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TABLE OF CONTENTS
Corporate Information
1
Notice of AGM
2
Directors’ Report
5
Management’s Discussion and Analysis
15
Report on Corporate Governance
17
Financial Statements
Auditors’ Report
30
Balance Sheet
36
Statement of Profit and Loss Account
37
Cash Flow Statement
38
Notes Forming Part of the Financial Statements
40
Consolidated Financials
Auditors’ Report
61
Balance Sheet
63
Statement of Profit and Loss Account
64
Cash Flow Statement
65
Notes Forming Part of the Consolidated Financial Statements
67
CORPORATE INFORMATION
Board of Directors SUDARSHAN VENKATRAMAN Chairman and CEO RAMANUJAM SESHARATHNAM Managing Director and COO M GAJHANATHAN Director Mr K S SUBRAMANIAN Director P SRIKANTH Executive Director (Resigned during FY 2013-14) Mr. M.P.MEHROTRA Director (Appointed during FY 2012-13 & Resigned during FY 2013-14)
Statutory Auditors M/s. Ramadoss & Company Registered Office 155, Thiruvalluvar Salai Kumaran Nagar Sholinganallur Chennai 600119 USA Headquarters 85, Lincoln Highway Edison, NJ 08820 Branches Hyderabad, India Bangalore, India Mumbai, India Fairfax, Virginia New York, New York Chicago, Illinois Houston, Texas Fremont, California Bankers Union Bank of India Syndicate Bank ICICI Bank Ltd PNC Bank Wachovia Bank Commerce Bank JP Morgan Chase Bank CITI Bank HSBC Registrars & Transfer Agents M/s. Cameo Corporate Services Limited “Subramanian Buildings” No.1, Club House Road, Chennai -600002, India Email:[email protected] Website: www.zsl.com
NOTICE OF AGM
ZYLOG SYSTEMS LIMITED Regd. Off. : 155, Thiruvalluvar Salai, Kumaran Nagar, Sholinganallur, Chennai - 600119
NOTICE
Notice is hereby given that the Eighteenth Annual General Meeting of Zylog Systems Limited will be held on Thursday, April 10, 2014 at 9.00 a.m. at the Registered office of the company to transact the following business: ORDINARY BUSINESS
1. To receive, consider and adopt the Audited Statement of Profit and Loss for the year ended March 31, 2013 and the Balance Sheet as at that date together with the Notes attached thereto, along with the Reports of the Board of Directors’ and Auditors’ thereon.
2. To appoint a Director in place of Mr. M.Gajanathan who is liable to retire by rotation and is eligible for re-appointment.
3. To appoint Auditors of the Company to hold office from the conclusion of this meeting until the conclusion of the next Annual General Meeting and to fix their remuneration. M/s. Ramadoss & Co., Chartered Accountants, Chennai the retiring auditors, are eligible for re-appointment.
SPECIAL BUSINESS
4. To consider and if thought fit to pass with or without modification the following resolution
as Ordinary Resolution:
“RESOLVED THAT Mr. K.S. Subramanian who was appointed as an Additional Director on February 14, 2014 on the Board of the Company in terms of Section 161 of the Companies Act, 2013 and who holds office upto the date of this Annual General Meeting and in respect of whom notice has been received from a member in writing, under section 257 of the Companies Act, 1956, proposing his candidature for the office of the Director be and is hereby appointed as Director of the Company whose period of office will not be subjected to retirement by rotation.”
By the order of the Board
For Zylog Systems Limited -s/d-
Date: February 14, 2014 Ramanujam Sesharathnam Place: Chennai Managing Director & COO
Notes:
(a) A MEMBER ENTITLED TO ATTEND AND VOTE AT THE ANNUAL GENERAL MEETING IS ENTITLED TO APPOINT A PROXY TO ATTEND AND VOTE INSTEAD OF HIMSELF/HERSELF AND SUCH PROXY NEED NOT BE A MEMBER OF THE COMPANY. A PROXY IN ORDER TO BE EFFECTIVE MUST REACH THE REGISTERED OFFICE OF THE COMPANY ATLEAST 48 HOURS BEFORE THE SCHEDULED TIME OF THE MEETING. A BLANK PROXY FORM IS ATTACHED.
(b) Members/ proxies should bring duly-filled Attendance Slips sent herewith to attend the
meeting.
(c) The Register of Members and Transfer Books of the Company has already been closed from December 21, 2013 to December 24, 2013 (both days inclusive) for the purpose of Annual General Meeting, hence no fresh book closure require to be fixed.
(d) The Explanatory Statement pursuant to Section 102 of the Companies Act, 2013, relating to Special Business to be transacted at the meeting, is annexed hereto.
(e) The relevant details as required by Clause 49 of the Listing Agreements entered with the Stock Exchanges, of person seeking re-appointment as Director under Item no.4 of the Notice is given below. Information pursuant to Clause 49 of the Listing Agreement for appointment of Director
Item No.4: Mr.K.S. Subramanian, appointed as on February 14, 2014 and posses knowledge in the field of Cost Accounting with experience in the field for more than 35 years. Mr. K.S.Subramanian holds NIL shares in the company.
By the order of the Board For Zylog Systems Limited -s/d-
Date: February 14, 2014 Ramanujam Sesharathnam Place: Chennai Managing Director & COO
ANNEXURE TO NOTICE
EXPLANATORY STATEMENT PURSUANT TO SECTION 102 OF THE COMPANIES ACT, 2013
ITEM NO.4
Mr.K.S.Subramanian was appointed as the Additional Director by the Board of Director in the Board
meeting held on February 14, 2014 in accordance with the provisions of section 260 of the
Companies Act, 1956.
Pursuant to Section 161 of the Companies Act, 2013 he holds office upto the date of this Annual
General Meeting. In this regard the Company has received request in writing from a member
proposing his candidature for appointment as Director of the Company in accordance with the
provisions of section 257 and other applicable provisions of the Companies Act, 1956.
None of the Directors or key managerial personnel of the company or their relatives are interested
in this resolution.
By the order of the Board For Zylog Systems Limited -s/d-
Date: February 14, 2014 Ramanujam Sesharathnam Place: Chennai Managing Director & COO
DIRECTORS’ REPORT
To the Members,
The Directors submit the Annual Report of the Company along with the audited financial statements
for the financial year ended March 31, 2013.
FINANCIAL RESULTS AND REVIEW OF OPERATION
During FY 2012-13, the company has posted a muted financial performance, both at the standalone
and consolidated level. Net Profit at the consolidated level has come down from ` 204.40 crores in
the previous year to ` 2.99 crores.
At standalone level, our loss after tax amounted to ` 8.09 crores as against the previous year profit
of ` 173.89 crores. On consolidated basis, our profit after tax amounted to ` 2.99 crores as against `
204.40 crores. This is principally due to three factors. Increase in Finance (interest) Costs to the
tune of ` 63 Crores when compared to FY 2012. Increase in Depreciation/Amortization Charges
to the extent of ` 118 crores & Bad debts written off to the tune of ` 20 Crores. These three
factors coupled with losses suffered due to foreign currency fluctuation dealt a severe flow to
P&L account. The Indian rupee which was at levels of ` 42 to a US dollar in October 2011
started to depreciate sharply to levels of ` 55 within a short period and again from ` 55 it
steadily depreciated to levels Rs 68 before settling to current levels of ` 62 to a USD. The
working capital PCFC loan limits was fixed in INR but availment & repayment was in USD. Steep
Rupee depreciation caused overdrawn situation in the account. Banks either adjusted or sent
letters to adjust the overdrawn immediately without any delay irrespective of whether the
receivables are overdue or not, thus the Rupee depreciation effected in PCFC limit shrinkage.
This explains the huge ` 200 crores forex loss suffered by the company cumulatively during the
period starting from October 2011 until September 2013 ie spread over 3 financial years of FY
2012, FY 2013 & FY 2014. The company had no option but to request the bank either to fix the
limits in US$ or increase the limit by the depreciated portion as the availment has always been
PCFC as majority of expenses being in US$. Unfortunately, both the requests were not
considered and thus leading to overdrawn situation. Due to prior customer contractual
commitments, the company had to borrow outside consortium by way of unsecured loan from
banks/NBFCs to tie up the WC deficit. This created an increased expense in interest costs.
Further lot of capex items which were in WIP the previous year went on stream this year for
which Depreciation/amortization expenses had to be taken.
The net worth of the company has decreased to ` 819.53 crores from ` 827.61 crores whereas the
group net worth has increased to ` 911.57 crores from ` 909.00 crores. The EPS stood at -2.46 (`
52.86 PY) for standalone and ` 0.91 (` 62.14 PY) for the group for the FY ending 31st March 2013.
CORPORATE DEBT RESTRUCTURING (CDR)
The Board of Directors are striving hard to bring out the Company from the present severe financial
crises through CDR. The Directors are in the process of approaching the Consortium bankers on this
matter through the Professional Consultants.
SUBSIDIARIES
The Company has 8 Subsidiaries as on March 31, 2013.
There has been no material change in the nature of the business of the Subsidiaries. A statement
containing brief financial details of the subsidiaries is included in the Annual Report.
As required under the Listing Agreements entered into with the Stock Exchanges, a consolidated
financial statement of the Company and all its subsidiaries is attached. The Consolidated financial
statements have been prepared in accordance with the relevant accounting standards as prescribed
under Section 211(3C) of the Act. These financial statements disclose the assets, liabilities, income,
expenses and other details of the Company and its subsidiary companies.
Pursuant to the provision of Section 212(8) of the Act, the Ministry of Corporate Affairs vide its
circular dated February 8, 2011 has granted general exemption from attaching the balance sheet,
statement of profit and loss and other documents of the subsidiary companies with the balance
sheet of the Company. A statement containing brief financial details of the Company’s subsidiaries
for the financial year ended March 31, 2013 is included in the Annual Report. The annual accounts of
these subsidiaries and the related detailed information will be made available to any member of the
Company seeking such information at any point of time and are also available for inspection by any
member of the Company at the registered office of the Company. The Company shall furnish a copy
of the details of annual accounts of subsidiaries to any member on demand.
SHARE CAPITAL
At the end of the financial year 2012-13, the Company’s Equity Share Capital stands at ` 1,644.64
Lakhs consisting of 3,28,92,840 Equity Shares of ` 5/- each. The Board of Directors of the Company in their meeting held on May 25, 2012 approved sub-division of each and every existing
equity share of `10/- each fully paid up into 2 equity shares of ` 5/- each fully paid up, for which the approval of the share holders been obtained in the Extraordinary General Meeting held on June 20, 2012.
DIVIDEND Considering the sharp dip in profitability, The Board of Directors has not recommended any
dividend for the FY 31.03.2013.
CORPORATE GOVERNANCE
A separate section on Corporate Governance forming part of the Directors Report and the certificate
from the Company’s auditors confirming compliance of Corporate Governance norms as stipulated
in Clause 49 of the Listing Agreement with National Stock Exchange of India (NSE) and Bombay Stock
Exchange of India (BSE) are included in the Annual Report.
MANAGEMENT DISCUSSION AND ANALYSIS
Pursuant to clause 49 of the Listing Agreement with the Stock Exchanges, we annex herewith a
Statement on Management Discussion and Analysis which forms part of the Directors report.
A cautionary note: Certain statements in the Management Discussion and Analysis section may be
forward looking and are stated as required by applicable laws and regulation. Many factors may
affect the actual results, which could be different from what we envisage in terms of future
performance and outlook.
CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY ABSORPTION,
FOREIGN EXCHANGE EARNINGS AND OUTGO
The particulars as prescribed under Section 217 (1)(e) of the Companies Act, 1956, read with the
Companies (Disclosure of particulars in the report of the Board of Directors) Rules, 1988, are
provided in the Annexure 2 to the directors’ report section.
PARTICULARS OF EMPLOYEES
The information required under Section 217(2A) of the Act and the Rules made thereunder, will be
provided to the Share Holder upon receiving specific request. Hence in terms of Section 219(1)(b)(iv)
of the Act, the report and accounts are being sent to the shareholders excluding the aforesaid
information.
FIXED DEPOSITS
The Company has not accepted any public deposits and, as such, no amount on account of principal
or interest was outstanding as on date of balance sheet.
DIRECTORS
In accordance with Article 99 of the Articles of Association, Mr.M. Gajanathan, Director retire by
rotation at the ensuing Annual General Meeting and being eligible has offered himself for re-
appointment.
Further, Mr.K.S.Subramanian was appointed as the Additional Director by the Board of Director in
the Board meeting held on February 14, 2014 in accordance with the provisions of section 260 of the
Companies Act, 1956.
Pursuant to Section 161 of the Companies Act, 2013 he holds office upto the date of this Annual
General Meeting. In this regard the Company has received request in writing from a member
proposing his candidature for appointment as Director of the Company in accordance with the
provisions of section 257 and other applicable provisions of the Companies Act, 1956.
During the Financial year 2012-13 and up to the date of this Report the following directors were
resigned from the Board.
1. Mr. S.Rajagopal
2. Mr. V.K.Ramani
3. Mr. A.P. Vasanth Kumar
4. Mr. P. Srikanth
During the Financial year 2012-13 Mr. M.P. Mehrotra was appointed as director, Mr. R.
Sivasubramanian was appointed as director in financial year 2013-14 and both have resigned from
the Board during the financial year 2013-14.
The Board took on record its appreciation the valuable services rendered by all the above persons
during their tenure as Directors of the Company.
After the resignations/appointment of the above Directors all the committees viz Audit Committee,
Remuneration Committee & Share Holders & Investor Grievance Committee have been duly
reconstituted where ever necessary as detailed in the Corporate Governance Report attached with
this report.
DIRECTORS’ RESPONSIBILITY STATEMENT AS REQUIRED UNDER SECTION 217 (2AA) OF THE
COMPANIES ACT, 1956
Pursuant to Section 217(2AA) of the Companies Act, 2000, the Directors confirm that:
(i) they accept responsibility for the integrity and objectivity of these accounting statements;
(ii) the financial statements are prepared in accordance with the guidelines and standards of
the ICAI and Companies Act 1956, to the extent applicable. There are no material departures
from the above-mentioned standards;
(iii) such standard accounting policies have been applied consistently, except as otherwise
stated;
(iv) the judgments and estimates have been made on a reasonable and prudent basis so that the
financial statements provide a true and fair view of the state of affairs of the Company at the
end of the financial year;
(v) the directors have taken proper and sufficient care for the maintenance of adequate
accounting records in accordance with the provisions of this Act for safeguarding the assets
of the Company and for preventing and detecting fraud and other irregularities;
(vi) the Annual Accounts are prepared on a going concern basis and on an accrual basis.
AUDITORS
M/s. Brahmayya & Company, the statutory Auditor of the company, expressed their
unwillingness to continue as a Statutory Auditors, The Board has appointed M/s Ramadoss
& Company as Statutory Auditor of the Company after obtaining the share holders
approval at Extra General Body Meeting held on February 5, 2014. The Company has
already submitted the Restated audited Financial results for Quarter and year ended 31st
March 2013 authenticated by M/s Ramadoss & Company, the new statutory Auditor to all
the stock exchanges.
M/s Ramadoss & Co Chartered Accountants, Chennai retire as the Auditors of the Company at the
conclusion of the ensuing Annual General Meeting and being eligible pursuant to Section 224 (1B) of
the Companies Act, 1956, have expressed willingness to accept office, if re-appointed.
Directors Observation on Auditor’s Remarks
NON PAYMENT OF DIVIDEND & TDS:
A substantial loss of ` 200 Crores due to appreciation of US Dollar Vs the Indian rupee created shrinkage in working capital limits as the Loans were in dollar denomination but limit was set in INR. Further the company couldn’t tie up additional sanctioned working capital limit in the subsequent year creating a deficit of additional ` 130 crores. This happened during the period when zylog was parallelly investing in expansion plans across different regions most of which were highly capital intensive in nature, but had the capability to provide solid & consistent returns after couple of years. Naturally the holding capacity of the company got deteriotated due to the losses suffered during the period & hence it had to abandon some plans mid way which created further losses. This mismatch in cash flow resulted in slippage in pay roll processing, vendor payment & payments related to statutory dues like Dividend, TDS etc. The management is taking several measures on the operational front, lots of optimization/consolidation measures was put across all projects across the globe to manage and improve the cash flow, the results of which will naturally take some time to fructify but the management is confident of steering the company back on track in another few quarters. HUMAN RESOURCES
Despite the crisis the company faced due to working capital mismatch it did not resort to retrenchment of employees. The employees were briefed on the crisis and were requested to provide the company with a breathing period for cash flows to get stabilized but those who wanting to leave the organization were allowed to do so. A number of resources at the off shore locations in Chennai & Hydrebad & Bangalore left the organization while the Onsite employees more or less remained in tact.
ENVIRONMENTAL AWARENESS
“Go Green” initiatives to conserve resources has been initiated in the Company. Steps required for
conserving power across all delivery centres are being undertaken. The Company has also taken
initiatives within its office buildings to reduce electrical power, water and paper consumption. These
initiatives shall be taken forward at a sustained pace.
ACKNOWLEDGEMENTS
Your directors profusely thank the stakeholders, clients, vendors, investors and bankers for their
continued support of Company’s growth. Your directors place on record their immense appreciation
of the contribution made by every employee at all levels, who through their commitment,
competency, hard work, solidarity, cooperation and support have enabled the company to achieve
this growth. Your directors sincerely thank the Government of India, particularly the Department of
Electronics, the Customs and Excise Departments, Software Technology Park – Chennai, the Ministry
of Commerce, Reserve Bank of India, Department of Telecommunications, State Government and
other Government agencies for their support during the year, and look forward to their continued
support in the future.
For and on behalf of the Board of Directors
of Zylog Systems Limited
-s/d -s/d-
Sudarshan Venkatraman Ramanujam Sesharathnam
Chairman & CEO Managing Director & COO
Place: Chennai
Date: February 14, 2014
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6,8
08
2,
38,
36
,226
6,
48,
11
,977
29,5
0,42
6
7,87
,31
,910
59,5
3,31
6
(20,
72,6
56)
8,76
,74
,916
3,90
,44
,090
8,97
,42
,049
2,00
,08
,603
2,0
1,31
,246
9,10
,144
9,52
,36
,446
11,3
2,16
,544
Annexure 2
PARTICULARS PURSUANT TO THE COMPANIES
(DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988
A. Details of Conservation of Energy
The Company is aware of the need to conserve resources, reduce its carbon emissions and create sustainable alternatives wherever feasible.
Even though the operations do not warrant high energy consumption, the Company continuously
takes measures to optimize energy usage, for example, replacement of flat monitors in the place of
CRT monitors, switching over to CFL lightings, switching off the air conditioners on a budgeted hour
basis.
B. Technology Absorption:
1. Special Areas in which R&D carried out by the Company
The Company has a Research, Analysis & Development wing, namely, "IDEA (Innovative
Development of Enterprise Applications) Lab" breeding innovation to meet the growing market
demands.
IDEA Lab assists the Independent Software Vendors (ISVs), Solution Providers (SPs) and our
partners by offering
Research & Development - The dedicated R&D unit is involved in exploring the hundreds of new emerging technologies in compliance with changing market trends helping clients to take advantage of opportunities, to serve their customers rapidly and economically keeping pace with trends, emerging customers as distinguished performer from their competitors. Product Re-Engineering - Helps in re-inventing and re-building a product suitable to fluxing and demanding market environment. Product Lifecycle Management (PLM) – Company’s deep expertise coupled with quality software deliverable capability help ISVs and SPs to reach their customers faster at lower cost. IDEA Lab's PLM helps businesses to create an integrated product development environment across the enterprise in diversified industries such as High Tech, Healthcare, Banking, Insurance, Telecommunication, Manufacturing, Automotive, Retail, Consumer Electronics and more.
