form b format of covering letter of the annual …form b format of covering letter of the annual...

FORM B

Format of covering letter of the annual audit report to be filed with the Stock Exchange

[Pursuant to Clause 31 of the Listing Agreement]

1. Name of the company Everonn Education Limited

2. Annual financial statements for the year ended 31-Mar-2014

3. Type of Audit qualification

Qualified

4. Frequency of qualification

Third Year Auditors Qualification & Management Reply:

i) We draw attention to Note No. 2.41 wherein the company has indicated that it is assessing

the carrying value of investment in subsidiaries and advances to subsidiaries, after taking into account the future operational plans and cash flows and accordingly no impairment loss has been recognized at this stage.

ii) We draw attention to Note No.2.42 wherein the company has indicated that Lease charges

amounting to Rs. 2286.20 Lakhs has not been provided in the books for some parties as required by the contractual terms pending re-negotiation.

iii) We draw attention to Note No.2.47 regarding non ascertaining of complete particulars of

dues to Micro, Small and Medium Enterprises, if any, under MSMED Act, 2006, and provision towards interest, if any, is not ascertained at this stage.

iv) We draw attention to Note No.2.49 of Financial Statements with regard to non-receipt of

Confirmation of balances from Debtors including dues from Government Companies, Creditors, Loans and Advances, Investments, banks and Other Liabilities. These amounts are subject to adjustments, if any, after reconciliation and for identification of doubtful debts/advances, which are not ascertainable at this stage.

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v) We draw attention to Note No 2.50, wherein the company has stated that provision

towards impairment/loss under AS 28 has not been ascertained. vi) We draw attention to Note No. 2.51 wherein the company has indicated the receipt of

income tax demand notices for various assessment years commencing from AY 06-07 amounting to Rs. 108,42,00(‘000) and appeals filed against the orders. The Company has sought the stay of demand of tax inclusive of interest for which no provision has been made beneficial .

vii) We draw attention to Note No 2.40 & 2.52 regarding the pending service tax dispute

towards penalty before settlement commission and the non-recognition of estimated liability of Rs. 1,11,55.98,(‘000) which is being recognized as contingent liability.

We are not aware of the any material adjustments which may arise on account of adjustments relating to issues set out above and subsequent to receipt of such confirmation / reconciliation.

i. (a) The Company has not maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) The Company has not carried out physical verification of fixed assets during the year. The company does not have a regular program of physical verification of its fixed assets. In our opinion the frequency of physical verification is not reasonable having regard to the size of the company and nature of its assets. Fixed Assets lying with third parties are also subject to confirmation. We are therefore unable to comment on the discrepancies, if any, which could have arisen on such verification.

ii. In our opinion and according to the information and explanations given to us,

having regard to the explanations that some of the items purchased are customized and are of special nature and suitable alternative sources are not readily available for obtaining comparable quotations. Additional strengthening of the internal control procedures with regard to purchase of fixed assets is recommended so as to be commensurate with the current size of the Company and nature of its business. However, the management has represented that it is taking reasonable steps to correct the said weaknesses and in our opinion, there is a continuing failure to correct major weaknesses in internal control system relating to purchase of fixed assets.

iii. The company did not have an internal audit system during the year.

iv. (a) According to the information and explanations given to us, the company has been

generally depositing undisputed statutory dues with few delays including Employees Provident Fund, Employees’ State Insurance, Investor Protection fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Income Tax, TDS, Professional Tax and

any other statutory dues with the appropriate authorities during the year. There have been significant delays in large number of cases.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect of income tax, service tax etc were in arrears as at 31.03.2014 for a

period of more than six months from the date they became payable excepting…

(c) According to the information and explanations made available to us and on the basis of examination of records of the Company, the dues of Excise Duty, Sales Tax and Income Tax as at 31st March 2014 which have not been deposited on account of any dispute are as follows..

Management reply to Auditors Qualifications With regard to the Auditors’ observations contained under the heading “Basis for Qualified Opinion” and subsequent paragraphs, the directors are of the view that the relevant notes to which the attention is drawn explains fully, the quantum of liabilities and its accounting treatment. Additionally, the directors want to draw the attention to the availability of a sum of Rs. 150 Crores under the head Business Reconstruction Reserve to absorb impairment losses if any which are referred in the Auditors’ Report. The financial crisis and the huge losses suffered by it which is a result of certain past events has put a great constraint in the working of the Company and its operations. The board is confident that with the change in the economic outlook coupled with additional support given by the bankers and promoter group, should ensure better compliance and deletion of most of the audit qualification in the future years.

With regard to confirmation of balances, from debtors, creditors etc., the company’s operations are linked to various statement governments and their respective undertakings who are not willing to confirm the outstanding balances at any point of time. This creates a great impediment in the company’s operations and relation with its creditors. The delays in the receipt of revenue from the Government and its agencies triggers a chain reaction making it incur additional cost especially finance cost to carry on its operations. Since most of the contracts are of five years duration, the reconciliation and shortfalls etc., are normally recognized only at the end of the term of the contract.

With regard to the identification of dues to Micro and Medium enterprises, pending complete information, the Company is unable to categorically state who parties are falling under this category. The company has not elicited any response to its circular sent to certain parties falling in this category.

The company almost in all cases is trying to reduce its expenditure and related outflow due the severe financial crunch faced by it. This has resulted in the re-negotiation of certain contractual terms with the creditors / lenders / lessors. The Company’s ongoing

efforts to persuade certain lessors to reduce and restructure the lease rental are yet to bear fruit.

Due to certain transactions carried out by the erstwhile management, the Company and the resulted income tax survey that conducted by the department, huge demands of tax and interest are raised on the company year after year including certain assessments which are reopened. The company is contesting all these demands and is of hopeful of early resolution of these disputes.

For Everonn Education Limited

A Srinivasan Ganapathy Puranik Managing Director CFO Chairman

Board of Directors

Name StatusMr. A. Srinivasan Managing DirectorMr. Dino Varkey Non-Executive and Non Independent DirectorMr. C N Radhakrishnan Non-Executive and Non Independent DirectorMr. R. Natarajan Non-Executive and Independent DirectorMr. Lakdawala Turab Non-Executive and Independent Director

Company SecretaryMr. N P Mathi Lingan

Chief Financial OfficerMr. Ganapathy Puranik

AuditorsM/s. P. ChandrasekarChartered Accountants

S-512, 514, Manipal Centre, # 47, Dikenson Road, Bangalore - 560 042.

Registered Office of the Company“Everonn House”, Plot No. 96-99, Industrial Estate, Perungudi, Chennai - 600 096.

Bankers

Axis Bank Limited ICICI Bank LimitedGround Floor, Karumuthu Nilayam, No. 25, 1st Avenue, Ashok Nagar,No. 192, Anna Salai, Chennai - 600 002. Chennai - 600 083.

State Bank of India IDBI Bank LimitedCorporate Accounts Group Branch No. 7, South Boag Road64, Greams Road, Chennai - 600 006 T. Nagar, Chennai- 600 017.

Standard Chartered BankNo. 19, Rajaji SalaiChennai - 600 001.

Subsidiaries

Everonn Educational Resources Solutions Limited Everonn School LimitedToppers Tutorial Private Limited Everonn Medical Education LimitedEveronn Infrastructure Limited Everonn Technical Education India LimitedAEG Skill Update Private Limited Edifications India LimitedEveronn Skill Development Limited Everonn Sport Management LimitedEveronn Business Education Limited Everonn Knowledge & Education Corridor LimitedEveronn Dassani Literate Limited Everonn Skilling India LimitedEveronn Skill Products Development Limited

Registrar & Share Transfer AgentCameo Corporate Services Limited

Subramanian Building, No. 1, Club House Road, Chennai - 600 002.

ANNUAL REPORT 2013-2014

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Everonn Education Limited

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CONTENTS

1 Notice 3

2 Directors’ Report 11

3 Management Discussion & Analysis Report 15

4 Corporate Governance Report 22

5 Auditors’ Report - Standalone 36

6 Addendum to Directors’ Report 41

7 Financial Statements - Standalone 42

8 Auditors’ Report - Consolidated 70

9 Financial Statements - Consolidated 72

10 Subsidiary Company Information 98

NOTICE

Notice is hereby given that the Fourteenth Annual General Meeting of the members of Everonn Education Limitedwill be held on Friday the 26th September 2014 at 10.00 a.m. at Everonn House, 96-99, Industrial EstatePerungudi, Perungudi, Chennai - 600 096, to transact the following business:

ORDINARY BUSINESS

1. To receive, consider and adopt the Audited Statement of Profit and Loss for the year ended March 31, 2014and the Balance Sheet as at that date together with the Reports of the Board of Directors and the Auditorsthereon.

2. Appointment of Auditors

To consider and if thought fit to pass with or without modification(s) the following resolution as an OrdinaryResolution:

"RESOLVED THAT pursuant to the provisions of section 139 and other applicable provisions, if any, of theCompanies Act, 2013 and the Rules framed thereunder, as amended from time to time, M/s. P. Chandrasekar,Chartered Accountants, be and are hereby re-appointed as Statutory Auditors of the Company to hold officefrom the conclusion of this Annual General Meeting (AGM) till the conclusion of the Fifteenth AGM of theCompany to be held in the year 2015, at such remuneration as may be mutually agreed between the Boardof Directors of the Company and the Auditors."

SPECIAL BUSINESS

3. Appointment of Mr. R. Natarajan as an Independent Director of the Company


"RESOLVED THAT pursuant to the provisions of sections 149, 152 and other applicable provisions, if any,of the Companies Act, 2013 (Act) and the Rules framed thereunder, read with Schedule IV to the Act, asamended from time to time, Mr. R. Natarajan (DIN 00218008), a non-executive Director of the Company,who has submitted a declaration that he meets the criteria for independence as provided in section 149(6)of the Act and who is eligible for appointment, be and is hereby appointed as an Independent Director ofthe Company with effect from 26th September 2014 up to 25th September 2019."

4. Appointment of Mr. Lakdawala Turab Mohd Hussein as an Independent Director of the Company


"RESOLVED THAT pursuant to the provisions of sections 149, 152 and other applicable provisions, if any,of the Companies Act, 2013 (Act) and the Rules framed thereunder, read with Schedule IV to the Act, asamended from time to time, Mr. Lakdawala Turab Mohd Hussein (DIN 00800492), a non-executive Directorof the Company, who has submitted a declaration that he meets the criteria for independence as providedin section 149(6) of the Act and who is eligible for appointment, be and is hereby appointed as an IndependentDirector of the Company with effect from 26th September 2014 up to 25th September 2019."

5. Conversion rights to lenders under DRA:

To consider and, if thought fit, to pass with or without modification(s), the following resolution as a SpecialResolution:

"RESOLVED THAT pursuant to Section 62(3) and all other applicable provisions of the Companies Act, 2013("the Act"), and applicable laws, rules and regulations (including any statutory modification or re-enactmentof any of the aforesaid acts/regulations, for the time being in force) together with the enabling provisionsof the Memorandum and Articles of Association of the Company and the Listing Agreement(s) entered intoby the Company with the Stock Exchange(s) where the Shares of the Company are listed (including anyamendments thereto) and subject to any approvals, consents or permissions, the Board of Directors(hereinafter referred to as the 'Board', which term shall include any Committee thereof) be and is herebyauthorized to accept, and the consent of the Company be and is hereby accorded to the Board for the

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allotment of such number of Equity Shares of the face value of Rs.10/- (Rupees Ten only) each to the Banksunder the Debt Restructuring Agreement (DRA) executed on 22nd March 2014 (hereinafter referred to asthe 'Lenders') which shall not exceed the amount of principal and interest outstanding as on the date ofdefault, in the event of default in payment of the principal or interest thereon under the Scheme of DebtRestructuring at a price as per the SEBI rules and regulations/ Companies Act, 2013, on the exercise bythe Lenders of the option to convert the whole or part of their loans, subject to a notice of at least 30 (thirty)days from the Lenders to the Company (hereinafter referred to as the "Notice of Conversion")."

The conversion by the Lenders shall be in accordance with the following conditions:

(i) On receipt of the Notice of Conversion, the Company shall allot and issue the requisite number offully paid-up Equity Shares to the Lenders and such Lenders shall accept the same in satisfactionof the loans of the Lenders so converted, as envisaged under the DRA;

(ii) The part of the said loans so converted shall cease to carry interest as from the date of conversionand the said loans shall stand correspondingly reduced. Upon such conversion, the repaymentinstallments payable after the date of conversion as per the DRA shall stand reduced proportionatelyby the amounts of the said loan so converted;

(iii) The Equity Shares so allotted and issued to the Lenders shall rank pari passu with the existing EquityShares of the Company in all respects, interalia, the dividends and other distributions declared or tobe declared in respect of the equity capital of the Company; and

(iv) In the event that the Lenders exercise the conversion right as aforesaid, the Company shall, if sorequired by the said Lenders, at its cost, apply to the stock exchanges where the shares of theCompany are listed for the listing of the Equity Shares issued to the Lenders as a result of theconversion.

"RESOLVED FURTHER THAT the Board be and is hereby authorized to do all such acts, deeds,matters and things as may be considered necessary or expedient for giving effect to the aboveresolution."

6. Increase in the authorised share capital and alteration of the capital clause in the memorandum ofassociation of the company:

To consider and, if thought fit, to pass with or without modification(s), the following resolution as an OrdinaryResolution:

"RESOLVED THAT pursuant to the provisions of Section 13 sub-section (1), read with Section 61, 64 andother applicable provisions, if any, of the Companies Act, 2013 (including any amendment thereto orre-enactment thereof) Authorised Share Capital of the Company be and is hereby increased from the existingRs. 25,00,00,000/- (Rupees Twenty Five Crores only) divided into 2,50,00,000 (Two Crore Fifty Lakhs) EquityShares of Rs. 10/- (Rupees Ten only) each to Rs. 50,00,00,000/- (Rupees Fifty Crores only) divided into5,00,00,000 (Five Crores) Equity Shares of Rs. 10/- (Rupees Ten only) each, by creation of additional2,50,00,000 (Two Crore Fifty Lakhs) Equity Shares of Rs. 10/- (Rupees Ten only) each and that clause 5of the Memorandum of Association of the Company be and is hereby altered accordingly."

By Order of the Board

Place : Chennai N P MATHI LINGANDate : 12th Aug, 2014 Company SecretaryCorporate Identification Number (CIN): L65991TN2000PLC058466

Registered Office:Everonn House, Plot # 96-99Industrial Estate, Perungudi,Chennai 600 096Tel: 91 44 66998400E-mail: [email protected], Website: www.everonn.com


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NOTES:

1. The relative Explanatory Statement pursuant to section 102 of the Companies Act, 2013 (Act) in respectof the business under Item Nos. 3 to 6 of the Notice, is annexed hereto. The relevant details as requiredunder clause 49 of the Listing Agreements entered into with the Stock Exchanges, of persons seekingappointment/re-appointment as Directors under Item Nos. 3 to 4 of the Notice, are also annexed.

2. A Member entitled to attend and vote at the Annual General Meeting (AGM) is entitled to appointa proxy to attend and vote instead of himself and the proxy need not be a Member of the Company.The instrument appointing the proxy, in order to be effective, must be deposited at the Company's RegisteredOffice, duly completed and signed, not less than FORTY-EIGHT HOURS before the meeting. Proxiessubmitted on behalf of limited companies, societies, etc., must be supported by appropriate resolutions/authority, as applicable. A person can act as proxy on behalf of Members not exceeding fifty (50) and holdingin the aggregate not more than 10% of the total share capital of the Company. In case a proxy is proposedto be appointed by a Member holding more than 10% of the total share capital of the Company carryingvoting rights, then such proxy shall not act as a proxy for any other person or shareholder.

3. The Register of Members and Transfer Books of the Company will be closed from Friday, 19th Sep, 2014to Friday, 26th Sep, 2014, both days inclusive.

4. Members holding shares in dematerialised form are requested to intimate all changes pertaining to theirbank details, National Electronic Clearing Service (NECS), Electronic Clearing Service (ECS), mandates,nominations, power of attorney, change of address, change of name, e-mail address, contact numbers, etc.,to their Depository Participant (DP). Changes intimated to the DP will then be automatically reflected in theCompany's records which will help the Company and the Company's Registrars and Transfer Agents,M/s. Cameo Corporate Services Limited, Subramanian Building, No.1, Club House Road, Chennai - 600002 (RTA) to provide efficient and better services. Members holding shares in physical form are requestedto intimate such changes to RTA.

5. Members holding shares in physical form are requested to consider converting their holding to dematerializedform to eliminate all risks associated with physical shares and for ease of portfolio management. Memberscan contact the Company or RTA for assistance in this regard.

6. Members holding shares in physical form in identical order of names in more than one folio are requestedto send to the Company or RTA, the details of such folios together with the share certificates for consolidatingtheir holding in one folio. A consolidated share certificate will be returned to such Members after makingrequisite changes thereon.

7. In case of joint holders attending the meeting, the Member whose name appears as the first holder in theorder of names as per the Register of Members of the Company will be entitled to vote.

8. Members seeking any information with regard to the Accounts, are requested to write to the Company atan early date, so as to enable the Management to keep the information ready at the meeting.

9. The Notice of the AGM along with the Annual Report 2013-14 is being sent by electronic mode to thoseMembers whose e-mail addresses are registered with the Company/Depositories, unless any Member hasrequested fora physical copy of the same. For Members who have not registered their e-mail addresses,physical copies are being sent by the permitted mode.

10. To support the 'Green Initiative', the Members who have not registered their e-mail addresses are requestedto register the same with our RTA.

11. In compliance with the provisions of section 108 of the Act and the Rules framed thereunder, the Membersare provided with the facility to cast their vote electronically, through the e-voting services provided by CDSL,

on all resolutions set forth in this Notice.

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The instructions for e-voting are as under:

(i) Log on to the e-voting website www.evotingindia.com

(ii) Click on "Shareholders" tab.

(iii) Now, select the "COMPANY NAME" from the drop down menu and click on "SUBMIT"

(iv) Now Enter your User ID (For CDSL: 16 digits beneficiary ID, For NSDL: 8 Character DP ID followed by 8 DigitsClient ID), Members holding shares in Physical Form should enter Folio Number registered with the Companyand then enter the Captcha Code as displayed and Click on Login.

(v) If you are holding shares in Demat form and had logged on to www.evotingindia.com and voted on an earliervoting of any company, then your existing password is to be used. If you are a first time user follow the stepsgiven below.

(vi) Now, fill up the following details in the appropriate boxes:


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*Members who have not updated their PAN with the Company/Depository Participant are requested to usethe first two letters of your name and the sequence number in the PAN field. Eg. If your name is ShanmugaRaja with sequence number 1 then enter SH00000001 in the PAN field. (Sl. No. mentioned in your address

label can be used as Sequence No. for this purpose)

# Please enter any one of the details in order to login. In case either of the details are not recorded withthe depository please enter the <Default Value> in the Dividend Bank details field.

(vii) After entering these details appropriately, click on "SUBMIT" tab.

(viii) Members holding shares in physical form will then reach directly the Company selection screen. However,members holding shares in demat form will now reach 'Password Creation' menu wherein they are requiredto mandatorily enter their login password in the new password field. Kindly note that this password is tobe also used by the demat holders for voting for resolutions of any other company on which they are eligibleto vote, provided that company opts for e-voting through CDSL platform. It is strongly recommended notto share your password with any other person and take utmost care to keep your password confidential.

(ix) For Members holding shares in physical form, the details can be used only for e-voting on the resolutionscontained in this Notice.

(x) Click on <Company Name> on which you choose to vote.

(xi) On the voting page, you will see Resolution Description and against the same the option "YES/NO" for voting.Select the option YES or NO as desired. The option YES implies that you assent to the Resolution andoption NO implies that you dissent to the Resolution.

(xii) Click on the "Resolutions File Link" if you wish to view the entire Resolutions.

(xiii) After selecting the resolution you have decided to vote on, click on "SUBMIT". A confirmation box will bedisplayed. If you wish to confirm your vote, click on "OK", else to change your vote, click on "CANCEL"and accordingly modify your vote.

For Members holding shares in Demat Form and in Physical Form

PAN*

DOB#

DividendBankDetails#

Enter your 10 digit alpha-numeric *PAN issued by Income Tax Department (Applicable forboth demat shareholders as well as physical shareholders)

Enter the Date of Birth as recorded in your demat account or in the company records for thesaid demat account or folio in dd/mm/yyyy format.

Enter the Dividend Bank Details as recorded in your demat account or in the companyrecords for the said demat account or folio.

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(xiv) Once you "CONFIRM" your vote on the resolution, you will not be allowed to modify your vote.

(xv) You can also take out print of the voting done by you by clicking on "Click here to print" option on theVoting page.

(xvi) If Demat account holder has forgotten the changed password then Enter the User ID and Captcha Codeclick on Forgot Password & enter the details as prompted by the system.

(xvii) Institutional shareholders (i.e. other than Individuals, HUF, NRI etc.) are required to log on to https://www.evotingindia.co.in and register themselves as Corporates. After receiving the login details they haveto link the account(s) which they wish to vote on and then cast their vote. They should upload a scannedcopy of the Board Resolution and Power of Attorney (POA) which they have issued in favour of theCustodian, if any, in PDF format in the system for the scrutinizer to verify the same.

(xviii) The voting period begins on 10.00 AM 19th Sep 2014 and ends on 6.00 PM 20th Sep 2014. Duringthis period shareholders' of the Company, holding shares either in physical form or in dematerialized form,as on the cut-off date may cast their vote electronically. The e-voting module shall be disabled by CDSLfor voting thereafter. The record date for the purpose of e-voting is 21st Sep 2014.

(xix) In case you have any queries or issues regarding e-voting, you may refer the Frequently Asked Questions("FAQs") and e-voting manual available at www.evotingindia.co.in under help section or write an email [email protected].


Place : Chennai N P MATHI LINGANDate : 12th Aug, 2014 Company Secretary

Corporate Identification Number (CIN): L65991TN2000PLC058466

Registered Office:Everonn House, Plot # 96-99Industrial Estate, PerungudiChennai 600 096Tel: 91 44 66998400

E-mail: [email protected], Website: www.everonn.com

Explanatory Statement

(Pursuant to section 102 of the Companies Act, 2013)

As required by section 102 of the Companies Act, 2013 (Act), the following explanatory statement sets out allmaterialfacts relating to the business mentioned under Item Nos. 3 to 6 of the accompanying Notice:

Item No. 3 to 4:

The Company had, pursuant to the provisions of clause 49 of the Listing Agreements entered with the StockExchanges, appointed Mr. R. Natarajan and Mr. Lakdawala Turab Mohd Hussein, as Independent Directors atvarious times, in compliance with the requirements of the clause.

Pursuant to the provisions of section 149 of the Act, which came in to effect from April 1, 2014, every listedpublic company is required to have at least one-third of the total number of directors as Independent Directors,who are not liable to retire by rotation.

The Board of Directors has recommended the appointment of these directors as Independent Directors from26th September 2014 up to 25th September 2019.


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Mr. R. Natarajan and Mr. Lakdawala Turab Mohd Hussein, non-executive directors of the Company, have givena declaration to the Board that they meet the criteria of independence as provided under section 149(6) of theAct. In the opinion of the Board, each of these directors fulfil the conditions specified in the Act and the Rulesframed thereunder for appointment as Independent Director and they are independent of the management.

In compliance with the provisions of section 149 read with Schedule IV of the Act, the appointment of thesedirectors as Independent Directors is now being placed before the Members for their approval.

Profile of Mr. R. Natarajan and Mr. Lakdawala Turab Mohd Hussein as required under Clause 49 of the ListingAgreement is given as Annexure to the Notice.

Item No. 5:

In view of adverse market conditions and liquidity constraints, the Company entered into a Debt RestructuringAgreement (DRA) with Axis Bank Limited, State Bank of India and ICICI Bank Limited on 22nd March 2014,for restructuring the Company's debts. DRA includes provision for conversion of restructured debt of the Companyin to Equity Shares by the Lenders in case of default in repayment of the principal/ interest by the Companyon the terms mentioned therein. In terms of provisions under Section 62(3) of the Companies Act, 2013 theCompany is required to take the approval of the shareholders through a special resolution.

The Board recommends passing of the resolution as set out in Item No. 4 of the accompanying notice.

None of the Directors or Key Managerial Personnel (KMP) or relatives of directors and KMP is concerned orinterestedin the Resolution at Item No. 3 of the accompanying Notice.

Item No. 6:

The Authorised Share Capital of the company as reflected in the Memorandum and Articles of Association ason date is Rs. 25,00,00,000/- (Rupees Twenty Five Crores only) divided into 2,50,00,000 (Two Crore Fifty Lakhs)Equity Shares of Rs. 10/- (Rupees Ten only) each. The Board of Directors of the Company in their meeting heldon 26th May 2014 subject to requisite approvals and consents resolved to offer equity shares to the existingshareholders of the Company (Rights Issue). In view of the proposed Rights Issue, the Authorised Share Capitalof the Company needs to be increased to Rs. 50,00,00,000/- (Rupees Fifty Crores only) divided into 5,00,00,000(Five Crores) Equity Shares of Rs. 10/- (Rupees Ten only) each, by creation of additional 2,50,00,000 (Two CroreFifty Lakhs) Equity Shares of Rs. 10/- (Rupees Ten only) each. Consequent to the increase of Authorised ShareCapital, the Authorised Share Capital contained in Clause V of the Memorandum of Association of the Companyneed to be altered as indicated in Resolution No.5 contained in the Notice convening the AGM.

The Board recommends passing of the resolution as set out in Item No. 4 of the accompanying notice.

None of the Directors or Key Managerial Personnel (KMP) or relatives of directors and KMP is concerned orinterestedin the Resolution at Item No. 3 of the accompanying Notice.

A copy of the Memorandum and Articles of Association together with the proposed alterations is available forinspection by the Members at the Registered Office of the Company between 11.00 a.m. to 1.00 p.m. on allworking days from the date hereof upto the date of the Meeting.


N P MATHI LINGANCompany Secretary

Place : ChennaiChennai : 12th Aug, 2014Corporate Identification Number (CIN): L65991TN2000PLC058466

Registered Office:Everonn House, Plot # 96-99Industrial Estate, PerungudiChennai 600 096Tel: 91 44 66998400E-mail: [email protected], Website: www.everonn.com

Details of Directors Seeking Appointment / Re-appointment at 14th Annual General Meeting

Name

Date of Birth

Date of Appointment

Qualifications

Expertise in specific Functional area

Mr. Natarajan Ranganathan

10-07-1965

03-04-2013

Mr. Natarajan Ranganathan is a member of ICAI (Institute of CostAccountants of India) and ICSI (Institute of Company Secretaries ofIndia).

