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o | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
o | SHELL COMPANY PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |
(Translation at Registrant’s name into English)
(Jurisdiction of incorporation or organization)
4, Rajiv Gandhi Salai
Taramani, Chennai 600 113 India
(91) 44-2254-0770, Fax (91) 44 -2254 0771
(Address of principal executive office)
Tidel Park, 2nd Floor, 4, Rajiv Gandhi Salai, Taramani, Chennai 600113 India
(Name,Telephone,Email and/or Facsimile number and Address of Company Contact Person)
Title of each class | Name of each Exchange on which registered | |
American Depository Shares, each represented by one Equity Share, par value Rs.10 per share | Nasdaq Global Market |
Title of each class | Name of each Exchange on which registered | |
None | Not Applicable |
Large accelerated filero | Accelerated filerþ | Non-accelerated filero (Do not check if a smaller reporting company) | Smaller reporting companyo |
US GAAPo | International Financial Reporting Standards as issued by the International Accounting Standard Boardþ | Othero |
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Exhibit 8.1 | ||||||||
Exhibit 12.1 | ||||||||
Exhibit 12.2 | ||||||||
Exhibit 13.1 | ||||||||
Exhibit 13.2 | ||||||||
Exhibit 15.1 | ||||||||
Exhibit 15.2 | ||||||||
Exhibit 15.3 |
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Consolidated Statement of Income
(In thousands of Rupees, except share data and as otherwise stated)
Year ended March 31, | Year ended March 31, | |||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2010 | ||||||||||||||||
Rs | Rs | Rs | Rs | Convenience | ||||||||||||||||
translation into | ||||||||||||||||||||
US$ in | ||||||||||||||||||||
thousands, | ||||||||||||||||||||
except share and | ||||||||||||||||||||
per share data | ||||||||||||||||||||
(Note 1) | ||||||||||||||||||||
Revenue | 6,710,188 | 6,162,161 | 6,006,215 | 5,447,347 | 148,652 | |||||||||||||||
Cost of goods sold and services rendered | (4,096,538 | ) | (3,613,349 | ) | (3,419,122 | ) | (2,939,329 | ) | (90,751 | ) | ||||||||||
Other income | 131,789 | 89,105 | 46,152 | 66,320 | 2,920 | |||||||||||||||
Selling, general and administrative expenses | (2,482,415 | ) | (2,813,425 | ) | (2,434,715 | ) | (2,094,971 | ) | (54,994 | ) | ||||||||||
Depreciation and amortization | (656,797 | ) | (498,872 | ) | (394,337 | ) | (463,780 | ) | (14,550 | ) | ||||||||||
Impairment loss on intangibles including goodwill | (47,269 | ) | (15,200 | ) | — | — | (1,047 | ) | ||||||||||||
Income from legal settlement | 561,120 | — | — | — | 12,431 | |||||||||||||||
Profit / (loss) from operating activities | 120,078 | (689,580 | ) | (195,807 | ) | 15,587 | 2,661 | |||||||||||||
Finance income | 27,994 | 122,565 | 161,783 | 154,192 | 620 | |||||||||||||||
Finance expenses | (293,873 | ) | (251,660 | ) | (57,682 | ) | (25,550 | ) | (6,510 | ) | ||||||||||
Net finance income / (expense) | (265,879 | ) | (129,095 | ) | 104,101 | 128,642 | (5,890 | ) | ||||||||||||
Share of profit of equity accounted investee (net of income tax) | 91,135 | 64,091 | 181,127 | 61,030 | 2,019 | |||||||||||||||
Profit / (loss) before tax | (54,666 | ) | (754,584 | ) | 89,421 | 205,259 | (1,210 | ) | ||||||||||||
Income tax (expense) / benefit | 81,479 | (97,049 | ) | (63,975 | ) | 66,113 | 1,805 | |||||||||||||
Profit / (loss) for the year | 26,813 | (851,633 | ) | 25,446 | 271,372 | 595 | ||||||||||||||
Attributable to: | ||||||||||||||||||||
Equity holders of the Company | 17,027 | (900,574 | ) | (4,696 | ) | 240,841 | 378 | |||||||||||||
Non-controlling interest | 9,786 | 48,941 | 30,142 | 30,531 | 217 | |||||||||||||||
26,813 | (851,633 | ) | 25,446 | 271,372 | 595 | |||||||||||||||
Earnings / (loss) per share | ||||||||||||||||||||
Basic earnings /(loss) per share | 0.33 | (20.77 | ) | (0.11 | ) | 5.64 | 0.01 | |||||||||||||
Diluted earnings/(loss) per share | 0.33 | (20.77 | ) | (0.11 | ) | 5.63 | 0.01 |
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(Rupees in thousands, except share and per share data)
Convenience | ||||||||||||||||||||
translation | ||||||||||||||||||||
into US$ in | ||||||||||||||||||||
thousands, | ||||||||||||||||||||
except share | ||||||||||||||||||||
and per share | ||||||||||||||||||||
data | ||||||||||||||||||||
(see note 2 | ||||||||||||||||||||
(Rupees in thousands, except share and | March 31, | below) | ||||||||||||||||||
per share data) | 2010 | 2009 | 2008 | 2007 | 2010 | |||||||||||||||
Rs | Rs | Rs | Rs | |||||||||||||||||
Balance Sheet data: | ||||||||||||||||||||
Cash and cash equivalents including restricted cash | 878,698 | 1,710,798 | 1,507,327 | 3,071,157 | 19,466 | |||||||||||||||
Net current assets | (46,814 | ) | (175,993 | ) | 1,294,199 | 2,435,290 | (1,038 | ) | ||||||||||||
Total assets | 9,345,824 | 9,145,555 | 7,710,760 | 7,321,891 | 207,040 | |||||||||||||||
Total equity attributable to equity shareholders of the Company | 4,171,092 | 3,851,693 | 4,694,984 | 4,538,906 | 92,403 | |||||||||||||||
Cash Flow Data | ||||||||||||||||||||
Net cash provided by (used in): | ||||||||||||||||||||
Operating activities | 759,802 | (371,556 | ) | (839,869 | ) | 116,262 | 16,832 | |||||||||||||
Investing activities | (896,683 | ) | (1,174,156 | ) | (756,300 | ) | (708,316 | ) | (19,864 | ) | ||||||||||
Financing activities | (354,486 | ) | 968,797 | (585,200 | ) | 847,939 | (7,853 | ) |
Notes | ||
1. | The convenience translation to U.S. Dollars was performed at the reference rate in the City of Mumbai for cable transfers as published by Reserve Bank of India on March 31, 2010 of Rs.45.14 per $1.00, which should not be construed as a representation that those Indian rupee or U.S. dollar amounts could have been, or could be, converted into U.S. dollars or Indian rupees, as the case may be, at this rate or at all. | |
2. | Reference to shares and per share amounts refer to our equity shares. Our outstanding equity shares include equity shares held by a depository underlying our ADSs. Effective September 24, 2002, one ADS represented one equity share. |
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High | Low | |||||||
Month | Rs. | Rs. | ||||||
August 2010 | 47.09 | 45.95 | ||||||
July 2010 | 47.33 | 46.46 | ||||||
June 2010 | 47.28 | 45.64 | ||||||
May 2010 | 47.57 | 44.56 | ||||||
April 2010 | 44.73 | 44.33 | ||||||
March 2010 | 46.02 | 44.94 |
Period | ||||||||||||||||
Fiscal Year Ended | end | Average | High | Low | ||||||||||||
March 31 | Rs. | Rs. | Rs. | Rs. | ||||||||||||
2010 | 45.14 | 47.36 | 50.53 | 44.94 | ||||||||||||
2009 | 50.95 | 45.91 | 52.06 | 39.89 | ||||||||||||
2008 | 40.02 | 40.13 | 43.05 | 38.48 | ||||||||||||
2007 | 43.10 | 45.12 | 46.83 | 42.78 |
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• | continue to develop and upgrade our technology; |
• | maintain and develop strategic relationships with business partners; |
• | offer compelling online services and content; |
• | the range of corporate network/data services provided by us and the usage thereof by our customers; | ||
• | the number of subscribers to our ISP services and the prevailing prices charged. | ||
• | advertising revenue generated by our online portal services. | ||
• | the timing and nature of any agreements we enter into with strategic partners of our corporate network/data services division; |
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• | services, products or pricing policies introduced by our competitors; | ||
• | capital expenditure and other costs relating to our operations; | ||
• | the timing and nature of our marketing efforts; | ||
• | our ability to successfully integrate operations and technologies from any acquisitions, joint ventures or other business combinations or investments; | ||
��� | the introduction of alternative technologies; and | ||
• | technical difficulties or system failures affecting the telecommunication infrastructure in India, the Internet generally or the operation of our websites. |
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• | Such projects may be subject to a higher risk of reduction in scope or termination than other contracts due to political and economic factors such as changes in government, pending elections or the reduction in, or absence of, adequate funding; |
• | Terms and conditions of government contracts tend to be more onerous than other contracts and may include, among other things, extensive rights of audit, more punitive service level penalties and other restrictive covenants. Also, the terms of such contracts are often subject to change due to political and economic factors; |
• | Government contracts are often subject to more extensive scrutiny and publicity than other contracts. Any negative publicity related to such contracts, regardless of the accuracy of such publicity, may adversely affect our business or reputation; |
• | Participation in government contracts could subject us to stricter regulatory requirements, which may increase our cost of compliance; and |
• | Such projects may involve multiple parties in the delivery of services and require greater project management efforts on our part. Any failure in this regard may adversely impact our performance. |
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• | altering our Articles of Association; | ||
• | issuing additional shares of capital stock, except for pro rata issuances to existing shareholders; | ||
• | commencing any new line of business; and | ||
• | commencing a liquidation. |
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• | perception of the level of political and economic stability in India; | ||
• | actual or anticipated variations in our quarterly operating results; | ||
• | announcement of technological innovations; | ||
• | conditions or trends in the corporate network/data services, Internet and electronic commerce industries; | ||
• | the competitive and pricing environment for corporate network/data services and Internet access services in India and the related cost and availability of bandwidth; | ||
• | the perceived attractiveness of investment in Indian companies; | ||
• | acquisitions and alliances by us or others in the industry; | ||
• | changes in estimates of our performance or recommendations by financial analysts; | ||
• | market conditions in the industry and the economy as a whole; | ||
• | introduction of new services by us or our competitors; | ||
• | changes in the market valuations of other Internet service companies; | ||
• | announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments; | ||
• | our failure to integrate successfully our operations with those of any acquired companies; | ||
• | additions or departures of key personnel; and | ||
• | other events or factors, many of which are beyond our control. |
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• | our ability to attract and retain advertisers at profitable rates in light of intense competition; |
• | our ability to generate and continue to grow a large community of users with demographics attractive to advertisers; |
• | advertisers’ acceptance of the Internet as an effective and sustainable medium; |
• | the effectiveness of our advertising delivery, tracking and reporting systems; and |
• | our ability to adapt, including technologically, to new forms of Internet advertising |
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• | inconsistent quality of service; | ||
• | the need to deal with multiple and frequently incompatible vendors; | ||
• | inadequate legal infrastructure relating to electronic commerce in India; | ||
• | a lack of security of commercial data, such as credit card numbers; and | ||
• | very few Indian companies accepting credit card numbers over the Internet. |
• | All Internet service providers shall provide adequate information to subscribers regarding Internet/broadband services being offered and marketed by them. |
• | All Internet service providers shall provide information regarding contention ratios or the number of users competing for the same bandwidth, adopted by them to provide Internet/broadband service in their tariff plans submitted to TRAI, manual of practice, call centers and on their websites |
• | All Internet service providers shall quarterly publish contention ratio for different Internet/broadband services on their website to facilitate subscribers to take informed decision. |
• | All Internet service providers must use the contention ratios better than specified ratios for different services to ensure sufficient bandwidth for providing good quality of service to their subscribers. |
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• | Corporate Network/Data Services. We offer end-to-end network, hosting, application and security services that provide our corporate customers with comprehensive Internet and private network access. Our services enable our corporate customers to offer a full range of business-to-business and electronic commerce related services. We provide NLD (National Long Distance) and ILD (International Long Distance) services through our network. We carry voice traffic, both national and international, using the IP back-bone and deliver voice traffic to Direct Inter-connect Operators. We also provide managed infrastructure services and managed security services in all aspects of infrastructure services, network security and hosting, with digital certificates based authentication service and VPN solutions. We have launched system integration service during the year 2009-10. We are the first service provider in India to be ISO 9001:2000 certified in network operations, data center operations and customer relationship management. |
• | Internet Access Services. We offer public Internet access to consumers through a retail chain of e-ports (formerlyiway)cybercafés. We also have agreements with certain cable television operators through which we offer Internet access through cable. As of March 31, 2010, we had approximately 0.3 million retail Internet access subscribers. |
• | Online Portal Services. We operate online portals, such aswww.sify.com,www.samachar.com andwww.sifymax.in, that function as principal entry points and gateway for accessing the Internet by providing useful web-related services and links. We also offer related content sites specifically tailored to Indian interests worldwide. |
• | Others.We facilitate web based learning for various organizations by digitizing and uploading content to facilitate the same. We also provide remote infrastructure management services such as Data center management, Network management, Security management and Desktop management to support the clients from offshore command centers, on a 24 x 7 x 365 basis. |
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• | End-to-end network solutions for business customers.We provide our business customers with a comprehensive range of Internet, connectivity, security and consulting, hosting and managed service solutions complemented by a broad base of web-based business applications. Our corporate services range from dedicated Internet access, virtual private networks, security, web implementation, electronic commerce solutions and web hosting. Our end-to-end solutions enable our corporate customers to address their networking and data communication needs efficiently without having to assemble products and services from different value-added resellers, Internet service providers and information technology firms. |
• | National private Internet protocol network backbone and Wireless delivery on the last mile. We operate a large national Internet protocol data network in India. As of March 31, 2010, we owned and operated 607 points of presence serving more than 550 towns and cities across India. Our network provides the platform to deliver Internet access and the backbone to provide a full range of corporate network/data services to consumers. A significant portion of our last mile delivery for corporates, and almost the entire iway cybercafé network and hi-speed / broadband delivery to homes, is on the wireless mode, thereby enabling us to implement and deliver superior services compared to the wire line medium. |
• | Internet content and electronic commerce websites customized for the Indian market. We view the Indian market as a series of specific market segments with unique cultural and topical interests, rather than an extension of a homogeneous, worldwide Internet market. We have assembled a team of India-based employees familiar with the local culture, language and business environments in our markets to develop Internet content and electronic commerce websites tailored for the Indian market. We regularly incorporate new and original third-party content suited to our local and regional audiences to enhance our customers’ online experience and to attract new users both within India and abroad. As a result of our local market knowledge, we are able to place contents in our websites which will attract more users to our websites and to create brand awareness for our SifyOnlineaccess service. |
• | Managed Infrastructure services and Managed Security Services. We have customer engagements in all aspects of infrastructure services, networks security and hosting, with digital certificates based authentication service. We have experience in providing information assurance and compliance certification in accordance with frameworks such as Committee of Sponsoring Organizations of the Treadway Commission (COSO) / Control Objectives for Information and related Technology (COBIT). We believe that our managed infrastructure and security services utilise our experience and skill sets to provide constant value to our customers, better service levels and reduced costs. We constantly look at ways to efficiently manage customer assets remotely thus providing focused superior service at lower cost. |
• | Invest in the continued enhancement and expansion of our network infrastructure to support customer growth, enter into new markets and accommodate increased customer usage.We intend to continue to increase the capacity and geographic reach of our network in order to support subscriber growth, enter new markets and accommodate increased customer usage. We are committed to using proven technologies and equipment and to providing superior network performance. We have deployed asynchronous transfer mode, or ATM, switches on nine points of presence along our network. The rest of our network is based on Internet Protocol, or IP, and we are the first Indian service provider to have made our network Multi Protocol Label Switching (MPLS) compliant. As of March 31, 2010, we have acquired adequate capacity of bandwidth lines, all from major telecommunications companies, which ensures that there is an assured supply of bandwidth service being provided to Sify’s customers without any disruptions. We have also leased intercity links from multiple suppliers including BSNL, Bharti, Reliance and Power Grid corporation, such that each one of our nodes is accessible from at least two other nodes, if not by two long distance operators. We believe that as the size and capacity of our network infrastructure grows, its structure and national coverage will create economies of scale. Being vendor neutral, we are able to procure bandwidth in a cost effective manner. Over the past five years we have designed and built four data centers in Mumbai, Chennai, Bangalore and Airoli. We intend to invest in additional data centers, and are currently building a data center at Noida near New Delhi. |
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• | Increase penetration in our existing markets by expanding awareness of the “Sify” brand name to capitalize on our first mover advantage in India.We intend to capitalize on our first-to-market advantage in India to establish national service and a brand name in advance of other private competitors. As of March 31, 2010, we had approximately 0.3 million retail Internet subscribers and 1,227 operative cybercafés, of which 6 were owned by us and 1,221 were franchised. Approximately 99% of thesee-portsare on broadband, which provides the user with significantly faster access speeds. Our marketing strategy includes print and radio advertising, direct mailing campaigns targeting personal computer owners and operating “cybercafés.” We are also actively promoting our broadband services to homes through cable television operators. As of March 31, 2010, we have more than 1,967 cable television operators across 203 cities in India. We believe that increased focus by GOI on delivery of broadband services, availability of broadband content, reduced cost of personal computers coupled with increased purchasing capacity of the middle class in India will drive this business forward in the future. We are also continuously working on better alternative technologies to overcome the last mile challenges and to offer superior connectivity to homes. |
• | Expand our services with new technologies to enable our customers to use the Internet more effectively.We continually seek to expand the breadth of our service offerings with new technologies. Our cybercafés prominently display the Sify and SifyOnlinebrands and offer a full range of our Internet connectivity services. We have previously introduced a number of other services, including VoIP, video conferencing, e-mail designed for regional Indian dialects, a user customized portal site and micro-payments. |
• | Provide more value added services by leveraging on the rapid growth of wireless Internet and mobile services in India and strengthen our Internet portal with more content tailored to Indian interests worldwide.Our portalswww.sify.comandwww.samachar.com, function as initial gateways to the Internet, the user’s starting point for web browsing and other Internet services, for our consumer Internet service provider subscribers and cybercafé users. We believe that our portals are media rich and user friendly, and the portals are interactive websites offering hyperlinks to a wide variety of websites and services, including our own websites. Our websites cater to a variety of Indian interests within and outside of India. To achieve our goal of developing the premier Internet portal focused on the Indian market, we intend to continue to expand and improve the quality ofwww.sify.com, and are developing additional content oriented towards topical and cultural interests of Indians worldwide. |
• | Expand our customer distribution channels through strategic alliances to take advantage of the sales and marketing capabilities of our strategic partners.We intend to continue to expand our customer acquisition channels, for both our consumer Internet access and corporate network/data services. We have arrangements with leading personal computer manufacturers to bundle our SifyOnlineInternet access service with the sale of their personal computers in India. |
• | Pursue selective strategic investments, alliances and acquisitions to expand our customer base, increase utilization of our network and add new technologies to our service mix.We believe that our growth can be supplemented by selective acquisitions of complementary businesses. We may seek to expand our market presence in our corporate network business through the acquisition of web hosting, data center, web implementation and/or systems integration companies serving India, the United States or other markets. We will also consider acquisitions of Internet service providers that have a significant or growing customer base in our current or targeted markets. |
• | Expand into international markets for providing managed network services.Our network and application level support can be provided remotely with a minimum of on-site presence. We are seeking to provide these services to international markets. The tools utilized to provide these services were developed in-house on Linux/open source platforms, and we plan to upgrade these tools in the future to meet customer requirements. We expect our expertise in network management, to enable us to perform these services to international customers at lower costs. We also intend to provide managed security solutions, including monitoring and vulnerability assessment, in addition to managed firewall and intrusion detection services. |
• | Superior end-user performance and customer support.We believe that we provide a high level of customer service, network performance and technical support to maximize customer satisfaction. A significant number of our employees are engaged in our customer service or technical support departments, which operate 24-hours-a-day, seven-days-a-week. Our network engineers continually monitor network traffic and congestion points to deliver high quality consistent network performance. Our backend processes are ISO 9001:2000 compliant for network operations, data center operations and customer care. Our strategy of providing superior network performance and customer service is designed to result in significant customer growth from referrals and industry recognition. |
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• | SiteConnect ™ which offers site-to-site managed MPLS-enabled IPVPN solutions for securely connecting regional and large branch offices within India to the corporate Intranet. | ||
• | GlobalSite Connect, an international site-to-site managed MPLS-enabled IPVPN solution, is used for securely connecting international branch offices to the corporate offices. It provides connectivity anywhere in the world through Sify’s alliances and partnerships with global overseas service providers such as Global Crossing (GC), Asia Net.Com (ANC), and PCCW Global to name a few. | ||
• | ExpressConnect, which offers a premium range of high-performance Internet bandwidth solutions for connecting regional offices, branch offices and remote locations to the corporate network. These solutions complement our SiteConnect range of MPLS enabled IPVPN solutions, provide high-speed bandwidth in those situations where basic connectivity and cost are the top concerns. | ||
• | RoamConnect, is our national and international remote access VPN, which is used for securely connecting employees, while they are traveling, to the corporate intranet. RoamConnect features “single number access” to SifyNet from anywhere in the country and provides access from anywhere in the world through Sify’s alliances with overseas service providers such as Verizon, IPASS and Fiberlink. | ||
• | PartnerConnect is our remote access VPN offering, for providing secure and restricted dial-up access to business partners such as dealers, distributors and suppliers to the corporate extranet. |
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• | The finance channel of Sifyhttp://sify.com/finance/ covers the entire spectrum of equity markets, business news, insurance, mutual funds, loans, SME news and a host of paid and free financial services. |
• | The sports channel http://sify.com/sports/ covers the entire gamut of Indian and international sports with special focus on cricket. Comscore has recently acknowledged Sify Sports as the fastest growing sports site (horizontal) in India with 345% growth YOY. |
• | We also host WWE updates as a standalone service http://wwe.sify.com/ for users. |
