in equity’) in the statement of changes in equity, requiring ‘non-owner changes in equity’ to be presented separately from owner changes in equity. All ‘non-owner changes in equity’ are required to be shown in a performance statement. | ||
Entities can choose whether to present one performance statement (the statement of comprehensive income) or two statements (the income statement and statement of comprehensive income). | |||
The group has elected to present two statements: an income statement and a statement of comprehensive income. The consolidated financial statements have been prepared under the revised disclosure requirements. | |||
• | IFRS 2 (Amendment), Share-based payment. It clarifies that only service conditions and performance conditions are vesting conditions. All other features need to be included in the grant date fair value and do not impact the number of awards expected to vest or the valuation subsequent to grant date. The amendment also specifies that all cancellations, whether by the entity or by other parties, should receive the same accounting treatment. The group will apply the amendment from 1 April 2009. The Group has applied amendments from April 1, 2009, however this does not have any significant impact on consolidated statements. | ||
• | IFRS 7 ‘Financialinstruments — Disclosures’ (amendment) — effective 1 January 2009, the amendment requires enhanced disclosures about fair value measurement and liquidity risk. In particular, the amendment requires disclosure of fair value measurements by level of a fair value measurement hierarchy. As the change in accounting policy only results in additional disclosures, there is no impact on earnings per share. | ||
• | IFRIC 14, IAS 19 — The limit on a defined benefit asset, minimum funding requirements and their interaction; IFRIC 14 provides guidance on assessing the limit in IAS 19 on the amount of the surplus that can be recognized as an asset. It also explains how the pension asset or liability may be affected by a statutory or contractual minimum-funding requirement. The Group has applied IFRIC14, IAS 19 effective April 1, 2008. |
The following standards, amendments and interpretations to published standards are effective as at 31 March 2011 but are not relevant to the group’s operations: |
• | IFRS 8 Operating Segments | ||
• | IAS 23 (amendment), ‘Borrowing costs’. | ||
• | IFRIC 13, ‘Customer loyalty programmes’. |
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• | IFRIC 15, ‘Agreements for the construction of real estate’. | ||
• | IFRIC 16, ‘Hedges of a net investment in a foreign operation’. |
2.1.3. | Standards, amendments and interpretations to existing standards that are not yet effective and have not been early adopted by the group |
The following standards, amendments and interpretations to existing standards have been published and are mandatory for the group’s financial year beginning on 1 April 2009 or later periods, but the group has not early adopted them: |
• | IAS 27 (Revised),Consolidated and Separate Financial Statements. It requires a mandatory adoption of the economic entity model which treats all providers of equity capital as shareholders of the entity. Consequently, a partial disposal of interest in a subsidiary in which the parent company retains control does not result in a gain or loss but in an increase or decrease in equity. Purchase of some or all of the non-controlling interests (also known as minority interests) (“NCI”) is treated as a treasury transaction and accounted for in equity. A partial disposal of interest in a subsidiary in which the parent company loses control triggers recognition of gain or loss on the entire interest. A gain or loss is recognised on the portion that has been disposed of; a further holding gain is recognised on the interest retained, being the difference between the fair value of the interest and book value of the interest. | ||
The revised standard requires an entity to attribute their share of net income and reserves to the NCI even if this results in the NCI having a deficit balance. | |||
The group will apply IAS 27 (Revised) from 1 April 2011. The group does not expect the adoption of this standard to have a material effect on the consolidated financial statements. | |||
• | IFRS 3 (Revised),Business Combinations. It has expanded the scope to include combinations by contract alone and combination of mutual entities and slightly amended the definition of business as ‘capable of being conducted’ rather than ‘are conducted and managed’. All the acquisition-related costs are to be recognised as period expenses in accordance with the appropriate IFRS. Costs incurred to issue debt or equity securities will be recognised in accordance with IAS 39. | ||
Consideration would include fair value of all interests previously held by the acquirer. Remeasurement of such interests to fair value would be through the income statement. Contingent consideration is required to be recognised at fair value even if not deemed probable of payment at the date of acquisition. All subsequent changes in debt contingent consideration are recognised in income statement and not in goodwill as required in the existing standard. | |||
IFRS 3 (Revised) provides an explicit option, available on a transaction-by-transaction basis, to measure any NCI in the entity acquired at fair value of their proportion of identifiable assets and liabilities or full fair value. The first will result in measurement of goodwill little different from existing IFRS 3; the second approach will record goodwill on the NCI as well as on the acquired controlling interest. | |||
The group will apply IFRS 3 (Revised) from 1 April 2011. The effect of the standards from future periods will depend on the nature and significance of any acquisitions that are subject to this standard. | |||
• | IFRS 9 ‘Financial Instruments’ introduces new requirements for classifying and measuring financial assets. IFRS 9 specifies how an entity should classify and measure its financial assets. It requires all financial assets to be classified in their entirety on the basis of the entity’s business model for managing the financial assets and the contractual cash flow characteristics of the financial assets. | ||
The standard is mandatory for the group effective from April 1, 2013 with early adoption permitted. The group is in process of assessing the applicability date of the standard and its impact on the consolidated financial statements. | |||
• | Revised IAS 24 (revised), ‘Related party disclosures’, issued in November 2009. It supersedes IAS 24, ‘Related party disclosures’, issued in 2003. The revised standard clarifies and simplifies the definition of a related party and removes the requirement for government-related entities to disclose details of all transactions with the government and other government-related entities. When the revised standard is applied, the group and the parent will need to disclose any transactions between its subsidiaries and its associates. | ||
The standard is mandatory for the group effective from April 1, 2011 with early adoption permitted. The group is in process of assessing the applicability date of the standard and its impact on the consolidated financial statements. | |||
• | IFRS 5 (Amendment),Non-current assets held-for-sale and discontinued operations (and consequential amendment to IFRS 1,First-time adoption). The amendment clarifies that all of a subsidiary’s assets and liabilities are classified as held for sale if a partial disposal sale plan results in loss of control. The group will apply the IFRS 5 (Amendment) prospectively to all partial disposals of subsidiaries from 1 April 2011. | ||
• | IFRIC 17, Distributions of non-cash assets to owners.IFRIC 17 clarifies how an entity should measure distributions of assets, other than cash, when it pays dividends to its owners. The group will apply IFRIC 17 from 1 April 2011. | ||
• | IAS 1 (Amendment),Presentation of financial statements. The amendment clarifies that classification of a liability, that can at the option of the counterparty be settled by the issue of the entity’s equity instruments, on the basis of the requirements to transfer cash or other assets rather than on settlement better reflects the liquidity and solvency position of an entity. The group will apply the IAS 1 (Amendment) from 1 April 2011. It is not expected to have an impact on the group’s financial statements. | ||
• | IAS 7 (Amendment), ‘Statement of cash flows’ is part of the IASB’s annual improvements project published in April 2009. The amendment clarifies that only an expenditure that results in a recognised asset can be classified as a cash flow from investing activities. The group will apply the IAS 1 (Amendment) from 1 April 2010. It is not expected to have an impact on the group’s financial statements. |
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• | IAS 17 (Amendment),Leases.The amendment modified the criteria for classification of lease that includes both land and buildings elements requiring an entity to assess the classification of each element as a finance or an operating lease separately in the same way as leases of other assets. The group will apply the IAS 17 (Amendment) from April 1, 2011. The Company is in process of assessing the impact, if any. |
2.1.4. | Amendments and interpretations to existing standards that are not yet effective and not relevant for the group’s operations |
The following interpretations to existing standards have been published and are mandatory for the group’s accounting period beginning on 1 April 2009 or later periods but are not relevant for the group’s operations: |
• | IFRIC 13,Customer loyalty programmes,clarifies that where goods or services are sold together with a customer loyalty incentive, the arrangement is a multiple—element arrangement and the consideration receivable from the customer is allocated between the components of the arrangement using fair values. | ||
• | IFRIC 15,Agreements for construction of real estates,clarifies whether IAS 18,Revenue, or IAS 11,Construction contracts, should be applied to particular transactions. | ||
• | IFRIC 16,Hedges of a net investment in a foreign operation, clarifies the accounting treatment in respect of net investment hedging. This includes the fact that net investment hedging relates to differences in functional currency not presentation currency, and hedging instruments may be held anywhere in the group. The requirements of IAS 21,The effects of changes in foreign exchange rates, do apply to the hedged item. | ||
• | IFRIC 18, Transfers of assets from customers. IFRIC 18 clarifies the accounting for arrangements where an item of property, plant and equipment, which is provided by the customer, is used to provide an ongoing service. The interpretation applies prospectively to transfers of assets from customers received on or after 1 July 2009, although some limited retrospective application is permitted. | ||
• | IFRIC 19, ‘Extinguishing Financial Liabilities with Equity Instruments’ addresses the accounting by an entity when the terms of a financial liability are renegotiated and result in the entity issuing equity instruments to a creditor of the entity to extinguish all or part of the financial liability. | ||
• | IAS 38 (Amendment),Intangible assets. The amendment deletes the wording that states that there is ‘rarely, if ever’ support for use of a method that results in a lower rate of amortisation than the straight-line method. The amendment did not have an impact on the group’s operations, as all intangible assets are amortised using the straight-line method. |
The Company is a subsidiary of MF Global Holdings Limited, a company incorporated in the State of Delaware, USA. MF Global Holdings Limited is listed on the New York Stock Exchange. |