2. Benefits derived as a result of above R&D
New innovative and State-of-the-art technology products on a less TCO.
Quicker ROI.
Product development is based on modular, flexible, scalable delivery mechanisms.
Customer centric approach in delivering Quality Solutions.
Aimed at providing solutions to dynamic business concerns.
Holistic approach in providing cutting edge technology.
Quickly customizable, adaptable offerings.
Very Quick Time to Market.
Subject Matter Experts with immense knowledge on latest technologies and tools.
Faster implementation and simple configuration procedures.
Highly secure and scalable
24x7x365 customer support
Less maintenance and support cost
3. Future plan of action:
To continue the focus is in doing R&D, developing Prototype and POCs (Proof of Concepts) by aligning the emerging enterprise technologies to the business requirements.
4. Expenditure on R&D:
Expenditure incurred on research and development activities are charged off to Profit and Loss Account as incurred till the time the techno-commercial viability is established.
C. Foreign Exchange Earnings and Outgo:
1. Activities relating to export initiatives taken to increase export developments of new markets
for product and services and export plans:
The geography concentration of the Company is mainly USA contributing to 48.6% and Canada
contributing to 37.4% of the revenue. The Company plans to continue concentrating on the
development of Export business.
2. Total Foreign Exchange used and earned FOB
a) Total Foreign Exchange Earned ` 56,632.21 Lakhs (`23,002.60 Lakhs)
b) Total Foreign Exchange used `39,164.85 Lakhs (`10,789.62 Lakhs)
For and on behalf of Board of Directors
of Zylog Systems Limited
Sudarshan Venkatraman
Chairman & CEO
Place: Chennai
Date: February 14, 2014 Ramanujam Sesharathnam
Managing Director & COO
MANAGEMENT’S DISCUSSION AND ANALYSIS
IN ADDITION TO HISTORICAL INFORMATION, THIS ANNUAL REPORT CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS. THE FORWARD-LOOKING STATEMENTS CONTAINED HEREIN ARE SUBJECT TO CERTAIN RISKS AND UNCERTAINITIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE REFLECTED IN THE FORWARD LOOKING STATEMENTS. FACTORS THAT MIGHT CAUSE SUCH A DIFFERENCE INCLUDE, BUT ARE NOT LIMITED TO THOSE DISCUSSED IN THE "MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL PERFORMANCE" AND ELSEWHERE IN THIS REPORT. READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH REFLECT MANAGEMENT’S ANALYSIS ONLY AS OF THE DATE HEREOF. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL PERFORMANCE The financial statements have been prepared in compliance with the requirement of Companies Act 1956, guidelines issued by Securities and Exchange Board of India (SEBI) and Generally Accepted Accounting Principles (GAAP) in India. The management of Zylog Systems Limited accepts responsibility for the integrity and objectivity of these financial statements, as well as for various estimates and judgments used therein. The estimates and judgments relating to financial statements have been made on prudent and reasonable basis, in order that the financial statements reflect in true and fair manner the form and substance of transaction, and reasonably present the company’s state of affairs and profit for the year. The Company went through severe liquidity crises during the period starting June 2012, which continued for more than year severely curtailing the entire global operations more particularly in India. This was due to aggregation of several factors. During FY 2012-13, the company has posted a muted financial performance, both at the standalone
and consolidated level. Net Profit at the consolidated level has come down from ` 204.40 crores in
the previous year to ` 2.99 crores.
At standalone level, our loss after tax amounted to ` 8.09 crores as against the previous year profit
of ` 173.89 crores. On consolidated basis, our profit after tax amounted to ` 2.99 crores as against `
204.40 crores. This is principally due to three factors. Increase in Finance (interest) Costs to the
tune of ` 63 Crores when compared to FY 2012. Increase in Depreciation/Amortization Charges
to the extent of ` 118 crores & Bad debts written off to the tune of ` 20 Crores. These three
factors coupled with losses suffered due to foreign currency fluctuation dealt a severe flow to
P&L account. The Indian rupee which was at levels of ` 42 to a US dollar in October 2011
started to depreciate sharply to levels of ` 55 within a short period and again from ` 55 it
steadily depreciated to levels ` 68 before settling to current levels of ` 62 to a USD. The working
capital PCFC loan limits was fixed in INR but availment & repayment was in USD. Steep Rupee
depreciation caused overdrawn situation in the account. Banks either adjusted or sent letters to
adjust the overdrawn immediately without any delay irrespective of whether the receivables are
overdue or not, thus the Rupee depreciation effected in PCFC limit shrinkage. This explains the
huge ` 200 crores forex loss suffered by the company cumulatively during the period starting
from October 2011 until September 2013 ie spread over 3 financial years of FY 2012, FY 2013 &
FY 2014. The company had no option but to request the bank either to fix the limits in US$ or
increase the limit by the depreciated portion as the availment has always been PCFC as majority
of expenses being in US$. Unfortunately, both the requests were not considered and thus
leading to overdrawn situation. Due to prior customer contractual commitments, the company
had to borrow outside consortium by way of unsecured loan from banks/NBFCs to tie up the WC
deficit. This created an increased expense in interest costs. Further lot of capex items which
were in WIP the previous year went on stream this year for which Depreciation/amortization
expenses had to be taken.
The net worth of the company has decreased to ` 819.53 crores from ` 827.61 crores whereas the
group net worth has increased to ` 911.57 crores from ` 909.00 crores. The EPS stood at -2.46 (`
52.86 PY) for standalone and ` 0.91 (` 62.14 PY) for the group for the FY ending 31st March 2013.
A substantial loss of more than ` 100 crores due to appreciation of US Dollar Vs the Indian rupee created shrinkage in working capital limits as the Loans were in dollar denomination but limit was set in INR. Further the company couldn’t tie up additional sanctioned working capital limit in the subsequent year creating a deficit of additional ` 130 crores. This happened during the period when zylog was parallelly investing in expansion plans across different regions most of which were highly capital intensive in nature, but had the capability to provide solid & consistent returns after couple of years. Naturally the holding capacity of the company got deteriotated due to the losses suffered during the period & hence it had to abandon some plans mid way which created further losses.
REPORT ON CORPORATE GOVERNANCE
1. Company’s Philosophy on Corporate Governance: Your Company places emphasis on business ethics, integrity, responsible conduct and
accountability. The Company is committed to good Corporate Governance, and
transparency in all its dealings. Information on the performance of the Company and other
key events concerning the operations are disclosed timely. All Endeavors are made on an
ongoing basis to achieve Business Excellence in a socially responsible manner with a view to
increase the long term shareholders value and in keeping in mind, the need of all the stake
holders of the company.
Your company has maintained the highest standards of corporate governance principles and
best practices by adopting corporate governance policies and code of conduct as the norms
for all constituent companies in Zylog Group. These policies and code of conduct envisage a
set of principles, process and systems, which conforms to the best international standards
and are reviewed periodically to ensure their continuing relevance, effectiveness and
responsiveness to the needs of investors both local and global and all other stakeholders.
2. Board of Directors:
The Directors of the Company possess highest professional ethics, integrity and values and
are committed to representing the long-term interests of the stakeholders. The basic
responsibility of the Board is to provide effective governance over the Company’s affairs
exercising its reasonable business judgement on behalf of the Company.
The Company as on 31st March 2013, has Five Directors with an Executive Chairman. Of the
Five Directors, three are Whole Time Directors, Two are Non-Executive Independent
Directors. Subsequent to the closure of the financial year the company has appointed some
more independent directors to meet the Corporate Governance requirements. The
composition and the category of Directors is as under:
S.No. Name of the Director Designation Category
1 Mr. Sudarshan Venkatraman Chairman & Chief Executive Officer
Executive
2 Mr.Ramanujam Sesharathnam Managing Director & Chief Operating Officer
Executive
3 Mr.P. Srikanth Executive Director Executive
4 Mr. M.Gajhanathan Director Independent
5* Mr. S.Rajagopal Director Independent
6* Mr .V.K.Ramani Director Independent
7* Mr. A.P.Vasanth Kumar Director Nominee Director
8* Mr. P.Mehrotra Director Independent
During the Financial year 2012-2013 there was resignation of Directors from the Board:
5*. Mr .S.Rajagopal, Director resigned the directorship on 07 December 2012
6* Mr. V.K.Ramani, Director resigned the directorship on 02 January 2013. 7*. Mr. A.P.Vasanth Kumar resigned the directorship on 20 November 2012. 8*. Mr. P.Mehrotra was appointed as the Director (Independent Non-executive) of the Company as on 7th December 2012.
Mr. M. Gajanathan being the Director retiring by rotation in the Eighteenth Annual General
Meeting is eligible for reappointment and has offered for re-appointment.
Post meeting follow up mechanism: Important decisions taken at the Board/Committee
Meetings are promptly communicated to the concerned departments. Action Taken
Report on decisions/minutes of previous meetings is placed at the succeeding meetings of
the Board/Committee for noting.
Other Directorships
The number of directorships and memberships in the committees held by the Directors as
on March 31, 2013 are as under:
Name of the Director No. of Directorships
held in other companies
Number of Committee positions held in other public companies
Chairman Member Chairman Member
Mr. Sudarshan Venkatraman 2 2 - -
Mr.Ramanujam Sesharathnam - 2 - -
Mr. P.Srikanth - 1 - -
Mr. M.Gajhanathan - - - -
Mr.S. Rajagopal 1 9 - 5
Mr.A.P.Vasanthakumar - 1 - - Mr.V.K.Ramani - 1 - - Mr. P.Mehrotra
Notes: 1. Excluding Directorship in Zylog Systems Limited 2. Excluding Directorship in Foreign Companies, Section 25 Companies, private Limited
Companies and Alternate Directorship. 3. As required by clause 49 of the Listing Agreement, the disclosure includes only
memberships/Chairpersonship of Audit Committee and Investor Grievance Committee only in Indian public companies (listed and unlisted).
None of the Directors of the Board is a member of more than 10 Committees or acts as a Chairman of more than 5 Committees across all Companies in which he is a Director. The Directors of the Company are not inter se related.
Board Meetings held from 01st April 2012 to 31st March 2013
During the period from 01st April 2012 to 31st March 2013 Four Board Meetings were held.
The dates on which the said Meetings were held are as follows:
May 25, 2012, August 13, 2012, November 14, 2012 and February 12, 2013.
None of the Non-Executive Directors have any material pecuniary relationship or transactions with the Company. Attendance of Directors at the meetings:
The details of the attendance of the Directors at the Board Meeting held during the period
from 01st April 2012 to 31st March 2013 and the last Annual General Meeting (“AGM”) are
given below:
Name of the Director Number of Board Meetings during the year 2012-13
Attendance at last AGM held on 25th September
2012 Held Attended
Mr. Sudarshan Venkatraman 4 3 Yes
Mr. Ramanujam Sesharathnam
4 3 Yes
Mr. P.Srikanth 4 4 Yes
Mr. M.Gajhanathan 4 4 Yes
Mr.S.Rajagopal 4 3 Yes
Mr.V.K.Ramani 4 3 Yes
Mr.A.P.Vasanth Kumar 4 2 Yes
Mr.M.P.Mehrotra 4 1 -
Board Committees The requirement that a Director shall not be a member of more than ten committees and Chairman of more than five committees has been complied with while constituting the Committee of Directors (A) Audit Committee
Terms of Reference: The committee’s power, role and functions are as stipulated at Clause 49 of the Listing Agreement and under Section 292A of the Companies Act, 1956. The role and functions of the committee , inter-alia, include overseeing the Company’s financial reporting process, reviewing with the management and external auditors key issues and significant processes , financial statements and results before submission to the Board, reviewing the adequacy of internal control systems and procedures, significant related party transactions and internal audit reports, reviewing the progress made in implementation of recommendations made by the Internal Auditors making the recommendation for improvement in internal control systems and reviewing issues related to risk management and compliances, review of financial statements and investments made by wholly owned subsidiary companies.
Composition, Name of Members and Chairman, Secretary and Invitees: The Audit committee comprised of one Non-Executive Independent director, namely, Mr. S. Rajagopal, who is also the Chairman of the Committee, Mr. P. Srikanth, and Mr. M.Gajhanathan. are members of the Committee. Subsequent to the resignation and appointments of Directors, the Board re-constituted the Audit Committee. Mr.M.P.Mehrotra, Mr. P.Srikanth and Mr.M.Gajanathan, directors of the company do constitute the members of the Audit committee at its meeting held on February 12, 2013. The Company Secretary acts as the Secretary of the Committee. The Chairman & Chief Executive Officer, Managing Director and Chief Operating Officer, Group Financial officer, Financial Controller and Financial Advisor of the Company, Statutory Auditors and the Internal Auditor, are invitees to the meeting. The Committee met Four times during the financial year ended March 31, 2013. The Meetings were held on May 25, 2012, August 13, 2012, November 14, 2012 and February 12, 2013 and there was no time gap of four months between any two meetings. Mr. M.Gajhanathan and Mr. P.Srikanth attended all the four Meetings. The Chairman of the Audit Committee, Mr. S. Rajagopal, attended the Annual General Meeting held on September 25, 2012 and he ensured that necessary clarifications and explanations were provided to the members of the Company on issues regarding accounts and finance. The minutes of the meetings of the Audit Committee are circulated to all the members of the Board along with the Board Agenda. The Quarterly Unaudited Financial Results as well as the Annual Financial Statements during the year ended March 31, 2013 were reviewed and examined by the members of the Audit Committee before recommendation of the same to the Board of Directors for their perusal and approval. (B) Investors’ Grievance Committee The Investors’ Grievance Committee consists of one Non- Executive Independent Director and two Executive Directors. Mr. M.Gajhanathan is the Chairman of the Committee and Mr. P. Srikanth and Mr. Sudarshan Venkatraman are members of the Committee. During the financial year ended March 31, 2013 the Committee on May 15, 2012 and May 25, 2012. This Committee specifically looks into the redressal of Shareholder’s and Investors’ Complaints/ Grievances with a primary objective to improve investor relations. The Company’s Registrars & Transfer Agents (R&T Agents) M/s Cameo Corporate Services Limited, were adequately equipped to carry out activities connected with transfer of shares both in physical and demat form and redressal of shareholders’/ investors’ complaints. The company maintains continuous interaction with the said R&T Agents and takes steps for resolving complaints/ queries of the shareholders/ investors and also takes initiatives and actions for resolving critical issues. Periodic reminders are sent to the shareholders for encashment of unclaimed dividends and unclaimed refund order amounts.
The committee has been authorized to approve proposals for transfer of shares in order to expedite the transfer process as also for deletion/splitting/consolidation of share certificates. Valid transfer proposals are approved frequently and the transfer process is completed within the stipulated time period. Apart from this, the Investors Grievance Committee of the Board, approves the transmission of shares, issuance of duplicate share certificates, etc. Name and designation of Compliance Officer:
Ms.Akila, Company Secretary (till February 2013)
Email-id for Investor Grievances: [email protected] C) Remuneration Committee
The Terms of Reference of the Remuneration Committee: The Committee shall discharge the Board’s Responsibility relating to compensating the Executive Directors, Directors, and Senior Management. The Committee has overall responsibilities of evaluating and approving the Compensation Plan, Policies of the Executive Directors and Senior Management and to determine and recommend to the Board based on overall performance and financial results of the Company and in consonance with the Industries Best Practices. Composition, Name of Members and Chairman, Secretary, Invitees: The Board of Directors in their meeting held on February 12, 2013 re-constituted the remuneration committee due to resignation of the directors from the Board. The Remuneration Committee consists of two Non- Executive Independent Directors Mr Gajhanathan, and Mr.P.Mehrotra, Members of the committee. The Company Secretary acts as the Secretary of the Committee. The Remuneration committee meeting was held on 25 May 2012. Compensation to the Chairman and Chief Executive Officer, Managing Director and Chief Operating Officer and Executive Director are as per the approval of the Shareholders subject to the limits specified as per the provisions of the Companies Act, 1956.
Details of remuneration paid to all the Directors
Remuneration of directors for 2012-13 Figures in `
Name of Director Sittting Fee
Salaries* Perquisites Commission Total
Mr.Sudarshan Venkatraman - 10583470 - - 10583470
Mr.Ramanujam Sesharathnam - 9326925
- - 9326925
Mr.M. Gajhanathan 85000 - - 85000
Mr.P. Srikanth 3570000 - - 3570000
Mr. S. Rajagopal 65000 - - - 65000
Mr. A.P. Vasanthakumar - - - - -
Mr.V.K.Ramani 35000 - - - 35000
Mr.M.P. Mehrotra 15000 15000
* Amount paid to only updated.
The Company does not have any Stock Option Plan or performance linked incentive for the
Executive Directors. The appointments of Chairman and Chief Executive Officer and
Managing Director and Chief Operating Officer are made for a period of five years and the
Executive Director for a period of two years on the terms and conditions contained in the
respective resolutions passed by the members in the General Meetings.
Shares held by Non-Executive Directors:
Name of the Non-Executive Director No. of Equity Shares held in the Company
Mr.M. Gajhanathan 40,000
3. GENERAL BODY MEETINGS:
The details of date, location and time of the last three Annual General Meetings held are as
under:
Year ended Location Date Time
31.03.2012 Narada Gana Sabha Trust, 314(Old no.254),T.T.K Road, Alwarpet, Chennai-600018
25th September 2012 10.30AM
31.03.2011 Esthell Continental Hotels and Resorts, No.1, Royal Enclave, Besant Avenue, Adyar, Chennai – 600020
29th September 2011 10.00 AM
31.03.2010 New Woodlands Hotel, Dr.Radhakrishnan Road, Chennai – 600004
30th September 2010 10:00 AM
Special Resolutions passed during the previous three Annual General Meetings:
17th Annual General Meeting- 25th September 2012
Special resolution was passed for Re-appointment of M/s. Ketan Pathak as the USA Branch
Auditor of the Company.
Special resolution was passed for Re-appointment and revision of terms of contract of Mr.
P.Srikanth, whole time director of the Company.
Special resolution was passed for Re-appointment and revision of terms of contract of Mr.
Sudarshan Venkatraman, Chairman and Chief Executive Officer of the Company.
16th Annual General Meeting – 29th September 2011
No Special resolutions were passed
15th Annual General Meeting – 30th September 2010
Special Resolution was passed approving change in the Articles of Association of Company,
authorization to the Board for the Capitalization of the profits and authorization to the Board
to create, offer, issue and allot, in domestic and/or international markets
securities/instruments for an amount up to Rs.400 crore on a preferential basis.
All the Special Resolutions indicated above were passed by show of hands.
During the FY 2012-13, An Extraordinary General Meeting of the Company was held on June
20, 2012 for the purpose of Subdivision of shares, Alteration of Memorandum and Articles of
Association.
4. DISCLOSURES:
a) Related Party Transactions:
Transactions with related parties are disclosed in detail in Note no. 2.26 annexed to the
financial statements of the year. These transactions were not in conflict with the interest of
the Company.
b) Details of non-compliance by the Company, penalties and strictures imposed on the
Company by the Stock Exchanges or Securities and Exchange Board of India (SEBI) or any
other statutory authority on any matter related to the Capital markets during the last
three years:
There were instances of material non-compliance relating to disclosures with Stock
Exchanges which are subsequently regularized. However no strictures or penalties were
imposed on the Company either by SEBI, Stock Exchanges or any statutory authorities on any
matter related to capital markets during the last three years.
c) Whistle Blower Policy
Though the Company does not have Whistle Blower Policy, no person is denied access to the
Audit Committee.
d) Mandatory and Non Mandatory Clauses
The Company has complied with all other mandatory requirements laid down by the Clause
49, as applicable. The non-mandatory requirements complied with has been disclosed at the
relevant places.
