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ADITYA BIRLA MINACS WORLDWIDE LIMITED
ANNUAL REPORT OF SUBSIDIARIES 2010-2011
Sl. No. Name Page No
1. Aditya Birla Minacs Worldwide Limited 1
2. Transworks Inc (USA) 27
3. Aditya Birla Minacs Philippines Inc. 30
4. A V Transworks Limited 37
5. Aditya Birla Minacs Worldwide Inc., (Canada) 42
6. The Minacs Group (USA) Inc. 58
7. Bureau of Collection Recovery, LLC 62
8. Minacs Worldwide S A De C V (Mexico) 64
9. Minacs Limited (UK) 66
10. Minacs Worldwide GmbH (Germany) 68
11. Minacs KFT, Hungary 71
12. Aditya Birla Minacs BPO Limited 74
13. Aditya Birla Minacs BPO Private Limited 81
14. Compass BPO Inc 91
(1)
ADITYA BIRLA MINACS WORLDWIDE LIMITED
C M Y K
DIVIDEND
In view of the carried forward losses no dividend is recommended.
BUSINESS REVIEW
Industry Scenario
In 2010-11, the global economy showed signs of coming out of recession
though there continues to be fears that the revival may not be sustainable.
Rising oil prices, EU debt pressures and sharp increase in inflation in
Asia continues to cast a gloomy picture though there are signs that the
impact may not as bad as in 2009-10. The BPO industry showed signs
of growth but pricing pressures continued. Customers continued to be
circumspect in increasing their outsourcing since their own businesses
have reduced resulting in excess employees in their own organizations.
Summar y of Operations
The actions initiated by your Company to improve operational excellence
and grow revenues have started to show results.
Over the previous year, consolidated revenues increased by 16%. The
sharp sales focus on delivering value to our customers whilst
demonstrating domain knowledge has resulted in revenue growth
despite lower revenue productivity due to pricing pressures.
The revenue growth along with the continued efforts on cost
optimization enabled your Company’s operating profits (EBITDA) has
shown an increase from ` 1,136 million to Rs.1,958 million – a significant
growth of 72% over the previous year. Your Company’s actions
continued the improvement in the operating margins from 7.8%
to 11.5%.
The growth in revenues required the company to expand its operations
sites. Your company opened a new site at Southfield, USA and has
also opened a new site in Philippines in June 2011.
Your Company has continued on its 3- Year roadmap to grow revenues
by obtaining a higher wallet share from existing clients whilst adding
new logos, improve profitability by continuing operational efficiencies
and increasing business delivered from India and other offshore
geographies. Your Company’s investment in its sales team organized
on industry verticals continues to fuel the strong growth in its sales
pipeline and the management plans to further invest in this area.
OUTLOOK
The improvement in your company’s revenues in FY 2010-11 is expected
to continue in the current financial year. However, the challenging
environment resulting in pricing pressures from our customers coupled
with growing inflation in India and Philippines is likely to put severe
pressures on profitability in the current financial year. Further, the sharp
DIRECTORS’ REPOR T
Dear Shareholders,
On behalf of the Directors, it is our pleasure to present the Sixteenth Annual Report, together with the Audited Statement of A ccounts of Aditya
Birla Minacs Worldwide Limited (“the Company”) and its subsidiaries for the year ended 31
st
March, 2011.
FINANCIAL PERFORMANCE
The summarized Standalone and consolidated results of your Company and its subsidiaries are given in the table below. Both Stan dalone and
Consolidated results include the results of Aditya Birla IT Services and Aditya Birla Technologies, which were merged into Aditya Birla Worldwide
Limited with effect from 1
st
April 2010 (detailed in a separate note below).
(` Mn)
Standalone Results Consolidated Results
Particulars Year ended Year ended Growth Year ended Year Ended Growth
31/03/2011 31/03/2010 31/03/2011 31/03/2010
Total Income 2,461 2,263 9% 16,326 14,693 11%
Operating EBITDA 121 179 (32%) 1,772 1,136 56%
Profit/(loss) before Interest, Depreciation
& Tax (EBITDA) 75 167 (55%) 1,701 901 89%
Finance Charges 261 319 (18%) 353 469 (25%)
Depreciation 192 141 36% 654 605 8%
Provision for Income Tax & FBT
(including for earlier years) 3 2 50% 9 58 (84%)
Net Profit/(Loss) After Tax (380) (295) 649 (231) —
Profit/(Loss) brought forward from
previous year (543) (248) (2,455) (2,224)
Profit/(Loss) carried to Balance Sheet (924) (543) (1,806) (2,455)
depreciation of the U.S dollar as against the Canadian dollar will also
hurt our efforts to improve profitability.
Your company plans to a 2 pronged approach to fight the profitability
issues. One, we will try and improve our share of higher margin business
like non voice work and combining our IT and BPO capabilities to improve
revenue productivity. Secondly, your Company will continue its focus
on building operating efficiencies and optimization of costs to bring its
cost structure in line with the best in class in the BPO industry.
HUMAN CAPITAL
Human capital is the key resource for Information Technology Enabled
Services Industry. At the end of the year, on a consolidated basis, your
Company had 19,615 employees and 12,345 operations seats across
25 company leased centers.
MERGER
Your company had filed a petition before the High Court of Karnataka,
Bangalore, seeking sanction to the composite scheme of amalgamation
amongst Aditya Birla Minacs IT Services Limited, Aditya Birla Minacs
Technologies and Aditya Birla Minacs Worldwide Limited (the
“Companies”) and their respective shareholders which was approved
by the Board of directors of the Companies at their respective meetings
on July 23, 2010 (the “Original Scheme”). The High Court was pleased
to sanction the Original Scheme by its order dated November 3, 2010.
However, the Board of Directors of the Companies passed a resolution
on February 17, 2011 to modify the Original Scheme and your company
had again filed an application with the High Court of Karnataka seeking
sanction to the modified Composite scheme of amalgamation (the
“Modified Scheme”). The Company convened meetings of secured
and unsecured creditors of the Company pursuant to the High Court
order dated March 4, 2011 to approve the Modified Scheme on Apr 8,
2011 and the Modified Scheme was approved at the said meetings.
The Company had filed a petition with the High Court seeking sanction
of the Modified Scheme. The High Court was pleased to sanction the
Modified Scheme vide its order dated September 5, 2011.
SUBSIDIARY COMPANIES
Following are the Subsidiaries of your Company:-■ A V Transworks Limited (Canada)
■ Transworks Inc. (USA)
■ Aditya Birla Minacs Philippines Inc.
■ Aditya Birla Minacs Worldwide Inc. (Canada) and its following
subsidiaries
• The Minacs Group (U.S.A.) Inc
(2)
ADITYA BIRLA MINACS WORLDWIDE LIMITED
C M Y K
• Minacs Worldwide GmbH (Germany)
• Minacs Limited (UK)
• Minacs Worldwide S.A. de C.V. (Mexico)
• Minacs Kft (Hungary)
• Aditya Birla Minacs BPO Limited (UK)
• Aditya Birla Minacs BPO Private Limited
• Compass BPO Inc. (USA)
• Bureau of Collection Recovery LLC
• Bureau of Collection Recovery Inc
As per Section 212 of the Companies Act, 1956, the Directors’ Report,
Auditor’s Report, Balance Sheet and Profit and Loss Account of the
Company’s subsidiaries are required to be attached to the Balance Sheet
of the Company. However, vide General Circular No. 2/2011 dated
08.02.2011, the Central Government has granted general exemption
from the provisions of Section 212 of the Act subject to compliance
with conditions specified therein, which include inter- alia, that:-(i) The Board of Directors of the Company by resolution gives its
consent for not attaching the balance sheet of the subsidiary
concerned;
(ii) The company shall present in the annual report, the consolidated
financial statements of holding company and all subsidiaries duly
audited by its statutory auditors; and
(iii) The company shall disclose in the consolidated balance sheet the
following information in aggregate for each subsidiary including
subsidiaries of subsidiaries:- (a) capital (b) reserves (c) total assets
(d) total liabilities (e) details of investment (except in case of
investment in the subsidiaries) (f) turnover (g) profit before taxation
(h) provision for taxation (i) profit after taxation (j) proposed dividend;
In line with above, the consolidated financial statement of the Company
is presented in its annual report along with the summary information
on the Company’s subsidiaries as mandated in circular above. The annual
accounts of the Company’s subsidiaries and the related detailed
information shall be made available to shareholders of the Company
and the Company’s subsidiaries seeking such information on request
at any point of time. The annual accounts of the Company’s subsidiaries
shall also be kept for inspection during business hours by any
shareholders at the Registered Office of the Company and of the
Company’s subsidiaries. A hard copy of details of accounts of
subsidiaries shall be furnished to any shareholder on demand.
EMPLOYEE STOCK OPTION PLAN
Your Company approved a new Employee Stock Option Plan (ESOP) in
the Extra-Ordinary General Meeting held on Dec 18, 2009. Under the
new ESOP Scheme, a total of 1,897,337 (One million Eight hundred
ninety seven thousand three hundred and thirty seven) options would
be available for being granted to eligible employees of your Company.
Each option when exercised would be converted into one Equity share
of Re. 1 each fully paid-up.
Till March 31, 2011, your Company had granted 1,367,000 options to
its full time employees leaving a balance of 530,337 for future grants.
DIRECTORS
During the year, Mr. Kumar Mangalam Birla resigned as director with
effect from August 28, 2010. The Board places on record its sincere
appreciation for the valuable services rendered by Mr. Kumar Mangalam
Birla.
Mr. Kumar Mangalam Birla and Mr. Deepak Jayant Patel were appointed
as additional directors at the Board meeting held on October 12, 2010.
Resolutions seeking your approval for the appointment of Mr. Deepak
Jayant Patel have been incorporated in the Notice of the ensuing Annual
General Meeting of the Company.
Mr. Deepak Jayant Patel was appointed as Whole-time director of the
Company with effect from October 12, 2010 for a period of three years
and the same was approved by the members at the Extra-ordinary
General meeting held on October 12, 2010.
In accordance with Article 100 of the Articles of Association, Mr. Sushil
Agarwal and Mr. Devajyoti Bhattacharya, Directors retire by rotation at
the forthcoming Annual General Meeting. Both of them, being eligible,
offer themselves for reappointment.
DIRECTORS’ RESPONSIBILITY STATEMENT
Your Company is committed to maintaining the highest standards of
Corporate Governance. Though your Company is an unlisted Company
and hence Clause 49 of the Listing Agreement is not applicable, yet
your Company, on a suo moto basis has taken necessary initiatives to
comply with the provisions of the said clause to the extent possible.
As required under Section 217(2AA) of the Companies Act, 1956, your
Directors confirm that:
i) In the preparation of the annual accounts, the applicable accounting
standards have been followed along with proper explanation relating
to material departures;
ii) The Directors have selected such accounting policies and applied
them consistently and made judgments and estimates that are
reasonable and prudent so as to give a true and fair view of the
state of affairs of the Company at the end of the financial year and
of the loss of the Company for that period;
iii) The Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with
the provisions of this Act for safeguarding the assets of the
Company and for preventing and detecting fraud and other
irregularities;
iv) The Directors have prepared the annual accounts on a going
concern basis.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION,
FOREIGN EXCHANGE EARNINGS AND OUTGO
The information required under the Companies (Disclosure of Particulars
in the Report of the Board of Directors) Rules, 1988 for the year ended
March 31, 2011 is given in Annexure ’A’ forming part of this Report.
PARTICULARS OF EMPLOYEES
In accordance with the provisions of Section 217(2A) read with
Companies (Particulars of Employees) Rules, 1975 and Companies
(Particulars of Employees) Amendment Rules, 2011, the names and
other particulars of employees are set out in the Directors’ report as
Annexure ’B’. It may be noted that in accordance with the notifications
dated March 24, 2004 and March 31, 2011 issued by the Ministry of
Corporate Affairs, Government of India, particulars of employees posted
and working in a country outside India, not being directors or their
relatives drawing more than Rupees Six Million per financial year or
Rupees five hundred thousand per month, as the case may be, are not
included in this statement but such particulars shall be furnished to the
Registrar of Companies. Such particulars shall be made available to any
shareholder on specific request made by him / her during the course of
the Annual General Meeting.
PUBLIC DEPOSITS
Your Company has not accepted any fixed deposits during the financial
year 2010-11. There was no unclaimed deposit and interest accrued as
on March 31, 2011.
STATUTORY AUDITORS
The report of the Statutory Auditors is attached to this report. All the
notes to Schedules and Accounts are self-explanatory and do not call
for any further comments.
Your Directors request you to appoint Auditors for the current year as
set out in the accompanying notice of the ensuing Annual General
Meeting.
ACKNOWLEDGEMENT
Your Directors place on record their appreciation for employees at all
levels, who have contributed to the growth and performance of your
Company.
Your Directors also thank the clients, vendors, bankers, shareholders
and advisers of the Company for their continued support.
Your Directors also thank the Central and State Governments, and other
statutory authorities for their continued support.
For and on behalf of the Board
Aditya Birla Minacs Worldwide Limited
Date : July 27, 2011 Sushil Agarwal Dr. Rakesh Jain
Place: Mumbai Director Director
(3)
ADITYA BIRLA MINACS WORLDWIDE LIMITED
C M Y K
ANNEXURE – A
Particulars pursuant to Companies (Disclosure of particulars in the
report of the Board of Directors) Rules, 1988
1. Conservation of energy
Your Company’s operations involve very low energy consumption.
However, measures are taken to reduce energy consumption by
using energy-efficient equipment.
As energy costs comprise a very small part of our total expenses,
the financial impact of these measures is not material.
2. Research and development (R&D)
a) R&D initiatives at institutes of national importance
As the Company was mainly engaged in the business of call
center activities, there are no matters to report on these
aspects
b) Specific areas for R&D at your Company
c) Benefits derived as a result of R&D activity
d) Future plan of action
e) Expenditure on R&D for the year ended 31
st
March, 2011
` Nil
3. Technology absorption, adaptation and innovation:
Your Company continues to use latest hardware and software to
improve the quality of its products and services. The Company will
continue to invest in state–of–the–art technology and infrastructure
to improve the productivity and quality of its products and services.
4. Foreign exchange earnings and outgo (Standalone)
( ` /Mn)
Foreign Exchange Year ended Year ended
31
st
March, 2011 31
st
March, 2010
Earnings 1488 1488 1604
Outflow (Including
capital goods & services) 281 281 285
5. Activities relating to exports, initiatives taken to increase
exports, development of new export markets for products and
services and export plans
In fiscal 2010-11, 61% of revenues were derived from exports.
Your Company established a substantial direct sales marketing
network in its strategic markets in North America and Europe to
grow its business in these regions. Your Company is also
addressing other Asia Pacific countries as potential markets for
growth.
(4)
ADITYA BIRLA MINACS WORLDWIDE LIMITED
C M Y K
AUDI TORS’ REPOR T
To
The Members of Aditya Birla Minacs Worldwide Limited
1. We have audited the attached Balance Sheet of Aditya Birla Minacs
Worldwide Limited (‘the Company’) as at March 31, 2011 and also
the Profit and Loss account and the cash flow statement for the
year ended on that date annexed thereto. These financial
statements are the responsibility of the Company’s management.
Our responsibility is to express an opinion on these financial
statements based on our audit.
2. We conducted our audit in accordance with auditing standards
generally accepted in India. Those Standards require that we plan
and perform an audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
3. As required by the Companies (Audito’s Report) Order, 2003 (as
amended) (“the Order”) issued by the Central Government of India
in terms of sub-section (4A) of Section 227 of the Companies Act,
1956 (“the Act”), we enclose in the Annexure a statement on the
matters specified in paragraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to above, we
report that:
i. We have obtained all the information and explanations, which
to the best of our knowledge and belief were necessary for
the purposes of our audit;
ii. In our opinion, proper books of account as required by law
have been kept by the Company so far as appears from our
examination of those books;
iii. The balance sheet, profit and loss account and cash flow
statement dealt with by this report are in agreement with the
books of account;
iv. In our opinion, the balance sheet, profit and loss account and
cash flow statement dealt with by this report comply with the
accounting standards referred to in sub-section (3C) of section
211 of the act.
v. On the basis of the written representations received from the
directors, as on March 31, 2011, and taken on record by the
Board of Directors, we report that none of the directors is
disqualified as on March 31, 2011 from being appointed as a
director in terms of clause (g) of sub-section (1) of section 274
of the Act.
vi. In our opinion and to the best of our information and according
to the explanations give to us, the said accoutn give the
information required by the act, in the manner so required
and give a true and fair view in conformity with the accounting
principles generally accepted in India;
a) in the case of the balance sheet, of the state of affairs of
the Company as at March 31, 2011;
b) in the case of the profit and loss account, of the loss for
the year ended on that date; and
c) in the case of cash flow statement, of the cash flows for
the year ended on that date.
For S.R. BATLIBOI & ASSOCIATES
Firm Registration No. 101049W
Chartered Accountants
per Amit Majumdar
Partner
Membership No. 36656
Place: Mumbai
Date: July 27, 2011
Annexure ref er red to in paragraph [3] of our report of e ven date
Re: Aditya Birla Minacs Worldwide Limited (‘the Company’)
1. (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets.
(b) Fixed assets have been physically verified by the
management during the year and no material discrepancies
were identified on such verification.
(c) There was no disposal of a substantial part of fixed assets
during the year.
ii. The Company does not have any inventory and hence the
provisions of clause 4(ii) of the Order are not applicable to the
Company and hence not commented upon.
iii. (a) According to the information and explanations given to us,
the Company has not granted any loans, secured or
unsecured to companies, firms or other parties covered in
the register maintained under section 301 of the Act.
Accordingly, the provisions of clause 4(iii) (a) to (d) of the
Order are not applicable to the Company and hence not
commented upon.
(b) According to information and explanations given to us, the
Company has not taken any loans, secured or unsecured,
from companies, firms or other parties covered in the register
maintained under section 301 of the Act. Accordingly, the
provisions of clause 4(iii) (e) to (g) of the Order are not
applicable to the Company and hence not commented upon.
iv. In our opinion and according to the information and explanations
given to us, there is an adequate internal control system
commensurate with the size of the Company and the nature of
its business, for the purchase of fixed assets and for the sale of
services. During the course of our audit, we have not observed
any major weakness or continuing failure to correct any major
weakness in the internal control system of the company in respect
of these areas. The activities of the Company do not involve
purchase of inventories and sale of goods.
v. According to the information and explanations provided by the
management, we are of the opinion that there are no contracts
or arrangements that need to be entered in the register
maintained under section 301 of the Act.
vi. The Company has not accepted any deposits from the public.
vii. In our opinion, the Company has an internal audit system
commensurate with the size and nature of its business.
viii. To the best of our knowledge and as explained, the Central
Government has not prescribed the maintenance of cost records
under clause (d) of sub-section (1) of section 209 of the Act for
the products of the Company.
ix. (a) The Company is generally regular in depositing with
appropriate authorities undisputed statutory dues including
provident fund, employees’ state insurance, income tax,
sales tax, wealth tax, service tax, custom duty, excise duty,
cess and other material statutory dues applicable to it. The
provisions relating to investor education and protection fund
are not applicable to Company.
Further, since the Central Government has till date not
prescribed the amount of cess payable under section 441 A
of the Act, we are not in a position to comment upon the
regularity or otherwise of the Company in depositing the
same.
(b) According to the information and explanations given to us,
no undisputed amounts payable in respect of provident fund,
employees’ state insurance, income tax, wealth tax, service
tax, sales tax, custom duty, excise duty, cess and other
material statutory dues were outstanding, at the year end,
for a period of more than six months from the date they
became payable. The provisions relating to investor
education and protection fund are not applicable to Company.
(5)
ADITYA BIRLA MINACS WORLDWIDE LIMITED
C M Y K
(c) According to the information and explanations given to us,
there are no dues of income tax, sales tax, wealth tax, service
tax, customs duty, excise duty and cess which have not
been deposited on account of any dispute, except as follows:
Name of Nature Amount Period to Forum
the statute of dues (Rs.) which the where
amount dispute is
relates pending
Income Tax Penalty 7,329,260 FY 2003- Bombay
Act 1961 for dis- 2004 High
allowance Court
of expenses
x. The Company’s accumulated losses at the end of the financial
year are less than fifty per cent of its net worth. The Company
has incurred cash loss during the year and in the immediately
preceding financial year.
xi. Based on our audit procedures and as per the information and
explanations given by the management, we are of the opinion
that the Company has not defaulted in repayment of dues to a
bank or debenture holders. The Company did not have any
outstanding dues in respect of a financial institution.
xii. According to the information and explanations given to us and
based on the documents and records produced before us, the
Company has not granted loans and advances on the basis of
security of way of pledge of shares, debentures and other
securities.
xiii. In our opinion, the Company is not a chit fund or a nidhi / mutual
benefit fund / society. Therefore, the provisions of clause 4(xiii)
of the Order are not applicable to the Company.
xiv. In our opinion, the Company is not dealing in or trading in shares,
securities, debentures and other investments. Accordingly, the
provisions of clause 4(xiv) of the Order are not applicable to the
Compnay.
xv. According to the information and explanations given to us, the
Company has given guarantee for loans taken by others from
bank and financial institutions. the terms and conditions whereof,
in our opinion, are not prima-facie prejudicial to the interest of
the Company.
xvi. Based on information and explanations given to us by the
management, term loans were applied for the purpose for which
the loans were obtained.
xvii. According to the information and explanations given to us and
on an overall examination of the balance sheet of the Company,
we report that no funds raised on short-term basis have been
used for long-term investment.
xviii. The Company has not made any preferential allotment of shares
to parties or companies covered in the register maintained under
section 301 of the Act.
xix. The Company has unsecured debentures outstanding during the
year, on which no security or charge is required to be created.
xx. The Company has not raised any money by public issues during
the year.
xxi. Based upon the audit procedures performed for the purpose of
reporting the true and fair view of the financial statements and
as per the information and explanations given by the
management, we report that no fraud on or by the Company has
been noticed or reported during the year.
For S.R. BATLIBOI & ASSOCIATES
Firm Registration No. 101049W
Chartered Accountants
per Amit Majumdar
Partner
Membership No. 36656
Place: Mumbai
Date: July 27, 2011
(6)
ADITYA BIRLA MINACS WORLDWIDE LIMITED
C M Y K
BALANCE SHEET AS AT 31S T MARCH, 2011
A s At 31st A s At 31st
Mar, 20 11 Mar, 20 10
Schedule ` Lacs ` Lacs
I. SOURCES OF FUNDS
1 Shareholders’ Funds
Share capital 1 234.92 234.92
Employee stock options
outstanding (Refer Note 9
of schedule 17) 576.53 126.15
Reserves and surplus 2 27,795.68 27,795.68
2 Loan funds
Secured loans 3 46,218.48 44,399.77
Unsecured loans 4 25,000.00 25,000.00
Total 99,825.61 97,556.52
II. APPLICATION OF FUNDS
1 Fixed Assets Fixed Assets 5
Gross Block 16,471.07 12,653.09
Less : Accumulated
Depreciation / Amortization 10,698.24 8,778.26
Net Block 5,772.83 3,874.83
Capital work-in-progress
(including capital advances) 489.63 1,399.18
2 Investments Investments 6 68,631.20 76,935.66
3 Current Assets,
Loans and Advances :
Accured interest — 75.53
Sundry debtors 7 5,162.24 3,803.84
Cash and bank balances 8 839.68 18.15
Loan to subsidiaries 15,185.23 11,009.19
Loans and advances 9 3,422.56 2,559.02
(A) (A) 24,609.71 17,465.73
Less: Current Liabilities
and Provisions : and Provisions : 10
Current liabilities 8,741.71 7,417.50
Provisions 172.48 133.11
(B) (B) 8,914.19 7,550.61
Net Current Assets (A-B) (A-B) 15,695.52 9,915.12
4 Profit and Loss account Profit and Loss account 9,236.43 5,431.73
Total Total 99,825.61 97,556.52
Notes to Accounts Notes to Accounts 17
The schedules referred to above and notes to accounts form an integral part of the
Balance Sheet.
As per our report of even date
For S.R. Batliboi & Associates
Firm Registration No. 101049W
Chartered Accountants
per Amit Majumdar
Partner
Membership No. 36656
Place: Mumbai
Date: July 27, 2011
For and on behalf of the Board of Directors of
Aditya Birla Minacs Worldwide Ltd.
Dr. Rakesh Jain
Director
Sushil Agarwal
Director
Ramesh Kamath
Chief Financial Officer
Date : July 27, 2011
PROFIT & LOSS ACCO UNT FOR THE YEAR ENDED 31ST
MARCH, 2011
For the For the
year ended year ended
31st March 31st March
2011 2010
Schedule ` Lacs ` Lacs
INCOME :
Service charges 24,400.99 22,111.06
Other income 11 206.21 522.38
Total Total 24,607.20 22,633.44
EXPENDITURE :
Personnel expenses 12 15,682.87 12,993.92
Other operating expenses 13 4,686.67 4,015.80
Administrative expenses 14 3,048.53 3,602.29
Marketing / business
development expenses 15 434.31 353.77
Financial charges /
interest cost 16 2,614.80 3,186.42
Depreciation / amortization 1,915.92 1, 413.85
Total 28,383.10 25,566.05
Loss for the year (3,775.90) (2,932.61)
Less: Withholding tax
written off / provided for 28.80 19.55
Net Loss for the year (3,804.70) (2,952.16)
Loss brought forward
from previous year (5,431.73) (2,479.57)
Deficit carried to
Balance Sheet (9,236.43) (5,4 31.73)
Earnings Per Share
Basic Weighted Average
number of shares 23,491,711 23,491,711
Diluted Weighted Average
number of shares 24,858,711 23,864,586
Basic earnings/(loss) per share
(Nominal value of shares ` 1 each
Previous year ` 1 each) ` (16.20) (12.57)
Diluted earnings/(loss) per share
((Nominal value of shares ` 1 each
Previous year ` 1 each) ` (16.20) (12.57)
Notes to Accounts Notes to Accounts 17
The schedules referred to above and notes to accounts form an integral part of the
Profit and Loss Account.
As per our report of even date
For S.R. Batliboi & Associates
Firm Registration No. 101049W
Chartered Accountants
per Amit Majumdar
Partner
Membership No. 36656
Place: Mumbai
Date: July 27, 2011
For and on behalf of the Board of Directors of
Aditya Birla Minacs Worldwide Ltd.
Dr. Rakesh Jain
Director
Sushil Agarwal
Director
Ramesh Kamath
Chief Financial Officer
Date : July 27, 2011
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ADITYA BIRLA MINACS WORLDWIDE LIMITED
C M Y K
CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2011
` Lacs
For the Year ended 31.3.2011 For the Year ended 31.3.2010
A. Cash flows from Operating Activities
Net Loss for the year (3,775.92) (2,932.61)
Adjustments for:
Depreciation / Amortization 1,915.92 1,413.85
Loss/(Profit) on Sale of Fixed Assets — 53.05
Unrealised foreign exchange (gain)/ loss (Net) 943.66 63.95
Interest Income (130.02) (222.21)
Gain On Mutual Fund Investments (57.58) (226.62)
Dividend Income — (68.33)
Finance/Interest Expense 2,614.80 3,186.42
Employee stock compensation expenses 450.38 126.15
Provision for doubtful debt 126.22 2.95
Operating Profit before working capital changes 2,087.46 1,396.60
Movements in working capital :
(Increase)/Decrease in Sundry Debtors (1,484.62) (194.90)
(Increase)/Decrease in Loans & Advances (640.41) (123.63)
Increase/(Decrease) Current Liabilities & Provisions 1,360.17 2,498.67
Cash generated from operations 1,322.60 3,576.73
Loan to subsdiaries (4,176.04) (419.60)
Add/(Less): Direct Taxes (including TDS) paid)/Tax Refunds (251.93) (82.68)
Net Cash flow from Operating Activities (3,105.37) 3,074.45
B. Cash Flows from Investing Activities
Purchase of Fixed Assets (2,904.32) (3,872.59)
Proceeds from sale of Fixed Assets — 116.66
Investment in Subsidaries (345.54) (13,247.66)
(Purchase)/Sale of investment 8,650.00 (5,350.00)
Interest income received 205.55 151.14
Dividend received 57.58 294.95
Net Cash from/(for) Investing Activities 5,663.27 (21,907.49)
C. Cash flow from Financing Activities
Proceeds from/(repayment of) Bank Borrowings - Unsecured — (2,500.00)
Proceeds from/(repayment of) Long-term borrowings - Secured 875.05 (491.49)
Proceeds from Issue of Compulsorily Convertible Debentures — 25,000.00
Interest/financial charges paid (2,611.43) (3,170.95)
Net Cash generated/(used) in Financing Activities (1,736.38) 18,837.56
D. Foreign Exchange difference on translation of foreign currency cash and cash equivalents Foreign Exchange difference on translation of foreign currency cash and cash equivalents — (0.02)
Net Increase in cash and Cash equivalants during the year 821.55 4.50
Cash and cash equivalants at the beginning of the year 16.21 11.71
Cash and cash equivalants at the end of the year 837.74 16.21
Notes:
Components of Cash and Cash Equivalents As at 31.3.2011 As at 31.3.2010
i) Cash Balance on hand 6.32 3.84
ii) Balance with Scheduled and other Banks :
- in Current Account 831.42 12.37
Total 837.74 16.21
Note:
i) Fixed Deposit of ` 1.94 Lacs (Previous year ` 1.94 Lacs) given as margin money has not been considered as cash and cash equivalents
As per our report of even date
For S.R. Batliboi & Associates
Firm Registration No. 101049W
Chartered Accountants
per Amit Majumdar
Partner
Membership No. 36656
Place: Mumbai
Date: July 27, 2011
For and on behalf of the Board of Directors of
Aditya Birla Minacs Worldwide Ltd.
Dr. Rakesh Jain
Director
Sushil Agarwal
Director
Ramesh Kamath
Chief Financial Officer
Date : July 27, 2011
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ADITYA BIRLA MINACS WORLDWIDE LIMITED
C M Y K
SCHEDULE 5 - FIXED A SSE TS Rs. Lacs
GROSS BLOCK DEPRECIATION / AMORTIZATION NET BLOCK
Particulars As on Additions Deductions As on As on For the Deductions As on As on As on
Apr-1-10 Mar-31-11 Apr-1-10 Year Mar-31-11 Mar-31-11 Mar-31-10
Computers and telecommunication
equipments 8,158.58 2,259.27 — 10,417.86 5,965.04 1,063.01 — 7,028.05 3,389.81 2,193.54
Plant and machinery 1,676.56 507.46 — 2,184.02 991.01 246.95 — 1,237.96 946.06 685.55
Office equipment 322.08 57.19 — 379.27 195.70 45.97 — 241.67 137.60 126.38
Furniture and fixtures 649.20 319.29 — 968.49 420.75 124.22 — 544.97 423.52 228.45
Leasehold improvements 1,488.28 464.90 — 1,953.18 979.64 344.36 — 1,324.00 629.18 508.64
Intangible assets
Software 52.19 204.20 — 256.39 52.19 0.14 — 52.33 204.06 —
Client acquisition cost 279.98 — — 279.98 164.11 87.65 — 251.76 28.22 115.87
Motor car 26.22 5.66 — 31.88 9.82 7.68 — 17.50 14.38 16.40
Total 12,653.09 3,817.97 — 16,471.07 8,778.26 1,919.98 — 10,698.24 5,772.83 3,874.83
Previous Year 10,679.49 2,549.47 575.87 12,653.09 7,770.56 1,413.85 406.15 8,778.26 3,874.83
Notes:
The opening gross block of fixed assets, accumulated depreciation and net block has been reclassified as per the asset categori es, per se.
A s At A s At
31st Mar, 20 11 31st Mar, 20 10
` Lacs ` Lacs
A s At A s At
31st Mar, 20 11 31st Mar, 20 10
` Lacs ` Lacs
SCHEDULES FORMING P ART OF THE BALANCE SHEET
As At As At
31st Mar, 2011 31st Mar, 2010
` Lacs ` Lacs
SCHEDULE - 1 - SHARE CAPITAL
Authorised Capital
30,000,000 (Previous Year 30,000,000)
Equity Shares of ` 1/- each 300.00 300.00
300.00 300.00
Issued, Subscribed and Paid up Capital
2,34,91,711 (P Y 2,34,91,711) Equity Shares of
` 1/- each fully paid up 234.92 234.92
(Of the above 20,738,378 (Previous Year: 20,738,378)
equity shares are held by Aditya Birla Nuvo Limited,
being the holding company, including 7 shares
held by them through their nominees)
Total 234.92 234.92
SCHEDULE - 2 - RESERVES and SURPLUS
Securities Premium Account 27,795.68 27,795.68
Total Total 27,795.68 27,795.68
SCHEDULE - 3 - SECURED LO ANS
i) Working capital facility from banks 2,304.06 —
(Secured against receivables)
(Repayable within one year - NIL ;
Previous Year ` 899.42 Lacs )
ii) Term loan from banks 2,000.00 3,000.00
(Secured against the first paripassu charge
on the moveable assets )
(Repayable within one year - Rs 1,000 Lacs;
Previous Year ` 2,000 Lacs )
iii) ECB from banks 41,914.42 41,399.77
(Secured against the first charge on the
moveable assets and second charge on
Receivables)
(Repayable within one year ` 207.59 Lacs,
Previous Year - ` 592.07 Lacs)
Total Total 46,218.48 44,399.77
SCHEDULE - 4 - UNSECURED LOANS
Compulsorily convertible debentures 25,000.00 25,000.00
(Refer note 17 of schedule 17)
Total Total 2 5,000.00 25,000.00
SCHEDULE - 6 - INVESTMENTS
Long Term Investments Long Term Investments (At Cost)
In Subsidiary Companies
Trade, unquoted, fully paid-up
NIL (Previous Year NIL) equity shares of US $ 1 each
in Transworks Inc. — —
127,000,001 (Previous Year 127,000,001) equity shares
of CAD 1 each in AV Transworks Limited 53,369.34 53,369.34
30,000,000 (Previous Year 30,000,000) preference
shares of CAD 1 each in A V Transworks Limited 13,690.00 13,344.46
969,232 (Previous Year 490,000) shares of Peso100
each in Aditya Birla Minacs Philippines Inc. 871.86 448.01
Share application money paid to Aditya Birla Minacs
Philippines Inc. — 423.85
Current Investments Current Investments (At lower of cost and
Net Assets Value)
Unquoted
(4,461,070.79 units of ` 15.69 each)
– In Mutual Funds - Birla Sunlife Cash Plus -Instl. Premium - Growth 216.86 850.00
– Birla Sunlife Savings Fund Instl. Growth 483.14 8,500.00
Total Total 68,631.20 76,935.66
No. of units The following Investments were purchased & Cost Sale Value Gain
sold during the period : (` Lacs) (` Lacs) ( ` Lacs)
364,571,417 B irla Sunlife Savings Fund -Instl. Premium - Growth 4,982.82 4,999.55 16.72
114,706,916 Birla Sunlife Cash Plus - Instl.
Premium - (Growth) - I 17,385.00 17,406.24 21.24
99,223,350 Birla Sunlife Cash Plus - Instl.
Premium - (Growth) - II 14,709.83 14,728.54 18.71
1,119,188 Birla Sunlife Saving - Instl. Prem. - Growth 200.00 200.91 0.91
Total Total 37,277.65 37,335.24 57.58
A s At A s At
31st Mar, 20 11 31st Mar, 20 10
` Lacs ` Lacs
SCHEDULE - 7 - SUNDR Y DEBT ORS
Debts outstanding over six months
i) Unsecured, considered good 18.50 42.81
Unsecured, considered doubtful 129.17 2.95
Less:- Provision for doubtful debts (129.17) (2.95)
18.50 42.81
ii) Other Debts
Unsecured, considered good 5,143.74 3,761.03
[Includes unbilled revenue of ` 2,056.86 Lacs
(Previous year ` 2,070.47 Lacs)]
Total Total 5,162.24 3,803.84
Included in Sundry Debtors are dues from
Companies under the same management:
Aditya Birla Financial Shared Services
Private Limited 1.51 1.92
Birla Sun Life Insurance Company Limited 163.53 228.32
SCHEDULE - 8 - CASH AND BANK BALANCES
i) Cash on hand 6.32 3.84
ii) Balance with scheduled Banks :
On current account 829.65 10.70
On fixed deposits (As margin against bank
guarantee) 1.94 1.94
Balance with other Banks :
On Current Account 1.77 1.67
(with Natwest Bank, UK. Maximum
Balance outstanding during the year
` 1.77 lacs (Previous year - ` 30.99 )
Total Total 839.68 18.15
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ADITYA BIRLA MINACS WORLDWIDE LIMITED
C M Y K
F or the F or the
y ear ended y ear ended
31st Marc h, 2011 31st Marc h, 2010
` Lacs ` Lacs
SCHEDULE - 14 - ADMINISTRATIVE EXPENSES
i) Legal & professional fees 600.80 453.26
ii) Telephone expenses 85.46 89.25
iii) R ecruitment & relocation 425.41 206.22
iv) Auditors remuneration
– Audit fees 33.50 36.86
– Out of pocket expenses 1.91 0.03
v) Vehicle expenses 292.26 159.71
vi) Seminar & outside training expenses 89.38 65.59
vii) Printing & stationery 58.05 37.13
viii) Di rectors sitting fees 1.85 1.65
ix) Insurance charges 26.79 35.71
x) Travelling expenses 399.78 329.46
xi) Loss / (Profit) on sale of fixed assets — 53.05
xii) Rates and Taxes 26.38 43.00
xiii) Provision for doubtful Debt 126.22 2.95
xv) Foreign Exchange loss on Loans taken/given 556.18 1,030.98
xvi) Foreign Exchange Fluctuation (net) - Others 111.03 807.77
xiv) Miscellaneous expenses 213.53 258.68
Total Total 3,048.53 3,611.30
SCHEDULE - 15 - MARKETING /
BUSINESS DEVELOPMENT EXPENSES
i) Business promotion expenses 4.97 6.18
ii) Advertisement and branding expenses 3.60 3.42
iii) Ente rtainment expe nses 5.21 3.35
iv) Marketing expenses 411.84 324.77
v) Telemarketing registration & bonding expenses 8.69 16.05
Total 434.31 353.77
SCHEDULE - 16 - FINANCIAL CHARGES & INTEREST COST
i) Arrangement Fees 96.66 427.56
ii) Interest on external commercial borrowings
and term Loan 2,418.51 2,666.73
iii) Interest on wo rking capital and demand Loan 21.83 73.05
v) Other financial charges 77.80 19.08
Total Total 2,614.80 3,186.42
A s At A s At
31st Mar, 20 11 31st Mar, 20 10
` Lacs ` Lacs
SCHEDULE - 9 - LO ANS AND ADVANCES
(Unsecured considered good)
i) Advances recoverable in cash or in kind or for
value to be received 1,011.57 1,383.30
ii) Tax deducted at source 447.06 223.93
iii) Deposits- other s 963.93 951.79
iv) Inter-company deposits 1,000.00 —
Total Total 3,422.56 2,559.02
Included in Loans and Advances are dues from
Companies under the same management:
Aditya Birla Minacs IT Services Limited 1,000.00 —
[Maximum amount outstanding during the year ` 1,000 lacs
( Previous Year- ` Nil)]
SCHEDULE - 10 - CURRENT LIABILITIES & PROVISIONS
i) Sundry creditors (including book overdraft of ` Nil Lacs;
Previous Year. ` 476.65 Lacs) 8,010.19 6,983.25
ii) Interest accrued but not due 212.71 216.08
iii) Subsidiary companies 290.65 (36.54)
iv) Other li abilities 228.16 254.71
8,741.71 7,417.50
PROVISIONS
i) Gratuity 50.45 29.91
ii) Leave encashment 122.03 103.20
172.48 133.11
Total Total 8,914.19 7,550.61
For the For the
year ended year ended
31st March, 2011 31st March, 2010
` Lacs ` Lacs
SCHEDULE - 11 - OTHER INCOME
i) Gain on mutual fund investments 57.58 226.62
ii) Dividend from subsidiary — 68.33
iii) M iscellaneous income 18.61 5.22
iv) Interest income
– on inter-company deposits
(TDS: ` 0.08 Lacs; Previous Year. ` 0.48 Lacs) 16.87 2.13
– on loan to subsidiary (TDS: ` 19.55 Lacs;
Previous Year ` 80.82 Lacs) 113.15 220.08
Total 206.21 522.38
SCHEDULE - 12 - PERSONNEL EXPENSES
i) Salaries & other employee benefits 12,377.97 10,715.15
ii) Contribution to provident and other funds 871.08 598.38
iii) Employee Compensation under ESOP 450.38 126.15
v) Staff Welfare Expenses 1,916.58 1,510.37
iv) Gratuity (Refer Note 16 schedule 17) 66.86 43.87
Total Total 15,682.87 12,993.92
SCHEDULE - 13- OTHER OPERATING EXPENSES
Facility Expenses
i) Rent charges 1,602.77 1,310.15
ii) Electricity expenses 1,112.91 835.34
iii) House keeping expenses 201.47 136.02
iv) Security charges 203.72 162.85
iv) Repairs & maintenance
– Building 8.34 71.26
– Others 253.16 196.21
v) Hire Charges 95.57 41.07
Technology Expenses
vi) Connectivity charges 668.51 795.08
vii) R epairs & maintenance - Machine ry 331.65 375.75
viii) Software & support expenses 208.57 92.07
Total Total 4,686.67 4,015.80
(10)
ADITYA BIRLA MINACS WORLDWIDE LIMITED
C M Y K
SCHEDULE – 17: NOTES TO ACCO UNTS
1. Nature of operations
Aditya Birla Minacs Worldwide Limited (“the Company”) (ABMWL) provides
customized business process outsourcing (BPO) solutions focused mainly on the
areas of capability, contact center solutions, integrated marketing services and
knowledge process outsourcing.
2. ACCOUNTING POLICIES
a. Basis of preparation
The financial statements have been prepared to comply in all material respects
with the Accounting Standards notified by Companies (Accounting Standards)
Rules, 2006, (as amended) and the relevant provisions of the Companies
Act, 1956. The financial statements have been prepared under the historical
cost convention on an accrual basis. The accounting policies have been
consistently applied by the Company and are consistent with those used in the
previous year.
b. Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent liabilities at the date of the financial statements and the results of
operations during the reporting period end. Although these estimates are based
upon management’s best knowledge of current events and actions, actual
results could differ from these estimates.
c. Revenue recognition
i) Revenue is derived from both time-based and unit-priced contracts.
Revenue is recognized as related services are performed based on
agreements / arrangements with the customers
ii) Interest income is recognised on a time proportion basis taking into
account the amount outstanding and the rate applicable.
iii) Divi dend is recognised when the shareholders’ right to receive payment
is established bythe balance sheet date.
d. Fixed assets
Fixed assets are stated at cost less accumulated depreciation and impairment
losses if any. Cost comprises the purchase price and any attributable cost of
bringing the asset to its working condition for its intended use
e. Depreciation
Depreciation on assets is provided on straight-line basis, on the rates based on
the useful lives as estimated by the management, which are greater than the
corresponding rates prescribed in Schedule XIV of the Companies Act, 1956.
The individual assets costing less than ` 5,000/- are depreciated in full in the
year of purchase. The management’s estimate of useful lives of the various
fixed assets is given hereby:
Assets Estimated useful life
i) Computers Equipment/Int angibles 2 - 4 years
ii) Telecommunication Equipment 5 years
iii) Plant & Machinery 5 years
iv) Office Equipment 5 Years
v) Furniture & Fixtures 6 Years
vi) Motor Car 5 Years
Leasehold improvements are depreciated over the shorter of the estimated
useful life of the asset and the lease term of the premises.
f. Leases
Finance lease, which effectively transfers to the Company substantially all the
risks and benefits incidental to ownership of the leased item, are capitalized at
lower of fair value and present value of the minimum lease payments at the
inception of the lease term and disclosed as leased assets. Lease payments
are apportioned between the finance charges and reduction of the lease liability
based on implicit rate of return. Finance charges are charged directly against
income. Lease management fees, lease charges and other initial direct costs
are capitalized.
Leases where the lessor effectively retains substantially all the risks and benefits
of ownership of the leased item, are classified as operating leases. Operating
lease payments are recognized as an expense in the Profit and Loss account
on a straight-line basis over the lease term.
g. Investments
i) Investments that are readily realizable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as long-term investments.
ii) Long-term investments are valued at cost. Any decline in the value of
investments other than temporary, is provided for and charged to the
profit & loss account.
iii) The current investments are carried at lower of cost and net asset value
determined on an individual investment basis.
h. Impairment
The carrying amounts of assets are reviewed at each balance sheet date if there
is any indication of impairment based on internal/external factors.
An impairment loss is recognized wherever the carrying amount of an asset
exceeds its recoverable amount. The recoverable amount is the greater of the
asset’s net selling price and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a pre-tax discount
rate that reflects current market assessments of the time value of money and
risks specific to the asset.
i. Transactions in Foreign Currency
i) Initial Recognition
Foreign currency transactions are recorded in the reporting currency, by
applying to the foreign currency amount the exchange rate between the
reporting currency and the foreign currency at the date of the transaction.
ii) Conversion
Foreign currency monetary items are reported using the closing rate.
Non-monetary items, which are carried in terms of historical cost
denominated in a foreign currency, are reported using the exchange rate
at the date of the transaction.
iii) Translation of Integral foreign operation
The financial statements of foreign operations whose operations are
integral to the operations of the Company are translated using the
principles and procedures as if the transactions of the foreign operations
had been those of Company itself.
iv) Exchange Differences
Exchange differences arising on the settlement of monetary items or on
reporting company’s monetary items at rates different from those at which
they were initially recorded during the year, or reported in previous financial
statements, are recognized as income or as expenses in the year in which
they arise.
v) Forward Exchange Contracts not intended for trading or speculation
purposes
The premium or discount arising at the inception of forward exchange
contracts is amortized as expense or income over the life of the contract.
Exchange differences on such contracts are recognized in the statement
of profit and loss in the year in which the underlying transactions occur.
Any profit or loss arising on cancellation or renewal of forward exchange
contract is recognized as income or as expense for the year.
vi) Accounting policy for Derivatives
The Company uses derivative financial instruments such as forward
exchange contracts, currency swaps and interest rate swaps to hedge
its risks associated with foreign currency fluctuations and interest rate.
Currency and interest rate swaps are accounted in accordance with their
contract
j. Retirement benefits
(i) Defined Contribution Plan
Company’s contributions payable during the year to Provident Fund,
Superannuation Schemes are recognized in the Profit and Loss Account.
(ii) De fined Benefit Plan
Company’s liabilities under payment of gratuity Act (funded) and
compensated leave encashment are determined by Actuarial Valuation
made at the end of each financial year using the projected unit credit
method. Actuarial gain and losses are recognized immediately in the
statement of Profit and Loss Account as income or expense. Obligation
is measured at the present value of estimated future cash flows using a
discounted rate that is determined by reference to market yields at the
Balance Sheet date on Government bonds where the currency and terms
of the Government bonds are consistent with the currency and estimated
terms of the defined benefit obligation.
k. Provision
A provision is recognized when an enterprise has a present obligation as a
result of past event; it is probable that an outflow of resources will be required
to settle the obligation, in respect of which a reliable estimate can be made.
Provisions are not discounted to its present value and are determined based
on best estimate required to settle the obligation at the balance sheet date.
These are reviewed at each balance sheet date and adjusted to reflect the
current best estimates.
l. Income Tax
Tax expense comprises of current and deferred tax. Provision for current tax is
made on the basis of estimated taxable income for the current accounting
year. The deferred tax for timing differences between the book and tax profits
for the year is accounted for, using the tax rates and laws that have been
substantively enacted as of the Balance Sheet date. Deferred tax assets arising
from timing differences are recognized to the extent there is reasonable certainty
(11)
ADITYA BIRLA MINACS WORLDWIDE LIMITED
C M Y K
that these would be realized in future. In case of unabsorbed losses and
unabsorbed depreciation, all deferred tax assets are recognized only if there is
virtual certainty supported by convincing evidence that they can be realized
against future taxable profit.
m. Employee Stock Options
Measurement and disclosure of the employee share-based payment plans is
done in accordance with SEBI (Employee Stock Option Scheme and Employee
Stock Purchase Scheme) Guidelines, 1999 and the Guidance Note on Accounting
for Employee Share-based Payments, issued by the Institute of Chartered
Accountants of India. The Company measures compensation cost relating to
employee stock options using the intrinsic value method. Compensation expense
is amortized over the vesting period of the option on a straight line basis.
n. Earnings per share
Basic earnings per share are calculated by dividing the net profit or loss for the
year attributable to equity shareholders by the weighted average number of
equity shares outstanding during the year.
For the purpose of calculating diluted earnings per share, the net profit or loss
for the year attributable to equity shareholders and the weighted average number
of shares outstanding during the year are adjusted for the effects of all dilutive
potential equity shares.
o. Cash and Cash equivalents
Cash and cash equivalents for the purposes of cash flow statement comprise
cash at bank and in hand and short-term investments with an original maturity
of three months or less.
3. Contingent Liabilities. ( ` Lacs)
Particulars As at As at
March 31, 2011 March 31, 2010
i) Estimated amount of contracts
remaining to be executed on capital
account and not provided for. 69.11 146.03
ii) Guarantees and counter guarantees
given by the Company to Commissioner
of Customs towards custom & excise
duty exemption under STPI Scheme
(Based on present export performance,
the Company expects to meet its export
obligation and hence this liability is not
likely to materialize) 1421.43 1,329.95
iii) Guarantees and Counter guarantees
given by the Company to its insurance
company in USA and to Citibank, NA on
the basis of which the insurance
company issued telemarketing bonds
favoring Attorney generals of various
states in USA on behalf of the Company.
(These bonds are required to be given
for compliance of telemarketing laws in
USA. In case of any violations of these
rules, the penalties are imposed. The
Company does not expect any liabilities
on the same). 446.50 451.40
iv) Guarantee given by the Company to
Banks for securing the loans granted by
such banks to the subsidiaries of
the Company. 10,939.25 11,059.30
v) Guarantee and Counter given by
Company to Department of
Telecommunication (DoT) for getting the
permission for sharing of international
and domestic call center. 350.00 210.00
vi) Service tax refund relating to year
2005-2007 rejected by service tax
department. Company is in appeal at
various levels against rejection orders 266.58 266.58
vii) Penalty for disallowances of expenses
incurred by the Company for F.Y
2003-2004. The Company has filed an
appeal before the Bombay High Court. 73.29 73.29
4. Earnings in foreign currency ( ` Lacs)
Particulars Year Ended Year Ended
March 31, 2011 March 31, 2010
a) Service Income 14,765.98 15,825.42
b) Interest Income 113.15 220.08
5. Expenditure in foreign cur rency ( ` Lacs)
P articulars Year Ended Year Ended
March 31, 2011 March 31, 2010
Expenditure in foreign cur rency (A ccrual Basis)
a) Traveling expenses 44.11 111.30
b) Marketing expenses 509.56 437.11
c) Interest expenses 2,212.96 2,283.54
d) Technology expenses 46.63 19.38
6. CIF value of imports ( ` Lacs)
Particulars Year Ended Year Ended
March 31, 2011 March 31, 2010
Capital goods 154.99 202.41
7.7. The Company has entered into operating lease agreements for its BPO centers ranging
for a period of 3 to 5 years The lease rentals charged during the year and maximum
obligations on long-term non-cancelable operating leases payable as per the rentals
stated in respective agreements are as follows
( ` Lacs)
Particulars Year Ended Year Ended
March 31,2011 March 31,2010
1. Lease payments recognized in the
profit & loss account for the year 1,602.77 1,379.78
2. Obligations on non-cancelable leases :
i) Not later than one year : 665.78 919.48
ii) Later than one year and not
later than 5 years Nil 517.00
iii) Later than 5 years Nil Nil
8. Deferred Taxes
The Company has deferred tax assets in respect of unabsorbed depreciation and
business loss. As there is no virtual certainty about the realization of the deferred tax
assets against the future taxable profits, the same has not been recognized.
9. Employee Stock Option Plan
In December 2009, the Board of the Company approved the Employees Stock Option
Plan 2009 (“the Plan”), which covers the employees of the Company including its
subsidiaries. The plan is administered and supervised by the Compensation Committee
of the board (the ‘Committee’).
The Scheme provides that these options would vest in tranches over a period of
3-4years as follows:
Period within which options will vest unto the participant %of options that
will vest
End of 15 months from the date of grant of options 20%
End of 27 months from the date of grant of options 20%
End of 39 months from the date of grant of options 60%
Fair Valuation:
The fair valuation of the options used to compute proforma net profit and earning per
share have been done by an independent valuer on the date of grant using black-Scholes Model. The key assumptions and the fair value are as under.