Domestic and foreign subsidiaries considered for consolidation are as follows: |
Percentage of | Percentage of | |||||||||||||||
Country of | holding as at | holding as at | ||||||||||||||
incorporation | March 31, 2011 | March 31, 2010 | ||||||||||||||
Direct subsidiaries | ||||||||||||||||
1 | ) | MF Global Commodities India Private Limited | India | 100 | % | 100 | % | |||||||||
2 | ) | MF Global Capital India Private Limited | India | — | 100 | % | ||||||||||
Indirect Subsidiary | ||||||||||||||||
1 | ) | MF Global Middle East DMCC | Dubai | 100 | % | 100 | % |
The reporting date for all the above companies is March 31. |
Subsidiaries are all entities over which the group has the power to govern the financial and operating policies so as to obtain economic benefits from its activities, generally accompanying a shareholding of more than one half of the voting rights. Subsidiaries are fully consolidated from the date on which control is transferred to the group. |
All significant inter—company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated but considered an impairment indicator of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group. |
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2.3. | Foreign currency translation |
a) | Functional and presentation currency |
Items included in the financial statements in each of the group’s entities are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). Indian rupee is the functional currency of MF Global Sify and its domestic subsidiaries. US dollar is the functional currency of MF Global Middle East Limited DMCC located in Dubai. These consolidated financial statements are presented in Indian Rupee (“INR”), which is the group’s presentation currency. The results and financial position are translated into presentation currency as follows: |
• | assets and liabilities for each balance sheet presented are translated as at the closing rate at that balance sheet date; | ||
• | income and expenses for each income statement are translated at an average exchange rate; and | ||
• | all resulting exchange differences are recognised as a separate component of equity. | ||
b) | Transactions and balances |
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year—end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the income statement. | ||
2.4. | Cash and bank balance | |
Cash and bank balance include cash in hand and at bank, and short—term deposits with an original maturity period of three months or less. The Group’s exposure to credit risk is represented by the carrying value of the assets. Bank overdrafts that are an integral part of cash management and where there is a legal right of set—off against positive cash balances are included in cash and bank balance. Otherwise bank overdrafts are classified as borrowings. | ||
2.5. | Restricted Cash | |
Individual entities within the group are members of exchange, where cash or securities are deposited or bank guarantees are issued to conduct day-to-day trading and clearance activities. As required by the respective exchange, margin obligations towards clearing organizations are determined based on open positions by clearing organizations of the exchanges. | ||
The group classifies bank fixed deposits as restricted cash on the balance sheet, when they are either placed with banks as margin for bank guarantees issued to clearing organisation or specifically earmarked as liens to clearing organizations towards margin. | ||
2.6. | Interest bearing deposits with banks | |
Interest bearing deposits with bank represent fixed term deposits placed with banks earning fixed rate of interest. At the balance sheet date, these deposits are measured at amortised cost using effective interest method. | ||
2.7. | Receivables | |
Receivables are recognized initially at fair value. They are subsequently measured at amortised cost using the effective interest method, net of provision for impairment, if the effect of discounting is considered material. The carrying amounts, net of provision for impairment, reported in the balance sheet approximate the fair value due to their short realisation period. A provision for impairment of trade receivables is established when there is objective evidence that Group will not be able to collect all amounts due according to the original terms of receivables. The provision is established at amounts considered to be appropriate, based primarily upon Group’s past credit loss experience and an evaluation of potential losses on the receivables. The amount of the provision is recognized in the income statement. Receivables include receivables from broker-dealers and clearing organizations and receivables from customers, whereas the securities owned by customers are held as collateral for receivables. | ||
2.8. | Financial instruments | |
Financial assets and financial liabilities are recognised in the consolidated balance sheet, when the Group becomes a party to the contractual provisions of an instrument, at fair value adjusted for transaction costs, except for financial assets classified at fair value through profit or loss where transaction costs are immediately recognised in the consolidated income statement. Financial assets are de-recognised when the rights to receive cash flows from the investments have expired or where they have been transferred and the Group has also transferred substantially all risks and rewards of ownership. Financial liabilities are de-recognised when the obligation under the liability has been discharged or cancelled. | ||
Financial assets principally comprise investments, receivable from broker dealers, clearing organisations, customers and other receivables, bank deposits and cash and bank balance. Financial liabilities principally comprise bank overdraft, and payables to broker dealers, clearing organisations, customers, other payables and accrued expenses. | ||
Financial assets and liabilities are offset and the net amount reported in the balance sheet if, and only if, there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis, or to realise an asset and settle the liability simultaneously. In many cases, even though there is a legal right to set off is in place, the lack of an intention to settle on a net basis results in the related assets and liabilities being presented gross in the balance sheet. |
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2.9. | Financial assets | |
The financial assets of the group are classified into following categories: loans and receivables and available for sale. The classification of financial assets depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition. |
a) | Loans and Receivables |
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. The entity’s loans and receivables comprise receivable from broker dealers, clearing organisations, customers and other receivables, investments in bank deposits and cash and bank balance and loans to staff classified under other assets in balance sheet (Notes 2.10, 2.11 and 2.12). |
b) | Available for sale |
Available for sale financial assets are non-derivatives that are either designated in this category or not classified in any other categories. Available for sale consists of marketable securities, which are investments in units of mutual funds and are reported at fair values. Securities not readily marketable represent investments in equity shares of BSEL, obtained by MF Global Sify pursuant to the exchange transaction under the ‘Bombay Stock Exchange (Corporatisation and Demutualization) scheme 2005’. |
After initial recognition, investments, which are classified as available-for-sale, are measured at fair value. Gains or losses, on available-for-sale investments are recognised as a separate component of equity until the investment is sold, collected or otherwise disposed of, or until the investment is determined to be impaired, at which time the cumulative gain or loss previously reported in equity is transferred to the consolidated income statement. For investments that are actively traded in organised financial markets, fair value is determined by reference to quoted market price at the close of business on the balance sheet date. For investments where there is no quoted market price, fair value is determined by using valuation techniques. |
MF assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired. In the case of securities classified as available for sale, a significant or prolonged decline in the fair value of the security below its cost is considered as an indicator that the equity securities are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss — measured as the difference between the cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss — is removed from equity and recognised in the income statement. Impairment losses recognised in the income statement on equity instruments are not reversed through the income statement. Impairment testing of trade receivables is described in Note 2.10. |
2.10. | Derivatives and Trading |
Financial assets at fair value through profit or loss are financial assets held for trading or upon initial recognition are designated by the group as at fair value through profit or loss. A financial asset is primarily classified as held for trading in this category if acquired principally for the purpose of selling in the short-term. Derivatives are also categorised as held for trading unless they are designated as hedges. Assets in this category are classified as current assets. Gains or losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ category are presented in the income statement within ‘other (losses)/gains — net’ in the period in which they arise. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value at each reporting date. | ||
2.11. | Property, plant and equipment |
Property, plant and equipment are stated at actual cost less accumulated depreciation and any accumulated impairment losses. The cost of an item of premise and equipment comprises its purchase price and any costs directly attributable to bringing the asset into use, while maintenance and repairs are charged to expense when incurred. |
On April 1, 2010, the Company changed (with retrospective effect) its method of calculating depreciation on fixed assets, from the Written Down Value method (‘WDV’) to the Straight Line Method (“SLM”) at the rates based on management’s estimates of useful lives. Management believes that such change will result in a more appropriate presentation of financial statements. |
The company adopted the straight line method (SLM) of depreciation so as to write off 100% of the cost of the assets based on management’s estimates of the useful lives of all the assets. Estimated useful lives over which assets are depreciated are as follows: |
Rates (SLM) adopted by the | ||
Type of assets | Company | |
Computer systems | 3 years | |
Office equipments | 3 years | |
Furniture and fixtures | 5 years | |
Vehicles | 4 years |
The residual values and useful economic lives of premises and equipment are reviewed annually. | ||
Depreciation on leasehold improvements is provided using the straight—line method over the shorter of the lease term or the useful life of the asset. |
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2.12. | Intangible assets | |
All intangible assets are stated at cost less accumulated amortisation and any accumulated impairment losses. | ||
a) Software | ||
Capitalised costs of computer software obtained for internal use represents costs incurred to purchase computer software from third parties. These capitalised costs are amortised over the period of three years on a straight—line basis, if the estimated useful lives are beyond one year. However, if the estimated useful life of an asset is short i.e. less than a year, it is charged to the income statement. They are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. |
