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    Aditya birla minacs worldwide limited Aditya birla minacs worldwide limited Document Transcript

    • ADITYA BIRLA MINACS WORLDWIDE LIMITEDANNUAL REPORT OF SUBSIDIARIES 2010-2011Sl. No. Name Page No1. Aditya Birla Minacs Worldwide Limited 12. Transworks Inc (USA) 273. Aditya Birla Minacs Philippines Inc. 304. A V Transworks Limited 375. Aditya Birla Minacs Worldwide Inc., (Canada) 426. The Minacs Group (USA) Inc. 587. Bureau of Collection Recovery, LLC 628. Minacs Worldwide S A De C V (Mexico) 649. Minacs Limited (UK) 6610. Minacs Worldwide GmbH (Germany) 6811. Minacs KFT, Hungary 7112. Aditya Birla Minacs BPO Limited 7413. Aditya Birla Minacs BPO Private Limited 8114. Compass BPO Inc 91(1)ADITYA BIRLA MINACS WORLDWIDE LIMITEDCMYKDIVIDENDIn view of the carried forward losses no dividend is recommended.BUSINESS REVIEW
    • Industry ScenarioIn 2010-11, the global economy showed signs of coming out of recessionthough there continues to be fears that the revival may not be sustainable.Rising oil prices, EU debt pressures and sharp increase in inflation inAsia continues to cast a gloomy picture though there are signs that theimpact may not as bad as in 2009-10. The BPO industry showed signsof growth but pricing pressures continued. Customers continued to becircumspect in increasing their outsourcing since their own businesseshave reduced resulting in excess employees in their own organizations.Summar y of OperationsThe actions initiated by your Company to improve operational excellenceand grow revenues have started to show results.Over the previous year, consolidated revenues increased by 16%. Thesharp sales focus on delivering value to our customers whilstdemonstrating domain knowledge has resulted in revenue growthdespite lower revenue productivity due to pricing pressures.The revenue growth along with the continued efforts on costoptimization enabled your Company’s operating profits (EBITDA) hasshown an increase from ` 1,136 million to Rs.1,958 million – a significantgrowth of 72% over the previous year. Your Company’s actionscontinued the improvement in the operating margins from 7.8%to 11.5%.The growth in revenues required the company to expand its operationssites. Your company opened a new site at Southfield, USA and hasalso opened a new site in Philippines in June 2011.
    • Your Company has continued on its 3- Year roadmap to grow revenuesby obtaining a higher wallet share from existing clients whilst addingnew logos, improve profitability by continuing operational efficienciesand increasing business delivered from India and other offshoregeographies. Your Company’s investment in its sales team organizedon industry verticals continues to fuel the strong growth in its salespipeline and the management plans to further invest in this area.OUTLOOKThe improvement in your company’s revenues in FY 2010-11 is expectedto continue in the current financial year. However, the challengingenvironment resulting in pricing pressures from our customers coupledwith growing inflation in India and Philippines is likely to put severepressures on profitability in the current financial year. Further, the sharpDIRECTORS’ REPOR TDear Shareholders,On behalf of the Directors, it is our pleasure to present the Sixteenth Annual Report, together with theAudited Statement of A ccounts of AdityaBirla Minacs Worldwide Limited (“the Company”) and its subsidiaries for the year ended 31stMarch, 2011.FINANCIAL PERFORMANCEThe summarized Standalone and consolidated results of your Company and its subsidiaries are given inthe table below. Both Stan dalone andConsolidated results include the results of Aditya Birla IT Services and Aditya Birla Technologies, whichwere merged into Aditya Birla WorldwideLimited with effect from 1st
    • April 2010 (detailed in a separate note below).(` Mn) Standalone Results Consolidated ResultsParticulars Year ended Year ended Growth Year ended Year Ended Growth31/03/2011 31/03/2010 31/03/2011 31/03/2010Total Income 2,461 2,263 9% 16,326 14,693 11%Operating EBITDA 121 179 (32%) 1,772 1,136 56%Profit/(loss) before Interest, Depreciation& Tax (EBITDA) 75 167 (55%) 1,701 901 89%Finance Charges 261 319 (18%) 353 469 (25%)Depreciation 192 141 36% 654 605 8%Provision for Income Tax & FBT(including for earlier years) 3 2 50% 9 58 (84%)Net Profit/(Loss) After Tax (380) (295) 649 (231) —Profit/(Loss) brought forward fromprevious year (543) (248) (2,455) (2,224)Profit/(Loss) carried to Balance Sheet (924) (543) (1,806) (2,455)depreciation of the U.S dollar as against the Canadian dollar will alsohurt our efforts to improve profitability.Your company plans to a 2 pronged approach to fight the profitabilityissues. One, we will try and improve our share of higher margin businesslike non voice work and combining our IT and BPO capabilities to improverevenue productivity. Secondly, your Company will continue its focuson building operating efficiencies and optimization of costs to bring itscost structure in line with the best in class in the BPO industry.
    • HUMAN CAPITALHuman capital is the key resource for Information Technology EnabledServices Industry. At the end of the year, on a consolidated basis, yourCompany had 19,615 employees and 12,345 operations seats across25 company leased centers.MERGERYour company had filed a petition before the High Court of Karnataka,Bangalore, seeking sanction to the composite scheme of amalgamationamongst Aditya Birla Minacs IT Services Limited, Aditya Birla MinacsTechnologies and Aditya Birla Minacs Worldwide Limited (the“Companies”) and their respective shareholders which was approvedby the Board of directors of the Companies at their respective meetingson July 23, 2010 (the “Original Scheme”). The High Court was pleasedto sanction the Original Scheme by its order dated November 3, 2010.However, the Board of Directors of the Companies passed a resolutionon February 17, 2011 to modify the Original Scheme and your companyhad again filed an application with the High Court of Karnataka seekingsanction to the modified Composite scheme of amalgamation (the“Modified Scheme”). The Company convened meetings of securedand unsecured creditors of the Company pursuant to the High Courtorder dated March 4, 2011 to approve the Modified Scheme on Apr 8,2011 and the Modified Scheme was approved at the said meetings.The Company had filed a petition with the High Court seeking sanctionof the Modified Scheme. The High Court was pleased to sanction theModified Scheme vide its order dated September 5, 2011.
    • SUBSIDIARY COMPANIESFollowing are the Subsidiaries of your Company:-■ A V Transworks Limited (Canada)■ Transworks Inc. (USA)■ Aditya Birla Minacs Philippines Inc.■ Aditya Birla Minacs Worldwide Inc. (Canada) and its followingsubsidiaries• The Minacs Group (U.S.A.) Inc(2)ADITYA BIRLA MINACS WORLDWIDE LIMITEDCMYK• Minacs Worldwide GmbH (Germany)• Minacs Limited (UK)• Minacs Worldwide S.A. de C.V. (Mexico)• Minacs Kft (Hungary)• Aditya Birla Minacs BPO Limited (UK)• Aditya Birla Minacs BPO Private Limited• Compass BPO Inc. (USA)• Bureau of Collection Recovery LLC• Bureau of Collection Recovery IncAs per Section 212 of the Companies Act, 1956, the Directors’ Report,Auditor’s Report, Balance Sheet and Profit and Loss Account of theCompany’s subsidiaries are required to be attached to the Balance Sheetof the Company. However, vide General Circular No. 2/2011 dated08.02.2011, the Central Government has granted general exemptionfrom the provisions of Section 212 of the Act subject to compliance
    • with conditions specified therein, which include inter- alia, that:-(i) The Board of Directors of theCompany by resolution gives itsconsent for not attaching the balance sheet of the subsidiaryconcerned;(ii) The company shall present in the annual report, the consolidatedfinancial statements of holding company and all subsidiaries dulyaudited by its statutory auditors; and(iii) The company shall disclose in the consolidated balance sheet thefollowing information in aggregate for each subsidiary includingsubsidiaries of subsidiaries:- (a) capital (b) reserves (c) total assets(d) total liabilities (e) details of investment (except in case ofinvestment in the subsidiaries) (f) turnover (g) profit before taxation(h) provision for taxation (i) profit after taxation (j) proposed dividend;In line with above, the consolidated financial statement of the Companyis presented in its annual report along with the summary informationon the Company’s subsidiaries as mandated in circular above. The annualaccounts of the Company’s subsidiaries and the related detailedinformation shall be made available to shareholders of the Companyand the Company’s subsidiaries seeking such information on requestat any point of time. The annual accounts of the Company’s subsidiariesshall also be kept for inspection during business hours by anyshareholders at the Registered Office of the Company and of theCompany’s subsidiaries. A hard copy of details of accounts ofsubsidiaries shall be furnished to any shareholder on demand.EMPLOYEE STOCK OPTION PLANYour Company approved a new Employee Stock Option Plan (ESOP) in
    • the Extra-Ordinary General Meeting held on Dec 18, 2009. Under thenew ESOP Scheme, a total of 1,897,337 (One million Eight hundredninety seven thousand three hundred and thirty seven) options wouldbe available for being granted to eligible employees of your Company.Each option when exercised would be converted into one Equity shareof Re. 1 each fully paid-up.Till March 31, 2011, your Company had granted 1,367,000 options toits full time employees leaving a balance of 530,337 for future grants.DIRECTORSDuring the year, Mr. Kumar Mangalam Birla resigned as director witheffect from August 28, 2010. The Board places on record its sincereappreciation for the valuable services rendered by Mr. Kumar MangalamBirla.Mr. Kumar Mangalam Birla and Mr. Deepak Jayant Patel were appointedas additional directors at the Board meeting held on October 12, 2010.Resolutions seeking your approval for the appointment of Mr. DeepakJayant Patel have been incorporated in the Notice of the ensuing AnnualGeneral Meeting of the Company.Mr. Deepak Jayant Patel was appointed as Whole-time director of theCompany with effect from October 12, 2010 for a period of three yearsand the same was approved by the members at the Extra-ordinaryGeneral meeting held on October 12, 2010.In accordance with Article 100 of the Articles of Association, Mr. SushilAgarwal and Mr. Devajyoti Bhattacharya, Directors retire by rotation atthe forthcoming Annual General Meeting. Both of them, being eligible,
    • offer themselves for reappointment.DIRECTORS’ RESPONSIBILITY STATEMENTYour Company is committed to maintaining the highest standards ofCorporate Governance. Though your Company is an unlisted Companyand hence Clause 49 of the Listing Agreement is not applicable, yetyour Company, on a suo moto basis has taken necessary initiatives tocomply with the provisions of the said clause to the extent possible.As required under Section 217(2AA) of the Companies Act, 1956, yourDirectors confirm that:i) In the preparation of the annual accounts, the applicable accountingstandards have been followed along with proper explanation relatingto material departures;ii) The Directors have selected such accounting policies and appliedthem consistently and made judgments and estimates that arereasonable and prudent so as to give a true and fair view of thestate of affairs of the Company at the end of the financial year andof the loss of the Company for that period;iii) The Directors have taken proper and sufficient care for themaintenance of adequate accounting records in accordance withthe provisions of this Act for safeguarding the assets of theCompany and for preventing and detecting fraud and otherirregularities;iv) The Directors have prepared the annual accounts on a goingconcern basis.CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION,
    • FOREIGN EXCHANGE EARNINGS AND OUTGOThe information required under the Companies (Disclosure of Particularsin the Report of the Board of Directors) Rules, 1988 for the year endedMarch 31, 2011 is given in Annexure ’A’ forming part of this Report.PARTICULARS OF EMPLOYEESIn accordance with the provisions of Section 217(2A) read withCompanies (Particulars of Employees) Rules, 1975 and Companies(Particulars of Employees) Amendment Rules, 2011, the names andother particulars of employees are set out in the Directors’ report asAnnexure ’B’. It may be noted that in accordance with the notificationsdated March 24, 2004 and March 31, 2011 issued by the Ministry ofCorporate Affairs, Government of India, particulars of employees postedand working in a country outside India, not being directors or theirrelatives drawing more than Rupees Six Million per financial year orRupees five hundred thousand per month, as the case may be, are notincluded in this statement but such particulars shall be furnished to theRegistrar of Companies. Such particulars shall be made available to anyshareholder on specific request made by him / her during the course ofthe Annual General Meeting.PUBLIC DEPOSITSYour Company has not accepted any fixed deposits during the financialyear 2010-11. There was no unclaimed deposit and interest accrued ason March 31, 2011.STATUTORY AUDITORSThe report of the Statutory Auditors is attached to this report. All the
    • notes to Schedules and Accounts are self-explanatory and do not callfor any further comments.Your Directors request you to appoint Auditors for the current year asset out in the accompanying notice of the ensuing Annual GeneralMeeting.ACKNOWLEDGEMENTYour Directors place on record their appreciation for employees at alllevels, who have contributed to the growth and performance of yourCompany.Your Directors also thank the clients, vendors, bankers, shareholdersand advisers of the Company for their continued support.Your Directors also thank the Central and State Governments, and otherstatutory authorities for their continued support.For and on behalf of the BoardAditya Birla Minacs Worldwide LimitedDate : July 27, 2011 Sushil Agarwal Dr. Rakesh JainPlace: Mumbai Director Director(3)ADITYA BIRLA MINACS WORLDWIDE LIMITEDCMYKANNEXURE – AParticulars pursuant to Companies (Disclosure of particulars in thereport of the Board of Directors) Rules, 19881. Conservation of energyYour Company’s operations involve very low energy consumption.
    • However, measures are taken to reduce energy consumption byusing energy-efficient equipment.As energy costs comprise a very small part of our total expenses,the financial impact of these measures is not material.2. Research and development (R&D)a) R&D initiatives at institutes of national importanceAs the Company was mainly engaged in the business of callcenter activities, there are no matters to report on theseaspectsb) Specific areas for R&D at your Companyc) Benefits derived as a result of R&D activityd) Future plan of actione) Expenditure on R&D for the year ended 31stMarch, 2011` Nil3. Technology absorption, adaptation and innovation:Your Company continues to use latest hardware and software toimprove the quality of its products and services. The Company willcontinue to invest in state–of–the–art technology and infrastructureto improve the productivity and quality of its products and services.4. Foreign exchange earnings and outgo (Standalone)( ` /Mn)Foreign Exchange Year ended Year ended31
    • stMarch, 2011 31stMarch, 2010Earnings 1488 1488 1604Outflow (Includingcapital goods & services) 281 281 2855. Activities relating to exports, initiatives taken to increaseexports, development of new export markets for products andservices and export plansIn fiscal 2010-11, 61% of revenues were derived from exports.Your Company established a substantial direct sales marketingnetwork in its strategic markets in North America and Europe togrow its business in these regions. Your Company is alsoaddressing other Asia Pacific countries as potential markets forgrowth.(4)ADITYA BIRLA MINACS WORLDWIDE LIMITEDCMYKAUDI TORS’ REPOR TToThe Members of Aditya Birla Minacs Worldwide Limited1. We have audited the attached Balance Sheet of Aditya Birla MinacsWorldwide Limited (‘the Company’) as at March 31, 2011 and alsothe Profit and Loss account and the cash flow statement for the
    • year ended on that date annexed thereto. These financialstatements are the responsibility of the Company’s management.Our responsibility is to express an opinion on these financialstatements based on our audit.2. We conducted our audit in accordance with auditing standardsgenerally accepted in India. Those Standards require that we planand perform an audit to obtain reasonable assurance about whetherthe financial statements are free of material misstatement. An auditincludes examining, on a test basis, evidence supporting theamounts and disclosures in the financial statements. An auditalso includes assessing the accounting principles used andsignificant estimates made by management, as well as evaluatingthe overall financial statement presentation. We believe that ouraudit provides a reasonable basis for our opinion.3. As required by the Companies (Audito’s Report) Order, 2003 (asamended) (“the Order”) issued by the Central Government of Indiain terms of sub-section (4A) of Section 227 of the Companies Act,1956 (“the Act”), we enclose in the Annexure a statement on thematters specified in paragraphs 4 and 5 of the said Order.4. Further to our comments in the Annexure referred to above, wereport that:i. We have obtained all the information and explanations, whichto the best of our knowledge and belief were necessary forthe purposes of our audit;ii. In our opinion, proper books of account as required by law
    • have been kept by the Company so far as appears from ourexamination of those books;iii. The balance sheet, profit and loss account and cash flowstatement dealt with by this report are in agreement with thebooks of account;iv. In our opinion, the balance sheet, profit and loss account andcash flow statement dealt with by this report comply with theaccounting standards referred to in sub-section (3C) of section211 of the act.v. On the basis of the written representations received from thedirectors, as on March 31, 2011, and taken on record by theBoard of Directors, we report that none of the directors isdisqualified as on March 31, 2011 from being appointed as adirector in terms of clause (g) of sub-section (1) of section 274of the Act.vi. In our opinion and to the best of our information and accordingto the explanations give to us, the said accoutn give theinformation required by the act, in the manner so requiredand give a true and fair view in conformity with the accountingprinciples generally accepted in India;a) in the case of the balance sheet, of the state of affairs ofthe Company as at March 31, 2011;b) in the case of the profit and loss account, of the loss forthe year ended on that date; andc) in the case of cash flow statement, of the cash flows for
    • the year ended on that date.For S.R. BATLIBOI & ASSOCIATESFirm Registration No. 101049WChartered Accountantsper Amit MajumdarPartnerMembership No. 36656Place: MumbaiDate: July 27, 2011Annexure ref er red to in paragraph [3] of our report of e ven dateRe: Aditya Birla Minacs Worldwide Limited (‘the Company’)1. (a) The Company has maintained proper records showing fullparticulars, including quantitative details and situation of fixedassets.(b) Fixed assets have been physically verified by themanagement during the year and no material discrepancieswere identified on such verification.(c) There was no disposal of a substantial part of fixed assetsduring the year.ii. The Company does not have any inventory and hence theprovisions of clause 4(ii) of the Order are not applicable to theCompany and hence not commented upon.iii. (a) According to the information and explanations given to us,the Company has not granted any loans, secured orunsecured to companies, firms or other parties covered in
    • the register maintained under section 301 of the Act.Accordingly, the provisions of clause 4(iii) (a) to (d) of theOrder are not applicable to the Company and hence notcommented upon.(b) According to information and explanations given to us, theCompany has not taken any loans, secured or unsecured,from companies, firms or other parties covered in the registermaintained under section 301 of the Act. Accordingly, theprovisions of clause 4(iii) (e) to (g) of the Order are notapplicable to the Company and hence not commented upon.iv. In our opinion and according to the information and explanationsgiven to us, there is an adequate internal control systemcommensurate with the size of the Company and the nature ofits business, for the purchase of fixed assets and for the sale ofservices. During the course of our audit, we have not observedany major weakness or continuing failure to correct any majorweakness in the internal control system of the company in respectof these areas. The activities of the Company do not involvepurchase of inventories and sale of goods.v. According to the information and explanations provided by themanagement, we are of the opinion that there are no contractsor arrangements that need to be entered in the registermaintained under section 301 of the Act.vi. The Company has not accepted any deposits from the public.vii. In our opinion, the Company has an internal audit system
    • commensurate with the size and nature of its business.viii. To the best of our knowledge and as explained, the CentralGovernment has not prescribed the maintenance of cost recordsunder clause (d) of sub-section (1) of section 209 of the Act forthe products of the Company.ix. (a) The Company is generally regular in depositing withappropriate authorities undisputed statutory dues includingprovident fund, employees’ state insurance, income tax,sales tax, wealth tax, service tax, custom duty, excise duty,cess and other material statutory dues applicable to it. Theprovisions relating to investor education and protection fundare not applicable to Company.Further, since the Central Government has till date notprescribed the amount of cess payable under section 441 Aof the Act, we are not in a position to comment upon theregularity or otherwise of the Company in depositing thesame.(b) According to the information and explanations given to us,no undisputed amounts payable in respect of provident fund,employees’ state insurance, income tax, wealth tax, servicetax, sales tax, custom duty, excise duty, cess and othermaterial statutory dues were outstanding, at the year end,for a period of more than six months from the date theybecame payable. The provisions relating to investoreducation and protection fund are not applicable to Company.
    • (5)ADITYA BIRLA MINACS WORLDWIDE LIMITEDCMYK(c) According to the information and explanations given to us,there are no dues of income tax, sales tax, wealth tax, servicetax, customs duty, excise duty and cess which have notbeen deposited on account of any dispute, except as follows:Name of Nature Amount Period to Forumthe statute of dues (Rs.) which the whereamount dispute isrelates pendingIncome Tax Penalty 7,329,260 FY 2003- BombayAct 1961 for dis- 2004 Highallowance Courtof expensesx. The Company’s accumulated losses at the end of the financialyear are less than fifty per cent of its net worth. The Companyhas incurred cash loss during the year and in the immediatelypreceding financial year.xi. Based on our audit procedures and as per the information andexplanations given by the management, we are of the opinionthat the Company has not defaulted in repayment of dues to abank or debenture holders. The Company did not have anyoutstanding dues in respect of a financial institution.xii. According to the information and explanations given to us and
    • based on the documents and records produced before us, theCompany has not granted loans and advances on the basis ofsecurity of way of pledge of shares, debentures and othersecurities.xiii. In our opinion, the Company is not a chit fund or a nidhi / mutualbenefit fund / society. Therefore, the provisions of clause 4(xiii)of the Order are not applicable to the Company.xiv. In our opinion, the Company is not dealing in or trading in shares,securities, debentures and other investments. Accordingly, theprovisions of clause 4(xiv) of the Order are not applicable to theCompnay.xv. According to the information and explanations given to us, theCompany has given guarantee for loans taken by others frombank and financial institutions. the terms and conditions whereof,in our opinion, are not prima-facie prejudicial to the interest ofthe Company.xvi. Based on information and explanations given to us by themanagement, term loans were applied for the purpose for whichthe loans were obtained.xvii. According to the information and explanations given to us andon an overall examination of the balance sheet of the Company,we report that no funds raised on short-term basis have beenused for long-term investment.xviii. The Company has not made any preferential allotment of sharesto parties or companies covered in the register maintained under
    • section 301 of the Act.xix. The Company has unsecured debentures outstanding during theyear, on which no security or charge is required to be created.xx. The Company has not raised any money by public issues duringthe year.xxi. Based upon the audit procedures performed for the purpose ofreporting the true and fair view of the financial statements andas per the information and explanations given by themanagement, we report that no fraud on or by the Company hasbeen noticed or reported during the year.For S.R. BATLIBOI & ASSOCIATESFirm Registration No. 101049WChartered Accountantsper Amit MajumdarPartnerMembership No. 36656Place: MumbaiDate: July 27, 2011(6)ADITYA BIRLA MINACS WORLDWIDE LIMITEDCMYKBALANCE SHEET AS AT 31S T MARCH, 2011A s At 31st A s At 31stMar, 20 11 Mar, 20 10Schedule ` Lacs ` Lacs
    • I. SOURCES OF FUNDS1 Shareholders’ FundsShare capital 1 234.92 234.92Employee stock optionsoutstanding (Refer Note 9of schedule 17) 576.53 126.15Reserves and surplus 2 27,795.68 27,795.682 Loan fundsSecured loans 3 46,218.48 44,399.77Unsecured loans 4 25,000.00 25,000.00Total 99,825.61 97,556.52II. APPLICATION OF FUNDS1 Fixed Assets Fixed Assets 5Gross Block 16,471.07 12,653.09Less : AccumulatedDepreciation / Amortization 10,698.24 8,778.26Net Block 5,772.83 3,874.83Capital work-in-progress(including capital advances) 489.63 1,399.182 Investments Investments 6 68,631.20 76,935.663 Current Assets,Loans and Advances :Accured interest — 75.53Sundry debtors 7 5,162.24 3,803.84Cash and bank balances 8 839.68 18.15
    • Loan to subsidiaries 15,185.23 11,009.19Loans and advances 9 3,422.56 2,559.02(A) (A) 24,609.71 17,465.73Less: Current Liabilitiesand Provisions : and Provisions : 10Current liabilities 8,741.71 7,417.50Provisions 172.48 133.11(B) (B) 8,914.19 7,550.61Net Current Assets (A-B) (A-B) 15,695.52 9,915.124 Profit and Loss account Profit and Loss account 9,236.43 5,431.73Total Total 99,825.61 97,556.52Notes to Accounts Notes to Accounts 17The schedules referred to above and notes to accounts form an integral part of theBalance Sheet.As per our report of even dateFor S.R. Batliboi & AssociatesFirm Registration No. 101049WChartered Accountantsper Amit MajumdarPartnerMembership No. 36656Place: MumbaiDate: July 27, 2011For and on behalf of the Board of Directors ofAditya Birla Minacs Worldwide Ltd.
    • Dr. Rakesh JainDirectorSushil AgarwalDirectorRamesh KamathChief Financial OfficerDate : July 27, 2011PROFIT & LOSS ACCO UNT FOR THE YEAR ENDED 31STMARCH, 2011For the For theyear ended year ended31st March 31st March2011 2010Schedule ` Lacs ` LacsINCOME :Service charges 24,400.99 22,111.06Other income 11 206.21 522.38Total Total 24,607.20 22,633.44EXPENDITURE :Personnel expenses 12 15,682.87 12,993.92Other operating expenses 13 4,686.67 4,015.80Administrative expenses 14 3,048.53 3,602.29Marketing / businessdevelopment expenses 15 434.31 353.77Financial charges /
    • interest cost 16 2,614.80 3,186.42Depreciation / amortization 1,915.92 1, 413.85Total 28,383.10 25,566.05Loss for the year (3,775.90) (2,932.61)Less: Withholding taxwritten off / provided for 28.80 19.55Net Loss for the year (3,804.70) (2,952.16)Loss brought forwardfrom previous year (5,431.73) (2,479.57)Deficit carried toBalance Sheet (9,236.43) (5,4 31.73)Earnings Per ShareBasic Weighted Averagenumber of shares 23,491,711 23,491,711Diluted Weighted Averagenumber of shares 24,858,711 23,864,586Basic earnings/(loss) per share(Nominal value of shares ` 1 eachPrevious year ` 1 each) ` (16.20) (12.57)Diluted earnings/(loss) per share((Nominal value of shares ` 1 eachPrevious year ` 1 each) ` (16.20) (12.57)Notes to Accounts Notes to Accounts 17The schedules referred to above and notes to accounts form an integral part of theProfit and Loss Account.
    • As per our report of even dateFor S.R. Batliboi & AssociatesFirm Registration No. 101049WChartered Accountantsper Amit MajumdarPartnerMembership No. 36656Place: MumbaiDate: July 27, 2011For and on behalf of the Board of Directors ofAditya Birla Minacs Worldwide Ltd.Dr. Rakesh JainDirectorSushil AgarwalDirectorRamesh KamathChief Financial OfficerDate : July 27, 2011(7)ADITYA BIRLA MINACS WORLDWIDE LIMITEDCMYKCASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2011` LacsFor the Year ended 31.3.2011 For the Year ended 31.3.2010A. Cash flows from Operating Activities
    • Net Loss for the year (3,775.92) (2,932.61)Adjustments for:Depreciation / Amortization 1,915.92 1,413.85Loss/(Profit) on Sale of Fixed Assets — 53.05Unrealised foreign exchange (gain)/ loss (Net) 943.66 63.95Interest Income (130.02) (222.21)Gain On Mutual Fund Investments (57.58) (226.62)Dividend Income — (68.33)Finance/Interest Expense 2,614.80 3,186.42Employee stock compensation expenses 450.38 126.15Provision for doubtful debt 126.22 2.95Operating Profit before working capital changes 2,087.46 1,396.60Movements in working capital :(Increase)/Decrease in Sundry Debtors (1,484.62) (194.90)(Increase)/Decrease in Loans & Advances (640.41) (123.63)Increase/(Decrease) Current Liabilities & Provisions 1,360.17 2,498.67Cash generated from operations 1,322.60 3,576.73Loan to subsdiaries (4,176.04) (419.60)Add/(Less): Direct Taxes (including TDS) paid)/Tax Refunds (251.93) (82.68)Net Cash flow from Operating Activities (3,105.37) 3,074.45B. Cash Flows from Investing ActivitiesPurchase of Fixed Assets (2,904.32) (3,872.59)Proceeds from sale of Fixed Assets — 116.66Investment in Subsidaries (345.54) (13,247.66)(Purchase)/Sale of investment 8,650.00 (5,350.00)
    • Interest income received 205.55 151.14Dividend received 57.58 294.95Net Cash from/(for) Investing Activities 5,663.27 (21,907.49)C. Cash flow from Financing ActivitiesProceeds from/(repayment of) Bank Borrowings - Unsecured — (2,500.00)Proceeds from/(repayment of) Long-term borrowings - Secured 875.05 (491.49)Proceeds from Issue of Compulsorily Convertible Debentures — 25,000.00Interest/financial charges paid (2,611.43) (3,170.95)Net Cash generated/(used) in Financing Activities (1,736.38) 18,837.56D. Foreign Exchange difference on translation of foreign currency cash and cash equivalents ForeignExchange difference on translation of foreign currency cash and cash equivalents — (0.02)Net Increase in cash and Cash equivalants during the year 821.55 4.50Cash and cash equivalants at the beginning of the year 16.21 11.71Cash and cash equivalants at the end of the year 837.74 16.21Notes:Components of Cash and Cash Equivalents As at 31.3.2011 As at 31.3.2010i) Cash Balance on hand 6.32 3.84ii) Balance with Scheduled and other Banks :- in Current Account 831.42 12.37Total 837.74 16.21Note:i) Fixed Deposit of ` 1.94 Lacs (Previous year ` 1.94 Lacs) given as margin money has not beenconsidered as cash and cash equivalentsAs per our report of even dateFor S.R. Batliboi & AssociatesFirm Registration No. 101049W
    • Chartered Accountantsper Amit MajumdarPartnerMembership No. 36656Place: MumbaiDate: July 27, 2011For and on behalf of the Board of Directors ofAditya Birla Minacs Worldwide Ltd.Dr. Rakesh JainDirectorSushil AgarwalDirectorRamesh KamathChief Financial OfficerDate : July 27, 2011(8)ADITYA BIRLA MINACS WORLDWIDE LIMITEDCMYKSCHEDULE 5 - FIXED A SSE TS Rs. LacsGROSS BLOCK DEPRECIATION / AMORTIZATION NET BLOCKParticulars As on Additions Deductions As on As on For the Deductions As on As on As onApr-1-10 Mar-31-11 Apr-1-10 Year Mar-31-11 Mar-31-11 Mar-31-10Computers and telecommunicationequipments 8,158.58 2,259.27 — 10,417.86 5,965.04 1,063.01 — 7,028.05 3,389.81 2,193.54Plant and machinery 1,676.56 507.46 — 2,184.02 991.01 246.95 — 1,237.96 946.06 685.55
    • Office equipment 322.08 57.19 — 379.27 195.70 45.97 — 241.67 137.60 126.38Furniture and fixtures 649.20 319.29 — 968.49 420.75 124.22 — 544.97 423.52 228.45Leasehold improvements 1,488.28 464.90 — 1,953.18 979.64 344.36 — 1,324.00 629.18 508.64Intangible assetsSoftware 52.19 204.20 — 256.39 52.19 0.14 — 52.33 204.06 —Client acquisition cost 279.98 — — 279.98 164.11 87.65 — 251.76 28.22 115.87Motor car 26.22 5.66 — 31.88 9.82 7.68 — 17.50 14.38 16.40Total 12,653.09 3,817.97 — 16,471.07 8,778.26 1,919.98 — 10,698.24 5,772.83 3,874.83Previous Year 10,679.49 2,549.47 575.87 12,653.09 7,770.56 1,413.85 406.15 8,778.26 3,874.83Notes:The opening gross block of fixed assets, accumulated depreciation and net block has been reclassified asper the asset categori es, per se.A s At A s At31st Mar, 20 11 31st Mar, 20 10` Lacs ` LacsA s At A s At31st Mar, 20 11 31st Mar, 20 10` Lacs ` LacsSCHEDULES FORMING P ART OF THE BALANCE SHEETAs At As At31st Mar, 2011 31st Mar, 2010` Lacs ` LacsSCHEDULE - 1 - SHARE CAPITALAuthorised Capital30,000,000 (Previous Year 30,000,000)Equity Shares of ` 1/- each 300.00 300.00
    • 300.00 300.00Issued, Subscribed and Paid up Capital2,34,91,711 (P Y 2,34,91,711) Equity Shares of` 1/- each fully paid up 234.92 234.92(Of the above 20,738,378 (Previous Year: 20,738,378)equity shares are held by Aditya Birla Nuvo Limited,being the holding company, including 7 sharesheld by them through their nominees)Total 234.92 234.92SCHEDULE - 2 - RESERVES and SURPLUSSecurities Premium Account 27,795.68 27,795.68Total Total 27,795.68 27,795.68SCHEDULE - 3 - SECURED LO ANSi) Working capital facility from banks 2,304.06 —(Secured against receivables)(Repayable within one year - NIL ;Previous Year ` 899.42 Lacs )ii) Term loan from banks 2,000.00 3,000.00(Secured against the first paripassu chargeon the moveable assets )(Repayable within one year - Rs 1,000 Lacs;Previous Year ` 2,000 Lacs )iii) ECB from banks 41,914.42 41,399.77(Secured against the first charge on themoveable assets and second charge on
    • Receivables)(Repayable within one year ` 207.59 Lacs,Previous Year - ` 592.07 Lacs)Total Total 46,218.48 44,399.77SCHEDULE - 4 - UNSECURED LOANSCompulsorily convertible debentures 25,000.00 25,000.00(Refer note 17 of schedule 17)Total Total 2 5,000.00 25,000.00SCHEDULE - 6 - INVESTMENTSLong Term Investments Long Term Investments (At Cost)In Subsidiary CompaniesTrade, unquoted, fully paid-upNIL (Previous Year NIL) equity shares of US $ 1 eachin Transworks Inc. — —127,000,001 (Previous Year 127,000,001) equity sharesof CAD 1 each in AV Transworks Limited 53,369.34 53,369.3430,000,000 (Previous Year 30,000,000) preferenceshares of CAD 1 each in A V Transworks Limited 13,690.00 13,344.46969,232 (Previous Year 490,000) shares of Peso100each in Aditya Birla Minacs Philippines Inc. 871.86 448.01Share application money paid to Aditya Birla MinacsPhilippines Inc. — 423.85Current Investments Current Investments (At lower of cost andNet Assets Value)Unquoted
    • (4,461,070.79 units of ` 15.69 each)– In Mutual Funds - Birla Sunlife Cash Plus -Instl. Premium - Growth 216.86 850.00– Birla Sunlife Savings Fund Instl. Growth 483.14 8,500.00Total Total 68,631.20 76,935.66No. of units The following Investments were purchased & Cost Sale Value Gainsold during the period : (` Lacs) (` Lacs) ( ` Lacs)364,571,417 B irla Sunlife Savings Fund -Instl. Premium - Growth 4,982.82 4,999.55 16.72114,706,916 Birla Sunlife Cash Plus - Instl.Premium - (Growth) - I 17,385.00 17,406.24 21.2499,223,350 Birla Sunlife Cash Plus - Instl.Premium - (Growth) - II 14,709.83 14,728.54 18.711,119,188 Birla Sunlife Saving - Instl. Prem. - Growth 200.00 200.91 0.91Total Total 37,277.65 37,335.24 57.58A s At A s At31st Mar, 20 11 31st Mar, 20 10` Lacs ` LacsSCHEDULE - 7 - SUNDR Y DEBT ORSDebts outstanding over six monthsi) Unsecured, considered good 18.50 42.81Unsecured, considered doubtful 129.17 2.95Less:- Provision for doubtful debts (129.17) (2.95)18.50 42.81ii) Other DebtsUnsecured, considered good 5,143.74 3,761.03[Includes unbilled revenue of ` 2,056.86 Lacs
    • (Previous year ` 2,070.47 Lacs)]Total Total 5,162.24 3,803.84Included in Sundry Debtors are dues fromCompanies under the same management:Aditya Birla Financial Shared ServicesPrivate Limited 1.51 1.92Birla Sun Life Insurance Company Limited 163.53 228.32SCHEDULE - 8 - CASH AND BANK BALANCESi) Cash on hand 6.32 3.84ii) Balance with scheduled Banks :On current account 829.65 10.70On fixed deposits (As margin against bankguarantee) 1.94 1.94Balance with other Banks :On Current Account 1.77 1.67(with Natwest Bank, UK. MaximumBalance outstanding during the year` 1.77 lacs (Previous year - ` 30.99 )Total Total 839.68 18.15(9)ADITYA BIRLA MINACS WORLDWIDE LIMITEDCMYKF or the F or they ear ended y ear ended31st Marc h, 2011 31st Marc h, 2010
    • ` Lacs ` LacsSCHEDULE - 14 - ADMINISTRATIVE EXPENSESi) Legal & professional fees 600.80 453.26ii) Telephone expenses 85.46 89.25iii) R ecruitment & relocation 425.41 206.22iv) Auditors remuneration– Audit fees 33.50 36.86– Out of pocket expenses 1.91 0.03v) Vehicle expenses 292.26 159.71vi) Seminar & outside training expenses 89.38 65.59vii) Printing & stationery 58.05 37.13viii) Di rectors sitting fees 1.85 1.65ix) Insurance charges 26.79 35.71x) Travelling expenses 399.78 329.46xi) Loss / (Profit) on sale of fixed assets — 53.05xii) Rates and Taxes 26.38 43.00xiii) Provision for doubtful Debt 126.22 2.95xv) Foreign Exchange loss on Loans taken/given 556.18 1,030.98xvi) Foreign Exchange Fluctuation (net) - Others 111.03 807.77xiv) Miscellaneous expenses 213.53 258.68Total Total 3,048.53 3,611.30SCHEDULE - 15 - MARKETING /BUSINESS DEVELOPMENT EXPENSESi) Business promotion expenses 4.97 6.18ii) Advertisement and branding expenses 3.60 3.42
    • iii) Ente rtainment expe nses 5.21 3.35iv) Marketing expenses 411.84 324.77v) Telemarketing registration & bonding expenses 8.69 16.05Total 434.31 353.77SCHEDULE - 16 - FINANCIAL CHARGES & INTEREST COSTi) Arrangement Fees 96.66 427.56ii) Interest on external commercial borrowingsand term Loan 2,418.51 2,666.73iii) Interest on wo rking capital and demand Loan 21.83 73.05v) Other financial charges 77.80 19.08Total Total 2,614.80 3,186.42A s At A s At31st Mar, 20 11 31st Mar, 20 10` Lacs ` LacsSCHEDULE - 9 - LO ANS AND ADVANCES(Unsecured considered good)i) Advances recoverable in cash or in kind or forvalue to be received 1,011.57 1,383.30ii) Tax deducted at source 447.06 223.93iii) Deposits- other s 963.93 951.79iv) Inter-company deposits 1,000.00 —Total Total 3,422.56 2,559.02Included in Loans and Advances are dues fromCompanies under the same management:Aditya Birla Minacs IT Services Limited 1,000.00 —
    • [Maximum amount outstanding during the year ` 1,000 lacs( Previous Year- ` Nil)]SCHEDULE - 10 - CURRENT LIABILITIES & PROVISIONSi) Sundry creditors (including book overdraft of ` Nil Lacs;Previous Year. ` 476.65 Lacs) 8,010.19 6,983.25ii) Interest accrued but not due 212.71 216.08iii) Subsidiary companies 290.65 (36.54)iv) Other li abilities 228.16 254.718,741.71 7,417.50PROVISIONSi) Gratuity 50.45 29.91ii) Leave encashment 122.03 103.20172.48 133.11Total Total 8,914.19 7,550.61For the For theyear ended year ended31st March, 2011 31st March, 2010` Lacs ` LacsSCHEDULE - 11 - OTHER INCOMEi) Gain on mutual fund investments 57.58 226.62ii) Dividend from subsidiary — 68.33iii) M iscellaneous income 18.61 5.22iv) Interest income– on inter-company deposits(TDS: ` 0.08 Lacs; Previous Year. ` 0.48 Lacs) 16.87 2.13
    • – on loan to subsidiary (TDS: ` 19.55 Lacs;Previous Year ` 80.82 Lacs) 113.15 220.08Total 206.21 522.38SCHEDULE - 12 - PERSONNEL EXPENSESi) Salaries & other employee benefits 12,377.97 10,715.15ii) Contribution to provident and other funds 871.08 598.38iii) Employee Compensation under ESOP 450.38 126.15v) Staff Welfare Expenses 1,916.58 1,510.37iv) Gratuity (Refer Note 16 schedule 17) 66.86 43.87Total Total 15,682.87 12,993.92SCHEDULE - 13- OTHER OPERATING EXPENSESFacility Expensesi) Rent charges 1,602.77 1,310.15ii) Electricity expenses 1,112.91 835.34iii) House keeping expenses 201.47 136.02iv) Security charges 203.72 162.85iv) Repairs & maintenance– Building 8.34 71.26– Others 253.16 196.21v) Hire Charges 95.57 41.07Technology Expensesvi) Connectivity charges 668.51 795.08vii) R epairs & maintenance - Machine ry 331.65 375.75viii) Software & support expenses 208.57 92.07Total Total 4,686.67 4,015.80
    • (10)ADITYA BIRLA MINACS WORLDWIDE LIMITEDCMYKSCHEDULE – 17: NOTES TO ACCO UNTS1. Nature of operationsAditya Birla Minacs Worldwide Limited (“the Company”) (ABMWL) providescustomized business process outsourcing (BPO) solutions focused mainly on theareas of capability, contact center solutions, integrated marketing services andknowledge process outsourcing.2. ACCOUNTING POLICIESa. Basis of preparationThe financial statements have been prepared to comply in all material respectswith the Accounting Standards notified by Companies (Accounting Standards)Rules, 2006, (as amended) and the relevant provisions of the CompaniesAct, 1956. The financial statements have been prepared under the historicalcost convention on an accrual basis. The accounting policies have beenconsistently applied by the Company and are consistent with those used in theprevious year.b. Use of estimatesThe preparation of financial statements in conformity with generally acceptedaccounting principles requires management to make estimates and assumptionsthat affect the reported amounts of assets and liabilities and disclosure ofcontingent liabilities at the date of the financial statements and the results ofoperations during the reporting period end. Although these estimates are basedupon management’s best knowledge of current events and actions, actual
    • results could differ from these estimates.c. Revenue recognitioni) Revenue is derived from both time-based and unit-priced contracts.Revenue is recognized as related services are performed based onagreements / arrangements with the customersii) Interest income is recognised on a time proportion basis taking intoaccount the amount outstanding and the rate applicable.iii) Divi dend is recognised when the shareholders’ right to receive paymentis established bythe balance sheet date.d. Fixed assetsFixed assets are stated at cost less accumulated depreciation and impairmentlosses if any. Cost comprises the purchase price and any attributable cost ofbringing the asset to its working condition for its intended usee. DepreciationDepreciation on assets is provided on straight-line basis, on the rates based onthe useful lives as estimated by the management, which are greater than thecorresponding rates prescribed in Schedule XIV of the Companies Act, 1956.The individual assets costing less than ` 5,000/- are depreciated in full in theyear of purchase. The management’s estimate of useful lives of the variousfixed assets is given hereby:Assets Estimated useful lifei) Computers Equipment/Int angibles 2 - 4 yearsii) Telecommunication Equipment 5 yearsiii) Plant & Machinery 5 yearsiv) Office Equipment 5 Years
    • v) Furniture & Fixtures 6 Yearsvi) Motor Car 5 YearsLeasehold improvements are depreciated over the shorter of the estimateduseful life of the asset and the lease term of the premises.f. LeasesFinance lease, which effectively transfers to the Company substantially all therisks and benefits incidental to ownership of the leased item, are capitalized atlower of fair value and present value of the minimum lease payments at theinception of the lease term and disclosed as leased assets. Lease paymentsare apportioned between the finance charges and reduction of the lease liabilitybased on implicit rate of return. Finance charges are charged directly againstincome. Lease management fees, lease charges and other initial direct costsare capitalized.Leases where the lessor effectively retains substantially all the risks and benefitsof ownership of the leased item, are classified as operating leases. Operatinglease payments are recognized as an expense in the Profit and Loss accounton a straight-line basis over the lease term.g. Investmentsi) Investments that are readily realizable and intended to be held for notmore than a year are classified as current investments. All otherinvestments are classified as long-term investments.ii) Long-term investments are valued at cost. Any decline in the value ofinvestments other than temporary, is provided for and charged to theprofit & loss account.iii) The current investments are carried at lower of cost and net asset value
    • determined on an individual investment basis.h. ImpairmentThe carrying amounts of assets are reviewed at each balance sheet date if thereis any indication of impairment based on internal/external factors.An impairment loss is recognized wherever the carrying amount of an assetexceeds its recoverable amount. The recoverable amount is the greater of theasset’s net selling price and value in use. In assessing value in use, the estimatedfuture cash flows are discounted to their present value using a pre-tax discountrate that reflects current market assessments of the time value of money andrisks specific to the asset.i. Transactions in Foreign Currencyi) Initial RecognitionForeign currency transactions are recorded in the reporting currency, byapplying to the foreign currency amount the exchange rate between thereporting currency and the foreign currency at the date of the transaction.ii) ConversionForeign currency monetary items are reported using the closing rate.Non-monetary items, which are carried in terms of historical costdenominated in a foreign currency, are reported using the exchange rateat the date of the transaction.iii) Translation of Integral foreign operationThe financial statements of foreign operations whose operations areintegral to the operations of the Company are translated using theprinciples and procedures as if the transactions of the foreign operationshad been those of Company itself.
    • iv) Exchange DifferencesExchange differences arising on the settlement of monetary items or onreporting company’s monetary items at rates different from those at whichthey were initially recorded during the year, or reported in previous financialstatements, are recognized as income or as expenses in the year in whichthey arise.v) Forward Exchange Contracts not intended for trading or speculationpurposesThe premium or discount arising at the inception of forward exchangecontracts is amortized as expense or income over the life of the contract.Exchange differences on such contracts are recognized in the statementof profit and loss in the year in which the underlying transactions occur.Any profit or loss arising on cancellation or renewal of forward exchangecontract is recognized as income or as expense for the year.vi) Accounting policy for DerivativesThe Company uses derivative financial instruments such as forwardexchange contracts, currency swaps and interest rate swaps to hedgeits risks associated with foreign currency fluctuations and interest rate.Currency and interest rate swaps are accounted in accordance with theircontractj. Retirement benefits(i) Defined Contribution PlanCompany’s contributions payable during the year to Provident Fund,Superannuation Schemes are recognized in the Profit and Loss Account.(ii) De fined Benefit Plan
    • Company’s liabilities under payment of gratuity Act (funded) andcompensated leave encashment are determined by Actuarial Valuationmade at the end of each financial year using the projected unit creditmethod. Actuarial gain and losses are recognized immediately in thestatement of Profit and Loss Account as income or expense. Obligationis measured at the present value of estimated future cash flows using adiscounted rate that is determined by reference to market yields at theBalance Sheet date on Government bonds where the currency and termsof the Government bonds are consistent with the currency and estimatedterms of the defined benefit obligation.k. ProvisionA provision is recognized when an enterprise has a present obligation as aresult of past event; it is probable that an outflow of resources will be requiredto settle the obligation, in respect of which a reliable estimate can be made.Provisions are not discounted to its present value and are determined basedon best estimate required to settle the obligation at the balance sheet date.These are reviewed at each balance sheet date and adjusted to reflect thecurrent best estimates.l. Income TaxTax expense comprises of current and deferred tax. Provision for current tax ismade on the basis of estimated taxable income for the current accountingyear. The deferred tax for timing differences between the book and tax profitsfor the year is accounted for, using the tax rates and laws that have beensubstantively enacted as of the Balance Sheet date. Deferred tax assets arisingfrom timing differences are recognized to the extent there is reasonable certainty
    • (11)ADITYA BIRLA MINACS WORLDWIDE LIMITEDCMYKthat these would be realized in future. In case of unabsorbed losses andunabsorbed depreciation, all deferred tax assets are recognized only if there isvirtual certainty supported by convincing evidence that they can be realizedagainst future taxable profit.m. Employee Stock OptionsMeasurement and disclosure of the employee share-based payment plans isdone in accordance with SEBI (Employee Stock Option Scheme and EmployeeStock Purchase Scheme) Guidelines, 1999 and the Guidance Note on Accountingfor Employee Share-based Payments, issued by the Institute of CharteredAccountants of India. The Company measures compensation cost relating toemployee stock options using the intrinsic value method. Compensation expenseis amortized over the vesting period of the option on a straight line basis.n. Earnings per shareBasic earnings per share are calculated by dividing the net profit or loss for theyear attributable to equity shareholders by the weighted average number ofequity shares outstanding during the year.For the purpose of calculating diluted earnings per share, the net profit or lossfor the year attributable to equity shareholders and the weighted average numberof shares outstanding during the year are adjusted for the effects of all dilutivepotential equity shares.o. Cash and Cash equivalentsCash and cash equivalents for the purposes of cash flow statement comprise
    • cash at bank and in hand and short-term investments with an original maturityof three months or less.3. Contingent Liabilities. ( ` Lacs)Particulars As at As atMarch 31, 2011 March 31, 2010i) Estimated amount of contractsremaining to be executed on capitalaccount and not provided for. 69.11 146.03ii) Guarantees and counter guaranteesgiven by the Company to Commissionerof Customs towards custom & exciseduty exemption under STPI Scheme(Based on present export performance,the Company expects to meet its exportobligation and hence this liability is notlikely to materialize) 1421.43 1,329.95iii) Guarantees and Counter guaranteesgiven by the Company to its insurancecompany in USA and to Citibank, NA onthe basis of which the insurancecompany issued telemarketing bondsfavoring Attorney generals of variousstates in USA on behalf of the Company.(These bonds are required to be givenfor compliance of telemarketing laws in
    • USA. In case of any violations of theserules, the penalties are imposed. TheCompany does not expect any liabilitieson the same). 446.50 451.40iv) Guarantee given by the Company toBanks for securing the loans granted bysuch banks to the subsidiaries ofthe Company. 10,939.25 11,059.30v) Guarantee and Counter given byCompany to Department ofTelecommunication (DoT) for getting thepermission for sharing of internationaland domestic call center. 350.00 210.00vi) Service tax refund relating to year2005-2007 rejected by service taxdepartment. Company is in appeal atvarious levels against rejection orders 266.58 266.58vii) Penalty for disallowances of expensesincurred by the Company for F.Y2003-2004. The Company has filed anappeal before the Bombay High Court. 73.29 73.294. Earnings in foreign currency ( ` Lacs)Particulars Year Ended Year EndedMarch 31, 2011 March 31, 2010a) Service Income 14,765.98 15,825.42
    • b) Interest Income 113.15 220.085. Expenditure in foreign cur rency ( ` Lacs)P articulars Year Ended Year EndedMarch 31, 2011 March 31, 2010Expenditure in foreign cur rency (A ccrual Basis)a) Traveling expenses 44.11 111.30b) Marketing expenses 509.56 437.11c) Interest expenses 2,212.96 2,283.54d) Technology expenses 46.63 19.386. CIF value of imports ( ` Lacs)Particulars Year Ended Year EndedMarch 31, 2011 March 31, 2010Capital goods 154.99 202.417.7. The Company has entered into operating lease agreements for its BPO centers rangingfor a period of 3 to 5 years The lease rentals charged during the year and maximumobligations on long-term non-cancelable operating leases payable as per the rentalsstated in respective agreements are as follows( ` Lacs)Particulars Year Ended Year EndedMarch 31,2011 March 31,20101. Lease payments recognized in theprofit & loss account for the year 1,602.77 1,379.782. Obligations on non-cancelable leases :i) Not later than one year : 665.78 919.48ii) Later than one year and not
    • later than 5 years Nil 517.00iii) Later than 5 years Nil Nil8. Deferred TaxesThe Company has deferred tax assets in respect of unabsorbed depreciation andbusiness loss. As there is no virtual certainty about the realization of the deferred taxassets against the future taxable profits, the same has not been recognized.9. Employee Stock Option PlanIn December 2009, the Board of the Company approved the Employees Stock OptionPlan 2009 (“the Plan”), which covers the employees of the Company including itssubsidiaries. The plan is administered and supervised by the Compensation Committeeof the board (the ‘Committee’).The Scheme provides that these options would vest in tranches over a period of3-4years as follows:Period within which options will vest unto the participant %of options thatwill vestEnd of 15 months from the date of grant of options 20%End of 27 months from the date of grant of options 20%End of 39 months from the date of grant of options 60%Fair Valuation:The fair valuation of the options used to compute proforma net profit and earning pershare have been done by an independent valuer on the date of grant using black-Scholes Model. The keyassumptions and the fair value are as under.Particulars PercentageRisk Free Interest Rate % 6.84%Option Life (years) 4.80Expected Volatility (%) 0%
    • Historical Volatility (%) 0%Expected Dividend Yield (%) 0%Weighted Average Fair Value per Option (`) 141Had the compensation cost for the stock option granted under ESOS-2009 beenrecognized, based on fair value at the date of grant in accordance with Black andScholes Model, the proforma amount of net profit and earning per share of theCompany would have been as under:(` Lacs)Particulars March 31, 2011 March 31,2010Net Loss (3,804.72) (2,952.16)Add: Compensation cost as per Intrinsic Value 450.38 126.15Less: Compensation cost as per fair value 813.73 227.92Adjusted Net Loss (4,168.07) (3,053.93)Weighted average number of Basic EquityShares Outstanding (in Nos) 23,491,711 23,491,711ESOPS outstanding at the end of the year 1,367,000 372,875Weighted average number of Diluted EquityShares Outstanding (in Nos) 24,858,711 23,864,586Face Value of Equity Shares (In `) 1.00 1.00Reported Earning Per Share (EPS)– EPS (In `) (16.20) (12.57)– Diluted (In `) (16.20) (12.57)Proforma Earning Per Share (EPS)– EPS (In `) (17.74) (13.00)– Diluted (In `) (17.74) (13.00)
    • (12)ADITYA BIRLA MINACS WORLDWIDE LIMITEDCMYKThe participants shall exercise the options within five years from vesting orwithin three years from the date of listing, whichever is earlier. The Plan is contingenton the shares being listed in a recognized stock exchange in India on or before1stJuly, 2015. If the Company’s shares are not listed on the stock exchange by30thJune, 2015, the existing employees shall have to sell all options vested to theCompany or its nominee at a price determined as per Plan.Particulars March31, 2011 March 31, 2010Total Options under the Plan 1,897,337 1,897,337Options outstanding at the beginning of the year 1,491,500 NilGranted during the year 34,500 1,491,500Forfeited during the year 159,000 NilExercised during the year Nil NilOutstanding at the end of the year 1,367,000 1,491,500Expired during the year Nil NilExercisable at the end of the year Nil NilExercise Price ( `) 230 230The employee stock option outstanding account shown in Balance Sheet is net ofunamortized amount on account of Deferred Employee Compensation Account
    • ` 490.28 Lacs (PY ` 1,037.82 Lacs).10. 10. The Company does not owe any amount a) to any Small Scale Undertaking b) tosupplier as defined under the Micro, Small and Medium Enterprises DevelopmentAct, 2006 at year end.11. Related Party TransactionsName and nature of relationship of the Related Party where control exists:Holding Company Aditya Birla Nuvo Limited (ABNL)Wholly owned subsidiary company AV TransWorks Limited, Canadaor parties where control exists:- (Subsidiary of ABMWL)TransWorks Inc., USA (TW Inc)(Subsidiary of ABMWL)Aditya Birla Minacs Worldwide Inc. Canada(ABMWI) (Subsidiary of AV TransWorks)Aditya Birla Minacs Philippines Inc.(Subsidiary of ABMWL)Aditya Birla Minacs BPO Private Limited.(Subsidiary of Aditya Birla Minacs BPOLimited, U.K, formerly known as CompassBPO Ltd.) (w.e.f. March 9, 2010)Fellow Subsidiaries Aditya Birla Financial Shared ServicesLimited (ABFSSL)Birla Sun Life Insurance Company Limited(BSLICL)Aditya Birla Minacs IT Services Limited(ABMITS)
    • ABNL Investment Limited(formerly Laxminarayan Investment Limited)Joint Venture of Holding Company/ Birla Sun Life Asset ManagementFellow subsidiary Company Limited (BSAMC)(Directly held by the Holding Company tillMar 22, 2010 thereafter Joint Venture ofFellow subsidiary)IDEA Cellular Limited. Joint venture ofholding company.Key Management Personnel Deepak Patel (Whole Time Director. w.e.fOctober 12, 2010.12. Summary of transactions with related parties during the year: ( ` Lacs)Particulars Year ended Year endedMarch 31, 2011March 31, 2010Holding CompanyInter corporate deposit (ICD) given to ABNL 1,500 NilICD repayment by ABNL 1,500 NilInterest income 8.14 NilReimbursement of costs to the company 5.14 33.34Service Income (Indo Gulf Fertilizers Division of ABNL) 7.21 NilSubsidiary CompaniesTransworks Inc. USA:– Repayment of Share Capital Nil 96.80– Payment of dividend to holding company Nil 68.33Aditya Birla Minacs Worldwide Inc Canada:
    • – Marketing and technology expenses 509.56 437.11– Services Income 695.00 669.37A V Transworks Limited, Canada:– Investment in Preference Share Capital Nil 13,344.46– Foreign Currency Loan Given 10,424.82 6,782.95– Repayment of Foreign currency Loan 7,350.85 6,362.40– Interest Income Nil 202.42Aditya Birla Minacs Philippines Inc:– Foreign Currency Loan Given Nil 117.36– Interest Income Nil 17.66Aditya Birla Minacs BPO Private Limited– ICD taken 100.00– ICD re-paid 100.00– Interest expenses on ICD 2.25F ello w SubsidiaryABNL Inv estment Limited– ICD Taken Nil 500.00– Interest expenses on ICD Nil 3.67– ICD Repaid Nil 500.00Birla Sun Lif e Insurance Company Limited.,– Staff welfare expenses(Term Life Insurance) 19.28 18.15– Services Income 891.07 645.55– Expenses Reimbursed by the company 22.80 NilAditya Birla Minacs IT Services Limited.