• | The food channel www.bawarchi.com focuses on Indian recipes and cooking and is especially popular among non-resident Indians (NRIs) audiences with over 90% of its content being user generated |
• | Our NRI news portal,www.samachar.com, focuses on Indian news and allows NRIs to stay connected to India by aggregating news from across all popular newspapers and other news portals. This portal provides a range of news in English and five Indian languages. Apart from Samachar we have another India targeted news channel http://sify.com/news/ which offers national and international general, political and offbeat news. |
• | The online shopping mall http://shopping.sify.com/, stocks products from India’s leading brands and products. We believe that it offers competitive prices and a secure and convenient method of payment. Users can buy using their credit or debit card, pay cash on delivery or send a check. |
• | Movies channel on Sify http://sify.com/movies/ is one of the key channels which offer updates from Bollywood/ Hollywood and all regional film industries. The content includes movie reviews, industry news, video galleries, photo galleries, downloads (photos) etc. |
• | Games channel of Sify http://games.sify.com/ offers multiple scoring non scoring games. Games include cricketing games, racing games, football specific games etc. |
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• | Internet access services, |
• | IP/ MPLS Virtual private networks, |
• | Internet based Voice services |
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• | Larger production and technical staff; | ||
• | Greater name recognition and larger marketing budgets and resources; and | ||
• | Substantially greater financial, technical and other resources. |
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• | make recommendations on (i) the need and timing for the introduction of new service providers, (ii) the terms and conditions of licenses granted to service providers, (iii) the revocation of licenses for non-compliance, (iv) measures to facilitate competition and promote efficiency in the operation of telecommunications services so as to facilitate growth in such services, (v) technological improvements in the services provided by service providers, (vi) the type of equipment to be used by service providers, (vii) measures for the development of telecommunications technology and the telecommunications industry and (viii) the efficient management of the available spectrum; |
• | discharge the following functions: (i) ensure compliance of the terms and conditions of licenses, (ii) fix the terms and conditions of interconnectivity between service providers, (iii) ensure technical compatibility and effective interconnection between service providers, (iv) regulate revenue sharing arrangements between service providers, (v) establish standards of quality of service, (vi) establish time periods for providing local and long distance telecommunications circuits between service providers, (vii) maintain and keep for public inspection a register of interconnect agreements and (viii) ensure effective compliance of universal service obligations; |
• | levy fees and other charges at such rates and in respect of such services as may be determined by regulation; and |
• | perform such other functions as may be entrusted to it by the Government of India or as may be necessary to carry out the provisions of the Telecom Regulatory Authority of India Act. |
• | to call on service providers to furnish information relating to their operations; |
• | to appoint persons to make official inquiries; |
• | to inspect the books of service providers; and |
• | to issue directives to service providers to ensure their proper functioning. |
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Fiscal | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
% | % | % | ||||||||||
Revenues | 100 | 100 | 100 | |||||||||
Cost of goods sold and services rendered | 61.05 | 58.64 | 56.92 | |||||||||
Other income/(expense) | 1.96 | 1.44 | 0.76 | |||||||||
Selling, general and administrative expenses | 36.99 | 45.65 | 40.53 | |||||||||
Depreciation and amortization expenses | 9.79 | 8.34 | 6.57 | |||||||||
Impairment loss on intangibles including goodwill | 0.70 | 0.25 | — | |||||||||
Income from legal settlement | 8.36 | — | — | |||||||||
Profit /(loss) from operating activities | 1.79 | (11.19 | ) | (3.26 | ) | |||||||
Finance income | 0.42 | 1.99 | 2.69 | |||||||||
Finance expenses | (4.38 | ) | (4.08 | ) | (0.96 | ) | ||||||
Net finance income/(Loss) | (3.96 | ) | (2.09 | ) | 1.53 | |||||||
Share of profit of equity accounted investee | 1.36 | 1.04 | 3.01 | |||||||||
Profit before tax | (0.81 | ) | (12.24 | ) | 1.48 | |||||||
Income tax (expense)/ benefit | 1.21 | (1.57 | ) | (1.06 | ) | |||||||
Net profit/(loss) for the year | 0.40 | (13.81 | ) | 0.42 |
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• | Cash flows were projected based on a 5 year business plan. Cash flows were arrived at as an excess of revenue over the related costs for the same period after giving due effect to non-cash charges and finance charges, if applicable, together with changes in working capital. |
• | Management believes that this forecast period is justified due to the long term nature of the travel business. |
• | The projected revenue growth included in the cash flow projections was 10% during the projected period. Management believes that this growth percentage was reasonable and is in line with the average trend of the industry. |
• | The projected increase in cost was 5% for call center cost and 10% for administrative costs. |
• | A pre-tax discount rate of 22.26% was applied in determining the recoverable amount of the cash generating unit. The discount rate was estimated based on an industry average weighted average cost of capital. |
• | In view of the expected long term market conditions, a terminal year end growth rate of 2% is estimated. |
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2010 | 2009 | 2008 | 2010 | |||||||||||||
Rs. in ’000 | Rs. in ’000 | Rs. in ’000 | US $ in ’000 | |||||||||||||
Profit / (loss) before tax | 26,813 | (851,633 | ) | 25,446 | 595 | |||||||||||
Other adjustments for non-cash items | 952,486 | 856,486 | 298,076 | 21,101 | ||||||||||||
Income taxes paid | (164,455 | ) | (108,560 | ) | (168,426 | ) | (3,643 | ) | ||||||||
Net decrease (increase) in working capital | (55,042 | ) | (258,173 | ) | (1,058,940 | ) | (1,221 | ) | ||||||||
Net cash from / (used in) operating activities | 759,802 | (371,556 | ) | (839,869 | ) | 16,832 | ||||||||||
Net cash from / (used in) investing activities | (896,683 | ) | (1,174,156 | ) | (756,300 | ) | (19,864 | ) | ||||||||
Net cash from / (used in) financing activities | (354,486 | ) | 968,797 | (585,200 | ) | (7,853 | ) | |||||||||
Effect of exchange rate changes on cash and cash equivalents | (2,934 | ) | 945 | (98 | ) | (65 | ) | |||||||||
Net increase / (decrease) in cash and cash equivalents | (491,367 | ) | (576,920 | ) | (2,181,369 | ) | (10,885 | ) |
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Payments due by period (Rs 000s) | ||||||||||||||||||||
Less | More than 5 | |||||||||||||||||||
Contractual Obligations | Total | than 1 year | 1-3 years | 3-5 years | years | |||||||||||||||
Long Term Debt Obligations | 449,424 | — | 396,169 | 53,255 | — | |||||||||||||||
Short Term Borrowings | 952,846 | 952,846 | — | — | — | |||||||||||||||
Finance Lease Obligations | 201,317 | 46,086 | 101,284 | 53,947 | — | |||||||||||||||
Non-cancellable Operating Lease obligations | 1,608,509 | 119,871 | 197,404 | 210,486 | 1,080,748 | |||||||||||||||
Proposed Lease Obligations | 2,423,554 | 22,850 | 251,400 | 269,408 | 1,879,896 | |||||||||||||||
Europe India Gateway Obligations | 184,908 | 184,908 | — | |||||||||||||||||
Purchase Obligations | 30,552 | 30,552 | ||||||||||||||||||
Total | 5,851,110 | 1,357,113 | 946,257 | 587,096 | 2,960,644 | |||||||||||||||
• | IFRS 3 (Revised), Business Combinations,as amended, is applicable for annual periods beginning on or after July 1, 2009. This standard was early adopted by the Group as at April 1, 2009. Business Combinations consummated after April 1, 2009 will be recorded under this standard. IFRS 3 (Revised) primarily requires the acquisition-related costs to be recognized as period expenses in accordance with the relevant IFRS. Costs incurred to issue debt or equity securities are required to be recognized in accordance with IAS 39. Consideration, after this amendment, will include fair values of all interests previously held by the acquirer. Re-measurement of such interests to fair value would be carried out through net profit in the statement of comprehensive income. Contingent consideration is required to be recognized at fair value even if not deemed probable of payment at the date of acquisition. | ||
IFRS 3 (Revised) provides an explicit option on a transaction-by-transaction basis, to measure any Non-controlling interest (NCI) in the entity acquired at fair value of their proportion of identifiable assets and liabilities or at full fair value. The first method will result in a marginal difference in the measurement of goodwill from the existing IFRS 3; however the second approach will require recording goodwill on NCI as well as on the acquired controlling interest. Upon consummating a business in future, the company is likely to adopt the first method for measuring NCI. | |||
• | IAS 27, as amended, is applicable for annual periods beginning on or after July 1, 2009. Earlier adoption is permitted provided IFRS 3 (Revised) is also early adopted. This standard was early adopted by the Company as at April 1, 2009. It requires a mandatory adoption of economic entity model which treats all providers of equity capital as shareholders of the entity. Consequently, a partial disposal of interest in a subsidiary in which the parent company retains control does not result in a gain or loss but in an increase or decrease in equity. Additionally purchase of some or all of the non-controlling interests is treated as treasury transaction and accounted for in equity and a partial disposal of interest in a subsidiary in which the parent company loses control triggers recognition of gain or loss on the entire interest. A gain or loss is recognized on the portion that has been disposed off and a further holding gain is recognized on the interest retained, being the difference between the fair value and carrying value of the interest retained. This Standard requires an entity to attribute their share of net profit / loss and reserves to the non-controlling interests even if this results in the non-controlling interests having a deficit balance. Consistent with the provisions of IFRS 3 (Revised), the Group accounted for its acquisition of 26% non-controlling interest in Sify Communications Limited on June 26, 2009 as an equity transaction. Also refer note 40. |
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• | The Company adoptedIAS 1 (revised), “Presentation of Financial Statements”, effective April 1, 2009. The revision aims to improve users’ ability to analyze and compare the information given in financial statements. IAS 1 sets overall requirements for the presentation of financial statements, guidelines for their structure and minimum requirements for their content. The revisions include non-mandatory changes in the titles of some of the financial statements to reflect their function more clearly (for example, the balance sheet is renamed as statement of financial position). The revised IAS 1 resulted in consequential amendments to other standards and interpretations. The Group has applied revisedIAS 1 Presentation of Financial Statements (2007), which has became effective as of April 1, 2009. As a result, the Group presents in the consolidated statement of changes in equity all owner changes in equity, whereas all non-owner changes in equity are presented in the consolidated statement of comprehensive income. Furthermore, the Group has included two statements to display all items of income and expense recognized during the period i.e., a ‘Statement of Income’ and a ‘Statement of Comprehensive Income’. Comparative information has been re-presented so that it also is in conformity with the revised standard. Since the change in accounting policy only impacts presentation aspects, there is no impact on earnings/ loss per share. |
• | IFRIC 18 — ‘Transfer of assets from customers’defines the treatment for property, plant and equipment transferred by customers to companies or for cash received to be invested in property, plant and equipment that must be used to either connect the customer to a network or to provide the customer with ongoing access to a supply of goods or services or to both. The item of property, plant and equipment is to be initially recognized by the Company at fair value with a corresponding credit to revenue. If an ongoing service is identified as a part of the agreement, the period over which revenue will be recognized for that service would be determined by the terms of the agreement with the customer. If the period is not clearly defined, then revenue should be recognized over a period no longer than the useful life of the transferred asset used to provide the ongoing service. This interpretation is applicable prospectively to transfers of assets from customers received on or after July 1, 2009. The Company has adopted this interpretation prospectively for all assets transferred after July 1, 2009. There has been no impact on the Group’s consolidated financial statements as a result of the adoption of this interpretation. |
• | In March 2009, the Amendments to IFRS 7 “Financial Instruments disclosure”, amended certain disclosure requirements in the standard. As a result, entities are required to classify fair value measurements for financial instruments measured at fair value in the statement of financial position, using a three level fair value hierarchy that reflects the significance of inputs used in the measurements. In addition, the amendments enhance disclosure requirements on the nature and extent of liquidity risks to which an entity is exposed. The Amendments to IFRS 7 apply for annual periods beginning on or after January 1, 2009 and provides an exception in the first year of application for providing comparative information. |
• | Improvements to IFRS- In April 2009, the IASB issued “Improvements to IFRSs” — a collection of amendments to twelve International Financial Reporting Standards — as part of its program of annual improvements to its standards, which is intended to make necessary, but non-urgent, amendments to standards that will not be included as part of another major project. The latest amendments were included in exposure drafts of proposed amendments to IFRS published in October 2007, August 2008, and January 2009. The amendments resulting from this standard mainly have effective dates for annual periods beginning on or after January 1, 2010, although entities are permitted to adopt them earlier. In May 2010 the IASB issuedImprovements to IFRS 2010,which comprises 11 amendments to 7 standards. Effective dates, early application and transitional requirements are addressed on a standard-by-standard basis. The majority of the amendments will be effective January 1, 2011. The Company is evaluating the impact, these amendments will have on the Group’s consolidated financial statements. |
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• | In November 2009, the IASB issued IFRS 9, “Financial instruments”, to introduce certain new requirements for classifying and measuring financial assets. IFRS 9 divides all financial assets that are currently in the scope of IAS 39 into two classifications — those measured at amortized cost and those measured at fair value. The standard along with proposed expansion of IFRS 9 for classifying and measuring financial liabilities, de-recognition of financial instruments, impairment, and hedge accounting will be applicable from the year 2013, although entities are permitted to adopt earlier. The Company is evaluating the impact which this new standard will have on the Group’s financial statements. |
• | In November 2009, the IASB issued IFRIC 19, “Extinguishing Financial Liabilities with Equity Instruments”; to introduce requirements when an entity renegotiates the terms of a financial liability with its creditor and the creditor agrees to accept the entity’s shares and other equity instruments to settle the financial liability fully or partially. This interpretation is effective from annual periods beginning on or after July 1, 2010. |
• | In October 2009, the IASB issuedClassification of Rights Issue — Amendment to IAS 32 Financial Instruments: Presentationwith an effective date of February, 2010. |
• | In November 2009, the IASB revisedIAS 24 Related Party Disclosureswith an effective date of January, 2010. |
• | In November 2009, the IASB issuedPrepayments of a Minimum Funding Requirement — Amendments to IFRIC 14 :IAS19 — the Limit on a Defined Benefit Asset, Minimum Funding Requirement and their Interaction, with an effective date of January1, 2011. |
• | Corporate network/data services, which provides Internet, connectivity, security and consulting, hosting, voice and managed service solutions; |
• | Internet access services, from homes and through cybercafes; |
• | Online portal services and content offerings; and |
• | Other services such as development of e-learning software |
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• | the amount of revenue can be measured reliably; |
• | it is probable that the economic benefits will flow to the seller; |
• | the stage of completion at the balance sheet date can be measured reliably; and |
• | the costs incurred, or to be incurred, in respect of the transaction can be measured reliably. |
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• | conducting a market survey and deciding on the best location for the cybercafé or cable head end; |
• | installing the broadband receiver equipment on the roof top of the cybercafé or the cable head end and connecting it to one of Sify’s broadcasting towers; |
• | obtaining the regulatory approvals for clearance of the site for wireless transmission at the allotted frequency range; |
• | installing the wiring from the receiver unit to the individual PCs in the cybercafé or the transmitting equipment in the cable head end; |
• | assisting in obtaining facilities, including computers and interiors for the cybercafés; and |
• | providing the operations manual with instructions and guidelines for running the cybercafé or distributing Internet access through cable network. |
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Name | Age | Designation | ||||
Raju Vegesna | 50 | Chairman, CEO and Managing Director | ||||
Ananda Raju Vegesna | 50 | Executive Director | ||||
C B Mouli (1) | 63 | Director, Chairman & Financial Expert of Audit Committee | ||||
S K Rao (1) (2) (3) | 66 | Director | ||||
T H Chowdary (2) (3) | 78 | Director & Chairman of Compensation & Nominating Committees | ||||
P S Raju (2) | 56 | Director | ||||
S R Sukumara (1) (2) (3) | 65 | Director | ||||
M P Vijay Kumar | 40 | Chief Financial Officer | ||||
C V S Suri | 50 | Chief Operating Officer | ||||
Pijush Kanti Das | 56 | President — Corporate Affairs | ||||
P J Nath | 48 | Executive President — Enterprise Solutions | ||||
Natesh Mani | 50 | President — Consumer Infrastructure Business | ||||
Baskar R Sayyaparaju | 43 | President — International Business | ||||
Aravind Mathur (4) | 46 | Chief Architect — Global Infrastructure Services | ||||
Venkata Rao Mallineni | 42 | Head — Portals and Consumer Marketing | ||||
Pranesh Babu | 44 | Chief Technology Officer | ||||
C R Rao | 50 | Vice President — Head HR & Administration | ||||
David Appasamy (4) | 52 | Chief Communications Officer | ||||
Ajith K N (4) | 41 | Head — HR |
(1) | Member of the Audit Committee. | |
(2) | Member of the Compensation Committee. | |
(3) | Member of the Nominating Committee. | |
(4) | Resigned as of June 30, 2010. |
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Summary Compensation Table | ||||||||
(Rs. Million) | ||||||||
Name | Salary | Bonus | ||||||
C V S Suri | 1.01 | — | ||||||
Bhaskar R Sayyaparaju | 6.20 | — | ||||||
M P Vijay Kumar | 6.34 | — | ||||||
P J Nath | 6.99 | — | ||||||
Natesh Mani | 3.19 | — | ||||||
Pijush Kanti Das | 3.40 | 0.60 | ||||||
Venkat Rao Mallineni | 3.52 | — | ||||||
Pranesh Babu K | 3.35 | 0.72 | ||||||
C R Rao | 3.14 | — | ||||||
Arvind Mathur | 7.66 | — | ||||||
David Appasamy | 2.99 | 0.32 | ||||||
Ajith K N | 2.80 | 0.22 |
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Rs. in | ||||
Name | million | |||
C V S Suri | 0.08 | |||
Bhaskar R Sayyaparaju | 0.30 | |||
M P Vijay Kumar | 0.33 | |||
P J Nath | 0.33 | |||
Natesh Mani | 0.17 | |||
Pijush Kanti Das | 0.17 | |||
Venkat Rao Mallineni | 0.17 | |||
Pranesh Babu K | 0.15 | |||
C R Rao | 0.18 | |||
Arvind Mathur | 0.28 | |||
David Appasamy | 0.14 | |||
Ajith K N | 0.13 |
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• | at least two-thirds of our directors shall be subject to re-election by our shareholders; and |
• | at least one-third of our directors who are subject to re-election shall be up for re-election at each annual meeting of our shareholders. |
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Equity Shares | ||||||||
Beneficially Owned | ||||||||
Beneficial Owner | Number | Percent | ||||||
Raju Vegesna * | 13,902,860 | 26.06 | % | |||||
T. H. Chowdary | — | — | ||||||
C B Mouli | — | — | ||||||
P S Raju | — | — | ||||||
S K Rao | — | — | ||||||
S R Sukumara | — | — | ||||||
Ananda Raju Vegesna | 14,530,000 | 27.24 | % |
* | In addition to the above, Mr Raju Vegesna beneficially owns 578,191 shares through his Family Trust, as a Co Trustee and has voting power. Including this, Raju Vegesna beneficially holds 27.14% of the issued capital of the Company. M/s T H Chowdary, C B Mouli, P S Raju, S K Rao and S R Sukumara do not hold any shares in the Company. |
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Equity Shares | ||||||||
Beneficially owned | ||||||||
Beneficial Owner | Number | Percent | ||||||
Infinity Capital Ventures, LP, 11601 Wilshire Boulevard, Suite 1900, Los Angeles, CA 90025 | 13,902,860 | 26.06 | ||||||
Vegesna Family Trust, LP, 11601 Wilshire Boulevard, Suite 1900, Los Angeles, CA, 90025 | 578,191 | 1.08 | ||||||
Infinity Satcom Universal Private Limited, Visakhapatnam | 14,530,000 | 27.24 |
2007-08 | 2008-09 | 2009-10 | ||||||||||||||||||||||
Name of the shareholder | No. of shares | % | No. of shares | % | No. of shares | % | ||||||||||||||||||
Infinity Capital Ventures, LP, USA | 17,902,860 | 41.81 | 17,902,860 | 41.81 | 13,902,860 | 26.06 | ||||||||||||||||||
Vegesna Family Trust, USA | 578,191 | 1.35 | 578,191 | 1.35 | 578,191 | 1.08 | ||||||||||||||||||
Infinity Satcom Universal Private Limited * | — | — | — | — | 14,530,000 | 27.24 |
• | altering our Articles of Association; |
• | issuing additional shares of capital stock, except forpro rataissuances to existing shareholders; |
• | commencing any new line of business; and |
• | commencing a liquidation. |
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• | On October 12, 2009, Department of Telecommunications (‘DOT’) raised a demand on Sify Technologies for INR 14 million after correcting the arithmetical error in the Assessment letter issued by the DoT. |
• | On February 26, 2010 DOT raised a demand on Sify Communications (erstwhile subsidiary merged with Sify Technologies Limited) for INR 26 million. |
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• | Certain items of income have been considered by DOT as licensed activities for payment of licensee fee as the information was not available to DOT. |
• | Certain items like other income, interest on deposits, gain on foreign exchange fluctuation, profit on sale of assets, provision written back has been considered by DOT as income eligible for licensed activities as against the Company’s claim that they are not liable for license fee. | ||
The Company has responded to the above said demand notices stating that the above demands are not tenable as the demands were not in accordance with the Telecom Disputes Settlement & Appellate Tribunal (‘TDSAT’) Order which has clarified in its Order that the items of income which are liable for license fee and items of income on which license fees are not liable to be paid. However the TDSAT Order has been challenged in Supreme Court by DoT and Associations of service providers and finality would be arrived only after the decision of the Court. The Company currently pays license fee in accordance with the TDSAT Order and Sify believes that it has adequate legal defenses for these demands and the ultimate outcome of these actions will not have a material adverse effect on Sify. |
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High | Low | |||||||
Fiscal year ended | $ | $ | ||||||
March 31, 2010 | 1.76 | 1.59 | ||||||
March 31, 2009 | 5.30 | 0.42 | ||||||
March 31, 2008 | 10.47 | 4.00 | ||||||
March 31, 2007 | 14.78 | 7.43 | ||||||
March 31, 2006 | 14.58 | 3.81 |
High | Low | |||||||
Fiscal year ended March 31, 2009 | $ | $ | ||||||
First Quarter | 5.41 | 3.73 | ||||||
Second Quarter | 3.89 | 1.60 | ||||||
Third Quarter | 2.05 | 0.42 | ||||||
Fourth Quarter | 1.82 | 0.48 |
High | Low | |||||||
Fiscal year ended March 31, 2010 | $ | $ | ||||||
First Quarter | 1.74 | 1.66 | ||||||
Second Quarter | 2.26 | 2.17 | ||||||
Third Quarter | 1.75 | 1.70 | ||||||
Fourth Quarter | 1.76 | 1.59 |
High | Low | |||||||
Month | Rs. | Rs. | ||||||
October 2010 | 2.81 | 1.95 | ||||||
September 2010 | 2.97 | 1.25 | ||||||
August 2010 | 1.50 | 1.22 | ||||||
July 2010 | 1.50 | 1.30 | ||||||
June 2010 | 1.35 | 1.30 | ||||||
May 2010 | 1.44 | 1.38 | ||||||
April 2010 | 1.69 | 1.66 | ||||||
March 2010 | 1.76 | 1.59 |
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1. | To develop and provide Internet service, Internet Telephony, Infrastructure based services, Virtual Private Network and other related data, voice and video services, wide area communication network, value added services on the network, lease or other transfers of network, software, peripherals and related products, and to provide marketing services. |
2. | To provide security products for corporate, carry on the business of consulting, software and hardware, integrated platform(s) for the e-commerce solutions, applications, information technology, security and all other kinds of technology solutions or services, and to acquire, maintain, operate, manage and undertake technology and infrastructure for this purpose. |
3 | To develop, service & sell/lease data based through direct or electronic media, to develop a wide area communication network of sell / lease the network or provide value added services on the network to develop, service, buy / sell computers, software, peripherals and related products to provide marketing services rising direct as well as electronic media; |
4 | To undertake the designing and development of systems and applications software either for its own use or for sale in India or for export outside India and to design and develop such systems and application software for or on behalf of manufacturers, owners and users of computer systems and digital / electronic equipment’s in India or elsewhere in the world; |