b) | Trading rights in Stock Exchange |
BSE membership | ||
MF Global Sify acquired The Stock Exchange, Mumbai (the ‘BSE’) membership card on December 6, 2000. During the year 2005-06, a scheme, The ‘Bombay Stock Exchange (Corporatisation and Demutualization) Scheme 2005’ (‘the Scheme’) was approved by the Securities Exchange Board of India with effect from August 19, 2005 which converted the BSE from an Association of Person to a corporate body in the name of Bombay Stock Exchange Limited (‘BSEL’). | ||
In accordance with the scheme, the members of the erstwhile BSE, in exchange of their erstwhile BSE membership cards (rights) received membership rights of BSEL (i.e. right to trade on BSEL without placement of cash deposit) as well as equity shares of BSEL. (refer to note 5.2 — Membership in Exchanges) | ||
DGCX membership | ||
MF Global Middle East DMCC (‘DMCC’) is registered with and has been granted a trading license by the Dubai Multi Commodities Centre on February 7, 2006. The United Arab Emirates Securities and Commodities Authority issued the DMCC a license on June 18, 2006 to operate as a broker on the Dubai Gold and Commodities Exchange (‘DGCX’). DMCC has been admitted as a member of the DGCX on September 1, 2006. DMCC has paid and capitalized US $100 thousand towards the license of DGCX, which is assessed for impairment. | ||
Trading rights in stock exchanges have indefinite useful life and are carried at cost less any accumulated impairment. They are reviewed for impairment annually or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. | ||
2.13. | Impairment of non—financial assets | |
Assets that have an indefinite useful life are not subject to amortisation and are tested for impairment annually or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Both external as well as internal indicators are considered by the group for impairment testing. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash—generating units). Non—financial assets that suffered impairment are reviewed for possible reversal of the impairment at each reporting date. | ||
2.14. | Payables | |
Payables include payables to broker-dealers and clearing organizations and payable to customers. The payable to broker-dealers and clearing organizations are at fair values because of their nature of short-term maturity. Amount payable to customers include amounts due on cash and margin transactions. These are recognized initially at fair value and subsequently measured at amortised cost using the effective interest method. | ||
2.15. | Borrowings — Bank overdraft | |
Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognized in the income statement over the period of the borrowings using the effective interest method. | ||
2.16. | Provisions | |
Provisions are recognised when the group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. In the event that the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects a current market assessment of the time value of money and, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost. | ||
2.17. | Current and deferred income tax | |
The current income tax charge is calculated on the basis of the tax laws in the countries where the group operates and generates taxable income. The tax rate of MF Global Sify and its Indian Subsidiaries is 33.2175%. MF Global Middle East DMCC, the Dubai based subsidiary operates in a tax free jurisdiction. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions, where appropriate, on the basis of amounts expected to be paid to the tax authorities. | ||
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Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates and laws that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. | ||
Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. | ||
Deferred income tax is provided on temporary differences, if any, arising on investments in subsidiaries, except where the timing of the reversal of the temporary difference is controlled by the group and it is probable that the temporary difference will not reverse in the foreseeable future. | ||
Current and deferred income tax are recognized in the income statement, except when the tax relates to items charged or credited directly to equity, in which case the tax is also dealt with directly in equity. | ||
2.18. | Employee benefits | |
Employee benefits are accrued in the period in which the associated services are rendered by employees of the group. The group provides employees with retirement benefits through both defined benefit and defined contribution schemes. Contributions to the defined contribution scheme are charged to the consolidated income statement as they become payable in accordance with the rules of the scheme. |
a) | Provident Fund |
In accordance with Indian law, all employees receive benefits from a provident fund, which is a defined contribution plan. Both the employee and employer make monthly contributions to the plan, each equal to a specified percentage of employee’s basic salary. The group has no further obligations under the plan beyond its monthly contributions. |
b) | Gratuity |
The Gratuity Plan is a defined benefit plan that, at retirement or termination of employment, provides all employees with a lump sum payment, which is a function of the respective employee’s salary and completed years of service with the group. The group provides the gratuity benefit through annual contributions to a fund managed by the Life Insurance Corporation of India (LIC). Under this scheme, the settlement obligation remains with the group, although the LIC administers the scheme and determines the contribution premium required to be paid by the group. The liability recognised in the balance sheet in respect of gratuity plan is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets, if any, together with adjustments for unrecognised past—service costs. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of Government of India securities (representing risk-free interest rates) and that have terms to maturity approximating to the terms of the related gratuity liability. |
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to income statement in the period in which they arise. |
c) | Share—based payment |
The group’s employees participate in share-based payment plans; that is stock appreciation rights plan sponsored by MF and co-investment plan sponsored by Man Group plc. The group follows IFRS 2,“Share Based Payment”(“IFRS 2”). |
For Equity settled share based payments; the fair value of the employee services received in exchange for the share awards and options granted is recognised as an expense. Equity-settled share-based payments are measured at the fair value of the equity instruments at the grant date and expensed, together with a corresponding increase in equity, on a straight-line basis over the vesting period, based on the Group’s estimate of shares that will eventually vest. |
For cash settled share based payments; the fair value of the employee services received in exchange for the stock appreciation rights is recognised as an expense. The cost of cash-settled transactions is measured initially at fair value at the grant date. The fair value of each tranche of rights issued under the plan is expensed over the period until vesting, with recognition of a corresponding liability. The liability is remeasured at each balance sheet date up to and including the settlement date, with changes in fair value recognised in the consolidated income statement. |
The impact of non-market vesting conditions is included in assumptions about the number of options that are expected to vest. At each balance sheet date, the group revises its estimates of the number of options that are expected to become exercisable. It recognises the impact of the revision of original estimates, if any, in the income statement. |
2.19. | Revenue Recognition |
a) | Commission, clearing fees, depository fee income |
Commission, clearing fees and related expenses are recorded on a trade-date basis as securities transactions occur. Depository fee income earned from customer is recognized in the period in which services are rendered. |
b) | Dividend and Interest Income |
Dividend income is recognised when the right to receive the payment is established. Interest income is recognised on accrual basis using the effective interest rate method. |
c) | Principal transactions |
Principal transactions include revenues from proprietary transactions. The Company records in Principal transactions the gains or losses on repurchase and resale agreements accounted for as sales and purchase transactions. |
The Company does not separately amortize purchase premiums and discounts associated with proprietary transactions, as these are a component of the recorded fair value. Changes in the fair value of such securities are recorded as unrealized gains and losses within Principal transactions in the consolidated statements of operations. |
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d) | Other |
Other revenues consist of revenues the Company earns from other normal business operations that are not otherwise included elsewhere. These include fees from clients and other. | ||
2.20. | Leases | |
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis over the period of the lease. All leases are classified as operating leases. | ||
Under these arrangements, interest free deposits have been given to the lessor and are refundable at the end of lease term. The group recognises the security deposit at fair value using the market rate of interest for a deposit of similar term. The difference between the amount of security deposit and fair value is considered as prepaid lease rental, which is a non-financial asset. | ||
The security deposit initially recognised at fair value will accrete to the amount of security deposit received through accruals as interest income over the term of security deposit and prepaid lease rental will be charged to income statement as lease rental over the lease term. |
3. | Financial risk management objectives and policies |
3.1. | Financial risk factors | |
The group is exposed to a variety of financial risks. The principal risks are business risk, interest rate risk, price risk, foreign currency risk, credit risk and cash liquidity risk. Each of these risks is discussed in detail below. The group monitors financial risks on a consolidated basis. The group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the financial performance. The group has a risk management structure and processes to monitor, evaluate and manage the principal risks in conducting business. | ||
Business Risk | ||
The group’s results of operations will be affected by many factors including economic, political and market conditions, broad trends in the brokerage and finance industry, changes in level of trading activity in the broader market place, price levels and price volatility in the derivative, equity and commodity markets, legislative and regulatory changes and competition, among other factors. In particular, the revenues of the group are substantially dependent on the volume of client transactions that it executes and clears, the volatility in the principal markets in which it operates and the prevailing interest rates. | ||
Interest rate Risk | ||