    • – Personnel costs 27.41 50.53– Software expenses (ERP implementation) Nil 102.83– Reimbursement of Cost to the company 320.46 111.38– ICD Given during the year 1,795.00 200.00– Interest Income on ICD 16.87 2.13– ICD Re-paid 795.00 200.00Aditya Birla Financial SharedServices Private Limited.– Reimbursement of cost to the company 10.60 1.92Joint VentureBirla Sun Life Asset ManagementCompany Limited.– Services Income 210.73 166.80– Reimbursement of cost by the company Nil 4.16– Reimbursement of cost to the company Nil 5.66Idea Cellular Limited– Services Income 7,114.84 5,102.90Remuneration to Key Management Person*– Salary & Allowances 136.20 Nil– Contribution to Provident fund andother funds 11.4 NilRelated Party Balances:Holding Company– Payable – ABNL 24.41 21.93– Receivable- ABNL
    • (Division-Indo Gulf Fertilisers) 7.07 Nil– Corporate guarantees taken fromHolding Company 13,160.83 9,479.40Subsidiary Company– Receivable– Transworks Inc 1.12 1.12– Payable Aditya Birla Minacs WorldwideInc (Net of receivable of ` 101.42 lacs) 252.94 Nil– Receivable - Aditya Birla MinacsWorldwide Inc (Net of payable 27.79 lacs) Nil 16.86– Receivable (foreign currency loan) toA V Transworks Limited 14,290.0 10,714.33Receivable-Aditya Birla Minacs Philippines Inc. 957.82 968.27Corporate Guarantee given to Bank forLoan taken by A V Transworks Limited 10,939.25 11,059.30Joint Venture– Receivable - Idea Cellular Limited 859.18 766.68– Receivable- Birla Sun Life AssetManagement Company Limited. 16.45 38.68Fellow Subsidiary– Payable - Aditya Birla MinacsIT Services Limited. Nil 61.59– Receivable -Aditya Birla FinancialShared Services Private Limited. 1.51 1.92– Receivable - Birla Sun Life InsuranceCompany Limited. 163.53 228.32
    • – Receivable from Aditya Birla MinacsIT Services Limited (ICD) 1,000.00 Nil* As the liabilities for gratuities and leave encashment are provided on an actuarialbasis for the company as a whole, the amounts pertaining to the director is notincluded above13. Derivative Instruments.The Company uses derivative financial instruments such as forward exchangecontracts, currency swaps and interest rate swaps to hedge its risks associated withforeign currency fluctuations and interest rate.(13)ADITYA BIRLA MINACS WORLDWIDE LIMITEDCMYKThe Company, time to time, holds financial derivatives instruments primarily forhedging purpose. In pursuance of the announcement dated 29th March 2008 ofICAI, The Company has decided to account for losses, if any, on derivativestransactions, on net basis, after considering effect of underlying exposure /commitments / obligations. As there was no such loss at the end of the year, theabove changes does not have any effect on the profit for the year.Derivative Outstanding as at March 31 2011Particulars Currency Amount in Foreign PurposeCurrency (in Lacs)Forward Cover USD 283.85 To hedge receivables(402.69)Forward Cover USD 754.20 To hedge Loan Payable(754.20)
    • Forward Cover CAD 84.00 To hedge Loan Receivable(9.50)Forward Cover CAD 300.00 To hedge Redeemable(300.00) Preference share CapitalReceivableForward Cover USD NIL To hedge Interest Payable(10.00)Forward Cover USD 50.00 To hedge working capital(Nil) (PCFC) Loan payableCross Currency Swap JPY 554.19 To hedge loan payable(2,121.22)Note: Figures in brackets relates to previous year.All the above contracts are for hedging and not for speculation.As at March 31, 2011 all the foreign currency exposure stands hedged by derivativeinstrument or otherwise.14. Segment Information for the year ended March 31, 2011(1) Primary business segmentThe company provides a variety of Business Process outsourcing services.The risks and rewards from each of these service agreements are similar. Asthe Company’s business activity primarily falls within a single business segment,there are no additional disclosures to be provided in respect of primary segmentunder Accounting Standard 17 ‘Segment Reporting’, other than those alreadyprovided in the Financial Statements.(2) Secondary business segment:a. Geographical turnover is segregated based on the location of the customer
    • to whom the services are rendered.b. Assets are segregated based on their location.c. Information about secondary business segments:( ` Lacs)Year ended 31stMarch, 2011 India Outside India TotalA Revenue by geographical market 9,635.01 14,765.98 24,400.99B Carrying amount of segment assets 13,147.82 86,355.55 99,503.37C Capital Expenditure (included in(b) above) 2,908.42 Nil 2,908.42Year ended 31stMarch, 2010 India Outside India TotalA Revenue by geographical market 6,285.64 15,825.42 22,111.06B Carrying amount of segment assets 18,183.22 81,467.26 99,650.48C Capital Expenditure (included in(b) above) 3,872.59 Nil 3,872.5915. 15. The Company has invested ` 81,349.34 Lacs (previous year ` 76,817.93 lacs) (includesloan given of ` 14,290 Lacs (previous year ` 10104.13 lacs)) in AV Transworks Ltd,Canada which has further invested in Aditya Birla Minacs Worldwide Inc, Canada.Considering the strategic and long term nature of aforesaid investments and assetbase and business plan of the investee companies, in the opinion of the managementthere is no diminution in the value of investment other than temporary.16. Retirement Benefits: ( ` Lacs)
    • Year ended Year endedMarch 31, 2011 March 31, 2010(a) Defined Benefit Plans -The Amounts recognized in the balancesheet are as follows in respect ofgratuity (fully funded by the company):Present value of the funded definedbenefit obligation at the end of the year 259.75 223.35Fair value of plan assets 133.36 163.82Benefit Paid on behalf of Fund 75.94 29.62Net Liability 50.45 29.91T he Amounts recogniz ed in Salary,Wages and Employee Benefits in theProfit and Loss Account as follows inrespect of gratuity (fully funded bythe company):Current Service cost 116.68 127.73Past Service Cost 8.73 NilInterest on Defined Benefit Obligations 18.43 14.17Expected return on plan assets (14.21) (9.45)Net Actuarial (gain)/loss recognizedduring the year (62.77) (88.58)Net Gratuity Cost 66.86 43.87Actual Return on Plan AssetsExpected Return on Plan Assets 14.21 9.45Actuarial gain/(loss) on Plan Assets 1.66 (4.95)
    • Actual Return on Plan Assets 15.86 4.50Reconciliation of present value of theobligation and the fair value of the plan assets:Opening Defined Benefit Obligationas on 1.4.2010 223.35 188.95Current Service Cost 116.68 127.73Past Service Cost 8.73 NilInterest Cost 18.43 14.17Actuarial (Gain)/loss (61.11) (77.87)Benefits Paid (46.32) (29.62)Closing Defined Benefit Obligationas on 31.03.2011 259.75 223.35Change in fair value plan assetsOpening Fair Value of the plan assets 163.82 125.96Expected return on plan assets 14.21 9.45Actuarial Gain/(loss) 1.66 (4.95)Contributions by the Employer Nil 62.98Benefits Paid (46.32) (29.62)Closing Fair value of the plan assets 133.36 163.82Investment details of plan assetsGovernment of India Securities 38.79 36.04Corporate Bonds 2.08 3.28Insurer Managed Fund (with commonfund of Holding Company) 86.80 124.50Others 5.69 Nil
    • Total 133.36 163.82The overall expected rate of return on assetsis determined based on the market pricesprevailing on that date, applicable to the yearover which the obligation is to be settled.(B) Defined Contributions Plans:Contribution to Employee Provident Fund 608.12 512.18Contribution to ESIC 260.23 85.17Contribution to superannuation fund 13.21 19.84(C) Principal Actuarial Assumptions At theBalance Sheet date (31.03.10)Discount rate 8.00% 8.25%Estimated rate of return on plan assets 8.00% 8.25%Future Salary escalation 10% for first 10% for firstthree years and Three Years and5% thereafter 5% thereafter(D) Experience Adjustment 2010-11 2009-10 2008-09 2007-08 2006-07Liability at the endof the Period 259.75 223.35 188.95 104.70 79.02Fair Value of Plan Assetsat the end of the Period 133.36 163.82 106.06 74.35 66.90Benefit paid onbehalf of fund 75.94 29.62 Nil Nil NilDeficit / (Surplus) 50.45 29.91 82.89 30.35 12.12Experience adjustments
    • on plan liabilities (Gain)/Loss (61.11) (77.87) 90.53 (23.12) (21.65)Experience adjustmentson plan Assets Gain/(Loss) 1.66 (4.95) 14.44 0.47 (2.34)17. 17. The Company has issued Zero Coupon Compulsorily Convertible Debentures (CCD)for Rs 25,000 Lacs (previous year Rs Rs 25,000 Lacs) which are to be converted intoEquity on the business day following expiry of a period of 60 months from the date ofallotment of such CCD. As per the terms of the issue, the Conversion price will bemutually decided thirty days before the conversion date. Aditya Birla Nuvo Limited(14)ADITYA BIRLA MINACS WORLDWIDE LIMITEDCMYKFor S.R. BATLIBOI & ASSOCIATES .Firm Registration No. 101049WChartered Accountantsper Amit MajumdarPartnerMembership No. 36656Place: MumbaiDate: July 27, 2011For and on behalf of the Board of Directors ofAditya Birla Minacs Worldwide LimitedDr. Rakesh JainDirectorSushil AgarwalDirector
    • Ramesh KamathChief Financial OfficerDate : July 27, 2011(ABNL), the holding company, has entered into an Option Agreement with theSubscribers of these CCD pursuant to which the holders of CCD have call option onABNL and ABNL has put option on the Subscribers on expiry of 24,36,48 and 60months from the date of allotment of these CCD. The holders can also exercise putoption on happening of certain specified events.18. 18. The Company had filed Composite Scheme of Amalgamation (or “Scheme”) withKarnataka High Court (or “High Court”) for the merger of Aditya Birla Minacs ITServices Limited and Aditya Birla Minacs Technologies Limited with the Companywith effect from April 1, 2010. The High Court sanctioned the Scheme on November3, 2010 and order was received by Company on December 9, 2010. The approved Sc hemewas not filed with Registrar of Companies as the management was desirous of makingcertain modifications in the Scheme. Therefore, the Company has revised the Schemeand the same has been filed for approval with the High Court on February 22, 2011.Currently, the revised Scheme is pending approval from the High Court. Accordingly,the revised Scheme has not been given effect in consolidated financial statements.1 9.9 . Previous year’s figures have been regrouped, where necessary to conform to this year’sclassification.(15)ADITYA BIRLA MINACS WORLDWIDE LIMITEDCMYKAUDITORS’ REPOR TTo
    • The Board of Directors of Aditya Birla Minacs Worldwide LimitedWe have audited the attached consolidated Balance Sheet of AdityaBirla Minacs Worldwide Limited (‘the Company’) and its subsidiaries(collectively referred to as the ‘Group’), as at March 31, 2011, and alsothe consolidated Profit and Loss Account, and the consolidated CashFlow statement for the year ended on that date annexed thereto. Thesefinancial statements are the responsibility of the Company’smanagement and have been prepared by the management on the basisof separate financial statements and other financial information regardingcomponents. Our responsibility is to express an opinion on thesefinancial statements based on our audit.We conducted our audit in accordance with auditing standards generallyaccepted in India. Those Standards require that we plan and performthe audit to obtain reasonable assurance about whether the financialstatements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts anddisclosures in the financial statements. An audit also includes assessingthe accounting principles used and significant estimates made bymanagement, as well as evaluating the overall financial statementpresentation. We believe that our audit provides a reasonable basis forour opinion.We did not audit the financial statements of subsidiaries namely, AdityaBirla Minacs Worldwide Inc. (consolidated) and Aditya Birla MinacsPhilippines Inc., whose financial statements reflect total assets of` 75,146.33 lacs as at March 31, 2011 and the total revenue of
    • ` 140,411.82 lacs and cash outflows amounting to ` 28.70 Lacs for theyear then ended. The financial statements and other financial informationof Aditya Birla Minacs Worldwide Inc. and Aditya Birla Minacs PhilippinesInc. have been audited by other auditors as per the requirements ofCandian Generally Accepted Accounting Standards (GAAP) andPhilippines GAAP respectively. These have been converted as perrequirements of Indian GAAP by the management and the conversionhas been audited by us. Our opinion, in so far as it relates to the amountsincluded in respect these subsidiaries, is based solely on report of otherauditors and converted into Indian GAAP as stated above.We report that the consolidated financial statements have been preparedby the Company’s management in accordance with the requirementsof Accounting Standards (AS) 21, Consolidated financial statements,notified pursuant to the Companies (Accounting Standards) Rules, 2006(as amended).Based on our audit and on consideration of reports of other auditors onseparate financial statements and on the other financial information ofthe components, and to the best of our information and according tothe explanations given to us, we are of the opinion that the attachedconsolidated financial statements give a true and fair view in conformitywith the accounting principles generally accepted in India:(a) in the case of the consolidated balance sheet, of the state of affairsof the Group as at March 31, 2011;(b) in the case of the consolidated profit and loss account, of the profitfor the year ended on that date; and
    • (c) in the case of consolidated cash flow statement, of the cash flowsfor the year ended on that date.For S. R. BATLIBOI & ASSOCIATES,Firm registration number: 101049WChartered Accountantsper Amit MajmudarPartnerMembership No.: 36656Place: MumbaiDate: July 27, 2011(16)ADITYA BIRLA MINACS WORLDWIDE LIMITEDCMYKCONSOLIDATED B ALANCE SHEE T AS AT MARCH 31, 2011Schedule March 31, March 31,2011 2010` Lacs ` LacsI. SOURCES OF FUNDS1 Shareholders’ FundsShare capital 1 234.92 234.92Employee stock options(Refer note 9 of schedule 17) 576.53 126.15Reserves and surplus 2 27,795.68 27,795.68Foreign currency translation reserve 5,843.43 3,825.392 Secured loans Secured loans 3 65,646.73 59,468.49
    • 3 Unsecured loans Unsecured loans 4 39,214.88 38,646.264 Deferred tax liability 941.68 497.79Total 140,253.85 130,594.68II. APPLICATION OF FUNDS1 Fixed Assets Fixed Assets 5Gross Block 78,263.88 67,838.12Less : Depreciation / Amortization 56,021.06 48,306.72Net Block 22,242.82 19,531.40Capital Work-in-Progress(including capital advances) 1,694.68 2,538.41Goodwill 70,807.08 60,789.412 Investments Investments 6 700.00 9,350.003 Deferred Tax Asset 276.59 297.514 Current Assets, Loans andAdvancesSundry Debtors 7 37,362.16 24,945.48Cash and Bank Balances 8 3,176.45 1,983.08Loans and Advances 9 12,889.35 8,439.07(A) (A) 53,427.96 35,367.63Less: Current Liabilities andProvisions Provisions 10Current Liabilities 26,774.08 21,698.75Provisions 184.68 135.12(B) (B) 26,958.76 21,833.87Net Current Assets (A-B) 26,469.20 13,533.76
    • 5 Profit and Loss account 18,063.48 24,554.19Total 140,253.85 130,594.68Notes to Accounts Notes to Accounts 17The schedules referred to above and notes to accounts form an integral part of theBalance Sheet.For and on behalf of the Board of Directors ofAs per our report of even date Aditya Birla Minacs Worldwide Ltd.For S.R. BATLIBOI & ASSOCIATESFirm Registration No. 101049w Dr. Rakesh JainChartered Accountants Directorper Amit Majumdar Sushil AgarwalPartner DirectorMembership No. 36656Place: Mumbai Ramesh KamathDate: July 27, 2011 Chief Financial OfficerDate : July 27, 2011CONSOLIDATED PR OFIT & LOSS ACCOUNT FOR THEYEAR ENDED MARCH 31, 2011Schedule March 31, March 31,2011 2010` Lacs ` LacsINCOME :Service Charges 163,140.16 146,688.59Other Income 11 124.08 247.58Total 163,264.24 146,936.17
    • EXPENDITURE :Personnel expenses 12 103,822.63 96,743.54Other Operating Expenses 13 13,196.10 12,356.64Administrative Expenses 14 28,974.13 28,635.21Marketing / BusinessDevelopment Expenses 15 257.89 192.43Financial Charges 16 3,533.40 4,692.43Depreciation / Amortization 6,540.36 6,047.28Total 156,324.51 148,667.53Profit / (Loss) before tax for the year 6,939.73 (1,731.36)Less: Provision for taxation /Minimum Alternative Tax 267.11 495.92Add: Recovery of income taxes 340.10 —Less: Deferred tax charge 522.01 79.99Profit / (Loss) for the year 6,490.71 (2,307.27)Profit / (Loss) brought forwardfrom previous year (24,554.19) (22,246.92)Accumulated balance carriedto the Balance Sheet (18,063.48) (24,554.19)Basic Weighted Average number of shares 23,491,711 23,491,711Diluted Weighted Average number of shares 24,858,711 23,864,586Basic earnings per share(Nominal value of shares` 1 each Previous year ` 1 each) ` 27.63 (9.82)Diluted earnings per share
    • (Nominal value of shares ` 1 eachPrevious year ` 1 each) ` 26.11 (9.82)Notes to Accounts Notes to Accounts 17The schedules referred to above and notes to accounts form an integral part ofthe Profit & Loss Account.For and on behalf of the Board of Directors ofAs per our report of even date Aditya Birla Minacs Worldwide Ltd.For S.R. BATLIBOI & ASSOCIATESFirm Registration No. 101049w Dr. Rakesh JainChartered Accountants Directorper Amit Majumdar Sushil AgarwalPartner DirectorMembership No. 36656Place: Mumbai Ramesh KamathDate: July 27, 2011 Chief Financial OfficerDate : July 27, 2011(17)ADITYA BIRLA MINACS WORLDWIDE LIMITEDCMYKCONSOLIDATED CA SH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2011(` in Lacs)For the year ended For the year endedMarch 31, 2011 March 31, 2010A. Cash flows from Operating ActivitiesNet Profit/(Loss) before taxation, and extraordinary items 6,939.73 (1,731.36)
    • Adjustments for:Depreciation / Amortization 6,540.36 6,047.28Loss/(Profit) on Sale of Fixed Assets — 53.05Foreign Exchange (Gain)/Loss (Net) 943.66 (2,595.19)Interest Income (25.89) (4.43)Dividend Income (57.58) (226.62)Finance/Interest Expense 3,533.40 4,692.43Employee stock compensation expenses 450.38 126.15Provision for doubtful debt 224.97 2.95Operating Profit before working capital changes 18,549.03 6,364.26Movements in working capital :(Increase)/Decrease in Sundry Debtors (11,506.86) 3,296.47(Increase)/Decrease in Loans & Advances (4,469.25) (4,254.09)Increase/(Decrease) Current Liabilities & Provisions 4,120.68 3,997.64Foreign exchange on translation (918.27) 1,088.11Cash generated from operations 5,775.33 10,492.39Add/(Less): Direct Taxes (including TDS) paid)/T ax Refunds (449.02) (575.91)Net Cash flow from Operating Activities 5,326.31 9,916.48B. Cash Flows from Investing ActivitiesPurchase consideration on acquisition (9,211.96) (3,468.05)(Purchase)/Sale of Fixed Assets (8,010.94) (8,011.01)Proceeds from sale of Fixed Assets 19.45 601.13(Purchase)/Sale of investment 8,650.00 (5,350.00)Interest income received 25.89 4.43Dividend received 57.58 226.62
    • Net Cash from/(for) Investing Activities Net Cash from/(for) Investing Activities (8,469.98) (15,996.88)C. Cash flow from Financing ActivitiesProceeds from/(repayment of) Bank Borrowings - Unsecured (0.00) (2,500.00)Proceeds from/(repayment of) Long-term borrowings - Secured 7,795.32 (9,697.56)Proceeds from/(repayment of) other borrowings — —Proceeds from/(Repayment of) Vehicle/Capital lease borrowing (725.76) (1,762.86)ESOP paymentsProceeds from Issue of Compulsorily Convertible Debentures — 25,000.00Interest/financial charges paid (3,533.40) (4,692.43)Net Cash generated/(used) in Financing Activities 3,536.16 6,347.15D. Foreign Exchange difference on translation of foreign currency cash and cash equivalents (0.27) (3.01)Net Increase in cash and C ash equivalents during the year 392.21 263.74Cash and cash equivalents at the beginning of the year 1,981.14 1,602.02Cash acquired on acquisition 801.23 115.38Cash and cash equivalents at the end of the year 3,174.58 1,981.14Notes:Components of Cash and Cash Equivalents As at As at31.03.2010 31.03.2009i) Cash Balance on hand 13.98 13.33ii) Balance with Scheduled and other Banks :- in Current Account 3,160.53 1,967.81Total 3,174.51 1,981.14Note:i) Fixed Deposit of ` 1.94 Lacs (P.Y. 1.94 Lacs) given as margin money has not been considered as cashand cash equivalentsAs per our report of even date For and on behalf of the Board of Directors
    • of Aditya Birla Minacs Worldwide LimitedFor S.R. BATLIBOI & ASSOCIATESFirm Registration No: 101049W Dr. Rakesh JainChartered Accountants DirectorSushil Agarwalper Amit Majmudar per Amit Majmudar DirectorPartnerMembership No. 36656 Ramesh KamathPlace: Mumbai Chief Financial OfficerDate: July 27, 2011 Date: July 27, 2011(18)ADITYA BIRLA MINACS WORLDWIDE LIMITEDCMYKSCHEDULES FORMING P ART OF THE BALANCE SHEETMarch 31, March 31,2011 2010` Lacs ` LacsSCHEDULE 1 - SHARE CAPITALAuthorised Capital30,000,000 (P Y 30,000,000) Equity Shares of ` 1/- each 300.00 300.00Total 300.00 300.00Issued, Subscribed and Paid up Capital2,34,91,711 (P Y 2,34,91,711) Equity Shares of` 1/- each fully paid up 234.92 234.92(Of the above 2,0,738,378 (PY: 20,738,378) equity shares are
    • held by Aditya Birla Nuvo Limited Being the holding company,including 7 shares held by them through their nominees)Total 234.92 234.92SCHEDULE 2 - RESERVES AND SURPLUSSecurities Premium AccountOpening Balance 27,795.68 27,795.68Total Total 27,795.68 27,795.68SCHEDULE 3 - SECURED LOANSi) Working Capital Facility from Banks 2,304.06 —(Secured against receivables)(Repayable within one year - NIL; Previous Year. ` 899.42 lacs)ii) Capital Lease — 725.76(Secured against the charge on the respective assets)iii) Term l oan from Banks 2, 000.00 3,000.00(Secured against the first charge on the fixed assets andsecond charge on Receivables) (Repayable withinone year - ` 1,000. lacs; Previous Year ` 2,000 lacs )iv) External Commercial Borrowings from banks 61,342. 67 55,742.73(Secured against the first charge on the fixed assets andsecond charge on Receivables)(Repayable within one year - ` 1,000. lacs;Previous Year ` 2,000 lacs )Total Total 6 5,646.73 59,468.49SCHEDULE 4 - UNSECURED LOANSi) Long Term Loan from Banks 1 4,214.88 13,646.26
    • (Repayable within one year - NIL; Previous Year. NIL)ii) Compulsorily Convertible Debentures 25,000.00 25,000.00(Refer note 15 of Schedule 17)Total Total 3 9,214.88 38,646.26SCHEDULE 6 - INVESTMENTSUnquoted(4,461,070.79 units of Rs. 15.69 each)In Mutual Funds - Birla Sunlife Cash P lus - Instl. Premium - Growth 216.86 850.00– Birla Sunlife Savings Fund Instl. Growt h 483.14 8,500.00Total 700.00 9,350.00SCHEDULE 7 - SUNDRY DEBTORSi) Debts outstanding over six monthsUnsecured, considered good 67.14 42.81Unsecured, considered doubtful 129.17 34.74Less:- Provision for doubtful Debt ( 129.17) (34.74)67.14 42.81ii) Other DebtsUnsecured, considered good 37,295.02 24,902.67Unsecured, considered doubtful 133.55 —Less:- Provision for doubtful Debt (133. 55) —(includes unbilled debtors of Rs. 10,911 lacs;Previous Year Rs. 7,827 lacs) 37,295. 02 24,902.67Total Total 37,362.16 24,945.48SCHEDULE 8 - CA SH AND BANK BALANCESi) Cash on hand 13.98 13.33
    • ii) Balance with Scheduled Banks :— On Current Account 1,521.29 83.45— On Fixed Deposits(As margin against bank guarantee) 1.94 1.94iii) Bala nce with other Banks :— On Current Account 1,639.24 1,884.36Total Total 3,176.45 1,983.08SCHEDULE 9 - LOANS AND ADVANCES(Unsecured considered good)i) Advances Recoverable in cash or in kind orfor value to be recei ved 10,449. 27 7,183.77ii) Tax Deducted at Source (net of provision) 330.03 111.92iii) Deposits 1, 110.05 1,143.38iv) Inter-company Deposits 1,000.00 —Total Total 1 2,889.35 8,439.07March 31, March 31,2011 2010` Lacs ` LacsMarch 31, March 31,2011 2010` Lacs ` LacsSCHEDULE 5 - FIXED A SSE TS (` in Lacs)GROSS BLOCK* DEPRECIATION / AMORTIZATION* NET BLOCKParticulars As on Additions Deletions Foreign As on As on Additions Deletions Foreign As on As on As onApr. 1, 10 Currency Mar 31, 11 Apr. 1, 10 Currency Mar 31, 11 Mar 31, 11 Mar 31, 10
    • Translation TranslationAdjustment AdjustmentComputers and telecommunicationequipments equipments 42, 531.05 6,270.63 (188.93) 1,122.98 49,735.73 35,565.66 3,675.53 (183.83)1,008.96 40,066.32 9,669.41 6,965.39Plant and machinery Plant and machinery 1, 864.12 511.47 (23.21) 4.45 2,356.83 1,101.00 278.97(22.59) 1.50 1,358.88 997.95 763.13Office equipment Office equipment 1, 031.84 79.56 (11.46) 23.91 1,123.85 630.69 127.27 (6.75) 14.22765.43 358.42 401.15Furniture and fixtures Furniture and fixtures 7, 468.92 381.85 (6.89) 239.63 8,083.51 4,118.11 802.27(2.40) 147.53 5,065.51 3,018.00 3,350.81Leasehold improvements Leasehold improvements 11, 061.01 545.53 (1.99) 341.82 11,946.37 5,998.631,415.96 — 208.35 7,622.94 4,323.43 5,062.38Intangible assetsGoodwill 3,208.51 — — (33.69) 3,174.82 615.85 — — (122.37) 493.48 2,681.34 2,592.66Software 52.19 204.20 — — 256.39 52.19 0.14 — — 52.33 204.06 —Client acquisition cost 568.66 987.48 — (1.63) 1,554.51 194.73 228.59 — 155.35 578.67 975.84 373.93Motor car Motor car 51.82 5.66 (26.94) 1.33 31.87 29.86 11.64 (24.42) 0.42 17.50 14.37 21.96Total 67,838.12 8,986.39 (259.43) 1,698.80 78,263.88 48,306.72 6,540.36 (239.98) 1,413.96 56,021.0622,242.82 19,531.40Previous Year 62,132. 35 5,158.29 2,172.72 2,720.20 67,838.12 41,628.82 6,047.28 1,518.54 2,149.1648,306.72 19,531.40Note :The opening gross block of fixed assets, accumulated depreciation and net block has been reclassified asper the asset categori es, per se.*: Computers and Telecommunication equipments, office equipment, furniture and fixtures, leaseholdimprovement include assets ta ken on finance lease, grossblock of which is ` Nil, ` Nil, ` Nil, ` Nil (previous year ` 5,861.70 lacs, ` 3.75 lacs, ` 557.19 lacs and `1,475.20 lacs) and accumalated depreciation in respect of those
    • assets aggregate to ` Nil, ` Nil, ` Nil, ` Nil (previous year ` 4,918.24 lacs, ` 1.17 lacs, ` 149.54 and ` 403.44lacs) respectively.March 31, March 31,2011 2010` Lacs ` Lacs(19)ADITYA BIRLA MINACS WORLDWIDE LIMITEDCMYKSCHEDULE 10 - CURRENT LIABILITIES & PROVISIONSi) Sundry Creditors (including book overdraft ofRs. Nil; Previous Year. Rs. 476.65 Lacs) 22,716.90 18,619.91ii) Interest accrued but not due 248.24 251.11iii) O ther Liabilities 3,808.94 2,827.7326,774.08 21,698.75PROVISIONSi) Gratuity 62.65 31.92ii) Leave encashment 122.03 103.20184.68 135.12Total Total 26,958.76 21,833.87SCHEDULES FORMING PART OF PROFIT & LOSS ACCOUNTMarch 31, March 31,2011 2010` Lacs ` LacsSCHEDULE 11 - OTHER INCOMEi) Gain on Mutual Fund investment s 57.58 226.62ii) Interest Income
    • — on balance with banks 6.87 2.30— on inter-company deposits [TDS: Rs. 0.08 lacs(Previous Year Rs. 0.48 lacs)] 19.02 2.13iii) Gain on Foreign Exchange Fluctuations - Others — —iv) Miscellaneous Income 40.61 16.53Total 124.08 247.58SCHEDULE 12 - PERSONNEL EXPENSESi) Salaries & other empl oyee benefits 92,540.52 87,433.49ii) Contribution to provident & other f unds 1,272.42 942.00iii) Employee Compensati on under ESOP 450.38 126.15iv) Staff Welfare Expenses 9,482.25 8,198.64v) Gratuity (Refer Note 13 of schedule 17) 77.06 43.26Total 103,822.63 96,743.54SCHEDULE 13 - OTHER OPERATING EXPENSESFacility Expensesi) Rent Charges 6,294.43 5,952.38ii) Electricity expenses 2,069.90 1,627.31iii) House keeping expenses 216.84 147.24iv) Security charges 458.71 377.95v) Repairs & maintenance— Building — 71.26— Others 1,105.70 1,013.41vi) Hire Charges 216.65 182.18Technology Expensesvii) Con nectivity charges 884.56 1,002.19
    • Assets Utilization Charges — —viii) R epairs & maintenance - M achinery 1,074.44 1,146.92ix) Software & support expenses 874.87 835.80Total Total 13,196.10 12,356.64March 31, March 31,2011 2010` Lacs ` LacsMarch 31, March 31,2011 2010` Lacs ` LacsSCHEDULE 14 - ADMINISTRATIVE EXPENSESi) Legal & professional fees 1,862.33 1,575.69ii) Telephone expenses 2,801. 79 2,445.44iii) R ecruitment & relocation 1,059.06 649.74iv) Auditors remuneration— Audit fees 262.30 224.73— Out of pocket expenses 1.91 0.03iv) Vehicle Expenses 382.26 268.53v) Seminar and O utside Training Expenses 180.19 180.41vi) Printing and Stationery 5,345.25 4,630.58vii) Di rectors sitting fees 19.19 10.86viii) Insurance charges 310.43 235.38ix) Traveling expenses 2,242.74 1,501.63x) Loss on sale of Fixed Assets — 53.05xi) Rates and Taxes 5,024.87 4,720.88
    • xii) Provision for Doubtful D ebts 224.97 2.95xiii) Restructuring Cost — 1,668.67xiv) Loss on Foreign Exchange Fl uctuations (net) 65.23 2,443.26xv) Miscellaneous expenses 9,191.61 8,023.38Total Total 28,974.13 28,635.21SCHEDULE 15 - MARKETING / BUSINESS DEVELOPMENT EXPENSESi) Business promotion expenses 59.88 64.23ii) Advertisement expenses 169.18 108.80iii) Ente rtainment expenses 20.09 3.35iv) Website expensesv) Telemarketing registration & bonding expenses 8.69 16.05Total 257.89 192.43SCHEDULE 16 - FINANCIAL CHARGES & INTEREST COSTi) Arrangement Fees 96.66 427.56ii) Interest on External commercial borrowings and Term Loan 2,827.70 3,120.52iii) In terest on Working capital and Demand Loan 435.18 830.25iv) Other Financial Charges 173.86 314.10Total Total 3,533.40 4,692.43(20)ADITYA BIRLA MINACS WORLDWIDE LIMITEDCMYKSCHEDULE 17 - NO TES T O ACCOUNTS ON CONSOLIDA TED FINANCIALSTATEMENTS1. Basis of preparationThe consolidated financial statements (CFS) of Aditya Birla Minacs Worldwide Limited
    • (“the Company” or “ABMWL”) and its subsidiaries collectively referred to as “theGroup” are prepared under the historical cost convention and in accordance with therequirements of the Companies Act, 1956.2. Principles of Consolidationi. The financial statements of the Company and its subsidiary companies havebeen combined on a line-by-line basis by adding together the book values oflike items of assets, liabilities, income and expenses, after eliminating intra-group balances andtransactions as per Accounting Standard (AS) 21“Consolidated Financial Statements”.ii. List of companies included in Consolidation are mentioned in paragraph 3 below.iii. The CFS have been prepared using uniform accounting policies for liketransactions and other events in similar circumstances and are presented, tothe extent possible, in the same manner as the Company’s separate financialstatements3. Companies included in ConsolidationSubsidiaries Country of Proportion of Proportion ofIncorporation ownership ownershipinterest as on interest as onMarch 31 ,2011 March 31, 2010TransWorks Inc., USA(TW Inc) (Subsidiary ofABMWL)* USA 100% 100%AV TransWorks Limited,Canada (Subsidiary ofABMWL) Canada 100% 100%Aditya Birla Minacs
    • Philippines Inc (Subsidiaryof ABMWL) Philippines 100% 100%Aditya Birla MinacsWorldwide Inc. Canada(ABMWI) (Subsidiary ofAV TransWorks Limited) Canada 100% 100%The Minacs Group (USA),Inc (Subsidiary of ABMWI) USA 100% 100%Minacs Limited, UK,(Subsidiary of ABMWI) UK 100% 100%Minacs Worldwide S.A. deC.V., Mexico (Subsidiary ofABMWI) Mexico 100% 100%Minacs Worldwide GmbH,Germany (Subsidiary ofABMWI) Germany 100% 100%Minacs Kft., (Subsidiary ofThe Minacs WorldwideGmbH) Hungary 100% 100%Aditya Birla Minacs BPOLimited, UK (Subsidiaryof ABMWI) UK 100% 100%Compass BPO, Inc, U.S.A(Subsidiary of Aditya BirlaMinacs BPO Limited) USA 100% 100%
    • Aditya Birla Minacs BPOPrivate Limited (FormerlyKnown as Compass BusinessProcess Outsourcing PrivateLimited, India) (Subsidiary ofAditya Birla Minacs BPOLimited, U.K) India 100% 100%Compass BPO FZE, U.A.E(Subsidiary of Aditya BirlaMinacs BPO Limited, UK)ceased to be subsidiaryw.e.f February 25, 2011 UAE — 100%Bureau of Collectionrecovery, LLC (Subsidiary ofABMWI w.e.f June 2, 2010) USA 100% NILBureau of CollectionsRecovery (BCR) Inc.(Subsidiary of ABMWIw.e.f March 4, 2011) USA 100% NIL*: The subsidiary is in the process of winding up.4. Significant accounting policiesi) Use of estimatesThe preparation of financial statements in conformity with generally acceptedaccounting principles requires management to make estimates and assumptionsthat affect the reported amounts of assets and liabilities and disclosure of
    • contingent liabilities at the date of the financial statements and the results ofoperations during the reporting period end. Although these estimates are basedupon management’s best knowledge of current events and actions, actualresults could differ from these estimates.ii) Revenue recognitiona) Revenue is derived from both time-based and unit-priced contracts.Revenue is recognized as related services are performed based onagreements / arrangements with the customers.Amounts collected from customers prior to the performance of servicesare recorded as deferred revenue. These advances are amortized torevenues in accordance with the Group’s policy on revenue recognition.For some contracts the Company is paid by its customer based onachievement of client-determined criteria specified in the client contractsuch as full time equivalents, units processed or completed contacts.The Company recognizes this performance-based revenue by measuringits actual results against the performance criteria specified in the contracts.b) Interest income is recognised on a time proportion basis taking intoaccount the amount outstanding and the rate applicable.c) Dividend is recognised when the shareholders’ right to receive paymentis established bythe balance sheet date.iii) Fixed assetsFixed assets are stated at cost less accumulated depreciation and impairmentlosses, if any. Cost comprises the purchase price and wherever applicablefreight, duties and taxes and expenses incidental to acquisition and installation.iv) Intangible Assets
    • The Group allocates value to intangible assets acquired relating to customercontracts, proprietary processes and certain business relationships. Amortizationof Client acquisition cost is provided on a straight-line basis over two to tenyears. Computer software is depreciated over four to five-year lives.v) DepreciationDepreciation on assets is provided on straight-line basis, on the rates based onthe useful lives as estimated by the management, which are higher than thecorresponding rates prescribed in Schedule XIV of the Companies Act, 1956.The individual assets costing less than Rs. 5, 000 are depreciated in full in theyear of purchase. The management’s estimate of useful lives of the variousfixed assets is given below:Assets Estimated useful lifea. Computers Equipment 2 - 4 yearsb. Telecommunication Equipment 5 - 7 yearsc. Plant & Machinery 5 yearsd. Office Equipment 5 Yearse. Furniture & Fixtures 3 - 10 Yearsf. Motor Car 5 YearsLeasehold improvements are depreciated over the shorter of the estimateduseful life of the asset and the lease term of the premises.vi) Goodwill on consolidationThe excess of cost to the Parent Company of its investments in the subsidiariesover its portion of equity in the subsidiaries, as at the date on which theinvestment was made, is recognized as goodwill in the consolidated financialstatements. The Parent Company’s portion of equity in the subsidiaries is
    • determined on the basis of the book value of assets and liabilities as per thefinancial statements of the subsidiaries as on the date of investment.Goodwill is not amortized and is tested for impairment on an annual basis.Such evaluation determines any impairment in value, taking into account theability to recover the carrying amount of goodwill from discounted cash flows.The Company also considers projected future operating results, trends, andother circumstances in making such evaluations.In addition to the annual impairment test, the Company will perform animpairment test if an event occurs or circumstances change that would morelikely than not reduce the fair value of the reporting unit below its carryingamount.vii) ImpairmentThe carrying amounts of assets are reviewed at each balance sheet date ifthere is any indication of impairment based on internal/external factors. Animpairment loss is recognized wherever the carrying amount of an asset exceedsits recoverable amount. The recoverable amount is the greater of the asset’snet selling price and value in use. In assessing value in use, the estimatedfuture cash flows are discounted to their present value using a pre-tax discount(21)ADITYA BIRLA MINACS WORLDWIDE LIMITEDCMYKrate that reflects current market assessments of the time value of money andrisks specific to the asset.viii) Leased assetsFinance lease, which effectively transfers to the Company substantially all the
    • risks and benefits incidental to ownership of the leased item, are capitalized atlower of fair value and present value of the minimum lease payments at theinception of the lease term and disclosed as leased assets. Lease paymentsare apportioned between the finance charges and reduction of the lease liabilitybased on implicit rate of return. Finance charges are charged directly againstincome. Lease management fees, lease charges and other initial direct costsare capitalized.Leases where the Lessor effectively retains substantially all the risks and benefitsof ownership of the lease term are classified as operating leases. Operatinglease payments are recognized as an expense in the profit & loss account on astraight-line basis over the lease termix) Deferred Financing ExpensesDeferred financing expenses represent the cost of establishing the Company’scredit facilities. Included in these costs is the fair value of warrants to acquirecommon shares of the Company issued on the acquisition of certain fundingfacilities. Amortization of deferred financing expenses is provided on a straight-line basis over thespecific term of the credit facilities and is recorded withininterest and financing expenses.x) Investmentsa. Investments that are readily realizable and intended to be held for notmore than a year are classified as current investments. All otherinvestments are classified as long-term investments.b. Long-term investments are valued at cost. Any decline in the value ofinvestments other than temporary, is provided for and charged to theprofit & loss account.c. The current investments are carried at lower of cost and net asset value
    • determined on an individual investment basis.xi) Transactions in Foreign Currencya) Initial RecognitionForeign currency transactions are recorded in the reporting currency, byapplying to the foreign currency amount the exchange rate between thereporting currency and the foreign currency at the date of the transaction.b) ConversionForeign currency monetary items are reported using the closing rate.Non-monetary items, which are carried in terms of historical costdenominated in a foreign currency, are reported using the exchange rateat the date of the transaction.c) Exchange DifferencesExchange differences arising on the settlement of monetary items or onreporting company’s monetary items at rates different from those at whichthey were initially recorded during the year, or reported in previous financialstatements, are recognized as income or as expenses in the year in whichthey occur.d) Forward Exchange Contracts not intended for trading or speculation purposesThe premium or discount arising at the inception of forward exchangecontracts is amortized as expense or income over the life of the contract.Exchange differences on such contracts are recognized in the statementof profit and loss in the year in which the underlying transactions occur.Any profit or loss arising on cancellation or renewal of forward exchangecontract is recognized as income or as expense for the year.e) Accounting policy for Derivatives
    • The Company uses derivative financial instruments such as forwardexchange contracts, currency swaps and interest rate swaps to hedgeits risks associated with foreign currency fluctuations and interest rate.Currency and interest rate swaps are accounted in accordance with theircontract except in case of other than effective hedges or instrument tohedge against highly probable and forecasted transactions or firmcommitment in which case net mark to market losses are provided.xii) Translation of foreign subsidiaries.Translation of foreign subsidiary is done in accordance with AS – 11 (Revised)“The Effects of Changes in Foreign Exchange Rates”. In the case of subsidiaries,the operation of which are considered as integral, the Balance Sheet itemshave been translated at closing rate except share capital and fixed assets, whichhave been translated at the transaction date. The income and expenditure itemshave been translated at the average rate for the year. Exchange Gain/(Loss) arerecognised in the Profit and Loss Account.In case of foreign subsidiaries, the operation of which are considered as non-integral, all assets andliabilities are converted at the closing rate at the end ofthe year, and items of income and expenditure items have been translated atthe average rate for the year. Exchange gain/(loss) arising on conversion arerecognised under Foreign Currency Translation Reserve.xiii) Retirement benefits(i) Defined Contribution PlanGroup’s contributions payable during the year to Provident Fund,Superannuation Schemes and other fund are recognized in the Profit andLoss Account.(ii) Defined Benefit Plan
    • Group’s liabilities under payment of gratuity Act (funded) and compensatedleave encashment are determined by Actuarial Valuation made at theend of each financial year using the projected unit credit method. Actuarialgain and losses are recognized immediately in the statement of Profitand Loss Account as income or expense. Obligation is measured at thepresent value of estimated future cash flows using a discounted rate thatis determined by reference to market yields at the Balance Sheet date onGovernment bonds where the currency and terms of the Governmentbonds are consistent with the currency and estimated terms of the definedbenefit obligationxiv) ProvisionA provision is recognized when an enterprise has a present obligation as aresult of past event; it is probable that an outflow of resources will be requiredto settle the obligation, in respect of which a reliable estimate can be made.Provisions are not discounted to its present value and are determined based onbest estimate required to settle the obligation at the balance sheet date. Theseare reviewed at each balance sheet date and adjusted to reflect the currentbest estimates.xv) Income TaxTax expense comprises of current and deferred tax.Current income tax is measured at the amount expected to be paid to the taxauthorities in accordance with the Income-tax Act, 1961 enacted in India andtax laws prevailing in the respective tax jurisdictions where the Company andits subsidiaries operate.Deferred tax for timing differences between the book and tax profits for the year
    • is accounted for, using the tax rates and laws that have been substantively enactedas of the Balance Sheet date. Deferred tax assets arising from timing differencesare recognized to the extent there is reasonable certainty that these would berealized in future. In case of unabsorbed losses and unabsorbed depreciation, alldeferred tax assets are recognized only if there is virtual certainty supported byconvincing evidence that they can be realized against future taxable profitxvi) Employee Stock OptionsMeasurement and disclosure of the employee share-based payment plans isdone in accordance with SEBI (Employee Stock Option Scheme and EmployeeStock Purchase Scheme) Guidelines, 1999 and the Guidance Note on Accountingfor Employee Share-based Payments, issued by the Institute of CharteredAccountants of India. The Company measures compensation cost relating toemployee stock options using the intrinsic value method. Compensation expenseis amortized over the vesting period of the option on a straight line basis.xvii) Earnings per sharea) Basic earnings per share are calculated by dividing the net profit or lossfor the year attributable to equity shareholders by the weighted averagenumber of equity shares outstanding during the year.For the purpose of calculating diluted earnings per share, the net profit orloss for the year attributable to equity shareholders and the weightedaverage number of shares outstanding during the year are adjusted forthe effects of all dilutive potential equity shares.xviii) The CFS of Aditya Birla Minacs Worldwide Inc which reflects the consolidationof The Minacs Group USA, Minacs Worldwide S.A. de C.V., The MinacsWorldwide GmbH, Minacs Kft, Bureau of Collection recovery, LLC, Bureau of
    • Collections Recovery (BCR) Inc. and Aditya Birla Minacs BPO Limited as atMarch 31, 2011 are prepared and Audited under Canadian Generally AcceptedAccounting Principles (GAAP). Further, financial statements of Aditya BirlaMinacs Philippines Inc are prepared and audited under Philippines GAAP. Thesefinancial statements have been converted to Indian GAAP by the managementfor the purpose of consolidation.xix) Revenue GrantThe grant receipts from the statutory authority in terms of the agreementsexecuted with such authorities requiring compliance of the company over theagreement period are amortized over such agreement period.The grant received from the statutory authorities for offsetting the particularcost, are amortized over the same period of the incurrence of the cost.xx) Cash and Cash equivalentsCash and cash equivalents for the purposes of cash flow statement comprisecash at bank and in hand and short-term investments with an original maturityof three months or less.5. Contingent LiabilitiesParticulars As at As atMarch 31, 2011 March 31, 2010( ` Lacs) ( ` Lacs)i) Estimated amount of contracts remainingto be executed on capital account and(22)ADITYA BIRLA MINACS WORLDWIDE LIMITEDCMYK
    • not provided for 627.14 160.27ii) Guarantees and counter guarantees given bythe Company to Commissioner of Customstowards custom & excise duty exemptionunder STPI Scheme (Based on presentexport performance, the Company expectsto meet its export obligation and hence thisliability is not likely to materialize) 1,421.43 1,329.95iii) Guarantees and Counter guarantees givenby the Company to its insurance companyin USA and to Citibank, NA on the basisof which the insurance company issuedtelemarketing bonds favoring Attorney generalsof various states in USA on behalf of theCompany (These bonds are required to begiven for compliance of telemarketing lawsin USA. In case of any violations of theserules, the penalties are imposed. The Companydoes not expect any liabilities on the same). 446.50 451.40iv) Guarantee and Counter given by Companyto Department of Telecommunication (DoT)for obtaining the permission for sharing ofinternational and domestic call center 350.00 210.00v) Claims against the group not acknowledgedas debts (represents claims by the party
    • against the group in respect of dispute relatingto the beneficiary of whole life insurance policyand term life insurance policy acquired bythe group. Management believes that theclaims made by the party have no merit andthe outcome of the proceeding is notdeterminable. 1,725.00 1,656.00vi) Service tax refund relating to year 2005-07rejected by service tax department. Companyis in appeal at various levels againstrejection orders. 266.58 266.58vii) Penalty for disallowances of expenses incurredby the company for FY 2003-04. The Companyhas filled and appeal before Bombay high court. 73.29 73.296. The details of finance lease payments payable and their Present value as at thebalance sheet date: ( ` Lacs)Sr. Particulars Total lease Present value Interestcharges payablei. Not later than one year Nil Nil Nil(742.77) (725.76) (17.01)ii. Later than one year and Nil Nil Nilnot later five years (Nil) (Nil) (Nil)iii. Later than five years Nil Nil Nil(Nil) (Nil) (Nil)Total Nil Nil Nil
    • (742.77) (725.76) (17.01)Previous year figures are shown in brackets.7. The Group has entered into operating lease agreements for its BPO centers, premises,furniture and fixtures and certain computer and communications equipment as wellas minimum purchase commitments for telephone services. The lease rentals chargedduring the year and maximum obligations on long-term non-cancelable operatingleases payable as per the rentals stated in respective agreements are as follows:( ` Lacs)Particulars Year Ended Year EndedMarch 31, 2011 March 31, 20101. Lease payments recognized in theprofit and loss account for the year 6,294.43 6,021.982. Obligations on non-cancelable leases :i) Not later than one year : 5,027.64 4,855.50ii) Later than one year and not laterthan 5 years 11,808.16 11,650.24iii) Later than 5 years 2,322.54 3,760.228. Deferred Tax:Deferred tax Assets/ (Liabilities) at the year end comprises timing difference onaccount of:( ` Lacs)Particulars As at As atMarch 31, 2011 March 31, 2010Carried forward losses 276.59 297.51Differences in depreciation and other
    • differences in block of fixed assets asper tax books and financial books (941.68) ( 497.79)Total (665.09) (200.28)In the absence of virtual certainty to generate future taxable income, deferred taxassets have not been recognized in respect of unabsorbed depreciation and businesslosses in case of the Company and it’s certain subsidiaries9. Employee Stock Option PlanIn December 2009, the Board of the Company approved the Employees Stock OptionPlan 2009 (“the Plan”), which covers the employees of the Company including itssubsidiaries. The plan is administered and supervised by the Compensation Committeeof the board (the ‘Committee’).The Scheme provides that these options would vest in tranches over a period of 3-4years as follows:Period within which options will vest unto the participant % of optionsthat willvestEnd of 15 months from the date of grant of options 20%End of 27 months from the date of grant of options 20%End of 39 months from the date of grant of options 60%Fair Valuation:The fair valuation of the options used to compute profarma net profit and earning pershare have been done by an independent valuer on the date of grant using black-Scholes Model. The keyassumptions and the fair value are as under.Particulars PercentageRisk Free Interest Rate % 6.84%Option Life (years) 4.80Expected Volatility (%) 0%
    • Historical Volatility (%) 0%Expected Dividend Yield (%) 0%Weighted Average Fair Value per Option (`) 141Had the compensation cost for the stock option granted under ESOS-2009 beenrecognised, based on fair value at the date of grant in accordance with black andScholes Model, the proforma amount of net profit and earning per share of theCompany would have been as under:(` Lacs)Particulars March 31, 2011 March 31,2010Net Profit/(Loss) 6,490.71 (2,307.27 )Add: Compensation cost as per Intrinsic Value 450.38 126.15Less: Compensation cost as per fair value 813.73 227.92Adjusted Net Income/(Loss) 6,127.35 (2,409.04)Weighted average number of Basic EquityShares Outstanding (in Nos) 23,491,711 23,491,711ESOPS outstanding at the end of the year 1,367,000 372,875Weighted average number of DilutedEquity Shares Outstanding (in Nos) 24,858,711 23,864,586Face Value of Equity Shares (In Rs) 1.00 1.00Reported Earning Per Share (EPS)– EPS (In `) 27.63 (9.82)– Diluted (In `) 26.11 (9.82)Proforma Earning Per Share (EPS)– EPS (In `) 26.08 (10.25)– Diluted (In `) 24.65 (10.25)
    • The participants shall exercise the options within five years from vesting or withinthree years from the date of listing, whichever is earlier. The Plan is contingent onthe shares being listed in a recognized stock exchange in India on or before 1st July,2015. If the Company’s shares are not listed on the stock exchange by 30th June,2015, the existing employees shall have to sell all options vested to the Company orits nominee at a price determined as per Plan.Particulars March31, 2011 March 31, 2010Total Options under the Plan 1,879,337 1,879,337Options outstanding at the beginning of the year 1,491,500 NilGranted during the year 34,500 1,491,500Forfeited during the year 159,000 NilExercised during the year Nil NilOutstanding at the end of the year 1,367,000 1,491,500Expired during the year Nil NilExercisable at the end of the year Nil NilExercise Price 230 230(23)ADITYA BIRLA MINACS WORLDWIDE LIMITEDCMYKThe employee stock option outstanding account shown in Balance Sheet is net ofunamortized amount on account of Deferred Employee Compensation Account` 490.28 Lacs (Previous year ` 1,037.82 Lacs).10. Related Party TransactionsName and nature of relationship of the Related Party where control exists:Holding Company Aditya Birla Nuvo Limited
    • Fellow Subsidiary Aditya Birla Financial Shared ServicesPrivate Limited (ABFSSPL) Birla Sun Life Insurance CompanyLimited (BSLICL) ABNL Investment Limited (formerly knownas Laxminarayan Investment Limited) Aditya Birla Minacs IT Services Limited(ABMITS)JOINT VENTURE Birla Sun Life Asset ManagementCompany Limited (BSAMC)(Directly held by the Company tillMar 22, 2010 thereafter Joint Venture ofa fellow subsidiary)IDEA Cellular Limited – Joint venture ofthe holding companyTransactions with related parties during the year ( ` Lacs)Particulars Year ended Year endedMarch 31, 2011March 31, 2010Holding Company – (ABNL)– Inter corporate deposit (ICD) Given by ABNL 1,500 Nil– ICD Repaid to ABNL 1,500 Nil– Interest Expense on ICD 8.14 Nil– Reimbursement of cost paid 5.14 33.34– Services Income (Indo Gulf FertilizersDivision of ABNL) 7.21 Nil
    • Fellow SubsidiaryABNL Investment Limited.– ICD Taken Nil 500.00– Interest expenses on ICD taken Nil 3.67– ICD Repaid Nil 500.00Birla Sun Life Insurance Company Limited.– Staff welfare expenses (Term Life Insurance)for employees 19.28 18.15– Services Income 891.07 645.55– Expenses Reimbursed by the Company 22.80 NilAditya Birla Minacs IT Services Limited.– ICD Given 1,895.00 200.00– Interest Income on ICD Given 19.02 2.13– ICD Repaid 895.00 200.00– Expenses Reimbursed by the Company 1,038.27 592.03– Software - ERP implementation (expenses) 10.80 102.83– Service charges (expense) 4,008.02 3,076.82Aditya Birla Financial Shared ServicesPrivate Limited.– Reimbursement of Cost received 10.60 1.92Joint VentureBirla Sun Life Asset ManagementCompany Limited.– Services Income 210.73 166.80– Reimbursement of cost by the company Nil 4.16
    • – Reimbursement of cost to the Company Nil 5.66Idea Cellular Limited.– Services Income 7,114.84 5,102.90Balances with Related parties at the end of the yearRelated Party Balances:Holding Company– Payable – ABNL 24.41 21.93– Receivable- ABNL (Division- Indo Gulf Fertilizers) 7.07 NilJoint Venture– Receivable - Birla Sun Life Asset ManagementCompany Limited. 16.45 38.68– Receivable - Idea Cellular Limited 859.18 766.68Fellow Subsidiary– Receivable from - Birla Sun Life InsuranceCompany Limited. 163.53 228.32– Receivable – Aditya Birla Financial SharedServices Private Limited. 1.51 1.92– Payable to Aditya Birla Minacs ITServices Limited. 375.34 637.77– Receivable - Aditya Birla MinacsIT Services Limited. 263.50 100.10– Receivable - Aditya Birla MinacsIT Services Limited. (ICD) 1,000.00 NilHolding Company– Corporate guarantees given by holding company 40,760.83 27,723.39
    • 11. Derivative InstrumentsThe Company uses derivative financial instruments such as forward exchangecontracts, currency swaps and interest rate swaps to hedge its risks associated withforeign currency fluctuations and interest rate.Derivative Outstanding as at March 31 2011Particulars Currency Amount in Foreign PurposeCurrency (in Lacs)Forward Cover USD 283.85 To hedge receivables(402.69)Forward Cover USD 754.20 To hedge Loan Payable(754.20)Forward Cover CAD 84.00 To hedge Loan Receivable(9.50)Forward Cover CAD 300.00 To hedge Preference Share(300.00) Capital ReceivableForward Cover USD NIL To hedge Interest Payable(10)Forward Cover USD 50.00 To hedge PCFC Loan(NIL) payableCross Currency Swap JPY 554.19 To hedge loan(2,121.22)US$ forward USD 725.00 To hedge receivablesexchange rate (765.00)contracts (CAD)Note: Figures in brackets relates to previous year.