5. MEANS OF COMMUNICATION TO SHAREHOLDERS
During the year, quarterly, half yearly and annual financial results on the standalone basis
and consolidated basis of the Company were submitted to the stock exchanges soon after
the Board meeting approved these. The Financial Results are also published in leading
newspapers Business Standard, Business Line, Economic Times (English) and Makkal Kural
(Tamil). These were also promptly put on the Company’s website www.zsl.com. All official
news release of relevance to the investors are also made available on the Company’s
website for a reasonable period of time.
6 GENERAL SHAREHOLDERS INFORMATION
a. 18th Annual General Meeting:
Date & Time : Thursday, April 10, 2014 at 9.00 a.m.
Venue : Registered office-Shollinganallur
a) Financial Calendar :
Tentative Financial Calendar for the year 2013- 14
Financial Year 01st April to 31st March
First Quarter Results On or before August 15, 2013
Half Yearly Results On or before November 15,2013
Third Quarter Results On or before February 15, 2014
Fourth Quarter Results and Annual On or before May 31,2014
b) Date of Book Closure:
December 21, 2013 to December 24, 2013 (Both days inclusive)
c) Listing of Stock Exchanges and Stock Code:
Name of Stock Exchange Stock Code
The National Stock Exchange of India Ltd., Mumbai (NSE) ZYLOG
The Bombay Stock Exchange of India Ltd., Mumbai (BSE) 532883
The Company has paid the annual listing fees for the year 2013-14 on both of the above
Stock Exchanges.
d) Market Price Data:
The closing market price of equity shares on 31st March 2013 (last trading day of the year)
was Rs. 43.65/- on NSE and Rs.43.70 /- on BSE.
The monthly movement of equity share prices during the year at NSE and BSE are
summarized herein below:
Monthly Share Price Movement during 2012-13 at NSE & BSE
Month NSE BSE
High Low Volume High Low Volume
Apr-12 663.80 560.00 405,207 663.80 560.00 85,358
May-12 659.80 614.00 751,070 659.80 614.00 3,71,339
Jun-12 652.00 310.00 505,509 652.00 310.00 1,64,731
July-12 340.00 270.05 1,335,792 340.00 270.05 6,14,807
Aug-12 320.00 285.10 1,263,570 320.00 285.10 6,43,476
Sept-12 319.00 275.10 1,065,253 319.00 275.10 3,78,383
Oct -12 309.85 149.10 2,990,485 309.85 149.10 11,86,040
Nov - 12 144.00 65.25 12,826,719 144.00 65.25 43,42,305
Dec -12 74.70 55.80 3,068,822 74.70 55.80 15,33,641
Jan-13 73.75 39.10 3,189,238 73.75 39.10 15,66,590
Feb-13 71.00 37.00 2,830,428 71.00 37.00 12,69,709
Mar-13 59.00 39.00 1,529,728 59.00 39.00 6,91,988
TOTAL 31,761,821 68,046,871
e) Distribution of Shareholding as at 31st March 2013
By size of shareholding:
SLNO HOLDING NUMBER % SHARES %
1 between 1 and 1000 27023 93.41 3885165 11.81
2 between 1001 and 5000 1414 4.88 3229612 9.81
3 between 5001 and 10000 236 0.81 1737513 5.28
4 between 10001 and 20000 112 0.38 1600417 4.86
5 between 20001 and 30000 37 0.12 953198 2.89
6 between 30001 and 40000 25 0.08 904979 2.75
7 between 40001 and 50000 19 0.06 888189 2.70
8 between 50001 and 100000 25 0.08 1788407 5.43
9 > 100000 37 0.13 17905360 54.43
Total 28929 100.00 32892840 100.00
By category of shareholders:
Category No. of Shares Total Shares
% of holding Electronic Physical
A. Promoter Group
Promoter and Promoter Group 6781203
- 6781203 20.62
B. Non-Promoter Group
Foreign Institutional Investors 566696 - 566696 1.72
Bodies Corporate 6655140 6655140 20.23
Clearing Members 372083 - 372083 1.13
Trusts 900080 - 900080 2.74
Central Government / State Government(s)
560 - 560 0
Financial Institutions/Banks 2522245 2522245 7.67
Individuals 14147625 948208 15094833 45.89
Total 31945632 948208 32892840 100
g) Dematerialization of Securities
As on March 31, 2013, 97.12% shares of the company were held in dematerialized form. The demat security (ISIN) code for the equity share is INE225I01026.
h) Share Transfer System
The shares of the company are compulsorily traded in dematerialized form. Shares received
in physical form are transferred within a period of 30 days from the date of lodgement
subject to documents being correct, valid and complete in all respects.
i) Registrar and Transfer Agents
The Registrar & Share Transfer Agent deals with all shareholders communications regarding
change of address, transfer of shares, change of mandate, demat of shares, non-receipt of
dividend etc. The address of the Registrar & Share Transfer Agent is as under: -
Name and Address of Registrar and Share Transfer Agent Tel no. Fax no. E-Mail ID Website
Cameo Corporate Services Limited “Subramanian Building” No.1, Club House Road Chennai - 600002 91 044 28460390 91 044 28460129 [email protected] www.cameoonline.net
AUDITORS’ CERTIFICATE ON CORPORATE GOVERNANCE
COMPLIANCE CERTIFICATE To the Members of Zylog Systems Limited, We have examined the compliance of conditions of Corporate Governance by Zylog Systems Limited (“the Company”), for the year ended March 31, 2013 as stipulated in Clause 49 of Listing Agreement of the Company with the Stock Exchanges. The compliance of Conditions of Corporate Governance is the responsibility of the management. Our examination was limited to a review of the procedures & implementations thereof adopted by the Company for ensuring compliance with the conditions of Corporate Governance. It is neither an audit nor an expression of opinion of the financial statements of the Company. In our opinion and to the best of our information and according to the explanations given to us and the representations made by the Directors and management, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in the above mentioned Listing Agreement. We state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the management has conducted the affairs of the Company.
For RAMADOSS & CO Chartered Accountants Firm Regn No 002879S
-s/d-
K RAMADOSS Partner
Membership No. 019176 Place: Chennai Date: February 14, 2014
FINANCIAL STATEMENTS
AUDITORS’S REPORT
BALANCE SHEET
PROFIT AND LOSS ACCOUNT
CASH FLOW STATEMENT
NOTES FORMING PART OF FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
INDEPENDENT AUDITORS’ REPORT
To the Members of Zylog Systems Limited, Report on the financial Statements We have audited the accompanying financial statements of Zylog Systems Limited (“the Company”) which comprise the Balance Sheet as at 31st March 2013, the Statement of Profit and loss and the Cash Flow Statement for the year then ended and a summary of the significant accounting policies and other explanatory information. Management’s responsibility to the financial Statements The Company’s Management is responsible for the preparation of these financial statements that gives a true and fair view of the financial position, financial performance and cash flows of the company in accordance with the Accounting Standards referred to in section 211 (3C) of the Companies Act. 1956 (‘the Act’) and in accordance with the accounting principles generally accepted in India. This responsibility includes the design, implementation of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards issued by the Institute of Chartered Accountants of India. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments , the auditor considers internal control relevant to the company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Management, as well as valuating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India subject to non compliance of Section 205 A of the companies Act, 1956 in respect of unpaid dividend for the financial year 2011-12 of ` 14,20,40,520/- has not been deposited in any scheduled bank as mentioned in para 2.38 of Notes on accounts.
(a) in the case of the Balance sheet , of the state of affairs of the Company as at 31st March 2013;
(b) in the case of the Statement of Profit and loss , of the Loss of the Company for the year ended on that date; and
(c) In the case of the Cash flow Statement, of the Cash flows of the Company for the year ended on that date.
Report on other Legal and Regulatory Requirements 1. As required by the Companies (Auditors’ Report) Order, 2003 (“the order) issued by the Central
government in terms of Section 227(4A) of the Act, we give in the Annexure a Statement on the matters specified in paragraphs 4 and 5 of the said order.
2. As required by Section 227(3) of the Act, we report that,
(a) We have obtained all the information and explanation which to the best of our knowledge and belief were necessary for the purposes of our audit.
(b) In our opinion, proper books of accounts as required by law have been kept by the company so far as it appears from our examination of those books.
(c) The Balance Sheet, the Statement of Profit and loss, and the Cash flow Statement dealt with by this report are in agreement with the books of account.
(d) In our opinion, the Balance Sheet, the Statement of Profit and Loss and the Cash flow Statement comply with the Accounting standards referred to in section 211(3C) of the Act.
(e) On the basis of written representation received from the directors as at 31st March 2013, taken on record by the Board of Directors, none of the Directors is disqualified as at 31st March 2013 from being appointed as a director in terms of section 274(1)(g) of the Act.
For Ramadoss & Co. Chartered Accountants Firm Regn No 002879S
-s/d-
K. Ramadoss Partner
Membership No.019176 Place : Chennai Date : February 14, 2014
Annexure to the Independent Auditors’ Report
(Refereed to in paragraph I under Report on other Legal and Regulatory requirements Section of our report of even date) i) In respect of fixed assets: a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets.
b) The fixed assets were physically verified by the management according to a phased program which, in our opinion, is reasonable having regard to the size of the company and nature of business.
c) No fixed assets have been disposed off during the year under review which would give rise to the question of whether the status of the company has been impaired as a going concern.
ii) In respect of Inventories,
The company’s main business is development of software. This doesn’t require any raw materials and the finished products are not identifiable and not measurable. Hence the paragraph of this order is not applicable.
iii) In respect of loans the company has not granted any loan, secured or unsecured, to companies,
firms or other parties covered in the register maintained under section 301 of the Companies Act, 1956 except to its wholly owned subsidiaries. Accordingly, causes (iii) (b), (iii) (c) and (iii) (d) of paragraph 4 of the Order are not applicable for the year.
iv) The company has taken secured loan from a company covered in the Register maintained under
section 301 of the Act. We have been informed that there are no terms regarding interest or repayment of principal and hence we are not in a position to comment whether these are prejudicial to the interest of the company or not.
No of Parties One
Amount involved `53,40,10,738/-
Max outstanding during the year `53,40,10,738/-
Balance as on 31st March 2013 `53,40,10,738/- v) In our opinion and according to the information and explanations given to us, there is an adequate
internal control system commensurate with the size of the company and the nature of its business for the purchase of inventory, and fixed assets and for sale of goods and services. During the course of our audit, we have not observed any major weakness in such internal control system.
vi) In our opinion and according to the information and explanations given to us, there are no
contracts or arrangements the particulars of which need to be entered into the register
maintained in pursuance of section 301 of the Companies Act. Accordingly the requirements
prescribed by paragraph 4(v) of the order are not applicable.
vii) According to the information and explanations given to us, the Company has not accepted any
deposit from the public. Therefore the provisions of Clause (vi) of paragraph 4 of the Order are
not applicable to the Company.
viii) In our opinion and according to explanations given to us, the company has an internal audit
system commensurate with the size and nature of its business.
ix) We have been informed by the company that the Central Government has not prescribed the
maintenance of cost accounts under section 209 (1)(d) of the Companies Act, 1956 and rules
made there under.
x) According to the information and explanations given to us in respect of statutory dues:
a. According to the records of the Company, generally been not regular in depositing
undisputed statutory dues including Provident Fund, Employees’ State Insurance, Income-
Tax, Sales Tax, Service Tax, Customs Duty, Excise Duty, Cess, and other statutory dues.
b. According to the information and explanations given to us, the Tax deducted at source of
`1,29,97,158/ in arrears as on 31st march 2013 for a period of more than six months from
the date they became payable .
c. Details of Income tax, Sales tax and service tax which have not been paid /deposited as on
31st March 2013 on account of disputes are given below.
Disputed statutory dues unpaid as on 31st Mar 2013
Amount in `
Statute Forum where the dues of rupees dispute is pending
Period to which amount relates
Amount
The Income Tax Act, 1961 CIT (Appeals) AY 2004-05 5,424,063
The Income Tax Act, 1961 CIT (Appeals) AY 2005-06 9,911,812
The Income Tax Act, 1961 CIT (Appeals) AY 2006-07 16,076,919
The Income Tax Act, 1961 CIT (Appeals) AY 2007-08 92,981,412
The Income Tax Act, 1961 Appellate Tribunal AY 2009-10 359,504,941
The Income Tax Act, 1961 CIT (Appeals) AY 2010-11 433,602,221
TN General Sales Tax Act Commercial Taxes Dept. 2004-05 1,934,000
Service Tax under the Finance Act 1994
Commissioner of Service Tax 2009-10 6,498,343
Karnataka Commercial tax act High Court, Karnataka 2009-10 2,542,074
xi) The Company has no accumulated losses at the end of the financial year.
The Company has not incurred cash loss during the financial year covered by the audit and has
not incurred cash loss in the immediate preceding financial year.
xii) Based on our audit procedures and according to the information and explanations given to us,
we are of the opinion that the Company has defaulted in repayment of dues to banks/financial
institutions/finance companies of the principal of ` 14380.61 lacs and interest of ` 2993.19 lacs.
( ̀ in lakhs)
Bank Name Principal Due Period Due Interest Due Period Due
Syndicate Bank – cash credit - 4.90 Feb’13 - Mar’13
Syndicate Bank – PC Loan - 713.88 Jan’13 - Mar’13
Syndicate Bank – PCFC Loan - 457.32 Jan’13 - Mar’13
State Bank of Mauritius – PC Loan - 170.46 Jan’13 - Mar’13
Syndicate Bank – Corporate Loan 625.00 Mar’13 159.83 Jan’13 – Mar’13
Union Bank of India – Term Loan III 100.00 Jan’13 19.67 Jan’13 – Mar’13
Union Bank of India – ECB Loan 170.39 Feb’13 168.27 Jan’13
Indian Overseas Bank 2500.00 Dec’12 286.03 Apr’12
Federal Bank Limited 2500.00 277.17 May’12 - Mar’13
SIDBI (Unsecured Loan) – Bill discounting Loan
337.06
- Jan’13 - Mar’13
Reliance Capital Limited 1100.00 88.72 Sep’12 - Mar’13
HPFS 476.71 Jun’12 30.77 Jun’12
IBM 2572.45 Apr’12 205.81 Apr’12
SREI Equipment Finance Pvt Ltd 999.00 Oct’12 79.70 Oct’12
L & T Finance Ltd 3000.00 Sep’12 330.66 Jun’12
Total 14380.61 2993.19
xiii) In our opinion and according to the explanations given to us and based on the information
available, no loans and advances have been granted by the Company on the basis of security by
way of pledge of shares, debentures and other securities.
xiv) In our opinion, the company is not a chit fund / nidhi / mutual benefit fund/society. Therefore,
the provisions of clause (xiii) of paragraph 4 of the Order are not applicable to the Company.
xv) The Company has not dealing or trading in shares, securities, debentures and other investments
and hence paragraph 4(xiii) of the other is not applicable. Therefore, the provisions of clause
(xiv) of paragraph 4 of the Order are not applicable to the Company.
xvi) The Company has not given guarantees for loans taken by others from banks and financial
institutions. Therefore, the provisions of clause (XV) of paragraph 4 of the Order are not
applicable to the Company.
xvii) The Company has raised new terms loan of Rs.126.18 Cores during the year. The term loans
outstanding at the beginning of the year and those raised during the year have been applied for
the purposes for which they are raised.
xviii) According to the information and explanations given to us and on an overall examination of the
Balance Sheet of the Company, we are of the opinion that there are no funds raised on short
term basis that have been used for long term investment.
xix) The Company has not made any preferential allotment of shares to parties and companies
covered in the register maintained under section 301 of the Companies Act, 1956.
xx) The Company has not raised any debentures. Therefore, the provisions of clause (XIX) of
paragraph 4 of the Order are not applicable to the Company.
xxi) The Company has not raised any monies by way of public issues during the year and hence
paragraph 4(XX) of the order is not applicable to this company.
xxii) In our opinion and according to the information and explanations given to us, no material fraud
on or by the Company has been noticed or reported during the year.
For Ramadoss & Co.
Chartered Accountants Firm Regn No 002879S
-s/d-
K. Ramadoss Partner
Membership No.019176
Place : Chennai Date : Febraury 14, 2014
` in lakhs
Particulars Note Mar 31, 2013 Mar 31, 2012
EQUITY AND LIABILITIES
Shareholders’ fundsShare capital 2.01 1,644.64 1,644.64 Reserves and surplus 2.02 80,307.96 81,116.84
81,952.60 82,761.48
Non-current liabilitiesLong-term borrowings 2.03 13,994.50 15,013.09 Deferred tax liabilities (Net) 2.11 2,036.04 463.52 Long-term provisions 2.04 262.76 185.51 Other Non-Current liabilities 2.05 3.00 3.00
16,296.30 15,665.12 Current liabilities
Short-term borrowings 2.06 54,798.91 37,160.84 Trade payables 2,056.13 2,294.53 Short-term provisions 2.07 62.82 1,988.69 Other current liabilities 2.08 24,507.80 6,166.15
81,425.66 47,610.21 179,674.56 146,036.81
ASSETS
Non-current assetsFixed assets 2.09
Tangible assets 28,962.46 11,540.58 Intangible assets 22,251.85 11,115.55 Intangible assets under development 3,320.37 1,573.90
Non-current investments 2.10 15,524.35 15,524.35 Long-term loans and advances 2.12 480.17 864.89 Other Non current Assets 2.13 7,484.02 12,334.85
78,023.22 52,954.12 Current assets
Current investments 2.14 0.55 0.55 Inventories 2.15 32.06 92.66 Trade receivables 2.16 50,721.50 47,743.50 Cash and bank balances 2.17 4,058.60 13,633.94 Short-term loans and advances 2.18 32,862.50 18,864.53 Other current assets 2.19 13,976.14 12,747.51
101,651.35 93,082.69 179,674.56 146,036.81
For Ramadoss & Co,Chartered Accountants,Firm Regn No. 02879S Sudarshan Venkatraman
Chairman and Chief Executive Officer
(K.Ramadoss)Partner Ramanujam SesharathnamMembership No. 019176 Managing Director and Chief Operating Officer
Chennai M GajhanathanFebruary 14, 2014 Director
BALANCE SHEET
TOTAL
TOTAL
Balance sheet as at
` in lakhs
Particulars Note Mar 31, 2013 Mar 31, 2012Revenue from operations 2.20 153,261.77 121,876.15 Other income 2.21 1,363.02 1,352.76 Total Revenue 154,624.79 123,228.90 Expenses :
Employee Benefit Expenses 2.22 36,612.25 36,666.68 Project related expenses 59,863.45 28,778.69 Operation and other Expenses 2.23 28,944.66 24,018.29 Finance Cost 2.24 7,359.55 2,455.06 Depreciation / Amortisation 14,972.63 3,806.65
Total Expenses 147,752.54 95,725.37 Profit Before Exceptional, Prior Period and Extraordinary items 6,872.25 27,503.53
Exceptional Item - Profit Before Prior Period and Extraordinary items 6,872.25 27,503.53
Prior Period Item 306.78 47.00 Profit Before Extraordinary items 6,565.47 27,456.53
Extraordinary Item - Profit Before Tax 6,565.47 27,456.53 Less: Tax expense
Current tax 5,768.62 9,764.92 Less:- Minimum Alternate Tax Credit Entitlement - Net Current Tax 5,768.62 9,764.92 Relating to Previous Years 33.21 Deferred tax 1,572.52 303.01
Total Tax Expense 7,374.35 10,067.93 Net profit after tax (808.88) 17,388.60
No. of Equity shares (Face Value Rs. 5/- (Rs.10/-) share) 32,892,840 32,892,840 Earnings per equity share:
Basic (2.46) 52.86 Diluted (2.46) 52.86
Significant Accounting Policies & Notes on Accounts
For Ramadoss & Co,Chartered Accountants,Firm Regn No. 02879S Sudarshan Venkatraman
Chairman and Chief Executive Officer
(K.Ramadoss)Partner Ramanujam SesharathnamMembership No. 019176 Managing Director and Chief Operating Officer
Chennai M GajhanathanFebruary 14, 2014 Director
PROFIT AND LOSS ACCOUNT Profit and loss account for the period ended
Cash flow statement for the year ended Amount in `March 31, 2013 March 31, 2012
Rs. Rs. Rs. Rs.
