important communication to membersimportant communication to members the ministry of corporate...
TRANSCRIPT
Annual Report 2012
Important Communication to Members
The Ministry of Corporate Affairs has taken a “Green Initiative in
Corporate Governance” by allowing paperless compliances by
companies and has issued circulars stating that service of notice
/ other documents including Annual Report can be sent by e-mail
to its members. To support this green initiative of the Government
in full measure, members who have not registered their e-mail
addresses, so far, are requested to register their e-mail addresses,
in respect of electronic holdings with the Depository through their
concerned Depository Participants. Members who hold shares
in physical form are requested to provide their e-mail id to the
Company at the following e-mail id or to the Registrar at the
following address, quoting their folio reference.
CAMEO Corporate Services Limited“Subramanian Building” No.1, Club House Road Chennai - 600 002Email: [email protected]
Board of Directors
Mr. S. RamakrishnanChairman
Mr. Srikanth RamanathanManaging Director
Mr. K. S. Vaidyanathan
Mr. V. Ganapathi Subramanian
Mr. K. Balaji
Chief Financial Officer & Company Secretary
Mr. S. Arun Kumar
Registered Office
New No. 15, Old No. 6Besant Avenue, Adyar, Chennai - 600020Tel: 044 - 42187785 / 42187794www.aurumsoftsystems.com
Contents Page
Notice 2
Directors’ Report & Management Discussion and Analysis Report 5
Corporate Governance Report 12
STANDALONE FINANCIAL STATEMENTS
Auditors’ Report 24
Balance Sheet 26
Profit & Loss Account 27
Cash Flow Statement 28
Notes forming part of the financial statements 29
CONSOLIDATED FINANCIAL STATEMENTS
Auditors’ Report on Consolidated Financial Statements 45
Consolidated Balance Sheet 46
Consolidated Profit & Loss Account 47
Consolidated Cash Flow Statement 48
Notes forming part of the consolidated financial statements 49
Attendance Slip / Proxy Form 63
Auditor
Mr. R. R. RajkumarChartered Accountant No. 510 (Old No. 164), T.T.K. Road Alwarpet, Chennai - 600018
Bankers
ICICI Bank LimitedThe Lakshmi Vilas Bank LimitedState Bank of IndiaStandard Chartered BankIDBI BankIndusind Bank
Registrar and Share Transfer Agent
Cameo Corporate Services Limited“Subramanian Building”1, Club House Road, Chennai - 600002.
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NOTICENOTES:
1. Appointment of Proxy
A member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and on poll to vote instead of himself. The proxy need not be a member of the Company. A blank form of proxy is enclosed herewith and, if intended to be used, it should be returned duly completed at the registered office of the Company not less than forty-eight hours before the scheduled time of the commencement of Annual General Meeting.
2. Appointment of Authorised Representatives
No person shall be entitled to attend or vote at the meeting as a duly authorized representative of any body corporate which is a shareholder of the Company, unless a copy of the resolution appointing him/her as a duly authorized representative, certified to be a true copy by the Chairman of the meeting at which it was passed, is filed with the Company.
3. Information under Clause 49 of the listing agreement(s) regarding re-appointment of Directors is annexed hereto.
4. Closure of Register of Members
The Register of Members and Share Transfer Books of the Company will remain closed from Monday, September 24th, 2012 to Friday, September 28th, 2012 (both days inclusive).
5. Compulsory Trading of Shares of the Company in Dematerialised (Demat) Form
The shares of the Company are compulsorily traded in dematerialized mode. The Company has signed agreements with both the depositories i.e. National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL).
6. Inspection of Registers and DocumentsAll the documents referred to in the accompanying notice, the Register of Directors’ shareholding and the Register of Contracts maintained under Sections 307 and 301 of the Companies Act, 1956, respectively, are open for inspection at the registered office of the Company up to the date of Annual General Meeting. Register of Directors’ shareholding shall be open for inspection up to 3 days after the Annual General Meeting.
NOTICE IS HEREBY GIVEN THAT THE 18th ANNUAL GENERAL MEETING OF THE MEMBERS OF AURUM SOFT SYSTEMS LIMITED WILL BE HELD ON FRIDAY, THE 28th DAY OF SEPTEMBER 2012 AT 10 A.M. AT THE CONFERENCE CENTRE - MINI HALL, NEW NO:24 (OLD NO:58), 2nd MAIN ROAD, R.A. PURAM, CHENNAI – 600028, TO TRANSACT THE FOLLOWING BUSINESS:
ORDINARY BUSINESSTo receive, consider and adopt the Audited Balance 1. Sheet of the Company as at 31st March 2012 and the Profit & Loss Account for the year ended on that date together with the Reports of the Directors and the Auditors thereon.
To appoint a Director in place of Mr. V. Ganapathi 2. Subramanian, who retires by rotation and being eligible, offers himself for re-appointment.
To appoint a Director in place of Mr. K. Balaji, who 3. retires by rotation and being eligible, offers himself for re-appointment.
To appoint Auditor and to fix his remuneration and in 4. this regard to consider and, if thought fit, to pass with or without modification(s), the following resolution as an Ordinary Resolution:
“RESOLVED THAT pursuant to the provisions of Section 225 and other applicable provisions, if any, of the Companies Act, 1956, Mr. S. Ramanath, Chartered Accountant, Coimbatore (Membership number 29416), be and is hereby appointed as the Statutory Auditor of the Company in place of the retiring auditor Mr. R. R. Rajkumar, Chartered Accountant, Chennai (Membership number 209877), to hold office from the conclusion of this Annual General Meeting until the conclusion of the next Annual General Meeting of the Company on such remuneration as may be fixed by the Board of Directors of the Company on the recommendation of the Audit Committee.”
By Order of the Board of Directors
Place: Chennai S. Arun KumarDate: August 14, 2012 Chief Financial Officer and
Company Secretary
Notice
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7. Shareholders may kindly note that no gifts/coupons will be distributed at the Annual General Meeting.
8. Shareholder Queries
In case you have any query relating to the enclosed Annual Accounts or about the operations of the Company, you are requested to send the same to the Chief Financial Officer and Company Secretary at the Registered Office of the Company at least seven days before the date of Annual General Meeting so that the information can be made available at the meeting.
9. Registrar and Share Transfer Agent
Cameo Corporate Services Limited (Cameo) is the Registrar & Share Transfer Agent of the Company. All investor related communication may be sent to the following address:
Cameo Corporate Services Limited“Subramanian Building”1, Club House Road, Chennai - 600002Contact Person: Mr. R.D. Ramasamy, DirectorTel: 044 – 28460390 / 391 / 392 / 393Email: [email protected]
10. For effecting changes in address/bank details/ECS (Electronic Clearing Service) mandate; members are requested to notify:
(i) the Registrar & Share Transfer Agent of the Company, if shares are held in physical form; and
(ii) their respective Depository Participant (DP), if shares are held in demat form.
11. Members who hold shares in the physical form can nominate a person in respect of all the shares held by them singly or jointly. Members who hold shares in a single name are advised, in their own interest, to avail of the nomination facility by completing and submitting Form 2B. Blank forms will be supplied by the Company’s Registrars & Share Transfer Agents on request. Members holding shares in the dematerialized form may contact their Depository Participant for recording the nomination in respect of their shares.
12. Members/Proxies are requested to kindly take note of the following:
(i) copies of Annual Report will not be distributed at the venue of the meeting.
(ii) Attendance Slip, as sent herewith, is required to be brought at the venue duly filled in and signed, for attending the meeting.
(iii) entry to the hall will be strictly on the basis of the entrance slip, which shall be provided at the counters at the venue, in exchange of duly completed and signed Attendance Slips.
(iv) Folio No./ DP & Client ID No. may please be quoted in all correspondence with the Company and/or the Registrar & Share Transfer Agent.
13. Members who have not encashed their dividend warrant(s) for the financial years 2009-10 and 2010-11, are requested to make their claims without any delay to the Company’s Registrar & Share Transfer agents.
Note on appointment of Mr. S. Ramanath, Chartered Accountant, as Statutory Auditor of the Company (Item No. 4)
Mr. R. R. Rajkumar, Chartered Accountant, Chennai (Membership No. 209877), who is the statutory auditor of the company, holds office, in accordance with the provisions of the Companies Act, 1956, upto the conclusion of the forthcoming Annual General meeting. He has not offered himself for re-appointment as auditor of the Company for the financial year 2012-13. Pursuant to Section 225 and other applicable provisions of the Companies Act, 1956, a special notice has been received from a member proposing the appointment of Mr. S. Ramanath, Chartered Accountant, Coimbatore (Membership number 29416) as the statutory auditor of the company to hold office from the conclusion of the ensuing annual general meeting until the conclusion of the next annual general meeting.
Mr. S. Ramanath, Chartered Accountant, Coimbatore (Membership number 29416) has also expressed his
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willingness to act as statutory auditor of the Company, if appointed, and has further confirmed that the said appointment, if made, would be within the limits prescribed under Section 224(1B) of the Companies Act, 1956.
The Members’ approval is being sought for the appointment of Mr. S. Ramanath, Chartered Accountant, Coimbatore (Membership number 29416) as the statutory auditor and to authorise the Board of Directors, on the recommendation of the Audit Committee, to determine the remuneration payable to him.
None of the Directors are concerned or interested in this resolution.
Your Directors recommend the resolution for your approval.
By Order of the Board of Directors
Place: Chennai S. Arun KumarDate: August 14, 2012 Chief Financial Officer and Company Secretary
Brief particulars of Directors being re-appointed are as under:
Name of the Director Mr. V. Ganapathi Subramanian Mr. K. Balaji
Date of Appointment December 19, 2008 March 15, 2011
Age 50 years 46 years
Qualification Chartered Accountant Masters in Business Administration
Brief profile Mr. V. Ganapathi Subramanian is a practicing Chartered Accountant specialising in Finance, Taxation and bank audits.
Mr. K. Balaji, a Post Graduate from Annamalai University, has more than Two Decades of Experience in Marketing and Sales in varied industries like Petrochemical, Textiles, Automobiles, Cement, Sugar, etc.
Directorships held in other Companies
Mahameru Fashion Apparel Limited Effimech Engineers P. Ltd
Memberships/ Chairmanships of Committees across other Public Companies
Nil Nil
Shares held in the Company Nil Nil
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DIRECTORS’ REPORT
Dear Members,Your Directors are pleased to present the report on our business and operations of your Company along with the audited accounts for the financial year ended March 31, 2012.
A. Results of operation
Particulars31-03-2012
(`)31-03-2011
(`)31-03-2012
(`)31-03-2011
(`)
Consolidated Standalone
Revenue from operation and other income 974,838,848 646,133,244 185,832,226 17,552,540
Earnings before Depreciation and amortization
37,071,078 22,209,290 14,106,510 6,461,955
Depreciation and amortization 20,826,062 7,976,290 10,785,788 760,634
Profit Before Tax 16,245,016 14,233,000 3,320,722 5,701,321
Less : Provision for Taxation
Income Tax 934,129 889,884 723,321 638,295
Deferred Tax (2,195,478) (2,814,991) 109,732 (3,533,288)
MAT Credit Entitlement 224,055 (604,701) 224,055 (604,701)
Profit After Tax 17,282,310 16,762,808 2,263,614 9,201,015
B. DividendYours directors have decided to utilize the internal accruals for future growth. Hence, your Directors have not recommended any dividend for the current year. Your Directors believe that this will increase the long-term shareholder value.
C. Management Discussion and Analysis report
Industry structure and developments *The year 2011 recorded steady growth for the Information Technology and related services sector with worldwide spending crossing USD 1.7 trillion, a growth of 5.4 per cent over 2010. Software products, IT and BPO services continued to lead, accounting for over USD 1 trillion of the total spend. The year saw renewed demand for overall
global sourcing, which grew by 12 per cent over 2010, nearly twice the global technology spend growth.
The global outsourcing market recorded a healthy growth driven by record contracting activity in small size deals, as clients aim to conserve cash flows and at the same time try out new models and service offerings.
A change in the overall structure in global sourcing is expected as organizations embark on a journey with enhanced focus on the customer. With customers demanding more immediate value from IT and forward-looking strategies that support growth and innovation, service providers are adopting agile methods focusing on operational excellence through ongoing innovation, diversification, renewed partnerships/alliances and new business models.
* Excerpts from Executive Summary of the Strategic Review 2012, NASSCOM
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Key global megatrends around macroeconomics, demographics, social, environmental, technology and business will shape the future of the IT-BPO industry. These megatrends will present a new set of opportunities in the form of largely untapped markets and customer segments, which can propel industry revenues to USD 225 billion by 2020. It is also expected that the IT-BPO services will be instrumental in the economic and social rise of India in the coming decade.
Opportunities *Despite the previous year ending in a difficult economic environment, better economic conditions in the second half of the year signified return of consumer confidence and renewal of business growth, is expected to drive IT spending going forward.
While the growth in IT-BPO spend is expected to be gradual over the next two-three years, global sourcing spend is seen to outpace this growth. IT outsourcing market is set to grow at a CAGR of about 8 per cent over 2011 to 2013, while BPO off shoring is expected to grow at a little over 7 per cent during the same period.
While cost and talent still remain essential considerations for global sourcing, industry expertise and innovation is expected to drive future sourcing requirement. Diversification and transformation, the key themes for the industry for the last two years, and the untapped opportunities in the new services is expected to drive the next phase of growth for the IT-BPO sector.
Suitably exploiting these emerging opportunities both in the global and domestic markets can help your company to surge its business going forward.
Segment-wise performanceThe entire revenue (except other income) of your Company and its subsidiaries is attributable to Information Technology Services and Consulting. For segment wise performance of the group from the different Geographies, refer note 24 in the notes forming part of the Consolidated Financial Statement.
Future Business OutlookDuring FY 2011-12, your Company ventured into Human Resource Outsourcing in the Indian market. This has resulted in a significant surge in the revenues of your company. Outsourcing has become a common response to manage people and technology resources strategically, enhance
services and manage costs more effectively. As the number of companies outsourcing HR activities continues to rise, the same present an opportunity to your company to surge its growth.
The group also continues to offer business solutions for a wide range of industries by bringing innovative ideas and cutting edge technology. The group’s wide range of service offerings meet the distinct, evolving needs of individual business within the industries and the group will continue to strive to be recognized as a Dependable and Customer-focused Global IT Organization delivering innovative technology and business solutions.
During the financial year 2011-12, your company has initiated the process of amalgamation of PointRed Telecom Limited (“PointRed”) with your Company. PointRed is engaged in the business of manufacturing 4G (WiMAX) equipments. PointRed has the distinction of being the only Indian company in the 4G space whose products are certified by the WiMAX forum. PointRed holds significant market share in developing economies such as India, Africa and Latin America. PointRed’s geographical advantage with its R&D centre/facility in Bangalore, India and manufacturing hub in Taiwan provides cost-effective offerings to the operators worldwide.
Given the growth prospects available in the LTE and WiMAX equipment business, your directors believe that the diversification into the 4G (WiMAX) equipment business through this amalgamation would help the group to exploit the business opportunities presented by the 4G (WiMAX) equipment business. Your Company would however continue to strive to scale its existing IT services and consulting business.
Risks and concernsAt present, your Company’s Resourcing business in India is a single client (i.e. Accel group of companies) driven business. In case your Company is not able to win other clients for providing Resourcing Business, the same might affect scalability of your Company’s Resourcing business.
A significant portion of our group’s revenues are from Dubai, Singapore and USA. Hence an economic slowdown in any of these countries would significantly impact our groups’ performance.
While cost-arbitrage continues to be a significant driver of the IT-BPO business for most buyers, the associated
* Excerpts from Executive Summary of the Strategic Review 2012, NASSCOM
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Directors’ Report
benefits will diminish over time with changes in underlying factors and this could have a significant impact on your Company’s performance.
The groups business is highly people driven and the business is dependent on ability of the group to hire and retain skilled technology professionals.
Adverse currency movements and wage inflation would put significant pressure on the groups’ operating margins.
Your directors believe that the diversification in to 4G and WiMAX equipment business would help mitigate some of the business risks present in the Information technology services and consulting.
The amalgamation of PointRed Telecom Limited with your company also brings with it the risk of integration of people, finances and technology. Your Company has already chalked out well-laid out integration plan so as to achieve the strategic objective of the business combination and the resultant synergy expected.
Internal control systems and their adequacyYour Company adopts strong internal control systems to ensure optimal utilization and protection of assets, timely compliance with the statutory provisions and facilitate accurate and timely compilation of financial statements and other reports to the management. The entire evaluation of internal controls of your company is carried out by the Chief Financial Officer. The Audit Committee then on a periodic basis, reviews the adequacy of Internal Control Systems.
Discussion on financial performance of the Company and the Group
Share Capital and PremiumAs at March 31, 2012 the paid-up capital of the company stood at ` 1302 lakhs. No shares were issued during the financial year 2011-12. The securities premium as on that date stood at ` 1838 lakhs.
Turnover & ProfitabilityThe Company together with its wholly owned subsidiaries, is engaged in the business of IT Services and Consulting.