    • All the above contracts are for hedging and not for speculation.As at March 31, 2011 all the foreign currency exposure stands hedged by derivativeinstrument or otherwise.12. Segment Information for the year ended March 31, 2011(1) Primary business segmentThe group provides a variety of Business Process outsourcing services. Therisks and rewards from each of these service agreements are similar. As theCompany’s business activity primarily falls within a single business segment,there are no additional disclosures to be provided in respect of primary segmentunder Accounting Standard 17 ‘Segment Reporting’, other than those alreadyprovided in the financial statements.(2) Secondary business segment:a. Geographical turnover is segregated based on the location of the customerto whom the services are rendered.b. Assets are segregated based on their location.c. Information about secondary business segments:( ` Lacs)Year ended March 31, 2011 India Outside India Totala Revenue by geographical market 9,635.01 153,505.15 163,140.16b Carrying amount of segment assets 13,147.82 135,819.28 149,867.10c Capital Expenditure (included in(b) above) 2,908.42 6,381.34 9,289.76Year ended March 31, 2010 India Outside India Totala Revenue by geographical market 6,285.64 140,402.95 146,688.59b Carrying amount of segment assets 18,688.34 108,800.38 127,488.72
    • c Capital Expenditure (included in(b) above) 4,059.22 3,591.15 7,650.3713. RETIREMENT BENEFITS ( ` Lacs)2010-11 2009-10(A) Defined Benefit Plans -The Amounts recognized in the balance sheetare as follows in respect of gratuity(fully funded by the company):Present value of the funded defined benefitobligation at the end of the year 271.96 225.36Fair value of plan assets 133.36 163.82Benefit paid on behalf of fund 75.94 29.62Net Liability 62.65 31.92The Amounts recognized in Salary, Wagesand Employee Benefits in the Profit and(24)ADITYA BIRLA MINACS WORLDWIDE LIMITEDCMYKL oss A ccount as follo ws in respect ofgratuity (fully funded by the company):Current Service cost 120.73 127.73Past Service Cost 8.73 NilInterest on Defined Benefit Obligations 18.82 14.17Expected Return on Plan Assets (14.21) (9.45)Net Actuarial (gain)/loss recognized during the year (57.02) (89.58)Net Gratuity Cost 77.06 43.26
    • Actual Return on Plan AssetExpected Return on Plan Assets 14.21 9.45Actuarial gain/(loss) on Plan Assets 1.66 (4.95)Actual Return on Plan Assets 15.86 4.50Reconciliation of present value of theobligation and the fair value of the plan assets:Opening Defined Benefit Obligationas on 1.4.2010 225.35 190.94Current Service Cost 120.73 127.73Past Service Cost 8.73 NilInterest Cost 18.82 14.17Actuarial (Gain)/loss (55.36) (77.87)Benefits Paid (46.32) (29.62)Closing Defined Benefit Obligationas on 31.03.2011 271.96 225.35Change in fair value plan assetsOpening Fair Value of the plan assets 163.82 125.96Expected return on plan assets 14.21 9.45Actuarial Gain/(loss) 1.66 (4.95)Contributions by the Employer Nil 62.98Benefits Paid (46.32) (29.62)Closing Fair value of the plan assets 133.36 163.82Investment details of plan assetsGovernment of India Securities 38.79 36.04Corporate Bonds 2.08 3.28
    • Insurer Managed Fund (with commonfund of Holding Company) 86.80 124.50Others 5.69 NilTotal 133.36 163.82The overall expected rate of return onassets is determined based on the marketprices prevailing on that date, applicable tothe year over which the obligation isto be settled.(B) Defined Contributions Plans:Contribution to Employee Provident Fund 996.81 848.61Contribution to ESIC 268.50 89.84Contribution to superannuation fund 7.11 19.84(C) Principal Actuarial Assumptions At theBalance Sheet date (31.03.11)Discount rate 8.00% 8.25%Estimated rate of return on plan assets 8.00% 8.25%Future Salary escalation 10% for first 10% for firstthree years and three years and5% thereafter 5% thereafter(D) Experience Adjustment 2010-11 2009-10 2008-09 2007-08 2006-07Liability at the endof the Period 271.96 225.35 191.68 105.79 79.02Fair Value of Plan Assetsat the end of the Period 133.36 163.82 106.06 74.35 66.90
    • Benefit paid onbehalf of fund 75.94 29.62 nil Nil nilDeficit / (Surplus) 62.65 31.91 85.62 31.44 12.12Experience adjustmentson plan liabilities (Gain)/Loss (55.36) (77.87) 91.96 (22.03) (21.65)Experience adjustmentson plan Assets Gain/(Loss) 1.66 (4.95) 14.44 0.47 (2.34)14. 14. Goodwill on consolidation relating to acquisition of subsidiaries aggregates to Rs.70,807.08 lacs (Previous year Rs. 60,789.41) as at March 31, 2011. Considering thestrategic and long term nature of aforesaid investments and asset base and businessplan of the investee companies, in the opinion of the management, no impairment isconsidered necessary in respect of goodwill on consolidation.15. 15. The Company has issued Zero Coupon Compulsorily Convertible Debentures (CCD)of Rs 25,000 Lacs (Previous year no 25,000) which are to be converted into Equity onthe business day following expiry of a period of 60 months from the date of allotmentof such CCD. As per the terms of the issue, the Conversion price will be mutuallydecided thirty days before the conversion date. Aditya Birla Nuvo Limited (ABNL),the holding company, has entered into an Option Agreement with the Subscribers ofthese CCD pursuant to which the holders of CCD have call option on ABNL andABNL has put option on the Subscribers on expiry of 24,36,48 and 60 months fromthe date of allotment of these CCD. The holders can also exercise put option onhappening of certain specified events.16. 16. During the current year, one of the subsidiaries of the Company, Aditya Birla MinacsWorldwide Inc., acquired Bureau of Collections Recovery Inc. ( BCR) and itssubsidiaries. The effect of such acquisition during the year is as under:
    • Revenue (Post acquisition) Rs 5,057.62 LacsNet Profit/( Loss) (Post acquisition) Rs 8.53 LacsNet Assets Rs 1,503.84 LacsFurther, during the previous year, Aditya Birla Minacs Worldwide Inc. acquired AdityaBirla Minacs BPO Limited (Formerly known as Compass BPO Ltd.) and its subsidiaries.The effect of such acquisition during the previous year is as under:Revenue (Post acquisition) Rs 182.87 LacsNet Profit / (Loss) (Post acquisition) Rs (0.10) LacsNet Assets Rs 590.86 Lacs17. The Company had filed Composite Scheme of Amalgamation (or “Scheme”) withKarnataka High Court (or “High Court”) for the merger of Aditya Birla Minacs ITServices Limited and Aditya Birla Minacs Technologies Limited with the Companywith effect from April 1, 2010. The High Court sanctioned the Scheme on November3, 2010 and order was received by Company on December 9, 2010. The approvedScheme was not filed with Registrar of Companies as the management was desirousof making certain modifications in the Scheme. Therefore, the Company has revisedthe Scheme and the same has been filed for approval with the High Court on February22, 2011. Currently, the revised Scheme is pending approval from the High Court.Accordingly, the revised Scheme has not been given effect in consolidated financialstatements18. The Company has opted for general exemption granted by Ministry of CorporateAffairs (MCA) vide General Circular No: 2 /2011 dated February 08, 2011 regardingdirection under Section 212(8) of the Companies Act, 1956 (the Act). For informationrequired to be disclosed in aggregate for each subsidiary (including subsidiaries ofsubsidiaries) under Section 212(8) of the Act- Refer Annexure 1.
    • 19. Previous year’s figures have been regrouped, where necessary to conform to thisyear’s classification.For S.R. BATLIBOI & ASSOCIA TESFirm Registration No. 101049WChartered Accountantsper Amit MajumdarPartnerMembership No. 36656Place: MumbaiDate: July 27, 2011For and on behalf of the Board of Directors ofAditya Birla Minacs Worldwide LimitedDr. Rakesh JainDirectorSushil AgarwalDirectorRamesh KamathChief Financial OfficerDate: July 27, 2011(25)ADITYA BIRLA MINACS WORLDWIDE LIMITEDCMYKANNEXURE- 1(Refer Note no 18 of Schedule 17)
    • The particulars of subsidiary companies as required by order No. 47/438/2007-CL-III dated 4thMarch,2007 of Ministry of Company Affairs,Government of India, issued under section 212 (8) of theCompanies Act, 1956 are as follows:Description Transworks Inc, USA A V Transworks Aditya Birla Minacs Aditya Birla Minacs Aditya BirlaMinacs Minacs Kft.- Minacs Limited. Minacs Worldwide Minacs WorldwideLimited, Canada Phillippins Inc Worldwide Inc, Canada Worldwide Inc, Canada Hungary* UK* S.A. deC.V., Mexico* GmbH, Germany*(Consolidated) (Standalone)*USD in mn Rs. in mn CAD in Mn Rs. in mn PHP in mn Rs. in mn CAD in Mn Rs. in mn CAD in mn Rs. in mnHUF in mn Rs. in mn GBP in mn Rs. in mn MXN in lacs Rs. in mn EUR in mn Rs. in mn1 Capital — — 157.00 7,222.00 96.92 99.83 120.39 5,537.94 120.39 5,537.94 3.00 0.72 ** 0.07 0.05 0.180.03 1.922 Reserves*** 0.04 1.81 (2.31) (106.26) (131.64) (135.59) (48.27) (2,220.42) (47.80) (2,198.80) 81.2519.50 0.33 23.96 (0.05) (0.18) 2.35 150.023 Total assets 0.05 2.26 214.08 9,847.68 135.87 139.95 164.32 7,558.72 132.22 6,082.12 169.79 40.751.03 74.78 — — 2.78 177.484 Total Liabilities 0.01 0.45 59.39 2,731.94 170.59 175.71 92.20 4,241.20 59.63 2,742.98 85.54 20.530.70 50.75 — — 0.40 25.545 Details of Investments(except in case of invetsmentsin subsidiary companies) ——————————————————6 Turnover ** ** 0.77 34.47 238.96 246.13 308.19 13,794.58 158.74 7,105.20 392.46 86.34 2.26 159.83— — 6.89 415.267 Profit/ (loss) before Taxation * * (0.05) (0.42) (18.80) 12.08 12.44 22.67 1,014.71 21.84 977.56 24.805.45 0.09 6.36 — — 0.36 21.708 Provision/ (Recovery)for Taxation ————****(1.68) (75.20) (2.61) (116.82) 13.10 2.88 0.03 2.12 — — 0.11 6.639 Profit/(loss) after Taxation ** (0.05) (0.42) (18.80) 12.08 12.44 24.35 1,089.91 24.45 1,094.38 11.702.57 0.06 4.24 — — 0.25 15.0710 Proposed dividend
    • (Including Dividend Tax) ——————————————————Note :a) Item 1 to 5 are translated at exchange rate as on March 31, 2011 as follows:1US Dollar (USD) = Rs (INR) 45.29 , 1 Canadian Dollar (CAD)= Rs. 46,1 Pound sterling (GBP) = 72.60 , 1EURO= Rs.63.84, 1 Philip pine peso (PHP) = Rs 1.03, 1 Hungary Forint(HUF) = Rs .24,1 MXN= Rs 3.62, 1United Arab Emirates Dirham(AED)= Rs.12.33b) Items 6 to 10 are translated at annual average exchange rate for the year ended March 31, 2011 asfollows:1 US Dollar)= Rs 45.59 , 1 Canadian Dollar (CAD) = Rs. 44.76, 1 Pound sterling (GBP) = 70.72 ,1 EURO=Rs.60.27, 1 Philippine pe so (PHP) = Rs 1.03, 1 Hungary Forint9HUF)= Rs .22, 1 MXN= Rs 3.62, 1 UnitedArab Emirates Dirham (AED) = 12.39* Indicates unaudited results. These results have been disclosed on the basis of the managementaccounts.** Indicates amounts less than 10,000*** Figures in bracket indicates debit balance(26)ADITYA BIRLA MINACS WORLDWIDE LIMITEDCMYKANNEXURE- 1(Refer Note no 18 of Schedule 17)The particulars of subsidiary companies as required by order No. 47/438/2007-CL-III dated 4thMarch,2007 of Ministry of Company Affairs,Government of India, issued under section 212 (8) of theCompanies Act, 1956 are as follows:Description The Minacs Group Bureau of Collection Bureau of Collections Aditya Birla Minacs AdityaBirla Minacs Aditya Birla Minacs Compass BPO, Compass BPO FZE,(USA) Inc* recovery, LLC * Recovery (BCR) Inc* BPO Limited, UK BPO Private BPO Limited, UK* Inc, U.S.A* U.A.E (closed)*(Consolidated) Limited. India*USD in mn Rs. in mn CAD in Mn Rs. in mn PHP in mn Rs. in mn CAD in mn Rs. in mn Rs. in mn HUF in mnRs. in mn GBP in mn Rs. in mn MXN in lacs Rs. in mn
    • 1 Capital 0.30 13.59 0.02 0.91 — — 0.02 1.45 13.49 0.02 1.45 ** ** — —2 Reserves*** 9.00 407.61 3.10 140.40 — — 0.84 60.98 (2.20) 0.82 59.53 0.18 8.15 — —3 Total assets 66.96 3,032.62 5.38 243.66 — — 1.61 116.89 76.51 1.17 84.94 0.32 14.49 — —4 Total Liabilities 57.66 2,611.42 2.26 102.35 — — 0.75 54.46 65.22 0.33 23.96 0.14 6.34 — —5 Details of Investments(except in case of invetsmentsin subsidiary companies) — — — — — — — — — — — — — — —6 Turnover 115.22 5,252.88 11.20 510.61 — — 4.27 301.97 185.65 1.69 119.52 2.60 118.53 2.55 31.597 Profit/ (loss) before Taxation 2. 06 93.91 (0.50) (22.80) — — 0.01 0.71 (3.33) (0.09) (6.36) 0.02 0.910.76 9.428 Provision/ (Recovery)for Taxation 1.16 52.88 (0.52) (23.71) — — 0.02 1.41 1.48 — — ** 0.19 — —9 Profit/(loss) after Taxation 0.90 41.03 0.02 0.91 — — (0.01) (0.70) (4.81) (0.09) (6.36) 0.02 0.72 0.769.4210 Proposed dividend(Including Dividend Tax) — — — — — — — — — — — — — — —Note :a) Item 1 to 5 are translated at exchange rate as on March 31, 2011 as follows:1US Dollar (USD) = Rs (INR) 45.29 , 1 Canadian Dollar (CAD)= Rs. 46,1 Pound sterling (GBP) = 72.60 , 1EURO= Rs.63.84, 1 Philip pine peso (PHP) = Rs 1.03, 1 Hungary Forint(HUF) = Rs .24,1 MXN= Rs 3.62, 1United Arab Emirates Dirham(AED)= Rs.12.33b) Items 6 to 10 are translated at annual average exchange rate for the year ended March 31, 2011 asfollows:1 US Dollar)= Rs 45.59 , 1 Canadian Dollar (CAD) = Rs. 44.76, 1 Pound sterling (GBP) = 70.72 ,1 EURO=Rs.60.27, 1 Philippine pe so (PHP) = Rs 1.03, 1 Hungary Forint9HUF)= Rs .22, 1 MXN= Rs 3.62, 1 UnitedArab Emirates Dirham (AED) = 12.39* Indicates unaudited results. These results have been disclosed on the basis of the managementaccounts.** Indicates amounts less than 10,000
    • *** Figures in bracket indicates debit balance(27)TRANSWORKS INC.CMYKBALANCE SHEE TAS AT 31ST MARCH, 2011As At As At31st March, 2011 31st March, 2010Schedule (US$) (INR) (US$) (INR)I. Sources of Funds1 Shareholders FundsShare Capital 1 — — — —2 Reserves and SurplusProfit and Loss Account 49,092 2, 191,938 47,416 2,140,350Total 49,092 2,191,938 47,416 2,140,350II. Application of Funds1 Current Assets,Loans and Advances :Cash andBank Balances 2 54,350 2, 426,728 53,762 2,426,81054,350 2,426,728 53,762 2,426,810Less: Current Liabilitiesand Provisions :Current Liabilities 3 5,258 234,790 6,346 286,460Net Current Assets 49,092 2, 191,938 47,416 2,140,350
    • Total 49,092 2,191,938 47,416 2,140,350Notes to Accounts Notes to Accounts 4The Schedules referred to above and the notes to accounts form an integral part of theBalance Sheet.As per our Report of even dateFor S .R. B atliboi & A ssociates ssociates For Transw orks Inc.Firm Registration No. 101049WChartered Accountantsper Vijay Maniar Deepak J. PatelPartner DirectorMembership No. 36738Place: MumbaiDate: April 27, 2011As per our Report of even dateFor S.R. Batliboi & Associates S.R. Batliboi & Associates For Transworks Inc.Firm Registration No. 101049WChartered Accountantsper Vijay Maniar Deepak J. PatelPartner DirectorMembership No. 36738Place: MumbaiDate: April 27, 2011PROFIT & LOSS ACCO UNTFOR THE YEAR ENDED 31ST MARCH, 2011For the year For the year For the year For the year
    • ended Mar, 31 ended Mar, 31 ended Mar, 31 ended Mar, 312011 2011 2010 2010Schedule (US$) (INR) (US$) (INR)OTHER INCOME :Excess provision written back 1,088 49,586.40 — —Bank interest 588 26,816.17 — —TOTAL 1,676 51,588.00 — —Profit before tax for the yearLess : Provision for tax — — (3,257) 154,517Profit / (Loss) after tax provisionfor the year 1676 51588.00 (3,257) 154,517Dividend paid during the year — — 150,000 7,116,250Profit / (Loss) for the year 1676 51588.00 (153,257) 8,505,782Profit / (Loss) brought forward fromprevious year 47,416 2,140,350 200,673 10,646,132Accumulated balance carriedforward to the Balance Sheet 49,092 219,938 47,146 214,035Notes to accounts Notes to accounts 4The schedules referred to above and the notes to accounts form an integral part of the Profit & Lossaccount(28)TRANSWORKS INC.CMYKCASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2011For the For the For the For the
    • Year ended Year ended Year ended Year ended31.3.2011 31 .3.2011 31.3.2010 31.3.2010(US$) (INR) (US$) (INR)A. Cash flo ws from Operating A ctivitiesNet Profit f or the y ear 1,676 76,403 (1,235,015)Adjustments for:Finance/Interest Income (588) (26,816)Excess provision written back (1,088) (49,586) —Difference on account of exchange rate dif ference in deff ered tax (68,257) (3,451,967)Operating Profit bef ore w orking capital c hanges hanges — — (68,257) (4,686,981.54)Movements in working capital :(Increase)/Decrease in Sundry Debtors 98,560 4,999,950(Increase)/Decrease in Loans & AdvancesIncrease/(Decrease) Current Liabilities & Provisions — 5 ,259 231,288Cash generated from operations — — 35,562 544,256Add/(Less): Direct Taxes paid —— Cash flow before extraordinary items — — 35,562 544,256Add/(Less): Extraordinary items ——— Net cash from/ (used in) operating activities Net cash from/(used in) operating activities — — 35,562 544,256B . Cash Flows from Inv esting A ctivitiesNet Cash from/(f or) Inv esting A ctivities (0) (0) (0) (0)C. Cash flo w from Financing A ctivitiesRepayment of share capital (200,000) (9,680,000)Interest received 588 26,816 — —Dividend paid — (150,000) (7,116,250)Tax on dividend paid ——— Net Cash generated/(used) in Financing A ctivities 588 26,81 6 (350,0 0 0) (16,796,250)
    • D. Foreign Exchange difference on translation of f oreign cur rencycash and cash equivalents ———— Net Increase in cash and Cash equivalants during the year 58826,261 (314,438) (16,251,994)Cash and cash equivalants at the beginning of the year 53,762 2,40 0,467 368,200 18,678,805Cash and cash equivalants at the end of the year 54,350 2,426,728 53,762 2,426,811Notes:Components of Cash and Cash Equivalents A s at 31.3.2011 A s at 31.3.2010 A s at 31.3.2010i) Cash Balance on handii) Balance with Scheduled and other Banks :- in Current Account 54,350 2,426,728 53,762 2,426,811Tot al 54,350 2,426,728 53,762 2,426,811As per our Report of even dateFor S .R. B atliboi & Co.Firm Registration No. 301003EChartered AccountantsDeepak J. Patelper V ijay ManiarPartnerMembership No. 36738Place: MumbaiDate:(29)TRANSWORKS INC.CMYKAs per our Report of even dateFor S .R. B atliboi & A ssociates ssociates For Transw orks Inc.
    • Firm Registration No. 101049WChartered Accountantsper Amit Majmudar Deepak J. PatelPartnerMembership No. 36656Place: Mumbai Ramesh KamathDate: Chief Financial OfficerSCHEDULES FOR THE YEAR ENDED 31ST MARCH, 2011A s At A s At A s At A s At31st March ‘1 1 31st March ‘1 1 31st March ’1 0 31st March’1 0(US$) (INR) (US$) (INR)SCHEDULE 1 - SHARE CAPI TALA uthorised Capital1,000,000 Equity Shares of US$ 1/- each 1,000,000 44,650,000 1,000,000 45,140,000Issued, Subscribed & Paid up CapitalNIL (P Y 200,000) Equity Shares of US$ 1/-each fully paid-up — — — —(All the above equity shares are held bythe holding company Aditya Birla MinacsWorldwide Limited)TOTAL — — — —SCHEDULE 2 - SUNDRY DEBTORS1 Other DebtsUnsecured, Considered good — — — —TOTAL — — — —SCHEDULE 3 - CASH AND BANK BALANCES
    • 1 Balance with Bank— In Current Account 54,350 2,426,728 53,762 2,426,810TOTAL 54,350 2,426,728 53,762 2,426,810SCHEDULE 4 - CURRENT LIABILITIES1 Sundry Creditors 2,258 100,840 2,258 101,9472 Outstanding Liabilities — — 1,088 49,0933 Provision for Tax 3, 000 133,950 3,000 135,420TOTAL 5,258 234,790 6,346 286,460SCHEDULE 5 - OTHER INCOMEi) Interest Income (588) (26,816) — —– In Balance with BanksTOTAL (588) (26,816) — —SCHEDULE 6 - OTHER EXPENSES1 Bank Charges — — — —2 Miscellaneous expenses — — — —3 Sales Commission (Net of write-back) — — — —4 Legal & Professional Fees (1,088) (49,586) — —5 Insurance Charges — — — —6 Maintenance Charges (Net of write-back) — — — —7 Loss on Sale of Fixed Assets — — — —8 US Payroll Taxes (Net of write-back) — — — —9 Repairs & Maint. - Others — — — —10 Write-back of deposits forLong Distance Charges — — — —TOTAL (1,088) (49,586) — —
    • 1. B ack groundTRANSWORKS INC (“the Company’) is domiciled in United States of America andaccordingly the financial statements have been prepared in United State Dollar (US$),which is the reporting currency of the Company.2. Operational OutlookThe Company has ceased operations and is in the process of being wound up.Accordingly, the financial statements have been prepared under liquidation basis.Since these financial statements are prepared under liquidation basis, assets andliabilities have been disclosed at their realisable / payable values, based onmanagement’s best estimates.3. ACCOUNTING POLICIESa. Basis of preparationThe financial statements have been prepared to comply in all material respectswith the accounting principles generally accepted in India. The financialstatements have been prepared on liquidation basis. The accounting policieshave been consistently applied by the Company and are consistent with thoseused in the previous year. The significant accounting policies are as follows:b. Interest IncomeInterest is recognised on a time proportion basis taking into account the amountoutstanding and the rate sapplicable.c. Income TaxThe Company utilizes the asset and liability method of accounting for Incometaxes. Under this method, deferred income taxes are recorded to reflect thetax consequences of future years differences between the tax basis of assetsand liabilities and there financial reporting amounts at each year end are based
    • on enacted tax laws and statutory tax rates applicable to the periods in whichthe differences are expected to effect taxable income. A valuation allowance isprovided against the future benefit of deferred tax asset if it is determined thatit is more likely than not that the future tax benefits associated with the deferredtax assets will not be realized.d. Transactions in Foreign Currencyi) Initial RecognitionForeign currency transactions are recorded in the reporting currency, byapplying to the foreign currency amount the exchange rate between thereporting currency and the foreign currency at the date of the transaction.ii) ConversionForeign currency monetary items are reported using the closing rate.Non-monetary items, which are carried in terms of historical costdenominated in a foreign currency, are reported using the exchange rateat the date of the transaction.iii) Exchange DifferencesExchange differences arising on the settlement of monetary items or onreporting company’s monetary items at rates different from those at whichthey were initially recorded during the year, or reported in previous financialstatements, are recognized as income or as expenses in the year in whichthey occur4. Provision for Taxation:Management is of the view that there is an adequate tax provision in the books ofaccount and no further tax provision is required in view of non cash profits in thecurrent year. Further, management is in the process of winding up the Company. Per
    • management, additional tax liability, if any, is not expected to be material. Hence notax provision has been created during the current year.5.5. The Company had repaid equity share capital to Aditya Birla Minacs Worldwide Limitedin the earlier years. However, Aditya Birla Minacs Worldwide Limited continues tocontrol the composition of the Board of Directors of the Company. Accordingly, AdityaBirla Minacs Worldwide Limited has been considered as the holding company.6. Related Party TransactionsThe Company had transactions with the following related parties:Ultimate Holding Company Aditya Birla Nuvo LimitedHolding Company Aditya Birla Minacs Worldwide Limited (ReferNote 5 above)Summary of transactions with above related parties is as follows: (in US$)Particulars Year ended Year endedMarch 31, 2011 March 31, 2010Holding CompanyRepayment of Share Capital NIL 200,000Payment of dividend NIL 150,000Related Party BalancesPayable to Holding Company 2,258 2,258(in INR)Particulars Year ended Year endedMarch 31, 2011 March 31, 2010Holding CompanyRepayment of Share Capital NIL 9,680,000
    • Payment of dividend NIL 7,116,250Related Party BalancesPayable to Holding Company 100,840 101,9476.6. Previous year’s figures have been regrouped where necessary to conform to thisyear’s classification.(30)ADITYA BIRLA MINACS PHILIPPINES, INC.CMYKBALANCE SHEETSMar-312011(PHP) 2011(INR) 2010(PHP) 2010(INR)ASSETSCurrent AssetsCash 33,090,861 34,045,115 4,294,486 4,299,248Receivables (Note 5) 62,253,614 64,048,847 33,738,747 33,776,160Prepaid expenses andother current assets(Notes 6 and 15) 3,971,358 4,085,882 5,575,511 5,581,694Total Current Assets Total Current Assets 99,315,833 102,179,844 43,608,744 43,657,101Noncurrent AssetsProperty and equipment(Notes 7 and 8) 34,070,710 35,053,221 40,140,748 40,185,260Other non-current assets(Note 15) 2,480,058 2,551,576 3,280,358 3,283,996Total Non-current Assets 36,550,768 37,604,797 43,421,106 43,469,256
    • TOTAL ASSETS 135,866,601 139,784,641 87,029,850 87,126,357LIABILITIES ANDCAPITAL DEFICIENCYCurrent LiabilitiesAccounts payable andaccrued expenses (Note 8) 76,318,515 78,519,343 36,529,566 36,570,073Non-current LiabilitiesLoans from parent company(Note 12) 93,081,884 95,766,124 96,900,408 97,007,860Accrued retirement benefits(Note 13) 1,186,100 1,220,304 200,500 200,722Total Non-current Liabilities 94,267,984 96,986,428 97,100,908 97,208,582Total Liabilities 170,586,499 175,505,770 133,630,474 133,778,656Capital DeficiencyCapital stock - 100 par value (Note 16)Authorized - 1,000,000 sharesIssued and outstanding -969,232 shares in 2011 and490,000 shares in 2010 96,923,200 99,718,213 49,000,000 49,054,336Deposits for future stocksubscription (Note 16) 13 13 47,923,213 47,976,355Deficit -131,643,111 -135,439,356 -143,523,837 -143,682,990Total Capital Deficiency -34,719,898 -35,721,130 -46,600,624 -46,652,299TOTAL LIABILITIES ANDCAPITAL DEFICIENCY 135,866,601 139,784,641 87,029,850 87,126,357See accompanying Notes to Financial Statements.
    • S TATEMENTS OF COMPREHENSIVE INCOMEYears Ended March 312011(PHP) 2011(INR) 2010(PHP) 2010(INR)SERVICE INCOME (Note 11) SERVICE INCOME (Note 11) 238,962,956 247,235,279 145,577,147147,781,703COST OF SERVICES (Note 8) COST OF SERVICES (Note 8) 187,367,264 193,853,468 150,079,412153,491,031GROSS LOSS GROSS LOSS 51,595,692 53,381,811 -4,502,265 -4,604,611General and administrativeexpenses (Note 10) -43,013,663 -44,502,693 -20,862,320 -21,336,564Foreign exchange loss(gain) - net 1,415,193 1,464,184 3,506,651 3,586,365Interest and b ank charges(Note 12) -69,641 -72,052 -1,848,541 -1,890,562Interest income 21,397 22,138 32,792 33,537Other income 2,128,146 2,201,817 1,147,925 1,174,020PROFIT/LOSS BEFOREINCOME TAX 12,077,124 12,495,205 -22,525,758 -23,037,816PROVISION FOR INCOME TAX -Current (Note 13) 2,398 2,481 3,377 3,454NET LOSS 12,074,726 12,492,724 -22,529,135 -23,041,270See accompanying Notes to Financial Statements.STATEMENTS OF CHANGES IN CAPITAL DEFICIENCYFOR THE YEARS ENDED MARCH 31, 2011 AND 2010Deposits forFuture StockSubscription
    • Capital Stock (Note 16) Deficit TotalBALANCES AT MARCH 31, 2009,AS PREVIOUSLYREPORTED 49,000,000 47,923,213 -121,408,602 -24,485,389Effects of changein accounting forretirement benefits(Note 3) — — 219,900 219,900BALANCES AT MARCH 31, 2009,AS RESTATED AS RESTATED 49,000,000 47,923,213 -121,188,702 -24,265,489Total comprehensiveloss for the year — — -22,529,135 -22,529,135BALANCES ATMARCH 31, 2010 49,000,000 47,923,213 -143,717,837 -46,794,624BALANCES AT MARCH 31, 2010,AS PREVIOUSLYREPORTED 49,000,000 47,923,213 -143,523,837 -46,600,624Effects of changein accounting forretirement benefits(Note 3) — — -194,000 -194,000BALANCES ATMARCH 31, 2010, MARCH 31, 2010, 49,000,000 47,923,213 -143,717,837 -46,794,624AS RESTATEDIssuance of shares 47,923,200 -47,923,200 — —
    • Total comprehensiveincome for the year — — 12,074,726 12,074,726BALANCES ATMARCH 31, 2011 (PHP) 96,923,200 13 -131,643,111 -34,719,898BALANCES ATMARCH 31, 2011 (INR) 99,718,213 13 -135,439,356 -35,721,130See accompanying Notes to Financial Statements.(31)ADITYA BIRLA MINACS PHILIPPINES, INC.CMYKS TATEMENTS OF CA SH FLO WSYears Ended March 312011(PHP) 2011(INR) 2010(PHP) 2010(INR)CASH FLOWS FROMOPERATING ACTIVITIESLoss before income tax 12,077,124 12,495,205 -22,111,858 -22,446,710Adjustments for:Depreciation (Note 6) 17,045,598 17,635,676 29,581,074 29,613,876Unrealized foreign exchangeloss (gain) - net -1,177,350 -1,218,107 -3,796,197 -3,800,407Interest expense (Note 11) 791,600 819,003 1,764,308 1,766,264Movement in accruedretirement benefits (Note 12) -18,999 -19,657 -60,500 -61,416Interest income — — -32,792 -33,289Operating income (loss) before
    • working capital changes 28,717,973 29,712,120 5,344,035 5,038,318Decrease (Increase) in:Receivables -29,333,656 -30,179,562 -13,001,452 -13,015,869Prepaid expenses andother current assets 1,604,153 1,650,413 -1,724,827 -1,726,740Increase (Decrease) inaccounts payable andaccrued expenses 43,202,115 44,447,952 -6,233,507 -6,240,419Net cash flows from(used in) operations 44,190,585 45,630,922 -15,615,751 -15,944,710Income taxes paid -2,398 -2,481 -3,377 -3,428Net cash flows from(used in) operating activities 44,188,187 45,628,441 -15,619,128 -15,948,138CASH FLOWS FROMINVESTING ACTIVITIESAdditions to property andequipment (Notes 6 and 7) -14,134,060 -14,541,650 -4,599,460 -4,604,560Decrease (Increase) inother non-current assets 800,300 823,379 114,035 114,161Interest received 18,999 19,657 32,792 33,289Net cash flows used ininvesting activities -13,314,761 -13,698,614 -4,452,633 -4,457,110CASH FLOWS FROMFINANCING ACTIVITESLoans from parent company — 0 12,429,562 12,443,345
    • EFFECT OF EXCHANGERATE CHANGES IN CASH -2,077,051 -2,148,954 -1,118,608 -1,135,548NET INCREASE (DECREASE)IN CASH 28,796,375 29,626,788 -8,760,807 -9,097,450CASH AT BEGINNING OFTHE YEAR 4,294,486 4,418,328 13,055,293 13,703,601CASH AT END OF THE YEAR 33,090,861 34,045,115 4,294,486 4,606,150See accompanying Notes to Financial Statements.NOTES TO FINANCIAL STATEMENTS1. Corporate InformationAditya Birla Minacs Philippines, Inc. (the Company) was registered with thePhilippine Securities and Exchange Commission (SEC) on November 3, 2006with the primary purpose of carrying on and undertaking the business of settingup and operating a center for sales and customer interaction services andbusiness process outsourcing services; providing system integration andsoftware development services which are ancillary thereto; and carrying onthe business in computer hardware and software related matters and fields,including the design, development, manufacture, production, marketing,selling, leasing and integration of computer hardware and software systems,the provision of customized software development consultancy and services,and the import and export of computer hardware technology. The Companystarted its commercial operations on March 5, 2007.The Company is a wholly owned subsidiary of Aditya Birla Minacs WorldwideLtd. (ABMW). The ultimate parent company is Aditya Birla Nuvo Limited(ABNL). ABMW and ABNL were incorporated in India.
    • The Company’s principal place of business is at 1800 Eastwood Ave. Bldg.,10/F Eastwood City Cyberpark, 188 E. Rodriguez, Jr. Ave., Bagumbayan,Quezon City.2. Registration with the Philippine Economic Zone Authority (PEZA)The Company is registered with PEZA as an Ecozone Information Technology(IT) Enterprise, engaged in providing customer contact center services atEastwood City Cyberpark.The Company is entitled to all incentives granted to pioneer projects underRepublic Act (RA) No. 7916, as amended, and the PEZA IT Guidelines, subjectto certain terms and conditions, including, among others, the following:a. The Company’s project shall be entitled to six years income tax holiday(ITH) incentive, as amended in accordance with the 2006 InvestmentPriorities Plan. The project’s entitlement to the said incentive shall besubject to validation by PEZA based on the Company’s audited financialstatements covering the first year of its operations showing theinvestment cost per seat for its project is equivalent to at least UnitedStates (US) $2,500, inclusive of the cost of equipment, office furnitureand fixtures, building improvements and renovations, fixed assets, exceptland, building and working capital, and complies with the minimumUS$2.5 million investment required for pioneer status.In case the Company does not attain the said investment cost per seat,the Company’s project shall be granted 5% gross income incentive andother incentives under RA 7916, as amended, instead of the ITHincentive. On the other hand, if the Company complies with the minimumUS$2,500 investment cost per seat but fails to comply with the minimum
    • US$2.5 million investment required for pioneer status, the Companyshall instead be entitled to only four years ITH incentive.Entitlement of the project to the 5th and 6th years of ITH from the dateof start of commercial operations shall be subject to the issuance by thePEZA Director General of a written validation of the project cost.b. The Company’s operations shall be limited to its PEZA-approved projects.Any expansion of this project or other additional activities to beundertaken by the Company shall require prior PEZA clearance.The Company is in a taxable loss position for the years endedMarch 31, 2011 and 2010 and, as such, it did not benefit from the ITH.3. Summary of Significant Accounting and Financial Reporting PoliciesBasis of PreparationThe financial statements of the Company are presented using the historicalcost convention and are presented in Philippine peso (Peso), the Company’sfunctional currency. All values are rounded off to the nearest Peso.Statement of ComplianceThe financial statements of the Company have been prepared in compliancewith the Philippine Financial Reporting Standards for Small and Medium-sizedEntities (PFRS for SMEs).Transition to PFRS for SMEsThe Company prepared its financial statements until March 31, 2010, inaccordance with accounting principles generally accepted in the Philippinesapplicable to non-publicly accountable entities (previous GAAP). The financialstatements for the year ended March 31, 2011, are the Company’s firstfinancial statements in accordance with PFRS for SMEs.