Mr. Natarajan has over 20 years' experience and serves on the Boardof Hurix Systems, Humming Bird Corporate Travel & Stay andAnantara Solutions. Before joining Helion, he was Global CFO andHead of Support Services at Tavant Technologies. During his stint inTavantTechnologies India Pvt. Ltd. he led key initiatives of strengtheningand implementing several internal processes related to Finance, HRand IS; and championing organizational improvement programs. Hehelped Tavant grow to $60M in revenue.

Prior to Tavant, Mr. Natarajan was CFO and CIO at Wipro peripherals.He worked for about 10 years in the Wipro group of Companies, inthe areas of strategic business planning, financial services accounting,marketing, human resources, information services, finance andresources management, treasury and taxation. He contributedsignificantly to the profitability through treasury management,controllership and compliances. WeP was awarded the Best IT UsageAward by NASSCOM in the ICT Category in September 2003, aninitiative led by him as the CIO. He started his career in 1989 withSRF Limited, a manufacturing company based inDelhi.

He is also on the advisory board of SCIT (part of SymbiosisInternational University).

Names of companies in which he holdsdirectorship

Hurix Systems Private Limited

Helion Advisors Private Limited

Tapasya Business Solutions Private Limited

Anantara Solutions Private Limited

Azure Power India Private Limited

Azure Power (Haryana) Private Limited

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Name

Date of Birth

Date of Appointment

Qualifications

Expertise in specific Functional area

Mr. Lakdawala Turab Mohd Hussein

27-10-1958

22-05-2013

Mr. Lakdawala Turab Mohd Hussein is a graduate from the IndianInstitute of Management, Ahmedabad.

Mr. Lakdawala Turab Mohd Hussein began his career with HindustanLever Ltd. He has about 32 years of experience in the field ofcommunications, advertising and customer relationship management.He has worked extensively in rural and urban India, across productand services segments. This experience has given him the ability tohelp brands reach both these segments successfully.

As an advertising professional he has specialized in brand planning.He has been a pioneer in CRM in the advertising industry, havingstarted work in 1998 in this field. He has been invited to speak at theAdministrative Staff College of India, Hyderabad Central University,National Institute of Fashion Technology, Hyderabad ManagementAssociation, Costs and Chartered Accountants Conferences andvarious Rotary Clubs.

Names of companies in which he holdsdirectorship

Tempest Advertising Private Limited

Inza Customer Relationship Management Services Private Limited

Sonnet Strategic Consultancy Private Limited

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DIRECTORS’ REPORT

To the Members,

Your Directors submit the Annual Report of the Company along with Audited Financial Statements for the financialyear ended March 31, 2014.

1. Financial Results

Rs. In Lakhs

Particulars 31st March 2014 31st March 2013

Income from operations 4,322.99 11,501.04

Other Income 33.89 43.63

Total Revenue 4,356.88 11,544.67

Total expenditure before Interest & Depreciation 4,051.50 19,153.27

Operating Profit / Loss (EBIDTA) 305.38 (7,608.59)

Interest 4,707.72 5,110.92

Depreciation / Amortization 4,618.52 4,931.28

Profit before exceptional and extraordinaryitems and tax (9,020.86) (17,650.80)

Less Exceptional items 6,495.49 23,242.65

Profit before tax (15,516.35) (40,893.44)

Deferred Tax 3,434.43 15,351.38

Profit after tax (PAT) (12,081.92) (25,542.07)

2. Issue of Equity shares

During the year, your company issued 10,91,303 Equity shares of ̀ 10/- each at ̀ 39.69/- per share (includinga premium of ` 29.69/- per share) were preferentially issued and allotted on March 27, 2014 toM/s. The Concorde Residential Schools (Kerala) Private Limited, being an entity forming part of the promotersand promoter group upon conversion of outstanding loan amount of `4,33,13,816/- (Rupees Four CroresThirty Three lakhs Thirteen Thousand Eight Hundred and Sixteen Only).

Another 10,91,303 Equity shares of ` 10/- each at ` 39.69/- per share (including a premium of ` 29.69/- pershare) of the Company were preferentially issued and allotted on May 26, 2014 toM/s. The Concorde Residential Schools (Kerala) Private Limited, being an entity forming part of the promotersand promoter group upon conversion of the one Optionally Convertible Debenture (OCD) of value` 4,33,13,816/- (Rupees Four Crores Thirty Three lakhs Thirteen Thousand Eight Hundred and Sixteen Only)which was originally issued on March 27, 2014 by converting the outstanding loan amount.

This was pursuant to the approval of Shareholders of the Company in the Extraordinary General Meetingheld on 6th March 2014. As a result of this, the issued, subscribed and paid up capital of the Company hasincreased from ` 21.86 Crores to ` 24.05 Crores.

The relevant date was inadvertently mentioned in the Notice calling the Extraordinary General Meeting heldon 6th March 2014 as 3-Feb-2014 as a matter of error in interpretation. Obliging to the Stock Exchange view,we revised the relevant date as 4-Feb-2014.

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3. Subsidiary Companies

The Company has 15 subsidiary companies; there has been no material change in the nature of the businessof the subsidiaries. A statement containing brief financial details of the subsidiaries is included in the AnnualReport.

As required under the Listing Agreements entered into with the Stock Exchanges, a consolidated financialstatement of the Company and all its subsidiaries is attached. The consolidated financial statements havebeen prepared in accordance with the relevant accounting standards as prescribed under Section 211(3C) ofthe Companies Act, 1956. These financial statements disclose the assets, liabilities, income, expenses andother details of the Company and its subsidiaries companies.

Pursuant to the provision of Section 212(8) of the Companies Act, 1956, the Ministry of Corporate Affairsvide its circular dated February 8, 2011 has granted general exemption from attaching the balance sheet,statement of profit and loss and other documents of the subsidiary companies with the balance sheet ofthe Company. A statement containing brief financial details of the Company’s subsidiaries for the financialyear ended March 31, 2014 is included in the Annual Report. The annual accounts of these subsidiariesand the related detailed information will be made available to any member of the Company/its subsidiariesseeking such information at any point of time and are also available for inspection by any member of theCompany/its subsidiaries at the registered office of the Company. The annual accounts of the saidsubsidiaries will also be available for inspection during business hours, as above, at the head offices/registered offices of the respective subsidiary companies. The Company shall furnish a copy of the detailsof annual accounts of subsidiaries to any members on demand.

4. Directors

The Board consists of Six Directors as at 31st March, 2014, including one Alternate Director. The Board hasfour Non-Executive Directors, out of whom two are independent directors and also the Chairman of the Boardis Non-Executive & Independent Director.The composition of the Board is in conformity with Clause 49 ofthe Listing Agreement, which stipulates that not less than fifty percent of the Board should comprise of Non-Executive Directors and if the Chairman is an Executive Director, at least half of the Board should beindependent.

During the year Mr. Sandeep Maniyar was appointed as an Alternate Director to Mr. C N Radha Krishnan.

Mr. R. Natarajan and Mr. Lakdawala Turab Mohd Hussein, independent directors of the company, beingeligible seek appointment for a term of five years in accordance with the provisions of the Companies Act,2013. The Board of Directors recommend their appointment.

5. Auditors

M/s. P. Chandrasekar, Chartered Accountants, Statutory Auditors of the Company hold office upto the dateof the ensuing Annual General Meeting of the Company and being eligible, offer themselves for re-appointment.

Pursuant to the provisions of Section 139 of the Companies Act, 2013 and the Rules framed thereunder,it is proposed to appoint M/s. P.Chandrasekar, Chartered Accountants as statutory auditors of the Companyfrom the conclusion of the forthcoming AGM till the conclusionof the Fifteenth AGM to be held in the year2017, subject to ratification of their appointment at every AGM.

6. Conservation of Energy, Technology absorption and Foreign Exchange earnings and outgo:

Information pursuant to Section 217 (1)(e) of the Companies Act, 1956 read with the Company’s (Disclosure ofparticulars in the report of the Board of Directors) Rules 1988 is provided hereunder.

(i) Conservation of Energy – The Company has planned and installed equipments in a manner that maximumenergy is conserved.

(ii) The Company’s business being IT education, every effort is made to ensure that changes in technologyare communicated throughout the organization at every stage.

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Particulars Year Ended Year Ended31-03-2014 31-03-2013

Expenditure in Foreign Currency

Business Associate Expenses - 24Travel and Conveyance 3,975 1,035Other Expenses - -

Earnings in Foreign ExchangeTesting Services 4,395 7,023

7. Particulars of Employees

In terms of the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies(Particulars of Employees) Rules, 1975, the names and other particulars of employees are set out in theAnnexure to the Directors Report section. However, as per the provisions of Section 219(1)(b)(iv) of theCompanies Act, 1956, the Annual Report excluding the aforesaid information is being sent to all the membersof the Company and others entitled thereto. Any member interested in obtaining such particulars may writeto the Company Secretary at the registered office of the Company.

8. Fixed Deposits

The Company has not accepted any public deposits and as such, no amount on account of principal or intereston public deposits was outstanding as on the date of the balance sheet.

9. Listing of Shares

The Equity Shares of your Company have been listed on National Stock Exchange of India Limited (NSE)and Bombay Stock Exchange Limited (BSE). The Listing fees for the year 2014-15 have already been paidto BSE and NSE. The custodial fees payable to depositories namely NSDL & CDSL have also been remittedby the Company.

10. Corporate Governance Report & Management Discussion and Analysis

As per clause 49 of the Listing Agreements entered into with the Stock Exchanges, Corporate GovernanceReport and Management Discussion and Analysis are attached and forms part of this report.

11. 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;

a) That the applicable accounting standards had been followed along with proper explanation relating tomaterial departures, if any;

b) That the selected accounting policies were applied consistently and judgments and estimates that arereasonable and prudent were made so as to give a true and fair view of the state of affairs of the Companyat the end of the financial year and of the loss of the Company for that period;

c) That the Directors have taken proper and sufficient care for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets ofthe Company and for preventing and detecting fraud and other irregularities;

d) That the annual accounts were prepared for the financial year ended 31st March 2014 on a going concernbasis.

(iii) The foreign exchange earnings and outflows are detailed below.Amount in ` ‘000


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12. Statutory Disclosure

None of the Directors of your Company are disqualified as per provisions of Section 274(1)(g) of theCompanies Act, 1956. The Directors of the Company have made necessary disclosures, as required undervarious provisions of the Act and Clause 49 of the Listing Agreement.

13. Compliance Certificate

A Certificate from the M/s. G L Subramanian, Company Secretary in Practice regarding compliance ofconditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement is attached asannexure to this report.

14. Corporate Social Responsibility

Everonn India Foundation is committed towards spreading quality education across rural India. Thefoundation will augment its corporate social responsibility initiatives and will focus on building an equitablesociety for sustainable development and all-around growth. Everonn strongly believes that by giving backto society, it can contribute to a growing economy as well as build stronger and prosperous communities.Through this initiative, Everonn’s employees, education content & technological strength aim to make adifference in many students’ lives and their learning experiences.

15. Acknowledgement and Appreciation

Your Directors take this opportunity to express their deep sense of appreciation of all the employees whoseoutstanding professionalism, commitment and initiative has made the organization’s growth and successpossible and continues to drive its progress.

Your Directors also would like to convey their appreciation for the support and co-operation received duringthe year under review, from all the Government Authorities, Regulators, Stock Exchanges, Shareholders,other Stakeholders, Clients, Vendors, Partners, Bankers and other Business Associates.

For and on Behalf of the Board

C N Radhakrishnan A SrinivasanDirector Managing Director

Place: ChennaiDate: 12-Aug-2014

MANAGEMENT DISCUSSION AND ANALYSIS

i. INDUSTRY STRUCTURE AND DEVELOPMENTS.

A. Industry Overview

Education is the key to the task of nation-building. It is also well-accepted that providing the right knowledgeand skills to the youth can ensure overall national progress and economic growth. The Indian educationsystem recognizes the role of education in instilling the values of secularism, egalitarianism, respect fordemocratic traditions and civil liberties and quest for justice. The Education sector in India is poised at acrucial stage in its growth. India’s demographic advantage of having a large population of youth, coupledwith low gross enrolment ratios, presents a huge opportunity to education sector players.

At the same time, the growth of the Indian economy and upward movement of income levels is boostingspend on Education, which already accounts for the second-highest share of wallet for middle-classhouseholds.

Additionally, a tremendous interest from entrepreneurs and private equity players is generated due to:

l Steady cash flows

l Recession-proof nature of the sector

l Negative working capital requirements

Government support for the sector has also seen a boost, with substantial reforms and increased financialoutlays being announced and implemented. These reforms aim at not only strengthening the sector butfacilitating planned expansion of the sector. The interplay of all these factors has made Education an attractivesector with multiple opportunities, as can be seen by the high growth many players are witnessing andpursuing.

Overall education market in India

The size of India’s education sector is expected to be ~USD 110b. Additionally, the cost of educationalservices in India is among the lowest – being ~ one-sixth of the global average. Revenue growth of theeducation sector in India has grown at a CAGR of ~15% since 2000. Households constitute ~55% of the totalspend on education, most of which goes towards private sector education. The private sector is expected togrow faster due to the lack of public funding, increased interest of private entrepreneurs and corporatehouses for investment in this sector due to its attractive investment opportunity and the willingness andability of the households to pay more for quality education (median income elasticity of 2 with respect tohousehold spend).

While a large share of the education sector spend is through the public sector, current facilities in the field ofeducation are inadequate in terms of quantity as well as quality. For example, seats available for post highersecondary (tertiary) education are sufficient for only 18-20% of the population in the age group that is eligiblefor the tertiary education. Technical and professional education receives only ~4% of budgetary spend and,therefore, a number of private technical/ professional educational institutes have come up to meet the shortfallin capacity.

We have a dedicated education sector team serving all key segments of the Education sector.

B. Company Overview

Everonn has been a leading presence in the Indian education industry for over two decades and as India’sfirst education and training company to offer satellite-enabled learning, Everonn is a pioneer in facilitatingeducation using breakthrough technologies. With dedicated teams of business and academic experts, thecompany has been on the forefront of heralding the next advancement in learning, thus becoming a distinctiveplayer in bridging geographical and cultural borders.

Everonn’s unrivalled reach in providing a blend of traditional and digitized content to the schools, collegesand retail segments has helped in offering quality education to students even in the most remote parts ofIndia. The company’s efforts has borne fruit in an extensive and well-connected network of schools, colleges

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and retail training centers that deliver best-in-class content. Everonn’s firm foothold in the web-based solutionsas well as the competitive exam guidance arenas has helped millions change their lives. Everonn todayreaches out to millions of students through thousands of learning centres across 27 states, works withseveral State Governments of India and is the largest VSAT education network in the World.

Varkey Group / GEMS Education joined Everonn as a strategic investor and acquired management control.NRI entrepreneur Padmashree Sunny Varkey, who is also the UNESCO Goodwill Ambassador for EducationPartnerships, is the Founder and Chairman of the Group.

GEMS Education (“GEMS”) is an international education company that owns and operates high performingschools. For over 55 years, GEMS has provided high quality education to hundreds of thousands of childrenaround the world. Headquartered in Dubai, the Company has a global network of award winning schoolswhich provide high quality holistic education.

GEMS Education, a UAE born brand founded 55 years ago, is now the world’s largest provider of K-12private education – operating more than 50 schools, educating over 140,000 students and employing over13,000 people across 19 markets in the Middle East, North America, Europe, Asia and Africa. GEMS wasfounded by educators and run by educators and believes that education is a long-term commitment. VarkeyGEMS Foundation (VGF) is the philanthropic arm of GEMS Education. VGF is a not-for-profit organisation,established to improve the standards of education for under privileged children. Former U.S. President BillClinton is the Honorary Chairman of VGF.

ii. OPPORTUNITIES

India, today, is considered as a talent pool of the world, having qualified and educated human resources inabundance. This has been one of the primary reasons for transformation of India into one of the fastestgrowing economies in the world. On a global scale, wealth and prosperity have become more dependent onthe access to knowledge than the access to natural resources.

The importance of education in India was recognized by the founding fathers of the country and the subsequentgovernments, and as a result considerable importance has been given to literacy, school enrolment, institutionsof higher education and technical education, over the decades ever since independence.

India’s aspirations to establish a knowledge society in the context of increasing globalization, is based on theassumption that higher and technical education essentially empowers people with the requisite competitiveskills and knowledge. It has been realized that it is the quality of education that prepares one for all pursuitsof life and in the absence of an acceptable level of quality, higher education becomes a mere formalismdevoid of any purpose or substance. As a result, from around the turn of the century, increasing attention hasalso been paid to quality and excellence in higher education.

Everonn possesses a highly developed higher education system, which offers the facility of education andtraining in almost all aspects of human creativity and intellectual endeavors.

iii. SEGMENT–WISE PERFORMANCE

A. SCHOOLS

Everonn School Limited (ESL) is a wholly owned subsidiary of Everonn Education Limited and caters to theK-12 school education segment.

ESL runs its K-12 brand of CBSE schools by the name of Everonn Public School. Part of a nationwidenetwork of K-12 CBSE schools, Everonn Public School draws from the experience of two education leaders.As a pioneer of education innovation in India for over 20 years, Everonn has added international experiencefrom GEMS education to help prepare a child for real world success. Our proven approach to educationprovides everything a child needs for a rewarding future and to thrive in an increasingly competitive globaleconomy.

Key strengths of EPS:

Part of the GEMS network of leading international private schools

GEMS Education (“GEMS”) is an international education company that owns and operates high performingschools. For over 55 years, GEMS has provided high quality education to hundreds of thousands of children

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around the world. Headquartered in Dubai, the Company has a network of award winning schools. GEMS istoday involved in the delivery of high quality holistic education to more than 100 schools globally. GEMS isoperating more than 50 schools, educating over 140,000 students across 19 markets in the Middle East,North America, Europe, Asia and Africa. It employs over 13,000 education professionals, specialists andstaff and is the largest employer of British and Indian teachers outside their home countries. GEMS has aworld class leadership team that combines business and education expertise from around the globe.

International best practice and methodology to design and deliver CBSE curriculum

Our comprehensive curriculum has been developed by internationally experienced education practitioners.Our 6Cs approach is student centered and activity based to accommodate a child’s individual learning style.The program is integrated into the child’s learning experience across different subjects and stages.

High quality and highly trained teaching staff

Our teachers are port of an international community, with access to extensive tools, resources, advisors andprofessional development opportunities. We use high quality teachers to deliver the curriculum who aresourced through GEMS’ leading recruitment processes and guided by effective staffing structures

Use of technology to facilitate learning

Everonn has been a technology leader in India for over 20 years, bridging geographical and cultural boundarieswith satellite enabled learning. Everonn Public School uses technology intelligently to support students,teachers, learning and assessment.

School Facilities

l Libraries, both junior and senior libraries

l Science laboratories

l Specialist teaching/language rooms

l ICT centre

l Art and craft rooms/Dance and drama studio

l Music room

l Multipurpose sports hall/auditorium

l Play areas

l Medical centre

l Cafeteria

Everonn Public Schools were opened at the following locations across India on the 16th of April 2014:

l Indore, Madhya Pradesh

l Gwalior, Madhya Pradesh

l Bhopal, Madhya Pradesh

l Haldwani Uttarakhand

l Bathinda, Punjab

l Patiala, Punjab

l Guntur, Andhra Pradesh

l Anantnag, Jammu & Kashmir

B. SKILL DEVELOPMENT:

Skill training is done through Everonn Skill Development Limited (ESDL), an indirect subsidiary of EveronnEducation Limited. Skill training includes vocational education and training to students. It focuses on impartingindustry relevant skills to youth to make them industry ready and skilled personnel. ESDL delivers courses inretail, apparel & textile, construction, gaming & animation, engineering, hospitality, health care and automobilesectors.


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Government Initiative:

Ministry of Rural Development (MoRD) & GSY Project :

A project funded by the Central Government of India, to empower below poverty line people with the vision toprovide employment based training. ESDL was chosen as one of the Implementing agencies to train andplace 7970 candidates across 6 states (Tamil Nadu, Karnataka, Andra Pradesh, Orissa, Bihar and UttarPradesh) between 2010-14. All trainings were completed by Sep. 2013.

Aajeevika – Initially started by the Central Government as SGSY (Swarnajayanti Gram Swarojgar Yojan)and then transferred to State Governments to run it as Ajeevika Skill Development program. The vision ofthe project is to empower the below poverty people on employability skilling in different course and sectorsin different states. The target trainees are 7740 across 4 states (Gujarat, Orissa, Rajasthan and Karnataka).

Jeevika – An initiative by the State Government of Bihar to empower people on employability by offeringdifferent courses like driving, beautician, retail, welding and so on. Total beneficiaries of 3000 will benefitfrom this project.

UPSDM – Uttar Pradesh Skill Development Mission:

A project focusing on employability skills such as Solar, Driving, Retail, IT/ITeS, Automobile and Electrical for4500 unemployed youth. The project is funded by UPSDM under the Government of UP.

Youth Skill Training (YST):

A project focused on empowering Youth on skills like Retail, Garments, Apparel, Driving and Hospitality. Theproject is funded by Government of Tamil Nadu – Tamil Nadu State Rural Livelihood Mission.

Entrepreneurship Development Institute (EDI):

In line with livelihood enhancement initiatives of the Government which included Entrepreneurship alongwith wage based livelihood, ESDL has developed training content to address this requirement. ESDL hassuccessfully completed 3 batches for the Entrepreneurship Institute of Tamil Nadu in Jute Bag Making andFood Processing.

Successfully bid for and won an order worth Rs. 1.20 Cr. from the Entrepreneurship Development Institute ofTamil Nadu for training 4000 women in 31 districts of TN in Installation and maintenance of Solar PowerPacks. Training completed for 1680 students by Financial Year 2013 - 14.

NGO:

International Funding for Agriculture Development (IFAD):

A project funded by International Funding for Agriculture Development through the Government of TamilNadu. The project focuses on training people in the Tsunami affected villages in Tamil Nadu. Training inRetail Apparel, tailoring, web designing program has been completed successfully.

NSDC STAR Program:

The scheme branded as STAR (Standard Training Assessment and Reward) for promotional purposesenvisages that a monetary reward will be provided to those who wish to acquire a new skill or upgradetheir skills to a higher level.

The overall scheme at the National Level aims to train 10 lakh youth in a one year time period startingSeptember 2013. The scheme was launched by Ministry of Finance, Govt. of India and promoted / managedby the Sector Skill Councils established by the National Skill Development Corporation (NSDC) throughits training and assessment partners

The assessment will be based on the National Occupation Standards defined by the respective SectorSkill Councils. The certification is viewed very positively by the industry and will boost the prospects ofthe candidate. The competency gained, which is mapped to the Occupational Standards defined by theSSC and Industry will make for easier placement

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Aggressively capturing this window of opportunity, ESDL addressed the NSDC STAR program and havebeen granted training numbers for INR 26 Crs.

CSR:

As per the new company law, all major companies have to mandatorily spend 2% of their PAT on CSR.Having the expertise and experience in implementing livelihood projects, ESDL under CSR- CorporateSocial Responsibility, plans to execute projects for CSR qualifying companies. ESDL will be focusing onRenewable energy linked CSR projects and NSDC linked CSR projects.

C. ICT:

Pioneers in offering complete ICT-enabled education in government schools through turn-key projects ona BOOT model, this division acts as an education service provider for computer education, computerliteracy, computer-aided learning and teachers’ training projects. Through this division’s unbeatable reachacross the nation, Everonn has built a strong brand image with key policy makers for computer educationin schools.

However, due to the capital intensive nature of the business, Everonn has now restructured the businessunit and has taken a conscious call to only bid and implement business that is asset light and serviceoriented. Given below is a snapshot of the existing ICT projects.

ICT’s scope of services for existing projects:

l Supply all IT hardware, software and other physical infrastructure necessary to provide IT education.Provide and maintain the infrastructure in good working condition Teach Computer Education in Englishand respective local language, if stipulated by the contract.

l Supply adequate stationary and consumables at the centres.

l Appoint full-time faculty, who are employees of Everonn, at the schools. The normal ratio is 2 instructorsfor every school.

l Create / build necessary print and multimedia content as per the curriculum stipulated by thegovernment in English and local languages, if necessary.

l Train teachers, headmaster / headmistress at the school on computers and usage of multimedia content.

Coverage

Everonn ICT has worked and is currently working under the Public - Private Partnership mode with stategovernments in Andaman & Nicobar, Andhra Pradesh, Delhi, Goa, Himachal Pradesh, Haryana, Jharkhand,Karnataka, Maharashtra, Uttar Pradesh, West Bengal, Gujarat, Tamil Nadu, Pondicherry, Tripura and manymore.

The new projects will focus on an asset light service oriented business model. Services include but isnot restricted to the below:

l Content in the areas of math, sciences and other subjects including syllabus specific content

l School and student management software which allows monitoring student attendance, progress &performance, evaluation, assessment, certification and preparation of various dashboards

l Specialized teachers training for pre-service and in-service teachers including soft skills / student handling /pedagogy, subjects re-skilling and IT courses specified in ICT scheme

l Instructor led training programs for students including providing full time trained teachers to schools toimpart computer education

l Specialized courseware in local language

ICT Projects Update

Apart from the existing projects, Everonn has also been successful in implementing two new projects inGadchiroli, Maharashtra and Rajasthan.


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Gadchiroli project is towards providing educational services across schools in the district. The servicesinclude provision of faculty, content and courseware

Rajasthan project involves providing services across 58 Satellite Interactive Terminals. The services involveprovision of resources to run these SITs and enable training.

Both of the above projects are non CAPEX, service based contracts.

iv. OUTLOOK

SCHOOLS

Everonn Public Schools opened at eight locations across India on the 16th of April 2014 starting the academicyear 2014-15. Everonn is in the process of opening more schools across India to establish its pan Indiapresence.

SKILL

Skill training includes vocational education and training to students. Everonn focuses on imparting industryrelevant skills to youth to make them industry ready and skilled personnel. Everonn delivers courses in retail,apparel & textile, construction, gaming & animation, engineering, hospitality, health care and automobilesectors. Everonn works broadly in Government and NSDC.