The group is exposed to interest rate risk primarily due to changes in interest rates on bank fixed deposits that impact the amount of interest income the group earns. Interest income is earned on fixed deposits placed with banks out of the group’s funds and margin monies placed by clients. The group monitors the movement of interest rates to determine whether deposits need to be placed at fixed or floating interest rates. Investments in fixed deposits placed with banks earn fixed rate of interest. As at March 31, 2010 the carrying value of bank deposits approximates fair value of these deposits as having original maturity of less than a year. The weighted average rate of interest earned on bank fixed deposits amounted to 6.49% p.a. and 6.97% p.a. during the year ended March 31, 2011 and March 31, 2010, respectively. | ||
The group rolls-over fixed deposits on maturity based on the market condition and business needs; the weighted average remaining term of fixed deposits as at the balance sheet date is approximately 7.35 months and 4.8 months as at March 31, 2011 and March 31, 2010, respectively. | ||
As at March 31, 2011, a 100 bps increase / decrease in interest rates, with all other variables held constant , would have resulted in an increase / decrease in Interest Income by Rs.18,064 ( Previous year Rs. 10,377) | ||
Price Risk | ||
The group is subject to price risk in respect of investments held by the group in listed and unlisted equity shares and investment in money market mutual funds, which are held as available for sale securities. The impact of price risk on carrying value of these shares is not material compared to the size and operations of the group. Investments in money market funds are subject to minimum price risk due to their investment in instruments of highest safety call money market instruments. Highest Safety represents a credit rating equivalent of AAA. | ||
Foreign Exchange Risk | ||
The group has minimal transactional currency exposure arising from operations in currencies other than its functional currency. | ||
Credit Risk | ||
Credit risk is the possibility that the group may suffer a loss from the failure of clients or counterparties to meet their financial obligations at all or in a timely manner. The group acts as an agent in providing execution and clearing services for exchange-traded products. The group’s clients’ security activities are transacted on either cash or margin basis. In the event that a client fails to satisfy its obligations for cash transactions, the group may be required to purchase or sell financial instruments at the prevailing market price to fulfil the client’s obligations. The clients are required to maintain margin accounts with collateral sufficient to support their open trading positions. Initially, the group establishes each client’s margin requirements to levels it believes are sufficient to cover their open positions. However, later if the client’s subsequent trading activity or adverse market conditions may cause the client’s previous margin payments to be inadequate to support their trading obligations, the group then serves as the exchange clearing member for the trade and thus the group would cover any shortfall and thereby expose itself to potential losses. |
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The Credit exposure also arises in relation to fixed deposits placed with Banks. The group places fixed deposits with highly rated banks , which are reviewed on an on-going basis. | ||
The group’s policy is to place fixed deposits with credit worthy banks. The following table depicts that the majority of the group’s fixed deposits are placed in highly rated banks : |
% of fixed deposits | ||||||||
Investment grade | 2011 | 2010 | ||||||
Highest safety | 100 | 100 | ||||||
High safety | — | — | ||||||
Adequate safety | — | — | ||||||
100 | 100 | |||||||
Highest Safety represents a credit rating equivalent of AAA, A1+, P1+; High Safety represents a credit rating equivalent of AA; and Adequate Safety represents a credit rating of A. |
The credit exposure also arises in relation to the deposits placed with exchanges and clearing corporations, which is required as per the rules of the exchanges / clearing corporation for the company membership. The risk is inherent in our industry and is largely controlled and influenced by the regulatory bodies that impose rules on the exchanges and clearing houses. |
All exchanges and clearing houses are financially sound organisations and the Company is therefore not exposed to significant credit risk. | ||
Risk Management Process and Mitigation |
The group has a separate risk management department, which monitors, evaluates and manages the risks. Client-wise position limits are set by the risk department based on the collateral placed by the respective clients. The risk department is responsible for making daily risk reports based on day-end positions of clients. Client orders are directed to the exchange only if the risk parameters set by the risk department are met. The risk department monitors client activity levels to ensure exposures are within the risk parameters of the group. Intra-day margin calls are made on the clients to reflect market movements on the client positions and may result in clients being asked to reduce positions. Generally, the group reserves the right to liquidate any client position immediately in the event of a failure to meet a margin call. For the year ended March 31, 2011 and March 31, 2010, group’s bad debts as a percentage of broking income were 2.75% and 0.01%, respectively. For clearing business, the group generally mandates that initial margin be paid by the clients as deposit before they commence trading. The clients are required to provide collateral as margin to secure the performance of their obligations. |
The group employs the following techniques to monitor the market environment and clients risk of default based upon the exposure created by their open positions: |
• | establishing risk parameters based on analysis of current and historical prices and price volatility; | ||
• | intra-day and end of day risk limit monitoring, including intra-day position and trade monitoring to identify any accounts trading beyond pre-set limits and parameters; | ||
• | market risk analysis and evaluation of adequacy of margin requirements for traded products; | ||
• | intra-day stress analysis for material market moves or accounts with material position taking and | ||
• | approval of margin requirements, limits and risk control of new instruments |
Cash Liquidity Risk |
In normal conditions, the group’s core business of providing execution and clearing brokerage services is self-financing because the operations generate sufficient revenues to pay expenses as they become due. As a result, the group generally does not face a substantial cash liquidity risk — that is a risk that the group will be unable to raise cash quickly enough to meet payment obligations as they arise. The group has sufficient readily available liquid assets and credit facilities to ensure that the group can meet financial obligations as they become due under both normal and distressed market conditions. The group also has committed credit lines from banks to support the business in respect of settlement and intraday requirements. The group evaluates liquidity needs by analysing the impact of liquidity stress scenarios. The following table analyses the Group’s financial assets, liabilities and commitments. The amounts disclosed are the contractual undiscounted cash flows. |
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Year ended March 31, 2011 |
Within 6 | 6 months to | |||||||||||||||||||
months | 1 Year | 2 to 3 years | After 3 years | Total | ||||||||||||||||
Financial Liabilities | ||||||||||||||||||||
Payable to broker dealers and clearing organizations | 264,504 | 264,504 | ||||||||||||||||||
Payable to customers | 1,272,570 | 1,272,570 | ||||||||||||||||||
Borrowings | 53,000 | — | — | — | 53,000 | |||||||||||||||
Accounts payable, accrued expenses, and other liabilities | 505,605 | 505,605 | ||||||||||||||||||
2,095,679 | — | — | — | 2,095,679 | ||||||||||||||||
Within 6 | 6 months to | |||||||||||||||||||
months | 1 Year | 2 to 3 years | After 3 years | Total | ||||||||||||||||
The group has at its disposal following financial assets in addition to unused lines of credit. | ||||||||||||||||||||
Cash and Bank balance | 281,486 | 281,486 | ||||||||||||||||||
Cash-restricted | 2,832,900 | 126,163 | 2,959,063 | |||||||||||||||||
Interest bearing deposits with bank | 86,523 | 6,839 | 93,362 | |||||||||||||||||
Deposits with clearing organizations | 173,783 | 173,783 | ||||||||||||||||||
Receivable from broker-dealers and clearing organizations | 18,580 | 18,580 | ||||||||||||||||||
Receivable from customers | 447,770 | 447,770 | ||||||||||||||||||
Available-for-sale securities Marketable, at market value | 40,776 | 40,776 | ||||||||||||||||||
Interest accrued but not due | 67,124 | 67,124 | ||||||||||||||||||
3,775,159 | 133,002 | — | 173,783 | 4,081,944 | ||||||||||||||||
Year ended March 31, 2010 |
Within 6 | 6 months | 2 to 3 | After 3 | |||||||||||||||||
months | to 1 Year | years | years | Total | ||||||||||||||||
Financial Liabilities | ||||||||||||||||||||
Payable to broker dealers and clearing organizations | 139,965 | — | — | — | 139,965 | |||||||||||||||
Payable to customers | 1,177,517 | — | — | — | 1,177,517 | |||||||||||||||
Borrowings | 3,508 | — | — | — | 3,508 | |||||||||||||||
Accounts payable, accrued expenses, and other liabilities | 394,327 | — | — | — | 394,327 | |||||||||||||||
1,715,317 | — | — | — | 1,715,317 | ||||||||||||||||
Within 6 | 6 months | 2 to 3 | After 3 | |||||||||||||||||
months | to 1 Year | years | years | Total | ||||||||||||||||
The group has at its disposal following financial assets in addition to unused lines of credit. | ||||||||||||||||||||
Cash and bank balance | 148,213 | — | — | — | 148,213 | |||||||||||||||
Cash-restricted | 2,179,803 | 310,044 | — | — | 2,489,847 | |||||||||||||||
Interest bearing deposits with bank | 107,445 | 188,214 | — | — | 295,659 | |||||||||||||||
Deposits with clearing organizations | — | — | — | 110,969 | 110,969 | |||||||||||||||
Receivable from broker-dealers and clearing organizations | 65,884 | — | — | — | 65,884 | |||||||||||||||
Receivable from customers | 437,207 | — | — | — | 437,207 | |||||||||||||||
Available-for-sale securities Marketable, at market value | 877 | — | — | — | 877 | |||||||||||||||
Available-for-sale securities not readily marketable, at fair value | 11,447 | — | — | — | 11,447 | |||||||||||||||
Interest accrued but not due | 71,443 | — | — | — | 71,443 | |||||||||||||||
3,022,319 | 498,258 | — | 110,969 | 3,631,546 | ||||||||||||||||
Available credit facilities (undrawn) as at March 31 |
As at March 31, | ||||||||
2011 | 2010 | |||||||
Fund based facilities (working capital) | — | 500,000 | ||||||
Non—fund facilities | — | 1,060,000 | ||||||
Total | — | 1,560,000 | ||||||
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3.2. | Capital risk management | |
The objectives of the Group when managing capital are to safeguard the group’s ability to continue as a going concern in order to provide returns for shareholders and to maintain minimal debt. Capital of the group is ‘equity’ as shown in the consolidated balance sheet. The exchange in which the group is a member has stipulated minimum net worth that must be maintained. In order to maintain or adjust the capital structure, the group may adjust the amount of dividends to shareholders, issue new shares or sell assets to reduce debt. The group has embedded in its regulatory compliance framework the necessary test to ensure the continuous and full compliance with the net worth criteria set by the Exchange at each entity level. The group has complied with the net worth requirement at each entity level during the year and as at March 31, 2011 and March 31, 2010. | ||