A CASH FLOW FROM OPERATING ACTIVITIES
Profit before Taxation 6,565.47 27,456.53
Adjustments for:
Depreciation and Amortization 14,972.63 3,806.65 Provision for employee benefits 62.82 77.25 Liabilities and provisions no longer required written back - (12.72) Exchange difference on translation of foreign currency cash and cash equivalents (1.89) 16.21 Bad debts written off 2,077.66 - Prior period adjustments - Unrealised foreign currency (gain)/ loss 1,585.63 242.66 (Profit) on Sale of tangible Asset (7.36) (857.15) Dividend income - (0.16) Interest expenses 6,266.17 2,351.77 Interest income (541.45) (471.41)
24,414.21 5,153.10
Operating profit before working capital changes 30,979.68 32,609.63
Adjustments for changes in working capital:(Increase)/Decrease in Inventories 60.60 (92.66) (Increase)/Decrease in Trade Receivables (4,875.37) (10,423.33) (Increase)/Decrease in Long term loans and advances 384.72 (244.11) (Increase)/Decrease in Short term Loans and advances and other current assets (14,830.78) (7,873.52) Increase/(Decrease) in Trade payables 79.44 849.95 Increase/(Decrease) in Other payables 16,380.21 1,643.02
(2,801.18) (16,140.65)
Cash generated from operations before tax adjustments 28,178.50 16,468.97
Taxes paid (5,801.29) (9,706.49)
Net cash from operating activities 22,377.21 6,762.49
B CASH FLOW FROM INVESTING ACTIVITIES
Purchase of Tangible Assets (27,771.09) (6,363.75) Purchase of Intangible Assets (16,651.07) (8,591.17) Sale of Tangible Assets 50.30 910.37 Interest receieved 476.62 866.77 Investment in subsidiaries - - Proceeds/(investment) in Non current Deposits 4,792.47 3,445.51 Dividend income - 0.16 Net cash used in investing activities (39,102.77) (9,732.12)
C CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from Long-term Borrowings 855.55 9,614.83 Repayment of Long-term Borrowings (1,420.17) (1,611.84) Proceeds from Shor-term Borrowings 39,046.26 40,403.45 Repayment of Short-term Borrowings (24,759.08) (37,399.49) Dividend paid (inclusive of dividend distribution tax) (248.69) (1,508.34) Interest paid (6,325.58) (2,277.68) Net cash used in financing activities 7,148.29 7,220.93
Net (Decrease)/Increase in Cash and Cash Equivalents (A+B+C) (9,577.26) 4,251.30
Opening Cash and Cash Equivalents 13,633.94 9,398.86 Exchange difference on translation of foreign currency cash and cash equivalents 1.89 (16.21) Closing Cash and Cash Equivalents 4,058.59 13,633.94
Note1. Cash and Cash Equivalents at the beginning of the year
As per Balance Sheet 13,633.94 9,398.86 Less: Margin money deposit accountLess: deposits maturing after ninety days
13,633.94 9,398.86
Cash and Cash Equivalents at the end of the yearAs per Balance Sheet 4,058.59 13,633.94 Less: Margin money deposit accountLess: deposits maturing after ninety days
4,058.60 13,633.94
For Ramadoss & Co,
Chartered Accountants,
Firm Regn No. 02879S Sudarshan Venkatraman
Chairman and Chief Executive Officer
(K.Ramadoss)
Partner Ramanujam Sesharathnam
Membership No. 019176 Managing Director and Chief Operating Officer
Chennai M Gajhanathan
February 14, 2014 Director
1 Significant Accounting Policies
1.01 Basis of preparation
1.02 Use of Estimates
1.03
1.04
1.05
1.06
1.07
Inventories
Inventories comprise of consumables utilised in E-Governance Projects are valued at lower of cost and net
realisable value.
Borrowing Costs
Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part
of the cost of such assets.
NOTES FORMING PART OF THE FINANCIAL STATEMENTS
The financial statements are prepared under historical cost convention on the accrual basis of accounting and
comply with the mandatory accounting standards recommended by The Institute of Chartered Accountants of
India (ICAI) and prescribed by the Central Government and comply with the relevant provisions of the Companies
Act, 1956.
Cash flows are reported using the indirect method whereby profit before tax is adjusted for the effects of
transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash
flows from regular revenue generating, financing and investing activities of the company are segregated.
The preparation of the financial statements in conformity with the Generally Accepted Accounting Principles
requires the Management to make estimates and assumptions that affect the reported balances of assets and
liabilities and disclosures relating to contingent assets and liabilities as at the date of the financial statements and
the reported amounts of income and expenses during the period. Examples of such estimates include provisions
for doubtful debts, future obligations under employee retirement benefit plans, income taxes, post-sales customer
support and the useful lives of fixed assets and intangible assets.
Revenue recognition
The company derives its revenues primarily from software development services, consultancy services, projects
and e-governance projects.
Revenue from software services and projects comprise income from time-and-material contracts, fixed price/fixed
time contracts, technical services and annual maintenance contracts. Revenue from time-and-material contracts is
recognized on the basis of man hours spent and materials utilized for the development of software and billable in
accordance with the terms of the contracts with clients. Revenue from fixed price/fixed time contract is
recognized as per the proportionate completion method. Revenue from technical service for software application
is recognized on completion of the service.
Cost incurred on unfinished projects that are yet to be billed and earnings in excess of billings are classified as
unbilled revenue.
Fixed assets including intangible assets
Tangible assets are stated at cost, less accumulated depreciation. Cost includes cost of acquisition including
material cost, freight, installation cost, duties and taxes, and other incidental expenses, incurred up to the
installation stage, related to such acquisition. Intangible assets are stated at cost of acquisition less accumulated
amortization.
Leased Assets
Assets acquired under finance lease are recognised at the lower of the fair value of the leased assets at inception
and the present value of minimum lease payments. Lease payments are apportioned between the finance charge
and the outstanding liability. The finance charge is allocated over the period of lease at a constant periodic rate of
interest on the remaining balance of the liability.
Lease arrangements where the risks and rewards incidental to the ownership is vested with lessor, are recognised
as operating lease. Lease rental are recognised in the statement of profit and loss on a straight line basis.
1.08
1.09
1.10
1.11
1.12
Depreciation & Amortization
Depreciation is provided on tangible assets in the written down value method, at the rates and in the manner
specified by schedule XIV to the Companies Act, 1956. Depreciation is charged from the date of
acquisition/installation and on assets sold, up to the date of sale. Assets Individually costing ` 5000 or less are fully
depreciated in the year of purchase.
The cost and the accumulated depreciation of assets sold, retired or otherwise disposed off is removed from the
stated values and the resulting gains and losses are included in the profit and loss account.
Leasehold land is amortized over the lease period of 99 years excluding any refundable deposit.
In respect of businesses acquired, the excess of purchase consideration over the tangible and intangible assets is
deemed to have been paid for human resources, clientele and other related benefits such as non-compete
agreements and is being amortised over 5 years.
The other intangible assets are being amortised as follows:
Computer software
Software for own use over 3 years
Product Development Cost over 5 years
Investments
Investments are either classified as current or long term, based on the management’s intention at the time of
purchase. Current investments are carried at the lower of cost and market value. Long-term investments are
carried at cost less provisions recorded to recognise any decline other than temporary, in the carrying value of
investment.Impairment of assets
The Management periodically assesses using external and internal sources whether there is an indication that an
asset may be impaired. All the fixed assets are assessed for any indication of impairment at the end of each
financial year. On such indication, the impairment (being excess of carrying value or the recoverable value of
asset) is charged to profit and loss account in the respective financial year. The impairment loss recognised in the
prior years is reversed where the recoverable value exceeds the carrying value of the asset upon reassessment in
the subsequent years.
Retirement benefits
a) Provident Fund (Defined contribution scheme):
Eligible employees receive benefit from defined benefit plan covered under the Provident Fund Act. Both
employees and the company make monthly contributions. The employer contribution is charged off to Profit &
Loss Account as an expense.
b) Gratuity (Defined Benefit Scheme):
The company provides for a non-funded gratuity, based on actuarial valuation.
c) Leave encashment:
The leave encashment liability upon retirement would not arise as the accumulated leave is reimbursed every year
and accounted at actual.
Foreign currency transactions
The company has a US based branch which is an integral operation.
The transactions of the Head Office in foreign currency are accounted at the rates of exchange prevailing on the
date of the transactions. The exchange difference between the rates prevailing on the date of transaction and the
date of settlement are recognized in the profit and loss account.
Foreign currency denominated monetary assets and liabilities are translated using exchange rate as at Balance
sheet date. The gains and losses resulting from such translations are included in the profit and loss account. Non-
monetary assets and liabilities denominated in foreign currency are translated at historical rate.
For the purposes of incorporation of the financial statements of the US branch into the Head Office financial
statements, all income and expenditure are translated at the average rate, the monetary assets and liabilities
translated at the yearend rate and non-monetary assets and liabilities translated at the date of transactions the
resultant gain or loss being recognized in the profit and loss account
1.13
1.14
1.15
Research and development cost
Expenditure incurred on research and development is charged off to Profit & Loss Account as incurred till the time
the techno-commercial viability is established.
Provisions
A provision is recognized when an enterprise has a present obligation as a result of past event; it is probable that
an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be
made. Provisions are not discounted to its present value and are determined based on best estimate required to
settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to
reflect the current best estimates. Contingencies are recorded when it is probable that a liability will be incurred
and the amount can be reasonably estimated.
Accounting for Taxes
The company is accounting for taxes in accordance with the Accounting Standard (AS) 22 - “Accounting for taxes”
notified under sub section 3 (c) of section 211 of companies Act 1956. Consequently, the tax provision includes the
income tax payable on the estimated taxable income as well as the tax impact arising on account of timing
differences, thus ensuring that the income and taxes thereon are matched.
Income tax is provided after taking into account deductions available under Chapter III of the Income Tax Act,
1961, the Minimum Alternate Tax as prescribed by section 115JB of the Income Tax Act, 1961 and the foreign taxes
paid which are available for set off under the relevant Double Taxation Avoidance Agreements.
In the situations where the company is entitled to a tax holiday under the income tax act, 1961enacted in india or
tax laws prevailing in the respective tax jurisdictions where it operates, no deferred tax(asset or liability) is
recognised in respect of timing difference which reverse during the tax holiday period, to the extend the
company’s gross total income is subject to the deduction during the tax holiday period. Deferred tax in respect of
timing difference which reverse after the tax holiday period is recognised in the year in which the timing
differences originate.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED
2.01 SHARE CAPITAL ` in lakhs
Authorised Capital 4,000.00 4,000.00 8,00,00,000 (4,00,00,000) Equity Shares of Rs. 5 (Rs.10) each
4,000.00 4,000.00 Issued, Subscribed & Fully Paid-Up3,28,92,840 (1,64,46,420) Equity Shares of Rs. 5 (Rs. 10) each 1,644.64 1,644.64
1,644.64 1,644.64
Reconciliation of the number of equity shares outstanding
Number Rs. Number Rs. Shares outstanding at the beginning of the year 32,892,840 164,464,200 16,446,420 164,464,200
Shares bought back/ other movements during the yearShares outstanding at the end of the year 32,892,840 164,464,200 16,446,420 164,464,200
*Effective Date of Shares Split : 03-July-2012
Details of shareholders holding more than 5% shares
No. of Shares held % of Holding No. of Shares held % of Holding
Sthithi Insurance Services Private Limited 5,964,203 18.13 6,641,776 40.38 Unit Trust of India Investment Advisory Services Ltd - A/c Ascent India Fund - - 1,150,000 6.99
- -
2.02 Reserves & Surplus ` in lakhs
Securities Premium AccountOpening Balance 17,842.89 17,842.89 Add : Securities premium credited on Share issue - Less : Amount utilised on issue of fully paid bonus shares -
- Closing Balance 17,842.89 17,842.89
General ReserveBalance at the beginning of the year 10,719.41 8,719.41 Add : Transferred from Profit & Loss account - 2,000.00
Less : Written Back in Current Year - Balance at the end of the year 10,719.41 10,719.41
Mar 31, 2013
Name of Shareholder Mar 31, 2013 Mar 31, 2012
Mar 31, 2013 Mar 31, 2012Particulars
Mar 31, 2013 Mar 31, 2012
(Every equity share of Rs.10 each fully paid is sub divided
into two equity shares of Rs.5 each fully paid)*
The company has only one class of shares referred to as equity shares having a par value of`Rs.5/-. Each holder of equity shares is entitled to one vote per
share. All shares are entitled to equal amount of dividend and return of capital in the event of liquidation.
Mar 31, 2012
Particulars
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED Surplus
Balance at the beginning of the year 52,554.54 39,077.37 Add: Net profit after tax transferred from Statement of Profit and Loss (808.88) 17,388.62 Add : Transfer from Reserves -
Amount Available for Appropriation 51,745.66 56,465.98 Interim dividend - Proposed dividend - 1,644.64 Total Dividend - 1,644.64 Dividend Distribution Tax - 266.80 Amount transferred to General Reserve - 2,000.00
Surplus Closing Balance 51,745.66 52,554.54
Total Reserves and Surplus 80,307.96 81,116.84
2.03 Long Term Borrowings ` in lakhs
31-Mar-13 31-Mar-12Term Loans
Indian rupee loans from Banks 7,899.77 5,000.00 Foreign currency loans from Banks 10,702.51 11,528.39
Other Loans and AdvancesFinance lease obligations 812.18 867.94
19,414.47 17,396.34 The above amount includes Secured borrowings 18,195.89 17,396.34 Unsecured borrowings 1,218.58 - Amount disclosed under head other current liabilities
Indian rupee loans from Banks (3,524.87) (625.00) Foreign currency loans from Banks (1,124.25) (959.44) Finance lease obligations (770.84) (798.80)
(5,419.97) (2,383.24)
Net Amount 13,994.50 15,013.09
Nature of Security and terms of repayment for secured borrowings
Foreign Currency loans from Banks
1
2
Indian rupee loans from Banks
3
4
5
6
Particulars
Indian rupee loan from banks includes crystallised Foreign currency loan amount of `519.54 lakhs which is secured by assets of a business in USA
the acquisition of which was funded by the term loan and fixed assets of the company. The loan is repayable in 20 equal quarterly installments.
Interest is charged @ 12.50% p.a. for this loan.
Indian rupee loan amount of '3000.00 lakhs is secured by first pari passu charge on current assets, both present and future. The loan is repayable
in 12 quarterly installments. 13.50% p.a. is charged at present for this loan.
The above 2 facilities are collaterally secured by other assets of the company.
Indian rupee loan is collaterally secured by pledge of promoters' shares of the company with market value to the extent of 50% of the term loan.
The loan is repayable in 8 quarterly installments with a moratorium of 12 months. 13.20% p.a. is charged at present for this loan.
The above 4 facilities are guaranteed by the two promoter directors of the company in their personal capacity.
Foreign currency loan amount of `5951.83 lakhs is secured by the pledge of shares of Nova Msc Sdn Bhd as well as Matrix Primus Partners Inc, the
acquisition of which was funded out of the loan; and a charge on present and future fixed and current asset of Matrix Primus Partners Inc. The loan
is payable in 90 months with a moratorium of 6 months under ballooning method. Present interest rate for this loan is 5.28% p.a..
Foreign currency loan amount of `4918.95 lakhs is lakhs secured by first pari passu charges on movable & immovable fixed assets and first pari
passu charges on the current assets of the company. The loan is payable in 11 half yearly installments with a moratorium of 24 months under step
up method. Interest charged for this loan is 4.5% p.a.
Indian rupee loan is collaterally secured by pledge of 2 lac promoters' shares of the company. The loan is repayable in 8 quarterly installments
with a moratorium of 6 months. 12.00% p.a. is charged at present for this loan.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED
7 Particulars of Loan & Interest in default as on 31-Mar-2013. ` in lakhs
Principal Due Period Due Interest Due Period Due
625.00 Mar'13 159.83 Jan'13 - Mar'13
100.00 Jan'13 19.67 Jan'13 - Mar'13
170.39 Feb'13 168.27 Jan'13
476.71 Jun'12 30.77 Jun'12
2,572.45 Apr '12 205.81 Apr '12
999.00 Oct'12 79.70 Oct'12
3,000.00 Sep'12 330.66 Jun'12
2,500.00 Dec'12 286.03 Apr '12
10,443.55 1,280.74
2.04 Long Term Provisions ` in lakhs
Mar 31, 2013 Mar 31, 2012Provision for employee benefits
Gratuity 219.93 142.68
Bonus 42.83 42.83
262.76 185.51
2.05 Other Non - Current liabilities ` in lakhs
Mar 31, 2013 Mar 31, 2012Security Deposit 3.00 3.00
3.00 3.00 2.06 Short term borrowings
` in lakhs
Mar 31, 2013 Mar 31, 2012
Secured Loans:Loans repayble on demand
Indian rupee loans 19,925.20 6,942.50 Foreign currency loans 21,803.18 26,955.85 Cash credit 205.94 199.31
Unsecured Loans:Loans repayble on demand
Indian rupee loans 407.06 - Foreign currency loans 75.20 -
Loans and advances from Related partiesZylog Systems India Limited 4,047.75 1,951.64
Zylog Systems Asia Limited 1,435.64 1,101.81
Zylog Systems Canada Limited 1,374.84 9.72
Other related parties 5,524.10 -
54,798.91 37,160.84
Particulars
Particulars
Particulars
Name of Financial Institutions
Syndicate Bank - Corporate Loan
Union Bank of India - Term Loan III
Union Bank of India - ECB Loan
Total
HPFS
IBM
SREI Equipment Finance Private Limited
L&T Finance Limited
Indian Overseas Bank
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED Nature of Security and terms of repayment for secured borrowings
Amt in lakhs
Principal Due Interest Due Period Due
- 4.90 Feb'13 - Mar'13
- 713.88 Jan'13 - Mar'13
- 457.32 Jan'13 - Mar'13
- 170.46 Jan'13 - Mar'13
SIDBI (Unsecured Loan) - Bill discounting Loan 337.06 - Jan'13 - Mar'13
1,100.00 88.72 Sep'12 - Mar'13
2,500.00 277.17 May'12 - Mar'13
Total 3,937.06 1,712.44
2.07 Short Term Provisions ` in lakhs
Mar 31, 2013 Mar 31, 2012Provision for employee benefits
Gratuity 62.82 77.25 Proposed Dividend - 1,644.64 Corporate Dividend Tax - 266.80
62.82 1,988.69 2.08 Other Current Liabilities
` in lakhs
Particulars Mar 31, 2013 Mar 31, 2012
Current Maturities of Long term borrowings 8,748.22 1,584.44
Current Maturities of Finance lease obligations 3,290.00 798.80
Interest accrued but not due on borrowings 122.52 181.93
Interest accrued and due on borrowings 2,992.88 -
Advance Received from Customers 134.47 134.47
Payroll Liabilities 3,501.09 2,080.18
Unclaimed Dividend 1,442.38 44.45
Statutory Dues # 1,101.92 364.02
3.18 2.70
Other payables 3,171.14 975.15
24,507.80 6,166.15 Others Payables include:-
Creditors for Capital goods 1,704.99 975.15 Creditors for expenses 1,432.94 -
# Statutory Dues includes an amount of Rs.266.80 lakhs being Dividend Distribution Tax payable by the company
5. Indian rupee loan amount of ' 1100.00 lakhs is secured by first pari pasu charge on current assets,book debts and movable property and the shares are
also pledged. The loan is repayable at the end of 90 days.Interest @ 16% p.a. floating rate payable at monthly rests.