ICT

Pioneers in offering complete ICT - enabled education in government schools through turn-key projectson a BOOT model, this division acts as an education service provider for computer education, computerliteracy, computer-aided learning and teachers’ training projects. Through this division’s unbeatable reachacross the nation, Everonn has built a strong brand image with key policy makers for computer educationin schools. Everonn ICT has worked and is currently working under the Public-Private Partnership modewith state governments in Andaman & Nicobar, Andhra Pradesh, Delhi, Goa, Himachal Pradesh, Haryana,Jharkhand, Karnataka, Maharashtra, Uttar Pradesh, West Bengal, Gujarat, Tamil Nadu, Pondicherry,Tripura and many more.

v. RISKS, THREATS AND CONCERNS

l The Company’s performance depends largely on the government policies on education and allocationof budgets towards education. Any adverse change in the government policies towards education andreduction in the allocation of government budget will materially affect the performance of the Company.

l The payment system with the government is exposed to delays due to bureaucratic process & systemicprocedures in making payments. The delay in receiving payment from the Government will impactour cash flow and working capital requirements. The Company has taken measures to mitigate therisk by including the additional cost which may be incurred due to payment delays, into the price ofthe product/service offered by the Company. Further, the Company has developed an efficient paymentfollow-up process to minimize the time taken to receive the payments from the Government

l Any adverse change in the tax laws of the Country that increases the tax liability, particularly incometax and service tax will have serious impact on the profitability of the Company. Any increase in thetaxes, duties, levies etc. on computer hardware will affect the business of the Company.

l The company is dependent on a number of key managerial personnel and the Company’s sustainedgrowth depends upon its ability to attract and retain skilled manpower. Our inability to attract or retainsuch persons could adversely affect the performance of the company.

l These are the days when technology takes no time to become obsolete. Thus, to be at par with itscompetitors the Company has to ensure that it constantly updates and upgrades its technology. Thecompany is well aware of these risks and challenges and has put in place mechanism to ensure thatthey are managed and mitigated with adequate timely actions.

l The Content developed by the Company is exposed to the risks of Piracy & infringement of copyrightwhich may result in loss of revenue. The company oversees the usage of the product by the client

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during the contract period, thereby minimizing the piracy risk. The copyright law, license agreement,confidentiality agreements with employees and contractual confidentiality requirements imposed onour customers protects our copyrights on the content developed by us.

vi. Internal control systems and their adequacy

The Company has in place adequate systems of internal control commensurate with its size and the natureof its operations. These have been designed to provide reasonable assurance with regard to recordingand providing reliable financial and operational information, complying with applicable statutes, safeguardingassets from unauthorised use, executing transactions with proper authorisation and ensuring complianceof corporate policies.

The Company has a well-defined delegation of power with authority limits for approving revenue as wellas expenditure. Processes for formulating and reviewing annual and long term business plans have beenlaid down.

The Company has an audit committee, the details of which have been provided in the corporate governancereport.

vii. Discussion on financial performance with respect to operational performance

The financial statements of Everonn Education Limited (referred to as “EEL”) and its subsidiaries(collectively referred to as the Company) are prepared in compliance with the Companies Act, 1956 andgenerally accepted accounting principles in India (Indian GAAP). EEL has followed the revised ScheduleVI as notified by the Ministry of Corporate Affairs with effect from April 1, 2011, in the financial statementsunder discussion. The Company will be following the Companies Act, 2013 with effect from April 1, 2014.The financial performance is discussed in the directros report.

viii. Material developments in human resources including number of people employed

The year 2013-14 was a year full of actions. The priorities of the organisation were reset which led torealigning our businesses in the group, loss making and high capital intensive businesses were closed.Manpower rationalization in line with new business focus done to keep the organisation more agile. In orderto retain the best talents, an objective talent assessment conducted and created the Talent Pool who canwork on any project or divisions. The HR processes and policies of the company made available on lineto create complete transparency, fairness and confidence amongst employees. The online HRMS moduleshelped in employees in the field connected and get to know the happening in the organisation on a regularbasis. The formal employee reward and recognition programme rolled out to promote performance andresult oriented culture in the organisation. The various employee engagement activities conducted duringthe year have created positive energy amongst employees and work place. Every activity was carried outwith care to build the new culture of achievement and appreciation. For Everonners at HO, every Fridayis a formal learning day. All the jobs in the company have been reviewed and Job descriptions were re-written to ensure high employee productivity and profitability. The second half was more challenging interms of building talents to meet the demands of opening up of 8 new schools in the group and to deliverthe skill training across against the new orders bagged in Skills business. The organization has Talentstrength of around 2300 of which 1900 are project staff and revenue earners. The talent pipeline ispromising and it is a matter of time in taking the organisation to the next level.

CAUTIONARY STATEMENT

Certain statements made in the Management Discussion and Analysis Report relating to the Company’sobjectives, projections, outlook, expectations, estimates and others may constitute ‘forward looking statements’within the meaning of applicable laws and regulations. Actual results may differ from such expectations whetherexpressed or implied. Several factors could make significant difference to the Company’s operations. Theseinclude climatic and economic conditions affecting demand and supply, government regulations and taxation,natural calamities over which the Company does not have any direct control.


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CORPORATE GOVERNANCEI. COMPANY’S PHILOSOPHY ON CODE OF CORPORATE GOVERNANCE.

Effective corporate governance practices constitute the strong foundation on which successful commercialenterprises are built to last. The Company's philosophy on corporate governance oversees businessstrategies and ensures fiscal accountability, ethical corporate behavior and fairness to all stakeholderscomprising of regulators, employees, customers, vendors, investors and the society at large.

Strong leadership and effective corporate governance practices have been the Company's hallmark and ithas inherited these from the Everonn culture and ethos. The Company continues to focus its resources,strengths and strategies to achieve its vision of becoming a truly global leader in education services, whileupholding the core values of excellence, integrity, responsibility, unity and understanding, which arefundamental to the Everonn Group. The Company believes in adopting the 'best practices' that are followedin the area of corporate governance across various geographies.

The Company has a strong legacy of fair, transparent and ethical governance practices. The Company hasadopted a Code of Conduct for its employees including the Managing Director and the Executive Directors.In addition, the Company has adopted a Code of Conduct for its Non-Executive Directors. Both these codesare available on the Company's website. The Company's corporate governance philosophy has been furtherstrengthened through, the Everonn Code of Conduct for Prevention of Insider Trading and the Code ofCorporate Disclosure Practices.

The Company is in compliance with the requirements stipulated under Clause 49 of the Listing Agreementsentered into with the Stock Exchanges with regard to corporate governance.

Corporate Governance essentially is the system by which companies are directed and controlled by themanagement in the best interest of the stakeholders and others. Corporate Governance ensures fairness,transparency and integrity of the management. Corporate Governance is a way of life, rather than a merelegal compulsion. It further inspires and strengthens investor's confidence and commitment to the Company.

Your Company acknowledges its responsibilities to its Stakeholders. Your Company has always focused ongood Corporate Governance practices which would ensure efficient conduct of the affairs of the Companyand achieve the Company's goal of maximizing values of all its stakeholders. Your Company recognizesthe transparency, disclosure, financial controls and accountability are the pillars of the good system ofcorporate governance. It is the Company's endeavor to attain highest level of governance to enhance thestakeholder's value.

The Board of Directors performs the pivotal role in the governance system and they are primarily responsiblefor corporate governance of the Company. The Board has formed several Committees to assist them inspecific areas resulting in sharper focus on Good Governance in order to ensure that the endeavor tomaximize value for the entire spectrum of its stakeholders leads to long term benefits to society at large.

The Company is in compliance with the requirements of the guidelines on Corporate Governance stipulatedunder Clause 49 of the Listing Agreement with the Stock Exchanges. The following is a report on the statusand progress on major aspects of Corporate Governance for the year ended 31st March, 2014.

II. BOARD OF DIRECTORS

The Board has an optimum combination of Executive, Non-Executive and Independent Directors, whichensures proper governance and management. As at 31stMarch, 2014, the composition of the Company'sBoard of Directors is in conformity with the prescribed code of Corporate Governance by the StockExchanges.

As mandated under Clause 49 of the Listing Agreement with the Stock Exchanges, none of the Directorsis a member of more than ten Board level Committees nor is any of them a Chairman of more than fiveBoard level committees, in which they are members. Necessary disclosures regarding Committee positionsin other public companies as on March 31, 2014, have been made by the Directors.

The names and categories of the Directors on the Board, their attendance at Board Meetings held duringthe year is given herein below.

23


a) Composition of the Board

Sl.no Name of the Director Category

1. Mr. Dino Sunny Varkey Non-Executive & Non Independent Director2. Mr. A Srinivasan Managing Director3. Mr. C N Radhakrishnan Non-Executive & Non Independent Director4. Mr. R Natarajan Non-Executive & Independent Director5. Mr. Lakdawala Turab Mohd. Hussein Non-Executive & Independent Director

b) Board Procedure

The Board has a formal schedule of matters reserved for its consideration and decision. Agenda papers forthe Board / Committee Meetings containing all necessary information / documents are made available to theBoard / Committee, respectively, in advance to enable the Board / Committee to discharge its responsibilitieseffectively and take informed decisions. The senior executives make presentations to the Board.

The Board of Directors meet at regular intervals and decisions are taken at the Meetings after detaileddiscussions and evaluation of the subject. After the Meetings, the Company has a formal system for followup, review and reporting. The actions taken on the Board / Committee Meetings and decisions arrived atare reported at its next meeting for being reviewed by the Board / Committee(s). Amongst other things,the Board considers the following matters:

– Strategy and Business plans;– Annual Operating and Expenditure Budgets;– Statutory Compliances;– Adoption of Quarterly / Half Yearly / Annual results;– Minutes of Meetings of the Board Committees; and– Minutes of Board Meetings of the Subsidiaries

In accordance with the code of Corporate Governance and based on the requirements to focus on specialareas, the Board has constituted several Committees to deal with specific matters and delegated powersfor different functional areas.

c) Meetings and Attendance

The Board met eleven times during the year on 3rd April 2013, 30th May 2013, 14th August, 2013, 20thAugust, 2013, 26th September, 2013, 30th September, 2013, 15th November 2013, 17th December 2013,6th February, 2014, 17th March, 2014 and 27th March, 2014. Details of attendance of each Director atthe Board Meetings held during the year and at the last Annual General Meeting (AGM) of the Companyare as follows:

Sl. No. of No. of CommitteeNo. Name of the Director Designation Attendance Directorship in Positions Held in

other Indian other PublicCompanies Companies

Board Last Public Private Chairman MemberMeeting AGM

1 Mr. Dino Sunny Varkey Non-Executive & 2 NO NIL 12 NIL NILNon Independent Director

2 Mr. A Srinivasan Managing Director 11 YES NIL 5 NIL NIL

3 Mr. C N Radhakrishnan Non-Executive & 9 YES NIL 9 NIL NILNon Independent Director

4 Mr. R Natarajan Non-Executive & 8 YES NIL 6 NIL NILIndependent Director

5 Mr. Lakdawala Turab Non-Executive & 11 NO NIL 3 NIL NILMohd. Hussein Independent Director


24

The necessary quorum was present for all the meetings.

None of the Non-Executive Directors have any material pecuniary relationship or transactions with theCompany.

During the year 2013-14, information as mentioned in Annexure 1A to clause 49 of the Listing Agreements

has been placed before the Board for its consideration.

III. COMMITTEES OF THE BOARD

A. Audit Committee

The Company has a qualified and independent Audit Committee with its members being Executive and Non-Executive Directors, to oversee the accounting and financial governance of the Company. The Chairman ofthe Committee is an Independent Director.

a) Composition

The Audit Committee of the Company is constituted in line with the provisions of Clause 49 of the ListingAgreements entered into with the Stock Exchanges read with Section 292A of the Companies Act, 1956(“Act”).

The Audit Committee was comprised of the following members in the beginning of the financial year 2013-14.

Director Position

Mr. R Natarajan Chairman

Mr. Lakdawala Turab Mohd. Hussein Member

Mr. C N Radhakrishnan Member

b) Terms of Reference in brief

The primary objective of the Committee is to monitor and provide effective supervision of the financialcontrol and reporting system. The Audit Committee reviews the business of the Company at regularintervals and makes appropriate recommendations to the Board for its approval. The terms of referenceof the Committee, which are in line with the requirements of the Clause 49 of the Listing Agreement andthe provisions of Section 292A of the Companies Act, 1956, inter-alia comprise of the following:

Ø Oversight of the Company’s Financial Reporting and disclosure of its financial information

Ø Reviewing with the Management, the Quarterly Financial Results before submission to the Board forits approval

Ø Reviewing with the Management, the Annual Financial Results / Statements before submission to theBoard for its approval

Ø Reviewing the adequacy of Internal Control Systems

Ø Discussion with the Internal Auditor on significant findings and follow up thereon

Ø Reviewing of the Capital Expenditure Plans and the status relating thereto

Ø Monitoring the Company’s Cost Control Measures

Ø Reviewing of compliance with Accounting Standards and

Ø Approval of appointment of CFO, before finalization by the Management.

The Audit Committee invites such of the executives, as it considers appropriate (particularly the head ofthe finance function), representatives of the statutory auditors and representatives of the internal auditorsto be present at its meetings. The Company Secretary acts as the secretary to the Audit Committee.

The previous Annual General Meeting (AGM) of the Company was held on September 26, 2013 and wasattended by Mr. R Natarajan, Chairman of the Audit Committee.

25


c) Meetings and attendance

During the year the Committee met four times, viz., 30th May, 2013, 14th August, 2013, 15th November, 2013,6th February, 2014. The attendance of the members of the Audit Committee are as follows:

Directors Number of Meetings attended

Mr. R. Natarajan 4

Mr. Lakdawala Turab Mohd. Hussein 4

Mr. CN Radhakrishnan 4

B. Remuneration Committee

a) Composition

The Remuneration Committee of the Board comprises of the following Non-Executive Directors & ExecutiveDirector:

S.No Directors Position

1 Mr. CN Radhakrishnan Chairman

2 Mr. R. Natarajan Member

3 Mr. Lakdawala Turab Mohd. Hussein Member


The terms of reference of the Committee inter-alia includes the following:

- determination of remuneration package of all the Directors of the Company;

- determination of the service contracts, notice period and severance fees;

- determination of eligibility of the Directors for stock options, if any and other modalities relating thereto.

- appointment/ reappointment of the Executive and Non- Executive Directors


No meetings were held during the year.

d) Remuneration Policy

The Remuneration policy of the Company has been structured to match the market trends of the industryand to attract the best talents of the sector. The scales of remuneration are determined based on the levelsof responsibility and scales prevailing in the industry. The Board of Directors of the Company had authorizedthe Remuneration Committee to fix the remuneration package of the Executive Director. Accordingly, theremuneration package of the Executive Director, including its break up into fixed component and performancelinked incentive, along with the performance criteria are determined by the Remuneration Committee.

e) Remuneration to the Directors

No Remuneration is payable to the Non-Executive Directors except sitting fees. No sitting fee is paid to theExecutive Director for attending the Meetings of the Board or the Committees thereof. Further, the membershave authorized the Board of Directors of the Company to vary the amount of sitting fees payable to theDirectors for attending the Meetings of the Board of Directors and any of the Committees constituted, withinsuch maximum permissible limit as may be prescribed under the Companies Act, 1956, Rules made andNotifications issued thereunder from time to time. As at present, the sitting fees payable to each of theDirectors per meeting is as follows:


26

Sl. No Name of the Committee (Amount In Rs.)

1 Board 20,000/-

2 Audit Committee 20,000/-

3 Remuneration Committee 20,000/-

4 Finance Committee 20,000/-

5 Shareholders / Investor Grievances &Share Transfer Committee 20,000/-

C. Shareholders/ Investor Grievances & Share Transfer Committee

a) Composition

The Shareholders/ Investor Grievances & Share Transfer Committee of the Board comprises of thefollowing members:


1 Mr. Lakdawala Turab Mohd. Hussein Chairman

2 Mr. R Natarajan Member

3 Mr. A Srinivasan Member


The Committee's main focus is on the basic rights of the Shareholders including, Transfer of Shares,Transmission/Transposition of Shares, Issue of Duplicate/Split Certificates, Sub Division/Consolidation ofShares, Consolidation of Folios, dematerialization/Rematerialization of Shares, Change of address, non-receiptof the Refund Orders, non receipt of the Share Certificates and such other issues relating to investor relations.


During the year the Committee met four times, viz., 30th May, 2013, 14th August, 2013, 15th November, 2013,6th February, 2014. The attendance of the members of the Shareholders/ Investor Grievances & Share TransferCommittee is as follows:

Directors Number of Meetings attended

Mr. R Natarajan 4

Mr. Lakdawala Turab Mohd. Hussein 4

Mr. A Srinivasan 4

d) Name and Designation of Compliance Officer:

Mr. N P Mathi Lingan, Company Secretary, acts as the Compliance Officer as per Clause 47 (a) and (f) of theListing Agreement entered with Stock Exchanges.

e) Status of the Shareholders' Complaints:

The Shareholders Committee and the Board reviews the status of Shareholders' Grievances received bythe Company together with the status of their redressal at every meeting. The details of complaint resolvedduring the financial year ended March 31, 2014 are as follows:

27


Sl. no Nature of Complaints Pending as Complaints Complaints Pending ason 1st Redressed on 31st

April 2013 March 2014

1 Nil Nil Nil Nil Nil

D. OTHER COMMITTEES

1. Finance Committee

a) Composition

The Finance Committee of the Board comprises of the following members. The Company Secretary acts asSecretary to the Committee:


1 Mr. A Srinivasan Chairman




The terms of reference of the Committee inter-alia includes the following:

- Opening, closing or Operation of Bank accounts.

- To review the position of funds of the Company, borrow monies required for the purpose of business, negotiateand finalise the terms of borrowings with the lenders, approve borrowings and look into its repayments andalso to make loans when there is surplus money available in hand.

- Authorisation to Directors, employees or others for effective representation before Statutory, Legal, Judicial,Quasi-Judicial, Arbitrators, Mediators, Conciliators, Tribunals and all Other Authorities.

2. Allotment Committee

a) Composition

The Board of Directors has constituted an Allotment Committee with the following members:


1 Mr. A Srinivasan Chairman




The scope of the Committee comprises of allotment of shares on conversion of warrants, Foreign CurrencyConvertible Bonds or any other convertible instrument. The Meetings of the Committee are held based on therequirements for the business to be transacted.


28

IV. GENERAL BODY MEETINGS

The following are the details of Date, Location and Time of the General Meetings held during the last threefinancial years:

Date Meeting Location Time

6th Mar, 2014 EGM Everonn House, 96-99 Industrial Estate 10.00 AMPerungudi, Chennai - 96

26th Sep, 2013 AGM Everonn House, 96-99 Industrial Estate 10.00 AMPerungudi, Chennai - 96

25th Sep, 2012 AGM Beach Park # 2/226, Chinnandikuppam Road, 10.00 AMVettuvankeni, Chennai

29th Jun, 2012 EGM Beach Park #2/226, Chinnandikuppam Road, 9.30 AMVettuvankeni, Chennai

19th Oct, 2011 EGM Beach Park #2/226, Chinnandikuppam Road, 9.30 AMVettuvankeni, Chennai

03rd Aug, 2011 AGM P.Obul Reddy Hall, Sri Thyaga Brahma Gana Sabha,Vani Mahal, G.N.Chetty Road, T.Nagar, Chennai 600 017 11.00 AM

During the last three Annual General Meetings, the Shareholders of the Company have approved the SpecialResolutions as provided in the notice of the respective Annual General Meetings. Brief details of such resolutionsare as under:

Year Annual Sr.No Particulars of Special Resolution PassedGeneralMeeting

2013 13th AGM NIL

2012 12th AGM NIL

2011 11th AGM 1 Appointment of Mr. P. Kishore, as Managing Director of theCompany in terms of provisions of sections 198,269,309,310,311read with Schedule XIII of the Companies Act, 1956.

2 Appointment of Mrs. Susha John, as Whole Time Director ofthe Company in terms of provisions of sections 198, 269, 309,310, 311 read with Schedule XIII of the Companies Act, 1956.

V. POSTAL BALLOT

There were no resolutions that were passed through postal ballot by the members of the Company duringthe year ended 31st March, 2014. None of the resolutions to be placed at the ensuing Annual GeneralMeeting are required to be passed by the members through Postal Ballot.

VI. CODE OF CONDUCT

The Code of Conduct (the Code) is applicable to all Directors and employees of the Company includingits subsidiaries. The Code is a comprehensive Code to ensure good governance and to provide for ethicalstandards of conduct on matters including conflict of interest, acceptance of positions of responsibility,treatment of business opportunities and the like. A copy of the Code of Conduct is posted on the Company’swebsite www.everonn.com

All the Board Members and Senior Management Personnel have affirmed compliance to the Code for theyear ended on 31st March, 2014.

29


VII. DISCLOSURES

a) Material Related Party Transaction

None of the transactions with any of the related parties was in conflict with the interest of the Company.Details of transactions with related parties are disclosed in the Financial Statements in the AnnualReport.

b) Compliances

No penalties or strictures have been imposed on the Company during the past three years by StockExchanges or SEBI or any statutory authorities, on any matter related to capital market. The Companyhas complied with applicable rules and regulations prescribed by Stock Exchanges, SEBI or any otherstatutory authority relating to the capital market. All Returns/Reports were filed within stipulated periodof time.

c) The Company has fulfilled the following non-mandatory requirements as prescribed inAnnexure I D to the clause 49 of the Listing Agreements entered into with the Stock Exchanges:

- The Company has set up a Remuneration Committee, details of which have been given earlierin this Report.

- The statutory financial statements of the Company are unqualified.

VIII. WHISTLE BLOWER POLICY

The Company has adopted whistle blower policy and has established the necessary mechanism foremployees to report concerns about unethical behaviour. No person has been denied access to the AuditCommittee.

IX. RECONCILIATION OF SHARE CAPITAL AUDIT:

A qualified practicing Company Secretary carried out a share capital audit to reconcile the total admittedequity share capital with the National Securities Depository Limited (NSDL) and the Central DepositoryServices (India) Limited (CDSL) and the total issued and listed equity share capital. The audit report confirmsthat the total issued/paid-up capital is in agreement with the total number of shares in physical form and thetotal number of dematerialised shares held with NSDL and CDSL.

X. MEANS OF COMMUNICATION

The Company regularly intimates information like quarterly financial results and media releases on significantdevelopments in the Company as also presentations that have been made from time to time to the media,institutional investors, analysts are posted on the Company’s website www.everonn.com and have alsobeen submitted to the stock exchanges on which the Company’s equity shares are listed, to enable them toput them on their own websites.

a) Quarterly Results: Quarterly Results are published in one English daily newspaper circulating in thewhole or substantially the whole of India and in one daily vernacular newspaper and are also postedon the Company’s website www.everonn.com

b) Media Releases and Presentations: Official media releases are sent to the Stock Exchanges beforetheir release to the media for wider dissemination. Presentations made to media, analysts, institutionalinvestors, etc. are posted on the Company’s website.

c) Annual Report: Annual Report containing, inter alia, Audited Annual Accounts, Consolidated FinancialStatements, Directors’ Report, Auditors’ Report and other important information is circulated to membersand others entitled thereto. The Management Discussion and Analysis (MD&A) Report forms part of theAnnual Report and is displayed on the Company’s website.


30

XI. GENERAL SHAREHOLDER INFORMATION

a) Details of the forthcoming Fourteenth Annual General Meeting

1. Date : 26th Sep, 2014

2. Day : Friday

3. Time : 10.00 AM

4. Venue : Everonn House, # 96-99, Industrial Estate, Perungudi, Chennai – 600 096.

Financial Calendar:

Year ending: March 31

AGM in: Sep

Date of Book Closure/Record Date: As mentioned in the Notice of the AGM to be held on 26th Sep, 2014

b) Listing on Stock Exchanges

The equity shares of the Company are listed on the following Stock Exchanges with the stock codesas indicated against each Stock Exchange:

Name of the Stock Exchange Address Stock Code

Bombay Stock Exchange Limited Phiroze Jheejeebhoy Towers, 532876Dalal Street, Mumbai – 400 001

National Stock Exchange Exchange Plaza, Everonnof India Limited Plot No. C/1, G Block,

Bandra-Kurla Complex, Bandra (E)Mumbai - 400 051.

c) Depositories

The equity shares of the Company are admitted in the following Depositories of the country under theInternational Securities Identification Number (ISIN) INE678H01010. This number is required to be quotedin each transaction relating to the dematerialized equity shares of the Company.

Name of the Depository Address

National Securities Depository Limited (NSDL) Trade World, A wing, 4th & 5th Floors,Kamala Mills Compound,Lower Parel, Mumbai - 400 013.

Central Depository Services (India) Limited (CDSL) Phiroze Jheejeebhoy Towers,(CDSL) 16th Floor, Dalal Street, Mumbai - 400 001

31


S.No. High

Month

NSE

Low

Avg. TotalTraded

QuantityHigh

BSE

Low

Avg. TotalTraded

Quantity

1 Apr 65.85 52.45 615,402 65.95 52.30 66,776

2 May 64.50 44.50 315,149 64.55 44.25 34,285

3 Jun 46.50 31.05 200,449 45.80 31.00 23,455

4 Jul 49.85 26.70 350,005 49.80 26.65 43,901

5 Aug 27.80 21.70 19,470 27.55 21.60 3,313

6 Sep 35.00 23.15 45,536 34.95 23.15 6,844

7 Oct 35.95 27.20 72,510 36.35 27.15 9,496

8 Nov 41.90 34.00 103,475 41.60 34.00 13,963

9 Dec 40.80 33.40 53,929 40.80 34.00 8,642

10 Jan 59.80 33.95 355,785 59.95 34.00 39,573

11 Feb 37.75 30.40 23,886 37.80 30.55 3,269

12 Mar 39.65 31.55 70,422 39.85 31.60 9,723

d) Details of the Share price movements in the National Stock Exchange of India Limited and BombayStock Exchange Limited

e) Performance in comparison to BSE Sensex and NSE S&P CNX Nifty

f) Registrar and Share Transfer Agents (RTA)

M/s. Cameo Corporate Services Limited, Chennai, is the Registrar and Share Transfer Agent (RTA) forhandling the physical and electronic registry work. The Shareholders are requested to address their sharerelated requests / queries to the RTA at the following address.