3.3. | Fair value estimation | |
The fair value of financial instruments traded in active markets (such as available-for-sale securities) is based on the quoted market price at the balance sheet date. The quoted market price used for financial assets held by the group is the closing market price. The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques except for the investment in equity shares of Bombay Stock Exchange Limited. | ||
The fair value of Investment in the equity shares of BSEL is provided by BSEL. The fair value provided by BSEL is used for valuing investment in shares for the purposes of computation of net worth of trading member. | ||
However the Investment in BSEL have been sold by the company during the financials year March 31, 2011. Please refer to note 14 for further details. | ||
The carrying value, less impairment provision of trade receivables, is assumed to approximate their fair values. |
4. | Critical accounting estimates and judgements |
4.1. | Critical accounting estimates | |
In the process of applying the group’s accounting policies, management has made estimates and judgements in preparing the financial statements. | ||
Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. | ||
MF makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. | ||
Valuation of financial assets where there is no quoted price — This determination requires significant judgement particularly in determining changes in fair value since the last formal valuation. | ||
Impairment of non-financial assets — The recoverable amount of an asset or a cash-generating unit is determined based on value-in-use calculations prepared on the basis of management’s assumptions and estimates. | ||
Income taxes — There are transactions and calculations for which the ultimate tax determination is uncertain and would get finalized on completion of assessment by tax authorities. Where the final tax outcome is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. | ||
Defined benefit schemes — Gratuity Liability — The costs of and period-end obligations under defined benefit schemes are determined using an actuarial valuation. The actuarial valuation involves making assumptions about discount rates, expected rates of return on assets, future salary increases, mortality rates and future pension increases. Due to the long-term nature of these schemes, such estimates are subject to significant uncertainty. The group reviews its assumptions annually in conjunction with its independent actuary and considers this adjustment appropriate given the geographical and demographic profile of the scheme. | ||
Share-based payment transactions — Share-based payments are measured at fair value by an independent valuer using the Black-Scholes model and expensed over the vesting period based on the group’s estimate of shares that will eventually vest. | ||
4.2. | Critical accounting judgements in applying the entity’s accounting policy |
4.2.1. | Revenue recognition |
MF estimates that fixed deposits placed with banks will be held till maturity while determining the accrued interest, which is unpaid on the balance sheet date. In the event 1% of such deposit is withdrawn before it’s its maturity date the Interest income will be lower by Rs. 733. |
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5. | Intangible assets |
5.1. | Software |
Web | ||||||||||||
Computer | Development | |||||||||||
Software | Costs | Total | ||||||||||
Cost | ||||||||||||
As at March 31, 2009 | 63,614 | 207,452 | 271,066 | |||||||||
Additions | 25,104 | — | 25,104 | |||||||||
Disposals | (30 | ) | (30 | ) | ||||||||
Exchange difference | (27 | ) | — | (27 | ) | |||||||
As at March 31, 2010 | 88,691 | 207,422 | 296,113 | |||||||||
Additions | 5,671 | — | 5,671 | |||||||||
Disposals | — | — | — | |||||||||
Exchange difference | (2 | ) | — | (2 | ) | |||||||
As at March 31, 2011 | 94,360 | 207,422 | 301,782 | |||||||||
Accumulated amortisation and impairment | ||||||||||||
As at March 31, 2009 | 47,540 | 207,452 | 254,992 | |||||||||
Charge for the year | 12,992 | — | 12,992 | |||||||||
Disposals | — | (30 | ) | (30 | ) | |||||||
Exchange difference | (27 | ) | — | (27 | ) | |||||||
As at March 31, 2010 | 60,505 | 207,422 | 267,927 | |||||||||
Charge for the year | 14,587 | — | 14,587 | |||||||||
Disposals | — | — | — | |||||||||
Exchange difference | (3 | ) | — | (3 | ) | |||||||
As at March 31, 2011 | 75,089 | 207,422 | 282,511 | |||||||||
Net book amount as at | ||||||||||||
March 31, 2011 | 19,271 | — | 19,271 | |||||||||
March 31, 2010* | 28,424 | — | 28,424 |
5.2. | Membership in Exchanges | |
Membership in exchanges consists of: |
a) | BSE membership of Rs.1,257 and Rs 1,257 as at March 31, 2011 and 2010 respectively, and | ||
b) | DGCX membership of Rs.4,476 and Rs. 4,525 as at March 31, 2011 and 2010, respectively. DGCX membership value underwent a change due to foreign currency translation. |
BSE membership |
The carrying value of the erstwhile BSE membership card in the books of MF Global Sify was Rs.13,570 in August 2005. Consequent to the corporatisation of the BSE, MF Global Sify computed the fair value of the membership rights of BSEL and shares of BSEL as follows: |
Membership rights of BSEL | On the basis of the benefits which MF Global Sify would get over the current deposit based membership right of BSEL | |
Equity shares of BSEL | On the basis of the fair value of the equity shares of BSEL determined by management |
The fair value of the membership rights of BSEL is calculated by present value over 10 years of opportunity costs incurred on current deposit and admission fees required for new membership on the date of the balance sheet. The interest rate and present value is determined @ 8% p.a. On the balance sheet date the current deposit requirement is Rs. 1,000 and admission fees (non — refundable) is Rs. 250. |
In accordance with the above methodology, an impairment charge arose in BSE membership rights of Rs. Nil and Rs. 3,130, which was written off to the consolidated income statement during the year ended March 31, 2011 and March 31, 2010 respectively. |
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6. | Property, Plant and Equipment* |
March 31, 2010 | 238 | — | 238 |
Furniture and | Computers | Office | ||||||||||||||||||
Fixtures | Systems | equipments | Vehicles | Total | ||||||||||||||||
Cost | ||||||||||||||||||||
As at March 31, 2009 | 8,182 | 165,061 | 36,861 | 13,215 | 223,319 | |||||||||||||||
Additions | 288 | 12,982 | 1,018 | — | 14,288 | |||||||||||||||
Disposals | — | (6 | ) | (7 | ) | — | (13 | ) | ||||||||||||
Exchange difference | (153 | ) | (110 | ) | (92 | ) | (114 | ) | (469 | ) | ||||||||||
As at March 31, 2010 | 8,317 | 177,927 | 37,780 | 13,101 | 237,125 | |||||||||||||||
Additions | 50 | 4,498 | 212 | — | 4,760 | |||||||||||||||
Disposals | — | — | — | — | ||||||||||||||||
Exchange difference | (14 | ) | (9 | ) | (8 | ) | (10 | ) | (41 | ) | ||||||||||
As at March 31, 2011 | 8,353 | 182,416 | 37,984 | 13,091 | 241,844 | |||||||||||||||
Accumulated depreciation | ||||||||||||||||||||
As at March 31, 2009 | 3,170 | 125,391 | 9,485 | 4,733 | 142,779 | |||||||||||||||
Charge for the year | 913 | 17,395 | 3,923 | 2,175 | 24,406 | |||||||||||||||
Disposals | — | (5 | ) | (1 | ) | — | (6 | ) | ||||||||||||
Exchange difference | (72 | ) | (77 | ) | (32 | ) | (32 | ) | (213 | ) | ||||||||||
As at March 31, 2010 | 4,011 | 142,704 | 13,375 | 6,876 | 166,966 | |||||||||||||||
Charge for the year | 2,739 | 25,595 | 20,233 | 4,506 | 53,073 | |||||||||||||||
Disposals | — | — | ||||||||||||||||||
Exchange difference | (7 | ) | (7 | ) | (4 | ) | (4 | ) | (22 | ) | ||||||||||
As at March 31, 2011 | 6,743 | 168,292 | 33,604 | 11,378 | 220,017 | |||||||||||||||
Net book amount | ||||||||||||||||||||
As at March 31, 2011 | 1,610 | 14,124 | 4,380 | 1,713 | 21,827 | |||||||||||||||
As at March 31, 2010 | 4,306 | 35,223 | 24,405 | 6,225 | 70,159 |
7. | Deferred income tax |
The movement in deferred tax assets and liabilities during the respective years is as follows: |
2011 | 2010 | |||||||
At April 1 | 17,901 | 56,082 | ||||||
Property Plant and Equipment | 10,479 | (3,422 | ) | |||||
Provision on receivable from customers | 12,765 | (19,783 | ) | |||||
Gratuity | 891 | 59 | ||||||
Stock appreciation rights | 24,404 | (8,060 | ) | |||||
Provision for Bonus | 12,106 | (8,593 | ) | |||||
Stamp duty | 930 | 1,618 | ||||||
At March 31 | 79,476 | 17,901 | ||||||
Comprised Of: | ||||||||
Deferred Tax Assets | �� | 79,476 | 18,215 | |||||
Deferred Tax Liabilities | — | (314 | ) | |||||
79,476 | 17,901 | |||||||
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An analysis of the gross deferred tax asset and liability balances is as follows: |
2011 | 2010 | |||||||
Deferred tax assets: | ||||||||
Property Plant and Equipment | 11,308 | 829 | ||||||
Provision on receivable from customers | 20,129 | 7,364 | ||||||
Stock appreciation rights | 31,881 | 7,477 | ||||||
Provision for Bonus | 13,033 | 927 | ||||||
Stamp Duty | 2,548 | 1,618 | ||||||
Gratuity | 577 | — | ||||||
79,476 | 18,215 | |||||||
Deferred tax liabilities: | ||||||||
Nil | — | (314 | ) | |||||
— | (314 | ) |
March 31, | March 31, | |||||||
2011 | 2010 | |||||||
Deferred tax assets: | ||||||||
— Deferred tax asset to be recovered after more than 12 months | 33,985 | 9,811 | ||||||
— Deferred tax asset to be recovered within 12 months | 45,491 | 8,404 | ||||||
79,476 | 18,215 | |||||||
Deferred tax liabilities: | ||||||||
— Deferred tax liability to be recovered after more than 12 months | — | 314 | ||||||
— Deferred tax liability to be recovered within 12 months | — | |||||||
— | 314 | |||||||
Deferred tax Assets (net) | 79,476 | 17,901 | ||||||
Provision on | ||||||||||||||||||||||||||||
receivable | Stock | |||||||||||||||||||||||||||
Property Plant | from | appreciation | Provision | |||||||||||||||||||||||||
Deferred tax assets: | and Equipment | customers | rights | for Bonus | Gratuity | Stamp Duty | Grand Total | |||||||||||||||||||||
Opening Balance as on April 1, 2009 | 4,251 | 27,147 | 15,537 | 9,520 | — | — | 56,455 | |||||||||||||||||||||
Charged / (Credited) to Other Comprehensive Income | (3,325 | ) | (19,166 | ) | (6,605 | ) | (8,375 | ) | 1,618 | (35,853 | ) | |||||||||||||||||
Effect of Change in Tax rates | (97 | ) | (617 | ) | (1,455 | ) | (218 | ) | — | (2,387 | ) | |||||||||||||||||
As at March 31, 2010 | 829 | 7,364 | 7,477 | 927 | — | 1,618 | 18,215 | |||||||||||||||||||||
Charged / (Credited) to Other Comprehensive Income | 10,479 | 12,765 | 24,404 | 12,106 | 577 | 930 | 61,261 | |||||||||||||||||||||
Effect of Change in Tax rates | — | |||||||||||||||||||||||||||
As at March 31, 2011 | 11,308 | 20,129 | 31,881 | 13,033 | 577 | 2,548 | 79,476 | |||||||||||||||||||||
Deferred tax liabilities: | �� | Gratuity | Grand Total | |||||||||||||
Opening Balance as on April 1, 2009 | 373 | 373 | ||||||||||||||
Charged / (Credited) to Other | (53 | ) | (53 | ) | ||||||||||||
Comprehensive Income | ||||||||||||||||
Effect of Change in Tax rates | (6 | ) | (6 | ) | ||||||||||||
As at March 31, 2010 | 314 | 314 | ||||||||||||||
Charged / (Credited) to Other | (314 | ) | (314 | ) | ||||||||||||
Comprehensive Income | ||||||||||||||||
Effect of Change in Tax rates | — | |||||||||||||||
As at March 31, 2011 | — | — | ||||||||||||||
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8. | Receivables from customers |
Receivables from customers that are due for less than six months are generally not considered impaired. In respect of receivables that are neither past due nor impaired, as at the reporting date, there are no indications that the customers will not meet their payment obligations. |