6. Indian rupee loan amount of ' 2500.00 lakhs is secured by hypothecation of current assets,both present and future on second charge basis. The loan is
repayable at the end of 6 months. Interest @ 12.97% p.a. payable at monthly rests.
Reliance Capital Limited
Federal Bank Limited
4. A new bill discounting loan of Rs.145 lakhs was availed in Mar'13 which carries Interest @ 15% p.a. repayable in 90 days.
State Bank of Mauritius - PC Loan
7. Particulars of Loan & Interest in default as on 31-Mar-2013.
Bank Name
Syndicate Bank - Cash Credit
Syndicate Bank - PC Loan
Syndicate Bank - PCFC Loan
Deferred Revenue
Particulars
2. Indian Rupee Loan from Banks includes an amount of Rs.950 lakhs which carries interest at 9.50 % p.a. The loan is repayable in 4 quarterly
installments along with interest, from the date of loan, viz 15-Mar-2013. The loan has been guaranteed by the Bank guarantee of Union Bank of India
1. The packing credit in foreign currency & in rupees and cash credit facilities are secured by hypothecation of book debts , other current assets and fixed
assets. Further guaranteed by the two promoter directors of the company in their personal capacity.The Cash Credit is repayable on demand and carries
interest @ 15.25 % p.a.
3. Indian rupee loan from banks includes crystallised Foreign currency loan amount of `7529 lakhs which carries interest @ 15% p.a. This loan is secured
by hypothecation of book debts , other current assets and fixed assets. Further guaranteed by the two promoter directors of the company in their personal
capacity.
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2.10 Non current Investments (Fully paid) ` in lakhs
Particulars Mar 31, 2013 Mar 31, 2012Non - Trade Investments unquoted in equity instruments (at cost) Subsidiary Companies
Vishwa Vikas Services Limited2,50,000 equity shares of Rs.10 each fully paid-up 25.00 25.00
Zylog Systems (India) Limited3,15,00,000 equity shares of Rs.10 each fully paid 3,150.00 3,150.00
Zylog systems (Europe) Limited15,64,701 equity shares of GBP 1 each fully paid-up 1,065.65 1,065.65
Zylog Systems Asia Pacific Pte Ltd19,06,389 equity shares of SGD 1 each full paid-up 625.99 625.99
Zylog BV Limited1,25,000 equity shares of USD 1 each, fully paid-up 62.99 62.99
Algorithm Solutions Private Ltd10,000 equity shares of Rs.10 each fully paid-up 175.00 175.00
Zylog Systems (Canada) Limited70,00,100 equity shares of CAD 1 each, fully paid-up 3,093.87 3,093.87
Matrix Primus Partners Inc10,03,750 equity shares of USD 1 each, fully paid-up 7,323.63 7,323.63
Non - Trade Investments quoted in equity instruments (at cost) Others
Union Bank of India(2018 equity shares of `110 each) 2.22 2.22
Total Non Trade Investments 15,524.35 15,524.35
Aggregate amount of Quoted Investments 2.22 2.22 Market Value of Quoted Investments 4.40 4.76 Aggregate amount of Non - Quoted Investments 15,522.13 15,522.13
2.11 Deferred Tax Assets / Liablility ` in lakhs
Particulars Mar 31, 2013 Current Year Mar 31, 2012Charge / (Credit)
Deferred Tax Assets - Provision for Gratuity 19.00 7.07 26.06
19.00 7.07 26.06 Deferred Tax Liabilities
Difference between book and tax depreciation 2,055.03 1,565.46 489.58
2,055.03 1,565.46 489.58
Net Deferred Tax Liability 2,036.04 1,572.52 463.52
2.12 Long - Term Loans and Advances ( Unsecured and considered good) ` in lakhs
Particulars Mar 31, 2013 Mar 31, 2012
Capital Advances (Unsecured and considered good) 36.50 176.21 Security Deposits (Unsecured and considered good) 443.67 398.06 Other Advances - 290.61
480.17 864.89
2.13 Other Non - Current Assets ` in lakhs
Particulars Mar 31, 2013 Mar 31, 2012Non Current Bank Deposits (As per Note 2.17)
Having Maturity more than 12 Months from date of depositFixed Deposit 6,349.02 10,261.07 Margin Money Deposit Accounts 51.32 1,091.12
Lien with Bank 1,083.68 982.66
7,484.02 12,334.85
2.14 Current Investments ` in lakhs
Particulars Mar 31, 2013 Mar 31, 2012
Investment in Preference SharesInvestment in Mutual Funds (Quoted) 0.55 0.55
Total Current Investments 0.55 0.55
2.15 Inventories ` in lakhs
Particulars Mar 31, 2013 Mar 31, 2012
Stocks - Smart cards 32.06 92.66
32.06 92.66
2.16 Trade Receivables ( Unsecured and considered good) ` in lakhs
Particulars Mar 31, 2013 Mar 31, 2012
Outstanding for a period exceeding six months 10,262.31 122.70 10,262.31 122.70
Less : Allowance for bad & doubtful debts10,262.31 122.70
Outstanding for a period not exceeding six months Outstanding for a period not exceeding six months 40,459.19 47,620.79
40,459.19 47,620.79
50,721.50 47,743.50
Pursuant to Accounting Standard 22 'Accounting for Taxes on Income' as prescribed in Companies Accounting Standard
Rules, 2006, the Company has recorded the Cumulative Net Deferred Tax Liabilities as at 31st Mar 2013 of ` 2,036.04
lakhs and ` 1,572.52 lakhs has been debited to the profit & Loss account.
2.17 Cash and Bank balances ` in lakhs
Particulars Mar 31, 2013 Mar 31, 2012Cash and cash equivalents
Cash on hand 0.90 2.63 Balance with Banks
On Current Accounts 3,974.48 13,586.87 Other Bank balances
Unclaimed Dividend account 22.89 44.45 Margin Money Deposit Accounts
Having Maturity more than 3 Months but less than or equal to 12 months 60.33 -
Amount disclosed under Non Current assets (Note no 2.13)Lien with Bank 1,083.68 982.66 Margin Money Deposit Accounts
Having Maturity more than 12 Months from date of deposit * 51.32 1,091.12 Fixed Deposit Accounts
Having Maturity more than 12 Months from date of deposit 6,349.02 10,261.07 Less: Amount Disclosed as Non Current Assets (7,484.02) (12,334.85)
4,058.60 13,633.94 * Balance of ` 51.32 lakhs (` 1,091.12 lakhs) is subject to restricted use and held as security against the borrowings.
2.18 Short - Term Loans and Advances ( Unsecured and considered good) ` in lakhs
Particulars Mar 31, 2013 Mar 31, 2012
Security Deposits (Unsecured and considered good) 3.33 2.08
Loans and advances to related parties ( Refer Note 2.18.1) 17,046.56 9,719.31 Others
Share Application money in subsidiary 3,200.00 3,200.00 Prepaid Expenses 4,460.71 4,509.29 Advance tax and withholding taxes (Net of Provisions) 199.74 114.96 Other advances 7,952.16 1,318.89
Less: Provision for Bad & doubtful advances
32,862.50 18,864.53
2.18.1 The details of loans and advances to related parties are as followsAdvances to Subsidiaries
Zylog Systems (Europe) Ltd 939.00 1,091.18 Zylog Systems (Canada) Ltd 792.39 154.20 Matrix Primus Partners Inc 4,465.48 3,819.75 Algorithm Solutions Private Ltd 6,295.50 225.89 Zylog BV Ltd 4,554.19 4,235.67 Vishwa Vikas Services Ltd - 192.62
17,046.56 9,719.31
2.19 Other Current Assets ` in lakhs
Particulars Mar 31, 2013 Mar 31, 2012Unbilled Revenue 13,616.32 12,452.51 Interest Accrued on Deposits 359.82 295.00
13,976.14 12,747.51
2.20 Revenue from operations ` in lakhs
Particulars Mar 31, 2013 Mar 31, 2012Export of software services, products & solutions 151,086.63 119,708.58 Domestic operations 2,175.14 2,167.57
153,261.77 121,876.15
2.21 Other Income ` in lakhs
Particulars Mar 31, 2013 Mar 31, 2012Interest Income on
Bank Deposits 541.45 471.41 Dividend Income
Current investments - 0.16 Rental Income 9.12 2.56 Forex gain 798.55 - Profit on Sale of Investments / Assets 7.36 857.15 Miscellaneous Income 6.54 21.48
1,363.02 1,352.76
2.22 Employee Benefits Expense ` in lakhs
Particulars Mar 31, 2013 Mar 31, 2012Salaries and incentives 35,417.25 35,569.30 Contribution to Provident fund and other funds 186.82 174.88 Gratuity 66.05 80.32 Reimbursement of expenses 345.24 342.28 Staff welfare expenses 596.89 499.90
36,612.25 36,666.68
2.23 Operation And Other Expenses ` in lakhs
Particulars Mar 31, 2013 Mar 31, 2012Consultancy Charges 3,878.82 4,745.75 Consumables 1,008.63 941.58 Directors' sitting fee 2.00 1.60 Rent 690.76 444.66 Repairs & Maintenance - Building 195.35 644.21 - Plant & Machinery - 82.75 - Others 427.90 20.23 Vehicle Maintenance 24.48 - Insurance 5,908.14 3,107.68 Rates & Taxes 178.03 187.82 Printing & Stationery 253.58 103.98 Lease rental Charges 89.50 108.49 Travelling Expenses 562.10 488.50 Communication Expenses 502.75 375.27 Payments to Auditor as
Statutory Audit Fee 58.00 54.00 Tax Audit Fee 10.00 9.37
Legal Expenses & Professional fees 502.46 543.63 Electricity 264.42 147.83 Recruitment and Training Expenses 297.64 332.50 Foreign exchange loss - 1,071.62 Visa Processing related expenses 5,096.99 3,326.38 Bad debts, loans & advances written off 2,077.66 - Trade show seminar and Conference Expense 284.44 367.84 Advertisement 223.08 123.83 Marketing Expenses 5,510.84 5,529.99 Entertainment 337.28 283.22 Donations 0.55 4.32 Bank Charges 137.37 826.93 Miscellaneous Expenses 237.43 144.30 GDR Expenses 184.46 -
28,944.66 24,018.29
2.24 Finance Cost ` in lakhs
Particulars Mar 31, 2013 Mar 31, 2012Interest 6,006.16 2,219.03 Loan Processing, preclosure & Other Charges 1,353.39 236.03
7,359.55 2,455.06
2.25 Earnings Per Share (EPS)
2013 2012
Net Income available to Equity Shareholders -808.88 17,388.60
No of outstanding equity shares
- Basic 32,892,840 32,892,840
- Diluted 32,892,840 32,892,840
Earning Per share ` *
- Basic -2.46 52.86
- Diluted -2.46 52.86
*
2.26 Disclosures under “ Accounting Standard (AS)-15 (Revised) – Employee Benefits
2013 2012
Defined Benefit obligation towards gratuity at beginning of the year 273.23 181.54
Current Service Cost 30.58 86.75
Interest Cost 21.86 12.71
Actuarial (gain)/Loss 39.71 (4.70)
Benefits Paid (14.47) (3.07)
Defined Benefit obligation at the year end 350.91 273.23
` in Lakhs
2013 2012
Fair value of plan assets - -
Present value of obligation 350.91 273.23
Amount recognised in the Balance Sheet ** 350.91 273.23
d. Expense recognized during the year
` in Lakhs
2013 2012
Current service cost 30.58 86.75
Interest cost 21.86 12.71
Actuarial (gain)/Loss 39.71 (4.70)
Amount recognised in the Balance Sheet ** 92.15 94.76
In determining earnings per share, the company considers the net profit after tax and includes the post tax effect of any
extraordinary / exceptional item. The number of shares used in computing basic earnings per share is the weighted average
number of shares outstanding during the period. The number of shares used in computing diluted earnings per share
comprises the weighted average shares considered for deriving basic earnings per share, and also the weighted average
number of equity shares that could have been issued on the conversion of all dilutive potential equity shares. The
components of basic and diluted earnings per share are as follows.
Particulars
a. Reconciliation of opening and closing balances of Defined Benefit obligation
** (The computations given hereunder are for the company and two of its wholly owned Indian subsidiaries. The figures do
not match with the figures in the financial statements since the amounts have been allocated to the three companies in
relation to their liability)
` in Lakhs
As at March 31,
The number of equity shares outstanding has been increased without an increase in resources by way of share split in the
ratio of 2:1. Therefore, as pe AS-20, "Earnings per share", number of equity shares outstanding before the share split is
adjusted for the proportionate change in the number of equity shares outstanding as if the share split had occurred at the
beginning of the earliest period reported. Accordingly, the earnings per share of the previous year is adjusted.
b. Reconciliation of opening and closing balances of fair value of plan assets- Not Funded
c. Reconciliation of fair value of assets and obligations
As at March 31,
As at March 31,
e. Investment Details: Not funded
f. Actuarial Assumptions:
2013 2012
8.00% 8.00%
4.00% 4.00%
58 58
# As per LIC (1975 – 79) Table of Mortality rates
2.27 Leases
Finance lease: Company as lessee
` in Lakhs
Minimum Lease
Payments
Present
value of MLP
Minimum Lease
Payments
Present
value of MLP
Not later than one year 244.78 233.52 705.43 674.20
41.89 36.27 225.89 190.72
Later than five years - -
286.67 269.79 931.32 864.91
Operating lease: Company as lessee
a) Lease rentals recognized during the year `29.18 lakhs (PY `58.15 lakhs)
b)Future minimum rentals payable under non-cancellable operating leases are as follows:
` in Lakhs
2013 2012
59.90 64.43
46.43 96.09
-
106.33 160.52
2.28
2.29 Details of auditors’ remuneration
` in Lakhs
2013 2012
Head office
Statutory audit 12.00 12.00
10.00 10.00
Tax Audit 4.00 4.00
Overseas Branch
Branch Audit 36.00 32.00
Tax Audit 6.00 5.37
68.00 63.37
As at March 31,
Interest rate
Not later than one year
Later than one year and not later than five years
Later than five years
As at March 31,
2013 2012
Later than one year and not later than five
years
As at March 31,
Since the company operates in IT Services, there are no other business segments. However around 98% of the revenue
accrue in US and consequently there are no other reportable geographical segments.
Inflation rate
Retirement age
a) Net carrying amount of assets taken on financial lease as on 31st March 2013 `591.47 lakhs (PY `985.79 lakhs)
b) Out of the total lease payments of `2,172.12 lakhs (PY `1,005.71 lakhs), Finance charges amounts to ` 260.01 lakhs (PY
`132.73 lakhs) and the reduction in principal amounts to `1,912.11 lakhs (PY `872.97 lakhs).
c) The minimum lease payments (MLP) and their present value (PV) in respect of these leases are as under:
Year ended March 31,
Certification and reviews
(under clauses 41 and 49 of the listing agreement with stock exchanges)
2.30 Related Party Disclosure
a) List of related parties and realtionships
Sthithi Insurance Services Pvt Ltd. Enterprise influenced by Key Management personnel
b) Transaction with related parties
` in Lakhs
2013 2012
Remuneration
Mr. Sudarshan Venkatraman 127.64 119.52
Mr. Ramanujam Sesharathnam 121.37 115.59
Mr. Srikanth Parthasarathy 60.00 60.00
309.01 295.10
Advances given during the year
Vishwa Vikas Services Limited 1.94 97.83
Zylog Systems (Europe) Limited 293.05 400.53
Zylog Systems (India) Limited 4,720.61 3,001.95
Zylog Systems (Canada) Limited 228.04 6,549.75
Zylog BV Limited 318.52 827.68
Algorithm Solutions Private Limited 6,458.91 274.66
Zylog Systems Asia Pacific Pte Limited - 39.26
Matrix Primus Partners Inc 2,929.33 2,149.44
Sthithi Insurance Services Pvt Ltd. 930.50 -
15,880.91 13,341.10
Share Application Deposits in Subsidiary
Zylog Systems (India) Limited 3,200.00 3,200.00
Name of the related party Relationship
Key Management Personnel
Mr. Sudarshan Venkatraman Chairman & CEO
As required under Accounting Standard 18 (AS-18), the following are the details of transactions during the year with the
related parties.
Vishwa Vikas Services Limited Subsidiary
Zylog Systems (India) Limited Subsidiary
Zylog Systems Asia Pacific Pte Limited Subsidiary
Mr. Ramanujam Sesharathnam Managing Director & COO
Mr. Srikanth Parthasarathy Executive Director
Zylog Systems (Europe) Limited Subsidiary
Algorithm Solutions Private Limited Subsidiary
Zylog Systems FZ LLC (Formerly, Ducont FZ
LLC)
Subsidiary of Zylog BV Limited
Zylog Systems Infotech Private Ltd
(Formerly, Ducont India Private Limited)
Subsidiary of Zylog Systems FZ LLC (Formerly, Ducont FZ
LLC)
Zylog BV Limited Subsidiary
Zylog Systems Canada Limited Subsidiary
Matrix Primus Partners Inc Subsidiary
Anodas Software Limited Subsidiary of Zylog Systems (Europe) Limited
Zylog AG Switzerland Subsidiary of Zylog Systems (Europe) Limited
Particulars Year ended March 31,
Zylog Systems Infotech SDN BHD Subsidiary of Zylog Systems Asia pacific Pte Limited
Advance Received during the year
Vishwa Vikas Services Limited 334.04 274.96
Zylog Systems (Europe) Limited 445.23 10.34
Zylog Systems (India) Limited 8,156.81 3,386.03
Zylog Systems (Canada) Limited 1,559.83 4,639.47
Zylog BV Limited - 249.15
Algorithm Solutions Private Limited 443.41 823.37
Zylog Systems Asia Pacific Pte Limited 333.83 160.64
Matrix Primus Partners Inc 2,506.08 321.98
Mr. Ramanujam Sesharathnam 183.99 -
Sthithi Insurance Services Pvt Ltd. 6,270.61 -
20,233.84 9,865.95
Services Rendered
Zylog BV Limited - 391.17
Services Received
Zylog Systems (India) Limited - 9.55
Vishwa Vikas Services Limited 198.16 213.43
Zylog Systems (Canada) Limited - 391.77
198.16 614.75
Interest Payable
Zylog Systems (Canada) Limited 43.75 5.76
Receivables ` in Lakhs
Balance
As at 31st March
Maximum amount
due during the year
Balance
As at 31st March
Maximum
amount due
during the year
Zylog Systems (Europe) Limited 939.00 1,349.08 1,091.18 1,091.18
Zylog BV Limited 4,554.19 4,582.02 4,235.67 4,430.39
Vishwa Vikas Services Limited - 333.85 192.62 334.98
Zylog Systems (Canada) Limited 792.39 898.07 154.20 3,024.62
Matrix Primus Partners Inc 4,465.48 6,364.11 3,819.75 3,998.64
Algorithm Solutions Private Limited 6,295.50 6,522.89 225.89 516.34
Zylog Systems AG 5.85 6.23 5.77 5.92
Zylog Systems M.E (FZE) 5.36 5.36 - -
Total 17,057.77 9,725.08
Amount payable to ` in Lakhs
Balance
As at 31st March
Maximum amount
due during the year
Balance
As at 31st March
Maximum
amount due
during the year
Zylog Systems Asia Pacific Pte Limited 1,435.64 1,462.20 1,101.81 1,107.90
Zylog Systems (India) Limited 4,047.75 4,206.73 1,951.64 3,275.77
Zylog Systems (Canada) Limited 1,374.84 1,411.12 - -
Total 6,858.23 3,053.45
Service rendered /received ` in Lakhs
2013 2012
Services received from Vishwa Vikas Services Limited 198.16 213.43
Services rendered to Ducont FZ LLC 1,231.84 406.97
Management Services receieved from Zylog Systems (Canada) Limited - 391.77
2013 2012
20122013
2.31
2.32
2.33
` in Lakhs
2.34 Contigent Liabilities and Commitments 2013 2012
(i)
1,000.00 490.00
- -
9,208.22 5,208.18
19.34 19.34
64.98 64.98
25.42 25.42
2,400.00 2,400.00
14,000.00 14,000.00
7,500.00 7,500.00
` in Lakhs
2013 2012
(ii)
(iii) Nil Nil
2013 2012
2.35 56,632.21 23,002.60
2.36 NIL 237
2.37 39,164.85 10,789.62
Estimated amount of contracts remaining to be executed on capital account and not
provided for (net of advance)NIL 38.86
Other Current Asset include unbilled revenue of ` 13,616.32 lakhs (` 12,452.51 lakhs) recognized in relation to efforts
incurred on various contracts until the balance sheet date.