    • (32)ADITYA BIRLA MINACS PHILIPPINES, INC.CMYKThe Company applied PFRS for SMEs Section 35, Transition to the PFRS forSMEs , in preparing the financial statements, with April 1, 2009, as the date oftransition. The transition from the previous GAAP to PFRS for SMEs resultedin certain changes to the Company’s previous accounting policies. Thecomparative figures for the fiscal year 2010 financial statements were restatedto reflect these changes in accounting policies.ReconciliationsThe following reconciliations show the effect of the transition from the previousGAAP to PFRS for SMEs on the Company’s capital deficiency account as ofApril 1, 2009 and March 31, 2010, and on the Company’s total comprehensiveloss for the year ended March 31, 2010.Reconciliation of capital deficiency accountMarch 31, 2010 March 31, 2010 April 1,2009Capital deficiency under previous GAAP 46,600,624 24,485,389Effect of change in accounting forretirement benefits 194,000 194,000 (219,900)Capital deficiency under PFRS for SMEs 46,794,624 24,265,489Reconciliation of total comprehensive loss for the year ended March 31, 2010Total comprehensive loss for the year under previous GAAP 22,115,235Effect of change in accounting for retirement benefits 413,900Total comprehensive loss for the year under PFRS for SMEs 22,529,135Effect of change in accounting for retirement benefits
    • PFRS for SMEs requires full recognition of actuarial gains and losses in theprofit and loss. Accordingly, all previously unrecognized actuarial gains andlosses were recognized.The change decreased deficit and increased accrued retirement benefits costby 219,900 as of April 1, 2009. The change also increased deficit and accruedretirement benefits by 413,900 as of March 31, 2010, and increasedretirement benefits cost by 194,000 for the year ended March 31, 2010.Effect of change in accounting for deferred income tax assetsUnder the previous GAAP, deferred income tax assets are recognized for alldeductible temporary differences, carryforward benefits of the excess of theminimum corporate income tax (MCIT) over the regular corporate income tax(RCIT) and unused net operating loss carryover (NOLCO) to the extent thatit is probable that sufficient future taxable profits will be available againstwhich these deductible temporary differences and carryforward benefits ofexcess MCIT and unused NOLCO can be utilized. Under PFRS for SMEs,deferred income tax assets must be recognized for all temporary differencesand unused carryforward benefits of the excess MCIT and unused NOLCOthat are expected to reduce taxable profits in the future. Valuation allowancemust be recognized against deferred income tax assets so that the carryingamount equals the highest amount that is more likely than not to berecovered based on current or future taxable profits. Any adjustment isrecognized in profit or loss.The change in accounting for deferred income tax assets resulted in therecognition of all previously unrecognized deferred income tax assets with acorresponding valuation allowance. The change however, has no effect on
    • the Company’s capital deficiency as of April 1, 2009 and March 31, 2010, andnet loss for the year ended March 31, 2010.Effect on 2010 statement of cash flowsThere are no significant differences between the statement of cash flowsprepared under PFRS for SMEs and the statement of cash flows presentedunder the previous GAAP.CashCash includes cash in hand and in banks.ReceivablesTrade receivables are recognized and carried at original invoice amount, lessany allowance for uncollectible accounts. An estimate for doubtful accountsis made when there is objective evidence that the Company will not be ableto collect the debts.Other receivables are recognized at face amount, less any allowance fordoubtful accounts.PrepaymentsPrepaid expenses are amounts paid in advance for goods and services thatare yet to be delivered and from which future economic benefits are expectedto flow to the Company within 12 months from the Balance Sheet date.Property and EquipmentProperty and equipment are carried at cost, less accumulated depreciationand any impairment in value.The initial cost of property and equipment consists of its purchase price,including any directly attributable cost of bringing the asset to its workingcondition and location for its intended use. Expenditures incurred after the
    • property and equipment have been put into operation, such as repairs andmaintenance, are normally charged to income in the period in which the costsare incurred. In situations where it can be clearly demonstrated that theexpenditures have resulted in an increase in the future economic benefitsexpected to be obtained from the use of an item of property and equipmentbeyond its originally assessed standard of performance, the expenditures arecapitalized as additional cost of property and equipment.Depreciation is computed using the straight-line method over the estimateduseful lives of the assets as follows:Category YearsComputer equipment 3Furniture and fixtures 3 to 5Office and communication equipment 5Leasehold improvements are amortized over the life of the assets (averageof two years) or the term of the lease, whichever is shorter. Recognition ofdepreciation commences when the asset is ready for its intended use.The estimated useful lives of the assets and depreciation method used arereviewed periodically to ensure that these are consistent with the expectedpattern of economic benefits from items of property and equipment.When assets are sold or retired, their costs, accumulated depreciation andany impairment in value are eliminated from the accounts. Any gain or lossresulting from their disposal is recognized in profit or loss.Construction in progress represents assets under construction and is statedat cost, including cost of construction and other direct costs. Construction inprogress is not depreciated until the relevant assets are completed and ready
    • for their intended operational use.Impairment of AssetsThe carrying values of property and equipment are reviewed for impairmentwhen events or changes in circumstances indicate that the carrying valuesmay not be recoverable. If any such indication exists and where the carryingvalues exceed the estimated recoverable amounts, the assets or cash-generating units are written downto their recoverable amount. Therecoverable amount of the asset is the greater of net selling price andvalue-in-use. In assessing value-in-use, the estimated future cash flowsare discounted to their present value using a pre-tax discount rate thatreflects current market assessments of the time value of money and therisks specific to the asset. For an asset that does not generate largelyindependent cash inflows, the recoverable amount is determined for thecash-generating unit to which the asset belongs. Any impairment loss isrecognized in profit or loss.If, in a subsequent period, the amount of the impairment loss decreases andthe decrease can be related objectively to an event occurring after theimpairment was recognized, the previously recognized impairment loss isreversed. Any subsequent reversal of an impairment loss is recognized inprofit or loss, to the extent that the carrying value of the asset does notexceed its amortized cost at the reversal date.LiabilitiesLiabilities are recognized when the Company has a present obligation frompast events, the settlement of which is expected to result in an outflow ofeconomic benefits from the Company and the amount can be reliablymeasured. Liabilities expected to be settled in the Company’s normal operating
    • cycle or within 12 months from the Balance Sheet date are classified as currentliabilities. Otherwise, these are classified as non-current liabilities.Capital StockCapital stock is carried at par value of the shares issued. When the shares aresold at a premium, the difference between the proceeds and the par value iscredited to additional paid-in capital. When the shares are issued for aconsideration other than cash, the proceeds are measured by the fair valueof the consideration received. In case the shares are issued to extinguish orsettle the liability of the Company, the shares shall be measured either at the(33)ADITYA BIRLA MINACS PHILIPPINES, INC.CMYKfair value of the shares issued or fair value of the liability settled, whichever ismore readily determinable.Deposits for Future Stock SubscriptionContributions from stockholders that are intended as payment for future capitalstock subscriptions are recognized as deposits for future stock subscription.The deposits are reduced and the corresponding shares of stock are issuedwhen the regulatory requirements have been complied with.DeficitDeficit represents the cumulative balance of the total comprehensive incomeor loss, net of any dividend declaration.RevenueRevenue is recognized to the extent that it is probable that the economicbenefits will flow to the Company and the amount of revenue can be reliably
    • measured. Revenue is measured at the fair value of the consideration receivedor receivable. The following specific recognition criteria must also be metbefore revenue is recognized:Service incomeService income is recognized as related services are performed based onagreements with the customers.Interest incomeInterest income is recognized as the interest accrues.LeasesLeases where the lessor retains substantially all the risks and benefits ofownership of the asset are classified as operating leases. Operating leaseexpense is recognized in profit or loss on a straight-line basis over thelease term.Retirement Benefits CostThe cost of providing retirement benefits is determined using the projectedunit credit method. This method reflects services rendered by employees upto the date of valuation and incorporates assumptions concerning employees’projected salaries. Retirement benefits cost includes current service cost plusamortization of past service cost, experience adjustments and changes inactuarial assumptions to the extent that benefits are already vestedimmediately. Past service cost is immediately expensed. Actuarial gains andlosses are recognized in their entirety in profit or loss. Past service cost, onthe other hand, is recognized as an expense on a straight-line basis over theaverage period until the benefits become vested. If the benefits are alreadyvested, past service cost is recognized immediately. Gains or losses on the
    • curtailment or settlement of retirement benefits are recognized when thecurtailment or settlement occurs.Foreign Currency-denominated TransactionsTransactions denominated in foreign currencies are recorded in Peso usingthe exchange rate prevailing at the date of the transaction. Outstandingmonetary assets and liabilities denominated in foreign currencies are translatedto Peso using the closing exchange rate at the Balance Sheet date. Foreignexchange gains or losses are credited to or charged against current operations.Income TaxesCurrent income taxCurrent income tax assets and liabilities for the current and prior periods aremeasured at the amount expected to be recovered from or paid to the taxationauthorities. The tax rates and tax laws used to compute the amount are thosethat have been enacted or substantively enacted at the Balance Sheet date.Deferred income taxDeferred income tax is provided, using the Balance Sheet liability method, onall temporary differences at the Balance Sheet date between the tax bases ofassets and liabilities and their carrying amounts for financial reporting purposes.Deferred income tax liabilities are recognized for all taxable temporarydifferences. Deferred income tax assets are recognized for all deductibletemporary differences, carry-forward benefits of the excess MCIT over RCITand NOLCO that are expected to reduce taxable profits in the future.A valuation allowance is recognized against deferred income tax assets sothat the net carrying amount equals the highest amount that is more likelythan not to be recovered based on current or future taxable profits. The carrying
    • amount of deferred income tax asset is reviewed at each Balance Sheet dateand the valuation allowance is adjusted to reflect the current assessment offuture taxable profits. Such adjustment is recognized in profit or loss, exceptthat an adjustment attributable to an item of income or expense recognizedas other comprehensive income is recognized in other comprehensive income.Deferred income tax assets and deferred income tax liabilities are measuredat the tax rates that are expected to apply to the period when the asset isrealized or the liability is settled, based on tax rates and tax laws that havebeen enacted or substantively enacted at the Balance Sheet date.Deferred income tax assets and deferred income tax liabilities are offset if alegally enforceable right exists to offset current income tax assets againstcurrent income tax liabilities and the deferred income taxes relate to the sametaxable entity and the same taxation authority.Borrowing CostsBorrowing costs are generally expensed as incurred.Provisions and ContingenciesProvisions are recognized when: (1) the Company has a present obligation(legal or constructive) as a result of a past event; (2) it is probable that anoutflow of resources embodying economic benefits will be required to settlethe obligation; and (3) a reliable estimate of the amount of the obligation canbe made.Contingent liabilities are not recognized in the financial statements.They are disclosed in the notes to financial statements unless the possibilityof an outflow of resources embodying economic benefits is remote.A contingent asset is not recognized in the financial statements but is
    • disclosed in the notes to financial statements when an inflow of economicbenefits is probable.Events after the Balance Sheet DatePost - year-end events that provide additional information about the Company’sposition at the Balance Sheet date (adjusting events) are reflected in thefinancial statements. Post-year-end events that are not adjusting events aredisclosed in the notes to financial statements when material.4. Significant Accounting Judgments, Estimates and AssumptionsThe preparation of the financial statements in compliance with PFRS forSMEs requires management to make judgments, estimates andassumptions that affect the amounts reported in the financial statementsand accompanying notes. The judgments, estimates and assumptions usedin the preparation of the financial statements are based upon management’sevaluation of relevant facts and circumstances as of the date of the financialstatements. Future events may occur, which can cause the assumptionsused in arriving at those judgments and estimates to change. The effects ofany changes will be reflected in the financial statements as they becomereasonably determinable.JudgmentsIn the process of applying the Company’s accounting policies, managementhas made the following judgments, apart from those involving estimations,which have the most significant effect on the amounts recognized in thefinancial statements:Determination of functional currencyBased on the economic substance of the underlying circumstances relevant
    • to the Company, the functional currency is determined to be the Peso. It isthe currency that mainly influences its service and rental costs.Operating lease - Company as lesseeThe Company has entered into a property lease, where it has determinedthat the significant risks and rewards related to the property are retained withthe lessor. As such, this lease agreement is accounted for as an operatinglease (see Note 15).Impairment of property and equipmentInternal and external sources of information are reviewed at the end ofeach reporting period to identify indications that the property andequipment may be impaired or an impairment loss previously recognizedno longer exists or may be decreased. If any such indication exists, therecoverable amount of the asset is estimated. An impairment loss isrecognized whenever the carrying amount of an asset exceeds itsestimated recoverable amount.An assessment is made on the impairment of assets whenever events orchanges in circumstances indicate that the carrying amount of an asset may(34)ADITYA BIRLA MINACS PHILIPPINES, INC.CMYKnot be recoverable. The factors that the Company considers important whichcould trigger an impairment review include significant underperformancerelative to expected historical or projected future operating results andsignificant negative industry or economic trends. As of March 31, 2011 and2010, there were no indications of impairment on the Company’s property
    • and equipment.The carrying value of the Company’s property and equipment, net ofaccumulated depreciation, amounted to 34,070,710 and 40,140,748 asof March 31, 2011 and 2010, respectively (see Note 7).Estimates and AssumptionsThe key assumptions concerning the future and other key sources ofestimation uncertainty at the Balance Sheet date that have a significant riskof causing a material adjustment to the carrying amounts of assets andliabilities within the next financial year are discussed below.Estimation of useful lives of property and equipmentThe Company estimates the useful lives of its property and equipmentbased on the period over which the assets are expected to be availablefor use. The Company reviews annually the estimated useful lives ofproperty and equipment based on factors that include asset utilization,internal technical evaluation, technological changes, environmental andanticipated use of the assets tempered by related industry benchmarkinformation. There was no change in the estimated useful lives of theproperty and equipment in both years.Estimation of retirement benefits costThe determination of the obligation and cost of accrued retirement benefitsis dependent on the assumptions used by the actuary in calculating suchamounts. Those assumptions are described in Note 13 and include, amongothers, discount rates and salary increase rates.The carrying value of the Company’s accrued retirement benefits amountedto 1,186,100 and 394,500 as of March 31, 2011 and 2010, respectively
    • (see Note 13).Estimation of valuation allowance for deferred income tax assetsThe carrying amounts of deferred income tax assets are reviewed at eachBalance Sheet date and the valuation allowance is adjusted to reflect thecurrent assessment of future taxable profits. In 2011 and 2010, managementrecognized valuation allowance on certain deferred income tax assets sinceit is not probable that taxable profits will be available against which the futureincome tax deductions can be utilized.The Company’s deferred income tax assets, net of valuation allowance,amounted to 689,401 and 1,138,859 as of March 31, 2011 and 2010,respectively (see Note 14).5. Receivables2011(PHP) 2011(INR) 2010(PHP) 2010(INR)Trade 61,003,203 62,762,377 33,156,570 33,193,337Advances to employeesand others 1,250,411 1,293,697 582,177 582,82362,253,614 64,056,074 33,738,747 33,776,160 6. Prepaid Expenses and Other Current Assets2011(PHP) 2011(INR) 2010(PHP) 2010(INR) Prepaid rent (Note 15) 1,911,666 1,966,793 1,258,5881,260,095Deposits (Note 15) 1,621,651 1,668,415 821,351 822,262Prepaid insurance 250,211 257,426 3,395,572 3,399,337Others 187,830 193,247 100,000 100,0003,971,358 4,085,882 5,575,511 5,581,6947. P ropert y and Equipment 2011Computer Furniture & Office & Com- L easehold Construction Tot al (PHP) Tot al (INR)Equipment Fixt ures munication Impro v ements in P rogress 2011 2011
    • EquipmentCostBeginning of year 43,065,999 26,907,546 15,468,204 26,008,357 3,974,789 115,424,895 118, 753,449Additions 5,868,943 390,000 4,419,593 36,395 260,629 10,975,560 11,292,067Reclassification 1,757,133 — 459,000 1,428,000 -3,644,133 0 0End of year 50,692,075 27,297,546 20,346,797 27,472,752 591,285 126,400,455 130,045,516Accumulated DepreciationBeginning of year 33,700,688 13,939,879 7,228,174 20,415,406 0 75,284,147 77,455,146Depreciation (Notes 9 and 10) 4,781,627 5,167,242 3,438,180 3,658,549 0 17,045,598 17,537,149End of year 38,482,315 19,107,121 10,666,354 24,073,955 0 92,329,745 94,992,295Net Book Values 12,209,760 8,190,425 9,680,443 3,398,797 591,285 34,070,710 35,053,2212010Computer Furniture & Office & Com- Leasehold Construction Total (PHP) Total (INR)Equipment Fixtures munication Improvements in Progress 2010 2010EquipmentCostBeginning of year 38,613,107 26,606,446 15,468,204 15,803,863 10,836,115 107,327,735107,446,750Additions 3,821,271 301,100 — —– 3,974,789 8,097,160 8,106,139Reclassification 631,621 — — 10,204,494 (10,836,115) — —End of year 43,065,999 26,907,546 15,468,204 26,008,357 3,974,789 115,424,895 115,552,889Accumulated DepreciationBeginning of year 20,593,516 8,794,710 4,113,891 12,200,956 — 45,703,073 45,753,753Depreciation (Notes 9 and 10) 13,107,172 5,145,169 3,114,283 8,214,450 — 29,581,074 29,613,876End of year 33,700,688 13,939,879 7,228,174 20,415,406 — 75,284,147 75,367,629Net Book Values 9,365,311 12,967,667 8,240,030 5,592,951 3,974,789 40,140,748 40,185,260
    • (35)ADITYA BIRLA MINACS PHILIPPINES, INC.CMYKb. The Company has various service agreements which are carried outtogether with its affiliates based in Bangalore, India and Toronto, Canada.These agreements are effective for three years, subject to renewal terms,and primarily cover after-sale support/call center services. Rates aredetermined based on the statement of work agreed with client and arenormally expressed per minute or per hour. Revenue recognized forthese agreements amounted to 238.96 million and 145.58 millionfor the years ended March 31, 2011 and 2010, respectively.c. In 2011, the Company received from its affiliate 10.91 million (US$0.25million), included under “Accounts payable and accrued expenses” inthe Balance Sheet, representing payment for receivable from clientswhich are covered in the service agreements described above.The amount advanced shall be offset upon collection of the outstandingreceivable from the said clients.d. Shared costs charged by ABMW amounted to 11.79 million and4.02 million in 2011 and 2010, respectively, and are included under“General and administrative expenses”. The amounts outstanding asof March 31, 2011 and 2010 amounting to 24.39 million and 5.86million, respectively, are included in “Accounts payable and accruedexpenses”.e. The compensation of key management personnel consists of2011(PHP) 2011(INR) 2010(PHP) 2010(INR)
    • Salaries and wages 5,915,470 6,120,249 2,112,357 2,144,346Retirement benefits (Note 13) 102,883 106,445 85,026 86,314Short-term employee benefits 41,898 43,348 90,027 91,3906,060,251 6,270,042 2,287,410 2,322,05013. Retirement Benefits CostThe Company has an unfunded, non-contributory, defined benefit retirementplan covering its regular, full time employees. Retirement benefits are providedin accordance with RA No. 7641.The following tables summarize the components of net retirement benefitscost recognized in the statements of comprehensive income and the amountsrecognized in the Balance Sheets based on the actuarial valuation report asof March 31, 2011.The components of retirement benefits cost which were charged tooperations follow:2011(PHP) 2011(INR) 2010(PHP) 2010(INR)(As restated,Note 3)Current service cost 197,700 203,401 1,800 1,817Interest cost 38,000 39,096 15,400 15,543Curtailment gain 0 0 -67,900 - 68,530Net actuarial loss 555,900 571,931 404,100 407,849Retirement benefits cost 791,600 814,428 353,400 356,679The movement in accrued retirement benefits of the Company follows:2011(PHP) 2011(INR) 2010(PHP) 2010(INR)(As restated,
    • Note 3)Balance, April 1 394,500 405,876 41,100 41,481Retirement benefits costsfor the year 791,600 814,428 353,400 356,679Balance, March 31 1,186,100 1,220,304 394,500 398,160Changes in the present value of the defined benefit obligation follow:2011(PHP) 2011(INR) 2010(PHP) 2010(INR)(As restated,Note 3)Balance, April 1 394,500 405,876 41,100 41,481Current service cost 197,700 203,401 1,800 1,817Interest cost 38,000 39,096 15,400 15,543Actuarial loss on obligation: 0 0 –Experience adjustments 349,500 359,579 13,400 13,524Change in assumptions 206,400 212,352 390,700 394,325Curtailment gain 0 0 (67,900) (68,530)Balance, March 31 1,186,100 1,220,304 394,500 398,1608. A ccounts P a y able and A ccrued Expenses2011(PHP) 2011(INR) 2010(PHP) 2010(INR)Accounts payable 9,034,741 9,295,279 4,811,527 4,816,862Accrued expenses (Note 12) 55,057,482 56,645,197 28,897,211 28,929,255Advances from affiliate(Note 12) 10,907,500 11,222,044 0 0Others 1,318,792 1,356,823 2,820,828 2,823,956 76,318,515 78,519,343 36,529,566 36,570,073 Accounts payable as of March 31, 2011 and 2010,include unpaid invoices for
    • the acquisition of certain items of property and equipment totaling 339,200and 3,497,700, respectively.9. Cost of Services2011(PHP) 2011(INR) 2010(PHP) 2010(INR)(As restated, (As restated,Note 3) Note 3)Personnel costs (Note 11) 111,413,572 115,270,442 67,311,840 67,960,668Technology charges 21,936,223 22,695,602 23,349,297 23,702,889Rent and utilities (Note 14) 16,822,428 17,404,780 15,322,959 15,555,003Depreciation (Note 7) 15,613,537 16,154,040 28,094,195 30,029,037Staff welfare 9,002,486 9,314, 130 4,992,377 5,067,979Recruitment 5,353,679 5,539, 010 3,725,398 3,781,814Repairs and maintenance 3,213,595 3,324,842 2,506,195 2,544,148Training 257,686 266,606 2,342,528 2,378,002Outside services and others 3,754,058 3,884,014 2,434,623 2,471,492187,367,264 193,853,468 150,079,412 153,491,032 10. General and Administrative Expenses2011(PHP) 2011(INR) 2010(PHP) 2010(INR)(As restated, (As restated,Note 3) Note 3)Personnel costs (Note 11) 16,588,541 17,162,796 8,465,733 8,544,280Shared cost (Note 12) 11,789,623 12,197,751 4,017,722 4,078,565Transportation and travel 3,717,069 3,845,745 1,051,985 1,067,916Professional fees 2,680,534 2,773,328 1,386,705 1,407,705Accommodations 1,759,204 1,820,103 1,079,333 1,095,678Depreciation (Note 7) 1,432,061 1,481,636 1,486,879 1,509,396
    • Utilities 1,208,328 1,250,157 849,838 862,708Insurance 880,240 910,712 382,936 388,735Rent (Note 15) 643,829 666,117 943,046 957,327Others 2,314,234 2,394,347 1,198,143 1,216,28743,013,663 44,502,693 20,862,320 21,128,595 11. Personnel Costs2011(PHP) 2011(INR) 2010(PHP) 2010(INR)Salaries, wagesand bonuses 113,074,009 116,988,359 74,526,431 75,655,331Retirement benefits cost(income) (Note 12) 791,600 819,003 353,400 -61,416Other short-termemployee benefits 14,136,504 14,625,876 897,742 911,032 128,002,113 132,433,238 75,777,573 76,504,94712. Related Party Transactionsa. The Company availed of various loans from ABMW to finance its workingcapital requirements. The loans bear interest at LIBOR + 1% and arepayable in 60 months (including the interest and other related charges).As of March 31, 2011 and 2010, the outstanding principal amounted to87.00 million (US$2.01 million) and 90.57 million (US$2.01 million),respectively. Interest expense charged to the Company amounted to1.76 million (US$39.13 thousand) for the year ended March 31, 2010.Interest for the year was waived by ABMW in 2011. Accrued interestexpense (included under “Loans from parent company” in the BalanceSheets) as of the March 31, 2011 and 2010 amounted to 6.08 millionand 6.33 million, respectively.
    • (36)ADITYA BIRLA MINACS PHILIPPINES, INC.CMYKThe assumptions used to determine retirement benefits costs of the Companyas of March 31 are as follows:2011 2011 2010Discount rate 8.61% 9.63%Salary increase rate 8.00% 8.00%14. Income Taxesa. The provision for current income tax represents final tax on interest income.b. The components of the Company’s deferred income tax assets anddeferred income tax liabilities as of March 31 are as follows:2011(PHP) 2011(INR) 2010(PHP) 2010(INR)(As restated,Note 3)Deferred income tax assets on:NOLCO 24,648,467 25,501,738 41,838,574 42,226,760Accrued retirement benefits 355,830 368,148 118,350 119,448Unrealized foreign exchangeloss - net — — 2,606,312 2,630,494Deferred lease — — 35,447 35,776Valuation allowance ondeferred income 25,004,297 25,869,886 44, 598,683 45,012,478Tax assets -24,314,896 -25,156,619 -43,459,824 - 47,798,196 689,401 71,326 1,138,8591,142,9426
    • Deferred income tax liabilities on:Unrealized foreign exchangegain - net 589,268 609,667 1, 138,859 1,149,426Deferred lease 100,133 103,599689,401 713,266 1,138,859 1,149,426Net deferred income tax assets — —The Company’s NOLCO as of March 31, 2011 will expire as follows:Incurred in Year March 31, March 31, Expiring2010 Expired Applied 2011 in2008 51,755,698 51,755,698 — ` — 20112009 50,574,668 — 5,544,656 45,030,012 20122010 37,131,546 — — 37,131,546 2013139,461,912 51,755,698 5,544,656 82,161,558c. The reconciliation between the provision for income tax at statutory taxrates and the provision for income tax as shown in the statement ofcomprehensive income is as follows:2011(PHP) 2011(INR) 2010(PHP) 2010(INR)(As restated,Note 3) Income tax at statutory ra te 3,623,137 3,748,561 -6,757,727 -6,820,426Additions to (reduction in)income tax resulting fromthe tax effects of:Net increase (decrease)in unrecognized
    • deferred income tax assets -1,954,821 -2,022,492 6,764,318 6,827,079Application of NOLCO -1,663,397 -1,720,980 — —Interest income subject to final tax -4,021 -4,160 -6,460 - 6,520Non-deductible interest andother expenses 1,500 1,552 3,246 3,276 2,398 2,481 3,377 3,40815. Lease CommitmentsThe Company has various lease agreements for its office space andcondominium units with terms ranging from three months to five years. Theseleases are renewable on terms mutually agreed by the parties. Certain leaseagreements require the Company to pay security deposits. These are includedunder “Prepaid expenses and other current assets” and “Other non-currentassets” in the Balance Sheets.The Company has three-year lease agreements covering two of its office/facilities spaces that are subject to annual escalation of 8% and 10%, withone month and three months rent-free period, respectively.Future minimum rentals payable under these non-cancellable operating leasearrangements are as follows:2011(PHP) 2011(INR) 2010(PHP) 2010(INR)Within one year 10,833,298 11,145,702 12,514,170 12,528,047After one year but not morethan five years 6,613,488 6, 804,204 18,131,585 18,151,69117,446,786 17,949,906 30,645,755 30,679,738 16. EquityOn January 19, 2009, the Company’s BOD authorized the issuance of 479,232additional shares from the remaining unissued shares at 100 per share in
    • favor of ABMW, to be applied against the deposits for future stocksubscription.On March 24, 2011, the Philippine SEC approved the issuance of the saidshares to the existing stockholder.17. Financial Assets and Financial LiabilitiesThe Company’s financial assets and financial liabilities measured at amortizedcosts as of December 31 are as follows:2011(PHP) 2011(INR) 2010(PHP) 2010(INR)Financial AssetsCash 33,090,861 34,045,115 4,294,486 4,299,248Receivables 62 ,253,614 64,048,847 33, 738,747 33,776,160Refundable deposits 4,101,709 4,219,992 4,101,709 4,106,257 99,446,184 102,313,954 42,134,942 42,181,665Financial LiabilitiesAccount payable and accrued expensesTrade 9,034,741 9,295,279 4,811,527 4,816,862Accrued expenses 55,057,482 56,645,197 28,897,211 28,929,255Advances from an affiliate 10 ,907,500 11,222,044 — —Loans from parent company 93,081,884 95,766,124 96,900,408 97,007,860 168,081,607 172,928,644 130,609,146 130,753,977 18. Net Income (Loss)/Total Comprehensive Income(Loss)The Company’s net income (loss) and total comprehensive income (loss) forthe years ended March 31, 2011 and 2010, are the same since the Companydoes not have other comprehensive income.19. Other MatterThe Company is a defendant in a number of labor cases filed with the National
    • Labor Regulatory Commission pertaining to non-payment of salaries and otherbenefits to its employees. Management believes that the outcome of thesecases will not have a material effect on the Company’s financial statements.20. Supplementary Information Required Under RevenueRegulations 15-2010In compliance with Bureau of Internal Revenue Regulations 15-2010 issuedon November 25, 2010, mandating all tax payers to disclose information ontaxes, duties and license fees paid and accrued during the taxable year,summarized below are the taxes paid and accrued by the Company in 2011.a. Value-Added Taxes (VAT)As a PEZA registered entity, the Company’s revenue is VAT zero-rated.b. Taxes and LicensesSEC fees for additional of shares 96,805Penalties 5,000PEZA certification 930102,735c. Withholding TaxesPaid Accrued TotalWithholding tax on compensation 11,329,434 2,718,099 14,047,533Withholding taxes on rental/services 497,607 456,797 954,40411,827,041 3,174,896 15,001,937(37)A V TRANSWORKS LIMITEDCMYKAuditors’ R eport
    • ToThe Board of Directors of Aditya Birla Minacs Worldwide Limited(Formerly known as Transworks Information Services Limited)1. We have audited the attached Balance Sheet of AV TransworksLtd (the Company), a wholly owned subsidiary of Aditya BirlaMinacs Worldwide Limited ("the Parent"), as at March 31, 2011and also the Profit and Loss account and the cash flow statementfor the year ended on that date annexed thereto. These financialstatements are the responsibility of the Companys management.Our responsibility is to express an opinion on these financialstatements based on our audit.2. We conducted our audit in accordance with auditing standardsgenerally accepted in India. Those Standards require that we planand perform the audit to obtain reasonable assurance aboutwhether the financial statements are free of material misstatement.An audit includes examining, on a test basis, evidence supportingthe amounts and disclosures in the financial statements. An auditalso includes assessing the accounting principles used andsignificant estimates made by management, as well as evaluatingthe overall financial statement presentation. We believe that ouraudit provides a reasonable basis for our opinion.3. We report that:i) We have obtained all the information and explanations, whichto the best of our knowledge and belief were necessary forthe purposes of our audit;
    • ii) In our opinion, proper books of account have been kept by theCompany so far as appears from our examination of thosebooks;iii) The balance sheet, profit and loss account and cash flowstatement dealt with by this report are in agreement with thebooks of account;iv) In our opinion, the balance sheet, profit and loss account andcash flow statement dealt with by this report comply with theaccounting standards referred to in sub-section (3C) of section211 of the Companies Act, 1956;v) In our opinion and to the best of our information and accordingto the explanations given to us, the said accounts give a trueand fair view in conformity with the accounting principlesgenerally accepted in India;a) in the case of the balance sheet, of the state of affairs ofthe Company as at March 31, 2011;b) in the case of the profit and loss account, of the loss forthe year ended on that date; andc) in the case of cash flow statement, of the cash flows forthe year ended on that date.4. This report is furnished solely for the purpose of meeting therequirement of consolidation of the attached consolidated financialstatements with the financial statement of the Parent and henceshould not be used for any other purpose.For S. R. Batliboi & Co.,
    • Firm registration number: 301003EChartered Accountantsper Vijay ManiarPartnerMembership No.:36738Place : Mumbai,Date: July 27, 2011(38)A V TRANSWORKS LIMITEDCMYKPROFIT & LOSS A CCOUNT FOR THE YEAR ENDED31ST MARCH, 2011For the For the For the For theYear Ended Year Ended Year Ended Year Ended31st March, 31st March, 31st March, 31st March,2011 2011 2010 2010Schedule CAD ` Lacs CAD ` LacsINCOME :Other Income 6 765,846 342.78 157,375 68.61Total 765,846 342.78 157,375 68.61EXPENDITURE :Administrative Expenses 7 11,283 5.05 (39,723) (17.31)Financial Charges 8 1,171,116 524.19 1,504,930 656.06Total 1,182,399 529.24 1,465,208 638.75Profit / (Loss) before Tax for the year (416,553) (186.46) (1,307,833) (570.14)
    • Less: Provision for Tax — — — —Profit / (Loss) for the year (416,553) (186.46) (1,307,833) (570.14)Profit / (Loss) brought forwardfrom previous year (1, 891,435) (811.58) (583,602) (241.45)Accumulated Balance carriedforward to the Balance Sheet (2,307,989) (998.04) (1,891,435) (811.59)Notes to Accounts Notes to Accounts 9The Schedules referred to above and the notes to accounts form an integral part of theProfit & Loss Account.BALANCE SHEE T AS AT 31S T MARCH, 2011A s At A s At A s At A s At31st Marc h, 31st Marc h, 31st Marc h, 31st Marc h,2011 2011 2010 2010Schedule CAD ` Lacs CAD ` LacsI. SOURCES OF FUNDS1 Shareholders’ FundsShare Capital 1 127,000,001 58,420.00 127,000,001 56,083.20Preference Share Capital 1 30,000,000 13,800.00 30,000,000 13,248.00Foreign Exchange on Translation — (63.66) — (23.68)2 Unsecured Loan from Bank ank 30,901,850 14,214.85 30,901,850 13,646.263 L oan from Holding Compan yy 28,255,752 12,997.65 21,424,531 9,461.07Tot al 216,157,603 99,368.84 209,326,382 92,41 4.85II. APPLICATION OF FUNDS1 Investments Investments 2 207,892,852 95,630.71 207,892,852 91,805.482 Current Assets, Loans
    • and Advances :Accured Interest 56,919 26.18 106,963 47.23Cash and Bank Balances 3 763,345 351.13 67,073 29.62Loans and Advances 4 5, 371,429 2,470.86 — —Sub - Total A 6, 191,693 2,848.17 174,036 76.85Less: Current Liabilitiesand Provisions : and Provisions : 5Current Liabilities 232,324 106.87 629,334 277.92Provisions 2,607 1.20 2,607 1.15Sub - Total B 234,931 108.07 631,941 279.07Net Current Assets (A-B) 5,956,762 2,740.10 (457,905) (202.22)3 Profit & Loss Account Profit & Loss Account 2, 307,989 998.03 1,891,435 811.59Total 216,157,603 99,368.84 209,326,382 92,414.85Notes to Accounts Notes to Accounts 9The Schedules referred to above and the notes to accounts form an integral part of the Balance Sheet.As per our report of the event date For and on behalf of the Board of Directors ofA V Transworks LimitedFor S. R. Batliboi & Co.,Firm registration number: 301003EChartered AccountantsDirectorper Vijay Maniar Michael IseyemiPartnerMembership No.:36738Place: Mumbai Place: Toronto
    • Date: July 27, 2011 Date: July 25, 2011As per our report of the event date For and on behalf of the Board of Directors ofA V Transworks LimitedFor S. R. Batliboi & Co.,Firm registration number: 301003EChartered AccountantsDirectorper Vijay Maniar Michael IseyemiPartnerMembership No.:36738Place: Mumbai Place: TorontoDate: July 27, 2011 Date: July 25, 2011(39)A V TRANSWORKS LIMITEDCMYKFor the Year ended For the Year ended For the Year ended For the Year endedMarch 31, 20 11 March 31, 20 11 March 31, 20 10 March 31, 20 10CAD Rs. Lacs CAD Rs. LacsA. Cash flo ws from Operating A ctivitiesNet Profit/(Loss) bef ore taxation, and extraordinar y items y items (41 6,553) (186.46) (1,307,833)(570.14)Adjustments for:Interest Income (7 65,846) (342.78) (157,375) (68.61)Interest Expense 1,166,010 521.89 1,497,734 652.92Foreign Exchange (Gain)/Loss (Net) — 2,865.41 0 6,125.02Operating Profit bef ore w orking capital c hanges (1 6,389) 2,858.06 32,526 6,139.19
    • Movements in working capital :(Increase)/Decrease in payable to subsidiary (351,422) (155.19) 267,093 121.24(Increase)/Decrease in Loans & Adv ances (106,686) (49.08) — 0.00Increase/(Decrease) Current Liabilities & Provisions 130,333 60.43 (12,534) (4.06)Cash generated from operations (344,165) 2,714.22 287,085 6,256.37Loan to subsdiaries (5,264,743) (2,421.78) — 0.00Cash flow before extraordinary items (5,608,907) 292.44 287,085 6,256.37Add/(Less): Extraordinary items — — — —Net Cash flow from Operating Activities (5,608,907) 292.44 287,085 6,256.37B. Cash Flows from Investing ActivitiesInvestment in Subsidaries 0 (3,825.23) (30,000,000) (20,182.45)Interest income received 815,889 363.83 449,913 182.23Net Cash from/(for) Investing Activities 815,889 (3,461.40) (29,550,087) (20,000.22)C. Cash flow from Financing ActivitiesLoan from Holding Company 6,831,221 3,536.58 898,346 1,196.84Preference Capital from Holding Com pany — 552.00 30,000,000 13,248.00Interest Payment (1,341,932) (598.12) (1,571,778) (672.80)Net Cash used in Financing Activities 5,489,290 3,490.46 29,326,569 13,772.04Net Decrease in cash and Cash equivalants during the year 696,271 321.50 63,567 28.19Cash and cash equivalants at the beginning of the year 67,073 29.62 3,506 1.51Cash and cash equivalants at the end of the year 763,344.67 351.12 67,073 29.70Notes:Components of Cash and Cash Equivalents As At 31st Mar, As At 31st Mar, As At 31st Mar, As At 31stMar,2011 2011 2010 2010i) Cash Balance in hand — — — —
    • ii) Balance with Scheduled and other Banks :- in Current Account 763,345 351.13 67,073 29.62Total 763,344.67 351.13 67,073 29.62CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2011As per our report of the event date For and on behalf of the Board of Directors ofA V Transworks LimitedFor S. R. Batliboi & Co.,Firm registration number: 301003EChartered AccountantsDirectorper Vijay Maniar Michael IseyemiPartnerMembership No.:36738Place: Mumbai Place: TorontoDate: July 27, 2011 Date: July 25, 2011(40)A V TRANSWORKS LIMITEDCMYKSCHEDULES FOR THE YEAR ENDED 31ST MARCH, 2011As At As At As At As At31st March, 31st March, 31st March, 31st March,2011 2011 2010 2010CAD ` Lacs CAD ` LacsSCHEDULE - 1 - SHARE CAPITALAuthorised Capital
    • 127,000,001 Equity Shares of CAD$ 1 each 127,000,001 58,420.00 127,000,001 56,083.20Issued, Subscribed & Paid up Capital127,000,001 Equity Shares of CAD$ 1each fully paid up 127,000,001 58,420.00 127,000,001 56,083.2030,000,000 Preference shares(P.Y. Nil) of CAD$ 1 each 30,000,000 13,800.00 30,000,000 13,248.00(All the above equity and Preferenceshares are held by Holding Company– Aditya Birla Minacs Worldwide Limited)Total 157,000,001 72,220.00 157,000,001 69,331.20SCHEDULE - 2 - INVESTMENTSLong Term Investments Long Term Investments (At Cost)In Subsidiary CompaniesUnquoted, fully paid-up27,945,822 shares (P.Y. 27,945,822shares) of CAD$ 1 each in AdityaBirla Minacs Worldwide Inc. 157,571,131 72,482.72 157,571,131 69,583.4120,321,721 Preference shares(P.Y. 20,321,721 shares) of CAD$1 each in Aditya Birla MinacsWorldwide Inc. 20,321,721 9,347.99 20,321,721 8,974.0730,000,000 Preference shares(P.Y. Nil) of CAD$ 1 each in AdityaBirla Minacs Worldwide Inc. 30,000,000 13,800.00 30,000,000 13,248.00Total 207,892,852 95,630.71 207,892,852 91,805.48
    • SCHEDULE - 3 - CASH AND BANK BALANCESBalance with other Banks :- In Current Account 763,345 351.13 67,073 29.62Total 763,345 351.13 67,073 29.62SCHEDULE - 4 - LOANS & ADVANCES(Unsecured considered good)i) Tax Deducted at Source 106,686 49.08 — —i) Loans to subsdiaries 5,264,743 2,421.78 — —Total 5,371,429 2,470.86 — —SCHEDULE - 5 - CURRENT LIABILITIES & PROVISIONSi) Sundry Creditors 2,536 1.17 3,864 1.71ii) Acrrued Interest on Secured Loan from Bank 79,045 36.36 83,926 37.06iii) Acrrued Interest on Loan from Holding Company 0 — 171,041 75.53iv) Payable to Subsidiary Company 0 — 351,422 155.19v) TDS Payable 150,743 69.34 19,081 8.43232,324 106.87 629,334 277.92PROVISIONSi) Provision for Taxation /Minimum Alternative Tax 2,607 1.20 2,607 1.152,607 1.20 2,607 1.15Total 234,931 108.07 631,941 279.07For the For the For the For theYear Ended Year Ended Year Ended Year Ended31st March 31st March 31st March 31st March2011 2011 2010 2010
    • CAD ` Lacs CAD ` LacsSCHEDULE - 6 - OTHER INCOMEInterest receivedi) Bank interest — — — —ii) DBS Loan — — — —iii) Intercompany Loan 765,846 342.78 157,375 68.61iv) Others — — — —Total 765,846 342.78 157,375 68.61SCHEDULE - 7 - ADMINISTRATIVE EXPENSESi) Foreign Exchange Loss/(Income) 2,194 0.98 (43,050) (18.76)ii) Legal & Professional Charges — — — —iii) Telephone Expenses — — — —iv) Rates & Taxes 954 0.43 3,327 1.45v) Miscellaneous Expenses 8,135 3.64 — —Total 11,283 5.05 (39,723) (17.31)SCHEDULE - 8 - FINANCIAL CHARGESi) Bank charges 5,106 2.30 7,196 3.14ii) Interest on Term Loan from Bank 914,327 409.24 1,040,947 453.79iii) Interest on Inter company Loan 251,683 112.65 456,787 199.13Total 1,171,116 524.19 1,504,930 656.06ACCOUNTS FOR THE YEAR ENDED 31S T MAR CH, 2011SCHEDULE - 9: - NOTES TO ACCO UNTS1. BACKGR O UNDAV TRANSWORKS LTD (“the Compan y’) is domiciled in Canada and accordingly thefinancial statements have been prepared in Canadian Dollars (CAD), which is the
    • reporting currency of the Company.2. ACCOUNTING POLICIESa. Basis of preparationThe financial statements have been prepared to comply in all material respectswith the accounting principles generally accepted in India. The financialstatements have been prepared under the historical cost convention on anaccrual basis.b. Use of estimatesThe preparation of financial statements in conformity with generally acceptedaccounting principles requires management to make estimates andassumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent liabilities at the date of the financial statements andthe results of operations during the reporting period. Although theseestimates are based upon management’s best knowledge of current eventsand actions, actual results could differ from these estimates.c. InterestInterest on Loan given / taken is booked on a time proportion basis taking intoaccount the amounts of loan given and taken and the rate of interestd. Transactions in Foreign Currencyi) Initial RecognitionForeign currency transactions are recorded in the reporting currency, byapplying to the foreign currency amount the exchange rate between thereporting currency and the foreign currency at the date of the transaction.ii) ConversionForeign currency monetary items are reported using the closing rate.
    • Non-monetary items, which are carried in terms of historical costdenominated in a foreign currency, are reported using the exchange rateat the date of the transaction.(41)A V TRANSWORKS LIMITEDCMYKiii) Exchange DifferencesExchange differences arising on the settlement of monetary items or onreporting company’s monetary items at rates different from those at whichthey were initially recorded during the year, or reported in previous financialstatements, are recognized as income or as expenses in the year in whichthey occur.iv) Forward Exchange Contracts not intended for trading or speculationpurposesThe premium or discount arising at the inception of forward exchangecontracts is amortised as expense or income over the life of the contract.Exchange differences on such contracts are recognised in the statementof profit and loss in the year in which the exchange rates change. Anyprofit or loss arising on cancellation or renewal of forward exchangecontract is recognised as income or as expense for the year.e. ProvisionA provision is recognized when an enterprise has a present obligation as aresult of past event; it is probable that an outflow of resources will be requiredto settle the obligation, in respect of which a reliable estimate can be made.Provisions are not discounted to its present value and are determined based
    • on best estimate required to settle the obligation at the balance sheet date.These are reviewed at each balance sheet date and adjusted to reflect thecurrent best estimates.f. Borrowing costsBorrowing costs directly attributable to the acquisition, construction orproduction of an asset that necessarily takes a substantial period of time to getready for its intended use or sale are capitalized as part of the cost of therespective asset. All other borrowing costs are expensed in the period theyoccur. Borrowing costs consist of interest and other costs that an entity incursin connection with the borrowing of funds.g. Investmentsi) Investments that are readily realizable and intended to be held for notmore than a year are classified as current investments. All otherinvestments are classified as long-term investments.ii) Long-term investments are valued at cost. Any decline in the value ofinvestments other than temporary, is provided for and charged to theprofit & loss account.Cash and cash equivalents for the purposes of cash flow statementcomprise cash at bank and in hand and short-term investments with anoriginal maturity of three months or less.3. Related Party Transactions(a) Name and nature of relationship of the Related Party where control exists:Ultimate Holding Company Aditya Birla Nuvo LimitedHolding Company Aditya Birla Minacs Worldwide Limited (ABMWL)Fellow Subsidiaries TransWorks Inc., USA (TW Inc)
    • Aditya Birla Minacs Philippines Inc. (formerlyTransWorks BPO Philippines Inc.) (ABMPI)Subsidiaries Aditya Birla Minacs Worldwide Inc. Canada(ABMWI)Minacs Kft, Hungary.Minacs Limited, UK.Minacs Worldwide S.A. de C.V., MexicoThe Minacs Worldwide GmbH, GermanyThe Minacs Group, USAAditya Birla Minacs BPO Limited, UK (formerlyCompass BPO Limited) (w.e.f. March 9, 2010)Compass BPO, Inc, U.S.A (w.e.f. March 9, 2010)Aditya Birla Minacs BPO Private Limited (FormerlyCompass Business Process Outsourcing Limited,India) (w.e.f. March 9, 2010)Compass BPO FZE, U.A.E (w.e.f. March 9, 2010up to 25 February 25, 2011)Bureau of Collection recovery, LLC, Canada (w.e.fJune 2, 2010)Bureau of Collections Recovery (BCR) Inc., Canada(w.e.f March 4, 2011)(b) Summary of transactions with related parties:(In CAD)Particulars As at As atMarch 31, 2011 March 31, 2010
    • Transactions during the year withHolding CompanyLoan Repayment 16,618,917 7,500,000Loan Taken 23,450,137 8,450,000Interest on loan from ABMWL 251,683 456,787Transactions during the yearwith Subsidiary (ABMWI)Investment Nil 30,000,000Loan repayment from subsidiary 18,331,745 7,500,000Loan given to subsidiary 23,596,488 7,500,000Interest on loan given 765,846 157,375Related Party BalancesHoldingLoan taken from Holding company 28,255,751 21,424,531Interest Payable to Holding company Nil 171,041Corporate guarantee given by Holding Co. 30,901,850 30,901,850Subsidiary (ABMWI)Investment 207,892,852 207,892,852Loan given to subsidiary 5,264,743 NilInterest receivable from subsidiary 56,919 106,963Forward contract with the subsidiary forhedging loan payable (USD 24.5 million) 30,901,850 30,901,8504. Derivative InstrumentsThe Company uses derivative financial instruments such as forward exchangecontracts, currency swaps and interest rate swaps to hedge its risks associated with
    • foreign currency fluctuations and interest rate.Particulars Amount Amount in Foreign Purpose(CAD) Foreign currencyCurrencyCurrency Swap 20,321,721 1,983,400,000 JPY To hedge Loan(20,321,721) (1,983,400,000) PayableForward contract 30,901,850 24,500,000 USD To hedge Loan(30,901,850) (24,500,000) PayableFigures in bracket represents previous year amount.All the above contracts are for hedging and not for speculation.As at March 31, 2011 all the foreign currency exposure stands hedged by derivativeinstrument or otherwise.5.5. Previous year figures have been regrouped wherever necessary to conform withcurrent year figures.For and on behalf of the Board of Directors ofAV TRANSWORKS LTDFor S. R. Batliboi & Co.,Firm registration number: 301003EChartered AccountantsMichael Iseyemiper Vijay Maniar per Vijay Maniar DirectorPartnerMembership No. 36738Place: Mumbai Place : TorontoDate : July 27, 2011 Date : July 25, 2011
    • (42)CMYKADITYA BIRLA MINACS WORLDWIDE INC., CANADAAUDI TORS’ REPOR TTo the Board of Directors ofAditya Birla Minacs Worldwide Inc.We have audited the consolidated Balance Sheet of Aditya Birla MinacsWorldwide Inc. as at March 31, 2011 and the consolidated statementsof operations and deficit, comprehensive income (loss), changes inshareholders’ equity (deficiency) and Cash Flows for the year thenended. These financial statements are the responsibility of theCompany’s management. Our responsibility is to express an opinionon these financial statements based on our audit.We conducted our audit in accordance with Canadian generallyaccepted auditing standards. Those standards require that we plan andperform an audit to obtain reasonable assurance whether the financialstatements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts anddisclosures in the financial statements. An audit also includes assessingthe accounting principles used and significant estimates made bymanagement, as well as evaluating the overall financial statementpresentation.In our opinion, these consolidated financial statements present fairly,in all material respects, the financial position of the Company as atMarch 31, 2011, and the results of its operations and its cash flows for
    • the year then ended in accordance with Canadian generally acceptedaccounting principles.Toronto, Canada, Chartered AccountantsApril 25, 2011. Licensed Public Accountants(43)CMYKADITYA BIRLA MINACS WORLDWIDE INC., CANADAConsolidated Balance Sheet as at 31st Marc h 201131-Mar-11 31-Mar-11 31-Mar-10 31-Mar-10CAD$’000 INR/Cr CAD$’000 INR/CrASSETSCurrent assetsCash $3,524 16.21 $4,230 18.68Accounts receivable and unbilledrevenue (Notes 10 and 17) 68,442 314.83 46,768 206.53Other receivables (Notes 4, 9(a) and (b)) 28,556 131.36 19,624 86.66Prepaid expenses 2,242 10.31 3,002 13.26Income taxes recoverable 82 0.38 80 0.35Future income taxes (Note 15) 601 2.76 273 1.21$103,447 475.86 73,977 326.68Long-term receivables — — — —Future income taxes (Note 15) — — 401 1.77Property, plant and equipment, net(Notes 5, 10 and 14) 20,094 92.43 24,424 107.86Deferred development costs (Note 6) 2,574 11.84 2,463 10.88
    • Intangible assets (Note 7) 21,037 96.77 8,048 35.54Goodwill (Note 8) 17,165 78.96 10,070 44.47Total Assets $164,317 755.86 $119,383 527.20LIABILITIESCurrent liabilitiesAccounts payable and accrued liabilities(Notes 4, 11, 14 and 17) $33,156 152.52 $27,403 121.01Long-term debt (Note 10) 50,470 232.16 33,914 149.76Income and other taxes payable 176 0.81 233 1.03Deferred grant and governmentassistance (Note 9c) 858 3.95 — —Obligations under capital leases (Note 13) — — 1,643 7.26$84,660 389,44 63,193 279.06Accrued Liabilities relating tooperating leases (Note 14) 4,101 18,86 4,351 19.21Deferred grant and governmentassistance (Note 9(c)) — — 858 3.79Future tax liabilities (Note 15) 3,429 15,77 2,509 11.0892,190 424.07 70,911 34.08Commitments and contingencies (Note 13)SHAREHOLDERS’ EQUITYShare capital (Note 12) 120,393 553.81 120,393 531.66Accumulated other comprehensive loss (3,784) (17.41) (3,087) (13.63)Deficit (44,482) (87.18) (68,834) (196.17)Exchange Fluctuation on Translation (117.44) (107.79)
    • 72,127 331.78 48,472 214.06Total Liabilities andShareholders’ Equity $164,31 7 755.86 $119,383 527.20See accompanying notes to the financial statementsFE Conversion Rate for Cdn $ to INRas at end of year 46.00 44.16Consolidated Statement of Operations and DeficitYear ended Marc h 31,2011 2011 2010 2010CAD$’0 0 0 INR/Cr CAD$’0 0 0 INR/CrRevenues (Note 17) $308,192 1,379.40 $282,615 1,232.02Direct expenses (Notes 9(a) and (b)) 214,143 958.45 208,598 909.35Gross profit 94,049 420.94 74,017 322.67Selling, general and administrativeexpenses (Notes 9(a) and (b)) 56,344 252.18 52,851 230.40Earnings before depreciation andamortization, restructuring charges,interest, financing expensesand income taxes 37,705 168.76 21,166 92.27Depreciation and amortization(Notes 5 and 7) 11,344 50.77 9,974 43.48Restructuring charges (Note 14) 1,170 5.24 3,828 16.69Interest and financing expenses (Note 10) 2,516 11.26 2,629 11.46Income (loss) before income taxes 22,675 101.49 4,735 20.64Provision for income taxes
    • Current (228) (1.02) 1,093 4.76Future (1,449) (6.49) 179 0.78(1,677) (7.51) 1,272 5.55Net income (loss) for the year 24,352 108.99 3,463 15.10Deficit, beginning of year (68,834) (196.17) (72,297) (211.27)Deficit, end of year ($44.482) (87.18) ($68,834) (196.17)See accompanying notes tothe consolidated financial statementsFE Conversion Rate for Cdn $ to INR 44.76 43.59Deepak J. PatelPlace: Toronto Chief Executive OfficerDeepak J. PatelPlace: Toronto Chief Executive OfficerConsolidated Statement of Comprehensive income (Loss)Year ended Marc h 31,2011 2011 2010 2010CAD$’0 0 0 INR/Cr CAD$’0 0 0 INR/CrNet income (loss) for the year 24,352 1 08.99 $3,463 15.10Unrecognized gain (loss) on foreigncontracts and options (750) (3.49) 18,774 82.91Change in foreign currency translationon foreign operations 53 0.25 (7,570) (33.43)Exchange Fluctuation on Tr anslation (0.74) (5.57)Comprehensive income (loss)f or the y ear $23,655 105.01 $14,667 59.01
    • (44)CMYKADITYA BIRLA MINACS WORLDWIDE INC., CANADAConsolidated Statement of Changes in Shareholders’ Equity (Deficiency)CAD Table A ccumulated Tot alOther Shareholders’s(thousands of dollars, e x cept Common Share R edeemable Preference R edeemable PreferenceComprehensive Equitynumber of shares) Shares Capital Shares – Series A Shares – Series B L oss Deficit (Deficiency)B alance, March 31, 2009 27,945,822 $70,071 20,321,721 $20,322 — — ($1 4,291) ($72,297) $3,805Issued during the year — — — — 30,000,000 30,000 — — $30,000Unrecognized gain on foreign currencyforward contracts and options — — — — — — $18,774 $18,774Change in foreign currency translationon self-sustaining foreign operations — — — — — — ($7,570) — ($7,570)Net loss for the year — — — — — — — $3,463 $3,463Balance, March 31, 2010 27,945,822 $70,071 20,321,721 $20,322 30,000,000 30,000 ($3,087) ($68,834)$48,472Issued during the year — — — — — — — — —Unrecognized gain on foreign currencyforward contracts and options — — — — — — ($750) — ($750)Change in foreign currency translationon self-sustaining foreign operations — — — — — — $53 — $53Net income for the year — — — — — — — $24,352 $24,352Balance, March 31, 2011 27,945,822 $70,071 20,321,721 $20,322 30,000,000 30,000 ($3,784) ($44,482)$72,127Audited Consolidated St atements of Changes in Shareholders ’ Deficiency
    • INR Table A ccumulated Tot alOther Shareholders’s(INR/Cr , ex cept f or number Common Share R edeemable Preference R edeemable PreferenceComprehensive Equityof shares) Shares Capital Shares – Series A Shares – Series B L oss Deficit (Deficiency)B alance, March 31, 2009 27,945,822 326.30 20,321,721 94.63 — — (65.74) (332.57) 17.50Issued during the year — — — — 30,000,000 139.70 — — 138.00Unrecognized gain on foreign currencyforward contracts and options — — — — — — 86.36 86.36Change in foreign currency translationon self-sustaining foreign operations — — — — — — (34.82) — (34.82)Net loss for the year — — — — — — — 15.10 15.10B alance, March 31, 2010 27,945,822 326.30 20,321,721 94.63 — 1 39.70 (1 4.20) (31 7.47) 222.1 4Issued during the year — — — — — — — — 0.00Unrecognized gain on foreign currencyforward contracts and options — — — — — — (3.45) — (3.45)Change in foreign currency translationon self-sustaining foreign operations — — — — — — 0.24) — 0.24Net income for the year — — — — — — — 108.99 108.99Exchange Fluctuation on Translation 0.00 0.00 0.00 121.30 3.86B alance, March 31, 2011 27,945,822 326.30 20,321,721 94.63 30,00 0,00 0 1 39.70 (1 7.41) (87.1 8) 331.78(45)CMYKADITYA BIRLA MINACS WORLDWIDE INC., CANADAConsolidated Statement of Cash Flo ws
    • Year ended Marc h 31,2011 2011 2010 2010CAD$’0 0 0 INR/Cr CAD$’0 0 0 INR/CrOPERATING ACTIVITIESNet income (loss) for the year $24,352 112.02 $3,463 15.29Adjustments to reconcile net income (loss) to cash provided by operating activities (Note 16) 9,94245.73 10,620 46.90Net change in non-cash working capital balances related to operations (Note 16) (22,191) (102.08) 1620.72Cash flow provided b y operating activities 12,103 55.67 1 4,245 62.91INVESTING ACTIVITIESPurchase of property, plant and equipment (6,216) (28.59) (5,012) (22.13)Purchase of intangibles (2,162) (9.95) 0 0.00Proceeds on disposal of property, plant and equipment 19 0.09 108 0.48Deferred development costs (2,699) (12.42) (2,693) (11.89)Investment in subsidiary (Note 3) (19,889) (91.49) (7,853) (34.68)Cash on acquisition of subsidiary (Note 3) 1,724 7.93 257 1.13Cash flows used in inv esting activities (29,223) (1 34.43) (1 5,193) (67.09)FINANCING ACTIVITIESRepayment of long-term debt (Note 10) (49,344) (226.98) (31,774) (140.31)Receipt of short-term debt (Note 11) 5,265 24.22 0 0.00Receipt of long-term debt (Note 10) 62,002 285.21 8,909 39.34Repayment of obligations under capital leases (1,643) (7.56) (4,342) (19.17)Issuance of share capital (Note 12) 0 0.00 30,000 132.48Cash flow provided b y (used in) financing 16,280 74.89 2,793 1 2.33Eff ect of foreign cur rency translation on cash 134 0.62 (702) (3.1 0)
    • Net increase (decrease) in cash (706) (3.25) 1,143 5.05Cash beginning of year 4,230 19.46 3,087 13.63Cash end of y ear $3,524 1 6.21 $4,230 1 8.68FE Conversion Rate for Cdn $ to INR as at end of year 46.00 44.16See accompanying notes to the consolidated financial statements.(46)CMYKADITYA BIRLA MINACS WORLDWIDE INC., CANADAand assumptions affect the reported amounts of assets and liabilities and disclosure ofcontingent assets and liabilities at the date of the consolidated financial statementsand the reported amounts of revenues and expenses during the year. Actual resultscould differ from those estimates.Revenue RecognitionThe Company derives revenues by providing BPO solutions and consultingarrangements. Payment terms may vary by contract. The Company recognizesrevenues at the time services are performed and when the price is fixed ordeterminable and collection is reasonably assured.The majority of revenues are recognized based on the billable hours or minutesrendered as defined in the client contract. The rate per billable hour or minute chargedis based on a predetermined contractual rate as agreed in the underlying contract.This contractual rate fluctuates based on the Company’s performance against certainpredetermined criteria related to quality and performance. Some clients are entitledto service credits when the Company is not in compliance with certain obligations asdefined in the client contract. Such service credits are recorded as a reduction ofrevenues as incurred based on a measurement of the Company’s obligation under
    • the terms of the client contract.For some contracts, the Company is paid by its customer based on achievement ofclient-determined criteria specified in the client contract such as full-time equivalents,units processed or completed contacts. The Company recognizes this performance-based revenue bymeasuring its actual results against the performance criteriaspecified in the contracts.Amounts collected from customers prior to the performance of services are recordedas deferred revenue. These advances are amortized to revenues in accordance withthe Company’s policy on revenue recognition.The Company classifies reimbursements received from customers for out-of-pocket expenditures asrevenues. The Company incurs out-of-pocket expendituressuch as expenses related to travel, postage and telecommunications costs forwhich customers have agreed to reimburse Minacs. The corresponding costassociated with this revenue is recorded within direct expenses. Some customersagree to reimburse the Company for initial training and recruiting costs over aspecified period of time. The revenue for these costs is recorded over the periodof time stipulated within the contract with a corresponding cost recorded withindirect expenses.Property, Plant and EquipmentProperty, plant and equipment are stated at cost less accumulated amortization.Amortization is provided on a straight-line basis over the estimated useful lives of theassets. Computer equipment is amortized over a four-year life. Communicationsequipment is amortized over five to seven-year lives. Furniture and fixtures areamortized over seven to ten-year lives. Leasehold improvements are amortized overthe term of the lease.Leases
    • Leases are classified as either capital or operating leases. Leases that substantiallytransfer all of the benefits and risks of ownership of property to the Company areaccounted for as capital leases. At the time a capital lease is entered into, an asset isrecorded together with its related long-term obligation to reflect the acquisition andfinancing. Equipment recorded under capital leases is amortized on the same basisas property, plant and equipment. Rental payments under operating leases areexpensed as incurred.Business Combinations, Goodwill and Intangible AssetsThe Company follows the guidance in the CICA Handbook Section 1581, BusinessCombinations, which requires all business combinations to be accounted for usingthe purchase method. In addition, any goodwill and intangible assets acquired in abusiness combination are accounted for under CICA Handbook Section 3064,Goodwill and Intangible Assets. This section requires that goodwill not be amortized,while identified intangible assets with finite useful lives be amortized over theiruseful lives.Goodwill represents the excess of the purchase price over the fair value of thenet identifiable assets acquired. Goodwill and indefinite life intangible assets aretested for impairment annually or more frequently if events or changes incircumstances indicate that those assets might be impaired. The impairmenttest is carried out in two steps. In the first step, the identification of a potentialimpairment is determined by comparing the fair value of the reporting unit to itscarrying value. Fair value is based on estimates of discounted future cash flows.When the fair value of the reporting unit is less than its carrying value, the fairvalue is allocated to all its assets and liabilities based on their fair values. Theamount that the fair value of the reporting unit exceeds the amounts assigned to
    • its assets and liabilities is the fair value of the goodwill. In the second step,impairment is determined by comparing the fair value of goodwill to its carryingvalue. Any shortfall is charged to income.Intangible assets with finite useful lives acquired through business combinationsare recorded at their fair value at the date of acquisition. An impairment loss onan intangible asset with a finite useful life is recognized when its carrying valueexceeds the total undiscounted cash flows expected from its use and disposition.NOTES T O CONSOLIDA TED FINANCIAL ST A TEMENTSMARCH 31, 20111 NATURE OF BUSINESSAditya Birla Minacs Worldwide Inc. (the “Company” or “Minacs”) is incorporatedunder the Ontario Business Corporations Act. The Company is wholly-owned byAV Transworks Limited Canada, a wholly-owned subsidiary of Aditya Birla MinacsWorldwide Limited, India, which in turn is a subsidiary of Aditya Birla Nuvo Limited.The Company operates in one segment as a provider of business processoutsourcing (“BPO”) solutions. These incorporate contact centre solutions,integrated marketing services and back office administration. Operating in multiplelanguages, the Company serves customers throughout North America, Europe,Latin America and the Pacific Rim from its operating locations in North Americaand Europe.2 SIGNIFICANT ACCOUNTING POLICIESBasis of PresentationThese consolidated financial statements have been prepared in accordance withCanadian generally accepted accounting principles (“GAAP”) and include the accountsof the Company and its subsidiaries. All significant inter-company balances and
    • transactions among these entities have been eliminated on consolidation.Changes in Accounting PoliciesEffective April 1, 2009, the Company adopted the following new Canadian Instituteof Chartered Accountants (“CICA”) accounting standards and Emerging IssuesCommittee (“EIC”) abstract.Section 3064, Goodwill and Intangible Assets, which replaced Section 3062, Goodwilland Other Intangible Assets. The standard establishes guidelines for the recognition,measurement, presentation and disclosure of goodwill and intangible assetssubsequent to initial recognition. As a result of the adoption of this standard, theCompany has reclassified computer software from property, plant and equipment tointangible assets and has separately disclosed deferred development costs on theconsolidated balance sheet.The following table summarizes the adjustment that was recorded in the consolidatedfinancial statements.Increase (Decrease)31-Mar-11 31-Mar-11 31-Mar-10 31-Mar-10CAD$’000 INR/Cr CAD$’000 INR/CrProperty, plant and equipment (net) $0 0.00 (3,841) (16.96)Deferred development costs $0 0.00 $0 0.00Intangible assets $0 0.00 $3,841 16.96Section 1000, Financial Statement Concepts. The objectives of this Section are toreinforce a principle-based approach to the recognition of costs as assets and toclarify the application of the concept of matching revenue and expenses in Section1000. Collectively, this change brings the Canadian practice closer to InternationalFinancial Reporting Standards (“IFRS”) and U.S. generally accepted accounting
    • principles by eliminating the practice of recognizing as assets a variety of start-up,pre-production and similar costs that do not meet the definition and recognition criteriaof an asset. Adoption of this guidance had no impact on the Company’s consolidatedfinancial statements.EIC 173, Credit Risk and the Fair Value of Financial Assets and Financial Liabilities.This guidance clarifies that an entity’s own credit risk and the credit risk of thecounterparty should be taken into account in determining the fair value of financialassets and financial liabilities including derivative instruments. Adoption of thisguidance had no impact on the Company’s consolidated financial statements.The adoption of the above pronouncements had no impact on opening deficit.Future Accounting ChangesIn 2006, the CICA announced that accounting standards in Canada will convergewith IFRS. The Company will have the option of reporting under IFRS beginningJanuary 1, 2011, with comparative data for the prior year. IFRS uses a conceptualframework similar to Canadian GAAP, but there could be significant differences onrecognition, measurement and disclosures that will need to be addressed.In September 2009, the CICA approved the final accounting standards for privateenterprises in Canada. The new standards (GAAP for private enterprises) are availablefor early adoption. Under the new standards, private enterprises will have a choiceof reporting in accordance with Canadian GAAP by adopting either the same set ofaccounting standards as publicly accountable enterprises (i.e., IFRS) or the new GAAPfor private enterprises. The existing accounting standards in the CICA Handbook willbe available until 2011, at which time they will be withdrawn. As such, enterpriseswill be able to adopt GAAP for private enterprises in 2009, 2010 or 2011. The Companyis considering the impact of these new standards and assessing whether it will adopt
    • IFRS or GAAP for private enterprises.Use of EstimatesThe preparation of these consolidated financial statements in conformity with CanadianGAAP requires management to make estimates and assumptions. These estimates(47)CMYKADITYA BIRLA MINACS WORLDWIDE INC., CANADAThe amount of loss is determined by deducting its fair value based on undiscountedcash flows expected from its use and disposition from its carrying value. TheCompany reviews definite life intangible assets for impairment whenever eventsor changes in circumstances indicate that the carrying value may not berecoverable. Amortization of intangible assets, other than computer software, isprovided on a straight-line basis over ten years. Computer software is amortizedover four to five-year lives.Asset ImpairmentThe Company follows the guidance in CICA Handbook Section 3063, Impairmentof Long-Lived Assets , and CICA Handbook Section 3855, Financial Instruments -Recognition andMeasurement . The Company evaluates the carrying value oflong-lived assets for potential impairment annually or more frequently if eventsor circumstances warrant a review. The carrying value of such assets is consideredimpaired when the anticipated net recoverable amount of the asset is less thanits carrying value or when the change in value is other than temporary. In thatevent, the carrying value of the asset is adjusted to fair value and an impairmentloss is charged to income. The Company reviews long-lived assets for impairmentwhenever events or changes in circumstances indicate that the carrying valuemay not be recoverable.
