aditya birla minacs worldwide limited

ADITYA BIRLA MINACS WORLDWIDE LIMITED

ANNUAL REPORT OF SUBSIDIARIES 2010-2011

Sl. No. Name Page No

1. Aditya Birla Minacs Worldwide Limited 1

2. Transworks Inc (USA) 27

3. Aditya Birla Minacs Philippines Inc. 30

4. A V Transworks Limited 37

5. Aditya Birla Minacs Worldwide Inc., (Canada) 42

6. The Minacs Group (USA) Inc. 58

7. Bureau of Collection Recovery, LLC 62

8. Minacs Worldwide S A De C V (Mexico) 64

9. Minacs Limited (UK) 66

10. Minacs Worldwide GmbH (Germany) 68

11. Minacs KFT, Hungary 71

12. Aditya Birla Minacs BPO Limited 74

13. Aditya Birla Minacs BPO Private Limited 81

14. Compass BPO Inc 91

(1)


C M Y K

DIVIDEND

In view of the carried forward losses no dividend is recommended.

BUSINESS REVIEW

Industry Scenario

In 2010-11, the global economy showed signs of coming out of recession

though there continues to be fears that the revival may not be sustainable.

Rising oil prices, EU debt pressures and sharp increase in inflation in

Asia continues to cast a gloomy picture though there are signs that the

impact may not as bad as in 2009-10. The BPO industry showed signs

of growth but pricing pressures continued. Customers continued to be

circumspect in increasing their outsourcing since their own businesses

have reduced resulting in excess employees in their own organizations.

Summar y of Operations

The actions initiated by your Company to improve operational excellence

and grow revenues have started to show results.

Over the previous year, consolidated revenues increased by 16%. The

sharp sales focus on delivering value to our customers whilst

demonstrating domain knowledge has resulted in revenue growth

despite lower revenue productivity due to pricing pressures.

The revenue growth along with the continued efforts on cost

optimization enabled your Company’s operating profits (EBITDA) has

shown an increase from ` 1,136 million to Rs.1,958 million – a significant

growth of 72% over the previous year. Your Company’s actions

continued the improvement in the operating margins from 7.8%

to 11.5%.

The growth in revenues required the company to expand its operations

sites. Your company opened a new site at Southfield, USA and has

also opened a new site in Philippines in June 2011.

Your Company has continued on its 3- Year roadmap to grow revenues

by obtaining a higher wallet share from existing clients whilst adding

new logos, improve profitability by continuing operational efficiencies

and increasing business delivered from India and other offshore

geographies. Your Company’s investment in its sales team organized

on industry verticals continues to fuel the strong growth in its sales

pipeline and the management plans to further invest in this area.

OUTLOOK

The improvement in your company’s revenues in FY 2010-11 is expected

to continue in the current financial year. However, the challenging

environment resulting in pricing pressures from our customers coupled

with growing inflation in India and Philippines is likely to put severe

pressures on profitability in the current financial year. Further, the sharp

DIRECTORS’ REPOR T

Dear Shareholders,

On behalf of the Directors, it is our pleasure to present the Sixteenth Annual Report, together with the Audited Statement of A ccounts of Aditya

Birla Minacs Worldwide Limited (“the Company”) and its subsidiaries for the year ended 31

st

March, 2011.

FINANCIAL PERFORMANCE

The summarized Standalone and consolidated results of your Company and its subsidiaries are given in the table below. Both Stan dalone and

Consolidated results include the results of Aditya Birla IT Services and Aditya Birla Technologies, which were merged into Aditya Birla Worldwide

Limited with effect from 1

st

April 2010 (detailed in a separate note below).

(` Mn)

Standalone Results Consolidated Results

Particulars Year ended Year ended Growth Year ended Year Ended Growth

31/03/2011 31/03/2010 31/03/2011 31/03/2010

Total 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 from

previous 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 also

hurt our efforts to improve profitability.

Your company plans to a 2 pronged approach to fight the profitability

issues. One, we will try and improve our share of higher margin business

like non voice work and combining our IT and BPO capabilities to improve

revenue productivity. Secondly, your Company will continue its focus

on building operating efficiencies and optimization of costs to bring its

cost structure in line with the best in class in the BPO industry.

HUMAN CAPITAL

Human capital is the key resource for Information Technology Enabled

Services Industry. At the end of the year, on a consolidated basis, your

Company had 19,615 employees and 12,345 operations seats across

25 company leased centers.

MERGER

Your company had filed a petition before the High Court of Karnataka,

Bangalore, seeking sanction to the composite scheme of amalgamation

amongst Aditya Birla Minacs IT Services Limited, Aditya Birla Minacs

Technologies and Aditya Birla Minacs Worldwide Limited (the

“Companies”) and their respective shareholders which was approved

by the Board of directors of the Companies at their respective meetings

on July 23, 2010 (the “Original Scheme”). The High Court was pleased

to sanction the Original Scheme by its order dated November 3, 2010.

However, the Board of Directors of the Companies passed a resolution

on February 17, 2011 to modify the Original Scheme and your company

had again filed an application with the High Court of Karnataka seeking

sanction to the modified Composite scheme of amalgamation (the

“Modified Scheme”). The Company convened meetings of secured

and unsecured creditors of the Company pursuant to the High Court

order 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 sanction

of the Modified Scheme. The High Court was pleased to sanction the

Modified Scheme vide its order dated September 5, 2011.

SUBSIDIARY COMPANIES

Following 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 following

subsidiaries

• The Minacs Group (U.S.A.) Inc

(2)


C M Y K

• 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 Inc

As per Section 212 of the Companies Act, 1956, the Directors’ Report,

Auditor’s Report, Balance Sheet and Profit and Loss Account of the

Company’s subsidiaries are required to be attached to the Balance Sheet

of the Company. However, vide General Circular No. 2/2011 dated

08.02.2011, the Central Government has granted general exemption

from 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 the Company by resolution gives its

consent for not attaching the balance sheet of the subsidiary

concerned;

(ii) The company shall present in the annual report, the consolidated

financial statements of holding company and all subsidiaries duly

audited by its statutory auditors; and

(iii) The company shall disclose in the consolidated balance sheet the

following information in aggregate for each subsidiary including

subsidiaries of subsidiaries:- (a) capital (b) reserves (c) total assets

(d) total liabilities (e) details of investment (except in case of

investment 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 Company

is presented in its annual report along with the summary information

on the Company’s subsidiaries as mandated in circular above. The annual

accounts of the Company’s subsidiaries and the related detailed

information shall be made available to shareholders of the Company

and the Company’s subsidiaries seeking such information on request

at any point of time. The annual accounts of the Company’s subsidiaries

shall also be kept for inspection during business hours by any

shareholders at the Registered Office of the Company and of the

Company’s subsidiaries. A hard copy of details of accounts of

subsidiaries shall be furnished to any shareholder on demand.

EMPLOYEE STOCK OPTION PLAN

Your Company approved a new Employee Stock Option Plan (ESOP) in

the Extra-Ordinary General Meeting held on Dec 18, 2009. Under the

new ESOP Scheme, a total of 1,897,337 (One million Eight hundred

ninety seven thousand three hundred and thirty seven) options would

be available for being granted to eligible employees of your Company.

Each option when exercised would be converted into one Equity share

of Re. 1 each fully paid-up.

Till March 31, 2011, your Company had granted 1,367,000 options to

its full time employees leaving a balance of 530,337 for future grants.

DIRECTORS

During the year, Mr. Kumar Mangalam Birla resigned as director with

effect from August 28, 2010. The Board places on record its sincere

appreciation for the valuable services rendered by Mr. Kumar Mangalam

Birla.

Mr. Kumar Mangalam Birla and Mr. Deepak Jayant Patel were appointed

as additional directors at the Board meeting held on October 12, 2010.

Resolutions seeking your approval for the appointment of Mr. Deepak

Jayant Patel have been incorporated in the Notice of the ensuing Annual

General Meeting of the Company.

Mr. Deepak Jayant Patel was appointed as Whole-time director of the

Company with effect from October 12, 2010 for a period of three years

and the same was approved by the members at the Extra-ordinary

General meeting held on October 12, 2010.

In accordance with Article 100 of the Articles of Association, Mr. Sushil

Agarwal and Mr. Devajyoti Bhattacharya, Directors retire by rotation at

the forthcoming Annual General Meeting. Both of them, being eligible,

offer themselves for reappointment.

DIRECTORS’ RESPONSIBILITY STATEMENT

Your Company is committed to maintaining the highest standards of

Corporate Governance. Though your Company is an unlisted Company

and hence Clause 49 of the Listing Agreement is not applicable, yet

your Company, on a suo moto basis has taken necessary initiatives to

comply with the provisions of the said clause to the extent possible.

As required under Section 217(2AA) of the Companies Act, 1956, your

Directors confirm that:

i) In the preparation of the annual accounts, the applicable accounting

standards have been followed along with proper explanation relating

to material departures;

ii) The Directors have selected such accounting policies and applied

them consistently and made judgments and estimates that are

reasonable and prudent so as to give a true and fair view of the

state of affairs of the Company at the end of the financial year and

of the loss of the Company for that period;

iii) The Directors have taken proper and sufficient care for the

maintenance of adequate accounting records in accordance with

the provisions of this Act for safeguarding the assets of the

Company and for preventing and detecting fraud and other

irregularities;

iv) The Directors have prepared the annual accounts on a going

concern basis.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION,

FOREIGN EXCHANGE EARNINGS AND OUTGO

The information required under the Companies (Disclosure of Particulars

in the Report of the Board of Directors) Rules, 1988 for the year ended

March 31, 2011 is given in Annexure ’A’ forming part of this Report.

PARTICULARS OF EMPLOYEES

In accordance with the provisions of Section 217(2A) read with

Companies (Particulars of Employees) Rules, 1975 and Companies

(Particulars of Employees) Amendment Rules, 2011, the names and

other particulars of employees are set out in the Directors’ report as

Annexure ’B’. It may be noted that in accordance with the notifications

dated March 24, 2004 and March 31, 2011 issued by the Ministry of

Corporate Affairs, Government of India, particulars of employees posted

and working in a country outside India, not being directors or their

relatives drawing more than Rupees Six Million per financial year or

Rupees five hundred thousand per month, as the case may be, are not

included in this statement but such particulars shall be furnished to the

Registrar of Companies. Such particulars shall be made available to any

shareholder on specific request made by him / her during the course of

the Annual General Meeting.

PUBLIC DEPOSITS

Your Company has not accepted any fixed deposits during the financial

year 2010-11. There was no unclaimed deposit and interest accrued as

on March 31, 2011.

STATUTORY AUDITORS

The report of the Statutory Auditors is attached to this report. All the

notes to Schedules and Accounts are self-explanatory and do not call

for any further comments.

Your Directors request you to appoint Auditors for the current year as

set out in the accompanying notice of the ensuing Annual General

Meeting.

ACKNOWLEDGEMENT

Your Directors place on record their appreciation for employees at all

levels, who have contributed to the growth and performance of your

Company.

Your Directors also thank the clients, vendors, bankers, shareholders

and advisers of the Company for their continued support.

Your Directors also thank the Central and State Governments, and other

statutory authorities for their continued support.

For and on behalf of the Board

Aditya Birla Minacs Worldwide Limited

Date : July 27, 2011 Sushil Agarwal Dr. Rakesh Jain

Place: Mumbai Director Director

(3)


C M Y K

ANNEXURE – A

Particulars pursuant to Companies (Disclosure of particulars in the

report of the Board of Directors) Rules, 1988

1. Conservation of energy

Your Company’s operations involve very low energy consumption.

However, measures are taken to reduce energy consumption by

using 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 importance

As the Company was mainly engaged in the business of call

center activities, there are no matters to report on these

aspects

b) Specific areas for R&D at your Company

c) Benefits derived as a result of R&D activity

d) Future plan of action

e) Expenditure on R&D for the year ended 31

st

March, 2011

` Nil

3. Technology absorption, adaptation and innovation:

Your Company continues to use latest hardware and software to

improve the quality of its products and services. The Company will

continue to invest in state–of–the–art technology and infrastructure

to improve the productivity and quality of its products and services.

4. Foreign exchange earnings and outgo (Standalone)

( ` /Mn)

Foreign Exchange Year ended Year ended

31

st

March, 2011 31

st

March, 2010

Earnings 1488 1488 1604

Outflow (Including

capital goods & services) 281 281 285

5. Activities relating to exports, initiatives taken to increase

exports, development of new export markets for products and

services and export plans

In fiscal 2010-11, 61% of revenues were derived from exports.

Your Company established a substantial direct sales marketing

network in its strategic markets in North America and Europe to

grow its business in these regions. Your Company is also

addressing other Asia Pacific countries as potential markets for

growth.

(4)


C M Y K

AUDI TORS’ REPOR T

To

The Members of Aditya Birla Minacs Worldwide Limited

1. We have audited the attached Balance Sheet of Aditya Birla Minacs

Worldwide Limited (‘the Company’) as at March 31, 2011 and also

the Profit and Loss account and the cash flow statement for the

year ended on that date annexed thereto. These financial

statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on these financial

statements based on our audit.

2. We conducted our audit in accordance with auditing standards

generally accepted in India. Those Standards require that we plan

and perform an audit to obtain reasonable assurance about whether

the financial statements are free of material misstatement. An audit

includes examining, on a test basis, evidence supporting the

amounts and disclosures in the financial statements. An audit

also includes assessing the accounting principles used and

significant estimates made by management, as well as evaluating

the overall financial statement presentation. We believe that our

audit provides a reasonable basis for our opinion.

3. As required by the Companies (Audito’s Report) Order, 2003 (as

amended) (“the Order”) issued by the Central Government of India

in terms of sub-section (4A) of Section 227 of the Companies Act,

1956 (“the Act”), we enclose in the Annexure a statement on the

matters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to above, we

report that:

i. We have obtained all the information and explanations, which

to the best of our knowledge and belief were necessary for

the 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 our

examination of those books;

iii. The balance sheet, profit and loss account and cash flow

statement dealt with by this report are in agreement with the

books of account;

iv. In our opinion, the balance sheet, profit and loss account and

cash flow statement dealt with by this report comply with the

accounting standards referred to in sub-section (3C) of section

211 of the act.

v. On the basis of the written representations received from the

directors, as on March 31, 2011, and taken on record by the

Board of Directors, we report that none of the directors is

disqualified as on March 31, 2011 from being appointed as a

director in terms of clause (g) of sub-section (1) of section 274

of the Act.

vi. In our opinion and to the best of our information and according

to the explanations give to us, the said accoutn give the

information required by the act, in the manner so required

and give a true and fair view in conformity with the accounting

principles generally accepted in India;

a) in the case of the balance sheet, of the state of affairs of

the Company as at March 31, 2011;

b) in the case of the profit and loss account, of the loss for

the year ended on that date; and

c) in the case of cash flow statement, of the cash flows for

the year ended on that date.

For S.R. BATLIBOI & ASSOCIATES

Firm Registration No. 101049W

Chartered Accountants

per Amit Majumdar

Partner

Membership No. 36656

Place: Mumbai

Date: July 27, 2011

Annexure ref er red to in paragraph [3] of our report of e ven date

Re: Aditya Birla Minacs Worldwide Limited (‘the Company’)

1. (a) The Company has maintained proper records showing full

particulars, including quantitative details and situation of fixed

assets.

(b) Fixed assets have been physically verified by the

management during the year and no material discrepancies

were identified on such verification.

(c) There was no disposal of a substantial part of fixed assets

during the year.

ii. The Company does not have any inventory and hence the

provisions of clause 4(ii) of the Order are not applicable to the

Company and hence not commented upon.

iii. (a) According to the information and explanations given to us,

the Company has not granted any loans, secured or

unsecured 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 the

Order are not applicable to the Company and hence not

commented upon.

(b) According to information and explanations given to us, the

Company has not taken any loans, secured or unsecured,

from companies, firms or other parties covered in the register

maintained under section 301 of the Act. Accordingly, the

provisions of clause 4(iii) (e) to (g) of the Order are not

applicable to the Company and hence not commented upon.

iv. In our opinion and according to the information and explanations

given to us, there is an adequate internal control system

commensurate with the size of the Company and the nature of

its business, for the purchase of fixed assets and for the sale of

services. During the course of our audit, we have not observed

any major weakness or continuing failure to correct any major

weakness in the internal control system of the company in respect

of these areas. The activities of the Company do not involve

purchase of inventories and sale of goods.

v. According to the information and explanations provided by the

management, we are of the opinion that there are no contracts

or arrangements that need to be entered in the register

maintained 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 Central

Government has not prescribed the maintenance of cost records

under clause (d) of sub-section (1) of section 209 of the Act for

the products of the Company.

ix. (a) The Company is generally regular in depositing with

appropriate authorities undisputed statutory dues including

provident 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. The

provisions relating to investor education and protection fund

are not applicable to Company.

Further, since the Central Government has till date not

prescribed the amount of cess payable under section 441 A

of the Act, we are not in a position to comment upon the

regularity or otherwise of the Company in depositing the

same.

(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, service

tax, sales tax, custom duty, excise duty, cess and other

material statutory dues were outstanding, at the year end,

for a period of more than six months from the date they

became payable. The provisions relating to investor

education and protection fund are not applicable to Company.

(5)


C M Y K

(c) According to the information and explanations given to us,

there are no dues of income tax, sales tax, wealth tax, service

tax, customs duty, excise duty and cess which have not

been deposited on account of any dispute, except as follows:

Name of Nature Amount Period to Forum

the statute of dues (Rs.) which the where

amount dispute is

relates pending

Income Tax Penalty 7,329,260 FY 2003- Bombay

Act 1961 for dis- 2004 High

allowance Court

of expenses

x. The Company’s accumulated losses at the end of the financial

year are less than fifty per cent of its net worth. The Company

has incurred cash loss during the year and in the immediately

preceding financial year.

xi. Based on our audit procedures and as per the information and

explanations given by the management, we are of the opinion

that the Company has not defaulted in repayment of dues to a

bank or debenture holders. The Company did not have any

outstanding 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, the

Company has not granted loans and advances on the basis of

security of way of pledge of shares, debentures and other

securities.

xiii. In our opinion, the Company is not a chit fund or a nidhi / mutual

benefit 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, the

provisions of clause 4(xiv) of the Order are not applicable to the

Compnay.

xv. According to the information and explanations given to us, the

Company has given guarantee for loans taken by others from

bank and financial institutions. the terms and conditions whereof,

in our opinion, are not prima-facie prejudicial to the interest of

the Company.

xvi. Based on information and explanations given to us by the

management, term loans were applied for the purpose for which

the loans were obtained.

xvii. According to the information and explanations given to us and

on an overall examination of the balance sheet of the Company,

we report that no funds raised on short-term basis have been

used for long-term investment.

xviii. The Company has not made any preferential allotment of shares

to parties or companies covered in the register maintained under

section 301 of the Act.

xix. The Company has unsecured debentures outstanding during the

year, on which no security or charge is required to be created.

xx. The Company has not raised any money by public issues during

the year.

xxi. Based upon the audit procedures performed for the purpose of

reporting the true and fair view of the financial statements and

as per the information and explanations given by the

management, we report that no fraud on or by the Company has

been noticed or reported during the year.




per Amit Majumdar

Partner


Place: Mumbai

Date: July 27, 2011

(6)


C M Y K

BALANCE SHEET AS AT 31S T MARCH, 2011

A s At 31st A s At 31st

Mar, 20 11 Mar, 20 10

Schedule ` Lacs ` Lacs

I. SOURCES OF FUNDS

1 Shareholders’ Funds

Share capital 1 234.92 234.92

Employee stock options

outstanding (Refer Note 9

of schedule 17) 576.53 126.15

Reserves and surplus 2 27,795.68 27,795.68

2 Loan funds

Secured loans 3 46,218.48 44,399.77

Unsecured loans 4 25,000.00 25,000.00

Total 99,825.61 97,556.52

II. APPLICATION OF FUNDS

1 Fixed Assets Fixed Assets 5

Gross Block 16,471.07 12,653.09

Less : Accumulated

Depreciation / Amortization 10,698.24 8,778.26

Net Block 5,772.83 3,874.83

Capital work-in-progress

(including capital advances) 489.63 1,399.18

2 Investments Investments 6 68,631.20 76,935.66

3 Current Assets,

Loans and Advances :

Accured interest — 75.53

Sundry debtors 7 5,162.24 3,803.84

Cash and bank balances 8 839.68 18.15

Loan to subsidiaries 15,185.23 11,009.19

Loans and advances 9 3,422.56 2,559.02

(A) (A) 24,609.71 17,465.73

Less: Current Liabilities

and Provisions : and Provisions : 10

Current liabilities 8,741.71 7,417.50

Provisions 172.48 133.11

(B) (B) 8,914.19 7,550.61

Net Current Assets (A-B) (A-B) 15,695.52 9,915.12

4 Profit and Loss account Profit and Loss account 9,236.43 5,431.73

Total Total 99,825.61 97,556.52

Notes to Accounts Notes to Accounts 17

The schedules referred to above and notes to accounts form an integral part of the

Balance Sheet.

As per our report of even date

For S.R. Batliboi & Associates



per Amit Majumdar

Partner


Place: Mumbai

Date: July 27, 2011

For and on behalf of the Board of Directors of

Aditya Birla Minacs Worldwide Ltd.

Dr. Rakesh Jain

Director

Sushil Agarwal

Director

Ramesh Kamath

Chief Financial Officer

Date : July 27, 2011

PROFIT & LOSS ACCO UNT FOR THE YEAR ENDED 31ST

MARCH, 2011

For the For the

year ended year ended

31st March 31st March

2011 2010

Schedule ` Lacs ` Lacs

INCOME :

Service charges 24,400.99 22,111.06

Other income 11 206.21 522.38

Total Total 24,607.20 22,633.44

EXPENDITURE :

Personnel expenses 12 15,682.87 12,993.92

Other operating expenses 13 4,686.67 4,015.80

Administrative expenses 14 3,048.53 3,602.29

Marketing / business

development expenses 15 434.31 353.77

Financial charges /

interest cost 16 2,614.80 3,186.42

Depreciation / amortization 1,915.92 1, 413.85

Total 28,383.10 25,566.05

Loss for the year (3,775.90) (2,932.61)

Less: Withholding tax

written off / provided for 28.80 19.55

Net Loss for the year (3,804.70) (2,952.16)

Loss brought forward

from previous year (5,431.73) (2,479.57)

Deficit carried to

Balance Sheet (9,236.43) (5,4 31.73)

Earnings Per Share

Basic Weighted Average

number of shares 23,491,711 23,491,711

Diluted Weighted Average

number of shares 24,858,711 23,864,586

Basic earnings/(loss) per share

(Nominal value of shares ` 1 each

Previous year ` 1 each) ` (16.20) (12.57)

Diluted earnings/(loss) per share

((Nominal value of shares ` 1 each

Previous year ` 1 each) ` (16.20) (12.57)



Profit and Loss Account.





per Amit Majumdar

Partner


Place: Mumbai

Date: July 27, 2011



Dr. Rakesh Jain

Director

Sushil Agarwal

Director

Ramesh Kamath



(7)


C M Y K

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2011

` Lacs

For the Year ended 31.3.2011 For the Year ended 31.3.2010

A. Cash flows from Operating Activities

Net Loss for the year (3,775.92) (2,932.61)

Adjustments for:


Loss/(Profit) on Sale of Fixed Assets — 53.05

Unrealised foreign exchange (gain)/ loss (Net) 943.66 63.95

Interest Income (130.02) (222.21)

Gain On Mutual Fund Investments (57.58) (226.62)

Dividend Income — (68.33)

Finance/Interest Expense 2,614.80 3,186.42

Employee stock compensation expenses 450.38 126.15

Provision for doubtful debt 126.22 2.95

Operating Profit before working capital changes 2,087.46 1,396.60

Movements 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 2,498.67

Cash generated from operations 1,322.60 3,576.73

Loan 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) 3,074.45

B. Cash Flows from Investing Activities

Purchase of Fixed Assets (2,904.32) (3,872.59)

Proceeds from sale of Fixed Assets — 116.66

Investment in Subsidaries (345.54) (13,247.66)

(Purchase)/Sale of investment 8,650.00 (5,350.00)

Interest income received 205.55 151.14

Dividend received 57.58 294.95

Net Cash from/(for) Investing Activities 5,663.27 (21,907.49)

C. Cash flow from Financing Activities

Proceeds 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 — 25,000.00

Interest/financial charges paid (2,611.43) (3,170.95)

Net Cash generated/(used) in Financing Activities (1,736.38) 18,837.56

D. Foreign Exchange difference on translation of foreign currency cash and cash equivalents Foreign Exchange difference on translation of foreign currency cash and cash equivalents — (0.02)

Net Increase in cash and Cash equivalants during the year 821.55 4.50

Cash and cash equivalants at the beginning of the year 16.21 11.71

Cash and cash equivalants at the end of the year 837.74 16.21

Notes:

Components of Cash and Cash Equivalents As at 31.3.2011 As at 31.3.2010

i) Cash Balance on hand 6.32 3.84

ii) Balance with Scheduled and other Banks :

- in Current Account 831.42 12.37

Total 837.74 16.21

Note:

i) Fixed Deposit of ` 1.94 Lacs (Previous year ` 1.94 Lacs) given as margin money has not been considered as cash and cash equivalents





per Amit Majumdar

Partner


Place: Mumbai

Date: July 27, 2011



Dr. Rakesh Jain

Director

Sushil Agarwal

Director

Ramesh Kamath



(8)


C M Y K

SCHEDULE 5 - FIXED A SSE TS Rs. Lacs

GROSS BLOCK DEPRECIATION / AMORTIZATION NET BLOCK

Particulars As on Additions Deductions As on As on For the Deductions As on As on As on

Apr-1-10 Mar-31-11 Apr-1-10 Year Mar-31-11 Mar-31-11 Mar-31-10

Computers and telecommunication

equipments 8,158.58 2,259.27 — 10,417.86 5,965.04 1,063.01 — 7,028.05 3,389.81 2,193.54

Plant 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 — 241.67 137.60 126.38

Furniture and fixtures 649.20 319.29 — 968.49 420.75 124.22 — 544.97 423.52 228.45

Leasehold improvements 1,488.28 464.90 — 1,953.18 979.64 344.36 — 1,324.00 629.18 508.64

Intangible assets

Software 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 28.22 115.87

Motor car 26.22 5.66 — 31.88 9.82 7.68 — 17.50 14.38 16.40

Total 12,653.09 3,817.97 — 16,471.07 8,778.26 1,919.98 — 10,698.24 5,772.83 3,874.83

Previous Year 10,679.49 2,549.47 575.87 12,653.09 7,770.56 1,413.85 406.15 8,778.26 3,874.83

Notes:

The opening gross block of fixed assets, accumulated depreciation and net block has been reclassified as per the asset categori es, per se.

A s At A s At

31st Mar, 20 11 31st Mar, 20 10

` Lacs ` Lacs

A s At A s At

31st Mar, 20 11 31st Mar, 20 10

` Lacs ` Lacs

SCHEDULES FORMING P ART OF THE BALANCE SHEET

As At As At

31st Mar, 2011 31st Mar, 2010

` Lacs ` Lacs

SCHEDULE - 1 - SHARE CAPITAL

Authorised Capital

30,000,000 (Previous Year 30,000,000)

Equity Shares of ` 1/- each 300.00 300.00

300.00 300.00

Issued, Subscribed and Paid up Capital

2,34,91,711 (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 shares

held by them through their nominees)

Total 234.92 234.92

SCHEDULE - 2 - RESERVES and SURPLUS

Securities Premium Account 27,795.68 27,795.68

Total Total 27,795.68 27,795.68

SCHEDULE - 3 - SECURED LO ANS

i) 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 charge

on 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 the

moveable assets and second charge on

Receivables)

(Repayable within one year ` 207.59 Lacs,

Previous Year - ` 592.07 Lacs)

Total Total 46,218.48 44,399.77

SCHEDULE - 4 - UNSECURED LOANS

Compulsorily convertible debentures 25,000.00 25,000.00

(Refer note 17 of schedule 17)

Total Total 2 5,000.00 25,000.00

SCHEDULE - 6 - INVESTMENTS

Long Term Investments Long Term Investments (At Cost)

In Subsidiary Companies

Trade, unquoted, fully paid-up

NIL (Previous Year NIL) equity shares of US $ 1 each

in Transworks Inc. — —

127,000,001 (Previous Year 127,000,001) equity shares

of CAD 1 each in AV Transworks Limited 53,369.34 53,369.34

30,000,000 (Previous Year 30,000,000) preference

shares of CAD 1 each in A V Transworks Limited 13,690.00 13,344.46

969,232 (Previous Year 490,000) shares of Peso100

each in Aditya Birla Minacs Philippines Inc. 871.86 448.01

Share application money paid to Aditya Birla Minacs

Philippines Inc. — 423.85

Current Investments Current Investments (At lower of cost and

Net 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 8,500.00

Total Total 68,631.20 76,935.66

No. of units The following Investments were purchased & Cost Sale Value Gain

sold during the period : (` Lacs) (` Lacs) ( ` Lacs)

364,571,417 B irla Sunlife Savings Fund -Instl. Premium - Growth 4,982.82 4,999.55 16.72

114,706,916 Birla Sunlife Cash Plus - Instl.

Premium - (Growth) - I 17,385.00 17,406.24 21.24

99,223,350 Birla Sunlife Cash Plus - Instl.

Premium - (Growth) - II 14,709.83 14,728.54 18.71

1,119,188 Birla Sunlife Saving - Instl. Prem. - Growth 200.00 200.91 0.91

Total Total 37,277.65 37,335.24 57.58

A s At A s At

31st Mar, 20 11 31st Mar, 20 10

` Lacs ` Lacs

SCHEDULE - 7 - SUNDR Y DEBT ORS

Debts outstanding over six months

i) Unsecured, considered good 18.50 42.81

Unsecured, considered doubtful 129.17 2.95

Less:- Provision for doubtful debts (129.17) (2.95)

18.50 42.81

ii) Other Debts

Unsecured, 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 3,803.84

Included in Sundry Debtors are dues from

Companies under the same management:

Aditya Birla Financial Shared Services

Private Limited 1.51 1.92

Birla Sun Life Insurance Company Limited 163.53 228.32

SCHEDULE - 8 - CASH AND BANK BALANCES

i) Cash on hand 6.32 3.84

ii) Balance with scheduled Banks :

On current account 829.65 10.70

On fixed deposits (As margin against bank

guarantee) 1.94 1.94

Balance with other Banks :

On Current Account 1.77 1.67

(with Natwest Bank, UK. Maximum

Balance outstanding during the year

` 1.77 lacs (Previous year - ` 30.99 )

Total Total 839.68 18.15

(9)


C M Y K

F or the F or the

y ear ended y ear ended

31st Marc h, 2011 31st Marc h, 2010

` Lacs ` Lacs

SCHEDULE - 14 - ADMINISTRATIVE EXPENSES

i) Legal & professional fees 600.80 453.26

ii) Telephone expenses 85.46 89.25

iii) R ecruitment & relocation 425.41 206.22

iv) Auditors remuneration

– Audit fees 33.50 36.86

– Out of pocket expenses 1.91 0.03

v) Vehicle expenses 292.26 159.71

vi) Seminar & outside training expenses 89.38 65.59

vii) Printing & stationery 58.05 37.13

viii) Di rectors sitting fees 1.85 1.65

ix) Insurance charges 26.79 35.71

x) Travelling expenses 399.78 329.46

xi) Loss / (Profit) on sale of fixed assets — 53.05

xii) Rates and Taxes 26.38 43.00

xiii) Provision for doubtful Debt 126.22 2.95

xv) Foreign Exchange loss on Loans taken/given 556.18 1,030.98

xvi) Foreign Exchange Fluctuation (net) - Others 111.03 807.77

xiv) Miscellaneous expenses 213.53 258.68

Total Total 3,048.53 3,611.30

SCHEDULE - 15 - MARKETING /

BUSINESS DEVELOPMENT EXPENSES

i) Business promotion expenses 4.97 6.18

ii) Advertisement and branding expenses 3.60 3.42

iii) Ente rtainment expe nses 5.21 3.35

iv) Marketing expenses 411.84 324.77

v) Telemarketing registration & bonding expenses 8.69 16.05

Total 434.31 353.77

SCHEDULE - 16 - FINANCIAL CHARGES & INTEREST COST

i) Arrangement Fees 96.66 427.56

ii) Interest on external commercial borrowings

and term Loan 2,418.51 2,666.73

iii) Interest on wo rking capital and demand Loan 21.83 73.05

v) Other financial charges 77.80 19.08

Total Total 2,614.80 3,186.42

A s At A s At

31st Mar, 20 11 31st Mar, 20 10

` Lacs ` Lacs

SCHEDULE - 9 - LO ANS AND ADVANCES

(Unsecured considered good)

i) Advances recoverable in cash or in kind or for

value to be received 1,011.57 1,383.30

ii) Tax deducted at source 447.06 223.93

iii) Deposits- other s 963.93 951.79

iv) Inter-company deposits 1,000.00 —

Total Total 3,422.56 2,559.02

Included in Loans and Advances are dues from

Companies 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 & PROVISIONS

i) Sundry creditors (including book overdraft of ` Nil Lacs;

Previous Year. ` 476.65 Lacs) 8,010.19 6,983.25

ii) Interest accrued but not due 212.71 216.08

iii) Subsidiary companies 290.65 (36.54)

iv) Other li abilities 228.16 254.71

8,741.71 7,417.50

PROVISIONS

i) Gratuity 50.45 29.91

ii) Leave encashment 122.03 103.20

172.48 133.11

Total Total 8,914.19 7,550.61

For the For the

year ended year ended

31st March, 2011 31st March, 2010

` Lacs ` Lacs

SCHEDULE - 11 - OTHER INCOME

i) Gain on mutual fund investments 57.58 226.62

ii) Dividend from subsidiary — 68.33

iii) M iscellaneous income 18.61 5.22

iv) 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) 113.15 220.08

Total 206.21 522.38

SCHEDULE - 12 - PERSONNEL EXPENSES

i) Salaries & other employee benefits 12,377.97 10,715.15

ii) Contribution to provident and other funds 871.08 598.38

iii) Employee Compensation under ESOP 450.38 126.15

v) Staff Welfare Expenses 1,916.58 1,510.37

iv) Gratuity (Refer Note 16 schedule 17) 66.86 43.87

Total Total 15,682.87 12,993.92

SCHEDULE - 13- OTHER OPERATING EXPENSES

Facility Expenses

i) Rent charges 1,602.77 1,310.15

ii) Electricity expenses 1,112.91 835.34

iii) House keeping expenses 201.47 136.02

iv) Security charges 203.72 162.85

iv) Repairs & maintenance

– Building 8.34 71.26

– Others 253.16 196.21

v) Hire Charges 95.57 41.07

Technology Expenses

vi) Connectivity charges 668.51 795.08

vii) R epairs & maintenance - Machine ry 331.65 375.75

viii) Software & support expenses 208.57 92.07

Total Total 4,686.67 4,015.80

(10)


C M Y K

SCHEDULE – 17: NOTES TO ACCO UNTS

1. Nature of operations

Aditya Birla Minacs Worldwide Limited (“the Company”) (ABMWL) provides

customized business process outsourcing (BPO) solutions focused mainly on the

areas of capability, contact center solutions, integrated marketing services and

knowledge process outsourcing.

2. ACCOUNTING POLICIES

a. Basis of preparation

The financial statements have been prepared to comply in all material respects

with the Accounting Standards notified by Companies (Accounting Standards)

Rules, 2006, (as amended) and the relevant provisions of the Companies

Act, 1956. The financial statements have been prepared under the historical

cost convention on an accrual basis. The accounting policies have been

consistently applied by the Company and are consistent with those used in the

previous year.

b. Use of estimates

The preparation of financial statements in conformity with generally accepted

accounting principles requires management to make estimates and assumptions

that affect the reported amounts of assets and liabilities and disclosure of

contingent liabilities at the date of the financial statements and the results of

operations during the reporting period end. Although these estimates are based

upon management’s best knowledge of current events and actions, actual

results could differ from these estimates.

c. Revenue recognition

i) Revenue is derived from both time-based and unit-priced contracts.

Revenue is recognized as related services are performed based on

agreements / arrangements with the customers

ii) Interest income is recognised on a time proportion basis taking into

account the amount outstanding and the rate applicable.

iii) Divi dend is recognised when the shareholders’ right to receive payment

is established bythe balance sheet date.

d. Fixed assets

Fixed assets are stated at cost less accumulated depreciation and impairment

losses if any. Cost comprises the purchase price and any attributable cost of

bringing the asset to its working condition for its intended use

e. Depreciation

Depreciation on assets is provided on straight-line basis, on the rates based on

the useful lives as estimated by the management, which are greater than the

corresponding rates prescribed in Schedule XIV of the Companies Act, 1956.

The individual assets costing less than ` 5,000/- are depreciated in full in the

year of purchase. The management’s estimate of useful lives of the various

fixed assets is given hereby:

Assets Estimated useful life

i) Computers Equipment/Int angibles 2 - 4 years

ii) Telecommunication Equipment 5 years

iii) Plant & Machinery 5 years

iv) Office Equipment 5 Years

v) Furniture & Fixtures 6 Years

vi) Motor Car 5 Years

Leasehold improvements are depreciated over the shorter of the estimated

useful life of the asset and the lease term of the premises.

f. Leases

Finance lease, which effectively transfers to the Company substantially all the

risks and benefits incidental to ownership of the leased item, are capitalized at

lower of fair value and present value of the minimum lease payments at the

inception of the lease term and disclosed as leased assets. Lease payments

are apportioned between the finance charges and reduction of the lease liability

based on implicit rate of return. Finance charges are charged directly against

income. Lease management fees, lease charges and other initial direct costs

are capitalized.

Leases where the lessor effectively retains substantially all the risks and benefits

of ownership of the leased item, are classified as operating leases. Operating

lease payments are recognized as an expense in the Profit and Loss account

on a straight-line basis over the lease term.

g. Investments

i) Investments that are readily realizable and intended to be held for not

more than a year are classified as current investments. All other

investments are classified as long-term investments.

ii) Long-term investments are valued at cost. Any decline in the value of

investments other than temporary, is provided for and charged to the

profit & loss account.

iii) The current investments are carried at lower of cost and net asset value

determined on an individual investment basis.

h. Impairment

The carrying amounts of assets are reviewed at each balance sheet date if there

is any indication of impairment based on internal/external factors.

An impairment loss is recognized wherever the carrying amount of an asset

exceeds its recoverable amount. The recoverable amount is the greater of the

asset’s net selling price and value in use. In assessing value in use, the estimated

future cash flows are discounted to their present value using a pre-tax discount

rate that reflects current market assessments of the time value of money and

risks specific to the asset.

i. Transactions in Foreign Currency

i) Initial Recognition

Foreign currency transactions are recorded in the reporting currency, by

applying to the foreign currency amount the exchange rate between the

reporting currency and the foreign currency at the date of the transaction.

ii) Conversion

Foreign currency monetary items are reported using the closing rate.

Non-monetary items, which are carried in terms of historical cost

denominated in a foreign currency, are reported using the exchange rate

at the date of the transaction.

iii) Translation of Integral foreign operation

The financial statements of foreign operations whose operations are

integral to the operations of the Company are translated using the

principles and procedures as if the transactions of the foreign operations

had been those of Company itself.

iv) Exchange Differences

Exchange differences arising on the settlement of monetary items or on

reporting company’s monetary items at rates different from those at which

they were initially recorded during the year, or reported in previous financial

statements, are recognized as income or as expenses in the year in which

they arise.

v) Forward Exchange Contracts not intended for trading or speculation

purposes

The premium or discount arising at the inception of forward exchange

contracts is amortized as expense or income over the life of the contract.

Exchange differences on such contracts are recognized in the statement

of profit and loss in the year in which the underlying transactions occur.

Any profit or loss arising on cancellation or renewal of forward exchange

contract is recognized as income or as expense for the year.

vi) Accounting policy for Derivatives

The Company uses derivative financial instruments such as forward

exchange contracts, currency swaps and interest rate swaps to hedge

its risks associated with foreign currency fluctuations and interest rate.

Currency and interest rate swaps are accounted in accordance with their

contract

j. Retirement benefits

(i) Defined Contribution Plan

Company’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) and

compensated leave encashment are determined by Actuarial Valuation

made at the end of each financial year using the projected unit credit

method. Actuarial gain and losses are recognized immediately in the

statement of Profit and Loss Account as income or expense. Obligation

is measured at the present value of estimated future cash flows using a

discounted rate that is determined by reference to market yields at the

Balance Sheet date on Government bonds where the currency and terms

of the Government bonds are consistent with the currency and estimated

terms of the defined benefit obligation.

k. Provision

A provision is recognized when an enterprise has a present obligation as a

result of past event; it is probable that an outflow of resources will be required

to settle the obligation, in respect of which a reliable estimate can be made.

Provisions are not discounted to its present value and are determined based

on best estimate required to settle the obligation at the balance sheet date.

These are reviewed at each balance sheet date and adjusted to reflect the

current best estimates.

l. Income Tax

Tax expense comprises of current and deferred tax. Provision for current tax is

made on the basis of estimated taxable income for the current accounting

year. The 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 enacted as of the Balance Sheet date. Deferred tax assets arising

from timing differences are recognized to the extent there is reasonable certainty

(11)


C M Y K

that these would be realized in future. In case of unabsorbed losses and

unabsorbed depreciation, all deferred tax assets are recognized only if there is

virtual certainty supported by convincing evidence that they can be realized

against future taxable profit.

m. Employee Stock Options

Measurement and disclosure of the employee share-based payment plans is

done in accordance with SEBI (Employee Stock Option Scheme and Employee

Stock Purchase Scheme) Guidelines, 1999 and the Guidance Note on Accounting

for Employee Share-based Payments, issued by the Institute of Chartered

Accountants of India. The Company measures compensation cost relating to

employee stock options using the intrinsic value method. Compensation expense

is amortized over the vesting period of the option on a straight line basis.

n. Earnings per share

Basic earnings per share are calculated by dividing the net profit or loss for the

year attributable to equity shareholders by the weighted average number of

equity shares outstanding during the year.

For the purpose of calculating diluted earnings per share, the net profit or loss

for the year attributable to equity shareholders and the weighted average number

of shares outstanding during the year are adjusted for the effects of all dilutive

potential equity shares.

o. Cash and Cash equivalents

Cash and cash equivalents for the purposes of cash flow statement comprise

cash at bank and in hand and short-term investments with an original maturity

of three months or less.