During FY 2011-12, the Company ventured into Resourcing services. Due to this, there was a significant growth in the turnover of the Company. The company achieved a turnover of ` 1797.84 lakhs on a standalone basis,
compared to ` 147.95 lakhs during the previous financial year. Other income of the Company on a standalone basis was ` 60.48 lakhs compared to ` 27.58 lakhs during the previous financial year. The significant increase in the other income was on account of Forex gain. The Profit Before Tax for FY 2011-12, on standalone basis was ` 33.21 lakhs compared to ` 57.01 lakhs, during the previous financial year. The Company has during FY 2011-12, amortized ` 100 lakhs, being 1/5th of the consideration paid for acquiring the Commercial right relating to the Resourcing services business. This has resulted in a decrease in the profitability of the Company. The Profit After Tax on a standalone basis was ̀ 22.64 lakhs compared to ̀ 92.01 lakhs during the previous financial year.
The Consolidated turnover of the group during the financial year 2011-12 was ` 9690.62 lakhs compared to ` 6430.80 lakhs during FY 2010-11. Other income was ` 57.77 lakhs compared to ` 30.53 lakhs, during the previous financial year. The Profit After Tax on a Consolidated basis for FY 2011-12 was ` 172.82 lakhs compared to a Profit After Tax of ` 167.63 lakhs during FY 2010-11.
ReservesConsequent to surrender of the NBFC registration, the Company is not required to maintain the statutory reserve. Hence the balance in the statutory reserves of ̀ 41.68 lakhs has been transferred back to the Profit & Loss account.
The balance in the Profit & Loss account on a standalone basis as at March 31, 2012 was ̀ 107.87 lakhs and that on a consolidated basis was ` 321.45 lakhs.
Investments
Investment in wholly owned subsidiary, is carried in the books at cost. The same stood at ` 2205 lakhs. The company does not have any other investment.
Goodwill on consolidation
The Goodwill arising on consolidation of all the subsidiaries is ` 1286.45 lakhs.
Trade Receivables
Trade receivables stood at ` 164.18 lakhs as at March 31, 2012 compared to ` 73.21 lakhs as at the end of the previous financial year. The increase in trade receivables was on account of billings for the month of March 2012 in relation to the resourcing services rendered.
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The same was realized during April 2012. The total trade receivables of the group stood at ` 2108.67 lakhs as at the end of the financial year 2011-12.
Cash and Bank Balance
The Cash and Bank balance represents Cash in hand, Bank Balance and amounts placed in Fixed deposits with Banks. As at March 31, 2012, the Company had a cash and bank balance of ` 12.25 lakhs and ` 168.55 lakhs have been placed in Fixed Deposits with Banks.
On a consolidated basis, the Cash and Bank balance including Fixed Deposits was ̀ 373.28 lakhs as at the end of the financial year 2011-12.
Fixed Assets
There was no addition to fixed asset of the holding company except capitalization of the consideration of ` 500 lakhs paid for acquisition of commercial right in relation to the resourcing business. The net tangible assets as at March 31, 2012 were ` 7.16 lakhs and intangible assets stood at ` 418.02 lakhs.
The net tangible assets of the group as at March 31, 2012 were ` 109.22 lakhs and intangible assets stood at ` 440.53 lakhs. Intangible assets under development stood at ` 60.68 lakhs.
Loans and AdvancesShort-term loans and advances as at March 31, 2012 on a standalone basis stood at ` 59.19 lakhs compared to ` 560.74 lakhs as at the end of the previous financial year. The decrease is mainly on account of capitalization of the consideration of ̀ 500 lakhs paid during the previous financial year 2010-11, for acquisition of Resourcing business. Long-term loans and advances as at March 31, 2012 on a standalone basis stood at ` 382.19 lakhs compared to ` 218.29 lakhs as at the end of the previous financial year. The increase in long-term loans and advances is mainly on account of the additional loan of ` 135.96 lakhs lent to the companies wholly-owned subsidiary M/s. Dicetek (Sing) Pte Limited, Singapore. There is also an increase in the tax deducted at source by the clients, on account of increase in the turnover of the Company.
On a consolidated basis, short-term loans and advances stood at ` 134.82 lakhs as at March 31, 2012, compared to ̀ 593.57 lakhs as at March 31, 2011. As at March 31, 2012, the long-term loans and advances stood at ` 226.39 lakhs.
Liabilities and provisionsThe provision for gratuity on a standalone basis as at March 31, 2012 stood at ` 28.42 lakhs compared to `1.33 lakhs as at March 31, 2011. The increase is on account of increase in the number of employees, who were taken over from Accel IT Resources Limited as part of the acquisition of the Resourcing Business. The provision for gratuity on a consolidated basis as at March 31, 2012 stood at ` 86.81 lakhs.
Short-term provision on a standalone basis represents provision for bonus. The same stood at ` 47.31 lakhs as at March 31, 2012. The said bonus would be paid to the employees during the current financial year.
Short-term provision of ` 201.43 lakhs on a consolidated basis represent provision made for employee benefits like Bonus, Leave Salary, Annual Air fare for employees, etc.
Short-term borrowings on a consolidated basis as at 31st March 2012 decreased to ` 70.96 lakhs from ` 177.06 lakhs as at 31st March 2011. Long-term borrowings on a consolidated basis stood at ` 20.23 lakhs. These borrowings represent the vehicle loans and other short-term loan borrowed by the company’s wholly owned subsidiary M/s. Dicetek LLC., Dubai.
As at March 31, 2012, Trade payables on a standalone basis stood at ` 0.83 lakhs and that on a consolidated basis stood at ` 148.63 lakhs.
Other current liabilities on a standalone basis stood at ` 140.08 lakhs compared to ` 1.84 lakhs. The increase mainly represents the salary and other statutory benefits payable for the month of March 2012. The same has been paid subsequently during April 2012. Other current liabilities on a consolidated basis stood at ` 718.22 lakhs. Of this, ` 593.65 lakhs represent salary payable, which has been subsequently paid.
Material developments in Human Resources / Industrial Relations front, including number of people employedWith the available abundant experience and expertise of our employees, your company believes that Human Resource is the major asset. Your Company has a long term strategy to attract and retain the best talents. Since your Company’s business is highly people driven, development and retention of human resources is one of the key challenges.
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Directors’ Report
As at March 31, 2012, your Company and its subsidiaries had 1889 employees on its rolls.
D. DirectorsMr. Srikanth Ramanathan was appointed as Managing Director of the Company for a period of 3 years with effect from February 6, 2009. Accordingly, his initial term as Managing Director ended on February 5, 2012. The Board of Directors of the Company based on the recommendation of the Remuneration committee has re-appointed Mr. Srikanth Ramanathan as Managing Director for a period of one year with effect from February 6, 2012 and the same has also been approved by the shareholders by way of postal ballot. Mr. Srikanth Ramanathan has expressed his desire to not draw any remuneration from the company and accordingly, he is not being paid any remuneration with effect from January 1, 2012.
In accordance with the requirements of the Companies Act, 1956 and the Articles of Association of the Company, Mr. V. Ganapathi Subramanian and Mr. K. Balaji, Directors, retire by rotation at the forthcoming Annual General Meeting of the Company and being eligible, offer themselves for re-appointment.
The information to shareholders as per Clause 49 of the Listing agreement pertaining to brief resume, expertise in functional areas, names of Companies in which Mr. V. Ganapathi Subramanian, and Mr. K. Balaji are Directors etc., is being provided in the Notice of the Annual General Meeting which forms part of this Annual Report.
E. Auditors Mr. R. R. Rajkumar, Chartered Accountant, Chennai retires as Auditor of the Company at the forthcoming Annual General Meeting. He has not offered himself for re-appointment. Pursuant to Section 225 and other applicable provisions of the Companies Act, 1956, a special notice has been received from a member proposing the appointment of Mr. S. Ramanath, Chartered Accountant, Coimbatore (Membership No. 29416) as the statutory auditor of the company to hold office from the conclusion of the ensuing annual general meeting until the conclusion of the next annual general meeting. Mr. S. Ramanath, Chartered Accountant, Coimbatore, (Membership No. 29416) has also expressed his willingness to act as statutory auditor of the company, if appointed. The Directors recommend the appointment of Mr. S. Ramanath, Chartered Accountant, Coimbatore, as
the Company’s auditor to hold office until the conclusion of the next Annual General Meeting. The Company has also received confirmation that his appointment, if made, will be within the limits prescribed under Section 224(1B) of the Companies Act, 1956.
F. Directors’ Responsibility StatementYour Directors’ hereby confirm in terms of Section 217(2AA) of the Companies Act, 1956 that:
In the preparation of the annual accounts for the year 1. ended March 31, 2012, the applicable accounting standards have been followed and there are no material departures; The accounting policies listed in Note 2 to the Notes 2. forming part of the financial statements have been selected and applied consistently and judgements and estimates that are reasonable and prudent made so as to give a true and fair view of the state of the affairs of the Company at the end of the financial year on March 31, 2012 and of the profit of the Company for that year;Proper and sufficient care has been taken for the 3. maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;The annual accounts for the year ended March 31, 4. 2012, have been prepared on a going concern basis.
G. DepositsDuring the year, your Company has not accepted any deposits from the public.
H. SubsidiaryYour Company has 3 subsidiaries namely, Dicetek (Sing) Pte Limited, Singapore, Dicetek LLC., Dubai and Dice Technologies Inc., USA. All these subsidiaries are engaged in the business of providing IT Services and Consulting.
As required under the Listing Agreements entered into with the Stock Exchanges, a consolidated financial statement of the Company and all its subsidiaries is attached. The consolidated financial statements have been prepared in accordance with the relevant accounting standards as prescribed under Section 211(3C) of the Companies Act, 1956.
Pursuant to the provisions of Section 212(8) of the Companies Act 1956, the Ministry of Corporate Affairs vide its circular
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dated February 8, 2011 has granted general exemption from attaching the balance sheet, statement of profit and loss and other documents of the subsidiary companies with the balance sheet of the Company. A statement containing brief financial details of the Company’s subsidiaries for the financial year ended March 31, 2012 is included in the Annual Report. The annual accounts of these subsidiaries and the related detailed information will be made available to any member of the Company/its subsidiaries seeking such information at any point of time and are also available for inspection by any member of the Company/its subsidiaries at the registered office of the Company and also at the respective registered office of the subsidiaries for inspection.
The same has also been put-up on the Company’s website, www.aurumsoftsystems.com
I. Corporate GovernanceIn terms of Clause 49 of the Listing Agreement with the stock exchanges, a Corporate Governance Report is made part of this Annual report.
A certificate from a practicing Company Secretary regarding compliance of the conditions stipulated for Corporate Governance under Clause 49 of the Listing Agreement is attached to this report.
The declaration by the Managing Director addressed to the members of the Company pursuant to Clause 49 of the Listing Agreement regarding adherence to the Code of Conduct by the Members of the Board and by the Members of the Senior Management Personnel of the Company is also attached to this Report.
J. Risk ManagementThe Managing Director of the Company is entrusted with the task of identifying, monitoring and taking steps for mitigating various risks which the Company is likely to encounter as part of its business operations. He periodically presents to the Board and the Audit Committee for review, the risks faced by the Company and the steps taken to mitigate the same.
K. Particulars of EmployeesDuring the financial year 2011-12, no employee of the Company has drawn remuneration in excess of the limits
specified under Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975, as amended. Hence, the particulars of employees’ remuneration prescribed under Section 217(2A) of the Companies Act, 1956 has not been attached to this Report.
L. Conservation of Energy, Technology Absorption and Research & Development
Your Company’s power requirements are very minimal. Your Company however takes every possible step to make optimum utilization of energy and avoid unnecessary wastage of power.
Your Company keeps itself updated with the latest technology available in the market. Your Company constantly strives to enhance state-of-the-art development standards to meet the ever growing challenges of the corporate world. Your company aims at providing future-proof and future adaptable technologies to all its clients.
M. Foreign Exchange Earnings and Outgo
During the financial year 2011-12, the Company provided Technical and other support services to its subsidiary in USA.
The total foreign exchange earnings during the year was ` 13.76 lakhs. There was no expenditure incurred by the Company in foreign currency during FY 2011-12.
N. Appreciation
Your Directors wish to place on record their appreciation to all shareholders, customers, suppliers and bankers for their co-operation and support extended to the Company.
Your Directors also place on record their appreciation of the efforts and contribution during 2011-12 of the Company’s employees.
For and on behalf of the Board of Directors
S. RamakrishnanChennai, August 14, 2012 Chairman
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Section 212 Statement
Statement pursuant to general exemption under Section 212(8) of the Companies Act, 1956 relating to subsidiary companies
(`)
S.No ParticularsM/s. Dicetek Sing Pte Limited, Singapore M/s. Dicetek LLC., Dubai M/s. Dice Technologies Inc.,
USAFor the year ended 31-Mar-12 For the year ended 31-Mar-12 For the year ended 31-Mar-12
Holding Company’s Interest 100% 100% Subsidiary of Dicetek Sing Pte Limited, Singapore
100% Subsidiary of Dicetek Sing Pte Limited, Singapore
Exchange Rate as at March 31, 2012 40.22 13.76 50.57 1 Capital 180,990,000 4,128,000 24,840,9952 Reserves 3,763,184 47,357,668 14,366,1283 Total Assets 160,785,403 157,412,336 53,474,5894 Total Liabilities 160,785,403 157,412,336 53,474,589
5 Details of investment (except in case of investment in subsidiaries) Nil Nil Nil
6 Turnover 207,777,807 496,155,548 123,436,768 7 Profit /(Loss) before Taxation 592,360 12,020,667 1,069,7588 Provision for Taxation (2,332,760) - 188,677 9 Profit /(Loss) after Taxation 2,925,120 12,020,667 881,081
10 Proposed Dividend, if any Nil Nil Nil
11 Material Changes between the end of the financial year of the subsidiary company and the company’s financial year ended March 31, 2012
a) Fixed Assets Nil Nil Nil b) Investments Nil Nil Nil c) Money lent Nil Nil Nil
d) Money borrowed other than those for meeting current liabilities Nil Nil Nil
12 Net aggregate profits / (losses) of the Subsidiary for the current period so far as it concerns the members of the holding company:
a) Dealt with or provided for in the accounts of the holding company Nil Nil Nil
b) Not dealt with or provided for in the accounts of the holding company 2,925,120 12,020,667 881,081
13 Net aggregate profits / (losses) of the Subsidiary for the previous financial year so far as it concerns the members of the holding company:
a) Dealt with or provided for in the accounts of the holding company Nil Nil Nil
b) Not dealt with or provided for in the accounts of the holding company 1,187,654 27,284,829 9,819,864
The Company undertakes that the audited annual accounts and other related information of the subsidiaries, where applicable, would be made available to the shareholders upon request. The annual accounts of the subsidiaries are also available for inspection at the registered office of the company during business hours. The same has also been put-up on our website www.aurumsoftsystems.com
For and on Behalf of the Board
SRIKANTH RAMANATHAN S. RAMAKRISHNAN Managing Director Chairman
Place : Chennai S. ARUN KUMARDate : August 14, 2012 Chief Financial Officer & Company Secretary
12
REPORT ON CORPORATE GOVERNANCE
Board are Non-Executive and Independent Directors. The Chairman of the Board Mr. S. Ramakrishnan is a Non-Executive Independent Director.
The Board members have collective experience in diverse fields like finance, legal and business administration. The Directors are elected based on their qualification and experience in varied fields as well as company’s business needs.
Details of other DirectorshipsThe details of the Directors, as at March 31, 2012 including the details of their other Board Directorship reckoned in line with clause 49 of the listing agreement, committee membership are given below:
A. COMPANY’S PHILOSOPHYGood Corporate Governance is the key to business growth and is also an important tool for investor protection. Good Corporate Governance ensures transparency in all corporate matters and decisions. The Company consistently subjects itself to the highest levels of Corporate Governance and aims at enhancing the value of all stakeholders concerned. Your Company complies with the Corporate Governance requirements setout in Clause 49 of the listing agreement.
B. BOARD OF DIRECTORS
Composition of the BoardThe Board currently consists of five members. Other than the Managing Director, all the other members of the
Director Category Other Directorships $Membership of Other Board Committees *
Mr. S. RamakrishnanIndependent &Non-Executive NIL NIL
Mr. Srikanth Ramanathan Promoter & Executive NIL NIL
Mr. V. Ganapathi SubramanianIndependent &Non-Executive
1 NIL
Mr. K.S. VaidyanathanIndependent &Non-Executive
NIL NIL
Mr. K. BalajiIndependent &Non-Executive
NIL NIL
*Includes only membership in Audit and Investor Grievance Committee
$ Excludes Alternate Directorships and Directorships of Private Limited Companies and Foreign Companies, wherever applicable.
Board MeetingsThe Board of Directors meet at regular intervals with a formal schedule of matters specifically reserved for its attention to ensure that it exercises full control over significant strategic, financial, operational and compliance matters. The board is regularly briefed and updated on the key activities of the business and is provided with briefings and presentations on other matters concerning the company on a need basis.