As at March 31, 2011, receivables of Rs.10,193 (March 31, 2010: Rs. 672) were past due but not impaired. There are no indications that these customers will not meet their payment obligations. The ageing analysis of receivables, which are not impaired, is as follows: |
As at March 31, | ||||||||
2011 | 2010 | |||||||
Up to 6 months | 437,577 | 436,535 | ||||||
more than 6 months | 10,193 | 672 | ||||||
447,770 | 437,207 | |||||||
Receivables are tested individually for impairment. Based on such testing as at March 31, 2011, receivables of Rs 60,600. (March 31, 2010: Rs. 22,300) were impaired and provided for. The amount of the provision was Rs. 60,600 as at March 31, 2011 (March 31, 2010: Rs. 22,300). |
The ageing of these receivables is as follows: |
As at March 31, | ||||||||
2011 | 2010 | |||||||
Up to 6 months | 45,796 | 5,020 | ||||||
more than 6 months | 14,804 | 17,280 | ||||||
60,600 | 22,300 | |||||||
The carrying amounts of the group’s receivables are denominated in Indian Rupees (INR): |
As at March 31, | ||||||||
2011 | 2010 | |||||||
447,770 | 437,207 | |||||||
447,770 | 437,207 | |||||||
Movements on the group’s provision for impairment of trade receivables are as follows: |
As at March 31, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
As at the beginning of the year | 22,300 | 80,000 | 77,075 | |||||||||
Provision for impairment | 38,300 | — | 2,925 | |||||||||
Write back of provision | — | (57,700 | ) | — | ||||||||
As at the closing of the year | 60,600 | 22,300 | 80,000 | |||||||||
The maximum exposure to credit risk at the reporting date is the fair value of each class of receivable mentioned above |
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9. | Receivable from and payable to broker-dealer and clearing organisations |
As at March 31 | ||||||||||||||||
2011 | 2010 | |||||||||||||||
Receivable | Payable | Receivable | Payable | |||||||||||||
Clearing organizations | ||||||||||||||||
- Unsettled trade | 8,208 | 38,638 | 60,250 | 8,327 | ||||||||||||
Broker-Dealer | 10,372 | 225,866 | 5,634 | 131,638 | ||||||||||||
Total | 18,580 | 264,504 | 65,884 | 139,965 | ||||||||||||
10. | Other assets |
As at March 31, | ||||||||
2011 | 2010 | |||||||
Prepaid expenses | 14,544 | 19,890 | ||||||
Advance tax (net of provisions) | 168,746 | 124,124 | ||||||
Deposits | 32,663 | 30,976 | ||||||
Loans and advances (to staff) | 12,594 | 22,168 | ||||||
Gratuity Trust | 2,228 | 3,232 | ||||||
Others* | 15,025 | 19,892 | ||||||
245,800 | 220,282 | |||||||
* | includes Advances to vendors towards expenses, delayed payment charges from clients, withholding tax recoverable, etc. |
11. | Cash and Bank Balance |
As at March 31, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Cash in hand | 0.49 | 32.00 | 20 | |||||||||
Cash at bank | 281,485.27 | 148,181.00 | 181,596 | |||||||||
281,485.76 | 148,213.00 | 181,616 | ||||||||||
12. | Cash — restricted |
13. | Interest bearing deposits with banks |
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14. | Available for Sale Securities |
As at March 31, | ||||||||||||||||
2011 | 2010 | |||||||||||||||
Amount | Amount | |||||||||||||||
(a) Equity Shares (Quoted) | Quantity | (Rs.) | Quantity | (Rs.) | ||||||||||||
Patni Computers Systems Limited. | 18,096 | 8,633 | — | — | ||||||||||||
Piramal Health Care Limited | 4,888 | 2,037 | — | — | ||||||||||||
Siemens Limited | 34,171 | 30,106 | — | — | ||||||||||||
Rural Electrification Corporation Limited | — | — | 3,500 | 877 | ||||||||||||
Bombay Stock Exchange Limited | — | — | 70,694 | 11,447 | ||||||||||||
Total (a) | 57,155 | 40,776 | 74,194 | 12,324 | ||||||||||||
Templeton India — Dividend reinvestment plan | 9,286,667 | 92,868 | — | — | ||||||||||||
Total (b) | 9,286,667 | 92,868 | — | — | ||||||||||||
15. | Share capital and Dividend distribution |
As at March 31, | ||||||||
2011 | 2010 | |||||||
Authorised capital | ||||||||
70,000,000 ordinary shares of Rs.10/- per share | 700,000 | 650,000 |
16. | Share—based payments |
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• | Corporate tax rate — Current period tax rate is considered as corporate tax rate. |
• | Future maintainable profit — Future maintainable profit is derived based on simple average adjusted PBT for each year. From the future maintainable profit, corporate tax at the corporate tax rate has been deducted to derive future maintainable profit after tax. |
• | Expected rate of return — Expected rate of return is determined based on the average price earnings multiple of comparable companies on the basis of their 12 months average market prices. |
As at March 31, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
As at the beginning of the year | 2,879,747 | 2,898,747 | 1,512,747 | |||||||||
Granted during the year | — | 1,386,000 | ||||||||||
Exercised | (2,558,394 | ) | — | — | ||||||||
Forfeited | (321,353 | ) | (120,008 | ) | (115,500 | ) | ||||||
Reissued | — | 100,508 | 115,500 | |||||||||
Lapsed | — | — | ||||||||||
As at the end of the year | — | 2,879,747 | 2,898,747 | |||||||||
Exercisable at the end of the year | — | — | — | |||||||||
Approximate remaining vesting period in years | — | 1.24 | 2.98 |
17. | Borrowings |
As at March 31, | ||||||||
2011 | 2010 | |||||||
Car Loan | — | 3,508 | ||||||
— | 3,508 | |||||||
As at March 31, | ||||||||
2011 | 2010 | |||||||
On demand or within one year | 53,000 | 1,266 | ||||||
In one to three years | — | 2,242 | ||||||
In three to five years | — | — | ||||||
53,000 | 3,508 | |||||||
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18. | Employee benefit obligation |
Years ended March 31, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Gratuity | 1,432 | 856 | 844 | |||||||||
Stock appreciation rights | 96,832 | 135,746 | 46,851 | |||||||||
98,264 | 136,602 | 47,695 | ||||||||||
Years ended March 31, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Opening defined benefit obligation | 9,861 | 9,700 | 9,458 | |||||||||
Current service cost | 2,879 | 2,853 | 3,000 | |||||||||
Interest cost | 715 | 679 | 755 | |||||||||
Actuarial losses/ (gains) | 3,948 | (3,373 | ) | (3,471 | ) | |||||||
Benefits paid | — | (42 | ) | |||||||||
Closing defined benefit obligation | 17,403 | 9,859 | 9,700 | |||||||||
Years ended March 31, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Beginning of year | 12,237 | 11,200 | 7,686 | |||||||||
Expected return on plan assets | 1,343 | 1,025 | 832 | |||||||||
Actuarial (losses)/gains | (278 | ) | 11 | (129 | ) | |||||||
Employer contributions | 6,732 | — | 2,853 | |||||||||
Benefits paid | (1,836 | ) | — | (42 | ) | |||||||
Closing fair value of plan assets | 18,198 | 12,236 | 11,200 | |||||||||
Years ended March 31, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Current service cost | 2,879 | 2,853 | 3,000 | |||||||||
Interest cost | 715 | 679 | 755 | |||||||||
Actuarial loss | 6,061 | (3,384 | ) | (3,342 | ) | |||||||
Expected return on plan asset | (1,344 | ) | (1,025 | ) | (832 | ) | ||||||
8,311 | (877 | ) | (419 | ) | ||||||||
Years ended March 31, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Discount rate | 8.00 | % | 7.00 | % | 8.00 | % | ||||||
Expected return on plan assets | 9.25 | % | 9.25 | % | 9.15 | % | ||||||
Long term rate of compensation increase | 6.00 | % | 6.00 | % | 6.00 | % |
19. | Accounts payables, accrued expenses and other liabilities |
As at March 31, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Accruals | 41,758 | 41,489 | 35,541 | |||||||||
Withholding tax payable | 85,062 | 71,382 | 52,060 | |||||||||
Bonus Payable | 255,242 | 157,410 | 126,350 | |||||||||
Other payables | 123,543 | 124,046 | 138,007 | |||||||||
Total | 505,605 | 394,327 | 351,958 | |||||||||
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20. | Other Expenses |
Year ended March 31, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Professional Fees | 12,087 | 11,059 | 10,590 | |||||||||
Travelling and conveyance | 18,901 | 16,068 | 15,872 | |||||||||
Books & Periodicals, Postage, printing and stationary | 29,120 | 25,817 | 33,466 | |||||||||
Loss on account of error trades (net) | 10,923 | 12,602 | 12,452 | |||||||||
Repairs & maintenance | 818 | 145 | 2,717 | |||||||||
Service fee expenses | — | — | 15,735 | |||||||||
Insurance Premium | 1,248 | 963 | 19,801 | |||||||||
Others | 12,531 | 15,457 | 15,060 | |||||||||
Total | 85,628 | 82,111 | 125,693 | |||||||||
21. | Employee benefit expense |
Year ended March 31 | ||||||||||||
�� | 2011 | 2010 | 2009 | |||||||||
Salaries and bonus | 670,766 | 508,264 | 483,382 | |||||||||
Defined contribution plans | 4,047 | 3,452 | 3,968 | |||||||||
Defined benefit plans | 9,134 | 159 | 285 | |||||||||
Staff welfare expenses | 14,677 | 6,796 | 2,896 | |||||||||
Share—based compensation expense | 95,911 | 89,104 | 23,973 | |||||||||
730 | ||||||||||||
794,535 | 607,775 | 515,234 | ||||||||||
22. | Provision for Doubtful Debts |
23. | Other income |
Year ended March 31, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Profit on sale of available-for-sale securities | 23,603 | — | 6,724 | |||||||||
Delayed payment charges (*) | 60,014 | 24,999 | 39,215 | |||||||||
Research fees | — | 3,072 | ||||||||||
Referral fees (**) | 57,745 | 51,160 | 2,824 | |||||||||
Interest | 16,278 | 5566 | 51990 | |||||||||
Dividend | 1,617 | 283 | 5,174 | |||||||||
Currency Fluctuation Gain | 912 | 7,960 | 167 | |||||||||
Expenses Reversal (***) | — | 17,567 | — | |||||||||
Principal Trading Activity | 4,056 | — | — | |||||||||
Miscellaneous income | 30,565 | 26,365 | 32,577 | |||||||||
194,790 | 136,972 | 138,671 | ||||||||||
(*) | Delayed payment charges represents the penal charges levied to clients on account of delay in settlement of their trade related obligations. | |
(**) | Referral fees consist of payments received for introducing clients to other MF Global associated companies. | |
(***) | The amount of Rs 17,567 was provided in year 2009 on account of group recharges from MF Global Holdings Limited (formerly known as MF Global Limited) has been reversed during the current year on account of mutual agreement between the stakeholders. |
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24. | Income tax expense |
Year ended March 31, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Current tax | 127,322 | 122679 | 127269 | |||||||||
Deferred tax (Note 7) | (61,575 | ) | 38181 | (894 | ) | |||||||
65,747 | 160,860 | 126,375 | ||||||||||
Year ended March 31, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Net income before taxes | 307,587 | 468,403 | 343,292 | |||||||||
Enacted tax rates in India | 33.22 | % | 33.99 | % | 33.99 | % | ||||||
Computed tax expense | 102,180 | 159,210 | 116,685 | |||||||||
Income exempt from tax: | ||||||||||||
Dividend | (536 | ) | (96 | ) | (57 | ) | ||||||
Non-deductible expenses: | ||||||||||||
Contribution to co-investment plan | 734 | 751 | 751 | |||||||||
Others including donations, IT interest etc. | 678 | 1,228 | 1,275 | |||||||||
Recharges by parent and affiliate companies | — | 980 | 8,498 | |||||||||
Excess Provisions for earlier years reverse back in current year | (26,491 | ) | — | — | ||||||||
Income charged at lower rate | (7,171 | ) | — | — | ||||||||
(Gain) / Loss in Subsidiaries | (4,209 | ) | (3,294 | ) | (1,123 | ) | ||||||
Others | 562 | 2081 | 346 | |||||||||
Income taxes recognized in the statement of income | 65,747 | 160,860 | 126,375 | |||||||||
25. | Financial instruments by category |
The accounting policies for financial instruments have been applied to the line items below: |
Loans and | Available | |||||||||||
March 31, 2011 | receivables | for sale | Total | |||||||||
Assets as per balance sheet | ||||||||||||
Cash and Bank balance | 281,486 | 281,486 | ||||||||||
Cash-restricted | 2,959,063 | 2,959,063 | ||||||||||
Interest bearing deposits with bank | 93,362 | 93,362 | ||||||||||