5 | To set up and run electronic data processing centres and to carry on the business of data processing, word processing, software consultancy, system studies, management consultancy, techno-economic feasibility studies of projects, design and development of management information systems, share / debenture issues management and / or registration and share/debenture transfer agency; |
6. | To undertake and execute feasibility studies for Computerisation, setting up of all kind of computer systems and digital/electronic equipment’s and the selection, acquisition and installation thereof whether for the Company or its customers or other users; |
7 | To conduct, sponsor or otherwise participate in training programmes, courses, seminar conferences in respect of any of the objects of the Company and for spreading or imparting the knowledge and use of computers and computer programming languages including the publication of books, journals, bulletins, study / course materials, circulars and news-letters; and to undertake the business as agents, stockist, distributors, franchise holders or otherwise for trading or dealing in computer systems, peripherals, accessories, parts and computer consumables, continuous and non-continuous stationery, ribbons and other allied products and things and standard software packages. |
8 | To conduct e-commerce for sale of all kinds of products and services through direct or electronic media as well as on and off line e-commerce including travel related services, buying and selling of products and services / merchandise, software, data information etc., in India and abroad. |
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(a) | no director of the Company can vote on a proposal, arrangement or contract in which he is materially interested; | ||
(b) | the directors of the Company cannot vote on a proposal in the absence of an independent quorum for compensation to themselves or their body; | ||
(c) | each of our directors is entitled to receive a sitting fee not exceeding Rs.20,000 for every meeting of the Board of Directors and each meeting of a Committee of the Board of Directors, as well as all traveling and out-of-pocket expenses incurred in attending such meetings; | ||
(d) | the directors are empowered to borrow moneys through board meetings up to the prescribed limit and beyond that with the approval of the shareholders through a General Meeting; | ||
(e) | retirement of directors are determined by rotation and not based on age limit; and | ||
(f) | no director is required to hold any qualification shares. |
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• | the rate of dividend to be declared may not exceed 10% of its paid up capital or the average of the rate at which dividends were declared by the Company in the prior five years, whichever is less; |
• | the total amount to be drawn from the accumulated profits earned in the previous years and transferred to the reserves may not exceed an amount equivalent to 10% of its paid up capital and free reserves, and the amount so drawn is to be used first to set off the losses incurred in the fiscal year before any dividends in respect of preference or equity shares are declared; and |
• | the balance of reserves after withdrawals shall not fall below 15% of its paid up capital. |
• | amendments of the memorandum of association to alter the objects of the Company and to change the registered office of the Company under section 146 of the Indian Companies Act; |
• | the issuance of shares with differential rights with respect to voting, dividend or other provisions of the Indian Companies Act; |
• | the sale of the whole or substantially the whole of an undertaking or facilities of the Company; |
• | providing loans, extending guarantees or providing a security in excess of the limits allowed under Section 372A of the Indian Companies Act; |
• | varying the rights of the holders of any class of shares or debentures; |
• | the election of a director by minority shareholders; and |
• | the buyback of shares. |
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• | Adopted of audited financials for the year ended March 31, 2010 as per Indian GAAP. |
• | Reappointment of Messers CB Mouli and PS Raju as directors. |
• | Appointment of M/s CKS Associates as statutory auditors in the place of M/s B S R & Co. |
• | Reappointment of Mr Anand Raju Vegesna as executive director. |
• | Enhancement of borrowing powers of the company. |
• | Authority to create security on the assets of the company. |
• | Enhancement of authorised share capital. |
• | Issue of further shares to the promoters group. |
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• | the ADSs must be offered at a price determined by the lead manager of such offering; |
• | all equity holders may participate; |
• | the issuer must obtain special shareholder approval; and |
• | the proceeds must be repatriated to India within one month of the closure of the issue. |
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• | 75% or more of its gross income for the taxable year is passive income; or |
• | on a quarterly average for the taxable year by value (or, if it is not a publicly traded corporation and so elects, by adjusted basis) 50% or more of its assets produce or are held for the production of passive income. |
• | pay an interest charge together with tax calculated at maximum ordinary income rates on “excess distributions” (as that term is defined in relevant provisions of the U.S. tax laws), and on any gain on a sale or other disposition of equity shares or ADSs; |
• | if a “qualified electing fund” election is made (as that term is defined in relevant provisions of the U.S. tax laws), include in their taxable income their pro rata share of undistributed amounts of our income; or |
• | if the equity shares are “marketable” (as that term is defined in relevant provisions of the U.S. tax laws), and a mark-to-market election is made, mark-to-market the equity shares each taxable year and recognize ordinary gain and, to the extent of prior ordinary gain, ordinary loss for the increase or decrease in market value for such taxable year. |
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(i) | a fee not in excess of US $5.00 per 100 ADSs is charged for each issuance of ADS upon deposit of Shares, excluding certain issuances described below; | ||
(ii) | a fee not in excess of US $5.00 per 100 ADSs is charged for each surrender of ADSs, property and cash in exchange for the underlying deposited securities; | ||
(iii) | a fee not in excess of US $2.00 per 100 ADSs for each distribution of cash dividend or other cash distribution pursuant to the deposit agreement; | ||
(iv) | a fee not in excess of US $2.00 per 100 ADSs for the distribution of ADSs pursuant to stock dividends or other free distributions or an exercise of rights; and | ||
(v) | a fee not in excess of $5.00 per 100 ADSs for depositary services. |
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Fee | Amount in $USD | |||
Broker Fee | 52,837.95 | |||
Call Charges | 767.05 | |||
Fee for material related to our Extraordinary General Meeting | 3,342.62 | |||
Internet, telephone and mail charges | 380.26 | |||
Notice mailing | 904.59 | |||
Printing and mailing | 14,136.86 | |||
Processing Fees | 26,759.90 | |||
Processing Fees for Annual meeting | 24,406.54 | |||
Text Conversion charges | 900.00 | |||
Balance credit available | 147.08 | |||
Total amount received | 124,582.85 |
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1) | Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with International Financial Reporting Standards, as issued by the International Accounting Standards Board. Our internal control over financial reporting includes those policies and procedures that: |
• | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets. |
• | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with applicable accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and |
• | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. |
2) | Management assessed the effectiveness of our internal control over financial reporting as of March 31, 2010. |
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3) | Our independent registered public accounting firm, KPMG, has audited the consolidated financial statements included in this Annual Report on Form 20-F, and as part of their audit, has issued their report, included herein, on the effectiveness of our internal control over financial reporting as of March 31, 2010 wherein it is indicated that the Company had a material weakness in internal controls relating to the failure of a control intended to carry out an accounting evaluation of certain transactions relating to the purchase of goods for onward sales. |
• | introduced specific policies to ensure that all transactions relating to purchase of products for onward sales in the System Integration business are subject to a fact specific accounting evaluation to enforce operating effectiveness. |
• | augment the IFRS expertise in our accounting team by imparting specific training to evaluate the trading transactions from a “Gross Versus Net” reporting. |
• | performed an accounting evaluation of all the transactions of purchase of products for onward sales in the Systems and noted that the accounting controls surrounding appropriateness of the “Gross versus Net” reporting are operating effectively. |
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Sify Technologies Limited
November 30, 2010
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Fiscal year ended | ||||||||
Type of Service | march 31,2010 | march 31,2009 | ||||||
(a) Audit Fees | Rs.12.45 million | Rs.11.00 million | ||||||
(b) Audit Related Fees | Nil | Nil | ||||||
(c) Tax Fees | Nil | Nil | ||||||
(d) All Other Fees | Nil | Nil |
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November 30, 2010
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Consolidated Statement of Financial Position
(In thousands of Rupees, except share data and as otherwise stated)
As at March 31, | As at March 31, | |||||||||||||||
Note | 2010 | 2009 | 2010 | |||||||||||||
Rs | Rs | Convenience | ||||||||||||||
translation into | ||||||||||||||||
US$ thousands | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Note 2(c) | ||||||||||||||||
Assets | ||||||||||||||||
Property, plant and equipment | 5 | 3,452,022 | 3,260,914 | 76,474 | ||||||||||||
Intangible assets | 6 | 129,524 | 177,872 | 2,869 | ||||||||||||
Investment in equity accounted investee | 7 | 633,469 | 542,901 | 14,033 | ||||||||||||
Restricted cash | 8 | — | 1,000 | — | ||||||||||||
Lease prepayments | 9 | 273,911 | 311,185 | 6,068 | ||||||||||||
Other assets | 10 | 554,358 | 496,325 | 12,281 | ||||||||||||
Deferred tax assets | 11 | — | 8,524 | — | ||||||||||||
Total non-current assets | 5,043,284 | 4,798,721 | 111,725 | |||||||||||||
Inventories | 12 | 21,488 | 39,088 | 476 | ||||||||||||
Trade and other receivables, net | 13 | 3,195,012 | 2,455,526 | 70,780 | ||||||||||||
Prepayments for current assets | 14 | 191,318 | 128,548 | 4,238 | ||||||||||||
Restricted cash | 8 | 360,909 | 1,329,756 | 7,995 | ||||||||||||
Cash and cash equivalents | 8 | 517,789 | 380,042 | 11,471 | ||||||||||||
Other investments | 15 | — | 13,874 | — | ||||||||||||
Total current assets | 4,286,516 | 4,346,834 | 94,960 | |||||||||||||
Total assets | 9,329,800 | 9,145,555 | 206,685 | |||||||||||||
Equity | 16 | |||||||||||||||
Share capital | 546,332 | 441,018 | 12,103 | |||||||||||||
Share premium | 16,528,621 | 16,375,217 | 366,164 | |||||||||||||
Share based payment reserve | 180,124 | 149,535 | 3,990 | |||||||||||||
Other components of equity | 3,374 | (9,691 | ) | 75 | ||||||||||||
Accumulated deficit | (13,087,359 | ) | (13,104,386 | ) | (289,929 | ) | ||||||||||
Total equity attributable to equity holders of the Company | 4,171,092 | 3,851,693 | 92,403 | |||||||||||||
Non-controlling interest | — | 248,848 | — | |||||||||||||
Total equity | 4,171,092 | 4,100,541 | 92,403 | |||||||||||||
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Consolidated Statement of Financial Position
(In thousands of Rupees, except share data and as otherwise stated)
As at March 31, | As at March 31, | |||||||||||||||
Note | 2010 | 2009 | 2010 | |||||||||||||
Rs | Rs | Convenience | ||||||||||||||
translation into | ||||||||||||||||
US$ thousands | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Note 2(c) | ||||||||||||||||
Liabilities | ||||||||||||||||
Finance lease obligations, other than current installments | 17 | 155,347 | 122,382 | 3,441 | ||||||||||||
Borrowings | 20 | 449,424 | 201,389 | 9,956 | ||||||||||||
Employee benefits | 18 | 54,807 | 64,300 | 1,214 | ||||||||||||
Other liabilities | 19 | 165,800 | 134,116 | 3,673 | ||||||||||||
Total non-current liabilities | 825,378 | 522,187 | 18,284 | |||||||||||||
Finance lease obligations, current installments | 17 | 45,970 | 32,943 | 1,018 | ||||||||||||
Borrowings | 20 | 952,846 | 1,182,770 | 21,109 | ||||||||||||
Bank overdraft | 8 | 1,060,284 | 1,397,083 | 23,489 | ||||||||||||
Trade and other payables | 21 | 1,855,664 | 1,555,230 | 41,109 | ||||||||||||
Deferred income | 22 | 418,566 | 354,801 | 9,273 | ||||||||||||
Total current liabilities | 4,333,330 | 4,522,827 | 95,998 | |||||||||||||
Total liabilities | 5,158,708 | 5,045,014 | 114,282 | |||||||||||||
Total equity and liabilities | 9,329,800 | 9,145,555 | 206,685 | |||||||||||||
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Consolidated Statement of Income
(In thousands of Rupees, except share data and as otherwise stated)
Year ended | ||||||||||||||||||||
Year ended March 31, | March 31, | |||||||||||||||||||
Note | 2010 | 2009 | 2008 | 2010 | ||||||||||||||||
Rs | Rs | Rs | Convenience | |||||||||||||||||
translation into | ||||||||||||||||||||
US$ thousands | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
Note2(c) | ||||||||||||||||||||
Revenue | ||||||||||||||||||||
- Rendering of services | 5,657,140 | 5,519,140 | 5,230,642 | 125,324 | ||||||||||||||||
- Sale of products | 1,053,048 | 643,021 | 775,573 | 23,328 | ||||||||||||||||
Total | 23 | 6,710,188 | 6,162,161 | 6,006,215 | 148,652 | |||||||||||||||
Cost of goods sold and services rendered | ||||||||||||||||||||
- Rendering of services | (3,157,472 | ) | (3,033,798 | ) | (2,721,768 | ) | (69,948 | ) | ||||||||||||
- Sale of products | (939,066 | ) | (579,551 | ) | (697,354 | ) | (20,803 | ) | ||||||||||||
Total | 25 | (4,096,538 | ) | (3,613,349 | ) | (3,419,122 | ) | (90,751 | ) | |||||||||||
Other income | 26 | 131,789 | 89,105 | 46,152 | 2,920 | |||||||||||||||
Selling, general and administrative expenses | 28 | (2,482,415 | ) | (2,813,425 | ) | (2,434,715 | ) | (54,994 | ) | |||||||||||
Depreciation and amortization | 5 & 6 | (656,797 | ) | (498,872 | ) | (394,337 | ) | (14,550 | ) | |||||||||||
Impairment loss on intangibles including goodwill | 6 | (47,269 | ) | (15,200 | ) | — | (1,047 | ) | ||||||||||||
Income from legal settlement | 27 | 561,120 | — | — | 12,431 | |||||||||||||||
Profit / (loss) from operating activities | 120,078 | (689,580 | ) | (195,807 | ) | 2,661 | ||||||||||||||
Finance income | 31 | 27,994 | 122,565 | 161,783 | 620 | |||||||||||||||
Finance expenses | 31 | (293,873 | ) | (251,660 | ) | (57,682 | ) | (6,510 | ) | |||||||||||
Net finance income / (expense) | 31 | (265,879 | ) | (129,095 | ) | 104,101 | (5,890 | ) | ||||||||||||
Share of profit of equity accounted investee | 7 | 91,135 | 64,091 | 181,127 | 2,019 | |||||||||||||||
Profit / (loss) before tax | (54,666 | ) | (754,584 | ) | 89,421 | (1,210 | ) | |||||||||||||
Income tax (expense) / benefit | 11 | 81,479 | (97,049 | ) | (63,975 | ) | 1,805 | |||||||||||||
Profit / (loss) for the year | 26,813 | (851,633 | ) | 25,446 | 595 | |||||||||||||||
Attributable to: | ||||||||||||||||||||
Equity holders of the Company | 17,027 | (900,574 | ) | (4,696 | ) | 378 | ||||||||||||||
Non-controlling interest | 9,786 | 48,941 | 30,142 | 217 | ||||||||||||||||
26,813 | (851,633 | ) | 25,446 | 595 | ||||||||||||||||
Earnings / (loss) per share | 32 | |||||||||||||||||||
Basic earnings /(loss) per share | 0.33 | (20.77 | ) | (0.11 | ) | 0.01 | ||||||||||||||
Diluted earnings/(loss) per share | 0.33 | (20.77 | ) | (0.11 | ) | 0.01 |
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Consolidated Statement of Comprehensive Income
(In thousands of Rupees, except share data and as otherwise stated)
Year ended March 31, | ||||||||||||||||||||
Note | 2010 | 2009 | 2008 | 2010 | ||||||||||||||||
Rs | Rs | Rs | Convenience | |||||||||||||||||
translation | ||||||||||||||||||||
into US$ | ||||||||||||||||||||
thousands | ||||||||||||||||||||
Note 2(c) | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
Profit / (loss) for the year | 26,813 | (851,633 | ) | 25,446 | 595 | |||||||||||||||
Other comprehensive income | ||||||||||||||||||||
Foreign currency translation differences for foreign operations | 1,682 | (1,256 | ) | 163 | 37 | |||||||||||||||
Defined benefit plan actuarial gains / (losses) | 5,508 | (4,346 | ) | (2,816 | ) | 122 | ||||||||||||||
Change in fair value of available for sale investments, transferred to profit or loss | 6,441 | — | — | 142 | ||||||||||||||||
Change in fair value of available for sale investments | — | (5,361 | ) | (1,080 | ) | — | ||||||||||||||
Share of gains and (losses) from equity accounted investees (net of taxes) | (566 | ) | 296 | (9,669 | ) | (13 | ) | |||||||||||||
Income tax on other comprehensive income | — | — | 957 | — | ||||||||||||||||
Other comprehensive income for the year, net of income tax | 13,065 | (10,667 | ) | (12,445 | ) | 288 | ||||||||||||||
Total comprehensive income for the year | 16 | 39,878 | (862,300 | ) | 13,001 | 883 | ||||||||||||||
Attributable to: | ||||||||||||||||||||
Equity holders of the Company | 30,092 | (911,241 | ) | (17,141 | ) | 666 | ||||||||||||||
Non-controlling interest | 9,786 | 48,941 | 30,142 | 217 | ||||||||||||||||
Total comprehensive income/(expense) for the year | 39,878 | (862,300 | ) | 13,001 | 883 | |||||||||||||||
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Consolidated Statement of Changes in Equity
(In thousands of Rupees, except share data and as otherwise stated)
For year ended March 31, 2010
Share | Retained | |||||||||||||||||||||||||||||||
based | Other | earnings / | Non- | |||||||||||||||||||||||||||||
Share | Share | payment | components | (accumulated | controlling | |||||||||||||||||||||||||||
Particulars | capital | premium | reserve | of equity | deficit) | Total | interest | Total equity | ||||||||||||||||||||||||
Balance at April 1, 2009 | 441,018 | 16,375,217 | 149,535 | (9,691 | ) | (13,104,386 | ) | 3,851,693 | 248,848 | 4,100,541 | ||||||||||||||||||||||
Total comprehensive income for the year | — | — | — | 13,065 | 17,027 | 30,092 | 9,786 | 39,878 | ||||||||||||||||||||||||
Transactions with owners, recorded directly in equity | ||||||||||||||||||||||||||||||||
Issue of share capital | 105,300 | 737,537 | — | — | — | 842,837 | — | 842,837 | ||||||||||||||||||||||||
Share options exercised | 14 | 70 | 84 | — | 84 | |||||||||||||||||||||||||||
Share-based payment transactions | — | — | 30,589 | — | — | 30,589 | — | 30,589 | ||||||||||||||||||||||||
Changes in ownership interests in subsidiaries that do not result in a loss of control | ||||||||||||||||||||||||||||||||
Acquisition of non-controlling interest | — | (584,203 | ) | — | — | — | (584,203 | ) | (258,634 | ) | (842,837 | ) | ||||||||||||||||||||
Balance at March 31, 2010 | 546,332 | 16,528,621 | 180,124 | 3,374 | (13,087,359 | ) | 4,171,092 | — | 4,171,092 |
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Consolidated Statement of Changes in Equity
(In thousands of Rupees, except share data and as otherwise stated)
For year ended March 31, 2009
Share | Retained | |||||||||||||||||||||||||||||||
based | Other | earnings / | Non- | |||||||||||||||||||||||||||||
Share | Share | payment | components | (accumulated | controlling | |||||||||||||||||||||||||||
Particulars | capital | premium | reserve | of equity | deficit) | Total | interest | �� | Total equity | |||||||||||||||||||||||
Balance at April 1, 2008 | 441,018 | 16,368,647 | 149,398 | 976 | (12,265,055 | ) | 4,694,984 | 199,907 | 4,894,891 | |||||||||||||||||||||||
Total comprehensive income for the year | — | — | — | (10,667 | ) | (900,574 | ) | (911,241 | ) | 48,941 | (862,300 | ) | ||||||||||||||||||||
Transactions with owners, recorded directly in equity | ||||||||||||||||||||||||||||||||
Share-based payment transactions | — | — | 61,380 | — | — | 61,380 | — | 61,380 | ||||||||||||||||||||||||
Stock options lapsed | — | — | (61,243 | ) | — | 61,243 | — | — | — | |||||||||||||||||||||||
Others | — | 6,570 | — | — | — | 6,570 | — | 6,570 | ||||||||||||||||||||||||
Balance at March 31, 2009 | 441,018 | 16,375,217 | 149,535 | (9,691 | ) | (13,104,386 | ) | 3,851,693 | 248,848 | 4,100,541 |
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Consolidated Statement of Changes in Equity
(In thousands of Rupees, except share data and as otherwise stated)
For year ended March 31, 2008
Share | Retained | |||||||||||||||||||||||||||||||
based | Other | earnings / | Non- | |||||||||||||||||||||||||||||
Share | Share | payment | components | (accumulated | controlling | |||||||||||||||||||||||||||
Particulars | capital | premium | reserve | of equity | deficit) | Total | interest | Total equity | ||||||||||||||||||||||||
Balance at April 1, 2007 | 428,003 | 16,262,096 | 101,540 | 13,421 | (12,266,154 | ) | 4,538,906 | 169,765 | 4,708,671 | |||||||||||||||||||||||
Total comprehensive income for the year | — | — | — | (12,445 | ) | (4,696 | ) | (17,141 | ) | 30,142 | 13,001 | |||||||||||||||||||||
Transactions with owners, recorded directly in equity | ||||||||||||||||||||||||||||||||
Issue of share capital | 12,817 | 99,332 | — | — | — | 112,149 | — | 112,149 | ||||||||||||||||||||||||
Stock options exercised | 198 | 7,219 | (2,757 | ) | — | — | 4,660 | — | 4,660 | |||||||||||||||||||||||
Stock options lapsed | (5,795 | ) | — | 5,795 | — | — | — | |||||||||||||||||||||||||
Share-based payment transactions | — | — | 56,410 | — | — | 56,410 | — | 56,410 | ||||||||||||||||||||||||
Others | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Balance at March 31, 2008 | 441,018 | 16,368,647 | 149,398 | 976 | (12,265,055 | ) | 4,694,984 | 199,907 | 4,894,891 |
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Consolidated Statements of Cash Flows
For the fiscal years ended March 31,
(In thousands of Rupees, except share data and as otherwise stated)
Year ended March 31, | ||||||||||||||||
2010 | 2009 | 2008 | 2010 | |||||||||||||
Rs | Rs | Rs | Convenience | |||||||||||||
translation into | ||||||||||||||||
US$ thousands | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Note 2(c) | ||||||||||||||||
Profit/(loss) for the year | 26,813 | (851,633 | ) | 25,446 | 595 | |||||||||||
Adjustments for: | ||||||||||||||||
Depreciation and amortization | 656,797 | 498,872 | 394,337 | 14,550 | ||||||||||||
Impairment loss on intangibles including goodwill | 47,269 | 15,200 | — | 1,047 | ||||||||||||
Share of profit of equity accounted investee | (91,135 | ) | (64,091 | ) | (181,127 | ) | (2,019 | ) | ||||||||
(Gain) / loss on sale of property, plant and equipment | (2,414 | ) | (828 | ) | 107 | (53 | ) | |||||||||
Provision for doubtful receivables | 121,987 | 84,346 | 131,954 | 2,702 | ||||||||||||
Provision for finance lease receivables | — | 6,929 | — | — | ||||||||||||
Realized loss on sale of investments | 373 | — | — | 8 | ||||||||||||
Stock compensation expense | 30,589 | 61,380 | 56,410 | 678 | ||||||||||||
Net finance (income) / expense | 265,879 | 129,095 | (104,101 | ) | 5,890 | |||||||||||
Income tax expense/(benefit) | (81,479 | ) | 97,049 | 63,975 | (1,805 | ) | ||||||||||
Unrealized (gain)/ loss on account of exchange differences | 703 | 455 | 496 | 16 | ||||||||||||
Amortization of leasehold prepayments | 3,917 | 8,403 | — | 87 | ||||||||||||
Provision for infrastructure costs | — | 10,000 | — | — | ||||||||||||
979,299 | (4,823 | ) | 387,497 | 21,696 | ||||||||||||
Change in trade and other receivables | (585,805 | ) | (314,349 | ) | (678,051 | ) | (12,980 | ) | ||||||||
Change in inventories | 17,600 | (1,337 | ) | (9,066 | ) | 390 | ||||||||||
Change in other assets | (64,112 | ) | 224,625 | (757,472 | ) | (1,420 | ) | |||||||||
Change in trade and other payables | 517,497 | (171,261 | ) | 460,211 | 11,464 | |||||||||||
Change in employee benefits | (3,984 | ) | 17,704 | 7,111 | (88 | ) | ||||||||||
Change in deferred income | 63,762 | (13,555 | ) | (81,673 | ) | 1,413 | ||||||||||
924,257 | (262,996 | ) | (671,443 | ) | 20,475 | |||||||||||
Income taxes paid | (164,455 | ) | (108,560 | ) | (168,426 | ) | (3,643 | ) | ||||||||
Net cash from / (used in) operating activities | 759,802 | (371,556 | ) | (839,869 | ) | 16,832 | ||||||||||
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Consolidated Statements of Cash Flows
For the fiscal years ended March 31,
(In thousands of Rupees, except share data and as otherwise stated)
Year ended March 31, | ||||||||||||||||
2010 | 2009 | 2008 | 2010 | |||||||||||||
Rs | Rs | Rs | Convenience | |||||||||||||
translation into | ||||||||||||||||
US$ thousands | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Note 2(c) | ||||||||||||||||
Cash flows from / (used in) investing activities | ||||||||||||||||
Acquisition of property, plant and equipment | (759,435 | ) | (1,170,905 | ) | (849,091 | ) | (16,824 | ) | ||||||||
Expenditure on intangible assets | (220,299 | ) | (165,247 | ) | (30,238 | ) | (4,880 | ) | ||||||||
Proceeds from sale of property, plant and equipment | 5,979 | 2,393 | 5,630 | 132 | ||||||||||||
Net investment in leases | — | 5,111 | 16,552 | — | ||||||||||||
Finance income received | 57,130 | 154,492 | 121,162 | 1,266 | ||||||||||||
Short term investments (net) | 19,942 | — | (20,315 | ) | 442 | |||||||||||
Net cash from / (used in) investing activities | (896,683 | ) | (1,174,156 | ) | (756,300 | ) | (19,864 | ) | ||||||||
Cash flows from / (used in) financing activities | ||||||||||||||||
Proceeds from issue of share capital (including share premium) | 84 | — | 116,809 | 2 | ||||||||||||
Proceeds from / (repayment) of borrowings (net) | 8,409 | 1,227,733 | (643,574 | ) | 186 | |||||||||||
Finance expenses paid | (318,723 | ) | (249,908 | ) | (57,679 | ) | (7,061 | ) | ||||||||
Repayment of finance lease liabilities | (44,256 | ) | (9,028 | ) | (756 | ) | (980 | ) | ||||||||
Net cash from / (used in) financing activities | (354,486 | ) | 968,797 | (585,200 | ) | (7,853 | ) | |||||||||
Net increase / (decrease) in cash and cash equivalents | (491,367 | ) | (576,920 | ) | (2,181,369 | ) | (10,885 | ) | ||||||||
Cash and cash equivalents at April 1 | 312,715 | 888,690 | 3,070,157 | 6,927 | ||||||||||||
Effect of exchange fluctuations on cash held | (2,934 | ) | 945 | (98 | ) | (65 | ) | |||||||||
Cash and cash equivalents at March 31 | (181,586 | ) | 312,715 | 888,690 | (4,023 | ) | ||||||||||
Refer note 3 (c) and note 8 for the composition of cash and cash equivalents. | ||||||||||||||||
Supplementary information | ||||||||||||||||
Additions to property, plant and equipment represented by finance lease obligations | 99,950 | 158,962 | 8,166 | 2,214 |
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of Rupees, except share data and as stated otherwise)