13
Corporate Governance
Attendance Record of the DirectorsSeven Board Meetings were held during the year from April 01, 2011 to March 31, 2012. The dates on which meetings were held are 14th May 2011, 13th August 2011, 1st October 2011, 19th October 2011, 14th November 2011, 7th December 2011 and 11th February 2012. The time gap between any two meetings did not exceed 4 months. The attendance record of all the Directors is as follows:
DirectorNo. of Board Meetings
Last AGM attendanceHeld Attended
Mr. S. Ramakrishnan 7 7 YES
Mr. Srikanth Ramanathan 7 7 YES
Mr. V. Ganapathi Subramanian 7 7 NO
Mr. K.S. Vaidyanathan 7 7 NO
Mr. K. Balaji 7 7 NO
The full details of Directors seeking re-appointment at the ensuing Annual General Meeting have been furnished in the Notice convening the meeting of the Shareholders.
Membership TermAs per the provisions of the Companies Act, 1956, one-third of the Board members (other than Managing Director) who are subjected to retire by rotation shall retire every year, and the approval of the shareholders is sought for the re-appointment of the retiring Director(s) who are so eligible. The Managing Director is appointed by the shareholders for a maximum period of three years at a time, but is eligible for re-appointment upon completion of the term.
Changes in the Board ConstitutionDuring the year ended March 31, 2012, there is no change in the Constitution of the Board.
Availability of Information to Board of DirectorsIn terms of the Corporate Governance philosophy, all statutory and other significant material informations are placed before the Board of Directors to enable it to discharge its responsibility of strategic supervision of the Company as trustees of the Shareholders.
Committees of the BoardVarious committees of the Board have been constituted to assist the Board in discharging its responsibilities. There are four committees constituted by the Board – the Allotment Committee, Audit Committee, Share Transfer and Investors’ Grievance Committee and the Remuneration Committee.
The Board at the time of constitution of each committee fixes the terms of reference for the Committee and also delegates powers from time to time. Various recommendations of the Committees are submitted to the Board for approval. The minutes of the meetings of all the Committees are circulated to the Board for its information.
The Quorum for meetings of all the above referred Committees is either two members or one - third of the members of the Committee, whichever is higher.
Shareholding of DirectorsThe shares held by Directors as on March 31, 2012 are given below:
S.No. Name of the DirectorNumber of
Shares
1 Mr. S. Ramakrishnan NIL
2 Mr. Srikanth Ramanathan 20,68,500
3 Mr. V. Ganapathi Subramanian NIL
4 Mr. K.S. Vaidyanathan NIL
5 Mr. K. Balaji NIL
There are no other shares or convertible instruments held by any other Director(s).
The Company does not have Stock Options in Force.
C. AUDIT COMMITTEEThe Company has constituted an Audit Committee comprising of Non-Executive Directors.
14
The terms of reference of the Committee covers all applicable matters specified under clause 49 of the Listing Agreements dealing with Corporate Governance and Section 292A of the Companies Act, 1956.
Terms of Reference of the Audit Committee include among other things:
a. A review of:
Financial statements before submission to the Board•
Draft Directors’, Auditors’ and Management Discussion • and Analysis Report before submission to the Board
Accounting policies and practices•
Risk management policies and practices•
Compliance with stock exchange and legal • requirements concerning financial Statements.
Related party transactions•
Internal Control systems•
Nature and scope of audit and the audit findings in • consultation with the auditors
b. Recommending the appointment of Auditors and fixing their fee
c. Appointment of Chief Financial Officer of the Company
Composition of the Audit CommitteeThe Committee currently comprises of Mr. S. Ramakrishnan as the Chairman, Mr. K.S. Vaidyanathan, Mr. V. Ganapathi Subramanian and Mr. K. Balaji as its members. All the members of the audit committee are financial literate.
The composition of the Audit Committee meets the stipulated minimum number of independent Directors. The Company’s Chief Financial Officer and its statutory auditor are permanent invitees to the Committee’s meetings. The Company Secretary is Secretary to the Committee.
Meetings of the Audit CommitteeThere were four meetings of the Audit Committee held during the year on 14th May 2011, 13th August 2011, 14th November 2011 and 11th February 2012 and not more than four months elapsed between any two meetings.
Attendance of the members to the Audit Committee MeetingsThe number of meetings attended by each Director, as member of the Audit Committee is as follows:
DirectorNo. of
Meetings held
No. of Meetings attended
Mr. S. Ramakrishnan 4 4
Mr. V. Ganapathi Subramanian 4 4
Mr. K.S. Vaidyanathan 4 4
Mr. K. Balaji 4 4
The Chairman of the Audit Committee was present at the last Annual General Meeting held on September 23, 2011.
D. REMUNERATION COMMITTEE
Remuneration PolicyThe Company has set up a Remuneration Committee in accordance with the requirements of Schedule XIII of the Companies Act, 1956 for the purpose of fixation of Remuneration payable to the Managing Director. The Board of Directors has authorised the Remuneration committee for fixation of the remuneration payable to the Managing Director.
a. For Managing Director
The Remuneration Committee determines the remuneration payable to the Managing Director on the basis of his performance as well as the Company’s performance, subject to consents as may be required.
The resolutions for the appointment and remuneration payable to the Managing Director are approved by the shareholders of the Company. The remuneration to the Managing Director consists of a fixed salary and other perquisites. Provident fund is provided for as per the Company’s policy. Wherever applicable, the perquisites are considered a part of remuneration and taxed as per income tax laws.
Mr. Srikanth Ramanathan was re-appointed as Managing Director of the Company for a period of 1 year w.e.f. February 6, 2012. Mr. Srikanth Ramanathan has expressed
15
Corporate Governance
his desire to not draw any remuneration from the company and accordingly, he is not being paid any remuneration since January 1, 2012.
b. For Non-executive Directors
The Non-Executive Directors are not paid any remuneration except for the sitting fees for attending the Board Meetings. There is no pecuniary relationship or transactions between any of the Non-executive Directors and the Company.
Composition of the CommitteeThe Remuneration Committee comprises of Mr. S. Ramakrishnan as the Chairman, Mr. V. Ganapathi Subramanian, Mr. K. Balaji and Mr. K.S. Vaidyanathan, all of them are Non-Executive Independent Directors. The Committee deals with all elements of remuneration package of the Managing Director. One meeting of the Remuneration Committee was held during the year 2011-12 on February 11, 2012, which was attended by all the members of the Committee.
Details of remuneration paid to Directors for the year 2011-12 are given below:
DirectorRemuneration paid during the year 2011-12
Salary Sitting fees Total
Mr. S. Ramakrishnan - 9,000 9,000
Mr. Srikanth Ramanathan 11,17,204 - 11,17,204
Mr. V. Ganapathi Subramanian - 9,000 9,000
Mr. K.S. Vaidyanathan - 9,000 9,000
Mr. K. Balaji - 9,000 9,000
E. SHARE TRANSFER AND INVESTORS’ GRIEVANCE COMMITTEEThe Company’s shares are compulsorily traded in dematerialized form.
Composition of the CommitteeThe Share Transfer and Investors’ Grievance Committee functions under the Chairmanship of Mr. S. Ramakrishnan. The other members of the Committee are Mr. Srikanth Ramanathan, Managing Director and Mr. K. Balaji.
Mr. S. Arun Kumar, Company Secretary is the Compliance Officer of the Company.
Terms of ReferenceThe terms of reference of the Share Transfer and Investors’ Grievance Committee includes transfer of shares, transmission, dematerialization, re-materialization, split of shares, consolidation, issue of duplicate share certificate and looking into the redressing of shareholders grievances
and determining, monitoring and reviewing the standards for resolution of shareholder’s grievances.
The Committee also reviews the performance of the Company’s Registrar & Transfer Agent (R&TA) M/s. Cameo Corporate Services Limited, and their system of dealing with and responding to correspondence from all categories of shareholders. The manner and timeliness of dealing with complaint letters received from Stock Exchanges/ SEBI / Ministry of Corporate Affairs (MCA) etc., and the responses thereto, are reviewed by this Committee.
During 2011-12, the Company has not received any complaints from Shareholders.
Attendance of the members to the Share Transfer and Investors’ Grievance Committee MeetingsThere were four meetings of the Share Transfer and Investors’ Grievance Committee held during the year on 17th May 2011, 19th August 2011, 25th November 2011 and 30th December 2011.
16
The number of meetings attended by each Director, as member of the Share Transfer and Investors’ Grievance Committee is as follows:
Name of the Director No. of Meetings held No. of Meetings attended
Mr. S. Ramakrishnan 4 4
Mr. Srikanth Ramanathan 4 4
Mr. K. Balaji 4 4
F. ALLOTMENT COMMITTEE
The Allotment committee of the Board was constituted during January 2011. The purpose of this committee is to consider allotment of equity shares whenever the need arises. The Allotment Committee comprises of Mr. S. Ramakrishnan as the Chairman, Mr. Srikanth Ramanathan and Mr. K. Balaji as the members.
The Committee has not met during the year 2011-12.
G. OTHER COMMITTEE
In addition to the above committees, the Board had also constituted a committee of Directors consisting of
Mr. S. Ramakrishnan, Mr. Srikanth Ramanathan and Mr. K. Balaji, to study and pass recommendations on the proposal received from PointRed Telecom Limited for a strategic business partnership and to suggest the best possible mode for facilitating the same. The said committee recommended the acquisition of PointRed Telecom Limited by amalgamating PointRed Telecom Limited with the Company. The approval of the equity shareholders has been obtained for the said amalgamation at the court convened meeting of equity shareholders held on 18th June 2012.
H. GENERAL BODY MEETINGSThe details of Annual General Meetings / Extraordinary General Meetings held since 2009, are given below:
YearAGM / EGM
Date Time Venue Special Resolutions Passed
2011 AGM September 23, 2011 10.00 A.M. The Conference Centre – Mini Hall, New No:24 (Old No:58), 2nd Main Road, R.A. Puram, Chennai – 600028
NIL
2011 EGM January 19, 2011 11.00 AM The Conference Centre – Mini Hall, New No:24 (Old No:58), 2nd Main Road, R.A. Puram, Chennai – 600028
NIL
2010 AGM September 24, 2010 11.00 A.M. The Conference Centre – Mini Hall, New No:24 (Old No:58), 2nd Main Road, R.A. Puram, Chennai – 600028
Alteration of Articles of Association
17
Corporate Governance
2010 EGM January 11, 2010 10.00 A.M. New No.15, Old No.6, Besant Avenue, Adyar, Chennai - 600020
Change of Name of the Company
2009 AGM September 23, 2009 10.00 A.M. New No.15, Old No.6, Besant Avenue, Adyar, Chennai - 600020
Alteration of Articles of Association
2009 EGM May 4, 2009 10.00 A.M. R.K. Mini Convention Hall154/313, 3rd Floor, TTK. Road, Royapettah, Chennai - 600014
1. Appointment of Mr. Srikanth Ramanathan as Managing Director of the Company2. Increase in Limits for FII Investments3. Increase in Limits for NRI Investments4. Investment Under Section 372A of the Companies Act, 1956.
All the proposed resolutions, including special resolutions were passed unanimously by the shareholders as set out in their respective Notices.
The Board of Directors at its meeting held on 24th April 2012 decided to conduct postal ballot for obtaining the approval of the shareholders for Amendment of Object Clause of the Memorandum of Association of the Company, Increase in Authorised Capital, Amendment in Capital Clause of the Memorandum of Association of the
Company and for Re-appointment of Managing Director.
Mr. Aashish Kumar Jain, practising Company Secretary, was appointed as Scrutiniser for conducting the postal ballot process in a fair and transparent manner.
The resolutions were approved by the members unanimously and the postal ballot results in respect of the above resolutions were declared by the Chairman on 11th June 2012. Following are the results of the Postal ballot:
Particulars
Assent Dissent
No of votes (shares)
% in favour No of votes (shares)
% against
Amendment of Object Clause of Memorandum of Association
27601633 100% - -
Increase in Authorized Share Capital 27601633 100% - -
Amendment in Capital Clause of Memorandum 27601633 100% - -
Re-appointment of Managing Director 27601633 100% - -
The approval of equity shareholders for the amalgamation of PointRed Telecom Limited with the Company was obtained at the Court Convened meeting held on 18th June 2012. All the 14 shareholders who were present in person or by proxy, holding 27693142 equity shares voted in favour of the Scheme of amalgamation. None voted against the Scheme of amalgamation.
18
I. DISCLOSURESNo transaction of material nature conflicting with the • Company’s interest was entered into by the Company with related parties.The particulars of transactions between the Company • and its related parties, as defined in Accounting Standard 18, is set out in Note 23 to Notes forming part of the standalone financial statements.There have been no instances of non-compliance by • the Company. During the last three years no penalties or strictures have been imposed on the Company on any matter related to the capital markets by Stock Exchanges or SEBI or any statutory authority.Presently the Company does not have a whistleblower • policy. No employee has been denied access to approach the Audit Committee to report any serious concerns.No differential treatment from the Accounting • Standards was followed in the preparation of the financial statements of the Company.The Company complies with all mandatory • requirements and has also adopted some of the non-mandatory requirements as detailed below.
J. MEANS OF COMMUNICATIONThe Company’s quarterly financial results, after their approval by the Board of Directors, are promptly issued
to all the Stock Exchanges with whom the Company has Listing arrangements. These financial results, in the prescribed format, are published in leading local and national newspapers; viz. “TRINITY MIRROR” in English and in “MAKKAL KURAL” in Tamil and are also posted on the Company’s website www.aurumsoftsystems.com. Key developments are communicated to the Stock Exchanges, as and when they occur and also displayed on Company’s Website.
A Management Discussion and Analysis Report, forming part of the Directors’ Report, is included in this Annual Report.
K. CEO / CFO CERTIFICATION
As required under Clause 49 of the Listing Agreement a Certificate duly signed by Mr. Srikanth Ramanathan, Managing Director (CEO) and Mr. S. Arun Kumar, Chief Financial Officer & Company Secretary was placed at the meeting of the Board of Directors held on August 14, 2012.
L. CERTIFICATE ON COMPLIANCE OF CONDITIONS OF CORPORATE GOVERNANCE
Certificate from Mr. Aashish Kumar Jain, Practising Company Secretary, affirming compliance with the conditions of Corporate Governance, is enclosed along with this Annual Report.
M. GENERAL SHAREHOLDER INFORMATION
1. Registered Offi ce Address New No.15, Old No.6, Besant Avenue Adyar, Chennai – 600020Tamil Nadu, India
2. 18th Annual General MeetingDateTime Venue
September 28, 201210.00 A.M.The Conference Centre – Mini HallNew No:24 (Old No:58), 2nd Main Road, R.A. PuramChennai - 600028.
3. Financial Year April to March
4. Dates of Book Closure September 24, 2012 to September 28, 2012 (both days inclusive)
5. Approval of Financial Result (Proposed)Quarter Ending June 30, 2012Quarter Ending September 30, 2012Quarter Ending December 31, 2012Quarter Ending March 31, 2013
Second Week of August 2012Second Week of November 2012Second Week of February 2013Last Week of May 2013
19
Corporate Governance
6. Listing on Stock Exchanges:The Equity Shares are listed at
Bombay Stock Exchange LimitedPhiroze Jeejeebhoy TowersDalal Street, Mumbai - 400001.Maharashtra, IndiaTel:91-22-22721233, 22721234Fax:91-22-22721919Madras Stock Exchange LimitedNew No:30, Second Line Beach, Chennai – 600001Tel: 91-44-25228951, Fax: 91-44-25244897
7. Listing Fees Listing Fees have been paid for all the above stock exchanges for 2012 – 2013
8. Stock Exchange Security Code and other related information
BSE 530885Depository ISIN No. INE 600D01021CIN L65921TN1994PLC026958
9. Dematerialization of Shares The Shares of the Company are available for trading in both the depository systems namely Central Depository Services (India) Limited and National Securities Depository Limited
10 No. of Shares Dematerialized as on 31st March 2012
60078725 shares; 92.29% of Total shares of the Company
11. Depository Participants for shares National Securities Depository LimitedTrade World, A Wing, 4th & 5th Floors Kamala Mills Compound Lower Parel, Mumbai - 400013Tel: (022) 2499 4200 Central Depository Services (India) LimitedPhiroze Jeejeebhoy Towers17th Floor, Dalal Street, Mumbai - 400001Tel: (022) 2272 3333
12. Registrar and Transfer Agents CAMEO Corporate Services Limited“Subramanian Building”No.1, Club House Road, Chennai - 600002Contact Person: Mr. R.D. Ramasamy, DirectorTel: 044 – 28460390 / 391 / 392 / 393Email: [email protected]
Shareholders are requested to correspond with the Registrar and Share Transfer Agent for transfer / transmission of shares, change of address, queries pertaining to their shareholding at their address given above.
13. Share Transfer System: Share transfers are processed and approved, subject to receipt of all requisite documents. The Company seeks to ensure that all transfers are approved for registration within the stipulated period. With a view to expediting the approval process, the Board of Directors has authorized the Share Transfer and Investors’ Grievance Committee to approve the transfer of shares.