The company has acquired various businesses during the financial years ended 31st March 2003, 31st March 2006, 31st
March 2008, 31st March 2009. During the current year ended 31st March 2013, the company has made payment of
`3,103.45 Lakhs towards earnout. The assets acquired in these business comprise various resources such as human
resources, client lists and other related benefits and also undertakings by the promoters of the vendors of these businesses
not to engage in any business with clients taken over for a specified period of time. The total amount invested in acquiring
these businesses is ` 9,315.50 Lakhs (`6121.05 Lakhs). The company has adopted the policy of amortizing this amount over
a period of 5 years. Accordingly, the company has amortized a sum of ` 920.84 Lakhs in the year under review (previous
year ` 795.67 Lakhs).
- Service Tax
d)Corporate gurantee given to:
SBI Frankfurt on behalf of Zylog BV
ICICI Bank Canda on behalf of Zylog Canada
ANDHRA Bank on behalf of ZSIL
**Demand raised by the Income Tax department against the company by disallowing certain deductions/benefits/ claims
made by the company. In the opinion of the Company most of these demands are not maintainable and accordingly
appeals have been preferred
- VAT
OTHER COMMITMENTS
Earnings in Foreign Exchange :
- Sales Tax
Value of Imports (CIF Value):
Expenditure in Foreign Currencies :
Contingent Liability not provided for :
a) Bank Guarantee/Bond executed by the Company
b) Letter of credits opened by bankers
c) Appeals filed in respect of disputed demands
- Income Tax **
Amounts due to Small Scale Industries under Current Liabilities is based on the information available with the company
regarding the status of the suppliers as defined under the “Micro, Small and Medium Enterprises Development Act, 2006”.
Amounts overdue as on 31st March 2013 to Micro, Small and Medium Enterprises on account of principal and interest is `
Nil ( ` Nil).
g) Unhedged Foreign Exposure
Particulars CurrencyAmount in Foreign
CurrencyAmount in ` (lakhs)
Amount in Foreign
Currency
Amount in `
(lakhs)
USD 65,765,174 35,943.96 40,465,982 21,074.80
GBP 0 - 295,050 245.70
EURO 60,000 42.04 70,000 48.63
SAR 477,461 69.68 293,645 40.78
THB 0 - 450,000 7.62
2.38
2.39
2.40
For Ramadoss & Co,
Chartered Accountants,
Firm Regn No. 02879S Sudarshan Venkatraman
Chairman and Chief Executive Officer
(K.Ramadoss)
Partner Ramanujam Sesharathnam
Membership No. 019176 Managing Director and Chief Operating Officer
Chennai M Gajhanathan
February 14, 2014 Director
Under the provisions of Companies Act 205 A, the payment of dividend declared in the last AGM dt 25th Sep 2012 of Rs
16.44 Cr. Out of which Rs.2.24 Cr. alone paid till 31st March 2013 and till date. The dividend distribution tax of Rs 2.67 Cr. of
the said dividend also not been paid till 31 St March 2013 and till date.
Receivables, Payables, Long term loans & Short term loans and Balances in banks are subject to confirmation.
Previous years’ figures are shown in parenthesis and have been regrouped, recast wherever necessary to conform to the
current year’s classification.
As at March 31, 2013 As at March 31, 2012
Trade receivable
Foreign currency exposures have not been hedged by a derivative instrument or otherwise. According to the management
almost 80% of the revenue is naturally hedged as it pays out salaries and incurs expenditures in the same foreign currency.
No dividend has been remitted in foreign currency during the current year and previous year.
This page has been intentionally left blank
CONSOLIDATED
FINANCIAL STATEMENTS
AUDITORS’ REPORT
BALANCE SHEET
PROFIT AND LOSS ACCOUNT
CASH FLOW STATEMENT
NOTES FORMING PART OF FINANCIAL STATEMENTS
NOTES TO THE FINANCIALS STATEMENTS
AUDITORS’ REPORT ON CONSOLIDATED FINANCIAL STATEMENTS
Independent Auditors’ Report To the Board of Directors of Zylog Systems Limited Report on Consolidated Financial Statements We have audited the accompanying Consolidated Financial Statements of Zylog Systems Limited (“the Company”), its subsidiaries and jointly controlled entities (the Company its subsidiaries and jointly controlled entities constitute “the Group”) which comprise the Consolidated Balance Sheet as at 31st March 2013, Consolidated Statement of Profit and Loss and the consolidated Cash Flow Statement for the year then ended and a summary of the significant accounting policies and other explanatory information. Management’s responsibility to the financial Statements The Company’s Management is responsible for the preparation of these consolidated financial statements that give a true and fair view of the consolidated financial position, consolidated financial performance and consolidated cash flows of the Group in accordance with the Accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the consolidated financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments , the auditor considers internal control relevant to the company’s preparation and presentation of the consolidated financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion and to the best of our information and according to the explanations given to us and based on the consideration of the separate audit reports on the financial statements/financial information of the subsidiaries, jointly controlled entities and associates; referred to below in the Other Matters paragraph, the aforesaid consolidated financial statements give a true and fair view in conformity with the accounting principles generally accepted in India subject to non payment of dividends declared in the AGM dated 25th Sep 2012 and also till date and non payment of distribution tax on the said dividend declared (a) in the case of the Consolidated Balance sheet , of the state of affairs of the Group as at 31st
March 2013; (b) in the case of the Consolidated Statement of Profit and loss , of the Profit of the Group for
the year ended on that date; and (c) in the case of the Consolidated Cash flow Statement, of the Cash flows of the Group for the
year ended on that date. Other Matters We did not audit the financial statements of subsidiaries, whose financial statements reflect total assets of ` 67,052.35 lakhs as at March 31, 2013, the total revenue of `92,529.25 lakhs and cash flows (Net) amounting to ` 11,581.72 Lakhs for the year then ended. These financial statements and other financial information have been audited by other auditors whose reports have been furnished to us, and our opinion is based solely on the report of other furnished to us, and our opinion is based solely on the report of other auditors in so far as it relates to the amounts included in respect of the subsidiaries. We report that the consolidated financial statements have been prepared by the management of Zylog Systems Limited in accordance with the requirements of accounting Standards (AS) 21, Consolidated Financial Statements and Accounting Standard (AS) 23, Accounting for investment in Associates in consolidated financial statements issued pursuant to the Companies (Accounting Standards) Rules, 2006 as per section 211 (3C) of the Companies Act, 1956 and on the basis of the separate audited financial statements of the Company and its consolidated entities included in the Consolidated Financial Statements. Place : Chennai Date : February 14, 2014
For Ramadoss & Co., Chartered Accountants F.R.No 002879S -s/d- (K.Ramadoss) Partner M No: 19176
` in lakhs
Particulars Note Mar 31, 2013 Mar 31, 2012
EQUITY AND LIABILITIES
Shareholders’ fundsShare capital 2.01 1,644.64 1,644.64
Share application money pending allotment -
Reserves and surplus 2.02 89,512.71 89,255.65 91,157.35 90,900.29
Non-current liabilities
Long-term borrowings 2.03 31,302.27 25,777.08
Deferred tax liabilities (Net) 2.11 2,225.31 556.46
Long-term provisions 2.04 923.38 395.94
Other Non-Current Liabilities 2.05 17.66 21.16 34,468.62 26,750.64
Current liabilities
Short-term borrowings 2.06 59,097.65 44,034.16
Trade payables 9,459.48 10,258.41
Short-term provisions 2.07 2,080.53 3,178.48
Other current liabilities 2.08 30,797.00 13,118.68
101,434.66 70,589.73 227,060.63 188,240.66
ASSETSNon-current assets
Fixed assets 2.09
Tangible assets 39,213.28 18,024.18
Intangible assets 39,649.71 29,749.64
Capital work-in-progress 18,172.72 5,640.38
Intangible assets under development 3,320.37 1,573.90
Goodwill on consolidation 784.99 1,035.04
Non-current investments 2.10 715.20 672.55
Long-term loans and advances 2.12 3,793.88 3,047.81
Other Non current Assets 2.13 9,207.69 13,925.96 114,857.84 73,669.46
Current assets
Current investments 2.14 0.55 4.57
Inventories 2.15 294.51 163.08
Trade receivables 2.16 71,629.69 72,205.73
Cash and bank balances 2.17 8,738.76 20,095.66
Short-term loans and advances 2.18 15,789.25 8,524.35
Other current assets 2.19 15,750.04 13,577.81
112,202.80 114,571.20 227,060.63 188,240.66
For Ramadoss & Co,Chartered Accountants,Firm Regn No. 02879S Sudarshan Venkatraman
Chairman and Chief Executive Officer(K.Ramadoss)Partner Ramanujam SesharathnamMembership No. 019176 Managing Director and Chief Operating Officer
Chennai M GajhanathanFebruary 14, 2014 Director
CONSOLIDATED BALANCE SHEETConsolidated balance sheet as at
TOTAL
TOTAL
` in lakhs
Particulars Note Mar 31, 2013 Mar 31, 2012
Revenue from operations 2.20 249,964.52 227,285.49
Other income 2.21 1,748.42 1,834.12
Total Revenue 251,712.94 229,119.61
Expenses :
Employee Benefit Expenses 2.22 107,541.34 117,806.52
Project related expenses 73,096.30 37,338.33
Operation and other Expenses 2.23 33,215.19 30,797.19
Finance Cost 2.24 10,874.72 4,523.86
Depreciation / Amortisation 18,588.53 6,769.68
Total Expenses 243,316.08 197,235.58
Profit Before Exceptional, Prior Period and Extraordinary items 8,396.86 31,884.03
Exceptional Item - -
Profit Before Prior Period and Extraordinary items 8,396.86 31,884.03
Prior Period Item (0.33) 56.41
Profit Before Extraordinary items 8,397.19 31,827.62
Extraordinary Item - -
Profit Before Tax 8,397.19 31,827.62
Less: Tax expense
Current tax 6,428.28 10,954.90
Less:- Minimum Alternate Tax Credit Entitlement - (0.55)
Net Current Tax 6,428.28 10,954.35
Relating to Previous Years 1.31 -
Deferred tax 1,668.84 336.52
Total Tax Expense 8,098.43 11,290.87
Net profit after tax, before share of profit of associates 298.76 20,536.75
Share of profit of associates - (96.83)
Net profit after share of profit of associates 298.76 20,439.92
No. of Equity shares (Face Value Rs. 5 /- share) 32,892,840 32,892,840
Earnings per equity share:
Basic 0.91 62.14
Diluted 0.91 62.14
Significant Accounting Policies & Notes on AccountsFor Ramadoss & Co,Chartered Accountants,Firm Regn No. 02879S Sudarshan Venkatraman
Chairman and Chief Executive Officer
(K.Ramadoss)Partner Ramanujam SesharathnamMembership No. 019176 Managing Director and Chief Operating Officer
Chennai M GajhanathanFebruary 14, 2014 Director
CONSOLIDATED PROFIT AND LOSS ACCOUNTConsolidated profit and loss account for the year ended
Consolidated Cash flow statement for the year ended ` in lakhs
67.91March 31, 2013
Rs. Rs. Rs. Rs.
A CASH FLOW FROM OPERATING ACTIVITIES
Profit before Taxation 8,397.19 31,827.61
Adjustments for:
Depreciation and Amortisation expenses 18,588.54 6,769.68 Share of Exchange Difference of the Associate - (10.72) Provision for employee benefits 62.95 91.73 Exchange difference on translation of foreign currency cash and cash equivalents (108.91) (604.90) Unrealised foreign currency (gain)/ loss 1,585.52 258.87 Liabilities no longer required written back - (12.72) Bad debts written off 2,079.95 - Prior period adjustments - - Loss/(Profit) on Sale of fixed assets (7.03) (858.03) Pre-operative expenses written off - 32.27 Dividend income - (0.16) Interest expenses 9,295.41 4,050.47 Interest income (730.65) (488.72) Prior period adjustments - -
30,765.79 9,227.77
Operating profit before working capital changes 39,162.97 41,055.39
Adjustments for changes in working capital:(Increase)/Decrease in Inventories (131.43) (72.42) (Increase)/Decrease in Trade Receivables (2,826.54) (13,875.13) (Increase)/Decrease in Short term Loans and advances and other current assets (20,490.23) (4,080.01) (Increase)/Decrease in Long term loans and advances (746.08) (1,507.73) Increase/(Decrease) in Other payables 17,866.86 (2,602.70) Increase/(Decrease) in Trade payables (110.40) 5,379.02 Adjustment of Translation difference on Working Capital (1,878.46) 805.98
- - (8,316.27) (15,952.99)
Cash generated from operations before tax adjustments 30,846.71 25,102.40
Taxes paid (5,302.66) (10,341.69)
Net cash from operating activities 25,544.04 14,760.71
March 31, 2012
Consolidated Cash flow statement for the year ended ` in lakhs
67.91March 31, 2013
Rs. Rs. Rs. Rs.
March 31, 2012
B CASH FLOW FROM INVESTING ACTIVITIES
Purchase of Tangible Assets (33,250.19) (11,362.62) Purchase of Intangible Assets (16,651.07) (8,736.11) Sale of Tangible Assets 50.63 926.88 Interest receieved 665.83 884.08 Increase in Capital work- in- progress (12,532.33) (2,149.88) Investment in subsidiaries - - Dividend income - 0.16 Proceeds/(investment) in Non current Deposits 4,792.47 3,444.51
Net cash used in investing activities (56,924.66) (16,992.98)
C CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from issue of Long-term Borrowings 1,226.55 12,101.05 Repayment of Long-term Borrowings 5,123.59 (3,348.86) Proceeds from Short-term Borrowings 39,699.10 42,176.43 Repayment of Short-term Borrowings (16,646.84) (38,033.11) Dividend paid (inclusive of dividend distribution tax) (248.69) (1,508.34) Interest paid (9,354.83) (3,976.38) Share application money received - - Issue of Common stock in consolidated subsidiary - -
Net cash used in financing activities 19,798.89 7,410.80
Net (Decrease)/Increase in Cash and Cash Equivalents (A+B+C) (11,581.72) 5,178.52
Opening Cash and Cash Equivalents 20,095.66 14,312.24 Exchange difference on translation of foreign currency cash and cash equivalents 224.82 604.90 Closing Cash and Cash Equivalents 8,738.76 20,095.66
Note1. Cash and Cash Equivalents at the beginning of the year
As per Balance Sheet 20,095.66 14,312.24 Less: Margin money deposit accountLess: deposits maturing after ninety days
20,095.66 14,312.24
Cash and Cash Equivalents at the end of the yearAs per Balance Sheet 8,738.76 20,095.66 Less: Margin money deposit accountLess: deposits maturing after ninety days
8,738.76 20,095.66
For Ramadoss & Co,Sudarshan VenkatramanChartered Accountants,Chairman and Chief Executive Officer
Firm Regn No. 02879S
Ramanujam Sesharathnam(K.Ramadoss)Managing Director and Chief Operating OfficerPartner
Membership No. 019176
M Gajhanathan
Chennai Director
February 14, 2014
1 SIGNIFICANT ACCOUNTING POLICIES
1.1 Basis of preparation
1.2 Use of Estimates:
1.3
1.4
1.5
1.6
Revenue recognition
The company derives its revenues primarily from software development services, consultancy services, projects and e-governance projects.
Revenue from software services and projects comprise income from time-and-material contracts, fixed price/fixed time contracts, technical services and annual maintenance contracts. Revenue from time-and-material contracts is recognized on the basis of man hours spent and materials utilized for the development of software and billable in accordance with the terms of the contracts with clients. Revenue from fixed price/fixed time contract is recognized as per the proportionate completion method. Revenue from technical service for software application is recognized on completion of the service.
Cost incurred on unfinished projects that are yet to be billed and earnings in excess of billings are classified as unbilled revenue.
Interest on deployment of surplus funds is recognized on the accrual basis, based on underlying interest rates.
Fixed assets including intangible assets:
Tangible assets are stated at cost, less accumulated depreciation. Cost includes cost of acquisition including material cost, freight, installation cost, duties and taxes, and other incidental expenses, incurred up to the installation stage, related to such acquisition. Intangible assets are stated at cost of acquisition less accumulated amortization.Leased Assets
Assets acquired under finance lease are recognised at the lower of the fair value of the leased assets at inception and the present value of minimum lease payments. Lease payments are apportioned between the finance charge and the outstanding liability. The finance charge is allocated over the period of lease at a constant periodic rate of interest on the remaining balance of the liability.
NOTES ANNEXED TO AND FORMING PART OF THE ACCOUNTS
FOR THE YEAR ENDED 31st MARCH 2013
The financial statements are prepared under historical cost convention on the accrual basis of accounting andcomply with the mandatory accounting standards recommended by The Institute of Chartered Accountants of India(ICAI) and prescribed by the Central Government and comply with the relevant provisions of the Companies Act,1956.
Cash flows are reported using the indirect method whereby profit before tax is adjusted for the effects oftransactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cashflows from regular revenue generating, financing and investing activities of the company are segregated.
All assets and liabilities have been classified as a current and non-current as per the Company's normal operatingcycle and other criteria set-out in the Schedule VI to the Companies Act, 1956. Based on the nature of service andthe time between the acquisition of assets for processing and their realisation in cash and cash equivalents, thecompany has ascertained its operating cycle as 12 months for the purpose of current - non current classification ofassets and liabilities.
The preparation of the financial statements in conformity with the Generally Accepted Accounting Principlesrequires the Management to make estimates and assumptions that affect the reported balances of assets andliabilities and disclosures relating to contingent assets and liabilities as at the date of the financial statements andthe reported amounts of income and expenses during the period. Examples of such estimates include provisions fordoubtful debts, future obligations under employee retirement benefit plans, income taxes, post-sales customersupport and the useful lives of fixed assets and intangible assets.
Borrowing cost
Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalized as part of the cost of such assets.
1.7
1.8
1.9
1.1
1.11
1.12
Depreciation & Amortization
Depreciation is provided on tangible assets in the written down value method, at the rates and in the manner specified by schedule XIV to the Companies Act, 1956. Depreciation is charged from the date of acquisition/installation and on assets sold, up to the date of sale.