    • Income TaxesThe Company follows the liability method of accounting for income taxes. Under thismethod, future tax assets and liabilities are determined based on differences betweenthe financial reporting and tax bases of assets and liabilities, and are measured usingsubstantively enacted tax rates and laws that are expected to be in effect when thedifferences are expected to reverse. Valuation allowances are established whennecessary to reduce future tax assets to the estimated amount that is more likelythan not to be realized.Government AssistanceGovernment assistance towards current expenses is included in the determinationof income for the year as a reduction of the expenses to which it relates. The Companyhas made a number of estimates and assumptions in determining the amount eligiblefor government assistance. It is possible that the allowed amount of assistance couldbe materially different from the recorded amount upon assessment by the respectivegovernment agency.Equity and Comprehensive IncomeComprehensive income is the change in equity from transactions and other eventsfrom non-owner sources. Other comprehensive income refers to items recognizedin comprehensive income that are excluded from net income calculated in accordancewith Canadian GAAP.Financial InstrumentsAll financial instruments, including derivatives, are measured on the consolidatedbalance sheet at fair value except for loans and receivables, held-to-maturityinvestments and other financial liabilities, which are measured at amortizedcost. Subsequent measurement and changes in fair value will depend on their
    • initial classification, as follows: held-for-trading financial assets are measuredat fair value and changes in fair value are recognized in net income; available-for-sale financialinstruments are measured at fair value with changes in fairvalue recorded in other comprehensive income until the investment isderecognized or impaired, at which time the amounts would be recorded in netincome. The Company’s financial assets and liabilities are generally classifiedand measured as follows:Asset/Liability Category MeasurementCash Held-for-trading Fair valueReceivables Loans and receivables Amortized costPayables and accrued liabilities Other financial liabilities Amortized costLong-term debt Other financial liabilities Amortized costObligations under capital leases Other financial liabilities Amortized costDeferred grant and Other financial liabilities Amortized costgovernment assistanceThe Company had no financial instruments classified as available-for-sale during theyear ended March 31, 2010.Financing costs and credit facility arrangement fees associated with the issuance oflong-term debt are netted against the carrying value of the related debt and areamortized using the effective interest rate method to interest expense over the periodto maturity of the related debt.HedgesThe Company applies hedge accounting to forward rate contracts, options and cross-currency swapagreements. These contracts have been designated as cash flowhedges, and are measured at fair value at the end of each period. The resulting gain/loss on recognition of the forward rate contracts, options and cross-currency swap
    • agreements is recognized in other comprehensive income.Foreign Exchange TranslationForeign operations are considered to be self-sustaining and are translated intoCanadian dollars using the current rate method. Assets and liabilities are translatedusing the exchange rate in effect at the consolidated Balance Sheet date andrevenues and expenses are translated at the average rate for the month in whichthe transaction is recorded. Exchange gains or losses on translation of theCompany’s investments in these subsidiaries are recorded in accumulated othercomprehensive income.Research and DevelopmentResearch costs are expensed as incurred. Development costs that meet specificcriteria related to technical, market and financial feasibility are capitalized and amortizedover the useful life of the technology when put into use.3 ACQUISITIONa. Compass BPO Limited (Compass)On March 9, 2010, the Company acquired Compass BPO Limited(“Compass”) for cash consideration of $7,853,000 (INR 34.68 Cr) includingacquisition costs of $39,000 (INR 0.17 Cr). The purchase has been accountedfor under the purchase method and, accordingly, the results of operationsare included in the consolidated financial statements from the date ofacquisition. The consideration and allocation of the purchase price areas follows:Compass BPO Limited (Compass) CAD$ INR/CrNet working capital $903 0.00Property, plant and equipment 476 0.00
    • Customer relationships (Note 7) 4,138 0.02Goodwill (Note 8) 3,718 0.02Future income tax liability (1,382) (0.01)7,853 0.04The customer relationships will be amortized on a straight-line basis over ten years.Included in the net working capital is $257,000 (INR 1.13 Cr) of cash.b. Bureau of Collection Recovery, LLC (BCR)On June 1, 2010, the Company acquired BCR, a third-party collection agencylocated in Minnesota, for cash consideration of $20,026,000 (INR 88.43 Cr).In December 2010, a final settlement review resulted in the considerationbeing reduced by $137,000 (INR 0.60 Cr) to $19,889,000 (INR 87.83 Cr). Thepurchase has been accounted for under the purchase method and, accordingly,the results of operations are included in the consolidated financial statementsfrom the date of acquisition. The consideration and allocation of the purchaseprice are as follows:Bureau of Collection Recovery, LLC (BCR) CAD$ INR/CrNet working capital $3,025 0.01Property, plant and equipment 244 0.00Customer relationships (Note 7) 8,135 0.04Licenses 1,085 0.00Non-compete agreement 79 0.00Goodwill (Note 8) 7,321 0.0319,889 0.09The customer relationships will be amortized on a straight-line basis over ten years,the licenses over three years and the non-compete agreement over five years. Included
    • in the net working capital is $1,724,000 (INR 7.61 Cr) of cash.4 OTHER RECEIVABLESOther receivables are comprised of:31-Mar-11 31-Mar-11 31-Mar-10 31-Mar-10CAD$’000 INR/Cr CAD$’000 INR/CrTax credits recoverable andother assets (Note 9(a)) $18,778 86.38 $10,818 47.77Other receivable (Note 9(b)) 440 2.02 1,332 5.88Derivative asset (Notes 11 and 17) 9,338 42.95 7,474 33.01B alance, end of y ear $28,556 132.58 $19,624 86.66(48)CMYKADITYA BIRLA MINACS WORLDWIDE INC., CANADA5 PROPERTY, PLANT AND EQUIPMENTIncluded in these figures are assets under capital leases as follows:A ccumulated A ccumulated A ccumulated A ccumulatedCostDepreciation CostDepreciation CostDepreciation CostDepreciation31-Mar-1 1 31-Mar-1 1 31-Mar-1 0 31-Mar-1 0CAD$’0 0 0 CAD$’0 0 0 INR/Cr INR/Cr CAD$’0 0 0 CAD$’0 0 0 INR/Cr INR/CrComputerequipment $30,479 ($26,025) 140.20 (119.72) 28,339 (23,762) 125.15 (104.93)Communicationsequipment 14,499 ($12,815) 66.70 (58.95) 14,218 (12,103) 62.79 (53.45)Furniture andfixtures 16,734 ($10,734) 76.98 (49.38) 16,785 (9,251) 74.12 (40.85)
    • Vehicles 0 $0 0.00 0.00 58 (45) 0.26 (0.20)Leaseholdimprovements 21,110 ($13,154) 97.11 (60.51) 21,088 (10,903) 93.12 (48.15)82,822 (62,728) 385.67 (288.55) 80,488 (56,064) 355.44 (247.58)Less: accumulateddepreciation ($62,728) (288.55) (56,064) (247.58)20,094 92.43 24,424 107.86Included in these figures are assets under capital leases as follows31-Mar-11 31-Mar-11 31-Mar-10 31-Mar-10CAD$’000 INR/Cr CAD$’000 INR/CrCost 0 0.00 15,193 67.09Less: accumulated depreciation 0 0.00 (9,915) (43.78)Net book value 0 0.00 5,278 23.31The assets under capital leases are held as collateral for the capital leaseobligations. For the year ended March 31, 2011, included within amortizationexpense is $745,000 (INR 3.43 Cr) (2010: $1,732,000) (INR 7.65) relating to assetsunder capital leases.6 DEFERRED DEVELOPMENT COSTSDeferred development costs are comprised of:31-Mar-11 31-Mar-11 31-Mar-10 31-Mar-10CAD$’000 INR/Cr CAD$’000 INR/CrBalance, beginning of year $2,463 11.33 546 2.41Additions 2,699 12.42 2,693 11.89Capitalized to computer software (2,532) (11.65) (576) (2.54)Foreign currency translation adjustment ( 56) (0.26) (200) (0.88)
    • B alance, end of y ear $2,574 11.99 $2,463 10.887 INT ANGIBLE A SSE TSIntangible assets consist of:CAD$’0 0 0 CAD$’0 0 0 INR/Cr INR/Cr CAD$’0 0 0 CAD$’0 0 0 INR/Cr INR/Cr31-Mar-11 31-Mar-11 31-Mar-10 31-Mar-10Accumu- Accumu- Accumu- Accumu-lated lated lated latedCost Amorti- Cost Amorti- Cost Depre- Cost Depre-zation zation zation ciation ciationComputersoftware 40,142 (32,312) 184.65 (148.64) 34,119 (30,278) 150.67 (133.71)Customerrelationships(Note 3) 12,273 (1,126) 56.46 (5.18) (5.18) 4,138 (34) 18.27 (0.15)Other 2,880 (812) 13.25 (3.74) (3.74) 812 (672) 3.59 (2.97)Foreign currencytranslationadjustment (30) 22 (0.14) 0.10 0.10 (158) 121 (0.70) 0.5355,265 (34,228) 254.22 (1 59.39) 59.39) 38,911 (30,863) 171.83 (136.29)Less :accumulateddepreciation (34,228) (157.45) (30,863) (136.29)21,037 96.77 96.77 8,048 35.54Included in these figures are intangible assets under capital leases as follows:31-Mar-1 1 31-Mar-1 1 31-Mar-1 0 31-Mar-1 0CAD$’0 0 0 INR/Cr CAD$’0 0 0 INR/CrCost 0 0.00 2,691 11.88
    • Less: accumulated amortizati on 0 0.00 (2,475) (10.93)Net book value 0 0.00 216 0.95The intangible assets under capital leases are held as collateral for the capital leaseobligations. For the year ended March 31, 2011, included within amortization expenseis $Nil (2010: $165,000) (INR 0.76) relating to intangible assets under capital leases.8 GOODWILLGoodwill consists of:31-Mar-11 31-Mar-11 31-Mar-10 31-Mar-10CAD$’000 INR/Cr CAD$’000 INR/CrBalance, beginning of year 10,070 46.32 6,818 30.11Acquisition of Compass (Note 3) 7,321 33.68 3,718 16.42Foreign currency translation adjustment (226) (1.04) (466) (2.06)B alance, end of y ear 17,1 65 79.93 10,070 44.479 DEFERRED GRANT AND GOVERNMENT A SSISTANCE(a) In fiscal 2009, the Company became eligible to receive funding from the OntarioApprenticeship Program. For the year ended March 31, 2011, the Companyrecorded $24,441,000(INR 112.43 Cr) (2010: $10,775,000) (INR 47.58 Cr) as areduction of direct expenses and selling, general and administrative expensesfor these grants. As at March 31, 2011, the Company has recorded $18,778,000(INR 86.38 Cr) (2010: $10,818,000) (INR 47.77 Cr) as part of other receivables.(b) The Company also receives payroll rebates from Nova Scotia Business Inc. ifcertain incremental wage growth is achieved within the Province of Nova Scotia.As at March 31, 2011, the Company has recorded $73,000 (INR 0.34Cr) (2010:$230,000) (INR 1.02Cr) as a payroll rebate receivable, which is included inother receivables. During the year ended March 31, 2011, the Company recorded
    • $73,000 (INR 0.34Cr) (2010: $231,000) (INR 1.02 Cr) as a reduction of directexpenses and selling, general and administrative expenses for this grant.(c) In fiscal 2008, Minacs finalized an agreement with the Province of NewBrunswick to receive a forgivable loan in the amount of $2,260,000 (INR 10.40Cr). The loan provides for forgiveness subject to terms being met in respect ofemployment to be created at a contact centre in that province. To date, Minacshas received $900,000 (INR 4.14 Cr); no amounts were received in fiscal 2010or 2011. As at March 31, 2011, the Company has recorded $858,000 (INR 3.95Cr) (2010: $858,000) (INR 3.79 Cr) as deferred grant and government assistance.If the terms of the loan are not met by December 31, 2011, then the amountremaining as deferred grant and government assistance will need to be repaid.10 LONG-TERM DEBT31-Mar-11 31-Mar-11 31-Mar-10 31-Mar-10CAD$’000 INR/Cr CAD$’000 INR/CrSenior revolving facility fromBank of America 25,813 118.74 33,914 149.76Loan from Bank of America 19,392 89.20 0 0.00Loan from AV Transworks LimitedCanada (Note 11) 5,265 24.22 0 0.0050,470 232.16 33,914 149.76Less: current portion (50,470) (235.02) (33,914) (149.76)0000Senior Revolving Facility – Bank of AmericaThis facility bears interest at 0.9% m argin over bank prime, banker’s acceptance orLIBOR rates. The total commitment available under the senior revolving facility is
    • $40,000,000 (INR 184 Cr), subject to certain borrowing base calculations and certainother restrictive covenants. The facility is a 365-day facility and, as collateral, theCompany has given a first charge on accounts receivable. In addition, this facility isguaranteed by Aditya Birla Nuvo Limited. As at March 31, 2011, the Company is incompliance with applicable bank covenants.Loan from Bank of AmericaThis loan bears interest at 1.50% margin over US LIBOR rates and matures on June1, 2011. This loan is unsecured and is guaranteed by Aditya Birla Nuvo Limited. As atMarch 31, 2011, the Company is in compliance with debt covenants.(49)CMYKADITYA BIRLA MINACS WORLDWIDE INC., CANADALoan from AV Transworks Limited CanadaThis loan is unsecured, bears interest at 6.05% and is payable on demand.Interest RateThe weighted average interest rate on borrowings at March 31, 2011, was 2.62% (2010:2.74%).Interest and financing expenses are comprised of the following amounts:2011 2011 2010 2010CAD$’0 0 0 INR/Cr CAD$’0 0 0 INR/CrInterest expense on loans fromParent Company (Note 11) $765 3.42 $157 0.68Interest expense on long-term debt 884 3.96 1,311 5.72Interest expense on obligationsunder capital leases 38 0.17 313 1.36
    • Other interest expense (income) 2 0.01 19.00 0.08Net interest expense 1,689 7.56 1,800 7.85Amortization of deferredfinancing expenses 0 0.00 83 0.36Bank charges 208 0.93 675 2.94Foreign exchange loss 619 2.77 71 0.31Total interest and financing expenses $2,516 11.26 $2,629 11.4611 RELATED PARTY TRANSACTIONSTransactions with the Aditya Birla Nuvo Limited group of companies are as follows:31-Mar-11 31-Mar-11 31-Mar-10 31-Mar-10CAD$’000 INR/Cr CAD$’000 INR/CrInterest charged on long term debt $765 3.42 $157 0.68Reimbursable expenses in statementof operations and deficit $5,426 24.29 $6,934 30.23Capitalised in the consolidatedBalance Sheet under deferreddevelopment costs and intangi bles $2,138 9.57 — —Short-term debt (Note 10) $5,265 23.56 — —Net amount due to related partiesin respect of accrued interest andreimbursable e xpenses $655 3. 05 $1,067 4.71These transactions are measured at the exchange amounts of consideration establishedand agreed to by the related parties.In fiscal 2010, the Company entered into a forward contract agreement with AVTransworks Limited Canada for U.S $24,500,000 (INR 112.70 Cr) in order to hedge
    • the Company’s anticipated U.S. dollar sales. The fair value gain of the forwardcontract as at March 31, 2011 is $6,913,000 (INR 31.80 Cr) (2010 – $5,699,000)(INR 25.17 Cr) and is recorded as a derivative asset in other receivables (note 4)and other comprehensive income.12 SHARE CAPITALThe Company is authorized to issue an unlimited number of common shares and anunlimited number of preferred shares issuable in series.2011 2010CAD$’000 INR/Cr CAD$’000 INR/CrNumber Numberof Shares Amount Amount of Shares Amount AmountCommon Shares 27,945,822 70,071 322.33 27,945,822 70,071 309.43Redeemable SeriesA Preference Shares 20,321,721 20,322 93.48 20,321,721 20,322 89.74Redeemable Series BPreference Shares 30,000,000 30,000 138.00 30,000,000 30,000 132.48120,393 560.61 120,393 531 .66The Company received $20,000,000 (INR 88.32 Cr) on February 24, 2010, and a further$10,000,000 (INR 44.16 Cr) on March 26, 2010, in cash from its parent company AVTransworks Limited Canada as subscription for Redeemable Series B Preference Sharesthat were issued during 2010.The Series A Preference Shares are redeemable at face value at the option of theCompany, at any time after December 31, 2012. The Series B Preference Shares areredeemable at face value at the option of the Company, at any time after December 31,2014. However, there is no redemption obligation on the Company. The preference
    • shareholders are entitled to a cumulative dividend of 4.50% for Series A and 5% forSeries B on the outstanding preference shares. The payment of dividends is at thediscretion of the Company and subject to availability of profits of the Company.The undeclared dividend as of March 31, 2011, is $3,441,000 (INR 15.83 Cr)(2010: $1,029,312) (INR 4.55 Cr).1 3 COMMI TMENTS AND CONTINGENCIESCommitmentsThe Company has operating leases for its premises, furniture and fixtures and certaincomputer and communications equipment, as well as minimum purchasecommitments for telephone services. The minimum annual payments for the nextfive years and thereafter are as follows:CAD$’000 INR/Cr2012 $9,240 42.502013 8,076 37.152014 8,028 36.932015 5,073 23.342016 4,345 19.99Thereafter 5,049 23.23Tot al commitments $39,811 1 85.39Contingent LiabilitiesOn May 17, 2006, the former major shareholder and founder of the Company, ElaineMinacs, died. The major shareholder of the Company then became the Estate ofElaine Minacs (the “Estate”) together with certain entities controlled by it (the “EMShareholders”) until August 18, 2006, when AV Transworks Limited Canada acquiredthe shares of the Estate and the EM Shareholders.
    • The Company is the owner of a $350,000 (INR 1.61 Cr) whole life insurance policy and a$2,000,000 (INR 9.2 Cr) term life insurance policy insuring the life of Elaine Minacs.The term life policy is a key-man policy, originally required by the Company’s previouslenders. The beneficiary of the policies when they were originally acquired was theCompany. During 2005, the beneficiary of the whole life insurance policy was changed atthe direction of Elaine Minacs. Also, during 2005, the beneficiary of the term life insurancepolicy was changed to family members related to Elaine Minacs at the direction of ElaineMinacs. In fiscal 2007, management changed the beneficiary back to the Company.A legal proceeding has been commenced by the Estate against the Company claiming$5,000,000 (INR 23 Cr) in damages stating that the change in beneficiary was in breachof Elaine Minacs’ employment agreement. Proceeds of $350,000 (INR 1.61 Cr) werepaid into escrow pursuant to an escrow agreement with the Estate. The proceeds of$2,000,000 (INR 9.2 Cr) were paid by the underwriter to the court to be held in trust.The Company has filed a defense and counterclaim to the initial Estate claim in August2007 for the proceeds of the life insurance policies and damages of $500,000 (INR 2.3Cr). A second claim for damages of $500,000 (INR 2.3 Cr) and for punitive damages of$100,000 (INR 0.46 Cr) was commenced by the Estate in December 2007 stating theCompany was in breach of contract related to an employment agreement. Managementhas not accrued a contingent liability for the claims made by the Estate because theybelieve that the claims have no merit and the outcome of the proceeding is notdeterminable.During the ordinary course of business activities, in addition to the above, the Companymay be a party to claims and may be contingently liable for litigation. Managementbelieves that adequate provisions have been made in the accounts where required.Although it is not possible to estimate the extent of potential costs and losses, if any,
    • management believes that the ultimate resolution of such contingencies will nothave a material adverse effect on the consolidated financial position of the Company.GuaranteesAt March 31, 2011, the Company had $425,000 (INR 1.96 Cr) (2010: $75,000) (INR0.33 Cr) of outstanding letters of credit to secure customer performance guarantees.14 R ESTRUCTURING AND OTHER CHARGESIn fiscal 2011, the Company terminated a number of employees and performed somedue diligence reviews. Total severance payments and other charges of $1,170,000(INR 5.38 Cr) (2010: $3,828,000) (INR 16.9 Cr) have been charged to restructuringand other charges.In fiscal 2010, the Company approved a plan to close its Port Hawkesbury site and restartthe operations at the Chatham site. The costs recorded in restructuring relating to leaseexit costs and asset impairment in fiscal 2011 are $Nil (2010: $2,485,000) (INR 10.97 Cr).The details of severance expenses, impaired assets, lease exist costs for the balanceof the remaining lease periods and the credits against lease exit liabilities are givenbelow:2011 2011 2010 2010CAD$’000 INR/Cr CAD$’000 INR/CrLease exit costs 0 0.00 2,239 9.76Other lease exit credits 0 0.00 ( 687) (2.99)Write down of property, plant and equipment 0 0.00 933 4.07Severance and other items 1,170 5.24 1,343 5.85Restructuring and other charges 1,170 5.24 3,828 16.69(50)CMYK
    • ADITYA BIRLA MINACS WORLDWIDE INC., CANADAA reconciliation of beginning and ending accounts payable and accrued liabilities withrespect to the restructuring and other charges is as follows:31-Mar-1 0 Charges 31-Mar-1 1 31-Mar-1 0 Charges 31-Mar-1 1Incur red P aid Incur red P aidCAD$’0 0 0 CAD$’0 0 0 CAD$’0 0 0 CAD$’0 0 0 INR/Cr INR/Cr INR/Cr INR/CrLease exit costs $3,235 — (1,158) $2,077 14.29 — (5.18) 9.67Severance 56 1,170 (1,180) 46 0.25 5.24 (5.28) 0.21Accounts payableand accrued liabilitiesrelating to restructuringand other $3,291 $1,170 (2,338) $2,123 14.53 5.24 (10.46) 9.89Long-term accrued liabilities relating to operating leases relate to tenant inducementsand free-rent liabilities.15 INCOME TAXThe reconciliation of income tax at the statutory income tax rate to the effectiveincome tax recorded in the consolidated statement of operations is as follows(thousands of dollars)31-Mar-11 31-Mar-10Income before income taxes 22,675 4,735Statutory income tax at 29.9% [2010 – 32.4%] 6,780 6,780 1,533Utilization of losses not benefited previously (6,551) (3,769)Decrease in valuation allowance resultingfrom unrealized gains in accumulated othercomprehensive loss (2,614) (2,614) —
    • US state tax expense (recovery) 386 386 (331)Income tax rate changes — 3,315Increase in tax reserves 143 143 270Other 179 179 254Income tax provision (recovery) (1,677) (1,677) 1,272Future tax assets consist of the following temporary differences:2011 2011 2010 2010CAD$’000 INR/Cr CAD$’000 INR/CrOperating losses carried forward 15,706 72.25 19,608 86.59Accounts payable and accrued liabilities 1,625 7.48 2,269 10.02Property, plant and equipment 0 0.00 77 0.34Deferred grant and government assistance 217 1.00 218 0.96Other 87 0.40 382 1.6917,635 81.12 22,554 99.60Valuation allowance (17,034) (78.36) (21,880) (96.62)Less: current portion (601) (2.76) (273) (1.21)0 0.00 401 1.77Future tax liabilities consist of the following temporary differences:2011 2011 2010 2010CAD$’000 INR/Cr CAD$’000 INR/CrProperty, plant and equipment $2,190 10.07 $304 1.34Other receivables 0 0.00 823 3.63Intangible assets 1,239 5.70 1382 6.10$3,429 15.97 $2,509 11.08Expiry of Losses
    • As at March 31, 2011, the Company has non-capital losses of approximately $62,078,000(INR 285.56 Cr) available to reduce future years’ income for tax purposes. If not utilized,these losses will expire as follows:CAD$’0 0 0 INR/Cr2026 $9,156 42.122027 14,188 65.262028 19,289 88.732029 19,445 89.45$62,078 289.071 6 SUPPLEMENTAL CASH FLO W INFORMATIONAdjustments to reconcile net income (loss) to cash flows provided by operating activitiesinclude:Year ended March 31, Year ended March 31,2011 2011 2010 2010CAD$’0 0 0 INR/Cr CAD$’0 0 0 INR/CrDepreciation and amortization 9,623 44.27 9,953 43.95Write-down of property,plant and equipment 33 0.15 933 4.12Restructuring recovery 0 0.00 (687) (3.03)Future income taxes (1,449) (6.67) 179 0.79Amortization of deferred grant andgovernment assistance 0 0.00 125 0.55Amortization of intangible assets 1,721 7.92 105 0.46Loss on sale of property,plant and equipment 14 0.06 12 0.05
    • Total adjustments to reconcilenet income (loss) to cash providedby operating activities 9,942 46.30 10,620 46.90The net change in non-cash working capital balances related to operations include:Year ended March 31, Year ended March 31,2011 2011 2010 2010CAD$’0 0 0 INR/Cr CAD$’0 0 0 INR/CrAccounts receivable andunbilled revenues (27,390) (125.99) (399) (1.76)Prepaid expenses 765 3.52 124 0.55Income taxes recoverable(payable) (26) (0.12) 570 2.52Accounts payable andaccrued liabilities 4,460 20.52 (133) (0.59)Total net change in non-cash workingcapital balances related to operations (22,1 91) (1 03.34) 162 0.72Cash interest and income taxes paid are as follows:Year ended March 31 Year ended March 312011 2011 2010 2010CAD$’0 0 0 INR/Cr CAD$’0 0 0 INR/CrInterest 2,505 11.52 $3,009 13.29Income taxes (161) (0.74) $549 2.4217 FINANCIAL INS TRUMENTS AND RISK MANAGEMENTFair Value of Financial InstrumentsThe fair value of financial instruments, which include cash, accounts receivable and
    • unbilled revenue, other receivables, income taxes recoverable, accounts payable andaccrued liabilities, long-term debt, income and other taxes payable, and obligationsunder capital leases, approximates their carrying value due to their short-term natureand/or variable interest rates.Other financial instruments are long-term in nature, which include long-termreceivables, accrued liabilities relating to operating leases and deferred grant andgovernment assistance, and due to their nature are measured at amortized cost,which approximates their fair value.Risk ManagementThe Company’s activities expose it to a variety of financial risks, including market risk(comprised of foreign currency risk and interest rate risk), credit risk and liquidity risk.The Company’s overall risk management program focuses on the unpredictability offinancial markets and seeks to minimize potential adverse effects on the Company’sfinancial performance. The Company does not purchase any derivative financialinstruments for speculative purposes.Risk management is the responsibility of the corporate finance function. Materialrisks are monitored and are regularly discussed with the Audit Committee of theBoard of Directors.Foreign Currency RiskThe Company has significant operations in Canada and the United States. TheCompany’s activities result in exposure to fluctuations in foreign currency exchangerates due to sale and purchase transactions in a foreign currency. Increases ordecreases in these rates could impact the Company’s net income.(51)CMYK
    • ADITYA BIRLA MINACS WORLDWIDE INC., CANADAAs at March 31, 2011, the Company purchased financial instruments to hedge its foreigncurrency exposure as follows:INR/Cr(Dollars in thousands) 31-Mar-1 1 31-Mar-1 1Notional Amount Av erage F air Mark et F air Mark etin USD R ate to CAD Term Value Gain Value GainFinancial Instr umentUSD forward foreign April 2011 –exchange rate contracts 72,500 1.1065 March 2013 $9,338 CAD 42.95Included in revenues is a gain from foreign exchange hedging contracts amounting to$1,923,000 (INR 8.85 Cr) for the year ended March 31, 2011 (2010: $1,302,000 loss)(INR 5.75 Cr loss). Included in selling, general and administrative expenses is a gainsfrom foreign exchange hedging contracts amounting to $186,000 (INR 0.86 Cr) for theyear ended March 31, 2011 (2010: $183,000 loss) (INR 0.84 Cr). At March 31, 2011, all contractswere designated as hedges for accounting purposes .During the year ended March 31, 2011, a substantial portion of the Company’s incomewas earned outside of Canada in currencies other than the Canadian dollar. Increasesin the value of the Canadian dollar can reduce net income and declines can result inincreased net income. Based on the income, a +/- 1% change in the United Statesdollar would, everything else being equal, have had the following effect on theCompany’s reported net income for the year ended March 31, 2011:Average Increase / Increase /Exchange Decrease Decreaserate of 1% of 1%
    • CAD INR/CrUnited States dollar 1.10562 $665,000 2.98The table below presents the percentages of the Company’s accounts receivable,accounts payable and accrued liabilities that are denominated in US dollars:March 31, March 31,2011 2010Accounts receivable 51% 43%Accounts payable 48% 57%Accrued liabilities 76% 86%During the years ended March 31, 2011 and 2010, the following percentage ofrevenues and expenses were earned or incurred in US dollars:March 31, March 31,2011 2010Revenues 64% 58%Expenses 46% 36%Interest Rate RiskThe objective of the Company’s interest rate management activities is to minimizethe volatility of the Company’s income. The Company’s interest rate risk primarilyarises from its floating rate debt.At March 31, 2011, the total long-term debt outstanding was $50,470,000 (INR232.16 Cr), which is subject to movements in floating interest rates. A +/-1% changein interest rates would, everything else being equal, have an effect on the Company’snet income for the year ended March 31, 2011, of approximately +/- $645,000(INR 2.97 Cr).Credit Risk
    • Credit risk arises from cash held with banks and financial institutions, as well ascredit exposure to clients, including outstanding accounts receivable. The maximumexposure to credit risk is equal to the carrying value of the financial assets.The objective of managing counterparty credit risk is to prevent losses in financialassets. The Company assesses the credit quality of the counterparties, taking intoaccount their financial position, past experience and other factors.The Company derived 33% or $101,500,000 (INR 466.90 Cr) of its revenues frommultiple contracts with two groups of clients in the automotive and technology sectorsfor the year ended March 31, 2011 (2010: 33.09% or $93,390,000) (INR 412.41 Cr).As at March 31, 2011, multiple contracts with two clients represented 34.6% (2010:23%) of the accounts receivable balance.The following table sets out details of the aging of accounts receivable that areoutstanding and related allowance for doubtful accounts:31-Mar-1 1 31-Mar-1 1CAD$’0 0 0 INR/CrCurrent 31,228 143.6531-60 days 26,369 121.3061-90 days 10,373 4 7.72Over 90 days 762 3 .51Less: allowance for doubtful accounts (290) (1.33)Tot al accounts receiv able and unbilled re v enues, net 68,442 318.71Included in accounts receivable and unbilled revenue are unbilled revenues of$19,554,000 (INR 89.95 Cr) (2010: $14,652,000) (INR 64.70 Cr).The carrying amount of accounts receivable is reduced through the use of an allowanceaccount and the amount of the loss is recognized in the consolidated statement of
    • operations and deficit within operating expenses. When a receivable balance isconsidered uncollectible, it is written off against the allowance for accounts receivable.Subsequent recoveries of amounts previously written off are credited against operatingexpenses in the consolidated statement of operations and deficit.31-Mar-11 31-Mar-11CAD$’000 INR/CrAllowance for doubtful accounts – March 31, 2010 (72) (0.33)Provisions (220) (1.01)Write-offs 0 —Foreign currency translation adjustment 2 0.01Allo w ance for doubtful accounts – Marc h 31, 2011 (290) (1 .35)Liquidity RiskLiquidity risk arises through the excess of financial obligations over available financialassets due at any point in time. The Company’s objective in managing liquidity risk isto maintain sufficient readily available reserves in order to meet its liquidityrequirements at any point in time. The Company achieves this by maintaining sufficientcash and through the availability of funding from committed credit facilities. As atMarch 31, 2011, the Company was holding cash of $3,524,000 (INR 16.21 Cr).18 MANAGEMENT OF CAPITALThe Company defines capital that it manages as the aggregate of its shareholders’equity, cash on the Balance Sheet and interest-bearing debt. The Company’s objectivewhen managing capital is to ensure that it can provide services to its customers andreturns to its shareholders.As at March 31, 2011, managed capital was comprised of shareholders’ equity of$72,127,000 (INR 331.78 Cr) (2010: $48,472,000) (INR 214.05 Cr), cash of $3,524,000
    • (INR 16.21 Cr) (2010: $4,230,000) (INR 19.46 Cr) and interest-bearing debt of$50,470,000 (INR 232.16 Cr) (2010: $35,557,000) (INR 157.01 Cr).The Company manages its capital structure in a manner that ensures operating cashflow together with cash on its Balance Sheet is greater than interest expense andcurrent principal debt repayments required to be paid.19 EMPLOYEE BENEFIT PLANSThe Company has defined contribution pension plans. The Company’s expenditureswith respect to these plans were $750,000 (INR 3.45 Cr) during the year endedMarch 31, 2011 (2010: $673,000) (INR 2.97 Cr).20 COMPARATIVE FIGURESCertain of the comparative figures have been reclassified to conform to the currentyear’s presentation.(52)CMYKADITYA BIRLA MINACS WORLDWIDE CANADA INC.Unaudited B alance Sheet31st Marc h, 2011 31st Marc h, 2010CAD $’00 0 INR/Cr CAD $’00 0 INR/CrSOURCES OF FUNDSI Shareholders’ EquityShare CapitalCommon SharesShares issued 39,755 182.87 39,755 175.56Redeemable CommulativePreference Shares 80,638 370.93 80,638 356.10
    • Sub - Total 120,393 553.81 120,393 531.65Other Comprehensive Income 4,747 21.83 5,497 24.27Retained earnings (52,546) (230.66) (76,991) (340.07)Exchange fluctuation on Translation — (11.05) — 0.0872,594 333.94 48,899 215.94II Loan FundsSecured LoansBorrowings from Banks 31,078 142.96 33,914 149.76Obligations under capital — — 1,317 5.8231,078 142.96 35,231 155.58Total 103,672 476.89 84,130 371.52APPLICATION OF FUNDSI Fixed AssetsProperty, plant andequipment net 18,515 85.17 22,282 98.40Deferred Development cost 1,523 7.01 954 4.21Investment in subsidiarycompanies 41,522 191.00 41,522 183.36Goodwill 4,422 20.34 4,422 19.5365,982 303.52 69,180 305.50II Current AssetsCash and cash equivalents (223) (1.02) 1,981 8.75Accounts receivable 65,389 300.79 48,512 214.23Prepared expenses 1,067 4.91 1,639 7.24Future income taxes 13 0.06 13 0.06
    • Other assets — — — —66,245 304.73 52,144 230.27Less LiabilitiesAccounts payableand accrued liabilities 20,360 93.66 21,494 94.92Income and othertaxes payable 116 0.53 97 0.43Due to related parties 7,222 33.22 14,745 65.11Deferred Grant 858 3.95 858 3.79Future income taxes — — — —28,556 131.36 37.194 164.25Total 103,672 476.89 84,130 371.52Commitments and contingencies (Notes 12 and 14)NotesFE Conversion Rate for CAD $ to INRas at end of year 46.00 44.16Place: TorontoDate: April 25, 2011Unaudited Profit & L oss Account f or the y ear ended31st March, 201112 Months Ended 12 Months Ended31st March, 2011 31st March, 2010CAD $’000 INR/Cr CAD $’000 INR/CrRevenues 158,747 710.52 158,506 690.98Direct expenses 102,785 460.04 116,453 507.66
    • Gross profit 55,962 250.47 42,053 183.32Management fee charged 9,636 43.13 10,449 45.55Selling, general and administrativeexpenses 35,365 158.29 38,536 167.99Earnings before interest expense,income taxes, depreciation andamortization and restructuringand other charges 30,233 135.32 13,966 60.88Restructuring and other charges 424 1.90 3,558 15.51Earnings before interest expense,income taxes, depreciationand amortization 29,810 133.42 10,407 45.37Depreciation and amortization 6,945 31.08 7,549 32.91Interest and financing expenses 1,034 4.63 1,534 6.69Income (Loss) before income taxes 21,830 97.71 1,325 5.77Provision for (recovery of) income taxesCurrent — — — —Future (2,615) (11.70) — —(2,615) (11.70) — —Net income (loss) for the period 24,445 109.41 1,325 5.77Deficit, beginning of period (76,991) (340.07) (78,315) (345.84)Deficit, end of period (52,546) (230.66) (76,991) (340.07)Average FE Conversion rate for CAD $ toINR for the financial year 44.76 43.59Place: Toronto
    • Date: April 25, 2011(53)CMYKADITYA BIRLA MINACS WORLDWIDE CANADA INC.as cash flow hedges. These derivatives are measured at fair value at the endof each period.The resulting gain/loss on recognition of the forward rate contracts, options andcross-currency swap agreements is recognized in other comprehensive income.Effective April 1, 2008, the Company also adopted the CICA accountingstandards Section 3862 “Financial Instruments – Disclosure”, Section 3863“Financial Instruments – Presentation”, Section 1400 “General Standards ofFinancial Statement Presentation” and Section 1535 “Capital Disclosures”.Use of EstimatesThe preparation of these financial statements in conformity with Canadian generallyaccepted accounting principles requires management to make estimates andassumptions. These estimates and assumptions affect the reported amounts of assetsand liabilities and disclosure of contingent assets and liabilities at the date of thefinancial statements and the reported amounts of revenues and expenses during theyear. Actual results could differ from those estimates.Revenue RecognitionThe Company derives revenues by providing BPO solutions and consultingarrangements. Payment terms may vary by contract. The Company recognizesrevenues at the time services are performed and when the price is fixed ordeterminable and collection is reasonably assured.The majority of revenues are recognized based on the billable hours or minutes
    • rendered as defined in the client contract. The rate per billable hour or minute chargedis based on a predetermined contractual rate as agreed in the underlying contract.This contractual rate fluctuates based on the Company’s performance against certainpredetermined criteria related to quality and performance. Some clients are entitledto service credits when the Company is not in compliance with certain obligations asdefined in the client contract. Such service credits are recorded as a reduction ofrevenues as incurred based on a measurement of the Company’s obligation underthe terms of the client contract.For some contracts the Company is paid by its customer based on achievement ofclient-determined criteria specified in the client contract such as full time equivalents,units processed or completed contacts. The Company recognizes this performance-based revenue bymeasuring its actual results against the performance criteriaspecified in the contracts.Amounts collected from customers prior to the performance of services are recordedas deferred revenue. These advances are amortized to revenues in accordance withthe Company’s policy on revenue recognition.The Company classifies reimbursements received from customers for out-of-pocketexpenditures as revenues. The Company incurs out-of-pocket expenditures such asexpenses related to travel, postage and telecommunications costs for whichcustomers have agreed to reimburse Minacs. The corresponding cost associatedwith this revenue is recorded within direct expenses. Some customers agree toreimburse the Company for initial training and recruiting costs over a specified periodof time. The revenue for these costs is recorded over the period of time stipulatedwithin the contract with a corresponding cost recorded within direct expenses.Property, Plant and EquipmentProperty, plant and equipment are stated at cost less accumulated depreciation.