20
14. Distribution of shareholding as on 31st March 2012
Shareholding No. of Shareholders % of total shareholders Number of Shares % of total shares
Up to 500 153 27.92 19257 0.03
501-1000 115 20.99 86758 0.13
1001-2000 75 13.69 113336 0.17
2001-3000 39 7.11 95726 0.15
3001-4000 39 7.11 143393 0.22
4001-5000 6 1.09 27632 0.04
5001-10000 34 6.21 242708 0.38
10001 and above 87 15.88 64371190 98.88
TOTAL 548 100.00 65100000 100.00
15. Shareholding pattern as on 31st March 2012
Particulars Number of Shares held % of Share holding
A. Promoter Holding
a) Indian Promoters 18526927 28.46
b) Foreign Promoters 2068500 3.18
Sub - Total (A) 20595427 31.64
B. Non- Promoter Holding
Institutional Investors
a) Foreign Institutional Investors (FIIs) 17629476 27.08
Sub - Total (B) 17629476 27.08
C. Others
a) Private Corporate Bodies 1117935 1.72
b) Indian Public (Individuals and HUFs) 18181512 27.93
c) Non Resident Indians 1575650 2.42
d) Overseas Corporate Bodies 6000000 9.21
Sub - Total (C) 26875097 41.28
Grand Total (A+B+C) 65100000 100.00
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Corporate Governance
16. Stock Price DataThe high and low of the share prices of the Company and the BSE Sensex is given below:
MonthBSE BSE Sensex
High Low High Low
Apr-2011 10.67 9.85 19811.14 18976.19
May-2011 11.23 9.85 19253.87 17786.13
Jun-2011 11.50 11.05 18873.39 17314.38
Jul-2011 11.28 11.06 19131.70 18131.86
Aug-2011 11.00 9.81 18440.07 15765.53
Sep-2011 9.81 8.04 17211.80 15801.01
Oct-2011 9.79 7.70 17908.13 15745.43
Nov-2011 10.48 7.30 17702.26 15478.69
Dec-2011 11.44 9.85 17003.71 15135.86
Jan-2012 10.20 10.20 17258.97 15358.02
Feb-2012 11.02 8.39 18523.78 17061.55
Mar-2012 11.50 8.70 18040.69 16920.61
5.00
6.00
7.00
8.00
9.00
10.00
11.00
12.00
10,000.00
11,500.00
13,000.00
14,500.00
16,000.00
17,500.00
19,000.00
20,500.00
Apr/2011
May/2011
Jun/2011
Jul/2011
Aug/2011
Sep/2011
Oct/2011
Nov/2011
Dec/2011
Jan/2012
Feb/2012
Mar/2012
Aur
um S
oft s
hare
pric
e
BSE
Sen
sex
Month
Aurum Soft Share Price Vs. BSE Sensex
BSE Sensex
Aurum Soft
22
17. Outstanding GDRs /ADRs
None
18. Branch None
19. Address for Investor correspondence
S. Arun Kumar, Chief Financial Officer & Company Secretary
Aurum Soft Systems LimitedNew No: 15, Old No: 6Besant Avenue, AdyarChennai - 600020Tel : 91 44 42187785 / 94E-mail: [email protected]
N. RECONCILIATION OF SHARE CAPITAL AUDITA Qualified Practising Company Secretary has carried out Secretarial Audit every quarter to reconcile the admitted capital with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) and the total issued and listed capital. The audit confirms that the total issued/ paid-up capital is in agreement with the aggregate total number of shares in physical form and the total number of dematerialized shares with NSDL and CDSL.
O. NON-MANDATORY REQUIREMENTSThe non mandatory requirements have been adopted to the extent and in the manner as stated under the appropriate headings detailed below:
Chairman’s office / BoardThe need for maintaining a Chairman’s office has not arisen. All non-executive directors are liable to retire by rotation and if eligible, offer themselves for re-appointment. No specific tenure has been fixed for the independent directors.
Remuneration CommitteeThe Company has constituted a Remuneration Committee. The Terms of Reference of the Committee have been described elsewhere in the Corporate Governance Report.
Shareholders rightsThe quarterly results of the Company are published in newspapers and on the Company’s website viz., www.aurumsoftsystems.com. These results are not sent to shareholders individually.
Audit QualificationsThe auditor has issued an unqualified opinion on the statutory financial statements of the Company.
Training of Board Members/Mechanism for evaluating non-executive directorsAll the Non-Executive Directors have rich experience and expertise in functional areas and attend various programmes in their personal capacities that keep them abreast of relevant developments. Consequently, in the opinion of the Board, they do not require any other training. There is no formal system of evaluating individual directors.
Whistle Blower policyPresently the Company does not have a whistleblower policy. No employee has been denied access to approach the Audit Committee to report any serious concerns.
For and on behalf of the Board of Directors
S. RamakrishnanChennai, August 14, 2012 Chairman
23
Corporate Governance
Certificate on Corporate Governance
To The Shareholders ofAurum Soft Systems Limited
We have examined the compliance of conditions of Corporate Governance by Aurum Soft Systems Limited for the year ended 31st March, 2012, as stipulated in Clause 49 of the Listing Agreement of the said Company with the stock exchanges in India.
The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination was limited to procedures and implementation thereof, adopted by the Company for ensuring the compliance of conditions of corporate governance. It is neither an audit nor an expression of opinion on the financial statements of the company.
In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in Clause 49 of the above mentioned Listing Agreements.
We state that no investor grievances have been received by the Company during the year ended 31st March, 2012, as per the records maintained by the Company and presented to the Share Transfer & Investors Grievances Committee.
We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the management has conducted the affairs of the Company.
For Aashish Kumar Jain & Associates.Company Secretary in practice
Aashish Kumar Jain164, Linghi Chetty Street, 2nd Floor, Parrys, Chennai - 1Membership No.20164CP No. 7353Date : 14.08.2012
Code of Conduct Certification
To
The Members,
The Board of Aurum Soft Systems Limited has laid down a code of conduct for all Board members and senior management. The code of conduct has been posted on the Company’s website viz., www.aurumsoftsystems.com.
All the Board members and the senior management have affirmed compliance of the code for the financial year 2011-12.
Place: Chennai Srikanth RamanathanDate: August 14, 2012 Managing Director
24
Auditors Report
To the Members of M/s Aurum Soft Systems Limited.
Standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;
On the basis of written representations received e. from the directors and taken on record by the Board of Directors, none of the Directors is disqualified as on March 31, 2012 from being appointed as a director under clause (g) of sub-section (1) of section 274 of the Companies Act, 1956;
In my opinion and to the best of my information f. and according to the explanations given to me, the said accounts together with Significant Accounting Policies and Notes thereon give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India;
in the case of the Balance Sheet, of the state i. of affairs of the company as at 31st March, 2012;
in the case of the Profit and Loss account, of ii. the profit for the year ended on that date, and
in the case of the Cash Flow Statement, of iii. the cash flows of the company for the year ended on that date.
Place: Chennai R.R.RajkumarDate: 14th August 2012 Chartered Accountant
M.No: 209877
Annexure to the Auditors’ Report:The Annexure referred to in the auditors’ report to the members of Aurum Soft Systems Limited (the Company) for the year ended March 31, 2012. I report that:
The Company has maintained proper records 1. showing full particulars, including quantitative details and situation of fixed assets. The company has a regular program of physical verification of its fixed assets. No material discrepancies were noticed on such verification.The Company does not hold any physical 2. inventories. The company has not granted any loans to parties 3. covered in the register maintained under section
I have audited the attached Balance Sheet of M/s 1. Aurum Soft Systems Limited (the company) as at March 31, 2012, the Profit and Loss Account and also the Cash Flow Statement for the year ended on that date, annexed thereto, which I have signed under reference to this report. These financial statements are the responsibility of the company’s management. My responsibility is to express an opinion on these financial statements based on my audit.
I have conducted the audit in accordance with 2. auditing standards generally accepted in India. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion.
As required by the Companies (Auditor’s Report) 3. Order, 2003, issued by the Central Government of India in terms of sub-section (4A) of Section 227 of the Companies Act, 1956, as amended from time to time, I enclose in the Annexure hereto a statement on the matters specified in paragraphs 4 and 5 of the said order.
Further to my comments in the Annexure referred to in 4. paragraph 3 above, I report that:
I have obtained all the information and a. explanations which to the best of my knowledge and belief were necessary for the purposes of my audit;
In my opinion, proper books of account as b. required by law have been kept by the company so far as appears from my examination of those books;
The Balance Sheet, the Profit and Loss Account c. and Cash Flow Statement dealt with by this report are in agreement with the books of account;
In my opinion, the Balance sheet and the Profit and d. Loss account and Cash Flow Statement dealt with by this report are in compliance with the Accounting
25
Auditors’ Report
301 of the Companies Act, 1956. The company has not taken any loans, secured or unsecured, to or from companies, firms or other parties covered in the register maintained under section 301 of the companies act, 1956. In my opinion and according to the information and 4. explanations given to me, there is adequate internal control system commensurate with the size of the company and the nature of its business with regard to purchase of fixed assets and the sale of services. The activities of the company do not involve purchase of inventory and the sale of goods. Further on the basis of my examination of the books and records of the Company carried out in accordance with the auditing standards generally accepted in India, and according to the information and explanations given to me, I have neither come across nor have I been informed of any continuing failure to correct major weaknesses in the internal control system.In my opinion, and according to the information and 5. explanations given to me, there are no contracts / arrangements, the particulars of which need to be entered into the register required to be maintained u/s 301 of the Companies Act, 1956. The Company has not accepted any deposits from the 6. public during the year and consequently, the directive issued by the Reserve Bank of India and the provisions of Sec 58A and 58AA of the Companies Act, 1956, and rule framed there under are not applicable. The company has no internal audit department 7. as such. However, its control procedures ensure reasonable internal checking of its financial and other records which commensurate with the size and nature of its business.As per the information and explanation given to me, 8. the company is not required to maintain cost records as prescribed by the Central Government under the section 209(1)(d) of the Companies Act, 1956 for any of the services rendered by the company. According to the information and explanations given 9. to me and on the basis of my examination of the books of accounts, the company, during the year has been regular in depositing, undisputed statutory dues including Provident Fund, Employees State Insurance, Income tax, service tax, cess and other statutory dues, wherever applicable, with the appropriate authorities.
According to the information and explanations given to me, no undisputed amounts payable in respect of Provident Fund, Employees State Insurance, Income tax, service tax, cess and other Statutory dues were in arrears as at 31st March 2012 for a period of more than six months from the date they became payable.
According to the records of the company and the information and explanations given to me, there are
no dues of sales tax, income tax, customs duty, wealth tax, service tax, excise duty and cess which have not been deposited with the appropriate authorities on account of any dispute.The company does not have any accumulated losses 10. as at 31st March, 2012 and has not incurred cash losses during the financial year ended on that date. The company has not incurred cash losses in the financial year and in the immediately preceding financial year.In my opinion and according to the information and 11. explanations given to me, the Company has not availed any loan from Banks, Financial Institutions or issued any debentures. In my opinion and according to the information and 12. explanations given to me, the company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. In my opinion and according to the information and 13. explanations given to me, the company is not a chit fund or a nidhi / mutual benefit fund / society. In my opinion according to the information and 14. explanations given to me, the company has not deal in shares, securities, debentures & other investments. According to the information and explanations given 15. to me, the company has not given any guarantee for loans taken by others from banks or financial institutions. According to the information and explanations given 16. to me, the company has not taken any term loans. In my opinion, the company has not raised any short 17. term funds. The Company during the year has not made any 18. preferential allotment of shares to any party or companies covered in the register maintained under section 301 of the Companies Act, 1956. The Company has not issued any debentures during 19. the year. The Company has not raised any money by public 20. issue during the year. During the course of my examination of the books and 21. records of the company, carried out in accordance with the generally accepted auditing practices in India and according to the information and explanations given to me, I have neither come across any instance of fraud on or by the company, noticed or reported during the year under report nor have I been informed of such case by the management.
Place: Chennai R.R.RajkumarDate: 14th August 2012 Chartered Accountant M.No: 209877
26
BALANCE SHEET AS AT 31st MARCH 2012Particulars Note As at 31st March 2012 As at 31st March 2011
I. EQUITY AND LIABILITIES (`) (`)Shareholders’ Funds (a) Share capital 3 130,200,000 130,200,000 (b) Reserves and surplus 4 194,587,250 192,323,636 324,787,250 322,523,636 Non-Current Liabilities (a) Long-term borrowings - - (b) Deferred tax liabilities (net) - - (c) Other long-term liabilities - - (d) Long-term provisions 5 2,841,773 132,757
2,841,773 132,757 Current Liabilities (a) Short-term borrowings - - (b) Trade payables 82,710 29,783 (c) Other current liabilities 6 14,007,997 183,900 (d) Short-term provisions 7 4,730,642 7,566,085
18,821,349 7,779,768 Total 346,450,372 330,436,161 II. ASSETS Non-current assets (a) Fixed assets 8 (i) Tangible assets 715,644 883,432 (ii) Intangible assets 41,801,512 2,419,512 (iii) Capital work-in-progress - - (iv) Intangible assets under development - - 42,517,156 3,302,944 (b) Non-current investments 9 220,500,000 220,500,000 (c) Deferred tax assets (net) 10 3,413,740 3,523,471 (d) Long-term loans and advances 11 38,218,841 21,829,383 (e) Other non-current assets - - 304,649,737 249,155,798Current assets (a) Current investments - - (b) Inventories - - (c) Trade receivables 12 16,418,222 7,321,527 (d) Cash and bank balances 13 18,134,142 17,444,445 (e) Short-term loans and advances 14 5,919,139 56,074,210 (f) Other current assets 15 1,329,132 440,181 41,800,635 81,280,363 Total 346,450,372 330,436,161
Notes forming part of the financial statements 1-33
As per my Report of even date attached For and on Behalf of the Board
R. R. RAJKUMAR SRIKANTH RAMANATHAN S. RAMAKRISHNAN Chartered Accountant Managing Director Chairman Membership No. 209877
Place : Chennai S. ARUN KUMARDate : August 14, 2012 Chief Financial Officer & Company Secretary
27
Standalone Accounts
Notes forming part of the financial statements 1-33
As per my Report of even date attached For and on Behalf of the Board
R. R. RAJKUMAR SRIKANTH RAMANATHAN S. RAMAKRISHNAN Chartered Accountant Managing Director Chairman Membership No. 209877
Place : Chennai S. ARUN KUMARDate : August 14, 2012 Chief Financial Officer & Company Secretary
STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED 31st MARCH 2012
Particulars Note For the year ended
31st March 2012
For the year ended
31st March 2011
(`) (`)
I. Revenue from operations 16 179,784,316 14,794,716
II. Other Income (net) 17 6,047,910 2,757,824
Total Revenue (I + II) 185,832,226 17,552,540
III. Expenses
(a) Employee benefit expenses 18 165,812,308 4,306,125
(b) Operation and other expenses 19 5,913,408 6,784,460
(c) Depreciation and amortization expense 8 10,785,788 760,634
Total Expenses 182,511,504 11,851,219
IV. Profit before tax 3,320,722 5,701,321
V. Tax expense
(a) Current tax 723,321 638,295
(b) Deferred tax 109,732 (3,533,288)
(c) MAT credit entitlement 224,055 (604,701)
1,057,108 (3,499,694)
VI. Profit for the year 2,263,614 9,201,015
Earnings per equity share of face value ` 2 26
Basic and Diluted Earning per share (`) 0.03 0.20
28
CASH FLOW STATEMENT FOR THE YEAR ENDED 31st March 2012Particulars Note Year ended 31st March 2012 Year ended 31st March 2011
A. CASH FLOW FROM OPERATING ACTIVITIES (`) (`) Profit / (Loss) before taxation 3,320,722 5,701,321 Adjustments for: Depreciation and Amortisation 10,785,788 760,634 Dividend on Mutual Funds - (2,439,722) Interest Income (2,271,914) (725,098) Provision for Gratuity 2,709,016 81,930 Profit / (Loss) on redemption / Mark to market on Mutual Funds - (136,956)Operating Cash Flow Before Working Capital Changes 14,543,612 3,242,109 Adjustments for: (Increase) / Decrease in Trade and other receivables (8,959,053) (39,436,060) Increase / (Decrease) in Trade and other payables 18,584,627 101,169 Cash generated from / (used in) Operations 24,169,186 (36,092,782) Income Taxes paid during the year (3,723,506) (87,478)Net Cash generated from / (used in) Operating Activities during the year - A 20,445,680 (36,180,260)B. CASH FLOW FROM INVESTING ACTIVITIES Dividend on mutual funds - 2,439,722 Interest received 1,382,963 306,155 Loan to wholly owned subsidiary (13,595,900) (20,286,000) Purchase of tangible assets - (429,195) Sale of mutual funds - 72,308,250 Funds deployed in Fixed deposits with more than 3 months maturity (7,500,000) (700,000)Net Cash generated from / (used in) Investing Activities during the year - B (19,712,937) 53,638,932 C. CASH FLOW FROM FINANCING ACTIVITIES Dividend Paid (6,486,699) (4,321,632) Tax on Dividend Paid (1,056,085) (720,820) Proceeds / (Disbursement) of Fractional Entitlement on Bonus Shares (262) 390 Funds earmarked for Dividend payment and Fractional Entitlement on Bonus shares (24,906) (28,417)Net Cash generated from Financing Activities during the year - C (7,567,952) (5,070,479)Net increase / (decrease) in cash and cash equivalents (A + B + C) (6,835,209) 12,388,193 Cash and Cash Equivalent as at the beginning of the year 15,216,028 2,827,835 Cash and Cash Equivalent at the end of the year 13 8,380,819 15,216,028 Earmarked balances with banks 53,323 28,417 Bank deposits with more than 3 months maturity 9,700,000 2,200,000 Cash and Bank balances at the end of the year 13 18,134,142 17,444,445
Notes forming part of the financial statements 1-33
Note: 1. Cash and Cash Equivalents represent Cash, Balances with Banks in Current Account and Fixed Deposits maturing within 3 months 2. Figures in brackets indicate Cash outflow, 3. Figures for the previous year have been regrouped / rearranged wherever found necessaryAs per my Report of even date attached For and on Behalf of the Board
R. R. RAJKUMAR SRIKANTH RAMANATHAN S. RAMAKRISHNANChartered Accountant Managing Director ChairmanMembership No. 209877Place : Chennai S. ARUN KUMARDate : August 14, 2012 Chief Financial Officer & Company Secretary
29
Standalone Accounts
Notes forming part of the Financial Statements
fixed price and fixed time frame contracts / arrangements are recognised when the services have been rendered in accordance with the contracts / arrangements and there is no uncertainty as to the measurement or collectability of the consideration. Where there is uncertainty as to measurement or collectability, Revenue Recognition is postponed until such uncertainty is resolved.