The cost and the accumulated depreciation of assets sold, retired or otherwise disposed off is removed from the stated values and the resulting gains and losses are included in the profit and loss account.
Leasehold land is amortized over the lease period of 99 years excluding any refundable deposit.
In respect of businesses acquired, the excess of purchase consideration over the tangible and intangible assets is deemed to have been paid for human resources, clientele and other related benefits such as non-compete agreements and is being amortised over 5 years.
The other intangible assets are being amortised as follows:Computer softwareSoftware for own use over 5 yearsProduct Development Cost over 5 years
Investments
Investments are either classified as current or long term, based on the management’s intention at the time of purchase. Current investments are carried at the lower of cost and market value. Long-term investments are carried at cost less provisions recorded to recognise any decline other than temporary, in the carrying value of investment.
Foreign currency transactions
The company has a US based branch which is an integral operation.
The transactions of the Head Office in foreign currency are accounted at the rates of exchange prevailing on the date of the transactions. The exchange difference between the rates prevailing on the date of transaction and the date of settlement are recognized in the profit and loss account.
Foreign currency denominated monetary assets and liabilities are translated using exchange rate as at Balance sheet date. The gains and losses resulting from such translations are included in the profit and loss account. Non-monetary assets and liabilities denominated in foreign currency are translated at historical rate.
For the purposes of incorporation of the financial statements of the US branch into the Head Office financial statements, all income and expenditure are translated at the average rate, the monetary assets and liabilities translated at the yearend rate and non-monetary assets and liabilities translated at the date of transactions the resultant gain or loss being recognized in the profit and loss account
Research and development cost
Expenditure incurred on research and development is charged off to Profit & Loss Account as incurred till the time the techno-commercial viability is established.
Impairment of assets
The Management periodically assesses using external and internal sources whether there is an indication that an asset may be impaired. All the fixed assets are assessed for any indication of impairment at the end of each financial year. On such indication, the impairment (being excess of carrying value or the recoverable value of asset) is charged to profit and loss account in the respective financial year. The impairment loss recognised in the prior years is reversed where the recoverable value exceeds the carrying value of the asset upon reassessment in the subsequent years.
Retirement benefits
a) Provident Fund (Defined contribution scheme)Eligible employees receive benefit from defined benefit plan covered under the Provident Fund Act. Both employees and the company make monthly contributions. The employer contribution is charged off to Profit & Loss Account as an expense.b) Gratuity (Defined Benefit Scheme)The company provides for a non-funded gratuity, based on actuarial valuation. c) Leave encashment:The leave encashment liability upon retirement would not arise as the accumulated leave is reimbursed every year and accounted at actual.
1.13
1.14 Accounting for Taxes:
The company is accounting for taxes in accordance with the Accounting Standard (AS) 22 - “Accounting for taxes” notified under sub section 3 (c) of section 211 of companies Act 1956. Consequently, the tax provision includes the income tax payable on the estimated taxable income as well as the tax impact arising on account of timing differences, thus ensuring that the income and taxes thereon are matched.
Provisions:
A provision is recognized when an enterprise has a present obligation as a result of past event; it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are not discounted to its present value and are determined based on best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates. Contingencies are recorded when it is probable that a liability will be incurred and the amount can be reasonably estimated.
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED
2.01 SHARE CAPITAL ` in lakhs
Mar 31, 2013 Mar 31, 2012Authorised Capital8,00,00,000 (4,00,00,000) Equity Shares of Rs. 5/- each 4,000.00 4,000.00
4,000.00 4,000.00 Issued, Subscribed & Fully Paid-Up3,28,92,840 (1,64,46,420) Equity Shares of Rs. 5/- each 1,644.64 1,644.64
1,644.64 1,644.64
Reconciliation of the number of equity shares outstanding ` in lakhs except number of shares
Number Rs. Number Rs. Shares outstanding at the beginning of the year 32,892,840 1,644.64 16,446,420 1,644.64
Shares Issued during the year Shares bought back/ other movements during the yearShares outstanding at the end of the year 32,892,840 1,644.64 16,446,420 1,644.64 * Effective date of share split - 03-Jul-2012
Details of shareholders holding more than 5% shares
No. of Shares held
% of Holding No. of Shares held
% of Holding
Sthithi Insurance Services Private Limited 5,964,203 18.1319 6,641,776 40.38Unit Trust of India Investment Advisory Services Ltd NIL NIL 1,150,000 6.99- A/c Ascent India Fund
2.02 Reserves & Surplus ` in lakhs
Mar 31, 2013 Mar 31, 2012
Capital Reserves
Securities Premium AccountOpening Balance 17,842.89 17,842.89 Add : Securities premium credited on Share issue - - Less : Amount utilised on issue of fully paid bonus shares - - Closing Balance 17,842.89 17,842.89
Other Reserves Foreign Currency Translation Reserve
Balance at the beginning of the year 1,780.31 1,780.31 Additions During the year (209.59) -
Foreign Currency Translation Reserve 1,570.72 1,780.31
General ReserveBalance at the beginning of the year 10,719.41 8,719.41 Add : Transferred from Profit & Loss account - 2,000.00
Less : Written Back in Current Year - - Balance at the end of the year 10,719.41 10,719.41
Particulars
The company has only one class of shares referred to as equity shares having a par value of `5/-. Each holder of equity shares is entitled to one
vote per share. All shares are entitled to equal amount of dividend and return of capital in the event of liquidation.
Mar 31, 2013
Mar 31, 2013
Name of Shareholder Mar 31, 2012
Mar 31, 2012
Particulars
(Every Equity share of `10/- each fully paid is sub-divided
into two equity shares of `5/- each fully paid)*
SurplusBalance at the beginning of the year 58,913.04 42,384.57 Add: Net profit after tax transferred from Statement of Profit and Loss 298.76 20,439.91 Add: Previous year adjustments 167.89 - Add : Transfer from Reserves - -
Amount Available for Appropriation 59,379.69 62,824.48 Interim dividend - - Proposed dividend - 1,644.64 Total Dividend - 1,644.64 Dividend Distribution Tax - 266.80 Amount transferred to General Reserve - 2,000.00
- - Surplus Closing Balance 59,379.69 58,913.04
89,512.71 89,255.65
2.03 Long Term Borrowings ` in lakhs
Mar 31, 2013 Mar 31, 2012Term Loans -
Indian rupee loans from Banks 25,994.38 14,664.93 Foreign currency loans from Banks 14,281.94 16,549.90
Other Loans and AdvancesFinance lease obligations 812.18 867.94
41,088.50 32,082.77 The above amount includes Secured borrowings 39,869.92 32,082.77 Unsecured borrowings 1,218.58 - Amount disclosed under head other current liabilities
Indian rupee loans from Banks (5,600.87) (2,338.77) Foreign currency loans from Banks (3,414.52) (3,168.12) Finance lease obligations (770.84) (798.80)
(9,786.23) (6,305.69)
Net Amount 31,302.27 25,777.08
Nature of Security and terms of repayment for secured borrowings
Foreign Currency loans from Banks
1
2
3
Particulars
The above 2 facilities are collaterally secured by other assets of the company.
Foreign currency loan amount of `5951.83 lakhs is secured by the pledge of shares of Nova Msc Sdn Bhd as well as Matrix
Primus Partners Inc, the acquisition of which was funded out of the loan; and a charge on present and future fixed and current
asset of Matrix Primus Partners Inc. The loan is payable in 90 months with a moratorium of 6 months under ballooning
method. Present interest rate for this loan is 5.28% p.a..
Foreign currency loan amount of `4,918.95 lakhs is lakhs secured by first pari passu charges on movable & immovable fixed
assets and first pari passu charges on the current assets of the company. The loan is payable in 11 half yearly installments
with a moratorium of 24 months under step up method. Interest charged for this loan is 4.5% p.a.
Foreign Currency loan amount of `1,137.44 lakhs from ICICI Bank is secured by a guarantee from the parent. This loan
requires the company to meet certain financial ratios and other covenants all of which have been met as at 31st March 2013.
The loan requires that an adequate amount of cash be restricted at all times in an amount that is not less than the minimum
principal and interest payments due in the current and subsequent interest periods. The loan is bearing interest at the
canadian dealer offered rate plus 1.70%, payable by semi-annual principal payment of CAD 12,00,000.
Indian rupee loans from Banks
4
5
6
7
8
9
10
11
12 Particulars of Loan & Interest in default as on 31-Mar-2013.
Amount in LakhsPrincipal Due Period Due Interest Due Period Due
625.00 Mar'13 159.83 Jan'13 - Mar'13100.00 Jan'13 19.67 Jan'13 - Mar'13170.39 Feb'13 168.27 Jan'13
HPFS 476.71 Jun'12 30.77 Jun'12IBM 2,572.45 Apr '12 205.81 Apr '12SREI Equipment Finance Private Limited 999.00 Oct'12 79.70 Oct'12L&T Finance Limited 3,000.00 Sep'12 330.66 Jun'12Indian Overseas Bank 2,500.00 Dec'12 286.03 Apr '12
115.52 Jan'13 180.31 Jan - Mar 2013223.60 Mar'13 102.24 Jan - Mar 2013
96.40 Mar'13 43.54 Jan - Mar 2013ICICI Bank 15.78 Jan - Mar 2013
10,879.06 1,622.61
Union Bank of India - Term LoanUnion Bank of India - Term Loan
Grand Total
Bank NameSyndicate Bank - Corporate LoanUnion Bank of India - Term Loan IIIUnion Bank of India - ECB Loan
Andhra Bank - Term Loan
The 4 facilities referred to in points 1,2,4 & 5 are guaranteed by the two promoter directors of the company in their personal capacity.
Indian Rupee Loan from Banks also includes an amount of `2,007.53 lakhs,obtained from Union Bank of India which has been
secured by Paripassu First Charge Fixed Assets of the Company. Collaterally secured by (i) paripassu second charge on the
current assets of the company and (ii) equitable mortgage of immovable properties of parent company Zylog Systems Limited,
(iii) pledge of shares of ` 493 Lakhs held by the promoters in Parent Company and (iv) additional security of `1,152 Lakhs
exclusively for this advance. Interest is charged PLR plus 2%. The loan is repayable in 20 quarterly instalments of `307.5
Lakhs each along with interest, under step up method from the date of loan, viz 21.04.2009.
Indian Rupee Loan from Banks includes an amount of `10,000 lakhs from Dena bank which carries interest @ 13% p.a. (Rate
of Interest calculated as Base Rate+TP+6.05%-4.25% i.e 13%). The loan is repayable in 48 monthly installments along with
interest, from the date of loan, viz 27-Mar-2012. The loan has been guaranteed by Mr.Sudarshan Venkatraman &
Mr.Ramanujam Sesharathnam in their personal capacity.
The above loan is secured by pledge of 5 lakh shares of the parent company by M/s Sthithi Insurance Services Pvt. Ltd.
Indian rupee loan from banks includes crystallised Foreign currency loan amount of ` 519.54 lakhs which is secured by assets
of a business in USA the acquisition of which was funded by the term loan and fixed assets of the company. The loan is
repayable in 20 equal quarterly installments. Interest is charged @ 12.50% p.a. for this loan.
Indian rupee loan is collaterally secured by pledge of promoters' shares of the company with market value to the extent of
50% of the term loan. The loan is repayable in 8 quarterly installments with a moratorium of 12 months. 13.20% p.a. is
charged at present for this loan.
Indian rupee loan from Banks includes an Amount of `3,571.29 Lakhs obtained from Andhra Bank which has been secured by
Pari passu first charge on Fixed Assets of the Company along with UBI. Collaterally secured by paripassu second charge on the
current assets of the Company. Loan is repayable in 24 quarterly instalments in six and a half years with a moratorium period
of 6 months. Further the loan has been guaranteed by the corporate guarantee of Zylog Systems Limited, the holding
Company and further guaranteed by personal guarantee of Promoter Director of Holding Company.
Term Loan from bank amount to `1.453.82 lakhs has been secured by pledge of shares of Zylog BV Limited and Zylog Systems
FZ LLC (Formerly, Ducont FZ LLC) (which was acquired out of the loans) and guaranteed by the parent company.
Term Loan from bank amount to `141.09 lakhs has been secured by the vehicles purchased out of the loan.
Term loans from Banks amount to ` 34.92 lakhs has been secured by the hypothecation of vehicles purchased out of the loan.
Indian rupee loan is collaterally secured by pledge of 2 lac promoters' shares of the company. The loan is repayable in 8
quarterly installments with a moratorium of 6 months. 12.00% p.a. is charged at present for this loan.
Indian rupee loan amount of '3000.00 lakhs is secured by first pari passu charge on current assets, both present and future.
The loan is repayable in 12 quarterly installments. 13.50% p.a. is charged at present for this loan.
2.04 Long Term Provisions ` in lakhs
Mar 31, 2013 Mar 31, 2012Provision for employee benefits
Superannuation (unfunded)Gratuity 454.52 395.94 Bonus 42.83 -
Others (Income tax for earlier years) 426.03 -
923.38 395.94
2.05 Other Non-Current Liabilities ` in lakhs
Mar 31, 2013 Mar 31, 2012
17.66 21.16
17.66 21.16
2.06 Short term borrowings ` in lakhs
Mar 31, 2013 Mar 31, 2012
Secured Loans:Loans repayble on demand
Indian rupee loans 22,106.01 8,469.98 Foreign currency loans 30,779.34 35,364.87 Cash credit 205.94 199.31
Loans repayble on demandIndian rupee loans 407.06 - Foreign currency loans 75.20 -
Loans and advances from Related partiesOther related parties 5,524.10 -
59,097.65 44,034.16
Security Deposit
Particulars
Particulars
Particulars
Nature of security:
Amount in LakhsBank Name Principal Due Interest Due Period DueSyndicate Bank - Cash Credit - 4.90 Feb'13 - Mar'13Syndicate Bank - PC Loan - 713.88 Jan'13 - Mar'13Syndicate Bank - PCFC Loan - 457.32 Jan'13 - Mar'13State Bank of Mauritius - PC Loan - 170.46 Jan'13 - Mar'13Andhra Bank - Working Capital Loan - 59.72 Jan'13 - Mar'13Reliance Capital Limited 1,100.00 88.72 Sep'12 - Mar'13Federal Bank Limited 2,500.00 277.17 May'12 - Mar'13SIDBI (Unsecured Loan) - Bill discounting Loan 337.06 - Jan'13 - Mar'13
Grand Total 3,937.06 1,772.16
2.07 Short Term Provisions ` in lakhs
Mar 31, 2013 Mar 31, 2012Provision for employee benefits
Superannuation (unfunded)Gratuity 62.82 -
Provision for Taxation (Net off Advance Tax) 1,693.60 1,267.04 Proposed Dividend - 1,644.64 Corporate Dividend Tax - 266.80 Others 324.11 -
2,080.53 3,178.48
7. Indian rupee loan amount of ' 1100.00 lakhs is secured by first pari pasu charge on current assets,book debts and movable property and the
shares are also pledged. The loan is repayable at the end of 90 days.Interest @ 16% p.a. floating rate payable at monthly rests.
8. Indian rupee loan amount of ' 2500.00 lakhs is secured by hypothecation of current assets,both present and future on second
charge basis. The loan is repayable at the end of 6 months. Interest @ 12.97% p.a. payable at monthly rests.
1. The packing credit in foreign currency & in rupees and cash credit facilities are secured by hypothecation of book debts , other
current assets and fixed assets. Further guaranteed by the two promoter directors of the company in their personal capacity.The
Cash Credit is repayable on demand and carries interest @ 15.25 % p.a.
4. A new bill discounting loan of Rs.145 lakhs was availed in Mar'13 which carries Interest @ 15% p.a. repayable in 90 days.
5. Secured Overdraft Working Capital loan from Andhra Bank for Rs. 1414.51 Lakhs is secured by exclusive first charge on the
Current Assets of the Company with margin for calculating the Drawing Power is 30% on the receivables not older than 90 days.
Secured Overdraft Working Capital Loan is collaterally secured by paripassu second charge on the entire fixed assets of the
Company. Further guaranteed by personal guarantee of Promoter Director of Holding Company. Secured Overdraft Working Capital
is repayable on demand and carries interest at 14%.
3. Indian rupee loan from banks includes crystallised Foreign currency loan amount of `7,529 lakhs which carries interest @ 15%
p.a. This loan is secured by hypothecation of book debts , other current assets and fixed assets. Further guaranteed by the two
promoter directors of the company in their personal capacity.
2. Indian Rupee Loan from Banks includes an amount of Rs.950 lakhs which carries interest at 9.5 % p.a. (Rate of Interest like PLR
Plus 2%). The loan is repayable in 4 quarterly installments along with interest, from the date of loan, viz 15-Mar-2013. The loan has
been guaranteed by the Bank guarantee of Union Bank of India.
9. Particulars of Loan & Interest in default as on 31-Mar-2013.
Particulars
6. Andhra Bank Bill Discounting facility has been availed during the year with a Bill Discounting limit of `681.58 lakhs. The balance
outstanding in the said account is Rs.681.58 lakhs.