M/s. Cameo Corporate Services Limited

Unit: M/s Everonn Education Limited

Subramanian Building, No.1, Club House Road, Mount Road, Chennai – 600 002,

Tel: 044 - 2846 0390 Fax: 044 - 2846 0129

g) Share Transfer System

The requests for physical share transfers, transmissions, transposition etc., are received by the Company orby the Registrar and Share Transfer Agent. In respect of the Company’s shares, which are traded in thedematerialized form, the transfers are processed and approved in electronic form by NSDL/CDSL throughtheir Depository Participants.

Apr

13

May

13

Jun

13

Jul 1

3

Aug

13

Sep

13

Oct

13

Nov

13Dec

13

Jan

14

Feb 1

4

Mar

14

Apr

13

May

13

Jun 1

3

Jul 1

3

Aug

13

Sep 1

3

Oct

13

Nov

13Dec

13

Jan

14

Feb 1

4

Mar

14

Everonn Share PriceEveronn Share Price


32

The physical share transfers, transmissions etc., are processed based on number of requests received andkeeping in view the prescribed timeline. The shares lodged for physical transfer/ transmission/transpositionare registered as per the requirement of the listing agreement, if the documents are complete in all respects.Adequate care is taken to ensure that no share transfers are pending for more than the period stipulatedin the listing agreement. Shares requested for dematerialisation are confirmed within 15 days.

h) Shareholding Pattern and the Distribution of Shareholding as at 31st March, 2014

CLIENT TYPE % OF HOLDINGS

Promoter and Promoter group 63.15

Resident 25.93

Corporate Body 4.83

Clearing Member 0.62

Foreign Institutional Investors 1.02

Others 2.03

NRI 0.81

Financial Institution /Bank 1.61

Total 100.00

The total number of shareholders as on 31st March 2014 stood at 39,893 (Thirty Nine Thousand and EightNinety Three only).

The Distribution of the Shareholding of the Company as at 31st March, 2014, is as follows:

HOLDING NUMBER % OF TOTAL SHARES % OF TOTAL

between 10 and 5000 37697 94.49 28622230 12.46

between 5001 and 10000 1230 3.08 9623720 4.19

between 10001 and 20000 536 1.34 7996810 3.48

between 20001 and 30000 160 0.40 4051480 1.76

between 30001 and 40000 76 0.19 2772410 1.20

between 40001 and 50000 55 0.14 2581900 1.12

between 50001 and 100000 86 0.22 6079110 2.64

> 100000 53 0.14 167883450 73.11

Total 39893 100 229611110 100

i) Dematerialization of Shares and Liquidity

The Company has entered into Agreements with both NSDL and CDSL to facilitate the shareholders todematerialize their equity shares with any one of the Depositories. The custodial charges for the year2014-15 have been paid to NSDL and CDSL as per the Listing Agreement.

As at 31st March, 2014, 2,29,60,404 equity shares representing 99.99% of the Company’s total numbersof shares have been dematerialized.

In view of the SEBI’s direction the settlement of trades in the listed securities should take place only in thedemat mode and the benefits embedded in holding of the securities in demat form, the Shareholders holdingthe shares in physical forms are requested to demat their shares at the earliest.

33


j) Outstanding GDRs/ADRs/Warrants or any Convertible instruments, conversion date and likelyimpact on equity

The Company has not issued any ADR/GDR or any convertible warrants during the year ended 31st March2014.

k) Address for Correspondence & Shareholders queries

Regd. Office :The Company Secretary,Everonn Education Limited,“Everonn House”,Plot Nos.96-99, Industrial Estate,Perungudi, Chennai - 600 096.Phone : 044-66998400 Fax : 044-66998408

M/s. Cameo Corporate Services LimitedUnit: Everonn Education LimitedSubramanian Building,No.1, Club House Road,Chennai - 600 002.Phone : 044-28460390 Fax : 044-28460129

Email-id for registering Investor complaints:

As required under sub clause 47(f) of the Listing Agreement, a separate email-id; [email protected],has been created by the Company for the purpose of registering the complaints by the investors.Mr. N P Mathi Lingan, Company Secretary, has been appointed as the Compliance Officer of the Companyfor the redressal of investor grievances. The Company has also displayed the email-id on thewebsite; www.everonn.com.

For and on Behalf of the Board

A Srinivasan C N RadhakrishnanManaging Director Director

Place: Chennai

Date: 12-Aug-2014


34

CODE OF CONDUCT

Declaration under Clause 49 I (D) of the Listing Agreement

THIS IS TO CONFIRM THAT the Company has adopted a Code of Conduct for its employees and the directors of

the Company. The Code of Conduct of the Company is available on the Company’s website.

I confirm that the Company has in respect of the financial year ended March 31, 2014, received from the Senior

Management Team of the Company and the Members of the Board a declaration of compliance with the Code of

Conduct as applicable to them.

A Srinivasan

Managing Director

Date: 12th Aug 2014

35


CERTIFICATE ON CORPORATE GOVERNANCE(Under Clause 49 of the Listing Agreement)

ToThe Members of Everonn Education Limited

We have examined the compliance of conditions of Corporate Governance by Everonn Education Limited (theCompany) for the year ended 31st March 2014 as stipulated in Clause 49 of the Listing Agreement of the saidCompany with Stock Exchanges.

The compliance of conditions of Corporate Governance is the responsibility of the Management. Our examinationwas limited to procedures and implementation thereof, adopted by the Company for ensuring the complianceof the conditions of Corporate Governance. It is neither an audit nor an expression of opinion on the financialstatements of the Company.

In our opinion and to the best of our information and according to the explanations given to us, we certify thatthe Company has complied with the conditions of Corporate Governance as stipulated in the above mentionedListing Agreement.

We further state that such compliance is neither an assurance as to the future viability of the Company nor theefficiency or effectiveness with which the management has conducted the affairs of the Company.

For M/S G L SUBHRAMANIANPracticing Company Secretaries

G L SubhramanianPlace : Chennai Company SecretariesDate : 12th August 2014 Membership No.27282


36

INDEPENDENT AUDITORS’ REPORT

TO THE MEMBERS OF EVERONN EDUCATION LIMITED

Report on the Financial Statements

We have audited the accompanying financial statements of Everonn Education Limited, which comprise theBalance Sheet as at March 31, 2014, and the Statement of Profit and Loss and Cash Flow Statement for theyear then ended, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation of these financial statements that give a true and fair view ofthe financial position, financial performance and cash flows of the Company in accordance with the AccountingStandards referred to in sub-section (3C) of section 211 of the Companies Act, 1956 (“the Act”). This responsibilityincludes the design, implementation and maintenance of internal control relevant to the preparation andpresentation of the financial statements that give a true and fair view and are free from material misstatement,whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted ouraudit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India.Those Standards require that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the financial statements are free from material misstatement.An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in thefinancial statements. The procedures selected depend on the auditors’ judgment, including the assessment ofthe risks of material misstatement of the financial statements, whether due to fraud or error. In making thoserisk assessments, the auditor considers internal control relevant to the Company’s preparation and fairpresentation of the financial statements in order to design audit procedures that are appropriate in thecircumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control.An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness ofthe accounting estimates made by management, as well as evaluating the overall presentation of the financialstatements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for ourqualified audit opinion.

Basis for Qualified Opinion

i) We draw attention to Note No. 2.41 wherein the company has indicated that it is assessing the carryingvalue of investment in subsidiaries and advances to subsidiaries, after taking into account the futureoperational plans and cash flows and accordingly no impairment loss has been recognized at thisstage.

ii) We draw attention to Note No.2.42 wherein the company has indicated that Lease charges amountingto Rs. 2286.20 Lakhs has not been provided in the books for some parties as required by the contractualterms pending re-negotiation.

iii) We draw attention to Note No.2.47 regarding non ascertaining of complete particulars of dues toMicro, Small and Medium Enterprises, if any, under MSMED Act, 2006, and provision towards interest,if any, is not ascertained at this stage.

iv) We draw attention to Note No.2.49 of Financial Statements with regard to non-receipt of Confirmationof balances from Debtors including dues from Government Companies, Creditors, Loans and Advances,Investments, banks and Other Liabilities. These amounts are subject to adjustments, if any, afterreconciliation and for identification of doubtful debts/advances, which are not ascertainable at thisstage.

v) We draw attention to Note No 2.50, wherein the company has stated that provision towards impairment/loss under AS 28 has not been ascertained.

vi) We draw attention to Note No. 2.51 wherein the company has indicated the receipt of income taxdemand notices for various assessment years commencing from AY 06-07 amounting toRs. 108,42,00(‘000) and appeals filed against the orders. The Company has sought the stay of demandof tax inclusive of interest for which no provision has been made beneficial .

vii) We draw attention to Note No 2.40 & 2.52 regarding the pending service tax dispute towards penaltybefore settlement commission and the non-recognition of estimated liability of Rs. 1,11,55.98,(‘000)which is being recognized as contingent liability.

We are not aware of the any material adjustments which may arise on account of adjustments relating to issues setout above and subsequent to receipt of such confirmation / reconciliation.

Qualified Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for theeffects / possible effects of the matter described in the Basis for Qualified Opinion paragraph to the audited financialswhich are not ascertainable, had the observations in Note number: 2.42 of the audited financials with regards to thelease charges had been considered the loss for the year ended March,31,2014 would have been a loss ofRs 14,368.14 Lakhs as against the reported audited loss for the year ended March 31,2014 of Rs 12,081.93Lakhs. The reserve and surplus would have been Rs.24,997.29 Lakhs as against reported figure of Rs.27,284.51Lakhs subject to paragraphs above, the financial statements give the information required by the Act in the mannerso 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, 2014;

(b) in the case of the Statement of Profit and Loss, of the loss for the year ended on that date; and

(c) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.

Emphasis of Matter

a) Without qualifying our opinion, attention is drawn to accounting policy no. 2.1 of the financialsstatement on the existence of certain liabilities including banks, and other commitments, which aredue for payment during the subsequent financial year and the management plan /action for meetingthe same. The company’s ability to continue as a going concern is dependent on the successfuloutcome of the management plans.

b) We draw attention to Note No: 2.26 Deferred tax asset has been recognized for the year ended31st March,2014, as the company is of the view that there is virtual certainty and has ability to continueas a going concern depends on the successful outcome of the management plans.

c) We draw attention to Note no: 2.57, Business Restructuring reserve of Rs 150 Crores has beencreated out of Securities Premium Account based on the order passed by the Hon’ble High Courtof Madras .

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors’ Report) Order, 2003 (“the Order”) issued by the Central Governmentof India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure, a statement on thematters specified in paragraphs 4 and 5 of the Order.

2. As required by section 227(3) of the Act, we report that:a. we have obtained all the information and explanations which to the best of our knowledge and belief

were necessary for the purpose of our audit except for the matter described in the Basis for QualifiedOpinion paragraph;

b. in our opinion proper books of account as required by law have been kept by the Company so faras appears from our examination of those books ;

c. the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Reportare in agreement with the books of account ;

d. except for the effects /possible effects of the matter described in the Basis for Qualified Opinionparagraph to the audited financials which are not ascertainable, had the observations in Note number:2.42 of the audited financials with regards to the lease charges had been considered the loss for theyear ended March,31,2014 would have been a loss of Rs.14368.14 Lakhs as against the reportedaudited loss for the year ended March 31,2014 of Rs.12081.93 Lakhs, subject to paragraphs above,in our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement comply withthe accounting standards referred to in sub-section (3C) of section 211 of the Act;

e. on the basis of written representations received from the directors as on March 31, 2014, and takenon record by the Board of Directors, none of the directors is disqualified as on March 31, 2014,from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of theCompanies Act, 1956.

For M/S. P. CHANDRASEKARChartered Accountants

Firm Registration No. 000580S

P.ChandrasekaranPlace : Chennai PartnerDate: 26th May, 2014 Membership No.: 026037

37



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ANNEXURE TO AUDITORS’ REPORTReferred to in paragraph 1 under ‘Report on Other Legal and Regulatory Requirements’ in the

Independent Auditors’ Report of even date to the members of Everonn Education Limitedon the financial statements for the year ended 31st March, 2014

Based on the audit procedures performed for the purpose of reporting, true and fair view of the financial statementsof the company and taking into consideration, the informations and explanations given to us, and the books ofaccounts and other records examined by us, in the normal course of audit, we report that;

i. (a) The Company has not maintained proper records showing full particulars, including quantitative details

and situation of fixed assets.

(b) The Company has not carried out physical verification of fixed assets during the year. The company

does not have a regular program of physical verification of its fixed assets. In our opinion the frequency

of physical verification is not reasonable having regard to the size of the company and nature of its

assets. Fixed Assets lying with third parties are also subject to confirmation. We are therefore unable

to comment on the discrepancies, if any, which could have arisen on such verification.

(c) The management has also represented that no substantial part of fixed assets have been disposedoff during the year, to affect the going concern.

ii. Having regard to the nature of the Company’s business / activities, clause 4(ii) of CARO is not applicable tothe Company as there is no inventory being held by the company.

iii. (a) According to the information and explanations given to us, during the period under review, the companyhas availed loans from subsidiaries and other related parties listed in the Register maintained undersection 301 of the Companies Act, 1956, the Outstanding Balance as on 31st March 2014 isRs.2,96,50,64,(‘000) and the maximum amount involved during the period is Rs.3,31,90,59 (‘000).

There are no written terms and conditions for repayment and interest on loans. Hence the availmentof loan is prima facie not prejudicial to the interest of the company. In respect of the said loans, thesame are repayable on demand and there are no overdue amounts.

(b) According to the information and explanations given to us, during the period under review, the companyhas granted loan to Subsidiaries listed in the Register maintained under Section 301 of the CompaniesAct, 1956. The outstanding balance as on 31st March 2014 is Rs.1,41,09,58(‘000) and the maximumamount involved during the period is Rs.1,72,99,81 (‘000.) There are no stipulated terms and condition

on either the interest rate or the repayment schedule. However the rate of interest and the interestfree nature where applicable and other terms and conditions of such loans are not, prima facie,prejudicial to the interest of the company. As there is no written repayment schedule we are unable to

comment as to whether the payment of principal amount is regular.

iv. In our opinion and according to the information and explanations given to us, having regard to the explanationsthat some of the items purchased are customized and are of special nature and suitable alternative sourcesare not readily available for obtaining comparable quotations. Additional strengthening of the internal controlprocedures with regard to purchase of fixed assets is recommended so as to be commensurate with thecurrent size of the Company and nature of its business. However, the management has represented that itis taking reasonable steps to correct the said weaknesses and in our opinion, there is a continuing failure to

correct major weaknesses in internal control system relating to purchase of fixed assets.

v. According to the information and explanations given to us, we are of the opinion that transactions that needto be entered in the register maintained under Section 301 of the Companies Act, 1956 have been generallyso entered.

vi. The company has not accepted deposits from the public, under the directives issued by the Reserve Bank ofIndia and the provisions of sections 58A and 58AA of the Act and the rules framed there under. However,temporary loans have been taken from employee welfare trust without adequate records.

vii. The company did not have an internal audit system during the year.

viii. The maintenance of cost records has not been prescribed by the Central Government under clause (d) ofsub-section (1) of section 209 of the Act.

ix. (a) According to the information and explanations given to us, the company has been generally depositing

undisputed statutory dues with few delays including Employees Provident Fund, Employees’ State

Insurance, Investor Protection fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty,

Income Tax, TDS, Professional Tax and any other statutory dues with the appropriate authorities

during the year. There have been significant delays in large number of cases.

(b) According to the information and explanations given to us, no undisputed amounts payable in respect

of income tax, service tax etc were in arrears as at 31.03.2014 for a period of more than six months

from the date they became payable excepting;

Particulars Amount(Rs. in ‘000)

Employee Provident Fund 1,190

Professional Tax 1,508

(c) According to the information and explanations made available to us and on the basis of examination of

records of the Company, the dues of Excise Duty, Sales Tax and Income Tax as at 31st March 2014

which have not been deposited on account of any dispute are as follows.

Name of the Statute Forum where matter Amount

(Nature of the Dues) is pending (Rs. in ‘000)

Income Tax AY : 2006-07 Under Appeal 7,557




Income Tax AY : 2008-09 Under Appeal 1,20,700





Penalty under Service Tax With Settlement Amount NotCommission Determined.

x. In our opinion, the Company had accumulated losses at the beginning of the year and has sustained cashlosses during the current financial year covered under our audit.

xi. As per the information and explanations made available to us, the company has been generally regular inrepayment of dues post restructuring to financial institutions or banks for the period ending 31st March,14excepting payment of dues to Standard Chartered Bank which is pending restructuring.

xii. According to the information and explanations given to us, the company has not granted any loan or advanceon the basis of Security by way of pledge of shares, Debentures and other securities.

xiii. The provisions of Clause 4(xiii) of the Order relating to Chit Funds / Nidhi 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.

xv. According to the information and explanations given to us, the Company has given guarantee towards loanstaken by others from banks and financial institutions, for which no counter guarantee has been obtainedfrom the parties.

xvi. According to the information and explanations given to us, the Company has used the Term Loan availedduring the current year for the purpose for which it was availed.

39



40

xvii. According to the Cash flow statement and other records examined by us and based on the informationand explanations given to us, on an overall basis, funds raised on short term basis have not been usedfor Long term Investment.

xviii. According to the information and explanations given to us, the company has made preferential allotmentof shares to parties and companies covered in the register maintained under section 301 of the Act. Basedon the information and explanation given to us in our opinion, the prices at which shares have been issuedare prima facie not prejudicial to the interest of the company.

xix. According to the information and explanations given to us, during the period covered by our audit report,the Company had issued one Optionally Convertible debentures of Rs 4,33,14(‘000) each. Thesedebentures being unsecured in nature the company has not created any security or charge in respect ofdebentures issued.

xx. The Company has not raised any funds by means of public issue during the current year and hence thequestion of disclosing the end-use of money raised by way of public issue does not arise.

xxi. Based on the audit procedures performed and on the basis of representation obtained from themanagement, we report that no instance of fraud on or by the company have been noted or reported bythe management during the year.

For M/s. P CHANDRASEKARChartered Accountants

Firm Registration No.000580S

P ChandrasekaranPartner

Membership No.026037

Place : ChennaiDate: 26th May, 2014

ADDENDUM TO DIRECTORS’ REPORTManagement reply to Auditors’ Qualifications

With regard to the Auditors’ observations contained under the heading “Basis for Qualified Opinion” and

subsequent paragraphs, the directors are of the view that the relevant notes to which the attention is drawn

explains fully, the quantum of liabilities and its accounting treatment. Additionally, the directors want to draw the

attention to the availability of a sum of Rs. 150 Crores under the head Business Reconstruction Reserve to absorb

impairment losses if any which are referred in the Auditors’ Report. The financial crisis and the huge losses

suffered by it which is a result of certain past events has put a great constraint in the working of the Company

and its operations. The board is confident that with the change in the economic outlook coupled with additional

support given by the bankers and promoter group, should ensure better compliance and deletion of most of the

audit qualification in the future years.

With regard to confirmation of balances, from debtors, creditors etc., the company’s operations are linked to

various State Governments and their respective undertakings who are not willing to confirm the outstanding

balances at any point of time. This creates a great impediment in the company’s operations and relation with

its creditors. The delays in the receipt of revenue from the Government and its agencies trigger a chain reaction,

making it incur additional cost especially finance cost to carry on its operations. Since most of the contracts are

of five years duration, the reconciliation and shortfalls etc., are normally recognized only at the end of the term

of the contract.

With regard to the identification of dues to Micro and Medium enterprises, pending complete information, the

Company is unable to categorically state which parties are falling under this category. The company has not elicited

any response to its circular sent to certain parties falling in this category.

The company almost in all cases is trying to reduce its expenditure and related outflow due the severe financial

crunch faced by it. This has resulted in the re-negotiation of certain contractual terms with the creditors / lenders /

lessors. The Company’s ongoing efforts to persuade certain lessors to reduce and restructure the lease rental

are yet to bear fruit.

Due to certain transactions carried out by the erstwhile management, and the resultant income tax survey that

was conducted by the department, huge demands of tax and interest are raised on the company year after year

including certain assessments which are reopened. The company is contesting all these demands and is hopeful

of early resolution of these disputes.

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42

EVERONN EDUCATION LIMITEDBALANCE SHEET AS AT 31-03-2014

` in ‘000

AS AT AS ATPARTICULARS NOTES 31-Mar-14 31-Mar-13

EQUITY AND LIABILITIES

SHARE HOLDER’S FUNDS

Share capital 2.16 2,29,611 2,18,698

Reserves and surplus 2.17 27,28,351 39,04,142

Non-current liabilities

Long-term borrowings 2.18 42,14,374 10,77,381

Other Long term liabilities 2.19 35,870 44,286

Current liabilities

Short-term borrowings 2.20 34,01,636 49,83,035

Trade payables 2.21 3,16,285 6,55,203

Other current liabilities 2.22 1,53,622 7,30,413

Short-term provisions 2.23 1,16,802 1,65,796

TOTAL 1,11,96,551 1,17,78,954

ASSETS

Non-current assets

Fixed assets

Tangible assets 2.24 7,75,740 15,84,643

Intangible assets 2.24 82,404 1,39,059

Capital work-in-progress 5,95,875 5,95,875

Non-current investments 2.25 25,46,606 25,46,606

Deferred tax assets (net) 2.26 17,05,636 13,62,193

Long-term loans and advances 2.27 74,838 1,14,173

Other non-current assets 2.28 3,73,211 5,59,817

Current assets

Current investments 2.29 12 12

Trade receivables 2.30 20,78,058 21,26,468

Cash and Bank Balances 2.31 1,64,062 45,691

Short-term loans and advances 2.32 28,00,109 27,04,417

TOTAL 1,11,96,551 1,17,78,954

Summary of significant accounting policies 2 The accompanying notes are an integral part of the financial statements

As per our report of even date For and on Behalf of Board of Directorsfor M/s. P Chandrasekar Chartered AccountantsFRN : 000580S

P Chandrasekaran A Srinivasan C N RadhakrishnanPartner Managing Director Director Membership No:26037

Place : Chennai Ganapathy Puranik N P Mathi LinganDate : 26-May-2014 Chief Financial Officer Company Secretary

43


EVERONN EDUCATION LIMITEDSTATEMENT OF PROFIT & LOSS FOR THE YEAR ENDED 31-03-2014

` in ‘000

Year Ended Year EndedPARTICULARS NOTES 31-Mar-14 31-Mar-13

Revenue from Operations 2.33 4,32,299 11,50,104

Other Income 2.34 3,389 4,363

Total Revenue A 4,35,688 11,54,467

Expenses:

Employee benefits expense 2.35 2,34,432 4,63,037

Finance costs 2.36 4,94,341 6,76,930

Depreciation and amortization expense 2.24 4,61,852 4,93,128

Other Expenses 2.37 1,47,149 12,86,452

Total Expenses B 13,37,774 29,19,547

Profit / (Loss) before exceptional and extraordinary items and tax A-B (9,02,086) (17,65,080)

Exceptional items 2.38 6,49,549 23,24,265

Profit / (Loss) before extraordinary items and tax (15,51,635) (40,89,345)

Extraordinary Items - - -

Profit / (Loss) before tax (15,51,635) (40,89,345)

Tax Expense

Deferred tax (3,43,443) (15,35,138)

Profit / (Loss) for the Year from continuing operations (12,08,192) (25,54,207)

Profit / (Loss) from discontinuing operations

Profit / (Loss) from Discontinuing operations (after tax)

Profit / (Loss) for the Year (12,08,192) (25,54,207)

Earnings per equity share (basic ) Rs. 2.39 (55.21) (116.79)

Earnings per equity share (diluted) Rs. 2.39 (52.59) (116.79)

Summary of significant accounting policies 2

The accompanying notes are an integral part of the financial statements





44

EVERONN EDUCATION LIMITEDCASH FLOW STATEMENT THE YEAR ENDED 31-03-2014

` in ‘000

Year Ended Year EndedParticulars 31-Mar-14 31-Mar-13 CASH FLOW FROM OPERATING ACTIVITIES Profit / (Loss) before tax (15,51,635) (40,89,345)Adjustments for:

Depreciation 8,68,856 4,93,128Interest on long term loan 4,70,772 88,204Interest income (2,870) (4,043)

13,36,758 5,77,289

Operating profit before working capital changes (2,14,877) (35,12,056)

Adjustments for :

Trade and other receivables 3,18,942 18,66,988Trade payables and other liabilities (4,05,984) (8,36,733)

Cash generated from operations (3,01,919) (24,81,801)Direct taxes paid / deducted at source (1,81,192) (29,935)

Cash Flow from Operations (4,83,111) (25,11,736) CASH FLOW FROM INVESTMENT ACTIVITIES

Purchase of Fixed Asset (10,697) 1,84,080Sale of fixed assets 7,398 -Interest income 2,870 4,043

Cash flow from Investment Activities (429) 1,88,123 CASH FLOW FROM FINANCE ACTIVITIES

Share capital Raised (net of exp warrants) 43,314 -Increase / (Decrease ) in Long-term borrowings 26,39,686 8,44,126Increase / (Decrease ) in Short-term borrowings (15,81,399) 13,83,462Interest payment (4,99,690) (39,793)

Cash flow from finance activities 11,28,136 18,30,937 Increase in cash and cash equivalents 1,18,371 (1,35,817)

Opening balance of cash and cash equivalents 45,691 1,81,509

Closing balance of cash and cash equivalents 1,64,062 45,691




45


1 CORPORATE INFORMATION

Everonn Education Limited (the ‘Company’) is a pioneer in using technological breakthroughs to makequality education a reality even in the most remote parts of the country. Everonn’s passion for enablingcutting-edge education delivery has seen us grow dramatically in the past two decades. The company isa public listed company and is listed on the Bombay Stock Exchange Limited (BSE) and the National StockExchange of India Limited (NSE)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1 BASIS OF PREPARATION OF FINANCIAL STATEMENTS

These financial statements have been prepared in accordance with the generally accepted accountingprinciples in India under the historical cost convention on accrual basis. These financial statements havebeen prepared to comply in all material aspects with the accounting standards notified under Section211(3C)[ Companies (Accounting Standards) Rules, 2006, as amended] (which continues to be applicablein terms of General circular 15/2013 date September 13, 2013 of the Ministry of Corporate Affairs in respectof Section 133 of the Companies Act, 2013) and the other relevant provisions of the Companies Act, 1956.