Interest on Fixed Deposits and Interest on ii. Advances are accounted on accrual basis. In case of Doubtful Loans, the Interest is recognised on actual receipt.
Dividend Income is recognised when the iii. Company’s right to receive the dividend is recognised.
Other receipts are accounted when it is iv. received.
d. Expenditure
Expenses are accounted on accrual basis. As a matter of prudence, provisions are made for all known losses and liabilities.
Fixed Assets e.
Fixed Assets are stated at cost less accumulated depreciation. The cost of the Fixed Assets comprises purchase price and any attributable cost of bringing the asset to its working condition for its intended use.
Intangible Assetsf.
Intangible Assets are recorded at the Consideration paid for acquisition of such assets and are carried at cost less accumulated amortization and impairment, if any.
Depreciation and Amortizationg.
Depreciation on fixed assets is provided on Straight-Line basis from the date the assets have been installed and put to use. In respect of Assets sold, depreciation is provided upto the date of disposal. Depreciation is charged at the rates prescribed in Schedule XIV to the Companies Act, 1956.
BACKGROUND1.
The Company is engaged in the business of IT services and consulting.
The Company was until February 2010, operating in the name of Jaisal Securities Limited. Effective from February 4, 2010, the name of the company was changed to AURUM SOFT SYSTEMS LIMITED. The Shares of the Company are listed on the Bombay and Madras Stock Exchanges.
SIGNIFICANT ACCOUNTING POLICIES2.
Basis of preparation of the Financial Statementsa.
The accompanying Financial Statements are prepared and presented under the Historical Cost Convention, on the accrual basis of accounting and comply with the Accounting Standards prescribed by the Companies (Accounting Standards) Rules, 2006 and the relevant provisions of the Companies Act, 1956 to the extent applicable. The Financial Statements are presented in Indian Rupees.
All assets and liabilities have been classified as current or non-current as per the Company’s normal operating cycle and other criteria set out in Schedule VI to the Companies Act, 1956.
Use of Estimatesb.
The preparation of the Financial Statements in conformity with the Generally Accepted Accounting Principles requires the management to make estimates and assumptions that affect the reported amount of Assets, Liabilities (including Contingent Liabilities) as of the date of the Financial Statements and the reported Revenues and Expenses during the reporting period. Actual results could differ from the estimates. Any revision to accounting estimates is recognised prospectively in current and future periods.
Revenue Recognitionc.
Revenue from Consulting business is primarily i. derived from Resourcing services, Technical Support Service, Licensing of Software and Business Support Services. Revenues from
30
All Fixed Assets individually costing less than ` 5,000 are fully depreciated in the year of purchase.
Intangible asset is amortised over its useful life (5 years) on straight-line basis, commencing from the date when the asset is put to use by the Company.
Investmentsh.
Long term investments are carried at cost less diminution, other than any temporary diminution in value, determined separately for each investment. Current investments are carried at lower of cost or Net Realisable value.
Foreign Currency Transactionsi.
Foreign Currency Transactions are recorded at the rates of exchange prevailing on the date of the transaction. Exchange differences, if any, arising out of transactions settled during the year are recognised in the Profit and Loss Account. Monetary Assets and Liabilities denominated in Foreign Currencies as at the Balance Sheet date are translated at the closing Exchange Rates on that date. The exchange differences, if any, are recognised in the Profit and Loss Account and related Assets and Liabilities are accordingly restated in the Balance Sheet.
Employee Benefitsj.
All Short Term Employee Benefits payable i. including Salaries and other allowances are recognised on accrual basis, in the manner provided in AS - 15.
The Company contributes to a Recognised ii. Provident Fund and Employee State Insurance, which are defined contribution schemes. The contributions are accounted for on an accrual basis and recognised in the Profit and Loss Account.
No provision has been made for leave iii. encashment benefit for the period as the terms of employment does not provide for such obligation on the Company.
Gratuity cost is accrued based on actuarial iv. valuation, carried out by an independent actuary as at the balance sheet date using the
projected unit credit method and provision is made in the books. The Company has not made any insurance contribution in respect of its gratuity liability.
k. Taxation
The accounting treatment for Income Tax in respect of Company’s income is based on the Accounting Standard 22 on ‘Accounting for Taxes on Income’ issued by the Institute of Chartered Accountants of India.
Income Tax : Provision for current Income Tax is made on the Taxable Income for the year as is determined in accordance with the provisions of the Income Tax Act, 1961.
Advance taxes and provisions for current income taxes are presented in the balance sheet after off-setting advance tax paid and income tax provision arising in the same tax jurisdiction and where the Company intends to settle the asset and liability on a net basis.
Deferred Tax : Deferred Tax Assets and Liabilities are recognized at substantively enacted Tax Rates, subject to the consideration of prudence, on timing difference, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.
The company off-sets deferred tax assets and deferred tax liabilities if it has a legally enforceable right and these relate to taxes on income levied by the same governing taxation laws.
l. Earnings Per Share (EPS)
The Company reports Basic and Diluted Earnings Per Share in accordance with Accounting Standard 20 - Earnings Per Share prescribed by the Companies (Accounting Standards) Rules, 2006. Basic Earnings per Share is computed by dividing the Net Profit After Tax by the weighted average number of Equity Shares outstanding during the year. The Company does not have any outstanding securities convertible into Equity Shares of the Company and hence there is no dilution in the Earnings per Share.
31
Standalone Accounts
m. Provisions and Contingencies
The Company creates a provision when there is present or legal constructive obligations as a result of past events, that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources.
When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.
Provisions are reviewed at each Balance Sheet date and adjusted to reflect the current best
estimate. If it is no longer probable that the outflow of resources would be required to settle the obligation, the provision is reversed.
Contingent assets are not recognised in the Financial Statements since this may result in the recognition of income that may never be realised.
n. Cash Flows
Cash Flows are reported using the indirect method, whereby Profit Before Tax is adjusted for the effects of transactions 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, financing and investing activities of the Company are segregated.
3. SHARE CAPITAL Share capital consist of the following:
ParticularsAs at
31st March 2012(`)
As at 31st March 2011
(`)
Authorised
75,000,000 Equity share of ` 2/- each 150,000,000 150,000,000
(31st March 2011: 75,000,000 Equity share of ` 2/- each)
Issued, Subscribed & paid-up
65,100,000 Equity shares of ` 2/- each 130,200,000 130,200,000
(31st March 2011: 65,100,000 Equity share of ` 2/- each)
130,200,000 130,200,000
a. Reconciliation of number of shares
As at 31st March 2012 As at 31st March 2011No. of shares Amount (`) No. of shares Amount (`)
Equity shares Opening balance (face value - ` 10) - - 8,680,000 86,800,000 Opening balance (face value - ` 2) 65,100,000 130,200,000 - - Sub-divided shares * - - 43,400,000 86,800,000 Issue of fully paid bonus shares - - 21,700,000 43,400,000 Closing balance 65,100,000 130,200,000 65,100,000 130,200,000 * During financial year 2010-11, the company has sub-divided each equity share of ` 10 each into 5 (five) equity shares of ` 2 each.
32
b. Shares held by holding company, its subsidiaries and associates
The company does not have any holding company.
c. Rights, preferences and restrictions attached to equity shares
The company has one class of equity shares having a face value of ` 2/- per share. Each
shareholder is eligible for one vote for each share held in the company. The dividend proposed by the Board of Directors is subject to approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the company after distribution of all preferential amounts, in proportion to their shareholding.
d. Details of equity shares held by shareholders holding more than 5% of the aggregate shares in the Company
Name of the shareholderAs at 31st March 2012 As at 31st March 2011
No. of shares% of share
capital No. of shares% of share
capital
Shripathee Investments Private Limited 18,526,927 28.46% 18,526,927 28.46%
Cresta Fund Limited 5,143,755 7.90% 5,143,755 7.90%
Sparrow India Diversified Opportunities Fund 5,509,477 8.46% 5,509,477 8.46%
Mavi Investment Fund Ltd 3,519,997 5.41% 3,519,997 5.41%
e. Shares allotted as fully paid up by way of bonus shares (during the 5 years preceding 31st March 2012)
The Company allotted 21,700,000 equity shares of face value ` 2/-, as fully paid up bonus shares by utilisation of the Securities premium account on 7th February 2011, pursuant to a shareholder’s resolution passed at the Extra ordinary General Meeting held on 19th January 2011.
4. RESERVES AND SURPLUS Reserves and surplus consist of the following:
As at 31st March 2012 (`)
As at 31st March 2011 (`)
(a) Securities premium account
Opening balance 183,800,000 227,200,000
Less: Capitalisation for bonus shares - 43,400,000
Closing balance 183,800,000 183,800,000
(b) Surplus in statement of profit & loss
Opening balance 4,355,289 2,720,305
Add: Profit for the year 2,263,614 9,201,015
Statutory reserves transferred to Profit and Loss account 4,168,347 -
Reversal of excess provision for Tax on dividend - 54
10,787,250 11,921,374
Table Continued
33
Standalone Accounts
Less: Appropriations
Proposed dividend on equity shares - 6,510,000
Tax on dividend - 1,056,085
- 7,566,085
Closing balance 10,787,250 4,355,289
(c) Statutory reserve
Opening Balance 4,168,347 4,168,347
Add: Transferred from / (to) Profit and Loss account (4,168,347) -
Closing Balance - 4,168,347
194,587,250 192,323,636
5. LONG-TERM PROVISIONS Long-term provisions consist of the following:
As at 31st March 2012 (`)
As at 31st March 2011 (`)
(a) Provision for gratuity 2,841,773 132,757
2,841,773 132,757
6. OTHER CURRENT LIABILITIES Other current liabilities consist of the following:
As at 31st March 2012 (`)
As at 31st March 2011 (`)
(a) Salary payable 11,311,660 9,302
(b) Unclaimed dividends 41,670 18,369
(c) Other payables 2,654,667 156,229
14,007,997 183,900
Other payables comprise:
Statutory liabilities 2,444,185 56,569
Others 210,482 99,660
7. SHORT-TERM PROVISIONS Short-term provisions consist of the following
As at 31st March 2012
(`)As at 31st March 2011
(`)
(a) Provision for Bonus to employees 4,730,642 -
(b) Others
(i) Proposed dividend on equity shares - 6,510,000
(ii) Tax on dividend - 1,056,085
4,730,642 7,566,085
34
8.
FIXE
D A
SSET
S
Fixed
ass
ets
cons
ist o
f the
follo
win
g:(in
`)
Desc
riptio
n
Gro
ss B
lock
Depr
ecia
tion
Net B
lock
As a
t 1st A
pril 2
011
Addi
tions
Dele
tions
As at
31
st Mar
ch 20
12Up
to
1st Apr
il 201
1Fo
r the
Year
2011
-12
Dele
tions
Upto
31st M
arch
2012
As at
31
st Ma
rch 20
12As
at
31st M
arch
2011
(i) Tan
gible
assets
Furnitu
re an
d fixtu
res 4
8,87
5 -
- 4
8,87
5 2
0,41
7 2
,059
-
22,
476
26,
399
28,
458
Plant a
nd eq
uipme
nt1,
091,
273
- -
1,0
91,2
73
236
,299
1
65,7
29
- 4
02,0
28
689
,245
8
54,9
74
Total
1,14
0,14
8 -
- 1
,140
,148
2
56,7
16
167
,788
-
424
,504
7
15,6
44
883
,432
Previo
us yea
r 7
10,9
53
429
,195
-
1,1
40,1
48
114
,082
1
42,6
34
- 2
56,7
16
883
,432
(ii) In
tangib
le ass
ets
Intellec
tual Pr
opert
y Righ
ts3,
090,
000
50,0
00,0
00
- 5
3,09
0,00
0 6
70,4
88
10,6
18,0
00
- 11
,288
,488
41
,801
,512
2,
419,
512
Total
3,09
0,00
0 50
,000
,000
-
53,
090,
000
670
,488
10
,618
,000
-
11,2
88,4
88
41,8
01,5
12
2,41
9,51
2
Previ
ous y
ear
3,09
0,00
0 -
- 3
,090
,000
5
2,48
8 6
18,0
00
- 6
70,4
88
2,4
19,5
12
Gran
d Tota
l4,
230,
148
50,0
00,0
00
- 5
4,23
0,14
8 9
27,2
04
10,7
85,7
88
- 11
,712
,992
42
,517
,156
3,
302,
944
35
Standalone Accounts
9. NON-CURRENT INVESTMENTS Non-current investment consist of the following:
Description No of shares Currency
Face value per
share
As at 31st March 2012
(`)
As at 31st March 2011
(`)
(A) TRADE INVESTMENTS (at cost)
(i) Wholly owned subsidiary company
(a) Fully paid equity shares (unquoted)
Dicetek Sing Pte Limited, Singapore 4,500,000
Singapore Dollar 1 220,500,000
220,500,000
220,500,000 220,500,000
10. DEFERRED TAX BALANCES Major components of Deferred tax balances consist of the following:
As at 31st March 2012
(`)As at 31st March 2011
(`)
(a) Deferred tax liabilities
(i) Depreciation and amortisation 992,275 190,611
992,275 190,611
(b) Deferred tax assets
(i) Carried forward losses 3,226,704 3,591,813
(ii) Provision for doubtful debts 122,269 122,269
(iii) Amalgamation expenses 178,934 -
(iv) Provision for gratuity 878,108 -
4,406,015 3,714,082
Deferred Tax Assets (net) 3,413,740 3,523,471
36
11. LONG-TERM LOANS AND ADVANCES (Unsecured)Long-term loans and advances consist of the following:
As at 31st March 2012 (`)
As at 31st March 2011 (`)
Considered good
(a) Loans to wholly owned subsidiary 33,881,900 20,286,000
(b) Advance tax (including refunds receivable) 3,979,690 893,182
(c) MAT credit entitlement 311,751 604,701
(d) Other amounts recoverable in cash or kind for value to be received 45,500 45,500
38,218,841 21,829,383
12. TRADE RECEIVABLESTrade receivables consist of the following:
As at 31st March 2012
(`)As at 31st March 2011
(`)
(a) Over six months from the date they were due for payment
(i) Considered good 110,400 20,718
(ii) Considered doubtful - -
(b) Others
(i) Considered good 16,307,822 7,300,809
(ii) Considered doubtful - -
16,418,222 7,321,527
13. CASH AND BANK BALANCESCash and bank balances consist of the following:
As at 31st March 2012
(`)As at 31st March 2011
(`)
(a) Cash and cash equivalents
(i) Balances with banks
In current accounts 1,220,997 557,786
In deposit accounts with maturity less than 3 months 7,155,436 14,650,000
(ii) Cash on hand 4,386 8,242
8,380,819 15,216,028
(b) Other bank balances
(i) Earmarked balances with banks 53,323 28,417
(ii) Bank deposits with more than 3 months maturity 9,700,000 2,200,000
18,134,142 17,444,445
37
Standalone Accounts
14. SHORT-TERM LOANS AND ADVANCES (Unsecured)Short-term loans and advances consist of the following
As at 31st March 2012
(`)As at 31st March 2011
(`)
(a) Considered good
(i) Loans and advances to employees 22,854 -
(ii) Other loans and advances 2,335,053 52,512,978
(b) Considered doubtful
(i) Inter-corporate deposits 3,956,924 3,956,924
Less: Provision for doubtful loans (395,692) (395,692)
3,561,232 3,561,232
5,919,139 56,074,210
Other short-term loans and advances comprise:
Security deposit 11,576 16,576
Rental Advance 337,080 515,280
Advance purchase consideration for business acquisition - 50,000,000
Others amounts recoverable in cash or kind for value to be received 1,986,397 1,981,122
15. OTHER CURRENT ASSETS (unsecured and considered good)Other current assets consist of the following:
As at 31st March 2012
(`)As at 31st March 2011
(`)
(a) Interest receivable on Fixed deposit 272,097 141,668
(b) Interest receivable on loan from wholly owned subsidiary 1,057,035 298,513
1,329,132 440,181
16. REVENUE FROM OPERATIONSRevenue from operations consist of revenues from:
For the year ended 31st March 2012
(`)
For the year ended 31st March 2011
(`)
(a) Information Technology services 1,376,101 13,847,308
(b) Consultancy services 178,408,215 947,408
179,784,316 14,794,716
38
17. OTHER INCOME (net)Other income consist of the following:
For the year ended 31st March 2012
(`)
For the year ended 31st March 2011
(`)
(a) Interest income 2,271,914 725,098
(b) Dividend on Mutual Funds - 2,439,720
(c) Exchange gain / (loss) (net) 3,732,417 (543,949)
(d) Miscellaneous income 43,579 136,955
6,047,910 2,757,824
Interest income comprise:
Interest on Long-term advance 165,978 162,802
Interest on bank deposits 1,307,539 263,783
Interest on loan given to subsidiary 697,317 298,513
Interest on income tax refund 101,080 -
18. EMPLOYEE BENEFIT EXPENSESEmployee benefit expenses consist of the following:
For the year ended 31st March 2012
(`)
For the year ended 31st March 2011
(`)
(a) Salaries and wages 149,761,682 4,057,104
(b) Contributions to provident and other funds 16,042,295 237,757
(c) Staff welfare expenses 8,331 11,264
165,812,308 4,306,125
39
Standalone Accounts
19. OPERATION AND OTHER EXPENSESOperation and other expenses consist of the following:
For the year ended 31st March 2012
(`)
For the year ended 31st March 2011
(`)
(a) Advertisement 93,382 223,284
(b) Audit and Certification fee 340,535 163,244
(c) Bank charges 93,338 84,142
(d) Consultancy expenses 2,690,675 3,242,786
(e) Conveyance 57,494 86,755
(f) Electricity expenses 186,499 194,565
(g) Insurance 150,077 -
(h) Printing and Stationery 222,196 150,230
(i) Rates and Taxes 258,633 500,425
(j) Rent 792,000 744,000
(k) Repairs and Maintenance - Others 378,902 451,381
(l) Security service charges 205,164 178,692
(m) Subscriptions 10,500 251,586
(n) Telephone Expenses 142,567 173,669
(o) Travelling, Hotel Boarding and Lodging 48,173 156,582
(p) Other Expenses 243,273 183,119
5,913,408 6,784,460
20. SEGMENT REPORTING
Business Segment
The Company has only one reportable business segment viz., IT Services and Consulting.