• | Available for sale financial assets are measured at fair value |
• | Derivative financial instruments are measured at fair value |
• | Financial instruments at fair value through profit or loss are measured at fair value. |
• | The defined benefit asset is recognised as the net total of the plan assets, plus unrecognised past service cost and unrecognised actuarial losses, less unrecognized actuarial gains and the present value of the defined benefit obligation. |
• | In relation to lease prepayments, the initial fair value of the security deposit, is estimated as the present value of the refundable amount, discounted using the market interest rates for similar instruments. The difference between the initial fair value and the refundable amount of the deposit is recognized as a lease prepayment. |
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• | Measurement of the recoverable amounts of cash-generating units containing goodwill (Note 6) |
• | Useful lives of property, plant and equipment (Note 3 e and Note 5) |
• | Useful lives of intangible assets (Note 3 f and Note 6) |
• | Lease classification (Note 3 g, 9, 17 and 31) |
• | Utilization of tax losses (Note 11) |
• | Measurement of defined employee benefit obligations (Note 18) |
• | Measurement of share-based payments (Note 30 and Note 31) |
• | Valuation of financial instruments (Note 3 c, 4, 38 and 39) |
• | Provisions and contingencies (Note 3 m and 35) |
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Estimate of useful life | ||||
in years | ||||
Buildings | 28 | |||
Plant and machinery comprising computers, servers etc. | 2 – 5 | * | ||
Plant and machinery comprising other items | 8 | * | ||
Furniture and fittings | 5 | |||
Office equipment | 5 | |||
Motor vehicles | 3 – 5 | |||
* | Revised during the year ended March 31, 2008. Also refer note 5. | |
Depreciation methods, useful lives and residual values are reviewed at the reporting date. |
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Estimate of useful life | ||||
in years | ||||
Software | Not exceeding 3 years | |||
Technical know-how | 5 years | |||
License fees | 20 years | |||
Portals and web development cost | 5 years | |||
Customer related intangibles | 5 years | |||
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• | conducting a market survey and deciding on the best location for the cybercafé or cable head end; | ||
• | installing the broadband receiver equipment on the roof top of the cybercafé or the cable head end and connecting it to one of Sify’s broadcasting towers; | ||
• | obtaining the regulatory approvals for clearance of the site for wireless transmission at the allotted frequency range; | ||
• | installing the wiring from the receiver unit to the individual PCs in the cybercafé or the transmitting equipment in the cable head end; | ||
• | assisting in obtaining facilities, including computers and interiors for the cybercafés; and | ||
• | providing the operations manual with instructions and guidelines for running the cybercafé or distributing Internet access through cable network. |
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• | IFRS 3 (Revised), Business Combinations,as amended, is applicable for annual periods beginning on or after July 1, 2009. This standard was early adopted by the Group as at April 1, 2009. Business Combinations consummated after April 1, 2009 will be recorded under this standard. IFRS 3 (Revised) primarily requires the acquisition-related costs to be recognized as period expenses in accordance with the relevant IFRS. Costs incurred to issue debt or equity securities are required to be recognized in accordance with IAS 39. Consideration, after this amendment, will include fair values of all interests previously held by the acquirer. Re-measurement of such interests to fair value would be carried out through net profit in the statement of comprehensive income. Contingent consideration is required to be recognized at fair value even if not deemed probable of payment at the date of acquisition. |
• | IAS 27, as amended, is applicable for annual periods beginning on or after July 1, 2009. Earlier adoption is permitted provided IFRS 3 (Revised) is also early adopted. This standard was early adopted by the Company as at April 1, 2009. It requires a mandatory adoption of economic entity model which treats all providers of equity capital as shareholders of the entity. Consequently, a partial disposal of interest in a subsidiary in which the parent company retains control does not result in a gain or loss but in an increase or decrease in equity. Additionally purchase of some or all of the non-controlling interests is treated as treasury transaction and accounted for in equity and a partial disposal of interest in a subsidiary in which the parent company loses control triggers recognition of gain or loss on the entire interest. A gain or loss is recognized on the portion that has been disposed off and a further holding gain is recognized on the interest retained, being the difference between the fair value and carrying value of the interest retained. This Standard requires an entity to attribute their share of net profit / loss and reserves to the non-controlling interests even if this results in the non-controlling interests having a deficit balance. Consistent with the provisions of IFRS 3 (Revised), the Group accounted for its acquisition of 26% non-controlling interest in Sify Communications Limited on June 26, 2009 as an equity transaction. Also refer to note 40. |
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• | The Company adoptedIAS 1 (revised), “Presentation of Financial Statements”, effective April 1, 2009. The revision aims to improve users’ ability to analyze and compare the information given in financial statements. IAS 1 sets overall requirements for the presentation of financial statements, guidelines for their structure and minimum requirements for their content. The revisions include non-mandatory changes in the titles of some of the financial statements to reflect their function more clearly (for example, the balance sheet is renamed as statement of financial position). The revised IAS 1 resulted in consequential amendments to other standards and interpretations. The Group has applied revisedIAS 1 Presentation of Financial Statements (2007), which has became effective as of April 1, 2009. As a result, the Group presents in the consolidated statement of changes in equity all owner changes in equity, whereas all non-owner changes in equity are presented in the consolidated statement of comprehensive income. Furthermore, the Group has included two statements to display all items of income and expense recognized during the period i.e., a ‘Statement of Income’ and a ‘Statement of Comprehensive Income’. Comparative information has been re-presented so that it also is in conformity with the revised standard. Since the change in accounting policy only impacts presentation aspects, there is no impact on earnings/ loss per share. |
• | IFRIC 18 — ‘Transfer of assets from customers’defines the treatment for property, plant and equipment transferred by customers to companies or for cash received to be invested in property, plant and equipment that must be used to either connect the customer to a network or to provide the customer with ongoing access to a supply of goods or services or to both. The item of property, plant and equipment is to be initially recognized by the Company at fair value with a corresponding credit to revenue. If an ongoing service is identified as a part of the agreement, the period over which revenue will be recognized for that service would be determined by the terms of the agreement with the customer. If the period is not clearly defined, then revenue should be recognized over a period no longer than the useful life of the transferred asset used to provide the ongoing service. This interpretation is applicable prospectively to transfers of assets from customers received on or after July 1, 2009. The Company has adopted this interpretation prospectively for all assets transferred after July 1, 2009. There has been no impact on the Group’s consolidated financial statements as a result of the adoption of this interpretation. |
• | In March 2009, the Amendments toIFRS 7“Financial Instrument disclosure”, amended certain disclosure requirements in the standard. As a result, entities are required to classify fair value measurements for financial instruments measured at fair value in the statement of financial position, using a three level fair value hierarchy that reflects the significance of inputs used in the measurements. In addition, the amendments enhance disclosure requirements on the nature and extent of liquidity risks to which an entity is exposed. The Amendments to IFRS 7 apply for annual periods beginning on or after January 1, 2009 and provides an exception in the first year of application for providing comparative information. |
• | Improvements to IFRS- In April 2009, the IASB issued “Improvements to IFRSs” — a collection of amendments to twelve International Financial Reporting Standards — as part of its program of annual improvements to its standards, which is intended to make necessary, but non-urgent, amendments to standards that will not be included as part of another major project. The latest amendments were included in exposure drafts of proposed amendments to IFRS published in October 2007, August 2008, and January 2009. The amendments resulting from this standard mainly have effective dates for annual periods beginning on or after January 1, 2010, although entities are permitted to adopt them earlier. In May 2010, the IASB issuedImprovements to IFRS 2010,which comprises 11 amendments to 7 standards. Effective dates, early application and transitional requirements are addressed on a standard-by-standard basis. The majority of the amendments will be effective January 1, 2011. The Company is evaluating the impact, these amendments will have on the Group’s consolidated financial statements. |
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• | In November 2009, the IASB issuedIFRS 9, “Financial instruments”, to introduce certain new requirements for classifying and measuring financial assets. IFRS 9 divides all financial assets that are currently in the scope of IAS 39 into two classifications — those measured at amortized cost and those measured at fair value. The standard along with proposed expansion of IFRS 9 for classifying and measuring financial liabilities, de-recognition of financial instruments, impairment, and hedge accounting will be applicable from the year 2013, although entities are permitted to adopt earlier. The Company is evaluating the impact which this new standard will have on the Group’s financial statements. |
• | In November 2009, the IASB issuedIFRIC 19, “Extinguishing Financial Liabilities with Equity Instruments”; to introduce requirements when an entity renegotiates the terms of a financial liability with its creditor and the creditor agrees to accept the entity’s shares and other equity instruments to settle the financial liability fully or partially. This interpretation is effective from annual periods beginning on or after July 1, 2010. |
• | In October 2009, the IASB issued “Classification of Rights Issue — Amendment to IAS 32 Financial Instruments: Presentation’with an effective date of February 1,2010. |
• | In November 2009, the IASB revisedIAS 24 “Related Party Disclosures”with an effective date of January 1,2011. |
• | In November 2009, the IASB issued “Prepayments of a Minimum Funding Requirement — Amendments to IFRIC 14, IAS19 — the Limit on a Defined Benefit Asset, Minimum Funding Requirement and their Interaction”, with an effective date of January 1, 2011. |
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Cost | Accumulated depreciation | Carrying | ||||||||||||||||||||||||||||||||||
As at | As at | As at | As at | amount as | ||||||||||||||||||||||||||||||||
April 01, | March 31, | April 1, | Depreciation | March 31, | at March 31, | |||||||||||||||||||||||||||||||
Particulars | 2009 | Additions | Disposals | 2010 | 2009 | for the year | Deletions | 2010 | 2010 | |||||||||||||||||||||||||||
Building | 769,663 | 7,756 | — | 777,419 | 148,401 | 28,671 | — | 177,072 | 600,347 | |||||||||||||||||||||||||||
Plant and machinery | 4,733,122 | 827,043 | 257,469 | 5,302,696 | 2,765,920 | 420,314 | 256,546 | 2,929,688 | 2,373,008 | |||||||||||||||||||||||||||
Computer equipments | 497,223 | 26,462 | 5,781 | 517,904 | 367,972 | 66,709 | 5,050 | 429,631 | 88,273 | |||||||||||||||||||||||||||
Office equipment | 162,132 | 68,106 | 1,820 | 228,418 | 96,955 | 12,070 | 1,773 | 107,252 | 121,166 | |||||||||||||||||||||||||||
Furniture and fittings | 628,279 | 101,188 | 23,319 | 706,148 | 389,771 | 77,608 | 21,942 | 445,437 | 260,711 | |||||||||||||||||||||||||||
Vehicles | 8,269 | — | 2,078 | 6,191 | 6,420 | 1,360 | 1,589 | 6,191 | — | |||||||||||||||||||||||||||
Total | 6,798,688 | 1,030,555 | 290,467 | 7,538,776 | 3,775,439 | 606,732 | 286,900 | 4,095,271 | 3,443,505 | |||||||||||||||||||||||||||
Add: Construction in progress | 8,517 | |||||||||||||||||||||||||||||||||||
Total | 6,798,688 | 1,030,555 | 290,467 | 7,538,776 | 3,775,439 | 606,732 | 286,900 | 4,095,271 | 3,452,022 | |||||||||||||||||||||||||||
Cost | Accumulated depreciation | Carrying | ||||||||||||||||||||||||||||||||||
As at | As at | As at | As at | amount as | ||||||||||||||||||||||||||||||||
April 01, | March 31, | April 1, | Depreciation | March 31, | at March 31, | |||||||||||||||||||||||||||||||
Particulars | 2008 | Additions | Disposals | 2009 | 2008 | for the year | Deletions | 2009 | 2009 | |||||||||||||||||||||||||||
Building | 769,663 | — | — | 769,663 | 120,924 | 27,477 | — | 148,401 | 621,262 | |||||||||||||||||||||||||||
Plant and machinery | 3,683,632 | 1,097,317 | 47,827 | 4,733,122 | 2,526,445 | 286,805 | 47,330 | 2,765,920 | 1,967,202 | |||||||||||||||||||||||||||
Computer equipments | 438,597 | 58,824 | 198 | 497,223 | 297,049 | 71,001 | 78 | 367,972 | 129,251 | |||||||||||||||||||||||||||
Office equipment | 116,691 | 47,090 | 1,649 | 162,132 | 83,928 | 14,673 | 1,646 | 96,955 | 65,177 | |||||||||||||||||||||||||||
Furniture and fittings | 422,939 | 208,486 | 3,146 | 628,279 | 339,750 | 52,720 | 2,699 | 389,771 | 238,508 | |||||||||||||||||||||||||||
Vehicles | 9,174 | — | 905 | 8,269 | 3,846 | 2,981 | 407 | 6,420 | 1,849 | |||||||||||||||||||||||||||
Total | 5,440,696 | 1,411,717 | 53,725 | 6,798,688 | 3,371,942 | 455,657 | 52,160 | 3,775,439 | 3,023,249 | |||||||||||||||||||||||||||
Add: Construction in progress | 237,665 | |||||||||||||||||||||||||||||||||||
Total | 5,440,696 | 1,411,717 | 53,725 | 6,798,688 | 3,371,942 | 455,657 | 52,160 | 3,775,439 | 3,260,914 | |||||||||||||||||||||||||||
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Cost | Accumulated depreciation | Carrying amount | ||||||||||||||||||||||||||||||||||
As at | As at | As at | As at | as at | ||||||||||||||||||||||||||||||||
April 01, | March 31, | April 1, | Depreciation | March 31, | March 31, | |||||||||||||||||||||||||||||||
Particulars | 2007 | Additions | Disposals | 2008 | 2007 | for the year | Deletions | 2008 | 2008 | |||||||||||||||||||||||||||
Building | 634,230 | 135,433 | — | 769,663 | 94,656 | 26,268 | — | 120,924 | 648,739 | |||||||||||||||||||||||||||
Plant and machinery | 3,180,761 | 508,820 | 5,949 | 3,683,632 | 2,341,233 | 187,414 | 2,202 | 2,526,445 | 1,157,187 | |||||||||||||||||||||||||||
Computer equipments | 353,874 | 84,857 | 134 | 438,597 | 204,953 | 92,230 | 134 | 297,049 | 141,548 | |||||||||||||||||||||||||||
Office equipment | 103,935 | 12,803 | 47 | 116,691 | 71,989 | 11,982 | 43 | 83,928 | 32,763 | |||||||||||||||||||||||||||
Furniture and fittings | 386,994 | 37,209 | 1,264 | 422,939 | 303,712 | 36,975 | 937 | 339,750 | 83,189 | |||||||||||||||||||||||||||
Vehicles | 8,766 | 4,448 | 4,040 | 9,174 | 2,439 | 3,788 | 2,381 | 3,846 | 5,328 | |||||||||||||||||||||||||||
Total | 4,668,560 | 783,570 | 11,434 | 5,440,696 | 3,018,982 | 358,657 | 5,697 | 3,371,942 | 2,068,754 | |||||||||||||||||||||||||||
Add: Construction in progress | 113,031 | |||||||||||||||||||||||||||||||||||
Total | 4,668,560 | 783,570 | 11,434 | 5,440,696 | 3,018,982 | 358,657 | 5,697 | 3,371,942 | 2,181,785 | |||||||||||||||||||||||||||
2008 | 2009 | 2010 | 2011 | |||||||||||||
Decrease / (increase) in depreciation expense | 110,315 | 98,650 | 61,498 | (17,674 | ) |
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March 31, 2010 | March 31, 2009 | |||||||
Goodwill | 14,595 | 40,461 | ||||||
Other intangible assets | 114,929 | 137,411 | ||||||
129,524 | 177,872 | |||||||
March 31, 2010 | March 31, 2009 | |||||||
Balance at the beginning of the year | 40,461 | 50,796 | ||||||
Effect of movement in exchange rates | (2,482 | ) | 4,865 | |||||
Impairment loss recognised during the year | (23,384 | ) | (15,200 | ) | ||||
Net carrying amount of goodwill | 14,595 | 40,461 | ||||||
• | Cash flows were projected based on a 5 year business plan. Cash flows were arrived at as an excess of revenue over the related costs for the same period after giving due effect to non-cash charges and finance charges, if applicable, together with changes in working capital. |
• | Management believes that this forecast period is justified due to the long term nature of the travel business. |
• | The projected revenue growth included in the cash flow projections was 10% during the projected period. Management believes that this growth percentage was reasonable and is in line with the average trend of the industry. |
• | The projected increase in cost was 5% for call center cost and 10% for administrative costs. |
• | A pre-tax discount rate of 22.26% was applied in determining the recoverable amount of the cash generating unit. The discount rate was estimated based on an industry average weighted average cost of capital. |
• | In view of the expected long term market conditions, a terminal year end growth rate of 2% is estimated. |
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Technical | Portals | Customer | ||||||||||||||||||||||
know- | and web | related | License | |||||||||||||||||||||
how | content | intangibles | Software | fees | Total | |||||||||||||||||||
(A) Cost | ||||||||||||||||||||||||
Balance as at April 1, 2007 | 82,753 | 52,730 | 199,554 | 240,878 | 50,000 | �� | 625,915 | |||||||||||||||||
Acquisitions during the year | — | — | — | 30,238 | — | 30,238 | ||||||||||||||||||
Balance as at March 31, 2008 | 82,753 | 52,730 | 199,554 | 271,116 | 50,000 | 656,153 | ||||||||||||||||||
Acquisitions during the year | — | — | 1,016 | 48,099 | — | 49,115 | ||||||||||||||||||
Balance as at March 31, 2009 | 82,753 | 52,730 | 200,570 | 319,215 | 50,000 | 705,268 | ||||||||||||||||||
Acquisitions during the year | — | — | — | 51,468 | — | 51,468 | ||||||||||||||||||
Disposals during the year | — | 52,730 | — | — | — | 52,730 | ||||||||||||||||||
Balance as at March 31, 2010 | 82,753 | — | 200,570 | 370,683 | 50,000 | 704,006 | ||||||||||||||||||
(B) Amortization | ||||||||||||||||||||||||
Balance as at April 1, 2007 | 82,753 | 52,710 | 136,269 | �� | 216,324 | 906 | 488,962 | |||||||||||||||||
Amortization for the year | — | 20 | 13,657 | 19,503 | 2,500 | 35,680 | ||||||||||||||||||
Balance as at March 31, 2008 | 82,753 | 52,730 | 149,926 | 235,827 | 3,406 | 524,642 | ||||||||||||||||||
Amortization for the year | — | — | 19,921 | 20,794 | 2,500 | 43,215 | ||||||||||||||||||
Balance as at March 31, 2009 | 82,753 | 52,730 | 169,847 | 256,621 | 5,906 | 567,857 | ||||||||||||||||||
Amortization for the year | — | — | 6,144 | 41,421 | 2,500 | 50,065 | ||||||||||||||||||
Impairment loss on intangibles | — | — | 22,148 | 1,737 | — | 23,885 | ||||||||||||||||||
Disposals during the year | — | 52,730 | — | — | — | 52,730 | ||||||||||||||||||
Balance as at March 31, 2010 | 82,753 | — | 198,139 | 299,779 | 8,406 | 589,077 | ||||||||||||||||||
(C) Carrying amounts | ||||||||||||||||||||||||
As at March 31, 2008 | — | — | 49,628 | 35,289 | 46,594 | 131,511 | ||||||||||||||||||
As at March 31, 2009 | — | — | 30,723 | 62,594 | 44,094 | 137,411 | ||||||||||||||||||
As at March 31, 2010 | — | — | 2,431 | 70,904 | 41,594 | 114,929 | ||||||||||||||||||
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March 31, 2010 | March 31, 2009 | |||||||
Balance sheet | ||||||||
Total assets | 3,974,094 | 3,435,921 | ||||||
Total liabilities | 1,851,919 | 1,617,159 | ||||||
Shareholders’ equity | 2,122,175 | 1,818,762 | ||||||
Total Liabilities and shareholders’ equity | 3,974,094 | 3,435,921 | ||||||
For the year ended | ||||||||||||
March 31, 2010 | March 31, 2009 | March 31, 2008 | ||||||||||
Statement of operations | ||||||||||||
Revenues | 1,612,545 | 1,413,643 | 2,503,520 | |||||||||
Net profit | 307,543 | 216,917 | 606,255 | |||||||||
March 31, 2010 | March 31, 2009 | March 31, 2008 | ||||||||||
Non current | ||||||||||||
Against future performance obligation | — | 1,000 | 1,000 | |||||||||
Current | ||||||||||||
Bank deposits held under lien against borrowings / guarantees from banks | 360,909 | 1,329,756 | 877,582 | |||||||||
Total restricted cash | 360,909 | 1,329,756 | 877,582 | |||||||||
(b) Non restricted cash | ||||||||||||
Current | ||||||||||||
Cash and bank balances | 517,789 | 380,042 | 628,745 | |||||||||
Total cash (a+b) | 878,698 | 1,710,798 | 1,507,327 | |||||||||
Bank overdraft used for cash management purposes | (1,060,284 | ) | (1,397,083 | ) | (617,637 | ) | ||||||
Less: Non current restricted cash | — | (1,000 | ) | (1,000 | ) | |||||||
Cash and cash equivalents for the statement of cash flows | (181,586 | ) | 312,715 | 888,690 | ||||||||
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March 31, 2010 | March 31, 2009 | |||||||
Towards buildings* | 273,911 | 311,185 | ||||||
273,911 | 311,185 | |||||||
* | Includes Rs.189,903 (March 31, 2009 : Rs 256,050) paid to VALS Developers Private Limited. Also refer note 37. |
March 31, 2010 | March 31, 2009 | |||||||
Non current | ||||||||
Withholding taxes (see note (a) below) | — | 174,234 | ||||||
Other deposits (see note (b) and (c) below) | 554,358 | 322,091 | ||||||
554,358 | 496,325 | |||||||
�� | ||||||||
Current | ||||||||
Net investment in leases | — | — | ||||||
— | — | |||||||
Financial assets included in other assets | 249,744 | 227,468 | ||||||
(a) | Withholding taxes represent taxes deducted at source by the customers and paid to the Government, which is adjustable against tax liability of the Company. The company started receiving refunds of such taxes from the Government. Accordingly the withholding taxes is expected to be realized within next 12 months and hence the withholding taxes are classified as current and included as part of trade and other receivables. Refer note 13. | |
(b) | Includes Rs. 32,098 (March 31 2009: Rs.26,775) paid to VALS Developers Private Limited. Also refer note 37. | |
(c) | Includes Rs. 304,614 (March 31 2009: Rs. 111,333) paid to Emirates Integrated Telecommunications Company PJSC in relation to supply of capacity from the Europe India Gateway and borrowing cost capitalized thereon. |
Assets / (liabilities) | ||||||||
Recognised deferred tax assets / (liabilities) | March 31, 2010 | March 31, 2009 | ||||||
Deferred tax assets | ||||||||
Property, plant and equipment | — | 1,796 | ||||||
Intangible assets | — | 2,212 | ||||||
Allowance for doubtful trade and other receivables | — | 4,516 | ||||||
Carry forward capital losses | 82,869 | 67,735 | ||||||
82,869 | 76,259 | |||||||
Deferred tax liabilities | ||||||||
Property, plant and equipment | (76 | ) | — | |||||
Intangible assets | (189 | ) | — | |||||
Investment in equity accounted investees | (82,604 | ) | (67,735 | ) | ||||
(82,869 | ) | (67,735 | ) | |||||
Net deferred tax asset recognized in balance sheet | — | 8,524 | ||||||
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Balance | Recognised | Balance | Recognised | Balance | ||||||||||||||||||||||||
as at | in | Recognised | as at | in | Recognised | as at | ||||||||||||||||||||||
April 1, | income | in | March | income | in | March | ||||||||||||||||||||||
2008 | statement | Equity | 31, 2009 | statement | Equity | 31, 2010 | ||||||||||||||||||||||
Property, plant and equipment | 1,733 | 63 | — | 1,796 | (1,872 | ) | — | (76 | ) | |||||||||||||||||||
Intangible assets | 3,155 | (943 | ) | — | 2,212 | (2,401 | ) | — | (189 | ) | ||||||||||||||||||
Allowance for doubtful trade and other receivables | 10,644 | (6,128 | ) | — | 4,516 | (4,516 | ) | — | — | |||||||||||||||||||
Tax loss carry forwards | 56,859 | 10,816 | 60 | 67,735 | 14,371 | 763 | 82,869 | |||||||||||||||||||||
Investment in equity accounted investees | (56,821 | ) | (10,854 | ) | (60 | ) | (67,735 | ) | (14,106 | ) | (763 | ) | (82,604 | ) | ||||||||||||||
15,570 | (7,046 | ) | — | 8,524 | (8,524 | ) | — | — | ||||||||||||||||||||
As at March 31, 2010 | As at March 31, 2009 | |||||||
Deductible temporary differences | 172,136 | 82,062 | ||||||
Unrecognized tax losses | 3,360,093 | 3,440,680 | ||||||
3,532,229 | 3,522,742 | |||||||
March 31, 2010 | March 31, 2009 | March 31, 2008 | ||||||||||
Current tax expense / (benefit) | ||||||||||||
Current period | (90,003 | ) | 90,003 | 12,013 | ||||||||
(90,003 | ) | 90,003 | 12,013 | |||||||||
Deferred tax expense | ||||||||||||
Origination and reversal of temporary differences | 22,895 | 17,862 | 31,469 | |||||||||
Recognition of previously unrecognized tax losses | (14,371 | ) | (10,854 | ) | (34,887 | ) | ||||||
Reversal of previously recognized tax losses | — | 38 | 55,380 | |||||||||
8,524 | 38 | 51,962 | ||||||||||
Total income tax expense / (benefit) | (81,479 | ) | 97,049 | 63,975 | ||||||||
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March 31,2010 | March 31,2009 | March 31,2008 | ||||||||||
Actuarial (gains) or losses | — | — | 957 | |||||||||
Tax effect of changes in the fair value of other investments | — | — | 556 | |||||||||
Tax effect on share of profit of associate recognised in OCI | — | — | — | |||||||||
Tax effect on foreign currency translation differences | — | — | (85 | ) | ||||||||
Income tax benefit / (expense) recognized directly in equity | — | — | 1,428 | |||||||||
Year ended | Year ended | Year ended | ||||||||||
March 31, 2010 | March 31, 2009 | March 31, 2008 | ||||||||||
Profit / (loss) before income taxes | (54,666 | ) | (754,584 | ) | 89,421 | |||||||
Enacted tax rates in India | 33.99 | % | 33.99 | % | 33.99 | % | ||||||
Computed expected tax expense / (benefit) | (18,581 | ) | (256,483 | ) | 30,394 | |||||||
Effect of: | ||||||||||||
Share based payment expense not deductible for tax purposes | 8,188 | 16,149 | 14,234 | |||||||||
Unrecognized deferred tax assets on losses incurred during the year (net of temporary differences, if any) | 41,370 | 359,669 | 65,714 | |||||||||
Unrecognized deferred tax asset on temporary differences | — | — | 12,634 | |||||||||
Share of profit of equity accounted investee taxed at a lower rate | (12,203 | ) | (8,582 | ) | (24,253 | ) | ||||||
Recognition of previously unrecognized tax losses | (18,774 | ) | (13,203 | ) | (37,312 | ) | ||||||
Reversal of tax expense consequent to merger (Refer note 40) | (81,479 | ) | — | — | ||||||||
Others | — | (501 | ) | 2,564 | ||||||||
(81,479 | ) | 97,049 | 63,975 | |||||||||