2.08 Other Current Liabilities ` in lakhs
Mar 31, 2013 Mar 31, 2012
Current Maturities of Long term borrowings 13,114.48 5,506.89 Current Maturities of Finance lease obligations 3,290.00 798.80 Interest accrued but not due on borrowings 122.52 201.75 Interest accrued and due on borrowings 3,394.47 152.71 Income received in advance 199.56 - Advance Received from Customers 134.47 372.99 Payroll Liabilities 3,881.04 2,080.18 Unclaimed Dividend 1,442.38 44.45 With holding and other taxes payable* 1,469.68 379.33
418.32 341.77 Other payables 3,330.08 3,239.81
30,797.00 13,118.68 * With holding and other taxes payable includes ` 266.80 lakhs being Dividend Distribution Tax payable from the parent company
Deferred Revenue
Particulars
2.0
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2.10 Non current Investments (Fully paid) ` in lakhs
Particulars Mar 31, 2013 Mar 31, 2012
Non - Trade Investments quoted in equity instruments (at cost) - of Associate Companies * - 670.33
Nova MSC Sdn(4,28,49,750 equity shares of RM 0.10 each)
'- of OthersNova MSC Sdn * 712.98 - Union Bank of India (2018 equity shares of `110 each) 2.22 2.22
715.20 672.55 * Refer Note 2.26 ( Changes in Group Structure )
Total Non-Current Investments 715.20 672.55
Aggregate amount of Quoted Investments 715.20 672.55 Market Value of Quoted Investments 379.92 597.06
2.11 Deferred Tax Assets / Liablility ` in lakhs
Current Year Charge / (Credit)
Deferred Tax AssetsProvision for Gratuity 7.97 30.76 38.73
7.97 30.76 38.73 Deferred Tax Liabilities
Depreciation and Amortisation 1.53 (593.66) 595.19 Other Deferred Tax Liabilities 2,231.75 2,231.75 -
2,233.28 1,638.09 595.19
Net Deferred Tax Liability 2,225.31 1,668.85 556.46
2.12 Long - Term Loans and Advances ` in lakhs
Particulars Mar 31, 2013 Mar 31, 2012
Capital Advances ( Unsecured and considered good) 36.50 176.21 Security Deposits ( Unsecured and considered good) 612.84 520.29
Other Deposits ( Unsecured and considered good) 184.07 - Others
Prepaid expenses 1,856.71 1,874.45 MAT Credit Entitlement - 0.55 Other advances 1,103.76 476.31
3,793.88 3,047.81
Particulars Mar 31, 2013 Mar 31, 2012
2.13 Other Non - Current Assets ` in lakhs
Particulars Mar 31, 2013 Mar 31, 2012Non Current Bank Deposits
Having Maturity more than 12 Months from date of depositFixed Deposit 7,897.47 11,783.77 Margin Money Deposit Accounts * 133.49 1,159.02
Lien with Bank 1,083.68 982.66 Interest Accrued on Deposits 93.05 0.51
9,207.69 13,925.96
2.14 Current Investments ` in lakhs
Particulars Mar 31, 2013 Mar 31, 2012
Investment in Mutual Funds (Quoted) 0.55 4.57
0.55 4.57
2.15 Inventories ` in lakhs
Particulars Mar 31, 2013 Mar 31, 2012
Stocks - Smart cards 294.51 163.08
294.51 163.08
2.16 Trade Receivables ( Unsecured and considered good) ` in lakhs
Particulars Mar 31, 2013 Mar 31, 2012
12,072.97 - Unsecured, Considered Good 7,854.46 Doubtful 31.79
12,072.97 7,886.25 Less : Allowance for bad & doubtful debts 31.79
Outstanding for a period exceeding six months 12,072.97 7,854.46 -
Outstanding for a period not exceeding six months 59,578.56 64,351.27 Less : Allowance for bad & doubtful debts 21.84 - Net Outstanding for a period not exceeding six months 59,556.72 64,351.27
71,629.69 72,205.73
* Balance of `133.49 lakhs ( `1,159.02 lakhs) as at 31-Mar-2012 was subject to restricted use and held as
security against the borrowings
2.17 Cash and Bank balances ` in lakhs
Particulars Mar 31, 2013 Mar 31, 2012Cash and cash equivalents
Cash on hand 6.17 13.77 Balance with Banks
On Current Accounts 8,248.56 19,436.05 On Deposits 340.77 529.88
Other Bank balancesUnclaimed Dividend account 22.89 44.45
Margin Money Deposit AccountsHaving Maturity more than 3 Months but less than or equal to 12 months 120.37 71.51
Amount disclosed under Non Current assets (Note no 2.13)Lien with Bank 1,083.68 982.66 Margin Money Deposit Accounts
Having Maturity more than 12 Months from date of deposit * 133.49 1,159.02 Fixed Deposit Accounts
Having Maturity more than 12 Months from date of deposit 7,897.47 11,783.77 Less: Amount Disclosed as Non Current Assets (9,114.64) (13,925.45)
8,738.76 20,095.66
2.18 Short - Term Loans and Advances ` in lakhs
Particulars Mar 31, 2013 Mar 31, 2012
Security Deposits ( Unsecured and considered good) 3.33 42.44
Other Deposits ( Unsecured and considered good) 65.19 - Loans and advances to related parties ( Refer Note - - Others
Share Application money in subsidiary - - Prepaid Expenses 6,128.91 5,741.05 Advance tax and withholding taxes (Net of Provisions) - - Others 8,441.60 - Other advances 1,150.22 2,740.86
15,789.25 8,524.35
2.19 Other Current Assets ` in lakhs
Particulars Mar 31, 2013 Mar 31, 2012Unbilled Revenue 15,388.75 13,277.23 Interest Accrued on Deposits 361.29 300.58
15,750.04 13,577.81
* Balance of ` 133.49 lakhs (` 1,159.02 lakhs) is subject to restricted use and held as security against the
2.20 Revenue from operations ` in lakhs
Particulars Mar 31, 2013 Mar 31, 2012Export of software services, products & solutions 240,341.00 221,259.82 Domestic operations 9,623.52 6,025.67
249,964.52 227,285.49
2.21 Other Income ` in lakhs
Particulars Mar 31, 2013 Mar 31, 2012Interest Income on
Bank Deposits 633.88 488.72 Others 44.12 -
Dividend Income Current investments - 0.16
Rental Income 9.12 2.56 Forex gain 973.08 427.93 Profit on Sale of Investments / Assets 7.36 859.95 Miscellaneous Income 39.02 44.08 Bad debts recovery 41.84 - Share of Exchange Difference of the Associated - 10.72
1,748.42 1,834.12
2.22 Employee Benefits Expense ` in lakhs
Particulars Mar 31, 2013 Mar 31, 2012Salaries and incentives 105,845.49 116,275.30 Contribution to Provident fund and other funds 374.22 368.94 Gratuity 124.89 125.35 Reimbursement of expenses 400.75 400.45 Staff welfare expenses 795.99 636.48
107,541.34 117,806.52
2.23 Operation And Other Expenses ` in lakhs
Particulars Mar 31, 2013 Mar 31, 2012Consultancy Charges 3,991.97 6,025.33 Consumables 1,008.63 1,327.06 Directors' sitting fee 2.00 1.60 Power and Fuel 4.09 54.13 Rent 1,581.80 1,580.13 Repairs & Maintenance - Building 334.38 734.51 - Plant & Machinery 68.88 82.75 - Others 557.77 297.38 Vehicle Maintenance 32.66 32.79 Insurance 6,017.18 3,218.67 Rates & Taxes 236.36 249.71 Royalty 71.86 - Printing & Stationery 354.21 197.54 Lease rental Charges 413.93 398.31 Travelling Expenses 943.27 978.97 Communication Expenses 898.10 771.73 Payments to Auditor as
Statutory Audit Fee 144.70 105.12 Tax Audit Fee 10.50 9.92
Legal Expenses & Professional fees 726.97 1,386.74 Electricity 411.24 163.31 Recruitment and Training Expenses 503.82 594.89 Foreign exchange loss - 1,071.62 Visa Processing related expenses 5,307.13 3,513.57 Bad debts, loans & advances written off 2,079.95 54.49 Trade show seminar and Conference Expense 345.02 412.26 Advertisement 292.85 414.97 Marketing Expenses 5,728.63 5,539.15 Commission 105.28 145.18 Entertainment 342.40 315.96 Donations 0.55 7.38 Bank Charges 187.64 858.05 Net Loss on sale on Assets 0.33 1.92 GDR Expenses 184.46 - Miscellaneous Expenses 326.63 252.05
33,215.19 30,797.19
2.24 Finance Cost ` in lakhs
Particulars Mar 31, 2013 Mar 31, 2012Interest 8,167.06 3,917.73 Loan Processing, preclosure & Other Charges 2,707.66 606.13
10,874.72 4,523.86
2.25
2013 2012
Zylog Systems (Europe) Limited UK 100% 100%Vishwa Vikas Services Limited India 100% 100%Zylog Systems (India) Limited India 100% 100%Zylog Systems Asia Pacific Pte Ltd Singapore 100% 100%
Zylog BV Limited British Virgin Islands 100% 100%
Zylog Systems Canada Limited Canada 100% 100%Matrix Primus Partners Inc USA 100% 100%Algorithm Solutions Private Ltd India 100% 100%Zylog Systems FZ LLC (Formerly, Ducont FZ LLC) UAE 100% 100%Zylog Systems Infotech Private Ltd (Formerly, Ducont India Private Limited) India 100% 100%Anodas Software Ltd UK 100% 100%Zylog AG Switzerland Switzerland 100% 100%Zylog Systems Infotech Sdn Bhd Malaysia 99.99% NIL
Investment in Associate
2013 2012Nova Msc Bhd Malaysia NA* 10.64%* Refer Note # 2.26
2.26 Changes in Group Structure
2.27 Earnings Per Share (EPS)
2013 2012Net Income available to Equity Shareholders ( ` in lakhs) 298.76 20,439.91
No of outstanding equity shares - Basic 32,892,840 32,892,840 - Diluted 32,892,840 32,892,840
Earning Per share ` *
- Basic 0.91 62.14 - Diluted 0.91 62.14
During the year our subsidiary in Singapore (viz.) Zylog Systems Asia Pacific Pte Ltd has ceased to exercise significant influence
over its associate company (viz.), Nova MSC Bhd as a result of which it ceases to be an associate. As per AS-23"Accounting for
Associates in Consolidated Financial Statements", such investment should be accounted in accordance with AS-13 "Accounting
for Investments". For this purpose, carrying amount of investment at the date its ceases to be an associate should be regarded as
cost thereafter. Accordingly Nova MSC Bhd has been reclassified as Non-Current Non-trade Quoted Investment with the cost of
the investment as Rs.7,12,98,411/-
Country of incorporation
Percentage of ownership interest as at March 31,
Particulars
* The number of equity shares outstanding has been increased without an increase in resources by way of share split in the ratio
of 2:1. Therefore, as pe AS-20, "Earnings per share", number of equity shares outstanding before the share split is adjusted for
the proportionate change in the number of equity shares outstanding as if the share split had occurred at the beginning of the
earliest period reported. Accordingly, the earnings per share of the previous year is adjusted.
The consolidated financial statements present the consolidated accounts of Zylog Systems Limited., and of the following subsidiaries and associate.
Name of the Subsidiary Company Country of incorporation
Extent of holding as at March 31,
Name of the Subsidiary Company
In determining earnings per share, the company considers the net profit after tax and includes the post tax effect of any
extraordinary / exceptional item. The number of shares used in computing basic earnings per share is the weighted average
number of shares outstanding during the period. The number of shares used in computing diluted earnings per share comprises
the weighted average shares considered for deriving basic earnings per share, and also the weighted average number of equity
shares that could have been issued on the conversion of all dilutive potential equity shares. The components of basic and diluted
earnings per share are as follows.
2.28 Disclosures under “ Accounting Standard (AS)-15 (Revised) – Employee Benefits
2013 2012
Defined Benefit obligation towards gratuity at beginning of the year 283.31 261.47 Current Service Cost 32.14 117.30 Interest Cost 21.86 12.71 Actuarial (gain)/Loss 39.71 -4.70 Benefits Paid (14.47) (3.48) Exchange loss adjustment - 12.60 Defined Benefit obligation at the year end 362.55 395.89
2013 2012Fair value of plan assets - - Present value of obligation 362.55 395.89 Amount recognised in the Balance Sheet * 362.55 395.89
d. Expense recognized during the year
2013 2012Current service cost 32.14 117.30 Interest cost 21.86 12.71 Actuarial (gain)/Loss 39.71 -4.70 Amount recognised in the Profit & Loss Account * 93.71 125.31
e. Investment Details: Not funded
f. Actuarial Assumptions:
2013 20128.00% 8.00%4.00% 4.00%
58.00 58.00 # As per LIC (1975 – 79) Table of Mortality rates
2.29 LeasesFinance lease: Company as lessee
` in Lakhs
Minimum Lease
PaymentsPresent
value of MLP Minimum Lease
PaymentsPresent
value of MLP Not later than one year 244.78 233.52 705.43 674.20
41.89 36.27 225.89 190.72 Later than five years - -
286.67 269.79 931.32 864.91
Inflation rateRetirement age
a) Net carrying amount of assets taken on financial lease as on 31st March 2013 ` 591.47 lakhs (PY ` 985.79 lakhs)
b) Out of the total lease payments of `2,172.12 lakhs (PY `1,005.71 lakhs), Finance charges amounts to ` 260.01 lakhs (PY ` 132.73
lakhs) and the reduction in principal amounts to `1,912.11 lakhs (PY `872.97 lakhs).
c) The minimum lease payments (MLP) and their present value (PV) in respect of these leases are as under:
* This amount will not match with the Gratuity provisions and expenses shown in the Balance Sheet and P & L respectively, since the same includes those of foreign subsidiaries to which AS-15 "Employee Benefits" is not applicable.
As at March 31,
As at March 31,
As at March 31,
Interest rate
` in Lakhs
` in Lakhs
a. Reconciliation of opening and closing balances of Defined Benefit obligation` in Lakhs
As at March 31,
As at March 31,2013 2012
Later than one year and not later than five years
b. Reconciliation of opening and closing balances of fair value of plan assets- Not Funded
c. Reconciliation of fair value of assets and obligations
Operating lease: Company as lesseea) Lease rentals recognized during the year 2013 `29.18 lakhs (PY `58.15 lakhs)
b)Future minimum rentals payable under non-cancellable operating leases are as follows:
` in Lakhs
2013 2012Lease rentals recognised during the year 347.97
59.90 333.55 46.43 1,447.44
- 106.33 2,128.96
2.30 Details of auditors’ remuneration (Net of service tax where applicable)` in Lakhs
2013 2012Statutory audit 144.70 105.12 Tax Audit 10.50 9.92
155.20 115.04
2.31 Related Party Disclosure
a) List of related parties and realtionships
Zylog Systems FZ LLC (Formerly, Ducont FZ LLC)
Zylog Systems Infotech Private Ltd (Formerly, Ducont India Private Limited)
Zylog Systems Infotech Sdn Bhd
b) Transaction with related parties` in Lakhs
2013 2012RemunerationMr. Sudarshan Venkatraman 127.64 119.52 Mr. Ramanujam Sesharathnam 121.37 115.59 Mr. Srikanth Parthasarathy 60.00 60.00
309.01 295.10
Fellow Subsidiary
Algorithm Solutions Private Ltd Subsidiary
Zylog AG Switzerland Fellow Subsidiary
Particulars Year ended March 31,
Zylog BV Limited Subsidiary
Fellow Subsidiary
Fellow Subsidiary
Anodas Software Ltd Fellow Subsidiary
Zylog Systems Canada Limited Subsidiary
Matrix Primus Partners Inc Subsidiary
Vishwa Vikas Services Limited Subsidiary
Zylog Systems (India) Limited Subsidiary
Zylog Systems Asia Pacific Pte Ltd Subsidiary
Mr. Ramanujam Sesharathnam Managing Director & COO
Mr. Srikanth Parthasarathy Executive Director
Zylog Systems (Europe) Limited Subsidiary
Name of the related party RelationshipKey Management Personnel
Mr. Sudarshan Venkatraman Chairman & CEO
Year ended March 31,
As required under Accounting Standard 18 (AS-18), the following are the details of transactions during the year with the related
parties.
As at March 31,
Not later than one yearLater than one year and not later than five yearsLater than five years
Advance Received during the yearMr. Ramanujam Sesharathnam 183.99 - Sthithi Insurance Services Pvt Ltd. 6,270.61 -
6,454.60 -
Advance given during the year Sthithi Insurance Services Pvt Ltd. 930.50 -
930.50 -
2.32
2.33
2.34
2.35 Contigent Liabilities and Commitments 2013 2012
(i) 1,000.00 490.00
-
9,208.22 5,208.18 19.34 19.34 90.40 90.40
2,400.00 2,400.00 14,000.00 14,000.00 7,500.00 7,500.00
2013 2012(ii)
(iii) Nil Nil
38.86
- Income Tax **- Sales Tax- Service Tax
Amounts due to Small Scale Industries under Current Liabilities is based on the information available with the company
regarding the status of the suppliers as defined under the “Micro, Small and Medium Enterprises Development Act, 2006”.
Amounts overdue as on 31st March 2012 to Micro, Small and Medium Enterprises on account of principal and interest is ` Nil ( `
Nil).
Other Current Assets include unbilled revenue of `15,388.75 lakhs ( `13,277.23 lakhs) recognized in relation to efforts incurred
on various contracts until the balance sheet date.
The company has acquired various businesses during the financial years ended 31st March 2003, 31st March 2006, 31st March
2008, 31st March 2009. During the current year ended 31st March 2013, the company has made payment of `3,103.45 Lakhs
towards earnout. The assets acquired in these businesses comprise various resources such as human resources, client lists and
other related benefits and also undertakings by the promoters of the vendors of these businesses not to engage in any business
with clients taken over for a specified period of time. The total amount invested in acquiring these businesses is ` 9,315.50
Lakhs (`6,121.05 Lakhs). The company has adopted the policy of amortizing this amount over a period of 5 years. Accordingly,
the company has amortized a sum of `920.84 Lakhs in the year under review (previous year `795.67 Lakhs).
b) Letter of credits opened by bankers
c) Appeals filed in respect of disputed demands
Contingent Liability not provided for :
OTHER COMMITMENTS
**Demand raised by the Income Tax department against the company by disallowing certain deductions/benefits/ claims made
by the company. In the opinion of the Company most of these demands are not maintainable and accordingly appeals have been
preferred
a) Bank Guarantee/Bond executed by the Company
Estimated amount of contracts remaining to be executed on capital account and not
provided for (net of advance)NIL
d)Corporate gurantee given to:
SBI Frankfurt on behalf of Zylog BVICICI Bank Canda on behalf of Zylog CanadaANDHRA Bank on behalf of ZSIL
2.36
2.37
For Ramadoss & Co,
Chartered Accountants,
Firm Regn No. 02879S Sudarshan Venkatraman
(K.Ramadoss)
PartnerRamanujam Sesharathnam
Membership No. 019176Managing Director and Chief Operating Officer
Chennai M Gajhanathan
February 14, 2014 Director
Previous years’ figures are shown in parenthesis and have been regrouped, recast wherever necessary to conform to the current
Under the provisions of Companies Act 205 A, the payment of dividend declared in the last AGM dt 25th Sep 2012 of Rs 16.44 Cr. Out
of which Rs.2.24 Cr. alone paid till 31st March 2013 and till date. The dividend distribution tax of Rs 2.67 Cr. of the said dividend also
not been paid till 31 St March 2013 and till date.
M Gajhanathan
Chairman and Chief Executive Officer
ZYLOG SYSTEMS LIMITED Registered Office: 155, Thiruvalluvar Salai, Kumaran Nagar, Sholinganallur, Chennai – 600119.
ATTENDANCE SLIP
(To be presented at the entrance)
18TH ANNUAL GENERAL MEETING ON THURSDAY, APRIL 10, 2014 AT 09.00 A.M NAME OF THE ATTENDING MEMBER____________________________________________________________________________________________ (IN BLOCK LETTERS) Folio No.* ___________________________________________________________________________________________________________________________ DP ID No. ____________________________________________________________________________________________________________________________ Client ID No. _________________________________________________________________________________________________________________________ No. of Shares held. ___________________________________________________________________________________________________________________ NAME OF PROXY (IN BLOCK LETTER)____________________________________________________________________________________________ (To be filled in if the proxy attends instead of the member) I, hereby record my presence at the 18th Annual General Meeting of the members of the Company held on Thursday, April 10, 2014 AT 09.00 a.m. at #155, Thiruvalluvar Salai, Kumaran Nagar, Sholinganallur, Chennai – 600119.
______________________________________ Signature of Shareholder / Proxy
* Applicable in case of shares held in Physical Form --------------------------------------------------------------------------------------------------------------------------------
ZYLOG SYSTEMS LIMITED
Registered Office: 155, Thiruvalluvar Salai, Kumaran Nagar, Sholinganallur, Chennai – 600119.
PROXY FORM I/We ____________________________________________________________________________of___________________________________ being a member /
member(s) of Zylog Systems Limited, hereby appoint _______________________________of ________________________________________ failing
him/her _________________________________________________________________of __________________________________________ or failing him/her
__________________________________ of _______________________ as my/our proxy to attend and vote on a poll for me/us and on my/our
behalf at the 18th Annual General Meeting of the Company to be held on Thursday, April 10, 2014 at 09.00 a.m. at #155,
Thiruvalluvar Salai, Kumaran Nagar, Sholinganallur, Chennai – 600119 and at any adjournment thereof:
Folio No. __________________________________ DP ID No. ______________________________ Client ID No. ____________________________________ No. of shares held ____________________________________ Signed this ___________________________ day of __________________________________ 2014. Note:
1. The Proxy Form should be signed by the member across the stamp. 2. A member intending to appoint a Proxy should complete the Proxy From and deposit it at the Company’s Registered
office, at least 48 hours before the time for holding the aforesaid meeting. 3. Members, who hold shares in Demat form to quote their Demat Account No. and Depository Participant (D P) ID No.
Please Affix
Re.1/-
revenue
stamp and
sign across.
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