Geographical Segments
Significant Revenue from IT Services and Consulting business is derived from clients in India and hence the Company does not have any separate reportable geographical segment.
21. CHANGE OF NAME OF THE COMPANY
The Company has changed its name to AURUM SOFT SYSTEMS LIMITED w.e.f. February 4, 2010, so as to reflect the change in the line of business. In accordance with Clause 32 and 41 of the listing agreement, the net sales or income, expenditure and net profit or loss after tax figures pertaining to the said new line of business are given below:
40
ParticularsYear ended
31st March 2012 (`)
Year ended 31st March 2011
(`)
Sales 179,784,316 14,794,716
Identifiable operating expenses (including depreciation and Amortization) 180,526,126 10,698,660
Operating Income (741,810) 4,096,056
Less: Tax Expenses (76,443) 860,172
Profit After Tax (665,367) 3,235,884
22. DETAILS OF SUBSIDIARY COMPANIES
Name of the Subsidiary Country Type of holdingPercentage of
holdingNature of Business
Wholly owned subsidiary
Dicetek (Sing) Pte Limited Singapore Equity 100% IT Services and Consulting
Wholly owned subsidiary of Dicetek (Sing) Pte Limited
Dicetek LLC Dubai - IT Services and Consulting
Dice Technologies Inc. USA - IT Services and Consulting
23. RELATED PARTY DISCLOSURE
Parties exercising Substantial controli.
Shripathee Investments Private Limited - Principal Shareholder - Holds 28.46% of the paid up equity share capital of the Company as on March 31, 2012.
Key Managerial personnelii.
Mr. Srikanth Ramanathan, Managing Director
iii. Subsidiaries
Dicetek (Sing) Pte Limited, Singapore Dicetek LLC., Dubai Dice Technologies Inc., USA
41
Standalone Accounts
The transactions with the related parties are: (`)
Nature of TransactionParties exercising substantial control
Key Managerial Personnel
Subsidiaries
Information Technology ServicesDicetek (Sing) Pte Limited
Dicetek LLC., Dubai
Dice Technologies Inc.
-(-)-
(-)-
(-)
-(-)-
(-)-
(-)
-(9,610,225)
-(2,716,615)1,376,101
(1,192,538)Loan Outstanding (including accrued interest) #Dicetek (Sing) Pte Limited
- (-)
-(-)
34,938,935(20,584,513)
Interest on loan (Income) Dicetek (Sing) Pte Limited -
(-)-
(-)697,317
(298,513)Outstanding Receivables #Dicetek (Sing) Pte Limited
Dice Technologies Inc.
-(-)-
(-)
-(-)-
(-)
-(7,011,900)
222,508(-)
RemunerationMr. Srikanth Ramanathan -
(-) 1,117,204
(1,200,000)-
(-)
Note: Figures in brackets represent previous year’s figures
# Based on the exchange rate prevailing as on March 31, 2012
24. GRATUITY The following table sets out the computation of gratuity liability of the Company, in accordance with AS 15 (Revised 2005):
ParticularsAs at 31st March 2012
(`)As at 31st March 2011
(`)Change in Present Value of obligationPresent Value of obligation as at the beginning of the year 132,757 50,827Interest Cost 10,821 4,066Current Service Cost 2,801,009 85,006Benefits Paid - -Actuarial (Gain) / Loss Recognised (102,814) (7,142)
Present Value of obligation as at the end of the year 2,841,773 132,757
Expense Recognised in Profit and Loss Account
Current Service Cost 2,801,009 85,006Interest Cost 10,821 4,066Actuarial (Gain) / Loss (102,814) (7,142)Recognised in the year 2,709,016 81,930
42
The computations are based on the following assumptions:
Discount rate : 8%
Salary Escalation : 10%
25. INTANGIBLE ASSETS (DISCLOSURE AS PER ACCOUNTING STANDARD 26)
ParticularsYear Ended
31st March 2012 (`)
Year Ended 31st March 2011
(`)
Intangible Assets Acquired
A. Copyright
Useful Life 5 Years 5 Years
Cost of Acquisition 3,090,000 3,090,000
Less: Amortisations 1,288,488 670,488
Net Carrying Amount 1,801,512 2,419,512
B. Commercial Right
Useful Life 5 Years -
Cost of Acquisition 50,000,000 -
Less: Amortisations 10,000,000 -
Net Carrying Amount 40,000,000 -
26. EARNINGS PER SHARE
The Basic and Diluted Earning per Share as per Accounting Standard 20 - Earnings Per Share, prescribed by the Companies (Accounting Standards) Rules, 2006:
ParticularsYear Ended
31st March 2012 Year Ended
31st March 2011
Profit / (Loss) After Taxation
` 2,263,614 ` 9,201,015
Weighted average no. of Equity Shares
65,100,000 46,550,959
Nominal value of the Equity Shares
` 2 ` 2
Basic and Diluted Earnings per Share
` 0.03 ` 0.20
27. FOREIGN CURRENCY EARNINGS AND OUTGO
The Company has undertaken the following transactions in foreign currency:
Year Ended 31st March 2012
Year Ended 31st March 2011
Income earned in Foreign Currency (on accrual basis)
Information technology services (`)
1,376,101 13,519,378
Interest on loan to wholly owned subsidiary (`)
697,317 298,513
Total Income earned in Foreign Currency (`)
2,073,418 13,817,891
Dividend Remittances in foreign currency during the year
Financial year to which Dividend relates
2010-11 2009-10
No of non-resident shareholders
3 3
No of shares 6000000 800000 *
Dividend remitted in foreign currency (`)
600,000 400,000
* Shares of face value ` 10/-
The Company has not incurred any expenditure in foreign currency during financial year 2011-12 and 2010-11
28. AUDITORS’ REMUNERATION
Auditors’ remuneration includes:
Year Ended 31st March 2012
(`)
Year Ended 31st March 2011
(`)Statutory Audit Fees 200,000 100,000Tax - Audit Fees 30,000 25,000Certification Fee 75,000 23,000Service-tax 35,535 15,244
340,535 163,244
29. The Company did not have any outstanding dues to any Micro or Small Enterprises as defined under Micro, Small and Medium Enterprises Development Act, 2006 at any point during the year that were outstanding for a period of more than 45 days from the date of acceptance.
43
Standalone Accounts
30. INFORMATION ON LOANS AND ADVANCES AS PER CLAUSE 32 OF THE LISTING AGREEMENT
Outstanding as at 31st March 2012
(`)
Maximum amount outstanding during
the year (`)
Outstanding as at 31st March 2011
(`)
Maximum amount outstanding during the previous year
(`)
Loan to Subsidiary (including interest)Dicetek Sing Pte Limited 34,938,935 34,938,935 20,584,513 20,584,513
The loan is denominated in US$ and the INR equivalents are based on the exchange rate prevailing at the end of the year. The same includes accrued interest at the rate of 2.5% per annum.
32. CONTINGENT LIABILITY
The Company has not provided any liability in respect of the following contested claim:
Name of the Statute : Income Tax Act, 1961Nature of Dues : Income TaxAmount : ` 499,559 Period to which amount relates : 1996-97Forum where dispute pending : CIT (Appeals)
The Company has paid the said amount of ` 499,559 under protest. The Company however is of the opinion that the above demand is not sustainable and expects to succeed in its appeal.
33. The previous year figures have been regrouped / reclassified, wherever necessary to confirm to the current year presentation. Accordingly, amounts and other disclosure for the previous year are included as an integral part of the current year’s Financial Statement and are to be read in relation to the amounts and other disclosures relating to the current year.
31. FORWARD CONTRACTS
The Company does not hedge its risks associated with foreign currency fluctuations relating to its receivables and payables, by entering into foreign currency forward contracts. The Company also does not use forward contracts for speculative purposes.
The foreign currency exposure as at the end of the financial year that have not been hedged by a derivative instrument or otherwise are given below:
Particulars Receivable in US$
As at 31st March 2012
As at 31st March 2011
Sundry Debtors 4,400 159,000
Interest Receivable 20,902 6,769
Loan given to subsidiary
670,000 460,000
Total 695,302 625,769
Signature to Notes forming part of the financial statements
As per my Report of even date attached For and on Behalf of the Board
R. R. RAJKUMAR SRIKANTH RAMANATHAN S. RAMAKRISHNANChartered Accountant Managing Director ChairmanMembership No. 209877
Place : Chennai S. ARUN KUMARDate : August 14, 2012 Chief Financial Officer & Company Secretary
CONSOLIDATED FINANCIAL STATEMENTS
45
Auditors Report on Consolidated Financial Statements
of these subsidiaries, is based solely on the reports of the other auditors, reports by the management of the subsidiaries and on the information and explanations for the purpose of the consolidation referred to herein, furnished to me by the Aurum Soft Systems Limited.
I report that the consolidated financial statements 3. have been prepared by the company’s management in accordance with the requirements of Accounting Standards – 21, Consolidated Financial Statements, prescribed in the Companies (Accounting Standards) Rules, 2006.
Based on my audit and on consideration of the reports 4. of the other auditors on separate financial statements of subsidiaries and on the financial information of the components, in my opinion and to the best of my information and according to the explanations given to me, the attached consolidated financial statements, read with the notes there on, give a true and fair view in conformity with the accounting principles generally accepted in India:
In the case of the consolidated Balance Sheet, of a. the state of affairs of the group as at 31st March 2012
In the case of the consolidated Profit and Loss b. Account, of the Profit for the year ended on that date; and
In the case of the consolidated Cash Flow c. Statement, of the cash flows for the year ended on that date.
Place: Chennai R.R.RajkumarDate: 14th August 2012 Chartered Accountant
M.No: 209877
To the Board of Directors of Aurum Soft Systems Limited on the consolidated financial statements of Aurum Soft Systems Limited and its subsidiaries.
I have audited the attached Consolidated Balance Sheet of Aurum Soft Systems Limited (‘the company’ or ‘the parent company’) and its subsidiaries (collectively referred to as “the Group”), as at 31st March 2012, and also the Consolidated Profit and Loss Account and the Consolidated Cash Flow Statement for the year ended on that date annexed thereto.
These financial statements are the responsibility of the Company’s management and have been prepared by the management on the basis of separate financial statements and other financial information regarding components. My responsibility is to express an opinion on these financial statements based on my audit.
I have conducted my audit in accordance with the 1. auditing standards generally accepted in India. Those Standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provides reasonable basis for my opinion.
I did not audit the financial statements of the subsidiaries 2. whose financial statements and other financial information have been audited by other auditors whose reports have been furnished to me. My opinion, in so far as it relates to the amounts included in the consolidated statements referred to above, in respect
46
CONSOLIDATED BALANCE SHEET AS AT 31st MARCH 2012Particulars Note As at 31st March 2012 As at 31st March 2011
I. EQUITY AND LIABILITIES (`) (`) Shareholders’ Funds (a) Share capital 3 130,200,000 130,200,000 (b) Reserves and surplus 4 226,132,119 195,660,465 356,332,119 325,860,465 Non-Current Liabilities (a) Long-term borrowings 5 2,022,940 3,484,860 (b) Deferred tax liabilities (net) 11(a) 1,027,168 192,886 (c) Other long-term liabilities - - (d) Long-term provisions 6 8,681,046 2,792,373 11,731,154 6,470,119 Current Liabilities (a) Short-term borrowings 7 7,096,045 17,706,057 (b) Trade payables 14,863,038 2,566,064 (c) Other current liabilities 8 71,822,130 65,728,351 (d) Short-term provisions 9 20,142,645 17,682,366 113,923,858 103,682,838 Total 481,987,131 436,013,422 II. ASSETS Non-current assets (a) Fixed assets 10 (i) Tangible assets 10,921,720 12,257,131 (ii) Intangible assets 44,053,832 7,133,284 (iii) Capital work-in-progress - - (iv) Intangible assets under development 26 6,068,400 5,352,000 61,043,952 24,742,415 (b) Non-current investments - - (c) Deferred tax assets (net) 11(b) 7,253,591 4,167,073 (d) Long-term loans and advances 12 22,639,339 16,899,776 (e) Other non-current assets - - (f) Goodwill (on Consolidation) 128,644,654 128,644,654 219,581,536 174,453,918 Current assets (a) Current investments - - (b) Inventories 13 52,488 52,488 (c) Trade receivables 14 210,866,798 142,925,138 (d) Cash and bank balances 15 37,327,774 58,194,458 (e) Short-term loans and advances 16 13,481,878 59,356,785 (f) Other current assets 17 676,657 1,030,635 262,405,595 261,559,504 Total 481,987,131 436,013,422
Notes forming part of the consolidated financial statements 1-32
As per my Report of even date attached For and on Behalf of the Board
R. R. RAJKUMAR SRIKANTH RAMANATHAN S. RAMAKRISHNANChartered Accountant Managing Director ChairmanMembership No. 209877
Place : Chennai S. ARUN KUMARDate : August 14, 2012 Chief Financial Officer & Company Secretary
47
Consolidated Accounts
CONSOLIDATED STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED 31st MARCH 2012
Particulars NoteFor the year ended 31st March 2012
(`)
For the year ended 31st March 2011
(`)
I. Revenue from operations 18 969,061,768 643,080,351
II. Other Income (net) 19 5,777,080 3,052,893
Total Revenue (I + II) 974,838,848 646,133,244
III. Expenses
(a) Employee benefit expenses 20 877,406,349 580,428,611
(b) Operation and other expenses 21 58,567,634 42,523,406
(c) Finance costs 22 1,793,787 971,937
(d) Depreciation and amortization expense 10 20,826,062 7,976,290
Total Expenses 958,593,832 631,900,244
IV. Profit before tax 16,245,016 14,233,000
V. Tax expense
(a) Current tax 934,129 889,884
(b) Deferred tax (2,195,478) (2,814,991)
(c) MAT credit entitlement 224,055 (604,701)
(1,037,294) (2,529,808)
VI. Profit for the year 17,282,310 16,762,808
Earnings per equity share of face value ` 2 27
Basic and Diluted Earning per share (`) 0.27 0.36
Notes forming part of the consolidated financial statements 1-32
As per my Report of even date attached For and on Behalf of the Board
R. R. RAJKUMAR SRIKANTH RAMANATHAN S. RAMAKRISHNANChartered Accountant Managing Director ChairmanMembership No. 209877
Place : Chennai S. ARUN KUMARDate : August 14, 2012 Chief Financial Officer & Company Secretary
48
CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31st MARCH 2012Particulars Year ended 31st March 2012 (`) Year ended 31st March 2011 (`)
A. CASH FLOW FROM OPERATING ACTIVITIES Profit / (Loss) before taxation 16,245,016 14,233,000 Adjustments for: Depreciation and Amortisation 20,826,062 7,976,290 (Profit) / Loss on sale of Fixed assets - 62,599 Dividend on Mutual Funds - (2,439,722) Interest Income (1,653,944) (338,403) Interest Expense 1,793,787 971,937 Provision for Gratuity 2,709,016 81,930 Profit / (Loss) on redemption / Mark to market on Mutual Funds - (136,956)Operating Cash Flow Before Working Capital Changes 39,919,937 20,410,675 Adjustments for: (Increase) / Decrease in Trade and other receivables (74,298,448) (83,535,570) Increase / (Decrease) in Trade and other payables 31,573,474 (10,970,660)Cash generated from / (used in) Operations (2,805,037) (74,095,555) Income Taxes paid during the year (4,153,535) (143,755)Net Cash generated from / (used in) Operating Activities during the year - A (6,958,573) (74,239,310)B. CASH FLOW FROM INVESTING ACTIVITIES Purchase of Fixed Assets (4,296,623) (11,242,852) Sale of Fixed Assets - 1,065,759 Sale of mutual funds - 72,308,250 Dividend on mutual funds - 2,439,722 Interest income 1,653,944 338,403 Funds deployed in Fixed deposits with more than 3 months maturity (7,500,000) (700,000)Net Cash generated from / (used in) Investing Activities during the year - B (10,142,679) 64,209,282 C. CASH FLOW FROM FINANCING ACTIVITIES Dividend Paid (6,486,699) (4,321,632) Tax on Dividend Paid (1,056,085) (720,820) Increase / (Decrease) in Loan Funds (12,071,932) 19,365,330 Interest Expense (1,793,787) (971,937) Proceeds / (Disbursement) of Fractional Entitlement on Bonus Shares (262) 390 Funds earmarked for Dividend payment and Fractional Entitlement on Bonus shares (24,906) (28,417)Net Cash generated from Financing Activities during the year - C (21,433,671) 13,322,914 Net increase / (decrease) in cash and cash equivalents (A + B + C) (38,534,923) 3,292,886 Cash and Cash Equivalent as at the beginning of the year 55,966,041 49,073,483 Effect of Exchange Rate Fluctuation on cash and cash equivalent 10,143,333 3,599,672Cash and Cash Equivalent at the end of the year 15 27,574,451 55,966,041Earmarked balances with banks 53,323 28,417 Bank deposits with more than 3 months maturity 9,700,000 2,200,000 Cash and Bank balances at the end of the year 15 37,327,774 58,194,458
Notes forming part of the consolidated financial statements 1-32Note: 1. Cash and Cash Equivalents represent Cash, Balances with Banks in Current Account and Fixed Deposits maturing within 3 months 2. Figures in brackets indicate Cash Outflow 3. Figures for the previous year have been regrouped / rearranged wherever found necessary
As per my Report of even date attached For and on Behalf of the Board
R. R. RAJKUMAR SRIKANTH RAMANATHAN S. RAMAKRISHNANChartered Accountant Managing Director ChairmanMembership No. 209877
Place : Chennai S. ARUN KUMARDate : August 14, 2012 Chief Financial Officer & Company Secretary
Note
49
Consolidated Accounts
Notes forming part of the Consolidated Financial Statements The excess of the cost to the Company of its
investment in the subsidiary over and above the share of equity in the subsidiary on the acquisition date, is recognised in the financial statement as goodwill. Goodwill arising out of consolidation is not amortised. However, the same is tested for impairment at each Balance Sheet date.