March 31, 2010 | March 31, 2009 | |||||||
Communication hardware | 19,826 | 30,832 | ||||||
Application software | 1,662 | 4,264 | ||||||
Others | — | 3,992 | ||||||
21,488 | 39,088 | |||||||
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March 31, 2010 | March 31, 2009 | |||||||
(i) Trade receivables, net | 1,912,348 | 1,504,927 | ||||||
(ii) Other receivables including deposits | 1,196,450 | 950,599 | ||||||
(iii) Construction contract in progress | 86,214 | — | ||||||
3,195,012 | 2,455,526 | |||||||
(i) | Trade receivables as of March 31, 2010 and March 31, 2009 are stated net of allowance for doubtful receivables. The Group maintains an allowance for doubtful receivables based on its age and collectability. Trade receivables are not collateralized except to the extent of refundable deposits received from cybercafé franchisees and from cable television operators. The Group’s exposure to credit and currency risks and impairment losses related to trade and other receivables, excluding construction work in progress is disclosed in note 24. Trade receivables consist of: |
March 31, 2010 | March 31, 2009 | |||||||
Trade receivables from related parties | — | 698 | ||||||
Other trade receivables | 2,083,054 | 1,620,524 | ||||||
2,083,054 | 1,621,222 | |||||||
Less: Allowance for doubtful receivables | (170,706 | ) | (116,295 | ) | ||||
Balance at the end of the year | 1,912,348 | 1,504,927 | ||||||
For the year ended | ||||||||
March 31, 2010 | March 31, 2009 | |||||||
Balance at the beginning of the year | 116,295 | 83,316 | ||||||
Add : Additional provision, net | 121,987 | 84,346 | ||||||
Less : Bad debts written off | (67,576 | ) | (51,367 | ) | ||||
Balance at the end of the year | 170,706 | 116,295 | ||||||
(ii) | Other receivables comprises of the following items: |
March 31, 2010 | March 31, 2009 | |||||||
Advances and other deposits (Refer Note (a) and (c) below) | 657,609 | 745,876 | ||||||
Deposits with Department of Income tax / Withholding taxes (Refer Note (b) below) | 530,146 | 191,457 | ||||||
Employee advances | 8,695 | 13,266 | ||||||
1,196,450 | 950,599 | |||||||
Financial assets included in other receivables | 322,833 | 405,989 | ||||||
Notes: | ||
a) | Advances and other deposits primarily comprises of receivables in the form of custom duty credit entitlement, service tax and other advances given in the ordinary course of business. |
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b) | Includes withholding taxes recoverable from the Department of Income-tax for which the Company has filed tax returns for refund. The Company expects to realize such refund of withholding taxes within the next 12 months. | |
c) | During the year ended March 31, 2010, the Group entered into a lease for 290,753 sq ft of building from Reliable Infomatics Park Private Ltd on a long term lease. The group has paid a sum of Rs 51,786 as a security deposit for the above lease. During the year, the Group has surrendered the above lease. The company expects to realize the above amount within the next 12 months. |
March 31, 2010 | March 31, 2009 | |||||||
Prepayments for purchase of bandwidth | 79,402 | 63,961 | ||||||
Prepayments related to insurance | 17,680 | 12,682 | ||||||
Prepayments-others | 57,245 | 47,066 | ||||||
Lease prepayments | 36,991 | 4,839 | ||||||
191,318 | 128,548 | |||||||
March 31, 2010 | March 31, 2009 | |||||||||||||||||||||||
Gains/ (Loss) | Gains/ (Loss) | |||||||||||||||||||||||
recognized in | recognized in | |||||||||||||||||||||||
other | other | |||||||||||||||||||||||
Gross | comprehensive | Gross | comprehensive | |||||||||||||||||||||
amount | income | Fair value | amount | income | Fair value | |||||||||||||||||||
Investment in mutual funds | — | — | — | 20,315 | (6,441 | ) | 13,874 | |||||||||||||||||
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Year ended March 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Issued as at April 01 | 42,820,082 | 55,637,082 | 42,800,265 | |||||||||
Issued for cash* | — | — | 12,817,000 | * | ||||||||
Issued for consideration other than cash | 10,530,000 | — | — | |||||||||
Exercise of share options | 1,416 | — | 19,817 | |||||||||
Shares forfeited* | — | (12,817,000 | ) | — | ||||||||
Issued as at March 31 | 53,351,498 | 42,820,082 | 55,637,082 | |||||||||
* | Paid up Rs.1/- per share |
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March 31, 2010 | March 31, 2009 | |||||||||||||||||||||||
Present | Present | |||||||||||||||||||||||
Future | value | Future | value | |||||||||||||||||||||
minimum | minimum | minimum | minimum | |||||||||||||||||||||
lease | lease | lease | lease | |||||||||||||||||||||
payments | Interest | payments | payments | Interest | payments | |||||||||||||||||||
Less than one year | 65,148 | (19,178 | ) | 45,970 | 42,743 | (9,800 | ) | 32,943 | ||||||||||||||||
Between one and five years | 182,206 | (26,859 | ) | 155,347 | 138,246 | (15,864 | ) | 122,382 | ||||||||||||||||
Total | 247,354 | (46,037 | ) | 201,317 | 180,989 | (25,664 | ) | 155,325 | ||||||||||||||||
March 31, 2010 | March 31, 2009 | |||||||
Gratuity payable | 16,753 | 15,082 | ||||||
Compensated absences | 38,054 | 49,218 | ||||||
54,807 | 64,300 | |||||||
March 31, 2010 | March 31, 2009 | March 31, 2008 | ||||||||||
Service cost | 14,498 | 12,067 | 8,533 | |||||||||
Interest cost | 4,501 | 3,038 | 1,639 | |||||||||
Expected return on plan asset | (2,963 | ) | (1,672 | ) | (957 | ) | ||||||
16,036 | 13,433 | 9,215 | ||||||||||
March 31, 2010 | March 31, 2009 | |||||||
Present value of projected benefit obligation at the end of the year | 51,046 | 43,389 | ||||||
Funded status of the plans | 34,293 | 28,307 | ||||||
Recognised (asset) / liability | 16,753 | 15,082 | ||||||
Change in defined benefit obligation | March 31, 2010 | March 31, 2009 | March 31, 2008 | |||||||||
Projected benefit obligation at the beginning of the year | 43,389 | 27,332 | 20,785 | |||||||||
Service cost | 14,498 | 12,067 | 8,533 | |||||||||
Interest cost | 4,501 | 3,038 | 1,639 | |||||||||
Actuarial (gain) / loss | (5,957 | ) | 3,662 | 2,393 | ||||||||
Benefits paid | (5,385 | ) | (2,710 | ) | (6,018 | ) | ||||||
Projected benefit obligation at the end of the year | 51,046 | 43,389 | 27,332 | |||||||||
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Change in plan assets | March 31, 2010 | March 31, 2009 | March 31, 2008 | |||||||||
Fair value of plan assets at the beginning of the year | 28,307 | 18,740 | 8,422 | |||||||||
Expected return on plan assets | 2,965 | 1,672 | 957 | |||||||||
Actuarial gain / (loss) | (449 | ) | (684 | ) | (423 | ) | ||||||
Employer contributions | 8,855 | 11,290 | 15,801 | |||||||||
Benefits paid | (5,385 | ) | (2,711 | ) | (6,017 | ) | ||||||
Fair value of plan assets at the end of the year | 34,293 | 28,307 | 18,740 | |||||||||
Actual return on plan assets | 2,513 | 988 | 534 |
March 31, 2010 | March 31, 2009 | March 31, 2008 | ||||||||||
Discount rate | 8.15 | % P.a | 7.95 | % P.a | 7.85 | % P.a | ||||||
Long-term rate of compensation increase | 8.00 | % P.a | 8.00 | % P.a | 6.00 | % P.a | ||||||
Expected long term rate of return on plan assets | 8.00 | % P.a | 8.00 | % P.a | 7.50 | % P.a | ||||||
Average future working life time | 11.06 years | 10.99 years | 10.23 years | |||||||||
March 31, 2010 | March 31, 2009 | |||||||
Experience adjustment on plan liabilities | (4,818 | ) | 1,574 | |||||
Experience adjustment on plan assets | (450 | ) | (684 | ) | ||||
March 31, 2010 | March 31, 2009 | |||||||
Funds managed by insurers | 100 | % | 100 | % |
March 31, 2010 | March 31, 2009 | March 31, 2008 | ||||||||||
Actuarial gain / (loss) | 5,508 | (4,346 | ) | (2,816 | ) | |||||||
5,508 | (4,346 | ) | (2,816 | ) | ||||||||
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March 31, 2010 | March 31, 2009 | |||||||
Franchisee deposits and other liabilities | 165,800 | 134,116 | ||||||
165,800 | 134,116 | |||||||
March 31, 2010 | March 31, 2009 | |||||||
Current | ||||||||
Loan secured against fixed deposits (Refer note 1 below) | — | 310,000 | ||||||
Term bank loans (Refer note 2 below) | 216,000 | 331,944 | ||||||
Other working capital facilities (Refer note 3 below) | 697,165 | 540,826 | ||||||
Borrowings from others (Refer note 4 below) | 39,681 | — | ||||||
952,846 | 1,182,770 | |||||||
Non current | ||||||||
Term bank loans (Refer note 2 below) | 325,940 | 201,389 | ||||||
Borrowings from others (Refer note 4 below) | 123,484 | — | ||||||
449,424 | 201,389 | |||||||
1. | Loan secured against fixed deposits of Rs. Nil as at March 31, 2010 (Rs. 310,000 as at March 31, 2009) represent bank loans for working capital requirements. These borrowings bear interest ranging from 10%-11.90% p.a. and are repayable within one year from the balance sheet date. |
2. | Term bank loans bear interest ranging from 9.50% to 13.50% p.a. The term loans are secured by way of pari-passu first charge over the unencumbered movable fixed assets acquired out of such term loans availed by the Company. Further these loans are collaterally secured by way of equitable mortgage over the office premises and also by way of pari passu second charge on the entire current assets of the Company. |
3. | Letter of credit discounted (including buyer’s credit) is secured by pari-passu charge on current assets of the Company and moveable assets of the company, both present and future. These borrowings bear interest ranging from 11% to 14% p.a. Such facilities are renewable every year. |
4. | Borrowings from others are secured against relevant assets and software. However, the Company is in the process of obtaining no objection certificate from the bank with whom such relevant assets and software are hypothecated. |
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March 31, 2010 | March 31, 2009 | |||||||
Trade payables | 989,020 | 690,388 | ||||||
Advance from customers | 37,047 | 52,224 | ||||||
Accrued expenses | 686,452 | 668,769 | ||||||
Other payables | 143,145 | 143,849 | ||||||
1,855,664 | 1,555,230 | |||||||
Financial liabilities included in trade and other payables | 1,798,764 | 1,411,358 | ||||||
March 31, 2010 | March 31, 2009 | |||||||
Corporate network/data services | 328,309 | 308,521 | ||||||
Internet access services | 24,941 | 28,065 | ||||||
Other services | 65,316 | 18,215 | ||||||
418,566 | 354,801 | |||||||
Year ended | ||||||||||||
March 31, 2010 | March 31, 2009 | March 31, 2008 | ||||||||||
Rendering of services | ||||||||||||
Service revenue* | 5,356,852 | 5,253,535 | 4,868,673 | |||||||||
Initial franchise fee | 11,369 | 30,489 | 43,503 | |||||||||
Installation service revenue | 288,919 | 235,116 | 318,466 | |||||||||
5,657,140 | 5,519,140 | 5,230,642 | ||||||||||
Sale of products | 1,053,048 | 643,021 | 775,573 | |||||||||
6,710,188 | 6,162,161 | 6,006,215 | ||||||||||
* | Including revenue arising from construction contracts (refer note 24) |
Year ended | ||||||||||||
March 31, 2010 | March 31, 2009 | March 31, 2008 | ||||||||||
Contract revenue recognised for the year ended March 31, 2010 | 86,214 | — | — | |||||||||
Aggregate amounts of costs incurred and recognized profits (less recognised losses) upto the reporting date | 86,214 | — | — | |||||||||
Advances received | 16,441 | — | — | |||||||||
Gross amount due from customers for contract work presented as an asset | 86,214 | — | — |
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Year ended | ||||||||||||
March 31, 2010 | March 31, 2009 | March 31, 2008 | ||||||||||
Duty credit entitlement | 82,486 | 79,278 | 46,152 | |||||||||
Others | 49,303 | 9,827 | — | |||||||||
131,789 | 89,105 | 46,152 | ||||||||||
Year ended | ||||||||||||
March 31, 2010 | March 31, 2009 | March 31, 2008 | ||||||||||
Personnel expenses | 745,067 | 987,585 | 715,365 | |||||||||
Marketing and promotion expenses | 482,554 | 608,318 | 558,573 | |||||||||
Administrative and other expenses* | 1,238,770 | 1,217,522 | 1,160,777 | |||||||||
2,466,391 | 2,813,425 | 2,434,715 | ||||||||||
* | Includes foreign exchange gain / (loss) of Rs.9,397, Rs.21,320 and Rs.(22,587) for the years ended March 31, 2010, 2009 and 2008 respectively. |
Year ended | ||||||||||||
March 31, 2010 | March 31, 2009 | March 31, 2008 | ||||||||||
Salaries and wages | 1,269,638 | 1,532,378 | 940,942 | |||||||||
Contribution to provident fund and other funds | 77,197 | 70,354 | 40,838 | |||||||||
Staff welfare expenses | 27,499 | 38,225 | 26,168 | |||||||||
Employee stock compensation expense | 30,589 | 61,380 | 60,933 | |||||||||
1,404,923 | 1,702,337 | 1,068,881 | ||||||||||
Attributable to cost of goods sold and services rendered | 659,856 | 714,752 | 431,588 | |||||||||
Attributable to selling, general and administration expenses | 745,067 | 987,585 | 637,293 |
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One sixth of the options: | At the end of one year from the date of the grant | |
Five sixth of the options: | At the end of each quarter during the second and third year from the date of the grant in eight equal installments. |
Weighted average exercise | ||||||||||||||||||||||||
No. of options granted, | Number of options | price in Rs. | ||||||||||||||||||||||
exercised and forfeited | 2010 | 2009 | 2008 | 2010 | 2009 | 2008 | ||||||||||||||||||
Outstanding at beginning of the year | — | — | 6,250 | — | — | 228.74 | ||||||||||||||||||
Granted during the year | — | — | — | — | — | — | ||||||||||||||||||
Forfeited during the year | — | — | — | — | — | — | ||||||||||||||||||
Expired during the year | — | — | 6,250 | — | — | 228.74 | ||||||||||||||||||
Exercised during the year | — | — | — | — | — | — | ||||||||||||||||||
Outstanding at the end of the year | — | — | — | — | — | — | ||||||||||||||||||
Exercisable at the end of the year | — | — | — | — | — | — | ||||||||||||||||||
One sixth of the options: | At the end of one year from the date of the grant | |
Five sixth of the options: | At the end of each quarter during the second and third year from the date of the grant in eight equal installments. |
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Weighted average exercise | ||||||||||||||||||||||||
No. of options granted, | Number of options | price in Rs. | ||||||||||||||||||||||
exercised and forfeited | 2010 | 2009 | 2008 | 2010 | 2009 | 2008 | ||||||||||||||||||
Outstanding at the beginning of the year | — | 326,093 | 868,195 | — | 328.84 | 238.32 | ||||||||||||||||||
Granted during the year | — | — | 119,400 | — | — | 340.82 | ||||||||||||||||||
Forfeited during the year | — | (29,167 | ) | (122,442 | ) | — | 449.16 | 376.64 | ||||||||||||||||
Expired during the year | — | (296,926 | ) | (28,293 | ) | — | 317.02 | 461.51 | ||||||||||||||||
Exercised during the year | — | — | (13,567 | ) | — | — | 238.32 | |||||||||||||||||
Replaced during the year (Refer to notes below) | — | — | (497,200 | ) | — | — | 422.91 | |||||||||||||||||
Outstanding at the end of the year | — | — | 326,093 | — | — | 328.84 | ||||||||||||||||||
Vested and exercisable at the end of the year | — | — | 235,010 | — | — | 328.84 | ||||||||||||||||||
Weighted average grant date fair value of grants during the year | — | — | — | — | — | 120.00 |
One sixth of the option quantity: | At the end of one year from the date of the grant. | |
Five sixth of the option quantity: | At the end of each quarter during the second, third and fourth year from the date of the grant in twelve equal installments. |
Weighted | Weighted | Weighted | ||||||||||||||||||||||
average | average | average | ||||||||||||||||||||||
exercise | Number | exercise | Number | exercise | ||||||||||||||||||||
Number | price in | of | price in | of | price in | |||||||||||||||||||
No. of options granted, | of options | Rs. | options | Rs. | options | Rs. | ||||||||||||||||||
exercised and forfeited | 2010 | 2010 | 2009 | 2009 | 2008 | 2008 | ||||||||||||||||||
Outstanding at the beginning of the year | 1,211,900 | 152.51 | 1,200,400 | 157.35 | — | — | ||||||||||||||||||
Granted during the year | 50,000 | 89.34 | 142,500 | 117.46 | 708,200 | 184.84 | ||||||||||||||||||
Replaced (Refer to notes below) | — | — | — | — | (123,900 | ) | 184.84 | |||||||||||||||||
Replacement options granted (Refer to notes below) | — | — | — | — | 621,100 | |||||||||||||||||||
Forfeited during the year | (93,616 | ) | 153.58 | (131,000 | ) | 158.77 | (5,000 | ) | 157.35 | |||||||||||||||
Expired during the year | (88,068 | ) | 158.01 | — | — | — | 308.42 | |||||||||||||||||
Exercised during the year | (1,416 | ) | 59.02 | — | — | — | ||||||||||||||||||
Outstanding at the end of the year | 1,078,800 | 149.21 | 1,211,900 | 152.51 | 1,200,400 | 157.35 | ||||||||||||||||||
Vested and Exercisable at the end of the year | 437,210 | 155.55 | 185,167 | 157.35 | — | — | ||||||||||||||||||
Weighted average grant date fair value of grants during the year | — | — | — | 71.82 | — | 80.78 |
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Year ended | Year ended | Year ended | ||||||||||
March 31, | March 31, | March 31, | ||||||||||
No. of options granted, exercised and forfeited | 2010 | 2009 | 2008 | |||||||||
Weighted average share price | 99.26 | 130.41 | 174.83 | |||||||||
Weighted average exercise price | 89.34 | 117.46 | 157.35 | |||||||||
Expected volatility | 115.8% – 136.7% | 53.5% – 120.0% | 53.83% – 77.82% | |||||||||
Option life | 3 – 4.5 years | 3 – 4.5 years | 3 – 4.5 years | |||||||||
Expected dividends | — | — | — | |||||||||
Risk-free interest rate | 2.43% – 2.69% | 1.64% – 3.45% | 2.50% – 7.50% |
Weighted | ||||||||||||||||||||||||
Number | Weighted | average | Number | Weighted | ||||||||||||||||||||
Range of | outstanding at | average | remaining | exercisable at | average | |||||||||||||||||||
exercise price | March 31, | exercise price | contractual | March 31, | exercise price | |||||||||||||||||||
in Rs. | 2010 | in Rs. | life | 2010 | in Rs. | |||||||||||||||||||
ASOP 2007 | 51.51-188.32 | 1,078,800 | 149.21 | 2.97 | 437,210 | 155.55 |
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Assumptions | Pre modification | Post modification | ||||||
Current market price | 174.83 | 174.83 | ||||||
Exercise price | 308.34 – 578.38 | 157.35 | ||||||
Expected term | 3 – 4.5 years | 3 – 4.5 years | ||||||
Volatility | 53.83% – 77.82% | 53.01% – 77.82% | ||||||
Dividend yield | 0% | 0% | ||||||
Discount rate | 2.5% | 2.5% |
Year ended | ||||||||||||
March 31, 2010 | March 31, 2009 | March 31, 2008 | ||||||||||
Interest income on bank deposits | 19,489 | 116,495 | 160,262 | |||||||||
Interest income from leases | — | 435 | 1,232 | |||||||||
Others | 8,505 | 5,635 | 289 | |||||||||
Finance income | 27,994 | 122,565 | 161,783 | |||||||||
Interest expense on lease obligations | 16,476 | 2,243 | 1,826 | |||||||||
Bank charges (including letter of credit, bill discounting and buyer’s credit charges) | 100,241 | 86,216 | 46,484 | |||||||||
Interest expense on borrowings | 177,156 | 163,201 | 9,372 | |||||||||
Finance expense | (293,873 | ) | (251,660 | ) | (57,682 | ) | ||||||
Net finance income / (expense) recognised in profit or loss | (265,879 | ) | (129,095 | ) | 104,101 | |||||||
Year ended | ||||||||||||
March 31, 2010 | March 31, 2009 | March 31, 2008 | ||||||||||
Net profit / (loss ) — as reported | 17,027 | (900,574 | ) | (4,696 | ) | |||||||
Weighted average number of shares — basic | 50,840,358 | 43,350,320 | 42,877,726 | |||||||||
Basic earnings / (loss) per share | 0.33 | (20.77 | ) | (0.11 | ) | |||||||
Weighted average number of shares — diluted | 50,853,293 | 43,350,320 | 42,877,726 | |||||||||
Diluted earnings / (loss) per share | 0.33 | (20.77 | ) | (0.11 | ) |
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Year ended March 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Issued fully paid ordinary shares at April 01 | 42,820,082 | 42,820,082 | 42,800,265 | |||||||||
Effect of shares issued on exercise of stock options | 166 | — | 14,562 | |||||||||
Effect of partly paid shares | — | 530,238 | 62,899 | |||||||||
Effect of shares issued consequent to amalgamation of Sify Communications Limited | 8,020,110 | — | — | |||||||||
Weighted average number of equity shares and equivalent shares outstanding | 50,840,358 | 43,350,320 | 42,877,726 | |||||||||
Year ended March 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Weighted average number of ordinary shares (basic) | 50,840,358 | 43,350,320 | 42,877,726 | |||||||||
Effect of stock options | 12,935 | — | — | |||||||||
Weighted average number of equity shares outstanding (diluted) | 50,853,293 | 43,350,320 | 42,877,726 | |||||||||
Less | More | |||||||||||||||
Lease obligations | Total | than 1 year | 1-5 years | than 5 years | ||||||||||||
Non-cancellable operating lease obligations | 1,608,509 | 119,871 | 407,890 | 1,080,748 | ||||||||||||
Non-cancellable obligations towards proposed lease * | 2,423,554 | 22,850 | 520,808 | 1,879,896 |
Less | More | |||||||||||||||
Lease obligations | Total | than 1 year | 1-5 years | than 5 years | ||||||||||||
Non-cancellable operating lease obligations | 1,801,477 | 135,165 | 585,564 | 1,080,748 | ||||||||||||
Non-cancellable obligations towards proposed lease * | 2,423,554 | — | 549,538 | 1,874,016 | ||||||||||||
* | For details on proposed lease, refer Note 37 on related parties. |
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• | Corporate network/data services, which provides Internet, connectivity, security and consulting, hosting and managed service solutions; |
• | Internet access services, from homes and through cybercafés, |
• | Online portal services and content offerings; and |
• | Other services, such as development of e-learning software. |
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Corporate | ||||||||||||||||||||||||
network / | Internet | Online | Consumer | |||||||||||||||||||||
data | access | portal | one | Other | ||||||||||||||||||||
services | services | services | (Sub-total) | services | Total | |||||||||||||||||||
A | B | A+B | ||||||||||||||||||||||
Segment revenue | 5,335,268 | 713,929 | 130,842 | 844,771 | 530,149 | 6,710,188 | ||||||||||||||||||
Allocated segment expenses | (3,929,727 | ) | (757,431 | ) | (140,966 | ) | (898,397 | ) | (406,063 | ) | (5,234,187 | ) | ||||||||||||
Impairment loss on intangibles including goodwill | — | — | (47,269 | ) | (47,269 | ) | — | (47,269 | ) | |||||||||||||||
Segment operating income / (loss) | 1,405,541 | (43,502 | ) | (57,393 | ) | (100,895 | ) | 124,086 | 1,428,732 | |||||||||||||||
Unallocated expenses: | ||||||||||||||||||||||||
Cost of goods sold | (477,807 | ) | ||||||||||||||||||||||
Selling, general and administrative expenses | (936,842 | ) | ||||||||||||||||||||||
Depreciation and amortization | (656,797 | ) | ||||||||||||||||||||||
Other income / (expense), net | 131,789 | |||||||||||||||||||||||
Income from legal settlement | 561,120 | |||||||||||||||||||||||
Finance income | 27,994 | |||||||||||||||||||||||
Finance expenses | (223,990 | ) | ||||||||||||||||||||||
Share of profit of equity accounted investee | 91,135 | |||||||||||||||||||||||
Profit / (loss) before tax | (54,666 | ) | ||||||||||||||||||||||
Income tax (expense) / benefit | 81,479 | |||||||||||||||||||||||
Profit / (loss) for the year | 26,813 | |||||||||||||||||||||||
Corporate | ||||||||||||||||||||||||
network / | Internet | Online | Consumer | |||||||||||||||||||||
data | access | portal | one | Other | ||||||||||||||||||||
services | services | services | (Sub-total) | services | Total | |||||||||||||||||||
A | B | A+B | ||||||||||||||||||||||
Segment revenue | 4,305,235 | 1,128,182 | 177,324 | 1,305,506 | 551,420 | 6,162,161 | ||||||||||||||||||
Allocated segment expenses | (2,842,889 | ) | (1,295,332 | ) | (220,967 | ) | (1,516,299 | ) | (473,008 | ) | (4,832,196 | ) | ||||||||||||
Impairment loss on goodwill | — | — | (15,200 | ) | (15,200 | ) | — | (15,200 | ) | |||||||||||||||
Segment operating income / (loss) | 1,462,346 | (167,150 | ) | (58,843 | ) | (225,993 | ) | 78,412 | 1,314,765 | |||||||||||||||
Unallocated expenses: | ||||||||||||||||||||||||
Cost of goods sold | (484,478 | ) | ||||||||||||||||||||||
Selling, general and administrative expenses | (1,130,221 | ) | ||||||||||||||||||||||
Depreciation and amortization | (498,872 | ) | ||||||||||||||||||||||
Other income / (expense), net | 89,105 | |||||||||||||||||||||||
Finance income | 122,565 | |||||||||||||||||||||||
Finance expenses | (231,539 | ) | ||||||||||||||||||||||
Share of profit of equity accounted investee | 64,091 | |||||||||||||||||||||||
Profit / (loss) before tax | (754,584 | ) | ||||||||||||||||||||||
Income tax (expense) / benefit | (97,049 | ) | ||||||||||||||||||||||
Profit / (loss) for the year | (851,633 | ) | ||||||||||||||||||||||
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Corporate | ||||||||||||||||||||||||
network / | Internet | Online | Consumer | |||||||||||||||||||||
data | access | portal | one | Other | ||||||||||||||||||||
services | services | services | (Sub-total) | services | Total | |||||||||||||||||||
A | B | A+B | ||||||||||||||||||||||
Segment revenue | 3,822,108 | 1,545,226 | 210,766 | 1,755,992 | 428,115 | 6,006,215 | ||||||||||||||||||
Allocated segment expenses | (2,434,316 | ) | (1,432,982 | ) | (298,031 | ) | (1,731,013 | ) | (366,851 | ) | (4,532,180 | ) | ||||||||||||
Segment operating income / (loss) | 1,387,792 | 112,244 | (87,265 | ) | 24,979 | 61,264 | 1,474,035 | |||||||||||||||||
Unallocated expenses: | ||||||||||||||||||||||||
Cost of goods sold | (333,681 | ) | ||||||||||||||||||||||
Selling, general and administrative expenses | (1,014,382 | ) | ||||||||||||||||||||||
Depreciation and amortization | (394,337 | ) | ||||||||||||||||||||||
Other income / (expense), net | 46,152 | |||||||||||||||||||||||
Finance income | 161,783 | |||||||||||||||||||||||
Finance expenses | (31,276 | ) | ||||||||||||||||||||||
Share of profit of equity accounted investee | 181,127 | |||||||||||||||||||||||
Profit / (loss) before tax | 89,421 | |||||||||||||||||||||||
Income tax (expense) / benefit | (63,975 | ) | ||||||||||||||||||||||
Profit / (loss) for the year | 25,446 | |||||||||||||||||||||||
Selling, general | ||||||||||||||||
and | ||||||||||||||||
Cost of goods | administrative | Finance | ||||||||||||||
sold | expenses | expenses | Total | |||||||||||||
Year ended March 31, 2010 | ||||||||||||||||
Allocated segment expenses | 3,618,731 | 1,545,573 | 69,883 | 5,234,187 | ||||||||||||
Unallocated segment expenses | 477,807 | 936,842 | 223,990 | |||||||||||||
Total as per income statement | 4,096,538 | 2,482,415 | 293,873 | |||||||||||||
Year ended March 31, 2009 | ||||||||||||||||
Allocated segment expenses | 3,128,871 | 1,683,204 | 20,121 | 4,832,196 | ||||||||||||
Unallocated segment expenses | 484,478 | 1,130,221 | 231,539 | |||||||||||||
Total as per income statement | 3,613,349 | 2,813,425 | 251,660 | |||||||||||||
Year ended March 31, 2008 | ||||||||||||||||
Allocated segment expenses | 3,085,441 | 1,420,333 | 26,406 | 4,532,180 | ||||||||||||
Unallocated segment expenses | 333,681 | 1,014,382 | 31,276 | |||||||||||||
Total as per income statement | 3,419,122 | 2,434,715 | 57,682 |
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Rest of the | ||||||||||||
Description | India | world | Total | |||||||||
Revenues | ||||||||||||
Year ended March 31, 2010 | 4,950,352 | 1,759,836 | 6,710,188 | |||||||||
Year ended March 31, 2009 | 5,071,137 | 1,091,024 | 6,162,161 | |||||||||
Year ended March 31, 2008 | 5,342,248 | 663,967 | 6,006,215 |