    • Depreciation is provided from the first day of the month following the date the assetsare placed into service, on a straight-line basis. Computer software is depreciatedover four to five-year lives. Computer equipment is depreciated over a four-year life.Communication’s equipment is depreciated over five to seven-year lives. Furnitureand fixtures are depreciated over seven to ten-year lives. Leasehold improvementsare depreciated over the term of the lease.LeasesLeases are classified as either capital or operating leases. Leases that substantiallytransfer all of the benefits and risks of ownership of property to the Company areaccounted for as capital leases. At the time a capital lease is entered into, an asset isrecorded together with its related long-term obligation to reflect the acquisition andfinancing. Equipment recorded under capital leases is amortized on the same basisas property, plant and equipment. Rental payments under operating leases areexpensed as incurred.GoodwillGoodwill is not amortized and is tested for impairment on an annual basis.Such evaluation determines any impairment in value, taking into account the abilityto recover the carrying amount of goodwill from discounted cash flows. The Companyalso considers projected future operating results, trends, and other circumstances inmaking such evaluations.In addition to the annual impairment test, the Company will perform an impairmenttest if an event occurs or circumstances change that would more likely than notreduce the fair value of the reporting unit below its carrying amount.Intangible AssetsThe Company allocates value to intangible assets acquired relating to customer and
    • supplier contracts, proprietary processes and certain business relationships.Amortization of intangible assets is provided on a straight-line basis over ten years.NOTES TO FINANCIAL STATEMENTS MAR CH 31, 20 111 NATURE OF BUSINESSAditya Birla Minacs Worldwide Inc. (the “Company” or “Minacs”) is incorporatedunder the Ontario Business Corporations Act. The Company changed its name fromMinacs Worldwide Inc. to Aditya Birla Minacs Worldwide Inc., effective November5, 2008. The Company operates in one segment as a provider of business processoutsourcing (“BPO”) solutions. These incorporate contact centre solutions, integratedmarketing services and back office administration. Operating in multiple languages,the Company serves customers throughout North America, Europe, Latin Americaand the Pacific Rim from its operating locations in North America and Europe.2 SIGNIFICANT ACCOUNTING POLICIESBasis of PresentationThese financial statements have been prepared in accordance with Canadian generallyaccepted accounting principles (“GAAP”) except that they have been prepared on astandalone basis and do not include the accounts of its subsidiaries.Changes in accounting policiesEffective April 1, 2008, the Company adopted the new recommendations of TheCanadian Institute of Chartered Accountants (“CICA”) Handbook Section 3251: Equity;Section 1530: Comprehensive Income; Section 3855: Financial Instruments -Recognition andMeasurement; and Section 3865: Hedges, retroactively, withoutrestatement. These new Handbook Sections apply to fiscal years beginning on orafter October 1, 2007.Under the new standards, policies followed for periods prior to the effective dategenerally are not reversed and, therefore, the comparative figures have not been restated
    • except to present foreign currency translation gains and losses on self-sustaining foreignoperations as part of accumulated other comprehensive income (loss).[a] Equity and comprehensive incomeCICA Handbook Section 3251 describes standards for the presentation of equityand changes in equity during the period with reference to the newcomprehensive income standard. CICA Handbook Section 1530 establishesstandards for reporting and presenting comprehensive income, which is definedas the change in equity from transactions and other events from non-ownersources. Other comprehensive income refers to items recognized incomprehensive income that are excluded from net earnings calculated inaccordance with Canadian GAAP.[b] Financial instrumentsUnder CICA Handbook Section 3855, financial instruments must be classifiedinto one of these five categories: held-for-trading, held-to-maturity, loans andreceivables, available-for-sale financial assets, or other financial liabilities. Allfinancial instruments, including derivatives, are measured in the Balance Sheetat fair value except for loans and receivables, held-to-maturity investments andother financial liabilities, which are measured at amortized cost. Subsequentmeasurement and changes in fair value will depend on their initial classification,as follows: held-for-trading financial assets are measured at fair value andchanges in fair value are recognized in net earnings; available-for-sale financialinstruments are measured at fair value with changes in fair value recorded inother comprehensive income until the investment is derecognized or impaired,at which time the amounts would be recorded in net earnings. In accordancewith the new standard, the Company’s financial assets and liabilities are
    • generally classified and measured as follows:Asset/Liability Category MeasurementCash and cash equivalents Held-for-trading Fair valueAccounts receivable Loans and receivables Amortized costLong-term receivables Loans and receivables Amortized costAccounts payable andaccrued liabilities Other financial liabilities Amortized costDeferred grant Other financial liabilities Amortized costLong-term debt Other financial liabilities Amortized costThe Company had no financial instruments classified as available-for-sale duringthe year ended March 31, 2011.Financing costs and credit facility arrangement fees associated with the issuanceof long-term debt are netted against the carrying value of the related debt andare amortized using the effective interest rate method to interest expense overthe period to maturity of the related debt.[c] HedgesSection 3865 specifies the criteria under which hedge accounting can be appliedand how hedge accounting should be executed for each of the permitted hedgingstrategies: fair value hedges, cash flow hedges and hedges of a foreign currencyexposure of a net investment in a self-sustaining foreign operation.The Company applied hedge accounting to forward rate contracts, optionsand cross currency swap agreements. These contracts have been designated(54)CMYKADITYA BIRLA MINACS WORLDWIDE CANADA INC.
    • Impairment of Long-Lived AssetsThe Company reviews its long-lived assets such as property, plant and equipment andintangible assets for impairment whenever events or changes in circumstances indicatethat the carrying amount may not be recoverable. When indicators of impairment ofthe carrying value of the asset exist, and the carrying value is greater than the netrecoverable value (as determined on an undiscounted basis), an impairment loss isrecognized to the extent that the fair value (measured as the discounted cash flowsover the remaining life of the asset when quoted market values are not readily available)is below the carrying value.Income TaxesThe Company follows the liability method of accounting for income taxes. Under thismethod, future tax assets and liabilities are determined based on differences betweenthe financial reporting and tax bases of assets and liabilities, and are measured usingsubstantively enacted tax rates and laws that are expected to be in effect when thedifferences are expected to reverse. Valuation allowances are established whennecessary to reduce future tax assets to the estimated amount that is more likelythan not to be realized.Cash and Cash EquivalentsCash and cash equivalents consist of unrestricted cash and short-term deposits havingan initial maturity of three months or less.Foreign Exchange TranslationForeign operations are considered to be self-sustaining and are translated into Canadiandollars using the current rate method. Assets and liabilities are translated using theexchange rate in effect at the Balance Sheet date and revenues and expenses aretranslated at the average rate for the month in which the transaction is recorded.
    • Exchange gains or losses on translation of the Company’s investments in thesesubsidiaries, and those arising on the translation of foreign currency long-term liabilitiesdesignated as hedges of these investments, are recorded in accumulated othercomprehensive income.3 PROPERTY, PLANT AND EQUIPMENTFY 2011 FY 2010Accumulated Accumulated Accumulated AccumulatedCost Depreciation Cost Depreciation Cost Depreciation Cost DepreciationCAD$’000 CAD$’000 INR/Cr INR/Cr CAD$’000 CAD$’000 INR/Cr INR/CrComputersoftware 30,070 (26,714) 138.32 (123) 27,648 (25,623) 122.10 (113)Computerequipment 20,380 (18,575) 93.75 (85) 19,868 (16,892) 87.74 (75)Communicationsequipment 13,358 (11,918) 61.45 (55) 13,269 (11,183) 58.60 (49)Furniture andfixtures 13,883 (8,918) 63.86 (41) 13,833 (7,579) 61.09 (33)Leaseholdimprovements 18,484 (11,535) 85.03 (53) 18,477 (9,537) 81.59 (42)96,175 (77,660) 442,41 (357) 93,096 (70,813) 411,11 (313)Less: accumulateddepreciation (77,660) (357.24) (70,813) (312.71)18,515 85.17 22,282 98.40Included in these figures are assets under capital leases as follows:FY 2011 FY 2011 FY 2010 FY 2010
    • CAD$’000 INR/Cr CAD$’000 INR/CrCost 0 0.00 12,771 56.40Less: accumulated depreciation 0 0.00 (8,035) (35.48)Net book value 0 0.00 4,736 20.91The assets under capital leases are held as collateral for the capital lease obligations.4 OTHER ASSETSFY 2011 FY 2010Accumulated Accumulated Accumulated AccumulatedCost Amortization Cost Amortization Cost Amortization Cost AmortizationCAD$’000 CAD$’000 INR/Cr INR/Cr CAD$’000 CAD$’000 INR/Cr INR/CrDeferred financingexpenses — — — — — — — —Long termreceivable — — — — — — — —Less: accumulatedamortization — — — ——— ——5 GOODWILLFY 20 11 FY 20 10CAD$’0 0 0 INR/Cr CAD$’0 0 0 INR/CrBalance, beginning of year 4,422 20.34 4,422 19.53Foreign currency translation adjustment — — — —B alance, end of y ear 4,422 20.34 4,422 19.536 DEFERRED GRANT AND GOVERNMENT A SSISTANCEFY 20 11 FY 20 10
    • CAD$’0 0 0 INR/Cr CAD$’0 0 0 INR/CrDeferred Grant 858 3.95 858 3.79858 3.95 858 3.79In fiscal 2008, Minacs finalized an agreement with the Province of New Brunswick toreceive a forgivable loan in the amount of $2,260,000 (INR 10.4 Cr). The loan providesfor forgiveness subject to terms being met in respect of employment to be createdat a contact centre in that province. To date, Minacs has received $900,000 (INR 4.14Cr); no amounts were received in fiscal 2010. As at March 31, 2011, the Companyhas recorded $858,000 (INR 3.95 Cr) (March 31, 2010: $858,000) (INR 3.79 Cr) asdeferred grant and government assistance. If the terms of the loan are not met byAugust 31, 2014, then the amount remaining as deferred grant and governmentassistance will need to be repaid.7 LONG-TERM DEBTSecurred LoansFY 2011 FY 2010CAD$’000 INR/Cr CAD$’000 INR/Cr1) Borrowings from BanksSwingline Overnight 0 — 914 4.04Senior revolving facility -Bank of America 0 — 33,000 145.73Long Term Debt 31,078 142.96 — —2) Obligation under Capital Leases 0 — 1,317 5.8231,078 142.96 35,231 159.59Senior Revolving Facility – Bank of AmericaThis facility bears interest at 0.9% margin over bank prime, banker’s acceptance orLIBOR rates. The total commitment available under the senior revolving facility is
    • $40,000,000 (INR 184 Cr), subject to certain borrowing base calculations and certainother restrictive covenants. The facility is a 365-day facility and, as collateral, theCompany has given a first charge on accounts receivable. In addition, this facility isguaranteed by Aditya Birla Nuvo Limited. As at March 31, 2011, the Company is incompliance with applicable bank covenants.Loan from Bank of AmericaThis loan bears interest at 1.50% margin over US LIBOR rates and matures on June1, 2011. This loan is unsecured and is guaranteed by Aditya Birla Nuvo Limited. As atMarch 31, 2011, the Company is in compliance with debt covenants.Loan from AV Transworks Limited, CanadaThis loan is unsecured, bears interest at 6.05% and is payable on demand.Interest RateThe weighted average interest rate on borrowings at March 31, 2011, was 2.62%(2010: 2.74%).Interest and financing expenses are comprised of the following amounts:FY 2011 FY 2010CAD$’000 INR/Cr CAD$’000 INR/CrInterest expense on long-term debt 1,349 6.04 1,468 6.40Interest charged to subsidiaries (914) (4.09) (777) (3.39)Interest expense on obligationsunder capital leases 30 0.13 246 1.07Other interest expense (income) 1 0.01 (5) (0.02)Interest expense 467 2.09 932 4.06Amortization of deferred finance charges 0 — 83 0.36Bank charges 85 0.38 591 2.58
    • Foreign exchange (gain) / loss 483 2.16 (72) (0.31)Total interest and financing expenses 1,034 4.63 1,534 6.69(55)CMYKADITYA BIRLA MINACS WORLDWIDE CANADA INC.8 RELATED PARTY TRANSACTIONSBalances and transactions with Aditya Birla Minacs Worldwide Ltd. group of companiesare as follows:FY 2011 FY 2010CAD$’000 INR/Cr CAD$’000 INR/CrInterest charged by Parent Company 765 3.42 157 0.69Interest charged to subsidiaries (914) (4.09) (777) (3.39)Management fee charged tosubsidiaries 9,636 43.13 10,449 45.55Accounts payable, accrued liabilitiesfor interest and re 695 3.20 412 1.8210,183 45.66 10,241 44.67These transactions are measured at the exchange amounts of considerationestablished and agreed to by the related parties.9 SHARE CAPITALThe Company is authorized to issue an unlimited number of common shares and anunlimited number of preferred shares issuable in series.2011 2010CAD$’000 INR/Cr CAD$’000 INR/CrNumber Amount Amount Number Amount Amount
    • of Shares of SharesCommon Shares 27,945,822 70,071 322.33 27,945,822 70,071 309.43Redeemable Series APreference Shares 20,321,721 20,322 93.48 20,321,721 20,322 89.74Redeemable Series BPreference Shares 30,000,000 30,000 138.00 30,000,000 30,000 132.48120,393 553.81 120,393 531.66The Company received $20,000,000 (INR 88.32 Cr) on February 24, 2010, and afurther $10,000,000 (INR 44.16 Cr) on March 26, 2010, in cash from its parent companyAV Transworks Limited, Canada, as subscription for Redeemable Series B PreferenceShares that were issued during the year.The Series A Preference Shares are redeemable at face value at the option of the Company,at any time after December 31, 2012. The Series B Preference Shares are redeemable atface value at the option of the Company, at any time after December 31, 2014. However,there is no redemption obligation on the Company. The preference shareholders areentitled to a cumulative dividend of 4.50% for Series A and 5% for Series B on theoutstanding preference shares. The payment of dividends is at the discretion of theCompany and subject to availability of profits of the Company. The undeclared dividendas of March 31, 2011 is $ 3,441,000 (2010: $ 1,029,312) (INR 4.55 Cr).10 COMMITMENTS AND CONTINGENT LIABILITIESCapital LeasesThe following is a schedule of future annual minimum lease payments for thesecapital leases:Minimum capital lease FY 2011 FY 2010payments due in CAD$’000 INR/Cr CAD$’000 INR/Cr
    • 2010 — — — —2011 0 — 1,347 5.95Total 0 — 1,347 5.95Less amount representing interest 0 — (30) (0.13)Present value of net minimum leasepayments 0 — 1,317 5.82Less : current portion 0 — (1,317) (5.82)Total capital lease obligations — — 0.06 0.00CommitmentsThe Company has operating leases for its premises, furniture and fixtures and certaincomputer and communications equipment as well as minimum purchasecommitments for telephone services. The minimum annual payments for the nextfive years and thereafter are as follows:FY 2011 FY 2010CAD$’000 INR/Cr CAD$’000 INR/Cr2011 6,616 30.43 7,139 31.632012 5,427 24.96 5,845 25.812013 5,526 25.42 4,899 21.632014 4,366 20.08 4,908 21.672015 4,260 19.60 4,366 19.28Thereafter 5,049 23.23 8,515 37.60Total commitments 31,244 143.72 35,672 157.53Contingent LiabilitiesOn May 17, 2006, the former major shareholder and founder of the Company, ElaineMinacs, died. The major shareholder of the Company then became the Estate of
    • Elaine Minacs (the “Estate”) together with certain entities controlled by it (the “EMShareholders”) until August 18, 2006, when AV Transworks Limited, Canada, acquiredthe shares of the Estate and the EM Shareholders.The Company is the owner of a $350,000 (INR 1.61 Cr) whole life insurance policy and a$2,000,000 (INR 9.2 Cr) term life insurance policy insuring the life of Elaine Minacs. Theterm life policy is a key-man policy, originally required by the Company’s previous lenders.The beneficiary of the policies when they were originally acquired was the Company.During 2005, the beneficiary of the whole life insurance policy was changed at the directionof Elaine Minacs. Also, during 2005, the beneficiary of the term life insurance policy waschanged to family members related to Elaine Minacs at the direction of Elaine Minacs. Infiscal 2007, management changed the beneficiary back to the Company. A legal proceedinghas been commenced by the Estate against the Company claiming $5,000,000 (INR 23Cr) in damages stating that the change in beneficiary was in breach of Elaine Minacs’employment agreement. Proceeds of $350,000 (INR 1.61 Cr) were paid into escrowpursuant to an escrow agreement with the Estate. The proceeds of $2,000,000 (INR 9.2Cr) were paid by the underwriter to the court to be held in trust. The Company has fileda defense and counterclaim to the initial Estate claim in August 2007 for the proceeds ofthe life insurance policies and damages of $500,000 (INR 2.3 Cr). A second claim fordamages of $500,000 (INR 2.3 Cr) and for punitive damages of $100,000 (INR .46 Cr)was commenced by the Estate in December 2007 stating the Company was in breach ofcontract related to an employment agreement. Management has not accrued a contingentliability for the claims made by the Estate because they believe that the claims have nomerit and the outcome of the proceeding is not determinable.During the ordinary course of business activities, in addition to the above, the Companymay be a party to claims and may be contingently liable for litigation. Management
    • believes that adequate provisions have been made in the accounts where required.Although it is not possible to estimate the extent of potential costs and losses, if any,management believes that the ultimate resolution of such contingencies will nothave a material adverse effect on the consolidated financial position of the Company.GuaranteesAt March 31, 2011, the Company had $425,000 (INR 1.96 Cr) (2010: $75,000) (INR0.33 Cr) of outstanding letters of credit to secure customer performance guarantees.11 RESTRUCTURING AND OTHER CHARGESIn fiscal 2011, the Company terminated a number of employees and performed some duediligence reviews. Total severance payments and other charges of $424,000 (INR 1.95 Cr)(2010: $1,343,000) (INR 5.93 Cr) have been charged to restructuring and other charges.In fiscal 2010, the Company approved a plan to close its Port Hawkesbury site and restartthe operations at the Chatham site. The costs recorded in restructuring relating to leaseexit costs and asset impairment in fiscal 2011 are $Nil (2010: $2,485,000) (INR 10.97).The details of severance expenses, impaired assets, lease exist costs for the balance ofthe remaining lease periods and the credits against lease exit liabilities are given below:FY 2011 FY 2010Charged to P&L CAD$’000 INR/Cr CAD$’000 INR/CrLease exit costs — — 2,200 9.59Other lease exit credits — — ( 687) (2.99)Write down of property, plant and equipment — — 933 4.07Serverance and other items 424 1.90 1,112 4.85Total 424 1.90 3,558 15.51Outstanding liabilitiesLease exit costs 2,077 9.30 3,235 14.10
    • Serverance and other items 6 0.03 56 0.24Accounts payable and accruedliabilities relating to restructuringand other charges 2,083 9.32 3,291 14.3512 INCOME TAXESFuture tax assets consist of the following temporary differences:FY 2011 FY 2010Future income tax CAD$’000 INR/Cr CAD$’000 INR/CrOperating losses carried forward 15,706 72.25 19,608 86.59Accounts payable and accrued liabilities 1,358 6.25 1,749 7.72Property, plant and equipment (415) (1.91) 77 0.34Deferred revenue & Grant 217 1.00 218 0.96Other 181 0.83 241 1.0617,047 78.42 21,893 96.68Valuation allowance (17,034) (78.42) (21,880) (96.68)Less : current portion — — — —13 — 13 —(56)CMYKADITYA BIRLA MINACS WORLDWIDE CANADA INC.Expiry of lossesAs at March 31, 2010, the Company has non-capital losses of approximately $77,316,000(INR 341.43 Cr) available to reduce future years’ income for tax purposes. If not utilized,these losses will expire as follows:FY 20 11 FY 20 10
    • CAD$’0 0 0 INR/Cr CAD$’0 0 0 INR/Cr2010 — — — —2011 — — 1,847 8.162026 9,156 42.12 21,754 96.072027 14,188 65.26 14,188 62.652028 19,289 88.73 17,596 77.702029 19,445 89.45 19,445 86.872030 — — 2,486 10.9862,078 285.56 77,31 6 341 .431 3 FINANCIAL INS TRUMENTS AND RISK MANAGEMENTFair Value of Financial InstrumentsThe fair value of financial instruments, which includes cash and cash equivalents,accounts receivable and current portions of accounts payable and accrued liabilities,long-term debt and deferred grant approximates their carrying value due to their,short-term nature and/or variable interest rates.Other financial instruments are long-term in nature, which include long-term receivableand non-current portions of accounts payable and accrued liabilities and deferredgrant, and due to their nature are measured at amortized cost which approximatestheir fair value.Risk ManagementThe Company’s activities expose it to a variety of financial risks, market risk (includingforeign exchange and interest rate), credit risk and liquidity risk. The Company’soverall risk management program focuses on the unpredictability of financial marketsand seeks to minimize potential adverse effects on the Company’s financialperformance. The Company does not purchase any derivative financial instruments
    • for speculative purposes.Risk management is the responsibility of the corporate finance function. Materialrisks are monitored and are regularly discussed with the Audit Committee of theBoard of Directors.Foreign Currency RiskThe Company has significant operations in Canada and the United States. TheCompany’s activities result in exposure to fluctuations in foreign currency exchangerates due to sale and purchase transactions in a foreign currency. Increases ordecreases in these rates could impact the Company’s net earnings.As at March 31, 2011, the Company purchased financial instruments to hedge itsforeign currency exposure as follows:FY 2011Financial Notional Amount Average Fair Market ValueInstrument Rate to CAD$ Term Gain / (Loss)CAD$’000 INR (Cr)US $ forward exchange April 2010 –rate contracts 72,500 1.1065 March 2012 9,338 40.71——Included in revenues is a gain from foreign exchange hedging contracts amountingto $1,923,000 (INR 8.85 Cr) for the year ended March 31, 2011 (2010: $1,302,000loss) (INR 5.75 Cr). Included in selling, general and administrative expensesis a gains from foreign exchange hedging contracts amounting to $186,000(INR 0.86 Cr) for the year ended March 31, 2011 (2010: $183,000 loss) (INR 0.81Cr loss). At March 31, 2011, all contracts were designated as hedges foraccounting purposes.
    • During the year ended March 31, 2011, a substantial portion of the Company’s incomewas earned outside of Canada in currencies other than the Canadian dollar. Increasesin the value of the Canadian dollar can reduce net income and declines can result inincrease net income. Based on the income, a +/- 1% change in the United Statesdollar would, everything else being equal, have had the following effect on theCompany’s reported net income for the year ended March 31, 2011:CAD INR/CrAverage Increase / Increase /exchange decrease decreaserate of 1% of 1%United States dollar 1.01704 $657,000 2.94The table below presents the percentages of the Company’s accounts receivable,accounts payable and accrued liabilities that are denominated in US dollars:March 31, March 31,2011 2010Accounts receivable 47% 43%Accounts payable 0% 57%Accrued liabilities 62% 86%During the years ended March 31, 2011 and 2010, the following percentage ofrevenues and expenses were earned or incurred in US dollars:March 31, March 31,2011 2010Revenues 43% 58%Expenses 2% 36%Interest Rate Risk
    • The objective of the Company’s interest rate management activities is to minimizethe volatility of the Company’s income. The Company’s interest rate risk primarilyarises from its floating rate debt.At March 31, 2011, the total long-term debt outstanding was $50,470,000 (INR 232.16Cr), which is subject to movements in floating interest rates. A +/-1% change in interestrates would, everything else being equal, have an effect on the Company’s net incomefor the year ended March 31, 2011, of approximately +/- $645,000 (INR 2.97 Cr).Credit RiskCredit risk arises from cash held with banks and financial institutions, as well ascredit exposure to clients, including outstanding accounts receivable. The maximumexposure to credit risk is equal to the carrying value of the financial assets. Theobjective of managing counterparty credit risk is to prevent losses in financial assets.The Company assesses the credit quality of the counterparties, taking into accounttheir financial position, past experience and other factors.The Company derived 33% or $101,500,000 (INR 466.90 Cr) of its revenues frommultiple contracts with two groups of clients in the automotive and technology sectorsfor the year ended March 31, 2011 (2010: 33.09% or $93,390,000) (INR 412.41 Cr).As at March 31, 2011, multiple contracts with two clients represented 34.6% (2010:23%) of the accounts receivable balance.The following table sets out details of the aging of accounts receivable that areoutstanding and related allowance for doubtful accounts:31-Mar-11 31-Mar-11CAD$’000 INR/CrCurrent 31,228 143.6531-60 days 26,369 121.30
    • 61-90 days 10,373 47.72Over 90 days 762 3.51Less: allowance for doubtful accounts (290) (1.33)Total accounts receivable and unbilled revenues, net 68,442 314.83Included in accounts receivable and unbilled revenue are unbilled revenues of$19,554,000 (INR 89.95 Cr) (2010: $14,652,000) (INR 64.70 Cr).The carrying amount of accounts receivable is reduced through the use of an allowanceaccount and the amount of the loss is recognized in the consolidated statement ofoperations and deficit within operating expenses. When a receivable balance isconsidered uncollectible, it is written off against the allowance for accounts receivable.Subsequent recoveries of amounts previously written off are credited against operatingexpenses in the consolidated statement of operations and deficit.31-Mar-11 31-Mar-11CAD$’000 INR/CrAllowance for doubtful accounts – March 31, 2010 (72) (0.33)Provisions (220) (1.01)Write-offs 0 —Foreign currency translation adjustment 2 0.01Allowance for doubtful accounts – March 31, 2011 (290) (1.33)14 LIQUIDITY RISKLiquidity risk arises through the excess of financial obligations over available financialassets due at any point in time. The Company’s objective in managing liquidity risk isto maintain sufficient readily available reserves in order to meet its liquidityrequirements at any point in time. The Company achieves this by maintaining sufficientcash and through the availability of funding from committed credit facilities.
    • (57)CMYKADITYA BIRLA MINACS WORLDWIDE CANADA INC.1 5 MANAGEMENT OF CAPITALThe Company defines capital that it manages as the aggregate of its shareholders’equity, cash on the Balance Sheet and interest-bearing debt. The Company’s objectivewhen managing capital is to ensure that it can provide services to its customers andreturns to its shareholders.As at March 31, 2011, managed capital was comprised of shareholders’ equity of$72,127,000 (INR 331.78 Cr) (2010: $48,472,000) (INR 214.05 Cr), cash of $3,524,000(INR 16.21 Cr) (2010: $4,230,000) (INR 18.68 Cr) and interest-bearing debt of$50,470,000 (INR 232.16 Cr) (2010: $35,557,000) (INR 157.02 Cr).The Company manages its capital structure in a manner that ensures operating cashflow together with cash on its Balance Sheet is greater than interest expense andcurrent principal debt repayments required to be paid.1 6 EMPLOYEE BENEFIT PLANSThe Company has defined contribution pension plans. The Company’s expenditureswith respect to these plans were $750,000 (INR 3.45 Cr) during the year endedMarch 31, 2011 (2010: $673,000) (INR 2.97 Cr).17 COMPARATIVE FIGURESCertain of the comparative figures have been reclassified to conform to the currentyear’s presentation.(58)MINACS GROUP (USA) Inc.CMYK
    • Consolidated Balance Sheet (Unaudited in US $)A s At A s AtMarch 31, 2011 March 31, 2010US $ INR/Cr US $ INR/CrSOURCES OF FUNDSI Shareholders’ Fund1. Share capital $302,040 1.37 $302,040 1.362. Retained earnings $9,000,150 41.34 $8,102,244 37.613. Exchange Fluctuationon Translation — (0.58) — (1.13)$9,302,191 42.13 $8,404,284 37.84II Debt1. Long-term debt fromholding company $20,768,591 94.05 $20,768,591 93.522. Short-term debt from Banks $20,000,000 90.57 $0 —$50,070,782 226.75 $29,172,875 131.36APPLICATION OF FUNDSI Fixed Assets1. Property, plant andequipment, net $8,516,338 38.57 $5,410,781 24.362. Deferred Development costs $1,079,887 4.89 $1,480,070 6.663. Intangibles $1996,102 9.04 $101,961 0.464. Goodwill $1,900,000 8.60 $1,900,000 8.56$13,492,327 61.1 0 $8,892,81 2 40.04II Investments 18,869,268 85.45 — —
    • III Current Assets1. Cash and cash equivalents $850,771 3.85 $1,038,954 4.682. Accounts receivable $26,174,035 118.53 $12,759,501 57.463. Due from parent compan y $6,264,898 28.37 $1 4,550,822 65.524. Prepaid expenses $920,576 4.17 $867,898 3.915. Future income taxes -Long term $0 — $361,234 1.636. Future income taxes -Short term $385,316 1.74 $256,472 1.15$34,595,596 156.67 $29,834,881 134.35Less LiabilitiesI Short term1. Accounts payable andaccrued liabilities $13,958,295 63.21 $7,625,908 34.342. Income and othertaxes payable 485.834 2.20 (29,082) (0.13)3. Obligations undercapital leases $0 — $321,213 1.45$14,444,129 65.41 $7,918,039 35.66II Long Term1. Accounts payable andaccrued liabilities $371,220 1.68 $527,081 2.372. Obligations undercapital leases — — $0 —3. Future income taxes $2,071,061 9.38 $1,109,698 5.00Total Liabilities $16,886,410 7 6.47 $9,554,818 43.03Net Assets $17,709,187 80.20 $20,280,063 91.32
    • To t a l $50,070,782 226.75 $29,1 72,875 1 31.37Notes :See accompanying notes to the financial statements.FE Conversion Rate for US$ to INR as at end of year 45.2854 45.0301St atement of Operations and DeficitUnaudited in US $31/3/2011 31/3/2011 31/3/2010 31/3/2010US $ INR/Cr US $ INR/CrRevenues $115,223,720 525.26 $97,017,763 448.13ExpendituresDirect expenses $86,645,571 394.99 $72,406,782 334.45Selling, general andadministrative expenses $15,481,374 70.57 $12,268,172 56.67$102,126,945 465.56 $84,674,953 391.12Earnings before interest, incomet axes, depreciation, amortizationand restructuring andother charges $13,096,775 59.70 $12,342,810 57.0 1Management fee $6,304,000 28.74 $6,857,000 31.67Restructuring and other charges $750,000 3.42 $113,188 0.52Interest and financing expenses $1, 292,158 5.89 $944,475 4.36Depreciation and amortization $2,693,868 12.28 $2,177,429 10.06Currency Revaluation Difference 0.37Provision for (recovery of) income taxesCurrent -$34,911 (0.16) $677,717 3.13
    • Future $1,193,753 5.44 $182,212 0.84Net income (loss) for the period $897,906 3.73 $1,390,789 6.42Earnings/(Deficit), beginning of period $8,102,244 37.61 $6,711,455 31.19Retained earnings, end of period $9,000,150 41.34 $8,102,244 37.61Notes:See accompanying notes to the financial statements.Average FE Conversion Rate for US $ to INRfor the Financial Y ear 45.5865 46.1904Place: Toronto Deepak J. PatelDate: April 23, 2010 Chief Executive OfficerPlace: Toronto Deepak J. PatelDate: April 25, 2011 Chief Executive Officer(59)MINACS GROUP (USA) Inc.CMYKNotes to Financial St atements, March 31, 20 111. NATURE OF BUSINESSMinacs Group (USA) Inc. (the “Company” or “Minacs USA”) is a provider ofbusiness process outsourcing (“BPO”) solutions. These incorporate contactcentre solutions, integrated marketing services and back office administration.Minacs USA is a subsidiary of Minacs Worldwide Inc. (“Minacs”).2. SIGNIFICANT ACCOUNTING POLICIESUse of EstimatesThe preparation of these financial statements in conformity with Canadiangenerally accepted accounting principles requires management to make
    • estimates and assumptions. These estimates and assumptions affect thereported amounts of assets and liabilities, and disclosure of contingent assetsand liabilities at the date of the financial statements and the reported amountsof revenues and expenses during the year. Actual results could differ fromthose estimates.Revenue RecognitionThe Company derives revenues through the provision of direct resources toits customers and consulting arrangements. Payment terms may vary bycontract. The Company recognizes revenues at the time services areperformed and when the price is fixed or determinable and collection isreasonably assured.The majority of revenues are recognized based on the billable hours or minutesrendered as defined in the client contract. The rate per billable hour or minutecharged is based on a predetermined contractual rate as agreed in the underlyingcontract. This contractual rate fluctuates based on the Company’s performanceagainst certain predetermined criteria related to quality and performance. Someclients are entitled to penalties when the Company is not in compliance withcertain obligations as defined in the client contract. Such penalties are recordedas a reduction of revenues as incurred based on a measurement of theCompany’s obligation under the terms of the client contract.For some contracts, the Company is paid by its customer based onachievement of certain level of revenues or other client-determined criteriaspecified in the client contract such as full time equivalents, units processedor completed contacts. The Company recognizes this performance-basedrevenue by measuring its actual results against the performance criteria
    • specified in the contracts.Amounts collected from customers prior to the performance of services arerecorded as deferred revenue.These advances are amortized to revenues in accordance with the Company’spolicy on revenue recognition.The Company classifies reimbursements received from customers for out-of-pocket expenditures asrevenues. The Company incurs out-of-pocketexpenditures such as expenses related to travel, postage andtelecommunications costs for which customers have agreed to reimburseMinacs USA. The corresponding cost associated with this revenue is recordedwithin the direct expenses. Some customers agree to reimburse the Companyfor initial training and recruiting costs over a specified period of time. Therevenue for these costs is recorded over the period of time stipulated withinthe contract with a corresponding cost recorded within direct expenses.Property, Plant and EquipmentProperty, plant and equipment are stated at cost less accumulated depreciation.Depreciation is provided from the first day of the month following the date theassets are placed into service, on a straight-line basis. Computer software isdepreciated over four to five-year lives. Computer equipment is depreciatedover a four-year life. Communications equipment is depreciated over five toseven-year lives. Furniture and fixtures are depreciated over seven to ten-yearlives. Leasehold improvements are depreciated over the term of the lease.GoodwillGoodwill is not amortized and is tested for impairment on an annual basis.Such evaluation determines any impairment in value, taking into account theability to recover the carrying amount of goodwill from discounted cash flows.
    • The Company also considers projected future operating results, trends, andother circumstances in making such evaluations.In addition to the annual impairment test, the Company will perform animpairment test if an event occurs or circumstances change that would morelikely than not reduce the fair value of the reporting unit below its carryingamount.IntangiblesThe Company allocates value to intangible assets acquired relating to customerand supplier contracts, proprietary processes, and certain businessrelationships. Amortization of intangibles is provided on a straight-line basisover 10 years.Impairment of Long-lived AssetsThe Company reviews its long-lived assets such as property, plant and equipmentand intangibles for impairment whenever events or changes in circumstancesindicate that the carrying amount may not be recoverable. When indicators ofimpairment of the carrying value of the asset exist, and the carrying value is greaterthan the net recoverable value (as determined on an undiscounted basis), animpairment loss is recognized to the extent that the fair value (measured as thediscounted cash flows over the remaining life of the asset when quoted marketvalues are not readily available) is below the carrying value.Income TaxesThe Company follows the liability method of accounting for income taxes. Underthis method, future tax assets and liabilities are determined based on differencesbetween the financial reporting and tax bases of assets and liabilities, and aremeasured using substantively enacted tax rates and laws that are expected to be
    • in effect when the differences are expected to reverse. Valuation allowances areestablished when necessary to reduce future income tax assets to the estimatedamount that is more likely than not to be realized.Foreign Exchange TranslationAssets and liabilities are translated using the exchange rate in effect at the BalanceSheet date and revenues and expenses are translated at the average rate of themonth the transaction is recorded.Cash and Cash EquivalentsCash and cash equivalents consist of unrestricted cash and short-term depositshaving an initial maturity of three months or less.A s At Marc h 31, 2011 A s At Marc h 31, 2010US $ INR/Cr US $ INR/Cr3.3 . Share CapitalCommon shares 100 0.00 100 0.00Contributed surplus 301.940 1.37 $301,940 1.36302,040 1.37 $302,040 1.36The Company is authorized to issue an unlimited number of common shares.4.4. DebtLoan from Parent Company 20,768,591 94.05 20,768,591 93.5220,768,591 94.05 $20,768,591 93.525.5 . Short term debtfrom Bank 20,000,000 90.57 — — 20,000,000 90.57 — —(60)MINACS GROUP (USA) Inc.
    • CMYK5 PROPERTY, PLANT AND EQUIPMENTA s At 31st March, 2011 A s At 31st March, 2010Gross A ccumulated Gross A ccumulated Gross A ccumulated Gross A ccumulatedCost Depreciation Cost Depreciation Cost Depreciation Cost DepreciationIn US $ In US $ In INR/Cr In INR/Cr In US $ In US $ In INR/Cr In INR/CrComputer software 9,267,800 (5,400,174.6) 41.97 (24.45) 6,367,256 (4,581,077) 28.67 (20.63)Computer equipment 9,500,299 (6,936,869.2) 43.02 (31.41) 7,601,383 (6,107,934) 34.23 (27.50)Communications equipment 1,176,689 (924,477.3) 5.33 (4.19) 934,194 (905,702) 4.21 (4.08)Furniture and fixtures 2,425,174 (1,567,184.7) 10.98 (7.10) 2,388,900 (1,458,332) 10.76 (6.57)Leasehold improvements 2,576,542 (1,601,460.5) 11.67 (7.25) 2,494,614 (1,322,519) 11.23 (5.96)24,946,504 (16,430,166.3) 112.97 (74.40) (19,786,346) (14,375,564.9) 89.10 (64.73)Less: Accumulated depreciation (16,430,166) (74.40) (14,375,565) (64.73)8,516,338 38.57 5,410,781 24.36Included in these figures are assets under capital leases as follows:In US $ INR (Cr) In US $ INR (Cr)Cost — — 5,034,046 22.67Less: Accumulated depreciation — — (4,289,108) (19.31)Net book value $0 — $744,938 3.35Conversion rates for US $ to INR 45.29 45.03A s At Marc h 31, 2011 A s At Marc h 31, 2010US $ INR/Cr US $ INR/Cr6. INT ANGIBLESCost 2,857,962 12.94 $643,962 2.90Less: Accumulated depreciation (861,860) (3.90) (542,001) (2.44)
    • Net book value 1,996,102 9.04 $101,961 0.467. GOODWILLBalance, beginning of period 1,900,000 8.60 $1,900,000 8.56Foreign currency translationadjustment — — — —Balance, end of period 1,900,000 8.60 $1,900,000 8.568. FUTURE INCOME TAXESAccounts payable and accruedliabilities 674,418 3.05 $512,340 2.31Other 98,065 0.44 $105,366 0.47772,483 3.50 $617,706 2.78Valuation allowance — — — —Less: Current portion (385,315) (1.74) ($256,472) (1.15)387.168 1.75 $361,234 1.63Future tax liabilities consistof the following temporarydifferences:Property, plant and equipment (2,444,169) (11.07) (299,690) (1.35)Other assets (14,059) (0.06) (810,008) (3.65)(2,458,228) (11.13) (1,109,698) (5.00)9. COMMI TMENTS AND CONTINGENCIESCapital LeasesThe following is a schedule of future minimum lease payments for these capital leases:A s At Marc h 31, 2011 A s At Marc h 31, 2010Capital Leases US $ INR/Cr US $ INR/Cr
    • 2008 — — — —2009 — — — —2010 — — $0 —2011 — — $329,278 1.48Total minimum lease payments — — $329,278 1.48Less: Amount representinginterest — — ($8,066) (0.04)Present value of net minimumlease payments — — $321,212 1.45Less: Current portion — — $321,212 1.45Total capital lease obligations — — $0 —CommitmentsThe Company has operating leases for its premises, furniture and fixtures and certaincomputer and communications equipment as well as minimum purchase commitmentsfor telephone services. The minimum annual payments for the next five years andthereafter are as follows:A s At Marc h 31, 2011 A s At Marc h 31, 2010US $ INR/Cr US $ INR/Cr2011 — — $0 —2012 2,680,633 12.14 $1,457,358 6.562013 2,709,412 12.27 $1,402,668 6.322014 2,560,272 11.59 $1,402,668 6.322015 723,383 3.28 $1,402,668 6.352016 86,540 0.39 467,556.00 —Thereafter — — $0 —
    • Total commitments 8,760,240 39.67 $6,132,918 25.55Contingent LiabilitiesDuring the ordinary course of business activities, the Company may be a party toclaims and may be contingently liable for litigation. Management believes thatadequate provisions have been made in the accounts where required. Although itis not possible to estimate the extent of potential costs and losses, if any,management believes that the ultimate resolution of such contingencies will nothave a material adverse effect on the financial position of the Company.10. RELATED P ARTY TRANSACTIONSTransactions with Related Parties are as follows:A s At Marc h 31, 2011 A s At Marc h 31, 2010US $ INR/Cr US $ INR/CrManagement fees charged byMinacs Worldwide Inc. 6,304,000 28.74 $6,857,000 31.86Interest charged by MinacsWorldwide Inc. 939,472 4.28 $712,666 3.31Interest charged to IT Services (688,285) (3.14) (794,836) (3.69)Reimbursable expenses - AdityaBirla Minacs Worldwide Ltd. 741,691 3.38 $149,428 0.69These transactions are measured at the exchange amounts of consideration establishedand agreed to by the related parties.11. EMPLOYEE BENEFI T PLANSThe Company has defined contribution pension plans. The Company’s pensionplan expenditures were $8278 (Previous Year: $ 4,160) (INR .04 Cr) (PreviousYear: INR 0.02 Cr) during 2011.
    • (61)MINACS GROUP (USA) Inc.CMYK12 INTEREST AND FINANCING EXPENSESInterest and financing expenses are comprised of the following amounts:A s At Marc h 31, 2011 A s At Marc h 31, 2010US $ INR/Cr US $ INR/CrInterest expense on long-term debt 939,472 4.28 $712,666 3.29Interest expense on obligationsunder capital leases 8,066 0.04 $60,373 0.28Bank Loan Interest 291,758 1.33 $0 —Other interest expense (income) (284) (0.00) $21,850 0.10Interest expense 1,239,012 5.65 $794,888 3.67Amortization of deferredfinance charges — — — —Bank charges 49,252 0.22 $42,868 0.20Foreign exchange loss (gain) 3,894 0.22 106,718 0.49Total 1,292,158 5.89 $944,475 4.36(62)BUREAU OF COLLECTION RECOVERY, LLCCMYKPlace: Toronto Deepak J. PatelDate: April 25, 2011 Chief Executive OfficerBALANCE SHEE TS(Unaudited in US$)
    • As At March 31, 2011US $ INR/CrASSETSCurrent assetsCash and cash equivalents 743,420 3.37Client cash held in trust 446,191 2.02Accounts receivable 1,945,000 8.81Prepaid expenses 61,208 0.28Total current assets 3,195,819 14.48Fixed assetsOffice equipment 278,620 1.26Leasehold improvements 55,977 0.25Total fixed assets 334,597 1.51Less: Accumulated depreciationand amortization 156,268 0.71Net fixed assets 178,329 0.80Other assetsDepositsFuture income taxes - Short term 237,540 1.08Corporate Federal taxes 466,341 2.11Due from Parent Company 1,305,395 5.91Total other assets 2,009,276 9.10Total assets $ 5,383,424 24.38LIABILITIES AND MEMBERS’ EQUITYCurrent liabilities
    • Trust cash payable to client 446,191 2.02Accounts payable & accrued expenses 1,031,352 4.67Accrued payroll 480,561 2.18State taxes payable 121,825 0.55Total current liabilities 2,079,929 9.42Long-term liabilitiesFuture income taxes 182,795 0.83Total long-term liabilities 182,795 0.83Shareholders’ fundsShare capital 20,500 0.09Retained earnings 3,100,200 14.12Exchange fluctuation on transaltion — (0.08)Total shareholders’ funds 3,120,700 14.13Total liabilities and members’ equity $ 5,383,424 24.38Notes :See accompanying notes to the financial statements.FE Conversion Rate for US$ to INR as at end of year 45.29Place: Toronto Deepak J. PatelDate: April 25, 2011 Chief Executive OfficerSTATEMENT OF INCOME AND EXPENDI TURE FOR THEPERIOD 1ST JUNE 2010 TO 31ST MARCH 2011Period Ended 31st March, 2011US $ INR/CrRevenuesCommission revenue 11,203,177 51.23
    • Operating expensesPersonnel and related expenses 7,026,886 32.13Communication expenses 999,357 4.57Other operating expenses 2,979,382 13.62Total operating expenses 11,005,625 50.32Operating income 197,552 0.91Other income (expenses)Management fee 670,000 3.06Depreciation and amortization 62,452 0.29Interest income (37,780) (0.17)Currency revaluation differ ence — 0.06Earnings before tax (497,120) (2.33)Current income tax (468,687) (2.14)State tax 5,000 0.02Future tax (52,399) (0.24)Net income (loss) for the period 18,966 0.03Earnings/(Deficit), beginning of period 3,081,234 14.09Retained earnings, end of period 3,100,200 14.12Notes :See accompanying notes to the financial statements.FE Conversion Rate for US$ to INR as at end of year 45.73(63)BUREAU OF COLLECTION RECOVERY, LLCCMYKNOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
    • Business OrganizationBureau of Collection Recovery, LLC is a third-party collection agency which collectspre-charge offs, post charge offs and primary and secondary accounts for nationallyrecognized banks and other creditors. The Company’s headquarters is located inEden Prairie, Minnesota.Client Cash Held in Trust and Trust Cash Payable to ClientsThe Company deposits all cash received from the collection of client placementsin separate trust bank accounts as required by client contracts. Client cash held intrust is not the property of the Company.Accounts ReceivableTrade accounts receivable are initially recorded at fair value upon completion ofservice to clients. They are stated net of allowance, which primarily representsestimated losses due to disputes with clients or inability of certain clients to makethe required payments. When determining the allowances, the Company takesseveral factors into consideration, including prior history of accounts receivable,credit activity and write-offs, the overall composition of accounts receivable aging,the types of clients, and day-to-day knowledge of specific clients. Changes in theallowance impact commission income or bad debt expense. No allowance fordoubtful accounts was deemed necessary at March 31, 2011. The Company’spolicy for charging interest on delinquent receivables varies by terms stated inindividual contracts. Accounts receivable are considered past due on an individualclient basis.Revenue and Expense RecognitionThe Company earns commissions on amounts collected from debtors on behalf ofits clients. Commission income is recognized as client placements are collected
    • from debtors, at which time the Company has rendered substantially all of theservices necessary to earn its commission.Fixed AssetsFixed assets are stated at cost. Depreciation is provided using the straight-linemethod for financial reporting purposes based on estimated service lives. Theestimated lives range from 3 to 5 years. Leasehold improvements are amortizedover the lives of the respective leases or the service lives of the improvements,whichever is shorter. Accelerated methods of depreciation are used for incometax reporting purposes. Expenditures for repairs and maintenance are chargedagainst operations. Renewals and betterments that materially extend the life ofthe asset are capitalized.Advertising CostsAdvertising costs are generally charged to operations in the year incurred and totaled$3,162 for the period ended March 31, 2011.Use of EstimatesThe preparation of financial statements in conformity with generally acceptedaccounting principles requires management to make estimates and assumptionsthat affect the reported amounts of assets and liabilities and disclosure of contingentassets and liabilities at the date of the financial statements and the reported amountsof revenues and expenses during the reporting period. Actual results could differfrom those estimates.Basis of PresentationThe accompanying financial statements are presented in accordance withaccounting principles generally accepted in the United States of America (US GAAP)as codified by the Financial Accounting Standards Board.
    • Financial InstrumentsThe Company’s financial instruments consist of accounts receivable, otherreceivable, accounts payable and trust cash payable to clients. It is management’sopinion that the Company is not exposed to significant interest rate or credit risksarising from these instruments. Unless otherwise noted, the fair values of thesefinancial instruments approximate their carrying values.NOTE 2 – COLLECTIONS ACTIVITYGross collections activity for the period ended March 31, 2011, was as follows:FY’11Customer Placements Received $ 1,335,520,831Collection of Placements $ 30,358,100Commissions Earned $ 11,203,177NOTE 3 – BUSINESS AND CREDIT CONCENTRATIONSCommission revenue from customers that exceed 10% of total commissionrevenue for the period ended March 31, 2011, was as follows:FY’11Customer A 24.2%Customer B 18.2%Customer C 18.0%Customer D 16.8%Customers’ accounts receivable balances that exceeded 10% of total accountsreceivable balances at March 31, 2011, was as follows:FY’11Customer A 48.9%Customer B 37.7%
    • NOTE 4 - RELATED PARTY TRANSACTIONSIntercompany DuesDuring the period ending 31stMarch 2011, the Company made unsecured interestbearing cash advances to the parent company. The Company also owesmanagement fees to the parent company. Net balance due from the parent companytotaled to $ 1,400,075.NOTE 5 – OPERATING LEASESBuilding Lease – Eden PrairieThe Company entered into an operating lease agreement dated January 1, 2008,to lease its headquarters in Eden Prairie, Minnesota. The initial lease term was forthree years expiring on December 31, 2010. The lease was then extended bythree years expiring on December 31, 2013. The monthly base rent is $15,000plus additional rental payments for other operating expenses. During the first leaseyear, the additional rental costs were included in the base rents. Subsequent toyear end, the lease was amended for the Company to pay all maintenance,insurance, and taxes on the leased property.Building Lease – WillmarThe Company entered into an operating lease on July 18, 2007, for a one year termcommencing on October 1, 2007 and expiring September 30, 2008, to lease officefacilities in Willmar, Minnesota. The agreement called for base rent of $ 39,062payable in monthly installments of $ 3,255 plus additional rental payments for otheroperating expenses. On September 15, 2008, a new lease commenced expiringon September 14, 2013. The new lease agreement requires base monthly rent
    • payments of $ 5,000 for the first three years and $ 5,475 for years four and five.Co-location AgreementOn November 30, 2007, the Company entered into a co-location license agreementfor the use of space located in Minnetonka, Minnesota, pursuant to the Licensor’sagreement. Minimum lease payments of $ 4,000 per month are required for threeyears ending November 30, 2010.The following is a schedule of future minimum rental payments required underthese operating lease agreements:Year EndingDecember 31, Amount2010 $ 284,0002011 61,6632012 65,7002013 46,538Total minimum rental payments $ 457,901Other LeasesThe Company is obligated under various operating lease agreements expiring atvarious dates through 2013. Monthly payments on these leases range from $ 292to $ 689.The following is a schedule of future minimum lease payments required underthese operating lease agreements:Year EndingDecember 31, Amount2010 $ 11,7642011 11,764
    • 2012 11,7642013 3,500Total minimum lease payments $ 38,792(64)MINACS WORLDWIDE SA de CVCMYKBB Balance SheetAA As at March 31, 2011 111 1 AA As at March 31, 2011 100 0PP Pesos INR/Cr PP Pesos INR/CrII I Sources of FundsShareholders’ fundsShare capitalShares issued 50,000 0.02 50,000 0.02Cumulative translationadjustment — —Deficit (50,000) (0.02) (50,000) (0.02)— — — —Debt — — — —TT Totalal al — — — —IIII II Application of FundsFixed Assets — — — —Current AA AssetsCash and cash equivalents — — — —Accounts receivable — — — —Prepaid expenses — — — —
    • — — — —LL Less Current Liabilities — — — —Bank Indebtedness — — — —Other liabilities — — — —Net Current AA Assets — — — —Total — — — —See accompanying notes to the financial statements.NoteConversion rate for Pesos to INR 3.79 3.62Currency factor 10,000,000 10,000,000Statements of Operations and DeficitYY Year Ended YY Year EndedMarch 31, 2011 111 1 March 31, 2011 100 0PP Pesos INR/Cr PP Pesos INR/CrRR Ree evv venues — — — —Direct expenses — — — —Selling, general andadministrative expenses — — — —Earnings before interestexpense, income taxes,depreciation and amortization — — — —Depreciation and amortization — — — —Interest and financing expenses — — — —Provision for (recovery of)income taxes — — — —
    • Net income (loss)for the period — — — —Deficit, beginning of period (50,000) (0.02) (50,000) (0.02)Deficit, end of period (50,000) (0.02) (50,000) (0.02)NoteConversion rate for Pesos toINR at 31 March, 2011 3.619 3.619Currency factor 10,000,000 10,000,000(65)MINACS WORLDWIDE SA de CVCMYKNotes to Financial Statements, March 31, 2011 111 111 1 NATURE OF BUSINESSMinacs Worldwide SA de CV (the “Company” or “Minacs Mexico”) is aprovider of business process outsourcing (“BPO”) solutions. TheCompany is a subsidiary of Minacs Worldwide Inc. (“Minacs”). MinacsMexico is an inactive subsidiary.22 2 SIGNIFICANT ACCOUNTING POLICIESUse of EstimatesThe preparation of these financial statements in conformity withCanadian generally accepted accounting principles requires managementto make estimates and assumptions. These estimates and assumptionsaffect the reported amounts of assets and liabilities and disclosure ofcontingent assets and liabilities at the date of the financial statementsand the reported amounts of revenues and expenses during the year.