3. Contingent Liabilities. ( ` Lacs)

Particulars As at As at

March 31, 2011 March 31, 2010

i) Estimated amount of contracts

remaining to be executed on capital

account and not provided for. 69.11 146.03

ii) Guarantees and counter guarantees

given by the Company to Commissioner

of Customs towards custom & excise

duty exemption under STPI Scheme

(Based on present export performance,

the Company expects to meet its export

obligation and hence this liability is not

likely to materialize) 1421.43 1,329.95

iii) Guarantees and Counter guarantees

given by the Company to its insurance

company in USA and to Citibank, NA on

the basis of which the insurance

company issued telemarketing bonds

favoring Attorney generals of various

states in USA on behalf of the Company.

(These bonds are required to be given

for compliance of telemarketing laws in

USA. In case of any violations of these

rules, the penalties are imposed. The

Company does not expect any liabilities

on the same). 446.50 451.40

iv) Guarantee given by the Company to

Banks for securing the loans granted by

such banks to the subsidiaries of

the Company. 10,939.25 11,059.30

v) Guarantee and Counter given by

Company to Department of

Telecommunication (DoT) for getting the

permission for sharing of international

and domestic call center. 350.00 210.00

vi) Service tax refund relating to year

2005-2007 rejected by service tax

department. Company is in appeal at

various levels against rejection orders 266.58 266.58

vii) Penalty for disallowances of expenses

incurred by the Company for F.Y

2003-2004. The Company has filed an

appeal before the Bombay High Court. 73.29 73.29

4. Earnings in foreign currency ( ` Lacs)

Particulars Year Ended Year Ended

March 31, 2011 March 31, 2010

a) Service Income 14,765.98 15,825.42

b) Interest Income 113.15 220.08

5. Expenditure in foreign cur rency ( ` Lacs)

P articulars Year Ended Year Ended

March 31, 2011 March 31, 2010

Expenditure in foreign cur rency (A ccrual Basis)

a) Traveling expenses 44.11 111.30

b) Marketing expenses 509.56 437.11

c) Interest expenses 2,212.96 2,283.54

d) Technology expenses 46.63 19.38

6. CIF value of imports ( ` Lacs)


March 31, 2011 March 31, 2010

Capital goods 154.99 202.41

7.7. The Company has entered into operating lease agreements for its BPO centers ranging

for a period of 3 to 5 years The lease rentals charged during the year and maximum

obligations on long-term non-cancelable operating leases payable as per the rentals

stated in respective agreements are as follows

( ` Lacs)


March 31,2011 March 31,2010

1. Lease payments recognized in the

profit & loss account for the year 1,602.77 1,379.78

2. Obligations on non-cancelable leases :

i) Not later than one year : 665.78 919.48

ii) Later than one year and not

later than 5 years Nil 517.00

iii) Later than 5 years Nil Nil

8. Deferred Taxes

The Company has deferred tax assets in respect of unabsorbed depreciation and

business loss. As there is no virtual certainty about the realization of the deferred tax

assets against the future taxable profits, the same has not been recognized.

9. Employee Stock Option Plan

In December 2009, the Board of the Company approved the Employees Stock Option

Plan 2009 (“the Plan”), which covers the employees of the Company including its

subsidiaries. The plan is administered and supervised by the Compensation Committee

of 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 options that

will vest

End of 15 months from the date of grant of options 20%



Fair Valuation:

The fair valuation of the options used to compute proforma net profit and earning per

share have been done by an independent valuer on the date of grant using black-Scholes Model. The key assumptions and the fair value are as under.

Particulars Percentage

Risk Free Interest Rate % 6.84%

Option Life (years) 4.80

Expected Volatility (%) 0%

Historical Volatility (%) 0%

Expected Dividend Yield (%) 0%

Weighted Average Fair Value per Option (`) 141

Had the compensation cost for the stock option granted under ESOS-2009 been

recognized, based on fair value at the date of grant in accordance with Black and

Scholes Model, the proforma amount of net profit and earning per share of the

Company would have been as under:

(` Lacs)

Particulars March 31, 2011 March 31,2010

Net Loss (3,804.72) (2,952.16)

Add: Compensation cost as per Intrinsic Value 450.38 126.15

Less: Compensation cost as per fair value 813.73 227.92

Adjusted Net Loss (4,168.07) (3,053.93)

Weighted average number of Basic Equity

Shares Outstanding (in Nos) 23,491,711 23,491,711

ESOPS outstanding at the end of the year 1,367,000 372,875

Weighted average number of Diluted Equity


Face Value of Equity Shares (In `) 1.00 1.00

Reported 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)


C M Y K

The participants shall exercise the options within five years from vesting or

within three years from the date of listing, whichever is earlier. The Plan is contingent

on the shares being listed in a recognized stock exchange in India on or before

1

st

July, 2015. If the Company’s shares are not listed on the stock exchange by

30

th

June, 2015, the existing employees shall have to sell all options vested to the

Company or its nominee at a price determined as per Plan.

Particulars March31, 2011 March 31, 2010

Total Options under the Plan 1,897,337 1,897,337

Options outstanding at the beginning of the year 1,491,500 Nil

Granted during the year 34,500 1,491,500

Forfeited during the year 159,000 Nil

Exercised during the year Nil Nil

Outstanding at the end of the year 1,367,000 1,491,500

Expired during the year Nil Nil

Exercisable at the end of the year Nil Nil

Exercise Price ( `) 230 230

The employee stock option outstanding account shown in Balance Sheet is net of

unamortized 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) to

supplier as defined under the Micro, Small and Medium Enterprises Development

Act, 2006 at year end.

11. Related Party Transactions

Name 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, Canada

or 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 BPO

Limited, U.K, formerly known as Compass

BPO Ltd.) (w.e.f. March 9, 2010)

Fellow Subsidiaries Aditya Birla Financial Shared Services

Limited (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 Management

Fellow subsidiary Company Limited (BSAMC)

(Directly held by the Holding Company till

Mar 22, 2010 thereafter Joint Venture of

Fellow subsidiary)

IDEA Cellular Limited. Joint venture of

holding company.

Key Management Personnel Deepak Patel (Whole Time Director. w.e.f

October 12, 2010.

12. Summary of transactions with related parties during the year: ( ` Lacs)

Particulars Year ended Year ended

March 31, 2011March 31, 2010

Holding Company

Inter corporate deposit (ICD) given to ABNL 1,500 Nil

ICD repayment by ABNL 1,500 Nil

Interest income 8.14 Nil

Reimbursement of costs to the company 5.14 33.34

Service Income (Indo Gulf Fertilizers Division of ABNL) 7.21 Nil

Subsidiary Companies

Transworks Inc. USA:

– Repayment of Share Capital Nil 96.80

– Payment of dividend to holding company Nil 68.33

Aditya Birla Minacs Worldwide Inc Canada:

– Marketing and technology expenses 509.56 437.11

– Services Income 695.00 669.37

A 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 202.42

Aditya Birla Minacs Philippines Inc:

– Foreign Currency Loan Given Nil 117.36

– Interest Income Nil 17.66

Aditya Birla Minacs BPO Private Limited

– ICD taken 100.00

– ICD re-paid 100.00

– Interest expenses on ICD 2.25

F ello w Subsidiary

ABNL Inv estment Limited

– ICD Taken Nil 500.00

– Interest expenses on ICD Nil 3.67

– ICD Repaid Nil 500.00

Birla Sun Lif e Insurance Company Limited.,

– Staff welfare expenses

(Term Life Insurance) 19.28 18.15


– Expenses Reimbursed by the company 22.80 Nil

Aditya 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 795.00 200.00

Aditya Birla Financial Shared

Services Private Limited.

– Reimbursement of cost to the company 10.60 1.92

Joint Venture

Birla Sun Life Asset Management

Company Limited.


– Reimbursement of cost by the company Nil 4.16

– Reimbursement of cost to the company Nil 5.66

Idea Cellular Limited

– Services Income 7,114.84 5,102.90

Remuneration to Key Management Person*

– Salary & Allowances 136.20 Nil

– Contribution to Provident fund and

other funds 11.4 Nil

Related Party Balances:

Holding Company

– Payable – ABNL 24.41 21.93

– Receivable- ABNL

(Division-Indo Gulf Fertilisers) 7.07 Nil

– Corporate guarantees taken from

Holding Company 13,160.83 9,479.40

Subsidiary Company

– Receivable– Transworks Inc 1.12 1.12

– Payable Aditya Birla Minacs Worldwide

Inc (Net of receivable of ` 101.42 lacs) 252.94 Nil

– Receivable - Aditya Birla Minacs

Worldwide Inc (Net of payable 27.79 lacs) Nil 16.86

– Receivable (foreign currency loan) to

A V Transworks Limited 14,290.0 10,714.33

Receivable-Aditya Birla Minacs Philippines Inc. 957.82 968.27

Corporate Guarantee given to Bank for

Loan taken by A V Transworks Limited 10,939.25 11,059.30

Joint Venture

– Receivable - Idea Cellular Limited 859.18 766.68

– Receivable- Birla Sun Life Asset

Management Company Limited. 16.45 38.68

Fellow Subsidiary

– Payable - Aditya Birla Minacs

IT Services Limited. Nil 61.59

– Receivable -Aditya Birla Financial

Shared Services Private Limited. 1.51 1.92

– Receivable - Birla Sun Life Insurance

Company Limited. 163.53 228.32

– Receivable from Aditya Birla Minacs

IT Services Limited (ICD) 1,000.00 Nil

* As the liabilities for gratuities and leave encashment are provided on an actuarial

basis for the company as a whole, the amounts pertaining to the director is not

included above

13. Derivative Instruments.

The Company uses derivative financial instruments such as forward exchange

contracts, currency swaps and interest rate swaps to hedge its risks associated with

foreign currency fluctuations and interest rate.

(13)


C M Y K

The Company, time to time, holds financial derivatives instruments primarily for

hedging purpose. In pursuance of the announcement dated 29th March 2008 of

ICAI, The Company has decided to account for losses, if any, on derivatives

transactions, on net basis, after considering effect of underlying exposure /

commitments / obligations. As there was no such loss at the end of the year, the

above changes does not have any effect on the profit for the year.

Derivative Outstanding as at March 31 2011

Particulars Currency Amount in Foreign Purpose

Currency (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 Capital

Receivable

Forward Cover USD NIL To hedge Interest Payable

(10.00)

Forward Cover USD 50.00 To hedge working capital

(Nil) (PCFC) Loan payable

Cross 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 derivative

instrument or otherwise.

14. Segment Information for the year ended March 31, 2011

(1) Primary business segment

The company provides a variety of Business Process outsourcing services.

The risks and rewards from each of these service agreements are similar. As

the Company’s business activity primarily falls within a single business segment,

there are no additional disclosures to be provided in respect of primary segment

under Accounting Standard 17 ‘Segment Reporting’, other than those already

provided 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 31

st

March, 2011 India Outside India Total

A Revenue by geographical market 9,635.01 14,765.98 24,400.99

B Carrying amount of segment assets 13,147.82 86,355.55 99,503.37

C Capital Expenditure (included in

(b) above) 2,908.42 Nil 2,908.42

Year ended 31

st

March, 2010 India Outside India Total

A Revenue by geographical market 6,285.64 15,825.42 22,111.06

B Carrying amount of segment assets 18,183.22 81,467.26 99,650.48

C Capital Expenditure (included in

(b) above) 3,872.59 Nil 3,872.59

15. 15. The Company has invested ` 81,349.34 Lacs (previous year ` 76,817.93 lacs) (includes

loan 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 asset

base and business plan of the investee companies, in the opinion of the management

there is no diminution in the value of investment other than temporary.

16. Retirement Benefits: ( ` Lacs)

Year ended Year ended

March 31, 2011 March 31, 2010

(a) Defined Benefit Plans -The Amounts recognized in the balance

sheet are as follows in respect of

gratuity (fully funded by the company):

Present value of the funded defined

benefit obligation at the end of the year 259.75 223.35

Fair value of plan assets 133.36 163.82

Benefit Paid on behalf of Fund 75.94 29.62

Net Liability 50.45 29.91

T he Amounts recogniz ed in Salary,

Wages and Employee Benefits in the

Profit and Loss Account as follows in

respect of gratuity (fully funded by

the company):

Current Service cost 116.68 127.73

Past Service Cost 8.73 Nil

Interest on Defined Benefit Obligations 18.43 14.17

Expected return on plan assets (14.21) (9.45)

Net Actuarial (gain)/loss recognized

during the year (62.77) (88.58)

Net Gratuity Cost 66.86 43.87

Actual Return on Plan Assets

Expected Return on Plan Assets 14.21 9.45

Actuarial gain/(loss) on Plan Assets 1.66 (4.95)

Actual Return on Plan Assets 15.86 4.50

Reconciliation of present value of the

obligation and the fair value of the plan assets:

Opening Defined Benefit Obligation

as on 1.4.2010 223.35 188.95

Current Service Cost 116.68 127.73


Interest Cost 18.43 14.17

Actuarial (Gain)/loss (61.11) (77.87)

Benefits Paid (46.32) (29.62)

Closing Defined Benefit Obligation

as on 31.03.2011 259.75 223.35

Change in fair value plan assets

Opening Fair Value of the plan assets 163.82 125.96

Expected return on plan assets 14.21 9.45

Actuarial Gain/(loss) 1.66 (4.95)

Contributions by the Employer Nil 62.98


Closing Fair value of the plan assets 133.36 163.82

Investment details of plan assets

Government of India Securities 38.79 36.04

Corporate Bonds 2.08 3.28

Insurer Managed Fund (with common

fund of Holding Company) 86.80 124.50

Others 5.69 Nil

Total 133.36 163.82

The overall expected rate of return on assets

is determined based on the market prices

prevailing on that date, applicable to the year

over which the obligation is to be settled.

(B) Defined Contributions Plans:

Contribution to Employee Provident Fund 608.12 512.18

Contribution to ESIC 260.23 85.17

Contribution to superannuation fund 13.21 19.84

(C) Principal Actuarial Assumptions At the

Balance 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 first

three years and Three Years and

5% thereafter 5% thereafter

(D) Experience Adjustment 2010-11 2009-10 2008-09 2007-08 2006-07

Liability at the end

of the Period 259.75 223.35 188.95 104.70 79.02

Fair Value of Plan Assets

at the end of the Period 133.36 163.82 106.06 74.35 66.90

Benefit paid on

behalf of fund 75.94 29.62 Nil Nil Nil

Deficit / (Surplus) 50.45 29.91 82.89 30.35 12.12

Experience adjustments

on plan liabilities (Gain)/Loss (61.11) (77.87) 90.53 (23.12) (21.65)


on 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 into

Equity on the business day following expiry of a period of 60 months from the date of

allotment of such CCD. As per the terms of the issue, the Conversion price will be

mutually decided thirty days before the conversion date. Aditya Birla Nuvo Limited

(14)


C M Y K

For S.R. BATLIBOI & ASSOCIATES .



per Amit Majumdar

Partner


Place: Mumbai

Date: July 27, 2011



Dr. Rakesh Jain

Director

Sushil Agarwal

Director

Ramesh Kamath



(ABNL), the holding company, has entered into an Option Agreement with the

Subscribers of these CCD pursuant to which the holders of CCD have call option on

ABNL and ABNL has put option on the Subscribers on expiry of 24,36,48 and 60

months from the date of allotment of these CCD. The holders can also exercise put

option on happening of certain specified events.

18. 18. The Company had filed Composite Scheme of Amalgamation (or “Scheme”) with

Karnataka High Court (or “High Court”) for the merger of Aditya Birla Minacs IT

Services Limited and Aditya Birla Minacs Technologies Limited with the Company

with effect from April 1, 2010. The High Court sanctioned the Scheme on November

3, 2010 and order was received by Company on December 9, 2010. The approved Sc heme

was not filed with Registrar of Companies as the management was desirous of making

certain modifications in the Scheme. Therefore, the Company has revised the Scheme

and 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’s

classification.

(15)


C M Y K

AUDITORS’ REPOR T

To

The Board of Directors of Aditya Birla Minacs Worldwide Limited

We have audited the attached consolidated Balance Sheet of Aditya

Birla Minacs Worldwide Limited (‘the Company’) and its subsidiaries

(collectively referred to as the ‘Group’), as at March 31, 2011, and also

the consolidated Profit and Loss Account, and the consolidated Cash

Flow statement for the year ended on that date annexed thereto. These

financial statements are the responsibility of the Company’s

management and have been prepared by the management on the basis

of separate financial statements and other financial information regarding

components. Our responsibility is to express an opinion on these

financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally

accepted in India. Those Standards require that we plan and perform

the audit to obtain reasonable assurance about whether the financial

statements are free of material misstatement. An audit includes

examining, on a test basis, evidence supporting the amounts and

disclosures in the financial statements. An audit also includes assessing

the accounting principles used and significant estimates made by

management, as well as evaluating the overall financial statement

presentation. We believe that our audit provides a reasonable basis for

our opinion.

We did not audit the financial statements of subsidiaries namely, Aditya

Birla Minacs Worldwide Inc. (consolidated) and Aditya Birla Minacs

Philippines 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 the

year then ended. The financial statements and other financial information

of Aditya Birla Minacs Worldwide Inc. and Aditya Birla Minacs Philippines

Inc. have been audited by other auditors as per the requirements of

Candian Generally Accepted Accounting Standards (GAAP) and

Philippines GAAP respectively. These have been converted as per

requirements of Indian GAAP by the management and the conversion

has been audited by us. Our opinion, in so far as it relates to the amounts

included in respect these subsidiaries, is based solely on report of other

auditors and converted into Indian GAAP as stated above.

We report that the consolidated financial statements have been prepared

by the Company’s management in accordance with the requirements

of 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 on

separate financial statements and on the other financial information of

the components, and to the best of our information and according to

the explanations given to us, we are of the opinion that the attached

consolidated financial statements give a true and fair view in conformity

with the accounting principles generally accepted in India:

(a) in the case of the consolidated balance sheet, of the state of affairs

of the Group as at March 31, 2011;

(b) in the case of the consolidated profit and loss account, of the profit

for the year ended on that date; and

(c) in the case of consolidated cash flow statement, of the cash flows

for the year ended on that date.

For S. R. BATLIBOI & ASSOCIATES,

Firm registration number: 101049W


per Amit Majmudar

Partner

Membership No.: 36656

Place: Mumbai

Date: July 27, 2011

(16)


C M Y K

CONSOLIDATED B ALANCE SHEE T AS AT MARCH 31, 2011

Schedule March 31, March 31,

2011 2010

` Lacs ` Lacs

I. SOURCES OF FUNDS


Share capital 1 234.92 234.92

Employee stock options

(Refer note 9 of schedule 17) 576.53 126.15

Reserves and surplus 2 27,795.68 27,795.68

Foreign currency translation reserve 5,843.43 3,825.39

2 Secured loans Secured loans 3 65,646.73 59,468.49

3 Unsecured loans Unsecured loans 4 39,214.88 38,646.26

4 Deferred tax liability 941.68 497.79

Total 140,253.85 130,594.68


1 Fixed Assets Fixed Assets 5

Gross Block 78,263.88 67,838.12

Less : Depreciation / Amortization 56,021.06 48,306.72

Net Block 22,242.82 19,531.40

Capital Work-in-Progress

(including capital advances) 1,694.68 2,538.41

Goodwill 70,807.08 60,789.41

2 Investments Investments 6 700.00 9,350.00

3 Deferred Tax Asset 276.59 297.51

4 Current Assets, Loans and

Advances

Sundry Debtors 7 37,362.16 24,945.48

Cash and Bank Balances 8 3,176.45 1,983.08

Loans and Advances 9 12,889.35 8,439.07

(A) (A) 53,427.96 35,367.63

Less: Current Liabilities and

Provisions Provisions 10

Current Liabilities 26,774.08 21,698.75

Provisions 184.68 135.12

(B) (B) 26,958.76 21,833.87

Net Current Assets (A-B) 26,469.20 13,533.76

5 Profit and Loss account 18,063.48 24,554.19

Total 140,253.85 130,594.68



Balance Sheet.


As per our report of even date Aditya Birla Minacs Worldwide Ltd.


Firm Registration No. 101049w Dr. Rakesh Jain

Chartered Accountants Director

per Amit Majumdar Sushil Agarwal

Partner Director


Place: Mumbai Ramesh Kamath

Date: July 27, 2011 Chief Financial Officer


CONSOLIDATED PR OFIT & LOSS ACCOUNT FOR THE

YEAR ENDED MARCH 31, 2011


2011 2010

` Lacs ` Lacs

INCOME :

Service Charges 163,140.16 146,688.59

Other Income 11 124.08 247.58

Total 163,264.24 146,936.17

EXPENDITURE :

Personnel expenses 12 103,822.63 96,743.54

Other Operating Expenses 13 13,196.10 12,356.64

Administrative Expenses 14 28,974.13 28,635.21

Marketing / Business

Development Expenses 15 257.89 192.43

Financial Charges 16 3,533.40 4,692.43


Total 156,324.51 148,667.53

Profit / (Loss) before tax for the year 6,939.73 (1,731.36)

Less: Provision for taxation /

Minimum Alternative Tax 267.11 495.92

Add: Recovery of income taxes 340.10 —

Less: Deferred tax charge 522.01 79.99

Profit / (Loss) for the year 6,490.71 (2,307.27)

Profit / (Loss) brought forward

from previous year (24,554.19) (22,246.92)

Accumulated balance carried

to the Balance Sheet (18,063.48) (24,554.19)

Basic Weighted Average number of shares 23,491,711 23,491,711

Diluted Weighted Average number of shares 24,858,711 23,864,586

Basic 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 each

Previous year ` 1 each) ` 26.11 (9.82)


The schedules referred to above and notes to accounts form an integral part of

the Profit & Loss Account.


As per our report of even date Aditya Birla Minacs Worldwide Ltd.


Firm Registration No. 101049w Dr. Rakesh Jain


per Amit Majumdar Sushil Agarwal

Partner Director



Date: July 27, 2011 Chief Financial Officer


(17)


C M Y K

CONSOLIDATED CA SH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2011

(` in Lacs)

For the year ended For the year ended

March 31, 2011 March 31, 2010

A. Cash flows from Operating Activities

Net Profit/(Loss) before taxation, and extraordinary items 6,939.73 (1,731.36)

Adjustments for:


Loss/(Profit) on Sale of Fixed Assets — 53.05

Foreign 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 4,692.43

Employee stock compensation expenses 450.38 126.15

Provision for doubtful debt 224.97 2.95

Operating Profit before working capital changes 18,549.03 6,364.26


(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 3,997.64

Foreign exchange on translation (918.27) 1,088.11

Cash generated from operations 5,775.33 10,492.39

Add/(Less): Direct Taxes (including TDS) paid)/T ax Refunds (449.02) (575.91)

Net Cash flow from Operating Activities 5,326.31 9,916.48


Purchase 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 4.43

Dividend received 57.58 226.62

Net Cash from/(for) Investing Activities Net Cash from/(for) Investing Activities (8,469.98) (15,996.88)


Proceeds 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 payments

Proceeds from Issue of Compulsorily Convertible Debentures — 25,000.00

Interest/financial charges paid (3,533.40) (4,692.43)

Net Cash generated/(used) in Financing Activities 3,536.16 6,347.15

D. 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 392.21 263.74

Cash and cash equivalents at the beginning of the year 1,981.14 1,602.02

Cash acquired on acquisition 801.23 115.38

Cash and cash equivalents at the end of the year 3,174.58 1,981.14

Notes:

Components of Cash and Cash Equivalents As at As at

31.03.2010 31.03.2009

i) Cash Balance on hand 13.98 13.33


- in Current Account 3,160.53 1,967.81

Total 3,174.51 1,981.14

Note:

i) Fixed Deposit of ` 1.94 Lacs (P.Y. 1.94 Lacs) given as margin money has not been considered as cash and cash equivalents

As per our report of even date For and on behalf of the Board of Directors

of Aditya Birla Minacs Worldwide Limited


Firm Registration No: 101049W Dr. Rakesh Jain


Sushil Agarwal

per Amit Majmudar per Amit Majmudar Director

Partner

Membership No. 36656 Ramesh Kamath

Place: Mumbai Chief Financial Officer

Date: July 27, 2011 Date: July 27, 2011

(18)


C M Y K


March 31, March 31,

2011 2010

` Lacs ` Lacs

SCHEDULE 1 - SHARE CAPITAL

Authorised Capital

30,000,000 (P Y 30,000,000) Equity Shares of ` 1/- each 300.00 300.00

Total 300.00 300.00

Issued, Subscribed and Paid up Capital

2,34,91,711 (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 234.92 234.92

SCHEDULE 2 - RESERVES AND SURPLUS

Securities Premium Account

Opening Balance 27,795.68 27,795.68

Total Total 27,795.68 27,795.68

SCHEDULE 3 - SECURED LOANS

i) 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 and

second charge on Receivables) (Repayable within

one 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 and

second charge on Receivables)

(Repayable within one year - ` 1,000. lacs;

Previous Year ` 2,000 lacs )

Total Total 6 5,646.73 59,468.49

SCHEDULE 4 - UNSECURED LOANS

i) 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 38,646.26

SCHEDULE 6 - INVESTMENTS

Unquoted

(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 8,500.00

Total 700.00 9,350.00

SCHEDULE 7 - SUNDRY DEBTORS

i) Debts outstanding over six months

Unsecured, considered good 67.14 42.81

Unsecured, considered doubtful 129.17 34.74

Less:- Provision for doubtful Debt ( 129.17) (34.74)

67.14 42.81

ii) Other Debts

Unsecured, considered good 37,295.02 24,902.67

Unsecured, 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 24,902.67

Total Total 37,362.16 24,945.48

SCHEDULE 8 - CA SH AND BANK BALANCES

i) 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 1.94

iii) Bala nce with other Banks :

— On Current Account 1,639.24 1,884.36

Total Total 3,176.45 1,983.08

SCHEDULE 9 - LOANS AND ADVANCES


i) Advances Recoverable in cash or in kind or

for value to be recei ved 10,449. 27 7,183.77

ii) Tax Deducted at Source (net of provision) 330.03 111.92

iii) Deposits 1, 110.05 1,143.38

iv) Inter-company Deposits 1,000.00 —

Total Total 1 2,889.35 8,439.07

March 31, March 31,

2011 2010

` Lacs ` Lacs

March 31, March 31,

2011 2010

` Lacs ` Lacs

SCHEDULE 5 - FIXED A SSE TS (` in Lacs)

GROSS BLOCK* DEPRECIATION / AMORTIZATION* NET BLOCK

Particulars As on Additions Deletions Foreign As on As on Additions Deletions Foreign As on As on As on

Apr. 1, 10 Currency Mar 31, 11 Apr. 1, 10 Currency Mar 31, 11 Mar 31, 11 Mar 31, 10

Translation Translation

Adjustment Adjustment

Computers and telecommunication

equipments 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 6,965.39

Plant 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 1,358.88 997.95 763.13

Office equipment Office equipment 1, 031.84 79.56 (11.46) 23.91 1,123.85 630.69 127.27 (6.75) 14.22 765.43 358.42 401.15

Furniture 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 3,350.81

Leasehold improvements Leasehold improvements 11, 061.01 545.53 (1.99) 341.82 11,946.37 5,998.63 1,415.96 — 208.35 7,622.94 4,323.43 5,062.38

Intangible assets

Goodwill 3,208.51 — — (33.69) 3,174.82 615.85 — — (122.37) 493.48 2,681.34 2,592.66

Software 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 — 155.35 578.67 975.84 373.93

Motor 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 21.96

Total 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 56,021.06 22,242.82 19,531.40

Previous 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 2,149.16 48,306.72 19,531.40

Note :

The opening gross block of fixed assets, accumulated depreciation and net block has been reclassified as per the asset categori es, per se.

*: Computers and Telecommunication equipments, office equipment, furniture and fixtures, leasehold improvement include assets ta ken on finance lease, gross

block 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 ` 403.44 lacs) respectively.

March 31, March 31,

2011 2010

` Lacs ` Lacs

(19)


C M Y K

SCHEDULE 10 - CURRENT LIABILITIES & PROVISIONS

i) Sundry Creditors (including book overdraft of

Rs. Nil; Previous Year. Rs. 476.65 Lacs) 22,716.90 18,619.91

ii) Interest accrued but not due 248.24 251.11

iii) O ther Liabilities 3,808.94 2,827.73

26,774.08 21,698.75

PROVISIONS

i) Gratuity 62.65 31.92

ii) Leave encashment 122.03 103.20

184.68 135.12

Total Total 26,958.76 21,833.87

SCHEDULES FORMING PART OF PROFIT & LOSS ACCOUNT

March 31, March 31,

2011 2010

` Lacs ` Lacs

SCHEDULE 11 - OTHER INCOME

i) Gain on Mutual Fund investment s 57.58 226.62

ii) 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 2.13

iii) Gain on Foreign Exchange Fluctuations - Others — —

iv) Miscellaneous Income 40.61 16.53

Total 124.08 247.58

SCHEDULE 12 - PERSONNEL EXPENSES

i) Salaries & other empl oyee benefits 92,540.52 87,433.49

ii) Contribution to provident & other f unds 1,272.42 942.00

iii) Employee Compensati on under ESOP 450.38 126.15

iv) Staff Welfare Expenses 9,482.25 8,198.64

v) Gratuity (Refer Note 13 of schedule 17) 77.06 43.26

Total 103,822.63 96,743.54

SCHEDULE 13 - OTHER OPERATING EXPENSES

Facility Expenses

i) Rent Charges 6,294.43 5,952.38

ii) Electricity expenses 2,069.90 1,627.31

iii) House keeping expenses 216.84 147.24

iv) Security charges 458.71 377.95

v) Repairs & maintenance

— Building — 71.26

— Others 1,105.70 1,013.41

vi) Hire Charges 216.65 182.18

Technology Expenses

vii) Con nectivity charges 884.56 1,002.19

Assets Utilization Charges — —

viii) R epairs & maintenance - M achinery 1,074.44 1,146.92

ix) Software & support expenses 874.87 835.80

Total Total 13,196.10 12,356.64

March 31, March 31,

2011 2010

` Lacs ` Lacs

March 31, March 31,

2011 2010

` Lacs ` Lacs

SCHEDULE 14 - ADMINISTRATIVE EXPENSES

i) Legal & professional fees 1,862.33 1,575.69

ii) Telephone expenses 2,801. 79 2,445.44

iii) R ecruitment & relocation 1,059.06 649.74

iv) Auditors remuneration

— Audit fees 262.30 224.73

— Out of pocket expenses 1.91 0.03

iv) Vehicle Expenses 382.26 268.53

v) Seminar and O utside Training Expenses 180.19 180.41

vi) Printing and Stationery 5,345.25 4,630.58

vii) Di rectors sitting fees 19.19 10.86

viii) Insurance charges 310.43 235.38

ix) Traveling expenses 2,242.74 1,501.63

x) Loss on sale of Fixed Assets — 53.05

xi) Rates and Taxes 5,024.87 4,720.88

xii) Provision for Doubtful D ebts 224.97 2.95

xiii) Restructuring Cost — 1,668.67

xiv) Loss on Foreign Exchange Fl uctuations (net) 65.23 2,443.26

xv) Miscellaneous expenses 9,191.61 8,023.38

Total Total 28,974.13 28,635.21

SCHEDULE 15 - MARKETING / BUSINESS DEVELOPMENT EXPENSES

i) Business promotion expenses 59.88 64.23

ii) Advertisement expenses 169.18 108.80

iii) Ente rtainment expenses 20.09 3.35

iv) Website expenses

v) Telemarketing registration & bonding expenses 8.69 16.05

Total 257.89 192.43

SCHEDULE 16 - FINANCIAL CHARGES & INTEREST COST

i) Arrangement Fees 96.66 427.56

ii) Interest on External commercial borrowings and Term Loan 2,827.70 3,120.52

iii) In terest on Working capital and Demand Loan 435.18 830.25

iv) Other Financial Charges 173.86 314.10

Total Total 3,533.40 4,692.43

(20)


C M Y K

SCHEDULE 17 - NO TES T O ACCOUNTS ON CONSOLIDA TED FINANCIAL

STATEMENTS

1. Basis of preparation

The consolidated financial statements (CFS) of Aditya Birla Minacs Worldwide Limited

(“the Company” or “ABMWL”) and its subsidiaries collectively referred to as “the

Group” are prepared under the historical cost convention and in accordance with the

requirements of the Companies Act, 1956.

2. Principles of Consolidation

i. The financial statements of the Company and its subsidiary companies have

been combined on a line-by-line basis by adding together the book values of

like items of assets, liabilities, income and expenses, after eliminating intra-group balances and transactions 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 like

transactions and other events in similar circumstances and are presented, to

the extent possible, in the same manner as the Company’s separate financial

statements

3. Companies included in Consolidation

Subsidiaries Country of Proportion of Proportion of

Incorporation ownership ownership

interest as on interest as on

March 31 ,2011 March 31, 2010

TransWorks Inc., USA

(TW Inc) (Subsidiary of

ABMWL)* USA 100% 100%

AV TransWorks Limited,

Canada (Subsidiary of

ABMWL) Canada 100% 100%

Aditya Birla Minacs

Philippines Inc (Subsidiary

of ABMWL) Philippines 100% 100%

Aditya Birla Minacs

Worldwide Inc. Canada

(ABMWI) (Subsidiary of

AV 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. de

C.V., Mexico (Subsidiary of

ABMWI) Mexico 100% 100%

Minacs Worldwide GmbH,

Germany (Subsidiary of

ABMWI) Germany 100% 100%

Minacs Kft., (Subsidiary of

The Minacs Worldwide

GmbH) Hungary 100% 100%

Aditya Birla Minacs BPO

Limited, UK (Subsidiary

of ABMWI) UK 100% 100%

Compass BPO, Inc, U.S.A

(Subsidiary of Aditya Birla

Minacs BPO Limited) USA 100% 100%


Private Limited (Formerly

Known as Compass Business

Process Outsourcing Private

Limited, India) (Subsidiary of


Limited, U.K) India 100% 100%

Compass BPO FZE, U.A.E

(Subsidiary of Aditya Birla

Minacs BPO Limited, UK)

ceased to be subsidiary

w.e.f February 25, 2011 UAE — 100%

Bureau of Collection

recovery, LLC (Subsidiary of

ABMWI w.e.f June 2, 2010) USA 100% NIL

Bureau of Collections

Recovery (BCR) Inc.

(Subsidiary of ABMWI

w.e.f March 4, 2011) USA 100% NIL

*: The subsidiary is in the process of winding up.

4. Significant accounting policies

i) Use of estimates



that affect the reported amounts of assets and liabilities and disclosure of

contingent liabilities at the date of the financial statements and the results of

operations during the reporting period end. Although these estimates are based

upon management’s best knowledge of current events and actions, actual

results could differ from these estimates.

ii) Revenue recognition

a) Revenue is derived from both time-based and unit-priced contracts.

Revenue is recognized as related services are performed based on

agreements / arrangements with the customers.

Amounts collected from customers prior to the performance of services

are recorded as deferred revenue. These advances are amortized to

revenues in accordance with the Group’s policy on revenue recognition.

For some contracts the Company is paid by its customer based on

achievement of client-determined criteria specified in the client contract

such as full time equivalents, units processed or completed contacts.

The Company recognizes this performance-based revenue by measuring

its actual results against the performance criteria specified in the contracts.

b) Interest income is recognised on a time proportion basis taking into

account the amount outstanding and the rate applicable.

c) Dividend is recognised when the shareholders’ right to receive payment

is established bythe balance sheet date.

iii) Fixed assets

Fixed assets are stated at cost less accumulated depreciation and impairment

losses, if any. Cost comprises the purchase price and wherever applicable

freight, duties and taxes and expenses incidental to acquisition and installation.

iv) Intangible Assets

The Group allocates value to intangible assets acquired relating to customer

contracts, proprietary processes and certain business relationships. Amortization

of Client acquisition cost is provided on a straight-line basis over two to ten

years. Computer software is depreciated over four to five-year lives.

v) Depreciation

Depreciation on assets is provided on straight-line basis, on the rates based on

the useful lives as estimated by the management, which are higher than the

corresponding rates prescribed in Schedule XIV of the Companies Act, 1956.

The individual assets costing less than Rs. 5, 000 are depreciated in full in the

year of purchase. The management’s estimate of useful lives of the various

fixed assets is given below:

Assets Estimated useful life

a. Computers Equipment 2 - 4 years

b. Telecommunication Equipment 5 - 7 years

c. Plant & Machinery 5 years

d. Office Equipment 5 Years

e. Furniture & Fixtures 3 - 10 Years

f. Motor Car 5 Years

Leasehold improvements are depreciated over the shorter of the estimated

useful life of the asset and the lease term of the premises.

vi) Goodwill on consolidation

The excess of cost to the Parent Company of its investments in the subsidiaries

over its portion of equity in the subsidiaries, as at the date on which the

investment was made, is recognized as goodwill in the consolidated financial

statements. 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 the

financial 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 the

ability to recover the carrying amount of goodwill from discounted cash flows.

The Company also considers projected future operating results, trends, and

other circumstances in making such evaluations.

In addition to the annual impairment test, the Company will perform an

impairment test if an event occurs or circumstances change that would more

likely than not reduce the fair value of the reporting unit below its carrying

amount.

vii) Impairment

The carrying amounts of assets are reviewed at each balance sheet date if

there is any indication of impairment based on internal/external factors. An

impairment loss is recognized wherever the carrying amount of an asset exceeds

its recoverable amount. The recoverable amount is the greater of the asset’s

net selling price and value in use. In assessing value in use, the estimated

future cash flows are discounted to their present value using a pre-tax discount

(21)


C M Y K

rate that reflects current market assessments of the time value of money and

risks specific to the asset.

viii) Leased assets

Finance lease, which effectively transfers to the Company substantially all the

risks and benefits incidental to ownership of the leased item, are capitalized at

lower of fair value and present value of the minimum lease payments at the

inception of the lease term and disclosed as leased assets. Lease payments

are apportioned between the finance charges and reduction of the lease liability

based on implicit rate of return. Finance charges are charged directly against

income. Lease management fees, lease charges and other initial direct costs

are capitalized.

Leases where the Lessor effectively retains substantially all the risks and benefits

of ownership of the lease term are classified as operating leases. Operating

lease payments are recognized as an expense in the profit & loss account on a

straight-line basis over the lease term

ix) Deferred Financing Expenses

Deferred financing expenses represent the cost of establishing the Company’s

credit facilities. Included in these costs is the fair value of warrants to acquire

common shares of the Company issued on the acquisition of certain funding

facilities. Amortization of deferred financing expenses is provided on a straight-line basis over the specific term of the credit facilities and is recorded within

interest and financing expenses.

x) Investments

a. Investments that are readily realizable and intended to be held for not



b. Long-term investments are valued at cost. Any decline in the value of



c. The current investments are carried at lower of cost and net asset value

determined on an individual investment basis.

xi) Transactions in Foreign Currency

a) Initial Recognition




b) Conversion





c) Exchange Differences





they occur.

d) Forward Exchange Contracts not intended for trading or speculation purposes


contracts is amortized as expense or income over the life of the contract.

Exchange differences on such contracts are recognized in the statement

of profit and loss in the year in which the underlying transactions occur.

Any profit or loss arising on cancellation or renewal of forward exchange

contract is recognized as income or as expense for the year.

e) Accounting policy for Derivatives

The Company uses derivative financial instruments such as forward

exchange contracts, currency swaps and interest rate swaps to hedge

its risks associated with foreign currency fluctuations and interest rate.

Currency and interest rate swaps are accounted in accordance with their

contract except in case of other than effective hedges or instrument to

hedge against highly probable and forecasted transactions or firm

commitment 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 items

have been translated at closing rate except share capital and fixed assets, which

have been translated at the transaction date. The income and expenditure items

have been translated at the average rate for the year. Exchange Gain/(Loss) are

recognised in the Profit and Loss Account.

In case of foreign subsidiaries, the operation of which are considered as non-integral, all assets and liabilities are converted at the closing rate at the end of

the year, and items of income and expenditure items have been translated at

the average rate for the year. Exchange gain/(loss) arising on conversion are

recognised under Foreign Currency Translation Reserve.

xiii) Retirement benefits

(i) Defined Contribution Plan

Group’s contributions payable during the year to Provident Fund,

Superannuation Schemes and other fund are recognized in the Profit and

Loss Account.

(ii) Defined Benefit Plan

Group’s liabilities under payment of gratuity Act (funded) and compensated

leave encashment are determined by Actuarial Valuation made at the

end of each financial year using the projected unit credit method. Actuarial

gain and losses are recognized immediately in the statement of Profit

and Loss Account as income or expense. Obligation is measured at the

present value of estimated future cash flows using a discounted rate that

is determined by reference to market yields at the Balance Sheet date on

Government bonds where the currency and terms of the Government

bonds are consistent with the currency and estimated terms of the defined

benefit obligation

xiv) Provision




Provisions are not discounted to its present value and are determined based on

best estimate required to settle the obligation at the balance sheet date. These

are reviewed at each balance sheet date and adjusted to reflect the current

best estimates.

xv) Income Tax

Tax expense comprises of current and deferred tax.

Current income tax is measured at the amount expected to be paid to the tax

authorities in accordance with the Income-tax Act, 1961 enacted in India and

tax laws prevailing in the respective tax jurisdictions where the Company and

its 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 enacted

as of the Balance Sheet date. Deferred tax assets arising from timing differences

are recognized to the extent there is reasonable certainty that these would be

realized in future. In case of unabsorbed losses and unabsorbed depreciation, all

deferred tax assets are recognized only if there is virtual certainty supported by

convincing evidence that they can be realized against future taxable profit

xvi) Employee Stock Options

Measurement and disclosure of the employee share-based payment plans is

done in accordance with SEBI (Employee Stock Option Scheme and Employee

Stock Purchase Scheme) Guidelines, 1999 and the Guidance Note on Accounting

for Employee Share-based Payments, issued by the Institute of Chartered

Accountants of India. The Company measures compensation cost relating to

employee stock options using the intrinsic value method. Compensation expense

is amortized over the vesting period of the option on a straight line basis.

xvii) Earnings per share

a) Basic earnings per share are calculated by dividing the net profit or loss

for the year attributable to equity shareholders by the weighted average

number of equity shares outstanding during the year.