Particulars Percentage
Risk Free Interest Rate % 6.84%
Option Life (years) 4.80
Expected Volatility (%) 0%
Historical Volatility (%) 0%
Expected Dividend Yield (%) 0%
Weighted Average Fair Value per Option (`) 141
Had the compensation cost for the stock option granted under ESOS-2009 been
recognized, based on fair value at the date of grant in accordance with Black and
Scholes Model, the proforma amount of net profit and earning per share of the
Company would have been as under:
(` Lacs)
Particulars March 31, 2011 March 31,2010
Net Loss (3,804.72) (2,952.16)
Add: Compensation cost as per Intrinsic Value 450.38 126.15
Less: Compensation cost as per fair value 813.73 227.92
Adjusted Net Loss (4,168.07) (3,053.93)
Weighted average number of Basic Equity
Shares Outstanding (in Nos) 23,491,711 23,491,711
ESOPS outstanding at the end of the year 1,367,000 372,875
Weighted average number of Diluted Equity
Shares Outstanding (in Nos) 24,858,711 23,864,586
Face Value of Equity Shares (In `) 1.00 1.00
Reported Earning Per Share (EPS)
– EPS (In `) (16.20) (12.57)
– Diluted (In `) (16.20) (12.57)
Proforma Earning Per Share (EPS)
– EPS (In `) (17.74) (13.00)
– Diluted (In `) (17.74) (13.00)
(12)
ADITYA BIRLA MINACS WORLDWIDE LIMITED
C M Y K
The participants shall exercise the options within five years from vesting or
within three years from the date of listing, whichever is earlier. The Plan is contingent
on the shares being listed in a recognized stock exchange in India on or before
1
st
July, 2015. If the Company’s shares are not listed on the stock exchange by
30
th
June, 2015, the existing employees shall have to sell all options vested to the
Company or its nominee at a price determined as per Plan.
Particulars March31, 2011 March 31, 2010
Total Options under the Plan 1,897,337 1,897,337
Options outstanding at the beginning of the year 1,491,500 Nil
Granted during the year 34,500 1,491,500
Forfeited during the year 159,000 Nil
Exercised during the year Nil Nil
Outstanding at the end of the year 1,367,000 1,491,500
Expired during the year Nil Nil
Exercisable at the end of the year Nil Nil
Exercise Price ( `) 230 230
The employee stock option outstanding account shown in Balance Sheet is net of
unamortized amount on account of Deferred Employee Compensation Account
` 490.28 Lacs (PY ` 1,037.82 Lacs).
10. 10. The Company does not owe any amount a) to any Small Scale Undertaking b) to
supplier as defined under the Micro, Small and Medium Enterprises Development
Act, 2006 at year end.
11. Related Party Transactions
Name and nature of relationship of the Related Party where control exists:
Holding Company Aditya Birla Nuvo Limited (ABNL)
Wholly owned subsidiary company AV TransWorks Limited, Canada
or parties where control exists:- (Subsidiary of ABMWL)
TransWorks Inc., USA (TW Inc)
(Subsidiary of ABMWL)
Aditya Birla Minacs Worldwide Inc. Canada
(ABMWI) (Subsidiary of AV TransWorks)
Aditya Birla Minacs Philippines Inc.
(Subsidiary of ABMWL)
Aditya Birla Minacs BPO Private Limited.
(Subsidiary of Aditya Birla Minacs BPO
Limited, U.K, formerly known as Compass
BPO Ltd.) (w.e.f. March 9, 2010)
Fellow Subsidiaries Aditya Birla Financial Shared Services
Limited (ABFSSL)
Birla Sun Life Insurance Company Limited
(BSLICL)
Aditya Birla Minacs IT Services Limited
(ABMITS)
ABNL Investment Limited
(formerly Laxminarayan Investment Limited)
Joint Venture of Holding Company/ Birla Sun Life Asset Management
Fellow subsidiary Company Limited (BSAMC)
(Directly held by the Holding Company till
Mar 22, 2010 thereafter Joint Venture of
Fellow subsidiary)
IDEA Cellular Limited. Joint venture of
holding company.
Key Management Personnel Deepak Patel (Whole Time Director. w.e.f
October 12, 2010.
12. Summary of transactions with related parties during the year: ( ` Lacs)
Particulars Year ended Year ended
March 31, 2011March 31, 2010
Holding Company
Inter corporate deposit (ICD) given to ABNL 1,500 Nil
ICD repayment by ABNL 1,500 Nil
Interest income 8.14 Nil
Reimbursement of costs to the company 5.14 33.34
Service Income (Indo Gulf Fertilizers Division of ABNL) 7.21 Nil
Subsidiary Companies
Transworks Inc. USA:
– Repayment of Share Capital Nil 96.80
– Payment of dividend to holding company Nil 68.33
Aditya Birla Minacs Worldwide Inc Canada:
– Marketing and technology expenses 509.56 437.11
– Services Income 695.00 669.37
A V Transworks Limited, Canada:
– Investment in Preference Share Capital Nil 13,344.46
– Foreign Currency Loan Given 10,424.82 6,782.95
– Repayment of Foreign currency Loan 7,350.85 6,362.40
– Interest Income Nil 202.42
Aditya Birla Minacs Philippines Inc:
– Foreign Currency Loan Given Nil 117.36
– Interest Income Nil 17.66
Aditya Birla Minacs BPO Private Limited
– ICD taken 100.00
– ICD re-paid 100.00
– Interest expenses on ICD 2.25
F ello w Subsidiary
ABNL Inv estment Limited
– ICD Taken Nil 500.00
– Interest expenses on ICD Nil 3.67
– ICD Repaid Nil 500.00
Birla Sun Lif e Insurance Company Limited.,
– Staff welfare expenses
(Term Life Insurance) 19.28 18.15
– Services Income 891.07 645.55
– Expenses Reimbursed by the company 22.80 Nil
Aditya Birla Minacs IT Services Limited.
– Personnel costs 27.41 50.53
– Software expenses (ERP implementation) Nil 102.83
– Reimbursement of Cost to the company 320.46 111.38
– ICD Given during the year 1,795.00 200.00
– Interest Income on ICD 16.87 2.13
– ICD Re-paid 795.00 200.00
Aditya Birla Financial Shared
Services Private Limited.
– Reimbursement of cost to the company 10.60 1.92
Joint Venture
Birla Sun Life Asset Management
Company Limited.
– Services Income 210.73 166.80
– Reimbursement of cost by the company Nil 4.16
– Reimbursement of cost to the company Nil 5.66
Idea Cellular Limited
– Services Income 7,114.84 5,102.90
Remuneration to Key Management Person*
– Salary & Allowances 136.20 Nil
– Contribution to Provident fund and
other funds 11.4 Nil
Related Party Balances:
Holding Company
– Payable – ABNL 24.41 21.93
– Receivable- ABNL
(Division-Indo Gulf Fertilisers) 7.07 Nil
– Corporate guarantees taken from
Holding Company 13,160.83 9,479.40
Subsidiary Company
– Receivable– Transworks Inc 1.12 1.12
– Payable Aditya Birla Minacs Worldwide
Inc (Net of receivable of ` 101.42 lacs) 252.94 Nil
– Receivable - Aditya Birla Minacs
Worldwide Inc (Net of payable 27.79 lacs) Nil 16.86
– Receivable (foreign currency loan) to
A V Transworks Limited 14,290.0 10,714.33
Receivable-Aditya Birla Minacs Philippines Inc. 957.82 968.27
Corporate Guarantee given to Bank for
Loan taken by A V Transworks Limited 10,939.25 11,059.30
Joint Venture
– Receivable - Idea Cellular Limited 859.18 766.68
– Receivable- Birla Sun Life Asset
Management Company Limited. 16.45 38.68
Fellow Subsidiary
– Payable - Aditya Birla Minacs
IT Services Limited. Nil 61.59
– Receivable -Aditya Birla Financial
Shared Services Private Limited. 1.51 1.92
– Receivable - Birla Sun Life Insurance
Company Limited. 163.53 228.32
– Receivable from Aditya Birla Minacs
IT Services Limited (ICD) 1,000.00 Nil
* As the liabilities for gratuities and leave encashment are provided on an actuarial
basis for the company as a whole, the amounts pertaining to the director is not
included above
13. Derivative Instruments.
The Company uses derivative financial instruments such as forward exchange
contracts, currency swaps and interest rate swaps to hedge its risks associated with
foreign currency fluctuations and interest rate.
(13)
ADITYA BIRLA MINACS WORLDWIDE LIMITED
C M Y K
The Company, time to time, holds financial derivatives instruments primarily for
hedging purpose. In pursuance of the announcement dated 29th March 2008 of
ICAI, The Company has decided to account for losses, if any, on derivatives
transactions, on net basis, after considering effect of underlying exposure /
commitments / obligations. As there was no such loss at the end of the year, the
above changes does not have any effect on the profit for the year.
Derivative Outstanding as at March 31 2011
Particulars Currency Amount in Foreign Purpose
Currency (in Lacs)
Forward Cover USD 283.85 To hedge receivables
(402.69)
Forward Cover USD 754.20 To hedge Loan Payable
(754.20)
Forward Cover CAD 84.00 To hedge Loan Receivable
(9.50)
Forward Cover CAD 300.00 To hedge Redeemable
(300.00) Preference share Capital
Receivable
Forward Cover USD NIL To hedge Interest Payable
(10.00)
Forward Cover USD 50.00 To hedge working capital
(Nil) (PCFC) Loan payable
Cross Currency Swap JPY 554.19 To hedge loan payable
(2,121.22)
Note: Figures in brackets relates to previous year.
All the above contracts are for hedging and not for speculation.
As at March 31, 2011 all the foreign currency exposure stands hedged by derivative
instrument or otherwise.
14. Segment Information for the year ended March 31, 2011
(1) Primary business segment
The company provides a variety of Business Process outsourcing services.
The risks and rewards from each of these service agreements are similar. As
the Company’s business activity primarily falls within a single business segment,
there are no additional disclosures to be provided in respect of primary segment
under Accounting Standard 17 ‘Segment Reporting’, other than those already
provided in the Financial Statements.
(2) Secondary business segment:
a. Geographical turnover is segregated based on the location of the customer
to whom the services are rendered.
b. Assets are segregated based on their location.
c. Information about secondary business segments:
( ` Lacs)
Year ended 31
st
March, 2011 India Outside India Total
A Revenue by geographical market 9,635.01 14,765.98 24,400.99
B Carrying amount of segment assets 13,147.82 86,355.55 99,503.37
C Capital Expenditure (included in
(b) above) 2,908.42 Nil 2,908.42
Year ended 31
st
March, 2010 India Outside India Total
A Revenue by geographical market 6,285.64 15,825.42 22,111.06
B Carrying amount of segment assets 18,183.22 81,467.26 99,650.48
C Capital Expenditure (included in
(b) above) 3,872.59 Nil 3,872.59
15. 15. The Company has invested ` 81,349.34 Lacs (previous year ` 76,817.93 lacs) (includes
loan given of ` 14,290 Lacs (previous year ` 10104.13 lacs)) in AV Transworks Ltd,
Canada which has further invested in Aditya Birla Minacs Worldwide Inc, Canada.
Considering the strategic and long term nature of aforesaid investments and asset
base and business plan of the investee companies, in the opinion of the management
there is no diminution in the value of investment other than temporary.
16. Retirement Benefits: ( ` Lacs)
Year ended Year ended
March 31, 2011 March 31, 2010
(a) Defined Benefit Plans -The Amounts recognized in the balance
sheet are as follows in respect of
gratuity (fully funded by the company):
Present value of the funded defined
benefit obligation at the end of the year 259.75 223.35
Fair value of plan assets 133.36 163.82
Benefit Paid on behalf of Fund 75.94 29.62
Net Liability 50.45 29.91
T he Amounts recogniz ed in Salary,
Wages and Employee Benefits in the
Profit and Loss Account as follows in
respect of gratuity (fully funded by
the company):
Current Service cost 116.68 127.73
Past Service Cost 8.73 Nil
Interest on Defined Benefit Obligations 18.43 14.17
Expected return on plan assets (14.21) (9.45)
Net Actuarial (gain)/loss recognized
during the year (62.77) (88.58)
Net Gratuity Cost 66.86 43.87
Actual Return on Plan Assets
Expected Return on Plan Assets 14.21 9.45
Actuarial gain/(loss) on Plan Assets 1.66 (4.95)
Actual Return on Plan Assets 15.86 4.50
Reconciliation of present value of the
obligation and the fair value of the plan assets:
Opening Defined Benefit Obligation
as on 1.4.2010 223.35 188.95
Current Service Cost 116.68 127.73
Past Service Cost 8.73 Nil
Interest Cost 18.43 14.17
Actuarial (Gain)/loss (61.11) (77.87)
Benefits Paid (46.32) (29.62)
Closing Defined Benefit Obligation
as on 31.03.2011 259.75 223.35
Change in fair value plan assets
Opening Fair Value of the plan assets 163.82 125.96
Expected return on plan assets 14.21 9.45
Actuarial Gain/(loss) 1.66 (4.95)
Contributions by the Employer Nil 62.98
Benefits Paid (46.32) (29.62)
Closing Fair value of the plan assets 133.36 163.82
Investment details of plan assets
Government of India Securities 38.79 36.04
Corporate Bonds 2.08 3.28
Insurer Managed Fund (with common
fund of Holding Company) 86.80 124.50
Others 5.69 Nil
Total 133.36 163.82
The overall expected rate of return on assets
is determined based on the market prices
prevailing on that date, applicable to the year
over which the obligation is to be settled.
(B) Defined Contributions Plans:
Contribution to Employee Provident Fund 608.12 512.18
Contribution to ESIC 260.23 85.17
Contribution to superannuation fund 13.21 19.84
(C) Principal Actuarial Assumptions At the
Balance Sheet date (31.03.10)
Discount rate 8.00% 8.25%
Estimated rate of return on plan assets 8.00% 8.25%
Future Salary escalation 10% for first 10% for first
three years and Three Years and
5% thereafter 5% thereafter
(D) Experience Adjustment 2010-11 2009-10 2008-09 2007-08 2006-07
Liability at the end
of the Period 259.75 223.35 188.95 104.70 79.02
Fair Value of Plan Assets
at the end of the Period 133.36 163.82 106.06 74.35 66.90
Benefit paid on
behalf of fund 75.94 29.62 Nil Nil Nil
Deficit / (Surplus) 50.45 29.91 82.89 30.35 12.12
Experience adjustments
on plan liabilities (Gain)/Loss (61.11) (77.87) 90.53 (23.12) (21.65)
Experience adjustments
on plan Assets Gain/(Loss) 1.66 (4.95) 14.44 0.47 (2.34)
17. 17. The Company has issued Zero Coupon Compulsorily Convertible Debentures (CCD)
for Rs 25,000 Lacs (previous year Rs Rs 25,000 Lacs) which are to be converted into
Equity on the business day following expiry of a period of 60 months from the date of
allotment of such CCD. As per the terms of the issue, the Conversion price will be
mutually decided thirty days before the conversion date. Aditya Birla Nuvo Limited
(14)
ADITYA BIRLA MINACS WORLDWIDE LIMITED
C M Y K
For S.R. BATLIBOI & ASSOCIATES .
Firm Registration No. 101049W
Chartered Accountants
per Amit Majumdar
Partner
Membership No. 36656
Place: Mumbai
Date: July 27, 2011
For and on behalf of the Board of Directors of
Aditya Birla Minacs Worldwide Limited
Dr. Rakesh Jain
Director
Sushil Agarwal
Director
Ramesh Kamath
Chief Financial Officer
Date : July 27, 2011
(ABNL), the holding company, has entered into an Option Agreement with the
Subscribers of these CCD pursuant to which the holders of CCD have call option on
ABNL and ABNL has put option on the Subscribers on expiry of 24,36,48 and 60
months from the date of allotment of these CCD. The holders can also exercise put
option on happening of certain specified events.
18. 18. The Company had filed Composite Scheme of Amalgamation (or “Scheme”) with
Karnataka High Court (or “High Court”) for the merger of Aditya Birla Minacs IT
Services Limited and Aditya Birla Minacs Technologies Limited with the Company
with effect from April 1, 2010. The High Court sanctioned the Scheme on November
3, 2010 and order was received by Company on December 9, 2010. The approved Sc heme
was not filed with Registrar of Companies as the management was desirous of making
certain modifications in the Scheme. Therefore, the Company has revised the Scheme
and the same has been filed for approval with the High Court on February 22, 2011.
Currently, the revised Scheme is pending approval from the High Court. Accordingly,
the revised Scheme has not been given effect in consolidated financial statements.
1 9.9 . Previous year’s figures have been regrouped, where necessary to conform to this year’s
classification.
(15)
ADITYA BIRLA MINACS WORLDWIDE LIMITED
C M Y K
AUDITORS’ REPOR T
To
The Board of Directors of Aditya Birla Minacs Worldwide Limited
We have audited the attached consolidated Balance Sheet of Aditya
Birla Minacs Worldwide Limited (‘the Company’) and its subsidiaries
(collectively referred to as the ‘Group’), as at March 31, 2011, and also
the consolidated Profit and Loss Account, and the consolidated Cash
Flow statement for the year ended on that date annexed thereto. These
financial statements are the responsibility of the Company’s
management and have been prepared by the management on the basis
of separate financial statements and other financial information regarding
components. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally
accepted in India. Those Standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.
We did not audit the financial statements of subsidiaries namely, Aditya
Birla Minacs Worldwide Inc. (consolidated) and Aditya Birla Minacs
Philippines Inc., whose financial statements reflect total assets of
` 75,146.33 lacs as at March 31, 2011 and the total revenue of
` 140,411.82 lacs and cash outflows amounting to ` 28.70 Lacs for the
year then ended. The financial statements and other financial information
of Aditya Birla Minacs Worldwide Inc. and Aditya Birla Minacs Philippines
Inc. have been audited by other auditors as per the requirements of
Candian Generally Accepted Accounting Standards (GAAP) and
Philippines GAAP respectively. These have been converted as per
requirements of Indian GAAP by the management and the conversion
has been audited by us. Our opinion, in so far as it relates to the amounts
included in respect these subsidiaries, is based solely on report of other
auditors and converted into Indian GAAP as stated above.
We report that the consolidated financial statements have been prepared
by the Company’s management in accordance with the requirements
of Accounting Standards (AS) 21, Consolidated financial statements,
notified pursuant to the Companies (Accounting Standards) Rules, 2006
(as amended).
Based on our audit and on consideration of reports of other auditors on
separate financial statements and on the other financial information of
the components, and to the best of our information and according to
the explanations given to us, we are of the opinion that the attached
consolidated financial statements give a true and fair view in conformity
with the accounting principles generally accepted in India:
(a) in the case of the consolidated balance sheet, of the state of affairs
of the Group as at March 31, 2011;
(b) in the case of the consolidated profit and loss account, of the profit
for the year ended on that date; and
(c) in the case of consolidated cash flow statement, of the cash flows
for the year ended on that date.
For S. R. BATLIBOI & ASSOCIATES,
Firm registration number: 101049W
Chartered Accountants
per Amit Majmudar
Partner
Membership No.: 36656
Place: Mumbai
Date: July 27, 2011
(16)
ADITYA BIRLA MINACS WORLDWIDE LIMITED
C M Y K
CONSOLIDATED B ALANCE SHEE T AS AT MARCH 31, 2011
Schedule March 31, March 31,
2011 2010
` Lacs ` Lacs
I. SOURCES OF FUNDS
1 Shareholders’ Funds
Share capital 1 234.92 234.92
Employee stock options
(Refer note 9 of schedule 17) 576.53 126.15
Reserves and surplus 2 27,795.68 27,795.68
Foreign currency translation reserve 5,843.43 3,825.39
2 Secured loans Secured loans 3 65,646.73 59,468.49
3 Unsecured loans Unsecured loans 4 39,214.88 38,646.26
4 Deferred tax liability 941.68 497.79
Total 140,253.85 130,594.68
II. APPLICATION OF FUNDS
1 Fixed Assets Fixed Assets 5
Gross Block 78,263.88 67,838.12
Less : Depreciation / Amortization 56,021.06 48,306.72
Net Block 22,242.82 19,531.40
Capital Work-in-Progress
(including capital advances) 1,694.68 2,538.41
Goodwill 70,807.08 60,789.41
2 Investments Investments 6 700.00 9,350.00
3 Deferred Tax Asset 276.59 297.51
4 Current Assets, Loans and
Advances
Sundry Debtors 7 37,362.16 24,945.48
Cash and Bank Balances 8 3,176.45 1,983.08
Loans and Advances 9 12,889.35 8,439.07
(A) (A) 53,427.96 35,367.63
Less: Current Liabilities and
Provisions Provisions 10
Current Liabilities 26,774.08 21,698.75
Provisions 184.68 135.12
(B) (B) 26,958.76 21,833.87
Net Current Assets (A-B) 26,469.20 13,533.76
5 Profit and Loss account 18,063.48 24,554.19
Total 140,253.85 130,594.68
Notes to Accounts Notes to Accounts 17
The schedules referred to above and notes to accounts form an integral part of the
Balance Sheet.
For and on behalf of the Board of Directors of
As per our report of even date Aditya Birla Minacs Worldwide Ltd.
For S.R. BATLIBOI & ASSOCIATES
Firm Registration No. 101049w Dr. Rakesh Jain
Chartered Accountants Director
per Amit Majumdar Sushil Agarwal
Partner Director
Membership No. 36656
Place: Mumbai Ramesh Kamath
Date: July 27, 2011 Chief Financial Officer
Date : July 27, 2011
CONSOLIDATED PR OFIT & LOSS ACCOUNT FOR THE
YEAR ENDED MARCH 31, 2011
Schedule March 31, March 31,
2011 2010
` Lacs ` Lacs
INCOME :
Service Charges 163,140.16 146,688.59
Other Income 11 124.08 247.58
Total 163,264.24 146,936.17
EXPENDITURE :
Personnel expenses 12 103,822.63 96,743.54
Other Operating Expenses 13 13,196.10 12,356.64
Administrative Expenses 14 28,974.13 28,635.21
Marketing / Business
Development Expenses 15 257.89 192.43
Financial Charges 16 3,533.40 4,692.43
Depreciation / Amortization 6,540.36 6,047.28
Total 156,324.51 148,667.53
Profit / (Loss) before tax for the year 6,939.73 (1,731.36)
Less: Provision for taxation /
Minimum Alternative Tax 267.11 495.92
Add: Recovery of income taxes 340.10 —
Less: Deferred tax charge 522.01 79.99
Profit / (Loss) for the year 6,490.71 (2,307.27)
Profit / (Loss) brought forward
from previous year (24,554.19) (22,246.92)
Accumulated balance carried
to the Balance Sheet (18,063.48) (24,554.19)
Basic Weighted Average number of shares 23,491,711 23,491,711
Diluted Weighted Average number of shares 24,858,711 23,864,586
Basic earnings per share
(Nominal value of shares
` 1 each Previous year ` 1 each) ` 27.63 (9.82)
Diluted earnings per share
(Nominal value of shares ` 1 each
Previous year ` 1 each) ` 26.11 (9.82)
Notes to Accounts Notes to Accounts 17
The schedules referred to above and notes to accounts form an integral part of
the Profit & Loss Account.
For and on behalf of the Board of Directors of
As per our report of even date Aditya Birla Minacs Worldwide Ltd.
For S.R. BATLIBOI & ASSOCIATES
Firm Registration No. 101049w Dr. Rakesh Jain
Chartered Accountants Director
per Amit Majumdar Sushil Agarwal
Partner Director
Membership No. 36656
Place: Mumbai Ramesh Kamath
Date: July 27, 2011 Chief Financial Officer
Date : July 27, 2011
(17)
ADITYA BIRLA MINACS WORLDWIDE LIMITED
C M Y K
CONSOLIDATED CA SH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2011
(` in Lacs)
For the year ended For the year ended
March 31, 2011 March 31, 2010
A. Cash flows from Operating Activities
Net Profit/(Loss) before taxation, and extraordinary items 6,939.73 (1,731.36)
Adjustments for:
Depreciation / Amortization 6,540.36 6,047.28
Loss/(Profit) on Sale of Fixed Assets — 53.05
Foreign Exchange (Gain)/Loss (Net) 943.66 (2,595.19)
Interest Income (25.89) (4.43)
Dividend Income (57.58) (226.62)
Finance/Interest Expense 3,533.40 4,692.43
Employee stock compensation expenses 450.38 126.15
Provision for doubtful debt 224.97 2.95
Operating Profit before working capital changes 18,549.03 6,364.26
Movements in working capital :
(Increase)/Decrease in Sundry Debtors (11,506.86) 3,296.47
(Increase)/Decrease in Loans & Advances (4,469.25) (4,254.09)
Increase/(Decrease) Current Liabilities & Provisions 4,120.68 3,997.64
Foreign exchange on translation (918.27) 1,088.11
Cash generated from operations 5,775.33 10,492.39
Add/(Less): Direct Taxes (including TDS) paid)/T ax Refunds (449.02) (575.91)
Net Cash flow from Operating Activities 5,326.31 9,916.48
B. Cash Flows from Investing Activities
Purchase consideration on acquisition (9,211.96) (3,468.05)
(Purchase)/Sale of Fixed Assets (8,010.94) (8,011.01)
Proceeds from sale of Fixed Assets 19.45 601.13
(Purchase)/Sale of investment 8,650.00 (5,350.00)
Interest income received 25.89 4.43
Dividend received 57.58 226.62
Net Cash from/(for) Investing Activities Net Cash from/(for) Investing Activities (8,469.98) (15,996.88)
C. Cash flow from Financing Activities
Proceeds from/(repayment of) Bank Borrowings - Unsecured (0.00) (2,500.00)
Proceeds from/(repayment of) Long-term borrowings - Secured 7,795.32 (9,697.56)
Proceeds from/(repayment of) other borrowings — —
Proceeds from/(Repayment of) Vehicle/Capital lease borrowing (725.76) (1,762.86)
ESOP payments
Proceeds from Issue of Compulsorily Convertible Debentures — 25,000.00
Interest/financial charges paid (3,533.40) (4,692.43)
Net Cash generated/(used) in Financing Activities 3,536.16 6,347.15
D. Foreign Exchange difference on translation of foreign currency cash and cash equivalents (0.27) (3.01)
Net Increase in cash and C ash equivalents during the year 392.21 263.74
Cash and cash equivalents at the beginning of the year 1,981.14 1,602.02
Cash acquired on acquisition 801.23 115.38
Cash and cash equivalents at the end of the year 3,174.58 1,981.14
Notes:
Components of Cash and Cash Equivalents As at As at
31.03.2010 31.03.2009
i) Cash Balance on hand 13.98 13.33
ii) Balance with Scheduled and other Banks :
- in Current Account 3,160.53 1,967.81
Total 3,174.51 1,981.14
Note:
i) Fixed Deposit of ` 1.94 Lacs (P.Y. 1.94 Lacs) given as margin money has not been considered as cash and cash equivalents
As per our report of even date For and on behalf of the Board of Directors
of Aditya Birla Minacs Worldwide Limited
For S.R. BATLIBOI & ASSOCIATES
Firm Registration No: 101049W Dr. Rakesh Jain
Chartered Accountants Director
Sushil Agarwal
per Amit Majmudar per Amit Majmudar Director
Partner
Membership No. 36656 Ramesh Kamath
Place: Mumbai Chief Financial Officer
Date: July 27, 2011 Date: July 27, 2011
(18)
ADITYA BIRLA MINACS WORLDWIDE LIMITED
C M Y K
SCHEDULES FORMING P ART OF THE BALANCE SHEET
March 31, March 31,
2011 2010
` Lacs ` Lacs
SCHEDULE 1 - SHARE CAPITAL
Authorised Capital
30,000,000 (P Y 30,000,000) Equity Shares of ` 1/- each 300.00 300.00
Total 300.00 300.00
Issued, Subscribed and Paid up Capital
2,34,91,711 (P Y 2,34,91,711) Equity Shares of
` 1/- each fully paid up 234.92 234.92
(Of the above 2,0,738,378 (PY: 20,738,378) equity shares are
held by Aditya Birla Nuvo Limited Being the holding company,
including 7 shares held by them through their nominees)
Total 234.92 234.92
SCHEDULE 2 - RESERVES AND SURPLUS
Securities Premium Account
Opening Balance 27,795.68 27,795.68
Total Total 27,795.68 27,795.68
SCHEDULE 3 - SECURED LOANS
i) Working Capital Facility from Banks 2,304.06 —
(Secured against receivables)
(Repayable within one year - NIL; Previous Year. ` 899.42 lacs)
ii) Capital Lease — 725.76
(Secured against the charge on the respective assets)
iii) Term l oan from Banks 2, 000.00 3,000.00
(Secured against the first charge on the fixed assets and
second charge on Receivables) (Repayable within
one year - ` 1,000. lacs; Previous Year ` 2,000 lacs )
iv) External Commercial Borrowings from banks 61,342. 67 55,742.73
(Secured against the first charge on the fixed assets and
second charge on Receivables)
(Repayable within one year - ` 1,000. lacs;
Previous Year ` 2,000 lacs )
Total Total 6 5,646.73 59,468.49
SCHEDULE 4 - UNSECURED LOANS
i) Long Term Loan from Banks 1 4,214.88 13,646.26
(Repayable within one year - NIL; Previous Year. NIL)
ii) Compulsorily Convertible Debentures 25,000.00 25,000.00
(Refer note 15 of Schedule 17)
Total Total 3 9,214.88 38,646.26
SCHEDULE 6 - INVESTMENTS
Unquoted
(4,461,070.79 units of Rs. 15.69 each)
In Mutual Funds - Birla Sunlife Cash P lus - Instl. Premium - Growth 216.86 850.00
– Birla Sunlife Savings Fund Instl. Growt h 483.14 8,500.00
Total 700.00 9,350.00
SCHEDULE 7 - SUNDRY DEBTORS
i) Debts outstanding over six months
Unsecured, considered good 67.14 42.81
Unsecured, considered doubtful 129.17 34.74
Less:- Provision for doubtful Debt ( 129.17) (34.74)
67.14 42.81
ii) Other Debts
Unsecured, considered good 37,295.02 24,902.67
Unsecured, considered doubtful 133.55 —
Less:- Provision for doubtful Debt (133. 55) —
(includes unbilled debtors of Rs. 10,911 lacs;
Previous Year Rs. 7,827 lacs) 37,295. 02 24,902.67
Total Total 37,362.16 24,945.48
SCHEDULE 8 - CA SH AND BANK BALANCES
i) Cash on hand 13.98 13.33
ii) Balance with Scheduled Banks :
— On Current Account 1,521.29 83.45
— On Fixed Deposits
(As margin against bank guarantee) 1.94 1.94
iii) Bala nce with other Banks :
— On Current Account 1,639.24 1,884.36
Total Total 3,176.45 1,983.08
SCHEDULE 9 - LOANS AND ADVANCES
(Unsecured considered good)
i) Advances Recoverable in cash or in kind or
for value to be recei ved 10,449. 27 7,183.77
ii) Tax Deducted at Source (net of provision) 330.03 111.92
iii) Deposits 1, 110.05 1,143.38
iv) Inter-company Deposits 1,000.00 —
Total Total 1 2,889.35 8,439.07
March 31, March 31,
2011 2010
` Lacs ` Lacs
March 31, March 31,
2011 2010
` Lacs ` Lacs
SCHEDULE 5 - FIXED A SSE TS (` in Lacs)
GROSS BLOCK* DEPRECIATION / AMORTIZATION* NET BLOCK
Particulars As on Additions Deletions Foreign As on As on Additions Deletions Foreign As on As on As on
Apr. 1, 10 Currency Mar 31, 11 Apr. 1, 10 Currency Mar 31, 11 Mar 31, 11 Mar 31, 10
Translation Translation
Adjustment Adjustment
Computers and telecommunication
equipments equipments 42, 531.05 6,270.63 (188.93) 1,122.98 49,735.73 35,565.66 3,675.53 (183.83) 1,008.96 40,066.32 9,669.41 6,965.39
Plant and machinery Plant and machinery 1, 864.12 511.47 (23.21) 4.45 2,356.83 1,101.00 278.97 (22.59) 1.50 1,358.88 997.95 763.13
Office equipment Office equipment 1, 031.84 79.56 (11.46) 23.91 1,123.85 630.69 127.27 (6.75) 14.22 765.43 358.42 401.15
Furniture and fixtures Furniture and fixtures 7, 468.92 381.85 (6.89) 239.63 8,083.51 4,118.11 802.27 (2.40) 147.53 5,065.51 3,018.00 3,350.81
Leasehold improvements Leasehold improvements 11, 061.01 545.53 (1.99) 341.82 11,946.37 5,998.63 1,415.96 — 208.35 7,622.94 4,323.43 5,062.38
Intangible assets
Goodwill 3,208.51 — — (33.69) 3,174.82 615.85 — — (122.37) 493.48 2,681.34 2,592.66
Software 52.19 204.20 — — 256.39 52.19 0.14 — — 52.33 204.06 —
Client acquisition cost 568.66 987.48 — (1.63) 1,554.51 194.73 228.59 — 155.35 578.67 975.84 373.93
Motor car Motor car 51.82 5.66 (26.94) 1.33 31.87 29.86 11.64 (24.42) 0.42 17.50 14.37 21.96
Total 67,838.12 8,986.39 (259.43) 1,698.80 78,263.88 48,306.72 6,540.36 (239.98) 1,413.96 56,021.06 22,242.82 19,531.40
Previous Year 62,132. 35 5,158.29 2,172.72 2,720.20 67,838.12 41,628.82 6,047.28 1,518.54 2,149.16 48,306.72 19,531.40
Note :
The opening gross block of fixed assets, accumulated depreciation and net block has been reclassified as per the asset categori es, per se.
*: Computers and Telecommunication equipments, office equipment, furniture and fixtures, leasehold improvement include assets ta ken on finance lease, gross
block of which is ` Nil, ` Nil, ` Nil, ` Nil (previous year ` 5,861.70 lacs, ` 3.75 lacs, ` 557.19 lacs and ` 1,475.20 lacs) and accumalated depreciation in respect of those
assets aggregate to ` Nil, ` Nil, ` Nil, ` Nil (previous year ` 4,918.24 lacs, ` 1.17 lacs, ` 149.54 and ` 403.44 lacs) respectively.
March 31, March 31,
2011 2010
` Lacs ` Lacs
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ADITYA BIRLA MINACS WORLDWIDE LIMITED
C M Y K
SCHEDULE 10 - CURRENT LIABILITIES & PROVISIONS
i) Sundry Creditors (including book overdraft of
Rs. Nil; Previous Year. Rs. 476.65 Lacs) 22,716.90 18,619.91
ii) Interest accrued but not due 248.24 251.11
iii) O ther Liabilities 3,808.94 2,827.73
26,774.08 21,698.75
PROVISIONS
i) Gratuity 62.65 31.92
ii) Leave encashment 122.03 103.20
184.68 135.12
Total Total 26,958.76 21,833.87
SCHEDULES FORMING PART OF PROFIT & LOSS ACCOUNT
March 31, March 31,
2011 2010
` Lacs ` Lacs
SCHEDULE 11 - OTHER INCOME
i) Gain on Mutual Fund investment s 57.58 226.62
ii) Interest Income
— on balance with banks 6.87 2.30
— on inter-company deposits [TDS: Rs. 0.08 lacs
(Previous Year Rs. 0.48 lacs)] 19.02 2.13
iii) Gain on Foreign Exchange Fluctuations - Others — —
iv) Miscellaneous Income 40.61 16.53
Total 124.08 247.58
SCHEDULE 12 - PERSONNEL EXPENSES
i) Salaries & other empl oyee benefits 92,540.52 87,433.49
ii) Contribution to provident & other f unds 1,272.42 942.00
iii) Employee Compensati on under ESOP 450.38 126.15
iv) Staff Welfare Expenses 9,482.25 8,198.64
v) Gratuity (Refer Note 13 of schedule 17) 77.06 43.26
Total 103,822.63 96,743.54
SCHEDULE 13 - OTHER OPERATING EXPENSES
Facility Expenses
i) Rent Charges 6,294.43 5,952.38
ii) Electricity expenses 2,069.90 1,627.31
iii) House keeping expenses 216.84 147.24
iv) Security charges 458.71 377.95
v) Repairs & maintenance
— Building — 71.26
— Others 1,105.70 1,013.41
vi) Hire Charges 216.65 182.18
Technology Expenses
vii) Con nectivity charges 884.56 1,002.19
Assets Utilization Charges — —
viii) R epairs & maintenance - M achinery 1,074.44 1,146.92
ix) Software & support expenses 874.87 835.80
Total Total 13,196.10 12,356.64
March 31, March 31,
2011 2010
` Lacs ` Lacs
March 31, March 31,
2011 2010
` Lacs ` Lacs
SCHEDULE 14 - ADMINISTRATIVE EXPENSES
i) Legal & professional fees 1,862.33 1,575.69
ii) Telephone expenses 2,801. 79 2,445.44
iii) R ecruitment & relocation 1,059.06 649.74
iv) Auditors remuneration
— Audit fees 262.30 224.73
— Out of pocket expenses 1.91 0.03
iv) Vehicle Expenses 382.26 268.53
v) Seminar and O utside Training Expenses 180.19 180.41
vi) Printing and Stationery 5,345.25 4,630.58
vii) Di rectors sitting fees 19.19 10.86
viii) Insurance charges 310.43 235.38
ix) Traveling expenses 2,242.74 1,501.63
x) Loss on sale of Fixed Assets — 53.05
xi) Rates and Taxes 5,024.87 4,720.88
xii) Provision for Doubtful D ebts 224.97 2.95
xiii) Restructuring Cost — 1,668.67
xiv) Loss on Foreign Exchange Fl uctuations (net) 65.23 2,443.26
xv) Miscellaneous expenses 9,191.61 8,023.38
Total Total 28,974.13 28,635.21
SCHEDULE 15 - MARKETING / BUSINESS DEVELOPMENT EXPENSES
i) Business promotion expenses 59.88 64.23
ii) Advertisement expenses 169.18 108.80
iii) Ente rtainment expenses 20.09 3.35
iv) Website expenses
v) Telemarketing registration & bonding expenses 8.69 16.05
Total 257.89 192.43
SCHEDULE 16 - FINANCIAL CHARGES & INTEREST COST
i) Arrangement Fees 96.66 427.56
ii) Interest on External commercial borrowings and Term Loan 2,827.70 3,120.52
iii) In terest on Working capital and Demand Loan 435.18 830.25
iv) Other Financial Charges 173.86 314.10
Total Total 3,533.40 4,692.43
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ADITYA BIRLA MINACS WORLDWIDE LIMITED
C M Y K
SCHEDULE 17 - NO TES T O ACCOUNTS ON CONSOLIDA TED FINANCIAL
STATEMENTS
1. Basis of preparation
The consolidated financial statements (CFS) of Aditya Birla Minacs Worldwide Limited
(“the Company” or “ABMWL”) and its subsidiaries collectively referred to as “the
Group” are prepared under the historical cost convention and in accordance with the
requirements of the Companies Act, 1956.
2. Principles of Consolidation
i. The financial statements of the Company and its subsidiary companies have
been combined on a line-by-line basis by adding together the book values of
like items of assets, liabilities, income and expenses, after eliminating intra-group balances and transactions as per Accounting Standard (AS) 21
“Consolidated Financial Statements”.
ii. List of companies included in Consolidation are mentioned in paragraph 3 below.
iii. The CFS have been prepared using uniform accounting policies for like
transactions and other events in similar circumstances and are presented, to
the extent possible, in the same manner as the Company’s separate financial
statements
3. Companies included in Consolidation
Subsidiaries Country of Proportion of Proportion of
Incorporation ownership ownership
interest as on interest as on
March 31 ,2011 March 31, 2010
TransWorks Inc., USA
(TW Inc) (Subsidiary of
ABMWL)* USA 100% 100%
AV TransWorks Limited,
Canada (Subsidiary of
ABMWL) Canada 100% 100%
Aditya Birla Minacs
Philippines Inc (Subsidiary
of ABMWL) Philippines 100% 100%
Aditya Birla Minacs
Worldwide Inc. Canada
(ABMWI) (Subsidiary of
AV TransWorks Limited) Canada 100% 100%
The Minacs Group (USA),
Inc (Subsidiary of ABMWI) USA 100% 100%
Minacs Limited, UK,
(Subsidiary of ABMWI) UK 100% 100%
Minacs Worldwide S.A. de
C.V., Mexico (Subsidiary of
ABMWI) Mexico 100% 100%
Minacs Worldwide GmbH,
Germany (Subsidiary of
ABMWI) Germany 100% 100%
Minacs Kft., (Subsidiary of
The Minacs Worldwide
GmbH) Hungary 100% 100%
Aditya Birla Minacs BPO
Limited, UK (Subsidiary
of ABMWI) UK 100% 100%
Compass BPO, Inc, U.S.A
(Subsidiary of Aditya Birla
Minacs BPO Limited) USA 100% 100%
Aditya Birla Minacs BPO
Private Limited (Formerly
Known as Compass Business
Process Outsourcing Private
Limited, India) (Subsidiary of
Aditya Birla Minacs BPO
Limited, U.K) India 100% 100%
Compass BPO FZE, U.A.E
(Subsidiary of Aditya Birla
Minacs BPO Limited, UK)
ceased to be subsidiary
w.e.f February 25, 2011 UAE — 100%
Bureau of Collection
recovery, LLC (Subsidiary of
ABMWI w.e.f June 2, 2010) USA 100% NIL
Bureau of Collections
Recovery (BCR) Inc.
(Subsidiary of ABMWI
w.e.f March 4, 2011) USA 100% NIL
*: The subsidiary is in the process of winding up.
4. Significant accounting policies
i) Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent liabilities at the date of the financial statements and the results of
operations during the reporting period end. Although these estimates are based
upon management’s best knowledge of current events and actions, actual
results could differ from these estimates.
ii) Revenue recognition
a) Revenue is derived from both time-based and unit-priced contracts.
Revenue is recognized as related services are performed based on
agreements / arrangements with the customers.
Amounts collected from customers prior to the performance of services
are recorded as deferred revenue. These advances are amortized to
revenues in accordance with the Group’s policy on revenue recognition.
For some contracts the Company is paid by its customer based on
achievement of client-determined criteria specified in the client contract
such as full time equivalents, units processed or completed contacts.
The Company recognizes this performance-based revenue by measuring
its actual results against the performance criteria specified in the contracts.
b) Interest income is recognised on a time proportion basis taking into
account the amount outstanding and the rate applicable.
c) Dividend is recognised when the shareholders’ right to receive payment
is established bythe balance sheet date.
iii) Fixed assets
Fixed assets are stated at cost less accumulated depreciation and impairment
losses, if any. Cost comprises the purchase price and wherever applicable
freight, duties and taxes and expenses incidental to acquisition and installation.
iv) Intangible Assets
The Group allocates value to intangible assets acquired relating to customer
contracts, proprietary processes and certain business relationships. Amortization
of Client acquisition cost is provided on a straight-line basis over two to ten
years. Computer software is depreciated over four to five-year lives.
v) Depreciation
Depreciation on assets is provided on straight-line basis, on the rates based on
the useful lives as estimated by the management, which are higher than the
corresponding rates prescribed in Schedule XIV of the Companies Act, 1956.
The individual assets costing less than Rs. 5, 000 are depreciated in full in the
year of purchase. The management’s estimate of useful lives of the various
fixed assets is given below:
Assets Estimated useful life
a. Computers Equipment 2 - 4 years
b. Telecommunication Equipment 5 - 7 years
c. Plant & Machinery 5 years
d. Office Equipment 5 Years
e. Furniture & Fixtures 3 - 10 Years
f. Motor Car 5 Years
Leasehold improvements are depreciated over the shorter of the estimated
useful life of the asset and the lease term of the premises.
vi) Goodwill on consolidation
The excess of cost to the Parent Company of its investments in the subsidiaries
over its portion of equity in the subsidiaries, as at the date on which the
investment was made, is recognized as goodwill in the consolidated financial
statements. The Parent Company’s portion of equity in the subsidiaries is
determined on the basis of the book value of assets and liabilities as per the
financial statements of the subsidiaries as on the date of investment.
Goodwill is not amortized and is tested for impairment on an annual basis.
Such evaluation determines any impairment in value, taking into account the
ability to recover the carrying amount of goodwill from discounted cash flows.
The Company also considers projected future operating results, trends, and
other circumstances in making such evaluations.
In addition to the annual impairment test, the Company will perform an
impairment test if an event occurs or circumstances change that would more
likely than not reduce the fair value of the reporting unit below its carrying
amount.
vii) Impairment
The carrying amounts of assets are reviewed at each balance sheet date if
there is any indication of impairment based on internal/external factors. An
impairment loss is recognized wherever the carrying amount of an asset exceeds
its recoverable amount. The recoverable amount is the greater of the asset’s
net selling price and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a pre-tax discount
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ADITYA BIRLA MINACS WORLDWIDE LIMITED
C M Y K
rate that reflects current market assessments of the time value of money and
risks specific to the asset.
viii) Leased assets
Finance lease, which effectively transfers to the Company substantially all the
risks and benefits incidental to ownership of the leased item, are capitalized at
lower of fair value and present value of the minimum lease payments at the
inception of the lease term and disclosed as leased assets. Lease payments
are apportioned between the finance charges and reduction of the lease liability
based on implicit rate of return. Finance charges are charged directly against
income. Lease management fees, lease charges and other initial direct costs
are capitalized.
Leases where the Lessor effectively retains substantially all the risks and benefits
of ownership of the lease term are classified as operating leases. Operating
lease payments are recognized as an expense in the profit & loss account on a
straight-line basis over the lease term
ix) Deferred Financing Expenses
Deferred financing expenses represent the cost of establishing the Company’s
credit facilities. Included in these costs is the fair value of warrants to acquire
common shares of the Company issued on the acquisition of certain funding
facilities. Amortization of deferred financing expenses is provided on a straight-line basis over the specific term of the credit facilities and is recorded within
interest and financing expenses.
x) Investments
a. Investments that are readily realizable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as long-term investments.
b. Long-term investments are valued at cost. Any decline in the value of
investments other than temporary, is provided for and charged to the
profit & loss account.
c. The current investments are carried at lower of cost and net asset value
determined on an individual investment basis.
xi) Transactions in Foreign Currency
a) Initial Recognition
Foreign currency transactions are recorded in the reporting currency, by
applying to the foreign currency amount the exchange rate between the
reporting currency and the foreign currency at the date of the transaction.
b) Conversion
Foreign currency monetary items are reported using the closing rate.
Non-monetary items, which are carried in terms of historical cost
denominated in a foreign currency, are reported using the exchange rate
at the date of the transaction.
c) Exchange Differences
Exchange differences arising on the settlement of monetary items or on
reporting company’s monetary items at rates different from those at which
they were initially recorded during the year, or reported in previous financial
statements, are recognized as income or as expenses in the year in which
they occur.
d) Forward Exchange Contracts not intended for trading or speculation purposes
The premium or discount arising at the inception of forward exchange
contracts is amortized as expense or income over the life of the contract.
Exchange differences on such contracts are recognized in the statement
of profit and loss in the year in which the underlying transactions occur.
Any profit or loss arising on cancellation or renewal of forward exchange
contract is recognized as income or as expense for the year.
e) Accounting policy for Derivatives
The Company uses derivative financial instruments such as forward
exchange contracts, currency swaps and interest rate swaps to hedge
its risks associated with foreign currency fluctuations and interest rate.
Currency and interest rate swaps are accounted in accordance with their
contract except in case of other than effective hedges or instrument to
hedge against highly probable and forecasted transactions or firm
commitment in which case net mark to market losses are provided.
xii) Translation of foreign subsidiaries.
Translation of foreign subsidiary is done in accordance with AS – 11 (Revised)
“The Effects of Changes in Foreign Exchange Rates”. In the case of subsidiaries,
the operation of which are considered as integral, the Balance Sheet items
have been translated at closing rate except share capital and fixed assets, which
have been translated at the transaction date. The income and expenditure items
have been translated at the average rate for the year. Exchange Gain/(Loss) are
recognised in the Profit and Loss Account.
In case of foreign subsidiaries, the operation of which are considered as non-integral, all assets and liabilities are converted at the closing rate at the end of
the year, and items of income and expenditure items have been translated at
the average rate for the year. Exchange gain/(loss) arising on conversion are
recognised under Foreign Currency Translation Reserve.
xiii) Retirement benefits
(i) Defined Contribution Plan
Group’s contributions payable during the year to Provident Fund,
Superannuation Schemes and other fund are recognized in the Profit and
Loss Account.
(ii) Defined Benefit Plan
Group’s liabilities under payment of gratuity Act (funded) and compensated
leave encashment are determined by Actuarial Valuation made at the
end of each financial year using the projected unit credit method. Actuarial
gain and losses are recognized immediately in the statement of Profit
and Loss Account as income or expense. Obligation is measured at the
present value of estimated future cash flows using a discounted rate that
is determined by reference to market yields at the Balance Sheet date on
Government bonds where the currency and terms of the Government
bonds are consistent with the currency and estimated terms of the defined
benefit obligation
xiv) Provision
A provision is recognized when an enterprise has a present obligation as a
result of past event; it is probable that an outflow of resources will be required
to settle the obligation, in respect of which a reliable estimate can be made.
Provisions are not discounted to its present value and are determined based on
best estimate required to settle the obligation at the balance sheet date. These
are reviewed at each balance sheet date and adjusted to reflect the current
best estimates.
xv) Income Tax
Tax expense comprises of current and deferred tax.
Current income tax is measured at the amount expected to be paid to the tax
authorities in accordance with the Income-tax Act, 1961 enacted in India and
tax laws prevailing in the respective tax jurisdictions where the Company and
its subsidiaries operate.
Deferred tax for timing differences between the book and tax profits for the year
is accounted for, using the tax rates and laws that have been substantively enacted
as of the Balance Sheet date. Deferred tax assets arising from timing differences
are recognized to the extent there is reasonable certainty that these would be
realized in future. In case of unabsorbed losses and unabsorbed depreciation, all
deferred tax assets are recognized only if there is virtual certainty supported by
convincing evidence that they can be realized against future taxable profit
xvi) Employee Stock Options
Measurement and disclosure of the employee share-based payment plans is
done in accordance with SEBI (Employee Stock Option Scheme and Employee
Stock Purchase Scheme) Guidelines, 1999 and the Guidance Note on Accounting
for Employee Share-based Payments, issued by the Institute of Chartered
Accountants of India. The Company measures compensation cost relating to
employee stock options using the intrinsic value method. Compensation expense
is amortized over the vesting period of the option on a straight line basis.
xvii) Earnings per share
a) Basic earnings per share are calculated by dividing the net profit or loss
for the year attributable to equity shareholders by the weighted average
number of equity shares outstanding during the year.
For the purpose of calculating diluted earnings per share, the net profit or
loss for the year attributable to equity shareholders and the weighted
average number of shares outstanding during the year are adjusted for
the effects of all dilutive potential equity shares.
xviii) The CFS of Aditya Birla Minacs Worldwide Inc which reflects the consolidation
of The Minacs Group USA, Minacs Worldwide S.A. de C.V., The Minacs
Worldwide GmbH, Minacs Kft, Bureau of Collection recovery, LLC, Bureau of
Collections Recovery (BCR) Inc. and Aditya Birla Minacs BPO Limited as at
March 31, 2011 are prepared and Audited under Canadian Generally Accepted
Accounting Principles (GAAP). Further, financial statements of Aditya Birla
Minacs Philippines Inc are prepared and audited under Philippines GAAP. These
financial statements have been converted to Indian GAAP by the management
for the purpose of consolidation.
xix) Revenue Grant
The grant receipts from the statutory authority in terms of the agreements
executed with such authorities requiring compliance of the company over the
agreement period are amortized over such agreement period.
The grant received from the statutory authorities for offsetting the particular
cost, are amortized over the same period of the incurrence of the cost.
xx) Cash and Cash equivalents
Cash and cash equivalents for the purposes of cash flow statement comprise
cash at bank and in hand and short-term investments with an original maturity
of three months or less.