Since all the subsidiaries are wholly owned subsidiaries, there is no minority interest.
Use of Estimatesc.
The preparation of the Financial Statements in conformity with the Generally Accepted Accounting Principles requires the management to make estimates and assumptions that affect the reported amount of Assets, Liabilities (including Contingent Liabilities) as of the date of the Financial Statement and the reported Revenues and Expenses during the reporting period. Actual results could differ from the estimates. Any revision to accounting estimates is recognised prospectively in current and future periods.
Revenue Recognitiond.
Revenue from Consulting business is primarily i. derived from Resourcing services, Technical Support Service, Licensing of Software and Business Support Services. Revenues from fixed price and fixed time frame contracts / arrangements are recognised when the services have been rendered in accordance with the contracts / arrangements and there is no uncertainty as to the measurement or collectability of the consideration. Where there is uncertainty as to measurement or collectability, Revenue Recognition is postponed until such uncertainty is resolved.
Interest on Fixed Deposits and Interest on ii. Loans and Advances are accounted on accrual basis. In case of Doubtful Loans, the Interest is recognised on actual receipt.
Dividend Income is recognised when the iii. Company’s right to receive the dividend is recognised.
BACKGROUND1. Aurum Soft Systems Limited acquired 100% stake in Dicetek (Sing) Pte Limited on July 28, 2009. Consequent to this, Dicetek (Sing) Pte Limited together with its wholly owned subsidiaries Dicetek LLC., Dubai and Dice Technologies Inc., USA, have become subsidiaries of the Company.
The Company together with its wholly owned subsidiaries is engaged in the business of providing IT services and consulting.
SIGNIFICANT ACCOUNTING POLICIES2. Basis of preparation of the Financial Statementsa.
These Consolidated financial statements of Aurum Soft Systems Limited and its subsidiaries (together called “the Company / Group”) are prepared under the historical cost convention in accordance with generally accepted accounting principles applicable in India, the provisions of the Companies Act, 1956 and the applicable accounting standards, to the extent possible in the same format as that adopted by the holding company for its separate financial statements.
The financial statements of subsidiaries used in the consolidated financial statements are drawn upto the same reporting date as that of the holding company i.e. March 31, 2012.
Basis of consolidationb.
The financial statements of the Company and its subsidiaries have been consolidated on a line by line basis by adding together the book values of like items of assets, liabilities, income and expenses, after eliminating intra-group balances, intra-group transactions and unrealised profits or losses as per Accounting Standard 21 “Consolidated Financial Statement”
The revenue items of these foreign subsidiaries are translated at the quarterly average exchange rate on a quarterly basis. All assets and liabilities as at the year-end are converted at the rates prevailing as at the end of the year. Any exchange difference arising on consolidation is shown under Foreign Currency Translation Reserve on Consolidation.
50
Government grants, if any, are recognised iv. when there is reasonable assurance that the conditions attached to the grant will be complied with and that the grant will be received.
Cash grants, if any, received from the v. government in relation to the Jobs credit scheme are recognised as income upon receipt.
Other receipts are accounted when it is vi. received.
e. Expenditure
Expenses are accounted on accrual basis. As a matter of prudence, provisions are made for all known losses and liabilities.
Bad debts are written-off when there is no expectation of recovery.
f. Fixed Assets
Fixed Assets are stated at cost less accumulated depreciation. The cost of the Fixed Assets comprises purchase price and any attributable cost of bringing the asset to its working condition for its intended use.
Intangible Assetsg.
Intangible Assets acquired (Software) are recorded at the Consideration paid for acquisition of such assets and are carried at cost less accumulated amortization and impairment, if any.
Intangible Assets under developmenth.
This represents computer software which was acquired and which is meant to be resold and or marketed with or without further development. The cost of acquisition along with other software production cost, if any, would be amortised using an acceptable method when ready for general customer in future.
Depreciation and Amortizationi.
Depreciation on fixed assets is provided by the holding company on Straight-Line basis from the date the assets have been installed and put to use. In respect of Assets sold, depreciation is provided upto the date of disposal.
The holding company charges depreciation at the rates prescribed in Schedule XIV to the Companies Act, 1956.
All Fixed Assets of the holding company individually costing less than ` 5,000 are fully depreciated in the year of installation.
Depreciation provided by the subsidiaries in respect of its fixed assets in their books of accounts have not been restated / recomputed for the purpose of consolidation.
Intangible asset is amortised over its useful life on straight-line basis, commencing from the date when the asset is put to use by the Company.
Inventoriesj.
Inventories are stated at the lower of cost or net realisable value.
Investmentsk.
Investments are classified into long term investments and current investments. Investments which are intended to be held for one year or more are classified as long term investments and investments which are intended to be held for less than one year are classified as current investments. Long term investments are carried at cost less diminution, other than any temporary diminution in value, determined separately for each investment. Current investments are carried at lower of cost or Net Realisable value.
Foreign Currency Transactionsl.
Foreign Currency Transactions are recorded at the rates of exchange prevailing on the date of the transaction. Exchange differences, if any, arising out of transactions settled during the year are recognised in the Profit and Loss Account. Monetary Assets and Liabilities denominated in Foreign Currencies as at the Balance Sheet date are translated at the closing Exchange Rates on that date. The exchange differences, if any, are recognised in the Profit and Loss Account and related Assets and Liabilities are accordingly restated in the Balance Sheet.
51
Consolidated Accounts
Employee Benefitsm.
All Short Term Employee Benefits payable i. including Salaries and other allowances are recognised on accrual basis.
The group’s contribution to a defined ii. contribution scheme in respect of its employees are accounted for on an accrual basis and recognised in the Profit and Loss Account.
Employee entitlements to annual leave are iii. recognised when they accrue to employees. A provision is made for the estimated liability for annual leave as a result of services rendered by employees upto the balance sheet date.
Gratuity cost of the holding company is iv. accrued based on actuarial valuation, carried out by an independent actuary as at the balance sheet date and provision is made in the books, unlike the subsidiaries, where gratuity is provided in accordance with local laws. The holding Company has not made any insurance contribution in respect of its gratuity liability.
n. Taxation
The accounting treatment for Income Tax in respect of holding Company’s income is based on the Accounting Standard 22 on ‘Accounting for Taxes on Income’ issued by the Institute of Chartered Accountants of India.
Income Tax: Provision for current Income Tax is made on the Taxable Income for the year as is determined in accordance with the provisions of tax laws that have been enacted or substantively enacted in countries where the Company and its subsidiaries operate.
Deferred Tax : Deferred Tax Assets and Liabilities are recognized at substantively enacted Tax Rates, subject to the consideration of prudence, on timing difference, being the difference between taxable income and accounting income that originate in one period and are capable of reversal in one or more subsequent periods.
o. Earnings Per Share (EPS)
The group reports Basic and Diluted Earnings Per Share in accordance with Accounting Standard 20 - Earnings Per Share prescribed by the Companies (Accounting Standards) Rules, 2006. Basic Earnings per Share is computed by dividing the Net Profit After Tax by the weighted average number of Equity Shares outstanding during the year. The Company does not have any outstanding securities convertible into Equity Shares of the Company and hence there is no dilution in the Earnings per Share.
p. Provisions and Contingencies
The group creates a provision when there is present or legal constructive obligations as a result of a past event, that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources.
When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.
Provisions are reviewed at each Balance Sheet date and adjusted to reflect the current best estimate. If it is no longer probable that the outflow of resources would be required to settle the obligation, the provision is reversed.
Contingent assets are not recognised in the Financial Statements since this may result in the recognition of income that may never be realised.
q. Cash Flows
Cash Flows are reported using the indirect method, whereby Profit Before Tax is adjusted for the effects of transactions 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, financing and investing activities of the Company are segregated.
52
3. SHARE CAPITAL Share capital consist of the following:
ParticularsAs at
31st March 2012 As at
31st March 2011Authorised (`) (`) 75,000,000 Equity share of ` 2/- each 150,000,000 150,000,000
(31st March 2011: 75,000,000 Equity share of ` 2/- each)
Issued, Subscribed & paid-up
65,100,000 Equity shares of ` 2/- each 130,200,000 130,200,000 (31st March 2011: 65,100,000 Equity share of ` 2/- each) 130,200,000 130,200,000
a. Reconciliation of number of shares
As at 31st March 2012 As at 31st March 2011No. of shares Amount (`) No. of shares Amount (`)
Equity shares Opening balance (face value - ` 10) - - 8,680,000 86,800,000 Opening balance (face value - ` 2) 65,100,000 130,200,000 - - Sub-divided shares * - - 43,400,000 86,800,000 Issue of fully paid bonus shares - - 21,700,000 43,400,000 Closing balance 65,100,000 130,200,000 65,100,000 130,200,000 * During financial year 2010-11, the company has sub-divided each equity share of ` 10 each into 5 (five) equity shares of ` 2 each.
b. Shares held by holding company, its subsidiaries and associates The company does not have any holding company.c. Rights, preferences and restrictions attached to equity shares The company has one class of equity shares having a face value of ̀ 2/- per share. Each shareholder is eligible
for one vote for each share held in the company. The dividend proposed by the Board of Directors is subject to approval of the shareholders in the ensuing Annual General Meeting, except in case of interim dividend. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the company after distribution of all preferential amounts, in proportion to their shareholding.
d. Details of equity shares held by shareholders holding more than 5% of the aggregate shares in the Company
Name of the shareholderAs at 31st March 2012 As at 31st March 2011
No. of shares% of share
capitalNo. of shares
% of share capital
Shripathee Investments Private Limited 18,526,927 28.46% 18,526,927 28.46%
Cresta Fund Limited 5,143,755 7.90% 5,143,755 7.90%
Sparrow India Diversified Opportunities Fund 5,509,477 8.46% 5,509,477 8.46%
Mavi Investment Fund Ltd 3,519,997 5.41% 3,519,997 5.41%
53
Consolidated Accounts
e. Shares allotted as fully paid up by way of bonus shares (during the 5 years preceding 31st March 2012)
The Company allotted 21,700,000 equity shares of face value ` 2/-, as fully paid up bonus shares by utilisation of the Securities premium account on 7th February 2011, pursuant to a shareholder’s resolution passed at the Extra ordinary General Meeting held on 19th January 2011.
4. RESERVES AND SURPLUSReserves and Surplus consist of the following:
As at 31st March 2012 (`)
As at 31st March 2011 (`)
(a) Securities premium account Opening balance 183,800,000 227,200,000 Less: Capitalisation for bonus shares - 43,400,000 Closing balance 183,800,000 183,800,000
(b) Surplus in statement of profit & loss Opening balance 10,694,232 1,497,455 Add: Profit for the year 17,282,310 16,762,808 Statutory reserves transferred to Profit and Loss account 4,168,347 - Reversal of excess provision for Tax on dividend - 54
32,144,889 18,260,317 Less: Appropriations Proposed dividend on equity shares - 6,510,000 Tax on dividend - 1,056,085 - 7,566,085 Closing balance 32,144,889 10,694,232
(c) Statutory reserve Opening Balance 4,168,347 4,168,347 Add: Transferred from / (to) Profit and Loss account (4,168,347) - Closing Balance - 4,168,347
(d) Foreign currency translation reserve on consolidation Opening Balance (3,002,114) (6,529,780) Add: Current year adjustments 13,189,344 3,527,666 Closing Balance 10,187,230 (3,002,114)
226,132,119 195,660,465
5. LONG-TERM BORROWINGS (SECURED)Long-term borrowings consist of the following:
As at 31st March 2012
(`)As at 31st March 2011
(`)(a) Vehicle Loans 2,022,940 3,484,860 2,022,940 3,484,860
54
6. LONG-TERM PROVISIONSLong-term provisions consist of the following:
As at 31st March 2012
(`)As at 31st March 2011
(`)(a) Provision for gratuity 8,681,046 2,792,373
8,681,046 2,792,373
7. SHORT-TERM BORROWINGSShort-term borrowings consist of the following:
As at 31st March 2012
(`)As at 31st March 2011
(`)Secured (a) Vehicle Loans 1,926,950 1,700,086 Unsecured (a) Short-term loans 5,169,095 16,005,971 7,096,045 17,706,057
8. OTHER CURRENT LIABILITIESOther current liabilities consist of the following:
As at 31st March 2012
(`)As at 31st March 2011
(`) (a) Salary payable 59,365,479 41,687,231 (b) Unclaimed dividends 41,670 18,369 (c) Short-term payable 2,598,292 17,762,984 (d) Other payables 9,816,689 6,259,767
71,822,130 65,728,351 Other payables comprise: Statutory liabilities 6,520,924 5,050,805 Others 3,295,765 1,208,962
9. SHORT-TERM PROVISIONSShort-term provisions consist of the following
As at 31st March 2012
(`)As at 31st March 2011
(`) (a) Provision for Bonus to employees 4,730,642 - (b) Provision for other employee benefits 15,412,003 10,116,281 (c) Others (i) Proposed dividend on equity shares - 6,510,000 (ii) Tax on dividend - 1,056,085 20,142,645 17,682,366
55
10.