For the purpose of calculating diluted earnings per share, the net profit or

loss for the year attributable to equity shareholders and the weighted

average number of shares outstanding during the year are adjusted for

the effects of all dilutive potential equity shares.

xviii) The CFS of Aditya Birla Minacs Worldwide Inc which reflects the consolidation

of The Minacs Group USA, Minacs Worldwide S.A. de C.V., The Minacs

Worldwide GmbH, Minacs Kft, Bureau of Collection recovery, LLC, Bureau of

Collections Recovery (BCR) Inc. and Aditya Birla Minacs BPO Limited as at

March 31, 2011 are prepared and Audited under Canadian Generally Accepted

Accounting Principles (GAAP). Further, financial statements of Aditya Birla

Minacs Philippines Inc are prepared and audited under Philippines GAAP. These

financial statements have been converted to Indian GAAP by the management

for the purpose of consolidation.

xix) Revenue Grant

The grant receipts from the statutory authority in terms of the agreements

executed with such authorities requiring compliance of the company over the

agreement period are amortized over such agreement period.

The grant received from the statutory authorities for offsetting the particular

cost, are amortized over the same period of the incurrence of the cost.

xx) Cash and Cash equivalents

Cash and cash equivalents for the purposes of cash flow statement comprise

cash at bank and in hand and short-term investments with an original maturity

of three months or less.

5. Contingent Liabilities


March 31, 2011 March 31, 2010

( ` Lacs) ( ` Lacs)

i) Estimated amount of contracts remaining

to be executed on capital account and

(22)


C M Y K

not provided for 627.14 160.27

ii) Guarantees and counter guarantees given by

the Company to Commissioner of Customs

towards custom & excise duty exemption

under STPI Scheme (Based on present

export performance, the Company expects

to meet its export obligation and hence this

liability is not likely to materialize) 1,421.43 1,329.95

iii) Guarantees and Counter guarantees given

by the Company to its insurance company

in USA and to Citibank, NA on the basis

of which the insurance company issued

telemarketing bonds favoring Attorney generals

of various states in USA on behalf of the

Company (These bonds are required to be

given for compliance of telemarketing laws

in USA. In case of any violations of these

rules, the penalties are imposed. The Company

does not expect any liabilities on the same). 446.50 451.40

iv) Guarantee and Counter given by Company

to Department of Telecommunication (DoT)

for obtaining the permission for sharing of

international and domestic call center 350.00 210.00

v) Claims against the group not acknowledged

as debts (represents claims by the party

against the group in respect of dispute relating

to the beneficiary of whole life insurance policy

and term life insurance policy acquired by

the group. Management believes that the

claims made by the party have no merit and

the outcome of the proceeding is not

determinable. 1,725.00 1,656.00

vi) Service tax refund relating to year 2005-07

rejected by service tax department. Company

is in appeal at various levels against

rejection orders. 266.58 266.58

vii) Penalty for disallowances of expenses incurred

by the company for FY 2003-04. The Company

has filled and appeal before Bombay high court. 73.29 73.29

6. The details of finance lease payments payable and their Present value as at the

balance sheet date: ( ` Lacs)

Sr. Particulars Total lease Present value Interest

charges payable

i. Not later than one year Nil Nil Nil

(742.77) (725.76) (17.01)

ii. Later than one year and Nil Nil Nil

not 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 well

as minimum purchase commitments for telephone services. The lease rentals charged

during the year and maximum obligations on long-term non-cancelable operating

leases payable as per the rentals stated in respective agreements are as follows:

( ` Lacs)


March 31, 2011 March 31, 2010

1. Lease payments recognized in the

profit and loss account for the year 6,294.43 6,021.98

2. Obligations on non-cancelable leases :

i) Not later than one year : 5,027.64 4,855.50

ii) Later than one year and not later

than 5 years 11,808.16 11,650.24

iii) Later than 5 years 2,322.54 3,760.22

8. Deferred Tax:

Deferred tax Assets/ (Liabilities) at the year end comprises timing difference on

account of:

( ` Lacs)


March 31, 2011 March 31, 2010

Carried forward losses 276.59 297.51

Differences in depreciation and other

differences in block of fixed assets as

per 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 tax

assets have not been recognized in respect of unabsorbed depreciation and business

losses in case of the Company and it’s certain subsidiaries

9. Employee Stock Option Plan

In December 2009, the Board of the Company approved the Employees Stock Option

Plan 2009 (“the Plan”), which covers the employees of the Company including its

subsidiaries. The plan is administered and supervised by the Compensation Committee

of the board (the ‘Committee’).

The Scheme provides that these options would vest in tranches over a period of 3-4

years as follows:

Period within which options will vest unto the participant % of options

that willvest




Fair Valuation:

The fair valuation of the options used to compute profarma net profit and earning per

share have been done by an independent valuer on the date of grant using black-Scholes Model. The key assumptions and the fair value are as under.

Particulars Percentage

Risk Free Interest Rate % 6.84%

Option Life (years) 4.80

Expected Volatility (%) 0%

Historical Volatility (%) 0%

Expected Dividend Yield (%) 0%

Weighted Average Fair Value per Option (`) 141

Had the compensation cost for the stock option granted under ESOS-2009 been

recognised, based on fair value at the date of grant in accordance with black and

Scholes Model, the proforma amount of net profit and earning per share of the

Company would have been as under:

(` Lacs)

Particulars March 31, 2011 March 31,2010

Net Profit/(Loss) 6,490.71 (2,307.27 )

Add: Compensation cost as per Intrinsic Value 450.38 126.15

Less: Compensation cost as per fair value 813.73 227.92

Adjusted Net Income/(Loss) 6,127.35 (2,409.04)

Weighted average number of Basic Equity


ESOPS outstanding at the end of the year 1,367,000 372,875

Weighted average number of Diluted

Equity Shares Outstanding (in Nos) 24,858,711 23,864,586

Face Value of Equity Shares (In Rs) 1.00 1.00

Reported 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 within

three years from the date of listing, whichever is earlier. The Plan is contingent on

the 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 or

its nominee at a price determined as per Plan.

Particulars March31, 2011 March 31, 2010

Total Options under the Plan 1,879,337 1,879,337

Options outstanding at the beginning of the year 1,491,500 Nil

Granted during the year 34,500 1,491,500

Forfeited during the year 159,000 Nil

Exercised during the year Nil Nil

Outstanding at the end of the year 1,367,000 1,491,500

Expired during the year Nil Nil

Exercisable at the end of the year Nil Nil

Exercise Price 230 230

(23)


C M Y K

The employee stock option outstanding account shown in Balance Sheet is net of

unamortized amount on account of Deferred Employee Compensation Account

` 490.28 Lacs (Previous year ` 1,037.82 Lacs).


Name and nature of relationship of the Related Party where control exists:

Holding Company Aditya Birla Nuvo Limited

Fellow Subsidiary Aditya Birla Financial Shared Services

Private Limited (ABFSSPL)

Birla Sun Life Insurance Company

Limited (BSLICL)

ABNL Investment Limited (formerly known

as Laxminarayan Investment Limited)

Aditya Birla Minacs IT Services Limited

(ABMITS)

JOINT VENTURE Birla Sun Life Asset Management

Company Limited (BSAMC)

(Directly held by the Company till

Mar 22, 2010 thereafter Joint Venture of

a fellow subsidiary)

IDEA Cellular Limited – Joint venture of

the holding company

Transactions with related parties during the year ( ` Lacs)


March 31, 2011March 31, 2010

Holding 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 Fertilizers

Division of ABNL) 7.21 Nil

Fellow Subsidiary

ABNL Investment Limited.

– ICD Taken Nil 500.00

– Interest expenses on ICD taken Nil 3.67

– ICD Repaid Nil 500.00

Birla Sun Life Insurance Company Limited.

– Staff welfare expenses (Term Life Insurance)

for employees 19.28 18.15


– Expenses Reimbursed by the Company 22.80 Nil

Aditya 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 3,076.82

Aditya Birla Financial Shared Services

Private Limited.

– Reimbursement of Cost received 10.60 1.92

Joint Venture

Birla Sun Life Asset Management

Company Limited.


– Reimbursement of cost by the company Nil 4.16

– Reimbursement of cost to the Company Nil 5.66

Idea Cellular Limited.

– Services Income 7,114.84 5,102.90

Balances with Related parties at the end of the year

Related Party Balances:

Holding Company

– Payable – ABNL 24.41 21.93

– Receivable- ABNL (Division- Indo Gulf Fertilizers) 7.07 Nil

Joint Venture

– Receivable - Birla Sun Life Asset Management


– Receivable - Idea Cellular Limited 859.18 766.68

Fellow Subsidiary

– Receivable from - Birla Sun Life Insurance


– Receivable – Aditya Birla Financial Shared

Services Private Limited. 1.51 1.92

– Payable to Aditya Birla Minacs IT

Services Limited. 375.34 637.77


IT Services Limited. 263.50 100.10


IT Services Limited. (ICD) 1,000.00 Nil

Holding Company

– Corporate guarantees given by holding company 40,760.83 27,723.39

11. Derivative Instruments




Derivative Outstanding as at March 31 2011

Particulars Currency Amount in Foreign Purpose

Currency (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 Receivable

Forward Cover USD NIL To hedge Interest Payable

(10)

Forward Cover USD 50.00 To hedge PCFC Loan

(NIL) payable

Cross Currency Swap JPY 554.19 To hedge loan

(2,121.22)

US$ forward USD 725.00 To hedge receivables

exchange rate (765.00)

contracts (CAD)

Note: Figures in brackets relates to previous year.




12. Segment Information for the year ended March 31, 2011

(1) Primary business segment

The group provides a variety of Business Process outsourcing services. The

risks and rewards from each of these service agreements are similar. As the

Company’s business activity primarily falls within a single business segment,

there are no additional disclosures to be provided in respect of primary segment

under Accounting Standard 17 ‘Segment Reporting’, other than those already

provided 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 March 31, 2011 India Outside India Total

a Revenue by geographical market 9,635.01 153,505.15 163,140.16

b Carrying amount of segment assets 13,147.82 135,819.28 149,867.10

c Capital Expenditure (included in

(b) above) 2,908.42 6,381.34 9,289.76

Year ended March 31, 2010 India Outside India Total

a Revenue by geographical market 6,285.64 140,402.95 146,688.59

b 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 7,650.37

13. RETIREMENT BENEFITS ( ` Lacs)

2010-11 2009-10

(A) Defined Benefit Plans -The Amounts recognized in the balance sheet

are as follows in respect of gratuity

(fully funded by the company):

Present value of the funded defined benefit

obligation at the end of the year 271.96 225.36

Fair value of plan assets 133.36 163.82

Benefit paid on behalf of fund 75.94 29.62

Net Liability 62.65 31.92

The Amounts recognized in Salary, Wages

and Employee Benefits in the Profit and

(24)


C M Y K

L oss A ccount as follo ws in respect of

gratuity (fully funded by the company):

Current Service cost 120.73 127.73


Interest on Defined Benefit Obligations 18.82 14.17

Expected 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 Asset

Expected Return on Plan Assets 14.21 9.45

Actuarial gain/(loss) on Plan Assets 1.66 (4.95)

Actual Return on Plan Assets 15.86 4.50

Reconciliation of present value of the

obligation and the fair value of the plan assets:

Opening Defined Benefit Obligation

as on 1.4.2010 225.35 190.94

Current Service Cost 120.73 127.73


Interest Cost 18.82 14.17

Actuarial (Gain)/loss (55.36) (77.87)


Closing Defined Benefit Obligation

as on 31.03.2011 271.96 225.35

Change in fair value plan assets

Opening Fair Value of the plan assets 163.82 125.96

Expected return on plan assets 14.21 9.45

Actuarial Gain/(loss) 1.66 (4.95)

Contributions by the Employer Nil 62.98


Closing Fair value of the plan assets 133.36 163.82

Investment details of plan assets

Government of India Securities 38.79 36.04

Corporate Bonds 2.08 3.28

Insurer Managed Fund (with common

fund of Holding Company) 86.80 124.50

Others 5.69 Nil

Total 133.36 163.82

The overall expected rate of return on

assets is determined based on the market

prices prevailing on that date, applicable to

the year over which the obligation is

to be settled.

(B) Defined Contributions Plans:

Contribution to Employee Provident Fund 996.81 848.61

Contribution to ESIC 268.50 89.84

Contribution to superannuation fund 7.11 19.84

(C) Principal Actuarial Assumptions At the

Balance Sheet date (31.03.11)


Estimated rate of return on plan assets 8.00% 8.25%

Future Salary escalation 10% for first 10% for first

three years and three years and

5% thereafter 5% thereafter

(D) Experience Adjustment 2010-11 2009-10 2008-09 2007-08 2006-07

Liability at the end

of the Period 271.96 225.35 191.68 105.79 79.02

Fair Value of Plan Assets

at the end of the Period 133.36 163.82 106.06 74.35 66.90

Benefit paid on

behalf of fund 75.94 29.62 nil Nil nil

Deficit / (Surplus) 62.65 31.91 85.62 31.44 12.12


on plan liabilities (Gain)/Loss (55.36) (77.87) 91.96 (22.03) (21.65)


on 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 the

strategic and long term nature of aforesaid investments and asset base and business

plan of the investee companies, in the opinion of the management, no impairment is

considered 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 on

the business day following expiry of a period of 60 months from the date of allotment

of such CCD. As per the terms of the issue, the Conversion price will be mutually

decided thirty days before the conversion date. Aditya Birla Nuvo Limited (ABNL),

the holding company, has entered into an Option Agreement with the Subscribers of

these CCD pursuant to which the holders of CCD have call option on ABNL and

ABNL has put option on the Subscribers on expiry of 24,36,48 and 60 months from

the date of allotment of these CCD. The holders can also exercise put option on

happening of certain specified events.

16. 16. During the current year, one of the subsidiaries of the Company, Aditya Birla Minacs

Worldwide Inc., acquired Bureau of Collections Recovery Inc. ( BCR) and its

subsidiaries. The effect of such acquisition during the year is as under:

Revenue (Post acquisition) Rs 5,057.62 Lacs

Net Profit/( Loss) (Post acquisition) Rs 8.53 Lacs

Net Assets Rs 1,503.84 Lacs

Further, during the previous year, Aditya Birla Minacs Worldwide Inc. acquired Aditya

Birla 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 Lacs

Net Profit / (Loss) (Post acquisition) Rs (0.10) Lacs

Net Assets Rs 590.86 Lacs

17. The Company had filed Composite Scheme of Amalgamation (or “Scheme”) with

Karnataka High Court (or “High Court”) for the merger of Aditya Birla Minacs IT

Services Limited and Aditya Birla Minacs Technologies Limited with the Company

with effect from April 1, 2010. The High Court sanctioned the Scheme on November

3, 2010 and order was received by Company on December 9, 2010. The approved

Scheme was not filed with Registrar of Companies as the management was desirous

of making certain modifications in the Scheme. Therefore, the Company has revised

the Scheme and 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

18. The Company has opted for general exemption granted by Ministry of Corporate

Affairs (MCA) vide General Circular No: 2 /2011 dated February 08, 2011 regarding

direction under Section 212(8) of the Companies Act, 1956 (the Act). For information

required to be disclosed in aggregate for each subsidiary (including subsidiaries of

subsidiaries) under Section 212(8) of the Act- Refer Annexure 1.

19. Previous year’s figures have been regrouped, where necessary to conform to this

year’s classification.

For S.R. BATLIBOI & ASSOCIA TES



per Amit Majumdar

Partner


Place: Mumbai

Date: July 27, 2011



Dr. Rakesh Jain

Director

Sushil Agarwal

Director

Ramesh Kamath


Date: July 27, 2011

(25)


C M Y K

ANNEXURE- 1

(Refer Note no 18 of Schedule 17)

The particulars of subsidiary companies as required by order No. 47/438/2007-CL-III dated 4th March,2007 of Ministry of Company Affairs,Government of India, issued under section 212 (8) of the Companies Act, 1956 are as follows:

Description Transworks Inc, USA A V Transworks Aditya Birla Minacs Aditya Birla Minacs Aditya Birla Minacs Minacs Kft.- Minacs Limited. Minacs Worldwide Minacs Worldwide

Limited, Canada Phillippins Inc Worldwide Inc, Canada Worldwide Inc, Canada Hungary* UK* S.A. de C.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 mn HUF in mn Rs. in mn GBP in mn Rs. in mn MXN in lacs Rs. in mn EUR in mn Rs. in mn

1 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 0.18 0.03 1.92

2 Reserves*** 0.04 1.81 (2.31) (106.26) (131.64) (135.59) (48.27) (2,220.42) (47.80) (2,198.80) 81.25 19.50 0.33 23.96 (0.05) (0.18) 2.35 150.02

3 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 40.75 1.03 74.78 — — 2.78 177.48

4 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 20.53 0.70 50.75 — — 0.40 25.54

5 Details of Investments

(except in case of invetsments

in 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 — — 6.89 415.26

7 Profit/ (loss) before Taxation * * (0.05) (0.42) (18.80) 12.08 12.44 22.67 1,014.71 21.84 977.56 24.80 5.45 0.09 6.36 — — 0.36 21.70

8 Provision/ (Recovery)

for Taxation ————****(1.68) (75.20) (2.61) (116.82) 13.10 2.88 0.03 2.12 — — 0.11 6.63

9 Profit/(loss) after Taxation ** (0.05) (0.42) (18.80) 12.08 12.44 24.35 1,089.91 24.45 1,094.38 11.70 2.57 0.06 4.24 — — 0.25 15.07

10 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 , 1 EURO= Rs.63.84, 1 Philip pine peso (PHP) = Rs 1.03, 1 Hungary Forint(HUF) = Rs .24,1 MXN= Rs 3.62, 1 United Arab Emirates Dirham(AED)= Rs.12.33

b) Items 6 to 10 are translated at annual average exchange rate for the year ended March 31, 2011 as follows:

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 United Arab Emirates Dirham (AED) = 12.39

* Indicates unaudited results. These results have been disclosed on the basis of the management accounts.

** Indicates amounts less than 10,000

*** Figures in bracket indicates debit balance

(26)


C M Y K

ANNEXURE- 1

(Refer Note no 18 of Schedule 17)

The particulars of subsidiary companies as required by order No. 47/438/2007-CL-III dated 4th March,2007 of Ministry of Company Affairs,Government of India, issued under section 212 (8) of the Companies Act, 1956 are as follows:

Description The Minacs Group Bureau of Collection Bureau of Collections Aditya Birla Minacs Aditya Birla 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 mn Rs. 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 invetsments

in 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 31.59

7 Profit/ (loss) before Taxation 2. 06 93.91 (0.50) (22.80) — — 0.01 0.71 (3.33) (0.09) (6.36) 0.02 0.91 0.76 9.42

8 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 0.76 9.42

10 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 , 1 EURO= Rs.63.84, 1 Philip pine peso (PHP) = Rs 1.03, 1 Hungary Forint(HUF) = Rs .24,1 MXN= Rs 3.62, 1 United Arab Emirates Dirham(AED)= Rs.12.33

b) Items 6 to 10 are translated at annual average exchange rate for the year ended March 31, 2011 as follows:

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 United Arab Emirates Dirham (AED) = 12.39

* Indicates unaudited results. These results have been disclosed on the basis of the management accounts.

** Indicates amounts less than 10,000

*** Figures in bracket indicates debit balance

(27)

TRANSWORKS INC.

C M Y K

BALANCE SHEE T

AS AT 31ST MARCH, 2011

As At As At


Schedule (US$) (INR) (US$) (INR)

I. Sources of Funds

1 Shareholders' Funds

Share Capital 1 — — — —

2 Reserves and Surplus

Profit and Loss Account 49,092 2, 191,938 47,416 2,140,350

Total 49,092 2,191,938 47,416 2,140,350

II. Application of Funds

1 Current Assets,

Loans and Advances :

Cash and

Bank Balances 2 54,350 2, 426,728 53,762 2,426,810

54,350 2,426,728 53,762 2,426,810


and Provisions :

Current Liabilities 3 5,258 234,790 6,346 286,460

Net Current Assets 49,092 2, 191,938 47,416 2,140,350

Total 49,092 2,191,938 47,416 2,140,350


The Schedules referred to above and the notes to accounts form an integral part of the

Balance Sheet.

As per our Report of even date

For S .R. B atliboi & A ssociates ssociates For Transw orks Inc.



per Vijay Maniar Deepak J. Patel

Partner Director


Place: Mumbai

Date: April 27, 2011


For S.R. Batliboi & Associates S.R. Batliboi & Associates For Transworks Inc.



per Vijay Maniar Deepak J. Patel

Partner Director


Place: Mumbai


PROFIT & LOSS ACCO UNT

FOR THE YEAR ENDED 31ST MARCH, 2011

For the year For the year For the year For the year

ended Mar, 31 ended Mar, 31 ended Mar, 31 ended Mar, 31

2011 2011 2010 2010

Schedule (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 year

Less : Provision for tax — — (3,257) 154,517

Profit / (Loss) after tax provision

for the year 1676 51588.00 (3,257) 154,517

Dividend paid during the year — — 150,000 7,116,250

Profit / (Loss) for the year 1676 51588.00 (153,257) 8,505,782

Profit / (Loss) brought forward from

previous year 47,416 2,140,350 200,673 10,646,132

Accumulated balance carried

forward to the Balance Sheet 49,092 219,938 47,146 214,035

Notes to accounts Notes to accounts 4

The schedules referred to above and the notes to accounts form an integral part of the Profit & Loss

account

(28)

TRANSWORKS INC.

C M Y K


For the For the For the For the

Year ended Year ended Year ended Year ended

31.3.2011 31 .3.2011 31.3.2010 31.3.2010

(US$) (INR) (US$) (INR)

A. Cash flo ws from Operating A ctivities

Net 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)


(Increase)/Decrease in Sundry Debtors 98,560 4,999,950

(Increase)/Decrease in Loans & Advances

Increase/(Decrease) Current Liabilities & Provisions — 5 ,259 231,288

Cash generated from operations — — 35,562 544,256

Add/(Less): Direct Taxes paid —— Cash flow before extraordinary items — — 35,562 544,256

Add/(Less): Extraordinary items ——— Net cash from/ (used in) operating activities Net cash from/ (used in) operating activities — — 35,562 544,256

B . Cash Flows from Inv esting A ctivities

Net Cash from/(f or) Inv esting A ctivities (0) (0) (0) (0)

C. Cash flo w from Financing A ctivities

Repayment 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) (1 6,796,250)

D. Foreign Exchange difference on translation of f oreign cur rency

cash and cash equivalents ———— Net Increase in cash and Cash equivalants during the year 588 26,261 (314,438) (16,251,994)

Cash and cash equivalants at the beginning of the year 53,762 2,40 0,467 368,200 18,678,805

Cash and cash equivalants at the end of the year 54,350 2,426,728 53,762 2,426,811

Notes:

Components of Cash and Cash Equivalents A s at 31.3.2011 A s at 31.3.2010 A s at 31.3.2010

i) Cash Balance on hand


- in Current Account 54,350 2,426,728 53,762 2,426,811

Tot al 54,350 2,426,728 53,762 2,426,811


For S .R. B atliboi & Co.

Firm Registration No. 301003E


Deepak J. Patel

per V ijay Maniar

Partner


Place: Mumbai

Date:

(29)

TRANSWORKS INC.

C M Y K


For S .R. B atliboi & A ssociates ssociates For Transw orks Inc.



per Amit Majmudar Deepak J. Patel

Partner



Date: Chief Financial Officer

SCHEDULES FOR THE YEAR ENDED 31ST MARCH, 2011

A s At A s At A s At A s At

31st March ‘1 1 31st March ‘1 1 31st March ’1 0 31st March’1 0

(US$) (INR) (US$) (INR)

SCHEDULE 1 - SHARE CAPI TAL

A uthorised Capital

1,000,000 Equity Shares of US$ 1/- each 1,000,000 44,650,000 1,000,000 45,140,000

Issued, Subscribed & Paid up Capital

NIL (P Y 200,000) Equity Shares of US$ 1/-each fully paid-up — — — —

(All the above equity shares are held by

the holding company Aditya Birla Minacs

Worldwide Limited)

TOTAL — — — —


1 Other Debts

Unsecured, Considered good — — — —

TOTAL — — — —

SCHEDULE 3 - CASH AND BANK BALANCES

1 Balance with Bank

— In Current Account 54,350 2,426,728 53,762 2,426,810

TOTAL 54,350 2,426,728 53,762 2,426,810

SCHEDULE 4 - CURRENT LIABILITIES

1 Sundry Creditors 2,258 100,840 2,258 101,947

2 Outstanding Liabilities — — 1,088 49,093

3 Provision for Tax 3, 000 133,950 3,000 135,420

TOTAL 5,258 234,790 6,346 286,460


i) Interest Income (588) (26,816) — —

– In Balance with Banks

TOTAL (588) (26,816) — —

SCHEDULE 6 - OTHER EXPENSES

1 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 for

Long Distance Charges — — — —

TOTAL (1,088) (49,586) — —

1. B ack ground

TRANSWORKS INC (“the Company’) is domiciled in United States of America and

accordingly the financial statements have been prepared in United State Dollar (US$),

which is the reporting currency of the Company.

2. Operational Outlook

The 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 and

liabilities have been disclosed at their realisable / payable values, based on

management’s best estimates.




with the accounting principles generally accepted in India. The financial

statements have been prepared on liquidation basis. The accounting policies

have been consistently applied by the Company and are consistent with those

used in the previous year. The significant accounting policies are as follows:

b. Interest Income

Interest is recognised on a time proportion basis taking into account the amount

outstanding and the rate sapplicable.

c. Income Tax

The Company utilizes the asset and liability method of accounting for Income

taxes. Under this method, deferred income taxes are recorded to reflect the

tax consequences of future years differences between the tax basis of assets

and 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 which

the differences are expected to effect taxable income. A valuation allowance is

provided against the future benefit of deferred tax asset if it is determined that

it is more likely than not that the future tax benefits associated with the deferred

tax assets will not be realized.

d. Transactions in Foreign Currency





ii) Conversion





iii) Exchange Differences





they occur

4. Provision for Taxation:

Management is of the view that there is an adequate tax provision in the books of

account and no further tax provision is required in view of non cash profits in the

current 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 no

tax provision has been created during the current year.

5.5. The Company had repaid equity share capital to Aditya Birla Minacs Worldwide Limited

in the earlier years. However, Aditya Birla Minacs Worldwide Limited continues to

control the composition of the Board of Directors of the Company. Accordingly, Aditya

Birla Minacs Worldwide Limited has been considered as the holding company.


The Company had transactions with the following related parties:

Ultimate Holding Company Aditya Birla Nuvo Limited

Holding Company Aditya Birla Minacs Worldwide Limited (Refer

Note 5 above)

Summary of transactions with above related parties is as follows:

(in US$)


March 31, 2011 March 31, 2010

Holding Company

Repayment of Share Capital NIL 200,000

Payment of dividend NIL 150,000

Related Party Balances

Payable to Holding Company 2,258 2,258

(in INR)


March 31, 2011 March 31, 2010

Holding Company

Repayment of Share Capital NIL 9,680,000

Payment of dividend NIL 7,116,250


Payable to Holding Company 100,840 101,947

6.6. Previous year’s figures have been regrouped where necessary to conform to this

year’s classification.

(30)

ADITYA BIRLA MINACS PHILIPPINES, INC.

C M Y K

BALANCE SHEETS

Mar-31

2011(PHP) 2011(INR) 2010(PHP) 2010(INR)

ASSETS

Current Assets

Cash 33,090,861 34,045,115 4,294,486 4,299,248

Receivables (Note 5) 62,253,614 64,048,847 33,738,747 33,776,160

Prepaid expenses and

other current assets

(Notes 6 and 15) 3,971,358 4,085,882 5,575,511 5,581,694

Total Current Assets Total Current Assets 99,315,833 102,179,844 43,608,744 43,657,101

Noncurrent Assets

Property and equipment

(Notes 7 and 8) 34,070,710 35,053,221 40,140,748 40,185,260

Other non-current assets

(Note 15) 2,480,058 2,551,576 3,280,358 3,283,996

Total 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 87,126,357

LIABILITIES AND

CAPITAL DEFICIENCY

Current Liabilities

Accounts payable and

accrued expenses (Note 8) 76,318,515 78,519,343 36,529,566 36,570,073

Non-current Liabilities

Loans from parent company

(Note 12) 93,081,884 95,766,124 96,900,408 97,007,860

Accrued retirement benefits

(Note 13) 1,186,100 1,220,304 200,500 200,722

Total Non-current Liabilities 94,267,984 96,986,428 97,100,908 97,208,582

Total Liabilities 170,586,499 175,505,770 133,630,474 133,778,656

Capital Deficiency

Capital stock - 100 par value (Note 16)

Authorized - 1,000,000 shares

Issued and outstanding -969,232 shares in 2011 and

490,000 shares in 2010 96,923,200 99,718,213 49,000,000 49,054,336

Deposits for future stock

subscription (Note 16) 13 13 47,923,213 47,976,355

Deficit -131,643,111 -135,439,356 -143,523,837 -143,682,990

Total Capital Deficiency -34,719,898 -35,721,130 -46,600,624 -46,652,299

TOTAL LIABILITIES AND

CAPITAL DEFICIENCY 135,866,601 139,784,641 87,029,850 87,126,357

See accompanying Notes to Financial Statements.

S TATEMENTS OF COMPREHENSIVE INCOME

Years Ended March 31

2011(PHP) 2011(INR) 2010(PHP) 2010(INR)

SERVICE INCOME (Note 11) SERVICE INCOME (Note 11) 238,962,956 247,235,279 145,577,147 147,781,703

COST OF SERVICES (Note 8) COST OF SERVICES (Note 8) 187,367,264 193,853,468 150,079,412 153,491,031

GROSS LOSS GROSS LOSS 51,595,692 53,381,811 -4,502,265 -4,604,611

General and administrative

expenses (Note 10) -43,013,663 -44,502,693 -20,862,320 -21,336,564

Foreign exchange loss

(gain) - net 1,415,193 1,464,184 3,506,651 3,586,365

Interest and b ank charges

(Note 12) -69,641 -72,052 -1,848,541 -1,890,562

Interest income 21,397 22,138 32,792 33,537

Other income 2,128,146 2,201,817 1,147,925 1,174,020

PROFIT/LOSS BEFORE

INCOME TAX 12,077,124 12,495,205 -22,525,758 -23,037,816

PROVISION FOR INCOME TAX -Current (Note 13) 2,398 2,481 3,377 3,454

NET LOSS 12,074,726 12,492,724 -22,529,135 -23,041,270


STATEMENTS OF CHANGES IN CAPITAL DEFICIENCY

FOR THE YEARS ENDED MARCH 31, 2011 AND 2010

Deposits for

Future Stock

Subscription

Capital Stock (Note 16) Deficit Total

BALANCES AT MARCH 31, 2009,

AS PREVIOUSLY

REPORTED 49,000,000 47,923,213 -121,408,602 -24,485,389

Effects of change

in accounting for

retirement benefits

(Note 3) — — 219,900 219,900


AS RESTATED AS RESTATED 49,000,000 47,923,213 -121,188,702 -24,265,489

Total comprehensive

loss for the year — — -22,529,135 -22,529,135

BALANCES AT

MARCH 31, 2010 49,000,000 47,923,213 -143,717,837 -46,794,624


AS PREVIOUSLY

REPORTED 49,000,000 47,923,213 -143,523,837 -46,600,624

Effects of change

in accounting for

retirement benefits

(Note 3) — — -194,000 -194,000

BALANCES AT

MARCH 31, 2010, MARCH 31, 2010, 49,000,000 47,923,213 -143,717,837 -46,794,624

AS RESTATED

Issuance of shares 47,923,200 -47,923,200 — —

Total comprehensive

income for the year — — 12,074,726 12,074,726

BALANCES AT

MARCH 31, 2011 (PHP) 96,923,200 13 -131,643,111 -34,719,898

BALANCES AT

MARCH 31, 2011 (INR) 99,718,213 13 -135,439,356 -35,721,130


(31)


C M Y K

S TATEMENTS OF CA SH FLO WS

Years Ended March 31

2011(PHP) 2011(INR) 2010(PHP) 2010(INR)

CASH FLOWS FROM

OPERATING ACTIVITIES

Loss before income tax 12,077,124 12,495,205 -22,111,858 -22,446,710

Adjustments for:

Depreciation (Note 6) 17,045,598 17,635,676 29,581,074 29,613,876

Unrealized foreign exchange

loss (gain) - net -1,177,350 -1,218,107 -3,796,197 -3,800,407

Interest expense (Note 11) 791,600 819,003 1,764,308 1,766,264

Movement in accrued

retirement benefits (Note 12) -18,999 -19,657 -60,500 -61,416

Interest income — — -32,792 -33,289

Operating income (loss) before

working capital changes 28,717,973 29,712,120 5,344,035 5,038,318

Decrease (Increase) in:

Receivables -29,333,656 -30,179,562 -13,001,452 -13,015,869

Prepaid expenses and

other current assets 1,604,153 1,650,413 -1,724,827 -1,726,740

Increase (Decrease) in

accounts payable and

accrued expenses 43,202,115 44,447,952 -6,233,507 -6,240,419

Net cash flows from

(used in) operations 44,190,585 45,630,922 -15,615,751 -15,944,710

Income taxes paid -2,398 -2,481 -3,377 -3,428

Net cash flows from

(used in) operating activities 44,188,187 45,628,441 -15,619,128 -15,948,138

CASH FLOWS FROM

INVESTING ACTIVITIES

Additions to property and

equipment (Notes 6 and 7) -14,134,060 -14,541,650 -4,599,460 -4,604,560

Decrease (Increase) in

other non-current assets 800,300 823,379 114,035 114,161

Interest received 18,999 19,657 32,792 33,289

Net cash flows used in

investing activities -13,314,761 -13,698,614 -4,452,633 -4,457,110

CASH FLOWS FROM

FINANCING ACTIVITES

Loans from parent company — 0 12,429,562 12,443,345

EFFECT OF EXCHANGE

RATE CHANGES IN CASH -2,077,051 -2,148,954 -1,118,608 -1,135,548

NET INCREASE (DECREASE)

IN CASH 28,796,375 29,626,788 -8,760,807 -9,097,450

CASH AT BEGINNING OF

THE YEAR 4,294,486 4,418,328 13,055,293 13,703,601

CASH AT END OF THE YEAR 33,090,861 34,045,115 4,294,486 4,606,150


NOTES TO FINANCIAL STATEMENTS

1. Corporate Information

Aditya Birla Minacs Philippines, Inc. (the Company) was registered with the

Philippine Securities and Exchange Commission (SEC) on November 3, 2006

with the primary purpose of carrying on and undertaking the business of setting

up and operating a center for sales and customer interaction services and

business process outsourcing services; providing system integration and

software development services which are ancillary thereto; and carrying on

the 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 Company

started its commercial operations on March 5, 2007.

The Company is a wholly owned subsidiary of Aditya Birla Minacs Worldwide

Ltd. (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 at

Eastwood City Cyberpark.

The Company is entitled to all incentives granted to pioneer projects under

Republic Act (RA) No. 7916, as amended, and the PEZA IT Guidelines, subject

to 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 Investment

Priorities Plan. The project’s entitlement to the said incentive shall be

subject to validation by PEZA based on the Company’s audited financial

statements covering the first year of its operations showing the

investment cost per seat for its project is equivalent to at least United

States (US) $2,500, inclusive of the cost of equipment, office furniture

and fixtures, building improvements and renovations, fixed assets, except

land, building and working capital, and complies with the minimum

US$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 and

other incentives under RA 7916, as amended, instead of the ITH

incentive. On the other hand, if the Company complies with the minimum

US$2,500 investment cost per seat but fails to comply with the minimum

US$2.5 million investment required for pioneer status, the Company

shall instead be entitled to only four years ITH incentive.

Entitlement of the project to the 5th and 6th years of ITH from the date

of start of commercial operations shall be subject to the issuance by the

PEZA 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 be

undertaken by the Company shall require prior PEZA clearance.

The Company is in a taxable loss position for the years ended

March 31, 2011 and 2010 and, as such, it did not benefit from the ITH.

3. Summary of Significant Accounting and Financial Reporting Policies

Basis of Preparation

The financial statements of the Company are presented using the historical

cost convention and are presented in Philippine peso (Peso), the Company’s

functional currency. All values are rounded off to the nearest Peso.

Statement of Compliance

The financial statements of the Company have been prepared in compliance

with the Philippine Financial Reporting Standards for Small and Medium-sized

Entities (PFRS for SMEs).

Transition to PFRS for SMEs

The Company prepared its financial statements until March 31, 2010, in

accordance with accounting principles generally accepted in the Philippines

applicable to non-publicly accountable entities (previous GAAP). The financial

statements for the year ended March 31, 2011, are the Company’s first

financial statements in accordance with PFRS for SMEs.

(32)


C M Y K

The Company applied PFRS for SMEs Section 35, Transition to the PFRS for

SMEs , in preparing the financial statements, with April 1, 2009, as the date of

transition. The transition from the previous GAAP to PFRS for SMEs resulted

in certain changes to the Company’s previous accounting policies. The

comparative figures for the fiscal year 2010 financial statements were restated

to reflect these changes in accounting policies.

Reconciliations

The following reconciliations show the effect of the transition from the previous

GAAP to PFRS for SMEs on the Company’s capital deficiency account as of

April 1, 2009 and March 31, 2010, and on the Company’s total comprehensive

loss for the year ended March 31, 2010.

Reconciliation of capital deficiency account

March 31, 2010 March 31, 2010 April 1,2009

Capital deficiency under previous GAAP 46,600,624 24,485,389

Effect of change in accounting for

retirement benefits 194,000 194,000 (219,900)

Capital deficiency under PFRS for SMEs 46,794,624 24,265,489

Reconciliation of total comprehensive loss for the year ended March 31, 2010

Total comprehensive loss for the year under previous GAAP 22,115,235

Effect of change in accounting for retirement benefits 413,900

Total comprehensive loss for the year under PFRS for SMEs 22,529,135

Effect of change in accounting for retirement benefits

PFRS for SMEs requires full recognition of actuarial gains and losses in the

profit and loss. Accordingly, all previously unrecognized actuarial gains and

losses were recognized.

The change decreased deficit and increased accrued retirement benefits cost

by 219,900 as of April 1, 2009. The change also increased deficit and accrued

retirement benefits by 413,900 as of March 31, 2010, and increased

retirement benefits cost by 194,000 for the year ended March 31, 2010.

Effect of change in accounting for deferred income tax assets

Under the previous GAAP, deferred income tax assets are recognized for all

deductible temporary differences, carryforward benefits of the excess of the

minimum corporate income tax (MCIT) over the regular corporate income tax

(RCIT) and unused net operating loss carryover (NOLCO) to the extent that

it is probable that sufficient future taxable profits will be available against

which these deductible temporary differences and carryforward benefits of

excess MCIT and unused NOLCO can be utilized. Under PFRS for SMEs,

deferred income tax assets must be recognized for all temporary differences

and unused carryforward benefits of the excess MCIT and unused NOLCO

that are expected to reduce taxable profits in the future. Valuation allowance

must be recognized against deferred income tax assets so that the carrying

amount equals the highest amount that is more likely than not to be

recovered based on current or future taxable profits. Any adjustment is

recognized in profit or loss.

The change in accounting for deferred income tax assets resulted in the

recognition of all previously unrecognized deferred income tax assets with a

corresponding valuation allowance. The change however, has no effect on

the Company’s capital deficiency as of April 1, 2009 and March 31, 2010, and

net loss for the year ended March 31, 2010.

Effect on 2010 statement of cash flows

There are no significant differences between the statement of cash flows

prepared under PFRS for SMEs and the statement of cash flows presented

under the previous GAAP.

Cash

Cash includes cash in hand and in banks.

Receivables

Trade receivables are recognized and carried at original invoice amount, less

any allowance for uncollectible accounts. An estimate for doubtful accounts

is made when there is objective evidence that the Company will not be able

to collect the debts.

Other receivables are recognized at face amount, less any allowance for

doubtful accounts.

Prepayments

Prepaid expenses are amounts paid in advance for goods and services that

are yet to be delivered and from which future economic benefits are expected

to flow to the Company within 12 months from the Balance Sheet date.

Property and Equipment

Property and equipment are carried at cost, less accumulated depreciation

and 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 working

condition and location for its intended use. Expenditures incurred after the

property and equipment have been put into operation, such as repairs and

maintenance, are normally charged to income in the period in which the costs

are incurred. In situations where it can be clearly demonstrated that the

expenditures have resulted in an increase in the future economic benefits

expected to be obtained from the use of an item of property and equipment

beyond its originally assessed standard of performance, the expenditures are

capitalized as additional cost of property and equipment.

Depreciation is computed using the straight-line method over the estimated

useful lives of the assets as follows:

Category Years

Computer equipment 3

Furniture and fixtures 3 to 5

Office and communication equipment 5

Leasehold improvements are amortized over the life of the assets (average

of two years) or the term of the lease, whichever is shorter. Recognition of

depreciation commences when the asset is ready for its intended use.

The estimated useful lives of the assets and depreciation method used are

reviewed periodically to ensure that these are consistent with the expected

pattern of economic benefits from items of property and equipment.

When assets are sold or retired, their costs, accumulated depreciation and

any impairment in value are eliminated from the accounts. Any gain or loss

resulting from their disposal is recognized in profit or loss.

Construction in progress represents assets under construction and is stated

at cost, including cost of construction and other direct costs. Construction in

progress is not depreciated until the relevant assets are completed and ready

for their intended operational use.

Impairment of Assets

The carrying values of property and equipment are reviewed for impairment

when events or changes in circumstances indicate that the carrying values

may not be recoverable. If any such indication exists and where the carrying

values exceed the estimated recoverable amounts, the assets or cash-generating units are written down to their recoverable amount. The

recoverable amount of the asset is the greater of net selling price and

value-in-use. In assessing value-in-use, the estimated future cash flows

are discounted to their present value using a pre-tax discount rate that

reflects current market assessments of the time value of money and the

risks specific to the asset. For an asset that does not generate largely

independent cash inflows, the recoverable amount is determined for the

cash-generating unit to which the asset belongs. Any impairment loss is

recognized in profit or loss.

If, in a subsequent period, the amount of the impairment loss decreases and

the decrease can be related objectively to an event occurring after the

impairment was recognized, the previously recognized impairment loss is

reversed. Any subsequent reversal of an impairment loss is recognized in

profit or loss, to the extent that the carrying value of the asset does not

exceed its amortized cost at the reversal date.

Liabilities

Liabilities are recognized when the Company has a present obligation from

past events, the settlement of which is expected to result in an outflow of

economic benefits from the Company and the amount can be reliably

measured. Liabilities expected to be settled in the Company’s normal operating

cycle or within 12 months from the Balance Sheet date are classified as current

liabilities. Otherwise, these are classified as non-current liabilities.