All assets and liabilities have been classified as current or non-current as per the Company’s normaloperating cycle and other criteria set out in the Schedule VI to the Companies Act, 1956. Based on thenature of products and the time between the acquisition of assets for processing and their realization incash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purposeof current and non-current classification of assets and liabilities.

The company is pursuing various options towards fund raising in the form of debt or equity or mix of both,and negotiating with the current lenders and is also reviewing the business plan and firmly believes thatwith the combination of internal accruals in the next financial year and on achieving successful closureof these options in the coming months it will be able to meet all its obligations. Consequently themanagement believes that the use of going concern assumption continues to be appropriate in thepreparation of these financial statements. Accordingly the assets and liabilities have been recorded in thesefinancial statements on the basis that the company will be able to realize its assets and discharge itsliabilities in the normal course of the business.

2.2 USE OF ESTIMATES

The preparation and presentation of Financial Statements requires estimates and assumptions to be madethat affect the reported amount of assets and liabilities and disclosure of contingent liabilities on the dateof the Financial Statements and the reported amount of revenues and expenses during the reporting period.Difference between the actual results and estimates is recognized in the period in which the results areknown/ materialized.

2.3 FIXED ASSETS, INTANGIBLE ASSETS AND CAPITAL WORK-IN-PROGRESS

Fixed Assets are carried at cost less accumulated depreciation and impairment loss if any. Cost includesall expenses incurred to bring the assets to its present location and condition. Assets acquired on hirepurchase are capitalized at gross value and interest thereon is charged to revenue.

Intangible assets are recognized only if it is probable that the future economic benefits that are attributableto the asset will flow to the enterprise and the cost of the asset can be measured reliably. The intangibleassets are recorded at cost and are carried at cost less accumulated amortization and impairment lossif any.

In respect of new projects setup include direct cost incurred are added to the cost of fixed assets andwherever the same is not exactly quantifiable, an reasonable allocation of expenditure is made, reflectinga portion of the cost as forming part of the cost of installation of the asset.

2.4 DEPRECIATION AND AMORTIZATION

Depreciation on fixed assets is provided on Straight Line Method at the rates and in the manner prescribedin Schedule XIV of the Companies Act, 1956, except


46

a) Fixed assets purchased for usage in executing the contractual obligations with the customers under

the project are depreciated over the period of contract.

b) Intangible assets comprising knowledge resource and content are amortized over a period of five years.

Deprecation on addition to the assets is calculated on a monthly pro-rata basis

2.5 REVENUE RECOGNITION

a) Education and training income is recognized on rendering of services over the period of instruction

as per the terms of agreement as the case may be.

b) In respect of fixed price contracts, revenue is recognized as per the proportionate completion method.

c) Revenue in respect of sale of trading, courseware content and knowledge resource is recognized on

the basis of dispatch / delivery of the material to the customers.

d) Revenue from online educational services is recognized upon receipt of subscription fees. In case

of supply to license, the revenue is recognized on establishment of right to receive.

e) Dividend income is recognized when the right to receive it is established. Interest income is recognized

on time proportion basis.

2.6 INVESTMENTS

Investments are classified as current or long term in accordance with Accounting Standard 13 on “Accordingfor Investments”. Current investments are stated at lower of cost or market value. Any reduction in thecarrying amount and or any reversal of such reduction are charged or credited to the statement of Profitand Loss.

Long-term investments are carried at cost less provision for other than temporary diminution in the carryingvalue of each investment.

2.7 LEASES

Lease arrangements where the risks and rewards incidental to the ownership of an asset substantiallyvest with the lessor, are recognized as operating leases. Lease rentals under operating leases arerecognized in the Profit and Loss account on straight-line basis over the lease term. Finance leasetransactions are considered as financing arrangements in accordance with Accounting Standard 19 andthe leased asset is capitalized at an amount equal to the present value of future lease payments and acorresponding amount is recognized as a liability. The lease payments made are apportioned betweenfinance charge and reduction of outstanding liability in relation to the leased asset.

2.8 EMPLOYEE BENEFITS

Employee benefits include provident fund, gratuity fund, employee state insurance, and compensatedabsences.

a) Defined contribution Plan

The company has contributed to provident, pension funds which are defined contribution plans. The

contributions paid/ payable under the scheme is recognized during the year in which employee renders

the related service.

b) Defined Benefit Plan

Gratuity

The Company provides for gratuity, defined benefit retirement plan (the “Gratuity Plan”) covering eligibleemployees in accordance with the Payment of Gratuity Act, 1972. The Gratuity Plan provides a lump sum

47


payment to vested employees at retirement, death, incapacitation or termination of employment, of anamount based on the respective employee’s salary and the tenure of employment. Company’s liability isactuarially determined at the end of the year and any shortfall in the fund size maintained by the Trustset up by the Company with SBI Life Insurance Co. Limited is additionally provided for.

The difference, if any, between the actuarial valuation of the gratuity of employees at the year end andthe balance of funds with SBI Life Insurance Co. Limited is provided for in the books.

Actuarial losses/ gains are charged/ credited to the Statement of Profit and Loss in the year in which suchLosses/ gains arise.

Compensated absences

Liability in respect of compensated absences is provided both for cashable leave and those expected tobe availed. The Company has defined benefit plans for compensated absences for employees, the liabilityfor which is determined on the basis of management estimation at the end of the year. Any gain or lossarising out of such valuation is recognized in the Statement of Profit and Loss.

2.9 PROVISIONS, CONTINGENCIES AND COMMITMENTS

The Company creates a provision when there is present obligation as a result of a past event that probablyrequires an outflow of resources and a reliable estimate can be made of the amount of obligation.A disclosure for a contingent liability is made when there is a possible obligation or a present obligationthat probably will not require an outflow of resources or where a reliable estimate of the obligation cannotbe made. Disclosure of show cause notices are made on merits of the matters where management foreseespossibilities of outflow of resources.

Claims receivable are accounted at the time when such income has been earned by the Companydepending on the certainty of receipts. Claims payable are accounted at the time of acceptance.

Claims raised by the Government Authorities regarding Taxes and Dues which are disputed by the Companyare accounted based on merits of each claim.

2.10 BORROWING COST

Borrowing costs that are attributable to the acquisition or construction of qualifying fixed assets arecapitalized as part of the cost of such assets till such time the asset is ready for its intended use or sale.A qualifying asset is one that necessarily takes substantial period of time to get ready for intended useor sale and other borrowing costs are recognized as an expense in the period in which they are incurred.

2.11 TAXES ON INCOME

Current tax is determined as the amount of tax payable in respect of taxable income of the year.

Deferred tax expense or benefit is recognized on timing differences being the difference between taxableincomes and accounting income that originate in one period and are capable of reversal in one or moresubsequent periods. Deferred tax assets and liabilities are measured using the tax rates and tax laws thathave been enacted or substantively enacted as at the balance sheet date. Deferred Tax asset in respectof unabsorbed depreciation and carry forward losses are recognized only if there is virtual certainty thatthere will be sufficient taxable income available to realize such assets. The Company offsets deferred taxassets and deferred tax liabilities if it has a legally enforceable right and these relate to taxes on incomelevied by the same governing taxation laws.

2.12 FOREIGN CURRENCY TRANSACTIONS

Foreign currency transactions are accounted for at the exchange rates prevailing at the date of thetransaction. Gains and losses resulting from the settlement of such transactions and from the translationsof monetary assets and liabilities denominated in foreign currencies at the year-end are recognized in theprofit and loss account.


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2.13 IMPAIRMENT OF ASSETS

Assets that are subject to impairment are reviewed for impairment whenever events or changes incircumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognizedfor the amount by which the assets carrying amount exceeds the recoverable amount.

2.14 EARNINGS PER SHARE

The earnings considered in ascertaining EPS comprise the net profit after tax. The number of shares usedin computing Basic EPS is the weighted average number of shares outstanding during the year. Dilutedearnings per share is computed by dividing the net profit after tax by the weighted average number ofequity shares considered for deriving basic earnings per share and also the weighted average numberof shares that could have been issued on the conversion of all dilutive potential equity shares unless theresults would be anti - dilutive. Dilutive potential equity shares are deemed converted as of the beginningof the period, unless issued at a later date.

2.15 CASH FLOW STATEMENT

Cash flows are reported using the indirect method; wherebynet profit before tax is adjusted for the effectsof transactions of a non-cash nature and any deferrals or accruals of past or future cash receipts orpayments. The cash flows from regular revenue generating, investment and financing activities of theCompany are segregated.

Cash and Cash equivalents for the purpose of cash flow statement comprises of Cash at Bank includingDemand Deposit accounts, Cash in Hand (including cheques in hand).

49


EVERONN EDUCATION LIMITEDNOTES TO FINANCIAL STATEMENTS AS AT MARCH 31, 2014

` in ‘000

Particulars As at As atMar 31 2014 March 31 2013

2.16 SHARE CAPITAL

AUTHORISED

2,50,00,000 (March 31, 2013: 2,50,00,000)

Equity Shares of Rs.10/- each 2,50,000 2,50,000

ISSUED :

2,29,61,111 (March 31,2013: 2,18,69,808) Equity Shares of

Rs.10/- each fully paid up 2,29,611 2,18,698

SUBSCRIBED AND PAID UP :

2,29,61,111 (March 31,2013: 2,18,69,808)

Equity Shares of Rs.10/- each fully paid up 2,29,611 2,18,698

a) Reconciliation of Number of Shares Equity Shares

Particulars Mar 31, 2014 Mar 31, 2013

Number of Amount Number of Amount

Shares in ` Shares in `

Balance as at the beginning of the year 2,18,69,808 21,86,98,080 2,18,69,808 21,86,98,080Add: Preferential Allotment of Equity Sharesto The Concorde Residential Schools(Kerala) Pvt Ltd 10,91,303 1,09,13,030 - -Shares bought back during the year - - - -

Balance as at the end of the year 2,29,61,111 22,96,11,110 2,18,69,808 21,86,98,080

b) Rights, preferences and restrictions attached to shares

Equity Shares: The Company has one class of equity shares having a par value of Rs.10 per share. Each

Shareholder is eligible for one vote per share held. The equity shareholders are eligible to receive in theremaining assets of the company after distribution of all preferential amounts, in proportion to their

shareholding.


50


c) Details of shares held by shareholders holding more than 5% of the aggregate shares in the company

Name of Shareholder As at 31 Mar 2014 As at 31 Mar 2013

No. of % of No. of % ofShares held Holding Shares held Holding

SKIL Infrastructure Ltd 40,00,000 17.42 40,00,000 18.29

The Concorde Residential Schools (Kerala) Pvt Ltd 21,84,303 9.51 10,93,000 5.00

Gems Education (Asia) 1 Limited 44,93,962 19.57 44,93,962 20.55

Varkey Group Limited 26,18,120 11.40 26,18,120 11.97

d) During the year the company has issued 1 Optionally Convertible Debenture of Rs. 4,33,14 (‘000) convertible

into 10,91,303 Equity shares at Rs. 39.69 per share convertible at any time at the option of the holder on or

before 26th Sep 2015.

` in ‘000

Particulars As at Mar 31 As at Mar 312014 2013

2.17 RESERVES AND SURPLUS

Capital Reserve

Balance as at the Beginning of the year 1,41,081 1,41,081

Added during the year - -

Balance as at the end of the year 1,41,081 1,41,081

Business Reconstruction Reserve

Balance as at the beginning of the year - -

Add: Amount transferred from Securities Premium Account 15,00,000 -

Balance as at the end of the year (Refer Note. 2.57) 15,00,000 -

Employee stock option outstanding

Balance as at the Beginning of the year - 10,534

Less : Transfer to General Reserve - (10,534)

Balance as at the end of the year - -

General Reserve


Add: Transferred from Employee stock option outstanding - 10,534



51

Securities Premium Account


Add: Received on issue of Equity Shares 32,401 -

Less: Transferred to Business Reconstruction Reserve 15,00,000 -


Surplus in Statement of Profit and Loss Account

Balance as at the beginning of the year (20,60,491) 4,93,716

Profit /(Loss) for the year (12,08,192) (25,54,207)

Less: Appropriations - -

Balance as at the end of the year (32,68,683) (20,60,491)

Total 27,28,351 39,04,142

2.18 LONG-TERM BORROWINGSSecuredTerm Loans From Banks 36,95,265 9,40,000From Other Parties 5,19,109 1,37,381

Total 42,14,374 10,77,381

During the year the company had approached its Bankers towards restructuring of repayment terms of the existingloans including fresh facilities. The loans have been restructured by Axis Bank Ltd, State Bank of India andICICI Bank Ltd. The restructured agreement provides for restructuring of repayment terms for principal and interest,reduction / adjustments in interest rates, conversion of outstanding interest amount to loan, promoters undertakingfor additional infusion of funds, monitoring oversight and certain restrictive covenants. The measurement,classification and disclosure of the Company’s term loan obligations have been recorded in these financial statementsin accordance with the Debt Restructuring Agreement.


` in ‘000

Particulars As at March 31 As at March 312014 2013

b ) A s s i g n m e n t i n f a v o r o f L e n d e r s , a l lthe rights,titles and interests of the Borrowerfrom all contracts, insurances, licenses in, to,and under all assets of the company; c) Firstparipassu charge on Borrower ’s all bankaccounts including, without limitation, the TRA.This would be by way of an account chargeagreement including Everonn GroupCompanies.d) Pledge of equity shares of allpresent and future investments made by theCompany.e) First paripassu charge on landowned by the promoter of value Rs. 110Cr.f)UnconditionalandIrrevocableCorporateGuarantee of Concorde Residential School(Kerala) Pvt. Ltd, and subsidiaries of EveronnEducation Limited.g)Personal guarantee fromthe promoter Mr. Sunny Varkey to the extent ofRs.325 crores for all facilities extended.h)Paripassu charge on shares of the Companyheld by Concorde Residential School (Kerala)Pvt Ltd


` in ‘000

52


Term Loan(FITL) ii–Axis, SBI

Nature of Security

Year No of %ending install repay31st ments mentMarch

FY 17 4 8

FY18 4 12

FY19 4 12

FY20 4 16

FY21 4 16

FY22 4 16

FY23 4 20

Total 28 100

Rate of interest is fixedto yield at least 10.25%on a weighted averagebasis over the loan tenure.

TTTTTerererererms of Rms of Rms of Rms of Rms of Repaymentepaymentepaymentepaymentepayment

As at Mar 31 2014Amt in ` ‘000(including current

maturities and accrued interest)

Funded Interest Term Loanaccumulated up to the interestmoratorium period to be repaidin 28 quarterly equalinstallments commencing from30th June 2016.

42,167 13,318

24,45,316 10,64,985 1,52,988

Axis SBI ICICI

To be repaid in 28 unequalquarterly installmentscommencingfrom 30th June2016 as given below:

RESTRUCTURED LOANS

Term SecurityLoan i – a) First paripassu chargeAxis, on all assets includingSBI and intangible assetsICICI (present and future) of

Everonn Group Companies.

Particulars

24,45,316 10,64,985 1,52,988

TermLoan iii–CISCO

Other LoansSecured by Hypothecation of assets acquiredfor ARSWAN Project.

Secured by Mortgage of Immovable Propertyat Perungudi, Chennai - 600096

Secured by Multimedia Content Software

TermLoan iv–Reliance

TermLoan v–HP

24 equal installments from theDec 2014 (Restructured)

96 Equated Monthly Installmentof ` 57,52 (in ‘000)/- startingfrom April 2014(Restructured)

Quarterly payment of Equatedinstallments of ` 3,854 (in ‘000)up to Feb ’13.

40,000 77,905

3,42,238 1,13,348

1,86,920 1,86,920

Nature of Security TTTTTerererererms of Rms of Rms of Rms of Rms of RepaymentepaymentepaymentepaymentepaymentAs at

March 312014

Particulars

` in ‘000(including current

maturities)

As atMarch 31

2013


maturities)

As mentioned in Term Loan i


53

2.20 Short-term borrowings

Secured:

Working Capital Loans repayable on demand from banks 3,48,402 21,44,371Other Loans from Banks 2,22,860

Unsecured: Debentures 43,314 -During the year the company has issued Zero Coupon OptionallyConvertible Debenture of Rs. 4,33,14 (‘000) convertible into10,91,303 Equity shares at Rs. 39.69 per share convertible at anytime at the option of the holder on or before 26th Sep 2015.

Loans From Banks - 98,857From Other Parties 44,856 44,856From Related Party 18,18,353 6,13,714From Subsidiaries 11,46,711 18,58,377

Total 34,01,636 49,83,035

Particulars Nature of Security Terms of Repayment As at March 31 As at March 31 2014 2013

Amt in ` ‘000 Amt in ` ‘000

Working Secured by Paripassu first charge on the On Demand 24,72,04 20,88,59Capital Capital entire current assetsTerm Present and future ` 5,000(in ‘000)/- of the CompanyLoan I – Cash deposit under lienSCB

Working Secured by Paripassu first charge on the On Demand 10,11,98 10,24,84

Capital Loan - entire current assets of the Company

IDBI


`̀̀̀̀ in ‘000

a. Loan from Related Party and from subsidiaries does not carry any interest and is repayable on demand.

b. The Company has defaulted in repayment of Working Capital term loan along with interest from StandardChartered Bank. The matter has been referred to Debt Recovery Tribunal. On non-receipt bank statement,the company has accrued interest based on sanction terms.

2.19 Other Long-term liabilities As at March 31 As at March 31

2014 2013 ` in ‘000 ` in ‘000

Deferred Tax Liabilities Caution Deposit (refer note below) 35,537 37,128Other deposits 333 7,158

Total 35,870 44,286

Note: Received from employees on various onsite projects

`̀̀̀̀ in ‘000

As at March 31 As at March 31 2014 2013

2.21 TRADE PAYABLESTrade Payables 3,16,285 6,55,203

Total 3,16,285 6,55,203

2.22 OTHER CURRENT LIABILITIESCurrent maturities of Long-term debt (refer note no. 2.18) 54,73,57,247 23,89,10,542From Banks - 3,40,000From Other Parties 50,050 2,07,357Interest accrued but not due on borrowings 17,211 -Interest accrued and due on borrowings 6,354 52,484Employee benefits payable 24,726 53,752Statutory dues (including Provident Fund and Tax deducted at Source) 6,939 37,552Other Payable 48,342 39,268

Total 1,53,622 7,30,413

2.23 SHORT-TERM PROVISIONSProvision for employee benefits :

Provision for gratuity 472 -Provision for Leave Encashment 3,781 3,781

Other Provisions

Provision for Tax 1,12,549 1,53,458Provision for Sales Tax - 8,557

Total 1,16,802 1,65,796

54



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2.25 NON - CURRENT INVESTMENTS

Unquoted

(i) Investment in Subsidiaries

- 108000 Equity shares (March 31,2013, 108000) of Rs.100/- eachfully paid up in Toppers Tutorial Private Limited. 1,35,000 1,35,000

- 2100000 Equity Shares (March 31,2013, 2100000) of Rs.10/- eachfully paid up in Everonn Educational Resources Solutions Limited. 41,000 41,000

- 1550000 Equity Shares (March 31,2013, 1550000) of Rs.10/- each fullypaid up in Everonn Infrastructure Limited. 15,500 15,500

- 5100 Equity Shares (March 31,2013, 5100 ) of Rs.10/- each fully paidup in AEG Skill Update Private Limited. 51 51

- 2250000 Equity Shares (March 31,2013, 2250000) of Rs.10/- each fullypaid up in Everonn Business Education Limited. 2,20,500 2,20,500

- 2450000 Equity Shares (March 31,2013, 2450000) of Rs.10/- each fullypaid up in Everonn School Limited. 60,500 60,500

- 50000 Equity Shares (March 31,2013, 50000) of Rs.10/- each fully paidup in Everonn Medical Education Limited. 500 500

- 50000 Equity Shares (March 31,2013, 50000) of Rs.10/- each fully paidup in Everonn Technical Education India Limited. 500 500

- 50000 Equity Shares (March 31,2013, 50000) of Rs.10/- each fully paidup in Everonn Sport Management Limited. 500 500

- 57178600 Equity Shares (March 31,2013, 6050000) of Rs.10/-each fully paid up in Edifications India Limited. 20,00,001 20,00,001

- 30000 Equity Shares (March 31,2013, 30000) of Rs.10/- each fully paidup in EveronnDassani Literate Limited. 300 300

- 50000 Equity Shares (March 31, 2013, 50000) of Rs.10/- each fully paidup in Everonn Knowledge & Education Corridor Limited. 500 500

- 50000 Equity Shares (March 31,2013, Nil) of Rs.10/- each fully paidup in Everonn Skilling India Limited 500 500

- 50000 Equity Shares (March 31,2013, Nil) of Rs.10/- each fully paidup in Everonn Skill Products Development Limited 500 500

Total A 24,75,852 24,75,852


` in ‘000


56



57

(ii) Others

− 82,530 Equity shares (March 31,2013, 82,530 Equity shares)

of Rs. 10/- each fully paid up DT Mediaand Entertainment Private Limited 10,729 10,729

- 1,22,500 Equity shares (March 31,2013, 1,22,500) of Rs. 1/- each fullypaid up Right Track Admizzionz Campuz Private Limited. 60,025 60,025

Total 70,754 70,754

Total 25,46,606 25,46,606

Aggregate amount of unquoted investments 25,46,606 25,46,606

2.26 DEFERRED TAX LIABILITIES / (ASSET)

Deferred Tax Liabilities

On account of written down value of fixed assets 68,164 2,84,949Total (A) Deferred Tax Assets 68,164 2,84,949on account of fiscal disallowances expenses allowablefor tax purposes when paid and loss carry forward 17,73,800 16,47,142

Total (B) 17,73,800 16,47,142

Net Deferred Tax Liability / (Asset ) (A-B) (17,05,636) (13,62,193)Deferred Tax Charge / (Credit) to Profit & Loss Account (3,43,443) (15,35,138)

Deferred tax asset has been recognized on account of unabsorbed depreciation and business loss for theyear ended 31st March, 2014. The management is of the opinion that there is a virtual certainty against whichsuch deferred tax will be realized especially on account of the new economic conditions. It is heartening tonote that the business plans of the company as well as core associates were fully accepted by the bankerswho have extended additional facilities including moratorium on loans and interest.

2.27 Long-term loans and advancesUnsecured, Considered good: Security Deposits 74,838 1,14,173

Total 74,838 1,14,173

2.28 Other non-current assetsLong term trade receivable unsecured considered good 3,73,211 5,59,817

Total 3,73,211 5,59,817


` in ‘000


2.29 Current investments

At cost or Market value, whichever is less Quoted

500 Equity shares of Rs.10/- each (Mar 31,2013 500 equityshares of Rs. 10 each) in Indian Overseas Bank 12 12Market Value Investments (IOB Shares) @ ` 51.00/- amounting

to ` 25,500/- (March 31,2013, @ ` 65.05/- amounting to ` 32,525/- )

Total 12 12

2.30 Trade Receivable

Unsecured, considered Good

Outstanding for a period exceeding 6 months from the datethey are due for payment 18,93,507 17,77,161Others 1,84,551 3,49,307

20,78,058 21,26,468

Unsecured, considered doubtfulOutstanding for a period exceeding 6 months from the datethey are due for payment 25,458 20,85,878

Less : Provision for doubtful debts (25,458) (20,85,878)

Total 20,78,058 21,26,468

2.31 CASH & BANK BALANCES

Cash on Hand 1,841 1,416

Bank balancesin Current Accounts 1,42,658 24,655in Deposit Accounts 6,508 6,565in Margin Account with Banks 13,055 13,055

Total 1,64,062 45,691

2.32 Short-term loans and advancesUnsecured, Considered good: Loans and advances to related parties 14,10,958 18,81,871

Other loans and advances Advance Income tax including Tax deducted at Source 2,34,386 94,103 Advance to Suppliers 10,90,771 6,93,159 Gratuity - 743 Others 63,994 34,541

Total 28,00,109 27,04,417


` in ‘000


58



59

EVERONN EDUCATION LIMITEDNOTES TO FINANCIAL STATEMENT FOR THE YEAR ENDED 31-MARCH-2014

` in ‘000

Particulars Year ended Year ended March 31, 2014 March 31, 2013

2.33 Revenue from Operations

Education and Training Income 4,32,299 11,50,104

Total 4,32,299 11,50,104

2.34 Other Income

Interest income 2,870 4,043

Profit on sale of asset - 11Foreign Exchange profit - 71Miscellaneous Income 519 238

Total 3,389 4,363

2.35 Employee Benefits Expense

Salaries 2,19,500 4,46,282

Contribution to Provident and Other Funds 11,403 13,871 Staff Welfare Expenses & others 3,529 2,884 Total 2,34,432 4,63,037

EMPLOYEE BENEFITS EXPENSE

The disclosure under Accounting Standard 15 “Employee Benefits” notified in the Companies (AccountingStandards) Rules 2006, are given below

Defined Contribution Plan

Contribution to Defined Contribution Plan, recognized as expenses for the year are as under:

` in ‘000

Particulars Year Ended Year Ended

31-March 14 31- March 13

Employer’s Contribution to Provident Fund& ESI 9,902 13,054

Defined benefit Plan

The Employees fund scheme managed by SBI Life Insurance Co. Limited is a defined benefit Plan. The presentvalue of obligation is determined based on actuarial valuation using the Projected Unit Method.