    • Actual results could differ from those estimates.Revenue RecognitionThe Company derives revenues through the provision of direct resourcesto its customers and consulting arrangements. Payment terms may varyby contract. The Company recognizes revenues at the time services areperformed and when the price is fixed or determinable and collection isreasonably assured.The majority of revenues are recognized based on the billable hours orminutes rendered as defined in the client contract. The rate per billablehour or minute charged is based on a predetermined contractual rateas agreed in the underlying contract. This contractual rate fluctuatesbased on the Company’s performance against certain predeterminedcriteria related to quality and performance. Some clients are entitledto penalties when the Company is not in compliance with certainobligations as defined in the client contract. Such penaltiesare recorded as a reduction of revenues as incurred based on ameasurement of the Company’s obligation under the terms of theclient contract.For some contracts the Company is paid by its customer based onachievement of certain level of revenues or other client-determinedcriteria specified in the client contract such as full time equivalents,units processed or completed contacts. The Company recognizes thisperformance-based revenue by measuring its actual results against theperformance criteria specified in the contracts.The Company classifies reimbursements received from customers for
    • out-of-pocket expenditures as revenues. The Company incurs out-of-pocket expenditures such asexpenses related to travel, postage andtelecommunications costs for which customers have agreed toreimburse Minacs. The corresponding cost associated with this revenueis recorded within direct expenses. Some customers agree to reimbursethe Company for initial training and recruiting costs over a specifiedperiod of time. The revenue for these costs are recorded over the periodof time stipulated within the contract with a corresponding cost recordedwithin direct expenses.Income TaxesThe Company follows the liability method of accounting for income taxes.Under this method, future tax assets and liabilities are determined basedon differences between the financial reporting and tax bases of assetsand liabilities, and are measured using substantively enacted tax ratesand laws that are expected to be in effect when the differences areexpected to reverse. Valuation allowances are established whennecessary to reduce future income tax assets to the estimated amountthat is more likely than not to be realized.Foreign Exchange TranslationAssets and liabilities are translated using the exchange rate in effect atthe Balance Sheet date and revenues and expenses are translated atthe average rate of the month the transaction is recorded.Cash and Cash EquivalentsCash and cash equivalents consist of unrestricted cash and short-termdeposits having an initial maturity of three months or less.22 2 SHARE CAPITAL
    • 2011 111 1 2011 100 0PP Pesos INR/Cr PP Pesos INR/CrCommon Shares 50,000 000 0 0.02 50,000 000 0 0.0250,000 000 0 0.02 50,000 000 0 0.02Authorized Share CapitalThe Company is authorized to issue an unlimited number of common shares.(66)MINACS LIMITED, UKCMYKBALANCE SHEET T T AA AS AA AT 31ST MARCH, 2011 111 1Notes As At As At31st March, 2011 31st March, 2010£ INR/Cr £ INR/CrII I Sources of FundsShareholders’ FundsCalled up share capital 4 1,000 0.01 1,000 0.01Profit and loss account 332.824 2.63 267,698 2.04Exchange fluctuation ontranslation (0.21) (0.23)333,824 2.43 268,698 1.82Loan Funds — — — —Total 333,824 2.43 268,698 1.82IIII II Application of FundsFixed assets — — — —Investments 5 15,277 0.10 15,277 0.10
    • Current assetsDebtors 6 898,081 6.52 707,809 4.80Cash at bank and in hand 124,741 0.91 146,936 1.001,022,822 7.43 854,745 5.80Less : Current liabilities 7 (704,275) (5.11) (601,324) (4.08)Net current assets 318,547 2.13 253,421 1.72Total 333,824 2.42 268,698 1.82Notes:See accompanying notes to the financials statements.FE Conversion Rate for GBP to INR as at year end 72.60 67.87PP Profit and Loss AA Account for the year ended 31st March, 2011 111 1YY Year Ended YY Year Ended31/3/2011 111 1 31/3/2011 100 0££ £ INR/Cr ££ £ INR/CrSales 2,263,039 16.00 2,392,193 18.23Total2,263,039 11 16.000 02,392,193 18.23Direct CostsWages and salaries 1,458,156 10.31 1,574,508 12.00Employer’s NI contributions 143,364 1.01 152,017 1.16Recruitment advertising 26 0.00 — —Staff pension scheme costs 8,396 0.06 10,127 0.08Placement & interview expenses 6,896 0.05 3,800 0.03Staff training 868 0.01 1,168 0.01Travel expenses 38,206 0.27 27,035 0.21Health & safety costs 1,422 0.01 1,676 0.01
    • TT Totalal al 1,657,332 11 11,72 1,770,332 13.49Gross Profit 605,707 4.28 621,862 4.744 4AdministrationWages and salaries 8,733 0.06 244,300 1.86Rent payable — — 29,100 0.22Printing, postage and stationery 2,996 0.02 4,539 0.03Telephone 3,209 0.02 3,602 0.03Motor vehicle leasing 1,250 0.01 — —Entertaining 1,149 0.01 2,443 0.02Legal and professional 11,412 0.08 5,430 0.04Accountancy 37,015 0.26 38,210 0.29Audit 6,000 0.04 6,000 0.05Bank charges 380 0.00 9 0.00Exchange rate (gain)/loss (9,505) (0.07) 639 0.00Payroll services 5,500 0.04 6,000 0.05General expenses 55,219 0.39 (240,918) (1.84)Recruitment costs — — — —Subscriptions 101 0.00 4,681 0.04Management charges 329,000 2.77 401,500 3.06515,458 3.65 505,534 3.85FinancialOther operating income (134) (0.00) (142) (0.00)Interest on overdue tax — — — —(134) (0.00) (142) (0.00)Total expenses 515,324 3.64 505,392 3.85
    • Net profit/(loss) before taxation 90,382 0.64 116,470 0.89Less : Corporation tax based onprofits for the period (25,256) (0.18) (32,567) (0.25)Net profits/(loss) for the year 65,126 0.46 83,902 0.64Balance brought forward 267,698 2.17 183,796 1.53Balance carried forward 332,824 2.63 267,698 2.17Notes:Please see accompanying notes to the financialsFE Conversion Rate for GBP to INR for the Financial Year 70.7172 76.1983Place: Toronto Deepak PatelDate: April 25, 2011 CEOPlace: Toronto Deepak PatelDate: April 25, 2011 CEO(67)MINACS LIMITED, UKCMYK11 1.. . ACCOUNTING POLICIES1.1. AA Accounting Convv ventionThe financial statements are prepared under the historical cost convention andin accordance with applicable accounting standards, and in accordance withthe Financial Reporting Standard for Smaller Entities (effective April 2008).1.2. TurnoverTurnover represents the total invoice value of sales made during the year statednet of value added tax.1.3. Leasing
    • Rentals payable under operating leases are charged against income on a straightline basis over the lease term.1.4. InvestmentsFixed asset investments are stated at cost less provision for permanentdiminution in value.1.5. PensionsThe pension costs charged in the financial statements represent the contributionpayable by the Company during the period.The regular cost of providing retirement pensions and related benefits is chargedto the Profit and Loss Account over the employees service lives on the basisof a constant percentage of earnings.1.6. Foreign CurrenciesMonetary assets and liabilities denominated in foreign currencies are translatedinto sterling at the rates of exchange prevailing at the accounting date.Transactions in foreign currencies are recorded at the date of the transactions.All differences are taken to the Profit and Loss Account.1.7. Group AccountsThe Company is entitled to the exemption under Section 398 of the CompaniesAct, 2006, from the obligation to prepare group accounts.2.2. 2. TURNOVERThe total turnover of the Company for the year has been derived from its principalactivity wholly undertaken in the UK and Ireland.3.3. 3. PENSION COSTSThe Company operates a defined contribution pension scheme in respect of theemployees. The Scheme and its assets are held by independent managers.
    • The pension charge represents contributions due from the Company and amountedto £ 8,396; INR 0.06 Cr (Previous Year: £ 10,127; INR 0.07 Cr).4.4. 4. SHARE CAPITAL As At As At31st March, 2011 31st March, 2010££ £ INR/Cr ££ £ INR/CrAuthorised1,000 Ordinary shares of £1 each 1,000 0.01 1,000 0.01Allotted, called up and fully paid1,000 Ordinary shares of £1 each 1,000 0.01 1,000 0.01Equity Shares1,000 Ordinary shares of £1 each 1,000 0.01 1,000 0.015.5. 5. INVESTMENTS IN SUBSIDIARY UNDERTAKINGSCost of SharesOpening balance 15,277 0.11 15,277 0.10Additions/(Deletions during the year) — — — —Closing balance 15,277 0.11 15,277 0.10Net Book ValuesOpening balance 15,277 0.11 15,277 0.10Additions/(Deletions during the year) — — — —Closing balance 15,277 0.11 15,277 0.10Holdings of 20% or moreThe Company holds 20% or more of the share capital of the following companies:Subsidiary undertaking Minacs Worldwide GmbH Minacs Worldwide GmbHCountry of Registration Germany GermanyNature of Business Provider of Outsourced Provider of Outsourced
    • solutions solutionsClass of Shares Held Euro Share Euro ShareProportion of Shares Held 100% 100%6.6. 6. DEBTORSTrade Debtors 489,674 3.55 700,210 4.75Amounts owed by group undertakings 404,402 2.94 5,104 0.03Other debtors 1,126 0.01 1,126 0.01Prepayments and accrued income 2,879 0.02 1,369 0.01898,081 6.52 707,809 4.807.7. 7. CURRENT LIABILITIESAmount falling due within one yearTrade creditors 6,243 0.05 5,923 0.04Amounts owed by group undertakings 522,810 3.80 359,437 2.44Corporation tax 25,306 0.18 32,651 0.22Other taxes and social security costs 95,916 0.70 153,452 1.04Accruals and deferred income 54,000 0.39 49,861 0.34704,275 5.11 601,324 4.08Year Ended Year Ended31st March, 2011 31st March, 2010££ £ INR/Cr ££ £ INR/Cr8.8. 8. OPERATING PROFIT / (LOSS)Operating profit/(loss) is statedafter charging:Auditors’ remuneration 6,000 0.04 6,000 0.05Pension Costs 8,396 0.06 10,127 0.08
    • 9.9. 9. TAX ON PROFIT/ (LOSS) ONORDINARY ACTIVITIESAnalysis of charge in periodCurrent TaxUK corporation tax 25,256 0.18 32,567 0.2510. FINANCIAL COMMITMENTSExpiry dateWithin one year — — — —Between one and five years — — — ———— —11. RELATED PARTY TRANSACTIONSSales toMinacs Kft, Hungary 47,034 0.33 61,887 0.47Minacs GmbH, Germany 51,687 0.37 3,155 0.02Reimbursement of expenses/feesMinacs GmbH, Germany 72,825 0.51 70,031 0.53Miancs Worldwide Inc, Canada 447,219 3.16 160,582 1.22Receivables fromMinacs Kft, Hungary 56,664 0.41 5,104 0.03Minacs GmbH, Germany 347,737 2.52 (8,846) (0.06)404,402 2.94 (3,742) (0.03)Payable toMinacs Worldwide Inc, Canada 522,810 3.80 359,437 2.4412. ULTIMATE PARENT UNDERTAKINGThe Company is wholly owned subsidiary of Minacs Worldwide Inc, a company
    • incorporated in Canada. The ultimate parent Company is Aditya Birla Nuvo Limited, aCompany incorporated in India.(68)MINACS WORLDWIDE GMBH, GERMANYCMYKUnaudited Balance Sheet AA As at 31st March, 2011 111 1Balance Sheet as of March 31, 201131.03.2011 31.03.2011 31.03.2010 31.03.2010INR/Cr INR/CrSources of FundsI Shareholders’ Funds1. Share capital authorizedand fully paid in 25,000 0.16 25,000 0.152. Profit carried forward 2,094,247 13.37 1,783,414 11.853. Profit current year 253,936 1.53 310,833 2.044. Exchange fluctuationson conversion — 0.09 — (0.96)Total equity 2,373,183 15.15 2,119,247 13.08II Loan Funds — — — —2,373,183 15.15 2,119,247 13.08Application of FundsII I Fixed Assets1. EDP software 998 0.01 998 0.012. Leasehold improvements 12,553 0.08 12,553 0.083. Furniture and equipment 29,364 0.19 27,422 0.17
    • 4. Office equipment 42,898 0.27 37,980 0.235. Deferred development costs — — 2,442 0.025. Low-value-equipment at cost — — — —Gross block 85,813 0.55 81,395 0.506. Accumulated depreciation (68,826) (0.44) (61,114) (0.38)Total net block 16,987 0.11 20,281 0.13IIII II Investments1. Investments in SubsidiaryCompany - Hungary 11,050 0.07 11,050 0.07IIIIII III Current Assets1. Cash at bank and in hand 110,969 0.71 166,461 1.032. Accounts receivable 1,649,627 10.53 1,752,586 10.823. Inter-company receivables 960,210 6.13 499,957 3.094. Prepaid expenses 30,265 0.19 42,249 0.265. Other assets 1,228 0.01 2,500 0.02Total current assets 2,752,299 17.57 2,463,753 15.21Less Liabilities1. Accounts payable (1,522) (0.01) 3,219 0.022. Inter-company payables — — — —3. Accrued expenses 450,720 2.88 368,169 2.274. Other liabilities (42,044) (0.27) 4,449 0.03Total liabilities 407,153 2.60 375,837 2.32Net current assets 2,345,146 14.97 2,087,916 12.89Total 2,373,183 15.15 2,119,247 13.08The accompanying notes to the
    • Financial Statements are anintergral part of this Balance SheetConversion Rate for Euro to INRas at year end rates 63.84 61.74Unaudited Profit and Loss AA Account for the year ended31st March, 2011April 1, 2010 to April 1, 2010 to April 1, 2009 to April 1, 2009 toMarch 31, 2011 March 31, 2011March 31, 2010 March 31, 2010INR/Cr INR/CrIncome1. Revenues 6,886,453 41.50 7,363,240 48.312. Interest income (1) (0.00) 59 0.006,886,453 41.50 7,363,299 48.31Expenditure3. Staff cost 5,090,971 30.68 5,213,485 34.204. Selling, general andadministrative expenses 485,081 2.92 444,458 2.925. Management fees 941,410 5.67 1,267,897 8.32Total 6,517,462 39.28 6,925,840 45.446. Earnings before interest,income taxes and depreciation 368,990 2.22 437,459 2.877. Depreciation on fixed assets 8,852 0.05 7,377 0.058. Currency revaluation difference 0.019. Interest expenses — — — —10. Earnings before income taxes 360,139 2.17 430,082 2.82
    • 11. Income taxes 106,202 0.64 119,249 0.7812. Net income 253,936 1.53 310,833 2.04The accompanying notes to theFinancial Statements are an integralpart of this Statement of IncomeThe average conversion rates forEuro to INR for the financial year 60.27 65.60(69)MINACS WORLDWIDE GMBH, GERMANYCMYKUnaudited Cash Flow Statement for the year ended31st March, 2011April 1, 2010 to April 1, 2010 to April 1, 2009 to April 1, 2009 toMarch 31, 2011 March 31, 2011March 31, 2010 March 31, 2010INR/Cr INR/CrNet earnings (Incl. FE Rate difference) 253,936 1.53 310,833 2.04Depreciation of fixed assets 8,852 0.05 7,377 0.05Changes in operating assetsand liabilities– Accounts receivables andinter-company receivables (358,434) (2.29) (111,326) (0.69)– Prepaid expenses and other assets 13,256 0.08 1,170 0.01– Deferred expenses — — — –– Accounts payables and inter-companypayables (4,741) (0.03) (84,519) (0.52)
    • – Accrued expenses andother liabilities 36,057 0.23 (47,689) (0.29)Cash flow used in operating activities (51,074) (0.42) 75,847 0.81Purchase of fixed assets /deferred expenses (4,418) (0.03) (11,795) (0.07)Correction profit carried forward — — — —Decrease/Increase in cashduring the year (55,492) (0.45) 64,052 0.74Cash at the beginning of the year 166,461 1.06 102,409 6.07Cash at the end of the year 110,969 0.71 166,461 6.81Notes to Financial Statements as of March 31, 2011 111 1I.I. I. General InformationThe Company was set up on May 17, 2000, through notarized contract under the formerfirm Insartor Holding SECHZEHNTE GmbH and was registered onJuly 04, 2000, with the commercial register at the district court in Munich (HRB 131937).The firm Insartor Holding SECHZEHNTE GmbH was changed in Minacs WorldwideGmbH with the shareholders resolution dated August 04, 2000. At the same time itwas concluded to transfer the Companys residence from Munich to Russelsheim.The change of the former firm Insartor Holding SECHZEHNTE GmbH in MinacsWorldwide GmbH as well as the residence transfer were registered on March 07, 2001,under HRB 3872 with the commercial register at the district court in Russelsheim.Within the course of concentration of keeping the commercial–, cooperativeassociation– and partnership register and the step-by-step establishment of an electronicregister Minacs Worldwide GmbH is registered from January 01, 2002, with thecommercial register at the district Court in Darmstadt under HRB 83872.
    • The subscribed capital of the Company amounts to EUR 25.000,00 and is paid intotally.The solely shareholder is Minacs Ltd., London.The purpose of the Company is to act as a provider of outsourced solutions incorporatingcustomer contact centre management and other professional services. The Companydesigns and delivers solutions that enable the customer relationship management ofits clients.During the period 01.04.2010 to 31.03.2011 most of the Companys revenue hasbeen generated by one major customer.II.II. II. Financial Information1.1. 1. General Accounting PolicyThe financial statements had been prepared in accordance with German GenerallyAccepted Accounting Principles, which are laid down in the Commercial Code.Fixed assets were carried at historical acquisition costs less accumulateddepreciation according to the straight-line method.The accrued expenses consider all recognized risks and uncertain commitments,based on reasonable commercial judgment.Liabilities were valued with their anticipated future settlement amounts.The provision for income taxes was calculated on the basis of the German taxableincome.2.2. 2. Other Informationa) Contingent LiabilitiesThere were no contingent liabilities on the Balance-Sheet date.b) Subsequent EventsThere have been no events occurred since March 31, 2011, which require
    • adjustments to the figures submitted in this report.III. Notes to Balance Sheet as at March 31, 2011April 1, 2010 to April 1, 2010 to April 1, 2009 to April 1, 2009 toMarch 31, 2011 March 31, 2011March 31, 2010 March 31, 2010INR/Cr INR/CrAssetsII I Fixed Assets (WDV) 16,987 0.11 20,281 0.13IIII II Investments 11,050 0.07 11,050 0.07IIIIII III Current Assets1.1. 1. Cash at Bank and in Handa) Cash at BankCommerz bank AGEUR-Account 00 29,021 0.19 47,783 0.29Deutschebank 76,184Komercni Banka GeneralAccount — — 114,968 0.71Commerz bank AGGBP-Account — — — —UniCredit Banca Italy 194 0.00 3,512 0.02Rent Deposit 5,448 0.03 — —Deutshce Bank HUF (95) (0.00) — —b) Cash in HandPetty cash in Germany 217 0.00 198 0.00110,969 0.22 166,461 1.032.2. 2. Accounts Receivables 1,649,627 10.53 1,752,586 10.82
    • 3.3. 3. Inter-company Receivablesa) Minacs Worldwide Inc.,Ontario, Canada 1,189,813 7.60 489,813 3.02b) Minacs Worldwide Inc.,Germany (261,523) (1.67) — —c) Minacs Worldwide Inc.,Management Fees 420,000 2.68 — —(70)MINACS WORLDWIDE GMBH, GERMANYCMYKd) Minacs Ltd., London,England (393,612) (2.51) 10,023 0.06e) Minacs Hungary 5,532 0.04 122 0.00960,210 6.09 499,957 3.094.4. 4. Prepaid Expenses 30,265 0.19 42,249 0.265.5. 5. Other AssetsAccounts receivables againstemployees 1,228 0.01 2,500 0.02Liabilities for pensiionschemes — — — —Advance payment forIncome Tax — —Value Added Tax — —1,228 0.01 2,500 0.02IV Liabilities
    • 6.6. 6. Accounts Payable (1522) (0.01) 3,219 0.027.7. 7. Accrued ExpensesAudit and legal expenses 30,300 0.19 36,650 0.23Disability 4,200 0.03 4,500 0.03Personnel expenses 117,000 0.75 6,000 0.04Foreign personnel expenses 60,000 0.38 — —Workmen’s compensation 25,000 0.16 25,000 0.15Outstanding holiday pay 162,000 1.03 190,000 1.17Bonus payment — — — —Other personnel liabilities 46,720 0.30 46,060 0.28Other accruals 5,500 0.04 59,959 0.37Outstanding expenses — —Total 450,720 2.88 368,169 2.278.8. 8. Other LiabilitySales tax payable (5,554) (0.04) (2,652) (0.02)Income and otherTaxes payable 36,490 0.23 7,101 0.0430,936 0.20 4,449 0.03Total 480,133 3.07 375,837 2.32April 1, 2011 10 to April 1, 2011 10 toApril 1, 2009 to April 1, 2009 toMarch 31, 2011 111 1 March 31, 2011 111 1 March 31, 2011 100 0 March 31, 2011 100 0INR/Cr INR/Cr9. Staff CostWages and salaries (4,040,131) (24.35) (4,245,153) (27.85)Social security, pensions
    • and other personnel expenses (926,450) (5.58) (941,884) (6.18)Subcontractor staff andminor services (124,391) (0.75) (26,448) (0.17)(5,090,971) (30.68) (5,213,485) (34.20)Wages and salaries (4,040,131) (24,35) (4,245,153) (27.85)Social security, pensionsand other personnel expenses (926,450) (5.58) (941,884) (6.18)Subcontractor staff andminor services (124,391) (0.75) (26,448) (0.17)Total (5,090,971) (30.68) (5,213,485) (34.20)10. Selling, General andAdministration ExpensesRent (19,798) (0.12) (34,384) (0.23)Gas, electricity & water (3,376) (0.02) (2,939) (0.02)Cleaning (4,747) (0.03) (3,315) (0.02)Insurances (652) (0.00) (583) (0.00)Other personnel expenses (234,523) (1.41) (229,574) (1.51)Representation andentertainment expenses (6,291) (0.04) (5,505) (0.04)Travel expenses (5,435) (0.03) (8,652) (0.06)Freight - out (1,336) (0.01) (905) (0.01)Other repair &Maintenance costs — — (1,013) (0.01)Mailing expenses (925) (0.01) (710) (0.00)Telephone, Internet (13,935) (0.08) (10,384) (0.07)
    • Office supplies (3,398) (0.02) (3,313) (0.02)Magazines, books,contributions (4,290) (0.03) (3,132) (0.02)Training expenses (22,800) (0.14) (18,861) (0.12)Legal, consulting andaccounting expenses (115,889) (0.70) (90,481) (0.59)Rent of equipment (5,825) (0.04) (4,424) (0.03)Bank charges (12,406) (0.07) (13,658) (0.09)Exchange losses (21,275) (0.13) (2,076) (0.01)Other supplies (8,180) (0.05) (10,549) (0.07)Total (485,081) (2.92) (444,458) (2.92)April 1, 2011 10 to April 1, 2011 10 toApril 1, 2009 to April 1, 2009 toMarch 31, 2011 111 1 March 31, 2011 111 1 March 31, 2011 100 0 March 31, 2011 100 0INR/Cr INR/Cr(71)MINACS KFT., HUNGARYCMYKUnaudited Balance Sheet as at 31st March, 2011 111 1Unaudited in HUFMarch 31, 2011 March 31, 2010HUF INR/Cr HUF INR/CrSOURCES OF FUNDSII I Shareholders’ FundsShare capital 3,000,000 0.07 3,000,000 0.07Retained earnings 81,252,998 1.88 69,544,015 1.63
    • Exchange fluctuationon FX translation — 0.06 — (0.05)84,252,998 2.01 72,544,015 1.65IIII II Loan Funds — — — —Total 84,252,998 2.01 72,544,015 1.65APPLICATION OF FUNDSII I Fixed AssetsProperty, plant andequipment, net — — 166,354 0.00Deferred development costs 306,546 0.01 134,936 0.00306,546 0.01 301,290 0.01IIII II Current AA AssetsCash and cash equivalents 66,482,212 1.59 84,120,524 1.92Accounts receivable 101,862,725 2.43 97,421,621 2.22Prepaid expenses 545,281 0.01 1,425,968 0.03Other receivables 597,513 0.01 13,759,783 0.31169,487,730 4.04 196,727,895 4.48LL Less LiabilitiesAccounts payable andaccrued liabilities 29,598,904 0.71 10,742,265 0.24Due to inter-companies 55,942,373 1.33 113,742,906 2.59Total 85,541,278 2.04 124,485,170 2.8483,946,452 2.00 72,242,725 1.65TT Totalal al 84,252,998 2.01 72,544,015 1.65Notes
    • FE Conversion Rate for HUF toINR as at the end of the year 0.23855 0.2279Unaudited Profit and Loss AA Account for the year ended 31st March, 2011 111 1Unaudited in HUFApril 1, 2011 10 to April 1, 2011 10 to April 1, 2009 to April 1, 2009 toMarch 31, 2011 111 1 March 31, 2011 111 1 March 31, 2011 100 0 March 31, 2011 100 0HUF INR/Cr HUF INR/CrRR Ree evv venues 392,468,062 8 .57 401,959,291 9.91ExpenditureLabour & Employee RelatedRemuneration 172,049,412 3.76 173,385,630 4.28Payroll Related 57,141,209 1.25 61,359,280 1.51Group Insurance 557,744 0.01 780,006 0.02Telecommunications 510,700 0.01 500,990 0.01Training and seminars 2 ,560,908 0.06 2,568,498 0.06Other dierct costs 33,842,010 0.74 32,373,811 0.80Total 266,661,983 5.82 270,968,215 6.67Gross profit 125,806,079 2 .75 130,991,076 3.24Selling, general and administrative expensesProfessional Services 7,755,082 0.17 7,300,170 0.18Recruiting 295,600 0.01 225,294 0.01Office Cost 425,059 0.01 537,987 0.01Other General and Admin. 9 ,445,942 0.21 6,331,476 0.16Total 17,921,683 0.39 14,394,927 0.35Earnings before interest expense, income
    • tt taxes, depreciation and amortization 11 107,884,396 2.35 11 111 16,596,149 2.88Depreciation and amortization — — — —Interest and financing expenses 1,173,112 0.03 1,781,984 0.04Management fee 81,900,000 1.79 90,072,000 2.22Currency Revaluation Difference 0.01 —Income (Loss) before income taxes 24,811,284 0.53 24,742,165 0.61PP Provision for (recovv very of) income taxesCurrent 13,102,300 0.29 10,091,000 0.25Future — — — -—13,102,300 0.29 10,091,000 0.25Net income (loss) for the period 11 11,708,984 0.25 11 14,651,165 0.36Earnings/(Deficit), beginning of period 69,544,015 1.63 54,892,850 1.27RR Retained earnings, end of period 81,252,998 1.88 69,544,015 1.63NotesAverage FE Conversion Rate for HUF toINR for the Financial Year 0.2183 0.2466(72)MINACS KFT., HUNGARYCMYKNotes to Financial Statements as of March 31, 2011 111 1I.I. I. General Information1. Business name:The name of the CompanyIn Hungarian: MINACS Telefoninformációs Szolgáltatások KftIn English: MINACS Call Center Services Limited
    • Tax registration number: 1311764974-2-41The abbreviated name of theCompany in Hungarian: MINACS Kft.The abbreviated name of theCompany in English: MINACS Ltd.Seat: Hungary 1114 Budapest, Ulaszlo street 27.The registered headquarter ofthe Company: Hungary 1138 Budapest, Váci út 169.2. The form of the Company: Limited liability companyThe Company was established in 2003 by the following owners:MINACS Worldwide GmbH 96,66%Julius Minacs 3,33%The Companys share capital is THUF3.000, which exclusively consists cashdeposits. The amount of it hasnt changedcompared to the last year.The managing director of Paul Lonford Niewoehnerthe Company: US-6115 Waterford,Grace K. DR. MI 48329-1328The Companys representation,The executives are entitled to register andregistration: represent the Company independently; themanagers appointed by the Generalmeeting are jointly entitled.The Companys present owners:Member Nominal Value THUF
    • MINACS Worldwide GmbH 2.900.000 HUFJulius Minacs 100.000 HUFThe MINACS Ltd. is going to consolidate by the Minacs Worldwide GmbH.The consolidated report can be seen at the seat of the Company.THE COMPANYS ACTIVITIES INCLUDE:82.20 Call center activities - main activity62.02 Computer consultancy activities63.11 Data processing hosting and related activities58.12 Publishing of directories and mailing lists62.09 Other information tec and service activities73.20 Market research and public opinion polling70.22 Business and management consulting82.99 Other business support servicesThe Company is only pursuing authorised activities owning the administrativelicense.Other:The financial year of the Company differs from the calendar year. The statementdate is March 31, 2011. The date of the preparation of the annual report isApril 10, 2011.Under the principle of completeness, the annual report includes those businessactivities which happened between the year end and the date of report preparation,and could affect the financial figures in the Balance Sheet and the Profit & Loss.TT The Form of the Financial StatementThe Company prepares a simplified annual report, accordingly it keeps double entry.The Company prepares an A type annual financial statement, with the so called
    • balance-like arrangement. The Company prepares its Profit and Loss Statement bythe A method, the cost summary method. It has formed its inner registrations,sub-ledger and chart of accounts, and their joining points in accordance with it.The data of the annual report are expressed in thousand HUF, if not indicatedotherwise.II.II. II. MAJOR ELEMENTS OF THE AA ACCOUNTING POLICYThe Company performs its activity in compliance with the regulations ofthe accounting law. The Company has established its policy for cashtreatment, inventory taking, and asset and liability valuation in accordance with theaccounting law.The Companys Accounting Policy has set out that under the principle of goingconcern the enforcement (the principle of integrity, authenticity, transparency,comparison, continuity, consistence, prudence, gross accounting, individualvaluation, accrual and deferral, priority of content over form, materiality andcomparison of cost and profit) should be ensured.It is considered to be a significant error if in the year of revealing the error duringdifferent checks considering a given business year (separately each year), the valueof the revealed errors and margins of error (independent of indication), increasing- decreasing profit and equity, the joint amount is above the 1% of the gross sum.It is considered an error influencing true and fair picture to a great extent if thecontracted value of the errors and margins significantly alters the equity. It isconsidered to be such an error in all cases when following the settling out there ismore than 20% change in the equity reported in the Balance Sheet of the previousfinancial year.In the case of the year-end assets and liabilities incurred in foreign currency or
    • exchange are going to be revaluated irrespective of the amount according topublished exchange rates of the HNB.Evaluation of the Assets in the Financial Statement1/ Intangible assetsIntangible assets are disclosed at purchase or production value, reduced byaccumulated depreciation, and at a value not exceeding their known market value.The calculation of depreciation is to be performed on a straight-line basis, by theapplication of the depreciation rates required for writing-off the intangible assetsover a period equal to the expected useful life of the assets. The expected usefullife of the intangible assets by categories:Rights representing value 7 yearsSoftware 3 years2/ Tangible assetsTangible assets are disclosed in the Balance Sheet at purchase or production value,reduced by accumulated deprecation. The calculation of deprecation is performedon a straight-line basis, by the application of the depreciation rates required for thewriting off of the tangible assets over a period equal to the expected useful life ofthe assets:Land and buildings 20 yearsTechnical equipment, machinery 3-7 yearsOther equipment 5-7 years3/ Financial investmentsInvestments representing ownership share in economic associations are disclosedat purchased price in the case of acquisition, while in the case of establishment atthe value set out in the Articles of Association, until their market value does not
    • permanently decrease below book value. In this case, they are valued at the marketvalue known as the date of preparation of the Balance Sheet.4/ Recognition of transactions in foreign currencyTransactions in foreign currency are accounted at the exchange rate of MNB asthe date of the transaction. The exchange gain or loss arising from the differencebetween the exchange rate as at the date of the financial fulfilment and thetransaction are disclosed in the Profit and Loss Statement.5/ Sales revenueNet sales revenues are accounted as at the date of fulfillment, and are exclusivelyof VAT.6/ Corporate taxThe corporate tax liability of the Company is accounted in the Profit and LossStatement on the basis of the regulations in the reported year.7/ Changes in the Companys accounting policyThe Companys accounting policy did not change during the year.III. FINANCIAL POSITION AND LIQUIDITYThere has been no such event since the date of the Balance Sheet, whichwould have a material impact on the Companys financial statement as at31 March, 2011. The liquidity of the Company was during the financial year insured.(73)MINACS KFT., HUNGARYCMYKIV.. . Notes to Balance Sheet as at March 31, 2011 111 1ADDITIONAL INFORMATION TO THE BALANCE SHEETApril 1, 2010 to April 1, 2010 to April 1, 2009 to April 1, 2009 to
    • March 31, 2011 March 31, 2011 March 31, 2010 March 31, 2010HUF INR/Cr HUF INR/Cr11 1 EquityShare capital 3,000,000 0.07 3,000,000 0.0722 2 AA Accumulated Profit Reservv vee eBalance at the beginningof the year 69,544,015 1.63 54,892,850 1.27Profits during the year from P&L 11,708,984 0.25 14,651,165 0.36Balance at the end of the year 81,252,998 11 1.88 69,544,011 155 5 11 1.6333 3 Liquid AA AssetsCommerzbank Hungary 65,667,800 1.57 83,147,371 1.89Petty cash 814,412 0.02 973,153 0.02Total: 66,482,2122 2 11 1.59 84,120,524 11 1.9244 4 ReceivablesTrade receivables 101,862,725 2.43 97,421,621 2.22Employee advances receivables — — — —Total: 11 100 01,862,725 2.43 97,421,621 2.2255 5 Other ReceivableValue added tax — — 12,267,783 0.28Income & other taxes payable/Receivables 597,513 0.01 1,492,000 0.03Total: 597,513 0.01 13,759,783 0.3166 6 LiabilitiesCurrent LiabilitiesTrade creditors 525,770 0.01 371,861 0.01
    • Accruals - General 10,542,955 0.25 1,000,370 0.02Accruals - Payroll 18,530,179 0.44 9,370,034 0.21Total: 29,598,904 0.71 10,742,265 0.2477 7 Due to Inter CompanyDue to GmbH Germany 1,467,047 0.03 32,345 0.00Due to MXW Canada 37,469,278 0.89 112,123,337 2.56Due to Minacs UK 17,006,048 0.41 1,587,223 0.04Total: 55,942,373 1.33 113,742,906 2.59VV V.. . Notes to Profit & Loss AA Account year ending March 31, 2011 111 1ADDITIONAL INFORMATION TO THE PROFIT & LOSSApril 1, 2011 10 to April 1, 2011 10 to April 1, 2009 to April 1, 2009 toMarch 31, 2011 111 1 March 31, 2011 111 1 March 31, 2011 100 0 March 31, 2011 100 0HUF INR/Cr HUF INR/Cr11 1 Labour & Employy yee Related RemunerationRegular Wages Paid 159,153,339 3.47 169,865,267 4.19Sick Pay 2,831,073 0.06 3,520,363 0.09Incentive Bonus Accrued 10,065,000 0.22 — —11 172,049,4122 2 3.766 6 11 173,385,630 4.2822 2 Payroll RelatedPayroll Taxes Direct 12,993,424 0.28 13,149,007 0.32401K/Pension Employer Match 38,478,741Medicare (US) 5,669,044 0.12 48,210,273 1.1957,141,209 0.41 61,359,280 1.5133 3 Other CostsTravel - Direct Cost 8,242,606 0.18 8,053,014 0.20
    • Project Disbursements 25,599,404 0.56 24,320,797 0.6033,842,010 0.74 32,373,811 0.8044 4 Professional ServicesAccounting Fees 7,755,082 0.17 6,922,255 0.17Corporate Legal Fees — — 377,915 0.017,755,082 0.17 7,300,170 0.1855 5 Office CostOffice Supplies & Minor Equipment 389,091 0.01 319,801 0.01Other Supplies 19,948 0.00 202,476 0.00Postage 16,020 0.00 15,710 0.00425,059 0.01 537,987 0.0166 6 Other General and AA Admin. CostNon-Cash Incentives - Indirect — — — —Other SG&A 9,445,942 0.21 6,319,280 0.14Penalty and Fine Charges — — 12,196 0.009,445,942 0.21 6,331,4766 6 0.144 477 7 Interest and Financing ExpensesBank Service Charges — — 785,504 0.02Foreign Currency Unrealised Gain — — 2,867 0.00Foreign Currency Realised Gain 1,358,830 0.03 1,229,518 0.03Other Interest Expenses (185,718) (0.00) (235,905) (0.01)1,173,111 122 2 0.03 1,781,984 0.0488 8 PP Provision for (Recovv very of) Income TT TaxesCurrent Income Tax 13,102,300 0.29 2,056,000 0.05State Tax — — 8,035,000 0.20
    • 11 13,102,3000 0 0.29 11 10,091,000 000 0 0.25(74)ADITYA BIRLA MINACS BPO LIMITEDCMYKREPORT OF THE DIRECT ORSFOR THE YEAR ENDED 31 MARCH, 2011The directors have pleasure in submitting their annual report with theaudited accounts of the group for the year.PRINCIPAL ACTIVITYThe principal activity of the group during the year under review was theprovision of personnel and related consultancy services from Asia.REVIEW OF BUSINESS AND FUTURE DEVELOPMENTSThe Group had a very positive year from the trading perspective.The Group returned to profit with a pretax figure of £10,686(2010 : loss of £169,923) on a revenue of £4.27m for the current year(2010: £ 4.37m). Cash on the Balance Sheet at the year end was£692,372 (2010 : £197,483).During the financial year, the Company changed its name from CompassBPO Ltd. to Aditya Birla Minacs BPO Limited.On the 24 February, 2011, Compass BPO FZE, a subsidiary undertaking,was wound up. Consultancy services continue to be provided in theregion since that date, and are supplied by Aditya Birla Minacs BPOPrivate Limited, which is another subsidiary undertaking based in India.DIVIDENDThe directors do not recommend the payment of a dividend.
    • (2010: £Nil).CREDITOR PAYMENT POLICYIt is the group’s policy to agree the terms of payment to creditors at thestart of business with that supplier, ensure that suppliers are aware ofthe terms of payment and to pay in accordance with its contractual andother legal obligations.EMPLOYEE INVOLVEMENTThe group’s policy is to consult and discuss with employees any matterslikely to affect their interests.Information on matters of concern to employees is given at staffmeetings and through information bulletins and reports.FINANCIAL RISKThe group’s operations expose it to a variety of financial risks that includethe credit risk, exchange rate risk, liquidity risk and interest rate risk.The group has in place risk management procedures to limit the adverseeffects on the financial performance of the Company by monitoringlevels of debt finance and related finance costs.DIRECTORSThe directors who served during the year were: -D. PatelM. KediaSTATEMENT OF DIRECTORS’ RESPONSIBILITIESThe directors are responsible for preparing the Directors’ Report andthe financial statements in accordance with applicable law andregulations.Company law requires the directors to prepare financial statements for
    • each financial year. Under that law the directors have elected to preparethe financial statements in accordance with United Kingdom GenerallyAccepted Accounting Practice (United Kingdom Accounting Standardsand applicable law). Under company law the directors must not approvethe financial statements unless they are satisfied that they give a trueand fair view of the state of affairs of the Company and of the profit orloss of the Company for that period. In preparing these financialstatements, the directors are required to:• select suitable accounting policies and then apply themconsistently;• make judgments and accounting estimates that are reasonableand prudent;• state whether applicable UK Accounting Standards have beenfollowed, subject to any material departures disclosed and explainedin the financial statements; and• prepare the financial statements on the going concern basis unlessit is inappropriate to presume that the Company will continue inbusiness.The directors are responsible for keeping adequate accounting recordsthat are sufficient to show and explain the Company’s transactions anddisclose with reasonable accuracy at any time the financial position ofthe Company and enable them to ensure that the financial statementscomply with the Companies Act, 2006. They are also responsible forsafeguarding the assets of the company and, hence, for takingreasonable steps for the prevention and detection of fraud and other
    • irregularities.So far as each of the directors is aware at the time the report is approved:• there is no relevant audit information of which the Company’sauditors are unaware; and• the directors have taken all steps that they ought to have taken tomake themselves aware of any relevant audit information and toestablish that the auditors are aware of that information.AUDITORSThe auditors, haysmacintyre, will be proposed for re-appointment inaccordance with S485 of the Companies Act, 2006.By order of the BoardD. PatelDirectorRegistered Office:Fairfax House15 Fulwood PlaceLondonWC1V 6AY 25 April, 2011(75)ADITYA BIRLA MINACS BPO LIMITEDCMYKINDEPENDENT REPOR T OF THE AUDI TORS TO THESHAREHOLDERS OFADITYA BIRLA MINACS BPO LIMITEDWe have audited the financial statements of Aditya Birla Minacs BPO
    • Limited for the year ended 31 March 2011, which comprise theConsolidated Profit and Loss Account, the Consolidated and CompanyBalance Sheets, the Consolidated Statement of Total Recognised Gainsand Losses and the related notes. The financial reporting frameworkthat has been applied in their preparation is applicable law and UnitedKingdom Accounting Standards (United Kingdom Generally AcceptedAccounting Practice).This report is made solely to the Company’s members, as a body, inaccordance with Chapter 3 of Part 16 of the Companies Act, 2006.Our audit work has been undertaken so that we might state to theCompany’s members those matters we are required to state to themin an Auditor’s report and for no other purpose. To the fullest extentpermitted by law, we do not accept or assume responsibility to anyoneother than the Company’s members as a body, for our audit work, forthis report, or for the opinions we have formed.Respective Responsibilities of Directors and AuditorsAs explained more fully in the Directors’ Responsibilities Statementset out on page 3, the directors are responsible for the preparation ofthe financial statements and for being satisfied that they give a trueand fair view. Our responsibility is to audit the financial statements inaccordance with applicable law and International Standards on Auditing(UK and Ireland). Those standards require us to comply with the AuditingPractices Board’s Ethical Standards for Auditors.Scope of the Audit of the Financial StatementsAn audit involves obtaining evidence about the amounts and disclosures
    • in the financial statements sufficient to give reasonable assurance thatthe financial statements are free from material misstatement, whethercaused by fraud or error. This includes an assessment of: whether theaccounting policies are appropriate to the Company’s circumstances,and have been consistently applied and adequately disclosed; thereasonableness of significant accounting estimates made by thedirectors; and the overall presentation of the financial statements.Opinion on Financial St atementsIn our opinion the financial statements:• give a true and fair view of the state of the group’s affairs as at31 March 2011, and of the group’s loss for the year then ended;• have been properly prepared in accordance with United KingdomGenerally Accepted Accounting Practice; and• have been prepared in accordance with the requirements of theCompanies Act, 2006.Opinion on other matter prescribed by the Companies Act, 2006In our opinion the information given in the Directors’ Report for thefinancial Year for which the financial statements are prepared isconsistent with the financial statements.Matters on which we are required to report by exceptionWe have nothing to report in respect of the following matters wherethe Companies Act, 2006, requires us to report to you if, in our opinion:• adequate accounting records have not been kept, or returnsadequate for our audit have not been received from branches notvisited by us; or
    • • the financial statements are not in agreement with the accountingrecords and returns; or• certain disclosures of directors’ remuneration specified by law arenot made; or• we have not received all the information and explanations werequire for our audit.Anastasia Frangos (Senior Statutory Auditor)for and on behalf of haysmacintyre, Statutory AuditorFairfax House15 Fulwood PlaceLondonWC1V 6AY(76)ADITYA BIRLA MINACS BPO LIMITEDCMYKCONSOLIDATED PR OFIT AND LOSS ACCO UNTFOR THE YEAR ENDED 31 MARCH, 2011Notes 2011 2010££Turnover Turnover 1 4,269,889 4,370,362Cost of Sales (1,914,541) (2,156,475)Gross Profit 2,355,348 2,213,887Administrative Expenses (2,362,527) (2,327,243)Operating Profit/(Loss) Operating Profit/(Loss) 2 (7,179) (113,356)Profit/(Loss) on Sale of Assets 7,415 (4,457)
    • Interest Receivable 11,273 4,290Interest Payabl e 3 (823) (56,400)Profit/(Loss) on OrdinaryActivities Before Taxation 10,686 (169,923)Taxation Taxation 5 (23,597) (1,525)Profit/(Loss) for the FinancialYear After Taxation Year After Taxation 12 £(12,911) £(171,448)All results relate to continuing activities.Statement of Total Recognised Gains and Losses2011 2010££Profit/(Loss) for the Financial Year (12,911) (171,448)Exchange Translation Differences (12,461) 11,505Total Recognised Gains and Lossesrelating to the year £(25,372) £(159,943)The attached notes form an integral part of these accounts.COMPANY PR OFIT AND LOSS ACCOUNTFOR THE YEAR ENDED 31 MARCH, 20112011 2010££££SALES 1,693,646 2,049,167LESS: COST OF SALES (1,329,085) (1,803,959)GROSS PROFIT GROSS PROFIT 364,561 245,208Profit on Sale of Assets — (60)Interest Received 34 41
    • Interest Payable / Guarantee Commission — (55, 858)Exchange Gain / (Loss) (18,557) (35,818)346,038 153,513LESS: OVERHEADSTelephone 27,103 31,323Insurance 32,095 33,348Printing, postage and stationery 135 2,580Entertaining and Staff Welfare — 133Rent and Electricity for Premises 27,297 34,282Rent for Data Centre 4,680 4,680Accountancy Fees 8,580 15,050Bank Charges 4,634 10,699Legal and Professional Fees 11,980 121,086Marketing Costs 51,854 35,844Commission Charges 21,180 21,819Sales Support 24,000 24,000Salaries 23,100 23,535Social Security 2,229 2,227Meetings and Conferences 198 1,657Office Expenses 2,791 2,185Write-off Inter-company Loan 49,675 —Depreciation 709 1,749Travel Expenses — 1,647Computer Maintenance and Support 7,600 7,448Bad Debts 134,761 —
    • (434,601) (375,292)PROFIT / (LOSS) ON ORDINARYACTIVITIES £ (88,563) £ (221,779)(77)ADITYA BIRLA MINACS BPO LIMITEDCMYKCONSOLIDATED BALANCE SHEETAS AT 31 MARCH, 20112011 2010Notes £ £ £ £FIXED ASSETSTangible Assets 6 148,756 299,210Current AssetsDebtors 8 767,470 946,096Cash at Bank and in Hand 692,372 197,4831,459,842 1,143,579Creditors Creditors: Amounts fallingdue within one year 9 (747, 886) (556,705)711,956 586,874Net Assets Net Assets £860,712 £886,084CAPITAL AND RESERVESCalled up Share Capital 10 18,967 18,967Share Premium 11 1,145,206 1,145,206Profit and Loss Account 12 (303,461) (278,089)TOTAL SHAREHOLDERS’ FUNDS 13 £860,712 £886,084
    • The financial statements were approved and authorised for issue by the Board on25 April, 2011, and were signed below on its behalf by:-D. Patel M. KediaDirector DirectorThe attached notes form an integral part of these accounts.COMPANY BALANCE SHEETAS AT 31 MARCH, 20112011 2010Notes £ £ £ £FIXED ASSETSTangible Assets 6 797 1,507Investments 7 246,226 268,548247,023 270,055CURRENT ASSETSDebtors 8 715,869 698,620Cash at Bank and in Hand 209,536 144,669925,405 843,289CREDITORS CREDITORS: Amounts fallingdue within one year 9 ( 333,607) (185,960)591,798 657,329NET ASSETS £838,821 £927,384CAPITAL AND RESERVESCalled up Share Capital 10 18,967 18,967Share Premium 11 1,145,206 1,145,206Profit and Loss Account 12 (325,352) (236,789)TOTAL SHAREHOLDERS’ FUNDS TOTAL SHAREHOLDERS’ FUNDS13 £838,821 £927,384
    • The financial statements were approved and authorised for issue by the Board on25 April, 2011, and were signed below on its behalf by:-D. Patel M. KediaDirector DirectorThe attached notes form an integral part of these accounts.(78)ADITYA BIRLA MINACS BPO LIMITEDCMYKNOTES TO THE A CCOUNTS FOR THE YEAR ENDED 31 MARCH, 20111. Turnov erTurnover is attributable to the principal activity of the group, net of Value Added Tax.A geographical analysis of turnover is as follows:2011 2010Group Group££United Kingdom 1,693,646 2,098,751Rest of the world 2,576,243 2,271,611£4,269,889 £4,370,3622. Operating Profit/(Loss)2011 2010Group Group££Operating Profit/(Loss) is stated after charging:Depreciation 124,186 136,447Payments made under Operating Leases 162,458 347,348Auditors’ Remuneration - Audit 12,500 8,500
    • - Other Services 8,144 12,4763. Interest Payable2011 2010Group Group££10% Convertible Loan Stock Interest — 47,725Guarantee Commission — 4,896Bank Loan Interest 823 3,779£823 £56,4004. Employees2011 2010Group Group££Staff Costs (including directors) during the year amounted to:Wages and Salaries 1,769,159 2,214,508Social Security Costs 2,229 2,227£1,771,388 £2,216,735No. No.The average weekly number of Employeesduring the year was: 271 363Directors’ Remuneration 2011 2010Group Group££Directors’ Fees (paid through subsidiary undertakings) £ — £411,009Pension contributions are made to a defined contribution scheme. All assets therein
    • are independent of the group.5. Tax on Ordinary Activities(a) Analysis of tax charge for the year: 2011 2010££UK Corporation Tax at current rates — (23,896)Overseas Taxation 3,655 28,986Under/(Over) Provision of UK CorporationTax in previous year — (300)Total Current Tax (note b) 3,655 4,790Overseas Deferred Taxation 19,942 (3,265)Total Tax Charge for the year £23,597 £1,525(b) Factors affecting Tax Charge for year:The corporation tax assessed for the year is different from the standard companiesrate of corporation tax in the UK of 28% (2010: 28%). The differences are explainedbelow:2011 2010££Profit/(Loss) on ordinary activities before tax £10,686 £(169,923)Profit/(Loss) on ordinary activities before taxmultiplied by the main rate of Corporation Taxin the UK of 28% (2010: 28%) 2,992 (47,578)STATEMENT OF ACCOUNTING POLICIESFOR THE YEAR ENDED 31 MARCH, 2011The financial statements have been prepared in accordance with applicable accountingstandards. The particular accounting policies adopted are described below:
    • (a) Basis of AccountingThe accounts have been prepared under the historical cost convention and inaccordance with applicable accounting standards.(b) Basis of ConsolidationThe group financial statements consolidate the accounts of Aditya Birla Minacs BPOLimited and its subsidiary undertakings made up to 31 March each year; the groupprofit and loss account includes the results of the subsidiary undertaking for theperiod from the date of their incorporation or acquisition and up to the date of disposal.No profit and loss account is presented for Aditya Birla Minacs BPO Limited as providedby S408 of the Companies Act, 2006. The holding companys loss for the year was£88,563 (2010: loss £197,584).(c) TurnoverTurnover arises from the principal activity of the Company.(d) Foreign CurrencyCompanyAssets and liabilities on foreign currencies are translated at the rates of exchangeruling at the balance sheet date. Transactions on foreign currencies are recorded atthe rate of exchange ruling at the date of the transaction. All differences are taken tothe profit and loss account.GroupThe balance sheets of overseas subsidiary undertakings are translated at the rate ofexchange ruling at the balance sheet date and the profit and loss accounts aretranslated at the average rates for the year. The exchange differences arising on there-translation of opening net assets is taken directly to reserves.(e) Deferred Taxation
    • Deferred taxation is provided on the full provision method to take account of timingdifferences between the treatment of certain items for accounts purposes and theirtreatment for tax purposes. Tax deferred or accelerated is accounted for in respectof all timing differences, where material.(f) Hire Purchase AgreementsAssets acquired under hire purchase contracts are capitalized in the balance sheet,and are depreciated over their expected useful lives. The interest element of theinstalments is charged to the profit and loss account over the period of the contract.(g) Operating Lease AgreementsRentals applicable to operating leases where substantially all of the benefits andrisks of ownership remain with the lessor are charged against profit as incurred.(h) Pension CostsContributions to defined contribution pension schemes are charged to the profit andloss account in the period in which they become payable. Aditya Birla Minacs BPOPrivate Limited operates a defined benefit pension scheme, known as CompassDevelopment (India) Pvt. Ltd. Employees Group Gratuity Assurance Scheme, coveringall eligible employees. The deficit on the pension scheme has been provided for inthe financial statements.(i) Tangible Fixed Assets and DepreciationDepreciation is calculated to write off the cost of the assets, net of disposal proceeds,over their anticipated useful lives at the following rates:Computer Equipment — 331/3
    • % straight lineEquipment — 331/3% straight lineMotor Vehicles — 331/3% straight line(j) InvestmentsFixed asset investments are shown at the lower of cost or directors valuation.(k) TaxationCorporation tax is provided for at the current rates.(l) Cash Flow StatementThe directors have taken advantage of the exemptions available in Financial ReportingStandard No.1 from the requirement to produce a cash flow statement.(79)ADITYA BIRLA MINACS BPO LIMITEDCMYKEffects of:2011 2010££Amounts not subject to UK Corporation Tax (27,790) (14,520)
    • Expenses not deductible for tax purposes 14,929 21,531Capital Allowances for the year in excess of depreciation (9) (327)Effect of Change in Tax Rates — 8,232Losses carried forward 9,878 17,134Other timing differences — (8,368)Current Tax Charge for the year £ — £(23,682)The company is carrying forward tax losses of £96,468 (2010: £61,193) to offset againstfuture profits.6. TANGIBLE FIX ED ASSETS Group CompanyFixturesFittingsComputer and Office Motor GroupEquipment Equipment Vehicles Total Equipment Total££££££COST1 April, 2010 485,115 320,937 37,608 843,660 2,236 2,236Additions 870 1,5 37 — 2,407 — —Forex Adjustment (29,244) (21,272) (1,215) (51,731) — —Disposals (61,087) (8,135) (36,393) (105,615) — —At 31 March, 2011 395,654 293,067 — 688,721 2,236 2,236DEPRECIATION1 April, 2010 431,072 83,940 29,438 544,450 729 729Charge for Year 33,940 85,912 4,332 124,184 710 710Forex Adjustment (27,271) (8,376) 292 (35,355) — —