Capital Stock

Capital stock is carried at par value of the shares issued. When the shares are

sold at a premium, the difference between the proceeds and the par value is

credited to additional paid-in capital. When the shares are issued for a

consideration other than cash, the proceeds are measured by the fair value

of the consideration received. In case the shares are issued to extinguish or

settle the liability of the Company, the shares shall be measured either at the

(33)


C M Y K

fair value of the shares issued or fair value of the liability settled, whichever is

more readily determinable.

Deposits for Future Stock Subscription

Contributions from stockholders that are intended as payment for future capital

stock subscriptions are recognized as deposits for future stock subscription.

The deposits are reduced and the corresponding shares of stock are issued

when the regulatory requirements have been complied with.

Deficit

Deficit represents the cumulative balance of the total comprehensive income

or loss, net of any dividend declaration.

Revenue

Revenue is recognized to the extent that it is probable that the economic

benefits will flow to the Company and the amount of revenue can be reliably

measured. Revenue is measured at the fair value of the consideration received

or receivable. The following specific recognition criteria must also be met

before revenue is recognized:

Service income

Service income is recognized as related services are performed based on

agreements with the customers.

Interest income

Interest income is recognized as the interest accrues.

Leases

Leases where the lessor retains substantially all the risks and benefits of

ownership of the asset are classified as operating leases. Operating lease

expense is recognized in profit or loss on a straight-line basis over the

lease term.

Retirement Benefits Cost

The cost of providing retirement benefits is determined using the projected

unit credit method. This method reflects services rendered by employees up

to the date of valuation and incorporates assumptions concerning employees’

projected salaries. Retirement benefits cost includes current service cost plus

amortization of past service cost, experience adjustments and changes in

actuarial assumptions to the extent that benefits are already vested

immediately. Past service cost is immediately expensed. Actuarial gains and

losses are recognized in their entirety in profit or loss. Past service cost, on

the other hand, is recognized as an expense on a straight-line basis over the

average period until the benefits become vested. If the benefits are already

vested, past service cost is recognized immediately. Gains or losses on the

curtailment or settlement of retirement benefits are recognized when the

curtailment or settlement occurs.

Foreign Currency-denominated Transactions

Transactions denominated in foreign currencies are recorded in Peso using

the exchange rate prevailing at the date of the transaction. Outstanding

monetary assets and liabilities denominated in foreign currencies are translated

to Peso using the closing exchange rate at the Balance Sheet date. Foreign

exchange gains or losses are credited to or charged against current operations.

Income Taxes

Current income tax

Current income tax assets and liabilities for the current and prior periods are

measured at the amount expected to be recovered from or paid to the taxation

authorities. The tax rates and tax laws used to compute the amount are those

that have been enacted or substantively enacted at the Balance Sheet date.

Deferred income tax

Deferred income tax is provided, using the Balance Sheet liability method, on

all temporary differences at the Balance Sheet date between the tax bases of

assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred income tax liabilities are recognized for all taxable temporary

differences. Deferred income tax assets are recognized for all deductible

temporary differences, carry-forward benefits of the excess MCIT over RCIT

and NOLCO that are expected to reduce taxable profits in the future.

A valuation allowance is recognized against deferred income tax assets so

that the net carrying amount equals the highest amount that is more likely

than 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 date

and the valuation allowance is adjusted to reflect the current assessment of

future taxable profits. Such adjustment is recognized in profit or loss, except

that an adjustment attributable to an item of income or expense recognized

as other comprehensive income is recognized in other comprehensive income.

Deferred income tax assets and deferred income tax liabilities are measured

at the tax rates that are expected to apply to the period when the asset is

realized or the liability is settled, based on tax rates and tax laws that have

been enacted or substantively enacted at the Balance Sheet date.

Deferred income tax assets and deferred income tax liabilities are offset if a

legally enforceable right exists to offset current income tax assets against

current income tax liabilities and the deferred income taxes relate to the same

taxable entity and the same taxation authority.

Borrowing Costs

Borrowing costs are generally expensed as incurred.

Provisions and Contingencies

Provisions 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 an

outflow of resources embodying economic benefits will be required to settle

the obligation; and (3) a reliable estimate of the amount of the obligation can

be made.

Contingent liabilities are not recognized in the financial statements.

They are disclosed in the notes to financial statements unless the possibility

of 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 economic

benefits is probable.

Events after the Balance Sheet Date

Post - year-end events that provide additional information about the Company’s

position at the Balance Sheet date (adjusting events) are reflected in the

financial statements. Post-year-end events that are not adjusting events are

disclosed in the notes to financial statements when material.

4. Significant Accounting Judgments, Estimates and Assumptions

The preparation of the financial statements in compliance with PFRS for

SMEs requires management to make judgments, estimates and

assumptions that affect the amounts reported in the financial statements

and accompanying notes. The judgments, estimates and assumptions used

in the preparation of the financial statements are based upon management’s

evaluation of relevant facts and circumstances as of the date of the financial

statements. Future events may occur, which can cause the assumptions

used in arriving at those judgments and estimates to change. The effects of

any changes will be reflected in the financial statements as they become

reasonably determinable.

Judgments

In the process of applying the Company’s accounting policies, management

has made the following judgments, apart from those involving estimations,

which have the most significant effect on the amounts recognized in the

financial statements:

Determination of functional currency

Based on the economic substance of the underlying circumstances relevant

to the Company, the functional currency is determined to be the Peso. It is

the currency that mainly influences its service and rental costs.

Operating lease - Company as lessee

The Company has entered into a property lease, where it has determined

that the significant risks and rewards related to the property are retained with

the lessor. As such, this lease agreement is accounted for as an operating

lease (see Note 15).

Impairment of property and equipment

Internal and external sources of information are reviewed at the end of

each reporting period to identify indications that the property and

equipment may be impaired or an impairment loss previously recognized

no longer exists or may be decreased. If any such indication exists, the

recoverable amount of the asset is estimated. An impairment loss is

recognized whenever the carrying amount of an asset exceeds its

estimated recoverable amount.

An assessment is made on the impairment of assets whenever events or

changes in circumstances indicate that the carrying amount of an asset may

(34)


C M Y K

not be recoverable. The factors that the Company considers important which

could trigger an impairment review include significant underperformance

relative to expected historical or projected future operating results and

significant negative industry or economic trends. As of March 31, 2011 and

2010, there were no indications of impairment on the Company’s property

and equipment.

The carrying value of the Company’s property and equipment, net of

accumulated depreciation, amounted to 34,070,710 and 40,140,748 as

of March 31, 2011 and 2010, respectively (see Note 7).

Estimates and Assumptions

The key assumptions concerning the future and other key sources of

estimation uncertainty at the Balance Sheet date that have a significant risk

of causing a material adjustment to the carrying amounts of assets and

liabilities within the next financial year are discussed below.

Estimation of useful lives of property and equipment

The Company estimates the useful lives of its property and equipment

based on the period over which the assets are expected to be available

for use. The Company reviews annually the estimated useful lives of

property and equipment based on factors that include asset utilization,

internal technical evaluation, technological changes, environmental and

anticipated use of the assets tempered by related industry benchmark

information. There was no change in the estimated useful lives of the

property and equipment in both years.

Estimation of retirement benefits cost

The determination of the obligation and cost of accrued retirement benefits

is dependent on the assumptions used by the actuary in calculating such

amounts. Those assumptions are described in Note 13 and include, among

others, discount rates and salary increase rates.

The carrying value of the Company’s accrued retirement benefits amounted

to 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 assets

The carrying amounts of deferred income tax assets are reviewed at each

Balance Sheet date and the valuation allowance is adjusted to reflect the

current assessment of future taxable profits. In 2011 and 2010, management

recognized valuation allowance on certain deferred income tax assets since

it is not probable that taxable profits will be available against which the future

income 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. Receivables

2011(PHP) 2011(INR) 2010(PHP) 2010(INR)

Trade 61,003,203 62,762,377 33,156,570 33,193,337

Advances to employees

and others 1,250,411 1,293,697 582,177 582,823

62,253,614 64,056,074 33,738,747 33,776,160 6. Prepaid Expenses and Other Current Assets

2011(PHP) 2011(INR) 2010(PHP) 2010(INR) Prepaid rent (Note 15) 1,911,666 1,966,793 1,258,588 1,260,095

Deposits (Note 15) 1,621,651 1,668,415 821,351 822,262

Prepaid insurance 250,211 257,426 3,395,572 3,399,337

Others 187,830 193,247 100,000 100,000

3,971,358 4,085,882 5,575,511 5,581,694

7. P ropert y and Equipment 2011

Computer Furniture & Office & Com- L easehold Construction Tot al (PHP) Tot al (INR)

Equipment Fixt ures munication Impro v ements in P rogress 2011 2011

Equipment

Cost

Beginning of year 43,065,999 26,907,546 15,468,204 26,008,357 3,974,789 115,424,895 118, 753,449

Additions 5,868,943 390,000 4,419,593 36,395 260,629 10,975,560 11,292,067

Reclassification 1,757,133 — 459,000 1,428,000 -3,644,133 0 0

End of year 50,692,075 27,297,546 20,346,797 27,472,752 591,285 126,400,455 130,045,516

Accumulated Depreciation

Beginning of year 33,700,688 13,939,879 7,228,174 20,415,406 0 75,284,147 77,455,146

Depreciation (Notes 9 and 10) 4,781,627 5,167,242 3,438,180 3,658,549 0 17,045,598 17,537,149

End of year 38,482,315 19,107,121 10,666,354 24,073,955 0 92,329,745 94,992,295

Net Book Values 12,209,760 8,190,425 9,680,443 3,398,797 591,285 34,070,710 35,053,221

2010

Computer Furniture & Office & Com- Leasehold Construction Total (PHP) Total (INR)

Equipment Fixtures munication Improvements in Progress 2010 2010

Equipment

Cost

Beginning of year 38,613,107 26,606,446 15,468,204 15,803,863 10,836,115 107,327,735 107,446,750

Additions 3,821,271 301,100 — —– 3,974,789 8,097,160 8,106,139

Reclassification 631,621 — — 10,204,494 (10,836,115) — —

End of year 43,065,999 26,907,546 15,468,204 26,008,357 3,974,789 115,424,895 115,552,889

Accumulated Depreciation

Beginning of year 20,593,516 8,794,710 4,113,891 12,200,956 — 45,703,073 45,753,753

Depreciation (Notes 9 and 10) 13,107,172 5,145,169 3,114,283 8,214,450 — 29,581,074 29,613,876

End of year 33,700,688 13,939,879 7,228,174 20,415,406 — 75,284,147 75,367,629

Net Book Values 9,365,311 12,967,667 8,240,030 5,592,951 3,974,789 40,140,748 40,185,260

(35)


C M Y K

b. The Company has various service agreements which are carried out

together 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 are

determined based on the statement of work agreed with client and are

normally expressed per minute or per hour. Revenue recognized for

these agreements amounted to 238.96 million and 145.58 million

for the years ended March 31, 2011 and 2010, respectively.

c. In 2011, the Company received from its affiliate 10.91 million (US$0.25

million), included under “Accounts payable and accrued expenses” in

the Balance Sheet, representing payment for receivable from clients

which are covered in the service agreements described above.

The amount advanced shall be offset upon collection of the outstanding

receivable from the said clients.

d. Shared costs charged by ABMW amounted to 11.79 million and

4.02 million in 2011 and 2010, respectively, and are included under

“General and administrative expenses”. The amounts outstanding as

of March 31, 2011 and 2010 amounting to 24.39 million and 5.86

million, respectively, are included in “Accounts payable and accrued

expenses”.

e. The compensation of key management personnel consists of

2011(PHP) 2011(INR) 2010(PHP) 2010(INR)

Salaries and wages 5,915,470 6,120,249 2,112,357 2,144,346

Retirement benefits (Note 13) 102,883 106,445 85,026 86,314

Short-term employee benefits 41,898 43,348 90,027 91,390

6,060,251 6,270,042 2,287,410 2,322,050

13. Retirement Benefits Cost

The Company has an unfunded, non-contributory, defined benefit retirement

plan covering its regular, full time employees. Retirement benefits are provided

in accordance with RA No. 7641.

The following tables summarize the components of net retirement benefits

cost recognized in the statements of comprehensive income and the amounts

recognized in the Balance Sheets based on the actuarial valuation report as

of March 31, 2011.

The components of retirement benefits cost which were charged to

operations follow:

2011(PHP) 2011(INR) 2010(PHP) 2010(INR)

(As restated,

Note 3)

Current service cost 197,700 203,401 1,800 1,817

Interest cost 38,000 39,096 15,400 15,543

Curtailment gain 0 0 -67,900 - 68,530

Net actuarial loss 555,900 571,931 404,100 407,849

Retirement benefits cost 791,600 814,428 353,400 356,679

The 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 41,481

Retirement benefits costs

for the year 791,600 814,428 353,400 356,679

Balance, March 31 1,186,100 1,220,304 394,500 398,160

Changes 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 41,481

Current service cost 197,700 203,401 1,800 1,817

Interest cost 38,000 39,096 15,400 15,543

Actuarial loss on obligation: 0 0 –

Experience adjustments 349,500 359,579 13,400 13,524

Change in assumptions 206,400 212,352 390,700 394,325

Curtailment gain 0 0 (67,900) (68,530)

Balance, March 31 1,186,100 1,220,304 394,500 398,160

8. A ccounts P a y able and A ccrued Expenses

2011(PHP) 2011(INR) 2010(PHP) 2010(INR)

Accounts payable 9,034,741 9,295,279 4,811,527 4,816,862

Accrued expenses (Note 12) 55,057,482 56,645,197 28,897,211 28,929,255

Advances from affiliate

(Note 12) 10,907,500 11,222,044 0 0

Others 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 339,200

and 3,497,700, respectively.

9. Cost of Services

2011(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 67,960,668

Technology charges 21,936,223 22,695,602 23,349,297 23,702,889

Rent and utilities (Note 14) 16,822,428 17,404,780 15,322,959 15,555,003


Staff welfare 9,002,486 9,314, 130 4,992,377 5,067,979

Recruitment 5,353,679 5,539, 010 3,725,398 3,781,814

Repairs and maintenance 3,213,595 3,324,842 2,506,195 2,544,148

Training 257,686 266,606 2,342,528 2,378,002

Outside services and others 3,754,058 3,884,014 2,434,623 2,471,492

187,367,264 193,853,468 150,079,412 153,491,032 10. General and Administrative Expenses

2011(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 8,544,280

Shared cost (Note 12) 11,789,623 12,197,751 4,017,722 4,078,565

Transportation and travel 3,717,069 3,845,745 1,051,985 1,067,916

Professional fees 2,680,534 2,773,328 1,386,705 1,407,705

Accommodations 1,759,204 1,820,103 1,079,333 1,095,678


Utilities 1,208,328 1,250,157 849,838 862,708

Insurance 880,240 910,712 382,936 388,735

Rent (Note 15) 643,829 666,117 943,046 957,327

Others 2,314,234 2,394,347 1,198,143 1,216,287

43,013,663 44,502,693 20,862,320 21,128,595 11. Personnel Costs

2011(PHP) 2011(INR) 2010(PHP) 2010(INR)

Salaries, wages

and bonuses 113,074,009 116,988,359 74,526,431 75,655,331

Retirement benefits cost

(income) (Note 12) 791,600 819,003 353,400 -61,416

Other short-term

employee benefits 14,136,504 14,625,876 897,742 911,032

128,002,113 132,433,238 75,777,573 76,504,947


a. The Company availed of various loans from ABMW to finance its working

capital requirements. The loans bear interest at LIBOR + 1% and are

payable in 60 months (including the interest and other related charges).

As of March 31, 2011 and 2010, the outstanding principal amounted to

87.00 million (US$2.01 million) and 90.57 million (US$2.01 million),

respectively. Interest expense charged to the Company amounted to

1.76 million (US$39.13 thousand) for the year ended March 31, 2010.

Interest for the year was waived by ABMW in 2011. Accrued interest

expense (included under “Loans from parent company” in the Balance

Sheets) as of the March 31, 2011 and 2010 amounted to 6.08 million

and 6.33 million, respectively.

(36)


C M Y K

The assumptions used to determine retirement benefits costs of the Company

as of March 31 are as follows:

2011 2011 2010


Salary increase rate 8.00% 8.00%

14. Income Taxes

a. The provision for current income tax represents final tax on interest income.

b. The components of the Company’s deferred income tax assets and

deferred 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 42,226,760

Accrued retirement benefits 355,830 368,148 118,350 119,448


loss - net — — 2,606,312 2,630,494

Deferred lease — — 35,447 35,776

Valuation allowance on

deferred income 25,004,297 25,869,886 44, 598,683 45,012,478

Tax 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:


gain - net 589,268 609,667 1, 138,859 1,149,426

Deferred lease 100,133 103,599

689,401 713,266 1,138,859 1,149,426

Net deferred income tax assets — —

The Company’s NOLCO as of March 31, 2011 will expire as follows:

Incurred in Year March 31, March 31, Expiring

2010 Expired Applied 2011 in

2008 51,755,698 51,755,698 — ` — 2011

2009 50,574,668 — 5,544,656 45,030,012 2012

2010 37,131,546 — — 37,131,546 2013

139,461,912 51,755,698 5,544,656 82,161,558

c. The reconciliation between the provision for income tax at statutory tax

rates and the provision for income tax as shown in the statement of

comprehensive 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 -6,820,426

Additions to (reduction in)

income tax resulting from

the tax effects of:

Net increase (decrease)

in unrecognized

deferred income tax assets -1,954,821 -2,022,492 6,764,318 6,827,079

Application of NOLCO -1,663,397 -1,720,980 — —

Interest income subject to final tax -4,021 -4,160 -6,460 - 6,520

Non-deductible interest and

other expenses 1,500 1,552 3,246 3,276

2,398 2,481 3,377 3,408

15. Lease Commitments

The Company has various lease agreements for its office space and

condominium units with terms ranging from three months to five years. These

leases are renewable on terms mutually agreed by the parties. Certain lease

agreements require the Company to pay security deposits. These are included

under “Prepaid expenses and other current assets” and “Other non-current

assets” 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%, with

one month and three months rent-free period, respectively.

Future minimum rentals payable under these non-cancellable operating lease

arrangements are as follows:

2011(PHP) 2011(INR) 2010(PHP) 2010(INR)

Within one year 10,833,298 11,145,702 12,514,170 12,528,047

After one year but not more

than five years 6,613,488 6, 804,204 18,131,585 18,151,691

17,446,786 17,949,906 30,645,755 30,679,738 16. Equity

On January 19, 2009, the Company’s BOD authorized the issuance of 479,232

additional shares from the remaining unissued shares at 100 per share in

favor of ABMW, to be applied against the deposits for future stock

subscription.

On March 24, 2011, the Philippine SEC approved the issuance of the said

shares to the existing stockholder.

17. Financial Assets and Financial Liabilities

The Company’s financial assets and financial liabilities measured at amortized

costs as of December 31 are as follows:

2011(PHP) 2011(INR) 2010(PHP) 2010(INR)

Financial Assets

Cash 33,090,861 34,045,115 4,294,486 4,299,248

Receivables 62 ,253,614 64,048,847 33, 738,747 33,776,160

Refundable deposits 4,101,709 4,219,992 4,101,709 4,106,257

99,446,184 102,313,954 42,134,942 42,181,665

Financial Liabilities

Account payable and accrued expenses

Trade 9,034,741 9,295,279 4,811,527 4,816,862

Accrued expenses 55,057,482 56,645,197 28,897,211 28,929,255

Advances 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) for

the years ended March 31, 2011 and 2010, are the same since the Company

does not have other comprehensive income.

19. Other Matter

The Company is a defendant in a number of labor cases filed with the National

Labor Regulatory Commission pertaining to non-payment of salaries and other

benefits to its employees. Management believes that the outcome of these

cases will not have a material effect on the Company’s financial statements.

20. Supplementary Information Required Under Revenue

Regulations 15-2010

In compliance with Bureau of Internal Revenue Regulations 15-2010 issued

on November 25, 2010, mandating all tax payers to disclose information on

taxes, 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 Licenses

SEC fees for additional of shares 96,805

Penalties 5,000

PEZA certification 930

102,735

c. Withholding Taxes

Paid Accrued Total

Withholding tax on compensation 11,329,434 2,718,099 14,047,533

Withholding taxes on rental/services 497,607 456,797 954,404

11,827,041 3,174,896 15,001,937

(37)

A V TRANSWORKS LIMITED

C M Y K

Auditors’ R eport

To

The 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 Transworks

Ltd ('the Company'), a wholly owned subsidiary of Aditya Birla

Minacs Worldwide Limited ("the Parent"), as at March 31, 2011

and also the Profit and Loss account and the cash flow statement

for the year ended on that date annexed thereto. These financial

statements are the responsibility of the Company's management.





and perform the audit to obtain reasonable assurance about

whether the financial statements are free of material misstatement.

An audit includes examining, on a test basis, evidence supporting

the amounts and disclosures in the financial statements. An audit





3. We report that:

i) We have obtained all the information and explanations, which



ii) In our opinion, proper books of account have been kept by the

Company so far as appears from our examination of those

books;

iii) The balance sheet, profit and loss account and cash flow

statement dealt with by this report are in agreement with the

books of account;

iv) In our opinion, the balance sheet, profit and loss account and



211 of the Companies Act, 1956;

v) In our opinion and to the best of our information and according

to the explanations given to us, the said accounts give a true

and fair view in conformity with the accounting principles

generally accepted in India;





c) in the case of cash flow statement, of the cash flows for

the year ended on that date.

4. This report is furnished solely for the purpose of meeting the

requirement of consolidation of the attached consolidated financial

statements with the financial statement of the Parent and hence

should not be used for any other purpose.

For S. R. Batliboi & Co.,

Firm registration number: 301003E


per Vijay Maniar

Partner

Membership No.:36738

Place : Mumbai,

Date: July 27, 2011

(38)


C M Y K

PROFIT & LOSS A CCOUNT FOR THE YEAR ENDED

31ST MARCH, 2011


Year Ended Year Ended Year Ended Year Ended

31st March, 31st March, 31st March, 31st March,

2011 2011 2010 2010

Schedule CAD ` Lacs CAD ` Lacs

INCOME :

Other Income 6 765,846 342.78 157,375 68.61

Total 765,846 342.78 157,375 68.61

EXPENDITURE :

Administrative Expenses 7 11,283 5.05 (39,723) (17.31)

Financial Charges 8 1,171,116 524.19 1,504,930 656.06

Total 1,182,399 529.24 1,465,208 638.75

Profit / (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)


from previous year (1, 891,435) (811.58) (583,602) (241.45)

Accumulated Balance carried

forward to the Balance Sheet (2,307,989) (998.04) (1,891,435) (811.59)


The Schedules referred to above and the notes to accounts form an integral part of the

Profit & Loss Account.

BALANCE SHEE T AS AT 31S T MARCH, 2011

A s At A s At A s At A s At

31st Marc h, 31st Marc h, 31st Marc h, 31st Marc h,

2011 2011 2010 2010

Schedule CAD ` Lacs CAD ` Lacs

I. SOURCES OF FUNDS


Share Capital 1 127,000,001 58,420.00 127,000,001 56,083.20

Preference Share Capital 1 30,000,000 13,800.00 30,000,000 13,248.00

Foreign Exchange on Translation — (63.66) — (23.68)

2 Unsecured Loan from Bank ank 30,901,850 14,214.85 30,901,850 13,646.26

3 L oan from Holding Compan yy 28,255,752 12,997.65 21,424,531 9,461.07

Tot al 216,157,603 99,368.84 209,326,382 92,41 4.85


1 Investments Investments 2 207,892,852 95,630.71 207,892,852 91,805.48

2 Current Assets, Loans

and Advances :

Accured Interest 56,919 26.18 106,963 47.23

Cash and Bank Balances 3 763,345 351.13 67,073 29.62

Loans and Advances 4 5, 371,429 2,470.86 — —

Sub - Total A 6, 191,693 2,848.17 174,036 76.85


and Provisions : and Provisions : 5

Current Liabilities 232,324 106.87 629,334 277.92

Provisions 2,607 1.20 2,607 1.15

Sub - Total B 234,931 108.07 631,941 279.07

Net 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 1,891,435 811.59

Total 216,157,603 99,368.84 209,326,382 92,414.85


The 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 of

A V Transworks Limited




Director

per Vijay Maniar Michael Iseyemi

Partner


Place: Mumbai Place: Toronto







Director


Partner




(39)


C M Y K

For the Year ended For the Year ended For the Year ended For the Year ended

March 31, 20 11 March 31, 20 11 March 31, 20 10 March 31, 20 10

CAD Rs. Lacs CAD Rs. Lacs

A. Cash flo ws from Operating A ctivities

Net 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 1,497,734 652.92

Foreign Exchange (Gain)/Loss (Net) — 2,865.41 0 6,125.02

Operating Profit bef ore w orking capital c hanges (1 6,389) 2,858.06 32,526 6,139.19


(Increase)/Decrease in payable to subsidiary (351,422) (155.19) 267,093 121.24

(Increase)/Decrease in Loans & Adv ances (106,686) (49.08) — 0.00

Increase/(Decrease) Current Liabilities & Provisions 130,333 60.43 (12,534) (4.06)

Cash generated from operations (344,165) 2,714.22 287,085 6,256.37

Loan to subsdiaries (5,264,743) (2,421.78) — 0.00

Cash flow before extraordinary items (5,608,907) 292.44 287,085 6,256.37

Add/(Less): Extraordinary items — — — —

Net Cash flow from Operating Activities (5,608,907) 292.44 287,085 6,256.37


Investment in Subsidaries 0 (3,825.23) (30,000,000) (20,182.45)

Interest income received 815,889 363.83 449,913 182.23

Net Cash from/(for) Investing Activities 815,889 (3,461.40) (29,550,087) (20,000.22)


Loan from Holding Company 6,831,221 3,536.58 898,346 1,196.84

Preference Capital from Holding Com pany — 552.00 30,000,000 13,248.00

Interest 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 13,772.04

Net Decrease in cash and Cash equivalants during the year 696,271 321.50 63,567 28.19

Cash and cash equivalants at the beginning of the year 67,073 29.62 3,506 1.51

Cash and cash equivalants at the end of the year 763,344.67 351.12 67,073 29.70

Notes:

Components of Cash and Cash Equivalents As At 31st Mar, As At 31st Mar, As At 31st Mar, As At 31st Mar,

2011 2011 2010 2010

i) Cash Balance in hand — — — —


- in Current Account 763,345 351.13 67,073 29.62

Total 763,344.67 351.13 67,073 29.62







Director


Partner




(40)


C M Y K

SCHEDULES FOR THE YEAR ENDED 31ST MARCH, 2011

As At As At As At As At

31st March, 31st March, 31st March, 31st March,

2011 2011 2010 2010

CAD ` Lacs CAD ` Lacs

SCHEDULE - 1 - SHARE CAPITAL

Authorised Capital

127,000,001 Equity Shares of CAD$ 1 each 127,000,001 58,420.00 127,000,001 56,083.20

Issued, Subscribed & Paid up Capital

127,000,001 Equity Shares of CAD$ 1

each fully paid up 127,000,001 58,420.00 127,000,001 56,083.20

30,000,000 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 Preference

shares are held by Holding Company

– Aditya Birla Minacs Worldwide Limited)

Total 157,000,001 72,220.00 157,000,001 69,331.20

SCHEDULE - 2 - INVESTMENTS

Long Term Investments Long Term Investments (At Cost)

In Subsidiary Companies

Unquoted, fully paid-up

27,945,822 shares (P.Y. 27,945,822

shares) of CAD$ 1 each in Aditya

Birla Minacs Worldwide Inc. 157,571,131 72,482.72 157,571,131 69,583.41


(P.Y. 20,321,721 shares) of CAD$

1 each in Aditya Birla Minacs

Worldwide Inc. 20,321,721 9,347.99 20,321,721 8,974.07


(P.Y. Nil) of CAD$ 1 each in Aditya

Birla Minacs Worldwide Inc. 30,000,000 13,800.00 30,000,000 13,248.00

Total 207,892,852 95,630.71 207,892,852 91,805.48

SCHEDULE - 3 - CASH AND BANK BALANCES

Balance with other Banks :

- In Current Account 763,345 351.13 67,073 29.62

Total 763,345 351.13 67,073 29.62

SCHEDULE - 4 - LOANS & ADVANCES


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 & PROVISIONS

i) Sundry Creditors 2,536 1.17 3,864 1.71

ii) Acrrued Interest on Secured Loan from Bank 79,045 36.36 83,926 37.06

iii) Acrrued Interest on Loan from Holding Company 0 — 171,041 75.53

iv) Payable to Subsidiary Company 0 — 351,422 155.19

v) TDS Payable 150,743 69.34 19,081 8.43

232,324 106.87 629,334 277.92

PROVISIONS

i) Provision for Taxation /

Minimum Alternative Tax 2,607 1.20 2,607 1.15

2,607 1.20 2,607 1.15

Total 234,931 108.07 631,941 279.07


Year Ended Year Ended Year Ended Year Ended

31st March 31st March 31st March 31st March

2011 2011 2010 2010

CAD ` Lacs CAD ` Lacs

SCHEDULE - 6 - OTHER INCOME

Interest received

i) Bank interest — — — —

ii) DBS Loan — — — —

iii) Intercompany Loan 765,846 342.78 157,375 68.61

iv) Others — — — —

Total 765,846 342.78 157,375 68.61

SCHEDULE - 7 - ADMINISTRATIVE EXPENSES

i) 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 1.45

v) Miscellaneous Expenses 8,135 3.64 — —

Total 11,283 5.05 (39,723) (17.31)

SCHEDULE - 8 - FINANCIAL CHARGES

i) Bank charges 5,106 2.30 7,196 3.14

ii) Interest on Term Loan from Bank 914,327 409.24 1,040,947 453.79

iii) Interest on Inter company Loan 251,683 112.65 456,787 199.13

Total 1,171,116 524.19 1,504,930 656.06

ACCOUNTS FOR THE YEAR ENDED 31S T MAR CH, 2011

SCHEDULE - 9: - NOTES TO ACCO UNTS

1. BACKGR O UND

AV TRANSWORKS LTD (“the Compan y’) is domiciled in Canada and accordingly the

financial statements have been prepared in Canadian Dollars (CAD), which is the

reporting currency of the Company.




with the accounting principles generally accepted in India. The financial

statements have been prepared under the historical cost convention on an

accrual basis.

b. Use of estimates


accounting principles requires management to make estimates and

assumptions that affect the reported amounts of assets and liabilities and

disclosure of contingent liabilities at the date of the financial statements and

the results of operations during the reporting period. Although these

estimates are based upon management’s best knowledge of current events

and actions, actual results could differ from these estimates.

c. Interest

Interest on Loan given / taken is booked on a time proportion basis taking into

account the amounts of loan given and taken and the rate of interest

d. Transactions in Foreign Currency





ii) Conversion





(41)


C M Y K

iii) Exchange Differences





they occur.

iv) Forward Exchange Contracts not intended for trading or speculation

purposes


contracts is amortised as expense or income over the life of the contract.

Exchange differences on such contracts are recognised in the statement

of profit and loss in the year in which the exchange rates change. Any

profit or loss arising on cancellation or renewal of forward exchange

contract is recognised as income or as expense for the year.

e. Provision




Provisions are not discounted to its present value and are determined based

on best estimate required to settle the obligation at the balance sheet date.

These are reviewed at each balance sheet date and adjusted to reflect the

current best estimates.

f. Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or

production of an asset that necessarily takes a substantial period of time to get

ready for its intended use or sale are capitalized as part of the cost of the

respective asset. All other borrowing costs are expensed in the period they

occur. Borrowing costs consist of interest and other costs that an entity incurs

in connection with the borrowing of funds.

g. Investments

i) Investments that are readily realizable and intended to be held for not



ii) Long-term investments are valued at cost. Any decline in the value of



Cash and cash equivalents for the purposes of cash flow statement

comprise cash at bank and in hand and short-term investments with an

original maturity of three months or less.


(a) Name and nature of relationship of the Related Party where control exists:

Ultimate Holding Company Aditya Birla Nuvo Limited

Holding Company Aditya Birla Minacs Worldwide Limited (ABMWL)

Fellow Subsidiaries TransWorks Inc., USA (TW Inc)

Aditya Birla Minacs Philippines Inc. (formerly

TransWorks 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., Mexico

The Minacs Worldwide GmbH, Germany

The Minacs Group, USA

Aditya Birla Minacs BPO Limited, UK (formerly

Compass 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 (Formerly

Compass Business Process Outsourcing Limited,

India) (w.e.f. March 9, 2010)

Compass BPO FZE, U.A.E (w.e.f. March 9, 2010

up to 25 February 25, 2011)

Bureau of Collection recovery, LLC, Canada (w.e.f

June 2, 2010)

Bureau of Collections Recovery (BCR) Inc., Canada

(w.e.f March 4, 2011)

(b) Summary of transactions with related parties:

(In CAD)


March 31, 2011 March 31, 2010

Transactions during the year with

Holding Company

Loan Repayment 16,618,917 7,500,000

Loan Taken 23,450,137 8,450,000

Interest on loan from ABMWL 251,683 456,787

Transactions during the year

with Subsidiary (ABMWI)

Investment Nil 30,000,000

Loan repayment from subsidiary 18,331,745 7,500,000

Loan given to subsidiary 23,596,488 7,500,000

Interest on loan given 765,846 157,375


Holding

Loan taken from Holding company 28,255,751 21,424,531

Interest Payable to Holding company Nil 171,041

Corporate guarantee given by Holding Co. 30,901,850 30,901,850

Subsidiary (ABMWI)

Investment 207,892,852 207,892,852

Loan given to subsidiary 5,264,743 Nil

Interest receivable from subsidiary 56,919 106,963

Forward contract with the subsidiary for

hedging loan payable (USD 24.5 million) 30,901,850 30,901,850

4. Derivative Instruments




Particulars Amount Amount in Foreign Purpose

(CAD) Foreign currency

Currency

Currency Swap 20,321,721 1,983,400,000 JPY To hedge Loan

(20,321,721) (1,983,400,000) Payable

Forward contract 30,901,850 24,500,000 USD To hedge Loan

(30,901,850) (24,500,000) Payable

Figures in bracket represents previous year amount.




5.5. Previous year figures have been regrouped wherever necessary to conform with

current year figures.


AV TRANSWORKS LTD




Michael Iseyemi

per Vijay Maniar per Vijay Maniar Director

Partner


Place: Mumbai Place : Toronto

Date : July 27, 2011 Date : July 25, 2011

(42)

C M Y K

ADITYA BIRLA MINACS WORLDWIDE INC., CANADA

AUDI TORS’ REPOR T

To the Board of Directors of

Aditya Birla Minacs Worldwide Inc.

We have audited the consolidated Balance Sheet of Aditya Birla Minacs

Worldwide Inc. as at March 31, 2011 and the consolidated statements

of operations and deficit, comprehensive income (loss), changes in

shareholders’ equity (deficiency) and Cash Flows for the year then

ended. These financial statements are the responsibility of the

Company’s management. Our responsibility is to express an opinion

on these financial statements based on our audit.

We conducted our audit in accordance with Canadian generally

accepted auditing standards. Those standards require that we plan and

perform an audit to obtain reasonable assurance whether the financial

statements are free of material misstatement. An audit includes

examining, on a test basis, evidence supporting the amounts and

disclosures in the financial statements. An audit also includes assessing

the accounting principles used and significant estimates made by

management, as well as evaluating the overall financial statement

presentation.

In our opinion, these consolidated financial statements present fairly,

in all material respects, the financial position of the Company as at

March 31, 2011, and the results of its operations and its cash flows for

the year then ended in accordance with Canadian generally accepted

accounting principles.

Toronto, Canada, Chartered Accountants

April 25, 2011. Licensed Public Accountants

(43)

C M Y K


Consolidated Balance Sheet as at 31st Marc h 2011

31-Mar-11 31-Mar-11 31-Mar-10 31-Mar-10

CAD$’000 INR/Cr CAD$’000 INR/Cr

ASSETS

Current assets

Cash $3,524 16.21 $4,230 18.68

Accounts receivable and unbilled

revenue (Notes 10 and 17) 68,442 314.83 46,768 206.53

Other receivables (Notes 4, 9(a) and (b)) 28,556 131.36 19,624 86.66

Prepaid expenses 2,242 10.31 3,002 13.26

Income taxes recoverable 82 0.38 80 0.35

Future income taxes (Note 15) 601 2.76 273 1.21

$103,447 475.86 73,977 326.68

Long-term receivables — — — —

Future income taxes (Note 15) — — 401 1.77

Property, plant and equipment, net

(Notes 5, 10 and 14) 20,094 92.43 24,424 107.86

Deferred development costs (Note 6) 2,574 11.84 2,463 10.88

Intangible assets (Note 7) 21,037 96.77 8,048 35.54

Goodwill (Note 8) 17,165 78.96 10,070 44.47

Total Assets $164,317 755.86 $119,383 527.20

LIABILITIES

Current liabilities

Accounts payable and accrued liabilities

(Notes 4, 11, 14 and 17) $33,156 152.52 $27,403 121.01

Long-term debt (Note 10) 50,470 232.16 33,914 149.76

Income and other taxes payable 176 0.81 233 1.03

Deferred grant and government

assistance (Note 9c) 858 3.95 — —

Obligations under capital leases (Note 13) — — 1,643 7.26

$84,660 389,44 63,193 279.06

Accrued Liabilities relating to

operating leases (Note 14) 4,101 18,86 4,351 19.21

Deferred grant and government

assistance (Note 9(c)) — — 858 3.79

Future tax liabilities (Note 15) 3,429 15,77 2,509 11.08

92,190 424.07 70,911 34.08

Commitments and contingencies (Note 13)

SHAREHOLDERS’ EQUITY

Share capital (Note 12) 120,393 553.81 120,393 531.66

Accumulated 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 48,472 214.06

Total Liabilities and

Shareholders’ Equity $164,31 7 755.86 $119,383 527.20

See accompanying notes to the financial statements

FE Conversion Rate for Cdn $ to INR

as at end of year 46.00 44.16

Consolidated Statement of Operations and Deficit

Year ended Marc h 31,

2011 2011 2010 2010

CAD$’0 0 0 INR/Cr CAD$’0 0 0 INR/Cr

Revenues (Note 17) $308,192 1,379.40 $282,615 1,232.02

Direct expenses (Notes 9(a) and (b)) 214,143 958.45 208,598 909.35

Gross profit 94,049 420.94 74,017 322.67

Selling, general and administrative

expenses (Notes 9(a) and (b)) 56,344 252.18 52,851 230.40

Earnings before depreciation and

amortization, restructuring charges,

interest, financing expenses

and income taxes 37,705 168.76 21,166 92.27

Depreciation and amortization

(Notes 5 and 7) 11,344 50.77 9,974 43.48

Restructuring charges (Note 14) 1,170 5.24 3,828 16.69

Interest and financing expenses (Note 10) 2,516 11.26 2,629 11.46

Income (loss) before income taxes 22,675 101.49 4,735 20.64

Provision for income taxes

Current (228) (1.02) 1,093 4.76

Future (1,449) (6.49) 179 0.78

(1,677) (7.51) 1,272 5.55

Net income (loss) for the year 24,352 108.99 3,463 15.10

Deficit, 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 to

the consolidated financial statements

FE Conversion Rate for Cdn $ to INR 44.76 43.59

Deepak J. Patel

Place: Toronto Chief Executive Officer

Deepak J. Patel

Place: Toronto Chief Executive Officer

Consolidated Statement of Comprehensive income (Loss)


2011 2011 2010 2010


Net income (loss) for the year 24,352 1 08.99 $3,463 15.10

Unrecognized gain (loss) on foreign

contracts and options (750) (3.49) 18,774 82.91

Change in foreign currency translation

on 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)

C M Y K


Consolidated Statement of Changes in Shareholders’ Equity (Deficiency)

CAD Table A ccumulated Tot al

Other Shareholders’s

(thousands of dollars, e x cept Common Share R edeemable Preference R edeemable Preference Comprehensive Equity

number 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) $3,805

Issued during the year — — — — 30,000,000 30,000 — — $30,000

Unrecognized gain on foreign currency

forward contracts and options — — — — — — $18,774 $18,774


on self-sustaining foreign operations — — — — — — ($7,570) — ($7,570)

Net loss for the year — — — — — — — $3,463 $3,463

Balance, March 31, 2010 27,945,822 $70,071 20,321,721 $20,322 30,000,000 30,000 ($3,087) ($68,834) $48,472

Issued during the year — — — — — — — — —


forward contracts and options — — — — — — ($750) — ($750)


on self-sustaining foreign operations — — — — — — $53 — $53

Net income for the year — — — — — — — $24,352 $24,352

Balance, March 31, 2011 27,945,822 $70,071 20,321,721 $20,322 30,000,000 30,000 ($3,784) ($44,482) $72,127

Audited Consolidated St atements of Changes in Shareholders ’ Deficiency

INR Table A ccumulated Tot al

Other Shareholders’s

(INR/Cr , ex cept f or number Common Share R edeemable Preference R edeemable Preference Comprehensive Equity

of 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) 17.50

Issued during the year — — — — 30,000,000 139.70 — — 138.00


forward contracts and options — — — — — — 86.36 86.36


on self-sustaining foreign operations — — — — — — (34.82) — (34.82)

Net loss for the year — — — — — — — 15.10 15.10

B 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 4

Issued during the year — — — — — — — — 0.00


forward contracts and options — — — — — — (3.45) — (3.45)


on self-sustaining foreign operations — — — — — — 0.24) — 0.24

Net income for the year — — — — — — — 108.99 108.99

Exchange Fluctuation on Translation 0.00 0.00 0.00 121.30 3.86

B 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)

C M Y K


Consolidated Statement of Cash Flo ws


2011 2011 2010 2010


OPERATING ACTIVITIES

Net income (loss) for the year $24,352 112.02 $3,463 15.29

Adjustments to reconcile net income (loss) to cash provided by operating activities (Note 16) 9,942 45.73 10,620 46.90

Net change in non-cash working capital balances related to operations (Note 16) (22,191) (102.08) 162 0.72

Cash flow provided b y operating activities 12,103 55.67 1 4,245 62.91

INVESTING ACTIVITIES

Purchase of property, plant and equipment (6,216) (28.59) (5,012) (22.13)

Purchase of intangibles (2,162) (9.95) 0 0.00

Proceeds on disposal of property, plant and equipment 19 0.09 108 0.48

Deferred 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 1.13

Cash flows used in inv esting activities (29,223) (1 34.43) (1 5,193) (67.09)

FINANCING ACTIVITIES

Repayment 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 0.00

Receipt of long-term debt (Note 10) 62,002 285.21 8,909 39.34

Repayment of obligations under capital leases (1,643) (7.56) (4,342) (19.17)

Issuance of share capital (Note 12) 0 0.00 30,000 132.48

Cash flow provided b y (used in) financing 16,280 74.89 2,793 1 2.33

Eff 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 5.05

Cash beginning of year 4,230 19.46 3,087 13.63

Cash end of y ear $3,524 1 6.21 $4,230 1 8.68

FE Conversion Rate for Cdn $ to INR as at end of year 46.00 44.16

See accompanying notes to the consolidated financial statements.