5. Contingent Liabilities
Particulars As at As at
March 31, 2011 March 31, 2010
( ` Lacs) ( ` Lacs)
i) Estimated amount of contracts remaining
to be executed on capital account and
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ADITYA BIRLA MINACS WORLDWIDE LIMITED
C M Y K
not provided for 627.14 160.27
ii) Guarantees and counter guarantees given by
the Company to Commissioner of Customs
towards custom & excise duty exemption
under STPI Scheme (Based on present
export performance, the Company expects
to meet its export obligation and hence this
liability is not likely to materialize) 1,421.43 1,329.95
iii) Guarantees and Counter guarantees given
by the Company to its insurance company
in USA and to Citibank, NA on the basis
of which the insurance company issued
telemarketing bonds favoring Attorney generals
of various states in USA on behalf of the
Company (These bonds are required to be
given for compliance of telemarketing laws
in USA. In case of any violations of these
rules, the penalties are imposed. The Company
does not expect any liabilities on the same). 446.50 451.40
iv) Guarantee and Counter given by Company
to Department of Telecommunication (DoT)
for obtaining the permission for sharing of
international and domestic call center 350.00 210.00
v) Claims against the group not acknowledged
as debts (represents claims by the party
against the group in respect of dispute relating
to the beneficiary of whole life insurance policy
and term life insurance policy acquired by
the group. Management believes that the
claims made by the party have no merit and
the outcome of the proceeding is not
determinable. 1,725.00 1,656.00
vi) Service tax refund relating to year 2005-07
rejected by service tax department. Company
is in appeal at various levels against
rejection orders. 266.58 266.58
vii) Penalty for disallowances of expenses incurred
by the company for FY 2003-04. The Company
has filled and appeal before Bombay high court. 73.29 73.29
6. The details of finance lease payments payable and their Present value as at the
balance sheet date: ( ` Lacs)
Sr. Particulars Total lease Present value Interest
charges payable
i. Not later than one year Nil Nil Nil
(742.77) (725.76) (17.01)
ii. Later than one year and Nil Nil Nil
not later five years (Nil) (Nil) (Nil)
iii. Later than five years Nil Nil Nil
(Nil) (Nil) (Nil)
Total Nil Nil Nil
(742.77) (725.76) (17.01)
Previous year figures are shown in brackets.
7. The Group has entered into operating lease agreements for its BPO centers, premises,
furniture and fixtures and certain computer and communications equipment as well
as minimum purchase commitments for telephone services. The lease rentals charged
during the year and maximum obligations on long-term non-cancelable operating
leases payable as per the rentals stated in respective agreements are as follows:
( ` Lacs)
Particulars Year Ended Year Ended
March 31, 2011 March 31, 2010
1. Lease payments recognized in the
profit and loss account for the year 6,294.43 6,021.98
2. Obligations on non-cancelable leases :
i) Not later than one year : 5,027.64 4,855.50
ii) Later than one year and not later
than 5 years 11,808.16 11,650.24
iii) Later than 5 years 2,322.54 3,760.22
8. Deferred Tax:
Deferred tax Assets/ (Liabilities) at the year end comprises timing difference on
account of:
( ` Lacs)
Particulars As at As at
March 31, 2011 March 31, 2010
Carried forward losses 276.59 297.51
Differences in depreciation and other
differences in block of fixed assets as
per tax books and financial books (941.68) ( 497.79)
Total (665.09) (200.28)
In the absence of virtual certainty to generate future taxable income, deferred tax
assets have not been recognized in respect of unabsorbed depreciation and business
losses in case of the Company and it’s certain subsidiaries
9. Employee Stock Option Plan
In December 2009, the Board of the Company approved the Employees Stock Option
Plan 2009 (“the Plan”), which covers the employees of the Company including its
subsidiaries. The plan is administered and supervised by the Compensation Committee
of the board (the ‘Committee’).
The Scheme provides that these options would vest in tranches over a period of 3-4
years as follows:
Period within which options will vest unto the participant % of options
that willvest
End of 15 months from the date of grant of options 20%
End of 27 months from the date of grant of options 20%
End of 39 months from the date of grant of options 60%
Fair Valuation:
The fair valuation of the options used to compute profarma net profit and earning per
share have been done by an independent valuer on the date of grant using black-Scholes Model. The key assumptions and the fair value are as under.
Particulars Percentage
Risk Free Interest Rate % 6.84%
Option Life (years) 4.80
Expected Volatility (%) 0%
Historical Volatility (%) 0%
Expected Dividend Yield (%) 0%
Weighted Average Fair Value per Option (`) 141
Had the compensation cost for the stock option granted under ESOS-2009 been
recognised, based on fair value at the date of grant in accordance with black and
Scholes Model, the proforma amount of net profit and earning per share of the
Company would have been as under:
(` Lacs)
Particulars March 31, 2011 March 31,2010
Net Profit/(Loss) 6,490.71 (2,307.27 )
Add: Compensation cost as per Intrinsic Value 450.38 126.15
Less: Compensation cost as per fair value 813.73 227.92
Adjusted Net Income/(Loss) 6,127.35 (2,409.04)
Weighted average number of Basic Equity
Shares Outstanding (in Nos) 23,491,711 23,491,711
ESOPS outstanding at the end of the year 1,367,000 372,875
Weighted average number of Diluted
Equity Shares Outstanding (in Nos) 24,858,711 23,864,586
Face Value of Equity Shares (In Rs) 1.00 1.00
Reported Earning Per Share (EPS)
– EPS (In `) 27.63 (9.82)
– Diluted (In `) 26.11 (9.82)
Proforma Earning Per Share (EPS)
– EPS (In `) 26.08 (10.25)
– Diluted (In `) 24.65 (10.25)
The participants shall exercise the options within five years from vesting or within
three years from the date of listing, whichever is earlier. The Plan is contingent on
the shares being listed in a recognized stock exchange in India on or before 1st July,
2015. If the Company’s shares are not listed on the stock exchange by 30th June,
2015, the existing employees shall have to sell all options vested to the Company or
its nominee at a price determined as per Plan.
Particulars March31, 2011 March 31, 2010
Total Options under the Plan 1,879,337 1,879,337
Options outstanding at the beginning of the year 1,491,500 Nil
Granted during the year 34,500 1,491,500
Forfeited during the year 159,000 Nil
Exercised during the year Nil Nil
Outstanding at the end of the year 1,367,000 1,491,500
Expired during the year Nil Nil
Exercisable at the end of the year Nil Nil
Exercise Price 230 230
(23)
ADITYA BIRLA MINACS WORLDWIDE LIMITED
C M Y K
The employee stock option outstanding account shown in Balance Sheet is net of
unamortized amount on account of Deferred Employee Compensation Account
` 490.28 Lacs (Previous year ` 1,037.82 Lacs).
10. Related Party Transactions
Name and nature of relationship of the Related Party where control exists:
Holding Company Aditya Birla Nuvo Limited
Fellow Subsidiary Aditya Birla Financial Shared Services
Private Limited (ABFSSPL)
Birla Sun Life Insurance Company
Limited (BSLICL)
ABNL Investment Limited (formerly known
as Laxminarayan Investment Limited)
Aditya Birla Minacs IT Services Limited
(ABMITS)
JOINT VENTURE Birla Sun Life Asset Management
Company Limited (BSAMC)
(Directly held by the Company till
Mar 22, 2010 thereafter Joint Venture of
a fellow subsidiary)
IDEA Cellular Limited – Joint venture of
the holding company
Transactions with related parties during the year ( ` Lacs)
Particulars Year ended Year ended
March 31, 2011March 31, 2010
Holding Company – (ABNL)
– Inter corporate deposit (ICD) Given by ABNL 1,500 Nil
– ICD Repaid to ABNL 1,500 Nil
– Interest Expense on ICD 8.14 Nil
– Reimbursement of cost paid 5.14 33.34
– Services Income (Indo Gulf Fertilizers
Division of ABNL) 7.21 Nil
Fellow Subsidiary
ABNL Investment Limited.
– ICD Taken Nil 500.00
– Interest expenses on ICD taken Nil 3.67
– ICD Repaid Nil 500.00
Birla Sun Life Insurance Company Limited.
– Staff welfare expenses (Term Life Insurance)
for employees 19.28 18.15
– Services Income 891.07 645.55
– Expenses Reimbursed by the Company 22.80 Nil
Aditya Birla Minacs IT Services Limited.
– ICD Given 1,895.00 200.00
– Interest Income on ICD Given 19.02 2.13
– ICD Repaid 895.00 200.00
– Expenses Reimbursed by the Company 1,038.27 592.03
– Software - ERP implementation (expenses) 10.80 102.83
– Service charges (expense) 4,008.02 3,076.82
Aditya Birla Financial Shared Services
Private Limited.
– Reimbursement of Cost received 10.60 1.92
Joint Venture
Birla Sun Life Asset Management
Company Limited.
– Services Income 210.73 166.80
– Reimbursement of cost by the company Nil 4.16
– Reimbursement of cost to the Company Nil 5.66
Idea Cellular Limited.
– Services Income 7,114.84 5,102.90
Balances with Related parties at the end of the year
Related Party Balances:
Holding Company
– Payable – ABNL 24.41 21.93
– Receivable- ABNL (Division- Indo Gulf Fertilizers) 7.07 Nil
Joint Venture
– Receivable - Birla Sun Life Asset Management
Company Limited. 16.45 38.68
– Receivable - Idea Cellular Limited 859.18 766.68
Fellow Subsidiary
– Receivable from - Birla Sun Life Insurance
Company Limited. 163.53 228.32
– Receivable – Aditya Birla Financial Shared
Services Private Limited. 1.51 1.92
– Payable to Aditya Birla Minacs IT
Services Limited. 375.34 637.77
– Receivable - Aditya Birla Minacs
IT Services Limited. 263.50 100.10
– Receivable - Aditya Birla Minacs
IT Services Limited. (ICD) 1,000.00 Nil
Holding Company
– Corporate guarantees given by holding company 40,760.83 27,723.39
11. Derivative Instruments
The Company uses derivative financial instruments such as forward exchange
contracts, currency swaps and interest rate swaps to hedge its risks associated with
foreign currency fluctuations and interest rate.
Derivative Outstanding as at March 31 2011
Particulars Currency Amount in Foreign Purpose
Currency (in Lacs)
Forward Cover USD 283.85 To hedge receivables
(402.69)
Forward Cover USD 754.20 To hedge Loan Payable
(754.20)
Forward Cover CAD 84.00 To hedge Loan Receivable
(9.50)
Forward Cover CAD 300.00 To hedge Preference Share
(300.00) Capital Receivable
Forward Cover USD NIL To hedge Interest Payable
(10)
Forward Cover USD 50.00 To hedge PCFC Loan
(NIL) payable
Cross Currency Swap JPY 554.19 To hedge loan
(2,121.22)
US$ forward USD 725.00 To hedge receivables
exchange rate (765.00)
contracts (CAD)
Note: Figures in brackets relates to previous year.
All the above contracts are for hedging and not for speculation.
As at March 31, 2011 all the foreign currency exposure stands hedged by derivative
instrument or otherwise.
12. Segment Information for the year ended March 31, 2011
(1) Primary business segment
The group provides a variety of Business Process outsourcing services. The
risks and rewards from each of these service agreements are similar. As the
Company’s business activity primarily falls within a single business segment,
there are no additional disclosures to be provided in respect of primary segment
under Accounting Standard 17 ‘Segment Reporting’, other than those already
provided in the financial statements.
(2) Secondary business segment:
a. Geographical turnover is segregated based on the location of the customer
to whom the services are rendered.
b. Assets are segregated based on their location.
c. Information about secondary business segments:
( ` Lacs)
Year ended March 31, 2011 India Outside India Total
a Revenue by geographical market 9,635.01 153,505.15 163,140.16
b Carrying amount of segment assets 13,147.82 135,819.28 149,867.10
c Capital Expenditure (included in
(b) above) 2,908.42 6,381.34 9,289.76
Year ended March 31, 2010 India Outside India Total
a Revenue by geographical market 6,285.64 140,402.95 146,688.59
b Carrying amount of segment assets 18,688.34 108,800.38 127,488.72
c Capital Expenditure (included in
(b) above) 4,059.22 3,591.15 7,650.37
13. RETIREMENT BENEFITS ( ` Lacs)
2010-11 2009-10
(A) Defined Benefit Plans -The Amounts recognized in the balance sheet
are as follows in respect of gratuity
(fully funded by the company):
Present value of the funded defined benefit
obligation at the end of the year 271.96 225.36
Fair value of plan assets 133.36 163.82
Benefit paid on behalf of fund 75.94 29.62
Net Liability 62.65 31.92
The Amounts recognized in Salary, Wages
and Employee Benefits in the Profit and
(24)
ADITYA BIRLA MINACS WORLDWIDE LIMITED
C M Y K
L oss A ccount as follo ws in respect of
gratuity (fully funded by the company):
Current Service cost 120.73 127.73
Past Service Cost 8.73 Nil
Interest on Defined Benefit Obligations 18.82 14.17
Expected Return on Plan Assets (14.21) (9.45)
Net Actuarial (gain)/loss recognized during the year (57.02) (89.58)
Net Gratuity Cost 77.06 43.26
Actual Return on Plan Asset
Expected Return on Plan Assets 14.21 9.45
Actuarial gain/(loss) on Plan Assets 1.66 (4.95)
Actual Return on Plan Assets 15.86 4.50
Reconciliation of present value of the
obligation and the fair value of the plan assets:
Opening Defined Benefit Obligation
as on 1.4.2010 225.35 190.94
Current Service Cost 120.73 127.73
Past Service Cost 8.73 Nil
Interest Cost 18.82 14.17
Actuarial (Gain)/loss (55.36) (77.87)
Benefits Paid (46.32) (29.62)
Closing Defined Benefit Obligation
as on 31.03.2011 271.96 225.35
Change in fair value plan assets
Opening Fair Value of the plan assets 163.82 125.96
Expected return on plan assets 14.21 9.45
Actuarial Gain/(loss) 1.66 (4.95)
Contributions by the Employer Nil 62.98
Benefits Paid (46.32) (29.62)
Closing Fair value of the plan assets 133.36 163.82
Investment details of plan assets
Government of India Securities 38.79 36.04
Corporate Bonds 2.08 3.28
Insurer Managed Fund (with common
fund of Holding Company) 86.80 124.50
Others 5.69 Nil
Total 133.36 163.82
The overall expected rate of return on
assets is determined based on the market
prices prevailing on that date, applicable to
the year over which the obligation is
to be settled.
(B) Defined Contributions Plans:
Contribution to Employee Provident Fund 996.81 848.61
Contribution to ESIC 268.50 89.84
Contribution to superannuation fund 7.11 19.84
(C) Principal Actuarial Assumptions At the
Balance Sheet date (31.03.11)
Discount rate 8.00% 8.25%
Estimated rate of return on plan assets 8.00% 8.25%
Future Salary escalation 10% for first 10% for first
three years and three years and
5% thereafter 5% thereafter
(D) Experience Adjustment 2010-11 2009-10 2008-09 2007-08 2006-07
Liability at the end
of the Period 271.96 225.35 191.68 105.79 79.02
Fair Value of Plan Assets
at the end of the Period 133.36 163.82 106.06 74.35 66.90
Benefit paid on
behalf of fund 75.94 29.62 nil Nil nil
Deficit / (Surplus) 62.65 31.91 85.62 31.44 12.12
Experience adjustments
on plan liabilities (Gain)/Loss (55.36) (77.87) 91.96 (22.03) (21.65)
Experience adjustments
on plan Assets Gain/(Loss) 1.66 (4.95) 14.44 0.47 (2.34)
14. 14. Goodwill on consolidation relating to acquisition of subsidiaries aggregates to Rs.
70,807.08 lacs (Previous year Rs. 60,789.41) as at March 31, 2011. Considering the
strategic and long term nature of aforesaid investments and asset base and business
plan of the investee companies, in the opinion of the management, no impairment is
considered necessary in respect of goodwill on consolidation.
15. 15. The Company has issued Zero Coupon Compulsorily Convertible Debentures (CCD)
of Rs 25,000 Lacs (Previous year no 25,000) which are to be converted into Equity on
the business day following expiry of a period of 60 months from the date of allotment
of such CCD. As per the terms of the issue, the Conversion price will be mutually
decided thirty days before the conversion date. Aditya Birla Nuvo Limited (ABNL),
the holding company, has entered into an Option Agreement with the Subscribers of
these CCD pursuant to which the holders of CCD have call option on ABNL and
ABNL has put option on the Subscribers on expiry of 24,36,48 and 60 months from
the date of allotment of these CCD. The holders can also exercise put option on
happening of certain specified events.
16. 16. During the current year, one of the subsidiaries of the Company, Aditya Birla Minacs
Worldwide Inc., acquired Bureau of Collections Recovery Inc. ( BCR) and its
subsidiaries. The effect of such acquisition during the year is as under:
Revenue (Post acquisition) Rs 5,057.62 Lacs
Net Profit/( Loss) (Post acquisition) Rs 8.53 Lacs
Net Assets Rs 1,503.84 Lacs
Further, during the previous year, Aditya Birla Minacs Worldwide Inc. acquired Aditya
Birla Minacs BPO Limited (Formerly known as Compass BPO Ltd.) and its subsidiaries.
The effect of such acquisition during the previous year is as under:
Revenue (Post acquisition) Rs 182.87 Lacs
Net Profit / (Loss) (Post acquisition) Rs (0.10) Lacs
Net Assets Rs 590.86 Lacs
17. The Company had filed Composite Scheme of Amalgamation (or “Scheme”) with
Karnataka High Court (or “High Court”) for the merger of Aditya Birla Minacs IT
Services Limited and Aditya Birla Minacs Technologies Limited with the Company
with effect from April 1, 2010. The High Court sanctioned the Scheme on November
3, 2010 and order was received by Company on December 9, 2010. The approved
Scheme was not filed with Registrar of Companies as the management was desirous
of making certain modifications in the Scheme. Therefore, the Company has revised
the Scheme and the same has been filed for approval with the High Court on February
22, 2011. Currently, the revised Scheme is pending approval from the High Court.
Accordingly, the revised Scheme has not been given effect in consolidated financial
statements
18. The Company has opted for general exemption granted by Ministry of Corporate
Affairs (MCA) vide General Circular No: 2 /2011 dated February 08, 2011 regarding
direction under Section 212(8) of the Companies Act, 1956 (the Act). For information
required to be disclosed in aggregate for each subsidiary (including subsidiaries of
subsidiaries) under Section 212(8) of the Act- Refer Annexure 1.
19. Previous year’s figures have been regrouped, where necessary to conform to this
year’s classification.
For S.R. BATLIBOI & ASSOCIA TES
Firm Registration No. 101049W
Chartered Accountants
per Amit Majumdar
Partner
Membership No. 36656
Place: Mumbai
Date: July 27, 2011
For and on behalf of the Board of Directors of
Aditya Birla Minacs Worldwide Limited
Dr. Rakesh Jain
Director
Sushil Agarwal
Director
Ramesh Kamath
Chief Financial Officer
Date: July 27, 2011
(25)
ADITYA BIRLA MINACS WORLDWIDE LIMITED
C M Y K
ANNEXURE- 1
(Refer Note no 18 of Schedule 17)
The particulars of subsidiary companies as required by order No. 47/438/2007-CL-III dated 4th March,2007 of Ministry of Company Affairs,Government of India, issued under section 212 (8) of the Companies Act, 1956 are as follows:
Description Transworks Inc, USA A V Transworks Aditya Birla Minacs Aditya Birla Minacs Aditya Birla Minacs Minacs Kft.- Minacs Limited. Minacs Worldwide Minacs Worldwide
Limited, Canada Phillippins Inc Worldwide Inc, Canada Worldwide Inc, Canada Hungary* UK* S.A. de C.V., Mexico* GmbH, Germany*
(Consolidated) (Standalone)*
USD in mn Rs. in mn CAD in Mn Rs. in mn PHP in mn Rs. in mn CAD in Mn Rs. in mn CAD in mn Rs. in mn HUF in mn Rs. in mn GBP in mn Rs. in mn MXN in lacs Rs. in mn EUR in mn Rs. in mn
1 Capital — — 157.00 7,222.00 96.92 99.83 120.39 5,537.94 120.39 5,537.94 3.00 0.72 ** 0.07 0.05 0.18 0.03 1.92
2 Reserves*** 0.04 1.81 (2.31) (106.26) (131.64) (135.59) (48.27) (2,220.42) (47.80) (2,198.80) 81.25 19.50 0.33 23.96 (0.05) (0.18) 2.35 150.02
3 Total assets 0.05 2.26 214.08 9,847.68 135.87 139.95 164.32 7,558.72 132.22 6,082.12 169.79 40.75 1.03 74.78 — — 2.78 177.48
4 Total Liabilities 0.01 0.45 59.39 2,731.94 170.59 175.71 92.20 4,241.20 59.63 2,742.98 85.54 20.53 0.70 50.75 — — 0.40 25.54
5 Details of Investments
(except in case of invetsments
in subsidiary companies) ——————————————————
6 Turnover ** ** 0.77 34.47 238.96 246.13 308.19 13,794.58 158.74 7,105.20 392.46 86.34 2.26 159.83 — — 6.89 415.26
7 Profit/ (loss) before Taxation * * (0.05) (0.42) (18.80) 12.08 12.44 22.67 1,014.71 21.84 977.56 24.80 5.45 0.09 6.36 — — 0.36 21.70
8 Provision/ (Recovery)
for Taxation ————****(1.68) (75.20) (2.61) (116.82) 13.10 2.88 0.03 2.12 — — 0.11 6.63
9 Profit/(loss) after Taxation ** (0.05) (0.42) (18.80) 12.08 12.44 24.35 1,089.91 24.45 1,094.38 11.70 2.57 0.06 4.24 — — 0.25 15.07
10 Proposed dividend
(Including Dividend Tax) ——————————————————
Note :
a) Item 1 to 5 are translated at exchange rate as on March 31, 2011 as follows:
1US Dollar (USD) = Rs (INR) 45.29 , 1 Canadian Dollar (CAD)= Rs. 46,1 Pound sterling (GBP) = 72.60 , 1 EURO= Rs.63.84, 1 Philip pine peso (PHP) = Rs 1.03, 1 Hungary Forint(HUF) = Rs .24,1 MXN= Rs 3.62, 1 United Arab Emirates Dirham(AED)= Rs.12.33
b) Items 6 to 10 are translated at annual average exchange rate for the year ended March 31, 2011 as follows:
1 US Dollar)= Rs 45.59 , 1 Canadian Dollar (CAD) = Rs. 44.76, 1 Pound sterling (GBP) = 70.72 ,1 EURO= Rs.60.27, 1 Philippine pe so (PHP) = Rs 1.03, 1 Hungary Forint9HUF)= Rs .22, 1 MXN= Rs 3.62, 1 United Arab Emirates Dirham (AED) = 12.39
* Indicates unaudited results. These results have been disclosed on the basis of the management accounts.
** Indicates amounts less than 10,000
*** Figures in bracket indicates debit balance
(26)
ADITYA BIRLA MINACS WORLDWIDE LIMITED
C M Y K
ANNEXURE- 1
(Refer Note no 18 of Schedule 17)
The particulars of subsidiary companies as required by order No. 47/438/2007-CL-III dated 4th March,2007 of Ministry of Company Affairs,Government of India, issued under section 212 (8) of the Companies Act, 1956 are as follows:
Description The Minacs Group Bureau of Collection Bureau of Collections Aditya Birla Minacs Aditya Birla Minacs Aditya Birla Minacs Compass BPO, Compass BPO FZE,
(USA) Inc* recovery, LLC * Recovery (BCR) Inc* BPO Limited, UK BPO Private BPO Limited, UK* Inc, U.S.A * U.A.E (closed)*
(Consolidated) Limited. India*
USD in mn Rs. in mn CAD in Mn Rs. in mn PHP in mn Rs. in mn CAD in mn Rs. in mn Rs. in mn HUF in mn Rs. in mn GBP in mn Rs. in mn MXN in lacs Rs. in mn
1 Capital 0.30 13.59 0.02 0.91 — — 0.02 1.45 13.49 0.02 1.45 ** ** — —
2 Reserves*** 9.00 407.61 3.10 140.40 — — 0.84 60.98 (2.20) 0.82 59.53 0.18 8.15 — —
3 Total assets 66.96 3,032.62 5.38 243.66 — — 1.61 116.89 76.51 1.17 84.94 0.32 14.49 — —
4 Total Liabilities 57.66 2,611.42 2.26 102.35 — — 0.75 54.46 65.22 0.33 23.96 0.14 6.34 — —
5 Details of Investments
(except in case of invetsments
in subsidiary companies) — — — — — — — — — — — — — — —
6 Turnover 115.22 5,252.88 11.20 510.61 — — 4.27 301.97 185.65 1.69 119.52 2.60 118.53 2.55 31.59
7 Profit/ (loss) before Taxation 2. 06 93.91 (0.50) (22.80) — — 0.01 0.71 (3.33) (0.09) (6.36) 0.02 0.91 0.76 9.42
8 Provision/ (Recovery)
for Taxation 1.16 52.88 (0.52) (23.71) — — 0.02 1.41 1.48 — — ** 0.19 — —
9 Profit/(loss) after Taxation 0.90 41.03 0.02 0.91 — — (0.01) (0.70) (4.81) (0.09) (6.36) 0.02 0.72 0.76 9.42
10 Proposed dividend
(Including Dividend Tax) — — — — — — — — — — — — — — —
Note :
a) Item 1 to 5 are translated at exchange rate as on March 31, 2011 as follows:
1US Dollar (USD) = Rs (INR) 45.29 , 1 Canadian Dollar (CAD)= Rs. 46,1 Pound sterling (GBP) = 72.60 , 1 EURO= Rs.63.84, 1 Philip pine peso (PHP) = Rs 1.03, 1 Hungary Forint(HUF) = Rs .24,1 MXN= Rs 3.62, 1 United Arab Emirates Dirham(AED)= Rs.12.33
b) Items 6 to 10 are translated at annual average exchange rate for the year ended March 31, 2011 as follows:
1 US Dollar)= Rs 45.59 , 1 Canadian Dollar (CAD) = Rs. 44.76, 1 Pound sterling (GBP) = 70.72 ,1 EURO= Rs.60.27, 1 Philippine pe so (PHP) = Rs 1.03, 1 Hungary Forint9HUF)= Rs .22, 1 MXN= Rs 3.62, 1 United Arab Emirates Dirham (AED) = 12.39
* Indicates unaudited results. These results have been disclosed on the basis of the management accounts.
** Indicates amounts less than 10,000
*** Figures in bracket indicates debit balance
(27)
TRANSWORKS INC.
C M Y K
BALANCE SHEE T
AS AT 31ST MARCH, 2011
As At As At
31st March, 2011 31st March, 2010
Schedule (US$) (INR) (US$) (INR)
I. Sources of Funds
1 Shareholders' Funds
Share Capital 1 — — — —
2 Reserves and Surplus
Profit and Loss Account 49,092 2, 191,938 47,416 2,140,350
Total 49,092 2,191,938 47,416 2,140,350
II. Application of Funds
1 Current Assets,
Loans and Advances :
Cash and
Bank Balances 2 54,350 2, 426,728 53,762 2,426,810
54,350 2,426,728 53,762 2,426,810
Less: Current Liabilities
and Provisions :
Current Liabilities 3 5,258 234,790 6,346 286,460
Net Current Assets 49,092 2, 191,938 47,416 2,140,350
Total 49,092 2,191,938 47,416 2,140,350
Notes to Accounts Notes to Accounts 4
The Schedules referred to above and the notes to accounts form an integral part of the
Balance Sheet.
As per our Report of even date
For S .R. B atliboi & A ssociates ssociates For Transw orks Inc.
Firm Registration No. 101049W
Chartered Accountants
per Vijay Maniar Deepak J. Patel
Partner Director
Membership No. 36738
Place: Mumbai
Date: April 27, 2011
As per our Report of even date
For S.R. Batliboi & Associates S.R. Batliboi & Associates For Transworks Inc.
Firm Registration No. 101049W
Chartered Accountants
per Vijay Maniar Deepak J. Patel
Partner Director
Membership No. 36738
Place: Mumbai
Date: April 27, 2011
PROFIT & LOSS ACCO UNT
FOR THE YEAR ENDED 31ST MARCH, 2011
For the year For the year For the year For the year
ended Mar, 31 ended Mar, 31 ended Mar, 31 ended Mar, 31
2011 2011 2010 2010
Schedule (US$) (INR) (US$) (INR)
OTHER INCOME :
Excess provision written back 1,088 49,586.40 — —
Bank interest 588 26,816.17 — —
TOTAL 1,676 51,588.00 — —
Profit before tax for the year
Less : Provision for tax — — (3,257) 154,517
Profit / (Loss) after tax provision
for the year 1676 51588.00 (3,257) 154,517
Dividend paid during the year — — 150,000 7,116,250
Profit / (Loss) for the year 1676 51588.00 (153,257) 8,505,782
Profit / (Loss) brought forward from
previous year 47,416 2,140,350 200,673 10,646,132
Accumulated balance carried
forward to the Balance Sheet 49,092 219,938 47,146 214,035
Notes to accounts Notes to accounts 4
The schedules referred to above and the notes to accounts form an integral part of the Profit & Loss
account
(28)
TRANSWORKS INC.
C M Y K
CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2011
For the For the For the For the
Year ended Year ended Year ended Year ended
31.3.2011 31 .3.2011 31.3.2010 31.3.2010
(US$) (INR) (US$) (INR)
A. Cash flo ws from Operating A ctivities
Net Profit f or the y ear 1,676 76,403 (1,235,015)
Adjustments for:
Finance/Interest Income (588) (26,816)
Excess provision written back (1,088) (49,586) —
Difference on account of exchange rate dif ference in deff ered tax (68,257) (3,451,967)
Operating Profit bef ore w orking capital c hanges hanges — — (68,257) (4,686,981.54)
Movements in working capital :
(Increase)/Decrease in Sundry Debtors 98,560 4,999,950
(Increase)/Decrease in Loans & Advances
Increase/(Decrease) Current Liabilities & Provisions — 5 ,259 231,288
Cash generated from operations — — 35,562 544,256
Add/(Less): Direct Taxes paid —— Cash flow before extraordinary items — — 35,562 544,256
Add/(Less): Extraordinary items ——— Net cash from/ (used in) operating activities Net cash from/ (used in) operating activities — — 35,562 544,256
B . Cash Flows from Inv esting A ctivities
Net Cash from/(f or) Inv esting A ctivities (0) (0) (0) (0)
C. Cash flo w from Financing A ctivities
Repayment of share capital (200,000) (9,680,000)
Interest received 588 26,816 — —
Dividend paid — (150,000) (7,116,250)
Tax on dividend paid ——— Net Cash generated/(used) in Financing A ctivities 588 26,81 6 (350,0 0 0) (1 6,796,250)
D. Foreign Exchange difference on translation of f oreign cur rency
cash and cash equivalents ———— Net Increase in cash and Cash equivalants during the year 588 26,261 (314,438) (16,251,994)
Cash and cash equivalants at the beginning of the year 53,762 2,40 0,467 368,200 18,678,805
Cash and cash equivalants at the end of the year 54,350 2,426,728 53,762 2,426,811
Notes:
Components of Cash and Cash Equivalents A s at 31.3.2011 A s at 31.3.2010 A s at 31.3.2010
i) Cash Balance on hand
ii) Balance with Scheduled and other Banks :
- in Current Account 54,350 2,426,728 53,762 2,426,811
Tot al 54,350 2,426,728 53,762 2,426,811
As per our Report of even date
For S .R. B atliboi & Co.
Firm Registration No. 301003E
Chartered Accountants
Deepak J. Patel
per V ijay Maniar
Partner
Membership No. 36738
Place: Mumbai
Date:
(29)
TRANSWORKS INC.
C M Y K
As per our Report of even date
For S .R. B atliboi & A ssociates ssociates For Transw orks Inc.
Firm Registration No. 101049W
Chartered Accountants
per Amit Majmudar Deepak J. Patel
Partner
Membership No. 36656
Place: Mumbai Ramesh Kamath
Date: Chief Financial Officer
SCHEDULES FOR THE YEAR ENDED 31ST MARCH, 2011
A s At A s At A s At A s At
31st March ‘1 1 31st March ‘1 1 31st March ’1 0 31st March’1 0
(US$) (INR) (US$) (INR)
SCHEDULE 1 - SHARE CAPI TAL
A uthorised Capital
1,000,000 Equity Shares of US$ 1/- each 1,000,000 44,650,000 1,000,000 45,140,000
Issued, Subscribed & Paid up Capital
NIL (P Y 200,000) Equity Shares of US$ 1/-each fully paid-up — — — —
(All the above equity shares are held by
the holding company Aditya Birla Minacs
Worldwide Limited)
TOTAL — — — —
SCHEDULE 2 - SUNDRY DEBTORS
1 Other Debts
Unsecured, Considered good — — — —
TOTAL — — — —
SCHEDULE 3 - CASH AND BANK BALANCES
1 Balance with Bank
— In Current Account 54,350 2,426,728 53,762 2,426,810
TOTAL 54,350 2,426,728 53,762 2,426,810
SCHEDULE 4 - CURRENT LIABILITIES
1 Sundry Creditors 2,258 100,840 2,258 101,947
2 Outstanding Liabilities — — 1,088 49,093
3 Provision for Tax 3, 000 133,950 3,000 135,420
TOTAL 5,258 234,790 6,346 286,460
SCHEDULE 5 - OTHER INCOME
i) Interest Income (588) (26,816) — —
– In Balance with Banks
TOTAL (588) (26,816) — —
SCHEDULE 6 - OTHER EXPENSES
1 Bank Charges — — — —
2 Miscellaneous expenses — — — —
3 Sales Commission (Net of write-back) — — — —
4 Legal & Professional Fees (1,088) (49,586) — —
5 Insurance Charges — — — —
6 Maintenance Charges (Net of write-back) — — — —
7 Loss on Sale of Fixed Assets — — — —
8 US Payroll Taxes (Net of write-back) — — — —
9 Repairs & Maint. - Others — — — —
10 Write-back of deposits for
Long Distance Charges — — — —
TOTAL (1,088) (49,586) — —
1. B ack ground
TRANSWORKS INC (“the Company’) is domiciled in United States of America and
accordingly the financial statements have been prepared in United State Dollar (US$),
which is the reporting currency of the Company.
2. Operational Outlook
The Company has ceased operations and is in the process of being wound up.
Accordingly, the financial statements have been prepared under liquidation basis.
Since these financial statements are prepared under liquidation basis, assets and
liabilities have been disclosed at their realisable / payable values, based on
management’s best estimates.
3. ACCOUNTING POLICIES
a. Basis of preparation
The financial statements have been prepared to comply in all material respects
with the accounting principles generally accepted in India. The financial
statements have been prepared on liquidation basis. The accounting policies
have been consistently applied by the Company and are consistent with those
used in the previous year. The significant accounting policies are as follows:
b. Interest Income
Interest is recognised on a time proportion basis taking into account the amount
outstanding and the rate sapplicable.
c. Income Tax
The Company utilizes the asset and liability method of accounting for Income
taxes. Under this method, deferred income taxes are recorded to reflect the
tax consequences of future years differences between the tax basis of assets
and liabilities and there financial reporting amounts at each year end are based
on enacted tax laws and statutory tax rates applicable to the periods in which
the differences are expected to effect taxable income. A valuation allowance is
provided against the future benefit of deferred tax asset if it is determined that
it is more likely than not that the future tax benefits associated with the deferred
tax assets will not be realized.
d. Transactions in Foreign Currency
i) Initial Recognition
Foreign currency transactions are recorded in the reporting currency, by
applying to the foreign currency amount the exchange rate between the
reporting currency and the foreign currency at the date of the transaction.
ii) Conversion
Foreign currency monetary items are reported using the closing rate.
Non-monetary items, which are carried in terms of historical cost
denominated in a foreign currency, are reported using the exchange rate
at the date of the transaction.
iii) Exchange Differences
Exchange differences arising on the settlement of monetary items or on
reporting company’s monetary items at rates different from those at which
they were initially recorded during the year, or reported in previous financial
statements, are recognized as income or as expenses in the year in which
they occur
4. Provision for Taxation:
Management is of the view that there is an adequate tax provision in the books of
account and no further tax provision is required in view of non cash profits in the
current year. Further, management is in the process of winding up the Company. Per
management, additional tax liability, if any, is not expected to be material. Hence no
tax provision has been created during the current year.
5.5. The Company had repaid equity share capital to Aditya Birla Minacs Worldwide Limited
in the earlier years. However, Aditya Birla Minacs Worldwide Limited continues to
control the composition of the Board of Directors of the Company. Accordingly, Aditya
Birla Minacs Worldwide Limited has been considered as the holding company.
6. Related Party Transactions
The Company had transactions with the following related parties:
Ultimate Holding Company Aditya Birla Nuvo Limited
Holding Company Aditya Birla Minacs Worldwide Limited (Refer
Note 5 above)
Summary of transactions with above related parties is as follows:
(in US$)
Particulars Year ended Year ended
March 31, 2011 March 31, 2010
Holding Company
Repayment of Share Capital NIL 200,000
Payment of dividend NIL 150,000
Related Party Balances
Payable to Holding Company 2,258 2,258
(in INR)
Particulars Year ended Year ended
March 31, 2011 March 31, 2010
Holding Company
Repayment of Share Capital NIL 9,680,000
Payment of dividend NIL 7,116,250
Related Party Balances
Payable to Holding Company 100,840 101,947
6.6. Previous year’s figures have been regrouped where necessary to conform to this
year’s classification.
(30)
ADITYA BIRLA MINACS PHILIPPINES, INC.
C M Y K
BALANCE SHEETS
Mar-31
2011(PHP) 2011(INR) 2010(PHP) 2010(INR)
ASSETS
Current Assets
Cash 33,090,861 34,045,115 4,294,486 4,299,248
Receivables (Note 5) 62,253,614 64,048,847 33,738,747 33,776,160
Prepaid expenses and
other current assets
(Notes 6 and 15) 3,971,358 4,085,882 5,575,511 5,581,694
Total Current Assets Total Current Assets 99,315,833 102,179,844 43,608,744 43,657,101
Noncurrent Assets
Property and equipment
(Notes 7 and 8) 34,070,710 35,053,221 40,140,748 40,185,260
Other non-current assets
(Note 15) 2,480,058 2,551,576 3,280,358 3,283,996
Total Non-current Assets 36,550,768 37,604,797 43,421,106 43,469,256
TOTAL ASSETS 135,866,601 139,784,641 87,029,850 87,126,357
LIABILITIES AND
CAPITAL DEFICIENCY
Current Liabilities
Accounts payable and
accrued expenses (Note 8) 76,318,515 78,519,343 36,529,566 36,570,073
Non-current Liabilities
Loans from parent company
(Note 12) 93,081,884 95,766,124 96,900,408 97,007,860
Accrued retirement benefits
(Note 13) 1,186,100 1,220,304 200,500 200,722
Total Non-current Liabilities 94,267,984 96,986,428 97,100,908 97,208,582
Total Liabilities 170,586,499 175,505,770 133,630,474 133,778,656
Capital Deficiency
Capital stock - 100 par value (Note 16)
Authorized - 1,000,000 shares
Issued and outstanding -969,232 shares in 2011 and
490,000 shares in 2010 96,923,200 99,718,213 49,000,000 49,054,336
Deposits for future stock
subscription (Note 16) 13 13 47,923,213 47,976,355
Deficit -131,643,111 -135,439,356 -143,523,837 -143,682,990
Total Capital Deficiency -34,719,898 -35,721,130 -46,600,624 -46,652,299
TOTAL LIABILITIES AND
CAPITAL DEFICIENCY 135,866,601 139,784,641 87,029,850 87,126,357
See accompanying Notes to Financial Statements.
S TATEMENTS OF COMPREHENSIVE INCOME
Years Ended March 31
2011(PHP) 2011(INR) 2010(PHP) 2010(INR)
SERVICE INCOME (Note 11) SERVICE INCOME (Note 11) 238,962,956 247,235,279 145,577,147 147,781,703
COST OF SERVICES (Note 8) COST OF SERVICES (Note 8) 187,367,264 193,853,468 150,079,412 153,491,031
GROSS LOSS GROSS LOSS 51,595,692 53,381,811 -4,502,265 -4,604,611
General and administrative
expenses (Note 10) -43,013,663 -44,502,693 -20,862,320 -21,336,564
Foreign exchange loss
(gain) - net 1,415,193 1,464,184 3,506,651 3,586,365
Interest and b ank charges
(Note 12) -69,641 -72,052 -1,848,541 -1,890,562
Interest income 21,397 22,138 32,792 33,537
Other income 2,128,146 2,201,817 1,147,925 1,174,020
PROFIT/LOSS BEFORE
INCOME TAX 12,077,124 12,495,205 -22,525,758 -23,037,816
PROVISION FOR INCOME TAX -Current (Note 13) 2,398 2,481 3,377 3,454
NET LOSS 12,074,726 12,492,724 -22,529,135 -23,041,270
See accompanying Notes to Financial Statements.
STATEMENTS OF CHANGES IN CAPITAL DEFICIENCY
FOR THE YEARS ENDED MARCH 31, 2011 AND 2010
Deposits for
Future Stock
Subscription
Capital Stock (Note 16) Deficit Total
BALANCES AT MARCH 31, 2009,
AS PREVIOUSLY
REPORTED 49,000,000 47,923,213 -121,408,602 -24,485,389
Effects of change
in accounting for
retirement benefits
(Note 3) — — 219,900 219,900
BALANCES AT MARCH 31, 2009,
AS RESTATED AS RESTATED 49,000,000 47,923,213 -121,188,702 -24,265,489
Total comprehensive
loss for the year — — -22,529,135 -22,529,135
BALANCES AT
MARCH 31, 2010 49,000,000 47,923,213 -143,717,837 -46,794,624
BALANCES AT MARCH 31, 2010,
AS PREVIOUSLY
REPORTED 49,000,000 47,923,213 -143,523,837 -46,600,624
Effects of change
in accounting for
retirement benefits
(Note 3) — — -194,000 -194,000
BALANCES AT
MARCH 31, 2010, MARCH 31, 2010, 49,000,000 47,923,213 -143,717,837 -46,794,624
AS RESTATED
Issuance of shares 47,923,200 -47,923,200 — —
Total comprehensive
income for the year — — 12,074,726 12,074,726
BALANCES AT
MARCH 31, 2011 (PHP) 96,923,200 13 -131,643,111 -34,719,898
BALANCES AT
MARCH 31, 2011 (INR) 99,718,213 13 -135,439,356 -35,721,130
See accompanying Notes to Financial Statements.
(31)
ADITYA BIRLA MINACS PHILIPPINES, INC.
C M Y K
S TATEMENTS OF CA SH FLO WS
Years Ended March 31
2011(PHP) 2011(INR) 2010(PHP) 2010(INR)
CASH FLOWS FROM
OPERATING ACTIVITIES
Loss before income tax 12,077,124 12,495,205 -22,111,858 -22,446,710
Adjustments for:
Depreciation (Note 6) 17,045,598 17,635,676 29,581,074 29,613,876
Unrealized foreign exchange
loss (gain) - net -1,177,350 -1,218,107 -3,796,197 -3,800,407
Interest expense (Note 11) 791,600 819,003 1,764,308 1,766,264
Movement in accrued
retirement benefits (Note 12) -18,999 -19,657 -60,500 -61,416
Interest income — — -32,792 -33,289
Operating income (loss) before
working capital changes 28,717,973 29,712,120 5,344,035 5,038,318
Decrease (Increase) in:
Receivables -29,333,656 -30,179,562 -13,001,452 -13,015,869
Prepaid expenses and
other current assets 1,604,153 1,650,413 -1,724,827 -1,726,740
Increase (Decrease) in
accounts payable and
accrued expenses 43,202,115 44,447,952 -6,233,507 -6,240,419
Net cash flows from
(used in) operations 44,190,585 45,630,922 -15,615,751 -15,944,710
Income taxes paid -2,398 -2,481 -3,377 -3,428
Net cash flows from
(used in) operating activities 44,188,187 45,628,441 -15,619,128 -15,948,138
CASH FLOWS FROM
INVESTING ACTIVITIES
Additions to property and
equipment (Notes 6 and 7) -14,134,060 -14,541,650 -4,599,460 -4,604,560
Decrease (Increase) in
other non-current assets 800,300 823,379 114,035 114,161
Interest received 18,999 19,657 32,792 33,289
Net cash flows used in
investing activities -13,314,761 -13,698,614 -4,452,633 -4,457,110
CASH FLOWS FROM
FINANCING ACTIVITES
Loans from parent company — 0 12,429,562 12,443,345
EFFECT OF EXCHANGE
RATE CHANGES IN CASH -2,077,051 -2,148,954 -1,118,608 -1,135,548
NET INCREASE (DECREASE)
IN CASH 28,796,375 29,626,788 -8,760,807 -9,097,450
CASH AT BEGINNING OF
THE YEAR 4,294,486 4,418,328 13,055,293 13,703,601
CASH AT END OF THE YEAR 33,090,861 34,045,115 4,294,486 4,606,150
See accompanying Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS
1. Corporate Information
Aditya Birla Minacs Philippines, Inc. (the Company) was registered with the
Philippine Securities and Exchange Commission (SEC) on November 3, 2006
with the primary purpose of carrying on and undertaking the business of setting
up and operating a center for sales and customer interaction services and
business process outsourcing services; providing system integration and
software development services which are ancillary thereto; and carrying on
the business in computer hardware and software related matters and fields,
including the design, development, manufacture, production, marketing,
selling, leasing and integration of computer hardware and software systems,
the provision of customized software development consultancy and services,
and the import and export of computer hardware technology. The Company
started its commercial operations on March 5, 2007.
The Company is a wholly owned subsidiary of Aditya Birla Minacs Worldwide
Ltd. (ABMW). The ultimate parent company is Aditya Birla Nuvo Limited
(ABNL). ABMW and ABNL were incorporated in India.
The Company’s principal place of business is at 1800 Eastwood Ave. Bldg.,
10/F Eastwood City Cyberpark, 188 E. Rodriguez, Jr. Ave., Bagumbayan,
Quezon City.
2. Registration with the Philippine Economic Zone Authority (PEZA)
The Company is registered with PEZA as an Ecozone Information Technology
(IT) Enterprise, engaged in providing customer contact center services at
Eastwood City Cyberpark.
The Company is entitled to all incentives granted to pioneer projects under
Republic Act (RA) No. 7916, as amended, and the PEZA IT Guidelines, subject
to certain terms and conditions, including, among others, the following:
a. The Company’s project shall be entitled to six years income tax holiday
(ITH) incentive, as amended in accordance with the 2006 Investment
Priorities Plan. The project’s entitlement to the said incentive shall be
subject to validation by PEZA based on the Company’s audited financial
statements covering the first year of its operations showing the
investment cost per seat for its project is equivalent to at least United
States (US) $2,500, inclusive of the cost of equipment, office furniture
and fixtures, building improvements and renovations, fixed assets, except
land, building and working capital, and complies with the minimum
US$2.5 million investment required for pioneer status.
In case the Company does not attain the said investment cost per seat,
the Company’s project shall be granted 5% gross income incentive and
other incentives under RA 7916, as amended, instead of the ITH
incentive. On the other hand, if the Company complies with the minimum
US$2,500 investment cost per seat but fails to comply with the minimum
US$2.5 million investment required for pioneer status, the Company
shall instead be entitled to only four years ITH incentive.
Entitlement of the project to the 5th and 6th years of ITH from the date
of start of commercial operations shall be subject to the issuance by the
PEZA Director General of a written validation of the project cost.
b. The Company’s operations shall be limited to its PEZA-approved projects.
Any expansion of this project or other additional activities to be
undertaken by the Company shall require prior PEZA clearance.
The Company is in a taxable loss position for the years ended
March 31, 2011 and 2010 and, as such, it did not benefit from the ITH.
3. Summary of Significant Accounting and Financial Reporting Policies
Basis of Preparation
The financial statements of the Company are presented using the historical
cost convention and are presented in Philippine peso (Peso), the Company’s
functional currency. All values are rounded off to the nearest Peso.
Statement of Compliance
The financial statements of the Company have been prepared in compliance
with the Philippine Financial Reporting Standards for Small and Medium-sized
Entities (PFRS for SMEs).
Transition to PFRS for SMEs
The Company prepared its financial statements until March 31, 2010, in
accordance with accounting principles generally accepted in the Philippines
applicable to non-publicly accountable entities (previous GAAP). The financial
statements for the year ended March 31, 2011, are the Company’s first
financial statements in accordance with PFRS for SMEs.
(32)
ADITYA BIRLA MINACS PHILIPPINES, INC.
C M Y K
The Company applied PFRS for SMEs Section 35, Transition to the PFRS for
SMEs , in preparing the financial statements, with April 1, 2009, as the date of
transition. The transition from the previous GAAP to PFRS for SMEs resulted
in certain changes to the Company’s previous accounting policies. The
comparative figures for the fiscal year 2010 financial statements were restated
to reflect these changes in accounting policies.
Reconciliations
The following reconciliations show the effect of the transition from the previous
GAAP to PFRS for SMEs on the Company’s capital deficiency account as of
April 1, 2009 and March 31, 2010, and on the Company’s total comprehensive
loss for the year ended March 31, 2010.
Reconciliation of capital deficiency account
March 31, 2010 March 31, 2010 April 1,2009
Capital deficiency under previous GAAP 46,600,624 24,485,389
Effect of change in accounting for
retirement benefits 194,000 194,000 (219,900)
Capital deficiency under PFRS for SMEs 46,794,624 24,265,489
Reconciliation of total comprehensive loss for the year ended March 31, 2010
Total comprehensive loss for the year under previous GAAP 22,115,235
Effect of change in accounting for retirement benefits 413,900
Total comprehensive loss for the year under PFRS for SMEs 22,529,135
Effect of change in accounting for retirement benefits
PFRS for SMEs requires full recognition of actuarial gains and losses in the
profit and loss. Accordingly, all previously unrecognized actuarial gains and
losses were recognized.
The change decreased deficit and increased accrued retirement benefits cost
by 219,900 as of April 1, 2009. The change also increased deficit and accrued
retirement benefits by 413,900 as of March 31, 2010, and increased
retirement benefits cost by 194,000 for the year ended March 31, 2010.
Effect of change in accounting for deferred income tax assets
Under the previous GAAP, deferred income tax assets are recognized for all
deductible temporary differences, carryforward benefits of the excess of the
minimum corporate income tax (MCIT) over the regular corporate income tax
(RCIT) and unused net operating loss carryover (NOLCO) to the extent that
it is probable that sufficient future taxable profits will be available against
which these deductible temporary differences and carryforward benefits of
excess MCIT and unused NOLCO can be utilized. Under PFRS for SMEs,
deferred income tax assets must be recognized for all temporary differences
and unused carryforward benefits of the excess MCIT and unused NOLCO
that are expected to reduce taxable profits in the future. Valuation allowance
must be recognized against deferred income tax assets so that the carrying
amount equals the highest amount that is more likely than not to be
recovered based on current or future taxable profits. Any adjustment is
recognized in profit or loss.
The change in accounting for deferred income tax assets resulted in the
recognition of all previously unrecognized deferred income tax assets with a
corresponding valuation allowance. The change however, has no effect on
the Company’s capital deficiency as of April 1, 2009 and March 31, 2010, and
net loss for the year ended March 31, 2010.
Effect on 2010 statement of cash flows
There are no significant differences between the statement of cash flows
prepared under PFRS for SMEs and the statement of cash flows presented
under the previous GAAP.
Cash
Cash includes cash in hand and in banks.
Receivables
Trade receivables are recognized and carried at original invoice amount, less
any allowance for uncollectible accounts. An estimate for doubtful accounts
is made when there is objective evidence that the Company will not be able
to collect the debts.
Other receivables are recognized at face amount, less any allowance for
doubtful accounts.
Prepayments
Prepaid expenses are amounts paid in advance for goods and services that
are yet to be delivered and from which future economic benefits are expected
to flow to the Company within 12 months from the Balance Sheet date.
Property and Equipment
Property and equipment are carried at cost, less accumulated depreciation
and any impairment in value.
The initial cost of property and equipment consists of its purchase price,
including any directly attributable cost of bringing the asset to its working
condition and location for its intended use. Expenditures incurred after the
property and equipment have been put into operation, such as repairs and
maintenance, are normally charged to income in the period in which the costs
are incurred. In situations where it can be clearly demonstrated that the
expenditures have resulted in an increase in the future economic benefits
expected to be obtained from the use of an item of property and equipment
beyond its originally assessed standard of performance, the expenditures are
capitalized as additional cost of property and equipment.
Depreciation is computed using the straight-line method over the estimated
useful lives of the assets as follows:
Category Years
Computer equipment 3
Furniture and fixtures 3 to 5
Office and communication equipment 5
Leasehold improvements are amortized over the life of the assets (average
of two years) or the term of the lease, whichever is shorter. Recognition of
depreciation commences when the asset is ready for its intended use.
The estimated useful lives of the assets and depreciation method used are
reviewed periodically to ensure that these are consistent with the expected
pattern of economic benefits from items of property and equipment.
When assets are sold or retired, their costs, accumulated depreciation and
any impairment in value are eliminated from the accounts. Any gain or loss
resulting from their disposal is recognized in profit or loss.
Construction in progress represents assets under construction and is stated
at cost, including cost of construction and other direct costs. Construction in
progress is not depreciated until the relevant assets are completed and ready
for their intended operational use.
Impairment of Assets
The carrying values of property and equipment are reviewed for impairment
when events or changes in circumstances indicate that the carrying values
may not be recoverable. If any such indication exists and where the carrying
values exceed the estimated recoverable amounts, the assets or cash-generating units are written down to their recoverable amount. The
recoverable amount of the asset is the greater of net selling price and
value-in-use. In assessing value-in-use, the estimated future cash flows
are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the
risks specific to the asset. For an asset that does not generate largely
independent cash inflows, the recoverable amount is determined for the
cash-generating unit to which the asset belongs. Any impairment loss is
recognized in profit or loss.