` in‘000

Sl.No. Particulars Gratuity Funded Gratuity FundedFor the year For the year

ended 31/03/2014 ended 31/03/2013

1 Changes in present value of obligationsPresent value of obligations as at beginning of year 6,054 7,962Interest cost 471 487Current Service Cost 1,418 1,542Benefits Paid (1,816) (3,741)Actuarial (Gain)/Loss on Obligations (146) (195)Present value of obligations as at end of year 5,982 6,054

2 Changes in the fair value of plan assetsFair value of plan assets at beginning of year 6,797 9,786Expected return on plan assets 472 -Contributions - -Benefits paid (1,816) (3,741)Actuarial Gain / (Loss) on Plan assets 57 (752)Fair value of plan assets at the end of year 5,510 6,797

3 Fair value of plan assetsFair value of plan assets at beginning of year 6,797 9,786Actual return on plan assets - -Contributions - -Benefits Paid (1,816) (3,741)Fair value of plan assets at the end of year 5,510 6,797Funded status (472) 743Excess of Actual over estimated return on plan assets (57) (752)

4 Actuarial Gain/Loss recognizedActuarial (Gain)/Loss for the year -Obligation (146) (195)Actuarial (Gain)/Loss for the year - Plan assets (57) (752)Total (Gain)/Loss for the year (203) (947)Actuarial (Gain)/Loss recognized in the year (203) (947)

5 Amounts to be recognized in the Balance SheetPresent value of obligations as at the end of year 5,982 9,786Fair value of plan assets as at the end of the year 5,510 6,797Funded status (472) 743Net Asset/(Liability) recognized in balance sheet (472) 743

6 Expenses Recognized in statement of Profit &LossCurrent Service cost 1,418 1,542Interest Cost 471 487Expected return on plan assets (472) -Net Actuarial (Gain)/Loss recognized in the year (203) (947)Difference in opening balance (actuarial valuation) - -Expenses recognized in statement of Profit &Loss 1,214 1,082

7 Assumptions used in accounting gratuity planDiscount Rate 9.16% 8.00%Salary Escalation 4.00% 4.00%Resignation rate per annum 1.00% 1.00%Rate of return on Plan Assets 8.00% 8.00%

60



61


` in‘000

Particulars Year Ended Year Ended 31/03/2014 31/03/2013

b. Unfunded Leave encashment Rs.3, 781 (000) (March 31 2013: 3,781(000)

As at 31st Mar 2013, leave encashment has been provided based on management computation andnot on actuarial valuation as provided under Accounting Standard 15, for the current year the provision

for leave encashment has not been estimated and provided.

2.36 Finance Costs Year Ended Year Ended March 31, 2014 March 31, 2013

Interest Expenses 4,70,772 5,11,092 Other borrowing costs 23,569 1,65,838

Total 4,94,341 6,76,930

2.37 Other Expenses Year Ended Year EndedMarch 31, 2014 March 31, 2013

Course execution and delivery expenses 24,959 59,906Software, hardware and material costs - 3,28,593Electricity Charges 9,677 24,079Rent 2,019 27,931Repairs to buildings - 1,179Repairs to machinery 19,788 33,812Repairs to Others 5,572 29,099Insurance 1,830 2,335Rates and Taxes 8,485 3,266Travelling Expenses 17,904 16,940Director Fees 615 255Payment to AuditorsAudit Fee 1,500 1,500Reimbursement of Expenses 382 390Professional fees 32,913 41,210Communication Expenses 11,077 21,423Advertisement and Publicity Expenses 9,320 1,23,410Equipment rental charges 1,105 5,69,962Miscellaneous Expenses 3 1,162

Total 1,47,149 12,86,452

2.38 Exceptional items Year Ended Year Ended March 31, 2014 March 31, 2013

Exceptional provision (refer Note No. 2.54 below) 6,49,550 23,24,265

Total 6,49,550 23,24,265

2.39 Earnings per Share

a) Basic

Profit after tax A (12,08,192) (25,54,207)

Weighted average number of shares outstanding B 2,18,81,767 2,18,69,808

Basic EPS A/B (55.21) (116.79)

Diluted



Diluted EPS ‘ A/B (52.59) (116.79)

Face Value per share ‘ 10 10

Note: Warrants, if, any outstanding at the year are anti-dilutive and hence ignored while computing diluted EPS.

The weighted average number of equity shares outstanding at the year-end has been considered for calculatingthe earning per share as per Accounting Standard-20.

Reconciliation of weighted average number of shares for the purpose of Basic and Diluted EPS

Particulars Year Ended Year EndedMarch 31, 2014 March 31, 2013

Number of shares considered as basic weighted averageshares outstanding 2,18,81,767 2,18,69,808

Add: Effect of potential dilutive shares 10,91,303 -

Number of shares considered as weighted average shares andpotential shares outstanding 2,29,73,070 2,18,69,808

2.40 CONTINGENT LIABILITIES AND COMMITMENTS TO BE UPDATED` in ‘000

As at As atMarch 31, 2014 March 31, 2013

a) Claims against the company not acknowledged as debt

Income Tax Matters 10,84,200 4,13,174

Service Tax Matters 11,155 94,269

b) Corporate Guarantee issued on behalf of Subsidiary Companies 19,17,300 17,38,172

c) Corporate Guarantee issued to banks for secured loans to third Party 3,13,118 6,80,029

d) Bank Guarantees 5,76,837 7,84,952

e) In respect of items above, future cash outflows in respect of contingent liabilities is determinable only onreceipt of judgments pending at various forum/ settlement of matter. The management believes that, based onlegal advice or internal assessment, the outcome of these contingencies will be favorable and the loss is notprobable. Accordingly no provisions have been made for the same.


` in‘000

Particulars Year Ended Year Ended March 31, 2014 March 31, 2013

62



63

f) A Civil suit has been filed by Prometric BV towards damages amounting to Rs. 15,000('000) (PY ` Nil)

g) Estimated amount of contracts remaining to be executed on capital account and not provided for is ` Nil(PY (` Nil))

h) Counter guarantee from third parties have not been taken for the corporate guarantee given on behalf of them.

i) The company has received notices from certain parties alleging defaults in respect of services/payments dueto them by the company. The management is discussing with its legal team for evaluating the financial impact

of these claims. Any adjustments/disclosures, if required, would be made, upon the claims being settled.

2.41 DIMUNITION IN VALUE OF INVESTMENT

The company has an investment of Rs 247.58 Crores in its subsidiaries and in other associates and has alsoextended loans and advances of Rs. 141.09 Crores to these subsidiaries/associates as of March, 31, 2014. Themanagement is in the process of making judicious evaluation of businesses carried on by each of the entities intheir respective sphere of operations. The company is at present contemplating to appoint consultants to adviseregarding the future business opportunities which these entities can exploit gainfully or whether the operation ofthese entities need to be scaled down/revamped/wound up. The company is carefully monitoring the losses if anythat may arise is to be kept at bare minimum on account of this proposed restructuring. Pending the finalization ofthe above proposals which are in the embryonic stage the company has not recognized in its accounts any diminutionin the value of its investments.

2.42 OPERATING LEASES

The company has entered into operating lease arrangement for its office facilities and equipment. These Leasesare for a period ranging from 1 to 5 years with an option to the company for renewing at the end of the initial term.Equipment rental/ Rental for operating leases is added in Profit and Loss account for the year `3,124 ('000)

(March 31 2013 ` 5,97,893 ('000))

The Future minimum lease payments under non-cancellable operating leases are as follows` in ‘000

Particulars Year Ended Year EndedMarch 31, 2014 March 31, 2013

Within one year 2,59,218 5,29,324Between one to five Years 2,52,586 4,61,931After five Years - -

The Lease arrangements for the above non-cancellable leases do not provide for any escalation and the same hasbeen factored in the future minimum lease rentals as disclosed above.

During the year the company has approached/represented and renegotiated some of its arrangements with theleasing companies and was successful in revising the terms of the certain arrangements in the best possiblemannerthe same has been given effect to, in these financials. With regards to other parties the company is pursuingvigorously and resolution of these arrangements are likely to occur within the next six months. Pending renegotiations,the company has not recognized a sum of Rs. 2,28,600('000) of lease charges during the current financial year.

The company has taken over the Axis bank liability of Acorn Commodity Exchange Private limited, towards leasingarrangement in view of the corporate guarantees given to them in respect of Uttar Pradesh project. This amount isnow reflected as a loan and the company is now paying interest. The Company is legally proceeding against theentity for the recovery of the sum due to it together with interest. In view of the above the lease rentals are notaccrued in the books.


The DRT passed an interim order directing that the proceeds from Haryana project should be shared betweenStandard Chartered bank and the company at the ratio of 55:45 on account of corporate guarantee given towardsthe leasing arrangements entered into between the company and Spaarkon Trading Pvt Ltd. In view of the abovethe lease rentals are not accrued in the books.

Nevertheless, at the end of project, the Company is obliged to transfer all the assets to the Haryana and UttarPradesh State Authorities as the project is on BOOT Model. This event is likely to occur in FY 2014-15 when theseassets will be transferred on as is where basis without any recourse to the Compensation.

2.43 EXPENDITURE IN FOREIGN CURRENCY

` in ‘000


March 31, 2014 March 31, 2013

Business Associate Expenses - 24Foreign Travel 3,975 1,035

Total 3,975 1,059

2.44 DIVIDEND REMITTED IN FOREIGN EXCHANGE` in ‘000


March 31, 2014 March 31, 2013

Testing and Other Services 4395 7023

2.45 RELATED PARTY DISCLOSURE

List of Related Parties

Name Nature of relationship

1. Everonn Educational Resources Solutions Limited Wholly-owned Subsidiary Company

2. Toppers Tutorial Private Limited Wholly-owned Subsidiary Company

3. Everonn Infrastructure Limited Wholly-owned Subsidiary Company

4. Everonn Business Education Limited Wholly-owned Subsidiary Company

5. Everonn Technical Education India Limited Wholly-owned Subsidiary Company

6. Everonn Medical Education Limited Wholly-owned Subsidiary Company

7. Everonn School Limited Wholly-owned Subsidiary Company

8. Edifications India Limited Wholly-owned Subsidiary Company

9. Everonn Sport Management Limited Wholly-owned Subsidiary Company

10. Everonn knowledge & Education Corridor Limited Wholly-owned Subsidiary Company

11. Everonn Skilling India Limited Indirect Subsidiary Company

12. Everonn Skill Products Development Limited Indirect Subsidiary Company

13. Everonn Skill Development Limited Indirect Subsidiary Company


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65

14. AEG Skill Update Private Limited Subsidiary Company with 51% of Holding

15. Everonn Dassani Literate Limited Subsidiary Company with 60% of Holding

16. Varkey Group Limited Promoter Group Company

17. SKIL Infrastructure Limited Promoter Group Company

18. Gems Education (Asia) 1 Limited Promoter Group Company

19. The Concorde Residential Schools (Kerala) Private Limited Promoter Group Company

20. Premier Educational Establishments Private Ltd Promoter Group Company

21. Gems Education India Private Limited Promoter Group Company

22. Zanskar Properties Private Limited Promoter Group Company

23. Vg school developments Private Ltd Promoter Group Company

24. Dream Solutions Private Ltd Promoter Group Company

25. A Srinivasan Key Managerial Personnel

26. N P Mathi Lingan Key Managerial Personnel

27. Ganapathy Puranik Key Managerial Personnel

Details of Transaction with the Related Parties

Nature of Transaction Subsidiaries Enterprise over which some Key Managerialof the directors exercise Personnel

significant influence

2013-14 2012-13 2013-14 2012-13 2013-14 2012-13

Subscription of Sharecapital and debenturesreceived - - 86,627 -

Interest Income - - - -

Interest Expense - - - -

Trade Loans received 10,96,471 4,51,742 - -

Trade Loans paid 13,37,155 5,22,517 - -

Short term borrowingReceived - - 14,97,182 10,13,494 - -

Short term borrowingRepaid - - 2,74,384 - - -

Remuneration Paid - - 5,197 -


Disclosure of significant transactions with related parties:

Type of Transaction Type of Name of the entity March MarchRelationship 31, 2014 31, 2013

Advance Given Subsidiary Everonn Educational Resources Solutions Limited 18,262 13,452including Toppers Tutorial Private Limited 2,657 3,05,494

Indirect Subsidiary Aeg Skill Update Pvt Ltd 116 87Everonn Infrastructure Limited 2,83,116 2,69,531Everonn Business Education Limited - 2,04,211Everonn knowledge & Education Corridor Limited 10,90,400 10,89,093Everonn Skill Development Limited 16,393 -Everonn Skill Products Limited 7 -Everonn Skilling India Limited 7 -

Advance Received Subsidiary Everonn Business Education Limited 74,664 -including Everonn Technical Education India Limited 8,178 162327

Indirect Subsidiary Everonn Medical Education Limited 22,857 475217Everonn School Limited 6,59,162 864036Edifications India Limited 3,81,199 348797Everonn Dassani Literate Limited 228 285Everonn Skill Development Limited - 7229Everonn Sport Management Limited 423 486

Short Term Borrowing Enterprise The Concorde Residential Schools (Kerala) private Limited (10,650) (38,635)over which Premier Educational Establishments Private Ltd (1,98,800) (1,98,800)some of the Gems Education India Private Limited (1,52,006) (1,47,500)

directors Zanskar Properties private Limited (5,50,600) (2,11,500)exercise VG School Developments Private Ltd (5,98,700) (3,500)

significant Dream Solutions Private Ltd (15,000) -influence Sunny Varkey (2,92,598) -

Corporate Guaranteeon behalf of Subsidiary Subsidiary Everonn Skill Development Limited 2,67,600 2,67,600

including Everonn School Limited - 94,552 -Indirect Subsidiary Edifications India Limited 16,49,700 13,76,019

Subsidiary


66



67

Disclosure pursuant to clause 32 of listing agreement in respect of loans given to subsidiaries and other parties in which Key ManagerialPersonnel are interested.

Outstanding Maximum Outstandingduring the Year

Name of the entity March 31 March 31 March 31 March 312014 2013 2014 2013

1. Everonn Educational Resources Solutions Limited 18,262 13,453 18,262 13,6442. Toppers Tutorial Private Limited 2,657 3,05,494 3,21,680 3,05,4943. Everonn Infrastructure Limited 2,83,116 2,69,531 2,83,116 2,69,5314. Everonn Business Education Limited (74,664) 2,04,282 2,08,858 2,04,2825. Everonn Technical Education India Limited (8,178) (1,62,327) (1,58,187) (1,75,363)6. Everonn Medical Education Limited (22,857) (4,75,217) (4,82,917) (4,82,917)7. Everonn School Limited (6,59,162) (8,64,036) (8,64,036) (8,64,036)8. Edifications India Limited (3,81,199) (3,48,797) (3,81,199) (3,48,797)9. Everonn Sport Management Limited (423) (486) (423) (486)10. Everonn knowledge & Education Corridor Limited 10,90,400 10,89,093 10,90,400 10,89,09311. Everonn Skilling India Limited 7 - 7 -12. Everonn Skill Products Development Limited 7 - 7 -13. Everonn Skill Development Limited 16,393 (7,229) 16,393 (7,229)14. AEG Skill Update Private Limited 116 88 116 8815. Everonn Dassani Literate Limited (228) (285) (285) (285)16. The Concorde Residential Schools (Kerala) Pvt Ltd (10,650) (38,635) (10,650) (52,414)17. Premier Educational Establishments Private Ltd (1,98,800) (1,98,800) (1,98,800) (1,98,800)18. Gems Education India Private Limited (1,52,006) (1,47,500) (1,52,006) (1,47,500)19. Zanskar Properties private Limited (5,50,600) (2,11,500) (5,50,600) (2,11,500)20. VG School Developments Private Ltd (5,98,700) (3,500) (3,500) (3,500)21. Dream Solutions Private Ltd (15,000) - (15,000) -

22. Sunny Varkey (2,92,598) - (2,92,598) -

2.46 SEGMENT REPORTING

The Company is engaged in the business of providing education and training and related sale of equipment's.There being only one 'business segment' and 'geographical segment' the segment information is not provided

2.47 DUES TO MICRO AND SMALL ENTERPRISES

The company has circulated a letter to all creditors to ascertain the applicability of MSMED Act on thetransaction which the company had with them. Provision for interest if any under the Act will be made uponreceipt of their responses and after examining the validity of their claim.

2.48 The company has transactions with "Associated Enterprises" which are subject to Transfer Pricing regulationsin India. The Management of the Company is of the opinion that such transactions with the associateenterprises are at arm's length. Consequently, this will not have any impact on the financial statements,particularly on account of tax expenses and that of provision for taxation.

2.49 BALANCE CONFIRMATION

Confirmations of Balance from Sundry Debtors, Deposit accounts, Loans and Advances and Sundry Creditorshave not been obtained. Accounts of certain sundry debtors, loans and advances, deposits and creditors arebeing reviewed as an ongoing process. As there is g the inordinate delay in receipt of confirmations fromGovernment Contracts adjustments, if any will be made on completion of review/reconciliation/ identificationof doubtful debts/advances.


` in ‘000

68



The company has initiated the process of review of impairment of assets in the respect of the tangible,intangible and other current assets including Capital Work in Progress carried in the Books, their results insuch impairment is awaited, The financial implication if any on the above will be provided appropriately atlater stage taking into account the future operational plans and cash flows as prepared by the management.

2.51 INCOME TAX

The company has received various demand notices of income tax and interest thereon in respect ofAssessment Years 2006-07 to 2011-12. During the year, the Company reviewed the position with regard tothe income tax assessments till date and has taken certain decisions to mitigate the tax outflow especially byfiling revised returns/computations in respect of all the pending assessments. Although the department hasnot accepted the revised computation for the Assessment year 2011-12, the company is hopeful that sincethe revised computation is in line with the revised returns of other years, the demand will ultimately getreduced and will reflect the income disclosed in the revised statement. The company has filed an appealagainst the order of assessment and is hopeful of obtaining substantial relief. The company is also pursuingother remedies (rectification application, waiver application etc.,) as permitted under the law to ensure thatthe tax liability is reduced as per law.

The company received a fresh assessment order for AY 2007-08 which is also being contested. No provisionis made in this regard, as the Company has been advised that the stand of the Company will be accepted inappeal.

Any additional tax provision arising out of the tax demands (inclusive of interest and penalty) will be madeupon reaching the finality in respect of the assessments.

2.52 SERVICE TAX

Against the delay in remittance of service tax, the Department has issued a show cause notice for levyingpenalty which is being contested before the settlement commission. By way of abundant caution, the companyhas at present, recognized a contingent liability of Rs. 1.05 Cr which is not provided for.

2.53 VAT

Assessment proceedings against the company under the Karnataka VAT Act were successfully completedat the appellate level and the company got substantial relief. The matter has since been remanded to theAssessing Officer for passing the consequential order.

2.54 EXCEPTIONAL ITEMS

The break up is as under


i. Restructuring of Operating Lease arrangementswith Reliance Capital Limited amount recognizedas on exceptional items (Note Below)

ii. Lease deposits for premises at Perungudi writtenoff (Note Below)

iii. Write down in the value of Fixed Assets

iv. Other Items

Rs. 1,65,406

Rs. 33,333

Rs. 4,07,005

Rs. 43,806

(` ‘000)

i. The company initially had an operating lease arrangement with Reliance capital in respect of certain assetsand the overduestowardsthe lease rentals resulted in legal proceedings against the company. The Companylater concluded a revised arrangement with Reliance Capital under which the operating lease arrangementwas substituted by a mortgage loan with EMIs being paid over a period of 8 years up to 2022. This mortgageloan together with existing mortgage loan aggregate to Rs. 342,238 ('000) and is secured by the title deedsof third floor of the property at Perungudi, Chennai.

The revised terms a necessitated a recognition of a onetime charge of Rs. 16.54 Cr.


69

ii. The company initially had an option to acquire two floors additionally in the office premises at Perungudi,Chennai. Accordingly, the company made a deposit of Rs. 5,00,000 ('000) towards the acquisition of threefloors with the land lord. However, due to financial constraints, the company acquired only the third floorand surrendered the option to acquire the other two floors along with the deposit of Rs. 33,333 ('000) whichis now reflected as an exceptional item as the negotiations were concluded during the current financialyear.

2.55 Due to huge losses incurred from the financial year 2012-13 onwards, and continuing defaults /delays bycustomers in settling their dues andtheprevailing uncertain economic environment, the company had verylittle financial resources available to it to carry on its operations. Further, the dues from the Company'scustomers are not backed by any tangible security/assets, the Company's recovery efforts have to bevery measured.,since the delays are attributable to the liquidity constraints of the customers

The consequent financial crunch faced by the company resulted inthecompanyhaving overdue amountspayable to creditors and certain lendersand other business support service providers. The bankers, agreedto restructure the loansandprovide fresh credit limitsprovided the company executes a satisfactorydocumentation as also achieves certain operating profits / financial ratios. As part of this approach anddue to persistent, cash crunch, the company opted to pool all the resources of its various wholly ownedsubsidiaries as the business segment of all the companies are common and operate in the same fieldof providing 'education services' and are structured as specific entities for the purpose of serving a specificcustomer segment in the same field -- educational services. These common funds were utilized to tideover temporary liquidity issues and kept the companies and subsidiaries remain as a going concern.

Debts across the group companies, namely, the Company and its wholly owned subsidiaries, wereadjusted with a view to comply with the various covenants (including the maintaining of stipulated financialratios) set out by the bankers for grant of further infusion of working capital limits and other loans. sothat the company could continue its future business plans by focusing on key thrust areas. The Companyis in negotiations with the, creditors and Bankers and is working on various solutions with them to ensuresettlement of their dues. The Company is also taking various steps to reduce costs and improve efficienciesto make its operations profitable and accordingly the financial statements have been prepared on the basisthat the Company is a going concern.

It is expected that with the initiation of the above steps the company will have adequate cash flowstofulfill,in aphased manner, its debt obligations.

2.56 In respect of advances given to various parties, Capital work in progress and Debts due from governmentagencies and others, in view of legal advices and other opinion receivedno provision is considerednecessary at this juncture, as the company at present is hopeful of recovering major portion of outstandingdues.

2.57 BUSINESS RESTRUCTURING RESERVE

The Hon 'ble High Court of Madras permitted the Company to reduce the Securities Premium Accountto an amount not exceeding Rs. 150 Crores to be transferred to a separate reserve styled as "BusinessRestructuring Reserve"(BRR). The resolution passed by the Share Holders and approved by the Courtpermitted the BRR should be utilized for setting off against diminution in the value of investments, andconsequent impairment of goodwill and accumulated losses, unrealized debtors and loans and advancesetc.,

The Company has given effect to this order of the Hon 'ble High Court by carving out of the Share PremiumAccount, a sum of Rs. 150 Crore to BRR. However, the Company is identifying the exact quantum ofamounts to be set off against BRR, which process is expected to be completed at the time half yearlylimited review results for the Current Financial Year 2014-15.

2.58 PREVIOUS YEAR FIGURES

Previous years figures have been regrouped / reclassified wherever necessary to conform to the currentyear presentation.

70

INDEPENDENT AUDITORS REPORT

TO THE BOARD OF DIRECTORS OF EVERONN EDUCATION LIMITED

REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS

We have audited the accompanying consolidated financial statements of Everonn Education Limited (theCompany”) and its subsidiaries (the “Group”), which comprise the Consolidated Balance Sheet as at 31st March,2014, the Consolidated Statement of Profit and Loss and the Consolidated Cash Flow Statement for the year thenended, and a summary of the significant accounting policies and other explanatory information.

Management’s Responsibility for the Consolidated Financial Statements

The Company’s Management is responsible for the preparation of these consolidated financial statements thatgive a true and fair view of the consolidated financial position, consolidated financial performance and consolidatedcash flows of the Group in accordance with the accounting principles generally accepted in India. This responsibilityincludes the design, implementation and maintenance of internal control relevant to the preparation and presentationof the consolidated financial statements that give a true and fair view and are free from material misstatement,whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audit. Weconducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountantsof India. Those Standards require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether the consolidated financial statements are free from materialmisstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in theconsolidated financial statements. The procedures selected depend on the auditor’s judgement, including theassessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparationand presentation of the consolidated financial statements that give a true and fair view in order to design auditprocedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of theaccounting policies used and the reasonableness of the accounting estimates made by the Management, as wellas evaluating the overall presentation of the consolidated financial statements.

Basis for Qualified Opinion

i) We draw attention to Note No.2.46 wherein the company has indicated that Lease charges amounting toRs. 2,286.20 Lakhs has not been provided in the books for some parties as required by the contractualterms pending re-negotiation.

ii) We draw attention to Note No.2.51 of Financial Statements regarding non ascertaining complete particulars(including interest payable) of dues to micro, small and medium enterprises if any under MSMED Act, 2006,provision if any to be made is not ascertainable at this stage.

iii) We draw attention to Note No.2.53 of Financial Statements with regard to non-receipt of Confirmation ofbalances from Debtors including dues from Government Companies, Creditors, Loans and Advances,Investments, banks and Other Liabilities. These amounts are subject to adjustments, if any, after reconciliationand for identification of doubtful debts/advances, which are not ascertainable at this stage.

iv) We draw attention to Note No 2.54, wherein the company has stated that provision towards impairment/lossunder AS 28 has not been ascertained.

v) We draw attention to Note No. 2.55 wherein the company has indicated the receipt of income tax demandnotices for various assessment yearscommencing from AY 06-07 amounting to Rs. 11,01,053(‘000) andappeals filed against the orders. The Company has sought the stay of demand of tax inclusive of interest forwhich no provision has been made beneficial.

71

vi) We draw attention to Note No 2.56 & 2.45 regarding the pending service tax dispute towards penalty beforesettlement commission and the non-recognition of estimated liability of Rs. 27,286 (‘000) towards Servicetax which is being recognized as contingent liability.

We are not aware of the any material adjustments which may arise on account of adjustments relating to issues setout above and subsequent to receipt of such confirmation / reconciliation.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, except for theeffects / possible effects of the matter described in the Basis for Qualified Opinion paragraph to the auditedfinancials which are not ascertainable, had the observations in Note number: 2.46 of the audited financials withregards to the lease charges had been considered the loss for the year ended March,31,2014 would have been aloss of Rs 17,104.07 Lakhs as against the reported audited loss for the year ended March 31,2014 of Rs14,817.87Lakhs. The reserve and surplus would have been Rs. 7,091.24 Lakhs as against reported figure of Rs.9,377.44Lakhs subject to paragraphs above, the financial statements give the information required by the Act in the mannerso required and 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 thestate of affairs of the Group as at 31st March, 2014;

b) in the case of the Consolidated Statement of Profit andLoss, of the profit of the Group for the year endedonthat date; and

c) in the case of the Consolidated Cash Flow Statement,of the cash flows of the Group for the year endedonthat date.

Emphasis of Matter

i) Without qualifying our opinion, attention is drawn to accounting policy no. 2.1 of the financials statement on theexistence of certain liabilities including banks, and other commitments, which are due for payment during thesubsequent financial year and the management plan /action for meeting the same. The company’s ability tocontinue as a going concern is dependent on the successful outcome of the management plans.

ii) We draw attention to Note No: 2.29 Deferred tax asset has been recognized for the year ended 31st March,2014, as the company is of the view that there is virtual certainty and has ability to continue as a going concerndepends on the successful outcome of the management plans.

iii) We draw attention to Note No: 2.61, Business Restructuring reserve of Rs. 150 Crores has been created outof Securities Premium Account based on the order passed by the Hon’ble High Court of Madras .