(46)

C M Y K


and assumptions affect the reported amounts of assets and liabilities and disclosure of

contingent assets and liabilities at the date of the consolidated financial statements

and the reported amounts of revenues and expenses during the year. Actual results

could differ from those estimates.

Revenue Recognition

The Company derives revenues by providing BPO solutions and consulting

arrangements. Payment terms may vary by contract. The Company recognizes

revenues at the time services are performed and when the price is fixed or

determinable 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 charged

is based on a predetermined contractual rate as agreed in the underlying contract.

This contractual rate fluctuates based on the Company’s performance against certain

predetermined criteria related to quality and performance. Some clients are entitled

to service credits when the Company is not in compliance with certain obligations as

defined in the client contract. Such service credits are recorded as a reduction of

revenues 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 of

client-determined criteria specified in the client contract such as full-time equivalents,

units processed or completed contacts. The Company recognizes this performance-based revenue by measuring its actual results against the performance criteria

specified in the contracts.

Amounts collected from customers prior to the performance of services are recorded

as deferred revenue. These advances are amortized to revenues in accordance with

the Company’s policy on revenue recognition.

The Company classifies reimbursements received from customers for out-of-pocket expenditures as revenues. The Company incurs out-of-pocket expenditures

such as expenses related to travel, postage and telecommunications costs for

which customers have agreed to reimburse Minacs. The corresponding cost

associated with this revenue is recorded within direct expenses. Some customers

agree to reimburse the Company for initial training and recruiting costs over a

specified period of time. The revenue for these costs is recorded over the period

of time stipulated within the contract with a corresponding cost recorded within

direct expenses.

Property, Plant and Equipment

Property, plant and equipment are stated at cost less accumulated amortization.

Amortization is provided on a straight-line basis over the estimated useful lives of the

assets. Computer equipment is amortized over a four-year life. Communications

equipment is amortized over five to seven-year lives. Furniture and fixtures are

amortized over seven to ten-year lives. Leasehold improvements are amortized over

the term of the lease.

Leases

Leases are classified as either capital or operating leases. Leases that substantially

transfer all of the benefits and risks of ownership of property to the Company are

accounted for as capital leases. At the time a capital lease is entered into, an asset is

recorded together with its related long-term obligation to reflect the acquisition and

financing. Equipment recorded under capital leases is amortized on the same basis

as property, plant and equipment. Rental payments under operating leases are

expensed as incurred.

Business Combinations, Goodwill and Intangible Assets

The Company follows the guidance in the CICA Handbook Section 1581, Business

Combinations, which requires all business combinations to be accounted for using

the purchase method. In addition, any goodwill and intangible assets acquired in a

business 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 their

useful lives.

Goodwill represents the excess of the purchase price over the fair value of the

net identifiable assets acquired. Goodwill and indefinite life intangible assets are

tested for impairment annually or more frequently if events or changes in

circumstances indicate that those assets might be impaired. The impairment

test is carried out in two steps. In the first step, the identification of a potential

impairment is determined by comparing the fair value of the reporting unit to its

carrying 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 fair

value is allocated to all its assets and liabilities based on their fair values. The

amount 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 carrying

value. Any shortfall is charged to income.

Intangible assets with finite useful lives acquired through business combinations

are recorded at their fair value at the date of acquisition. An impairment loss on

an intangible asset with a finite useful life is recognized when its carrying value

exceeds the total undiscounted cash flows expected from its use and disposition.

NOTES T O CONSOLIDA TED FINANCIAL ST A TEMENTS

MARCH 31, 2011

1 NATURE OF BUSINESS

Aditya Birla Minacs Worldwide Inc. (the “Company” or “Minacs”) is incorporated

under the Ontario Business Corporations Act. The Company is wholly-owned by

AV Transworks Limited Canada, a wholly-owned subsidiary of Aditya Birla Minacs

Worldwide Limited, India, which in turn is a subsidiary of Aditya Birla Nuvo Limited.

The Company operates in one segment as a provider of business process

outsourcing (“BPO”) solutions. These incorporate contact centre solutions,

integrated marketing services and back office administration. Operating in multiple

languages, the Company serves customers throughout North America, Europe,

Latin America and the Pacific Rim from its operating locations in North America

and Europe.

2 SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

These consolidated financial statements have been prepared in accordance with

Canadian generally accepted accounting principles (“GAAP”) and include the accounts

of the Company and its subsidiaries. All significant inter-company balances and

transactions among these entities have been eliminated on consolidation.

Changes in Accounting Policies

Effective April 1, 2009, the Company adopted the following new Canadian Institute

of Chartered Accountants (“CICA”) accounting standards and Emerging Issues

Committee (“EIC”) abstract.

Section 3064, Goodwill and Intangible Assets, which replaced Section 3062, Goodwill

and Other Intangible Assets. The standard establishes guidelines for the recognition,

measurement, presentation and disclosure of goodwill and intangible assets

subsequent to initial recognition. As a result of the adoption of this standard, the

Company has reclassified computer software from property, plant and equipment to

intangible assets and has separately disclosed deferred development costs on the

consolidated balance sheet.

The following table summarizes the adjustment that was recorded in the consolidated

financial statements.

Increase (Decrease)

31-Mar-11 31-Mar-11 31-Mar-10 31-Mar-10


Property, plant and equipment (net) $0 0.00 (3,841) (16.96)

Deferred development costs $0 0.00 $0 0.00

Intangible assets $0 0.00 $3,841 16.96

Section 1000, Financial Statement Concepts. The objectives of this Section are to

reinforce a principle-based approach to the recognition of costs as assets and to

clarify the application of the concept of matching revenue and expenses in Section

1000. Collectively, this change brings the Canadian practice closer to International

Financial 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 criteria

of an asset. Adoption of this guidance had no impact on the Company’s consolidated

financial 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 the

counterparty should be taken into account in determining the fair value of financial

assets and financial liabilities including derivative instruments. Adoption of this

guidance had no impact on the Company’s consolidated financial statements.

The adoption of the above pronouncements had no impact on opening deficit.

Future Accounting Changes

In 2006, the CICA announced that accounting standards in Canada will converge

with IFRS. The Company will have the option of reporting under IFRS beginning

January 1, 2011, with comparative data for the prior year. IFRS uses a conceptual

framework similar to Canadian GAAP, but there could be significant differences on

recognition, measurement and disclosures that will need to be addressed.

In September 2009, the CICA approved the final accounting standards for private

enterprises in Canada. The new standards (GAAP for private enterprises) are available

for early adoption. Under the new standards, private enterprises will have a choice

of reporting in accordance with Canadian GAAP by adopting either the same set of

accounting standards as publicly accountable enterprises (i.e., IFRS) or the new GAAP

for private enterprises. The existing accounting standards in the CICA Handbook will

be available until 2011, at which time they will be withdrawn. As such, enterprises

will be able to adopt GAAP for private enterprises in 2009, 2010 or 2011. The Company

is considering the impact of these new standards and assessing whether it will adopt

IFRS or GAAP for private enterprises.

Use of Estimates

The preparation of these consolidated financial statements in conformity with Canadian

GAAP requires management to make estimates and assumptions. These estimates

(47)

C M Y K


The amount of loss is determined by deducting its fair value based on undiscounted

cash flows expected from its use and disposition from its carrying value. The

Company reviews definite life intangible assets for impairment whenever events

or changes in circumstances indicate that the carrying value may not be

recoverable. Amortization of intangible assets, other than computer software, is

provided on a straight-line basis over ten years. Computer software is amortized

over four to five-year lives.

Asset Impairment

The Company follows the guidance in CICA Handbook Section 3063, Impairment

of Long-Lived Assets , and CICA Handbook Section 3855, Financial Instruments -Recognition and Measurement . The Company evaluates the carrying value of

long-lived assets for potential impairment annually or more frequently if events

or circumstances warrant a review. The carrying value of such assets is considered

impaired when the anticipated net recoverable amount of the asset is less than

its carrying value or when the change in value is other than temporary. In that

event, the carrying value of the asset is adjusted to fair value and an impairment

loss is charged to income. The Company reviews long-lived assets for impairment

whenever events or changes in circumstances indicate that the carrying value

may not be recoverable.

Income Taxes

The Company follows the liability method of accounting for income taxes. Under this

method, future tax assets and liabilities are determined based on differences between

the financial reporting and tax bases of assets and liabilities, and are measured using

substantively enacted tax rates and laws that are expected to be in effect when the

differences are expected to reverse. Valuation allowances are established when

necessary to reduce future tax assets to the estimated amount that is more likely

than not to be realized.

Government Assistance

Government assistance towards current expenses is included in the determination

of income for the year as a reduction of the expenses to which it relates. The Company

has made a number of estimates and assumptions in determining the amount eligible

for government assistance. It is possible that the allowed amount of assistance could

be materially different from the recorded amount upon assessment by the respective

government agency.

Equity and Comprehensive Income

Comprehensive income is the change in equity from transactions and other events

from non-owner sources. Other comprehensive income refers to items recognized

in comprehensive income that are excluded from net income calculated in accordance

with Canadian GAAP.

Financial Instruments

All financial instruments, including derivatives, are measured on the consolidated

balance sheet at fair value except for loans and receivables, held-to-maturity

investments and other financial liabilities, which are measured at amortized

cost. Subsequent measurement and changes in fair value will depend on their

initial classification, as follows: held-for-trading financial assets are measured

at fair value and changes in fair value are recognized in net income; available-for-sale financial instruments are measured at fair value with changes in fair

value recorded in other comprehensive income until the investment is

derecognized or impaired, at which time the amounts would be recorded in net

income. The Company’s financial assets and liabilities are generally classified

and measured as follows:

Asset/Liability Category Measurement

Cash Held-for-trading Fair value

Receivables Loans and receivables Amortized cost

Payables and accrued liabilities Other financial liabilities Amortized cost

Long-term debt Other financial liabilities Amortized cost

Obligations under capital leases Other financial liabilities Amortized cost

Deferred grant and Other financial liabilities Amortized cost

government assistance

The Company had no financial instruments classified as available-for-sale during the

year ended March 31, 2010.

Financing costs and credit facility arrangement fees associated with the issuance of

long-term debt are netted against the carrying value of the related debt and are

amortized using the effective interest rate method to interest expense over the period

to maturity of the related debt.

Hedges

The Company applies hedge accounting to forward rate contracts, options and cross-currency swap agreements. These contracts have been designated as cash flow

hedges, 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 Translation

Foreign operations are considered to be self-sustaining and are translated into

Canadian dollars using the current rate method. Assets and liabilities are translated

using the exchange rate in effect at the consolidated Balance Sheet date and

revenues and expenses are translated 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 these subsidiaries are recorded in accumulated other

comprehensive income.

Research and Development

Research costs are expensed as incurred. Development costs that meet specific

criteria related to technical, market and financial feasibility are capitalized and amortized

over the useful life of the technology when put into use.

3 ACQUISITION

a. 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) including

acquisition costs of $39,000 (INR 0.17 Cr). The purchase has been accounted

for under the purchase method and, accordingly, the results of operations

are included in the consolidated financial statements from the date of

acquisition. The consideration and allocation of the purchase price are

as follows:

Compass BPO Limited (Compass) CAD$ INR/Cr

Net working capital $903 0.00

Property, plant and equipment 476 0.00

Customer relationships (Note 7) 4,138 0.02

Goodwill (Note 8) 3,718 0.02

Future income tax liability (1,382) (0.01)

7,853 0.04

The 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 agency

located in Minnesota, for cash consideration of $20,026,000 (INR 88.43 Cr).

In December 2010, a final settlement review resulted in the consideration

being reduced by $137,000 (INR 0.60 Cr) to $19,889,000 (INR 87.83 Cr). The

purchase has been accounted for under the purchase method and, accordingly,

the results of operations are included in the consolidated financial statements

from the date of acquisition. The consideration and allocation of the purchase

price are as follows:

Bureau of Collection Recovery, LLC (BCR) CAD$ INR/Cr

Net working capital $3,025 0.01

Property, plant and equipment 244 0.00

Customer relationships (Note 7) 8,135 0.04

Licenses 1,085 0.00

Non-compete agreement 79 0.00

Goodwill (Note 8) 7,321 0.03

19,889 0.09

The 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 RECEIVABLES

Other receivables are comprised of:

31-Mar-11 31-Mar-11 31-Mar-10 31-Mar-10


Tax credits recoverable and

other assets (Note 9(a)) $18,778 86.38 $10,818 47.77

Other receivable (Note 9(b)) 440 2.02 1,332 5.88

Derivative asset (Notes 11 and 17) 9,338 42.95 7,474 33.01

B alance, end of y ear $28,556 132.58 $19,624 86.66

(48)

C M Y K


5 PROPERTY, PLANT AND EQUIPMENT

Included in these figures are assets under capital leases as follows:

A ccumulated A ccumulated A ccumulated A ccumulated

CostDepreciation CostDepreciation CostDepreciation CostDepreciation

31-Mar-1 1 31-Mar-1 1 31-Mar-1 0 31-Mar-1 0

CAD$’0 0 0 CAD$’0 0 0 INR/Cr INR/Cr CAD$’0 0 0 CAD$’0 0 0 INR/Cr INR/Cr

Computer

equipment $30,479 ($26,025) 140.20 (119.72) 28,339 (23,762) 125.15 (104.93)

Communications

equipment 14,499 ($12,815) 66.70 (58.95) 14,218 (12,103) 62.79 (53.45)

Furniture and

fixtures 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)

Leasehold

improvements 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: accumulated

depreciation ($62,728) (288.55) (56,064) (247.58)

20,094 92.43 24,424 107.86

Included in these figures are assets under capital leases as follows

31-Mar-11 31-Mar-11 31-Mar-10 31-Mar-10


Cost 0 0.00 15,193 67.09

Less: accumulated depreciation 0 0.00 (9,915) (43.78)

Net book value 0 0.00 5,278 23.31

The assets under capital leases are held as collateral for the capital lease

obligations. For the year ended March 31, 2011, included within amortization

expense is $745,000 (INR 3.43 Cr) (2010: $1,732,000) (INR 7.65) relating to assets

under capital leases.

6 DEFERRED DEVELOPMENT COSTS

Deferred development costs are comprised of:

31-Mar-11 31-Mar-11 31-Mar-10 31-Mar-10


Balance, beginning of year $2,463 11.33 546 2.41

Additions 2,699 12.42 2,693 11.89

Capitalized 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 10.88

7 INT ANGIBLE A SSE TS

Intangible 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/Cr

31-Mar-11 31-Mar-11 31-Mar-10 31-Mar-10

Accumu- Accumu- Accumu- Accumu-lated lated lated lated

Cost Amorti- Cost Amorti- Cost Depre- Cost Depre-zation zation zation ciation ciation

Computer

software 40,142 (32,312) 184.65 (148.64) 34,119 (30,278) 150.67 (133.71)

Customer

relationships

(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 currency

translation

adjustment (30) 22 (0.14) 0.10 0.10 (158) 121 (0.70) 0.53

55,265 (34,228) 254.22 (1 59.39) 59.39) 38,911 (30,863) 171.83 (136.29)

Less :

accumulated

depreciation (34,228) (157.45) (30,863) (136.29)

21,037 96.77 96.77 8,048 35.54

Included 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 0


Cost 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 0.95

The intangible assets under capital leases are held as collateral for the capital lease

obligations. For the year ended March 31, 2011, included within amortization expense

is $Nil (2010: $165,000) (INR 0.76) relating to intangible assets under capital leases.

8 GOODWILL

Goodwill consists of:

31-Mar-11 31-Mar-11 31-Mar-10 31-Mar-10


Balance, beginning of year 10,070 46.32 6,818 30.11

Acquisition of Compass (Note 3) 7,321 33.68 3,718 16.42

Foreign currency translation adjustment (226) (1.04) (466) (2.06)

B alance, end of y ear 17,1 65 79.93 10,070 44.47

9 DEFERRED GRANT AND GOVERNMENT A SSISTANCE

(a) In fiscal 2009, the Company became eligible to receive funding from the Ontario

Apprenticeship Program. For the year ended March 31, 2011, the Company

recorded $24,441,000(INR 112.43 Cr) (2010: $10,775,000) (INR 47.58 Cr) as a

reduction of direct expenses and selling, general and administrative expenses

for 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. if

certain 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 in

other 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 direct

expenses and selling, general and administrative expenses for this grant.

(c) In fiscal 2008, Minacs finalized an agreement with the Province of New

Brunswick to receive a forgivable loan in the amount of $2,260,000 (INR 10.40

Cr). The loan provides for forgiveness subject to terms being met in respect of

employment to be created at a contact centre in that province. To date, Minacs

has received $900,000 (INR 4.14 Cr); no amounts were received in fiscal 2010

or 2011. As at March 31, 2011, the Company has recorded $858,000 (INR 3.95

Cr) (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 amount

remaining as deferred grant and government assistance will need to be repaid.

10 LONG-TERM DEBT

31-Mar-11 31-Mar-11 31-Mar-10 31-Mar-10


Senior revolving facility from

Bank of America 25,813 118.74 33,914 149.76

Loan from Bank of America 19,392 89.20 0 0.00

Loan from AV Transworks Limited

Canada (Note 11) 5,265 24.22 0 0.00

50,470 232.16 33,914 149.76

Less: current portion (50,470) (235.02) (33,914) (149.76)

0 0 0 0

Senior Revolving Facility – Bank of America

This facility bears interest at 0.9% m argin over bank prime, banker’s acceptance or

LIBOR rates. The total commitment available under the senior revolving facility is

$40,000,000 (INR 184 Cr), subject to certain borrowing base calculations and certain

other restrictive covenants. The facility is a 365-day facility and, as collateral, the

Company has given a first charge on accounts receivable. In addition, this facility is

guaranteed by Aditya Birla Nuvo Limited. As at March 31, 2011, the Company is in

compliance with applicable bank covenants.

Loan from Bank of America

This loan bears interest at 1.50% margin over US LIBOR rates and matures on June

1, 2011. This loan is unsecured and is guaranteed by Aditya Birla Nuvo Limited. As at

March 31, 2011, the Company is in compliance with debt covenants.

(49)

C M Y K


Loan from AV Transworks Limited Canada

This loan is unsecured, bears interest at 6.05% and is payable on demand.

Interest Rate

The 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 2010


Interest expense on loans from

Parent Company (Note 11) $765 3.42 $157 0.68

Interest expense on long-term debt 884 3.96 1,311 5.72

Interest expense on obligations

under capital leases 38 0.17 313 1.36

Other interest expense (income) 2 0.01 19.00 0.08

Net interest expense 1,689 7.56 1,800 7.85

Amortization of deferred

financing expenses 0 0.00 83 0.36

Bank charges 208 0.93 675 2.94

Foreign exchange loss 619 2.77 71 0.31

Total interest and financing expenses $2,516 11.26 $2,629 11.46

11 RELATED PARTY TRANSACTIONS

Transactions with the Aditya Birla Nuvo Limited group of companies are as follows:

31-Mar-11 31-Mar-11 31-Mar-10 31-Mar-10


Interest charged on long term debt $765 3.42 $157 0.68

Reimbursable expenses in statement

of operations and deficit $5,426 24.29 $6,934 30.23

Capitalised in the consolidated

Balance Sheet under deferred

development costs and intangi bles $2,138 9.57 — —

Short-term debt (Note 10) $5,265 23.56 — —

Net amount due to related parties

in respect of accrued interest and

reimbursable e xpenses $655 3. 05 $1,067 4.71

These transactions are measured at the exchange amounts of consideration established

and agreed to by the related parties.

In fiscal 2010, the Company entered into a forward contract agreement with AV

Transworks 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 forward

contract 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 CAPITAL

The Company is authorized to issue an unlimited number of common shares and an

unlimited number of preferred shares issuable in series.

2011 2010


Number Number

of Shares Amount Amount of Shares Amount Amount

Common Shares 27,945,822 70,071 322.33 27,945,822 70,071 309.43

Redeemable Series

A Preference Shares 20,321,721 20,322 93.48 20,321,721 20,322 89.74

Redeemable Series B

Preference Shares 30,000,000 30,000 138.00 30,000,000 30,000 132.48

120,393 560.61 120,393 531 .66

The 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 AV

Transworks Limited Canada as subscription for Redeemable Series B Preference Shares

that were issued during 2010.

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 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% for

Series B on the outstanding preference shares. The payment of dividends is at the

discretion 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 CONTINGENCIES

Commitments

The Company has operating leases for its premises, furniture and fixtures and certain

computer and communications equipment, as well as minimum purchase

commitments for telephone services. The minimum annual payments for the next

five years and thereafter are as follows:

CAD$’000 INR/Cr

2012 $9,240 42.50

2013 8,076 37.15

2014 8,028 36.93

2015 5,073 23.34

2016 4,345 19.99

Thereafter 5,049 23.23

Tot al commitments $39,811 1 85.39

Contingent Liabilities

On May 17, 2006, the former major shareholder and founder of the Company, Elaine

Minacs, died. The major shareholder of the Company then became the Estate of

Elaine Minacs (the “Estate”) together with certain entities controlled by it (the “EM

Shareholders”) until August 18, 2006, when AV Transworks Limited Canada acquired

the 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 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 direction of Elaine Minacs. Also, during 2005, the beneficiary of the term life insurance

policy was changed to family members related to Elaine Minacs at the direction of Elaine

Minacs. 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 breach

of Elaine Minacs’ employment agreement. Proceeds of $350,000 (INR 1.61 Cr) were

paid 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 August

2007 for the proceeds of the life insurance policies and damages of $500,000 (INR 2.3

Cr). 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 the

Company was in breach of contract related to an employment agreement. Management

has not accrued a contingent liability for the claims made by the Estate because they

believe that the claims have no merit and the outcome of the proceeding is not

determinable.

During the ordinary course of business activities, in addition to the above, the Company

may 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 not

have a material adverse effect on the consolidated financial position of the Company.

Guarantees

At March 31, 2011, the Company had $425,000 (INR 1.96 Cr) (2010: $75,000) (INR

0.33 Cr) of outstanding letters of credit to secure customer performance guarantees.

14 R ESTRUCTURING AND OTHER CHARGES

In fiscal 2011, the Company terminated a number of employees and performed some

due 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 restructuring

and other charges.

In fiscal 2010, the Company approved a plan to close its Port Hawkesbury site and restart

the operations at the Chatham site. The costs recorded in restructuring relating to lease

exit 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 balance

of the remaining lease periods and the credits against lease exit liabilities are given

below:

2011 2011 2010 2010


Lease exit costs 0 0.00 2,239 9.76

Other lease exit credits 0 0.00 ( 687) (2.99)

Write down of property, plant and equipment 0 0.00 933 4.07

Severance and other items 1,170 5.24 1,343 5.85

Restructuring and other charges 1,170 5.24 3,828 16.69

(50)

C M Y K


A reconciliation of beginning and ending accounts payable and accrued liabilities with

respect 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 1

Incur red P aid Incur red P aid

CAD$’0 0 0 CAD$’0 0 0 CAD$’0 0 0 CAD$’0 0 0 INR/Cr INR/Cr INR/Cr INR/Cr

Lease exit costs $3,235 — (1,158) $2,077 14.29 — (5.18) 9.67

Severance 56 1,170 (1,180) 46 0.25 5.24 (5.28) 0.21

Accounts payable

and accrued liabilities

relating to restructuring

and other $3,291 $1,170 (2,338) $2,123 14.53 5.24 (10.46) 9.89

Long-term accrued liabilities relating to operating leases relate to tenant inducements

and free-rent liabilities.

15 INCOME TAX

The reconciliation of income tax at the statutory income tax rate to the effective

income tax recorded in the consolidated statement of operations is as follows

(thousands of dollars)

31-Mar-11 31-Mar-10

Income before income taxes 22,675 4,735

Statutory income tax at 29.9% [2010 – 32.4%] 6,780 6,780 1,533

Utilization of losses not benefited previously (6,551) (3,769)

Decrease in valuation allowance resulting

from unrealized gains in accumulated other

comprehensive loss (2,614) (2,614) —

US state tax expense (recovery) 386 386 (331)

Income tax rate changes — 3,315

Increase in tax reserves 143 143 270

Other 179 179 254

Income tax provision (recovery) (1,677) (1,677) 1,272

Future tax assets consist of the following temporary differences:

2011 2011 2010 2010


Operating losses carried forward 15,706 72.25 19,608 86.59

Accounts payable and accrued liabilities 1,625 7.48 2,269 10.02

Property, plant and equipment 0 0.00 77 0.34

Deferred grant and government assistance 217 1.00 218 0.96

Other 87 0.40 382 1.69

17,635 81.12 22,554 99.60

Valuation allowance (17,034) (78.36) (21,880) (96.62)

Less: current portion (601) (2.76) (273) (1.21)

0 0.00 401 1.77

Future tax liabilities consist of the following temporary differences:

2011 2011 2010 2010


Property, plant and equipment $2,190 10.07 $304 1.34

Other receivables 0 0.00 823 3.63

Intangible assets 1,239 5.70 1382 6.10

$3,429 15.97 $2,509 11.08

Expiry 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/Cr

2026 $9,156 42.12

2027 14,188 65.26

2028 19,289 88.73

2029 19,445 89.45

$62,078 289.07

1 6 SUPPLEMENTAL CASH FLO W INFORMATION

Adjustments to reconcile net income (loss) to cash flows provided by operating activities

include:

Year ended March 31, Year ended March 31,

2011 2011 2010 2010


Depreciation and amortization 9,623 44.27 9,953 43.95

Write-down of property,

plant and equipment 33 0.15 933 4.12

Restructuring recovery 0 0.00 (687) (3.03)

Future income taxes (1,449) (6.67) 179 0.79

Amortization of deferred grant and

government assistance 0 0.00 125 0.55

Amortization of intangible assets 1,721 7.92 105 0.46

Loss on sale of property,

plant and equipment 14 0.06 12 0.05

Total adjustments to reconcile

net income (loss) to cash provided

by operating activities 9,942 46.30 10,620 46.90

The net change in non-cash working capital balances related to operations include:

Year ended March 31, Year ended March 31,

2011 2011 2010 2010


Accounts receivable and

unbilled revenues (27,390) (125.99) (399) (1.76)

Prepaid expenses 765 3.52 124 0.55

Income taxes recoverable

(payable) (26) (0.12) 570 2.52


accrued liabilities 4,460 20.52 (133) (0.59)

Total net change in non-cash working

capital balances related to operations (22,1 91) (1 03.34) 162 0.72

Cash interest and income taxes paid are as follows:

Year ended March 31 Year ended March 31

2011 2011 2010 2010


Interest 2,505 11.52 $3,009 13.29

Income taxes (161) (0.74) $549 2.42

17 FINANCIAL INS TRUMENTS AND RISK MANAGEMENT

Fair Value of Financial Instruments

The fair value of financial instruments, which include cash, accounts receivable and

unbilled revenue, other receivables, income taxes recoverable, accounts payable and

accrued liabilities, long-term debt, income and other taxes payable, and obligations

under capital leases, 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

receivables, accrued liabilities relating to operating leases and deferred grant and

government assistance, and due to their nature are measured at amortized cost,

which approximates their fair value.

Risk Management

The 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 of

financial markets and seeks to minimize potential adverse effects on the Company’s

financial performance. The Company does not purchase any derivative financial

instruments for speculative purposes.

Risk management is the responsibility of the corporate finance function. Material

risks are monitored and are regularly discussed with the Audit Committee of the

Board of Directors.

Foreign Currency Risk

The Company has significant operations in Canada and the United States. The

Company’s activities result in exposure to fluctuations in foreign currency exchange

rates due to sale and purchase transactions in a foreign currency. Increases or

decreases in these rates could impact the Company’s net income.

(51)

C M Y K


As at March 31, 2011, the Company purchased financial instruments to hedge its foreign

currency exposure as follows:

INR/Cr

(Dollars in thousands) 31-Mar-1 1 31-Mar-1 1

Notional Amount Av erage F air Mark et F air Mark et

in USD R ate to CAD Term Value Gain Value Gain

Financial Instr ument

USD forward foreign April 2011 –

exchange rate contracts 72,500 1.1065 March 2013 $9,338 CAD 42.95

Included 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 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 0.84 Cr). At March 31, 2011, all contracts

were designated as hedges for accounting purposes .

During the year ended March 31, 2011, a substantial portion of the Company’s income

was earned outside of Canada in currencies other than the Canadian dollar. Increases

in the value of the Canadian dollar can reduce net income and declines can result in

increased net income. Based on the income, a +/- 1% change in the United States

dollar would, everything else being equal, have had the following effect on the

Company’s reported net income for the year ended March 31, 2011:

Average Increase / Increase /

Exchange Decrease Decrease

rate of 1% of 1%

CAD INR/Cr

United States dollar 1.10562 $665,000 2.98

The 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 2010

Accounts receivable 51% 43%

Accounts payable 48% 57%

Accrued liabilities 76% 86%

During the years ended March 31, 2011 and 2010, the following percentage of

revenues and expenses were earned or incurred in US dollars:

March 31, March 31,

2011 2010

Revenues 64% 58%

Expenses 46% 36%

Interest Rate Risk

The objective of the Company’s interest rate management activities is to minimize

the volatility of the Company’s income. The Company’s interest rate risk primarily

arises from its floating rate debt.

At March 31, 2011, the total long-term debt outstanding was $50,470,000 (INR

232.16 Cr), which is subject to movements in floating interest rates. A +/-1% change

in interest rates would, everything else being equal, have an effect on the Company’s

net 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 as

credit exposure to clients, including outstanding accounts receivable. The maximum

exposure 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 financial

assets. The Company assesses the credit quality of the counterparties, taking into

account their financial position, past experience and other factors.

The Company derived 33% or $101,500,000 (INR 466.90 Cr) of its revenues from

multiple contracts with two groups of clients in the automotive and technology sectors

for 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 are

outstanding and related allowance for doubtful accounts:

31-Mar-1 1 31-Mar-1 1

CAD$’0 0 0 INR/Cr

Current 31,228 143.65

31-60 days 26,369 121.30

61-90 days 10,373 4 7.72

Over 90 days 762 3 .51

Less: allowance for doubtful accounts (290) (1.33)

Tot al accounts receiv able and unbilled re v enues, net 68,442 318.71

Included 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 allowance

account and the amount of the loss is recognized in the consolidated statement of

operations and deficit within operating expenses. When a receivable balance is

considered uncollectible, it is written off against the allowance for accounts receivable.

Subsequent recoveries of amounts previously written off are credited against operating

expenses in the consolidated statement of operations and deficit.

31-Mar-11 31-Mar-11

CAD$’000 INR/Cr

Allowance for doubtful accounts – March 31, 2010 (72) (0.33)

Provisions (220) (1.01)

Write-offs 0 —

Foreign currency translation adjustment 2 0.01

Allo w ance for doubtful accounts – Marc h 31, 2011 (290) (1 .35)

Liquidity Risk

Liquidity risk arises through the excess of financial obligations over available financial

assets due at any point in time. The Company’s objective in managing liquidity risk is

to maintain sufficient readily available reserves in order to meet its liquidity

requirements at any point in time. The Company achieves this by maintaining sufficient

cash and through the availability of funding from committed credit facilities. As at

March 31, 2011, the Company was holding cash of $3,524,000 (INR 16.21 Cr).

18 MANAGEMENT OF CAPITAL

The 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 objective

when managing capital is to ensure that it can provide services to its customers and

returns 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 cash

flow together with cash on its Balance Sheet is greater than interest expense and

current principal debt repayments required to be paid.

19 EMPLOYEE BENEFIT PLANS

The Company has defined contribution pension plans. The Company’s expenditures

with respect to these plans were $750,000 (INR 3.45 Cr) during the year ended

March 31, 2011 (2010: $673,000) (INR 2.97 Cr).

20 COMPARATIVE FIGURES

Certain of the comparative figures have been reclassified to conform to the current

year’s presentation.

(52)

C M Y K

ADITYA BIRLA MINACS WORLDWIDE CANADA INC.

Unaudited B alance Sheet

31st Marc h, 2011 31st Marc h, 2010

CAD $’00 0 INR/Cr CAD $’00 0 INR/Cr

SOURCES OF FUNDS

I Shareholders’ Equity

Share Capital

Common Shares

Shares issued 39,755 182.87 39,755 175.56

Redeemable Commulative

Preference Shares 80,638 370.93 80,638 356.10

Sub - Total 120,393 553.81 120,393 531.65

Other Comprehensive Income 4,747 21.83 5,497 24.27

Retained earnings (52,546) (230.66) (76,991) (340.07)

Exchange fluctuation on Translation — (11.05) — 0.08

72,594 333.94 48,899 215.94

II Loan Funds

Secured Loans

Borrowings from Banks 31,078 142.96 33,914 149.76

Obligations under capital — — 1,317 5.82

31,078 142.96 35,231 155.58

Total 103,672 476.89 84,130 371.52

APPLICATION OF FUNDS

I Fixed Assets

Property, plant and

equipment net 18,515 85.17 22,282 98.40

Deferred Development cost 1,523 7.01 954 4.21

Investment in subsidiary

companies 41,522 191.00 41,522 183.36

Goodwill 4,422 20.34 4,422 19.53

65,982 303.52 69,180 305.50

II Current Assets

Cash and cash equivalents (223) (1.02) 1,981 8.75

Accounts receivable 65,389 300.79 48,512 214.23

Prepared expenses 1,067 4.91 1,639 7.24

Future income taxes 13 0.06 13 0.06

Other assets — — — —

66,245 304.73 52,144 230.27

Less Liabilities

Accounts payable

and accrued liabilities 20,360 93.66 21,494 94.92

Income and other

taxes payable 116 0.53 97 0.43

Due to related parties 7,222 33.22 14,745 65.11

Deferred Grant 858 3.95 858 3.79

Future income taxes — — — —

28,556 131.36 37.194 164.25

Total 103,672 476.89 84,130 371.52

Commitments and contingencies (Notes 12 and 14)

Notes

FE Conversion Rate for CAD $ to INR

as at end of year 46.00 44.16

Place: Toronto


Unaudited Profit & L oss Account f or the y ear ended

31st March, 2011

12 Months Ended 12 Months Ended


CAD $’000 INR/Cr CAD $’000 INR/Cr

Revenues 158,747 710.52 158,506 690.98

Direct expenses 102,785 460.04 116,453 507.66

Gross profit 55,962 250.47 42,053 183.32

Management fee charged 9,636 43.13 10,449 45.55

Selling, general and administrative

expenses 35,365 158.29 38,536 167.99

Earnings before interest expense,

income taxes, depreciation and

amortization and restructuring

and other charges 30,233 135.32 13,966 60.88

Restructuring and other charges 424 1.90 3,558 15.51

Earnings before interest expense,

income taxes, depreciation

and amortization 29,810 133.42 10,407 45.37

Depreciation and amortization 6,945 31.08 7,549 32.91

Interest and financing expenses 1,034 4.63 1,534 6.69

Income (Loss) before income taxes 21,830 97.71 1,325 5.77

Provision for (recovery of) income taxes

Current — — — —

Future (2,615) (11.70) — —

(2,615) (11.70) — —

Net income (loss) for the period 24,445 109.41 1,325 5.77

Deficit, 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 $ to

INR for the financial year 44.76 43.59

Place: Toronto


(53)

C M Y K


as cash flow hedges. These derivatives 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.

Effective April 1, 2008, the Company also adopted the CICA accounting

standards Section 3862 “Financial Instruments – Disclosure”, Section 3863

“Financial Instruments – Presentation”, Section 1400 “General Standards of

Financial Statement Presentation” and Section 1535 “Capital Disclosures”.

Use of Estimates

The preparation of these financial statements in conformity with Canadian generally

accepted accounting principles requires management to make estimates and

assumptions. These estimates and assumptions affect the reported amounts of assets

and liabilities and disclosure of contingent assets and liabilities at the date of the

financial statements and the reported amounts of revenues and expenses during the

year. Actual results could differ from those estimates.

Revenue Recognition

The Company derives revenues by providing BPO solutions and consulting

arrangements. Payment terms may vary by contract. The Company recognizes

revenues at the time services are performed and when the price is fixed or

determinable and collection is reasonably assured.


rendered as defined in the client contract. The rate per billable hour or minute charged

is based on a predetermined contractual rate as agreed in the underlying contract.

This contractual rate fluctuates based on the Company’s performance against certain

predetermined criteria related to quality and performance. Some clients are entitled

to service credits when the Company is not in compliance with certain obligations as

defined in the client contract. Such service credits are recorded as a reduction of

revenues 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 of

client-determined criteria specified in the client contract such as full time equivalents,

units processed or completed contacts. The Company recognizes this performance-based revenue by measuring its actual results against the performance criteria


Amounts collected from customers prior to the performance of services are recorded

as deferred revenue. These advances are amortized to revenues in accordance with

the Company’s policy on revenue recognition.

The Company classifies reimbursements received from customers for out-of-pocket

expenditures as revenues. The Company incurs out-of-pocket expenditures such as

expenses related to travel, postage and telecommunications costs for which

customers have agreed to reimburse Minacs. The corresponding cost associated

with this revenue is recorded within direct expenses. Some customers agree to

reimburse the Company for initial training and recruiting costs over a specified period

of time. The revenue for these costs is recorded over the period of time stipulated

within the contract with a corresponding cost recorded within direct expenses.


Property, plant and equipment are stated at cost less accumulated depreciation.

Depreciation is provided from the first day of the month following the date the assets

are placed into service, on a straight-line basis. Computer software is depreciated

over 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. Furniture

and fixtures are depreciated over seven to ten-year lives. Leasehold improvements

are depreciated over the term of the lease.

Leases

Leases are classified as either capital or operating leases. Leases that substantially

transfer all of the benefits and risks of ownership of property to the Company are

accounted for as capital leases. At the time a capital lease is entered into, an asset is

recorded together with its related long-term obligation to reflect the acquisition and

financing. Equipment recorded under capital leases is amortized on the same basis

as property, plant and equipment. Rental payments under operating leases are

expensed as incurred.

Goodwill


Such evaluation determines any impairment in value, taking into account the ability

to recover the carrying amount of goodwill from discounted cash flows. The Company

also considers projected future operating results, trends, and other circumstances in

making such evaluations.

In addition to the annual impairment test, the Company will perform an impairment

test if an event occurs or circumstances change that would more likely than not

reduce the fair value of the reporting unit below its carrying amount.

Intangible Assets

The 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 11

1 NATURE OF BUSINESS

Aditya Birla Minacs Worldwide Inc. (the “Company” or “Minacs”) is incorporated

under the Ontario Business Corporations Act. The Company changed its name from

Minacs Worldwide Inc. to Aditya Birla Minacs Worldwide Inc., effective November

5, 2008. The Company operates in one segment as a provider of business process

outsourcing (“BPO”) solutions. These incorporate contact centre solutions, integrated

marketing services and back office administration. Operating in multiple languages,

the Company serves customers throughout North America, Europe, Latin America

and the Pacific Rim from its operating locations in North America and Europe.

2 SIGNIFICANT ACCOUNTING POLICIES


These financial statements have been prepared in accordance with Canadian generally

accepted accounting principles (“GAAP”) except that they have been prepared on a

standalone basis and do not include the accounts of its subsidiaries.

Changes in accounting policies

Effective April 1, 2008, the Company adopted the new recommendations of The

Canadian Institute of Chartered Accountants (“CICA”) Handbook Section 3251: Equity;

Section 1530: Comprehensive Income; Section 3855: Financial Instruments -Recognition and Measurement; and Section 3865: Hedges, retroactively, without

restatement. These new Handbook Sections apply to fiscal years beginning on or

after October 1, 2007.

Under the new standards, policies followed for periods prior to the effective date

generally are not reversed and, therefore, the comparative figures have not been restated

except to present foreign currency translation gains and losses on self-sustaining foreign

operations as part of accumulated other comprehensive income (loss).

[a] Equity and comprehensive income

CICA Handbook Section 3251 describes standards for the presentation of equity

and changes in equity during the period with reference to the new

comprehensive income standard. CICA Handbook Section 1530 establishes

standards for reporting and presenting comprehensive income, which is defined

as the change in equity from transactions and other events from non-owner

sources. Other comprehensive income refers to items recognized in

comprehensive income that are excluded from net earnings calculated in

accordance with Canadian GAAP.

[b] Financial instruments

Under CICA Handbook Section 3855, financial instruments must be classified

into one of these five categories: held-for-trading, held-to-maturity, loans and

receivables, available-for-sale financial assets, or other financial liabilities. All

financial instruments, including derivatives, are measured in the Balance Sheet

at fair value except for loans and receivables, held-to-maturity investments and

other financial liabilities, which are measured at amortized cost. Subsequent

measurement and changes in fair value will depend on their initial classification,

as follows: held-for-trading financial assets are measured at fair value and

changes in fair value are recognized in net earnings; available-for-sale financial

instruments are measured at fair value with changes in fair value recorded in

other comprehensive income until the investment is derecognized or impaired,

at which time the amounts would be recorded in net earnings. In accordance

with the new standard, the Company’s financial assets and liabilities are

generally classified and measured as follows:

Asset/Liability Category Measurement

Cash and cash equivalents Held-for-trading Fair value

Accounts receivable Loans and receivables Amortized cost

Long-term receivables Loans and receivables Amortized cost


accrued liabilities Other financial liabilities Amortized cost

Deferred grant Other financial liabilities Amortized cost

Long-term debt Other financial liabilities Amortized cost

The Company had no financial instruments classified as available-for-sale during

the year ended March 31, 2011.

Financing costs and credit facility arrangement fees associated with the issuance

of long-term debt are netted against the carrying value of the related debt and

are amortized using the effective interest rate method to interest expense over

the period to maturity of the related debt.

[c] Hedges

Section 3865 specifies the criteria under which hedge accounting can be applied

and how hedge accounting should be executed for each of the permitted hedging

strategies: fair value hedges, cash flow hedges and hedges of a foreign currency

exposure of a net investment in a self-sustaining foreign operation.