If, in a subsequent period, the amount of the impairment loss decreases and
the decrease can be related objectively to an event occurring after the
impairment was recognized, the previously recognized impairment loss is
reversed. Any subsequent reversal of an impairment loss is recognized in
profit or loss, to the extent that the carrying value of the asset does not
exceed its amortized cost at the reversal date.
Liabilities
Liabilities are recognized when the Company has a present obligation from
past events, the settlement of which is expected to result in an outflow of
economic benefits from the Company and the amount can be reliably
measured. Liabilities expected to be settled in the Company’s normal operating
cycle or within 12 months from the Balance Sheet date are classified as current
liabilities. Otherwise, these are classified as non-current liabilities.
Capital Stock
Capital stock is carried at par value of the shares issued. When the shares are
sold at a premium, the difference between the proceeds and the par value is
credited to additional paid-in capital. When the shares are issued for a
consideration other than cash, the proceeds are measured by the fair value
of the consideration received. In case the shares are issued to extinguish or
settle the liability of the Company, the shares shall be measured either at the
(33)
ADITYA BIRLA MINACS PHILIPPINES, INC.
C M Y K
fair value of the shares issued or fair value of the liability settled, whichever is
more readily determinable.
Deposits for Future Stock Subscription
Contributions from stockholders that are intended as payment for future capital
stock subscriptions are recognized as deposits for future stock subscription.
The deposits are reduced and the corresponding shares of stock are issued
when the regulatory requirements have been complied with.
Deficit
Deficit represents the cumulative balance of the total comprehensive income
or loss, net of any dividend declaration.
Revenue
Revenue is recognized to the extent that it is probable that the economic
benefits will flow to the Company and the amount of revenue can be reliably
measured. Revenue is measured at the fair value of the consideration received
or receivable. The following specific recognition criteria must also be met
before revenue is recognized:
Service income
Service income is recognized as related services are performed based on
agreements with the customers.
Interest income
Interest income is recognized as the interest accrues.
Leases
Leases where the lessor retains substantially all the risks and benefits of
ownership of the asset are classified as operating leases. Operating lease
expense is recognized in profit or loss on a straight-line basis over the
lease term.
Retirement Benefits Cost
The cost of providing retirement benefits is determined using the projected
unit credit method. This method reflects services rendered by employees up
to the date of valuation and incorporates assumptions concerning employees’
projected salaries. Retirement benefits cost includes current service cost plus
amortization of past service cost, experience adjustments and changes in
actuarial assumptions to the extent that benefits are already vested
immediately. Past service cost is immediately expensed. Actuarial gains and
losses are recognized in their entirety in profit or loss. Past service cost, on
the other hand, is recognized as an expense on a straight-line basis over the
average period until the benefits become vested. If the benefits are already
vested, past service cost is recognized immediately. Gains or losses on the
curtailment or settlement of retirement benefits are recognized when the
curtailment or settlement occurs.
Foreign Currency-denominated Transactions
Transactions denominated in foreign currencies are recorded in Peso using
the exchange rate prevailing at the date of the transaction. Outstanding
monetary assets and liabilities denominated in foreign currencies are translated
to Peso using the closing exchange rate at the Balance Sheet date. Foreign
exchange gains or losses are credited to or charged against current operations.
Income Taxes
Current income tax
Current income tax assets and liabilities for the current and prior periods are
measured at the amount expected to be recovered from or paid to the taxation
authorities. The tax rates and tax laws used to compute the amount are those
that have been enacted or substantively enacted at the Balance Sheet date.
Deferred income tax
Deferred income tax is provided, using the Balance Sheet liability method, on
all temporary differences at the Balance Sheet date between the tax bases of
assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognized for all taxable temporary
differences. Deferred income tax assets are recognized for all deductible
temporary differences, carry-forward benefits of the excess MCIT over RCIT
and NOLCO that are expected to reduce taxable profits in the future.
A valuation allowance is recognized against deferred income tax assets so
that the net carrying amount equals the highest amount that is more likely
than not to be recovered based on current or future taxable profits. The carrying
amount of deferred income tax asset is reviewed at each Balance Sheet date
and the valuation allowance is adjusted to reflect the current assessment of
future taxable profits. Such adjustment is recognized in profit or loss, except
that an adjustment attributable to an item of income or expense recognized
as other comprehensive income is recognized in other comprehensive income.
Deferred income tax assets and deferred income tax liabilities are measured
at the tax rates that are expected to apply to the period when the asset is
realized or the liability is settled, based on tax rates and tax laws that have
been enacted or substantively enacted at the Balance Sheet date.
Deferred income tax assets and deferred income tax liabilities are offset if a
legally enforceable right exists to offset current income tax assets against
current income tax liabilities and the deferred income taxes relate to the same
taxable entity and the same taxation authority.
Borrowing Costs
Borrowing costs are generally expensed as incurred.
Provisions and Contingencies
Provisions are recognized when: (1) the Company has a present obligation
(legal or constructive) as a result of a past event; (2) it is probable that an
outflow of resources embodying economic benefits will be required to settle
the obligation; and (3) a reliable estimate of the amount of the obligation can
be made.
Contingent liabilities are not recognized in the financial statements.
They are disclosed in the notes to financial statements unless the possibility
of an outflow of resources embodying economic benefits is remote.
A contingent asset is not recognized in the financial statements but is
disclosed in the notes to financial statements when an inflow of economic
benefits is probable.
Events after the Balance Sheet Date
Post - year-end events that provide additional information about the Company’s
position at the Balance Sheet date (adjusting events) are reflected in the
financial statements. Post-year-end events that are not adjusting events are
disclosed in the notes to financial statements when material.
4. Significant Accounting Judgments, Estimates and Assumptions
The preparation of the financial statements in compliance with PFRS for
SMEs requires management to make judgments, estimates and
assumptions that affect the amounts reported in the financial statements
and accompanying notes. The judgments, estimates and assumptions used
in the preparation of the financial statements are based upon management’s
evaluation of relevant facts and circumstances as of the date of the financial
statements. Future events may occur, which can cause the assumptions
used in arriving at those judgments and estimates to change. The effects of
any changes will be reflected in the financial statements as they become
reasonably determinable.
Judgments
In the process of applying the Company’s accounting policies, management
has made the following judgments, apart from those involving estimations,
which have the most significant effect on the amounts recognized in the
financial statements:
Determination of functional currency
Based on the economic substance of the underlying circumstances relevant
to the Company, the functional currency is determined to be the Peso. It is
the currency that mainly influences its service and rental costs.
Operating lease - Company as lessee
The Company has entered into a property lease, where it has determined
that the significant risks and rewards related to the property are retained with
the lessor. As such, this lease agreement is accounted for as an operating
lease (see Note 15).
Impairment of property and equipment
Internal and external sources of information are reviewed at the end of
each reporting period to identify indications that the property and
equipment may be impaired or an impairment loss previously recognized
no longer exists or may be decreased. If any such indication exists, the
recoverable amount of the asset is estimated. An impairment loss is
recognized whenever the carrying amount of an asset exceeds its
estimated recoverable amount.
An assessment is made on the impairment of assets whenever events or
changes in circumstances indicate that the carrying amount of an asset may
(34)
ADITYA BIRLA MINACS PHILIPPINES, INC.
C M Y K
not be recoverable. The factors that the Company considers important which
could trigger an impairment review include significant underperformance
relative to expected historical or projected future operating results and
significant negative industry or economic trends. As of March 31, 2011 and
2010, there were no indications of impairment on the Company’s property
and equipment.
The carrying value of the Company’s property and equipment, net of
accumulated depreciation, amounted to 34,070,710 and 40,140,748 as
of March 31, 2011 and 2010, respectively (see Note 7).
Estimates and Assumptions
The key assumptions concerning the future and other key sources of
estimation uncertainty at the Balance Sheet date that have a significant risk
of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year are discussed below.
Estimation of useful lives of property and equipment
The Company estimates the useful lives of its property and equipment
based on the period over which the assets are expected to be available
for use. The Company reviews annually the estimated useful lives of
property and equipment based on factors that include asset utilization,
internal technical evaluation, technological changes, environmental and
anticipated use of the assets tempered by related industry benchmark
information. There was no change in the estimated useful lives of the
property and equipment in both years.
Estimation of retirement benefits cost
The determination of the obligation and cost of accrued retirement benefits
is dependent on the assumptions used by the actuary in calculating such
amounts. Those assumptions are described in Note 13 and include, among
others, discount rates and salary increase rates.
The carrying value of the Company’s accrued retirement benefits amounted
to 1,186,100 and 394,500 as of March 31, 2011 and 2010, respectively
(see Note 13).
Estimation of valuation allowance for deferred income tax assets
The carrying amounts of deferred income tax assets are reviewed at each
Balance Sheet date and the valuation allowance is adjusted to reflect the
current assessment of future taxable profits. In 2011 and 2010, management
recognized valuation allowance on certain deferred income tax assets since
it is not probable that taxable profits will be available against which the future
income tax deductions can be utilized.
The Company’s deferred income tax assets, net of valuation allowance,
amounted to 689,401 and 1,138,859 as of March 31, 2011 and 2010,
respectively (see Note 14).
5. Receivables
2011(PHP) 2011(INR) 2010(PHP) 2010(INR)
Trade 61,003,203 62,762,377 33,156,570 33,193,337
Advances to employees
and others 1,250,411 1,293,697 582,177 582,823
62,253,614 64,056,074 33,738,747 33,776,160 6. Prepaid Expenses and Other Current Assets
2011(PHP) 2011(INR) 2010(PHP) 2010(INR) Prepaid rent (Note 15) 1,911,666 1,966,793 1,258,588 1,260,095
Deposits (Note 15) 1,621,651 1,668,415 821,351 822,262
Prepaid insurance 250,211 257,426 3,395,572 3,399,337
Others 187,830 193,247 100,000 100,000
3,971,358 4,085,882 5,575,511 5,581,694
7. P ropert y and Equipment 2011
Computer Furniture & Office & Com- L easehold Construction Tot al (PHP) Tot al (INR)
Equipment Fixt ures munication Impro v ements in P rogress 2011 2011
Equipment
Cost
Beginning of year 43,065,999 26,907,546 15,468,204 26,008,357 3,974,789 115,424,895 118, 753,449
Additions 5,868,943 390,000 4,419,593 36,395 260,629 10,975,560 11,292,067
Reclassification 1,757,133 — 459,000 1,428,000 -3,644,133 0 0
End of year 50,692,075 27,297,546 20,346,797 27,472,752 591,285 126,400,455 130,045,516
Accumulated Depreciation
Beginning of year 33,700,688 13,939,879 7,228,174 20,415,406 0 75,284,147 77,455,146
Depreciation (Notes 9 and 10) 4,781,627 5,167,242 3,438,180 3,658,549 0 17,045,598 17,537,149
End of year 38,482,315 19,107,121 10,666,354 24,073,955 0 92,329,745 94,992,295
Net Book Values 12,209,760 8,190,425 9,680,443 3,398,797 591,285 34,070,710 35,053,221
2010
Computer Furniture & Office & Com- Leasehold Construction Total (PHP) Total (INR)
Equipment Fixtures munication Improvements in Progress 2010 2010
Equipment
Cost
Beginning of year 38,613,107 26,606,446 15,468,204 15,803,863 10,836,115 107,327,735 107,446,750
Additions 3,821,271 301,100 — —– 3,974,789 8,097,160 8,106,139
Reclassification 631,621 — — 10,204,494 (10,836,115) — —
End of year 43,065,999 26,907,546 15,468,204 26,008,357 3,974,789 115,424,895 115,552,889
Accumulated Depreciation
Beginning of year 20,593,516 8,794,710 4,113,891 12,200,956 — 45,703,073 45,753,753
Depreciation (Notes 9 and 10) 13,107,172 5,145,169 3,114,283 8,214,450 — 29,581,074 29,613,876
End of year 33,700,688 13,939,879 7,228,174 20,415,406 — 75,284,147 75,367,629
Net Book Values 9,365,311 12,967,667 8,240,030 5,592,951 3,974,789 40,140,748 40,185,260
(35)
ADITYA BIRLA MINACS PHILIPPINES, INC.
C M Y K
b. The Company has various service agreements which are carried out
together with its affiliates based in Bangalore, India and Toronto, Canada.
These agreements are effective for three years, subject to renewal terms,
and primarily cover after-sale support/call center services. Rates are
determined based on the statement of work agreed with client and are
normally expressed per minute or per hour. Revenue recognized for
these agreements amounted to 238.96 million and 145.58 million
for the years ended March 31, 2011 and 2010, respectively.
c. In 2011, the Company received from its affiliate 10.91 million (US$0.25
million), included under “Accounts payable and accrued expenses” in
the Balance Sheet, representing payment for receivable from clients
which are covered in the service agreements described above.
The amount advanced shall be offset upon collection of the outstanding
receivable from the said clients.
d. Shared costs charged by ABMW amounted to 11.79 million and
4.02 million in 2011 and 2010, respectively, and are included under
“General and administrative expenses”. The amounts outstanding as
of March 31, 2011 and 2010 amounting to 24.39 million and 5.86
million, respectively, are included in “Accounts payable and accrued
expenses”.
e. The compensation of key management personnel consists of
2011(PHP) 2011(INR) 2010(PHP) 2010(INR)
Salaries and wages 5,915,470 6,120,249 2,112,357 2,144,346
Retirement benefits (Note 13) 102,883 106,445 85,026 86,314
Short-term employee benefits 41,898 43,348 90,027 91,390
6,060,251 6,270,042 2,287,410 2,322,050
13. Retirement Benefits Cost
The Company has an unfunded, non-contributory, defined benefit retirement
plan covering its regular, full time employees. Retirement benefits are provided
in accordance with RA No. 7641.
The following tables summarize the components of net retirement benefits
cost recognized in the statements of comprehensive income and the amounts
recognized in the Balance Sheets based on the actuarial valuation report as
of March 31, 2011.
The components of retirement benefits cost which were charged to
operations follow:
2011(PHP) 2011(INR) 2010(PHP) 2010(INR)
(As restated,
Note 3)
Current service cost 197,700 203,401 1,800 1,817
Interest cost 38,000 39,096 15,400 15,543
Curtailment gain 0 0 -67,900 - 68,530
Net actuarial loss 555,900 571,931 404,100 407,849
Retirement benefits cost 791,600 814,428 353,400 356,679
The movement in accrued retirement benefits of the Company follows:
2011(PHP) 2011(INR) 2010(PHP) 2010(INR)
(As restated,
Note 3)
Balance, April 1 394,500 405,876 41,100 41,481
Retirement benefits costs
for the year 791,600 814,428 353,400 356,679
Balance, March 31 1,186,100 1,220,304 394,500 398,160
Changes in the present value of the defined benefit obligation follow:
2011(PHP) 2011(INR) 2010(PHP) 2010(INR)
(As restated,
Note 3)
Balance, April 1 394,500 405,876 41,100 41,481
Current service cost 197,700 203,401 1,800 1,817
Interest cost 38,000 39,096 15,400 15,543
Actuarial loss on obligation: 0 0 –
Experience adjustments 349,500 359,579 13,400 13,524
Change in assumptions 206,400 212,352 390,700 394,325
Curtailment gain 0 0 (67,900) (68,530)
Balance, March 31 1,186,100 1,220,304 394,500 398,160
8. A ccounts P a y able and A ccrued Expenses
2011(PHP) 2011(INR) 2010(PHP) 2010(INR)
Accounts payable 9,034,741 9,295,279 4,811,527 4,816,862
Accrued expenses (Note 12) 55,057,482 56,645,197 28,897,211 28,929,255
Advances from affiliate
(Note 12) 10,907,500 11,222,044 0 0
Others 1,318,792 1,356,823 2,820,828 2,823,956
76,318,515 78,519,343 36,529,566 36,570,073 Accounts payable as of March 31, 2011 and 2010, include unpaid invoices for
the acquisition of certain items of property and equipment totaling 339,200
and 3,497,700, respectively.
9. Cost of Services
2011(PHP) 2011(INR) 2010(PHP) 2010(INR)
(As restated, (As restated,
Note 3) Note 3)
Personnel costs (Note 11) 111,413,572 115,270,442 67,311,840 67,960,668
Technology charges 21,936,223 22,695,602 23,349,297 23,702,889
Rent and utilities (Note 14) 16,822,428 17,404,780 15,322,959 15,555,003
Depreciation (Note 7) 15,613,537 16,154,040 28,094,195 30,029,037
Staff welfare 9,002,486 9,314, 130 4,992,377 5,067,979
Recruitment 5,353,679 5,539, 010 3,725,398 3,781,814
Repairs and maintenance 3,213,595 3,324,842 2,506,195 2,544,148
Training 257,686 266,606 2,342,528 2,378,002
Outside services and others 3,754,058 3,884,014 2,434,623 2,471,492
187,367,264 193,853,468 150,079,412 153,491,032 10. General and Administrative Expenses
2011(PHP) 2011(INR) 2010(PHP) 2010(INR)
(As restated, (As restated,
Note 3) Note 3)
Personnel costs (Note 11) 16,588,541 17,162,796 8,465,733 8,544,280
Shared cost (Note 12) 11,789,623 12,197,751 4,017,722 4,078,565
Transportation and travel 3,717,069 3,845,745 1,051,985 1,067,916
Professional fees 2,680,534 2,773,328 1,386,705 1,407,705
Accommodations 1,759,204 1,820,103 1,079,333 1,095,678
Depreciation (Note 7) 1,432,061 1,481,636 1,486,879 1,509,396
Utilities 1,208,328 1,250,157 849,838 862,708
Insurance 880,240 910,712 382,936 388,735
Rent (Note 15) 643,829 666,117 943,046 957,327
Others 2,314,234 2,394,347 1,198,143 1,216,287
43,013,663 44,502,693 20,862,320 21,128,595 11. Personnel Costs
2011(PHP) 2011(INR) 2010(PHP) 2010(INR)
Salaries, wages
and bonuses 113,074,009 116,988,359 74,526,431 75,655,331
Retirement benefits cost
(income) (Note 12) 791,600 819,003 353,400 -61,416
Other short-term
employee benefits 14,136,504 14,625,876 897,742 911,032
128,002,113 132,433,238 75,777,573 76,504,947
12. Related Party Transactions
a. The Company availed of various loans from ABMW to finance its working
capital requirements. The loans bear interest at LIBOR + 1% and are
payable in 60 months (including the interest and other related charges).
As of March 31, 2011 and 2010, the outstanding principal amounted to
87.00 million (US$2.01 million) and 90.57 million (US$2.01 million),
respectively. Interest expense charged to the Company amounted to
1.76 million (US$39.13 thousand) for the year ended March 31, 2010.
Interest for the year was waived by ABMW in 2011. Accrued interest
expense (included under “Loans from parent company” in the Balance
Sheets) as of the March 31, 2011 and 2010 amounted to 6.08 million
and 6.33 million, respectively.
(36)
ADITYA BIRLA MINACS PHILIPPINES, INC.
C M Y K
The assumptions used to determine retirement benefits costs of the Company
as of March 31 are as follows:
2011 2011 2010
Discount rate 8.61% 9.63%
Salary increase rate 8.00% 8.00%
14. Income Taxes
a. The provision for current income tax represents final tax on interest income.
b. The components of the Company’s deferred income tax assets and
deferred income tax liabilities as of March 31 are as follows:
2011(PHP) 2011(INR) 2010(PHP) 2010(INR)
(As restated,
Note 3)
Deferred income tax assets on:
NOLCO 24,648,467 25,501,738 41,838,574 42,226,760
Accrued retirement benefits 355,830 368,148 118,350 119,448
Unrealized foreign exchange
loss - net — — 2,606,312 2,630,494
Deferred lease — — 35,447 35,776
Valuation allowance on
deferred income 25,004,297 25,869,886 44, 598,683 45,012,478
Tax assets -24,314,896 -25,156,619 -43,459,824 - 47,798,196
689,401 71,326 1,138,8591,142,9426
Deferred income tax liabilities on:
Unrealized foreign exchange
gain - net 589,268 609,667 1, 138,859 1,149,426
Deferred lease 100,133 103,599
689,401 713,266 1,138,859 1,149,426
Net deferred income tax assets — —
The Company’s NOLCO as of March 31, 2011 will expire as follows:
Incurred in Year March 31, March 31, Expiring
2010 Expired Applied 2011 in
2008 51,755,698 51,755,698 — ` — 2011
2009 50,574,668 — 5,544,656 45,030,012 2012
2010 37,131,546 — — 37,131,546 2013
139,461,912 51,755,698 5,544,656 82,161,558
c. The reconciliation between the provision for income tax at statutory tax
rates and the provision for income tax as shown in the statement of
comprehensive income is as follows:
2011(PHP) 2011(INR) 2010(PHP) 2010(INR)
(As restated,
Note 3)
Income tax at statutory ra te 3,623,137 3,748,561 -6,757,727 -6,820,426
Additions to (reduction in)
income tax resulting from
the tax effects of:
Net increase (decrease)
in unrecognized
deferred income tax assets -1,954,821 -2,022,492 6,764,318 6,827,079
Application of NOLCO -1,663,397 -1,720,980 — —
Interest income subject to final tax -4,021 -4,160 -6,460 - 6,520
Non-deductible interest and
other expenses 1,500 1,552 3,246 3,276
2,398 2,481 3,377 3,408
15. Lease Commitments
The Company has various lease agreements for its office space and
condominium units with terms ranging from three months to five years. These
leases are renewable on terms mutually agreed by the parties. Certain lease
agreements require the Company to pay security deposits. These are included
under “Prepaid expenses and other current assets” and “Other non-current
assets” in the Balance Sheets.
The Company has three-year lease agreements covering two of its office/
facilities spaces that are subject to annual escalation of 8% and 10%, with
one month and three months rent-free period, respectively.
Future minimum rentals payable under these non-cancellable operating lease
arrangements are as follows:
2011(PHP) 2011(INR) 2010(PHP) 2010(INR)
Within one year 10,833,298 11,145,702 12,514,170 12,528,047
After one year but not more
than five years 6,613,488 6, 804,204 18,131,585 18,151,691
17,446,786 17,949,906 30,645,755 30,679,738 16. Equity
On January 19, 2009, the Company’s BOD authorized the issuance of 479,232
additional shares from the remaining unissued shares at 100 per share in
favor of ABMW, to be applied against the deposits for future stock
subscription.
On March 24, 2011, the Philippine SEC approved the issuance of the said
shares to the existing stockholder.
17. Financial Assets and Financial Liabilities
The Company’s financial assets and financial liabilities measured at amortized
costs as of December 31 are as follows:
2011(PHP) 2011(INR) 2010(PHP) 2010(INR)
Financial Assets
Cash 33,090,861 34,045,115 4,294,486 4,299,248
Receivables 62 ,253,614 64,048,847 33, 738,747 33,776,160
Refundable deposits 4,101,709 4,219,992 4,101,709 4,106,257
99,446,184 102,313,954 42,134,942 42,181,665
Financial Liabilities
Account payable and accrued expenses
Trade 9,034,741 9,295,279 4,811,527 4,816,862
Accrued expenses 55,057,482 56,645,197 28,897,211 28,929,255
Advances from an affiliate 10 ,907,500 11,222,044 — —
Loans from parent company 93,081,884 95,766,124 96,900,408 97,007,860
168,081,607 172,928,644 130,609,146 130,753,977 18. Net Income (Loss)/Total Comprehensive Income (Loss)
The Company’s net income (loss) and total comprehensive income (loss) for
the years ended March 31, 2011 and 2010, are the same since the Company
does not have other comprehensive income.
19. Other Matter
The Company is a defendant in a number of labor cases filed with the National
Labor Regulatory Commission pertaining to non-payment of salaries and other
benefits to its employees. Management believes that the outcome of these
cases will not have a material effect on the Company’s financial statements.
20. Supplementary Information Required Under Revenue
Regulations 15-2010
In compliance with Bureau of Internal Revenue Regulations 15-2010 issued
on November 25, 2010, mandating all tax payers to disclose information on
taxes, duties and license fees paid and accrued during the taxable year,
summarized below are the taxes paid and accrued by the Company in 2011.
a. Value-Added Taxes (VAT)
As a PEZA registered entity, the Company’s revenue is VAT zero-rated.
b. Taxes and Licenses
SEC fees for additional of shares 96,805
Penalties 5,000
PEZA certification 930
102,735
c. Withholding Taxes
Paid Accrued Total
Withholding tax on compensation 11,329,434 2,718,099 14,047,533
Withholding taxes on rental/services 497,607 456,797 954,404
11,827,041 3,174,896 15,001,937
(37)
A V TRANSWORKS LIMITED
C M Y K
Auditors’ R eport
To
The Board of Directors of Aditya Birla Minacs Worldwide Limited
(Formerly known as Transworks Information Services Limited)
1. We have audited the attached Balance Sheet of AV Transworks
Ltd ('the Company'), a wholly owned subsidiary of Aditya Birla
Minacs Worldwide Limited ("the Parent"), as at March 31, 2011
and also the Profit and Loss account and the cash flow statement
for the year ended on that date annexed thereto. These financial
statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial
statements based on our audit.
2. We conducted our audit in accordance with auditing standards
generally accepted in India. Those Standards require that we plan
and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
3. We report that:
i) We have obtained all the information and explanations, which
to the best of our knowledge and belief were necessary for
the purposes of our audit;
ii) In our opinion, proper books of account have been kept by the
Company so far as appears from our examination of those
books;
iii) The balance sheet, profit and loss account and cash flow
statement dealt with by this report are in agreement with the
books of account;
iv) In our opinion, the balance sheet, profit and loss account and
cash flow statement dealt with by this report comply with the
accounting standards referred to in sub-section (3C) of section
211 of the Companies Act, 1956;
v) In our opinion and to the best of our information and according
to the explanations given to us, the said accounts give a true
and fair view in conformity with the accounting principles
generally accepted in India;
a) in the case of the balance sheet, of the state of affairs of
the Company as at March 31, 2011;
b) in the case of the profit and loss account, of the loss for
the year ended on that date; and
c) in the case of cash flow statement, of the cash flows for
the year ended on that date.
4. This report is furnished solely for the purpose of meeting the
requirement of consolidation of the attached consolidated financial
statements with the financial statement of the Parent and hence
should not be used for any other purpose.
For S. R. Batliboi & Co.,
Firm registration number: 301003E
Chartered Accountants
per Vijay Maniar
Partner
Membership No.:36738
Place : Mumbai,
Date: July 27, 2011
(38)
A V TRANSWORKS LIMITED
C M Y K
PROFIT & LOSS A CCOUNT FOR THE YEAR ENDED
31ST MARCH, 2011
For the For the For the For the
Year Ended Year Ended Year Ended Year Ended
31st March, 31st March, 31st March, 31st March,
2011 2011 2010 2010
Schedule CAD ` Lacs CAD ` Lacs
INCOME :
Other Income 6 765,846 342.78 157,375 68.61
Total 765,846 342.78 157,375 68.61
EXPENDITURE :
Administrative Expenses 7 11,283 5.05 (39,723) (17.31)
Financial Charges 8 1,171,116 524.19 1,504,930 656.06
Total 1,182,399 529.24 1,465,208 638.75
Profit / (Loss) before Tax for the year (416,553) (186.46) (1,307,833) (570.14)
Less: Provision for Tax — — — —
Profit / (Loss) for the year (416,553) (186.46) (1,307,833) (570.14)
Profit / (Loss) brought forward
from previous year (1, 891,435) (811.58) (583,602) (241.45)
Accumulated Balance carried
forward to the Balance Sheet (2,307,989) (998.04) (1,891,435) (811.59)
Notes to Accounts Notes to Accounts 9
The Schedules referred to above and the notes to accounts form an integral part of the
Profit & Loss Account.
BALANCE SHEE T AS AT 31S T MARCH, 2011
A s At A s At A s At A s At
31st Marc h, 31st Marc h, 31st Marc h, 31st Marc h,
2011 2011 2010 2010
Schedule CAD ` Lacs CAD ` Lacs
I. SOURCES OF FUNDS
1 Shareholders’ Funds
Share Capital 1 127,000,001 58,420.00 127,000,001 56,083.20
Preference Share Capital 1 30,000,000 13,800.00 30,000,000 13,248.00
Foreign Exchange on Translation — (63.66) — (23.68)
2 Unsecured Loan from Bank ank 30,901,850 14,214.85 30,901,850 13,646.26
3 L oan from Holding Compan yy 28,255,752 12,997.65 21,424,531 9,461.07
Tot al 216,157,603 99,368.84 209,326,382 92,41 4.85
II. APPLICATION OF FUNDS
1 Investments Investments 2 207,892,852 95,630.71 207,892,852 91,805.48
2 Current Assets, Loans
and Advances :
Accured Interest 56,919 26.18 106,963 47.23
Cash and Bank Balances 3 763,345 351.13 67,073 29.62
Loans and Advances 4 5, 371,429 2,470.86 — —
Sub - Total A 6, 191,693 2,848.17 174,036 76.85
Less: Current Liabilities
and Provisions : and Provisions : 5
Current Liabilities 232,324 106.87 629,334 277.92
Provisions 2,607 1.20 2,607 1.15
Sub - Total B 234,931 108.07 631,941 279.07
Net Current Assets (A-B) 5,956,762 2,740.10 (457,905) (202.22)
3 Profit & Loss Account Profit & Loss Account 2, 307,989 998.03 1,891,435 811.59
Total 216,157,603 99,368.84 209,326,382 92,414.85
Notes to Accounts Notes to Accounts 9
The Schedules referred to above and the notes to accounts form an integral part of the Balance Sheet.
As per our report of the event date For and on behalf of the Board of Directors of
A V Transworks Limited
For S. R. Batliboi & Co.,
Firm registration number: 301003E
Chartered Accountants
Director
per Vijay Maniar Michael Iseyemi
Partner
Membership No.:36738
Place: Mumbai Place: Toronto
Date: July 27, 2011 Date: July 25, 2011
As per our report of the event date For and on behalf of the Board of Directors of
A V Transworks Limited
For S. R. Batliboi & Co.,
Firm registration number: 301003E
Chartered Accountants
Director
per Vijay Maniar Michael Iseyemi
Partner
Membership No.:36738
Place: Mumbai Place: Toronto
Date: July 27, 2011 Date: July 25, 2011
(39)
A V TRANSWORKS LIMITED
C M Y K
For the Year ended For the Year ended For the Year ended For the Year ended
March 31, 20 11 March 31, 20 11 March 31, 20 10 March 31, 20 10
CAD Rs. Lacs CAD Rs. Lacs
A. Cash flo ws from Operating A ctivities
Net Profit/(Loss) bef ore taxation, and extraordinar y items y items (41 6,553) (186.46) (1,307,833) (570.14)
Adjustments for:
Interest Income (7 65,846) (342.78) (157,375) (68.61)
Interest Expense 1,166,010 521.89 1,497,734 652.92
Foreign Exchange (Gain)/Loss (Net) — 2,865.41 0 6,125.02
Operating Profit bef ore w orking capital c hanges (1 6,389) 2,858.06 32,526 6,139.19
Movements in working capital :
(Increase)/Decrease in payable to subsidiary (351,422) (155.19) 267,093 121.24
(Increase)/Decrease in Loans & Adv ances (106,686) (49.08) — 0.00
Increase/(Decrease) Current Liabilities & Provisions 130,333 60.43 (12,534) (4.06)
Cash generated from operations (344,165) 2,714.22 287,085 6,256.37
Loan to subsdiaries (5,264,743) (2,421.78) — 0.00
Cash flow before extraordinary items (5,608,907) 292.44 287,085 6,256.37
Add/(Less): Extraordinary items — — — —
Net Cash flow from Operating Activities (5,608,907) 292.44 287,085 6,256.37
B. Cash Flows from Investing Activities
Investment in Subsidaries 0 (3,825.23) (30,000,000) (20,182.45)
Interest income received 815,889 363.83 449,913 182.23
Net Cash from/(for) Investing Activities 815,889 (3,461.40) (29,550,087) (20,000.22)
C. Cash flow from Financing Activities
Loan from Holding Company 6,831,221 3,536.58 898,346 1,196.84
Preference Capital from Holding Com pany — 552.00 30,000,000 13,248.00
Interest Payment (1,341,932) (598.12) (1,571,778) (672.80)
Net Cash used in Financing Activities 5,489,290 3,490.46 29,326,569 13,772.04
Net Decrease in cash and Cash equivalants during the year 696,271 321.50 63,567 28.19
Cash and cash equivalants at the beginning of the year 67,073 29.62 3,506 1.51
Cash and cash equivalants at the end of the year 763,344.67 351.12 67,073 29.70
Notes:
Components of Cash and Cash Equivalents As At 31st Mar, As At 31st Mar, As At 31st Mar, As At 31st Mar,
2011 2011 2010 2010
i) Cash Balance in hand — — — —
ii) Balance with Scheduled and other Banks :
- in Current Account 763,345 351.13 67,073 29.62
Total 763,344.67 351.13 67,073 29.62
CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2011
As per our report of the event date For and on behalf of the Board of Directors of
A V Transworks Limited
For S. R. Batliboi & Co.,
Firm registration number: 301003E
Chartered Accountants
Director
per Vijay Maniar Michael Iseyemi
Partner
Membership No.:36738
Place: Mumbai Place: Toronto
Date: July 27, 2011 Date: July 25, 2011
(40)
A V TRANSWORKS LIMITED
C M Y K
SCHEDULES FOR THE YEAR ENDED 31ST MARCH, 2011
As At As At As At As At
31st March, 31st March, 31st March, 31st March,
2011 2011 2010 2010
CAD ` Lacs CAD ` Lacs
SCHEDULE - 1 - SHARE CAPITAL
Authorised Capital
127,000,001 Equity Shares of CAD$ 1 each 127,000,001 58,420.00 127,000,001 56,083.20
Issued, Subscribed & Paid up Capital
127,000,001 Equity Shares of CAD$ 1
each fully paid up 127,000,001 58,420.00 127,000,001 56,083.20
30,000,000 Preference shares
(P.Y. Nil) of CAD$ 1 each 30,000,000 13,800.00 30,000,000 13,248.00
(All the above equity and Preference
shares are held by Holding Company
– Aditya Birla Minacs Worldwide Limited)
Total 157,000,001 72,220.00 157,000,001 69,331.20
SCHEDULE - 2 - INVESTMENTS
Long Term Investments Long Term Investments (At Cost)
In Subsidiary Companies
Unquoted, fully paid-up
27,945,822 shares (P.Y. 27,945,822
shares) of CAD$ 1 each in Aditya
Birla Minacs Worldwide Inc. 157,571,131 72,482.72 157,571,131 69,583.41
20,321,721 Preference shares
(P.Y. 20,321,721 shares) of CAD$
1 each in Aditya Birla Minacs
Worldwide Inc. 20,321,721 9,347.99 20,321,721 8,974.07
30,000,000 Preference shares
(P.Y. Nil) of CAD$ 1 each in Aditya
Birla Minacs Worldwide Inc. 30,000,000 13,800.00 30,000,000 13,248.00
Total 207,892,852 95,630.71 207,892,852 91,805.48
SCHEDULE - 3 - CASH AND BANK BALANCES
Balance with other Banks :
- In Current Account 763,345 351.13 67,073 29.62
Total 763,345 351.13 67,073 29.62
SCHEDULE - 4 - LOANS & ADVANCES
(Unsecured considered good)
i) Tax Deducted at Source 106,686 49.08 — —
i) Loans to subsdiaries 5,264,743 2,421.78 — —
Total 5,371,429 2,470.86 — —
SCHEDULE - 5 - CURRENT LIABILITIES & PROVISIONS
i) Sundry Creditors 2,536 1.17 3,864 1.71
ii) Acrrued Interest on Secured Loan from Bank 79,045 36.36 83,926 37.06
iii) Acrrued Interest on Loan from Holding Company 0 — 171,041 75.53
iv) Payable to Subsidiary Company 0 — 351,422 155.19
v) TDS Payable 150,743 69.34 19,081 8.43
232,324 106.87 629,334 277.92
PROVISIONS
i) Provision for Taxation /
Minimum Alternative Tax 2,607 1.20 2,607 1.15
2,607 1.20 2,607 1.15
Total 234,931 108.07 631,941 279.07
For the For the For the For the
Year Ended Year Ended Year Ended Year Ended
31st March 31st March 31st March 31st March
2011 2011 2010 2010
CAD ` Lacs CAD ` Lacs
SCHEDULE - 6 - OTHER INCOME
Interest received
i) Bank interest — — — —
ii) DBS Loan — — — —
iii) Intercompany Loan 765,846 342.78 157,375 68.61
iv) Others — — — —
Total 765,846 342.78 157,375 68.61
SCHEDULE - 7 - ADMINISTRATIVE EXPENSES
i) Foreign Exchange Loss/(Income) 2,194 0.98 (43,050) (18.76)
ii) Legal & Professional Charges — — — —
iii) Telephone Expenses — — — —
iv) Rates & Taxes 954 0.43 3,327 1.45
v) Miscellaneous Expenses 8,135 3.64 — —
Total 11,283 5.05 (39,723) (17.31)
SCHEDULE - 8 - FINANCIAL CHARGES
i) Bank charges 5,106 2.30 7,196 3.14
ii) Interest on Term Loan from Bank 914,327 409.24 1,040,947 453.79
iii) Interest on Inter company Loan 251,683 112.65 456,787 199.13
Total 1,171,116 524.19 1,504,930 656.06
ACCOUNTS FOR THE YEAR ENDED 31S T MAR CH, 2011
SCHEDULE - 9: - NOTES TO ACCO UNTS
1. BACKGR O UND
AV TRANSWORKS LTD (“the Compan y’) is domiciled in Canada and accordingly the
financial statements have been prepared in Canadian Dollars (CAD), which is the
reporting currency of the Company.
2. ACCOUNTING POLICIES
a. Basis of preparation
The financial statements have been prepared to comply in all material respects
with the accounting principles generally accepted in India. The financial
statements have been prepared under the historical cost convention on an
accrual basis.
b. Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent liabilities at the date of the financial statements and
the results of operations during the reporting period. Although these
estimates are based upon management’s best knowledge of current events
and actions, actual results could differ from these estimates.
c. Interest
Interest on Loan given / taken is booked on a time proportion basis taking into
account the amounts of loan given and taken and the rate of interest
d. Transactions in Foreign Currency
i) Initial Recognition
Foreign currency transactions are recorded in the reporting currency, by
applying to the foreign currency amount the exchange rate between the
reporting currency and the foreign currency at the date of the transaction.
ii) Conversion
Foreign currency monetary items are reported using the closing rate.
Non-monetary items, which are carried in terms of historical cost
denominated in a foreign currency, are reported using the exchange rate
at the date of the transaction.
(41)
A V TRANSWORKS LIMITED
C M Y K
iii) Exchange Differences
Exchange differences arising on the settlement of monetary items or on
reporting company’s monetary items at rates different from those at which
they were initially recorded during the year, or reported in previous financial
statements, are recognized as income or as expenses in the year in which
they occur.
iv) Forward Exchange Contracts not intended for trading or speculation
purposes
The premium or discount arising at the inception of forward exchange
contracts is amortised as expense or income over the life of the contract.
Exchange differences on such contracts are recognised in the statement
of profit and loss in the year in which the exchange rates change. Any
profit or loss arising on cancellation or renewal of forward exchange
contract is recognised as income or as expense for the year.
e. Provision
A provision is recognized when an enterprise has a present obligation as a
result of past event; it is probable that an outflow of resources will be required
to settle the obligation, in respect of which a reliable estimate can be made.
Provisions are not discounted to its present value and are determined based
on best estimate required to settle the obligation at the balance sheet date.
These are reviewed at each balance sheet date and adjusted to reflect the
current best estimates.
f. Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or
production of an asset that necessarily takes a substantial period of time to get
ready for its intended use or sale are capitalized as part of the cost of the
respective asset. All other borrowing costs are expensed in the period they
occur. Borrowing costs consist of interest and other costs that an entity incurs
in connection with the borrowing of funds.
g. Investments
i) Investments that are readily realizable and intended to be held for not
more than a year are classified as current investments. All other
investments are classified as long-term investments.
ii) Long-term investments are valued at cost. Any decline in the value of
investments other than temporary, is provided for and charged to the
profit & loss account.
Cash and cash equivalents for the purposes of cash flow statement
comprise cash at bank and in hand and short-term investments with an
original maturity of three months or less.
3. Related Party Transactions
(a) Name and nature of relationship of the Related Party where control exists:
Ultimate Holding Company Aditya Birla Nuvo Limited
Holding Company Aditya Birla Minacs Worldwide Limited (ABMWL)
Fellow Subsidiaries TransWorks Inc., USA (TW Inc)
Aditya Birla Minacs Philippines Inc. (formerly
TransWorks BPO Philippines Inc.) (ABMPI)
Subsidiaries Aditya Birla Minacs Worldwide Inc. Canada
(ABMWI)
Minacs Kft, Hungary.
Minacs Limited, UK.
Minacs Worldwide S.A. de C.V., Mexico
The Minacs Worldwide GmbH, Germany
The Minacs Group, USA
Aditya Birla Minacs BPO Limited, UK (formerly
Compass BPO Limited) (w.e.f. March 9, 2010)
Compass BPO, Inc, U.S.A (w.e.f. March 9, 2010)
Aditya Birla Minacs BPO Private Limited (Formerly
Compass Business Process Outsourcing Limited,
India) (w.e.f. March 9, 2010)
Compass BPO FZE, U.A.E (w.e.f. March 9, 2010
up to 25 February 25, 2011)
Bureau of Collection recovery, LLC, Canada (w.e.f
June 2, 2010)
Bureau of Collections Recovery (BCR) Inc., Canada
(w.e.f March 4, 2011)
(b) Summary of transactions with related parties:
(In CAD)
Particulars As at As at
March 31, 2011 March 31, 2010
Transactions during the year with
Holding Company
Loan Repayment 16,618,917 7,500,000
Loan Taken 23,450,137 8,450,000
Interest on loan from ABMWL 251,683 456,787
Transactions during the year
with Subsidiary (ABMWI)
Investment Nil 30,000,000
Loan repayment from subsidiary 18,331,745 7,500,000
Loan given to subsidiary 23,596,488 7,500,000
Interest on loan given 765,846 157,375
Related Party Balances
Holding
Loan taken from Holding company 28,255,751 21,424,531
Interest Payable to Holding company Nil 171,041
Corporate guarantee given by Holding Co. 30,901,850 30,901,850
Subsidiary (ABMWI)
Investment 207,892,852 207,892,852
Loan given to subsidiary 5,264,743 Nil
Interest receivable from subsidiary 56,919 106,963
Forward contract with the subsidiary for
hedging loan payable (USD 24.5 million) 30,901,850 30,901,850
4. Derivative Instruments
The Company uses derivative financial instruments such as forward exchange
contracts, currency swaps and interest rate swaps to hedge its risks associated with
foreign currency fluctuations and interest rate.
Particulars Amount Amount in Foreign Purpose
(CAD) Foreign currency
Currency
Currency Swap 20,321,721 1,983,400,000 JPY To hedge Loan
(20,321,721) (1,983,400,000) Payable
Forward contract 30,901,850 24,500,000 USD To hedge Loan
(30,901,850) (24,500,000) Payable
Figures in bracket represents previous year amount.
All the above contracts are for hedging and not for speculation.
As at March 31, 2011 all the foreign currency exposure stands hedged by derivative
instrument or otherwise.
5.5. Previous year figures have been regrouped wherever necessary to conform with
current year figures.
For and on behalf of the Board of Directors of
AV TRANSWORKS LTD
For S. R. Batliboi & Co.,
Firm registration number: 301003E
Chartered Accountants
Michael Iseyemi
per Vijay Maniar per Vijay Maniar Director
Partner
Membership No. 36738
Place: Mumbai Place : Toronto
Date : July 27, 2011 Date : July 25, 2011
(42)
C M Y K
ADITYA BIRLA MINACS WORLDWIDE INC., CANADA
AUDI TORS’ REPOR T
To the Board of Directors of
Aditya Birla Minacs Worldwide Inc.
We have audited the consolidated Balance Sheet of Aditya Birla Minacs
Worldwide Inc. as at March 31, 2011 and the consolidated statements
of operations and deficit, comprehensive income (loss), changes in
shareholders’ equity (deficiency) and Cash Flows for the year then
ended. These financial statements are the responsibility of the
Company’s management. Our responsibility is to express an opinion
on these financial statements based on our audit.
We conducted our audit in accordance with Canadian generally
accepted auditing standards. Those standards require that we plan and
perform an audit to obtain reasonable assurance whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation.
In our opinion, these consolidated financial statements present fairly,
in all material respects, the financial position of the Company as at
March 31, 2011, and the results of its operations and its cash flows for
the year then ended in accordance with Canadian generally accepted
accounting principles.
Toronto, Canada, Chartered Accountants
April 25, 2011. Licensed Public Accountants
(43)
C M Y K
ADITYA BIRLA MINACS WORLDWIDE INC., CANADA
Consolidated Balance Sheet as at 31st Marc h 2011
31-Mar-11 31-Mar-11 31-Mar-10 31-Mar-10
CAD$’000 INR/Cr CAD$’000 INR/Cr
ASSETS
Current assets
Cash $3,524 16.21 $4,230 18.68
Accounts receivable and unbilled
revenue (Notes 10 and 17) 68,442 314.83 46,768 206.53
Other receivables (Notes 4, 9(a) and (b)) 28,556 131.36 19,624 86.66
Prepaid expenses 2,242 10.31 3,002 13.26
Income taxes recoverable 82 0.38 80 0.35
Future income taxes (Note 15) 601 2.76 273 1.21
$103,447 475.86 73,977 326.68
Long-term receivables — — — —
Future income taxes (Note 15) — — 401 1.77
Property, plant and equipment, net
(Notes 5, 10 and 14) 20,094 92.43 24,424 107.86
Deferred development costs (Note 6) 2,574 11.84 2,463 10.88
Intangible assets (Note 7) 21,037 96.77 8,048 35.54
Goodwill (Note 8) 17,165 78.96 10,070 44.47
Total Assets $164,317 755.86 $119,383 527.20
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities
(Notes 4, 11, 14 and 17) $33,156 152.52 $27,403 121.01
Long-term debt (Note 10) 50,470 232.16 33,914 149.76
Income and other taxes payable 176 0.81 233 1.03
Deferred grant and government
assistance (Note 9c) 858 3.95 — —
Obligations under capital leases (Note 13) — — 1,643 7.26
$84,660 389,44 63,193 279.06
Accrued Liabilities relating to
operating leases (Note 14) 4,101 18,86 4,351 19.21
Deferred grant and government
assistance (Note 9(c)) — — 858 3.79
Future tax liabilities (Note 15) 3,429 15,77 2,509 11.08
92,190 424.07 70,911 34.08
Commitments and contingencies (Note 13)
SHAREHOLDERS’ EQUITY
Share capital (Note 12) 120,393 553.81 120,393 531.66
Accumulated other comprehensive loss (3,784) (17.41) (3,087) (13.63)
Deficit (44,482) (87.18) (68,834) (196.17)
Exchange Fluctuation on Translation (117.44) (107.79)
72,127 331.78 48,472 214.06
Total Liabilities and
Shareholders’ Equity $164,31 7 755.86 $119,383 527.20
See accompanying notes to the financial statements
FE Conversion Rate for Cdn $ to INR
as at end of year 46.00 44.16
Consolidated Statement of Operations and Deficit
Year ended Marc h 31,
2011 2011 2010 2010
CAD$’0 0 0 INR/Cr CAD$’0 0 0 INR/Cr
Revenues (Note 17) $308,192 1,379.40 $282,615 1,232.02
Direct expenses (Notes 9(a) and (b)) 214,143 958.45 208,598 909.35
Gross profit 94,049 420.94 74,017 322.67
Selling, general and administrative
expenses (Notes 9(a) and (b)) 56,344 252.18 52,851 230.40
Earnings before depreciation and
amortization, restructuring charges,
interest, financing expenses
and income taxes 37,705 168.76 21,166 92.27
Depreciation and amortization
(Notes 5 and 7) 11,344 50.77 9,974 43.48
Restructuring charges (Note 14) 1,170 5.24 3,828 16.69
Interest and financing expenses (Note 10) 2,516 11.26 2,629 11.46
Income (loss) before income taxes 22,675 101.49 4,735 20.64
Provision for income taxes
Current (228) (1.02) 1,093 4.76
Future (1,449) (6.49) 179 0.78
(1,677) (7.51) 1,272 5.55
Net income (loss) for the year 24,352 108.99 3,463 15.10
Deficit, beginning of year (68,834) (196.17) (72,297) (211.27)
Deficit, end of year ($44.482) (87.18) ($68,834) (196.17)
See accompanying notes to
the consolidated financial statements
FE Conversion Rate for Cdn $ to INR 44.76 43.59
Deepak J. Patel
Place: Toronto Chief Executive Officer
Deepak J. Patel
Place: Toronto Chief Executive Officer
Consolidated Statement of Comprehensive income (Loss)
Year ended Marc h 31,
2011 2011 2010 2010
CAD$’0 0 0 INR/Cr CAD$’0 0 0 INR/Cr
Net income (loss) for the year 24,352 1 08.99 $3,463 15.10
Unrecognized gain (loss) on foreign
contracts and options (750) (3.49) 18,774 82.91
Change in foreign currency translation
on foreign operations 53 0.25 (7,570) (33.43)
Exchange Fluctuation on Tr anslation (0.74) (5.57)
Comprehensive income (loss)
f or the y ear $23,655 105.01 $14,667 59.01
(44)
C M Y K
ADITYA BIRLA MINACS WORLDWIDE INC., CANADA
Consolidated Statement of Changes in Shareholders’ Equity (Deficiency)
CAD Table A ccumulated Tot al
Other Shareholders’s
(thousands of dollars, e x cept Common Share R edeemable Preference R edeemable Preference Comprehensive Equity
number of shares) Shares Capital Shares – Series A Shares – Series B L oss Deficit (Deficiency)
B alance, March 31, 2009 27,945,822 $70,071 20,321,721 $20,322 — — ($1 4,291) ($72,297) $3,805
Issued during the year — — — — 30,000,000 30,000 — — $30,000
Unrecognized gain on foreign currency
forward contracts and options — — — — — — $18,774 $18,774
Change in foreign currency translation
on self-sustaining foreign operations — — — — — — ($7,570) — ($7,570)
Net loss for the year — — — — — — — $3,463 $3,463
Balance, March 31, 2010 27,945,822 $70,071 20,321,721 $20,322 30,000,000 30,000 ($3,087) ($68,834) $48,472
Issued during the year — — — — — — — — —
Unrecognized gain on foreign currency
forward contracts and options — — — — — — ($750) — ($750)
Change in foreign currency translation
on self-sustaining foreign operations — — — — — — $53 — $53
Net income for the year — — — — — — — $24,352 $24,352
Balance, March 31, 2011 27,945,822 $70,071 20,321,721 $20,322 30,000,000 30,000 ($3,784) ($44,482) $72,127
Audited Consolidated St atements of Changes in Shareholders ’ Deficiency
INR Table A ccumulated Tot al
Other Shareholders’s
(INR/Cr , ex cept f or number Common Share R edeemable Preference R edeemable Preference Comprehensive Equity
of shares) Shares Capital Shares – Series A Shares – Series B L oss Deficit (Deficiency)
B alance, March 31, 2009 27,945,822 326.30 20,321,721 94.63 — — (65.74) (332.57) 17.50
Issued during the year — — — — 30,000,000 139.70 — — 138.00
Unrecognized gain on foreign currency
forward contracts and options — — — — — — 86.36 86.36
Change in foreign currency translation
on self-sustaining foreign operations — — — — — — (34.82) — (34.82)
Net loss for the year — — — — — — — 15.10 15.10
B alance, March 31, 2010 27,945,822 326.30 20,321,721 94.63 — 1 39.70 (1 4.20) (31 7.47) 222.1 4
Issued during the year — — — — — — — — 0.00
Unrecognized gain on foreign currency
forward contracts and options — — — — — — (3.45) — (3.45)
Change in foreign currency translation
on self-sustaining foreign operations — — — — — — 0.24) — 0.24
Net income for the year — — — — — — — 108.99 108.99
Exchange Fluctuation on Translation 0.00 0.00 0.00 121.30 3.86
B alance, March 31, 2011 27,945,822 326.30 20,321,721 94.63 30,00 0,00 0 1 39.70 (1 7.41) (87.1 8) 331 .78
(45)
C M Y K
ADITYA BIRLA MINACS WORLDWIDE INC., CANADA
Consolidated Statement of Cash Flo ws
Year ended Marc h 31,
2011 2011 2010 2010
CAD$’0 0 0 INR/Cr CAD$’0 0 0 INR/Cr
OPERATING ACTIVITIES
Net income (loss) for the year $24,352 112.02 $3,463 15.29
Adjustments to reconcile net income (loss) to cash provided by operating activities (Note 16) 9,942 45.73 10,620 46.90
Net change in non-cash working capital balances related to operations (Note 16) (22,191) (102.08) 162 0.72
Cash flow provided b y operating activities 12,103 55.67 1 4,245 62.91
INVESTING ACTIVITIES
Purchase of property, plant and equipment (6,216) (28.59) (5,012) (22.13)
Purchase of intangibles (2,162) (9.95) 0 0.00
Proceeds on disposal of property, plant and equipment 19 0.09 108 0.48
Deferred development costs (2,699) (12.42) (2,693) (11.89)
Investment in subsidiary (Note 3) (19,889) (91.49) (7,853) (34.68)
Cash on acquisition of subsidiary (Note 3) 1,724 7.93 257 1.13
Cash flows used in inv esting activities (29,223) (1 34.43) (1 5,193) (67.09)
FINANCING ACTIVITIES
Repayment of long-term debt (Note 10) (49,344) (226.98) (31,774) (140.31)
Receipt of short-term debt (Note 11) 5,265 24.22 0 0.00
Receipt of long-term debt (Note 10) 62,002 285.21 8,909 39.34
Repayment of obligations under capital leases (1,643) (7.56) (4,342) (19.17)
Issuance of share capital (Note 12) 0 0.00 30,000 132.48
Cash flow provided b y (used in) financing 16,280 74.89 2,793 1 2.33
Eff ect of foreign cur rency translation on cash 134 0.62 (702) (3.1 0)
Net increase (decrease) in cash (706) (3.25) 1,143 5.05
Cash beginning of year 4,230 19.46 3,087 13.63
Cash end of y ear $3,524 1 6.21 $4,230 1 8.68
FE Conversion Rate for Cdn $ to INR as at end of year 46.00 44.16
See accompanying notes to the consolidated financial statements.