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• | On October 12, 2009, Department of Telecommunications (‘DOT’) raised a demand on Sify Technologies for INR 14 million after correcting the arithmetical error in the Assessment letter issued by the DoT. |
• | On February 26, 2010 DOT raised a demand on Sify Communications (erstwhile subsidiary merged with Sify Technologies Limited) for INR 26 million. |
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• | Certain items of income have been considered by DOT as licensed activities for payment of licensee fee as the information was not available to DOT. |
• | Certain items like other income, interest on deposits, gain on foreign exchange fluctuation, profit on sale of assets, provision written back has been considered by DOT as income eligible for licensed activities as against the Company’s claim that they are not liable for license fee. | ||
The Company has responded to the above said demand notices stating that the above demands are not tenable as the demands were not in accordance with the Telecom Disputes Settlement & Appellate Tribunal (‘TDSAT’) Order which has clarified in its Order that the items of income which are liable for license fee and items of income on which license fees are not liable to be paid. However the TDSAT Order has been challenged in Supreme Court by DoT and Associations of service providers and finality would be arrived only after the decision of the Court. The Company currently pays license fee in accordance with the TDSAT Order and Sify believes that it has adequate legal defenses for these demands and the ultimate outcome of these actions will not have a material adverse effect on Sify. |
Country | % of Ownership interest | |||||||||||
of | March 31, | March 31, | ||||||||||
Particulars | incorporation | 2010 | 2009 | |||||||||
Subsidiaries | ||||||||||||
Sify Communications Limited (until March 31, 2008 also refer note 40) | India | — | 74 | |||||||||
Sify International Inc. | USA | 100 | 100 | |||||||||
Sify Software Limited (Formerly Sify Networks Private Limited) | India | 100 | 100 | |||||||||
Sify Technologies (Singapore) Pte. Limited (Incorporated on December 7, 2009) | Singapore | 100 | — | |||||||||
Associates | ||||||||||||
MF Global-Sify Securities India Private Limited | India | 29.85 | 29.85 | |||||||||
Others (Entities in which the Key Management Personnel have controlling interest/significant influence) | ||||||||||||
Server Engines LLC | USA | — | — | |||||||||
Server Engines India Private Limited | India | — | — | |||||||||
VALS Developers Private Limited | India | — | — | |||||||||
Infinity Satcom Universal Private Limited | India | — | — |
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Key | ||||||||||||
Management | ||||||||||||
Transactions | Associates | Others | Personnel*** | |||||||||
Consultancy services received | — | — | 240 | |||||||||
Sitting fees paid | — | — | 1,240 | |||||||||
Salaries and other short term benefits | — | — | 52,441 | |||||||||
Contributions to defined contribution plans | — | — | 2,427 | |||||||||
Share based payment transactions | — | — | 9,486 | |||||||||
Issuance of shares on amalgamation of erstwhile Sify Communications limited with Sify Technologies limited | — | 842,837 | — | |||||||||
Amount of outstanding balances | ||||||||||||
Debtors | — | — | — | |||||||||
Advance lease rentals and refundable deposits made* | — | 282,825 | — |
Key | ||||||||||||
management | ||||||||||||
Transactions | Associates | Others | personnel*** | |||||||||
Sale of goods / services | 6,600 | 734 | — | |||||||||
Advance lease rentals and refundable deposits made* | — | 282,825 | — | |||||||||
Consultancy services received | — | — | 240 | |||||||||
Sitting fees paid | — | — | 1,220 | |||||||||
Salaries and other short term benefits | — | — | 50,672 | |||||||||
Contributions to defined contribution plans | — | — | 2,389 | |||||||||
Share based payments | — | — | 33,579 | |||||||||
Amount of outstanding balances | ||||||||||||
Debtors | 524 | 174 | — | |||||||||
Advance lease rentals and refundable deposits made | — | 282,825 | — |
Key | ||||||||||||
management | ||||||||||||
Transactions | Associates | Others | personnel*** | |||||||||
Purchase of goods / services | — | 3,796 | — | |||||||||
Issue of shares for cash** | — | 112,149 | — | |||||||||
Consultancy services | — | — | 240 | |||||||||
Sitting fees paid | — | — | 1,320 | |||||||||
Salaries and other short term benefits | — | — | 53,298 | |||||||||
Contribution to defined contribution plans | — | — | 2,516 | |||||||||
Share based payments | — | — | 40,169 |
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* | Represents deposits made to VALS Developers Private Limited (“VALS”).VALS is owned and controlled by Raju Vegesna Infotech & Industries Private Limited, in which Mr. Raju Vegesna, our principal share holder and Chief Executive Officer, is holding 94.66% equity in his personal capacity. During the year ended March 31, 2009, Sify entered into a Memorandum of Understanding (‘MoU)’ for long term lease with VALS Developers Private Limited to obtain land and building which is in the process of being constructed. The lease agreement, when final and executed, was expected to have an initial non-cancellable term of 5 years, with a further option for Sify to renew or cancel the lease for the incremental five year terms. In connection with this memorandum of understanding, Sify has paid a security deposit of Rs.125,700 and advance rental of Rs.157,125 to VALS. As per the terms of the MOU, the security deposit will be refunded at the end of lease term and the advance rental would be adjusted over a period of 15 months from the commencement of the lease. Subsequently on October 30,2010, the Board of Directors have proposed to cancel the MoU for lease arrangement and has decided to acquire the property which is under construction from the third party directly. The above deposits would be adjusted against the consideration payable for acquiring the property. | |
** | Also refer note 16 in relation to transactions relating to issue of equity shares to Infinity Satcom Universal Private Limited. | |
*** | Some of the key management personnel of the Group are also covered under the Group’s gratuity plan along with other employees of the Group. Proportionate amounts of gratuity accrued under the gratuity plan have not been separately computed or included in the above disclosure. |
Financial | ||||||||||||||||||||||||||||
assets / | ||||||||||||||||||||||||||||
liabilities | ||||||||||||||||||||||||||||
at fair | ||||||||||||||||||||||||||||
value | ||||||||||||||||||||||||||||
through | Other | Total | ||||||||||||||||||||||||||
Loans and | profit and | Available | financial | carrying | Total fair | |||||||||||||||||||||||
Particulars | Note | receivables | loss | for sale | liabilities | value | value | |||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||
Cash and cash equivalents | 8 | 878,698 | — | — | — | 878,698 | 878,698 | |||||||||||||||||||||
Other assets | 10 | 249,744 | — | — | — | 249,744 | 249,744 | |||||||||||||||||||||
Trade receivables | 13 | 1,912,348 | — | — | — | 1,912,348 | 1,912,348 | |||||||||||||||||||||
Other receivables | 13 | 315,835 | — | — | — | 315,835 | 315,835 | |||||||||||||||||||||
Derivative financial instruments | 13 | — | 6,998 | — | — | 6,998 | 6,998 | |||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||
Bank overdraft | 8 | — | — | 1,060,284 | 1,060,284 | 1,060,284 | ||||||||||||||||||||||
Finance lease liabilities | 17 | — | — | — | 201,317 | 201,317 | 201,317 | |||||||||||||||||||||
Other liabilities | 19 | — | — | 165,800 | 165,800 | 165,800 | ||||||||||||||||||||||
Borrowings from banks | 20 | — | — | 1,239,105 | 1,239,105 | 1,239,105 | ||||||||||||||||||||||
Borrowings from others | 20 | — | — | — | 163,165 | 163,165 | 163,165 | |||||||||||||||||||||
Trade and other payables | 21 | — | — | 1,798,764 | 1,798,764 | 1,798,764 |
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Financial | ||||||||||||||||||||||||||||
assets / | ||||||||||||||||||||||||||||
liabilities | ||||||||||||||||||||||||||||
at fair | ||||||||||||||||||||||||||||
value | ||||||||||||||||||||||||||||
through | Other | Total | ||||||||||||||||||||||||||
Loans and | profit and | Available | financial | carrying | Total fair | |||||||||||||||||||||||
Particulars | Note | receivables | loss | for sale | liabilities | value | value | |||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||
Cash and cash equivalents | 8 | 1,710,798 | — | — | — | 1,710,798 | 1,710,798 | |||||||||||||||||||||
Other assets | 10 | 227,468 | — | — | — | 227,468 | 227,468 | |||||||||||||||||||||
Trade receivables | 13 | 1,504,927 | — | — | — | 1,504,927 | 1,504,927 | |||||||||||||||||||||
Other receivables | 13 | 402,992 | — | — | — | 402,992 | 402,992 | |||||||||||||||||||||
Derivative financial instruments | 13 | — | 2,997 | — | — | 2,997 | 2,997 | |||||||||||||||||||||
Other investments | 15 | — | — | 13,874 | — | 13,874 | 13,874 | |||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||
Bank overdraft | 8 | — | — | 1,397,083 | 1,397,083 | 1,397,083 | ||||||||||||||||||||||
Finance lease liabilities | 17 | — | — | — | 155,325 | 155,325 | 155,325 | |||||||||||||||||||||
Other liabilities | 19 | — | — | 134,116 | 134,116 | 134,116 | ||||||||||||||||||||||
Borrowings from banks | 20 | — | — | 1,384,519 | 1,384,519 | 1,384,519 | ||||||||||||||||||||||
Trade and other payables | 21 | — | — | 1,411,358 | 1,411,358 | 1,411,358 |
March 31, 2010 | March 31, 2009 | |||||||
Cash and cash equivalents | 878,698 | 1,710,798 | ||||||
Other assets | 249,744 | 227,468 | ||||||
Trade receivables | 1,912,348 | 1,504,927 | ||||||
Other receivables | 315,835 | 402,992 | ||||||
3,356,625 | 3,846,185 | |||||||
As of | ||||||||
March 31, 2010 | March 31, 2009 | |||||||
Forward contracts | ||||||||
In U.S. Dollars (Sell) | — | — | ||||||
In U.S Dollars (Buy) | — | — | ||||||
Option contracts | ||||||||
In U.S Dollars (Sell) | 67,710 | 216,538 | ||||||
In U.S Dollars (Buy) | — | 25,475 |
As of | ||||||||
March 31, 2010 | March 31, 2009 | |||||||
Sell: | ||||||||
Not later than one month | 33,855 | 25,525 | ||||||
Later than one month and not later than three months | 33,855 | 50,950 | ||||||
Later than three months and not later than six months | — | 76,425 | ||||||
Later than six months and not later than one year | — | 63,638 | ||||||
67,710 | 216,538 | |||||||
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As of | ||||||||
March 31, 2010 | March 31, 2009 | |||||||
Buy: | ||||||||
Not later than one month | — | 25,475 | ||||||
Later than one month and not later than three months | — | — | ||||||
Later than three months and not later than six months | — | — | ||||||
Later than six months and not later than one year | — | — | ||||||
— | 25,475 | |||||||
Year ended | ||||||||||||
March 31, 2010 | March 31, 2009 | March 31, 2008 | ||||||||||
Loans and receivables | ||||||||||||
Interest income on bank deposits | 19,489 | 116,495 | 160,262 | |||||||||
Interest income from leases | — | 435 | 1,232 | |||||||||
Interest income from other loans and receivables | 8,505 | 5,635 | 289 | |||||||||
Impairment loss of trade receivables | (121,987 | ) | (84,346 | ) | (131,954 | ) | ||||||
Impairment loss on finance lease receivables | — | (6,929 | ) | — | ||||||||
Financial assets at fair value through profit or loss | ||||||||||||
Net change in fair value of derivative financial instruments | 6,998 | 2,997 | (3,312 | ) | ||||||||
Other financial liabilities | ||||||||||||
Interest expenses on lease obligations | (16,476 | ) | (2,243 | ) | (1,826 | ) | ||||||
Interest expenses on borrowings from banks, others and overdrafts | (177,156 | ) | (163,201 | ) | (9,372 | ) |
Year ended | ||||||||||||
March 31, 2010 | March 31, 2009 | March 31, 2008 | ||||||||||
Net change in fair value of available-for-sale financial assets | — | (5,361 | ) | (1,080 | ) |
• | Credit risk |
• | Liquidity risk |
• | Market risk |
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March 31, 2010 | March 31, 2009 | |||||||
Cash and cash equivalents | 878,698 | 1,710,798 | ||||||
Other assets | 249,744 | 227,468 | ||||||
Trade receivables | 1,912,348 | 1,504,927 | ||||||
Other receivables | 315,835 | 402,992 | ||||||
Derivative financial instruments | 6,998 | 2,997 | ||||||
Other investments | — | 20,315 | ||||||
3,363,623 | 3,869,497 |
Period (in days) | March 31, 2010 | March 31, 2009 | ||||||
Past due 181 - 270 days | 160,979 | 120,662 | ||||||
Past due 271 - 365 days | 29,346 | 59,534 | ||||||
More than 365 days | 114,932 | — | ||||||
305,257 | 180,196 | |||||||
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March 31, 2010 | March 31, 2009 | |||||||
Security deposits received for internet access services | 16,236 | 32,918 | ||||||
Carrying | Contractual | |||||||||||||||||||
amount | cash flows | 0-12 months | 1-3 years | 3-5 years | ||||||||||||||||
Non-derivative financial liabilities | ||||||||||||||||||||
Bank overdrafts | 1,060,284 | 1,060,284 | 1,060,284 | — | — | |||||||||||||||
Finance lease liabilities | 201,317 | 247,354 | 65,148 | 123,922 | 58,284 | |||||||||||||||
Other liabilities | 165,800 | 165,800 | 165,800 | — | — | |||||||||||||||
Borrowing from banks | 1,239,105 | 1,333,922 | 972,962 | 360,960 | — | |||||||||||||||
Borrowings from others | 163,165 | 207,828 | 57,041 | 91,247 | 59,540 | |||||||||||||||
Trade and other payables | 1,798,764 | 1,798,764 | 1,798,764 | — | — | |||||||||||||||
4,628,435 | 4,813,952 | 4,119,999 | 576,129 | 117,824 | ||||||||||||||||
Carrying | Contractual | |||||||||||||||||||
amount | cash flows | 0-12 months | 1-3 years | 3-5 years | ||||||||||||||||
Non-derivative financial liabilities | ||||||||||||||||||||
Bank overdrafts | 1,397,083 | 1,397,083 | 1,397,083 | — | — | |||||||||||||||
Finance lease liabilities | 155,325 | 180,989 | 42,743 | 84,746 | 53,500 | |||||||||||||||
Other liabilities | 134,116 | 134,116 | 134,116 | — | — | |||||||||||||||
Borrowing from banks | 1,384,159 | 1,498,236 | 1,261,604 | 200,694 | 35,938 | |||||||||||||||
Trade and other payables | 1,411,358 | 1,411,358 | 1,411,358 | — | — | |||||||||||||||
4,482,041 | 4,621,782 | 4,246,904 | 285,440 | 89,438 | ||||||||||||||||
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• | Forecasting inflows and outflows denominated in US$ for a twelve-month period | |
• | Estimating the net-exposure in foreign currency, in terms of timing and amount | |
• | Determining the extent to which exposure should be protected through one or more risk-mitigating instruments to maintain the permissible limits of uncovered exposures. |
• | Carrying out a variance analysis between estimate and actual on an ongoing basis, and taking stop-loss action when the adverse movements breaches the 5% barrier of deviation, subject to review by Audit Committee. |
USD | CAD | CHF | Euro | GBP | DHS | HKD | ||||||||||||||||||||||
Cash and cash equivalents | 1,198 | — | — | — | — | — | — | |||||||||||||||||||||
Trade receivables | 8,869 | 168 | 209 | 32 | 96 | 1 | — | |||||||||||||||||||||
Trade payables | (4,764 | ) | — | — | (31 | ) | (12 | ) | — | (11 | ) | |||||||||||||||||
Gross balance sheet exposure | 5,303 | 168 | 209 | 1 | 84 | 1 | (11 | ) | ||||||||||||||||||||
Forward exchange / option contracts | (1,500 | ) | — | — | — | — | — | — | ||||||||||||||||||||
Net exposure | 3,803 | 168 | 209 | 1 | 84 | 1 | (11 | ) |
USD | CAD | CHF | Euro | GBP | SGD | DHS | ||||||||||||||||||||||
Cash and cash equivalents | 1,347 | — | — | — | — | — | — | |||||||||||||||||||||
Trade receivables | 5,770 | 301 | 161 | 2 | 91 | 16 | — | |||||||||||||||||||||
Trade payables | (3,390 | ) | — | — | (15 | ) | (14 | ) | (26 | ) | (6 | ) | ||||||||||||||||
Gross balance sheet exposure | 3,727 | 301 | 161 | (13 | ) | 77 | (10 | ) | (6 | ) | ||||||||||||||||||
Forward exchange / option contracts | (3,750 | ) | — | — | — | — | — | — | ||||||||||||||||||||
Net exposure | (23 | ) | 301 | 161 | (14 | ) | 77 | (10 | ) | (6 | ) |
Other | ||||||||
comprehensive | ||||||||
income | Profit or loss | |||||||
March 31, 2010 | — | (19,367 | ) | |||||
March 31, 2009 | — | (2,253 | ) |
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Carrying amount | ||||||||
Fixed rate instruments | March 31, 2010 | March 31, 2009 | ||||||
Financial assets | ||||||||
- Fixed deposits with banks | 531,192 | 1,401,224 | ||||||
Financial liabilities | ||||||||
- Borrowings from banks | 697,165 | 850,826 | ||||||
- Borrowings from others | 163,165 | — | ||||||
Variable rate instruments | ||||||||
Financial liabilities | ||||||||
- Borrowings from banks | 541,940 | 533,333 | ||||||
- Bank overdrafts | 1,060,284 | 1,397,083 |
Equity | Profit or loss | |||||||
March 31, 2010 | — | (16,022 | ) | |||||
March 31, 2009 | — | (19,304 | ) |
• | As a consequence of the merger, the Company was eligible under the Indian Income-tax laws to consolidate the Income-tax returns of Sify and Sify Communications Limited retrospectively from April 1, 2008. Accordingly, the taxable income reported by Sify Communications Limited for the period subsequent to April 1, 2008 has been off-set against the previously fully reserved business losses of the Company. This resulted in the reversal of income tax liabilities aggregating to Rs.90,003 and a write off of deferred tax assets of Rs.8,524 during the year ended March 31, 2010. |
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• | Consequent to the approval of the merger by the Honorable High Court on June 26, 2009, the Company was obliged to issue 10,530,000 shares which the Company has duly issued on July 16, 2009, and accordingly, the fair value of shares to be issued as at June 26, 2009 has been considered as the consideration for the acquisition of the non-controlling interest. The difference between the fair value of the consideration paid and the face value of equity shares issued is recorded as share premium and the difference between the fair value of the consideration paid and the carrying amount of non-controlling interests is recorded as an adjustment in equity and is included as part of share premium. |
i. | to provide extension of time for listing the shares in the Indian stock exchanges | |
ii. | to grant a special permission to issue shares on rights basis to the existing shareholders |
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Particulars | Page No. | |||
165 | ||||
166 | ||||
167 | ||||
168 | ||||
169 | ||||
170 | ||||
171 |
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Firm Registration No. 301112E
Place: Mumbai
Date: November 26, 2010
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As at March 31, | ||||||||||||
Note | 2010 | 2009 | ||||||||||
ASSETS | ||||||||||||
Cash and bank balance | 11 | 148,213 | 181,616 | |||||||||
Cash-restricted | 12 | 2,489,847 | 2,347,862 | |||||||||
Interest bearing deposits with bank | 13 | 295,659 | 107,495 | |||||||||
Receivable from broker-dealers and clearing organizations | 9 | 65,884 | 42,228 | |||||||||
Receivable from customers (net of provision of Rs.22,300 and Rs. 80,000 respectively) | 8 | 437,207 | 171,993 | |||||||||
Available-for-sale securities: | ||||||||||||
Marketable, at market value | 14 | 877 | — | |||||||||
Not readily marketable (at estimated fair value) | 14 | 11,447 | 9,920 | |||||||||
Deposits with clearing organizations | 110,969 | 120,865 | ||||||||||
Interest accrued but not due | 71,443 | 102,170 | ||||||||||
Other assets | 10 | 220,282 | 189,581 | |||||||||
Intangible assets: | ||||||||||||
Computer software including work in progress (Rs. 238) | 5.1 | 28,424 | 16,074 | |||||||||
Memberships in exchanges | 5.2 | 5,782 | 9,495 | |||||||||
Property, plant and equipment | 6 | 70,159 | 80,540 | |||||||||
Deferred tax asset (Net) | 7 | 17,901 | 56,082 | |||||||||
Total assets | 3,974,094 | 3,435,921 | ||||||||||
EQUITY | ||||||||||||
Capital and reserves attributable to the Equity holders | ||||||||||||
Ordinary shares | 15 | 518,942 | 518,942 | |||||||||
Additional paid in capital | 28,968 | 28,968 | ||||||||||
Retained earnings | 1,564,231 | 1,256,688 | ||||||||||
Currency translations | 953 | 6,610 | ||||||||||
Fair value adjustments | 9,081 | 7,554 | ||||||||||
Total Equity | 2,122,175 | 1,818,762 | ||||||||||
LIABILITIES | ||||||||||||
Payable to broker dealers and clearing organizations | 9 | 139,965 | 227,786 | |||||||||
Payable to customers | 1,177,517 | 985,075 | ||||||||||
Borrowings | 17 | 3,508 | 4,645 | |||||||||
Accounts payable, accrued expenses, and other liabilities | 19 | 394,327 | 351,958 | |||||||||
Employee benefit obligation | 18 | 136,602 | 47,695 | |||||||||
Total Liabilities | 1,851,919 | 1,617,159 | ||||||||||
Total liabilities and Equity | 3,974,094 | 3,435,921 | ||||||||||
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Years ended March 31, | ||||||||||||||||
Note | 2010 | 2009 | 2008 | |||||||||||||
Income | ||||||||||||||||
Commissions | 1,201,594 | 914,969 | 1,761,848 | |||||||||||||
Depository and clearing fees | 35,488 | 34,456 | 78,324 | |||||||||||||
Interest on fixed deposits with banks | 238,491 | 325,547 | 497,683 | |||||||||||||
Other Income | 23 | 136,972 | 138,671 | 165,665 | ||||||||||||
Total Income | 1,612,545 | 1,413,643 | 2,503,520 | |||||||||||||
Expenses | ||||||||||||||||
Employee compensation and benefits | 21 | 607,775 | 515,234 | 745,773 | ||||||||||||
Exchange expenses and clearance fees | 165,769 | 130,904 | 253,658 | |||||||||||||
Brokerage to other broker-dealers | 152,002 | 95,859 | 177,795 | |||||||||||||
Communications and data processing | 28,168 | 27,585 | 24,707 | |||||||||||||
Bank Interest and guarantee commission | 7,616 | 28,883 | 42,522 | |||||||||||||
Depreciation and amortization | 37,398 | 38,348 | 36,086 | |||||||||||||
Occupancy | 75,210 | 69,933 | 37,990 | |||||||||||||
Write back of provision | 22 | (57,500 | ) | — | — | |||||||||||
Provision for receivable from customers | — | 2,925 | 675 | |||||||||||||
Advertisement and business promotion | 45,593 | 34,987 | 72,426 | |||||||||||||
Other expenses | 20 | 82,111 | 125,693 | 151,964 | ||||||||||||
Total Expenses | 1,144,142 | 1,070,351 | 1,543,596 | |||||||||||||
Profit before income tax | 468,403 | 343,292 | 959,924 | |||||||||||||
Income tax expense | 24 | 160,860 | 126,375 | 353,669 | ||||||||||||
Profit for the year attributable to the Equity holders | 307,543 | 216,917 | 606,255 | |||||||||||||
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Years ended March 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Net income for the year | 307,543 | 216,917 | 606,255 | |||||||||
Other comprehensive income | ||||||||||||
Available for sale financial assets | ||||||||||||
- Net change in fair value | 1,527 | (10,473 | ) | (7,885 | ) | |||||||
- Transfer to consolidated statement of income | — | — | (22,387 | ) | ||||||||
Foreign currency translation differences | ||||||||||||
Currency translation differences | (5,657 | ) | 9,257 | (1,586 | ) | |||||||
(4,130 | ) | (1,216 | ) | (31,858 | ) | |||||||
Total comprehensive income for the year | 303,413 | 215,701 | 574,397 |
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Number of | Additional | |||||||||||||||||||||||||||||||
ordinary | Par | Share | paid-in | Retained | Currency | Fair Value | Total | |||||||||||||||||||||||||
shares | value | capital | capital | earnings | translations | adjustment | Equity | |||||||||||||||||||||||||
Balance at April 1, 2007 | 51,894,182 | 10 | 518,942 | 28,968 | 433,516 | (1,061 | ) | 48,299 | 1,028,664 | |||||||||||||||||||||||
Currency translation differences | — | — | — | — | (1,586 | ) | — | (1,586 | ) | |||||||||||||||||||||||
Transfer to income statement on sale of available-for-sale securities, net of taxes | — | — | — | — | — | (22,387 | ) | (22,387 | ) | |||||||||||||||||||||||
Fair value loss on available-for-sale securities (net of tax) | — | — | — | — | (7,885 | ) | (7,885 | ) | ||||||||||||||||||||||||
Net income directly recognised in equity | — | — | — | — | (1,586 | ) | (30,272 | ) | (31,858 | ) | ||||||||||||||||||||||
Profit for the year | — | — | — | 606,255 | — | 606,255 | ||||||||||||||||||||||||||
Total recognised income and expense for the year | — | — | — | 606,255 | (1,586 | ) | (30,272 | ) | 574,397 | |||||||||||||||||||||||
Balance at March 31, 2008 | 51,894,182 | 10 | 518,942 | 28,968 | 1,039,771 | (2,647 | ) | 18,027 | 1,603,061 | |||||||||||||||||||||||
Currency translation differences | — | — | — | — | 9,257 | 9,257 | ||||||||||||||||||||||||||
Fair value loss on available-for-sale securities (net of tax) | — | — | — | — | (10,473 | ) | (10,473 | ) | ||||||||||||||||||||||||
Net loss directly recognised in equity | — | — | — | — | 9,257 | (10,473 | ) | (1,216 | ) | |||||||||||||||||||||||
Profit for the year | — | — | — | 216,917 | — | 216,917 | ||||||||||||||||||||||||||
Total recognised income and expense for the year | — | — | — | 216,917 | 9,257 | (10,473 | ) | 215,701 | ||||||||||||||||||||||||
Balance at March 31, 2009 | 51,894,182 | 10 | 518,942 | 28,968 | 1,256,688 | 6,610 | 7,554 | 1,818,762 | ||||||||||||||||||||||||
Currency translation differences | — | — | — | — | (5,657 | ) | (5,657 | ) | ||||||||||||||||||||||||
Fair value loss on available-for-sale securities (net of tax) | — | — | — | — | 1,527 | 1,527 | ||||||||||||||||||||||||||
Net loss directly recognised in equity | — | — | — | — | (5,657 | ) | 1,527 | (4,130 | ) | |||||||||||||||||||||||
Profit for the year | — | — | — | 307,543 | — | 307,543 | ||||||||||||||||||||||||||
Total recognised income and expense for the year | — | — | — | 307,543 | (5,657 | ) | 1,527 | 303,413 | ||||||||||||||||||||||||
Balance at March 31, 2010 | 51,894,182 | 10 | 518,942 | 28,968 | 1,564,231 | 953 | 9,081 | 2,122,175 | ||||||||||||||||||||||||
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Years ended March 31, | ||||||||||||||||
Note | 2010 | 2009 | 2008 | |||||||||||||
Cash flows from operating activities | ||||||||||||||||
Profit before income tax | 468,403 | 343,292 | 959,924 | |||||||||||||
Adjustments for | ||||||||||||||||
Depreciation and amortization | 37,398 | 38,348 | 35,980 | |||||||||||||
Profit on sale of Available-for-sale securities | — | (6,724 | ) | (51,816 | ) | |||||||||||
Provision on receivable from customers | 8 | (57,700 | ) | 2,925 | 675 | |||||||||||
Interest on fixed deposits with banks | (238,491 | ) | (325,547 | ) | (497,683 | ) | ||||||||||
Loss on Sale of Property,plant and equipment | 6 | 13 | — | — | ||||||||||||
Interest income | (5,566 | ) | (5,174 | ) | (11,160 | ) | ||||||||||
Dividend income | (283 | ) | (167 | ) | (548 | ) | ||||||||||
Others | 3,963 | (2,617 | ) | (33 | ) | |||||||||||
Movements in working capital | ||||||||||||||||
Cash-restricted | 12 | (141,985 | ) | 3,066,861 | (2,852,691 | ) | ||||||||||
Interest bearing deposits with banks | (188,164 | ) | (90,995 | ) | 113,924 | |||||||||||
Deposits with clearing organizations | 9,896 | 30,650 | (31,467 | ) | ||||||||||||
Receivable from broker-dealers and clearing organizations | 9 | (23,656 | ) | 312,213 | (293,525 | ) | ||||||||||
Receivable from customers | 8 | (207,514 | ) | 755,753 | (314,554 | ) | ||||||||||
Other assets | 10 | (3,857 | ) | 5,237 | (19,620 | ) | ||||||||||
Payable to broker dealers and clearing organizations | 9 | (87,821 | ) | (2,756,446 | ) | 1,788,638 | ||||||||||
Payable to customers | 192,442 | (1,509,559 | ) | 697,534 | ||||||||||||