The Company applied hedge accounting to forward rate contracts, options

and cross currency swap agreements. These contracts have been designated

(54)

C M Y K


Impairment of Long-Lived Assets

The Company reviews its long-lived assets such as property, plant and equipment and

intangible assets for impairment whenever events or changes in circumstances indicate

that the carrying amount may not be recoverable. When indicators of impairment of

the carrying value of the asset exist, and the carrying value is greater than the net

recoverable value (as determined on an undiscounted basis), an impairment loss is

recognized to the extent that the fair value (measured as the discounted cash flows

over the remaining life of the asset when quoted market values are not readily available)

is below the carrying value.

Income Taxes

The Company follows the liability method of accounting for income taxes. Under this

method, future tax assets and liabilities are determined based on differences between

the financial reporting and tax bases of assets and liabilities, and are measured using

substantively enacted tax rates and laws that are expected to be in effect when the

differences are expected to reverse. Valuation allowances are established when

necessary to reduce future tax assets to the estimated amount that is more likely

than not to be realized.

Cash and Cash Equivalents

Cash and cash equivalents consist of unrestricted cash and short-term deposits having

an initial maturity of three months or less.


Foreign operations are considered to be self-sustaining and are translated into Canadian

dollars using the current rate method. Assets and liabilities are translated using the

exchange rate in effect at the Balance Sheet date and revenues and expenses are

translated 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 these

subsidiaries, and those arising on the translation of foreign currency long-term liabilities

designated as hedges of these investments, are recorded in accumulated other

comprehensive income.


FY 2011 FY 2010

Accumulated Accumulated Accumulated Accumulated

Cost Depreciation Cost Depreciation Cost Depreciation Cost Depreciation

CAD$’000 CAD$’000 INR/Cr INR/Cr CAD$’000 CAD$’000 INR/Cr INR/Cr

Computer

software 30,070 (26,714) 138.32 (123) 27,648 (25,623) 122.10 (113)

Computer

equipment 20,380 (18,575) 93.75 (85) 19,868 (16,892) 87.74 (75)

Communications

equipment 13,358 (11,918) 61.45 (55) 13,269 (11,183) 58.60 (49)

Furniture and

fixtures 13,883 (8,918) 63.86 (41) 13,833 (7,579) 61.09 (33)

Leasehold

improvements 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: accumulated

depreciation (77,660) (357.24) (70,813) (312.71)

18,515 85.17 22,282 98.40


FY 2011 FY 2011 FY 2010 FY 2010


Cost 0 0.00 12,771 56.40

Less: accumulated depreciation 0 0.00 (8,035) (35.48)

Net book value 0 0.00 4,736 20.91

The assets under capital leases are held as collateral for the capital lease obligations.

4 OTHER ASSETS

FY 2011 FY 2010

Accumulated Accumulated Accumulated Accumulated

Cost Amortization Cost Amortization Cost Amortization Cost Amortization

CAD$’000 CAD$’000 INR/Cr INR/Cr CAD$’000 CAD$’000 INR/Cr INR/Cr

Deferred financing

expenses — — — — — — — —

Long term

receivable — — — — — — — —

Less: accumulated

amortization — — — —

—— ——

5 GOODWILL

FY 20 11 FY 20 10


Balance, beginning of year 4,422 20.34 4,422 19.53

Foreign currency translation adjustment — — — —

B alance, end of y ear 4,422 20.34 4,422 19.53

6 DEFERRED GRANT AND GOVERNMENT A SSISTANCE

FY 20 11 FY 20 10


Deferred Grant 858 3.95 858 3.79

858 3.95 858 3.79

In fiscal 2008, Minacs finalized an agreement with the Province of New Brunswick to

receive a forgivable loan in the amount of $2,260,000 (INR 10.4 Cr). The loan provides

for forgiveness subject to terms being met in respect of employment to be created

at a contact centre in that province. To date, Minacs has received $900,000 (INR 4.14

Cr); no amounts were received in fiscal 2010. As at March 31, 2011, the Company

has recorded $858,000 (INR 3.95 Cr) (March 31, 2010: $858,000) (INR 3.79 Cr) as

deferred grant and government assistance. If the terms of the loan are not met by

August 31, 2014, then the amount remaining as deferred grant and government

assistance will need to be repaid.

7 LONG-TERM DEBT

Securred Loans

FY 2011 FY 2010


1) Borrowings from Banks

Swingline Overnight 0 — 914 4.04

Senior revolving facility -Bank of America 0 — 33,000 145.73

Long Term Debt 31,078 142.96 — —

2) Obligation under Capital Leases 0 — 1,317 5.82

31,078 142.96 35,231 159.59

Senior Revolving Facility – Bank of America

This facility bears interest at 0.9% margin over bank prime, banker’s acceptance or

LIBOR rates. The total commitment available under the senior revolving facility is

$40,000,000 (INR 184 Cr), subject to certain borrowing base calculations and certain

other restrictive covenants. The facility is a 365-day facility and, as collateral, the

Company has given a first charge on accounts receivable. In addition, this facility is

guaranteed by Aditya Birla Nuvo Limited. As at March 31, 2011, the Company is in

compliance with applicable bank covenants.

Loan from Bank of America

This loan bears interest at 1.50% margin over US LIBOR rates and matures on June

1, 2011. This loan is unsecured and is guaranteed by Aditya Birla Nuvo Limited. As at

March 31, 2011, the Company is in compliance with debt covenants.

Loan from AV Transworks Limited, Canada

This loan is unsecured, bears interest at 6.05% and is payable on demand.

Interest Rate

The weighted average interest rate on borrowings at March 31, 2011, was 2.62%

(2010: 2.74%).


FY 2011 FY 2010


Interest expense on long-term debt 1,349 6.04 1,468 6.40

Interest charged to subsidiaries (914) (4.09) (777) (3.39)


under capital leases 30 0.13 246 1.07

Other interest expense (income) 1 0.01 (5) (0.02)

Interest expense 467 2.09 932 4.06

Amortization of deferred finance charges 0 — 83 0.36

Bank 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)

C M Y K


8 RELATED PARTY TRANSACTIONS

Balances and transactions with Aditya Birla Minacs Worldwide Ltd. group of companies

are as follows:

FY 2011 FY 2010


Interest charged by Parent Company 765 3.42 157 0.69

Interest charged to subsidiaries (914) (4.09) (777) (3.39)

Management fee charged to

subsidiaries 9,636 43.13 10,449 45.55

Accounts payable, accrued liabilities

for interest and re 695 3.20 412 1.82

10,183 45.66 10,241 44.67

These transactions are measured at the exchange amounts of consideration

established and agreed to by the related parties.

9 SHARE CAPITAL

The Company is authorized to issue an unlimited number of common shares and an

unlimited number of preferred shares issuable in series.

2011 2010


Number Amount Amount Number Amount Amount

of Shares of Shares

Common Shares 27,945,822 70,071 322.33 27,945,822 70,071 309.43

Redeemable Series A


Redeemable Series B


120,393 553.81 120,393 531.66

The 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

AV Transworks Limited, Canada, as subscription for Redeemable Series B Preference

Shares 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 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% for Series B on the

outstanding preference shares. The payment of dividends is at the discretion of the

Company and subject to availability of profits of the Company. The undeclared dividend

as of March 31, 2011 is $ 3,441,000 (2010: $ 1,029,312) (INR 4.55 Cr).

10 COMMITMENTS AND CONTINGENT LIABILITIES

Capital Leases

The following is a schedule of future annual minimum lease payments for these

capital leases:

Minimum capital lease FY 2011 FY 2010

payments due in CAD$’000 INR/Cr CAD$’000 INR/Cr

2010 — — — —

2011 0 — 1,347 5.95

Total 0 — 1,347 5.95

Less amount representing interest 0 — (30) (0.13)

Present value of net minimum lease

payments 0 — 1,317 5.82

Less : current portion 0 — (1,317) (5.82)

Total capital lease obligations — — 0.06 0.00

Commitments


computer and communications equipment as well as minimum purchase

commitments for telephone services. The minimum annual payments for the next

five years and thereafter are as follows:

FY 2011 FY 2010


2011 6,616 30.43 7,139 31.63

2012 5,427 24.96 5,845 25.81

2013 5,526 25.42 4,899 21.63

2014 4,366 20.08 4,908 21.67

2015 4,260 19.60 4,366 19.28

Thereafter 5,049 23.23 8,515 37.60

Total commitments 31,244 143.72 35,672 157.53


On May 17, 2006, the former major shareholder and founder of the Company, Elaine

Minacs, died. The major shareholder of the Company then became the Estate of

Elaine Minacs (the “Estate”) together with certain entities controlled by it (the “EM

Shareholders”) until August 18, 2006, when AV Transworks Limited, Canada, acquired

the 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 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 direction

of Elaine Minacs. Also, during 2005, the beneficiary of the term life insurance policy was

changed to family members related to Elaine Minacs at the direction of Elaine Minacs. 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 breach of Elaine Minacs’

employment agreement. Proceeds of $350,000 (INR 1.61 Cr) were paid 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 August 2007 for the proceeds of

the life insurance policies and damages of $500,000 (INR 2.3 Cr). A second claim for

damages 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 of

contract related to an employment agreement. Management has not accrued a contingent

liability for the claims made by the Estate because they believe that the claims have no

merit and the outcome of the proceeding is not determinable.

During the ordinary course of business activities, in addition to the above, the Company

may 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,


have a material adverse effect on the consolidated financial position of the Company.

Guarantees

At March 31, 2011, the Company had $425,000 (INR 1.96 Cr) (2010: $75,000) (INR

0.33 Cr) of outstanding letters of credit to secure customer performance guarantees.

11 RESTRUCTURING AND OTHER CHARGES

In fiscal 2011, the Company terminated a number of employees and performed some due

diligence 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 restart

the operations at the Chatham site. The costs recorded in restructuring relating to lease

exit 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 of

the remaining lease periods and the credits against lease exit liabilities are given below:

FY 2011 FY 2010

Charged to P&L CAD$’000 INR/Cr CAD$’000 INR/Cr

Lease exit costs — — 2,200 9.59

Other lease exit credits — — ( 687) (2.99)

Write down of property, plant and equipment — — 933 4.07

Serverance and other items 424 1.90 1,112 4.85

Total 424 1.90 3,558 15.51

Outstanding liabilities

Lease exit costs 2,077 9.30 3,235 14.10

Serverance and other items 6 0.03 56 0.24

Accounts payable and accrued

liabilities relating to restructuring

and other charges 2,083 9.32 3,291 14.35

12 INCOME TAXES

Future tax assets consist of the following temporary differences:

FY 2011 FY 2010

Future income tax CAD$’000 INR/Cr CAD$’000 INR/Cr

Operating losses carried forward 15,706 72.25 19,608 86.59

Accounts payable and accrued liabilities 1,358 6.25 1,749 7.72

Property, plant and equipment (415) (1.91) 77 0.34

Deferred revenue & Grant 217 1.00 218 0.96

Other 181 0.83 241 1.06

17,047 78.42 21,893 96.68

Valuation allowance (17,034) (78.42) (21,880) (96.68)

Less : current portion — — — —

13 — 13 —

(56)

C M Y K


Expiry of losses

As 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


2010 — — — —

2011 — — 1,847 8.16

2026 9,156 42.12 21,754 96.07

2027 14,188 65.26 14,188 62.65

2028 19,289 88.73 17,596 77.70

2029 19,445 89.45 19,445 86.87

2030 — — 2,486 10.98

62,078 285.56 77,31 6 341 .43

1 3 FINANCIAL INS TRUMENTS AND RISK MANAGEMENT

Fair Value of Financial Instruments

The 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 receivable

and non-current portions of accounts payable and accrued liabilities and deferred

grant, and due to their nature are measured at amortized cost which approximates

their fair value.

Risk Management

The Company’s activities expose it to a variety of financial risks, market risk (including

foreign exchange and interest rate), credit risk and liquidity risk. The Company’s

overall risk management program focuses on the unpredictability of financial markets

and seeks to minimize potential adverse effects on the Company’s financial

performance. The Company does not purchase any derivative financial instruments

for speculative purposes.

Risk management is the responsibility of the corporate finance function. Material

risks are monitored and are regularly discussed with the Audit Committee of the

Board of Directors.

Foreign Currency Risk

The Company has significant operations in Canada and the United States. The

Company’s activities result in exposure to fluctuations in foreign currency exchange

rates due to sale and purchase transactions in a foreign currency. Increases or

decreases in these rates could impact the Company’s net earnings.

As at March 31, 2011, the Company purchased financial instruments to hedge its

foreign currency exposure as follows:

FY 2011

Financial Notional Amount Average Fair Market Value

Instrument 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 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). Included in selling, general and administrative expenses

is 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 0.81

Cr loss). At March 31, 2011, all contracts were designated as hedges for

accounting purposes.

During the year ended March 31, 2011, a substantial portion of the Company’s income

was earned outside of Canada in currencies other than the Canadian dollar. Increases

in the value of the Canadian dollar can reduce net income and declines can result in

increase net income. Based on the income, a +/- 1% change in the United States

dollar would, everything else being equal, have had the following effect on the

Company’s reported net income for the year ended March 31, 2011:

CAD INR/Cr

Average Increase / Increase /

exchange decrease decrease

rate of 1% of 1%

United States dollar 1.01704 $657,000 2.94

The 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 2010

Accounts receivable 47% 43%

Accounts payable 0% 57%

Accrued liabilities 62% 86%

During the years ended March 31, 2011 and 2010, the following percentage of

revenues and expenses were earned or incurred in US dollars:

March 31, March 31,

2011 2010

Revenues 43% 58%

Expenses 2% 36%

Interest Rate Risk

The objective of the Company’s interest rate management activities is to minimize

the volatility of the Company’s income. The Company’s interest rate risk primarily

arises from its floating rate debt.

At March 31, 2011, the total long-term debt outstanding was $50,470,000 (INR 232.16

Cr), which is subject to movements in floating interest rates. A +/-1% change in interest

rates would, everything else being equal, have an effect on the Company’s net 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 as

credit exposure to clients, including outstanding accounts receivable. The maximum

exposure 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 financial assets.

The Company assesses the credit quality of the counterparties, taking into account

their financial position, past experience and other factors.

The Company derived 33% or $101,500,000 (INR 466.90 Cr) of its revenues from

multiple contracts with two groups of clients in the automotive and technology sectors

for 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 are

outstanding and related allowance for doubtful accounts:

31-Mar-11 31-Mar-11

CAD$’000 INR/Cr

Current 31,228 143.65

31-60 days 26,369 121.30

61-90 days 10,373 47.72

Over 90 days 762 3.51

Less: allowance for doubtful accounts (290) (1.33)

Total accounts receivable and unbilled revenues, net 68,442 314.83

Included 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 allowance

account and the amount of the loss is recognized in the consolidated statement of

operations and deficit within operating expenses. When a receivable balance is

considered uncollectible, it is written off against the allowance for accounts receivable.

Subsequent recoveries of amounts previously written off are credited against operating

expenses in the consolidated statement of operations and deficit.

31-Mar-11 31-Mar-11

CAD$’000 INR/Cr


Provisions (220) (1.01)

Write-offs 0 —

Foreign currency translation adjustment 2 0.01


14 LIQUIDITY RISK

Liquidity risk arises through the excess of financial obligations over available financial

assets due at any point in time. The Company’s objective in managing liquidity risk is

to maintain sufficient readily available reserves in order to meet its liquidity

requirements at any point in time. The Company achieves this by maintaining sufficient

cash and through the availability of funding from committed credit facilities.

(57)

C M Y K


1 5 MANAGEMENT OF CAPITAL

The 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 objective

when managing capital is to ensure that it can provide services to its customers and

returns 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 cash

flow together with cash on its Balance Sheet is greater than interest expense and

current principal debt repayments required to be paid.

1 6 EMPLOYEE BENEFIT PLANS

The Company has defined contribution pension plans. The Company’s expenditures

with respect to these plans were $750,000 (INR 3.45 Cr) during the year ended

March 31, 2011 (2010: $673,000) (INR 2.97 Cr).

17 COMPARATIVE FIGURES

Certain of the comparative figures have been reclassified to conform to the current

year’s presentation.

(58)

MINACS GROUP (USA) Inc.

C M Y K

Consolidated Balance Sheet (Unaudited in US $)

A s At A s At

March 31, 2011 March 31, 2010

US $ INR/Cr US $ INR/Cr

SOURCES OF FUNDS

I Shareholders’ Fund

1. Share capital $302,040 1.37 $302,040 1.36

2. Retained earnings $9,000,150 41.34 $8,102,244 37.61

3. Exchange Fluctuation

on Translation — (0.58) — (1.13)

$9,302,191 42.13 $8,404,284 37.84

II Debt

1. Long-term debt from

holding company $20,768,591 94.05 $20,768,591 93.52

2. Short-term debt from Banks $20,000,000 90.57 $0 —

$50,070,782 226.75 $29,172,875 131.36


I Fixed Assets

1. Property, plant and

equipment, net $8,516,338 38.57 $5,410,781 24.36

2. Deferred Development costs $1,079,887 4.89 $1,480,070 6.66

3. Intangibles $1996,102 9.04 $101,961 0.46

4. Goodwill $1,900,000 8.60 $1,900,000 8.56

$13,492,327 61.1 0 $8,892,81 2 40.04

II Investments 18,869,268 85.45 — —

III Current Assets

1. Cash and cash equivalents $850,771 3.85 $1,038,954 4.68

2. Accounts receivable $26,174,035 118.53 $12,759,501 57.46

3. Due from parent compan y $6,264,898 28.37 $1 4,550,822 65.52

4. Prepaid expenses $920,576 4.17 $867,898 3.91

5. Future income taxes -Long term $0 — $361,234 1.63

6. Future income taxes -Short term $385,316 1.74 $256,472 1.15

$34,595,596 156.67 $29,834,881 134.35

Less Liabilities

I Short term

1. Accounts payable and

accrued liabilities $13,958,295 63.21 $7,625,908 34.34

2. Income and other

taxes payable 485.834 2.20 (29,082) (0.13)

3. Obligations under

capital leases $0 — $321,213 1.45

$14,444,129 65.41 $7,918,039 35.66

II Long Term

1. Accounts payable and

accrued liabilities $371,220 1.68 $527,081 2.37

2. Obligations under

capital leases — — $0 —

3. Future income taxes $2,071,061 9.38 $1,109,698 5.00

Total Liabilities $16,886,410 7 6.47 $9,554,818 43.03

Net 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 31.37

Notes :

See accompanying notes to the financial statements.

FE Conversion Rate for US$ to INR as at end of year 45.2854 45.0301

St atement of Operations and Deficit

Unaudited in US $

31/3/2011 31/3/2011 31/3/2010 31/3/2010


Revenues $115,223,720 525.26 $97,017,763 448.13

Expenditures

Direct expenses $86,645,571 394.99 $72,406,782 334.45

Selling, general and

administrative expenses $15,481,374 70.57 $12,268,172 56.67

$102,126,945 465.56 $84,674,953 391.12

Earnings before interest, income

t axes, depreciation, amortization

and restructuring and

other charges $13,096,775 59.70 $12,342,810 57.0 1

Management fee $6,304,000 28.74 $6,857,000 31.67

Restructuring and other charges $750,000 3.42 $113,188 0.52

Interest and financing expenses $1, 292,158 5.89 $944,475 4.36

Depreciation and amortization $2,693,868 12.28 $2,177,429 10.06

Currency Revaluation Difference 0.37

Provision for (recovery of) income taxes

Current -$34,911 (0.16) $677,717 3.13

Future $1,193,753 5.44 $182,212 0.84

Net income (loss) for the period $897,906 3.73 $1,390,789 6.42

Earnings/(Deficit), beginning of period $8,102,244 37.61 $6,711,455 31.19

Retained earnings, end of period $9,000,150 41.34 $8,102,244 37.61

Notes:


Average FE Conversion Rate for US $ to INR

for the Financial Y ear 45.5865 46.1904

Place: Toronto Deepak J. Patel

Date: April 23, 2010 Chief Executive Officer



(59)


C M Y K

Notes to Financial St atements, March 31, 20 11

1. NATURE OF BUSINESS

Minacs Group (USA) Inc. (the “Company” or “Minacs USA”) is a provider of

business process outsourcing (“BPO”) solutions. These incorporate contact

centre solutions, integrated marketing services and back office administration.

Minacs USA is a subsidiary of Minacs Worldwide Inc. (“Minacs”).

2. SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of these financial statements in conformity with Canadian

generally accepted accounting principles requires management to make

estimates and assumptions. These estimates and assumptions affect the

reported amounts of assets and liabilities, and disclosure of contingent assets

and liabilities at the date of the financial statements and the reported amounts

of revenues and expenses during the year. Actual results could differ from

those estimates.

Revenue Recognition

The Company derives revenues through the provision of direct resources to

its customers and consulting arrangements. Payment terms may vary by

contract. The Company recognizes revenues at the time services are

performed and when the price is fixed or determinable and collection is

reasonably assured.


rendered as defined in the client contract. The rate per billable hour or minute

charged is based on a predetermined contractual rate as agreed in the underlying

contract. This contractual rate fluctuates based on the Company’s performance

against certain predetermined criteria related to quality and performance. Some

clients are entitled to penalties when the Company is not in compliance with

certain obligations as defined in the client contract. Such penalties are recorded

as a reduction of revenues 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 of certain level of revenues or other client-determined criteria

specified in the client contract such as full time equivalents, units processed

or completed contacts. The Company recognizes this performance-based

revenue by measuring its actual results against the performance criteria


Amounts collected from customers prior to the performance of services are

recorded as deferred revenue.

These advances are amortized to revenues in accordance with the Company’s

policy on revenue recognition.

The Company classifies reimbursements received from customers for out-of-pocket expenditures as revenues. The Company incurs out-of-pocket

expenditures such as expenses related to travel, postage and

telecommunications costs for which customers have agreed to reimburse

Minacs USA. The corresponding cost associated with this revenue is recorded

within the direct expenses. Some customers agree to reimburse the Company

for initial training and recruiting costs over a specified period of time. The

revenue for these costs is recorded over the period of time stipulated within

the contract with a corresponding cost recorded within direct expenses.


Property, plant and equipment are stated at cost less accumulated depreciation.

Depreciation is provided from the first day of the month following the date the

assets are placed into service, on a straight-line basis. Computer software is

depreciated over four to five-year lives. Computer equipment is depreciated

over a four-year life. Communications equipment is depreciated over five to

seven-year lives. Furniture and fixtures are depreciated over seven to ten-year

lives. Leasehold improvements are depreciated over the term of the lease.

Goodwill


Such evaluation determines any impairment in value, taking into account the

ability to recover the carrying amount of goodwill from discounted cash flows.

The Company also considers projected future operating results, trends, and

other circumstances in making such evaluations.

In addition to the annual impairment test, the Company will perform an

impairment test if an event occurs or circumstances change that would more

likely than not reduce the fair value of the reporting unit below its carrying

amount.

Intangibles

The Company allocates value to intangible assets acquired relating to customer

and supplier contracts, proprietary processes, and certain business

relationships. Amortization of intangibles is provided on a straight-line basis

over 10 years.

Impairment of Long-lived Assets

The Company reviews its long-lived assets such as property, plant and equipment

and intangibles for impairment whenever events or changes in circumstances

indicate that the carrying amount may not be recoverable. When indicators of

impairment of the carrying value of the asset exist, and the carrying value is greater

than the net recoverable value (as determined on an undiscounted basis), an

impairment loss is recognized to the extent that the fair value (measured as the

discounted cash flows over the remaining life of the asset when quoted market

values are not readily available) is below the carrying value.

Income Taxes

The Company follows the liability method of accounting for income taxes. Under

this method, future tax assets and liabilities are determined based on differences

between the financial reporting and tax bases of assets and liabilities, and are

measured using substantively enacted tax rates and laws that are expected to be

in effect when the differences are expected to reverse. Valuation allowances are

established when necessary to reduce future income tax assets to the estimated

amount that is more likely than not to be realized.


Assets and liabilities are translated using the exchange rate in effect at the Balance

Sheet date and revenues and expenses are translated at the average rate of the

month the transaction is recorded.


Cash and cash equivalents consist of unrestricted cash and short-term deposits

having an initial maturity of three months or less.

A s At Marc h 31, 2011 A s At Marc h 31, 2010


3.3 . Share Capital

Common shares 100 0.00 100 0.00

Contributed surplus 301.940 1.37 $301,940 1.36

302,040 1.37 $302,040 1.36

The Company is authorized to issue an unlimited number of common shares.

4.4. Debt

Loan from Parent Company 20,768,591 94.05 20,768,591 93.52

20,768,591 94.05 $20,768,591 93.52

5.5 . Short term debt

from Bank 20,000,000 90.57 — —

20,000,000 90.57 — —

(60)


C M Y K


A s At 31st March, 2011 A s At 31st March, 2010

Gross A ccumulated Gross A ccumulated Gross A ccumulated Gross A ccumulated

Cost Depreciation Cost Depreciation Cost Depreciation Cost Depreciation

In US $ In US $ In INR/Cr In INR/Cr In US $ In US $ In INR/Cr In INR/Cr

Computer 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 24.36


In US $ INR (Cr) In US $ INR (Cr)

Cost — — 5,034,046 22.67

Less: Accumulated depreciation — — (4,289,108) (19.31)

Net book value $0 — $744,938 3.35

Conversion rates for US $ to INR 45.29 45.03



6. INT ANGIBLES

Cost 2,857,962 12.94 $643,962 2.90

Less: Accumulated depreciation (861,860) (3.90) (542,001) (2.44)

Net book value 1,996,102 9.04 $101,961 0.46

7. GOODWILL

Balance, beginning of period 1,900,000 8.60 $1,900,000 8.56

Foreign currency translation

adjustment — — — —

Balance, end of period 1,900,000 8.60 $1,900,000 8.56

8. FUTURE INCOME TAXES

Accounts payable and accrued

liabilities 674,418 3.05 $512,340 2.31

Other 98,065 0.44 $105,366 0.47

772,483 3.50 $617,706 2.78

Valuation allowance — — — —

Less: Current portion (385,315) (1.74) ($256,472) (1.15)

387.168 1.75 $361,234 1.63

Future tax liabilities consist

of the following temporary

differences:

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 CONTINGENCIES

Capital Leases

The following is a schedule of future minimum lease payments for these capital leases:


Capital Leases US $ INR/Cr US $ INR/Cr

2008 — — — —

2009 — — — —

2010 — — $0 —

2011 — — $329,278 1.48

Total minimum lease payments — — $329,278 1.48

Less: Amount representing

interest — — ($8,066) (0.04)

Present value of net minimum

lease payments — — $321,212 1.45

Less: Current portion — — $321,212 1.45

Total capital lease obligations — — $0 —

Commitments


computer and communications equipment as well as minimum purchase commitments

for telephone services. The minimum annual payments for the next five years and

thereafter are as follows:



2011 — — $0 —

2012 2,680,633 12.14 $1,457,358 6.56

2013 2,709,412 12.27 $1,402,668 6.32

2014 2,560,272 11.59 $1,402,668 6.32

2015 723,383 3.28 $1,402,668 6.35

2016 86,540 0.39 467,556.00 —

Thereafter — — $0 —

Total commitments 8,760,240 39.67 $6,132,918 25.55


During the ordinary course of business activities, the Company may 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,


have a material adverse effect on the financial position of the Company.

10. RELATED P ARTY TRANSACTIONS

Transactions with Related Parties are as follows:



Management fees charged by

Minacs Worldwide Inc. 6,304,000 28.74 $6,857,000 31.86

Interest charged by Minacs

Worldwide Inc. 939,472 4.28 $712,666 3.31

Interest charged to IT Services (688,285) (3.14) (794,836) (3.69)

Reimbursable expenses - Aditya

Birla Minacs Worldwide Ltd. 741,691 3.38 $149,428 0.69

These transactions are measured at the exchange amounts of consideration established

and agreed to by the related parties.

11. EMPLOYEE BENEFI T PLANS

The Company has defined contribution pension plans. The Company’s pension

plan expenditures were $8278 (Previous Year: $ 4,160) (INR .04 Cr) (Previous

Year: INR 0.02 Cr) during 2011.

(61)


C M Y K

12 INTEREST AND FINANCING EXPENSES




Interest expense on long-term debt 939,472 4.28 $712,666 3.29


under capital leases 8,066 0.04 $60,373 0.28

Bank Loan Interest 291,758 1.33 $0 —

Other interest expense (income) (284) (0.00) $21,850 0.10

Interest expense 1,239,012 5.65 $794,888 3.67

Amortization of deferred

finance charges — — — —

Bank charges 49,252 0.22 $42,868 0.20

Foreign exchange loss (gain) 3,894 0.22 106,718 0.49

Total 1,292,158 5.89 $944,475 4.36

(62)

BUREAU OF COLLECTION RECOVERY, LLC

C M Y K



BALANCE SHEE TS

(Unaudited in US$)

As At March 31, 2011

US $ INR/Cr

ASSETS

Current assets

Cash and cash equivalents 743,420 3.37

Client cash held in trust 446,191 2.02

Accounts receivable 1,945,000 8.81

Prepaid expenses 61,208 0.28

Total current assets 3,195,819 14.48

Fixed assets

Office equipment 278,620 1.26

Leasehold improvements 55,977 0.25

Total fixed assets 334,597 1.51

Less: Accumulated depreciation

and amortization 156,268 0.71

Net fixed assets 178,329 0.80

Other assets

Deposits

Future income taxes - Short term 237,540 1.08

Corporate Federal taxes 466,341 2.11

Due from Parent Company 1,305,395 5.91

Total other assets 2,009,276 9.10

Total assets $ 5,383,424 24.38

LIABILITIES AND MEMBERS’ EQUITY

Current liabilities

Trust cash payable to client 446,191 2.02

Accounts payable & accrued expenses 1,031,352 4.67

Accrued payroll 480,561 2.18

State taxes payable 121,825 0.55

Total current liabilities 2,079,929 9.42

Long-term liabilities

Future income taxes 182,795 0.83

Total long-term liabilities 182,795 0.83

Shareholders’ funds

Share capital 20,500 0.09

Retained earnings 3,100,200 14.12

Exchange fluctuation on transaltion — (0.08)

Total shareholders’ funds 3,120,700 14.13

Total liabilities and members’ equity $ 5,383,424 24.38

Notes :


FE Conversion Rate for US$ to INR as at end of year 45.29



STATEMENT OF INCOME AND EXPENDI TURE FOR THE

PERIOD 1ST JUNE 2010 TO 31ST MARCH 2011

Period Ended 31st March, 2011

US $ INR/Cr

Revenues

Commission revenue 11,203,177 51.23

Operating expenses

Personnel and related expenses 7,026,886 32.13

Communication expenses 999,357 4.57

Other operating expenses 2,979,382 13.62

Total operating expenses 11,005,625 50.32

Operating income 197,552 0.91

Other income (expenses)

Management fee 670,000 3.06

Depreciation and amortization 62,452 0.29

Interest income (37,780) (0.17)

Currency revaluation differ ence — 0.06

Earnings before tax (497,120) (2.33)

Current income tax (468,687) (2.14)

State tax 5,000 0.02

Future tax (52,399) (0.24)

Net income (loss) for the period 18,966 0.03

Earnings/(Deficit), beginning of period 3,081,234 14.09

Retained earnings, end of period 3,100,200 14.12

Notes :


FE Conversion Rate for US$ to INR as at end of year 45.73

(63)

BUREAU OF COLLECTION RECOVERY, LLC

C M Y K

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES

Business Organization

Bureau of Collection Recovery, LLC is a third-party collection agency which collects

pre-charge offs, post charge offs and primary and secondary accounts for nationally

recognized banks and other creditors. The Company’s headquarters is located in

Eden Prairie, Minnesota.

Client Cash Held in Trust and Trust Cash Payable to Clients

The Company deposits all cash received from the collection of client placements

in separate trust bank accounts as required by client contracts. Client cash held in

trust is not the property of the Company.

Accounts Receivable

Trade accounts receivable are initially recorded at fair value upon completion of

service to clients. They are stated net of allowance, which primarily represents

estimated losses due to disputes with clients or inability of certain clients to make

the required payments. When determining the allowances, the Company takes

several 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 the

allowance impact commission income or bad debt expense. No allowance for

doubtful accounts was deemed necessary at March 31, 2011. The Company’s

policy for charging interest on delinquent receivables varies by terms stated in

individual contracts. Accounts receivable are considered past due on an individual

client basis.

Revenue and Expense Recognition

The Company earns commissions on amounts collected from debtors on behalf of

its clients. Commission income is recognized as client placements are collected

from debtors, at which time the Company has rendered substantially all of the

services necessary to earn its commission.

Fixed Assets

Fixed assets are stated at cost. Depreciation is provided using the straight-line

method for financial reporting purposes based on estimated service lives. The

estimated lives range from 3 to 5 years. Leasehold improvements are amortized

over the lives of the respective leases or the service lives of the improvements,

whichever is shorter. Accelerated methods of depreciation are used for income

tax reporting purposes. Expenditures for repairs and maintenance are charged

against operations. Renewals and betterments that materially extend the life of

the asset are capitalized.

Advertising Costs

Advertising costs are generally charged to operations in the year incurred and totaled

$3,162 for the period ended March 31, 2011.

Use of Estimates



that affect the reported amounts of assets and liabilities and disclosure of contingent

assets and liabilities at the date of the financial statements and the reported amounts

of revenues and expenses during the reporting period. Actual results could differ

from those estimates.


The accompanying financial statements are presented in accordance with

accounting principles generally accepted in the United States of America (US GAAP)

as codified by the Financial Accounting Standards Board.

Financial Instruments

The Company’s financial instruments consist of accounts receivable, other

receivable, accounts payable and trust cash payable to clients. It is management’s

opinion that the Company is not exposed to significant interest rate or credit risks

arising from these instruments. Unless otherwise noted, the fair values of these

financial instruments approximate their carrying values.

NOTE 2 – COLLECTIONS ACTIVITY

Gross collections activity for the period ended March 31, 2011, was as follows:

FY’11

Customer Placements Received $ 1,335,520,831

Collection of Placements $ 30,358,100

Commissions Earned $ 11,203,177

NOTE 3 – BUSINESS AND CREDIT CONCENTRATIONS

Commission revenue from customers that exceed 10% of total commission

revenue for the period ended March 31, 2011, was as follows:

FY’11

Customer A 24.2%

Customer B 18.2%

Customer C 18.0%

Customer D 16.8%

Customers’ accounts receivable balances that exceeded 10% of total accounts

receivable balances at March 31, 2011, was as follows:

FY’11

Customer A 48.9%

Customer B 37.7%

NOTE 4 - RELATED PARTY TRANSACTIONS

Intercompany Dues

During the period ending 31

st

March 2011, the Company made unsecured interest

bearing cash advances to the parent company. The Company also owes

management fees to the parent company. Net balance due from the parent company

totaled to $ 1,400,075.

NOTE 5 – OPERATING LEASES

Building Lease – Eden Prairie

The Company entered into an operating lease agreement dated January 1, 2008,

to lease its headquarters in Eden Prairie, Minnesota. The initial lease term was for

three years expiring on December 31, 2010. The lease was then extended by

three years expiring on December 31, 2013. The monthly base rent is $15,000

plus additional rental payments for other operating expenses. During the first lease

year, the additional rental costs were included in the base rents. Subsequent to

year end, the lease was amended for the Company to pay all maintenance,

insurance, and taxes on the leased property.

Building Lease – Willmar

The Company entered into an operating lease on July 18, 2007, for a one year term

commencing on October 1, 2007 and expiring September 30, 2008, to lease office

facilities in Willmar, Minnesota. The agreement called for base rent of $ 39,062

payable in monthly installments of $ 3,255 plus additional rental payments for other

operating expenses. On September 15, 2008, a new lease commenced expiring

on 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 Agreement

On November 30, 2007, the Company entered into a co-location license agreement

for the use of space located in Minnetonka, Minnesota, pursuant to the Licensor’s

agreement. Minimum lease payments of $ 4,000 per month are required for three

years ending November 30, 2010.

The following is a schedule of future minimum rental payments required under

these operating lease agreements:

Year Ending

December 31, Amount

2010 $ 284,000

2011 61,663

2012 65,700

2013 46,538

Total minimum rental payments $ 457,901

Other Leases

The Company is obligated under various operating lease agreements expiring at

various dates through 2013. Monthly payments on these leases range from $ 292

to $ 689.

The following is a schedule of future minimum lease payments required under

these operating lease agreements:

Year Ending

December 31, Amount

2010 $ 11,764

2011 11,764

2012 11,764

2013 3,500

Total minimum lease payments $ 38,792

(64)

MINACS WORLDWIDE SA de CV

CMYK

BB Balance Sheet

AA As at March 31, 2011 111 1 AA As at March 31, 2011 100 0

PP Pesos INR/Cr PP Pesos INR/Cr

II I Sources of Funds

Shareholders’ funds

Share capital

Shares issued 50,000 0.02 50,000 0.02

Cumulative translation

adjustment — —

Deficit (50,000) (0.02) (50,000) (0.02)

— — — —

Debt — — — —

TT Totalal al — — — —

IIII II Application of Funds

Fixed Assets — — — —

Current AA Assets

Cash and cash equivalents — — — —

Accounts receivable — — — —

Prepaid expenses — — — —

— — — —

LL Less Current Liabilities — — — —

Bank Indebtedness — — — —

Other liabilities — — — —

Net Current AA Assets — — — —

Total — — — —


Note

Conversion rate for Pesos to INR 3.79 3.62

Currency factor 10,000,000 10,000,000

Statements of Operations and Deficit

YY Year Ended YY Year Ended

March 31, 2011 111 1 March 31, 2011 100 0


RR Ree evv venues — — — —

Direct expenses — — — —

Selling, general and

administrative expenses — — — —

Earnings before interest

expense, 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)

Note

Conversion rate for Pesos to

INR at 31 March, 2011 3.619 3.619

Currency factor 10,000,000 10,000,000

(65)

MINACS WORLDWIDE SA de CV

CMYK

Notes to Financial Statements, March 31, 2011 111 1

11 1 NATURE OF BUSINESS

Minacs Worldwide SA de CV (the “Company” or “Minacs Mexico”) is a

provider of business process outsourcing (“BPO”) solutions. The

Company is a subsidiary of Minacs Worldwide Inc. (“Minacs”). Minacs

Mexico is an inactive subsidiary.

22 2 SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of these financial statements in conformity with

Canadian generally accepted accounting principles requires management

to make estimates and assumptions. These estimates and assumptions

affect the reported amounts of assets and liabilities and disclosure of

contingent assets and liabilities at the date of the financial statements

and the reported amounts of revenues and expenses during the year.

Actual results could differ from those estimates.

Revenue Recognition

The Company derives revenues through the provision of direct resources

to its customers and consulting arrangements. Payment terms may vary

by contract. The Company recognizes revenues at the time services are

performed and when the price is fixed or determinable 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 charged is based on a predetermined contractual rate

as agreed in the underlying contract. This contractual rate fluctuates

based on the Company’s performance against certain predetermined

criteria related to quality and performance. Some clients are entitled

to penalties when the Company is not in compliance with certain

obligations as defined in the client contract. Such penalties

are recorded as a reduction of revenues 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 of certain level of revenues or other client-determined

criteria specified in the client contract such as full time equivalents,

units processed or completed contacts. The Company recognizes this

performance-based revenue by measuring its actual results against the

performance 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 as expenses related to travel, postage and

telecommunications costs for which customers have agreed to

reimburse Minacs. The corresponding cost associated with this revenue

is recorded within direct expenses. Some customers agree to reimburse

the Company for initial training and recruiting costs over a specified

period of time. The revenue for these costs are recorded over the period

of time stipulated within the contract with a corresponding cost recorded

within direct expenses.

Income Taxes

The Company follows the liability method of accounting for income taxes.

Under this method, future tax assets and liabilities are determined based

on differences between the financial reporting and tax bases of assets

and liabilities, and are measured using substantively enacted tax rates

and laws that are expected to be in effect when the differences are

expected to reverse. Valuation allowances are established when

necessary to reduce future income tax assets to the estimated amount

that is more likely than not to be realized.


Assets and liabilities are translated using the exchange rate in effect at

the Balance Sheet date and revenues and expenses are translated at

the average rate of the month the transaction is recorded.


Cash and cash equivalents consist of unrestricted cash and short-term

deposits having an initial maturity of three months or less.

22 2 SHARE CAPITAL

2011 111 1 2011 100 0


Common Shares 50,000 000 0 0.02 50,000 000 0 0.02

50,000 000 0 0.02 50,000 000 0 0.02

Authorized Share Capital

The Company is authorized to issue an unlimited number of common shares.

(66)

MINACS LIMITED, UK

CMYK

BALANCE SHEET T T AA AS AA AT 31ST MARCH, 2011 111 1

Notes As At As At


£ INR/Cr £ INR/Cr

II I Sources of Funds

Shareholders’ Funds

Called up share capital 4 1,000 0.01 1,000 0.01

Profit and loss account 332.824 2.63 267,698 2.04

Exchange fluctuation on

translation (0.21) (0.23)

333,824 2.43 268,698 1.82

Loan Funds — — — —

Total 333,824 2.43 268,698 1.82

IIII II Application of Funds

Fixed assets — — — —

Investments 5 15,277 0.10 15,277 0.10

Current assets

Debtors 6 898,081 6.52 707,809 4.80

Cash at bank and in hand 124,741 0.91 146,936 1.00

1,022,822 7.43 854,745 5.80

Less : Current liabilities 7 (704,275) (5.11) (601,324) (4.08)

Net current assets 318,547 2.13 253,421 1.72

Total 333,824 2.42 268,698 1.82

Notes:

See accompanying notes to the financials statements.