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C M Y K
ADITYA BIRLA MINACS WORLDWIDE INC., CANADA
and assumptions affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the consolidated financial statements
and the reported amounts of revenues and expenses during the year. Actual results
could differ from those estimates.
Revenue Recognition
The Company derives revenues by providing BPO solutions and consulting
arrangements. Payment terms may vary by contract. The Company recognizes
revenues at the time services are performed and when the price is fixed or
determinable and collection is reasonably assured.
The majority of revenues are recognized based on the billable hours or minutes
rendered as defined in the client contract. The rate per billable hour or minute charged
is based on a predetermined contractual rate as agreed in the underlying contract.
This contractual rate fluctuates based on the Company’s performance against certain
predetermined criteria related to quality and performance. Some clients are entitled
to service credits when the Company is not in compliance with certain obligations as
defined in the client contract. Such service credits are recorded as a reduction of
revenues as incurred based on a measurement of the Company’s obligation under
the terms of the client contract.
For some contracts, the Company is paid by its customer based on achievement of
client-determined criteria specified in the client contract such as full-time equivalents,
units processed or completed contacts. The Company recognizes this performance-based revenue by measuring its actual results against the performance criteria
specified in the contracts.
Amounts collected from customers prior to the performance of services are recorded
as deferred revenue. These advances are amortized to revenues in accordance with
the Company’s policy on revenue recognition.
The Company classifies reimbursements received from customers for out-of-pocket expenditures as revenues. The Company incurs out-of-pocket expenditures
such as expenses related to travel, postage and telecommunications costs for
which customers have agreed to reimburse Minacs. The corresponding cost
associated with this revenue is recorded within direct expenses. Some customers
agree to reimburse the Company for initial training and recruiting costs over a
specified period of time. The revenue for these costs is recorded over the period
of time stipulated within the contract with a corresponding cost recorded within
direct expenses.
Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated amortization.
Amortization is provided on a straight-line basis over the estimated useful lives of the
assets. Computer equipment is amortized over a four-year life. Communications
equipment is amortized over five to seven-year lives. Furniture and fixtures are
amortized over seven to ten-year lives. Leasehold improvements are amortized over
the term of the lease.
Leases
Leases are classified as either capital or operating leases. Leases that substantially
transfer all of the benefits and risks of ownership of property to the Company are
accounted for as capital leases. At the time a capital lease is entered into, an asset is
recorded together with its related long-term obligation to reflect the acquisition and
financing. Equipment recorded under capital leases is amortized on the same basis
as property, plant and equipment. Rental payments under operating leases are
expensed as incurred.
Business Combinations, Goodwill and Intangible Assets
The Company follows the guidance in the CICA Handbook Section 1581, Business
Combinations, which requires all business combinations to be accounted for using
the purchase method. In addition, any goodwill and intangible assets acquired in a
business combination are accounted for under CICA Handbook Section 3064,
Goodwill and Intangible Assets. This section requires that goodwill not be amortized,
while identified intangible assets with finite useful lives be amortized over their
useful lives.
Goodwill represents the excess of the purchase price over the fair value of the
net identifiable assets acquired. Goodwill and indefinite life intangible assets are
tested for impairment annually or more frequently if events or changes in
circumstances indicate that those assets might be impaired. The impairment
test is carried out in two steps. In the first step, the identification of a potential
impairment is determined by comparing the fair value of the reporting unit to its
carrying value. Fair value is based on estimates of discounted future cash flows.
When the fair value of the reporting unit is less than its carrying value, the fair
value is allocated to all its assets and liabilities based on their fair values. The
amount that the fair value of the reporting unit exceeds the amounts assigned to
its assets and liabilities is the fair value of the goodwill. In the second step,
impairment is determined by comparing the fair value of goodwill to its carrying
value. Any shortfall is charged to income.
Intangible assets with finite useful lives acquired through business combinations
are recorded at their fair value at the date of acquisition. An impairment loss on
an intangible asset with a finite useful life is recognized when its carrying value
exceeds the total undiscounted cash flows expected from its use and disposition.
NOTES T O CONSOLIDA TED FINANCIAL ST A TEMENTS
MARCH 31, 2011
1 NATURE OF BUSINESS
Aditya Birla Minacs Worldwide Inc. (the “Company” or “Minacs”) is incorporated
under the Ontario Business Corporations Act. The Company is wholly-owned by
AV Transworks Limited Canada, a wholly-owned subsidiary of Aditya Birla Minacs
Worldwide Limited, India, which in turn is a subsidiary of Aditya Birla Nuvo Limited.
The Company operates in one segment as a provider of business process
outsourcing (“BPO”) solutions. These incorporate contact centre solutions,
integrated marketing services and back office administration. Operating in multiple
languages, the Company serves customers throughout North America, Europe,
Latin America and the Pacific Rim from its operating locations in North America
and Europe.
2 SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
These consolidated financial statements have been prepared in accordance with
Canadian generally accepted accounting principles (“GAAP”) and include the accounts
of the Company and its subsidiaries. All significant inter-company balances and
transactions among these entities have been eliminated on consolidation.
Changes in Accounting Policies
Effective April 1, 2009, the Company adopted the following new Canadian Institute
of Chartered Accountants (“CICA”) accounting standards and Emerging Issues
Committee (“EIC”) abstract.
Section 3064, Goodwill and Intangible Assets, which replaced Section 3062, Goodwill
and Other Intangible Assets. The standard establishes guidelines for the recognition,
measurement, presentation and disclosure of goodwill and intangible assets
subsequent to initial recognition. As a result of the adoption of this standard, the
Company has reclassified computer software from property, plant and equipment to
intangible assets and has separately disclosed deferred development costs on the
consolidated balance sheet.
The following table summarizes the adjustment that was recorded in the consolidated
financial statements.
Increase (Decrease)
31-Mar-11 31-Mar-11 31-Mar-10 31-Mar-10
CAD$’000 INR/Cr CAD$’000 INR/Cr
Property, plant and equipment (net) $0 0.00 (3,841) (16.96)
Deferred development costs $0 0.00 $0 0.00
Intangible assets $0 0.00 $3,841 16.96
Section 1000, Financial Statement Concepts. The objectives of this Section are to
reinforce a principle-based approach to the recognition of costs as assets and to
clarify the application of the concept of matching revenue and expenses in Section
1000. Collectively, this change brings the Canadian practice closer to International
Financial Reporting Standards (“IFRS”) and U.S. generally accepted accounting
principles by eliminating the practice of recognizing as assets a variety of start-up,
pre-production and similar costs that do not meet the definition and recognition criteria
of an asset. Adoption of this guidance had no impact on the Company’s consolidated
financial statements.
EIC 173, Credit Risk and the Fair Value of Financial Assets and Financial Liabilities.
This guidance clarifies that an entity’s own credit risk and the credit risk of the
counterparty should be taken into account in determining the fair value of financial
assets and financial liabilities including derivative instruments. Adoption of this
guidance had no impact on the Company’s consolidated financial statements.
The adoption of the above pronouncements had no impact on opening deficit.
Future Accounting Changes
In 2006, the CICA announced that accounting standards in Canada will converge
with IFRS. The Company will have the option of reporting under IFRS beginning
January 1, 2011, with comparative data for the prior year. IFRS uses a conceptual
framework similar to Canadian GAAP, but there could be significant differences on
recognition, measurement and disclosures that will need to be addressed.
In September 2009, the CICA approved the final accounting standards for private
enterprises in Canada. The new standards (GAAP for private enterprises) are available
for early adoption. Under the new standards, private enterprises will have a choice
of reporting in accordance with Canadian GAAP by adopting either the same set of
accounting standards as publicly accountable enterprises (i.e., IFRS) or the new GAAP
for private enterprises. The existing accounting standards in the CICA Handbook will
be available until 2011, at which time they will be withdrawn. As such, enterprises
will be able to adopt GAAP for private enterprises in 2009, 2010 or 2011. The Company
is considering the impact of these new standards and assessing whether it will adopt
IFRS or GAAP for private enterprises.
Use of Estimates
The preparation of these consolidated financial statements in conformity with Canadian
GAAP requires management to make estimates and assumptions. These estimates
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ADITYA BIRLA MINACS WORLDWIDE INC., CANADA
The amount of loss is determined by deducting its fair value based on undiscounted
cash flows expected from its use and disposition from its carrying value. The
Company reviews definite life intangible assets for impairment whenever events
or changes in circumstances indicate that the carrying value may not be
recoverable. Amortization of intangible assets, other than computer software, is
provided on a straight-line basis over ten years. Computer software is amortized
over four to five-year lives.
Asset Impairment
The Company follows the guidance in CICA Handbook Section 3063, Impairment
of Long-Lived Assets , and CICA Handbook Section 3855, Financial Instruments -Recognition and Measurement . The Company evaluates the carrying value of
long-lived assets for potential impairment annually or more frequently if events
or circumstances warrant a review. The carrying value of such assets is considered
impaired when the anticipated net recoverable amount of the asset is less than
its carrying value or when the change in value is other than temporary. In that
event, the carrying value of the asset is adjusted to fair value and an impairment
loss is charged to income. The Company reviews long-lived assets for impairment
whenever events or changes in circumstances indicate that the carrying value
may not be recoverable.
Income Taxes
The Company follows the liability method of accounting for income taxes. Under this
method, future tax assets and liabilities are determined based on differences between
the financial reporting and tax bases of assets and liabilities, and are measured using
substantively enacted tax rates and laws that are expected to be in effect when the
differences are expected to reverse. Valuation allowances are established when
necessary to reduce future tax assets to the estimated amount that is more likely
than not to be realized.
Government Assistance
Government assistance towards current expenses is included in the determination
of income for the year as a reduction of the expenses to which it relates. The Company
has made a number of estimates and assumptions in determining the amount eligible
for government assistance. It is possible that the allowed amount of assistance could
be materially different from the recorded amount upon assessment by the respective
government agency.
Equity and Comprehensive Income
Comprehensive income is the change in equity from transactions and other events
from non-owner sources. Other comprehensive income refers to items recognized
in comprehensive income that are excluded from net income calculated in accordance
with Canadian GAAP.
Financial Instruments
All financial instruments, including derivatives, are measured on the consolidated
balance sheet at fair value except for loans and receivables, held-to-maturity
investments and other financial liabilities, which are measured at amortized
cost. Subsequent measurement and changes in fair value will depend on their
initial classification, as follows: held-for-trading financial assets are measured
at fair value and changes in fair value are recognized in net income; available-for-sale financial instruments are measured at fair value with changes in fair
value recorded in other comprehensive income until the investment is
derecognized or impaired, at which time the amounts would be recorded in net
income. The Company’s financial assets and liabilities are generally classified
and measured as follows:
Asset/Liability Category Measurement
Cash Held-for-trading Fair value
Receivables Loans and receivables Amortized cost
Payables and accrued liabilities Other financial liabilities Amortized cost
Long-term debt Other financial liabilities Amortized cost
Obligations under capital leases Other financial liabilities Amortized cost
Deferred grant and Other financial liabilities Amortized cost
government assistance
The Company had no financial instruments classified as available-for-sale during the
year ended March 31, 2010.
Financing costs and credit facility arrangement fees associated with the issuance of
long-term debt are netted against the carrying value of the related debt and are
amortized using the effective interest rate method to interest expense over the period
to maturity of the related debt.
Hedges
The Company applies hedge accounting to forward rate contracts, options and cross-currency swap agreements. These contracts have been designated as cash flow
hedges, and are measured at fair value at the end of each period. The resulting gain/
loss on recognition of the forward rate contracts, options and cross-currency swap
agreements is recognized in other comprehensive income.
Foreign Exchange Translation
Foreign operations are considered to be self-sustaining and are translated into
Canadian dollars using the current rate method. Assets and liabilities are translated
using the exchange rate in effect at the consolidated Balance Sheet date and
revenues and expenses are translated at the average rate for the month in which
the transaction is recorded. Exchange gains or losses on translation of the
Company’s investments in these subsidiaries are recorded in accumulated other
comprehensive income.
Research and Development
Research costs are expensed as incurred. Development costs that meet specific
criteria related to technical, market and financial feasibility are capitalized and amortized
over the useful life of the technology when put into use.
3 ACQUISITION
a. Compass BPO Limited (Compass)
On March 9, 2010, the Company acquired Compass BPO Limited
(“Compass”) for cash consideration of $7,853,000 (INR 34.68 Cr) including
acquisition costs of $39,000 (INR 0.17 Cr). The purchase has been accounted
for under the purchase method and, accordingly, the results of operations
are included in the consolidated financial statements from the date of
acquisition. The consideration and allocation of the purchase price are
as follows:
Compass BPO Limited (Compass) CAD$ INR/Cr
Net working capital $903 0.00
Property, plant and equipment 476 0.00
Customer relationships (Note 7) 4,138 0.02
Goodwill (Note 8) 3,718 0.02
Future income tax liability (1,382) (0.01)
7,853 0.04
The customer relationships will be amortized on a straight-line basis over ten years.
Included in the net working capital is $257,000 (INR 1.13 Cr) of cash.
b. Bureau of Collection Recovery, LLC (BCR)
On June 1, 2010, the Company acquired BCR, a third-party collection agency
located in Minnesota, for cash consideration of $20,026,000 (INR 88.43 Cr).
In December 2010, a final settlement review resulted in the consideration
being reduced by $137,000 (INR 0.60 Cr) to $19,889,000 (INR 87.83 Cr). The
purchase has been accounted for under the purchase method and, accordingly,
the results of operations are included in the consolidated financial statements
from the date of acquisition. The consideration and allocation of the purchase
price are as follows:
Bureau of Collection Recovery, LLC (BCR) CAD$ INR/Cr
Net working capital $3,025 0.01
Property, plant and equipment 244 0.00
Customer relationships (Note 7) 8,135 0.04
Licenses 1,085 0.00
Non-compete agreement 79 0.00
Goodwill (Note 8) 7,321 0.03
19,889 0.09
The customer relationships will be amortized on a straight-line basis over ten years,
the licenses over three years and the non-compete agreement over five years. Included
in the net working capital is $1,724,000 (INR 7.61 Cr) of cash.
4 OTHER RECEIVABLES
Other receivables are comprised of:
31-Mar-11 31-Mar-11 31-Mar-10 31-Mar-10
CAD$’000 INR/Cr CAD$’000 INR/Cr
Tax credits recoverable and
other assets (Note 9(a)) $18,778 86.38 $10,818 47.77
Other receivable (Note 9(b)) 440 2.02 1,332 5.88
Derivative asset (Notes 11 and 17) 9,338 42.95 7,474 33.01
B alance, end of y ear $28,556 132.58 $19,624 86.66
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ADITYA BIRLA MINACS WORLDWIDE INC., CANADA
5 PROPERTY, PLANT AND EQUIPMENT
Included in these figures are assets under capital leases as follows:
A ccumulated A ccumulated A ccumulated A ccumulated
CostDepreciation CostDepreciation CostDepreciation CostDepreciation
31-Mar-1 1 31-Mar-1 1 31-Mar-1 0 31-Mar-1 0
CAD$’0 0 0 CAD$’0 0 0 INR/Cr INR/Cr CAD$’0 0 0 CAD$’0 0 0 INR/Cr INR/Cr
Computer
equipment $30,479 ($26,025) 140.20 (119.72) 28,339 (23,762) 125.15 (104.93)
Communications
equipment 14,499 ($12,815) 66.70 (58.95) 14,218 (12,103) 62.79 (53.45)
Furniture and
fixtures 16,734 ($10,734) 76.98 (49.38) 16,785 (9,251) 74.12 (40.85)
Vehicles 0 $0 0.00 0.00 58 (45) 0.26 (0.20)
Leasehold
improvements 21,110 ($13,154) 97.11 (60.51) 21,088 (10,903) 93.12 (48.15)
82,822 (62,728) 385.67 (288.55) 80,488 (56,064) 355.44 (247.58)
Less: accumulated
depreciation ($62,728) (288.55) (56,064) (247.58)
20,094 92.43 24,424 107.86
Included in these figures are assets under capital leases as follows
31-Mar-11 31-Mar-11 31-Mar-10 31-Mar-10
CAD$’000 INR/Cr CAD$’000 INR/Cr
Cost 0 0.00 15,193 67.09
Less: accumulated depreciation 0 0.00 (9,915) (43.78)
Net book value 0 0.00 5,278 23.31
The assets under capital leases are held as collateral for the capital lease
obligations. For the year ended March 31, 2011, included within amortization
expense is $745,000 (INR 3.43 Cr) (2010: $1,732,000) (INR 7.65) relating to assets
under capital leases.
6 DEFERRED DEVELOPMENT COSTS
Deferred development costs are comprised of:
31-Mar-11 31-Mar-11 31-Mar-10 31-Mar-10
CAD$’000 INR/Cr CAD$’000 INR/Cr
Balance, beginning of year $2,463 11.33 546 2.41
Additions 2,699 12.42 2,693 11.89
Capitalized to computer software (2,532) (11.65) (576) (2.54)
Foreign currency translation adjustment ( 56) (0.26) (200) (0.88)
B alance, end of y ear $2,574 11.99 $2,463 10.88
7 INT ANGIBLE A SSE TS
Intangible assets consist of:
CAD$’0 0 0 CAD$’0 0 0 INR/Cr INR/Cr CAD$’0 0 0 CAD$’0 0 0 INR/Cr INR/Cr
31-Mar-11 31-Mar-11 31-Mar-10 31-Mar-10
Accumu- Accumu- Accumu- Accumu-lated lated lated lated
Cost Amorti- Cost Amorti- Cost Depre- Cost Depre-zation zation zation ciation ciation
Computer
software 40,142 (32,312) 184.65 (148.64) 34,119 (30,278) 150.67 (133.71)
Customer
relationships
(Note 3) 12,273 (1,126) 56.46 (5.18) (5.18) 4,138 (34) 18.27 (0.15)
Other 2,880 (812) 13.25 (3.74) (3.74) 812 (672) 3.59 (2.97)
Foreign currency
translation
adjustment (30) 22 (0.14) 0.10 0.10 (158) 121 (0.70) 0.53
55,265 (34,228) 254.22 (1 59.39) 59.39) 38,911 (30,863) 171.83 (136.29)
Less :
accumulated
depreciation (34,228) (157.45) (30,863) (136.29)
21,037 96.77 96.77 8,048 35.54
Included in these figures are intangible assets under capital leases as follows:
31-Mar-1 1 31-Mar-1 1 31-Mar-1 0 31-Mar-1 0
CAD$’0 0 0 INR/Cr CAD$’0 0 0 INR/Cr
Cost 0 0.00 2,691 11.88
Less: accumulated amortizati on 0 0.00 (2,475) (10.93)
Net book value 0 0.00 216 0.95
The intangible assets under capital leases are held as collateral for the capital lease
obligations. For the year ended March 31, 2011, included within amortization expense
is $Nil (2010: $165,000) (INR 0.76) relating to intangible assets under capital leases.
8 GOODWILL
Goodwill consists of:
31-Mar-11 31-Mar-11 31-Mar-10 31-Mar-10
CAD$’000 INR/Cr CAD$’000 INR/Cr
Balance, beginning of year 10,070 46.32 6,818 30.11
Acquisition of Compass (Note 3) 7,321 33.68 3,718 16.42
Foreign currency translation adjustment (226) (1.04) (466) (2.06)
B alance, end of y ear 17,1 65 79.93 10,070 44.47
9 DEFERRED GRANT AND GOVERNMENT A SSISTANCE
(a) In fiscal 2009, the Company became eligible to receive funding from the Ontario
Apprenticeship Program. For the year ended March 31, 2011, the Company
recorded $24,441,000(INR 112.43 Cr) (2010: $10,775,000) (INR 47.58 Cr) as a
reduction of direct expenses and selling, general and administrative expenses
for these grants. As at March 31, 2011, the Company has recorded $18,778,000
(INR 86.38 Cr) (2010: $10,818,000) (INR 47.77 Cr) as part of other receivables.
(b) The Company also receives payroll rebates from Nova Scotia Business Inc. if
certain incremental wage growth is achieved within the Province of Nova Scotia.
As at March 31, 2011, the Company has recorded $73,000 (INR 0.34Cr) (2010:
$230,000) (INR 1.02Cr) as a payroll rebate receivable, which is included in
other receivables. During the year ended March 31, 2011, the Company recorded
$73,000 (INR 0.34Cr) (2010: $231,000) (INR 1.02 Cr) as a reduction of direct
expenses and selling, general and administrative expenses for this grant.
(c) In fiscal 2008, Minacs finalized an agreement with the Province of New
Brunswick to receive a forgivable loan in the amount of $2,260,000 (INR 10.40
Cr). The loan provides for forgiveness subject to terms being met in respect of
employment to be created at a contact centre in that province. To date, Minacs
has received $900,000 (INR 4.14 Cr); no amounts were received in fiscal 2010
or 2011. As at March 31, 2011, the Company has recorded $858,000 (INR 3.95
Cr) (2010: $858,000) (INR 3.79 Cr) as deferred grant and government assistance.
If the terms of the loan are not met by December 31, 2011, then the amount
remaining as deferred grant and government assistance will need to be repaid.
10 LONG-TERM DEBT
31-Mar-11 31-Mar-11 31-Mar-10 31-Mar-10
CAD$’000 INR/Cr CAD$’000 INR/Cr
Senior revolving facility from
Bank of America 25,813 118.74 33,914 149.76
Loan from Bank of America 19,392 89.20 0 0.00
Loan from AV Transworks Limited
Canada (Note 11) 5,265 24.22 0 0.00
50,470 232.16 33,914 149.76
Less: current portion (50,470) (235.02) (33,914) (149.76)
0 0 0 0
Senior Revolving Facility – Bank of America
This facility bears interest at 0.9% m argin over bank prime, banker’s acceptance or
LIBOR rates. The total commitment available under the senior revolving facility is
$40,000,000 (INR 184 Cr), subject to certain borrowing base calculations and certain
other restrictive covenants. The facility is a 365-day facility and, as collateral, the
Company has given a first charge on accounts receivable. In addition, this facility is
guaranteed by Aditya Birla Nuvo Limited. As at March 31, 2011, the Company is in
compliance with applicable bank covenants.
Loan from Bank of America
This loan bears interest at 1.50% margin over US LIBOR rates and matures on June
1, 2011. This loan is unsecured and is guaranteed by Aditya Birla Nuvo Limited. As at
March 31, 2011, the Company is in compliance with debt covenants.
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ADITYA BIRLA MINACS WORLDWIDE INC., CANADA
Loan from AV Transworks Limited Canada
This loan is unsecured, bears interest at 6.05% and is payable on demand.
Interest Rate
The weighted average interest rate on borrowings at March 31, 2011, was 2.62% (2010:
2.74%).
Interest and financing expenses are comprised of the following amounts:
2011 2011 2010 2010
CAD$’0 0 0 INR/Cr CAD$’0 0 0 INR/Cr
Interest expense on loans from
Parent Company (Note 11) $765 3.42 $157 0.68
Interest expense on long-term debt 884 3.96 1,311 5.72
Interest expense on obligations
under capital leases 38 0.17 313 1.36
Other interest expense (income) 2 0.01 19.00 0.08
Net interest expense 1,689 7.56 1,800 7.85
Amortization of deferred
financing expenses 0 0.00 83 0.36
Bank charges 208 0.93 675 2.94
Foreign exchange loss 619 2.77 71 0.31
Total interest and financing expenses $2,516 11.26 $2,629 11.46
11 RELATED PARTY TRANSACTIONS
Transactions with the Aditya Birla Nuvo Limited group of companies are as follows:
31-Mar-11 31-Mar-11 31-Mar-10 31-Mar-10
CAD$’000 INR/Cr CAD$’000 INR/Cr
Interest charged on long term debt $765 3.42 $157 0.68
Reimbursable expenses in statement
of operations and deficit $5,426 24.29 $6,934 30.23
Capitalised in the consolidated
Balance Sheet under deferred
development costs and intangi bles $2,138 9.57 — —
Short-term debt (Note 10) $5,265 23.56 — —
Net amount due to related parties
in respect of accrued interest and
reimbursable e xpenses $655 3. 05 $1,067 4.71
These transactions are measured at the exchange amounts of consideration established
and agreed to by the related parties.
In fiscal 2010, the Company entered into a forward contract agreement with AV
Transworks Limited Canada for U.S $24,500,000 (INR 112.70 Cr) in order to hedge
the Company’s anticipated U.S. dollar sales. The fair value gain of the forward
contract as at March 31, 2011 is $6,913,000 (INR 31.80 Cr) (2010 – $5,699,000)
(INR 25.17 Cr) and is recorded as a derivative asset in other receivables (note 4)
and other comprehensive income.
12 SHARE CAPITAL
The Company is authorized to issue an unlimited number of common shares and an
unlimited number of preferred shares issuable in series.
2011 2010
CAD$’000 INR/Cr CAD$’000 INR/Cr
Number Number
of Shares Amount Amount of Shares Amount Amount
Common Shares 27,945,822 70,071 322.33 27,945,822 70,071 309.43
Redeemable Series
A Preference Shares 20,321,721 20,322 93.48 20,321,721 20,322 89.74
Redeemable Series B
Preference Shares 30,000,000 30,000 138.00 30,000,000 30,000 132.48
120,393 560.61 120,393 531 .66
The Company received $20,000,000 (INR 88.32 Cr) on February 24, 2010, and a further
$10,000,000 (INR 44.16 Cr) on March 26, 2010, in cash from its parent company AV
Transworks Limited Canada as subscription for Redeemable Series B Preference Shares
that were issued during 2010.
The Series A Preference Shares are redeemable at face value at the option of the
Company, at any time after December 31, 2012. The Series B Preference Shares are
redeemable at face value at the option of the Company, at any time after December 31,
2014. However, there is no redemption obligation on the Company. The preference
shareholders are entitled to a cumulative dividend of 4.50% for Series A and 5% for
Series B on the outstanding preference shares. The payment of dividends is at the
discretion of the Company and subject to availability of profits of the Company.
The undeclared dividend as of March 31, 2011, is $3,441,000 (INR 15.83 Cr)
(2010: $1,029,312) (INR 4.55 Cr).
1 3 COMMI TMENTS AND CONTINGENCIES
Commitments
The Company has operating leases for its premises, furniture and fixtures and certain
computer and communications equipment, as well as minimum purchase
commitments for telephone services. The minimum annual payments for the next
five years and thereafter are as follows:
CAD$’000 INR/Cr
2012 $9,240 42.50
2013 8,076 37.15
2014 8,028 36.93
2015 5,073 23.34
2016 4,345 19.99
Thereafter 5,049 23.23
Tot al commitments $39,811 1 85.39
Contingent Liabilities
On May 17, 2006, the former major shareholder and founder of the Company, Elaine
Minacs, died. The major shareholder of the Company then became the Estate of
Elaine Minacs (the “Estate”) together with certain entities controlled by it (the “EM
Shareholders”) until August 18, 2006, when AV Transworks Limited Canada acquired
the shares of the Estate and the EM Shareholders.
The Company is the owner of a $350,000 (INR 1.61 Cr) whole life insurance policy and a
$2,000,000 (INR 9.2 Cr) term life insurance policy insuring the life of Elaine Minacs.
The term life policy is a key-man policy, originally required by the Company’s previous
lenders. The beneficiary of the policies when they were originally acquired was the
Company. During 2005, the beneficiary of the whole life insurance policy was changed at
the direction of Elaine Minacs. Also, during 2005, the beneficiary of the term life insurance
policy was changed to family members related to Elaine Minacs at the direction of Elaine
Minacs. In fiscal 2007, management changed the beneficiary back to the Company.
A legal proceeding has been commenced by the Estate against the Company claiming
$5,000,000 (INR 23 Cr) in damages stating that the change in beneficiary was in breach
of Elaine Minacs’ employment agreement. Proceeds of $350,000 (INR 1.61 Cr) were
paid into escrow pursuant to an escrow agreement with the Estate. The proceeds of
$2,000,000 (INR 9.2 Cr) were paid by the underwriter to the court to be held in trust.
The Company has filed a defense and counterclaim to the initial Estate claim in August
2007 for the proceeds of the life insurance policies and damages of $500,000 (INR 2.3
Cr). A second claim for damages of $500,000 (INR 2.3 Cr) and for punitive damages of
$100,000 (INR 0.46 Cr) was commenced by the Estate in December 2007 stating the
Company was in breach of contract related to an employment agreement. Management
has not accrued a contingent liability for the claims made by the Estate because they
believe that the claims have no merit and the outcome of the proceeding is not
determinable.
During the ordinary course of business activities, in addition to the above, the Company
may be a party to claims and may be contingently liable for litigation. Management
believes that adequate provisions have been made in the accounts where required.
Although it is not possible to estimate the extent of potential costs and losses, if any,
management believes that the ultimate resolution of such contingencies will not
have a material adverse effect on the consolidated financial position of the Company.
Guarantees
At March 31, 2011, the Company had $425,000 (INR 1.96 Cr) (2010: $75,000) (INR
0.33 Cr) of outstanding letters of credit to secure customer performance guarantees.
14 R ESTRUCTURING AND OTHER CHARGES
In fiscal 2011, the Company terminated a number of employees and performed some
due diligence reviews. Total severance payments and other charges of $1,170,000
(INR 5.38 Cr) (2010: $3,828,000) (INR 16.9 Cr) have been charged to restructuring
and other charges.
In fiscal 2010, the Company approved a plan to close its Port Hawkesbury site and restart
the operations at the Chatham site. The costs recorded in restructuring relating to lease
exit costs and asset impairment in fiscal 2011 are $Nil (2010: $2,485,000) (INR 10.97 Cr).
The details of severance expenses, impaired assets, lease exist costs for the balance
of the remaining lease periods and the credits against lease exit liabilities are given
below:
2011 2011 2010 2010
CAD$’000 INR/Cr CAD$’000 INR/Cr
Lease exit costs 0 0.00 2,239 9.76
Other lease exit credits 0 0.00 ( 687) (2.99)
Write down of property, plant and equipment 0 0.00 933 4.07
Severance and other items 1,170 5.24 1,343 5.85
Restructuring and other charges 1,170 5.24 3,828 16.69
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ADITYA BIRLA MINACS WORLDWIDE INC., CANADA
A reconciliation of beginning and ending accounts payable and accrued liabilities with
respect to the restructuring and other charges is as follows:
31-Mar-1 0 Charges 31-Mar-1 1 31-Mar-1 0 Charges 31-Mar-1 1
Incur red P aid Incur red P aid
CAD$’0 0 0 CAD$’0 0 0 CAD$’0 0 0 CAD$’0 0 0 INR/Cr INR/Cr INR/Cr INR/Cr
Lease exit costs $3,235 — (1,158) $2,077 14.29 — (5.18) 9.67
Severance 56 1,170 (1,180) 46 0.25 5.24 (5.28) 0.21
Accounts payable
and accrued liabilities
relating to restructuring
and other $3,291 $1,170 (2,338) $2,123 14.53 5.24 (10.46) 9.89
Long-term accrued liabilities relating to operating leases relate to tenant inducements
and free-rent liabilities.
15 INCOME TAX
The reconciliation of income tax at the statutory income tax rate to the effective
income tax recorded in the consolidated statement of operations is as follows
(thousands of dollars)
31-Mar-11 31-Mar-10
Income before income taxes 22,675 4,735
Statutory income tax at 29.9% [2010 – 32.4%] 6,780 6,780 1,533
Utilization of losses not benefited previously (6,551) (3,769)
Decrease in valuation allowance resulting
from unrealized gains in accumulated other
comprehensive loss (2,614) (2,614) —
US state tax expense (recovery) 386 386 (331)
Income tax rate changes — 3,315
Increase in tax reserves 143 143 270
Other 179 179 254
Income tax provision (recovery) (1,677) (1,677) 1,272
Future tax assets consist of the following temporary differences:
2011 2011 2010 2010
CAD$’000 INR/Cr CAD$’000 INR/Cr
Operating losses carried forward 15,706 72.25 19,608 86.59
Accounts payable and accrued liabilities 1,625 7.48 2,269 10.02
Property, plant and equipment 0 0.00 77 0.34
Deferred grant and government assistance 217 1.00 218 0.96
Other 87 0.40 382 1.69
17,635 81.12 22,554 99.60
Valuation allowance (17,034) (78.36) (21,880) (96.62)
Less: current portion (601) (2.76) (273) (1.21)
0 0.00 401 1.77
Future tax liabilities consist of the following temporary differences:
2011 2011 2010 2010
CAD$’000 INR/Cr CAD$’000 INR/Cr
Property, plant and equipment $2,190 10.07 $304 1.34
Other receivables 0 0.00 823 3.63
Intangible assets 1,239 5.70 1382 6.10
$3,429 15.97 $2,509 11.08
Expiry of Losses
As at March 31, 2011, the Company has non-capital losses of approximately $62,078,000
(INR 285.56 Cr) available to reduce future years’ income for tax purposes. If not utilized,
these losses will expire as follows:
CAD$’0 0 0 INR/Cr
2026 $9,156 42.12
2027 14,188 65.26
2028 19,289 88.73
2029 19,445 89.45
$62,078 289.07
1 6 SUPPLEMENTAL CASH FLO W INFORMATION
Adjustments to reconcile net income (loss) to cash flows provided by operating activities
include:
Year ended March 31, Year ended March 31,
2011 2011 2010 2010
CAD$’0 0 0 INR/Cr CAD$’0 0 0 INR/Cr
Depreciation and amortization 9,623 44.27 9,953 43.95
Write-down of property,
plant and equipment 33 0.15 933 4.12
Restructuring recovery 0 0.00 (687) (3.03)
Future income taxes (1,449) (6.67) 179 0.79
Amortization of deferred grant and
government assistance 0 0.00 125 0.55
Amortization of intangible assets 1,721 7.92 105 0.46
Loss on sale of property,
plant and equipment 14 0.06 12 0.05
Total adjustments to reconcile
net income (loss) to cash provided
by operating activities 9,942 46.30 10,620 46.90
The net change in non-cash working capital balances related to operations include:
Year ended March 31, Year ended March 31,
2011 2011 2010 2010
CAD$’0 0 0 INR/Cr CAD$’0 0 0 INR/Cr
Accounts receivable and
unbilled revenues (27,390) (125.99) (399) (1.76)
Prepaid expenses 765 3.52 124 0.55
Income taxes recoverable
(payable) (26) (0.12) 570 2.52
Accounts payable and
accrued liabilities 4,460 20.52 (133) (0.59)
Total net change in non-cash working
capital balances related to operations (22,1 91) (1 03.34) 162 0.72
Cash interest and income taxes paid are as follows:
Year ended March 31 Year ended March 31
2011 2011 2010 2010
CAD$’0 0 0 INR/Cr CAD$’0 0 0 INR/Cr
Interest 2,505 11.52 $3,009 13.29
Income taxes (161) (0.74) $549 2.42
17 FINANCIAL INS TRUMENTS AND RISK MANAGEMENT
Fair Value of Financial Instruments
The fair value of financial instruments, which include cash, accounts receivable and
unbilled revenue, other receivables, income taxes recoverable, accounts payable and
accrued liabilities, long-term debt, income and other taxes payable, and obligations
under capital leases, approximates their carrying value due to their short-term nature
and/or variable interest rates.
Other financial instruments are long-term in nature, which include long-term
receivables, accrued liabilities relating to operating leases and deferred grant and
government assistance, and due to their nature are measured at amortized cost,
which approximates their fair value.
Risk Management
The Company’s activities expose it to a variety of financial risks, including market risk
(comprised of foreign currency risk and interest rate risk), credit risk and liquidity risk.
The Company’s overall risk management program focuses on the unpredictability of
financial markets and seeks to minimize potential adverse effects on the Company’s
financial performance. The Company does not purchase any derivative financial
instruments for speculative purposes.
Risk management is the responsibility of the corporate finance function. Material
risks are monitored and are regularly discussed with the Audit Committee of the
Board of Directors.
Foreign Currency Risk
The Company has significant operations in Canada and the United States. The
Company’s activities result in exposure to fluctuations in foreign currency exchange
rates due to sale and purchase transactions in a foreign currency. Increases or
decreases in these rates could impact the Company’s net income.
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ADITYA BIRLA MINACS WORLDWIDE INC., CANADA
As at March 31, 2011, the Company purchased financial instruments to hedge its foreign
currency exposure as follows:
INR/Cr
(Dollars in thousands) 31-Mar-1 1 31-Mar-1 1
Notional Amount Av erage F air Mark et F air Mark et
in USD R ate to CAD Term Value Gain Value Gain
Financial Instr ument
USD forward foreign April 2011 –
exchange rate contracts 72,500 1.1065 March 2013 $9,338 CAD 42.95
Included in revenues is a gain from foreign exchange hedging contracts amounting to
$1,923,000 (INR 8.85 Cr) for the year ended March 31, 2011 (2010: $1,302,000 loss)
(INR 5.75 Cr loss). Included in selling, general and administrative expenses is a gains
from foreign exchange hedging contracts amounting to $186,000 (INR 0.86 Cr) for the
year ended March 31, 2011 (2010: $183,000 loss) (INR 0.84 Cr). At March 31, 2011, all contracts
were designated as hedges for accounting purposes .
During the year ended March 31, 2011, a substantial portion of the Company’s income
was earned outside of Canada in currencies other than the Canadian dollar. Increases
in the value of the Canadian dollar can reduce net income and declines can result in
increased net income. Based on the income, a +/- 1% change in the United States
dollar would, everything else being equal, have had the following effect on the
Company’s reported net income for the year ended March 31, 2011:
Average Increase / Increase /
Exchange Decrease Decrease
rate of 1% of 1%
CAD INR/Cr
United States dollar 1.10562 $665,000 2.98
The table below presents the percentages of the Company’s accounts receivable,
accounts payable and accrued liabilities that are denominated in US dollars:
March 31, March 31,
2011 2010
Accounts receivable 51% 43%
Accounts payable 48% 57%
Accrued liabilities 76% 86%
During the years ended March 31, 2011 and 2010, the following percentage of
revenues and expenses were earned or incurred in US dollars:
March 31, March 31,
2011 2010
Revenues 64% 58%
Expenses 46% 36%
Interest Rate Risk
The objective of the Company’s interest rate management activities is to minimize
the volatility of the Company’s income. The Company’s interest rate risk primarily
arises from its floating rate debt.
At March 31, 2011, the total long-term debt outstanding was $50,470,000 (INR
232.16 Cr), which is subject to movements in floating interest rates. A +/-1% change
in interest rates would, everything else being equal, have an effect on the Company’s
net income for the year ended March 31, 2011, of approximately +/- $645,000
(INR 2.97 Cr).
Credit Risk
Credit risk arises from cash held with banks and financial institutions, as well as
credit exposure to clients, including outstanding accounts receivable. The maximum
exposure to credit risk is equal to the carrying value of the financial assets.
The objective of managing counterparty credit risk is to prevent losses in financial
assets. The Company assesses the credit quality of the counterparties, taking into
account their financial position, past experience and other factors.
The Company derived 33% or $101,500,000 (INR 466.90 Cr) of its revenues from
multiple contracts with two groups of clients in the automotive and technology sectors
for the year ended March 31, 2011 (2010: 33.09% or $93,390,000) (INR 412.41 Cr).
As at March 31, 2011, multiple contracts with two clients represented 34.6% (2010:
23%) of the accounts receivable balance.
The following table sets out details of the aging of accounts receivable that are
outstanding and related allowance for doubtful accounts:
31-Mar-1 1 31-Mar-1 1
CAD$’0 0 0 INR/Cr
Current 31,228 143.65
31-60 days 26,369 121.30
61-90 days 10,373 4 7.72
Over 90 days 762 3 .51
Less: allowance for doubtful accounts (290) (1.33)
Tot al accounts receiv able and unbilled re v enues, net 68,442 318.71
Included in accounts receivable and unbilled revenue are unbilled revenues of
$19,554,000 (INR 89.95 Cr) (2010: $14,652,000) (INR 64.70 Cr).
The carrying amount of accounts receivable is reduced through the use of an allowance
account and the amount of the loss is recognized in the consolidated statement of
operations and deficit within operating expenses. When a receivable balance is
considered uncollectible, it is written off against the allowance for accounts receivable.
Subsequent recoveries of amounts previously written off are credited against operating
expenses in the consolidated statement of operations and deficit.
31-Mar-11 31-Mar-11
CAD$’000 INR/Cr
Allowance for doubtful accounts – March 31, 2010 (72) (0.33)
Provisions (220) (1.01)
Write-offs 0 —
Foreign currency translation adjustment 2 0.01
Allo w ance for doubtful accounts – Marc h 31, 2011 (290) (1 .35)
Liquidity Risk
Liquidity risk arises through the excess of financial obligations over available financial
assets due at any point in time. The Company’s objective in managing liquidity risk is
to maintain sufficient readily available reserves in order to meet its liquidity
requirements at any point in time. The Company achieves this by maintaining sufficient
cash and through the availability of funding from committed credit facilities. As at
March 31, 2011, the Company was holding cash of $3,524,000 (INR 16.21 Cr).
18 MANAGEMENT OF CAPITAL
The Company defines capital that it manages as the aggregate of its shareholders’
equity, cash on the Balance Sheet and interest-bearing debt. The Company’s objective
when managing capital is to ensure that it can provide services to its customers and
returns to its shareholders.
As at March 31, 2011, managed capital was comprised of shareholders’ equity of
$72,127,000 (INR 331.78 Cr) (2010: $48,472,000) (INR 214.05 Cr), cash of $3,524,000
(INR 16.21 Cr) (2010: $4,230,000) (INR 19.46 Cr) and interest-bearing debt of
$50,470,000 (INR 232.16 Cr) (2010: $35,557,000) (INR 157.01 Cr).
The Company manages its capital structure in a manner that ensures operating cash
flow together with cash on its Balance Sheet is greater than interest expense and
current principal debt repayments required to be paid.
19 EMPLOYEE BENEFIT PLANS
The Company has defined contribution pension plans. The Company’s expenditures
with respect to these plans were $750,000 (INR 3.45 Cr) during the year ended
March 31, 2011 (2010: $673,000) (INR 2.97 Cr).
20 COMPARATIVE FIGURES
Certain of the comparative figures have been reclassified to conform to the current
year’s presentation.
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ADITYA BIRLA MINACS WORLDWIDE CANADA INC.
Unaudited B alance Sheet
31st Marc h, 2011 31st Marc h, 2010
CAD $’00 0 INR/Cr CAD $’00 0 INR/Cr
SOURCES OF FUNDS
I Shareholders’ Equity
Share Capital
Common Shares
Shares issued 39,755 182.87 39,755 175.56
Redeemable Commulative
Preference Shares 80,638 370.93 80,638 356.10
Sub - Total 120,393 553.81 120,393 531.65
Other Comprehensive Income 4,747 21.83 5,497 24.27
Retained earnings (52,546) (230.66) (76,991) (340.07)
Exchange fluctuation on Translation — (11.05) — 0.08
72,594 333.94 48,899 215.94
II Loan Funds
Secured Loans
Borrowings from Banks 31,078 142.96 33,914 149.76
Obligations under capital — — 1,317 5.82
31,078 142.96 35,231 155.58
Total 103,672 476.89 84,130 371.52
APPLICATION OF FUNDS
I Fixed Assets
Property, plant and
equipment net 18,515 85.17 22,282 98.40
Deferred Development cost 1,523 7.01 954 4.21
Investment in subsidiary
companies 41,522 191.00 41,522 183.36
Goodwill 4,422 20.34 4,422 19.53
65,982 303.52 69,180 305.50
II Current Assets
Cash and cash equivalents (223) (1.02) 1,981 8.75
Accounts receivable 65,389 300.79 48,512 214.23
Prepared expenses 1,067 4.91 1,639 7.24
Future income taxes 13 0.06 13 0.06
Other assets — — — —
66,245 304.73 52,144 230.27
Less Liabilities
Accounts payable
and accrued liabilities 20,360 93.66 21,494 94.92
Income and other
taxes payable 116 0.53 97 0.43
Due to related parties 7,222 33.22 14,745 65.11
Deferred Grant 858 3.95 858 3.79
Future income taxes — — — —
28,556 131.36 37.194 164.25
Total 103,672 476.89 84,130 371.52
Commitments and contingencies (Notes 12 and 14)
Notes
FE Conversion Rate for CAD $ to INR
as at end of year 46.00 44.16
Place: Toronto
Date: April 25, 2011
Unaudited Profit & L oss Account f or the y ear ended
31st March, 2011
12 Months Ended 12 Months Ended
31st March, 2011 31st March, 2010
CAD $’000 INR/Cr CAD $’000 INR/Cr
Revenues 158,747 710.52 158,506 690.98
Direct expenses 102,785 460.04 116,453 507.66
Gross profit 55,962 250.47 42,053 183.32
Management fee charged 9,636 43.13 10,449 45.55
Selling, general and administrative
expenses 35,365 158.29 38,536 167.99
Earnings before interest expense,
income taxes, depreciation and
amortization and restructuring
and other charges 30,233 135.32 13,966 60.88
Restructuring and other charges 424 1.90 3,558 15.51
Earnings before interest expense,
income taxes, depreciation
and amortization 29,810 133.42 10,407 45.37
Depreciation and amortization 6,945 31.08 7,549 32.91
Interest and financing expenses 1,034 4.63 1,534 6.69
Income (Loss) before income taxes 21,830 97.71 1,325 5.77
Provision for (recovery of) income taxes
Current — — — —
Future (2,615) (11.70) — —
(2,615) (11.70) — —
Net income (loss) for the period 24,445 109.41 1,325 5.77
Deficit, beginning of period (76,991) (340.07) (78,315) (345.84)
Deficit, end of period (52,546) (230.66) (76,991) (340.07)
Average FE Conversion rate for CAD $ to
INR for the financial year 44.76 43.59
Place: Toronto
Date: April 25, 2011
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as cash flow hedges. These derivatives are measured at fair value at the end
of each period.
The resulting gain/loss on recognition of the forward rate contracts, options and
cross-currency swap agreements is recognized in other comprehensive income.
Effective April 1, 2008, the Company also adopted the CICA accounting
standards Section 3862 “Financial Instruments – Disclosure”, Section 3863
“Financial Instruments – Presentation”, Section 1400 “General Standards of
Financial Statement Presentation” and Section 1535 “Capital Disclosures”.
Use of Estimates
The preparation of these financial statements in conformity with Canadian generally
accepted accounting principles requires management to make estimates and
assumptions. These estimates and assumptions affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during the
year. Actual results could differ from those estimates.
Revenue Recognition
The Company derives revenues by providing BPO solutions and consulting
arrangements. Payment terms may vary by contract. The Company recognizes
revenues at the time services are performed and when the price is fixed or
determinable and collection is reasonably assured.
The majority of revenues are recognized based on the billable hours or minutes
rendered as defined in the client contract. The rate per billable hour or minute charged
is based on a predetermined contractual rate as agreed in the underlying contract.
This contractual rate fluctuates based on the Company’s performance against certain
predetermined criteria related to quality and performance. Some clients are entitled
to service credits when the Company is not in compliance with certain obligations as
defined in the client contract. Such service credits are recorded as a reduction of
revenues as incurred based on a measurement of the Company’s obligation under
the terms of the client contract.
For some contracts the Company is paid by its customer based on achievement of
client-determined criteria specified in the client contract such as full time equivalents,
units processed or completed contacts. The Company recognizes this performance-based revenue by measuring its actual results against the performance criteria
specified in the contracts.
Amounts collected from customers prior to the performance of services are recorded
as deferred revenue. These advances are amortized to revenues in accordance with
the Company’s policy on revenue recognition.
The Company classifies reimbursements received from customers for out-of-pocket
expenditures as revenues. The Company incurs out-of-pocket expenditures such as
expenses related to travel, postage and telecommunications costs for which
customers have agreed to reimburse Minacs. The corresponding cost associated
with this revenue is recorded within direct expenses. Some customers agree to
reimburse the Company for initial training and recruiting costs over a specified period
of time. The revenue for these costs is recorded over the period of time stipulated
within the contract with a corresponding cost recorded within direct expenses.
Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated depreciation.
Depreciation is provided from the first day of the month following the date the assets
are placed into service, on a straight-line basis. Computer software is depreciated
over four to five-year lives. Computer equipment is depreciated over a four-year life.
Communication’s equipment is depreciated over five to seven-year lives. Furniture
and fixtures are depreciated over seven to ten-year lives. Leasehold improvements
are depreciated over the term of the lease.
Leases
Leases are classified as either capital or operating leases. Leases that substantially
transfer all of the benefits and risks of ownership of property to the Company are
accounted for as capital leases. At the time a capital lease is entered into, an asset is
recorded together with its related long-term obligation to reflect the acquisition and
financing. Equipment recorded under capital leases is amortized on the same basis
as property, plant and equipment. Rental payments under operating leases are
expensed as incurred.
Goodwill
Goodwill is not amortized and is tested for impairment on an annual basis.
Such evaluation determines any impairment in value, taking into account the ability
to recover the carrying amount of goodwill from discounted cash flows. The Company
also considers projected future operating results, trends, and other circumstances in
making such evaluations.
In addition to the annual impairment test, the Company will perform an impairment
test if an event occurs or circumstances change that would more likely than not
reduce the fair value of the reporting unit below its carrying amount.
Intangible Assets
The Company allocates value to intangible assets acquired relating to customer and
supplier contracts, proprietary processes and certain business relationships.
Amortization of intangible assets is provided on a straight-line basis over ten years.
NOTES TO FINANCIAL STATEMENTS MAR CH 31, 20 11
1 NATURE OF BUSINESS
Aditya Birla Minacs Worldwide Inc. (the “Company” or “Minacs”) is incorporated
under the Ontario Business Corporations Act. The Company changed its name from
Minacs Worldwide Inc. to Aditya Birla Minacs Worldwide Inc., effective November
5, 2008. The Company operates in one segment as a provider of business process
outsourcing (“BPO”) solutions. These incorporate contact centre solutions, integrated
marketing services and back office administration. Operating in multiple languages,
the Company serves customers throughout North America, Europe, Latin America
and the Pacific Rim from its operating locations in North America and Europe.
2 SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
These financial statements have been prepared in accordance with Canadian generally
accepted accounting principles (“GAAP”) except that they have been prepared on a
standalone basis and do not include the accounts of its subsidiaries.
Changes in accounting policies
Effective April 1, 2008, the Company adopted the new recommendations of The
Canadian Institute of Chartered Accountants (“CICA”) Handbook Section 3251: Equity;
Section 1530: Comprehensive Income; Section 3855: Financial Instruments -Recognition and Measurement; and Section 3865: Hedges, retroactively, without
restatement. These new Handbook Sections apply to fiscal years beginning on or
after October 1, 2007.
Under the new standards, policies followed for periods prior to the effective date
generally are not reversed and, therefore, the comparative figures have not been restated
except to present foreign currency translation gains and losses on self-sustaining foreign
operations as part of accumulated other comprehensive income (loss).
[a] Equity and comprehensive income
CICA Handbook Section 3251 describes standards for the presentation of equity
and changes in equity during the period with reference to the new
comprehensive income standard. CICA Handbook Section 1530 establishes
standards for reporting and presenting comprehensive income, which is defined
as the change in equity from transactions and other events from non-owner
sources. Other comprehensive income refers to items recognized in
comprehensive income that are excluded from net earnings calculated in
accordance with Canadian GAAP.