Accounts payable, accrued expenses, and other liabilities | 19 | 42,370 | (330,331 | ) | 321,549 | |||||||||||
Stock appreciation rights | 18 | 88,907 | 23,973 | 15,218 | ||||||||||||
Cash provided by operations | (111,645 | ) | (448,308 | ) | (367,503 | ) | ||||||||||
Interest received | 5,566 | 5,174 | 11,160 | |||||||||||||
Interest received on fixed deposits placed | 269,218 | 457,503 | 325,282 | |||||||||||||
Income taxes paid | (149,524 | ) | (151,697 | ) | (389,865 | ) | ||||||||||
Net cash provided by/(used in) operating activities | 13,615 | (137,328 | ) | (420,926 | ) | |||||||||||
Cash flows from investing activities | ||||||||||||||||
Purchase of Available for Sale Securities: Marketable, At Market Value | (877 | ) | 168,004 | 72,325 | ||||||||||||
Available for Sale Securities: Not readily marketable (at estimated fair value) | — | — | 23,722 | |||||||||||||
Dividend income | 283 | 167 | 548 | |||||||||||||
Expenditure on Property, plant and equipment | 6 | (14,288 | ) | (35,695 | ) | (36,840 | ) | |||||||||
Expenditure on computer software | 5.1 | (25,342 | ) | (12,118 | ) | (7,265 | ) | |||||||||
Sale of Property, plant and equipment | — | 2,278 | 205 | |||||||||||||
Net cash (Used in) / provided by investing activities | (40,224 | ) | 122,636 | 52,695 | ||||||||||||
Cash flows from financing activities | ||||||||||||||||
Proceeds from loan from associate company | 383,700 | 270,000 | — | |||||||||||||
Repayment of loan to associate company | (383,700 | ) | (270,000 | ) | — | |||||||||||
(Repayment of) / Proceeds from borrowings | 17 | (1,137 | ) | (100,414 | ) | 105,059 | ||||||||||
Net cash ( Used in ) / provided by financing activities | (1,137 | ) | (100,414 | ) | 105,059 | |||||||||||
Effect of foreign exchange fluctuation (Unrealised) | (5,657 | ) | 9,257 | (1,586 | ) | |||||||||||
Net (decrease) in cash and bank balance | (33,403 | ) | (105,849 | ) | (36,910 | ) | ||||||||||
Cash and bank balance at beginning of the year | 11 | 181,616 | 287,465 | 324,375 | ||||||||||||
Cash and Bank balance at end of year | 11 | 148,213 | 181,616 | 287,465 | ||||||||||||
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1. | General information |
2. | Summary of significant accounting policies |
2.1. | Basis of preparation |
2.1.1. | Standards, amendments and interpretations effective as at 31 March 2010 |
• | IAS 1 (revised), ‘Presentation of financial statements’. The revised standard prohibits the presentation of items of income and expenses (that is ‘non-owner changes in equity’) in the statement of changes in equity, requiring ‘non-owner changes in equity’ to be presented separately from owner changes in equity. All ‘non-owner changes in equity’ are required to be shown in a performance statement. |
• | IFRS 2 (Amendment), Share-based payment. It clarifies that only service conditions and performance conditions are vesting conditions. All other features need to be included in the grant date fair value and do not impact the number of awards expected to vest or the valuation subsequent to grant date. The amendment also specifies that all cancellations, whether by the entity or by other parties, should receive the same accounting treatment. The group will apply the amendment from 1 April 2009. The Group has applied amendments from April 1, 2009, however this does not have any significant impact on consolidated statements. |
• | IFRS 7 ‘Financialinstruments — Disclosures’ (amendment) — effective 1 January 2009, the amendment requires enhanced disclosures about fair value measurement and liquidity risk. In particular, the amendment requires disclosure of fair value measurements by level of a fair value measurement hierarchy. As the change in accounting policy only results in additional disclosures, there is no impact on earnings per share. |
• | IFRIC 14, IAS 19 — The limit on a defined benefit asset, minimum funding requirements and their interaction; IFRIC 14 provides guidance on assessing the limit in IAS 19 on the amount of the surplus that can be recognized as an asset. It also explains how the pension asset or liability may be affected by a statutory or contractual minimum-funding requirement. The Group has applied IFRIC14, IAS 19 effective April 1, 2008. |
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2.1.2. | Amendments and interpretations effective as at 31 March 2010 but not relevant |
• | IFRS 8 Operating Segments |
• | IAS 23 (amendment), ‘Borrowing costs’. |
• | IFRIC 13, ‘Customer loyalty programmes’. |
• | IFRIC 15, ‘Agreements for the construction of real estate’. |
• | IFRIC 16, ‘Hedges of a net investment in a foreign operation’. |
2.1.3. | Standards, amendments and interpretations to existing standards that are not yet effective and have not been early adopted by the group |
• | IAS 27 (Revised),Consolidated and Separate Financial Statements. It requires a mandatory adoption of the economic entity model which treats all providers of equity capital as shareholders of the entity. Consequently, a partial disposal of interest in a subsidiary in which the parent company retains control does not result in a gain or loss but in an increase or decrease in equity. Purchase of some or all of the non-controlling interests (also known as minority interests) (“NCI”) is treated as a treasury transaction and accounted for in equity. A partial disposal of interest in a subsidiary in which the parent company loses control triggers recognition of gain or loss on the entire interest. A gain or loss is recognised on the portion that has been disposed of; a further holding gain is recognised on the interest retained, being the difference between the fair value of the interest and book value of the interest. |
• | IFRS 3 (Revised),Business Combinations. It has expanded the scope to include combinations by contract alone and combination of mutual entities and slightly amended the definition of business as ‘capable of being conducted’ rather than ‘are conducted and managed’. All the acquisition-related costs are to be recognised as period expenses in accordance with the appropriate IFRS. Costs incurred to issue debt or equity securities will be recognised in accordance with IAS 39. |
• | IFRS 9 ‘Financial Instruments’ introduces new requirements for classifying and measuring financial assets. IFRS 9 specifies how an entity should classify and measure its financial assets. It requires all financial assets to be classified in their entirety on the basis of the entity’s business model for managing the financial assets and the contractual cash flow characteristics of the financial assets. |
• | Revised IAS 24 (revised), ‘Related party disclosures’, issued in November 2009. It supersedes IAS 24, ‘Related party disclosures’, issued in 2003. The revised standard clarifies and simplifies the definition of a related party and removes the requirement for government-related entities to disclose details of all transactions with the government and other government-related entities. When the revised standard is applied, the group and the parent will need to disclose any transactions between its subsidiaries and its associates. |
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• | IFRS 5 (Amendment),Non-current assets held-for-sale and discontinued operations (and consequential amendment to IFRS 1,First-time adoption). The amendment clarifies that all of a subsidiary’s assets and liabilities are classified as held for sale if a partial disposal sale plan results in loss of control. The group will apply the IFRS 5 (Amendment) prospectively to all partial disposals of subsidiaries from 1 April 2010. |
• | IFRIC 17, Distributions of non-cash assets to owners.IFRIC 17 clarifies how an entity should measure distributions of assets, other than cash, when it pays dividends to its owners. The group will apply IFRIC 17 from 1 April 2010. |
• | IAS 1 (Amendment),Presentation of financial statements. The amendment clarifies that classification of a liability, that can at the option of the counterparty be settled by the issue of the entity’s equity instruments, on the basis of the requirements to transfer cash or other assets rather than on settlement better reflects the liquidity and solvency position of an entity. The group will apply the IAS 1 (Amendment) from 1 April 2010. It is not expected to have an impact on the group’s financial statements. |
• | IAS 7 (Amendment), ‘Statement of cash flows’ is part of the IASB’s annual improvements project published in April 2009. The amendment clarifies that only an expenditure that results in a recognised asset can be classified as a cash flow from investing activities. The group will apply the IAS 1 (Amendment) from 1 April 2010. It is not expected to have an impact on the group’s financial statements. |
• | IAS 17 (Amendment),Leases.The amendment modified the criteria for classification of lease that includes both land and buildings elements requiring an entity to assess the classification of each element as a finance or an operating lease separately in the same way as leases of other assets. The group will apply the IAS 17 (Amendment) from April 1, 2010. The Company is in process of assessing the impact, if any. |
2.1.4. | Amendments and interpretations to existing standards that are not yet effective and not relevant for the group’s operations |
• | IFRIC 13,Customer loyalty programmes,clarifies that where goods or services are sold together with a customer loyalty incentive, the arrangement is a multiple-element arrangement and the consideration receivable from the customer is allocated between the components of the arrangement using fair values. |
• | IFRIC 15,Agreements for construction of real estates,clarifies whether IAS 18,Revenue, or IAS 11,Construction contracts, should be applied to particular transactions. |
• | IFRIC 16,Hedges of a net investment in a foreign operation, clarifies the accounting treatment in respect of net investment hedging. This includes the fact that net investment hedging relates to differences in functional currency not presentation currency, and hedging instruments may be held anywhere in the group. The requirements of IAS 21,The effects of changes in foreign exchange rates, do apply to the hedged item. |
• | IFRIC 18, Transfers of assets from customers. IFRIC 18 clarifies the accounting for arrangements where an item of property, plant and equipment, which is provided by the customer, is used to provide an ongoing service. The interpretation applies prospectively to transfers of assets from customers received on or after 1 July 2009, although some limited retrospective application is permitted. |
• | IFRIC 19, ‘Extinguishing Financial Liabilities with Equity Instruments’ addresses the accounting by an entity when the terms of a financial liability are renegotiated and result in the entity issuing equity instruments to a creditor of the entity to extinguish all or part of the financial liability. |
• | IAS 38 (Amendment),Intangible assets. The amendment deletes the wording that states that there is ‘rarely, if ever’ support for use of a method that results in a lower rate of amortisation than the straight-line method. The amendment did not have an impact on the group’s operations, as all intangible assets are amortised using the straight-line method. |
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2.2. | Consolidation |
Percentage of | Percentage of | |||||||||
Country of | holding as at | holding as at | ||||||||
incorporation | March 31, 2010 | March 31, 2009 | ||||||||
Direct subsidiaries | ||||||||||
1)MF Global Commodities India Private Limited | India | 100 | % | 100 | % | |||||
2)MF Global Capital India Private Limited | India | 100 | % | 100 | % | |||||
Indirect Subsidiary | ||||||||||
1)MF Global Middle East DMCC | Dubai | 100 | % | 100 | % |
2.3. | Foreign currency translation |
a) | Functional and presentation currency |
• | assets and liabilities for each balance sheet presented are translated as at the closing rate at that balance sheet date; | ||
• | income and expenses for each income statement are translated at an average exchange rate; and | ||
• | all resulting exchange differences are recognised as a separate component of equity. |
b) | Transactions and balances |
2.4. | Property, plant and equipment |
Furniture and fixtures | 18.10 | % | ||
Computer systems | 40.00 | % | ||
Office equipments | 13.91 | % | ||
Vehicles | 25.89 | % |
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2.5. | Intangible assets |
a) | Software |
b) | Trading rights in Stock Exchange |
2.6. | Impairment of non-financial assets |
2.7. | Financial instruments |
2.8. | Financial assets |
a) | Loans and Receivables |
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b) | Available for sale |
2.9. | Derivatives and Trading |
2.10. | Receivables |
2.11. | Interest bearing deposits with banks |
2.12. | Cash and bank balance |
2.13. | Restricted Cash |
2.14. | Payables |
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2.15. | Borrowings — Bank overdraft |
2.16. | Provisions |
2.17. | Current and deferred income tax |
2.18. | Employee benefits |
a) | Provident Fund |
b) | Gratuity |
c) | Share-based payment |
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2.19. | Revenue Recognition |
a) | Commission, clearing fees, depository fee income |
b) | Dividend and Interest Income |
2.20. | Leases |
3. | Financial risk management objectives and policies |
3.1. | Financial risk factors |
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% of fixed deposits | ||||||||
Investment grade | 2010 | 2009 | ||||||
Highest safety | 100 | 100 | ||||||
High safety | — | — | ||||||
Adequate safety | — | — | ||||||
100 | 100 | |||||||
• | establishing risk parameters based on analysis of current and historical prices and price volatility; |
• | intra-day and end of day risk limit monitoring, including intra-day position and trade monitoring to identify any accounts trading beyond pre-set limits and parameters; |
• | market risk analysis and evaluation of adequacy of margin requirements for traded products; |
• | intra-day stress analysis for material market moves or accounts with material position taking and |
• | approval of margin requirements, limits and risk control of new instruments |
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Within 6 | 6 months to | 2 to 3 | After 3 | |||||||||||||||||
months | 1 Year | years | years | Total | ||||||||||||||||
Financial Liabilities | ||||||||||||||||||||
Payable to broker dealers and clearing organizations | 139,965 | — | — | — | 139,965 | |||||||||||||||
Payable to customers | 1,177,517 | — | — | — | 1,177,517 | |||||||||||||||
Borrowings | 3,508 | — | — | — | 3,508 | |||||||||||||||
Accounts payable, accrued expenses, and other liabilities | 394,327 | — | — | — | 394,327 | |||||||||||||||
1,715,317 | — | — | — | 1,715,317 | ||||||||||||||||
Within 6 | 6 months to | 2 to 3 | After 3 | |||||||||||||||||
months | 1 Year | years | years | Total | ||||||||||||||||
The group has at its disposal following financial assets in addition to unused lines of credit. | ||||||||||||||||||||
Cash and bank balance | 148,213 | — | — | — | 148,213 | |||||||||||||||
Cash-restricted | 2,179,803 | 310,044 | — | — | 2,489,847 | |||||||||||||||
Interest bearing deposits with bank | 107,445 | 188,214 | — | — | 295,659 | |||||||||||||||
Deposits with clearing organizations | — | — | — | 110,969 | 110,969 | |||||||||||||||
Receivable from broker-dealers and clearing organizations | 65,884 | — | — | — | 65,884 | |||||||||||||||
Receivable from customers | 437,207 | — | — | — | 437,207 | |||||||||||||||
Available-for-sale securities Marketable, at market value | 877 | — | — | — | 877 | |||||||||||||||
Available-for-sale securities not readily marketable, at fair value | 11,447 | — | — | — | 11,447 | |||||||||||||||
Interest accrued but not due | 71,443 | — | — | — | 71,443 | |||||||||||||||
3,022,319 | 498,258 | — | 110,969 | 3,631,546 | ||||||||||||||||
Within 6 | 6 months to | 2 to 3 | After 3 | |||||||||||||||||
months | 1 Year | years | years | Total | ||||||||||||||||
Financial Liabilities | ||||||||||||||||||||
Payable to broker dealers and clearing organizations | 227,786 | — | — | — | 227,786 | |||||||||||||||
Payable to customers | 985,075 | — | — | — | 985,075 | |||||||||||||||
Borrowings | 781 | 781 | 2,302 | 781 | 4,645 | |||||||||||||||
Accounts payable, accrued expenses, and other liabilities | 351,958 | — | — | — | 351,958 | |||||||||||||||
1,565,600 | 781 | 2,302 | 895 | 1,569,464 | ||||||||||||||||
Within 6 | 6 months to | 2 to 3 | After 3 | |||||||||||||||||
months | 1 Year | years | years | Total | ||||||||||||||||
The group has at its disposal following financial assets in addition to unused lines of credit. | ||||||||||||||||||||
Cash and Bank balance | 181,616 | — | — | — | 181,616 | |||||||||||||||
Cash-restricted | 1,081,574 | 1,266,288 | — | — | 2,347,862 | |||||||||||||||
Interest bearing deposits with bank | 87,495 | 20,000 | — | — | 107,495 | |||||||||||||||
Deposits with clearing organizations | — | — | — | 120,865 | 120,865 | |||||||||||||||
Receivable from broker-dealers and clearing organizations | 42,228 | — | — | — | 42,228 | |||||||||||||||
Receivable from customers | 171,993 | — | — | — | 171,993 | |||||||||||||||
Available-for-sale securities Marketable, at market value | — | — | — | — | — | |||||||||||||||
Interest accrued but not due | 102,170 | — | — | — | 102,170 | |||||||||||||||
1,667,076 | 1,286,288 | — | 120,865 | 3,074,229 | ||||||||||||||||
As at March 31, | ||||||||
2010 | 2009 | |||||||
Fund based facilities (working capital) | 500,000 | 350,950 | ||||||
Non-fund facilities | 1,060,000 | 402,148 | ||||||
Total | 1,560,000 | 753,098 | ||||||
3.2. | Capital risk management |
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3.3. | Fair value estimation |
4. | Critical accounting estimates and judgements |
4.1. | Critical accounting estimates |
4.2. | Criticial accounting judgements in applying the entity’s accounting policy | |
4.2.1. | Revenue recognition | |
MF estimates that fixed deposits placed with banks will be held till maturity while determining the accrued interest, which is unpaid on balance sheet date. In the event 1% of such deposit is withdrawn before maturity date the Interest income will be lower by Rs. 63. |
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5. | Intangible assets |
5.1. | Software |
Web | ||||||||||||
Computer | Development | |||||||||||
Software | Costs | Total | ||||||||||
Cost | ||||||||||||
As at March 31, 2008 | 51,446 | 207,452 | 258,898 | |||||||||
Additions | 12,118 | — | 12,118 | |||||||||
Exchange difference | 50 | — | 50 | |||||||||
As at March 31, 2009 | 63,614 | 207,452 | 271,066 | |||||||||
Additions | 25,104 | — | 25,104 | |||||||||
Disposals | — | (30 | ) | (30 | ) | |||||||
Exchange difference | (27 | ) | (27 | ) | ||||||||
As at March 31, 2010 | 88,691 | 207,422 | 296,113 | |||||||||
Accumulated amortisation | ||||||||||||
As at March 31, 2008 | 35,766 | 207,452 | 243,218 | |||||||||
Charge for the year | 11,733 | — | 11,733 | |||||||||
Exchange difference | 41 | — | 41 | |||||||||
As at March 31, 2009 | 47,540 | 207,452 | 254,992 | |||||||||
Charge for the year | 12,992 | 12,992 | ||||||||||
Disposals | — | (30 | ) | (30 | ) | |||||||
Exchange difference | (27 | ) | — | (27 | ) | |||||||
As at March 31, 2010 | 60,505 | 207,422 | 267,927 | |||||||||
Net book amount as at | ||||||||||||
March 31, 2010 | 28,424 | 28,424 | ||||||||||
March 31, 2009 | 16,074 | — | 16,074 | |||||||||
Capital Work in Progress | 238 | — | 238 |
5.2. | Membership in Exchanges |
a) | BSE membership of Rs.1,257 and Rs 4,387 as at March 31, 2010 and 2009 respectively, and |
b) | DGCX membership of Rs.4,525 and Rs. 5,108 as at March 31, 2010 and 2009, respectively. DGCX membership value underwent a change due to foreign currency translation. |
Membership rights of BSEL | On the basis of the benefits which MF Global Sify would get over the current deposit based membership right of BSEL | |
Equity shares of BSEL | On the basis of the fair value of the equity shares of BSEL determined by the management |
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6. | Property, Plant and Equipment |
Furniture and | Computers | Office | ||||||||||||||||||
Fixtures | Systems | equipments | Vehicles | Total | ||||||||||||||||
Cost | ||||||||||||||||||||
As at March 31, 2008 | 6,383 | 147,441 | 20,781 | 19,110 | 193,715 | |||||||||||||||
Additions | 1,537 | 18,243 | 15,915 | — | 35,695 | |||||||||||||||
Disposals | — | (813 | ) | — | (6,108 | ) | (6,921 | ) | ||||||||||||
Exchange difference | 262 | 190 | 165 | 213 | 830 | |||||||||||||||
As at March 31, 2009 | 8,182 | 165,061 | 36,861 | 13,215 | 223,319 | |||||||||||||||
Additions | 288 | 12,982 | 1,018 | — | 14,288 | |||||||||||||||
Disposals | — | (6 | ) | (7 | ) | — | (13 | ) | ||||||||||||
Exchange difference | (153 | ) | (110 | ) | (92 | ) | (114 | ) | (469 | ) | ||||||||||
As at March 31, 2010 | 8,317 | 177,927 | 37,780 | 13,101 | 237,125 | |||||||||||||||
Accumulated depreciation | ||||||||||||||||||||
As at March 31, 2008 | 1,492 | 106,150 | 7,038 | 6,153 | 120,833 | |||||||||||||||
Charge for the year | 1,571 | 19,780 | 2,401 | 2,864 | 26,616 | |||||||||||||||
Disposals | — | (647 | ) | — | (4,304 | ) | (4,951 | ) | ||||||||||||
Exchange difference | 107 | 108 | 46 | 20 | 281 | |||||||||||||||
As at March 31, 2009 | 3,170 | 125,391 | 9,485 | 4,733 | 142,779 | |||||||||||||||
Charge for the year | 913 | 17,395 | 3,923 | 2,175 | 24,406 | |||||||||||||||
Disposals | — | (5 | ) | (1 | ) | — | (6 | ) | ||||||||||||
Exchange difference | (72 | ) | (77 | ) | (32 | ) | (32 | ) | (213 | ) | ||||||||||
As at March 31, 2010 | 4,011 | 142,704 | 13,375 | 6,876 | 166,966 | |||||||||||||||
Net book amount as at | ||||||||||||||||||||
March 31, 2010 | 4,306 | 35,223 | 24,405 | 6,225 | 70,159 | |||||||||||||||
March 31, 2009 | 5,012 | 39,670 | 27,376 | 8,482 | 80,540 |
7. | Deferred income tax |
2010 | 2009 | |||||||
At April 1 | 56,082 | 54,682 | ||||||
Property Plant and Equipment | (3,422 | ) | (867 | ) | ||||
Provision on receivable from customers | (19,783 | ) | 994 | |||||
Stock appreciation rights | (8,060 | ) | 8,200 | |||||
Provision for Bonus | (8,593 | ) | (6,528 | ) | ||||
Preliminary Expenses | — | (32 | ) | |||||
Gratuity | 59 | (873 | ) | |||||
Stamp duty | 1,618 | — | ||||||
Gain on Exchange Shares | — | 506 | ||||||
At March 31 | 17,901 | 56,082 | ||||||
Comprised Of: | ||||||||
Deferred tax assets | 18,215 | 56,455 | ||||||
Deferred tax liabilities | (314 | ) | (373 | ) | ||||
17,901 | 56,082 | |||||||
2010 | 2009 | |||||||
Deferred tax assets: | ||||||||
Property Plant and Equipment | 829 | 4,251 | ||||||
Provision on receivable from customers | 7,364 | 27,147 | ||||||
Stock appreciation rights | 7,477 | 15,537 | ||||||
Provision for Bonus | 927 | 9,520 | ||||||
Stamp Duty | 1,618 | — | ||||||
18,215 | 56,455 | |||||||
Deferred tax liabilities: | ||||||||
Gratuity | (314 | ) | (373 | ) | ||||
(314 | ) | (373 | ) | |||||
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Mar-10 | Mar-09 | |||||||
Deferred tax assets: | ||||||||
— Deferred tax asset to be recovered after more than 12 months | 9,811 | 31,398 | ||||||
— Deferred tax asset to be recovered within 12 months | 8,404 | 25,057 | ||||||
18,215 | 56,455 | |||||||
Deferred tax liabilities: | ||||||||
— Deferred tax liability to be recovered after more than 12 months | (314 | ) | (373 | ) | ||||
— Deferred tax liability to be recovered within 12 months | — | — | ||||||
(314 | ) | (373 | ) | |||||
Deferred tax Assets (net) | 17,901 | 56,082 | ||||||
Provision on | Prelimi | |||||||||||||||||||||||||||
Property | receivable | Stock | nary | |||||||||||||||||||||||||
Plant and | from | appreciat | Provision | Expend | Stamp | Grand | ||||||||||||||||||||||
Equipment | customers | ion rights | for Bonus | iture | Duty | Total | ||||||||||||||||||||||
Deferred tax assets: | ||||||||||||||||||||||||||||
Opening Balance as on April 1, 2008 | 5,118 | 26,153 | 7,337 | 16,048 | 32 | — | 54,688 | |||||||||||||||||||||
Charged / (Credited) to Other Comprehensive Income | (867 | ) | 994 | 8,200 | (6,528 | ) | (32 | ) | — | 1,767 | ||||||||||||||||||
Effect of Change in Tax rates | — | — | — | — | — | — | — | |||||||||||||||||||||
As at March 31, 2009 | 4,251 | 27,147 | 15,537 | 9,520 | — | — | 56,455 | |||||||||||||||||||||
Charged / (Credited) to Other Comprehensive Income | (3,325 | ) | (19,166 | ) | (6,605 | ) | (8,375 | ) | 1,618 | (35,853 | ) | |||||||||||||||||
Effect of Change in Tax rates | (97 | ) | (617 | ) | (1,455 | ) | (218 | ) | — | (2,387 | ) | |||||||||||||||||
As at March 31, 2010 | 829 | 7,364 | 7,477 | 927 | 1,618 | 18,215 | ||||||||||||||||||||||
Gain on | ||||||||||||
Exchange | ||||||||||||
Shares | Gratuity | Grand Total | ||||||||||
Deferred tax liabilities: | ||||||||||||
Opening Balance as on April 1, 2008 | 506 | (500 | ) | 6 | ||||||||
Charged / (Credited) to Other Comprehensive Income | (506 | ) | 873 | 367 | ||||||||
Effect of Change in Tax rates | ||||||||||||
As at March 31, 2009 | — | 373 | 373 | |||||||||
Charged / (Credited) to Other Comprehensive Income | — | (53 | ) | (53 | ) | |||||||
Effect of Change in Tax rates | — | (6 | ) | (6 | ) | |||||||
As at March 31, 2010 | — | 314 | 314 | |||||||||
8. | Receivables from customers |
As at March 31, | ||||||||
2010 | 2009 | |||||||
Up to 6 months | 436,535 | 162,268 | ||||||
more than 6 months | 672 | 9,725 | ||||||
437,207 | 171,993 | |||||||
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As at March 31, | ||||||||
2010 | 2009 | |||||||
Up to 6 months | 5,020 | 13,020 | ||||||
more than 6 months | 17,280 | 66,980 | ||||||
22,300 | 80,000 | |||||||
As at March 31, | ||||||||
2010 | 2009 | |||||||
437,207 | 171,993 | |||||||
437,207 | 171,993 | |||||||
As at March 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
As at the beginning of the year | 80,000 | 77,075 | 76,400 | |||||||||
Provision for impairment | — | 2,925 | 675 | |||||||||
Write back of provision | (57,700 | ) | — | — | ||||||||
As at the closing of the year | 22,300 | 80,000 | 77,075 | |||||||||
9. | Receivable from and payable to broker-dealer and clearing organisations |
As of March 31, | ||||||||||||||||
2010 | 2009 | |||||||||||||||
Receivable | Payable | Receivable | Payable | |||||||||||||
Clearing organizations — | ||||||||||||||||
— Unsettled trade | 60,250 | 8,327 | 27,760 | 29,614 | ||||||||||||
Broker-Dealer | 5,634 | 131,638 | 14,468 | 198,172 | ||||||||||||
65,884 | 139,965 | 42,228 | 227,786 | |||||||||||||
10. | Other assets |
As at March 31, | ||||||||
2010 | 2009 | |||||||
Prepaid expenses | 19,890 | 28,983 | ||||||
Advance tax (net of provisions) | 124,124 | 97,281 | ||||||
Deposits | 30,976 | 29,015 | ||||||
Loans and advances (to staff) | 22,168 | 10,579 | ||||||
Gratuity Trust | 3,232 | 2,343 | ||||||
Others* | 19,892 | 21,380 | ||||||
220,282 | 189,581 | |||||||
* | includes Advances to vendors towards expenses, delayed payment charges from clients, withholding tax recoverable, etc. |
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11. | Cash and Bank Balance |
As at March 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Cash in hand | 32 | 20 | 21 | |||||||||
Cash at bank | 148,181 | 181,596 | 287,444 | |||||||||
148,213 | 181,616 | 287,465 | ||||||||||
12. | Cash — restricted |
13. | Interest bearing deposits with banks |
14. | Available for Sale Securities |