FIXED
ASS
ETS
Fixed
asse
ts co
nsist
of the
follo
wing
:
(In `
)
Partic
ulars
Gro
ss B
lock
Dep
reci
atio
nN
et B
lock
As a
t 1st A
pril 2
011
Addi
tions
Dele
tions
/
Adju
stmen
ts *
As at
31
st Mar
ch 20
12Up
to
1st Apr
il 201
1Fo
r the
Year
2011
-12
Dele
tions
/
Adju
stmen
ts *
Upto
31st M
arch
2012
As at
31
st Ma
rch 20
12As
at
31st M
arch
2011
(i) Ta
ngib
le As
sets
Furn
iture
s and
fixtur
es 6
,001
,718
4
7,09
6 (4
97,9
83)
6,5
46,7
97
1,3
98,2
73
1,1
05,1
82
58,
090
2,4
45,3
65
4,1
01,4
31
4,6
03,4
45
Plan
t and
equ
ipmen
t 6
,868
,575
7
57,1
51
538
,331
7
,087
,395
4
,301
,556
1
,208
,324
7
63,4
11
4,7
46,4
69
2,3
40,9
26
2,5
67,0
19
Vehic
les 6
,482
,760
2
64,9
20
(878
,295
) 7
,625
,975
1
,396
,093
1
,487
,861
(2
62,6
58)
3,1
46,6
12
4,4
79,3
63
5,0
86,6
67
Tota
l 1
9,35
3,05
3 1
,069
,167
(8
37,9
47)
21,2
60,1
67
7,0
95,9
22
3,8
01,3
67
558
,843
1
0,33
8,44
6 1
0,92
1,72
0 1
2,25
7,13
1
Prev
ious y
ear
11,
118,
524
11,
242,
852
3,0
08,3
24
19,3
53,0
52
5,4
17,1
55
2,6
33,4
71
954
,705
7
,095
,921
1
2,25
7,13
1
(ii) In
tang
ible
Asse
ts
Intell
ectua
l Pro
perty
Righ
ts 1
7,23
8,71
0 5
3,22
7,45
6 1
3,99
7,68
6 56
,468
,480
1
0,10
5,42
6 1
7,02
4,69
5 1
4,71
5,47
3 1
2,41
4,64
8 4
4,05
3,83
2 7
,133
,284
Tota
l 1
7,23
8,71
0 5
3,22
7,45
6 1
3,99
7,68
6 56
,468
,480
1
0,10
5,42
6 1
7,02
4,69
5 1
4,71
5,47
3 1
2,41
4,64
8 4
4,05
3,83
2 7
,133
,284
Prev
ious y
ear
15,
944,
377
- (1
,294
,333
)17
,238
,710
4
,338
,416
5
,342
,819
(4
24,1
91)
10,
105,
426
7,1
33,2
84
Gra
nd To
tal
36,
591,
763
54,
296,
623
13,
159,
739
77,7
28,6
47
17,
201,
348
20,
826,
062
15,
274,
316
22,
753,
094
54,
975,
552
19,
390,
415
* Inc
ludes
Exc
hang
e dif
feren
ce a
rising
on
trans
lation
of fi
xed
asse
t to IN
R
56
11. DEFERRED TAX BALANCESMajor components of deferred tax balances consist of the following:
As at 31st March 2012
(`)As at 31st March 2011
(`)(a) Deferred tax liabilities (i) Depreciation and amortisation 1,022,111 192,886 (ii) Expenses allowed for tax purpose 5,057 -
1,027,168 192,886 (b) Deferred tax assets (i) Carried forward losses 6,074,280 4,044,804 (ii) Provision for doubtful debts 122,269 122,269 (iii) Amalgamation expenses 178,934 - (iv) Provision for gratuity 878,108 -
7,253,591 4,167,073
12. LONG-TERM LOANS AND ADVANCES (Unsecured)Long-term loans and advances consist of the following:
As at 31st March 2012
(`)As at 31st March 2011
(`) Considered good (a) Advance tax (including refunds receivable) 4,296,038 849,198 (b) MAT credit entitlement 311,751 604,701 (c) Rental Advance 1,947,389 1,717,125 (d) Refundable Deposits 12,396,989 10,051,240 (e) Other amounts recoverable in cash or kind for value to be received 125,940 116,280 19,078,107 13,338,544 Considered doubtful (a) Inter-corporate deposits 3,956,924 3,956,924 Less: Provision for doubtful loans (395,692) (395,692) 3,561,232 3,561,232 22,639,339 16,899,776
13. INVENTORIESInventories consist of the following:
As at 31st March 2012
(`)As at 31st March 2011
(`) (a) Software Product - held for sale 52,488 52,488
52,488 52,488
57
Consolidated Accounts
14. TRADE RECEIVABLESTrade receivables consist of the following:
As at 31st March 2012
(`)As at 31st March 2011
(`) (a) Over six months from the date they were due for payment (i) Considered good 1,774,500 1,208,835 (ii) Considered doubtful - - (b) Others (i) Considered good 209,092,298 141,716,303 (ii) Considered doubtful - - 210,866,798 142,925,138
15. CASH AND BANK BALANCESCash and bank balances consist of the following
As at 31st March 2012
(`)As at 31st March 2011
(`) (a) Cash and cash equivalents (i) Balances with banks In current accounts 20,414,629 41,307,799 In deposit accounts with maturity less than 3 months 7,155,436 14,650,000 (ii) Cash on hand 4,386 8,242 27,574,451 55,966,041 (b) Other bank balances (i) Earmarked balances with banks 53,323 28,417 (ii) Bank deposits with more than 3 months maturity 9,700,000 2,200,000 9,753,323 2,228,417 37,327,774 58,194,458
16. SHORT-TERM LOANS AND ADVANCES (Unsecured)Short-term loans and advances consist of the following
As at 31st March 2012 (`)
As at 31st March 2011 (`)
(a) Considered good (i) Loans and advances to employees 1,447,716 932,085 (ii) Other loans and advances 12,034,162 58,424,700 13,481,878 59,356,785 Other short-term loans and advances comprise: Refundable deposits 704,997 16,576 Prepaid Expenses 3,387,805 2,123,067 Rental advance 337,080 515,280 Advance purchase consideration for business acquisition - 50,000,000 Other amounts recoverable in cash or kind for value to be received 7,604,280 5,769,777
58
17. OTHER CURRENT ASSETS (unsecured and considered good)Other current assets consist of the following:
As at 31st March 2012
(`)As at 31st March 2011
(`) (a) Unbilled revenue 404,560 888,967 (b) Interest receivable on Fixed deposit 272,097 141,668 676,657 1,030,635
18. REVENUE FROM OPERATIONSRevenue from operations consist of revenues from:
For the year ended 31st March 2012
(`)
For the year ended 31st March 2011
(`) (a) Information Technology services - 9,742,970 (b) Consultancy services 969,061,768 633,337,381 969,061,768 643,080,351
19. OTHER INCOME (net)Other income consist of the following:
For the year ended 31st March 2012
(`)
For the year ended 31st March 2011
(`) (a) Interest income 1,653,944 501,204 (b) Dividend on Mutual Funds - 2,439,722 (c) Exchange gain / (loss) (net) 3,878,991 14,380 (d) Profit / (Loss) on sale of Fixed Assets - (62,599) (e) Miscellaneous income 244,145 160,186 5,777,080 3,052,893 Interest income comprise: Interest on Long-term advance 165,978 162,801 Interest on bank deposits 1,386,886 338,403 Interest on income tax refund 101,080 -
20. EMPLOYEE BENEFIT EXPENSESEmployee benefit expenses consist of the following:
For the year ended 31st March 2012
(`)
For the year ended 31st March 2011
(`) (a) Salaries and wages 858,305,264 579,694,572 (b) Contributions to provident and other funds 16,042,295 237,757 (c) Staff welfare expenses 3,058,790 496,282 877,406,349 580,428,611
59
Consolidated Accounts
21. OPERATION AND OTHER EXPENSESOperation and other expenses consist of the following:
For the year ended 31st March 2012
(`)
For the year ended 31st March 2011
(`) (a) Advertisement 1,141,963 1,024,863 (b) Audit and Certification fee 340,535 163,244 (c) Bank charges 125,903 139,085 (d) Consultancy expenses 21,342,783 7,320,771 (e) Conveyance 283,829 278,763 (f) Discount 184,121 3,342,393 (g) Electricity expenses 186,499 250,700 (h) Insurance 1,203,017 934,676 (i) Printing and Stationery 585,814 512,523 (j) Rates and Taxes 4,491,696 3,802,449 (k) Rent 9,092,336 9,471,607 (l) Repairs and Maintenance - Others 2,194,613 2,695,113 (m) Sales promotion expenses 756,658 817,157 (n) Subscriptions 790,025 325,069 (o) Telephone Expenses 1,921,179 1,888,385 (p) Travelling, Hotel Boarding and Lodging 1,514,938 1,725,835 (q) Visa expenses 11,684,957 7,004,196 (r) Other Expenses 726,768 826,577 58,567,634 42,523,406
22. FINANCE COSTSFinance costs consist of the following:
For the year ended 31st March 2012
(`)
For the year ended 31st March 2011
(`) (a) Interest and finance charges 1,793,787 971,937 1,793,787 971,937
23. DETAILS OF SUBSIDIARY COMPANIES
Name of the Subsidiary Country Type of holdingPercentage of
holdingNature of Business
Wholly owned subsidiary
Dicetek (Sing) Pte Limited Singapore Equity 100% IT Services and Consulting
Wholly owned subsidiary of Dicetek (Sing) Pte Limited
Dicetek LLC Dubai IT Services and Consulting
Dice Technologies Inc. USA IT Services and Consulting
60
24. SEGMENT REPORTING
Business Segment
The Company and its subsidiaries have only one reportable business segment viz., IT Services and Consulting.
Geographical Segments
The segment information in respect of different geographies in which the company operates is given below:
(`)
Particulars
For the year ended 31st March 2012
Geographical SegmentsTotal
India Singapore Dubai USA
Revenue
External sales, services and other income (net)
183,758,8083,734,650
199,645,559188,044,597
473,050,138 331,061,318
118,384,343123,292,678
974,838,848646,133,243
Identifiable Expenses 171,725,71611,090,586
191,900,406180,044,183
458,307,828315,437,178
115,833,820117,352,005
937,767,770623,923,952
Depreciation 10,785,788760,634
6,645,8814,951,277
3,347,1602,258,005
47,2336,374
20,826,0627,976,290
Profit / (Loss) Before Tax 1,247,304(8,116,570)
1,099,272 3,049,137
11,395,15013,366,135
2,503,290 5,934,299
16,245,01614,233,000
Carrying amount of segment assets
91,781,229 81,271,044
86,094,61078,854,579
137,265,144103,528,055
38,201,49442,103,045
353,342,477305,756,723
Carrying amount of segment liabilities
22,655,3952,782,448
16,155,08734,463,030
72,901,67359,385,493
13,942,8578,299,285
125,655,012104,930,256
Capital expenditure -
429,195 3,227,456
57,518 731,996
10,672,070337,171
84,069 4,296,623
11,242,852 Previous years’ figures are in italics
25. RELATED PARTY DISCLOSURE
i. Party exercising Substantial control
Shripathee Investments Private Limited - Principal Shareholder - Holds 28.46% of the paid up equity share capital of the Company as on March 31, 2012.
ii. Key Managerial personnel
Mr. Srikanth Ramanathan, Managing Director
iii. Subsidiaries
Dicetek (Sing) Pte Limited, Singapore
Dicetek LLC., Dubai
Dice Technologies Inc., USA
61
Consolidated Accounts
The transactions with the related parties are: (`)
Nature of Transaction
Party exercising Substantial
Control
Key Managerial personnel
Remuneration Mr. Srikanth Ramanathan
-(-)
1,117,204(1,200,000)
26. INTANGIBLE ASSETS (DISCLOSURE AS PER ACCOUNTING STANDARD 26)
ParticularsYear Ended
31st March 2012 (`)
Year Ended 31st March 2011
(`)
I. Acquired
A. Copyright
Useful Life 5 Years 5 Years
Cost of Acquisition 3,090,000 3,090,000
Less: Amortisations 1,288,488 670,488
Net Carrying Amount 1,801,512 2,419,512
B. Commercial Right
Useful Life 5 Years -
Cost of Acquisition 50,000,000 -
Less: Amortisations 10,000,000 -
Net Carrying Amount 40,000,000 -
II. Internally Developed
C. Software
Useful Life 3 Years 3 Years
Opening 14,148,711 12,854,377
Additions 3,227,456 -
Deletions/Adjustments* (13,997,687) 1,294,334
Gross (net) 3,378,480 14,148,711
Less: Accumulated Amortisations
1,126,160 9,434,939
Net Carrying Amount 2,252,320 4,713,772
Net Carrying Amount (I + II) 44,053,832 7,133,284
* includes exchange difference arising on translation of the asset into INR
III. Intangible assets under development
Cost of acquisition of Computer software is treated as intangible assets under development as the same is not ready for sale to general customer. The cost of acquisition along with other software production cost, if any, would be amortised using an acceptable method when ready for general customer in future.
27. EARNINGS PER SHARE
The Basic and Diluted Earnings per Share as per Accounting Standard 20 - Earnings Per Share, prescribed by the Companies (Accounting Standards) Rules, 2006:
Particulars Year Ended 31st March 2012
Year Ended 31st March 2011
Profit / (Loss) After Taxation
` 17,282,310 ` 16,762,808
Weighted average no. of Equity Shares
65100000 46550959
Nominal value of the Equity Shares
` 2 ` 2
Basic and Diluted Earnings per Share
` 0.27 ` 0.36
28. AUDITORS’ REMUNERATION
Statutory Auditors’ remuneration includes:
Year Ended 31st March 2012
(`)
Year Ended 31st March 2011
(`)
Statutory Audit Fees 200,000 100,000
Tax - Audit Fees 30,000 25,000
Certification Fee 75,000 23,000
Service-tax 35,535 15,244
340,535 163,244
29. CONTINGENT LIABILITY
The Company has not provided any liability in respect of the following contested claim:
Name of the Statute : Income Tax Act, 1961Nature of Dues : Income TaxAmount : ` 499,559
62
Period to which amount relates : 1996-97Forum where dispute pending : CIT (Appeals)
The Company has paid the said amount of ` 499,559 under protest. The Company however is of the opinion that the above demand is not sustainable and expects to succeed in its appeal.
30. OPERATING LEASE COMMITMENTS
As at the balance sheet date the group was committed to making the following payments in respect of operating leases:
As at 31st March 2012
(`)
As at 31st March 2011
(`)
Not later than one year 791,530 2,722,924
Later than one year but not later than five years
- 696,475
Later than five years - -
Total 791,530 3,419,399
31. FORWARD CONTRACTS
The Company and its subsidiaries do not hedge its
risks associated with foreign currency fluctuations
relating to its receivables and payables, by entering
into foreign currency forward contracts. The Company
and its subsidiaries also does not use forward contracts
for speculative purposes.
32. The previous year figures have been regrouped /
reclassified, wherever necessary to confirm to the
current year presentation. Accordingly, amounts and
other disclosure for the previous year are included
as an integral part of the current year’s Financial
Statement and are to be read in relation to the amounts
and other disclosures relating to the current year.
Signature to Notes forming part of the Consolidated financial statements
As per my Report of even date attached For and on Behalf of the Board
R. R. RAJKUMAR SRIKANTH RAMANATHAN S. RAMAKRISHNANChartered Accountant Managing Director ChairmanMembership No. 209877
Place : Chennai S. ARUN KUMARDate : August 14, 2012 Chief Financial Officer & Company Secretary
AURUM SOFT SYSTEMS LIMITEDRegd. Office: New No. 15, Old No. 6, Besant Avenue, Adyar, Chennai - 600020
ANNUAL GENERAL MEETING
ADMISSION SLIPPlease hand over this admission slip at the entrance of meeting hall
I / We, hereby record my / our presence at the Annual General Meeting of the Company at THE CONFERENCE CENTRE - MINI HALL, New No: 24 (Old No: 58), 2nd Main Road, R.A. Puram, Chennai - 600028 on Friday, September 28, 2012 at 10.00 A.M.
Name of the Member (in block letters): _____________________________________________________________
Name of the Proxy: _____________________________________________________________________________
(To be filled in if the proxy attends instead of the member)
Folio No. / DP ID & Client ID: _____________________________________________________________________
No of Shares held: _____________________________________________________________________________
Signature of the Member / Proxy
------------------------------- ------------------------------------------------------------------ ----------------------------------------------
AURUM SOFT SYSTEMS LIMITEDRegd. Office : New No. 15, Old No. 6, Besant Avenue, Adyar, Chennai - 600020
ANNUAL GENERAL MEETINGPROXY FORM
I/We……………………………………………....……………..of…………........…………………………………
in the distri..…………......................................................………………being a Member of AURUM SOFT
SYSTEMS LIMITED hereby appoint …….....………....……………of……………………. in the district of…………
……………...……………………….……………………….or failing him ………………………………………..
of………………….…………….in the district of ………….…………………………………….as my / our Proxy
to vote for me / us and on my / our behalf at the Annual General Meeting of the Company to be held on Friday,
September 28, 2012 and at any adjournment thereof.
Signed this…………………………………………day of…………………….
Folio No. / DP ID & Client ID …………………………………….......……….
Number of shares held ……………………………………….……………….
Affix 15 paise revenue stamp
Signature
AURUM SOFT SYSTEMS LIMITEDRegd. Office : New No.15 (Old No.6) Besant Avenue
Adyar, Chennai - 600 020www.aurumsoftsystems.com