Deposits with clearing organizations and others | 173,783 | 173,783 | ||||||||||
Receivable from broker-dealers and clearing organizations | 18,580 | 18,580 | ||||||||||
Receivable from customers | 447,770 | 447,770 | ||||||||||
Available-for-sale securities: | ||||||||||||
Marketable, at market value | 40,776 | 40,776 | ||||||||||
Not readily marketable (at estimated fair value) | 92,868 | 92,868 | ||||||||||
Interest accrued but not due | 67,124 | 67,124 | ||||||||||
Other assets | 245,800 | 245,800 | ||||||||||
4,286,968 | 133,644 | 4,420,612 | ||||||||||
Other | ||||||||
financial | ||||||||
liabilities | Total | |||||||
Liabilities as per balance sheet | ||||||||
Payable to broker dealers and clearing organizations | 264,504 | 264,504 | ||||||
Payable to customers | 1,272,570 | 1,272,570 | ||||||
Borrowings | 53,000 | 53,000 | ||||||
Accounts payable, accrued expenses, and other liabilities | 505,605 | 505,605 | ||||||
2,095,679 | 2,095,679 | |||||||
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Loans and | Available | |||||||||||
March 31, 2010 | receivables | for sale | Total | |||||||||
Assets as per balance sheet | ||||||||||||
Cash and Bank balance | 148,213 | — | 148,213 | |||||||||
Cash-restricted | 2,489,847 | — | 2,489,847 | |||||||||
Interest bearing deposits with bank | 295,659 | — | 295,659 | |||||||||
Deposits with clearing organizations and others | 110,969 | — | 110,969 | |||||||||
Receivable from broker-dealers and clearing organizations | 65,884 | — | 65,884 | |||||||||
Receivable from customers | 437,207 | — | 437,207 | |||||||||
Available-for-sale securities: | ||||||||||||
Marketable, at market value | — | 877 | 877 | |||||||||
Not readily marketable (at estimated fair value) | — | 11,447 | 11,447 | |||||||||
Interest accrued but not due | 71,443 | — | 71,443 | |||||||||
Other assets | 203,982 | — | 203,982 | |||||||||
3,823,204 | 12,324 | 3,835,528 | ||||||||||
Other | ||||||||
financial | ||||||||
March 31, 2010 | liabilities | Total | ||||||
Liabilities as per balance sheet | ||||||||
Payable to broker dealers and clearing organizations | 139,965 | 139,965 | ||||||
Payable to customers | 1,177,517 | 1,177,517 | ||||||
Borrowings | 3,508 | 3,508 | ||||||
Accounts payable, accrued expenses, and other liabilities | 394,327 | 394,327 | ||||||
1,715,317 | 1,715,317 | |||||||
The carrying amounts reported in the balance sheet for cash and cash equivalents, receivables, amounts due to or from related parties, accounts payable and other liabilities approximate their respective fair values due to their short maturity. |
26. | During October 2010, Sify Technologies Limited, the minority shareholder of the Company holding 29.85 percent of the outstanding shares of the Company, requested the Company’s Board of Directors to reconsider certain costs charged to the Company by MF Global Holdings Limited (the majority shareholder) and its affiliated and associated group companies, who hold 70.15 percent of the outstanding shares of the Company. These charges are currently recorded in the financial statements of the Company for year ended March 31, 2008 aggregating to Rs. 43,478,911 and March 31, 2009 aggregating to Rs. 15,374,528. The resolution of this matter between the shareholders remains uncertain and any financial adjustment that may arise is not presently known. Any financial adjustment that may arise on resolution of the said matter would be expected to be handled prospectively and therefore would be reported in the period in which it is resolved. |
27. | Merger of Subsidiary Company |
The Scheme of Amalgamation (the ‘Scheme’) of MF Global Capital India Private Limited (‘MFGCIPL’) [the Transferor Company] with MF Global Sify Securities India Private Limited (‘MFGSSIPL’) [the Transferee Company] was sanctioned by the Bombay High Court on March 25, 2011 and the order sanctioning the Scheme was filed with the Registrar of Companies at Mumbai on April 15, 2011 (‘the Effective Date’). |
Accordingly, pursuant to the Scheme, the undertaking of the erstwhile MFGCIPL (comprising all of its properties and assets (whether movable or immovable, tangible or intangible) such as security deposits, licenses, permits, quotas, approvals, leases, tenancy rights, permissions, incentives if any, and all other rights, title, interests, contracts, consent, approvals or powers of every nature and descriptions shall without any further act, instrument or deed stand transferred to and vested in and/or deemed to be transferred to and vested in the Transferee Company, free from all encumbrances, but subject to subsisting charges and pledges, if any. All debts, liabilities, contingent liabilities, financial commitments, duties and obligations pertaining to the Transferor Company, whether provided for or not in the books of account of the Transferor Company and whether disclosed or undisclosed in its Balance Sheet has been transferred to and vested with MFGSSIPL retrospectively with effect from April 1, 2010 (the ‘Appointed Date’). The Scheme has accordingly been given effect to in these financial statements. |
28. | Commitments and contingencies |
a) | Contingent Liabilities |
(i) Guarantee given by scheduled banks on behalf of the company in favour of commodity Exchange Rs. 200,000 (PY ending March 31, 2010 Rs.190,000). |
(ii)Claims against the company not acknowledged as debts Rs. 15,030 (PY. ending March 31, 2010 Rs. 15,030). |
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b) | Operating lease commitments — MF as lessee |
The group has obligations under long term operating leases with initial non-cancellable terms in excess of one year. Aggregate annual rentals for office space as of March 31, 2011, are approximately as listed below: |
As at March 31, | ||||||||
2011 | 2010 | |||||||
Not later than 1 year | 59,409 | 59,087 | ||||||
Later than 1 year and not later than 5 years | 20,346 | 13,771 | ||||||
Later than 5 years | — | — | ||||||
Total minimum lease commitments | 79,755 | 72,858 | ||||||
Rent expense for the current year aggregated to Rs. 59,979 (2010: Rs. 61,694) and is included in the occupancy expense line item on the consolidated statements of income. |
c) | Contingencies |
The group is a member of various exchanges that trade and clear securities, commodities and/or futures contracts. Associated with its membership, the group may be required to pay a proportionate share of the financial obligations of another member who may default on its obligations to the exchange. While the rules governing different exchange memberships vary, in general the group’s exposure would be restricted only to the extent of amounts receivable from the exchange and would arise only if the exchange had previously exhausted its resources. However, based on its experience, the company expects the risk of loss to be remote. |
29. | Related party transactions |
The share capital of MF is held jointly by MF Global Overseas Limited and Sify Technologies Limited. The ultimate holding company of MF Global Sify is MF Global Holdings Limited. |
a) | Related Party Relationship |
Related parties where control exists: | ||
Nature of Relationship | Related Party | |
Holding enterprises: | MF Global Overseas Limited | |
Ultimate Holding company: | MF Global Holdings Limited | |
Party having substantial interest: | Sify Technologies Limited | |
Other related parties with whom transactions have taken place: | ||
Nature of Relationship | Related Party | |
Subsidiary companies: | MF Global Commodities India Private Limited | |
MF Global Middle East DMCC | ||
Fellow subsidiary companies: | MF Global India Private Limited | |
(where transactions exist) | MF Global Holdings HK Limited | |
MF Global Hong Kong Limited | ||
MF Global Australia Limited | ||
MF Global Singapore Limited | ||
MF Global Finance & Investment Services India Private Limited | ||
MF Global Centralised Services India Private Limited | ||
MF Global UK Limited | ||
MF Global Inc (DE) | ||
Key management personnel: | Mr. Vineet Bhatnagar | |
Mr. Rajendra Bhambhani | ||
Mr. Randy MacDonald# | ||
(#Joined with effect from July 28, 2010) | ||
Mr. Laurence O’Connell* | ||
(*resigned with effect from May 25, 2010) |
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b) | Transactions involving services |
Year ended March 31, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Services provided by MF to: | ||||||||||||
Holding companies | ||||||||||||
Reimbursement of Expenses | — | 539 | 3,205 | |||||||||
Fellow Subsidiary Companies | ||||||||||||
Referral Fees | 57,750 | 51,162 | 51,992 | |||||||||
Brokerage Income | 5,333 | 5,185 | ||||||||||
Reimbursement of Expenses | 5,165 | 5,646 | 8,715 | |||||||||
68,248 | 57,347 | 69,097 | ||||||||||
Services received by MF from: | ||||||||||||
Holding companies | ||||||||||||
Service Fees | 9,349 | |||||||||||
Bank Guarantee Commission | 72 | 497 | 1,692 | |||||||||
Insurance Premium | — | (17,567 | ) | 17,842 | ||||||||
Purchase / AMC of Computer Hardware | 6,600 | |||||||||||
Fellow Subsidiary Companies | ||||||||||||
Lease Line Charges | 1,675 | |||||||||||
IB Commission Expense | 4,691 | 2,006 | 1,454 | |||||||||
Interest Expense | 1,562 | 888 | 1,039 | |||||||||
Service Fees | — | — | 6,386 | |||||||||
Membership & Subscription | 6,368 | 3,266 | 247 | |||||||||
12,693 | (10,910 | ) | 46,284 | |||||||||
Loan Taken and Repaid (Net) | (5,300 | ) | 383,700 | 270,000 |
c) | Key management compensation |
Year ended March 31, | ||||||||||||
2011 | 2010 | 2009 | ||||||||||
Salaries and other short-term employee benefits | 122,410 | 71,361 | 63,112 | |||||||||
Other long-term benefits (Co-Investment Plan) | — | 2,208 | 2,208 | |||||||||
Share-based payments | — | 19,653 | 5,420 | |||||||||
122,410 | 93,222 | 70,740 | ||||||||||
d) | Year-end balances arising from transactions involving services |
Due To Related Parties | ||||||||
MF Global Holdings Ltd. | 32,857 | 34,005 | ||||||
MF Global UK Ltd. | 57,953 | 19,213 | ||||||
MF Global Inc. DE | 6,372 | 3,504 | ||||||
MF Global Holdings USA Inc. | 2,014 | 2,036 | ||||||
MF Global Singapore Pte Ltd. | 1,028 | 1,529 | ||||||
MF Global Holdings HK Ltd. | — | 699 | ||||||
MF Global Finance and Investment Services India Private Limited | 53,000 | — | ||||||
MF Global Australia Limited | 125 | — | ||||||
153,349 | 60,986 | |||||||
Due from Related Parties | ||||||||
MF Global Inc. DE | 179 | 361 | ||||||
MF Global Mauritius Pvt. Ltd. | 1,116 | 1,399 | ||||||
MF Global Singapore Pte Ltd. | 1,243 | 2,347 | ||||||
MF Global Holdings HK Ltd. | 109 | — | ||||||
MF Global HK Ltd. | 269 | — | ||||||
MF Global UK Ltd. | 1,697 | 2,257 | ||||||
MF Global Overseas Limited | — | 3,292 | ||||||
MF Global India Pvt. Ltd. | 1,153 | — | ||||||
MF Global Centralised Services India Pvt. Ltd. | — | 1,287 | ||||||
MF Global FXA Securites Limited | 200 | — | ||||||
5,966 | 10,943 | |||||||
Managing Director
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Number | Description | |||
1.1 | Amended Articles of Association of Sify Technologies Limited. (1) | |||
1.2 | Memorandum of Association of Sify Technologies Limited. (2) | |||
1.3 | Amendment of Memorandum of Association. (3) | |||
2.1 | Deposit Agreement, dated as of October 18, 1999, among Sify Technologies Limited, Citibank, N.A. and holders from time to time of American Depository Shares evidenced by American Depository Receipts issued thereunder (including, as an exhibit, the form of American Depository Receipt). (4) | |||
2.2 | Amendment No. 1 to Deposit Agreement among Sify Technologies Limited, Citibank, N.A. and holders from time to time of American Depository Shares evidenced by American Depository Receipts issued thereunder (including, as an exhibit, the form of American Depository Receipt). (4) | |||