As at March 31, | ||||||||
2010 | 2009 | |||||||
3,500 shares of Rural Electrification Corporation Limited ( FV of Rs. 10 each) — Listed | 877 | — | ||||||
70,694 shares of Bombay Stock Exchange Limited (FV of Rs 1 each) — Unlisted | 11,447 | 9,920 | ||||||
15. | Share capital and Dividend distribution |
As at March 31, | ||||||||
2010 | 2009 | |||||||
Authorised capital | ||||||||
65,000,000 ordinary shares of Rs.10/- per share | 650,000 | 650,000 |
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16. | Share—based payments |
• | Corporate tax rate — Current period tax rate is considered as corporate tax rate. |
• | Future maintainable profit — Future maintainable profit is derived based on simple average adjusted PBT for each year. From the future maintainable profit, corporate tax at the Corporate tax rate has been deducted to derive future maintainable profit after tax. |
• | Expected rate of return — Expected rate of return is determined based on the average price earnings multiple of comparable companies on the basis of their 12 months average market prices. |
As at March 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
As at the beginning of the year | 2,898,747 | 1,512,747 | 711,247 | |||||||||
Granted during the year | — | 1,386,000 | 809,500 | |||||||||
Exercised | — | — | — | |||||||||
Forfeited | (120,008 | ) | (115,500 | ) | (62,000 | ) | ||||||
Reissued | 100,508 | 115,500 | 54,000 | |||||||||
Lapsed | — | — | — | |||||||||
As at the end of the year | 2,879,747 | 2,898,747 | 1,512,747 | |||||||||
Exercisable at the end of the year | — | — | ||||||||||
Approximate remaining vesting period in years | 1.24 | 2.98 | 3.92 |
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17. | Borrowings |
Effective interest | As at March 31, | |||||||||||
rate | 2010 | 2009 | ||||||||||
Car Loan (Secured) | 10 | % | 3,508 | 4,645 | ||||||||
3,508 | 4,645 | |||||||||||
As at March 31, | ||||||||
2010 | 2009 | |||||||
On demand or within one year | 1,266 | 1,156 | ||||||
In one to three years | 2,242 | 2,622 | ||||||
In three to five years | — | 867 | ||||||
3,508 | 4,645 | |||||||
18. | Employee benefit obligation |
Years ended March 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Gratuity | 856 | 844 | 1,772 | |||||||||
Stock appreciation rights | 135,746 | 46,851 | 22,616 | |||||||||
136,602 | 47,695 | 24,388 | ||||||||||
Years ended March 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Opening defined benefit obligation | 9,700 | 9,458 | 6,287 | |||||||||
Current service cost | 2,853 | 3,000 | 3,110 | |||||||||
Interest cost | 679 | 755 | 505 | |||||||||
Actuarial losses/ (gains) | (3,373 | ) | (3,471 | ) | (444 | ) | ||||||
Benefits paid | — | (42 | ) | — | ||||||||
Closing defined benefit obligation | 9,859 | 9,700 | 9,458 | |||||||||
Years ended March 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Beginning of year | 11,200 | 7,686 | 4,027 | |||||||||
Expected return on plan assets | 1,025 | 832 | 321 | |||||||||
Actuarial (losses)/gains | 11 | (129 | ) | 32 | ||||||||
Employer contributions | — | 2,853 | 3,306 | |||||||||
Benefits paid | — | (42 | ) | — | ||||||||
Closing fair value of plan assets | 12,236 | 11,200 | 7,686 | |||||||||
Years ended March 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Current service cost | 2,853 | 3,000 | 3,153 | |||||||||
Interest cost | 679 | 755 | 505 | |||||||||
Actuarial loss | (3,384 | ) | (3,342 | ) | (537 | ) | ||||||
Expected return on plan asset | (1,025 | ) | (832 | ) | (321 | ) | ||||||
(877 | ) | (419 | ) | 2,800 | ||||||||
Years ended March 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Discount rate | 7 | % | 8 | % | 8 | % | ||||||
Expected return on plan assets | 9.25 | % | 9.15 | % | 8 | % | ||||||
Long term rate of compensation increase | 6 | % | 6 | % | 6 | % |
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19. | Accounts payables, accrued expenses and other liabilities |
As at March 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Accruals | 41,489 | 35,541 | 42,205 | |||||||||
Withholding tax payable | 71,382 | 52,060 | 147,729 | |||||||||
Bonus Payable | 157,410 | 126,350 | 307,076 | |||||||||
Other payables | 124,046 | 138,007 | 185,279 | |||||||||
Total | 394,327 | 351,958 | 682,289 | |||||||||
20. | Other Expenses |
Years ended March 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Professional Fees | 11,059 | 10,590 | 17,562 | |||||||||
Travelling and conveyance | 16,068 | 15,872 | 18,844 | |||||||||
Books & Periodicals, Postage, printing and stationary | 25,817 | 33,466 | 46,284 | |||||||||
Loss on sale of available-for-sale securities (net) | 12,602 | 12,452 | 30,818 | |||||||||
Repairs & maintenance | 145 | 2,717 | 708 | |||||||||
Service fee expenses | — | 15,735 | 22,222 | |||||||||
Insurance Premium | 963 | 19,801 | 3,632 | |||||||||
Others | 15,457 | 15,060 | 11,894 | |||||||||
Total | 82,111 | 125,693 | 151,964 | |||||||||
21. | Employee benefit expense |
Years ended March 31 | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Salaries and bonus | 508,264 | 483,382 | 720,070 | |||||||||
Defined contribution plans | 3,452 | 3,968 | 3,828 | |||||||||
Defined benefit plans | 159 | 285 | 2,800 | |||||||||
Staff welfare expenses | 6,796 | 2,896 | 3,688 | |||||||||
Share—based compensation expense | 89,104 | 23,973 | 15,218 | |||||||||
Fringe benefit tax | — | 730 | 169 | |||||||||
Total | 607,775 | 515,234 | 745,773 | |||||||||
22. | Write back of provision |
23. | Other income |
Years ended March 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Profit on sale of available-for-sale securities | — | 6,724 | 51,816 | |||||||||
Delayed payment charges(*) | 24,999 | 39,215 | 52,622 | |||||||||
Research fees | 3,072 | 2,824 | 7,861 | |||||||||
Referral fees(**) | 51,160 | 51,990 | 20,527 | |||||||||
Interest | 5,566 | 5,174 | 11,160 | |||||||||
Dividend | 283 | 167 | 548 | |||||||||
Currency fluctuation gain | 7,960 | — | — | |||||||||
Expenses Reversal(***) | 17,567 | — | — | |||||||||
Miscellaneous income | 26,365 | 32,577 | 21,131 | |||||||||
Total | 136,972 | 138,671 | 165,665 | |||||||||
(*) | Delayed payment charges represents the penal charges levied to clients on account of delay in settlement of their trade related obligations. | |
(**) | Referral fees consist of payments received for introducing clients to other MF Global associated companies. | |
(***) | The amount of Rs 17,567 was provided in year 2009 on account of group recharges from MF Global Holdings Limited (formerly known as MF Global Limited) has been reversed during the current year on account of mutual agreement between the stakeholders. |
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24. | Income tax expense |
Years ended March 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Current tax | 122,679 | 127,269 | 360,626 | |||||||||
Deferred tax | 38,181 | (894 | ) | (6,957 | ) | |||||||
160,860 | 126,375 | 353,669 | ||||||||||
Years ended March 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Net income before taxes | 468,403 | 343,292 | 959,924 | |||||||||
Enacted tax rates in India | 33.99 | % | 33.99 | % | 33.99 | % | ||||||
Computed tax expense | 159,210 | 116,685 | 326,278 | |||||||||
Income exempt from tax: | ||||||||||||
Dividend | (96 | ) | (57 | ) | (198 | ) | ||||||
Non-deductible expenses: | ||||||||||||
Contribution to co-investment plan | 751 | 751 | 751 | |||||||||
Security transaction tax not allowable | — | — | 3,022 | |||||||||
Others including donations, FBT, etc. | 1,228 | 1,275 | 1,335 | |||||||||
Recharges by parent and affiliate companies | 980 | 8,498 | — | |||||||||
Provision for disallowance of previous year expenses | — | — | 26,675 | |||||||||
Income charged at lower rate | — | — | (2,536 | ) | ||||||||
(Gain) / Loss in Subsidiaries | (3,294 | ) | (1,123 | ) | 491 | |||||||
Others | 2,081 | 346 | (2,149 | ) | ||||||||
Income taxes recognized in the statement of income | 160,860 | 126,375 | 353,669 | |||||||||
25. | Financial instruments by category |
Loans and | Available | |||||||||||
March 31, 2010 | receivables | for sale | Total | |||||||||
Assets as per balance sheet | ||||||||||||
Cash and Bank balance | 148,213 | — | 148,213 | |||||||||
Cash-restricted | 2,489,847 | — | 2,489,847 | |||||||||
Interest bearing deposits with bank | 295,659 | — | 295,659 | |||||||||
Deposits with clearing organizations and others | 110,969 | — | 110,969 | |||||||||
Receivable from broker-dealers and clearing organizations | 65,884 | — | 65,884 | |||||||||
Receivable from customers | 437,207 | — | 437,207 | |||||||||
Available-for-sale securities: | ||||||||||||
Marketable, at market value | — | 877 | 877 | |||||||||
Not readily marketable (at estimated fair value) | — | 11,447 | 11,447 | |||||||||
Interest accrued but not due | 71,443 | — | 71,443 | |||||||||
Other assets | 203,982 | — | 203,982 | |||||||||
3,823,204 | 12,324 | 3,835,528 | ||||||||||
Other | ||||||||||||
financial | ||||||||||||
March 31, 2010 | liabilities | Total | ||||||||||
Liabilities as per balance sheet | ||||||||||||
Payable to broker dealers and clearing organizations | 139,965 | 139,965 | ||||||||||
Payable to customers | 1,177,517 | 1,177,517 | ||||||||||
Borrowings | 3,508 | 3,508 | ||||||||||
Accounts payable, accrued expenses, and other liabilities | 394,327 | 394,327 | ||||||||||
1,715,317 | 1,715,317 | |||||||||||
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Loans and | Available | |||||||||||
March 31, 2009 | receivables | for sale | Total | |||||||||
Assets as per balance sheet | ||||||||||||
Cash and Bank balance | 181,616 | — | 181,616 | |||||||||
Cash-restricted | 2,347,862 | — | 2,347,862 | |||||||||
Interest bearing deposits with bank | 107,495 | — | 107,495 | |||||||||
Deposits with clearing organizations and others | 120,865 | — | 120,865 | |||||||||
Receivable from broker-dealers and clearing organizations | 42,228 | — | 42,228 | |||||||||
Receivable from customers | 171,993 | — | 171,993 | |||||||||
Available-for-sale securities: | ||||||||||||
Marketable, at market value | — | — | — | |||||||||
Not readily marketable (at estimated fair value) | — | 9,920 | 9,920 | |||||||||
Interest accrued but not due | 102,170 | — | 102,170 | |||||||||
Other assets | 189,581 | — | 189,581 | |||||||||
3,263,810 | 9,920 | 3,273,730 | ||||||||||
Other | ||||||||||||
financial | ||||||||||||
March 31, 2009 | liabilities | Total | ||||||||||
Liabilities as per balance sheet | ||||||||||||
Payable to broker dealers and clearing organizations | 227,786 | 227,786 | ||||||||||
Payable to customers | 985,075 | 985,075 | ||||||||||
Borrowings | 4,645 | 4,645 | ||||||||||
Accounts payable, accrued expenses, and other liabilities | 351,958 | 351,958 | ||||||||||
1,569,464 | 1,569,464 | |||||||||||
26. | During October 2010, Sify Technologies Limited, the minority shareholder of the Company holding 29.85 percent of the outstanding shares of the Company, requested the Company’s Board of Directors to reconsider certain costs charged to the Company by MF Global Holdings Limited (the majority shareholder) and its affiliated and associated group companies, who hold 70.15 percent of the outstanding shares of the Company. These charges are currently recorded in the financial statements of the Company for year ended March 31, 2008 aggregating to Rs. 43,478,911 and March 31, 2009 aggregating to Rs. 15,374,528. The resolution of this matter between the shareholders remains uncertain and any financial adjustment that may arise is not presently known. Any financial adjustment that may arise on resolution of the said matter would be expected to be handled prospectively and therefore would be reported in the period in which it is resolved. |
27. | Commitments and contingencies |
As at March 31, | ||||||||
2010 | 2009 | |||||||
Not later than 1 year | — | — | ||||||
Later than 1 year and not later than 5 years | 59,087 | 61,067 | ||||||
Later than 5 years | 13,771 | 71,636 | ||||||
Total minimum lease commitments | 72,858 | 132,703 | ||||||
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28. | Related party transactions |
Nature of Relationship | Related Party | |
Holding enterprises: | MF Global Overseas Limited | |
Ultimate Holding company: | MF Global Holdings Limited (Formerly known as MF Global Limited) |
Party having substantial interest | Sify Technologies Limited |
Nature of Relationship | Related Party | |
Subsidiary companies: | MF Global Commodities India Private Limited | |
MF Global Middle East DMCC | ||
MF Global Capital India Private Limited | ||
Fellow subsidiary companies: (where transactions exist) | MF Global India Private Limited MF Global Holdings HK Limited | |
MF Global Finance & Investment Services India Private Limited | ||
MF Global Centralised Services India Private Limited | ||
MF Global UK Limited | ||
MF Global DE | ||
Key management personnel: | Mr. Vineet Bhatnagar | |
Mr. Rajendra Bhambani | ||
Other enterprises under control of the key management personnel and their relatives: | Mr. Laurence O’connell* (* resigned with effect from May 25, 2010) MF Global Capital Services India Private Limited |
Years ended March 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Services provided by MF to: | ||||||||||||
Holding companies | ||||||||||||
Reimbursement of Expenses | 539 | 3,205 | — | |||||||||
Fellow Subsidiary Companies | ||||||||||||
Referral Fees | 51,162 | 51,992 | 20,527 | |||||||||
Reimbursement of Expenses | 5,646 | 5,185 | — | |||||||||
Service Fees | — | 8,715 | — | |||||||||
57,347 | 69,097 | 20,527 | ||||||||||
Services received by MF from: | ||||||||||||
Holding companies | ||||||||||||
Reimbursement of Expenses | — | — | — | |||||||||
Service Fees | — | 9,349 | 8,263 | |||||||||
Bank Guarantee Commission | 497 | 1,692 | 14,616 | |||||||||
Insurance Premium | (17,567 | ) | 17,842 | — | ||||||||
Purchase / AMC of Computer Hardware | — | 6,600 | — | |||||||||
Fellow Subsidiary Companies | ||||||||||||
Reimbursement of Expenses | — | — | 2,780 | |||||||||
Service Fees | — | 6,386 | 13,998 |
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Years ended March 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Membership & Subscription | — | — | 3,447 | |||||||||
Insurance Premium | — | — | 1,809 | |||||||||
Lease Line Charges | — | 1,675 | 1,346 | |||||||||
IB Commission Expense | 2,006 | 1,454 | — | |||||||||
Interest Expense | 888 | 1,039 | — | |||||||||
Others | 3,266 | 247 | — | |||||||||
(10,910 | ) | 46,284 | 46,259 | |||||||||
Loan taken and repaid | 383,700 | 270,000 | — | |||||||||
Years ended March 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Salaries and other short-term employee benefits | 71,361 | 63,112 | 170,488 | |||||||||
Other long-term benefits (Co-Investment Plan) | 2,208 | 2,208 | 2,208 | |||||||||
Share-based payments | 19,653 | 5,420 | 6,824 | |||||||||
93,222 | 70,740 | 179,520 | ||||||||||
As at March 31, | ||||||||
2010 | 2009 | |||||||
Due To Related Parties: | ||||||||
MF Global Holdings Limited | 34,005 | 58,139 | ||||||
MF Global UK Limited | 19,213 | 37,859 | ||||||
MF Global Inc. DE | 3,504 | 577 | ||||||
MF Global Holdings USA Inc. | 2,036 | 2,298 | ||||||
MF Global Singapore Pte Limited | 1,529 | 1,582 | ||||||
MF Global Holdings HK Limited | 699 | — | ||||||
60,986 | 100,455 | |||||||
As at March 31, | ||||||||
2010 | 2009 | |||||||
Due from Related Parties: | ||||||||
MF Global Inc. DE | 361 | 2,497 | ||||||
MF Global Mauritius Private Limited | 1,399 | 408 | ||||||
MF Global Singapore Pte Limited | 2,347 | 1,427 | ||||||
MF Global Holdings HK Limited | — | 155 | ||||||
MF Global UK Limited | 2,257 | 1,172 | ||||||
MF Global Overseas Limited | 3,292 | 3,204 | ||||||
MF Global Capital Services India Private Limited | — | 2,592 | ||||||
MF Global India Private Limited | — | 947 | ||||||
MF Global Centralised Services India Private Limited | 1,287 | 66 | ||||||
10,943 | 12,468 | |||||||
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Table of Contents
Number | Description | |||
1.1 | Amended Articles of Association of Sify Technologies Limited. (1) | |||
1.2 | Memorandum of Association of Sify Technologies Limited. (2) | |||
1.3 | Amendment of Memorandum of Association. (3) | |||
2.1 | Deposit Agreement, dated as of October 18, 1999, among Sify Technologies Limited, Citibank, N.A. and holders from time to time of American Depository Shares evidenced by American Depository Receipts issued thereunder (including, as an exhibit, the form of American Depository Receipt). (4) | |||
2.2 | Amendment No. 1 to Deposit Agreement among Sify Technologies Limited, Citibank, N.A. and holders from time to time of American Depository Shares evidenced by American Depository Receipts issued thereunder (including, as an exhibit, the form of American Depository Receipt). (4) | |||
2.3 | Amendment No. 2 to Deposit Agreement among Sify Technologies Limited, Citibank, N.A. and holders from time to time of American Depository Shares evidenced by American Depository Receipts issued thereunder (including, as an exhibit, the form of American Depository Receipt). (5) | |||
2.4 | Subscription Agreement dated November 10, 2005 between Sify Technologies Limited and Infinity Capital Ventures, LP. (9) | |||
2.5 | Standstill Agreement dated November 10, 2005 by and among Sify Technologies Limited, Infinity Capital Ventures, LP and Mr Raju Vegesna. (9) | |||
2.6 | Shareholders’ Agreement dated December 20, 2005 between Sify Technologies Limited, Infinity Satcom Universal (P) Limited, and Sify Communications Limited(erstwhile subsidiary). (10) | |||
2.7 | Shareholders’ Agreement dated November 25, 2005 between Sify Technologies Limited and Man Financial. (11) | |||
4.1 | Associate Stock Option Plan 2000 (6) | |||
4.2 | Associate Stock Option Plan 2002 (6) | |||
4.3 | Associate Stock Option Plan 2005 (12) | |||
4.4 | Associate Stock Option Plan 2007 (14) | |||
4.5 | Form of Indemnification Agreement. (7) | |||
4.6 | License Agreement for Provision of Internet Service, including Internet Telephony dated as of April 1, 2002 by and between Sify Technologies Limited and the Government of India, Ministry of Communications and Information Technology, Department of Telecommunications, Telecom Commission. (3) | |||
4.7 | Bank Guarantee, dated as of November 4, 1998. (2) | |||
4.8 | Agreement, dated November 10, 2004, between Sify Technologies Limited, Satyam Computer Services Limited, SAIF Investment Company Limited and Venture Tech Solutions Pvt. Ltd. (8) | |||
4.9 | Subscription Agreement dated March 24, 2008 between Sify Technologies Limited and Infinity Satcom Universal Private Limited. (13) | |||
4.10 | Scheme of Amalgamation between Sify Communications Limited with Sify Technologies Limited and their respective shareholders (15) | |||
8.1 | List of Subsidiaries. | |||
11.1 | Code of Conduct and Conflict of Interest Policy (6) | |||
12.1 | Rule 13a-14(a) Certification of Chief Executive Officer | |||
12.2 | Rule 13a-14(a) Certification of Chief Financial Officer | |||
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Table of Contents
Number | Description | |||
13.1 | Section 1350 Certification of Chief Executive Officer | |||
13.2 | Section 1350 Certification of Chief Financial Officer | |||
15.1 | Consent of KPMG in respect of the Sify Technologies Limited | |||
15.2 | Consent of Price Waterhouse in respect of MF Global Sify Securities Private Limited | |||
15.3 | KPMG response letter. |
(1) | Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on October 17, 2007 and incorporated herein by reference. | |
(2) | Previously filed as an exhibit to Amendment No. 1 to the Registration Statement on Form F-1 filed with the Commission on October 4, 1999 and incorporated herein by reference. | |
(3) | Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on October 17, 2007 and incorporated herein by reference. | |
(4) | Previously filed as an exhibit to the Post-Effective Amendment No. 1 to Form F-6 filed with the Commission on January 5, 2000 and incorporated herein by reference. | |
(5) | Previously filed as an exhibit to the Registration Statement on Form S-8 (File No. 333-101322) filed with Commission on November 20, 2002 and incorporated herein by reference. | |
(6) | Previously filed as an exhibit to the Annual Report on Form 20-F filed with the Commission on June 29, 2004 and incorporated herein by reference. | |
(7) | Previously filed as an exhibit to Amendment No. 2 to the Registration Statement on Form F-2 filed with the Commission on October 13, 1999 and incorporated herein by reference. | |
(8) | Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on November 30, 2004 and incorporated herein by reference. | |
(9) | Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on November 21, 2005 and incorporated herein by reference. | |
(10) | Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on December 7, 2005 and incorporated herein by reference. | |
(11) | Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on December 23, 2005 and incorporated herein by reference. | |
(12) | Previously filed as an exhibit to the Annual Report on Form 20-F filed with the Commission on June 30, 2006 and incorporated herein by reference. | |
(13) | Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on April 14, 2008 and incorporated herein by reference. | |
(14) | Previously filed as an exhibit to the Report on Form 20-F filed with the Commission on October 11, 2008 and incorporated herein by reference | |
(15) | Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on January 23, 2009 and incorporated herein by reference |
195
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SIFY TECHNOLOGIES LIMITED | ||||
By: | /s/ Raju Vegesna | |||
Name: | Raju Vegesna | |||
Title: | Chief Executive Officer | |||
Date: November 30, 2010 | By: | /s/ M P Vijay Kumar | ||
Name: | M P Vijay Kumar | |||
Title: | Chief Financial Officer |
196
Table of Contents
Number | Description | |||
1.1 | Amended Articles of Association of Sify Technologies Limited. (1) | |||
1.2 | Memorandum of Association of Sify Technologies Limited. (2) | |||
1.3 | Amendment of Memorandum of Association. (3) | |||
2.1 | Deposit Agreement, dated as of October 18, 1999, among Sify Technologies Limited, Citibank, N.A. and holders from time to time of American Depository Shares evidenced by American Depository Receipts issued thereunder (including, as an exhibit, the form of American Depository Receipt). (4) | |||
2.2 | Amendment No. 1 to Deposit Agreement among Sify Technologies Limited, Citibank, N.A. and holders from time to time of American Depository Shares evidenced by American Depository Receipts issued thereunder (including, as an exhibit, the form of American Depository Receipt). (4) | |||
2.3 | Amendment No. 2 to Deposit Agreement among Sify Technologies Limited, Citibank, N.A. and holders from time to time of American Depository Shares evidenced by American Depository Receipts issued thereunder (including, as an exhibit, the form of American Depository Receipt). (5) | |||
2.4 | Subscription Agreement dated November 10, 2005 between Sify Technologies Limited and Infinity Capital Ventures, LP. (9) | |||
2.5 | Standstill Agreement dated November 10, 2005 by and among Sify Technologies Limited, Infinity Capital Ventures, LP and Mr Raju Vegesna. (9) | |||
2.6 | Shareholders’ Agreement dated December 20, 2005 between Sify Technologies Limited, Infinity Satcom Universal (P) Limited, and Sify Communications Limited(erstwhile subsidiary). (10) | |||
2.7 | Shareholders’ Agreement dated November 25, 2005 between Sify Technologies Limited and Man Financial. (11) | |||
4.1 | Associate Stock Option Plan 2000 (6) | |||
4.2 | Associate Stock Option Plan 2002 (6) | |||
4.3 | Associate Stock Option Plan 2005 (12) | |||
4.4 | Associate Stock Option Plan 2007 (14) | |||
4.5 | Form of Indemnification Agreement. (7) | |||
4.6 | License Agreement for Provision of Internet Service, including Internet Telephony dated as of April 1, 2002 by and between Sify Technologies Limited and the Government of India, Ministry of Communications and Information Technology, Department of Telecommunications, Telecom Commission. (3) | |||
4.7 | Bank Guarantee, dated as of November 4, 1998. (2) | |||
4.8 | Agreement, dated November 10, 2004, between Sify Technologies Limited, Satyam Computer Services Limited, SAIF Investment Company Limited and Venture Tech Solutions Pvt. Ltd. (8) | |||
4.9 | Subscription Agreement dated March 24, 2008 between Sify Technologies Limited and Infinity Satcom Universal Private Limited. (13) | |||
4.10 | Scheme of Amalgamation between Sify Communications Limited with Sify Technologies Limited and their respective shareholders (15) | |||
8.1 | List of Subsidiaries. | |||
11.1 | Code of Conduct and Conflict of Interest Policy (6) | |||
12.1 | Rule 13a-14(a) Certification of Chief Executive Officer | |||
12.2 | Rule 13a-14(a) Certification of Chief Financial Officer |
197
Table of Contents
Number | Description | |||
13.1 | Section 1350 Certification of Chief Executive Officer | |||
13.2 | Section 1350 Certification of Chief Financial Officer | |||
15.1 | Consent of KPMG in respect of the Sify Technologies Limited | |||
15.2 | Consent of Price Waterhouse in respect of MF Global Sify Securities Private Limited | |||
15.3 | KPMG response letter. |
(1) | Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on October 17, 2007 and incorporated herein by reference. | |
(2) | Previously filed as an exhibit to Amendment No. 1 to the Registration Statement on Form F-1 filed with the Commission on October 4, 1999 and incorporated herein by reference. | |
(3) | Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on October 17, 2007 and incorporated herein by reference. | |
(4) | Previously filed as an exhibit to the Post-Effective Amendment No. 1 to Form F-6 filed with the Commission on January 5, 2000 and incorporated herein by reference. | |
(5) | Previously filed as an exhibit to the Registration Statement on Form S-8 (File No. 333-101322) filed with Commission on November 20, 2002 and incorporated herein by reference. | |
(6) | Previously filed as an exhibit to the Annual Report on Form 20-F filed with the Commission on June 29, 2004 and incorporated herein by reference. | |
(7) | Previously filed as an exhibit to Amendment No. 2 to the Registration Statement on Form F-2 filed with the Commission on October 13, 1999 and incorporated herein by reference. | |
(8) | Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on November 30, 2004 and incorporated herein by reference. | |
(9) | Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on November 21, 2005 and incorporated herein by reference. | |
(10) | Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on December 7, 2005 and incorporated herein by reference. | |
(11) | Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on December 23, 2005 and incorporated herein by reference. | |
(12) | Previously filed as an exhibit to the Annual Report on Form 20-F filed with the Commission on June 30, 2006 and incorporated herein by reference. | |
(13) | Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on April 14, 2008 and incorporated herein by reference. | |
(14) | Previously filed as an exhibit to the Report on Form 20-F filed with the Commission on October 11, 2008 and incorporated herein by reference | |
(15) | Previously filed as an exhibit to the Report on Form 6-K filed with the Commission on January 23, 2009 and incorporated herein by reference |
198