[b] Financial instruments
Under CICA Handbook Section 3855, financial instruments must be classified
into one of these five categories: held-for-trading, held-to-maturity, loans and
receivables, available-for-sale financial assets, or other financial liabilities. All
financial instruments, including derivatives, are measured in the Balance Sheet
at fair value except for loans and receivables, held-to-maturity investments and
other financial liabilities, which are measured at amortized cost. Subsequent
measurement and changes in fair value will depend on their initial classification,
as follows: held-for-trading financial assets are measured at fair value and
changes in fair value are recognized in net earnings; available-for-sale financial
instruments are measured at fair value with changes in fair value recorded in
other comprehensive income until the investment is derecognized or impaired,
at which time the amounts would be recorded in net earnings. In accordance
with the new standard, the Company’s financial assets and liabilities are
generally classified and measured as follows:
Asset/Liability Category Measurement
Cash and cash equivalents Held-for-trading Fair value
Accounts receivable Loans and receivables Amortized cost
Long-term receivables Loans and receivables Amortized cost
Accounts payable and
accrued liabilities Other financial liabilities Amortized cost
Deferred grant Other financial liabilities Amortized cost
Long-term debt Other financial liabilities Amortized cost
The Company had no financial instruments classified as available-for-sale during
the year ended March 31, 2011.
Financing costs and credit facility arrangement fees associated with the issuance
of long-term debt are netted against the carrying value of the related debt and
are amortized using the effective interest rate method to interest expense over
the period to maturity of the related debt.
[c] Hedges
Section 3865 specifies the criteria under which hedge accounting can be applied
and how hedge accounting should be executed for each of the permitted hedging
strategies: fair value hedges, cash flow hedges and hedges of a foreign currency
exposure of a net investment in a self-sustaining foreign operation.
The Company applied hedge accounting to forward rate contracts, options
and cross currency swap agreements. These contracts have been designated
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Impairment of Long-Lived Assets
The Company reviews its long-lived assets such as property, plant and equipment and
intangible assets for impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. When indicators of impairment of
the carrying value of the asset exist, and the carrying value is greater than the net
recoverable value (as determined on an undiscounted basis), an impairment loss is
recognized to the extent that the fair value (measured as the discounted cash flows
over the remaining life of the asset when quoted market values are not readily available)
is below the carrying value.
Income Taxes
The Company follows the liability method of accounting for income taxes. Under this
method, future tax assets and liabilities are determined based on differences between
the financial reporting and tax bases of assets and liabilities, and are measured using
substantively enacted tax rates and laws that are expected to be in effect when the
differences are expected to reverse. Valuation allowances are established when
necessary to reduce future tax assets to the estimated amount that is more likely
than not to be realized.
Cash and Cash Equivalents
Cash and cash equivalents consist of unrestricted cash and short-term deposits having
an initial maturity of three months or less.
Foreign Exchange Translation
Foreign operations are considered to be self-sustaining and are translated into Canadian
dollars using the current rate method. Assets and liabilities are translated using the
exchange rate in effect at the Balance Sheet date and revenues and expenses are
translated at the average rate for the month in which the transaction is recorded.
Exchange gains or losses on translation of the Company’s investments in these
subsidiaries, and those arising on the translation of foreign currency long-term liabilities
designated as hedges of these investments, are recorded in accumulated other
comprehensive income.
3 PROPERTY, PLANT AND EQUIPMENT
FY 2011 FY 2010
Accumulated Accumulated Accumulated Accumulated
Cost Depreciation Cost Depreciation Cost Depreciation Cost Depreciation
CAD$’000 CAD$’000 INR/Cr INR/Cr CAD$’000 CAD$’000 INR/Cr INR/Cr
Computer
software 30,070 (26,714) 138.32 (123) 27,648 (25,623) 122.10 (113)
Computer
equipment 20,380 (18,575) 93.75 (85) 19,868 (16,892) 87.74 (75)
Communications
equipment 13,358 (11,918) 61.45 (55) 13,269 (11,183) 58.60 (49)
Furniture and
fixtures 13,883 (8,918) 63.86 (41) 13,833 (7,579) 61.09 (33)
Leasehold
improvements 18,484 (11,535) 85.03 (53) 18,477 (9,537) 81.59 (42)
96,175 (77,660) 442,41 (357) 93,096 (70,813) 411,11 (313)
Less: accumulated
depreciation (77,660) (357.24) (70,813) (312.71)
18,515 85.17 22,282 98.40
Included in these figures are assets under capital leases as follows:
FY 2011 FY 2011 FY 2010 FY 2010
CAD$’000 INR/Cr CAD$’000 INR/Cr
Cost 0 0.00 12,771 56.40
Less: accumulated depreciation 0 0.00 (8,035) (35.48)
Net book value 0 0.00 4,736 20.91
The assets under capital leases are held as collateral for the capital lease obligations.
4 OTHER ASSETS
FY 2011 FY 2010
Accumulated Accumulated Accumulated Accumulated
Cost Amortization Cost Amortization Cost Amortization Cost Amortization
CAD$’000 CAD$’000 INR/Cr INR/Cr CAD$’000 CAD$’000 INR/Cr INR/Cr
Deferred financing
expenses — — — — — — — —
Long term
receivable — — — — — — — —
Less: accumulated
amortization — — — —
—— ——
5 GOODWILL
FY 20 11 FY 20 10
CAD$’0 0 0 INR/Cr CAD$’0 0 0 INR/Cr
Balance, beginning of year 4,422 20.34 4,422 19.53
Foreign currency translation adjustment — — — —
B alance, end of y ear 4,422 20.34 4,422 19.53
6 DEFERRED GRANT AND GOVERNMENT A SSISTANCE
FY 20 11 FY 20 10
CAD$’0 0 0 INR/Cr CAD$’0 0 0 INR/Cr
Deferred Grant 858 3.95 858 3.79
858 3.95 858 3.79
In fiscal 2008, Minacs finalized an agreement with the Province of New Brunswick to
receive a forgivable loan in the amount of $2,260,000 (INR 10.4 Cr). The loan provides
for forgiveness subject to terms being met in respect of employment to be created
at a contact centre in that province. To date, Minacs has received $900,000 (INR 4.14
Cr); no amounts were received in fiscal 2010. As at March 31, 2011, the Company
has recorded $858,000 (INR 3.95 Cr) (March 31, 2010: $858,000) (INR 3.79 Cr) as
deferred grant and government assistance. If the terms of the loan are not met by
August 31, 2014, then the amount remaining as deferred grant and government
assistance will need to be repaid.
7 LONG-TERM DEBT
Securred Loans
FY 2011 FY 2010
CAD$’000 INR/Cr CAD$’000 INR/Cr
1) Borrowings from Banks
Swingline Overnight 0 — 914 4.04
Senior revolving facility -Bank of America 0 — 33,000 145.73
Long Term Debt 31,078 142.96 — —
2) Obligation under Capital Leases 0 — 1,317 5.82
31,078 142.96 35,231 159.59
Senior Revolving Facility – Bank of America
This facility bears interest at 0.9% margin over bank prime, banker’s acceptance or
LIBOR rates. The total commitment available under the senior revolving facility is
$40,000,000 (INR 184 Cr), subject to certain borrowing base calculations and certain
other restrictive covenants. The facility is a 365-day facility and, as collateral, the
Company has given a first charge on accounts receivable. In addition, this facility is
guaranteed by Aditya Birla Nuvo Limited. As at March 31, 2011, the Company is in
compliance with applicable bank covenants.
Loan from Bank of America
This loan bears interest at 1.50% margin over US LIBOR rates and matures on June
1, 2011. This loan is unsecured and is guaranteed by Aditya Birla Nuvo Limited. As at
March 31, 2011, the Company is in compliance with debt covenants.
Loan from AV Transworks Limited, Canada
This loan is unsecured, bears interest at 6.05% and is payable on demand.
Interest Rate
The weighted average interest rate on borrowings at March 31, 2011, was 2.62%
(2010: 2.74%).
Interest and financing expenses are comprised of the following amounts:
FY 2011 FY 2010
CAD$’000 INR/Cr CAD$’000 INR/Cr
Interest expense on long-term debt 1,349 6.04 1,468 6.40
Interest charged to subsidiaries (914) (4.09) (777) (3.39)
Interest expense on obligations
under capital leases 30 0.13 246 1.07
Other interest expense (income) 1 0.01 (5) (0.02)
Interest expense 467 2.09 932 4.06
Amortization of deferred finance charges 0 — 83 0.36
Bank charges 85 0.38 591 2.58
Foreign exchange (gain) / loss 483 2.16 (72) (0.31)
Total interest and financing expenses 1,034 4.63 1,534 6.69
(55)
C M Y K
ADITYA BIRLA MINACS WORLDWIDE CANADA INC.
8 RELATED PARTY TRANSACTIONS
Balances and transactions with Aditya Birla Minacs Worldwide Ltd. group of companies
are as follows:
FY 2011 FY 2010
CAD$’000 INR/Cr CAD$’000 INR/Cr
Interest charged by Parent Company 765 3.42 157 0.69
Interest charged to subsidiaries (914) (4.09) (777) (3.39)
Management fee charged to
subsidiaries 9,636 43.13 10,449 45.55
Accounts payable, accrued liabilities
for interest and re 695 3.20 412 1.82
10,183 45.66 10,241 44.67
These transactions are measured at the exchange amounts of consideration
established and agreed to by the related parties.
9 SHARE CAPITAL
The Company is authorized to issue an unlimited number of common shares and an
unlimited number of preferred shares issuable in series.
2011 2010
CAD$’000 INR/Cr CAD$’000 INR/Cr
Number Amount Amount Number Amount Amount
of Shares of Shares
Common Shares 27,945,822 70,071 322.33 27,945,822 70,071 309.43
Redeemable Series A
Preference Shares 20,321,721 20,322 93.48 20,321,721 20,322 89.74
Redeemable Series B
Preference Shares 30,000,000 30,000 138.00 30,000,000 30,000 132.48
120,393 553.81 120,393 531.66
The Company received $20,000,000 (INR 88.32 Cr) on February 24, 2010, and a
further $10,000,000 (INR 44.16 Cr) on March 26, 2010, in cash from its parent company
AV Transworks Limited, Canada, as subscription for Redeemable Series B Preference
Shares that were issued during the year.
The Series A Preference Shares are redeemable at face value at the option of the Company,
at any time after December 31, 2012. The Series B Preference Shares are redeemable at
face value at the option of the Company, at any time after December 31, 2014. However,
there is no redemption obligation on the Company. The preference shareholders are
entitled to a cumulative dividend of 4.50% for Series A and 5% for Series B on the
outstanding preference shares. The payment of dividends is at the discretion of the
Company and subject to availability of profits of the Company. The undeclared dividend
as of March 31, 2011 is $ 3,441,000 (2010: $ 1,029,312) (INR 4.55 Cr).
10 COMMITMENTS AND CONTINGENT LIABILITIES
Capital Leases
The following is a schedule of future annual minimum lease payments for these
capital leases:
Minimum capital lease FY 2011 FY 2010
payments due in CAD$’000 INR/Cr CAD$’000 INR/Cr
2010 — — — —
2011 0 — 1,347 5.95
Total 0 — 1,347 5.95
Less amount representing interest 0 — (30) (0.13)
Present value of net minimum lease
payments 0 — 1,317 5.82
Less : current portion 0 — (1,317) (5.82)
Total capital lease obligations — — 0.06 0.00
Commitments
The Company has operating leases for its premises, furniture and fixtures and certain
computer and communications equipment as well as minimum purchase
commitments for telephone services. The minimum annual payments for the next
five years and thereafter are as follows:
FY 2011 FY 2010
CAD$’000 INR/Cr CAD$’000 INR/Cr
2011 6,616 30.43 7,139 31.63
2012 5,427 24.96 5,845 25.81
2013 5,526 25.42 4,899 21.63
2014 4,366 20.08 4,908 21.67
2015 4,260 19.60 4,366 19.28
Thereafter 5,049 23.23 8,515 37.60
Total commitments 31,244 143.72 35,672 157.53
Contingent Liabilities
On May 17, 2006, the former major shareholder and founder of the Company, Elaine
Minacs, died. The major shareholder of the Company then became the Estate of
Elaine Minacs (the “Estate”) together with certain entities controlled by it (the “EM
Shareholders”) until August 18, 2006, when AV Transworks Limited, Canada, acquired
the shares of the Estate and the EM Shareholders.
The Company is the owner of a $350,000 (INR 1.61 Cr) whole life insurance policy and a
$2,000,000 (INR 9.2 Cr) term life insurance policy insuring the life of Elaine Minacs. The
term life policy is a key-man policy, originally required by the Company’s previous lenders.
The beneficiary of the policies when they were originally acquired was the Company.
During 2005, the beneficiary of the whole life insurance policy was changed at the direction
of Elaine Minacs. Also, during 2005, the beneficiary of the term life insurance policy was
changed to family members related to Elaine Minacs at the direction of Elaine Minacs. In
fiscal 2007, management changed the beneficiary back to the Company. A legal proceeding
has been commenced by the Estate against the Company claiming $5,000,000 (INR 23
Cr) in damages stating that the change in beneficiary was in breach of Elaine Minacs’
employment agreement. Proceeds of $350,000 (INR 1.61 Cr) were paid into escrow
pursuant to an escrow agreement with the Estate. The proceeds of $2,000,000 (INR 9.2
Cr) were paid by the underwriter to the court to be held in trust. The Company has filed
a defense and counterclaim to the initial Estate claim in August 2007 for the proceeds of
the life insurance policies and damages of $500,000 (INR 2.3 Cr). A second claim for
damages of $500,000 (INR 2.3 Cr) and for punitive damages of $100,000 (INR .46 Cr)
was commenced by the Estate in December 2007 stating the Company was in breach of
contract related to an employment agreement. Management has not accrued a contingent
liability for the claims made by the Estate because they believe that the claims have no
merit and the outcome of the proceeding is not determinable.
During the ordinary course of business activities, in addition to the above, the Company
may be a party to claims and may be contingently liable for litigation. Management
believes that adequate provisions have been made in the accounts where required.
Although it is not possible to estimate the extent of potential costs and losses, if any,
management believes that the ultimate resolution of such contingencies will not
have a material adverse effect on the consolidated financial position of the Company.
Guarantees
At March 31, 2011, the Company had $425,000 (INR 1.96 Cr) (2010: $75,000) (INR
0.33 Cr) of outstanding letters of credit to secure customer performance guarantees.
11 RESTRUCTURING AND OTHER CHARGES
In fiscal 2011, the Company terminated a number of employees and performed some due
diligence reviews. Total severance payments and other charges of $424,000 (INR 1.95 Cr)
(2010: $1,343,000) (INR 5.93 Cr) have been charged to restructuring and other charges.
In fiscal 2010, the Company approved a plan to close its Port Hawkesbury site and restart
the operations at the Chatham site. The costs recorded in restructuring relating to lease
exit costs and asset impairment in fiscal 2011 are $Nil (2010: $2,485,000) (INR 10.97).
The details of severance expenses, impaired assets, lease exist costs for the balance of
the remaining lease periods and the credits against lease exit liabilities are given below:
FY 2011 FY 2010
Charged to P&L CAD$’000 INR/Cr CAD$’000 INR/Cr
Lease exit costs — — 2,200 9.59
Other lease exit credits — — ( 687) (2.99)
Write down of property, plant and equipment — — 933 4.07
Serverance and other items 424 1.90 1,112 4.85
Total 424 1.90 3,558 15.51
Outstanding liabilities
Lease exit costs 2,077 9.30 3,235 14.10
Serverance and other items 6 0.03 56 0.24
Accounts payable and accrued
liabilities relating to restructuring
and other charges 2,083 9.32 3,291 14.35
12 INCOME TAXES
Future tax assets consist of the following temporary differences:
FY 2011 FY 2010
Future income tax CAD$’000 INR/Cr CAD$’000 INR/Cr
Operating losses carried forward 15,706 72.25 19,608 86.59
Accounts payable and accrued liabilities 1,358 6.25 1,749 7.72
Property, plant and equipment (415) (1.91) 77 0.34
Deferred revenue & Grant 217 1.00 218 0.96
Other 181 0.83 241 1.06
17,047 78.42 21,893 96.68
Valuation allowance (17,034) (78.42) (21,880) (96.68)
Less : current portion — — — —
13 — 13 —
(56)
C M Y K
ADITYA BIRLA MINACS WORLDWIDE CANADA INC.
Expiry of losses
As at March 31, 2010, the Company has non-capital losses of approximately $77,316,000
(INR 341.43 Cr) available to reduce future years’ income for tax purposes. If not utilized,
these losses will expire as follows:
FY 20 11 FY 20 10
CAD$’0 0 0 INR/Cr CAD$’0 0 0 INR/Cr
2010 — — — —
2011 — — 1,847 8.16
2026 9,156 42.12 21,754 96.07
2027 14,188 65.26 14,188 62.65
2028 19,289 88.73 17,596 77.70
2029 19,445 89.45 19,445 86.87
2030 — — 2,486 10.98
62,078 285.56 77,31 6 341 .43
1 3 FINANCIAL INS TRUMENTS AND RISK MANAGEMENT
Fair Value of Financial Instruments
The fair value of financial instruments, which includes cash and cash equivalents,
accounts receivable and current portions of accounts payable and accrued liabilities,
long-term debt and deferred grant approximates their carrying value due to their,
short-term nature and/or variable interest rates.
Other financial instruments are long-term in nature, which include long-term receivable
and non-current portions of accounts payable and accrued liabilities and deferred
grant, and due to their nature are measured at amortized cost which approximates
their fair value.
Risk Management
The Company’s activities expose it to a variety of financial risks, market risk (including
foreign exchange and interest rate), credit risk and liquidity risk. The Company’s
overall risk management program focuses on the unpredictability of financial markets
and seeks to minimize potential adverse effects on the Company’s financial
performance. The Company does not purchase any derivative financial instruments
for speculative purposes.
Risk management is the responsibility of the corporate finance function. Material
risks are monitored and are regularly discussed with the Audit Committee of the
Board of Directors.
Foreign Currency Risk
The Company has significant operations in Canada and the United States. The
Company’s activities result in exposure to fluctuations in foreign currency exchange
rates due to sale and purchase transactions in a foreign currency. Increases or
decreases in these rates could impact the Company’s net earnings.
As at March 31, 2011, the Company purchased financial instruments to hedge its
foreign currency exposure as follows:
FY 2011
Financial Notional Amount Average Fair Market Value
Instrument Rate to CAD$ Term Gain / (Loss)
CAD$’000 INR (Cr)
US $ forward exchange April 2010 –
rate contracts 72,500 1.1065 March 2012 9,338 40.71
——
Included in revenues is a gain from foreign exchange hedging contracts amounting
to $1,923,000 (INR 8.85 Cr) for the year ended March 31, 2011 (2010: $1,302,000
loss) (INR 5.75 Cr). Included in selling, general and administrative expenses
is a gains from foreign exchange hedging contracts amounting to $186,000
(INR 0.86 Cr) for the year ended March 31, 2011 (2010: $183,000 loss) (INR 0.81
Cr loss). At March 31, 2011, all contracts were designated as hedges for
accounting purposes.
During the year ended March 31, 2011, a substantial portion of the Company’s income
was earned outside of Canada in currencies other than the Canadian dollar. Increases
in the value of the Canadian dollar can reduce net income and declines can result in
increase net income. Based on the income, a +/- 1% change in the United States
dollar would, everything else being equal, have had the following effect on the
Company’s reported net income for the year ended March 31, 2011:
CAD INR/Cr
Average Increase / Increase /
exchange decrease decrease
rate of 1% of 1%
United States dollar 1.01704 $657,000 2.94
The table below presents the percentages of the Company’s accounts receivable,
accounts payable and accrued liabilities that are denominated in US dollars:
March 31, March 31,
2011 2010
Accounts receivable 47% 43%
Accounts payable 0% 57%
Accrued liabilities 62% 86%
During the years ended March 31, 2011 and 2010, the following percentage of
revenues and expenses were earned or incurred in US dollars:
March 31, March 31,
2011 2010
Revenues 43% 58%
Expenses 2% 36%
Interest Rate Risk
The objective of the Company’s interest rate management activities is to minimize
the volatility of the Company’s income. The Company’s interest rate risk primarily
arises from its floating rate debt.
At March 31, 2011, the total long-term debt outstanding was $50,470,000 (INR 232.16
Cr), which is subject to movements in floating interest rates. A +/-1% change in interest
rates would, everything else being equal, have an effect on the Company’s net income
for the year ended March 31, 2011, of approximately +/- $645,000 (INR 2.97 Cr).
Credit Risk
Credit risk arises from cash held with banks and financial institutions, as well as
credit exposure to clients, including outstanding accounts receivable. The maximum
exposure to credit risk is equal to the carrying value of the financial assets. The
objective of managing counterparty credit risk is to prevent losses in financial assets.
The Company assesses the credit quality of the counterparties, taking into account
their financial position, past experience and other factors.
The Company derived 33% or $101,500,000 (INR 466.90 Cr) of its revenues from
multiple contracts with two groups of clients in the automotive and technology sectors
for the year ended March 31, 2011 (2010: 33.09% or $93,390,000) (INR 412.41 Cr).
As at March 31, 2011, multiple contracts with two clients represented 34.6% (2010:
23%) of the accounts receivable balance.
The following table sets out details of the aging of accounts receivable that are
outstanding and related allowance for doubtful accounts:
31-Mar-11 31-Mar-11
CAD$’000 INR/Cr
Current 31,228 143.65
31-60 days 26,369 121.30
61-90 days 10,373 47.72
Over 90 days 762 3.51
Less: allowance for doubtful accounts (290) (1.33)
Total accounts receivable and unbilled revenues, net 68,442 314.83
Included in accounts receivable and unbilled revenue are unbilled revenues of
$19,554,000 (INR 89.95 Cr) (2010: $14,652,000) (INR 64.70 Cr).
The carrying amount of accounts receivable is reduced through the use of an allowance
account and the amount of the loss is recognized in the consolidated statement of
operations and deficit within operating expenses. When a receivable balance is
considered uncollectible, it is written off against the allowance for accounts receivable.
Subsequent recoveries of amounts previously written off are credited against operating
expenses in the consolidated statement of operations and deficit.
31-Mar-11 31-Mar-11
CAD$’000 INR/Cr
Allowance for doubtful accounts – March 31, 2010 (72) (0.33)
Provisions (220) (1.01)
Write-offs 0 —
Foreign currency translation adjustment 2 0.01
Allowance for doubtful accounts – March 31, 2011 (290) (1.33)
14 LIQUIDITY RISK
Liquidity risk arises through the excess of financial obligations over available financial
assets due at any point in time. The Company’s objective in managing liquidity risk is
to maintain sufficient readily available reserves in order to meet its liquidity
requirements at any point in time. The Company achieves this by maintaining sufficient
cash and through the availability of funding from committed credit facilities.
(57)
C M Y K
ADITYA BIRLA MINACS WORLDWIDE CANADA INC.
1 5 MANAGEMENT OF CAPITAL
The Company defines capital that it manages as the aggregate of its shareholders’
equity, cash on the Balance Sheet and interest-bearing debt. The Company’s objective
when managing capital is to ensure that it can provide services to its customers and
returns to its shareholders.
As at March 31, 2011, managed capital was comprised of shareholders’ equity of
$72,127,000 (INR 331.78 Cr) (2010: $48,472,000) (INR 214.05 Cr), cash of $3,524,000
(INR 16.21 Cr) (2010: $4,230,000) (INR 18.68 Cr) and interest-bearing debt of
$50,470,000 (INR 232.16 Cr) (2010: $35,557,000) (INR 157.02 Cr).
The Company manages its capital structure in a manner that ensures operating cash
flow together with cash on its Balance Sheet is greater than interest expense and
current principal debt repayments required to be paid.
1 6 EMPLOYEE BENEFIT PLANS
The Company has defined contribution pension plans. The Company’s expenditures
with respect to these plans were $750,000 (INR 3.45 Cr) during the year ended
March 31, 2011 (2010: $673,000) (INR 2.97 Cr).
17 COMPARATIVE FIGURES
Certain of the comparative figures have been reclassified to conform to the current
year’s presentation.
(58)
MINACS GROUP (USA) Inc.
C M Y K
Consolidated Balance Sheet (Unaudited in US $)
A s At A s At
March 31, 2011 March 31, 2010
US $ INR/Cr US $ INR/Cr
SOURCES OF FUNDS
I Shareholders’ Fund
1. Share capital $302,040 1.37 $302,040 1.36
2. Retained earnings $9,000,150 41.34 $8,102,244 37.61
3. Exchange Fluctuation
on Translation — (0.58) — (1.13)
$9,302,191 42.13 $8,404,284 37.84
II Debt
1. Long-term debt from
holding company $20,768,591 94.05 $20,768,591 93.52
2. Short-term debt from Banks $20,000,000 90.57 $0 —
$50,070,782 226.75 $29,172,875 131.36
APPLICATION OF FUNDS
I Fixed Assets
1. Property, plant and
equipment, net $8,516,338 38.57 $5,410,781 24.36
2. Deferred Development costs $1,079,887 4.89 $1,480,070 6.66
3. Intangibles $1996,102 9.04 $101,961 0.46
4. Goodwill $1,900,000 8.60 $1,900,000 8.56
$13,492,327 61.1 0 $8,892,81 2 40.04
II Investments 18,869,268 85.45 — —
III Current Assets
1. Cash and cash equivalents $850,771 3.85 $1,038,954 4.68
2. Accounts receivable $26,174,035 118.53 $12,759,501 57.46
3. Due from parent compan y $6,264,898 28.37 $1 4,550,822 65.52
4. Prepaid expenses $920,576 4.17 $867,898 3.91
5. Future income taxes -Long term $0 — $361,234 1.63
6. Future income taxes -Short term $385,316 1.74 $256,472 1.15
$34,595,596 156.67 $29,834,881 134.35
Less Liabilities
I Short term
1. Accounts payable and
accrued liabilities $13,958,295 63.21 $7,625,908 34.34
2. Income and other
taxes payable 485.834 2.20 (29,082) (0.13)
3. Obligations under
capital leases $0 — $321,213 1.45
$14,444,129 65.41 $7,918,039 35.66
II Long Term
1. Accounts payable and
accrued liabilities $371,220 1.68 $527,081 2.37
2. Obligations under
capital leases — — $0 —
3. Future income taxes $2,071,061 9.38 $1,109,698 5.00
Total Liabilities $16,886,410 7 6.47 $9,554,818 43.03
Net Assets $17,709,187 80.20 $20,280,063 91.32
To t a l $50,070,782 226.75 $29,1 72,875 1 31.37
Notes :
See accompanying notes to the financial statements.
FE Conversion Rate for US$ to INR as at end of year 45.2854 45.0301
St atement of Operations and Deficit
Unaudited in US $
31/3/2011 31/3/2011 31/3/2010 31/3/2010
US $ INR/Cr US $ INR/Cr
Revenues $115,223,720 525.26 $97,017,763 448.13
Expenditures
Direct expenses $86,645,571 394.99 $72,406,782 334.45
Selling, general and
administrative expenses $15,481,374 70.57 $12,268,172 56.67
$102,126,945 465.56 $84,674,953 391.12
Earnings before interest, income
t axes, depreciation, amortization
and restructuring and
other charges $13,096,775 59.70 $12,342,810 57.0 1
Management fee $6,304,000 28.74 $6,857,000 31.67
Restructuring and other charges $750,000 3.42 $113,188 0.52
Interest and financing expenses $1, 292,158 5.89 $944,475 4.36
Depreciation and amortization $2,693,868 12.28 $2,177,429 10.06
Currency Revaluation Difference 0.37
Provision for (recovery of) income taxes
Current -$34,911 (0.16) $677,717 3.13
Future $1,193,753 5.44 $182,212 0.84
Net income (loss) for the period $897,906 3.73 $1,390,789 6.42
Earnings/(Deficit), beginning of period $8,102,244 37.61 $6,711,455 31.19
Retained earnings, end of period $9,000,150 41.34 $8,102,244 37.61
Notes:
See accompanying notes to the financial statements.
Average FE Conversion Rate for US $ to INR
for the Financial Y ear 45.5865 46.1904
Place: Toronto Deepak J. Patel
Date: April 23, 2010 Chief Executive Officer
Place: Toronto Deepak J. Patel
Date: April 25, 2011 Chief Executive Officer
(59)
MINACS GROUP (USA) Inc.
C M Y K
Notes to Financial St atements, March 31, 20 11
1. NATURE OF BUSINESS
Minacs Group (USA) Inc. (the “Company” or “Minacs USA”) is a provider of
business process outsourcing (“BPO”) solutions. These incorporate contact
centre solutions, integrated marketing services and back office administration.
Minacs USA is a subsidiary of Minacs Worldwide Inc. (“Minacs”).
2. SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of these financial statements in conformity with Canadian
generally accepted accounting principles requires management to make
estimates and assumptions. These estimates and assumptions affect the
reported amounts of assets and liabilities, and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the year. Actual results could differ from
those estimates.
Revenue Recognition
The Company derives revenues through the provision of direct resources to
its customers and consulting arrangements. Payment terms may vary by
contract. The Company recognizes revenues at the time services are
performed and when the price is fixed or determinable and collection is
reasonably assured.
The majority of revenues are recognized based on the billable hours or minutes
rendered as defined in the client contract. The rate per billable hour or minute
charged is based on a predetermined contractual rate as agreed in the underlying
contract. This contractual rate fluctuates based on the Company’s performance
against certain predetermined criteria related to quality and performance. Some
clients are entitled to penalties when the Company is not in compliance with
certain obligations as defined in the client contract. Such penalties are recorded
as a reduction of revenues as incurred based on a measurement of the
Company’s obligation under the terms of the client contract.
For some contracts, the Company is paid by its customer based on
achievement of certain level of revenues or other client-determined criteria
specified in the client contract such as full time equivalents, units processed
or completed contacts. The Company recognizes this performance-based
revenue by measuring its actual results against the performance criteria
specified in the contracts.
Amounts collected from customers prior to the performance of services are
recorded as deferred revenue.
These advances are amortized to revenues in accordance with the Company’s
policy on revenue recognition.
The Company classifies reimbursements received from customers for out-of-pocket expenditures as revenues. The Company incurs out-of-pocket
expenditures such as expenses related to travel, postage and
telecommunications costs for which customers have agreed to reimburse
Minacs USA. The corresponding cost associated with this revenue is recorded
within the direct expenses. Some customers agree to reimburse the Company
for initial training and recruiting costs over a specified period of time. The
revenue for these costs is recorded over the period of time stipulated within
the contract with a corresponding cost recorded within direct expenses.
Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated depreciation.
Depreciation is provided from the first day of the month following the date the
assets are placed into service, on a straight-line basis. Computer software is
depreciated over four to five-year lives. Computer equipment is depreciated
over a four-year life. Communications equipment is depreciated over five to
seven-year lives. Furniture and fixtures are depreciated over seven to ten-year
lives. Leasehold improvements are depreciated over the term of the lease.
Goodwill
Goodwill is not amortized and is tested for impairment on an annual basis.
Such evaluation determines any impairment in value, taking into account the
ability to recover the carrying amount of goodwill from discounted cash flows.
The Company also considers projected future operating results, trends, and
other circumstances in making such evaluations.
In addition to the annual impairment test, the Company will perform an
impairment test if an event occurs or circumstances change that would more
likely than not reduce the fair value of the reporting unit below its carrying
amount.
Intangibles
The Company allocates value to intangible assets acquired relating to customer
and supplier contracts, proprietary processes, and certain business
relationships. Amortization of intangibles is provided on a straight-line basis
over 10 years.
Impairment of Long-lived Assets
The Company reviews its long-lived assets such as property, plant and equipment
and intangibles for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. When indicators of
impairment of the carrying value of the asset exist, and the carrying value is greater
than the net recoverable value (as determined on an undiscounted basis), an
impairment loss is recognized to the extent that the fair value (measured as the
discounted cash flows over the remaining life of the asset when quoted market
values are not readily available) is below the carrying value.
Income Taxes
The Company follows the liability method of accounting for income taxes. Under
this method, future tax assets and liabilities are determined based on differences
between the financial reporting and tax bases of assets and liabilities, and are
measured using substantively enacted tax rates and laws that are expected to be
in effect when the differences are expected to reverse. Valuation allowances are
established when necessary to reduce future income tax assets to the estimated
amount that is more likely than not to be realized.
Foreign Exchange Translation
Assets and liabilities are translated using the exchange rate in effect at the Balance
Sheet date and revenues and expenses are translated at the average rate of the
month the transaction is recorded.
Cash and Cash Equivalents
Cash and cash equivalents consist of unrestricted cash and short-term deposits
having an initial maturity of three months or less.
A s At Marc h 31, 2011 A s At Marc h 31, 2010
US $ INR/Cr US $ INR/Cr
3.3 . Share Capital
Common shares 100 0.00 100 0.00
Contributed surplus 301.940 1.37 $301,940 1.36
302,040 1.37 $302,040 1.36
The Company is authorized to issue an unlimited number of common shares.
4.4. Debt
Loan from Parent Company 20,768,591 94.05 20,768,591 93.52
20,768,591 94.05 $20,768,591 93.52
5.5 . Short term debt
from Bank 20,000,000 90.57 — —
20,000,000 90.57 — —
(60)
MINACS GROUP (USA) Inc.
C M Y K
5 PROPERTY, PLANT AND EQUIPMENT
A s At 31st March, 2011 A s At 31st March, 2010
Gross A ccumulated Gross A ccumulated Gross A ccumulated Gross A ccumulated
Cost Depreciation Cost Depreciation Cost Depreciation Cost Depreciation
In US $ In US $ In INR/Cr In INR/Cr In US $ In US $ In INR/Cr In INR/Cr
Computer software 9,267,800 (5,400,174.6) 41.97 (24.45) 6,367,256 (4,581,077) 28.67 (20.63)
Computer equipment 9,500,299 (6,936,869.2) 43.02 (31.41) 7,601,383 (6,107,934) 34.23 (27.50)
Communications equipment 1,176,689 (924,477.3) 5.33 (4.19) 934,194 (905,702) 4.21 (4.08)
Furniture and fixtures 2,425,174 (1,567,184.7) 10.98 (7.10) 2,388,900 (1,458,332) 10.76 (6.57)
Leasehold improvements 2,576,542 (1,601,460.5) 11.67 (7.25) 2,494,614 (1,322,519) 11.23 (5.96)
24,946,504 (16,430,166.3) 112.97 (74.40) (19,786,346) (14,375,564.9) 89.10 (64.73)
Less: Accumulated depreciation (16,430,166) (74.40) (14,375,565) (64.73)
8,516,338 38.57 5,410,781 24.36
Included in these figures are assets under capital leases as follows:
In US $ INR (Cr) In US $ INR (Cr)
Cost — — 5,034,046 22.67
Less: Accumulated depreciation — — (4,289,108) (19.31)
Net book value $0 — $744,938 3.35
Conversion rates for US $ to INR 45.29 45.03
A s At Marc h 31, 2011 A s At Marc h 31, 2010
US $ INR/Cr US $ INR/Cr
6. INT ANGIBLES
Cost 2,857,962 12.94 $643,962 2.90
Less: Accumulated depreciation (861,860) (3.90) (542,001) (2.44)
Net book value 1,996,102 9.04 $101,961 0.46
7. GOODWILL
Balance, beginning of period 1,900,000 8.60 $1,900,000 8.56
Foreign currency translation
adjustment — — — —
Balance, end of period 1,900,000 8.60 $1,900,000 8.56
8. FUTURE INCOME TAXES
Accounts payable and accrued
liabilities 674,418 3.05 $512,340 2.31
Other 98,065 0.44 $105,366 0.47
772,483 3.50 $617,706 2.78
Valuation allowance — — — —
Less: Current portion (385,315) (1.74) ($256,472) (1.15)
387.168 1.75 $361,234 1.63
Future tax liabilities consist
of the following temporary
differences:
Property, plant and equipment (2,444,169) (11.07) (299,690) (1.35)
Other assets (14,059) (0.06) (810,008) (3.65)
(2,458,228) (11.13) (1,109,698) (5.00)
9. COMMI TMENTS AND CONTINGENCIES
Capital Leases
The following is a schedule of future minimum lease payments for these capital leases:
A s At Marc h 31, 2011 A s At Marc h 31, 2010
Capital Leases US $ INR/Cr US $ INR/Cr
2008 — — — —
2009 — — — —
2010 — — $0 —
2011 — — $329,278 1.48
Total minimum lease payments — — $329,278 1.48
Less: Amount representing
interest — — ($8,066) (0.04)
Present value of net minimum
lease payments — — $321,212 1.45
Less: Current portion — — $321,212 1.45
Total capital lease obligations — — $0 —
Commitments
The Company has operating leases for its premises, furniture and fixtures and certain
computer and communications equipment as well as minimum purchase commitments
for telephone services. The minimum annual payments for the next five years and
thereafter are as follows:
A s At Marc h 31, 2011 A s At Marc h 31, 2010
US $ INR/Cr US $ INR/Cr
2011 — — $0 —
2012 2,680,633 12.14 $1,457,358 6.56
2013 2,709,412 12.27 $1,402,668 6.32
2014 2,560,272 11.59 $1,402,668 6.32
2015 723,383 3.28 $1,402,668 6.35
2016 86,540 0.39 467,556.00 —
Thereafter — — $0 —
Total commitments 8,760,240 39.67 $6,132,918 25.55
Contingent Liabilities
During the ordinary course of business activities, the Company may be a party to
claims and may be contingently liable for litigation. Management believes that
adequate provisions have been made in the accounts where required. Although it
is not possible to estimate the extent of potential costs and losses, if any,
management believes that the ultimate resolution of such contingencies will not
have a material adverse effect on the financial position of the Company.
10. RELATED P ARTY TRANSACTIONS
Transactions with Related Parties are as follows:
A s At Marc h 31, 2011 A s At Marc h 31, 2010
US $ INR/Cr US $ INR/Cr
Management fees charged by
Minacs Worldwide Inc. 6,304,000 28.74 $6,857,000 31.86
Interest charged by Minacs
Worldwide Inc. 939,472 4.28 $712,666 3.31
Interest charged to IT Services (688,285) (3.14) (794,836) (3.69)
Reimbursable expenses - Aditya
Birla Minacs Worldwide Ltd. 741,691 3.38 $149,428 0.69
These transactions are measured at the exchange amounts of consideration established
and agreed to by the related parties.
11. EMPLOYEE BENEFI T PLANS
The Company has defined contribution pension plans. The Company’s pension
plan expenditures were $8278 (Previous Year: $ 4,160) (INR .04 Cr) (Previous
Year: INR 0.02 Cr) during 2011.
(61)
MINACS GROUP (USA) Inc.
C M Y K
12 INTEREST AND FINANCING EXPENSES
Interest and financing expenses are comprised of the following amounts:
A s At Marc h 31, 2011 A s At Marc h 31, 2010
US $ INR/Cr US $ INR/Cr
Interest expense on long-term debt 939,472 4.28 $712,666 3.29
Interest expense on obligations
under capital leases 8,066 0.04 $60,373 0.28
Bank Loan Interest 291,758 1.33 $0 —
Other interest expense (income) (284) (0.00) $21,850 0.10
Interest expense 1,239,012 5.65 $794,888 3.67
Amortization of deferred
finance charges — — — —
Bank charges 49,252 0.22 $42,868 0.20
Foreign exchange loss (gain) 3,894 0.22 106,718 0.49
Total 1,292,158 5.89 $944,475 4.36
(62)
BUREAU OF COLLECTION RECOVERY, LLC
C M Y K
Place: Toronto Deepak J. Patel
Date: April 25, 2011 Chief Executive Officer
BALANCE SHEE TS
(Unaudited in US$)
As At March 31, 2011
US $ INR/Cr
ASSETS
Current assets
Cash and cash equivalents 743,420 3.37
Client cash held in trust 446,191 2.02
Accounts receivable 1,945,000 8.81
Prepaid expenses 61,208 0.28
Total current assets 3,195,819 14.48
Fixed assets
Office equipment 278,620 1.26
Leasehold improvements 55,977 0.25
Total fixed assets 334,597 1.51
Less: Accumulated depreciation
and amortization 156,268 0.71
Net fixed assets 178,329 0.80
Other assets
Deposits
Future income taxes - Short term 237,540 1.08
Corporate Federal taxes 466,341 2.11
Due from Parent Company 1,305,395 5.91
Total other assets 2,009,276 9.10
Total assets $ 5,383,424 24.38
LIABILITIES AND MEMBERS’ EQUITY
Current liabilities
Trust cash payable to client 446,191 2.02
Accounts payable & accrued expenses 1,031,352 4.67
Accrued payroll 480,561 2.18
State taxes payable 121,825 0.55
Total current liabilities 2,079,929 9.42
Long-term liabilities
Future income taxes 182,795 0.83
Total long-term liabilities 182,795 0.83
Shareholders’ funds
Share capital 20,500 0.09
Retained earnings 3,100,200 14.12
Exchange fluctuation on transaltion — (0.08)
Total shareholders’ funds 3,120,700 14.13
Total liabilities and members’ equity $ 5,383,424 24.38
Notes :
See accompanying notes to the financial statements.
FE Conversion Rate for US$ to INR as at end of year 45.29
Place: Toronto Deepak J. Patel
Date: April 25, 2011 Chief Executive Officer
STATEMENT OF INCOME AND EXPENDI TURE FOR THE
PERIOD 1ST JUNE 2010 TO 31ST MARCH 2011
Period Ended 31st March, 2011
US $ INR/Cr
Revenues
Commission revenue 11,203,177 51.23
Operating expenses
Personnel and related expenses 7,026,886 32.13
Communication expenses 999,357 4.57
Other operating expenses 2,979,382 13.62
Total operating expenses 11,005,625 50.32
Operating income 197,552 0.91
Other income (expenses)
Management fee 670,000 3.06
Depreciation and amortization 62,452 0.29
Interest income (37,780) (0.17)
Currency revaluation differ ence — 0.06
Earnings before tax (497,120) (2.33)
Current income tax (468,687) (2.14)
State tax 5,000 0.02
Future tax (52,399) (0.24)
Net income (loss) for the period 18,966 0.03
Earnings/(Deficit), beginning of period 3,081,234 14.09
Retained earnings, end of period 3,100,200 14.12
Notes :
See accompanying notes to the financial statements.
FE Conversion Rate for US$ to INR as at end of year 45.73
(63)
BUREAU OF COLLECTION RECOVERY, LLC
C M Y K
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
Business Organization
Bureau of Collection Recovery, LLC is a third-party collection agency which collects
pre-charge offs, post charge offs and primary and secondary accounts for nationally
recognized banks and other creditors. The Company’s headquarters is located in
Eden Prairie, Minnesota.
Client Cash Held in Trust and Trust Cash Payable to Clients
The Company deposits all cash received from the collection of client placements
in separate trust bank accounts as required by client contracts. Client cash held in
trust is not the property of the Company.
Accounts Receivable
Trade accounts receivable are initially recorded at fair value upon completion of
service to clients. They are stated net of allowance, which primarily represents
estimated losses due to disputes with clients or inability of certain clients to make
the required payments. When determining the allowances, the Company takes
several factors into consideration, including prior history of accounts receivable,
credit activity and write-offs, the overall composition of accounts receivable aging,
the types of clients, and day-to-day knowledge of specific clients. Changes in the
allowance impact commission income or bad debt expense. No allowance for
doubtful accounts was deemed necessary at March 31, 2011. The Company’s
policy for charging interest on delinquent receivables varies by terms stated in
individual contracts. Accounts receivable are considered past due on an individual
client basis.
Revenue and Expense Recognition
The Company earns commissions on amounts collected from debtors on behalf of
its clients. Commission income is recognized as client placements are collected
from debtors, at which time the Company has rendered substantially all of the
services necessary to earn its commission.
Fixed Assets
Fixed assets are stated at cost. Depreciation is provided using the straight-line
method for financial reporting purposes based on estimated service lives. The
estimated lives range from 3 to 5 years. Leasehold improvements are amortized
over the lives of the respective leases or the service lives of the improvements,
whichever is shorter. Accelerated methods of depreciation are used for income
tax reporting purposes. Expenditures for repairs and maintenance are charged
against operations. Renewals and betterments that materially extend the life of
the asset are capitalized.
Advertising Costs
Advertising costs are generally charged to operations in the year incurred and totaled
$3,162 for the period ended March 31, 2011.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results could differ
from those estimates.
Basis of Presentation
The accompanying financial statements are presented in accordance with
accounting principles generally accepted in the United States of America (US GAAP)
as codified by the Financial Accounting Standards Board.
Financial Instruments
The Company’s financial instruments consist of accounts receivable, other
receivable, accounts payable and trust cash payable to clients. It is management’s
opinion that the Company is not exposed to significant interest rate or credit risks
arising from these instruments. Unless otherwise noted, the fair values of these
financial instruments approximate their carrying values.
NOTE 2 – COLLECTIONS ACTIVITY
Gross collections activity for the period ended March 31, 2011, was as follows:
FY’11
Customer Placements Received $ 1,335,520,831
Collection of Placements $ 30,358,100
Commissions Earned $ 11,203,177
NOTE 3 – BUSINESS AND CREDIT CONCENTRATIONS
Commission revenue from customers that exceed 10% of total commission
revenue for the period ended March 31, 2011, was as follows:
FY’11
Customer A 24.2%
Customer B 18.2%
Customer C 18.0%
Customer D 16.8%
Customers’ accounts receivable balances that exceeded 10% of total accounts
receivable balances at March 31, 2011, was as follows:
FY’11
Customer A 48.9%
Customer B 37.7%
NOTE 4 - RELATED PARTY TRANSACTIONS
Intercompany Dues
During the period ending 31
st
March 2011, the Company made unsecured interest
bearing cash advances to the parent company. The Company also owes
management fees to the parent company. Net balance due from the parent company
totaled to $ 1,400,075.
NOTE 5 – OPERATING LEASES
Building Lease – Eden Prairie
The Company entered into an operating lease agreement dated January 1, 2008,
to lease its headquarters in Eden Prairie, Minnesota. The initial lease term was for
three years expiring on December 31, 2010. The lease was then extended by
three years expiring on December 31, 2013. The monthly base rent is $15,000
plus additional rental payments for other operating expenses. During the first lease
year, the additional rental costs were included in the base rents. Subsequent to
year end, the lease was amended for the Company to pay all maintenance,
insurance, and taxes on the leased property.
Building Lease – Willmar
The Company entered into an operating lease on July 18, 2007, for a one year term
commencing on October 1, 2007 and expiring September 30, 2008, to lease office
facilities in Willmar, Minnesota. The agreement called for base rent of $ 39,062
payable in monthly installments of $ 3,255 plus additional rental payments for other
operating expenses. On September 15, 2008, a new lease commenced expiring
on September 14, 2013. The new lease agreement requires base monthly rent
payments of $ 5,000 for the first three years and $ 5,475 for years four and five.
Co-location Agreement
On November 30, 2007, the Company entered into a co-location license agreement
for the use of space located in Minnetonka, Minnesota, pursuant to the Licensor’s
agreement. Minimum lease payments of $ 4,000 per month are required for three
years ending November 30, 2010.
The following is a schedule of future minimum rental payments required under
these operating lease agreements:
Year Ending
December 31, Amount
2010 $ 284,000
2011 61,663
2012 65,700
2013 46,538
Total minimum rental payments $ 457,901
Other Leases
The Company is obligated under various operating lease agreements expiring at
various dates through 2013. Monthly payments on these leases range from $ 292
to $ 689.
The following is a schedule of future minimum lease payments required under
these operating lease agreements:
Year Ending
December 31, Amount
2010 $ 11,764
2011 11,764
2012 11,764
2013 3,500
Total minimum lease payments $ 38,792
(64)
MINACS WORLDWIDE SA de CV
CMYK
BB Balance Sheet
AA As at March 31, 2011 111 1 AA As at March 31, 2011 100 0
PP Pesos INR/Cr PP Pesos INR/Cr
II I Sources of Funds
Shareholders’ funds
Share capital
Shares issued 50,000 0.02 50,000 0.02
Cumulative translation
adjustment — —
Deficit (50,000) (0.02) (50,000) (0.02)
— — — —
Debt — — — —
TT Totalal al — — — —
IIII II Application of Funds
Fixed Assets — — — —
Current AA Assets
Cash and cash equivalents — — — —
Accounts receivable — — — —
Prepaid expenses — — — —
— — — —
LL Less Current Liabilities — — — —
Bank Indebtedness — — — —
Other liabilities — — — —
Net Current AA Assets — — — —
Total — — — —
See accompanying notes to the financial statements.
Note
Conversion rate for Pesos to INR 3.79 3.62
Currency factor 10,000,000 10,000,000
Statements of Operations and Deficit
YY Year Ended YY Year Ended
March 31, 2011 111 1 March 31, 2011 100 0
PP Pesos INR/Cr PP Pesos INR/Cr
RR Ree evv venues — — — —
Direct expenses — — — —
Selling, general and
administrative expenses — — — —
Earnings before interest
expense, income taxes,
depreciation and amortization — — — —
Depreciation and amortization — — — —
Interest and financing expenses — — — —
Provision for (recovery of)
income taxes — — — —
Net income (loss)
for the period — — — —
Deficit, beginning of period (50,000) (0.02) (50,000) (0.02)
Deficit, end of period (50,000) (0.02) (50,000) (0.02)
Note
Conversion rate for Pesos to
INR at 31 March, 2011 3.619 3.619
Currency factor 10,000,000 10,000,000
(65)
MINACS WORLDWIDE SA de CV
CMYK
Notes to Financial Statements, March 31, 2011 111 1
11 1 NATURE OF BUSINESS
Minacs Worldwide SA de CV (the “Company” or “Minacs Mexico”) is a
provider of business process outsourcing (“BPO”) solutions. The
Company is a subsidiary of Minacs Worldwide Inc. (“Minacs”). Minacs
Mexico is an inactive subsidiary.
22 2 SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of these financial statements in conformity with
Canadian generally accepted accounting principles requires management
to make estimates and assumptions. These estimates and assumptions
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the year.
Actual results could differ from those estimates.
Revenue Recognition
The Company derives revenues through the provision of direct resources
to its customers and consulting arrangements. Payment terms may vary
by contract. The Company recognizes revenues at the time services are
performed and when the price is fixed or determinable and collection is
reasonably assured.
The majority of revenues are recognized based on the billable hours or
minutes rendered as defined in the client contract. The rate per billable
hour or minute charged is based on a predetermined contractual rate
as agreed in the underlying contract. This contractual rate fluctuates
based on the Company’s performance against certain predetermined
criteria related to quality and performance. Some clients are entitled
to penalties when the Company is not in compliance with certain
obligations as defined in the client contract. Such penalties
are recorded as a reduction of revenues as incurred based on a
measurement of the Company’s obligation under the terms of the
client contract.
For some contracts the Company is paid by its customer based on
achievement of certain level of revenues or other client-determined
criteria specified in the client contract such as full time equivalents,
units processed or completed contacts. The Company recognizes this
performance-based revenue by measuring its actual results against the
performance criteria specified in the contracts.
The Company classifies reimbursements received from customers for
out-of-pocket expenditures as revenues. The Company incurs out-of-pocket expenditures such as expenses related to travel, postage and
telecommunications costs for which customers have agreed to
reimburse Minacs. The corresponding cost associated with this revenue
is recorded within direct expenses. Some customers agree to reimburse
the Company for initial training and recruiting costs over a specified
period of time. The revenue for these costs are recorded over the period
of time stipulated within the contract with a corresponding cost recorded
within direct expenses.
Income Taxes
The Company follows the liability method of accounting for income taxes.
Under this method, future tax assets and liabilities are determined based
on differences between the financial reporting and tax bases of assets
and liabilities, and are measured using substantively enacted tax rates
and laws that are expected to be in effect when the differences are
expected to reverse. Valuation allowances are established when
necessary to reduce future income tax assets to the estimated amount
that is more likely than not to be realized.
Foreign Exchange Translation
Assets and liabilities are translated using the exchange rate in effect at
the Balance Sheet date and revenues and expenses are translated at
the average rate of the month the transaction is recorded.
Cash and Cash Equivalents
Cash and cash equivalents consist of unrestricted cash and short-term
deposits having an initial maturity of three months or less.
22 2 SHARE CAPITAL
2011 111 1 2011 100 0
PP Pesos INR/Cr PP Pesos INR/Cr
Common Shares 50,000 000 0 0.02 50,000 000 0 0.02
50,000 000 0 0.02 50,000 000 0 0.02
Authorized Share Capital
The Company is authorized to issue an unlimited number of common shares.