2.3 | Amendment No. 2 to Deposit Agreement among Sify Technologies Limited, Citibank, N.A. and holders from time to time of American Depository Shares evidenced by American Depository Receipts issued thereunder (including, as an exhibit, the form of American Depository Receipt). (5) | |||
2.4 | Subscription Agreement dated November 10, 2005 between Sify Technologies Limited and Infinity Capital Ventures, LP. (9) | |||
2.5 | Standstill Agreement dated November 10, 2005 by and among Sify Technologies Limited, Infinity Capital Ventures, LP and Mr Raju Vegesna. (9) | |||
2.6 | Shareholders’ Agreement dated December 20, 2005 between Sify Technologies Limited, Infinity Satcom Universal (P) Limited, and Sify Communications Limited(erstwhile subsidiary). (10) | |||
2.7 | Shareholders’ Agreement dated November 25, 2005 between Sify Technologies Limited and Man Financial. (11) | |||
4.1 | Associate Stock Option Plan 2000 (6) | |||
4.2 | Associate Stock Option Plan 2002 (6) | |||
4.3 | Associate Stock Option Plan 2005 (12) | |||
4.4 | Associate Stock Option Plan 2007 (14) | |||
4.5 | Form of Indemnification Agreement. (7) | |||
4.6 | License Agreement for Provision of Internet Service, including Internet Telephony dated as of April 1, 2002 by and between Sify Technologies Limited and the Government of India, Ministry of Communications and Information Technology, Department of Telecommunications, Telecom Commission. (3) | |||
4.7 | Bank Guarantee, dated as of November 4, 1998. (2) | |||
4.8 | Agreement, dated November 10, 2004, between Sify Technologies Limited, Satyam Computer Services Limited, SAIF Investment Company Limited and Venture Tech Solutions Pvt. Ltd. (8) | |||
4.9 | Subscription Agreement dated March 24, 2008 between Sify Technologies Limited and Infinity Satcom Universal Private Limited. (13) | |||
4.10 | Scheme of Amalgamation between Sify Communications Limited with Sify Technologies Limited and their respective shareholders (15) | |||
4.11 | Subscription agreement dated October 22, 2010 between Sify Technologies Limited and Mr Ananda Raju Vegesna, Representative of the entities and affiliates in India of Mr Raju Vegesna, Chief Executive and Managing Director of the company. (16) | |||
4.12 | Amendment to subscription agreement dated September 7, 2011 between Sify Technologies Limited and Mr Ananda Raju Vegesna, Representative of the entities and affiliates in India of Mr Raju Vegesna, Chief Executive and Managing Director of the company. (17) |
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Number | Description | |||
8.1 | List of Subsidiaries. | |||
11.1 | Code of Conduct and Conflict of Interest Policy (6) | |||
12.1 | Rule 13a-14(a) Certification of Chief Executive Officer | |||
12.2 | Rule 13a-14(a) Certification of Chief Financial Officer | |||
13.1 | Section 1350 Certification of Chief Executive Officer | |||
13.2 | Section 1350 Certification of Chief Financial Officer | |||
15.1 | Consent of ASA & Associates in respect of Sify Technologies Limited | |||
15.2 | Consent of Price Waterhouse in respect of MF Global Sify Securities Private Limited | |||
15.3 | Consent of KPMG in respect of Sify Technologies Limited |
(1) | Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on October 17, 2007 and incorporated herein by reference. | |
(2) | Previously filed as an exhibit to Amendment No. 1 to the Registration Statement on Form F-1 filed with the Commission on October 4, 1999 and incorporated herein by reference. | |
(3) | Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on October 17, 2007 and incorporated herein by reference. | |
(4) | Previously filed as an exhibit to the Post-Effective Amendment No. 1 to Form F-6 filed with the Commission on January 5, 2000 and incorporated herein by reference. | |
(5) | Previously filed as an exhibit to the Registration Statement on Form S-8 (File No. 333-101322) filed with Commission on November 20, 2002 and incorporated herein by reference. | |
(6) | Previously filed as an exhibit to the Annual Report on Form 20-F filed with the Commission on June 29, 2004 and incorporated herein by reference. | |
(7) | Previously filed as an exhibit to Amendment No. 2 to the Registration Statement on Form F-2 filed with the Commission on October 13, 1999 and incorporated herein by reference. | |
(8) | Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on November 30, 2004 and incorporated herein by reference. | |
(9) | Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on November 21, 2005 and incorporated herein by reference. | |
(10) | Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on December 7, 2005 and incorporated herein by reference. | |
(11) | Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on December 23, 2005 and incorporated herein by reference. | |
(12) | Previously filed as an exhibit to the Annual Report on Form 20-F filed with the Commission on June 30, 2006 and incorporated herein by reference. | |
(13) | Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on April 14, 2008 and incorporated herein by reference. | |
(14) | Previously filed as an exhibit to the Report on Form 20-F filed with the Commission on October 11, 2008 and incorporated herein by reference. | |
(15) | Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on January 23, 2009 and incorporated herein by reference. | |
(16) | Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on November 15, 2010 and incorporated herein by reference. | |
(17) | Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on September 8, 2011 and incorporated herein by reference. |
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SIFY TECHNOLOGIES LIMITED | ||||
By: | /s/ Raju Vegesna | |||
Name: | Raju Vegesna | |||
Title: | Chief Executive Officer | |||
By: | /s/ MP Vijay Kumar | |||
Name: | M P Vijay Kumar | |||
Title: | Chief Financial Officer |
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Number | Description | |||
1.1 | Amended Articles of Association of Sify Technologies Limited. (1) | |||
1.2 | Memorandum of Association of Sify Technologies Limited. (2) | |||
1.3 | Amendment of Memorandum of Association. (3) | |||
2.1 | Deposit Agreement, dated as of October 18, 1999, among Sify Technologies Limited, Citibank, N.A. and holders from time to time of American Depository Shares evidenced by American Depository Receipts issued thereunder (including, as an exhibit, the form of American Depository Receipt). (4) | |||
2.2 | Amendment No. 1 to Deposit Agreement among Sify Technologies Limited, Citibank, N.A. and holders from time to time of American Depository Shares evidenced by American Depository Receipts issued thereunder (including, as an exhibit, the form of American Depository Receipt). (4) | |||
2.3 | Amendment No. 2 to Deposit Agreement among Sify Technologies Limited, Citibank, N.A. and holders from time to time of American Depository Shares evidenced by American Depository Receipts issued thereunder (including, as an exhibit, the form of American Depository Receipt). (5) | |||
2.4 | Subscription Agreement dated November 10, 2005 between Sify Technologies Limited and Infinity Capital Ventures, LP. (9) | |||
2.5 | Standstill Agreement dated November 10, 2005 by and among Sify Technologies Limited, Infinity Capital Ventures, LP and Mr Raju Vegesna. (9) | |||
2.6 | Shareholders’ Agreement dated December 20, 2005 between Sify Technologies Limited, Infinity Satcom Universal (P) Limited, and Sify Communications Limited(erstwhile subsidiary). (10) | |||
2.7 | Shareholders’ Agreement dated November 25, 2005 between Sify Technologies Limited and Man Financial. (11) | |||
4.1 | Associate Stock Option Plan 2000 (6) | |||
4.2 | Associate Stock Option Plan 2002 (6) | |||
4.3 | Associate Stock Option Plan 2005 (12) | |||
4.4 | Associate Stock Option Plan 2007 (14) | |||
4.5 | Form of Indemnification Agreement. (7) | |||
4.6 | License Agreement for Provision of Internet Service, including Internet Telephony dated as of April 1, 2002 by and between Sify Technologies Limited and the Government of India, Ministry of Communications and Information Technology, Department of Telecommunications, Telecom Commission. (3) | |||
4.7 | Bank Guarantee, dated as of November 4, 1998. (2) | |||
4.8 | Agreement, dated November 10, 2004, between Sify Technologies Limited, Satyam Computer Services Limited, SAIF Investment Company Limited and Venture Tech Solutions Pvt. Ltd. (8) | |||
4.9 | Subscription Agreement dated March 24, 2008 between Sify Technologies Limited and Infinity Satcom Universal Private Limited. (13) | |||
4.10 | Scheme of Amalgamation between Sify Communications Limited with Sify Technologies Limited and their respective shareholders (15) | |||
8.1 | List of Subsidiaries. | |||
11.1 | Code of Conduct and Conflict of Interest Policy (6) | |||
12.1 | Rule 13a-14(a) Certification of Chief Executive Officer | |||
12.2 | Rule 13a-14(a) Certification of Chief Financial Officer |
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Number | Description | |||
13.1 | Section 1350 Certification of Chief Executive Officer | |||
13.2 | Section 1350 Certification of Chief Financial Officer | |||
15.1 | Consent of ASA & Associates in respect of Sify Technologies Limited | |||
15.2 | Consent of Price Waterhouse in respect of MF Global Sify Securities Private Limited | |||
15.3 | Consent of KPMG in respect of Sify Technologies Limited |
(1) | Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on October 17, 2007 and incorporated herein by reference. | |
(2) | Previously filed as an exhibit to Amendment No. 1 to the Registration Statement on Form F-1 filed with the Commission on October 4, 1999 and incorporated herein by reference. | |
(3) | Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on October 17, 2007 and incorporated herein by reference. | |
(4) | Previously filed as an exhibit to the Post-Effective Amendment No. 1 to Form F-6 filed with the Commission on January 5, 2000 and incorporated herein by reference. | |
(5) | Previously filed as an exhibit to the Registration Statement on Form S-8 (File No. 333-101322) filed with Commission on November 20, 2002 and incorporated herein by reference. | |
(6) | Previously filed as an exhibit to the Annual Report on Form 20-F filed with the Commission on June 29, 2004 and incorporated herein by reference. | |
(7) | Previously filed as an exhibit to Amendment No. 2 to the Registration Statement on Form F-2 filed with the Commission on October 13, 1999 and incorporated herein by reference. | |
(8) | Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on November 30, 2004 and incorporated herein by reference. | |
(9) | Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on November 21, 2005 and incorporated herein by reference. | |
(10) | Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on December 7, 2005 and incorporated herein by reference. | |
(11) | Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on December 23, 2005 and incorporated herein by reference. | |
(12) | Previously filed as an exhibit to the Annual Report on Form 20-F filed with the Commission on June 30, 2006 and incorporated herein by reference. | |
(13) | Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on April 14, 2008 and incorporated herein by reference. | |
(14) | Previously filed as an exhibit to the Report on Form 20-F filed with the Commission on October 11, 2008 and incorporated herein by reference | |
(15) | Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on January 23, 2009 and incorporated herein by reference | |
(16) | Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on November 15, 2010 and incorporated herein by reference. | |
(17) | Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on September 8, 2011 and incorporated herein by reference. |
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