FE Conversion Rate for GBP to INR as at year end 72.60 67.87

PP Profit and Loss AA Account for the year ended 31st March, 2011 111 1

YY Year Ended YY Year Ended

31/3/2011 111 1 31/3/2011 100 0

££ £ INR/Cr ££ £ INR/Cr

Sales 2,263,039 16.00 2,392,193 18.23

Total2,263,039 11 16.000 02,392,193 18.23

Direct Costs

Wages and salaries 1,458,156 10.31 1,574,508 12.00

Employer’s NI contributions 143,364 1.01 152,017 1.16

Recruitment advertising 26 0.00 — —

Staff pension scheme costs 8,396 0.06 10,127 0.08

Placement & interview expenses 6,896 0.05 3,800 0.03

Staff training 868 0.01 1,168 0.01

Travel expenses 38,206 0.27 27,035 0.21

Health & safety costs 1,422 0.01 1,676 0.01

TT Totalal al 1,657,332 11 11,72 1,770,332 13.49

Gross Profit 605,707 4.28 621,862 4.744 4

Administration

Wages and salaries 8,733 0.06 244,300 1.86

Rent payable — — 29,100 0.22

Printing, postage and stationery 2,996 0.02 4,539 0.03

Telephone 3,209 0.02 3,602 0.03

Motor vehicle leasing 1,250 0.01 — —

Entertaining 1,149 0.01 2,443 0.02

Legal and professional 11,412 0.08 5,430 0.04

Accountancy 37,015 0.26 38,210 0.29

Audit 6,000 0.04 6,000 0.05

Bank charges 380 0.00 9 0.00

Exchange rate (gain)/loss (9,505) (0.07) 639 0.00

Payroll services 5,500 0.04 6,000 0.05

General expenses 55,219 0.39 (240,918) (1.84)

Recruitment costs — — — —

Subscriptions 101 0.00 4,681 0.04

Management charges 329,000 2.77 401,500 3.06

515,458 3.65 505,534 3.85

Financial

Other 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 0.89

Less : Corporation tax based on

profits for the period (25,256) (0.18) (32,567) (0.25)

Net profits/(loss) for the year 65,126 0.46 83,902 0.64

Balance brought forward 267,698 2.17 183,796 1.53

Balance carried forward 332,824 2.63 267,698 2.17

Notes:

Please see accompanying notes to the financials

FE Conversion Rate for GBP to INR for the Financial Year 70.7172 76.1983

Place: Toronto Deepak Patel

Date: April 25, 2011 CEO

Place: Toronto Deepak Patel

Date: April 25, 2011 CEO

(67)

MINACS LIMITED, UK

CMYK

11 1.. . ACCOUNTING POLICIES

1.1. AA Accounting Convv vention

The financial statements are prepared under the historical cost convention and

in accordance with applicable accounting standards, and in accordance with

the Financial Reporting Standard for Smaller Entities (effective April 2008).

1.2. Turnover

Turnover represents the total invoice value of sales made during the year stated

net of value added tax.

1.3. Leasing

Rentals payable under operating leases are charged against income on a straight

line basis over the lease term.

1.4. Investments

Fixed asset investments are stated at cost less provision for permanent

diminution in value.

1.5. Pensions

The pension costs charged in the financial statements represent the contribution

payable by the Company during the period.

The regular cost of providing retirement pensions and related benefits is charged

to the Profit and Loss Account over the employees' service lives on the basis

of a constant percentage of earnings.

1.6. Foreign Currencies

Monetary assets and liabilities denominated in foreign currencies are translated

into 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 Accounts

The Company is entitled to the exemption under Section 398 of the Companies

Act, 2006, from the obligation to prepare group accounts.

2.2. 2. TURNOVER

The total turnover of the Company for the year has been derived from its principal

activity wholly undertaken in the UK and Ireland.

3.3. 3. PENSION COSTS

The Company operates a defined contribution pension scheme in respect of the

employees. The Scheme and its assets are held by independent managers.

The pension charge represents contributions due from the Company and amounted

to £ 8,396; INR 0.06 Cr (Previous Year: £ 10,127; INR 0.07 Cr).

4.4. 4. SHARE CAPITAL As At As At



Authorised

1,000 Ordinary shares of £1 each 1,000 0.01 1,000 0.01

Allotted, called up and fully paid


Equity Shares


5.5. 5. INVESTMENTS IN SUBSIDIARY UNDERTAKINGS

Cost of Shares

Opening balance 15,277 0.11 15,277 0.10

Additions/(Deletions during the year) — — — —

Closing balance 15,277 0.11 15,277 0.10

Net Book Values

Opening balance 15,277 0.11 15,277 0.10

Additions/(Deletions during the year) — — — —

Closing balance 15,277 0.11 15,277 0.10

Holdings of 20% or more

The Company holds 20% or more of the share capital of the following companies:

Subsidiary undertaking Minacs Worldwide GmbH Minacs Worldwide GmbH

Country of Registration Germany Germany

Nature of Business Provider of Outsourced Provider of Outsourced

solutions solutions

Class of Shares Held Euro Share Euro Share

Proportion of Shares Held 100% 100%

6.6. 6. DEBTORS

Trade Debtors 489,674 3.55 700,210 4.75

Amounts owed by group undertakings 404,402 2.94 5,104 0.03

Other debtors 1,126 0.01 1,126 0.01

Prepayments and accrued income 2,879 0.02 1,369 0.01

898,081 6.52 707,809 4.80

7.7. 7. CURRENT LIABILITIES

Amount falling due within one year

Trade creditors 6,243 0.05 5,923 0.04

Amounts owed by group undertakings 522,810 3.80 359,437 2.44

Corporation tax 25,306 0.18 32,651 0.22

Other taxes and social security costs 95,916 0.70 153,452 1.04

Accruals and deferred income 54,000 0.39 49,861 0.34

704,275 5.11 601,324 4.08

Year Ended Year Ended



8.8. 8. OPERATING PROFIT / (LOSS)

Operating profit/(loss) is stated

after charging:

Auditors’ remuneration 6,000 0.04 6,000 0.05

Pension Costs 8,396 0.06 10,127 0.08

9.9. 9. TAX ON PROFIT/ (LOSS) ON

ORDINARY ACTIVITIES

Analysis of charge in period

Current Tax

UK corporation tax 25,256 0.18 32,567 0.25

10. FINANCIAL COMMITMENTS

Expiry date

Within one year — — — —

Between one and five years — — — —

— — — —

11. RELATED PARTY TRANSACTIONS

Sales to

Minacs Kft, Hungary 47,034 0.33 61,887 0.47

Minacs GmbH, Germany 51,687 0.37 3,155 0.02

Reimbursement of expenses/fees

Minacs GmbH, Germany 72,825 0.51 70,031 0.53

Miancs Worldwide Inc, Canada 447,219 3.16 160,582 1.22

Receivables from

Minacs Kft, Hungary 56,664 0.41 5,104 0.03

Minacs GmbH, Germany 347,737 2.52 (8,846) (0.06)

404,402 2.94 (3,742) (0.03)

Payable to

Minacs Worldwide Inc, Canada 522,810 3.80 359,437 2.44

12. ULTIMATE PARENT UNDERTAKING

The Company is wholly owned subsidiary of Minacs Worldwide Inc, a company

incorporated in Canada. The ultimate parent Company is Aditya Birla Nuvo Limited, a

Company incorporated in India.

(68)

MINACS WORLDWIDE GMBH, GERMANY

CMYK

Unaudited Balance Sheet AA As at 31st March, 2011 111 1

Balance Sheet as of March 31, 2011

31.03.2011 31.03.2011 31.03.2010 31.03.2010

INR/Cr INR/Cr

Sources of Funds

I Shareholders’ Funds

1. Share capital authorized

and fully paid in 25,000 0.16 25,000 0.15

2. Profit carried forward 2,094,247 13.37 1,783,414 11.85

3. Profit current year 253,936 1.53 310,833 2.04

4. Exchange fluctuations

on conversion — 0.09 — (0.96)

Total equity 2,373,183 15.15 2,119,247 13.08

II Loan Funds — — — —

2,373,183 15.15 2,119,247 13.08

Application of Funds

II I Fixed Assets

1. EDP software 998 0.01 998 0.01

2. Leasehold improvements 12,553 0.08 12,553 0.08

3. Furniture and equipment 29,364 0.19 27,422 0.17

4. Office equipment 42,898 0.27 37,980 0.23

5. Deferred development costs — — 2,442 0.02

5. Low-value-equipment at cost — — — —

Gross block 85,813 0.55 81,395 0.50

6. Accumulated depreciation (68,826) (0.44) (61,114) (0.38)

Total net block 16,987 0.11 20,281 0.13

IIII II Investments

1. Investments in Subsidiary

Company - Hungary 11,050 0.07 11,050 0.07

IIIIII III Current Assets

1. Cash at bank and in hand 110,969 0.71 166,461 1.03

2. Accounts receivable 1,649,627 10.53 1,752,586 10.82

3. Inter-company receivables 960,210 6.13 499,957 3.09

4. Prepaid expenses 30,265 0.19 42,249 0.26

5. Other assets 1,228 0.01 2,500 0.02

Total current assets 2,752,299 17.57 2,463,753 15.21

Less Liabilities

1. Accounts payable (1,522) (0.01) 3,219 0.02

2. Inter-company payables — — — —

3. Accrued expenses 450,720 2.88 368,169 2.27

4. Other liabilities (42,044) (0.27) 4,449 0.03

Total liabilities 407,153 2.60 375,837 2.32

Net current assets 2,345,146 14.97 2,087,916 12.89

Total 2,373,183 15.15 2,119,247 13.08

The accompanying notes to the

Financial Statements are an

intergral part of this Balance Sheet

Conversion Rate for Euro to INR

as at year end rates 63.84 61.74

Unaudited Profit and Loss AA Account for the year ended

31st March, 2011

April 1, 2010 to April 1, 2010 to April 1, 2009 to April 1, 2009 to

March 31, 2011 March 31, 2011March 31, 2010 March 31, 2010

INR/Cr INR/Cr

Income

1. Revenues 6,886,453 41.50 7,363,240 48.31

2. Interest income (1) (0.00) 59 0.00

6,886,453 41.50 7,363,299 48.31

Expenditure

3. Staff cost 5,090,971 30.68 5,213,485 34.20

4. Selling, general and

administrative expenses 485,081 2.92 444,458 2.92

5. Management fees 941,410 5.67 1,267,897 8.32

Total 6,517,462 39.28 6,925,840 45.44

6. Earnings before interest,

income taxes and depreciation 368,990 2.22 437,459 2.87

7. Depreciation on fixed assets 8,852 0.05 7,377 0.05

8. Currency revaluation difference 0.01

9. Interest expenses — — — —

10. Earnings before income taxes 360,139 2.17 430,082 2.82

11. Income taxes 106,202 0.64 119,249 0.78

12. Net income 253,936 1.53 310,833 2.04

The accompanying notes to the

Financial Statements are an integral

part of this Statement of Income

The average conversion rates for

Euro to INR for the financial year 60.27 65.60

(69)


CMYK

Unaudited Cash Flow Statement for the year ended

31st March, 2011



INR/Cr INR/Cr

Net earnings (Incl. FE Rate difference) 253,936 1.53 310,833 2.04

Depreciation of fixed assets 8,852 0.05 7,377 0.05

Changes in operating assets

and liabilities

– Accounts receivables and

inter-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-company

payables (4,741) (0.03) (84,519) (0.52)

– Accrued expenses and

other liabilities 36,057 0.23 (47,689) (0.29)

Cash flow used in operating activities (51,074) (0.42) 75,847 0.81

Purchase of fixed assets /

deferred expenses (4,418) (0.03) (11,795) (0.07)

Correction profit carried forward — — — —

Decrease/Increase in cash

during the year (55,492) (0.45) 64,052 0.74

Cash at the beginning of the year 166,461 1.06 102,409 6.07

Cash at the end of the year 110,969 0.71 166,461 6.81

Notes to Financial Statements as of March 31, 2011 111 1

I.I. I. General Information

The Company was set up on May 17, 2000, through notarized contract under the former

firm Insartor Holding SECHZEHNTE GmbH and was registered on

July 04, 2000, with the commercial register at the district court in Munich (HRB 131937).

The firm Insartor Holding SECHZEHNTE GmbH was changed in Minacs Worldwide

GmbH with the shareholders resolution dated August 04, 2000. At the same time it

was concluded to transfer the Company's residence from Munich to Russelsheim.

The change of the former firm Insartor Holding SECHZEHNTE GmbH in Minacs

Worldwide 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–, cooperative

association– and partnership register and the step-by-step establishment of an electronic

register Minacs Worldwide GmbH is registered from January 01, 2002, with the

commercial 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 in

totally.

The solely shareholder is Minacs Ltd., London.

The purpose of the Company is to act as a provider of outsourced solutions incorporating

customer contact centre management and other professional services. The Company

designs and delivers solutions that enable the customer relationship management of

its clients.

During the period 01.04.2010 to 31.03.2011 most of the Company's revenue has

been generated by one major customer.

II.II. II. Financial Information

1.1. 1. General Accounting Policy

The financial statements had been prepared in accordance with German Generally

Accepted Accounting Principles, which are laid down in the Commercial Code.

Fixed assets were carried at historical acquisition costs less accumulated

depreciation 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 taxable

income.

2.2. 2. Other Information

a) Contingent Liabilities

There were no contingent liabilities on the Balance-Sheet date.

b) Subsequent Events

There 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, 2011



INR/Cr INR/Cr

Assets

II I Fixed Assets (WDV) 16,987 0.11 20,281 0.13

IIII II Investments 11,050 0.07 11,050 0.07

IIIIII III Current Assets

1.1. 1. Cash at Bank and in Hand

a) Cash at Bank

Commerz bank AG

EUR-Account 00 29,021 0.19 47,783 0.29

Deutschebank 76,184

Komercni Banka General

Account — — 114,968 0.71

Commerz bank AG

GBP-Account — — — —

UniCredit Banca Italy 194 0.00 3,512 0.02

Rent Deposit 5,448 0.03 — —

Deutshce Bank HUF (95) (0.00) — —

b) Cash in Hand

Petty cash in Germany 217 0.00 198 0.00

110,969 0.22 166,461 1.03

2.2. 2. Accounts Receivables 1,649,627 10.53 1,752,586 10.82

3.3. 3. Inter-company Receivables

a) Minacs Worldwide Inc.,

Ontario, Canada 1,189,813 7.60 489,813 3.02

b) Minacs Worldwide Inc.,

Germany (261,523) (1.67) — —

c) Minacs Worldwide Inc.,

Management Fees 420,000 2.68 — —

(70)


CMYK

d) Minacs Ltd., London,

England (393,612) (2.51) 10,023 0.06

e) Minacs Hungary 5,532 0.04 122 0.00

960,210 6.09 499,957 3.09

4.4. 4. Prepaid Expenses 30,265 0.19 42,249 0.26

5.5. 5. Other Assets

Accounts receivables against

employees 1,228 0.01 2,500 0.02

Liabilities for pensiion

schemes — — — —

Advance payment for

Income Tax — —

Value Added Tax — —

1,228 0.01 2,500 0.02

IV Liabilities

6.6. 6. Accounts Payable (1522) (0.01) 3,219 0.02

7.7. 7. Accrued Expenses

Audit and legal expenses 30,300 0.19 36,650 0.23

Disability 4,200 0.03 4,500 0.03

Personnel expenses 117,000 0.75 6,000 0.04

Foreign personnel expenses 60,000 0.38 — —

Workmen’s compensation 25,000 0.16 25,000 0.15

Outstanding holiday pay 162,000 1.03 190,000 1.17

Bonus payment — — — —

Other personnel liabilities 46,720 0.30 46,060 0.28

Other accruals 5,500 0.04 59,959 0.37

Outstanding expenses — —

Total 450,720 2.88 368,169 2.27

8.8. 8. Other Liability

Sales tax payable (5,554) (0.04) (2,652) (0.02)

Income and other

Taxes payable 36,490 0.23 7,101 0.04

30,936 0.20 4,449 0.03

Total 480,133 3.07 375,837 2.32

April 1, 2011 10 to April 1, 2011 10 toApril 1, 2009 to April 1, 2009 to

March 31, 2011 111 1 March 31, 2011 111 1 March 31, 2011 100 0 March 31, 2011 100 0

INR/Cr INR/Cr

9. Staff Cost

Wages 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 and

minor 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, pensions

and other personnel expenses (926,450) (5.58) (941,884) (6.18)

Subcontractor staff and

minor services (124,391) (0.75) (26,448) (0.17)

Total (5,090,971) (30.68) (5,213,485) (34.20)

10. Selling, General and

Administration Expenses

Rent (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 and

entertainment 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 and

accounting 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 to


INR/Cr INR/Cr

(71)

MINACS KFT., HUNGARY

CMYK

Unaudited Balance Sheet as at 31st March, 2011 111 1

Unaudited in HUF

March 31, 2011 March 31, 2010

HUF INR/Cr HUF INR/Cr

SOURCES OF FUNDS

II I Shareholders’ Funds

Share capital 3,000,000 0.07 3,000,000 0.07

Retained earnings 81,252,998 1.88 69,544,015 1.63

Exchange fluctuation

on FX translation — 0.06 — (0.05)

84,252,998 2.01 72,544,015 1.65

IIII II Loan Funds — — — —

Total 84,252,998 2.01 72,544,015 1.65


II I Fixed Assets

Property, plant and

equipment, net — — 166,354 0.00

Deferred development costs 306,546 0.01 134,936 0.00

306,546 0.01 301,290 0.01

IIII II Current AA Assets

Cash and cash equivalents 66,482,212 1.59 84,120,524 1.92

Accounts receivable 101,862,725 2.43 97,421,621 2.22

Prepaid expenses 545,281 0.01 1,425,968 0.03

Other receivables 597,513 0.01 13,759,783 0.31

169,487,730 4.04 196,727,895 4.48

LL Less Liabilities


accrued liabilities 29,598,904 0.71 10,742,265 0.24

Due to inter-companies 55,942,373 1.33 113,742,906 2.59

Total 85,541,278 2.04 124,485,170 2.84

83,946,452 2.00 72,242,725 1.65

TT Totalal al 84,252,998 2.01 72,544,015 1.65

Notes

FE Conversion Rate for HUF to

INR as at the end of the year 0.23855 0.2279

Unaudited Profit and Loss AA Account for the year ended 31st March, 2011 111 1

Unaudited in HUF

April 1, 2011 10 to April 1, 2011 10 to April 1, 2009 to April 1, 2009 to



RR Ree evv venues 392,468,062 8 .57 401,959,291 9.91

Expenditure

Labour & Employee Related

Remuneration 172,049,412 3.76 173,385,630 4.28

Payroll Related 57,141,209 1.25 61,359,280 1.51

Group Insurance 557,744 0.01 780,006 0.02

Telecommunications 510,700 0.01 500,990 0.01

Training and seminars 2 ,560,908 0.06 2,568,498 0.06

Other dierct costs 33,842,010 0.74 32,373,811 0.80

Total 266,661,983 5.82 270,968,215 6.67

Gross profit 125,806,079 2 .75 130,991,076 3.24

Selling, general and administrative expenses

Professional Services 7,755,082 0.17 7,300,170 0.18

Recruiting 295,600 0.01 225,294 0.01

Office Cost 425,059 0.01 537,987 0.01

Other General and Admin. 9 ,445,942 0.21 6,331,476 0.16

Total 17,921,683 0.39 14,394,927 0.35

Earnings before interest expense, income

tt taxes, depreciation and amortization 11 107,884,396 2.35 11 111 16,596,149 2.88

Depreciation and amortization — — — —

Interest and financing expenses 1,173,112 0.03 1,781,984 0.04

Management fee 81,900,000 1.79 90,072,000 2.22

Currency Revaluation Difference 0.01 —

Income (Loss) before income taxes 24,811,284 0.53 24,742,165 0.61

PP Provision for (recovv very of) income taxes

Current 13,102,300 0.29 10,091,000 0.25

Future — — — -—

13,102,300 0.29 10,091,000 0.25

Net income (loss) for the period 11 11,708,984 0.25 11 14,651,165 0.36

Earnings/(Deficit), beginning of period 69,544,015 1.63 54,892,850 1.27

RR Retained earnings, end of period 81,252,998 1.88 69,544,015 1.63

Notes

Average FE Conversion Rate for HUF to

INR for the Financial Year 0.2183 0.2466

(72)


CMYK

Notes to Financial Statements as of March 31, 2011 111 1

I.I. I. General Information

1. Business name:

The name of the Company

In Hungarian: MINACS Telefoninformációs Szolgáltatások Kft

In English: MINACS Call Center Services Limited

Tax registration number: 1311764974-2-41

The abbreviated name of the

Company in Hungarian: MINACS Kft.

The abbreviated name of the

Company in English: MINACS Ltd.

Seat: Hungary 1114 Budapest, Ulaszlo street 27.

The registered headquarter of

the Company: Hungary 1138 Budapest, Váci út 169.

2. The form of the Company: Limited liability company

The Company was established in 2003 by the following owners:

MINACS Worldwide GmbH 96,66%

Julius Minacs 3,33%

The Company's share capital is THUF

3.000, which exclusively consists cash

deposits. The amount of it hasn't changed

compared to the last year.

The managing director of Paul Lonford Niewoehner

the Company: US-6115 Waterford,

Grace K. DR. MI 48329-1328

The Company's representation,The executives are entitled to register and

registration: represent the Company independently; the

managers appointed by the General

meeting are jointly entitled.

The Company's present owners:

Member Nominal Value THUF

MINACS Worldwide GmbH 2.900.000 HUF

Julius Minacs 100.000 HUF

The MINACS Ltd. is going to consolidate by the Minacs Worldwide GmbH.

The consolidated report can be seen at the seat of the Company.

THE COMPANY'S ACTIVITIES INCLUDE:

82.20 Call center activities - main activity

62.02 Computer consultancy activities

63.11 Data processing hosting and related activities

58.12 Publishing of directories and mailing lists

62.09 Other information tec and service activities

73.20 Market research and public opinion polling

70.22 Business and management consulting

82.99 Other business support services

The Company is only pursuing authorised activities owning the administrative

license.

Other:

The financial year of the Company differs from the calendar year. The statement

date is March 31, 2011. The date of the preparation of the annual report is

April 10, 2011.

Under the principle of completeness, the annual report includes those business

activities 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 Statement

The 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 by

the '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 indicated

otherwise.

II.II. II. MAJOR ELEMENTS OF THE AA ACCOUNTING POLICY

The Company performs its activity in compliance with the regulations of

the accounting law. The Company has established its policy for cash

treatment, inventory taking, and asset and liability valuation in accordance with the

accounting law.

The Company's Accounting Policy has set out that under the principle of going

concern the enforcement (the principle of integrity, authenticity, transparency,

comparison, continuity, consistence, prudence, gross accounting, individual

valuation, accrual and deferral, priority of content over form, materiality and

comparison of cost and profit) should be ensured.

It is considered to be a significant error if in the year of revealing the error during

different checks considering a given business year (separately each year), the value

of 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 the

contracted value of the errors and margins significantly alters the equity. It is

considered to be such an error in all cases when following the settling out there is

more than 20% change in the equity reported in the Balance Sheet of the previous

financial 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 to

published exchange rates of the HNB.

Evaluation of the Assets in the Financial Statement

1/ Intangible assets

Intangible assets are disclosed at purchase or production value, reduced by

accumulated 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 the

application of the depreciation rates required for writing-off the intangible assets

over a period equal to the expected useful life of the assets. The expected useful

life of the intangible assets by categories:

Rights representing value 7 years

Software 3 years

2/ Tangible assets

Tangible assets are disclosed in the Balance Sheet at purchase or production value,

reduced by accumulated deprecation. The calculation of deprecation is performed

on a straight-line basis, by the application of the depreciation rates required for the

writing off of the tangible assets over a period equal to the expected useful life of

the assets:

Land and buildings 20 years

Technical equipment, machinery 3-7 years

Other equipment 5-7 years

3/ Financial investments

Investments representing ownership share in economic associations are disclosed

at purchased price in the case of acquisition, while in the case of establishment at

the 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 market

value known as the date of preparation of the Balance Sheet.

4/ Recognition of transactions in foreign currency

Transactions in foreign currency are accounted at the exchange rate of MNB as

the date of the transaction. The exchange gain or loss arising from the difference

between the exchange rate as at the date of the financial fulfilment and the

transaction are disclosed in the Profit and Loss Statement.

5/ Sales revenue

Net sales revenues are accounted as at the date of fulfillment, and are exclusively

of VAT.

6/ Corporate tax

The corporate tax liability of the Company is accounted in the Profit and Loss

Statement on the basis of the regulations in the reported year.

7/ Changes in the Company's accounting policy

The Company's accounting policy did not change during the year.

III. FINANCIAL POSITION AND LIQUIDITY

There has been no such event since the date of the Balance Sheet, which

would have a material impact on the Company's financial statement as at

31 March, 2011. The liquidity of the Company was during the financial year insured.

(73)


CMYK

IV.. . Notes to Balance Sheet as at March 31, 2011 111 1

ADDITIONAL INFORMATION TO THE BALANCE SHEET


March 31, 2011 March 31, 2011 March 31, 2010 March 31, 2010


11 1 Equity

Share capital 3,000,000 0.07 3,000,000 0.07

22 2 AA Accumulated Profit Reservv vee e

Balance at the beginning

of the year 69,544,015 1.63 54,892,850 1.27

Profits during the year from P&L 11,708,984 0.25 14,651,165 0.36

Balance at the end of the year 81,252,998 11 1.88 69,544,011 155 5 11 1.63

33 3 Liquid AA Assets

Commerzbank Hungary 65,667,800 1.57 83,147,371 1.89

Petty cash 814,412 0.02 973,153 0.02

Total: 66,482,2122 2 11 1.59 84,120,524 11 1.92

44 4 Receivables

Trade receivables 101,862,725 2.43 97,421,621 2.22

Employee advances receivables — — — —

Total: 11 100 01,862,725 2.43 97,421,621 2.22

55 5 Other Receivable

Value added tax — — 12,267,783 0.28

Income & other taxes payable/

Receivables 597,513 0.01 1,492,000 0.03

Total: 597,513 0.01 13,759,783 0.31

66 6 Liabilities

Current Liabilities

Trade creditors 525,770 0.01 371,861 0.01

Accruals - General 10,542,955 0.25 1,000,370 0.02

Accruals - Payroll 18,530,179 0.44 9,370,034 0.21

Total: 29,598,904 0.71 10,742,265 0.24

77 7 Due to Inter Company

Due to GmbH Germany 1,467,047 0.03 32,345 0.00

Due to MXW Canada 37,469,278 0.89 112,123,337 2.56

Due to Minacs UK 17,006,048 0.41 1,587,223 0.04

Total: 55,942,373 1.33 113,742,906 2.59

VV V.. . Notes to Profit & Loss AA Account year ending March 31, 2011 111 1

ADDITIONAL INFORMATION TO THE PROFIT & LOSS

April 1, 2011 10 to April 1, 2011 10 to April 1, 2009 to April 1, 2009 to



11 1 Labour & Employy yee Related Remuneration

Regular Wages Paid 159,153,339 3.47 169,865,267 4.19

Sick Pay 2,831,073 0.06 3,520,363 0.09

Incentive Bonus Accrued 10,065,000 0.22 — —

11 172,049,4122 2 3.766 6 11 173,385,630 4.28

22 2 Payroll Related

Payroll Taxes Direct 12,993,424 0.28 13,149,007 0.32

401K/Pension Employer Match 38,478,741

Medicare (US) 5,669,044 0.12 48,210,273 1.19

57,141,209 0.41 61,359,280 1.51

33 3 Other Costs

Travel - Direct Cost 8,242,606 0.18 8,053,014 0.20

Project Disbursements 25,599,404 0.56 24,320,797 0.60

33,842,010 0.74 32,373,811 0.80

44 4 Professional Services

Accounting Fees 7,755,082 0.17 6,922,255 0.17

Corporate Legal Fees — — 377,915 0.01

7,755,082 0.17 7,300,170 0.18

55 5 Office Cost

Office Supplies & Minor Equipment 389,091 0.01 319,801 0.01

Other Supplies 19,948 0.00 202,476 0.00

Postage 16,020 0.00 15,710 0.00

425,059 0.01 537,987 0.01

66 6 Other General and AA Admin. Cost

Non-Cash Incentives - Indirect — — — —

Other SG&A 9,445,942 0.21 6,319,280 0.14

Penalty and Fine Charges — — 12,196 0.00

9,445,942 0.21 6,331,4766 6 0.144 4

77 7 Interest and Financing Expenses

Bank Service Charges — — 785,504 0.02

Foreign Currency Unrealised Gain — — 2,867 0.00

Foreign Currency Realised Gain 1,358,830 0.03 1,229,518 0.03

Other Interest Expenses (185,718) (0.00) (235,905) (0.01)

1,173,111 122 2 0.03 1,781,984 0.04

88 8 PP Provision for (Recovv very of) Income TT Taxes

Current Income Tax 13,102,300 0.29 2,056,000 0.05

State 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 LIMITED

C M Y K

REPORT OF THE DIRECT ORS

FOR THE YEAR ENDED 31 MARCH, 2011

The directors have pleasure in submitting their annual report with the

audited accounts of the group for the year.

PRINCIPAL ACTIVITY

The principal activity of the group during the year under review was the

provision of personnel and related consultancy services from Asia.

REVIEW OF BUSINESS AND FUTURE DEVELOPMENTS

The 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 Compass

BPO 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 the

region since that date, and are supplied by Aditya Birla Minacs BPO

Private Limited, which is another subsidiary undertaking based in India.

DIVIDEND

The directors do not recommend the payment of a dividend.

(2010: £Nil).

CREDITOR PAYMENT POLICY

It is the group’s policy to agree the terms of payment to creditors at the

start of business with that supplier, ensure that suppliers are aware of

the terms of payment and to pay in accordance with its contractual and

other legal obligations.

EMPLOYEE INVOLVEMENT

The group’s policy is to consult and discuss with employees any matters

likely to affect their interests.

Information on matters of concern to employees is given at staff

meetings and through information bulletins and reports.

FINANCIAL RISK

The group’s operations expose it to a variety of financial risks that include

the credit risk, exchange rate risk, liquidity risk and interest rate risk.

The group has in place risk management procedures to limit the adverse

effects on the financial performance of the Company by monitoring

levels of debt finance and related finance costs.

DIRECTORS

The directors who served during the year were: -D. Patel

M. Kedia

STATEMENT OF DIRECTORS’ RESPONSIBILITIES

The directors are responsible for preparing the Directors’ Report and

the financial statements in accordance with applicable law and

regulations.

Company law requires the directors to prepare financial statements for

each financial year. Under that law the directors have elected to prepare

the financial statements in accordance with United Kingdom Generally

Accepted Accounting Practice (United Kingdom Accounting Standards

and applicable law). Under company law the directors must not approve

the financial statements unless they are satisfied that they give a true

and fair view of the state of affairs of the Company and of the profit or

loss of the Company for that period. In preparing these financial

statements, the directors are required to:

• select suitable accounting policies and then apply them

consistently;

• make judgments and accounting estimates that are reasonable

and prudent;

• state whether applicable UK Accounting Standards have been

followed, subject to any material departures disclosed and explained

in the financial statements; and

• prepare the financial statements on the going concern basis unless

it is inappropriate to presume that the Company will continue in

business.

The directors are responsible for keeping adequate accounting records

that are sufficient to show and explain the Company’s transactions and

disclose with reasonable accuracy at any time the financial position of

the Company and enable them to ensure that the financial statements

comply with the Companies Act, 2006. They are also responsible for

safeguarding the assets of the company and, hence, for taking

reasonable 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’s

auditors are unaware; and

• the directors have taken all steps that they ought to have taken to

make themselves aware of any relevant audit information and to

establish that the auditors are aware of that information.

AUDITORS

The auditors, haysmacintyre, will be proposed for re-appointment in

accordance with S485 of the Companies Act, 2006.

By order of the Board

D. Patel

Director

Registered Office:

Fairfax House

15 Fulwood Place

London

WC1V 6AY 25 April, 2011

(75)


C M Y K

INDEPENDENT REPOR T OF THE AUDI TORS TO THE

SHAREHOLDERS OF


We have audited the financial statements of Aditya Birla Minacs BPO

Limited for the year ended 31 March 2011, which comprise the

Consolidated Profit and Loss Account, the Consolidated and Company

Balance Sheets, the Consolidated Statement of Total Recognised Gains

and Losses and the related notes. The financial reporting framework

that has been applied in their preparation is applicable law and United

Kingdom Accounting Standards (United Kingdom Generally Accepted

Accounting Practice).

This report is made solely to the Company’s members, as a body, in

accordance with Chapter 3 of Part 16 of the Companies Act, 2006.

Our audit work has been undertaken so that we might state to the

Company’s members those matters we are required to state to them

in an Auditor’s report and for no other purpose. To the fullest extent

permitted by law, we do not accept or assume responsibility to anyone

other than the Company’s members as a body, for our audit work, for

this report, or for the opinions we have formed.

Respective Responsibilities of Directors and Auditors

As explained more fully in the Directors’ Responsibilities Statement

set out on page 3, the directors are responsible for the preparation of

the financial statements and for being satisfied that they give a true

and fair view. Our responsibility is to audit the financial statements in

accordance with applicable law and International Standards on Auditing

(UK and Ireland). Those standards require us to comply with the Auditing

Practices Board’s Ethical Standards for Auditors.

Scope of the Audit of the Financial Statements

An audit involves obtaining evidence about the amounts and disclosures

in the financial statements sufficient to give reasonable assurance that

the financial statements are free from material misstatement, whether

caused by fraud or error. This includes an assessment of: whether the

accounting policies are appropriate to the Company’s circumstances,

and have been consistently applied and adequately disclosed; the

reasonableness of significant accounting estimates made by the

directors; and the overall presentation of the financial statements.

Opinion on Financial St atements

In our opinion the financial statements:

• give a true and fair view of the state of the group’s affairs as at

31 March 2011, and of the group’s loss for the year then ended;

• have been properly prepared in accordance with United Kingdom

Generally Accepted Accounting Practice; and

• have been prepared in accordance with the requirements of the

Companies Act, 2006.

Opinion on other matter prescribed by the Companies Act, 2006

In our opinion the information given in the Directors’ Report for the

financial Year for which the financial statements are prepared is

consistent with the financial statements.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where

the Companies Act, 2006, requires us to report to you if, in our opinion:

• adequate accounting records have not been kept, or returns

adequate for our audit have not been received from branches not

visited by us; or

• the financial statements are not in agreement with the accounting

records and returns; or

• certain disclosures of directors’ remuneration specified by law are

not made; or

• we have not received all the information and explanations we

require for our audit.

Anastasia Frangos (Senior Statutory Auditor)

for and on behalf of haysmacintyre, Statutory Auditor

Fairfax House

15 Fulwood Place

London

WC1V 6AY

(76)


C M Y K

CONSOLIDATED PR OFIT AND LOSS ACCO UNT


Notes 2011 2010

£ £

Turnover Turnover 1 4,269,889 4,370,362

Cost of Sales (1,914,541) (2,156,475)

Gross Profit 2,355,348 2,213,887

Administrative 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 4,290

Interest Payabl e 3 (823) (56,400)

Profit/(Loss) on Ordinary

Activities Before Taxation 10,686 (169,923)

Taxation Taxation 5 (23,597) (1,525)

Profit/(Loss) for the Financial

Year After Taxation Year After Taxation 12 £(12,911) £(171,448)

All results relate to continuing activities.

Statement of Total Recognised Gains and Losses

2011 2010

£ £

Profit/(Loss) for the Financial Year (12,911) (171,448)

Exchange Translation Differences (12,461) 11,505

Total Recognised Gains and Losses

relating to the year £(25,372) £(159,943)

The attached notes form an integral part of these accounts.

COMPANY PR OFIT AND LOSS ACCOUNT


2011 2010

£ £ £ £

SALES 1,693,646 2,049,167

LESS: COST OF SALES (1,329,085) (1,803,959)

GROSS PROFIT GROSS PROFIT 364,561 245,208

Profit on Sale of Assets — (60)

Interest Received 34 41

Interest Payable / Guarantee Commission — (55, 858)

Exchange Gain / (Loss) (18,557) (35,818)

346,038 153,513

LESS: OVERHEADS

Telephone 27,103 31,323

Insurance 32,095 33,348

Printing, postage and stationery 135 2,580

Entertaining and Staff Welfare — 133

Rent and Electricity for Premises 27,297 34,282

Rent for Data Centre 4,680 4,680

Accountancy Fees 8,580 15,050

Bank Charges 4,634 10,699

Legal and Professional Fees 11,980 121,086

Marketing Costs 51,854 35,844

Commission Charges 21,180 21,819

Sales Support 24,000 24,000

Salaries 23,100 23,535

Social Security 2,229 2,227

Meetings and Conferences 198 1,657

Office Expenses 2,791 2,185

Write-off Inter-company Loan 49,675 —

Depreciation 709 1,749

Travel Expenses — 1,647

Computer Maintenance and Support 7,600 7,448

Bad Debts 134,761 —

(434,601) (375,292)

PROFIT / (LOSS) ON ORDINARY

ACTIVITIES £ (88,563) £ (221,779)

(77)


C M Y K

CONSOLIDATED BALANCE SHEET

AS AT 31 MARCH, 2011

2011 2010

Notes £ £ £ £

FIXED ASSETS

Tangible Assets 6 148,756 299,210

Current Assets

Debtors 8 767,470 946,096

Cash at Bank and in Hand 692,372 197,483

1,459,842 1,143,579

Creditors Creditors: Amounts falling

due within one year 9 (747, 886) (556,705)

711,956 586,874

Net Assets Net Assets £860,712 £886,084

CAPITAL AND RESERVES

Called up Share Capital 10 18,967 18,967

Share Premium 11 1,145,206 1,145,206

Profit 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 on

25 April, 2011, and were signed below on its behalf by:-D. Patel M. Kedia

Director Director


COMPANY BALANCE SHEET

AS AT 31 MARCH, 2011

2011 2010

Notes £ £ £ £

FIXED ASSETS

Tangible Assets 6 797 1,507

Investments 7 246,226 268,548

247,023 270,055

CURRENT ASSETS

Debtors 8 715,869 698,620

Cash at Bank and in Hand 209,536 144,669

925,405 843,289

CREDITORS CREDITORS: Amounts falling

due within one year 9 ( 333,607) (185,960)

591,798 657,329

NET ASSETS £838,821 £927,384

CAPITAL AND RESERVES

Called up Share Capital 10 18,967 18,967

Share Premium 11 1,145,206 1,145,206

Profit 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 on

25 April, 2011, and were signed below on its behalf by:-D. Patel M. Kedia

Director Director


(78)


C M Y K

NOTES TO THE A CCOUNTS FOR THE YEAR ENDED 31 MARCH, 2011

1. Turnov er

Turnover is attributable to the principal activity of the group, net of Value Added Tax.

A geographical analysis of turnover is as follows:

2011 2010

Group Group

£ £

United Kingdom 1,693,646 2,098,751

Rest of the world 2,576,243 2,271,611

£4,269,889 £4,370,362

2. Operating Profit/(Loss)

2011 2010

Group Group

£ £

Operating Profit/(Loss) is stated after charging:

Depreciation 124,186 136,447

Payments made under Operating Leases 162,458 347,348

Auditors’ Remuneration - Audit 12,500 8,500

- Other Services 8,144 12,476

3. Interest Payable

2011 2010

Group Group

£ £

10% Convertible Loan Stock Interest — 47,725

Guarantee Commission — 4,896

Bank Loan Interest 823 3,779

£823 £56,400

4. Employees

2011 2010

Group Group

£ £

Staff Costs (including directors) during the year amounted to:

Wages and Salaries 1,769,159 2,214,508

Social Security Costs 2,229 2,227

£1,771,388 £2,216,735

No. No.

The average weekly number of Employees

during the year was: 271 363

Directors’ Remuneration 2011 2010

Group Group

£ £

Directors’ Fees (paid through subsidiary undertakings) £ — £411,009

Pension 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 28,986

Under/(Over) Provision of UK Corporation

Tax in previous year — (300)

Total Current Tax (note b) 3,655 4,790

Overseas 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 companies'

rate of corporation tax in the UK of 28% (2010: 28%). The differences are explained

below:

2011 2010

£ £

Profit/(Loss) on ordinary activities before tax £10,686 £(169,923)

Profit/(Loss) on ordinary activities before tax

multiplied by the main rate of Corporation Tax

in the UK of 28% (2010: 28%) 2,992 (47,578)

STATEMENT OF ACCOUNTING POLICIES


The financial statements have been prepared in accordance with applicable accounting

standards. The particular accounting policies adopted are described below:

(a) Basis of Accounting

The accounts have been prepared under the historical cost convention and in

accordance with applicable accounting standards.

(b) Basis of Consolidation

The group financial statements consolidate the accounts of Aditya Birla Minacs BPO

Limited and its subsidiary undertakings made up to 31 March each year; the group

profit and loss account includes the results of the subsidiary undertaking for the

period 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 provided

by S408 of the Companies Act, 2006. The holding company's loss for the year was

£88,563 (2010: loss £197,584).

(c) Turnover

Turnover arises from the principal activity of the Company.

(d) Foreign Currency

Company

Assets and liabilities on foreign currencies are translated at the rates of exchange

ruling at the balance sheet date. Transactions on foreign currencies are recorded at

the rate of exchange ruling at the date of the transaction. All differences are taken to

the profit and loss account.

Group

The balance sheets of overseas subsidiary undertakings are translated at the rate of

exchange ruling at the balance sheet date and the profit and loss accounts are

translated at the average rates for the year. The exchange differences arising on the

re-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 timing

differences between the treatment of certain items for accounts purposes and their

treatment for tax purposes. Tax deferred or accelerated is accounted for in respect

of all timing differences, where material.

(f) Hire Purchase Agreements

Assets acquired under hire purchase contracts are capitalized in the balance sheet,

and are depreciated over their expected useful lives. The interest element of the

instalments is charged to the profit and loss account over the period of the contract.

(g) Operating Lease Agreements

Rentals applicable to operating leases where substantially all of the benefits and

risks of ownership remain with the lessor are charged against profit as incurred.

(h) Pension Costs

Contributions to defined contribution pension schemes are charged to the profit and

loss account in the period in which they become payable. Aditya Birla Minacs BPO

Private Limited operates a defined benefit pension scheme, known as Compass

Development (India) Pvt. Ltd. Employees Group Gratuity Assurance Scheme, covering

all eligible employees. The deficit on the pension scheme has been provided for in

the financial statements.

(i) Tangible Fixed Assets and Depreciation

Depreciation 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 — 33

1

/

3

% straight line

Equipment — 33

1

/

3

% straight line

Motor Vehicles — 33

1

/

3

% straight line

(j) Investments

Fixed asset investments are shown at the lower of cost or directors' valuation.

(k) Taxation

Corporation tax is provided for at the current rates.

(l) Cash Flow Statement

The directors have taken advantage of the exemptions available in Financial Reporting

Standard No.1 from the requirement to produce a cash flow statement.

(79)


C M Y K

Effects of:

2011 2010

£ £

Amounts not subject to UK Corporation Tax (27,790) (14,520)

Expenses not deductible for tax purposes 14,929 21,531

Capital Allowances for the year in excess of depreciation (9) (327)

Effect of Change in Tax Rates — 8,232

Losses carried forward 9,878 17,134

Other 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 against

future profits.