    • Disposals (54,072) (5,183) (34,062) (93,316) — —At 31 March, 2011 383,670 156,293 — 539,963 1,439 1,439NET BOOK VALUE31 March, 2011 £11,982 £136,775 £ — £148,758 £797 £79731 March, 2010 £54,043 £236,997 £8,170 £299,210 £1,507 £1,5077. INVESTMENT IN SUBSIDIARY UNDERTAKINGSCompanyCOST £As at 1 April, 2010 268,548Additions 144,983Disposals (167,305)At 31 March, 2011 £246,226The Company’s investments are comprised of the following:Company Class of % Cost ofof Shares Held Investmentincorporation HeldAditya Birla Minacs BPOPrivate Limited India Ordinary 100% 101,188Aditya Birla Minacs BPOPrivate Limited India 5% Preference 100% 144,983Compass BPO Inc. US Ordinary 100% 55The principal activities of Aditya Birla Minacs BPO Pvt. Ltd. and Compass BPO Inc.are the provision of personnel and related consultancy services from Asia.On 23 August, 2010, the companys entire preference shareholding in Aditya BirlaMinacs BPO Pvt. Ltd. was redeemed and the proceeds reinvested in further preference
    • share capital of that Company.On the 24 February, 2011, Compass BPO FZE was wound up and the 100%investment in that company disposed of.8. DEBTORS2011 2010Group Company Group Company££££Trade Debtors 493,098 139,974 471,776 160,165Other Debtors 220,523 48,794 321,934 15,818Due from Subsidiary Undertakings — 493,121 — 488,611Prepayments and Accrued Income 29,953 10,084 128,490 10,130Corporation Tax Recoverable 23,896 23,896 23,896 23,896£767,470 £715,869 £946,096 £698,6209. CREDITORS: Amounts falling due within one year:2011 2010Group Company Group Company££££Trade Creditors 59,726 11,069 214,450 97,831Amounts Owed to Group Undertakings 290,333 262,505 — 19,665Other Taxation and Social Security 34,098 22,166 60,110 41,038Other Creditors 3,685 — 83,206 —Corporation Tax 38,150 — 54,230 —Accruals 321,894 37,867 144,709 27,426£747,886 £333,607 £556,705 £185,96010. SHARE CAPITAL
    • Group and Company 2011 2010££Allotted, Issued and Fully Paid:75,866 (2010: 75,866) Ordinary Shares of £0.25 each £18,967 £18,96711. SHARE PREMIUM2011 2010Group and Company Group Group££Share Premium at 1 April, 2010 1,145,206 765,173Premium on Issue of Shares — 348,372Transfer from other reserves on conversion of loan notes — 31,661Share premium at 31 March, 2011 £1,145,206 £1,145,20612. PROFIT AND LOSS ACCOUNT2011 2010Group Company Group Company££££Brought forward at 1 April, 2010 (278,089) (236,789) (118,146) (39,205)Profit/(Loss) for the financial year ( 12,911) (88,563) (171,448) (197,584)Exchange gain on currency transl ation (12,461) — 11,505 —Carried forward at 31 March, 2011 £(303,461) £(325,352) £(278,089) £(236,789)13. Reconciliation of Movements in Shareholders’ Funds2011 2010Group Company Group Company££££New Share Capital (including share premium) — — 350,779 350,779
    • Profit/(Loss) for the financial year (12,911) (88,563) (171,448) (197,584)Exchange gain on currency translation (12,461) — 11,505 —Opening Shareholders Funds 886,084 927,384 695,248 774,189Closing Shareholders Funds £860,712 £838,821 £886,084 £927,38414. Pension CommitmentsAditya Birla Minacs BPO Pvt. Ltd., operates a defined benefit pension scheme, foreligible staff. It is funded by the payment of contributions to a separately administeredtrust fund. The assets of the scheme are held separately from those of the group.The Group adopts the valuation and disclosure requirements of FRS 17 "RetirementBenefits". The Group includes the assets and liabilities of the pension fund in theGroups Balance Sheet, with a subsequent effect on reserves.NOTES TO THE ACCOUNTS (continued)(80)ADITYA BIRLA MINACS BPO LIMITEDCMYKThe pension contributions are determined with the advice of a qualified actuary onthe basis of annual valuations using the method. The most recent valuation wasconducted as at 31March, 2011. The principal assumptions used by the actuarieswere that the return on assets would be 9% per annum and salaries would increaseby 6% per annum. The market value of the assets at 31 March, 2011, was £34,218.The pension charge for the year was £64,696 (2010: £17,017). Contributions to thescheme are expected to remain at this level in the future.The key assumptions were as follows:Main Assumptions % per annum2011 2010
    • Rate of Return on Investments 9% 9%Increase in Earnings 6% 4%Discount Rate 8% 8%Value at Value at31 March 2011 31 March 2010£’000s £’000sMarket Value of Assets 34 34Present Value of Scheme Liabilities (99) (53)Net Pension Scheme Liability (65) (19)The movement in the deficit during the year arose as follows: 2011£’000sDeficit as at 1 April 2010 (19)Movement in present value of scheme liabilities (18)Interest Earned 3Settlements (19)Employer Contributions 21Exchange Gains (34)Deficit as at 31 March, 2011 (65)1 5. Operating Lease CommitmentsAt 31 March, 2011 the Company had the following annual commitments undernon-cancellable operating leases.2011 2010Group GroupLand and Land andBuildings Buildings
    • ££Operating Leases which expire:– within one year 81,923 64,652– within one to two years 12,600 –– within two to five years – 12,60016. Related Party TransactionsThe Company has taken advantage of the exemption available under FRS 8 "RelatedParty Disclosures" not to disclose transactions with its 100% owned subsidiaries.During the year, the Company was recharged £212,621 by its immediate parentcompany, Aditya Birla Minacs Worldwide Inc., for shared sales costs and managementfees. These fees remained unpaid at the year end and are included within amountsdue to group undertakings in note 9.17. Contingent LiabilitiesThe Company is a joint guarantor in respect of loan and overdraft facilities granted toAditya Birla Minacs Private Limited, the Companys wholly owned subsidiary.The loan and overdraft facilities provided by The IDBI Bank amounted to £35,000.At the year end, no amount was drawn.18. ControlThe ultimate parent company and controlling party is Aditya Birla Nuvo Limited, acompany listed on the Bombay Stock Exchange.The largest group into which Aditya Birla Minacs BPO Limited is consolidated isheaded by Aditya Birla Nuvo Limited.The smallest group into which Aditya Birla Minacs BPO Limited is consolidated isheaded by Aditya Birla Minacs Worldwide Inc., its immediate parent company.NOTES TO THE ACCOUNTS (continued)
    • (81)ADITYA BIRLA MINACS BPO PVT. LTD. (Formerly: Compass Business Process Outsourcing Pvt. Ltd.)CMYKDIRECTORS’ REPOR T TO THE MEMBER SYour Directors have pleasure in presenting the 13thAnnual Report andthe Audited Accounts for the year ended 31stMarch, 2011.FINANCIAL RESULTS:(` in Lacs)31.03.2011 31.03.2010Sales and Other Income 1,870.45 2,409.23Profit/(Loss) before Depreciation 51.85 231.09Depreciation (85.16) (88.64)Profit/(Loss) before Taxation (33.31) 142.45Provision for Taxation (14.78) (8.85)Profit/(Loss) after Taxation (48.09) 133.60Loss Brought Forward (13.25) (146.85)Accumulated Profit/(Loss)Carried to Balance Sheet (61.34) (13.25)DIVIDENDThe Company has made loss during the year. However, it has beendecided to retain the profits and, hence, the directors do not recommend
    • any dividend for the year.DIRECTORS’ RESPONSIBILITY STATEMENTPursuant to the requirement under Section 217(2AA) of the CompaniesAct, 1956, with respect to Directors’ Responsibility Statement, it ishereby confirmed:(i) that in the preparation of the annual accounts for the financial yearended 31.03.2011 the applicable accounting standards have beenfollowed along with proper explanation relating to materialdepartures;(ii) the Directors had selected such accounting policies and appliedthem consistently and made judgments and estimates that arereasonable and prudent so as to give a true and fair view of thestate of the affairs of the Company at the end of the financial yearand of the profit or loss of the Company for that period;(iii) the Directors had taken proper and sufficient care for themaintenance of adequate accounting records in accordance withthe provisions of this Act for safeguarding the assets of theCompany and for preventing and detecting fraud and otherirregularities; and(iv) that the Directors have prepared the accounts for the financial yearended 31.03.2011 on a on going concern’ basis.PARTICULARS OF CONSERVATION OF ENERGY ANDTECHNOLOGY ABSORPTIONSince your Company is a 100% export-oriented unit and only operatesin data processing and development, the information as required under
    • Section 217(1)(e) of the Companies Act, 1956, read with The Companies(Disclosure of Particular in the Report of the Board of Directors) Rules,1988, are reported below to the extent applicable.The Company has not deployed and imported Technology to carry outits process. The consumption of energy is minimal. The Company willtake suitable steps, if required, in future for reduction of consumptionof energy.PARTICULARS OF EMPLOYEESThere were no employees covered by the provisions of Section 217(2A) of the Companies Act, 1956, read with companies (Particulars ofEmployees) Rules, 1975, whose particulars are required to be given.FOREIGN EXCHANGEYour Company remains to be net foreign exchange earner for India.(` in Lacs)31.03.2011 31.03.2010Export Earnings for Service 1,856.49 2,406.34Less: Expenses— Capital NIL 8.54— Others 25.53 24.74Net Foreign Exchange Earnings 1,830.96 2,373.06STATUTORY AUDITORSThe report of the Statutory Auditors, S. V. Ghatalia & Company,Chartered Accountants, Mumbai, is attached to this report. Theobservations made in the Auditors’ Report are self explanatory and,therefore, do not call for any further comments under Section 217(3)
    • of the Companies Act, 1956.Your Directors request you to appoint Auditors for the current year asset out in the accompanying notice of the Annual General Meeting.DEPOSITSThe Company has not accepted any deposit during the financial year.NAME CHANGEYour Company has changed its name from Compass Business ProcessOutsourcing Private Limited to Aditya Birla Minacs BPO Private Limitedw.e.f. 15thNovember, 2010.ISSUE OF COMPULSORILY CONVERTIBLE PREFERENCE SHARESAND REDEMPTION OF EXISTING PREFERENCE SHARESYour Company had issued 65,625, 5% Compulsorily ConvertiblePreference Shares of ` 100 each at a premium of ` 60 per shareaggregating to a total consideration of ` 1 Crore 5 Lacs to Aditya BirlaMinacs BPO Limited, UK (f/k/a Compass BPO Limited, UK), holdingcompany of your Company.Your Company had thereon redeemed 105,000, 10% RedeemablePreference Shares of ` 100/- each aggregating to a total value of` 1 Crore 5 Lacs during the year. The said Preference Shares wereallotted to Aditya Birla Minacs BPO Limited, UK (f/k/a Compass BPOLimited, UK), holding company of your Company.ACKNOWLEDGEMENTSYour Directors thank Aditya Birla Minacs BPO Ltd., UK, for their
    • continuous support and guidance given to the Company.Your Directors are also thankful to the various Governments’ Agenciesand Banks for their valuable support. The Directors also express theirappreciation to all Employees, Staff and Shareholders of the Company.For and on behalf of the Board ofAditya Birla Minacs BPO Pvt. Ltd.sd/ sd/Place: Mumbai Mr. Deepak J. Patel Mr. Manoj Kediadate : April 22, 2011 Director Director(82)ADITYA BIRLA MINACS BPO PVT. LTD. (Formerly: Compass Business Process Outsourcing Pvt. Ltd.)CMYKAUDITORS’ REPOR TToThe Members of Aditya Birla Minacs BPO Private Limited(Formerly Compass Business Process Outsourcing Private Limited)1. We have audited the attached Balance Sheet of Aditya Birla MinacsBPO Limited (Formerly Compass Business Process OutsourcingPrivate Limited) (‘the Company’) as at March 31, 2011, and alsothe Profit and Loss Account, and the Cash Flow Statement for theyear ended on that date annexed thereto. These financialstatements are the responsibility of the Company’s management.Our responsibility is to express an opinion on these financialstatements based on our audit.2. We conducted our audit in accordance with auditing standards
    • generally accepted in India. Those Standards require that we planand perform the audit to obtain reasonable assurance aboutwhether the financial statements are free of material misstatement.An audit includes examining, on a test basis, evidence supportingthe amounts and disclosures in the financial statements. An auditalso includes assessing the accounting principles used andsignificant estimates made by management, as well as evaluatingthe overall financial statement presentation. We believe that ouraudit provides a reasonable basis for our opinion.3. As required by the Companies (Auditor’s Report) Order, 2003 (asamended), issued by the Central Government of India, in terms ofsub-section (4A) of Section 227 of the Companies Act, 1956, weenclose in the Annexure a statement on the matters specified inparagraphs 4 and 5 of the said Order.4. Further to our comments in the Annexure referred to above, wereport that:i. We have obtained all the information and explanations, whichto the best of our knowledge and belief were necessary forthe purposes of our audit;ii. In our opinion, proper books of account as required by lawhave been kept by the Company so far as appears from ourexamination of those books;iii. The balance sheet, profit and loss account, and cash flowStatement dealt with by this report are in agreement with thebooks of account;
    • iv. In our opinion, the balance sheet, profit and loss account, andcash flow statement dealt with by this report comply with theaccounting standards referred to in sub-section (3C) of section211 of the Companies Act, 1956;v. On the basis of the written representations received from thedirectors, as on March 31, 2011, and taken on record by theBoard of Directors, we report that none of the directors isdisqualified as on March 31, 2011, from being appointed as adirector in terms of clause (g) of sub-section (1) of section 274of the Companies Act, 1956;vi. In our opinion and to the best of our information and accordingto the explanations given to us, the said accounts give theinformation required by the Companies Act, 1956, in themanner so required and give a true and fair view in conformitywith the accounting principles generally accepted in India:a) in the case of the balance sheet, of the state of affairs ofthe Company as at March 31, 2011;b) in the case of the profit and loss account, of the loss forthe year ended on that date; andc) in the case of the cash flow statement, of the cash flowsfor the year ended on that date.For S.V. Ghatalia & AssociatesFirm Registration Number: 103162WChartered Accountantsper Himanshu Chapsey
    • PartnerMembership No.: 36738Place : MumbaiDate : April 25, 2011Annexure ref er red to in paragraph [3] of our report of e ven dateRe: Aditya Birla Minacs BPO Private Limited(Formerly Compass Business Process Outsourcing Private Limited)(‘the Company’)(i)(a) The Company has maintained proper records showing fullparticulars, including quantitative details and situation offixed assets.(b) Fixed assets have been physically verified by themanagement during the year and no material discrepancieswere identified on such verification.(c) There was no substantial disposal of fixed assets duringthe year.(ii) The Company does not have any inventory and, hence, this clause(ii) of the Order is not applicable.(iii) (a) As informed, the Company has not granted any loans,secured or unsecured, to companies, firms or other partiescovered in the register maintained under section 301 oftheCompanies Act, 1956. Accordingly, provisions ofclauses 4(iii) (b) (c) and (d) of the Companies (Auditor’s
    • Report) Order, 2003 (as amended), are not applicable.(b) As informed, the Company has not taken any loan, securedor unsecured, from companies, firms or other partiescovered in the register maintained under section 301 ofthe Act. Accordingly, provisions of clauses 4(iii) (f) and (g)of the Companies (Auditor’s Report) Order, 2003 (asamended), are not applicable to the Company.(iv) In our opinion and according to the information and explanationsgiven to us, there is an adequate internal control systemcommensurate with the size of the Company and the nature ofits business, for the purchase of inventory and fixed assets andfor the sale of goods and services. During the course of our audit,no major weakness has been noticed in the internal controlsystem in respect of these areas. During the course of our audit,we have not observed any continuing failure to correct majorweakness in internal control system of the Company.(v) According to the information and explanations provided by themanagement, we are of the opinion that there are no contractsor arrangement referred to in section 301 of the Act that needsto be entered into the register maintained under section 301 ofthe Act.(vi) The Compa ny has not accepted any deposits from the public.(vii) In our opinion, the Company has an internal audit systemcommensurate with the size and nature of its business.(viii) To the best of our knowledge and as explained, the Central
    • Government has not prescribed maintenance of cost recordsunder clause (d) of sub-section (1) of section 209 of theCompanies Act, 1956, for the products of the Company.(ix) (a) The Company is generally regular in depositing withappropriate authorities undisputed statutory dues includingprovident fund, income-tax, sales tax, wealth tax, servicetax, customs duty, cess and other material statutory duesapplicable to it. The provisions relating to investor educationand protection fund and excise duty are not applicable tothe Company. Further, since the Central Government hastill date not prescribed the amount of cess payable undersection 441 A of the Companies Act, 1956, we are not ina position to comment upon the regularity or otherwise ofthe Company in depositing the same.(b) According to the information and explanations given tous, no undisputed amount payable in respect of providentfund, income-tax, wealth tax, service tax, sales tax,customs duty, cess and other undisputed statutory dueswere outstanding at the year end, for a period of morethan six months from the date they became payable. Theprovisions of investor education and protection fund andexcise duty are not applicable to the Company.(83)ADITYA BIRLA MINACS BPO PVT. LTD. (Formerly: Compass Business Process Outsourcing Pvt. Ltd.)CMYK
    • (c) According to the information and explanations given tous, there are no dues of income-tax, sales tax, wealth tax,service tax, customs duty and cess, which have not beendeposited on account of any dispute.(x) The Company has no accumulated losses at the end of thefinancial year and it has not incurred cash losses in the currentand immediately preceding financial year.(xi) Based on our audit procedures and as per the information andexplanations given by the management, we are of the opinionthat the Company has not defaulted in repayment of dues to afinancial institution, bank or debenture holders.(xii) According to the information and explanations given to us andbased on the documents and records produced to us, theCompany has not granted loans and advances on the basis ofsecurity by way of pledge of shares, debentures and othersecurities.(xiii) In our opinion, the Company is not a chit fund or a nidhi / mutualbenefit fund / society. Therefore, the provisions of clause 4(xiii)of the Companies (Auditor’s Report) Order, 2003 (as amended),are not applicable to the Company.(xiv) In our opinion, the Company is not dealing in or trading in shares,securities, debentures and other investments. Accordingly, theprovisions of clause 4(xiv) of the Companies (Auditor’s Report)Order, 2003 (as amended), are not applicable to the Company.(xv) According to the information and explanations given to us, the
    • Company has not given any guarantee for loans taken by othersfrom bank or financial institutions.(xvi) The Com pany did not have any term loans outstanding duringthe year.(xvii) According to the information and explanations given to us andon an overall examination of the balance sheet of the Company,we report that no funds raised on short-term basis have beenused for long-term investment.(xviii) The Company has not made any preferential allotment of sharesto parties or companies covered in the register maintained undersection 301 of the Companies Act, 1956.(xix) The Company did not have any outstanding debentures duringthe year.(xx) The Company has not raised any money from public issues duringthe year.(xxi) Based upon the audit procedures performed for the purpose ofreporting the true and fair view of the financial statements andas per the information and explanations given by themanagement, we report that no fraud on or by the Company hasbeen noticed or reported during the course of our audit.For S.V. Ghatalia & AssociatesFirm Registration Number: 103162WChartered Accountantsper Himanshu ChapseyPartner
    • Membership No.: 36738Place : MumbaiDate : April 25, 2011.(84)ADITYA BIRLA MINACS BPO PVT. LTD. (Formerly: Compass Business Process Outsourcing Pvt. Ltd.)CMYKAs per our report of even date For and on behalf of the Board of DirectorsFor S.V . Ghat alia & A ssociatesFirm Registration No. 103162WChartered Accountants Mr. Deepak PatelDirectorper Himanshu ChapseyPartner Mr. Manoj KediaMembership No: 36738 DirectorPlace: Mumbai Place: MumbaiDate : April 25, 2011 Date : April 25, 2011BALANCE SHEE T AS AT MARCH 31, 2011Schedule March 31, March 31,2011 2010(`)(`)SOURCES OF FUNDSShareholders’ FundsShare capital 11 13,493,500 17,431,000Securities premium 22 3,937,500 —Loan funds
    • Secured loans 33 — 637,140Unsecured loans 44 1,852,283 1,852,283Total 19,283,283 19,920,423APPLICATION OF FUNDSFixed assets 5Gross block 49,326,248 56,331,620Less : Accumulated depreciation 38,817,707 36,675,776Net block 10,508,541 19,655,844Deffered tax asset Deffered tax asset — 1,478,000Current assets, loans andadvancesSundry debtors 66 18,911,494 1,334,632Cash and bank balances 77 31,685,589 3,457,283Loans and advances 88 15,408,828 25,920,94466,005,911 30,712,859Less : Current liabilities andprovisionsCurrent liabilities 99 48,985,985 29,383,650Provisions 10 10 14,378,906 3,867,10163,364,891 33,250,751Net current assets 2,641,020 (2,537,892)Profit and loss account 6,133,722 1,324,471Total 19,283,283 19,920,423Significant accounting policies 15and notes on accounts
    • The Schedules referred to above form an integral part of the balance sheet.PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED ONMARCH 31, 2011March 31, March 31,2011 2010Schedule ( ` ) ( ` )INCOMEIncome from services 185,648,849 240,634,675Other income 11 11 1,395,730 288,847Total income 187,044,579 240,923,522EXPENDITUREPersonnel expenses 12 12 129,880,981 140,669,881Operating and other expenses 13 13 51,922,552 77,104,319Finance expenses 14 14 56,181 39,334Depreciation 8,516,116 8,864,548190,375,830 226,678,083Profit / (Loss) before tax (3,331,251) 14,245,439Current tax — 1,111,000Deferred tax charge 1,478,000 (226,017)Profit / (Loss) after tax (4,809,251) 13,360,456Profit / (Loss) brought forwardfrom the previous year (1,324,471) (14,684,928)Balance carried forwardto the balance sheet (6,133,722) (1,324,471)Earnings per share
    • (basic and diluted)[Nominal value of shares ` 10Previous year: ` 10] (Refer NoteC.9 of Schedule 15) (7.23) 17.83Significant Accounting Policies 15and Notes on AccountsThe Schedules referred to above form an integral part of the profit and loss accountAs per our report of even date For and on behalf of the Board of DirectorsFor S.V . Ghat alia & A ssociatesFirm Registration No. 103162WChartered Accountants Mr. Deepak PatelDirectorper Himanshu ChapseyPartner Mr. Manoj KediaMembership No: 36738 DirectorPlace: Mumbai Place: MumbaiDate : April 25, 2011 Date : April 25, 2011(85)ADITYA BIRLA MINACS BPO PVT. LTD. (Formerly: Compass Business Process Outsourcing Pvt. Ltd.)CMYKAs per our report of even date For and on behalf of the Board of DirectorsFor S.V . Ghat alia & A ssociatesFirm Registration No. 103162WChartered Accountants Mr. Deepak PatelDirector
    • per Himanshu ChapseyPartner Mr. Manoj KediaMembership No: 36738 DirectorPlace: Mumbai Place: MumbaiDate : April 25, 2011 Date : April 25, 2011CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2011Year ended March 31, 2011 Year ended March 31,2010(`)(`)A CASH FLOWS FROM OPERATING ACTIVITIESNet profit/(Loss) before taxation (3,331,251) 14,245,439Adjustment for:Depreciation 8,516,116 8,864,548Profit on sale of fixed assets (Net) (583,897) (29,502)Interest income (811,833) (254,234)Interest expenses 56,181 39,334Unrealised foreign exchange (gain) / loss (net) 1,333,545 (947,966)Operating profit before working capital changes 5,178,861 21,917,619Movements in working capital:Decrease / (Increase) in sundry debtors (18,012,704) 3,079,864Decrease / (Increase) in loans and advances 10,574,723 52,194Increase in provisions 10,511,805 655,201Increase / (Decrease) in current liabilities 18,729,594 (7,095,384)Cash generated from operations 26,982,279 18,609,494Direct taxes paid — (1,111,000)Net cash from operating activities 26,982,279 17,498,494
    • B CASH FLOWS FROM INVESTING ACTIVITIESPurchase of fixed assets (172,067) (18,663,228)Proceeds from sale of fixed assets 1,387,155 839,615Interest received 749,226 51,651Net cash from / (used in) investing activi ties 1,964,314 (17,771,962)C CASH FLOWS FROM FINANCING ACTIVITIESRepayment from short-term borrowings (637,140) 561,816Interest paid (56,181) (39,334)Net cash from / (used in) financing activi ties (693,321) 522,482Net increase in cash and cash equivalents ( A+B+C) 28,253,271 249,014Cash and cash equivalents at the beginning of the year 3,457,283 3,208,695Effect of exchange difference on cash and cash equivalents held in foreign currency (24,966) (426)Cash and cash equivalents at the end of the year 31,685,589 3,457,283Components of cash and cash equivalentsCash in hand 146,202 154,152Balances with scheduled banks: —— in current accounts 28,440,904 354,131in fixed deposit accounts 3,098,483 2,949,000Cash and cash equvivalents in cash flow statement 31,685,589 3,457,283(86)ADITYA BIRLA MINACS BPO PVT. LTD. (Formerly: Compass Business Process Outsourcing Pvt. Ltd.)CMYKSCHEDULES FORMING P ART OF THE BALANCE SHEETMarch 31, 20 11 March 31, 20 10(`)(`)SCHEDULE 1 - SHARE CAPI TAL
    • Authorised700,000 (Previous year : 700,000) Equity shares of `10 each 7, 000,000 7,000,000105,000 (Previous year : 105,000) Preference shares of ` 100 each 1 0,500,000 10,500,000T OTAL 17,500,000 17,500,000Issued,subscribed and paid-up693,100 (Previous year : 693,100) Equity shares of` 10 each fully paid 6,931,000 6,931,00065,625 (Previous year: Nil) 5% Compulsory convertiblepreference shares of ` 100 each fully paid 6,562,500 —105,000 (Previous year: 105,000) 10% Preference shares of` 100 each fully paid-up — 10,500,000TOTAL 13,493,500 17,431,000Notes:1. Of the above 693,080 (Previous year: 693,080) equity shares are held by Aditya Birla Minacs BPOLimited, UK, the holding company.2. Of the above 93,100 (Previous year: 93,100) equity shares are allotted as fully paid-up pursuant toa contract for consideration other than cash.3. 65,625 (Previous year: Nil) fully paid-up 5% Compulsory Convertible preference shares are held byAditya Birla Minacs BPO Limited, UK, the holding company.4. Nil (Previous year 105,000) fully-paid 10% redeemable preference share are held by Holding CompanyCompass BPO Limited, UK.SCHEDULE 2 - RESERVES & SURPLUSSecurities Premium 3,937,500 —(During the year, 65,625 10% preference shares were issuedto holding company at a premium of Rs 60 per share.
    • Also refer to note C.2 of Schedule 15)TOTAL 3,937,500 —SCHEDULE 3 - SECURED LOANSLoans from bankCash credit fac ilities — 637,140Total Secured Loans — 637,140SCHEDULE 4 - UNSECURED LOANSInterest free loan from shareholder 1,852,283 1,852,283TOTAL 1,852,283 1,852,283SCHEDULE 6 - SUNDRY DEBTORS(Unsecured considered good)Debts outstanding for more than six months — —Other debts 18,911,494 1,334,632TOTAL 18,911,494 1,334,632CHEDULE 7 - CASH AND BANK BALANCESCash on hand 146,202 154,152Balance with scheduled banksIn current account 28,440,904 354,131In deposit account 3,098,483 2,949,000TOTAL 31,685,589 3,457,283SCHEDULE 8 - LOANS AND ADVANCES(Unsecured, considered good)Advances recoverable in cash or in kind or for value to be received 10,474,905 15,639,249Deposits - others 4, 585,187 9,794,648Due from fellow subsidiary — 487,047
    • (Maximum amount outstanding during the year ` 487,047(previous year: 487,047))Due from holding company 348,736 —TOTAL 15,408,828 25,920,944SCHEDULE 5 - FIXED ASSE TS ( ` )GROSS BLOCK DEPRECIATION NET BLOCKParticulars As at Additions Disposals As at As at Disposals For the As at As at As at1-Apr-10 during the during the 31-Mar-11 1-Apr-10 during the year 31-Mar-11 31-Mar-11 31-Mar-10year year yearPlant & machinery- Computers 32,480,429 61,100 4,198,765 28,342,764 29,124,666 3,720,509 2,250,824 27,654,981687,783 3,355,763- Electrical fittings 2,623,990 — — 2,623,990 218,666 — 874,663 1,093,329 1,530,661 2,405,324Office equipment 11,034,796 110,967 293,380 10,852,383 3,290,893 233,890 3,043,590 6,100,5934,751,790 7,743,903Vehicles 2,552,421 — 2,552,421 — 1,997,868 2,300,350 302,482 — — 554,553Furniture and fixtures 7,639,984 — 132,873 7,507,111 2,043,680 119,433 2,044,557 3,968,8043,538,307 5,596,304TOTAL 56,331,620 172,067 7,177,439 49,326,248 36,675,773 6,374,182 8,516,116 38,817,70710,508,541 19,655,847Previous year 63,732,756 18,663,228 26,064,364 56,331,620 53,065,478 25,254,252 8,864,54836,675,776 19,655,844 —March 31,2011 March 31,2010(`)(`)March 31, 20 11 March 31, 20 10(`)(`)March 31, 20 11 March 31, 20 10
    • (`)(`)SCHEDULE 9 - CURRENT LIABILITIESSundry creditors 11,637,021 16,088,544Creditors for capital goods 10 ,101,763 9,418,710Due to holding company 83,900 1,687,594Advances from customers 25,437,444 —Other liabilities 1,725,857 2,188,801TOTAL 48,985,985 29,383,650SCHEDULE 10 - PROVISIONSProvision for taxation 2,590,800 2,590,800Provision for leave encashment 7,074,923 —Provision for gratuity 4,713,183 1,276,301TOTAL 14,378,906 3,867,101(87)ADITYA BIRLA MINACS BPO PVT. LTD. (Formerly: Compass Business Process Outsourcing Pvt. Ltd.)CMYKSCHEDULES FORMING P ART OF THE PR OFIT AND LOSSACCOUNT FOR THE YEAR ENDING MARCH 31, 20 11March 31, 2011 March 31, 2010(`)(`)SCHEDULE 11 - OTHER INCOMEInterest- bank deposits 372,189 254,234- others 439,644 —(Tax deducted 75,762/- (Last year: 34,640)
    • Profit on sale of fixed assets ( Net) 583,897 29,502Miscelleaneous income — 5,111TOTAL 1,395,730 288,847SCHEDULE 12 - PERSONNEL EXPENSESSalaries, wages and bonus 116,695,935 129,655,511Contribution to provident and other funds 5, 337,335 6,275,998Staff welfare expenses 3,134,528 3,462,071Gratuity expenses 4,713,183 1,276,301TOTAL 129,880,981 140,669,881SCHEDULE 13 - OPERATING AND OTHER EXPENSESRent 9,507,700 22,147,603Rates and taxes 390,336 633,512Power and fuel charges 5, 244,911 10,971,011Travelling and conveyance expenses 8, 552,411 8,368,304Printing and stationery 566,644 924,696Communication cost 5,931,269 8,178,898Payment to auditorsAs auditorsAudit fees 525,000 275,000Tax audit f ees — 50,000As adviser in respect ofTaxation matters — 25,000Management audit fees — 150,000Other services — 219,323Legal and professional charges 5, 078,023 3,640,396
    • Business promotion/entertainment 335,263 112,107Repairs and maintenance others 11,435,272 17,587,870Insurance expenses 788,171 821,854Bank charges 148,223 235,974Loss on foreign exchange fluctuations 3, 119,968 2,545,077Misc. expenses 299,361 217,694TOTAL 51,922,552 77,104,319SCHEDULE 14 - INTERESTInterest to banks 56,181 39,334TOTAL 56,181 39,334SCHEDULE 15 - SIGNIFICANT ACCO UNTING POLICIES AND NOTES ONACCOUNTSA. NATURE OF OPERATIONSThe principle activities of the Company are processing of data for providingback office accounting and other services.B. SIGNIFICANT ACCOUNTING POLICIESB.1. Basis of PreparationThe financial statements have been prepared to comply in all material respectswith the Accounting Standards notified by Companies (Accounting Standards)Rules, 2006, (as amended), and the relevant provisions of the CompaniesAct, 1956. The financial statements have been prepared under the historicalcost convention on an accrual basis except in case of assets for which provisionfor impairment is made and revaluation is carried out. The accounting policieshave been consistently applied by the Company and except for the changesin accounting policy discussed more fully below, are consistent with those
    • used in the previous year.B.2. Use of EstimatesThe preparation of financial statements in conformity with generally acceptedaccounting principles requires management to make estimates andassumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent liabilities at the date of the financial statements andthe results of operations during the reporting period. Although these estimatesare based upon management’s best knowledge of current events and actions,actual results could differ from these estimates.B.3. Fixed AssetsFixed assets are stated at cost, less accumulated depreciation and impairmentloss, if any. Cost comprises of purchase price and attributable cost of bringingthe assets to its working condition for its intended use.B.4. Depreciationa. The depreciation is charged on Straight Line basis at the following rates,which are not lower than those prescribed under Schedule XIV of theCompanies Act, 1956, whichever is higher:Rates (SLM) Schedule XlVRates (SLM)Computers 33.33% 16.21%Office equipment 33.33% 4.75%Vehicles 33.33% 9.50%Furniture & fixtures 33.33% 6.33%Electric fittings 33.33% 4.75%b. The depreciation on the addition of the asset is provided from the month
    • of such addition and for disposals up to the month of such disposals.c. Individual low cost assets (acquired for less than ` 5,000) are depreciatedwithin a year of acquisition as per the requirement of schedule XIV ofthe Companies Act, 1956.B.5. Impairment of Assets:The carrying amounts of the assets are reviewed at each Balance Sheet datefor impairment based on internal/external factors. An asset is treated asimpaired when the carrying cost of the asset exceed its recoverable value.An impairment loss, if any, is charged to Profit and Loss Account in the yearin which an asset is identified as impaired. Reversal of impairment lossrecognised in prior years is recorded when there is an indication that theimpairment losses recognised for the assets no longer exists or has decreased.B.6. Capital CommitmentsThere is no amount of contracts remaining to be executed on capital accountand not provided for.B.7. Operating LeasesLeases where the lessor effectively retains substantially all the risks andbenefits of ownership of the leased item, are classified as operating leases.Operating lease payments are recognized as an expense in the Profit andLoss Account on a straight-line basis over the lease term.B.8. Revenue RecognitionRevenue is recognized to the extent that it is probable that the economicbenefits will flow to the Company and the revenue can be reliably measured.Income from ServicesRevenue is recognised on rendering of services to customers and is recognised
    • in accordance with the contracts entered into with the customers.(88)ADITYA BIRLA MINACS BPO PVT. LTD. (Formerly: Compass Business Process Outsourcing Pvt. Ltd.)CMYKInterestRevenue is recognised on a time proportion basis taking into account theamount outstanding and the rate applicable.B.9. Foreign Currency TransactionsInitial RecognitionForeign currency transactions are recorded in the reporting currency, byapplying to the foreign currency amount the exchange rate between thereporting currency and the foreign currency at the date of the transaction.ConversionForeign currency monetary items are reported using the closing rate. Non-monetary items, which arecarried in terms of historical cost denominated ina foreign currency, are reported using the exchange rate at the date of thetransaction; and non-monetary items, which are carried at fair value or othersimilar valuation denominated in a foreign currency, are reported using theexchange rates that existed when the values were determined.Exchange DifferencesExchange differences arising on a monetary item that, in substance, formpart of the company’s net investment in a non-integral foreign operation isaccumulated in a foreign currency translation reserve in the financialstatements until the disposal of the net investment, at which time they arerecognised as income or as expenses.Exchange differences arising on the settlement of monetary items not covered
    • above, or on reporting such monetary items of company at rates differentfrom those at which they were initially recorded during the year, or reportedin previous financial statements, are recognized as income or as expenses inthe year in which they arise.B.10.Retirement and other Employee Benefitsi. Retirement benefit in the form of Provident Fund is a defined contributionscheme and the contributions are charged to the Profit and Loss Accountof the year when the contributions to the respective funds are due.There are no other obligations other than the contribution payable tothe respective funds.ii. Gratuity liability is defined benefit obligations and is provided for on thebasis of an actuarial valuation on projected unit credit method made atthe end of each financial year.iii.Short term compensated absences are provided for based on estimates.Long term compensated absences are provided for based on actuarialvaluation at the year end. The actuarial valuation is done as per projectedunit credit method.iv. Actuarial gains/losses are immediately taken to profit and loss accountand are not deferred.B.11.TaxationTax expense comprises of current tax and deferred Tax.The current charge for income tax is measured at the amount expected to bepaid to the tax authorities in accordance with the Indian Income Tax Act.Provision for current income tax is made on the basis of the results of the
    • year although the actual liability will be computed and paid on the basis of theresults for the year ended 31 March, 2011.Deferred tax is measured based on the tax rates and the tax laws enacted orsubstantively enacted at the balance sheet date. Deferred tax assets anddeferred tax liabilities are offset, if a legally enforceable right exists to set offcurrent tax assets against current tax liabilities and the deferred tax assetsand deferred tax liabilities relate to the taxes on income levied by samegoverning taxation laws. Deferred tax assets are recognised only to the extentthat there is reasonable certainty that sufficient future taxable income will beavailable against which such deferred tax assets can be realised. In situationswhere the Company has unabsorbed depreciation or carry forward tax losses,all deferred tax assets are recognised only if there is virtual certainty supportedby convincing evidence that they can be realised against future taxable profits.At each balance sheet date the Company re-assesses unrecognised deferredtax assets. It recognises unrecognised deferred tax assets to the extent thatit has become reasonably certain or virtually certain, as the case may be thatsufficient future taxable income will be available against which such deferredtax assets can be realised.The carrying amount of deferred tax assets are reviewed at each balancesheet date. The Company writes down the carrying amount of a deferred taxasset to the extent that it is no longer reasonably certain or virtually certain,as the case may be, that sufficient future taxable income will be availableagainst which deferred tax asset can be realised. Any such write-down isreversed to the extent that it becomes reasonably certain or virtually certain,as the case may be, that sufficient future taxable income will be available.
    • B.12.Segment Reporting PoliciesIdentification of SegmentThe Company’s operating businesses are organized and managed separatelyaccording to the nature of products and services provided, with each segmentrepresenting a strategic business unit that offers different products and servesdifferent markets. The analysis of geographical segments is based on theareas in which major operating divisions of the Company operate.Segment PoliciesThe Company prepares its segment information in conformity with theaccounting policies adopted for preparing and presenting the financialstatements of the Company as a whole.C. Notes on AccountsC. 1.Contingent Liabilities not provided for:Bank Guarantee given to Custom Authorities: ` 449,000 (Previous year:` 535,000) taken against lien on fixed deposits of ` 449,000 (Previous year:` 535,000). This bank guarantee is given for duty free import of material underSTPI scheme.Preference dividend amounting to `198,973 relating to 65,625 5% Redeemablepreference shares of ` 100 each issued during the current year.C.2. During the current year, the Company has redeemed 105,000 10%Redeemable preference shares to Aditya Birla Minacs BPO Limited, UK (orthe holding company). Further, the Company has issued 65,625 5%Redeemable preference shares of ` 100 each at a premium of ` 60 per shareto the holding company. In view of unavailability of distributable profits, thedividend on such preference shares have not been provided for. However,
    • the same has been disclosed as a contingent liability.C.3. C.3. Earnings foreign currency (Accrual basis)Year ended Year endedMarch 31, March 31,2011 2010`` Income from services 185,648,849 240,634,675Total 185,648,849 240,634,675C.4. C.4. Expenditure in foreign currency(Accrual basis)Communication costs (Lease line cost) 2,553,188 2,474,052Total 2,553,188 2,474,052C.5. C.5. Value of imports calculated on CIF basisCapital Goods — 854,451Total — 854,451C.6. C.6. Disclosure pursuant to the Accounting Standard 15 (Revised) “EmployeeBenefits”:The Company has a defined benefit gratuity plan. Every employee who hascompleted five years or more of service gets a gratuity on departure at 15days salary (last drawn salary) for each completed year of service. The schemeis funded with an insurance company in the form of a qualifying insurancepolicy.The following tables summarise the components of net benefit expenserecognised in the profit and loss account and the funded status and amountsrecognised in the balance sheet for the respective plans.Profit and loss account
    • Net employee benefit expense (recognized in Employee Cost)[AS 15 Para 120 (c) (i) to (x)]Gratuity2011 2011 2010Current service cost 1,104,068 1,104,068 739,409Expected return on plan assets 238,165 238,165 193,164Net actuarial( gain) / lossrecognised in the year (2,252,569) (101,960)Past service cost 6,099,849 6,099,849 832,016Net benefit expense 4,713,183 4,713,183 1,276,301Actual return on plan assets 238,165 238,165 193,164(89)ADITYA BIRLA MINACS BPO PVT. LTD. (Formerly: Compass Business Process Outsourcing Pvt. Ltd.)CMYKB alance sheetDetails of pro vision for gratuityGrat uity201112010 Defined benefit obligation 7,203,91 77 3,619,373Fair value of plan assets 2,490,734 2,343,072Net liability (4,713,183) 83) (1,276,301)Changes in the present value of the defined benefit obligation are asfollows:[AS15 Para 120(e) (i) to (viii)]Gratuity2011 2011 2010
    • Opening defined benefit obligation 3,619,373 3,619,373 3,052,442Interest cost 238,165 238,165 193,164Current service cost 4,713,183 4,713,183 1,276,301Benefits paid 1,366,804 1,366,804 832,016Actuarial (gains) / losses on obligation — — 70,518Closing defined benefit obligation 7,203,917 7,203,917 3,619,373Changes in the fair value of plan assets are as follows:Gratuity2011 2011 2010Opening fair value of plan assets 2,343,072 2,343,072 1,860,896Expected return 238,165 238,165 193,164Contributions by employer benefits paid 1,276,301 1,276,301 1,121,028Benefits paid 1,366,804 1,366,804 832,016Closing fair value of plan assets 2,490,734 2,490,734 2,343,072The Company expects to contribute ` 4,713,183 to gratuity in 2011. [AS 15Para 120(o)]The major categories of plan assets as a percentage of the fair value of totalplan assets are as follows:[AS 15 Para 120 (h)]Gratuity2011 2011 2010% %% Investments with insurer 100 100 100The principal assumptions used in determining gratuity obligationsfor the Company’s plans are shown below:{AS15 Para 120 (1) (i) to (v)}
    • 2011 2011 2010% %% Discount rate 888 Expected rate of return on assets 999 Employee turnover 1% to 3% 1% to 3%depending on depending onage ageThe estimates of future salary increases, considered in actuarial valuation,take account of inflation, seniority, promotion and other relevant factors, suchas supply and demand in the employment market.Amounts for the current and previous periods are as follows: [AS 15 Para120(n)] 96Gratuity2011 2010 2009Defined benefit obli gation 7,203,917 3,619,373 3,052,442Plan assets 2,490,734 2,343,072 1,800,832Surplus / (Deficit) (4,713,183) (1,276,301) (1,251,610)Experience adjustments onplan liabilities — — —Experience adjustments on plan assets — — —C.8. The Company has taken a property under operating lease with option to renewafter the period of expiry. The lease rentals for the year endedMarch 31, 2011, aggregating ` 8,460,309 (Previous year: ` 21,574,530) hasbeen charged to the Profit & Loss Accounts.The following lease rentals remains committed as at 31stMarch, 2011a) Not Later than One year: ` 6,071,625 (Previous year: ` 45,15,746)
    • b) Later than One year but not later than five years: ` Nil(Previous year: ` Nil)C.9. Earnings Per Share (EPS) is calculated as under:March 31, March 31,2011 2010a) Net Profit/(Loss) as disclosed inProfit & loss account ( `) (4,809,251) 13,360,456b) Weighted average number ofequity shares (`10 each)outstanding during the year (in number) 693,100 693,100c) Earnings per share (basic/diluted) (`) (7.23) 17.83C 10.Segment Reporting:The Company is operating in single segment that is processing of data forproviding back office accounting and other services.Geographical Segment:Geographical turnover is segregated on the basis of the location of thecustomers. Assets are segregated on the basis of their location. Informationrelating to the geographical segment is stated below:Year ended March 31, 2011Revenue Europe and UK Others TotalRevenue 148,485,021 37,073,827 185,648,848Assets 2,290,061 74,224,392 76,514,453Capital expenditure — 172,067 172,067Year ended March 31, 2010Revenue Europe and UK Others Total
    • Revenue 240,634,675 — 240,634,675Assets 3,322,695 48,524,008 51,846,703Capital expenditure — 18,663,228 18,663,228C 11. A) Related parties and their relationship:Names of related parties where control existsUltimate holding company : Aditya Birla Nuvo LimitedHolding company : Aditya Birla Minacs BPO Limited, UK: Aditya Birla Minacs Worldwide Ltd. (Intermediate holding company)Names of other related parties Names of other related parties Aditya Birla Minacs IT Serviceswith whom transactions have with whom transactions have Limited The Minacs Group (USA) Inc.taken place during theyear fellow subsidiariesKey Management Personnel Key Management Personnel : Mr. Deepak Patel - Director: Mr. Manoj Kedia - DirectorB) Transactions during the year(`)Year ended Year endedMarch 31, March 31,2011 2010RevenueAditya Birla Minacs BPO Limited, UK 139,098,386 240,634,675The Minacs Group ( USA) Inc . 4,192,013 —Interest incomeAditya Birla Minacs Worldwide Limited 225,123 —
    • Aditya Birla Minacs IT Services Limited 214,521 —Redemption of 10% redeemablepreference sharesAditya Birla Minacs BPO Limited, UK 10,500,000 —Issue of 5% compulsory convertiblepreference shares (Includingsecurities premium)Aditya Birla Minacs BPO Limited, UK 10,500,000 —Purchase of fixed assetsAditya Birla Minacs BPO Limited, UK — 854,421(90)ADITYA BIRLA MINACS BPO PVT. LTD. (Formerly: Compass Business Process Outsourcing Pvt. Ltd.)CMYKSale of fix ed assetsAditya Birla Minacs W orldwide Limited 270,000 —Inter-corporate deposits giv enAditya Birla Minacs Worldwide Limited 10,000,000 —Inter-corporate deposits received backAditya Birla Minacs Worldwide Limited 10,000,000 —Inter-corporate deposits giv enAditya Birla Minacs IT Services Limited 10,000,000 —Inter-corporate deposits received backAditya Birla Minacs IT Services Limited 10,000,000 —(C) B alances as at the y ear endR eceivables
    • The Minacs Group (USA) Inc. 4,192,013 —Aditya Birla Minacs BPO Limited, UK 348,736 —Pa y ablesAditya Birla Minacs BPO Limited, UK 9,664,357 11,106,304Aditya Birla Minacs IT Services Limited 94,215 —Year ended Year endedMarch 31, March 31,2011 2010C.12.2. Deferred tax assets have not been recognised as there is no virtual certaintyabout the realisation of the deferred tax assets against the future taxableprofits.C.13.Details of dues to Micro and Small Enterprises as per MSMED Act, 2006As at March 31 2011, as confirmed by the management, the Company hasno outstanding dues to Micro Enterprises and Small Enterprises / Small ScaleIndustrial Undertakings.C.14.Previous year comparativesThe figures of previous year were audited by a firm of Chartered accountantsother than S.V. Ghatalia & Associates.Previous year’s figures have been regrouped where necessary to conform tothis year’s classification.For S.V. Ghatalia & Associates For and on behalf of the Board of DirectorsFirm Registration No. 103162WChartered Accountants Mr. Deepak PatelDirectorper Himanshu Chapsey
    • Partner Mr. Manoj KediaMembership No: 105731 DirectorPlace: Mumbai Place: MumbaiDate : April 25, 2011 Date : April 25, 2011(91)COMPASS BPO INC.P rofit & L oss A ccount f or the period ended 31 March, 2011Particulars Amt($) Amt($) Particulars Amt($) Amt($)2010-11 2009-10 2010-11 2009-10Salary 227,813 468,850 Revenue 907,952 1,135,919Consultant Charges 224,655 320,832Management Fees - Minacs 210,641 —Shared Sales Cost - Minacs 85,961 —Travel 37,284 107,389Office Costs 46,842 89,062Marketing 30,897 35,990Audit Fees 3,114 9,270Legal & Professional Fees 450 2,020Insurance 5,771 9,432Bad Debts 7,573 —Taxes & Fees 1,756 3,786Depreciation 4,438 8,338Bank Charges 1,011 710Tax for the Year 4,100 24,200Profit transferred to Balance Sheet 15,645 56,040
    • 907,952 1,135,919 907,952 1,135,919B alance Sheet as at 31 Marc h, 2011Liabilities Amt($) Amt($) Assets Amt($) Amt($) Amt($)2010-11 2009-10 2010-11 2009-10Capital Stock 100 100 Computer Equipment 6,482Less: Depreciation 3,697 2,784 4,659Amount Owed to Holding Company — 249,696Accounts Payable 1,336 36,085 Office Equipments 1,480Other Liabilities 135,038 10,629 Less: Depreciation 687 793 1,287Provision for Taxation 4,100 24,200Furnitures & Fixtures 6,208Retained Earning 180,946 165,302 Less: Depreciation 4,025 2,182 4,252Amount Receivable fromHolding Company 79,986 —Bank 86,109 10,648Debtors 149,621 448,010Prepaid 44 17,156321,520 486,012 321,520 486,012(92)COMPASS BPO INC.CMYKSchedule for Profit & Loss AccountAccount Code Account Name Amount$1 Salaries : Gross Salary (DM) 227,813
    • 227,8132 Office Cost :400-150 Staff Welfare Exps. 407410-090 Courier Charges 751410-130 Foreign Exchange Gain/Loss 3,001410-170 Postage Expenses 5410-200 Membership & Subscription 4,246410-220 R & M - Office Equipment 60410-230 R & M - Co mputers 239410-240 R & M - Others 173410-260 Rent 5,400410-250 Rates & Taxes 2,978410-290 Software Exps. 1,266410-310 Tel. Line Ongoing Cost 2,391410-370 Tel. Cost - Mobile 11,964410-400 Tel. Cost Internet 4,285410-410 Others 9,253410-440 Meetings & Conferences 42446,8423 Audit Fees :410-020 Audit Fees 3,1144 Legal & Professional Fees :410-160 Legal & Professional Fees 4505 Travel Etc. :400-090 Flights Charges 21,176
    • 400-110 Conveyance Local 8,774400-130 Hotel Accommodation 4,315400-190 Trl. & Liv. Travel 3,01937,2846 Marketing :400-140 Marketing Cost 29,202410-040 Business Prom/Ent 1,664410-420 Entertain - B’ness Dev. 3130,8977 Revenue300-010 Staff Charges 1,479,949320-010 Con sulting - IND 438,520320-025 Consulting Fixed Price 204,614320-040 Software Revenue - 2,123,082320-020 Consulting-USConsulting (DAVID) 35,525Consulting (MEL) 191,041Consulting (VICKY) 14,213Consulting (CHERYL) 30,480 271,259310-010 Other Income 201,128310-030 Int erest rec. 122 201,2492,595,590Less:400-020 CDIPL Charges-UK/US 1,601,574410-360 Recharge 86,065 1,687,639
    • 907,952Schedule for Balance SheetA ccount Code A ccount Name Amount$1 Debtors :120-010 Debtors 149,621149,6212 Prepaid :150-070 Prepaid Expenses 44443 Other Liabilities :150-040 Advance Account 7,320240-051 OS Liab for Minacs Mgt Fe 38,642240-052 OS Liab for Minacs Sales 85,961240-060 Out. Liabilities for Exps. 3,114135,038Account Code Account Name Amount$