(66)
MINACS LIMITED, UK
CMYK
BALANCE SHEET T T AA AS AA AT 31ST MARCH, 2011 111 1
Notes As At As At
31st March, 2011 31st March, 2010
£ INR/Cr £ INR/Cr
II I Sources of Funds
Shareholders’ Funds
Called up share capital 4 1,000 0.01 1,000 0.01
Profit and loss account 332.824 2.63 267,698 2.04
Exchange fluctuation on
translation (0.21) (0.23)
333,824 2.43 268,698 1.82
Loan Funds — — — —
Total 333,824 2.43 268,698 1.82
IIII II Application of Funds
Fixed assets — — — —
Investments 5 15,277 0.10 15,277 0.10
Current assets
Debtors 6 898,081 6.52 707,809 4.80
Cash at bank and in hand 124,741 0.91 146,936 1.00
1,022,822 7.43 854,745 5.80
Less : Current liabilities 7 (704,275) (5.11) (601,324) (4.08)
Net current assets 318,547 2.13 253,421 1.72
Total 333,824 2.42 268,698 1.82
Notes:
See accompanying notes to the financials statements.
FE Conversion Rate for GBP to INR as at year end 72.60 67.87
PP Profit and Loss AA Account for the year ended 31st March, 2011 111 1
YY Year Ended YY Year Ended
31/3/2011 111 1 31/3/2011 100 0
££ £ INR/Cr ££ £ INR/Cr
Sales 2,263,039 16.00 2,392,193 18.23
Total2,263,039 11 16.000 02,392,193 18.23
Direct Costs
Wages and salaries 1,458,156 10.31 1,574,508 12.00
Employer’s NI contributions 143,364 1.01 152,017 1.16
Recruitment advertising 26 0.00 — —
Staff pension scheme costs 8,396 0.06 10,127 0.08
Placement & interview expenses 6,896 0.05 3,800 0.03
Staff training 868 0.01 1,168 0.01
Travel expenses 38,206 0.27 27,035 0.21
Health & safety costs 1,422 0.01 1,676 0.01
TT Totalal al 1,657,332 11 11,72 1,770,332 13.49
Gross Profit 605,707 4.28 621,862 4.744 4
Administration
Wages and salaries 8,733 0.06 244,300 1.86
Rent payable — — 29,100 0.22
Printing, postage and stationery 2,996 0.02 4,539 0.03
Telephone 3,209 0.02 3,602 0.03
Motor vehicle leasing 1,250 0.01 — —
Entertaining 1,149 0.01 2,443 0.02
Legal and professional 11,412 0.08 5,430 0.04
Accountancy 37,015 0.26 38,210 0.29
Audit 6,000 0.04 6,000 0.05
Bank charges 380 0.00 9 0.00
Exchange rate (gain)/loss (9,505) (0.07) 639 0.00
Payroll services 5,500 0.04 6,000 0.05
General expenses 55,219 0.39 (240,918) (1.84)
Recruitment costs — — — —
Subscriptions 101 0.00 4,681 0.04
Management charges 329,000 2.77 401,500 3.06
515,458 3.65 505,534 3.85
Financial
Other operating income (134) (0.00) (142) (0.00)
Interest on overdue tax — — — —
(134) (0.00) (142) (0.00)
Total expenses 515,324 3.64 505,392 3.85
Net profit/(loss) before taxation 90,382 0.64 116,470 0.89
Less : Corporation tax based on
profits for the period (25,256) (0.18) (32,567) (0.25)
Net profits/(loss) for the year 65,126 0.46 83,902 0.64
Balance brought forward 267,698 2.17 183,796 1.53
Balance carried forward 332,824 2.63 267,698 2.17
Notes:
Please see accompanying notes to the financials
FE Conversion Rate for GBP to INR for the Financial Year 70.7172 76.1983
Place: Toronto Deepak Patel
Date: April 25, 2011 CEO
Place: Toronto Deepak Patel
Date: April 25, 2011 CEO
(67)
MINACS LIMITED, UK
CMYK
11 1.. . ACCOUNTING POLICIES
1.1. AA Accounting Convv vention
The financial statements are prepared under the historical cost convention and
in accordance with applicable accounting standards, and in accordance with
the Financial Reporting Standard for Smaller Entities (effective April 2008).
1.2. Turnover
Turnover represents the total invoice value of sales made during the year stated
net of value added tax.
1.3. Leasing
Rentals payable under operating leases are charged against income on a straight
line basis over the lease term.
1.4. Investments
Fixed asset investments are stated at cost less provision for permanent
diminution in value.
1.5. Pensions
The pension costs charged in the financial statements represent the contribution
payable by the Company during the period.
The regular cost of providing retirement pensions and related benefits is charged
to the Profit and Loss Account over the employees' service lives on the basis
of a constant percentage of earnings.
1.6. Foreign Currencies
Monetary assets and liabilities denominated in foreign currencies are translated
into sterling at the rates of exchange prevailing at the accounting date.
Transactions in foreign currencies are recorded at the date of the transactions.
All differences are taken to the Profit and Loss Account.
1.7. Group Accounts
The Company is entitled to the exemption under Section 398 of the Companies
Act, 2006, from the obligation to prepare group accounts.
2.2. 2. TURNOVER
The total turnover of the Company for the year has been derived from its principal
activity wholly undertaken in the UK and Ireland.
3.3. 3. PENSION COSTS
The Company operates a defined contribution pension scheme in respect of the
employees. The Scheme and its assets are held by independent managers.
The pension charge represents contributions due from the Company and amounted
to £ 8,396; INR 0.06 Cr (Previous Year: £ 10,127; INR 0.07 Cr).
4.4. 4. SHARE CAPITAL As At As At
31st March, 2011 31st March, 2010
££ £ INR/Cr ££ £ INR/Cr
Authorised
1,000 Ordinary shares of £1 each 1,000 0.01 1,000 0.01
Allotted, called up and fully paid
1,000 Ordinary shares of £1 each 1,000 0.01 1,000 0.01
Equity Shares
1,000 Ordinary shares of £1 each 1,000 0.01 1,000 0.01
5.5. 5. INVESTMENTS IN SUBSIDIARY UNDERTAKINGS
Cost of Shares
Opening balance 15,277 0.11 15,277 0.10
Additions/(Deletions during the year) — — — —
Closing balance 15,277 0.11 15,277 0.10
Net Book Values
Opening balance 15,277 0.11 15,277 0.10
Additions/(Deletions during the year) — — — —
Closing balance 15,277 0.11 15,277 0.10
Holdings of 20% or more
The Company holds 20% or more of the share capital of the following companies:
Subsidiary undertaking Minacs Worldwide GmbH Minacs Worldwide GmbH
Country of Registration Germany Germany
Nature of Business Provider of Outsourced Provider of Outsourced
solutions solutions
Class of Shares Held Euro Share Euro Share
Proportion of Shares Held 100% 100%
6.6. 6. DEBTORS
Trade Debtors 489,674 3.55 700,210 4.75
Amounts owed by group undertakings 404,402 2.94 5,104 0.03
Other debtors 1,126 0.01 1,126 0.01
Prepayments and accrued income 2,879 0.02 1,369 0.01
898,081 6.52 707,809 4.80
7.7. 7. CURRENT LIABILITIES
Amount falling due within one year
Trade creditors 6,243 0.05 5,923 0.04
Amounts owed by group undertakings 522,810 3.80 359,437 2.44
Corporation tax 25,306 0.18 32,651 0.22
Other taxes and social security costs 95,916 0.70 153,452 1.04
Accruals and deferred income 54,000 0.39 49,861 0.34
704,275 5.11 601,324 4.08
Year Ended Year Ended
31st March, 2011 31st March, 2010
££ £ INR/Cr ££ £ INR/Cr
8.8. 8. OPERATING PROFIT / (LOSS)
Operating profit/(loss) is stated
after charging:
Auditors’ remuneration 6,000 0.04 6,000 0.05
Pension Costs 8,396 0.06 10,127 0.08
9.9. 9. TAX ON PROFIT/ (LOSS) ON
ORDINARY ACTIVITIES
Analysis of charge in period
Current Tax
UK corporation tax 25,256 0.18 32,567 0.25
10. FINANCIAL COMMITMENTS
Expiry date
Within one year — — — —
Between one and five years — — — —
— — — —
11. RELATED PARTY TRANSACTIONS
Sales to
Minacs Kft, Hungary 47,034 0.33 61,887 0.47
Minacs GmbH, Germany 51,687 0.37 3,155 0.02
Reimbursement of expenses/fees
Minacs GmbH, Germany 72,825 0.51 70,031 0.53
Miancs Worldwide Inc, Canada 447,219 3.16 160,582 1.22
Receivables from
Minacs Kft, Hungary 56,664 0.41 5,104 0.03
Minacs GmbH, Germany 347,737 2.52 (8,846) (0.06)
404,402 2.94 (3,742) (0.03)
Payable to
Minacs Worldwide Inc, Canada 522,810 3.80 359,437 2.44
12. ULTIMATE PARENT UNDERTAKING
The Company is wholly owned subsidiary of Minacs Worldwide Inc, a company
incorporated in Canada. The ultimate parent Company is Aditya Birla Nuvo Limited, a
Company incorporated in India.
(68)
MINACS WORLDWIDE GMBH, GERMANY
CMYK
Unaudited Balance Sheet AA As at 31st March, 2011 111 1
Balance Sheet as of March 31, 2011
31.03.2011 31.03.2011 31.03.2010 31.03.2010
INR/Cr INR/Cr
Sources of Funds
I Shareholders’ Funds
1. Share capital authorized
and fully paid in 25,000 0.16 25,000 0.15
2. Profit carried forward 2,094,247 13.37 1,783,414 11.85
3. Profit current year 253,936 1.53 310,833 2.04
4. Exchange fluctuations
on conversion — 0.09 — (0.96)
Total equity 2,373,183 15.15 2,119,247 13.08
II Loan Funds — — — —
2,373,183 15.15 2,119,247 13.08
Application of Funds
II I Fixed Assets
1. EDP software 998 0.01 998 0.01
2. Leasehold improvements 12,553 0.08 12,553 0.08
3. Furniture and equipment 29,364 0.19 27,422 0.17
4. Office equipment 42,898 0.27 37,980 0.23
5. Deferred development costs — — 2,442 0.02
5. Low-value-equipment at cost — — — —
Gross block 85,813 0.55 81,395 0.50
6. Accumulated depreciation (68,826) (0.44) (61,114) (0.38)
Total net block 16,987 0.11 20,281 0.13
IIII II Investments
1. Investments in Subsidiary
Company - Hungary 11,050 0.07 11,050 0.07
IIIIII III Current Assets
1. Cash at bank and in hand 110,969 0.71 166,461 1.03
2. Accounts receivable 1,649,627 10.53 1,752,586 10.82
3. Inter-company receivables 960,210 6.13 499,957 3.09
4. Prepaid expenses 30,265 0.19 42,249 0.26
5. Other assets 1,228 0.01 2,500 0.02
Total current assets 2,752,299 17.57 2,463,753 15.21
Less Liabilities
1. Accounts payable (1,522) (0.01) 3,219 0.02
2. Inter-company payables — — — —
3. Accrued expenses 450,720 2.88 368,169 2.27
4. Other liabilities (42,044) (0.27) 4,449 0.03
Total liabilities 407,153 2.60 375,837 2.32
Net current assets 2,345,146 14.97 2,087,916 12.89
Total 2,373,183 15.15 2,119,247 13.08
The accompanying notes to the
Financial Statements are an
intergral part of this Balance Sheet
Conversion Rate for Euro to INR
as at year end rates 63.84 61.74
Unaudited Profit and Loss AA Account for the year ended
31st March, 2011
April 1, 2010 to April 1, 2010 to April 1, 2009 to April 1, 2009 to
March 31, 2011 March 31, 2011March 31, 2010 March 31, 2010
INR/Cr INR/Cr
Income
1. Revenues 6,886,453 41.50 7,363,240 48.31
2. Interest income (1) (0.00) 59 0.00
6,886,453 41.50 7,363,299 48.31
Expenditure
3. Staff cost 5,090,971 30.68 5,213,485 34.20
4. Selling, general and
administrative expenses 485,081 2.92 444,458 2.92
5. Management fees 941,410 5.67 1,267,897 8.32
Total 6,517,462 39.28 6,925,840 45.44
6. Earnings before interest,
income taxes and depreciation 368,990 2.22 437,459 2.87
7. Depreciation on fixed assets 8,852 0.05 7,377 0.05
8. Currency revaluation difference 0.01
9. Interest expenses — — — —
10. Earnings before income taxes 360,139 2.17 430,082 2.82
11. Income taxes 106,202 0.64 119,249 0.78
12. Net income 253,936 1.53 310,833 2.04
The accompanying notes to the
Financial Statements are an integral
part of this Statement of Income
The average conversion rates for
Euro to INR for the financial year 60.27 65.60
(69)
MINACS WORLDWIDE GMBH, GERMANY
CMYK
Unaudited Cash Flow Statement for the year ended
31st March, 2011
April 1, 2010 to April 1, 2010 to April 1, 2009 to April 1, 2009 to
March 31, 2011 March 31, 2011March 31, 2010 March 31, 2010
INR/Cr INR/Cr
Net earnings (Incl. FE Rate difference) 253,936 1.53 310,833 2.04
Depreciation of fixed assets 8,852 0.05 7,377 0.05
Changes in operating assets
and liabilities
– Accounts receivables and
inter-company receivables (358,434) (2.29) (111,326) (0.69)
– Prepaid expenses and other assets 13,256 0.08 1,170 0.01
– Deferred expenses — — — –
– Accounts payables and inter-company
payables (4,741) (0.03) (84,519) (0.52)
– Accrued expenses and
other liabilities 36,057 0.23 (47,689) (0.29)
Cash flow used in operating activities (51,074) (0.42) 75,847 0.81
Purchase of fixed assets /
deferred expenses (4,418) (0.03) (11,795) (0.07)
Correction profit carried forward — — — —
Decrease/Increase in cash
during the year (55,492) (0.45) 64,052 0.74
Cash at the beginning of the year 166,461 1.06 102,409 6.07
Cash at the end of the year 110,969 0.71 166,461 6.81
Notes to Financial Statements as of March 31, 2011 111 1
I.I. I. General Information
The Company was set up on May 17, 2000, through notarized contract under the former
firm Insartor Holding SECHZEHNTE GmbH and was registered on
July 04, 2000, with the commercial register at the district court in Munich (HRB 131937).
The firm Insartor Holding SECHZEHNTE GmbH was changed in Minacs Worldwide
GmbH with the shareholders resolution dated August 04, 2000. At the same time it
was concluded to transfer the Company's residence from Munich to Russelsheim.
The change of the former firm Insartor Holding SECHZEHNTE GmbH in Minacs
Worldwide GmbH as well as the residence transfer were registered on March 07, 2001,
under HRB 3872 with the commercial register at the district court in Russelsheim.
Within the course of concentration of keeping the commercial–, cooperative
association– and partnership register and the step-by-step establishment of an electronic
register Minacs Worldwide GmbH is registered from January 01, 2002, with the
commercial register at the district Court in Darmstadt under HRB 83872.
The subscribed capital of the Company amounts to EUR 25.000,00 and is paid in
totally.
The solely shareholder is Minacs Ltd., London.
The purpose of the Company is to act as a provider of outsourced solutions incorporating
customer contact centre management and other professional services. The Company
designs and delivers solutions that enable the customer relationship management of
its clients.
During the period 01.04.2010 to 31.03.2011 most of the Company's revenue has
been generated by one major customer.
II.II. II. Financial Information
1.1. 1. General Accounting Policy
The financial statements had been prepared in accordance with German Generally
Accepted Accounting Principles, which are laid down in the Commercial Code.
Fixed assets were carried at historical acquisition costs less accumulated
depreciation according to the straight-line method.
The accrued expenses consider all recognized risks and uncertain commitments,
based on reasonable commercial judgment.
Liabilities were valued with their anticipated future settlement amounts.
The provision for income taxes was calculated on the basis of the German taxable
income.
2.2. 2. Other Information
a) Contingent Liabilities
There were no contingent liabilities on the Balance-Sheet date.
b) Subsequent Events
There have been no events occurred since March 31, 2011, which require
adjustments to the figures submitted in this report.
III. Notes to Balance Sheet as at March 31, 2011
April 1, 2010 to April 1, 2010 to April 1, 2009 to April 1, 2009 to
March 31, 2011 March 31, 2011March 31, 2010 March 31, 2010
INR/Cr INR/Cr
Assets
II I Fixed Assets (WDV) 16,987 0.11 20,281 0.13
IIII II Investments 11,050 0.07 11,050 0.07
IIIIII III Current Assets
1.1. 1. Cash at Bank and in Hand
a) Cash at Bank
Commerz bank AG
EUR-Account 00 29,021 0.19 47,783 0.29
Deutschebank 76,184
Komercni Banka General
Account — — 114,968 0.71
Commerz bank AG
GBP-Account — — — —
UniCredit Banca Italy 194 0.00 3,512 0.02
Rent Deposit 5,448 0.03 — —
Deutshce Bank HUF (95) (0.00) — —
b) Cash in Hand
Petty cash in Germany 217 0.00 198 0.00
110,969 0.22 166,461 1.03
2.2. 2. Accounts Receivables 1,649,627 10.53 1,752,586 10.82
3.3. 3. Inter-company Receivables
a) Minacs Worldwide Inc.,
Ontario, Canada 1,189,813 7.60 489,813 3.02
b) Minacs Worldwide Inc.,
Germany (261,523) (1.67) — —
c) Minacs Worldwide Inc.,
Management Fees 420,000 2.68 — —
(70)
MINACS WORLDWIDE GMBH, GERMANY
CMYK
d) Minacs Ltd., London,
England (393,612) (2.51) 10,023 0.06
e) Minacs Hungary 5,532 0.04 122 0.00
960,210 6.09 499,957 3.09
4.4. 4. Prepaid Expenses 30,265 0.19 42,249 0.26
5.5. 5. Other Assets
Accounts receivables against
employees 1,228 0.01 2,500 0.02
Liabilities for pensiion
schemes — — — —
Advance payment for
Income Tax — —
Value Added Tax — —
1,228 0.01 2,500 0.02
IV Liabilities
6.6. 6. Accounts Payable (1522) (0.01) 3,219 0.02
7.7. 7. Accrued Expenses
Audit and legal expenses 30,300 0.19 36,650 0.23
Disability 4,200 0.03 4,500 0.03
Personnel expenses 117,000 0.75 6,000 0.04
Foreign personnel expenses 60,000 0.38 — —
Workmen’s compensation 25,000 0.16 25,000 0.15
Outstanding holiday pay 162,000 1.03 190,000 1.17
Bonus payment — — — —
Other personnel liabilities 46,720 0.30 46,060 0.28
Other accruals 5,500 0.04 59,959 0.37
Outstanding expenses — —
Total 450,720 2.88 368,169 2.27
8.8. 8. Other Liability
Sales tax payable (5,554) (0.04) (2,652) (0.02)
Income and other
Taxes payable 36,490 0.23 7,101 0.04
30,936 0.20 4,449 0.03
Total 480,133 3.07 375,837 2.32
April 1, 2011 10 to April 1, 2011 10 toApril 1, 2009 to April 1, 2009 to
March 31, 2011 111 1 March 31, 2011 111 1 March 31, 2011 100 0 March 31, 2011 100 0
INR/Cr INR/Cr
9. Staff Cost
Wages and salaries (4,040,131) (24.35) (4,245,153) (27.85)
Social security, pensions
and other personnel expenses (926,450) (5.58) (941,884) (6.18)
Subcontractor staff and
minor services (124,391) (0.75) (26,448) (0.17)
(5,090,971) (30.68) (5,213,485) (34.20)
Wages and salaries (4,040,131) (24,35) (4,245,153) (27.85)
Social security, pensions
and other personnel expenses (926,450) (5.58) (941,884) (6.18)
Subcontractor staff and
minor services (124,391) (0.75) (26,448) (0.17)
Total (5,090,971) (30.68) (5,213,485) (34.20)
10. Selling, General and
Administration Expenses
Rent (19,798) (0.12) (34,384) (0.23)
Gas, electricity & water (3,376) (0.02) (2,939) (0.02)
Cleaning (4,747) (0.03) (3,315) (0.02)
Insurances (652) (0.00) (583) (0.00)
Other personnel expenses (234,523) (1.41) (229,574) (1.51)
Representation and
entertainment expenses (6,291) (0.04) (5,505) (0.04)
Travel expenses (5,435) (0.03) (8,652) (0.06)
Freight - out (1,336) (0.01) (905) (0.01)
Other repair &
Maintenance costs — — (1,013) (0.01)
Mailing expenses (925) (0.01) (710) (0.00)
Telephone, Internet (13,935) (0.08) (10,384) (0.07)
Office supplies (3,398) (0.02) (3,313) (0.02)
Magazines, books,
contributions (4,290) (0.03) (3,132) (0.02)
Training expenses (22,800) (0.14) (18,861) (0.12)
Legal, consulting and
accounting expenses (115,889) (0.70) (90,481) (0.59)
Rent of equipment (5,825) (0.04) (4,424) (0.03)
Bank charges (12,406) (0.07) (13,658) (0.09)
Exchange losses (21,275) (0.13) (2,076) (0.01)
Other supplies (8,180) (0.05) (10,549) (0.07)
Total (485,081) (2.92) (444,458) (2.92)
April 1, 2011 10 to April 1, 2011 10 toApril 1, 2009 to April 1, 2009 to
March 31, 2011 111 1 March 31, 2011 111 1 March 31, 2011 100 0 March 31, 2011 100 0
INR/Cr INR/Cr
(71)
MINACS KFT., HUNGARY
CMYK
Unaudited Balance Sheet as at 31st March, 2011 111 1
Unaudited in HUF
March 31, 2011 March 31, 2010
HUF INR/Cr HUF INR/Cr
SOURCES OF FUNDS
II I Shareholders’ Funds
Share capital 3,000,000 0.07 3,000,000 0.07
Retained earnings 81,252,998 1.88 69,544,015 1.63
Exchange fluctuation
on FX translation — 0.06 — (0.05)
84,252,998 2.01 72,544,015 1.65
IIII II Loan Funds — — — —
Total 84,252,998 2.01 72,544,015 1.65
APPLICATION OF FUNDS
II I Fixed Assets
Property, plant and
equipment, net — — 166,354 0.00
Deferred development costs 306,546 0.01 134,936 0.00
306,546 0.01 301,290 0.01
IIII II Current AA Assets
Cash and cash equivalents 66,482,212 1.59 84,120,524 1.92
Accounts receivable 101,862,725 2.43 97,421,621 2.22
Prepaid expenses 545,281 0.01 1,425,968 0.03
Other receivables 597,513 0.01 13,759,783 0.31
169,487,730 4.04 196,727,895 4.48
LL Less Liabilities
Accounts payable and
accrued liabilities 29,598,904 0.71 10,742,265 0.24
Due to inter-companies 55,942,373 1.33 113,742,906 2.59
Total 85,541,278 2.04 124,485,170 2.84
83,946,452 2.00 72,242,725 1.65
TT Totalal al 84,252,998 2.01 72,544,015 1.65
Notes
FE Conversion Rate for HUF to
INR as at the end of the year 0.23855 0.2279
Unaudited Profit and Loss AA Account for the year ended 31st March, 2011 111 1
Unaudited in HUF
April 1, 2011 10 to April 1, 2011 10 to April 1, 2009 to April 1, 2009 to
March 31, 2011 111 1 March 31, 2011 111 1 March 31, 2011 100 0 March 31, 2011 100 0
HUF INR/Cr HUF INR/Cr
RR Ree evv venues 392,468,062 8 .57 401,959,291 9.91
Expenditure
Labour & Employee Related
Remuneration 172,049,412 3.76 173,385,630 4.28
Payroll Related 57,141,209 1.25 61,359,280 1.51
Group Insurance 557,744 0.01 780,006 0.02
Telecommunications 510,700 0.01 500,990 0.01
Training and seminars 2 ,560,908 0.06 2,568,498 0.06
Other dierct costs 33,842,010 0.74 32,373,811 0.80
Total 266,661,983 5.82 270,968,215 6.67
Gross profit 125,806,079 2 .75 130,991,076 3.24
Selling, general and administrative expenses
Professional Services 7,755,082 0.17 7,300,170 0.18
Recruiting 295,600 0.01 225,294 0.01
Office Cost 425,059 0.01 537,987 0.01
Other General and Admin. 9 ,445,942 0.21 6,331,476 0.16
Total 17,921,683 0.39 14,394,927 0.35
Earnings before interest expense, income
tt taxes, depreciation and amortization 11 107,884,396 2.35 11 111 16,596,149 2.88
Depreciation and amortization — — — —
Interest and financing expenses 1,173,112 0.03 1,781,984 0.04
Management fee 81,900,000 1.79 90,072,000 2.22
Currency Revaluation Difference 0.01 —
Income (Loss) before income taxes 24,811,284 0.53 24,742,165 0.61
PP Provision for (recovv very of) income taxes
Current 13,102,300 0.29 10,091,000 0.25
Future — — — -—
13,102,300 0.29 10,091,000 0.25
Net income (loss) for the period 11 11,708,984 0.25 11 14,651,165 0.36
Earnings/(Deficit), beginning of period 69,544,015 1.63 54,892,850 1.27
RR Retained earnings, end of period 81,252,998 1.88 69,544,015 1.63
Notes
Average FE Conversion Rate for HUF to
INR for the Financial Year 0.2183 0.2466
(72)
MINACS KFT., HUNGARY
CMYK
Notes to Financial Statements as of March 31, 2011 111 1
I.I. I. General Information
1. Business name:
The name of the Company
In Hungarian: MINACS Telefoninformációs Szolgáltatások Kft
In English: MINACS Call Center Services Limited
Tax registration number: 1311764974-2-41
The abbreviated name of the
Company in Hungarian: MINACS Kft.
The abbreviated name of the
Company in English: MINACS Ltd.
Seat: Hungary 1114 Budapest, Ulaszlo street 27.
The registered headquarter of
the Company: Hungary 1138 Budapest, Váci út 169.
2. The form of the Company: Limited liability company
The Company was established in 2003 by the following owners:
MINACS Worldwide GmbH 96,66%
Julius Minacs 3,33%
The Company's share capital is THUF
3.000, which exclusively consists cash
deposits. The amount of it hasn't changed
compared to the last year.
The managing director of Paul Lonford Niewoehner
the Company: US-6115 Waterford,
Grace K. DR. MI 48329-1328
The Company's representation,The executives are entitled to register and
registration: represent the Company independently; the
managers appointed by the General
meeting are jointly entitled.
The Company's present owners:
Member Nominal Value THUF
MINACS Worldwide GmbH 2.900.000 HUF
Julius Minacs 100.000 HUF
The MINACS Ltd. is going to consolidate by the Minacs Worldwide GmbH.
The consolidated report can be seen at the seat of the Company.
THE COMPANY'S ACTIVITIES INCLUDE:
82.20 Call center activities - main activity
62.02 Computer consultancy activities
63.11 Data processing hosting and related activities
58.12 Publishing of directories and mailing lists
62.09 Other information tec and service activities
73.20 Market research and public opinion polling
70.22 Business and management consulting
82.99 Other business support services
The Company is only pursuing authorised activities owning the administrative
license.
Other:
The financial year of the Company differs from the calendar year. The statement
date is March 31, 2011. The date of the preparation of the annual report is
April 10, 2011.
Under the principle of completeness, the annual report includes those business
activities which happened between the year end and the date of report preparation,
and could affect the financial figures in the Balance Sheet and the Profit & Loss.
TT The Form of the Financial Statement
The Company prepares a simplified annual report, accordingly it keeps double entry.
The Company prepares an 'A' type annual financial statement, with the so called
balance-like arrangement. The Company prepares its Profit and Loss Statement by
the 'A' method, the cost summary method. It has formed its inner registrations,
sub-ledger and chart of accounts, and their joining points in accordance with it.
The data of the annual report are expressed in thousand HUF, if not indicated
otherwise.
II.II. II. MAJOR ELEMENTS OF THE AA ACCOUNTING POLICY
The Company performs its activity in compliance with the regulations of
the accounting law. The Company has established its policy for cash
treatment, inventory taking, and asset and liability valuation in accordance with the
accounting law.
The Company's Accounting Policy has set out that under the principle of going
concern the enforcement (the principle of integrity, authenticity, transparency,
comparison, continuity, consistence, prudence, gross accounting, individual
valuation, accrual and deferral, priority of content over form, materiality and
comparison of cost and profit) should be ensured.
It is considered to be a significant error if in the year of revealing the error during
different checks considering a given business year (separately each year), the value
of the revealed errors and margins of error (independent of indication), increasing
- decreasing profit and equity, the joint amount is above the 1% of the gross sum.
It is considered an error influencing true and fair picture to a great extent if the
contracted value of the errors and margins significantly alters the equity. It is
considered to be such an error in all cases when following the settling out there is
more than 20% change in the equity reported in the Balance Sheet of the previous
financial year.
In the case of the year-end assets and liabilities incurred in foreign currency or
exchange are going to be revaluated irrespective of the amount according to
published exchange rates of the HNB.
Evaluation of the Assets in the Financial Statement
1/ Intangible assets
Intangible assets are disclosed at purchase or production value, reduced by
accumulated depreciation, and at a value not exceeding their known market value.
The calculation of depreciation is to be performed on a straight-line basis, by the
application of the depreciation rates required for writing-off the intangible assets
over a period equal to the expected useful life of the assets. The expected useful
life of the intangible assets by categories:
Rights representing value 7 years
Software 3 years
2/ Tangible assets
Tangible assets are disclosed in the Balance Sheet at purchase or production value,
reduced by accumulated deprecation. The calculation of deprecation is performed
on a straight-line basis, by the application of the depreciation rates required for the
writing off of the tangible assets over a period equal to the expected useful life of
the assets:
Land and buildings 20 years
Technical equipment, machinery 3-7 years
Other equipment 5-7 years
3/ Financial investments
Investments representing ownership share in economic associations are disclosed
at purchased price in the case of acquisition, while in the case of establishment at
the value set out in the Articles of Association, until their market value does not
permanently decrease below book value. In this case, they are valued at the market
value known as the date of preparation of the Balance Sheet.
4/ Recognition of transactions in foreign currency
Transactions in foreign currency are accounted at the exchange rate of MNB as
the date of the transaction. The exchange gain or loss arising from the difference
between the exchange rate as at the date of the financial fulfilment and the
transaction are disclosed in the Profit and Loss Statement.
5/ Sales revenue
Net sales revenues are accounted as at the date of fulfillment, and are exclusively
of VAT.
6/ Corporate tax
The corporate tax liability of the Company is accounted in the Profit and Loss
Statement on the basis of the regulations in the reported year.
7/ Changes in the Company's accounting policy
The Company's accounting policy did not change during the year.
III. FINANCIAL POSITION AND LIQUIDITY
There has been no such event since the date of the Balance Sheet, which
would have a material impact on the Company's financial statement as at
31 March, 2011. The liquidity of the Company was during the financial year insured.
(73)
MINACS KFT., HUNGARY
CMYK
IV.. . Notes to Balance Sheet as at March 31, 2011 111 1
ADDITIONAL INFORMATION TO THE BALANCE SHEET
April 1, 2010 to April 1, 2010 to April 1, 2009 to April 1, 2009 to
March 31, 2011 March 31, 2011 March 31, 2010 March 31, 2010
HUF INR/Cr HUF INR/Cr
11 1 Equity
Share capital 3,000,000 0.07 3,000,000 0.07
22 2 AA Accumulated Profit Reservv vee e
Balance at the beginning
of the year 69,544,015 1.63 54,892,850 1.27
Profits during the year from P&L 11,708,984 0.25 14,651,165 0.36
Balance at the end of the year 81,252,998 11 1.88 69,544,011 155 5 11 1.63
33 3 Liquid AA Assets
Commerzbank Hungary 65,667,800 1.57 83,147,371 1.89
Petty cash 814,412 0.02 973,153 0.02
Total: 66,482,2122 2 11 1.59 84,120,524 11 1.92
44 4 Receivables
Trade receivables 101,862,725 2.43 97,421,621 2.22
Employee advances receivables — — — —
Total: 11 100 01,862,725 2.43 97,421,621 2.22
55 5 Other Receivable
Value added tax — — 12,267,783 0.28
Income & other taxes payable/
Receivables 597,513 0.01 1,492,000 0.03
Total: 597,513 0.01 13,759,783 0.31
66 6 Liabilities
Current Liabilities
Trade creditors 525,770 0.01 371,861 0.01
Accruals - General 10,542,955 0.25 1,000,370 0.02
Accruals - Payroll 18,530,179 0.44 9,370,034 0.21
Total: 29,598,904 0.71 10,742,265 0.24
77 7 Due to Inter Company
Due to GmbH Germany 1,467,047 0.03 32,345 0.00
Due to MXW Canada 37,469,278 0.89 112,123,337 2.56
Due to Minacs UK 17,006,048 0.41 1,587,223 0.04
Total: 55,942,373 1.33 113,742,906 2.59
VV V.. . Notes to Profit & Loss AA Account year ending March 31, 2011 111 1
ADDITIONAL INFORMATION TO THE PROFIT & LOSS
April 1, 2011 10 to April 1, 2011 10 to April 1, 2009 to April 1, 2009 to
March 31, 2011 111 1 March 31, 2011 111 1 March 31, 2011 100 0 March 31, 2011 100 0
HUF INR/Cr HUF INR/Cr
11 1 Labour & Employy yee Related Remuneration
Regular Wages Paid 159,153,339 3.47 169,865,267 4.19
Sick Pay 2,831,073 0.06 3,520,363 0.09
Incentive Bonus Accrued 10,065,000 0.22 — —
11 172,049,4122 2 3.766 6 11 173,385,630 4.28
22 2 Payroll Related
Payroll Taxes Direct 12,993,424 0.28 13,149,007 0.32
401K/Pension Employer Match 38,478,741
Medicare (US) 5,669,044 0.12 48,210,273 1.19
57,141,209 0.41 61,359,280 1.51
33 3 Other Costs
Travel - Direct Cost 8,242,606 0.18 8,053,014 0.20
Project Disbursements 25,599,404 0.56 24,320,797 0.60
33,842,010 0.74 32,373,811 0.80
44 4 Professional Services
Accounting Fees 7,755,082 0.17 6,922,255 0.17
Corporate Legal Fees — — 377,915 0.01
7,755,082 0.17 7,300,170 0.18
55 5 Office Cost
Office Supplies & Minor Equipment 389,091 0.01 319,801 0.01
Other Supplies 19,948 0.00 202,476 0.00
Postage 16,020 0.00 15,710 0.00
425,059 0.01 537,987 0.01
66 6 Other General and AA Admin. Cost
Non-Cash Incentives - Indirect — — — —
Other SG&A 9,445,942 0.21 6,319,280 0.14
Penalty and Fine Charges — — 12,196 0.00
9,445,942 0.21 6,331,4766 6 0.144 4
77 7 Interest and Financing Expenses
Bank Service Charges — — 785,504 0.02
Foreign Currency Unrealised Gain — — 2,867 0.00
Foreign Currency Realised Gain 1,358,830 0.03 1,229,518 0.03
Other Interest Expenses (185,718) (0.00) (235,905) (0.01)
1,173,111 122 2 0.03 1,781,984 0.04
88 8 PP Provision for (Recovv very of) Income TT Taxes
Current Income Tax 13,102,300 0.29 2,056,000 0.05
State Tax — — 8,035,000 0.20
11 13,102,3000 0 0.29 11 10,091,000 000 0 0.25
(74)
ADITYA BIRLA MINACS BPO LIMITED
C M Y K
REPORT OF THE DIRECT ORS
FOR THE YEAR ENDED 31 MARCH, 2011
The directors have pleasure in submitting their annual report with the
audited accounts of the group for the year.
PRINCIPAL ACTIVITY
The principal activity of the group during the year under review was the
provision of personnel and related consultancy services from Asia.
REVIEW OF BUSINESS AND FUTURE DEVELOPMENTS
The Group had a very positive year from the trading perspective.
The Group returned to profit with a pretax figure of £10,686
(2010 : loss of £169,923) on a revenue of £4.27m for the current year
(2010: £ 4.37m). Cash on the Balance Sheet at the year end was
£692,372 (2010 : £197,483).
During the financial year, the Company changed its name from Compass
BPO Ltd. to Aditya Birla Minacs BPO Limited.
On the 24 February, 2011, Compass BPO FZE, a subsidiary undertaking,
was wound up. Consultancy services continue to be provided in the
region since that date, and are supplied by Aditya Birla Minacs BPO
Private Limited, which is another subsidiary undertaking based in India.
DIVIDEND
The directors do not recommend the payment of a dividend.
(2010: £Nil).
CREDITOR PAYMENT POLICY
It is the group’s policy to agree the terms of payment to creditors at the
start of business with that supplier, ensure that suppliers are aware of
the terms of payment and to pay in accordance with its contractual and
other legal obligations.
EMPLOYEE INVOLVEMENT
The group’s policy is to consult and discuss with employees any matters
likely to affect their interests.
Information on matters of concern to employees is given at staff
meetings and through information bulletins and reports.
FINANCIAL RISK
The group’s operations expose it to a variety of financial risks that include
the credit risk, exchange rate risk, liquidity risk and interest rate risk.
The group has in place risk management procedures to limit the adverse
effects on the financial performance of the Company by monitoring
levels of debt finance and related finance costs.
DIRECTORS
The directors who served during the year were: -D. Patel
M. Kedia
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The directors are responsible for preparing the Directors’ Report and
the financial statements in accordance with applicable law and
regulations.
Company law requires the directors to prepare financial statements for
each financial year. Under that law the directors have elected to prepare
the financial statements in accordance with United Kingdom Generally
Accepted Accounting Practice (United Kingdom Accounting Standards
and applicable law). Under company law the directors must not approve
the financial statements unless they are satisfied that they give a true
and fair view of the state of affairs of the Company and of the profit or
loss of the Company for that period. In preparing these financial
statements, the directors are required to:
• select suitable accounting policies and then apply them
consistently;
• make judgments and accounting estimates that are reasonable
and prudent;
• state whether applicable UK Accounting Standards have been
followed, subject to any material departures disclosed and explained
in the financial statements; and
• prepare the financial statements on the going concern basis unless
it is inappropriate to presume that the Company will continue in
business.
The directors are responsible for keeping adequate accounting records
that are sufficient to show and explain the Company’s transactions and
disclose with reasonable accuracy at any time the financial position of
the Company and enable them to ensure that the financial statements
comply with the Companies Act, 2006. They are also responsible for
safeguarding the assets of the company and, hence, for taking
reasonable steps for the prevention and detection of fraud and other
irregularities.
So far as each of the directors is aware at the time the report is approved:
• there is no relevant audit information of which the Company’s
auditors are unaware; and
• the directors have taken all steps that they ought to have taken to
make themselves aware of any relevant audit information and to
establish that the auditors are aware of that information.
AUDITORS
The auditors, haysmacintyre, will be proposed for re-appointment in
accordance with S485 of the Companies Act, 2006.
By order of the Board
D. Patel
Director
Registered Office:
Fairfax House
15 Fulwood Place
London
WC1V 6AY 25 April, 2011
(75)
ADITYA BIRLA MINACS BPO LIMITED
C M Y K
INDEPENDENT REPOR T OF THE AUDI TORS TO THE
SHAREHOLDERS OF
ADITYA BIRLA MINACS BPO LIMITED
We have audited the financial statements of Aditya Birla Minacs BPO
Limited for the year ended 31 March 2011, which comprise the
Consolidated Profit and Loss Account, the Consolidated and Company
Balance Sheets, the Consolidated Statement of Total Recognised Gains
and Losses and the related notes. The financial reporting framework
that has been applied in their preparation is applicable law and United
Kingdom Accounting Standards (United Kingdom Generally Accepted
Accounting Practice).
This report is made solely to the Company’s members, as a body, in
accordance with Chapter 3 of Part 16 of the Companies Act, 2006.
Our audit work has been undertaken so that we might state to the
Company’s members those matters we are required to state to them
in an Auditor’s report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone
other than the Company’s members as a body, for our audit work, for
this report, or for the opinions we have formed.
Respective Responsibilities of Directors and Auditors
As explained more fully in the Directors’ Responsibilities Statement
set out on page 3, the directors are responsible for the preparation of
the financial statements and for being satisfied that they give a true
and fair view. Our responsibility is to audit the financial statements in
accordance with applicable law and International Standards on Auditing
(UK and Ireland). Those standards require us to comply with the Auditing
Practices Board’s Ethical Standards for Auditors.
Scope of the Audit of the Financial Statements
An audit involves obtaining evidence about the amounts and disclosures
in the financial statements sufficient to give reasonable assurance that
the financial statements are free from material misstatement, whether
caused by fraud or error. This includes an assessment of: whether the
accounting policies are appropriate to the Company’s circumstances,
and have been consistently applied and adequately disclosed; the
reasonableness of significant accounting estimates made by the
directors; and the overall presentation of the financial statements.
Opinion on Financial St atements
In our opinion the financial statements:
• give a true and fair view of the state of the group’s affairs as at
31 March 2011, and of the group’s loss for the year then ended;
• have been properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice; and
• have been prepared in accordance with the requirements of the
Companies Act, 2006.
Opinion on other matter prescribed by the Companies Act, 2006
In our opinion the information given in the Directors’ Report for the
financial Year for which the financial statements are prepared is
consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where
the Companies Act, 2006, requires us to report to you if, in our opinion:
• adequate accounting records have not been kept, or returns
adequate for our audit have not been received from branches not
visited by us; or
• the financial statements are not in agreement with the accounting
records and returns; or
• certain disclosures of directors’ remuneration specified by law are
not made; or
• we have not received all the information and explanations we
require for our audit.
Anastasia Frangos (Senior Statutory Auditor)
for and on behalf of haysmacintyre, Statutory Auditor
Fairfax House
15 Fulwood Place
London
WC1V 6AY
(76)
ADITYA BIRLA MINACS BPO LIMITED
C M Y K
CONSOLIDATED PR OFIT AND LOSS ACCO UNT
FOR THE YEAR ENDED 31 MARCH, 2011
Notes 2011 2010
£ £
Turnover Turnover 1 4,269,889 4,370,362
Cost of Sales (1,914,541) (2,156,475)
Gross Profit 2,355,348 2,213,887
Administrative Expenses (2,362,527) (2,327,243)
Operating Profit/(Loss) Operating Profit/(Loss) 2 (7,179) (113,356)
Profit/(Loss) on Sale of Assets 7,415 (4,457)
Interest Receivable 11,273 4,290
Interest Payabl e 3 (823) (56,400)
Profit/(Loss) on Ordinary
Activities Before Taxation 10,686 (169,923)
Taxation Taxation 5 (23,597) (1,525)
Profit/(Loss) for the Financial
Year After Taxation Year After Taxation 12 £(12,911) £(171,448)
All results relate to continuing activities.
Statement of Total Recognised Gains and Losses
2011 2010
£ £
Profit/(Loss) for the Financial Year (12,911) (171,448)
Exchange Translation Differences (12,461) 11,505
Total Recognised Gains and Losses
relating to the year £(25,372) £(159,943)
The attached notes form an integral part of these accounts.
COMPANY PR OFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 MARCH, 2011
2011 2010
£ £ £ £
SALES 1,693,646 2,049,167
LESS: COST OF SALES (1,329,085) (1,803,959)
GROSS PROFIT GROSS PROFIT 364,561 245,208
Profit on Sale of Assets — (60)
Interest Received 34 41
Interest Payable / Guarantee Commission — (55, 858)
Exchange Gain / (Loss) (18,557) (35,818)
346,038 153,513
LESS: OVERHEADS
Telephone 27,103 31,323
Insurance 32,095 33,348
Printing, postage and stationery 135 2,580
Entertaining and Staff Welfare — 133
Rent and Electricity for Premises 27,297 34,282
Rent for Data Centre 4,680 4,680
Accountancy Fees 8,580 15,050
Bank Charges 4,634 10,699
Legal and Professional Fees 11,980 121,086
Marketing Costs 51,854 35,844
Commission Charges 21,180 21,819
Sales Support 24,000 24,000
Salaries 23,100 23,535
Social Security 2,229 2,227
Meetings and Conferences 198 1,657
Office Expenses 2,791 2,185
Write-off Inter-company Loan 49,675 —
Depreciation 709 1,749
Travel Expenses — 1,647
Computer Maintenance and Support 7,600 7,448
Bad Debts 134,761 —
(434,601) (375,292)
PROFIT / (LOSS) ON ORDINARY
ACTIVITIES £ (88,563) £ (221,779)
(77)
ADITYA BIRLA MINACS BPO LIMITED
C M Y K
CONSOLIDATED BALANCE SHEET
AS AT 31 MARCH, 2011
2011 2010
Notes £ £ £ £
FIXED ASSETS
Tangible Assets 6 148,756 299,210
Current Assets
Debtors 8 767,470 946,096
Cash at Bank and in Hand 692,372 197,483
1,459,842 1,143,579
Creditors Creditors: Amounts falling
due within one year 9 (747, 886) (556,705)
711,956 586,874
Net Assets Net Assets £860,712 £886,084
CAPITAL AND RESERVES
Called up Share Capital 10 18,967 18,967
Share Premium 11 1,145,206 1,145,206
Profit and Loss Account 12 (303,461) (278,089)
TOTAL SHAREHOLDERS’ FUNDS 13 £860,712 £886,084
The financial statements were approved and authorised for issue by the Board on
25 April, 2011, and were signed below on its behalf by:-D. Patel M. Kedia
Director Director
The attached notes form an integral part of these accounts.
COMPANY BALANCE SHEET
AS AT 31 MARCH, 2011
2011 2010
Notes £ £ £ £
FIXED ASSETS
Tangible Assets 6 797 1,507
Investments 7 246,226 268,548
247,023 270,055
CURRENT ASSETS
Debtors 8 715,869 698,620
Cash at Bank and in Hand 209,536 144,669
925,405 843,289
CREDITORS CREDITORS: Amounts falling
due within one year 9 ( 333,607) (185,960)
591,798 657,329
NET ASSETS £838,821 £927,384
CAPITAL AND RESERVES
Called up Share Capital 10 18,967 18,967
Share Premium 11 1,145,206 1,145,206
Profit and Loss Account 12 (325,352) (236,789)
TOTAL SHAREHOLDERS’ FUNDS TOTAL SHAREHOLDERS’ FUNDS13 £838,821 £927,384
The financial statements were approved and authorised for issue by the Board on
25 April, 2011, and were signed below on its behalf by:-D. Patel M. Kedia
Director Director
The attached notes form an integral part of these accounts.
(78)
ADITYA BIRLA MINACS BPO LIMITED
C M Y K
NOTES TO THE A CCOUNTS FOR THE YEAR ENDED 31 MARCH, 2011
1. Turnov er
Turnover is attributable to the principal activity of the group, net of Value Added Tax.
A geographical analysis of turnover is as follows:
2011 2010
Group Group
£ £
United Kingdom 1,693,646 2,098,751
Rest of the world 2,576,243 2,271,611
£4,269,889 £4,370,362
2. Operating Profit/(Loss)
2011 2010
Group Group
£ £
Operating Profit/(Loss) is stated after charging:
Depreciation 124,186 136,447
Payments made under Operating Leases 162,458 347,348
Auditors’ Remuneration - Audit 12,500 8,500
- Other Services 8,144 12,476
3. Interest Payable
2011 2010
Group Group
£ £
10% Convertible Loan Stock Interest — 47,725
Guarantee Commission — 4,896
Bank Loan Interest 823 3,779
£823 £56,400
4. Employees
2011 2010
Group Group
£ £
Staff Costs (including directors) during the year amounted to:
Wages and Salaries 1,769,159 2,214,508
Social Security Costs 2,229 2,227
£1,771,388 £2,216,735
No. No.
The average weekly number of Employees
during the year was: 271 363
Directors’ Remuneration 2011 2010
Group Group
£ £
Directors’ Fees (paid through subsidiary undertakings) £ — £411,009
Pension contributions are made to a defined contribution scheme. All assets therein
are independent of the group.
5. Tax on Ordinary Activities
(a) Analysis of tax charge for the year: 2011 2010
£ £
UK Corporation Tax at current rates — (23,896)
Overseas Taxation 3,655 28,986
Under/(Over) Provision of UK Corporation
Tax in previous year — (300)
Total Current Tax (note b) 3,655 4,790
Overseas Deferred Taxation 19,942 (3,265)
Total Tax Charge for the year £23,597 £1,525
(b) Factors affecting Tax Charge for year:
The corporation tax assessed for the year is different from the standard companies'
rate of corporation tax in the UK of 28% (2010: 28%). The differences are explained
below:
2011 2010
£ £
Profit/(Loss) on ordinary activities before tax £10,686 £(169,923)
Profit/(Loss) on ordinary activities before tax
multiplied by the main rate of Corporation Tax
in the UK of 28% (2010: 28%) 2,992 (47,578)
STATEMENT OF ACCOUNTING POLICIES
FOR THE YEAR ENDED 31 MARCH, 2011
The financial statements have been prepared in accordance with applicable accounting
standards. The particular accounting policies adopted are described below:
(a) Basis of Accounting
The accounts have been prepared under the historical cost convention and in
accordance with applicable accounting standards.
(b) Basis of Consolidation
The group financial statements consolidate the accounts of Aditya Birla Minacs BPO
Limited and its subsidiary undertakings made up to 31 March each year; the group
profit and loss account includes the results of the subsidiary undertaking for the
period from the date of their incorporation or acquisition and up to the date of disposal.
No profit and loss account is presented for Aditya Birla Minacs BPO Limited as provided
by S408 of the Companies Act, 2006. The holding company's loss for the year was
£88,563 (2010: loss £197,584).
(c) Turnover
Turnover arises from the principal activity of the Company.
(d) Foreign Currency
Company
Assets and liabilities on foreign currencies are translated at the rates of exchange
ruling at the balance sheet date. Transactions on foreign currencies are recorded at
the rate of exchange ruling at the date of the transaction. All differences are taken to
the profit and loss account.
Group
The balance sheets of overseas subsidiary undertakings are translated at the rate of
exchange ruling at the balance sheet date and the profit and loss accounts are
translated at the average rates for the year. The exchange differences arising on the
re-translation of opening net assets is taken directly to reserves.
(e) Deferred Taxation
Deferred taxation is provided on the full provision method to take account of timing
differences between the treatment of certain items for accounts purposes and their
treatment for tax purposes. Tax deferred or accelerated is accounted for in respect
of all timing differences, where material.
(f) Hire Purchase Agreements
Assets acquired under hire purchase contracts are capitalized in the balance sheet,
and are depreciated over their expected useful lives. The interest element of the
instalments is charged to the profit and loss account over the period of the contract.
(g) Operating Lease Agreements
Rentals applicable to operating leases where substantially all of the benefits and
risks of ownership remain with the lessor are charged against profit as incurred.
(h) Pension Costs
Contributions to defined contribution pension schemes are charged to the profit and
loss account in the period in which they become payable. Aditya Birla Minacs BPO
Private Limited operates a defined benefit pension scheme, known as Compass
Development (India) Pvt. Ltd. Employees Group Gratuity Assurance Scheme, covering
all eligible employees. The deficit on the pension scheme has been provided for in
the financial statements.
(i) Tangible Fixed Assets and Depreciation
Depreciation is calculated to write off the cost of the assets, net of disposal proceeds,
over their anticipated useful lives at the following rates:
Computer Equipment — 33
1
/
3
% straight line
Equipment — 33
1
/
3
% straight line
Motor Vehicles — 33
1
/
3
% straight line
(j) Investments
Fixed asset investments are shown at the lower of cost or directors' valuation.
(k) Taxation
Corporation tax is provided for at the current rates.
(l) Cash Flow Statement
The directors have taken advantage of the exemptions available in Financial Reporting
Standard No.1 from the requirement to produce a cash flow statement.
(79)
ADITYA BIRLA MINACS BPO LIMITED
C M Y K
Effects of:
2011 2010
£ £
Amounts not subject to UK Corporation Tax (27,790) (14,520)
Expenses not deductible for tax purposes 14,929 21,531
Capital Allowances for the year in excess of depreciation (9) (327)
Effect of Change in Tax Rates — 8,232
Losses carried forward 9,878 17,134
Other timing differences — (8,368)
Current Tax Charge for the year £ — £(23,682)
The company is carrying forward tax losses of £96,468 (2010: £61,193) to offset against
future profits.