For M/S. P. CHANDRASEKARChartered Accountants

Firm Registration No.000580S

P ChandrasekaranPlace : Chennai PartnerDate : 26th May,2014 Membership No 026037

72

EVERONN EDUCATION LIMITEDCONSOLIDATED BALANCE SHEET AS AT 31-Mar-14

`̀̀̀̀ in ‘000 AS AT AS ATParticulars Notes 31-March-14 31-March-13

EQUITY AND LIABILITIES SHARE HOLDER’S FUNDS

Share capital 2.18 2,29,611 2,18,698Reserves and surplus 2.19 9,37,744 23,87,164

Minority Interest 146 178Non-current liabilities

Long-term borrowings 2.20 57,57,487 24,29,489Other Long term liabilities 2.21 35,870 44,286Long-term provisions 2.22 1,566 -

Current liabilitiesShort-term borrowings 2.23 23,65,925 31,24,658Trade payables 2.24 4,80,289 8,46,476Other current liabilities 2.25 6,88,089 14,89,745Short-term provisions 2.26 1,93,178 2,50,152

TOTAL 1,06,89,905 1,07,90,846ASSETSNon-current assets

Fixed assetsTangible assets 2.27 8,67,901 16,88,604Intangible assets 2.27 4,74,740 7,21,719Capital work-in-progress 6,28,229 5,95,875Intangible assets under development - 2,137

Goodwill 4,783 4,783Non-current investments 2.28 73,254 73,254Deferred tax assets (net) 2.29 24,31,111 19,84,399Long-term loans and advances 2.30 11,66,040 12,09,697Other non-current assets 2.31 3,73,211 5,59,817Current assets - -

Current investments 2.32 12 12Trade receivables 2.33 25,34,699 24,83,245Cash and Bank Balances 2.34 1,89,616 81,718Short-term loans and advances 2.35 19,25,680 13,82,981Other current assets 2.36 20,629 2,605

TOTAL 1,06,89,905 1,07,90,846

As per our report of even date For and on Behalf of Board of Directorsfor M/s.P.Chandrasekar Chartered AccountantsFRN : 000580S

P Chandrasekaran A Srinivasan C N RadhakrishnanPartner Managing Director DirectorMembership No:026037


73

EVERONN EDUCATION LIMITEDCONSOLIDTED STATEMENT OF PROFIT & LOSS FOR THE YEAR ENDED 31-MARCH-14

` in ‘000

AS AT AS ATParticulars Notes 31-March-14 31-March-13

Revenue from Operations 2.37 6,09,196 12,29,566

Other Income 2.38 5,256 16,827

Total Revenue A 6,14,452 12,46,393

Expenses:

Purchase of stock in trade 2.39 - 9,940

Employee benefits expense 2.40 2,82,332 7,13,246

Finance costs 2.41 6,56,245 10,01,317

Depreciation and amortization expense 6,87,117 7,88,324

Other Expenses 2.42 2,67,772 15,45,298

Total Expenses B 18,93,466 40,58,125

Profit / (Loss) before exceptional and extraordinary

items and tax A-B (12,79,014) (28,11,732)

Exceptional items 2.43 6,49,550 23,24,265

Profit / (Loss) before extraordinary items and tax (19,28,564) (51,35,997)

Extraordinary Items

Profit / (Loss) before tax (19,28,564) (51,35,997)

Tax Expense

Current tax

Deferred tax (4,46,745) (18,54,952)

Profit / (Loss) for the period from continuing operations (14,81,819) (32,81,045)

Profit/(loss) from discontinuing operations

Tax expense of discontinuing operations

Profit/(loss) from Discontinuing operations (after tax)

Minority Interest (32) (8)

Profit / (Loss) for the period (14,81,787) (32,81,037)

Earnings per equity share (basic ) `̀̀̀̀ 2.44 (67.72) (150.03)

Earnings per equity share (diluted) `̀̀̀̀ 2.44 (64.50) (150.03)




74


EVERONN EDUCATION LIMITEDCONSOLIDTED CASH FLOW STATEMENT FOR THE YEAR ENDED 31-MARCH-14

` in ‘000

CASH FLOW FROM OPERATING ACTIVITIESProfit before tax (19,28,564) (51,35,997)Adjustments for:

Depreciation 10,94,123 7,88,324Interest on long term loan 6,14,352 3,46,633Interest income (2,870) (4,043)

17,05,605 11,30,914Operating profit before working capital changes (2,22,959) (40,05,083)

Adjustments for :Trade and other receivables 3,34,108 20,47,016Trade payables and other liabilities (5,23,390) (97,436)Cash generated from operations (4,12,241) (20,55,503)Direct taxes paid / deducted at source (1,89,618) (34,535)

Cash Flow from Operations (6,01,859) (20,90,038) - -

CASH FLOW FROM INVESTMENT ACTIVITIESPurchase of Fixed Asset (64,056) 1,78,592Sale of fixed assets 7,399 -Interest income 2,870 4,043Cash flow from Investment Activities (53,787) 1,82,635

- -CASH FLOW FROM FINANCE ACTIVITIES

Share capital Raised (net of exp warrants) 43,314 -Increase / (Decrease) in Long-term borrowing 28,30,690 4,24,479Increase / (Decrease) in Short-term borrowing (14,67,189) 13,59,055Interest payment (6,43,271) (2,98,222)Dividend paid (including dividend tax) - -

- -Cash flow from finance activities 7,63,544 14,85,312

Increase /(Decrease) in cash and cash equivalents 1,07,898 (4,22,091)

Opening balance of cash and cash equivalents 81,718 5,03,809

Closing balance of cash and cash equivalents 1,89,616 81,718

Year Ended Year Ended31-March-14 31-March-13

Particulars





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1 CORPORATE INFORMATION

Everonn Education Limited (the 'Company') is a pioneer in using technological breakthroughs to make qualityeducation a reality even in the most remote parts of the country. Everonn's passion for enabling cutting-edgeeducation delivery has seen us grow dramatically in the past two decades. The company is a public listedcompany and is listed on the Bombay Stock Exchange Limited (BSE) and the National Stock Exchange ofIndia Limited (NSE)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1 BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The Consolidated Financial Statements comprises of the financial statements of Everonn Education Limited(the Holding Company or Parent Company) and its subsidiaries. These Consolidated financial statementshave been prepared to comply in all material aspects with the accounting standards notified under Section211(3C)[Companies (Accounting Standards) Rules, 2006, as amended] ( which continues to be applicablein terms of General circular 15/2013 date September 13, 2013 of the Ministry of Corporate Affairs in respectof Section 133 of the Companies Act, 2013)and the other relevant provisions of theCompanies Act, 1956.

All assets and liabilities have been classified as current or non-current as per the Company's normal operatingcycle and other criteria set out in the Schedule VI to the Companies Act, 1956. Based on the nature ofproducts and the time between the acquisition of assets for processing and their realization in cash andcashe quivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current -non current classification of assets and liabilities.

The company is pursuing various options towards fund raising in the form of debt or equity or mix of both,and negotiating with the current lenders and is also reviewing the business plan and firmly believes that withthe combination of internal accruals in the next financial year and on achieving successful closure of theseoptions in the coming months it will be able to meet all its obligations. Consequently the managementbelieves that the use of going concern assumption continues to be appropriate in the preparation of thesefinancial statements. Accordingly the assets and liabilities have been recorded in these financial statementson the basis that the company will be able to realize its assets and discharge its liabilities in the normalcourse of the business.

2.2 USE OF ESTIMATES

The preparation and presentation of Financial Statements requires estimates and assumptions to be madethat affect the reported amount of assets and liabilities and disclosure of contingent liabilities on the date ofthe Financial Statements and the reported amount of revenues and expenses during the reporting period.Difference between the actual results and estimates is recognised in the period in which the results areknown/ materialized.

2.3 PRINCIPLES OF CONSOLIDATION

The Consolidated Financial Statements of the Company and its wholly-owned subsidiaries have beencombined on a line by line basis by adding together like items of assets, liabilities, income and expenses.The intra-group balances and intra-group transactions are eliminated.

The excess of cost to the Company of its investments in the subsidiary over its shares of the equity of thesubsidiary, at the date on which the investments in the subsidiary Company was made, is recognized as'Goodwill' being an asset in the consolidated financial statements.

List of subsidiaries

Name of the Subsidiary % of holding

1. Everonn Educational Resources Solutions Limited 100

2. Toppers Tutorial Private Limited 100

3. Everonn Infrastructure Limited 100

4. Everonn Business Education Limited 100

76


5. Everonn Technical Education India Limited 100

6. Everonn Medical Education Limited 100

7. Everonn School Limited 100

8. Edifications India Limited 100

9. Everonn Sport Management Limited 100

10. Everonn knowledge & Education Corridor Limited 100

11. Everonn Skilling India Limited* 100

12. Everonn Skill Products Development Limited* 100

13. Everonn Skill Development Limited* 100

14. AEG Skill Update Private Limited 51

15. Everonn Dassani Literate Limited 60

* Indirect Subsidiary

The consolidated financial statements have been prepared to comply in material aspects with the accountingstandards notified by Central Government and the relevant provisions of Companies Act, 1956.

The consolidated financial statements have been prepared under historical cost convention and on accrualbasis.

Minority Interest in the net assets of consolidated subsidiary is identified and presented in the consolidatedbalance sheet separately from liabilities and equity of the Company shareholders. Minority Interest in the netassets of consolidated subsidiaries consist of

a) The amount of equity attributable to minority at the date on which investment in a subsidiary is made.

b) The minority share of movements in equity since the date parent subsidiary relationship came intoexistence.

c) Minority interest's share of net profit/(loss) for the year of consolidated subsidiaries is identified andadjusted against the profit after tax.

The financial statements of the Company and its subsidiaries are prepared under uniform accounting policiesin accordance with the generally accepted accounting principles in India.

2.4 FIXED ASSETS, INTANGIBLE ASSETS AND CAPITAL WORK-IN-PROGRESS

Fixed Assets are carried at cost less accumulated depreciation and impairment loss if any. Cost includes allexpenses incurred to bring the assets to its present location and condition. Assets acquired on hire purchaseare capitalized at gross value and interest thereon is charged to revenue.

Intangible assets are recognized only if it is probable that the future economic benefits that are attributable tothe asset will flow to the enterprise and the cost of the asset can be measured reliably. The intangible assetsare recorded at cost and are carried at cost less accumulated amortization and impairment loss if any.

In respect of new projects setup include direct cost incurred are added to the cost of fixed assets andwherever the same is not exactly quantifiable, an reasonable allocation of expenditure is made, reflecting aportion of the cost as forming part of the cost of installation of the asset.

2.5 DEPRECIATION AND AMORTIZATION

Depreciation on fixed assets is provided on Straight Line Method at the rates and in the manner prescribedin Schedule XIV of the Companies Act, 1956, except

a) Fixed assets purchased for usage in executing the contractual obligations with the customers underthe project are depreciated over the period of contract.

b) Intangible assets comprising knowledge resource and content are amortized over a period of fiveyears.

Deprecation on addition to the assets is calculated on a monthly pro-rata basis


77

2.6 REVENUE RECOGNITION

a) Education and training income is recognized on rendering of services over the period of instruction asper the terms of agreement as the case may be.

b) In respect of fixed price contracts, revenue is recognized as per the proportionate completion method.

c) Revenue in respect of sale of trading, courseware content and knowledge resource is recognized onthe basis of dispatch/delivery of the material to the customers.

d) Revenue from online educational services is recognized upon receipt of subscription fees. In case ofsupply to license, the revenue is recognized on establishment of right to receive.

e) Dividend income is recognized when the right to receive it is established. Interest income is recognizedon time proportion basis.

2.7 INVESTMENTS

Investments are classified as current or long term in accordance with Accounting Standard 13 on "Accordingfor Investments". Current investments are stated at lower of cost or market value. Any reduction in the carryingamount and or any reversal of such reduction are charged or credited to the statement of Profit and Loss.

Long-term investments are carried at cost less provision for other than temporary diminution in the carryingvalue of each investment.

2.8 LEASES

Lease arrangements where the risks and rewards incidental to the ownership of an asset substantially vestwith the lessor, are recognized as operating leases. Lease rentals under operating leases are recognized inthe Profit and Loss account on straight-line basis over the lease term. Finance lease transactions areconsidered as financing arrangements in accordance with Accounting Standard 19 and the leased asset iscapitalized at an amount equal to the present value of future lease payments and a corresponding amount isrecognized as a liability. The lease payments made are apportioned between finance charge and reductionof outstanding liability in relation to the leased asset.

2.9 EMPLOYEE BENEFITS

Employee benefits include provident fund, gratuity fund, employee state insurance, and compensatedabsences.

a) Defined contribution Plan

The company has contributed to provident, pension which are defined contribution plans. The contributionspaid/payable under the scheme is recognized during the year in which employee renders the related service.

b) Defined Benefit Plan

Gratuity

The Company makes annual contribution to gratuity funds administered by trustees. The liability for futuregratuity benefits is accounted for based on actuarial valuation, as at the Balance Sheet date, determinedevery year using projected unit credit method. Actuarial gains / (losses) are immediately recognized in Profit& Loss Account.

Compensated Absences

Liability in respect of compensated absences is provided both for en-cashable leave and those expectedtobe availed. The Company has defined benefit plans for compensated absences for employees, the liabilityor which is determined on the basis of management estimation at the end of the year. Any gain or lossarisingout of such valuation is recognized in the Statement of Profit and Loss.

2.10 PROVISIONS, CONTINGENCIES AND COMMITMENTS

The Company creates a provision when there is present obligation as a result of a past event that probablyrequires an outflow of resources and a reliable estimate can be made of the amount of obligation. A disclosurefor a contingent liability is made when there is a possible obligation or a present obligation that probablywillnot require an outflow of resources or where a reliable estimate of the obligation cannot be made.Disclosureof show cause notices are made on merits of the matters where management foresees possibilities ofoutflow of resources.

78


Claims receivable are accounted at the time when such income has been earned by the Company dependingon the certainty of receipts. Claims payable are accounted at the time of acceptance.

Claims raised by the Government Authorities regarding Taxes and Dues which are disputed by the Companyare accounted based on merits of each claim.

2.11 BORROWING COST

Borrowing costs that are attributable to the acquisition or construction of qualifying fixed assets are capitalizedas part of the cost of such assets till such time the asset is ready for its intended use or sale. A qualifyingasset is one that necessarily takes substantial period of time to get ready for intended use or sale and otherborrowing costs are recognized as an expense in the period in which they are incurred.

2.12 TAXES ON INCOME

Current tax is determined as the amount of tax payable in respect of taxable income of the year.

Deferred tax expense or benefit is recognized on timing differences being the difference between taxableincomes and accounting income that originate in one period and are capable of reversal in one or moresubsequent periods. Deferred tax assets and liabilities are measured using the tax rates and tax laws thathave been enacted or substantively enacted as at the balance sheet date. Deferred Tax asset in respect ofunabsorbed depreciation and carry forward losses are recognized only if there is virtual certainty that therewill be sufficient taxable income available to realize such assets. The Company offsets deferred tax assetsand deferred tax liabilities if it has a legally enforceable right and these relate to taxes on income levied bythe same governing taxation laws.

2.13 FOREIGN CURRENCY TRANSACTIONS

Foreign currency transactions are accounted for at the exchange rates prevailing at the date of the transaction.Gains and losses resulting from the settlement of such transactions and from the translations of monetaryassets and liabilities denominated in foreign currencies at the yearend are recognized in the profit and lossaccount.


Assets that are subject to impairment are reviewed for impairment whenever events or changes incircumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognizedfor the amount by which the assets carrying amount exceeds the recoverable amount.


The earnings considered in ascertaining EPS comprise the net profit after tax. The number of shares usedin computing Basic EPS is the weighted average number of shares outstanding during the year. Dilutedearnings per share is computed by dividing the net profit after tax by the weighted average number of equityshares considered for deriving basic earnings per share and also the weighted average number of sharesthat could have been issued on the conversion of all dilutive potential equity shares unless the results wouldbe anti - dilutive. Dilutive potential equity shares are deemed converted as of the beginning of the period,unless issued at a later date

2.16 INVENTORIES

Stock in trade is carried at the lower of cost and net realizable value. Cost is determined on a weightedaverage basis. Purchased goods-in-transit are carried at cost. Work-in-progress is carried at the lower ofcost and net realizable value.

2.17 CASH FLOW STATEMENT

Cash flows are reported using the indirect method, whereby net profit before tax is adjusted for the effects oftransactions of a non-cash nature and any deferrals or accruals of past or future cash receipts or payments.The cash flows from regular revenue generating, investment and financing activities of the Company aresegregated.

Cash and Cash equivalents for the purpose of cash flow statement comprises of Cash at Bank, Cash inHand (including cheques in hand) and short term investments.


79

As at As atMarch 31 2014 March 31 2013

` in ‘000 in ‘000 in ‘000 in ‘000 in ‘000 ` in ‘000 in ‘000 in ‘000 in ‘000 in ‘000

2.18 SHARE CAPITAL

AUTHORISED :

2,50,00,000 (March 31, 2013: 2,50,00,000)Equity Shares of Rs.10/- each 2,50,000 2,50,000

ISSUED : 2,29,61,111 (March 31,2013: 2,18,69,808) EquityEquity Shares of Rs.10/- each fully paid up 2,29,611 2,18,698

SUBSCRIBED AND PAID UP : 2,29,61,111 (March 31,2013: 2,18,69,808)Equity Shares of Rs.10/- each fully paid up 2,29,611 2,18,698

a) Reconciliation of Number of Shares Equity Shares

March 31, 2014 March 31, 2013

Particulars Number of Number ofShares ` Amount Shares ` Amount

Balance as at the beginning of the year 2,18,69,808 21,86,98,080 2,18,69,808 21,86,98,080

Add: Preferential Allotment Of Equity Shares toThe Concorde Residential Schools (Kerala) Pvt Ltd 10,91,303 1,09,13,030

Shares bought back during the year - - -

Balance as at the end of the year 2,29,61,111 22,96,11,110 2,18,69,808 21,86,98,080

b) Rights, preferences and restrictions attached to shares

Equity Shares: The Company has one class of equity shares having a par value of Rs.10 per share. Each Shareholder is eligible for one vote per share held. The equity shareholders are eligible to receive in the remaining assetsof the company after distribution of all preferential amounts, in proportion to their shareholding.

c) Details of shares held by shareholders holding more than 5% of the aggregate shares in the company

As at 31 March 2014 As at 31 March 2013

Name of Shareholder No. of Shares % of No. of Shares % ofheld Holding held Holding

Skil Infrastructure Ltd 40,00,000 17.42 40,00,000 18.29

The Concorde Residential Schools (Kerala) Pvt Ltd 21,84,303 9.51 10,93,000 5.00

Gems Education (Asia) 1 Limited 44,93,962 19.57 44,93,962 20.55

Varkey Group Limited 26,18,120 11.40 26,18,120 11.97


` in ‘000 in ‘000 in ‘000 in ‘000 in ‘000 ` in ‘000 in ‘000 in ‘000 in ‘000 in ‘000

2.19 RESERVES AND SURPLUS

Capital Reserve


Add: Added during the year - -



80

Business Reconstruction Reserve

Balance as at the beginning of the year - -

Add: Amount transferred from Securities Premium Account 15,00,000 -

Balance as at the end of the year (Refer Note. 2.61) 15,00,000 -

Employee stock option outstanding

Balance as at the Beginning of the year - 10,534

Less : Transfer to General Reserve - (10,534)

Balance as at the end of the year - -

General Reserve


Add: Transferred from Employee Stock Option outstanding - 10,534


Securities Premium Account


Add: Received on issue of Equity Shares 32,400 -

Less: Transferred to Business Reconstruction Reserve 15,00,000


Surplus in Statement of Profit and Loss Account

Balance as at the beginning of the year (35,77,502) (2,96,432)

Profit /(Loss) for the year (14,81,787) (32,81,037)

Less: Appropriations - -

Balance at the end of the year (50,59,289) (35,77,469)

Total 9,37,744 23,87,164

2.20 LONG-TERM BORROWINGS

Secured

Term Loans

From Banks 51,33,256 20,50,703

From Other Parties 6,24,231 3,78,786

Total 57,57,487 24,29,489

During the year the company including one its subsidiaries had approached its Bankers towards restructuring ofrepayment terms of the existing loans including fresh facilities. The loans have been restructured by Axis Bank Ltd,State Bank of India and ICICI Bank Ltd. The restructured agreement provides for restructuring of repayment termsfor principal and interest, reduction / adjustments in interest rates, conversion of outstanding interest amount to loan,promoters undertaking for additional infusion of funds, monitoring oversight and certain restrictive covenants. Themeasurement, classification and disclosure of the Company's term loan obligations have been recorded in thesefinancial statements in accordance with the Debt Restructuring Agreement.



81

Securitya)First paripassu charge on all assets includingintangible assets (present and future) ofEveronn Group Companies.b)Assignment in favor of Lenders, alltherights,titles and interests of the Borrower fromall contracts, insurances, licenses in, to, andunder all assets of the company;c) First paripassu charge on Borrower's all bankaccounts including, without limitation, the TRA.This would be by way of anaccount chargeagreement including Everonn GroupCompanies.d) Pledge of equity shares of all present andfuture investments made by the Company.e) First paripassu charge on land owned by thepromoter of value Rs. 110 Cr.f) Unconditional and Irrevocable CorporateGuarantee of Concorde Residential School(Kerala) Pvt. Ltd, Everonn Group Companies.g) Personal guarantee from the promoterMr. Sunny Varkey to the extent of Rs.325 croresfor all facilities extended.h) Paripassu charge on shares of the Companyheld by Concorde Residential School (Kerala)Pvt Ltd

Term Loan(FITL)ii-Axis,SBI andICICI

Nature of Security

Year No of %ending install repay31st ments mentMarch

FY 17 4 8

FY18 4 12

FY19 4 12

FY20 4 16

FY21 4 16

FY22 4 16

FY23 4 20

Total 28 100

Rate of interest is fixed to yieldat least 10.25% on a weightedaverage basis over the loan

tenure.

TTTTTerererererms of Rms of Rms of Rms of Rms of Repaymentepaymentepaymentepaymentepayment

As at Mar 31 2014Amt in `̀̀̀̀ ‘000(including current

maturities and accrued interest)

Axis SBI ICICI

24,45,316 10,64,985 15,19,188

Funded Interest Term Loanaccumulated up to the interestmoratorium period to be repaidin 28 quarterly equalinstallments commencing from30th June 2016.

Term Loani - Axis,SBIand ICICI

Particulars

RESTRUCTURED LOANS

42,167 13,318 71,791As mentioned in Term Loan i

Term Loaniii- CISCO

40,000 77,905

3,42,238 1,13,348

1,86,920 1,86,920

2,58,302 2,67,600

23,619 25,827

- 86,053

Secured by Hypothecation of assets acquiredfor ARSWAN Project.

Term Loaniv- RelianceCapital Ltd

Secured by Mortgage of Immovable Propertyat Perungudi, Chennai - 600096

Term Loanv- HP

Secured by Multimedia Content Software

Term Loanvi - NSDC

Secured by creation of senior charge on theAcquired Assets and by creation of seniorcharge on the project cash flows in favour ofthe lender in accordance with the terms of theHypothecation Deed

Term Loanvii - RelianceCapital Ltd

Secured by mortgage of Immoveable Propertyat Perundudi, Chennai 600096

24 equal installments from the Dec2014 (Restructured)

96 Equated Monthly Installmentof`57,52 (in '000)/- starting from April2014(Restructured)

Quarterly payment of Equatedinstallments of ` 3,854 (in '000) up toFeb '13.

16 Qtrly repayment commencingfrom July 2012

125 Monthly Installmentscommenced from 05.03.2011

Term Loanviii - Axis

Loan closed

Note: One of the subsidiaries had defaulted in complying with terms and conditions of the loan taken from NSDC and also defaulted inrepayment of principle of ` 258302 '(000) and interest of ` 4501 '(000)

Nature of Security TTTTTerererererms of Rms of Rms of Rms of Rms of RepaymentepaymentepaymentepaymentepaymentAs at

March 31

2014

Particulars


maturities)

As at

March 31

2013


maturities)


82

2.21 OTHER LONG-TERM LIABILITIES

Caution Deposit (refer note below) 35,537 37,128

Other Deposits 333 7,158

Total 35,870 44,286

2.22 LONG-TERM PROVISIONS

Provision for employee benefits:

Provision for Gratuity 1,566 -

Total 1,566 -

2.23 SHORT-TERM BORROWINGS

Secured: Working Capital Loans repayable on demand from banks 3,48,402 21,44,371Other Loans from Banks - 2,22,860

Unsecured:

Debentures 43,314 -

During the year the company has issued Zero Coupon Optionally Convertible Debenture ofRs. 4,33,14 (‘000) convertible into 10,91,303 Equity shares at Rs. 39.69 per share convertible

at any time at the option of the holder on or before 26th Sep 2015.

Loans

From Banks - 98,857

From Other Parties 44,856 44,856

From Related Party 19,29,353 6,13,714

Total 23,65,925 31,24,658


` in ‘000

WorkingCapital TermLoan I - SCB

2,47,209 2,08,859Secured byParipassu first charge on the entire currentassets of the Company, Present and future`5,000(in '000)/- Cash deposit under lien

On Demand

Nature of Security TTTTTerererererms of Rms of Rms of Rms of Rms of RepaymentepaymentepaymentepaymentepaymentParticulars

As atMarch 31 2014

`̀̀̀̀ Amount

As at

March 31 2013

`̀̀̀̀ Amount

WorkingCapital Loan- IDBI

1,01,198 1,02,484Secured by Paripassu first charge on theentire current assets of the Company

On Demand

a. Loan from Related Party does not carryany interest and is repayable on demand.b. The Company has defaulted in repayment of Working Capital term loan along with interest from Standard Chartered Bank. The matter

has been referred to Debt Recovery Tribunal. On non-receipt of bank statement, the company has accrued interest based on sanction

terms.