6. TANGIBLE FIX ED ASSETS

Group Company

Fixtures

Fittings

Computer and Office Motor Group

Equipment Equipment Vehicles Total Equipment Total

£ £ £ £ £ £

COST

1 April, 2010 485,115 320,937 37,608 843,660 2,236 2,236

Additions 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 2,236

DEPRECIATION

1 April, 2010 431,072 83,940 29,438 544,450 729 729

Charge for Year 33,940 85,912 4,332 124,184 710 710

Forex 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 1,439

NET BOOK VALUE

31 March, 2011 £11,982 £136,775 £ — £148,758 £797 £797

31 March, 2010 £54,043 £236,997 £8,170 £299,210 £1,507 £1,507

7. INVESTMENT IN SUBSIDIARY UNDERTAKINGS

Company

COST £

As at 1 April, 2010 268,548

Additions 144,983

Disposals (167,305)

At 31 March, 2011 £246,226

The Company’s investments are comprised of the following:

Company Class of % Cost of

of Shares Held Investment

incorporation Held


Private Limited India Ordinary 100% 101,188


Private Limited India 5% Preference 100% 144,983

Compass BPO Inc. US Ordinary 100% 55

The 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 company's entire preference shareholding in Aditya Birla

Minacs 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. DEBTORS

2011 2010

Group Company Group Company

£ £ £ £

Trade Debtors 493,098 139,974 471,776 160,165

Other Debtors 220,523 48,794 321,934 15,818

Due from Subsidiary Undertakings — 493,121 — 488,611

Prepayments and Accrued Income 29,953 10,084 128,490 10,130

Corporation Tax Recoverable 23,896 23,896 23,896 23,896

£767,470 £715,869 £946,096 £698,620

9. CREDITORS: Amounts falling due within one year:

2011 2010


£ £ £ £

Trade Creditors 59,726 11,069 214,450 97,831

Amounts Owed to Group Undertakings 290,333 262,505 — 19,665

Other Taxation and Social Security 34,098 22,166 60,110 41,038

Other 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 £185,960

10. 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 £18,967

11. SHARE PREMIUM

2011 2010

Group and Company Group Group

£ £

Share Premium at 1 April, 2010 1,145,206 765,173

Premium on Issue of Shares — 348,372

Transfer from other reserves on conversion of loan notes — 31,661

Share premium at 31 March, 2011 £1,145,206 £1,145,206

12. PROFIT AND LOSS ACCOUNT

2011 2010


£ £ £ £

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’ Funds

2011 2010


£ £ £ £

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 886,084 927,384 695,248 774,189

Closing Shareholders' Funds £860,712 £838,821 £886,084 £927,384

14. Pension Commitments

Aditya Birla Minacs BPO Pvt. Ltd., operates a defined benefit pension scheme, for

eligible staff. It is funded by the payment of contributions to a separately administered

trust 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 "Retirement

Benefits". The Group includes the assets and liabilities of the pension fund in the

Group's Balance Sheet, with a subsequent effect on reserves.

NOTES TO THE ACCOUNTS (continued)

(80)


C M Y K

The pension contributions are determined with the advice of a qualified actuary on

the basis of annual valuations using the method. The most recent valuation was

conducted as at 31March, 2011. The principal assumptions used by the actuaries

were that the return on assets would be 9% per annum and salaries would increase

by 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 the

scheme are expected to remain at this level in the future.

The key assumptions were as follows:

Main Assumptions % per annum

2011 2010

Rate of Return on Investments 9% 9%

Increase in Earnings 6% 4%

Discount Rate 8% 8%

Value at Value at

31 March 2011 31 March 2010

£’000s £’000s

Market Value of Assets 34 34

Present Value of Scheme Liabilities (99) (53)

Net Pension Scheme Liability (65) (19)

The movement in the deficit during the year arose as follows: 2011

£’000s

Deficit as at 1 April 2010 (19)

Movement in present value of scheme liabilities (18)

Interest Earned 3

Settlements (19)

Employer Contributions 21

Exchange Gains (34)

Deficit as at 31 March, 2011 (65)

1 5. Operating Lease Commitments

At 31 March, 2011 the Company had the following annual commitments under

non-cancellable operating leases.

2011 2010

Group Group

Land and Land and

Buildings Buildings

£ £

Operating Leases which expire:

– within one year 81,923 64,652

– within one to two years 12,600 –

– within two to five years – 12,600


The Company has taken advantage of the exemption available under FRS 8 "Related

Party Disclosures" not to disclose transactions with its 100% owned subsidiaries.

During the year, the Company was recharged £212,621 by its immediate parent

company, Aditya Birla Minacs Worldwide Inc., for shared sales costs and management

fees. These fees remained unpaid at the year end and are included within amounts

due to group undertakings in note 9.

17. Contingent Liabilities

The Company is a joint guarantor in respect of loan and overdraft facilities granted to

Aditya Birla Minacs Private Limited, the Company's 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. Control

The ultimate parent company and controlling party is Aditya Birla Nuvo Limited, a

company listed on the Bombay Stock Exchange.

The largest group into which Aditya Birla Minacs BPO Limited is consolidated is

headed by Aditya Birla Nuvo Limited.

The smallest group into which Aditya Birla Minacs BPO Limited is consolidated is

headed 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.)

C M Y K

DIRECTORS’ REPOR T TO THE MEMBER S

Your Directors have pleasure in presenting the 13

th

Annual Report and

the Audited Accounts for the year ended 31

st

March, 2011.

FINANCIAL RESULTS:

(` in Lacs)

31.03.2011 31.03.2010

Sales and Other Income 1,870.45 2,409.23

Profit/(Loss) before Depreciation 51.85 231.09

Depreciation (85.16) (88.64)

Profit/(Loss) before Taxation (33.31) 142.45

Provision for Taxation (14.78) (8.85)

Profit/(Loss) after Taxation (48.09) 133.60

Loss Brought Forward (13.25) (146.85)

Accumulated Profit/(Loss)

Carried to Balance Sheet (61.34) (13.25)

DIVIDEND

The Company has made loss during the year. However, it has been

decided to retain the profits and, hence, the directors do not recommend

any dividend for the year.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 217(2AA) of the Companies

Act, 1956, with respect to Directors’ Responsibility Statement, it is

hereby confirmed:

(i) that in the preparation of the annual accounts for the financial year

ended 31.03.2011 the applicable accounting standards have been

followed along with proper explanation relating to material

departures;

(ii) the Directors had selected such accounting policies and applied

them consistently and made judgments and estimates that are

reasonable and prudent so as to give a true and fair view of the

state of the affairs of the Company at the end of the financial year

and of the profit or loss of the Company for that period;

(iii) the Directors had taken proper and sufficient care for the

maintenance of adequate accounting records in accordance with

the provisions of this Act for safeguarding the assets of the

Company and for preventing and detecting fraud and other

irregularities; and

(iv) that the Directors have prepared the accounts for the financial year

ended 31.03.2011 on a on going concern’ basis.

PARTICULARS OF CONSERVATION OF ENERGY AND

TECHNOLOGY ABSORPTION

Since your Company is a 100% export-oriented unit and only operates

in 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 out

its process. The consumption of energy is minimal. The Company will

take suitable steps, if required, in future for reduction of consumption

of energy.

PARTICULARS OF EMPLOYEES

There were no employees covered by the provisions of Section 217

(2A) of the Companies Act, 1956, read with companies (Particulars of

Employees) Rules, 1975, whose particulars are required to be given.

FOREIGN EXCHANGE

Your Company remains to be net foreign exchange earner for India.

(` in Lacs)

31.03.2011 31.03.2010

Export Earnings for Service 1,856.49 2,406.34

Less: Expenses

— Capital NIL 8.54

— Others 25.53 24.74

Net Foreign Exchange Earnings 1,830.96 2,373.06

STATUTORY AUDITORS

The report of the Statutory Auditors, S. V. Ghatalia & Company,

Chartered Accountants, Mumbai, is attached to this report. The

observations 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 as

set out in the accompanying notice of the Annual General Meeting.

DEPOSITS

The Company has not accepted any deposit during the financial year.

NAME CHANGE

Your Company has changed its name from Compass Business Process

Outsourcing Private Limited to Aditya Birla Minacs BPO Private Limited

w.e.f. 15

th

November, 2010.

ISSUE OF COMPULSORILY CONVERTIBLE PREFERENCE SHARES

AND REDEMPTION OF EXISTING PREFERENCE SHARES

Your Company had issued 65,625, 5% Compulsorily Convertible

Preference Shares of ` 100 each at a premium of ` 60 per share

aggregating to a total consideration of ` 1 Crore 5 Lacs to Aditya Birla

Minacs BPO Limited, UK (f/k/a Compass BPO Limited, UK), holding

company of your Company.

Your Company had thereon redeemed 105,000, 10% Redeemable

Preference Shares of ` 100/- each aggregating to a total value of

` 1 Crore 5 Lacs during the year. The said Preference Shares were

allotted to Aditya Birla Minacs BPO Limited, UK (f/k/a Compass BPO

Limited, UK), holding company of your Company.

ACKNOWLEDGEMENTS

Your 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’ Agencies

and Banks for their valuable support. The Directors also express their

appreciation to all Employees, Staff and Shareholders of the Company.

For and on behalf of the Board of

Aditya Birla Minacs BPO Pvt. Ltd.

sd/ sd/

Place: Mumbai Mr. Deepak J. Patel Mr. Manoj Kedia

date : April 22, 2011 Director Director

(82)


C M Y K

AUDITORS’ REPOR T

To

The 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 Minacs

BPO Limited (Formerly Compass Business Process Outsourcing

Private Limited) (‘the Company’) as at March 31, 2011, and also

the Profit and Loss Account, and the Cash Flow Statement for the

year ended on that date annexed thereto. These financial

statements are the responsibility of the Company’s management.





and perform the audit to obtain reasonable assurance about

whether the financial statements are free of material misstatement.

An audit includes examining, on a test basis, evidence supporting

the amounts and disclosures in the financial statements. An audit





3. As required by the Companies (Auditor’s Report) Order, 2003 (as

amended), issued by the Central Government of India, in terms of

sub-section (4A) of Section 227 of the Companies Act, 1956, we

enclose in the Annexure a statement on the matters specified in

paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to above, we

report that:

i. We have obtained all the information and explanations, which



ii. In our opinion, proper books of account as required by law

have been kept by the Company so far as appears from our

examination of those books;

iii. The balance sheet, profit and loss account, and cash flow

Statement dealt with by this report are in agreement with the

books of account;

iv. In our opinion, the balance sheet, profit and loss account, and



211 of the Companies Act, 1956;

v. On the basis of the written representations received from the

directors, as on March 31, 2011, and taken on record by the

Board of Directors, we report that none of the directors is

disqualified as on March 31, 2011, from being appointed as a

director in terms of clause (g) of sub-section (1) of section 274

of the Companies Act, 1956;

vi. In our opinion and to the best of our information and according

to the explanations given to us, the said accounts give the

information required by the Companies Act, 1956, in the

manner so required and give a true and fair view in conformity

with the accounting principles generally accepted in India:





c) in the case of the cash flow statement, of the cash flows

for the year ended on that date.

For S.V. Ghatalia & Associates

Firm Registration Number: 103162W


per Himanshu Chapsey

Partner


Place : Mumbai

Date : April 25, 2011

Annexure ref er red to in paragraph [3] of our report of e ven date

Re: Aditya Birla Minacs BPO Private Limited

(Formerly Compass Business Process Outsourcing Private Limited)

(‘the Company’)

(i)

(a) The Company has maintained proper records showing full

particulars, including quantitative details and situation of

fixed assets.

(b) Fixed assets have been physically verified by the

management during the year and no material discrepancies

were identified on such verification.

(c) There was no substantial disposal of fixed assets during

the 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 parties

covered in the register maintained under section 301 of

the

Companies Act, 1956. Accordingly, provisions of

clauses 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, secured

or unsecured, from companies, firms or other parties

covered in the register maintained under section 301 of

the Act. Accordingly, provisions of clauses 4(iii) (f) and (g)

of the Companies (Auditor’s Report) Order, 2003 (as

amended), are not applicable to the Company.

(iv) In our opinion and according to the information and explanations

given to us, there is an adequate internal control system

commensurate with the size of the Company and the nature of

its business, for the purchase of inventory and fixed assets and

for the sale of goods and services. During the course of our audit,

no major weakness has been noticed in the internal control

system in respect of these areas. During the course of our audit,

we have not observed any continuing failure to correct major

weakness in internal control system of the Company.

(v) According to the information and explanations provided by the

management, we are of the opinion that there are no contracts

or arrangement referred to in section 301 of the Act that needs

to be entered into the register maintained under section 301 of

the Act.

(vi) The Compa ny 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 Central

Government has not prescribed maintenance of cost records

under clause (d) of sub-section (1) of section 209 of the

Companies Act, 1956, for the products of the Company.

(ix) (a) The Company is generally regular in depositing with

appropriate authorities undisputed statutory dues including

provident fund, income-tax, sales tax, wealth tax, service

tax, customs duty, cess and other material statutory dues

applicable to it. The provisions relating to investor education

and protection fund and excise duty are not applicable to

the Company. Further, since the Central Government has

till date not prescribed the amount of cess payable under

section 441 A of the Companies Act, 1956, we are not in

a position to comment upon the regularity or otherwise of

the Company in depositing the same.

(b) According to the information and explanations given to

us, no undisputed amount payable in respect of provident

fund, income-tax, wealth tax, service tax, sales tax,

customs duty, cess and other undisputed statutory dues

were outstanding at the year end, for a period of more

than six months from the date they became payable. The

provisions of investor education and protection fund and

excise duty are not applicable to the Company.

(83)


C M Y K

(c) According to the information and explanations given to

us, there are no dues of income-tax, sales tax, wealth tax,

service tax, customs duty and cess, which have not been

deposited on account of any dispute.

(x) The Company has no accumulated losses at the end of the

financial year and it has not incurred cash losses in the current

and immediately preceding financial year.

(xi) Based on our audit procedures and as per the information and

explanations given by the management, we are of the opinion

that the Company has not defaulted in repayment of dues to a

financial institution, bank or debenture holders.

(xii) According to the information and explanations given to us and

based on the documents and records produced to us, the

Company has not granted loans and advances on the basis of

security by way of pledge of shares, debentures and other

securities.

(xiii) In our opinion, the Company is not a chit fund or a nidhi / mutual

benefit 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, the

provisions 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 others

from bank or financial institutions.

(xvi) The Com pany did not have any term loans outstanding during

the year.

(xvii) According to the information and explanations given to us and

on an overall examination of the balance sheet of the Company,

we report that no funds raised on short-term basis have been

used for long-term investment.

(xviii) The Company has not made any preferential allotment of shares

to parties or companies covered in the register maintained under

section 301 of the Companies Act, 1956.

(xix) The Company did not have any outstanding debentures during

the year.

(xx) The Company has not raised any money from public issues during

the year.

(xxi) Based upon the audit procedures performed for the purpose of

reporting the true and fair view of the financial statements and

as per the information and explanations given by the

management, we report that no fraud on or by the Company has

been noticed or reported during the course of our audit.

For S.V. Ghatalia & Associates

Firm Registration Number: 103162W



Partner


Place : Mumbai

Date : April 25, 2011.

(84)


C M Y K


For S.V . Ghat alia & A ssociates


Chartered Accountants Mr. Deepak Patel

Director


Partner Mr. Manoj Kedia

Membership No: 36738 Director

Place: Mumbai Place: Mumbai

Date : April 25, 2011 Date : April 25, 2011

BALANCE SHEE T AS AT MARCH 31, 2011


2011 2010

( ` ) ( ` )

SOURCES OF FUNDS

Shareholders’ Funds

Share capital 11 13,493,500 17,431,000

Securities premium 22 3,937,500 —

Loan funds

Secured loans 33 — 637,140

Unsecured loans 44 1,852,283 1,852,283

Total 19,283,283 19,920,423


Fixed assets 5

Gross block 49,326,248 56,331,620

Less : Accumulated depreciation 38,817,707 36,675,776

Net block 10,508,541 19,655,844

Deffered tax asset Deffered tax asset — 1,478,000

Current assets, loans and

advances

Sundry debtors 66 18,911,494 1,334,632

Cash and bank balances 77 31,685,589 3,457,283

Loans and advances 88 15,408,828 25,920,944

66,005,911 30,712,859

Less : Current liabilities and

provisions

Current liabilities 99 48,985,985 29,383,650

Provisions 10 10 14,378,906 3,867,101

63,364,891 33,250,751

Net current assets 2,641,020 (2,537,892)

Profit and loss account 6,133,722 1,324,471

Total 19,283,283 19,920,423

Significant accounting policies 15

and notes on accounts

The Schedules referred to above form an integral part of the balance sheet.

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED ON

MARCH 31, 2011

March 31, March 31,

2011 2010

Schedule ( ` ) ( ` )

INCOME

Income from services 185,648,849 240,634,675

Other income 11 11 1,395,730 288,847

Total income 187,044,579 240,923,522

EXPENDITURE

Personnel expenses 12 12 129,880,981 140,669,881

Operating and other expenses 13 13 51,922,552 77,104,319

Finance expenses 14 14 56,181 39,334

Depreciation 8,516,116 8,864,548

190,375,830 226,678,083

Profit / (Loss) before tax (3,331,251) 14,245,439

Current tax — 1,111,000

Deferred tax charge 1,478,000 (226,017)

Profit / (Loss) after tax (4,809,251) 13,360,456


from the previous year (1,324,471) (14,684,928)

Balance carried forward

to the balance sheet (6,133,722) (1,324,471)

Earnings per share

(basic and diluted)

[Nominal value of shares ` 10

Previous year: ` 10] (Refer Note

C.9 of Schedule 15) (7.23) 17.83

Significant Accounting Policies 15

and Notes on Accounts

The Schedules referred to above form an integral part of the profit and loss account





Director






(85)


C M Y K





Director






CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2011

Year ended March 31, 2011 Year ended March 31,2010

( ` ) ( ` )

A CASH FLOWS FROM OPERATING ACTIVITIES

Net profit/(Loss) before taxation (3,331,251) 14,245,439

Adjustment for:

Depreciation 8,516,116 8,864,548

Profit on sale of fixed assets (Net) (583,897) (29,502)

Interest income (811,833) (254,234)

Interest expenses 56,181 39,334

Unrealised foreign exchange (gain) / loss (net) 1,333,545 (947,966)

Operating profit before working capital changes 5,178,861 21,917,619

Movements in working capital:

Decrease / (Increase) in sundry debtors (18,012,704) 3,079,864

Decrease / (Increase) in loans and advances 10,574,723 52,194

Increase in provisions 10,511,805 655,201

Increase / (Decrease) in current liabilities 18,729,594 (7,095,384)

Cash generated from operations 26,982,279 18,609,494

Direct taxes paid — (1,111,000)

Net cash from operating activities 26,982,279 17,498,494

B CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of fixed assets (172,067) (18,663,228)

Proceeds from sale of fixed assets 1,387,155 839,615

Interest received 749,226 51,651

Net cash from / (used in) investing activi ties 1,964,314 (17,771,962)

C CASH FLOWS FROM FINANCING ACTIVITIES

Repayment from short-term borrowings (637,140) 561,816

Interest paid (56,181) (39,334)

Net cash from / (used in) financing activi ties (693,321) 522,482

Net increase in cash and cash equivalents ( A+B+C) 28,253,271 249,014

Cash and cash equivalents at the beginning of the year 3,457,283 3,208,695

Effect 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 3,457,283

Components of cash and cash equivalents

Cash in hand 146,202 154,152

Balances with scheduled banks: —— in current accounts 28,440,904 354,131

in fixed deposit accounts 3,098,483 2,949,000

Cash and cash equvivalents in cash flow statement 31,685,589 3,457,283

(86)


C M Y K


March 31, 20 11 March 31, 20 10

( ` ) ( ` )

SCHEDULE 1 - SHARE CAPI TAL

Authorised

700,000 (Previous year : 700,000) Equity shares of `10 each 7, 000,000 7,000,000

105,000 (Previous year : 105,000) Preference shares of ` 100 each 1 0,500,000 10,500,000

T OTAL 17,500,000 17,500,000

Issued,subscribed and paid-up

693,100 (Previous year : 693,100) Equity shares of

` 10 each fully paid 6,931,000 6,931,000

65,625 (Previous year: Nil) 5% Compulsory convertible

preference shares of ` 100 each fully paid 6,562,500 —

105,000 (Previous year: 105,000) 10% Preference shares of

` 100 each fully paid-up — 10,500,000

TOTAL 13,493,500 17,431,000

Notes:

1. Of the above 693,080 (Previous year: 693,080) equity shares are held by Aditya Birla Minacs BPO

Limited, UK, the holding company.

2. Of the above 93,100 (Previous year: 93,100) equity shares are allotted as fully paid-up pursuant to

a contract for consideration other than cash.

3. 65,625 (Previous year: Nil) fully paid-up 5% Compulsory Convertible preference shares are held by

Aditya Birla Minacs BPO Limited, UK, the holding company.

4. Nil (Previous year 105,000) fully-paid 10% redeemable preference share are held by Holding Company

Compass BPO Limited, UK.

SCHEDULE 2 - RESERVES & SURPLUS

Securities Premium 3,937,500 —

(During the year, 65,625 10% preference shares were issued

to 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 LOANS

Loans from bank

Cash credit fac ilities — 637,140

Total Secured Loans — 637,140

SCHEDULE 4 - UNSECURED LOANS

Interest free loan from shareholder 1,852,283 1,852,283

TOTAL 1,852,283 1,852,283



Debts outstanding for more than six months — —

Other debts 18,911,494 1,334,632

TOTAL 18,911,494 1,334,632

CHEDULE 7 - CASH AND BANK BALANCES

Cash on hand 146,202 154,152

Balance with scheduled banks

In current account 28,440,904 354,131

In deposit account 3,098,483 2,949,000

TOTAL 31,685,589 3,457,283

SCHEDULE 8 - LOANS AND ADVANCES

(Unsecured, considered good)

Advances recoverable in cash or in kind or for value to be received 10,474,905 15,639,249

Deposits - others 4, 585,187 9,794,648

Due 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 25,920,944

SCHEDULE 5 - FIXED ASSE TS ( ` )

GROSS BLOCK DEPRECIATION NET BLOCK

Particulars As at Additions Disposals As at As at Disposals For the As at As at As at

1-Apr-10 during the during the 31-Mar-11 1-Apr-10 during the year 31-Mar-11 31-Mar-11 31-Mar-10

year year year

Plant & machinery

- Computers 32,480,429 61,100 4,198,765 28,342,764 29,124,666 3,720,509 2,250,824 27,654,981 687,783 3,355,763

- Electrical fittings 2,623,990 — — 2,623,990 218,666 — 874,663 1,093,329 1,530,661 2,405,324

Office equipment 11,034,796 110,967 293,380 10,852,383 3,290,893 233,890 3,043,590 6,100,593 4,751,790 7,743,903

Vehicles 2,552,421 — 2,552,421 — 1,997,868 2,300,350 302,482 — — 554,553

Furniture and fixtures 7,639,984 — 132,873 7,507,111 2,043,680 119,433 2,044,557 3,968,804 3,538,307 5,596,304

TOTAL 56,331,620 172,067 7,177,439 49,326,248 36,675,773 6,374,182 8,516,116 38,817,707 10,508,541 19,655,847

Previous year 63,732,756 18,663,228 26,064,364 56,331,620 53,065,478 25,254,252 8,864,548 36,675,776 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 LIABILITIES

Sundry creditors 11,637,021 16,088,544

Creditors for capital goods 10 ,101,763 9,418,710

Due to holding company 83,900 1,687,594

Advances from customers 25,437,444 —

Other liabilities 1,725,857 2,188,801

TOTAL 48,985,985 29,383,650

SCHEDULE 10 - PROVISIONS

Provision for taxation 2,590,800 2,590,800

Provision for leave encashment 7,074,923 —

Provision for gratuity 4,713,183 1,276,301

TOTAL 14,378,906 3,867,101

(87)


C M Y K

SCHEDULES FORMING P ART OF THE PR OFIT AND LOSS

ACCOUNT FOR THE YEAR ENDING MARCH 31, 20 11

March 31, 2011 March 31, 2010

( ` ) ( ` )


Interest

- 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 29,502

Miscelleaneous income — 5,111

TOTAL 1,395,730 288,847

SCHEDULE 12 - PERSONNEL EXPENSES

Salaries, wages and bonus 116,695,935 129,655,511

Contribution to provident and other funds 5, 337,335 6,275,998

Staff welfare expenses 3,134,528 3,462,071

Gratuity expenses 4,713,183 1,276,301

TOTAL 129,880,981 140,669,881

SCHEDULE 13 - OPERATING AND OTHER EXPENSES

Rent 9,507,700 22,147,603

Rates and taxes 390,336 633,512

Power and fuel charges 5, 244,911 10,971,011

Travelling and conveyance expenses 8, 552,411 8,368,304

Printing and stationery 566,644 924,696

Communication cost 5,931,269 8,178,898

Payment to auditors

As auditors

Audit fees 525,000 275,000

Tax audit f ees — 50,000

As adviser in respect of

Taxation matters — 25,000

Management audit fees — 150,000

Other services — 219,323

Legal and professional charges 5, 078,023 3,640,396

Business promotion/entertainment 335,263 112,107

Repairs and maintenance others 11,435,272 17,587,870

Insurance expenses 788,171 821,854

Bank charges 148,223 235,974

Loss on foreign exchange fluctuations 3, 119,968 2,545,077

Misc. expenses 299,361 217,694

TOTAL 51,922,552 77,104,319

SCHEDULE 14 - INTEREST

Interest to banks 56,181 39,334

TOTAL 56,181 39,334

SCHEDULE 15 - SIGNIFICANT ACCO UNTING POLICIES AND NOTES ON

ACCOUNTS

A. NATURE OF OPERATIONS

The principle activities of the Company are processing of data for providing

back office accounting and other services.

B. SIGNIFICANT ACCOUNTING POLICIES

B.1. Basis of Preparation


with the Accounting Standards notified by Companies (Accounting Standards)

Rules, 2006, (as amended), and the relevant provisions of the Companies

Act, 1956. The financial statements have been prepared under the historical

cost convention on an accrual basis except in case of assets for which provision

for impairment is made and revaluation is carried out. The accounting policies

have been consistently applied by the Company and except for the changes

in accounting policy discussed more fully below, are consistent with those

used in the previous year.

B.2. Use of Estimates


accounting principles requires management to make estimates and

assumptions that affect the reported amounts of assets and liabilities and

disclosure of contingent liabilities at the date of the financial statements and

the results of operations during the reporting period. Although these estimates

are based upon management’s best knowledge of current events and actions,

actual results could differ from these estimates.

B.3. Fixed Assets

Fixed assets are stated at cost, less accumulated depreciation and impairment

loss, if any. Cost comprises of purchase price and attributable cost of bringing

the assets to its working condition for its intended use.

B.4. Depreciation

a. The depreciation is charged on Straight Line basis at the following rates,

which are not lower than those prescribed under Schedule XIV of the

Companies Act, 1956, whichever is higher:

Rates (SLM) Schedule XlV

Rates (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 depreciated

within a year of acquisition as per the requirement of schedule XIV of

the Companies Act, 1956.

B.5. Impairment of Assets:

The carrying amounts of the assets are reviewed at each Balance Sheet date

for impairment based on internal/external factors. An asset is treated as

impaired 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 year

in which an asset is identified as impaired. Reversal of impairment loss

recognised in prior years is recorded when there is an indication that the

impairment losses recognised for the assets no longer exists or has decreased.

B.6. Capital Commitments

There is no amount of contracts remaining to be executed on capital account

and not provided for.

B.7. Operating Leases

Leases where the lessor effectively retains substantially all the risks and

benefits of ownership of the leased item, are classified as operating leases.

Operating lease payments are recognized as an expense in the Profit and

Loss Account on a straight-line basis over the lease term.

B.8. Revenue Recognition

Revenue is recognized to the extent that it is probable that the economic

benefits will flow to the Company and the revenue can be reliably measured.

Income from Services

Revenue is recognised on rendering of services to customers and is recognised

in accordance with the contracts entered into with the customers.

(88)


C M Y K

Interest

Revenue is recognised on a time proportion basis taking into account the

amount outstanding and the rate applicable.

B.9. Foreign Currency Transactions

Initial Recognition




Conversion

Foreign currency monetary items are reported using the closing rate. Non-monetary items, which are carried in terms of historical cost denominated in

a foreign currency, are reported using the exchange rate at the date of the

transaction; and non-monetary items, which are carried at fair value or other

similar valuation denominated in a foreign currency, are reported using the

exchange rates that existed when the values were determined.

Exchange Differences

Exchange differences arising on a monetary item that, in substance, form

part of the company’s net investment in a non-integral foreign operation is

accumulated in a foreign currency translation reserve in the financial

statements until the disposal of the net investment, at which time they are

recognised 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 different

from those at which they were initially recorded during the year, or reported

in previous financial statements, are recognized as income or as expenses in

the year in which they arise.

B.10.Retirement and other Employee Benefits

i. Retirement benefit in the form of Provident Fund is a defined contribution

scheme and the contributions are charged to the Profit and Loss Account

of the year when the contributions to the respective funds are due.

There are no other obligations other than the contribution payable to

the respective funds.

ii. Gratuity liability is defined benefit obligations and is provided for on the

basis of an actuarial valuation on projected unit credit method made at

the 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 actuarial

valuation at the year end. The actuarial valuation is done as per projected

unit credit method.

iv. Actuarial gains/losses are immediately taken to profit and loss account

and are not deferred.

B.11.Taxation

Tax expense comprises of current tax and deferred Tax.

The current charge for income tax is measured at the amount expected to be

paid 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 the

results for the year ended 31 March, 2011.

Deferred tax is measured based on the tax rates and the tax laws enacted or

substantively enacted at the balance sheet date. Deferred tax assets and

deferred tax liabilities are offset, if a legally enforceable right exists to set off

current tax assets against current tax liabilities and the deferred tax assets

and deferred tax liabilities relate to the taxes on income levied by same

governing taxation laws. Deferred tax assets are recognised only to the extent

that there is reasonable certainty that sufficient future taxable income will be

available against which such deferred tax assets can be realised. In situations

where the Company has unabsorbed depreciation or carry forward tax losses,

all deferred tax assets are recognised only if there is virtual certainty supported

by convincing evidence that they can be realised against future taxable profits.

At each balance sheet date the Company re-assesses unrecognised deferred

tax assets. It recognises unrecognised deferred tax assets to the extent that

it has become reasonably certain or virtually certain, as the case may be that

sufficient future taxable income will be available against which such deferred

tax assets can be realised.

The carrying amount of deferred tax assets are reviewed at each balance

sheet date. The Company writes down the carrying amount of a deferred tax

asset 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 available

against which deferred tax asset can be realised. Any such write-down is

reversed 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 Policies

Identification of Segment

The Company’s operating businesses are organized and managed separately

according to the nature of products and services provided, with each segment

representing a strategic business unit that offers different products and serves

different markets. The analysis of geographical segments is based on the

areas in which major operating divisions of the Company operate.

Segment Policies

The Company prepares its segment information in conformity with the

accounting policies adopted for preparing and presenting the financial

statements of the Company as a whole.

C. Notes on Accounts

C. 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 under

STPI scheme.

Preference dividend amounting to `198,973 relating to 65,625 5% Redeemable

preference 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 (or

the holding company). Further, the Company has issued 65,625 5%

Redeemable preference shares of ` 100 each at a premium of ` 60 per share

to the holding company. In view of unavailability of distributable profits, the

dividend 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)


March 31, March 31,

2011 2010

`` Income from services 185,648,849 240,634,675

Total 185,648,849 240,634,675

C.4. C.4. Expenditure in foreign currency

(Accrual basis)

Communication costs (Lease line cost) 2,553,188 2,474,052

Total 2,553,188 2,474,052

C.5. C.5. Value of imports calculated on CIF basis

Capital Goods — 854,451

Total — 854,451

C.6. C.6. Disclosure pursuant to the Accounting Standard 15 (Revised) “Employee

Benefits”:

The Company has a defined benefit gratuity plan. Every employee who has

completed five years or more of service gets a gratuity on departure at 15

days salary (last drawn salary) for each completed year of service. The scheme

is funded with an insurance company in the form of a qualifying insurance

policy.

The following tables summarise the components of net benefit expense

recognised in the profit and loss account and the funded status and amounts

recognised 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)]

Gratuity

2011 2011 2010

Current service cost 1,104,068 1,104,068 739,409

Expected return on plan assets 238,165 238,165 193,164

Net actuarial( gain) / loss

recognised in the year (2,252,569) (101,960)

Past service cost 6,099,849 6,099,849 832,016

Net benefit expense 4,713,183 4,713,183 1,276,301

Actual return on plan assets 238,165 238,165 193,164

(89)


C M Y K

B alance sheet

Details of pro vision for gratuity

Grat uity

201112010 Defined benefit obligation 7,203,91 77 3,619,373

Fair value of plan assets 2,490,734 2,343,072

Net liability (4,713,183) 83) (1,276,301)

Changes in the present value of the defined benefit obligation are as

follows:

[AS15 Para 120(e) (i) to (viii)]

Gratuity

2011 2011 2010

Opening defined benefit obligation 3,619,373 3,619,373 3,052,442

Interest cost 238,165 238,165 193,164

Current service cost 4,713,183 4,713,183 1,276,301

Benefits paid 1,366,804 1,366,804 832,016

Actuarial (gains) / losses on obligation — — 70,518

Closing defined benefit obligation 7,203,917 7,203,917 3,619,373

Changes in the fair value of plan assets are as follows:

Gratuity

2011 2011 2010

Opening fair value of plan assets 2,343,072 2,343,072 1,860,896

Expected return 238,165 238,165 193,164

Contributions by employer benefits paid 1,276,301 1,276,301 1,121,028

Benefits paid 1,366,804 1,366,804 832,016

Closing fair value of plan assets 2,490,734 2,490,734 2,343,072

The Company expects to contribute ` 4,713,183 to gratuity in 2011. [AS 15

Para 120(o)]

The major categories of plan assets as a percentage of the fair value of total

plan assets are as follows:

[AS 15 Para 120 (h)]

Gratuity

2011 2011 2010

% %% Investments with insurer 100 100 100

The principal assumptions used in determining gratuity obligations

for 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 on

age age

The estimates of future salary increases, considered in actuarial valuation,

take account of inflation, seniority, promotion and other relevant factors, such

as supply and demand in the employment market.

Amounts for the current and previous periods are as follows: [AS 15 Para

120(n)] 96

Gratuity

2011 2010 2009

Defined benefit obli gation 7,203,917 3,619,373 3,052,442

Plan assets 2,490,734 2,343,072 1,800,832

Surplus / (Deficit) (4,713,183) (1,276,301) (1,251,610)

Experience adjustments on

plan liabilities — — —

Experience adjustments on plan assets — — —

C.8. The Company has taken a property under operating lease with option to renew

after the period of expiry. The lease rentals for the year ended

March 31, 2011, aggregating ` 8,460,309 (Previous year: ` 21,574,530) has

been charged to the Profit & Loss Accounts.

The following lease rentals remains committed as at 31

st

March, 2011

a) 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 2010

a) Net Profit/(Loss) as disclosed in

Profit & loss account ( `) (4,809,251) 13,360,456

b) Weighted average number of

equity shares (`10 each)

outstanding during the year (in number) 693,100 693,100

c) Earnings per share (basic/diluted) (`) (7.23) 17.83

C 10.Segment Reporting:

The Company is operating in single segment that is processing of data for

providing back office accounting and other services.

Geographical Segment:

Geographical turnover is segregated on the basis of the location of the

customers. Assets are segregated on the basis of their location. Information

relating to the geographical segment is stated below:

Year ended March 31, 2011

Revenue Europe and UK Others Total

Revenue 148,485,021 37,073,827 185,648,848

Assets 2,290,061 74,224,392 76,514,453

Capital expenditure — 172,067 172,067

Year ended March 31, 2010

Revenue Europe and UK Others Total

Revenue 240,634,675 — 240,634,675

Assets 3,322,695 48,524,008 51,846,703

Capital expenditure — 18,663,228 18,663,228

C 11. A) Related parties and their relationship:

Names of related parties where control exists

Ultimate holding company : Aditya Birla Nuvo Limited

Holding 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 Services

with whom transactions have with whom transactions have Limited The Minacs Group (USA) Inc.

taken place during the

year fellow subsidiaries

Key Management Personnel Key Management Personnel : Mr. Deepak Patel - Director

: Mr. Manoj Kedia - Director

B) Transactions during the year

(`)


March 31, March 31,

2011 2010

Revenue

Aditya Birla Minacs BPO Limited, UK 139,098,386 240,634,675

The Minacs Group ( USA) Inc . 4,192,013 —

Interest income

Aditya Birla Minacs Worldwide Limited 225,123 —

Aditya Birla Minacs IT Services Limited 214,521 —

Redemption of 10% redeemable

preference shares

Aditya Birla Minacs BPO Limited, UK 10,500,000 —

Issue of 5% compulsory convertible

preference shares (Including

securities premium)

Aditya Birla Minacs BPO Limited, UK 10,500,000 —

Purchase of fixed assets

Aditya Birla Minacs BPO Limited, UK — 854,421

(90)


C M Y K

Sale of fix ed assets

Aditya Birla Minacs W orldwide Limited 270,000 —

Inter-corporate deposits giv en

Aditya Birla Minacs Worldwide Limited 10,000,000 —

Inter-corporate deposits received back

Aditya Birla Minacs Worldwide Limited 10,000,000 —

Inter-corporate deposits giv en

Aditya Birla Minacs IT Services Limited 10,000,000 —

Inter-corporate deposits received back

Aditya Birla Minacs IT Services Limited 10,000,000 —

(C) B alances as at the y ear end

R eceivables

The Minacs Group (USA) Inc. 4,192,013 —

Aditya Birla Minacs BPO Limited, UK 348,736 —

Pa y ables

Aditya Birla Minacs BPO Limited, UK 9,664,357 11,106,304

Aditya Birla Minacs IT Services Limited 94,215 —


March 31, March 31,

2011 2010

C.12.2. Deferred tax assets have not been recognised as there is no virtual certainty

about the realisation of the deferred tax assets against the future taxable

profits.

C.13.Details of dues to Micro and Small Enterprises as per MSMED Act, 2006

As at March 31' 2011, as confirmed by the management, the Company has

no outstanding dues to Micro Enterprises and Small Enterprises / Small Scale

Industrial Undertakings.

C.14.Previous year comparatives

The figures of previous year were audited by a firm of Chartered accountants

other than S.V. Ghatalia & Associates.

Previous year’s figures have been regrouped where necessary to conform to

this year’s classification.

For S.V. Ghatalia & Associates For and on behalf of the Board of Directors



Director






(91)

COMPASS BPO INC.

P rofit & L oss A ccount f or the period ended 31 March, 2011

Particulars Amt($) Amt($) Particulars Amt($) Amt($)

2010-11 2009-10 2010-11 2009-10

Salary 227,813 468,850 Revenue 907,952 1,135,919

Consultant Charges 224,655 320,832

Management Fees - Minacs 210,641 —

Shared Sales Cost - Minacs 85,961 —

Travel 37,284 107,389

Office Costs 46,842 89,062

Marketing 30,897 35,990

Audit Fees 3,114 9,270

Legal & Professional Fees 450 2,020

Insurance 5,771 9,432

Bad Debts 7,573 —

Taxes & Fees 1,756 3,786

Depreciation 4,438 8,338

Bank Charges 1,011 710

Tax for the Year 4,100 24,200

Profit transferred to Balance Sheet 15,645 56,040

907,952 1,135,919 907,952 1,135,919

B alance Sheet as at 31 Marc h, 2011

Liabilities Amt($) Amt($) Assets Amt($) Amt($) Amt($)

2010-11 2009-10 2010-11 2009-10

Capital Stock 100 100 Computer Equipment 6,482

Less: Depreciation 3,697 2,784 4,659

Amount Owed to Holding Company — 249,696

Accounts Payable 1,336 36,085 Office Equipments 1,480

Other Liabilities 135,038 10,629 Less: Depreciation 687 793 1,287

Provision for Taxation 4,100 24,200

Furnitures & Fixtures 6,208

Retained Earning 180,946 165,302 Less: Depreciation 4,025 2,182 4,252

Amount Receivable from

Holding Company 79,986 —

Bank 86,109 10,648

Debtors 149,621 448,010

Prepaid 44 17,156

321,520 486,012 321,520 486,012

(92)

COMPASS BPO INC.

C M Y K

Schedule for Profit & Loss Account

Account Code Account Name Amount

$

1 Salaries : Gross Salary (DM) 227,813

227,813

2 Office Cost :

400-150 Staff Welfare Exps. 407

410-090 Courier Charges 751

410-130 Foreign Exchange Gain/Loss 3,001

410-170 Postage Expenses 5

410-200 Membership & Subscription 4,246

410-220 R & M - Office Equipment 60

410-230 R & M - Co mputers 239

410-240 R & M - Others 173

410-260 Rent 5,400

410-250 Rates & Taxes 2,978

410-290 Software Exps. 1,266

410-310 Tel. Line Ongoing Cost 2,391

410-370 Tel. Cost - Mobile 11,964

410-400 Tel. Cost Internet 4,285

410-410 Others 9,253

410-440 Meetings & Conferences 424

46,842

3 Audit Fees :

410-020 Audit Fees 3,114

4 Legal & Professional Fees :

410-160 Legal & Professional Fees 450

5 Travel Etc. :

400-090 Flights Charges 21,176

400-110 Conveyance Local 8,774

400-130 Hotel Accommodation 4,315

400-190 Trl. & Liv. Travel 3,019

37,284

6 Marketing :

400-140 Marketing Cost 29,202

410-040 Business Prom/Ent 1,664

410-420 Entertain - B’ness Dev. 31

30,897

7 Revenue

300-010 Staff Charges 1,479,949

320-010 Con sulting - IND 438,520

320-025 Consulting Fixed Price 204,614

320-040 Software Revenue - 2,123,082

320-020 Consulting-US

Consulting (DAVID) 35,525

Consulting (MEL) 191,041

Consulting (VICKY) 14,213

Consulting (CHERYL) 30,480 271,259

310-010 Other Income 201,128

310-030 Int erest rec. 122 201,249

2,595,590

Less:

400-020 CDIPL Charges-UK/US 1,601,574

410-360 Recharge 86,065 1,687,639

907,952

Schedule for Balance Sheet

A ccount Code A ccount Name Amount

$

1 Debtors :

120-010 Debtors 149,621

149,621

2 Prepaid :

150-070 Prepaid Expenses 44

44

3 Other Liabilities :

150-040 Advance Account 7,320

240-051 OS Liab for Minacs Mgt Fe 38,642

240-052 OS Liab for Minacs Sales 85,961

240-060 Out. Liabilities for Exps. 3,114

135,038

Account Code Account Name Amount

$