6. TANGIBLE FIX ED ASSETS
Group Company
Fixtures
Fittings
Computer and Office Motor Group
Equipment Equipment Vehicles Total Equipment Total
£ £ £ £ £ £
COST
1 April, 2010 485,115 320,937 37,608 843,660 2,236 2,236
Additions 870 1,5 37 — 2,407 — —
Forex Adjustment (29,244) (21,272) (1,215) (51,731) — —
Disposals (61,087) (8,135) (36,393) (105,615) — —
At 31 March, 2011 395,654 293,067 — 688,721 2,236 2,236
DEPRECIATION
1 April, 2010 431,072 83,940 29,438 544,450 729 729
Charge for Year 33,940 85,912 4,332 124,184 710 710
Forex Adjustment (27,271) (8,376) 292 (35,355) — —
Disposals (54,072) (5,183) (34,062) (93,316) — —
At 31 March, 2011 383,670 156,293 — 539,963 1,439 1,439
NET BOOK VALUE
31 March, 2011 £11,982 £136,775 £ — £148,758 £797 £797
31 March, 2010 £54,043 £236,997 £8,170 £299,210 £1,507 £1,507
7. INVESTMENT IN SUBSIDIARY UNDERTAKINGS
Company
COST £
As at 1 April, 2010 268,548
Additions 144,983
Disposals (167,305)
At 31 March, 2011 £246,226
The Company’s investments are comprised of the following:
Company Class of % Cost of
of Shares Held Investment
incorporation Held
Aditya Birla Minacs BPO
Private Limited India Ordinary 100% 101,188
Aditya Birla Minacs BPO
Private Limited India 5% Preference 100% 144,983
Compass BPO Inc. US Ordinary 100% 55
The principal activities of Aditya Birla Minacs BPO Pvt. Ltd. and Compass BPO Inc.
are the provision of personnel and related consultancy services from Asia.
On 23 August, 2010, the company's entire preference shareholding in Aditya Birla
Minacs BPO Pvt. Ltd. was redeemed and the proceeds reinvested in further preference
share capital of that Company.
On the 24 February, 2011, Compass BPO FZE was wound up and the 100%
investment in that company disposed of.
8. DEBTORS
2011 2010
Group Company Group Company
£ £ £ £
Trade Debtors 493,098 139,974 471,776 160,165
Other Debtors 220,523 48,794 321,934 15,818
Due from Subsidiary Undertakings — 493,121 — 488,611
Prepayments and Accrued Income 29,953 10,084 128,490 10,130
Corporation Tax Recoverable 23,896 23,896 23,896 23,896
£767,470 £715,869 £946,096 £698,620
9. CREDITORS: Amounts falling due within one year:
2011 2010
Group Company Group Company
£ £ £ £
Trade Creditors 59,726 11,069 214,450 97,831
Amounts Owed to Group Undertakings 290,333 262,505 — 19,665
Other Taxation and Social Security 34,098 22,166 60,110 41,038
Other Creditors 3,685 — 83,206 —
Corporation Tax 38,150 — 54,230 —
Accruals 321,894 37,867 144,709 27,426
£747,886 £333,607 £556,705 £185,960
10. SHARE CAPITAL
Group and Company 2011 2010
£ £
Allotted, Issued and Fully Paid:
75,866 (2010: 75,866) Ordinary Shares of £0.25 each £18,967 £18,967
11. SHARE PREMIUM
2011 2010
Group and Company Group Group
£ £
Share Premium at 1 April, 2010 1,145,206 765,173
Premium on Issue of Shares — 348,372
Transfer from other reserves on conversion of loan notes — 31,661
Share premium at 31 March, 2011 £1,145,206 £1,145,206
12. PROFIT AND LOSS ACCOUNT
2011 2010
Group Company Group Company
£ £ £ £
Brought forward at 1 April, 2010 (278,089) (236,789) (118,146) (39,205)
Profit/(Loss) for the financial year ( 12,911) (88,563) (171,448) (197,584)
Exchange gain on currency transl ation (12,461) — 11,505 —
Carried forward at 31 March, 2011 £(303,461) £(325,352) £(278,089) £(236,789)
13. Reconciliation of Movements in Shareholders’ Funds
2011 2010
Group Company Group Company
£ £ £ £
New Share Capital (including share premium) — — 350,779 350,779
Profit/(Loss) for the financial year (12,911) (88,563) (171,448) (197,584)
Exchange gain on currency translation (12,461) — 11,505 —
Opening Shareholders' Funds 886,084 927,384 695,248 774,189
Closing Shareholders' Funds £860,712 £838,821 £886,084 £927,384
14. Pension Commitments
Aditya Birla Minacs BPO Pvt. Ltd., operates a defined benefit pension scheme, for
eligible staff. It is funded by the payment of contributions to a separately administered
trust fund. The assets of the scheme are held separately from those of the group.
The Group adopts the valuation and disclosure requirements of FRS 17 "Retirement
Benefits". The Group includes the assets and liabilities of the pension fund in the
Group's Balance Sheet, with a subsequent effect on reserves.
NOTES TO THE ACCOUNTS (continued)
(80)
ADITYA BIRLA MINACS BPO LIMITED
C M Y K
The pension contributions are determined with the advice of a qualified actuary on
the basis of annual valuations using the method. The most recent valuation was
conducted as at 31March, 2011. The principal assumptions used by the actuaries
were that the return on assets would be 9% per annum and salaries would increase
by 6% per annum. The market value of the assets at 31 March, 2011, was £34,218.
The pension charge for the year was £64,696 (2010: £17,017). Contributions to the
scheme are expected to remain at this level in the future.
The key assumptions were as follows:
Main Assumptions % per annum
2011 2010
Rate of Return on Investments 9% 9%
Increase in Earnings 6% 4%
Discount Rate 8% 8%
Value at Value at
31 March 2011 31 March 2010
£’000s £’000s
Market Value of Assets 34 34
Present Value of Scheme Liabilities (99) (53)
Net Pension Scheme Liability (65) (19)
The movement in the deficit during the year arose as follows: 2011
£’000s
Deficit as at 1 April 2010 (19)
Movement in present value of scheme liabilities (18)
Interest Earned 3
Settlements (19)
Employer Contributions 21
Exchange Gains (34)
Deficit as at 31 March, 2011 (65)
1 5. Operating Lease Commitments
At 31 March, 2011 the Company had the following annual commitments under
non-cancellable operating leases.
2011 2010
Group Group
Land and Land and
Buildings Buildings
£ £
Operating Leases which expire:
– within one year 81,923 64,652
– within one to two years 12,600 –
– within two to five years – 12,600
16. Related Party Transactions
The Company has taken advantage of the exemption available under FRS 8 "Related
Party Disclosures" not to disclose transactions with its 100% owned subsidiaries.
During the year, the Company was recharged £212,621 by its immediate parent
company, Aditya Birla Minacs Worldwide Inc., for shared sales costs and management
fees. These fees remained unpaid at the year end and are included within amounts
due to group undertakings in note 9.
17. Contingent Liabilities
The Company is a joint guarantor in respect of loan and overdraft facilities granted to
Aditya Birla Minacs Private Limited, the Company's wholly owned subsidiary.
The loan and overdraft facilities provided by The IDBI Bank amounted to £35,000.
At the year end, no amount was drawn.
18. Control
The ultimate parent company and controlling party is Aditya Birla Nuvo Limited, a
company listed on the Bombay Stock Exchange.
The largest group into which Aditya Birla Minacs BPO Limited is consolidated is
headed by Aditya Birla Nuvo Limited.
The smallest group into which Aditya Birla Minacs BPO Limited is consolidated is
headed by Aditya Birla Minacs Worldwide Inc., its immediate parent company.
NOTES TO THE ACCOUNTS (continued)
(81)
ADITYA BIRLA MINACS BPO PVT. LTD. (Formerly: Compass Business Process Outsourcing Pvt. Ltd.)
C M Y K
DIRECTORS’ REPOR T TO THE MEMBER S
Your Directors have pleasure in presenting the 13
th
Annual Report and
the Audited Accounts for the year ended 31
st
March, 2011.
FINANCIAL RESULTS:
(` in Lacs)
31.03.2011 31.03.2010
Sales and Other Income 1,870.45 2,409.23
Profit/(Loss) before Depreciation 51.85 231.09
Depreciation (85.16) (88.64)
Profit/(Loss) before Taxation (33.31) 142.45
Provision for Taxation (14.78) (8.85)
Profit/(Loss) after Taxation (48.09) 133.60
Loss Brought Forward (13.25) (146.85)
Accumulated Profit/(Loss)
Carried to Balance Sheet (61.34) (13.25)
DIVIDEND
The Company has made loss during the year. However, it has been
decided to retain the profits and, hence, the directors do not recommend
any dividend for the year.
DIRECTORS’ RESPONSIBILITY STATEMENT
Pursuant to the requirement under Section 217(2AA) of the Companies
Act, 1956, with respect to Directors’ Responsibility Statement, it is
hereby confirmed:
(i) that in the preparation of the annual accounts for the financial year
ended 31.03.2011 the applicable accounting standards have been
followed along with proper explanation relating to material
departures;
(ii) the Directors had selected such accounting policies and applied
them consistently and made judgments and estimates that are
reasonable and prudent so as to give a true and fair view of the
state of the affairs of the Company at the end of the financial year
and of the profit or loss of the Company for that period;
(iii) the Directors had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with
the provisions of this Act for safeguarding the assets of the
Company and for preventing and detecting fraud and other
irregularities; and
(iv) that the Directors have prepared the accounts for the financial year
ended 31.03.2011 on a on going concern’ basis.
PARTICULARS OF CONSERVATION OF ENERGY AND
TECHNOLOGY ABSORPTION
Since your Company is a 100% export-oriented unit and only operates
in data processing and development, the information as required under
Section 217(1)(e) of the Companies Act, 1956, read with The Companies
(Disclosure of Particular in the Report of the Board of Directors) Rules,
1988, are reported below to the extent applicable.
The Company has not deployed and imported Technology to carry out
its process. The consumption of energy is minimal. The Company will
take suitable steps, if required, in future for reduction of consumption
of energy.
PARTICULARS OF EMPLOYEES
There were no employees covered by the provisions of Section 217
(2A) of the Companies Act, 1956, read with companies (Particulars of
Employees) Rules, 1975, whose particulars are required to be given.
FOREIGN EXCHANGE
Your Company remains to be net foreign exchange earner for India.
(` in Lacs)
31.03.2011 31.03.2010
Export Earnings for Service 1,856.49 2,406.34
Less: Expenses
— Capital NIL 8.54
— Others 25.53 24.74
Net Foreign Exchange Earnings 1,830.96 2,373.06
STATUTORY AUDITORS
The report of the Statutory Auditors, S. V. Ghatalia & Company,
Chartered Accountants, Mumbai, is attached to this report. The
observations made in the Auditors’ Report are self explanatory and,
therefore, do not call for any further comments under Section 217(3)
of the Companies Act, 1956.
Your Directors request you to appoint Auditors for the current year as
set out in the accompanying notice of the Annual General Meeting.
DEPOSITS
The Company has not accepted any deposit during the financial year.
NAME CHANGE
Your Company has changed its name from Compass Business Process
Outsourcing Private Limited to Aditya Birla Minacs BPO Private Limited
w.e.f. 15
th
November, 2010.
ISSUE OF COMPULSORILY CONVERTIBLE PREFERENCE SHARES
AND REDEMPTION OF EXISTING PREFERENCE SHARES
Your Company had issued 65,625, 5% Compulsorily Convertible
Preference Shares of ` 100 each at a premium of ` 60 per share
aggregating to a total consideration of ` 1 Crore 5 Lacs to Aditya Birla
Minacs BPO Limited, UK (f/k/a Compass BPO Limited, UK), holding
company of your Company.
Your Company had thereon redeemed 105,000, 10% Redeemable
Preference Shares of ` 100/- each aggregating to a total value of
` 1 Crore 5 Lacs during the year. The said Preference Shares were
allotted to Aditya Birla Minacs BPO Limited, UK (f/k/a Compass BPO
Limited, UK), holding company of your Company.
ACKNOWLEDGEMENTS
Your Directors thank Aditya Birla Minacs BPO Ltd., UK, for their
continuous support and guidance given to the Company.
Your Directors are also thankful to the various Governments’ Agencies
and Banks for their valuable support. The Directors also express their
appreciation to all Employees, Staff and Shareholders of the Company.
For and on behalf of the Board of
Aditya Birla Minacs BPO Pvt. Ltd.
sd/ sd/
Place: Mumbai Mr. Deepak J. Patel Mr. Manoj Kedia
date : April 22, 2011 Director Director
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ADITYA BIRLA MINACS BPO PVT. LTD. (Formerly: Compass Business Process Outsourcing Pvt. Ltd.)
C M Y K
AUDITORS’ REPOR T
To
The Members of Aditya Birla Minacs BPO Private Limited
(Formerly Compass Business Process Outsourcing Private Limited)
1. We have audited the attached Balance Sheet of Aditya Birla Minacs
BPO Limited (Formerly Compass Business Process Outsourcing
Private Limited) (‘the Company’) as at March 31, 2011, and also
the Profit and Loss Account, and the Cash Flow Statement for the
year ended on that date annexed thereto. These financial
statements are the responsibility of the Company’s management.
Our responsibility is to express an opinion on these financial
statements based on our audit.
2. We conducted our audit in accordance with auditing standards
generally accepted in India. Those Standards require that we plan
and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
3. As required by the Companies (Auditor’s Report) Order, 2003 (as
amended), issued by the Central Government of India, in terms of
sub-section (4A) of Section 227 of the Companies Act, 1956, we
enclose in the Annexure a statement on the matters specified in
paragraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to above, we
report that:
i. We have obtained all the information and explanations, which
to the best of our knowledge and belief were necessary for
the purposes of our audit;
ii. In our opinion, proper books of account as required by law
have been kept by the Company so far as appears from our
examination of those books;
iii. The balance sheet, profit and loss account, and cash flow
Statement dealt with by this report are in agreement with the
books of account;
iv. In our opinion, the balance sheet, profit and loss account, and
cash flow statement dealt with by this report comply with the
accounting standards referred to in sub-section (3C) of section
211 of the Companies Act, 1956;
v. On the basis of the written representations received from the
directors, as on March 31, 2011, and taken on record by the
Board of Directors, we report that none of the directors is
disqualified as on March 31, 2011, from being appointed as a
director in terms of clause (g) of sub-section (1) of section 274
of the Companies Act, 1956;
vi. In our opinion and to the best of our information and according
to the explanations given to us, the said accounts give the
information required by the Companies Act, 1956, in the
manner so required and give a true and fair view in conformity
with the accounting principles generally accepted in India:
a) in the case of the balance sheet, of the state of affairs of
the Company as at March 31, 2011;
b) in the case of the profit and loss account, of the loss for
the year ended on that date; and
c) in the case of the cash flow statement, of the cash flows
for the year ended on that date.
For S.V. Ghatalia & Associates
Firm Registration Number: 103162W
Chartered Accountants
per Himanshu Chapsey
Partner
Membership No.: 36738
Place : Mumbai
Date : April 25, 2011
Annexure ref er red to in paragraph [3] of our report of e ven date
Re: Aditya Birla Minacs BPO Private Limited
(Formerly Compass Business Process Outsourcing Private Limited)
(‘the Company’)
(i)
(a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of
fixed assets.
(b) Fixed assets have been physically verified by the
management during the year and no material discrepancies
were identified on such verification.
(c) There was no substantial disposal of fixed assets during
the year.
(ii) The Company does not have any inventory and, hence, this clause
(ii) of the Order is not applicable.
(iii) (a) As informed, the Company has not granted any loans,
secured or unsecured, to companies, firms or other parties
covered in the register maintained under section 301 of
the
Companies Act, 1956. Accordingly, provisions of
clauses 4(iii) (b) (c) and (d) of the Companies (Auditor’s
Report) Order, 2003 (as amended), are not applicable.
(b) As informed, the Company has not taken any loan, secured
or unsecured, from companies, firms or other parties
covered in the register maintained under section 301 of
the Act. Accordingly, provisions of clauses 4(iii) (f) and (g)
of the Companies (Auditor’s Report) Order, 2003 (as
amended), are not applicable to the Company.
(iv) In our opinion and according to the information and explanations
given to us, there is an adequate internal control system
commensurate with the size of the Company and the nature of
its business, for the purchase of inventory and fixed assets and
for the sale of goods and services. During the course of our audit,
no major weakness has been noticed in the internal control
system in respect of these areas. During the course of our audit,
we have not observed any continuing failure to correct major
weakness in internal control system of the Company.
(v) According to the information and explanations provided by the
management, we are of the opinion that there are no contracts
or arrangement referred to in section 301 of the Act that needs
to be entered into the register maintained under section 301 of
the Act.
(vi) The Compa ny has not accepted any deposits from the public.
(vii) In our opinion, the Company has an internal audit system
commensurate with the size and nature of its business.
(viii) To the best of our knowledge and as explained, the Central
Government has not prescribed maintenance of cost records
under clause (d) of sub-section (1) of section 209 of the
Companies Act, 1956, for the products of the Company.
(ix) (a) The Company is generally regular in depositing with
appropriate authorities undisputed statutory dues including
provident fund, income-tax, sales tax, wealth tax, service
tax, customs duty, cess and other material statutory dues
applicable to it. The provisions relating to investor education
and protection fund and excise duty are not applicable to
the Company. Further, since the Central Government has
till date not prescribed the amount of cess payable under
section 441 A of the Companies Act, 1956, we are not in
a position to comment upon the regularity or otherwise of
the Company in depositing the same.
(b) According to the information and explanations given to
us, no undisputed amount payable in respect of provident
fund, income-tax, wealth tax, service tax, sales tax,
customs duty, cess and other undisputed statutory dues
were outstanding at the year end, for a period of more
than six months from the date they became payable. The
provisions of investor education and protection fund and
excise duty are not applicable to the Company.
(83)
ADITYA BIRLA MINACS BPO PVT. LTD. (Formerly: Compass Business Process Outsourcing Pvt. Ltd.)
C M Y K
(c) According to the information and explanations given to
us, there are no dues of income-tax, sales tax, wealth tax,
service tax, customs duty and cess, which have not been
deposited on account of any dispute.
(x) The Company has no accumulated losses at the end of the
financial year and it has not incurred cash losses in the current
and immediately preceding financial year.
(xi) Based on our audit procedures and as per the information and
explanations given by the management, we are of the opinion
that the Company has not defaulted in repayment of dues to a
financial institution, bank or debenture holders.
(xii) According to the information and explanations given to us and
based on the documents and records produced to us, the
Company has not granted loans and advances on the basis of
security by way of pledge of shares, debentures and other
securities.
(xiii) In our opinion, the Company is not a chit fund or a nidhi / mutual
benefit fund / society. Therefore, the provisions of clause 4(xiii)
of the Companies (Auditor’s Report) Order, 2003 (as amended),
are not applicable to the Company.
(xiv) In our opinion, the Company is not dealing in or trading in shares,
securities, debentures and other investments. Accordingly, the
provisions of clause 4(xiv) of the Companies (Auditor’s Report)
Order, 2003 (as amended), are not applicable to the Company.
(xv) According to the information and explanations given to us, the
Company has not given any guarantee for loans taken by others
from bank or financial institutions.
(xvi) The Com pany did not have any term loans outstanding during
the year.
(xvii) According to the information and explanations given to us and
on an overall examination of the balance sheet of the Company,
we report that no funds raised on short-term basis have been
used for long-term investment.
(xviii) The Company has not made any preferential allotment of shares
to parties or companies covered in the register maintained under
section 301 of the Companies Act, 1956.
(xix) The Company did not have any outstanding debentures during
the year.
(xx) The Company has not raised any money from public issues during
the year.
(xxi) Based upon the audit procedures performed for the purpose of
reporting the true and fair view of the financial statements and
as per the information and explanations given by the
management, we report that no fraud on or by the Company has
been noticed or reported during the course of our audit.
For S.V. Ghatalia & Associates
Firm Registration Number: 103162W
Chartered Accountants
per Himanshu Chapsey
Partner
Membership No.: 36738
Place : Mumbai
Date : April 25, 2011.
(84)
ADITYA BIRLA MINACS BPO PVT. LTD. (Formerly: Compass Business Process Outsourcing Pvt. Ltd.)
C M Y K
As per our report of even date For and on behalf of the Board of Directors
For S.V . Ghat alia & A ssociates
Firm Registration No. 103162W
Chartered Accountants Mr. Deepak Patel
Director
per Himanshu Chapsey
Partner Mr. Manoj Kedia
Membership No: 36738 Director
Place: Mumbai Place: Mumbai
Date : April 25, 2011 Date : April 25, 2011
BALANCE SHEE T AS AT MARCH 31, 2011
Schedule March 31, March 31,
2011 2010
( ` ) ( ` )
SOURCES OF FUNDS
Shareholders’ Funds
Share capital 11 13,493,500 17,431,000
Securities premium 22 3,937,500 —
Loan funds
Secured loans 33 — 637,140
Unsecured loans 44 1,852,283 1,852,283
Total 19,283,283 19,920,423
APPLICATION OF FUNDS
Fixed assets 5
Gross block 49,326,248 56,331,620
Less : Accumulated depreciation 38,817,707 36,675,776
Net block 10,508,541 19,655,844
Deffered tax asset Deffered tax asset — 1,478,000
Current assets, loans and
advances
Sundry debtors 66 18,911,494 1,334,632
Cash and bank balances 77 31,685,589 3,457,283
Loans and advances 88 15,408,828 25,920,944
66,005,911 30,712,859
Less : Current liabilities and
provisions
Current liabilities 99 48,985,985 29,383,650
Provisions 10 10 14,378,906 3,867,101
63,364,891 33,250,751
Net current assets 2,641,020 (2,537,892)
Profit and loss account 6,133,722 1,324,471
Total 19,283,283 19,920,423
Significant accounting policies 15
and notes on accounts
The Schedules referred to above form an integral part of the balance sheet.
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED ON
MARCH 31, 2011
March 31, March 31,
2011 2010
Schedule ( ` ) ( ` )
INCOME
Income from services 185,648,849 240,634,675
Other income 11 11 1,395,730 288,847
Total income 187,044,579 240,923,522
EXPENDITURE
Personnel expenses 12 12 129,880,981 140,669,881
Operating and other expenses 13 13 51,922,552 77,104,319
Finance expenses 14 14 56,181 39,334
Depreciation 8,516,116 8,864,548
190,375,830 226,678,083
Profit / (Loss) before tax (3,331,251) 14,245,439
Current tax — 1,111,000
Deferred tax charge 1,478,000 (226,017)
Profit / (Loss) after tax (4,809,251) 13,360,456
Profit / (Loss) brought forward
from the previous year (1,324,471) (14,684,928)
Balance carried forward
to the balance sheet (6,133,722) (1,324,471)
Earnings per share
(basic and diluted)
[Nominal value of shares ` 10
Previous year: ` 10] (Refer Note
C.9 of Schedule 15) (7.23) 17.83
Significant Accounting Policies 15
and Notes on Accounts
The Schedules referred to above form an integral part of the profit and loss account
As per our report of even date For and on behalf of the Board of Directors
For S.V . Ghat alia & A ssociates
Firm Registration No. 103162W
Chartered Accountants Mr. Deepak Patel
Director
per Himanshu Chapsey
Partner Mr. Manoj Kedia
Membership No: 36738 Director
Place: Mumbai Place: Mumbai
Date : April 25, 2011 Date : April 25, 2011
(85)
ADITYA BIRLA MINACS BPO PVT. LTD. (Formerly: Compass Business Process Outsourcing Pvt. Ltd.)
C M Y K
As per our report of even date For and on behalf of the Board of Directors
For S.V . Ghat alia & A ssociates
Firm Registration No. 103162W
Chartered Accountants Mr. Deepak Patel
Director
per Himanshu Chapsey
Partner Mr. Manoj Kedia
Membership No: 36738 Director
Place: Mumbai Place: Mumbai
Date : April 25, 2011 Date : April 25, 2011
CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2011
Year ended March 31, 2011 Year ended March 31,2010
( ` ) ( ` )
A CASH FLOWS FROM OPERATING ACTIVITIES
Net profit/(Loss) before taxation (3,331,251) 14,245,439
Adjustment for:
Depreciation 8,516,116 8,864,548
Profit on sale of fixed assets (Net) (583,897) (29,502)
Interest income (811,833) (254,234)
Interest expenses 56,181 39,334
Unrealised foreign exchange (gain) / loss (net) 1,333,545 (947,966)
Operating profit before working capital changes 5,178,861 21,917,619
Movements in working capital:
Decrease / (Increase) in sundry debtors (18,012,704) 3,079,864
Decrease / (Increase) in loans and advances 10,574,723 52,194
Increase in provisions 10,511,805 655,201
Increase / (Decrease) in current liabilities 18,729,594 (7,095,384)
Cash generated from operations 26,982,279 18,609,494
Direct taxes paid — (1,111,000)
Net cash from operating activities 26,982,279 17,498,494
B CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets (172,067) (18,663,228)
Proceeds from sale of fixed assets 1,387,155 839,615
Interest received 749,226 51,651
Net cash from / (used in) investing activi ties 1,964,314 (17,771,962)
C CASH FLOWS FROM FINANCING ACTIVITIES
Repayment from short-term borrowings (637,140) 561,816
Interest paid (56,181) (39,334)
Net cash from / (used in) financing activi ties (693,321) 522,482
Net increase in cash and cash equivalents ( A+B+C) 28,253,271 249,014
Cash and cash equivalents at the beginning of the year 3,457,283 3,208,695
Effect of exchange difference on cash and cash equivalents held in foreign currency (24,966) (426)
Cash and cash equivalents at the end of the year 31,685,589 3,457,283
Components of cash and cash equivalents
Cash in hand 146,202 154,152
Balances with scheduled banks: —— in current accounts 28,440,904 354,131
in fixed deposit accounts 3,098,483 2,949,000
Cash and cash equvivalents in cash flow statement 31,685,589 3,457,283
(86)
ADITYA BIRLA MINACS BPO PVT. LTD. (Formerly: Compass Business Process Outsourcing Pvt. Ltd.)
C M Y K
SCHEDULES FORMING P ART OF THE BALANCE SHEET
March 31, 20 11 March 31, 20 10
( ` ) ( ` )
SCHEDULE 1 - SHARE CAPI TAL
Authorised
700,000 (Previous year : 700,000) Equity shares of `10 each 7, 000,000 7,000,000
105,000 (Previous year : 105,000) Preference shares of ` 100 each 1 0,500,000 10,500,000
T OTAL 17,500,000 17,500,000
Issued,subscribed and paid-up
693,100 (Previous year : 693,100) Equity shares of
` 10 each fully paid 6,931,000 6,931,000
65,625 (Previous year: Nil) 5% Compulsory convertible
preference shares of ` 100 each fully paid 6,562,500 —
105,000 (Previous year: 105,000) 10% Preference shares of
` 100 each fully paid-up — 10,500,000
TOTAL 13,493,500 17,431,000
Notes:
1. Of the above 693,080 (Previous year: 693,080) equity shares are held by Aditya Birla Minacs BPO
Limited, UK, the holding company.
2. Of the above 93,100 (Previous year: 93,100) equity shares are allotted as fully paid-up pursuant to
a contract for consideration other than cash.
3. 65,625 (Previous year: Nil) fully paid-up 5% Compulsory Convertible preference shares are held by
Aditya Birla Minacs BPO Limited, UK, the holding company.
4. Nil (Previous year 105,000) fully-paid 10% redeemable preference share are held by Holding Company
Compass BPO Limited, UK.
SCHEDULE 2 - RESERVES & SURPLUS
Securities Premium 3,937,500 —
(During the year, 65,625 10% preference shares were issued
to holding company at a premium of Rs 60 per share.
Also refer to note C.2 of Schedule 15)
TOTAL 3,937,500 —
SCHEDULE 3 - SECURED LOANS
Loans from bank
Cash credit fac ilities — 637,140
Total Secured Loans — 637,140
SCHEDULE 4 - UNSECURED LOANS
Interest free loan from shareholder 1,852,283 1,852,283
TOTAL 1,852,283 1,852,283
SCHEDULE 6 - SUNDRY DEBTORS
(Unsecured considered good)
Debts outstanding for more than six months — —
Other debts 18,911,494 1,334,632
TOTAL 18,911,494 1,334,632
CHEDULE 7 - CASH AND BANK BALANCES
Cash on hand 146,202 154,152
Balance with scheduled banks
In current account 28,440,904 354,131
In deposit account 3,098,483 2,949,000
TOTAL 31,685,589 3,457,283
SCHEDULE 8 - LOANS AND ADVANCES
(Unsecured, considered good)
Advances recoverable in cash or in kind or for value to be received 10,474,905 15,639,249
Deposits - others 4, 585,187 9,794,648
Due from fellow subsidiary — 487,047
(Maximum amount outstanding during the year ` 487,047
(previous year: 487,047))
Due from holding company 348,736 —
TOTAL 15,408,828 25,920,944
SCHEDULE 5 - FIXED ASSE TS ( ` )
GROSS BLOCK DEPRECIATION NET BLOCK
Particulars As at Additions Disposals As at As at Disposals For the As at As at As at
1-Apr-10 during the during the 31-Mar-11 1-Apr-10 during the year 31-Mar-11 31-Mar-11 31-Mar-10
year year year
Plant & machinery
- Computers 32,480,429 61,100 4,198,765 28,342,764 29,124,666 3,720,509 2,250,824 27,654,981 687,783 3,355,763
- Electrical fittings 2,623,990 — — 2,623,990 218,666 — 874,663 1,093,329 1,530,661 2,405,324
Office equipment 11,034,796 110,967 293,380 10,852,383 3,290,893 233,890 3,043,590 6,100,593 4,751,790 7,743,903
Vehicles 2,552,421 — 2,552,421 — 1,997,868 2,300,350 302,482 — — 554,553
Furniture and fixtures 7,639,984 — 132,873 7,507,111 2,043,680 119,433 2,044,557 3,968,804 3,538,307 5,596,304
TOTAL 56,331,620 172,067 7,177,439 49,326,248 36,675,773 6,374,182 8,516,116 38,817,707 10,508,541 19,655,847
Previous year 63,732,756 18,663,228 26,064,364 56,331,620 53,065,478 25,254,252 8,864,548 36,675,776 19,655,844 —
March 31,2011 March 31,2010
( ` ) ( ` )
March 31, 20 11 March 31, 20 10
( ` ) ( ` )
March 31, 20 11 March 31, 20 10
( ` ) ( ` )
SCHEDULE 9 - CURRENT LIABILITIES
Sundry creditors 11,637,021 16,088,544
Creditors for capital goods 10 ,101,763 9,418,710
Due to holding company 83,900 1,687,594
Advances from customers 25,437,444 —
Other liabilities 1,725,857 2,188,801
TOTAL 48,985,985 29,383,650
SCHEDULE 10 - PROVISIONS
Provision for taxation 2,590,800 2,590,800
Provision for leave encashment 7,074,923 —
Provision for gratuity 4,713,183 1,276,301
TOTAL 14,378,906 3,867,101
(87)
ADITYA BIRLA MINACS BPO PVT. LTD. (Formerly: Compass Business Process Outsourcing Pvt. Ltd.)
C M Y K
SCHEDULES FORMING P ART OF THE PR OFIT AND LOSS
ACCOUNT FOR THE YEAR ENDING MARCH 31, 20 11
March 31, 2011 March 31, 2010
( ` ) ( ` )
SCHEDULE 11 - OTHER INCOME
Interest
- bank deposits 372,189 254,234
- others 439,644 —
(Tax deducted 75,762/- (Last year: 34,640)
Profit on sale of fixed assets ( Net) 583,897 29,502
Miscelleaneous income — 5,111
TOTAL 1,395,730 288,847
SCHEDULE 12 - PERSONNEL EXPENSES
Salaries, wages and bonus 116,695,935 129,655,511
Contribution to provident and other funds 5, 337,335 6,275,998
Staff welfare expenses 3,134,528 3,462,071
Gratuity expenses 4,713,183 1,276,301
TOTAL 129,880,981 140,669,881
SCHEDULE 13 - OPERATING AND OTHER EXPENSES
Rent 9,507,700 22,147,603
Rates and taxes 390,336 633,512
Power and fuel charges 5, 244,911 10,971,011
Travelling and conveyance expenses 8, 552,411 8,368,304
Printing and stationery 566,644 924,696
Communication cost 5,931,269 8,178,898
Payment to auditors
As auditors
Audit fees 525,000 275,000
Tax audit f ees — 50,000
As adviser in respect of
Taxation matters — 25,000
Management audit fees — 150,000
Other services — 219,323
Legal and professional charges 5, 078,023 3,640,396
Business promotion/entertainment 335,263 112,107
Repairs and maintenance others 11,435,272 17,587,870
Insurance expenses 788,171 821,854
Bank charges 148,223 235,974
Loss on foreign exchange fluctuations 3, 119,968 2,545,077
Misc. expenses 299,361 217,694
TOTAL 51,922,552 77,104,319
SCHEDULE 14 - INTEREST
Interest to banks 56,181 39,334
TOTAL 56,181 39,334
SCHEDULE 15 - SIGNIFICANT ACCO UNTING POLICIES AND NOTES ON
ACCOUNTS
A. NATURE OF OPERATIONS
The principle activities of the Company are processing of data for providing
back office accounting and other services.
B. SIGNIFICANT ACCOUNTING POLICIES
B.1. Basis of Preparation
The financial statements have been prepared to comply in all material respects
with the Accounting Standards notified by Companies (Accounting Standards)
Rules, 2006, (as amended), and the relevant provisions of the Companies
Act, 1956. The financial statements have been prepared under the historical
cost convention on an accrual basis except in case of assets for which provision
for impairment is made and revaluation is carried out. The accounting policies
have been consistently applied by the Company and except for the changes
in accounting policy discussed more fully below, are consistent with those
used in the previous year.
B.2. Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent liabilities at the date of the financial statements and
the results of operations during the reporting period. Although these estimates
are based upon management’s best knowledge of current events and actions,
actual results could differ from these estimates.
B.3. Fixed Assets
Fixed assets are stated at cost, less accumulated depreciation and impairment
loss, if any. Cost comprises of purchase price and attributable cost of bringing
the assets to its working condition for its intended use.
B.4. Depreciation
a. The depreciation is charged on Straight Line basis at the following rates,
which are not lower than those prescribed under Schedule XIV of the
Companies Act, 1956, whichever is higher:
Rates (SLM) Schedule XlV
Rates (SLM)
Computers 33.33% 16.21%
Office equipment 33.33% 4.75%
Vehicles 33.33% 9.50%
Furniture & fixtures 33.33% 6.33%
Electric fittings 33.33% 4.75%
b. The depreciation on the addition of the asset is provided from the month
of such addition and for disposals up to the month of such disposals.
c. Individual low cost assets (acquired for less than ` 5,000) are depreciated
within a year of acquisition as per the requirement of schedule XIV of
the Companies Act, 1956.
B.5. Impairment of Assets:
The carrying amounts of the assets are reviewed at each Balance Sheet date
for impairment based on internal/external factors. An asset is treated as
impaired when the carrying cost of the asset exceed its recoverable value.
An impairment loss, if any, is charged to Profit and Loss Account in the year
in which an asset is identified as impaired. Reversal of impairment loss
recognised in prior years is recorded when there is an indication that the
impairment losses recognised for the assets no longer exists or has decreased.
B.6. Capital Commitments
There is no amount of contracts remaining to be executed on capital account
and not provided for.
B.7. Operating Leases
Leases where the lessor effectively retains substantially all the risks and
benefits of ownership of the leased item, are classified as operating leases.
Operating lease payments are recognized as an expense in the Profit and
Loss Account on a straight-line basis over the lease term.
B.8. Revenue Recognition
Revenue is recognized to the extent that it is probable that the economic
benefits will flow to the Company and the revenue can be reliably measured.
Income from Services
Revenue is recognised on rendering of services to customers and is recognised
in accordance with the contracts entered into with the customers.
(88)
ADITYA BIRLA MINACS BPO PVT. LTD. (Formerly: Compass Business Process Outsourcing Pvt. Ltd.)
C M Y K
Interest
Revenue is recognised on a time proportion basis taking into account the
amount outstanding and the rate applicable.
B.9. Foreign Currency Transactions
Initial Recognition
Foreign currency transactions are recorded in the reporting currency, by
applying to the foreign currency amount the exchange rate between the
reporting currency and the foreign currency at the date of the transaction.
Conversion
Foreign currency monetary items are reported using the closing rate. Non-monetary items, which are carried in terms of historical cost denominated in
a foreign currency, are reported using the exchange rate at the date of the
transaction; and non-monetary items, which are carried at fair value or other
similar valuation denominated in a foreign currency, are reported using the
exchange rates that existed when the values were determined.
Exchange Differences
Exchange differences arising on a monetary item that, in substance, form
part of the company’s net investment in a non-integral foreign operation is
accumulated in a foreign currency translation reserve in the financial
statements until the disposal of the net investment, at which time they are
recognised as income or as expenses.
Exchange differences arising on the settlement of monetary items not covered
above, or on reporting such monetary items of company at rates different
from those at which they were initially recorded during the year, or reported
in previous financial statements, are recognized as income or as expenses in
the year in which they arise.
B.10.Retirement and other Employee Benefits
i. Retirement benefit in the form of Provident Fund is a defined contribution
scheme and the contributions are charged to the Profit and Loss Account
of the year when the contributions to the respective funds are due.
There are no other obligations other than the contribution payable to
the respective funds.
ii. Gratuity liability is defined benefit obligations and is provided for on the
basis of an actuarial valuation on projected unit credit method made at
the end of each financial year.
iii.
Short term compensated absences are provided for based on estimates.
Long term compensated absences are provided for based on actuarial
valuation at the year end. The actuarial valuation is done as per projected
unit credit method.
iv. Actuarial gains/losses are immediately taken to profit and loss account
and are not deferred.
B.11.Taxation
Tax expense comprises of current tax and deferred Tax.
The current charge for income tax is measured at the amount expected to be
paid to the tax authorities in accordance with the Indian Income Tax Act.
Provision for current income tax is made on the basis of the results of the
year although the actual liability will be computed and paid on the basis of the
results for the year ended 31 March, 2011.
Deferred tax is measured based on the tax rates and the tax laws enacted or
substantively enacted at the balance sheet date. Deferred tax assets and
deferred tax liabilities are offset, if a legally enforceable right exists to set off
current tax assets against current tax liabilities and the deferred tax assets
and deferred tax liabilities relate to the taxes on income levied by same
governing taxation laws. Deferred tax assets are recognised only to the extent
that there is reasonable certainty that sufficient future taxable income will be
available against which such deferred tax assets can be realised. In situations
where the Company has unabsorbed depreciation or carry forward tax losses,
all deferred tax assets are recognised only if there is virtual certainty supported
by convincing evidence that they can be realised against future taxable profits.
At each balance sheet date the Company re-assesses unrecognised deferred
tax assets. It recognises unrecognised deferred tax assets to the extent that
it has become reasonably certain or virtually certain, as the case may be that
sufficient future taxable income will be available against which such deferred
tax assets can be realised.
The carrying amount of deferred tax assets are reviewed at each balance
sheet date. The Company writes down the carrying amount of a deferred tax
asset to the extent that it is no longer reasonably certain or virtually certain,
as the case may be, that sufficient future taxable income will be available
against which deferred tax asset can be realised. Any such write-down is
reversed to the extent that it becomes reasonably certain or virtually certain,
as the case may be, that sufficient future taxable income will be available.
B.12.Segment Reporting Policies
Identification of Segment
The Company’s operating businesses are organized and managed separately
according to the nature of products and services provided, with each segment
representing a strategic business unit that offers different products and serves
different markets. The analysis of geographical segments is based on the
areas in which major operating divisions of the Company operate.
Segment Policies
The Company prepares its segment information in conformity with the
accounting policies adopted for preparing and presenting the financial
statements of the Company as a whole.
C. Notes on Accounts
C. 1.Contingent Liabilities not provided for:
Bank Guarantee given to Custom Authorities: ` 449,000 (Previous year:
` 535,000) taken against lien on fixed deposits of ` 449,000 (Previous year:
` 535,000). This bank guarantee is given for duty free import of material under
STPI scheme.
Preference dividend amounting to `198,973 relating to 65,625 5% Redeemable
preference shares of ` 100 each issued during the current year.
C.2. During the current year, the Company has redeemed 105,000 10%
Redeemable preference shares to Aditya Birla Minacs BPO Limited, UK (or
the holding company). Further, the Company has issued 65,625 5%
Redeemable preference shares of ` 100 each at a premium of ` 60 per share
to the holding company. In view of unavailability of distributable profits, the
dividend on such preference shares have not been provided for. However,
the same has been disclosed as a contingent liability.
C.3. C.3. Earnings foreign currency (Accrual basis)
Year ended Year ended
March 31, March 31,
2011 2010
`` Income from services 185,648,849 240,634,675
Total 185,648,849 240,634,675
C.4. C.4. Expenditure in foreign currency
(Accrual basis)
Communication costs (Lease line cost) 2,553,188 2,474,052
Total 2,553,188 2,474,052
C.5. C.5. Value of imports calculated on CIF basis
Capital Goods — 854,451
Total — 854,451
C.6. C.6. Disclosure pursuant to the Accounting Standard 15 (Revised) “Employee
Benefits”:
The Company has a defined benefit gratuity plan. Every employee who has
completed five years or more of service gets a gratuity on departure at 15
days salary (last drawn salary) for each completed year of service. The scheme
is funded with an insurance company in the form of a qualifying insurance
policy.
The following tables summarise the components of net benefit expense
recognised in the profit and loss account and the funded status and amounts
recognised in the balance sheet for the respective plans.
Profit and loss account
Net employee benefit expense (recognized in Employee Cost)
[AS 15 Para 120 (c) (i) to (x)]
Gratuity
2011 2011 2010
Current service cost 1,104,068 1,104,068 739,409
Expected return on plan assets 238,165 238,165 193,164
Net actuarial( gain) / loss
recognised in the year (2,252,569) (101,960)
Past service cost 6,099,849 6,099,849 832,016
Net benefit expense 4,713,183 4,713,183 1,276,301
Actual return on plan assets 238,165 238,165 193,164
(89)
ADITYA BIRLA MINACS BPO PVT. LTD. (Formerly: Compass Business Process Outsourcing Pvt. Ltd.)
C M Y K
B alance sheet
Details of pro vision for gratuity
Grat uity
201112010 Defined benefit obligation 7,203,91 77 3,619,373
Fair value of plan assets 2,490,734 2,343,072
Net liability (4,713,183) 83) (1,276,301)
Changes in the present value of the defined benefit obligation are as
follows:
[AS15 Para 120(e) (i) to (viii)]
Gratuity
2011 2011 2010
Opening defined benefit obligation 3,619,373 3,619,373 3,052,442
Interest cost 238,165 238,165 193,164
Current service cost 4,713,183 4,713,183 1,276,301
Benefits paid 1,366,804 1,366,804 832,016
Actuarial (gains) / losses on obligation — — 70,518
Closing defined benefit obligation 7,203,917 7,203,917 3,619,373
Changes in the fair value of plan assets are as follows:
Gratuity
2011 2011 2010
Opening fair value of plan assets 2,343,072 2,343,072 1,860,896
Expected return 238,165 238,165 193,164
Contributions by employer benefits paid 1,276,301 1,276,301 1,121,028
Benefits paid 1,366,804 1,366,804 832,016
Closing fair value of plan assets 2,490,734 2,490,734 2,343,072
The Company expects to contribute ` 4,713,183 to gratuity in 2011. [AS 15
Para 120(o)]
The major categories of plan assets as a percentage of the fair value of total
plan assets are as follows:
[AS 15 Para 120 (h)]
Gratuity
2011 2011 2010
% %% Investments with insurer 100 100 100
The principal assumptions used in determining gratuity obligations
for the Company’s plans are shown below:
{AS15 Para 120 (1) (i) to (v)}
2011 2011 2010
% %% Discount rate 888 Expected rate of return on assets 999 Employee turnover 1% to 3% 1% to 3%
depending on depending on
age age
The estimates of future salary increases, considered in actuarial valuation,
take account of inflation, seniority, promotion and other relevant factors, such
as supply and demand in the employment market.
Amounts for the current and previous periods are as follows: [AS 15 Para
120(n)] 96
Gratuity
2011 2010 2009
Defined benefit obli gation 7,203,917 3,619,373 3,052,442
Plan assets 2,490,734 2,343,072 1,800,832
Surplus / (Deficit) (4,713,183) (1,276,301) (1,251,610)
Experience adjustments on
plan liabilities — — —
Experience adjustments on plan assets — — —
C.8. The Company has taken a property under operating lease with option to renew
after the period of expiry. The lease rentals for the year ended
March 31, 2011, aggregating ` 8,460,309 (Previous year: ` 21,574,530) has
been charged to the Profit & Loss Accounts.
The following lease rentals remains committed as at 31
st
March, 2011
a) Not Later than One year: ` 6,071,625 (Previous year: ` 45,15,746)
b) Later than One year but not later than five years: ` Nil
(Previous year: ` Nil)
C.9. Earnings Per Share (EPS) is calculated as under:
March 31, March 31,
2011 2010
a) Net Profit/(Loss) as disclosed in
Profit & loss account ( `) (4,809,251) 13,360,456
b) Weighted average number of
equity shares (`10 each)
outstanding during the year (in number) 693,100 693,100
c) Earnings per share (basic/diluted) (`) (7.23) 17.83
C 10.Segment Reporting:
The Company is operating in single segment that is processing of data for
providing back office accounting and other services.
Geographical Segment:
Geographical turnover is segregated on the basis of the location of the
customers. Assets are segregated on the basis of their location. Information
relating to the geographical segment is stated below:
Year ended March 31, 2011
Revenue Europe and UK Others Total
Revenue 148,485,021 37,073,827 185,648,848
Assets 2,290,061 74,224,392 76,514,453
Capital expenditure — 172,067 172,067
Year ended March 31, 2010
Revenue Europe and UK Others Total
Revenue 240,634,675 — 240,634,675
Assets 3,322,695 48,524,008 51,846,703
Capital expenditure — 18,663,228 18,663,228
C 11. A) Related parties and their relationship:
Names of related parties where control exists
Ultimate holding company : Aditya Birla Nuvo Limited
Holding company : Aditya Birla Minacs BPO Limited, UK
: Aditya Birla Minacs Worldwide Ltd.
(Intermediate holding company)
Names of other related parties Names of other related parties Aditya Birla Minacs IT Services
with whom transactions have with whom transactions have Limited The Minacs Group (USA) Inc.
taken place during the
year fellow subsidiaries
Key Management Personnel Key Management Personnel : Mr. Deepak Patel - Director
: Mr. Manoj Kedia - Director
B) Transactions during the year
(`)
Year ended Year ended
March 31, March 31,
2011 2010
Revenue
Aditya Birla Minacs BPO Limited, UK 139,098,386 240,634,675
The Minacs Group ( USA) Inc . 4,192,013 —
Interest income
Aditya Birla Minacs Worldwide Limited 225,123 —
Aditya Birla Minacs IT Services Limited 214,521 —
Redemption of 10% redeemable
preference shares
Aditya Birla Minacs BPO Limited, UK 10,500,000 —
Issue of 5% compulsory convertible
preference shares (Including
securities premium)
Aditya Birla Minacs BPO Limited, UK 10,500,000 —
Purchase of fixed assets
Aditya Birla Minacs BPO Limited, UK — 854,421
(90)
ADITYA BIRLA MINACS BPO PVT. LTD. (Formerly: Compass Business Process Outsourcing Pvt. Ltd.)
C M Y K
Sale of fix ed assets
Aditya Birla Minacs W orldwide Limited 270,000 —
Inter-corporate deposits giv en
Aditya Birla Minacs Worldwide Limited 10,000,000 —
Inter-corporate deposits received back
Aditya Birla Minacs Worldwide Limited 10,000,000 —
Inter-corporate deposits giv en
Aditya Birla Minacs IT Services Limited 10,000,000 —
Inter-corporate deposits received back
Aditya Birla Minacs IT Services Limited 10,000,000 —
(C) B alances as at the y ear end
R eceivables
The Minacs Group (USA) Inc. 4,192,013 —
Aditya Birla Minacs BPO Limited, UK 348,736 —
Pa y ables
Aditya Birla Minacs BPO Limited, UK 9,664,357 11,106,304
Aditya Birla Minacs IT Services Limited 94,215 —
Year ended Year ended
March 31, March 31,
2011 2010
C.12.2. Deferred tax assets have not been recognised as there is no virtual certainty
about the realisation of the deferred tax assets against the future taxable
profits.
C.13.Details of dues to Micro and Small Enterprises as per MSMED Act, 2006
As at March 31' 2011, as confirmed by the management, the Company has
no outstanding dues to Micro Enterprises and Small Enterprises / Small Scale
Industrial Undertakings.
C.14.Previous year comparatives
The figures of previous year were audited by a firm of Chartered accountants
other than S.V. Ghatalia & Associates.
Previous year’s figures have been regrouped where necessary to conform to
this year’s classification.
For S.V. Ghatalia & Associates For and on behalf of the Board of Directors
Firm Registration No. 103162W
Chartered Accountants Mr. Deepak Patel
Director
per Himanshu Chapsey
Partner Mr. Manoj Kedia
Membership No: 105731 Director
Place: Mumbai Place: Mumbai
Date : April 25, 2011 Date : April 25, 2011
(91)
COMPASS BPO INC.
P rofit & L oss A ccount f or the period ended 31 March, 2011
Particulars Amt($) Amt($) Particulars Amt($) Amt($)
2010-11 2009-10 2010-11 2009-10
Salary 227,813 468,850 Revenue 907,952 1,135,919
Consultant Charges 224,655 320,832
Management Fees - Minacs 210,641 —
Shared Sales Cost - Minacs 85,961 —
Travel 37,284 107,389
Office Costs 46,842 89,062
Marketing 30,897 35,990
Audit Fees 3,114 9,270
Legal & Professional Fees 450 2,020
Insurance 5,771 9,432
Bad Debts 7,573 —
Taxes & Fees 1,756 3,786
Depreciation 4,438 8,338
Bank Charges 1,011 710
Tax for the Year 4,100 24,200
Profit transferred to Balance Sheet 15,645 56,040
907,952 1,135,919 907,952 1,135,919
B alance Sheet as at 31 Marc h, 2011
Liabilities Amt($) Amt($) Assets Amt($) Amt($) Amt($)
2010-11 2009-10 2010-11 2009-10
Capital Stock 100 100 Computer Equipment 6,482
Less: Depreciation 3,697 2,784 4,659
Amount Owed to Holding Company — 249,696
Accounts Payable 1,336 36,085 Office Equipments 1,480
Other Liabilities 135,038 10,629 Less: Depreciation 687 793 1,287
Provision for Taxation 4,100 24,200
Furnitures & Fixtures 6,208
Retained Earning 180,946 165,302 Less: Depreciation 4,025 2,182 4,252
Amount Receivable from
Holding Company 79,986 —
Bank 86,109 10,648
Debtors 149,621 448,010
Prepaid 44 17,156
321,520 486,012 321,520 486,012
(92)
COMPASS BPO INC.
C M Y K
Schedule for Profit & Loss Account
Account Code Account Name Amount
$
1 Salaries : Gross Salary (DM) 227,813
227,813
2 Office Cost :
400-150 Staff Welfare Exps. 407
410-090 Courier Charges 751
410-130 Foreign Exchange Gain/Loss 3,001
410-170 Postage Expenses 5
410-200 Membership & Subscription 4,246
410-220 R & M - Office Equipment 60
410-230 R & M - Co mputers 239
410-240 R & M - Others 173
410-260 Rent 5,400
410-250 Rates & Taxes 2,978
410-290 Software Exps. 1,266
410-310 Tel. Line Ongoing Cost 2,391
410-370 Tel. Cost - Mobile 11,964
410-400 Tel. Cost Internet 4,285
410-410 Others 9,253
410-440 Meetings & Conferences 424
46,842
3 Audit Fees :
410-020 Audit Fees 3,114
4 Legal & Professional Fees :
410-160 Legal & Professional Fees 450
5 Travel Etc. :
400-090 Flights Charges 21,176
400-110 Conveyance Local 8,774
400-130 Hotel Accommodation 4,315
400-190 Trl. & Liv. Travel 3,019
37,284
6 Marketing :
400-140 Marketing Cost 29,202
410-040 Business Prom/Ent 1,664
410-420 Entertain - B’ness Dev. 31
30,897
7 Revenue
300-010 Staff Charges 1,479,949
320-010 Con sulting - IND 438,520
320-025 Consulting Fixed Price 204,614
320-040 Software Revenue - 2,123,082
320-020 Consulting-US
Consulting (DAVID) 35,525
Consulting (MEL) 191,041
Consulting (VICKY) 14,213
Consulting (CHERYL) 30,480 271,259
310-010 Other Income 201,128
310-030 Int erest rec. 122 201,249
2,595,590
Less:
400-020 CDIPL Charges-UK/US 1,601,574
410-360 Recharge 86,065 1,687,639
907,952
Schedule for Balance Sheet
A ccount Code A ccount Name Amount
$
1 Debtors :
120-010 Debtors 149,621
149,621
2 Prepaid :
150-070 Prepaid Expenses 44
44
3 Other Liabilities :
150-040 Advance Account 7,320
240-051 OS Liab for Minacs Mgt Fe 38,642
240-052 OS Liab for Minacs Sales 85,961
240-060 Out. Liabilities for Exps. 3,114
135,038
Account Code Account Name Amount
$