83

2.24 TRADE PAYABLES

Trade Payables (Also refer Note 2.51) 4,80,289 8,46,476

Total 4,80,289 8,46,476

2.25 OTHER CURRENT LIABILITIES

Current maturities of Long-term debt

From Banks - 6,86,082

From Other Parties 1,19,073 2,59,380

Installments due on long term loans 1,07,778 -

Interest accrued and but not due on borrowings 17,210 -

Interest accrued and due on borrowings 11,410 94,570

Application money received for allotment of securities 2,50,000 2,50,000

Employee benefits payable 35,156 76,446

Statutory dues (including Provident Fund and Tax deducted at Source) 29,004 74,945

Other Payable 1,18,458 48,322

Total 6,88,089 14,89,745

2.26 SHORT-TERM PROVISIONS

Provision for employee benefits :

Provision for gratuity 1,409 1,886

Provision for Leave Encashment 7,822 7,823

Other Provisions

Provision for Tax 1,22,122 1,66,552

Provision for Sales Tax - 8,557

Other Provisions 61,825 65,334

Total 1,93,178 2,50,152



84

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85

EVERONN EDUCATION LIMITED

Notes to Consolidated Financial Statements for the year ended March 31, 2014

2.28 NON - CURRENT INVESTMENTS

Unquoted(i) Long Term, Unquoted, Non Traded & Cost

- 82,530 Equity shares (March 31,2013, 82,530Equity shares) of ` 10/- each fully paid up inDT Media and Entertainment Private Limited 10,729 10,729

- 1,22,500 Equity shares (March 31,2013, 1,22,500)of ` 10/- each fully paid up inRight Track Admizzionz Campuz Private Limited. 60,025 60,025

- 25,000 Debentures (March 31,2013, 25,000) of` 100/- each fully paid up Music Univ India Pvt Ltd. 2,500 2,500

Total 73,254 73,254

Aggregate amount of unquoted investments 73,254 73,254

2.29 DEFERRED TAX ASSET (NET)

Deferred Tax Liabilities

On account of written down value of fixed assets 71,830 3,06,413

Total (A)

Deferred Tax Assetson account of fiscal disallowances expenses allowablefor tax purposes when paid and loss carry forward - -

Total (B) 25,02,941 22,90,812

Net Deferred Tax Liability / (Asset ) (A-B) (24,31,111) (19,84,399)

Deferred Tax Charge / (Credit) to Profit & Loss Account (4,46,745) (18,54,952)

Deferred tax asset has been recognized on account of unabsorbed depreciation and business loss for the yearended 31st March, 2014. The management is of the opinion that there is a virtual certainty against which suchdeferred tax will be realized especially on account of the new economic conditions. It is heartening to note that thebusiness plans of the company as well as core associates were fully accepted by the bankers who have extendedadditional facilities including moratorium on loans and interest

2.30 LONG-TERM LOANS AND ADVANCES

Unsecured, Considered good:Security Deposits 91,040 1,34,697

Capital Advances 10,75,000 10,75,000

Total 11,66,040 12,09,697

As at As at31-March-14 31-March-13

` in ‘000

86

2.31 OTHER NON-CURRENT ASSETS

Long term trade receivableunsecured considered good 3,73,211 5,59,817

Total 3,73,211 5,59,817

2.32 CURRENT INVESTMENTS

At cost or Market value, whichever is lessQuoted

500 Equity shares of Rs.10/- each (Mar 31,2013 500 equity shares of Rs. 10 each) in Indian Overseas Bank 12 12 Market Value Investments (IOB Shares) @ ` 51.00/-amounting to ` 25,500/- (March 31,2013, @ ` 65.05/-amounting to` 32,525/- )

Aggregate amount of quoted investments 12 12

2.33 TRADE RECEIVABLE

Unsecured, considered Good

Outstanding for a period exceeding 6 monthsfrom the date they are due for payment 22,18,447 22,48,884

Others 3,16,252 2,34,361

25,34,699 24,83,245

Unsecured, considered doubtful - -

Outstanding for a period exceeding 6 monthsfrom the date they are due for payment 29,630 20,86,411

Others - -

Less : Provision for doubtful debts (29,630) (20,86,411)

Total 25,34,699 24,83,245

2.34 CASH & BANK BALANCES

Cash on Hand 2,551 1,596

Bank balances

in Current Accounts 1,56,677 35,199

in Deposit Accounts 14,333 31,868

in Margin Account with Banks 16,055 13,055

Total 1,89,616 81,718




` in ‘000

87

2.35 SHORT-TERM LOANS AND ADVANCES

Unsecured, Considered good:

Other loans and advances

Advance Income tax including Tax deducted at Source 2,38,505 1,07,896

Advance to Suppliers 10,92,787 6,93,159

Gratuity - 743

Others 5,94,388 5,81,183

Total 19,25,680 13,82,981

2.36 OTHER CURRENT ASSETS

Unsecured Considered good:Others 20,629 2,605

Total 20,629 2,605

2.37 REVENUE FROM OPERATIONS

Education & Training Income 6,09,196 12,21,688

Sale of Hardware - 7,878

Total 6,09,196 12,29,566

2.38 OTHER INCOME

Interest income 3,758 11,688

Profit on sale of asset - 11

Foreign Exchange profit - 71

Miscellaneous Income 1,498 5,057

Total 5,256 16,827

2.39 PURCHASE OF STOCK IN TRADE

Opening stock - 3,398

Purchase of Trading Items - 6,542

Less : Closing Stock - -

Cost of Goods sold - 9,940




` in ‘000` in ‘000



88



2.40 EMPLOYEE BENEFITS EXPENSE

Salaries 2,63,342 6,91,571

Contribution to Provident and Other Funds 13,797 16,738

Staff Welfare Expenses & others 5,193 4,937

Total 2,82,332 7,13,246

The disclosure under Accounting Standard 15 "Employee Benefits" notified in the Companies (AccountingStandards) Rules 2006, are given below

Defined Contribution Plan

Contribution to Defined Contribution Plan, recognized as expenses for the year are as under:


` in ‘000

Employer's Contribution to Provident Fund 11681 18163

Year Ended Year EndedParticulars 31-Mar-14 31-Mar-13

` in ‘000


89



Defined benefit Plan

The Employees fund scheme managed by SBI Life Insurance Co. Limited is a defined benefit Plan. The present value ofobligation is determined based on actuarial valuation using the Projected Unit Method.

` in '000

Sl. No. Particulars Gratuity Funded Gratuity FundedFor the year ended For the year ended

31/03/2014 31/03/2013

1 Changes in present value of obligationsPresent value of obligations as at beginning of year 7,040.00 10,197.10Interest cost 563.19 676.98Current Service Cost 1,531.41 2,007.55Benefits Paid (1,816.00) (3,741.00)Actuarial (Gain)/Loss on Obligations 228.05 (2,099.63)Present value of obligations as at end of year 7,547.64 7,040.00

2 Changes in the fair value of plan assets - -Fair value of plan assets at beginning of year 6,797.00 9,786.00Expected return on plan assets 472.00 -Contributions - -Benefits paid (1,816.00) (3,741.00)Actuarial Gain / (Loss) on Plan assets 57.00 (752.00)Fair value of plan assets at the end of year 5,510.00 6,797.00

3 Fair value of plan assets - -Fair value of plan assets at beginning of year 6,797.00 9,786.00Actual return on plan assets - -Contributions - -Benefits Paid (1,816.00) (3,741.00)Fair value of plan assets at the end of year 5,510.00 6,797.00Funded status (472.00) 743.00Excess of Actual over estimated return on plan assets (57.00) (752.00)

4 Actuarial Gain/Loss recognized - -Actuarial Gain/(Loss) for the year -Obligation (146.00) (195.00)Actuarial (Gain)/Loss for the year - Plan assets (57.00) (752.00)Total (Gain)/Loss for the year (203.00) (947.00)Actuarial (Gain)/Loss recognized in the year (203.00) (947.00)

5 The amounts to be recognized in the Balance Sheet andStatements of Profit and Loss - -Present value of obligations as at the end of year 7,081.24 10,385.06Fair value of plan assets as at the end of the year 5,510.00 6,797.00Funded status (472.00) 743.00Net Asset/(Liability) recognized in balance sheet (2,037.64) (243.00)

6 Expenses Recognised in statement of Profit &Loss - -Current Service cost 1,531.41 2,007.55Interest Cost 563.19 676.98Expected return on plan assets (472.00) -Net Actuarial (Gain)/Loss recognised in the year 171.05 (2,851.63)Difference in opening balance (actuarial valuation) - -Expenses recognised in statement of Profit &Loss* 1,793.65 (167.10)

7 Assumptions used in accounting gratuity planDiscount Rate 8% 8%Salary Escalation 4% 4%Resignation rate per annum (parent) 1% 1%Rate of return on Plan Assets (parent) 8% 8%


91

2.41 FINANCE COSTS

Interest Expense 6,30,467 7,86,284Other Borrowing Costs 25,778 2,15,033

Total 6,56,245 10,01,317

2.42 OTHER EXPENSES

Course execution and delivery expenses 85,018 1,64,789

Software, hardware and material costs - 3,28,593

Electricity Charges 9,889 28,896

Rent 19,865 62,210

Printing and Stationery 2,939 8,007

Repairs to buildings - 1,198

Repairs to machinery 19,803 34,971

Repairs to Others 8,249 40,640

Insurance 1,830 2,376

Rates and Taxes 11,262 5,626

Travelling Expenses 31,725 27,914

Director Fees 615 255

Payment to Auditors

Audit Fee 2,409 2,475

Reimbursement of Expenses 382 390

Professional fees 40,423 69,802

Communication Expenses 12,243 25,750

Advertisement and Publicity Expenses 15,318 1,68,334

Equipment rental charges 1,104 5,69,962

Miscellaneous Expenses 526 1,202

Provision for Bad and Doubtful debts 4,172 1,907

Total 2,67,772 15,45,297


Exceptional provision (refer Note No.2.58 below) 6,49,550 23,24,265

Total 6,49,550 23,24,265

b. Unfunded Leave encashment Rs.7,822 (000) (March 31 2013: 7,822(000)

Leave encashment has been provided based on management computation and not on actuarial valuation as providedunder Accounting Standard 15 however for the current year the provision for leave encashment has not been estimatedand provided.




` in ‘000


92



a) Basic



Basic EPS A/B (67.72) (150.03)

Diluted



Diluted EPS ` A/B (64.50) (150.03)

Face Value per share ` 10 10

Note: Warrants, if, any outstanding at the year are anti-dilutive and hence ignored while computing diluted EPS.The weighted average number of equity shares outstanding at the year-end has been considered for calculatingthe earning per share as per Accounting Standard-20.

Reconciliation of weighted average number of shares for the purpose of Basic and Diluted EPS

` in ‘000

2.45 CONTINGENT LIABILITIES AND COMMITMENTS

a) Claims against the company not acknowledged as debtIncome Tax Matters 11,01,053 4,13,174Service Tax Matters 27,286 94,269Sales tax Matters - 18,300

b) Corporate Guarantee issued on behalf of Subsidiary Companies 19,17,300 17,38,172c) Corporate Guarantee issued to banks for secured loans to third Party 3,13,118 6,80,029d) Bank Guarantees 5,76,837 7,84,952

In respect of items above, future cash outflows in respect of contingent liabilities is determinable only on receiptof judgments pending at various forum/ settlement of matter. The management believes that, based on legaladvice or internal assessment, the outcome of these contingencies will be favorable and the loss is not probable.Accordingly no provisions have been made for the same.

e) A Civil suit has been filed by The ICFAI Academy for permanent injunction for creating third party rights, ordisposing the assets, both tangible and intangible, in the plaintiff's campuses and control offices from theacademic year 2011 onwards. The plaintiff has claimed damages of ̀ 5,000('000) along with interest at the rateof 18% p.aandthe main injunction is still pending in the High court.


31-March-14 31-March-13

Number of shares considered as basic weightedaverage shares outstanding 2,18,81,767 2,18,69,808

Add: Effect of potential dilutive shares 10,91,303 -

Number of shares considered as weighted average shares andpotential shares outstanding 2,29,73,070 2,18,69,808


` in ‘000

93

f) A Civil suit has been filed by Prometric BV towards damages amounting to Rs. 15,000('000) (PY ` Nil)

g) Estimated amount of contracts remaining to be executed on capital account and not provided for is` Nil (PY ` Nil)

h) Counter guarantee from third parties have not been taken for the corporate guarantee given on behalf of them.

i) The company has received notices from certain parties alleging defaults in respect of services/payments due tothem by the company. The management is discussing with its legal team for evaluating the financial impact ofthese claims. Any adjustments/disclosures, if required, would be made, upon the claims being settled.

2.46 OPERATING LEASES

The company has entered into operating lease arrangement for its office facilities and equipments. These Leasesare for a period ranging from 1 to 5 years with an option to the company for renewing at the end of the initial term.Equipment rental/ Rental for operating leases is added in Profit and Loss account for the year `20,969('000)(March 31, 2013, ̀ 632,171('000))

The Future minimum lease payments under non-cancellable operating leases are as follows

The Lease arrangements for the above non-cancellable leases do not provide for any escalation and the samehas been factored in the future minimum lease rentals as disclosed above.

During the year the company has approached/represented and renegotiated some of its arrangements with theleasing companies and was successful in revising the terms of the certain arrangements in the best possiblemanner the same has been given effect to, in these financials. With regards to other parties the company ispursuing vigorously and resolution of these arrangements are likely to occur within the next six months. Pendingrenegotiations, the company has not recognized a sum of Rs. 2,28,600 ('000) of lease charges during the currentfinancial year.

The company has taken over the Axis bank liability of Acorn Commodity Exchange Private limited, towards leasingarrangement in view of the corporate guarantees given to them in respect of Uttar Pradesh project. This amountis now reflected as a loan and the company is now paying interest. The Company is legally proceeding againstthe entity for the recovery of the sum due to it together with interest. In view of the above the lease rentals arenot accrued in the books.

The DRT passed an interim order directing that the proceeds from Haryana project should be shared betweenStandard Chartered bank and the company at the ratio of 55:45 on account of corporate guarantee given towardsthe leasing arrangements entered into between the company and Spaarkon Trading Pvt Ltd. In view of the abovethe lease rentals are not accrued in the books.

Nevertheless, at the end of project, the Company is obliged to transfer all the assets to the Haryana and UttarPradesh State Authorities as the project is on BOOT Model. This event is likely to occur in FY 2014-15 whenthese assets will be transferred on as is where basis without any recourse to the Compensation.

Particulars As at As at

31-March-14 31-March-13

Within one year 2,62,755 6,03,118

Between one to five Years 2,57,759 4,80,380

After five Years - -

94

ParticularsYear Ended31-March 14

Year Ended31-March 13

`̀̀̀̀ in '000

Capital Expenditure 26,388 -

Business Associate Expenses - 24

Foreign Travel 6,740 1,035

Total 33,128 1,059

ParticularsYear Ended31-March 14

Year Ended31-March 13

`̀̀̀̀ in '000

Testing and Other Services 4,395 7,023

2.48 DIVIDEND REMITTED IN FOREIGN EXCHANGE

2.49 RELATED PARTY DISCLOSURE

List of Related Parties

Name Nature of relationship

1. Varkey Group Limited Promoter Group Company

2. SKIL Infrastructure Limited Promoter Group Company

3. Gems Education (Asia) 1 Limited Promoter Group Company

4. The Concorde Residential Schools (Kerala) Private Limited Promoter Group Company

5. Premier Educational Establishments Private Limited Promoter Group Company

6. Gems Education India Private Limited Promoter Group Company

7. Zanskar Properties Private Limited Promoter Group Company

8. VG School Developments Private Limited Promoter Group Company

9. Dream Solutions Private Limited Promoter Group Company

10. A Srinivasan Key Managerial Personnel

11. N P Mathi Lingan Key Managerial Personnel

12. Ganapathy Puranik Key Managerial Personnel

Details of Transaction with the Related Parties

Enterprise over which someof the directors exercise

significant influenceKey Managerial PersonnelNature of Transaction

2013-14 2012-13 2012-132013-14

`̀̀̀̀ in '000

Subscription of Share capital anddebentures received 86,627 -

Short term borrowing Received 14,97,182 10,13,494 - -

Short term borrowing Repaid 2,74,384 -

Remuneration Paid - - 5,197 -

2.47 EXPENDITURE IN FOREIGN CURRENCY

95

The Concorde Residential Schools (Kerala) Pvt Ltd (15,029) (38,635) (10,650) (52,414)

Premier Educational Establishments Private Ltd (1,98,800) (1,98,800) (1,98,800) (1,98,800)

Gems Education India Private Limited (1,52,006) (1,47,500) (1,52,006) (1,47,500)

Zanskar Properties private Limited (5,50,600) (2,11,500) (5,50,600) (2,11,500)

VG School Developments Private Ltd (5,98,700) (3,500) (3,500) (3,500)

Dream Solutions Private Ltd (15,000) - (15,000) -

Sunny Varkey (2,92,598) - (2,92,598) -

OutstandingMaximum Outstanding

during the Year

March 312013

March 312014

March 312013

March 312014

Name of the entity

Disclosure of significant transactions with related parties:

Type of TransactionType of

Relationship Name of the entity

Short Term Borrowing Enterpriseover whichsome of the

directorsexercise

significantinfluence

The Concorde Residential Schools (Kerala) private Limited (15,029) (38,635)

Premier Educational Establishments Private Ltd (1,98,800) (1,98,800)

Gems Education India Private Limited (1,52,006) (1,47,500)

Zanskar Properties private Limited (5,50,600) (2,11,500)

VG School Developments Private Ltd (5,98,700) (3,500)

Dream Solutions Private Ltd (15,000) -

Sunny Varkey (2,92,598) -

March 312014

March 312013

Disclosure pursuant to clause 32 of listing agreement in respect of loans given to subsidiaries and other parties inwhich Key Managerial Personnel are interested.

2.50 SEGMENT REPORTING

The Company is engaged in the business of providing education and training and related sale of equipments.There being only one 'business segment' and 'geographical segment' the segment information is not provided

2.51 DUES TO MICRO AND SMALL ENTERPRISES

The company has circulated a letter to all creditors to ascertain the applicability of MSMED Act on the transactionwhich the company had with them. Provision for interest if any under the Act will be made upon receipt of theirresponses and after examining the validity of their claim.

2.52

The company has transactions with "Associated Enterprises" which are subject to Transfer Pricing regulationsin India. The Management of the Company is of the opinion that such transactions with the associate enterprise4sare at arms length. Consequently, this will not have any impact on the financial statements, particularly on accountof tax expenses and that of provision for taxation.

2.53 BALANCE CONFIRMATION

Confirmations of Balance from Sundry Debtors, Deposit accounts, Loans and Advances and Sundry Creditorshave not been obtained. Accounts of certain sundry debtors, loans and advances, deposits and creditors are beingreviewed as on a going process. As there is g the inordinate delay in receipt of confirmations from GovernmentContracts adjustments, if any will be made on completion of review/reconciliation/ identification of doubtful debts/advances.

96


The group has initiated the process of review of impairment of assets in the respect of the tangible, intangibleand other current assets including Capital Work in Progress carried in the Books, their results in such impairmentis awaited, The financial implication if any on the above will be provide appropriately at later stage taking intoaccount the future operational plans and cash flows as prepared by the management.

2.55 INCOME TAX

The company has received various demand notices of income tax and interest thereon in respect of AssessmentYears 2006-07 to 2011-12. During the year, the Company reviewed the position with regard to the income taxassessments till date and has taken certain decisions to mitigate the tax outflow especially by filing revised returns/computations in respect of all the pending assessments. Although the department has not accepted the revisedcomputation for the Assessment year 2011-12, the company is hopeful that since the revised computation is inline with the revised returns of other years, the demand will ultimately get reduced and will reflect the incomedisclosed in the revised statement. The company has filed an appeal against the order of assessment and is hopefulof obtaining substantial relief. The company is also pursuing other remedies (rectification application, waiverapplication etc.,) as permitted under the law to ensure that the tax liability is reduced as per law.

The company received a fresh assessment order for AY 2007-08 which is also being contested. No provision ismade in this regard, as the Company has been advised that the stand of the Company will be accepted in appeal.

Any additional tax provision arising out of the tax demands (inclusive of interest and penalty) will be made uponreaching the finality in respect of the assessments.

2.56 SERVICE TAX

The company has received various show cause notices in respect of service tax matters .Additional service taxliability arose for the years 2009-10 to 2011-12 aggregating to Rs. 12.03 Cr excluding interest. The company hasbased on the legal advice, filed application before Settlement Commission (after payment of service tax dues alongwith interest) to ensure that no penalty or other adverse orders are passed against the company for the delayin remittance of service tax. Pending for adjudication proceedings, no provision is considered necessary

2.57 VAT

Assessment proceedings against the company under the Karnataka VAT Act were successfully completed at theappellate level and the company got substantial relief. The matter has since been remanded to the AssessingOfficer for passing the consequential order.


The break up is as under `̀̀̀̀ in ‘000

i. Restructuring of Operating Lease arrangementswith Reliance Capital Limited amount recognized Rs. 1,65,406as on exceptional items (Note Below)

ii. Lease deposits for premises at Perungudiwritten off (Note Below) Rs. 33,333

iii. Write down in the value of Fixed Assets Rs. 4,07,005

iv. Other Items Rs. 43,806

i. The company initially had an operating lease arrangement with Reliance capital in respect of certain assetsand the over dues towards the lease rentals resulted in legal proceedings against the company. The Companylater concluded a revised arrangement with Reliance Capital under which the operating lease arrangementwas substituted by a mortgage loan with EMIs being paid over a period of 8 years up to 2022. This mortgageloan together with existing mortgage loan aggregate to Rs. 342,238 ('000) and is secured by the title deedsof third floor of the property at Perungudi, Chennai.

97

The revised terms a necessitated a recognition of a onetime charge of Rs. 16.54 Cr.

ii. The company initially had an option to acquire two floors additionally in the office premises at Perungudi,Chennai. Accordingly, the company made a deposit of Rs. 5,00,000 ('000) towards the acquisition of three floorswith the land lord. However, due to financial constraints, the company acquired only the third floor and surrenderedthe option to acquire the other two floors along with the deposit of Rs. 33,333 ('000) which is now reflected asan exceptional item as the negotiations were concluded during the current financial year.

2.59

Due to huge losses incurred from the financial year 2012-13 onwards, and continuing defaults /delays by customersin settling their dues and the prevailing uncertain economic environment, the company had very little financialresources available to it to carry on its operations. Further, the dues from the Company's customers are not backedby any tangible security/assets, the Company's recovery efforts have to be very measured., since the delays areattributable to the liquidity constraints of the customers

The consequent financial crunch faced by the company resulted in the company having overdue amounts payableto creditors and certain lendersand other business support service providers. The bankers, agreed to restructurethe loans and provide fresh working capital limits provided the company executes a satisfactory documentationas also achieves certain operating profits/financial ratios. As part of this approach and due to persistent, cashcrunch , the company opted to pool all the resources of its various wholly owned subsidiaries as the businesssegment of all the companies are common and operate in the same field of providing 'education services' andare structured as specific entities for the purpose of serving a specific customer segment in the same field-- educational services. These common funds were utilized to tide over temporary liquidity issues and kept thecompanies and subsidiaries remain as a going concern.

Debts across the group companies, namely, the Company and its wholly owned subsidiaries, were adjusted witha view to comply with the various covenants (including the maintaining of stipulated financial ratios) set out bythe bankers for grant of further infusion of working capital limits and other loans. so that the company could continueits future business plans by focusing on key thrust areas. The Company is in negotiations with the, creditors andBankers and is working on various solutions with them to ensure settlement of their dues. The Company is alsotaking various steps to reduce costs and improve efficiencies to make its operations profitable and accordinglythe financial statements have been prepared on the basis that the Company is a going concern.

It is expected that with the initiation of the above steps the company will have adequate cash flows to fulfill, ina phased manner, its debt obligations.

2.60

In respect of advances given to various parties, Capital work in progress and Debts due from government agenciesand others, amounting in view of legal advices and other opinion received no provision is considered necessaryat this juncture, as the company at present is hopeful of recovering major portion of outstanding dues.

2.61 BUSINESS RESTRUCTURING RESERVE

The Hon 'ble High Court of Madras permitted the Company to reduce the Securities Premium Account to an amountnot exceeding Rs. 150 Crores to be transferred to a separate reserve styled as "Business RestructuringReserve"(BRR). The resolution passed by the Share Holders and approved by the Court permitted the BRR shouldbe utilized for setting off against diminution in the value of investments, and consequent impairment of goodwilland accumulated losses, unrealized debtors and loans and advances etc.,

The Company has given effect to this order of the Hon 'ble High Court by carving out of the Share Premium Account,a sum of Rs. 150 Crore to BRR. However, the Company is identifying the exact quantum of amounts to be setoff against BRR, which process is expected to be completed at the time publication of first quarter results forthe Current Financial Year 2014-15.

2.62 PREVIOUS YEAR FIGURES

Previous years figures have been regrouped/ re classified wherever necessary to conform to the current yearpresentation.

98

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99

EVERONN EDUCATION LIMITEDRegd. Office : ‘Everonn House’, #96-99, Industrial Estate, Perungudi, Chennai - 600 096.

ATTENDANCE SLIP

Please hand over this admission slip at the entrance of the meeting hall

NAME AND ADDRESS OF THE SHARE HOLDER .........................................................................................................

Foilio No. / DPI*D - Client ID ...........................................................................................................................................

NAME OF THE PROXY (IN CAPITAL LETTERS) ......................................................................................................................

No. of Shares held ..........................................................................................................................................................

ANNUAL GENERAL MEETING26th September 2014 at 10.00 a.m.‘Everonn House”, Perungudi Industrial Estate, PerungudiChennai - 600 096.

I hereby record my presence at the meeting

Signature of Member / Proxy

EVERONN EDUCATION LIMITEDRegd. Office : ‘Everonn House’, #96-99, Industrial Estate, Perungudi, Chennai - 600 096.

PROXY FORM

I / We ........................................................................................................................................................................... of

................................................................................................................................................................ in the district of

.............................................................................................................................................................................................

..................................................................................................................................................................... or failing him

................................................................................................................................................................ in the district of

................................................................................................................................................. as my / our Proxy to vote

for me / us and my / our behalf at the Annual General Meeting of the Copany to be held on Friday 26th September 2014

at 10.00 A.M. and at any adjournment thereof.

Signed this day of .................................................................... day of .................................................................... 2014

Proxy form must reach company’s registered office not late

than 48 hours before the commencement of the meeting.

Proxy No. ........................................................................ Date of Receipt .......................................

Affix Re.1/-Revenue Stamp

Signature

$

$$



form b format of covering letter of the annual …form b format of covering letter of the annual...

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